Between 1963 and 1981, the Consumer Price Index went from 30.6 to 90.9.
Cumulatively, prices increased 197.1%, which works out to an average of
6.24% per year. Put differently, a dollar in 1963 bought what
$0.34 buys in 1981.
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.
The headline number is an average. Individual categories moved very differently over this
period. Here is what $100 of 1963 spending costs in 1981, by category:
Category
Avg. yearly inflation
$100 in 1963 →
All items (CPI-U)
6.24%
$297
Energy
8.47%
$432
Medical care
7.10%
$344
Transportation
6.33%
$302
Food
6.31%
$301
Core (all items less food & energy)
5.90%
$281
Apparel
4.02%
$203
Not shown because the BLS began these indexes after 1963: housing (1967–), recreation (1993–), education & communication (1993–).
1981 was the year the inflation fever finally broke, at an extraordinary price.
Consumer prices rose 10.3%, the second year of back-to-back double-digit
inflation and the last time the U.S. would see one. To end it, Paul Volcker’s
Federal Reserve drove its policy rate above 19% and let borrowing costs go
where they may: a 30-year mortgage cost more than 18% by autumn, car loans and
business credit froze, and homebuilders mailed the Fed two-by-fours in protest.
The squeeze tipped the economy into recession in July, the deep 1981–82
downturn that would push unemployment past 10%. But it worked. Inflation fell
by nearly half within a year and to under 4% by 1983, the disinflation that
defined the following two decades. Even the price of mailing a letter told the
year’s story: postage went up twice in eight months.
MLA: “Inflation from 1963 to 1981: $100 is worth $297 today.” InflationCalculator.com, U.S. Bureau of Labor Statistics CPI-U data, https://inflationcalculator.com/inflation/1963-to-1981/
APA: InflationCalculator.com. Inflation from 1963 to 1981. Based on U.S. Bureau of Labor Statistics CPI-U data. Retrieved from https://inflationcalculator.com/inflation/1963-to-1981/