The U.S. Presidents and the Economy?

The U.S. has a new president. Hopes are for a better economy. The U.S. presidents could affect the lives of millions, some for better and some for worse. The question is how do they affect the average. The affect the macro-economy primarily via their tax policies because taxes, whether on labor income or capital, affect productivity, labor supply and capital accumulation. Most economists agree that taxes have real effects. Other policies such as the spending on infrastructure, defense, the environment, health, education, R&D and social policies can also have some effect on growth and income per capita. However, there is no consensus about the empirical size of the average effects of these policies. The president's policy effects on growth may take a much longer time than the time he spends in office. These policies also change, and expected to change, from one president to another. A tax reduction today may well mean a tax increase tomorrow.  

Here are the average growth rates of real GDP and real GDP per capita for the periods of the presidencies of Carter, Reagan, Bush I, Clinton, Bush II, and Obama. GDP may not be a perfect measure of well being, but that is the only measure available today. These growth rates did not vary across presidents significantly, except for the Obama presidency. For him, the growth rates are relatively lower than the rest and lower than the overall averages from 1977 to 2015. However, the Obama presidency coincided with the global financial crisis and the Great Recession from October 2007 to April 2009. The U.S. economy also experienced recessions during Bush I and Bush II presidencies. For Bush I, there was a recession from October 1989 to January 1991. For Bush II, there was a short recession from January 2001 to July 2001. In these three presidencies, the growth rates were relatively lower. However, there is no evidence that presidents Bush I, II, and Obama caused these recessions just as there is no evidence that Carter, Reagan, and Clinton caused the expansions.The people were equally better off during the Reagan and Clinton eras even though they are two different presidents with very different policies. 

Average of Annual Real GDP and Real GDP per Capita Growth Rates (%)

		GDP		GDP per Capita		Std.
Carter	1977-1981		3.2		2.2	2.5
Reagan	1981-1989		3.5		2.6	2.6
Bush I	1989-1993		2.3		1.1	1.8
Clinton	1993-2001		3.9		2.6	0.8
Bush II	2001-2009		2.1		1.2	1.3
Obama*	2009-2016		1.5		0.4	1.9

Std. is the standard deviation. These are almost the same for both growth rates.

Asterisk: data are up to2015.

Red color denotes growth below the overall average and periods included recessions.

The data source is the Federal Reserve Bank of St. Louis.