While many commentators are nostalgic for the glory days of yesteryear, families are richer today and can afford to buy more than ever before.
While many commentators are nostalgic for the glory days of yesteryear, families are richer today and can afford to buy more than ever before.
E conomic nostalgia has proven a potent force in modern American politics. Social media feeds are filled with decades-old receipts and price tags to show how cheap things used to be. Populists in both parties allege that most families can no longer support themselves on one parent’s income as they once did. Many claim that the essential components of a middle-class lifestyle have become less affordable over the past several decades.
For the most part, this message resonates with Americans. Consumer sentiment, as measured by the University of Michigan, is at a record low in 2026, having collapsed from pre-pandemic levels that mirrored the late-20th-century highs. The high and rising cost of living dominates polls of voters’ most important issues. For many adults, the 1980s and ’90s were the golden age of affordability — at least within their living memory — and everything has gone downhill since.
These are claims that deserve scrutiny. By any metric, Americans’ incomes have risen significantly since the late 20th century, both in nominal terms and adjusted for inflation. There is legitimate debate over how much incomes have grown, but not over whether they’re higher than they used to be. We can check hourly compensation, weekly earnings, personal income per capita, median personal income, median household income, median family income, or any other relevant metric. All the lines point in the same direction.
Yet rising incomes, even inflation-adjusted, do not necessarily mean that the standard middle-class lifestyle has become more affordable. For one, a larger percentage of married couples now have two earners than in the 1970s and earlier, which naturally boosts household income. Two workers can afford to buy more things than one worker, of course, but it’s hard to call that a gain in broad affordability. The components of the Consumer Price Index, which measures general inflation, may also not line up with a typical family’s budget over time.
Nor can we wave away affordability concerns by pointing to technological progress. Yes, Americans now enjoy far more modern luxuries, such as air conditioning and cellphones, at far lower prices than they once did. But these conveniences never made up a large share of households’ budgets, so their value is purely additive. The question at hand is whether the essential facets of life have gotten costlier for families.
To answer this, we must look at the consumption side of Americans’ ledger, not just the income side. This approach can show how households’ spending in different categories has changed over time. We should also hold the type of household fairly constant, as the country’s composition of living arrangements has changed dramatically since the 1970s: more childless single people, fewer married parents.
Fortunately, the federal government’s Bureau of Labor Statistics has decades of data on consumer expenditures by category and breaks them down further by household type. If a standard middle-class household can be defined as married couples with children — excluding childless married couples and single parents — data are available for this group from 1972–73 onward. The most recent data are from 2024, allowing us to look at regular ten-year intervals. Throughout this article, I select past comparison years that best reflect the overall trend, as shown below.
Using artificial intelligence, I collected the relevant data and converted all figures to 2024 dollars by adjusting for inflation. Pretax income numbers for each year are also available, so we can also calculate each spending category’s share of household income over time. With that, let’s dig into how the budget needed to support a typical American family has changed since the periods we remember most fondly.
The Undeniable Improvements
In many categories, expenses as a share of household income have gone down since the ’80s, even as overall spending has gone up.
Believe it or not, American families used to spend over 5 percent of their income, or more than $5,500 per year in inflation-adjusted dollars, on clothing and footwear. Today, families spend only 1.9 percent of their income on apparel, or just over $3,000 per year. Those numbers align with the collapse in real clothing prices in the 21st century, even as we buy more clothing items than ever. Score one for better living standards.
Entertainment and recreation have also gotten more affordable, rising slightly in real terms since 1984 but falling as a share of income from 4.9 percent to 3.2 percent. Yes, sporting events and concert tickets have gotten pricier, but consider the savings on televisions, in-home viewing, and music. In this category, too, Americans consume more entertainment than at any point in history.
Other miscellaneous expenses have also shrunk. Personal-care spending has fallen from $1,542 in 1972–73 to $1,372 in 2024. Reading expenses have dwindled (tragically) from a peak of $485 in 1984 to a mere $189. Life and personal insurance used to eat up 2.5 percent of income; now that employers pick up most of the bill, it’s 0.5 percent.
The greatest triumph is spending on food. As a headline figure, meals have declined from around 15 percent of budgets in 1984 to 9 percent today, and spending has risen by only a thousand real dollars in those 40 years. That’s plenty respectable. Look under the hood, though, and the news is even better: Food at home, meaning grocery spending, has gone from 9.2 percent of incomes to 5.5 percent. Food away from home has also fallen from 5.6 percent to 3.5 percent of income, even as families eat out much more often. In fact, across all American consumers, spending on food away from home has now surpassed food at home. If that isn’t a rise in living standards, I don’t know what is.
The Complicated Cases
One area where spending has grown by quite a lot is education. In 1984, families spent an average of $1,375 (adjusted for inflation) on schooling and related activities. That amount has more than doubled to $3,213. This bucket also includes childcare, so rising costs for families with young children have surely contributed.
However, a couple of qualifications are necessary. First, education has never been a large chunk of families’ budgets and remains small today: It took up 1.3 percent of pretax income in 1972–73 and now takes up just 1.9 percent.
Second, much of this rise in spending comes from increased consumption of education services. A substantially greater share of high school graduates attend college than in the 1970s and ’80s, and far more students graduate from high school to begin with. Average spending has also risen as many parents send their children to more expensive private K–12 schools and pricier universities. These are improvements in living standards that cost money, certainly, but improvements nonetheless. Sending your kid to a public school and a public university — or to no college at all — is still a path that many families take.
Transportation, by contrast, is a much less optional expense. Since 1972–73, transportation spending has risen from $15,792 to $19,739, with the bulk of that spending on vehicle purchases. But changing household choices can also explain much of this trend. The biggest jump in spending was in the 1980s, when many families transitioned from owning one or zero vehicles to two or three.
Since that shift, transportation spending has shrunk from 18.7 percent of income to 11.7 percent. Vehicle purchases in particular have fallen from 8.1 percent to 4.8 percent, and spending on motor fuel has fallen from 4.7 percent to 2.4 percent of income. For families with a now-standard number of cars, it has never been more affordable to get around.
It’s true, new-vehicle prices have leaped recently, and there’s been a broader shift toward costlier models like trucks and SUVs. But three-quarters of vehicle sales are of used cars, and those prices have risen slower than inflation. Plus, inexpensive new cars are still available (though not nearly as popular). Even with gas at $4 a gallon, transportation still isn’t as big a budget burden as it used to be.
The Legitimate Grievances
At last, we reach the consumption categories where economic nostalgia contains a genuine point. And unfortunately, they’re some of the big ones.
Take health care. In 1984, families spent an average of $3,654 per year on health insurance and out-of-pocket medical expenses combined, or 3.8 percent of pretax income. In 2024, they spent $8,090 on those categories, or 4.8 percent of income.
Health care has gotten a lot better over the past few decades, of course. Technological and pharmaceutical advances have raised life expectancy and survival rates for many diseases, and those advances cost money. But for most families, higher health-care spending that’s been socialized from sick patients feels like a loss in everyday living standards. And there’s strong evidence that health-care prices have been inflated even beyond what improvements in quality might justify.
And then, there’s the elephant in the room: Since 1972–73, total spending on housing has risen from $23,287 per family to $34,655 — the largest absolute increase ($11,368) of any category by far. Because of growth in income, however, families are actually spending a lower share on housing than they did a half century ago. Within the broad housing bucket, spending on shelter — which includes mortgage interest, property taxes, insurance, and maintenance — rose from $11,468 to $20,522. Spending on occupant-owned homes specifically (excluding rented dwellings and other lodging) increased from $7,832 per year to $15,036.
Some of that increase has been counteracted by falling costs for other housing-related expenditures. Electricity, other utilities, and household furnishings have all become more affordable in both inflation-adjusted dollars and relative to earnings. But housing is still the greatest burden on family budgets, eating up a fifth of pretax income. The second-largest category, transportation, is approximately half that share.
Importantly, higher spending on housing is not due to mortgage rates. Anyone who was around in the 1970s and ’80s can tell you rates were much higher then — even as they rise again today. The main burden, rather, is the home prices that show up in mortgage payments (paying off principal is counted as asset accumulation, so only interest costs appear in the consumption data), as well as in property taxes and other charges. Those underlying prices have been going up ever since the 2008 housing crash, even adjusted for general inflation. From 2020 to 2022, they exploded to record highs.
Critics will respond that homes have gotten much larger and better than in the past, and in fact they have. The typical floor area of a new single-family house is now more than 2,100 square feet, compared to around 1,500 in 1973. When adjusting for residents per household, living space has almost doubled.
Yet part of the issue is that home sizes across the board may have gotten too big. The percentage of new houses under 1,400 square feet has collapsed from 40 percent in 1972–73 to under 10 percent in the 2020s. Traditional three-bedroom homes have been increasingly displaced by those with four or more bedrooms. Starter homes such as duplexes, triplexes, and townhouses have been zoned out of existence in many neighborhoods, and minimum lot sizes push up the size — and thus the cost — of single-family detached homes.
For families who are already settled in a home with a low mortgage rate and built-up equity, housing costs aren’t top of mind. But for younger Americans trying to grab the first rung of the housing ladder, the current combination of home prices and interest rates is very daunting. Since the early 1980s, housing affordability for new buyers truly isn’t what it used to be.
All told, economic nostalgia is mostly fiction. The things people buy every day, like groceries and gas, are more affordable now. But a couple of major expenses — health care and especially housing — have indeed raised the bar particularly for younger adults to support a family. If policymakers want to polish up the American dream, they must focus on controlling costs in those two areas.