Why does buying power seemingly not correlate with how people feel about the economy?

Question

I’ve been looking into economics recently as a way to understand wealth inequality, and I read something that just doesn’t make sense to me.

[https://www.thebalance.com/income-per-capita-calculation-and-u-s-statistics-3305852](https://www.thebalance.com/income-per-capita-calculation-and-u-s-statistics-3305852)

This source says that the 2018 nominal median income per capita was $33,706. It also says that in 1967, the national median income per capita was $2,464,but that would be equivalent to $18,261 in 2018 dollars. That’s roughly half of what our actual per capita income is.

From what I understand, the 1967 economy was doing fairly well, and throughout the 60s the economy was growing. So why is it that now, despite making twice what would expected if you just looked at inflation, people feel like the economy is really bad for the individual and that people aren’t earning enough money?

In: Economics

Answer 1

One contributing factor is lifestyle inflation.

The 1960s household would have a nice family room with a single tv. A kitchen without a dishwasher or microwave usually. The kids rooms were small as most rooms are just for sleeping, changing clothes, and playing with what few toys they might have. The driveway has just one car as a 2nd car isn’t worth the price and women stay at home with the kids anyways.

The 2020 house has a family room similar to the 60s, but includes some smarthome devices, tablets, computers, and probably a smartphone in everyone’s hand. The TV has jumped from 24-30 inch to 55+ with subscriptions for various services. Kitchens are no longer empty counter space for work, but lined with appliances and devices to simplify food prep and cooking. Dishwashers are standard, much like the coffee machines and toasters in every home. The rooms have grown in size to accommodate all the things children have now days. TVs, Toys, Clothes, and more that makes a 60’s kid envious. We also have a car for both working adults, as well as one for the oldest kid usually.

So while we can say… we make more on average these days. It’s also pretty true that we apend much more on just living up to our standards these days too.