Economics,politics, and the cycle of presidential popularity

Does the economy hold the key to the ups and downs of the popularity of American presidents? This study, which is based on quarterly data from 1961 to 1980, employs stochastic models for time series (Box-Jenkins). For inflation, though not for unemployment, the findings confirm a significant effect at a lag of one quarter. The worries of political leaders about the inflation side of macroeconomic performance appear to be justified. Nevertheless, the influence of noneconomic factors such as international events, the Vietnam War, and Watergate proves even more potent. Moreover, presidential popularity is subject to a cycle whereby each president begins his service with an unearned popularity bonus that subsequently erodes. Economic performance is not found to be responsible for this inauguration-erosion cycle, but neither are rallies, wars, or scandal.