Are Americans as Poor as They Feel?

December 6, 2010  |  

(Businessweek) — For many Americans, thinking back to the days of 99¢ gas and 50¢ cups of coffee, it may be cathartic to grumble about how expensive life has become, especially during the current economic downturn. The reality, however, is that a lot of things aren’t as expensive as we think—and many things actually cost less in relative terms.  A look at the cost of living between 1980 and 2010 shows that nominal income rose more than overall consumer prices (nominal income is income not adjusted for inflation). The price of many day-to-day expenses such as food and even energy increased at a slower pace than overall consumer prices, which means their relative costs are lower, while some big-ticket items, such as education and health care, became more expensive, causing a shift in spending.

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