From the Freakonomics blog:
I can envision how this will be interpreted. I could see a conservative looking at it and saying “Bush has done a good job. The initial downturn started under Clinton and was increased due to 9/11, but since then we’ve seen growth.”
The downturn in 2000-2002 was going to happen no matter who was President, it was simply the part of the business cycle where the economy contracts. However, when looking at the following growth as the business cycle heats up again, it doesn’t quite match the previous high. The standard assumption would be that each successive peak would be higher than the previous one as economies tend to grow over time. Thus even equalling the high point of 1999 would be poor performance. Failing to match the prior peak is a sign of poor economic performance.
It is a common claim that Presidents have no control over yet are evaluated primarily on the economy. It is true that Presidents and policies are not likely to change the nature of business cycles, but they do matter. If in this decade we had chosen policies that would have fixed the health care issue, invested more in education, put more into infrastructure, had greater oversight over the banking/housing industry, and avoided excess war, I would expect the economic performance to have been significantly higher.
To a certain degree, Bush may not have made us substantially worse off, but he has failed to make us better off. In economics there is the concept of the opportunity cost, that is, the value of an alternative action that is not selected. In this case, the opportunity cost of allowing Bush to conduct economic policy is far greater than the direct cost, but it is very relevant to consider.
UPDATE: From Kevin Drum: Apparently Bush is the only President to have a cycle that results in lower median household income than before. Carter had essentially null. Let me say that again, Bush is slightly worse than Carter, who was pretty bad (though there are some other comparison charts of economic performance between Democrats and Republicans that show Carter as basically equivalent to Reagan, making the worst Democrat equal to the best Republican on economic performance in the past 50 years or so.
