You probably won’t be surprised to learn the economy has been better under Democrats for 75

At the left-leaning Economic Policy Institute, Josh Bivens took a look at economic performance back to 1949. What did he find? 

“There is a pronounced Democratic advantage in nearly every measure of macroeconomic performance. Positive indicators like growth in gross domestic product, income, jobs, and wages are faster, while negative indicators like unemployment, inflation, and interest rates are lower.”

Bivens also quotes from a 2016 peer-reviewed study in the American Economic Review—Presidents and the US Economy: An Econometric Exploration by Alan S. Blinder and Mark W. Watson:

The US economy has performed better when the president of the United States is a Democrat rather than a Republican, almost regardless of how one measures performance …The superiority of economic performance under Democrats rather than Republicans is nearly ubiquitous: it holds almost regardless of how you define success. By many measures, the performance gap is startlingly large. 

Not only does the economy perform better under Democratic presidents, the gains from economic growth are distributed more equally even when researchers exclude most government safety net and income support payments. Bivens notes that data are so obvious that “it is striking that public opinion polling has consistently shown that voters rate Republicans more highly as the party that is better at managing the economy.”

Indeed striking. And not a little of the blame for this unconformity of data and opinion falls on the mainstream media. 

Better doesn’t mean perfect, of course. It’s not as if there aren’t still gaps in economic well-being. Chronic problems in that realm need serious attention. But if the history Bivens lays out is any guide, it won’t be Republicans who come up with solutions.

As any economist will tell you, Bivens included, presidents don’t have anything close to total control over the economy, and luck plays a role in economic outcomes. But luck can’t be assigned all the credit when the performance record covers three-quarters of a century.

The table below shows the average performance of a range of key macroeconomic variables under Democratic and Republican administrations since 1949, the beginning of Harry Truman’s first elected term. (Scroll inside the table to see the complete thing.)

During Democratic administrations, combined job growth in the public and private sectors has averaged 2.5% a year and just over 1% during Republican administrations. Calculate that based on today’s workforce, and this would mean 2.4 million more jobs created every year when Democrats are president.

Here’s another EPI elaboration from the table:

Real personal income excluding transfers per capita (annual % growth) is a measure of market incomes, excluding the effect on personal incomes of tax changes or public benefits (like Social Security). Again, to the degree that Republican rhetoric reflected actual results, there should be a Republican advantage in generating greater growth in market-driven incomes. Yet again the Democratic advantage is large in this category, with market-driven personal incomes rising at almost double the pace of growth compared with times when Republicans hold the presidency.

Here are two different breakdowns by administration, first from the EPI: 

And from the Bureau of Labor Statistics:

Bivens concludes:

The matching of economic policy decisions and real-time economic performance is far from perfect. Some presidential administrations enact smart policies and run into bad luck, and others enact short-sighted policies and are blessed with good luck. Some might even get the results their policy decisions deserve. One would expect that the large role of chance would (almost by definition) cut uniformly across the partisan composition of presidential administrations. And yet the Democratic advantage in economic performance by partisan control of the presidency is striking.

As Blinder and Watson (2016) note in their abstract, the performance gap between Democratic and Republican administrations is “so large, in fact, that it strains credulity, given how little influence over the economy most economists (or the Constitution, for that matter) assign to the president of the United States.”

All of this seems worth knowing as people make their decisions about which candidates are likely to be better economic managers.

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Those people asserting that the economy was so much better under Donald Trump and is lousy under Biden have some memory lapses, or their partisan stance forbids them from accepting basic facts. On inflation, for instance:

However, while many acute economic problems no longer are problems, some of the chronic ones we’ve still got with us. The housing and homeless crises, for one example. The lack of affordable child care, for another. Economic inequality has narrowed slightly, but it’s still rampant. Not everything associated with these serious chronic situations is economic in nature, but many are. And just as presidents can’t fix every other flaw and failure of the economy, these crises are not theirs alone to address, especially given how laws and rules in local jurisdictions affect them. But national policy matters. Like Blinder and Watson, Bivens shows it’s not hard to figure out who the best person to address those matters is.