Value of $100 in 1928, adjusted to 1941

What happened to prices between 1928 and 1941

Between 1928 and 1941, the Consumer Price Index went from 17.1 to 14.7. Cumulatively, prices declined 14.0%, which works out to an average of -1.16% per year. Put differently, a dollar in 1928 bought what $1.16 buys in 1941.

Consumer prices fell 1.7% in 1928, the second straight year of mild decline even as the stock market climbed sharply, a widening gap between asset prices and the cost of living that later economists pointed to as an early warning sign. The Federal Reserve tightened policy repeatedly over the year, raising its discount rate in an effort to slow the flood of borrowed money pouring into stock purchases without derailing the broader economy, a balancing act it ultimately failed to manage. Herbert Hoover won the presidential election that November, defeating Democrat Al Smith on a platform built around continuing the prosperity of the Coolidge years; few voters or policymakers anticipated how quickly that prosperity would end. First-class postage remained at 2 cents, a price that had now held for nine straight years.

More about inflation in 1928 →

The destination year: 1941

Consumer prices rose 5.0% in 1941, up sharply from just 0.7% in 1940 and the fastest annual increase since 1920, as rearmament and Lend-Lease production pushed demand well ahead of peacetime supply even before the United States formally joined the war. Congress had already tilted the country away from neutrality that March, passing the Lend-Lease Act to arm Britain, and later the Soviet Union and other Allies, without requiring immediate payment. That April, the government created the Office of Price Administration to hold down the cost of civilian goods, the start of a price-control system that would keep official inflation numbers well below what wartime demand alone would have produced over the next four years. Then, on December 7, Japan attacked the naval base at Pearl Harbor, destroying much of the Pacific Fleet and killing more than 2,400 Americans. Congress declared war on Japan the next day and on Germany and Italy three days later, ending years of debate over whether the United States should stay out of the conflict spreading across Europe and Asia. Consumer prices, already up 48.5% from their 1913 level, would climb far faster over the next two years as the economy converted fully to war production. First-class postage held at 3 cents, and the minimum wage stayed at 30 cents an hour.

More about inflation in 1941 →