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the new era in eating
housing prospects are improving
ness review
THE NEW ERA IN EATING
“ A meal fit for a king!” You’ve heard it many
house” pre-cooked and frozen in plastic bags.
times. It’s supposed to be complimentary— not
This regal standard of eating is a new and sur
literal. Yet today, the expression may hold more
prising development. Not long ago, Americans
truth than flattery.
were chided for their simple fare, their lack of
Many Americans, perhaps without realizing it,
now eat as well as royalty. Freezing brings sum
interest in food. Today they demand and receive
menus of imagination and variety.
mertime succulence to their dinner tables the
Since World War II, consumers have formed
year round. Avocados and artichokes, shell
strong new eating and cooking habits. Food
fish and game birds await their fancy in the
shopping and spending patterns have changed
nearest super market. The finest chefs create
and the changes have stood up in the recent reces
pastries for Mrs. Modern to brown and serve.
sion. The postwar period has become a new era
Famous restaurants send her “ specialties of the
in eating.
b u s in e ss re v ie w
FOOD'S PLACE IN THE BUDGET
About 20 cents out of every dollar the consumer
spends goes for food.1
This figure is somewhat higher than it was in the
consumer’s dollar been so keen. Nonetheless,
food has more than held its own.
Those food prices
opment. It was thought that in bad times people
High food prices are a deceptively easy way to
explain the consumer’s food-spending patterns.
would spend more on food, less on other things.
The cost of food has risen faster than the general
Then, when business brightened and incomes
cost of living index. Food is up 158 per cent since
rose, some economists figured that more dollars
1939, while “ all items” are up 108 per cent. Thus,
would be spent on food but that the amount
it could be said, high prices have inflated food
would be a progressively smaller percentage of
spending. It costs relatively more to fill the same
total consumption expenditures. In other words,
old market basket. But if we stop here, we get an
spending on food was supposed to rise at a slower
incomplete picture and run the danger of mistak
ing cause for effect.
depths of the depression— an unexpected devel
rate than consumer spending as a whole.
By this reasoning, food should be a signifi
The pushes behind food prices become clearer
cantly smaller item in today’s “ affluent” budgets.
if we understand food’s split personality. Look at
Yet spending on food is now relatively more
it this way: when the housewife checks out her
important than it was in the early 1930’s.
bundles at the market, she purchases two very
Food spending also should have been slowed
different kinds of resources rolled into one. First,
by other factors. With increasing automation, we,
she buys nourishment— calories, proteins, vita
as a nation, are doing less physical work. We use
less energy and are eating fewer pounds of food
per person.
mins, etc., and, of course, taste. Second, she pur
chases a vast variety of services— things that
have been done to her food like transportation,
Our population mix has changed in a way that
should reduce average food consumption. Com
pared to 1940, there is a greater percentage of
children under 10 and senior citizens over 55.
Both groups are relatively light eaters. On the
other hand, there is a smaller percentage of those
THE HIGHER COST OF EATING
Consumer price index (1935-1939 = 100)
INDEX
2 4 0 ---------------------------------------------------------------------- — —
voracious teen-agers who seem to be eating all
the time (experts say they do eat 20 per cent more
than grownups).
200
We have been living in a cornucopia of con
sumer goods. Houses, cars, appliances, recrea
tion, improved services— never before have there
been so many things other than food to spend
money on, never before has competition for the
' O fficial figures on food expenditures are undergoing a major
re vision. O ur discussion is based on p re lim inary data just re
ceived. T h is article is concerned with groceries, or food fo r use
at home, not food purchased in restaurants.
0 i— i— i— i— i— i— i— i— i— i___ i___ i___ i___ i___ i___ i
1935
40
45
'5 0
i
i
i
i
■
i
■
'55
3
i
b u s in e ss re v ie w
HOW CHANGES IN THE POPULATION MIX
AFFECT FOOD CONSUMPTION
Age Group
(years)
Percentage Distribution of the Population
1965
1956
1940
(projected)
9
16.1
22.1
19.8
10- 19
J8.3
14.9
19.1
20-54
50.7
45.3
43.0
55 and over
14.9
17.7
18.1
Total
100.0
100.0
100.0
0-
Source: Bureau of the Census
From 1940 to 1956 the population changed in a way that tended to reduce food consumption per
person. Light-eating age groups— under 10 and over 55 years— increased in importance while the
percentage of hungry teen-agers decreased.
Between now and 1965, changes in the population mix should have the opposite effect. A sharp
increase in teen-agers, plus a drop in the 0 - 10 year group, more than offset the increase in older folks.
processing, and packaging.2 The distinction is
demand for nourishment continued to increase
important.
with the growing population but it was a slow,
Now, back to the price story. World War II
steady rise that supply factors were able to offset.
touched off a major price upheaval. War work
Still, prices continued to rise. This time, increased
created healthy appetites and incomes to satisfy
demand for services played a prominent part.
them. Ten million servicemen had to be fed and
fed well. Many tons of food were shipped to our
THE INVISIBLE MAID
allies overseas. The demand for food soared, but
the supply was capable of only slow expansion.
The typical post-war housewife had become
dollar rich and minute poor. Her family income
Output grew but 17 per cent from 1940 to 1945.
climbed to new records but she couldn’t find time
The price of food rose in spite of Governmental
for all the things she wanted to do. She wanted
controls and burst out when the controls were
more hours with her children, social activities,
finally removed. The wartime increase in demand
leisure, and often an outside job, but increasing
was mostly for food as nourishment, and those
demands were being made on her time. With her
who create and sell nourishment— the farmers—
growing brood in a new suburban home, she had
benefited most from the price rise. The farmers’
After the country settled back from war, the
to be wife, mother, nurse, laundress, chauffeur,
gardener, seamstress, chambermaid, and cook.
She needed assistance.
2 G ross national product accounting includes these services in
the price of food rather than in the category of personal con
sumption expenditures fo r services.
During the war it had developed new techniques
share of the food dollar rose from 40 to 53 cents.
4
The food industry offered a helping hand.
b u s in e s s re v ie w
for processing food for the military. Now it ap
and frozen, costs 59 cents compared to 33 cents
plied this knowledge to the civilian market and
for an equivalent amount of fresh veal. A choco
began to take over some of the steps in prepara
late cake sold at 89 cents— or more than twice its
tion formerly performed in the kitchen. Food
do-it-yourself cost.
In some instances over-capacity and competi
companies offered items ready to cook and al
ready cooked. More foods were canned, more
were frozen, more appeared in instant form.
tion in the freezing industry have pulled prices
“ Brown and serve,” “ heat and eat,” “ add boiling
rule. In general, the family budget has had to
water” became culinary bywords.
Housewives loved these built-in maid services.
With an assist from appliances, women slashed
the time they had to spend doing kitchen chores.
A recent survey found that the average woman
down but this is the exception rather than the
bear some or all of the cost of built-in services.
The consumer, however, has been willing and
able to pay.
OTHER INFLUENCES
now spends 4 fewer hours a day preparing meals
The strong demand for services is important in
than her mother did.
deed but other factors also have affected the
These hours didn’t come free. The cost of the
time-saving services often was added to the retail
demand for, and the cost of food.
price. Here are some specific examples based on
The household paradox
our own “ research” in nearby super markets. A
In spite of the fabulous birth rate since the war,
frozen, ready-to-serve dinner costs 65 cents while
the size of the average household has been getting
the items it contains could be purchased “ in the
raw” for 35 cents. Breaded veal cutlet, pre-fried
smaller. It has dropped from 3.67 people in 1940
to 3.34 people today. Other forces have more than
offset the work of the stork.
THE SIGNIFICANCE OF SERVICES
BILLIONS $
There has been a mass exodus of in-laws and
relatives since 1945. Many members of large
FROM 1947 TO 1957
SPENDING ON FOOD INCREASED
TH IS MUCH
families have “ undoubled” and set up their own
smaller households. The virtual disappearance of
the domestic, plus earlier marriages, and the
draft also have whittled down the size of the
average household.
Smaller cooking units mean higher food costs
per person. It’s a matter of efficiency. Buying and
W H A T MIDDLEMEN GO T
cooking in quantity is considerably cheaper. A
survey shows the per-person cost of food is 15
per cent higher in a family of three than in a
family of four.
More city folks
The vast movement of people from country to
W H A T FARMERS GOT
city has tended to raise the nation’s food bill.
5
b u s in e ss re v ie w
Food costs more in the big town. It has to be
rediscovered after years of making do with gas
shipped farther and handled more often— in some
and electricity. It’s a costly way to eat, however.
places quite inefficiently. In addition, most city
Only expensive foods seem to be suitable— after
dwellers have to buy all their food. They can’t
all, you can’t quite grille a stew. But Dad’s doing
grow a portion of it as their country cousins do.
As a result 59 per cent of the nation’s people
the cooking and he wants everything to be just
so— so hang the expense! Let’s eat steak!
who live in the city account for 69 per cent of
all food sales.
Super market shopping
Company's coming
Mother’s behavior in the super market has been
subjected to a lot of recent surveying. Motivation
Americans now entertain at home more than they
research people claim she becomes hypnotized by
ever did. Having friends in for dinner and the
the tiered abundance all about her. Dazed and
evening is an increasingly popular custom. Guests
alone with her shopping cart and her inner drives,
of some sort are said to be present at one out of
she falls for “ impulse items” in pretty packages.
every seven home-cooked meals. It is a pleasant
In the end, say the motivation research men, she
way to entertain and it’s cheap compared to other
buys 35 per cent more than she intended.
It’s hard to believe that this figure isn’t exag
forms of playing host but party food does run up
the grocery bill.
gerated. Nevertheless, super markets have unques
Related to entertaining is the great glorification
tionably been a factor in our growing food
of the patio. Summer suburbia has moved its liv
purchases. They offer a much greater selection
ing and cooking outdoors. Charcoal has been
than the corner grocery store of yesteryear.
Modern markets carry more than 5,000 items and
OPERATION DEEP FREEZE
they do their best to make shopping quick and
convenient.
Yearly production of frozen foods
MILLION POUNDS
BEEFED-UP MENUS
Broad changes have taken place in the average
American’s diet. He eats more red meat, more
poultry, and more dairy products. He has cut
back on potatoes and cereals. In other words,
he is getting his full feeling with more expensive
foods.
This is the traditional response to rising
income. People usually buy more steaks and
chicken, less bread and spaghetti, when they get
a raise. Yet, in menus too, new influences have
been at work.
The first is our increased concern about our
waistlines. Modern men and women make a
1947 '4 &
'49
1957 partly estimated
'50
6
'51
'52
'5 3
'5 4
'5 5
'5 6
'57
greater effort to stay slim than did their parents.
b u s in e ss re v ie w
THE CHANGE IN MODERN MENUS
Per capita consumption of selected major foods. Percentage change 1935-1939 average to 1957
CHICKEN AND TURKEY
PROCESSED AND FROZEN FRUIT
DAIRY PRODUCTS
FRESH VEGETABLES AND MELONS
CORN PRODUCTS
-6 0
PER CENT
-4 0
-2 0
20
Second, people have developed a new interest in
nutrition— food for health’s sake.
regular meals but many experts think it is extra.
Both these trends have helped cause shifts in
They feel that snacks don’t reduce the amount we
our diet. Meat is low in calories and nutritious.
snacking amounts to borrowing appetite from
eat when we sit down to the table.
So are most dairy products. Many starchy foods,
on the other hand, will add to your middle with
Adventures in eating
out adding much to your health. Money-wise,
Gourmet cooking— a catch-all phrase that in
proteins and vitamins always seem to be more
cludes anything different or exotic— has become
expensive than calories.
very popular. Maybe the idea started during the
war when GI’s had a chance to see the cooking
Snatching a snack
Americans have developed other costly dietary
customs of other countries. And, no doubt, the
great postwar increase in foreign travel has
habits. One is nibbling. Watching TV, after
played a part. Today most markets have a section
school, coffee breaks, almost anytime, any place
devoted to expensive delicacies for discriminating
is suitable for a snack. The cokes, peanuts, and
palates. Keeping up with the trend, bookstores
potato chips, etc. gulped down between meals in
do a brisk business in fancy and/or foreign
1957 added up to almost $2 billion. Some say this
cookbooks that tell you how to cook everything
7
b u s in e ss re v ie w
from shishkabob to bear’s foot in red wine.
The consumer seems to have recession-proofed
the food industry.
RECESSION TESTED
The strength and permanence of the consumer’s
FOOD IN THE FUTURE
new cooking and eating habits have been tested
The new era appears to be far from over. Ex
by the recent recession. They passed the test—
and then some.
pected increases in income and living standards
should sustain food expenditures and other fac
Retail food sales have trended upward since
tors should provide extra impetus.
summer 1957. This happened in spite of a drop
in personal income. True, rising prices accounted
The number of teen-agers will increase 40.5
per cent by 1965— a rate three times as fast as
for some, but by no means all, of the increased
the growth of the whole population. Their raven
spending on food.
ous appetites certainly will add to the nation’s
Super market chains in this area report little
food bill. Super markets should grow in size and
downgrading in the quality of the food the con
in their understanding of what makes mother buy.
sumer is buying. When business slumps, shifts
Other food-affecting trends like the decline in
to low-price substitutes — from filet mignon to
household size and the centering of activities in
“ franks,” from shrimp to sole— are expected. So
the home are expected to continue.
far, this kind of shifting has been slight.
Convenience foods with built-in services are
The consumer appears to be solidly set in his
likely to increase in importance. The housewife
new food habits. When the recession reduced his
already has indicated in the recent recession that
income, he found other things in the budget to
she is not at all anxious to reassume the chores
slash. Spending for automobiles and appliances
of preparing food. In addition, the industry itself
was trimmed; purchases of furniture and other
can be counted on to develop new ways to make
items were put off. Some of the money thus
its services better and more attractive. An unpre
saved was spent to maintain eating standards.
cedented amount of research is going on and
RECESSION-RESISTANT
many new advances in packaging and processing
are not far away. For example, radiation-steriliza
tion is being readied for commercial application.
The process preserves food so that it can be stored
without refrigeration. You just take a meal down
from the shelf, pop it into your new radar range
for a few seconds, and, Voila!
Food has an exciting future and housewives
can look forward to still more free time. As in the
past, however, these extra minutes may be costly.
The continued popularity of convenience foods
could act as a high-level floor for retail food
prices. Seasonal factors will continue to be impor
tant, of course, but a long-run price decline is
not probable.
8
HOUSING PROSPECTS ARE IMPROVING
,
,
Builders realtors and lenders
look fo r a better fa ll market
Reserve District have strengthened since the early
There is mortgage money to supply all
foreseeable needs
spring. Most of the improvement in demand for
Mortgage markets have made a complete turn
Housing markets in the Philadelphia Federal
new and existing houses has come in the past six
around since the early weeks of this year, and at
weeks or so and further gains appear likely in
present the over-all supply of funds appears to be
the opinion of builders, realtors, and mortgage
exceeding the demand by a sizable margin. Some
lenders in our area.
An ample supply of mortgage money and
say that lenders have been “ beating the bushes”
looking for suitable investments in mortgages.
increasing evidence that recessionary forces in
Scarcely six months ago the expression, “ scraping
the local economy have eased seem to have been
the bottom of the barrel” was the appropriate
the principal factors prompting renewed interest
way of describing a serious shortage of funds
in home buying. But it still is a buyer’s market.
available for housing needs.
price-consciousness
In the present situation, it is a borrower’s mar
remains very much in evidence. Builders are pro
ket and would-be borrowers are shopping for
ceeding cautiously and keeping a watchful eye on
terms. Pressure on the rate structure has reduced
the fall market, which they hope will permit more
the interest on conventional mortgages to a range
Competition
is keen
and
starts than in 1957 when adequate financing was
of 5 to 5 !/4 per cent from an average of 5^ to
so hard to find.
5^4 per cent prevailing a few short months ago.
9
b u s in e ss re v ie w
And conventional loans, with their one-quarter
to one-third or larger down payments, are not in
Demand for existing houses is much
more active
very great demand today except on higher-priced
Sales of existing properties seem to be running
houses— those selling at $20,000 and upward.
somewhat ahead of the new-house market. This
FHA insured mortgages have become most
is particularly true of houses five to six years old,
popular, especially on the liberalized terms per
where financing on favorable terms has become
mitted on properties selling up to and including
more readily available. In this area of the housing
market about the only evidence of stickiness is
$13,500. Many old houses are priced in this
bracket. Since they now qualify for minimum
FHA terms, this type of financing is being used
to be found in some of the older neighborhoods
where zoning regulations have been relaxed, and
extensively. In secondary markets, FHA’s gener
in the case of large dwellings offered at above
ally are priced at par and in a few cases they are
market prices. Reasonably prompt sales of old
said to command a small premium.
houses are taken as a healthy sign. A quick sale
VA guaranteed mortgage loans still are not too
popular with most builders but they have been
gaining favor slowly in our area. They have been
of considerable help in financing existing pro
perties, particularly in cases where an owner has
been willing to absorb the shrinking discounts in
order to make a prompt sale. These mortgages
are accounting for a larger proportion of all home
financing than was the case over most of last year.
Buyer's interest in new homes is returning
Builders operating in the price ranges up to about
$15,000 tell us their sales have picked up con
siderably since June. Some projects above these
brackets also are moving faster now, although in
this area of the market a spotty situation noted
on an existing property many times speeds up
settlement on a new one.
The supply of unsold houses has diminished
Few builders carried a significant number of com
pleted houses over the winter. They became
acutely aware of their weakening market after
mid-1957 and scheduled new projects accord
ingly; however, in a poor early spring selling
season even a small inventory seemed to occasion
some concern. These carry-overs have since dis
appeared and no local builders report an over
hang of any consequence in today’s improved
market.
Vacancy rates continue low in
rental properties
earlier this year seems to persist. As one builder
The number of houses offered for rent has not
explains it, some projects catch on fast; others
been large at any time in the recent past. Those
are just plain sticky and no one knows why. The
that appeared on the spring market seem to have
mass market for new housing very definitely lies
row houses and small twin dwellings priced more
been taken up quickly. Much the same situation
is true of small apartments and duplexes. The
trend of rents still is rising in metropolitan
nearly to suit the budget of today’s price
areas of this District. In the opinion of many
conscious home buyers. But with land and build
realtors, the narrow selection offered in houses
ing costs remaining high not very many projects
for rent and the continuing slow climb in rentals
fall into this category. It is, however, significant
contribute in no small way to the sales demand
that more are in the planning stage.
for houses both new and old. With the help of
below the $13,500 level. In this bracket are the
10
b u s in e s s re v ie w
better financing, more people seem to find that
it suits their budgets to buy rather than pay high
rents prevailing in the more desirable locations.
tunities are opening in the home-building field.
What about builders' plans?
Although homebuilders in this area have become
Construction costs have not changed
significantly
more optimistic lately, their projects are geared
In our area, as in most other parts of the country,
construction costs reached new peak levels last
means that operations still are on a conservative
year. Prices of several building materials, notably
years when the apparent need for new dwellings
lumber, declined late last fall and through the
was considerably greater than at present. It is a
winter months. In some cases, however, the
healthy situation over-all, and our builders say
spring and early summer of 1958 saw a mild
they want to keep it that way.
closely to the current market for houses. This
scale compared with 1955 and earlier postwar
reversal of trends that brought material prices
In line with the moderate improvement exper
back close to their 1957 peaks. Steel prices, for
example, were raised in early August. Current
ienced in recent weeks, some builders’ plans have
been reactivated in whole or in part. These were
forecasts for the “ big three” — lumber, cement,
projects temporarily shelved when the demand
and steel— suggest that a further slow rise may
for houses fell off and both construction loans
be expected in the months ahead.
and permanent financing were so difficult to
Labor costs locally have risen less this year
arrange. This is a welcome and apparently fully
than last. In some instances, long-term contracts
warranted change of pace. But it does not forecast
negotiated in the spring of 1957 called for only
moderate advances in subsequent years. And in
any rapid expansion or a shift to a more specula
tive type of home building for the fall market.
others, the fact that so many construction workers
There are signs that in the weeks ahead more
were laid off or were on short time last fall and
winter seems to have discouraged pressure for
ground will be acquired and development started
— but only if the expected demand from home
wage advances now that more employment oppor
buyers materializes.
11
F O R TH E R E C O R D . . .
Th ird Federal
Reserve D istric t
June 1958
from
mo.
ago
year
ago
6
mos.
1958
year
ago
6
June 1958
from
mo.
ago
year
ago
mos.
1958
LO C A L
CH A N G ES
year
ago
Department Store
Check
Payments
Employ
ment
Payrolls
Sales
Stocks
Per cent
change
June 1958
from
Per cent
change
June 1958
from
Per cent
change
June 1958
from
Per cent
change
June 1958
from
Per cent change
Per cent change
SUM M A RY
Factory*
United States
year mo.
ago ago
year
ago
2 — 10
+26
+24
+
mo.
ago
year mo. year mo.
ago ago ago ago
+
— 8 +
year
ago
Per cent
change
June 1958
from
mo.
ago
O U TP U T
Manufacturing production
Construction contracts . ..
Coal mining ........................
1
4- ^
+20
+
— 13
+ 2
— 17
-1 3
— 8
—26
+ 2
+ 12
+20
— 10
+ 18
— 17
— 10
— 1
—21
EM P LO Y M EN T AND
IN C O M E
Factory employment
(Total) ................................
Factory wage income . . . .
0
2
— 8
— 11
— 7
— 1
+ 2
— 7
— 1
— 4
+
— 11
+
1
-1 0
— 9
— 4
— 3
— 3
— 1
+
3
Reading ........
B A N K IN G
(A ll member banks)
Deposits .................................
Loans ......................................
U .S . Govt, securities . . . .
Check payments ................
+
4 — 12 +
7 — 14
+
1 -
6 +
2 — 4 -
0 -
8 +
1 — 8 — 7 -
Philadelphia .
TR A D E *
Department store sales ..
Department store stocks .
Lancaster . . . .
+
Scra n to n ........
+
+
+
+
+
+
2
2
2
2
4
7f
+ 3
+ 1
+ 7
+ 4
+ 15
+ It
+ 3
+ 3
+ 3
+ 3
+ 4
+ 12
+ ZT + 3*
0
0
6
0
+ 15
+ 12
+23
+ 7f
+
+ 8
H“ 1
+ 19
+ 19
+20
+ 13
+
+
+
+
+
+
5
2
10
9
14
5
+
+
+
+
2
3
Trenton ..........
o*
‘ Adjusted fo r seasonal variation.
+20 C itie s
{Philadelphia
1 — 7 +
0 -1 0
+
2 -1 3
9 +
6 -
5 +
5 +
&
0
+
5 +
5
5 — 9 — 6 — 5 — 10 — 7 +
1 +
2
9 — 8
— 14 — 4 -
+
1 -1 0
+
1 — 14 + 12 — 3 +
0 +
9 + 10
5 — 5 +
8 + 16
8
0 — 6 +
1 — 9 — 8 — 8 — 2 — 1 +
W ilm ing to n ..
0 — 9 +
1 -1 0
1 — 5 +
4
York ................
+
7 + 13
7 +
W ilke s-Ba rre .
P R IC E S
1
3
i
0
— 2 — 4 — 6
5 +
0 +32
0 — 6 — 6 — 3 -
^
+22
3 -
‘ Not restricted to corporate lim its of citie s but covers areas of
one or more counties.
3
@FedFRASER