40 years ago this week, Ronald Reagan asked in a final debate before his election “Are you better off than you were four years ago?”.  It became the standard litmus test for Presidential elections.

That question helped crystalize the myriad of issues facing voters into a binary choice.  Do we want to continue on the same leadership path, or is it time to make a change?  It personalized the “right track versus wrong track” question for voters.

This year, it’s a bit more complicated.  The question asked by Reagan was definitely in the context of economic metrics.  It mirrored President Carter’s use of economist Arthur Okan’s misery index four years prior.

The misery index is the sum of the annual inflation rate and the unemployment rate.  It was perhaps a more powerful indicator in the 1976 and 1980 elections when the inflation experienced in the 1970’s was top of mind among voters.  

While the average of the misery index was almost identical under the Ford and Carter administrations, it had fallen under 13 at the end of Ford’s term, but was rising and above 19 when Carter was facing Reagan and the “better off” question was posed.

The numbers are relatively tame now, with Unemployment going into the election four years ago at 5% nationally and inflation pegged at 1.5%.  Thus, a 6.5% misery index after eight years of the Obama administration.

This year’s economic statistics have seen dramatic changes.  In February, before Covid had affected the US economy, the unemployment rate was at record lows of 3.5% and inflation was at 2.3%, for a misery index of 5.8%.  Now, the national numbers have risen dramatically, with unemployment at 7.9% while inflation has dropped to 1.4% annualized, for a misery rate of 9.3%

While those are national statistics, the vote for President is a contest within states for electoral votes.  The unemployment rates among states has differed widely with different approaches to Covid shutdowns.  

Georgia’s unemployment rate spiked to 12.6% in April but had already dropped back to 5.7% in August.  Hawaii, heavily dependent on tourism but mandating 14 day quarantines of visitors until this month, has a 12.5% unemployment rate.  Thus, using a national employment rate for a misery index is likely as pointless as national popular vote polls for the Presidential contest.

Inflation represents a different problem these days in that policymakers are actually trying to recreate it – something voters in the 70’s and 80’s would have never thought possible or reasonable.  

It presents a bit more of a direct issue for older voters who rely on the Consumer Price Index for increases to Social Security Payments.  It’s why you hear members of both parties complain about rising drug prices.  One of the main costs of living for seniors on fixed incomes is rising faster than their incomes.  Seniors are also among the most reliable voting blocs.  

Those are some objective numbers that seemed to once matter.  The question that most voters hear today when asked if they’re better off is likely more subjective.  When economic times are good – as they were entering the pandemic and for many still are – voters feel like economic issues can take a back seat.

If you’re an American that has taken to protesting in the streets, you don’t likely feel like you’re better off than you were four years ago.  If you’re an American watching acts of rioting and looting while being told that the protest was “mostly peaceful”, you may be inclined to think things are heading in the wrong direction. 

If you didn’t move your 401K to cash during the March stock market swoon and have watched fiscal and monetary stimulus move the markets back to all-time highs, you’re probably inclined to think we’re on the right track.  If you hear other people talk about 401K’s as you’re scrambling to find entry level work after Congress failed to extend unemployment benefits, you’re probably a bit frustrated with the country’s direction.

Voting, and all the questions internalized by voters, ends up being a personal Rorschach test. The “better off” question still matters.  At least this year, the old indexes likely do not.