Campbell’s Tomato Soup was first produced in 1898. It continues to be the company’s second biggest seller—right after Chicken Noodle Soup. Over the 120 years of its existence it has been sold in cans of the same size. Political Calculations remarks:
Political Calculations has tracked the price history of Campbell’s Condensed Tomato Soup over the past 126 years because of its remarkable consistency as an identifiable product over time. In fact, if you had a time machine and could travel to nearly any point in time from January 1898 to the present, you could likely find a 10.75 ounce size (Number 1) can of Campbell’s condensed tomato soup stocked for sale in American grocery stores.
That long-running consistency makes Campbell’s Condensed Tomato Soup an ideal product to follow to understand how inflation has affected American consumers through its history. Today, we’re updating our chart visualizing that history from January 1898 through January 2023.
The same product sold over the same period in the same sized container provides a nearly unique way of gauging inflation.
So by that metric, the 1970’s inflation never went away – it spiked up and then ameliorated somewhat.
Not exactly. From about 1990 to 2005 it was noisy but sort of under control.
I’m looking at the trend lines – 80 years where it’s flat followed by 50 years where it’s steadily increased. The flat part for about a decade in there doesn’t really change the overall trend.
I think the message is that when you take food and energy out of your calculation of inflation it provides the illusion that the Fed brought inflation under control.
It didn’t control it so much as move it.
“I think the message is that when you take food and energy out of your calculation of inflation it provides the illusion that the Fed brought inflation under control.”
A pet peeve mine for many years. The rational is bogus. Those items may be volatile, but their long term trend is instructive. I have always attributed the motivation to the one you cite.
That all said, no one would construct an index off of one series of data.
@Andy — the 80 years flat is when the US ran on the gold standard. Its not a coincidence the steady rise in prices for the following 50 years started right after the abandonment of the Bretton Woods and any link between the value of dollars and gold.
An interesting observation is the price deflation from 1918 to 1932 – there was a 50% decrease over 14 years. The price declines that distressed economists during and after the Great Depression started much earlier than the depression itself.
Following in line with CuriousOnlooker’s observations, the gold standard is a strait jacket but some form of discipline is necessary. If you can’t impose discipline on yourself, it will be imposed from outside.
I don’t advocate the gold standard for that reason but I do think we need to have some tough-to-override discipline. There are a number of possibilities and I see no prospect that Congress (ANY Congress) will adopt any of them.
I note that the early 70’s, when the soup price took off, is also regarded as the peak era for working class incomes.
The long history of every currency is one of debasement, even gold and silver coins. It will be interesting to see if Russia, China and their friends can gin up an alternative reserve currency. Certainly, they have every motivation to get rid of the dollar and the dangers of relying on US good will.
CuriousOnlooker: Its not a coincidence the steady rise in prices for the following 50 years started right after the abandonment of the Bretton Woods and any link between the value of dollars and gold.
The problem with the gold standard is that the economy expands, while the supply of money (gold) stays constant. This distorts market signals and slows growth. It increases economic inequality while decreasing social mobility, as people with money get richer and richer.
CuriousOnlooker: I note that the early 70’s, when the soup price took off, is also regarded as the peak era for working class incomes.
A century ago you could buy a gallon of gas for two silver dimes. Today, you can buy a gallon of gas for two silver dimes.
(Sorry. Second comment should have been attributed to bob sykes.)
Don’t interpret my comment as recommending the US go back to a gold standard; the comment is this is the explanation for the graph.
I agree the gold standard was not paradise; the long depression and the Great Depression occurred during it; it doesn’t limit conflict because the civil war; WW1, WW2 occurred under it.
As a further elucidation; underneath the gold standard explanation is Mundell’s Trilemma. https://en.m.wikipedia.org/wiki/Impossible_trinity
It states we can either choose to control 2 of the 3 — (a) fixed exchange rate (b) free capital flow (c) sovereign monetary policy.
During Bretton Woods it was chosen (a) and (c); for the past 50 years it’s (b) and (c). And as my economics professor pithily put it; “why anchor the choice in the trilemma by choosing to tie your currency to rocks?â€.
Inflation at about 2% every year is not under control?
Steve
Campbell soup has increased by 12x over 50 years — about 5% a year.
Which likely is not far from the overall inflation over the last 50 years. Using the CPI index it’s 4%.
However you slice it; 4% to 5% inflation is a lot more than 2%.