In the fall of 1972, President Richard Nixon made a statement that puzzled economists and intrigued political strategists: “The rate of increase of inflation is decreasing.” It was a moment that marked the first known use of the third derivative of a key economic indicator—inflation—in presidential rhetoric. While it may sound like mathematical gymnastics, this phrasing was a calculated move to reframe economic conditions in a more favorable light during a critical election year.
Let’s unpack what this meant, why Nixon said it, and how it played into his broader strategy to secure reelection.
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🔍 Understanding the Third Derivative
To grasp Nixon’s statement, we need a quick refresher on derivatives in economics:
• Inflation is the rate at which prices increase.
• The first derivative of inflation is the rate of change of inflation—how fast inflation is rising or falling.
• The second derivative is the acceleration of that change.
• The third derivative—the one Nixon referenced—is the rate at which the acceleration itself is changing. In physics, this is called “jerk.”
So when Nixon said “the rate of increase of inflation is decreasing,” he meant that inflation was still rising, but more slowly than before. It was a subtle way of saying things were improving—without claiming inflation had stopped or reversed.
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🧠 Why Nixon Chose This Language
Nixon’s choice of words wasn’t accidental. In 1971, the U.S. economy was struggling with stagflation—a mix of high inflation and stagnant growth. Nixon had already taken dramatic steps, including:
• Imposing a 90-day freeze on wages and prices through Executive Order 11615 A
• Ending the convertibility of the dollar to gold, effectively dismantling the Bretton Woods system A
• Instituting a 10% import surcharge to protect domestic industries A
These moves, collectively known as the Nixon Shock, were designed to stabilize the economy and restore confidence. But by 1972, inflation was still a concern, and Nixon needed a way to show progress without admitting failure.
Enter the third derivative.
By highlighting that inflation’s acceleration was slowing, Nixon could claim that his policies were working—even if prices were still rising. It was a clever way to shift the narrative from “inflation is bad” to “inflation is improving.”
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🗳️ The Political Strategy Behind the Math
Nixon’s use of economic jargon wasn’t just about accuracy—it was about perception. He remembered how economic downturns had hurt his chances in the 1960 election against John F. Kennedy. In 1972, he was determined not to let inflation sink his campaign.
According to political historian Theodore H. White, Nixon had learned from past mistakes. He knew that voters cared more about unemployment than inflation, but both were politically dangerous B. By reframing inflation as “improving,” he could neutralize criticism and focus on other achievements.
And it worked. Nixon won reelection in a landslide, defeating George McGovern with one of the largest margins in U.S. history A.
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🧮 The Role of Arthur Burns and the Fed
Behind the scenes, Nixon was pressuring Federal Reserve Chairman Arthur Burns to adopt an easier monetary policy. Burns warned that flooding the economy with money could trigger an international crisis, but Nixon was focused on short-term gains B.
In taped conversations, Nixon told Burns, “We’ve really got to think of goosing it… late summer and fall of this year and next year.” He wanted interest rates low and growth high—at least until the election was over.
Burns resisted, but Nixon found other ways to influence the economy, including appointing dovish members to the Fed and using fiscal policy to stimulate demand.
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🧠 Public Reaction and Legacy
Economists and mathematicians were amused—and sometimes baffled—by Nixon’s use of the third derivative. Hugo Rossi, a mathematician, famously quipped that it was “the first time a sitting president used the third derivative to advance his case for reelection” C.
The phrase became a symbol of political spin, showing how complex ideas could be used to shape public opinion. It also highlighted the growing role of economic data in political messaging—a trend that continues today.
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📚 Conclusion: A Lesson in Framing
Nixon’s 1972 inflation statement wasn’t just a quirky moment in presidential history—it was a masterclass in framing. By using the third derivative, he turned a negative trend into a sign of progress. It was mathematically accurate, politically savvy, and rhetorically brilliant.
In a world where perception often trumps reality, Nixon’s statement reminds us that how we talk about data can be just as important as the data itself.
