AUGUST 1953 Ism U. S. DEPARTMENT OF COMMERCE OFFICE OF BUSINESS ECONOMICS SURVEY OF CURRENT BUSINESS DEPARTMENT OF COMMERCE FIELD SERVICE Albuquerque, N. Mex. Los Angeles 15, Calif. No. 8 204 S. 10th St. 112 West 9th St. AUGUST 1953 Atlanta 3, Ga. Memphis 3, Tenn. 86 Forsyth St. NW. 229 Federal Bide. Boston 9, Mass. Miami 32, Fla. 261 Franklin St. 36 NE. First St. Minneapolis 2. Minn. Buffalo 3. N. Y. 607 Marquette Are. 117 Ellicott St, New Orleans 12. La. Charleston 4, S. C. Area 2. 333 St. Charles Ate. PAGE Sergeant Jasper Bldg. New York 13, N. Y. THE BUSINESS SITUATION ........ 1 Cheyenne, Wyo. 346 Broadway 307 Federal Office Bldf. Review of National Income and Product Philadelphia 7, Pa. Chicago 1, III. 1015 Chestnut St. in the Second Quarter 3 221 N. LaSalle St. Phoenix, Ariz. 137 N. Second Ave. Cincinnati 2, Ohio 105 W. Fourth St. Pittsburgh 22, Pa. 717 Liberty Are. SPECIAL ARTICLES Cleveland 14, Ohio 925 Euclid AT*. State Income Payments in 1952 *,.,.., 7 Portland 4, Oreg. 520 SW. Morrison St. Farm Capital Outlays and Stock ...... 16 Dallas 2. Tex. 1114 Commerce St, Reno, Nev. 1479 Wells Ave. Denver 2, Colo. 142 New Custom House Richmond, Va. MONTHLY BUSINESS STATISTICS . S-l to S-40 400 East Main St. Detroit 26, Mich. Statistical Index . Inside Back Cover 1214 Giiswold St. St. Louis I, Mo. 1114 Market St. El Paso, Tex. Chamber of Commerce Salt Lake City 1, Utah Bldg. 109 W. Second St. So. Houston, Tex. Sac Francisco 2, Calif. 430 Lamar St. 870 Market St. Jacksonville 1. Fla. Sarannah, Ga. 311 W. Monroe St. 125-29 BoH Si. Published by the U. S. Department of Commerce, SINCLAIR WEEKS, Secretary. Office of Business Economics, M. JOSEPH ME EH AN, Kansas City 6, Mo. Seattle 4, Wash. Director. Subscription price, including weekly statistical supplement, is 911 Walnut St. 909 Firsi Ave. $3.25 a year; Foreign, $4.25. Single copy, 30 cents, Send remittances to any Department of Commerce Field Office or to the Superintendent of Docu- ments, United States Government Printing Office* Washington 25, D. C. Special subscription arrangements, including changes of address, should be For local telephone listing, consult section made directly with the Superintendent of Documents. Make checks payable to Treasurer of the United States. devoted to U. S. Government AUGUST 1953 By the Office of Business Economics B>ROAi D production advances throughout the past year, culminating in a $372 billion annual rate of national product With prices stable during past year, real in the second quarter, have led to current business sales and x disposable personal income per capita output well above those of any previous summer. Congress has provided for Federal expenditures for national security has moved up with dollar income which, though smaller than once envisaged, will continue for 1600 120 some time in the range of the present high rate. Against this PER CAPITA DISPOSABLE background of strong private and public demand, the cessa- INCOME * tion of fighting in Korea has made little immediate impres- 1500 110 § sion upon the domestic economy. Civilian employment in July aggregated 63.1 million persons, little changed from June, as farm operations and 1400 100 other outdoor work continued seasonally high and industrial activity brisk. Unemployment was the lowest for any July CONSUMER PRICE INDEX \ 300 90 "§ since the war; only 1.5 million persons, or 2.4 percent of the civilian labor force, were seeking work. Widespread employment at gradually rising pay scales has 1200 till i I ' 1 80 kept the Nation's payroll, and with it total personal income, moving upward—despite recurrent declines in farm income. The proportion of income spent Over the past year the rise in personal income has out- has remained stable stripped population growth. With basic tax rates un- I 10 110 changed, disposable personal income per capita has risen as RATIO OF CONSUMPTION EXPENDITURES shown in the chart. Consumer prices have been steady so TO DISPOSABLE INCOME that the advance in real disposable income per capita has 100 100 approximately paralleled that in current dollar income. The uptrend in per capita disposable income has been trans- lated into rising expenditures for personal consumption. 90 90 Industrial output large 80 i I i 80 1950 1951 1952 1953 Industrial activity has continued exceptionally high into the third quarter, after allowance for the usual seasonal slackening. Steel tonnage produced in July, with the newly Consumer outlays for autos showed largest enlarged capacity operating at a high rate, was the largest -sir relative increase, services next for any July on record. Automobile and truck output for PERCENT INCREASE, FIRST HALF 1952 the month, virtually back to the spring high, was near a TO FIRST HALF 1953 record for July. New construction expenditures totaled 0 10 20 30 almost $3.3 billion for the month. The small increase above June (2 percent) resulted largely from seasonal AUTOMOBILES gains in highway and public utility construction along with AND PARTS a more than seasonal increase in commercial construction. ALL OTHER Housing construction remains high but the spring and sum- DURABLES mer rise has been less than usual for the season—possibly FOOD AND ALCO- because of the fast start residential building got in the first HOLIC BEVERAGES quarter from, the exceptionally open winter. ALL OTHER Manufacturers' sales in June remained above $26 billion NONDURABLES for the third successive month to complete the best quarter yet achieved. New orders, reported net of contract cancel- SERVICES lations which in the case of military contracts continued sig- nificant, were a little below shipments and down $0.5 billion from May. Hence unfilled orders continued their gradual ~ QUARTERLY TOTALS, - SEASONALLY ADJUSTED, AT ANNUAL RATES decline arid are now $5 billion below the peak reached last U, S. DEPARTMENT OF COMMERCE. OFFICE OF BUSINESS ECONOMICS 53 September. 263747°—-53 1 SURVEY OF CURRENT BUSINESS August 1953 The most substantial reductions have occurred in non- raw material costs for most final products, however, and electrical machinery and, reflecting primarily last year's steel with wage rates and transportation and other costs contin- strike, in primary metals. However, the backlog remaining uing to rise, lower raw material costs have been reflected in to durable goods producers on June 30, as the Korean truce substantially lower prices to final consumers only in scattered approached, equaled $67.3 billion or 5.1 months' sales as instances. compared with $21.5 billion, or 2.3 months of sales at the With these divergent trends, the general price level has then-prevailing rate, when the fighting commenced 3 years manifested unusual stability since the first of the year. The earlier. Manufacturers' inventories moved up again in June. average of wholesale prices as measured by the^Bureau of Federal Government spending programs provided the driv- Labor Statistics' index varied no more than 0.6 points ing force behind the rising level of national output and in- throughout the entire period December through June, then come for 2 years after the invasion of South Korea. More rose 1 point in July. The consumer price index varied during recently, developments in the private economy have domi- the same period (through June) by less than 1 point. In nated the economic situation to an increasing extent, and wholesale markets, this stability followed a downward read- Congressional action on the budget for fiscal year 1954 indi- justment covering a period of 21 months after the peak was cates that this tendency will continue. On the basis of the attained in March 1951; at retail, it extended the stable President's estimate of last May, which does not appear to situation of the preceding half year, which had followed a be markedly changed by subsequent Congressional action, it 2-year advance. appears that total budget expenditures for fiscal year 1954 may be about 3 percent below the $76.2 billion annual rate prevailing during the period January to June 1953. Little Some divergent trends change in the rate of national security expenditures is By June 1953, raw cr semimanufactured materials at implied. wholesale had lost three-fourths of the price rise during the inflation period from June 1950 to March 1951 and stood Price Developments only 5 percent higher than just prior to the Korean invasion. Wholesale prices of manufactures, on the other hand, re- A major development of the past year has been the gradual tained almost three-fourths of their rise and stood 11 percent but relatively steady depreciation in wholesale markets of above their starting point. Since June 1952, when both prices of raw and semimanufactured materials relative to the types of products were 11 percent above their June 1950 prices of manufactured products. These trends have re- levels, manufactures have remained steady in price while the flected the growing adequacy of raw material supplies and raw products and semimanufactures have persisted in their semimanufactures relative to industrial consumption require- downward movement. ments, in the one case, and the continued strong demand for Recent price weakness for agricultural products, to which the final products of industry in the other. The divergent most of the divergence is ascribable, is chiefly due to falling price trends signify that while the output of the farms, off in export demand while volume of domestic output and forests, and mines of the free world is increasingly catching marketings was larger. Weakness in some foreign agri-' up with industrial requirements, the output of our factories cultural materials such as copra, hard fibers, palm oil and is still—apart from special situations—well balanced with natural crude rubber has, however, been a contributing demands for final products and for the building of stocks.