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The ‘Better Off’ Question



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Over the past couple days, the question of whether Americans are “better off than they were four years ago” has become quite popular, with Republicans trying to hammer their opponent on it, most Democrats waffling, and some attempting an affirmative reply. It’s worth considering the historical context to the issue. Over the weekend at Slate, Matt Yglesias suggested that the classic example of the question, the 1980 elections, belies the conventional wisdom:


The above chart of real GDP per capita in the late 1970s is, I think, an important bit of context to keep in mind as the question “are you better off than you were four years ago” re-emerges in American politics. At the time Ronald Reagan asked it during the 1980 campaign the correct answer was that, yes, on average Americans were better off than they had been four years earlier during the waning days of the Ford administration.

Jimmy Carter’s actual problem was that economic performance in 1979 and 1980 was really bad. So even though on net people were more prosperous at the end of his term than they had been at the beginning, voters felt that conditions were deteriorating and punished Carter for it. Obama is, if anything, in the opposite situation—dismal economy at the beginning of his administration that’s been partially offset by better performance later.

While Yglesias doesn’t necessarily suggest otherwise, it’s important to note that, in the terms he provides, the reality of Obama’s economy actually is worse. If voters were in fact better off and yet still ousted Carter over the question, Obama’s, well, definitely not better off. Look at the same measure over a similar period that Yglesias cites, that is, GDP per capita in the waning years of the preceding administration vs. now:


That would be “worse off.” The major drop, of course, occurs mostly before Obama entered office, and neither he nor Bush should be blamed for the financial crisis. But the fact remains that, by the measure that could have given a Jimmy Carter a case that Americans were “better off” than they were four years prior, well, Americans aren’t: Their share of the economy is still smaller than it was four years ago. Obama’s presidency began at the bottom of a downturn and has seen slow but steady GDP growth, but about one-fifth of the ground remains to be made up, before we’re even in positive territory. Hard to expect, then, Americans to say that they’re better off.

There’s more to it than that, though. A better indication of Americans’ sense of their personal economic situation than GDP growth per capita might be  personal income. In this respect, they’re barely feeling any improvement of late:


(To reinforce the point that this question might be even more damning today than in 1980, personal income under Carter performed much better. And obviously, the situation remains dismal employment-wise, much worse than in 1980.)  

But that’s assuming the “better off” query is a fair question — is it? A blogger at the liberal Center for Economic Policy Research castigates “incompetent reporters” for emphasizing it; he compares it to asking someone whose house just burned down, in assessing the quality of a fire department, “is your house better off than it was yesterday?” This would be a good criticism, if economics reporters were using the question to evaluate the president’s policies, rather than political reporters trying to assess whether people were going to support the president, and the assumption is that voters are asking the “better off” question. Some voters might indeed be asking, “Did the president do the right things to arrest our economic catastrophe and begin improving the economy?” But received political wisdom seems to suggest that isn’t what voters ask (how unfair!); they want and expect the president to have fixed the economy (compare how often one hears moderate voters complain “he just hasn’t fixed the economy” vs. “well, he’s tried the right things”).

The fact is, regardless of the merits of the question, we assume it’s being asked (even by Democrats now), and in economic terms, the answer is a resounding “no.” That’s the response from polling, too: In a Gallup survey this month, 56 percent of voters in swing states said they’re not better off than they were four years ago; just 40 percent say they are. (To take a contrary view, in a post last night, Nate Silver suggests that this isn’t the right political question, the more relevant question being “what have you done for me lately?” i.e., voters are paying attention to recent economic trends. In this respect, Obama’s situation falls somewhere between Carter’s hobbled economy and Reagan’s surging one, but it still doesn’t look great.)

#more#There are other even more depressing ways to catalog the stagnation: Besides the obvious persistently high unemployment rate, Derrick Morgan pointed out yesterday that far fewer Americans are working today than they were four years ago, and this number is perhaps the most shocking indication of how, for some, the economic has not recovered at all:




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