Infographic: The Buying Power of the U.S. Dollar Over the Last Century
Connect with us

Markets

Visualizing the Buying Power of the U.S. Dollar Over the Last Century

Published

on

The Buying Power of the U.S. Dollar Over the Last Century

The Buying Power of the U.S. Dollar Over the Last Century

The Money Project is an ongoing collaboration between Visual Capitalist and Texas Precious Metals that seeks to use intuitive visualizations to explore the origins, nature, and use of money.

The value of money is not static. In the short term, it may ebb and flow against other currencies on the market. In the long-term, a currency tends to lose buying power over time through inflation, and as more currency units are created.

Inflation is a result of too much money chasing too few goods โ€“ and it is often influenced by government policies, central banks, and other factors. In this short timeline of monetary history in the 20th century, we look at major events, the change in money supply, and the buying power of the U.S. dollar in each decade.

A Short Timeline of U.S. Monetary History

1900s
After the Panic of 1907, the National Monetary Commission is established to propose legislation to regulate banking.

U.S. Money Supply: $7 billion
What $1 Could Buy: A pair of patent leather shoes.

1910s
The Federal Reserve Act is signed in 1913 by President Woodrow Wilson.

U.S. Money Supply: $13 billion
What $1 Could Buy: A woman’s house dress.

1920s
U.S. dollar bills were reduced in size by 25%, and standardized in terms of design.

The Fed starts using open market operations as a tool for monetary policy.

U.S. Money Supply: $35 billion
What $1 Could Buy: Five pounds of sugar.

1930s
To deal with deflation during the Great Depression, the United States suspends the gold standard. President Franklin D. Roosevelt signs Executive Order 6102, which criminalizes the possession of gold.

By no longer allowing gold to be legally redeemed, this removes a major constraint on the Fed, which can now control the money supply.

U.S. Money Supply: $46 billion
What $1 Could Buy: 16 cans of Campbell’s Soup

1940s
The massive deficits of World War II are almost financed entirely by the creation of new money by the Federal Reserve.

Interest rates are pegged low at the request of the Treasury.

Under Bretton-Woods, the โ€œgold-exchange standardโ€ is adopted.

U.S. Money Supply: $55 billion
What $1 Could Buy: 20 bottles of Coca-Cola

1950s
The Korean War starts in 1950, and inflation is at an annualized rate of 21%.

The Fed can no longer manage such low interest rates, and tells the Treasury that it can โ€œno longer maintain the existing situationโ€.

U.S. Money Supply: $151 billion
What $1 Could Buy: One Mr. Potato Head

1960s
An agreement, called the Treasury-Federal Reserve Accord, is reached to establish the central bankโ€™s independence.

By this time, U.S. dollars in circulation around the world exceeded U.S. gold reserves. Unless the situation was rectified, the country would be vulnerable to the currency equivalent of a โ€œbank runโ€.

U.S. Money Supply: $211 billion
What $1 Could Buy: Two movie tickets.

1970s
In 1971, President Richard Nixon ends direct convertibility of the United States dollar to gold.

The period following the Nixon Shock is uncertain. The federal deficit doubles, stagflation hits, and the oil price skyrockets โ€“ all during the Vietnam War.

Over the decade, the dollar loses 1/3 of its value.

U.S. Money Supply: $401 billion
What $1 Could Buy: Three Morton TV dinners.

1980s
The stock market crashes in 1987 on Black Monday.

The Federal Reserve, under newly-appointed Alan Greenspan, issues the following statement:

โ€œThe Federal Reserve, consistent with its responsibilities as the nationโ€™s central bank, affirmed today its readiness to serve as a source of liquidity to support the economic and financial system.โ€

The Dow would recover by 1989, with no prolonged recession occurring.

U.S. Money Supply: $1,560 billion
What $1 Could Buy: One bottle of Heinz Ketchup.

1990s
This decade is generally considered to be a time of declining inflation and the longest peacetime economic expansion in U.S. history.

During this decade, many improvements are made to U.S. paper currency to prevent counterfeiting. Microprinting, security thread, and other features are used.

U.S. Money Supply: $3,277 billion
What $1 Could Buy: One gallon of milk.

2000s
After the Dotcom crash, the Fed drops interest rates to near all-time lows.

In 2008, the Financial Crisis hits and the Fed begins โ€œquantitative easingโ€. Later, this would be known as QE1.

U.S. Money Supply: $4,917 billion
What $1 Could Buy: One Wendy’s hamburger.

2010-
After QE1, the Fed holds $2.1 trillion of bank debt, mortgage-backed securities, and Treasury notes. Shortly after, QE2 starts.

In 2012, itโ€™s time for QE3.

Purchases were halted in October 2014 after accumulating $4.5 trillion in assets.

U.S. Money Supply: $13,291 billion
What $1 Could Buy: One song from iTunes.

The Changing Value of a Dollar

At the turn of the 20th century, the money supply was just $7 billion. Today there are literally 1,900X more dollars in existence.

While economic growth has meant we all make many more dollars today, it is still phenomenal to think that during past moments in the 20th century, a dollar could buy a pair of leather shoes or a womenโ€™s house dress.

The buying power of a dollar has changed significantly over the last century, but itโ€™s important to recognize that it could change even faster (up or down) under the right economic circumstances.

About The Money Project

The Money Project is an ongoing collaboration between Visual Capitalist and Texas Precious Metals that seeks to use intuitive visualizations to explore the origins, nature, and use of money.

Subscribe to Visual Capitalist
Click for Comments

Markets

Mapped: GDP Growth Forecasts by Country, in 2023

The global economy faces an uncertain future in 2023. This year, GDP growth is projected to be 2.9%โ€”down from 3.2% in 2022.

Published

on

GDP Growth

Mapped: GDP Growth Forecasts by Country, in 2023

This was originally posted on Advisor Channel. Sign up to the free mailing list to get beautiful visualizations on financial markets that help advisors and their clients.

Since Russiaโ€™s invasion of Ukraine early last year, talk of global recession has dominated the outlook for 2023.

High inflation, spurred by rising energy costs, has tested GDP growth. Tightening monetary policy in the U.S., with interest rates jumping from roughly 0% to over 4% in 2022, has historically preceded a downturn about one to two years later.

For European economies, energy prices are critical. The good news is that prices have fallen recently since March highs, but the continent remains on shaky ground.

The above infographic maps GDP growth forecasts by country for the year ahead, based on projections from the International Monetary Fund (IMF) October 2022 Outlook and January 2023 update.

2023 GDP Growth Outlook

The world economy is projected to see just 2.9% GDP growth in 2023, down from 3.2% projected for 2022.

This is a 0.2% increase since the October 2022 Outlook thanks in part to Chinaโ€™s reopening, higher global demand, and slowing inflation projected across certain countries in the year ahead.

With this in mind, we show GDP growth forecasts for 191 jurisdictions given multiple economic headwindsโ€”and a few emerging bright spots in 2023.

Country / Region2023 Real GDP % Change (Projected)
๐Ÿ‡ฆ๐Ÿ‡ฑ Albania2.5%
๐Ÿ‡ฉ๐Ÿ‡ฟ Algeria2.6%
๐Ÿ‡ฆ๐Ÿ‡ด Angola3.4%
๐Ÿ‡ฆ๐Ÿ‡ฌ Antigua and Barbuda5.6%
๐Ÿ‡ฆ๐Ÿ‡ท Argentina*2.0%
๐Ÿ‡ฆ๐Ÿ‡ฒ Armenia3.5%
๐Ÿ‡ฆ๐Ÿ‡ผ Aruba2.0%
๐Ÿ‡ฆ๐Ÿ‡บ Australia*1.6%
๐Ÿ‡ฆ๐Ÿ‡น Austria1.0%
๐Ÿ‡ฆ๐Ÿ‡ฟ Azerbaijan2.5%
๐Ÿ‡ง๐Ÿ‡ญ Bahrain3.0%
๐Ÿ‡ง๐Ÿ‡ฉ Bangladesh6.0%
๐Ÿ‡ง๐Ÿ‡ง Barbados5.0%
๐Ÿ‡ง๐Ÿ‡พ Belarus0.2%
๐Ÿ‡ง๐Ÿ‡ช Belgium0.4%
๐Ÿ‡ง๐Ÿ‡ฟ Belize2.0%
๐Ÿ‡ง๐Ÿ‡ฏ Benin6.2%
๐Ÿ‡ง๐Ÿ‡น Bhutan4.3%
๐Ÿ‡ง๐Ÿ‡ด Bolivia3.2%
๐Ÿ‡ง๐Ÿ‡ฆ Bosnia and Herzegovina2.0%
๐Ÿ‡ง๐Ÿ‡ผ Botswana4.0%
๐Ÿ‡ง๐Ÿ‡ท Brazil*1.2%
๐Ÿ‡ง๐Ÿ‡ณ Brunei Darussalam3.3%
๐Ÿ‡ง๐Ÿ‡ฌ Bulgaria3.0%
๐Ÿ‡ง๐Ÿ‡ซ Burkina Faso4.8%
๐Ÿ‡ง๐Ÿ‡ฎ Burundi4.1%
๐Ÿ‡จ๐Ÿ‡ป Cabo Verde4.8%
๐Ÿ‡จ๐Ÿ‡ฒ Cameroon4.6%
๐Ÿ‡ฐ๐Ÿ‡ญ Cambodia6.2%
๐Ÿ‡จ๐Ÿ‡ฆ Canada*1.5%
๐Ÿ‡จ๐Ÿ‡ซ Central African Republic3.0%
๐Ÿ‡น๐Ÿ‡ฉ Chad3.4%
๐Ÿ‡จ๐Ÿ‡ฑ Chile-1.0%
๐Ÿ‡จ๐Ÿ‡ณ China*5.3%
๐Ÿ‡จ๐Ÿ‡ด Colombia2.2%
๐Ÿ‡ฐ๐Ÿ‡ฒ Comoros3.4%
๐Ÿ‡จ๐Ÿ‡ท Costa Rica2.9%
๐Ÿ‡จ๐Ÿ‡ฎ Cรดte d'Ivoire6.5%
๐Ÿ‡ญ๐Ÿ‡ท Croatia3.5%
๐Ÿ‡จ๐Ÿ‡พ Cyprus2.5%
๐Ÿ‡จ๐Ÿ‡ฟ Czech Republic1.5%
๐Ÿ‡จ๐Ÿ‡ฉ Democratic Republic of the Congo6.7%
๐Ÿ‡ฉ๐Ÿ‡ฐ Denmark0.6%
๐Ÿ‡ฉ๐Ÿ‡ฏ Djibouti5.0%
๐Ÿ‡ฉ๐Ÿ‡ฒ Dominica4.9%
๐Ÿ‡ฉ๐Ÿ‡ด Dominican Republic4.5%
๐Ÿ‡ช๐Ÿ‡จ Ecuador2.7%
๐Ÿ‡ช๐Ÿ‡ฌ Egypt*4.0%
๐Ÿ‡ธ๐Ÿ‡ป El Salvador1.7%
๐Ÿ‡ฌ๐Ÿ‡ถ Equatorial Guinea-3.1%
๐Ÿ‡ช๐Ÿ‡ท Eritrea2.9%
๐Ÿ‡ช๐Ÿ‡ช Estonia1.8%
๐Ÿ‡ธ๐Ÿ‡ฟ Eswatini1.8%
๐Ÿ‡ช๐Ÿ‡น Ethiopia5.3%
๐Ÿ‡ซ๐Ÿ‡ฏ Fiji6.9%
๐Ÿ‡ซ๐Ÿ‡ฎ Finland0.5%
๐Ÿ‡ซ๐Ÿ‡ท France*0.7%
๐Ÿ‡ฒ๐Ÿ‡ฐ North Macedonia3.0%
๐Ÿ‡ฌ๐Ÿ‡ฆ Gabon3.7%
Georgia4.0%
Germany*0.1%
Ghana2.8%
Greece1.8%
Grenada3.6%
Guatemala3.2%
Guinea5.1%
Guinea-Bissau4.5%
Guyana25.2%
Haiti0.5%
Honduras3.5%
Hong Kong SAR3.9%
Hungary1.8%
Iceland2.9%
India*6.1%
Indonesia*4.8%
Iraq4.0%
Ireland4.0%
Iran*2.0%
Israel3.0%
Italy*0.6%
Jamaica3.0%
Japan*1.8%
Jordan2.7%
Kazakhstan*4.3%
Kenya5.1%
Kiribati2.4%
South Korea*1.7%
Kosovo3.5%
Kuwait2.6%
Kyrgyz Republic3.2%
Lao P.D.R.3.1%
Latvia1.6%
Lesotho1.6%
Liberia4.2%
Libya17.9%
Lithuania1.1%
Luxembourg1.1%
Macao SAR56.7%
Madagascar5.2%
๐Ÿ‡ฒ๐Ÿ‡ผ Malawi2.5%
๐Ÿ‡ฒ๐Ÿ‡พ Malaysia*4.4%
๐Ÿ‡ฒ๐Ÿ‡ป Maldives6.1%
๐Ÿ‡ฒ๐Ÿ‡ฑ Mali5.3%
๐Ÿ‡ฒ๐Ÿ‡น Malta3.3%
๐Ÿ‡ฒ๐Ÿ‡ญ Marshall Islands3.2%
๐Ÿ‡ฒ๐Ÿ‡ท Mauritania4.8%
๐Ÿ‡ฒ๐Ÿ‡บ Mauritius5.4%
๐Ÿ‡ฒ๐Ÿ‡ฝ Mexico*1.7%
๐Ÿ‡ซ๐Ÿ‡ฒ Micronesia2.9%
๐Ÿ‡ฒ๐Ÿ‡ฉ Moldova2.3%
๐Ÿ‡ฒ๐Ÿ‡ณ Mongolia5.0%
๐Ÿ‡ฒ๐Ÿ‡ช Montenegro2.5%
๐Ÿ‡ฒ๐Ÿ‡ฆ Morocco3.1%
๐Ÿ‡ฒ๐Ÿ‡ฟ Mozambique4.9%
๐Ÿ‡ฒ๐Ÿ‡ฒ Myanmar3.3%
๐Ÿ‡ณ๐Ÿ‡ฆ Namibia3.2%
๐Ÿ‡ณ๐Ÿ‡ท Nauru2.0%
๐Ÿ‡ณ๐Ÿ‡ต Nepal5.0%
๐Ÿ‡ณ๐Ÿ‡ฑ Netherlands*0.6%
๐Ÿ‡ณ๐Ÿ‡ฟ New Zealand1.9%
๐Ÿ‡ณ๐Ÿ‡ฎ Nicaragua3.0%
๐Ÿ‡ณ๐Ÿ‡ช Niger7.3%
๐Ÿ‡ณ๐Ÿ‡ฌ Nigeria*3.2%
๐Ÿ‡ณ๐Ÿ‡ด Norway2.6%
๐Ÿ‡ด๐Ÿ‡ฒ Oman4.1%
๐Ÿ‡ต๐Ÿ‡ฐ Pakistan*2.0%
๐Ÿ‡ต๐Ÿ‡ผ Palau12.3%
๐Ÿ‡ต๐Ÿ‡ฆ Panama4.0%
๐Ÿ‡ต๐Ÿ‡ฌ Papua New Guinea5.1%
๐Ÿ‡ต๐Ÿ‡พ Paraguay4.3%
๐Ÿ‡ต๐Ÿ‡ช Peru2.6%
๐Ÿ‡ต๐Ÿ‡ญ Philippines*5.0%
๐Ÿ‡ต๐Ÿ‡ฑ Poland*0.3%
๐Ÿ‡ต๐Ÿ‡น Portugal0.7%
๐Ÿ‡ต๐Ÿ‡ท Puerto Rico0.4%
๐Ÿ‡ถ๐Ÿ‡ฆ Qatar2.4%
๐Ÿ‡จ๐Ÿ‡ฌ Republic of Congo4.6%
๐Ÿ‡ท๐Ÿ‡ด Romania3.1%
๐Ÿ‡ท๐Ÿ‡บ Russia*0.3%
๐Ÿ‡ท๐Ÿ‡ผ Rwanda6.7%
๐Ÿ‡ผ๐Ÿ‡ธ Samoa4.0%
๐Ÿ‡ธ๐Ÿ‡ฒ San Marino0.8%
๐Ÿ‡ธ๐Ÿ‡น Sรฃo Tomรฉ and Prรญncipe2.6%
๐Ÿ‡ธ๐Ÿ‡ฆ Saudi Arabia*2.6%
๐Ÿ‡ธ๐Ÿ‡ณ Senegal8.1%
๐Ÿ‡ท๐Ÿ‡ธ Serbia2.7%
๐Ÿ‡ธ๐Ÿ‡จ Seychelles5.2%
๐Ÿ‡ธ๐Ÿ‡ฑ Sierra Leone3.3%
๐Ÿ‡ธ๐Ÿ‡ฌ Singapore2.3%
๐Ÿ‡ธ๐Ÿ‡ฐ Slovak Republic1.5%
๐Ÿ‡ธ๐Ÿ‡ฎ Slovenia1.7%
๐Ÿ‡ธ๐Ÿ‡ง Solomon Islands2.6%
๐Ÿ‡ธ๐Ÿ‡ด Somalia3.1%
๐Ÿ‡ฟ๐Ÿ‡ฆ South Africa*1.2%
๐Ÿ‡ธ๐Ÿ‡ธ South Sudan5.6%
๐Ÿ‡ช๐Ÿ‡ธ Spain*1.1%
๐Ÿ‡ฑ๐Ÿ‡ฐ Sri Lanka-3.0%
๐Ÿ‡ฐ๐Ÿ‡ณ St. Kitts and Nevis4.8%
๐Ÿ‡ฑ๐Ÿ‡จ St. Lucia5.8%
๐Ÿ‡ป๐Ÿ‡จ St. Vincent and the Grenadines6.0%
๐Ÿ‡ธ๐Ÿ‡ฉ Sudan2.6%
๐Ÿ‡ธ๐Ÿ‡ท Suriname2.3%
๐Ÿ‡ธ๐Ÿ‡ช Sweden-0.1%
๐Ÿ‡จ๐Ÿ‡ญ Switzerland0.8%
๐Ÿ‡น๐Ÿ‡ผ Taiwan2.8%
๐Ÿ‡น๐Ÿ‡ฏ Tajikistan4.0%
๐Ÿ‡น๐Ÿ‡ฟ Tanzania5.2%
๐Ÿ‡น๐Ÿ‡ญ Thailand*3.7%
๐Ÿ‡ง๐Ÿ‡ธ The Bahamas4.1%
๐Ÿ‡ฌ๐Ÿ‡ฒ The Gambia6.0%
๐Ÿ‡น๐Ÿ‡ฑ Timor-Leste4.2%
๐Ÿ‡น๐Ÿ‡ฌ Togo6.2%
๐Ÿ‡น๐Ÿ‡ด Tonga2.9%
๐Ÿ‡น๐Ÿ‡น Trinidad and Tobago3.5%
๐Ÿ‡น๐Ÿ‡ณ Tunisia1.6%
๐Ÿ‡น๐Ÿ‡ท Turkey*3.0%
๐Ÿ‡น๐Ÿ‡ฒ Turkmenistan2.3%
๐Ÿ‡น๐Ÿ‡ป Tuvalu3.5%
๐Ÿ‡บ๐Ÿ‡ฌ Uganda5.9%
๐Ÿ‡บ๐Ÿ‡ฆ UkraineN/A
๐Ÿ‡ฆ๐Ÿ‡ช United Arab Emirates4.2%
๐Ÿ‡ฌ๐Ÿ‡ง United Kingdom*-0.6%
๐Ÿ‡บ๐Ÿ‡ฒ U.S.*1.4%
๐Ÿ‡บ๐Ÿ‡พ Uruguay3.6%
๐Ÿ‡บ๐Ÿ‡ฟ Uzbekistan4.7%
๐Ÿ‡ป๐Ÿ‡บ Vanuatu3.1%
๐Ÿ‡ป๐Ÿ‡ช Venezuela6.5%
๐Ÿ‡ป๐Ÿ‡ณ Vietnam6.2%
West Bank and Gaza3.5%
๐Ÿ‡พ๐Ÿ‡ช Yemen3.3%
๐Ÿ‡ฟ๐Ÿ‡ฒ Zambia4.0%
๐Ÿ‡ฟ๐Ÿ‡ผ Zimbabwe2.8%

*Reflect updated figures from the January 2023 IMF Update.

The U.S. is forecast to see 1.4% GDP growth in 2023, up from 1.0% seen in the last October projection.

Still, signs of economic weakness can be seen in the growing wave of tech layoffs, foreshadowed as a white-collar or โ€˜Patagonia-vestโ€™ recession. Last year, 88,000 tech jobs were cut and this trend has continued into 2023. Major financial firms have also followed suit. Still, unemployment remains fairly steadfast, at 3.5% as of December 2022. Going forward, concerns remain around inflation and the path of interest rate hikes, though both show signs of slowing.

Across Europe, the average projected GDP growth rate is 0.7% for 2023, a sharp decline from the 2.1% forecast for last year.

Both Germany and Italy are forecast to see slight growth, at 0.1% and 0.6%, respectively. Growth forecasts were revised upwards since the IMF’s October release. However, an ongoing energy crisis exposes the manufacturing sector to vulnerabilities, with potential spillover effects to consumers and businesses, and overall Euro Area growth.

China remains an open question. In 2023, growth is predicted to rise 5.2%, higher than many large economies. While its real estate sector has shown signs of weakness, the recent opening on January 8th, following 1,016 days of zero-Covid policy, could boost demand and economic activity.

A Long Way to Go

The IMF has stated that 2023 will feel like a recession for much of the global economy. But whether it is headed for a recovery or a sharper decline remains unknown.

Today, two factors propping up the global economy are lower-than-expected energy prices and resilient private sector balance sheets. European natural gas prices have sunk to levels seen before the war in Ukraine. During the height of energy shocks, firms showed a notable ability to withstand astronomical energy prices squeezing their finances. They are also sitting on significant cash reserves.

On the other hand, inflation is far from over. To counter this effect, many central banks will have to use measures to rein in prices. This may in turn have a dampening effect on economic growth and financial markets, with unknown consequences.

As economic data continues to be released over the year, there may be a divergence between consumer sentiment and whether things are actually changing in the economy. Where the economy is heading in 2023 will be anyone’s guess.

Continue Reading

Subscribe

Popular