Keeping Up: Notes From An Armchair Economist

[NotHardUp1]

Pork bellies may be accurate, but not relevant.

I was watching an ancient re-run of What's My Line an hour ago, and they were running the original commercials. Stopette, a deodorant, was the sponsor, and one commercial indicated the price then was 60 cents. That put me to wondering how expensive that was. Stopette sponsored the show for eight years in the 1950's, so I chose 1955 as a fair year to compare inflation or consumer prices.

As cheap as 60 cents sounds, it wasn't compared to today's deodorant. When researching, $1 in 1955 is worth a little over $11 today. Using that as a multiplier, deodorant today would cost almost $7. The average is a lot less than that today, so smelling good is a bargain now compared to the days of Camelot.

Another website compared a bunch of prices from 1955 to 2018, so I used it as a barometer to see change relative to simple inflation. It's not science. It's not the Consumer Price Index. Some of the prices given for 2018 looked more urban than what I know from living in lesser cities (under 1 million).

What jumps out is that little expenses are good deals, meaning you can live on poverty income IF you can find a place to live. You can't afford a car, you can't buy a house, and you can't pay rent if you were just a single person transported forward to our time. Of course, households were single income in 1955, as a rule. So, a fair comparison for MOST people today is two incomes. That says something for gays who are mostly single, and for divorced couples.

Here's a table to see what I mean about consumables. It's cold comfort to see how affordable groceries are when you struggle to pay for roof and transportation. The 1955 & 2018 prices came from the website. The 2024 are projected should-costs using the inflation factors of 2023 vs. 1955.



The reds are just numbers I don't see in my market as average. Bread under $2 would be really bad bread, and I doubt bad bread was sold in 1955. Bacon is closer to $4.50 per pound where I find it, if not buying premium bacon. Cereal at $8 per box would be easily twice the price I see at the grocer.

 

[NotHardUp1]

Mea culpa. I had swagged in the house price and forgotten to look it up. Average house price in 2018 in the US was $381,800.00, very much to my point about relative affordability.

Our nation faces a moral question, not even merely an ethical one. We have encouraged and enshrined housing speculation as a source of profiteering. Now, in a growing crisis, we see major investment cartels buying up housing, in effect controlling the market through intervention. This is in addiction to local small landlords buying up affordable housing and turning into less affordable rental property. We saw similar behavior during the housing collapse during the foreclosure crisis a few years back: the banks held onto foreclosed properties and wouldn't sell them at the depressed prices, keeping them empty.

We make much of other nations and wars and pollution and oppression, but we have much to answer for ourselves. We impoverish citizens by giving economic control to profiteering manipulators. And news coverage of it treats it like and "oh dear!" instead of a question of justice.

 

[Alistair]

If your paying $477 for rent it’s a single room in a very bad part of town

 

[NotHardUp1]

If you're paying $477 for rent, it’s a single room in a very bad part of town

Exactly the point. Housing costs have risen obscenely. The cost of renting a HOUSE should be $477.

Rents are between 3 and 4 times where inflation should have put them. House ownership is at three times where inflation projects.

 

[Norri]

Mea culpa. I had swagged in the house price and forgotten to look it up. Average house price in 2018 in the US was $381,800.00, very much to my point about relative affordability.

Our nation faces a moral question, not even merely an ethical one. We have encouraged and enshrined housing speculation as a source of profiteering. Now, in a growing crisis, we see major investment cartels buying up housing, in effect controlling the market through intervention. This is in addiction to local small landlords buying up affordable housing and turning into less affordable rental property. We saw similar behavior during the housing collapse during the foreclosure crisis a few years back: the banks held onto foreclosed properties and wouldn't sell them at the depressed prices, keeping them empty.

We make much of other nations and wars and pollution and oppression, but we have much to answer for ourselves. We impoverish citizens by giving economic control to profiteering manipulators. And news coverage of it treats it like and "oh dear!" instead of a question of justice.

I have always believed that constantly low interest rates played a large role in the 08 collapse as investment capital went looking for a place to make money in a low int. rate environment. In 2022 1/3 of all home sales were in cash a good indication that it’s happening again as investors eyes have been opened to the world of very high rental apartments and that world extends well beyond the cities. We’re always told that government can’t solve every problem, neither can capitalism.

 

[Kahaih]

Consider in your calculations that in 1955 the world population was 2,746,072,141.

 

[Peloso]

Of course, households were single income in 1955, as a rule.

And you could live comfortably off that. Not as a single person, but a whole family. That's the crux here. Today, minimum wage would have to be something like $40 for most people to keep up.

Wealth begets security and power, and power is often hard to lose, so where does that leave the rest of us? We talk about this big raging 'threat to democracy' but democracy is already dead if all the money just gets sucked up into a black hole by the corporate rich voters are too misinformed and/or ignorant to vote in their best interests. As a destructive force, ignorance trumps evil.

The only solution left now for either side is violence, and I'm just too fucking old for that now, so I guess I'll just have to sit back with a big gulp and a bag of pretzels and watch America implode remotely.

 

[Alistair]

…so I guess I'll just have to sit back with a big gulp and a bag of pretzels and watch America implode remotely.

I wouldn’t limit that to America.

 

[NotHardUp1]

Consider in your calculations that in 1955 the world population was 2,746,072,141.

YOU have to do the calculations: this is armchair economics.

Yes, but we're talking US housing. There was a shortage of housing after WW2 that was severe, so rents should have been high, even as late as the 1950's.

That just reinforces the point that housing is obscene in our democracy.

Food is cheaper and many consumer goods because of globalization.

 

[NotHardUp1]

I have always believed that constantly low interest rates played a large role in the 08 collapse as investment capital went looking for a place to make money in a low int. rate environment. In 2022 1/3 of all home sales were in cash a good indication that it’s happening again as investors eyes have been opened to the world of very high rental apartments and that world extends well beyond the cities. We’re always told that government can’t solve every problem, neither can capitalism.

I agree. Our government ignores the widening income gap at its peril.

The populace will only go so far before revolting. "Bread riots" are not necessarily a thing of the past, even if bread itself and hunger are not the issue any more.

Homeland Security is so obsessed with foreign actors and militia that they are likely not attuned to the sleeping giant that is the working class.

 

[rareboy]

Housing is so obscene in North America because of the way we plan and build and what we want to buy.

Post war housing was often a 1000 sf bungalow (maybe with unfinished basement, 1 bath and carport or detached garage) Now houses are ofter 3 to 4 times the size for the same size of family.

And building sprawling suburbs based on the automobile is ruinous.

I am always fascinated to see where food items end up on COL projections.

North Americans have also had decades of being provided with incredibly cheap food and gas.

And that ship has likely sailed for good as industrial farming and processing replaces eating local or even regional and the subsidies are now sucked up by the corporations instead of the family farmer.

 

[NotHardUp1]

Housing is so obscene in North America because of the way we plan and build and what we want to buy.

Post war housing was often a 1000 sf bungalow (maybe with unfinished basement, 1 bath and carport or detached garage) Now houses are ofter 3 to 4 times the size for the same size of family.

Except that doesn't explain the disparity in rental costs PSF and the growing sector of rental vs. owned.

We are giving housing away to speculators just as surely as we gave electronics to the Japanese in the 60's and after.

All this freaking out about the Central Americans invading, yet no clamor about the domestic capitalist threatening the security of the nation.

The whole system is rigged to overprice real estate, and the bloodsuckers are embedded in every stage of the transaction of buying a house.

 

[belamyi]

I wouldn’t limit that to America.

He surely meant Pax Americana.

 

[Norri]

Housing is so obscene in North America because of the way we plan and build and what we want to buy.

Post war housing was often a 1000 sf bungalow (maybe with unfinished basement, 1 bath and carport or detached garage) Now houses are ofter 3 to 4 times the size for the same size of family.

And building sprawling suburbs on the automobile is ruinous.

I was easier to build cheaper houses when land didn’t cost so much. In many parts of the country the high cost of the land dictates the type and size of the house being built as the dwelling must cost more than the land it sits on or it’s unlikely to sell. We are a victim of our own economic success.

One generally overlooked reason not to build around the auto is that the spaces for cars take up more space than almost anything else. Look around next time you’re out no matter the space be it a hospital, a courthouse, a shopping mall a strip mall or a restaurant there is more space dedicated to the car that brought you there than exists in the place you are about to enter. I can’t think of a single exception to that rule.

Thats a lot of very expensive real estate given away for free.

 

[fredroy]

This is in addiction to local small landlords buying up affordable housing and turning into less affordable rental property.

I've seen similar comments about this elsewhere. But look at it another way. Owning vs Renting. If you rent and something fails, you call the Landlord. If you own, all that stuff is on you.

The blower failed on my central air a few months ago. It's a "fancy" heat pump system. Variable speed blower... it goes from whisper to roar. $95 to come diagnose. $825 for a new blower. Right out of my check book.

I'm not saying there are not slum lords out there gouging folks.

Then there are property taxes. We're locked in because someone is over 65. But if we were not locked, we'd be sorta fucked because in the last 10 years the assessed value on the house has gone from 90 grand to 200 grand in "value". Yeah, sure, the tax rates are just a tiny little bit more now but they increase the so-called value of the house every year. It's still the same house in the same place, saying "someone built a new house and it's worth 600 grand so that makes your house worth more" is pure bullshit when the new house is almost two miles away.

How about insurance? Those folks say the joint is suddenly worth 450 grand. Yeah, no, I got them to drop that to 320 grand to save a thousand bucks a year.

So everything, repairs and taxes and insurance are built into your rent on top of the landlord's mortgage payment.

 

[rareboy]

Except that doesn't explain the disparity in rental costs PSF and the growing sector of rental vs. owned.

We are giving housing away to speculators just as surely as we gave electronics to the Japanese in the 60's and after.

All this freaking out about the Central Americans invading, yet no clamor about the domestic capitalist threatening the security of the nation.

The whole system is rigged to overprice real estate, and the bloodsuckers are embedded in every stage of the transaction of buying a house.

What is now very much built into the price of the house is the financing on top of inflated market prices.

And with the rent, it is the ever increasing costs of taxes, insurance, utilities and maintenance.

We have one property that rents for $1400 per month and after all expenses, likely clears about $5000 per year on average...although I would say that we invest about 30% of the rent each year into maintenance. If a landlord has a 25 year mortgage, then the cost of the interest also has to be factored in. I would say though, that we don't raise the rent avery year for our tenants, so they get some security that way.

With more properties being purchased for rentals, the market becomes increasingly more expensive for renters.

 

[Latimer]

Regarding housing, it should be added that the post-WWII US government subsidized housing through the GI Bill which provided no down payment housing loans to returning veterans. It should also be added that now in many states--California being the most notorious example--in addition to building and zoning code requirements, building permit and inspection fees add enormously to the cost of building and the length of time it takes to build. This will only get worse when the all-electric regime takes hold and--with inadequate electric power--home generators become necessary to ensure a house that functions smoothly during the rolling blackouts that are surely in our future.

I'd be interested to know what a typical carpenter, electrician or plumber in California earned in 1955 vis a vis today, and how this factors into the cost of construction. I'm sure liability and workers comp insurance is much higher today than in the 50s.

Additionally, for reasons that include changes in building and zoning permit requirements, environmental requirements and construction practice, I need to produce at least ten times the number of A (that is, Architecture) sheets to build a house than an architect doing similar work would have needed in the 1950s.

We live in a more complicated world.

We also have air conditioning--a mixed blessing if there ever was one.

 

[NotHardUp1]

Regarding housing, it should be added that the post-WWII US government subsidized housing through the GI Bill which provided no down payment housing loans to returning veterans. It should also be added that now in many states--California being the most notorious example--in addition to building and zoning code requirements, building permit and inspection fees add enormously to the cost of building and the length of time it takes to build. This will only get worse when the all-electric regime takes hold and--with inadequate electric power--home generators become necessary to ensure a house that functions smoothly during the rolling blackouts that are surely in our future.

I'd be interested to know what a typical carpenter, electrician or plumber in California earned in 1955 vis a vis today, and how this factors into the cost of construction. I'm sure liability and workers comp insurance is much higher today than in the 50s.

Additionally, for reasons that include changes in building and zoning permit requirements, environmental requirements and construction practice, I need to produce at least ten times the number of A (that is, Architecture) sheets to build a house than an architect doing similar work would have needed in the 1950s.

We live in a more complicated world.

We also have air conditioning--a mixed blessing if there ever was one.

And a factor we can never know the number of: the number of thieves stealing Worker's Comp and Disability SS.

The increase is staggering. If you have any doubt about the magnitude of the problem, watch the "handicapped" parking spots at any major store. Not only the many people using it with NO authorization, but many more using someone else's illegally, and still more legal, but cheats. There is surely a correlation in that abuse and the larger very real abuse of benefits given myriad citizens without need,

Those deadbeats are a huge burden on the work force and taxes.

And, it erodes the respect we owe the actual citizens with real disability.

We've lost our way with work ethics. Too many people shrug or even envy the slothful.

 

[peeonme]

Homes and cars aren't what they once were. Seems that most folks need far more sq. feet and have fewer children than in the '50's. My home was built in 1952 and is about 800 sq. ft. (that includes an addition for a laundry room). In the 50's most blue-collar workers drove used cars that were plain Janes, most had standard steering, brakes and transmissions.
Today starter homes have to be around 1800 sq. ft. and cars, suv's and pick ups all have every bell and whistle you can think of. There are some "cheap" cars out there but you don't see many. I know guys that think nothing of a $200. plus cable bill.

To put it into perspective in lawn care I have customers in "McMansions" that want a lawn manicured for $40. and they have large yards, people in my neighborhood have small yards and gladly pay $35. and aren't too fussy. The wealthy realize the value of a dollar... the poor seem to "let go" of a buck far easier. You won't find many wealthy people buying lottery tickets either.

The adults in the 50's had been around during the depression (or were raised by parents that had been) and waste not want not was the mantra, I heard it almost daily.

 

[Latimer]

^
There's a handicap parking space in front of the office tower where my gym is located. Often the space is occupied by either a Lamborghini or Ferrari with a handicap pass hanging from the rear-view mirror. I've never seen an automobile there that a handclapped person could easily get into, let alone drive. I've assumed the cars are owned by one of the hot early-thirties Iranian guys who work out there. I've imagined of keying the purple iridescent wrap on the former or the "rossa corsa" paint job on the latter, but I know the pleasure I'd feel in doing so would be outweighed by the guilt I'd feel afterward.

A contractor with whom I've done a number of houses told me that many of the contractors he knows tell him they did "very well" during the pandemic with the Covid relief payments that were given out--even though construction projects were considered "essential" and were not shut down--and that the government required no verification for a claim as long as it was under $100,000.