Value of $100 in 1944, adjusted to 1949

What happened to prices between 1944 and 1949

Between 1944 and 1949, the Consumer Price Index went from 17.6 to 23.8. Cumulatively, prices increased 35.2%, which works out to an average of 6.22% per year. Put differently, a dollar in 1944 bought what $0.74 buys in 1949.

Consumer prices rose just 1.7% in 1944, down from 1943’s 6.1% and the slowest increase of the war years, as price and wage controls held the cost of living nearly flat even as the conflict reached its most expensive phase. The war itself turned decisively that June, when more than 150,000 Allied troops landed on the beaches of Normandy, France, opening the long-planned second front against Nazi Germany. Congress used the same month to plan for the war’s end, passing the GI Bill on June 22 to give returning veterans money for college or vocational training, low-cost home and business loans, and unemployment benefits, a package that would reshape American housing and higher education for a generation. The following month, delegates from 44 Allied nations gathered at Bretton Woods, New Hampshire, and agreed to peg their currencies to the U.S. dollar, itself pegged to gold, creating the International Monetary Fund and the World Bank to manage the new system. Consumer prices stood 77.8% above their 1913 level, a cumulative wartime rise held down by controls that would start unwinding the following year. First-class postage held at 3 cents, and the minimum wage stayed at 30 cents an hour.

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The destination year: 1949

Consumer prices fell 1.2% in 1949, down from 1948’s 8.1% gain and the first annual decline since 1939, the first real break in a decade otherwise defined by wartime and postwar inflation. A mild recession drove the drop: the National Bureau of Economic Research dates a downturn from November 1948 to October 1949, as businesses worked off inventories built up during the postwar buying boom and price pressure finally eased. The Cold War hardened around the same time. On April 4, the United States, Canada, and ten Western European nations signed the North Atlantic Treaty, committing to treat an attack on one member as an attack on all and formalizing the Western alliance against Soviet expansion. That August 29, the Soviet Union tested its first atomic bomb, ending the American nuclear monopoly just four years after Hiroshima and Nagasaki and setting off an arms race that would run for decades. Congress closed out the decade’s wage policy that October, passing the Fair Labor Standards Amendments of 1949 to raise the federal minimum wage to 75 cents an hour effective the following January, nearly double the 40 cents that had held since 1945. The decade closed with consumer prices 140.4% above their 1913 level, up 70% since 1940 alone even after 1949’s decline. First-class postage held at 3 cents.

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