Prior to the 2008 presidential election we provided forecasts of the final vote relying on a model containing only two variables: (1) the cumulated weighted growth in leading economic indicators (LEI) through the thirteenth quarter of the sitting president's term; and (2) the incumbent party candidate's share in the most recent trial-heat polls. The novelty is the reliance on the advanced reading of the economy from the quarter ending in March of the election year. (The exact equation and the exact forecast change as the poll readings get closer to the election.) Our final forecast (Erikson and Wlezien Reference Erikson and Wlezien2008) based on trial-heat polls in August was that Barack Obama would win 52.2% of the two-party popular vote. This turned out to be quite close to the Election Day outcome of 53.5% (as of December 2), a little more than one percentage point above what we predicted.

Our model performed well because our cumulative LEI measure nicely taps election-year economic conditions. This is for two reasons: (1) it provides a comprehensive summary of the state of the economy leading up to the election year; and (2) it gives advance indication of changes in the economy during the election year. In 2008, the value of cumulative LEI growth (−0.049) was well below average (0.16) over the last 15 presidential election years, one of two times the value has been negative, the other being in 1980, when the national economy actually shrank. It not only told us that things were bad heading into 2008, it pointed to things getting worse leading up to Election Day. This is exactly what transpired. Even before the stock market collapse in September and October, there were strong negative signals from the real economy. The summer personal income numbers showed actual declines, and third-quarter GDP did as well.

Economic circumstances thus boded well for the out-party candidate in 2008. This was already clear heading into the conventions. At the time, Obama held a slight lead in the polls of four percentage points—52-48%. Based on leading economic indicators, we expected that he would not only retain this lead, but would also expand it some by Election Day. This is what happened, if slightly more than we predicted.