Value of $100 in 1942, adjusted to 1966

What happened to prices between 1942 and 1966

Between 1942 and 1966, the Consumer Price Index went from 16.3 to 32.4. Cumulatively, prices increased 98.8%, which works out to an average of 2.90% per year. Put differently, a dollar in 1942 bought what $0.50 buys in 1966.

Consumer prices rose 10.9% in 1942, up from 1941’s already rapid 5.0% and the fastest increase since 1920, as the economy’s crash conversion to war production collided with shrinking supplies of civilian goods. The government tried to contain it: the General Maximum Price Regulation, effective May 18 and known as “General Max,” froze most retail prices at their highest March level, the broadest price control Washington had ever attempted. Rationing followed close behind. Sugar rationing began that May and gasoline rationing went nationwide in December, the leading edge of a system that would eventually cover meat, coffee, shoes, tires, and dozens of other goods before the war ended. The year’s other defining wartime measure had nothing to do with prices. Executive Order 9066, signed February 19, authorized the military to remove more than 110,000 Japanese Americans, most of them U.S. citizens, from the West Coast and hold them in inland internment camps for the war’s duration, one of the era’s starkest violations of civil liberties. Even with price controls in place, consumer prices climbed more than 10% for the first time since 1920, leaving the CPI 64.6% above its 1913 level. First-class postage held at 3 cents, and the minimum wage stayed at 30 cents an hour.

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The destination year: 1966

Consumer prices rose 2.9% in 1966, nearly double 1965’s 1.6% as Vietnam War spending kept climbing without an offsetting tax increase, pushing the economy closer to capacity and prices higher along with it. Medicare coverage took effect that July 1, extending federal health insurance to roughly 19 million Americans age 65 and older under the program signed into law the year before. The Federal Reserve had already moved to cool the overheating economy, raising its discount rate the previous December over White House objections; the tightening carried into 1966 as the first postwar credit crunch, freezing parts of the housing and municipal bond markets even as inflation kept climbing. Congress widened the wage floor’s reach that September 23, when the Fair Labor Standards Amendments of 1966 set a $1.40 minimum wage effective the following February and extended coverage to roughly 9 million more workers in retail, hospitals, schools, and other services not previously covered. Consumer prices finished 1966 227.3% above their 1913 level. First-class postage held at 5 cents, and the minimum wage stayed at $1.25 an hour for the rest of the year.

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