Measuring the Economic Performance of the Last Six US Presidents

With the election season now in full swing in the United States, the records and achievements of the current and previous presidents are being scrutinized as never before, particularly in such a transcendent year for US politics.  Moreover, while issues such as immigration, crime and race relations are playing a larger role in this year’s presidential election than in previous elections, the issue that will most likely decide the outcome of this year’s election remains the economy.  In fact, it is the United States’ relatively sluggish recovery from the global financial crisis eight years ago that has added to the tensions in place in the US today.  As such, it seemed like a good idea to go back and measure the economic performance of the United States under the presidents of the past 40 years.  This time frame is interesting as for the past 40 years; the US has had three Democratic presidents and three Republican presidents, with each party holding the presidency for 20 years since 1976.  Of course, a president does not manage the massive US economy alone, but their role in shaping policy and appointing policy makers plays a major role in the direction of the US economy.  So, let’s take a look at 40 years of US economic and presidential history.

The first exercise is simple.  We will measure the average annual rate of economic growth during the terms in office of the last six presidents.  When we measure the performance by this simple calculation, we see why so many people in the US are angry at their country’s political leaders as economic growth rates under the last two presidents (Bush II and Obama) are the lowest of any presidencies since the Truman Administration (1945-1952).  In contrast, the highest rates of growth were recorded under Bill Clinton and Ronald Reagan, and therefore it is little surprise that the Democrats’ nominee this year is the wife of the former, while the Republicans’ nominee is constantly trying to compare himself to the latter.

Of course, it is hardly fair to credit or blame the economic performance of the United States in the first year of a president’s term in office to that president, as they have inherited an economic situation and climate shaped by their predecessor.  For example, it is hardly fair to blame 2009’s recession in the US on President Obama, as the recession was the result of a crisis that erupted during the presidency of George W. Bush.  Therefore, we are also using a +1 Year System to measure economic performances during the terms of the past six presidents.  This moves the economic growth rate during the first year of a president’s term in office to their predecessor’s growth figure, but gives the first year after their term has ended to their own figure.  For example, under the +1 Year System, George W. Bush’s average annual GDP growth figure is derived from the years 2002 to 2009, not 2001 to 2008 when he was in office.  Under this system, we see that economic growth rates under President Obama, while still poor by US historical standards, were better than those of the last two Republican presidents, but still way behind those of Clinton and Reagan.

Measuring the economic performance of the United States during the administrations of the last six presidents is insightful, but so far, we have not taken into account external factors that have had an impact on the US economy during this period.  As such, we now will look at the average rate of economic growth in the United States in comparison to the average global rate of economic growth during the past six presidencies.  Over the past 40 years, the US economy has tended to grow at a slower pace than the global average, due mostly to the fact that large emerging markets have been growing, for the most part, at a very strong pace during this period. 

The only two presidents to record higher-than-the-global-average rates of economic growth were, you guessed it, Clinton and Reagan.  Moreover, the presidents who led the US to the worst economic growth levels were again Presidents Bush II and Obama.  In fact, when we use the more accurate +1 Year System, the performance of the US economy under President Obama has been anemic (with the US economy growing at just 57% of the rate of the global economy), while the performance under George W. Bush (just 41%) was the worst in US history.  It is no wonder that Donald Trump and the Republicans have moved so decisively to distance themselves from the disastrous eight-year Bush II presidency, while derided the economic management of the Obama Administration.

Of course, it is not entirely fair to compare the economic performance of a country as wealthy as the United States to that of much poorer emerging markets.  Therefore, we will now compare the economic performance of the US over the past 40 years with the rest of the world’s advanced economies as this will allow us to measure the US’ economic growth rates against countries facing many of the same challenges as the US.  Unlike its relatively sluggish growth rates compared to the global economy as a whole, the United States economy has managed to record significantly higher rates of economic growth than most other advanced economies over the past 40 years.  By this comparison, the Clinton Administration continues to shine as the US economy outgrew the world’s advanced economies by 26% during his term in office and by nearly 20% using the +1 Year System.  Meanwhile, as poor as the US economic performance has been in recent years, the US economy has grown 36% faster than the world’s advanced economies under President Obama, suggesting that many of the struggles facing the US economy today are due to external factors.  In fact, since the Clinton Administration took office, the US economy has grown by an average 15% faster than the world’s advanced economies as a whole, and this gap has actually widened in recent years.

Looking back at the last 40 years of US presidential and economic history, it is easy to see why there is so much nostalgia for Presidents Reagan and Clinton.  Reagan led the US during a period of strong economic growth (though not much better than that of other developed economies during that period) and positioned the US to win the Cold War, which seemed unlikely when he took office.  Meanwhile, Bill Clinton’s economic record is better than that of any US president since Lyndon Johnson and his presidency appears to have been a high-water mark of US global power.  In contrast, George W Bush’s economic record is worse than that of any president since Herbert Hoover, as not only did the US economy perform relatively poorly during his administration, but the legacy of his administration’s policies continued to have a negative impact on the US economy for many years thereafter.  As a result, it is easy to see why the Democrats will point to Bill Clinton’s economic record as president in this year’s election campaign, while the Republicans will do everything they can to distance themselves from George W Bush and try to position Donald Trump as the modern-day Ronald Reagan.  Moreover, as the campaign moves forward, it is important not to forget the famous words of James Carville.  In this election, as in most others, “it’s the economy, stupid”.