Value of $100 in 1950, adjusted to 2020

What happened to prices between 1950 and 2020

Between 1950 and 2020, the Consumer Price Index went from 24.1 to 258.811. Cumulatively, prices increased 973.9%, which works out to an average of 3.45% per year. Put differently, a dollar in 1950 bought what $0.09 buys in 2020.

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.

More about inflation in 1950 →

The destination year: 2020

2020 was the year the pandemic rewired the price data without triggering the inflation spike that followed it. Consumer prices rose just 1.2% for the year, the mildest pace since 2015, as COVID-19 lockdowns emptied roads, closed airports, and crushed energy demand. Oil told the starkest story: on April 20, U.S. crude futures fell to about negative $37 a barrel, the first negative settlement in the market’s history, as storage capacity ran out and no one wanted the physical barrels. Gasoline followed it down, falling to about $1.80 a gallon nationally that month before recovering to average $2.17 for the year. Grocery prices moved the other way: pantry stocking and meatpacking-plant disruptions pushed food-at-home costs up faster than usual, a rare case of food and energy pulling the index in opposite directions. Washington answered with the $2.2 trillion CARES Act, signed March 27, which sent $1,200 payments to most adults and added $600 a week to unemployment benefits as states ordered widespread business closures. The Federal Reserve cut its policy rate to near zero in two emergency moves that same month and pledged to buy Treasury and mortgage bonds “in the amounts needed” to keep credit markets working, an open-ended commitment beyond even its 2008 response. None of it showed up in the CPI yet: the stimulus, the supply shocks, and the reopening whiplash that followed would build into the fastest inflation in four decades over the next two years.

More about inflation in 2020 →