Value of $100 in 1959, adjusted to 2009

What happened to prices between 1959 and 2009

Between 1959 and 2009, the Consumer Price Index went from 29.1 to 214.537. Cumulatively, prices increased 637.2%, which works out to an average of 4.08% per year. Put differently, a dollar in 1959 bought what $0.14 buys in 2009.

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: 2009

2009 is the rarest kind of year in the modern price data: one where the cost of living went down. The CPI fell 0.4%, the first full-year deflation since 1955, as the Great Recession hollowed out demand and oil unwound from its $147 spike the summer before. Gasoline that had cost over $4 a gallon in July 2008 averaged $2.35 in 2009, and that energy collapse dragged the 12-month inflation rate to −2.1% by July, the deepest reading since 1950. Policymakers treated falling prices not as relief but as a warning: deflation raises the real weight of debt precisely when households are drowning in it, which is why the Federal Reserve pinned interest rates near zero, began buying bonds by the hundreds of billions, and Washington passed a $787 billion stimulus. The medicine took: prices stabilized within a year, and 2009 remains the textbook case of why central banks fear deflation more than moderate inflation.

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