Value of $100 in 2009, adjusted to 2020

What happened to prices between 2009 and 2020

Between 2009 and 2020, the Consumer Price Index went from 214.537 to 258.811. Cumulatively, prices increased 20.6%, which works out to an average of 1.72% per year. Put differently, a dollar in 2009 bought what $0.83 buys in 2020.

2009 is the rarest kind of year in the modern price data: one where the cost of living went down. The CPI fell 0.4%, the first full-year deflation since 1955, as the Great Recession hollowed out demand and oil unwound from its $147 spike the summer before. Gasoline that had cost over $4 a gallon in July 2008 averaged $2.35 in 2009, and that energy collapse dragged the 12-month inflation rate to −2.1% by July, the deepest reading since 1950. Policymakers treated falling prices not as relief but as a warning: deflation raises the real weight of debt precisely when households are drowning in it, which is why the Federal Reserve pinned interest rates near zero, began buying bonds by the hundreds of billions, and Washington passed a $787 billion stimulus. The medicine took: prices stabilized within a year, and 2009 remains the textbook case of why central banks fear deflation more than moderate inflation.

More about inflation in 2009 →

The destination year: 2020

2020 was the year the pandemic rewired the price data without triggering the inflation spike that followed it. Consumer prices rose just 1.2% for the year, the mildest pace since 2015, as COVID-19 lockdowns emptied roads, closed airports, and crushed energy demand. Oil told the starkest story: on April 20, U.S. crude futures fell to about negative $37 a barrel, the first negative settlement in the market’s history, as storage capacity ran out and no one wanted the physical barrels. Gasoline followed it down, falling to about $1.80 a gallon nationally that month before recovering to average $2.17 for the year. Grocery prices moved the other way: pantry stocking and meatpacking-plant disruptions pushed food-at-home costs up faster than usual, a rare case of food and energy pulling the index in opposite directions. Washington answered with the $2.2 trillion CARES Act, signed March 27, which sent $1,200 payments to most adults and added $600 a week to unemployment benefits as states ordered widespread business closures. The Federal Reserve cut its policy rate to near zero in two emergency moves that same month and pledged to buy Treasury and mortgage bonds “in the amounts needed” to keep credit markets working, an open-ended commitment beyond even its 2008 response. None of it showed up in the CPI yet: the stimulus, the supply shocks, and the reopening whiplash that followed would build into the fastest inflation in four decades over the next two years.

More about inflation in 2020 →