The Political Number We’ve Been Missing

Since 1952, the University of Michigan Consumer Sentiment Index has told us more about the economy than almost any GDP report or monthly jobs release. The Index surveys real people regarding how they feel about their finances and the future, compresses it into a single figure, and releases it publicly. Whether you're familiar with it or not, that number shapes your life. Businesses use it to decide whether to hire, the Fed watches it before setting rates, and sophisticated investors move billions on its monthly release. It’s a clean signal cutting through the noise.

Now there’s a political equivalent for regular people, and it’s long overdue.

Last week, Kalshi, the federally regulated prediction market, launched the American Power Index (KPOW). It measures, on a scale from +50 Democratic to +50 Republican, how much political power each party holds right now and where the market thinks that power is headed. KPOW applies the logic of prediction markets one level up: just as a single market crystallizes conventional wisdom about one event into a percentage, a basket of markets can be compiled into a single composite number. KPOW is to political power what the S&P 500 is to equities or CPI is to inflation: one legible number tracking a complicated underlying reality.

Like those indices and algorithms, the secret sauce of KPOW is how various markets are weighted as well as what other information is included in the index. Per Kalshi, the index weights the objective facts of the current government against forward-looking prediction market signals about future elections and adjusts for risks like a government shutdown that weaken a governing coalition’s effective power. It’s reweighted weekly. When shutdown odds spike on Kalshi, KPOW falls for the GOP. When a midterms contract moves toward Democrats, KPOW moves to the Dems. The mechanics translate a dozen market signals into one number a non-specialist can actually read and understand.

Until now, if you wanted a sophisticated, real-time read on political power in America, you needed to be a hedge fund or other sophisticated institution. Goldman Sachs, Bridgewater, and Point72 have entire teams of analysts whose job is to calculate exactly this kind of thing, and they spend millions a year on it because political intelligence is a trading edge worth paying for. KPOW puts that same signal in everyone’s pocket for free.

Why does this matter? Because polling, the instrument we’ve relied on for decades to understand political reality, is facing a crisis. On the other hand, KPOW is based not on what people say they believe, but on where they are willing to stake real money.

Every student of politics remembers Truman versus Dewey. But polling failures are not ancient history. The polls missed Trump in 2016. In 2020, national polls had Biden ahead by an average of more than seven points when the actual margin turned out to be about four and a half. Pollsters also missed the scale of Trump’s 2024 victory. Each cycle, the postmortems get longer and the methodological patches get more elaborate, and each cycle a new failure reveals that the foundation is cracked. Response rates for telephone polls have cratered from 36% in 1997 to single digits today. The industry is working to respond to this through more panel-based polls and better modeling, but it’s a work in progress.

Prediction markets don’t have this problem. They don’t ask people what they think; they ask people to put their money where their mouth is. And that changes everything. As the economists Justin Wolfers and Eric Zitzewitz demonstrated in their influential research, markets where participants have financial skin in the game consistently outperform polls, with average errors around 1.5 percentage points compared to polling’s increasingly embarrassing misses. This is because if the market price is wrong, someone can profit by correcting it, while no such incentive exists in a survey. Kalshi’s markets correctly called 2024 races when the polls were still hand-wringing.

But KPOW goes beyond any single election prediction. It answers the sprawling, messy question that no individual market can: which way is the wind blowing in American politics, right now, today?

American politics is awash in populist sentiment. Last year, 80% of Americans said that “political institutions have been captured by the rich and powerful,” and 75% said “most important decisions in politics happen behind closed doors, without public accountability.” This distrust has metastasized despite the sea of data that now exists in politics, possibly because the existence of data alone is not what matters. What matters is that data is visible, accessible, and understandable by the many, not just the few. When something is poorly understood, the human default is to assume it’s rigged.

A single understandable number is a civic primitive. The stock index made markets legible to ordinary investors. The weather forecast made meteorology legible to anyone planning a picnic. Neither solved the underlying complexity, but they made it easy to understand. KPOW is an attempt to do the same for political power: to take the omnipresent, invisible force that shapes our lives and give everyone a shared, accessible measure of which way it’s moving.

And this number is one that comes up from the people rather than down from elites. For decades, even centuries, news about politics has come from a few established gatekeepers in the press, wizened institutions like the New York Times, CBS, and the Times of London. While that information flow from top to bottom may have been a necessary function given logistical and technological constraints, that does not mean it was free of bias. The views and mores of elites were inherently laden within its reports on politics.

By deriving its information from mass markets, KPOW reversed that flow. It lets ordinary people’s views actually ascend up the waterfall and influence even the views and actions of elites. KPOW is a battering ram against elite gatekeeping.

Think about what this means in practice. If you run a healthcare company watching whether the Affordable Care Act will be strengthened or overturned, the direction of KPOW tells you something important about your regulatory future. If you’re a defense contractor, an energy sector employee, a university student trying to anticipate federal funding decisions, or just a regular person, the balance of power in Washington is not an abstraction. It affects your daily life.

The Consumer Sentiment Index became indispensable because it gave a diverse set of actors, from central bankers to small business owners, a legible signal about a complex system. KPOW has the potential to do the same for politics.

And here’s what excites us most: this is democratizing and demotic. The big hedge fund shops have had this kind of political intelligence for years, spending millions to staff analysts who model exactly what KPOW now captures in a single number. That edge was never available to the small business owner in Ohio trying to figure out whether to sign a five-year lease, or the parent in Arizona wondering whether school choice will be available to her kid trapped in a failing school. KPOW puts the real thing, not a dumbed down version of it, in everyone’s pocket for free.

We are swimming in political information but starving for political clarity. KPOW won’t solve that entirely. But one clean number, built on value rather than vibes, available to everyone rather than just the privileged few, is a heartening development.