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SALT LAKE CITY — Despite low unemployment, Americans are still feeling the pinch of inflation, cost of living and general financial pain. That leads to the question, “Are we better now than we were four years ago?” This is the question former President Ronald Reagan famously asked during the 1980 presidential debate.
Let’s extend this question beyond the presidency. Considering the inflationary struggles the world experienced last year, are we better off now than he was 40 years ago in the 1980s?
“Yes, as a society we believe that’s the way it is,” said Shane Stewart, a DMBA certified financial planner. “All things considered, if you think about what the average family could afford in 1985, they are better off now than they were then.”
Inflation and cost of living change our lives
In the 1980s, family ownership of two cars was not as common as it is today. It was rather unusual for a family to have two jobs. As Stewart explained, for many it feels like a necessity.
“The perception of lifestyle has changed exponentially because now we are saying, ‘It takes two jobs to sustain a thriving lifestyle, not a lifestyle to survive. “
The difference between inflation, cost of living and cost of prosperity
Living expenses just cover the cost of living. Rent, food, and transportation. Stewart said the so-called “cost of prosperity” is more related to luxuries such as travel.
“Today we see younger generations and young families traveling,” Stewart said. “I don’t think I traveled much when I was their age. I didn’t have the money.”
So today’s notion of prosperity requires more money to do more than it did two generations ago.
Everyone says “I’m worse”
If you ask people if they are better today than they were 4 or 40 years ago, most people will say no.
“Generations will always believe they are no better off than they were a year ago,” Stewart explained. “This is why Ronald Reagan’s question was such a great political question. For everyone, the intuitive answer is ‘No, I’m not.'”
However, perception does not always match reality.
“Statistically, life should probably be better, but I just don’t feel better,” Stewart said.
He called it the “Law of Scarcity.”
“You always feel like you don’t have everything you want or need, but you might not,” Stewart says.
Stewart says he’s trying to draw people’s attention to the “law of sufficiency.” The law asks the question, “Is it enough?”
“Human brains don’t work that way,” says Stewart. “I say, ‘Well, I have some good stuff, but not enough.'”
Every generation complains about inflation and the cost of living
One of the most common complaints people voice today is about inflation. They can’t afford eggs, gasoline, or cars. Is this he a unique challenge for us in 2023?
“No,” said Stewart. “Each generation faces the horror of inflation… This is not very different from what we have seen in other years.”
There is a basic misconception about inflation.
“A healthy economy is inflating and means growing,” Stewart said. “It’s like a car tire. It needs to be properly inflated.”
Like tires, if the economy is inflated insufficiently, the system will be strained. If properly inflated, it runs fine. “The problem is hyperinflation or overinflation,” Stewart said. “If it grows too fast, it becomes difficult to stop it, and everything becomes very expensive.”
