Full text of Supplement to Economic Indicators : 1953
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83d Congress, 1st Session HISTORICAL AND DESCRIPTIVE SUPPLEMENT TO Economic Indicators Prepared for the Joint Committee on the Economic Report hy the Committee Staff with the Cooperation of the Office of Statistical Standards, Bureau of the Budget UNITED STATES GOVERNMENT PRINTING OFFICE WASHINGTON : 19S3 JOINT COMMITTEE ON THE ECONOMIC REPORT (Created pursuant to sec. 5 (a) of Public Law 304, 79th Cong.) JESSE P. WOLCOTT, Michigan, RALPH E. FLANDERS, Vermont, Chairman Vice Chairman ARTHUR V. WATKINS (Utah) BARRY GOLDWATER (Arizona) FRANK CARLSON (Kansas) JOHN SPARKMAN (Alabama) PAUL H. DOUGLAS (Illinois) J. WILLIAM FULBRIGHT (Arkansas) RICHARD M. SIMPSON (Pennsylvania) HENRY O. TALLE (Iowa) GEORGE H. BENDER (Ohio) EDWARD J. HART (New Jersey) WRIGHT PATMAN (Texas) RICHARD BOLLING (Missouri) GROVER W . JOHN W . ENSLEY, Staff Director LEHMAN, Clerk [PUBLIC LAW 120—81ST CONGRESS; CHAPTER 237—1ST SESSION] J O I N T R E S O L U T I O N [S. J. Res. 55] T o print the monthly publication entitled "Economic Indicators" Resolved by the Senate and House of Representatives of the United States of America in Congress assembled, That the Joint Committee on the Economic Report be authorized to issue a monthly publication entitled "Economic Indicators/' and that a sufficient quantity be printed to furnish one copy to each Member of Congress; the Secretary and the Sergeant at Arms of the Senate; the Clerk, Sergeant at Arms, and Doorkeeper of the House of Representatives; two copies to the libraries of the Senate and House, and the Congressional Library; seven hundred copies to the Joint Committee on the Economic Report; and the required number of copies to the Superintendent of Documents for distribution to depository libraries; and that the Superintendent of Documents be authorized to have copies printed for sale to the public. Approved June 23, 1949. ii Letters of Transmittal DECEMBER 1 8 , 1 9 5 3 . To Members of the Joint Committee on the Economic Report: For the information of the members of the Joint Committee on the Economic Report and others interested there is transmitted herewith a Supplement to the committee's monthly publication Economic Indicators containing both historical tables of the various indicators now published and a description of the derivation, limitations and uses of each indicator. These materials were developed by the committee staff with the cooperation of the Office of Statistical Standards, Bureau of the Budget, and of the agencies responsible for each series. As you are undoubtedly aware, there have been numerous requests for this information in recent years. It is believed that the present publication will be useful not only to the members of the committee and to other Members of Congress but also to other users of Economic Indicators, both within the Government and among the nearly 4,000 private subscribers. JESSE P . WOLCOTT, Chairman, Joint Committee on the Economic Report. DECEMBER 1 8 , 1 9 5 3 . The Honorable JESSE P . WOLCOTT, Chairman, Joint Committee on the Economic Report, United States House of Representatives, Washington, D. C. D E A R M R . WOLCOTT: Pursuant to numerous requests the committee staff transmits herewith a supplement to the committee's monthly publication Economic Indicators, containing for each indicator (1) historical data and (2) a description and references to additional technical explanations. This report is intended to answer most of the requests for general information which cannot be carried each month in the committee's publication but which is often essential to the interpretation and use of the current materials. The descriptive material shown for each series in Economic Indicators attempts in a nontechnical way to explain how the series is derived, what its limitations are, and the uses for which it is appropriate or, in some cases, warning of uses for which it is especially not appropriate. Both the historical data and the descriptions which are included in this Supplement are designed for general users of the data rather than for technicians. It might be helpful to point out for the benefit of persons not familiar with Economic Indicators that this is a monthly publication printed by the Congress in accordance with Public Law 120, 81st Congress; chapter 237, 1st session, a copy of which is reproduced on the back of the front cover of this Supplement. Economic Indicators was first published by the Joint Committee on the Economic Report as a committee print in 1948 to provide its members with information on current economic trends and developments in a concise and graphic form. Knowing that other Members of the Congress, businessmen, farm leaders, labor organizations, and representatives of the press also sought such information the Joint Committee at the same time sponsored legislation which later resulted in authorizing publication on a permanent basis. The materials for Economic Indicators are prepared each month for the Joint Committee on the Economic Report by the Council of Economic Advisers. The Committee has always invited suggestions for improving Economic Indicators. Improvements have been made as a result of these suggestions. It is recognized that the materials included must be limited to those series of most general use by Members of Congress, executive Government agencies, and others. The Committee policy has been to carry standard series and relationships without interpretation. Other publications of the Committee and the executive agencies are considered the medium for interpretations of the data. iii Economic Indicators currently has a list of nearly 4,000 paid subscribers. It is used widely by schools and libraries as a reference source and has a circulation of over 200 foreign subscribers, covering all major nations of the world. The monthly Indicators is sold through the Superintendent of Documents, United States Government Printing Office, Washington, D. C., price 20 cents per copy; $2 per year; $2.50 foreign. For this Supplement, the developmental and supervisory work was done by the Committee staff. The descriptions of the series were written by members of the staff of the Office of Statistical Standards, Bureau of the Budget. The tables were prepared by Miss Frances James and the agencies compiling the original data. Respectfully submitted. G H O V E R W . E N S L E Y , Staff Director. Contents THE TOTAL OUTPUT OF THE ECONOMY The Nation's Economic Accounts Gross National Product PRICES Consumer Prices Wholesale Prices. Prices Received and Paid by Farmers Stock Prices EMPLOYMENT AND WAGES Civilian Labor Force Nonagricultural Employment—Selected Industries Average Weekly Hours—Selected Industries Average Hourly Earnings—Selected Industries Average Weekly Earnings—Selected Industries PRODUCTION AND BUSINESS ACTIVITY Industrial Production Production of Selected Manufactures Weekly Production—Selected Indicators Gross Private Domestic Investment Expenditures for New Plant and Equipment New Construction New Housing Starts Inventories and Sales Merchandise Exports and Imports Pagfl — 1 4 6 8 10 13 - — -- - 14 18 20 22 22 24 27 28 30 32 34 36 38 40 PURCHASING POWER National Income — Corporate Profits Personal Income. Per Capita Disposable Income Consumer Income, Spending, and Saving. _ Farm Income 42 44 46 46 48 50 CREDIT, MONEY, AND FEDERAL FINANCE Bank Loans and Investments Consumer Credit Bond Yields and Interest Rates Money Supply Federal Budget Receipts and Expenditures Federal Cash Receipts From and Payments to the Public 52 54 56 58 60 62 - V THE TOTAL OUTPUT OF THE ECONOMY THE NATION'S ECONOMIC ACCOUNTS Description of series.—The Nation's economic Government receipts and expenditures are shown accounts summarize the combined incomes and o: on an income and product account basis, rather than expenditures of consumers, business, and Govern- o; on either a. cash or a conventional budget 'basis, ment. Tbe accounts are designed to equal, when s< so as to be consistent with the receipts and expenditotaled, expenditures for gross national production ti ture accounts of the other sectors and with the gross national product total. Government transfer payon the one side and incomes from gross national n ments, such as social security and veterans' benefits, production on the other side. The statement of n and interest charges represent income to the recipithese accounts represents the results of double-entry a: ents, but are not included in the gross national bookkeeping—for every dollar of recorded expendi- e; product. Therefore, these payments are subtracted tures for goods and services there must be a dollar of p recorded income. Thus in the Nation's economic h from both receipts and expenditures. accounts, receipts and expenditures add to the same The income and product accounts of the Government are on a consolidated basis, just as the cash total. It follows,that for any past period if the n receipts of any one of these three categories of the aaccounts are, but they depart from the latter beeconomy exceeds the expenditures of that category, ccause of the timing of the items included in each and this saving will be offset by an excess of expenditures because b of conceptual differences. The income and over receipts in another category or categories* p product accounts of the Government are designed The consumer account summarizes the detailed t<to be in accord with the accrual records maintained statistics on personal income and consumption shown b by private business. Thus, business taxes, espein the tables in the Purchasing Power section of ccially those on corporate profits, are recorded on an Economic Indicators, particularly the table on Con- accrual a rather than a collections basis, and Governsumer Income, Spending, and Saving. It should nment expenditures for goods are corrected for the lag between deliveries and payments therefor. All capibe rioted that, whereas personal income includes b the income of unincorporated businesses and farms, ttal transactions, such as receipts from the sale of only expenditures for consumption purposes are CGovernment property and changes in loans and inincluded in this account. Investments of both cor- vvestments of Government credit agencies, are exporate and noncorporate businesses are included in ccluded from the income and product accounts althe business account. Residential construction, t! though such transactions are included in both the whether for owner occupancy or for rental purposes, ccash and conventional budgets. is also included with business investment, while the Uses and lirnitations.—A set of economic accounts actual or imputed rent of dwellings is included in f< for the Nation reduces the voluminous detail of consumer expenditure. eeconomic activity to understandable proportions by In the business account, receipts of business include p providing the factual background for seeing in perthe undistributed profits of corporations after ad- sspective the operations of the major categories of justment for inventory valuation, plus the capital t'the economy—consumer, business, and Governconsumption allowances of both corporate and non- nment—and the interrelationships or transactions corporate enterprises and institutions, and deprecia- bbetween and among them. A statement of these tion on residences. Depreciation allowances must aaccounts serves a number of purposes: be added to receipts since investment is on a gross (1) In summarizing the pattern of change in the basis, that is, before deduction for depreciation, eeconomy over recent periods, the statement indicates Business investment includes additions to plant and \what one should look for among the other charts equipment and inventories of both corporate and aand tables included in Economic Indicators. noncorporate enterprises, as well as residential (2) The accounting methodology needed to preconstruction. i pare this statement helps to assure that the various 1 estimates such as income, expenditures, savings, investment in the other charts and tables are consistent. (3) It is frequently necessary to project and evaluate the likely economic impact of public and private programs on the economy. The framework of these accounts enables the expression quantitatively of the combination of such public and private plans within a framework of the broad categories of the economy so as to measure inconsistencies or imbalances between and among them, and inconsistencies between and among the assumptions upon which these plans are based. Preparation of a Nation's economic budget for a future period, using these accounts, is especially helpful when Government programs are of such magnitude and importance that they dominate changes in the economy; in other words, when Government spending and tax plans are the main forces making for changes in the economy. This type of analysis is therefore particularly useful in formulating a stabilization program in periods of war or high national defense operations. At other times, its main benefit is in identifying and measuring inflationary and deflationary programs of Government and private economic groups or individuals and in pointing out areas in which adjustments are necessary to achieve economic stability and growth. (4) Another use, related to this last use, is that of enabling those who must make an actual forecast, such as businessfirms,private economists and others, to check their forecasts as to their consistency in several ways: consistency with past patterns of fluctations in the total and various segments of the economy; consistency as between and among the various assumptions as to income, savings, investment, prices, and employment that underlie the forecast. Certain limitations must be recognized in using these economic accounts. Needless to say, the statistics do not throw light on all aspects of the economy but only broad summary categories and 2 thus must be supplemented by the use of additional economic information, such as that contained in other parts of Economic Indicators. Also, the data are national in coverage, hence their trends and changes must be carefully interpreted and supplemented by other data for use in the analysis of regional or individual industry problems. Third, they do not, of course, provide the assumptions or the reasons which one should have for explaining or projecting economic changes; they only provide the relevant statistical background for intelligent reasoning and judgment. Finally, it must be recognized that estimates for both receipts and expenditures for some of these categories rest upon data collected for other purposes, or upon crude or indirect estimates in cases where no direct survey is regularly conducted to obtain data. Thus there will be times when it will be difficult to interpret the meaning of some of the changes in the accounts if, at the time, statistical discrepancies in the accounts which arise from technical problems in estimating the various items are so large that they throw doubt on some of the movements or the importance of other movements in the accounts. References.—The estimates included in the Nation's economic accounts are all taken from the national income and product statistics of the Department of Commerce. The National Income Supplement to the Survey oj Current Business, 1951, has complete statistics from 1929 to 1950, as well as much explanatory material. Revised estimates for 1949-52 can be found in the Survey of Current Business, July 1953. See also Technical Notes on the Nation's Economic Budget, Appendix A: Report of the Joint Committee on the Economic Report on the January 1952 Economic Report of the President, Senate Report No. 1295, 82d Congress, 2d session, pp. 99-105, and statistical materials accompanying the Annual Economic Reviews prepared by the Council of Economic Advisers for inclusion with the Economic Report of the President, 1948-53. The Nation1 s Economic Accounts [Billions of dollars] Consumers Year Consumption expenditures Disposable income Business Saving ( + ) or dissaving ( - ) Gross retained earnings Investment 1 Government Excess of of Expendi- Excess earnings Receipts receipts tures for ( + ) or (less trans- goods and ( + ) or investexpendifers, etc.) services tures (—) ment (—) Statistical discrepancy 2 1929 82. 5 78. 8 + 3. 7 11.9 16. 6 -4.7 9.5 8.5 + 1. 1 -0. 1 193 0 193 1 193 2 193 3 193 4 73. 7 63. 0 47. 8 45. 2 51. 6 70. 8 61. 2 49. 2 46. 3 51. 9 + 2.9 + 1.8 -1. 4 -1. 2 2 9.0 5.3 2.7 2. 7 5. 0 10. 9 5. 6 1. 1 1. 5 3. 2 -1. 9 2 + 1.7 + 1.2 + 1.7 8.9 6.4 6.4 6. 7 7.4 9. 2 9. 2 8. 1 8.0 9.8 3 -2. 8 -1. 7 -t. 3 -2.4 -. 7 + 1.2 + 1.4 + 1.2 +.9 1935— 193 6 193 7 193 8 193 9 58. 0 66. 1 71. 1 65. 5 70. 2 56. 2 62. 5 67. 1 64. 5 67. 5 + + + + + 1. 8 3. 6 3. 9 1.0 2. 7 6. 5 6. 7 7.9 8.0 8. 6 6. 1 8. 2 11. 5 7.4 10. 8 +.4 -1. 6 -3. 6 +.6 -2. 2 8. 0 8.9 12. 3 11. 3 11. 2 9. 9 11. 7 11. 6 12. 8 13. 1 -1. 8 -2. 9 +.7 -1.5 -1. 9 -.3 +.9 -1. 0 1 + 1.4 194 0 194 1 1942— 1943— 1944—. 75. 7 92. 0 116. 7 132. 4 147. 0 72. 1 82. 3 91. 2 102. 2 111. 6 + 3. 7 + 9. 8 + 25. 6 + 30. 2 + 35.4 10. 7 11. 6 13. 9 16. 3 17.5 15. 5 19. 5 10. 7 3. 5 5. 6 -4.8 -7.9 + 3. 2 + 12. 8 + 11. 9 13.4 21. 2 28. 6 44. 7 45. 2 13. 9 24. 7 59. 7 88. 6 96. 5 -. 5 -3. 5 -31. 2 —43. 9 -51. 4 + 1.6 + 1. 6 + 2.3 +.9 +4.0 194 5 194 6 194 7 194 8 194 9 151. 1 158. 9 169. 5 188. 4 187. 2 123. 1 146. 9 165. 6 177. 9 180. 6 + 28. 0 + 12. 0 + 3.9 + 10. 5 + 6.7 15. 7 15. 0 21. 1 29. 1 30.2 9.3 33. 3 39. 1 44. 6 34. 0 + 6. 4 -18. 3 -18. 0 -15. 5 -3.8 43.6 35. 5 42. 4 44. 8 40. 6 82. 8 30. 9 28. 6 36. 6 43. 6 -39. 2 +4. 6 + 13. 7 + 8. 2 -3. 1 + 4. 9 + 1.7 +.3 -3. 2 +.2 1950 1951—_ 1952 205. 8 225. 0 235. 0 194. 6 208. 1 218. 1 + 11. 3 + 16. 9 + 16. 9 30. 3 33.8 37.4 50. 2 58. 8 52. 3 -20. 0 »25. 0 -14. 9 50. 3 70. 0 75. 1 42. 0 62. 9 77.5 + 8.3 +7.1 -2.4 +.4 + 1. 1 +.5 i Gross private domestic investment and net foreign investment. » Excess of the value of the estimated gross national product computed by thefinalproducts irethod over its independently estimated value computed by adding necessary conceptual adjustments to the national income. Discrepancy shown may differ from that derived from income and expenditure items shown in this table because of rounding. Source: Department of Commerce. 6044S—53 2 3 GROSS NATIONAL PRODUCT Description of series.—Gro_ss National Product purchases from abroad and international contribu(often called GNP) represents the total national tions. Items which do not represent current prooutput of goods and services at current market ductive activity—such as transfer payments (e. g., prices. It measures this output in terms of the social security and veterans' payments), Governexpenditures by which these goods are acquired. ment interest, subsidies, loans, and other financial These expenditures are the sum of four major items: transfers—are excluded. The GNP series on Government purchases will differ from expenditures 1. Personal consumption expenditures shown in the Federal Budget, which includes many 2. Gross private domestic investment of these items. Differences may also arise because 3. Net foreign investment 4. Government purchases of goods and services of variation in the time at which expenditures occur The goods and services included in the GNP are and are recorded. Statistical procedures.—Hundreds of basic ecofor the most part those actually bought for final use in legal markets. There are a number of exceptions, nomic series are evaluated, adjusted, and combined the most important of which is the rental value of in the process of preparing the GNP estimates. For example, consumer expenditures are estimated for owner-occupied dwellings. The GNP series measures the product attributable benchmark years primarily from data in the Censuses to the factors of production—labor and property— of Business and Manufactures, reports of the Desupplied by residents of continental United States. partment of Agriculture, Internal Revenue Service, For the most part these factors are located in this and Interstate Commerce Commission, with current country, but the GNP total also includes earnings quarterly estimates carried forward by the extensive of American employees of the United States Gov- sample reports of the Census Bureau's Monthly Reernment stationed abroad, foreign interest and port on Retail Trade, sales-tax data, and data from dividends received by Americans, and the profits other sources. Construction activity is estimated from foreign branches of American business. jointly by the Departments of Commerce and Labor "Personal consumption expenditures" is the sum from BLS reports on building permits secured in of money and imputed expenditures made by hundreds of cities, special field surveys, and F. W. consumers (individuals, nonprofit institutions such Dodge reports on construction contract awards and as hospitals, etc.) for goods and services. This related items. Investment in producers' durable series is described below, in the section on Consumer equipment is estimated for benchmark years from Income, Spending and Saving (p. 48). Census of Manufactures and related data, with cur"Gross private domestic investment" consists of rent quarterly and annual totals estimated from new construction, producers' durable equipment, sample surveys and sales andfinancialreports to the and changes in business inventories. This component Department of Commerce and other agencies. For of GNP is described below, in a separate section details of the methods used, reference should be (p. 30). made to the comprehensive study by the Department "Net foreign investment" is the net change in the of Commerce, National Income, 1951 edition. international assets and liabilities of this country Relation to other series.—Two other series widely (including our gold stocks) arising out of current used as indicators of the general level of economic transactions with foreign countries. It is the sum of: activity are National Income and the Federal Reserve (1) domestic output sold abroad minus United States Index of Industrial Production. Gross National Prodpurchases of foreign output; (2) cash gifts and con- uct and National Income are compiled from the same tributions received from abroad minus those sent series of accounts, but whereas the former measures abroad; and (3) production abroad by United States the current value of total output, the latter measures labor and property minus production in the United only the earnings of labor and property which flow States by foreign-owned labor and property. from that output. National Income is the smaller of "Government purchases of goods and services" the two aggregates because from the current value are those made by Federal, State, and local govern- of total output are subtracted (1) allowance for ments. They include: (1) net purchases of new depreciation and similar capital consumption, and goods (such as school buildings and armaments); (2) indirect taxes (such as sales and excise taxes). (2) payments for services (principally compensation The GNP measures total output, whereas the for Government employees); (3) gross investment by Federal Reserve Index of Industrial Production Government enterprises; and (4) net Government covers only two sections of the economy—manufac4 Gross National Product [Billions of dollars] Government purchases of goods and services Year 1929. 1930. 19311932_ 1933. 1934. 1935. 1936. 1937. 1938. 1939. 19401941_ 1942. 19431944. 1945. 1946. 1947. 1948. 1949. 1950_ 1951. 1952. Personal Gross Total conNet private foreign gross sump- domestic national tion investproduct expend- investment ment itures 103.8 90. 9 75. 9 58. 3 55.8 64.9 72.2 82.5 90. 2 84.7 91.3 101. 4 126.4 161. 6 194. 3 213.7 215.2 211. 1 233.3 259.0 258. 2 286.8 329.8 348.0 78.8 70. 8 61.2 49.2 46. 3 51. 9 56.2 62. 5 67. 1 64. 5 67.5 72. 1 82. 3 91.2 102.2 111.6 123. 1 146. 9 165. 6 177. 9 180. 6 194. 6 208. 1 218. 1 15. 8 0.8 10. 2 .7 .2 .2 .2 .4 1 1 .1 5.4 . 9 1.3 2.8 6. 1 8. 3 11.4 6.3 9.9 13. 9 18.3 10.9 5.7 7.7 10.7 28. 7 30.2 42.7 33.5 52. 5 58. 6 52. 5 1.1 .9 1.5 1. 1 -.2 »2.2 -2. 1 -1.4 4.6 8.9 1.9 .5 -2.3 .3 -.2 Federal Total Total 8.5 9.2 9.2 8. 1 8.0 9.8 9.9 11.7 11. 6 12. 8 13. 1 33. 9 24. 7 59. 7 88. 6 96.5 82.8 30.9 28.6 36. 6 43.6 42.0 62. 9 77.5 1.3 1.4 1.5 1.5 2.0 3.0 2. 9 4. 8 4.6 5.3 5.2 6.2 16.9 52.0 81.2 89.0 74.8 20.9 15.8 21.0 25.4 22. 1 41. 1 54.2 National security (2) (22) ( (2) (22) () (( 22 ) (2 (2) 1.3 2. 2 13.8 49.6 80. 4 88.6 75.9 21.2 13.3 16. 1 19.3 18. 5 37.4 48. 9 Other (2) (2) (2) (3) (2) (2) (2) (2) (2) (2) 3. 9 4.0 3.2 2.7 1.5 1.6 1.0 2. 5 3.8 5.6 6.6 3.9 4. 1 5.8 Less Government sales (3) (3) 0.2 . 6 1.2 2.2 2.7 1.3 . 6 . 4 .2 .4 .5 State and local 7.2 7.8 7.7 6. 6 5. 9 6.8 7.0 6. 9 7.0 7.5 7. 9 7.8 7.8 7.7 7.4 7.5 8.0 10.0 12.8 15. 6 18.2 19.9 21.8 23.4 i Includes expenditures for military services, international security and foreign relations (except foreign loans), development and control of atomic energy, promo* tion of the merchant marine, promotion of defense production and economic stabilization, and civil defense. For further details, see Economic Report of the Presf dent, January 1953 (p. 165), and Survey of Current Business, July 1953 (p. 10). a Not available. * Less than $50 million. NOTE.—Detail will not necessarily add to totals because of rounding. Quarterly data are available beginning with 1939. Source: Department of Commerce. tures and mining. The products in the GNP series the physical quantity of goods and services produced are final product, whereas the Reserve Board index by the economy. On an annual basis, however, GNP includes both final and intermediate product, and estimates corrected for price changes ("deflated thus may show an increase or decrease in activity GNP") are available which show changes in the total not yet reflected in flow of final output. The volume of national output. One of the most GNP series in current prices combines price and important characteristics of the GNP is that changes volume changes, whereas the Federal Reserve index in the total can be analyzed by examination of measures physical volume. changes in its components, notably purchases by Uses and limitations.—The GNP total is the most consumers, the investment of private business, the inclusive monetary measure of trends in the economy expenditures of Government, and the movement of as a whole which is currently estimated. It also foreign trade. has high value as an analytic tool, since the moveReferences.—The quarterly GNP estimates appear ments of many sectors of the economy, including each month in the statistical section of the Survey of the sales of many industries and enterprises, are Current Business. Preliminary annual estimates quite closely related to changes in the level of GNP. appear in the February issue, final estimates in the Since GNP is measured in current dollars, the July issue. Statistical data for 1929-48, including effects of changes in both the price level and the measures of deflated GNP, appear in the 1951 physical volume of output are combined, and move- National Income Supplement to the Survey of Current ments in the total from quarter to quarter should not Business; those for 1949-52 appear in the July 1953 be interpreted as necessarily representing changes in issue of the Survey. 5 PRICES CONSUMER PRICES Description oj series.—The Consumer Price Index, compiled by the Bureau of Labor Statistics, measures the average change in prices of goods and services purchased by urban wage earner and salaried clerical workers' families. The goods and services included in the index are those required to maintain the level of living characteristic of such families in 1952. These families represent about 64 percent of all people living in urban places, and about 40 percent of the total United States population. The index is not specifically representative of price changes for commodities and services purchased by farm families, for persons making purchases in communities of less than 2,500 population, for single persons, or for families living in urban areas whose purchases are not similar to those of wage earner and salaried clerical workers' families. The index is a price barometer; it does not measure changes in the total amount of money spent by such urban families for family living. The index is based upon prices collected on about 300 items in 46 cities. These 300 items were selected by the Bureau of Labor Statistics as representative, of the thousands of commodities and services purchased in 1950 as reported in a survey of wage earner and salaried clerical workers' families in 91 cities. In each of these 46 cities the Bureau has selected a list of stores and service establishments from which to collect prices regularly. This list is representative of the types of outlets in which wage earner and salaried clerical workers' families make their purchases, and includes chain stores, independent stores, department stores, specialty stores and public utilities. Prices are also collected on such items as physicians' and dentists' fees, hospital rates, and beauty-parlor services. Federal, State, and city taxes are added to the retail prices for the commodities on which they are imposed. Automobile taxes are added; property taxes are included in the cost of homeownership, and implicitly included in rental costs. Neither income taxes nor social-security taxes are included. Prices on the 300 items are collected by the use of specifications limiting the qualities- priced to those representative of the qualities purchased by urban wage earner and salaried clerical workers', families in 1952. Revisions in individual specifications are made from time to time as former descriptions become obsolete. Prices are collected in each city at intervals ranging from once every month to once every 4 months. Prices for foods, for a few other 6 important items such as cigarettes and public transportation, and for rents, are collected monthly in each city. Prices for other goods and services are collected every month in the 5 largest cities; in the other 41 cities they are collected every 3 or 4 months, depending on the size of the city. Pricing of these other goods and services in these 41 cities is on a rotating cycle so that several cities of each size group are priced each month. Between the periodic pricing periods in a given city, the price change for groups of these items is estimated for the purpose of computing the monthly national index. Prices for practically all of the commodities and many of the services are collected by personal interview. Monthly rent information and a few other prices (e. g., streetcar and bus fares, public utility rates, fuel prices) are collected by mail. A major revision of this series was recently completed, with the revised index introduced as of January 1953. The principal changes were— 1. Change in the list of items priced to reflect current purchasing habits. 2. Increase in the number of items priced. Among the important additions to the pricing list were used cars, home purchase and maintenance, and restaurant meals. 3. Revision and expansion of the list of cities in which prices were collected so that the index will reflect price changes affecting wage earner and clerical workers' families in all urban areas. 4. Change of the base period of the index from 1935-39 to 1947-49. The revised series was linked to the former series to provide a continuous index from 1913. Statistical procedures.—The purpose of the index calculation is to determine how much more or less it would cost to purchase the same quantities and qualities of goods and services in this period than in an earlier period. The first step in the index calculation is to compare the current price for each commodity or service with the price reported for that particular commodity or service at the time of the preceding collection. This percentage change is then multiplied by the estimated cost of this fixed quantity of the item in the preceding period. After these calculations have been made for each of the food items, for example, these estimated costs for food for the current period are totaled and compared with the total for the preceding period. This result measures the average price change for all foods, and Consumer Prices [1947-49=100] Year All items Housing Apparel Food Total Kent Transportation Reading and Medical Personal care recreacare tion Other goods and 1917. 1918. 1919. 54.8 64. 3 74. 0 57. 9 66. 5 74. 2 77.4 78. 8 85. .3 88.2 1920. 1921. 1922. 1923. 1924. 85.7 76.4 71.6 72. 9 73. 1 83. 6 63. 5 59.4 61.4 60. 8 100.2 115. 1 118.5 121. 6 125. 9 105. 1 80. 9 65. 7 65. 8 65.3 1925. 1926. 1927. 1928. 75.0 75.6 74.2 73.3 65.8 68.0 65. 5 64. 8 126.4 125.2 123. 2 120. 3 64. 0 63. 0 60. 9 1929. 73.3 65. 6 117. 4 60. 3 1930. 1931. 1932. 1933. 1934- 71.4 65.0 58.4 55. 3 57.2 62.4 51.4 42. 8 41. 6 46.4 114 2 108.2 97. 1 83. 6 78.4 58.9 53. 6 47. 5 45.9 50.2 19351936. 1937. 1938. 1939- 58. 7 59.3 61.4 60.3 59.4 49. 7 50. 1 52. 1 48.4 47.1 78,2 80. 1 83. 8 86. 5 86. 6 50. 6 51.0 53.7 53.4 52. 5 1940. 19411942. 1943. 1944. 59.9 62.9 69.7 74.0 75.2 47.8 52.2 61. 3 68.3 67.4 86.9 88.4 90.4 90. 3 90:6 53. 55. 64. 67. 72. 19451946. 1947. 1948. 1949. 76.9 83.4 95.5 102.8 101.8 68.9 79.0 95.9 104. 1 100.0 95.0 101.7 103. 3 90* 9 91. 4 94.4 100.7 105. 0 76.3 83. 7 97. 1 103.5 99.4 90. 6 100. 9 108.5 94. 9 100. 9 104. 1 97.6 101.3 101. 1 95.5 100. 4 104. 1 96. 1 100.5 103.4 1950. 1951. 1952- 111.0 102.8 101.2 114.6 108. 8 113. 1 117. 9 98. 1 106. 9 105.8 111. 3 118.4 126,2 106.0 113.5 106. 1 112.4 114. 6 101. 1 110. 5 111. 8 103.4 106.5 107.0 105. 2 109. 7 115.4 112. 6 49. 2 66. 6 61.8 2 6 9 8 6 111. 1 117.2 NOTE.—Monthly data are available beginning with January 1913 for "all items" and food; September 1940-September 1944 and January 1947 to date for rent; September 1940 for apparel, and January 1947 for all others. Source: Department of Labor. from this the index number of food for that city is Uses and limitations.—The index measures changes calculated. Similar calculations are made for for only a limited population group: wage earner apparel, rent, and for all other groups of items and salaried clerical workers' families living in priced. The United States index is calculated by urban areas. Other qualities of commodities and combining city totals. Two-fifths of the weight is weights would have to be used for other income groups, for single workers, for retired people, etc. carried by the 12 largest cities; one-fifth by the 9 The "fixed market basket" represents the average cities selected to represent the 42 cities with popula- quantities bought by all wage earner and clerical tion of 240,000 to 1,000,000; one-fifth by the 9 cities workers' families, and is not necessarily representaselected to represent the more than 200 cities with tive of the purchases made by any single family. population of 30,000 to 240,000; and one-fifth by the However, the index is a good measure of average 16 small cities selected to represent the nearly 3,000 changes in prices for goods and services purchased towns with population ranging from 2,500 to 30,000. by an average wage earner or clerical worker's family. 7 The city indexes cannot be used to measure the differences in the levels of prices in the various cities; they indicate only the difference in the rate of price movement. That is, assume the index for city A is 113 and that for city B is 115. This does nbt necessarily mean that prices on the average are higher in city B than in city A. If prices in city A were higher than in city B in the base period, the total cost of the market basket may still be higher in city A. The indexes do show that prices have increased more rapidly in city B than in city A since the base period. Although attention is paid to quality changes, no index can take complete account of such changes. References.—The basic release of the index is the report entitled "Consumer Price Index," issued by the Bureau of Labor Statistics toward the end of the month following the month to which the figures relate. A detailed description of the Consumer Price Index and its uses and limitations is presented in "The Consumer Price Index, A Short Description of the Index as Revised, 1953"—a multilith statement issued by BLS in January 1953; and in an article in the February 1953 issue of the Monthly Labor Review- WHOLESALE PRICES Description of series—The Wholesale Price Index, compiled by the Bureau of Labor Statistics, measures the general rate and direction of the composite of price movements in primary markets, and the specific rates and directions of price movements for individual commodities and groups of commodities. The index is based on price quotations for approximately 2,000 commodities selected to represent all commodities sold on primary markets in the United States. All types of commodities, from raw mateterials to fabricated products, are included in the index. For commodities traded on organized exchanges, such as livestock and grains, the quotations are furnished by the exchanges or other Government agencies, or are taken from published sources. For some standardized commodities, such as certain chemicals and specified constructions of cotton gray goods, quotations are taken from authoritative trade papers. For the majority of fabricated products, prices are reported to the Bureau of Labor Statistics by producers. Prices are quoted at the level of the first commercial transaction, and, for each commodity, the reporter is requested to quote the price which he charges to the channel of distribution to which he sells the largest volume of this particular commodity. Consequently, the majority of the quotations in the index are producers' prices, rather than wholesalers' prices. The prices relate to a particular day of the month—usually Tuesday of the week containing the 15th. Initial contacts with manufacturers to solicit their cooperation in reporting prices on specified commodities are made by personal interview; subsequent price reports are mailed to Washington by the reporting firm. Insofar as possible, identical qualities of the commodities are priced from period to period, so that the index will measure only real price changes, not any differences due to changes in qualities or terms of sale. 8 A revision of this index was introduced with release of the January 1952 index. The principal changes from the old series were— 1. Increase in the commodity coverage—the number of items priced was increased from approximately 900 to about 2,000. 2. Change in the basis for weights from average sales for 1929-31 to 1947 sales. 3. Change of the base period from 1926 to 1947-49. 4. A modification of the classification system. The revised index has been linked to the old series to provide a continuous index. Statistical procedures.—The individual price series are combined into the index by multiplying the value weight assigned each item by its current price relative, and summing to obtain the current aggregate. The weights in the index are based on the total value of primary market transactions for commodities in 1947, the latest year for which a complete Census of Manufactures is available. The weights are based on 1947 data, shifted to a 1947-49 base (i. e., weights adjusted by change in item prices from 1947 to 1947-49 average). Within product classes, the total 1947 adjusted weight has been split to reflect more recent or normal conditions. For example, steel weights reflect increased importance of alloys since 1947. Each commodity price series in the index has its own direct weight (i. e., the value of the sales of that commodity on primary markets in 1947) plus an imputed weight for other commodities not priced for the index, but for which it is known, or assumed, that prices move like the commodity priced. The current index is obtained by dividing this aggregate by the aggregate for the base period. In addition to the comprehensive index, indexes are released each month for 15 major groups such as farm products and processed foods, 88 subgroups such as grains and cotton products, over 200 product classes and Wholesale Prices [1947-49=100] 1 Year comdities Farm products Processed foods Other than farm products and foods (industrial) 1926 1927 1928 1929 65. 0 62.0 62. 9 61. 9 55. 9 55. 5 59. 2 58. 6 58. 2 56. 7 59. 4 58. 5 71. 5 67. 2 66. 4 65. 5 1930 1931 1932 1933 1934 56. 1 47.4 42. 1 42. 8 48. 7 49. 3 36. 2 26. 9 28. 7 36. 5 53.3 44. 8 36. 5 36. 3 42. 6 60. 9 53. 6 50. 2 50. 9 56.0 1935 1936 1937 1938 1939 52.0 52. 5 56. 1 51. 1 50. 1 44. 0 45. 2 48.3 38. 3 36. 5 52. 1 50. 1 52. 4 45. 6 43. 3 55.7 56. 9 61. 0 58. 4 58. 1 1940 1941 1942 1943 1944. 51. 1 56. 8 64. 2 67.0 67. 6 37.8 46.0 59. 2 68. 5 68. 9 43. 6 50. 5 59. 1 61. 6 60.4 59.4 63.7 68. 3 69. 3 70.4 1945 1946 1947 1948 1949 68.8 78.7 96.4 104.4 99.2 71. 6 83.2 100.0 107. 3 92.8 60.8 77.6 98.2 106. 1 95.7 71.3 78. 3 95. 3 103.4 101. 3 1950 1951 1952 103. 1 114. 8 111. 6 97. 5 113. 4 107.0 99. 8 111.4 108. 8 105.0 115. 9 113.2 i This does not replace the former Index (1926=100) as the official index of primary market prices prior to January 1952. These data from January 1947 through December 1951 represent the revised sample and the 1947-49 weighting pattern. Prior to January 1947 they are based on the month to month movement of the former index. The only official index up to and including December 1951 is the former monthly index (1926=100). NOTE.—Monthly data are available beginning with 1926. Source: Department of Labor. most of the individual series. In addition. 16 special group indexes (e. g., building materials) are regularlypublished. Each week the Bureau publishes an index based on that week's prices for a small sample (about 200) of the commodities included in the monthly index, and on an estimate of the prices for all other commodities. Uses and limitations.—The index is based for the most part on producers' prices; therefore, it cannot be used as a measure of price change at the wholesale market level. A comparison of the movement of the subgroud indexes of the Wholesale Price Index and the Consumer Price Index cannot be used as a measure of the change in retailers' margins for the specified groups of commodities mainly because the two indexes are based on different weighting patterns, and the lists of commodities priced are not identical. The index is designed to measure "pure" price changes; that is, changes which are not occasioned by changes in quality, quantity, terms of sale, etc. Therefore, it cannot be used as a measure of changes in manufacturers' average realized prices which are affected by product mix and terms of sale as well as by price movements. An individual price series (in contrast to the price indexes) relates to a single quality and is selected to represent the price movement of the commodity and is not necessarily the average price of all qualities of the commodity. References.—The basic release of the index is the report entitled "Wholesale (Primary Market) Price Index," issued by the Bureau of Labor Statistics during the second week of the month following the month to which the figures relate. A detailed description of the index and its uses and limitations is presented in the February 1952 Monthly Labor Review and issued as Reprint No. R. 2067, 9 PRICES RECEIVED AND PAID BY FARMERS average prices for the State are calculated for each item. Chain store prices for many items are reported Description oj series.—The Department of Agri- directly to the Washington office where they are culture Parity Index, computed by the Agricultural combined with the appropriate State averages based Marketing Service (AMS),1 measures the changes in on independent store prices. These averages are prices being paid by farmers for a list of commodities then combined into national averages by weighting and services used in family living and farm produc- each State average by the estimate of the amount of tion. The index is composed of five major parts. that commodity purchased by farmers in the desigThe series on prices paid for commodities and serv- nated State. These estimates of purchases are based ices used in family living accounts for 44.0 percent upon census reports and other available information. of the total weight; commodities and services used Subgroup indexes are computed for 15 types of in farm production, 41.2 percent; interest on inexpenditures, such as food and tobacco, clothing, debtedness secured by farm mortgages, 3.0 percent; farm machinery, and livestock. The 6 subgroup taxes on farm real estate, 3.8 percent; and rates of indexes relating to expenditures for family living are wages paid hired farm labor, 8.0 percent. combined into 1 index, and the 9 subgroups relating Altogether 344 price series in addition to interest to expenditures required for producing farm products on farm mortgage debt, taxes on farm real estate, are combined into another index. These two group and wage rates are currently included in the Parity indexes are combined with the indexes for wage rates, Index. Forty-two of the price series are used in interest, and taxes to form the Parity Index. both the Family Living and Production Indexes. Relation to other series.—The movement of retail The Family Living Index includes 194 items and prices as they affect farmers is frequently compared the Production Index 192 items. Prices for most commodities are collected quar- with that relating to urban workers by comparing terly from independent stores and monthly from the movement of the Consumer Price Index with chain stores. Prior to March 1953 the index was that of the Index of Prices Paid by Farmers for based on independent store prices only, but since Family Living. Although the movement of the two that date combined (independent and chain) price indexes in some periods has been quite similar, there series have been used. The index changes in the are important differences between the indexes which interquarterly months are determined largely by account for differences in movements in other periods. Some of the principal differences are: changes in chain store prices. Changes in average costs of electricity and tele1. The commodity coverage of the two indexes is phone services are based upon an annual survey of not the same and the weights used for individual 20,000 farmers. Data on interest charges are de- commodities differ because one index is based on the veloped annually on the basis of data obtained from urban family pattern of purchases, the other on the the Bureau of the Census, special surveys, and lend- farm family pattern. ing agencies. The tax series is developed annually 2. All expenses for commodities and services purfrom data obtained from the Bureau of the Census chased by urban families are represented in the Conand special surveys. The wage-rate series is based sumer Price Index (CPI). On the other hand, ceron returns from quarterly mail surveys to farmers. tain types of expenses are not represented in the The index was revised with the release of the Janu- Index of Prices Paid by Farmers for Family Living. ary 1950 series. The principal differences between For example, medical expenses are not included; nor the old and revised series are— are residential rents, since few farmers rent homes 1. Cash wage rates paid to hired farm labor other than those that are rented with the farm. All were added to the index. costs of homeownership, including purchase, repairs 2. A weighting pattern based on farmers' and maintenance, and insurance are represented in purchasing habits during the 1937-41 period the CPI; only costs of building materials for houses was adopted, are represented in the farm family-living index. 3. The number of items included in the index Services carry a relatively heavy weight in the CPI; was increased. only telephone and electricity costs are represented Statistical procedures.—Independent dealers mailin the farm family-living index. their price reports to the AMS State offices where 3. The Consumer Price Index measures price i Under the reorganization of the Department of Agriculture which became changes only; the Index of Prices Paid by Farmers effective on November 2,1953, most statistical functions of the former Bureau of Agricultural Economics were reassigned to the Agricultural Marketing Service, for Family Living reflects differences occasioned by Parity Index 10 Prices Received and Paid by Farmers [1810—14= 100] Prices paid for items used in Prices received by farmers Parity ratio1 Production Parity index (prices paid, interest, taxes, and wage rates) 99 99 100 100 102 97 98 102 101 102 97 98 101 101 103 103 95 99 101 102 106 97 98 100 99 104 115 143 170 202 104 115 156 180 195 105 116 148 173 197 99 119 178 206 218 94 103 120 119 111 228 164 153 156 156 195 128 127 138 140 214 155 151 159 160 212 124 131 142. 143 99 80 87 89 89 1925 1926 1627 1928 1929 161 158 155 156 154 145 141 141 148 146 164 160 159 162 160 156 146 141 149 148 95 91 89 92 92 1930_ 1931 1932 1933 1934 144 124 106 108 122 135 113 99 99 114 151 130 112 109 120 125 87 65 70 90 83 67 58 64 75 1935.— 1936 1937 1938 1939_ 124 124 128 122 120 122 122 132 122 121 124 124 131 124 123 109 114 122 97 95 88 92 93 78 77 1940 1941 1942.. 1943 1944 121 130 149 166 175 123 130 148 164 173 124 133 152 171 182 100 123 158 3 192 2 196 81 92 104 112 108 1945 1946 1947. 1948 1949. 182 202 237 251 243 176 191 224 250 238 190 208 240 260 251 a 206 2 234 275 285 249 108 112 115 110 99 1950 1951 1952.. 246 268 271 246 273 274 256 282 287 256 302 288 100 107 100 Year Living 1910. 1911 1912 1913 1914 — 1915 1916 1917 1918 1919— _ 1920 1921 1922 1923 1924 ... i i Ratio of index of prices received by farmers to parity index. * Includes wartime subsidy payments paid on beef cattle, sheep, lambs, milk, and butterfat between October 1943 and June 1946. NOTE.—Monthly data are available beginning with January 1910 for the index of prices received by farmers and beginning with January 1937 for the other indexes. Source: Department of Agriculture. differences in qualities purchased in various periods, as well as price changes. Uses and limitations.—The index is designed to measure prices for the qualities of the commodities being purchased currently by farmers; therefore, the movement of the index may be affected by changes in qualities which farmers purchase as they adjust to changing income levels or to changes in qualities commonly stocked by merchants. That is, if farmers 39448—53 3 purchase better quality merchandise the index will rise because of this trading up; conversely, the purchase of poorer quality merchandise will depress the index. Therefore, the use of the index as a measure of pure price movements—that is, of differences not occasioned by changes in qualities or terms of sale— is limited. References.—See below under "Prices Received by Farmers." 11 ferences. The index described here measures changes in prices at the point of first sale, whereas the WholeDescription of series.—The Index of Prices Re- sale Price Index measures them in selected central ceived by Farmers computed by the Agricultural markets. This series is based on average prices for all Marketing Service is a measure of the change in of a given commodity rather than prices of specific average prices of farm products from month to grades or qualities, as is the Wholesale Price Index. month. It covers the period from January 1910 to Furthermore, commodities traded among farmers date. It is based on average prices received for all never enter into wholesale trade. Finally, there are grades and qualities of the important agricultural differences in the weights and base periods used in commodities at the point of first sale, which generally the two indexes. is the local market. Tlie base period is January 1910 Uses and limitations.—The index is widely used as to December 1914, as required by law. the best measure of changes in average prices received The price data used in constructing the index are by farmers for commodities sold in local markets. It obtained chiefly by mail on a voluntary basis from is used in the computation of adjusted base-period buyers of farm products (such as country mills and prices, which are needed in calculating parity prices elevators, creameries and milk stations, cooperative under the "new" formula prescribed by the Agrimarketing organizations, and local dealers) and other cultural Adjustment Act of 1938, as amended. It is persons with a knowledge of farm product prices also used in computing the "Parity ratio" (the ratio (such as local bankers and well-informed farmers). of the Index of Prices Received by Fanners to the In recent years reports have been received each Parity Index), to measure whether prices farmers month from approximately 10,000 such reporters. receive for farm products are on the average higher The index is based on prices for about 50 commodi- or lower in relation to prices farmers pay for goods ties which account for approximately 95 percent of and services than they were in the base period, the total cash receipts from marketings of all farm 1910-14. commodities. In addition to the over-all index for The Index of Prices Received by Farmers is not a "all farm products," indexes are prepared for "all pure price index in the sense of measuring changes in crops," for "livestock and livestock products," prices alone. It measures changes in average prices and for 13 subgroups. Four of these subgroup for all grades and qualities of a given commodity indexes—fruit, truck crops, dairy products, and rather than changes in prices of specific grades. poultry and eggs—are published also on a seasonally Consequently, changes in the index may result from adjusted basis. price changes for specific grades of a commodity or Statistical procedures.—The index is basically of the for all grades, from changes in the relative quantities weighted aggregative type. In combining the United of various grades, or from a combination of these. States average prices for individual commodities into As already noted, the index is based on comsubgroup indexes, weights based on average quanti- modities accounting for about 95 percent of the total ties sold during 1937-41 are used. The subgroup in- value of all commodities farmers have to sell. dexes are then converted to a 1910-14 base. Timber and other forest products, greenhouse prodIn combining subgroup indexes into group and all- ucts, and a number of miscellaneous and minor commodity indexes, the index numbers are weighted commodities are omitted for lack of adequate marketby the percentage which cash receipts from market- ing and price data. These omissions are not sigings for the particular commodity subgroups bear to nificant with respect to the index as a whole. the total for the same period—1937-41. References,—The Parity Index and the Index of A number of revisions have been made in the Prices Received by Farmers are published monthly index series from time to time. Mainly they have by the Agricultural Marketing Service in Agriinvolved revisions in basic price series or changes in cultural Prices. Historical data appear in the weights. The most recent major revision was made Department of Agriculture's annual publications, as of January 1950. This revision resulted in changes Agricultural Statistics and Crops and Markets. A dewhich put the index on a basis more consistent with tailed description of the price series is included in that for the Parity Index (the Index of Prices Paid The Agricultural Estimating and Reporting Services by Farmers, Including Interest, Taxes, and Wage of the United States Department of Agriculture, MiscelRates), improved the weighting structure, and made laneous Publication No. 703 of the Department of minor changes in commodity coverage. Agriculture. A semitechnical explanation of the Relation to other series.—This index should not be most recent major revisions is available in the April confused with the farm product component of the 1950 issue of Agricultural Economics Research, pubWholesale Price Index. There are significant dif- lished by the Department of Agriculture. Prices Received by Farmers 12 Stock Prices [Weekly average; 1939=100] Manufacturing Year Composite index 1 Total Durable goods Nondurable goods Transportation Utilities Trade, finance, and service Mining 1939 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 1940 1941 1942 1943 1944 . . . 94.2 85.7 74. 9 99.2 108. 1 93.4 84.8 75.5 99. 1 106. 9 92.5 81.6 73.7 94.7 104.7 94.2 88.0 77.2 103.5 109.2 99.2 96.5 90.8 125. 1 140.8 99.9 89. 1 69.8 90.5 99.0 90. 4 82.0 71.3 101.0 117.3 75.6 71. 1 59.7 83. 5 93.3 1945 . 1946 . , 1947 1948 1949 131.2 149.4 130.9 132.7 127.7 129.0 146. 6 132.4 136.8 132. 1 129.0 138.6 119.9 124.3 116.0 129.2 154.5 144. 6 148.6 147.2 190. 0 202.4 149. 1 158. 1 136.0 112. 9 121.0 105.5 99.3 98. 1 149.3 204.3 162. 8 156.9 160. 7 114.3 125.5 117. 2 133. 0 129.4 1950 1951 1952 154. 1 184. 9 195.0 165.7 206. 8 220.2 150.2 178. 5 188. 8 180.2 233. 1 249.3 160.0 199.0 220. 6 108. 9 112. 6 117.9 183.8 207. 9 205.8 143. 5 204. 9 275. 7 1 1 i Includes 265 common stocks, distributed as follows: 14 for mining, 98 for durable goods manufacturing, 72 for nondurable goods manufacturing, 21 for transportation, 28 for utilities, and 32 for trade,finance,and service. NOTE.—Monthly and weekly data are available beginning with 1939. Source: Securities and Exchange Commission. .STOCK PRICES Description of series.—These indexes measure issue is changed an adjustment of the index is made average price movement of 265 of the more active only if such change involves a change in the invested common stocks listed on the New York Stock capital. The base value of the issue is then revised Exchange. The stocks, classified in Economic Indi- in the ratio of the new to the old capitalization so cators only by broad categories, are also classified in that the index will reflect only price movement. the basic releases under 29 selected industry groups. Uses and limitations.—This is the only stock-price These groups and the individual stocks in them index issued by the Federal Government. It is a were selected on the basis of common-stock trading moderately sensitive weekly index presented in terms activity on the Exchange in 1949. The selected of categories roughly comparable with the Standard groups correspond in general to classifications in the Industrial Classification—a feature which facilitates Standard Industrial Classification. The stocks thus use in conjunction with other series so presented. selected from a total of approximately 1,000 listed The indexes will not necessarily reflect weekly common stocks accounted for about 70 percent of the price movements of stocks not listed on the New value of common-stock trading activity on the New York Stock Exchange, of the less active stocks so York Stock Exchange in 1949. listed, or of those from industries excluded from the The prices reflected in the indexes are for the last sample because of low volume of trading activity. sales of the respective stocks during the week as This selectivity of industries should be borne in mind when using the indexes for the broader industrial reported in the financial press. Statistical procedures.—The index for each of the categories presented in Economic Indicators. 29 industry groups measures the total current market References.—The SEC data are first published in value of the included issues (i. e., number of shares a release issued each Monday entitled "SEC Indexes outstanding times price) as a percentage of their of Weekly Closing Prices of Common Stocks on the total market value in 1939 (computed as an average New York Stock Exchange," showing data for the of 52 weekly figures). Each specific industry is 2 previous weeks, with percent change. The monthly weighted in the larger aggregates according to the SEC Statistical Bulletin shows price and change data value of the selected issues, and not necessarily for the 4 or 5 latest weeks. Data back to 1939 are according to the value of all listed issues in the available on request. A release entitled "Computaindustry. tion of SEC Index," which includes a list of the When the number of outstanding shares of an selected stocks, may be obtained from SEC. 13 EMPLOYMENT AND WAGES CIVILIAN LABOR FORCE Description of series—Each month the Census Bureau publishes estimates of the civilian labor force—that is, all persons at work or holding a job and persons who are seeking work. In addition to the overall figures on employment and unemployment, subgroupings of the data are presented to make clear changes in the labor-force activity of various types of persons. Employed persons are classified by age and sex, by whether they are engaged in agricultural or nonagricultural pursuits, by broad occupational groupings and by number of hours worked during the week. In addition to age and sex, duration of unemployment is shown for the unemployed. The estimates are obtained by means of a sample survey of households, representing all persons in the continental United States except those living in institutions (such as prisons or homes for the aged). On the basis of responses to the census interviewers, all persons 14 years and over in the sample households are classified as employed, unemployed or not in the labor force for the calendar week including the 8th of the month. Counted as employed are all persons who, during the survey week, were either (a) "At work"—those who did any work for pay or profit, or those who worked without pay for 15 hours or more on a family farm or business; or (6) "With a job but not at work"—those who did not work and were not looking for work but had a job or business from which they were temporarily absent because of vacation, illness, industrial dispute, bad weather, or layoff with definite instructions to return within 30 days of layoff. Also included are persons who had new jobs to which they were scheduled to report within 30 days. Included as unemployed are those persons who did not work at all during the survey week and who were looking for work. Also included as unemployed are persons who would have been looking for work except that (a) they were temporarily ill, (b) they expected to return to a job from which they had been laid off for an indefinite period, or (c) they believed no work was available in their line of work or in the community. The sum of the employed and the unemployed provides the civilian labor force. All other civilians 14 years of age and over are classified as "not in the labor force" (housewives, students, retired or disabled persons, those doing less than 15 hours of unpaid family work, and the voluntarily idle). 14 The sample survey was started in March 1940. Prior to that date there was no direct enumeration of the labor force. The estimates shown for 1939 and earlier years have since been prepared by the Bureau of Labor Statistics, using the same concepts as those employed by the Census Bureau, and whatever information was available—primarily the 1930 and 1940 Censuses of Population, and employment trends from BLS and BAE series for intervening years. Since the sample survey was instituted in 1940, two revisions have been made in the series. In November 1943 an improved sample design was introduced and the estimates were revised back to 1940 using the 1940 Census of Population figures as a benchmark for that date. In July 1945 a new schedule was used which resulted in a more nearly complete count of employed persons; the estimates were again revised back to 1940 to take account of the change in interviewing procedure. Statistical procedures.—National estimates are prepared by inflating the sample results to independent estimates of the population by sex, color, and age groups. The population estimates are obtained by bringing Census of Population figures up to date by adding births and net immigration and subtracting deaths. Starting in January 1953, materials from the 1950 Census of Population were used in preparing the estimates. Therefore, the figures from January 1953 on are not exactly comparable with those for prior months. A further change in estimating procedures in September 1953 affected somewhat thefiguresfor agricultural employment. In order to improve the reliability of the sample without increasing its size, the Census Bureau is now engaged in spreading the sample of 25,000 households among 230 areas instead of 68 as in the past. Figures based on the new sample design will become available early in 1954. Relation to other series.—The Census Bureau's estimates of employment, obtained from a sample of households, differ in a number of respects from estimates of employment prepared from reports of employing establishments and based on payroll records, such as the Bureau of Labor Statistics current nonagricultural employment series and the Department of Agriculture estimates of farm employment. Because of sampling variability, changes in the various series may not always be consistent. The census estimates provide information on the work Civilian labor farce Civilian labor force Total labor force (including armed forces) 1 Year Employment Total Total Agricultural 3 Nonagricultural Unemployment Unemployment as percent of total civilian labor force Thousands of persons 14 years of age and over 1929 - 1930 1931. 1932_ 1933 1934— - 1935 1936 1937 1938 1939 1940 1941 1942 1943 1944 1945 1946 1947 1948 1949-1950 1951. 1952 - - — — - — — 49, 440 49, 180 47, 630 10, 450 37, 180 1, 550 3. 2 - 50, 080 50, 680 51, 250 51, 840 52, 490 49, 820 50, 420 51, 000 51, 590 52, 230 45, 480 42, 400 38, 940 38, 760 40, 890 10, 340 10, 290 10, 170 10, 090 9,900 35, 140 32, 110 28, 770 28, 670 30, 990 4, 340 8, 020 12, 060 12, 830 11, 340 8. 7 15. 9 23. 6 24 9 21.7 53,140 53, 740 54, 320 54, 950 55, 600 52, 870 53, 440 54, 000 54, 610 55, 230 42, 260 44, 410 46, 300 44, 220 45, 750 10, 110 10, 000 9, 820 9, 690 9, 610 32, 150 34, 410 36, 480 34, 530 36, 140 10, 610 9, 030 7, 700 10, 390 9,480 20. 1 16. 9 14. 3 19.0 17.2 56, 030 57, 380 60, 230 64, 410 65, 890 55, 640 55, 910 56, 410 55, 540 54, 630 47, 520 50, 350 53, 750 54, 470 53,960 9, 540 9, 100 9, 250 9, 080 8,950 37, 980 41, 250 44, 500 45, 390 45, 010 8, 120 5, 560 2, 660 1, 070 670 14.6 9.9 4. 7 1. 9 1.2 65,140 60, 820 61, 608 62, 748 63, 571 53, 860 57, 520 60, 168 61, 442 62, 105 52, 820 55, 250 58, 027 59, 378 58, 710 8, 580 8, 320 8,266 7, 973 8, 026 44, 240 46, 930 49, 761 51, 405 50, 684 1, 040 2, 270 2, 142 2, 064 3, 395 1.9 3.9 3.6 3.4 5.5 64, 599 65, 832 66, 426 63, 099 62, 884 62, 966 59, 957 61, 005 61, 293 7, 507 7, 054 6,805 52, 450 53, 951 54, 488 3, 142 1, 879 1, 673 5.0 3.0 2.7 i Data for 1940-52 exclude about 150,000 members of the armed forces who were outside the continental United States in 1940 and who were therefore not enumerated In the 1940 census. Thisfigureis deducted by the Census Bureau from its current estimates for comparability with 1940 data. * Includes part-time workers and those who had jobs but were not at work for such reasons as vacation, illness, bad weather, temporary lay-off, and industrial disputes. NOTE.—Monthly data are available beginning with March 1940. Sources: Department of Labor (1929-39) and Department of Commerce (1940-52). status of the population: persons employed at more than one job, either because they hold more than one job concurrently or because they changed jobs during the survey week, are counted only once by the census and are classified according to the job at which they work the greatest number of hours during the week. Estimates based on reports from business establishments and farms, on the other hand, count persons who work for more than one establishment as many times as the number of different payrolls on which their names appear. The census estimates relate to all types of workers, including domestic service workers, unpaid family workers (working 15 hours or more during the week) and self-employed persons, groups which are generally excluded from employment series based on establishment reports. On the other hand, the census excludes workers less than 14 years of age whereas the payroll-based series have no age exclusions. An additional difference arises from the fact that persons with a job but not at work are included with the employed in the census estimates, whereas only part of this group (those receiving pay while away from work) are likely to be included in the BLS estimates. Finally, the census estimates relate to the calendar week including the 8th of the month, the BLS figures relate to the payroll period ending nearest the 15th of the month and farmers report to the Department of Agriculture for a week ending near the end of the month. For a number of reasons, the unemployment estimates of the Bureau of the Census are not directly comparable with statistics derived from unemployment insurance operations. In the first place, some unemployed persons are not eligible for unemployment insurance, particularly young persons looking 15 for theirfirstjobs, domestic servants, ex-government understand current trends, the summaryfiguresneed workers,, agricultural workers, and persons who lost to be supplemented by the detailed data. The their jobs in firms too small to be covered by the information provided regularly on hours worked various State unemployment insurance laws. Unem- shows the number of full-time and part-time employed persons who have already received the bene- ployed. From time to time additional information fits to which they are currently entitled are not is provided on the extent of voluntary and involunincluded in the unemployment insurance claims tary part-time employment, and the amount of figures. Also, the qualifications for drawing unem- underemployment arising from economic causes. ployment insurance differ from the definition of Similarly, information on changes in the duration unemployment used by the Census Bureau. For of unemployment adds meaning to the total count example, persons with a job but not at work and of unemployment. Since the estimates are prepared from a small persons working only a few hours during the week are sometimes eligible for unemployment insurance, sample, the user should not attach significance to but are classified by the Census Bureau as employed. very small monthly changes. A table showing the Furthermore, some persons may be reported to the sampling reliability of the estimates is regularly Census Bureau as not looking for work even though published in the census releases. they may be registered at public employment offices, The user should also keep in mind that the inforconsider themselves available for jobs and be eligible mation is collected by personal interview, usually for unemployment insurance. with the housewife. She may not, in some cases, .Uses and limitations:—One of the chief advantageshave exact knowledge for all members of the houseof the census labor force, employment and unem- hold. For this reason, as well as because of the ployment estimates is that they provide the only relatively small size of the sample, only broad occupacomprehensive figures covering the employment tional and industry groupings of the data are pubstatus of the whole population. The data are col- lished. Finally, the measurement of unemployment lected monthly and published promptly. The esti- is in some cases difficult, since it depends in part on mates of unemployment, in particular, are used as a the attitude of the person interviewed. The classicurrent indicator of the general health of the economy. fication of a person as unemployed has been made as Another advantage of the household enumeration objective as possible, by using the criterion of "lookmethod of obtaining labor force information is the ing for work," but no method has been as yet develr possibility of relating work status to other personal oped which will insure consistent reporting of acand family characteristics. In addition to broad tivity month after month. Some marginal (usually occupation and industry groups, classifications can very small) groups may be reported as unemployed be made by sex, age, and color, by marital status and in some circumstances whereas they would be renumber of children. For example, changes in the ported as not in the labor force in others. Most of employment of married women, and of married these problems of measurement affect persons whose women with small children, can be studied. By ask- attachment to the labor force is casual or intering supplementary questions from time to time other mittent, especially married women and youths still information concerning the family can be similarly in school looking for part-time jobs. estimated, such as family incomes and the amount of References.—The regular monthly estimates of the migration during the course of a year. All these civilian labor force are published by the Bureau of analyses throw light on the changing size and com- the Census in The Monthly Report on the Labor Force position of the labor force. (Current Population Reports, Series P-57), which It should be noted that in the classification used, includes also descriptions of the data and an indication anyone who did any work for pay during the survey of the reliability of the estimates. Annual summaweek (or did 15 or more hours of unpaid work in a ries and supplementary information on part-time family enterprise) is counted as employed. Also workers, income, migration, etc., are published in counted as employed are those who did not work nor special labor-force reports (Current Population Relook for work but who had definite jobs waiting for ports, Series P-50). them. (The numbers in these groups are shown The techniques used in preparing the estimates for separately in census releases.) Thus the survey the earlier years are described in "Labor Force, Emindicates roughly the total demand for jobs: The ployment, and Unemployment, 1929-39: Estimating number of persons who have jobs (the employed) Methods," which appeared in the July 1948 issue of and the number seeking jobs (the unemployed). To the Labor Department's Monthly kafoor Review, 16 Nonagricultural Employment [Thousands of wage and salary workers Manufacturing Year Total Contract construction Wholesale and retail trade Finance, service, etc. Government (Federal, State, local) Transportation and public utilities Mining Durable goods Nondurable goods (2) 1, 021 4,664 3, 104 2, 671 3, 711 1, 124 (32) () (22) () (2) 848 1,012 1, 185 1, 229 1, 321 4, 623 4, 754 5, 084 5, 494 5, 626 3, 252 3, 284 3, 347 3, 554 3, 679 2, 603 2, 531 2, 542 2, 611 2, 723 3, 998 3, 459 3, 505 3, 882 3, 806 1, 230 953 920 1, 203 1, 092 1919 10, 534 1920... 1921 1922 1923 1924 10, 534 8, 132 8, 986 10, 155 9, 523 (2) (2) (22) () (2) (2) 1925 1926 1927 1928 9, 786 9, 997 9, 839 9, 786 (2) (2) (22) () (22) () (2) (2) 1, 446 1, 555 1, 608 1, 606 5,810 6, 033 6, 165 6, 137 3, 757 3, 990 4, 166 4,322 2, 802 2, 848 2,917 2, 996 3, 824 3, 940 3, 891 3, 822 1, 080 1, 176 1, 105 1, 041 1929 10, 534 (2) 1,497 6, 401 4, 558 3, 066 3, 907 1,078 1930 1931 1932 1933 1934 9, 401 8, 021 6, 797 7, 258 8, 346 (2) (2) (22) () (2) (2) (2) (2) (22) () (2> 1,372 1,214 970 809 862 6, 064 5, 531 4, 907 4, 999 5, 552 4, 482 4, 246 3, 952 3, 839 4, 031 3,149 3, 264 3, 225 3,167 3, 298 3, 675 3, 243 2, 804 2, 659 2, 736 1,000 864 722 735 874 1935 1936 1937 1938 1939 8, 907 9, 653 10, 606 9, 253 10, 078 (2) (2) (2) (2) 4, 683 (22) () (2) (2) 5, 394 912 1, 145 1,112 1,055 1,150 5, 692 6, 076 6, 543 6, 453 6, 612 4,145 4, 373 4, 588 4, 543 4, 703 3, 477 3, 662 3, 749 3, 876 3, 987 2, 771 2, 956 3,114 2, 840 2, 912 888 937 1,006 882 845 1940_ 1941 — *. 1942 1943 1944 10, 780 12, 974 15, 051 17, 381 17, 111 5, 337 6, 945 8, 804 11, 077 10, 858 5, 443 6, 028 6, 247 6, 304 6, 253 1,294 1,790 2,170 1,567 1,094 6, 940 7, 416 7, 333 7,189 7, 260 4, 896 5,167 5, 297 5, 320 5, 308 4,192 4, 622 5, 431 6, 049 6, 026 3, 013 3, 248 3, 433 3, 619 3, 798 916 947 983 917 883 1945 1946 1947_ 1948 1949.. 15, 302 14, 461 15, 290 15, 321 14, 178 9, 079 7, 739 8, 372 8, 312 7, 473 6, 222 6, 722 6, 918 7, 010 6, 705 1,132 1,661 1, 982 2,169 2,165 7, 522 8, 602 9, 196 9, 519 9, 513 5, 449 6, 207 6, 448 6, 636 6, 736 5, 967 5, 607 5, 456 5, 614 5, 837 3, 872 4, 023 4,122 4, 141 3, 949 826 852 943 982 918 1950 1951 1952 14, 967 16, 082 16, 209 8, 085 9, 071 9, 262 6, 882 7, 011 6, 946 2, 333 2, 588 2, 572 9, 645 10,013 10, 251 6, 894 7, 068 7, 237 5, 992 6, 373 6, 633 3, 977 4,166 4, 220 889 913 872 ' Revised series; see Employment and Payrolls, April 1953. Includes all full- and part-time wage and salary workers In nonagricultural establishments who worked during or received pay for any part of the pay period ending nearest the 15th of the month. Excludes proprietors, self-employed persons, domestic servants, and personnel of the armed forces. Total derived from this table not comparable with estimates of nonagricultural employment of the civilian-labor force reported by the Department of Commerce (p. 15) which include proprietors, self-employed persons, and domestic servants; which count persons as employed when they are not at work because of industrial disputes; and which are based on an enumeration of population, whereas the estimates in this table are based on reports from employing establishments. »Not available. NOTE.—Monthly data are available beginning with January 1939. Source: Department of Labor. 17 NONAGRICULTURAL EMPLOYMENT—SELECTED INDUSTRIES products, primary metal industries, fabricated metal (Table on p. 17.) Description of series.—Current monthly series on products, machinery, transportation equipment, inemployment in nonagricultural establishments, with struments and miscellaneous manufacturing indusrelated information on hours and earnings (see tries. All other manufacturing industries are inbelow), are prepared by the Bureau of Labor Sta- cluded in the nondurable manufacturing estimates. Statistical procedures.—Sampling is used to collect tistics. Employment estimates are published for more than 200 separate industry groups and sub- current data in most industries. In general, the groups as well as 8 major industry divisions sample of about 150,000 establishments is designed (manufacturing, mining, trade, etc.). In addition, to obtain reports from most if not all the large employment indexes for more than 150 specific establishments in each industry but the proportion industries are published monthly, and estimates of of total employment covered varies considerably women employed in manufacturing industries are from industry to industry. It is relatively high (68 percent) in manufacturing, for example, and much available quarterly. Employment figures represent the total number lower in wholesale and retail trade (19 percent) and of persons employed in nonagricultural establish- service industries. In order to compute total employment from the ments in the continental United States during a sample reports, month-to-month changes in the specified payroll period which (for all industries except Government) is that ending nearest the 15 th sample establishments are applied to a total employof the month. Employed persons include all those ment figure (benchmark) separately for each inwho worked during or received pay for any part of dustry. The benchmark figures are obtained from the payroll period, including part-time as well as sources which, singly or in combination, insure full-time, temporary as well as permanent, em- either a complete count of employment for the ployees. Workers on an establishment's payroll who specified benchmark period, or an estimate of reasonare on paid sick leave, paid holiday or paid vacation, able accuracy. This method takes advantage of or who work a part of a specified pay period and are benchmark data which are byproducts of other unemployed or on strike during the other part are governmental functions. Since 1939 the basic sources of benchmark inforconsidered employed. Persons on the payroll of more than one establishment during the pay period mation have been periodic tabulations of employare counted each time reported. On the other hand, ment data by industry compiled by State agencies persons are not considered employed who are laid from reports of establishments covered under State off, on leave without pay, or on strike for the entire unemployment insurance laws. Supplementary pay period. Proprietors, the self-employed and tabulations prepared by the United States Bureau unpaid family workers, farm workers, and domestic of Old-Age and Survivors Insurance are used for workers in households are not included. Govern- small-size establishments exempt from State unemment employment statistics refer to civilian em- ployment insurance laws. For industries not ployees only, but include employees of State and covered by either of the two programs, benchmarks local governments as well as Federal. are compiled from other sources: for example, for Information on employment (as well as on payrolls interstate railroads, from information reported to the and hours worked) is collected each month from a Interstate Commerce Commission; for State and sample of establishments under cooperative arrange- local government, from data reported to the Bureau ments with State agencies (primarily State employ- of the Census; for the Federal Government, from ment security agencies). The cooperating State data compiled by the Civil Service Commission. agencies mail questionnaires to the reporting estab- Establishments are classified into the same industrial lishments and edit them when returned, before groupings for benchmark purposes as they are for passing the information on to the BLS. To elimi- monthly reporting. nate duplicate reporting, the same establishment The most recent benchmark adjustment was to reports are used for preparing State, area, and na- data for the first quarter of 1951 (published in April tional estimates. 1953). These revisions were carried back to 1947 Durable goods manufacturing industries include: where appropriate. ordnance and accessories (except GovernmentRelation to other series.—For a comparison with operated establishments), lumber and wood prod- the Current Population Survey, see under Civilian ucts, furniture and fixtures, stone, clay and glass Labor Force, above. 18 Average weekly hours [Hours per week, for production workers or nonsupervisory employees*] Manufacturing Year Total Durable goods Nondurable goods Building construction Retail trade 3 1909 51.0 (3) (3) (3) (3) 1914 49.4 (3) (3) (3) O 46.3 (3) (3) (3) (3) 47. 4 43. 1 44. 2 45. 6 43. 7 (33) () (3) (3) (3) (3) (33) () (3) (3) (3) (3) (33) ( )' (3) 44. 5 45.0 45.0 44. 4 44.2 (33) () (3) (3) (3) (3) (33) () (3) (3) (3) (33) () (3) (3) (3) (3) (3) (3) (3) (3) (3) .1930 1931 1932 1933 1934 42. 1 40. 5 38.3 38. 1 34.6 (3) (3) (3) (3) 1935 1936 1937 1938 1939 36. 6 39. 2 38. 6 35. 6 37.7 37. 3 41. 0 40. 0 35. 0 38. 0 36. 1 37. 7 37.4 36. 1 37.4 30. 1 32. 8 33.4 32. 1 32. 6 1940 1941„„ 1942 1943 1944 38. 1 40. 6 42.9 44. 9 45.2 39. 3 42. 1 45. 1 46. 6 46. 6 37.0 38. 9 40.3 42.5 43. 1 33. 1 34. 8 36.4 38.4 39. 6 4?. 5 42. 1 41. 1 40. 3 40.4 43. 4 40. 4 40.4 40. 1 39. 2 44. 1 40. 2 40. 6 40. 5 39. 5 42. 3 40. 5 40. 1 39. 6 38.8 39. 0 38. 1 37. 6 37. 3 36. 7 40. 3 40. 7 40. 3 40. 3 40.4 40. 5 40. 7 40. 7 41. 2 41. 6 41. 5 39. 7 39. 5 39.6 36. 3 37. 2. 38. 1 40. 5 40. 2 39.9 1919 •„ >1920 1921 1922 1923 1924 • 1925 1926 1927 1928 1929 : - 1945 1946. 1947 1948 1949 1951 ___ i 32. 6 34. 8 33.9 41. 9 40. 0 35. 1 m m (3) «(3) «(3) 28. 9 4 (33) () (3) (3) « (33) () t») (3) 42.7 » Revised series; see Hours and Earnings—Industry Report, April 1953. » Hours and earnings data exclude eating and drinking places. * Not available. * Data beginning with January 1948 are not strictly comparable with those for earlier years. NOTE.—Monthly data are available beginning with 1932 for manufacturing industries, 1034 for building construction, and 1939 for retail trade. Source: Department of Labor. 30448—53 19 In addition to total employment in each industry, incorporated in other Federal statistical series, parBLS also prepares estimates of production-worker ticularly in making current estimates of production, employment for mining and manufacturing industries. productivity and national income. The publication of comparable State and local These estimates are exactly comparable with the average hours and earning series (see below) which area estimates by the cooperating State agencies are prepared from information reported on the same using the same concepts and methods provides a questionnaires as the employment figures. means whereby business trends can be followed for In general, BLS employment estimates are com- various sections of the country and for about 100 of parable with other data collected from establish- the large metropolitan areas. The national estimates are not all of uniform qualments, such as employment, production, and similar data obtained by the Census Bureau in the manu- ity, however. In general, those for manufacturing facturing censuses and annual surveys. Some industries are most reliable. Since "cutoff" samdifferences will be found, however, especially for pling rather than a probability design has been used, individual industries, caused chiefly by differences in it is not possible to calculate the sampling variability the industries covered, the business units considered of monthly estimates. Experience with the program parts of an establishment, and in the industrial has shown that the monthly employment data in classification of establishments. some industries tend to have an increasing bias for More serious differences are found between the the successive months between two benchmarks. BLS establishment-based series and those based on Although this error cannot be adjusted precisely on a reports from companies, such as financial reports on current basis, average adjustment is made through profits, because the industry totals that result when the use of bias adjustment factors before publication. a single industry classification is assigned to an entire Appropriate changes in employment levels are also company differ substantially from those in which made, when necessary, at the next revision to new each establishment of the company has been assigned benchmarks. to the industry of its principal activity. (See CorReferences.—The basic release of the employment porate Profits, below.) series is the BLS Employment and Payrolls Monthly Uses and limitations.—Current employment statistics are widely used as a timely indicator of changes Statistical Report, which contains national estimates, in economic activity in various sectors of the econ- State and area estimates, and an explanatory note. omy. Comparable information for a large number The national employment series for 13 months are of detailed industries is provided within a few weeks. also reprinted in the Monthly Labor Review. A more Furthermore, because of the promptness with which detailed technical note on "Measurement of Indusbasic information is supplied in considerable industry trial Employment" appears in the September 1953 detail, the BLS employment estimates are frequently issue of the Monthly Labor Review. AVERAGE WEEKLY HOURS—SELECTED INDUSTRIES (Table on p. 19.) Description of series.—With the employment figures for the specified payroll period, described in the preceding section, BLS collects from the sample establishments total man-hours of production or nonsupervisory workers actually worked or paid for, including hours paid for holidays, sick leave, and vacations taken. Statistical procedures.—The average hour figures are obtained by dividing the number of production and related workers (or nonsupervisory workers in industries other than mining and manufacturing) into the total man-hours reported for each industry. The average hours are normally less than scheduled hours because of such factors as absenteeism, labor turnover, part-time work, and stoppages. Uses and limitations.—Changes in hours worked 20 supplement the information on employment, since frequently hours worked are affected even before employment by changes in economic activity. The hours figures are used in compiling the average earnings figures discussed below. They also serve as a basis for current production estimates for some industries (see description of the Index of Industrial Production, p. 24). Hours paid for as measured by these series differ from plant man-hours which do not include hours paid for vacation, sick leave, or holidays. References.—The basic release of the average weekly hours series is the BLS monthly Hours and Earnings—Industry Report, which includes an explanatory note. A more detailed technical note on "Hours and Earnings in Nonagricultural Industries" is also available from the Bureau of Labor Statistics. Average Hourly Earnings [For production workers or nonsupervisory emplo3Tees *] All manufacturing Durable goods manufacturing Nondurable goods manufacturing Building construction Retail trade 3 Year 1952 Current prices prices 3 1909. $0. 193 - M Current prices 1952 prices 3 Current prices 1952 prices 8 Current prices 1952 prices 3 Current prices 1952 prices * (4) (4) (4) (4) (4) (4) « (4) m (4) (4) (4) (4) (4) w (4) (4) (4) (4) (4) (4) (44) (4) () (4) (4) (4) (4) (4) (4) (4) (4) (4) (4) (4) (4) (4) (4) (4) (4) (4) o (4) (4) (44) (4) () (4) (4) (4) (4) (44) () (4) (4) (44) () (4) (4) (4) (4) (4) (4) (4) (44) () (4) (4) (4) (4) (44) () (4) (4) (44) () (4) (4) (4) (4) (44) () (4) (4) (4) (4) 223 $0. 590 1919 477 . 732 1920_ 1921 1922 1923 1924 555 515 487 522 • 547 . 735 . 765 • 772 . 813 . 849 1925 1926 1927 1928 1929 547 548 550 562 • 566 . 828 . 823 . 841 .870 . 876 552 515 446 442 532 . 878 . 899 . 866 . 908 1. 056 $0. 497 .472 556 $0. 965 . 969 1. 103 $0. 420 .427 , 515 $0. 816 .877 1. 022 $0. 795 $1. 577 550 556 624 627 633 1. 064 1. 065 1. 153 1. 181 1. 210 .577 586 . 674 . 686 . 698 1. 116 1. 123 1. 246 1. 292 1. 335 . 530 , 529 .577 . 584 . 582 1. 025 1. 013 1. 067 1. 100 1. 113 815 824 903 908 , 932 1. 576 1. 579 1. 669 1. 710 1. 782 w $1. 542 $1. Oofi 661 729 853 961 I! 019 1. 252 1. 316 1. 389 1. 474 1. 537 . 724 . 808 . 947 1. 059 1. 117 1. 371 1. 458 1. 542 1. 624 1. 685 . . . . . 1. 140 1. 155 1. 178 1. 232 1. 299 . 958 1. 010 1. 148 1. 252 1. 319 1. 814 1. 823 I. 870 1. 920 1. 989 553 580 626 . 670 ' 731 1. 047 1. (M7 1. 02P 1. 0-41 1. 103 i. 023 I. 237 i. 350 l. 401 1. 509 1. 478 1. 471 1. 490 1. 562 1. I l l 1. 156 1. 292 1. 410 1. 469 1. 639 1. 573 1. 536 1. 556 1. 638 . 904 1. 015 1. 171 1. 278 1. 325 1. 333 1. 379 1. 478 1. 381 1. 681 1. 392 1.411 * 1. 848 1. 935 1. 477 2. 034 2. 011 1. 999 2. 040 2. 157 . 783 . 893 1. 009 1. 088 1. 137 1. 155 1. 215 1. 200 1. 201 1. 268 I. 465 I. 59 I. 67 1. 617 1. 63 1. 67 1. 537 1. 67 1. 76 1. 696 1. 71 1. 76 1. 378 1. 48 1. 54 1. 521 1. 51 1. 54 2. 242 2. 24 2. 31 1. 176 1. 26 1. 32 1. 298 1. 29 1. 32 1914 1930 1931 1932__ 1933 1934 * 1935 1936 1937 1938 1939.„ 1940 1941 1942__ 1943 1944 1945 1946 1947 1948 1949 1950 1951 1952 y 086 _ «(4) « (4) (4) m m « w (4) 602 640 723 803 861 2. 031 2. 19 2. 31 (4) (44) () (4) (<) « « 0) (4) 0) w (44) () (4) (4) (4) (4) (4) i Revised series; see Hours and Earnings—Industry Report, April 1953. »Hours and earnings data exclude eating and drinking places. * Earnings in current prices divided by consumer price index on base 1952=100. «Data beginning with January 1948 are not strictly comparable with those for earlier years. NOTE.—Monthly data are available beginning with 1932 for manufacturing industries, 1934 for building construction and 1639 for retail trade. Source: Department of Labor; « (4) (4) (4) (4) (4) (4) (4) (4) (4) (4) (4) (4) (44) () (4) (44) () 4 ((4)) AVERAGE HOURLY EARNINGS—SELECTED INDUSTRIES paid on an incentive basis. The changing employ(Table on p. 21.) f Description of series.—The payrollfigureson which ment of workers as between relatively high-paid and these averages are based are collected by BLS with low-paid work, and relatively high-wage and lowthe employment and hours figures, described above. wage industries, also affects the hourly earnings They are reported before deductions for taxes, social averages. Hourly earnings refer to the actual return to the insurance, etc. They include pay for sick leave, holidays, and vacations taken, but exclude retro- worker for a stated period of time, and should not active pay and bonuses, unless earned and paid be confused with wage rates, which represent the regularly each pay period. Earnings in 1952 prices, rates stipulated for a given unit of work or time. prepared by the Council of Economic Advisers, are Since certain types of payments (see above) as well the average hourly earnings figures adjusted for as payments to workers excluded from the production changes in purchasing power as determined by the worker (or nonsupervisory employee) definition are not included, the earning series should not be taken Consumer Price Index, with 1952 = 100. Statistical procedures.—Average hourly earnings to represent labor costs to the employer. The fact that large establishments predominate in are derived by dividing total payrolls by total manhours reported for each industry. Only the sample the BLS sample may affect somewhat the level of data are used, since there are no benchmarks avail- the average earnings figures for some industries, but has no measurable effect on the trends in average able for hours and earnings. hourly earnings. Uses and limitations.—Average hourly earnings References.—The basic release of the average hourly figures are widely used in collective bargaining, in "escalating" long-term sales contracts (such as labor earnings series is the BLS monthly Hours and Earncosts for equipment which takes a number of months ings—Industry Report, which also includes estimates or years to build) and in general economic analysis. of hourly earnings excluding overtime, and an exThe hourly earningsfiguresreflect not only changes planatory note. A more detailed technical note on in basic hourly and incentive wage rates, but also "Hours and Earnings in Nonagricultural Industries" such variable factors as premium pay for overtime is also available from the Bureau of Labor Statistics. and late-shift work, and changes in output of workers AVERAGE WEEKLY EARNINGS—SELECTED INDUSTRIES Statistical procedures.—Average weekly earningsoccupational supplies, union dues, or other payroll are obtained by multiplying average hours and deductions. average hourly earnings for each industry (see References.—The basic release of the average above). weekly earnings series is the BLS monthly Hours Uses and limitations.—The average weekly earn- and Earnings—Industry Report, which also includes ings figures come closer than the hourly earnings to estimates of net spendable weekly earnings in manumeasuring what the worker has to spend, since these facturing, earnings in 1947-49 dollars for selected figures are affected by changes in the length of the industries, and an explanatory note. A more detailed workweek. However, they do not represent take- technical note on "Hours and Earnings in Nonagrihome pay, since no deductions have been made for cultural Industries" is also available from the Bureau income and social-security taxes, group insurance, of Labor Statistics. 22 Average Weekly Earnings [For production workers or nonsupervisory employees All manufacturing Durable goods manufacturing Nondurable goods manufacturing Building construction xietaii trade a Year 1909 Current prices 1952 prices 3 Current prices $9.84 0) « 1952 prices * Current prices 1952 prices * Current prices 1952 prices 8 Current prices 1952 prices * m w (4) (*) w « « (4) () (44) () (4) (4) (4) (4) (4) (4) <4) (4) « (4) (4) (4) (4) (4) $21. 94 22. 07 (4) (44) () $34 17 34 27 (44) (4) () (4) (4) (4) (44) () (4) (4) 39. 92 39. 95 40.76 42. 17 22. 44 22.75 23. 01 22. 88 33. 95 34 16 35. 18 35. 42 (4) (4) 4 (4) (44) () (4) (4) (44) ( (4) (4) (4) (44) (4) (4) (44) () (4) (*) (4) (4) (44) () (4) 27. 22 42. 14 22.93 35. 50 (4) (4) 36. 96 36. 42 33. 11 34. 35 36.51 24. 77 21. 28 16. 21 16. 43 18.87 39. 38 37. 14 31. 48 33. 74 37.44 21.84 20. 50 17. 57 16. 89 18.05 34. 72 35. 78 34. 12 34.68 35.81 (4) (44) () (4) $22. 97 (4) (4) (44) () $45.58 (4) (44) () (4) (4) (4) (4) (4) (44) (4). () (4) 20. 13 21. 78 24. 05 22. 30 23. 86 38. 94 41. 72 44. 45 42. 00 45. 62 21. 52 24. 04 26. 91 24. 01 26. 50 41. 62 46. 05 49. 74 45. 22 50. 67 19. 11 19. 94 21. 53 21. 05 21. 78 36. 96 38.20 39. 80 39. 64 41. 64 24.51 27.01 30. 14 29. 19 30. 39 47. 41 51. 74 55. 71 54. 97 58. 11 (4) 0) $23.14 $44.24 1940 1941 , . 1942 1943.— 1944 25. 20 29. 58 36. 65 43. 14 46. 08 47.73 53. 39 59. 69 66. 17 69. 50 28. 44 34. 04 42. 73 49. 30 52. 07 53. 86 - 22.27 2 4 92 61. 44 69. 59 " 29.13 34. 12 75. 61 37. 12 78. 54 42. 18 44. 98 47. 44 52. 33 55. 99 31. 70 35. 14 41. 80 48. 13 52. 18 60.04 63. 43 68. 08 73. 82 78. 70 23. 50 24.42 25. 73 27. 36 29. 53 44,51 44.08 41. 91 41. 96 44.54 1945 1946 1947 1948 1949 44. 39 43. 82. 49. 97 54. 14 54 92 65.47 59. 62 59. 42 59.76 61. 23 49. 05 46. 49 52. 46 57. 11 58.03 72. 35 63. 25 62. 38 63. 04 64.69 38. 29 41. 14 46. 96 50. 61 51.41 56. 47 55. 97 55. 84 55. 86 57. 31 53. 73 56. 24 63. 30 « 68. 85 70. 95 79. 25 76. 52 75. 27 75. 99 79. 10 31. 55 36.35 40. 66 43. 85 45. 93 46. 53 49. 46 48. 35 48. 40 51. 20 1950 . 1951 1952 59. 33 64 71 67.97 65. 49 66. 17 67. 97 63. 32 69. 47 73. 04 69. 89 71. 03 73. 04 54 71 58. 46 60.98 60. 39 59. 78 60. 98 73. 73 81. 47 88.01 81. 38 83. 30 88.01 47. 63 50. 65 52. 67 52.57 51. 79 52.67 1914. _ , 11. 01 $29. 13 (4) 1919 22. 08 33. 87 (4) 1920 1921 1922 19231924 26. 30 22. 18 21. 51 23. 82 23. 93 34 83 32. 96 34 09 37. 10 37. 16 (4) (4) m $25. 78 25. 84 $40. 16 40. 12 192519261927 1928 24. 37 24. 65 24. 74 24. 97 36. 87 37.01 37.83 38. 65 26. 39 26.61 26. 66 27.24 1929 25. 03 38. 75 1930 ... 1931 1932 1933 1934 „ 23. 25 20. 87 17. 05 16. 73 18.40 1935 , . 1936 1937 . . . . 1938 1939 «« 4 4) (4) (4) (4) (4) i Revised series; see Hours and Earnings—Industry Report, April 1953. * Hours and earnings data exclude eating and drinking places. 1 Earnings in currcnt prices divided by consumer price index on base 1952-=100. * Not available. »Data beginning with January 1948 are not strictly comparable with those for earlier years. NOTE.—Monthly data are available beginning with June 1914 for all manufacturing Industries, 1923 for durable and nondurable goods manufacturing, 1934 for building construction, and 1939 for retail trade. Source: Department of Labor. 23 PRODUCTION AND BUSINESS ACTIVITY INDUSTRIAL PRODUCTION Description of series.—The Index of Industrial Production is computed by the Board of Governors of the Federal Reserve System. It is designed to measure changes in the physical volume or quantity of output of manufactures and minerals. It does not register changes in the value of such production, nor does it include other productive activities (such as construction and public utilities) often regarded as industrial. The manufacturing and mining industries covercd by the index produce about onethird of the goods and services in the United States. The manufactures and minerals indexes are based on figures compiled by the Bureau of the Census, Bureau of Mines, Department of Agriculture, Tariff Commission, Bureau of Labor Statistics, the Internal Revenue Service, and a few other Government agencies, and by trade associations and trade journals. The component series are carefully chosen to represent the industries, industry groups, and other subdivisions in the index, and where necessary and possible they are adjusted for under coverage or other deficiencies. For example, shipment series are adjusted for inventory changes, where feasible; value data for price changes; man-hours for estimated changes in output per man-hour. Both annual and monthly data are utilized. Annual data, which are generally more reliable and available in greater detail than the monthly data, are used to compute an annual index and a set of annual group, subgroup, and industry indexes measuring year-to-year output changes. Monthly data are utilized to make a monthly index and group and other detailed monthly indexes similiar to the annual indexes. The use of comprehensive annual indexes to determine levels makes it possible to employ fewer but more select component series to represent each industry in the monthly indexes. Manufactures.—The annual index of manufactures includes about 1,370 detailed product or industry series, and the monthly index 164 series. The series selected are iclassified^nto the 21 major groups for manufacturing of the Standard Industrial Classification. Indexes are also computed for durable and nondurable manufactured goods. Series on quantities of products manufactured or shipped, or quantities of materials consumed or supplied, account for about three-fourths of the weights assigned in the annual index, and about one-half of the weights in the monthly index. The remaining series in the annual index are mostly 24 deflated value figures, estimates based on several types of data, or adjusted man-hour data, with the last accounting for 4 percent of the weight. The remaining components in the monthly index consist largely of man-hour data adjusted for estimated changes in output per man-hour to represent output. The use of so large a proportion of man-hour data in the monthly index has been questioned, but it should be remembered that only the current changes are governed by these man-hour series, with the index levels for the industries concerned determined largely by annual data on quantities of products produced or shipped or other types of data. Minerals.—The annual index of minerals is composed of about 70 separate series, and the monthly index of 11 series, classified into the 5 major groups for mining of the Standard Industrial Classification. The annual series on minerals, representing the production of all the important minerals, are in physical volume units, and all but one of the monthly series are in physical volume units. The exception is the man-hour series used to represent stone and earth quarrying, to which less than 10 percent of the weight of the minerals index is assigned, and which, of course, is adjusted to annual physical volume levels. Since its first publication in 1927 the index has undergone several major revisions. The most recent revision was completed in 1953, and the revised index introduced in December 1953. The principal changes were— 1. Increase in the number of component monthly series from 100 to 175, and many improvements in the series used. 2. Use of component series to represent certain industries formerly represented only indirectly. 3. Use of a comprehensive and detailed annual index, based on about 1,440 series, to check and correct the annual levels of the individual monthly measurements. 4. Use of 1947 value added data for calculative weights, in place of the 1937 value added data previously employed, for the segment of the index from 1947 to date. 5. Change of the comparison base period from 1935-39 to 1947-49. 6. Adoption of the latest Standard Industrial Classification code as the basis for organizing the index and its components. Industrial Production [1947-49=100, seasonally adjusted] Period Total industrial production Manufactures Total Durable goods Nondurable goods Minerals 1919__ 39 38 38 37 45 1920 1921 1922. 1923. 1924 41 31 39 47 44 39 30 39 45 43 42 24 37 47 43 36 34 40 44 42 53 42 45 62 57 1925 1926.. 1927 1928 1929 49 51 51 53 59 48 50 50 52 58 49 52 49 53 60 46 48 50 51 56 59 63 64 63 68 1930... 193 1932 1933 1934... 49 40 31 37 40 48 39 30 36 39 45 31 19 24 30 51 48 42 48 49 59 51 42 48 51 1935 1936 1937 1938. 1939 47 56 61 48 58 46 55 60 46 57 38 49 55 35 49 55 61 64 57 66 55 63 71 62 68 67 87 106 127 125 66 88 110 133 130 63 91 126 162 159 69 84 93 103 99 76 81 84 87 93 107 90 100 104 97 110 90 100 103 97 123 86 101 104 95 96 95 99 102 99 92 91 100 106 94 112 120 124 113 121 125 116 128 136 111 114 114 105 115 114 __ 1940 1941. 1942 1943 1944 1945. 1946 1947. 1948 1949. .... 1950. 1951 1952... NOTE.—Monthly data are available beginning with 1919. Source: Board of Governors of the Federal Reserve System. The new version of the index is confined for the present to the period since January 1947. In revising the index for the earlier period use will be made of the major group components of the benchmark index of manufactures (computed by Federal Reserve and the Census Bureau from data of the 1939 and 1947 Censuses of Manufactures, and published in 1952) to determine the 1939 levels of the industry group indexes relative to 1947. Pending this detailed revision, interim benchmark adjustments have been made to the old indexes for durable and nondurable manufactures—and also for minerals and total industrial production—from January 1939 to December 1946. The old indexes beginning in 1919 have been linked on to the respective revised meas- ures to form a series of continuous indexes from 1919 to the present. Statistical procedures.—The method used in combining the individual series is the weighted average of relatives. This consists of (1) reducing each series into relatives with the average for the base period, 1947-49, as 100; (2) multiplying each series of relatives by a base-year weight factor; and (3) adding the products (series of relatives multiplied by weights) for any one month to obtain the index number for the month. The weights used are percentage weight factors, that is, percentage of the weight assigned to each series to the total weight assigned to all series in the base period. Since the total of the percentage weight factors is equal to 25 100, the sum of the products of all series for any one month (all series times their respective weight factors) gives the index of industrial production for that month. The products of the component series and their weights give the number of points contributed to the index by individual series. This method of computation facilitates analysis of the changes in the index. For example, it makes it possible to observe the points contributed by each series or group of series, and therefore to determine what series or group of series are responsible for the month-to-month changes in the total index or in the index for any group or subgroup of industries. The weights used are based on value added—the difference between the value of products and the cost of materials or supplies consumed—in individual mining and manufacturing industries in 1947. The value added data for mining are based on estimates prepared by the Bureau of Labor Statistics in connection with its input-output studies. The value added figures for manufacturing are obtained from the Census of Manufactures for 1947. However, since value added data are not available for individual products of each industry, such data are in most cases estimated on the assumption that they are proportional to value of the product. Since the value added data used relate to 1947, while the component series are expressed as relatives with the average for the base period 1947-49 as 100, it is necessary to adjust the 1947 value added for each series by the ratio of the level of that series in 1947 to the average level of that series in 1947-49. The value added data so adjusted, expressed as percentages of the total for all manufacturing and mining, are the weight factors used in combining the individual series into the group and total industrial production indexes. Components of the index are adjusted for two kinds of short-time recurring fluctuations—differences in the number of working days from month to month and seasonal variations. The first adjustment is accomplished by reducing reported quantity figures to average daily output in the month. For this purpose, only regular weekend closings—where in effect—are treated as nonworking days. No allowance is made for holiday shutdowns, whose effects on production are adjusted by the seasonal variation factors. No adjustment is needed for the man-hour series which are reported in terms of rates. The adjustment for seasonal fluctuations is made directly for the 21 manufacturing and 5 mineral major industry group indexes, and the adjusted indexes for the larger aggregates—such as durable and nondurable manufactures, manufactures, min26 erals, and industrial production—are obtained as combinations of these. Relation to other series.—As an important general economic indicator, the index of industrial production is related in varying degree to other general economic indicators. Among the more important series to which the index is closely related are gross national product and manufacturers' sales. It should be observed, however, that these are value or dollar-volume series, and are therefore influenced by price as well as quantity changes. The industrial production index, on the other hand, being a measurement of physical volume, registers quantity changes only. Also, the national product statistics relate to output at afinalstage and include trade and services as well as both "industrial" and "nonindustrial" goods, whereas the industrial production index is confined to manufacturing and mining, and reflects activity at successive stages within these sectors. Other differences include the fact that as a monthly measure the production index is available more frequently, and for the sectors concerned, in greater detail. The monthly Department of Commerce series on manufacturers' sales corresponds in coverage to the manufacturing component of the production index, and includes successive stages of processing. The importance assigned to each industry, however, is proportional to the gross value of sales, rather than net value added as in the production index, so that changes in activity at later stages of processing influence the sales measure more than they do the production index. This and other factors, including the influence of price changes on the sales measures, lead to differences in movements, and indicate why one (or more) series may be the best measure for a specific purpose. Uses and limitations.—The total index of industrial production is probably most widely used as a business barometer. Both in whole and in detail it is used in conjunction with related data on employment, inventories, trade, prices, and other economic variables, in analyzing short- and long-run developments in the economy. The component indexes are used to determine the areas in which the occurrence of important changes accounted for the observed changes in the total index. They are also used in analyses relating to individual industries. Many companies, for instance, make continuing studies of their own output and sales figures in relation to the output movements of the industry. They also use the industry and product series in studies of potential markets, and in other types of research. The new index includes Production of Selected Manufactures [1947-49= 100, seasonally adjusted] Durable manufactures Period Primary metals Nondurable manufactures Lumber TransporMachinery2 and tation products 1 equipment Textiles and apparel Petroleum and coal products Food and beverage manufactures Chemicals and allied products 1939 53 80 38 48 80 63 66 45 1947 1948 1949 1950 1951 1952 103 107 90 115 126 116 101 106 93 113 113 111 103 104 93 114 130 147 96 102 102 120 135 154 99 103 97 110 106 105 97 104 99 110 122 123 101 99 100 103 105 105 97 103 101 121 136 137 i Except furniture. s Electrical and nonelectrical. Source: Board of Governors of the Federal Reserve System. many more detailed industry and product series than the old, and this expansion in detail—e. g., for consumer durable items—greatly facilitates analysis of current developments in markets for different types of industrial materials andfinishedgoods. Because the coverage of the index is limited to manufacturing and mining, it should not be used as a measure of total production, or even as a measure of total production of goods; the important goodsproducing sectors of agriculture, construction, and utilities are not included. It might be noted, however, that changes in the output of manufactures and minerals are especially significant, in part because they account for a large part of variation in the total of all economic activity. Because it is necessary to use estimated or approximate data in many cases, some of the components are less reliable than others. References.—The index of industrial production is published monthly in the Federal Reserve Bulletin. Seasonally adjusted indexes are available for all major groups and larger aggregates, and separate component indexes of manufactures, minerals, durable manufactures, nondurable manufactures, individual manufacturing and mineral industries, and individual manufacturing and mineral products are also published monthly in the Bulletin, without seasonal adjustment. The method of constructing the index is described in the December 1953 Bulletin. PRODUCTION OF SELECTED MANUFACTURES The charts and figures on "Production of Selected Manufactures" presented in the monthly issues of Economic Indicators are selected from the componentgroup indexes prepared by the Board of Governors of the Federal Reserve System for the Index of Industrial Production, described above. The table on "Industrial Production" presents index figures for total industrial production and for manufactures (total, durable goods, and nondurable goods) and minerals. The table on "Production of Selected Manufactures" presents index figures for 8 of the major components which comprise the index of manufactures. The relative importance of each of these 8 component indexes, as well as of the minerals and manufactures indexes, in the over-all Index of Industrial Production may be seen in the following tabulation, which shows the percent of the weight of each to the total weight of the index in the base period, 1947-49: S8448—53 5 Industrial production Percentage of total weight assigned 100. 00 Minerals Manufactures Durable manufactures Primary metals Lumber and products (except furniture) Machinery (electrical and nonelectrical) Transportation equipment All other Nondurable manufactures Textiles and apparel Petroleum and coal products,. Food and beverage manufactures Chemicals and allied products.. All other 9. 98 90. 02 6. 70 45.17 3. 09 13.68 7. 54 14.16 44. 85 11. 87 2. 50 10.73 6. 84 12. 91 27 WEEKLY PRODUCTION—SELECTED INDICATORS Steel . The weekly series on steel production is compiled by the American Iron and Steel Institute. It includes ingot production by open-hearth, Bessemer, and electric-furnace processes, and steel for castings, except that produced in foundries operated by companies which do not produce ingots. The very small quantity of crucible steel is included with the production of electric furnaces. The series on "Percent of theoretical capacity" is the ratio of weekly production to average weekly capacity as of the first of the year. During 1953 the estimates of total production and capacity have been based on current reports from 93 percent of the industry. The estimated 100 percent production is obtained on the basis of the ratio of the annual production of the reporting companies to the total production of all companies in the previous year. With the release of the weekly production figures, the Institute also published the scheduled operating rate for the coming week. Also published by the Institute are monthly estimates of the ratio of production to capacity, calculated in essentially the same manner as the weekly estimates. The monthly figures are subsequently revised when the final total production figures for the year are available. Other related monthly series, such as iron-ore production, pig-iron production, shipments of steel foldings, and manufactured steel products, are published in the Department of Commerce's monthly Survey of Current Business. Weekly and monthly estimates of production and percent of operating capacity are issued as mimeographed releases by the American Iron and Steel Institute. More detailed figures are contained in the Institute's monthly AIS Form 7. For more complete statistical coverage of the industry, see the Annual Statistical Report of the American Iron and Steel Institute, and Business Statistics} 1953, a supplement to the Survey of Current Business. The weeklyfigures_arecollected by the institute, by telegraph, from approximately 90 reporting utilities (either companies or groups of interconnected companies) representing in the aggregate over 90 percent of the total energy available for public consumption. The estimated 100 percent production is obtained by applying the ratio of the monthly production of the reporting utilities to the total production of all utilities as reported to the Federal Power Commission for the previous month. The weekly series is useful in economic analysis because it is available promptly and is a reliable measure of net energy distribution to the public supply. It should be remembered, however, that figures on total net generation are not a sensitive measure of important changes in industrial activity, since they include energy used for nonindustrial purposes, such as air-conditioning loads and sales to residential and rural consumers. In addition to the weekly series, the Edison Electric Institute also publishes a monthly statement on "Source and Disposal of Energy," for which the data on generation are obtained from the Federal Power Commission. The Federal Power Commission issues a monthly publication on Electric Power Statistics} with data on production, fuel consumption, requirements, and supply. Bituminous Coal The series on the production of bituminous coal, which includes bituminous coal and lignite, is compiled weekly by the Bureau of Mines, Department of the Interior. It is a very close approximation of total production in the United States. The figures are estimated on the basis of car loadings and river shipments. The method of estimation consists of raising the rail and river shipment figures by factors to represent the coal that is not transported by rail or river, such as truck shipments, local sales, colliery fuel, and coal produced by small mines for local use. The weekly estimates are adjusted annually by the actual figures on the production of bituminous coal and lignite which are collected Electric Power, by Utilities annually from all producers by the Bureau of Mines. The weekly figures shown are the Edison Electric The correction is negligible—within less than oneInstitute's estimates of "net energy for distribution" half of 1 percent of the annual canvass figures. by all plants that contribute to the public supply. Although bituminous coal is still an important "Net energy for distribution" may be defined as the industrial fuel, contributing approximately 40 percent energy sold to ultimate consumers, plus line losses of the total supply of energy from mineral fuels, and unaccounted for energy; or as net generation, the series on bituminous coal and lignite production plus net import over international boundaries, less may not by itself be as good an indicator of industrial energy used by the producer and the distributor. activity as its importance suggests. During normal The series is not a measure of total use of electric peacetime, coal mines operate at a fraction of their energy, since it does not include energy generated by capacity, about 3 days a week, and the coal-using captive plants of industrial establishments. industries carry considerable stocks which may serve 28 Weekly Production—Selected Indicators [Weekly average] Steel Year 1919 1920 1921 1922 1923 1924 1925 1926 1927 1928 1929 1930 1931 1932 1933 1934 1935 1936 1937 1938 1939 1940 1941 1942 1943 1944 1945 1946 1947 1948 1949 1950 1951 1952__ 1 Thousands of net tons — Percent of capacity based on weekly net ton capacity. 745 903 425 765 965 813 975 1,037 965 1,104 1, 212 874 557 293 499 560 732 1,023 1,086 609 1,013 1,281 1, 589 1, 650 1, 704 1, 715 1,529 1,277 1, 628 1,695 1, 496 1, 857 2,018 1, 782 Percent of theoretical capacity 1 63.6 75.7 34. 5 60. 9 76.6 63.8 74.2 83. 5 74. 9 83. 9 88.5 62. 5 37. 6 19.5 33. 1 37.4 48.7 68.4 72.5 39.6 64. 5 82. 1 97. 3 96. 8 98. 1 95. 5 83.5 72. 5 93.0 94. 1 81.0 96. 9 100. 9 85.8 * Daily average for the week. Electric power, Bituminous by utilities Cars and coal (thou(millions of sands of short trucks (number) 3 kilowatt-hours) tons) (3) (3) (3) (3) (3) (3) (3) (3) (3) 1,551 1,733 1,714 1,646 1,488 1,544 1, 655 1,793 2, 037 2, 256 2,148 2, 398 2, 684 3,142 3, 552 4,155 4, 385 4, 244 4, 235 4, 821 5, 300 5, 500 6, 183 6, 958 7, 451 1, 512 1,847 1, 356 1, 379 1, 845 1, 573 1,692 1,864 1, 684 1, 631 1, 740 1, 522 1, 243 1,007 1, 090 1,173 1,217 1,432 1,456 1, 139 1,293 1, 503 1, 695 1, 909 1, 907 2, 009 1,891 1,745 2, 058 1, 948 1, 427 1, 687 1, 772 1,542 36, 084 42, 834 31, 079 48, 926 77, 577 69, 280 82, 035 82, 710 65, 410 83, 822 103, 047 64, 538 45, 956 26, 359 36, 924 52, 944 75, 903 85, 656 92, 480 47, 867 68, 794 85, 949 93, 049 20, 830 14, 456 15, 218 15, 094 59, 581 92, 163 82, 340 120, 350 154, 212 129, 828 106, 765 * Not available. Sources: American Iron and Steel Institute, Edison Electric Institute, Department of the Interior, and Ward's Automotive Reports. as a buffer between changes in industrial activity as represented by increases and decreases in coal consumption and by the ups and downs in coal output. Coal production figures should therefore be analyzed in conjunction with the related series, also compiled by the Bureau of Mines, on the consumption of coal by industries and deliveries to retail dealers, and on stocks of coal held by industries and retail dealers. The weekly estimates of production, together with the series on consumption and consumers' stocks, are published in the Bureau of Mines multilithed Weekly Coal Report. A description of the method used in making the estimates may be found in the chapter on "Bituminous Coal and Lignite" in the Bureau of Mines Minerals Yearbook. Cars and Trucks This series is an average of the weekly output of cars and trucks by each of the individual producers in the United States. It appears in Ward's Automotive Reports, published each Monday, which shows a breakdown of the weekly total by cars, trucks and makes, and a similar breakdown for cars produced in Canada. These series are used by general business analysts as well as by persons especially concerned with the level of activity in the industry, particularly its suppliers. In addition to the weekly series, the Automotive Reports carries current and cumulative monthly totals. Closely related to these monthly production totals are the monthly factory sales figures compiled by the Automobile Manufacturers Association. The sales figures typically differ somewhat from the production figures, principally because of the inclusion of some units produced in earlier periods and the exclusion of some units produced in the current month. 29 GROSS PRIVATE DOMESTIC INVEST! Description of series.—Gross private domestic the nonfarm portion of these business inventories is investment is one of the major components of gross reported accounting data on the value of inventories national product. The series measures gross fixed at the beginning and end of the period for which capital formation, which is defined for national the estimates are made. Inventory calculation by income purposes as including all newly produced individual business firms varies widely in method, durables acquired by their ultimate business users, both with respect to the scope of the cost elements included in the inventory account and with respect and net changes in business inventories. Three separate series are published under fGross to the valuation procedures used, and numerous private domestic investment": New Construction, adjustments in the reported data are necessary to Producers' Durable Equipment, and Change in arrive at an estimate of changes in inventories conBusiness Inventories. The New Construction series sistent with the basic concept. The principal adjustused in computing gross private domestic investment ment, however, is that of removing the price change is derived from the private construction component element in the reported figures and revaluing invenof the New Construction series described below (p. tory change in current dollars. 34) by adding oil- and gas-well drilling. Relation to other series.—The relationship between The quarterly estimates of national income and the Producers' Durable Equipment Expenditures product, of which these series are a part, are revised series and the durable goods portion of the Expendiannually to reflect more complete data than were tures for New Plant and Equipment series, to which available when the estimates were made initially. it is most closely related, is discussed in the following The revised series are published annually in the July section. issue of the Survey of Current Business and for both The Change in Business Inventories series is most the Producers' Durable Equipment series and the closely related to the estimates of inventories levels, Change in Business Inventories series reflect more discussed below (p. 38). These series differ concomplete data and more detailed procedures. In ceptually, however, in that the Inventories series is recent years revisions in the Change in Business based upon the data as reported by reporting comInventories series sometimes have been quite sizable, panies, whereas for the GNP Change in Business and have arisen primarily from revisions in the basic Inventories series, OBE adjusts the data reported to book value data rather than from revision in the reflect a uniform method of valuation. The two inventory valuation adjustment. series therefore should not be used interchangeably. Statistical procedures.—The Producers' Durable Uses and limitations.—The three series which Equipment series is estimated generally by use of constitute Gross Private Domestic Investment are the commodity-flow technique, i. e., by segregating part of the national product accounts. Although finished producers' durables from total manufactur- relatively small they are important, since they measing output and then tracing their flow and measuring ure an economic factor of crucial importance in their distributive costs so as to arrive at the final business conditions. While thefigureson the Change costs to purchasers. Three of the producers' durable in Business Inventories are in the nature of rough equipment groups—Business Motor Vehicles, Rail- estimates, they are useful indicators of the trends in road and Transit Equipment, and Ships and Boats— the level of inventory accumulation. Comprehensive are estimated by other methods. accounting data on inventories become available The estimates of producers' durable equipment only after a lag of several years, and current estimates expenditures are based upon 1939 benchmarks pro- are based upon less satisfactory data than the estivided by the Census of Manufactures of that year mates for past years. and brought up to date by data from the 1947 census Finally, the estimates of inventory change included and 1950 and 1951 Annual Survey of Manufactures, in the series are calculated as the difference between and from summaries of quarterly reports to the Na- large and possibly volatile inventory totals at two tional Production Authority. For more recent quar- points in time. Even small errors in the estimates ters, estimates are made by extrapolating these of total inventories can lead to large relative errors benchmark estimates largely on the basis of industry in the estimates of inventory change. sales data, which have significant limitations in such References.—These series are published quarterly use. in the Survey of Current Business. For a full discusThe Change in Business Inventories series meas- sion of the concepts and statistical methods employed ures physical changes in business inventories valued in these series, see the 1951 National Income Suppleat average prices prevailing during the year. ment to the Survey of Current Business, particularly The primary source for estimates of changes in pages 37-39 and 112-125. 30 Gross Private Domestic Investment [Billions of dollars] Year Total gross private domestic investment N ew constructic>n Total Residential nonfarm Other Producers' durable equipment Change in business inventories 1929 15. 8 7.8 2.8 5.0 6.4 1930 1931 1932. 1933 1934 10. 2 5. 4 . 9 1.3 2. 8 5. 6 3. 6 1. 7 1. 1 1.4 1. 4 1. 2 .5 ,3 .4 4.2 2.4 1. 2 .8 1.0 4.9 3.2 1.8 1.8 2.5 -.3 — 1. 4 -2.6 -1. 6 -1. 1 1935 1936 1937 1938 1939 6. 1 8. 3 11.4 6.3 9.9 1. 9 2.8 3.7 3. 3 4.9 .7 1. 1 1. 4 1.5 2.7 1. 2 1. 7 2.3 1.8 2.2 3.4 4.5 5.4 4.0 4.6 . 1. 2. -1. . 1940 1941 1942 1943 1944_ 13. 9 18. 3 10. 9 5.7 7. 7 5. 6 6. 8 4.0 2. 5 2.8 3.0 3. 4 1. 8 1.0 .8 2.6 3.3 2.2 1.5 2.0 6. 1 7.7 4.9 4. 1 5. 7 2.3 3. 9 2. 1 9 1945 1946 1947 1948 1949 10. 28. 30. 42. 33. 7 7 2 7 5 3.9 10. 3 13. 9 17. 7 17.2 1. 1 4.0 6.3 8. 6 8.3 2.8 6.3 7.6 9. 1 9.0 7.5 12. 3 17. 1 19. 9 18. 7 -.7 6. 1 -.8 5.0 -2.5 1950 1951 1952_ 52.5 58.6 52. 5 22.7 23. 1 23.4 12. 6 11.0 11. 1 10. 1 12. 2 12.3 22. 3 24. 6 25.4 7.5 10. 9 3.7 1.6 9 0 3 0 4 NOTE.—Detail will not necessarily add to totals because of rounding. Quarterly data are available beginning with 1939. Source: Department of Commerce. 31 EXPENDITURES FOR NEW PLANT A] D EQUIPMENT Description• of series.—The series on expenditures The seasonal factors used for adjusting the actual for new plant and equipment, published jointly by expenditures data for changes due to seasonal fluctuthe Securities and Exchange Commission and the ations are based on the "ratio to moving average" Office of Business Economics, Department of Com- technique. Adjustments are also made where necesmerce, measures the expenditures by all private busi- sary in the estimates of plant and equipment expendinesses except agriculture, professions, and institu- tures to correct for biases due to changes in the tions for plant and types of machineiy and equip- business population which are not reflected in the ment for which the reporting companies maintain constant reporting group data. Relation to other series.—The SEC-OBE series on depreciation accounts. Expenditures charged off as expense during the period in which made are ex- actual plant and equipment expenditures utilizes the cluded. Estimates are made for both actual plant same definitions and industry classification as those and equipment expenditures for recent quarters (and of the 1947 Census of Manufactures and the later calendar years) and anticipated expenditures for the Annual Surveys of Manufactures of the Census two succeeding quarters (and calendar year). These Bureau. There is a substantial difference between estimates are based upon information contained in the Census Bureau data on expenditures for plant the annual reports of virtually all (and in quarterly and equipment and the SEC-OBE manufacturing reports of approximately half) of the registered series, however, in that the SEC-OBE series uses corporations to SEC, quarterly reports by a group companywide outlays whereas Census uses outlays of nonregistered corporations to OBE, and annual of establishments. Thus, the Census annual series and quarterly reports by Class I railroads to the covers only establishments classified as manufacturing Interstate Commerce Commission. whereas the SEC-OBE quarterly and annual series The last major revision in the series was published cover all activities, manufacturing as well as nonin two parts, the revision for manufacturing indus- manufacturing, of companies classified as manufactries in the December 1951 issue of the Survey of turing and excludes the manufacturing activities of Current Business and the revision for nonmanufac- companies classified as nonmanufacturing. turing industries in the August 1952 issue. The The SEC-OBE series differs somewhat in concept revision established a benchmark based on gross from the Producers' Durable Equipment and New capital assets as reported to the Internal Revenue Construction components of Gross Private Domestic Service for the 1948 tax year, and introduced im- Investment (see p. 30). The principal differences provements in the estimating procedures being used. are that the SEC-OBE series is confined to nonagriFor example, information contained in the manda- cultural industries, and excludes expenditures of tory annual reports of corporations registered with institutions and professional persons and outlays on the SEC was used for the first time and adjustments plant and equipment charged off as expenses during were made for biases arising out of changes in the the period of the expenditure. The Producers' business population. Durable Equipment estimates are derived generally Because of the method of estimating used, viz, the by use of a commodity-flow technique to arrive at a extrapolation of benchmark estimates on the basis measure of the output of all types of capital goods of less than complete current data, lesser revisions destined for use by domestic business. The SECin the estimates of actual expenditures for plant and OBE series measures directly expenditures by users equipment for any given quarter or year are made to for capital goods for which depreciation accounts take into account new data as they become available. are maintained. Statistical procedures.—The benchmark for the The SEC-OBE series on manufacturers' expendiestimates is the gross capital assets of the full uni- tures for new plant and equipment is directly comverse of companies as derived from reports to the parable in classification and scope with the OBE Internal Revenue Service for the tax year 1948. series on manufacturers' sales, new orders, and The estimation of year-to-year and quarter-to- inventories (see p. 38). It has a different scope from quarter movements in these expenditures are made the Federal Trade Commission-Securities and Exby extrapolating the benchmark estimates on the change Commission financial reports series in manubasis of the annual and quarterly reports received facturing, mainly in that the FTC-SEC estimates by SEC, OBE, and ICC. A relatively constant of balance-sheet and income-statement items covers group of reporting companies is used; this group of only corporations. reporting companies is not a randomly selected Uses and limitations.—This series is one of the sample. very few economic series in which estimates of antic32 Expenditures for New Plant and Equipment [Millions of dollars] Manufacturing Year Total i Total 1939 5, 512 194 5 194 6 194 7 194 8 194 9 8, 14, 20, 22, 19, 692 848 612 059 285 195 0 195 1 195 2 20,605 25,644 26, 455 983 790 703 134 149 7, 491 10, 852 11, 994 Public utilities Durable goods Nondurable goods 756 1, 187 326 280 365 520 590 112 407 483 593 2, 3, 5, 5, 4, 393 678 296 651 555 383 427 691 882 792 548 583 889 1,319 1, 352 574 923 1, 298 1, 285 887 505 792 1, 539 2, 543 3, 125 4, 356 5, 684 6,210 707 929 880 1,212 1, 490 1, 363 3, 309 3, 664 3, 838 1, 943 3, 6, 8, 9, 7, Transportation Mining 1, 3, 3, 3, 2, 3, 135 5, 168 5, 784 Railroads 1, 111 1, 474 1, 391 Other 1 Excludes agriculture. > Commercial and other includes trade, service, finance, communications, and construction. NOTE.—Thesefiguresdo not agree with the totals included in the gross national product estimates of the Department of Commerce, principally because the latter cover agricultural investment and also certain equipment and construction outlays charged to current expense. Detail will not necessarily add to totals because of rounding. Data on Expenditures for New Plant and Equipment are not available for the years 194(M4. Sources: Securities and Exchange Commission and Department of Commerce. ipated events as well as historical events are made. The series attempts to measure economic phenomena of great importance in the analysis of business conditions. The reliability of estimates of anticipations is difficult to ascertain. An estimate of anticipated expenditures for a period can be different from actual expenditures for the same period either because the estimating procedures and statistical techniques employed are faulty or because the anticipated expenditures were—for any number of reasons—not made in fact. In some periods in the past there have been marked differences between estimates of anticipated expenditures and actual expenditures for the same period, generally due to unanticipated develop- ments, such as substantial price changes or the outbreak of Korean hostilities, which caused businessmen to change their plans. In the postwar period the deviations between actual and anticipated expenditures have ranged from 1 to 15 percent. References.—These estimates are published quarterly in Department of Commerce press releases and in the Survey of Current Business and in a special statistical release of the SEC. For a fuller description of the methods employed in making the estimates and of the latest revisions in the series, see the December 1951 and August 1952 issues of the Survey of Current Business. ^ 33 NEW CONSTRUCTION Description of series.—This series represents the field surveys to reflect construction costs. These monthly dollar value of new construction put in estimates of valuation of work started are then place. A seasonally adjusted series is also published translated into estimates of the value of work put currently. The Business and Defense Services in place by the application of typical progress patAdministration, Department of Commerce, and the terns which have been developed for different types Bureau of Labor Statistics, Department of Labor, and sizes of projects by surveying actual projects. are jointly responsible for the series, with the former The second method—reports of physical progress— having primary responsibility for private non- provides the basis for estimates of construction activresidential construction and the latter for private ity on most Federal public-construction projects as residential and all public construction. well as on some State and local jobs receiving Federal Construction covers the erection of fixed structures aid. Progress reports are supplied by the Federal and utilities. It includes building and nonbuilding agencies administering the various programs. structures such as dams, reservoirs, docks, highways, The third method—based on financial reports—is airfields, and utility lines. Installed service facilities used for estimating most utility construction. The which become integral parts of structures are in- method is to apply a monthly trend pattern to an cluded, but movable equipment and machinery are estimated annual total based on the previous year's not included. Drilling of oil, gas, and water wells, level and other information on anticipated activity. digging and shoring of mines, and operations which The trend data are based on Dodge reports of conare an integral part of farming such as plowing, tract awards and quarterly reports of some types of terracing, and digging drainage ditches, are not companies to the Securities and Exchange Commisconsidered as construction. Major additions and sion. These monthly estimates are revised when alterations are counted as new construction, but the financial reports become available after the end maintenance and repairs are not. of the year. Construction expenditure estimates for The distinction between private and Federal, telephone and telegraph are based on monthly estiState, and local public construction is made on the mates received from the companies. basis of ownership, not source of funds. ResidenMonthly estimates of farm construction are tial construction includes nonhousekeeping facilities prepared by projecting annual estimates for the such as hotels and dormitories as well as dwelling preceding year on the basis of the trend of farm units. income and applying a seasonal pattern to the annual Statistical procedures.—Three general methods aretotals. used in making the estimates of new construction Relation to other series.—This series is one of the activity, depending on the availability of sources of components in the Gross National Product series. data on different types of construction. The definition of construction used in the New The first method—converting data on work Construction series is more inclusive than that in started to estimates of work put in place—is used some of the series pertaining to labor. The Nonfor most types of private and non-Federal public agricultural Employment series contains a comconstruction. Information compiled by the F. W. ponent for employment in contract construction Dodge Corp. on contract awards for private non- only, excluding employment on construction perresidential and State and local public construction formed by force account. The series on Average in the 37 Eastern States is adjusted to allow for Weekly Hours and Average Hourly and Weekly projects not included in the Dodge reports—chiefly Earnings cover contract construction of buildings Small projects and work done by a firm's own force. only. Aliowance is also made for construction in 11 Western Uses and limitations.—Although the New ConStates not covered by Dodge by applying the ratio struction series indicates the current volume of this of valuation of building authorized in these States segment of economic activity, it does not serve the to the total valuation of permits in the entire country same purpose as would a series on new work started. for each of several types of construction. An esti- The future trend in the series is determined to a mate of the valuation of dwelling units started is considerable extent by past commitments made. obtained by multiplying the number of units reThe figures cannot be used as an indicator of the ported in the New Housing Starts series (p. 36) by physical volume of construction without extensive valuation figures reported in building permits, the adjustments for changes in prices and wage rates, latter having been adjusted on the basis of periodic technological changes, and other relevant factors. 34 New Construction [Monthly average, millions of dollars] Total new construction Year 1915 1916 1917 1918 1919 1920 1921. 1922 1923 1924 1925. 1926 1927 1928 1929 1930 1931 1932 1933 1934 1935 1936 1937 1938 1939 1940 1941 1942 1943 1944 1945 1946 1947. 1948 1950. 1951 1952 — • — - : - _ : - 272 321 381 426 525 562 500 637 778 867 953 1, 007 1, 003 970 899 728 536 295 240 310 353 541 5»3 582 683 723 996 1,173 692 438 469 1, 000 1, 391 1, 806 .1, 899 2, 371 2, 575 2, 720 Private construction Total private 212 262 274 240 360 450 370 497 642 709 775 828 802 763 692 490 314 140 103 126 167 248 325 297 366 421 517 285 165 182 270 803 1, 105 1, 404 •1, 365 1, 788 1, 797 1, 818 Residential (nonfarm) 102 115 99 76 154 168 175 280 367 422 460 467 430 397 302 173 130 52 39 52 84 130 156 166 223 249 292 143 74 68 92 335 526 715 689 1, 050 914 925 Federal, State, and local 1 Other 110 147 175 164 206 282 195 217 276 287 315 361 372 365 390 317 184 87 63 74 82 118 169 131 142 172 225 142 91 114 178 469 579 689 676 738 883 893 60 59 107 186 165 113 130 140 135 158 178 179 201 207 207 238 222 155 137 184 186 293 258 285 317 302 479 888 527 256 200 197 287 402 534 583 778 902 i Includes public residential construction. NOTE.—Detail will not necessarily add to totals because of rounding. Monthly data are available beginning with 1939. Sources: Department of Commerce and Department of Labor. Also, since the series does not include maintenance factors as weather or the labor and materials supply and repair, it cannot be related directly to the total situation. The indexes used in adjusting to eliminate seasonal variation' may also be obsolete. use of construction labor and materials. References.—Data used in this series are published Because of the many different sources of data, and the various estimating procedures used, the error in in more detail by type of construction, ownership, the estimates cannot be statistically measured. and geographic location in Construction and Building Year-to-year trends are probably quite good but Materials, a monthly publication of the Department caution should be exercised in drawing conclusions of Commerce, and in Construction, a monthly publication of the Bureau of Labor Statistics. from relatively small month-to-month changes. More detailed descriptions of the sources of data While extensive adjustments are made for undercoverage of the source data now used, there is no used and the methods of compiling the estimates of satisfactory factual basis for making these adjust- expenditures for new construction are contained in a ments, and much reliance is placed on judgment and supplement to Construction and Building Materials opinion. The construction patterns used in translat- published each May, and in an article on "Estimating work started into work put in place may be obso- ing Expenditures for New Construction" published lete and do not reflect short-run changes due to such in the Monthly Labor Review for February 1950. 35 NEW HOUSING STARTS Description of series.—This series, prepared by the an estimate of the number of private units started Bureau of Labor Statistics, represents the number in rural non-permit-issuing places. Thisfigureadded of nonfarm dwelling units on which construction is to that for permit-issuing places gives the total number of private nonfarm units started. started in the United States each month. Information on number of public units started is For the purpose of this series the dwelling unit is defined as a dwelling place containing permanent obtained directly from the sponsoring Federal, State, cooking facilities, i. e., accommodations with house- and local agencies. Thisfigureadded to the estimate keeping facilities designed for family living. Units for private units gives the estimate of the total such as transient hotels and dormitories which lack number of nonfarm dwelling units started each housekeeping facilities and such dwellings as trailers, month. The seasonally adjusted annual rate of starts of houseboats, sheds, and shacks are not included. Temporary dwellings built just before and during private units published currently is computed each World War II and the temporary reuse units built month by dividing the estimate of private starts for during the veterans' emergency housing program of that month by the respective seasonal index and 1946-47 are not included. multiplying the result by 12. Dwelling units are classified as public or private In order to obtain a preliminary estimate by 15 on the basis of ownership. Those owned by agen- days following the end of the month, all permit cies of Federal, State, or local governments are reports received at that time, supplemented by telecounted as public. graphic and telephone reports as necessary, are Statistical procedures.—Each month a question-classified into estimating cells. The percent change naire is mailed to some 6,000 local government offi- from the previous month is computed for identical cials throughout the country who issue building per- reporting places and thisfigureis applied to all places mits. About 2,500 of these are in urban places and in the class, except all large cities and high activity the rest are in incorporated places under 2,500 popu- places for which actual reports are required. Since lation, plus some counties and townships which the field surveys in non-permit-issuing areas are not require permits. Information is requested, among completed in time, a preliminary estimate for such other things, on the number of dwelling units for areas is made by projecting the previous month's which building permits were issued during the figure on the basis of the trend shown by rural nonmonth. farm places for which permits are issued. Reports from permit-issuing places are classified Relation to other series.—Data compiled for this by type of place, size, geographic area, and whether series are used in the preparation of estimates for inside or outside a metropolitan area. Reports in the series on New Construction, described above. each class are weighted to account for places not The series on New Housing Starts has a limited reporting, and added to give the total number of relationship to Census of Housing figures. Units units for which permits were issued. Adjustments started should not be added to Census inventory are made to allow for difference in time between figures without an adjustment to allow time for issuance of permit and start of construction and for completion. Also, although new construction usually permits not used. The result is an estimate of pri- accounts for the greater part of the difference in invate units started in permit-issuing places. ventory reported in successive housing censuses, there Information on new housing starts in rural non- are other changes too, such as demolition, disaster farm portions of the country not covered by building losses, additions and losses due to conversions, and permits is obtained byfieldsurveys in the non-permit- changes in classification as farm or nonfarm. The issuing parts of a sample of 96 counties. This sample census also includes certain types of places where was selected by classifying all counties into 96 groups people live which would not be counted as dwelling according to such characteristics as size, whether units under the definition for the New Housing more urban or rural in character, winter temperature, Starts series. extent of previous building activity, and racial comThe Bureau of Labor Statistics also publishes data position of the population, and drawing one county on building authorized for all reporting places. at random from each group. The number of starts These figures differ from the New Housing Starts reported in each sample county is weighted to rep- series in that they represent totals taken from buildresent all counties in the group from which it was ing permit reports without any adjustment for lag drawn, and the weighted figures are added to give and lapse. 36 New Housing Starts New nonfarm housing units started Year Publicly owned Total 1920 1921 1922 1923 1924 247, 449, 716, 871, 893, 000 000 000 000 000 1925 1926 1927 1928 1929 937, 849, 810, 753, 509, 000 000 000 000 000 1930 1931 1932 1933 1934, 330, 254, 134, 93, 126, 000 000 000 000 000 1935 1936. 1937. 1938. 1939. 221, 319, 336, 406, 515, 000 000 000 000 000 5, 14, 3, 6, 56, 300 800 600 700 600 1940. 1941. 1942. 1943. 1944. 602, 706, 356, 191, 141, 600 100 000 000 800 73, 86, 54, 7, 3, 000 600 800 300 100 1945. 1946. 1947. 1948. 1949. 209, 670, 849, 931, 1, 025, 300 500 000 600 100 1, 8, 3, 18, 36, 200 000 400 100 300 1950. 1951. 1952. 1, 396, 000 1, 091, 300 1, 127, 000 43, 800 71, 200 58, 500 NOTE.—Monthly data are available beginning with 1939. Source: Department of Labor. Uses and limitations.—This series serves as an im-run changes in the time of starting construction after portant guide in the formulation of national housing permits are issued, and use of obsolete data in policy and as an indicator of a substantial part of all classifying areas into the various groups used in the building activity and related economic trends. One estimating procedure. The latter is in process of deficiency, which affects its use as a timely indicator, being corrected by rebasing the classifications on is the fact that the revised estimate, made 3% months more up-to-date information, and the estimating after the month affected, may differ fairly substan- procedure for both permit and nonpermit areas is tially from the preliminary estimate. For the 4-year being improved. period 1949-52 these changes averaged 3.2 percent, References.—Data presented in this series are pubbut ranged from an increase of 12.8 percent in the lished" in somewhat greater detail in Construction, final estimate over the preliminary to a decrease of 6.1 published monthly by the Bureau of Labor Statistics. percent. Increases have been slightly more frequent A more detailed technical description of the methods and larger than decreases. used was presented in an article on "Estimating NaThe revised or final estimates are subject to two tional Housing Volume" in the October 1949 issue of kinds of errors. Thefirst,amounting to about 2 perthe Monthly Labor Review. The seasonal adjustcent, is error due to sampling in nonpermit places and ment is described in more detail in an article on lack of complete information reported from permitissuing places. The amount of the second type of "Method of Compiling Seasonally Adjusted Annual error cannot be measured. It stems from a variety Rates of Housing Starts" in the August 1952 issue of of sources, such as building without permits, short- Construction. 37 INVENTORIES AND SALES ventories series are important economic indicators, reflecting the level of economic activity at the three major stages of the distributive process. The sales Description of series.—Total business sales and series reflect the demand for goods and services at inventories are estimated monthly by the Office of these three stages, and constitute a basic measure of Business Economics, Department of Commerce, by the state of business for the periods covered. The summing the estimates computed separately for inventories series reflect the net result of a combinamanufacturing, retail trade and wholesale trade. tion of at least two factors, viz, the effect of recent The sales estimates include all business receipts of actual sales levels on the stocks of sellers at various the reporting companies, not just receipts from sale stages of distribution and the sales levels expected of merchandise. In the manufacturers' series, in- by these sellers during the immediate future. ventories are valued at book value. In the retail and The monthly estimates are tested against more wholesale trade series, inventories are valued at cost. comprehensive data when those data become availThe estimates are adjusted for seasonal variation. able at some later time. The estimates for such Statistical procedures.—The estimates of manu- aggregates as total manufactures' sales have in the facturers' and wholesale monthly sales and end-of- past proved generally accurate, but preliminary month inventories are made by extrapolating bench- estimates, especially, are subject to changes. mark estimates: the Internal Revenue Service's References.—Sales and inventory data for manuStatistics of Income, 1949, Part II, for manufacturers,facturers, wholesale trade and retail trade are and a modified 1948 Census of Wholesale Trade base published monthly in the form of press releases and for wholesalers. As new annual data become avail- in the Survey of Current Business. Retail sales able the benchmark estimates are extrapolated to estimates are also published in a separate Monthly more recent annual estimates which in turn are Retail Trade report by the Bureau of the Census. extrapolated on the basis of monthly data reported More complete descriptions of the various series to the Census Bureau and OBE. The estimates are have been presented in issues of the Survey of Current revised as more comprehensive data become availBusiness: for Manufacturers, October 1951, October able. A sample survey being initiated by Census 1952, and December 1953; for Wholesale Trade, will soon provide direct estimates for wholesale trade. August 1948, October 1951, October 1952, and Monthly estimates of retail sales, unadjusted for December 1953; and for Retail Trade, September seasonal variation, are derived directly from a 1952 and November 1952. The Bureau of the monthly sample survey conducted by the Census Census has also issued a "Description of the Sample Bureau. A random sample, stratified by size and for the Monthly Retail Trade Report." industry group, is used. The estimates are computed directly from the reported sales of stores in Department Stores the sample essentially by weighting the reported Description of series.—Monthly indexes of departsales of each member of the sample by a value dependent upon its probability of selection. These ment store daily average sales and end-of-month inestimates are not linked to a benchmark. Adjust- ventories are prepared as a joint product of the Federal Reserve Board's Division of Research and ments for seasonal variation are made by OBE. In attempting to relate these series to each other, Statistics and the research departments of the 12 it must be recognized that the different basic units Federal Reserve district banks. The coverage and of measurement used (e. g., company or establish- collection methods and the procedures used in comment) can affect the totals, and to a lesser extent puting these indexes are described in detail in the the movements, which a given series reflects. For December 1951 issue of the Federal Reserve Bulletin. example, the wholesale trade and retail trade sales Relation to other series.—'The index of departmentseries described above are based upon the establish- store sales is closely related in scope to the^Comment unit of classification, whereas the manufac- merce (Census and Office of Business Economics) turers' sales series is based upon the company unit series on department-store sales. The series are not of classification. The Office of Business Economics completely comparable. The Commerce series inadjusts the wholesale series to remove the major clude sales taxes in the total receipts figure; the sources of duplication so that they can be summed Federal Reserve sales index is based upon a receipts to obtain a series for total business sales. figure from which sales taxes are excluded. The Uses and limitations.—The monthly sales and in- Census dollar-volume series, which is unadjusted 44 Total Business, Retail, and Manufacturing Inventories and Sales Total business 1 Inventories 3 Year Sales» Retail Inventories 8 Sales 5 Manufacturing Inventories 3 Sales * Department stores New orders 3 Millions of dollars 1925 1926 1927 1928 1929 1930 1931__ 1932 1933 1934.. 1935 1936 1937.. 1938 1939 1940 1941 1942 1943 1944 1945-. 1946 19471948 1949.. I960.. 1951 1952 (5) (fi) W (fi) „ (fi) (5) (fi) (fi) (6) (fi) (6) (6) 18, 920 20, 051 22, 176 28, 780 31, 091 31, 343 31, 059 30, 893 42, 942 50, 605 55, 647 52, 264 62, 423 8 74, 059 74, 757 m w w (B) m «cfij w « « m w « 10, 802 12, 134 15, 811 18, 623 21, 920 23, 785 23, 852 27, 150 33, 156 36, 438 34, 664 39, 425 • 44, 454 45, 554 (5) (fi) « (6) (6) w (6) (') (fi) (6) (6) w « 5, 276 5, 534 6, 119 7, 776 8, 023 7, 561 7, 640 7, 948 11, 852 14, 060 15, 828 15, 311 18, 652 • 20, 754 20, 804 « (6) (5) (fi) (6) (6) (fi) (fi) (5) (6) (5) (5) (fi) (fi) 3, 503 3, 865 4, 606 4, 768 5, 270 5, 851 6, 503 8, 541 9, 967 10, 877 10, 893 11, 974 fl 13, 185 13, 674 Inventories 4 Sales 8 Index 1947-49=100 (5) 12, 466 12, 089 12, 206 12, 775 11, 265 9, 105 7, 332 8, 146 8, 718 9, 098 10, 676 12, 012 10, 750 11, 465 12, 819 16, 960 19, 287 20, 098 19, 507 18, 390 24, 498 28, 920 31, 734 28, 972 34, 118 43, 039 43, 824 (5) 5, 137 5, 225 5,488 5, 859 4, 759 3, 585 2, 565 2, 857 3,601 4, 194 5, 008 5, 485 4, 487 5, 112 5, 859 8, 172 10, 430 12, 820 13, 782 12, 873 12, 617 15, 917 17, 630 16, 416 19, 312 22, 334 23, 043 (5) (5) (fi) (8) (6> (6) (5) (5) (6) w (5) (5) (5) (4) 5, 354 6, 806 9, 803 13, 345 12, 705 11, 906 10, 532 13, 694 15, 622 17, 350 15, 903 20, 967 24, 431 23, 603 48 48 48 48 48 44 39 31 29 31 31 33 39 35 35 38 46 63 55 58 59 77 93 107 100 109 129 118 36 37 37 37 38 35 32 24 24 27 29 33 35 32 35 37 44 50 56 62 70 90 98 104 98 105 109 110 * Also includes -wholesale, rot shown separately in this table. Revised salesfiguresfor manufacturing and wholesale trade will appear in the December 1953, Surrey of Current Business; revised inventoryfiguresfor manufacturing and wholesale and retail trade will appear in the January 1954 issue of the Survey. 1 Book value, end of period, seasonally adjusted. i Monthly average for year. < Average of end-of-month book value. • Not available. • Revised series beginning with 1951; not comparable with previous data. See Survey of Current Business, September and November, 1952, for detail. NOTE.—Monthly data are available beginning with 1919 for department stores and beginning with 1939 for all others. Also, quarterly data for manufacturing inventories and sales are available beginning with 1926. Sources: Department of Commerce and Board of Governors of the Federal Beserve System. for seasonal variation, measures total sales during a Considerable use is made of the indexes at the local calendar month, whereas the Federal Reserve unad- level, especially in the department-store field. The department-store sales and inventories injusted index measures daily average- sales on the trading days in the month. All other things being dexes are useful as indicators of the relative sales and equal, the Census estimates will vary with the num- inventories positions of this limited, although imber of trading days in the month; the department- portant, segment of retail trade. However, one store sales index should not be affected by changes should not attribute to the department-store indexes in the number of trading days in the month. OBE the characteristics of all retail trade. Comparison of month-to-month changes in department-store adjusts the Census series for seasonal variation and sales with month-to-month changes in total retail for number of trading days in the month. The sales shows that, while changes in the two series have Commerce adjusted dollar series is, therefore, com- been almost always in the same direction, the magniparable in this respect with the Federal Reserve tudes of the changes are substantially different for a adjusted index of department-store sales. majority of the months for which data are available. Uses and limitations.—Economic Indicators pub- References.—The indexes of department-store sales lishes the national indexes of department-store sales and inventories are published monthly in the Federal and inventories. Indexes for the 12 Federal Re- Reserve Bulletin. A detailed description of the series serve bank districts and for some cities or areas with- appeared in the December 1951 issue of the Bulletin, in those districts, as well as for the Nation, are com- and an explanation of "Adjustment for Seasonal puted and published by the Federal Reserve System. Variation" in the June 1941 issue. 39 MERCHANDISE EXPORTS AND IMP Description of series.—This monthly Bureau of the Census series on exports gives the value of merchandise (except in-transit merchandise) shipped from the United States to foreign countries. Exports of Alaska, Hawaii, and Puerto Rico to foreign countries are shown as United States exports. Shipments between the United States and its Territories and possessions are not regarded as exports or imports. Both Government and non-Government exports are included. The former include Mutual Security program military and economic aid, and Department of the Army civilian supply shipments, but shipments to United States Armed Forces and diplomatic missions abroad for their own use are excluded. Also excluded are exports of gold and silver, oil and coal bunkers laden at United States ports on vessels in foreign trade, and a number of items of relatively small importance such as lowvalued or noncommercial shipments by mail and gifts valued below $100. Except for Department of Defense shipments as explained below, exportfiguresare obtained from the Shippers' Export Declaration which exporters are required to file with the collectors of customs. These shipments are valued at the time and place of export—that is, actual selling price, or cost if not sold, including inland freight, insurance and other charges to the place of export. Transportation and other costs beyond the United States port of exportation are excluded. For exports made by the Department of Defense of grant-aid military equipment and supplies under the Mutual Security Program and for other Department of Defense shipments such as those under the Civilian Supply Program, information is compiled by the Bureau of the Census from the records of the Department of Defense. In most instances, these records show values f. o. b. point of origin. These are adjusted to show value at the United States port of exportation. The monthly series on imports gives the value of "general imports" into the United States, that is, merchandise released from customs custody immediately upon arrival, plus merchandise entered into customs bonded warehouses on arrival. As in the case of exports, Alaska, Hawaii, and Puerto Rico are included with continental United States, and both Government and non-Government shipments are recorded. Similarly, the exclusions with respect to in-transit shipments, gold and silver, and low-value items apply. Imports are valued in accordance with the Tariff Act of 1930 which provides that the value of imported merchandise shall be the foreign or export 40 value, whichever is higher. In general, they approximate those f. o. b. the exporting country. Transportation costs and United States customs duties are therefore excluded. The values given in the published statistics are those reported by importers on the Bureau of Customs Import Entry Form. Relation to other series.—Concurrently with the publication of monthly totals for exports (including reexports) and general imports, the Bureau of the Census also shows exports of domestic merchandise and imports for consumption. The latter includes imports for immediate consumption, plus withdrawals for consumption from customs bonded warehouses. The difference between total merchandise exports and imports should not be confused with the more inclusive Gross National Product series of Net Foreign Investment, which is a measure of the excess of goods and services transferred to foreigners over those acquired from foreigners (see p. 4). Uses and limitations.—These overall series provide accurate monthly indicators of the movement of merchandise exports and imports. They do not distinguish between Government and non-Government transactions. Although the exports are divided into "Grant-aid" and "Excluding grant-aid," the latter also includes some Government-sponsored exports, as noted in the table. The import totals include private shipments and those under Government sponsorship, such as purchases of strategic materials and reverse lend-lease. When United States trade statistics are compared with those of other countries, special attention needs to be given to the extent to which the series being compared differ as to valuation and coverage. Changes in exports relative to imports may indicate significant changes in our merchandise trade with other countries, but do not necessarily reflect changes in the balance of payments of the United States, which must take nonmerchandise items into account. References.—-Preliminary totals for exports (including reexports) and general imports are published monthly in the Bureau of Census release, FT 900-P, "Preliminary (Estimated) Export and Import Totals." Compiled totals for exports and general imports, exports of domestic merchandise, imports for consumption, and Department of Defense shipments of grant-aid military equipment and supplies are published shortly afterward in the monthly release FT 900, "Total Trade." Cumulative totals are provided in the "Quarterly Summary of Foreign Commerce of the United States," which also contains index numbers for the several export and import series. Detailed commodity by country Merchandise Exports and Imports [Monthly average, millions of dollars] Merchandise exports Year Total1 1915 1916 1917 1918 1919 1920 1921 1922 1923 1924 1925. 1926 1927 1928 1929 1930 1931 1932 1933 1934 1935 1936 1937 1938. 1939 1940 1941. 1942 1943 1944 1945 1946 1947 1948 1949 1950 1951. 19521 .... Grant-aid shipments2 296 457 520 512 660 686 374 319 347 383 409 401 405 427 437 320 202 134 140 178 190 205 279 258 265 335 429 673 1, 080 1, 188 817 812 1, 278 1, 054 1,004 856 1, 253 1, 265 62 411 863 942 463 54 96 « (3) 24 89 166 Excluding grant-aid shipments 367 262 217 247 354 757 1, 182 (3) (3) 833 1, 164 1, 099 Merchandise imports Excess of exports ( + ) or imports (—) Total 148 199 246 253 325 440 209 259 316 301 352 369 349 341 367 255 174 110 121 138 171 202 257 163 193 219 279 230 282 327 347 412 480 594 552 738 914 893 + 148 + 258 + 274 + 259 + 335 + 246 + 165 + 60 + 31 + 82 + 57 + 32 + 56 + 86 + 70 + 65 + 28 + 24 + 19 + 40 + 19 +3 + 22 + 95 +72 + 116 + 150 + 443 + 798 + 861 +470 +400 + 798 + 460 +452 + 118 + 339 + 372 Excluding grant-aid shipments + 88 +32 -65 -80 +7 + 345 + 702 (3) P) + 95 +250 + 206 1 Includes shipments under special programs such as those grant-aid programs listed in footnote1 below as well as other grant-aid programs such as ECA (Marshall Plan); other less important programs such as Surplus Incentive Material, Reorientation and Rehabilitation programs; and programs such as UNRRA, International Refugee Organization, etc. which were grant-aid only in part. 3 Except for Army Civilian Supply exports for 1943-46 for which information is not available,-the figures shown for 1947 and prior years include exports under the following programs (dates shown are the approximate periods the programs were in operation): Lend-lease (1941-47); Greek-Turkish Aid (1947-52); Unite^ States Foreign Relief <1947—4S>; Interim Aid (1947-48); and Army Civilian Supply (1943-present). Figures are not shown for the years 1948-49 because separate information on ECA (Marshall Plan) economic aid exports is not available and these shipments represented most of the grant-aid shipments during that period. Figures for the years 1950-52 include only the Department of Defense shipments of grant-aid military supplies and equipment under the Mutual Security Program—the only important grant-aid program during that period for which separate export information is available. During this period ECA and Mutual Security Program economic aid exports were important, but by 1952 they were much less important than the military grant-aid exports shown. Army Civilian Supply shipments were also relatively unimportant by 1952. More precise information on military and other grant-aid extended to other countries by the United States is provided in the baJancc of payments statistics. »Not available. NOTE.—Monthly data are available for all years shown In table. Source: Foreign Commerce and Navigation of the United States and other Bureau of the Census publications and tabulations. data are also published by the Census Bureau. A monthly pamphlet, "Foreign Trade Statistics Notes/' contains supplementary information on such items as unusual transactions appearing in the statistics, changes in the types of shipments included in the statistics, special problems of valuation, commodity classification, and the like. A comprehensive dis- cussion of the scope and content of United States foreign trade and shipping statistics is available in Foreign Commerce and Navigation of the United States, last published in 1946. A complete list of all Census publications in the field of foreign trade is available in the Catalog of United States Foreign Trade Statistical Publications. 41 PURCHASING POWER NATIONAL INCOME Description of series.—National income is the plement to the Survey of Current Business, 1951. The aggregate of earnings by labor and property from the following indicate briefly the types of estimating current production of goods and services by the procedures used: Nation's economy. It is the sum of five major "Compensation of Employees"—reliable data items: (1) compensation of employees, (2) proprieare available each year from the social-security tors' income, (3) rental income, (4) net interest, and system, with current monthly estimates resting (5) corporate profits. chiefly on employer reports to the Bureau of "Compensation of employees" is the sum of wages, Labor Statistics on employment and earnings. salaries, and certain supplements, such as employer "Proprietors' Income"—estimated from incontributions to social insurance. come tax returns to the Internal Revenue Ser"Proprietors' income" measures the monetary vice, usually obtained every second year, with earnings and income in kind of sole proprietorships current quarterly data derived from analysis of (including doctors, lawyers, and other self-employed), trends in sales and corporate profits in indipartnerships and producers' cooperatives, exclusive of vidual industries. capital gains or losses. The supplementary income "Rental Income"—estimated from a variety which individuals obtain from renting property does of Census and BLS data on average rents paid not appear here, but under rental income of persons. at various dates and Census and Internal "Rental income" consists of (1) net money income Revenue Service data on the distribution of of persons from rental of real property, (2) estimated property ownership and rental income between net rental value to homeowners of their homes, and persons and business. (3) royalties received by persons from patents, "Net Interest"—estimated from reports to the copyrights, and rights to natural resources. Internal Revenue Service, Bureau of the Cen"Net interest" measures both the money interest sus, Board of Governors of the Federal Reserve and the imputed interest accruing to the Nation's System, and other agencies on interest and debt. residents from private business and from abroad, Relation to othqr series.—The relation of national minus Government interest disbursements to busiincome to gross national product is discussed ness, which appears as part of business incomes. above (p. 4); and the relation to personal income Imputed interest consists of the value of financial is defined below (p. 47). services received by persons without explicit payUses and limitations.—The national income measment and property income withheld by life-insurures earnings from current output and is a useful ance companies and mutual financial intermediaries measure of the rate of flow of such earnings. The on account of persons. "Corporate profits" are the earnings of corpora- movements of this series correspond with movements tions organized for profit, measured before Federal in production. However, the value of the national and State profit taxes, but without deduction of income series lies more in the components than in depletion charges and exclusive of capital gains and the total. It may mean little to know that national losses. (For a more extended discussion of corporate income (unadjusted for price changes) has gone up; but it may be very important to know the relative profits, see the following section.) "Corporate inventory valuation adjustment" contribution of wages and profits to that increase. The chief cautions for use result partly from the measures the excess of the value of change in the volume of corporate inventories (in terms of average definitions used, and partly from the nature of the prices during the period) over the change in terms basic data. With respect to the first, care must be of book values. This adjustment is required since, taken not to interpret movements in the series as as is customary in business accounting, corporate measuring something other than they are intended profits are reported inclusive of inventory profits or to measure. For example, variations in wages and loss, whereas only the value of the real change in profits do not necessarily indicate changes in the inventories is counted as current output in the welfare of workers or in the ability of corporations to national product. provide new capital. For such purposes, these variaStatistical procedures.—The methods of estimation tions must be considered in the light of other factors employed in the very complex area of national income such as the cost of living and the cost of new plant are described in detail in the National Income Sup and equipment. With respect to the second—which 42 National Income [Billions of dollars] Year Total national income Compensation of employees Proprietors' (business, professional, farm) and rental income Corporate profits and inventory valuation adjustment Net interest Total Profits before taxes 1929. 87.4 50. 8 19.7 6.5 10.3 1930. 1931. 1932. 1933 1934. 75.0 58. 9 41.7 39. 6 48. 6 46. 5 39.5 30. 8 29.3 34. 1 15.7 11.8 7.4 7.2 8.7 6. 2 5.9 5.4 5.0 48 -2.0 1935 1936. 1937 1938. 1939. 56. 8 64.7 73. 6 67.4 72.5 37. 1 42. 7 47. 7 44. 7 47.8 12. 1 12. 6 15. 4 14.0 14.7 4.5 4. 5 4.4 4.3 4.2 3.0 4.9 6. 2 4.3 5.8 3.2 5.7 1940. 1941 1942. 1943. 1944. 81.3 103. 8 137. 1 169.7 183.8 51.8 64.3 84.9 109. 2 121. 2 16.3 20. 8 28. 4 32. 8 35. 5 4. 1 4. 1 3.9 3.4 3. 1 9.2 14. 6 19. 9 24.3 24 0 9.3 17.2 21. 1 25. 1 24 3 1945 1946. 1947. 1948. 1949. 182.7 180.3 198.7 223. 5 216. 3 123.0 117. 1 128.0 140.2 139.9 37. 5 42.0 42. 4 47. 3 42. 1 3.0 2.9 3. 5 4.3 5.0 19. 2 18.3 24.7 31.7 29.2 19.7 23. 5 30.5 33. 8 27. 1 1950. 1951. 1952. 240. 6 278.4 291. 6 153.4 178. 9 193. 2 45.4 50.7 51. 2 5.7 6. 4 7.0 36.0 42.4 40.2 41.0 43.7 39. 2 6.6 1. 6 -2.0 1. 1 Inventory valuation adjustment 9. 8 3.3 -.8 -3.0 .2 1.7 6.2 3.3 6. 5 * Less than $0.05 billion. NOTE.—Detail will not necessarily add to totals because of rounding. Quarterly data are available beginning with 1939. Source: Department of Commerce. is particularly applicable to the current data on proprietors' earnings, rental income, net interest, and the inventory valuation adjustment—it should be recognized that many of the available data permit only fair approximations of the phenomena being measured, and therefore too great reliance should not be placed on these statistics as instruments of precise measurement. References.—Quarterly data appear regularly in the statistical section of the Survey of Current Business. For annual data, preliminary estimates appear in the February issue, revised estimates in the July issue. Historical data for 1929-48 appear in the 1951 National Income Supplement to the Survey, and for 1949-52 in the July 1953 issue of the Survey. A detailed discussion of the technical aspects of the estimates is given in the 1951 National Income Supplement. 43 CORPORATE PROFITS Description oj series.—The corporate profits series national income purposes, and profits of these comof the Office of Business Economics, Department of panies are removed from the tax-return tabulations. Since the tax-return tabulations are not available Commerce, contains profits estimates for past years and recent quarters for all United States corporations, until more than 2 years after the close of the year estimates of the distribution of those profits between to which they refer, other bases for the estimates for dividends and retained earnings, and estimates of the most recent 2 years and for quarters must be corporate tax liability. The national income concept used. These estimates for current periods are made of profits of OBE is used in this series. This concept by extrapolating the benchmark estimates, i. e., the of profits differs from the conventional accounting latest estimates based upon Internal Revenue taxconcept of profits (which is used in the Internal return tabulations. The extrapolators are based Revenue Service tabulation of profits and in the upon regular quarterly reports from manufacturing financial reports series of the Federal Trade Com- corporations to FTC and SEC and from publicmission and Securities Exchange Commission) in utility corporations to Federal regulatory agencies, that dividends received by corporations are deducted and upon nongovernmental surveys and miscelfrom profits (and dividends) to obtain unduplicated laneous sources of varying reliability. When the totals reflecting income originating in United States Internal Revenue tabulations of tax returns for a corporations; profits are calculated inclusive of de- given year become available, the estimates for that pletion, which is not considered an element of capital year are revised to conform to the Internal Revenue consumption in the national income and product tabulations. The series on "Corporate tax liability" is derived accounts; capital gains and losses are eliminated from profits because they do not measure gains or losses by procedures generally similar to those described originating in current production; and adjustments for corporate profits. Relation to other series.—-The corporate-profits for international flows affecting profits are made. series is designed primarily to measure the contriThe estimates are based largely on tabulations from bution of corporate profits to the national income. income-tax returns and from reports to the SEC, It is, therefore, as consistent with the concepts and FTC, and other regulatory agencies. other series which are a part of the national income The corporate profits series as initially published accounts as the basic data permit, and can be used are revised to reflect more comprehensive data when in conjunction with the other national income series those data become available. Since the data become (e. g., net interest, proprietors' and rental income, more comprehensive in stages, i. e., more and more compensation of employees, etc.) with confidence of data become available periodically until the complete conceptual comparability. Internal Revenue tabulations are published, several The corporate-profits series is, as it must be, based revisions are made before "final" estimates are pubupon reports from companies rather than establishlished. Some revisions, though minor, are made even ments. This results in some noncomparability with after the tabulations are available. series based upon reports from establishments. Statistical procedures.—The annual data published Furthermore, surveys based upon the establishin the corporate profits series are, except for the 2 or ment unit of classification are not confined to es3 most recent years, based upon tabulations by the tablishments of corporations but include establishInternal Revenue Service of unaudited corporate- ments of other forms of organization as well. The income-tax returns. The data in these tabulations corporate-profits series, or any other series based are adjusted in various ways to make them com- upon company reports, cannot safely be assumed to parable, statistically and conceptually, with other be directly comparable with these establishment entries in the national income accounts. The im- series unless the reports on the different bases have portant accounting conceptual adjustments are sug- been reconciled. These factors are more important gested by the statement above of differences between when series for specific industries are being comthe conventional accounting concept of profits and pared, however, than when the broad aggregates the national income concept. Another important published in Economic Indicators are compared. adjustment of the tabulations is the audit adjustment The series on Expenditures for New Plant and which makes allowance for additional profits dis- Equipment (p. 32) and Manufacturers' Inventories closed by auditing of the income-tax returns by and Sales (p. 38) are also based primarily upon Internal Revenue. Mutual insurance companies company reports. All three series are produced are not considered part of the corporate universe for for recent periods by extrapolating benchmark esti44 Corporate Profits {Billions of dollars] Corporate profits after taxes Corporate profits before taxes Corporate tax liability 9.8 1.4 8.4 5.8 2.6 3.3 8 -3.0 .2 1.7 .8 .5 .4 ,5 .7 2.5 -1.3 -3.4 -.4 1.0 5. 5 4. 1 2. 6 2. 1 2. 6 -3.0 — 5. 4 -6.0 -2. 4 -1. 6 3. 2 5.7 6. 2 3. 3 6.5 1.0 1.4 1. 5 1.0 1. 5 2. 3 4.3 4. 7 2. 3 5.0 2.9 4. 6 4.7 3.2 3.8 6 -.3 9.3 17.2 21. 1 25. 1 24.3 2.9 7.8 11. 7 14. 4 13. 5 6.4 9.4 9.4 10. 6 10.8 4.0 4.5 4.3 4. 5 4.7 2.4 4. 9 5. 1 6.2 6. 1 1945 1946 1947 1948 1949 19. 7 23. 5 30. 5 33.8 27. 1 11.2 9. 6 11.9 13.0 10.8 8. 5 13. 9 18.5 20.7 16.3 4.7 5.8 6. 6 7. 2 7.5 3. 8 8. 1 12.0 13. 5 8.8 1950 1951 1952_ 41.0 43.7 39.2 18.2 23.6 20. 6 22.7 20. 1 18. 6 9. 1 9.2 9. 1 13. 6 10. 9 9.5 Year 1929 1930 1931 1932 1933_ 1934 1935 1936 1937 1938 1939 1940 1941 1942 1943 1944 ... Total Dividend payments Undistributed profits W -.9 1.2 * Less than $0.05 billion. NOTE.—See table p. 43 for profits before taxes and inventory valuation adjustment. Quarterly data are available beginning with 1939. Detail will not necessarily add to totals because of rounding. Source: Department of Commerce. mates based upon Internal Revenue Service tabula- annual estimates for past years. There are two tions of income-tax returns. The Plant and Equip- principal reasons for this: (a) quarterly income ment Expenditures and the Inventories and Sales statements, upon which the quarterly series must be series differ from the corporate-profits series in that based, are inherently less reliable than annual income they cover unincorporated as well as incorporated statements because they are affected by seasonal influences that are not completely accounted for in businesses. Uses and limitations.—The corporate-profits series company reports and (6) wide gaps in the financial is an important economic indicator, reflecting the data available quarterly make the underlying basis state of health of a substantial part of the Nation's of the quarterly estimates weaker than that of the business community. Certain limitations of the annual estimates, even before the Internal Revenue series require that it be used with caution, however. tabulations become available. References:—The corporate-profits series is pub(1) As its title indicates, the series measures only the profits of corporations. It does not, therefore, lished quarterly in the Survey of Current Business. A complete statement of the methods and the portray fully the profit position of all business. (2) The total corporate-profits series is too gen- sources of data used in preparing these estimates is eral to provide any indication of the profit positions presented in the 1951 National Income Supplement of specific industries. In some situations knowledge of the Survey of Current Business, pages 84-90. of the profits experience of specific industries is vital The statement on procedures for preparing recent year and quarterly estimates, described in detail on to correct economic analysis. (3) The quarterly corporate-profits estimates are pages 88-89, is still generally accurate, although less reliable than the annual estimates, especially the some relatively minor revisions have been made. 45 Personal Income [Billions of dollars] Year 1929 Labor income (salaries, Total perwages, and sonal income other labor income)1 50. 5 85. 1 Proprietors' income Farm Dividends and personal Business, interest professional, and rental 1 income Transfer payments 5. 7 14. 1 13.3 1. 5 12. 6 11. 1 9. 1 8. 2 8.6 1. 5 2. 7 2. 2 2. 1 2.2 1930 1931 1932 1933 1934.-, 76. 2 64. 8 49. 3 46. 6 53. 2 46.3 39. 2 30. 5 29. 0 33. 8 3. 9 2.9 1. 7 2. 3 2. 3 11. 8 8.9 5.7 4. 9 6.4 1935 1936 1937 1938 1939 59. 9 68. 4 74. 0 68. 3 72. 6 36. 8 42. 1 45. 9 42. 8 45. 7 4. 9 3. 9 5. 6 4.4 4. 5 7. 3 8. 8 9.8 9. 6 10. 2 8. 6 10. 1 10. 3 8. 7 9. 2 2.4 3. 5 2. 4 2.8 3.0 1940 1941 19421943 1944 78. 3 95. 3 122. 7 150. 3 165.9 49. 5 61. 5 81.4 104. 5 116. 2 4. 9 6.9 10. 5 11.8 11.8 11.3 13.9 18. 0 21. 1 23.7 9.4 9.9 9. 7 10. 0 10. 6 3. 1 3. 1 3.2 3.0 3. 6 1945 1946 1947 19481949 171. 9 177. 7 191. 0 209. 5 205.9 116. 9 111. 1 122. 3 134. 9 134.2 12. 5 14. 8 15. 6 17. 7 12.8 25.0 27. 2 26. 8 29. 6 29.3 11. 4 13. 2 14. 5 16. 0 17. 1 6.2 11.4 11.8 11.3 12.4 1950 1951 1952 226. 7 254. 3 269. 7 146. 5 170. 7 184. 9 13. 3 15. 5 14.8 32. 1 35. 2 36. 1 19. 6 20. 5 21. 0 15. 1 12. 5 12. 9 i Excludes social insurance contributions of employees and, beginning January 1952, of self-employed persons. NOTE.—Detail will not necessarily add to totals because of rounding. Monthly data are available beginning with 1929. ' Source: Department of Commerce. PERSONAL INCOME and PER CAPITA DISPOSABLE INCOME "Dividends and personal interest" is the sum of (Discussion of these two series is here combined in money dividends and the net interest component of one section, because of their close relationship.) Description of series.—Personal income is composed national income, plus net interest paid by the of income received currently by individuals, by un- Government. "Transfer payments" include payments not resultincorporated businesses, and by nonprofit institutions (including pension, trust, and welfare funds). ing from current production, such as social-security This income is here divided into labor income, pro- benefits, military pensions, corporate gifts to nonprietors' income, dividends and personal interest, and profit institutions, direct relief, and consumer bad transfer payments. Although most of the income is debts. This component does not include Governin monetary form, there are important exceptions— ment interest. chiefly estimated rental value to owner-occupants of Disposable personal income is equal to Pertheir homes and value of food consumed on farms. sonal Income less taxes on individuals (including "Labor income" is principally wages and salaries, income, property, and other taxes not deductible as less contributions which are made from employees' business expense), customs receipts, and other genpay for social security. eral Government revenues received from individuals "Proprietors' income" is the sum of unincorporated as individuals. business and rental income as defined above in the "Disposable personal income in 1952 prices" is section on National Income (p. 42). In the present the preceding series valued in 1952 prices by dividseries, however, the income of farm operators is ing the series in current dollars by an overall shown separately. price index (with 1952—100) for personal consump46 Per Capita Disposable Income Total disposable personal Per capita disposable perincome (billions of dollars)1 sonal income (dollars)1 Year Current prices 1952 prices 3 Current prices 1952 prices 3 Population (thousands)3 1929 82. 5 127.3 677 1, 045 121, 881 1930 1931. 1932 1933 1934 73. 7 63. 0 47. 8 45.2 51. 6 119. 1 113. 5 97. 8 97. 0 104.7 598 507 383 360 408 966 914 783 773 828 123, 188 124, 149 124, 949 125, 690 126, 485 1935 1936 1937 1938 1939 58.0 66. 1 71. 1 65. 5 70.2 115. 5 130. 6 135.4 127. 7 138.2 455 516 551 504 536 906 1, 020 1, 050 982 1, 055 127, 362 128, 181 128, 961 129, 969 131, 028 1940 1941 1942 1943 1944 75.7 92. 0 116. 7 132.4 147.0 147. 9 169.4 191. 3 198. 5 210. 3 573 690 865 968 1, 062 1, 119 1,271 1,418 1, 451 1, 519 132, 122 133, 402 134, 860 136, 739 138, 397 1945 1946 1947 1948 1949 151. 1 158. 9 169. 5 188.4 187.2 208. 7 204.2 198. 2 208. 6 209. 9 1, 080 1, 124 1, 176 1, 285 1, 255 1, 1, 1, 1, 1, 492 445 375 423 407 139, 928 141, 389 144, 126 146, 631 149, 188 1950 1951 1952 205. 8 225. 0 235. 0 225. 7 229. 6 235.0 1, 357 1, 458 1, 497 1, 488 1, 488 1, 497 151, 677 154, 360 156, 981 * Income less taxes. s Dollar estimates in current prices divided by an overall implicit price index for personal consumption expenditures. This price index is based on Department of Commerce data, shifted from a 1939 base. * Including armed forces overseas. Annual data as of July 1. NOTE,—Quarterly data are available beginning with 1939. Sources: Department of Commerce and Council of Economic Advisers. tion expenditures. As a result, the income difference, for example, between 1939 and 1952 is far less in real terms than is indicated by comparing the current dollar estimates of 70.2 billion and 235 billion, respectively. Prices were so much lower in 1939 that the income for that year should almost be doubled for comparison with real income in 1952. "Per capita disposable personal income" is obtained simply by dividing the disposable personal income series by the total midyear population. Relation to other series.—Personal income differs from national income by including transfer payments and Government interest and by excluding contributions to social insurance (by employee and employer), the inventory valuation adjustment and corporate profits tax liability and undistributed corporate profits. Uses and limitations.—The estimates for personal income and its components and for disposable income provide a measurement of trends in spending power of individuals. The inclusion of substantial nonmonetary items—imputed rent, interest, food, fuel— should be noted for some purposes, but the effect of including these items should not be overemphasized. They tend to make the income estimates generally more stable, but should have little effect on the ability of the estimates to show when a change is occuring and the direction of the shift. Disposable personal income gives a more direct measure of income available for spending, since it approximates take-home income, than does personal income. For measuring changes, in real terms, in consumers' buying power, the estimates of disposable income in constant prices are to be preferred. References.—Monthly data on personal income and quarterly data on disposable personal income appear regularly in the statistical section of the Survey of Current Business. Preliminary annual estimates appear in the February issue, and revised estimates in the July issue of the Survey. Historical data for 1929-48 appear in the 1951 National Income Supplement to the Survey of Current Business, and for 191952 in the July 1953 issue of the Survey. The supplement also contains a detailed discussion of the statistical procedures used. 47 CONSUMER INCOME, SPENDING, AN ) SAVING Description of the series.—" Disposable personal in- ment stores, sales-tax receipts, and other source data. come" is discussed in the preceding section. Relation to other series.—Estimates of personal con"Personal consumption expenditures" is the sum of money and imputed expenditures made by con- sumption expenditures will show much the same sumers (individuals, nonprofit institutions such as trends from quarter to quarter as the figures for hospitals, etc.) for goods and services. The expen- total retail sales. However, personal consumption diture total covers total purchase cost to consumers, expenditures also include a wide variety of services including general sales taxes. The full cost of auto- and such items as food produced and consumed on mobiles, refrigerators, furniture, and the like is in- farms which are outside of retail trade. Conversely, cluded in the period when sold—quarter or year— retail trade includes some commodity items, such as regardless of when payments are made or completed. building materials, gasoline and trucks, which are The purchase of homes is not included as an expendi- not part of personal consumption expenditures. ture: instead the estimated rental value to the The estimate of personal net saving and the liquid homeowner is included if he occupies the home. savings estimate of the Securities and Exchange Com"Durable goods" are those items which generally mission differ in level and trend. The chief reason last more than 3 years in use. "Nondurable goods" for the difference is the inclusion in the personal net are items with a shorter life. "Services" include saving series (and not in the liquid savings estitelephone, electricity, shoe repair, gas and water, mates) of net purchases of nonfarm residences and and also such items as the expense of handling life net increases in persons' equities in farms and other insurance, and banking services furnished without unincorporated businesses. (For a detailed reconpayment (such as free checks where a minimum ciliation of the two series, see table 6, p. 14, of the balance is maintained). July 1953 issue of the Survey of Current Business.) "Personal net saving" is equal to disposable perUses and limitations.—The estimates of personal sonal income less personal consumption expenditures. consumption expenditures represent a generally useAs such, it conceptually includes not merely cash and ful, reliable measure of trends in consumer purbank deposits but changes in reserves of life-insurance chases. They may be used to study trends in the companies, farmers' purchases of land and tractors, ratio of wages, or more generally of income, to expendietc. ture, and to review the division of the national outStatistical procedures.—Personal consumption ex-put between consumer takings, business capital penditures for goods are estimated for benchmark formation, and Government defense or other exyears from the value of the output of specified items penditures. as reported in the Census of Manufactures, less the The estimates of personal saving are among the portion of this output bought by business and gov- least satisfactory of the significant series which ernment or exported. To the consumer portion of appear in the national income accounts. They are manufactured products is added the value of non- the residual from two larger estimates. The errors manufactured consumer goods (for example, non- and limitations present in the hundreds of seriesf processed foods) to derive producers' output for developed for other purposes, which must be used at consumers. Successive adjustments are added for present in estimating the national income do not transportation, imports and exports, wholesale and completely cancel out. To this extent these errors retail inventory changes, wholesale and retail mark- are transmitted into the saving estimate. Quarter to ups, and sales taxes. Transportation charges are quarter changes are, however, subject to revision as computed from ICC and other data on transporta- better data become available. tion. Wholesale and retail markups are derived from References.—Quarterly data appear in the statisCensus of Business and Internal Revenue Service tical section of the Survey of Current Businessm data. For service items a great variety of sources Preliminary annual estimates appear in the February and procedures are used. issue and revised estimates in the July issue of the Current estimates of consumption expenditures Survey. Historical data for 1929-48 appear in the rest chiefly on the month-to-month trends shown 1951 National Income Supplement to the Survey of by the retail salesfigures,by kind of store, reported Current Business, and for 1949-52 in the July 1953 in the Census Bureau's Monthly Report on Retail Survey. The Supplement also contains a detailed Trade, by Federal Reserve Board data for depart- discussion of the technical aspects of the estimates. 48 Consumer Income, Spending and Saving \ [Billions of dollars] Year 1929 ___ Disposable personal income 1 Less: Personal consumption expenditures Total Durable goods Nondurable goods Services Equals: Personal net saving Net saving as percent of disposable income 82.5 78.8 9. 4 37.7 31. 7 3.7 4.5 1930 1931 1932 1933 1934 73.7 63.0 47.8 45.2 51. 6 70.8 61.2 49.2 46. 3 51. 9 7. 3 5. 6 3. 7 3. 5 4. 3 34. 1 29.0 22.7 22. 3 26.7 29. 5 26. 6 22.8 20. 6 20.9 2.9 1. 8 -1.4 -1.2 -.2 3. 9 2. 9 -2. 9 -2. 6 —. 5 1935 1936 1937 1938 1939 58.0 66. 1 71. 1 65. 5 70.2 56.2 62. 5 67. 1 64.5 67.5 5. 2 6. 4 7. 0 5. 8 6, 7 29.4 32. 9 35.2 34,0 35. 3 21. 7 23. 3 24. 9 24.7 25. 5 1.8 3. 6 3. 9 1.0 2.7 3.0 5.4 5. 5 1. 5 3.8 1940 1941.. 1942 1943--1944 75. 7 92.0 116. 7 132.4 147.0 72. 1 82.3 91.2 102.2 111. 6 7. 9 9. 8 7. 1 6. 8 7. 1 37. 6 44.0 52. 9 61.0 67. 1 26. 6 28.5 31. 2 34. 4 37.4 3.7 9.8 25. 6 30.2 35.4 4. 9 10. 6 21. 9 22.8 24. 1 1945 1946 1947 1948 1949 151. 1 158.9 169. 5 188.4 187.2 123. 1 146. 9 165. 6 177.9 180. 6 8. 5 16. 6 21. 4 22. 9 23. 8 74.9 85.8 95. 1 100. 9 99.2 39. 7 44.5 49. 1 54. 1 57.5 28.0 12.0 3.9 10. 5 6.7 18.5 7. 6 2.3 5. 6 3.6 1950 1951--.. 1952.. 205.8 225.0 235.0 194. 6 208. 1 218. 1 29. 2 27. 3 26. 7 102. 6 113. 4 118.8 62.7 67.4 72.7 11.3 16. 9 16. 9 5. 5 7.5 7.2 »Income less taxes. NOTE.—Detail will not necessarily add to totals because of rounding. Quarterly data are available beginning with 1939. Source: Department of Commerce. 49 FARM INCOME Description of series.—The farm income series, com- keted or the time it was marketed, it sometimes is puted by the Agricultural Marketing Service,1 is a necessary to impute figures on the basis of patterns measure of the amount of cash received by fanners for and relationships found in earlier periods or in census the commodities they sell and for participation in data. In the absence of a midmonth price, a season certain Government farm programs. Estimates are average price is used. When the marketing of an made monthly and for calendar years and are avail- individual commodity is completed and more comable annually back to 1910. The series includes cash plete information becomes available, the monthly receipts from all sales except those from livestock and annual estimates are revised. Cash receipts from farm marketings include sold by one farmer directly to another farmer in the same State. It represents gross receipts of farm moneys received from nonrecourse loans made by operators, including any share going to landlords, the Commodity Credit Corporation in connection without any deduction for expenses incurred. Gov- with price supports. These are included in cash ernment payments included in the series represent receipts in the month in which the loans are made. all money received by farmers directly from the If redeemed later, they are treated as an offset to Federal Government in connection with farm pro- cash receipts in the month in which redeemed. grams, such as rental and benefit, conservation, Slight variations from this procedure are necessary price-adjustment, parity, and production payments. in the case of wheat and cotton. Also the procedure is not applicable to tobacco. These payments to landlords also are included. Estimates of cash farm income are revised as more The series is built up almost entirely from data collected for other purposes. In the past some in- complete data become available, sometimes within a come data have been obtained by interview surveys, few months after they are first published but in any but the surveys have been limited in scope and case at the end of the marketing year. They are infrequent. Consequently, it has been necessary to also revised every 5 years following the agricultural consider agriculture as one big enterprise and to census. No major conceptual change has been made develop income estimates from estimates of quantities in the series since 1936 when" the work on "income marketed and average prices. The basic data are parity" gave impetus to getting more complete and collected by the Agricultural Marketing Service in better income data. As a result the estimates were connection with other series. Information on Gov- extended back to 1910, put on a calendar-year basis, ernment payments comes from the records of the and generally improved in comparability. The Parity Index, which is used to convert the Commodity Stabilization Service (formerly part of farm income series from current dollars to 1952 the Production and Marketing Administration). Approximately 165 commodities or commodity dollars, is discussed above in the section on prices. Relation to other series.—The estimates of cash groups are represented in the series. Cash receipts from "all farm marketings7' and from "livestock and farm income form the basic core of several other livestock products" and "crops" are computed and income series. "Realized gross farm income" is published monthly by States. Monthly estimates obtained by adding to cash farm income the market for 12 commodity groups also are published for the value of home consumption of farm products and the United States. A further breakdown by individual rental value of farm dwellings. By subtracting farm commodities is published for the United States and production expenses one gets the amount of "realized for each State on an annual basis. net income of farm operators." Adjustments of Statistical procedures.—In general, estimates of realized net income for the net change in inventories cash farm income are derived by multiplying quan- held on farms and the addition of farm wages of tities marketed each month by midmonth prices. laborers living on farms gives the "net income of With minor exceptions, this procedure is followed persons on farms from farming." The further commodity by commodity and State by State. addition of farm wages of nonresident laborers, net Calendar-year estimates are a summation of the rent paid to nonfarm landlords, and interest paid on monthly estimates, and United States totals are a farm-mortgage debt provides an estimate of "net summation of the State figures. In case adequate income from agriculture." In most instances, corredata are not available on either the quantity mar- sponding series on a purely cash basis can also be computed. Under the reorganization of the Department of Agriculture which became The series on "realized net income of farm opereffective on November 2, 1953, most statistical functions of the former Bureau ators" differs from the Commerce Department series of Agricultural Economics were reassigned to the Agricultural Marketing Service. on "net income of farm proprietors" to the extent Of 1 50 Farm Income Year 1910 1911 1912 1913, 1914. 1915 1916 1917. 1918. 1919. 1920 1921. 1922 1923. 1924. 1925. 1926. 1927. 1928. 1929. 1930. 1931 1932. 1933. 1934. 1935. 1936. 1937. 1938. 1939. 1940. 1941. 1942. 1943. 1944. 1945. 1946. 1947. 1948. 1949. 1950. 1951. 1952. Farm income Parity index Farm income (monthly av(prices paid, (monthly average, millions interest, taxes, erage, millions of current and wage rates) of 1952 dollars) 1952 = 100 1 dollars) 2 482 465 501 520 503 533 645 895 1, 122 1,214 1, 050 676 715 796 850 918 879 894 916 942 754 531 395 453 563 637 720 763 679 715 755 968 1, 345 1, 667 1, 763 1, 844 2, 111 2, 502 2, 539 2, 344 2, 384 2, 757 2, 721 34 34 35 35 36 37 40 52 60 69 75 54 53 55 56 57 56 55 56 56 53 45 39 38 42 43 43 46 43 43 43 46 53 60 63 66 72 84 91 87 89 98 100 * Converted from the reported base, 1910-14=100, to the base 1952=100. ' Farm income in current dollars divided by parity index on base 1952=100. NOTE—Farm income includes cash receipts from marketings and Government payments. Monthly data are available beginning with 1924, but with the exception of 1950, 1951, and 1952. .they do not agree with the latest annual totals. Source: Department of Agriculture. the adjustments for the net change in farm inven- These other series, however, are prepared only on an annual basis. tories, which are reflected in the latter series. Uses and limitations.—There is widespread interest References.—Current estimates of farm income in estimates of farm income as an important measure appear in The Farm Income Situation published by of the general condition of agriculture. The series is the Agricultural Marketing Service of the Departthe most current indication of the flow of cash funds ment of Agriculture. Historical data can be found to that segment of the economy. Its use is limited in the Department's annual publication, Agricultural though in that it measures gross cash farm income. Statistics. For a detailed discussion of procedures, Because it measures gross cash income, it is not as see The Agricultural Estimating and Reporting Services good a measure of the farmer's economic position as of the United States Department of Agriculture) some of the net income series referred to above. Miscellaneous Publication No. 703. 51 CREDIT, MONEY, AND FEDERAL FINANCE BANK LOANS AND INVESTMENTS Description of series.—"Commercial banks" are in reports for the banking system are available. The general distinguished from other lending institutions June and December estimates are later replaced by by the fact that they accept deposits subject to check "benchmark" figures for all commercial banks. or withdrawal on demand. Mutual savings banks These benchmarks are compiled by the Federal are not included, nor are savings and loan associations Deposit Insurance Corporation on the basis of comor various other financial institutions which do not pulsory "call reports" filed by all banks subject to receive demand deposits even though referred to as Federal supervision (National banks, State member banks. banks, and nonmember insured banks) with one or The "Weekly reporting member banks" comprise another of the Federal bank supervisory agencies; some 400 selected member commercial banks in (or and of information obtained from State banking with head offices in) approximately 100 cities, ac- authorities and other sources for the relatively few counting currently for over half of the total com- uninsured banks. These final June and December mercial banking resources. The cities comprise the figures, being normally for a day other than Wednesmore important banking centers within each Federal day, replace rather than revise the earlier estimates. Reserve district; and within each city the banks Interim monthly estimates are revised only when comprise a voluntary sample, usually accounting for some substantial error of estimate is suggested by over 90 percent of member bank resources. The the benchmarks. coverage of the weekly series was last substantially Prior to 1947 each of the Federal supervisory revised in 1947 and carried back one year, with an agencies prepared separately a series of semiannual increase of about 15 percent in loans and investments "all bank" statistics. Since 1947 a single series has of reporting banks. by agreement been prepared by the FDIC. The The category of "Bank loans" reported for all Federal Reserve monthly estimates for all comcommercial banks covers all loans and discounts. mercial banks have been published only since 1948. The "Business loan" category reported for the weekly Relation to other series.—The Federal Government banks is the major component of bank loans and publishes a variety of statistical series covering all includes commercial, industrial and agricultural or part of the banking system. For purposes of (other than real estate) loans. Monthly estimates general analysis, these will not necessarily lead to for all commercial banks are not available, but the significantly different conclusions, but the differences weekly banks currently account for about 70 percent should be kept in mind. Thus, the all-commercialof all such business loans. bank series should be distinguished from the someMonthly figures shown in both series are as of the what larger "all bank" series which includes some 500 last Wednesday of the month except that final June mutual savings banks; and from various smaller and December figures for "all commercial banks" aggregates such as national banks and insured are as of the last day of the month. commercial banks. The all-commercial-bank aggreStatistical procedures.—The "All commercial bank"gates here are for continental United States, and the and "Weekly reporting member bank" series are unrounded figures differ slightly from totals which closely related. The weekly series is based on include banks in the possessions, published by the weekly reports filed with Federal Reserve banks Comptroller of the Currency and the FDIC. and compiled cooperatively by these banks and the The weekly series covers a substantial segment of Board of Governors. Published figures are simple the total commercial banks and includes most of aggregates for the reporting banks. The monthly the larger banks in larger cities. Although the series estimates for all commercial banks are prepared, is not identical in coverage with any published call also by the Federal Reserve System, on the basis report aggregate, it is similar in movement to the of the weekly reports, monthly reports from all aggregate for all member banks other than "country" other member banks, and other information. Esti- banks. A recently developed Federal Reserve series mates are made for nonmember banks, accounting showing changes in business loans by type of business currently for about 16 percent of commercial bank of borrower weekly from 1951 is based on a subcredit, on the basis of the relationship between the sample of the weekly reporting banks and ties in movement of "country" member banks (those out- with the business-loan figure here published. side the major cities) and that of the nonmember Uses and limitations.—The all-commercial-bank banks, as determined semiannually when complete figures are useful as a measure of general trends in 52 Bank Loans and Investments [Billions of dollars] All commercial banks Investments End of period 1 Weeklyreporting member banks— business loans 3 Total loans and investments Bank loans 1914—June 30 16. 9 13.2 3.7 0.8 2. 9 1915—June 1916—June 1917—June 1918—June 1919—June 23 30 20 29 30 17.5 20.4 23. 9 27.4 31.8 13. 5 15.8 18. 2 20. 1 22.4 4.0 4.6 5.7 7.3 9.4 .8 .8 1.5 3.2 5. 1 3.2 3. 9 4. 1 4. 1 4.3 1920—June 1921—June 1922—June 1923—June 1924—June 30 30 30 30 30 36.3 34.2 33. 9 37. 1 38. 1 28. 1 26. 1 24. 7 26. 9 27. 6 8.2 8. 1 9.2 10.2 10. 5 3.7 3.4 4.0 4.7 4.4 4.4 4.8 5.3 5. 5 6. 1 1925—June 30 1926—June 30 1927—June 30 1928—June 1929—June 41.2 43. 5 45. 1 48. 5 49.4 29. 6 31.4 32.2 34. 0 35.7 11.7 12. 1 12. 9 14. 5 13.7 4.6 4.6 4.6 5.2 4.9 7.0 7.5 8.4 9.3 8.7 1930—June1931—June__ 1932—June_ 1933—June.. 1934—June___ 48. 9 44. 9 36. 1 30.4 32.7 34. 5 29.2 21.8 16.3 15.7 14.4 15.7 14.3 14,0 17.0 5.0 6.0 6.2 7.5 10.3 9.4 9.7 8. 1 6.5 6.7 1935—June 1936—December 1937—December 1938—December 1939—December 34. 6 39. 5 38.3 38. 7 40. 7 14. 9 16. 4 17. 1 16.4 17.2 19.7 23. 1 21.2 22. 3 23.4 12.7 15. 3 14.2 15. 1 16. 3 7.0 7.8 7. 1 7.2 7. 1 5. 1 4.2 4.7 1940—December 1941—December 1942—December 1943—December 1944—December 43. 9 50.7 67.4 85. 1 105.5 18.8 21.7 19.2 19. 1 21.6 25. 1 29.0 48.2 66.0 83. 9 17.8 21.8 41.4 59.8 77.6 7.4 7.2 6.8 6. 1 6.3 5.3 7.1 6.3 6.4 6.5 1945—December 1946—December 1947—December. 1948—December 1949—D ecember 124.0 114.0 116.3 114.3 120.2 26. 1 31. 1 38. 1 42. 5 43.0 97.9 82.9 78.2 71. 8 77.2 90. 6 74.8 69.2 62. 6 67.0 7.3 8. 1 9.0 9.2 10.2 7.2 »11. 3 14.7 15. 6 13.9 1950—December 1951—December 1952—December 126. 7 132.6 141.6 52.2 57.7 64.2 74.4 74.9 77.5 62.0 61.5 63.3 12.4 13. 3 14. 1 17. 9 21. 6 * 23.4 _____ ___ Total U. S. Government securities Other securities i June dates prior to 1936 because end-of-year data not available for U. S. Government obligations; December dates thereafter, For weekly reporting member banks, Wednesday date nearest end of year. ® Not available prior to 1937; includes agricultural loans. ' Series revised to extend coverage; previousfiguresnot entirely comparable. NOTE.—Detail may not add to totals because of rounding. Monthly data are available beginning with October 1917. Source: Board of Qovernora of the Federal Reserve System. bank credit. The weekly series is more frequent and more prompt than that for all commercial banks. It is available in greater detail, including a total for "business loans"—a significant current indicator of business activity. The weekly series also is a more sensitive indicator of developments in the short-term money market, because it covers the larger banks in the more important centers. It is not supposed to reflect developments in the smaller centers. References.—The monthly estimates for all commercial banks appear initially about a month after the date of the report in a set of releases of the Board of Governors of the Federal Reserve System (G7, G7a, G7b) showing the major balance-sheet 53 The Wednesday data for the weekly reporting items and changes during the past month and year for all banks, all commercial banks, and for member member banks appear initially on the following Wedbank categories. The Federal Reserve Bulletin also nesday in a release of the Federal Reserve Board carries the estimates for recent months, with call (H.4.2) showing changes in assets and liabilities over report data for selected years back to 1939. Although the last week and year. A simultaneous release the estimating procedures for the monthly estimates (H.4.2a) shows assets and liabilities by Federal are not described in any publication of the Board, the Reserve districts. Data for New York City and composition of the current all-bank call report data Chicago are available the day after the date of the is indicated in notes to the statistical tables in the report (H.4.3). The Bulletin carries the weekly data annual reports of the Federal Deposit Insurance and monthly averages for the last 3 months. The Corporation. All-bank statistics are also discussed series is discussed fully in Banking and Monetary in Banking and Monetary Statistics, published by theStatistics; recent revisions are explained in the Federal Reserve Bulletin for June 1947 and April 1953. Federal Reserve Board in 1943. CONSUMER CREDIT Description oj series.—These series are estimates of total short- and intermediate-term consumer credit, and of major types. Federal Reserve publishes additional detail by type of credit and by type of financial institution or retail outlet to which the debt is owed. "Consumer credit" is defined as "all credit used to finance the purchase of commodities and services for personal consumption or to refinance debts originally incurred for such purposes." Credit covers both loans and sales involving deferred payment. Personal consumption is defined so as to exclude consumption not only by businesses but by nonprofit organizations. The estimates exclude home-mortgage credit, which is traditionally considered separately. "Installment credit," accounting for the bulk of consumer credit, is that scheduled to be repaid in two or more payments. Installment credit classified as "Automobile paper" and "Other consumer goods paper" includes credit for the purchase of, and secured by, such goods regardless of whether originating as loans or as credit sales, and regardless of whether the paper is held by a merchant or a financial institution. "Repair and modernization loans" includes such loans held byfinancialinstitutions but not by merchants. "Personal installment loans'9 covers loans by financial institutions for all other consumer purposes, such as to consolidate debts, to pay medical expenses, or for education. Consumers' "noninstallment credit" is classified by Federal Reserve into three types: charge accounts; single-payment loans; and service credit, which includes consumer debts to a variety of creditors, including hospitals, doctors, utilities, and service establishments. The definition of consumer credit cited above is followed in general but not rigidly in the construction of the series. In the absence of sufficiently refined data, certain arbitrary decisions must be made. For example, all bank credit to farmers is excluded even 54 though an undetermined part is for consumption. On the other hand, all credit for the purchase of automobiles by individuals is included even though an undetermined part of the use is for business purposes. The consumer credit series have recently undergone a thorough revision involving a revision of concepts, adjustment to the latest Census benchmark (1948), and improved estimating techniques involving some new current data. The revision involved an upward adjustment of about 7 percent in the figure for total consumer credit as of December 31, 1952, with greater relative changes in component series. Prior to the revision, the data were classified on the basis of the type of firms originating the credit, and a major distinction was made between loan credit and sale credit. The data are now presented in terms of the financial or other institutions holding the paper, regardless of origin. Statistical procedures.—The consumer credit series are aggregates of separate estimates of the consumer credit held by a number of different types of creditors—financial institutions, retail and service establishments, and others. The procedures are complex, and vary for the different groups. In general, estimates for retail trade are based on the 1948 Census of Business, which provides information on credit held by the various retail lines. These figures have been adjusted to exclude estimated amounts of nonconsumer credit. Monthly figures are then arrived at by estimating, on the basis of sample monthly data, what change has taken place since the benchmark date. For the more important credit-granting lines, monthly data on credit receivables are collected from a sample of the firms. For other lines, monthly receivables are estimated by means of a formula based on sales during the previous few months. Annual sample data on receivables, collected from many lines, provide a basis for correcting the monthly estimates, Consumer Credit [Millions of dollars] End of year 1929. 1930 1931_ 1932 1933. 1934 1935 1936 1937 1938 1939 1940 1941 1942 1943 1944 1945 1946 1947 1948 1949 1950 1951 1952 Total consumer credit outstanding 6, 444 5, 767 4, 760 3, 567 3, 482 3, 904 4, 911 6, 135 6, 689 6, 338 7, 222 8, 338 9, 172 5, 983 4, 901 5, 111 5, 665 8, 384 11,570 14, 411 17, 104 20, 813 21, 468 25, 827 Installment credit Total 3, 151 2, 687 2, 207 1, 521 1,588 1, 871 2, 694 3, 623 4,015 3, 691 4, 503 5, 514 6, 085 3, 166 2, 136 2, 176 2, 462 4, 172 6, 695 8, 968 11,516 14, 490 14, 837 18, 684 Automobile paper 1 Noninstallment credit Other Repair and consumer moderni- Personal goods zation loans loans2 paper 1 (4) (4) (4) 0) (4) 0) (4) m «« 1,497 2, 071 2, 458 742 355 397 455 981 1, 924 3, 054 4, 699 6, 342 6, 242 8, 099 « (4) (44) () (4) (4) (4) (44) () W 1, 620 1, 827 1, 929 1,195 819 791 816 1, 290 2, 143 2, 842 3, 486 4, 337 4, 270 5, 328 (4) (4) (4) (44) () (4) (4) (44) () (4) 298 371 376 255 130 119 182 405 718 843 887 1,006 1,090 1,406 (4) (4) (4) (44) () (4) (4) (44) () (4) 1, 088 1, 245 1,322 974 832 869 1,009 1, 496 1, 910 2, 229 2, 444 2, 805 3, 235 3, 851 Total 3, 293 3, 080 2, 553 2, 046 1, 894 2, 033 2,217 2,512 2, 674 2, 647 2,719 2, 824 3, 087 2,817 2, 765 2, 935 3, 203 4,212 4, 875 5, 443 5, 588 6, 323 6, 631 7, 143 Charge accounts 1, 602 1,476 1,265 1, 020 990 1, 102 1, 183 1, 300 1,336 1,362 1,414 1,471 1, 645 1, 444 1,440 1,517 1, 612 2, 076 2, 353 2,713 2, 680 3, 006 3, 096 3, 342 Other 3 1, 691 1,604 1, 288 1, 026 904 931 1, 034 1,212 1, 338 1, 285 1, 305 1,353 1,442 1, 373 1,325 1,418 1, 591 2, 136 2, 522 2, 730 2, 908 3,317 3, 535 3, 801 i Includes all consumer credit extended for the purpose of purchasing automobiles and other consumer goods and secured by the items purchased. * Includes only such loans held byfinancialinstitutions; those held by retail outlets are included in "other consumer goods paper." 3 Single payment loans and service credit. < Not available. NOTE.—Revised series; see Federal Reserve Bulletin, April 1953 and November 1953. Detail will not necessarily add to totals because of rounding. Monthly data are available beginning with 1929. Source: Board of Governors of the Federal Reserve System. For most types of financial institution, benchmark data are provided by the 1950 registration of installment credit grantors under Regulation W and by annual or more frequent statistics on a complete coverage basis. Monthly data on receivables are available from reporting samples of various types of lenders. Service credit is in general based on less substantial data. The methods vary among the different types. Although virtually complete monthly data are received for telephone bills, the largest category (medical debt) is based on an annual sample survey of consumers, and is "moved" by statistics of industrial illness. Uses and limitations.—The widespread interest in consumer credit is due in part to its importance as a source of consumer purchasing power, and especially its significance in the market for consumer goods frequently bought on the installment plan. In part it is due to the fact that consumer credit reflects one aspect of the financial position of consumers. Consumer credit is also an important element in the demand for funds in the financial community. In the face of problems of adapting available data to the precise definition of consumer credit outlined above, Federal Reserve points out that the estimate of total short- and intermediate-term consumer credit probably understates somewhat the true total. Problems of definition and estimation are discussed fully in the descriptive material on the series, cited below. References.—The data appear originally in a monthly release entitled "Consumer Credit (Short and Intermediate Term)," which shows credit by type, with change during the month and year. Installment credit is further classified by holder. Tables in the Federal Reserve Bulletin give back data and more detailed cross-classification by type and holder. The April 1953, issue of the Federal Reserve Bulletin explains the recent revision and gives monthly data back to 1939 (and in less detail to 1929). A supplementary technical discussion of estimating methods is available in pamphlet form from Federal Reserve. 55 BOND YIELDS AND INTEREST RATES 3-Month Treasury Bills Corporate Aaa Bonds (Moody's) This is a measure of the currently prevailing This series measures the average rate at which 3-month Treasury bills have been issued during the maturity yield on long-term corporate debt of the highest quality, as reflected in the yields of selected month. bonds rated Aaa by Moody's Investors Service. An average discount rate is computed for each It is an unweighted average of three averages weekly issuance, on the basis of the varying rates at which portions of the issue are awarded, in order, to computed separately for industrial, railroad, and the highest bidders. The monthly figure is a simple public-utility bonds. Each of these component average of the average rates for the four or five series in turn is an unweighted average of the yields of the selected bonds comprising these series. issues during the month. Monthly figures are averages of daily figures, The series is useful as a measure of a short-term rate on relatively riskless borrowing. Issuance computed from closing prices. The plan of the index calls for 10 bonds in each of rates, while related to, are typically not identical with market rates on outstanding issues of com- the 3 industrial categories. However, there are not necessarily 10 suitable issues in each category; curparable maturity. The monthly averages appear in the Federal Re- rently only 6 railroad and 4 industrial bonds are serve Bulletin, and in an advance monthly Federal covered. This index is a useful general indicator of the level Reserve release, G 13. Rates for the individual and movement of average yields of selected bonds of issues appear in the Treasury Bulletin. the highest grade with sufficiently long maturities Taxable Bonds and other features to afford an adequate measure of The "Old series" is the average yield of all taxable long-term interest rates. It is not a measure of Treasury bonds due or callable in from 12 to 20 average yield of all Aaa bonds available to the years. There are 4 such bonds currently, all bearing investor. a 2%-percent coupon. The "New series" by definiThe daily Aaa corporate bonds yield averages are tion measures the yield of bonds due or callable in published in Moody's Bond Survey, a weekly publica20 years or more—but at present only a single issue, tion, which includes from time to time the list of the 3%-percent 30-year bond issued in May 1953, is bonds. A brief statement may be found in Business covered. Prior to the appearance of this issue there Statisticsy 1958, a Supplement to the Survey of was a single series covering bonds not due or callable Current Business, and Moody's will supply a similar before 12 years. short statement on request. Both series are based on daily closing-bid quotations in the over-the-counter market as reported to the Federal Reserve Bank of New York by leading Prime Commercial Paper This series measures the prevailing rate on prime dealers in New York City. The old series is an unweighted average of the yields of the four issues 4 to 6 months commercial paper. included. The new series was begun and the old The Federal Reserve Bank of New York deterseries redefined in order not to destroy the homo- mines the prevailing daily selling rate quotation of geneity of the group of bonds comprising the old New York City dealers handling the bulk of the series. volume of commercial paper of the inventory type. These indexes measure the interest rates on the The bank receives less frequent reports from dealers highest grade of long-term investments of different outside New York, which occasionally necessitate maturity classes, which are normally below that on retroactive revisions of the series. Monthly figures are averages of weekly prevailing rates. the highest grade of corporate securities. The series is useful as a measure of the cost of The series are published in the monthly Treasury Bulletint with an advance release in the monthly open-market short-term credit available to large Federal Reserve release (G 13) entitled Open Market business borrowers of the highest credit standing. Money Rates. The series are discussed in the It is published in the Federal Reserve Bulletin and Treasury Bulletin, March 1944, and in current in the advance Federal Reserve monthly release, footnotes to the Bulletin tables. G 13. 56 Bond Yields and Interest Rates [Percent per annum] U. S. Government security yields Year 3-month Treasurybills * Taxable bonds 2 Corporate Aaa bonds (Moody's) 1919. 5. 49 1920. 19211922. 1923. 1924- 6. 5. 5. 5. 5. 12 97 10 12 00 1925. 1926. 1927. 1928. 1929- 4. 4. 4. 4. 4. 88 73 57 55 73 1930. 1931. 1932. 19331934. 1. 402 .879 .515 .256 4. 4. 5. 4. 4. 55 58 01 49 00 1935. 19361937. 1938. 1939. . 137 . 143 .447 .053 .023 3. 3. 3. 3. 3. 60 24 26 19 01 19401941. 1942. 19431944. .014 . 103 .326 .373 .375 2. 46 2. 84 2.77 2. 83 2. 73 2. 72 19451946. 1947. 1948. 1949. .375 .375 .594 1. 040 1. 102 2. 37 2. 19 2. 25 2. 44 2.31 2. 62 1950. 19511952- 1.218 2. 32 2. 62 2. 86 1. 552 1. 766 2. 47 2. 48 2. 57 2. 68 2. 53 2. 61 2. 82 2. 66 2. 96 ' Rate on new issues within period. ' Old series; 2 ^ percent bonds, 15 years and over prior to April 1952; 12 years and over beginning in April. NOTE—Monthly data are available beginning with 1931 (scattered issues beginning December 1929) for 3-month Treasury bills, November 1941 for Government taxable bonds (old series; new series of ZH percent bonds of 1978-83, first issued in 1941), 1919 for Corporate Aaa bonds (Moody's) and 1890 for prime commercial paper, 4-6 months. Source: Board of Governors of the Federal Reserve System. 57 MONEY SUPPLY Description oj series.—These data measure the deposits due to foreign banks, has been calculated supply of money as an aggregate of several types of for selected dates back to 1929, it has appeared assets of the highest liquidity* The concept includes currently as a monthly series only since 1949. Prior not only pocket money but bank deposits, both to that year Federal Reserve published a less comdemand and time, as well as deposits in the Postal prehensive table for deposits and currency. Savings System. The table in Economic Indicators Relation to other series.—The money supply aggrecovers "privately held" deposits and currency (in- gate shown here is quite different from the wellcluding the holdings of States and political subdi- known "Money in Circulation" figure published visions but excluding those of banks) and deposits monthly by the Treasury. The latter covers only to the credit of the Federal Government. The table coins and paper money, and consists of the total is derived from a Federal Reserve tabulation of outside the Treasury and the Federal Reserve banks, "Deposits and currency," which covers in addition less an estimate of the amount of coin held abroad. cash held by the Treasury and net deposits due to The money supply data differ in that they add bank deposits, but exclude currency held by the banks. foreign banks. This table, and the more detailed Federal Reserve Monthly estimates are for the final Wednesday of the month, except that the June and December deposits and currency table, are derived from data estimates are later replaced by reported figures as of in general available in other banking or Treasury statistics. Because of adjustments and special groupthe last day of the month. Statistical procedures.—The bulk of the aggregate ofings of items, however, the component series of these deposits and currency consists of deposits in com- two tables cannot necessarily be identified precisely mercial banks. Monthly estimates of these deposits with series found elsewhere. are prepared in approximately the same manner as Uses and limitations.—The data on deposits and those for loans and investments, discussed above. currency permit an adequate measurement of the Data for the "weekly reporting member banks" are level and general trend of the supply of money as one combined with monthly reports from other commer- of the important factors affecting the functioning cial member banks, and an estimate is made for of the economic system. nonmember banks on the basis of the reports from the There is no one accepted definition of money. The "country" (generally smaller) member banks. Semi- Federal Reserve presentation of deposits and curannual "all bank" figures later replace the Wednes- rency makes it possible for the user to adapt the data day figures for June and December. The monthly to his particular use by excluding one or more comestimate for deposits in mutual savings banks, which ponent series. Thus the Economic Indicators excludes are largely outside the Federal Reserve System, is deposits of foreign banks and Treasury cash holdings. based on monthly statistics of the National Asso- A more restrictive definition of money supply exciation of Mutual Savings Banks covering the bulk cludes time deposits. On the other hand, a broader of mutual savings banks deposits. Figures for definition might include savings and loan shares United States Government cash holdings are taken or Government savings bonds, for which data are from the Daily Statement of the United States Treasavailable elsewhere. ury. Preliminary figures for Government bank References.—The money supply data come from a deposits are estimates based also on the Treasury monthly table entitled "Consolidated Condition Daily Statement, subject to later correction on the Statement for Banks and the Monetary System" basis of bank records. Currency outside banks is in the Federal Reserve Bulletin, showing deposits and based on the Treasury figures for currency held out- currency detail and data for related asset and capital side the Treasury and the Federal Reserve System, accounts of the banking and monetary institutions. from which are deducted monthly estimates of cash The basis for the table is discussed in the Federal held by the commercial and savings banks. Reserve Bulletin for January 1948. Historical data Although the present series on deposits and cur- to 1892 are available in Banking and Monetary rency, including cash held by the Treasury and net Statistics. 58 Money Supply [Billions of dollars] Total deposits and currency End of period U. S. Government deposits1 Total excluding U. S. Government deposits (privately held money supply) 3 Total Currency outside banks Demand deposits adjusted 3 Time deposits 4 1903—June 1904—June 1905—June 1906—June 1907—June 11.5 12. 0 13. 2 14. 1 15. 1 0. 1 . 1 . 1 . 1 ,2 11. 3 11. 9 13. 2 14.0 14. 9 1.5 1.6 1.6 1.8 1.7 6. 0 6. 3 7. 1 7.5 7. 9 3.8 4. 0 4.5 4.8 5.4 1908—June 1909—June 1910—June 1911—June 1912—June 14.7 15. 8 17. 0 17. 8 18. 9 .1 .1 . 1 . 1 14. 6 15.7 16. 9 17. 7 18.8 1.7 1.7 1.7 1.7 1.8 7.4 7. 8 8.3 8. 7 9.2 5. 5 6. 3 6. 9 7.3 7.9 . 1 19.4 20. 0 1.9 1.5 9. 1 10. 1 8.4 8.4 . 1 1. 1 1. 6 1.0 20. 6 24.2 27.3 29. 9 34. 6 1.6 1. 9 2.3 3.3 3.6 9.8 12.0 13. 5 14. 8 17. 6 9.2 10. 3 11.5 11.7 13.4 (5) fi 1913—June 1914—June 19. 4 20.0 () 1915—June 1916—June. 1917—June 1918—June 1919—June 20. 7 24.3 28.4 31. 5 35.7 (5) 1920—June 1921—June. 1922—June 1923—December.^ 1924—December 39.9 37.8 39. 0 43. 5 47. 1 .3 .5 .2 .3 .3 39.6 37.4 38.8 43.2 46.8 4. 1 3.7 3.3 3.7 3.7 19. 6 17. 1 18.0 19. 1 20.9 15. 8 16. 6 17.4 20.4 22. 2 1925—December 1926—December 1927—December 1928—December 1929—December 50. 51. 54. 55. 54. 3 1 1 7 7 .3 .3 .3 . 3 .2 50.0 50.9 53.8 55.4 54. 6 3.8 3.8 3.7 3. 6 3.6 22. 3 21. 7 22.7 23. 1 22.8 23. 9 25. 3 27.4 28.7 28.2 1930—December 1931—December 1932—December. 1933—December 1934—December 53. 6 48. 4 45.4 42. 6 48. 1 3 .5 .5 1.0 1.8 53.2 47.9 44.9 41.5 46.3 3.6 4. 5 4.7 4.8 4.7 21.0 17.4 15.7 15.0 18. 5 28. 7 26.0 24. 5 21. 7 23. 2 1935—December 1936—December 1937—December 1938—December 1939—December 52. 7 57. 6 56. 8 59. 9 64.7 1. 5 1.2 1. 0 1.8 1.5 51. 3 56.4 55. 8 58. 1 63. 3 4. 9 5.5 5. 6 5.8 6.4 22. 1 25.5 24.0 26.0 29.8 24.2 25.4 26. 2 26.3 27. 1 1940—December 1941—December 1942—December 1943—December 1944—December 71. 1 79. 1 100. 5 123.4 151.4 1. 1 2.8 9.2 11.0 21. 2 70. 0 76.3 91.3 112.4 130.2 7.3 9. 6 13. 9 18.8 23.5 34.9 39.0 48.9 60. 8 66.9 27.7 27.7 28.4 32.7 39.8 176.4 167.5 172. 3 172.7 173. 9 25.6 3. 5 2. 3 3.6 4.1 150.8 164.0 170.0 169. 1 169. 8 26.5 26. 7 26.5 26. 1 25.4 75. 9 83. 3 87.1 85.5 85.8 48.5 54.0 56.4 57.5 58.6 180.6 189. 8 200.4 3.7 3. 9 5.6 176. 9 186.0 194.8 25.4 26.3 27.5 92.3 98.2 101.5 59.2 61.4 65.8 1945—December 1946—December 1947—December 1948—December 1949—December ___ _ 1950—December 1951—December 1952—December 1 Beginning with 1916, includes U . S. Government deposits at Federal Reserve banks; beginning with 1938, includes U . 8. Treasurer's time deposits open account. Includes deposits and currency held b y State and local governments. * Demand deposits other than interbank and U . S. Government, less cash items reported as in process of collection. * Includes deposits in commercial banks, mutual savings banks, and the Postal Savings System other than interbank time deposits, tTnited'States Treasurer's time deposits open account, and postal savings redeposlted In banks. • Less than $50 million. 1 NOTE,—Detail may not add to totals because of rounding. Monthly data are available beginning with 1943. Source: Board of Governors of the Federal Reserve System. 59 FEDERAL BUDGET RECEIPTS AND E2 Description oj series.—Budget receipts represent the cash income of the Federal Government and are derived from various kinds of taxes, fees, fines, proceeds from the sale of property, etc. Budget expenditures represent current payments for Government programs, including grants and contributions and capital outlays. Budget expenditures are payable out of budget receipts or out of borrowing. Transactions of trust funds are excluded from budget receipts and expenditures. Budget expenditures, budget receipts, and the public debt are compiled daily from records of the United States Treasury and published in the Daily Statement of the United States Treasury. The figures are compiled from the latest daily reports received by the Treasurer of the United States from Government depositaries, Treasury disbursing officers, and the Departments of the Army and the Air Force. For disbursements made by Treasury disbursing officers, thefiguresfor expenditures represent checks issued, but where checks-issued data are not available currently (now over 50 percent of the total expenditures), thefiguresrepresent checks paid, as reported in daily transcripts received from Treasury depositaries. A few items included in budget expenditures are in the form of debt issuances (for example, Armed Forces leave bonds issued in 1947) or increases in the public debt (such as the current increase in redemption value of savings bonds). •''Budget expenditures7' cover the general fund, the special funds, and the revolving and management funds. Expenditures for the revolving and management funds are on a net basis; that is, the collections received by each fund are deducted from the total of the payments made for goods and services received, and the resulting figure is shown as the expenditure. Where the collections are larger than the payments from such a fund, the net amount included in the expenditures is a negative item. Budget expenditures do not include retirement of Government debt, nor do they include net investments in United States Government securities (which occur sometimes in the case of Government corporations). "Major national security programs" is a special classification of budget expenditures first published by the Bureau of the Budget in 1952, in the 1953 Budget Document. It comprises: (1) Military services, including Armed Forces, stockpiling of strategic and critical materials, selective service, and the National Advisory Committee for Aeronautics; (2) international security and foreign relations, including military and economic assistance; (3) development and control of atomic energy; (4) 60 civil defense; (5) merchant marine; and (6) defense production and economic stabilization activities. "Budget receipts" include all money paid into the Treasury to the credit of the general fund and of special funds. They do not include money obtained from borrowing; nor do they include receipts of revolving and management funds, since these funds are reported on a net basis in the expenditure figures. "Budget surplus or deficit" represents the difference between the budget receipts and budget expenditures. The "public debt" is affected not only by the budget surplus or deficit, but by other factors as well. The amount which it is necessary to borrow or which it is possible to repay is also influenced by the amount of the Treasury cash balance; the result of trust-fund transactions; the use of Government corporation borrowing directly from the public as a means of financing budget expenditures of the corporations (and vice versa in the case of direct repayments of borrowing by the corporations); and the change in the amount of checks outstanding and other items in process of clearance through the accounts. In these tables the amounts refunded by the Government (principally for the overpayment of taxes) are reported as deductions from total budget receipts rather than as expenditures. Investments in revolving and management funds, and dividends and repayment of investment in such funds are excluded from both receipts and expenditures. Relation to other series.—Annual data on receipts and expenditures of the Government are also reported by the Treasury Department in the Combined Statement of Receipts, Expenditures, and Balances of the United States Government. The receipts data in the Combined Statement include those collections which have been credited in the accounts of the Treasurer of the United States, and the expenditures data include the checks which have been issued during the fiscal year in payment of Government obligations. The figures reported in the Combined Statement are not available until several months after the close of thefiscalyear to which they relate. They differ somewhat from those in the Daily Statement of the United States Treasury, principally because the greater time lag in publication makes it possible to include only those transactions which occurred in the particular fiscal year. Data on tax receipts of the Government are also published monthly by the Internal Revenue Service, and appear in the Treasury Bulletin. The Internal Federal Budget Receipts and Expenditures [Billions of dollars] Budget expenditures Year Major national security programs 1 Total Fiscal year 1929 3. 1 Fiscal Fiscal Fiscal Fiscal Fiscal year year year year year 1930 1931 1932 1933___ 1934 3. 3 3. 6 4. 7 4. 6 6.7 Fiscal Fiscal Fiscal Fiscal Fiscal year year year year year 1935 1936 1937 1938 1939 Fiscal Fiscal Fiscal Fiscal Fiscal year year year year year 1940 1941 1942 1943 1944 9.2 13.4 34. 2 79. 6 95. 3 Fiscal Fiscal Fiscal Fiscal Fiscal year year year year year 1945 1946 1947 1948 1949 Fiscal Fiscal Fiscal Fiscal year year year year 1950__ 1951 1952 1953 _ (3) (3) Net budget receipts Budget surplus ( + ) or deficit (—) Public debt (end of period) 2 3. 9 + 0. 7 16.9 4. 1 3. 1 1.9 2. 0 3. 1 +.7 5 -2.7 -2. 6 —3. 6 16.2 16. 8 19. 5 22. 5 27.7 1.1 3. 7 4. 1 5.0 5. 8 5. 1 -2. 8 -4.4 -2. 8 -1. 2 -3.9 32. 38. 41. 42. 45. 1.6 6. 5 27.5 73.6 88. 2 5.3 7.2 12. 7 22. 2 43.9 -3. 9 -6. 2 -21. 5 -57.4 -51.4 48. 5 55. 3 77.0 140. 8 202. 6 98. 7 60. 7 39. 3 33.8 40. 1 88.7 47.2 20.9 16.4 19. 1 44. 8 40.0 40.0 42. 2 38. 2 -53. 9 -20. 7 +8.4 -1.8 +.8 259. 1 269. 9 258.4 252.4 252. 8 40.2 44. 6 66. 1 74.6 17.8 26.4 47. 2 52.8 37.0 48. 1 62. 1 65. 2 -3. 1 +3.5 -4. 0 -9. 4 257.4 255. 3 259.2 266. 1 6. 5 8.5 7. 8 7.0 9.0 h h h (3) «( ) 3 e) 8 5 1 0 9 1 Includes expenditures for military services, international security and foreign relations, development and control of atomic energy, promotion of the merchant marine, promotion of defense production and economic stabilization, and civil defense. Data not available for years prior to 1939. 2 Includes guaranteed securities, except those held by the Treasury. Part of total shown is not subject to statutory debt limitation. »Not available. Norn—Detail will not necessarily add to totals because of rounding. For data beginning with 1789, see "Historical Statistics of the United States, 1789-1945," Series P 89-103. Sources: Treasury Department and Bureau of the Budget. Revenue series is based upon reports of the District Directors of Internal Revenue. It is not directly comparable with data on tax receipts reported in the Daily Statement series, since withheld taxes deposited by employers on a current basis with depositaries are not recorded and reported by District Directors until quarterly tax returns are filed, but are reported in the Daily Statement when the deposit is made. Amounts collected directly by District Directors are recorded and reported when collected for the internal-revenue series, but are not included in the Daily Statement series until they are received and acknowledged by a Federal depositary. Uses and limitations.—Data on budget receipts and expenditures are useful in appraising the impact of Federal financial operations. For purposes of economic analysis, however, they have limitations, some of which have been corrected by deriving other statistical series from the budget receipts and expenditures data. For example, the series on Federal cash receipts from and payments to the public (see the following section) is based upon the data on budget receipts and expenditures, together with trust fund transactions, with certain adjustments to arrive at the cash flow of funds to and from the public. Budget receipts and expenditures are also the basis for the Government accounts included in the Department of Commerce income and product statistics (see p. 42 and p. 4). Since budgetary figures are reported on a cash rather than an accrual accounting basis, the budgetary figures are adjusted to the accrual accounting basis used in the income and product accounts; for example, corporation profits taxes are adjusted to show tax liabilities instead of tax collections. The expenditure data are also adjusted for the lag between production of goods ordered by the Government and the actual payment for those goods by the Treasury. References.—The basic release of the budget receipts and expenditures data is the Daily Statement of the United States Treasury. A description of the basis was published in the Annual Report of the Secretary of the Treasury on the State of the Finances for Fiscal Year 1952, pages 501-504. 61 FEDERAL CASH RECEIPTS FROM AND PAYMENTS TO THE PUBLIC Description of series.—This series is derived from difference between the two series is that receipts the same sources as the series on budget receipts and from the exercise of monetary authority (i. e., expenditures, described above. The Government is seigniorage) are included in cash operating income, defined to include transactions of the Treasurer of but excluded from receipts from the public. The the United States as agent for certain quasi-govern- figures published in Economic Indicators have been mental corporations, such as the Federal Deposit adjusted to the concept of receipts from the public. Uses and limitations.—The series on receipts from Insurance Corporation, home-loan banks, Federal land banks, etc. These transactions are excluded and payments to the public measures the flow of cash from the series on budget receipts and expenditures. between the public and the United States GovernThe public is defined to include individuals; banks, ment as a whole more accurately than does the series including the Federal Reserve and Postal Savings on budget receipts and expenditures. Thus, for Systems; businesses; private corporations; State, purposes of economic analysis it is a somewhat better local, and foreign governments; and international and more complete measure of the economic impact of Federal financial transactions. However, certain organizations. In deriving this series, the transactions of trust Federal financial operations which are not measured funds are added to those included in budget receipts by this series or by the series on budget receipts and and expenditures. Intragovernmental transactions expenditures also influence economic activity. For (for example, payments of interest on securities held example, Federal guaranties and insurance of private by trust funds which are budget expenditures and also loans have relatively little effect on payments to the trust-fund receipts) are then eliminated to obtain public but have a significant effect on economic receipts from and payments to the public. Receipts activity. Similarly, the enactment of large approof the Government from the exercise of its monetary priations for defense after the attack on Korea stimuauthority (mainly seigniorage on silver) are ex- lated business activity long before the authorized cluded, because they are not cash received from the funds were spent and reported as payments to the public. A few items included in budget expenditures public. which are in the form of debt issuances or increases References.—Current quarterly data on Federal in the public debt are also excluded from this series. cash receipts from and payments to the public are The most important of these is the current increase prepared for Economic Indicators. The related series in redemption value of savings bonds. At the time on Treasury cash income and outgo is published of redemption the amount of interest paid is included monthly in the Treasury Bulletin. Annual data for as a payment to the public. both series, by fiscal years back to 1929, are pubThe excess of receipts or payments is sometimes lished in the Statistical Abstract. referred to as the cash surplus or deficit. The adjustments made in the figures for budget Conceptual and statistical revisions of this series receipts and expenditures to obtain the concept of were made in 1947. A few changes have been made cash receipts from and payments to the public are since then to reflect similar changes made in the con- listed in detail in an annual release of the Bureau cept of budget receipts and expenditures, such as of the Budget entitled "Receipts From and Paythe change in the reporting of refunds of receipts. ments to the Public, Supporting Tables." These Relation to other series.—This series is similar toadjustments are also summarized in tables 1 to 5, the series on cash operating income and outgo pub- "Treasury Cash Income and Outgo," of the monthly lished monthly in the Treasury Bulletin. The only Treasury Bulletin. 62 Federal Cash Receipts From and Payments to the Public Federal cash receipts from the public Year Federal cash payments^ to the public Excess of receipts ( + ) or payments ( — ) Billions of dollars Fiscal years 192 9 3.8 2.9 + 0.9 193 0 193 1 1932... 1933... 193 4 4. 0 3.2 2. 0 2. 1 3. 1 3. 1 4. 1 4. 8 4.7 6. 5 +.9 -1. 0 -2.7 -2. 6 -3.3 193 5 193 6 1937... 1938... 1939 3. 8 4. 2 5.6 7.0 6. 6 6.3 7. 6 8.4 7.2 9.4 -2.4 -3. 5 -2.8 -. 1 —2. 9 1940... 194 1 194 2 194 3 194 4 6. 9 9.2 15. 1 25. 1 47. 8 9. 6 14. 0 34. 5 78.9 94.0 -2.7 -4. 8 -19.4 -53. 8 -46. 1 194 5 1946— 1947 1948— 1949— 50.2 43. 5 43. 5 45.4 41. 6 95.2 61.7 36.9 36.5 40. 6 -45.0 -18.2 + 6. 6 +8. 9 + 1.0 195 0 195 1 1952— 1953 40. 9 53.4 68.0 71.3 43.2 45. 8 68.0 76.6 -2.2 + 7.6 +. 1 -6.3 Millions of dollars Calendar years 1943 1 194 4 1 37, 863 48, 131 88, 987 94, 810 194 5 1946. 194 7 194 8 194 9 49, 41, 44, 44, 41, 423 441 282 922 346 86,142 41, 399 38, 616 36, 897 42, 642 195 0 195 1 1952. 42, 419 59, 278 71, 339 41, 969 58, 034 72, 980 First year for which data are available. NOTE.—Detail will not necessarily add to totals because of rounding. Sources: Bureau of the Budget and Treasury Department. O 63