JANUARY 1960 survey of CURRENT BUSINESS U.S. DEPARTMENT OF COMMERCE OFFICE OF BUSINESS ECONOMICS Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis SURVEY OF CURRENT BUSINESS JANUARY 1960 VOL. 40, NO. 1 U.S. Department of Commerc Frederick H. Mueller, Secretary Office of Business Economics M. Joseph Meehan, Contents Director BUSINESS REVIEW PAGE Introduction ............. I Louis J. Paradise Features of Business Situation . 2 Managing Director Retail Sales in 1959 ...... 2 Loughlin H. McHugh K. Celeste Sto Recent Production Developments 4 Business Review Editor Statistics Edit Billy Jo Dawkins SPECIAL ARTICLES Graphics National Income Posts New Record in 1959 STAFF CONTRIBUTORS TO Distribution Reflects Cyclical Upswing . 7 THIS ISSUE Profits Swing During Year . 8 Business Review and Features: Growth in Labor and Other Income . 10 Francis L. Hirt Industrial Shifts .«,.....*.,* 11 Articles: Business Investments in Durable Goods Harlow D. Osboine Developments in the Machinery Industry 13 Geiievieve B. Wimsatt Major Machinery Markets 17 MONTHLY BUSINESS STATISTICS S1-S40 Subscription prices, including week! General business indicators, 1-5 International transactions of the statistical supplements, are $4 a year f< Commodity prices, 6, 7 U.S., 21, 22 Construction and real estate, 7, 8 Transportation and communica- domestic and $7.50 for foreign mailing. Domestic trade, 9—11 tions, 23, 24 Make checks payable to the Superintends Employment and population, 11-15 of Documents and send to U.S. Governmer Finance, 16-20 Subject index, inside back cover Printing Office, Washington 25, B.C., or t any U.S. Department of Commerce Fiel Office. U.S. DEPARTMENT OF COMMERCE FIELD OFFICES Albuquerque, N. Mex., 321 Post Office Bldg., Phone Denver 2, Colo., 142 New Customhouse. KEystone Philadelphia 7, Pa., Jefferson Bldg., 1015 Chestnut St. 7-0311. 4-4151. WAlnut 3-2400. Atlanta 3, Ga., 604 Volunteer Bldg., 66 Luckie St., N.W., Detroit 26, Mich., 438 Federal Bldg. WOodward 3-9330. Phoenix, Ariz., 137 N. Second Ave. ALpine 8-6851. JAckson 2-4121. Greensboro, N.C., 407 U.S. Post Office Bldg. Phone: Pittsburgh 22, Pa., 107 Sixth St. GRant 1-5370. Boston 9, Mass., U.S. Post Office and Courthouse Bldg. 3-8234. GApitol 3-2312 or 2313: ' Houston 2, Tex., 610 Scanlan Bldg., 405 Main Street, Portland 4, Oreg., 217 Old U.S. Courthouse Bldg. Buffalo 3, N.Y., 504 Federal Bldg., 117 Ellicott St. CApitol 2-7201. CApltal 6-3361. MAdison 4216, Jacksonville 1, Fia., 425 Federal Bldg. ELgin 4-7111. Reno, Nev., 1479 Wells Ave. Phone: 2-7138. Charleston 4, S.C,, Area 2, Sergeant Jasper Bldg., West Kansas City 6, Mo,, Room 2011, 911 Walnut St. BAltl- Richmond 19, Va., Room 309 Parcel Post Bldg. Milton End Broad St. Phone: 2-7771. • more 1-7000. 4-9471. Cheyenne, Wyo., 207 Majestic Bldg,, 10th St. and Los Angeles 15, Calif., Room 450, 1031 S. Broadway St. Louis 1, Mo,, 910 New Federal Bldg. MAin 1-8100. Capitol Ave. Phone: 8-8931. Richmond 9-4711. Salt Lake City 1, Utah, 222 SW. Temple St. EMpire Chicago 6, 111., Room 1302, 226 W. Jackson Blvd. Memphis 3, Tenn., 212 Falls Bldg. JAckson 0-3426. 4-2552. ANdover 3-3600. Cincinnati 2, Ohio, 915 Fifth Third Bank Bldg., 36 E, Miami 32, Fla., 316 U.S. Post Office Bldg. FRanklin San Francisco 11, Calif., Room 419 Customhouse. Fourth St. D Unbar 1-2200. 9-5431. YUkon 6-3111. Cleveland I, Ohio, Federal Reserve Bank Bldg,, E. 6th Minneapolis 1, Minn., 319 "Metropolitan Bldg. FEderal Savannah, Ga., 235 U.S. Courthouse and P.O. Bldg. St. and Superior Ave. CHerry 1-7900. 2-3244. ADams 2-4755. Dallas 1, Tex., Room 3-104 Merchandise Mart, River- New Orleans 12, La., 333 St. Charles Ave. Express 2411. Seattle 4, Wash., 809 Federal Office Bldg,, 909 First Ave. side 8-5611. New York 1, N.Y., Empire State Bldg. LOngacre 3-3377. Mutual 2-3300. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis JANUARY 1960 By the Office of Business Economics JjUSINESS activity was moving about 1 percent. Farm proprietors' At other stores which cater in large ahead at the start of the new year, with income was lower, but other major in- part to holiday trade, sales also exceeded personal income up to a new high. The come flows were higher. The wage and the normal seasonal advance in the labor agreement negotiated in early salaries component was more than 7 final months of the year. Of the January in the steel industry assures percent above that of 1958. major groupings of consumer purchases, that the current high steel output will only in the case of automobiles did buy- be extended to benefit the supply posi- Holiday sales up ing lag, and here the situation was un- tion of consuming industries. This will Sales of holiday goods marked up a doubtedly in large part the result of the permit expanding output of durable new record. At department stores, con- limited range of choice occasioned by goods. Imbalances in inventories of sumer buying in December was up 4 the arresting of usual production dur- materials are still a limiting factor on percent from November on a seasonally ing the early part of the new model year. output of some finished manufactured adjusted basis. Sales at these stores According to preliminary estimates, products, but these shortages are being had not been especially buoyant during total retail sales in December were off eliminated. the fall season, but with the pickup in about 1 percent, primarily reflecting a Employment in mid-December December, the total for the final quarter relatively low volume of new car sales. marked a further recovery—after allow- matched the previous high achieved in Excluding auto dealers, sales held at the ing for the usual seasonal influences. the summer period. high November volume, after seasonal Employees on nonfarm payrolls in- creased 300,000 from November to 52% million, raising the total close to the Income, Spending, and Saving prestrike record. The primary gain represented the call-back of auto and Index, 1957 = 100 Billion $ 120 - - 60 other workers that had been temporar- ADDITIONS TO PERSONAL DISPOSABLE PERSONAL INCOME ily idled in November and in the earlier ASSETS AND DEBT period by lack of materials. With the 110 - - 40 improved flow of steel for final manu- Toto/ factures, recalls continued throughout the month. 100 -^ - 20 Personal income was up in November and December, with the totals exceed- ing the prestrike volume. At a season- 90 ally adjusted annual rate, the December 120 - flow of $390% billion was 1 percent PERSONAL CONSUMPTION EXPENDITURES PERSONAL SAVING AS A PERCENT above November; last June it was $384 OF DISPOSABLE PERSONAL INCOME billion. A large part of the December 110 - - 8 ise reflected increases in manufactur- ing wages and salaries, but gains were also apparent elsewhere. 100 -—, - 4 \ Total / The year 1959 set a record in the Durables amount of income received, and in its 90 purchasing power. The total of $380 »1957 1958 1959 1957 1958 1959 billion for the year was about $20 bil- Quarterly Annual lion, or 5% percent, higher than in 1958. Based on seasonally adjusted data The real gains in purchasing power were U. S. Department of Commerce, Office of Business Economics also large, as consumer prices were up Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis SURVEY OF CURRENT BUSINESS January 100(' allowance—well above the best previous annual rate of $21% billion, were 7 per- rate. Demand for most consumer ap- showing in 1959. cent below the spring high and 5 percent pliances was high, with particularly lower than the total for 1959 as a large increases reported for television Manufacturing recovers whole. Privately financed housing units and radio sets, room air conditioners, With operations by automobile man- started in November were at a season- and dryers. ufacturers again approaching full sched- ally adjusted annual rate of 1.2 million, In nondurable goods, all major lines ule, total manufacturing activity moved off 200,000 from the April high. Diffi- of trade scored advances ranging from in December to the earlier high. New culties in obtaining mortgage funds 3 to 8 percent over 1958. While the orders late in the year reflected the under present capital market conditions relative gain in sales of food stores was strong state of demand for factory out- continue to be a major influence affect- somewhat less than in recent years, put and with final sales approximating ing private building programs. food prices at retail in 1959 wer: production rates, there has been slight Nonresidential construction has held slightly lower than in 1958. Food opportunity to replenish inventories fairly steady. Increased availability store sales in November and December drawn down during the protracted of steel products used in such construc- were running above those of a year ago. strike period. tion permitted improvement from the Sales in general merchandise stores Auto assemblies are fast approaching restricted November level, with both registered a very pronounced advance the scheduled average rate projected for private and public projects being as consumers stepped up their purchases the first quarter. With dealer stocks affected. Public construction has re- of apparel, homefurnishings, and of 1960 model cars in a low and un- mained below the earlier peak, prima- appliances. Seasonally adjusted sales balanced state, current production rily reflecting reductions in outlays for peaked in the third quarter and slipped schedules are aimed not only at meet- highways, public housing and school a bit in October and November. The ing customer demand but also at build- building. most recent data, however, point to ing up car stocks in dealers' hands.