Value of $100 in 1957, adjusted to 1971

What happened to prices between 1957 and 1971

Between 1957 and 1971, the Consumer Price Index went from 28.1 to 40.5. Cumulatively, prices increased 44.1%, which works out to an average of 2.65% per year. Put differently, a dollar in 1957 bought what $0.69 buys in 1971.

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: 1971

Consumer prices rose 4.4% in 1971, down from 1970’s 5.7% as the recession that started in December 1969 finally cooled demand. The bigger economic story came that August 15, when President Nixon closed the “gold window” that let foreign governments exchange dollars for gold, ending the Bretton Woods system that had anchored the dollar since World War II. The same address announced a 90-day freeze on wages and prices, the first peacetime controls the country had seen, an attempt to break inflationary expectations without the slower grind of tighter money. The “Nixon Shock,” as it came to be known, let the dollar float against other currencies for the first time and set the stage for a wage-and-price-control regime that would run in various forms into 1973. Politically, the country lowered its voting age that year: the 26th Amendment, ratified July 1, extended the vote to 18-year-olds, capping a campaign built on the argument that men old enough to be drafted to Vietnam were old enough to vote for the people who sent them. The Postal Service, independent since 1970’s reorganization, raised first-class postage from 6 to 8 cents that May. A median household earned $9,028 in 1971, up from $8,734 the year before, while gas held near 36 cents a gallon and a new home sold for a median $25,200. Consumer prices stood 309.1% above their 1913 level by year’s end, still years away from the double-digit inflation the controls were meant to prevent.

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