SURVEY of CURRENT BUSINESS August 1948
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AUGUST 194 SURVEY OF U. S. DEPARTMENT OF COMMERCE BUREAU OF FOREIGN AND DOMESTIC COMMERCE DEPARTMENT OF COMMERCE FIELD SERVICE SURVEY OF CURRENT BUSINESS Albuquerque, N. Mex. Memphis 3, Tenn. 203 W. Gold Ave. 229 Federal Bid* Atlanta 1, Ca. Miami 32, Fla. 50 Whitehall St. SW. 36 NE. First St. No. 8 Baltimore 2, Md. Milwaukee l,Wis. 103 S. Gay St. 517 E. Wisconsin Are, Boston 9, Mass. Minneapolis 1, Minn. AUGUST 1948 2 India St. 125 S. Third St. Buffalo 3, N. Y. Mobile, Ala. 117 Ellicott St. 109-13 St. Joseph St, Butte, Mont. New Orleans 12, La. 14 W. Granite St. 333 St. Charles Ave, Charleston 3, S. C. New York 1, N. Y. PAGE 18 Broad St. 350 Fifth Ave, THE BUSINESS SITUATION 1 Cheyenne, Wyo. Oklahoma City 2, Okla. National Product and Income in the Second Quarter 304 Federal Office Bldg. 102 NW. Third St. Chicago 4, III. Omaha 2, Nebr. 332 S. Michigan Ave. of 1948 4 1319 Farnam St, Cincinnati 2t Ohio Trend of Manufactures . 7 105 W. Fourth St. Philadelphia 2, Pa. 42 S. Fifteenth St. • * * Cleveland 14, Ohio 925 Euclid Aye. Phoenix 8, Ariz. 234 N. Central Ave. SPECIAL ARTICLE Dallas 2. Tex. 1114 Commerce St. Pittsburgh 19, Pa. State Income Payments in 1947 . 10 700 Grant St. Denver 2, Colo. 828 Seventeenth St. Portland 4, Oreg. • • • 520 SW. Morrison St. Detroit 26, Mich. 230 W. Fort St. Providence 3, R. I. NEW OR REVISED STATISTICAL SERIES 24 Weybossett St. El Paso 7, Tex. Revised Estimates of Wholesale Sales and Stocks . 22 310 San Francisco St. Reno, Nev. 50 Sierra St, • • * Hartford 1, Conn. 135 High St. Richmond 19, Va. 801 E. Broad St, Houston 14, Tex. MONTHLY BUSINESS STATISTICS . S-l to S-40 St. Louis 1, Mo. 602 Federal Office Bldg. Statistical Index . Inside Back Cover 1114 Market St* Jacksonville 1, Fla. Salt Lake City 1, Utah 311 W. Monroe St. 350 S. Main St. Kansas City 6, Mo. San Francisco 11. Calif. 911 Walnut St. Published by the Department of Commerce, CHARLES SAWYER, 555 Battery St. Secretary. Office of Business Economics, M.JOSEPH MEEHAN,^ cting Los Angeles 12, Calif. Savannah, Ga. Director. Subscription price, including weekly statistical supplement, $3 a 312 North Spring St. 125-29 Bull St. year; Foreign $4. This issue, 25 cents. Send remittances to any Depart- Louisville 1, Ky. Seattle 4, Wash. ment of Commerce Field Office or to the Superintendent of Documents, 631 Federal Bldg. 909 First Ave. United States Government Printing Office, Washington 25, D. C. Special subscription arrangements, including changes of address, should be made For local telephone listing, consult section directly with the Superintendent of Documents. devoted to U. S. Government Make check payable to Treasurer of the United States. PUBLISHED WITH THE APPROVAL OF THE DIRECTOR OF THE BUDGET (42 J. C. P.) AUGUST 1948 CONSUMER INCOME, SPENDING, AND PRICES BILLIONS OF DOLLARS DISPOSABLE PERSONAL THE I increase INCOME* in income available to consumers ! SITUATION By the Office of Business Economics I I • PERCENT EjCONOMI, C activity was sustained at a high rate in PERSONAL TAXES AS A PERCENT OF June and July. Rising costs and increasing demand relative PERSONAL INCOME *i* to the flow of goods were reflected in a further advance in. the I price level. In recent weeks, the area of rising prices has broadened and Lin part, the pace of the advance has quickened. A diverse group of from lower important industrial raw materials, coal, iron and steel together with fabricated metal products, and such major »aXes. " foods as meat, dairy, and poultry products all registered increases. Grain prices weakened, however, as crop pros- pects continued to improve both at home and abroad. In view of the mounting pressure on prices, new legislation I I 1 1 I ) 1 I I II , JL,J o was enacted in early August by the special session of Congress authorizing the Board of Governors of the Federal Reserve BILLIONS OF DOLLARS 200 System to raise reserve requirements of member banks, and ! PERSONAL CONSUMPTION i to reestablish control of consumer installment credit which EXPENDITURES* had lapsed at the end of October of last year. As a comple- L mentary measure, the Secretary of the Treasury raised in- rise in terest rates on short-term Government borrowing. Pro- consumer vision for easier housing credit was made, however, by the spending.... liberalization of provisions of the National Housing Act. Employment expanded more than seasonally in June and " '00 rose again in July. Industrial production, though at a high rate, was nevertheless moderately lower in June and July than the rate attained in the first quarter of the year, as operations continued to be handicapped by material short- ages in basic industries (see table 1). For the first 6 months of the year total nonagricultural production of commodities averaged higher than in the latter half of 1947, but the gain • was narrow and confined wholly to the first quarter of the I I year with some easing during the second quarter. The INDEX, 1935-39= 100 trend of manufacturing output is analyzed in some detail in has been CONSUMERS* PRICES !a subsequent section. accompanied (B.L.S. INDEX) In the agricultural sector, the output of goods for con- by higher sumers is appreciably lower in the first half of 1947 than a prices, year earlier. The curtailment in marketing extended to Lespecially both crops and livestock and livestock products. P I for food. The progress of wage settlements in the "third round" adjustment in the basic industries was reflected in a rise in - 150 earnings data for June compiled by the Department of Labor. ^^~~—** f^^ COMBINED Hourly earnings in manufacturing rose about two cents an ^^^^mmm—*** INDEX hour from May to June, and some major wage increases have been granted since that time. This rise coupled with the 1 1 1 1 1 1 I 1 1 1 1 1 I t 1 expansion in employment accounted for half of the 4.7 1945 1946 1947 1948 billion-dollar increase in total personal income from 207.2 billion dollars (annual rate) in May to 211.9 billion in June. ) LOCAL GOVERNMENTS. Most of the additional gain for the month was in farm U. S. DEPARTMENT OF COMMERCE, OFFICE OF BUSINESS ECONOMICS. 48-261 I income. SURVEY OF CURRENT BUSINESS August 1948 Table 1.—Production Widespread Price Advances Upward price pressures were featured in commodity Farm Industrial marketings markets in July (see table 2), with the latest increases pushing (adjusted) (unadjusted) the monthly general wholesale price index above the post- World War I peak of May 1920. Numerous price advances (Index 1935-39=100) were made affecting basic raw materials, which along with higher wage rates will affect the cost of production of manu- 1947: First quarter... 189 130 factured products. Supplementing the June 1948 advances Second quarter. 185 127 Third quarter.. 182 164 in such raw materials as aluminum and rubber, price in- Fourth quarter 191 170 creases in July and early August were announced for coal, 1948: First quarter. _. 193 118 finished steel, copper, lead, zinc, glass, and nickel. Aside Second quarter 190 121 from any effects resulting from the dropping of the basing- June 192 130 point price system, steel prices were advanced about 10 Sources: Industrial Production, Board of Governors, Federal Reserve System; Farm percent in July. Subsequently, rises have occurred in scrap Marketings, U. S. Department of Agriculture, Bureau of Agricultural Economics. steel and other materials entering into finished-steel produc- tion. The increase in personal disposable income from the first These higher prices of basic materials and higher wage to the second quarter of the year was accompanied by in- rates have already been reflected in rising prices of various creases in both consumer spending and consumer prices (see manufactured goods such as agricultural machinery, auto- the chart on page 1). Part of the rise in disposable in- mobiles and rubber tires. To a considerable extent, however, come, as is brought out in the second panel of the chart, was adjustment of prices of fabricated products has not yet due to the reduction in personal taxes. Recent changes in reflected the full impact of these cost increases. the national income and product are discussed in detail in a later section. Table 2.—Prices The value of goods flowing through distribution channels was moderately higher at all levels, with the principal ad- Wholesale Consumers' vance registered in durables. A 2-percent rise in the index Other price index of manufacturers' sales from May to June was principally All Farm than farm due to a 6-percent advance in durables. New orders of and food manufacturers—always a sensitive measure of general busi- (Index ness sentiment—had drifted lower during the first few months (Index 1926=100) 1935-39=100) of the year, but in June they rose in a broad group of in- 1947: dustries. First quarter. 145.2 172.7 129.1 154. 3 Second quarter. 147.5 176.8 131.8 156.4 Second-quarter retail sales were from 2 to 3 percent higher Third quarter.. 153.9 183.2 135.9 160.8 than in the preceding quarter as June sales increased slightly Fourth quarter 160,5 191.4 142.7 165.2 1948: over May almost to the high point reached in April of this First quarter. „ 162.6 190.2 147.8 167. 7 Second quarter. 164.3 190.6 149.0 170.5 year. After adjustment for seasonal variation and the 149.5 171. 7 number of trading days, the June index of retail sales stood June 166.2 196.0 at 334 (1935-39 = 100) compared with 328 in May.