Presidential economics: Do parties matter?

[Lasher]

Democrats have a clear edge on GDP growth: 4.4% vs. 2.6%. Even if you start the clock with Truman in 1949 (eliminating the war boom and immediate postwar bust), the Dem advantage survives, with average growth of 4.5%. The partisan difference is widespread, too, not dependent on a few strong or weak readings: the blue bars stack towards the top of the graph, and the red bars towards the bottom. It might surprise some readers to learn that the Carter years weren’t quite as bad as some remember—though the inflation performance was miserable.



With only few exceptions, Republican administrations have presided over increases in unemployment, and Democrats over declines. On average, the jobless rate has risen by 1.0 points under the GOP, and fallen by 1.9 points under Dems (–1.3 points if you start in 1949). The only exceptions to the partisan pattern were Reagan (–2.1), the Roosevelt–Truman joint term (+3.2), and Carter (no change).



Though the picture so far is of the Republicans as the party of austerity and the Democrats as the party of stimulus, there’s a surprise when it comes to changes in the federal deficit: Republicans are more liberal with the red ink than Dems. On average, a Republican in the White House has meant a shift of –1.9% of GDP in the government’s budget balance (i.e., towards smaller surpluses or bigger deficits), while a Dem has meant a 1.5% improvement in the budget position (or 1.8%, if you start in 1949, thereby omitting the huge World War II deficit). And in this case, the average is a faithful representation of the distribution, with only one Democrat in the minus column and only one Republican in the plus.



The blue years have an edge on stock returns, with the S&P 500 rising an average of 4.7% a year in real terms (price only, excluding dividends, deflated by the CPI) under Democratic administrations, compared with 2.9% under Republicans. (Starting the clock in 1949 raises the Dem average to 6.9%.) Still, there are some red bars towards the top of the heap and blue bars toward the bottom.

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