With the race for the U.S. presidency now entering the homestretch, we look back at a turbulent week. Historically, the stock market has always been a great predictor of who will be in the White House. In fact, in 20 of the past 23 elections, the S&P 500 index has accurately predicted who would make the race.
According to the latest election polls, presidential candidate Joe Biden is comfortably ahead of President Trump. However, various market and economic based indicators suggest otherwise – instead, alluding to a much closer than expected race. After all, take a look back to 2016, when Donald Trump when the presidency despite Democratic candidate Hillary Clinton leading in the polls. What’s even more interesting was the fact that Clinton actually received 3 million more votes over all. So how did she lose the race? Two words: Electoral college!
How does the system work?
In the U.S. presidential elections, Americans vote for a group of representatives that make up the electoral college – these representatives are called “electors”. The word “college” refers to this group of electors whose task it is to choose the president and the vice-president. The elections occur every four years and the “college” meets a few weeks afterwards to cast its vote. Each state is assigned a different number of electors – that number depends on the size of each state’s population. In total, there are 538 electors. Take California, for instance, which is the biggest state by population and has thus, the most electors at 55. Smaller states such as Alaska, North Dakota, and Wyoming, on the other hand, receive only 3 electors.
ach elector represents one electoral college vote. Therefore, a presidential candidate must win a majority of these votes to win the presidency, i.e. 270 votes or more. In most states, whoever wins the majority there will be awarded all of its electoral college votes. That said, if a candidate wins the most votes in California for instance, he/she would win all 55 of its electoral college votes. In Maine and Nebraska, however, votes are awarded by congressional district method, i.e. the electoral college votes can sometimes be split. Therefore, a candidate only needs to win 50.1% of a state’s vote to be awarded all of the state’s electoral votes. Hence, winning by a landslide (popular vote) still gives a candidate the same amount of electoral votes.
Because of this controversial system, candidates can win the most votes nationally, yet still not reach the 270 electoral votes needed to win the presidency. In 2000, for instance, Al Gore won 500K more votes than George Bush, yet still received fewer electoral college votes. Historically, the electoral college, which has been around since the early 1800s, has always played a major role in many presidential elections.
Heading into the final stretch of one of the most anticipated elections in history, there remains a lot of uncertainty. Though Biden is consistently ahead nationally, Trump still has a narrow and certainly not impossible path through the key states to winning this presidency.
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