US elections: an insider’s view
Matt Miller
Political Economist
  • Recent events have increased the likelihood of presidential victory for Democratic candidate Joe Biden.
  • However, Donald Trump still has a legitimate chance with polls in key swing states showing only a small Biden advantage. 
  • A result may not be known for days, or even weeks after the election on 3 November 2020, and the associated uncertainty could create short-term market volatility.

Swing states will decide the presidency

To briefly re-cap how the US presidential election works: it is decided not by the popular vote but by the electoral college vote. The successful candidate in each state takes all the electoral votes for that state and becomes an ‘elector’ in the electoral college. The ‘electors’ from each state then vote for the president. The majority of states tend to tilt decisively towards either the Democratic or Republican party, but there are about five to seven states where it’s typically not clear which party has the edge. These swing states include Michigan, Wisconsin, Pennsylvania, Florida, North Carolina and, this year, perhaps Arizona. These battleground states are decisive in terms of the election outcome, which explains how candidates can still win the presidency without having the larger share of the popular vote.

Donald Trump is likely to do better in electoral college terms than in the overall national vote. This was the situation in the 2016 election, when he narrowly won the electoral contest, but received 3 million fewer votes than Democratic candidate, Hillary Clinton. 


Biden’s chances have improved but it’s still a highly contested race 

Earlier in the race, I had thought the probability of either candidate clinching the presidency was a coin-toss, at 50%. This was based on the assumption that the Trump campaign would change the narrative on the election from simply a ‘referendum’ on his performance – particularly with regard to COVID-19 – to a ‘choice’ between the two main candidates: Trump and Biden. However, more recent events have changed this scenario. Trump’s handling of the first presidential debate, his COVID diagnosis, and relaxed practices in the White House that allowed the virus to spread have all been a distraction from a campaigning perspective and I don’t see that the Republicans have been successful in making the election a ‘choice’.

Joe Biden has solidified his national lead to about 10 points since the presidential debate of 29 September. National polls are relatively accurate, but state polls have been less credible, although they have adjusted their models following the 2016 election. The higher-quality state polls show that Biden is still ahead, but by a small margin and there is the possibility that Trump could close this gap in the coming weeks. Nevertheless, I now see Biden as having a 65% chance of winning the presidential contest.

This still means Trump has a 35% chance of winning. Apart from the margin for error in individual state polls, Trump could also benefit from his quick bounceback from COVID-19, helped by experimental treatments, and subsequent return to the campaign trail. This plays to his argument that he is right on the coronavirus, both in arguing that the country as a whole should continue normal life, and in showing that he is doing well as president in accelerating the development of treatments.


Matt Miller is a political economist at Capital Group. He was formerly a senior advisor at McKinsey, a Washington Post columnist and author, host of public radio's "Left, Right & Center" program, and a Clinton White House aide. He has a law degree from Columbia and a bachelor's from Brown.

Past results are not a guarantee of future results. The value of investments and income from them can go down as well as up and you may lose some or all of your initial investment. This information is not intended to provide investment, tax or other advice, or to be a solicitation to buy or sell any securities.

Statements attributed to an individual represent the opinions of that individual as of the date published and do not necessarily reflect the opinions of Capital Group or its affiliates. All information is as at the date indicated unless otherwise stated. Some information may have been obtained from third parties, and as such the reliability of that information is not guaranteed.