Value of $100 in 1940, adjusted to 2020

What happened to prices between 1940 and 2020

Between 1940 and 2020, the Consumer Price Index went from 14 to 258.811. Cumulatively, prices increased 1748.6%, which works out to an average of 3.71% per year. Put differently, a dollar in 1940 bought what $0.05 buys in 2020.

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.

More about inflation in 1940 →

The destination year: 2020

2020 was the year the pandemic rewired the price data without triggering the inflation spike that followed it. Consumer prices rose just 1.2% for the year, the mildest pace since 2015, as COVID-19 lockdowns emptied roads, closed airports, and crushed energy demand. Oil told the starkest story: on April 20, U.S. crude futures fell to about negative $37 a barrel, the first negative settlement in the market’s history, as storage capacity ran out and no one wanted the physical barrels. Gasoline followed it down, falling to about $1.80 a gallon nationally that month before recovering to average $2.17 for the year. Grocery prices moved the other way: pantry stocking and meatpacking-plant disruptions pushed food-at-home costs up faster than usual, a rare case of food and energy pulling the index in opposite directions. Washington answered with the $2.2 trillion CARES Act, signed March 27, which sent $1,200 payments to most adults and added $600 a week to unemployment benefits as states ordered widespread business closures. The Federal Reserve cut its policy rate to near zero in two emergency moves that same month and pledged to buy Treasury and mortgage bonds “in the amounts needed” to keep credit markets working, an open-ended commitment beyond even its 2008 response. None of it showed up in the CPI yet: the stimulus, the supply shocks, and the reopening whiplash that followed would build into the fastest inflation in four decades over the next two years.

More about inflation in 2020 →