I am not an economist. Just a lowly bean counter. But even a bean counter can see some things when they are obvious enough.
A good friend suggested I write an article about the condition of the economy. I could easily go down a negative road…inflation, minimum wage, stock market, etc. but my Dad taught me to look for the silver lining in every dark cloud. (Sometimes it’s hard to see that silver lining when that dark cloud is dumping a gully-whumper on you at the moment.)
So, there are two ways to look at the following. A Big Mac now costs about $9.72. In the early 1970’s a Big Mac cost about $0.69. Thus, using the “burgernomics” standard, Big Mac inflation over the last 50 years was at 26.17%. It’s still the same “two all-beef patties, special sauce, lettuce, cheese, pickles, on a sesame seed bun.”
Minimum Wage in 1974 was $2 an hour. Today, in Nevada, it is $12 an hour. That works out to about a rise of 2.4% a year over the last 50 years.
So, where’s the silver lining Kelly? Well, if you only had to work for 20 minutes at minimum wage to “earn” a Big Mac in 1974. Today, you have to work almost twice that (48 minutes) to earn a Big Mac. That’s still less than an hour of work for a Big Mac. Nowhere near as bad as the inflation rate difference would have led you to believe, eh?
Take the S&P500 stock market index for another economic indicator. Over the last couple of years, it has not done as well as it usually does. Current trends show an expectation of about 10% gain over the year before. Usually the S&P500 does 15-20% a year. Silver Lining? It’s still gaining much more than a simple savings account. AND, using the “dollar cost averaging” rule, any S&P500 you purchase now, is at a bargain price and it will eventually go up.
Mortgage interest rates. A couple years ago, you could borrow to purchase a home at about 3.5%. Today, it stands at about 7%. That’s about double the earlier rate. Ok Kelly, I got you on this one! Where’s the silver lining in that?! Simple! In 1979, the average mortgage rate was about 22%. People were still buying homes with such high interest rates. (We used to joke that you were better off to buy a house on an 18% APR credit card.) You’d have to triple today’s mortgage rate to get to the painful rate I had in purchasing my first home back in 1979.
So, to recap the silver linings…a Big Mac hasn’t changed, just the price; it still takes less than an hour at minimum wage to earn a Big Mac; the S&P%500 stock index is still performing at twice bank savings account rates, and mortgage rates are less than a third of what they were in 1979!
Have you heard? Prov 3:13 says, “Happy is the man who finds wisdom, the man who gets understanding.”
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