Value of $100 in 1941, adjusted to 1956

What happened to prices between 1941 and 1956

Between 1941 and 1956, the Consumer Price Index went from 14.7 to 27.2. Cumulatively, prices increased 85.0%, which works out to an average of 4.19% per year. Put differently, a dollar in 1941 bought what $0.54 buys in 1956.

Consumer prices rose 5.0% in 1941, up sharply from just 0.7% in 1940 and the fastest annual increase since 1920, as rearmament and Lend-Lease production pushed demand well ahead of peacetime supply even before the United States formally joined the war. Congress had already tilted the country away from neutrality that March, passing the Lend-Lease Act to arm Britain, and later the Soviet Union and other Allies, without requiring immediate payment. That April, the government created the Office of Price Administration to hold down the cost of civilian goods, the start of a price-control system that would keep official inflation numbers well below what wartime demand alone would have produced over the next four years. Then, on December 7, Japan attacked the naval base at Pearl Harbor, destroying much of the Pacific Fleet and killing more than 2,400 Americans. Congress declared war on Japan the next day and on Germany and Italy three days later, ending years of debate over whether the United States should stay out of the conflict spreading across Europe and Asia. Consumer prices, already up 48.5% from their 1913 level, would climb far faster over the next two years as the economy converted fully to war production. First-class postage held at 3 cents, and the minimum wage stayed at 30 cents an hour.

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The destination year: 1956

Consumer prices rose 1.5% in 1956, a return to mild inflation after they had fallen 0.4% in 1955, the only annual decline of the decade. The two years sat in the calmest stretch of the postwar index, a lull between the Korean War price surge earlier in the 1950s and the acceleration that would return in the 1970s. Congress had already raised the wage floor into that calm: the Fair Labor Standards Amendments of 1955, signed the previous August, took effect March 1 and lifted the federal minimum wage from 75 cents to $1 an hour, the first increase since 1950. Eisenhower signed a longer-lasting commitment on June 29, the Federal-Aid Highway Act, funding 41,000 miles of controlled-access highway at 90% federal cost to build the Interstate System, the largest public-works program the country had undertaken. He won a second term that November, carrying 41 states and about 57% of the popular vote in a rematch against Adlai Stevenson. Abroad, the Suez Crisis broke the calm on the supply side: Egypt nationalized the canal on July 26, and after Israel invaded the Sinai on October 29 with British and French forces following, the canal’s closure and damaged pipelines squeezed oil shipments to Western Europe for months. Consumer prices stood 174.7% above their 1913 level by 1956, up 94% since 1940 alone, even after a decade that had barely moved the index. First-class postage held at 3 cents, unchanged since 1932.

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