Ronald Reagan derailed Jimmy Carter’s re-election in 1980 by asking voters a simple question: “Are you better off than you were four years ago?”
Government policies matter, but presidents have less influence on the economy than most people think. Still, that doesn’t keep candidates from making big promises or voters from having big expectations.
By many measures, America’s economy has grown by leaps and bounds since Reagan’s famous question. But because of structural changes since the 1970s, many poor and middle-class people are not feeling better off. Wealth inequality is its highest levels since the 1920s.
Economics has been the dominant issue in every presidential election since Reagan, and it reached a fever pitch last year. A radical populist from the left shocked the establishment with his popularity, and a radical populist from the right ran over the establishment to win the election.
Barack Obama entered the White House eight years ago in the midst of the biggest financial crisis since the Great Depression. So how did he do? Well by many traditional measures, but he hasn’t gotten much credit. Let’s look at the numbers:
▪ Stock markets are at an all-time high after one of the longest bull-market runs in history. The Dow Jones Industrial Average has risen 106 percent under Obama, while the Standard & Poor’s 500-stock Index is up 139 percent and the NASDAQ Composite index is up 222 percent.
▪ Corporate profits have risen 166 percent under Obama, to an annual rate of almost $1.8 trillion.
▪ Inflation has risen by less than 12.5 percent over the past eight years, one of the smallest increases in modern history. Gasoline prices remain low.
▪ The Bureau of Labor Statistics’ measure of real weekly wages — adjusted for inflation and seasonal factors — is 3.4 percent higher than when Obama took office.
▪ The nation’s unemployment rate is 4.7 percent, less than half the 10 percent peak in October 2009 when recovery from recession began. Obama’s term has been marked by 75 consecutive months of job growth, with more than 9.2 million jobs added.
But not all the economic news has been positive:
▪ The vast majority of job growth has been in full-time jobs, which is good. But there are still about 1 million more part-time workers who want full-time work than there were before the financial collapse.
▪ Long-term unemployment has dropped under Obama by 614,000, but is still 761,000 higher than when the Great Recession began.
▪ The labor participation rate has fallen 3 percentage points to 62.5 percent. That’s significant, although the Congressional Budget Office estimated in 2014 that half that lack of participation was voluntary — aging baby boomers, etc. Still, that means the other half is people who want work but don’t have it.
▪ Federal government debt has risen 116 percent. By the end of fiscal 2017, Obama will have racked up a record $6.616 trillion in deficits, doubling the second-biggest spender, George W. Bush, whose deficits totaled $3.293 trillion.
But Trump’s biggest challenge will be keeping his promises to the blue-collar workers who elected him. Automation, globalization and other economic shifts that began hurting America’s middle class when Carter was president are not easing. If anything, they’re accelerating. If Trump’s protectionism sparks trade wars, consumer prices could rise.
Plus, the economic policies Trump has embraced could make things worse for his blue-collar fans. Tax cuts for the rich don’t create jobs, and they could explode deficits, especially if Congress also lets him launch huge unfunded infrastructure projects like a border wall.
Republicans are against raising the minimum wage and want to kill Obama’s rule change that made 4.2 million low-salaried workers eligible for overtime pay.
Trump may bully or bribe a few manufacturers into “saving” some American jobs, but it won’t reverse the tide. Reopen Ohio’s shuttered steel mills? Dream on. Most coal miners lost their jobs to mechanization before Obama became president. It would take an unlikely end to fracking and a spike in natural gas prices to bring many recent Kentucky coal miners back to work.
Reagan asked the key question in 1980. You can bet Trump voters — and opponents — will be asking it repeatedly over the next four years.