Politicians rarely agree on much and some of the most heated debates in politics center on economic policy. There are nearly as many differing views on which policies grow or hurt an economy as there are politicians. This made us wonder if we could actually measure, in a broad sense, the effects various economic policies might have had on the overall economy.
To address this question we compiled and analyzed some statistics on several broad economic indicators. Our goal was to create a long-term view of the economy, using the indicators most economist bring up when discussing how good (or bad) things are going. The indicators we used were unemployment rate, job creation, gross domestic product (GDP) growth, inflation, and debt. This would allow us put actual numbers to common questions such as, “What was really happening?” and “How did we get that way?”
The Bureau of Labor Statistics and the Bureau of Economic analysis have been compiling economic data for decades, and whenever possible we took the data directly from their websites. For data on the national debt, our source is the St. Louis Federal Reserve. The data we used measures economic growth since World War II, although data from the depression have also been included when possible. (Source websites are available on each graph.)
In general, the data is presented chronologically based on presidential terms. There are two reasons for this. First, there is a lot of variation in numbers from quarter to quarter and month to month, but most policy changes operate on longer economic horizons than that—a bad month generally affects only short-term investors, but two bad years makes most people question their economic security. A four-year term will give a pretty good indication of the soundness of a policy and certainly averages out most of the short term fluctuations that occur in any economy.
Second, there is perhaps no single person who receives more popular credit (good and bad) for how our economy performs than the President of the United States. Thus we often hear of “Reaganomics”, the “Carter Inflation”, the “Bush Tax Cuts”, and so on. This is not completely unreasonable since the president has much more power than anyone else, and probably more even than the entire legislative branch to set economic policy and priorities. So this method of presenting data allows us to ask whether the president really is in control of the economic outcome, and if so, how.
Note that for these purposes Kennedy/Johnson and Nixon/Ford were combined, since Johnson finished Kennedy’s first term and Ford finished Nixon’s second term. For this analysis, we assumed Ford and Johnson continued the economic policies of their predecessors.