I always thought the ultimate car that I owned was a 1980 Datsun 280 ZX two-seater complete with T-top, plush leather seats and a stereo system that was the envy of everyone who sat in the passenger seat.
That was until a few months ago when I went to pass someone going up Pacheco Pass in my current car — a 2018 Ford Focus SE hatchback.
A car purist would say you can’t compare the two and the 1980 Datsun 280ZX would win hands down. Really? Let’s see, the Ford Focus accelerates 25 percent faster, has 30 percent more horsepower, gets about 40 percent better gas mileage, it’s seats are classier and more comfortable, the stereo system makes the 280 ZX sound system seem like a transistor radio in comparison, and the sun roof beats the T-top. I’ll call it a toss-up in the looks department in terms of lines and colors — the Datsun 280 ZX was graphite gray with several layers of lacquer applied while the Ford Focus is a deep Kona blue. As far as crash safety, the 1980 Datsun 280 ZX couldn’t hold a candle to even a stripped down 2018 Ford Fiesta.
I paid $17,800 for the Datsun 280 ZX in 1980. Based on the Department of Commerce inflation index that same car new today would cost me $57,211.27. The suggested manufacturer’s price on my Ford Focus when I bought it in November 2018 was $22,000.
I bought a lot more car in the Ford Focus with a lot less money when the buying power of the dollars I earn are taken into account.
It is just one reason why the Consumer Price Index is a hideous way to measure the buying power of a dollar as the years pass. To be an accurate comparison you’d have to be buying the same exact thing and not a new and improved version.
Let’s take something that is a basic need — food. It has changed like everything especially given the trend toward convenience that is significantly more expensive as opposed from scratch. In 1980 the average American household was spending 13.2% of overall income on food whether it was eaten at home or dining out. That has since dropped to 9.9%. Keep in mind Department of Agricultural statistics show that in 1930 American households were spending 24.2% of their income on food.
Spending less on food has freed up money for other things such as $800 smartphones. That sounds like a lot until you realize what it replaces that we would have bought separately in 1980. It is a watch, camera, alarm, radio, TV, bank, road map, information service, outdoor thermometer, day planner, calendar, calculator, as well as a host of other things. And we even use it occasionally as a phone.
Consider monthly “phone” charges for a second. Back in 1980 it cost you $24 to “rent” a phone plus you got local area calling for no charge, six or so free directory assistance calls, and unlimited “popcorn” or time calls. If you called Oakdale from Manteca there was a charged based on minutes. Calling New York City cost the proverbial arm and leg. If you called San Francisco several times a day every day of the week for 10 minutes at a time your monthly phone bill would be approaching $100.
Today there are no extra charges to call anywhere in the United States.
If you still had the same landline service with the same type of terms you had back in 1980 you’d be paying $72.97 today due to inflation. From Verizon based on one-line with unlimited data you can get service for $75 and a new smartphone for $7 a month if you stay at the lower end. That’s $82 or $10 more than you would have paid in 1980 for one land-line.
But in 1980 you could only place or receive a call as long as your phone card was. You couldn’t call Maui without racking up extra charges, and you could only use your phone to talk to people. You couldn’t email, send text messages, take photos, check the latest news, surf the Internet which was still Buck Rogers stuff for most of America 38 years ago, or watch “WKRP in Cincinnati.” We get all of that and more essentially for paying $10 more than in 1980 in terms of inflation adjusted dollars.
Now for the somber news: Households with credit card debt were carrying an average of $15,983 in revolving debt in 2017. That’s up from roughly $5,500 in 1980 and from practically nothing prior to 1970. Worse yet, revolving debt has significantly higher rates that mortgage based debts as well as most auto loans.
Then on top of that the convenience charges banks are slapping against merchants on everything we use an ATM card or a credit card for is adding hidden costs to the products and services we buy.
It should be clear that inflation isn’t ravaging the purchasing power of the dollars we earn. It is our liberal use of credit.
Even mortgage debt that can be justified and is at a much lower rate is often supersized because we have a tendency to maximize the home we buy with our dollars. The more home we buy the more we owe and the more interest we pay in the end.
How people survived through the Depression and in the relative inflation free days of the 1950s and early 1960s was due to disciplines called “delayed gratification” and “living within your means.” Unless something was an absolute need such as a basic car for travel, a refrigerator, or a basic washing machine for clothes, Americans waited until they saved up money to buy items.
This column is the opinion of executive editor, Dennis Wyatt, and does not necessarily represent the opinion of The Bulletin or Morris Newspaper Corp. of CA. He can be contacted at firstname.lastname@example.org or 209.249.3519.