Unemployment and presidential elections, reconsidered

Nate Silver notices that the change in non-farm payrolls in an election year does a pretty good job predicting presidential elections. I've used his variable in the chart below to predict incumbent party vote shares:

This variable does almost as well as real disposable income in predicting election results. Of course, payroll growth and RDI growth are closely correlated, but this is nonetheless forces me to reevaluate my earlier claim that unemployment levels didn't really predict presidential election results. This measure also calls for some other reconsiderations if you buy the argument. For example, Gore did just about as well as could be expected, Stevenson massively underperformed in 1952 (thanks to the Korean War, five terms of Democratic control of the White House, and his relative lack of Ike-ness), and Nixon actually had a pretty solid economy in 1972. Oh, and McCain slightly over-performed in 2008, so cut him and Palin some slack. Or call the electorate racist. Whatever.

Silver also comes up with a magic number for Obama: he needs 166,000 new jobs per month (a figure that was well exceeded in December and January).

Undead FDR SMASH Denver Post

Today's NY Times:

Though unemployment levels dropped to 8.6 percent last month, they remain higher than the level at which any president has been re-elected since the Great Depression. [emphasis added]

The version that appeared in today's Denver Post:

Although the nation's unemployment rate dropped to 8.6 percent last month, no president has been re-elected with an unemployment rate so high.

For the record, here are the unemployment levels during FDR's three successful reelection bids:

1936: 16.9%
1940: 14.6%
1944: 1.2%

What, there wasn't space for the four words that would make the sentence true?

Grrrr...

More on unemployment and presidential elections

Carlisle Rainey, a poli sci and statistics graduate student at Florida State, has written a response to my earlier post in which I argued that there was no relationship between unemployment levels and presidential election results. Carlisle's post is definitely worth a read. His main objection to my argument is that there are only 16 elections since WWII on which to draw conclusions. It is possible, he says, that there is an important relationship between unemployment levels and election outcomes, but we just can't detect it because we have so few observations.

This is certainly a valid concern. Unfortunately, those are the data we have. Now, we can look to other elections, as well -- notably, unemployment levels don't seem to affect congressional elections, either -- but if our concern is specifically over presidential elections, we're limited to very few cases.

And perhaps it's incumbent on me to revise, or at least recast, what I said a bit. I wasn't so much trying to argue that unemployment has nothing to do with elections as I was trying to call out journalists who seem to think unemployment has everything to do with elections. If you're going to argue that Obama is in trouble because the unemployment rate will be above 7.5% next year, you really need to deal with the fact that some very easily obtainable data do not support that claim. Reagan won in an historic landslide during a time of very high unemployment, while the Democrats lost control of the White House in 1952 during the lowest unemployment on record.

Interestingly, Carlisle drills down into the data a bit more, finding an important trend if you isolate just those elections in which the president had been previously elected:

Nice catch. And there's a plausible story there, suggesting that voters hold incumbents accountable for unemployment rates but not necessarily parties. (The trend would still hold if you counted LBJ '64 and Ford '76 as incumbents.) My one concern would be that if 16 elections are too few to make good inferences, we should be even more concerned about seven. Also, as Brendan Nyhan points out, we have plenty of measures, like the growth in real disposable income, that explain elections quite well whether or not there's an incumbent running.

All in all, Carlisle has written a thoughtful post about the use of statistics in elections. I look forward to reading more on his blog.

Unemployment and presidential elections

Binyamin Appelbaum, in today's New York Times:

No American president since Franklin Delano Roosevelt has won a second term in office when the unemployment rate on Election Day topped 7.2 percent. Seventeen months before the next election, it is increasingly clear that President Obama must defy that trend to keep his job.

I feel a scatterplot coming on...

Well, let's for a moment ignore the obvious problem with Appelbaum's claim: Reagan won reelection in a landslide with annual unemployment at 7.5 percent. (I'm assuming Appelbaum is working with monthly or quarterly data or something.) The fact is, as the above scatterplot demonstrates, the unemployment rate does not predict presidential elections at all. The Democrats failed to hold the White House in 1952 during the lowest unemployment on record. Parties have both lost and retained the White House during periods of high unemployment. And the biggest reelection margins have occurred with unemployment between five and six percent -- right around the middle of its historic range.

What does matter a great deal is growth in real disposable personal income. As Harry Joe Enten (via Brendan Nyhan) shows, that's actually not looking particularly good for Obama right now:

According to the BEA's prior April report, RDPI grew at 1.8% in the fourth quarter of 2010 over the preceding quarter and 2.9% in the first quarter of 2011. Last Friday, the BEA re-adjusted those numbers to 1.1% and 0.8%.

Of course, what will matter far more for Obama's reelection prospects is how personal income grows between now and next summer. But the nation's unemployment status by itself is not going to affect Obama's.