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Facts and Beliefs

Michael Parkin

The question

When it comes to the economy, do you believe Americans are better off than they were four years ago?

David Muir ABC News question to Kamala Harris.

Kamala Harris didn’t say what she believed, but we can answer a related question:

Are Americans better off in 2024 than they were in 2021?

The answer

Yes, they are better off.

The evidence

We measure the standard of living—how well-off people are on average—by real GDP per person, which increased from $64,417 in 2021 to $68,177 in 2024, a 5.8 percent increase.

Figure 1 shows the annual levels of real GDP per person during the Biden-Harris term.

Another question

Were Americans better off in 2020 when Donald Trump left office than they were four years earlier?

The answer

Yes, they were better off.

The evidence

Real GDP per person increased from $60,293 in 2017 to $61,081 in 2020, a 1.3 percent increase.

Figure 2 shows the annual levels of real GDP per person during the Trump term.

Although real GDP per person increased less in the Trump years than in the Biden-Harris years, it is likely that its level in 2020 would have been much higher without covid, and the graph shows an estimate of the cost of covid.

Now take a short quiz to ensure you understand what you just read.

Answer the following questions to check your understanding of the story.

During which period did Americans experience a higher growth rate in their living standards, based on real GDP per person: The Trump years (2017-2020) or the Biden-Harris years (2021-2024)?

Wrong! - Was the growth in living standards higher during the Trump period, the same in both periods, or absent in both?

That's Right! - The real GDP per person increased by 5.8% during the Biden-Harris period compared with 1.3% during the Trump Period indicating a higher improvement in living standards during the Biden-Harris period.

Why did real GDP per person fail to increase as much as it could have without the covid pandemic during the Trump administration?

Wrong! - Would a rise in prices influence real GDP? Would a pandemic like the covid increase production or employment? Would an increase in production or employment hinder the growth of real GDP per person?

Well Done! - An increase in real GDP occurs if and only if the goods and services produced increase. During the covid pandemic, lockdowns and restrictions limited production, which meant that real GDP didn't grow as much as it could have under normal circumstances.

What was the estimated loss in real GDP per person due to covid pandemic in 2020, as shown in Figure 2?

The estimated loss in real GDP per person attributable to covid pandemic in 2020 was approximately __________.

Wrong! - The real GDP per person in 2020 was $61,081, but it would have been approximately $64,000 without the impact of the covid pandemic. Doesn’t a loss of $2,000, $4,000, or $0 in real GDP per person seem off the mark?

Correct! - The real GDP per person in 2020 was $61,081, but it would have been approximately $64,000 without the impact of the covid pandemic. Therefore, the estimated loss in real GDP per person was about $2,919 ($64,000 – $61,081).

Why does an increase in real GDP per person indicate a rise in the standard of living?

An increase in real GDP per person indicates a rise in the standard of living because it implies that ____________.

Wrong! - Does a rise in prices influence the real GDP? Does an increase in unemployment indicate a rise in the standard of living? Can’t aggregate output increase while the average output per person decreases?

Very Good! - An increase in real GDP means that the country is producing more goods. When real GDP per person increases, it indicates that more of these goods are available per person, reflecting an improvement in the standard of living.

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