Inflation and the Baby Boomer Mindset
Baby Boomers have experienced high inflation in the past
The latest measure of inflation shows the Consumer Price Index increasing 7.5% year over year. As the following infographic indicates, we haven’t had inflation this high since the 1970s, the decade when most Baby Boomers reached adulthood.
The 1970s were a difficult decade for the United States. In addition to extremely high inflation, we experienced the debacle of the end of the Vietnam War, OPEC cutting off oil supplies leading to long lines at gas stations, a severe economic recession, and the Iran hostage crisis. It’s a bit hard to read on the chart above, but while the grey line traces the inflation rate, the grey bars show wage growth or restriction. In most years during the 1970s and 1980s, average wages fell rather than grew.
Baby Boomers, of course, were not the only generation to face an economic crisis just as they were coming of age — think of Millennials and the Great Recession — but no doubt the reversals of the 1970s helped shape Baby Boomers attitudes and sense of security. In my last post, I discussed the Baby Boomers’ turning away from the activism of opposing the Vietnam War and fighting for civil rights to focus instead on their own personal and financial development (though as one reader pointed out, not all Baby Boomers were opposed to the war and most of those fighting for civil rights were older than Baby Boomers).
I’d argue that the end of the post-World War II economic boom contributed to this drawing inward. No longer could younger Americans (or at least white Americans) feel confident and relaxed in their ability to find work that paid enough to support themselves and a family. For the three decades from the end of World War II until the 1970s, most Americans’ financial situation kept improving. Then this forward progress stopped and for many it reversed, leading to the growing inequality which we have discussed before.
Growing financial insecurity arguably led to a turning inward and anger towards those seen as threats, whether coastal elites, women, minorities or immigrants that is playing out in our politics today. Will our back to the future growth in inflation exacerbate these trends? We may find out in the elections later this year an in 2024.