Last night I put on the original Great Gatsby with Robert Redford. It’s not a particularly good movie really. I guess it’s just a story that doesn’t translate from the page to the screen. What struck me however, was this idea of when “times were good” that is, as in better than they are today, you know, the “Good Old Days.” While watching Gatsby, it is clear that in 1974 we romanticized the Roaring 20’s. The economy was good, everyone was happy, there was no war and the crash of ’29 and upcoming depression, not yet a glimmer of a possibility. Remember that in 1974 we were still ankles deep in Viet Nam and our President was under investigation for illegal activity associated with Watergate. Yes, things were pretty bad when compared to the Roaring ‘20’s. In fact they were pretty bad as compared to the 1950’s too, or so George Lucas would have us believe in his 1973 classic look back in American Graffiti. So I guess 1974 was a pretty bleak year.
And yet… because of the Oil Crisis, gas prices were “raging high,” at $0.53 per gallon, the median income was somewhere around $11,000 per year and a new home cost about $39,000 (just over 3 times median income).
When I compare these figures to today, I’m not so sure the folks of 1974 had a clue what was a good time and what was a bad time. Consider this, today the median income stands around $51,000 per annum about 4.5 times higher than 1974; median home price about $203,000, 4 times median income and about 5.5 times higher and gas about 9 times higher. As you can see, today income is being out paced today by costs of goods and services. What I find interesting here is that it would appear that times were better then, than they are now, much like they felt in 1974 when thinking about the 20’s or the 50’s. However, there are a couple of things that stand out when comparing 1974 to today. While unemployment stood at 4.3% roughly 70% lower than today, inflation was at 13% and climbing which meant interest rates were going up and while incomes were higher relative to home prices, home affordability was much lower. So exactly am I getting at? I guess I’d liken these comparisons to a little like the Aesop fable of the dog and his bone: A dog with a bone crosses a bridge. Upon seeing his reflection in the stream below, the dog determines that the dog in the reflection has a better bone than he. So he drops his bone and lunges for the other only to wind up with no bone and a mouthful of water. As Aesop so wisely presents in his allegory, sometimes we are better off today than we might think we are and it isn’t until later that this becomes clear. You see, while we have many problems as a nation, not the least of which is our current Congress, things could be a whole lot worse (as they just were during the Great Recession) and maybe, just maybe, we will look back at 2013 and call these times the “Good Old Days” when homes were appreciating, interest rates low, the economy improving and we have for the first time a nation where everyone will have health insurance. I suppose only time will tell.