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News from EPI New report finds that the economy performs better under Democratic presidential administrations

For well over a decade economists and other social scientists have documented a strong advantage in economic performance during Democratic administrations. A new Economic Policy Institute report updates this work to the latest data available and confirms that this Democratic advantage persists. Positive indicators like growth in gross domestic product (GDP), income, and wages are faster, while negative indicators like unemployment, inflation, and interest rates are lower. Further, the fruits of economic growth are distributed substantially more equally under Democratic presidents. 

In particular, the report finds that since 1949: 

  • Annual real GDP growth is 1.2 percentage points faster during Democratic administrations than Republican ones (3.79% versus 2.60%).  
  • Total job growth has averaged 2.5% annually during Democratic administrations, while it is barely over 1% annually during Republican administrations. Applied to today’s total workforce, this would imply nearly 2.4 million more jobs created every year under Democratic administrations.  
  • The Democratic advantage is even larger in private job growth than it is for total job growth. Notably, business investment is higher during Democratic administrations, with investment growth running at more than double the pace than it does during Republican ones. 
  • Average rates of inflation—both overall and “core” measures that exclude volatile food and energy prices—are slightly lower during Democratic administrations. 
  • Families in the bottom 20% of the income distribution experience 188% faster income growth during Democratic administrations.  

The data in this report do not claim to measure the causal effect of partisan White House control on economic performance. The president does not have total control over the economy, and luck and chance can determine economic outcomes. Yet, the Democratic advantage in economic performance by partisan control of the presidency is striking. And given how clear the data are, it is striking that public opinion polling has consistently shown that voters rate Republicans more highly as the party that is better at managing the economy.  

“Economic performance is much stronger when Democrats hold the White House,” said Josh Bivens, EPI chief economist and author of the report. “But it is our sense that the simple facts on real-time economic performance during Democratic and Republican administrations aren’t particularly well known. These facts constitute important information people should have during this time of rampant misinformation.”