Value of $100 in 1940, adjusted to 1962

What happened to prices between 1940 and 1962

Between 1940 and 1962, the Consumer Price Index went from 14 to 30.2. Cumulatively, prices increased 115.7%, which works out to an average of 3.56% per year. Put differently, a dollar in 1940 bought what $0.46 buys in 1962.

Consumer prices rose 0.7% in 1940, snapping 1939’s decline and marking the first increase since 1937. The gain was modest, and the CPI still stood 18.1% below its 1929 peak, a reminder of how far the recovery from the Depression’s trough had left to go even as defense orders from Britain and France began reaching American factories. War was already reshaping domestic policy well before it touched American soil. Congress passed the Selective Training and Service Act that September, the country’s first peacetime draft, requiring men aged 21 to 35 to register and authorizing the induction of up to 900,000 men a year, more than a year before Pearl Harbor. That November, Franklin Roosevelt won an unprecedented third term, defeating Republican Wendell Willkie after campaigning on keeping the United States out of the war then consuming Europe and Asia. The promise would not hold much longer: within two years, wartime demand would push consumer prices up faster than at any point since the aftermath of World War I. First-class postage held at 3 cents, and the federal minimum wage stayed at 30 cents an hour, the level set the previous October under the Fair Labor Standards Act.

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The destination year: 1962

Consumer prices rose 1.0% in 1962, matching 1961’s pace as inflation stayed remarkably low and unemployment slowly declined from its recession-era highs. That January, Kennedy’s Council of Economic Advisers introduced “wage-price guideposts,” non-binding targets meant to keep pay and price increases in line with productivity growth without formal controls. The space race delivered a milestone that February, when John Glenn’s Friendship 7 capsule circled Earth three times, making him the first American to orbit the planet. Markets got a scare that spring: a dispute over U.S. Steel’s April price increase, which Kennedy publicly pressured the company into rolling back, rattled investors, and the Dow Jones Industrial Average fell about 5.7% on May 28, its steepest one-day drop since the 1929 crash. The year’s gravest moment came that October, when American reconnaissance photographed Soviet nuclear missiles in Cuba, setting off a 13-day standoff that brought the two superpowers closer to nuclear war than at any other point in the Cold War before the Soviet Union agreed to remove the missiles in exchange for a U.S. pledge not to invade the island. Consumer prices finished 1962 205.1% above their 1913 level. First-class postage held at 4 cents, and the minimum wage stayed at $1.15 an hour.

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