JULY 1949 U. S. DEPARTMENT OF COMMERCE BUREAU OF FOREIGN AND DOMESTIC COMMERCE DEPARTMENT OF COMMERCE FIELD SERVICE SURVEY OF CURRENT BUSINESS Albuquerque, N. Mez. Memphis 3, Tenn. 203 W. Gold Ave; 229 Federal Bldg. Atlanta 1, Ga. Miami 32, Fla. /^^^\ 50 Whitehall St. SW. 36 NE. First St. Vol. 29 ffi^^f \g| No. 7 Baltimore 2, Md. Milwaukee 1, Wig. 103 S Gay St. 517 E Wisconsin Ave I \ ^£G~^_SI t I Boston 9, Mass. Minneapolis 1, Minn. 2 India Su 2d Ave. S. at 4th St. X^gs^^ JULY 1949 Buffalo 3, N. Y. Mobile, Ala. 117 ElHcott St* 109-13 St. Joseph St. Butte, Mont. New Orleans 12, La. 14 W. Granite Sfc 333 St. Charles Ave. Charleston 3, S. C. New York 4, N. Y. (^ontents 18 Broad St, 42 Broadway Cheyenne, Wyo. Oklahoma City 2, Okla. PAGE 304 Federal Office Bldgi 102 NW. Third St. Chicago 4, III. ^ , „ ,T . THE BUSINESS SITUATION ............ 1 „« c ' , . A Omaha 2, Nebr. 332 S. Michigan Are* 131lo^r9, FarnaT-. m <-St, . Cincinnati 2, Ohio ^ Plant and Equipment Expenditures 4 105 W. Fourth St, PhJadelP^a 2, Pa. 42 S. Fifteenth St. Cleveland 14, Ohio Corporate Financing in the First 6 Months of 1949 . 5 925 Euclid Ave; P^nix «, Ariz. 234 N. Central Arc. Dallas 2, Tex. * * * 1114 Commerce Sfc Pittsburgh 19, Pa. 700 Grant St. Denver 2, Colo. 828 Seventeenth Sfc Portland 4, Oreg. NATIONAL INCOME AND PRODUCT STATISTICS 520 SW. Morrison St. Detroit 26, Mich. OF THE UNITED STATES 1942-48 6 230 "\ff Vnrt *?*• T>i>rtvifl4»-nAA 4 13 T 24 Weybossett St. El Paso 7, Tex. 310 San Francisco Sfc Reno, NOT. * * * 118 W. Second St. Hartford 1, Conn. 135 High St, Richmond 19, Va. MONTHLY BUSINESS STATISTICS . S-l to S-40 801 E. Broad St. Houston 14, Tex. c _ . _ ., «V> V A 1 C\tK TMJ St. LOUIS 1, MO. Statistical Index . .'.',• Inside Back Cover 602 Federal Office Bldg. UM ^^ ^ Jacksonville ] I Fla. Salt Lake City 1, Utah 311 W. Monroe Sfc 350 S. Main St. Kansas City 6, Mo. San Francisco 11. Calif. Published by the Department of Commerce, CHARLES SAWYER, 911 Walnut St. 555 Battery St. Secretary. Office of Business Economics, M. JOSEPH ME EH AN, 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, 30 cents. Send remittances to any Depart- Louisville 2, 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 directly with the Superintendent of Documents. For local telephone listing, consult section devoted to U. S. Government Make check payable to Treasurer of the United States JULY 1949 THE Business Trends During the first half of 1949 cutbacks in factory employment and a gradual reduction in business inventories were accompanied by MILLIONS OF PERSONS BILLIONS OF DOLLARS 25 100 MANUFACTURING BUSINESS INVENTORIES SITUATION EMPLOYMENT BOOK VALUE, END OF (SEASONALLY ADJUSTED) MONTH (SEASONALLY ADJUSTED) 20 80 By the Office of Business Economics 15 60 E_jCONOMI< C developments in June were marked by a 40 continuation of cautious business purchasing as inventories 10 were further liquidated; by an extension of the decline in industrial output and in industrial prices; by the continued high rate of personal income; and by a high volume of fixed 20 business investment. Some seasonal increase occurred in employment as activi- ties expanded both in farm and nonfarm areas. The June rise did not lift the level of employment to that reached a 1948 1049 1948 1949 year ago and the increase in the labor force with school declines in wholesale prices, mainly industrial closings was more than the increase in employment so that commodities and in factory sales unemployment also rose. The recent OBE-SEC survey of plant and equipment ex- INDEX, 1926 = 100 AV. MO. 1939=100 penditures completed in June, the results of which are de- 250 500 WHOLESALE MANUFACTURERS1 tailed in a subsequent section, reveals that the expenditure PRICES SALES plans by business have remained firm during the recent (SEASONALLY ADJUSTED) period of business adjustment. Expenditures of this char- 200 400 acter for the second quarter are estimated to have been as large as in the corresponding period of 1948. Adjustments in business so far this year are mirrored in 300 the changes in the flow of corporate funds which is analyzed 150 in the final section of this review. With fixed capital ex- OTHER THAN FARM PRODUCTS AND FOODS penditures continuing high, corporations used a somewhat larger amount of funds for this purpose—about $8.4 billion— 100 200 in the first half of the year than in the corresponding period of 1948. However, with the shift in inventory policy from accumulation to liquidation and with lower amounts re- 50 i i ! i i i i i I i 11 i i I i i i i i I I i i i i i I i i i i i I i i i i i I i i i i i I | Op quired for receivables, the need for short-term funds by | 1948 1949 1948 1949 corporations w^as substantially reduced. The funds required | but, in retail markets, both prices and sales for these latter purposes dropped from a positive figure of $4 billion in the initial half of 1948 representing additional I registered little aggregate change. financial requirements to a negative figure of $4 billion in I INDEX, 1935-39=100 INDEX, 1935-39 = I 00 the initial half of the current year representing a flow of 200 500 CONSUMERS1 SALES OF ALL funds to corporations resulting from reduced requirements. PRICES RETAIL STORES The result of this and other changes in corporate finance (SEASONALLY ADJUSTED) was to enhance the liquid asset position of corporations. 175 400 Investment lower—Personal income steady The outstanding change in the national product accounts 150 300 during the first half of this year as a result of the above* developments was the decline in inventories and the associ- ated reduction in total private capital investment. The dol- lar expenditures by consumers also declined, but the reduc- 125 200 tion was less absolutely and much less relatively. Consumer spending remains more selective, however, and price reduc- tions have continued to be necessary in many lines. 100 100 The outstanding fact concerning the flow of personal 1948 1949 1948 1949 income has been its stability. From February through May SOURCES OF DATA: EMPLOYMENT, FEDERAL RESERVE; INVENTORIES AND SALES, U.S.DEPT. OF COMMERCE, 0. B.E.; PRICES, U.S. DEPT. OF LABOR, 8. L.S. there was almost no variation in the annual rate of personal U. S. DEPARTMENT OF COMMERCE, OFFICE OF BUSINESS ECONOMICS 49-235 income. Despite the decline which occurred from December S5^:£$^^ to February, the entire movement from June of 1948 through 843656—49 1 SUEVEY OF CUERENT BUSINESS July 1949 May of 1949 has been within a range of 2 percent. The Government expenditures rising only income flows to show quantitatively significant declines this year are manufacturing pay rolls and proprietors' income The recommendations in the President's Midyear Eco- in agriculture and certain nonfarm industries. In the aggre- nomic Report would mean an extension of the rising trend of gate these have been partially offset by rising transfer pay- Federal outlays and no major increase in taxation. ments and small increases in other types of income. In the first half of 1949 Federal cash payments to the public exceeded cash receipts by $1 billion at an annual rate—in contrast with a cash surplus of $4 billion at an Seasonal rise in employment annual rate in the latter half of 1948. The major factor in the shift to a cash deficit was a $4 billion increase in the Employment rose seasonally to 59.6 million in June as annual rate of Federal cash payments. This rise in cash outdoor work expanded toward the summer peak. This outlays was about equal to the increase taking place in the was about 1 million higher than a month earlier, but 1.7 second half of 1948. Federal cash receipts declined by only million lower than in June of 1948. Unemployment was $1 billion at an annual rate in the first half of 1949 from the also higher in June, rising to 3.8 million. These changes rate of the second half of 1948, in contrast with a decline of reflected the large seasonal advance in the labor force at the about $5 billion from the first to the second half of 1948. end of the school year as students and youth sought employ- The recent decline in receipts was still mainly attributable ment. to the individual income tax reduction enacted in the spring Most of the decline in employment from a year ago has of 1948, rather than to the shrinkage in tax base produced by occurred in manufacturing industries (see the first panel of declining levels of income. However, a further decline in the chart on page 1), and in addition some reduction has cash receipts is foreshadowed by the recent drop in corporate taken place in the length of the workweek. Nonmanufac- profits and taxable personal income. turing employment continues to show little change with most private groups about the same as, or a little lower than, a Chart 2.—Weekly Steel Operating Rate 1 year ago and Government employment higher.