Value of $100 in 1937, adjusted to 1980

What happened to prices between 1937 and 1980

Between 1937 and 1980, the Consumer Price Index went from 14.4 to 82.4. Cumulatively, prices increased 472.2%, which works out to an average of 4.14% per year. Put differently, a dollar in 1937 bought what $0.17 buys in 1980.

Consumer prices rose 3.6% in 1937, the fastest pace since before the Depression and the fourth straight year of gains, leaving prices 10.8% above their 1933 trough though still 15.8% below the 1929 peak. The recovery did not last the year. The National Bureau of Economic Research dates a new business cycle peak to that May, the start of what became known as the Recession of 1937-38. Policy tightened on two fronts at once: the Federal Reserve had doubled bank reserve requirements over the preceding year to head off inflation it worried was building, and the federal government pulled back its own spending even as new Social Security payroll taxes began draining money from paychecks months before the first benefit checks went out. Together they choked off a recovery that had not yet reached its pre-Depression footing. Not every milestone that year was economic. The Golden Gate Bridge opened to traffic on May 27 after four years of construction, at the time the longest suspension bridge span in the world, a rare bright spot in a year that would end with the economy sliding backward again. First-class postage held at 3 cents.

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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.

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