U.S. Election Model Update

Mark Zandi, Chief Economist

October 2020XXXXX, TitleBernard Yaros, Assistant Director

October 2020 2

1. Who Will Be the Next President?

2. Which State Will Determine the Presidency?

3. U.S. Congressional Races

4. Wildcards

Agenda

1 Who Will Be the Next

President?

October 2020 4

Biden Will Win a Nailbiter How states will vote if nonincumbent turnout is typical

Source: Moody’s Analytics

Democrat

Republican

Electoral count:

Democrats: 279

Republicans: 259

Note: Results reflect Oct 2020 forecast

October 2020 5

How a Biden Blowout Would Look LikeHow states will vote if nonincumbent turnout is high

Source: Moody’s Analytics

Democrat

Republican

Electoral count:

Democrats: 352

Republicans: 186

Turns Democrat

Note: Results reflect Oct 2020 forecast

October 2020 6

Trump Can Still Win if Nonincumbent Turnout Is LowHow states will vote if nonincumbent turnout is low

Source: Moody’s Analytics

Democrat

Turns Republican

Electoral count:

Democrats: 209

Republicans: 329

Republican

Note: Results reflect Oct 2020 forecast

October 2020 7

President Trump’s Approval Is Low but Stable

Sources: Gallup, Moody’s Analytics

Historical range of approval ratings for U.S. presidents, %

20 40 60 80 100

TrumpObama

W. BushClinton

H.W. BushReagan

CarterFord

NixonJohnsonKennedy

EisenhowerTruman

Roosevelt

Avg during

presidency

October 2020 8

-1

0

1

2

3

4

20Q1 20Q2 20Q3 20Q4 21Q1 21Q2 21Q3 21Q4

Rental and interest income Dividend IncomeProprietors' income Labor incomeEased pass-through limits Expanded UI benefitsRecovery rebates Automatic stabilizers

Voters Head to Polls With Aggregate Incomes Mostly IntactDisposable personal income, $ tril, SAAR, change from 2019Q4

Sources: BEA, CBO, JCT, Moody’s Analytics

Disposable personal income

October 2020 9

Older Voters Are Paying Close Attention to Stock Prices

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

20,000

22,000

24,000

26,000

28,000

30,000

32,000

34,000

36,000

38,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct

Wilshire 5000 (L)

Federal Fund Rate (R)

Sources: Federal Reserve, SIX Financial, Moody’s Analytics

October 2020 10

0

2

4

6

8

10

12

14

16

20Q1 20Q2 20Q3 20Q4

Red statesTrump-won swing statesClinton-won swing statesBlue states

Unemployment Crisis Is Still Severe…

Sources: BLS, Moody’s Analytics

Unemployment rate, %, SA

Note: 20Q3 and 20Q4 values reflect Oct 2020 forecast

October 2020 11

Election Yr Incumbent Recession Unemployment Rate, % Outcome

1912 William Taft January 1910 to January 1912 5.2 Loss

1924 Calvin Coolidge May 1923 to July 1924 5.5 Win

1932 Herbert Hoover August 1929 to March 1933 23.6 Loss

1976 Gerald Ford November 1973 to March 1975 7.7 Loss

1980 Jimmy Carter January 1980 to July 1980 7.2 Loss

1992 George H.W. Bush July 1990 to March 1991 7.5 Loss

2020 Donald Trump March to April 2020 8.5 ?

…And Will Cast a Long Shadow on the 2020 ElectionPresidential elections in which incumbent ran for re-election within two yrs of a recession

Sources: BLS, Census Bureau, NBER, Moody’s Analytics Note: Unemployment rate is annual avg

2 Which State Will Determine

the Presidency?

October 2020 13

Major Shifts in Pennsylvania’s Political Geography # of votes Trump received more/less (+/-) than avg Republican from 1988 to 2012

Sources: Pennsylvania Department of State, Moody’s Analytics

<-10,000

-10,000 to <0

0 to <10,000

≥10,000

Philadelphia

Scranton

Northampton County

Montgomery County

Delaware County

Pittsburgh

Erie Luzerne CountyCentre County

Westmoreland County Chester CountyLancaster

October 2020 14

Biden Is Favored to Win Back the Keystone StateHow counties will vote during pandemic if nonincumbent turnout is avg

Source: Moody’s Analytics

Trump’s projected margin

of defeat, # of votes:

111,798

<48%

48% to <50%

50% to <52%

≥52%

Trump’s projected share

of two-party vote in 2020:

Note: Results reflect Sep 2020 forecast

October 2020 15

How a Biden Blowout Would Look Like in PennsylvaniaHow counties will vote during pandemic if nonincumbent turnout is high

Source: Moody’s Analytics

Trump’s projected margin

of defeat, # of votes:

224,521

<48%

48% to <50%

50% to <52%

≥52%

Trump’s projected share

of two-party vote in 2020:

Note: Results reflect Sep 2020 forecast

October 2020 16

Trump Can Still Win If Nonincumbent Turnout Is LowHow counties will vote during pandemic if nonincumbent turnout is low

Source: Moody’s Analytics

Trump’s projected margin

of victory, # of votes:

38,187

<48%

48% to <50%

50% to <52%

≥52%

Trump’s projected share

of two-party vote in 2020:

Note: Results reflect Sep 2020 forecast

October 2020 17

3.5

4.5

5.5

6.5

7.5

8.5

9.5

90 92 94 96 98 00 02 04 06 08 10 12 14 16

Donald Trump Hillary Clinton

The Economy Still Matters to Pennsylvanian VotersUnemployment rate, %, in Pennsylvania counties won by…

Sources: BLS, Moody’s Analytics Gray bars: presidential election yrs

October 2020 18

Democrats Are Vulnerable to ‘Naked’ Ballot RejectionsMail ballots requested, % of registered voters

Sources: U.S. Elections Project, Moody’s Analytics

<20

20 to <30

30 to <40

≥40

Allegheny County Chester County

Montgomery County

3 U.S. Congressional Races

October 2020 20

5 Vacancies

1 Libertarian

Republicans

197 seats

Party Breakdown of 116th U.S. House of Representatives

Sources: Clerk of the House, Moody’s Analytics

Democrats

232 seats

Key Points:

» Every two yrs, all 435 House seats

are up for grabs

» 218 seats required for a majority

» Republicans need a net gain of at

least 17 seats to retake majority

• 4 previously held

by Republicans

• 1 previously held

by Democrats

October 2020 21

-40

-30

-20

-10

0

10

20

30

-24 -18 -12 -6 0 6 12 18 24

Republicans

Democrats

Good News #1 for GOP: 30 Democrats in Trump CountryCompetitive House districts held by…

Sources: University of Virginia Center for Politics, Moody’s Analytics

2018 House of Representatives vote (D less R)

20

16

Pre

sid

en

tia

l vo

te (

D le

ss R

)

Voted for Trump in

‘16 and GOP in ‘18

Voted for Trump in ‘16

and Democrat in ‘18

Voted for Clinton in

‘16 and GOP in ‘18

Voted for Clinton in ‘16

and Democrat in ‘18

October 2020 22

-20

-10

0

10

20

30

40

-10

-5

0

5

10

15

20

46 54 62 70 78 86 94 02 10 18

House popular vote (L)

House seats won (R)

D

R

Good News #2 for GOP: Geographic Distribution

Sources: Brookings, Clerk of the House, Moody’s Analytics

Democratic share less Republican share, ppt

October 2020 23

0

5

10

15

20

25

30

1/1/19 4/1/19 6/30/19 9/28/19 12/27/19 3/26/20 6/24/20 9/22/20

Democrats Republicans

Woodall

(GA-7)

Hurd

(TX-23)

Marchant

(TX-24) Holding

(NC-2)

Walker

(NC-6)

Brooks

(IN-5)

King

(NY-2)

Bad News #1 for GOP: Fewer Incumbents on the BallotCumulative # of House representatives announcing they will not seek reelection in 2020

Sources: Ballotpedia, University of Virginia Center for Politics, Moody’s Analytics

Olson

(TX-22)

Gianforte

(MT-AL)

Loebsack

(IA-2)

October 2020 24

Net House gain/loss (+/-) for

incumbent president’s party

Did House

Majority Flip?

Incumbent

President’s Party

Net House gain/loss (+/-) for

incumbent president’s party

Did House

Majority Flip?

Incumbent

President’s Party

1948 75 Yes Democrat 1984 14 No Republican

1952 -22 Yes Democrat 1988 -2 No Republican

1956 -2 No Republican 1992 10 No Republican

1960 22 No Republican 1996 3 No Democrat

1964 37 No Democrat 2000 1 No Democrat

1968 -5 No Democrat 2004 3 No Republican

1972 12 No Republican 2008 -21 No Republican

1976 -1 No Republican 2012 8 No Democrat

1980 -34 No Democrat 2016 6 No Democrat

Historical avg 5.8

Bad News #2 for GOP: HistoryAll postwar presidential election years

Sources: U.S. House of Representatives, Moody’s Analytics

October 2020 25

38

40

42

44

46

48

50

4/1/19 6/30/19 9/28/19 12/27/19 3/26/20 6/24/20 9/22/20

Democrats Republicans

Bad News #3 for GOP: Congressional Generic Ballot% of voters who will support given party in congressional elections

Sources: FiveThirtyEight, Moody’s Analytics

October 2020 26

140

160

180

200

220

240

260

280

300

-20 -15 -10 -5 0 5 10 15 20 25

2004

Final pre-election generic ballot margin for president’s party, ppt

1980

2000

2016

1996

19841992

1976

19561972

2008

1973

1988

Republicans Risk Sinking Further into House MinorityCongressional elections in presidential election years

Sources: Clerk of the House, FiveThirtyEight, Gallup, Moody’s Analytics

Ho

use

se

ats

wo

n, p

resid

en

t’s p

art

y

Current generic ballot, ppt = -7

1964

1968

2012

October 2020 27

Senate Majority Hangs in the Balance

Sources: RealClearPolitics, Moody’s Analytics Note: Reflect avg of polls in past 30 days wherever RCP avg N/A

Republican’s support in head-to-head polls less Democrat’s, ppt

-12

-9

-6

-3

0

3

6

46 47 48 49 50 51 52 53 54 55

Republican-held

Democrat-held seat

45 solid blue seats or not up

SCMT

IANC

MEMI

GA

KS

AZ

CO

51 seats for Senate majority

45 solid red seats or not up

4 Wildcards

October 2020 29

0.0 20.0 40.0 60.0 80.0 100.0

PA

NM

U.S.

NV

IA

NC

FL

CO

Democrat

Other

Republican

Wildcard #1: Early Voting

Sources: U.S. Elections Project, Moody’s Analytics

% of mail ballots returned by party Early voting, % of 2016 turnout, as of Oct 26

<20

20 to <40

40 to <60

≥60

October 2020 30

If Pennsylvania Is the Decider, Buckle InWhen mail and absentee ballots are pre-processed

Source: New York Times, Moody’s Analytics

Upon receipt

On Election Day

Before Election Day

October 2020 31

0

20

40

60

80

100

9/4/20 9/11/20 9/18/20 9/25/20 10/2/20 10/9/20 10/16/20 10/23/20

Not before Inauguration DayBy Inauguration DayBy Thanksgiving DayBy election week

Election Night Could Morph into Election Month

Sources: The Good Judgement Project, Moody’s Analytics

Probability, %, a major party’s presidential campaign concedes defeat in the 2020 election

October 2020 32

1,250

1,300

1,350

1,400

1,450

11/1/00 11/15/00 11/29/00 12/13/00 12/27/00

Full machine recount of FL votes

Gore requests manual recount in four FL counties

FL Supreme Court allows manual recounts to continue

Bush petitions SCOTUSSCOTUS overrules FL Supreme Court

Gore concedes

Election Disputes Could Be Messier Than Gore v. BushS&P 500 Index

Sources: S&P Dow Jones Indices LLC, Moody’s Analytics

Election day SCOTUS hears arguments in Gore v. Bush

October 2020 33

Wildcard #2: COVID-19

Sources: CDC, Moody’s Analytics

14-day change in confirmed COVID-19 infections, %

12% to <20%

>33%

7% to 12%

20% to <33%

<7%

October 2020 34

0

1

2

3

4

5

6

7

8

9

Mar Apr May Jun Jul Aug Sep Oct

Democratic Republican Swing

Pandemic Could Hurt GOP Turnout in Must-Win States

Sources: MIT Election Lab, Johns Hopkins University, PredictIt, Moody’s Analytics

New monthly COVID-19 cases per 1,000 residents, thru 23rd of each month

Counties in most likely tipping-point states, according

to betting markets: PA, FL, WI, MI, AZ, and NC.

October 2020 35

US

AL

AK AZ

CA

DE

DC

FL

ID

IL

IA

KY

LAMD

MTNE

NV

NH

NJ

NM

NY

OR

PARI

SD

TN

TX

UT

WA

WV

WIWY

y = 0.0002x + 3.3R² = 0.19

0

2

4

6

8

10

12

0 5,000 10,000 15,000 20,000 25,000

Sources: CDC, BLS, Moody’s Analytics

More Infections…Weaker EconomyY-axis: Change in unemployment rate, 3 mo ended Aug 2020 to 2019Q4

X-axis: Infections per mil inhabitants in Jul

October 2020 36

30

40

50

60

70

80

1900 1916 1932 1948 1964 1980 1996 2012

Presidential elections Midterm elections

Wildcard #3: Voter TurnoutU.S. voter turnout, % of voting-eligible population

Sources: U.S. Elections Project, Moody’s Analytics

October 2020 37

0 10 20 30 40 50 60 70 80

Trump voters ('20)

Biden voters ('20)

Trump voters ('16)

Clinton voters ('16)

Against Biden

Against Trump

Against Trump

Against Clinton

Enthusiasm for Candidate Versus Negative Partisanship

Sources: Pew Research Center, Moody’s Analytics

% of voters who say their choice is more a vote…

For Trump

For Biden

For Trump

For Clinton

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October 2020 40

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