News / Economy

    Which US Political Party is Better for the Economy?

    FILE - Traders work on the floor at the New York Stock Exchange in New York, July 8, 2015.
    FILE - Traders work on the floor at the New York Stock Exchange in New York, July 8, 2015.
    Jim Randle

    Many U.S. voters are worried about the economy and job preservation, but a researcher who examined the performance of stocks and bonds in Democratic and Republican presidential administrations asserts that neither side has a monopoly on economic wisdom. 

    Republican Donald Trump is a leading contender in the race to become his party's nominee for president. The flamboyant billionaire tells voters his business skills make him best qualified to boost the economy.

    "We need a leader that wrote The Art of the Deal,” said Trump, referencing his 1987 book. “We need a leader that can bring back our jobs, can bring back our manufacturing."

    Stock market

    Financial expert Robert Johnson said the U.S. stock market does far better, though, when Democrats hold the White House than when Republicans are in charge.

    "Under Democrats, the S&P 500 from 1965 through 2008 returned 14.61 percent, and under Republicans, returned only 7.73 percent," he said.

    Johnson, who is president and CEO of The American College of Financial Services in Bryn Mawr, Pennsylvania, said data in later years show very similar results. Johnson worked with researchers at several schools to examine what link, if any, existed between the party in power and market results.

    The results related to the stock market might encourage Hillary Clinton, a leading candidate for the Democratic Party's presidential nomination.

    Policies by Democrats kept the nation from lapsing into recession, "saved the auto industry, provided health care to 16 million working people, and replaced the jobs we lost," Clinton said, pledging to strengthen and continue such policies.

    Bond market

    But Johnson said the corporate bond market, which is very large, does far better under Republicans than Democrats.

    "Bonds do much better under Republican presidents than under Democratic presidents," he said. "Corporate bonds returned on average 10.75 percent. Under Democrats, corporate bonds only returned 3.52 percent so there was over a 7 percent difference."

    Johnson cautioned that looking at just one factor to measure the very large and complex U.S. economy is simplistic. The professor said that whatever correlations there are between the party in power and the performance of different markets does not prove that one event caused the other.

    This seems particularly true since one indicator does better under one party and the other expands under the rival group.

    Economic growth

    A 2014 study by Alan Blinder and Mark Watson shows that since World War II, economic growth has been consistently higher under Democrats than Republicans.

    When the Princeton University economists examined the kinds of economic changes that can be controlled, or at least influenced, by presidents — like tax cuts or military spending — they concluded that these factors did not explain the differences in growth.

    They found that things that can't be controlled by a president — like sharp changes in oil prices or advances in technology that boost productivity — seem more relevant in explaining the differences in economic growth between presidents.

    The pair concludes that it makes little sense to give credit or blame to a leader who has little control over these economic changes.

    Looking at other economic data produces mixed results.

    Unemployment, inflation

    The unemployment rate soared under Republicans Richard Nixon, Gerald Ford, and both George Bushes. It also rose, and then fell, under Democrat Barack Obama and declined in the administration of Democrat Bill Clinton. 

    Inflation soared during the administrations of Republicans Nixon and Ford, and rose even higher under Democrat Jimmy Carter. Inflation dropped while Republicans Ronald Reagan and George W. Bush were in the White House, and fell low enough to spark worries about deflation under Obama.

    As a general economic policy prescription, many Republicans say cutting taxes, government spending and regulations help businesses expand, and that boosts economic growth. Meanwhile, Democrats often argue for an increase in the minimum wage and seek other protections for workers and limits on the power of business. 

    The authors of The Third Way, a book that discusses the intersection of politics and economics, say Washington politicians have "missed the point" on economic issues.

    Upendra Chivukula, a Democrat, and Veny Musum, a Republican, say a struggling middle class and growing income inequality are key reasons that voters are worried about the economy.

    They contend that advancing technology is making the economy more and more dependent on capital goods, which are generally owned by the wealthiest segment of the population.

    Chivukula and Musum argue that public policies that give the middle class more access to capital could boost growth and ease political tensions. They say laws that encourage employee ownership of companies also would help.

    You May Like

    Video Democrats Clinton, Kaine Offer 'Very Different Vision' Than Trump

    In a jab at Trump, Clinton says her team wants to 'build bridges, not walls'; Obama Hails Kaine's record; Trump calls Kaine a 'job-killer'

    Turkey Wants Pakistan to Close Down institutions, Businesses Linked to Gulen

    Thousands of Pakistani students are enrolled in Gulen's commercial network of around two dozen institutions operating in Pakistan for over two decades

    AU Passport A Work in Progress

    Who will get the passport and what the benefits are still need to be worked out

    This forum has been closed.
    Comment Sorting
    by: Your Name
    February 04, 2016 8:03 AM
    Yeah, whatever. Just so I can make you run around in "Verify Proof" circles that waste your time and pay my bills.

    Featured Videos

    Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
    In State of Emergency, Turkey’s Erdogan Focuses on Spiritual Movementi
    July 22, 2016 11:49 AM
    The state of emergency that Turkish President Recep Tayyip Erdogan has declared is giving him even more power to expand a purge that has seen an estimated 60,000 people either arrested or suspended from their jobs. VOA Europe correspondent Luis Ramirez reports from Istanbul.

    Video In State of Emergency, Turkey’s Erdogan Focuses on Spiritual Movement

    The state of emergency that Turkish President Recep Tayyip Erdogan has declared is giving him even more power to expand a purge that has seen an estimated 60,000 people either arrested or suspended from their jobs. VOA Europe correspondent Luis Ramirez reports from Istanbul.

    Video Scientists in Poland Race to Save Honeybees

    Honeybees are in danger worldwide. Causes of what's known as colony collapse disorder range from pesticides and loss of habitat to infections. But scientists in Poland say they are on track to finding a cure for one of the diseases. VOA’s George Putic reports.

    Video Wall Already Runs Along Parts of US-Mexico Border

    The Republican Party’s presidential nominee, Donald Trump, gained the support of many voters by saying he would build a wall to keep undocumented immigrants and drugs from coming across the border from Mexico. Critics have called his idea impractical and offensive to Mexico, while supporters say such a bold approach is needed to control the border. VOA’s Greg Flakus has more from the border town of Nogales, Arizona.

    Video New HIV Tests Emphasize Rapid Results

    As the global fight against AIDS intensifies, activists have placed increasing importance on getting people to know their HIV status. Some companies are developing new HIV testing methods designed to be quick, easy and accurate. Thuso Khumalo looks at the latest methods, presented at the International AIDS conference in Durban, South Africa.

    Video African Youth with HIV Urge More Support

    HIV, the virus that causes AIDS, is the top killer of teens in sub-Saharan Africa. But many youths say their experience with the virus is unique and needs to be addressed differently than the adult epidemic. VOA South African Correspondent Anita Powell reports.

    Video Poor Residents in Cleveland Not Feeling High Hopes of Republican Convention

    With the Republican Party's National Convention underway in Cleveland, Ohio, delegates and visitors are gathered in the host city's downtown - waiting to hear from the party's presidential candidate, Donald Trump. But a few kilometers from the convention's venue, Cleveland's poorest residents are not convinced Trump or his policies will make a difference in their lives. VOA's Ramon Taylor spoke with some of these residents as well as some of the Republican delegates and filed this report.

    Video Pop-Up Art Comes to Your Living Room, Backyard and Elsewhere

    Around the world, independent artists and musicians wrestle with a common problem: where to exhibit or perform? Traditional spaces such as museums and galleries are reserved for bigger names, and renting a space is not feasible for many. Enter ArtsUp, which connects artists with venue owners. Whether it’s a living room, restaurant, office or even a boat, pop-up events are bringing music and art to unexpected places. Tina Trinh has more.

    Video With Yosemite as Backdrop, Obama Praises National Parks

    Last month, President Barack Obama and his family visited some of the most beautiful national parks in the U.S. Using the majestic backdrop of a towering waterfall in California's Yosemite National Park, Obama praised the national park system which celebrates its 100th anniversary this year. He talked about the importance of America’s “national treasures” and the need to protect them from climate change and other threats. VOA’s Julie Taboh reports.

    Video Counter-Islamic State Coalition Plots Next Steps

    As momentum shifts against Islamic State in Iraq, discussions are taking place about the next steps for driving the terrorist group from its final strongholds. Secretary of State John Kerry is hosting a counter-IS meeting at the State Department, a day after defense ministers from more than 30 countries reviewed and agreed upon a course of action. VOA Pentagon correspondent Carla Babb reports.

    Video Russia's Participation at Brazil Olympic Games Still In Question

    The International Olympic Committee has delayed a decision on whether to ban all Russian teams from competing in next month's Olympic Games in Brazil over allegations of an elaborate doping scheme. The World Anti-Doping Agency recently released an independent report alleging widespread doping by Russian athletes at the 2014 Winter Olympics in Sochi. So far, only Russian track and field athletes have been barred from the Summer Games in Brazil. VOA's Zlatica Hoke has more.

    Video Scotland’s Booming Whisky Industry Fears Brexit Hangover

    After Britain’s vote to leave the European Union, Scotland’s government wants to break away from the United Kingdom – fearing the nation’s exports are at risk. Among the biggest of these is whisky. Henry Ridgwell reports on a time of turmoil for those involved in the ancient art of distilling Scotland’s most famous product.

    Video Millennials Could Determine Who Wins Race to White House

    With only four months to go until Americans elect a new president, one group of voters is getting a lot more attention these days: those ages 18 to 35, a generation known as millennials. It’s a demographic that some analysts say could have the power to decide the 2016 election. But a lot depends on whether they actually turn out to vote. VOA’s Alexa Lamanna reports.

    Special Report

    Adrift The Invisible African Diaspora

    World Currencies


    Rates may not be current.