Value of $100 in 1989, adjusted to 2013

What happened to prices between 1989 and 2013

Between 1989 and 2013, the Consumer Price Index went from 124 to 232.957. Cumulatively, prices increased 87.9%, which works out to an average of 2.66% per year. Put differently, a dollar in 1989 bought what $0.53 buys in 2013: the 1989 dollar lost 46.8% of its purchasing power over these 24 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: 2013

In 2013, prices rose 1.5% and $100 from 1989 had the buying power of $188; the year's average CPI of 232.957 is the level behind every 2013 figure on this page.

2013 was a low-inflation year with a lot of noise around the Federal Reserve. Consumer prices rose 1.5%, below the Fed’s 2% target, and gasoline eased to an average of $3.51 a gallon. Housing was the exception: the median new home sold for about $268,900, up sharply from $245,200 in 2012, as the market recovered from its post-crisis bottom.

The Fed dominated the news. Chairman Ben Bernanke’s May comments about slowing bond purchases pushed long-term interest rates up by roughly a percentage point that summer, and mortgages became more expensive within weeks. In December the Fed finally announced a first small cut to its purchases while promising to keep short-term rates near zero for a long time.

Washington added its own disruption. A 16-day government shutdown in October delayed data releases and left a hole in that month’s CPI collection. Median household income was reported at $53,585, the federal minimum wage stayed at $7.25, and a first-class stamp cost 46 cents. The decade’s pattern was taking shape: slow price growth, ultra-low interest rates, and a labor market that improved gradually.

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