"To hijack Charles Dickens, the US economy is characterised by wisdom and foolishness"by George Magnus / February 8, 2016 / Leave a comment
Read more: Donald Trump’s genius
Read more: the US primaries: a political failure
The New Hampshire primary, which takes place tomorrow, 9th February, has a poor record when it comes to picking the eventual president (unless they were already incumbents). Since 1976, its Republican nominees have only twice gone on to become president—Ronald Reagan and George H Bush, while only one Democratic nominee, Jimmy Carter, reached the White House. So, whatever happens in New Hampshire, political speculation about the presidential race will build through the spring, with intriguing implications for us all.
This time round, the dysfunctional nature of both major political parties and their loss of popular support to fringe or non-traditional candidates, such as Trump, Cruz and Sanders, could spring a bigger, more awkward surprise than Leicester City winning the Premier League. At the very least, the presidential race has become a laboratory in which important economic issues are being re-framed, and sometimes in overtly populist fashion.
It is widely acknowledged that the state of the economy exerts an important impact on the presidential race, often swamping other things such as personal attributes, debating skills, and campaign contributions. Bill Clinton’s campaign strategist in the 1992 contest, James Carville famously coined the phrase “the economy, stupid” to convey to activists the goal of associating the George H. Bush administration with the 1990-91 recession and aftermath. More recently Alan Blinder, one-time Vice Chair of the Federal Reserve, and Mark Watson of Princeton published a less visceral and more econometric attempt to attribute political success or failure to prior economic performance. In a 2014 paper, they demonstrated the significance of economic developments in delivering or dashing the Oval Office for presidential aspirants in every election since Harry S. Truman (a man who confounded expectations in 1948 on the back of a post-war expansion that arrived in the nick of time)
President Obama’s victory in 2008 was in some measure a reflection of the public’s association of the financial crisis with George W Bush’s administration. By 2014, though, the Obama administration and Democratic…