Economic and Crime Statistics by Presidential Administration

People will often say that the economy got better or worse under this or that President, or that crime has gotten really out of hand under this or that President. (Hardly anyone seems to perceive crime falling, even though violent crime has fallen nearly continuously since 1991). Many times people will make these assertions based on what some commentator said, their perception of crime in the local news, or how many friends or family are unemployed. We will not do that here. Instead we will look at hard numbers.

The unemployment, inflation, and misery index numbers were obtained from the website Miseryindex.us. They get their unemployment data from the U.S. Dept. of Labor, and their inflation data from BLS. Stock market data was obtained from Yahoo Finance.

Violent crime data was obtained from the FBI UCR table-building tool except for years 2013-2015 which cannot be accessed with this tool. For those years I obtained them directly from the FBI Uniform Crime Reports.

The Data

I present the data two ways. First, I present it as-is by President and by month of their administration (starting with month zero). Second, I present it normalized to the first month (or year) of the President's administration. In this latter format, every President starts with a value of "1". If the value for a given period is "1.2", this means that it is 20% higher than at the start of that President's administration.

Unemployment

In absolute terms, unemployment started at a generally lower level for both Bushes, and at a generally higher level for the remaining Presidents. Among the two 1-term Presidents, unemployment had risen by the end of their terms, although the pattern is different. During Carter, unemployment fell to 80% of its starting level, then rose back to its starting level. During Bush Sr., unemployment rose to 140% of its starting level. Among the 2-term Presidents, unemployment rose sharply early in Reagan's first term, to 145% of its starting, falling back to its starting level. It continued to fall during Reagan's 2nd term, eventually reaching 75% of its starting level. During Clinton, unemployment fell steadily all through both terms, eventually reaching ~55% of its starting value. During GW Bush, unemployment rose sharply to 150% of its starting value in the first 2.5 years, ending about 1.3 times its starting value by the end of his first term. During his second term, unemployment continued to fall, bottoming out just above its starting value, then rose sharply again during his last year, peaking at 175% of its starting value.

If we were to rank the first-term of Presidents (including the one-termers) on the basis of net unemployment change during their first/only 4 years, it would be from best to worst:
1. Clinton
2. Carter/Reagan/Obama (practical tie)
5. GW Bush
6. GHW Bush

Ranking the total performance of the 2-term presidents, we have from best to worst:
1. Clinton
2. Obama
3. Reagan
4. GW Bush

Inflation

Inflation is a little different than unemployment. While pretty much everyone agrees that lower is better with unemployment, this is not true with inflation. The Federal reserve has an inflation target of 2%. Higher than that is considered less desirable and eventually eats into workers' paychecks unless accompanied by wage inflation. Lower than 2% is considered to be approaching deflation, and less than 0% is deflation, which is considered bad by economists, though it does help consumers on fixed incomes during otherwise bad times. For this reason, it is not appropriate to employ the simplified relative comparison I used for unemployment. Instead I simply show the basic CPI inflation numbers above. The more intersting parts of the above graph are (1) the very high and mostly rising inflation under Carter, (2) the falling inflation early in Reagan's term, (3) near-deflationary conditions at the end of GW Bush's term, (4) deflationary conditions in Obama's 1st and 6th year. It is more difficult to construct an objective ranking, and I won't try.

Misery Index

From the website of the same name: "The misery index was initiated by economist Arthur Okun, an adviser to President Lyndon Johnson in the 1960's. It is simply the unemployment rate added to the inflation rate. It is assumed that both a higher rate of unemployment and a worsening of inflation both create economic and social costs for a country. A combination of rising inflation and more people out of work implies a deterioration in economic performance and a rise in the misery index."

About half the Presidents shown had the misery index rise during their first terms, Obama most sharply, before falling back closer to baseline by the end of his first term. Carter's held steady at first before rising sharply in the later half of his term. For Reagan and Clinton, the misery index fell even during their first terms. Among those reelected to a 2nd term, Obama had the highest relative increase in misery index during the first term. If we were to rank them based on their first term change in misery index, these would be the rankings (best to worst):

Among the 2-term Presidents, all had the misery index decline in their 2nd terms, ending below where it was at the beginning of their terms. It is notable however that for GW Bush, the index rose sharply during his final year, peaking at ~140% of the starting value just prior to the Obama vs. McCain election, then falling during his lame-duck period due to the sharp disinflation.

It is said that people vote with their pocketbooks or wallets. In the above data, we can see four Presidents who were reelected, and two who were not. It appears that this saying is not strictly true, either on the basis of unemployment alone, or general economic misery. Carter tied with Reagan and Obama for change in unemployment after 4-years, but was not reelected. In his case, the high inflation contributed to that, I imagine. On the other hand, GHW Bush was seemingly penalized for the 40% increase in unemployment during his term, while GW Bush was reelected with a 30% increase. On the basis of misery index, we can see why Carter was not reelected, but then GHW Bush's misery index change was not so bad, and he also lost reelection. It is also notable that GHW Bush had successfully executed a limited and popular war (Gulf War). It appears that a large enough increase in unemployment alone, or in overall misery index, can be a basis for not reelecting a President. But if there are other factors that make a President popular, he can be reelected even if the economy is not so great.

Stock Market

The stock market is yet another barometer of economic performance. It has a greater impact on the wealth of the rich and upper middle class versus working class and poor. For the middle class, it mainly impacts their retirement savings. For the poor who cannot afford to save for retirement, there is no direct impact, though a sharp move up or down may signal good or bad economic times ahead. There are various measures of stock market performance, the Dow Jones Industrial Average (DJIA) being most discussed on the evening news and probably most familiar to the average person. The Dow is an index of 30 of the largest companies. However, the average person with a retirement account is probably more impacted by the Standard and Poors 500 Index (S&P 500). The most heavily marketed index funds track this index, and most retirement investors are encouraged to put their money into one of these index funds, or a target-date fund. Target-date funds typically use a mixture of index funds, bond funds, and cash. The take home message here is that the S&P 500 index is going to be a fairly accurate measure of the performance of retirement funds held by the middle class.

The first graph below is the closing value of the S&P 500 at the end of each month. It is not adjusted for dividends, inflation, or anything else. The second graph is the value of the S&P 500 normalized to the start of each President's term, in the same manner as the previous graphs.

The first graph (raw index) is not all that useful, because of the tendency of the index to increase over the long term. It causes the changes to appear more pronounced for the recent Presidents, and gives the appearance that markets were little-changed further in the past. The normalized graph is much more useful. It is clear that the index generally increased during the first and second terms of all the presidents, with the exception of G.W. Bush, where neither of those things are true. If we were to rank them based on their first term change in the S&P 500 index, these would be the rankings (best to worst):

Rank	President	Normalized S&P 500 Index
1	Obama	1.727
2	Clinton	1.688
3	GHW Bush	1.465
4	Carter	1.331
5	Reagan	1.291
6	GW Bush	0.887

So if you had invested in an index fund at the beginning of the Obama administration, after 4 years you'd have had 173% of what you started with. If you'd invested at the beginning of the GW Bush administration, after 4 years you'd have had only 89% of what you started with. It also appears that the stock market performance during a first term has little or no bearing on whether a President is reelected. GHW Bush and Carter, who were not reelected, had the stock market perform better during their first terms than Reagan or GW Bush, who were reelected. Next, let's rank the 2-term Presidents at the end of their administrations:

So there's an obvious, glaring difference here between our top three and last place. If you'd have invested your money during the Clinton, Obama, or Reagan administrations, you'd have at least doubled your money, and tripled it in the case of Clinton. In the case of GW Bush, you'd only have two-thirds of your money left. In fact, the only time you'd have made money during GW Bush's term would be if you sold your stock sometime during 2007, and even then, the return would have been paltry compared with the other administrations. I think some of this was just bad luck for George W. He assumed office right at the peak of the most overvalued stock market bubble in history to that point. Then later in his term, he presided over the beginning of the Great Recession and accompanying banking crisis, the sort of crisis not seen since the Great Depression.

Gasoline Prices

One more economic thing we will examine here is gasoline prices. Most Americans, save for some in big cities, drive various places. Gasoline prices are fairly volatile compared with many other consumer prices, and they are posted in big numbers at every gas station one passes. They are controlled by the whims of commodity traders and OPEC, but many people credit or blame the current administration for high or low gas prices.

Violent Crime

The causes of crime are complicated. America has pretty much always been more violent than Europe, if we leave out war. We have had an interesting phenomenon occur in the U.S. regarding violent crime in our recent history. The FBI publishes statistics back to 1960 for violent crime. (Note: The 1995 Oklahoma City bombing deaths are counted as murders, but the 9/11 attack deaths are not. This is the FBI's decision, not mine.) People remember the "good old days" as having relatively little crime to today, and it is true if you are thinking about the early 60s. But if your "good old days" took place in the late 70s through the late 90s, not so much.

From 1960 to 1991, violent crime in the U.S. increased by a factor of 4.71. This means that in 1991, America was 471% as violent as it was in 1960. By the mid-1990s, crime was rapidly declining. By 2015, violent crime had fallen to 49% of its 1991 peak. Note that 2015 violent crime is still more than double what it was in 1960. I have heard the 1990s drop attributed to "law and order" criminal justice policies like "3-strikes". I have also heard more unusual explanations. In the 2005 book Freakonomics, the authors attribute the drop to legalized abortion. More recently, the phase-out of leaded gasoline has been credited with this decline.

Let us now look at the Presidents. Our data is less granular than the economic data, because the FBI only gives us crime data by year.

It is readily seen that the two Presidents who were not reelected had increases in violent crime during their first terms, while those who were reelected had decreases in violent crime occur. Coincidence or not?

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