Democrats to Win in a Landslide in 2016, According to Moody's Election Model

Analysis by Dan White, senior economist at Moody's Analytics

NEW YORK (TheStreet) -- Our Moody's Analytics election model now predicts a Democratic electoral landslide in the 2016 presidential vote. A small change in the forecast data in August has swung the outcome from the statistical tie predicted in July, to a razor-edge ballot outcome that nevertheless gives the incumbent party 326 electoral votes to the Republican challenger's 212. 

Just three states account for the change in margin, with Ohio, Florida and Colorado swinging from leaning Republican to leaning Democrat. The margin of victory in each of these important swing states is still solidly within the margin of error though, and will likely swing back and forth in Moody's monthly updates ahead, underlining the closeness of the election to come. Furthermore, three of the candidates for the Republican nomination enjoy favorite-son status in Ohio or Florida, potentially making the outcome of those important states even more unpredictable.

It takes 270 electoral votes to win a U.S. presidential election. Our July forecast predicted a Democratic win with 270 electoral votes, to 268 for the Republican, regardless of who wins either party's nomination. Read More: Deep Dive Into Moody's Model.

The primary factor driving the results further to the incumbent party in August is lower gasoline prices. Plummeting prices and changing dynamics in global energy markets from Chinese weakness and the Iranian nuclear deal have caused us to significantly lower our gasoline price forecast for the next several years. This variable is very significant to voter sentiment in the model, with lower prices favoring incumbents.

It is important to note that the model does not reflect results if an election were held today, but relies on Moody's Analytics economic forecasts to determine what the world will look like in November 2016. Should gasoline prices rebound above the current baseline forecast by election time, the results of the model will move more in favor of the challenging Republicans. The forecast for house prices also accelerated moderately.

The election model's other main drivers saw little to no change from the previous month. No new historical data were available for real personal income per household, though September's quarterly update from the Bureau of Economic Analysis has potential to swing the model back toward the challengers if data come in weaker than forecast. The president's approval rating was unchanged from the previous forecast update; however, given the recent volatility in equity markets and what is expected to prove an extremely contentious debate surrounding the Iranian nuclear deal, this factor also has the potential to swing the forecast by next month.

The Moody's Analytics Presidential Election model forecasts whether or not the incumbent party will maintain control over the White House using a mixture of economic, demographic and political data. The model successfully predicts every election back to 1980, including a perfect electoral vote prediction in the 2012 election. Read More: Moody's on Volatility.

 

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