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The Economists' Ouija Boards Spell George


Economic Trends

THE ECONOMISTS' OUIJA BOARDS SPELL GEORGE

Separately, economists and political scientists may not be known for their accuracy at predicting the future, but as a team, there is one thing they have been able to get right almost every time: the outcome of Presidential elections. And what these experts say now is that, despite the sluggish economy and Bill Clinton's 55% post-convention approval rating, George Bush will win.

While the pollsters report large and frequent swings in voter choice, economists and political scientists track the "fundamental values" that determine votes when Election Day rolls around. Primary among these is the state of the economy and the incumbency factor.

It turns out that the economy has to be in awfully poor shape for an incumbent to lose. That was the case in 1980 when gross domestic product per capita fell by 5.9% in the first half, and Jimmy Carter was routed at the polls. Ray Fair of Yale University bases his predictions on the per capita GDP growth rate in the first half of 1992 and the inflation rate for the past two years. Assuming inflation of about 3% and per capita growth of about 2%, Bush would win handily with about a 57% share of the vote. According to Fair's calculations, even if the economy did a triple dip and GDP declined 1%, Bush would still beat Clinton by a slim margin in November.

Calculations based on a model devised by Alberto Alesina of Harvard University, John Londregan of the Woodrow Wilson School at Princeton University, and Howard Rosenthal of Carnegie Mellon University show that growth of about 1% in the current calendar year would yield a 52.8% vote share for Bush, but because of the margin of error in the calculations, the probability of a Bush win is 73%. The odds rise to 81% if growth comes in at 2% for 1992.

Of course, forecasters like to hedge their bets a bit. Londregan notes that his model would have missed the 1948 win for Harry Truman, and that in 1976 it gave Gerald Ford a 52%-to-48% edge over Carter. Fair cautions that voters might judge economic growth to be poor based on three years of sluggish growth rather than two quarters worth, and that could work against Bush.KAREN PENNAR


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