Inflation is impacting American households, influenced by fuel shortages and oil supply issues. A distant war contributes to national unrest, while increasing political division adds to public anxiety. These factors remind many of the 1970s, despite it being the 2020s.
Back in 1974, after the Watergate scandal, Richard Nixon resigned. His departure left a politically divided America. The unpopular Vietnam War had fueled inflation and led to a period of severe stagflation, exacerbated by the 1973 Arab oil embargo. Fast forward fifty years, and President Donald Trump was preparing for a second term after promising increased affordability. However, a new war in the Middle East under his administration caused global oil prices to soar, escalating inflation in the U.S.
Despite differences, parallels exist between then and now. The country today is different, and many Americans are in a different financial position compared to fifty years ago. A ConsumerAffairs study indicates that even amid affordability and pricing issues, some Americans might be better off today than in the 1970s.
Inflation and Rising Incomes
ConsumerAffairs researchers evaluated changes in income, inflation, and significant expenses like housing, healthcare, and college tuition from 1974 to 2024. Factors included median individual income, consumer price index (CPI), and purchasing power by category.
Over the past fifty years, CPI categories, such as college tuition and housing costs, have increased. However, on average, incomes have generally kept up with the cost of living. Buying power rose by 73 percent, suggesting that, adjusted for inflation, the average American can afford more than in 1974.
In some areas, though, it’s more complex. College tuition saw a decrease in buying power by almost 43 percent, and healthcare by over 17 percent. Conversely, electronics and appliances are cheaper relative to income than in the 1970s.
Housing Costs: Then and Now
In 1974, the median sale price of a U.S. home was $36,050. In 2024, it rose to $418,975. Adjusted for inflation, the 1974 price would be $229,342, showing a significant increase.
The cost of homes today isn’t only higher in real terms, but mortgage rates, insurance, and taxes are also more expensive, contributing to the housing affordability crisis. Rent costs are similarly higher, affecting homeownership rates. In 1974, median rent was $143, or $910 when adjusted for inflation. By 2024, it escalated to $1,487.
In 2023, 42.5 million U.S. households rented, with nearly half spending over 30 percent of their income on housing. This increase in renters is more likely driven by housing costs than preferences. First-time homebuyer age increased from 29 in 1981 to 40 in 2024.
Healthcare and Education Expenses
Out-of-pocket healthcare costs rose 68 percent from 1974 to 2024. These expenses exclude employer-paid or government-funded costs, focusing on direct individual payments. Inflation-adjusted, spending jumped from $972 to $1,632.
The rise is partly due to technological advancements and administrative complexities. Yet no single cause fully explains the cost increase.
For education, young Americans today feel the American dream is further out of reach, struggling to achieve milestones their parents met. The promise of a good job post-college is no longer certain. Tuition costs rose, with public college tuition moving from $3,270 to $9,872 and private from $13,010 to $35,911.
Comparing Generational Well-being
Data suggests that 2020s Americans are often better off than those in the 1970s, with median incomes increasing from $28,278 to $48,960 in inflation-adjusted dollars. Nonetheless, many, such as students, feel burdened, with reduced purchasing power in education.
The CNBC All-America Economic Survey recently showed 61 percent of adults are pessimistic about the economic situation and future—the highest since December 2023. Nearly half are cutting essential expenses like food and medical care, while two-thirds reduce nonessential spending such as dining out and entertainment.
For more insights, contact Newsweek editors Ben Kelly and Gray R. Thomas.