Two Charts That Say “It’s The Economy, Stupid”
InTrade has become a relatively reliable indicator of sentiment in myriad areas including the 2012 election. Prior to last Thursday, Barack Obama being reelected was trading at 58 (or a 58% probability of winning) while Mitt Romney was just below 39.
Thursday the Commerce Department revised the numbers for GDP growth in the first quarter downward from 2.2% to 1.9%; the Labor Department revised the initial unemployment claims upwardly for the week ended May 26, 2012; and the saving rate decreased to 3.6% or the lowest level since 2007. All of this, and more, was covered in a Bloomberg News article including the effects of the global economic slowdown.
On Friday, as we all know, the Bureau of Labor Statistics released a horrid set of unemployment numbers with only 69,000 new jobs added and a U3 unemployment rate increase to 8.2%, plus they adjusted the April numbers negatively.
By the InTrade close on Sunday, Obama had dropped to just above 53 and Romney had jumped to more than 42. The gap that was 19 points on Thursday morning was down to 11 in just 4 days, and all based on reactions to the dismal economic numbers of Thursday and Friday.
Obama’s InTrade Chart from May 22 to June 5, 2012
Romney’s InTrade Chart from May 22 to June 5, 2012
On Friday the financial markets took a huge hit with the DJIA off more than 274 points thus giving up its entire 2102 gain. Subsequently the Asian markets took big hits as well when they opened Sunday night on the East Coast. Clearly there is no further evidence necessary to ascertain the 2012 Presidential election is about the economy, and the best efforts of the Obama campaign over the weekend and on the Sunday shows did nothing to reverse the sentiment trend in yesterday’s InTrade prices.
What is potentially petrifying for the Obama camp and very encouraging for the Romney campaign is the distinct possibility that second quarter GDP growth will be anemic and the unemployment numbers for the next month or so are looking soft as well.
Not that the country needs anymore bad economic news but given the clear message that this election is all about the economy, a couple more months of difficult news is a small price to pay for a Romney victory and avoiding another four years of complete economic failure under Obama.