Value of $100 in 1963, adjusted to 1974

What happened to prices between 1963 and 1974

Between 1963 and 1974, the Consumer Price Index went from 30.6 to 49.3. Cumulatively, prices increased 61.1%, which works out to an average of 4.43% per year. Put differently, a dollar in 1963 bought what $0.62 buys in 1974.

Consumer prices rose 1.3% in 1963, up slightly from 1962’s 1.0% as the expansion entered its third year with inflation still low, conditions that gave Kennedy room to push the large tax cut he had proposed to Congress. The cost of a first-class stamp rose that January 7, to 5 cents from 4 cents, the first postal rate change since 1958. That August 28, Martin Luther King Jr. delivered his “I Have a Dream” speech from the steps of the Lincoln Memorial to a quarter million people gathered for the March on Washington, building pressure on Congress to pass the civil rights bill Kennedy had proposed that June. The year ended in tragedy: Kennedy was assassinated while riding in a motorcade through Dallas on November 22, and Lyndon B. Johnson was sworn in aboard Air Force One that same afternoon. Johnson would spend the following year pushing Kennedy’s stalled tax and civil rights agenda through Congress. The minimum wage rose again that September, to $1.25 an hour, the second step of the phased increase set two years earlier. Consumer prices finished 1963 209.1% above their 1913 level.

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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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