I just heard in a poll today that one of the key factors in Trump's favor in this much too close election is that significantly more people have greater confidence in his ability to manage the economy than Harris. In oh so many ways, this is infuriatingly insane. Donald Trump has never shown mastery or even interest in the economy.
Trump's signature economic proposal is to impose a huge tariff on all imported goods. This is universally considered a bad idea by essentially any economist that is not actively on Trump's payroll. It would at least be defensible as a policy except that Trump doesn't even understand what a tariff is. He apparently thinks that the US just kind of sends an invoice to China that they'd have to pay. It is, in fact, as fact checkers have repeatedly described, a tax on the US companies that are importing the goods into the country. The whole point of a tariff is to make the imported goods more expensive, thus, possibly allowing locally produced goods to compete. Note that they are competing at the higher price point created by the tariff. Thus, by definition, it's inflationary. This is such an elemental concept that I can't believe that a presidential candidate claims otherwise. But, of course, this is Donald Trump that we're talking about.
Some time ago, in Biden's first year of office, I wrote a blog exploring the myth that Republicans are better at managing the economy than Democrats. I went all the way back to Reagan and did a comparison on a number of factors. You can click here to read it.
A couple of years later, I've now decided to run the analysis again to accommodate President Biden's more complete term. Last time, I was lazy and did not include links to where I got the data. Therefore, the historical data is a bit different this time because I couldn't resurrect those links. I'm trying to be a bit smarter this time by including the reference links that I used to build the tables in this article.
Seems like the easiest way to compare Democrat to Republican Presidents is to look at GDP growth. After all, a growing economy would seem to be a pretty good indicator of how well it's doing. Here is the annual growth rate per President.
| President | Annual Growth % |
| Bill Clinton | 3.88 |
| Ronald Reagan | 3.48 |
| Joe Biden | 3.43 |
| George H W Bush | 2.24 |
| George W Bush | 2.21 |
| Barack Obama | 1.67 |
| Donald Trump | 1.42 |
Link
The three big winners here are Clinton, Reagan, and Biden. Notice that, despite everyone grumbling about Biden's economic performance, that his annualized growth is right behind Reagan's. Clinton is the clear winner.
And Donald Trump? Dead last. His presidency was the worst performing of the last 44 years.
That's only one measure. Jobs are also important. After all, we're a nation of hard workers that to a great extent identify ourselves through our careers. Therefore, whichever Presidents generate the most jobs must be the better economic Presidents. Let's take a look.
| President | Avg Annual Growth % |
| Joe Biden | 3.31 |
| Bill Clinton | 2.40 |
| Ronald Reagan | 2.06 |
| Barack Obama | 1.04 |
| George H W Bush | 0.61 |
| George W Bush | 0.13 |
| Donald Trump | -0.5 |
Link
Joe Biden jumps to the top of the list! Wow, his presidency has been really bad economically so far, amirite? On the podium with Biden is Clinton and Reagan.
And Donald Trump? Dead last once again! Even better, he somehow managed to be the only President with fewer jobs that when he started. Yeah, let's bring that economy back again. Notice that the bottom three Presidents are all Republicans.
Oh, I know! I bet that the Republicans will win when it comes to legalized gambling. Let's look at stock market returns. I bet that'll be the category where the Democrats socialist agenda will be exposed!
| President | Total Gain % | Avg Annual Gain % |
| Bill Clinton | 229 | 28.6 |
| Barack Obama | 148 | 18.5 |
| Ronald Reagan | 147 | 18.4 |
| Donald Trump | 51 | 12.8 |
| George H W Bush | 41 | 10.3 |
| Joe Biden | 36 | 9.8 |
| George W Bush | -26.5 | -3.3 |
Link
You have to give it to the 90s. For the third straight time, Clinton makes it onto the podium with another first place finish. Obama makes his first appearance finishing second, followed by the Gipper. If it wasn't for Reagan, the Republicans would be really sad.
Here I have to give Trump credit. He manages to not finish in last place this time. He even beats Biden by this metric. The Republicans suffer another embarrassment when George W Bush manages, over an eight year period, to average a negative stock return. I remember those years. They were not great.
OK, things still aren't going well for the Republicans. Let's see if we can shake this up. The Republicans are always going on about how irresponsible the Democrats are when it comes to spending while they are the small government stewards of fiscal responsibility. So, let's take a look at debt. Remember, low numbers are good here.
| President | Total Debt % Increase | Avg Annual Debt Increase % |
| Bill Clinton | 28.6 | 3.6 |
| Joe Biden | 16.7 | 4.2 |
| George H W Bush | 42.3 | 5.4 |
| Barack Obama | 64.4 | 8.0 |
| Donald Trump | 33.1 | 8.3 |
| George W Bush | 72.6 | 9.1 |
| Ronald Reagan | 160.8 | 20.1 |
Link
Well, look at that. Clinton is absolutely dominating these tables, coming in with his third 1st place showing. Biden makes a comeback here by being the second most responsible adult in the presidency. George HW Bush makes the podium for the first time here.
Look at the bottom three. Donald Trump, George W Bush, and here Reagan falls dramatically to last place by a mile. All Republicans. So much for being the sober party of fiscal restraint. For a supposedly small government conservative, Reagan really crushed that last place finish. No one else was even close.
Maybe I'm still not being fair. Perhaps we should measure greater macro trends. Perhaps it'd be better to measure recessions. If our country's entire economy goes negative for at least two quarters, that should be a pretty good indicator of which party is better at not steering our national economy into a ditch, right? Let's see who was our President when any one of our recessions over the last forty years was started.
February / 2020 - Donald Trump
December / 2007 - George W Bush
March / 2001 - George W Bush
July / 1990 - George H W Bush
July / 1981 - Ronald Reagan
Link
Isn't that interesting? Over the last forty years, every single recession started on a Republican's watch. Every single Republican had a recession and not a single Democrat did. If you pull the lens a bit further back, you'll discover that, of the last twelve recessions, going back to 1948, ten of them have been during Republican presidencies. Presidents Carter and Truman each had one. Presidents Biden, Obama, Clinton, Johnson, and Kennedy did not experience a recession. On the other hand, every Republican President going all of the way back to at least Eisenhower experienced at least one.
In fact, if you just look at statistics by party (going all the way back to Truman), Democrats consistently outperform Republicans.
| Variable | Democrats | Republicans | Difference | P-value |
| Real GDP growth | 4.33% | 2.54% | 1.79 pp | 0.01 |
| Job creation rate % | 2.59% | 1.17% | 1.42 pp | 0.02 |
| Unemployment rate % | 5.64% | 6.01% | 0.38 pp | 0.62 |
| Unemployment rate change | -0.83 pp | +1.09 pp | 1.92 pp | 0.01 |
| Inflation rate (GDP deflator) | 2.89% | 3.44% | 0.55 pp | 0.59 |
| Budget deficit % potential GDP | 2.09% | 2.78% | 0.69 pp | 0.30 |
| Stock market S&P 500 annual return | 8.35% | 2.70% | 5.65 pp | 0.15 |
Link
So, what does all of this mean? Shockingly enough, I'm not saying that Republican Presidents are bad at managing the economy. I am saying that we need to stop the narrative that somehow Democrats are bad at it. The data just doesn't reflect that. There are much larger global trends going on that are beyond a President's ability to control (eg global pandemic, dot com market crash).
Having said that, it is interesting, and probably not shocking, that the party that professes to hold government in contempt, that supposedly wants to shrink it so small that it can be drowned in a bathtub, and that seems to be manifestly suspicious of intellectual competence and expertise would prove to be possibly not up to the task of managing an immense and complex 21 trillion dollar economy.
Considering the fact that Donald Trump had a recession, finished in last place in two categories, never finished higher than fourth, and that Joe Biden outperformed him in nearly every category and had zero recessions, can we please all stop thinking that Trump is some economic savior?
Please?
Just sayin'
No comments:
Post a Comment