Are You Better Off Than You Were Four Years Ago?

Alden Wicker

Almost 32 years ago, Ronald Reagan, in his bid to win the presidency and oust incumbent Jimmy Carter, famously asked the public, “Are you better off than you were four years ago?”

It was a powerful question, and the answer, judging by Reagan’s win and Carter’s defeat, was a big “no.”

Now Republicans are asking the same question about Barack Obama’s first term: Are we better off than when he took office in January of 2009?

There are many ways to interpret this question. Some people point to the misery index, which melds the unemployment rate with the inflation rate (and it’s not looking great). Others point to the state of the auto industry (recovering quite nicely). Still others track the GDP (pretty good, especially compared to other developed countries).

The fact is, there are myriad ways to measure the growth and health of the economy, and everything seems to yield a different answer. So, today, we’ve decided to look at the four factors that matter most to your bottom line: housing, jobs, wages and retirement savings.

Are We Better Housed?

Housing prices were in the process of plummeting during Barack Obama’s election campaign, and didn’t bottom out until March 2009, three months after he took office. Since then, they’ve stagnated. It depends on what city you live in, but overall, median home prices are only $9,000 above where they were four years ago–currently $185,000, far below the 2006 high of $227,100. Of course, this is bad (sorry, not just bad, head-bangingly frustrating) if you are trying to sell a home that’s worth less than the mortgage you have on it.

But if you are trying to buy a house, times are good. The Housing Affordability Index for the first quarter of 2012 rose to a record high. This is good news, as the higher the index, the more able consumers are to buy homes. Consumers are taking the hint–the National Association of Realtors reported 15 months of gains in the Pending Home Sales Index, scootching it up to its highest level since April 2010.

What about foreclosures? In January of 2009, one in every 466 U.S. housing units received a foreclosure filing, according to RealtyTrac. In July 2012, that number stood at 1 in 686. So, fewer people are being forced out of their homes than four years ago because they can’t pay their mortgages.

Why Is This?

Home prices are largely determined by the Federal Reserve setting interest rates (which determines how expensive your mortgage will be) and how consumers are feeling about buying a home–consumer confidence is doing well right now but isn’t as amazing as in the early 2000′s. In other words, a lot of this isn’t in the direct control of the government.

But one thing the administration has tried to change? Foreclosures.

Obama’s 2009 Home Affordable Mortgage Program (or HAMP) promised to help three million to four million homeowners, but three years later only one million have been helped. The U.S. Treasury Department blames the banks, who haven’t fully embraced the voluntary program, despite signing contracts to do so.

The parallel Home Affordable Refinance Program (HARP)–to help refinance existing mortgages–was supposed to help five million homeowners, but had helped fewer than two million people by the end of last year; also, the program has used less than $3 billion of the $50 billion allotted for it, at least in part because stringent requirements made many banks decline to participate. Some people posit that these programs even slowed housing recovery progress, as homeowners stalled, waiting for a bailout to come that never arrived.

Touted as a win for consumers, Obama reached a deal with banks that settled allegations that banks mishandled mortgages, but the banks have stalled in handing out the full $10 billion promised in loan forgiveness to consumers, and, judging by several reports, are completely unhelpful to consumers in general.

The takeway: Stan Humphries, chief economist at Zillow, says: “The overall market is healing, albeit at a frustratingly slow pace.”  Things could have been even better with a better managed mortgage program from the administration and more cooperation from the banks.

Are We Better Employed?

There are two good ways to look at this: through job creation and through unemployment numbers.

Job losses were at a high when Obama took office in January of 2009, with 839,000 jobs disappearing that month. Since then, those losses have gradually shrunk, finally heading into positive territory in March of 2010 and we’ve been gaining jobs ever since. It’s important to note, however, that these numbers don’t include public sector jobs, which have been disappearing as the state and local governments see their budgets shrink because of lower income tax revenues. Overall, we have 332,000 more private sector jobs than when Obama was sworn in; after accounting for public sector jobs, the country has slightly fewer jobs overall than in January 2009.

Unemployment, meanwhile, is not looking great. It was at 7.8% in Janauary of 2009. From there, it continued to rise, hitting its peak of 10% that October. Despite declining since then, it’s still higher then when Obama started, at 8.3%.

Why Is This?

The Obama administration passed a stimulus program in 2009, which the nonpartisan Congressional Budget Office estimates saved or created at least 1.4 million jobs. He proposed a second stimulus called the American Jobs Act, but that was stalled in Congress and hasn’t been taken back up since.

Many say unemployment remains high because companies just can’t find qualified people. While there are four job seekers for every open position, those positions remain open because of an overall mismatch in skills. This isn’t due to any one action by a president, but because of a profound shift in how business functions due to changing technology (for example, administrative assistants now need to know how to manage digital calendars instead of just typing), and many potential employees are being left behind.

The takeaway: Job creation isn’t terribly impressive, but is better, while unemployment is still worse than four years ago. Obama gave it a shot but has been oaneuvered by a shifting business climate and an incalcitrant Congress.

Are We Paid Better?

Median household income fell from $54,983 in January of 2009 to $50,964 in June of 2012. But when we look not at households (which can include a shifting number of members as people join and leave a household) but at individuals, real personal income per capita has risen since the fall of 2008.

Meanwhile, the top 1% captured 93% of the growth in income from the recovery, contributing to an ever-widening income gap. So that means that while Average Joe is worse off, the wealthy have been doing pretty well.

Why Is This?

The fall of median household incomes has to do with the kinds of jobs that have become available. Most of the jobs lost during the recession were solid, middle-class jobs. Most of the new jobs gained during the recovery are low-wage jobs, according to a study by the National Employment Law Project. This is due, again, to the fact that there is a skill mismatch and the loss of middle-class public sector jobs.

More importantly, this trend might just be a continuation of what had been happening long before Obama took office. Middle-class jobs have been eroding for the past decade.

The takeaway: We are definitely worse off when it comes to income. Obama’s administration hasn’t successfully addressed the skill mismatch or the hollowing out of the middle class. But then again, Bush’s economic policies weren’t successful, either.

Are We Better Prepared for Retirement?

Finally, let’s look at how your retirement account is doing. Since Obama has taken office, the Dow has soared from 8,228 to 13,292. That’s only slightly down from its frothy heights in 2007. So it’s likely your 401(k) has recovered quite nicely. In fact, the average 401(k) balance was 62% higher in March of this year than at the same time 2009.

Why Is This?

As the economy has slowly worked its way out of the recession and corporations have recovered, the stock market has gone up with investor sentiment.

If you believe that Obama’s administration was instrumental in preventing the deepening of the recession and stabilizing the economy, then you have him to thank. According to the Fitch ratings agency, at least, the federal government may be responsible for 4% of US growth and prevented a longer and deeper recession.

The takeaway: On the whole, Americans are much better prepared for retirement than when Barack Obama assumed office. While many factors affect the market, the president’s policies were one piece of a positive recovery.

Image credit:  BeckyF/Flickr

  • Jcs16509

    we are NOT better off or nearly as good and in a significant manner.

  • Skibby Tidoodah

    I’m better off today than I was four years ago. I am still employed (in the public sector, despite the number of jobs lost), and I’ve gotten raises — not a huge raises, but enough to keep up with the cost of living. The appraised value of my house may be lower than it once was, but in practical terms, that means I pay less in property taxes. Paying less in taxes means I have more money for other things, so a lower appraised value is a good thing for my bottom line. And yes, I also have a lot more saved for retirement, and that’s a very good thing.

    When Ronald Reagan asked if we were better off after four years under Carter, I think he intended for each of us to look at our own personal situation, not a set of statistics, and I think that’s what each of us should do again. For me, the answer is “yes.”

    • Lisa Aristippo

      and for me making below the six fiogure salary no,,i’m just told how i should take advantage of free programs because i’m a women. sorry but i was not raised like that!

  • Lsmith94

    Why bring up Bush at all? Thought the article was about the last 4 years.

    • Sand252

      Four years ago, Bush was president.

  • Stephanie

    I’m absolutely better off.  Since 2008 I got 2 promotions at my full-time job and one at my part-time job, as well as some raises (albeit small ones), and my total income increased by nearly 33%.  I went from living in a small one-bedroom apartment to buying a 3-bedroom house on just under a quarter acre.  The money in my retirement accounts has more than doubled.  And I’m definitely not in “the 1%” either.  I’m pretty solidly middle class.  And extra lucky, because I work in the public sector, which is apparently worse off than the private sector at this point. 

  • Fetchitup

    I work in the public sector and will got my first raise in MANY years last year.  My health insurance cost has gone down.  I feel secure in my job.  My mortgage is more than the value of my home but my interest rate is low and I couldn’t rent for less than I pay now. My kids are employed, my daughter got a nice promotion…things are in the upswing in my neighborhood.  New families moving into homes that were foreclosed too!  Road projects like crazy in my county…I’m voting O’Bama.   Romney spells disaster. I want Clinton economics!

    • Studentoftheteaparty

      First off I want to say that I am currently going to college for a business management degree with a minor in finance and economics. That being said, I am only 21 years old and I find it very concerning that people are more concerned with their personal well being and wether or not they have more “spending money” and less concerned with the overall status of the United States as a whole. To answer some of the previous comments, Clinton was president during a time of economic stability which had nothing to do with his policies while in office. Thousands of Jobs were being created overnight thanks to the DotCom bubble, not the work of Clinton. And does anyone remember how that turned out? Guess who inherited that economic crisis?   Guess who had to deal with the single largest terrorist attack on our nation within the first years in office? A war was fought to protect our freedom, and how much did that war cost us? $1.283 trillion for “military operations, base security, reconstruction, foreign aid, embassy costs, and veterans’ health care for the three operations initiated since the 9/11 attacks.” How much is your freedom worth? Since taking office in 2009, Obama has not only incurred 1/3 of entire national debt since the beginning of our country, but he has continued to create a false idea that our economy is increasing. You say that you work in the public sector and things are better off for you now than four years ago? Well here are the facts if you want to see them ( and they are very telling. The number of unemployed is overwhelming the entire system with nearly 12.7 million unemployed, 46.6 million on food stamps, and 47% of citizens do not pay any income taxes. I would like you to show me where there is an economic principle that states that for economic recovery we must take from the rich, job producing, business creating individuals and pay out that money to more and more unemployed who receive unemployment for up to 26 weeks, disability insurance for fraudulent claims , food stamps which are used outside their original purpose, and section 8 housing to individuals who have the money to buy flat screen tv’s and iphones. Obama has failed to help improve our economy in the past four years, therefor the only possible option is to vote for someone who has experience balancing expenses and creating successful business with NO DEBT. 

  • kat_y

    Yes, my husband and I are better off than 4 years ago.  Last year I got a job in biotech that pays double that of my previous postdoc salary.  My husband got a bump in his salary earlier this year, too.  So, we count ourselves as lucky, and are hoping to be in a position soon to buy our first home.  

  • Janice C. Smith

    We certainly are not better off since Obama’s election…not in a long shot…unless you are looking at fairytales.

  • Perplexed52

    Sometimes I read these articles and the posts and I wonder what world people are living in.  This has been the slowest recovery from a recession in the history of the U.S. and Obama IS to blame for it.  I am CFO at a US company with affiliates in Germany/Switzerland – even Germany, certainly a socialist leaning country is shocked at Obama’s spending excesses.  Does anyone THINK how we are going to ever pay back the HUGE debt that Obama was responsible for - he incurred the largest debt that ALL other presidents combined have done and only in 4 years -what do you think the future will be? — will he ever stop blaming Bush and take responsibility?  Everyone talking below about how much better off they are — only based on THEIR salaries and increases and jobs.  Do you think that any business has hired because of the fabulous business climate we have in this country with Obama?  NO, businesses are surviving in spite of Obama, but how much better could they be doing with a business friendly environment..

    • Lisa Aristippo

      two types of people i grew up with..a) person who got their pay check and spent it within two days on themselves and everyone they knew and b) the person who put half away and put the other half back into the economy.. now we are all learnvest members ..who is the smarter?

  • Will

    If you want to be better off, a few points to consider: (1) Ryan doesn’t want fact checkers to affect policy (2) Grover Norquist is a very dangerous force, who wants an autocracy type government, (he already dictates Republican congressional vote), and will be further embolden if the GOP prevails, (3) Obama endorse Clintons ideology, and say what you may about Clinton, his annual deficits averaged less than 1/6th of George W’s, his top income tax rate was approx. 25% lower than Reagan’s, and during his term we had one of our best economic growth periods!

  • Cc11782n

    You have to realize that neither Obama or Bush are the ones responsible for what goes on with the economy. As presidents, and leaders of their political parties, they try to influence policy – but its your representatives in Congress that are passing or shooting down these policies. The fact that we’ve had a contentious group of people in Congress who seem to want to only further their political careers, and not cross party lines for fear of not being reelected is making it nearly impossible for any GOOD legislation to be passed. Its the people in the Federal Reserve that are setting monetary policy and interest rates. Other countries are able to produce goods quicker, for less and that is making it hard for the US to compete in a global market that cares less about safe working conditions and more about turning a quick profit. Furthermore, the generations that are graduating from college are coming out further and further in student loan debt, and that money they are paying back is money that otherwise would have (probably) been spent and helped out the economy. Finally – the economy is its own entity. Its subject to cycles of growth and recession, and based on consumer confidence. In any economics class you learn this, and also learn that there is little we can do that is 100% guaranteed to bring the economy out of a recession, or further the economy’s growth. You want to fix the economy and balance the budget? Bring in economists and financial planners who are experts in their fields and keep politics out of it.