Comparing Presidents, Real GDP per Capita and a Look at the Business Cycle as an Explanation for the Performance Discrepancy

I had a post about real gdp per capita. I’m going to repeat that with some updated information and a graph below, but I’m also going to address some of the concerns from our friends on the right.

So, first thing’s first… the data comes from the BEA’s NIPA Table 7.1. Graphically, it looks like this:

A summary of these results:

Now, as noted here, our Republican friends object to this – they feel the results are misleading. They’ve raised several objections… the first was that Congress was to blame. But here I note that growth is faster under Democratic Congresses than under Republican Congresses, no matter what the party has the Presidency. Those results were not satisfactory, so it was decided that the fault lay with lags – the idea being that it takes 8 years of a Republican administration before growth really starts to kick in, and that Republican administrations suffer from following Democratic administrations. This explanation too has a few problems, mostly related to Ronald Reagan. One is that after eight years of Ronald Reagan, another Republican, GHW Bush, had an abysmal performance – worse than any Democrat in the sample. Another is more philosophical… Republicans seem to adore Reagan. To assume that lags are important enough to explain the difference between Democrats and Republicans is to assume that Reagan’s performance is due to Nixon and Ford, or worse, Jimmy Carter. Clearly that would never do. Another explanation is that real growth is an aberration – pick another series and we would see that Republicans in general outperform. But regular readers know that by now I’ve run through a lot of series, and that isn’t happening either.

Which leads to the new explanation… the business cycle. We have to remove the effect of recessions. Even before looking at data, I find this explanation lacking for three reasons. One is that it ignores the fact that all else being equal, an incompetent President will make an economy worse, and a competent one will make the economy better. A good President might be able to shorten negative effects, a bad one would exacerbate the problem. Put another way… the economy could be in a lousy place in the business cycle because the President put it there. Thus, accounting for the business cycle goes some way toward excusing a President’s own incompetence.

The second reason is that Clinton’s lack of a recession is unusual. Democrats suffer from the business cycle too. In Carter’s case, the recession began during his term – he may well have been partly to blame for it. In JFK’s case, the recession was inherited. His actions may have determined in part whether its effects were more or less severe.

The third reason is that this reason strikes me as grasping at straws, after 3 other explanations failed to work. I would note that this explanation was originally put forth by our resident troll, whom we share with Maxspeak, but only recently got taken up by some of our more honest conservative commentators. And I note that in my opinion, we (And Maxspeak) were shortchanged in the troll department. The folks who assign trolls clearly sent us what can only be charitable described as one of the lesser trolls. I doubt he even graduated from troll school, much less achieved certification.

But enough of that. Let’s see what the data says… I got data on the recessions from the official arbiter of recessions, the NBER. But is it enough just to not count recessions? Put another way… if I’m going to pick a measure that is biased toward Republican Presidents, I might as well go all the way. Well, GW and his people like to tell us how well things have gone since about August or September of 2003. That’s seven (maybe seven plus change) quarters since the last recession ended in November 2001. People don’t tend to think in terms of 7 quarters, so I rounded up to 8 – a full 2 years. So… I decided not to count not just the recession, but also the 8 quarters following the recession, in keeping with what the GW administration apparently would suggest.

The table below summarizes the results of this study, and looks at the quarterly growth rate for each of the administrations during periods when the data could be counted. (Note: some administrations appear twice. For instance, consider the Ike administration. The first figure (Ike 1) is for the period before the first recession in Q2 of 1954. The second figure (Ike 2) is for the period after the first recession plus 8 quarters, and before the second recession from Q3 of 1957 to Q2 of 1958).

(Note – the growth rate shown in the table is quarterly, not annual this time around.)

So what does this show? First, even though the Republican sample is more heavily cherry picked (Republican Presidents seem to provide the American public with alot more opportunity to enjoy the pleasures of being in and recovering from recessions), Republican administrations still tend to perform worse. Clinton now looks a bit worse… but that’s because his entire term is now going up against four quarters of the Nixon administration, or 72% of the Reagan administration. And Clinton’s entire term still beats a cherry-picked GW term.

Bringing up the top of the list is JFK/LBJ. But number two is… Jimmy Carter. And the bottom half are all… predictably… Republican administrations.

(I would note… as mentioned many times in the past, real GDP per capita is not really the best measure of performance for growth. Because government spending is a factor in GDP, the government can boost GDP in the short term by pushing up debt. As we’ve seen here, once you account for debt, Democrats take up the three to spots. If you’re wondering why I didn’t do this analysis using that data, its because I can’t find quarterly figures for the debt. If anyone has them, please send them my way.)

Anyway, it really doesn’t seem like taking into account the business cycle is particularly useful for the Republican cause, even doing so in the way intended to favor Republicans the most. And so at least until another excuse is developed and found lacking, we are left with one of the following two conclusions: either Democrats simply have better policies, on the average, or God intervenes to make things go badly in Republican Presidencies.