The Obamanometer: Your Guide to Whether the Economy Favors Romney or Obama

This new gauge gives a glance how economic developments may swing the presidential race.

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The economy's up. The economy's down. There are changes literally every day in the way we measure our well-being and future prospects.

But this fall, it matters more than usual. That's because the state of the economy will very likely determine whether President Obama gets reelected or his Republican opponent Mitt Romney wins the White House.

To measure the vagaries of the economy through Election Day, I created the Obamanometer: a unique, at-a-glance gauge that indicates whether the economy is getting better or worse. The Obamanometer isn't meant to determine whether the economy is healthy or not by some absolute standard. Instead, it measures whether the latest economic indicators in 11 broad categories, ranging from stock prices to unemployment to the risk of recession, are improving or deteriorating. [See a detailed methodology note at the bottom.] These are the factors that will determine whether voters on Election Day feel an uplift or a downdraft in the economy. Many are likely to vote accordingly.

The latest Obamanometer reading indicates that recent developments significantly favor the president. But this is due largely to one thing: the big jump in stock prices that followed the Federal Reserve's recently announced plan to begin more monetary stimulus. Before that, the Obamanometer slightly favored Romney. And it could favor Romney again once the stock-market buzz wears off.

Other than the stock market, the trends that generally favor Obama include an improving housing market and consumer spending that's been stronger than expected. Working against Obama: rising gas prices, an overall increase in inflation, and a weak job market. With the economy hovering somewhere between recovery and stagnation, small changes in one or two indicators could tip voter sentiment—and perhaps the election itself—one way or another.

I'll update the Obamanometer daily through November 6, and write fresh blog posts whenever there's a meaningful change. So when there's news about the economy, check back to see where the needle's pointing.

Rick Newman is Chief Business Correspondent at U.S. News and the author of Rebounders: How Winners Pivot From Setback To Success. Follow him on Twitter: @rickjnewman


Methodology: The Obamanometer measures 22 economic metrics in 11 broad categories: the S&P 500 stock index, the price of gas, the unemployment rate, other job indicators, consumer confidence, leading economic indicators, inflation, housing, personal income, consumer spending, and the risk of recession as calculated by Moody's Analytics. The S&P 500 index and gas prices are updated daily, based on the level of change from one week prior. Other indicators are updated weekly or monthy as they come out. Changes are coded on a seven-point scale ranging from -3 to +3, with -3 representing a strongly negative economic development that favors Romney, and +3 indicating a strongly positive development that favors Obama. If a new reading were to indicate no change in a given metric, it would be scored as 0, which means it would favor neither candidate. All individual scores are then averaged each day, with the overall Obamanometer reading ranging somewhere between -3 and +3. In visual terms, an overall reading of -3 would be represented by the needle pointing all the way to the left, while +3 would be represented by the needle pointing all the way to the right. If the overall reading were 0, the needle would point straight up.