Value of $100 in 1961, adjusted to 1965

What happened to prices between 1961 and 1965

Between 1961 and 1965, the Consumer Price Index went from 29.9 to 31.5. Cumulatively, prices increased 5.4%, which works out to an average of 1.31% per year. Put differently, a dollar in 1961 bought what $0.95 buys in 1965.

Consumer prices rose 1.0% in 1961, down from 1960’s 1.7% as the economy climbed out of recession, a recovery the National Bureau of Economic Research dates to that February. Politically, the year opened with a changing of the guard: outgoing president Dwight Eisenhower’s farewell address on January 17 warned of a growing “military-industrial complex,” and three days later John F. Kennedy was sworn in, urging Americans to “ask not what your country can do for you.” The new administration’s first major foreign-policy test came quickly and badly: a CIA-organized force of Cuban exiles landed at the Bay of Pigs on April 17 aiming to topple Fidel Castro, and without the U.S. air support Kennedy withheld, the invasion collapsed within three days. Cold War tensions hardened further that August, when East German forces sealed the border between East and West Berlin overnight, building what would become the Berlin Wall and stopping the flow of refugees to the West. Domestically, the wage floor moved for the first time in five years: the Fair Labor Standards Amendments of 1961, effective that September, raised the minimum wage to $1.15 an hour and extended coverage to roughly 3.6 million additional workers. Consumer prices finished 1961 202.0% above their 1913 level. First-class postage held at 4 cents.

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The destination year: 1965

Consumer prices rose 1.6% in 1965, up from 1964’s 1.3% in a pickup that economists later mark as the start of the Great Inflation, a run of accelerating price increases driven by rising Vietnam War spending layered on top of new Great Society programs. The war itself escalated on the ground that March, when about 3,500 Marines came ashore at Da Nang, the first American combat troops committed to Vietnam; troop levels would climb toward 200,000 by year’s end. Domestic policy expanded just as fast: Medicare and Medicaid became law that July 30, creating federal health insurance for older and low-income Americans, and the Voting Rights Act, signed that August 6, banned literacy tests and other devices used to disenfranchise Black voters. The civil rights movement’s gains coexisted with urban unrest that same August, when a highway patrol traffic stop in the Watts neighborhood of Los Angeles set off six days of rioting that left 34 people dead. Consumer prices finished 1965 218.2% above their 1913 level. First-class postage held at 5 cents, and the minimum wage stayed at $1.25 an hour.

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