Some interesting presimetrics

I did some interesting "Presimetrics" yesterday - the study of the economy under various presidential administrations and the title of a book written by Mike Kimel. Since I prefer to use Real GDP per Capita as a measurement for economic success and failure (a decline in annual Real GDP per Capita being my definition of a recession) I decided to check up on how the post-war presidents have performed. I don't know if Mike Kimel did this in his book (which I have sitting in a box in my garage) so please excuse me if I have discovered something that Mike has already pointed out.

My study started with the desire to measure economic performance under Obama against GW Bush. Of course the problem with such comparisons is that Obama has not been in office for as long as Bush had been, so I had to measure according to how many quarters each president had served and divide economic performance by those quarters. The result was very interesting - Real GDP per capita under Obama has grown by 0.29% per quarter while under GW Bush it grew by a paltry 0.19%. Encouraged by this interesting result (Newsflash: Economy growing faster under Obama than Bush!) I decided to go back and compare everyone since Eisenhower. This is the result:

By way of methodology, I access the data on Real GDP, then divided that number by the population at the end of each quarter (with 2011 population data being mid-monthly) to get a Real GDP per capita figure. I then measured the change in Real GDP per Capita from the first quarter of the president's first term in office against the final quarter of his final term in office. For Johnson and Ford, I measured the first quarter in office as the quarter they became president, which means that Kennedy's and Nixon's last quarter in office was followed by the quarter in which they ceased to be president. Once I measured the change in Real GDP per Capita as a percentage, I then divided it by how many quarters the president spent in office. So what do we find?

Obama - 0.29%
Too early to tell but there has certainly been a growth in Real GDP per Capita faster than Bush II. I am predicting another recession, so I expect this number to drop over time. Moreover Obama's result has the statistical advantage of an economic trough being followed by a recovery.

Bush II - 0.19%
His presidency was bookmarked by recessions and there is no doubt that the 2008 credit crisis affected his result badly. A quick check of the spreadsheet tells me that up until 2007 Q4, Bush's performance was 0.38% per quarter.

Clinton - 0.71%
Do we miss the 90s yet? In hindsight economic growth during Clinton's time in office was based upon the unsustainable dot-com bubble. if we measure Clinton's performance to 1994 Q4 (the quarter before the bubble began to expand), growth was lower at 0.56% which is, however, a reasonably good result.

Bush I - 0.18%
GHW Bush's result suffers from a recession at the middle and end of his single term, but even if we factor that out his performance from 1989 Q1 to 1990 Q2 the result is 0.31%. I'm wondering if GHW's figures suffer from a bust from the Reagan years (though some conservatives would argue that his "read my lips, no new taxes" taxes killed it)

Reagan - 0.62%
From memory, studies into Real GDP show that Reagan's years weren't that good. Per Capita, though, the results are worth talking about. Yet while Clinton's higher growth came at the expense of a sharemarket bubble, Reagan's growth came at the expense of the public debt. In essence, Reagan borrowed against the future to boost the present. Now that the present is Reagan's future, I would argue that we are reaping now what Reagan and congress sowed back in the 1980s. Also, let's not forget Paul Volcker - killing inflation really did stabilise the economy in the 80s.

Carter - 0.47%
Malaise never had it so good. The further into the future we get the more we realise that Carter's presidency was better than what was believed. "History's greatest monster" he was not. 0.47% growth was certainly not as good as other periods in postwar history (and certainly not as good as Reagan) but is certainly better than both Bushes, Ford and Nixon.

Ford - 0.42%
Not a great sample size admittedly (10 quarters, or 2½ years) so we could probably add this onto Nixon. Certainly not a great number compared to previous years but better than recent times.

Nixon - 0.44%
What happened here? Nixon inherited some of the strongest growth on record and managed to halve it. Two recessions (1970 and 1974) damaged it severely. We also shouldn't forget the first oil crisis as well. Barring any further evidence of economic stupidity, I don't think Nixon is responsible for such low growth in this period.

Johnson - 1.00%
The postwar US economy grew fastest on a per capita basis under Johnson. This was aided by two wars - the war in Vietnam and the war on poverty. While military expenditure created a demand for labour, conscription created a shortage of it. At the same time wealth was redistributed via poverty reducing policies and the creation of Medicare. And this was done without a huge increase in public debt.

Kennedy - 0.97%
Obviously the Johnson growth had its basis in Kennedy's 11 terms in office, though Vietnam was not as prominent in calculations here. We also need to factor in the effects of substantially better transport infrastructure, thanks to Eisenhower.

Eisenhower - 0.14%
This has to be one of the most interesting results of all. It is generally believed that the 50s saw an economic boom but what we see here is something different. Under Eisenhower, real GDP grew from $2.3484 to $2.8002 trillion, a total growth of 19.24%. But per capita figures divide this by population. Under Eisenhower, population grew from 159 million to 182 million, a total growth of 14.24%. So while the economy undoubtedly grew, the sheer number of baby boomers born in that period reduced GDP per capita something severe and thus skews the figures.

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