Just yesterday, the political prediction markets gave Mitt Romney an 85 percent chance of winning Saturday's primary in South Carolina. With this morning's news that Rick Perry is dropping out and endorsing Newt Gingrich, Gingrich appears to be consolidating the anyone-but-Romney vote. (This in spite of the fact that Santorum is now the officially winner in Iowa by 34 votes as of today, and has the backing of evangelical Christian leaders.)
At present writing, South Carolina's primary is now a dogfight between Romney at about 60 percent and Gingrich at 40 percent, according to prediction market data. Just three days ago, prior to Monday's Fox debate, Gingrich was below 10%, just above Santorum:
Romney's position has been comfortable so long as Gingrich, Santorum, and Perry have split the non-Romney vote. (More about how Paul fits in momentarily.) His hope was that there would be no consolidation prior to South Carolina, where he will only win with a plurality, if at all.
Perry had no likelihood of winning the South Carolina primary, but he did retain a few percentage points of support that will likely consolidate to Gingrich. Santorum, meanwhile, received no boost from the revised Iowa results that put him 34 points ahead of Romney. In the past the electorate has tended to obsess over the placement of the candidates, regardless of the proportional nature of the delegates. This belated Iowa result may break the mold.
Ron Paul, meanwhile, is really running in parallel to all of this Romney versus anyone-but-Romney drama. His supporters are coming from a different, libertarian and independent wing of the Republican primary electorate who don't appear to readily switch camps.
Even with a win Saturday, there are still major concerns about Gingrich's long-term viability. At the same time that Gingrich is consolidating his South Carolina support, one of his ex-wives is going to be on the air tonight on ABC with a scathing interview about his lack of personal morals. There are also serious electability concerns with Gingrich; our models show him about 10 percentage points less likely to win against Barack Obama than Romney.
After South Carolina, there will functionally be three candidates remaining. Romney and Paul are going to continue regardless of what happens. Gingrich is going to be fine as long as he "places" (i.e., first or second), but will be dead in the water if Paul or Santorum slips him by. Santorum could continue if he "shows" (i.e., first, second, or third), but that is both unlikely and not very viable if Gingrich is ahead of him, given Paul's support.