Value of $100 in 1950, adjusted to 1980

What happened to prices between 1950 and 1980

Between 1950 and 1980, the Consumer Price Index went from 24.1 to 82.4. Cumulatively, prices increased 241.9%, which works out to an average of 4.18% per year. Put differently, a dollar in 1950 bought what $0.29 buys in 1980.

Consumer prices rose 1.3% in 1950, up from 1949’s 1.2% decline, a mild gain that hid a sharp turn partway through the year. The cost of living had been roughly flat through the spring, then jumped after North Korea invaded South Korea on June 25, setting off a wave of hoarding and defense buying reminiscent of World War II shortages. The United States entered the war within days under a United Nations mandate; American and South Korean forces were pushed back to the Pusan Perimeter that summer before a landing at Inchon that September reversed the front, and China’s entry into the war that November turned it into a longer stalemate. Congress moved to put the economy on a war footing that September, passing the Defense Production Act, which gave the president authority to direct industrial output toward the military and, if prices kept climbing, to impose formal wage and price controls. Domestic policy also expanded that year: the Social Security Amendments of 1950, signed August 28, raised benefits across the board and extended coverage to roughly 10 million more workers, the program’s first major expansion since it began in 1935. Consumer prices finished 1950 143.4% above their 1913 level, matching 1948’s postwar high after 1949’s brief decline. First-class postage held at 3 cents, and the minimum wage stood at 75 cents an hour after January’s increase.

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The destination year: 1980

1980 sat at the very peak of the Great Inflation. Prices rose 13.5% in that single year, mortgage rates were climbing toward 16%, and the Federal Reserve under Paul Volcker was administering the painful interest-rate medicine that would finally break the inflationary spiral, at the cost of the deep 1981–82 recession. No single year looms larger in how Americans think about inflation.

More about inflation in 1980 →