President Reagan, aggressively defending his economic program, has been arguing that the nation is already better off as a result of his policies, not just that things will improve in the future.
Most economic analysts, however, reject the president's claim. They point to a wide range of statistics covering employment, output and incomes that, they say, indicate that the economy as a whole and most individuals are not economically better off now than they were when Reagan took office.
Reagan concedes only some delay. "Yes, I'd hoped that we'd be further along by now," Reagan told a Texas campaign rally recently. "But make no mistake, we're better off than we were 20 months ago."
This week Treasury Secretary Donald T. Regan echoed that sentiment, with a touch of restraint, when he declared, "Those of us who are employed are indeed much better off."
Neither the president nor Regan has provided many specifics to back up his claims, though the president most often cites the drop in inflation as leaving American families better off than they were.
Reagan also cites the reduction in personal income tax rates, but he often overstates the size of the cuts so far. Rates are only 10 percent lower for 1982 than they were before last year's cut was passed, with another 9 percentage point cut due in 1983 and another 4 percentage point cut due in 1984. Top rates, of course, were lowered this year 70 percent to 50 percent.
"Today a family that is at the poverty level of income, not on welfare, they are getting almost $600 more in purchasing power because of what we've done to reduce inflation," the president said last month. A family with a higher income has benefited even more from the drop in inflation, as well as from the tax cuts, he said.
These examples have been giving administration economists fits ever since Reagan began using them last spring. "They are technically correct but not very meaningful," said one economist. "They have given us a lot of trouble."
The examples are extremely narrow and easily can be misleading, the economist said. They assume a family with a truly fixed income that is not affected by the state of the economy or by any of the reductions in federal income support programs made in the last two years.
Moreover, administration economists concede that the families have not, in fact, had any increase in purchasing power from their fixed incomes. Rather, they have had a loss. The "gain" to which Reagan refers is the difference between what would have been lost by the families had inflation continued at its 1980 rate rather than the loss they actually experienced with the lower inflation rates of 1981 and 1982.
Secretary Regan's point about people who are employed certainly being better off is also not as obvious as it might seem, analysts say. For example, Murray Foss of the American Enterprise Institute notes that in the last year, the rate of increase in most types of income has fallen faster than the inflation rate, even though the inflation rate is down sharply.
Here are some of the numbers economists use to gauge the present state of the economy, compared with what they were when Reagan took office:
* The gross national product in the third quarter was down 1.8 percent, after adjustment for inflation, from its level in the first quarter of 1981. Since the population has grown during the last 18 months, the amount of goods and services produced for each person in the country is down even more, by 3.1 percent.
* National income, which is GNP less certain items such as the wear and tear on machines used to produce GNP, was down 2.8 percent through the second quarter, the latest figure available. On a per capita basis, national income dropped by 3.9 percent.
* Because of the tax cuts enacted last year, real disposable personal income per capita is up 1.1 percent. That increase, however, was achieved at the cost of incurring the largest federal budget deficit in history, $110.7 billion for fiscal 1982, and many analysts expect the red ink to rise to around $175 billion this year.
* Average hourly earnings of production or non-supervisory workers on private non-farm payrolls, adjusted for inflation, are up 0.3 percent through September. That average includes a 2.5 percent gain in the mining industry and increases of just over 1 percent for workers in manufacturing, transportation, services, and finance, insurance and real estate. In construction, the gain is only 0.1 percent, while in wholesale and retail trade, real average hourly earnings are off 2.2 percent.
* Average weekly earnings, adjusted for inflation, are down even though hourly earnings are up slightly because the number of hours being worked has fallen. Overall, real average weekly earnings are down 2.2 percent since January 1981. Mining, which had the largest gain in average hourly earnings, has had the largest drop in weekly earnings -- 3.9 percent. In manufacturing, weekly earnings are down 3.3 percent. In both transportation and finance, insurance and real estate, they are down 0.3 percent. In services, they are up 1.1 percent. Construction has had the largest gain -- 1.9 percent.
Thus, even if someone is at work, they may or may not be better off in terms of what they are earning and what their paychecks will buy. In September, gross average weekly earnings in current dollars stood at $270.69, up from $246.75 in January 1981. Suppose that two workers, one single, the other with a spouse and two children, were paid at those rates for all of 1981 and 1982, respectively. If they have no other income, they would have earned $12,831 in 1981 and $14,042.60 this year.
After allowing for the personal income tax cut and an increase in payroll taxes for 1982, the single worker's take-home pay is up this year by $1,046.65 or 10.3 percent. For the married worker, the figures are $1,038.77 and 9.3 percent. But since January 1981, the consumer price index is up 12.6 percent. Alternatively, the deflator for personal consumption is up an estimated 10.8 percent.
In other words, while take home pay is up, prices are up more.
AEI's Foss has delved deeply into the income figures and found some large differences in movements according to the type of income involved.
He found, for instance, that from the beginning of 1979 through September 1981, personal income, adjusted by the personal consumption deflator--which avoids the distortions of mortgage interest rate changes on the consumer price index -- rose at an annual rate of 2.1 percent. In the last 12 months, it fell 0.3 percent, Foss said.
Within those totals, some types of income are up in real terms while others are down. Wages and salaries rose 0.5 percent annually in the earlier period but are down 2.2 percent in the last year.
Income from property -- personal interest, dividends and rents -- shot up by 10.8 percent a year from 1979 to September 1981, and continued to rise by 3.7 percent in the last year.
Proprietors income fell 16.3 percent in the earlier period, largely because of a sharp drop in farm income, which has continued. In the last year, farm income is down roughly one-fourth, Foss said.
Transfer payments show the least slowdown of all, he added. In the earlier period, they rose 6.6 percent a year and continued rising at a rate of 4.7 percent in the last 12 months. As with the overall income figures, there are substantial differences within the transfer payments total. From 1979 through September 1981, the combined figure for welfare payments through the Aid to Dependent Children program and food stamps climbed at about a 15 percent annual rate, while the personal consumption deflator was rising at a 9.3 percent rate. In the last year, both AFDC and food stamp payments are down in current dollar terms at the same time the personal consumption expenditure deflator was rising 5.3 percent, Foss said.
Meanwhile, payments under other programs, such as the retirement and survivors portion of Social Security have also slowed down but they still are going up faster than inflation. In the earlier period, they were rising 19 percent a year in current dollar terms, and that dropped to 10 percent in the last year.