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This algorithm predicts who will win the US election - so who is it?

David Taylor
Contributing Editor
Who will win the US 2020 election? David Taylor predicts. Source: Getty

Presidential hopeful Elizabeth Warren believes she's in with a chance. And fellow Democrat Michael Bloomberg's far from giving up on his bid.

While former South Bend mayor Pete Buttigieg's also throwing everything at his presidential campaign.

But what are their chances of succeeding… really?

History shows Bill Clinton, George Bush junior and Barrack Obama (in 2012) were all re-elected because the economy was seen to be doing well.

Fast forward to 2020, and US analysts say the US economy is doing particularly well.

Managing director of New York-based investment firm TJM, Tim Anderson, says that greatly enhances Trump's chances of a second term.

“[Trump] is at the high watermark right now of the probability of re-election.”

“The economy is very strong and I don’t see that coming to an end between now and November,” says Mr Anderson.

Model points to Trump victory

Australia's AMP Capital now has a working model of the probability of Trump winning the election.

Why? Well because the election result affects the fund manager’s investment decisions.

Its head of investment strategy, Shane Oliver, says there's now a greater-than-even chance of Trump winning. 

He makes the point that in 100 per cent of cases an incumbent president is re-elected when presiding over a robust economy (and share market).

Relatively speaking, Donald Trump is an unpopular president. He’s also held office in the midst of several scandals, an impeachment trial and a very risky trade war.

That said, in the US right now unemployment remains very low, wages are rising, and there are strong levels of consumer confidence.

Basically, folks feel like they’re better off now than they were in 2016 when Donald Trump was elected to office.

Economic success came before Trump

How much of America’s recent economic success though can be attributed to Trump?

Well even just a brief brush of recent history shows the thrust of economic growth can traced back to Obama era economic policies.

Barrack Obama’s taxpayer-funded economic stimulus plan is widely regarded as firing up the US economy.

Trump ‘topped it up’ with big corporate tax cuts and deregulation. 

Trump essentially inherited a growing economy and kept it going – producing a “strong” economy laden with enormous amounts of debt.

Record low global interest rates are also helping

Record low interest rates are also a big factor in both the economy and share markets performing well.

You could argue that Trump’s trade war against China forced the US Federal Reserve (our equivalent of the Reserve Bank) into cutting interest rates several times last year.

That piece of foreign policy had the potential to derail the entire global economy but, so far, has only served to super-charge the US economy.

It’s also turbo-charged Wall Street, or more accurately the US stock market.

US shares are consistently pushing all-time highs. It’s partly to do with a very healthy corporate sector, but it’s also related to easy borrowing conditions and a search for decent returns by investors…

… ‘cos you’re not going to earn much interest with your money in a bank account.

Plenty of Americans have their money in the stock market, and perhaps more importantly, some pretty powerful people run Wall Street. A well performing stock market is going to work well for the president.

More significantly, however, while a rising share market doesn’t necessarily reflect a strong economy, a share market crash would cause enormous economic damage. The perception, rightly or wrongly, is that Donald Trump is share market friendly and will therefore do everything he can to keep the rivers of gold flowing.

Indeed Tim Anderson says Wall Street would be 'horrified' if either Bernie Sanders or Elizabeth Warren won the Oval Office due to their so-called socialist economic policies and the expected damage that would do to stock prices.

Apparently Michael Bloomberg wouldn’t be so bad though. He’s still seen as Wall Street friendly.

So where does all of this leave us?

Donald Trump has said some despicable things in the past. He’s also been accused of sprouting mistruths, and has publicly bullied state officials.

His behaviour, on occasion, has been quite appalling.

And yet he has taken action on many of his election campaign promises, and millions of Americans believe they are now better off as a result.

The United States remains bitterly divided, so it’s unlikely that Trump will sweep back into office. It is clear, however, that assuming the economic status quo remains, it’s a reasonable bet he’ll go onto four more years in the Oval Office.

@DaveTaylorNews

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