Time-tested model says a Democrat will win in 2016

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Prepare for another Democrat to win the White House in 2016.

Republicans might be in the spotlight this week with their first big debate, but Democrats received some very encouraging news. Moody's Analytics, which has correctly predicted every presidential race since Ronald Reagan's victory in 1980, just came out with its forecast for 2016.

It will be an extremely close race, but the next president will be a Democrat, according to Moody's.

This doesn't mean that Hillary Clinton is on her way back to the White House. The model that Moody's uses doesn't focus on individual candidates. Instead, it predicts which party will win in every state, so it forecasts the results of the Electoral College.

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Moody's says the Democratic nominee will get 270 electoral votes -- the minimum number of votes needed to win -- while the Republican nominee will accumulate 268 votes. The model correctly predicted every state in the 2012 election and has a nearly 90% success rate in forecasting each state accurately since 1980.

It will all come down to Virginia and Ohio this time because Moody's predicts that Republicans will win Florida. At the moment, Moody's says Virginia will go Democratic and Ohio will swing Republican, but that could change.

"If President Obama's approval rating falls by any more than 2 percentage points by Election Day, Virginia will swing and the Republicans will win the president," the report says.

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So what is the key to such accurate predictions? Moody's says it's all about economics.

The model takes into account how the economy is doing in each state. The researchers have tested a lot of variables over the years, but the best ones are family ("household") income, home values and gas prices. If those three variables are going up, it favors the incumbent party. If they're not, people want change in Washington.

"The economy's performance strongly favors the Democratic nominee for president," says Moody's.

Moody's points out that household incomes have been steadily improving lately and are likely to go up further before Election Day.

"The only missing ingredient is stronger wage growth, which is expected to pick up in the coming months as the job market approaches full employment," the authors wrote.

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