Running Head: The President and the Economy

How Presidents Can Affect our Economy

Review of Literature
Mathew Looney
The University of Texas at El Paso

Running Head: The President and the Economy

Abstract
Presidents and candidates alike have always tried to gain support by discussing a topic
that all citizens of the United States care about, the Economy. Studies have been done that
discuss the roles of the president, and if those roles allow an effective fix to the economy.
Unfortunately, many factors come in when trying to figure out how to fix an economy, and
different hardships can present obstacles that are nearly impossible to overcome. Party affiliation
seems to have no effect on the outcome of a presidents effectiveness, nor does the length that a
president is in office. The past has shown us that presidents have been on the fence about
fulfilling promises and actually revitalizing the economy, and arent as effective as they should
be at fulfilling their goals. Neither Democrat nor Republican parties matter in this situation, but a
mutual agreement needs to be made in order to restore our nations economy.

Running Head: The President and the Economy

How Presidents Can Affect our Economy
Review of Literature
Presidential candidates have been able to persuade voters by promising economic change.
Statistics are unable to make a direct correlation to the President and the economic standing that
follows after his election. As a result, we constantly seek to find whether a new President can
actually change the economy. Economically, things promised during a presidential change sound
great to a voter, and investors alike, as they promise things that are relevant to the current
economic standing of the United States. For example, gas prices are a great talking point right
now, a flux of gas prices sweeps across the nation. Mistakenly, voters may believe that they will
find themselves exposed to higher or lower inflation due to policy changes implemented by a
new President.
Voters must become more conscious of the roles of each branch, and comprehend how the
government works in order to fully understand what the Presidents are promising. We as citizens
of the United States must be more informed on economics, and effects that policy changes have
on present and future situations. Ignorance is bliss, a quote that is relevant to the promises we
are fed by presidential candidates. Understanding how they actually change the economy after
they are elected, and during their terms in office is imperative to our voting decisions. A lot of
questions have been raised about the United States economy, and the Presidents ability to bring
about change. Statistics given have brought about several questions that need to be answered:
-

Does party affiliation influence the economy?

Does term length influence effectiveness in economic change?
How does the election affect fiscal policies implemented?
How effective have Presidents been at fulfilling their economic promises?
Does party affiliation influence the economy?

Running Head: The President and the Economy

A question that always tends to be asked is, which party does better at giving the United
States a stable economy. Many attempts have been made to correlate a positive outcome in the
economy to a certain political affiliation. Factors such as job growth, inflation, gas prices are
usually proposed during a political campaign and often being in a party affects what voters
believe will be the candidates standpoint on the future of the economy. The two leading parties
that attract economic change have been Republican and Democrats. In this study we will
determine if party affiliation influences the economy.

The Economic Democrats

Both parties tend to use the economy as an influential talking point in their campaigns,
and during their terms in office to receive the support of our nation. Research done has come to
the conclusion that Democratic presidents have gained around a 4.35% annual Gross Domestic
Product (GDP) growth while in office. The GDP is an indicator of a healthy economy, as it
represents the total dollar value of goods and services produces over a period of time. Presidents
usually look at the annual percentage rate, and so long as it stays positive, they are doing
something right. Its counterparts, the Republican Party has unfortunately shown only an average
of 2.54% growth in GDP while in office. Statistics have shown a strong suit in economic change
while a Democratic president is in office, therefore causing the voters to favor democrats when it
comes to economic change and fiscal policies.

Luck or Just Coincidence

Running Head: The President and the Economy

The Democratic Party has put on a display of great economic change during their terms
in office, but is it actually the presidents doing, or just luck of timing. (Wilde, R) argues that
political parties have nothing to do with job growth, inflation, and the overall health of the
economy, but are just a luck of world situations that allow the President to maneuver around
economic hardships. In fact, recent studies have shown that Barrack Obama, the current
Democratic President, has shown a decrease in GDP by about 2 percent during his terms in
office. The Bureau of Economic Statistics (BEA) publishes changes in the GDP and reviews
statistics to provide informed opinions. In 2008, the first year for Obamas Administration, the
GDP was overstated about $125 billion, but later dropped down to $70 billion in just one year.
(Street, C.). Obama is marked as fourth to the bottom of presidents who handled the economy
well, with an overall growth rate of just 1.55% during their 7 years in office. The bottom line is
that voters can expect a solid economic performance from the Democratic Party, but there is no
actual guarantee that a democratic president can actually change the economy. That being said
we can move on to the next topic, term length and its effect on a presidents ability to make a
stable economy.

Does term length influence effectiveness in economic change?

Most voters and investors alike, suggest that a different economic outcome can be
achieved if the length of a Presidents term is sufficient enough. This is due to the belief that more
policies can be implemented, and carried out effectively with more years in office. Our current
President has been in office for almost 8 years, and yet ranks as one of the worst presidents to
create a change in our economy with an overall GDP increase rate of 1.55%. Many people argue

Running Head: The President and the Economy

that term length, just like party affiliation have nothing to do with the standing of the economy
due to the simple fact that the President has no actual pull in influencing the economy.

Different Lengths, Different Results

As stated earlier, Obama has been in office for 8 years and has only seen an in GDP by 1.55%,
with Bush Jr. Not trailing too far behind at 1.7%. Both of these presidents succumbed to various
hardships in their terms, and responded in the best way they thought they could. Earlier
Presidents had shown a greater stabilization of the economy, such as the great John F. Kennedy,
president from 1961 to 1963. While in office President Kennedy showed a 5.4% increase in GDP
growth, while he undertook a tremendous amount of hardships. Statistics given show that even a
short term can stabilize an economy, therefore invalidating the belief that term length can affect
the economic change that a president can make during their terms in office.

How does the election affect fiscal policies implemented?

Often times we find ourselves at a standoff between what we believe in, and what we see
in the world around us. During election times, we often see a dip in oil and gas prices, a change
in inflation which candidates utilize to fan the flame created by their campaign. Especially when
going for reelection, Presidents/President hopefuls use persuasive tactics such as these to create
promises that stability in the economy is what they can bring to the table. According to polls on
the Daily Fuel Economy website taken in 2008, about half of us believe that we are being
manipulated when it comes to gas prices during the presidential election. Lets look at some

Running Head: The President and the Economy

information that will shed some light on how election affects policies that are put into place and
if they are effective.

An Unstable Market

During election season, most candidates spend a little extra to get ahead in polls, trying to
influence policies implemented to gain support in their endeavors. Financial Institutions suggest
that when a president leaves from a two-term presidency, that markets become nervous about the
future. If theres one thing markets hate, its uncertainty, says Mary Ann Bartels, head of the
Merrill Lynch Wealth Management Portfolio Strategy. The presidential candidates seem to
change things before election to ease themselves into the position, and provide peace of mind to
the market. So not only are they trying to persuade everyday citizens, they are trying to persuade
the whole market.

How effective have Presidents been at fulfilling their promises?

The final question that needs to be determined is, how effective are presidents at actually
achieving economic change. Many questions have been asked, many promises made during
campaigns and terms in office, but what do statistics say about our presidents, past and possibly
future. Information like this is imperative for people to know so that informed decisions and
votes can be made. I believe that when a President is able to achieve his goals and fulfill his
promises, he becomes an effective leader, regardless of the overall outcome of his terms in

Running Head: The President and the Economy

office. Although promises provide hope, results provide success; lets take a look at recent
opinions and statistics.

Approval of Obama

When Obama became President in 2008, he promised many things to the citizens of the
United States. He offered hope to those overseas, and promised to bring home soldiers that were
away from their families. He promised to stop spending so much on the military, and caring for
those here at home. We were promised lower taxes, higher unemployment rates, creation of jobs,
tax credits, and a system for undocumented citizens to work and become paying citizens.
Unfortunately, Obama has only fulfilled about half of these promises, and has failed to meet the
others. There are still delays in bringing home soldiers, and still a lot of money being put into
military funding. He has tried hard to earn tax credits for the citizens of our nation, but has been
unstable in doing so. He was also ineffective in persuading congress to allow undocumented
immigrants to work and pay to gain citizenship. Although unemployment rates are low, we see a
decline in our overall economy. About 53 % of voters disagree with the way that Barack Obama
has handled the economy during his terms in office.

Trumps False Hopes

Trump like many candidates is offering many false hopes, as he promises to revitalize the
United States, and make it great again. Studies have discovered that most of the things that
trump wants to do more than likely cant be completed if he stays in for 3 years, let alone the first

Running Head: The President and the Economy

100 days like he has promised. Offering a stimulation in economy by revamping the coal
industry, which has recently declined due to clean-air regulations. Although things like this seem
like a good idea, other markets have far surpassed the capabilities of coal, and there for offer no
hope in actually improving the economy. This really comes to show that candidates will say what
they need to for votes, but if elected, we already know that he wont be able to fulfill this
promise, how many others will he lie about?

Beauty in the Eye of the Beholder

As we can see, statistics have shown that Presidents are about 50/50 when it comes to
fulfilling promises, especially when it comes to fixing the economy. Changes such as lower gas
prices, higher unemployment and lower inflation can lead a nation to be blindsided, as they
believe that the economy is getting better. The truth is that as of August 15 th, 2016, the national
debt is at 19 trillion dollars, and is increasing about 2.37 billion per day. Unless we find a way to
stop this, temporary beauty displayed by candidates in their campaigns and terms in office will
ultimately lead to the collapse of our great nation.

Running Head: The President and the Economy

Conclusion:

In conclusion, this literature review researched areas that inform voters and the general
population of the powers a President actually has when making major changes in the economy.
We have familiarized ourselves with information that can allow us to make informed decisions
for the future. The following four questions have been the focus of this research, and have
covered topics that may be encountered in our upcoming election:
-

Does party affiliation influence the economy?

Does term length influence effectiveness in economic change?
How does the election affect fiscal policies implemented?
How effective have Presidents been at fulfilling their economic promises?

Presidents and candidates alike have always tried to gain support by discussing a topic that all
citizens of the United States care about, the Economy. Studies have been done that discuss the
roles of the president, and if those roles allow an effective fix to the economy. Unfortunately,
many factors come in when trying to figure out how to fix an economy, and different hardships
can present obstacles that are nearly impossible to overcome. Party affiliation seems to have no
effect on the outcome of a presidents effectiveness, nor does the length that a president is in
office. The past has shown us that presidents have been on the fence about fulfilling promises
and actually revitalizing the economy, and arent as effective as they should be at fulfilling their
goals. Neither Democrat nor Republican parties matter in this situation, but a mutual agreement
needs to be made in order to restore our nations economy.

Running Head: The President and the Economy

References

Running Head: The President and the Economy

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05, 2016, from http://www.nytimes.com/2016/06/20/opinion/campaign-stops/ask-notwhat-the-president-can-do-for-the-economy.html?_r=0
Dubner, S. (2012, March 7). Does the president actually influence the economy?

Retrieved

July 01, 2016, from http://www.marketplace.org/2012/03/07/economy/freakonomicsradio/does-president-actually-influence-economy

How Presidential Elections Affect the Markets. (n.d.). Retrieved July 03, 2016, from
https://www.ml.com/articles/how-presidential-elections-affect-the-markets.html
Nath, T. (2016, March 01). How Presidential Elections Affect the Stock Markets. Retrieved July
01, 2016, from http://www.nasdaq.com/article/how-presidential-elections-affect-thestock-markets-cm586601
Nickles, M. (2004). Graziadio Business Review | Graziadio School of Business and Management
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Pepperdine

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from

https://gbr.pepperdine.edu/2010/08/presidential-elections-and-stock-market-cycles/
Street, C. (2016, June 16). Obama Administration to Revise Total GDP Growth Down 2%.
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from

http://www.breitbart.com/big-

government/2016/06/16/obama-administration-massively-revise-gdp-downward/
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Obameter

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(n.d.).

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http://www.politifact.com/truth-o-meter/promises/obameter/
Wile, R. (2014, July 28). The US Economy Does Better Under Democratic Presidents, But Party
Affiliation Has Nothing To Do With It. Retrieved July 03, 2016, from
http://www.businessinsider.com/presidential-party-and-gdp-2014-7