Inflation hits another 40-year high. It's bad, but older folks say they've seen worse
Updated February 10, 2022 at 8:42 AM ET
Jeanette Vecchio is 30, and everywhere she goes, she's feeling the pinch of something she hasn't experienced before in her life: high inflation.
The latest reminder came when she went to her favorite corner restaurant in Chicago where she loves the bread and butter.
"They're now charging for bread and butter," she says. "I was so devastated by it. But it's just another example of an increase across the board."
From restaurant meals to apartment rents, consumer prices have been climbing at the fastest pace in 40 years, meaning younger adults are witnessing the highest inflation of their lifetimes.
The Labor Department said Thursday that January prices were 7.5% higher than a year ago — the largest increase since 1982. Higher costs for food, shelter, and electricity were among the biggest drivers of inflation last month.
For Vecchio, high inflation is affecting not only personal decisions — like when and where to shop for a house — but also her job.
Vecchio is a project manager at Chicago Metal Rolled Products, a company that's been in her family for four generations.
Steel prices have been so volatile over the last year, she's sometimes had to tell customers that price quotes were good only through the end of the day.
"We felt sympathy for our customers," Vecchio says. "How are they supposed to bid on a job if a steel price is changing on a daily basis?"
Then there's Vecchio's mom
While high inflation is new territory for Vecchio, it's painfully familiar for her mother.
"Oh yes," says Ginny Wendt Vecchio, with a rueful laugh.
Ginny is 66, and recalls the oil shocks that fueled high inflation in the 1970s.
"I remember being in line and we had big cars then," she says. "They were gas guzzlers and you would be around the block waiting to fill up your car. And you couldn't fill it up all the way. That concerned me a lot."
By 1980, the inflation rate reached 14.6% — nearly double what it is today. And the Federal Reserve cracked down hard with higher interest rates. By the following year, mortgage rates topped 18% — five times the cost of home loan now.
"We purchased a house in '86 and the interest rate was in the teens," Ginny Vecchio recalls. "My parents were probably scared to death. Could we make the mortgage? But it didn't really matter because I was young and ignorance is bliss."
Eventually, interest rates came back down, and three-and-a-half decades later, Ginny Vecchio still lives in that house, which is paid for. Both at home and in business, she's taught her children to be careful with their money.
"Think before you spend," she says. "Which, I think, is hard, too, because everybody's online all the time and shopping. So it's just a press of a button."
The Gulkes are also seeing that generational divide
Ashley Gulke is another person experiencing the highest inflation of her lifetime. Gulke, who's 39, lives in Minot, North Dakota, where the high temperature on Friday is expected to be nine degrees.
"I don't even look at those heat bills," says Gulke, who heats her home with propane and electricity. "I mean they're over $600 a month for sure. Maybe $700. But I don't even look at them. I just let my husband deal with that grief."
Gulke's husband is a farmer, so he also has to deal with the rising cost of fertilizer and equipment.
They have three kids, who go through a lot of shampoo. To avoid sending money down the drain, Gulke shops at the dollar store. But even dollar store shampoo now costs a $1.25.
"It sounds so silly," Gulke says. "But I remember my dad talking about the dime store. And I thought, 'Were things really actually ever a dime?' And now, things aren't even actually a dollar."
Gulke's dad has wise advice
Ashley's dad, Jerry Gulke, is 77. He remembers not only dime stores but the double-digit inflation of 40 years ago.
"The baggage that I bring to the party is I've been there before," says the elder Gulke. "Each generation has to probably find their own way."
Ultimately, the Federal Reserve did bring inflation under control in the '80s with those sky-high interest rates. But not before a deep recession, and a sharp drop in the value of Jerry Gulke's farmland. He hopes the medicine this time around is less painful.
"I'm just hoping that we're a lot smarter in the government and the Federal Reserve than we were back then," Gulke says. "But Economics 101 hasn't been repealed."
To be sure, inflation is less entrenched now than it was four decades ago. And the rate hikes the Federal Reserve is contemplating to address high prices are much less draconian. Still, Ashley Gulke has internalized some of her father's caution.
"I think he's kind of pounded into my head about the dangers of inflation," she says. "You don't want to get stuck in a position where you can't make a payment because all of a sudden interest rates go through the roof and then you lose everything you've been working for. So he's definitely put that into my head since I was a kid."
It's hard to know who struggles more with today's high inflation: those going through it for the first time, or those for whom it's an echo of a painful past.
But in Chicago, Jeanette Vecchio is taking things in stride as she finds comfort from her mom's experience.
"I'm confident that, OK, my parents figured it out," she says. "And we can do it, too."
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