Value of $100 in 1989, adjusted to 2018

What happened to prices between 1989 and 2018

Between 1989 and 2018, the Consumer Price Index went from 124 to 251.107. Cumulatively, prices increased 102.5%, which works out to an average of 2.46% per year. Put differently, a dollar in 1989 bought what $0.49 buys in 2018: the 1989 dollar lost 50.6% of its purchasing power over these 29 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: 2018

In 2018, prices rose 2.4% and $100 from 1989 had the buying power of $203; the year's average CPI of 251.107 is the level behind every 2018 figure on this page.

2018 was the peak of the late-2010s expansion. Consumer prices rose 2.4%, the fastest since 2011, with gasoline averaging $2.72 a gallon after a summer high. Unemployment fell to 3.7% in September, the lowest since 1969, and median household income reached $63,179. The median new home sold for about $331,800, and a first-class stamp cost 50 cents. The federal minimum wage was still $7.25.

Trade policy became a price factor for the first time in decades. New tariffs on steel, aluminum, and a growing list of Chinese goods raised costs for manufacturers and some consumer products, and retaliation cut into exports of soybeans and other farm goods.

The Federal Reserve, led from February by Jerome Powell, raised rates four times to 2.25–2.50%. A stock-market drop of nearly 20% in the fourth quarter led the Fed to signal a pause in early 2019. Oil fell from over $75 a barrel in October to below $50 by December, which pulled headline inflation lower going into the next year.

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