Economics
Trump’s lead over Biden may be smaller than it looks
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IF AMERICA were to hold its presidential election tomorrow, Donald Trump would be picking out curtains for the Oval Office. The Economist’s polling average puts him up by 2.3 points over Joe Biden nationwide (see top chart). And across the six swing states expected to decide the election—Arizona, Georgia, Michigan, Nevada, Pennsylvania and Wisconsin—he leads by an average of 3.8 points. Betting markets list Mr Trump as a clear favourite. Never in his past two campaigns were his general-election polls this strong. Is it time for the world to brace itself for a second Trump presidency?
The election is still nine months away. Historically, polls taken before the summer of an election year have been poor predictors of results. But no former president has sought to return to office since the advent of modern polling. Opinions about the omnipresent Mr Trump are much firmer than they are about typical challenger candidates, who at this stage of the race are usually still fighting to secure their party’s nomination. As a result, even though Mr Trump is not yet the presumptive Republican nominee, current head-to-head polls between him and Mr Biden may be unusually informative.
Nationwide surveys over the past month have varied widely, ranging from an eight-point lead for Mr Trump to a six-point edge for Mr Biden. Polling averages, which blunt the effect of such outliers, suggest that Mr Trump holds a clear lead. But the polls that comprise such averages differ in their methods and degree of rigour. Democrats hunting for a silver lining can take solace in one clear pattern: pollsters with the best records of accuracy show better results for Mr Biden. Lower-quality pollsters are kinder to Mr Trump.
Public trust in polling has weakened following the industry’s high-profile underestimates of Mr Trump’s support in 2016 and 2020 (although polling before the 2018 and 2022 midterm elections was accurate). Reliably estimating pollsters’ accuracy—measured by the size of their historical errors and whether they consistently exaggerate support for a particular party—requires a large sample of surveys across many elections. FiveThirtyEight, a data-journalism outfit, recently updated its ratings of American pollsters. It assesses them on a combination of their records and their methodological transparency.
Some pollsters are consistently more accurate than the field. But there are many ways to judge quality. The Economist’s general-election polling average weights polls solely by sample size and recency, so larger and newer polls contribute a greater share to the overall score. On this basis, Mr Trump leads Mr Biden in national polls by 2.3 points. That compares with a 0.2-point lead for Mr Biden in an unweighted average that gives polls from six months ago the same weight as those from this past week.
The size of Mr Trump’s lead varies widely by the quality of pollster, as assessed by FiveThirtyEight (see bottom chart). This early in the election cycle, the pollsters in its highest tier have run polls only sporadically. (An exception is a weekly survey by YouGov, an online pollster, for The Economist.) However, in total, 13 polls have been conducted in 2024 by firms in this group. On average, they show a virtual tie between Mr Trump and Mr Biden.
By contrast, most polls released in January 2024 have come from firms with good but not exceptional records. Polls in these (“good” and “decent”) tiers show Mr Trump with a 2.4-point and 1.7-point lead respectively. Meanwhile, pollsters with a poor record or no previous published results show Mr Trump with an average lead of around six percentage points.
National polls reflect the general mood, and correspond to the popular vote. But thanks to the electoral-college system, winning the popular vote is no guarantee of electoral victory. In 2000 and 2016, for example, Republican nominees won the presidency despite losing the popular vote. In recent decades the electoral college has benefited Republican candidates. If Mr Trump were to win the popular vote by a six-point margin, he would almost certainly win at least 358 electoral-college votes, giving him the largest Republican victory since George H.W. Bush‘s in 1988. This would bring into play even states that Mr Biden won comfortably in 2020, such as Maine, Minnesota, New Hampshire, New Mexico and Virginia.
To those who think that all polls are created equal, Mr Trump has opened a modest but growing lead nationwide. But to those who insist that pollsters’ historical accuracy predicts future accuracy, the candidates are in a dead heat.■
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The struggling German economy has been a major talking point among critics of Chancellor Olaf Scholz’ government during the latest election campaign — but analysts warn a new leadership might not turn these tides.
As voters prepare to head to the polls, it is now all but certain that Germany will soon have a new chancellor. The Christian Democratic Union’s Friedrich Merz is the firm favorite.
Merz has not shied away from blasting Scholz’s economic policies and from linking them to the lackluster state of Europe’s largest economy. He argues that a government under his leadership would give the economy the boost it needs.
Experts speaking to CNBC were less sure.
“There is a high risk that Germany will get a refurbished economic model after the elections, but not a brand new model that makes the competition jealous,” Carsten Brzeski, global head of macro at ING, told CNBC.
The CDU/CSU economic agenda
The CDU, which on a federal level ties up with regional sister party the Christian Social Union, is running on a “typical economic conservative program,” Brzeski said.
It includes income and corporate tax cuts, fewer subsidies and less bureaucracy, changes to social benefits, deregulation, support for innovation, start-ups and artificial intelligence and boosting investment among other policies, according to CDU/CSU campaigners.
“The weak parts of the positions are that the CDU/CSU is not very precise on how it wants to increase investments in infrastructure, digitalization and education. The intention is there, but the details are not,” Brzeski said, noting that the union appears to be aiming to revive Germany’s economic model without fully overhauling it.
“It is still a reform program which pretends that change can happen without pain,” he said.
Geraldine Dany-Knedlik, head of forecasting at research institute DIW Berlin, noted that the CDU is also looking to reach gross domestic product growth of around 2% again through its fiscal and economic program called “Agenda 2030.”
But reaching such levels of economic expansion in Germany “seems unrealistic,” not just temporarily, but also in the long run, she told CNBC.
Germany’s GDP declined in both 2023 and 2024. Recent quarterly growth readings have also been teetering on the verge of a technical recession, which has so far been narrowly avoided. The German economy shrank by 0.2% in the fourth quarter, compared with the previous three-month stretch, according to the latest reading.
Europe’s largest economy faces pressure in key industries like the auto sector, issues with infrastructure like the country’s rail network and a housebuilding crisis.
Dany-Knedlik also flagged the so-called debt brake, a long-standing fiscal rule that is enshrined in Germany’s constitution, which limits the size of the structural budget deficit and how much debt the government can take on.
Whether or not the clause should be overhauled has been a big part of the fiscal debate ahead of the election. While the CDU ideally does not want to change the debt brake, Merz has said that he may be open to some reform.
“To increase growth prospects substantially without increasing debt also seems rather unlikely,” DIW’s Dany-Knedlik said, adding that, if public investments were to rise within the limits of the debt brake, significant tax increases would be unavoidable.
“Taking into account that a 2 Percent growth target is to be reached within a 4 year legislation period, the Agenda 2030 in combination with conservatives attitude towards the debt break to me reads more of a wish list than a straight forward economic growth program,” she said.
Franziska Palmas, senior Europe economist at Capital Economics, sees some benefits to the plans of the CDU-CSU union, saying they would likely “be positive” for the economy, but warning that the resulting boost would be small.
“Tax cuts would support consumer spending and private investment, but weak sentiment means consumers may save a significant share of their additional after-tax income and firms may be reluctant to invest,” she told CNBC.
Palmas nevertheless pointed out that not everyone would come away a winner from the new policies. Income tax cuts would benefit middle- and higher-income households more than those with a lower income, who would also be affected by potential reductions of social benefits.
Coalition talks ahead
Following the Sunday election, the CDU/CSU will almost certainly be left to find a coalition partner to form a majority government, with the Social Democratic Party or the Green party emerging as the likeliest candidates.
The parties will need to broker a coalition agreement outlining their joint goals, including on the economy — which could prove to be a difficult undertaking, Capital Economics’ Palmas said.
“The CDU and the SPD and Greens have significantly different economic policy positions,” she said, pointing to discrepancies over taxes and regulation. While the CDU/CSU want to reduce both items, the SPD and Greens seek to raise taxes and oppose deregulation in at least some areas, Palmas explained.
The group is nevertheless likely to hold the power in any potential negotiations as it will likely have their choice between partnering with the SPD or Greens.
“Accordingly, we suspect that the coalition agreement will include most of the CDU’s main economic proposals,” she said.
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