Uncertain Future

[LARS]

Quote:

Originally Posted by Hamlet They publish a core CPI that excludes those things, but that core CPI is just for information only.

While I agree with what you have said, I think the core CPI is more than information only. Core inflation seems to be front and center in the decision making of the Federal Reserve. Its less volatile nature has caused them (the FED) to focus (too much IMHO) on core as justification for its loose monetary policy of the last 15 years or so.

At this point, the CPI, like unemployment, has been heavily massaged by the government.

[HFWR]

CPI, and unemployment, have issues, but they provide relative numbers to compare month-to-month, and year-to-year.

The future's uncertain, and the end is always near...

The Doors

[bosco]

Quote:

Originally Posted by LARS At this point, the CPI, like unemployment, has been heavily massaged by the government.

IIRC, over the years they have made lots of changes to how the CPI is calculated. The net result of these changes is to make inflation appear less than it actually is.

A couple of things that I remember are

1) hedonic adjustments. As an example, how do you compare a TV now to one in the 1960s? They argue that today's TV provides greater value, and will come up with a value of what the old B&W you had as a kid would be today, and use that in the comparison. Problem is a) you can't find one, and b) by my way of thinking, an index to the standard of living to me means if I buy a TV, I buy one that's not 30 years old.

2) substitutions. They won't index the price of top sirloin. If some sort of pork is cheaper this month, they'll substitute that in until beef goes down. Their argument is that that's what a shopper would do. But the index is clearly not for a particular basket of goods anymore.

It's been a while since I looked into this, and I'm not going to do it now, so if there are minor inaccuracies in what I just said, please forgive me. But the gist of the matter, in my opinion is calculate your own personal inflation rate. And then keep in mind that your TIPS bonds might not keep up with inflation as you experience it. The CPI might be a useful number. It just might not be the number you think it is.

[Gone4Good]

Quote:

Originally Posted by bosco IIRC, over the years they have made lots of changes to how the CPI is calculated. The net result of these changes is to make inflation appear less than it actually is.

That's the widely held belief, but what is the evidence . . .

Quote:

Originally Posted by bosco 1) hedonic adjustments.

Quote:

Contrary to a priori expectations, these empirical results indicate that hedonic quality adjustment may produce higher index values as compared to the case where all new goods are treated as noncomparable. This result seems to be consistent with the conjecture that the introduction of new models is used as an opportunity to raise price. When new models are treated as noncomparable, this price increase remains unaccounted for in the index calculation. Given empirical studies on computers (Stavins (1997)) and television sets in the U.K. (Silver (1998)) and others (Parker (1992)), this model changeover price increase does appear to be a marketing strategy in practice. Not only can producers "piggyback" a pure price increase on new models, it is also possible that the subset of consumers which are most likely to purchase these new models (the "innovators" (Parker (1992)) are less price-sensitive than other consumers and are willing to pay a premium for the new product because it is new.

Using Hedonic Methods for Quality Adjustment in the CPI: The Consumer Audio Products Component

Quote:

Originally Posted by bosco 2) substitutions. They won't index the price of top sirloin. If some sort of pork is cheaper this month, they'll substitute that in until beef goes down. Their argument is that that's what a shopper would do. But the index is clearly not for a particular basket of goods anymore.

That is simply not true. The CPI specifically doesn't adjust for substitution between categories. A separate index, called the "Chained Consumer Price Index" makes that adjustment . . .

Quote:

Since January 1999, a geometric mean formula has been used to calculate most basic indexes within the CPI, in other words, the prices within most item categories (for example, apples) are averaged with the use of a geometric mean formula. . The geometric mean formula, though, does not account for consumer substitution taking place between CPI item categories. For example, pork and beef are two separate CPI item categories. If the price of pork increases while the price of beef does not, consumers might shift away from pork to beef. The C-CPI-U is designed to account for this type of consumer substitution between CPI item categories. In this example, the C-CPI-U would rise, but not by as much as an index that was based on fixed purchase patterns.

[bosco]

Apparently, goods are not substituted per se, but rather the government tinkers with the relative weightings based on perceived or likely consumer behavior.

I personally don't believe that the CPI is totally on the level, regardless of the billions of dollars to be saved if it is understated (to quote Dylan, "money doesn't talk, it swears"). But whether it is or is not, my point is that people might be better advised to construct their own CPI through meticulous tracking of expenses. Even if the gummit CPI is totally accurate, it is a large-scale average which may not apply to you.

A casual google hunt turns up a whole lot of people that disagree with you on this. Which is not to say you might not be right.

Finally, if weightings are being altered, then that would seem to be a coping strategy for consumers due to inflation. Are you saying it is fair for the government to jigger the weightings to minimize the effects of this? Not all apples are the same. Yes, I will probably buy a cheaper variety in the face of a price rise. But by altering the weighting to account for this, the government is taking a step to lock in a lower standard of living for me (i.e. from now on I'll likely have to eat the cheaper apples).

a couple of links:

Consumer Price Index
Jeff Nabers’ Self Directed IRA & Solo 401(k) Blog » CPI Explained – Part 2 – Substitution

[traineeinvestor]

The components and weightings of a CPI calculation get revised periodically - and they need to be in order to provide a measure of changes in consumer prices which is meaningful. The composition of a CPI index is always going to have the potential to be a subject of some debate given that:

1. selecting the components involves making decisions on what goods and services are representatives of the typical consumer (or consumers as a whole);

2. deciding how much weight to give to each component;

3. adjustments are made after consumer spending has changed which means that, even if the weightings and components were "correct" at the time they are determined, they will inevitably be "wrong" afterwards.

While there have been instances where governments clearly either tried to manipulate the numbers or simply got it wrong (depending on perspective) I have yet to be convinced that there is a widespread conspiracy to artificially understate the number. (That said, it would not take too much to convince me that there is.)

It goes without saying that the rate of change in cost of living experienced by an individual may vary widely from a published CPI number. If you spend a lot of money on items like healthcare (to use one example) you would expect your personal cost of living to increase at a rate higher than the general CPI. When my long term inflation expectation was 2%, I was using 3% in my retirement calculation spreadsheet. Now that my long term inflation expectaion is 3%, I am in the process of revising the assumption used for my personal calculations to 4%.

[bosco]

Quote:

Originally Posted by traineeinvestor 1. selecting the components involves making decisions on what goods and services are representatives of the typical consumer (or consumers as a whole); 2. deciding how much weight to give to each component; 3. adjustments are made after consumer spending has changed which means that, even if the weightings and components were "correct" at the time they are determined, they will inevitably be "wrong" afterwards. .

You see, this is exactly the philosophical difference in a nutshell. I am saying that the CPI originally was intended to measure the price of a specific basket of goods. The government has changed it to "what goods and services are representative of the typical consumer."

The problem is--if the typical consumer's standard of living is on the decline, then changing weightings legitimizes this. The typical consumer altered his purchases due to having experienced a decline in purchasing power. Now the government re-weights the CPI to make that the new "norm." Pretty obvious where this goes over time. Seems wrong to me.....

[Gone4Good]

Quote:

Originally Posted by bosco Even if the gummit CPI is totally accurate, it is a large-scale average which may not apply to you.

Agreed. It is not, nor is it intended to be a "personal inflation" index. But remember, if you're relying on FIRECalc results, FIRECalc assumes your inflation equals CPI. If you plan on spending more, or believe CPI is systematically manipulated, then you better plan on adjusting your withdrawal rate down.

Quote:

Originally Posted by bosco A casual google hunt turns up a whole lot of people that disagree with you on this.

And every single last one of them is either a charlatan or is misinformed.

Now that is a pretty strong claim, but I'll stand by it. Why? Because it is demonstrably false that CPI systematically understates inflation in any meaningful way. We'll prove it in a minute.

But even as a matter of theory, it doesn't stand to reason. Suppose the government did manipulate CPI lower for all of the good reasons typically given. Over time that manipulation would compound and CPI's tracking error with actual prices would get increasingly, exponentially, large. So while the government might be able to get away with it in any given year, over many years CPI would eventually lag actual price moves so badly that the manipulation would be obvious.

But no obvious tracking error exists. This is easy to test (which is why I made the claim that the many internet sites pushing CPI conspiracy theories are charlatans). Find any independent source for historic prices, like this one. Adjust those prices for changes in the CPI index and see if the result corresponds with the prices you see today.

For our purposes, I chose prices from 50 years ago. Partly because 50 is a nice round number but also because 50 years is long enough that any systematic manipulation would compound to a meaningfully large tracking error. And then I inflated those 1959 prices to a 2009 equivalent using the CPI index. If CPI systematically understates inflation, then the resulting "2009" prices should be low compared to what you can actually find today.

Judge for your self . . .

Oldsmobile 88 . . . . . . . . . . . . $21,222.10
Men's Shirt . .. . . . . . . . . . . . . . . . $36.39
Men's Slacks . . . . . . . . . . . . . . . . .$38.67
Men's Suit . . . . . . . . . . . . . . . . . $234.86
Cotton Dress . . . . . . . . . . . . . . . . . $80.71
Women's Shoes . . . . . . . . . . . . . . .$109.90
Junior Accountant (Annual Salary) . . . $34,402.30
Chemical Engineer (Annual Salary) . . . $51,456.43
Snack bar attendant (Wage $/hr) . . . . $8.58
Bacon ($/lb) . . . . . . . . . .. . . . . . . . . $3.60
Chuck Steak ($/lb) . . . . . . . . . . . . . . $2.87
Bread (loaf) . . . . . . . . . . . . . . . . . . . $2.13
Onions ($/lb) . . . . . . . . . . .. . . . . . . . $0.32
Skippy Peanut butter (12 oz) . . . . . . . .$2.43
Campbells Soup (10.5 oz Can) . . . . . . . $0.75
Clothes dryer . . . . . . . . . . . . . . . $1,021.78
Coffee Maker . . . . . . . . . . . . . . . . . .$58.66
Dishwasher . . . . . . . . . . . . .. . . . .$1,543.33
Lawn mower . . . . . . . . . . . . . . . . . $587.19
Paint ($/Gallon) . . . . . . . . . . . . . . . .$35.80
News paper . . . . . . . . . . .. . . . . . .. .. $0.51
3 bedroom split level house . . . . . $132,316.53
Board game, Monopoly . . . . . . . . . . .. $22.75
Football . . . . . . . . . . . . . .. . . . . . . . $14.41
Television, 21" . . . . .. . . . . . . . . .. .$2,351.93

[Zathras]

bosco, but surely you would want to update the 'specific basket of goods'.
I mean, if you leave it as, partially, the price of a 13" black and white tv the declining price isn't really a good measure, is it?

[Gone4Good]

Quote:

Originally Posted by Zathras bosco, but surely you would want to update the 'specific basket of goods'. I mean, if you leave it as, partially, the price of a 13" black and white tv the declining price isn't really a good measure, is it?

Do you mean that my buggy whip and coal hod price index isn't a good representation of inflation?

[smjsl]

Quote:

Originally Posted by . . . Yrs to Go For our purposes, I chose prices from 50 years ago. Partly because 50 is a nice round number but also because 50 years is long enough that any systematic manipulation would compound to a meaningfully large tracking error. And then I inflated those 1959 prices to a 2009 equivalent using the CPI index. If CPI systematically understates inflation, then the resulting "2009" prices should be low compared to what you can actually find today. Judge for your self . . . Oldsmobile 88 . . . . . . . . . . . . $21,222.10 Men's Shirt . .. . . . . . . . . . . . . . . . $36.39 Men's Slacks . . . . . . . . . . . . . . . . .$38.67 Men's Suit . . . . . . . . . . . . . . . . . $234.86 Cotton Dress . . . . . . . . . . . . . . . . . $80.71 Women's Shoes . . . . . . . . . . . . . . .$109.90 Junior Accountant (Annual Salary) . . . $34,402.30 Chemical Engineer (Annual Salary) . . . $51,456.43 Snack bar attendant (Wage $/hr) . . . . $8.58 Bacon ($/lb) . . . . . . . . . .. . . . . . . . . $3.60 Chuck Steak ($/lb) . . . . . . . . . . . . . . $2.87 Bread (loaf) . . . . . . . . . . . . . . . . . . . $2.13 Onions ($/lb) . . . . . . . . . . .. . . . . . . . $0.32 Skippy Peanut butter (12 oz) . . . . . . . .$2.43 Campbells Soup (10.5 oz Can) . . . . . . . $0.75 Clothes dryer . . . . . . . . . . . . . . . $1,021.78 Coffee Maker . . . . . . . . . . . . . . . . . .$58.66 Dishwasher . . . . . . . . . . . . .. . . . .$1,543.33 Lawn mower . . . . . . . . . . . . . . . . . $587.19 Paint ($/Gallon) . . . . . . . . . . . . . . . .$35.80 News paper . . . . . . . . . . .. . . . . . .. .. $0.51 3 bedroom split level house . . . . . $132,316.53 Board game, Monopoly . . . . . . . . . . .. $22.75 Football . . . . . . . . . . . . . .. . . . . . . . $14.41 Television, 21" . . . . .. . . . . . . . . .. .$2,351.93

Interesting list...

I think the list should not include items considered as "high-tech" during that period. Clearly those will diminish in price as technology develops further vs when they were introduced... like TV, dryer, dishwasher, lawn mower. Just like tomorrow's must-haves are not necessarily needed today and will cost much less.

Looking at above list, housing costs seem to be going faster than official CPI. So do wages, some food items. Others, like clothing seem to grow similar to CPI...

[Gone4Good]

Quote:

Originally Posted by smjsl Interesting list... I think the list should not include items considered as "high-tech" during that period. Clearly those will diminish in price as technology develops further vs when they were introduced... like TV, dryer, dishwasher, lawn mower. Just like tomorrow's must-haves are not necessarily needed today and will cost much less. Looking at above list, housing costs seem to be going faster than official CPI. So do wages, some food items. Others, like clothing seem to grow similar to CPI...

See, that's part of the problem when people think about inflation. They want to exclude or ignore all of the stuff that goes down in price and only focus on those items that increase. I'm not sure why CPI should exclude "high-tech" items, unless we stop buying them. And I also thought that "hedonic" adjustments for technology improvements more than offset the deflationary impact in the CPI calculation . . . that $2K 21" TV begs to differ.

When I look at the list, I see mostly stuff where CPI is either about right or has overstated inflation. Housing is a notable exception. Wages are a bit trickier because we don't know what level of experience these listings were for. The salaries look about right for entry level positions, but not for more experienced folks (the snack bar attendant is probably spot on). But then again, CPI isn't designed to track wage inflation, which typically is higher than general inflation.

But the point is, if CPI understated inflation by say 7% annually, which is what some folks allege than that jar of Skippy peanut butter should cost $190 today. Obviously it doesn't. Obviously anyone suggesting CPI is off by 700 basis points is smoking crack. But that doesn't stop this kind of drivel from getting picked up, reported and repeated all over the place as some kind of fact.

[smjsl]

Quote:

Originally Posted by . . . Yrs to Go See, that's part of the problem when people think about inflation. They want to exclude or ignore all of the stuff that goes down in price and only focus on those items that increase. I'm not sure why CPI should exclude "high-tech" items, unless we stop buying them. And I also thought that "hedonic" adjustments for technology improvements more than offset the deflationary impact in the CPI calculation . . . that $2K 21" TV begs to differ.

There are items that you MUST have to live and items that are "luxury". For planning purposes, I am more interested in must-have-item inflation, which includes things like food, shelter, income (during accumulation years), clothing, health care, energy costs.

High-tech items of a given generation are luxury items which become must-haves in future but for your personal consumption, you are likely to be able to live without high-tech items of your day. So those folks that did not have a TV or a dryer in 59 could probably live just fine without them until 70's or 80's when they came down enough in price. In other words, deflation in these "luxury" items does not really affect their personal CPI.

I would think many people spend X% of a budget on "luxury", and until some new toy comes down to that X% they would not be buying it (or course for some people X is very different than for others). So, the luxury items "deflation" does not really affect the CPI.

For example, today's supercomputers will surely contribute to "deflation" piece but it does not affect my CPI since I would not be buying them until they are low enough in price, if ever. So in terms of seeing how close official CPI matches my own personal inflation, I would think you should not consider such items.

I am not saying CPI is off by 7%, and to be honest I was hoping I could trust it and did not really investigate this question... but seeing the numbers that you posted makes me somewhat suspicious actually when I look at those must-haves that I would care about.

[bosco]

YTG,

Allow me to point out a fairly obvious flaw in your argument. You are arguing that systematic understating of the CPI would, over 50 years, be obvious due to compounding. You then (somewhat selectively, I might add), provided price quotes to bolster your argument.

First, the "adjustments" to the methodology that we are discussing (at least the ones that I am) were implemented in the late 1990s--around 1998. So there have only been 10 or 11 years of compounding--not 50 years (big difference). Furthermore, I personally don't believe there is anything like seven percent of understatement--more like a percent or two. Which, however, will compound over time.

Secondly, your list tended to focus on clothes and appliances. Clearly, the emergence of China has had a large influence on clothes, and probably appliances too, and I don't think there has been much inflation in these areas. However, maybe "reverse hedonic adjustments should apply here since Walmart clothing falls apart. But I digress.... In some areas that people can't avoid, inflation has been more obvious, and the CPI seems to lag.

Thirdly, the prices were listed from newspaper sale ads. I don't know about you, but I can't always get things on sale, and I don't think newspaper flyers are necessarily a good starting base for price comparisons.

With this in mind, let's look at a few items from the same list that you didn't include, using the same factors (strange how you avoided housing.....)

Daily Paper $.51 (yes, it was on your list, but it's double that pretty much everywhere I've been lately--about 7% compounding over 10 years as it turns out. It could be the areas where I've lived)

Regarding your inclusion of the Oldsmobile 88, it's difficult to get a sense since there were a few models of this car. But the Pontiac Star Chief was a high-end car, and costs out at $25,728 in today's dollars. Think you could get a luxury high-end car for that?

Engineers, EE & ME $73,509/year lotsa luck--try double that unless they're fresh out of school in which case they're not registered yet and not really engineers. Also, lotsa luck finding that Chem E for $50k per year.

corn per ear $.18 (they better be on sale--much more usually)

oranges, valencia, each $.29 (good luck!)

Houses: Denville 3br $62,482 (anyone in NJ want to sell to me for that?)
9 room Highland Park, New $231,554

accordion lessons $7.35 per lesson

drive in movie $7.35 per carload (ok, they don't exist, but how much is a theater ticket--or do we get hedonically adjusted for being indoors. I hope not, cause getting laid in an indoor theater is a lot more difficult....)

I don't believe for a minute that there is a huge conspiracy to understate the CPI by 7% per year. I do believe that it is in the government's perceived interest to modify their methodology to minimized the effects. But whether or not this is true, what is incontestable is that the CPI post 1998 measures something different than before the methodology changes were implemented.

Let me end with a totally unscientific comment. When I was a kid in the 50s and 60s, most women were stay-at-home wives. Middle-class families had automobiles, dryers, freezers, and ate well. Today, stay-at-home wives are a rarity. Middle-class families have automobiles, dryers, freezers, and eat well. But it typically takes two wages to do so. How do you explain this if both wages and prices are in synch with the CPI?

One final disclaimer: My stomping grounds include Alaska, Yukon, British Columbia, Idaho, Washington State, and Oregon. I have no idea what things cost on the East coast, I realize that Canada is off the table for this discussion, and I know that Alaska is not representative. So I'm basing my opinions on what I observe mostly in the Pacific Northwest. When I was in Palm Desert, California, I was amazed at how cheap food was compared to Washington State. So I have no idea where New Jersey fits in today or in 1959.

[Gone4Good]

Bosco, I hope you realize that the CPI is an average. And as such, some actual prices will inflate more quickly. And some will inflate more slowly. But if the average is systematically manipulated lower, then over time, ALL or nearly all prices will inflate more quickly than the manipulated average. There is no evidence of that in the historic record, or in your long post.

But I'll comment on some of this stuff anyway. . .

Quote:

Originally Posted by bosco You then (somewhat selectively, I might add), provided price quotes to bolster your argument.

No, the prices were pretty much chosen at random from the categories that were available. Feel free to compose your own list. The fact that the results bolster my argument is due to the fact that my argument is correct.

Quote:

Originally Posted by bosco First, the "adjustments" to the methodology that we are discussing (at least the ones that I am) were implemented in the late 1990s--around 1998. So there have only been 10 or 11 years of compounding--not 50 years (big difference).

No, the "hedonic" adjustments go back "two decades" according to BLS. And before that, their wasn't a time when people didn't complain that CPI understated inflation.

Feel free to go back and do the same work I did for the past 20 years, or 10 years or whatever floats your boat. The results are the same.

Quote:

Originally Posted by bosco Daily Paper $.51 (yes, it was on your list, but it's double that pretty much everywhere I've been lately--about 7% compounding over 10 years as it turns out. It could be the areas where I've lived)

Except the Daily Record (for which the original price is taken) is only $0.50 on the newstand.

Quote:

Originally Posted by bosco Regarding your inclusion of the Oldsmobile 88, it's difficult to get a sense since there were a few models of this car.

It's a mid-sized sedan. Like the Camary, MSRP 19,395. The smaller car prices out similar to a Smart Car today. I don't know how "luxury" the Star Chief was. I know that Rolls Royce was making cars in 1959, I doubt they'd inflate to $25K today. So we have lots of prices that are all pretty reasonable relative to those we can see today . . . next.

Quote:

Originally Posted by bosco Engineers, EE & ME $73,509/year lotsa luck--

Starting salary for a chemical engineer, $52K

See comment in an earlier post about this.

Quote:

Originally Posted by bosco drive in movie $7.35 per carload (ok, they don't exist, but how much is a theater ticket--

Or alternatively I can get four (or more) movies delivered right to my door every month for $9. Or I can go to Blockbuster and get a single movie for whatever they're charging these days. Or I can go to one of those vending machines that charge something like a buck a night . . . but you're right, movies are way more expensive now.

[MichaelB]

Quote:

I don't believe for a minute that there is a huge conspiracy to understate the CPI by 7% per year. I do believe that it is in the government's perceived interest to modify their methodology to minimized the effects. But whether or not this is true, what is incontestable is that the CPI post 1998 measures something different than before the methodology changes were implemented.

The absence of credible business or academic research to support the theory that CPI is understated is a problem IMHO. Not for lack of effort.

Quote:

Let me end with a totally unscientific comment. When I was a kid in the 50s and 60s, most women were stay-at-home wives. Middle-class families had automobiles, dryers, freezers, and ate well. Today, stay-at-home wives are a rarity. Middle-class families have automobiles, dryers, freezers, and eat well. But it typically takes two wages to do so. How do you explain this if both wages and prices are in synch with the CPI?

There has been a tremendous improvement in standard of living since the mid-60’s. Elizabeth Warren describes this well in her book “The Two Income Trap”. The dynamics here are complex but the drivers around two income households are not understated CPI but excessive housing costs, too many cars and far too much consumer debt. The one area where she makes a well reasoned case for understated inflation is in medical care, especially when hospitalization is involved.

I side with those that feel CPI is more likely overstated, and the most glaring evidence is the massive increase in consumption of consumer goods in this country when compared with our past (50’s thru 70’s) or the rest of the world.

[hguyw]

Quote:

Originally Posted by bosco YTG, Let me end with a totally unscientific comment. When I was a kid in the 50s and 60s, most women were stay-at-home wives. Middle-class families had automobiles, dryers, freezers, and ate well. Today, stay-at-home wives are a rarity. Middle-class families have automobiles, dryers, freezers, and eat well. But it typically takes two wages to do so. How do you explain this if both wages and prices are in synch with the CPI?

Average new home size in 1950 was 983 SF. Average in 2004 was 2349 SF. My guess is that two incomes are required today to make the payments on the McMansion and still buy cars, dryers, freezers and food.

[audreyh1]

No kidding. People buy HUGE houses these days. And huge furniture. And huge appliances. And huge A/V systems. And I can't even imagine what the utility bills must be.

I think that's exactly where the 2nd wage went - to furnishing and maintaining the much larger home and two vehicles, and to the daycare for the kids of course. And then there are the convenience foods and/or lots of eating out for time-strapped families - much more expensive than in the "old days".

Audrey

[teejayevans]

Quote:

Originally Posted by audreyh1 No kidding. People buy HUGE houses these days. And huge furniture. And huge appliances. And huge A/V systems. And I can't even imagine what the utility bills must be.

I asked once, answer was >$1000/month.
TJ

[brewer12345]

Quote:

Originally Posted by audreyh1 I think that's exactly where the 2nd wage went - to furnishing and maintaining the much larger home and two vehicles, and to the daycare for the kids of course. And then there are the convenience foods and/or lots of eating out for time-strapped families - much more expensive than in the "old days". Audrey

Sounds about right. In many ways, DW and I live a 1950s lifestyle: one income, modest 1900 sq ft house (built in the 1950s), two kids, two dogs, a car and a half (second car is older with a bajillion miles), one TV in the house, not a lot of convenience food and kids have never been in daycare. I cannot imagine living the Joneses' lifestyle without a second (large) income, since it would quickly overwhelm a single income even if pretty decent.