In recent polls, Donald Trump has gained ground. The oddsmakers see him as a clear favorite to beat Vice President Kamala Harris in next week’s presidential race, but not a strong one.
But people who are betting on Trump might want to look at the most recent economic data. It shows that Harris could gain from big tailwinds that make the difference in a close race.
That’s what analysts at Moody’s Analytics say. They looked at past presidential races to find the economic factors that can best predict how they will turn out.
An economist from Moody’s Analytics named Justin Begley told MarketWatch, “The model suggests that this election is still anyone’s ballgame.” This is because four states—Georgia, North Carolina, Nevada, and Pennsylvania—together have 57 electoral votes and are rated as “toss-ups.”
Mortgage rates have gone down a lot since last year, and gas prices are still going down. This is good news for Harris as the nominee from the ruling party, according to a recent simulation run for clients.
Another thing that is likely to help the vice president’s chances is rising family income.
A year over year, people’s income rose more than 5% in the second quarter of 2024. The rate dropped to 3.1% in the third quarter, but the Bureau of Economic Analysis says it was still higher than the average of 2.9% over the past 10 years.
Begley said, “Harris’s projected popular-vote margin was raised by an average of 0.2 percentage points across the country. This was mostly due to higher revisions to our state-level real household-income forecast.”
He also said that after running the model 1,000 times, Harris had a 55.5% chance of winning, which isn’t much better than a coin toss.
Not all signs of the economy have been going in Harris’s way. Before Trump took office, mortgage rates were very high. They have gone down since then, but they are still much higher than they were then and have been going up for the past six weeks.
Meanwhile, the former president may benefit from what is, by some measures, depressed consumer confidence.
Moody’s sees a consumer who is confident enough to re-elect a Democrat to the White House, as the Conference Board’s measure of consumer confidence remains near its decades-long average.
But voter dissatisfaction with the economy shows up more markedly in the University of Michigan consumer sentiment index.
The index is at its highest level in several months, but well below its pre-pandemic peak, at levels where incumbents tend not to get re-elected, according to a recent analysis by Joanne Hsu, an economist who oversees the Michigan survey.
Another model based on economic data is similarly showing that the White House race is tight, though moving slightly in Harris’s direction.
This model, run by Yale University economics professor Ray Fair, shows Harris getting 49.47% of the two-party presidential popular vote, a slight increase for her from 49.28% in July.
“The bottom line is that the election is predicted to be very close,” Fair wrote Wednesday in explaining his latest update. “Given that the estimated standard error is about 3 percentage points, the election has always been too close to call,” he added.
