13 ms·

It may also help to see the cumulative inflation picture: https://totalrealreturns.com/s/USDOLLAR?normalize=end https://totalrealreturns.com/s/USDOLLAR?normaliz

It may also help to see the cumulative inflation picture: https://totalrealreturns.com/s/USDOLLAR?normalize=end https://totalrealreturns.com/s/USDOLLAR?normalize=end (disclosure: my side project) The 1974 and 1980 peaks from the article correspond to the steeper slope regions in those same years on my graph. (I'm plotting 1/[CPI-U price level], while the article is plotting d/dt [CPI-U price level]) On my y-axis is the purchasing power of a US dollar, relative to current level. So when the y-axis shows 9.813 on 1962-10-04, this means that sixty years ago, a one-dollar bill would buy a basket of goods that today would cost $9.813. It certainly "feels scary" when the purchasing power is eroding quickly (i.e. a fast-declining slope on my purchasing power graph, or a peak on the article's year-over-year derivative graph). All data from BLS: https://www.bls.gov/news.release/cpi.nr0.htm https://www.bls.gov/news.release/cpi.nr0.htm

rdtwo 4y ago
Yeah but that’s not the whole picture… in 1962 the ford truck was $2000 now is around 40,000 so while a new one is better you still have to earn 2x as much to get the most basic one available
- zeckalpha 4y ago
  They also last much longer
  - taftster 4y ago
    Or we are forced to make them last longer.
    - scarecrowbob 4y ago
      That doesn't match my experiences; IME cars do last longer now. I have owned and spent substantial time driving a 1978 Buick Regal and a 1968 Westphalia VW van. I don't think that you're gonna see 200K miles out of either of those vehicles. The Buick had about 120K on it and was clearly on its last legs. It's likely been scrapped. The VW only runs because I sold it to a mechanical engineer who wanted to have a project to work on with his children, and it's now a "vintage" toy instead of my daily driver. I am at about 180K on my 2014 Tacoma and I expect to get at least another 120k out of it before I sell it.
      - mgkimsal 4y ago
        random anecdote: 2004 chrysler Sebring - nothing special, hit 180k before I had some 'unknown' engine problem. Mechanic spent a couple hours trying some stuff, and something worked, and I got another 60k miles out of it before it was time to let it go. That was over a 14 year period. If I was mechanically inclined, I probably could have done a little bit more on my own re: preventative/etc, to get a bit more out of it. Or... had I sunk another $2k in (estimate) to fix a bunch of stuff, who knows? I might have got another few years. But I went with something smaller, newer, better mpg, and probably overall better safety (12 years newer).
      - tastyfreeze 4y ago
        Shout out to Toyota making 200k miles the new 100k. The Toyotas I have owned have been over 150k with very little issue.
        erichocean 4y ago
        My 2001 4Runner has over 350K miles, and is still rocking 4x4 action on the North Carolina beach daily.
        rdtwo 4y ago
        Non salt state? Pre 2005 Toyotas had serious corrosion issues in salt road conditions
      - KptMarchewa 4y ago
        People are extremely overestimating how cars last decades ago. Barring other things, corrosion protection was nonexistent, few year old cars were rusting away.
- tcbawo 4y ago
  I think a new 2022 Ford F-150 will run closer to $60k.
- mrb 4y ago
  When I go to ford.com and look at their basic truck, the 2023 Maverick, I see "starting at $22,195". So if a 1962 truck truly sold for $2000, the inflation seems to account for entirely the price increase. And I'm pretty sure everyone will agree a 2023 Maverick is superior to a 1962 F-100 in every conceivable aspect. Housing and healthcare are better examples of goods or services whose prices have increased faster than CPI-U.
  - mikewarot 4y ago
    The F-150 is the lowest cost full size pickup truck Ford makes. If you can't put full sheets of plywood and 2x4s in it, it's not really a pickup truck. How Much Does the Ford F-150 Cost? The 2022 Ford F-150 starts at $29,990, which is the lowest base price in the full-size pickup truck segment. However, that's for the three-seat Regular Cab, so if you're looking for more room, take note of the Super Cab's $34,075 base price and the SuperCrew's $37,700 MSRP. Source: https://cars.usnews.com/cars-trucks/ford/f-150 https://cars.usnews.com/cars-trucks/ford/f-150 The nearest dealer to me had 17 of them ranging in price from USD$34k to USD$62k
    - fshbbdssbbgdd 4y ago
      The cheapest F-100 also had a short bed, so it wasn’t a real pickup truck either. You had a pay a whole $35 extra to get the long one!
      - bobmaxup 4y ago
        It had a bed ~2 feet longer than the 2022 Maverick.
    - Aunche 4y ago
      A 1962 Ford truck would only have a single row. Without the Maverick's second row, you'd probably get a full-sized bed.
    - mrb 4y ago
      The 2022 Maverick has an engine literally twice more powerful than the 1962 F-100 (270 vs 135 hp). With your logic, picking on one tech detail of many, I could argue the 1962 model is "not really a pickup truck" with such a puny engine of weak towing abilities ! What this shows is that Ford merely decided to trade 18 inches of pickup box space for a second row of seat, a more powerful engine, and many other higher-end specs. Today Ford could definitely make a 1962-spec'd pickup with a weak 135 hp engine at less than $20k.
- washywashy 4y ago
  And most people rarely need a pickup truck for its specifically design utility. They likely just want a safer car which is essentially an arms race at that point. I think less pickup trucks on the road would be a good thing considering how the majority of people drive.
  - eru 4y ago
    American CAFE standards drove people away from station wagons and towards SUVs and pickup trucks.
  - logifail 4y ago
    > They likely just want a safer car Are modern pickup trucks objectively safer than modern cars, or is it more about the perception of driving something that feels it's half way to being an armoured vehicle? In Europe almost no-one drives around in a truck. Even the tradespeople (carpenters, plumbers, roofers, gardeners, heating installers, you name it) all drive light vans, not trucks.
    - yywwbbn 4y ago
      > Are modern pickup trucks objectively safer than modern cars In a collision with a significantly lighter/smaller car? Usually
      - logifail 4y ago
        > In a collision with a significantly lighter/smaller car? Usually Can you give a source for that? I'm struggling to find anything up to date which isn't blatantly biased, so here's something (old!) from Berkeley Lab: 'Those who think that driving big is driving safe, or that lightweight, fuel-efficient vehicles are inherently more dangerous than their heavyweight counterparts, need to think again. A researcher with Lawrence Berkeley National Lab (Berkeley Lab) has teamed with a researcher from the University of Michigan in a unique risk analysis study which shows that, contrary to conventional wisdom, vehicle quality is a much more important safety factor than weight for the drivers of vehicles involved in a crash. "Most cars are safer than the average sports utility vehicle [SUV], while pickup trucks are much less safe than all other types. Minivans and import luxury cars have the safest records," states the report, "An Analysis of Traffic Deaths by Vehicle Type and Model," which was prepared by Tom Wenzel, an energy analyst with Berkeley Lab's Environmental Energy Technologies Division, and Marc Ross, a professor in Michigan's Applied Physics Department.' https://www2.lbl.gov/Science-Articles/Archive/EETD-SUV-Safety.html https://www2.lbl.gov/Science-Articles/Archive/EETD-SUV-Safet...
- arcticbull 4y ago
  You can't just pick one single item and consider it 'representative' of inflation. [1] Some things cost more than they used to, some less. Cars happen to have tracked very well. [1] https://ritholtz.com/wp-content/uploads/2018/02/pricechanges.png https://ritholtz.com/wp-content/uploads/2018/02/pricechanges...
zie 4y ago
I haven't dug into everything you are doing, but the biggest flaw I see seems to be that you assume Cash returns 0% nominal, i.e. that there is no return for holding cash. That is only true if you hide it under your mattress(and no deflation happens). Most people do not hide money under their mattress anymore, especially if they have large amounts of it. They put it in a bank account or in a MMF or some other interest producing place. Since 1972, Cash has a real return of 0.53% (inflation adjusted): https://www.portfoliovisualizer.com/backtest-asset-class-allocation?s=y&mode=1&timePeriod=4&startYear=1972&firstMonth=1&endYear=2022&lastMonth=12&calendarAligned=true&includeYTD=false&initialAmount=10000&annualOperation=0&annualAdjustment=0&inflationAdjusted=true&annualPercentage=0.0&frequency=4&rebalanceType=1&absoluteDeviation=5.0&relativeDeviation=25.0&leverageType=0&leverageRatio=0.0&debtAmount=0&debtInterest=0.0&maintenanceMargin=25.0&leveragedBenchmark=false&portfolioNames=false&portfolioName1=Portfolio+1&portfolioName2=Portfolio+2&portfolioName3=Portfolio+3&asset1=TreasuryBills&allocation1_1=100 https://www.portfoliovisualizer.com/backtest-asset-class-all...
- xapata 4y ago
  Yep, always need to pick your risk-free asset for comparison.
- consp 4y ago
  Doesn't that practically mean the rich get richer and the poor stay poor? If it would be net 0 everything would stay the same?
  - p0nce 4y ago
    Yes, see also Piketty
  - saurik 4y ago
    Is that surprising? Alternatively, do you have a fix in mind? Having power means you can build more things that give you more power faster than someone with less power. You can't change this using inflation, as people will just hold something else instead of cash (and, in fact, inflation seems to most punish the people with the least power, as those people are spending a much much greater proportion of their income on critical consumption and are least able to hold assets that aren't cash... hell: we make laws that actively limit or even prevent poorer people from holding non-cash assets "for their own protection").
collegeburner 4y ago
nice site you built. where did you source the data?
RayVR 4y ago
Great stuff! This is a nice demonstration of the variability of inflation and how under-trend we have been for many years. There was a strong push from some monetary policy people to move toward a longer term, average inflation targeting that would make the Fed have symmetric reaction functions to upside and downside inflation while attempting to keep a longer term average as the goal. One interesting explanation for high inflation during the 1970s to early 1980s was that the monetary system and supply of real assets had to adjust to a massive influx of working age adults (babyboomers). A second wave from that population event started to enter the workforce over the last ten years. It might be interesting to normalize the data here against the size of the workforce.
- Gibbon1 4y ago
  My partial theory is oil production grew exponentially up till a bit after 1970. And before that the US had outstripped domestic supply and started having to import oil. And you are right boomers household formation increased demand for stuff.
filoeleven 4y ago
I had no idea that kids in 1962 were spending $100 on one piece of licorice. Kinda puts the “millennials and their avocado toast” thing in perspective, huh?

rdtwo 4y ago

Yeah but that’s not the whole picture… in 1962 the ford truck was $2000 now is around 40,000 so while a new one is better you still have to earn 2x as much to get the most basic one available

zeckalpha 4y ago
They also last much longer
- taftster 4y ago
  Or we are forced to make them last longer.
  - scarecrowbob 4y ago
    That doesn't match my experiences; IME cars do last longer now. I have owned and spent substantial time driving a 1978 Buick Regal and a 1968 Westphalia VW van. I don't think that you're gonna see 200K miles out of either of those vehicles. The Buick had about 120K on it and was clearly on its last legs. It's likely been scrapped. The VW only runs because I sold it to a mechanical engineer who wanted to have a project to work on with his children, and it's now a "vintage" toy instead of my daily driver. I am at about 180K on my 2014 Tacoma and I expect to get at least another 120k out of it before I sell it.
    - mgkimsal 4y ago
      random anecdote: 2004 chrysler Sebring - nothing special, hit 180k before I had some 'unknown' engine problem. Mechanic spent a couple hours trying some stuff, and something worked, and I got another 60k miles out of it before it was time to let it go. That was over a 14 year period. If I was mechanically inclined, I probably could have done a little bit more on my own re: preventative/etc, to get a bit more out of it. Or... had I sunk another $2k in (estimate) to fix a bunch of stuff, who knows? I might have got another few years. But I went with something smaller, newer, better mpg, and probably overall better safety (12 years newer).
    - tastyfreeze 4y ago
      Shout out to Toyota making 200k miles the new 100k. The Toyotas I have owned have been over 150k with very little issue.
      - erichocean 4y ago
        My 2001 4Runner has over 350K miles, and is still rocking 4x4 action on the North Carolina beach daily.
      - rdtwo 4y ago
        Non salt state? Pre 2005 Toyotas had serious corrosion issues in salt road conditions
    - KptMarchewa 4y ago
      People are extremely overestimating how cars last decades ago. Barring other things, corrosion protection was nonexistent, few year old cars were rusting away.
tcbawo 4y ago
I think a new 2022 Ford F-150 will run closer to $60k.
mrb 4y ago
When I go to ford.com and look at their basic truck, the 2023 Maverick, I see "starting at $22,195". So if a 1962 truck truly sold for $2000, the inflation seems to account for entirely the price increase. And I'm pretty sure everyone will agree a 2023 Maverick is superior to a 1962 F-100 in every conceivable aspect. Housing and healthcare are better examples of goods or services whose prices have increased faster than CPI-U.
- mikewarot 4y ago
  The F-150 is the lowest cost full size pickup truck Ford makes. If you can't put full sheets of plywood and 2x4s in it, it's not really a pickup truck. How Much Does the Ford F-150 Cost? The 2022 Ford F-150 starts at $29,990, which is the lowest base price in the full-size pickup truck segment. However, that's for the three-seat Regular Cab, so if you're looking for more room, take note of the Super Cab's $34,075 base price and the SuperCrew's $37,700 MSRP. Source: https://cars.usnews.com/cars-trucks/ford/f-150 https://cars.usnews.com/cars-trucks/ford/f-150 The nearest dealer to me had 17 of them ranging in price from USD$34k to USD$62k
  - fshbbdssbbgdd 4y ago
    The cheapest F-100 also had a short bed, so it wasn’t a real pickup truck either. You had a pay a whole $35 extra to get the long one!
    - bobmaxup 4y ago
      It had a bed ~2 feet longer than the 2022 Maverick.
  - Aunche 4y ago
    A 1962 Ford truck would only have a single row. Without the Maverick's second row, you'd probably get a full-sized bed.
  - mrb 4y ago
    The 2022 Maverick has an engine literally twice more powerful than the 1962 F-100 (270 vs 135 hp). With your logic, picking on one tech detail of many, I could argue the 1962 model is "not really a pickup truck" with such a puny engine of weak towing abilities ! What this shows is that Ford merely decided to trade 18 inches of pickup box space for a second row of seat, a more powerful engine, and many other higher-end specs. Today Ford could definitely make a 1962-spec'd pickup with a weak 135 hp engine at less than $20k.
washywashy 4y ago
And most people rarely need a pickup truck for its specifically design utility. They likely just want a safer car which is essentially an arms race at that point. I think less pickup trucks on the road would be a good thing considering how the majority of people drive.
- eru 4y ago
  American CAFE standards drove people away from station wagons and towards SUVs and pickup trucks.
- logifail 4y ago
  > They likely just want a safer car Are modern pickup trucks objectively safer than modern cars, or is it more about the perception of driving something that feels it's half way to being an armoured vehicle? In Europe almost no-one drives around in a truck. Even the tradespeople (carpenters, plumbers, roofers, gardeners, heating installers, you name it) all drive light vans, not trucks.
  - yywwbbn 4y ago
    > Are modern pickup trucks objectively safer than modern cars In a collision with a significantly lighter/smaller car? Usually
    - logifail 4y ago
      > In a collision with a significantly lighter/smaller car? Usually Can you give a source for that? I'm struggling to find anything up to date which isn't blatantly biased, so here's something (old!) from Berkeley Lab: 'Those who think that driving big is driving safe, or that lightweight, fuel-efficient vehicles are inherently more dangerous than their heavyweight counterparts, need to think again. A researcher with Lawrence Berkeley National Lab (Berkeley Lab) has teamed with a researcher from the University of Michigan in a unique risk analysis study which shows that, contrary to conventional wisdom, vehicle quality is a much more important safety factor than weight for the drivers of vehicles involved in a crash. "Most cars are safer than the average sports utility vehicle [SUV], while pickup trucks are much less safe than all other types. Minivans and import luxury cars have the safest records," states the report, "An Analysis of Traffic Deaths by Vehicle Type and Model," which was prepared by Tom Wenzel, an energy analyst with Berkeley Lab's Environmental Energy Technologies Division, and Marc Ross, a professor in Michigan's Applied Physics Department.' https://www2.lbl.gov/Science-Articles/Archive/EETD-SUV-Safety.html https://www2.lbl.gov/Science-Articles/Archive/EETD-SUV-Safet...
arcticbull 4y ago
You can't just pick one single item and consider it 'representative' of inflation. [1] Some things cost more than they used to, some less. Cars happen to have tracked very well. [1] https://ritholtz.com/wp-content/uploads/2018/02/pricechanges.png https://ritholtz.com/wp-content/uploads/2018/02/pricechanges...

zie 4y ago

I haven't dug into everything you are doing, but the biggest flaw I see seems to be that you assume Cash returns 0% nominal, i.e. that there is no return for holding cash. That is only true if you hide it under your mattress(and no deflation happens). Most people do not hide money under their mattress anymore, especially if they have large amounts of it. They put it in a bank account or in a MMF or some other interest producing place. Since 1972, Cash has a real return of 0.53% (inflation adjusted): https://www.portfoliovisualizer.com/backtest-asset-class-allocation?s=y&mode=1&timePeriod=4&startYear=1972&firstMonth=1&endYear=2022&lastMonth=12&calendarAligned=true&includeYTD=false&initialAmount=10000&annualOperation=0&annualAdjustment=0&inflationAdjusted=true&annualPercentage=0.0&frequency=4&rebalanceType=1&absoluteDeviation=5.0&relativeDeviation=25.0&leverageType=0&leverageRatio=0.0&debtAmount=0&debtInterest=0.0&maintenanceMargin=25.0&leveragedBenchmark=false&portfolioNames=false&portfolioName1=Portfolio+1&portfolioName2=Portfolio+2&portfolioName3=Portfolio+3&asset1=TreasuryBills&allocation1_1=100 https://www.portfoliovisualizer.com/backtest-asset-class-all...

xapata 4y ago
Yep, always need to pick your risk-free asset for comparison.
consp 4y ago
Doesn't that practically mean the rich get richer and the poor stay poor? If it would be net 0 everything would stay the same?
- p0nce 4y ago
  Yes, see also Piketty
- saurik 4y ago
  Is that surprising? Alternatively, do you have a fix in mind? Having power means you can build more things that give you more power faster than someone with less power. You can't change this using inflation, as people will just hold something else instead of cash (and, in fact, inflation seems to most punish the people with the least power, as those people are spending a much much greater proportion of their income on critical consumption and are least able to hold assets that aren't cash... hell: we make laws that actively limit or even prevent poorer people from holding non-cash assets "for their own protection").

collegeburner 4y ago

nice site you built. where did you source the data?

RayVR 4y ago

Great stuff! This is a nice demonstration of the variability of inflation and how under-trend we have been for many years. There was a strong push from some monetary policy people to move toward a longer term, average inflation targeting that would make the Fed have symmetric reaction functions to upside and downside inflation while attempting to keep a longer term average as the goal. One interesting explanation for high inflation during the 1970s to early 1980s was that the monetary system and supply of real assets had to adjust to a massive influx of working age adults (babyboomers). A second wave from that population event started to enter the workforce over the last ten years. It might be interesting to normalize the data here against the size of the workforce.

Gibbon1 4y ago
My partial theory is oil production grew exponentially up till a bit after 1970. And before that the US had outstripped domestic supply and started having to import oil. And you are right boomers household formation increased demand for stuff.

filoeleven 4y ago

I had no idea that kids in 1962 were spending $100 on one piece of licorice. Kinda puts the “millennials and their avocado toast” thing in perspective, huh?