US election monitor: Final thoughts – And a guide to following the results

Tune into Danske Research's morning call on 6th of November to hear our quick takes on preliminary election results, implications for US economy and the Fed.

The election week is here and while Trump held the momentum over the past month, recent data suggests the results remain up in the air. Polymarket now shows Trump's lead narrowing, with PredictIt now even favouring Harris. Over the weekend, Harris was in the lead in Iowa - a state Trump won in 2016 and 2020 - per late October Des Moines Register polling. However, early November polling by Emerson shows Trump leading Iowa by 10 pp., underscoring how volatile poll results are. In swing states, Harris has edged back into slim leads in Michigan and Wisconsin, both must-win states for her, while Trump expanded his lead in Arizona, Georgia, Nevada and North Carolina (see p. 3-4 for charts).

In the most likely scenario, northern states of Michigan, Wisconsin and Pennsylvania will determine the final election result. If Harris secures all three, she is the winner. If Trump wins the southern states where he has held the strongest position in polls (Georgia, Arizona and North Carolina), then securing any of the three northern states would guarantee him the victory. Nevada is also a swing state, but as it awards the smallest number of delegates (6), its results will likely play a more minor role.

Early voting turnout has been high with 76 million ballots cast already in advance. This is roughly 48% of the total votes cast in 2020. Historically, high voter turnout has benefited Democrats, who have also typically been more active early voters. According to NBC, registered Democrats have made up the largest share of this year's early voters as well, but how this translates into overall voting activity remains uncertain. The share of early voters (out of total) has been rising constantly over the years and especially in the 2020 elections organized during the pandemic restrictions.

We will also pay close attention to congressional elections, and especially the House of Representatives. Prediction markets see the election practically as a coinflip and it could have a major impact on the future of fiscal policies. The party that wins the majority can also nominate the Speaker of the House who controls which bills the House votes to be sent to Senate. If Republicans lose their current slim majority in the House, Trump's ability to push through the widely expected looser tax policies might be severely limited, even if he wins the presidential election. Keep in mind, even as a 'lame duck' President, Trump would still be able to set up new tariffs via executive orders.

Unless Trump comes out clearly in the lead in the first states to report their result, there is a high likelihood that the total result will not be known by the morning on the 6th of November European time. Pennsylvania and Wisconsin do not allow for pre-counting early votes before the election date, which means they are likely among the last states where the result is called (the former was only called by Friday evening in 2020). Michigan was also called close to midnight between 6th and 7th of November European time in 2020, and again, Trump needs at least one of the three states to confirm his victory. House elections were also only called on Thursday in 2020, so knowing the final balance of power could well drag out longer than usual. Democrats' majority in the Senate was only confirmed in January 2021 after the party surprisingly won two run-offs in Georgia. This time, Republicans are the clear favourites to win control of Senate, however.

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