(This column originally appeared in The Hill)
With presidential elections looming, the question is, who has been historically better for the economy — Republicans or Democrats? For that answer, let’s take a look at Gross Domestic Product and inflation. We’ll use government data going back to 1969, when Richard Nixon took office.
Under the eight years of the Nixon/Ford administration, the economy grew by 100 percent with an average inflation rate of 6.3 percent. Under Ronald Reagan and George H.W. Bush’s three terms, GDP rose 115 percent, with inflation at an average of 4.3 percent. George W. Bush’s eight years saw a 38 percent increase in GDP, with an average 2.7 percent inflation rate. Donald Trump’s four years as president saw GDP increasing 17 percent and inflation averaging 1.9 percent.
How did the Democrats do?
The economy grew 57 percent under Jimmy Carter, with an 8.9 percent average inflation rate. Under Bill Clinton’s eight years, the economy grew 56 percent and inflation was 2.6 percent on average. Barack Obama’s administration saw an economic increase of 34 percent with an average of just 1.4 percent during his two terms. In three years, President Biden has overseen economic growth of 25 percent with inflation on average at 5.6 percent.
Here are the takeaways: In the 32 years that Republican presidents have held office since 1969, the average economic growth was 8.4 percent and average inflation was 4.75 percent. Under the 23 years of Democratic administrations, the economy grew on average 7.5 percent and inflation averaged 8 percent.
So a Republican president is better for the economy, right?
Maybe. Maybe not so much. A good economist can easily argue that there is more to these numbers.
For example, the GDP numbers that I’m using above are in real dollars and don’t reflect inflation, which factored significantly during some of these periods. This is why I’m also taking inflation into consideration separately, rather than baking it in, so we keep things apples-to-apples.
There’s no argument that the huge GDP growth we saw in the 1970s and 1980s had a lot to do with inflation, both under Republican and Democratic administrations. But even during the Reagan/Bush growth period at 115 percent, GDP was at 26.7 times inflation, which was still better than Clinton’s 21.5.
Many argue, rightfully, that an administration’s policies can only affect so much in such a giant economy. Industry trends, technologies, banking crises, dot-com boom/busts, scientific discoveries, foreign trade, emerging markets, population movements and other demographic factors have more of an impact on a country’s economy than rules and regulations coming from Washington.
There are other “acts of God” factors as well — weather, pandemics, wars, oil price shocks, supply chain disruptions — that impact GDP and inflation. But this is the same for all presidents, and you can argue that each had their own benefits and challenges.
Finally, you can say that there are a lot of important metrics that I’m not considering — for example, both parties have equally contributed to the explosion in federal deficits and debts. They’ve competed with each other over who could spend the most, although spending was generally higher under Democratic administrations. But which party has created more jobs over the past 55 years? Or created more capital? Or overseen more of a rise in wealth? Or cut taxes the most? GDP and inflation aren’t the only considerations when comparing the economic achievements of Republican and Democratic presidents.
So who’s better for your business, a Republican or Democratic president? The answer to this question, like all complicated questions, is: it depends.
It depends on your business, your location, your industry. It depends on regulations that affect you, good or bad. It also depends on how good you are running your business, because I know many leaders who have prospered even during hard economic times.
That said, using just GDP and inflation as factors, you can conclude that a Republican president would be better overall for the economy. Whether or not that impacts your vote in November remains to be seen.
