Can The Economy Predict The Next President?

2019-10-09T09:44:20-04:00 October 9th, 2019|Weekly Market Commentary|

“Incredibly, the last 11 times there wasn’t a recession within two years of a re-election, the sitting president won.”

“The economy, stupid” — Phrase campaign strategist James Carville used to help Bill Clinton get elected in 1992.

As Carville noted ahead of the 1992 election, the recession in 1990 and 1991 was top of mind for many voters as they headed to the polls to vote for either incumbent President George H.W. Bush or opponent Bill Clinton. And now we see investors becoming more skittish around the U.S. economic outlook just before we flip the calendar to 2020, a presidential election year. Is there any logic behind the idea that a well-performing economy tends to make voters feel better about voting for the current administration?

“Incredibly, the last 11 times there wasn’t a recession within two years of a re-election, the sitting president won,” according to LPL Senior Market Strategist Ryan Detrick. “Compare that to the seven times there was a recession, and the incumbent president didn’t get re-elected five of those times.”

As shown in the LPL Chart of the Day, the U.S. economy predicted the winner of 16 of the previous 18 elections in which a sitting president was up for re-election. In fact, you have to go all the way back to Calvin Coolidge in 1924 to find the last time the economy was wrong regarding the re-election of a president.

prez-recession_2

We’re in the 10th year—so far—of this economic expansion, and the U.S. economy has had an impressive track record of predicting the next president. There’s still another 13 months to go before the next election, but this is something to remember.

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This Research material was prepared by LPL Financial, LLC.

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