One year ago, Plain Truth Editor Herbert W Armstrong wrote "Prepare to Greatly Reduce Your Standard of Living!" The prediction was right on target — 1980 has seen an incredible fall in living standards. What was behind such an accurate prediction?
NINETEEN EIGHTY — the 50th anniversary of the first full year of the Great Depression — was an incredible — an incredibly bad-year! The economic world went crazy. Gold approached U.S. $900 an ounce before receding. Silver came near U.S. $50 an ounce — and then the bubble burst, wiping out billions in paper profits. Inflation reached unheard — of levels in the United States — 18 percent — and remains in a disastrous 10 percent range. Interest rates hit 20 percent — another sign of economic madness. The outcome: 1980 saw a dramatic fall in the real income of the average person, just as Plain Truth Editor Herbert W. Armstrong predicted in the January, 1980, U.S. issue.
The raw figures show that living standards have plummeted. According to the U.S. Labor Department, the average (median) income of families in the United States rose in the neighborhood of 8 percent. But the cost of living for the same period, March, 1979, to March, 1980, went up to 13.3 percent. For the period June, 1979, to June, 1980, the statistics were even worse. Average nonfarm workers pay rose only 6.4 percent — but inflation in the same period was a whopping 14.3 percent. In other words, almost an 8 percent drop in living standards. The drop in living standards is best illustrated in housing costs. Skyrocketing interest rates have made monthly housing payments of U.S. $700 to $1,000 a month not uncommon. Over the last decade, the percent of disposable income spent on housing by the average worker has doubled.
Bare Stats and Real Pain
But the statistics don't tell the personal side of the story. Living standards have dropped in real, tangible ways. A CBS News-New York Times poll reveals just how much the average family cut back their standards recently: • 80 percent of those polled have cut back on the amount of gasoline they use. • 86 percent lowered the heat in their homes last winter. • 54 percent have cut back on the quality of food they buy. • 66 percent have cut back on vacations. • 44 percent have someone in the family who is supplementing the family income by working longer hours or getting a second job. But the inflation of the past year has taken a devastating toll on the poor. The National Advisory Council on Economic Opportunity estimates that households in — the lowest 10 percent income tax bracket are spending nearly a fifth more of their after-tax income than they have — actually going into the hole — to pay for food, shelter, energy and health. The current inflation has hit the poor hard because it is the price of necessities that have gone up the most. The worst inflated areas are heat, medical care, gasoline and food.
Worst of All Possible Worlds
The best indicator of how the economy is doing in the present is the "misery index." The misery index is the inflation rate plus the unemployment rate. In 1980, the misery index hit 20. Four years earlier, it had been 12.5. In 1980, as unemployment approached 8 percent, inflation settled to a base of 10 percent, often going much higher. Of course, economic conditions were getting worse before 1980. In 1979, the average weekly earnings of the average worker — his real standard of living — also declined by more than 8 percent. And because of a combination of inflation — pushing workers into higher tax brackets — and higher social security taxes, the typical married worker with two children and a nonsupervisory nongovernment job had seen his real standard of living go down by 6 percent over the past decade. In the past three years, there has been no gain at all in living standards for the average worker.
Prophesied for the U.S.A.
A survey this year by the University of Michigan Survey Research Center revealed that consumer attitudes toward their economic future hit the lowest on record since 1946. Such gloom reflected the atrocious state of affairs in the economy. But why? Are mere economic factors the only reason for all the bad news? Listen to what Herbert W. Armstrong wrote before the beginning of this incredible year: "And now, FOR OUR OWN GOOD, an all-wise and all-loving God is about to PUNISH our nations, in order finally to bring us to HIM!" More than mere economic factors were at work in making 1980 a disastrous year economically! Divine punishment must be included. The special reasons for this punishment are laid bare in our handsome soft-cover book The United States And Britain In Prophecy. Its price hasn't inflated one bit in all the years we've been publishing it — it is still free.