Value of $100 in 1920, adjusted to 1977

What happened to prices between 1920 and 1977

Between 1920 and 1977, the Consumer Price Index went from 20 to 60.6. Cumulatively, prices increased 203.0%, which works out to an average of 1.96% per year. Put differently, a dollar in 1920 bought what $0.33 buys in 1977.

1920 was the last year of the inflation that had built since the war began: consumer prices rose 15.6% for the year, leaving the CPI more than double its 1913 starting level after seven straight years of increases. The boom behind those increases turned to bust before the year was over. The Federal Reserve, worried about speculation, pushed its discount rate to a record 7% that spring, and wholesale prices, which had led the wartime runup, began collapsing within months. The National Bureau of Economic Research dates the resulting downturn from January 1920 to July 1921, one of the shortest but steepest contractions in U.S. history, and consumer prices followed into outright decline, falling 10.5% in 1921. Two constitutional changes reshaped the country that year, too. The 18th Amendment’s ban on alcohol took legal effect January 17, enforced under the Volstead Act Congress had passed the previous October. Then, on August 18, Tennessee’s ratification of the 19th Amendment secured women’s right to vote nationwide, and women cast ballots in a presidential election for the first time that November, when Warren Harding won on a promise to return the country to “normalcy” after a decade of war, pandemic, and rising prices. First-class postage held at 2 cents, unchanged since mid-1919.

More about inflation in 1920 →

The destination year: 1977

Consumer prices rose 6.5% in 1977, ticking back up from 1976’s 5.8% as the economic recovery strengthened, wages climbed, and energy costs pushed higher again. The year opened with a warning about that energy dependence: record cold across the Midwest and Northeast in January and February strained natural gas supplies so badly that schools and factories in several states shut down for days to conserve fuel. Jimmy Carter, inaugurated that January, made energy policy a centerpiece of his presidency, and Congress created the cabinet-level Department of Energy that August to consolidate programs built up piecemeal since the 1973 oil embargo. Culture offered some relief from the anxiety: released that May, Star Wars became the highest-grossing film in history to that point, drawing lines around theater blocks for months. The year also closed an era in a different way. Elvis Presley was found dead at his Graceland home on August 16 at age 42, drawing tens of thousands of mourners to Memphis. A median household earned $13,572 in 1977, a new home sold for a median $48,800, and gas averaged 62 cents a gallon. Consumer prices stood 512.1% above their 1913 level, with the energy anxieties of the year setting up the harder shocks of 1978 and 1979.

More about inflation in 1977 →