Good News for Bush? Economic News, Personal Finances, and the 2004 Presidential Election

Abstract

The forecasting model presented here is a revised version of a model developed prior to the 1996 election (Holbrook 1996) and is essentially a referendum model. The original model regressed the incumbent party percent of the two-party vote on presidential popularity, an aggregate measure of satisfaction with personal finances, and a dummy variable coded “1” for years in which the incumbent party had held the White House for at least two consecutive terms and “0” for all other years. The first two variables are intended to capture the political and economic performance of the incumbent administration, while the latter variable (borrowed from Abramowitz 1988) is based on the idea that it may be easier to convince voters that it is “time for a change” if the incumbent party has held the White House for at least two consecutive terms. This model provided a fairly accurate forecast of the 1996 election and also had close out-of-sample post-dictions of elections from 1952–1992. However, the 2000 election represented a significant bump in the road, and the model over-predicted Gore's percent of the vote by approximately 10 percentage points.