Value of $100 in 1940, adjusted to 1972

What happened to prices between 1940 and 1972

Between 1940 and 1972, the Consumer Price Index went from 14 to 41.8. Cumulatively, prices increased 198.6%, which works out to an average of 3.48% per year. Put differently, a dollar in 1940 bought what $0.33 buys in 1972.

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: 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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