While the USSR obviously was never as rich as the US or the 'West', did the living standards actually DECREASE before they collapsed?
In other words, was the populace undergoing unusually heavy (for the USSR) hardship, or were they simply jealous of the West?
Going into the 1980s there had been a decline in economic growth, production was stagnating and so forth. While the stagnation/slowing of the economy was apparent in the 1970s, it seems that effects were felt more acutely by consumers in the 1980s. Some indicators actually improved briefly during the Gorbachev era, but by the late 1980s through to 1991 things got even worse as the system started to come apart.
While trying to find a reference for economic growth figures I came across this link: http://www.nber.org/chapters/c6021.pdf Stanley Fischer, Russia and the Soviet Union Then and Now
Pg228-229 has GNP growth estimages 1928 to 1985 from three sources - trying to figure out what was really going on with the Soviet economy was an area of debate for decades. Pg234 has assorted economic indicators for 1985-1991.
In terms of consumer perception of living standards with regard to the west etc., I would say that is complicated. Soviet consumer demand was increasing and consumers were becoming more discerning. Part of that was an awareness that there were better things to be had in foreign countries, but part of it was also actually driven by domestic factors. While the party wasn't keen on full on consumerism in the western sense, they did want Soviet citizens to 'cultured' and being about to demonstrate that more and better goods were being provided was an important part of legitimation domestically (as well as a competitive thing in the Cold War).
Did Soviet consumers see themselves as poor or were they particularly jealous? In a way yes, but it doesn't seem to have been an overpowering thing. For some Soviet citizens the appeal of foreign items, their way of living etc. wasn't appealing because it was better, but simply because it was exotic and different. So Soviet youth would collect pictures of items, like advertisments for alcohol from foreign magazines, and paste them around the place. While this reflects a desire to possess something, the imagery is almost more about the perceived lifestyle and something that stands out from daily Soviet life, rather than simply wanting to have the real bottles. For some Soviet citizens while they might see themselves as materially less well off, they often thought of themselves as equally or more 'cultured' or 'spiritual' than their western counterparts. So a Soviet consumer might point out what a great time they have talking about the world with their friends, instead of talking about not having enough quality goods to serve up at that gathering.
On consumer perceptions I'm referencing Natalya Chernyshova's "Soviet Consumer Culture in the Brezhnev Era", Yurchak's "Everything Was Forever Until It Was No More" and Donald Raleigh's "Soviet Baby Boomers".