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**Firstly I want to state that I do not consider myself an economics expert in any way and I am not attempting to make some political statement with this post.**
That said, I am only 25 and yet I still find myself thinking "gee, that used to be a lot cheaper" quite a bit and meanwhile from what I gather the people around me make roughly the same or even less than what I remember growing up. I've always wondered if maybe the rate of inflation was causing some trickery here, and so I found a calculator online (Westegg). I plugged in some of the values I could remember and saw that things are more expensive now even when you adjust for inflation. Now, one obvious trouble is I don't have a perfect memory (or judgment for some) and another is that I can't put 100% faith in the calculator I have found. Here are some examples in the format of...
ITEM >> RECALLED AMOUNT >> RECALLED YEAR >> ADJUSTED AMOUNT FOR PRESENT
Gallon of gas >> $0.99 >> 1992 >> $1.60
Cheeseburger value meal >> $5.00 >> 2004 >> $6.01
Hot Wheels toy >> $.79 >> 1992 >> $1.27
Used car under 7 years old in good running shape >> $3,000 >> 2004 >> $3607.03
Again, I acknowledge my judgment and memory are flawed, but the only thing that stands up to this test in my mind is the Hot Wheels Toy, but I've always thought those were good values for kids. I know there are a lot complicated things that affect oil prices and used car prices, too. I'd like it if the good posters here could dig up some memories out of their head to make similar comparisons. It would be interesting to see if somebody already has an existing database to do something like this.
Assuming that goods are in fact more expensive today than they have been in the past, even adjusting for inflation, is there anything else that I'm missing here? Are some goods a better value today than they have been before because they are more functional or longer lasting? Or perhaps they are healthier for you? Or do you think I'm simply on the right track in saying that it is harder to stretch your dollars and afford the same things that you could have in the past?
Inflation is the increase in the cost of goods and services. Naturally some costs have increased more than the inflation rate and some have increased less.
I suppose what I am primarily concerned with is the inflation of essential goods. It seems to me that an inflation rate is generalized over the entire economy, but only a small percentage of that contains essential or basic items. What I mean by essential and basic are the things that are nearly universal in their consumption. Things like food and gas.
Look at it more from a perspective of how much these things cost in relation to salary. I'm not going to look up any stats but just from a general perspective and my experiences, goods are no more or less affordable today then the were 40 years or more ago. People BUY more today and think they NEED more today is really what has changed, and it drives up prices.
Again, not really scientific but I had a conversation with my Grandfather about this many years ago and we were comparing what goods cost when he was young--30's with small children young--and the ratio of goods to salary was actually higher in his experience then what we were experiencing at the time. His house was a much higher ratio then what the average house cost back then (90's when we were discussing this).
I think the single contributing factor to the raise in prices and the steep inflation we saw in the 80-90's was due to more dual income houses....more money coming in means more money to spend...
Look at it more from a perspective of how much these things cost in relation to salary. I'm not going to look up any stats but just from a general perspective and my experiences, goods are no more or less affordable today then the were 40 years or more ago. People BUY more today and think they NEED more today is really what has changed, and it drives up prices.
Again, not really scientific but I had a conversation with my Grandfather about this many years ago and we were comparing what goods cost when he was young--30's with small children young--and the ratio of goods to salary was actually higher in his experience then what we were experiencing at the time. His house was a much higher ratio then what the average house cost back then (90's when we were discussing this).
I think the single contributing factor to the raise in prices and the steep inflation we saw in the 80-90's was due to more dual income houses....more money coming in means more money to spend...
I disagree with this. As a mother of 4 kids, one of the most difficult things to keep up with is the rising cost of household goods. The laundry detergent that I buy at costco used to be $10 five years ago, now it is $13. Generally speaking, my grocery costs have gone up about $300/month. My health insurance has gone up about $100/month, the cost of gas for our vehicles has gone up $150 a month. Electricity used to cost .05/kwh, now it is .09/kwh. Basically, we have less disposable income today than we did 5 years ago, even though my husband has had considerable pay raises. It is very disheartening. I do agree that we buy more non-essential items today than in the 30's, but I'm comparing costs to five years ago, not the thirties. We have had to cut everything down to bare bones.
I disagree with this. As a mother of 4 kids, one of the most difficult things to keep up with is the rising cost of household goods. The laundry detergent that I buy at costco used to be $10 five years ago, now it is $13. Generally speaking, my grocery costs have gone up about $300/month. My health insurance has gone up about $100/month, the cost of gas for our vehicles has gone up $150 a month. Electricity used to cost .05/kwh, now it is .09/kwh. Basically, we have less disposable income today than we did 5 years ago, even though my husband has had considerable pay raises. It is very disheartening. I do agree that we buy more non-essential items today than in the 30's, but I'm comparing costs to five years ago, not the thirties. We have had to cut everything down to bare bones.
5 years is not a good sample though--especially when those 5 years were during one of the worst recessions in our nation's history...
A couple points... Many of our consumer goods are made in China. Well, wages have been rapidly growing over the last decade at a rate of 10% a year. Take a look...
Add to that the rising cost of fuel, which is needed to transport the goods, and Americans have been feeling it. Sometimes, we get some of those jobs back, but they rarely pay comparable to what they used to.
We are competing against workers for jobs on a global scale. Some Americans (usually those with cushy jobs removed from this element of competition) feel this is a good thing. We are "spreading the wealth". I'm not convinced. Trade is usually about mutual benefit. We're getting cheap(er) products, but for how long, and at what cost to us? What exactly do we have to trade to low wage nations?
5 years is not a good sample though--especially when those 5 years were during one of the worst recessions in our nation's history...
Has there ever been a time in US history with this type of increase in cost of living ratio to wages where the COL eventually went down (or wages rose enough to offset the COL increase)? If so, do you have documentation?
Has there ever been a time in US history with this type of increase in cost of living ratio to wages where the COL eventually went down (or wages rose enough to offset the COL increase)? If so, do you have documentation?
Can you be more specific?
If you are just asking about a deflationary period, here you go.
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There are many metrics
