The conventional wisdom about the U.S. economy happens to be dead wrong | Opinion
Conventional wisdom refers to the generally accepted opinion or judgment about a particular topic of conversation. These opinions can be true or false but the fact that they are so widely assumed to be true lends an air of credibility to them. For decades, conventional wisdom says that the United States’ economy always does better under a Republican president than under a Democratic one.
The history and data for decades proves that nothing can be further from the truth. Since WWII, regardless of what metric is used, the economy performs demonstrably better under Democratic presidents. I researched Bureau of Labor Statistics and scholarly articles by two economists Alan Binder and Mark Watson published in 2016 titled Presidents and the U.S. Economy: an Econometric Exploration.
Since 1933, the Gross Domestic Product (GDP) has increased by 4.6% under Democratic president and 2.4% under Republicans. The average American income would be more than double its current level if we had had only Democratic presidents for the last nine decades.
Beginning with Truman, the seven Democratic presidents have created 70.5 million jobs while the six Republican presidents created only 29.1 million jobs.
The Democratic presidents were in office a total of 429 months with an average of 164,000 jobs added per month. The Republican presidents were in office a total of 475 months and added an average of 61,000 jobs per month. Job growth under Democrats was 2.4 faster than under Republicans.
Ten of the eleven recessions between 1953 and 2020 began under Republican presidents. Every Republican president since Benjamin Harrison has had a recession during his first term.
Binder and Watson determined that the unemployment rates fell by an average of 0.8% under Democrats but rose by an average of 1.1% under Republicans. The unemployment rate has been lower at the end of every Democratic presidents’ term since Kennedy in 1961. That was true only for Reagan since Eisenhower terms.
These economists also determined that since 1945 the average inflation rates were higher under Republicans. They found that the federal budget deficits were smaller under Democrats at 2.1% potential GDP while 2.8% potential GDP under Republicans.
Since 1981, the federal budget deficits were higher under Reagan, both Bushes and Trump, while deficits decreased under Clinton and Obama. During Clinton’s second term, the nation had a surplus for the first time since 1969.
The stock market returns are also higher under Democrats than under Republicans. According to the Standard and Poor 500 average increased by 11.2% under Democrat president compared to 6.9% under Republican presidents.
IN 2021, Bloomberg News reported that the Democratic presidents held seven of the top ten highest S and P 500 in the first year of a Democrat president. Joe Biden ranked first with a 37.4% return.
Since 1945, the corporate earnings per share grew 12.8% under Democrat but only 1.8% for Republicans.
I can continue to produce data that supports the claim that the economy does substantially better under Democratic presidents, but why bother?
Given these facts, how do Republicans ever win any races. Simple. They exploit hot button social issues such as abortion, LGBTQ rights, perceived loss of moral values, in society, abandonment of religious beliefs, perceived decline in national defense against threats, and imagined threats associated with increased civil rights for minorities. None of these has anything to do with the economy, but they do evoke passionate, though totally fictitious, fears.
The Republican party today appeals to voters by exploiting fear in various forms. By loudly focusing on these fears, they misdirect the people attention away from the harsh reality of the failure of their policies on improving economic growth for all people, while rewarding the ultra-rich who donate huge sums of money to safeguard their strangle hold on their elected positions.
Roger Guffey is a retired math teachers in Fayette County.