Does Misery Index Foretell Election Results?

Bloomberg Brief points to this report from Carl J. Riccadonna, senior U.S.
Economist at Deutsche Bank, looking at the misery index — Inflation + Unemployment.

Riccadonna took the usual analysis one step further, applying it to the swing states in the Presidential contest. What did he find:

“The following states are “worse-off” based on the misery index over this period: Colorado, Missouri, Nevada and Pennsylvania. Florida is a toss-up. If these states go for Romney, his electoral tally will come in at a still-too-low 255. If he can also win states where the misery index is only marginally lower — meaning that the improvement in the economy has been tepid (less than 1 percent), he will also win Iowa, Minnesota and North Carolina, which pushes him to victory. In fact, any two of these would be sufficient.
Clearly, the economy is a major issue in the upcoming election and voters may be influenced by factors other than unemployment and inflation. To the degree that voters purely cast ballots along the guidelines of the misery index, the analysis points to a narrow reelection for President Obama. Of course, in a tight race any number of exogenous factors, such as voter turnout, may tip the balance.”

Your political mileage may vary . . .

http://www.ritholtz.com/blog/2012/10/misery-index-analysis/