Value of $100 in 1969, adjusted to 2009

What happened to prices between 1969 and 2009

Between 1969 and 2009, the Consumer Price Index went from 36.7 to 214.537. Cumulatively, prices increased 484.6%, which works out to an average of 4.51% per year. Put differently, a dollar in 1969 bought what $0.17 buys in 2009.

Consumer prices rose 5.5% in 1969, up from 1968’s 4.2% and the fastest pace since the Korean War era, as years of Vietnam War spending, a labor market with unemployment under 4%, and expansionary fiscal policy finally showed up fully in prices. Richard Nixon was inaugurated that January 20, pledging to curb rising prices without wage and price controls, a position he would reverse within two years. The decade’s most triumphant moment came that July 20, when Neil Armstrong and Buzz Aldrin walked on the Moon while Michael Collins orbited above, fulfilling the goal Kennedy had set in 1961 of landing a man on the lunar surface before the decade’s end. Culture and protest both reached new extremes that year: an estimated 400,000 people gathered on a dairy farm in Bethel, New York, for the Woodstock music festival that August, and a police raid on the Stonewall Inn in New York’s Greenwich Village that June touched off days of resistance now credited with launching the modern gay rights movement. Consumer prices finished the decade 270.7% above their 1913 level, up 24.0% from where they stood in 1960. The 1960s had opened with inflation near 1% a year and closed with prices rising faster than at any point since Korea, setting up the Great Inflation that would define the 1970s. First-class postage held at 6 cents, and the minimum wage stayed at $1.60 an hour.

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The destination year: 2009

2009 is the rarest kind of year in the modern price data: one where the cost of living went down. The CPI fell 0.4%, the first full-year deflation since 1955, as the Great Recession hollowed out demand and oil unwound from its $147 spike the summer before. Gasoline that had cost over $4 a gallon in July 2008 averaged $2.35 in 2009, and that energy collapse dragged the 12-month inflation rate to −2.1% by July, the deepest reading since 1950. Policymakers treated falling prices not as relief but as a warning: deflation raises the real weight of debt precisely when households are drowning in it, which is why the Federal Reserve pinned interest rates near zero, began buying bonds by the hundreds of billions, and Washington passed a $787 billion stimulus. The medicine took: prices stabilized within a year, and 2009 remains the textbook case of why central banks fear deflation more than moderate inflation.

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