The 100 Day Sprint - Olympic Edition, How is Romney Not 10 Points Ahead?

Who Will Take the Gold?
Days Until the Election: 100
Projected Popular Vote Total: Obama +0.3% (unchanged from last week)
Projected Electoral Vote Total: Obama 332, Romney 206 (unchanged from last week)

For all that those of us who like politics like to make out of supposed gaffes, whether it is Mitt Romney making his first political visit to the UK and insulting their readiness to hose the Olympics or President Obama making remarks which, without proper context, make it sound like he was saying that the government built private businesses, it is obvious from the polling that these are having very little effect on the Presidential race to date.  Nor is the massive amount of money already being spent on both sides to try to sway voters.

The electoral map has been remarkably stable.  The last time my map looked any different in terms of the electoral total was five weeks ago, when Ohio was narrowly in Mitt Romney's column.  As a matter of fact, 47 of the states have been in the same column on every single map this year.  Only Florida, Ohio and Virginia have swung back and forth and as you can see, they are still among the closest of the states.

Looking at the Intrade Odds, which tend to reflect both swings in political fortunes and the stability of the race, the odds of President Obama being re-elected have stayed in a range between 52% and 61% all year (they are very close to the center of that range right now, at 57.4%.)

So we have the odd phenomenon of a very close race that has seen very little change over a long period of time.

If the election were held today, I have no doubt that the President would win re-election.  But, to paraphrase a great political thinker, if the election were held today, we'd all be a bit confused, because it was supposed to happen in November.  100 days is still a lot of runway for Mitt Romney to overcome what is, after all, a very modest lead for the President.

The world and the United States will be paying little attention to politics for the next 16 days as the summer Olympics take place in London.  Sure, there are wall-to-wall RNC ads during the Olympics, but no one is paying attention while they are busy rooting on America's best athletes.

Mitt Romney has clearly made the choice to make a late announcement of his VP pick, as he is almost guaranteed not to make an announcement during the Olympics, meaning the EARLIEST he could announce now is August 13th, which is exactly two weeks before the Republican Convention.

Obama Ahead - How is this Even Possible?
By all historical data, this should be a Republican year.  As has been discussed many times, economic conditions are a huge indicator of Presidential election prospects and the numbers are still dismal for the President.

Since World War II, the following sitting Presidents have run for re-election.

Harry Truman in 1948
Dwight Eisenhower in 1956
Lyndon Johnson in 1964*
Richard Nixon in 1972
Gerald Ford in 1976*
Jimmy Carter in 1980
Ronald Reagan in 1984
George H.W. Bush in 1992
Bill Clinton in 1996
George W. Bush in 2004

* Johnson and Ford where not elected President in their first, partial term.  Johnson became President when John F. Kennedy was killed and Ford became President when Nixon resigned following the Watergate scandal.  Still, they were incumbents running for re-election.

The election year unemployment rates (January through October as the election takes place in early November), the CHANGE in unemployment rates from the same period the prior year and the ultimate percentage of the two-party popular vote are below (I use the two-party popular vote because the presence of major independent candidates, such as John Anderson in 1980 and H. Ross Perot in 1992 and 1996 can distort the results.)
Year - UE, Change, 2-Party Vote %
1948 - 3.7%, -1.7%, 52%
1956 - 4.1%, -0.3%, 58%
1964 - 5.2%, -0.5%, 61%
1972 - 5.7%, -0.2%, 62%
1976 - 7.7%, -0.8%, 49%
1980 - 7.1%, +1.3%, 45%
1984 - 7.6%, -2.2%, 59%
1992 - 7.5%, +0.7%, 47%
1996 - 5.4%, -0.2%, 55%
2004 - 5.6%, -0.4%, 51%

Looking at these data, of the 7 re-election candidates who have received more than 50% of the popular vote, only 1, Ronald Reagan in 1984, was re-elected with an unemployment rate over 6%.  In Reagan's case, the unemployment rate was still high put was coming down quickly, having dropped 2.2% in 12 months.  Of the 3 candidates who did NOT received 50% of the vote, all 3 had unemployment rates over 7%.

Putting these two causal factors, absolute unemployment rate and annual change in unemployment rate into a linear regression model, I was able to develop the following equation for Presidents seeking re-election:
Popular Vote = 59.38% - 1.1 * unemployment rate - 2.5 * change in unemployment rate

With this, we can see who has beat and who has under performed versus the natural course of the election based on the unemployment rate:

Year - Candidate, Predicted Outcome, Actual Outcome, Difference
1948 - Harry Truman, 60%, 52%, 8% Under Perform
1956 - Dwight Eisenhower, 56%, 58%, 2% Outperform
1964 - Lyndon Johnson, 55%, 61%, 5% Outperform
1972 - Richard Nixon, 54%, 62%, 8% Outperform
1976 - Gerald Ford, 53%, 49%, 4% Under Perform
1980 - Jimmy Carter, 48%, 45%, 3% Under Perform
1984 - Ronald Reagan, 57%, 59%, 2% Outperform
1992 - George H.W. Bush, 49%, 47%, 2% Under Perform
1996 - Bill Clinton, 54%, 55%, 1% Outperform
2004 - George W. Bush, 54%, 51%, 3% Under Perform

In every race except 1948, 1964, 1972 and 1976, the sitting President performed within 3% of the results that would be predicted by the unemployment rate and change in unemployment rate.

Harry Truman, who is a surprising biggest loser versus expectations, given that he won, is actually a natural candidate to under perform in 1948, given the vicious divisions in the Democratic party over civil rights that led to a splinter candidacy by Strom Thurmond, who actually won most of the deep south as an Independent.

Lyndon Johnson's poor performance in 1964 followed a similar theme as Johnson put his legacy on the line in order to get the Civil Rights Act passed and faced a stiff primary challenge from George Wallace in the wake of Kennedy's assassination.

Richard Nixon's brilliant performance in 1972 was a result of a very weak candidate in George McGovern and his awful initial choice of Tom Eagleton as VP, a man who had a history of mental problems.

Gerald Ford's under performance in 1976 can be soundly attributed to fallout from the Watergate scandal and Ford's decision to pardon Richard Nixon, an act that has been praised by many historians but was bitterly unpopular at the time.

It is worth noting that while there are some variations int he popular vote, in terms of outcome, the ONLY candidate predicted to win by this equation who actually lost was Gerald Ford and no candidate predicted to lose has won.  And 1976 was truly unique, with the backdrop of Watergate and the odd situation of Ford running for re-election despite never having won a national election (he was appointed VP by Nixon after Spiro Agnew resigned amidst a bribery scandal.)

So what would this equation predict for the 2012 race?

The data set is incomplete, but through 6 months, the unemployment rate this year has averaged 8.2%, a 0.8% decline from  a year prior.

Plugging those numbers into the equation would predict 52% of the two-party vote for President Obama.  One would argue that this is exactly where the race stands or that perhaps Romney is even over performing a bit at this stage (my national numbers has Obama at +0.3%, he should be at +4% with a 52% total.)

So, to all those who say Romney is the worst candidate in generations and is spoiling what should be a huge Republican lead given the poor economy, they are wrong.  The trajectory of the economy is actually far more critical than its absolute state, as shown by Ronald Reagan in 1984, whose resounding victory came despite high unemployment and aligned closely to the model.

The stage is set for a close race.  What happens between now and November with the economy is critical.  And the other circumstances matter a lot when the model predicts a race this close.

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