Consumer prices fell 2.1% in 1938, reversing most of 1937’s gain and interrupting four straight years of recovery from the Depression’s trough. The National Bureau of Economic Research dates the bottom of the downturn, which had begun that May, to June 1938, a sharp 13-month contraction that briefly pushed unemployment back up near 19%. Even in a year the economy was shrinking again, Congress passed one of the New Deal’s most lasting reforms. The Fair Labor Standards Act, signed June 25 and effective that October, established the first federal minimum wage, 25 cents an hour, capped the standard workweek at 44 hours with time-and-a-half overtime beyond it, and restricted the employment of children in most industries. The wage floor and hours limits applied only to workers engaged in interstate commerce at first, but they set a precedent that would expand in the decades that followed. Consumer prices stood 42.4% above their 1913 level and 17.5% below their 1929 peak, evidence of how far the recovery still had to go even eight years after the Depression began. First-class postage held at 3 cents.
Year in review
Inflation in 1938
The U.S. inflation rate in 1938 was -2.1% (CPI: 14.1). Convert 1938 dollars to today →
-2.1% 1938 inflation rate
-1.9% 1930s average
0.7% peak month (Jan)
-4.1% lowest month (Oct)
What things cost in 1938
| First-class stamp | $0.03 |
|---|---|
| Federal minimum wage | $0.25 |
What $100 from 1938 was worth later
| In 1940 | $99.29 |
|---|---|
| In 1950 | $171 |
| In 1960 | $210 |
| In 1970 | $275 |
| In 1980 | $584 |
| In 1990 | $927 |
| In 2000 | $1,221 |
| In 2010 | $1,546 |
| In 2020 | $1,836 |
| In 2026 | $2,352 |
Inflation in 1938, month by month
| Month | CPI-U | 12-month rate |
|---|---|---|
| January | 14.2 | 0.7% |
| February | 14.1 | 0.0% |
| March | 14.1 | -0.7% |
| April | 14.2 | -0.7% |
| May | 14.1 | -2.1% |
| June | 14.1 | -2.1% |
| July | 14.1 | -2.8% |
| August | 14.1 | -2.8% |
| September | 14.1 | -3.4% |
| October | 14 | -4.1% |
| November | 14 | -3.4% |
| December | 14 | -2.8% |
Economic events of 1938
- Consumer prices fall 2.1% as the 1937-38 recession bites The drop reversed most of 1937's gain and interrupted four straight years of recovery, a reminder of how fragile the climb back from the Depression's trough still was.
- The recession bottoms out that June The National Bureau of Economic Research dates the trough of the downturn that began in May 1937 to June 1938, a 13-month contraction that briefly pushed unemployment back up near 19%, one of the sharpest short-term downturns on record.
- The Fair Labor Standards Act establishes the first federal minimum wage Signed June 25 and effective that October, the law set a federal minimum wage of 25 cents an hour, capped the standard workweek at 44 hours with time-and-a-half overtime beyond it, and restricted the employment of children in most industries.
Sources: U.S. Bureau of Labor Statistics, Consumer Price Index history; National Bureau of Economic Research, US Business Cycle Expansions and Contractions; U.S. Department of Labor, history of the Fair Labor Standards Act; USPS historical postage rates.
Inflation figures: U.S. Bureau of Labor Statistics, CPI-U annual averages. See the methodology.