Value of $100 in 1928, adjusted to 1980

What happened to prices between 1928 and 1980

Between 1928 and 1980, the Consumer Price Index went from 17.1 to 82.4. Cumulatively, prices increased 381.9%, which works out to an average of 3.07% per year. Put differently, a dollar in 1928 bought what $0.21 buys in 1980.

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: 1980

1980 sat at the very peak of the Great Inflation. Prices rose 13.5% in that single year, mortgage rates were climbing toward 16%, and the Federal Reserve under Paul Volcker was administering the painful interest-rate medicine that would finally break the inflationary spiral, at the cost of the deep 1981–82 recession. No single year looms larger in how Americans think about inflation.

More about inflation in 1980 →