Clinton predicted to beat Trump...due to economics

Hillary Clinton and Donald Trump on the 'woman card'
Hillary Clinton and Donald Trump on the 'woman card'

Donald Trump is in trouble, according to a model that has correctly predicted the winner of every presidential race since Ronald Reagan in 1980.

This time around the model -- run by Moody's Analytics -- says a Democrat will win the White House. Hillary Clinton is widely expected to be the Democratic nominee.

It's a bad sign for Trump. Moody's has been predicting a Democratic triumph since last August, but the margin of victory is getting bigger for the left as the economy has stayed relatively strong and President Obama's approval rating has risen.

The reason a Democrat will win isn't about polling or personalities, it's about economics, says Moody's. The economy is the top issue in just about every election. When the economy is doing well, the party currently in office usually wins again. When the economy is tanking, Americans vote for change.

So far, the U.S. economy is chugging along. It's growing. Millions of people are getting jobs, home prices are rising and gas is cheap. All of this favors Democrats.

Related: Donald Trump's favorite stocks

What Trump needs to win

So how can Trump win? Moody's says the only way that happens is if gas prices spike, President Obama's approval rating tanks or voters act very, very differently than they have since the 1980s.

"Gasoline prices would have to be somewhere in the $3 range for the Republicans to potentially win," says Dan White, a senior economist at Moody's Analytics. (The average price at the pump is currently a mere $2.31, according to AAA).

The next president could be Hillary Clinton or Bernie Sanders (or even another Democrat). Moody's doesn't analyze individual candidates. It only predicts which party will win the White House.

"We don't have a Trump variable in the model," admits White. "If voters don't react the way they have in the past, then the results of the model count be wrong."

Related: The truth about Hillary Clinton's Wall Street speeches

The swing state economies look good

In addition to economics, the Moody's model also looks at how states have voted in the past and President Obama's approval rating. Obama's approval rating is now above 50% for the first time in three years. That helps Clinton.

"If it holds at current levels, the two-year increase in the president's approval rating running up to the election would surpass even that of President Ronald Reagan at the end of the Cold War," notes Moody's.

Furthermore, the economic situation on the ground is especially good in many of the swing states. Seven states are very close in the model: Virginia, New Hampshire, Ohio, Colorado, Florida, Nevada and North Carolina. Moody's predicts that all of them will go to the Democrat except North Carolina.

Related: The U.S. is 'basically at full employment'

"Nevada has moved back into the democratic category very recently," says White. "A lot of that is because Nevada's economy is growing very well. It's one of top 10 states in country on income growth."

Trump seems to understand this dynamic. He talks often about how terrible he thinks the economy is. He says the "middle class is disappearing" and America's trade with China is "disastrous." He offers himself as the candidate of change, especially for business and the economy.

Personal Finance


CNNMoney Sponsors