A glimpse into the past reveals some interesting starting points for (still more!) debate over who makes a better president in times of economic turmoil: a Republican or a Democrat.
Last week’s final debate between President Barack Obama and his Republican Party challenger, former Massachusetts Governor Mitt Romney, although ostensibly devoted to foreign policy, developed an uncanny ability to drift back into the domain of domestic affairs and specifically the economy. That’s because both candidates appear convinced – and probably rightly so – that the vast majority of voters will be casting their ballots next week based on who they believe has a better chance of steering the nation into calmer economic waters and creating more growth and more jobs.
The latest economic data don’t provide much assistance to those still trying to make up their minds. On the one hand, the unemployment rate did dip in September to only 7.8%; on the other, the number of long-term unemployed remains very high and the United States economy is taking an unprecedented amount of time to replace the jobs lost during the financial crisis and its aftermath. In the president’s favor is the fact that the first estimates of third-quarter GDP put the growth rate at 2%, a significant improvement over the 1.3% pace recorded during the second quarter. But excluding government spending produces what is known as the gross private product – and that actually contracted slightly, growing at a rate of only 1.6% annual rate, down from 1.7% in the second quarter and from an average of 4.4% in the two quarters before that.
So, does history offer any guide as to whether the economy is in safer hands with a Democrat or a Republican in the White House? That’s the question we tried to address in this week’s Chart of the Week, which looks at the unemployment rate and the rate of inflation during Republican and Democratic Party administrations.
Refresh Chart Edit Chart
Under the Kennedy/Johnson administration, and later, under that of President Bill Clinton, unemployment showed declines and hitting a trough close to the end of their occupancy of the White House. A similar decline is visible in the case of the Obama administration, although both the start and end points are significantly higher. The Nixon era and the presidencies of Bush father and son were all characterized by periods of rising unemployment, although in the case of Nixon and of Bush, Jr., there were “wild cards” that help explain that: the Vietnam War, the end of the dot.com boom, the 9/11 terrorist attacks and the wars in Iraq and Afghanistan, as well as the financial crisis. The Reagan years, however, saw an initial spike in unemployment, followed quickly by a sharp decline.
Inflation seems to have been less of a political hot potato in recent decades than it was back in the 1970s and early 1980s, when it proved an intractable problem for both Republican (Nixon and Ford) administrations and for that of Democrat Jimmy Carter.
This week’s two-pronged Chart of the Week may offer more food for debate and thought than it does clear answers. Given the number of variables that affect the U.S. economy, and the fact that today’s economy is a vastly different animal than that of the 1970s, 1980s or even 1990s (given the changes wrought by technology and globalization), the data may prove an interesting jumping off point for prognosticators interested in discussing what happens next, especially in light of the U.S. jobs market report for October, scheduled for release at the end of this week. It may end up proving to be the case, as Reuters BreakingViews suggested in this analysis, that these data points shape the election’s outcome, rather than any views of the lessons of history.
