The Price Of Everything

1965 Ford Mustang Convertible

1965 Ford Mustang Convertible

Ah, the good old days, 1965 – when you could leave your doors unlocked, the temperature was a balmy 80 degrees, and your new Mustang convertible sat eagerly waiting for you in the carport. You had $10 burning a hole in your pocket, and Betty Lou was getting out, or so you heard.

Fast forward to 2014 and things have changed. For one, you are 50 years older, and so is Betty Lou. The Mustang is long gone, sold for a minivan. And that $10 doesn’t stay in your pocket long enough to even get warm.

Yes, yes, everything is so expensive these days. But you are a rational human being. Instead of sitting around whining, you decide to QUANTIFY the situation. Because there’s nothing like a well crafted number to assuage your sense of foreboding about retirement, right? You power up the laptop and begin your quest. A few hours later you have your answer.

Price Ratio Chart

Ratio of prices, 2014 vs 1965

Ratio of prices, 2014 vs 1965

So now you know. Steering away from high prices and seeking out the proven bargains, you may glide peacefully into retirement with the following plan:

    1. Downsize your median home
    2. Purchase a Yaris
    3. Drive to Walmart and get a nice new TV
    4. Stock up on beer
    5. Watch a wide variety of election ads
    6. Pray for good health

—————————————————
SOURCES:
Consumer Price Index (CPI-U) (7.5)
1965: 31.5
2014 (est): 236.2

http://www.minneapolisfed.org/community_education/teacher/calc/hist1913.cfm

Gasoline (11.9)
1965: $0.31

http://www.1960sflashback.com/1965/economy.asp

2014: $3.69

http://www.gasbuddy.com/

Four year public university Tuition, Room and Board per Year (13.1)
1965: $1,105

http://nces.ed.gov/programs/digest/d07/tables/dt07_320.asp

2014 (est): $14,500

http://www.washingtonpost.com/blogs/wonkblog/wp/2013/08/26/introducing-the-tuition-is-too-damn-high/

Doctors Office Visit (21.1)
1965 (est): $7.50

http://www.cdc.gov/nchs/data/series/sr_10/sr10_049.pdf

2014: $158

http://www.fchp.org/members/resources/guide-to-costs.aspx

Economy Automobile (6.1)
1965: $2,650

http://www.thecostofliving.com/index.php?id=105

2014: $16,050 (Toyota Yaris)

http://blogs.cars.com/kickingtires/2014/02/top-10-cheapest-new-cars-you-can-buy.html

Median New Home (13.5)
1965: $20,700

http://www.census.gov/const/uspricemon.pdf

2014: $280,000

http://research.stlouisfed.org/fred2/series/MSPNHSUS

Television (0.7)
1965 (est.): $500

http://www.tvhistory.tv/tv-prices.htm

2104 (40 inch): $348

http://www.walmart.com/ip/Sony-KDL40R350B-40-1080p-60Hz-Class-LED-HDTV/36575378

Box of Cheerios (13.1)
1965: $0.28

http://www.thepeoplehistory.com/60sfood.html

2014: $3.68

http://www.walmart.com/ip/Cheerios-Toasted-Whole-Grain-Oat-Cereal-18-oz/10311410

Beer 6-Pack (5.0)
1965: $1.00

http://www.dummies.com/how-to/content/remembering-what-a-buck-could-buy-in-the-1960s.html

2014: $5.00

http://qz.com/174700/how-many-hours-of-minimum-wage-work-it-takes-to-earn-a-beer/

Big Mac (10.3)
1965 (ish): $0.45

http://pabook.libraries.psu.edu/palitmap/BigMac.html

2014: $4.62

http://www.economist.com/content/big-mac-index

US President (125.3)
1964 (LBJ): $8.8 million

http://www.theawl.com/2012/11/presidential-fundraising-adjusted-for-inflation

2012 (Obama): $1,123 million
http://www.politico.com/story/2012/12/barack-obama-mitt-romney-both-topped-1-billion-in-2012-84737.html

  1. This is really interesting…I mean it really is…but what does it mean.

    Things cost more today. Ok. Granted.

    BUT, in 1965, per the U.S. Census a family of 4’s median income was $6,900 a year. (http://www2.census.gov/prod2/popscan/p60-049.pdf)

    In 2012 median household income was $51,371 a year. (http://www.census.gov/prod/2013pubs/acsbr12-02.pdf)

    That economy car in 1965 cost you 38 percent of your income. In 2012 it was 31 percent.

    So…what did you want us to gather from your comparisons….like I said, a lot of work here…a ton of work….and really interesting but I am looking for the thesis you were setting out to prove.

    Help?

    • Murph, not so much a thesis, as a piece of the puzzle. But if there is one observation to be drawn, it is that, while manufactured goods continue to be (relatively) affordable, the things that really matter for quality of life have increased in price disproportionately: healthcare and education being the glaring examples.

      Now what to make of political spending, the startling outlier? For some time I have been thinking about political spending as the result of investment decisions made by those who expect a return. So this begs the question, what changed to make the investment so much more attractive, such as to justify investing so much more? And who are the primary investors: corporations? rich people? the common man?

      Put this together with the other more recent trends in campaign spending: codifying the unbridled investment; and obfuscating the sources.

      It rather stinks, doesn’t it?

      • Ok this is brilliant.

        The analysis takes me to another plane of interaction with your post.

        Suggestion….take the post already done and repost it with a new beginning (say it was a puzzler) and then your analysis.

        Expand on why manufactured products remain affordable but services do not. Expand on your perspective of political donations as investments.

        Run at it one more time and expand the field.

  2. My first house cost me $35,000 in 1974. My first car cost me $40 (used Austin 5 speed) I drove it 2 miles, pushed it about 100 yards and sold it for $50 as is.
    After high school my first job paid $35 a week for forty hours. Then I was drafted and the army paid me $99 a month!

    Ah, what memories!

  3. I had the ’67 Mustang Coup with the 289 V8 when I was in college. Rebuilt the engine once and had to cram 9 of us in there so we could go get Chinese food. I paid $1,200 for it in 1974…

    Miles “Good Times” Long

    • I had a ’79. Bought it new ($4,900) as a reward for getting a good job.

      Pro: Ford recaptured some of the original look in the body style.

      Con: With the 4 cyl engine, it was a sheep in wolf’s clothing. Baaaaaaa.

      My wife wrecked it in ’82. Yeah, that back end tended to lose traction.