The economy was improving in 1976, but under Ford's term the economy had been the worst it'd ever been at that point since the Great Depression. So yes, it was bad. Not the absolute worst, but bad.
Saying that Carter's lead was never "real" because his victory was narrow ignores the basic fact that most voters in 1976 wanted change: change from Watergate, change from the bad economy, change from the failure of Vietnam. This is why Carter won and why it would've been extremely difficult for Ford to win. So difficult that he only could have won if the Democratic nominee stumbled, as Carter did with the Playboy interview and his poor performance in the debates, and if he himself had done everything perfectly (e.g., don't pardon Nixon, campaign prior to Labor Day, avoid the "Soviet domination gaffe). This didn't happen, so he lost. But that fact that the result was narrow happened because Carter stumbled in the general election. A stronger politician would've won more decisively with over 300 electoral votes.
Additionally, your contention about Ford wanting to save Vietnam is irrelevant to my original point, as he didn't save it and this hurt him in 1976. I was referring to the fundamental conditions favoring the Democrats, not some hypothetical about Ford. As for your point about Carter's unpopularity in the North, that is true. But again it is not relevant to my point that fundamental conditions favored the Democrats in 1976, and the election should have never been a close affair.