Inflation is squeezing American household budgets, driven up by fuel shortages and oil supply shocks; a war far away from home is making the nation antsy; and growing political polarisation is fueling public anxiety.
It could be the 1970s in America as well as the 2020s, since the two decades share several striking parallels. In 1974, Richard Nixon was resigning following the Watergate scandal, leaving a shaken, politically divided country behind. Spending for the increasingly unpopular Vietnam War had driven up inflation and contributed to plunging the nation into a period of severe “stagflation,” also fueled by the energy crisis triggered by the Arab oil embargo of 1973.
Fifty years later, in 2024, President Donald Trump was preparing to return to the White House for his second term, after promising voters he would restore affordability nationwide. A little over a year after his inauguration, however, his administration would start a war in the Middle East, which would cause oil prices to shoot up across the world, driving up inflation in the U.S.
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While fundamentally different, the present definitely has echoes of the past. But in the space of half a century, the nation has changed a lot—and Americans are now in a very different position than they were 50 years ago, including financially.
While people often look back with nostalgia and think previous generations had it easier, a new study by ConsumerAffairs found that many Americans today, even as they face significant affordability issues and much higher prices, are better off than they were in the 1970s.
For others, things have gotten much worse.
Inflation Has Made Everything More Expensive—But Incomes Are Higher
Researchers at ConsumerAffairs analyzed changes in income, inflation and the cost of major expenses like housing, healthcare and college tuition between 1974 and 2024.
Among the factors they considered are median individual income, consumer price index (CPI), purchasing power by category, median home sale price, median monthly rent, out-of-pocket healthcare spending per capita, and average annual tuition and required fees for public and private four-year colleges.
If we look at the CPI, each consumer price index category has risen over the past 50 years, from college tuition to the cost of shelter. But paychecks have actually kept pace—for the most part—with the rising cost of living.
Buying power climbed 73 percent between 1974 and 2024, according to ConsumerAffairs, which means the average American today can afford a lot more than their 1974 counterpart could, once adjusted for inflation.
When looking at individual categories, though, the picture gets more nuanced, with two bucking the trend. College tuition buying power sank by nearly 43 percent between 1974 and 2024, while healthcare fell by over 17 percent.
These are less avoidable expenses than the purchase of everyday goods, like electronics and appliances, which have actually become much cheaper relative to Americans’ income since the 1970s. With historically high housing, healthcare and educational costs, Americans today are struggling to see the advantage they have gained over the last 50 years.
Housing Was More Affordable In the 1970s—Though Borrowing Costs Were Higher
In terms of raw dollars, the median sale price of a typical U.S. home was $36,050 in 1974—a sum that American homebuyers in 2024, facing a median sale price of $418,975, can only dream of. But when we adjust the price for inflation, the median sale price in 1974 would have been $229,342—still half of what American homebuyers were paying two years ago, but not as dramatic a difference.
Homes are definitely more expensive now than they were in the 1970s, and not only because values have risen in real terms. Mortgage rates, insurance premiums, and property taxes are all higher now than they used to be and are major factors in the current housing affordability crisis.
The cost of renting has also dramatically increased since the 1970s, while also shifting from a temporary step toward homeownership to a long-term reality for millions of Americans. In 1974, the median rent nationwide was $143, or $910 once adjusted to 2024 inflation. In 2024, however, it had climbed to $1,487.
Despite rent being so much more expensive than it was in the 1970s, a lot more people are renting now than they were then. In 2023, there were 42.5 million renter households in the U.S., according to Census data, and nearly half of these (49.7 percent) were cost-burdened, meaning they spent more than 30 percent of their income on housing.
The growth in the country’s renting population might have more to do with the higher cost of housing than with a lifestyle choice. Americans struggling to save to buy a home are being forced to rent for longer before being able to step onto the property ladder. According to the National Association of Realtors (NAR), the typical first-time homebuyer was just 29 in 1981, the earliest data available, while in 2024 it had climbed to 40.
Healthcare Costs Have Shot Up 68% Since 1974
“Out-of-pocket” healthcare spending, the money that Americans pay directly for healthcare and which includes deductibles, copays and coinsurance, has shot up by 68 percent between 1974 and 2024.
This estimate excludes costs paid by employers, private insurers or government programs, referring only to the money paid directly by Americans for their healthcare. In inflation-adjusted dollar terms, Americans went from spending $972 to $1,632.
While increases in the cost of healthcare have been due in part to technological improvements, with more sophisticated machines and treatments often being more expensive, and increased administrative complexity, “no single factor explains the increase on its own,” according to ConsumerAffairs.
Higher Education Has Gotten More Expensive, But It Is No Safe Bet
For many young people in the U.S., the American dream feels out of reach compared to how it was for their parents or grandparents, as they fail to meet crucial life milestones by the age at which older generations already had a car, a house, and a family.
Their parents and grandparents could count on the promise of higher education for a decent job and eventually enough money to buy a home. Now, a college degree is no longer a guaranteed ticket to financial stability or success.
Escalating tuition costs, crushing debt, and a devaluation of degrees in the job market, with the youth unemployment rate now over 9 percent, have created deep disillusionment with the American college system.
For many, the expense of a college education is just not worth the result you get back. Since 1974, public college tuition has risen from $3,270 to $9,872 a year in inflation-adjusted dollars. Private tuition has climbed from $13,010 to $35,911 a year in inflation-adjusted dollars.
Are 2020s Americans Better Off Than Their 1970s Peers?
On paper, Americans living in the 2020s are mostly better off than their 1970s peers, based on the data highlighted by ConsumerAffairs. Overall, Americans’ median income has risen from $28,278 in 1974 to $48,960 in 2024, in inflation-adjusted dollars.
But depending on whom you ask the question across the country, the answer might be different. Students are definitely worse off, with their purchasing power falling 43 percent with respect to college tuition. Americans who have not yet stepped onto the property ladder might not feel better than those who purchased one in the 1970s, but those who own a home have built record equity in their homes in the past few years.
A CNBC All-America Economic Survey published on Friday found that 61 percent of U.S. adults are pessimistic about the current state of the economy and about the outlook for the future—the highest percentage since December 2023, when the country was just recovering from the spike in inflation during the pandemic years.
Nearly half of all respondents (47 percent) said they were cutting back on essential items, like food and medical care, and two-thirds say they are reducing purchases of nonessentials, like eating out and entertainment.
Contact Newsweek editors on this story: Ben Kelly and Gray R. Thomas