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Goldman Sachs is out with a note about its political forecasting model, and how the economy might affect the 2016 White House race. According to the Goldman model, the fundamental factors that matter most are real GDP, real consumption, and real personal income. With the 2012 election added to the sample, the change in non-farm payrolls also seems to have acquired more predictive power. And the stock market? Not so much.
Timing matters, too. Goldman: “It is only around the current stage of the presidential cycle (i.e., late in the year before the election) that economic variables tend to become useful in predicting the outcome, and not until Q2 of the election year that many indicators reach their maximum predictive value.” The bank also includes whether the incumbent party has held office for at least two terms, kind of a “fatigue” factor I suppose.