Impact on Consumer Price Index Per Presidents

Hypothesis testing using Welch's two sample t-test was performed to simply answer the question at hand, what does the data tell us - Republican presidents have time after time commanded lower US consumer price inflation compared to Democratic presidents?

Null Hypothesis: Average change (increase or decrease) in consumer price (inflation rate) between Democrat and Republican Presidency is same.

Alternate Hypothesis: Average change (increase or decrease) in consumer price (inflation rate) between Democrat and Republican Presidency is not the same but indeed greater for one of them. 

Results & Conclusion: Upcoming Soon

Test 1: No presidents excluded

Welch Two Sample t-test

data:  Increase / Decrease in Price Index (Inflation Rate) by Political Party (President)

t = 0.062997, df = 14.804, p-value = 0.4753

alternative hypothesis: true difference in means between group Democrat and group Republican is greater than 0

95 percent confidence interval:

 -6.921801       Inf

sample estimates:

  mean in group Democrat mean in group Republican 

                12.87778                 12.62000  

Test 2: Test data adjusted to remove top two outliers - President Jimmy Carter (1977 - 1980), and President Nixon / Ford (Republican) 2nd term (1973 - 1976) to retest without bias

Welch Two Sample t-test

data:  Increase / Decrease in Price Index (Inflation Rate) by Political Party (President)

t = -0.38862, df = 14.959, p-value = 0.6485

alternative hypothesis: true difference in means between group Democrat and group Republican is greater than 0

95 percent confidence interval:

 -4.80752      Inf

sample estimates:

  mean in group Democrat mean in group Republican 

                 9.85000                 10.72222 

What does the graph above shows?

The above graph tracks cumulative change in US inflation rate (log change in price index) for each president from the time they take office to the end of each of their presidential terms. This allows to track impact on inflation in US through the course of each presidency based on their socio - economic, foreign and domestic policies and leadership. 

Each president is baselined at the price index they inherit and their subsequent contribution to price inflation and economic well being of the nation is tracked. Each line/curve represent the cumulative change in US price index for the respective presidential term from begining to end i.e. 0 quarters (begining) to 16 quarters (end).

What is the methodology and data used for this analysis for the purpose of independent validation and replication? 

1.) Get the quarterly US unemployment rate data from Federal Reserve Board (FRB). The ticker in UNRATE. 

2.) Calculate the change (increase / decrease) in unemployment rate for each president with respect to the unemployment rate level when they took office i.e. calculate cumulative change in unemployment rate for 1 quarter into presidency, 2 quarter into presidency, and so forth for the entire presidential term of each president i.e. 16 quarters for each presidency.

4.) Plot the graph on a chronological basis i.e. time on x-axis and the change in US unemployment rate observed over each period in a given presidency on y-axis.

5.) Color each line with the color of each presidents party.

1. Unemployment Rate is the market value of all the goods (like crops, cattle, and cars) and services (like teaching, trucking, and repairs) produced in the country. When GDP increases means market values of goods and services have increased meaning economy grew, and hopefully more money for the pocket and investment if inflation is mellow i.e., inflation is less than the economic growth rate.

2. The median of a set of numbers is the value separating the higher half from the lower half of a data sample, a population, or a probability distribution. For a data set, it may be thought of as the “middle" value. The basic feature of the median in describing data compared to the mean (often simply described as the "average") is that it is not skewed by a small proportion of extreme values, and therefore provides a better representation of the center. Median income, for example, may be a better way to describe the center of the income distribution because increases in the largest incomes alone have no effect on the median. For this reason, the median is of central importance in robust statistics. Median is a 2-quantile; it is the value that partitions a set into two equal parts.