Value of $100 in 1938, adjusted to 1975

What happened to prices between 1938 and 1975

Between 1938 and 1975, the Consumer Price Index went from 14.1 to 53.8. Cumulatively, prices increased 281.6%, which works out to an average of 3.69% per year. Put differently, a dollar in 1938 bought what $0.26 buys in 1975.

Consumer prices fell 2.1% in 1938, reversing most of 1937’s gain and interrupting four straight years of recovery from the Depression’s trough. The National Bureau of Economic Research dates the bottom of the downturn, which had begun that May, to June 1938, a sharp 13-month contraction that briefly pushed unemployment back up near 19%. Even in a year the economy was shrinking again, Congress passed one of the New Deal’s most lasting reforms. The Fair Labor Standards Act, signed June 25 and effective that October, established the first federal minimum wage, 25 cents an hour, capped the standard workweek at 44 hours with time-and-a-half overtime beyond it, and restricted the employment of children in most industries. The wage floor and hours limits applied only to workers engaged in interstate commerce at first, but they set a precedent that would expand in the decades that followed. Consumer prices stood 42.4% above their 1913 level and 17.5% below their 1929 peak, evidence of how far the recovery still had to go even eight years after the Depression began. First-class postage held at 3 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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