One of the best indicators for who will win an election shows the pollsters could be in for a big surprise. The most closely watched barometer of consumer confidence fell further (to -5) this April.
‘One of the best predictors’
Chief Economist at The Retail Economist Michael Niemira says that data shows consumer confidence is “one of the best predictors” of elections. That’s because consumer confidence represents the electorate’s perception of the economy. The actual economic data is much less relevant. It’s the public who is voting.
Niemira produced a forecasting model incorporating consumer confidence. The model accurately predicted every US presidential result from 1972-1992.
Over in the UK, in April 2015, consumer confidence was at a longtime high of +7. This was just before the Conservatives won their surprise majority in the general election.
This parallels the election before. After the 2008 financial crash, consumer confidence was at a 13-year low of -17. In 2010, consumer confidence still hadn’t remotely recovered, and the incumbent Labour government lost the election.
There are many factors that contribute to an election result. And the polls cannot be ignored completely. But slipping consumer confidence suggests they may be overstating the Conservatives’ lead over Labour. Samuel Tombs, Chief UK Economist at Pantheon Macroeconomics, believes that consumer confidence indicates Theresa May:
will attain a much smaller majority in the forthcoming general election than implied by current opinion polls
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The opinion polls, meanwhile, are changing. Only one week into the campaign, and Labour has made gains of seven points on the Conservatives. May hiding from the electorate stands in stark contrast to Corbyn’s “flying start“.
In 2013, key Tory election strategist Lynton Crosby said [22.20]:
Ignore most of the opinion polls you see in the newspapers because they are so simplistic
Polls give us a general picture, but they are by no means conclusive. Other factors such as consumer confidence, a high turnout, or an anti-establishment, pro-change mood are also important. What’s for certain is that Labour needs to fight tooth and nail to win this election. And only a strong grassroots campaign can do it.
– Register to vote in the 8 June general election. If you don’t have a national insurance number, a 5 minute phone call on 0300 200 3500 will get it sent to you in ten days.
– Discuss the key policy issues with family members, colleagues and neighbours. And organise! Join (and participate in the activities of) a union, an activist group, and/or a political party.
– Also read more Canary articles on the 2017 general election.
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