The purchasing power of $1 over time.
Drag the year-range to see how the U.S. dollar's purchasing power has evolved since 1913. The chart re-renders instantly using official BLS CPI-U data.
Purchasing power vs. real dollars
The two terms are closely related but mean different things in technical use.
Purchasing power describes the quantity of goods and services a fixed amount of money can buy. As prices rise, a dollar buys less stuff — its purchasing power falls. Purchasing power is inherently a relative concept; it has to be compared to a baseline period.
Real dollars are nominal dollars adjusted to a chosen base year using a price index. "$50,000 in 2010 real 2024 dollars" means the amount of 2024 dollars that has the same purchasing power as $50,000 did in 2010. Real dollars are a way of expressing different time periods on a common scale.
One way to think about the difference: purchasing power is a ratio (how much can $1 buy?); real dollars are a quantity (how many of today's dollars equal a past amount?). They contain the same information but are useful for different framings.
The U.S. record at a glance
From 1913 to today, the U.S. price level has risen roughly 32-fold, meaning the dollar's purchasing power has fallen to roughly 3% of its 1913 level. Cumulative losses are unevenly distributed:
- 1913 to 1940: prices rose ~40%. The dollar lost about 30% of its purchasing power.
- 1940 to 1970: prices roughly tripled. The dollar lost about two-thirds of its mid-century purchasing power.
- 1970 to 2000: prices roughly quadrupled. The 1970s inflation episode dominates this period.
- 2000 to 2024: prices roughly doubled. The post-COVID episode contributed more than half of this period's inflation.
The exception: 1929 to 1933
The Great Depression is the one major U.S. period in the past century where the dollar's purchasing power actually rose. The price level fell about 24% over those four years; equivalently, the dollar gained about 31% in purchasing power. The episode was a textbook deflation — falling demand, contracting money supply, widespread bank failures. Outside of that period, sustained gains in dollar purchasing power have been the exception.
Frequently asked questions
What is purchasing power?
Purchasing power is the quantity of goods and services a fixed amount of money can buy. As prices rise, the purchasing power of a fixed dollar amount falls; as prices fall, it rises.
How is purchasing power calculated?
Purchasing power is the inverse of the price level. If the price level doubles, purchasing power halves. We use CPI-U as the price level measure.
What's the difference between purchasing power and real dollars?
'Real dollars' typically means inflation-adjusted dollars in a target year (e.g., '$100 in 1970 real 2024 dollars'). 'Purchasing power' describes the quantity of stuff money can buy. They're closely related but distinct concepts.
Has the dollar lost most of its purchasing power since 1913?
Yes. The U.S. dollar has lost roughly 97% of its 1913 purchasing power. A 1913 dollar buys what about 3 cents bought then; equivalently, a current dollar is worth about 3 cents in 1913 terms.
Why has the dollar lost so much purchasing power?
Sustained inflation since the U.S. departed the gold standard. The largest cumulative losses came during World War II, the 1970s, and the post-COVID period.
Does CPI overstate purchasing power loss?
Possibly slightly. Quality improvements not fully captured by hedonic adjustment, and consumer substitution not captured by fixed weights, are both argued to make CPI overstate inflation by a few tenths of a percent per year. PCE methodology corrects some but not all of this.