Impact on Unemployment Rate / Joblessness Per Presidents

Null Hypothesis: Republican presidents have time after time commanded higher decrease in US unemployment / joblessness rates compared to Democratic presidents!

Graph 1: Change (increase or decrease) in US Unemployment/Joblessness rate wrt to the begining of the presidency (y-axis) over time (x-axis) per president.

Key Takeaways

1.) The median US unemployment rate change (log) over each presidency since 1950 (President Truman 2nd term) to 2024 (President Joe Biden) is around -2.7% i.e., most presidencies reduce the unemployment rate by about 2.7%. For the purpose of illustration during President Carter's the unemployment rate went down from 7.4% to 7.2% i.e. -2.7% change.

2.) The record for highest increase in US unemployment rate is held by President Eisenhower (Republican) in his second term (1957 - 1960) when US unemployment rate increased (log change) by 57% (from 3.7% to 6.6%); only to beat his own recond for the second highest increase in US unemployment rate in his first term where he managed to garner a 48% increase (from 2.6% to 4.2%). Across his both terms the increase was 93% second highest increase only after 108% achieved in Presidents Donald J. Trump's first term. The only other time the US unemployment rate increased more than 40% was under President Donald J. Trump (Republican) (1st Term) (2016 - 2020) saw a sharp increase of 42% in unemployment rate as it went from 4.4% to 6.7%; in fact the increase observed in 2020 was in excess of 108% (when unemployment rate hit 13%) highest amongst any president since 1950.

2.) Other presidents that were able to achieve comparable soaring increases are President Richard Nixon / Gerarld Ford (Republican) in both 1st and 2nd term leading the increase in nations unemployment rate by 43% (from 3.4% to 5.2%) and then beating his own record with an increase of 47% (4.9% to 7.8%). President George HW Bush (Republican) achieved 39% increase in US unemployment rate (from 5% to 7.4%), while his son President George W Bush (Republican) in his 1st term lead to an increase in US unemployment rate of 23% (from 4.3% to 5.4%) and then beating his own record with an higher increase of 34% (from 5.2% to 7.3%) in his 2nd Term. Across his both terms the increase was 53%.

3.) President Truman (Democrat) (1949 - 1952) 2nd term saw an initial spike of around 25% increase, but ending hsi second term with a strong and sustained decrease of -62% (from 5% to 2.7%), he still holds the record for largest decrease in US unemployment amongst all presidents since 1950s. Coming in close at 2nd place is President Barak Obama (Democrat) (2012 - 2016) in 2nd term reduced US uneployment rate by -47% (from 7.5% to 4.7%), he was able to achieve -10% (8.7% to 7.9%) in his 1st Term only after 12% increase during early first term; across his both terms the US unemployment rate reduced by -67% (from 8.7% to 4.7%). Under President John F. Kennedy the US unemployment rate reduced by -32% (from 6.9% to 5%); this was sustained by President Lyndon B Jhonson for another reduction by -32% (from 4.7% to 3.4%); the net reduction in US unemployment rate over both these presidents was -71% (from 6.9% to 3.4%). Meanhwhile under President Clinton (Democrat) the US unemployment rate decreased by -26% (from 7% to 5.4%) in his 1st term, and -29% (from 5.2% to 3.9%) in his 2nd term; across both of his terms the US unemployment rate reduced by -58% (from 7% to 3.9%). This implies President Obama holds the record of highest reduction in US unemployment rate over both terms; followed by President William Clinton. Under President Biden (Democrat) the US unemployment rate decrease -40% from (6.1% to 4.1%), infact the decrease was as much as -60% in 2023 only to increase and end up at -40%; almost comparable to the record held by President Truman (Democrat) (1949 - 1952) in his 2nd term i.e. -62%.

4.) There is no known record of US unemployment rate reducing or remaining same at the end of the term as compared to when the president took office for any other Republican president except for President Ronald Reagan who saw a reduction of -1.4% (from 7.4% to 7.3%) after an increase of about 30% in midterms in his 1st term, followed by a reduction in US unemployment rate of -30% (from 7.2% to 5.3%) in his 2nd Term.

5.) There is no known record of US unemployment rate increasing or remaining same at the end of the term as compared to when the president took office for any Democratic President.

Sample Data

Graph 2: Change (increase or decrease) in US Unemployment/Joblessness rate wrt to the unemployment rate at the begining of the presidency (y-axis) by quarters into presidency (x-axis) for each president (trend lines).

Graph 3: Change (increase or decrease) in US Unemployment/Joblessness rate at the end of the presidency wrt to the unemployment rate at the begining of the presidency (y-axis) date (x-axis) for each president (bars).

Hypothesis Testing

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 higher decrease in US unemployment / joblessness rates compared to Democratic presidents?

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

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

Results & Conclusion: The average change in US unemployment rate for Democratic presidency is -31%, on the other hand the average change in US unemployment rate for Republican presidency is +30%. Therefore, alternate hypothesis is true, and null hypothesis is false. This was further scrutinized by limiting the test data to 1953 (President Eisenhower) onwards to remove the biases from Truman 2nd term. The average change in US unemployment rate for Democratic presidency is -27%, on the other hand the average change in US unemployment rate for Republican presidency is +30%. Therefore, further confirming alternate hypothesis is true, and null hypothesis is false.

Test 1: No presidents excluded

Welch Two Sample t-test

data: Increase / Decrease in Joblessness by Political Party (President)

t = -5.8994, df = 15.742, p-value = 1.198e-05

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

95 percent confidence interval:

-Inf -43.04745

sample estimates:

mean in group Democrat mean in group Republican

-31.07778 30.09000

Test 2: Test Data limited to year 1953 (President Eisenhower) onwards in order to remove the biases from Truman 2nd term

Welch Two Sample t-test

data: Increase / Decrease in Joblessness by Political Party (President)

t = -5.7667, df = 14.385, p-value = 2.193e-05

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

95 percent confidence interval:

-Inf -39.86858

sample estimates:

mean in group Democrat mean in group Republican

-27.2625 30.0900

Sample Data

About the Graph

What does the graph above shows?

The above graph tracks cumulative change in US unemployment rate (increase or decrease) for each president from the time they take office to the end of each of their presidential terms. This allows to track impact on joblessness 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 Unemployment rate they inherit and their subsequent contribution to job creation and economic well being of the nation is tracked. Each line/curve represent the cumulative change in US unemployment rate for the respective presidential term from begining to end i.e. 0 quarters (begining) to 16 quarters (end).

Methodology

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.

Key Definitions / Glossary

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.

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.

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