Political Parties in Power and U.S. Economic Performance
14 Pages Posted: 20 Mar 2020
Date Written: February 21, 2020
This study examines the interaction across all combinations of the political parties in control of the White House and both chambers of Congress. Past economic growth is not significantly different under Republican and Democratic presidential administrations. Nor does the party that controls the House of Representatives appear to have a significant impact on economic growth. However, growth has been strongest when the Senate is controlled by Republicans. Non-farm payrolls and industrial production grow faster under Democratic Presidents, while higher inflation and unemployment are generally observed when Democrats control the Senate or House. Republican Presidents are in office for a significantly greater number of months when the economy is in a recession. The same is true when Democrats are in charge of the Senate or House. The U.S. economy appears to have the strongest performance under the combination of a Democratic President with a Republican controlled Senate and House, and the weakest economic performance is generally under a Republican President with a Senate and House controlled by Democrats.
Keywords: Political Business Cycle, Leading Indicators, Economic History
JEL Classification: D72, E32, N12
Suggested Citation: Suggested Citation