reader Steven Kopitz Write a response Are you better off than you were four years ago?:
I don’t think people will compare anything to the pandemic. Trump did not cause the pandemic, and frankly most of the world has suffered some kind of economic shock. I don't think voters compare that.
They will be compared to 2019.
I'm not so sure… Let's actually look at the data.
figure 1: Gross domestic product per capita today (blue) and gross domestic product per capita five years ago (tan), both in billions of dollars. Source: Bank of East Asia.
figure 2: Per capita consumption now (blue), five years ago (tan), and annual growth rate of per capita consumption in 2017. Source: Bank of East Asia.
image 3: Disposable income per capita today (blue), five years ago (tan), 2017 US$ SAAR. Source: Bank of East Asia.
Figure 4: Unemployment rate now (blue), unemployment rate four years ago (tan), in %. April's observation was the Bloomberg consensus. Source: Bureau of Labor Statistics.
Figure 5: VIX now (blue), five years ago (tan). Source: CBOE via FRED.
Figure 6: Economic policy uncertainty index (blue), four years ago (tan). Source: Policyuncertainty.com via FRED.
Figure 7: Misery index now (blue), misery index four years ago (tan), expressed as a percentage. The April unemployment rate observation is the Bloomberg consensus, and the inflation data comes from the Cleveland Fed's immediate forecast through April 30, 2024. Source: Bureau of Labor Statistics, Federal Reserve Bank of Cleveland, and author's calculations.
Mr. Kopitz also wrote:
…it looks like the median household is no better off than it was in 2019.
I believe Mr. Kopitz is visually impaired.Below I show the evolution of real median household income, where the red line is drawn starting in March 2019the index was 111.6 at that time.
source: Motio Research.
To sum up, per capita GDP, consumption, disposable income and median household income are all higher than five years ago. The unemployment rate is the same. VIX and economic policy uncertainty (bad things, I would say) were higher five years ago than they are today. The negative is that the “misery index” is 1.7 percentage points higher than it was five years ago (but certainly lower now than it was four years ago).
Finally, Mr. Kopitz displayed a clear ignorance of terminology. He wrote:
By the way, property taxes and home insurance have gone up a lot since then, but there hasn't been a corresponding increase in tangible benefits that I've seen, at least for most homeowners. On my current home, my property taxes have increased 37% since 2019. Can it be presumed that there will be a corresponding increase in the service industry and thus an increase in “consumption”? Or is this purely cost inflation?
Real consumption is private consumption of goods and services, adjusted for inflation (Figure 2). Disposable income takes into account federal, state and local taxes (Figure 3).
