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 * The US presidential election is now a toss-up


THE US PRESIDENTIAL ELECTION IS NOW A TOSS-UP

Fri, 18th Oct 2024

Article tags ElectionsForecastingPoliticsUS electionAmericasUnited StatesCountry
Analysis



--------------------------------------------------------------------------------

 * The US presidential race has become extremely close, with the contest between
   the Democratic vice-president, Kamala Harris, and the Republican former
   president, Donald Trump, having settled into a statistical tie.
 * We now believe that the election will be a toss-up, marking a shift from our
   previous (high-risk) forecast that Mr Trump would win. The final result will
   be extremely close, and vote-counting delays mean that a winner will probably
   not be clear right after Election Day. 
 * Undecided voters and the composition of turnout in the battleground states
   will ultimately decide the election, with the US economy, women’s healthcare
   rights and the Middle East conflict among the most likely factors to shape
   voter behaviour. 
 * A divided Congress remains most likely, regardless of the presidential
   election result. This would present greater obstacles to Ms Harris than to
   Mr Trump if Republicans retake the Senate (the upper house), as we assume.

With about two weeks left until Election Day on November 5th, the races that
will decide which party controls the US presidency and Congress remain extremely
close. This article outlines our latest forecasts on these elections, noting any
updates from our previous election calls and our reasoning for making
those changes.


MS HARRIS AND MR TRUMP NOW HAVE EQUAL CHANCES OF WINNING

We now believe that the presidential election will be a toss-up between
Ms Harris and Mr Trump. This marks a shift from our previous forecast of a Trump
win, which we had set just before Ms Harris entered the race in late July,
although we had always qualified our election call as high risk. Since launching
her campaign, Ms Harris has erased the wide and stable polling leads that
Mr Trump had developed against the Democratic incumbent and previous
presidential candidate, Joe Biden. However, her meteoric rise has hit a ceiling
in recent weeks, with polls between her and Mr Trump having settled into a
statistical tie.



Ms Harris continues to hold her months-long lead in the national polls, although
by a thin 1-3-point margin, which may actually be narrower given that polls have
tended to undercount votes for Mr Trump. Meanwhile, she and Mr Trump each hold
leads in about half of the seven battleground states that will decide the
Electoral College vote and hence the election’s ultimate winner. Those leads
vary across polls but consistently sit well within the margin of error, meaning
that most (if not all) of these states remain in play for both candidates,
including absolutely critical states like Pennsylvania. With no further
presidential debates scheduled (Mr Trump has refused) and most voters already
set in their voting intentions, we expect that the race will remain in deadlock
right up until Election Day.  


WHAT FACTORS COULD DETERMINE THE OUTCOME?

The outcome of the presidential election will be determined by a small number of
undecided voters and turnout in the battleground states. Decisions about who to
vote for and who shows up will have the greatest impact on the Electoral College
results. The election’s trajectory will remain vulnerable to many factors,
including unexpected events, that could shape the opinions of these voters
between now and Election Day. We feature below three such factors that we are
watching most closely, and how we believe each will favour either candidate.

 * The US economy (neutral): The economy has long topped the list of voter
   concerns, with the cost of living and jobs attracting the most interest. This
   benefited Mr Trump for most of the campaign, particularly when Mr Biden was
   the Democratic candidate and inflation remained stubbornly high. However,
   Ms Harris has managed to erode this advantage, even pulling ahead of Mr Trump
   in some recent polls on the economy. Strong economic growth and labour market
   data published over the past month have worked to her advantage, as has the
   recent decision by the Federal Reserve (Fed, the central bank) to
   begin cutting interest rates as inflation continues to ease–the next Fed
   meeting is right after the election. The release of additional growth and
   employment data in the next few days could further shape voter opinion,
   and our expectation of solid GDP growth in the third quarter is likely to
   give Ms Harris a boost. Meanwhile, Mr Trump will have to contend with growing
   voter scepticism towards his economic policies, which we believe would be
   inflationary and would slow growth. The often surprising jobs data due out
   the Friday prior to the election could sway voter opinion. However, early
   voting in key states such as Arizona, Georgia and Michigan, and in some
   counties in Pennsylvania, suggests that substantial votes may already have
   been cast by the time the data are released.
 * Women’s healthcare rights (favours Ms Harris): Reproductive health remains a
   top voter concern. The issue has expanded beyond abortion rights to encompass
   healthcare access for women, including treatment for miscarriages, as well as
   obtaining contraceptives and fertility treatments. The issue has proven to be
   an asset to Democrats, having helped to generate surprise victories at
   the 2022 midterms and the 2023 state elections, particularly by mobilising
   young, female and independent voters and encouraging voter turnout. We expect
   Ms Harris to benefit similarly, given her unwavering support for women’s
   healthcare rights, her plans to restore federal abortion protections
   (although this would face obstacles in Congress) and her likely efforts to
   appoint liberal judges, potentially to the Supreme Court. Mr Trump’s
   own muddled approach to the issue (his stance on a proposed federal abortion
   ban remains unclear) will only help Ms Harris further. Ballot measures on
   abortion access, which several states will vote on during the election,
   should give her with an additional boost by increasing voter turnout among
   likely Harris voters in some key toss-up states. Arizona, Florida and Nevada
   are among the states that will be holding these referendums. If the measures
   help to generate turnout for the Democrats, particularly on the back of a
   large campaign spending push, Ms Harris’s performance in these states could
   end up stronger than current polls suggest.
 * Middle East conflict (favours Mr Trump): Now in its second year, the
   Israel-Hamas war continues to weigh on Democrats’ electoral chances, working
   to Mr Trump’s advantage. The continuation of the conflict and its recent
   expansion into Lebanon have allowed Mr Trump to sharpen his attacks against
   the Biden administration’s (and Ms Harris’s) handling of US foreign policy.
   (The ongoing Russia-Ukraine war, which has divided voter opinion, has had a
   similar effect.) Meanwhile, Ms Harris’s continued alignment with Mr Biden’s
   support for Israel, despite her strong emphasis on the humanitarian crisis in
   Gaza, has compromised her standing with Arab/Muslim voters, who traditionally
   vote Democrat as a bloc. This is particularly a liability in the battleground
   state of Michigan, which Mr Biden won in the 2020 election and houses the
   country’s largest Arab-American population. The state’s “uncommitted”
   movement, which protested Mr Biden’s candidacy over his approach to the war,
   has refused to endorse Ms Harris, although it also opposes Mr Trump. We
   assume that some Arab/Muslim voters will still vote for Ms Harris, owing to
   Mr Trump’s more staunchly pro-Israel stance and his anti-Muslim rhetoric.
   However, Ms Harris’s inability to rely fully on this voting group will
   complicate her path to an election victory. If the conflict in the Middle
   East intensifies, which we view as a moderate risk scenario, her chances
   could dim even further.

Regardless of whether Ms Harris or Mr Trump wins the election, we expect the
result to be extremely close. With some states, including Georgia and
Pennsylvania, not reporting their full results on Election Day owing to rules
around when and how votes are counted, it could take several days before the
final winner is clear. Mr Trump in particular has refused to confirm that he
would accept an election loss. With two key states not reporting full results
until after Election Day, Mr Trump will have a window to declare victory if he
so chooses. This is because Ms Harris is unlikely to have a sufficient number of
Electoral College votes to win without Georgia or Pennsylvania in the mix. Such
a scenario would generate political instability, and the risk of a negative
market response would be high.




A DIVIDED CONGRESS REMAINS MOST LIKELY

We continue to believe that neither Democrats nor Republicans will win
commanding majorities in the next Congress, regardless of the presidential
election results. Intense voter polarisation and a small number of competitive
races mean that the parties will have little opportunity to expand their current
wafer-thin margins; Democrats now control the Senate, while Republicans hold the
House of Representatives (the lower house), both by a handful of seats. The next
president will therefore be unable to translate their full policy agenda into
legislation. However, the exact party split between the two chambers will matter
(even if majorities remain slim), creating distinct scenarios for whichever
party controls the presidency. We believe that two scenarios are most likely. 

 * Majorities flip—Democrats take the House and Republicans take the Senate (55%
   probability): The 2024 electoral map favours the current minority parties in
   both chambers. Republicans are certain to gain a Senate seat in West
   Virginia, a deeply conservative state, now that Joe Manchin, a
   Democrat-turned-independent, is retiring. That puts Republicans just one seat
   away from retaking the chamber, and this will probably come via a win in
   Montana, where the Democratic incumbent, John Tester, faces an uphill battle.
   Meanwhile, Democrats appear well positioned to flip the few seats needed to
   control the House; the importance of races in California, a blue state where
   Ms Harris was senator, and a likely rally effect around issues like abortion,
   as occurred during the 2022 midterms, will work in the party’s
   favour. Another divided government will mean that even basic legislation,
   including to fund the federal government and avoid a disruptive default, will
   face partisan gridlock and delays. Neither Ms Harris nor Mr Trump would have
   much prospect for implementing their legislative agendas. However, Ms Harris
   would face the bigger burden, given that a Republican Senate would block any
   cabinet or judicial appointments that it deems too progressive; conversely,
   Mr Trump’s appointments would face little obstruction. This would carry
   important implications for the ideological balance of the Supreme Court if a
   vacancy emerges before the 2026 midterms.
 * Trifecta sweep—single party takes the presidency, House and Senate (45%
   probability): Although less likely, it remains very possible that the winning
   party in the presidential election will also take full control of Congress.
   This has been the norm since 1989, and the potential for upsets (particularly
   in the Florida, Nebraska and Texas Senate races, or in some California House
   contests) will keep this possibility alive. We believe that Ms Harris and
   Mr Trump would have equal chances of such an outcome. The absence of large
   congressional majorities would prevent either candidate from enacting the
   more partisan elements of their agendas, for example a rise in the corporate
   tax rate by Ms Harris, or a repeal of the Affordable Care Act under
   Mr Trump. However, the more moderate elements of their platforms would have
   an easier time passing, particularly if bipartisan agreement is possible.
   This could include Ms Harris’s proposed cost-of-living controls or extensions
   to some of Mr Trump’s previous tax cuts.




The analysis featured in this article can be found in EIU’s Country
Analysis service. This integrated solution provides unmatched global insights
covering the political and economic outlook for nearly 200 countries, enabling
organisations to identify prospective opportunities and potential risks.

Fri, 18th Oct 2024 Article tags ElectionsForecastingPoliticsUS
electionAmericasUnited StatesCountry Analysis

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