1983 confirmed that the Volcker disinflation was not a one-year fluke. Consumer prices rose 3.2% for the year, nearly identical to 1982’s pace and a fraction of the double-digit rates of 1980 and 1981. With inflation tamed and interest rates coming down, the economy roared back from the 1981-82 recession: real GDP grew 4.6%, the strongest calendar-year growth since the 1950s, and unemployment fell from its 10.8% peak to 8.3% by December. Housing and auto sales, both starved of credit during the recession, led the rebound. In April, Congress and President Reagan enacted the Social Security Amendments of 1983, a bipartisan rescue of a system projected to run out of money within months. The law gradually raised the full retirement age from 65 to 67, began taxing benefits for higher-income retirees, and delayed that year’s cost-of-living adjustment by six months. For a program whose benefits had been indexed to the CPI since 1975, the amendments were the first major sign that inflation-proofing Social Security carried a cost Congress could not simply legislate away. By year’s end, gas averaged $1.16 a gallon and mailing a letter still cost 20 cents, prices that had barely moved since 1981, a sharp break from the constant increases of the previous decade.
Year in review
Inflation in 1983
The U.S. inflation rate in 1983 was 3.2% (CPI: 99.6). Convert 1983 dollars to today →
3.2% 1983 inflation rate
5.6% 1980s average
3.9% peak month (Apr)
2.5% lowest month (Jul)
What things cost in 1983
| Median household income | $20,885 |
|---|---|
| Gas (per gallon) | $1.16 |
| Median home price | $75,300 |
| First-class stamp | $0.20 |
| Federal minimum wage | $3.35 |
What $100 from 1983 was worth later
| In 1990 | $131 |
|---|---|
| In 2000 | $173 |
| In 2010 | $219 |
| In 2020 | $260 |
| In 2026 | $333 |
Inflation in 1983, month by month
| Month | CPI-U | 12-month rate |
|---|---|---|
| January | 97.8 | 3.7% |
| February | 97.9 | 3.5% |
| March | 97.9 | 3.6% |
| April | 98.6 | 3.9% |
| May | 99.2 | 3.5% |
| June | 99.5 | 2.6% |
| July | 99.9 | 2.5% |
| August | 100.2 | 2.6% |
| September | 100.7 | 2.9% |
| October | 101 | 2.9% |
| November | 101.2 | 3.3% |
| December | 101.3 | 3.8% |
Economic events of 1983
- The recovery becomes the strongest since the 1950s Real GDP grew 4.6% for the year as lower interest rates and falling inflation let consumer spending and housing rebound sharply from the 1981-82 recession. Unemployment fell from its 10.8% peak to 8.3% by December.
- Congress passes the Social Security Amendments of 1983 Signed by President Reagan in April, the law gradually raised the full retirement age from 65 to 67, began taxing benefits for higher-income retirees, and delayed that year's cost-of-living adjustment by six months, changes meant to keep the system solvent as it neared a projected shortfall.
- Inflation holds at 3.2%, confirming the disinflation stuck After two years of double-digit price increases followed by 1982's sharp deceleration, 1983 showed the lower inflation rate was not a one-year fluke tied to recession. The Fed had room to let interest rates ease further as the recovery took hold.
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.