I got to wondering, with it now being a presidential election year, if this did anything special for the state’s economy. My immediate concern is not the specific mechanism generating a different economic outcome. I mean, for all we know it could be as simple as buying votes with policies favoring the state. I think this is essentially the policy of both parties in any year but that’s an issue to address in a different post at this point.
So what would the appropriate metric be to look at for economic performance in presidential election years? I thought a bit about the typical GDP or personal income measures. Would national level policy be able to impact these? Short answer is yes, but again the specific mechanism would be an issue. I do find it more likely to be a policy target than employment.
Maximum employment is always a broad goal for fiscal policy makers (politicians). Working people are more likely to be happy with the status quo and therefore more likely to vote for incumbents is their thought process. Now every state likely gets certain handouts in policy bills in any, maybe every, year. Economic improvement is a goal for policymakers at all levels but I think smaller areas, like local and state, worry even more about employment or other labor market measures.
| Year Type | % |
|---|---|
| Presidential Election Year | 7.82 |
| All other Years | 4.94 |
According to the table, which uses personal income data for North Dakota from 1998 to 2022, it is clear presidential election years do see a significant increase in personal income growth compared to the prior year. The average presidential election year is around 1.5 times a regular year in terms of growth from the prior year.
There is still a great deal to work out with this, especially attempts at timing economic outcomes (the classic political business cycle), and while the success rate of that timing is likely low it does seem like the type of thing actors will attempt regardless. Of course my interest in this also comes from the predictive/forecasting side of things. If there is a relationship to assess or evaluate here it would have a big impact on what we see happening this year.
