Al Charlson is a North Central Iowa farm kid, lifelong Iowan, and retired bank trust officer. The Waverly newspaper group previously published a version of this commentary.
Based on the standard measures I learned to watch over 30 years as a trust officer, the U.S. economy is in good condition. We have completed seven straight quarters of real GDP growth. Corporate profits after taxes in the first quarter or 2024 were 6.4 percent higher than a year earlier. Monthly job growth remains strong, and unemployment has been 4 percent or lower every month since January 2022.
In this economic environment, investment markets are favorable. Stock market indices are at or near record levels. Long-term bond yields have returned to rational levels, and certificate of deposit interest rates are the highest in years. My wife’s and my personal finances are also in good condition.
As I listen to people who see the current economy differently, I try to understand their point of view. Since they are typically younger it can be helpful to look back at our younger selves.
Fifty years ago, I had completed my active duty Army service and formal college education, and was beginning my first full-time civilian job. Moving to a new community was toughest on our three year-old son. We had spent the previous year and a half in University Village, north of the Iowa State campus. where we were surrounded by families with kids his age. We moved during a very cold, snowy January which kept him indoors. We still remember him peering out the living room window and asking, “Where are all my friends?”
Along with the typical challenges for young families, we did have to contend with inflation. From June 1973 through May 1982, the average annual increase in the Consumer Price Index (CPI) was 9.0 percent, peaking in 1980 at 14.4 percent.
Fortunately, our recent experience with inflation has not been that extreme. From June 2020 through May 2024, the average annual CPI increase has been 5.2 percent, peaking at 8.6 percent in 2022, and declining to 3.3 percent for the 12 months ending in May 2024.
However, even though the current inflation outbreak has not been as prolonged or severe as we experienced in the 1970s, today’s cost of living does make it tough for younger Iowa families. Three key elements stand out.
We were able to buy our first house (a three-year-old, 864 square foot ranch with a one-car garage) for two and a half times my starting salary. We had a 9 percent mortgage, but it was doable.
Since 2010 the CPI housing cost index has increased 54 percent, compared to a 44 percent increase in the total CPI index. The housing market is still distorted by the response to the 2008 crash of the mortgage-backed securities market. Young families hoping to buy their first homes are caught in the backlash.
Every employer I worked for, including the U.S. Army, provided family health insurance. Since we retired, Medicare has largely shielded us from rising health care costs. However, I serve on the governing board of a nonprofit organization which provides health insurance for eligible employees. The cost of that coverage is astonishing. According to a May 2024 report by the Peterson Center on Healthcare and KFF, the cost of medical care increased 119 percent from January 2000 through March 2024, compared to an 85 percent increase in the total CPI during the same period.
My wife and I were able to decide that she would postpone her professional career while our sons were young. We could live comfortably on one income. That’s not a viable choice for many young families today. Good quality, affordable child care is essential.
Iowa’s current elected leadership has been very nice to the financially fortunate, including higher-income retirees. My wife’s and my income puts us in the top 25 percent to 30 percent of Iowa households, but we pay no Iowa income tax. We financially well-off older Iowans should be calling for our elected leaders to be more balanced in their tax and budget decisions.
Our state should emphasize the concerns of our younger neighbors, including affordable housing, health care, and child care, and as well as our public education system and the environment. That would not only be more fair, it would be in our own self-interest. We need our communities to be attractive to the younger Iowans we rely on for everything from health care to home and car maintenance.
Top photo of Al Charlson provided by the author and published with permission.