{"id":259462,"date":"2024-09-12T04:28:17","date_gmt":"2024-09-12T04:28:17","guid":{"rendered":"https:\/\/michigandigitalnews.com\/index.php\/2024\/09\/12\/the-stock-market-is-the-most-accurate-predictor-of-presidential-elections-not-the-polls\/"},"modified":"2025-06-25T17:11:21","modified_gmt":"2025-06-25T17:11:21","slug":"the-stock-market-is-the-most-accurate-predictor-of-presidential-elections-not-the-polls","status":"publish","type":"post","link":"https:\/\/michigandigitalnews.com\/index.php\/2024\/09\/12\/the-stock-market-is-the-most-accurate-predictor-of-presidential-elections-not-the-polls\/","title":{"rendered":"The stock market is the most accurate predictor of presidential elections, not the polls"},"content":{"rendered":"

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In the wake of the latest presidential debate<\/a> between Vice President Kamala Harris and former President Donald Trump, election polls are in the spotlight.<\/p>\n

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Harris now has a slight edge<\/a> in many national polls. The New York Times<\/em> has Harris ahead<\/a>, with 49% odds compared with Trump\u2019s 47%, while Project FiveThirtyEight and ABC<\/a> give the vice president a 47% chance of winning compared with Trump\u2019s 44.3%. However, on Polymarket, the world\u2019s largest prediction betting market, Harris and Trump are tied<\/a>, with each having a 49% chance of being elected the next president of the United States.\u00a0<\/p>\n

While these election polls will get most of the headlines, it turns out Americans might be better off watching the stock market if they want to know who will be in Washington next year.<\/p>\n

Election polls\u2019 historical accuracy has been spotty at best. In a 2023 examination<\/a> of hundreds of U.S. election polls dating back to 1998, FiveThirtyEight senior elections analyst Nathaniel Rakich found that pollsters accurately predicted the winner only 78% of the time, and in 2022, they did so in just 72% of the races.<\/p>\n

On the other hand, the S&P 500\u2019s performance between August and October has accurately predicted the winner of every presidential election since 1984. In the years when the blue-chip index rises between August and October, the incumbent party has won every time, but when the S&P 500 has fallen over that period, it\u2019s always signaled an impending victory for the challenger.<\/p>\n

Comerica<\/a> Bank\u2019s chief investment officer John Lynch and senior analyst Matthew Anderson offered a simple explanation for the correlation between stock prices and election outcomes in a Tuesday note to clients. \u201cEquity performance reflects broader economic sentiment,\u201d they wrote.\u00a0 \u201cWhen voters are satisfied with the economy\u2019s direction, they tend to support the status quo, and when they are dissatisfied, they are more inclined to vote for change.\u201d<\/p>\n

Lynch and Anderson noted that while a strong stock market performance for the full year before an election has also been heavily correlated with success for the incumbent party, it hasn\u2019t always been a guarantee of success. The S&P 500 rose 14.1% and 13.4% in 1976 and 1980, respectively, but the incumbent party lost the election during both of those inflation-heavy years.<\/p>\n

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