Over the years prices have changed (generally getting higher except possibly for technology devices). But it is difficult to track the changes if the length of the ruler is constantly changing. You need to compare it to a constant measurement.
When that comes to calculating the cost of things, in order to get an idea of how prices are doing you need to adjust them for inflation. That is called measuring “constant dollars”. Typically the calculation is based on the CPI or Consumer Price Index.
In today’s infographic created by our friends at Vouchercloud we will look at how things are doing in the ten years since 2003.
Gasoline costs are a fact of life and a major component of our day-to-day expenses and not only for what we put into our car but also as a major component of everything we buy.
Looking at the cost of gasoline we can see that prices in inflation adjusted terms were actually the lowest in 2003 and the highest in 2008 with current prices in the middle.
In inflation adjusted terms, prices of gasoline increased 96.2%. In other words, gasoline prices increased 96% more than the average item.
Over 15 years, the average American will spend $22,000 on gasoline.
Average Wage Earner
Although we have heard that wages haven’t kept up with inflation over the long term during this period wages have actually done quite well (if you have a job). Back in 2003 the average annual US wage was $32,678 but adjusted for inflation that would be $41,373 so the average wage earners are actually better off today than they were in 2003. Although today we are paying more for gas than they were at that time as well. Wages increased 11% more than the average cost of things so people should be 11% better off.
Minimum Wage Earner
The minimum wage in 2003 was $5.15 which had the purchasing power of $6.52 in 2013 dollars. So at $7.25 even those earning minimum wage are better off than they were in 2003 but not as well off as they were in 2009 when the wage was initially raised to $7.25. Although, today in some states the minimum wage is higher than the federal minimum wage of $7.25.
Buying a Car
The average price of a new car in 2003 was $21,169 which in 2013 dollars was $26,801. The best prices for cars was in 2006 when the average price in 2013 dollars was $26,174. But by 2013 the average price of a new car was up to $31,252. a whopping 17% increase in inflation adjusted terms and a 47.6% increase in nominal terms!
NFL Ticket Prices
In 2003, the average NFL ticket cost $52.75 in nominal terms which equaled $66.79 in inflation adjusted terms. By 2013 NFL ticket prices had increased by 23% to $82.00. So ticket prices increased 23% more than average inflation.
Inflation adjusted college education costs have been skyrocketing as prices handily outpaced inflation in other areas. The average college tuition cost in 2003 was $14,439 or $18,281 in inflation adjusted terms. Tuition costs peaked in 2012 at $23,200 ($23,540 inflation adjusted) and then dropped slightly to $22,261 in 2013. College costs increased 22% more than inflation.
At the same time, 47% of college graduates have a household income of less than $40,000/year.
Public Transportation Costs
In 2003, a weekly Metro-card travel pass in New York City would cost you the equivalent of $26.59 in 2013 dollars so the best inflation adjusted price occurs in 2004. In inflation adjusted terms NYC transport prices increased 13% above the rate of inflation.
With all these prices we’ve looked at so far increasing more than the average level of inflation it makes one wonder if the U.S. Bureau of Labor Statistics is purposely underestimating inflation, after all everything can’t increase more than average! See: Can We Trust Government Inflation Numbers?
In 2003, the average price of a gallon of milk was $2.95 or $3.73 in inflation adjusted terms. In 2013 the average price of a gallon of milk was $3.50 so finally we have found one item that has decreased in inflation adjusted terms. But that simple single item that is decreased doesn’t make up for all the other increases. See: Food Price Inflation Since 1913 and How long do you have to work to buy food?
The average Big Mac cost $2.71 in 2003, for an inflation adjusted price of $3.43. By 2013, the average price of a Big mac had increased to $4.56 once again out pacing inflation by 33%.
The average price of attending a movie in 2003 was $6.03 or an inflation adjusted $7.63. By 2006 prices had not kept up with inflation but by 2013 movie prices had increased to $8.38 once again outpacing the official inflation rate by 10%. See: Inflation adjusted Movie Revenues
Cost of Living
If you would like to compare the cost of living between two cities you can use our Cost of Living calculator. Or compare the cost of a Ford 1913, 1927 and 2013 or Inflation Adjusted Housing Prices. or How Much of Your Budget Goes to Buy Food? Also see What is Inflation- Define Inflation.
We’d like to thank our friends at Vouchercloud for creating this Price of the American Dream infographic.