Value of $100 in 1954, adjusted to 1966

What happened to prices between 1954 and 1966

Between 1954 and 1966, the Consumer Price Index went from 26.9 to 32.4. Cumulatively, prices increased 20.4%, which works out to an average of 1.56% per year. Put differently, a dollar in 1954 bought what $0.83 buys in 1966.

Consumer prices rose 0.7% in 1954, extending 1953’s 0.8% slowdown even as the economy tipped into recession, an early example of prices continuing to rise through a downturn rather than falling with it. The National Bureau of Economic Research dates that recession from July 1953 to May 1954, as defense spending fell after the Korean War armistice and the tighter monetary policy of the year before worked its way through the economy. The Supreme Court reshaped a different part of American life that spring: its unanimous May 17 ruling in Brown v. Board of Education held that “separate but equal” public schools violated the Constitution, overturning the legal basis for segregated education. Washington also closed the book on a different fight that year. Following the televised Army-McCarthy hearings that spring, the Senate voted 67 to 22 on December 2 to condemn Senator Joseph McCarthy’s conduct, ending his dominance of American politics after four years of anti-communist investigations. Consumer prices finished 1954 171.7% above their 1913 level, essentially flat with 1953 as the mild recession held the cost of living in check. First-class postage held at 3 cents, and the minimum wage stayed at 75 cents an hour.

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The destination year: 1966

Consumer prices rose 2.9% in 1966, nearly double 1965’s 1.6% as Vietnam War spending kept climbing without an offsetting tax increase, pushing the economy closer to capacity and prices higher along with it. Medicare coverage took effect that July 1, extending federal health insurance to roughly 19 million Americans age 65 and older under the program signed into law the year before. The Federal Reserve had already moved to cool the overheating economy, raising its discount rate the previous December over White House objections; the tightening carried into 1966 as the first postwar credit crunch, freezing parts of the housing and municipal bond markets even as inflation kept climbing. Congress widened the wage floor’s reach that September 23, when the Fair Labor Standards Amendments of 1966 set a $1.40 minimum wage effective the following February and extended coverage to roughly 9 million more workers in retail, hospitals, schools, and other services not previously covered. Consumer prices finished 1966 227.3% above their 1913 level. First-class postage held at 5 cents, and the minimum wage stayed at $1.25 an hour for the rest of the year.

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