Krugman's Strange Conclusion
By David Henderson
UPDATE: I was wrong. Alex Tabarrok has provided the data from FRED. I should have done so. Median family income was $56,447 in 1984, down slightly from $56,585 in 1980. Given how wrong I was, I would rather not have written this post. But to delete now would be strange, given that people have already commented.
His graph is inconsistent with his words.
Paul Krugman makes a good point about the timing of recessions. Jimmy Carter had the misfortune of having a recession during the last year of his 4-year term. Ronald Reagan had a deeper recession early in his 4-year term. The decline of family income during Carter’s last year arguably cost him reelection. The increase in family income in the last two years of Reagan’s first term arguably won him reelection.
So the point is a good one and he shows a graph of median family income from 1976 to 1985 to make his point.
But then he goes too far, writing:
Make sure that the bad stuff happens early in your rule; then you can claim credit when things get better, even if you leave the nation in a worse condition than it was when you arrived.
He seems to be saying that that connects with his graph. But it doesn’t. His graph shows that median family income under Reagan was higher than when Reagan took office.