All of these patterns look pretty random to me... you just don't have that many data points, and the stock market is so different now than it was 100 years ago, you should probably discard any pre-WW2 data.
Not to mention "Republicanism" vs "Democratism" change substantively over time too. The EPA was established under Nixon, and Carter deregulated key travel/communications industries, for example.
Interesting analysis. It is not surprising at all to me. I have long believed that we give presidents far too much credit and blame for economic growth. I particularly hate the terms “Biden economy” or “Reagan economy” or “Obama economy.” It is not their economy!
Economic growth comes from society, not the president. I think a president can mess up economic growth, but it is hard for them to make it better, at least on the scale of reforms that presidents can usually pass in one term. Economic policy does matter for long-term economic growth, but presidents rarely move the needle much, except for raising or lowering taxes.
It might be interesting to repeat the same analysis with other common economic metrics, such as economic growth, unemployment, inflation, etc.
I wouldn't expect a pattern by party over such a long period, but since World War II, there has been a pattern. Eisenhower was the only Republican president who didn't leave office without the economy in recession. If you look at household incomes by percentile, you'd see a post war pattern in which incomes for all households rise during growth periods but incomes for lower percentile households are reset by recessions. (https://www.kaleberg.com/public/top5-vs-bot20.jpg)
The current stock market is decoupled from the economy of goods and services that most people live in. It is dominated by a massive glut of capital and a relative lack of demand for goods and services. There isn't much to invest in since most people don't have much money, so people who do have money buy stocks and other symbolic assets. I've been living on my investments for decades now, and while I consider my analysis suspect, it has provided me a good living.
The data shows that with an exception or two Republican presidents since World War II have had recessions while Democratic presidents did not. This seems to be related to the way that pro-business red states have poorer economies than anti-business blue states, again with a few exceptions. It's just too consistent to be simple chance.
As to the cause, I have my suspicions. Policies like tax cuts for the wealthy, favoring bosses over labor, inadequate regulation, and stinting on research and education are part of a package that is associated with a weaker economy, so when some shock or transition comes, a recession is more likely. I doubt it's one particular policy, but rather the overall package of policies. In other words, I'm waving my hands and saying Republican policies bad, Democratic policies less bad.
Alternately, Republican presidents are just unlucky. If you are superstitious and willing to believe this, then it makes sense not to vote for one or perhaps rubbing your rabbit's foot three times before doing so.
P.S. Since I've been living on investments for thirty some odd years, I've often tried to understand the economy. I doubt that I do, but I get surprised less and less with each passing year.
One is that federal policies like tax cuts, deregulation, and funding for research and education (especially!) have predominantly long-term effects, so we can't meaningfully conclude their impacts from 4 year terms. (If anything, if someone told me President X faced a recession I would be more interested in knowing what the past presidents did while in office than the current one).
States are more interesting since they tend to be blue/red for longer periods. But the the wealth/blue relationship being "just too consistent to be simple chance" could be true without the causation you suggest. For one thing, there could be confounding factors that drive states to be richer and bluer (e.g. big cities might generate wealth and separately encourage liberalism for cultural/demographic reasons). Or the causation could be the other way, where richer states have greater capacity to be progressive (more funds for welfare, more time for gender reimagination, etc).
And finally, what it means to be a Republican vs Democrat has changed over the past 79 years since WW2 ended.
I agree that my analysis does some reaching. On the other hand, the fact is that Republican presidents are much more likely to have recessions than Democratic ones. There could be a billion reasons for this or none at all. Recessions could just be the money gods rolling a d20. Looking at state level policies offers some insights, but, as you note, there could be confounding factors. On the other hand, if you are going to bet your money, it can pay to look at past outcomes.
I have my own theories about the mechanisms, and they basically follow the outlines of Friedrich List. He laid out a program for modern industrialization in the early 19th century. He was forced into exile for his efforts, but years later he was rewarded. Every industrial nation has more or less followed his program with its emphasis on universities and industrial policy. Democratic presidents and blue state politicians are more in alignment with List's policies. There's a reason Apple, Google, Tesla and SpaceX were founded in California and not Texas.
You are definitely right about cities generating wealth and altering politics. One of the interesting things I've noticed visiting the South recently is how small the cities are. They're still surprisingly small new South, air conditioning and all. The larger political system in the South is still hostile to cities, but I remember when Colorado was a solid red state.
There was a book in the 1970s predicting the fall of the USSR. One severe weakness it pointed out was that the USSR seemed to have a 500K maximum city size bar Moscow and Leningrad and only one bookstore per city. There are solid political reasons for wanting to control the size and power of cities and not just in the USSR or China. Look at all the laws being passed in Texas and Florida to prevent cities from enacting politically incorrect policies like requiring water breaks for outdoor workers on hot days. European cities were suspect in a similar way in the Middle Ages, but the Black Death broke the equilibrium and let cities grow to the benefit of the region.
Fun! Now do S&P growth versus average household purchasing power over time. Is what’s good for Wall Street good for Main Street?
That's a good idea, I just updated the post!
All of these patterns look pretty random to me... you just don't have that many data points, and the stock market is so different now than it was 100 years ago, you should probably discard any pre-WW2 data.
Not to mention "Republicanism" vs "Democratism" change substantively over time too. The EPA was established under Nixon, and Carter deregulated key travel/communications industries, for example.
Interesting analysis. It is not surprising at all to me. I have long believed that we give presidents far too much credit and blame for economic growth. I particularly hate the terms “Biden economy” or “Reagan economy” or “Obama economy.” It is not their economy!
Economic growth comes from society, not the president. I think a president can mess up economic growth, but it is hard for them to make it better, at least on the scale of reforms that presidents can usually pass in one term. Economic policy does matter for long-term economic growth, but presidents rarely move the needle much, except for raising or lowering taxes.
It might be interesting to repeat the same analysis with other common economic metrics, such as economic growth, unemployment, inflation, etc.
I wouldn't expect a pattern by party over such a long period, but since World War II, there has been a pattern. Eisenhower was the only Republican president who didn't leave office without the economy in recession. If you look at household incomes by percentile, you'd see a post war pattern in which incomes for all households rise during growth periods but incomes for lower percentile households are reset by recessions. (https://www.kaleberg.com/public/top5-vs-bot20.jpg)
The current stock market is decoupled from the economy of goods and services that most people live in. It is dominated by a massive glut of capital and a relative lack of demand for goods and services. There isn't much to invest in since most people don't have much money, so people who do have money buy stocks and other symbolic assets. I've been living on my investments for decades now, and while I consider my analysis suspect, it has provided me a good living.
What Republican policies do you think are recessionary?
The data shows that with an exception or two Republican presidents since World War II have had recessions while Democratic presidents did not. This seems to be related to the way that pro-business red states have poorer economies than anti-business blue states, again with a few exceptions. It's just too consistent to be simple chance.
As to the cause, I have my suspicions. Policies like tax cuts for the wealthy, favoring bosses over labor, inadequate regulation, and stinting on research and education are part of a package that is associated with a weaker economy, so when some shock or transition comes, a recession is more likely. I doubt it's one particular policy, but rather the overall package of policies. In other words, I'm waving my hands and saying Republican policies bad, Democratic policies less bad.
Alternately, Republican presidents are just unlucky. If you are superstitious and willing to believe this, then it makes sense not to vote for one or perhaps rubbing your rabbit's foot three times before doing so.
P.S. Since I've been living on investments for thirty some odd years, I've often tried to understand the economy. I doubt that I do, but I get surprised less and less with each passing year.
There's some big problems with this analysis.
One is that federal policies like tax cuts, deregulation, and funding for research and education (especially!) have predominantly long-term effects, so we can't meaningfully conclude their impacts from 4 year terms. (If anything, if someone told me President X faced a recession I would be more interested in knowing what the past presidents did while in office than the current one).
States are more interesting since they tend to be blue/red for longer periods. But the the wealth/blue relationship being "just too consistent to be simple chance" could be true without the causation you suggest. For one thing, there could be confounding factors that drive states to be richer and bluer (e.g. big cities might generate wealth and separately encourage liberalism for cultural/demographic reasons). Or the causation could be the other way, where richer states have greater capacity to be progressive (more funds for welfare, more time for gender reimagination, etc).
And finally, what it means to be a Republican vs Democrat has changed over the past 79 years since WW2 ended.
I agree that my analysis does some reaching. On the other hand, the fact is that Republican presidents are much more likely to have recessions than Democratic ones. There could be a billion reasons for this or none at all. Recessions could just be the money gods rolling a d20. Looking at state level policies offers some insights, but, as you note, there could be confounding factors. On the other hand, if you are going to bet your money, it can pay to look at past outcomes.
I have my own theories about the mechanisms, and they basically follow the outlines of Friedrich List. He laid out a program for modern industrialization in the early 19th century. He was forced into exile for his efforts, but years later he was rewarded. Every industrial nation has more or less followed his program with its emphasis on universities and industrial policy. Democratic presidents and blue state politicians are more in alignment with List's policies. There's a reason Apple, Google, Tesla and SpaceX were founded in California and not Texas.
You are definitely right about cities generating wealth and altering politics. One of the interesting things I've noticed visiting the South recently is how small the cities are. They're still surprisingly small new South, air conditioning and all. The larger political system in the South is still hostile to cities, but I remember when Colorado was a solid red state.
There was a book in the 1970s predicting the fall of the USSR. One severe weakness it pointed out was that the USSR seemed to have a 500K maximum city size bar Moscow and Leningrad and only one bookstore per city. There are solid political reasons for wanting to control the size and power of cities and not just in the USSR or China. Look at all the laws being passed in Texas and Florida to prevent cities from enacting politically incorrect policies like requiring water breaks for outdoor workers on hot days. European cities were suspect in a similar way in the Middle Ages, but the Black Death broke the equilibrium and let cities grow to the benefit of the region.