Cost of Living: 1957 vs 2007
Posted in the Hugo Forum
#1 Apr 28, 2008
The Cost of Living; 1957 vs. 2007
Compare what it costs to live in America today verses fifty years ago in 1957. To put this in perspective, 1957 is considered to be the height of the baby boomer generation. Dwight D. Eisenhower was the United States President and Richard Nixon was the Vice President. There were around 170 million people living in this country (compared to 300 million today). The 1957 Best Picture of the Year (The Bridge on the River Kwai) grossed $27,200. So far in 2007 the movie The Departed grossed $125 million. No one owned a computer fifty years ago. The only games were board games and make believe games. Girls still wore dresses and guys still dressed up to take a girl on a date. Mothers stayed at home to raise the kids and fathers were happy to be the breadwinner of the family.
A lot has changed in fifty short years. The United States of America bears little resemblance to the country bearing its name not even two generations ago. States that were mainly deserted deserts fifty years ago are now the fastest growing states in the country (Arizona, Nevada and Utah). Areas that were farms fifty years ago are now cities with hundreds of thousands of people. There was only one Interstate Highway fifty years ago and that was I-70. Now people can travel all over the country on multi-lane super highways going pretty much as fast as they want.
In 1957, the average income of Americas 44 million families (according to the United States Commerce Department) was $5,000. There were actually 4 million families whose income was over $10,000. There were also 6.5 million families whose annual income was under $2,000. The vast majority of American families, 33 ½ million of them, had annual income between $2,000 and $10,000. In 2006, the average income for an American family was $48,000. In fifty years the average income had increased tenfold. The main difference between 1957 and 2006 is that most families need two incomes to reach the $48,000 figure whereas fifty years ago only the father usually worked. Logic dictates that if annual income has risen tenfold in fifty years, then the cost of most items has probably risen about the same. This logic is correct in many categories, but horribly flawed in one huge area.
In 1957 the average price for a gallon of milk was $1.00. Today, that gallon of milk averages around $3.00. It really is quite amazing that something as vital as milk has only tripled in price in 50 years. The price of most other things has definitely gone up much more rapidly and dramatically.
In 1957 gasoline averaged around .30 per gallon. This should not be surprising since only a few years ago it was still under a dollar. But, even if you took the high average today of $3.00, that is only a tenfold increase in 50 years in one of the most volatile commodities on the market. Of course at the rate of increase gasoline has gone up, that would put a gallon of milk at $10. Thank God the rate of inflation for milk has not kept up with oil.
Fifty years ago, the postage stamp was 3 cents. Now it is 41 cents (at least this week). Calculating the difference in the cost of a loaf of bread is a little more difficult. There are so many kinds of bread out there today that it is very hard to compare apples and apples, but in 1957 a loaf of bread cost 19 cents and today the range is from $1.90 to 3.90. A dozen eggs cost .28 fifty years ago and many times they cost barely over a dollar today.
#2 Apr 28, 2008
Most things that are still bought and sold today are about 10 times more expensive than they were fifty years ago. Even big ticket items follow this same rule of thumb. The average cost of a new car in 1957 was $2,100. Today, the average price for a new vehicle is $27,958. Although vehicle prices have gone up more than 10 times, the average for todays vehicles includes SUVs and luxury cars. It also takes into account the incredible advances in technology found in todays vehicles.
It is very interesting to note that in all the years my dad bought and sold vehicles (1932 through 1989), he always paid cash for the new vehicle.Back in the day, no one ever financed a car except possibly through a credit union or a family loan. Today, the average new vehicle loan works out to $378 per month for 63 months! Considering that a new vehicle loses 70% of its value in just 48 months, what exactly do people have to show for the $4,536 per year, or the $18, 144 they pay in four years of vehicle payments? A used vehicle worth 30% of what they paid for it.
Here comes the statistic I have been leading up to all this time. In 1957, the average price for a house in the United States was $2,330. Can you believe that! A house and a car cost roughly the same thing! I know normal people who pay $2,330 per month to rent an apartment. Just 50 years ago, this figure represented the average price for a house in this country.
Now consider what the average price is today (not taking into account the current depressed prices due to the sub-mortgage crises); which is $212,800. The average price of a house fifty years ago represented 50% of the annual income for the average family. The median price today is four times MORE than the average family makes in a year. This statistic explains why Americans today are saddled with a debt load that destroys marriages and causes the current unheard of foreclosure rates. Families simply cannot afford the home they live in. This is NOT a good thing.
In 1958 my parents purchased a modest home in a nice residential neighborhood in Wichita, Kansas. The house cost about $8,000 and their monthly mortgage payment was a little over $100 per month. Today, the average family in this country has a house payment of around $1,250 per month. All things being equal, if nothing else had changed between 1957 and today; then the amount paid each month for the house payment would not be much different than fifty years ago (the rule of things increasing tenfold), but all things are not equal.
#3 Apr 28, 2008
Most people fifty years ago bought a house and lived in it for most, if not all of the 30 years of the mortgage. Today, people want to move into bigger and fancier houses after a few years. They never get to an equity position. If they do, they get home equity loans for toys, vacations, and other things and suddenly have not only a house note, but also a home equity loan note. Add in a couple of car loans, college loans and medical expenses. Once again, people cannot afford the home they live in.
Our country has always taken pride in home ownership. It is The American Dream after all. But, if the current trends continue, no one will be able to afford the home they live in. Instead of moving up, they will be forced to move down to housing they can afford. This is not the American way of thinking. People are not used to having less and less. That flies in the face of the bigger, better, more and more mentality that has fueled so many of the problems now being encountered.
There was a time in this country, not too many years ago, when people simply made do with what they had and could afford. With the advent of credit cards and cheap credit lines, people have been conditioned to get whatever they want, when they want it. There is no financial discipline or maturity to speak of. This ugly mentality is now being passed on the next generation who has been conditioned to have everything they want without working for it, saving for it or waiting for it.
The old values learned by those who suffered through the Great Depression have died off with that generation. The baby boom generation ushered in the greatest spending spree in American history. With it has come utter incompetence in financial matters at home, within businesses and inside the government. Perhaps a good recession or even a depression would not be all bad for this country. At the very least it would provide a wakeup call to millions of people. People might begin to understand that you cant keep spending what you do not have without someday suffering the consequences for it.
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