Datastream
Purchasing Power of the U.S. Dollar Over Time
The Briefing
- The purchasing power of the U.S. dollar has fallen over time, as money supply has grown
- In fact, $1 in 1913 had the same purchasing power as $26 in 2020
What is Purchasing Power?
The purchasing power of a currency is the amount of goods and services that can be bought with one unit of the currency.
For example, one U.S. dollar could buy 10 bottles of beer in 1933. Today, it’s the cost of a small McDonald’s coffee. In other words, the purchasing power of the dollar—its value in terms of what it can buy—has decreased over time as price levels have risen.
Tracking the Purchasing Power of the Dollar
In 1913, the Federal Reserve Act granted Federal Reserve banks the ability to manage the money supply in order to ensure economic stability. Back then, a dollar could buy 30 Hershey’s chocolate bars.
As more dollars came into circulation, average prices of goods and services increased while the purchasing power of the dollar fell. By 1929, the value of the Consumer Price Index (CPI) was 73% higher than in 1913, but a dollar was now enough only for 10 rolls of toilet paper.
| Year | Event | Purchasing Power of $1 | What a Dollar Buys |
|---|---|---|---|
| 1913 | Creation of the Federal Reserve System | $26.14 | 30 Hershey’s chocolate bars |
| 1929 | Stock market crash | $15.14 | 10 rolls of toilet paper |
| 1933 | Gold possession criminalized | $19.91 | 10 bottles of beer |
| 1944 | Bretton Woods agreement | $14.71 | 20 bottles of Coca-Cola |
| 1953 | End of the Korean War | $9.69 | 10 bags of pretzels |
| 1964 | Escalation of the Vietnam War | $8.35 | 1 drive-in movie ticket |
| 1971 | End of the gold standard | $6.39 | 17 oranges |
| 1987 | "Black Monday" stock market crash | $2.28 | 2 boxes of crayons |
| 1997 | Asian financial crisis | $1.61 | 4 grapefruits |
| 2008 | Global Financial crisis | $1.20 | 2 lemons |
| 2020 | COVID-19 pandemic | $1.00 | 1 McDonald’s coffee |
Between 1929-1933, the purchasing power of the dollar actually increased due to deflation and a 31% contraction in money supply before eventually declining again. Fast forward to 1944 and the U.S. dollar, fixed to gold at a rate of $35/oz, became the world’s reserve currency under the Bretton Woods agreement.
Meanwhile, the U.S. increased its money supply in order to finance the deficits of World War II followed by the Korean war and the Vietnam war. Hence, the buying power of the dollar reduced from 20 bottles of Coca-Cola in 1944 to a drive-in movie ticket in 1964.
By the late 1960s, the number of dollars in circulation was too high to be backed by U.S. gold reserves. President Nixon ceased direct convertibility of U.S. dollars to gold in 1971. This ended both the gold standard and the limit on the amount of currency that could be printed.
More Dollars in the System
Money supply (M2) in the U.S. has skyrocketed over the last two decades, up from $4.6 trillion in 2000 to $19.5 trillion in 2021.
The effects of the rise in money supply were amplified by the financial crisis of 2008 and more recently by the COVID-19 pandemic. In fact, around 20% of all U.S. dollars in the money supply, $3.4 trillion, were created in 2020 alone.
How will the purchasing power of the dollar evolve going forward?
Where does this data come from?
Source: Bureau of Labor Statistics – Consumer Price Index, Morris County Library of Historic Prices
Details: Purchasing power is based on average annual CPI values from 1913-2020 (not seasonally adjusted). Reference base for the CPI is 1982-84 = 100.
Datastream
Charted: The Ukraine War Civilian Death Toll
Using data from the UN, this chart shows civilian death toll figures resulting from Russia’s invasion of Ukraine.
The Briefing
- In total, since the war began in February there have been over 7,031 Ukrainian civilian deaths
- Most of the civilian casualties recorded were caused by the use of explosive weapons, such as missiles and heavy artillery
Charted: The Ukraine War Civilian Death Toll
Russia’s war of aggression in Ukraine has wrought suffering and death on a mass scale, with many Russian attacks targeted at civilians.
We’ve created this visual using data from the UN Office of the High Commissioner for Human Rights (OHCHR) to better understand how many civilians have died in Ukraine as a result of the war, as well as how many were injured and how many were children.
The Numbers
As of early December, it is reported that 7,031 people in Ukraine have died because of the war — 433 of them children. Another 11,327 have been injured, 827 of which are children. In total, this is over 18,000 people killed or injured.
The figures are difficult to verify due to differing reports coming out of both Russia and Ukraine. The UN OHCHR anticipates that the numbers could be even higher.
The State of the Conflict
The war began on February 24th, 2022 and less than a year in, millions of people have been displaced by the conflict, and thousands of civilians have been injured or killed.
According to the UN, most of the civilian deaths have been caused by wide-ranging explosives such as heavy artillery shelling, missiles, and air strikes, and have been concentrated in Donetsk and Luhansk and in other territory still held by Ukraine.
Additionally, new estimates from Kyiv report approximately 13,000 Ukrainian military or soldier deaths, which has yet to be confirmed by the army.
Where does this data come from?
Source: The United Nations Office of the High Commissioner for Human Rights monthly reports on civilian deaths in Ukraine.
Note: Data on deaths and injuries can vary wildly depending on the source.
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