Does the U.S. Economy Really Do Better Under Republican Presidential Rule?

March 13, 2025

The pivotal voter perception that returned Donald Trump to the White House in the 2024 election was the perception that Republicans do a better job of handling the economy than the Democrats. Beginning with a posting during the Obama-McCain presidential campaign of 2008, this website has examined this question numerous times by looking at several vital signs such as employment and GDP growth, consumer price inflation, the value of the dollar, and stock market performance. Comparisons were made going back to 1961, and the verdict by a significant and consistent margin was that the U.S. economy actually performed better on balance when the White House occupant was from the Democratic Party.

Given the Republican Party’s reputation for being business-friendly, it’s perhaps understandable why a discrepancy would emerge between voter perception and what recorded data depict. In last year’s election, moreover, memory was still strong of the very sharp spike in inflation during President Biden’s first two years, and the U.S. economy when Trump was president the first time was remembered as a period at least prior to Covid when the United States experienced decent growth with stable and low inflation. Actually, as this comparatively recent article attests, the average economic and job growth pace in the Biden years was significantly faster than when Trump was president.

In giving Republican economic management the benefit of the doubt, it’s less credible that a persistent majority of voters overlook what happened in previous GOP administrations during the postwar era.

The Eisenhower administration ended with a recession that began in April 1960 and extended to February 1961, two months into the Kennedy administration.
Under Richard Nixon’s appointed Federal Reserve Chairman, Arthur Burns, monetary authorities maintained a pro-growth accommodative stance with an interest rate often below inflation. Nixon went on to win a second term but quickly became ensnared in the Watergate scandal. Both his Vice President and he ultimately resigned, the only president/VP duo to do so, but not before the economy fell into what at the time was the severest postwar recession.
That downturn began in November 1973 — nine months after the second dollar devaluation in 14 months and eventual abandonment of fixed dollar parties. The recession would last sixteen months including the first seven months of Gerald Ford’s presidency.
Upon taking office, Ford unveiled the WIN campaign — Whip Inflation Now. He got flat-footed by the intensifying recession and quickly reversed priorities to address elevated unemployment.
Ronald Reagan inherited double-digit inflation, but the real hero of the war to restore price stability in America was Paul Volcker, a Carter appointee. Reaganomics, governed by the novel supply-side theory of economics, didn’t pull America out of recession until November 1983 and was associated with a sharp increase in the federal deficit, a loss of manufacturing jobs, and a widening wealth disparity between the economic classes.
Under Reagan’s Republican successor, George H. W. Bush, inflation rose and was followed by a recession between July 1990 and March 1991 for which he paid the political price of not getting reelected in 1992.
George Bush’s two-term presidency featured recessions at both the front and back ends, first between March and November of 2001, and the big bopper “Great Recession” at the end that began with a banking sector meltdown that had a potential to eclipse the Great Depression and ran from December 2007 to June 2009.
Not to be undone by Bush43, Trump45 was literally stopped in its tracks by the Covid19 pandemic. Trump’s first term was the only postwar presidency that ended with fewer American jobs than at its start.

Obama inherited an extraordinarily weak economy. For six straight months starting one month after he was elected, the Labor Department announced a job loss of at least 700k, and U.S. share prices were seemingly in freefall. But steps were hastily taken by the new administration to save the banking system and restore investor confidence. And here is the odd finding when one compares the earliest part of the Obama Adminstration with what has occurred during the earliest weeks of the Trump47 Administration.

U.S. GDP had expanded in real inflation-adjusted terms by 6.1% in 2021, 2.5% in 2022, 2.9% in 2023 and 2.8% last year. There was lots of forward momentum when voters chose the candidate of change last November 5. Yet, between inauguration day on January 20th and closing levels today, the S&P 500, DOW Jones Industrials and Nasdaq fell by 7.8%, 6.1% and 11.9%. By comparison, between January 20th and March 13 in 2009 the comparable span during Obama’s stewardship, those three summary indices dropped 6.0%, 9.1% and 0.6%, respectively. Only the DOW in this span suffered a bigger drop in 2009 than this time. Handed much better cards than what Obama had to work with, Trump’s results at least up to this point have been distinctly poorer than Obama was able to secure.

To be fair, there’s a whole lot of time for Trump47’s record to be redeemed. Of equal interest, one wonders if the Republican Party will retain its reputation for being the better handler of the economy.

Tags: U.S. economic performance

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on Thursday, March 13th, 2025 at 6:55 pm and is filed under Larry’s Blog.
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