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Think the Economy Is Hard to Predict? Try the Midterms.

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Based on the economy alone, Democrats face a big problem in the midterm elections.Inflation has been extremely high and economic growth has been weak or even negative. That is a toxic political combination — bad enough for the Democrats to lose the House of Representatives by a substantial margin.That, at least, is the forecast of an econometric model run by Ray Fair, a Yale economist. He has used purely economic variables to track and predict elections in real time since 1978, with fairly good results, which he shares with his students and which are available on his website for anyone who wants to examine the work.The party in power always starts off with a handicap in midterm elections, and a bad economy makes matters worse, Professor Fair said in an interview. “At the moment, the Democrats definitely have an uphill climb.”Yet Professor Fair acknowledges that his model can’t capture everything that is going on in the country.While his analysis shows that the Democrats have fallen into an increasingly deep hole as the year has gone on, prediction markets and public opinion polls are more upbeat for the Democrats right now, and show a surge that began in late June.Eric Zitzewitz, a Dartmouth professor who has studied prediction markets extensively, says the improved odds for the Democrats may be linked to an important development beyond the economy: the Supreme Court’s decision to overturn Roe v. Wade.The power of the economyNo one would question whether economic conditions have a major influence on politics.But Professor Fair’s work goes further than that. In his book “Predicting Presidential Elections and Other Things,” and in a series of papers and online demonstrations, he has shown that the economy is so powerful that it explains the broad outcome of most national elections since 1916. His relentlessly economic approach does not include any consideration whatsoever of the staples of conventional political analysis: the transcendent issues of the day, the personalities of the candidates or the tactics emplo …

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