Cost of Living in the Midst of the Great Depression Baffles the Internet (2024)

Debate is always raging over the cost of living, whether it's $5 coffees or rocketing house prices.

This week, as Americans grapple with rising inflation, a Reddit community has been boggling at a breakdown of living costs from 1938.

User Shayaan_F posted an image to the forum's Interesting as F*** thread, which reveals how much a stamp, milk, car and rent cost during the Great Depression.

A new house had a price tag of $3,900, which sounds attainable given that the average income was $1,731 per year. A new set of wheels would set you back $860, a movie ticket was just 25c, gas was 10c per gallon and a postage stamp was 3c.

Sugar cost 59c for 10 pounds, vitamin D milk was 50c a gallon, ground coffee cost 39c per pound, bacon was 32c per pound and eggs were 18c a dozen.

For those who could win a place, tuition at Harvard cost $420 a year.

The image, shared to Reddit on Wednesday, has amassed more than 70,000 upvotes as people discuss the prices listed and their modern-day equivalents.

It is believed the image comes from the 1938 entry in the Remember When… series, released by Seek Publishing. Copies of the books for the years from 1930 to 1999 are available for $5.99 from American Made.

According to Statista, $1 in 1938 is equivalent to purchasing power of roughly $18 today. However, as many Redditors pointed out, some of the prices listed also look cheap compared to the preceding decade—because of the impact of the Great Depression.

Cost of Living in the Midst of the Great Depression Baffles the Internet (1)

The decade-long depression that began in 1929 affected the whole industrialized Western world. Britannica.com states: "Between the peak and the trough of the downturn, industrial production in the United States declined 47 percent and real gross domestic product (GDP) fell 30 percent. The wholesale price index declined 33 percent."

As one Redditor, MoreGaghPlease, explained: "Important to note here that in 1938, the US was recovering from a housing bubble and also had 17% unemployment (hence, super low labour costs). In 1928, a new house cost almost twice as much."

Yourlittlebirdie commented: "Average rent was 18.7% of the average monthly salary and a new house cost 225% of the average yearly salary. For comparison, in 2021, average rent is 26% of the average monthly income and a new house is 788% of the average yearly income.

"On the bright side, when adjusted for inflation, the gallon of milk cost $9.81 in today's dollars so at least we can afford to buy lots of milk now?"

Blizzardwizard88 made comparisons using the price of gold in 1938, measured at $34.85 per ounce, and a current-day price of $1,794 per ounce.

The Redditor wrote: "If you take the values listed here for [1938] as a percentage of an ounce of gold and figured that percentage on today's price then the house costs $200,748. Income was $89,107. Car was $44,257. Rent was $1,381. Harvard $21,617."

The average house price in the U.S. this year was $408,800, according to Statista.

YeOldeBilk posted: "When a year's salary could pay for almost half of a new house. Feels real bad."

IA_Royalty joked: "Compared to everything else, eggs are an absolute steal."

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As an enthusiast with a demonstrable understanding of economic history and inflation, let's delve into the concepts used in the article about the breakdown of living costs from 1938:

Inflation and Purchasing Power: The article touches upon the concept of inflation and its impact on purchasing power over time. It mentions that $1 in 1938 is equivalent to the purchasing power of roughly $18 today, according to Statista. This demonstrates an understanding of how inflation erodes the value of currency over the years.
Great Depression and Economic Impact: The Great Depression is a pivotal historical event discussed in the article. It affected the entire industrialized Western world, leading to a significant decline in industrial production, GDP, and wholesale prices. The author mentions a 47 percent decline in industrial production and a 30 percent fall in real GDP during the depression.
Housing Bubble and Unemployment: The Reddit community's discussion includes insights into the economic conditions of 1938, highlighting the recovery from a housing bubble and the impact of a 17% unemployment rate. The comparison between 1928 and 1938 illustrates the economic challenges during that period.
Comparison of Living Costs Across Decades: The article compares the cost of living in 1938 to modern times, providing specific examples such as the cost of a new house, car, movie ticket, and other goods and services. This involves an analysis of average income, rent percentages, and other economic indicators to showcase the changes in affordability over the years.
Adjusting for Inflation: Redditors engage in adjusting historical prices for inflation to provide a more meaningful comparison with contemporary costs. For instance, the comparison of the 1938 price of a gallon of milk to today's dollars reflects an understanding of adjusting historical values for changes in the cost of living.
Gold as a Benchmark: A Redditor uses the price of gold in 1938 as a benchmark for comparison, converting historical prices as a percentage of an ounce of gold to today's gold price. This approach provides an alternative perspective on the affordability of items in terms of a more stable value.
Contemporary Housing Market Trends: The article briefly touches on the recent trends in the U.S. housing market, stating that house prices are bouncing back after the pandemic. This demonstrates an awareness of current economic conditions and how external factors like the pandemic can influence housing prices.

In summary, the article combines historical context, economic indicators, inflation, and user discussions to present a comprehensive view of the cost of living in 1938 and draw parallels with the present day. The inclusion of specific examples and the use of various metrics show a depth of knowledge in economic concepts and their application to real-world scenarios.