Value of $100 in 1957, adjusted to 1966

What happened to prices between 1957 and 1966

Between 1957 and 1966, the Consumer Price Index went from 28.1 to 32.4. Cumulatively, prices increased 15.3%, which works out to an average of 1.59% per year. Put differently, a dollar in 1957 bought what $0.87 buys in 1966.

Consumer prices rose 3.3% in 1957, up from 1956’s 1.5% and the sharpest increase since the Korean War price surge of 1951. The jump fed a growing debate among economists over “cost-push” inflation, prices climbing from rising wages and material costs rather than excess demand, a debate that would recur for the next quarter century. The Federal Reserve tightened policy to fight it, and by August the tighter money combined with falling business investment to tip the economy into a recession, according to the National Bureau of Economic Research’s dating. The Cold War took a technological turn that October, when the Soviet Union launched Sputnik, the first artificial satellite, on the 4th, stunning the American public and setting off both the Space Race and a surge in federal science and defense spending the following year. Civil rights reached a crisis that September in Little Rock, Arkansas: after Governor Orval Faubus used the National Guard to block nine Black students from Central High School, Eisenhower federalized the Guard and sent the 101st Airborne Division to enforce the Supreme Court’s desegregation order. Consumer prices finished 1957 183.8% above their 1913 level. First-class postage held at 3 cents, and the minimum wage stood at $1.00 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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