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The Best Presidents for the Economy

By Morgan Housel - Oct 24, 2012 at 11:24PM

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Commanders-in-chief, by the numbers.

We're two weeks away from the presidential election. You will inevitably hear over the coming days that this will be one of the most important elections of our lifetimes. I'm not sure that's the case. One of my favorite election quotes comes from bank lobbyist Andrew Lowenthal: "Every election I've ever been involved with has been 'the most important election in history.' At some point, it's not. It's just the path of history."

In general, presidents get too much credit for the economy when things are good, and too much blame when things are poor. We tend to imagine every blip in the stock market and every unemployment report as a direct reflection of a president's policies -- particularly during election years. In reality, Congress and the Federal Reserve probably have just as much, if not more, sway over the economy than any president. And one president's policies can spill over into the next administration, making it difficult to sort out who is liable for what. We have a hard enough time accurately measuring what the economy is doing, let along assigning responsibility for its moves.

Still, everyone should know a little economic history. And the cleanest way to get a feel for how the economy has done under past presidents is to just lay the numbers bare.

Here are five economic variables going back to 1900, covering every president from Teddy Roosevelt to Barack Obama.

1. Stock market performance
This is the inflation-adjusted, dividend-adjusted, performance of the S&P 500:

2. Corporate profits

A word here: Corporate profits were incredibly depressed from the financial crisis in January 2009, when President Obama entered office. That low starting point makes growth through today look massive. If, instead of January 2009, you use January 2008 profit levels as a starting base, average annual corporate profit growth under President Obama is 6.8%.

3. Real GDP per capita
This measures growth of the entire economy adjusted for the size of the population:

Another note here: World War II spending was near a peak when President Roosevelt passed away in 1945, boosting the economy and annual growth. Real GDP fell 12% between 1945 and 1947 as wartime spending tapered off.

4. Inflation

5. Unemployment rate
This is the change in the unemployment rate during presidential terms (or through September for President Obama), measured in percentage points. Unemployment is measured by a yearly average before 1955; after, it is measured on a monthly basis.

What do you make of these numbers? Share your thoughts below.

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