Value of $100 in 1962, adjusted to 1978

What happened to prices between 1962 and 1978

Between 1962 and 1978, the Consumer Price Index went from 30.2 to 65.2. Cumulatively, prices increased 115.9%, which works out to an average of 4.93% per year. Put differently, a dollar in 1962 bought what $0.46 buys in 1978.

Consumer prices rose 1.0% in 1962, matching 1961’s pace as inflation stayed remarkably low and unemployment slowly declined from its recession-era highs. That January, Kennedy’s Council of Economic Advisers introduced “wage-price guideposts,” non-binding targets meant to keep pay and price increases in line with productivity growth without formal controls. The space race delivered a milestone that February, when John Glenn’s Friendship 7 capsule circled Earth three times, making him the first American to orbit the planet. Markets got a scare that spring: a dispute over U.S. Steel’s April price increase, which Kennedy publicly pressured the company into rolling back, rattled investors, and the Dow Jones Industrial Average fell about 5.7% on May 28, its steepest one-day drop since the 1929 crash. The year’s gravest moment came that October, when American reconnaissance photographed Soviet nuclear missiles in Cuba, setting off a 13-day standoff that brought the two superpowers closer to nuclear war than at any other point in the Cold War before the Soviet Union agreed to remove the missiles in exchange for a U.S. pledge not to invade the island. Consumer prices finished 1962 205.1% above their 1913 level. First-class postage held at 4 cents, and the minimum wage stayed at $1.15 an hour.

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The destination year: 1978

Consumer prices rose 7.6% in 1978, accelerating for a second straight year as rising wages, a weakening dollar, and climbing energy costs outpaced the Federal Reserve’s response. Fed chairman G. William Miller, appointed by Carter that March, kept interest rates too low to slow the trend, a policy later cited as one reason inflation kept building toward the following year’s crisis. California voters responded to their own version of the problem that June, passing Proposition 13 by nearly two to one to cap property tax rates after years of rising home values had pushed tax bills up alongside them. Foreign policy delivered one of the decade’s genuine breakthroughs: President Carter brought Egyptian President Anwar Sadat and Israeli Prime Minister Menachem Begin together for thirteen days of negotiations at Camp David that September, producing a framework for peace between the two countries that was signed as a treaty the following March. First-class postage rose to 15 cents that May 29, a rate that would hold longer than any other in the decade. The year ended in tragedy: cult leader Jim Jones directed the mass murder-suicide of more than 900 followers at a remote settlement in Guyana that November 18. A median household earned $15,064 in 1978, a new home sold for a median $55,700, and gas averaged 63 cents a gallon. Consumer prices stood 558.6% above their 1913 level, with the decade’s worst inflation still to come.

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