Can Romney still win? Of course—just not the way things are going (Originally posted on Yahoo!'s "The Signal" Blog)

This is not where the Romney campaign wanted to be three weeks after Tampa.

The bounce in the polls that President Barack Obama netted coming out of the Democratic National Convention might have vanished by now, as those postconvention bumps tend to do, if not for the bad press that has pelted Republican challenger Mitt Romney nearly every day since the Democrats returned from Charlotte. First, Romney's response to the death of the American ambassador to Libya was widely viewed as inappropriate, even within his party. Just as he was recovering from that stumble, Mother Jones magazine released a leaked video of Romney disparaging the work ethic of 47 percent of Americans.

What everyone wants to know, of course, is whether historians will look back on these episodes as the effective end of Romney's chances at the presidency, to which we answer: Of course not. This is not just because the news media will tire of this story line by the end of the week, though that's part of it. ("Assignment editors: Now is the time to order up those 'Romney's coming back' pieces," one columnist quipped on Tuesday.) Mostly, it is the fact that new information and new story lines will relentlessly pile on for the next 47 days.

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Hidden video moves Obama 2.5% closer to reelection

The effect of the hidden video of Mitt Rommey addressing fundraisers about the 47% of Americans that do not pay federal income taxes was about 2.5 percenage points. We are not sure if the polls will really be affected in the short-run, but the prediction markets anticipate a long-term cost to Romney. The video will play in advertisments, dominate the debate over the next few days and weeks, and may play a major part in debates. Even if it does not move polls tomorrow, it will, likely, make a difference on Election Day.

Obama Reaches His Highest Likelihood of Reelection (Syndicated on the Huffington Post)

The headline would not surprise regular followers of the election; both aggregated polls and expectations created from polls have been telling that story. What is impressive is the trend and magnitude of the movement in last few weeks (i.e., since the end of the Republican National Convention). Below I have charted the likelihood of victory for Obama from my forecast that uses a combination of fundamental data, polling data, and prediction market data.

Sources: Betfair, Intrade, HuffPost's Pollster, RealClearPolitics, etc … The values are updated in real-time for both state-by-state and overall presidential predictions.

As an incumbent candidate with mediocre economic indicators, Obama's likelihood of victory hovered at just over 50 percent likelihood a year before the election. A full year before the election the uncertainty in the prediction rests in a year's worth of events: from the nomination of the Republican candidate, to economic indicators, to any of the multitude of unforeseen events that can occur in a year's time.

Obama's rise during the first few months of the 2012 occurred for two reasons: Romney's vulnerability and strong economic indicators. First, my model always had Romney as the most likely Republican nominee, but struggling to secure his party's nomination made him appear weak heading into the general election. Second, economic indicators were surging during this period, 275,000 jobs were created in January, inviting the possibility of a quick and decisive economic recovery.

The economic indicators took a turn for the worse in the spring and Obama's numbers collapsed along with them. Research that I conducted with Patrick Hummel makes three key observations about economic indicators and elections. First, it is trends not levels that are important; if economic levels were key, than Obama, or anyone who took over in January 2009 when we lost 818,000 jobs, would have no chance at reelection. Second, the impact of economic indicators crescendos around the second quarter of the election year; they continue to be meaningful after that, but there is a diminishing return to their impact. The storyline created by the first and second quarters was a tepid recovery and unless something shocking happens in the next few indicators, that story is hard to shake. Third, state-by-state indicators are of paramount relative to national numbers; thus, it is very relevant that key states such as Ohio and Virginia are doing much better than the national average.

As the summer turned towards Labor Day, Obama gained ground every day that Romney did not. Time is kind to incumbents and leading candidates. For example, Romney continues to struggle with historically low favorability and every day that he does not turn that around is one less day for him to make it happen.

The conventions and the nomination of a vice-presidential candidate are a key opportunity for the trailing candidate to shake up the race. The Republicans did not exceed expectations and the Democrats did not fall below expectations. That juxtaposition alone is sufficient for the Democratic nominee to trend upward and gain in likelihood of victory.

The remaining uncertainty in my prediction is not what will happen if the election were held today, but in what will happen over the next few weeks that could impact the election. The burden is now completely on Romney and/or Ryan to move the needle in their four debates, or orchestrate some other major event. If nothing major happens, than Obama will be reelected.

Where does this leave the overall election for me as we head into the Republican National Convention — I have Obama with a 58.9 percent likelihood of reelection, or the exact same likelihood as his chances in the pivotal swing state of Ohio.

This article is syndicated on the Huffington Post.

Romney’s chief opponent is not Obama. It’s time. (Originally posted on Yahoo!'s "The Signal" Blog)

There are four trends to consider when thinking about the general election so far:

As Romney encountered stiffer-than-expected resistance in his march to the nomination, he began to appear vulnerable as a general election challenger. Economic indicators were looking up in the first quarter of 2012, fortifying Obama's position. If that trend had continued into the second quarter, this would not be a close election.

The jobs numbers, released the first Friday of every month, hit the skids in the second quarter. Obama's re-election likelihood tumbled with them. April, May and June were the three lowest job growth months this year.

From early July to the present, we see the influence of Father Time, who is unkind to challengers of either party. By definition, an election is the incumbent's to lose, and his or her opponent has a finite amount of time to successfully make the case for a change in leadership.

Last, we see that the conventions were a net boost for Obama. Romney netted a historically low poll bounce in an average convention and the unfortunate presence of Hurricane Isaac. Obama gained a modest bounce in the polls from his own convention highlighted by President Clinton's policy-oriented address.)

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Markets sour on both Romney and Obama speeches, but conventions boost Obama (Originally posted on Yahoo!'s "The Signal" Blog)

While the purpose of the political conventions was to draw clear distinctions between President Barack Obama and challenger Mitt Romney, the two men remain identical in one key respect: When they open their mouths before a national audience, their odds of winning in November suffer.

As you see here, the likelihood of Obama's re-election jumped about 1 percentage point immediately after Romney's address last Thursday evening, and fell slightly after Obama's turn last night. (The model for predicting the outcome of presidential elections relies on many contemporary and historical factors, but the fine-tuned reactions you see here are driven by prediction markets.)

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Trust me, a primary reminder

There were 10 lead changes over the course of the primary season in the polls, but the foresight of our prediction model allowed us to hold steady with eventual nominee, Romney.

Sources: Betfair, Intrade, and RealClearPolitics

As we enter the second night of the Democratic Convention, Obama and Romney are tied in both HuffPost’s Pollster and RealClearPolitics’ aggregated voter-intention poll averages. With foresight over the events that are yet to come in the election cycle, our prediction model concludes that Obama is 62.1 likely to win reelection, despite the tie in the polls.

There is a huge value to polls in understanding where the race stood if the election were held on that day; that is what polls provide. It was both fun and insightful to see Perry, Cain, Gingrich, and Santorum have their time as the anyone-but-Romney candidate. Yet, most people just want to know who is going to win; for that that, we encourage you to follow our predictions.

Follow the state-by-state and overall presidential predictions in real-time with PredictWise.com.

 

Romney catches up in polls with convention bounce, but now it’s Obama’s turn (Originally posted on Yahoo!'s "The Signal" Blog)

If only Mitt Romney could have convinced Congress to muster a law moving Election Day to September 1, there's a very real chance he could have walked away with this contest.

As expected, the Republican convention was good for a small boost in Romney's standing, bringing the race to a virtual tie in the polls. (Romney leads, well within the margin of error, for the first time since early August.) Now he has to hold that ground as attention turns to Charlotte.

Click Here for the Full Text on Yahoo!'s The Signal

Republican convention fails to move markets, but expect a bounce in polls (Originally posted on Yahoo!'s "The Signal" Blog)

Two stories will play out today as the floors are swept and the balloons popped at the Tampa Bay Times Forum: That Republican nominee Mitt Romney will receive a bump in the polls after accepting the nomination, and to pay no attention to this bump. These stories evidently do not cancel one another out.

The prediction markets we follow are generally uninterested in temporary inflations like these. (The same will probably be true for President Obama this time next week.) In fact, the spread in the gambling markets moved slightly in Obama's favor from before to after the Republican Convention. This does not mean the convention was unsuccessful. Sure, there were some strange moments, but most of the events went off without a hitch. It simply means it was not a homerun. Romney is challenging an incumbent president, so anything less than a picture-perfect convention is going to give the market a sense that he's running out of time to make his case for a change of leadership.

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Three States Hold the Keys to the Election (syndicated on the Huffington Post)

If you have limited time to devote to following the presidential election this fall, I suggest you follow the data on just three states: Florida, Virginia, and Ohio. Mitt Romney's only likely path to victory over Barack Obama is to win those three states. Conversely, if Obama can carry just one of those states, he will likely win the election.

All of the predictions in this column update in real-time on PredictWise. I create the predictions with a combination of three types of data: polls of voter intention (via the HuffPost Pollster API), prediction markets, and fundamental data. For the unfamiliar, prediction markets, such as Betfair and Intrade, are markets where the user buy and sell contracts on outcome of the upcoming election.

Obama is extremely likely to carry 191 electoral votes from 15 states and DC. Likewise, Romney is extremely likely to carry 167 electoral votes from 20 states. In these states, the other candidate has a negligible likelihood of flipping the state.

Obama has 46 electoral votes from three additional states where Romney has a non-negligible likelihood of stealing a state (Obama's likelihood of victory): MN (89.5 percent), PA (89.2 percent), and MI (86.6 percent). Romney has 39 electoral votes from four additional states where Obama has a non-negligible likelihood of stealing a state (Romney's likelihood of victory): AZ (94.4 percent), MO (90.3 percent), ND (86.9 percent), and NC (85.2 percent).

I actually expect, on average, one of these states to flip. Electoral College elections are not independent outcomes; it is highly likely that any candidate that picks up a state where he had a 5 to 20 percent likelihood of victory has also won a lot of states where he had a 20 to 50 percent likelihood of victory. In order to capture a long-shot state, a candidate needs something more than an idiosyncratic shock to that state, but also a national trend that carries a few other states with it as well. Thus, it is extremely unlikely that the long-shot state would swing the election; rather, it will pad a solid victory.

Before considering the only eight swing states, Obama has 237 electoral votes to Romney's 206 electoral votes; the winner needs 270 electoral votes or 33 more for Obama and 64 more for Romney.

Florida (29), Virginia (13), and Ohio (18) account for 60 or the 95 remaining electoral votes and constitute Romney's only viable path towards victory. Victory in all three would require Romney to just pick of one of the other five remaining states (Obama's likelihood of victory): Iowa (52.1 percent), Colorado (60.8 percent), Wisconsin (67.5 percent), New Hampshire (71.2 percent), and Nevada (73.7 percent).

If Obama wins Florida (41.1 percent), there is no almost likelihood that Romney sweeps the rest of the states to take the presidency. This is the only swing state that leans Romney. If Obama wins just Virginia (52.4 percent) or Ohio (58.9 percent), it is possible for Romney to win, but highly unlikely, because he would have to virtually sweep the remaining swing states.

Where does this leave the overall election for me as we head into the Republican National Convention — I have Obama with a 58.9 percent likelihood of reelection, or the exact same likelihood as his chances in the pivotal swing state of Ohio.

This article is syndicated on the Huffington Post.

Christie’s keynote address comes with awkward political calculus (Originally posted on Yahoo!'s "The Signal" Blog)

Note on 8/29 at 3:40 PM: This article was written and published prior to Christie's speech.
To quote Ezra Klein: "This is a great speech. But it's a great speech for Chris Christie, not for Mitt Romney."

 

Let's assume that, like virtually every politician in America, Christie wouldn't mind being the president. He made a mistake not running this year, in which Republicans reluctantly nominated a former blue-state governor with low favorability to go up against a vulnerable sitting president. But economics counsels us not to make decisions based on sunk costs or regrets. Let's game this out.

If Romney wins in November, the soonest Christie could run is 2020, barring a historically disastrous first term for the former Massachusetts governor. First, he will have to decide whether or not to run for re-election in New Jersey in 2013. Many suspect that popular Newark Mayor Cory Booker will be the Democratic candidate, meaning Christie would face a bruising election. Losing would damage him nationally, and winning would require that he solidify his blue-state bonafides. This will make running for national office more difficult, even seven years later—just ask Romney.

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