1982 was the hard bottom of the disinflation Paul Volcker had set in motion. Consumer prices rose just 6.2% for the year, roughly half of 1981’s rate and a fraction of the 13.5% peak from two years earlier. The price fell because demand had been crushed: the recession that began in July 1981 did not officially end until November 1982, and unemployment kept climbing even as the economy technically began to recover, reaching 10.8% in November and December, the highest rate since the Great Depression. Manufacturing and construction, especially the auto and housing industries starved of credit by double-digit interest rates, bore the worst of it. Abroad, Mexico’s August announcement that it could not service its foreign debt opened a Latin American debt crisis that spread across the region and forced the Federal Reserve and IMF into emergency lending. The stress on the financial system pushed Volcker to start easing interest rates that October, stepping back from the strict money-supply targets he had followed since 1979. Markets read the shift correctly: the Dow Jones Industrial Average bottomed at 776.92 in mid-August, and the rally that followed became the opening leg of the 1980s bull market. By year’s end, the trade-off Volcker had bet on was becoming visible: much lower inflation, at the cost of the worst unemployment in 40 years.
Year in review
Inflation in 1982
The U.S. inflation rate in 1982 was 6.2% (CPI: 96.5). Convert 1982 dollars to today →
6.2% 1982 inflation rate
5.6% 1980s average
8.4% peak month (Jan)
3.8% lowest month (Dec)
What things cost in 1982
| Median household income | $20,171 |
|---|---|
| Gas (per gallon) | $1.22 |
| Median home price | $69,300 |
| First-class stamp | $0.20 |
| Federal minimum wage | $3.35 |
What $100 from 1982 was worth later
| In 1990 | $135 |
|---|---|
| In 2000 | $178 |
| In 2010 | $226 |
| In 2020 | $268 |
| In 2026 | $344 |
Inflation in 1982, month by month
| Month | CPI-U | 12-month rate |
|---|---|---|
| January | 94.3 | 8.4% |
| February | 94.6 | 7.6% |
| March | 94.5 | 6.8% |
| April | 94.9 | 6.5% |
| May | 95.8 | 6.7% |
| June | 97 | 7.1% |
| July | 97.5 | 6.4% |
| August | 97.7 | 5.9% |
| September | 97.9 | 5.0% |
| October | 98.2 | 5.1% |
| November | 98 | 4.6% |
| December | 97.6 | 3.8% |
Economic events of 1982
- Unemployment peaks at 10.8% in November and December, the postwar record until 2020 The recession that began in July 1981 did not officially end until November 1982, and unemployment kept climbing even as output began to recover, reaching a rate unseen since the Great Depression. Paul Volcker's Fed had accepted that price as the cost of ending inflation.
- Inflation falls to 6.2%, roughly half of 1981's rate The disinflation the Federal Reserve had promised arrived faster than expected. With demand crushed by the deepest recession since the 1930s, businesses lost the pricing power that had driven the previous decade's wage-price spiral.
- Mexico's debt default in August triggers a Latin American debt crisis Mexico announced it could not service its foreign debt, the opening shock of a crisis that soon spread to Brazil, Argentina, and other heavily indebted economies in the region. The Fed and IMF organized emergency lending, and the strain pushed Volcker to start easing U.S. interest rates that autumn.
- The stock market bottoms out in August, starting a bull run that would last until 1987 The Dow Jones Industrial Average closed at 776.92 on August 12, its lowest point of the year, then rallied as falling interest rates and the prospect of recovery took hold. It marked the start of the decade's long bull market.
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.