The Presidential election will be held in early November. The next president will be tasked with helping the U.S. economy recover from a funk brought on by the bursting of the residential housing bubble and ensuing Great Recession that also slowed the global economy. It is generally assumed that Republicans are pro-business and good for the economy, while Democrats are focused on regulation and related tax-and-spend initiatives to encourage government growth at the expense of private businesses. The reality is that the difference isn't as stark as people might expect.

Bad for Business?
As strange as it may sound, diehard Republicans believe that President Barack Obama's tenure has been disastrous to U.S. business. Stock market returns so far during his tenure tell another story. A recent Reuters article detailed that the S&P 500 is up some 74% since Obama took office in late January 2009. Of course, luck has much to do with the fact that he came into office just as the stock market was bottoming from the credit crisis, but it is somewhat surprising to learn that this is the strongest first-term performance since Dwight Eisenhower served his first term back in the 1950s.
Another study published by Bloomberg went into more depth on the issue of whether Democrats or Republicans are better for the economy. It cited work by Richard Carroll, who performed an analysis and ranked economic performance for presidents starting with Harry Truman following the Great Depression.

Highest-Ranked
Truman was ranked the highest and happens to be a Democrat. Of course, the post-war boom was one of the strongest economic performance periods in U.S. history, so Truman may have also lucked out with his timing as America's leader. Carroll's analysis also detailed that Truman's tenure saw a budget surplus, reduction in national debt and a record-low unemployment rate of 4%.

The second spot also went to a Democrat: John F. Kennedy, who was followed by Democrat Lyndon B. Johnson. Next on the list were Republican Dwight D. Eisenhower, Republican Gerald Ford, Democrat Bill Clinton, Republican Richard Nixon, Republican Ronald Reagan, Democrat Obama, Republican George Bush Sr., Democrat Jimmy Carter and finally Republican George W. Bush.

As it turns out, Carroll's analysis resulted in a tie between Democrats and Republicans regarding which party affiliation was better for the economy. Somewhat surprisingly, the pro-business reputations of Reagan and both Bush presidents ranked toward the bottom of the list. Obama's ranking toward the bottom is not overly surprising, nor is Carter's rank as second last as he served during the difficult economic environment in the 1970s. Bill Clinton, a Democrat, ended up being quite supportive of business, but did serve during a period of strong overall economic performance.

Economic Factors
Economic performance does have an impact on whether a president is likely to be elected for a second term. Ford, Bush Sr., and Carter failed to win re-election and the weak economy was seen as a primary culprit. Obama's unfavorable ranking in terms of economic performance may not bode well for his re-election chances come November.

Carroll's ranking dinged a president if the federal budget grew faster than the economy during his tenure. In this respect, both Republicans and Democrats served as presidents during periods where big government got bigger and calls into question whether Republicans are truly supportive of smaller government.

The Bottom Line
The real question might be if the government can truly be responsible for controlling the ups and downs in the business cycle. The Federal Reserve and other politicians in Congress certainly pulled together to help save the economy from financial ruin at the height of the credit crisis, but most of the time there are just too many considerations that go into supply and demand fluctuations in the economy in general.

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