Obama is currently the presidential frontrunner. Note that, on Intrade, the market odds of an economic recession in 2008 are rising in tandem with the odds that Obama will be elected President. Correlation does not prove causation but this correlation is worrisome.
UPDATE: It may not be clear what I mean, since even if Obama were elected he would not take office until 2009, and Intrade’s recession prediction refers to 2008. The point is that the prospect of a President with Obama’s stated values would raise expectations of tax increases and of other economically destructive measures, and such expectations would lead to reduced investment and hiring.
UPDATE 2 (Jan. 9): A rejoinder by Barry Ritholtz is here.
(This blog is an Intrade affiliate.)
Related: Obama-McCain: Political Inertia Coupling?