Value of $100 in 1936, adjusted to 1973

What happened to prices between 1936 and 1973

Between 1936 and 1973, the Consumer Price Index went from 13.9 to 44.4. Cumulatively, prices increased 219.4%, which works out to an average of 3.19% per year. Put differently, a dollar in 1936 bought what $0.31 buys in 1973.

Consumer prices rose 1.5% in 1936, a third straight annual increase and part of a slow, steady climb back from the 1933 trough, though prices and the broader economy still had not fully recovered to their pre-Depression levels. Voters delivered their verdict on that recovery in November, reelecting Franklin D. Roosevelt over Republican Alf Landon in one of the most lopsided elections in U.S. history: Roosevelt carried 46 of 48 states and won the Electoral College 523 to 8, a broad public endorsement of the New Deal. Public works kept advancing that year, too. Hoover Dam, one of the era’s signature projects, had been dedicated in September 1935, but its first generators did not begin sending electricity over transmission lines to Los Angeles until October 1936, a milestone that showed how long even a celebrated project took to reach full operation. Consumer prices ended the year 40.4% above their 1913 level, still 18.7% below the 1929 peak, a gap that would keep narrowing until a sharp new recession interrupted the recovery the following year. First-class postage held at 3 cents.

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The destination year: 1973

Consumer prices rose 6.2% in 1973, nearly double 1972’s 3.2%, as Nixon’s wage and price controls were phased out through the year and pressure the controls had been holding back broke loose. The bigger shock arrived that October, when Arab oil-producing states embargoed exports to the United States and other supporters of Israel in the Yom Kippur War. Crude oil, which had traded around $3 a barrel, approached $12 by early 1974, and gas lines became a fixture outside filling stations nationwide. Earlier in the year, the Paris Peace Accords, signed that January 27, ended direct American combat in Vietnam and set a 60-day deadline for withdrawing remaining U.S. troops, even as fighting between North and South Vietnam went on. Financial markets read the year correctly as a turning point: the Dow Jones Industrial Average peaked at 1,051.70 on January 11, a level it would not reach again until 1980, before the oil shock and rising interest rates dragged it into a two-year bear market. A median household earned $10,512 in 1973, a new home sold for a median $32,500, and gas averaged 38.5 cents a gallon, still under half of what the embargo’s effects would bring the following year. Consumer prices stood 348.5% above their 1913 level by year’s end, with the decade’s worst inflation still ahead.

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