Fender Squier guitars start at around $150. They've been a popular first guitar for decades. Fender sell a substantial quantity of "guitar starter packs" through retailers like Wal-Mart and Costco.
And, contrary to when they started being produced, they're of comparable quality to regular Fenders now.
Has Squier improved or Fender declined?
As a former owner of a 1981 and a 1999 Squier, I would say Squier has definitely improved.
Squier has definitely improved. Pretty mind blowing what they can make now for $150.
One of the things I learned growing up and playing some real vintage axes is that the consistency of build quality back then was incredibly hit-or-miss. Hand made not always a good thing, fit and finish. Sure, a lot of character, but from a practical standpoint, the "build quality" of guitars is highly refined in the 2000s!
So true. I'm very happy with my Fender Squier Classic Vibe 50's Tele. Awesome build quality with a great off-the-shelf setup. It's not exactly cheap (~$400), but it was totally worth it.
Anecdata: I went shopping for a new 5-string bass last month, took my time and had fun playing everything I could find in town (Portland), and even though I'd budgeted a couple grand to treat myself, the one that felt best under my fingers turned out to be a $225 Squier. It was a weird experience having to talk myself into spending less, but man, it's a great instrument.