Every time before the US presidential election, the polling data of various agencies always becomes the focus of attention.

Although people are accustomed to judging the chances of the two competing parties by comparing the support rate data of various opinion polls, there are often unexpected election results that question the reliability of the opinion polls.

Recently, American election analysts have found that if Americans want to know who will be elected as the next US president next year, there is a more direct and accurate source of judgment than opinion polls: the US stock market.

Is the US stock market more reliable than opinion polls?

In this year's US election, polling data shows that Harris is slightly ahead in many national polls: The New York Times poll shows a 49% chance of Harris winning, with Trump at 47%; while FiveThirtyEight and the American Broadcasting Company (ABC) poll shows a 47% chance of Harris winning, with Trump at 44.3%. However, in the world's largest prediction gambling market, Polymarket, both Harris and Trump have an equal 49% chance of being elected as the next US president.

Although these election opinion polls will dominate most of the headlines, a historical review reveals that the accuracy of election opinion polls is actually not very high.

In 2023, senior election analyst Nathaniel Rakich of FiveThirtyEight analyzed hundreds of opinion polls in each of the US elections since 1998 and found that the probability of accurately predicting the winner of the polls was only 78%. In the 2022 midterm elections, the probability of accurately predicting the winner of the polls was only 72%.

On the other hand, since 1984, the accuracy rate of the US stock market in predicting the US presidential elections has reached an astonishing 100%!

Analysts found that during the months of August to October in election years, as long as the S&P 500 index rises during this period, the incumbent party is likely to win; conversely, whenever the S&P 500 index falls during this time, the opposition party is likely to win.

On Tuesday Eastern Time, John Lynch, Chief Investment Officer of US Alliance, and Senior Analyst Anderson provided a simple explanation for the correlation between stock prices and election results in their report.

"Market performance reflects broader economic sentiment," they wrote, "when voters are satisfied with the direction of the economy, they tend to support the status quo, but when they are dissatisfied, they are more inclined to vote for change."

Another highly accurate predictive indicator

In addition to the US stock market, Lynch and Anderson also discovered another noteworthy election predictive indicator: the Misery Index.

The Misery Index is an indicator that combines seasonally adjusted unemployment rate and annual inflation rate to measure the economic pain felt by ordinary Americans. Generally speaking, the higher the Misery Index, the more difficult it is for consumers to cope with rising prices and finding jobs, leading to more economic "misery".

Statistics have found that since 1980, the misery index has also achieved an accuracy rate of 100% in predicting each election.

During the period from August to October of each election year, the three-month moving average of the misery index can accurately predict the election results: as long as the misery index rises, the ruling party will be defeated; vice versa.

Currently, the misery index in the usa in August is 6.73%, although this is far lower than the peak of 12.66% during the Biden administration in July 2022, it is still higher than the 6.57% in June.

Lynch and Anderson wrote in the report that this means the unexpected rise in the U.S. unemployment rate in July poses a potential threat to Vice President Harris's chances of winning.

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