Value of $100 in 1972, adjusted to 2016

What happened to prices between 1972 and 2016

Between 1972 and 2016, the Consumer Price Index went from 41.8 to 240.007. Cumulatively, prices increased 474.2%, which works out to an average of 4.05% per year. Put differently, a dollar in 1972 bought what $0.17 buys in 2016: the 1972 dollar lost 82.6% of its purchasing power over these 44 years.

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: 2016

In 2016, prices rose 1.3% and $100 from 1972 had the buying power of $574; 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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