USD Purchasing Power in Real Time Since 2000 | Hacker News Reader

USD Purchasing Power in Real Time Since 2000

onedollar.today

79 pointstraviswingo77 comments

This isn't very surprising. Typical US economic policy aims for 2-3% annual inflation. That counter shows an average 2.6% inflation across 26 years, which is kind of right in the range we'd expect.

It's debatable whether this is good longterm policy - but it's been the norm in the US for decades.

> Typical US economic policy aims for 2-3% annual inflation. That counter shows an average 2.6% inflation across 26 years, which is kind of right in the range we'd expect

We aim for "inflation of 2 percent over the longer run, as measured by the annual change in the price index for personal consumption expenditures" [1].

[1] https://www.federalreserve.gov/faqs/economy_14400.htm

Accurately aiming inflation as a central bank is like trying to keep a deflating balloon the same size using a harmonica. 2.6% isn’t bad, I don’t know that many if any central banks have managed a tighter band.

> "as measured by the annual change in the price index for personal consumption expenditures"

How closely does that track with CPI-U, which is the index this web site is using? If I believe Gemini, PCE should show a slightly lower inflation number?

It also says nothing of where that dollar has been in 20 years

Probably down the back of a sofa.

This ticker's current speed is faster than that, though. It's going about 1e-9 dollar per second. That comes to about $0.03 per year, which as a fraction of the current base of $0.50, comes to 6% inflation per year.

I don't know how that speed was determined. Either it's using a linear decrease since 2000 (which isn't correct, the inverse of exponential inflation would be logarithmic decay, not linear), or it's weighting by recency for the high inflation since 2020 (which may continue, or may not.)

Good eye. The ticker was using the observed rate of change over the two most recent data points, so it's actually biased towards the most recent inflation numbers. I've updated it to simply use the slope between the oldest (January 2000) and the most recent data.

It won't be 100% accurate, but it's close enough to create a visual. And the number is always updated monthly with real data anyways.

Nice job, thoughtful execution

Hey all. This was merely intended as a fun visualization of inflation over long periods of time, in a format that’s slightly easier to grok for most people.

That’s it. There’s no further intention behind this, I just thought a real time “decay” visualization would be neat.

Literally everything about how this works is in the source in maybe 30 lines of js. It’s not complicated. Data is from BLS (whether or not that's accurate is another conversation entirely). I auto update the data monthly via a chron job, right around the time new data is published.

I’m not really changing this from where it’s at. It’s done as is. There are other sources out there already if you want to customize the date range or see a graph.

Thanks for checking it out :).

As much as the notion of "Purchasing Power" is <macro>economic, thus perhaps having a greater chance of being related to reality, I've been wondering if - and how - could these long-term measures account for greater diversity and "scale" of "things money can buy".

Nowadays if you're properly rich you can buy a seat on a sub-orbital flight. This wasn't an option in '00, no matter how rich you were.

On the other end of the scale, for basic things a (really) good quality loaf of bread will always be cheaper in Poland than say up north from Oslo, Norway; whereas a USA-designed made-in-China laptop pretty much never did scale with the rest of the "CPI basket"...

Point being: we sure do have numbers - what they really mean in practice is vague at best.

The best example I heard recently was anesthesia. Costs less than $5 to make. Worth a lot more if you have surgery coming up.

The cost of anesthesia is surely concentrated in the labor involved more so than the cost of the chemicals, no?

The example is supposed to illuminate the limits of ppp or gdp adjustment. Anesthesia contributes almost nothing to gdp, but it matters more than almost anything to you if you need surgery.

> The example is supposed to illuminate the limits of ppp or gdp adjustment.

... Yes, but that's like exemplifying the value of an actual slice of bread vs bitcoin to someone who is hungry.

Macroeconomic numbers may have an impact on the local - as in the individual scale - but that's neither the topic nor the thread.

The PCE measure attempts to account for this in a more principled way. But precisely because it's trying to, it can't be reported as quickly, since there's no way to know how much a price change impacts PCE until you know how consumer behavior changed along with it. So the CPI data gets reported first (we got February CPI data in the middle of last month while PCE data isn't expected until Thursday), and thus drives media conversations about inflation.

The real time number isn't as interesting as the potential future number. If the dollar stops being the reserve currency, the purchasing power of the dollar will crash. No more cheap borrowing, no more low interest rates, hello constant high inflation. The Iran war has made that increasingly likely to happen. It may even have been intentional.

https://www.jpmorgan.com/insights/global-research/currencies... | https://spectator.com/article/the-us-currency-is-under-attac...

> If the dollar stops being the reserve currency, the purchasing power of the dollar will crash

This is far from clear.

The Federal Reserve's Real Broad Dollar Index (RTWEXBGS) is 113.51 as of February. Not saying it would crash losing all of that 13.51 excess overnight, but it's still overvalued against foreign currencies.

Is this not what the current US administration seeks? You can't simultaneously be the reserve currency and hope to be a net exporter at the same time.

Perpetual trade deficit is modern system of tribute.

> Perpetual trade deficit is modern system of tribute

Probably not. Equatorial Guinea, Palau and Kyrgyzstan run the largest current-account deficits as fractions of GDP [1]. (Current account counts goods and services.)

[1] https://en.wikipedia.org/wiki/List_of_countries_by_current_a...

Resource extraction... High value infra projects in, low value unprocessed resource out.

Edit: Palau is the exception, it's main industry is tourism. Wealthy westerners come and consume and leave. Palau doesn't produce anything so all that consumption must be imported.

US current accounts deficit ~1 trillion annually, greater than your counterexamples' total combined economies. This should be a clue it's not the same mechanism of action.

> it's still overvalued against foreign currencies

That would make imports more expensive and exports more competitive. Some pain, given we run a deficit [1]. But $50bn/month adustment in a $30tn economy is 2%. Not fun. But not a "crash."

(There is a genuine argument to be made that American voters have been rejecting dollar hegemony across multiple elections for a couple of decades.)

[1] https://www.bea.gov/data/intl-trade-investment/international...

It would cause inflation, which would lower purchasing power of imports; It would raise interest rates, which would raise the cost of loans and debt for individuals; and it would make the Government getting loans much harder, leading to spending cuts and higher taxes. All of these things will come together to weaken the dollar, thus making it have less purchase power. Whether it's a crash or slow bleeding out doesn't make a difference in the end.

> No more cheap borrowing, no more low interest rates, hello constant high inflation.

Do you mean that we’ll have high inflation because we’ll keep running massive deficits? Because many countries that don’t have the reserve currency also have low inflation.

I think some people think that high velocity is deflationary. So if suddenly dollars are not traded as much, it slow down the dollar velocity and this has a global inflationnary effect. This isn't a bad theory tbh, i believe at least half of it (money velocity decreasing have an inflationary effect on assets, productive or not)

It's not the deficit itself, it's the quantitative easing that is used to pay for most of the deficit. If the US dollar weren't a reserve currency, printing more money would have a much larger inflationary impact.

It means high inflation because if we're not the reserve currency, global markets sell their dollars, which leaves more dollars unused, which makes them plentiful, which makes them less valuable. This has a knock-on effect; it makes import goods more expensive, it makes government borrowing more expensive (which raises costs for citizens), and loss of petrodollar (the main reason for us being the reserve currency) makes oil more expensive. To pay for our debt, after we no longer have all this investment (other nations buying our dollars, t-bills), we print more money. So our currency is less valuable, and everything for us becomes more expensive, thus, inflation.

> It means high inflation because if we're not the reserve currency, global markets sell their dollars, which leaves more dollars unused, which makes them plentiful, which makes them less valuable.

So why don't Japan and Germany have high inflation, since those country's currencies aren't the reserve currency either?

For reasons? You want me to tell you the entire economic history of 3 countries in a HN comment? The US has no real industry except finance (well, and healthcare, and real estate (which is/was basically finance)), and our economy is only strong because of the petrodollar-created reserve currency. Take it away and we have a gaping void where an economy used to be.

Japan may implode if the US dollar collapses, due to the weird USD<->Yen cyclical debt scheme (yen carry trade) propping them up. If the world switches to the Yen to price oil this might not be so bad. They also just started moving away from negative interest rates and ZIRP, and BoJ may reach 1% interest at the end of this month. This is good for Japan, bad for US.

Germany is not doing great but they do/did have a strong manufacturing sector.

> If the dollar stops being the reserve currency, the purchasing power of the dollar will crash.

And thus manufacturing will return to the US! I thought we wanted that. It's the only way out of the Triffin dilemma.

I question the accuracy. In 2010 I could buy a McDonald's double cheeseburger for $1. Now they're like $3 and they took off a slice of cheese.

Double cheeseburger has always had and still has two slices of cheese. The McDouble (which used to be $1) always had a single slice of cheese.

The real hack was asking them to put Big Mac sauce on the McDouble. For $.30 it was pretty damn close at 1/3 the price.

The Big Mac Index has the fatal flaw in that it assumes the value of Big Mac is consistent over time; McDonald’s has been at the forefront of fast food attempting to break into a more high income market segment.

Yeah, same here. Perhaps the Big Mac Index [0] is what you want.

[0] https://en.wikipedia.org/wiki/Big_Mac_Index

Of course this is comparing to one data point that is an outlier. If people are choosing to pay $3 in today's dollars for it, that means that in 2010 McDonald's was underpricing that item relative to its market value. Presumably deliberately as a promotion. Compare across everything you buy and compare like-to-like if you want to judge its accuracy.

Yes, but that's how vibflation works :)

In the last 12-24 months the price of fast food in particular has risen at a higher rate than inflation has hit other types of food and goods. Fast food makes no economic sense anymore.

And you're right, the food has gotten worse as well.

Fast food is gut wraughting

What economic sense does fast food ever make? You're paying a premium for a convenience.

It made sense to pay less money for lower quality prepared food. Now the price is comparable to better food.

Paying for convenience does make sense if you value the convenience.

I like this visualization, but I think there is a harder to quantify layer under this. While someone making 50k a year in 2000, would need to make 100k in 2026 for the same economic power, it is actually much worse.

In the year 2000, there were just less products and services then there are now. And the products that did exist were generally more durable and repairable than today. And in many cases, products that exist now but didn’t back then have reasonable substitutes (like renting or buying movies, since you don’t have Netflix).

I would even take it one step further and say that the ways you had to interact with those substitutes were healthier and more social than what we have now.

You know what, it's not as bad as I was thinking.

For me it's the opposite. I am a bit surprised that inflation halved buying power since 2000.

In my mind those level of interest usually come from the stock market or house appreciation, but I guess those are much faster (I seem to recall doubling every 8 years in the stock market and housing being a bit slower).

It would be useful if you explain how you calculate it. I mean, if you just apply a decaying exponential function, anyone can do that on their calculator.

I think the more interesting thing to chew on is how this will look over the next 25 years. The numbers will be... huge. 75k salary in 2000 is similar to 150k salary in 2026, project that out to 2050...

Something feels like it'll give out, but I've felt that way for 8 years at this point and I haven't been correct.

DCA and pray I suppose.

edit: a word

Rule of 72. For costs to double in 26 years, that means inflation was about 2.7-2.8%, which is pretty much where it’s supposed to be.

> I am a bit surprised that inflation halved buying power since 2000.

It's a bit more than I expected but a 2% drop 26 times gets pretty close to halving.

The number on the page suggests 2.5% average inflation.

SimCity, Starcraft, etc. taught me the value of saving up. But after some decades in the real world, I think computer games should simulate inflation so youth can get some practice at this!

$1 put into the S&P 500 with dividends reinvested would be more than $6 today. That more than offsets the inflation. It also gives some clues about why the raw dollar purchasing power has been lost to inflation.

Don’t keep your retirement savings all in cash.

It's a problem that our society is designed for and judged in relation to capital. Most people are paid in dollars, not shares of the S&P 500. 38% of the population doesn't even own any stocks[1]. We can't act like the dropping dollar value is fine simply because stock investments are outpacing those losses. Maybe that tradeoff benefits the people reading this, but it hurts a huge number of Americans.

[1] - https://news.gallup.com/poll/266807/percentage-americans-own...

> Most people are paid in dollars

Real wages are up since 2000 [1]. (Even the federal minimum wage went up 40% in nominal terms [2], though that is less than inflation.)

[1] https://fred.stlouisfed.org/series/LES1252881600Q

[2] https://en.wikipedia.org/wiki/Fair_Minimum_Wage_Act_of_2007

Measurements like this obfuscate other costs that aren't well tracked. Healthcare and housing being two big ones.

> Healthcare and housing being two big ones

Almost all BLS price indices, including CPI, include housing. (CPI measures the “rent of primary residence, owners' equivalent rent, utilities, bedroom furniture” [1].)

That said, this is the second time I've come across this myth on HN in less than a week. Where did you hear that price indices don't track healthcare and housing costs?

[1] https://www.bls.gov/opub/hom/cpi/concepts.htm#the-cpi-as-a-c...

The point isn't that CPI excludes healthcare and housing, CPI shelter sub-index https://fred.stlouisfed.org/series/CUSR0000SAH1 and the medical care sub-index https://fred.stlouisfed.org/series/CUSR0000SAM2 have grown ~500% and ~770% respectively in the same time frame. The _overall_ CPI they are blended into grew ~300%, which means real wages are deflated. So if personal spending is weighted towards healthcare and housing (anyone who rents or pays a mortgage below a certain income) then your purchasing power is declining faster than the real wage would suggest.

EDIT: saying real wages is deflated is ambiguous, the headline CPI understates the effective inflation experienced by people whose spending consumption is weighted towards housing and healthcare. So the "real wage" is inflated relative to the lived experience of those people.

> have grown ~500% and ~770% respectively in the same time frame. The _overall_ CPI they are blended into grew ~300%, which means real wages are deflated

If you spend a third of your income on housing and 8% on healthcare [1], then those components–assuming your 5x and 7.7x multiples–will raise your cost of living by 2.25x. That leaves 1.75x for the other components (to get to the overall 3x). That sounds reasonable as a median estimate.

> if personal spending is weighted towards healthcare and housing (anyone who rents or pays a mortgage below a certain income) then your purchasing power is declining faster than the real wage would suggest

Sure. If you spend a lot on imported dates, your purchasing power will currently be declining faster than the median American's. This is a problem. But it's almost by definition not one that can be widespread.

> the "real wage" is inflated relative to the lived experience of those people

Well, yes. There are regional CPIs and income-indexed CPIs and all manners of privately-calculated costs of living. Paying attention to lived experiences or whatever is important, especially in politics. But it's no substitute for broad measures when conducting a national economy.

[2] https://www.bls.gov/opub/btn/volume-9/how-have-healthcare-ex...

> Well, yes. There are regional CPIs and income-indexed CPIs and all manners of privately-calculated costs of living.

Great. So we agree, you are just dismissing the distributional analysis and equating fungible goods with inelastic ones. You can't substitute away from something like region-locked housing supply so those folks face higher effective inflation (BLS R-CPI-I).[1]

[1] https://www.minneapolisfed.org/article/2024/lower-income-hig...

> you are just dismissing the distributional analysis and equating fungible goods with inelastic ones

No, I'm not. You're the one moving goalposts.

The thread started by someone claiming, wrongly, that housing and healthcare aren't included in CPI. (A common myth.) I showed that was wrong. You said it's underweighted. I pushed back. You're now saying it's underweighted for some people, which, like, is how distributions work.

Variance doesn't make a central tendency meaningless. And the truth is for most Americans, real wages are up. Lived experience and all. It's painfully not for a section of Americans in housing markets locked by policy from expansion or in bad health and luck. That's unfortunate and deserves attention. But it doesn't negate the whole.

> You can't substitute away from something like region-locked housing supply so those folks face higher effective inflation

Straw man. Nobody claimed universality.

If we were having a discussion about the Midwest, I'd quote different numbers and reach a different conclusion. That's how scoping works. Americans, as a whole, have experienced real wage growth since 2000. That doesn't mean literally every single American has. And it doesn't mean that people outside America have.

And by "real wages" you mean "Employed full time: Median usual weekly real earnings: Wage and salary workers: 16 years and over". You chose a number that specifically factored out the negatives like dropping participation rate[1] and underemployment (couldn't find the isolated number for underemployment in 30 seconds of googling, so here's one that's tempered by including unemployment too)[2]. It also glosses over the heart of the problem by using median. If 38% of the population suddenly had their wages drop to $0, it wouldn't show up when looking at the median values.

I also don't see why you're citing the nominal federal minimum wage. The nominal value is totally irrelevant to the conversation. $1 is still nominally $1, but according to the link it is also now $0.51 in purchasing power.

[1] - https://fred.stlouisfed.org/series/CIVPART/

[2] - https://fred.stlouisfed.org/series/u6rate

> by "real wages" you mean "Employed full time: Median usual weekly real earnings: Wage and salary workers: 16 years and over"

Yes.

> You chose a number that specifically factored out the negatives like dropping participation rate[1] and underemployment

I chose a consistent dataset. One of many. (Dropping participation rate is affected by stuff like demographics in addition to underemployment.)

If you have a credible source that shows declining real wages since 2000, I'd love to see it.

> don't see why you're citing the nominal federal minimum wage. The nominal value is totally irrelevant to the conversation. $1 is still nominally $1, but according to the link it is also now $0.51 in purchasing power

If $1 is 51¢ today, then $1.40 is 71¢ today. Rising nominal wages is how real wage gains are generated.

>If you have a credible source that shows declining real wages since 2000, I'd love to see it.

My original comment was about growing inequality and my second comment was describing why the metric you cited and median real wages in general don't address that issue. So no, I will not be looking for a better real wages metric, because it is not the appropriate measure to capture inequality. You can find plenty of numbers and charts on that problem here[1].

[1] - https://en.wikipedia.org/wiki/Income_inequality_in_the_Unite...

> So no, I will not be looking for a better real wages metric, because it is not the appropriate measure to capture inequality

Got it, your complaints about real wages were entirely a non sequitur.

This is legitimately one of the strangest responses I have ever gotten on HN. You brought real wages into the conversation. My complaints weren't a non sequitur, they were a direct response to you. Now you're criticizing me for engaging with what you said? I guess I should have refused to engage from the start, but you know the proverb about the second best time to plant a tree, so I'm done with this conversation.

I guess I didn't see the inequality focus in your first comment. At least, not beyond the qualitative assets as cash and sundries vs assets as financial assets. I pointed out that real wages are up in response to your claim about people being paid dollars. (The dollars we're paid are worth more. They're individually less. But the total take home is more. Hence real wage.) I think it's a non sequitur to then turn around and say well I was actually arguing about inequality from the start.

> It's a problem that our society is designed for and judged in relation to capital.

Cash is also capital.

If you were trying to say it’s a problem that our economic system favors deploying capital into investments instead of hoarding cash, I disagree. An economy where everyone is incentivized to hoarde cash instead of deploying it to investments doesn’t progress because the smartest thing you could do with your money is to not invest it in new businesses or buildings. It doesn’t work.

> Most people are paid in dollars, not shares of the S&P 500.

You’re conflating income and savings.

It wouldn’t matter if you got paid in dollars or in S&P 500 shares of the same dollar value. You can exchange one for the other. In the year 2026 you can do that instantly from your phone with an app and not pay any fees.

The point was not that S&P 500 shares are a superior unit of trade, because they’re not. I’m trying to explain that long term savings needs to be in an investment, not sitting around in actual cash.

>Cash is also capital.

It's funny you say this and also this:

>You’re conflating income and savings.

You're doing the same thing.

The problem I was hitting on is that large portions of our population don't have any investments are therefore are being left further behind by this tradeoff of stocks in favor of cash. You can't just tell people not to leave their cash sitting around when they don't actually have any cash sitting around.

I think the problem here isn’t the preference that we create with the way inflation is chosen as a target but that we try to exert influence at all. It should be possible for many people to lead good lives without investing cash in the stock market. And the stock market should be a good place to raise capital. But when our retirement savings are bundled up in the stock market it creates a perverse incentive to manipulate the market to prevent us from losing our retirement savings.

> $1 put into the S&P 500 with dividends reinvested would be more than $6 today

On April 7 2000 a 30-year Treasury 5.71%. It would be worth $1,063 today and have paid out $1,484.60 in coupons to date. Even if you held those coupons in cash, you'd still have 2.5x'd your money.

Modern currencies split their medium-of-currency and store-of-value functions. The plain dollar is for transacting. Cash and cash equivalents are for transporting value across time.

The author just discovered the meaning of inflation? What matters (for living standards) is that real wages and GDP grew over the same period.

I think you're confusing "created a visualization because I thought it would be interesting" with "just learned about inflation." :)

If each digit right of the cents place was 1/2 as tall as the digit to its left, I could process it more intuitively.

A change of one hundred millionth of a percent is not enough to consider even if I have 10 million dollars.

How is this calculated? It's a rate based on historical purchasing power parity index trends, or it's tied to live market data?

At best, this is a strong warning not to keep your money in the mattress. Saved in any safe investment would beat this inflation and typical wage would also beat this.

The way the figure is presented is usually opposite to how most talk about value of past monies.

What is the calculation? And how can you calculate it 10 decimal points?

There's a little explained if you hit the (?) at the bottom. They are taking the monthly inflation value and calculate it per tick.

Where does the value go?

Reply on news.ycombinator.com