It’s down to the wire, with just a short time till the presidential election on November 8. The polls show that it’s a two-horse race with Hillary Clinton ahead of Donald Trump going into the home stretch. Purely on the basis of political party – not the individual candidate – we looked at the Republican and Democratic party track records based on three key economic indicators in the last four decades to answer the question: which is the best party for the U.S. economy?
U.S. National Unemployment Rate
Since 1974 there have been four Republicans and three Democrats in the Oval Office.
On the U.S. unemployment rate, which is the percentage of unemployed workers in the country’s labor force, we found that not only did Republican presidents have a tougher time reducing unemployment in their tenures, but they were also in office at the beginning of two of the worst recessions in the nation’s history: 1981-1982 and 2007-2009, often referred to as the Great Recession. At this point, the unemployment rate increased to 9.5% in June 2009, from 5.0% in December 2007. (President Barack Obama took office in January 2009.)
The Democrats have a far more successful track record at reducing unemployment, with the Obama administration most recently cutting the unemployment rate to its lowest level in almost a decade to 4.9% in August. As of September, it was 5%.
The strength of the U.S. dollar is highly contingent on not just domestic, but international economic strength. Strength of the dollar is a mixed blessing for U.S.-based businesses as importers find their cost base falling, while exporters face lower and tougher profit margins. As such, it’s difficult to ascribe a stronger dollar to a political objective, and therefore which political party is superior to the other when it comes to exchange rates.
However, the numbers show that a Democratic administration most commonly coincides with a stronger dollar. In the most recent examples, Bill Clinton and Obama oversaw an appreciation of more than 10% in the dollar USD Index. On the contrary, a Republican president commonly means a weaker dollar. Gerald Ford (1974-1977) was the last Republican to see a strong dollar during his time in office.
Gross Domestic Product is the most popular, and often most impactful, method of gauging economic health. GDP is the sum of the monetary value of the nation’s consumption, investment, government spending and trade balance. The U.S. has grown at an astonishing rate (1,000% since the 1970s), but not without obstacles many of which were caused by failed public policy decisions.
In that time, Republican presidents led the U.S. economy to 158.5% growth, besting the Democratic leaders who reported 141.1% growth. However, adjusting for the additional Republican term (four years), a Democratic president will usually oversee an annual growth of 6.1%, beating the Republican’s 5.8%.
And the Winner Is…
Creating jobs. Stimulating economic growth. The Democrats have gotten it done. Plus, they tend to oversee a stronger dollar and with talks of the Federal Reserve raising interest rates next month that could remain the case if voters are with her, so to speak.
Whether we welcome a Democrat or Republican into the White House in November, make sure your business is prepared. Find out how World First’s industry-leading foreign exchange solutions can help you make the most of your money.
Please note: This editorial is strictly based on publicly available economic data and is not intended to express the political views of World First USA, Inc.