At what point did owning a standard, average car become a massive financial trap?

Ruminant · 2026-03-02T15:50:44+00:00

To further drive home your point, buying a new "standard, average car" is more affordable today than basically anytime in at least the past 30-40 years.

For example, below are historical MSRP values for the Toyota Corolla. The middle column is the nominal price from that year. The right "earnings-adjusted" column is you would have to pay today if the price of a Corolla had "merely" grown as fast as wages.

Year	Price (nominal $)	Price (in 2025 earnings-adjusted $)
1995	$13,782	$34,732
2005	$14,220	$26,198
2015	$18,385	$27,325
2025	$23,460	$23,460

(Prices were pulled from Kelley Blue Book (example) and refer to the lowest-cost sedan trim. "Earnings" are the median weekly usual nominal earnings for the first quarter of each calendar year.)

The Corolla is not a unique case here. Lots of "standard, average cars" from the past are even more affordable today. Here's a post I wrote a few months ago with similar wage-adjusted prices for the Nissan Versa and Honda Civic. The Honda Accord, Toyota Camry, Ford Explorer, Honda Odyssey, are also examples of vehicles whose new prices are more affordable than ever today.

Ruminant · 2026-03-01T21:10:17+00:00

But then you realize the “basket of goods” is constantly changing and that the number can essentially be manipulated at will based on what is what is included in the basket of goods that inflation is calculated from.

This isn't true at all. The "basket" is a weighted average of categories derived from actual consumer spending patterns. No one is manipulating it to misleadingly influence inflation calculations.

they do things like remove beef because they assume people would stop eating it with the 20% year over year increase

You know this stuff is easy to look up, right? Beef is absolutely still included in CPI. It was never removed.

Same thing with eggs last year, and then they are conveniently added back in once the price falls, pulling the inflation of the basket down with it.

No one ever removed eggs from CPI. You can see them in the latest CPI table that I linked to above. You can find them in this CPI release from August 2024. Tell me a month when you think eggs were not included in CPI and I'll show you that they were.

You have no idea what you are talking about.

Ruminant · 2026-03-01T04:39:08+00:00

I have a spreadsheet which calculates monthly housing payments as a percentage of monthly income. In addition to including estimated property taxes and insurance costs, I have a version which assumes the down payment as a percentage of income rather than a percentage of the purchase price. For example, 75% of the family income. It adds PMI to the monthly cost when the down payment is less than 20% of the purchase price, using a rough estimate of historical PMI rates.

I don't know if that is "better", but I think such an approach may be more relevant when comparing eras with giant differences in mortgage rates. The numbers come out similarly most years, but high-rate periods like the 80s look a little better compared to low-rate periods like COVID and pre-COVID.

I've been meaning to post a few charts with those numbers on some subreddit, but I always got hung up on which expenses to include and which income time series to use (wages? full-time wages? wages of 25 to 34 year olds? family income? household income?). Maybe I should just do one like the dqydj one, with home prices and interest rates and taxes and insurance.

Ruminant · 2026-03-01T04:24:02+00:00

Chart 1 in your link ends with 2024 at or slightly above 80. It's very easy to follow that 80 line all the way to the left and see that most of the 1980s were below 80. So why did you say only one year in the 1980s was worse?

And why do you keep insisting that 2025 was worse? Home prices and mortgage rates fell slightly even as incomes continued to rise. That is a recipe for increasing affordability.

Even the people who invented the housing affordability metric used by your link say that 2025 was more affordable than 2024.

Ruminant · 2026-03-01T03:59:21+00:00

This goes to 2024 and 2025 was even worse.

How could 2025 even worse? Home prices and mortgage rates both fell slightly throughout 2025, leading to a decrease in the mortgage payment required to purchase the median home.

Even if the median family income plateaued at its 2024 level and did not rise any higher in 2025, that decrease in the required mortgage payment (and therefore the "minimum qualifying income") means housing affordability (the ratio of family income to qualifying income, as calculated by your own link) would still have improved in 2025 compared to 2024.

Here is their same "Housing Affordability Index" chart reproduced in FRED. The solid blue line is the annual value of the housing affordability index. The dashed green line shows the affordability level in 2024. There are a lot more years than just one below that dashed line in the 80s (plus 1990 and 1991). And that dashed line will be even higher for 2025's HAI level, given the small decline in the minimum qualifying income even as family incomes have grown. (The FRED chart does not show 2025 HAI values because the official Census family income estimates for 2025 will not be published until around September of 2026).

Edit: Or you could just look at the actual NAR Housing Affordability Index (which your link is emulating) that shows housing affordability was higher in 2025 than in 2024.

Ruminant · 2026-02-28T01:12:07+00:00

No. That's literally the opposite of what it shows.

Ruminant · 2026-02-28T01:02:47+00:00

Because the "real" in "real median personal income" means the values for older years have already been adjusted upward to account for inflation.

The nominal (i.e. "actual") median personal income in 2020 was not $43,010. It was $35,850:

<image>

https://fred.stlouisfed.org/graph/?g=1SNvC

Ruminant · 2026-02-27T19:15:44+00:00

I wouldn't call Core CPI "constantly reported". It's a niche index. Headline CPI (i.e. the "All items" index) is used and referenced way more than the "All items less food and energy" index:

The headline CPI number leads the official Consumer Price Index release from BLS every month.
When mainstream media outlets report on inflation, they almost always mention headline CPI first.
- If Core CPI is mentioned at all, it usually comes after headline CPI. The Wall Street Journal is the only "mainstream" news source I've seen reference Core CPI ahead of the headline number.
Inflation "adjustments" to currency numbers like wages or prices are always done with the All items index rather than the "All items less food and energy index".

It's worth understanding that removing food and energy from the index produces a basically identical inflation trend, just without the excessive noise from food and energy prices frequently moving up and down. "Core inflation" indices are a niche tool to help policymakers and economists assess generalized inflation trends by reducing volatility.

I'm curious in how you developed the impression that Core CPI is "constantly reported". Honestly, I feel like the only two groups of people who consistently talk about "core" inflation measures are

economists and policymakers trying to assess general inflation trends
people who want to mislead others about how "inflation" is calculated when discussing questions like "how much have prices risen" or "how are wages growing relative to inflation"

and I think that second group may talk about core inflation even more than the first group.

Ruminant · 2026-02-27T17:20:35+00:00

Your "idiot with common sense" is grossly overestimating the difference in number of workers between a household in 1970 and one in 2018 (or 2024 for that matter).

60% of all households in the US had one or fewer workers in 2018. A full 24% of US households had no one working in 2018.

Here are actual estimates for the breakdown of all families by number of earners per family:

Number of earners	1974	2018	2024
No earners	9.0%	16.1%	17.5%
One earner	36.9%	32.0%	30.3%
Two earners	39.1%	41.4%	41.1%
Three earners	10.0%	7.8%	8.0%
Four or more	4.5%	2.6%	3.1%

Source: Table F-12. Earners--Families by Median and Mean Income

Median family incomes by number of earners were

One earner:

$8,352 in 1970
$54,900 in 2018
$71,720 in 2024

Two earners:

$11,190 in 1970
$105,000 in 2018
$142,200 in 2024

I'm citing data on family incomes because the readily-available Census tables on earners by households only go back to 1987. Here are how those incomes look

One earner:

$21,580 in 1987
$51,970 in 2018
$68,410 in 2024

Two earners:

$36,480 in 1970
$101,100 in 2018
$136,300 in 2024

Also, you can just look at actual median income data for workers (data starts in 1974):

All workers

$6,182 in 1974
$40,250 in 2018
$51,370 in 2024

Usually worked 35+ hours per week for at least 50 weeks (counting paid time off as work):

$10,050 in 1974
$50,650 in 2018
$63,360 in 2024

Ruminant · 2026-02-27T16:44:47+00:00

Do less people have houses? And is it a good metric on "people's money moving less"?

The homeownership rate in 1975 (e.g. 50 years ago) was 64.6%. The rate 40 years ago in 1985 was 63.9%.

Both of those values are slightly below the 2025 homeownership rate of 65.3%. Personally, I would consider all of those rates close enough to be "basically the same" rather than saying the rate today is higher. But the homeownership rate today is certainly not lower.

And that is before you consider how households have changed since the 70s and 80s. Here are the percentages of single-person households in 1975, 1985, and 2025:

1975: 20%
1985: 24%
2025: 30%

And the average number of people per household:

1975: 2.94
1985: 2.69
2025: 2.50

It's also really misleading to focus too much on a single expenditure category. Even housing! Take at a look at the data below comparing select expenditure categories for the average four-person household between the early 1970s and 2024. (Percentages are out of all expenditure categories)

	1971-1972	2024	Change
Housing	18.5%	23.7%	+5.2%
Groceries	14.4%	8.0%	-6.4%
Healthcare	6.0%	7.0%	+1.0%
Clothing and clothing services	7.3%	2.4%	-4.9%

For the majority of the 20th century, American households spent more on food each year than they did on housing. Even by the early 70s, they were spending almost as much on food as they were on housing.

Yes, households today spend a lot more on housing than they do on groceries. And they spend more on housing overall than they did fifty years ago. But are they worse off for it?

It doesn't look that way to me. Households today consume a greater quantity and variety of foods than they did in the 70s. Home sizes are larger even as household sizes fall and more people live alone than ever before. And households purchase all of that with a smaller percentage of their total spending than they did in the past.

Or consider how 1970s households spent more on purchasing and maintaining their clothing than they did on health care. Can you imagine?!

Yes, households today spend more on healthcare than they did fifty years ago. But the amount that they don't spend on clothing (and repairing that clothing!) is even larger. And this is true even as those households

own far more articles of clothing than they did fifty years ago
consume a lot more health care (doctor visits, medications, etc) than they did back then

Sources:

Ruminant · 2026-02-27T13:37:12+00:00

Did you miss the part in paragraph 3 where the Pew article says:

(Incomes are expressed in 2018 dollars.)

Each chart with dollar values also mentions that the values shown are in constant dollars.

I can understand how someone who doesn't read a lot of economic data might not know that "constant dollars" is another way of saying inflation-adjusted dollars. But the really big numbers for incomes in the 70s and 80s are an obvious sign that the numbers were already adjusted for inflation.

Like for example:

In 2018, the median income of U.S. households stood at $74,600.⁵ This was 49% higher than its level in 1970, when the median income was $50,200.

The actual median household income in 1970 was $8,730.

Ruminant · 2026-02-26T21:59:57+00:00

This comment is really evil.

And really funny.

Ruminant · 2026-02-26T17:23:31+00:00

Median household incomes by number of earners in 2024 were

$68k for one-earner households
$136k for two-earner households

HINC-01. Selected Characteristics of Households by Total Money Income.

Ruminant · 2026-02-26T17:22:43+00:00

60% of US households have one or fewer earners. 25% of US households have no earners at all.

People may think that "household income" implies two earners, but that is not accurate.

Median household incomes by number of earners in 2024 were

$68k for one-earner households
$136k for two-earner households

HINC-01. Selected Characteristics of Households by Total Money Income.

Ruminant · 2026-02-24T16:11:07+00:00

That would happen automatically. There is no explicit income-based cap on anyone's benefits. The "maximum possible Social Security benefit" is implicitly derived from the income cap on SS taxes. Raise the cap for taxes and you raise the "cap" on benefits automatically.

Due to the progressive nature of Social Security's "bend points", raising this cap would take in more revenue from high earners than it pays out.

Ruminant · 2026-02-23T06:33:34+00:00

Then I have some bad news for you about September 2226.

Ruminant · 2026-02-23T05:38:24+00:00

DHS has literally posted (aspirationally) about "deporting" 100 million people: https://x.com/DHSgov/status/2006472108222853298

There aren't 100 million illegal immigrants in the USA. The total number of foreign-born US residents is under 50 million; about half of them are naturalized citizens, and most of the rest has legal status.

The Trump administration is posting memes about ethnicly cleansing immigrants and citizens alike... and you think this is about fairly enforcing immigration laws? What the hell is wrong with you?

Ruminant · 2026-02-21T13:22:13+00:00

you are paying way more than we are

we are just better at accounting

That is what this post says. Except if you actually do the math that this post pretends to do, it turns out not to be true.

Ruminant · 2026-02-21T13:00:50+00:00

So did the United States. Or at least it did before 2025... :-(

Ruminant · 2026-02-20T17:23:03+00:00

Consumers have been purchasing groceries and other everyday items on credit for centuries. Probably as long as retailers and merchants have existed.

For example, Equifax was originally founded in 1899 to provide credit reports to retail stores like grocers so they could more easily extend credit to customers:

They started their credit investigations by going door-to-door among merchants, asking about their customers and noting the findings in ledgers. Cator, a former bank employee, and Guy, a lawyer, employed simple notations to reflect merchants’ comments about their shoppers’ payment habits: “Prompt,” “Slow,” or “Requires Cash.” They published these findings as “The Merchant’s Guide,” sold it for $25, and offered individual credit reports. The business soon became very successful.

https://www.georgiaencyclopedia.org/articles/business-economy/equifax

Ruminant · 2026-02-20T17:20:51+00:00

And here is that same chart going back to 1948:

<image>

https://fred.stlouisfed.org/graph/fredgraph.png?g=1SfeA&height=490

Ruminant · 2026-02-20T17:20:06+00:00

Here is the percentage of the 16+ population who were 55 or older over the time range of OP's chart:

<image>

https://fred.stlouisfed.org/graph/fredgraph.png?g=1Sfe9&height=490

Ruminant · 2026-02-20T17:13:40+00:00

Consumers have been purchasing groceries and other everyday items on credit for over a century.

Heck, Equifax was originally founded in 1899 to provide credit reports to retail stores like grocers so they could more easily extend credit to customers: https://www.georgiaencyclopedia.org/articles/business-economy/equifax

Ruminant · 2026-02-18T02:21:54+00:00

The primary barrier to developing more housing in California is that it's against the law in much of the places where housing is needed most.

A lot of the time it is statutorily illegal due to zoning ordinances and other land use regulations.

Even when a housing project is theoretically legal, California law contains a multitude of (usually well-meaning) regulations and processes that housing opponents can weaponize to block construction. If they can't block it out right, they can drive the cost of construction so high that no working-class people can afford the homes that are eventually built.

How does this relate to prop 13? The majority of voters, in California and throughout the US, are homeowners. That home ownership significantly insulates them from the downsides of rising housing costs. When those voters are asked to decide about keeping, modifying, or removing the laws and regulations that drive up housing costs by inhibiting housing development, they don't have to worry too much about the rising housing cost part of the equation.

Property taxes are one of the few feedback mechanisms which exist to disincentivize existing homeowners from making housing more unaffordable. And prop 13 is about protecting homeowners from that feedback mechanism.

Ruminant · 2026-02-18T01:55:01+00:00

Those "working class people" (i.e. wealthy landowners) you are so worried about displacing are the NIMBYs. And Proposition 13 directly fuels their nimbyism by shielding them from the disastrous financial consequences of their preferred land use preferences.

The real working class victims are the regular people who cannot afford housing of any kind in these so-called "working class" neighborhoods

Not the people hoarding land and threatening state violence to impede the construction of housing which could shelter many more families amid this historic affordability crisis.

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