How Far Does Your Dollar Go Compared to Your Grandparents’ Dollar?

President Harry Truman.
©Wikimedia Commons Public Domain

Harry Truman famously said, “The buck stops here” — but Truman’s buck had the purchasing power of about $17 in today’s money.

Every generation believes a dollar doesn’t go as far as it used to — and every generation is right. While a buck feels smaller and smaller as prices steadily rise over time, the dwindling value of money through the generations is about more than just inflation.

Here’s a look at how the value of a dollar has changed over time and what those changes meant for your grandparents and theirs.  

The Incredible Shrinking Dollar

The purchasing power of the U.S. dollar has fallen dramatically over the last 110 years thanks to inflation and a sharp increase in the country’s money supply, which grew by $3.8 trillion in 2020 alone. That equals 20% of all the currency created in American history, meaning that one in five dollars ever printed was printed in 2020.

Financial data firm Visual Capitalist highlighted 11 crucial economic events over the last 110 years as benchmarks for what your grandparents could get for a buck as inflation and the country’s money supply increased:

  • 1913: The Federal Reserve Act grants Federal Reserve banks the power to manage the country’s money supply to ensure economic stability. That year, $1 could buy 30 Hershey’s chocolate bars worth $26.14 today.
  • 1929: Just 16 years later, when the stock market crashed at the dawn of the Great Depression, the Consumer Price Index (CPI), which measures inflation, had risen by 73%. By that point, $1 could buy just 10 rolls of toilet paper worth about $15.14 today.
  • 1933: When FDR criminalized the private ownership of gold, $1 could buy 10 bottles of beer worth $19.91 today.
  • 1944: When the Bretton Woods agreement established the gold standard and set the U.S. dollar as the world’s reserve currency, $1 could buy 20 bottles of Coca-Cola worth $14.71 today.
  • 1953: When the Korean War ended, $1 could buy 10 bags of pretzels worth $9.69 today.
  • 1964: At the start of the Vietnam War, $1 was good for a ticket to a drive-in movie worth $8.35 today.
  • 1971: When Richard Nixon took America off the gold standard, $1 could buy 17 oranges worth $6.39 today.
  • 1987: The year of the Black Monday stock market crash, $1 could buy two boxes of crayons worth $2.28 today.
  • 1997: When the Asian Financial Crisis roiled global markets, $1 could buy four grapefruits worth $1.61 today.
  • 2008: When the Great Recession hit, $1 could buy two lemons worth $1.20 today.
  • 2020: When the COVID-19 pandemic struck, the same dollar that could buy $26.14 worth of chocolate in 1913 was good for only a small McDonald’s coffee.
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Inflation and the Money Supply Are Only Part of the Story

Consumer Affairs states, “It’s common for older generations to say they had things harder than ‘kids these days.’ But that old adage doesn’t align with the data, especially when you compare the cost of living for Gen Z with that of baby boomers when they were in their 20s.”

“In the 1950s and ’60s, many goods and services cost much less than today when adjusted for inflation,” said Fluent in Finance founder Andrew Lokenauth, a 15-year financial planner and Wall Street veteran who held leadership positions at JP Morgan, Goldman Sachs and Citi. “A dollar went over three times further for basics like bread, milk and eggs.”

Modest inflation is a necessary part of a healthy, growing economy — as long as income keeps pace. But over the last half century, it has not.

Wages rose by 80% from an inflation-adjusted $24,600 in 1970 to $44,200 in 2022. But during that same period, the CPI soared by more than 500%, which means Gen Z dollars have 86% less purchasing power than the dollars their baby boomer grandparents spent in their 20s.

Three Big Expenses Have Done Most To Diminish the Dollar

Bread, eggs, milk, Coca-Cola, toilet paper, bags of pretzels and countless other day-to-day purchases are far more expensive when comparing income to inflation over the decades. But those things just nibble around the edges of household budgets while three big categories take giant bites.

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“Major expenses like housing, medical care and college were more affordable for earlier generations,” Lokenauth said.

According to Consumer Affairs:

  • The median home cost $24,800 in 1970. Adjusted for inflation in 2022 dollars, that’s $185,600. But the median home didn’t cost $185,600 in 2022. It cost $370,600.
  • The median monthly rent in 1970 was $100, or $800 in 2022 dollars. But in 2022, the median monthly rent was not $800. It was $2,000.
  • The average tuition for one year at a public college was $400 in 1970, or $2,800 in 2022 dollars. But in 2022, public college tuition cost $11,400 per year, not $2,800.
  • According to Peterson-KFF, the average person spent $353 on healthcare in 1970, or $1,951 in 2021 dollars. But in 2021, the average person spent $12,914 on healthcare, not $1,951.

Generational Assumptions Rarely Hold Up to Reality

A dollar clearly went much further in previous generations, but your grandparents faced challenges that modern workers would find difficult to fathom — even if they’re wrong for assuming today’s young adults have it easy.

“We falsely presume that past generations were all able to easily afford houses, college and medical care,” Lokenauth said. “In reality, many still struggled.”

In 1913, when $1 had the spending power of $26, there was no minimum wage, no Social Security, no Medicare and no G.I. Bill. During World War II, the top federal income tax rate was 94%. After the war, the top rate dropped to 91% and stayed there for nearly two decades until the 1962-64 Kennedy tax cuts.

Gen Xers and younger generations with self-directed 401(k)s assume pensions allowed everyone to live high on the hog after they put in 30 years at the factory, but that was often not the case.

“It’s a fallacy that they were all able to retire comfortably,” Lokenauth said. “Senior poverty was about 30% in the 1960s.”

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In the 1970s, an OPEC oil embargo led to nationwide fuel shortages and skyrocketing gas prices while inflation soared to historic levels before peaking at nearly 15% in 1980. One year later, in 1981, interest rates peaked near 19%.

The list goes on and on. In short, the purchasing power of the dollar has steadily declined since the era of the Federal Reserve began 110 years ago, but the challenges and opportunities have changed with the generations. A young Gen Zer could reasonably consider decades of student debt to be an unprecedented obstacle to financial success, but an older boomer who toiled as a sharecropper in the Jim Crow South could reasonably disagree.

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