When he ran for the presidency in 1980, Ronald Reagan, then Republican governor of California, struck at then-President Jimmy Carter over the strength of the economy. His question for Americans: “Are you better off now than you were four years ago?”
That’s the question Paul Ashworth and Paul Dales, senior analysts with Capital Economics, offered to answer in a report released by the consultancy on Friday. The report breaks down recent economic trends, including GDP, home sales, and median income.
The consensus? Sure, people feel like everything is worse for the wear, but the bigger picture may just offer a sharp contrast to everyone’s gut feeling.
“For many Americans, the answer to the question of whether they are better off now than four years ago appears to be a resounding ‘no,’” Ashworth and Dales said in the report. “But the issue is perhaps a bit more nuanced than that.”
According to the report, real median household income slammed into a 16-year low last year, a fact that the analysts took to mean that “many Americans are worse off now than they were when President Obama first took office.
“But the whole economy is undoubtedly in better shape,” the two add.
Capital Economics found GDP in a downright healthier column than other economic portents. Numbers pulled from the International Monetary Fund show that the economy is now growing by close to 2 percent – a change of pace from four years ago, when GDP fell at an annualized rate of 8.9 percent.
The same is true for jobs, which surge ahead with roughly 100,000 new private-sector positions each month, a dramatic contrast with more than 700,000 jobs that the economy lost each month, 2008 onward.
Concluded Ashworth and Dales: “So given that President Obama moved into the White House at a time of unprecedented economic and financial uncertainty and malaise, it is hard to conclude that the economy is not in a better shape now.”
That isn’t to say that Americans – and the middle class in particular – aren’t facing tough times. According to theCensus Bureau, median income plummeted by 4.7 percent from 2008 to 2011, registering the largest three-year freefall for the variable since the George H. W. Bush administration.
The two also sketch a brightening sky for the housing market. According to the latest from Thomson Datastream, existing-home sales ticked up by 2.3 percent month-over-month in July to hit 4.47 million.
“[E]ven when accounting for the recent, unusually high cancellation rate, the pending sales index suggests that there is potential for a large rise in existing home sales,” Ashworth and Dales wrote.