The Obama Administration knows that as the economy goes so go the odds of the President being re-elected. And while the jobs market is moving in the right direction, it has been a slow go with unemployment still over 8%. But at the same time the recent rally in the stock market has Wall Street smiling and probably more than a few people in the White House too.
The recent rally in the markets to start 2012 is the biggest seen to start a new year since 1991, climbing over 7.5%. With an improving economy, at least in the equity markets, the chances of President Obama being re-elected have also increased. One interesting gauge of the President’s chances for a second term is the bookmaker Intrade, which is based in Dublin, Ireland. Since the start of the year a bet on Obama has risen by 14%, and a lot of the rise has to do with the improving prices for global equities.
Online betting is a huge business around the world and the things you can place a bet on are as varied as you can imagine. While betting on these sites is severely limited in the U.S. and banned all together for sporting events and other such contests, that does not mean that others, outside of the U.S. aren’t making book on all things Americana, including our elections. The price for a bet on the President has been rising and falling with every dip and upswing in the economy since 2011 and no doubt will continue to do the same as we move closer to the elections later this year.
Intrade has a very good track record for predicting the outcome of the U.S. presidential election, correctly putting Barack Obama into the pole position going into the 2008 election for most of that campaign, with John McCain getting no better than a 33% chance of winning at any time. If the odds maker is correct again, Obama is the lead horse; at least for as long as the economy continues to make the American public fell just a little better each day and that eventually the rise in the equity market will spillover into the jobs market. An unemployment rate dipping under 8% will be a tremendous boost to the President.
If it looks like the economy will turn around going into the election, the GOP will turn the presidential race into an battle over ideology, which they will probably do anyway. Even if the unemployment rate drops to 7%, they will find some reason to say that things are still dangerous out there and that the President is the most dangerous one of all.