Are We Better Off Than Four Years Ago?

(I write a monthlyish opinion piece for Barron’s. This one was published there in June. My previous pieces are here.)

Are you better off today than you were four years ago?

Ever since President Ronald Reagan first asked that question in 1980, it has summed up a decisive factor in national politics. Those presidents who deliver material improvement in voters’ lives win re-election (for themselves or their parties). Those who don’t, do not.

Was 2024 a confirmation of this conventional wisdom, or a departure from it? It’s a harder question to answer than you might think. Whether or not people are better off depends on what we measure, and what we compare it to.

Many voters certainly expressed unhappiness with the economy. And those voters strongly favored Donald Trump. In 2020, 50% of voters rated the economy as “not good/poor.” Joe Biden got 80% of this group’s vote. In 2024, 68% of voters rated the economy as “not good/poor.” Kamala Harris received just 28% of their vote.

On the face of it, this unhappiness is a puzzle. By the measures economists typically focus on, U.S. economic performance looks exceptionally strong. Postpandemic growth has been stronger than in any other rich country, inflation is back down to normal, unemployment is near historic lows, and strong wage growth, especially for the lowest-paid workers, has reversed decades of rising inequality.

When a senior Biden advisor described the US as experiencing “the best economy ever,” she spoke not just for fellow partisans, but for many economists. With a record like that, shouldn’t the economy have been a selling point for the Democrats, rather than a weakness? What do voters have to complain about?

Commentators have written off voters’ concerns as mere vibes or the result of misleading media coverage. But a more careful look suggests that there is something to voters’ perception that they are worse-off economically. Although wages have more than kept pace with inflation, especially at the bottom, wages are not the only source of income. The withdrawal of pandemic-era welfare policies has left many people materially worse off than in the first year of the Biden administration, even as their paychecks have grown.

Let’s start with the positive case for U.S. economic strength. Compared with other countries in the OECD, the U.S. postpandemic recovery has been exceptionally strong. Real gross domestic product per capita is 10% higher than it was in 2019, the highest growth rate among the G7 group of rich countries. And the U.S. has not paid for this growth with higher inflation—U.S. inflation rates have been no higher than elsewhere.

Wage growth has actually exceeded pre-pandemic trends even after accounting for inflation. This is especially true for those at the bottom of the distribution. As labor economists David Autor, Arin Dube, and Annie McGrew documented in an important paper, the wage compression over 2020-2023 reversed a full third of the past four decades of rising wage inequality. (And as Dean Baker has often noted, the increase in remote work is effectively a raise for millions of workers who no longer have to spend time commuting, one not captured in the data.)

Why, then, did over two-thirds of voters tell pollsters that the economy was not good or poor? Why, according to exit polls, did Trump gain so much support precisely among those lower-income families who seem to have benefited the most from the strong labor markets of the past few years?

There’s no shortage of answers to this question. But one factor must surely have been the withdrawal of pandemic-era income support. During 2020-2021, the federal government did more than ever before in history to support the incomes and living standards of ordinary Americans. And then it took that support away.

One-off stimulus checks were the most obvious component of this extension and withdrawal of support, but it had many other aspects. For a year and a half (from March 2020 to September 2021), America’s threadbare unemployment insurance system briefly reached almost everyone who had lost their jobs. Over roughly the same period, an eviction moratorium protected renters from one of the most disruptive life events. Until April 2023, continuous enrollment in Medicaid maintained access to health insurance for millions of people who would otherwise lose it. SNAP (food stamp) benefits were expanded during the pandemic, by an average of $90 per person per month, under the declaration of public health emergency that lasted until April 2023. Even free school lunches were, temporarily, extended to far more students than had ever received them. And then, all of that was removed.

One striking statistic: Real per-capita income was 6% lower in 2022 than in 2021. This is more than twice as large as the next biggest decline since the data begins in the 1950s.

You might say that this is just another statistic, no more relevant to ordinary people’s lives than the more positive numbers cited by Biden admirers. But the withdrawal of pandemic social assistance also shows up in more direct measures of living standards.

In 2024, there were a million more Americans without health insurance than there were in 2022. The fraction of children without health insurance was higher on Election Day than it was when Biden took office.

Or look at the number of Americans who report each month that they can’t afford enough food for their families. This number is always too high for a country as rich as the United States, and it has historically risen during recessions. But strikingly, this number did not increase during the pandemic. It did rise sharply, though, after 2022, as pandemic-era expansions to unemployment insurance and SNAP were withdrawn. As of 2023, 5.1% of Americans reported being unable to afford enough food to meet their families minimal needs — more than at any point during Trump’s presidency.

Or consider evictions. National statistics on evictions are hard to come by, but in the cities and states tracked by the Eviction Lab, eviction rates were twice as high over the past year as in the last year of Trump’s presidency. This difference is, of course, due in large part to the eviction moratorium put in place by the CDC during the pandemic. But for the people who found themselves with their furniture out on the sidewalk in 2024, exactly which government agency is responsible is probably not so important.

Once we drill down past aggregate measures like GDP, it is clear that a large fraction of Americans were materially better off a few years ago than they are today.

An obvious response is that the biggest fall in income was due to the end of the stimulus, which was always meant to be temporary. That is true as far as it goes—though it’s not clear how much comfort this should give to parents who could afford food for their children thanks to the stimulus checks, and could not once those were taken away. But many other income-support measures, such as the child tax credit, were clearly intended to last. Biden spent much of his first year, and of his political capital, trying to win a permanent expansion of the welfare state in the form of the Build Back Better package.

We can debate how feasible this program was, in retrospect. But certainly the administration and its allies believed, and publicly promised, that they were going to deliver something other than a return to the prepandemic status quo. Are people wrong to be disappointed that these promises were not borne out? When Democrats boasted, in 2021, of the largest-ever reduction in child poverty rates, was there an understanding that it would be followed, a year later, by the largest-ever increase?

If we compare the material conditions faced by American families today to 2019, it’s easy to make a case that most people are better off. If we compare conditions to 2021—and look at more than just wages—it’s equally easy to make a case that people are doing worse.

Of course, as journalist Bryce Covert points out, there’s a strong case that the temporary income supports were essential to the rapid postpandemic recovery. In that sense, the right point of comparison is not actual conditions four years ago, but a deep recession that might otherwise have happened (and that many of us expected.) But one can hardly blame voters for answering Reagan’s question based on what actually occurred, and not based on a counterfactual, plausible though it may be.

It’s hard to say how much the Biden administration could have avoided this whiplash. In hindsight, it’s easy to argue that the unique political space of early 2021 would have been better used to craft a smaller set of permanent programs, rather than the broad but temporary package we actually got. Would that have changed the outcome of this year’s election? I have no idea. Probably historians will be debating these questions for decades to come.

But one thing is clear: When people say they are worse off than they were four years ago, they have good reason to feel that way. If someone says, “Under Trump the government started doing more to help me pay my bills, and under Biden it stopped doing that,” that is not just partisan bias or bad media coverage. It’s a straightforward statement of fact.