Value of $100 in 1959, adjusted to 1974

What happened to prices between 1959 and 1974

Between 1959 and 1974, the Consumer Price Index went from 29.1 to 49.3. Cumulatively, prices increased 69.4%, which works out to an average of 3.58% per year. Put differently, a dollar in 1959 bought what $0.59 buys in 1974.

Consumer prices rose 0.7% in 1959, down sharply from 1958’s 2.8% as the economy recovered briskly from the year before’s recession, with output and employment both rebounding through the year. The map of the country changed that year for the first time since 1912: Alaska joined the union January 3, and Hawaii followed August 21, completing the 50-state United States. Ninety miles from Florida, Cuba changed hands that January, when Fidel Castro’s guerrilla forces overthrew President Fulgencio Batista, who fled the country on the 1st; Castro entered Havana on the 8th, beginning a Communist government that would define Cold War tensions in the hemisphere for decades. Labor and management fought their longest battle of the postwar era that summer: the United Steelworkers walked out July 15 in a dispute over work rules, the longest strike in the industry’s history, before a federal court granted the Eisenhower administration a Taft-Hartley back-to-work order that November. Consumer prices finished the decade 193.9% above their 1913 level, up 20.7% from where they stood in 1950. First-class postage held at 4 cents, and the minimum wage stayed at $1.00 an hour.

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The destination year: 1974

1974 was the year the postwar economy broke its old rules. Consumer prices rose 11.0%, the fastest annual increase since 1947, as the Arab oil embargo that ran from October 1973 to March 1974 roughly quadrupled the price of crude oil worldwide. Gasoline, which had averaged 38.5 cents a gallon in 1973, jumped to 53.2 cents, and shortages forced many states into odd-even rationing at the pump. Nixon’s wage and price controls, in place in some form since 1971, expired at the end of April, removing the last brake on prices just as the oil shock hit. Nixon himself resigned in August over Watergate, and Gerald Ford’s response to inflation, a voluntary “Whip Inflation Now” campaign built around lapel buttons, became a symbol of how little conventional politics could do against the problem. Prices kept climbing even as the economy weakened: a recession that started in November 1973 dragged on, the Dow fell to a bear-market bottom of 577.60 in December, and unemployment was already rising toward the 9% it would reach in 1975. The combination of rising prices and a shrinking economy gave the decade its name: stagflation.

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