The bank BBVA Compass is predicting that Mitt Romney will win the 2012 election as economic conditions continue to deteriorate over the next few months. In a research note Wednesday, the bank said that the current economic conditions favour a victory for President Barack Obama. However, the bank expects manufacturing activity to slow in the months ahead, causing further sluggish job growth that has become the norm of the past few months. That’s why they think Romney will emerge with the presidency: From the note:
Mitt Romney will be victorious according to our vote-share model, assuming our revised baseline scenario. Under current conditions, however, opinion polls, options probabilities and our vote-share model suggest Obama has a higher probability of winning. Thus, maintaining the status quo favours Obama whereas deteriorating economic conditions favour Mitt Romney.
Here’s how the bank breaks it down:
- If the election were held today, Obama would win. Opinion polls and Intrade both predict as much. And manufacturing activity is “better than expected.” So, according to the bank’s current predicted vote-share model, Obama would win 50.7 per cent of the popular vote (this doesn’t take the electoral college into account).
- Non-farm payroll growth has shrunk to a 75,000 three-month average, something that the bank expects to continue. And the Manufacturing Purchasing Managers’ Index is at its lowest level in 34 months. “Our baseline forecasts now incorporate a more pessimistic view with regard to future activity,” the bank writes.
Here’s a chart that breaks it all down. The big keys are a decline in inflation and a further decline in ISM Manufacturing will give Romney a predicted 53.3 per cent of the vote share.
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