The chart above shows that household spending on “Life’s Basics” – food, clothing and shelter – has steadily declined over time as a share of after-tax personal income, from more than 50% in the 1930s and 1940s, to more than 40% for most of the 1970s when it took more than a week of work to buy a standard air conditioner, to only about 32% in recent years.
The gradual increase in our standard of living thanks to the falling prices (measured in both inflation-adjusted dollars and in the “time cost”) of appliances, food, clothing, cars and household appliances is an under-appreciated and under-reported benefit of the “miracle and magic of the marketplace.”
As Larry Kudlow always reminds us “Free market capitalism is the best path to prosperity.”
