Prediction Markets’ take on American politics, public policy, and the economy in 2010

Intrade.com publishes the “Intrade Gazette” every two weeks.  The “Intrade Gazette” is essentially a newsletter that comments on the prediction markets’ take on any number of topics.  Anyway, I just received the 1/28/2010 “issue” via email today, which I reproduce below.  The previous (1/14/2010) issue is available on the web at http://www.intrade.com/Market_Moves/20100114/newsletter.html.

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“After having just delivered his first State of the Union speech, it’s a good time to look at what the Intrade markets are predicting for President Barack Obama in 2010.

Much has been made of the President’s falling approval ratings, which according to Real Clear Politics currently stand at 48.7% – a similar rating to both Jimmy Carter and Ronald Reagan after their first year in office. The Intrade markets suggest this rating will likely hold steady for the immediate future. There is 73.5% probability the President’s approval rating will remain above 45% at the end of March, and a 43.6% chance it will climb to above 50%. The figures for the end of June paint a similar picture: a 75.0% chance of an approval rating above 45% and a 40.0% chance it will be above 50%.

The continuing lack of cooperation from Republicans and the loss of that key 60th Senate vote will make it tough for the President to advance his domestic agenda in 2010. The market gives his heath care reforms only a 34.0% chance of being passed before the end of June. Another of his signature policies, a cap-and-trade system to regulate carbon emission, currently only has a 19.9% probability of being established. Early trading also suggests the President will be unable to close Guantanamo Bay detention camp before the end of the year.

What about the economy? The market shows it should continue to grow, with a 90.1% probability of positive growth in Q1 of 2010 and a 86.0% probability of positive growth in Q2. The chance of the economy slipping back into recession during 2010 are only 18.7%. But according to the market, unemployment will continue to be a problem. There is a 65.1% probability the unemployment rate will remain above 9.5% at the end of the year, and a 44.9% probability it will climb above 10.0% at year-end. The stock market is not expected to see significant growth. The Dow Jones Industrial Average has 56.0% chance of staying above 10,000 and a 49.1% chance of being above 10,500 at the end of 2010.

2010 is shaping up as a tough one for President Obama. And to top things off the Democrats will most likely be operating with reduced Congressional majorities after November’s mid-term elections. The bright side? The market shows a 58.4% chance he will be re-elected in 2012.”

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