OPINION | DANA KELLEY: Math ain’t mathin’

There's dollar-amount statistics, and then there's purchasing power. Finally, there's true-value comparisons.

Take gasoline, for example. Right now, the average price per gallon in the U.S. is nearly $4. The last time we saw prices that high was in the middle of the Obama administration 10 years ago. It's almost twice as high as a mere three years ago, and four times what Americans paid 30 years ago.

But a dollar's purchasing power today is different than it was then. Specifically, according to the Bureau of Labor Statistics (BLS), $1 today is the equivalent of 85 cents in 2020, 76 cents in 2013 and 47 cents in 1993.

So if a gallon of gas cost $1.06 in 1993, that's the same as about $2.24 today. The true cost of filling up your tank is 74 percent higher this September than it was in 1993.

Gas prices can fluctuate erratically. Compared to a decade ago, using inflation-adjusted dollars, we're actually paying about 60 cents less per gallon now. At its spike, Obama-era gasoline cost the equivalent of $4.50 today.

Adjusting for inflation in the last three years, the gas price from September 2020 is approximately $2.56 today--a 52 percent real-value increase in only 36 months. If you graphed those benchmark points, it would look like an inverted V: In today's dollars we paid $2.24 for gas in 1993, $4.50 in 2013 and $2.56 in 2020.

Everybody buys gas. A pricing chart like that can wreck a household budget. Especially when average and median income numbers over time haven't kept up.

The average annual pay nationwide in 1993 was $26,362, according to the BLS. Adjusted for inflation, that'd be the same as $55,781 today. Last month, Forbes reported that the average salary nationwide is currently $59,428.

So the average Joe or Jane at the gas pump is really only earning about 6 percent more than 30 years ago, but is paying 74 percent more for gas.

That math ain't mathin', as one Facebooker phrased inflationary discrepancies. And no matter how you slice, dice or crunch the numbers, the cost of everything related to gasoline (driving, commuting, shipping, travel) has risen much more than income over time.

While gas is a necessary expense, it's small potatoes compared to the average American's single largest investment. Home ownership is a heartwarming part of the proverbial American dream. It's also the most expensive part. That hasn't changed through the years.

In at-the-time dollars, the median home price in America in 1993 was $103,090, which was roughly four times the average annual pay ($26,362). If housing costs kept pace with average income growth over the last 30 years, the median house price today should be about $232,000.

Instead, it's nearly $400,000. In some reports, it's more.

A home now costs, on average, nearly seven times the average annual pay. And since most houses are mortgaged, the total cost including interest is a much larger multiple.

National numbers are sometimes scarier than what we experience locally, of course. Arkansas income in 1993 was lower than the national average at $20,337, which after inflation would be $43,032 today. But our actual average annual pay in 2023 is higher; the same Forbes report puts it at $48,570.

That 12.9 percent increase is double the national growth rate. Not surprising, since we were poorer to begin with. But still a plus.

Another plus: National averages are made up of states above and below the average, and Arkansas home costs are well below it. Zillow calculates our average house price to be $199,284, or about four times today's Arkansas average salary.

Back in 1993, Arkansas housing was an even better bargain, when the average house only cost about two-and-a-half times the average salary.

"The economy" is a sweeping, expansive concept, affected by a lot of complex situations, circumstances and developments. Unsustainability is a simple principle, however, and national housing and fuel cost trends are breaching it.

Common sense suggests that a federal government administration that takes in $5 trillion but spends $7 trillion would be the last place to look for help in righting economic imbalances of any sort. Alas, common sense often goes AWOL during election seasons.

By normal accounting standards, the federal government is broke. And, increasingly, more average Americans will be facing the same thing if they try to buy their dream home. Or suffer a costly illness (health-care cost increases are crazy, too).

And yet, as next year's political campaigns materialize, the Joe Biden-Democrat mantra will be to boost government spending even more. Even some Republicans in tight races will jump on the "more government aid" bandwagon.

We need a candidate, and maybe a whole new party, that promises to focus government's economic efforts on returning personal affordability--and free-enterprise prosperity--to average Americans' lives.

But until we have voters who can understand there's no such thing as a free lunch, promises of more "benefits" will probably continue to prove popular.

All the way to privation, insolvency and financial ruin.

Dana D. Kelley is a freelance writer from Jonesboro.