Value of $100 in 1943, adjusted to 1979

What happened to prices between 1943 and 1979

Between 1943 and 1979, the Consumer Price Index went from 17.3 to 72.6. Cumulatively, prices increased 319.7%, which works out to an average of 4.06% per year. Put differently, a dollar in 1943 bought what $0.24 buys in 1979.

Consumer prices rose 6.1% in 1943, a slower pace than 1942’s surge but still well above anything the country had seen before the war. The slowdown owed largely to the “Hold the Line” order, issued that April, which froze most wages, prices, and rents at their current levels after the previous year’s jump showed how far demand had outrun the existing controls. Rationing grew more sophisticated alongside the freeze: starting in February, a points system split scarce goods into red points for meat, butter, and other fats and blue points for canned and processed foods, letting households budget across categories instead of simply going without once a flat quota ran dry. The government also changed how it collected the taxes paying for all of it. The Current Tax Payment Act, signed June 9, required employers to withhold federal income tax directly from paychecks for the first time, smoothing the flow of wartime revenue and creating the pay-as-you-go system still used today. Consumer prices stood 74.7% above their 1913 level and 33.1% above 1933’s Depression-era low. First-class postage held at 3 cents, and the minimum wage stayed at 30 cents an hour.

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The destination year: 1979

Consumer prices rose 11.3% in 1979, the fastest pace since 1947 and the decade’s second bout of double-digit inflation after 1974’s 11.0%. The trigger was familiar: the Iranian Revolution that January halted Iran’s oil exports, and panic buying amplified the shortage, sending crude prices sharply higher over the year and motorists back into gas lines, with some states reviving the odd-even rationing last seen in 1974. Paul Volcker, appointed Federal Reserve chairman that August, responded with a strategy shift announced that October: the Fed would target the money supply directly and let interest rates rise as high as necessary to break inflation, whatever the short-term cost. That cost would arrive as a deep recession in 1981-82, but by year’s end 1979 had already delivered enough turmoil on its own. A reactor at the Three Mile Island plant near Harrisburg, Pennsylvania, suffered a partial core meltdown that March 28, the worst commercial nuclear accident in U.S. history, and on November 4, militants in Tehran stormed the U.S. embassy and took 52 Americans hostage, beginning a 444-day crisis that consumed the rest of Carter’s presidency. A median household earned $16,461 in 1979, a new home sold for a median $62,900, and gas jumped to 86 cents a gallon. Consumer prices finished the decade 97.8% above where they stood in 1969, very nearly doubling in ten years, and stood 633.3% above their 1913 level. The 1970s had opened with inflation cooling from the 1969 spike and closed with prices rising faster than at any point since 1947, setting up the Great Inflation’s final act in 1980.

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