Between 1915 and 1981, the Consumer Price Index went from 10.1 to 90.9.
Cumulatively, prices increased 800.0%, which works out to an average of
3.39% per year. Put differently, a dollar in 1915 bought what
$0.11 buys in 1981.
Consumer prices rose 1.0% in 1915, the second straight year of near-flat
inflation before the wartime price surges of 1916 through 1918. The year’s
defining event had nothing to do with prices directly: a German submarine
sank the British liner Lusitania off the Irish coast on May 7, killing 128
Americans and hardening U.S. opinion against Germany two years before the
country entered the war. Economically, 1915 was a turning point of a
different kind. A recession that had dragged on since 1913 began lifting as
Britain and France placed growing orders for steel, munitions, and other war
materiel with American manufacturers, and U.S. exports to the Allied powers
climbed sharply through the year. That demand would keep building through
1916, eventually pulling prices up with it. On the regulatory
side, the Federal Trade Commission opened for business in March, taking on
enforcement of the Clayton Antitrust Act that Congress had passed the
previous fall. A first-class stamp still cost 2 cents, unchanged since 1885
and still two years from its first wartime increase.
The headline number is an average. Individual categories moved very differently over this
period. Here is what $100 of 1915 spending costs in 1981, by category:
Category
Avg. yearly inflation
$100 in 1915 →
All items (CPI-U)
3.39%
$900
Food
3.45%
$936
Apparel
2.81%
$623
Not shown because the BLS began these indexes after 1915: core (all items less food & energy) (1957–), energy (1957–), housing (1967–), medical care (1935–), transportation (1935–), recreation (1993–), education & communication (1993–).
Long periods are sampled every 5 years; the calculator above covers any pair of years.
The destination year: 1981
1981 was the year the inflation fever finally broke, at an extraordinary price.
Consumer prices rose 10.3%, the second year of back-to-back double-digit
inflation and the last time the U.S. would see one. To end it, Paul Volcker’s
Federal Reserve drove its policy rate above 19% and let borrowing costs go
where they may: a 30-year mortgage cost more than 18% by autumn, car loans and
business credit froze, and homebuilders mailed the Fed two-by-fours in protest.
The squeeze tipped the economy into recession in July, the deep 1981–82
downturn that would push unemployment past 10%. But it worked. Inflation fell
by nearly half within a year and to under 4% by 1983, the disinflation that
defined the following two decades. Even the price of mailing a letter told the
year’s story: postage went up twice in eight months.
MLA: “Inflation from 1915 to 1981: $100 is worth $900 today.” InflationCalculator.com, U.S. Bureau of Labor Statistics CPI-U data, https://inflationcalculator.com/inflation/1915-to-1981/
APA: InflationCalculator.com. Inflation from 1915 to 1981. Based on U.S. Bureau of Labor Statistics CPI-U data. Retrieved from https://inflationcalculator.com/inflation/1915-to-1981/