The Coming Political Tsunami Part III

Bespoke Investment Group looked at the impact of consumer confidence on elections.  Their analysis is not good for Democrats.  Actually I'd say it's not good for incumbants as I think a few Republicans are going to get turned out in this cycle as well.

"{Tuesday's} weaker than expected Consumer Confidence report for the month of September certainly isn't welcome news for Democratic members of Congress. As George Bush I learned in 1992, it's the economy stupid, and with Democrats in control, voters are likely to take out their frustrations on the party in power. The table below highlights the results of US mid-term elections since 1970 and summarizes how many seats the party of the President gained or lost in the mid-term elections. For each year, we also highlight the most recent Consumer Confidence reading ahead of that year’s mid-term elections.

As shown, no matter what the Consumer Confidence reading is leading up to the mid-terms, it is common for the President's party to lose seats. While one would think that lower readings in Consumer Confidence would have some correlation with the number of seats the party in power loses, the reality is that voters have been just as prone to 'throwing the bums' out no matter what their mood. True, in the two other periods where Consumer Confidence was in the 50s leading up to the mid-terms (highlighted in grey), the party in power lost an average of 37 seats in the House. However, back in 1994 when Democrats lost 54 seats in the House, Consumer Confidence was at 89.1 (67% above current levels), and in 2006 the Republicans lost 30 seats in the House when Consumer Confidence was at 105.1 (98% above current levels). "

The table below was originally published in an August report for Bespoke Premium clients where we analyzed market returns during mid-term elections. To view that report, or any of our other client reports, subscribe to Bespoke Premium today.

Link:  Consumer Confidence & Elections.