Value of $100 in 1989, adjusted to 2011

What happened to prices between 1989 and 2011

Between 1989 and 2011, the Consumer Price Index went from 124 to 224.939. Cumulatively, prices increased 81.4%, which works out to an average of 2.74% per year. Put differently, a dollar in 1989 bought what $0.55 buys in 2011: the 1989 dollar lost 44.9% of its purchasing power over these 22 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.

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The destination year: 2011

In 2011, prices rose 3.2% and $100 from 1989 had the buying power of $181; the year's average CPI of 224.939 is the level behind every 2011 figure on this page.

2011 brought the fastest inflation of the post-recession recovery. Consumer prices rose 3.2%, roughly double the 2010 pace, and the cause was mostly at the pump and the grocery store. Unrest across the Middle East and North Africa, including the war in Libya, pushed gasoline to an annual average of $3.52 a gallon, the highest yearly figure recorded to that point. Food prices also rose faster than the overall index.

Household budgets did not keep up. The median household income was $50,054, barely above the year before, and the median new home sold for about $227,200. The federal minimum wage stayed at $7.25 and a first-class stamp at 44 cents.

Policy stayed loose. The Federal Reserve kept its policy rate near zero and launched Operation Twist in September to lower long-term rates. Washington spent the summer in a debt-ceiling fight that ended in S&P’s August downgrade of the U.S. credit rating. The inflation spike proved temporary: the 2011 rate was the high point of the early 2010s, and prices grew more slowly in every year that followed until 2017.

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