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The story of America’s cost of living is, at its core, a reflection of how society has evolved-economically, culturally, and technologically-over the past century. To truly appreciate the magnitude of this transformation, it’s worth stepping back into the 1920s, an era marked by exuberance and innovation, and comparing it to the realities of 2025. The numbers, when laid side by side, offer a striking narrative not just about prices, but about the changing nature of American life.

In 1925, the average American earned $5,425 a year-a sum that, when adjusted for inflation, wields roughly the same purchasing power as $99,000 today. Taxes were almost an afterthought, with the average rate at just 3.35%, translating to $176 a year (about $3,210 in today’s dollars). This left most workers with a substantial share of their earnings to spend or save. Fast forward to the present, and the landscape is far less forgiving: the average tax rate has swelled to 14.9%, meaning someone earning around $80,610 faces a tax bill of $12,010, leaving a net income of $68,6001. The dollar stretches less, and the cost of daily life is an ever-present concern.

Housing, the cornerstone of the American dream, was once well within reach for the average family. In the 1920s, a new house cost about $5,500, or roughly half the inflation-adjusted price of today’s median home. By 1938, the price had dropped to $3,900, just over twice the average annual income of the time. Compare this to the present, where the median home price now exceeds $400,000-five times the average annual wage. The path to homeownership, once a rite of passage, now feels more like an uphill climb, with stagnant wages and soaring real estate values putting the dream out of reach for many.

Groceries and household staples tell a similar story of shifting burdens. In the 1920s and 1930s, a dozen eggs cost 18 cents, a gallon of milk was 50 cents, and a pound of bacon could be had for 32 cents. Adjusted for inflation, some staples were actually pricier then than now: that 50-cent gallon of milk in 1925 would cost about $9 today, compared to an average of $4.98 in 20251. Yet, the real difference was in the share of income spent on food. In the Great Depression, groceries could devour a quarter or more of a household’s budget. Today, thanks to advances in agriculture, logistics, and retail, Americans spend a much smaller percentage of their income on food-even as sticker shock at the supermarket remains a common refrain.

Gasoline, the lifeblood of American mobility, has seen its own evolution. In the 1920s, gas cost about 21 cents a gallon (roughly $3.59 today), and it dipped to 17 cents by the 1930s ($3.27 in today’s dollars). Modern prices, hovering around $3.50 a gallon, are remarkably similar in real terms. What has changed is the centrality of the automobile to daily life and the sheer number of miles Americans now travel.

But perhaps the most telling comparison lies in the broader category of general living expenses. In the 1920s, these costs consumed about 30% of income, rising to 40% during the Depression as wages fell and unemployment soared. Today, despite higher nominal incomes, living expenses can eat up 50% or more of a household’s earnings, driven by housing, healthcare, education, and a consumer culture that prizes convenience and immediacy over thrift.

Cultural attitudes have shifted as well. The 1920s and 1930s were shaped by values of frugality and planning, born of necessity during hard times. Over the decades, the pendulum swung toward consumerism, with advertising and easy credit encouraging Americans to buy now and pay later. Yet, as financial pressures mount in the 2020s, there is a renewed interest in minimalism and financial independence, especially among younger generations who question the sustainability of the status quo.

To bring these contrasts into sharper focus, consider the following table, which compares the costs of key living expenses across the decades:

*Adjusted for inflation to 2025 dollars.

The numbers are more than just figures-they are a window into how American life has changed. The Roaring Twenties offered a world where the average salary could buy a home, fill a pantry, and leave room for leisure. The Great Depression tested the nation’s resilience, forcing families to make do with less. Today, the challenges are different but no less daunting: incomes that lag behind the cost of living, a housing market out of reach, and a culture wrestling with its own expectations.

Yet, if history teaches anything, it’s that Americans are nothing if not adaptable. As the cost of living continues to evolve, so too will the ways in which people navigate, endure, and ultimately thrive in the face of economic change. The past century has been a testament to that enduring spirit-a reminder that while numbers matter, it’s the choices and values behind them that truly shape the American experience.