Value of $100 in 1951, adjusted to 1964

What happened to prices between 1951 and 1964

Between 1951 and 1964, the Consumer Price Index went from 26 to 31. Cumulatively, prices increased 19.2%, which works out to an average of 1.36% per year. Put differently, a dollar in 1951 bought what $0.84 buys in 1964.

Consumer prices rose 7.9% in 1951, up sharply from 1950’s 1.3% and the fastest increase since 1947, as Korean War buying and a defense spending surge hit an economy still adjusting to peacetime. Much of the jump came early in the year, before the government stepped in: the Office of Price Stabilization imposed a general ceiling on prices January 26, and the Wage Stabilization Board froze wages soon after, the broadest peacetime controls since the war began that June. The year’s more lasting change came in monetary policy. On March 4, the Treasury and the Federal Reserve signed the Accord, ending the Fed’s wartime obligation to hold down interest rates on government bonds and freeing the central bank to fight inflation on its own terms for the first time since 1942, a shift that would shape Fed independence for decades. Congress raised taxes that October to help pay for the war: the Revenue Act of 1951, signed October 20, lifted individual and corporate income taxes along with a range of excise taxes, the third increase in taxes since fighting began in Korea. Consumer prices finished 1951 162.6% above their 1913 level. First-class postage held at 3 cents, and the minimum wage stayed at 75 cents an hour.

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The destination year: 1964

Consumer prices rose 1.3% in 1964, matching 1963’s pace even as a large federal tax cut took effect that year. The Revenue Act of 1964, signed February 26, lowered individual and corporate tax rates significantly, the cut Kennedy had proposed the year before his death and Johnson pushed through Congress as a Keynesian bet that lower taxes would spur enough growth without stoking prices. Congress reshaped civil rights law that July 2, when the Civil Rights Act of 1964 outlawed discrimination based on race, color, religion, sex, and national origin in employment and public accommodations, the most sweeping civil rights legislation since Reconstruction. Vietnam policy shifted that August, when Congress passed the Gulf of Tonkin Resolution after reported attacks on U.S. Navy destroyers, authorizing Johnson to use military force in Vietnam without a formal declaration of war. American pop culture changed that February too: the Beatles landed at New York’s Kennedy Airport and played the Ed Sullivan Show two days later for an estimated 73 million viewers, igniting the “British Invasion.” Consumer prices finished 1964 213.1% above their 1913 level. First-class postage held at 5 cents, and the minimum wage stayed at $1.25 an hour.

More about inflation in 1964 →