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USD Purchasing Power in Real Time Since 2000
- spprashant 6mo agoYou know what, it's not as bad as I was thinking.
- kvuj 6mo agoFor me it's the opposite. I am a bit surprised that inflation halved buying power since 2000. In my mind those level of interest usually come from the stock market or house appreciation, but I guess those are much faster (I seem to recall doubling every 8 years in the stock market and housing being a bit slower).
- xarchive 6mo agoIt would be useful if you explain how you calculate it. I mean, if you just apply a decaying exponential function, anyone can do that on their calculator.
- irishcoffee 6mo agoI think the more interesting thing to chew on is how this will look over the next 25 years. The numbers will be... huge. 75k salary in 2000 is similar to 150k salary in 2026, project that out to 2050... Something feels like it'll give out, but I've felt that way for 8 years at this point and I haven't been correct. DCA and pray I suppose. edit: a word
- jdlshore 6mo agoRule of 72. For costs to double in 26 years, that means inflation was about 2.7-2.8%, which is pretty much where it’s supposed to be.
- Dylan16807 6mo ago> I am a bit surprised that inflation halved buying power since 2000. It's a bit more than I expected but a 2% drop 26 times gets pretty close to halving. The number on the page suggests 2.5% average inflation.
- rkagerer 6mo agoSimCity, Starcraft, etc. taught me the value of saving up. But after some decades in the real world, I think computer games should simulate inflation so youth can get some practice at this!
- drbig 6mo agoAs much as the notion of "Purchasing Power" is <macro>economic, thus perhaps having a greater chance of being related to reality, I've been wondering if - and how - could these long-term measures account for greater diversity and "scale" of "things money can buy". Nowadays if you're properly rich you can buy a seat on a sub-orbital flight. This wasn't an option in '00, no matter how rich you were. On the other end of the scale, for basic things a (really) good quality loaf of bread will always be cheaper in Poland than say up north from Oslo, Norway; whereas a USA-designed made-in-China laptop pretty much never did scale with the rest of the "CPI basket"... Point being: we sure do have numbers - what they really mean in practice is vague at best.
- vessenes 6mo agoThe best example I heard recently was anesthesia. Costs less than $5 to make. Worth a lot more if you have surgery coming up.
- ambicapter 6mo agoThe cost of anesthesia is surely concentrated in the labor involved more so than the cost of the chemicals, no?
- vessenes 6mo agoThe example is supposed to illuminate the limits of ppp or gdp adjustment. Anesthesia contributes almost nothing to gdp, but it matters more than almost anything to you if you need surgery.
- drbig 6mo ago> The example is supposed to illuminate the limits of ppp or gdp adjustment. ... Yes, but that's like exemplifying the value of an actual slice of bread vs bitcoin to someone who is hungry. Macroeconomic numbers may have an impact on the local - as in the individual scale - but that's neither the topic nor the thread.
- 6mo ago
- blindriver 6mo agoWhat is the calculation? And how can you calculate it 10 decimal points?
- spprashant 6mo agoThere's a little explained if you hit the (?) at the bottom. They are taking the monthly inflation value and calculate it per tick.
- nrclark 6mo agoThis isn't very surprising. Typical US economic policy aims for 2-3% annual inflation. That counter shows an average 2.6% inflation across 26 years, which is kind of right in the range we'd expect. It's debatable whether this is good longterm policy - but it's been the norm in the US for decades.
- JumpCrisscross 6mo ago> Typical US economic policy aims for 2-3% annual inflation. That counter shows an average 2.6% inflation across 26 years, which is kind of right in the range we'd expect We aim for "inflation of 2 percent over the longer run, as measured by the annual change in the price index for personal consumption expenditures" [1]. [1] https://www.federalreserve.gov/faqs/economy_14400.htm https://www.federalreserve.gov/faqs/economy_14400.htm
- bobthepanda 6mo agoAccurately aiming inflation as a central bank is like trying to keep a deflating balloon the same size using a harmonica. 2.6% isn’t bad, I don’t know that many if any central banks have managed a tighter band.
- rootusrootus 6mo ago> "as measured by the annual change in the price index for personal consumption expenditures" How closely does that track with CPI-U, which is the index this web site is using? If I believe Gemini, PCE should show a slightly lower inflation number?
- downboots 6mo agoIt also says nothing of where that dollar has been in 20 years
- oniony 6mo agoProbably down the back of a sofa.
- 6mo ago
- Aurornis 6mo ago$1 put into the S&P 500 with dividends reinvested would be more than $6 today. That more than offsets the inflation. It also gives some clues about why the raw dollar purchasing power has been lost to inflation. Don’t keep your retirement savings all in cash.
- JumpCrisscross 6mo ago> $1 put into the S&P 500 with dividends reinvested would be more than $6 today On April 7 2000 a 30-year Treasury 5.71%. It would be worth $1,063 today and have paid out $1,484.60 in coupons to date. Even if you held those coupons in cash, you'd still have 2.5x'd your money. Modern currencies split their medium-of-currency and store-of-value functions. The plain dollar is for transacting. Cash and cash equivalents are for transporting value across time.
- slg 6mo agoIt's a problem that our society is designed for and judged in relation to capital. Most people are paid in dollars, not shares of the S&P 500. 38% of the population doesn't even own any stocks[1]. We can't act like the dropping dollar value is fine simply because stock investments are outpacing those losses. Maybe that tradeoff benefits the people reading this, but it hurts a huge number of Americans. [1] - https://news.gallup.com/poll/266807/percentage-americans-owns-stock.aspx https://news.gallup.com/poll/266807/percentage-americans-own...
- JumpCrisscross 6mo ago> Most people are paid in dollars Real wages are up since 2000 [1]. (Even the federal minimum wage went up 40% in nominal terms [2], though that is less than inflation.) [1] https://fred.stlouisfed.org/series/LES1252881600Q https://fred.stlouisfed.org/series/LES1252881600Q [2] https://en.wikipedia.org/wiki/Fair_Minimum_Wage_Act_of_2007 https://en.wikipedia.org/wiki/Fair_Minimum_Wage_Act_of_2007
- Avicebron 6mo agoMeasurements like this obfuscate other costs that aren't well tracked. Healthcare and housing being two big ones.
- traviswingo 6mo agoHey all. This was merely intended as a fun visualization of inflation over long periods of time, in a format that’s slightly easier to grok for most people. That’s it. There’s no further intention behind this, I just thought a real time “decay” visualization would be neat. Literally everything about how this works is in the source in maybe 30 lines of js. It’s not complicated. Data is from BLS (whether or not that's accurate is another conversation entirely). I auto update the data monthly via a chron job, right around the time new data is published. I’m not really changing this from where it’s at. It’s done as is. There are other sources out there already if you want to customize the date range or see a graph. Thanks for checking it out :).
- 0xbadcafebee 6mo agoThe real time number isn't as interesting as the potential future number. If the dollar stops being the reserve currency, the purchasing power of the dollar will crash. No more cheap borrowing, no more low interest rates, hello constant high inflation. The Iran war has made that increasingly likely to happen. It may even have been intentional. https://www.jpmorgan.com/insights/global-research/currencies/de-dollarization https://www.jpmorgan.com/insights/global-research/currencies... | https://spectator.com/article/the-us-currency-is-under-attack-like-never-before/ https://spectator.com/article/the-us-currency-is-under-attac...
- JumpCrisscross 6mo ago> If the dollar stops being the reserve currency, the purchasing power of the dollar will crash This is far from clear.
- selcuka 6mo agoThe Federal Reserve's Real Broad Dollar Index (RTWEXBGS) is 113.51 as of February. Not saying it would crash losing all of that 13.51 excess overnight, but it's still overvalued against foreign currencies.
- gritspants 6mo agoIs this not what the current US administration seeks? You can't simultaneously be the reserve currency and hope to be a net exporter at the same time.
- engineer_22 6mo agoPerpetual trade deficit is modern system of tribute.
- JumpCrisscross 6mo ago> Perpetual trade deficit is modern system of tribute Probably not. Equatorial Guinea, Palau and Kyrgyzstan run the largest current-account deficits as fractions of GDP [1]. (Current account counts goods and services.) [1] https://en.wikipedia.org/wiki/List_of_countries_by_current_account_balance https://en.wikipedia.org/wiki/List_of_countries_by_current_a...
- grebc 6mo agoThe way the figure is presented is usually opposite to how most talk about value of past monies.
- drnick1 6mo agoThe author just discovered the meaning of inflation? What matters (for living standards) is that real wages and GDP grew over the same period.
- traviswingo 6mo agoI think you're confusing "created a visualization because I thought it would be interesting" with "just learned about inflation." :)
- xnx 6mo agoAt best, this is a strong warning not to keep your money in the mattress. Saved in any safe investment would beat this inflation and typical wage would also beat this.
- sanex 6mo agoI question the accuracy. In 2010 I could buy a McDonald's double cheeseburger for $1. Now they're like $3 and they took off a slice of cheese.
- koolba 6mo agoDouble cheeseburger has always had and still has two slices of cheese. The McDouble (which used to be $1) always had a single slice of cheese. The real hack was asking them to put Big Mac sauce on the McDouble. For $.30 it was pretty damn close at 1/3 the price.
- bobthepanda 6mo agoThe Big Mac Index has the fatal flaw in that it assumes the value of Big Mac is consistent over time; McDonald’s has been at the forefront of fast food attempting to break into a more high income market segment.
- traviswingo 6mo agoYeah, same here. Perhaps the Big Mac Index [0] is what you want. [0] https://en.wikipedia.org/wiki/Big_Mac_Index https://en.wikipedia.org/wiki/Big_Mac_Index
- vikingerik 6mo agoOf course this is comparing to one data point that is an outlier. If people are choosing to pay $3 in today's dollars for it, that means that in 2010 McDonald's was underpricing that item relative to its market value. Presumably deliberately as a promotion. Compare across everything you buy and compare like-to-like if you want to judge its accuracy.
- sanex 6mo agoYes, but that's how vibflation works :)
- gdulli 6mo agoIn the last 12-24 months the price of fast food in particular has risen at a higher rate than inflation has hit other types of food and goods. Fast food makes no economic sense anymore. And you're right, the food has gotten worse as well.
- engineer_22 6mo agoIf each digit right of the cents place was 1/2 as tall as the digit to its left, I could process it more intuitively. A change of one hundred millionth of a percent is not enough to consider even if I have 10 million dollars. How is this calculated? It's a rate based on historical purchasing power parity index trends, or it's tied to live market data?
- nitrat3 6mo agoWhere does the value go?
- Decabytes 6mo agoI like this visualization, but I think there is a harder to quantify layer under this. While someone making 50k a year in 2000, would need to make 100k in 2026 for the same economic power, it is actually much worse. In the year 2000, there were just less products and services then there are now. And the products that did exist were generally more durable and repairable than today. And in many cases, products that exist now but didn’t back then have reasonable substitutes (like renting or buying movies, since you don’t have Netflix). I would even take it one step further and say that the ways you had to interact with those substitutes were healthier and more social than what we have now.