Recently I wrote about how US Democratic Presidential candidate Barack Obama world tour hadn't lifted him above the 50% threshold in the national polls. More importantly, state by state electoral college voting was razor thin in favor of Obama. Well now comes a new Gallup poll showing that Obama's lead in national polling has shrunk down to 45-44 over McCain. This is happening despite a story on Reuters that has 3 different economic models indicating a 5 point win for Obama.
Why would this be occurring? Even though Obama looked and sounded great overseas, this doesn't resonate with voters losing their jobs in the United States. Today's economic numbers weren't great and may have been influenced by the extension of jobless benefits. The point is these are weak and voters are focused intently on the economy.
The GDP number showed two things to me. Housing continues to be a drag on the economy and subtracted 0.6%. Trade continues to be a major boost to the economy. Without it, GDP would've been -0.52% vs a +1.9%. McCain is a big proponent for trade and Obama is for re-opening trade agreements. Again, American voters are not as dumb as people think and the latest polling data could be showing they understand which policies are going to work for creating jobs via trade.
Larry Kudlow has repeatedly questioned whether the stock market has been selling off due to polling data showing an Obama victory. I believe he bases this on many policy proposals, but the big one is a rise in capital gains tax. This hike could promote 2008 year end tax selling to garner the lower tax rate now in place and would be a major wet blanket in December. Could it be possible that a shift in the polls brings a positive impact to the markets with McCain pulling even?