This Election Year Indicator Has Been Correct 9 Of The Last 10 Presidential Elections(and the 10th is Easily Explained)

We are seeing hundreds of millions of dollars spent on this year’s election. And a lot of money is being spent to predict what the outcome will be in the fall of 2016.

I have an indicator that has been correct 9 of the last 10 Presidential elections, and the 10th can be explained with relative ease: Richard Nixon and Gerald Ford.

Corporate profits after taxes, as reported by the Bureau of Economic Analysis has easily predicted whether or not the incumbent would win, and whether or not the party in power would hold that power going forward.

How is that possible?  Corporate Profits after taxes is an amazingly easy concept to understand.  It’s an overall look at just how the economy is doing.  After all, if companies are not growing profits, the people that work for these companies will experience the stress and duress of an unsteady economic environment.

Let’s have a look at what the results were.

1976:  CPAT up 25.01%  But the country was fed up with Nixon, and Ford, and Carter won the election.

1980: CPAT were down 9.62% year over year.  The Republicans replaced Carter with Ronald Reagan.

1984:  CPAT were up 20.64%.  Reagan won reelection.

1988: CPAT were up 16.02%.  Bush won the presidential election

1992: CPAT were up a mere 4.43%.  The rate of improvement needs to be 7% or higher.  It wasn’t.  The Democrats and Bill Clinton take over.

1996: CPAT were up 14.20%.  More than enough to give Clinton a second term.

2000: CPAT were down 9.64%.  This nixed the possibilities for Al Gore, and George W. Bush took over.

2004:  CPAT were up 20.46%.  Bush wins reelection.

2008: CPAT were down 9.62%, and Obama moves into the White House.

2012: CPAT were up 7.86% and Obama gets to stay for another four years.

2016: As of now CPAT are down 5.13% for the four quarters ending in December 2015.  This does not bode well for the Democrats and is a positive sign for the Republicans.

It would take an economic miracle that defies all logic for corporations suddenly to see a jump in corporate profits after taxes based on where we are today.

Those who don’t believe that economic issues matter the most are fooling themselves. So be prepared for what is going to happen in the fall of 2016.  Barring an economic miracle, the White House will once again belong to the Republicans.

Will they understand enough to make the economy their number one job?

Time will tell.

 

 

This entry was posted in Economy, Federal Reserve, Finance, Politics, Taxes by EJ Moosa. Bookmark the permalink.

About EJ Moosa

EJ Moosa believes that a smaller government is a more efficient government. He believes that better analysis leads to better solutions. A graduate of Georgia State University In Business Administration, EJ grew up in Cobb County graduating from Osborne High School and worked at several Atlanta companies including First Atlanta, IBM, and Six Flags over Georgia.

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