U.S. Economy Does Better Under Republicans or Democrats?

Conservatives (Republicans) often claim that their policies are good for the middle class. In “Presidents and U.S. Economy: An Econometric Exploration (PDF)”, authors Alan Blinder and Mark Watson compare the economic records of Republican and Democratic Presidential administrations focusing on the period after WW2. They find GDP tends to grow faster under Democratic presidents (avg. 4.33% p.a.) than Republican presidents (avg. 2.54% p.a.).

Some others have compared other areas impacted by Republican or Democratic presidents:

       i.          Inequality

         The middle and working class increasingly fall behind the richest Americans. Income growth  is faster and more equal under Democratic presidents and the chart below (by Harry Bartels) suggests this effect is driven by market conditioning and redistribution:

      ii.          Unemployment

     Possibly the single largest question for Americans is jobs. Douglas Hibbs finds that “unemployment rate was driven downward by Democratic administrations and upward by Republicans”. Bryan Dettrey and Harvey D. Palmer find “economic growth under Republican presidents has a stronger effect on stimulating stock market performance, while economic growth under Democratic presidents has a stronger effect on reducing unemployment”.

    iii.          Taxes

        In a recent book, “Welfare for the Wealthy”, Christopher Faricy shows that the rise of tax subsidies has effect on increasing inequality.

            Democrats favour tax credits while Republicans favour tax deductions which benefit the rich.

    iv.          Race

         People of colour make up an increasingly large share in middle and working class. Zoltan Hajnal and Jeremy Horowitz found that under Democratic presidents black poverty declined by 38.6% while it grew by 3% under Republicans.

The results of a broad range of studies are clear – progressive policies are better for economic growth, equitability, reducing unemployment and poverty. The arguments that conservative policies are beneficial to the working class are difficult to match-up with research done to date.

References

1. Tim Hyde, Why Does The Economy Do Better When Democrats Are In The White House?

2. Sean McElwee, These Five Charts Show The Economy Does Better Under Democratic Presidents