Why the President Doesn’t Affect the Economy as Much as You’d Think
Written by
Adam Palasciano
Edited by
Zuri Anderson
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Every four years, we elect a new president to lead our nation. Also referred to as “the leader of the free world,” this person is often judged and associated with how the economy is doing when they’re up for reelection, whether they’re an incumbent or a new candidate running for the first time.
In a recent Gallup News poll, the economy was the most important issue for voters in the 2024 presidential election. Republican voters rated the economy and immigration as the two most important issues. Meanwhile, the top issues for Democrats were democracy and potential Supreme Court justice picks.
In the 2024 presidential election, the electorate spoke loud and clear: President-elect Donald Trump won all seven critical swing states and the popular vote by a wide margin.
Trump was favored over Vice President Kamala Harris by nine points to handle the economy, but does the president affect such a critical system as much as we think?
Presidential Traits That Positively Impact the Economy
Research from Georgia Tech’s School of Public Policy indicated presidential traits that may generally have a positive impact on the U.S. economy:
- An ability to build and maintain trust in major political and economic institutions in the U.S.
- An active view of government.
- An active stance in the face of crisis.
- An ability to negotiate and compromise.
- Having a strong vision for where they want to take the county.
While these traits can make a difference, it remains to be seen if Trump will live up to his grand economic promises as he enters his second term.
However, experts explain that in reality, the sitting president doesn’t have as much impact on the economy as people may assume.
The President Doesn’t Affect The Economy That Much
The state of the economy can (and usually does) guide how people vote when choosing the next president. A September 2024 survey from financial services company Empower showed that one in two Americans believe that the outcome of the presidential 2024 presidential election directly impacts their finances.
“Voters absolutely are using the economy as a metric by which to evaluate presidents,” explained John Kane, a clinical associate professor of politics at New York University, to CNBC.
“People can eventually get this sort of picture in their minds of a president as kind of an economic wizard behind a curtain that’s pulling levers, and we’re just all on the receiving end.”
However, the president alone isn’t responsible for economic outcomes. Generally, policymakers have two main tools to influence the economy: monetary and fiscal policy. This domain largely falls under the Federal Reserve Bank whose decisions have serious implications on interest rates, unemployment and inflation across the nation.
While the sitting president may choose the Chairman of the Federal Reserve, usually someone who has the same monetary and fiscal ideology as they do, the president does not have control over the decisions made by the central bank.
Furthermore, to enact sweeping fiscal policy, the president can’t do much without the support of Congress.
“There has been a tendency on the part of our society led by politicians to exaggerate the amount of power that the president wields,” said Mark Hamrick, a senior economic analyst at Bankrate, to CNBC. “And that’s encouraged by participants in these campaigns: ‘You’ve got a problem? I’m going to solve it.'”
The bottom line is it’s important to fully realize the president’s role in the economy and take a holistic approach when choosing a presidential candidate.
Editor’s note on election coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
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