Declining U.S. Dollar and Increasing Inflation Continue to Stymie Americans, According to Latest Northwood University Economic Analysis

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Monthly Economic Outlook Takes Hard Look at Jobs, Income and Other Flags Related to Growth and Concern; Also Examines Global Fiscal Health

Perhaps a better measure of inflation and its impact on the average American is the cost of key items as a percent of income in 1938 vs. 2014.

The U.S. economy continues to show signs of growth coupled with signs of concern, according to the most recent Monthly Economic Outlook released by Northwood University in Midland, Michigan. Notably, the U.S. unemployment rate dropped to 5.9 percent in September with the economy creating just under 250,000 jobs. At the same time, the U.S. Labor Force Participate Rate dropped to 62.7 percent.

“The September Labor Force Participation Rate was the lowest in the United States since 1978,” notes report author, economist Timothy G. Nash, vice president for Strategic and Corporate Alliances and the Fry Endowed Professor in Free Market Economics at Northwood University. “It’s evidence that Americans are frustrated and leaving the job market because they can’t find jobs, or if they can, they aren’t ones that are paying well enough.”

To support the rationale behind his opinion that Americans are frustrated, Nash offers a unique comparison between economic data he uncovered from 1938 and current data in this month’s report. As he points out, average U.S. household income was $1,731 in 1938, with the average cost of a home at $3,900, a new car at $860 and Harvard tuition at $420. A movie ticket cost 25 cents, and a gallon of gas rang up at 10 cents.

Today, average U.S. household income is roughly $51,930, roughly 30 times more than that of 1938. However, the average price of a new home is roughly $273,600 (70 times more), a car is $32,000 (37 times more), yearly Harvard tuition is $59,600 (142 times more), a gallon of gas is approximately $3.40 (34 times more) and a movie ticket is $8.40 (34 times more).

“This is not a pure measure of inflation, as you can argue that the average home is larger and nicer today than in 1938, and the point is true for the automobile, as well, but clearly inflation has been problematic for most Americans,” Nash says. “Perhaps a better measure of inflation and its impact on the average American is the cost of key items as a percent of income in 1938 vs. 2014. In 1938, for example, you could purchase 6,924 movie tickets with your gross household income. Today, you only could purchase 6,182. Our examples aren’t perfect measures of inflation but do reflect that the U.S. dollar has lost a tremendous amount of value over the past 76 years.”

The entire Northwood University Monthly Economic Outlook, which also examines the status of the global economy, is available at http://www.northwood.edu/documents/about/Outlook/NUEconomicOutlook_102014.pdf.

For more information on Northwood University, visit http://www.northwood.edu, or call 800.622.9000.

ABOUT NORTHWOOD UNIVERSITY
Northwood University is committed to the most personal attention to prepare students for success in their careers and in their communities; it promotes critical thinking skills, personal effectiveness, and the importance of ethics, individual freedom and responsibility.

Private, nonprofit, and accredited, Northwood University specializes in managerial and entrepreneurial education at two full-service, residential campuses located in southern Florida and mid-Michigan. Adult Degree Programs are available in seven states with many course delivery options including online. The DeVos Graduate School offers accelerated, evening and weekend programming in Michigan, Texas and Florida. The Alden B. Dow Center for Creativity and Enterprise provides system-wide expertise in family enterprise, entrepreneurship, creativity and innovation, and new business development. International education is offered through study abroad and in Program Centers in Switzerland, China (Changchun and Wuxi), Malaysia and Sri Lanka.

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