Social Mood, Stock Market Performance, and U.S. Presidential Elections

We analyze all U.S. presidential election bids. We find a positive,significant relationship between the incumbent’s vote margin and the prior netpercentage change in the stock market. This relationship does not extend to theincumbent’s party when the incumbent does not run for reelection. We find no significantrelationships between the incumbent’s vote margin and inflation or unemployment. Grossdomestic product (GDP) is a significant predictor of the incumbent’s popular vote marginin simple regression but is rendered insignificant when combined with the stock marketin multiple regression. Hypotheses of economic voting fail to account for the findings.The results are consistent with socionomic voting theory, which includes the hypothesesthat (a) social mood as reflected by the stock market is a more powerful regulator ofreelection outcomes than economic variables such as GDP, inflation, and unemployment;and (b) voters unconsciously credit or blame the leader for their mood