Value of $100 in 1970, adjusted to 2016

What happened to prices between 1970 and 2016

Between 1970 and 2016, the Consumer Price Index went from 38.8 to 240.007. Cumulatively, prices increased 518.6%, which works out to an average of 4.04% per year. Put differently, a dollar in 1970 bought what $0.16 buys in 2016: the 1970 dollar lost 83.8% of its purchasing power over these 46 years.

Consumer prices rose 5.7% in 1970, up from 1969’s 5.5%, extending a run of faster price growth that stretched back to the mid-1960s, even as a recession that began in December 1969 pushed unemployment toward 6%. Prices and joblessness rising together confounded the era’s economic thinking, which held that policymakers could trade a little more inflation for a little less unemployment; 1970 was an early sign that trade-off was breaking down, a pattern that would harden into stagflation later in the decade. Washington restructured how it delivered mail that year: after postal workers staged the first strike ever by federal employees that March, Congress passed the Postal Reorganization Act in August, replacing the cabinet-level Post Office Department with the independent U.S. Postal Service. Environmental policy also took shape in 1970. An estimated 20 million Americans marked the first Earth Day on April 22, and the Environmental Protection Agency opened that December to enforce the Clean Air Act and the pollution rules that followed. The Vietnam War kept dividing the country: on May 4, National Guard troops fired on antiwar demonstrators at Kent State University in Ohio, killing four students and setting off strikes on hundreds of campuses. A median household earned $8,734 that year, a gallon of gas averaged 36 cents, and a first-class stamp cost 6 cents, the rate it had held since 1968. Prices stood 291.9% above their 1913 level by the end of 1970, a milestone that would look almost mild against the decade still to come.

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The destination year: 2016

In 2016, prices rose 1.3% and $100 from 1970 had the buying power of $619; the year's average CPI of 240.007 is the level behind every 2016 figure on this page.

2016 opened with the cheapest oil in more than a decade and closed with a change in political direction. Crude fell to about $26 a barrel in February, and gasoline averaged $2.14 a gallon for the year, its lowest annual average since 2004. Headline inflation was 1.3%, a modest rebound from 2015’s 0.1%, though prices excluding food and energy rose faster, driven by rents and health care.

Median household income rose to $59,039, the second large gain in a row, and the median new home sold for about $307,800. The federal minimum wage held at $7.25, and a first-class stamp fell to 47 cents after a January rate cut, a rare decrease.

Two votes changed the outlook. Britain’s June decision to leave the European Union unsettled currency markets, and the U.S. election in November raised expectations of tax cuts, deficits, and faster growth, sending long-term interest rates higher. OPEC’s November output cut ended the oil slump, and the Federal Reserve made its second rate increase in December, to 0.50–0.75%.

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