Yale professor Ray Fair‘s model for predicting Presidential elections were the subject of these prior posts here and here. In this new piece, Professor Fair tries to explain why his model predicted that President Bush would win 57.4% of the two-party popular vote when he actually got only 51.5% (he speculates that the war hurt Bush more than projected), and provides this early prediction regarding the 2008 race:

It is possible to use the current vote equation to make a prediction for 2008. There will be no incumbent running again (PERSON = 0), and the Republicans will have a negative duration effect (DURATION = 1). If, say, GROWTH is 3.0, INFLATION is 3.0, and GOODNEWS is 2, which is a moderately good economy, the vote prediction for the Republicans is 50.1 percent, a dead heat. So the main message for 2008 is that the election will be close if the economy is moderately good. It would take a quite strong economy for the equation to predict a comfortable Republican win, and it would take a quite weak economy for the equation to predict a comfortable Democratic win. The Democrats clearly have a much better shot in 2008 than they had in 2004 according to the equation.