For God’s sake will people stop talking about inflation! Especially you inflation “truthers” who insist the BLS is lying and the actual inflation rate is between 7% and 10%. Those are the sorts of rates we averaged during the Great Inflation of 1965-81. For those too young to remember, a little history lesson:
I was so excited when my dad came home with a red 1964 Oldsmobile 88. That was a car for upper middle class Americans. We were only middle class, but lived in an upper middle class house, because my dad was smart. The car was actually used, but almost new. He used to say a car lost 15% of it’s value the minute it was driven out the door of the dealer. Now when I go look for late model used cars the dealers ask more money than for a new model. Here’s the car (which sold for $3600):
Now let’s flash forward to 1986. The Japanese cars are in style, and the first upper middle class Japanese car on the market is the Acura Legend, which sells for $22,500, more than a six-fold increase in 22 years. It was voted Car of the Year. That’s what high inflation feels like.
Now let’s go up to the present. I’m not quite sure what model would be comparable to the Legend, but the Accord is made by the same company, and is slightly larger. Here’s a picture of the Accord:
I’m pretty sure the Accord LX is better than the Legend LS in almost every way you could imagine. It’s price? Brace yourself, because 28 years is even more than 22 years. Surely the price of cars has risen more than 6-fold in the last 28 years. I’d say around $200,000. Nope.
OK, $100,000. No.
Actually it’s $22,105. (The link has all the specs.)
Cars have gotten cheaper over the past 28 years.
In nominal terms.
(The CPI says car prices have risen about 35% in the past 28 years–I don’t believe that.)
BTW, wages of factory workers rose from just over $2.50 an hour in 1964, to about $8.90 in 1986, to $20.68 today. Put away the tissue paper, the middle class is doing fine.
My favorite car was a 1976 powder blue Olds Cutlass with a T-bar roof, whitewall tires and white bucket seats:
It was a $6000 dollar car, but I bought it used for $3500 in 1981. That’s actually a 1977, I don’t have a picture of my car.
Hmmm, I thought they were a bit better looking than that.
And no, I did not have a “Landau roof.” I do have standards.
PS. OK, I cheated a bit by using a Wikipedia photo of the Legend, which isn’t too flattering, and a very pretty official Honda web site photo of the Accord. But I’m not kidding, I’d rather have the Accord, even for the same price.
Millennials have no idea how lucky they are that they can just go out and buy a Honda Accord, brand new. On a middle class income.
That BMW you always dreamed of? Back in 1970 they looked like something made in a Soviet factory.
PPS. Labor intensive service prices have risen much more than car prices, and high tech goods have fallen dramatically in price. There is no such thing as a “true rate of inflation,” but there’s also no reason to assume that inflation has not averaged 2% in recent decades. It’s just as reasonable as any other number the BLS might pull out of the air.