Value of $100 in 1947, adjusted to 1958

What happened to prices between 1947 and 1958

Between 1947 and 1958, the Consumer Price Index went from 22.3 to 28.9. Cumulatively, prices increased 29.6%, which works out to an average of 2.38% per year. Put differently, a dollar in 1947 bought what $0.77 buys in 1958.

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: 1958

Consumer prices rose 2.8% in 1958, down only slightly from 1957’s 3.3% even as the country sank into the sharpest postwar recession to that point, an early sign that inflation and a shrinking economy could coexist rather than trade off against each other. The National Bureau of Economic Research dates the downturn’s trough to that April, with unemployment peaking near 7.5% that summer, the worst reading since the 1930s. The Post Office raised first-class postage to 4 cents that August 1, up from 3 cents, the rate’s first change since 1932. Washington answered the Soviet Union’s technological lead that summer too: Eisenhower signed the National Aeronautics and Space Act on July 29, establishing NASA, which opened for business that October 1 to compete with the Soviet space program after the shock of Sputnik the year before. Consumer prices finished 1958 191.9% above their 1913 level. The minimum wage held at $1.00 an hour, and first-class postage rose to 4 cents that August, the first increase since 1932.

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