Visualizing the Purchasing Power of the Dollar Over the Last Century

by howmuch

It’s no secret that $1 now will get you less than it would 100 years ago, but just how much has the purchasing power of the U.S. Dollar decreased over the years? To illustrate this, we created a visualization that demonstrates the rise and fall of the dollar since 1913. Using this graphic, we can see how inflation and changes in the Consumer Price Index have decreased the dollar’s purchasing power over the last century.

  • $100 in 1913 would only be worth about $3.87 today.
  • While the purchasing power of the dollar has gone up and down since 1913, it has never surpassed the purchasing power it had in 1913.
  • The purchasing power of U.S. citizens has always topped the charts, but that could be changing in the future.
  • Inflation impacts nearly all variables of macroeconomics, and many believe that current U.S. inflation levels are too low.

To create our visualization, we used data from the Bureau of Labor Statistics’ CPI Inflation Calculator. This calculator uses the Consumer Price Index for All Urban Consumers, which represents the changes in prices for consumer goods and services purchased by urban households.

By examining this data we can see how the purchasing power, or the total amount of goods and services that can be bought with one dollar, has changed since 1913. Additionally, we can see how recessions and major economic events impact our purchasing power.

What is $100 worth in 1913 over time?

1913: $100
1923: $57.89
1933: $76.15
1943: $57.23
1953: $37.08
1963: $32.35
1973: $22.30
1983: $9.94
1993: $6.85
2003: $5.38
2013: $4.25
2019: $3.87

Though there are outliers, the purchasing power of the dollar has steadily decreased since 1913. This is due to inflation and the continued increase of the Consumer Price Index over the years. As demonstrated by the data, dollar purchasing power has a negative correlation with the CPI. As the CPI increases, purchasing power of the dollar decreases over time.

Inflation is the constant rise in the prices of consumer goods and services over the years. As these prices continue to increase, the total amount of goods and services that can be purchased with a single dollar decreases.

Typically, sustained inflation occurs when the world’s money supply outperforms economic growth, which is why many people suggest that the world’s central banks must coordinate to maintain economic stability. This isn’t necessarily a bad thing. Controlled inflation provides stable growth environment in asset prices. This increases the value of homes and other real assets.

Recessions and major economic events can also affect inflation and the CPI. During a recession, the CPI often falls or increases at a slower rate due to the decreased demand for consumer goods and services.

By taking a look at our informative visualization, we can see how inflation and the increase in the Consumer Price Index have impacted our purchasing power over the years.

What do you think of this phenomenon? Is inflation necessary for economic growth? Let us know in the comments.

Data: Table 1.1

 

 

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