I ran those numbers too. However, I can assure you that my $19,500 salary did NOT spend like $60K! When I finally did earn $60K, something like 1990, I saw a considerable difference in my standard of living. My point regarding auto loans was only to illustrate that, at the time, we had a negative net worth BEFORE taking on an $80k mortgage. We did NOT buy an average home (quite a bit less than the $142k using the inflation adjusted numbers you cite.)
Young people starting out today shouldn’t expect to either. They call them starter homes for a reason. Same for cars. We did NOT buy average priced cars. We made do with solid, but well used, pre owned cars. Much of the analysis I’m seeing recently assumes that one should immediately be “average.” Many of us had to work awhile to get to “average.”
Lastly, I wonder how much the average person had in savings in 1984?
I'm sure you didn't buy a $142,000 home as a first home in 1984. Even though it was the average home price if adjusting for current home prices backwards using reverse CPI, that would have been a palatial estate. That's sort of my point.
When my family lost the family farm around 1984, it was foreclosure of $114,000. That was a 7 or 8 bedroom farm manor on 100+ acres of land. Today, that home sits on only 4 acres and is worth between $3m and $3.5m USD. Point being, you didn't need much to buy something quite substantial in 1984.
An $80,000 mortgage going against a $20,000 income in 1984 is 4x a year's salary, albeit a
starting salary. That is akin to a starting salary today of $60,000 buying a starter home or condo for $240,000. That just isn't happening anywhere I know of in America that pays starting wages to 22 year olds of $60,000. Basic one bedroom condos are pushing mid-300s and of course HOA is substantial as well. There's a rural home with 3 bedrooms and 2 baths with a bad location on a major highway about 50' from the front door in this poor redneck county of mine...they are asking $725,000. If you move into the small towns in this area of the world and want a 15 year old track home ranch with a 1.5 car garage, you're going to be over $450,000 minimum, and 45 mins drive to jobs.
That's the biggest difference between 1984 and today: cost of living differential.
Another quick anecdote that is different than 1984. I needed a new (steel) roof for my house and garage. Five years ago, they would have cost $30,000. Last year, it was $100,000 and they didn't do a particularly grand job. I don't remember roofing jobs in the 1980s because I didn't track the costs, but in the early 1990s that would have been a $5000 job. To afford a $100k roof someone is likely at the 2nd highest tax bracket, and even then they had to earn $200k pre-tax of discretionary income to cover that single needed repair on top of basic living expenses.
We can reverse CPI calculate a lot of these things back to 1984, but the math never seems to work backwards. Do I care deeply on a personal level? No, because I'm a GenX and have tangible assets that insulate me from potential inflationary and fiat currency shockwaves. But the younger generations than ours are hopping mad because the math does not work and their collective answer has been a preference for socialism.
Socialism will accelerate when full recession hits, resulting in fewer jobs, economic stagflation, and inability for younger people to service their debts that are unsecured. (credit card, student loan, etc.)
