Directions: Ask an adult of voting age (18 years of age or
older) the following three-part question. (This adult can be a
family member, a guardian, a friend, a relative, a co-worker, or
anyone else who may be willing to share his or her views about
important issues in a presidential election. Make sure to indicate
that you are NOT asking whether the interviewee plans to vote, or
has voted in a prior election. You are also NOT asking for whom the
interviewee has voted in the past, or may support in the future.)
The question: Please indicate the three issues that are most
important to you as you decide who will get your vote in a U.S.
presidential election. Issue 1:
_________________________________________________________________
Issue 2:
_________________________________________________________________
Issue 3:
_________________________________________________________________
Slide 4
Business Cycle PEAK Level of business activity Time Trough
TROUGH Expansion GROWTH TREND Expansion PEAK Inflation Too much
money Contraction Unemployment Contraction
Slide 5
http://www.nytimes.com/interactive/2008/1
0/18/business/20081019-metrics-graphic.html
http://www.nytimes.com/interactive/2008/1
0/18/business/20081019-metrics-graphic.html
http://www.portfolio.com/interactive-
features/2008/01/Economics-of-Presidency
http://www.portfolio.com/interactive-
features/2008/01/Economics-of-Presidency As important as the
economy may be for voters when they go to the polls, many
economists contend that presidents have little power over general
economic performance during their terms of office, even though some
things, like the minimum wage, are set by the government.
Slide 6
Unemployment Rate : The percentage of people in the labor force
who are unemployed. Inflation Rate : The percentage increase in the
overall price level. Real GDP : the value of all final goods and
services produced in a country in a year, expressed in terms of
constant dollars. TWO STATISTICS BASED ON THESE INDICATORS Misery
Index : The sum of the unemployment rate and the inflation rate.
Growth rate in real GDP per capita : The percentage change in real
GDP per person.
Slide 7
Survey on Unemployment Survey on Unemployment BLS calls 60,000
households every month. They ask three questions: 1. Are you
working?no 1. Are you working? If the answer is no, Did you work at
all this month-even 1 day? 2. Did you work at all this month-even 1
day? yes You are a member of the LF if yes on 1 or 2. Did you look
for work during the last month? 3. Did you look for work during the
last month? yes [agency, resume, interview ] A yes counts you as
LFnonot counted part of the LF. A no means you are not counted.
discouraged worker. You are a discouraged worker. The labor force
employedunemployed consists of the employed and unemployed.
Slide 8
Inflation overall increase in prices Inflation overall increase
in prices Deflation decrease in prices (1954) Deflation decrease in
prices (1954) Disinflation decrease in inflation(1980-83)
Disinflation decrease in inflation(1980-83)
Misery Index Inflation Rate + Unemployment Rate = Misery Index
discomfort Arthur Okun developed the economic discomfort index
health of the economy. index to summarize the health of the
economy. Jimmy Carter used it against Gerald Ford and won. Ronald
Reagan used it against Carter (20%) and won.ArthurOkun Inflation
Rate Unemployment Rate
A Real GDP per capita growth rule: The incumbent party usually
wins if... The growth rate of real GDP per capita is greater than
0% during the year of the election.
Slide 14
A Real GDP per capita growth rule : The incumbent party usually
wins if... The growth rate of real GDP per capita is greater than
or equal to 2.5% during the year of the election. A Misery Index
rule : The incumbent party usually wins if... The Misery Index has
not increased from the year prior to the election. A Guaranteed
Loss Rule : The incumbent party has always lost if the real GDP per
capita growth is less than 2.5% AND the misery index has increased
from the year prior to the election to the year of the
election.
Slide 15
1956 : Eisenhower 57.4%, Stevenson 42.0% Real GNP growth
(Economy): Two Year : 4.54% Four Year : 3.25% Previous
Administration : 4.95% Unemployment Rate (Jobs): Two Year : 4.25%
Four Year : 4.25% Previous Administration : 4.36% Although
Eisenhower won in a landslide, the Economy had actually performed
better under the Truman administration than it did during
Eisenhower's first term. Real GNP, however, grew at an amazing
7.14% per year in 1955, which certainly helped Eisenhower get
reelected.
Slide 16
1984 : Reagan 58.8%, Mondale 40.6% Real GNP growth (Economy):
Two Year : 5.85% Four Year : 3.07% Previous Administration : 3.28%
Unemployment Rate (Jobs): Two Year : 8.55% Four Year : 8.58%
Previous Administration : 6.56% Reagan won in a landslide, which
certainly had nothing to do with the unemployment statistics. The
economy came out of recession just in time for Reagan's reelection
bid, as real GNP grew a robust 7.19% in Reagan's final year of his
first term.
Slide 17
1996 : Clinton 49.2%, Dole 40.7% Real GNP growth (Economy): Two
Year : 3.10% Four Year : 3.22% Previous Administration : 2.14%
Unemployment Rate (Jobs): Two Year : 5.99% Four Year : 6.32%
Previous Administration : 5.60% Not quite a landslide, we see quite
a different pattern than the other two incumbent victories. Here we
see fairly consistent economic growth during Clinton's first term
as President, but a consistently improving unemployment rate. It
would appear that the economy grew first, then the rate of
unemployment decreased, which we would expect since the
unemployment rate is a lagging indicator.
Slide 18
Incumbent 55.1%, Challenger 41.1% Real GNP growth Two Year :
4.50% Four Year : 3.18% Previous Administration : 3.46%
Unemployment Rate (Jobs): Two Year : 6.26% Four Year : 6.39%
Previous Administration : 5.51% It would appear then from this very
limited sample that voters are more interested in how the economy
has improved during the tenure of the presidency than they are in
comparing the performance of the current administration with past
administrations.
Slide 19
Incumbent 42.3%, Challenger 48.0% Real GNP growth (Economy):
Two Year : 1.87% Four Year : 2.67% Previous Administration : 3.12%
Unemployment Rate (Jobs): Two Year : 6.97% Four Year : 6.56%
Previous Administration : 6.50%
Slide 20
Election Year and Macroeconomic Performance Presidential
PartyYearUnemploymentInflation RateMisery IndexChange in Misery
Index Incumbent Party Relative Vote Share Republican19564.12.97.0
Republican19605.51.57.00.049.9 Democrat19645.21.26.4-0.661.3
Democrat19683.64.78.31.949.6 Republican19725.64.410.01.761.8
Republican19767.74.812.52.548.9 Democrat19807.112.419.57.044.7
Republican19847.53.911.4-8.159.2 Republican19885.54.49.9-1.553.9
Republican19927.52.910.40.546.5 Democrat19965.43.38.7-1.754.7
Democrat20004.03.47.4-1.350.3 Republican20045.52.78.20.851.5