Could sputtering U.S. economy torpedo Clinton?

Disappointing data showing the U.S. economy floundered in the second quarter offers ammunition for Donald Trump and the Republican presidential nominee's view of a crippled nation.

Certainly, the Commerce Department's estimate that gross domestic product grew at a mere 1.2 percent annual rate between April and June is not welcome news for the incumbent party. Experts say that such faltering growth, which far undershoot economists forecasts for the period, also makes the economy more vulnerable to external shocks, such as a sudden downturn in China.

The risk for Democratic nominee Hillary Clinton? With the election less than 100 days away, a full-blown economic swoon would buttress her opponent's case that the U.S. is headed in the wrong direction.

Yet other numbers could be even more meaningful in how ballots are cast in November. The U.S. Labor Department reported on Friday that wages and benefits paid to U.S. civilian workers rose at a steady clip in the second quarter, up 2.6 percent on the year.

That might not have workers planning a shopping spree, but wage growth -- a major missing piece of what has been the slowest post-recovery in more than 60 years -- has accelerated of late. With the nation's economic output slowing, pay for average Americans takes on even more importance given that robust consumer spending is critical for keeping the economy from going off the rails.

Still, Gregory Daco, head of U.S. macroeconomics at Oxford Economics, does not believe last week's disappointing growth figure will move the needle much for voters. For now, Oxford -- whose presidential election modeling has correctly called 13 of the last 17 national U.S. elections -- is sticking with its projection that gives Democrat Hillary Clinton a razor-thin edge over her opponent.

That's because the firm's model does not factor in GDP, the broadest measure of economic output, and instead zeros in on only three factors: growth in real disposable income, unemployment and inflation.

By those measures, Clinton remains favored to win. "We look at proxies for how people are feeling in terms of their wages, professional situations and their costs, and that would bode in favor of Hillary," Daco said.

An upward drift in wages, low unemployment and tame inflation means that the cost of living is rising only modestly. If those trends hold, that should benefit the Democrats, he said.

The latest jobs report found the labor market revived in in June, with payrolls expanding the most in eight months, and the unemployment rate at 4.9 percent.

Oxford's index, which is updated monthly, in July found Clinton holding a 1 percent lead in a two-party vote, with Clinton getting 50.5 percent and Trump garnering 49.5 percent.

But there are conditions making the whole prediction business a risky affair. The economic picture in the third quarter is what matters most in terms of the impact on the presidential election, said Daco, who hastens to add: "The big caveat this time around is the Trump factor."

As Oxford put it in its July release: "The model pays no attention to candidates' race, gender or 'likability' -- a factor that seems to have particular importance in 2016 -- nor does it factor in the current anti-establishment electoral mood."

That uncertainty is showing up in the financial markets. Presidential elections have an impact on investor sentiment and consumer confidence, just to name two factors that affect the economy. Markets are often choppy in the months prior to the vote, especially in election years perceived as signaling a major political change, such as in 1980 and 2008.

But such uncertainty leading up to an election can boost financial markets immediately after the outcome becomes known regardless of which party triumphs, according to UBS.