Comparing Presidents – Real GDP per Capita, late 2009 edition
Every so often I find I have to rewrite a post about how well Presidents have done at producing economic growth. See, over time, we get new readers, and some of the, based on what I read in comments or in e-mails I get sent, don’t seem to have much knowledge of what actually happened. There’s a lot of what Stephen Colbert refers to as truthiness, or what Fox refers to as “facts.” Interestingly enough, folks who write this sort of $&^ seem to feel it is important to lecture everyone else on the evils of being ignorant about economic history.
So to do my part to help reduce the incidence of people being ignorant about economic history, below you’ll find a graph below shows the annualized growth rate in real GDP per capita for every President going back to 1929. Before I put up the graph, some housekeeping notes:
1. I’m only going back to 1929 because 1929 is the first year for which data is available. Blame Simon Kuznets for not getting started sooner if it bothers you.
2. The methodology used is simple – I’m looking at the annualized change in the real GDP per capita from the last full year before a President took office to his last full year in office. Think of it this way – the last full year before he took office is what the economy looked like before he showed up. His last full year in office is the last point at which his policies are affecting the economy without someone else being in a position to start undoing or changing those policies. Reagan and GW both cut taxes their first year in office; Clinton raised taxes in his first year in office.
3. A few Presidents didn’t make it through their entire terms. I’m going to call the “last full year” the year President died (or resigned) in the second half of the year. Alternatively, if the President died (or resigned) in the first half of the year, I’m going to call the calendar year before that happened his last full year. Thus – FDR is measured from 1932 to 1944, JFK from 1960 to 1963, and Nixon from 1968 to 1973.
4. If you think lags matter, wait a bit. I’ll write that post next. If you think other things matter, wait a bit… and I’ll get to that too as time permits.
5. All the data for the post comes from line 10 of the BEA’s National Income and Product Accounts Table 7.1.. I like to get things straight from the horse’s mouth, not from the Heritage Foundation.
6. I’ve also included all the data plus the analysis itself in this nifty google spreadsheet.
7. The graph below is a variation of one that appears in my book coming out next year. Of course, in the book the graphs are done by a first rate professional – Nigel Holmes. What you see below are my own best efforts in Excel. There is a difference.
OK. Chega de lero lero (“enough yadda yadda”) as they used to say in Brazil. Here’s what it looks like, sorted from fastest growth to slowest:
I can comment, but there isn’t much point. Since I’ve had this post before (maybe three times), I know the first reaction from certain quarters – “the data ain’t right.” After all, this isn’t exactly what the WSJ is peddling or the National Review are peddling these days. To which I respond – I’ve provided links to the data. Do it yourself. Or follow along with the google spreadsheet. I don’t care.
The next argument tends to focus around FDR. All other insults the graph seems to imply pale by comparison with the idea that the economy grew so quickly under FDR. Heck, I remember my own introductory macro prof back in college telling us how FDR destroyed the American economy. And there are plenty of college profs today who seem to be making a living stating that today – this dude who teaches at my old alma mater being a prime example.
What you’re likely to get from people like that is something along these lines: “FDR was making a hash out of things, but when World War 2 started, the economy picked up.” There’s usually something about communism or socialism thrown in to boot.
And that’s fine excuse. It sounds good. And while talk is cheap, to be honest, these days so is checking data. Since the folks who peddle the line about the commie bastard taking America apart brick by brick until we wuz all saved by the Japanese attack on Pearl Harbor don’t put up the data, I’ll do it. In fact, I’ll do better than that. I’m going to measure the growth rate from 1932 (the year before FDR took office) to 1938. That was not just before the War, it was before Lend-Lease, before the Destroyers for Bases agreement, and before just about any American preparation for the war whatsoever.
Furthermore, outside of the depression, the ’37-’38 recession was the worst economic problem between 1929 and the start of World War 2. In fact, real GDP per capita declined from 1937 to 1938, and real GDP per capita was about the same in 1938 as it was in 1936.
So 1938 accomplishes two goals, a) it avoids the influence the war and b) is about the best year you can pick as an “ending” to FDR’s administration if your want to make FDR look bad. And for giggles, let’s leave out Hoover altogether. Here’s what it looks like:
There isn’t much to say about this graph except that it clearly isn’t part of the Gospel According to Amity Shlaes. But it is more than enough heresy for one night, so I’m shutting down. But on my way out the door, let me just share one thought, for those who think this somehow can be reconciled with a “Republicans know what they’re doing when it comes to the economy” story-line: if just about every data point is a special case, your model sucks.