Posted by mybudget in cost of livingincomeinflation 8 Comment People have a hard time understanding how inflation erodes their purchasing power. Little by little the cost of everything goes up and people simply assume this is normal in an economy.
Posted by mybudget in debteconomygovernmentincomeinflation 20 Comment Inflation has a subtle eroding effect that impacts entire economies.
In the United States, we have been fortunate to have relatively stable rates of inflation for two generations. Even in times of high inflation like the s, people were able to adjust unlike places that experience uncontrolled inflation like Argentina is currently facing.
Also, wages rose in tandem which helped buffer the pain of higher costs. Today however, inflation has eroded the purchasing power of the middle class. Only when we look at longer periods of time do we see the large impact inflation has on our ability to buy real goods and services.
People found a piece comparing and prices on various goods and items to be enlightening. Since our middle class did not fully emerge until the end of World War II, it might be useful to compare the price of items back from to where things stand today. Has inflation had a big impact on our purchasing power since ?
The average family income: Since we consider having a car and a home as cornerstones to a middle class lifestyle, it is useful to look at these figures since we can easily grab these figures from reliable sources.
See below for source data: US Department of Commerce Then we can see the median home price: Income is an important measure because it gives us an insight into how well families are doing and how much money is being spent on certain items. So let us derive ratios for each of the items for the s: The typical home cost 2.
Let us now fast forward to and see where these things stand: National Association of Realtors Household income was pulled from Census data based on what the typical household earns. Inflation has a subtle way of eroding purchasing power.
Let us pull some ratios here: The cost of a new car has gone up but not so noticeably when looking at inflation data. Inflation has largely eaten away at income on other fronts like college tuition and healthcare. These were much more affordable back in the s relative to overall income. We should run a ratio here as well: Ina family sending their child to the University of Pennsylvania would only spend 18 percent of their annual income if they paid in cash to send their kid to study.
Today it would consume 79 percent of gross annual income. Even if we look at net take home pay a regular family in no way could send their child to school without going into massive student debt.
A good portion of inflation over this time has been masked by massive amounts of debt and financing. Car purchases, mortgages, and college are now financed long-term.
Low rates have masked this erosion but with rates reaching the lower bound of the range, the pain of inflation is now being felt by many households.This article is comparing oranges to bananas.
Cars today should be more expensive today just from an engineering standard. Modern cars have air bags, emissions systems, mileage standards, etc. that did not exist 50 years ago. POVERTY AND EDUCATION: FINDING THE WAY FORWARD 3 EXECUTIVE SUMMARY AND HIGHLIGHTS* More than one in five U.S.
children live in “official” poverty today. However, today families has the advantage of equality between men and women and there is more freedom for children to shape their future, families in past were happier, more united, and more stabile and members respects values of a real family.
Jan 30, · Within that tiny group, most of these workers are not poor and are not trying to support a family on only their earnings. In fact, according to a recent study, 63 percent of workers who earn less.
Comparing life today with life fifty years ago, there are many dramatic changes. There are new forms of media such as Television and the Internet.
Family structures and emphasis on values today are nothing like what they were fifty years ago. Even peop 4/5(6). The Growth of the Suburbs - and the Racial Wealth Gap Developed by David M. Seiter. Grade Levels: 11th & 12th grades Subject Matter: Economics, Social Studies, American History Time Allotment: up.