Value of $100 in 1962, adjusted to 2020

What happened to prices between 1962 and 2020

Between 1962 and 2020, the Consumer Price Index went from 30.2 to 258.811. Cumulatively, prices increased 757.0%, which works out to an average of 3.77% per year. Put differently, a dollar in 1962 bought what $0.12 buys in 2020.

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: 2020

2020 was the year the pandemic rewired the price data without triggering the inflation spike that followed it. Consumer prices rose just 1.2% for the year, the mildest pace since 2015, as COVID-19 lockdowns emptied roads, closed airports, and crushed energy demand. Oil told the starkest story: on April 20, U.S. crude futures fell to about negative $37 a barrel, the first negative settlement in the market’s history, as storage capacity ran out and no one wanted the physical barrels. Gasoline followed it down, falling to about $1.80 a gallon nationally that month before recovering to average $2.17 for the year. Grocery prices moved the other way: pantry stocking and meatpacking-plant disruptions pushed food-at-home costs up faster than usual, a rare case of food and energy pulling the index in opposite directions. Washington answered with the $2.2 trillion CARES Act, signed March 27, which sent $1,200 payments to most adults and added $600 a week to unemployment benefits as states ordered widespread business closures. The Federal Reserve cut its policy rate to near zero in two emergency moves that same month and pledged to buy Treasury and mortgage bonds “in the amounts needed” to keep credit markets working, an open-ended commitment beyond even its 2008 response. None of it showed up in the CPI yet: the stimulus, the supply shocks, and the reopening whiplash that followed would build into the fastest inflation in four decades over the next two years.

More about inflation in 2020 →