Does the Stock Market Predict Presidential Elections? New SI Study Says Yes.
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Social Mood, Stock Market Performance and U.S. Presidential Elections:
A Socionomic Perspective on Voting Results
Abstract
We analyze all U.S. presidential re-election bids and find a positive, significant relationship between the incumbent’s vote margin and the prior net percentage change in the stock market. This relationship does not extend to the incumbent’s party when the incumbent does not run for re-election. We find no significant relationships between the incumbent’s vote margin and inflation or unemployment. GDP is a significant predictor of incumbents’ popular vote margin in simple regression but is rendered insignificant when combined with the stock market in multiple regression. Egotropic and sociotropic voting hypotheses fail to account for the findings. The results are consistent with socionomic voting theory, which includes the hypotheses that (1) social mood as reflected by the stock market is a more powerful regulator of re-election outcomes than economic variables such as GDP, inflation and unemployment and (2) voters unconsciously credit or blame the leader for their mood.
Authors
Robert R. Prechter Jr. — Socionomics Institute
Deepak Goel — Socionomics Institute
Wayne D. Parker — Emory University School of Medicine; Socionomics Foundation
Matthew Lampert —Unversity of Cambridge; Socionomics Institute
The Socionomist enables you to see trend-shaping waves of social mood, as reflected by the stock market — and capitalize on them. The March issue looks at corporate risk management from a socionomic perspective. It also looks at winners of the Socionomics Foundation’s annual scholarship competition and announces a new grant program for college professors. Mood Riffs topics include the U.S. dollar, consumer credit and artificial intelligence. Read the February issue when you become a Socionomics Premier Member.