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Biden’s Economic Edge

Summary:
Contrary to widespread belief, post-war Democratic US presidents have been significantly better for the American economy than Republicans have. There is every reason to believe that trend will continue if Joe Biden wins on November 3. CAMBRIDGE – In a few days, Americans will choose a president. Opinion polling suggests that voters favor former Vice President Joe Biden when it comes to social policy, foreign policy, the environment, and managing the pandemic, not to mention personal character. But until recently, some polls indicated that on the economy, voters favored President Donald Trump. The Everlasting Mao PS OnPoint Tao Zhang/Getty Images

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Contrary to widespread belief, post-war Democratic US presidents have been significantly better for the American economy than Republicans have. There is every reason to believe that trend will continue if Joe Biden wins on November 3.

CAMBRIDGE – In a few days, Americans will choose a president. Opinion polling suggests that voters favor former Vice President Joe Biden when it comes to social policy, foreign policy, the environment, and managing the pandemic, not to mention personal character. But until recently, some polls indicated that on the economy, voters favored President Donald Trump.

The general impression that the US economy does better under Republicans than Democrats is long-standing. But the facts do not support it.

In the 16 complete presidential terms since World War II, from Harry Truman through Barack Obama, annual GDP growth averaged 4.3% under Democratic presidents, versus 2.5% under Republicans. Trump’s presidency has pulled down the Republican score further. In fact, average annual growth during his term to date has actually been negative.

The necessary qualifier in such comparisons is that the president is only one of many influences on the economy. Luck also plays a big role. One might choose to exclude 2020 from Trump’s record, for example, on the grounds that the coronavirus was just bad luck. But even the pre-pandemic increases in GDP, employment, and the stock market under Trump merely continued trends that he inherited from Obama.

Moreover, one cannot absolve Trump of responsibility for mismanaging the pandemic. His only “plan” remains to predict that the virus will disappear within a few weeks. He has aggressively undermined the measures urged by experts, such as mask-wearing and mass testing, which would have better protected both public health and the economy.

In any case, the difference in average economic performance between Democratic and Republican administrations is statistically significant – that is, not attributable to pure chance.

Jeffrey Frankel
Jeffrey Frankel, a professor at Harvard University's Kennedy School of Government, previously served as a member of President Bill Clinton’s Council of Economic Advisers. He directs the Program in International Finance and Macroeconomics at the US National Bureau of Economic Research, where he is a member of the Business Cycle Dating Committee, the official US arbiter of recession and recovery.

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