Is the value of the U.S. dollar declining?
Yes, the purchasing power of the dollar has declined steadily over time, with brief exceptions during deflationary periods such as the Great Depression. The chart shows a 2026 dollar buys what 5.2 cents bought in 1926.
The decline has not been uniform. Prices actually fell during the 1930s: the CPI index dropped from 17.5 in 1926 to 14.0 in 1936, so $100 from 1936 is worth $2,407 today. The steepest losses in buying power of the dollar came during the 1970s, when the index on the Visual Capitalist chart dropped from roughly 180 in 1976 to 91 in 1986, and again after 2020.5 The chart's inflation by decade data confirms that the 1976-to-1986 period, when the CPI index rose from 57.6 to 110.2, cut the buying power of the dollar nearly in half.
Why did inflation surge so sharply in the decade after 2016?
The 40% rise in prices from 2016 to 2026, the biggest 10-year gain since 1986 to 1996, was driven largely by the COVID-19 pandemic and its aftermath. The Peterson Institute for International Economics, in a project co-directed by Karen Dynan and David Wilcox, concluded that in the United States "excess demand combined with inelastic supply" generated the inflation surge, which was the highest in more than 40 years.1
Fiscal stimulus, supply-chain disruptions and labor-market tightness all played roles, according to the Peterson Institute's assembled experts.1 Anchored inflation expectations helped bring inflation down from its peak in the early 2020s, but the Peterson Institute cautions that those anchors "cannot be taken for granted going forward."1 Gasoline was a particular driver: $100 bought 45 gallons in September 2016 and only 22 in September 2026, at $4.48 a gallon, and the Peterson Institute notes that gasoline and food prices had an outsized influence on consumer expectations during the COVID era.1
Who is hit hardest when the dollar loses purchasing power?
Lower-income households are hit hardest when the dollar loses purchasing power. Taylor Bowley, an economist with Bank of America Institute, said: "Inflation is a point of stress for everyone, but recent price increases are hitting lower-income households the hardest."2 In August 2025, lower-income households faced a year-over-year inflation rate of roughly 3%, compared with 2.9% for middle and higher-income households, according to a Bank of America Institute analysis.2
The gap comes down to spending patterns. Francesco D'Acunto, a professor of finance at Georgetown McDonough's Psaros Center for Financial Markets and Policy, explained that lower-income groups spend more on necessities such as food, rent and transportation, so "they are hit more, relative to higher-income groups who spend more on services."2 Lower-income households also "can't easily contract their consumption" when prices rise, and are more likely to carry revolving credit-card debt at roughly 20% interest annually, compounding the damage.2 Young people face a similar squeeze: the Peter G. Peterson Foundation notes that from 2020 to 2024, transportation prices rose 34.4%, food 23.6% and housing 23.0%, all faster than the 21.2% rise in the all-items CPI, hitting early-career workers with lower wages especially hard.4
What will a dollar be worth in 20 years?
What the data does show is the direction: the purchasing power of the dollar has fallen in almost every decade since 1926, with the pace depending heavily on monetary policy and economic shocks.
The Peterson Institute warns that anchored inflation expectations, which helped bring inflation down after the COVID surge, "cannot be taken for granted going forward," leaving the future path uncertain.1 The Peter G. Peterson Foundation notes that America's rising national debt puts upward pressure on inflation, adding uncertainty that makes it harder even now for young people to estimate retirement savings targets over a 40- or 50-year horizon.4
What do economists say about inflation staying above 3 percent?
Economists see the persistence of inflation above 3% as a policy challenge with roots in both demand and supply. The Peterson Institute's project, led by Karen Dynan and David Wilcox, found that "monetary policy flexibility is critical when inflation risks are outsized, and forecasting errors are likely," and that fiscal policy needs stronger automatic stabilizers to respond to capacity constraints in real time.1
The Dallas Fed, examining lessons from the 1970s, found that inflation did not destabilize overnight: starting from under 2% in the early 1960s, it reached 6% by 1970 and peaked at 15% in early 1980, driven by monetary expansions and the end of the Bretton Woods gold-exchange system.3 That history suggests that once inflation becomes embedded, bringing it back down is slow and costly. The Peterson Institute adds that anchored inflation expectations "played a critical role in enabling rapid disinflation in the early 2020s," but cautions they cannot be assumed to hold if inflation stays elevated.1