“ARE YOU BETTER OFF THAN YOU WERE FOUR YEARS AGO?”
That was former President Donald Trump’s question to his supporters on Truth Social on March 18. After locking up the Republican Party’s presidential nomination for 2024, now the American people are looking towards the general election where Trump will square off against incumbent President Joe Biden, who has also locked up the Democratic Party’s nomination.
It was the same question Ronald Reagan famously posed to the American people in 1980 when he defeated Jimmy Carter in his reelection bid amid a recession that saw high inflation and unemployment simultaneously.
By the time the American people voted in Nov. 1980, consumer prices since Carter had taken office were up a whopping 45.8 percent, according to Bureau of Labor Statistics data. And personal income measured by the Bureau of Economic Analysis, including government transfer payments, was up 55.4 percent.
That was enough to defeat Carter, even though income outpaced consumer prices.
In contrast, since Feb. 2021 (starting at Jan. 2021 would include another round of stimulus that had passed at the end of the Trump administration and would not improve the Biden administration’s personal income number), consumer prices are up 18 percent, but personal income is still only up 16.6 percent.
While there are still seven months and change to go until the election, at the moment, their money still doesn’t go as far as it once did prior to Biden’s tenure in office, which is the first time this has happened, even with the inflation of the 1970s and 1980s, times when although prices were increasingly massively, so were incomes.
Under Richard Nixon and Gerald Ford, from Jan. 1973 to Jan. 1977, consumer prices grew a whopping 37.4 percent, but personal income kept pace, growing 44.8 percent.
Under Ronald Reagan’s first term, consumer prices still grew very quickly at 21.2 percent but personal income grew 37.8 percent from Jan. 1981 to Jan. 1985, a dramatic improvement.
Whenever inflation rises faster than income, for a short times during a presidency, politically, the result can be fatal. It impacted Gerald Ford in 1976, Jimmy Carter did in 1980 and George H.W. Bush did in 1992.
More recently, bouts of incomes sliding faster than prices early in the terms of George W. Bush and Barack Obama — a slightly different situation that occurs during recessions — however, invariably resulted in reelections as the recessions were over by the time the American people voted.
Usually, overall income still grows faster than inflation, even when prices are high. Except under President Biden. And even if incomes eventually catch up to prices, time will tell whether or not it was too late to make a difference. Stay tuned.
Robert Romano is the Vice President of Public Policy at Americans for Limited Government Foundation.
