Value of $100 in 1941, adjusted to 1961

What happened to prices between 1941 and 1961

Between 1941 and 1961, the Consumer Price Index went from 14.7 to 29.9. Cumulatively, prices increased 103.4%, which works out to an average of 3.61% per year. Put differently, a dollar in 1941 bought what $0.49 buys in 1961.

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: 1961

Consumer prices rose 1.0% in 1961, down from 1960’s 1.7% as the economy climbed out of recession, a recovery the National Bureau of Economic Research dates to that February. Politically, the year opened with a changing of the guard: outgoing president Dwight Eisenhower’s farewell address on January 17 warned of a growing “military-industrial complex,” and three days later John F. Kennedy was sworn in, urging Americans to “ask not what your country can do for you.” The new administration’s first major foreign-policy test came quickly and badly: a CIA-organized force of Cuban exiles landed at the Bay of Pigs on April 17 aiming to topple Fidel Castro, and without the U.S. air support Kennedy withheld, the invasion collapsed within three days. Cold War tensions hardened further that August, when East German forces sealed the border between East and West Berlin overnight, building what would become the Berlin Wall and stopping the flow of refugees to the West. Domestically, the wage floor moved for the first time in five years: the Fair Labor Standards Amendments of 1961, effective that September, raised the minimum wage to $1.15 an hour and extended coverage to roughly 3.6 million additional workers. Consumer prices finished 1961 202.0% above their 1913 level. First-class postage held at 4 cents.

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