Inflation/Deflation Index and Political Parties

L. David Roper (roperld@vt.edu)

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This shows the U.S. Consumer Price Index for the years 1914-1952 compared to the presidential terms (Dem=1, Rep=0) and Democratic control index of the federal government (see below for definition). Note the large deflations (negative inflation) in the Harding and the Hoover administrations (Great Depression 1929-1933), with near constant values in the intervening years. Note the large inflations during the WW I (1914-1918) and WW II (1939-1945) years and after the wars and during the Korean War (1949-1953).

This shows the change in U.S. Consumer Price (inflation/deflation) Index from year to year for the years 1914-1952 compared presidential terms (Dem=1, Rep=0) and Democratic control index of the federal government (see below for definition). Note the large deflations (negative inflation) in the Harding and the Hoover administrations (Great Depression 1929-1933), with near zero change values in the intervening years. Note the large inflations during the WW I (1914-1918) and WW II (1939-1945) years and after the wars and during the Korean War (1949-1953).

This shows the U.S. Consumer Price Index for the years 1953-1999 compared to the presidential terms (Dem=1, Rep=0) and Democratic control index of the federal government (see below for definition). Note the climbing inflation during the Vietnam War (1965-1975) and after the war. A leveling off started at the end of the Carter administration, but then it started increasing again during the Reagan administration, probably because of the huge tax cuts without decreasing government spending.

This shows the change in U.S. Consumer Price (inflation) Index from year to year for the years 1953-1999 compared to the presidential terms (Dem=1, Rep=0) and Democratic control index of the federal government (see below for definition). Note the climbing inflation during the Vietnam War (1965-1975) and after the war. A fast decline started at the end of the Carter administration, but then it started increasing again during the Reagan administration, probably because of the huge tax cuts without decreasing government spending. The Eisenhower and the Clinton administrations had the best records, although there were larger fluctuations in the Eisenhower years.

This shows the average % change in the absolute value of the CPI for presidential administrations. Standard deviations are shown. Note the lows Coolidge, Eisenhower, Kennedy/Johnson and Clinton.

This shows the average % change in the absolute value of the CPI for the Democratic control index (see below for definition). Standard deviations are shown. Note the lows for full Republican (index 0) and full Democratic (index 7) control, closely followed by Republican president and Democratic House and Senate (index 3). The highest average is for Democratic and Senate (index 5).

This shows the average % change in the absolute value of the CPI plotted for presidential administrations by political party. Standard deviations are shown. Considering the large standard deviation for the Republican presidents, there is very little difference between the two parties.

The correlation coefficients for Democratic control of the Senate, House and presidency with the % change in the absolute value of the CPI are:

Thus, we see that change in |CPI| occurs about 11% more often when we have a Democratic president and there is essentially no correlation with full Democratic control of the government.

The correlation coefficients for Democratic control of the Senate, House and presidency with the % change in the absolute value of the CPI for administrations since Franklin Roosevelts' the correlations are:

Thus, there is essentially no correlation for party control.

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These data can be found at http://www.jsc.nasa.gov/bu2/inflateCPI.html.