How Well Did States Prosper Under Bush 43? The Numbers Are In

As the Democratic administration wrestles with huge U.S. economic problems, officials can take comfort in the fact that they have an easy act to follow. The numbers are in, and under Bush 43 only four U.S. states beat the average long-term growth rate. The four "winner" states that did better than the long-term U.S. per-capita average annual growth rate of 2.5 percent were North Dakota, New York, Louisiana and Montana. (Louisiana wins on a technicality as explained below.) The other 46 states grew at less than the long-term average growth rate.

The numbers are through 2007, but we know that 2008 was a recession year, so the final numbers by state will be worse than the record through 2007.

The state records are on two charts prepared by my friend Professor Jurgen Brauer of the James M. Hull College of Business at Augusta State University in Augusta, Ga. His numbers are from the St. Louis Fed's FRED database, which vacuums population data from the U.S. Census and Gross State Product (GSP) data from the Bureau of Economic Analysis.

With Prof. Brauer's permission I am using his chart below showing average annual real growth in per-capita GSP during the first seven Bush 43 years.
Among the top ten losing states, two showed negative annual per-capita GSP real growth during 2001-2007 (2000 being the base year): Michigan and Georgia. The next eight states all had real growth of less than one percent: Indiana, Colorado, South Carolina, Missouri, Ohio, Alaska, Illinois and New Hampshire. Professor Brauer observes:

Two of the bottom five states in real per-capita GSP average annual growth rates switched from "red" to "blue" in the November 2008 presidential elections.

On the upside, the top state in per-capita GSP real growth was North Dakota, with annual growth of about 3.5 percent. The next nine states were all in the 2-3 percent range on per-capita real growth: New York, Louisiana, Montana, Vermont, Oregon, Maryland, South Dakota, Iowa and Alabama. Professor Brauer adds:

Only four states in the nation beat the long-term per-capita average annual growth rate for the United States of 2.5 percent since the late 1920s. Louisiana is an anomaly for its growth is at least partially explained by the exodus of poor residents following Hurricane Katrina so that the improvement in its average growth rate for the remaining residents is a statistical fiction.

Prof. Brauer's second chart below shows the state-by-state per-capita value of economic production in 2007.
The top ten states by per-capita GSP in 2007 are Delaware ($56,500 GSP per capita), Connecticut, New York, Massachusetts, New Jersey, Alaska, California, Virginia, Minnesota and Colorado (the District of Columbia is not included).

The bottom ten states are Mississippi (less than $25,000 GSP per capita), West Virginia, Arkansas, Montana, South Carolina, Oklahoma, Alabama, Idaho, Maine and Kentucky.

Should the weak economic performance of the states during the 2001-2007 years be a surprise? Michael Kinsley, writing in the Washington Post in 2005, concluded that the Democrats did better since 1960 on the Republican ("Daddy"-party) criterion of economic prosperity.

From 1960 to 2005 the GDP in year-2000 dollars rose an average of $165 billion a year under Republican presidents and $212 billon a year under Democrats. Measured from 1989, or measured with a one-year delay, or both, the results are similar. [On the] average annual rise in real per-capita income, Democrats score about 30 percent higher.

Bush 43 did not reverse this weak economic record.

Comments

[DuganS1]

The belief that Democratic Presidents have been better for the economy than Republican Presidents is a very silly argument. First, how the economy fares during a specific Presidency often has more to do with the timing of the business cycle than Presidential policy. Second, Presidential policies often need time to have an effect so using economic data from the first year or two of a Presidency often has little to no reflection on the success of a President's policy. Third, many Presidents have been faced with a congress of the opposition party. This occurred, for example, for most years when Reagan was President, all for years of the Bush Sr Presidency, six years of the Clinton Presidency, and two years of the Bush Jr Presidency; and when this happens, much of what a President wants to do gets blocked and some of what they don't want to do gets passed. Last, the policies of many Presidents of the same party have been dramatically different. For example, Clinton's policies in no way resemble that of Carter or Lyndon Johnson and Reagan's policies in no way resembled that of Nixon. Clinton's policies in many ways resembled those of George W when it came to free trade and low taxes. Present John F Kennedy's policies resembled those of Reagan more than any other. And President Ford wasn't even in the White House long but had the misfortune of suffering through the Oil embargo.

[DuganS1]

The data is misleading, if not meaningless, because this is merely an issue of timing. The US economy boomed from the middle of 1991 up until the end of 2000. Then the economy went into recession on almost the very day George W Bush became President. The US job market, in fact, peaked in December 2000, the last month Bill Clinton was President, and didn't sustain levels above that until about spring of 2004. This fact has nothing to do with the economic policies of George W Bush, but rather to do with timing of his Presidency. In hindsight, it appears that the 2003-2008 boom was mainly an extension of the 1991-2000 boom because much of the 2001-spring 2003 downturn was mitigated or negated entirely because of the Bush tax cuts and tax rebates, as well as the Federal Reserve cutting rates dramatically in 2001.

[caphillprof]

Since all but 2 states are above-average, do we assume that the long term growth rate is something other than a rate reflective of the 2000-2007 period? OR are we in Lake Woebegone?

[LeftRight]

How are all but two states above average??? There were two states that saw NEGATIVE growth, and the other 48 saw positive growth, but only 4 states beat the long term average increase of 2.5% per year, and in the case of LA that wasn't what would have happened had Katrina not resulted in a long term exodus from the state.

[TrooAmerican]

LA has also had huge infrastructure work going on for the past 3.5 yrs from hundreds of Billions in federal disaster aid they got because of Katrina, construction has been going on their nonstop since sept 2005, on the federal dime. I'm sure had Michigan been handed that kind of money, our roads wouldnt be so bad, and the unemployment wouldnt be so high from so many auto related jobs lost statewide.