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The 2016 election will be determined by the economy, not by Trump gaffes

The Chicago Board Options Exchange was pretty intense today.
The Chicago Board Options Exchange was pretty intense today.
Scott Olson/Getty Images
Dylan Matthews is a senior correspondent and head writer for Vox's Future Perfect section and has worked at Vox since 2014. He is particularly interested in global health and pandemic prevention, anti-poverty efforts, economic policy and theory, and conflicts about the right way to do philanthropy.

If you want to know who'll win the presidency next year, pay more attention to the massive stock market movements in China and the US — and less to Donald Trump's latest shenanigans. The strength of the economy is, by far, the most reliable predictor of election results in the US. It's far too early to know if these market swings reflect real economic problems — today's Dow drop, for example, was nearly erased by lunchtime. But if this turns out to be something real, it'll be more important than any Trump gaffe.

We are currently 442 days away from the 2016 presidential election. General election polls are, at this point, pretty useless. Columbia's Robert S. Erikson and University of Texas Austin's Christopher Wlezien have found that merely 300 days away from the general election, polls have basically no predictive value:

Chart showing the R^2 value of polls each day before an election

Erikson and Wlezien, via

By contrast, across many countries, overall economic performance has proven to be a quite reliable predictor of election results, and the same goes for presidential elections in the US. To quote George Washington University's John Sides and University of Missouri's Jake Haselswerdt: "Two factors are most important, especially in presidential elections: the health of the economy, and whether the country is at war (particularly an unsuccessful war) or at peace."

Sides and Haselswerdt also note that economic outcomes in the year leading up to an election are more important than outcomes in the three years prior. But while economic forecasting is hard, it's doable. And Wlezien has found that real income growth in the last two years before an election explains 65 percent of variation in outcomes in presidential elections, so the economy right now has some predictive value (if you add in the fact that the presidency tends to switch parties after two terms, you can explain 85 percent of the variation; the fundamentals really matter!).

We don't know, right now, what the current crash portends for the rest of 2015 and early 2016. But if the stock dip proves to be truly significant — if this is more like 2007 than 1987 — then it will affect crucially important economic variables next year as well. And if it's more 1987 than 2007 and things stay the same ultimately, as the rebound in the Dow and S&P today suggests might happen, that'll matter in the end too.

This stage of the 2016 election is important for reasons other than knowing who's going to ultimately win; the rise of Trump is an important cultural phenomenon, for one thing. But if you do want to know who's going to win, you ought to pay less attention to politics and more to economics.

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