Inflation was 2.8% in 2007, with gasoline averaging $2.80 a gallon, but the year is better known for what began underneath prices. In August, French bank BNP Paribas froze funds tied to U.S. subprime mortgages, and credit between banks tightened. The Federal Reserve responded with a half-point cut on September 18, its first in four years, and took the policy rate from 5.25% to 4.25% by December. The economy peaked that month, by the National Bureau of Economic Research’s dating, and the Great Recession followed. The median household earned about $50,200, and the median new home cost $247,900. Congress ended the decade-long freeze on the federal minimum wage in May, with the first of three steps to $5.85 in July. A first-class stamp cost 41 cents.
Year in review
Inflation in 2007
The U.S. inflation rate in 2007 was 2.8% (CPI: 207.342). Convert 2007 dollars to today →
2.8% 2007 inflation rate
2.6% 2000s average
4.3% peak month (Nov)
2.0% lowest month (Aug)
What things cost in 2007
In 2007, the median household income was $50,233, and a gallon of gas cost $2.80.
| Median household income | $50,233 |
|---|---|
| Gas (per gallon) | $2.80 |
| Median home price | $247,900 |
| First-class stamp | $0.41 |
| Federal minimum wage | $5.85 |
What $100 from 2007 was worth later
$100 from 2007 had the buying power of $160 by 2026; each milestone links to that conversion.
| In 2010 | $105 |
|---|---|
| In 2020 | $125 |
| In 2026 | $160 |
Inflation in 2007, month by month
| Month | CPI-U | 12-month rate |
|---|---|---|
| January | 202.416 | 2.1% |
| February | 203.499 | 2.4% |
| March | 205.352 | 2.8% |
| April | 206.686 | 2.6% |
| May | 207.949 | 2.7% |
| June | 208.352 | 2.7% |
| July | 208.299 | 2.4% |
| August | 207.917 | 2.0% |
| September | 208.49 | 2.8% |
| October | 208.936 | 3.5% |
| November | 210.177 | 4.3% |
| December | 210.036 | 4.1% |
Economic events of 2007
Subprime mortgage losses spread to global credit markets in August; prices rose 2.8% that year.
- Subprime mortgage losses spread to global credit markets in August On August 9, French bank BNP Paribas froze three investment funds that held U.S. mortgage securities it could no longer value, and lending between banks seized up.
- The Fed starts cutting rates in September A half-point cut on September 18 was the first in four years. The policy rate fell from 5.25% to 4.25% by December.
- The federal minimum wage is raised for the first time in a decade Signed in May, the law raised the wage in three steps: to $5.85 in July 2007, $6.55 in July 2008, and $7.25 in July 2009.
- The Great Recession begins in December The National Bureau of Economic Research later set the business-cycle peak at December 2007. The recession lasted 18 months, the longest since the 1930s.
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.