CURRENT BUSINES UNITED STATES DEPARTMENT OF BUREAU OF FOREIGN AND DOMESTIC COMMERCE DOMESTIC COMMERCE An Official Publication of the Eureau of Foreign and Domestic Commerce, Department of Commerce, Washington DOMESTIC COMMERCE, a weekly bulletin of the national economy, brings to business the aids that are necessary in securing an understanding of the broad economic problems confronting the country. It provides authoritative information on the results of research on behalf of business, and broadcasts the policies and principles which should be seriously considered. Special articles by authorities in the fields covered appear in each issue, together with data showing industrial con- ditions as reported by the Bureau's specialists. Much information about Government that is of interest is included; activities of trade associations are covered, and a comprehensive list of new books and reports; also contains a review of mate- rial that is of particular interest to businessmen. DOMESTIC COMMERCE is available at $2 per year, in advance. Subscription remittance should be by check or money order, payable to the Bureau of Foreign and Do- mestic Commerce, and should be forwarded directly to the Bureau in Washington. SURVEY OF CURRENT BUSINESS OCTOBER 1942 ECONOMIC HIGHLIGHTS. THE BUSINESS SITUATION. MONTHLY ESTIMATES OF TOTAL CONSUMER EXPENDI- TURES, 1935-42 8 ALTERNATIVES IN WAR FINANCE. 15 CONSUMER EXPENDITURES FOR SELECTED GROUPS OF SERVICES 23 STATISTICAL DATA: Monthly business statistics. s-i General index Inside back cover Published by the Department of Commerce, JESSE H. JONES, Secretary, and issued through the Bureau of Foreign and Domestic Commerce, CARROLL L. WILSON, Director Volume 22 Number 10 Subscription price of the monthly and weekly issues of the SURVEY OF CURRENT BUSINESS, $2 a year. Single-copy price: Monthly, 15 cents; weekly, 5 cents. Foreign subscriptions, 33.50. Price of the 1940 Supplement is 40 cents. Make remittances only to Superintendent of Documents, Washington, D. C. aSftSSft—42 1 SURVEY OF CUERENT BUSINESS October 1942 Economic Highlights Consumer Purchases Declining in Terms of Farm Output 26 Percent Above 1935-39 Real Goods American farm production, held back in recent years to American consumers' total dollar expenditures for goods and stabilize prices, has reached unprecedented high levels . services reached all-time high level of $39.7 billions in first half stimulated by favorable weather and rising prices. Department of 1942 on seasonally adjusted basis . but actual quantities of Agriculture 1942 index of total agricultural production esti- purchased during this period were less than in either half of mated to be 26 percent above the average for 1935-39. Both 1941. Consumer seasonally adjusted expenditures (see chart) BILLIONS OF DOLLARS 12 BILLIONS OF DOLLARS 100 CURRENT DOLLARS 1939 DOLLARS WORLD "WAR I 60 20 1914'15 '16 '17 '18 '19 '20'21 '22 '23 '24 '25 '26 '27 '28 '29 '30 '3! '32'33'34'35'36'37 '38'39 '40 '4P42 1st Haif 2nd Half 1st Half 2nd Half 1st Hcrif 2nd Half 1st Half 2nd Half DO 42-405 1939 1940 194! 1942 DO. 42-412 Agricultural Production for Sale and for Consumption in the Farm Home Consumer Expenditures Adjusted for Seasonal Variations (Half-Year in 1935-39 Dollars by Calendar Years. Totals Expressed at Annual Rate). crops and livestock products output at record highs. Total have increased in each 6-month period since 1939 when meas- 1942 meat production will be 22 billion pounds ... a third ured in current dollars of slowly declining purchasing power . greater than the 1935-39 average . but 1942 demands for but when measured in constant (1939) dollars, physical volume meat stimulated by wartime conditions are considerably greater of purchases for each period is revealed and shows a decline than available supply. from peak level attained in last half of 1941 . since 1939, Farm output estimate for 1942 includes: Wheat crop 980 proportion of each 6-month expenditure total attributable to million bushels, corn crop 3 billion bushels, 29 and 35 percent price inflation, shows rising trend ... by first half of 1942, it above 1935-39; and 14-million-bale cotton crop, 5 percent accounted for 13 percent of consumer expenditures . seems up ... all these from a combined smaller acreage than in virtually certain that physical quantity of goods available to 1935-39 but aided by higher yields per acre. 1942 yields will consumers will continue down for the duration. The physical be: Wheat up 48 percent; corn up 39 percent; and cotton up quantity of services available to consumers will increase some- 26 percent from 1935-39 . with output up, main problems what over level of first half of 1942 . only a question of are shortages of harvest labor and transportation and storage time until they too start to shrink. facilities. Conversion of Motor Vehicle Industry to War Nearing Completion Production of war materials AVERAGE MONTH, 1939 100 average and 2% times that of 300 by automotive industry has 1939. now virtually offset the slump Prior to 1941—as shown by 250 resulting from curtailment of chart—trend of parts and ac- its civilian output which oc- cessories shipments was closely curred in first half of this year. 200 related to trend of motor- . July shipments from both vehicle industry. But con- new and converted facilities 150 version of latter to munitions approximate 90 percent of manufacture early this year, the high record at 1941 peak 100 caused only slight reduction in of civilian buying. Motor- output of parts and accessories vehicle parts and accessories plants because their conversion industry has led this recovery was more simple, and their with attainment of new all- products were easily diverted 1939 1940 1942 time sales peak 23 percent D. 0.42-302 with little or no modification to above January level ... up Indexes of Shipments of Motor-Vehicle and Motor-Vehicle Parts and military uses in tanks, bomb- Accessories Industries. one-third over 1941 monthly ers, and other war items. October 1942 SURVEY OF CURRENT BUSINESS The Business Situation "DOWERFUL forces have now been mobilized against current rapid rate of growth in the national income. -*• inflation. Again making economic history, the An important part of the rise in the national income Congress and the President early this month took in the first half of 1942 over the same 1941 period, as positive action in the shape of new legislation and a may be seen from table 1, was due to price increases. new Executive order which seem reasonably adequate Henceforth, rising national income will be caused to prevent much further inflation. On the basis of a much more exclusively by higher output alone. literal and broad interpretation of the new law and Price Control Fairly Effective Since May. the new Executive order, the Economic Stabilization Director, aided by the Economic Stabilization Board, The record shows that the General Maximum Price appears to have all the nonlegislative powers necessary Regulation issued on April 28 of this year has been to keep the cost of living within bounds. Under these reasonably successful. During the 12 months prior to circumstances, should runaway living costs now ma- its promulgation, wholesale prices as measured by the terialize, the only possible conclusion would then be Bureau of Labor Statistics' index had been rising 1% that human beings even under the stress of desperate percent a month and the cost-of-living index had risen war, are simply incapable of acting logically and slightly more than 1 percent per month. Between courageously for the common good and in their own May and September 1942, the wholesale price index long-run economic best interests. Upon the assump- has risen only about 0.5 percent altogether and the tion, however, that the Congress will in due time enact cost-of-living index only 1.5 percent. fiscal measures appropriate to the needs of the emer- Despite this initial success, however, there were good gency, and that the Economic Stabilization Director grounds for believing that far sterner tests of its effec- will effectively use all the powers placed in his hands, tiveness lay ahead as the volume of goods available for it now seems entirely reasonable to expect that this consumers diminished while their income mounted will indeed be the first great war fought by this Nation higher. The 1.5 percent cost-of-living increase just without the scourge of drastic inflation. mentioned was almost entirely the result of an advance The two biggest loopholes in the Emergency Price of approximately 10 percent in the prices of uncontrolled Control Act of 1942 were the exemption of the prices foods. The chief danger was that continued rise in of farm products and foods from ceilings below certain food prices would set off a series of wage-increase high levels and the omission of any control over wages demands by workers whose level of living was pared and salaries. Thus important parts of the average down thereby. This would have set the rising price consumer's budget and the largest single element of spiral in motion again. It was to prevent this threat- producers' costs were uncontrolled. The real signifi- ened renewal of the rise that the President had on cance of the new anti-inflation measures is that they Labor Day requested additional price-control legislation. can, if effectively enforced, largely plug up these loop- Chart 1.—Cost of Goods Purchased by Wage Earners and holes. By so doing, they will also slow down the Lower-Salaried Workers in Large Cities 1935 -39 - 100 1935-39 » 100 Table 1.—National Income, Cost of Living, and Hourly 140 Earnings ALL ITE FOOD 120 Amount (billions of dollars) Percent increase / MO IIO 1941 Second First / **M • • 0y 100 Item half half 100 1940, 1942, 1941 1942 second first over over MM.IMI.I I.IMIMMI H.l.flllll MM, I,,,, half First Second half same same 90 IIIMIMMI 90 half half period period I 30 130 1940 1941 HOUSE FURNISHINGs^ GLOTHIIS 120 r 120 Total national income 40.5 43.7 51.0 53.3 25.9 22.0 / Total compensation of em- i ployees 27.4 30.5 34.4 37.9 25 5 24 3 I 10 / 110 Salaries and wages 25.5 28.5 32.7 36.1 28.2 26.7 Other labor income 1.8 1.9 1.7 1 8 — 5 6 — 5 3 Entrepreneurial .