Value of $100 in 1927, adjusted to 1975

What happened to prices between 1927 and 1975

Between 1927 and 1975, the Consumer Price Index went from 17.4 to 53.8. Cumulatively, prices increased 209.2%, which works out to an average of 2.38% per year. Put differently, a dollar in 1927 bought what $0.32 buys in 1975.

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: 1975

Consumer prices rose 9.1% in 1975, easing slightly from 1974’s 11.0% but still running far above anything the country had experienced before the decade began. The recession that started in November 1973, the deepest since the Great Depression, bottomed out that March, yet unemployment kept climbing through the year and touched 9%, a combination of high inflation and high joblessness that had no precedent in the postwar data. Vietnam ended that April 30, when North Vietnamese forces captured Saigon and the last Americans were evacuated by helicopter from the U.S. embassy roof. Fiscal strain hit closer to home too: New York City, facing bankruptcy after years of borrowing to paper over budget gaps, asked Washington for help that October. President Ford’s initial refusal produced the Daily News headline “Ford to City: Drop Dead,” though he ultimately signed a federal loan package that December. Amid the gloom, Bill Gates and Paul Allen founded Microsoft that April in Albuquerque, New Mexico, to sell a version of the BASIC programming language for the Altair 8800, one of the first personal computers sold to hobbyists. A median household earned $11,800 in 1975, a new home sold for a median $39,300, and first-class postage held at 10 cents, unchanged since 1974’s increase. Consumer prices stood 443.4% above their 1913 level, with the decade barely past its midpoint.

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