Politics, the Economy and the Market Across Time

October 31st, 2012

by Doug Short

With the presidential election just a few days away, I thought this might be a good time to recall the larger historical context of the US economy and markets with an eye on the party in power.

First up, here is a look at GDP by party in control of the White House and Congress. Since the inception of quarterly GDP in 1947, Real Quarterly GDP has averaged 4.0 percent during Democratic administrations and 2.6 percent during Republican administrations.

Recessions are highlighted in gray.

If we switch to annual GDP, here is a look from 1930 through 2011.

What about the market? Here is a snapshot of the Dow Jones Industrial Averages since 1900. For the past 112 years, the average annual gain (excluding dividends) is 5.7% for Republicans and 8.7% for Democrats. (The 2012 Dow performance for Obama is through October 26th.)

Here is a snapshot of Debt-to-GDP and presidential politics:

And finally, with Bush tax cuts set to expire, here is a look at the complete history of Federal Tax Brackets.

Naturally, when the party in control of the White House changes, there is an inheritance factor from the previous administration. Nevertheless, the charts above offer some context for the rhetoric of an election year.

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