America's 250 years of inflation and upheaval

Jul 5, 2026

Sources and methodology

Inflation is the year-over-year percentage change in the U.S. consumer price index. Historical CPI comes from MeasuringWorth’s annual U.S. CPI series, which is constructed back to 1774 and linked to official BLS CPI from 1917 onward, using CPI-U from 1978 onward; the latest observations are extended with BLS/FRED CPI-U All Items, U.S. City Average, not seasonally adjusted, series CPIAUCNS. Interest is the nominal short-term U.S. “ordinary funds” rate from MeasuringWorth, using commercial paper for 1831–1930 and Treasury bills from 1931 onward; recent observations are extended with the 3-month Treasury bill secondary-market rate, discount basis, FRED TB3MS. Unemployment uses Christina Romer’s filtered revision of Lebergott’s historical unemployment estimates for 1890–1930 and BLS/FRED UNRATE, the civilian U-3 unemployment rate, for the modern period.

1775–1789 · Revolution and the Continental

Congress emitted ~$241 million in Continental currency (states added roughly $200M more). It depreciated catastrophically: Congress officially revalued at 40:1 in March 1780, and by 1781 the market rate exceeded 100:1 — hence “not worth a Continental.” Peak monthly inflation reached roughly 47% (November 1779), making this, proportionally, the worst inflation in American history. The 1780s brought the reverse: deflation and a post-war trade depression. Hamilton’s 1790 funding program ultimately redeemed Continentals at 100:1.

1790–1815 · Early Republic

The First Bank of the United States (1791–1811) and the Coinage Act of 1792 (bimetallic dollar, 15:1 silver–gold ratio) set the framework. Federal “sixes” yielded 6–8% in the 1790s; state usury caps of 6–7% meant quoted rates understate true credit scarcity. The War of 1812 pushed wholesale prices up roughly 45% from 1811 to the 1814 peak; banks outside New England suspended specie payments in August 1814.

1815–1860 · Antebellum cycles

Sharp deflation 1815–1821 culminated in the Panic of 1819, the first major peacetime financial crisis. The Second Bank (1816–1836) died in the Bank War — Jackson’s veto July 1832, deposit removal 1833, Specie Circular July 1836 — followed by the Panic of 1837 (specie suspension May 1837) and the 1839–43 deflationary depression: wholesale prices fell ~40% and the money stock ~30%, though Temin’s work shows real output held up far better than in 1929–33. The Coinage Act of 1834 (16:1 ratio) put the US on de facto gold. Gold-rush inflows produced mild 1850s inflation; the Panic of 1857 (Ohio Life failure, August 24) spiked New York commercial paper from its normal 6–10% range to 18–36%. Net of all this: the price level in 1860 sat roughly where it had in 1774.

1861–1879 · Greenbacks and the long deflation

The Legal Tender Act (February 25, 1862) authorized $450M in greenbacks. Northern consumer prices rose ~75–80% over the war; gold hit $2.85 in greenbacks (July 1864), i.e., the paper dollar at ~35 cents. The Confederacy suffered near-hyperinflation — prices up roughly 92-fold by early 1865. Afterward came deliberate deflation: the Coinage Act of February 1873 (“Crime of ‘73”) demonetized silver; Jay Cooke’s failure (September 18, 1873) triggered the Long Depression — at 65 months (Oct 1873–Mar 1879), still the longest NBER contraction on record. Specie resumption at par arrived January 1, 1879, after prices had fallen ~30% from 1865.

1879–1913 · Classical gold standard

Secular deflation of ~1–2%/yr ran to 1896, crushing debtor farmers and fueling Populism (Bryan’s “Cross of Gold,” July 9, 1896). The Panic of 1893 produced the era’s worst slump: 1894 unemployment is estimated at 18.4% (Lebergott) or 12.3% (Romer) — the gap itself tells you how soft the data are. Klondike and South African gold reversed the trend to ~2%/yr inflation, 1897–1913. High-grade bond yields bottomed around 3.1–3.5% circa 1900 — the pre-2020 secular low — while call money could spike above 100% in panics, as in October 1907 (Knickerbocker Trust, Morgan’s rescue). The Panic of 1907 begat Aldrich–Vreeland (1908) and the Federal Reserve Act, December 23, 1913.

1914–1929 · The Fed’s baptism

The Fed opened November 16, 1914. WWI inflation ran ~17–18%/yr in 1917–18, and CPI year-over-year peaked at 23.7% in June 1920 — still the all-time record in the official series. The Fed’s 7% discount rate (June 1920) produced the violent 1920–21 depression: CPI fell 15.8% year-over-year by June 1921 (record deflation), with unemployment at 11.7% (Lebergott) or 8.7% (Romer). Then near-perfect price stability 1922–29, unemployment ~3–5%, and a speculative endgame: call money near 20% in March 1929, discount rate to 6% that August.

1929–1945 · Depression and war

After the October 1929 crash, CPI fell ~27% peak-to-trough (−9.0% in 1931, −9.9% in 1932); roughly 9,000 banks suspended; Friedman and Schwartz’s money stock fell by a third. Unemployment hit 24.9% in 1933 (Lebergott; 20.6% by Darby’s method counting relief workers as employed) and stayed above 14% through 1940, relapsing to 19% in 1938 after the Fed doubled reserve requirements. Key dates: Bank Holiday March 6, 1933; gold nationalization (EO 6102, April 5, 1933); Gold Reserve Act January 1934 revaluing gold from $20.67 to $35 — a 41% devaluation; Glass–Steagall and FDIC 1933. T-bills traded near 0.1%. In WWII the Fed pegged bills at 0.375% and long bonds at 2.5% (April 1942); OPA controls suppressed inflation while unemployment hit 1.2% in 1944, the all-time annual low. Controls lifted June 1946 → CPI +18.1% December-over-December 1946.

1946–1971 · Bretton Woods and the creep

The Treasury–Fed Accord (March 4, 1951) freed the Fed from the wartime peg — modern monetary policy begins here. Korean War inflation touched ~9% year-over-year in early 1951, then the Martin era delivered ~1–2% inflation, fed funds mostly 1–4%, and unemployment cycling between 2.5% (1953, the official monthly record low) and 7.5% (1958). From 1965, Vietnam plus the Great Society pushed CPI from 1.6% to ~6% by end-1969, through the 1966 credit crunch and the 1968 collapse of the London gold pool.

1971–1982 · The Great Inflation

Nixon closed the gold window August 15, 1971, with a 90-day wage-price freeze; the dollar floated by March 1973. The October 1973 OPEC embargo (oil ~$3→$12) drove CPI to 12.3% (Dec/Dec 1974) with unemployment peaking at 9.0% (May 1975); Burns’s stop-go accommodation entrenched expectations. The 1979 Iranian shock (oil ~$35) pushed CPI to a 14.8% year-over-year peak in March 1980. Volcker (appointed August 1979; reserves targeting from October 6, 1979) took the effective fed funds rate to a 19.10% monthly average (June 1981, daily prints above 22%), prime to 21.5% (December 1980), the 10-year to ~15.8% (September 1981), and mortgages to 18.6%. Cost: back-to-back recessions and 10.8% unemployment (November–December 1982), the postwar record until 2020.

1983–2007 · Great Moderation

CPI settled at 3.2% by 1983 and averaged ~3% for two decades with sharply lower variance. Punctuations: Black Monday (October 19, 1987, −22.6%), the S&L collapse (~1,000+ thrifts, FIRREA 1989), the 1990–91 recession (unemployment 7.8% by June 1992), the 1994 bond massacre (funds 3%→6%), LTCM (1998), unemployment at 3.8% in April 2000, then the dot-com recession with funds cut to 1.00% (June 2003) and unemployment topping at 6.3%. Hikes to 5.25% (2004–06) met a housing bubble already cresting.

2007–2019 · GFC and the zero bound

BNP Paribas froze funds August 9, 2007; Bear Stearns sold March 2008; Lehman failed September 15, 2008; ZIRP arrived December 16, 2008, with QE1/2/3 to follow. Unemployment peaked at 10.0% (October 2009); 2009’s annual-average CPI was −0.4%, the first negative year since 1955. The recovery was long and disinflationary: liftoff only in December 2015, a 2.25–2.50% peak (December 2018), then 2019’s “mid-cycle” cuts — with unemployment at 3.5% (a 50-year low) and core PCE stuck near 1.6%.

2020–2026 · Pandemic, inflation redux, and now an oil shock

March 2020: funds back to 0–0.25%, unlimited QE, unemployment spiking to 14.8% (April 2020) — the worst official monthly print ever — against ~$5T of fiscal response. The reopening surge peaked with CPI at 9.1% year-over-year in June 2022 (a 41-year high); the Fed hiked 525bp between March 2022 and July 2023 (four straight 75s) to 5.25–5.50%. Disinflation came without recession; unemployment troughed at 3.4% (April 2023, lowest since 1969). Cuts followed — 100bp in late 2024, then three more in late 2025 to 3.50–3.75%, against tariff-driven price pressure and the autumn 2025 shutdown’s data disruptions.

Then history rhymed. The war with Iran triggered an oil shock: energy costs were up 17.9% year-over-year by April 2026, and headline CPI reached 4.2% in May 2026 — the highest since April 2023, the third consecutive acceleration — while core CPI held at 2.9% (core PCE 3.4%). The FOMC held the funds rate at 3.50–3.75% on June 17, 2026, citing solid activity despite the Middle East conflict and inflation elevated by energy supply shocks — the first projections round under new Fed chair Kevin Warsh — and the June dot plot’s median now projects a quarter-point hike by year-end 2026, to 3.75–4.00%. On the labor side, June 2026 payrolls rose just 57,000 and unemployment ticked down to 4.2% — but only because participation fell 0.3pp to 61.5%, its lowest since March 2021.

The long view

Three structural facts fall out of 250 years.

• First, the monetary regime determines the trend: under commodity money (1774–1913), war inflations and peacetime deflations netted out — the 1913 price level was only ~25% above 1774’s. Under the Fed and then pure fiat, CPI is up roughly 33-fold since 1913, ~3.1% compounded, with deflation essentially extinct after 1955.

• Second, interest rates trace two great secular cycles: yields fell from ~8% (1790s) to ~3% (1900) to ~2% (1946), rose to the 1981 apex (~15% on the 10-year), then fell for 39 years to the August 2020 low of 0.52% on the 10-year — we are five years into the reversal.

• Third, unemployment’s official range runs from 1.2% (1944) and 2.5% (1953) to 10.8% (1982), 10.0% (2009), and 14.8% (2020), with the ~25% of 1933 standing outside the measured era entirely.

The recurring plot device across all three series is the same: wars and oil.