Backgrounder: The Truth About Growth
by John Gaski, Ph.D.
A perennial, or at least quadrennial, staple of Democratic Party argumentation is the claim that economic-growth rates under Democratic presidents outpace those under Republican presidents. Recently, Hillary Clinton resurrected this familiar mantra. But a closer look at the numbers tells a different story.
Every president’s economic record benefits (or suffers) from the economic conditions he inherits from his predecessor. Moreover, an outgoing administration’s final fiscal year doesn’t end until Oct. 1 of the successor’s first calendar year. So, rather than computing the average economic growth rate under a given president or party across calendar years of presidential terms, a more accurate measure would impose a one- or two-year time lag — preferably two years, because of the inevitable interval between fiscal-year policies and their economic effects.
The two-year lagged period would begin three months after the end of a new president’s first full fiscal year. For example, George W. Bush left office in January 2009; Barack Obama’s first fiscal year ran from October 2009 through Sept. 30, 2010; and the first full calendar year following the latter president’s economic-policy implementation period was 2011.
Using this more realistic framework, a picture emerges that contradicts Democratic claims of superiority. In fact, rather than better GDP growth during Democratic presidencies, we find the opposite — a slight advantage (3.2 percent real growth versus 3.13 percent) for Republicans, based on data from 1947 through 2015. This difference isn’t statistically significant, but it does undermine long-running claims that Democratic presidents deliver stronger economic growth.
Don’t believe me? You can “look it up,” as Casey Stengel once said.
Try the website of the federal Bureau of Economic Analysis. I have a table that provides the raw growth numbers going back to the early Truman administration. It shows that even with the two-year lag President Obama’s growth rate is anemic, just over 2 percent, which lags the averages for presidents of both parties since 1947.
Perhaps Republicans should stop referring to a weak recovery and start describing our current economic conditions as long-term stagnation.
John Gaski, Ph.D., an adjunct scholar of the Indiana Policy Review, is associate professor in the Mendoza College of Business, Notre Dame University. He wrote this for the March 30, 2016, issue of City Journal.