Does the Consumer Price Index show if you are better off than 4 years ago
In February 2009, President Obama infamously stated,
“You know, a year from now, I think people are going to see that we’re starting to make some progress but there is still going to be some pain out there. If I don’t have this done in three years, then there’s going to be a one-term proposition.” – Face the Nation
In August of 2011, President Obama came back to that theme with the addendum that “We knew this was going to take time…” and that “we need to make the case” – the full comments can be seen in the following video of both comments.
Determining what is progress, and the amount of that progress if it occurs, is very difficult to qualtify. Take the Obama Stimulus as an example: it is credited with creating around 3 million jobs, on the high side of estimates, since passage but there has yet to be a single net new job created. In addition, the Stimulus boasted “saving jobs”, a criteria that has yet to be clearly defined. At the same time it increased the national debt by roughly $860 billion.
Looking at the progress of the nation another way, there is legislation. The Health Care Reform (Obamacare) was passed to create sweeping changes in the way healthcare functions in the nation. Some 20-30 million Americans will have healthcare as a result of this law. But the law is opposed by the majority of Americans in polls since July 2009. In addition there have been numerous corrections that have been found needed in the law, such as the burden on small businesses with 1099 forms. Plus there is the fact that some 15-20 million Americans will still not have healthcare after the law takes effect.
Thus we felt that the only indicator that is fair may be the Consumer Price Index (CPI). It directly addresses what President Obama was discussing; how the average American is able to live their life day to day.
To start, there are some givens that must be noted.
Therefore, we present the CPI, as recorded by the U.S. Department Of Labor, Bureau of Labor Statistics (BLS). We start each President from the January they took office until 4 years later. Since many people compare President Carter’s Administration to President Obama’s we start with him. We will also include the August figure from their last year to give an accurate comparison to the to-date figures for President Obama, noted in ().
President Carter
CPI January 1977 – 58.5
CPI December 1980 – 86.3 (August 1980 – 83.3) [cost of electricity per KWH, $0.062]
Net change – 27.8 or an increase of 47.5% inflation of consumer prices (24.8 in August for 42.4% increase)
President Reagan – first term
CPI January 1981 – 87.0
CPI December 1984 – 105.3 (August 1984 – 104.5) [cost of electricity per KWH, $0.078]
Net change – 18.3 or an increase of 21% inflation of consumer prices (17.5 in August for 20.1% increase)
President Reagan – second term
CPI January 1985 – 105.5
CPI December 1988 – 120.5 (August 1988 – 119.0) [cost of electricity per KWH, $0.078]
Net change – 15 or an increase of 14.2% inflation of consumer prices (13.5 in August for 12.8% increase)
President G. Bush
CPI January 1989 – 121.1
CPI December 1992 – 141.9 (August 1992 – 140.9) [cost of electricity per KWH, $0.088]
Net change – 20.8 or an increase of 17.2% inflation of consumer prices (19.8 in August for 16.4% increase)
President Clinton – first term
CPI January 1993 – 142.6
CPI December 1996 – 158.6 (August 1996 – 157.3) [cost of electricity per KWH, $0.092]
Net change – 16 or an increase of 11.2% inflation of consumer prices (14.7 in August for 10.3% increase)
President Clinton – second term
CPI January 1997 – 159.1
CPI December 2000 – 174.0 (August 2000 – 172.8) [cost of electricity per KWH, $0.086]
Net change – 14.9 or an increase of 9.4% inflation of consumer prices (13.7 in August for 8.6% increase)
President G.W. Bush – first term
CPI January 2001 – 175.1
CPI December 2004 – 190.3 (August 2004 – 189.5) [cost of electricity per KWH, $0.092]
Net change – 15.2 or an increase of 8.7% inflation of consumer prices (14.4 in August for 8.2% increase)
President G.W. Bush – second term
CPI January 2005 – 190.7
CPI December 2008 – 210.228 (August 2008 – 219.086) [cost of electricity per KWH, $0.124]
Net change – 19.5 or an increase of 10.2% inflation of consumer prices (28.4 in August for 14.9% increase)
President Obama
CPI January 2009 – 211.143
(August 2012 – 230.379) [cost of electricity per KWH, $0.133]
Net change – (19.2 in August for 9.1% increase)
Therefore, if President Obama meant that the rate of consumer price increases would improve for the nation during his presidency, then his statement is accurate. The rate has decreased versus the 2nd term of President G.W. Bush. But few politicians are (re-)elected on the basis that they will slow down the increase in costs the average American will pay.
The statement that President Obama made can be inferred that consumer prices would net decrease. No President that we have reviewed has been able to do this in the current era. The only times that the CPI decreased year over year was from: 1920-’22, ’26-’27, ’29-’33, and ’38-’39.
So in conclusion, we look at the question again, is the average American better off than 4 years ago?
The answer is all in the manner in which you look at it. The rate at which prices go up has slowed, but they are still going higher. For all the media hype on “necessarily skyrocketing” energy costs, electricity (which was the target of that comment) has risen slower than during G.W. Bush’s 2nd term. At the same time, not only are prices higher but many food portions have been shrank.
If you merely look at if from the way people feel, well those with a job certainly do feel better. Those receiving extended benefits would also likely feel better now versus then. But those that lost homes, are without work and exhausted their benefits, and/or are trying to feed a family with a budget that has not increased along with inflation might not agree.
If you thought this would provide a definitive reason to vote for or against President Obama, you still need to decide for yourself.
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