Value of $100 in 1989, adjusted to 2010

What happened to prices between 1989 and 2010

Between 1989 and 2010, the Consumer Price Index went from 124 to 218.056. Cumulatively, prices increased 75.9%, which works out to an average of 2.72% per year. Put differently, a dollar in 1989 bought what $0.57 buys in 2010: the 1989 dollar lost 43.1% of its purchasing power over these 21 years.

1989 closed out a decade that began in economic crisis and ended in a long, calmer expansion. Inflation for the year came in at 4.8%, higher than the mid-decade lull but still roughly a third of the 13.5% peak that had opened the decade in 1980. The federal minimum wage, unchanged at $3.35 an hour since January 1981, had gone longer without an increase than at any point since Congress created it, and had lost close to a third of its purchasing power to inflation in the meantime; lawmakers would finally raise it to $3.80 the following April. The decade’s other unfinished business came due in August, when Congress passed FIRREA, the law that created the Resolution Trust Corporation to seize and sell off the hundreds of savings and loan institutions that a decade of deregulation and risky lending had left insolvent, a bailout that eventually cost taxpayers over $100 billion. On Wall Street, the recovery was already complete: the Dow Jones Industrial Average closed 1989 at a record high, just over two years after Black Monday’s 22.6% single-day crash, capping the bull market that had begun at the Dow’s 776 low in August 1982. Between the S&L bailout, a wage floor eroded by years without a raise, and a stock market at new highs, 1989 captured how unevenly the decade’s disinflation had been felt.

More about inflation in 1989 →

The destination year: 2010

In 2010, prices rose 1.6% and $100 from 1989 had the buying power of $176; the year's average CPI of 218.056 is the level behind every 2010 figure on this page.

2010 was a year of recovery without much price pressure. The CPI rose 1.6%, a return to growth after 2009’s deflation, with gasoline averaging $2.78 a gallon as energy prices climbed back from their recession lows. Housing costs barely moved: millions of foreclosed and vacant homes kept rents soft, and the median new home sold for about $221,800. The federal minimum wage stayed at $7.25, the level set in July 2009, and a first-class stamp cost 44 cents.

The Federal Reserve was more worried about too little inflation than too much. Its policy rate sat at 0–0.25%, and in November it announced a further $600 billion of Treasury purchases to hold down long-term borrowing costs. Congress passed the Dodd-Frank Act in July to tighten financial regulation, while a 110 billion euro rescue of Greece in May showed that the crisis had moved from American mortgages to European government debt. For anyone comparing dollars across the decade, 2010 is a useful baseline: prices were still close to their 2008 levels, and the years ahead brought a slow, steady climb.

More about inflation in 2010 →