Value of $100 in 1927, adjusted to 1956

What happened to prices between 1927 and 1956

Between 1927 and 1956, the Consumer Price Index went from 17.4 to 27.2. Cumulatively, prices increased 56.3%, which works out to an average of 1.55% per year. Put differently, a dollar in 1927 bought what $0.64 buys in 1956.

Consumer prices fell 1.7% in 1927, a mild retreat after three years of gradual increases and part of a shallow up-and-down pattern that ran through the second half of the decade. Aviation delivered the year’s signature moment: Charles Lindbergh departed Roosevelt Field, New York, on May 20 and landed at Le Bourget Field outside Paris roughly 33.5 hours later, the first person to fly the Atlantic solo and nonstop. Detroit closed a chapter of its own that May, when Ford halted the Model T’s production line after nearly 19 years and more than 15 million cars sold, idling tens of thousands of workers while its factories retooled for the Model A. The Federal Reserve, meeting with European central bankers that summer, cut its discount rate to ease pressure on currencies still recovering from the war, a move later cited by economists including Milton Friedman and Anna Schwartz as fuel for the stock market speculation that built through the following two years. First-class postage held at 2 cents.

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The destination year: 1956

Consumer prices rose 1.5% in 1956, a return to mild inflation after they had fallen 0.4% in 1955, the only annual decline of the decade. The two years sat in the calmest stretch of the postwar index, a lull between the Korean War price surge earlier in the 1950s and the acceleration that would return in the 1970s. Congress had already raised the wage floor into that calm: the Fair Labor Standards Amendments of 1955, signed the previous August, took effect March 1 and lifted the federal minimum wage from 75 cents to $1 an hour, the first increase since 1950. Eisenhower signed a longer-lasting commitment on June 29, the Federal-Aid Highway Act, funding 41,000 miles of controlled-access highway at 90% federal cost to build the Interstate System, the largest public-works program the country had undertaken. He won a second term that November, carrying 41 states and about 57% of the popular vote in a rematch against Adlai Stevenson. Abroad, the Suez Crisis broke the calm on the supply side: Egypt nationalized the canal on July 26, and after Israel invaded the Sinai on October 29 with British and French forces following, the canal’s closure and damaged pipelines squeezed oil shipments to Western Europe for months. Consumer prices stood 174.7% above their 1913 level by 1956, up 94% since 1940 alone, even after a decade that had barely moved the index. First-class postage held at 3 cents, unchanged since 1932.

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