(FORTUNE Magazine) – WHATEVER THE Democrats have going for them this year, you'd think the Republicans would at least have a lock on the one issue that most often decides presidential elections -- the economy. Think again. Individually, Americans feel fairly flush. According to a recent Gallup/Times Mirror poll, $ 80% of those surveyed expressed ''satisfaction'' with their personal lives, including their economic situation. But looking at the U.S. economy as a whole, a surprising number of citizens don't see a nation enjoying its 70th month of steady growth, relatively low inflation, and broad prosperity. Instead, their self-image is of a society plagued by downward mobility and declining living standards, with a future that seems to hold little promise and even larger problems. So far the Democrats have been remarkably successful in making political capital out of America's economic anxieties. The satisfied citizens identified by Gallup say they favor Michael Dukakis in November by a 4-to-3 margin. But Dukakis doesn't just claim, as he frequently has in his campaign speeches, that ''we can do better'' in the future. Take his line about the need for ''good jobs at good wages.'' The implication is that while the Reagan era may have been splendid for the undeserving rich, many poor and middle-class voters are less well off than they were eight years ago. Are they? To get an accurate reflection of how the U.S. economy has fared since January 1981, clear your mind of campaign rhetoric and focus on the following facts: -- Real median household incomes are the best measure of family prosperity. From 1981 through 1986 (the latest year for which data are available) they rose a total of 9.1%, to $29,458. During the Carter years, they decreased 3.4%. -- Under Reagan, real median incomes of male, full-time workers climbed 3.8%, compared with a 6.4% drop under Carter. These gains have been shared by all races. -- America's ''misery index'' -- the sum of its inflation and unemployment rates -- has plunged from 17.9% in January 1981 to 9.4% today. Barring a last- minute disaster, Ronald Wilson Reagan promises to become the first President on record to complete his term with both inflation and unemployment lower than when he was elected. -- Since the end of 1980 the U.S. has produced nearly 16 million net new jobs, some 90% of all the jobs created by the Big Seven industrial economies. Today a record 115 million Americans are employed. At 5.4%, the unemployment rate is the lowest in 15 years. Black teenage unemployment, essentially unchanged under Carter, has fallen a full ten percentage points since 1981, to 31%. -- During the Reagan years, the gap between rich and poor has widened. Between 1981 and 1986 the share of total national income claimed by the poorest 20% of % households dropped from 5% to 4.6%. The take of the richest 5% of American families swelled from 15.4% to 17%. -- Sending a child to a four-year, private college now consumes some 40% of median family income, up from 31% in 1981. The price of health care has also continued to skyrocket. But that other staple of the American dream, the home mortgage, has gotten cheaper. In real dollars, the annual after-tax cost of owning an average home peaked in 1982 at $9,599 and now stands at just $7,449. Measured as a share of median family income, that's a decline from a budget- busting 36% to a more bearable 25%. -- Real GNP growth since the end of 1980 has averaged 3% a year, slightly less impressive than the 3.2% pace achieved during Jimmy Carter's term. But at 70 months and counting, the current expansion -- already the longest period of peacetime growth in the history of the Republic -- shows no immediate sign of ending its record-shattering run (see Fortune Forecast). -- Still, the U.S. has purchased a sizable chunk of its current prosperity by running up a fearsome -- and unprecedented -- credit tab. Under Reagan, the federal debt has ballooned by $1.2 trillion, to $2.4 trillion. The current account, which measures trade in both goods and services, has swung from a surplus of $6.9 billion to a deficit of $154 billion. But not all this borrowing has been frittered away on consumption. Real gross business and personal investment has risen 25.6% since 1981, versus a decline of 2.3% under Carter. By most measures U.S. business is more competitive today than it was in the late 1970s. But then, with those kinds of debts to pay off, it had better be. What these statistics tell us about Election 1988 pocketbook issues is clear: Americans have reason to fear possible future falls in living standards. Serious unsolved problems remain. But the charge that the rising tide of Reaganomics has mainly lifted the yachts and left the dinghies grounded is a bum rap. If anything, the current expansion has been even stronger and broader than most voters realize. THE BIGGEST WINNERS by and large have been the two groups least likely to support George Bush: blacks and women. From 1981 through 1986 real median incomes of black families rose 10.1%, to $17,604 a year. Under Carter, they dropped almost 6%. One reason for the increase: the stunning gains by black families in which both spouses are full-time wage earners. Since 1981 their real median income has surged more than 34%, to nearly $40,000 a year. Gains by women generally reflect the progress they have made in the workplace. Nearly 50 million women hold paying jobs -- some 8.1 million more than when Reagan's presidency began. The rate of female unemployment has, for the first time during the 1980s, fallen to the same level as that of men. Many of the jobs women hold today are in higher-paying occupations that were once male preserves. The number of women in management and skilled production jobs has swelled since 1981 by 70.8% and 52.4% respectively. That partly explains why the infamous pay gap between males and females narrowed by five percentage points over the same period. Average annual earnings of women are now 65% of men's. Unable to attack the Republicans for inadequate job creation, the Democrats have been assailing the quality of employment. Eight years of ''deindustrialization,'' they claim, have pushed legions of well-paid manufacturing workers into low-wage McJobs. Though he generally avoids echoing Walter Mondale, Michael Dukakis repeats a line from Fritz's old stump speech. The country, he warns, is sinking toward ''an America where all we do is flip each other's hamburgers and take in each other's dry cleaning for $3.35 an hour.'' Burger-bashing makes no more economic sense in 1988 than it did in 1984. The bottom line is that for every category of full-time worker -- black and white, male and female -- real median incomes have risen since 1981, after stagnating throughout the 1970s. Marvin Kosters, an economist at the American Enterprise Institute, calculates that over 90% of lower income workers are part-timers, perhaps 80% of whom choose to work shorter hours. True, even though the American industrial heartland has begun to rebound, some 550,000 manufacturing jobs have disappeared since 1981. But this hardly signals an erosion of the nation's industrial base. Manufacturing's share of national output is about the same today as it was eight years ago -- 20%. Many of these lost jobs were in relatively low-paying industries such as textiles and apparel. In general, the fastest-growing job categories in the 1980s have been higher-paying managerial and professional positions. They have increased 28% since the start of Reagan's first term and now compose a quarter of all employment. DEMOCRATS are on somewhat stronger ground when they complain about a failure to close the gap between the haves and have-littles. Though more Americans are working, the proportion of the populace living in poverty -- currently 13.6% -- is little changed from 1981.* What has caused this stagnation is not some mythical expansion of bad jobs but an increase in the number of households headed either by single parents or people aged 15 to 24. For example, the number of families headed by black female teenagers -- the poorest of all categories, with a meager median income of just $4,446 -- has risen 5% since Reagan took office. Among married couples, however, the percentage living below the poverty line has declined. Only 10.8% of black married couples were classified as poor in 1986. That's a full 4.6 percentage points less than in 1981 and the lowest level since the Census Bureau started tracking this group in 1974. Among those 65 or older, the proportion in poverty peaked under Carter at 15.7%; by 1986 it too had dropped to a record low, 12.4%. But what about the incredible shrinking middle class? Haven't a growing number of formerly well-off American families been slipping sadly into penury? No. Though many cases of downward mobility can be found, a study by Bureau of Labor Statistics economists Michael W. Horrigan and Steven E. Haugen shows that those exiting the middle-class are primarily upward bound. Thus, while the number of U.S. households with real yearly incomes between $20,000 and $56,000 has decreased since 1981 by 1.2 percentage points, families with incomes above $56,000 grew by four points. So, if the income data are almost uniformly upbeat, why do many Americans feel edgy about the economy? Maybe it's superstition. Like Dickens's free- spending Mr. Micawber, who sailed through life blithely certain that something would ''turn up,'' the U.S. in the 1980s has enjoyed an amazing string of timely breaks. When the budget deficit threatened to crowd out private investment, a horde of eager foreign lenders unexpectedly appeared. Later, oil prices -- the scourge of the 1970s -- took a largely unforeseen dive. And when U.S. consumer spending began to flag, well, the dollar dropped -- without causing the friendly foreigners to panic, mind you -- and exports exploded. Perhaps Americans simply fret that when Ron leaves the White House, his luck goes with him. A more rational reason is that the costs of some of the essential components of the good life -- college education, health care, and down payments on a home in many areas -- have not stopped soaring. As a result, many families must run even harder just to keep pace. No one knows for sure, but it's likely that many second incomes brought home by working wives may well have been prompted by economic necessity rather than a desire to seek new career options. Reaganomics didn't spark these unhappy long-term trends. But neither has it done much to slow them down. Both the working poor and the middle class, for example, continue to lose ground against rapidly rising health care costs. They have climbed more than 50% faster than the rate of consumer price increases over the past 20 years. Though prices in general moderated during the Reagan presidency, health care costs surged 57%. A survey by Hay/Huggins, an employee benefit consulting firm, reports that premiums paid by workers for employer-sponsored family health coverage rose 336% since 1981, to $485 this year. Financing college education for one's children today, a far-off fantasy for many of the poor, is also becoming a bigger burden for middle-income Americans. The average annual cost of a state university education has soared more than 60% since 1981, far outstripping the 21% rise in financial aid. The price of sending a son or daughter to a private college now averages $11,870 a year, up from $6,566 in 1981. Above all else, hanging over the economy like some giant boulder poised to flatten it are those monstrous trade and budget deficits. Because of them, Jay Schmiedeskamp, the Gallup Organization's chief economist, predicts that 1988 will prove an exception to the rule that the state of voters' wallets determines their electoral preference. Says he: ''People vote their pocketbook when it's in trouble. When they see other problems looming, they vote on their perceptions. Voters today worry that the deficit is leaving a walloping bill that is about to come due.'' THE CRUCIAL QUESTION of this election, then, may not be ''Are you better off than you were eight years ago?'' If it were, the Republicans should win hands down. Rather, the issue may well be which candidate will voters perceive as most likely to leave them even better off in 1992 -- and beyond. In a presidential campaign still too volatile to predict, bashing the Reagan record (as Dukakis has been doing) or resting on its laurels (as Bush seems inclined to try) does the citizenry a disservice. The battleground is the future. What both men owe the country are the best arguments they can muster for how they plan to build upon the real prosperity achieved under Reagan -- and some concrete proposals for tackling the daunting unfinished business that he will leave.

FOOTNOTE: * The government draws the poverty line according to family size and age. For a single person under 65 years, it's an annual income of less than $5,701. For a couple over 65, poverty means income below $6,630. For a married couple with two children, it's an income under $11,113. For philoprogenitive families with nine or more members, the threshold rises to $21,185.

CHART: NOT AVAILABLE CREDIT: NO CREDIT ILLUSTRATIONS BY MARC ROSENTHAL CAPTION: After sinking under Jimmy Carter, black and white family incomes rose smartly during the Reagan years. Women with full-time jobs also prospered mightily. Very young families were about the only big income category in need of a life preserver. DESCRIPTION: Percentage change in real median income for all families, women, black families, young families from 1981 through 1986; color illustration.

CHART: THE REAGAN RECORD WHEN THE PRESIDENT TOOK NOW OFFICE Inflation (CPI) 10.5% 4.0% Unemployment rate 7.4% 5.4% Unemployment rate, adult black males 12.1% 9.5% Mortgage interest rates 13.2% 9.0% Personal income tax rates 14-70% 11-50% Budget deficit (billions) $79 $152 Trade deficit (billions) $34.6 $131

THE MISERY INDEX 1981 Inflation Unemployment 17.9% 1988 9.4% CREDIT: NO CREDIT CAPTION: NO CAPTION