The Corner


An Exercise in Stupidity

(Andrew Kelly/Reuters)

In Bloomberg, Justin Fox reports that:

GDP Growth Under Trump Was the Worst Since Hoover

If you’re thinking, “well, that’s stupid, especially given the pandemic” then you’re right. And do you know who agrees with you? Justin Fox does:

This is, let’s be clear from the start, not a perfect way of measuring presidential economic performance.

Right. It’s stupid.

There are lots of things that determine economic growth rates other than who is in the White House, and when a president does make a difference the results may be felt long after he’s left Washington. Still, it’s a widely used metric and Trump was downright obsessed with it, so here goes.

Still stupid, though, right? Right:

This does seem a bit unfair, given the pandemic and all.

What if we tried a different measurement?

One is to adjust the timing. For the above chart I’ve taken real GDP in the quarter a president entered office and the quarter he left, and calculated the compound annual growth rate from one to the other. Here’s what it looks like if you shift that back or forward by a quarter.

Nope, still stupid, because the pandemic is still fully accounted for in that data, too.

Is there anything else stupid that Fox could raise? Ah, yes. This:

Over the nearly 75 years for which we have reliable quarterly GDP and monthly jobs numbers, the growth of both has been markedly faster during Democratic presidencies than Republican ones.

Why is this stupid? Because:

In 2016 the very eminent Alan S. Blinder and Mark W. Watson of Princeton undertook “An Econometric Exploration” of this phenomenon for the American Economic Review and came to the not especially helpful conclusion that: the Democratic edge stems mainly from more benign oil shocks, superior total factor productivity (TFP) performance, a more favorable international environment, and perhaps more optimistic consumer expectations about the near-term future.

Which means that:

That sounds mainly as if the Democrats have just been luckier, and perhaps better at inculcating optimism.

And that Trump’s problem was:

mostly bad luck.

So the entire article was pointless from start to finish, then?



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