On this show, I’ve discussed inflation repeatedly, more so since 2020 when I saw the Federal Reserve pumping trillions of dollars into our economy and the federal government spending a record six and a half trillion dollars.

After the Federal Reserve’s last meeting, Chairman Jerome Powell signaled the central bank will remain hawkish on combating inflation and is open to future rate hikes despite holding the Fed funds rate steady at 5.25-5.5%. That’s not surprising considering the most recent disappointing inflation data. Consumer prices jumped to 3.7% for the 12-month period ending in August- the largest monthly increase since January thanks to soaring gas prices. It appears the Fed may have lost its battle against inflation.

Consequently, older Americans on a fixed income in retirement will be hardest hit by surging prices. I say this for two reasons. First, is to encourage reverse mortgage professionals that despite challenging market conditions and rising rates more than ever before older homeowners will need additional cash flow to absorb the increased cost of living. Second, to sound the alarm that our nation’s present economic trajectory is unsustainable In fact, over the last ten years federal spending has increased 70 percent, or more than three times the rate of inflation and population growth.

Today, every American consumer is feeling the pain in their pocketbooks as a result of our government’s unchecked spending as the purchasing power of the U.S. dollar continues to decline making goods and services more expensive. But just how much more expensive?

The sudden surge in consumer costs for everything from a gallon of milk to a gallon of gas is eating away at American savings and most tragically retirement security of older Americans.

Today, I’m going to show you just how much the cost of goods and services has soared in the last four years and how the cost of some of those items has often exceeded the inflation rate.

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Okay- let’s begin first with where consumer goods and services are exceeding the pace of inflation due to market forces outside the U.S. dollar. To do this we go to in2013dollars.com. This site shows just how much the purchasing power of the dollar has declined. You input the dollar amount and select the date range for comparison. For example, the site explains “$100 in 1930 is equivalent in purchasing power to about $1,838.48 today, an increase of $1,738.48 over 93 years. The dollar had an average inflation rate of 3.18% per year between 1930 and today, producing a cumulative price increase of 1,738.48%. This means that today’s prices are 18.38 times as high as average prices since 1930, according to the Bureau of Labor Statistics consumer price index. Today’s dollar only buys 5.439% of what it could buy back then.” Simply said, it would take $1,830 today to purchase what $100 was purchased in 1930.

Using this inflation methodology let’s see where the price of goods or services exceeds the rate of inflation. Let’s begin with the average cost of a gallon of milk. In 2019, before the pandemic, the average price was $3.04 which if adjusted for inflation should bring us to an average cost of $3.65 a gallon. However, today the average price of milk exceeds inflation coming in at $4.33 a gallon- or 16% more than the inflation rate during that period.

And speaking of gallons let’s look at the price of gasoline which strangely is often nearly the same price- milk. We’ll look to California as it’s the state generating the majority of HECM endorsements. In January 2019 the average price for a gallon of milk was $3.23. Today it’s $5.52/gallon, or 42% more. Again, well above the inflation-adjusted average.

Transportation costs have exploded as well. The average price of a new car in 2019 was $37,000. By 2013 the average price had jumped to $48,000. Thanks to supply chain and manufacturing issues new vehicle prices grew as inventories remained constrained throughout 2021-2022 and exceeded the standard rate of inflation from 2019 to 2023. But don’t forget, that the interest rates for both new and used vehicles have nearly doubled during the same time sending the average car payment to record highs and further exasperating affordability

However, if there’s one silver lining for retirees and especially older homeowners it’s the historic rise of home prices. The Federal Reserve Bank of St Louis reports the median sales price of homes in the U.S. in the first quarter of 2019 was $313,000. Today, even after a small decline- the median price is $416,000. But remember, all real estate is local and in dozens of metros across the country prices are still up 25-40% or more above pre-pandemic levels. Metros such as Nashville, Tennessee where the median home price is still 47% more than it was in June 2019. Or Miami Fort Lauderdale- West Palm Beach where median prices are a staggering 61% more than four years ago.

In the final analysis, housing wealth is more crucial to the financial survival of older homeowners today than it was just four short years ago. What are your thoughts on the current pace of inflation and its impact on older Americans? Be part of the conversation and leave your comment below.

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