Value of $100 in 1947, adjusted to 1957

What happened to prices between 1947 and 1957

Between 1947 and 1957, the Consumer Price Index went from 22.3 to 28.1. Cumulatively, prices increased 26.0%, which works out to an average of 2.34% per year. Put differently, a dollar in 1947 bought what $0.79 buys in 1957.

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: 1957

Consumer prices rose 3.3% in 1957, up from 1956’s 1.5% and the sharpest increase since the Korean War price surge of 1951. The jump fed a growing debate among economists over “cost-push” inflation, prices climbing from rising wages and material costs rather than excess demand, a debate that would recur for the next quarter century. The Federal Reserve tightened policy to fight it, and by August the tighter money combined with falling business investment to tip the economy into a recession, according to the National Bureau of Economic Research’s dating. The Cold War took a technological turn that October, when the Soviet Union launched Sputnik, the first artificial satellite, on the 4th, stunning the American public and setting off both the Space Race and a surge in federal science and defense spending the following year. Civil rights reached a crisis that September in Little Rock, Arkansas: after Governor Orval Faubus used the National Guard to block nine Black students from Central High School, Eisenhower federalized the Guard and sent the 101st Airborne Division to enforce the Supreme Court’s desegregation order. Consumer prices finished 1957 183.8% above their 1913 level. First-class postage held at 3 cents, and the minimum wage stood at $1.00 an hour.

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