Value of $100 in 1989, adjusted to 2015

What happened to prices between 1989 and 2015

Between 1989 and 2015, the Consumer Price Index went from 124 to 237.017. Cumulatively, prices increased 91.1%, which works out to an average of 2.52% per year. Put differently, a dollar in 1989 bought what $0.52 buys in 2015: the 1989 dollar lost 47.7% of its purchasing power over these 26 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: 2015

In 2015, prices rose 0.1% and $100 from 1989 had the buying power of $191; the year's average CPI of 237.017 is the level behind every 2015 figure on this page.

2015 was almost a year with no inflation at all. Consumer prices rose 0.1%, the smallest increase since the 2009 decline, because energy prices kept falling. Gasoline averaged $2.45 a gallon, down from $3.37 in 2014, and a strong dollar made imported goods cheaper. The picture was different outside food and energy: core prices rose about 1.8% as rents and medical costs climbed.

Incomes finally showed real progress. Median household income reached $56,516, a large jump from $53,657, and the median new home sold for about $296,400. The federal minimum wage stayed at $7.25, and a first-class stamp stayed at 49 cents.

The Federal Reserve chose December to end its zero-rate policy, raising the target range to 0.25–0.50% for the first time since 2006. It moved even though headline inflation was far under 2%, arguing that the drag from energy was temporary. Earlier, a currency shift in China in August had shaken global markets and pushed oil below $40 a barrel. Prices in 2015 ended the year barely above their 2014 level.

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