US MIDTERMS – A DIVIDED GOVERNMENT AHEAD?
Macro Insight
QuantCube predicts US midterms election results leveraging NLP technology and social media sentiment analysis
The outcome of the imminent 2022 US midterm elections may lead to a divided government, in which case Joe Biden's administration will face significant challenges to unify political parties. The Democrats have been in power since 2020 and have controlled the presidency and both chambers of Congress. This allowed them to successfully pass several key pieces of legislation such as the Student Loan Relief Plan and the Inflation Reduction Act, which contributed to lowering energy prices in the US.
On November 8, all 435 seats in the House of Representatives as well as one third of the Senate’s seats will be up for election. Democrats currently hold narrow majorities in both chambers of Congress, so midterm elections could result in a divided government, where one or more houses of the legislature are controlled by the party of opposition. Such an outcome is often associated with political gridlock, as close cooperation between Congress and the President is typically needed to pass key legislations; therefore, under a split government it can become harder to fulfill campaign promises.
Leveraging social media data and our proprietary NLP (Natural Language Processing) technology, we examined the potential outcome of the US midterm elections at a district level. As social media data is collected and processed in real-time, it provides timely insights on electoral campaigns’ dynamics earlier than the information obtained by other methods, which often rely on polls that require longer processing time especially for validating data sample structure, response time for polls and post-processing of the collected data.
Democrats vs. Republicans – which party may be closer to controlling the House of Representatives?
To predict the potential winning party at a district level we have used over 250 million social media posts related to US midterms for their political sentiment. Our NLP algorithm is trained to detect and remove the news created by bots to eliminate irrelevant noises in the datasets. We also developed a robust classification method to identify each post’s political orientation; Pro-Democrat and Pro-Republican. Since August 2022, the beginning of our observation, we classified over 1.5 million users per day using this method.
US midterms are often defined as a referendum on the incumbent and their party. Indeed, the outcome is highly correlated with the President’s approval rating. Based on users’ political orientation, we estimated the trend in Biden administration’s approval rating from August 4 to October 27. QuantCube’s estimate of Biden’s approval rating is updated daily, and reflects changes in users’ political orientation in real-time. Thus, it provides reliable and timely insights into the current state of the President’s popularity. As suggested in Exhibit 1, Joe Biden’s approval rating hit a high on August 17, the day after the US President signed the Inflation Reduction Act. Since then, the rating came down slightly, and it currently stands at 41.91% as of October 27.
In our view, sentiment analysis based on social media alone is not enough to explain the dynamics of voters’ behaviour in each district. For this reason, our analysis also incorporates other types of data. Firstly, we took into account specific local political bias, such as information on candidates; the public profile of incumbents often leads them to be re-elected at midterm elections. Secondly, we considered socio-demographic data. Indeed, certain factors such as education level, average income and ethnic distribution often play an important role in influencing voters’ choices.
These explanatory variables are important to identify each district’s existing political bias and to ensure the robustness of our predictive model. However, political and socio-demographic data tend to be static over time and to report changes only in the medium to long term. Therefore, the combination of the insights from Biden’s approval rating, political data and socio-demographic data, allowed us to predict the winning party in each district in real time, and to calculate the number of seats that will likely be won by each party.
Exhibit 2 shows the results of our analysis for potential winning parties at a district level. As of October 27, our analysis suggests that the Republicans will control the House of Representatives with 228 seats.
The slight decrease in Joe Biden’s approval rating is reflected in the attribution of the seats in The House of Representatives. Compared to the analysis on August 17, when Biden’s approval rating reached a peak, the Republicans gained seven seats, an increase to 228 seats in total from the previous 221. As for the Democrats, our analysis suggests that they lost three seats within the same period, and currently hold 202 seats. Furthermore, we observe that the number of toss-up seats has decreased from nine to five.
Note: The intensity of each district colour corresponds to the scores attributed to the Democrat or the Republican candidate:
Even (or Toss-up): we expect one party to lead by 0-2 points
Leaning Dem/Rep: we expect one party to lead by 2-5 points
Likely Dem/Rep: we expect one party to lead by 5-10 points
Strongly Dem/Rep: we expect one party to lead by a minimum of 10 points
Please also note that our analysis takes into account the 2022 redistricting
Events affecting the social media traffic associated with midterms
The 2022 US midterms will take place in a challenging period characterised by geopolitical risk, slowing growth and soaring inflation. Such topics, especially rising prices, are animating the debate on US midterms.
Using our proprietary machine learning techniques, we detected the topics that affect social media traffic on US midterms most as Exhibit 3 indicates. Not surprisingly, a daily number of posts by each topic are highly correlated to specific events. For example, we observe a rise in social media posts on international issues at the time Nancy Pelosi made a trip to Taiwan in early August. The Mar-a-Lago raid by the FBI also increased traffic on police and security issues. On August 26, a number of economy-related posts skyrocketed reflecting Jerome Powell’s speech on the Federal Reserve’s monetary policy. Our latest observations suggest that economic and international topics are dominating midterm-related social media posts.
Users’ political orientation is dictating their perception of the economy
We identified inflation as a key driver for impacting the midterm elections. Political orientation seems to have a significant influence on inflation-related social media posts. We also found that the Republicans and the Democrats react with differing intensity depending on the inflation events at stake. The perception of the current state of the economy significantly differs in pro-Democrat and pro-Republican posts, with Republicans appearing more pessimistic than Democrats.
In our observation, the Inflation Reduction Act legislative events generated mostly pro-Democrat posts while the publication of August inflation numbers drove a peak of pro-Republican posts, as Exhibit 4 indicates.
Using Wordclouds we can clearly see the impact of political orientation on the perception of the current economic condition. Exhibit 5 and 6 represent the key words used in pro-Democrat and pro-Republican posts respectively. The main keywords found in pro-Democrat posts suggest optimism regarding the current inflation level as Exhibit 5 indicates. Indeed, inflation is associated with “reduction”, “act”, “fight”, emphasizing the efforts by Biden administration to tackle rising prices. Democrat’s posts also carry words such as “historic”, “medicare’, “prescription’, “insulin’, “drug’, and tend to praise the unprecedented social security package passed by the Biden administration along with the Inflation Reduction Act.
On the other hand, Republican posts on inflation seem to be more pessimistic as Exhibit 6 shows. They tend to associate the rising prices with “recession”, “crises”, “raise”, “record”. Also “Crime” appears in the Republican wordcloud, suggesting that the Republicans tend to associate high inflation (or Biden administration) with rising crimes.
Note: The words most frequently used appear largest in the visualisation
Inflation – the key driver to influence election results
Rising prices represent the main challenge for Biden’s administration, massively animating debate in the run up to the midterms. Interestingly, following the publication of US CPI data about August inflation on September 13, we observe a significant amount of undecided users posting pro-Republican comments. Furthermore, we do not only observe undecided users, but also new users publishing pro-Republican posts. This suggests that inflation is one of the main drivers of the current administration’s slight decrease in popularity.
In our analysis, all the users with ambiguous political orientation on social media are tagged as “undecided”. Undecided users typically didn’t manifest any clear preference between Republican or Democrat candidates. We separated “undecided” users from the remaining datasets and carried out further analysis of their behaviour.
Exhibit 7 indicates the behaviour of undecided users on social media after the release of August inflation numbers, which caused turmoil on news and in financial markets. Each vertical line in the figure represents a set of users with an opinion and each flow between the two vertical lines represents a change in opinion. When the US Bureau of Labor Statistics published August CPI numbers on September 13, the pro-Republican posts by undecided users increased visibly. If we further look into these posts, we observe the changing behaviour of undecided users.
We classified approx. 40% of the 740,000 users posting about inflation as undecided. Between September 1 and September 20, a significant amount of these undecided users demonstrated a change in opinion, switching from posting comments that were either impartial or pro-Democrat to posting comments that were pro-Republican.
Note: The users taken into account here are the ones posting comments on inflation between Sept 1 and Sept 20 who were previously undecided. (i.e. the users were identified as undecided from July onwards). Please note also that some users started posting on the topic after September 9, leading to an increase in the overall number of users observed.
QuantCube will continue to monitor social media traffic associated with the midterms with a specific focus on the Democrats’ approval rating and each district’s majority.
