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7 things getting cheaper, 7 things that aren’t April 15, 2009

Posted by emuleman in Thoughts.
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Here is a interesting article I read today from MSN today, and thought it was worth posting.  It is true that during this recession their are plenty of bargains available if you look, but also many things are also getting more expensive.  It just doesn’t make sense, you would think everything would be cheaper during hard times. 

Cheaper: Homes

When we think of prices declining, that’s usually a good thing. However, the chief investments of millions of Americans took dives in 2008 and still haven’t hit bottom.

Home prices have tumbled 27% since the housing market peaked in 2006, and some analysts say they’ll fall 42% before they start to rebound. The S&P/Case-Shiller index shows prices were down 18.5% in December from a year earlier.

This house on an acre near Seattle was listed for $925,000 in September; by February, it was listed as a short sale for $399,000 before being taken off the market. That was a drop of 57%, down to its 2005 sale price.

There are two positives here, depending on your situation: First, interest rates are at record lows; second, if you’re liquid, it’s a good time to buy, except in a handful of states (North Dakota and Texas, to name a couple) where home prices have remained steady or increased slightly. (Estimate your home’s value at MSN Real Estate.)

More expensive: Food

It should come as no surprise that five of the seven categories getting more expensive are basic necessities — or all seven of them are, if you think college is necessary and you can’t go without beer.

Sticker shock at the supermarket hit many Americans in 2008, with grocery prices increasing by an average of 5.7%. The prices for cereals and baking products jumped 11.3% over the year, according to Consumer Price Index data compiled by the U.S. Bureau of Labor Statistics. In January 1999, the average cost of a loaf of bread was 87 cents; in January 2009, it was $1.38, up nearly 57%. Overall inflation for the decade was 31%.

It’s not all bad news, however. Food costs are evening out; the food-at-home index fell slightly from December to January.

Cheaper: Electronics

You’d have to have been living in a cave not to have noticed the drops in prices on electronics over the past few years. The Consumer Price Index puts it in perspective: Computers cost 87% less in January than they did a decade ago, when you take into account upgrades in quality (such as processing power and memory). TVs were 79% cheaper.

A Sony progressive-scan DVD/VCR player that cost $106.99 in 2006 was recently selling for $43.99 at Best Buy, a drop of nearly 59% in three years.

Average prices for computers were 12% less in January than they were a year ago; TV prices were down 21%. And the price index’s numbers don’t even reflect improvements and technological advances — no small potatoes.

More expensive: Medical care

There’s no sticker shock when it comes to medical care — just the usual outrage. Since 1985, medical costs have increased 251%, more than double the overall inflation rate.

In just one year, the average cost of having a gallbladder removed increased from $34,137 (2005) to $36,459 (2006).

If you look back 10 years, you’ll find the average cost of an inpatient hospital stay increased 84.6% from 1999 to 2009, and costs for outpatient services doubled.

Cheaper: Clothing

Those slashed clothing prices you’ve been seeing in department stores are for real. Prices for women’s outerwear have dropped 23% over the past decade and 12% over the past five years, according to the Consumer Price Index.

The decline is due partly to low-cost imports, but the more recent drops are likely tied to recessionary belt-tightening. Apparel prices in January were down 5% from a year earlier. A pair of Levi’s 501 Original jeans cost about $50 (about $66 in today’s dollars) in 1998; they were $46 in early 2009.

More expensive: College tuition

President Barack Obama recently told the nation that getting a college education (or other training beyond high school) is the patriotic thing to do. Others, however, are increasingly questioning a college degree’s worth.

It is a little shocking that universities and colleges have been jacking up their tuition rates four times faster than the overall inflation rate and faster than increases in health care. Tuition at Harvard University was $26,002 in 2006; it jumped to $33,696 for the 2009-10 academic year, a 30% increase.

Obama promises help in the form of Pell Grants and financial support to students in exchange for community service. (See “How to find free money for college.”) That could level the playing field a little, but we’re still talking big bucks.

Cheaper: Automobiles

If you’re looking for a used vehicle, do we have a deal for you: The Consumer Price Index shows that used car and truck prices have dropped about 17% over the past decade and were down 9% in January from a year earlier.

Not so fast on the new cars: The price of new vehicles dropped about 2.6% last year. But auto analysts in a recent JPMorgan survey noted that the average price of a new vehicle fell 2.3% in the second quarter of 2008, the largest single drop in the history of the 41-year survey.

The base price for a Toyota Tacoma double-cab truck was $24,750 in 2008; this year it dropped to $22,045, almost 11% less.

We’ve all seen what’s been happening with the auto companies, so 2009 is likely to be a bumpy ride for them while consumers have the wind at their backs.

More expensive: Gasoline

 

OK, you think gas is cheap now, but that’s just because we all rode the roller coaster of last summer’s high prices and then watched prices drop to 2003 levels. Higher prices are coming back, and when they do, so will the higher costs of all goods and services associated with them. That includes just about everything.

Consumer Price Index data show the price of gasoline was down 40% in January from the previous year, but it was up nearly 6% from December to January. As this week began, the national average was just above $2 a gallon.

So fasten your seat belts: The gas surplus is being depleted, and even though the price of oil is hovering around $50 a barrel, you’re going to see some numbers flipping at your local station.

Cheaper: Airfares

 

It’s called supply and demand, and the phenomenon doesn’t bode well for airlines these days. The airline industry is in a tailspin, due first to high fuel prices and now to sagging ticket sales.

Ticket prices in January were down less than a percentage point from a year earlier, according to the Consumer Price Index, but some analysts are predicting bargains galore on travel this year, including possible bargains for flights abroad.

Travelocity reported in January that average domestic airfares for spring were down $24 year over year, to $369, with fares to Chicago down 17% and to Los Angeles, Salt Lake City and San Antonio down 16%.

“Certain destinations have seen dips in price from time to time, but this is the first time in recent memory we’re seeing declines across the board,” said Genevieve Shaw Brown, Travelocity’s senior editor.

More expensive: Garbage collection

Having someone remove your trash is not a necessity for everyone. But it sure is nice. The problem is, the cost has increased by 43% in the past decade, 24% in the past five years — and that’s with all the recycling programs and other efforts at waste reduction.

In Missoula, Mont., for example, the cost of throwing out the trash has increased 31% (the same as the overall inflation rate) in 10 years, from $45.45 in 1999 to $59.54 in 2009.

With consumer belt-tightening and a drop in the construction sector, Americans produced 10% to 15% less waste in the past two years, according to analyst Neal Bolton of MSW Management, a newsletter for municipal solid-waste professionals. But he predicted 10% to 18% increases in tipping fees at landfills in the next few years, which quickly translate into higher garbage bills.

Cheaper: Alternative energy

With all the talk of ditching oil and going for renewable energy, it’s heartening to know that options for alternative energy are increasing. The cost of a solar photovoltaic residential system has dropped about 3.5% per year from 1998 to 2007, and declines in 2009 could be more dramatic.

First Solar, a thin-film solar cell manufacturer, broke below the $1-per-watt barrier in late 2008, creating electricity for 98 cents per watt. This is big news because it moves solar close to “grid parity” with other generators, meaning it could generate the buzz at the same rate as natural gas or coal.

And there’s more good news for consumers: An oversupply of thin-film solar cells and silicon has led to a drop in prices. That, along with advancements in the technology and a 30% federal rebate, could drop the price of an installed 2-kilowatt system from around $21,000 in 1998 to $9,240 in 2009. State rebates could further sweeten the deal.

 More expensive: Beer

Consumer Price Index data show beer, ales and other malt liquors cost 30% more in January than they did a decade ago, basically matching the overall inflation rate, and 5% more than a year earlier.

Recent news stories have reported a decrease in consumption of the suds at home, no doubt due to belt-tightening. Price-index data show a 3% decrease in sales from December to January; that’s noteworthy in an otherwise consistent rise of 30% over the past decade.

Costs are up about 3 cents per 16 ounces from a year ago and 30 cents higher than in 1999. This computes to a $1.35 increase in cost for a six-pack in 10 years.

Cheaper: Toys

The cost of having fun has decreased about 45% over the past decade, if you want to take the toys index of the Bureau of Labor Statistics as an indicator.

Hasbro’s Dream Life plug-in TV game, for example, costs $9.89 today, a cool 5 bucks less than it did in 2007.

More expensive: Prescription drugs

U.S. expenditures on prescription drugs were $216.7 billion in 2006, more than five times the $40.3 billion spent in 1990.

The Consumer Price Index shows prescription drug prices were 44% higher in January compared with a decade ago and 7% higher than in 2006. A 40-milligram dose of cholesterol drug Lipitor, the nation’s best-selling prescription drug, cost $3.33 in 2006 through Drugstore.com. The same pill today is $4.14.

Let’s end on a high note: An analyst at the bureau says the trend could be down over the coming year, citing more use of generic drugs and decreases resulting from implementation of Medicare Part D.

Source: Joan Melcher-MSN

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