Obama Looking for a Real Recovery

While this applies to the recovery America has experienced courtesy of the President's economic policies, the bulk of this post applies to our models.

But let's look at the economy for minute. Economic growth a total of 6.7% since recession ended three years ago. Average of other recoveries was 15.2%. Lost output in real terms $1.1 trillion. And that gap will grow when GDP is updated on Friday.

Back to the election. Obama improved from our morning post. But on ou state based model his improvement was modest. It was modest enough that the Obama cheer leading squad would call it statistical noise if it was a gain for Romney.

Anyway our model puts the race at 277 Obama 261 Romney. Obama is in trouble if the current trend continues. While Romney's advance has slowed after his sharp post 1st debate advance, the underlying trend continues albeit at a slower pace. The pace is sufficient under our model to result in a Romney victory.

Our state based model currently projects Obama 277 Romney 261.

Senate news over the last 24 hours has focused on Indiana. While the Indiana data suggests a decline in GOP prospects it did not change our model's projection of 49 Republican seats.

Charts are posted below.

Are Markets About to Make Romney the Favorite?

Special Morning Update:  Updated data used in the ElectionMarkets Presidential race models.  The state based simulation shows Romney at 266 electoral votes to the President's 272.  (Distribution of outcomes chart posted below.)  Romney won in 44% of the simulations.  The most frequently observed outcome was 268.

As I have explained previously the model forecast is the median forecast.  Significantly, on the maximum price point Romney garnered 273 electoral votes.  This is the model's first showing of more than the magic 270 for Romney at any of the pricing points.  The low end price point showed Romney with 259 electoral votes.

For the last several days, I have given a chart that tracked our model estimates with Nate Silver's fivethirtyeight.com fore and now casts.  Here is how they stack up as of last night.  The ElectionMarkets model doesn't paint as pretty of a picture for the President as Silver's model does.

Romney March to 270 Continues

Romney moved closer to victory on all our metrics today.

Our macro model shows President Obama's probability of reelection dropping to 56% today.  The President's electoral vote count under our macro model dropped to 280. 

However, our electoral vote count under the state based model showed the President's position continuing to erode.  Our current assessment shows the President's advantage dropping to 275 - 263.  Here is our chart of the distribution of our results after simulating the election ten thousand times.

Most disturbing for the Obama campaign is that for THE FIRST TIME OUR MAXIMUM PRICING POINT SHOWS MITT ROMNEY GETTING 270 ELECTORAL VOTES.

Several weeks ago when the Obama campaign was riding high we raised the question of when the Obama bubble would burst.  Without question, the bubble has burst.  The question is if the Obama campaign can reverse the Romney momentum. 

While the President maintains a slight advantage under our models, THE TREND IS NOT OBAMA'S FRIEND.  For a number of days we have compared the results of our state based model with those of Nate Silver at his New York Times blog fivethirtyeight.com.  While fivethirtyeight has shown the President halting Romney's momentum, we find no evidence that is true.

We will post an updated chart comparing our results with those of fivethrityeight when Nate updates his model.

While the race for President is foremost in the mind of citizens, the race for control of the United States Senate is of great significance.  Our state based model currently projects Republicans with 50 seats after the election with a range of 49-50. 

Little Change the Morning After

President Obama failed to gain any traction from last nights debate. Our macro model's win probability measure actually saw the President's standing decline. His probability of reelection on this measure has dropped to 58%.

Our state based micro model has the President garnering 278 electoral vote to 260 for Mitt Romney. That is a move of 1 electoral towards Obama.

To put some perspective on the magnitude of Romney's recent gains, since the first debate. On October 2 our model reading was Obama 316 Romney 222. Romney has gained 38 electoral votes since then. Will the momentum continue? At least for now there is no indication that it will not

Obama Standing on Edge of Cliff

Tonight’s debate may well signal the outcome of the Presidential election. President Obama is standing on the edge of an electoral cliff. Unless he emerges with a resounding win, not just on debating points, on the underlying substantive issues, his reelection bid is doomed.

Unlike Nate Silver’s model at fivethirtyeight.com, the ElectionMarkets models have showed the President’s standing continuing to slide. Our latest read on the election using our state based modeling of InTrade data shows the President dropping below 280 electoral votes to a narrow advantage of 277 – 261. Prior to the first debate the model showed the President with 313 electoral votes.

More troubling for the President is that for the first time, the model has one of the four most frequently observed outcomes showing a Romney win with exactly 270 electoral votes.

The other three top outcomes out of 10,000 simulations of the elections have Romney at 257, 263 and 264.

The macro based model has the President’s reelection probability at 61% and on a downward trajectory.

The models do still show the President with a slight advantage. But the President’s task is large. The markets, as John McCain learned, will react quickly and with a vengeance if the President does not halt the Romney momentum. Mitt Romney still has work to do, but is in an enviable position where the trend is his friend.

Charts and updated analysis will be posted tonight after the debate.

As a side note, we had a marginal change in our state based Senate model which now projects Republicans emerging with 50 Senate seats. The range is now 49-50