Survey of Current Business September 1946
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SEPTEMBER 1946 ,. SUR CURRE BUSINE 1 UNITED STATES DEPARTMENT OF BUREAU OF FOREIGN AND DOMESTIC CURRENT • 1 t"''^ BUSINESS YOXUMB 26, No. 9 SEPTEMBER 1946 Statutory Functions: "The Bureau of Foreign and Domestic Commerce ... ^ to foster, promote, and develop the foreign and domestic commerce of the United States" [Law creating the Bureau Aug. 23, 1912 [37 Stat. 408].] J Contents *r£%\ ~ Page i^jplSINESS, SITUATION 1 STATISTICAL DATA Monthly Business Statistics: Page Page ItjrRejpqrtM Corporate Profits for Business Indexes S—1 Leather and products S-30 Business population S—3 Lumber and manufactures. S"*31 Mv First Half of 1946 8 Commodity prices S-3 Metals and manufactures: Construction and real estate. .. S-5 Iron and steel S-32 Domestic trade S—6 Nonferrous metals and. Employment conditions and wages S—9 products S-33 Finance S—15 Machinery and apparatus. S""34 DEBT IN THE Foreign trade S-20 Paper and printing S-34 Transportation and communi- Petroleum and coal products S«"36 10 cations S-22 Rubber and rubber products. S-37 Commodity sections: Stone, clay, and glass prod- Chemicals and allied prod- ucts S-37 ucts S-23 Textile products S-38 Electric power and gas S-26 Transportation equipment. • S—40 IN DEPARTMENT Foodstuffs and tobacco S-26 Canadian statistics S-40 SALES-EXPENSE RATIOS . 18 Statistical Index Inside back cover II 11 OlC—Contents of this publication are not copyrighted and I : \ may be reprinted freely. Mention of source will be appreciated Jl "* *£•£' S '* " Published by the Department of Commerce, ALFRED SCHINDLER, Acting Secretary.—Bu- reau of Foreign and Domestic Commerce, AMOS E. TAYLOR, Director. Subscription price $2 a year; Foreign $2.75. Single copies, 20 cents. Price of the 1942 supplement, the last issue, 50 cents. Make remittances direct to the Superintendent of Documents, United States Government Printing Office. Washington 25, D. C. THE BUSINESS SITUATION By the Office of Business Economics USINESS DEVELOPMENTS during B the summer months have generally The Month in Review reflected the continuing pressure of de- mands, as evidenced clearly by the sub- stantial rise in prices both during the The broad trends in business activ- Both wholesale and retail prices ity continued upward during the lapse in OP A controls and after the re- advanced further in August, due to summer months, with incomes, pro- imposition of ceilings. These rising upward ceiling adjustments and the duction, and employment increasing, continuance of free-market pricing prices have been accompanied by a con- but with consumption trends ob- tinued advance in industrial output, but for many agricultural commodities. scured by the difficulty of allowing for As a result of a series of decontrol ac- the distribution data give a much less the influence of price advances. tions, approximately half the con- clear indication of expansion in con- Notwithstanding these generally sumption. rising tendencies, the economic spot- sumer's food budget has been freed Certainly, there was in July, when light was directed on developments of price ceilings. prices were rising largely under the free which may have significance for the Partly because of the influence of play of market forces, an evident tend- rising prices on farm income and the ency for inventories to increase at a rate future course of production and dis- tribution: (1) the accelerated inven- further rise in wages and salaries, in- well beyond the growth of the preceding come payments to individuals rose months. Rising prices of themselves tory accumulation in July which fo- contribute to the increase in the dollar cused attention on this factor of markedly in July to a seasonally ad- volume of inventories, although the di- temporary strength on the demand justed annual rate of 169 billion dol- rect influence of advancing prices can- side, even though inventories are still lars. The previous high month was not account for more than a fraction of low in relation to current sales; (2) February 1945, when a rate of 165 bil- the actual increase. It is true, of course, the tendency of recent retail sales in- lion dollars was reached. that in some instances the upward price creases to no more than match the ***** movement impeded the smooth flow of increases in commodity prices; and goods through distributive channels, (3) the declining stock market trend Most of the statistical series used especially as there was considerable un- which, by early September, had wiped in this review of the business situa- certainty as to the price quotations that out the full gain made during the pre- tion will be found in the statistical would prevail if and when controls were ceding year. section at the back (pp. S-l to S-40). restored, as they eventually were in modified form. It is true, likewise, that inventories are not at present excessive rent year, it is generally expected that price increases obviates any attempt to in terms of the current level of sales. more units of consumer goods will reach measure the exact extent of the rise. The price rise has been an important the market; but it is obvious that unit Furthermore, at this season of the year, factor in the sharp advance in the flow prices of most such goods will be higher. it is usual for businessmen to accumulate of income payments to individuals, par- Hence, it must be equally obvious that stocks of certain types of goods and this ticularly through its influence upon the in order for balance to be preserved be- seasonal element must also be allowed income of the farm population. How- tween production and consumption, con- for. ever, nonagricultural income has also sumer expenditures must rise by an Nevertheless, it is well to keep in mind been increasing. amount large enough to cover both the the fact that any accumulation of busi- price and volume increases. ness inventories in physical units means Questions of Balance Raised If consumer expenditures do not rise that production is exceeding final prod- to that extent, then a portion of the uct consumption and puts the community During any broad forward movement consumer goods produced during the pe- on notice that sooner or later inventories of the economy, it is inevitable that ques- riod will accumulate in unwanted busi- will reach the level which business men tions of balance arise. These are espe- ness inventories. The rise in business in- will regard as adequate. Beyond that cially hard to answer at a time like this ventories that has been under way since point there must be an offsetting rise in not only because of our imperfect knowl- VJ-day at varying rates of accumulation consumption if there is not to be a de- edge and measurements of what is hap- should be weighed against such a back- cline in production or prices, or both. pening, but also because of the difficulty ground. It is clear that the rate of ac- of determining what constitutes balance cumulation rose during July, even though Stock Prices Decline at a given time among dynamic factors. the difficulty of making a precise allow- A feature of recent weeks attracting Thus, during the second half of the cur- ance for the upward valuation caused by widespread comment in the business SURVEY OF CURRENT BUSINESS September 1946 press, was the continuation of the de- Chart 1.—Weekly Wholesale Prices in excess of any monthly advance in the cline in stock prices that began in June INDEX, 1926= 100 preceding period of control. Meat prices, and has now extended without serious !40j which had featured the July upsurge, interruption over a period of three advanced another 14 percent at whole- months. Stock price averages in early sale during August. Part of the increase September were not much above the since June, of course, was accounted for levels that prevailed at the end of the 120 by the elimination of subsidy payments. war and represented a decline of ap- A further reduction in the prices of proximately one-fifth from their early fruits partially offset the rise in other June peak. It is as usual difficult to food prices. interpret the significance of this de- Wholesale prices of farm products for cline. However, unless and until a re- the week ending August 31 were virtually versal in stock price movements occurs, unchanged from late July quotations, it must be recognized that a decline of with somewhat higher livestock and the magnitude experienced may react poultry prices offsetting lower grain on business plans and consumer atti- prices. The latter were primarily af- tudes and have some influence upon the 160 fected by the encouraging supply situa- shape of future tendencies. tion in grains, which helped reduce Current and impending business de- prices well below the highs reached after velopments will best be understood if it the OPA controls were lifted. Signifi- is kept in mind that the American econ- cantly, futures prices did not experience omy is now going through one of the the same degree of movement as cash most dynamic periods in time of peace. prices, being more influenced by crop Many factors and relationships are, so prospects. to speak, in an unusually fluid condi- tion. Hence, striking changes are to be 120 Industrial Prices Higher expected as aftermath-of-war influences Industrial prices remained steady in wane and supply and demand are late August, after rising earlier in the brought into closer balance. At pres- month. As may be seen in the chart, 100 ent, the forces making for expansion are ^^COMMODITIES OTHER THAN prices of goods other than farm prod- in the ascendency, but some of these FARM PRODUCTS AND FOODS ucts and foods rose 2 percent from July forces are temporary in character and to August and on August 31 were 5 per- not all of the present movements are in cent over the June 29 average.