A Vox reader asks: There is a perception in the United States that Republicans do a better job supervising the economy, but is this true in fact?
Throughout the 2024 election, polls showed voters believed President-elect Donald Trump would be better for the economy than President Joe Biden or Vice President Kamala Harris. That sentiment often repeats in many election cycles because Americans tend to think Republicans are better at handling the economy than Democrats. In 2012, for example, polls showed that voters trusted Mitt Romney more on the economy than Barack Obama.
There are a lot of reasons why voters would think this. Republicans have a long history of branding themselves as the pro-business party that will cut taxes and eliminate red tape. Meanwhile, Democrats run on strengthening regulations, and even though those can be popular proposals (like, say, raising the minimum wage), voters get concerned that those policies will hinder business.
But there’s a disconnect between how voters feel about Republicans’ management of the economy and the historical record. Since World War II, there’s been a consistent pattern of the economy faring better under Democratic presidents than Republican ones. More jobs have been created under Democrats, for example, who also saw higher rates of GDP growth. And economic downturns tend to happen under Republicans: Ten of the last 11 recessions started under a Republican administration.
What do the numbers say?
First things first: The economy has expanded more under Democrats than Republicans. Since 1945, Democratic presidents oversaw, on average, 4.1 percent annual GDP growth, whereas Republican administrations had an average GDP growth rate of 2.5 percent, according to CFRA Research, an investment research firm.
When it comes to job creation, both Biden and Harris highlighted Trump’s poor record: During his first term, the United States lost more jobs than it had gained — the worst jobs record of any president in modern history. In Trump’s defense, the Covid pandemic, a once-in-a-century kind of event, is the reason so many jobs were gone by the time he left office. But while Trump can point to Covid as the reason for his bad performance, the truth is that Republicans still have a significantly worse jobs record than Democrats.
Going back to President Harry Truman, Democrats have added more than twice the amount of jobs as Republicans (70.5 million jobs under Democrats compared to 29.1 million under Republicans), according to the Washington Post.
Even the stock market — which, it should be noted, does not always reflect the actual health of the economy — has performed better under Democratic leadership. According to CFRA Research, the S&P 500 saw an average annual gain of 11.2 percent under Democrats and 6.9 percent under Republicans since 1945.
Inflation is a more complicated story: According to the American Economic Association, the inflation rates were, on average, lower under Democrats than Republicans from 1945 to 2016. But while that might make it seem like Democrats have a better record, researchers found that inflation rises under Democrats and falls under Republicans. More than that, two presidents are now remembered for unusually high inflationary periods: Biden and Jimmy Carter, both Democrats.
Are the numbers just a coincidence?
You might think it’s hard to argue with numbers. When you look at the past 80 years, it’s clear that the economy has performed better when Democrats are in the White House. But the reality is that it’s difficult to pinpoint exactly why that is.
“Even those of us who believe that Democrats may have pursued better policies than Republicans, overall, have a hard time explaining the big observed gap in performance,” writes Jeffrey Frankel, a professor at the Harvard Kennedy School who served on President Bill Clinton’s Council of Economic Advisers. “After all, many other powerful and unpredictable factors impact the economy, often dwarfing the effect of any policy levers that the president can control.”
Other experts agree. Economists Alan Blinder and Mark Watson, who dug into economic performance under different presidents, found that the reason the economy has done better during Democratic tenures has less to do with specific fiscal or monetary policies and more to do with factors that presidents have little control over, including oil shocks, consumer sentiments, and the global economic environment.
That doesn’t mean that economic policies don’t matter. But policies sometimes take years to have an impact and their effects might only be felt well beyond a specific presidency. And when expansions or recessions happen, it’s difficult to pinpoint exactly what went right (or wrong) and when.
But when it comes to the numbers, the verdict is clear. And back in 2004, even Trump agreed: “It just seems that the economy does better under the Democrats than the Republicans,” he said.
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