Value of $100 in 1972, adjusted to 2017

What happened to prices between 1972 and 2017

Between 1972 and 2017, the Consumer Price Index went from 41.8 to 245.12. Cumulatively, prices increased 486.4%, which works out to an average of 4.01% per year. Put differently, a dollar in 1972 bought what $0.17 buys in 2017: the 1972 dollar lost 82.9% of its purchasing power over these 45 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: 2017

In 2017, prices rose 2.1% and $100 from 1972 had the buying power of $586; the year's average CPI of 245.12 is the level behind every 2017 figure on this page.

2017 pushed consumer prices back above the Federal Reserve’s 2% target. The CPI rose 2.1%, the first reading over 2% in five years, helped by a rebound in energy after OPEC’s output cuts and by a storm-related spike at the pump: Hurricane Harvey shut a large part of Gulf Coast refining in late August. Gasoline averaged $2.42 a gallon, up from $2.14 in 2016.

Household incomes kept rising. The median household income reached $61,372, and the median new home sold for about $322,100. The federal minimum wage stayed at $7.25, its eighth year at that level, and a first-class stamp rose to 49 cents.

The Fed raised rates three times, to 1.25–1.50%, and in October began letting its bond holdings shrink. Congress passed the Tax Cuts and Jobs Act in December, lowering the corporate rate to 21%. Even with unemployment near 4%, core inflation stayed under 2%, a puzzle that shaped Fed debates for the next two years.

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