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U.S. economic performance by presidential party

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Since World War II, the United States economy has performed significantly better on average under the administration of Democratic presidents than Republican presidents. The reasons for this are debated, and the observation applies to economic variables including job creation, GDP growth, stock market returns, personal income growth, and corporate profits. The unemployment rate has risen on average under Republican presidents, while it has fallen on average under Democratic presidents. Budget deficits relative to the size of the economy were lower on average for Democratic presidents.[1][2] Ten of the eleven U.S. recessions between 1953 and 2020 began under Republican presidents.[3] Of these, the most statistically significant differences are in real GDP growth, unemployment rate change, stock market annual return, and job creation rate.[4][5]

Job creation

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Main article: Jobs created during U.S. presidential terms

Job creation refers to the number of net jobs added, which is reported monthly by the Bureau of Labor Statistics.[6] In October 2020, Journalist Glenn Kessler of The Washington Post summarized the total job creation by president from Harry S. Truman through Donald Trump as of August 2020. For the 13 presidents beginning with Truman, total job creation was about 70.5 million for the 7 Democratic presidents and 29.1 million for the 6 Republican presidents. The Democratic presidents were in office for a total of 429 months, with 164,000 jobs per month added on average, while the Republicans were in office for 475 months, with a 61,000 jobs added per month average. This monthly average rate was 2.4 times faster under Democratic presidents.[7]

In 2012, former president Bill Clinton said: "Since 1961 ... the Republicans have held the White House for 28 years, the Democrats for 24 ... In those 52 years, our private economy has produced 66 million private-sector jobs. So what's the jobs score? Republicans 24 million, Democrats 42 million." Commenting on his statement, The Economist reported that the difference increased by 5 million thereafter under Barack Obama by 2014.[2] From April 1945 to August 2023, of the 115 million net jobs added, 83 million (72%) were under Democrats and 32 million (28%) were under Republicans.[8] Economists Alan Blinder and Mark Watson estimated job growth at 2.6% annually for Democratic presidents, about 2.2 times faster than the 1.2% for Republican presidents, for the 1949–2012 period (Truman's elected term through Obama's first term).[1]

Job creation by U.S. presidency

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Annualized change in non-farm employment over each presidency from 1939 to 2023. Democrats are in blue and Republicans in red.
Change in non-farm employment for all U.S. presidents since 1939 (data from the Bureau of Labor Statistics)[9][10]
President Political party Period of presidency Nonfarm employment at the start of presidency (in thousands) Nonfarm employment at the end of presidency (in thousands) Annual percentage change in nonfarm employment
Franklin D. Roosevelt (data available for 1939–1945 only) Democratic 1933–1945 29,923 (for January 1939) 41,446 5.35% (annual average from January 1939 to April 1945)
Harry S. Truman Democratic 1945–1953 41,446 50,144 2.49%
Dwight D. Eisenhower Republican 1953–1961 50,144 53,683 0.86%
John F. Kennedy Democratic 1961–1963 53,683 57,255 2.30%
Lyndon B. Johnson Democratic 1963–1969 57,255 69,439 3.80%
Richard M. Nixon Republican 1969–1974 69,439 78,619 2.25%
Gerald R. Ford Republican 1974–1977 78,619 80,690 1.08%
Jimmy Carter Democratic 1977–1981 80,690 91,033 3.06%
Ronald W. Reagan Republican 1981–1989 91,033 107,161 2.06%
George H. W. Bush Republican 1989–1993 107,161 109,794 0.61%
Bill Clinton Democratic 1993–2001 109,794 132,698 2.40%
George W. Bush Republican 2001–2009 132,698 134,055 0.13%
Barack H. Obama Democratic 2009–2017 134,055 145,612 1.04%
Donald J. Trump Republican 2017–2021 145,612 142,669 -0.51%
Joe Biden Democratic 2021–present 142,669 157,304 (for December 2023) 3.31% (CAGR)

GDP growth

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GDP is a measure of both the economic production and income. The Economist reported in August 2014 that real (inflation-adjusted) GDP growth averaged about 1.8 percentage points faster under Democrats, from Truman through Obama's first term, which ended in January 2013.[2] Blinder and Watson estimated the average Democratic real GDP growth rate at 4.3%, vs. 2.5% for Republicans, from Truman's elected term through Obama's first term, which ended January 2013.[1] This pattern of faster GDP growth under Democratic presidents continued after Blinder and Watson published their study; GDP grew faster both in Obama's second term and in the first two years of Joe Biden's administration than in Trump's term.[11]

CNN reported in September 2020 that GDP grew 4.1% on average under Democrats, versus 2.5% under Republicans, from 1945 through the second quarter of 2020, a difference of 1.6 percentage points.[3] In February 2021, The New York Times reported: "Since 1933, the economy has grown at an annual average rate of 4.6 percent under Democratic presidents and 2.4 percent under Republicans ... The average income of Americans would be more than double its current level if the economy had somehow grown at the Democratic rate for all of the past nine decades."[12] The Washington Post reported that average GDP growth under Trump for his first three years in office was 2.5%; when the COVID-19 pandemic hit in 2020, GDP for his fourth year in office fell 6.5%.[13]

Real GDP growth rate by president since 1947 (the quarter in which a new president takes office is attributed to the incoming president)[14]
President Political party Period of presidency Average annual real GDP

(in trillions)

Average annual percentage growth
Harry S. Truman

(data available from 1947)

Democratic 1945–1953 2.43 4.88%
Dwight D. Eisenhower Republican 1953–1961 3.17 3.03%
John F. Kennedy Democratic 1961–1963 3.79 4.35%
Lyndon B. Johnson Democratic 1963–1969 4.70 5.30%
Richard M. Nixon Republican 1969–1974 5.60 3.50%
Gerald R. Ford Republican 1974–1977 6.17 1.55%
Jimmy Carter Democratic 1977–1981 7.07 3.27%
Ronald W. Reagan Republican 1981–1989 8.33 3.48%
George H. W. Bush Republican 1989–1993 10.09 2.24%
Bill Clinton Democratic 1993–2001 12.25 3.88%
George W. Bush Republican 2001–2009 15.62 2.21%
Barack H. Obama Democratic 2009–2017 17.71 1.67%
Donald J. Trump Republican 2017–2021 20.18 1.42%
Joe Biden Democratic 2021–present 21.87 3.43%

Unemployment rates

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Unemployment rates account for people of working age that do not have a job. Unemployment rates are important due to the differences in policies taken from each political party. However, Job creation and unemployment are affected by many factors such as economic conditions, global competition, education, automation, and demographics, and global crisis. Studies published in the American Economic Review by Blinder and Watson have analyzed the factors which determine differences between unemployment rates during Democratic and Republican Leadership. They found that the unemployment rate fell under Democratic presidents by an average of 0.8 percentage points, while it increased under Republican presidents by an average of 1.1 percentage points. They commented: "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."[1] Unemployment is largely influenced by the economic policies from the Federal Reserve, which has as a main objective to balance the trade off between maintaining low and stable inflation vs maximizing employment.[15]

Historical unemployment rate statistics

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Unemployment rate change by United States president between the start of their presidency and the end of their presidency from 1948 (data from the Bureau of Labor Statistics)[10]
President Political party Period of presidency Unemployment rate at start of presidency Unemployment rate at end of presidency Change in unemployment rate during presidency (percentage points)
Harry S. Truman (data available for 1948–1953 only) Democratic 1945–1953 3.4% (for January 1948) 2.9% Positive decrease −0.5 (from January 1948 to January 1953)
Dwight D. Eisenhower Republican 1953–1961 2.9% 6.6% Negative increase +3.7
John F. Kennedy Democratic 1961–1963 6.6% 5.7% Positive decrease −0.9
Lyndon B. Johnson Democratic 1963–1969 5.7% 3.4% Positive decrease −2.3
Richard M. Nixon Republican 1969–1974 3.4% 5.5% Negative increase +2.1
Gerald R. Ford Republican 1974–1977 5.5% 7.5% Negative increase +2.0
Jimmy Carter Democratic 1977–1981 7.5% 7.5% Steady 0.0
Ronald W. Reagan Republican 1981–1989 7.5% 5.4% Positive decrease −2.1
George H. W. Bush Republican 1989–1993 5.4% 7.3% Negative increase +1.9
Bill Clinton Democratic 1993–2001 7.3% 4.2% Positive decrease −3.1
George W. Bush Republican 2001–2009 4.2% 7.8% Negative increase +3.6
Barack H. Obama Democratic 2009–2017 7.8% 4.7% Positive decrease −3.1
Donald J. Trump Republican 2017–2021* 4.7%* 6.4%* Negative increase +1.7*
Joe Biden Democratic 2021–present* 6.4%* 3.9%* (February 2024)[16] Positive decrease −2.5* (from January 2021 to February 2024)

* The COVID-19 pandemic and the Great Resignation had a dramatic influence in statistics presented, including a sharp increase in unemployment rate at the time of changes from Trump to Biden.

Annualized change in unemployment rate over each presidency from Truman to Biden, ordered from best-performing to worst-performing economic performance. Democrats are in blue and Republicans in red.
Unemployment rate change for each U.S. presidential term from 1949 (data from the Bureau of Labor Statistics)[10]
President Political party Period of presidency Unemployment rate at start of presidential term Unemployment rate at end of presidential term Change in unemployment rate during presidential term (percentage points)
Harry S. Truman Democratic 1949–1953 4.3% 2.9% Positive decrease −1.4
Dwight D. Eisenhower Republican 1953–1957 2.9% 4.2% Negative increase +1.3
Dwight D. Eisenhower Republican 1957–1961 4.2% 6.6% Negative increase +2.4
John F. Kennedy and Lyndon B. Johnson Democratic 1961–1965 6.6% 4.9% Positive decrease −1.7
Lyndon B. Johnson Democratic 1965–1969 4.9% 3.4% Positive decrease −1.5
Richard M. Nixon Republican 1969–1973 3.4% 4.9% Negative increase +1.5
Richard M. Nixon and Gerald R. Ford Republican 1973–1977 4.9% 7.5% Negative increase +2.6
Jimmy Carter Democratic 1977–1981 7.5% 7.5% Steady 0.0
Ronald W. Reagan Republican 1981–1985 7.5% 7.3% Positive decrease −0.2
Ronald W. Reagan Republican 1985–1989 7.3% 5.4% Positive decrease −1.9
George H. W. Bush Republican 1989–1993 5.4% 7.3% Negative increase +1.9
Bill Clinton Democratic 1993–1997 7.3% 5.3% Positive decrease −2.0
Bill Clinton Democratic 1997–2001 5.3% 4.2% Positive decrease −1.1
George W. Bush Republican 2001–2005 4.2% 5.3% Negative increase +1.1
George W. Bush Republican 2005–2009 5.3% 7.8% Negative increase +2.5
Barack H. Obama Democratic 2009–2013 7.8% 8.0% Negative increase +0.2
Barack H. Obama Democratic 2013–2017 8.0% 4.7% Positive decrease −3.3
Donald J. Trump* Republican 2017–2021* 4.7%* 6.4%* Negative increase +1.6*
Joe Biden* Democratic 2021–present* 6.4%* 3.9%* (February 2024)[16] Positive decrease −2.5* (from January 2021 to February 2024)

* The COVID-19 pandemic and the Great Resignation had a dramatic influence in statistics presented, including a sharp increase in unemployment rate at the time of changes from Trump to Biden.

Income growth and inequality

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Analysis conducted by Vanderbilt University political science professor Larry Bartels in 2004 and 2015 found income growth is faster and more equal under Democratic presidents. From 1982 through 2013, he found real incomes increased in the 20th and 40th percentiles of incomes under Democrats, while they fell under Republicans. Real incomes grew across all higher percentiles at a greater rate under Democrats, even during the Great Recession and its recovery in Obama's first term. Bartels calculated in 2008 that the real value of the minimum wage over the preceding sixty years had increased 16 cents per year under Democratic presidents but declined by 6 cents per year under Republican presidents.[17][18]

Inflation

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Blinder and Watson found that since 1945 the average inflation rate was higher under Republican presidents than under Democrats, although inflation tended to rise under Democrats but fall under Republicans.[1]

Federal budget deficits

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Blinder and Watson reported that budget deficits tended to be smaller under Democrats at 2.1% potential GDP versus 2.8% potential GDP for Republicans, a difference of about 0.7 of a percentage point. They wrote that higher budget deficits should theoretically have boosted the economy more for Republicans, and therefore cannot explain the greater GDP growth under Democrats.[1] Since 1981, federal budget deficits have increased under Republican presidents Ronald Reagan, both Bushes, and Trump, while deficits have declined under Democratic presidents Clinton and Obama. The economy ran surpluses during Clinton's last four fiscal years, the first surpluses since 1969. The deficit was projected to decline sharply in Biden's first fiscal year.[19][20][21]

Stock market returns

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Stock market returns are higher under Democratic presidents.[22] In September 2020, CNN reported: "Since 1945, the S&P 500 has averaged an annual gain of 11.2% during years when Democrats controlled the White House, according to CFRA Research. That's well ahead of the 6.9% average gain under Republicans."[3] Analysis conducted by S&P Capital IQ in 2016 found similar results since 1901.[23] Blinder and Watson estimated that the S&P 500 returned 8.4% annually on average under Democrats versus 2.7% under Republicans, a difference of 5.7% percentage points. This computation used the average value in last year of the president's term, minus the average value in last year of previous term.[1] In November 2020, The Washington Post cited a study by CFRA Research that the stock market (as measured by the S&P 500) averaged the following annual rates of return, under different control scenarios, from 1945 to September 2020:[24]

  1. Democratic president with split Congress: 13.6%
  2. Democratic president with Republican Congress: 13.0%
  3. Republican president with Republican Congress: 12.9%
  4. Democratic president with Democratic Congress: 9.8%
  5. Republican president with split Congress: 5.8%
  6. Republican president with Democratic Congress: 4.9%

Bloomberg News reported in November 2021 that Democratic presidents held seven of the top ten positions of S&P 500 returns during the first year of a presidential term, measured from their election days. Biden ranked first with a 37.4% return, with the next five highest positions also held by Democrats.[25] The Democratic outperformance is even more striking if data from the Great Depression and World War II are included. From 1927 through 2016, the average excess stock market return (that is, the difference between the stock market return and the return on a risk-free investment) was 10.7% per year under Democratic presidents and -0.2% per year under Republican presidents.[26]

Corporate profits

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Analysis conducted by CFRA Research in 2020 found that since 1945 corporate earnings per share, a key measure of corporate profitability, grew 12.8% on average under Democratic presidents versus 1.8% for Republicans.[3]

Recessions

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Comparison of job creation and time in recession
Democrats presided over 72% of job creation and 16% of quarters in recession since World War II (April 1945 to August 2023).[1][8]

CNN reported in October 2020 that 10 of the last 11 recessions started under Republican presidents, and added: "Every Republican president since Benjamin Harrison, who served from 1889 to 1893, had a recession start in their first term in office."[3] The National Bureau of Economic Research reports the start date of recessions,[27] and the following list includes the president in office at that time and their party:

  1. February 2020 (Trump, Republican; House, Democratic; Senate, Republican)
  2. December 2007 (Bush 43, Republican; House, Democratic; Senate, Democratic)
  3. March 2001 (Bush 43, Republican; House, Republican; Senate, Republican)
  4. July 1990 (Bush 41, Republican; House, Democratic; Senate, Democratic)
  5. July 1981 (Reagan, Republican; House, Democratic; Senate, Democratic)
  6. January 1980 (Carter, Democratic; House, Democratic; Senate, Democratic)
  7. November 1973 (Nixon, Republican; House, Democratic; Senate, Democratic)
  8. December 1969 (Nixon, Republican; House, Democratic; Senate, Democratic)
  9. April 1960 (Eisenhower, Republican; House, Democratic; Senate, Democratic)
  10. August 1957 (Eisenhower, Republican; House, Democratic; Senate, Democratic)
  11. July 1953 (Eisenhower, Republican; House, Republican; Senate, Republican)
  12. November 1948 (Truman, Democratic; House, Republican; Senate, Republican)

Blinder and Watson estimated that the economy was in recession for 49 quarters from 1949–2013; 8 of these quarters were under Democrats, with 41 under Republicans.[1] The 2020 recession brings that to 50 quarters total in recession, 42 under Republicans (84%) and 8 under Democrats (16%).[27]

Reasons for over-performances by Democratic presidents

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Blinder and Watson studied the comparative economic performance from Truman's elected term through Obama's first term in 2012. They excluded certain causes and identified some possible causes.[2] Excluded as causes were age and experience of the president, which political party controlled Congress, and quality of economy inherited (as Democrats tended to take over when times were more difficult). Furthermore, fiscal and monetary policy did not seem to be possible causes. Changes in tax policy had little impact; for example, Clinton raised taxes while Reagan cut them but both had strong growth. Interest rates had typically risen under Democrats and fallen under Republicans, which theoretically should have favored Republicans. Democrats did benefit from lower oil prices, larger increases in productivity, and better global conditions.[2] Blinder and Watson concluded: "Rather, it appears 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."[1]

Commentary

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During a March 2004 interview, Trump stated: "It just seems that the economy does better under the Democrats than the Republicans."[28][29] The Joint Economic Committee Democrats summarized and expanded the Blinder and Watson analysis in a June 2016 report, writing: "Claims that Republicans are better at managing the economy are simply not true. While the reasons are neither fully understood nor completely attributable to policy choices, data show that the economy has performed much better during Democratic administrations. Economic growth, job creation and industrial production have all been stronger."[30]

Journalist David Leonhardt wrote in The New York Times that economists he interviewed were not certain of the cause. One possibility for the consistent outperformance by Democratic presidents was that "Democrats have been more willing to heed economic and historical lessons about what policies actually strengthen the economy, while Republicans have often clung to theories that they want to believe — like the supposedly magical power of tax cuts and deregulation. Democrats, in short, have been more pragmatic." He wrote that Democratic presidents championing the ideas of John Maynard Keynes have taken stronger fiscal action to address crises.[12]

Statistics

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The following table compares selected results for the Democratic and Republican presidents, using the Blinder and Watson data (typically Truman's elected term through Obama's first term). The abbreviation pp means percentage points. The p-value is the probability that the observed difference would occur if it were due to chance.[1] P-values typically considered statistically significant are those equal to or less than .1, .05, or .01, with each of these numbers representing a different level of significance and lower being more significant.[31]

Variable Democrats Republicans Difference P-value
Real GDP growth 4.33% 2.54% 1.79 pp 0.01
Job creation rate % 2.59% 1.17% 1.42 pp 0.02
Unemployment rate % 5.64% 6.01% 0.38 pp 0.62
Unemployment rate change -0.83 pp +1.09 pp 1.92 pp 0.01
Inflation rate (GDP deflator) 2.89% 3.44% 0.55 pp 0.59
Budget deficit % potential GDP 2.09% 2.78% 0.69 pp 0.30
Stock market S&P 500 annual return 8.35% 2.70% 5.65 pp 0.15

References

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  1. ^ a b c d e f g h i j k Blinder, Alan S.; Watson, Mark W. (April 2016). "Presidents and the U.S. Economy: An Econometric Exploration". American Economic Review. 106 (4): 1015–1045. doi:10.1257/aer.20140913. S2CID 32188412.
  2. ^ a b c d e "Timing is everything". The Economist. August 9, 2014. Retrieved October 20, 2024.
  3. ^ a b c d e Egan, Matt (September 23, 2020). "Stocks perform better when a Democrat is in the White House". CNN. Retrieved October 20, 2024.
  4. ^ Bivens, Josh (April 2, 2024). "Economic performance is stronger when Democrats hold the White House". EPI Action. Retrieved October 20, 2024.
  5. ^ "New report finds that the economy performs better under Democratic presidential administrations". Economic Policy Institute. April 10, 2024. Retrieved October 20, 2024.
  6. ^ "Employment Situation Summary". Bureau of Labor Statistics. November 6, 2020. Retrieved October 20, 2024.
  7. ^ Kessler, Glenn (October 2, 2020). "Biden's claim that Trump will be the first president with a negative jobs record". The Washington Post. Retrieved October 20, 2024.
  8. ^ a b "All Employees, Total Nonfarm". Federal Reserve Bank of St. Louis. August 2023. Retrieved October 21, 2024.
  9. ^ "Top Picks (Most Requested Statistics) : U.S. Bureau of Labor Statistics". Bureau of Labor Statistics. March 27, 2024. Retrieved October 20, 2024.
  10. ^ a b c "Civilian unemployment rate". Bureau of Labor Statistics. March 27, 2024. Retrieved October 20, 2024.
  11. ^ "Real Gross Domestic Product". Federal Reserve Bank of St. Louis.
  12. ^ a b Leonhardt, David (February 3, 2021). "Why Are Republican Presidents So Bad for the Economy?". The New York Times. Retrieved October 20, 2024.
  13. ^ Long, Heather (September 5, 2020). "The Trump vs. Obama Economy — in 16 charts?". The Washington Post. Retrieved October 20, 2024.
  14. ^ "Table 1.1.6. Real Gross Domestic Product, Chained Dollars". Bureau of Economic Analysis. March 27, 2024. Retrieved October 20, 2024.
  15. ^ "Conducting Monetary Policy" (PDF). Federal Reserve Board. March 27, 2024. Retrieved October 20, 2024.
  16. ^ a b "The employment situation February 2024" (PDF). Bureau of Labor Statistics. March 8, 2024. Retrieved October 20, 2024.
  17. ^ Bartels, Larry (January 15, 2015). "Can 'conservative principles' boost working-class incomes?". The Washington Post. Retrieved October 20, 2024.
  18. ^ McElwee, Sean (December 28, 2015). "These 5 charts prove that the economy does better under Democratic presidents". Salon. Retrieved October 20, 2024.
  19. ^ Funke, Daniel (July 29, 2019). "'Reagan took the deficit from $70 billion to $175 billion. Bush 41 took it to $300 billion. Clinton got it to zero. Bush 43 took it from zero to $1.2 trillion. Obama halved it to $600 billion. Trump's got it back to a trillion'". PoliFact. Retrieved October 20, 2024.
  20. ^ Wichert, Bill (June 8, 2012). "'It took us four years to balance the budget. Then I gave you four surplus budgets for the first time in more than 70 years, paid $600 billion down on the national debt'". PoliFact. Retrieved October 20, 2024.
  21. ^ Lawder, David (May 25, 2022). "CBO sees sharp reduction in FY 2022 deficit, but slowing economy to boost debt". Reuters. Retrieved October 20, 2024.
  22. ^ Santa-Clara, Pedro; Valkanov, Rossen (October 2003). "The Presidential Puzzle: Political Cycles and the Stock Market". The Journal of Finance. 58 (5). Wiley: 1841–1872. doi:10.1111/1540-6261.00590. JSTOR 3648176. S2CID 9684018.
  23. ^ Egan, Matt (March 3, 2016). "History Shows Stocks, GDP Outperform Under Democrats". Fox Business. Retrieved October 20, 2024.
  24. ^ Long, Heather (November 4, 2020). "What a contested election means for the economy—and your wallet". The Washington Post. Retrieved October 20, 2024.
  25. ^ Emily Graffeo; Lu Wang (November 3, 2021). "S&P 500 Is Up 37% Since Biden's Election One Year Ago, Setting Presidential Record". Bloomberg News.
  26. ^ Ke, Da (July 2024). "Left Behind: Partisan Identity and Wealth Inequality". Journal of Banking and Finance. doi:10.1016/j.jbankfin.2024.107201.
  27. ^ a b "US Business Cycle Expansions and Contractions". National Bureau of Economic Research. November 23, 2020. Retrieved October 20, 2024.
  28. ^ "Transcripts: CNN Late Edition With Wolf Blitzer". CNN. March 21, 2004. Retrieved October 20, 2024.[dead link]
  29. ^ "Donald Trump in Unearthed Interview: I Identify More As a Democrat". Inside Edition (official account). August 13, 2015. Retrieved October 20, 2024 – via YouTube.
  30. ^ "The Economy Under Democratic vs. Republican Presidents". Joint Economic Committee. June 22, 2016. Retrieved October 20, 2024.
  31. ^ "Tests of Significance". Department of Statistics and Data Science. Retrieved October 20, 2024.[dead link]
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