Value of $100 in 1939, adjusted to 1972

What happened to prices between 1939 and 1972

Between 1939 and 1972, the Consumer Price Index went from 13.9 to 41.8. Cumulatively, prices increased 200.7%, which works out to an average of 3.39% per year. Put differently, a dollar in 1939 bought what $0.33 buys in 1972.

Consumer prices fell 1.4% in 1939, closing out a decade in which the CPI fell in six years and rose in four, leaving prices 18.7% below their 1929 level even after the mid-decade recovery. Measured against the start of the CPI’s modern record, prices still stood 40.4% above their 1913 level, a reminder that even a decade defined by deflation left the cost of living well above where it had been a generation earlier. The decade’s final months reset the economic picture entirely. Germany invaded Poland on September 1, and Britain and France declared war two days later; the United States stayed formally neutral under the Neutrality Acts, but Allied orders for war materiel began flowing to American factories almost immediately, a demand shock that would do more to end the Depression over the next few years than any peacetime relief program had managed. Domestic policy kept building on the New Deal’s framework, too: the federal minimum wage rose to 30 cents an hour that October, the second step in the schedule set by the 1938 Fair Labor Standards Act. Amid it all, the New York World’s Fair opened April 30 in Queens, themed “The World of Tomorrow” and drawing tens of millions of visitors with exhibits on television and other technologies promising a more prosperous decade than the one just ending. First-class postage held at 3 cents.

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The destination year: 1972

Consumer prices rose just 3.2% in 1972, the calmest year of the decade and a sharp break from the previous two years. The relief was largely engineered: Nixon’s wage and price controls, imposed as a 90-day freeze in August 1971, had settled into a series of “phases” that capped how much businesses could raise prices through the election year. Economists would later argue the controls mostly deferred inflation rather than curing it, storing up pressure that broke loose once they were lifted. Nixon spent political capital on foreign policy that year, traveling to Beijing that February in the first visit by a sitting U.S. president to the People’s Republic of China, a trip that began normalizing relations Washington had frozen since 1949. Closer to home, five men were arrested breaking into the Democratic National Committee’s offices at the Watergate complex that June 17, an event that drew little attention at the time but would eventually force Nixon from office. None of it dented his re-election bid: Nixon carried 49 states against Democrat George McGovern that November, helped by an economy that, on paper, looked more stable than it had in years. A median household earned $9,697 in 1972, a new home sold for a median $27,600, and gas held near 36 cents a gallon for a third straight year. Consumer prices stood 322.2% above their 1913 level, a lull that would not survive contact with the controls’ expiration and the oil shock still to come.

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