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SURVEY OF CURRENT BUSINESS

August 1948

the reduced rate of nonfarm inventory accumulation noted
below, as other components of private investment either
remained constant or increased moderately.
After a rapid rise in the latter half of 1947, new private
construction activity has continued at the high rate of the
fourth quarter. A slight increase was registered in the first
3 months of this year, the resultant rate of 14.3 billion dollars
being sustained in the second quarter. For three consecutive quarters, private construction has constituted a larger
proportion of gross national product than in any year since
1930.
No significant shifts in the composition of new construction occurred during the second quarter. There were fractional declines in industrial and nonfarm residential building,
Table 3.—National Income and Product, First and Second Quarters
of 1948 i
[Billions of dollars]
Seasonally adjusted,
at annual rates

Unadjusted
Item

I

II

National income by distributive shares
National income
Compensation of employees
Wages and salaries
Private
Military
Government civilian
Supplements to wages and salaries
Proprietors' and rental income2
Business and professional
Farm
Rental income of persons
Corporative profits and inventory valuation
adjustment
Corporate profits before tax
Corporate-profits tax liability
Corporate profits after tax
Inventory valuation adjustment
Net interest
Addendum: Compensation of general government employees

53.2
32.9
31.6
27.1
.9
3.6
1.3
12.6
6.3
4.5
1.9

()
33.5
32.3
27.7
.9
3.7
1.2
13.0
6.4
4.7
1.9

215.1
133.7
128.8
111.1

133.9
129.1
111.0

14.2

14.5

50.6
25.0
18.0

51.9
25.4
18.9

3.5

3.6

4.9

4.9

7.5

7.6

6.5
7.8
3.0
4.8
-1.3
1.2

()
-.6
1.2

4.2

4.3

16.5

16.9

41.0
4.9
23.7
12.5
10.0
2.9
1.4
1.5
4.9
2.2
2.3
1.0
7.3
4.3
.3
3.3

60.5
43.0
5.3
25.0
12.6
8.4
3.6
1.7
1.8
5.1
-.3
-.4
1.0
8.2
4.6
.2
3.7

243.8
172.0
21.4
101.0
49.6
38.5
14.3

248.2
175.1
22.3
102.4
50.4
37.2
14.3

19.6

20.6

29.4
17.3

32.1
18.6

13.4

14.2

51.1
9.3
8.6
.6
41.8
41.0
.7

52.4
3.9
3.3
.6
48.5
43.0
5.5

207.3
23.6
21.5

208.8
21.6
19.4

183.7
172.0
11.7

187.3
175.]
12.2

59.3

60.5
3.6
4.8
.2

243.8
14.0
18.9

248.2
14.2
19.4

.a
0

.a
0

26.2
31.4
12.2
19.2
-5.3
4.6

(3)
(3)
(')
(*)

-2.5

4.7

Gross national product or expenditure
Gross national product
Personal consumption expenditures
Durable goods
Nondurable goods
Services
Gross private domestic investment.
New construction
_..
Residential nonfarm
Other
Producers' durable equipment
Change in business inventories, total
Nonfarm only
Net foreign investment
Government purchases of goods and services.
Federal
Less: Government sales
State and local

7.0
7.3

6.9
7.4

2.3
1.8
3.9

4.6
5.1
3.9
1.3

.7

Disposition of personal income
Personal income
Less: Personal tax and nontax payments
Federal
State and local
Equals: Disposable personal income
Less: Personal consumption expenditures
Equals: Personal saving

2.1

2.1

Relation oj gross national product, national income,
and personal income
Gross national product
Less: Capital consumtpion allowances
_
Indirect business tax and nontax liability
Business transfer payments
Statistical discrepancy
Plus: Subsidies less current surplus of government enterprises
Equals: National income
Less: Corporate profits and inventory valuation
adjustment
C ontributions for social insurance
Excess of wage accruals over disbursements..
Plus: Government transfer payments
Net interest paid by government
Dividends
Business transfer payments
Equals: Personal income

3.5
4.6
.2
-2.2
-.1
53.2
6.5
1.3
0
2.7
1.1
1.7
.2
51.1

* Detail will not necessarily add to totals because of rounding.
2
Includes noncorporate inventory valuation adjustment.
* Not available.




-5.2
-.1
)
()
1.3
0
2.7
1.4
1.7
.2
52.4

-.3

-.3

215.1

(3)

26.2

(3)

5.0
0

5.0
0

10.9

10.6

207.3

208.8

4.6
7.3
.6

4.7
7.3
.6

offset by minor gains in the public-utility group, but seasonal adjustment factors are not sufficiently precise to permit
attachment of meaning to changes of such magnitudes.
Residential building continued, as in the previous two
quarters, to constitute an extraordinarily large portion—
about half—of new private construction.
Business investment in producers' durable equipment advanced to an annual rate of 20.6 billion dollars, as compared
with 19.6 billion dollars during the first quarter. Virtually
all components, including machinery, commercial motor vehicles, and railroad equipment, shared in the advance. However, a considerable part of the increase was probably attributable to price factors rather than to an increase in the physical volume of production.
The accelerated accumulation of business inventories
which took place in the first quarter of 1948 was curtailed in
the second to a billion dollar annual rate. As noted in the
May SURVEY, the increase in the early months of the year
had been restricted to trade inventories and was concentrated
at the retail level. Its association with a flattening of consumer expenditures suggested that the accumulation was, at
least in part, involuntary. In the second quarter, however,
with disposable personal income increasing, retail sales
picked up again. In consequence, retailers' stocks were
more readily moved, and these inventories, in real terms,
remained very nearly constant. The less pronounced accumulation of wholesale trade inventories in the first quarter
also virtually disappeared in the second.
In contrast with trade stocks, manufacturing inventories,
which had remained stable (after valuation adjustment) in
the early part of the year, rose moderately in the second
quarter to account for the bulk of the nonfarn business inventory movement shown in table 3.
Shift in Financing Foreign Requirements
Net foreign investment, following the large decline in the
first quarter, held steady at an annual rate of approximately
4 billion dollars. While merchandise imports fell off somewhat from the peak achieved earlier in the year, this was
offset by an increase in Government unilateral transfers,
which had the same statistical effect upon the net foreign
investment figure as a rise in imports (or a reduction of
exports). The drain on foreign gold and dollar reserves,
which had slackened sharply in the first quarter, was temporarily renewed (although by no means to the 1947 level)
pending full-scale operation of the European Recovery Program. This shift in foreign countries' means of financing
imports from the United States was occasioned primarily by
reduced disbursements of Government loans.
In interpreting changes in net foreign investment between
1947 and 1948, an' important alteration in the form of U. S.
Government assistance should be borne in mind. Last year,
American aid consisted predominantly of loans, and expenditure of the proceeds of such loans by foreigners for our
exports entered gross national product under the heading of
net foreign investment. This year, on the other hand,
direct assistance in the form of grants will predominate, and
these are reflected in the gross national product as Government expenditures. In the computation of the balance of
international payments, the recording of unilateral transfers
representing such direct aid offsets a corresponding amount
of exports, and thus eliminates that amount from net foreign
investment. It is apparent, then, that a shift from foreign
investment to Government expenditures may transpire
without a significant change in the actual net international
flow of goods and services. To a considerable degree, this
has been, in fact, the nature of the decline in net foreign
investment in 1948.
The aggregate Government component of gross national
product accelerated its slow climb from the postwar low

* BUSINESS STATISTICS
XHE DATA here are a continuation of the statistics published in the 1942 Supplement to the SURVEY OF CURRENT BUSINESS. That volume
contains monthly data for the years 1938 to 1941, and monthly averages for earlier years back to 1913 insofar as available; it also provides a
description of each series and references to sources of monthly figures prior to 1938. Series added or revised since publication of the 1942 Supplement are indicated by an asterisk (*) and a dagger (f), respectively, the accompanying footnote indicating where historical data and a descriptive
note may be found. The terms "unadjusted" and "adjusted" used to designate index numbers refer to adjustment of monthly figures for seasonal
variation.
Data subsequent tc June for selected series will be found in the Weekly Supplement to the Survey.
Unless otherwise stated, statistics through
1941 and descriptive notes may be found
in the 1942 Supplement to the Survey

1947
June

July

August

September

1948
October

November

December

January

February

March

April

May

June

GENERAL BUSINESS INDICATORS
NATIONAL INCOME AND PRODUCT*
Seasonally adjusted quarterly totals at annual rates:
National income
bil. of dol
Compensation of employees
do
Wages and salaries
do _
Private
do
Military
_
_.
_ do_ _
Government civilian _ _ _ _ _ _
do. _
Supplements to wages and salaries
do
Proprietors' and rental income
do
Business and professional.
do
Farm
_
_
do
Rental income of persons
do
Corporate profits and inventory valuation adjustment
_
bil. of dol
Corporate profits before tax _ _ _ _ _ do_ __
Corporate profits tax liability
do
Corporate profits after tax
do
Inventory valuation adjustment
do
Net interest
do

199.3
125. 3
119.6
102.3
3.9
13.4
5.7
44.6
22.7
14.9
7.0

200.6
127. 6
122.5
105.3
3.7
13.5
5.1
44.4
23.0
14.3
7.1

25.2
28.8
11.3
17.5
-3.6
4.2

24.3
29.1
11.4
17.7
-4.8
4.4

27 5
32.4
12 7
19.7
—4 9
4.5

Gross national product
_
do
Personal consumption expenditures
do
Durable goods
_
do
Nondurable goods
do
Services
_____
_ do
Gross private domestic investment
do
New construction
__ _
do
Producers' durable equipment
do
Change in business inventories
_ _ do
Net foreign investment
do
Government purchases of goods and services
bil. of dol__
Federal (less Government sales)
do
State and local
do

228.3
164.2
21.1
96.3
46.7
26.4
10.3
17.9
-1.8
10.2

227.9
165. 6
21.1
96.8
47.7
25. 6
11.6
17.6
-3.5
8.4

243 8
171 1
22 1
100 2
48 8
35 4
14 0
18.9
2.5
8.2

27.6
15.7
11.9

28.3
15.7
12.6

Personal income.
do_ .
Less: Personal tax and nontax payments do
Equals: Disposable personal income
„__ do_ .
Personal savings!
_ do
PERSONAL INCOME*
Seasonally adjusted, at annual rates:
Total personal income
bil. of dol_.
"Wage and salary receipts, total
do
Total employer disbursements.._ ___ do_
Commodity-producing industries
do
Distributive industries
do
Service industries
do
Government
_
do
Less employee contributions for social insurance
bil. of dol_.
Other labor income
__
do
Proprietors' and rental income
do
Personal interest income and dividends, .do
Total transfer payments
do

189.6
21.4
168.2
4.1

196.7
21.7
175.0

r

212 8
132 2
127 1
109.5
3.6
14.0
5.0
48.6
24.7
16 5
74

215 1
133 7
128 8
111 1
3.5
14.2
r
4.9
50 6
25.0
18 0
75

133.9
129.1
111.0
3.6
14.5
4.9
51.9
25.4
18.9
7.6

T

r

-2.5
4.7

r
243 8
r 172 0
21 4
r ioi 0
49.6
r 38 5
14.3
19 6
'4.6
3 9

248.2
175.1
22.3
102.4
50.4
37.2
14.3
20.6
2.3
3.9

29.0
15.5
13.5

29 4
16.0
13 4

32.1
17 9
14.2

203.1
22 2
180.9
9 7

9.4

26.2
31.4
12.2
19.2
—5.3
46

207.3
r
23 6
r r 183 7
11 7

208.8
21.6
187.3
12.2

192.4
119.6
121.7
54.0
35.0
15.3
17.4

193.2
119.4
121.4
53.6
35.2
15.5
17.1

190.8
120.1
122.2
54.3
35.4
15.3
17.2

206.2
121.9
123.9
55.4
36.0
15.2
17.3

200.0
122.7
124.7
55.9
36.0
15.2
17.6

201.4
125.5
127.3
57.4
37.1
15.2
17.6

207.7
127.4
129.4
59.2
37.4
15.2
17.6

209.4
127.5
129.7
59.3
37.5
15.3
17.6

206.8
126.9
128.9
58.0
37.8
15.4
17.7

205.6
125.7
127.8
57.0
37.5
15.4
17.9

207.4
125. 0
127.0
56.3
37.2
15.6
17.9

'207.2
'126.8
' 128.8
'57.2
37.9
r
15.6
'18.1

211.9
129.1
131.3
59.0
38.2
15.8
18.3

2.1
1.8
45.1
15.4
10.5

2.0
1.8
45.3
15.6
11.1

2.1
1.8
42.8
15.6
10.5

2.0
1.9
45.0
16.2
21.2

2.0
1.9
47.5
15.9
12.0

1.8
1.9
47.1
16.1
10.8

2.0
1.9
51.3
16.2
10.9

2.2
1.9
52.4
16.5
11.1

2.0
2.0
50.0
16.6
11.3

2.1
1.9
49.3
16.6
12.1

2.0
2.0
51.9
16.7
11.8

2.0
2.0
'50.7
'16.8
10.9

2.2
2.0
53.0
16.8
11.0

172.9
172.4
Total nonagricultural income
do
187.4
173.1
184.2
179.7
181.4
184.4
184.7
184.5
187.1
183.7
NEW PLANT AND EQUIPMENT
184.1
EXPENDITURES*
All industries, total
mil. of dol
3,940
4,140
4,960
4,690
Electric and gas utilities
do
450
500
620
610
4 500
170
2,010
2,050
2,500
Manufacturing and mining _
do
1 980
2,190
220
230
Railroad
do
310
270
350
1,260
1,360
1,530
Commercial and miscellaneous
do. _
1,420
1,540
FARM INCOME AND MARKETINGS
Cash farm income, total, including Government
payments*
mil. of doL.
2,211
2,662
3,060
3,773
2,517
3,109
2,927
2,001
2,581
1,866
' 2,103
2,096
From marketings and C. C. C. loans*
do. .
2,185
2,657
3,049
3,759
2,505
3,096
2,909
1,961
2,555
1,837
' 2,065
2,047
2,377
Crops*
do
743
1,205
1,497
2,122
1,187
1,540
1,299
698
1,044
717
'602
670
764
Livestock and products*
do
1,442
1,452
1,552
1,637
1,318
1,556
1,610
1,263
1,511
1,120
' 1,463
1,377
1,613
392
382
4.RQ
334
319
353
293
303
373
329
318
460
392
Dairy products* _
do
Meat animals*
_ do
782
785
958
1,039
711
970
1,019
645
968
593
'725
720
873
234
Poultry and eggs*
do.
251
244
262
232
280
279
237
206
201
255
250
243
' Revised. §Personal savings is the excess of disposable income over personal consumption expenditures shown as a component of gross national product above.
*New series. Quarterly data for 1939-43 and earlier annual data beginning 1929 for national income and gross national product and monthly data for 1929-43 for personal income are published in the "National Income Supplement to Survey of Current Business," which is available from the Superintendent of Documents, Washington, D. C , for 25 cents; revised figures beginning 1944 on pp. 27-29 of the July 1948 Survey. For description of the series on plant and equipment expenditures and data for 1929-45, see p. 24 of the March 1948 Survey; second quarter of 1948
estimates are based on anticipated capital expenditures of business. Revisions for January 1945-May 1946 for farm income are available on request; see note in September 1947 Survey regarding
earlier data; revisions beginning 1945 were in part to adjust the series to levels indicated by 1945 Census data; 1940-44 data have not been similarly revised.




S-l


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102