1974 was the year the postwar economy broke its old rules. Consumer prices rose 11.0%, the fastest annual increase since 1947, as the Arab oil embargo that ran from October 1973 to March 1974 roughly quadrupled the price of crude oil worldwide. Gasoline, which had averaged 38.5 cents a gallon in 1973, jumped to 53.2 cents, and shortages forced many states into odd-even rationing at the pump. Nixon’s wage and price controls, in place in some form since 1971, expired at the end of April, removing the last brake on prices just as the oil shock hit. Nixon himself resigned in August over Watergate, and Gerald Ford’s response to inflation, a voluntary “Whip Inflation Now” campaign built around lapel buttons, became a symbol of how little conventional politics could do against the problem. Prices kept climbing even as the economy weakened: a recession that started in November 1973 dragged on, the Dow fell to a bear-market bottom of 577.60 in December, and unemployment was already rising toward the 9% it would reach in 1975. The combination of rising prices and a shrinking economy gave the decade its name: stagflation.
Year in review
Inflation in 1974
The U.S. inflation rate in 1974 was 11.0% (CPI: 49.3). Convert 1974 dollars to today →
11.0% 1974 inflation rate
7.1% 1970s average
12.3% peak month (Dec)
9.4% lowest month (Jan)
What things cost in 1974
| Median household income | $11,197 |
|---|---|
| Gas (per gallon) | $0.53 |
| Median home price | $35,900 |
| First-class stamp | $0.10 |
| Federal minimum wage | $2.00 |
What $100 from 1974 was worth later
| In 1980 | $167 |
|---|---|
| In 1990 | $265 |
| In 2000 | $349 |
| In 2010 | $442 |
| In 2020 | $525 |
| In 2026 | $673 |
Inflation in 1974, month by month
| Month | CPI-U | 12-month rate |
|---|---|---|
| January | 46.6 | 9.4% |
| February | 47.2 | 10.0% |
| March | 47.8 | 10.4% |
| April | 48 | 10.1% |
| May | 48.6 | 10.7% |
| June | 49 | 10.9% |
| July | 49.4 | 11.5% |
| August | 50 | 10.9% |
| September | 50.6 | 11.9% |
| October | 51.1 | 12.1% |
| November | 51.5 | 12.2% |
| December | 51.9 | 12.3% |
Economic events of 1974
- Consumer prices rise 11.0% for the year, the fastest since 1947 The jump followed the Arab oil embargo of October 1973 to March 1974, which roughly quadrupled the price of crude oil on world markets. It was the first year Americans experienced the double bind of high inflation alongside a weakening economy, a combination economists started calling "stagflation."
- Gasoline shortages bring rationing by license plate With embargoed oil squeezing supply through early 1974, many states adopted odd-even rationing: cars with plates ending in an odd number could buy gas only on odd-numbered days, even plates on even days. Lines at the pump became a defining image of the year even after the embargo ended in March.
- Nixon's wage and price controls expire at the end of April The controls, first imposed in 1971 to hold down inflation, had been loosened in stages since; their final phase lapsed on April 30, 1974, removing the last restraint on prices just as the oil shock was pushing them higher.
- Nixon resigns; Ford launches the "Whip Inflation Now" campaign Richard Nixon left office on August 9, 1974, over the Watergate scandal, and Gerald Ford became president. That October, Ford asked Americans to wear "WIN" buttons and pledge to cut their own spending and waste, a voluntary anti-inflation drive that was widely mocked and had little measurable effect on prices.
- The stock market falls to a bear-market bottom in December The Dow Jones Industrial Average closed at 577.60 on December 6, 1974, down about 45% from its January 1973 high. A recession that had begun in November 1973 would run into March 1975, and unemployment climbed toward 9% the following year even as prices kept rising.
Sources: U.S. Census Bureau, Current Population Survey (income); U.S. Census Bureau, New Residential Sales (home price); U.S. Energy Information Administration (gasoline); U.S. Department of Labor (minimum wage); USPS historical rates.
Inflation figures: U.S. Bureau of Labor Statistics, CPI-U annual averages. See the methodology.