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The economy is such a powerful tool, which influences the results of United States presidential elections. It enables political scientists to predict the outcome of the elections, the losers, and winners of the elections long before the commencement of the campaigns. However, a question that political scientists should contend with is whether it is the economy since incumbent presidents with well performing economies lose elections. The reason suggested by Vavreck (2009) is that what matters in an election is not merely the state of the economy, but rather, how the presidential candidates react to the economy. Studies have established a strong correlation between the economy and presidential elections. Thus, to understand the impact of the economy on presidential elections, and whether the economy affects the elections directly, it is critical to look at previous elections, both the present and past elections.
Numerous studies have been conducted on the impact of the economy on the recent presidential elections, and the findings of the studies are well documented. However, though a significant number of the researchers appreciate the role of the economy on the modern-day presidential elections, less has been documented on the impact of the economy on the past presidential elections. The main factor, which explains the knowledge gap, is the confusion arising from the definition of the modern day elections. Many scholars have often disagreed on the commencement of the modern-day elections. Citing the massive developments, which have been witnessed in the Federal Government and passing of various legislations, such as the Employment Act of 1946, the majority of the research is based on the modern-day presidential elections. Thus, the major question, which may remain unanswered, is whether the economy has played a significant role since the earliest elections in history.
This is complicated by the fact that a majority of the research has not established a distinction between the two periods. There are numerous studies conducted on the impact of the economy on the elections in the 19 century; however, no studies have been conducted on the elections conducted earlier than 1872. This will be the greatest shortcoming in drawing the conclusion of this research.
In all presidential elections, employment and the economy are mentioned as pivotal issues in the elections. It is always assumed that the incumbent president has little to be worried about if the economy is performing well and employment rate is maintained at a minimum rate. However, this is not always true. Since 1948, the United States has had eight presidential elections with an incumbent presidential candidate versus an upcoming challenger. Out of the eight elections, two pitted a presidential candidate who was too weak to be elected; thus, the two elections of 1964 and 1972 are not worth studying. Out of the remaining six presidential elections, incumbent presidents have lost three elections to their challengers. In the elections of 1956, Eisenhower had a massive win despite the fact that the economy had witnessed a tremendous improvement during Truman's presidency than in the first term of Eisenhower's presidency.
However, the high growth of the real GDP witnessed during Eisenhower's presidency was a critical factor in his reelection. Furthermore, Reagan won the 1984 elections with a landslide; however, this had little to do with the unemployment statistics. The economy was recovering from a recession at the time of Reagan's reelection bid; the real GNP had grown massively in the last year of Reagan's first presidential term. In Clinton's second run for the presidency, he did not have a landslide win as in the other two incumbent president wins. In Clinton's first term as president, the United States witnessed a consistent economic growth and an improving unemployment rate. The analysis of the three incumbent president wins we realize that a small sample of the voters was interested in the economic improvement during a presidents tenure in office; a majority were more interested in the comparison of the current administration with the earlier administrations.
The analysis of the elections of the incumbents who lost their reelection bids is based on the three elections. The 1976 election is an unusual occurrence; Gerald Ford replaced Richard Nixon after resigning as president. In the elections, the analysis is conducted to compare the performance of a Republican ncumbent relative to the earlier Republican administration. There are various economic reasons that point to the incumbent's loss; the economy witnessed a declining performance while unemployment rates were rising steeply. The economy's performance explains Ford's loss in the election. In the 1980 election, Jimmy carter won against Reagan, the incumbent president. Unemployment rate had little to do with Reagan's landslide win over Carter since employment rates had improved during Carter's presidency.
However, the last two years of the incumbent's term had seen an insignificant economic growth. Thus, the 1980 election indicate that economic growth rather than unemployment had an impact in toppling the incumbent. The 1982 is another unusual election marked by Bush running against Reagan in his reelection bid. Bush's loss can be attributed to the insignificant economic growth in the last two years of Bush administration. The economy suffered a recession, and the voters vented their anger on the incumbent president. The analysis of these elections reveals that economic performance rather than unemployment affected the outcome of the elections.
The impact of the economy on the modern-day presidential elections is well documented. The models used have predicted the outcome of the elections with ell before the commencement of the campaign period. Vavreck (2009) observes that the most striking similarity between the forecasting models is that they have predicted the same winner for the election despite their striking variations. Numerous studies have established a link between the economy and the presidential vote. Everyone wants the restoration of international peace, similarly, every citizen wants the prosperity of the country; therefore, when governments fail to deliver their economic promises, the citizens hold them accountable (Lewis-Beck and Stegmaier, 2007). Furthermore, studies conducted by Radcliff (1988) between the period 1947-1975 establish a strong correlation between the presidential approval and variations in employment and inflations.
In an earlier study, Erikson undertakes the study on establishing the effects of changes in the real per capital disposable income and the cumulative evaluations on presidential elections between 1948 and 1984. He establishes that though the two variables significantly affects the presidential vote, the variations in income produce a stronger effect on presidential candidate evaluations when compared to the changes in the real per capital disposable income. This is a new and unanticipated; the economy can match presidential candidate evaluations. Furthermore, Alesina and Rosenthal (1995) establish that variations in real GDP significantly influence the presidential elections. Unlike the works of previous researchers, their work is based on the period earlier than1915, and they based their research on partnership intersection, split ticket voting, and polarization.
Dolan, Frendreis, and Tatalovich (2009) have conducted the most recent studies on the impact of the economy on the elections; they tried to establish the accuracy of the individual's perception of the economy. The study was conducted for the period between 1949 and 2008. The findings of the study demonstrated that not only does a person's perception of the economy influence their voting, but also a person's perception of the economy strongly matches the economic reality. However, this occurrence was seen to hold for unemployment and other economic conditions in general, but excluded inflation. Vavreck (2009) goes further and deviates from researching on the effects of the aggregate economy on presidential elections. He researches on the relationship between economic voting, campaigning, and the behavior of candidates between the period 1952 and 2008. Vavreck establishes a typology of campaign behavior, which he uses to classify presidential candidates into two categories: candidates favored by the economy and the candidates who are not; she successfully establishes a correlation between the economy and the campaign behavior of presidential candidates.
The effects of the economy on the earlier presidency
As from the late years of the 19th century, a country's economy forms the backdrop against which politics of presidential campaigns are performed. Lynch (2002) posits that, a slight change in the GNP, deflation and inflation of the economy have a very strong effect on the presidential electtions. Any new nation is focused on a better economy. The fresh constitutional government must have novel policies on taxation and how the income will be disbursed from the treasury. Prominent issues of economic background like the national bank and taxation get into the public sphere ahead of any presidential elections. For instance, in 1837, Van Buren who was a vice president for one term when Andrew Jackson was president stated that he does not care about the bank. This comment resulted to national bank collapse, riots due to high food prices, and depression that set the background of elections in 1840.
As the campaign gained momentum, Charles Ogle said that Buren does not have the interest of the American workers in his mind since he buys everything from the Frenchmen. This implied that as the American workers toiled, he was busy taking his monies to the Frenchmen, and this is what led to the collapse of banks. This made Buren to lose in the election as his competitor won because voters were disillusioned by his inappropriate words that spurred economic depression.
Analysis of the GDP, inflation, and deflation based on the Electoral College Vote can show how the economy affects presidential elections. GDP increase will spur an increase in a double-party Electoral College segregate vote that the sitting president expected. In this model, the percent change in the GDP that occurs before and after the presidential election is measured. According to Campbell, Philip, Warren, and Donald (1960), the GDP change in the 1828 presidential election was -1.67 percent. This means that, from the previous campaign year of 1827 to the year of the real election, the GDP declined. The inflation rate is also calculated like the GDP. The rate is then squared, which allows the rate to accommodate negative or positive price change. In most cases, the inflation rate increases and this leads to a decline in the double-party Electoral College vote that the sitting president receives.
These analyses and their related findings imply that incumbents are usually held accountable for the success or collapse of the economy. In the public sphere, the current government has a significant control over the economy. In the economic recession of 2007/2008, Obama was elected because people felt that he could help in economic recovery. Stock Market Performance is usually affected by the presidential campaigns. Even after the Obama administration, the economy is still not strong. Stimulus spending, benefits, and other policies that have been made to improve the economy have not the economy off the ground.
Brian Knight, a research fellow at the National Bureau of Economic Research acknowledges the fact that the elections have a great effect on the economy. Knight researches on the major key pillars of the economy, which include technology, tobacco, pharmaceuticals, defense, and energy. In the pre-election years, the defense stocks underperform while the biotechnological and pharmaceutical sectors underperform. In his research, Knight found out that there are candidates who are favored by the economic conditions while there are those who are ill favored by the economic conditions. He used the 2000 elections where Al Gore and George Bush were the main contenders. Knight concluded his research in 2004, and he found out that firms that were favored by the Gore administration in 2000 underperformed while those that were Bush favored outperformed.
In conclusion, incumbents usually make economic policies that direct the failure or the success of the economy. Underperformance of the main economic pillars, stocks, and lack of jobs contributes to a decline in GDP in the election years. Before the elections, people are overly concerned with issues concerning finances. People want to spend less and cut back on their credit. The citizenry always want focused leaders who will influence the formation of sound policies that will help in their welfare. The economy is a strong tool that directs the re-election of a president. During the election period, the public is usually hopeful that the economy will get better. This is the reason that contributes to the decline in the share of votes that an incumbent president gets in the election. Media plays a great role in influencing people towards making the right vote. Political leaders especially incumbents are usually rated according to the economic status of the country rather than the decorum displayed by their campaign.