Research shows that the economy does better under Democratic than Republican presidents.
Bespoke Investment Group researched political control and the stock market from 1926-2023 and found that the S&P 500 index rose most when there was a Democratic president with a split Congress, followed by a Democratic president with a Republican Congress.
Research from Blinder and Watson of Princeton University similarly concluded that, using any major economic indicator, since 1933, the economy grew faster with a Democratic president regardless of congressional control.
Possible explanations for the Democratic success are:
- Democrats are pragmatic and apply past successes but are also willing to try new approaches if old ones fail. Consequently, Democrats have been much more responsive to crises than Republicans. Franklin D. Roosevelt, Barack Obama and Joe Biden are presidents who faced imminent crises and took bold actions in response.
- Democrats favor policies that improve the well-being of a broad swath of the population, especially the middle class. Biden often says that when the middle class does better, so do the rich and poor. Republicans limit themselves mostly to tax cuts and deregulation, which tends to shift income towards the already-wealthy. Michael Strain, a Republican economist, said “… in periods of economic distress, Democrats are more concerned about jobs than Republicans.” Donald Trump is the first president since Herbert Hoover to lose jobs, mainly because of unwillingness to be proactive during the covid crisis.
The pace of the post-pandemic economic recovery and inflation is a worldwide problem. All economic indicators show that the U.S. is heading in the right direction and is currently the world’s strongest economy. We avoided the long recession that other countries experienced, and inflation is steadily dropping.
But lower inflation, the rate at which prices rise, has not actually lowered prices. We remember pre-pandemic prices and cringe at today’s bills for groceries and gas. Unfortunately, most prices will never return to pre-pandemic levels because a handful of companies control nearly every level of the food chain and can reap enormous profits from steadily raising prices.
Such greedonomics, more commonly known as price gouging, is why people think the economy is not doing well. Prices are set by corporations and retailers, not the president. Many companies exploited Covid-era supply-chain disruptions and Russia’s invasion of Ukraine to raise their prices and increase their profit. AI has generated new algorithms that companies use to test whether they can raise prices without losing too many sales. Exploiting consumers for profit is not new but what is new are the many tools now available to companies.
Evelyn Gallegos
Brighton
