By Matt Lampert | Excerpted from the August 2015 Socionomist
In an October 2012 study, socionomist Matt Lampert (et al) found that the political party of a sitting president has had zero effect on the US stock market. Here, Lampert considers the relationship between the party in power and economic growth over the past 140 years.
His conclusion is the same: The political party in power has had no effect on the U.S. economy.
Read an excerpt below.
Candidates on both sides of the aisle of American politics are gearing up for the 2016 presidential election. Prepare to hear impassioned arguments from Democrats and Republicans alike about why their party’s proposals will be better for the economy. Republicans will remind us that GDP grew nearly twice as much per year on average under George W. Bush than it did during the current president’s first term. Democrats will tell us that average annual real GDP growth has been less than 4% for each of the past eleven Republican presidential terms, whereas it has exceeded 4% for six of the past eleven Democrat terms. With more than a century-and-a-half of data available, partisans can find bits of history that shine favorably on whichever party they choose to support. But when we study all of the data, we find that stark disparities in economic performance under the two parties evaporate, and the small differences that remain fail to hold up to additional scrutiny.
In a 2013 paper, Professors Alan S. Blinder and Mark W. Watson of Princeton University investigated the difference in average annual real GDP growth under Republican and Democrat presidents. They found that since 1947, the economy grew an average of 1.81% more per year when the president was a Democrat. Interestingly, Blinder and Watson found that the economic performance gap narrowed between the two parties when they extended their study back to 1875.
We knew that more data existed and wanted to see what would happen if we included it in a comparable analysis. We used a data series compiled by Louis Johnston, professor of economics with a chair in public policy at the College of St. Benedict and St. John’s University, and Samuel H. Williamson, professor emeritus of economics at Miami University, which allowed us to extend the study back to the election of 1856, the first year that Democrats and Republicans competed against each other in presidential politics. …
Read the rest of this brief article for the results of Lampert’s study. Learn how social mood — not politicians or policymakers — regulates society’s drive to innovate, grow and prosper.
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