Nine Widely Owned Items That Cost Less Now Than a Year Ago

saleYou may love a good deal. But that doesn't mean you should always be happy about lower prices.

Economists, including those that oversee the Federal Reserve, fear that the U.S. could enter a much-dreaded deflationary spiral. That's when companies are forced to lower prices in order to stimulate demand. Then, faced with lower revenues, they lay off workers. That, in turn, leads to lower consumer spending and reduced demand for goods.

September's consumer price index notched on a scant 0.1% increase, mainly because of gains in food and energy prices. The prices of a number of things in America have dropped sharply since the beginning of the recession. Housing is an obvious example, but fierce competition combined with a fall-off in the price of components has driven down the prices of many kinds of consumer electronics. Clothing, used cars and recreation costs have all declined recently.

To show the breadth of price declines across the U.S. economy, we've consulted industry research firms, such as iSuppli and Zillow to compile a list of nine well-known and widely owned products that have dropped in price over the last year:

Amazon Kindle 3Amazon's Kindle
Last year: $299 (price of a Kindle 2 in September, 2009)
This year: $139 (price of a third-generation Kindle with Wi-Fi. It's $189 for third-generation Kindle with Wi-Fi and 3G in September, 2010)

In response to the growing popularity of e-reading devices, Amazon has once again lowered the price of its Kindle. Competition has grown fierce, not only with the Barnes & Noble Nook, which recently underwent a price reduction from $259 to $199, but with other devices featuring electronic reading capabilities, such as the Apple iPad. The move reflects that, even as a leader in the market, Amazon (AMZN) must fight to maintain its position.

Volkswagen Jetta
Last year: $16,765 (price of 2010 Jetta)
This year: $15,175 (price of redesigned 2011 Jetta upon release in June)

Volkswagen has a significant stake in nearly every market in the world, with one exception: the U.S. The German automaker hopes to get a much bigger foot in the door by releasing many of its new models for several thousand dollars less than the same model in the previous year.

XboxMicrosoft's Xbox 360
Last year: $400 (the market price of an Xbox 360 Elite in August, 2009)
This year: $300 (the market price of an Xbox 360 S, the upgraded version of the Elite)

Since the Xbox 360, Sony's Playstation 3, and Nintendo's Wii platform all entered the gaming console market, a price war has ensued. It has prompted each of the three brands to repeatedly cut prices. Today the most up-to-date version of Microsoft's (MSFT) console, the "360 S" is being sold for $300. That is $100 less than what the "360 elite," its comparable predecessor, sold for last year.

Flat-Screen TVs
Last year: $1,479 (the average price of a flat screen, LCD TV sold in the third quarter of 2009 in the U.S., according to iSuppli)
This year: $1,177 (the projected average price of a flat screen TV sold in the third quarter of 2010 in the U.S.)

As the costs for component sand manufacturing fall through the floor, flat-screen TVs are rapidly making the transition from luxury item to household staple. The market has become flooded with brands. In order to stay competitive, companies are cutting prices. This past year has seen major price reductions from LCD manufacturers like Samsung, LG Electronics, and Panasonic.

Downy Fabric Softener
Last year: $3.49 (the price of a 64-ounce bottle of Downy fabric softener on sale during summer of 2009)
This year: $2.99 (the price of a 64-ounce bottle of Downy fabric softener on sale during April, 2010)

Downy is just one of a number of household products that have undergone aggressive price cuts to attract customers in the recession. The aim among larger brands such as Downy is to win back customers who may have turned to less expensive, alternative brands during hard times. In addition to fabric softener, Procter & Gamble (PG), parent company of Downy, has dropped the prices of a number of products, including batteries, shampoo, and diapers to combat private label brands sold by discount super chains like Target (TGT).

Apple iPhone Apps
Last year: $2.50 (the average price of the 100 highest ranked paid apps in US between Sept. 1, 2009 and Oct. 31, 2009)
This year: $2.15 (the average price of the 100 highest ranked paid apps in US in July, 2010)

Although the prices of all iPhone Apps have not dropped, the average price of the 100 highest ranked apps has gone down by almost 15% as of July, 2010. Part of the reason for this change is that many higher-priced apps have left the top 100. The change also represents a trend of price reductions for many popular apps. With over 250,000 Apple (AAPL) iPhone apps now available, app developers must offer their products at more competitive prices if they wish to attract new users.

Florida real estateFlorida Vacation Home
Last year: $137,000 (the average price of a house sold in Orlando, Florida in July, 2009)
This year: $98,000 (the average price of a house sold in Orlando, Florida in July, 2010)

As the housing bubble continues to deflate, home prices have continued to drop. Not surprisingly, housing has tended to fall the most in markets where unemployment is highest. But the average price of homes sold in the entire U.S. dropped 3% from July, 2009 to July, 2010.

Charles Schwab Online Trading
Last year: $12.95 (the price per online trade in September, 2009)
This year: $8.95 (the price per online trade through September, 2010)

In January 2010, discount broker Charles Schwab (SCHW) lowered its price per online trade for customers who have less than $1 million in household assets. This price reduction was necessary for the company to maintain its significant market share and to compete in an industry where other brokers offer trading for much smaller fees. Examples include companies like SogoTrade, which charges customers only $3 per online trade. It also has two very large, and well-financed competitors: TD Ameritrade (AMTD), and E-Trade (ETFC).

laptopLaptops
Last year: $775 (the average cost of all notebooks, laptops and netbooks in the first quarter of 2009)
This year: $678 (the projected average cost of all notebooks, laptops and netbooks in the third quarter of 2010)

With the cost of laptop components going down, a price war has been sparked among laptop manufacturers. The largest of these companies include Dell (DELL), Hewlett-Packard (HPQ), Lenovo, Asus, and Acer. This war has depressed prices across the board. Also contributing to the drop is competition from the iPad.

It may seem to American families that household expenses only go up, but this assortment of nine big and small-ticket purchases shows that many prices are actually falling quite sharply. That may seem like good news for shoppers. Longer term, however, lower prices may not prove to be such a good deal for the American economy.

Increase your money and finance knowledge from home

Building Credit from Scratch

Start building credit...now.

View Course »

Banking Services 101

Understand your bank's services, and how to get the most from them

View Course »

Add a Comment

*0 / 3000 Character Maximum

87 Comments

Filter by:
RMS

Gee, I'll run right out today and buy a new Jetta and a Florida vacation home with my unemployment check! The average person is trying to put food on the table, pay the rent or mortgage, and is living paycheck to paycheck, that is , if they still have a job!

November 02 2010 at 2:01 PM Report abuse rate up rate down Reply
Nat

My first reaction to this article is that its trying to make us feel bad that items are going down, and its horrible for our economy. Last time I checked, everything else around me has been going up, while my wage has not. I don't feel bad that I am trying to pay less for these types of items, if I'm even trying to buy them at all. Like others have said, most of them I can do without. And as far as the economy goes, its already screwed with the new healthcare plan. So I guess why should I worry about not paying 50cents on fabric softener??

October 28 2010 at 7:52 AM Report abuse rate up rate down Reply
Safari Morning

OH... FORGOT TO MENTION... THE DEMAND FOR COFFEE IS "NOT UP"... ITS STRICKLY NEW YORK [MOSTLY BASED] HEDGE FUNDS WHICH IS DRIVING THE PRICE THROUGH THE ROOF.. ITS NO WONDER WHEN THEY ONLY HAVE TO PUT UP 3% OF THE CONTRACT PRICE TO BUY 97% OF THE "FUTURE" CONTRACTS.. AND WHERE IS THE GOVERNMENT "OUT TO LUNCH"...!!! L PAUL PHILLIPS SAFARI COFFEE 916 624 0188

October 28 2010 at 1:19 AM Report abuse rate up rate down Reply
Safari Morning

EXCEPT COFFEE....LOOK FOR 30-40% HIGHER PRICES ON THE SHELF IN NEXT 60 DAYS !!! L PAUL PHILLIPS SAFARI MORNING COFFEE

October 28 2010 at 1:12 AM Report abuse rate up rate down Reply
box1car

When did you last change OIL or repair/buy a tire, or go to a movie, or buy silver or gold coins, or buy Insulin, or buy a cooler water pump or filter for furnace? If you compare ALL of these to last years price, its a startling 50% INCREASE for ordinary garden-variety monthly expenses. Does anyone know "The Rule of 72" here? Divide 72 by 50% to get the time in years for the price to DOUBLE- Its 1.4 years If expenses double every 1.4yrs, ordinary expenses will quadruple every 3 years. Best measure is rate RATIO of Gold$ to $ilver is changing- Its been 60 to 1 for decades, but NOT ANYMORE. When Gold ran $1000 first of 2010, Silver was $17 for a ratio of ~59, but now its $1300/24 = 54 and dropping. Means paper currency has started into a downward spiral that will bring SLAVE LABOR back into USA so we can compete with SLAVE LABOR in China where there's a BILLION SLAVES In short whoever's POLICY it was to have multi-birth unplanned families is to BLAME for the horrific events like genocide ongoing now.Sinead O'Conner had it right when she tore up someone's photo on SNL in 1992- little did she know Too many people will destroy the economy along with the closed planet Earth Hitler, Stalin, Saddam & terrorists are merely a symptom of what happens when we replicate ourselves like so many human lemmings for after 3 generations we traditionally resort to global genocide as our FINAL SOLUTION again and again When anyone finds intelligent life on the planet, let me know- I don't see any or at least there's no COMMON SENSE anymore. Don't believe me- google "Solar Mortality Theory" to see what drives us over cliff of genocide again & again As for recession, IF you think Feds got it right (it ended in 2009 BTW) then think this- we have been in the "Eye of the Storm" since early 2009. What's up next is this- Google "Mortgage Resets" to see end of Brick & Mortar economy coming to an end in your neighborhood soon when APPRAISERS find out they CAN'T reset mortgages- no value. Means most retail will be conducted on the INTERNET Sorry about that Wish NONE of this true, but me thinks...............NOT

October 27 2010 at 6:53 PM Report abuse rate up rate down Reply
Ruthann

OH MY.....they forgot the biggest thing of all....TALK.....that is cheaper than last year!!!

October 25 2010 at 8:40 AM Report abuse +1 rate up rate down Reply
atedensjj

OH right! Downey lower price. What plant is that on. I'ts $5.00 plus here in Myrtle Beach, SC.

October 25 2010 at 8:18 AM Report abuse rate up rate down Reply
Zack

Coffee, toilet paper, creamer, yogurt, bread, all meats and poultry, cereal, canned vegies, fresh produce keep going up and up. Local and state taxes keep going up and up. I cant eat a kindle or wipe with a laptop. You vote democrat, then you are a fool.

October 25 2010 at 6:33 AM Report abuse rate up rate down Reply
1 reply to Zack's comment
Jose

Inflation is the result of the Fed financing the Government's out of control spending and deficits by buying govt bonds that soon no one else will want. Let me remind you that Bill Clinton (a Democrat) balanced the budget and that George Bush (A Republican) unbalanced it with unnecessary and unaffordable tax cuts. Obama, well, he took Bush's unnecessary and destructive bailouts to another level :( I am for smaller government and less regulation, but lower spending has to come before lower taxes. In a perfect world, we should only tax the things we want to discourage (alcohol, tobacco, marijuana, prostitution, gasoline and diesel sales (not oil production), pollution of any kind) or things we can live without (sales except for food, housing and health care) not income. The U.S. could fix it's budget problem by allowing more immigration, but we have to downsize welfare first and we also have to downsize warfare spending. The role of govt. has to be limited and focused. My biggest problem with Republicans is that they tend to mix religion and politics. Anyway, desire for less govt. makes me liberal on social and moral issues and conservative on financial issues, and that makes me a Libertarian I guess. For now, I will keep voting opposite parties for President vs. Congress. At least it makes it harder for them to do more harm that way.

October 27 2010 at 11:01 PM Report abuse rate up rate down Reply
Bill M

Show me things that I use every day or every month. And I can do without Downy fabric softner.

October 25 2010 at 5:17 AM Report abuse +1 rate up rate down Reply
Nathan

Technology goes down in price as it grows older? Wow, how enlightening and informative. What a dumb article.

October 25 2010 at 2:46 AM Report abuse +4 rate up rate down Reply