Between 1958 and 1981, the Consumer Price Index went from 28.9 to 90.9.
Cumulatively, prices increased 214.5%, which works out to an average of
5.11% per year. Put differently, a dollar in 1958 bought what
$0.32 buys in 1981.
Consumer prices rose 2.8% in 1958, down only slightly from
1957’s 3.3% even as the country sank into the sharpest
postwar recession to that point, an early sign that inflation and a
shrinking economy could coexist rather than trade off against each other.
The National Bureau of Economic Research dates the downturn’s trough to
that April, with unemployment peaking near 7.5% that summer, the worst
reading since the 1930s. The Post Office raised first-class postage to 4
cents that August 1, up from 3 cents, the rate’s first change since 1932.
Washington answered the Soviet Union’s technological lead that summer
too: Eisenhower signed the National Aeronautics and Space Act on July 29,
establishing NASA, which opened for business that October 1 to compete
with the Soviet space program after the shock of Sputnik the year before.
Consumer prices finished 1958 191.9% above their 1913
level. The minimum wage held at $1.00 an hour, and first-class postage
rose to 4 cents that August, the first increase since 1932.
The headline number is an average. Individual categories moved very differently over this
period. Here is what $100 of 1958 spending costs in 1981, by category:
Category
Avg. yearly inflation
$100 in 1958 →
All items (CPI-U)
5.11%
$315
Energy
6.80%
$454
Medical care
6.24%
$402
Transportation
5.27%
$326
Food
5.04%
$310
Core (all items less food & energy)
4.91%
$301
Apparel
3.36%
$214
Not shown because the BLS began these indexes after 1958: housing (1967–), recreation (1993–), education & communication (1993–).
1981 was the year the inflation fever finally broke, at an extraordinary price.
Consumer prices rose 10.3%, the second year of back-to-back double-digit
inflation and the last time the U.S. would see one. To end it, Paul Volcker’s
Federal Reserve drove its policy rate above 19% and let borrowing costs go
where they may: a 30-year mortgage cost more than 18% by autumn, car loans and
business credit froze, and homebuilders mailed the Fed two-by-fours in protest.
The squeeze tipped the economy into recession in July, the deep 1981–82
downturn that would push unemployment past 10%. But it worked. Inflation fell
by nearly half within a year and to under 4% by 1983, the disinflation that
defined the following two decades. Even the price of mailing a letter told the
year’s story: postage went up twice in eight months.
MLA: “Inflation from 1958 to 1981: $100 is worth $315 today.” InflationCalculator.com, U.S. Bureau of Labor Statistics CPI-U data, https://inflationcalculator.com/inflation/1958-to-1981/
APA: InflationCalculator.com. Inflation from 1958 to 1981. Based on U.S. Bureau of Labor Statistics CPI-U data. Retrieved from https://inflationcalculator.com/inflation/1958-to-1981/