Value of $100 in 1972, adjusted to 1978

What happened to prices between 1972 and 1978

Between 1972 and 1978, the Consumer Price Index went from 41.8 to 65.2. Cumulatively, prices increased 56.0%, which works out to an average of 7.69% per year. Put differently, a dollar in 1972 bought what $0.64 buys in 1978.

Consumer prices rose just 3.2% in 1972, the calmest year of the decade and a sharp break from the previous two years. The relief was largely engineered: Nixon’s wage and price controls, imposed as a 90-day freeze in August 1971, had settled into a series of “phases” that capped how much businesses could raise prices through the election year. Economists would later argue the controls mostly deferred inflation rather than curing it, storing up pressure that broke loose once they were lifted. Nixon spent political capital on foreign policy that year, traveling to Beijing that February in the first visit by a sitting U.S. president to the People’s Republic of China, a trip that began normalizing relations Washington had frozen since 1949. Closer to home, five men were arrested breaking into the Democratic National Committee’s offices at the Watergate complex that June 17, an event that drew little attention at the time but would eventually force Nixon from office. None of it dented his re-election bid: Nixon carried 49 states against Democrat George McGovern that November, helped by an economy that, on paper, looked more stable than it had in years. A median household earned $9,697 in 1972, a new home sold for a median $27,600, and gas held near 36 cents a gallon for a third straight year. Consumer prices stood 322.2% above their 1913 level, a lull that would not survive contact with the controls’ expiration and the oil shock still to come.

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The destination year: 1978

Consumer prices rose 7.6% in 1978, accelerating for a second straight year as rising wages, a weakening dollar, and climbing energy costs outpaced the Federal Reserve’s response. Fed chairman G. William Miller, appointed by Carter that March, kept interest rates too low to slow the trend, a policy later cited as one reason inflation kept building toward the following year’s crisis. California voters responded to their own version of the problem that June, passing Proposition 13 by nearly two to one to cap property tax rates after years of rising home values had pushed tax bills up alongside them. Foreign policy delivered one of the decade’s genuine breakthroughs: President Carter brought Egyptian President Anwar Sadat and Israeli Prime Minister Menachem Begin together for thirteen days of negotiations at Camp David that September, producing a framework for peace between the two countries that was signed as a treaty the following March. First-class postage rose to 15 cents that May 29, a rate that would hold longer than any other in the decade. The year ended in tragedy: cult leader Jim Jones directed the mass murder-suicide of more than 900 followers at a remote settlement in Guyana that November 18. A median household earned $15,064 in 1978, a new home sold for a median $55,700, and gas averaged 63 cents a gallon. Consumer prices stood 558.6% above their 1913 level, with the decade’s worst inflation still to come.

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