Cost of Living in the US Over 20 Years?

February 06th, 2024

Cost of Living in the US Over 20 Years?

What is the Cost of Living in the US over 20 years?

The cost of living in the United States has changed significantly over the past 20 years. Keep reading to learn more about the changes in the cost of living across this time period. 

The price of everything from a simple gallon of milk to a new home climbs up every year. After adjusting for inflation, today's dollar bill buys a lot less than it did 20 years ago. The Consumer Price Index for All Urban Consumers increased by 3.4% over the last year. 

The average cost for everything in America has increased faster than it did in the 80s. The most expensive expense that has increased the most over time has been a home. Americans have complained about the cost of living for years, but it has changed over time due to different locations

American incomes have generally kept pace with the cost of living in recent decades; however, the most significant share of wage gains has gone to the highest-paid workers, which has become an issue for many. Based on the CPI, it has changed many Americans' lives, how affordable it is, and the changes throughout the years. 

Knowing the cost of living is essential when you are searching for where you live. There are many aspects that go into the cost of living for specific locations such as the cost of living, food, healthcare, transportation, and many other expenses. If you are searching to move somewhere new, make sure you know the cost of living of the place to make sure it fits your needs. 

Here is the cost of living in the US over 20 years. 

Overall Cost of Living

The average cost of living in the United States is estimated to be between $2,500 and $3,500 per month, depending on your location and other everyday expenses. The cost of living is relatively high, with expenses like housing, education, and healthcare, which often rank the highest in the world. 

The average cost of living in the United States has risen over the last 20 years and is only predicted to continue to grow. From housing to food to transportation, these costs are something every American has to pay and have a drastic impact on how affordable it is. Be aware, though, that every area in the United States varies, so knowing the specific location is important when you are moving somewhere

The cost of living in the United States is, on average, 15% higher than other countries around the world. That said, this country is very expensive compared to other parts of the world. The reasons why our prices have increased are due to many reasons. With the imbalance of supply and demand, higher costs are going to stay in the United States.

NYC Downtown Business Buildings

Housing

Housing expenses are one of the most significant components of calculating the cost of living. Housing costs in the United States do vary depending on the location, size, and type of high. The cost of housing may be higher in major metro areas like New York City, Los Angeles, and San Francisco. On the other hand, smaller towns may have more affordable housing options. 

Buying a home is something many people want to do in their life. As of the last quarter of 2023, the median home sales price for a home in the United States is $431,000. This number is up 4% from the beginning of the last year. Home prices have risen in the United States by 48% in the previous ten years and will only continue to grow. 

Despite areas around the country, prices for homes are not predicted to fall anytime soon and will continue to have a linear increase in prices in the upcoming years, just like they did over the last 20 years. Due to inflation, prices are rapidly changing the cost of living, so just be aware, especially if you are looking to buy a home. 

Average American home front porch with US flag

Tuition

College costs have been on an upward trend for the last two decades. College tuition inflation averaged 12% annually from 20210 to now. Since the 80s, the prices have increased by 52%. There is no single reason why college tuition keeps rising, but the economy has a significant impact on this.  

Back in 1980, it cost about $1,856 to attend a public school in the United States and $10,227 to attend a private school after adjusting for inflation. Since then, these numbers have skyrocketed. According to the Bureau of Labor Statistics, the highest year-over-year change in college tuition and fees was recorded in June 1982 at 14%. 

The United States colleges have hiked prices over the years, and the prices are on an upward trend. The decrease in state funding, increase in demand, and increase in financial aid are some of the main reasons why the cost of providing education has increased. Institutional expenditures, student services, maintenance, and other things have increased these prices drastically. 

Purchasing Power

Household purchasing power has increased over the past couple of decades. The dollar had an average inflation rate of 2.44% per year between 2000 and 2022, producing a cumulative price increase of 70%. In other terms, this means that prices are 1.7 times higher than average prices were back in 2000, according to the Bureau of Labor Statistics consumption price index. 

The purchasing power of the US dollar has fallen sharply over the last century due to rising inflation and money supply. 

Below is a chart showing the inflation from 2000 to 2022 to see some differences over time.

Cumulative Price Change 69.95%
Average Inflation Rate 2.44%
Price Difference $3.76
CPI in 2000 172.200
CPI in 2022 292.656
Inflation in 2000 3.36%
Inflation in 2022 8.00%
$5.38 in 2000 $9.15 in 2022

Inflation

Inflation rising and decreasing over time chart

According to the US Inflation Calculator, the annual inflation rate for the United States was 3.5% for the year. The US is experiencing higher rates of inflation than usual. Given the extremely low inflation over the past ten years, the current inflation has greatly impacted consumers. Some have had to cut back on spending, and especially with the higher prices, the United States has not been as affordable as it used to be. 

The average annual inflation rate fluctuates over time, and the Federal Reserve's goal is to keep inflation rates between 2-3% annually. It is hard to predict how long inflation will last. The spike of prices such as gas has trended downward, so hopefully, over time, other everyday expenses will soon lower. 

Below is a chart showing the impaction from 2000 to 2022 based on various categories of cost of living in the United States. 

Category Average Inflation Total Inflation $5.38 in 2000 to 2022
Food 2.71% 80.16% 9.69
Housing 2.64% 77.41% 9.54
Transportation 2.54% 73.70% 9.34
Education 1.55% 40.28% 7.55
Other Goods/Services 2.88% 86.81% 10.05

Impact on Incomes

The cost of living refers to the average income to predict how much one can spend on essential expenses while maintaining a reasonable lifestyle. Salary and wages play a vital role in whether the cost of living in an area is affordable. However, every location varies and might not fit everyone's needs. 

Looking at all 50 states, these are the statistics we have gotten about the incomes. 

  • Hawaii has taken the top spot for the most expensive cost of living. The total average spending for the year here is about $55,491. 
  • Mississippi has the lowest cost of living with a spending of about $32,336 per year. 
  • The West and Northeast regions include the most expensive states to live in, while the South includes states will the bottom ten rankings for the cost of living 

Cost of Living Impact on Income and Residents

Average Salary by State

The amount of salary you earn and in what state will have a huge impact on how much the cost of living is for that place. Keep in mind that no matter where you live and work, inflation erodes purchasing power. With the spiking costs, rising wages, and inflation, be aware that what you used to spend 20 years ago is very different than what it is now. 

Knowing what the state's average income is can have a huge impact on whether you can move there and live affordably. Below are some numbers we have found about the average salary for states in the United States. 

  • The average salary in the United States is about $61,000, according to the Bureau of Labor Statistics data. 
  • Massachusetts led the nation with the highest annual salary of about $76,600
  • Mississippi was at the bottom of the list with a lower average salary of about $45,180

However, keep in mind that every state has its own averages as well as average costs. Make sure you know the overall cost of living in the place to make sure you can live there affordable and comfortably for your specific lifestyle. Also, be aware that these numbers are just averages and can change over time. 

Methodology

We used information and data from different sources as well as our own data to determine the average and overall cost of living in the United States and compare it to the last 20 years.  There were various data to use, so we put them together to predict the average numbers. 

Above are a few sources that we used to gather most of our information about the overall cost of living in the United States and compare it to the last 20 years. 

FAQS

Is it more expensive to live now than 20 years ago?

The price of everything, no matter how big or small, keeps climbing each year. Since 1970, we have seen the CPI increase over 500%. Even after adjusting for inflation, today's dollar buys a lot less than what it did 20 years ago. 

How has the cost of living changed over the years?

The average cost of living in homes for Americans has increased further than other costs and wages since the 80s. The most expensive expense that has risen faster than others is the home prices as well as incomes. 

Why is the cost of living so high in America?

According to the US Bureau of Labor Statistics, labor costs are high, and the food production costs in the United States are high and predicted to continue to rise over the next couple of years. 

Capitol of the US Building and area around it

Cost of Living in the US Over 20 Years - The Bottom Line

Everyone always says how much cheaper everything was "back in the day," but if you look deeper into the costs for things, you will see how drastically prices have changed and risen over the last 20 years. There are many reasons for the rise in prices, so it is important to be aware that, yes, prices will change over time, but they will never be like they were 20 years ago. 

Over the last decade, Americans have experienced a rise in costs for many things, and it has become difficult to have economic security. While prices fall and rise drastically over time, main costs like housing and healthcare have slowly increased over the past years. 

Knowing the cost of living is essential when you are searching for where you live. There are many aspects that go into the cost of living for specific locations such as the cost of living, food, healthcare, transportation, and many other expenses. If you are searching to move somewhere new, make sure you know the cost of living of the place to make sure it fits your needs. 

Before you buy your next home or make the big step to move, feel free to contact one of our helpful real estate specialists, as they are eager to help you find the perfect home.

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Ryan Fitzgerald

Ryan Fitzgerald

Hi there! My name is Ryan Fitzgerald, and I am a REALTOR®. My goal is to help you learn more about real estate through our Real Estate Blog! Hopefully, you enjoyed the above blog post and it found a way to provide help or value to you. When you're ready to buy or sell a home of your own let us know here. Please feel free to join the conversation by dropping us a comment below.

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