How 1970s Households Fought 12% Inflation — And Came Up $125 Short

In 1974 the Consumer Price Index rose about 11 percent, and by December the twelve-month rate had reached 12.3 percent - the sharpest inflation the United States had seen since 1947.

The median American family earned about $12,840 that year, per the Census Bureau's Current Population Survey - more dollars than 1973, and about 4 percent less in purchasing power. To buy what the 1973 median had bought, a family needed roughly $13,380. It had $12,840.

The difference is about $540 a year: $45 a month, a little over $10 a week. Nobody spent it. It simply left, and it could not come from a raise, because the raise was already inside the $12,840. What follows prices what households did about that gap - not as nostalgia, but as arithmetic.

THE GARDEN AND THE CANNING JAR

Under the U.S. Department of Agriculture's moderate-cost food plan, a family of four with school-age children spent $53.20 a week on food at home in January 1974 and $56.90 by October - under $3,000 for the year. A garden and a summer of canning reached only the produce end of that bill, seasonally, against real costs for jars, lids and a pressure canner. Run honestly it returned between $150 and $250 a year: real money, and clearly not $540.

By 1975 there were more than 20 million home canners, six million of them new gardeners, after President Gerald Ford's Address on the Economy of October 8, 1974 launched the Whip Inflation Now campaign and asked families to plant vegetable gardens.

But the better evidence that this was economics rather than patriotism is the equipment. In June 1975 a Ball Corporation vice president told a House Small Business subcommittee that first-quarter sales in that line went from about $166,000 in 1973 to about $5,750,000 in 1974 - thirty-five times in a year. Ball was one of only three companies making home canning lids, with Kerr and Bernardin. A tinplate shortage cut production, shelves emptied, and Representative Charles Rose of North Carolina sent interns to gather 2,160 lids for constituents. Justice and the Federal Trade Commission investigated price fixing and found none.

S AND H GREEN STAMPS

The practice remembered most fondly returned the least. Sperry and Hutchinson issued ten stamps per dollar spent, and a book held 1,200 stamps across 24 pages - so a filled book represented $120 of groceries. A June 1963 article in Reader's Digest reported the average supermarket paid about $2.45 for the stamps to fill one.

That is about 2 percent - and 2 percent is the grocer's cost, not the household's return, because it went into the shelf price. The household was, in a rough and unmeasurable way, buying its own premiums, with no way to opt out and take the discount instead. By the mid-1970s supermarkets were dropping stamp programs to fund visible price cuts.

THE SMALLER ECONOMIES

Baking instead of buying: with bread at about 39 cents a pound in 1974, a household making four or five loaves a week and saving roughly 20 cents a loaf saved on the order of $50 a year, in exchange for several hours a week, permanently.

Layaway: Sears, Kmart and Montgomery Ward all kept staffed layaway counters, but layaway lowered no price. What it saved was interest. The Federal Reserve put bank-card holding at 16 percent of American families in 1970 and only 38 percent in 1977, with the average card rate in 1974 at 17.2 percent. Paying down a $200 appliance on layaway rather than a card avoided about $20 over a year.

Mending and home sewing: by the National Women's History Museum's reckoning, home sewing peaked in 1958. Across the 1970s the Bureau of Labor Statistics apparel index rose about 54 percent against a Consumer Price Index up about 112, so clothes fell more than a quarter against everything else and sewing a dress was often no longer cheaper than buying one. Mending still paid as avoided cost: keeping six or eight garments alive across a year was plausibly worth something like $60. That is the softest figure here. Nobody measured it.

THE PANTRY

In a year when prices rise about 11 percent, anything durable bought early that would have been bought later returns that 11 percent, with no risk. The shelf did what no ordinary savings account in America could do in 1974: keep up with the Consumer Price Index. A pantry three or four hundred dollars deep quietly earned $30 or $40 - but it required spare cash in a year when almost nobody had it, which is why the households best able to protect themselves from inflation were the ones who needed protection least.

WHAT IT ADDED UP TO

No single documented family did all six. For a household that ran every one of them competently for a full year: canning and the garden, call it $200; baking, $50; stamps, $50 in merchandise and arguably closer to nothing; mending, perhaps $60; layaway, $20 in avoided interest; the pantry, $35.

Six numbers of very different quality, so the total deserves to be a range rather than a figure - somewhere between $300 and $425, against a hole of about $540. At the very best, a household came within about $125 of standing still. Everyone else fell further behind, and 1975 brought more inflation on top of it.

So the practices worked, and the year still won. Both are true, and the nostalgia only ever tells you the first one.

THE LINE THAT NEVER APPEARS

Every dollar in that stack was produced by unpaid labor, most of it done by women, and none of it was counted anywhere. It was not income. It was not in the Gross National Product. It accrued no Social Security credits, and when Congress looked at fixing that for homemakers at the end of the decade, nothing was enacted. The national accounts will impute a value for the rent a homeowner does not pay himself. They will not impute a value for a homemaker's labor.

The practices faded through the 1980s not because anyone got weaker, but because inflation came down and ready-made goods kept getting cheaper in real terms, so the sums stopped adding up. Layaway came back in 2008, when it was needed again.

The household ledger is where a shortfall gets absorbed. It has never been where the shortfall gets created.

Sources: U.S. Census Bureau, Current Population Reports P-60; Bureau of Labor Statistics, Consumer Price Index and CPI Detailed Report (December 1974); USDA Economic Research Service and Agricultural Research Service; U.S. House of Representatives History, Art and Archives; House Select Committee on Small Business, Shortage of Home Canning Equipment (1975); Federal Reserve Bulletin and statistical release G.10; Reader's Digest (June 1963); Forbes (January 1973); National Women's History Museum; Bureau of Economic Analysis; Social Security Bulletin (1979).

When Money Broke (@whenmoneybroke) decodes how ordinary households survived economic crises through their real budgets. Website: https://whenmoneybroke.com/ Contact: contact@whenmoneybroke.com