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In politics, Wall Street ignores history

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Wall street wants - and expects - President Bush to be reelected. And like business in general, the financial industry gives far more campaign funds to Republicans than Democrats.

That's odd, in a way. Looking just at history, Wall Street is backing the wrong horse. The economy has done better under Democratic presidents than Republican ones since the 1940s.

Surprised? Examine gross domestic product. Real growth in the measure of the nation's total goods and services averaged 4.0 percent a year with a Democratic president; only 3.1 percent with a Republican, according to an analysis by Merrill Lynch.

The stock market? No contest. The Standard & Poor's 500 stock index rose 54 percent on average during a Democrat's term; only 32.3 percent with a Republican. Even unemployment fell with Democrats in the Oval Office (by 0.3 percentage points) and rose (1.1 points) with Republicans in charge. Republicans beat Democrats in one economic measure. Inflation under the Democrats increased 1.6 percentage points; it fell 1.1 points under GOP presidents.

The general view on Wall Street is that inflation damages financial markets. Yet bonds (which rise and fall with interest rates) have done better under Demo- crats. The value of 10-year Treasuries rose 1.2 percentage points under Demo- cratic presidents; they fell 0.5 percentage points under Republicans.

One shouldn't jump to conclusions. Economics may determine elections rather than the other way around.

Still, it seems a little puzzling that the securities and investment banking industry is giving George W. Bush five times the support it has pledged to John Kerry. (The latest numbers from the Center for Responsive Politics put their respective totals at $5.5 million and $1.1 million.)

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