Value of $100 in 1926, adjusted to 1954

What happened to prices between 1926 and 1954

Between 1926 and 1954, the Consumer Price Index went from 17.7 to 26.9. Cumulatively, prices increased 52.0%, which works out to an average of 1.51% per year. Put differently, a dollar in 1926 bought what $0.66 buys in 1954.

Consumer prices rose 1.1% in 1926, a third straight year of mild inflation and part of the price stability that defined the middle of the decade. Florida’s real estate boom, which had peaked the previous year on speculative buying of undeveloped land, ended abruptly that September when the Great Miami Hurricane made landfall near the city, killing hundreds and wrecking the market for land whose value had rested on continued speculation rather than anything underneath it. In Detroit, Henry Ford moved his company to a five-day, 40-hour work week without cutting pay, a break from the standard six-day schedule that other large employers would gradually adopt over the following decades; Ford argued publicly that workers with more leisure time would also become better customers for the cars his factories built. Consumer prices remained low enough by historical standards that a first-class stamp still cost just 2 cents, the same price it had held since mid-1919.

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The destination year: 1954

Consumer prices rose 0.7% in 1954, extending 1953’s 0.8% slowdown even as the economy tipped into recession, an early example of prices continuing to rise through a downturn rather than falling with it. The National Bureau of Economic Research dates that recession from July 1953 to May 1954, as defense spending fell after the Korean War armistice and the tighter monetary policy of the year before worked its way through the economy. The Supreme Court reshaped a different part of American life that spring: its unanimous May 17 ruling in Brown v. Board of Education held that “separate but equal” public schools violated the Constitution, overturning the legal basis for segregated education. Washington also closed the book on a different fight that year. Following the televised Army-McCarthy hearings that spring, the Senate voted 67 to 22 on December 2 to condemn Senator Joseph McCarthy’s conduct, ending his dominance of American politics after four years of anti-communist investigations. Consumer prices finished 1954 171.7% above their 1913 level, essentially flat with 1953 as the mild recession held the cost of living in check. First-class postage held at 3 cents, and the minimum wage stayed at 75 cents an hour.

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