Patience is warranted for baseline forecast after US election twist

If President Biden did not drop out, the outcome of the election appeared to be clear, but things have changed and we are opting not to replace the baseline with any of our election scenarios in August. We will reevaluate for the second baseline release in August and in September as more data on polling will be available, a running mate will be selected, and the Democratic National Convention will have occurred.

What you will learn:

• According to betting markets, former President Donald Trump is still the favorite to win, but the implied odds of him winning have declined by 10ppts, from 65% to 55%, putting them on par with the median eventual winning candidate at this stage of the election cycle. Unlike Biden, who was below the range of past winners, Vice President Kamala Harris’ implied odds are within it.
• Presidents inherit an economy and it often takes time before their policies begin to shape it. The level of real GDP at the end of next year is only 0.06% higher in the limited Trump scenario relative to the baseline. Patience in changing the forecast is also needed as the election is still several months away, which is an eternity in politics.

For more insights on the 2024 US Presidential Election, click here.