JULY 1955 U. S. DEPARTMENT OF COMMERCE OFFICE OF BUSINESS ECONOMICS NATIONAL INCOME N SURVEY OF CURRENT BUSINESS DEPARTMENT OF COMMERCE FIELD SERVICE Albuquerque, N. Mex. Los Angeles 15, Calif. No. 7 321 Post Office BIdg. 1031 S. Broadway JULY 1955 Atlanta 5, Ga. Memphis 3, Tenn. 50 Seventh St. NE. 229 Federal BIdg, Miami 32 FIa Boston 9t Mass. > - U. S. Post Office and 300 NE- Fir8t Ave. Courthouse BIdg. Minneapolis 2, Minn. Buffalo 3, N. Y. 2d Ave. South and r lational Jsncome I lumber 117 Ellicott St. 3d St. New Orleans 12, La. Charleston 4, S. C. Area 2, 333 St. Charles Ave. PAGE Sergeant Jasper BIdg. THE BUSINESS SITUATION. 1 New York 17, N. Y. Cheyenne, Wyo, 110 E. 45th St. 307 Federal Office BIdg. Philadelphia 7, Pa. 1015 Chestnut St. Chicago 6, 111. 226 W. Jackson Blvd. Phoenix, Ariz. 137 N. Second Ave. Cincinnati 2, Ohio NATIONAL INCOME AND PRODUCT 442 U. S. Post Office Pittsburgh 22, Pa. OF THE UNITED STATES, 1954 4 and Courthouse 107 Sixth St. Cleveland 14, Ohio Portland 4, Oreg. List of Statistical Tables 5 1100 Chester Ave. 520 SW. Morrison St. National Income and Product Accounts 6 Dallas 2, Tex. Reno, Nev. 1114 Commerce St. 1479 Wells Ave. Denver 2, Colo. Richmond 20, Va. 142 New Customhouse 900 N. Lombardy St. Detroit 26, Mich. St. Louis 1, Mo. 230 W. Fort St. MONTHLY BUSINESS STATISTICS....S-1 to S-40 1114 Market St, El Paso, Tex. New or Revised Statistics • •. 28 Chamber of Commerce Salt Lake City 1, Utah BIdg. 222 SW. Temple St. Statistical Index Inside back cover Houston 2, Tex. San Francisco 11, Calif. 430 Lamar Ave. 555 Battery St. Jacksonville 1, Fla. Savannah, Ga. 311 W. Monroe St. 125-29 Bull St. Kansas City 6, Mo. Seattle 4, Wash. Published by the U. S. Department of Commerce, SINCLAIR WEEKS, 911 Walnut St. 909 First Ave, Secretary. Office of Business Economics, M. JOSEPH ME EH AN, Director. Subscription price, including weekly statistical supplement, is $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. For local telephone listing, consult section Special subscription arrangements, including changes of address, should be devoted to U. S. Government made directly uith the Superintendent of Documents. Make checks payable to Treasurer of the United States. JULY 1955 VL udinedd uauon By the Office of Business Economics LT MID-YEAR the forward momentum created by the interplay of rising income and expenditures had carried both New Construction Activity industrial output and the aggregate production of the econ- omy to new high ground. The steady advances in the in- BILLIONS OF DOLLARS comes and spending of both individual consumers and busi- 8 ness firms which had characterized the earlier months of 1955 were being maintained as spring merged into summer. The recovery in corporate profits, following the reduced TOTAL PRIVATE earnings of last year, has been an important element in strengthening and broadening the growth of business oper- ations, and particularly, it may be presumed, in the moti- vations which resulted in the reversal of the trend of capital expenditures. Higher profits have also facilitated the financ- ing of expansion and modernization programs by enlarging the flow of internal funds available for investment. By the first quarter of this year, as indicated by data which have just become available, corporate profits before tax had risen to a seasonally adjusted annual rate of $40.9 billion; up $7% billion from the average rate of the first 9 months of 1954 and only fractionally below the first half of 1953. After-tax profits, estimated at an annual rate of $20.4 billion, were above early 1953 as a result of the intervening tax reduction, and the best since the winter of 1950-51, when corporate financial statements were greatly affected by rapid price advances. In the first quarter of 1955 prices were generally stable and earnings reports included only a small element of profits arising from a raised valuation of inven- tories. The bulk of the gain from the previous year was the direct result of the higher volume of operations. Nearly all i 1 1,1,1 major industries participated in the profit advance through the first quarter, and from the subsequent advance in produc- tion and sales it may be inferred that earnings have since PRIVATE CONSTRUCTION advanced further. Income rise continues RESIDENTIAL Consumer income, which on an after-tax basis had in- (NONFARM) creased appreciably even in 1954, is continuing the more rapid advance of recent months. In May, personal income (before tax) reached an annual rate of $301 billion, which compares with $293% billion in the first quarter of this year NONRESIDENTIAL and a 1953 quarterly peak of $288 billion. The principal BUILDING personal income gains this year have been in payrolls, which have been attaining new highs each month. Employment continued to increase in June. On a season- ally adjusted basis, the number of employees in nonagrieul- PUBLIC UTILITY FARM a OTHER PRIVATE ••••••••••••••••••••••••••• tural establishments was up over 100,000 from May and 450,000 from April. Over the 2-months period all major I I I I I I TT7T7* i r industries reported increases—with manufacturing account- 1952 1953 1954 1955 ing for nearly half of the total advance. QUARTERLY TOTALS, SEASONALLY ADJUSTED Wage settlements during June and early July in the auto- OATA: BDSA & BLS mobile, steel, and other industries, together with increases U. S. DEPARTMENT OF COMMERCE, OFFICE OF BUSINESS ECONOMICS 55-39-1 • in salary rates enacted for Federal military and civilian em- 348407°—55 1 SUEVEY OF CUEEENT BUSINESS July 1955 ployees, will operate toward further raising labor income ment. In this development, however, the part played by beginning in the summer months. Effective within a few the averaging process is significant because the stability of days of the wage increase, with its influence upon production the price indexes has resulted as much from the mutual costs, leading steel producers announced price advances canceling out of divergent movements of various component^ averaging nearly 6 percent. of the indexes as from absence of price change. Price The construction industry continued very active in June. changes on the part of some commodities or commodity The construction total for the first half year, seasonally groups have in fact been appreciable since 1953. adjusted, was 11 percent above the 1954 annual average while that for private (nonfarm) residential building was up Consumer commodities down, services up 20 percent. The latter increase is attributable to the com- bined effects of more dwellings started, completions in 1955 The divergence between the movement of the average of the unusually large number started in the final months of prices of consumer services and that of the more heavily 1954, some increase in construction costs and a trend toward weighted consumer commodities, which was evident in 1952, larger and higher-average-priced homes. became more pronounced during the 1953 business down- Manufacturers' seasonally adjusted new orders, up 6 turn and the subsequent recovery period. Between March percent from April were the largest placed in 1 month since 1953 and March 1954—spanning most of the downward ad- the buying rush accompanying the Korean emergency. justment phase—average prices of consumer commodities Nearly all of the increase was ascribable to new orders for declined 0.3 percent while consumer service prices (excluding durable goods. Manufacturers7 seasonally corrected May rent) moved up 3.6 percent. From March 1954 to March sales, although expanding less rapidly than new orders, were of this year, the decline of consumer commodity prices be- larger than ever before. came more substantial with an additional drop of 1.8 percent during the period; in the same time span consumer services Table 1.—Prices of Selected Consumer Commodities and Services extended their rise by an added 1.9 percent. The rent index [Indexes, March 1953=100] went up 5 percent from March 1953 to March 1954 and an additional 1.5 percent to March 1955. March March March 1953 1954 1955 The current divergence of consumer commodity and serv- ice prices is about in line, according to the evidence available All consumer prices 100 101.1 100.6 since 1935, with developments in earlier business cycles. All commoditiesl 100 99.7 97.9 Service prices characteristically move differently from commodity prices for various reasons. Food 100 100.4 99.2 100 101.6 Tobacco products 101.7 On the demand side, they are purchased as needed, they Apparel 100 99.6 98.6 expand with population and income, and, apart from seasonal Cotton apparel 100 99.7 98.7 Rayon and nylon apparel- 100 98.6 96.8 movements, are relatively free from short-term fluctuations Shoes 100 101.7 102.4 arising from consumer stockpiling in good years and budget- cutting in poorer years. On the supply side, many services Housefurnishings i 99.3 96.9 Textile housefurnishings.._ 95.4 92.8 Furniture and bedding 99.2 98.2 are produced by public utilities whose rates are subject to Electric refrigerators iii 95.0 89.5 regulation by public authorities and hence are adjusted tc II Solid fuels and oil I 101.1 101.4 changing economic conditions usually after a lag. House Television sets 94.4 87.5 rents also experience lagging adjustments either because Radios, table 97.2 92.5 they also may at times be regulated or because they are All services except rent 1.