Comparing Presidents: Rankings of Economic Growth

I’m coming to the end of the series of posts comparing Presidents. There may be a few more… if I can find the data for them. But in the meantime, this one is sure to piss people off. It takes some information from previous macro posts, and summarizes it in a bit of a different way… in an attempt to rank how well the economy as a whole performed under each administration. I intend to do the same in various other areas (e.g., social issues, personal income issues, etc.) in later posts.

Each of the series I’ll use in this post has been used in an earlier post – to avoid repeating myself excessively, I’ll note that the sources of the data are linked to in the earlier posts I’m going to reference, as are graphs of the series themselves. In particular, this post will make reference to are on real GDP per capita, the National Debt, and Real GDP less change in the National Debt per capita (sorry – no graph in this last post, just a table showing the percentage change). Note… unfortunately, I only found data on debt by fiscal year. Thus, while real GDP figures are annual (i.e., the most common way of presenting them), I was forced to use quarterly data (for the last quarter of the fiscal year) for real GDP less debt per capita. Thus, the three series aren’t 100% compatible, but its as good as I could do given the constraints of the data.

OK. So let’s start…

First off… here’s a summary of how each administration did on real GDP per capita (note – it’s a graphical representation of a table that appears in the real GDP per capita post)…

Here’s a table ranking them. Note that I show the “raw rank” and an “adjusted rank.” While Clinton’s growth rate is faster than Reagan’s, they are sufficiently close that I decided to rank Reagan equal to Clinton.

What do we get from this… the three Democratic Presidents are in the top half of the sample… and only one Republican President is. Put another way, 80% of Republican administrations are in the bottom half of the sample, and 100% of the Democratic administrations are in the top half of the sample.

Next, debt. Why debt? Well,
GDP = Consumption + Investment in Capital + Government Spending + Next Exports.

Which means that a President can boost GDP (and hence real GDP per capita) simply by borrowing 3 zillion bucks and spending it. (On a menu of economic policies, that one is known as “The Reagan.”) Should that really count? Well, probably not… its like borrowing money and then counting what you charge on your credit card as income. So in order to come up with a “true” measure of growth, we have to take into account debt… so here’s what the annualized percentage change in debt look like…

Here’s a table…

Clinton did the best job of reducing the size of the debt, followed by Ike and Nixon/Ford. All Democratic Presidents left a smaller debt than they inherited. All Republican Presidents since 1980 have increased the debt. Reagan was the grand champeen, as my grandfather would say. In fact, the annualized in the national debt under Reagan was greater than the sum of annualized decrease under all five administrations that decreased the debt. Fiscal responsibility and small government indeed…

And now, we combine the two…

And a table…

(Here’s where having to use a different period for debt per capita and real GDP less debt per capita than for the real GDP per capita measure becomes obvious. Note that Even though Ike cut the debt, his real GDP less debt per capita is less than his real GDP per capita. This is because of the difference between the annual real GDP per capita used in the first table (i.e., the standard way of looking at real GDP per capita), and the real GDP per capita for the end of the second quarter used in computing the last series, because that’s when the fiscal year ended during Ike’s term.)

So what do we get from this? Well, the economy performed best under Clinton, then JFK/LBJ. Then Carter, and since he’s almost as good, we’ll call Reagan a tie for third. Then Nixon/Ford, with Ike and GW tied for sixth, and GHW bringing up the rear. And in terms of parties, there is no contest… the economy as a whole seems to grow faster under Democrats. Giving Reagan the benefit of the doubt, he’s the only the Republican that does as well as the worst Democratic President. 100% of Democratic administrations in the sample get at least a bronze medal.

And before anything else, lets cover the excuses that come up time and again… Its not that Republicans inherit problems from Democratic administrations –even leaving out the first two years of each administration, growth is quite a bit faster under Democratic Presidents. It’s not control of Congress – growth is faster under Democratic Congresses than under Republican Congresses. It also is not the case that Democrats are elected when times are good and Republicans are elected when times are bad. And lags don’t explain it either. Its not the Fed – among Democratic Presidents, only JFK/LBJ got more favorable monetary policy than Republican Presidents, and Carter and Clinton were treated much more shabbily than Republican administrations.

I think that covers all the excuses I’ve seen before… for growth. I’m not sure what excuses one might come up with to explain away the massive run-up of debt under some Republican Presidents.

What’s left? Well, its possible I made a mistake with the numbers. You’re welcome to check ’em – the original sources of the data for each series are provided in the posts to which I linked above, and as regular readers know, I tend to go the true original source of the data where I can – the BEA for real GDP per capita, the Treasury or the OMB for debt, etc. And if there’s no mistake? Well then…

On the whole, Republicans are either the victims of incredibly bad luck, or lousy economic policy. But either way, they are not the Party of growth. Macro-economic growth seems to be faster when Democrats are in office.

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As an aside… regular readers know I’m thinking of putting this series of posts into a book format. Question… does the above way of summarizing results work in such a format?