By Robert Romano
One of the great mysteries in Washington, D.C. facing elected officials is why constituents feel like they are running in place, and never seem to get ahead financially.
It’s because they aren’t.
Since the Great Inflation of the 1970’s, brought on by a surge of the working-age population and exacerbated by leaving the gold standard, prices have more or less moved in tandem with income, according to data compiled by the Bureau of Labor Statistics and the U.S. Census Bureau.
From 1976 through 2013, inflation averaged 3.97 percent a year. Household median income grew nominally at 3.96 percent a year. So, while inflation has slowed down since the late 1970’s, so have wages.
Meaning although we might have cooler gadgets today, more fuel-efficient cars, etc. yet financially, we’re no better off than we were almost 40 years ago.
The picture looks even worse when you consider the prices of things like housing, energy, tuition or health care.
According to the Freddie Mac home price index, home values have grown nominally at 5.28 percent a year through 2013, compared with median income’s 3.96 percent.
Oil prices averaged 9.5 percent growth a year through 2013, according to the U.S. Census Bureau, more than double the growth rate of incomes.
College tuition has exploded at 5.5 percent a year, according to data compiled by the U.S. Department of Education, again, with wages lagging behind.
The cost of a family health premium has risen at 7.6 percent a year since 2000 according to data compiled by the Kaiser Family Foundation, compared with household median income at just 1.7 percent a year since that time.
So, while the Federal Reserve and elected leaders in Washington, D.C. may like to point out that the Consumer Price Index as measured by the Bureau of Labor Statistics is technically historically low, particularly compared to the Great Inflation of the 1970’s, it still bears little resemblance to the items that people actually spend much of their money one, like mortgages, rent, gasoline, student loans, and now mandatory health care.
And politicians wonder why the American people think they’re not getting ahead. As it turns out, it’s because they’re not.
Robert Romano is the senior editor of Americans for Limited Government.