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Unemployment Claims & Elections

Posted By Barry Ritholtz On June 24, 2004 @ 5:11 pm In Politics | Comments Disabled

last of today’s quant trilogy regarding the Presidential Elections: This fascinating chart is courtesy of Don Hays:

click for larger chart
Unemployment Claims, 4 week moving average (thousands)
unemployment_claims_vs_elections [1]
Source: Hays Advisory [2]

The red circles were where the unemployment claims started getting appreciably better. The red arrows show when the elections were held. Hays is implying that Bush I lost because the election came about 6 months too early. Bush II doesn’t appear to have the same issue.

Hays observed:

“You can see the reaction. The herd—and of course the Fed is the chief of the herd—was under the strong belief that the economy (remember it was the no-jobs recovery they told us) was still in the doldrums until the March employment news screamed out from its cocoon. It happened in an almost perfect replay of that 19992-93 experience. Take a look once again at the unemployment insurance claims chart.

You can see the difference in the two graphs, how the election in 1992 occurred almost simultaneously with the strong jobs recovery coming out for the world to see. Good Bye Bush, Hello Clinton with “It’s the Economy, Stupid,” slogan. History shows that voters vote how they feel, and the job security, real disposable income, and inflation (interest rates) are the three factors that determine if an incumbent will win or not. So I continue to believe strongly that George W. Bush’s timing is a lot luckier than George H.W. Bush, and that his election is about as certain as you can get in this world.”

For those of you who have read me over the years, you know that Hays was extremely influential in the development of my own market viewpoint. Although he is far, far to the right of my own flavor of pragmatic, centrist, Libertarianism, he is nonetheless a reasonable guy and a deep thinker.

I also recognize the potential variance versus this quantitative analysis: Consider the differing impact the success of the 1991 Iraq war had relative to this one; Clouded issues of the incumbent’s credibility at present and the basis for this war; Lastly, the generally changing global marketplace from what was then in 1992 a simpler world.

As Twain was rumored to have said: “History may not repeat, but it often rhymes.”


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URL to article: http://www.ritholtz.com/blog/2004/06/unemployment-claims-elections/

URLs in this post:

[1] Image: http://bigpicture.typepad.com/comments/images/unemployment_claims_vs_elections.html

[2] Hays Advisory: http://www.haysmarketfocus.com/

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