For those of you who would like a simple thesis for predicting the outcome of the election – one that is both highly correlated and has a strong causative element – we suggest the chart below, courtesy of DePaul University economics Professor Stuart Eugene Thiel. The professor plotted the weekly US gasoline prices (inverted) versus a Presidential Index. As the chart reveals, gasoline prices are coincident indicators to the incumbent’s approval rating.
Gasoline $ versus Incumbent Approval Ratings
click for larger chart
Source: Pollkatz.homestead.com
We are a nation of drivers. “Pump pain” erodes consumer’s confidence, reduces discretionary spending, and crimps family budgets. As a predictive factor in the Presidential election, the higher gasoline prices are, the greater the negative impact it is likely to have for the incumbent.
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Causation & Correlation: Gasoline vs. Incumbency
With the debates now behind us, voters (and investors) can expect to hear a spate of
Does not matter what approval rate Bush has…I am sure that Americans will still vote for him..