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Economic Model Predicts Clinton Win, but Trump Gains Ground

The latest forecast by Moody’s Analytics predicts that Hillary Clinton will win based on the current economic model, but that Donald Trump will continue to gain ground on Clinton.

The Hill reports:

But the latest model shows a downgrade in the real income per household forecast, which narrowed the Democratic lead in all states and pushed Nevada, where neither candidate has been able to grab a clear foothold in the polls, back into the Republican column.

With Nevada’s six votes switching over to the GOP, Moody’s forecasts a Clinton win with 326 electoral votes to Trump’s 212. To win, a candidate needs 270 votes.

Moody’s model awards Electoral College votes to each party based on state-by-state outcomes.

“Little else changed in terms of forecast values this month, though the president’s approval rating is showing signs of weakening ahead of next month’s update,” said Dan White, a Moody’s economist who oversees the monthly model. “Likely in response to terrorist attacks overseas and a spate of tragedies here at home, approval of the president has fallen noticeably in the past few weeks.”

The most recent Gallup poll shows President Obama’s approval rating at 49 percent, down from 53 percent in June.

Obama’s rating is a key component of the model’s outcome and has been a main reason why Democrats have held the lead in the model since the first forecast was released a year ago.

But a decline in approval for Obama would have to continue for the next several weeks to move the model any further in Trump’s favor.

“Given how the model series is calculated as a moving average, however, this weakness will not result in a material change in the model outcome until it has persisted for at least several more weeks,” White said.

Two states, Maine and Nebraska, allow electoral votes to be split by congressional district, while the rest are winner take all.

The model, which has predicted every election correctly since it was created in 1980, has forecast a Democratic victory since the release of its first run in July 2015.

Moody’s economic model won’t take into account any poll bounce for Trump from the Republican National Convention, which ended on Thursday night in Cleveland.

The model chooses a party, not a candidate, to win.

The latest forecast puts 16 states, which includes Washington, D.C., firmly in Democratic territory, with 10 more leaning in that direction.

Republicans hold comfortable leads in 21 states, with four more leaning red.

The most important economic variable is income growth by state, including job and wage growth, hours worked and the quality of the jobs being created in the two years leading up to an election.

The model also factors in home and gasoline prices on a state level, as well as presidential approval numbers.

The Moody’s equation also includes a dummy variable that penalizes Democrat incumbents, stemming from the theory that Democrats and Democrat-leaning independent voters are more likely to switch sides and vote for a Republican candidate than vice versa.

Democrats will gather in Philadelphia beginning on Monday to formally nominate Clinton.

Photo credit: Raw Conservative.

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