Inheritance, Growth Rates and Recession

This post looks at the annual growth in real GDP through the quarter before a President took office, the quarter he took office, etc., through the fourth quarter of the year he took office.

Basically, I want to get at two points. First, while the data seems to show that the economy grows faster when the President is a Democrat, the improvement doesn’t happen over night. Second, in the comments to several posts, it was mentioned that Republicans leave behind well functioning economies, and Democrats generally leave behind lousy economies. This post should also show that this isn’t case either.

And before we start, a caveat… I recognize I should be looking at real GDP per capita. But I’m in a hurry, the BEA’s NIPA Table 1.1.1 calculates the annualized percentage change in real GDP per capita for us… so I’m going to take a short cut.

Here’s a graph…

How do you read this? The first bar for each year shows the annualized growth rate for the quarter ending in the December before the President took office. The second bar shows the annualized growth rate for the quarter after that, the quarter the President took office. And so forth.


The annualized growth rate for Q4 of 1952, the quarter before Ike took office, was 13.8% For the Q1 of 1953, it was 7.7%. In Q2 of 1953, it was 3.1%, and then -2.4% and -6.2% in Q3 and Q4 of 1953.

And a bit more info… This is data on recessions from the NBER:

So what do we conclude? Right before Ike took office, the economy was zipping along. It was still zipping along when he took office. A bit less zippy, but 7.7% a year is damn good. About six months later, there was a recession. Maybe its not Ike’s fault, but would you blame it on Truman?

JFK, on the other hand, inherited a recession. It was on when he was elected, and ran for a month into his presidency. Six months later, the economy was humming along at over 6% a year. Maybe JFK was lucky, but was this Ike’s doing?

LBJ’s last quarter was kinda mediocre – a growth rate of 1.7%. Nixon’s first quarter had a growth rate of 6.5%. Things had picked up… but only temporarily… by the end of the year, there was a recession. Is this LBJ’s recession?

Ford’s last quarter had an annual growth rate of 2.9%. Growth was pretty good most of the following year, but by the end of 1976, it was 0%. Who gets credit for the rapid growth? And slowdown? (It was a brief slowdown – 1978 Q2 had a scorching 16.7% growth rate.)

Carter’s last quarter… a pretty good 7.6% per year. Reagan’s first quarter… 8.4% a year. Seems like things were humming. And then… a 16 month recession. Shall we blame Carter?

Reagan’s last quarter… growth in real GDP per capita was 5.4% a year. GHW’s first quarter saw 4.1% a year, and it continued to decline from there. The economy was slowing when GHW took office, but enough for us to blame Reagan for the continued slow decline?

GHW’s last quarter had a growth rate of 4.5%, Clinton’s first was 0.5%. From then on it started to rise, hitting 5.5% by the end of the year. The economy was slowing when Clinton took office… should we attribute the growth by the end of the year to GHW?

Clinton’s last quarter in office had a growth rate of 2.1% a year. A recession began in March. The economy was slowing when GW took office… but enough for there to be a recession, or was the recession Clinton’s fault?

Have at it… but make sure your story line is consistent. If something works to put the blame on President X, it better also work to put the blame on President Y for an equivalent set of circumstances.