Coping with Inflation

Report Outline
Learning to Cut Corners
Effects on Family Life
Alterations to Lifestyles
Special Focus

Learning to Cut Corners

Inflation-Caused Changes in Daily Living

It comes as little surprise to learn that four-fifths of the persons questioned in a recent Gallup Poll said the high cost of living was the most important problem they faced. Last year's 13.3 percent rise in the Consumer Price Index (CPI), the largest since 1947, was followed by an even faster climb during the first three months of 1980. Although inflation has since abated somewhat, economists predict that by the end of the year the increase will be around 12 percent. What is surprising is that most Americans — 60 percent in a University of Michigan Survey Research Center poll — seem to have found ways to cope with inflation. One reason is that incomes have risen, though usually not as fast as prices. Another is that many Americans have found ways to cut their expenses — and consequently their standard of living.

These changes affect nearly all aspects of everyday life — from the type of breakfast cereal they buy to how low they set their thermostats in the winter. The changes involve how they travel to work and how they rear their children, where they go on vacation, and a thousand other things. “Most people are changing. There's no question about that,” said Midge Shubow, White House director of consumer information. “They are definitely making changes in their lives — big ones or little ones.”

Illegal Methods: Income Tax Avoidance

Millions, apparently, have chosen an illegal method of coping with inflation. They do not pay part or all of their federal income taxes, an expense they consider highly inflated and unfair. The Internal Revenue Service maintains that the overwhelming majority of Americans still pay their taxes. But the agency is concerned that many otherwise law-abiding citizens no longer feel quite as morally obligated to abide by the tax laws. “Inflation has undermined much of the moral support for income taxation,” said James Wetzler, chief economist for the congressional Joint Committee on Taxation.