History could portend a bad omen for President-elect
Every Republican president since
While history isn't gospel, the track record makes the odds that a recession might appear during President Trump's term all the more likely, Stovall says. "From a probability perspective, a recession is very likely in President Trump’s first term in office," he says.
Interestingly, recessions aren't the only indicator of economic slowdown that appear during times of Republican presidents.
Real GDP growth, a measure of economic activity in the U.S., averaged 3.33% during the 64 years and 16 presidential terms going back to
"The U.S. economy has performed better when the President of the United States is a Democrat rather than a Republican, almost regardless of how one measures performance," according to the report titled "Presidents and the Economy: A Forensic Investigation."
Academics and market historians are trying to figure out why the economy tends to stall out with a Republican president. Such research that is all the more timely given Trump's largely unexpected win for the high office this month. Research offers a few suggestions, including:
* Random "good luck." Democrats have had the fortune of being in office when favorable random shocks go their way during their terms, Blinder and Watson found. Big drops in oil prices, positive boosts in productivity and also optimistic consumer outlooks tend to occur during Democratic administrations, they said. None of these factors are tied directly to the actions of the president, the professors found, These three factors explain upwards of 62% of the better economic performance.
* Lag times for policies to kick in. Evidence pointing to better economic growth under Democrats is an illusion created by the timing of when presidents enter office, says
* The business cycle. The economy follows a natural progression of expansion, peaking and contraction which is more powerful than the president, Stovall says. "I think the business cycle trumps the presidential cycle, and Fed policy is most important of all," he says. Currently, leading indicators like housing starts, consumer confidence and the Conference Board's Leading Economic Index don't signal a looming recession.
But the cycle inevitably turns, it's just unknown when. Trump faces a ticking clock in terms of the ongoing economic recovery's life, Stovall says. The economic expansion period the U.S. is in now is 89 months old making it the fourth longest expansion of the 21 since 1902 and twice the length of the median expansion, Stovall says.
Understanding why the economy does what it does with different ideologies in the White House remains a mystery, Kane says."The question of presidential economic performance gets increasingly complicated the more we study it," he says.