Wednesday, November 16, 2022

Does the Economy Perform Worse Under Republicans? (Part 2)

Click here to read the original Cautious Optimism Facebook post with comments

4 MIN READ - Another round of partisan economics from the Cautious Optimism Correspondent for Economic Affairs and Other Egghead Stuff.

As we mentioned in the Economics Correspondent’s previous column, now that midterm elections are over and the Republicans appear to have gained control of the House of Representatives, legislative battles and gridlock between GOP leadership and the Senate and Biden White House are probably inevitable.

Also without doubt we'll see an escalation of partisan rhetoric about the two major parties’ economic track records from all directions, including this old classic that the Economics Correspondent has seen in various forms more times than he can count:

“The economy traditionally performs better under Democratic presidents.”

“Bush, Bush Jr, and Trump all gave us recessions while Clinton, Obama, and Biden had to come in and clean up the mess.”

The Economics Correspondent addressed the similar “fiscal deficits and debt are worse under Republican presidents” soundbites at:

Of course these sorts of generalizations about overall economic performance, posted frequently by liberal and Democratic-leaning commenters, are always short on details and usually ignore inconvenient data like (for example) the Ronald Reagan 1980’s was fastest decade of real GDP and per-capita GDP growth in the last half-century.

But the much greater oversight, once again, is the exclusive focus on presidents and complete disregard for Congress—you know, the branch of government where tax policy, government spending, borrowing, and regulations all originate—as if Capitol Hill has no role whatsoever in the economy.

So just as we uncovered in Part 1 on deficits and debt, a closer look at economic performance by Congressional party control also reveals why Democrats never, ever mention Congress.


If we go back to 1980 and compile the average percent change in real GDP under Democratic vs Republican presidents, those liberal/detail-deficient one-liners are confirmed: the economy has performed slightly better under Democratic presidents – attributable to George H. W. Bush presiding over a recession, George W. Bush presiding over two recessions, and Donald Trump presiding over the Covid recession:

Republican presidents: 24 years, average real GDP growth +2.47%

Democratic presidents: 18 years, average real GDP growth +2.91%

Conclusion: Democratic presidential GDP growth rates have averaged 17.8% higher than Republican ones.

(Source data at end of column: St. Louis Federal Reserve and U.S. Bureau of Economic Analysis)

But once again Democrats never mention the economy’s performance when Republicans or Democrats control Congress. And for good reason.

According to the Senate Joint Economic Committee (which only measures from 1987 to 2016) not only do Republican Congresses outperform Democratic ones, but by a much wider margin.

Republican control of Congress: 12 years, average real GDP growth +3.48%

Democratic control of Congress: 12 years, average real GDP growth +2.06%

Split control of Congress: 6 years, average real GDP growth +1.75%

Conclusion: Republican Congress real GDP growth rates have averaged 68.9% higher than Democratic ones.

(See attached chart, source at end of column)

Prior to 1987 Congressional control was split, and after 2016 Republicans enjoyed control for two years (2017-2018), Democrats for two (2021 and 2022 so far), and the remaining two have also been split (2019-2020).

Factoring in this handful of additional years to fully cover 1980-2022 the Economics Correspondent calculates the gap narrows slightly with Republican Congresses outperforming Democratic ones +3.35% to +2.19%, or 53% stronger.

And what about unemployment?

That’s one we don’t hear about as much, because the unemployment rate under Democratic presidents isn’t that much different from Republican ones. Going back again to 1980:

Republican presidents: 24 years, average unemployment rate: 6.16%

Democratic presidents: 18 years, average unemployment rate: 6.13%

But once again, the unemployment rate is far lower under Republican controlled Congresses.

Republican control of Congress: 16 years, average unemployment rate: 4.93% (i.e. full employment)

Democratic control of Congress: 14 years, average unemployment rate: 6.31% (i.e. recession level)

Split control of Congress: 12 years, average unemployment rate: 7.58%

(Source data at end of column: St Louis Federal Reserve and Bureau of Labor Statistics)


In the Economics Correspondent's personal experience those who argue “the economy is better under Democratic presidents” once again instantly discover the need to discuss nuance and detail when confronted with the logical counter: “the economy fares far better under Republican Congresses.”

The Economics Correspondent has frequently seen rapid pivots to “well that's only because” backdoors like “Well Democratic Congresses had to clean up a recession that Bush Sr. and Bush Jr. left them. That’s why GDP growth and unemployment aren’t that great for Democrats."

But as always, “the other party left us with” argument can be applied both ways.

For example: “Ronald Reagan had to clean up the mess Jimmy Carter and literally 26 years of total Democratic Congressional control left him.”

Or “George W Bush and the Republican Congress had to clean up the recession Bill Clinton left behind as he departed office.”

Or using their same logic, even: “The Republican Congress had to clean up the 2008 Financial Crisis and Great Recession that began under a Democratically controlled Congress.”

But just as the Economics Correspondent explained in his Part 1 column, Democratic-leaning/liberal/socialist commenter meme bombs about Republican presidents overseeing inferior economic growth are virtually always absent any specifics, details, and of course mention of Congress.

It's only when confronted with a retort about economic growth being far superior under Republican Congresses that they suddenly claim the circumstances are more complex than soundbites and insist multiple factors need to be analyzed more closely.

Unfortunate that they’re not willing to disclose things are a little more complicated in the real world until the conversation turns against the first narrative.
(from the Economics Correspondent) Source data:

1) Real GDP growth by year: St. Louis Federal Reserve and U.S. Bureau of Economic Analysis

2) Real GDP growth by Congressional party control: U.S. Senate Joint Economic Committee

3) Unemployment rate by year: St. Louis Federal Reserve and Bureau of Labor Statistics

4) Party division/control of Congress by year.

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