Value of $100 in 1947, adjusted to 1948

What happened to prices between 1947 and 1948

Between 1947 and 1948, the Consumer Price Index went from 22.3 to 24.1. Cumulatively, prices increased 8.1%, which works out to an average of 8.07% per year. Put differently, a dollar in 1947 bought what $0.93 buys in 1948.

Consumer prices rose 14.4% in 1947, up from 1946’s 8.3% and the fastest annual increase since 1920, as the last of the wartime price controls disappeared and a year of strikes, wage catch-up, and lingering shortages hit consumers all at once. Congress answered the previous year’s strike wave that June, overriding President Truman’s veto to pass the Taft-Hartley Act, which banned secondary boycotts and the closed shop and let states adopt “right-to-work” laws curbing union power. American attention was also turning outward. In a June 5 speech at Harvard, Secretary of State George Marshall outlined a U.S.-funded plan to rebuild Western Europe’s economies, an effort that would become known as the Marshall Plan once Congress funded it the following year. The government reorganized itself for the confrontation with the Soviet Union that plan was partly designed to prevent: the National Security Act, signed July 26, created the Department of Defense, the Air Force as a separate service, the Central Intelligence Agency, and the National Security Council. Consumer prices stood 125.3% above their 1913 level and 30.4% above 1929’s pre-Depression peak, up from just 1.2% above it four years earlier. First-class postage held at 3 cents, and the minimum wage stayed at 40 cents an hour.

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The destination year: 1948

Consumer prices rose 8.1% in 1948, down slightly from 1947’s 14.4% but still the second straight year of sharp postwar inflation now that wartime price controls were fully gone. Congress moved to stabilize a different economy that April, passing the Economic Cooperation Act to fund the plan Secretary of State George Marshall had proposed the year before: more than $13 billion over four years to rebuild Western Europe and counter Soviet influence. The Cold War turned tense closer to the plan’s target that June, when Soviet forces cut off road and rail access to the Western-controlled sectors of Berlin. American and British aircraft responded almost immediately with an airlift of food, fuel, and supplies that would keep the city running for nearly a year. Domestic politics produced its own upset that November: nearly every poll and pundit had predicted a Republican win, but Harry Truman defeated New York Governor Thomas Dewey, handing the Chicago Tribune its famously wrong “Dewey Defeats Truman” headline. Consumer prices finished the year 143.4% above their 1913 level and 40.9% above 1929’s pre-Depression peak. First-class postage held at 3 cents, and the minimum wage stayed at 40 cents an hour.

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