US Economic Growth 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 higher US economic growth rates compared to Democratic presidents?

Null Hypothesis: Avg. Economic growth between Democrat and Republican Presidency is same 

Alternate Hypothesis: Average Economic growth between Democrat and Republican presidency is not same but greater for one of them. 

Results & Conclusion: The average economic growth rate for Democratic presidency is 14%, on the other hand the average economic growth rate for Republican presidency is 8.9%. 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 economic growth rate for Democratic presidency is 13%, on the other hand the average economic growth rate for Republican presidency is 8.9%. Therefore, further confirming alternate hypothesis is true, and null hypothesis is false.

Test 1: No presidents excluded

Welch Two Sample t-test

data:  Economic Growth by Political Party (President)

t = 2.7191, df = 12.207, p-value = 0.009197

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

95 percent confidence interval:

 1.852034      Inf

sample estimates:

  mean in group Democrat mean in group Republican 

                14.21111                  8.85000 

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:  Economic Growth by Political Party (President)

t = 2.3747, df = 11.661, p-value = 0.01783

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

95 percent confidence interval:

 1.05872     Inf

sample estimates:

  mean in group Democrat mean in group Republican 

                  13.125                    8.850  

What does the graph above shows?

The above graph tracks cumulative US economic growth (or decline) for each president from the time they take office to the end of each of their presidential terms. This allows to track how economy grew through the course of each presidency based on their socio - economic, foreign and domestic policies and leadership. 

Each president is baselined at the economy they inherit and their subsequent contribution to economic well being of the nation is tracked. Each line represent the cumulative economic growth curve of 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 GDP (Real GDP) Data from Federal Reserve Board (FRB). The ticker in GDPC1. 

1.1) Real GDP was used as its already adjusted for inflation, so as to have apples to apples comparison to measure the change in GDP based on socio - economic policies of each presidency sans the noise from inflation.

2.) Calculate the economic growth rate for each president with respect to the real GDP level when they took office i.e. calculate cumulative change in GDP 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 US economic growth observed over each period in a given presidency on y-axis.

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

1. Gross Domestic Product (GDP) 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.