JULY 216 Presidential Election Chartbook 1
Bottom Line Favorability of 216 election candidates is historically low Economic and market-based indicators continue to suggest Democrat win in November, although geopolitical turmoil and volatility has reduced the lead for Democrats in our national vote-share model Issues that will reign throughout the campaign include investment in infrastructure, research & development, education, healthcare costs, and broad access to opportunity Polarization is lowering the likelihood of comprehensive reform Despite do or die campaigning, historical evidence suggests that neither party is significantly better at producing economic growth or market returns DISCLAIMER: The economic-based election forecasts contained herein reflect economic conditions at the time of the forecast and are subject to change in tandem with economic conditions.
Presidential Election Chartbook July 216 Election 216 shaping up to be a contest between two historically unpopular candidates Net Favorability Net Favorability Trend 3 2 25 Reagan 2 Dukakis Clinton, B. Obama 1 Bush, W. Mondale McCain Bush, H. W. Bush, W. Bush, H. W. Dole Kerry Obama Gore -1 Romney Clinton, H. -2 Clinton, B. Trump -3 1984 1988 1992 1996 2 24 28 212 216 1-1 -2-3 -4-5 Clinton Polling Spread* (rhs) Clinton Net Favorability Trump Net Favorability -6 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 2 15 1 5 Source: BBVA Research, New York Times/CBS & Real Clear Politics *Figures based on monthly averages of registered voter polls 3
Presidential Election Chartbook July 216 Twitter wars TWEETS: 32.6K FOLLOWING: 41 FOLLOWERS: 9.76M Trump re: Clinton* 46 After today, Crooked Hillary can officially be called Lyin Crooked Hillary. *as of 7/15/16 8 8 5 @realdonaldtrump crooked lying/lies bad judgement corrupt TWEETS: 6,536 FOLLOWING: 673 FOLLOWERS: 7.4M,7 Clinton re: Trump* Next week in Cleveland, Repuplicans 6 will nominate someone who thinks Latino outreach is tweeting out a picture of a taco bowl. 2 2 2 *as of 7/15/16 dangerous unfit cheating reckless @HillaryClinton Source: candidates official Twitter accounts * Most common adjectives used to describe opposing candidate from June 15-July 15, 216 4
Presidential Election Chartbook July 216 Heart of the matter Trump s Platform Word Cloud* Clinton s Platform Word Cloud* *Graphic visualizes key messages from both candidates issues and positions pages from their official websites Source: BBVA Research 5
Presidential Election Chartbook July 216 New administration faces challenge of promoting broad job and income gains Despite so-so job creation, 95 of jobs have gone to college educated Income growth for highest skilled These trends can deepen frustrations with status quo and increase populism Presidential Job Creation Thousands 25, 2, 15, Obama Bush (W.) Clinton Reagan Post-Crisis Jobs Recovery Millions 7 6 No College Some College College Grad + 5 4 3 2 1-1 -2 29 21 211 212 213 214 215 Inflation-adjusted Median Household Income Index, 199=1 1, 5, -5, 13 12 11 1 HS Diploma Some College College Grad -1, 6 12 18 24 3 36 42 48 54 6 66 72 78 84 9 9 Source: BBVA Research & Haver Analytics 8 199 1993 1996 1999 22 25 28 211 6
Presidential Election Chartbook July 216 Fiscal policy: Not all about deficits Budget gap closing, as economy recovers to potential Real government investment contracting to historic lows Costs of financing trillion dollar infrastructure deficit low Government Debt & Financing Costs Share of GDP, 12 1 8 6 4 2 U.S. Debt-to-GDP. 197 1975 198 1985 199 1995 2 25 21 215 Source: BBVA Research & Haver Analytics Avg. Interest Rate 14. 12. 1. 8. 6. 4. 2. Revenues and Expenditures Share of GDP, 24. 22. 2. 18. 16. 14. 12. 1. Real Fixed Investment Average YoY 2 15 1 5-5 Receipts Outlays ex interest payments 1995 2 25 21 215 Government Private (Non-res) 7 195's 196's 197's 198's 199's 2's 21's Average
Jan-97 Jan-98 Jan-99 Jan- Jan-1 Jan-2 Jan-3 Jan-4 Jan-5 Jan-6 Jan-7 Jan-8 Jan-9 Jan-1 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Presidential Election Chartbook July 216 Need to strengthen human capital Public investment in R&D near historic lows Despite ranking poorly amongst developed economies, divisions remain on importance of education 1 To remain competitive, educational outcomes need to improve Federal Investment in Research & Development Share of GDP () 1.8 1.6 1.4 Nondefense Defense Top priorities for U.S. Policy Makers of Respondents 9 85 8 75 7 65 6 55 5 Economy Terrorism Education PISA Scores Relative to OECD Average Standardized by OECD avg. 1.2 1.8.6.4.2 4 3 2 1-1 -2 Math Reading Science 196 1965 197 1975 198 1985 199 1995 2 25 21 215 1 See Slide 1 for more details Source: BBVA Research, OECD, Pew Research Center & Haver Analytics 8
25 26 27 28 29 21 211 212 213 214 215 216 217 218 219 22 221 222 223 224 225 Total Life Expectancy at Birth Presidential Election Chartbook July 216 Healthcare: Much to be done Insurance coverage growing after ACA, but reforms have yet to bend the cost curve Although per capita health spending is highest in OECD, outcomes compare poorly Looming healthcare crisis? Health Expenditure and Life Expectancy in OECD Countries* Current Prices (USD PPP), years Uninsurance Rates for Adults Ages 18-64 25 2 15 1 5 21.7 17.4 14.9 Medicaid Nonexpansion States All Adults Medicaid Expansion States 14.1 9.9 7.3 86 84 JPN CHE 82 NOR GRC DEU 8 CHL CZE USA 78 TUR 76 MEX 74 72 2, 4, 6, 8, 1, Expenditure on Healthcare per Capita *most recent available data used: life expectancy (214), spending (215) Source: BBVA Research, OECD, Urban Institute & Center for Medicare and Medicaid Services National Health Expenditures, Per Capita $, YoY change 18, 16, 14, 12, 1, 8, 6, 4, 2, NHE YoY growth (rhs) Projected 6 5 4 3 2 1 9
Presidential Election Chartbook July 216 Polarization a risk to policy making Centripetal force pulling on party centers Some evidence that disparate outcomes are connected to political polarization Limited progress on structural reforms, as issues remain highly politicized Ideological Distribution Ideological Priority Republican Democrat Ind R-D Gun Policy 13 57 36-44 Climate Change 14 55 41-41 Environment 26 61 49-35 Education 47 76 71-29 Poor 34 63 59-29 Criminal Justice Reform 32 49 47-17 Job Situation 53 68 65-15 Medicare 55 64 6-9 Crime 54 62 56-8 Health Care Costs 59 64 6-5 Global Trade 33 28 32 5 Social Security 67 62 6 5 Economy 8 74 76 6 Taxation 52 4 45 12 Terrorism 87 73 7 14 Budget Deficits 7 48 54 22 Immigration 66 43 51 23 Military 76 33 53 43 Source: BBVA Research, Pew Research Center & World Bank Income Inequality & Polarization.48 1. Gini (rhs) Polarization.46 1..44.9.42.9.4.38.8.36.8.34.7.32.7.3.6 1947 1953 1959 1965 1971 1977 1983 1989 1995 21 27 213 1
1952 1956 196 1964 1968 1972 1976 198 1984 1988 1992 1996 2 24 28 212 216 Presidential Election Chartbook July 216 Geopolitical tensions, financial turmoil and desire for change increase GOP chances BBVA Research National Vote-Share Results* Democrat VP Candidate Probabilities 65 6 55 5 45 4 35 Actual Dec. 215 Feb. 216 Jul. 216 Democrat Majority GOP Majority Candidate Market Odds Tim Kaine 52 3 Elizabeth Warren 14 19 Tom Vilsack 13 NA Tom Perez 6 7 Julian Castro 4 13 Cory Booker 4 1 Bernie Sanders 2 6 *Estimates based on linear vote-share regression () Last available Source: BBVA Research & PredictWise 11
At state-level, Dems leading despite polling margins shrinking in key swing states Presidential Election Chartbook July 216 BBVA Research State Vote-Share Projection Dems 323 GOP 212 Polling Data (Clinton-Trump) 12 1 8 6 4 2-2 Florida Wisconsin Virginia N. Carolina Today 3-months ago Penn. Colorado Ohio State-level projections show Democrats gaining EC votes (318 (D) vs. 217(R) in February) Florida has seen largest shift in polling Current polling suggests Clinton leading in OH Source: BBVA Research 12
1953 1955 1957 1959 1961 1963 1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 21 23 25 27 29 211 213 215 Presidential Election Chartbook July 216 Doomsday scenario unlikely despite projections that candidates would imperil the economy Economic Health Index, >=better 15 1 5-5 -1-15 Rep Dem Index Economic Performance President 1953-215 Real GDP Volatility Real GDP Growth Unemployment Rate, Inflation, 1-year Treasury, S&P5 change Real Income per capita, Payroll, change Home Deficit Ownership GDP, Debt GDP Income Inequality, Gini Rep (36yrs) 2.3 2.8 5.9 3.9 6.7 6.6 2. 1.4 65.5-2.2 5.7.39 Dem (27yrs) 2.1 3.5 6. 3.2 5.2 1.2 2.2 2.2 65.1-2.5 62.2.4 Source: BBVA Research & Haver 13
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