AUGUST 1955 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. 8 321 Poet Office BIdg. 1031 S. Broadway AUGUST 1955 Atlanta 5, Ga. Memphis 3, Tenn. 50 Seventh St. NE. 229 Federal Bldg. Boston 9, Mass. Miami 32, Fla. U.S. Post Office and 300 NE. First Ave. Courthouse BIdg. Minneapolis 2, Minn. Buffalo 3, N. Y. 2d Ave. South and 117 ElHcott St. 3d St. Charleston 4, S. C. New Orleans 12, La. Are 12, 333 St. Charles Ave. PAGE Sergeant Jasper BIdg. New York 17, N. Y. THE BUSINESS SITUATION................... 1 Cheyenne, Wyo. 110 E. 45th St. 307 Federal Office Bldg. National Income and National Product Philadelphia 7, Pa. Chicago 6, 111. 1015 Chestnut St. A Review of the Second Quarter 2 226 W. Jackson Blvd. Phoenix, Ariz. 137 N. Second Ave. Recent Trends in Consumer Credit ...... 7 Cincinnati 2, Ohio 442 U. S. Poat Office Pittsburgh 22, Pa. and Courthouse * * * 107 Sixth St. Cleveland 14, Ohio Portland 4, Oreg. 1100 Chester Ave. SPECIAL ARTICLE 520 SW. Morrison St. Dallas 2, Tex. Reno, Ncv. Income by States, an Announcement. ....... 9 1114 Commerce St. 1479 Wells Ave. International Investments and Earnings. .... 10 Denver 2, Colo. Richmond 20, Va. 142 New Customhouse 900 N. Loinbardy St. if if if Detroit 26, Mich. St. Louie 1, Mo. 230 W. Fort St. 1114 Market St. El Paso, Tex. Salt Lake City 1, Utah MONTHLY BUSINESS STATISTICS... .S-l to S-40 Chamber of Commerce Bldg. 222 SW. Temple St. Statistical Index ............... Inside back cover Houston 2, Tex. Sail 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 mailings, $4.25. Single copy, 30 cents. Send remit- tances to any Department of Commerce Field Office or to the Superintendent of For local telephone listing, consult section Documents, United States Government Printing Office, Washington 25, D. C. Special subscription arrangements, including changes of address, should be devoted to U. S. Government made directly with the Superintendent of Documents. Make checks payable to Treasurer of the United States. AUGUST 1955 By the Office of Business Economics BBUSINES, S has sustained its active pace into the summer Personal Income quarter as major sectors of the economy are apparently experiencing less than the usual seasonal slack. Consumer BILLIONS OF DOLLARS and investment demands, both buttressed by rising incomes, 325 continue buoyant. Although prices of nonagricultural prod- ucts have continued to edge upward in wholesale markets, agricultural prices have moved downward and the net change TOTAL PERSONAL INCOME in the combined wholesale index has been slight. At the 300 consumer level, price changes have been fractional through- out the January-June period. Despite the stability of the comprehensive price averages, the strength of the business rise and particularly the strong 275 supporting role played by credit expansion have been deemed sufficient warrant for taking steps to tighten the credit supply. In the 12 months between the end of July last year and this year, total loans of the reporting member banks of 250 the Federal Reserve System increased $5.8 billion or 15 per- cent, the largest expansion, both absolutely and relatively, for a similar period since the defense build-up of 1950-51. The credit expansion of the past year has been more general 225 U than that in the defense buildup period, however, with com- mercial, industrial, and agricultural loans up 9 percent, loans WAGE AND SALARY DISBURSEMENTS to security brokers and dealers up 40 percent, other loans on 125 securities up 38 percent and real estate loans up 19 percent. From July 1950 to July 1951, the expansion was largely con- centrated on commercial, industrial, and agricultural loans. In these circumstances, the discount rates of 11 of the 12 100 Federal Reserve banks have been raised since the end of March by stages from \% to 2 percent (to 2% percent at the Cleveland bank) while home mortgage credit on Federal Government insured or guaranteed loans was tightened by 75 increasing the required downpayments and shortening the COMMODITY-PRODUCING INDUSTRIES maximum maturity periods. Minimum downpayments were increased by 2 percent of the price of the house and the maximum maturity period was reduced from 30 to 25 years. 50 Income and employment 75 Personal income in June remained at a $301 billion PROPRIETORS'AND RENTAL INCOME seasonally adjusted annual rate, unchanged from May as \ lower agricultural income offset slightly higher payrolls. 50 "^•••••» *•.••••••••••••••.,,. •••••«..•.„••••..••••••••• Scattered work stoppages limited the size of the payroll advance. The strong recovery in employment was extended further in July, with the total moving up to 65 million. Unem- 25 ployment registered another substantial contra-seasonal decline. PERSONAL INTEREST INCOME AND DIVIDENDS Seasonally adjusted employment in nonagricultural estab- lishments increased by 200 thousand in July; most major industry groups participated in the expansion. Manhours 1952 1953 1954 1955 worked in nonagricultural industries contracted seasonally, MONTHLY TOTALS, SEASONALLY ADJUSTED, AT ANNUAL RATES since July is the peak vacation month. U. S. DEPARTMENT OF COMMERCE. OFFICE OF BUSINESS ECONOMICS 55-44-1 Sales of retail stores in July moved ahead about 2 percent from the record rates of May and June, after seasonal adjust- 353028°—55 1 SURVEY OF CURRENT BUSINESS August 1955 ment, according to the advance report of the Bureau of the nondurable goods manufacturers; sales of durable goods, Census. The largest increases were registered by general notwithstanding their sharp recovery, aggregated only merchandise, furniture and appliance and apparel stores. slightly more than in the first half of 1953. The most rapid The strength in retail trade in recent months has widened sales growth among major groups was recorded by the chemi- to encompass practically all major store groups. In the cal industry, up 16 percent from early 1953. Sales of tb^ durable sector automotive sales, which rose rapidly in the petroleum and paper industries also showed sizable gains. first quarter, have been maintained at high rates since then. The continued rise of new orders received by manu- At the same time, generally mounting sales in the other hard facturers, which have been outrunning actual sales for the goods groups have contributed to the almost steady rise in past half year, provides support for the high rate of manu- the durables total so far this year. facturing operations over the short run. The unfilled order Nondurable store sales, while generally confined to more backlog increased to over $49 billion at the end of June. modest advances, have also registered steady gains. Among That total is nearly $3 billion above the low point reached the nondurables, drugstores, eating and drinking places, and late in 1954, although it is only two-thirds of the unfilled gasoline service stations had the largest increases in the order accumulation of June 30,1953, when defense contracts, past 6 months, while the remaining groups including food often for delivery relatively far into the future, comprised and general merchandise stores moved up only slightly. a larger proportion of the total. No downtrend was evident in any major kind of business. 7 With June output somewhat ahead of sales, the book value At the producers level, sales by manufacturers rose 2 per- of seasonally adjusted inventories of merchants and manu- cent from May to June on a seasonally adjusted basis to facturers expanded by a further $400 million during the exceed $27 billion. The high rate to which manufacturing activity has risen since last summer can be judged from the month. Stocks held by manufacturers accounted for $250 fact that this year's January-June sales total of almost $155 million of the total rise, with most of the expansion occurring billion was nearly 3 percent above the corresponding 1953 in purchased materials and goods in process. But since sales amount, the previous high for a comparable period. Most are also rising, stock-sales ratios in both manufacturing and of the increase over this time period is ascribable to sales of trade remain lower than a year ago. National Income and National Product A Review of the Second Quarter IN THE second quarter of 1955 the gross national product Since 1953 a rise has occurred in the average of prices at reached an annual rate of $385 billion, up $10 billion from which the national product is sold. It is difficult to allow the first. The increase was somewhat larger than in the two for this rise, especially on a quarterly basis, but such cal- preceding quarters of recovery from the 1953-54 recession. culations as can be made suggest that the second quarter The alternative measure of national output, the national 1955 gain over the preceding peak was about 2 percent income, indicated a similar upturn through the first quarter in physical terms. of 1955. This trend continued in the second quarter, but absence of the requisite data on corporate profits does not Shifts in output composition permit a complete measurement of the change at this time. Personal income also rose during the business recovery, by This gain in production should be evaluated in the light 4K percent from the third quarter of 1954 to the second of the substantial shifts in the composition of total output quarter of the current year. This increase was less than the to which the economy had to adapt itself over the past 7 percent rise in the total value of production over the same two years.