Value of $100 in 1949, adjusted to 1977

What happened to prices between 1949 and 1977

Between 1949 and 1977, the Consumer Price Index went from 23.8 to 60.6. Cumulatively, prices increased 154.6%, which works out to an average of 3.39% per year. Put differently, a dollar in 1949 bought what $0.39 buys in 1977.

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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The destination year: 1977

Consumer prices rose 6.5% in 1977, ticking back up from 1976’s 5.8% as the economic recovery strengthened, wages climbed, and energy costs pushed higher again. The year opened with a warning about that energy dependence: record cold across the Midwest and Northeast in January and February strained natural gas supplies so badly that schools and factories in several states shut down for days to conserve fuel. Jimmy Carter, inaugurated that January, made energy policy a centerpiece of his presidency, and Congress created the cabinet-level Department of Energy that August to consolidate programs built up piecemeal since the 1973 oil embargo. Culture offered some relief from the anxiety: released that May, Star Wars became the highest-grossing film in history to that point, drawing lines around theater blocks for months. The year also closed an era in a different way. Elvis Presley was found dead at his Graceland home on August 16 at age 42, drawing tens of thousands of mourners to Memphis. A median household earned $13,572 in 1977, a new home sold for a median $48,800, and gas averaged 62 cents a gallon. Consumer prices stood 512.1% above their 1913 level, with the energy anxieties of the year setting up the harder shocks of 1978 and 1979.

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