Do Republican Presidents have Better Economic Records?

Republicans often get the nod for being better with the economy. For example, a recent Pew Research Poll of registered voters found that 49 percent of voters trusted Republicans to handle the economy better, while 40 percent trusted Democrats. This post seeks to answer a simple question — is this perception true when it comes to the presidency? Do Republican presidents have better economies?

To answer the question, I looked at a variety of measures. These included measures of economic performance, like Gross Domestic Product or the change in the unemployment rate. I also looked at some areas of criticism for Democrats — that their policies lead to debt and inflation. Then, I looked at President Trump’s favorite measure of performance — the stock market. Finally, because this blog is about inequality, I examined how a measure of inequality did under Republican presidents and Democrats.

The results are presented in all their glory below, but let me summarize it for you. If you are going to vote for a Republican presidential candidate based on their economic performance, think again. The perception that Republican presidents get better economic performance is wrong. Across most of the measures I will present, if anything, Republicans do worse. And you don’t have to believe me. Every measure I looked at came from here or here. Go have a look for yourself. Or, just trust me and read on.

Republican Presidents vs. Democrats: GDP & Unemployment

Probably the two most commonly used metrics of economic performance are GDP growth and unemployment. GDP measures the total output of the economy. Unemployment measures the share of workers who want a job, but don’t have one. To analyze how the various presidents did along these metrics, I analyzed performance from January of the first year of a term to January of the last year of the term. The exception is President Trump, whose measurement I stopped in January 2020, before COVID-19 struck. Presidents with two terms get two observations, and I analyzed all presidents from Jimmy Carter and on.

The figure below shows the results for annual GDP growth. The red bars are Republican presidents and the blue bars are Democrats. The figure clearly shows that during Democratic presidencies, GDP grows faster — 3.0 percent per year vs. 2.3 percent for Republican presidents. And if you think, “well, I bet Trump beat Obama,” then you are wrong. Both of Obama’s terms compare favorably to Trump’s before COVID.

Figure 1. Annual Growth in Real GDP since Jimmy Carter

Note: Growth rate is calculated as the logged difference between the beginning and end of term values, divided by 4 years. Source: Federal Reserve Economic Data. Data Series: Real Gross Domestic Product, Billions of Chained 2012 Dollars, Quarterly, Seasonally Adjusted Annual Rate.

The story is similar for the unemployment rate. Republican presidents saw an increase in the unemployment rate of about 0.4 percentage points during their terms. Democrats saw a decrease of about 1.2 percentage points. During Republican presidencies, unemployment has gone up on average, during Democratic Presidencies it has gone down.

OK, so that’s not great for Republicans. Well, Democrats must spend way too much money right? And that must lead to hyper inflation…right? Yeah, about that…

Republican Presidents vs. Democrats: Debt and Inflation

When we talk about national debt, the most important metric is probably the debt-to-GDP ratio. The idea is simple — if our nation produces a lot of output, then debt isn’t such a problem. Today, the ratio is quite high due to COVID-19 spending, sitting at 1.35. This fact means that the government has 1.35 times as much debt as the nation produces in output…not great. But don’t worry, I didn’t count this against President Trump…again, I stopped measuring his performance in January.

The graph below shows the annual rate of growth in the debt-to-GDP ratio. If you were expecting to see Republicans outperform Democrats on this metric, then you will be surprised. The average Republican saw an annual increase in this metric of 4.6 percent. Democrats had a lower number, at 0.4 percent. So, having a Republican president does nothing to slow the accumulation of debt.

Figure 2. Annual Growth in the Debt-to-GDP Ratio since Jimmy Carter

Note: Growth rate is calculated as the logged difference between the beginning and end of term values, divided by 4 years. Source: Federal Reserve Economic Data. Data Series: Total Public Debt as Percent of Gross Domestic Product, Percent of GDP, Quarterly, Seasonally Adjusted.

On the inflation front, things do look a bit better for Republicans. During their presidencies, inflation increased by about 3.2 percent on average and during Democratic presidencies by 3.7 percent. Hardly hyper inflation, but a win for Republicans. A lot of that difference is driven by Jimmy Carter’s historically bad 9.9 percent…more than twice any other president during this time period. But, fair is fair. It’s 3 to 1 in favor of the Dems.

Let’s turn now to our current President’s favorite measure of economic performance the stock market. Why he loves it so much is beyond me, since only about half of Americans report they actually own any stock. But, to be honest, I don’t completely understand that man’s preferences. Surely, Republicans do better by this metric. And, surely, Donald Trump beats out Barack Obama. Well, they seriously don’t…and don’t call me Shirly.

Republican Presidents vs. Democrats: The Stock Market

To look at the stock market under various presidents, I turned to the Wilshire 5000, the broadest measure of stock market performance available. For some reason it contains 3,473 actively traded stocks, not 5,000. Look, I didn’t name it.

The figure below shows annual growth in the index during the presidential terms in question. And, it shows that Democratic presidents see better performance during their terms than Republican presidents.

Figure 3. Annual Growth in the Inflation-adjusted Wilshire 5000 Index since Jimmy Carter

Note: Growth rate is calculated as the logged difference between the beginning and end of term values, divided by 4 years. Source: Federal Reserve Economic Data. Data Series: Wilshire 5000 Total Market Full Cap Index, Index, Quarterly, Not Seasonally Adjusted.

It also seems to be a common belief that Trump’s presidency before COVID was one of incredible stock market growth. And, it had actually been pretty good. But, if you are one of those people thinking you’ve never seen your 401(k) grow like this, then you are either 3 years old or wrong. So, Democrats are up 4 to 1 heading to the home stretch — looking at inequality.

Republican Presidents vs. Democrats: Inequality

To measure inequality, I turned to a metric that I’ve used frequently in this blog — growth in median household income. And, I’m going to be pretty real with you — on this front both parties’ presidents look pretty bad. But, if you are keeping score — and I am — Democrats win. Since Jimmy Carter, Democratic presidents have seen growth in median household income of 0.6 percent per year. For Republican presidents, it has been 0.3 percent per year. Both very low and both much lower than growth in GDP. C’mon America, do better!

Figure 4. Annual Growth in Real Median Household Income since Jimmy Carter

Note: Growth rate is calculated as the logged difference between the beginning and end of term values, divided by 4 years. Source: U.S. Census Bureau.

In this figure, you can actually see the one thing that President Obama and Trump have in common — overseeing some reasonable growth in median household income. Obama’s second term and Trump’s current term (importantly, pre-COVID) both saw increases in line with GDP.

Scoreboard

The scoreboard for this little exercise is below, and it shows Democrats beating Republican presidents by a score of 5 to 1.

Note: All numbers in this table are described above. Aside from the change in unemployment, all numbers represent annual growth rates. The change in unemployment is the difference in unemployment from beginning to the end of the term.

So, if your plan is to vote for Donald Trump because Republican presidents are good for the economy, you need to think again. The evidence suggests the opposite. If you usually vote with your wallet, then it might be time to change parties.

5 Comments

  1. Hi Geoff, I would not vote for president on the basis of how the economy has done in the past under Republicans or Democrats. While this is an interesting study, I do not see it relevant to the choice we face today. For me the choice is clear, Trump all the way, not even a question. Biden’s health is uncertain, I oppose the socialist policies of the Democrats and Trump has accomplished so much I see no reason to vote him from office. I should say I did not vote for him in the last election because his temperament turned me off, but I have gotten used to his quirks.

    By the way, your parents are awesome and Arlo is not so bad either.

    Chris Hahn

  2. Thank you for putting this information in such an easy to understand and concise format. All of you posts have been very informative and I enjoy reading them.

  3. One more comment and a question …… it takes time for a new president’s policies to have any impact on the metrics, there is somewhat of a lag, right? is there a way to reflect this in the analysis ….. not asking you to do this again as there was a lot of work put into the study. And if you could account for the lag would you think the outcome would be any different?

    Chris

    1. Hi Chris,

      Agree on my parents and Arlo! The lag point is a good one, and I am not sure how much of a difference it would make. George W. Bush’s presidency is a good example. He had a recession at the beginning, which with a lag could be attributed to Clinton. But, he also had a big recession at the end, which would be still attributed to George W. Bush under a reasonable lag. Trump is another example. In this analysis, I am attributing good income and GDP growth to him…under a lagged approach it might go to Obama. My guess is that it would be a wash — sometimes the lags would make a Republican look better and sometimes the Democrat.

      My goal here (as always) is just to be clear about what analysis I did and where I got the data, so that the reader can think about whether they agree. In any case, I think my broader point is that there seems to be a persistent perception that one party handles the economy better, and that a quick look at the data doesn’t support that view.

      Thanks for reading!

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