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1971 was a 'watershed' year for the US economy. Pres. Nixon imposed price controls in the summer of that year. He also suspended the convertibility of the dollar into gold. The controls were aimed to stop the impulse of inflation after the elimination of the gold standard.
One unintended effect of Nixon's decision was the 'stagflation' which plagued the US economy throughout the 1970s.
I view 1971 as the last year of the almost continuous post-World War II economic boom for the US.
1971 was a 'watershed' year for the US economy. Pres. Nixon imposed price controls in the summer of that year. He also suspended the convertibility of the dollar into gold. The controls were aimed to stop the impulse of inflation after the elimination of the gold standard.
One unintended effect of Nixon's decision was the 'stagflation' which plagued the US economy throughout the 1970s.
I view 1971 as the last year of the almost continuous post-World War II economic boom for the US.
Nixon's actions were the result of the end of the post-World War II economic boom, not the cause of it. The cause was that Europe and Japan had rebuilt and finally caught up. It was a bubble that was bound to burst sooner or later.
He also hedged his bet in floating the dollar on the world currency market by the "petrodollar" deal with OPEC in which they would sell their oil only for dollars as long as the US guaranteed their military safety.
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
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Quote:
Originally Posted by svedski
This is something that I've been wondering about for quite some time now.
From time to time, I come across an advertisement or article from the 1970s and it seems like owning a $100,000 home meant that you were rich. Is that really true? 100,000 dollar sin 1972 money is the equivalent of about $480,000 today. How can that be considered rich?
But I actually went overboard with 100,000. I've heard people owning a $30,000 home calling themselves "rich".
How cheap was the US in those days really? I though the US was "rich" in those days.
No, and salaries were a lot less. We bought our first house in California, the expensive San Francisco Bay Area in 1978. When I got a big promotion in 1976 to $1,200/month we started saving for the down payment (10%). With interest rates at 9% then we were only hoping for a starter 2 bedroom 1 bath home, and prices were at about $35k. By the time we saved up $3,500 the prices had gone up to $45,000. We saved even more and finally had the $5,000 down for our house when it was at $50,000. That was increase of 15k in 2 years, or 43%, even more that what's happening now. The house was 45 years old, 1,100 sf on a 5,000 sf lot, and we had to do a lot of work inside before moving in. Of course that all depends on where it was, I'm sure there were cheaper homes in other states. A little research shows:
No, and salaries were a lot less. We bought our first house in California, the expensive San Francisco Bay Area in 1978. When I got a big promotion in 1976 to $1,200/month we started saving for the down payment (10%). With interest rates at 9% then we were only hoping for a starter 2 bedroom 1 bath home, and prices were at about $35k. By the time we saved up $3,500 the prices had gone up to $45,000. We saved even more and finally had the $5,000 down for our house when it was at $50,000. That was increase of 15k in 2 years, or 43%, even more that what's happening now. The house was 45 years old, 1,100 sf on a 5,000 sf lot, and we had to do a lot of work inside before moving in. Of course that all depends on where it was, I'm sure there were cheaper homes in other states. A little research shows:
Median home prices in 1978 (hard to find)
Castro Valley CA (where we bought) $48,800
Dallas Texas $53,639
San Diego, CA $73,000
Canton, Missouri $10,000
There was a time, in that time period or a bit before, where someone who made $10K was considered to have "made it". Mellon Bank (I think it was) ran ads talking about being a "thousandaire".
It's more logical to talk in terms of hours of labor at medium wage, such as: How does what 40 hours of labor at medium income purchase compare to what 40 hours of labor at medium wage can purchase today?
1971 was a 'watershed' year for the US economy. Pres. Nixon imposed price controls in the summer of that year. He also suspended the convertibility of the dollar into gold. The controls were aimed to stop the impulse of inflation after the elimination of the gold standard.
One unintended effect of Nixon's decision was the 'stagflation' which plagued the US economy throughout the 1970s.
I view 1971 as the last year of the almost continuous post-World War II economic boom for the US.
1973 would also be a candidate for the last year of the post war boom. The oil embargo is always cited as a primary driver for the economic woes of the mid to late 70s. Of course Nixions actions regarding the gold standard are also a major player as you have said. Both years are significant in ending the post war boom.
1973 would also be a candidate for the last year of the post war boom. The oil embargo is always cited as a primary driver for the economic woes of the mid to late 70s. Of course Nixions actions regarding the gold standard are also a major player as you have said. Both years are significant in ending the post war boom.
We can't pinpoint the end of the economic boom to a single year or a single event. The boom was already fading toward the latter half of the 60s as Europe and Japan wound down their purchases of American manufactured durable goods.
The value of American labor was already decreasing, which is why housewives began entering the workforce in the latter 60s. No, housewives didn't start working because of feminism, they started working because the budget wasn't going far enough; feminism just caught the wave.
The fade had become serious enough by the early 70s to require Nixon's several economic fan dances. But it didn't happen all at once.
One of things to keep in mind about the 70's was the hyper-inflation - My parents bought their first home (a 1955 ranch) for 18,000 in 1971 and sold it for 48,000 in 1979 - a 260% increase in 8 years - Realtor values it at 300,000 today, last sold for 220,000 in 2015 a 36% increase in 9 years
In 1974 I was making about $2.90 an hour and we lived in a 1971 Academy house trailer in Muncie, Indiana for $74 a month. About $10 a month for electricity, about $10 a month for a phone, cigarettes were 3 packs for a dollar, gas was about 35 cents a gallon, car payment on a 1968 VW was $44. It really was easy living and you didn't need a whole lot of money in order to afford it.
What people spend money on has changed a lot over the years. Food, clothing, and landline telephones are examples of things that are a much smaller share of household expenditures now than they once were.
Focusing on housing prices is uniquely distorting, since it's the one big thing that's increased as a percentage of household budgets (as measured by consumer expenditures). This paper mostly looks at the 1980s through 2010, but does mention 1972 prices: https://www.bls.gov/opub/mlr/2014/ar...penditures.htm
Scroll down to the graphs (Figure 1 and Figure 2); from 1982 to 2012, the relative importance within CPI of almost everything was flat or down, except for housing services and specifically "owners' equivalent rent", which nearly doubled as a share of personal consumer expenditure (from 13.5% to 24%). "This shift has paralleled an increase in housing demand and homeownership rates over most of the last three decades, as well as an increase in the size of new single-family homes."
Quote:
Originally Posted by Ralph_Kirk
It's more logical to talk in terms of hours of labor at medium wage, such as: How does what 40 hours of labor at medium income purchase compare to what 40 hours of labor at medium wage can purchase today?
Correct. An example is the labor time needed to light a room: https://www.bbc.com/news/business-38650976
Even since the early 20th century, lighting has gotten more efficient by a factor of almost 10X.
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