Sunday, January 29, 2006

Inflation and the Sears Catalog

Economic naysayers often point out that wages adjusted for inflation are pretty much at the same level now as they were 30 years ago. While this is technically true, I feel that it is a rather weak claim to make that we have had no economic progress over this time period. Inflation, especially as measured by the CPI, has a difficult time tracking trends over the long run, paritcularly in the quality of a good. This has been such a big problem that they have even had to redo the way that they estimate inflation, and some economists have estimated that the CPI is off by more than 1% a year, which over a 30 year period is a huge difference. The always interesting Cafe Hayek addresses this issue through the (admittedly unscientific) but simple aproach of buying an old Sears catalog and comparing the goods in the catalog with what you could buy today. Check out the link, it is rather enlightening.

Of course, there’s been a good deal of dollar inflation since 1975. Judged by changes in the consumer-price index, what $100 bought in 1975 takes about $354 to buy today. So that six-digit calculator would today cost about $49. Sears lowest-priced microwave oven in 1975 would today set you back $672.

Here are some other 1975 products and their 1975 prices (along with their inflation-adjusted 2006 prices):

Sears Best kitchen range, $589.95 ($2,088).

Sears Best television, $749.95 ($2,655)

Sears Best black and white television, $137.95 ($488)

Sears Best typewriter, $278.99 ($988)

Sears Best motion-picture camera (no sound; but it did have 8X zoom!), $197.00 ($697)

Sears lowest-cost telephone answering machine, $99.50 ($352)

Sears highest-priced tent for four adults, $84.88 ($300)