Value of $100 in 1916, adjusted to 1980

What happened to prices between 1916 and 1980

Between 1916 and 1980, the Consumer Price Index went from 10.9 to 82.4. Cumulatively, prices increased 656.0%, which works out to an average of 3.21% per year. Put differently, a dollar in 1916 bought what $0.13 buys in 1980.

1916 was when World War I first showed up clearly in American price tags. Consumer prices rose 7.9% for the year, easily the sharpest increase since the Bureau of Labor Statistics’ CPI history begins in 1913, as factories ran flat out to fill steel, munitions, and food orders from Britain and France. Railroad workers felt the squeeze from rising living costs enough to threaten a nationwide strike; Congress headed it off in September with the Adamson Act, which set an eight-hour standard workday for interstate rail employees, the first federal law of its kind covering private-sector hours. Washington was also preparing more directly for war: the National Defense Act, signed in June, expanded the Army and National Guard and funded new government-owned munitions plants, adding another source of demand to an economy already running hot. Woodrow Wilson won re-election in November largely on having kept the country out of the fighting so far, a promise that would not survive the following spring. A first-class stamp still cost 2 cents, one of the few prices that had not yet moved.

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The destination year: 1980

1980 sat at the very peak of the Great Inflation. Prices rose 13.5% in that single year, mortgage rates were climbing toward 16%, and the Federal Reserve under Paul Volcker was administering the painful interest-rate medicine that would finally break the inflationary spiral, at the cost of the deep 1981–82 recession. No single year looms larger in how Americans think about inflation.

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