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Presidential Election
JULY
2016
Chartbook 1
Bottom Line
• Favorability of 2016 election candidates is historically low
• Economic and market-based indicators continue to suggest Democrat win in
November, although geopolitical turmoil and volatility has reduced the lead
for Democrats in our national vote-share model
• Issues that will reign throughout the campaign include investment in
infrastructure, research & development, education, healthcare costs, and
broad access to opportunity
• Polarization is lowering the likelihood of comprehensive reform
• Despite “do or die” campaigning, historical evidence suggests that neither
party is significantly better at producing economic growth or market returns
DISCLAIMER: The economic-based election forecasts contained herein reflect economic conditions at the time of the forecast and are subject to change in tandem with economic conditions.
Presidential Election Chartbook July 2016
Election 2016 shaping up to be a contest between
two historically unpopular candidates Net Favorability Trend
%
Net Favorability
%
*Figures based on monthly averages of registered voter polls Source: BBVA Research, New York Times/CBS & Real Clear Politics
0
5
10
15
20
25
-60
-50
-40
-30
-20
-10
0
10
20
Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16
Clinton Polling Spread* (rhs)
Clinton Net Favorability
Trump Net Favorability
3
Reagan
Bush, H. W.
Bush, H. W.
Dole
Bush, W.
Bush, W.
McCain
Romney
Trump
Mondale
Dukakis
Clinton, B.
Clinton, B.
Gore
Kerry
Obama
Obama
Clinton, H.
-30
-20
-10
0
10
20
30
1984 1988 1992 1996 2000 2004 2008 2012 2016
Presidential Election Chartbook July 2016
Twitter wars
0,7 “Next week in
Cleveland, Repuplicans
will nominate someone
who thinks “Latino
outreach” is tweeting
out a picture of a taco
bowl.”
@HillaryClinton
“After today,
Crooked Hillary can
officially be called
Lyin’ Crooked
Hillary.”
@realDonaldTrump
46
8 8 5
crooked lying/lies badjudgement
corrupt
Trump re: Clinton*
6
2 2 2
dangerous unfit cheating reckless
Clinton re: Trump*
Source: candidates’ official Twitter accounts
* Most common adjectives used to describe opposing candidate from June 15-July 15, 2016
TWEETS: 6,536
FOLLOWING: 673
FOLLOWERS: 7.4M
*as of 7/15/16
TWEETS: 32.6K
FOLLOWING: 41
FOLLOWERS: 9.76M
*as of 7/15/16
4
Presidential Election Chartbook July 2016
Trump’s Platform Word Cloud* Clinton’s Platform Word Cloud*
Heart of the matter
*Graphic visualizes key messages from both candidates’ issues and positions pages
from their official websites
Source: BBVA Research
5
Presidential Election Chartbook July 2016
New administration faces challenge of promoting
broad job and income gains Post-Crisis Jobs Recovery Millions
Inflation-adjusted Median Household Income Index, 1990=100
Presidential Job Creation Thousands
Despite so-so job creation, 95% of jobs
have gone to college educated
Income growth for highest skilled
These trends can deepen frustrations
with status quo and increase populism
-10,000
-5,000
0
5,000
10,000
15,000
20,000
25,000
90847872666054484236302418126
Obama Bush (W.) Clinton Reagan
80
90
100
110
120
130
1990 1993 1996 1999 2002 2005 2008 2011
HS Diploma Some College College Grad
-2
-1
0
1
2
3
4
5
6
7
2009 2010 2011 2012 2013 2014 2015
No College Some College College Grad +
Source: BBVA Research & Haver Analytics 6
Presidential Election Chartbook July 2016
-5
0
5
10
15
20
1950's 1960's 1970's 1980's 1990's 2000's 2010's Average
Government Private (Non-res)
Fiscal policy: Not all about deficits Revenues and Expenditures Share of GDP, %
Real Fixed Investment Average YoY%
Government Debt & Financing Costs Share of GDP, %
Budget gap closing, as economy recovers
to potential
Real government investment contracting
to historic lows
Costs of financing trillion dollar
infrastructure deficit low
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
22.0%
24.0%
1995 2000 2005 2010 2015
Receipts Outlays ex interest payments
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
0
20
40
60
80
100
120
1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
U.S. Debt-to-GDP Avg. Interest Rate
Source: BBVA Research & Haver Analytics
7
Presidential Election Chartbook July 2016
Need to strengthen human capital Top priorities for U.S. Policy Makers % of Respondents
PISA Scores Relative to OECD Average Standardized by OECD avg.
Federal Investment in Research & Development Share of GDP (%)
Public investment in R&D near historic lows
Despite ranking poorly amongst developed
economies, divisions remain on importance of
education1
To remain competitive, educational outcomes
need to improve
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
Nondefense Defense
505560657075808590
Jan-9
7
Jan-9
8
Jan-9
9
Jan-0
0
Jan-0
1
Jan-0
2
Jan-0
3
Jan-0
4
Jan-0
5
Jan-0
6
Jan-0
7
Jan-0
8
Jan-0
9
Jan-1
0
Jan-1
1
Jan-1
2
Jan-1
3
Jan-1
4
Jan-1
5
Jan-1
6
Economy Terrorism Education
-2
-1
0
1
2
3
4Math Reading Science
Source: BBVA Research, OECD, Pew Research Center & Haver Analytics 1 See Slide 10 for more details
8
Presidential Election Chartbook July 2016
Healthcare: Much to be done Uninsurance Rates for Adults Ages 18-64 %
National Health Expenditures, Per Capita $, YoY % change
Health Expenditure and Life Expectancy in OECD Countries* Current Prices (USD PPP), years
Insurance coverage growing after ACA, but
reforms have yet to “bend the cost curve”
Although per capita health spending is
highest in OECD, outcomes compare poorly
Looming healthcare crisis?
21.7%
14.1%
17.4%
9.9% 14.9%
7.3%
0%
5%
10%
15%
20%
25%
Medicaid Nonexpansion States
All Adults
Medicaid Expansion States
*most recent available data used: life expectancy (2014), spending (2015)
CHL CZE
DEU GRC
JPN
MEX
NOR
CHE
TUR USA
72
74
76
78
80
82
84
86
0 2,000 4,000 6,000 8,000 10,000
To
tal L
ife E
xp
ecta
ncy a
t B
irth
Expenditure on Healthcare per Capita
0%
1%
2%
3%
4%
5%
6%
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20
20
21
20
22
20
23
20
24
20
25
NHEYoY growth (rhs)
Projected
Source: BBVA Research, OECD, Urban Institute & Center for Medicare and Medicaid Services
9
Presidential Election Chartbook July 2016
Polarization a risk to policy making
Income Inequality & Polarization
Ideological Priority
Centripetal force pulling on party centers
Some evidence that disparate outcomes
are connected to political polarization
Limited progress on structural reforms,
as issues remain highly politicized
Ideological Distribution
Republican Democrat Ind R-D
Gun Policy 13 57 36 -44Climate Change 14 55 41 -41Environment 26 61 49 -35Education 47 76 71 -29Poor 34 63 59 -29Criminal Justice Reform 32 49 47 -17Job Situation 53 68 65 -15Medicare 55 64 60 -9Crime 54 62 56 -8Health Care Costs 59 64 60 -5Global Trade 33 28 32 5Social Security 67 62 60 5Economy 80 74 76 6Taxation 52 40 45 12Terrorism 87 73 70 14Budget Deficits 70 48 54 22Immigration 66 43 51 23Military 76 33 53 43
Source: BBVA Research, Pew Research Center & World Bank
0.6
0.7
0.7
0.8
0.8
0.9
0.9
1.0
1.0
0.30
0.32
0.34
0.36
0.38
0.40
0.42
0.44
0.46
0.48
1947 1953 1959 1965 1971 1977 1983 1989 1995 2001 2007 2013
Gini (rhs) Polarization
10
%
%
Presidential Election Chartbook July 2016
BBVA Research National Vote-Share Results*
Geopolitical tensions, financial turmoil and desire
for “change” increase GOP chances
Last available
Source: BBVA Research & PredictWise
Candidate Market Odds
Tim Kaine 52% 30%
Elizabeth Warren 14% 19%
Tom Vilsack 13% NA
Tom Perez 6% 7%
Julian Castro 4% 13%
Cory Booker 4% 10%
Bernie Sanders 2% 6%
Democrat VP Candidate Probabilities
*Estimates based on linear vote-share regression (%)
35%
40%
45%
50%
55%
60%
65%
195
2
195
6
196
0
196
4
196
8
197
2
197
6
198
0
198
4
198
8
199
2
199
6
200
0
200
4
200
8
201
2
201
6
Actual Dec. 2015 Feb. 2016 Jul. 2016
GOP Majority
Democrat Majority
11
Presidential Election Chartbook July 2016
BBVA Research State Vote-Share Projection
At state-level, Dems leading despite polling
margins shrinking in key swing states
Source: BBVA Research
• State-level projections show Democrats gaining
EC votes (318 (D) vs. 217(R) in February)
• Florida has seen largest shift in polling
• Current polling suggests Clinton leading in OH
-2
0
2
4
6
8
10
12
Florida Wisconsin Virginia N.Carolina
Penn. Colorado Ohio
Today
3-months ago
Polling Data (Clinton-Trump)
323 Dems
212 GOP
12
Presidential Election Chartbook July 2016
Doomsday scenario unlikely despite projections
that candidates would imperil the economy
President
1953-2015
Real GDP
Volatility
Real GDP
%
Growth
Unemployment
Rate, %
Inflation,
%
10-year
Treasury,
%
S&P500
% change
Real
Income
per capita,
%
Payroll,
%
change
Home
Ownership
, %
Deficit %
GDP
Debt %
GDP
Income
Inequality,
Gini
Rep (36yrs) 2.3 2.8 5.9 3.9 6.7 6.6 2.0 1.4 65.5 -2.2 50.7 0.39
Dem (27yrs) 2.1 3.5 6.0 3.2 5.2 10.2 2.2 2.2 65.1 -2.5 62.2 0.40
Economic Performance
Economic Health Index, >0=better
Source: BBVA Research & Haver
-15
-10
-5
0
5
10
15
1953
1955
1957
1959
1961
1963
1965
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
2015
Rep
Dem
Index
13
DISCLAIMER
This document was prepared by Banco Bilbao Vizcaya Argentaria’s (BBVA) BBVA Research U.S. on behalf of itself and its affiliated companies (each BBVA Group Company)
for distribution in the United States and the rest of the world and is provided for information purposes only. Within the US, BBVA operates primarily through its subsidiary
Compass Bank. The information, opinions, estimates and forecasts contained herein refer to the specific date and are subject to changes without notice due to market
fluctuations. The information, opinions, estimates and forecasts contained in this document have been gathered or obtained from public sources, believed to be correct by the
Company concerning their accuracy, completeness, and/or correctness. This document is not an offer to sell or a solicitation to acquire or dispose of an interest in securities.
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https://www.bbvaresearch.com/wp-content/uploads/2015/12/Election-Chartbook-December-2015_final.pdf