Republicans v. Democrats, Round 2: The Stock Market

This is the second article in a series of three which examines the relative economic performance of Republican and Democratic administrations over the last forty years.  If you haven’t already done so, start with the first article, which compares management of the federal debt––a contest the underdog Democrats won, and not by a small margin.

In this article, we determine which party has been the better steward of economic growth, also from 1977 to 2017.  There are a lot of ways to gauge economic growth, but most are arguable or complicated or both.  (See Notes below.)  For the purpose of this comparison, we’ve chosen yet another simple, agnostic, and numeric yardstick: relative stock-market performance during each party’s administrations.

The three major market indices are the Dow Jones Industrial Average, the Standard and Poor 500 Index, and the Russell 2000 Index.  The markets tend to move together, thus any one would be a fair measure, but, to misquote Goldilocks, “The Dow is too small, and the Russell 2000 is too big, but the S&P 500 is just right.”

Forthwith, the incoming and outgoing S&P 500 indices by Republican and Democratic administration were as follows:

President                  Party          In Office       Opening S&P   Closing S&P    Change

Jimmy Carter            Dem.        1977-1981           101.00            128.40           +27.1%

Ronald Reagan         Rep.          1981-1989           128.40            294.00         +129.0%

Bush I                         Rep.          1989-1993           294.00            441.70           +50.2%

Bill Clinton                Dem.         1993-2001            441.70         1305.75         +195.6%

Bush II                       Rep.          2001-2009          1305.75            805.22            -61.7%

Barack Obama         Dem.         2009-2017            805.22         2329.91         +189.4%

On average, the S&P 500 index increased by 13.6% during the last three Republican administrations.  In comparison, the average S&P 500 index increased by 137.4% during the last three Democratic administrations.

Using the S&P 500 as a benchmark, the last three Democratic administrations beat the last three Republican administrations––by a factor of ten.  

The next time someone tells you that the Republicans are better stewards of the economy than the Democrats, ask them, “By what measure?”

Full disclosure: From February 1, 2017 to February 1, 2018, the S&P 500 index increased from 2329.91 to 2816.45, or 20.9%, but that’s one year on the Trumpian calendar.  The performance of the last three Republican administrations suggests that the index will close at 2648 on February 1, 2021 or 2025, or 225 points below the market peak of 2873 reached on January 26 of this year.  Fortunately, and by that I refer to the value of our fortunes, past isn’t always prologue.


1)  The comparison begins on February 1, 1977, twelve days after Jimmy Carter was inaugurated, and continues through February 1, 2017, twelve days after Barack Obama left office.

It could be argued that the impact of each incoming president’s policies are not reflected in the indices until a year or so after his inauguration, although Donald Trump would disagree.  In this (rare) instance, it is probably fairer to agree with The Donald because: a) market performance anticipates the policies of the incoming administration, and b) the numbers reflect the impact of the president’s policies at different therefore debatable times after his inauguration.  If, however, you feel the need, then by all means change the dates and/or indices and run your own comparison.  It’s unlikely though that the pendulum will swing more than a few degrees, and it may swing in either direction.

2)  The commonest economic metrics we might have chosen but didn’t were pre capita income and gross domestic product (GDP) growth.  Since 1977, per capita income has increased every year except 1991, 2002, and 2009, but the majority of that growth favored the wealthy––which may make it the Republican party’s favorite benchmark (although Republican presidents were in office all three years), but not ours.  The other candidate was GDP growth, but this measure by its nature has a long policy tail.  There’s no reasonable way to approximate the beginning and end points of each administration’s influence, and the length of the tails will vary.

The bottom line is that every measure has its plusses and minuses.  We chose what we chose; choose what you will.

Republicans v. Democrats, Round 3: Jobs

This is the third and final article in a series of three that examine the relative economic performance of Republican and Democratic administrations since the end of the Second Industrial Age.  If you haven’t already done so, read the first and second articles, which compare federal debt and stock-market performance since the proximate end of the Second Industrial Age.  Spoiler alert: the underdog Democrats defeated the overdog Republicans in both instances, and neither outcome was a close call.

In this piece, we attempt to determine which party has been the better “job creator” over the last four decades.  As in the last two comparisons, there are a number of metrics that can be used to measure relative job creation, but the simplest, most widely understood, and least obscured by a growing economy is the unemployment rate.

The incoming and outgoing unemployment rates by administration were as follows:

President                  Party          In Office     Incoming Rate  Exit Rate    Change

Jimmy Carter            Dem.         1977-1981            8.5%             8.0%          -0.5%

Ronald Reagan         Rep.          1981-1989             8.0%             5.6%           -2.4%

Bush the First           Rep.          1989-1993             5.6%             7.8%          +2.2%

Bill Clinton                Dem.        1993-2001              7.8%             4.1%          +2.9%

Bush the Second      Rep.          2001-2009             4.1%              8.6%         +4.5%

Barack Obama         Dem.         2009-2017             8.6%              4.9%          -3.7%

On average, the unemployment rate increased from 5.9% to 7.3% during the last three Republican administrations.  On average, the unemployment rate decreased from 8.3% to 5.7% during the last three Democratic administrations.

Another way to gauge the difference: the unemployment rate increased by an average of 24% during the average Republican administration; it decreased by an average of 32% during the average Democratic administration.

That’s a difference of tens of millions of jobs over the last forty years.

Full disclosure:  From February 2017 to February 2018, US unemployment decreased from 4.9% to 4.4%.  The trend line suggests, however, that the unemployment rate will be materially higher by February of 2021, or maybe The Donald is channeling Ronald Reagan.  We’ll know in a few more years.


(1)  The unemployment data are from Bureau of Labor Statistics.

(2)  The comparison assumes that each incoming president was responsible for the economy from the first February after his inauguration until the first February after his successor’s inauguration, which is why incoming and exit figures are identical.