Between 1975 and 2009, the Consumer Price Index went from 53.8 to 214.537.
Cumulatively, prices increased 298.8%, which works out to an average of
4.15% per year. Put differently, a dollar in 1975 bought what
$0.25 buys in 2009.
Consumer prices rose 9.1% in 1975, easing slightly from 1974’s
11.0% but still running far above anything the country had experienced before
the decade began. The recession that started in November 1973, the deepest
since the Great Depression, bottomed out that March, yet unemployment kept
climbing through the year and touched 9%, a combination of high inflation and
high joblessness that had no precedent in the postwar data. Vietnam ended
that April 30, when North Vietnamese forces captured Saigon and the last
Americans were evacuated by helicopter from the U.S. embassy roof. Fiscal
strain hit closer to home too: New York City, facing bankruptcy after years
of borrowing to paper over budget gaps, asked Washington for help that
October. President Ford’s initial refusal produced the Daily News headline
“Ford to City: Drop Dead,” though he ultimately signed a federal loan package
that December. Amid the gloom, Bill Gates and Paul Allen founded Microsoft
that April in Albuquerque, New Mexico, to sell a version of the BASIC
programming language for the Altair 8800, one of the first personal
computers sold to hobbyists. A median household earned $11,800 in 1975, a new
home sold for a median $39,300, and first-class postage held at 10 cents,
unchanged since 1974’s increase. Consumer prices stood 443.4%
above their 1913 level, with the decade barely past its
midpoint.
The headline number is an average. Individual categories moved very differently over this
period. Here is what $100 of 1975 spending costs in 2009, by category:
Category
Avg. yearly inflation
$100 in 1975 →
All items (CPI-U)
4.15%
$399
Medical care
6.27%
$791
Energy
4.58%
$459
Housing
4.37%
$428
Core (all items less food & energy)
4.21%
$407
Food
3.88%
$364
Transportation
3.82%
$358
Apparel
1.50%
$166
Not shown because the BLS began these indexes after 1975: recreation (1993–), education & communication (1993–).
Long periods are sampled every 2 years; the calculator above covers any pair of years.
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.
MLA: “Inflation from 1975 to 2009: $100 is worth $399 today.” InflationCalculator.com, U.S. Bureau of Labor Statistics CPI-U data, https://inflationcalculator.com/inflation/1975-to-2009/
APA: InflationCalculator.com. Inflation from 1975 to 2009. Based on U.S. Bureau of Labor Statistics CPI-U data. Retrieved from https://inflationcalculator.com/inflation/1975-to-2009/