By Georgia Earley
For as long as I can remember, the economy has been a top voter issue and especially this election year. Since the middle of 2020 we’ve all had sticker shock from the abrupt price rises. And when prices go up they usually don’t come down. So who’s to blame? As long as I can remember, every U.S. president, Democrat or Republichas ridden an economic “wave,” good or bad, that starts previous to their taking office. And good economies prevail until something major and usually out of presidential control disrupts it. Below is a chart that illustrates this.
It refers to three main categories that make up the economy. The Gross Domestic Product, or GDP, shows how much U.S. companies are producing and how much people are buying. The Inflation Rate is the rate that prices rise compared with the previous year’s price hikes. And the Unemployment Rate; more jobs means more money-flowing into our economy, which keeps it moving.
And all it takes is a hiccup like the 2008 housing market crash or a pandemic to upset the apple cart and cause production to slow, prices to rise, and jobs to disappear. And it doesn’t matter who’s sitting in the oval office when that occurs.
The chart below illustrates those hiccups and the “waves” the last three presidents have ridden. And while there are many factors like wars and global oil prices that affect the economy, it’s a simple way to see basic economic trends.
To summarize, the economy under President G. W. Bush in 2007 had a reasonable 2% GDP, a moderately high Inflation at 4.1% and fairly high unemployment rate at 5%. Then in December 2008, Bush’s last year, the housing market crashed. So in 2009, President Obama’s first year, the GDP tanked to -2.6% and the Unemployment Rate soared to 9.9%.
Then, starting in 2010 and in the years that followed under Obama, we had a steady increase of the GDP, less unemployment, and a stable Inflation Rate, so the economy was expanding. This trend lasted eight years and continued through the Trump years until 2020, his last year when COVID hit and the economy was rocked once again.
So don’t be fooled by politicians of either party. The economy is a long-term game. And while a president can affect it, remember that Congress holds the purse strings. And whatever a president, the congress or anyone else does, it’ll either be short lived, or will take several years to see a consistent effect either way on the economy thus often running into the term of the next president.
And unfortunately few leaders will risk their political capital to address boring, back burner issues that have long term effects. Why? Because the importance of laws like the decades-overdue infrastructure bill are usually little understood by most voters and their affects on our economy often go unnoticed for many years, so it won’t get them re-elected in the short term.
And that short-term thinking throws away our taxpayer dollars. Any business managed with “hand to mouth” policies cannot plan for the future and costs more to run. But yet our Congress is running our country that way due to extreme cultural ideologies fueling partisan politics on both sides. Congress hasn’t even been able to pass a budget in 7 of the last 15 fiscal years for more than a few months at a time.
So who’s really responsible for inflation? Lots of people. But our Congress is a big player since they determine fiscal policies of how much tax we pay and how those dollars are spent, which not only affects our federal deficit, but our economy, which in turn affects the Federal Reserve’s decisions about interest rates, and how much money to print and to leave circulating in the system. And the more money that’s available the less value it has on the global market so our prices go up. And the more money we consumers spend, the demand for products goes up, supply goes down and prices go up.
So we need to do our homework and be attentive to how our system is working and what our leaders are doing. We need to vote for leaders who’ll prioritize those boring but important long-term issues when they pass laws. And we especially need leaders who will listen to and reason with each other as adults, and represent all the people they serve as apposed to being distracted with passing petty, divisive laws to promote partisan cultural opinions that should be decided by individuals, not politicians.
Really the bottom line is that we need to beware of the myths and the political games our leaders play so that we’re not manipulated by them.
U.S. GDP Growth Rate by Year Compared to Inflation and Unemployment from 2007 through 2023
