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DECEMBER 1955 in e s s view cOERAL RESERVE 3ANK OF PHILADELPHIA VING AT THE SPEED LIMIT? drive the economy right at the speed limit, . Will it happen next year? There are factors both inflation and recession. There are also business will drive at the speed limit in 1956. CURRENT TRENDS Early-season expectations of Christmas trade in Third District department stores range from “ promising" to “ excellent." Additional copies of this issue are available upon request to the Department of Research, Federal Reserve Bank of Philadelphia, Philadelphia 1, Pa. 1956: DRIVING AT THE SPEED LIMIT — Did you ever try to drive your car at exactly the faster, no slower. Our chances of attaining the speed limit, say 50 miles an hour, for a good speed limit is what this article is about. period of time? If you have a finely tuned motor, are a skilled driver, and don’t come upon too many sharp curves the chances are you might W hat’s the speed limit? Before talking about how fast we might be going be able to do it. But it’s difficult— the odds are in 1956 it might be well to define the “ speed against you. You tend to pick up speed or to limit.” This isn’t easy. The fact is no one knows slow down; to average out at around 50 miles at precisely what speed the economy should an hour but not to drive precisely at that speed. proceed once full employment is attained. One The American economy is racing into 1956 thing we know is that we can’t keep up the rate at a very fast clip. But until now this has been of increase we have enjoyed over the past year all to the good. In 1954 we were running well or so. This would clearly be excessive. under the speed limit. So in 1955 excessive speed In the third quarter of 1954, our total output, was called for to make up the lost ground— to Gross National Product (GNP) was running at average out at 50 miles an hour. Now, how an annual rate of $360 billion. One year later ever, comes the real test. Will the rate of expan total output stood at $392 billion and by the end sion slow down just to the speed limit, and hold of 1955 it is expected that we should be around there? $400 billion. This means that in the space of 15 If we don’t slow down a bit it will probably months or five quarters our total spending has mean higher prices, shortages, and resulting dis advanced by $40 billion on an annual basis. locations. If we slow down too much it will tend That’s an average increase of about $8 billion to be reflected in unemployment, business fail every quarter. ures, and repossessions. increases have held quite close to $8 billion. sirable. Neither course is de The objective is the speed limit— no And surprisingly, the quarterly For the year as a whole, our total output for 3 business re v ie w 1955 will probably stand at about $388 billion. satisfy our requirements. So let’s use 4 per cent This is up $28 billion from 1954. as our rule of thumb. The question you might On a per centage basis the increase is about 8 per cent. It’s been a tremendous year, and a tremendous ask is 4 per cent on what— 4 per cent higher than the total for the year 1955 or 4 per cent After all we began 1955 above the annual rate for the fourth quarter of with some slack in our economy. The most im 1955? Ordinarily we think a 4 per cent increase year was necessary. portant evidence of slack was in employment. In on a yearly basis provides the desired expansion. the early months of 1954 we had just 60 million people working an average of about 39 hours a That’s all right if you start from a year of full employment— a slackless year. But the year 1955 week, and 3*/2 million people were not working does not exactly fit this description. We spent at all. By November of this year this situation had much of 1955 racing to make up the ground lost improved so that 65 million people had jobs, the in 1954. We probably didn’t take up all of the average workweek was 41 hours, and only 2.4 slack until the final quarter. So that it might be million people were unemployed. The slack is more realistic to set as our speed limit, a 4 per virtually gone. To take up this slack our economy generated cent increase in total output from the fourth an $8 billion increase in total output quarterly, In dollar terms this means the economy would quarter of 1955 to the fourth quarter of 1956. bringing us up to about a $400 billion output in be rolling along with total output at an annual the final quarter. Now we can’t relax our efforts rate of $416 billion in the final quarter of 1956 and content ourselves to sit at the $400 billion — a 4 per cent increase over the fourth quarter output for the entire year of 1956. We need con of 1955. As a yearly total this sets the speed stant growth because both the size of the labor limit at around $410 billion for 1956 as com force and its productivity— what is produced pared with $388 billion in 1955— just about a per hour per worker— grow larger year after 6 per cent rise. This means too, that our quarter- year in this country. If production and demand to-quarter increases in total output at an annual should remain at present levels we would soon rate should average about $4 billion— just half have rising unemployment— more slack. So we the amount of quarterly increase during the should keep increasing our total output— but not catch-up in 1955. by $8 billion a quarter. That’s a catch-up rate. What we are looking for now is a rate of ad Will we drive at the speed limit? vance that will absorb the additions to our labor The desirability of having our economy running force, reflect the increases in productivity, pro at the speed limit in 1956 is obvious. But the vide feasibility remains a question. Will we do it? out citizens with a higher standard of liv ing, and accomplish all this without a general A straight sector-by-sector analysis of the eco rise in prices. In other words we are looking for nomic prospects for 1956 seems to give a re the millenium. markably affirmative answer to this question. In What rate of increase will give us this objec short, yes, we will drive at the speed limit— if tive? About this we can’t be positive. A simple Government and business spending do what extension of the long-term average growth of seems to be in prospect, and if consumer spend GNP indicates a 4 per cent increase would ing stays in about the same relationship to 4 b usin ess re v ie w the total of Government and business spending. But a straight, conventional, sector-by-sector goods and services the Government buys are rising. analysis of economic prospects for 1956 may not give us an accurate answer. Psychological fact State and local spending ors, political considerations, and other forces State and local government spending has in may strongly influence business activity in 1956. creased between $2 and $3 billion each year If they do, we may find ourselves driving faster since 1946. Despite all of this spending, schools than the speed limit or dragging below the de are dangerously overcrowded and highways are sired level of activity. We’ll take a look at some alarmingly inadequate. In other words, the main of these special factors which might upset the pressures for more spending are still with us. conclusion drawn from the conventional ap For 1955 as a whole, state and local spending proach to the outlook. First, however, let’s look totaled $30 billion. There is good reason to be at the economy conventionally, sector by sector, lieve that in 1956 this spending will reach $32 and see how it adds up. billion or $33 billion. Taking Federal, and state and local Govern GOVERNMENT SPENDING ment spending together we might look for a total All Government spending for the year 1955 will of about $79 billion in 1956 as compared with probably total about $75.8 billion; as such it the present $76 billion. This looks forward to absorbs about 20 per cent of our total output. an increase of about $1 billion Government expenditures are usually broken spending and $2 billion in state and local ex into two main parts— Federal, and state and penditures. in Federal local Government. BUSINESS INVESTMENT Federal spending While the role of Government in economic af Federal Government spending is the larger cate fairs has expanded greatly, economic activity in gory. National security spending makes up nine- this country is still primarily private business tenths of all Federal spending. For the year 1955 activity. For this reason it is sometimes difficult as a whole, Federal spending for goods and serv to understand why business spending as repre ices will total about $45 billion and national se sented in GNP accounting is smaller than either curity spending about $40 billion. Quarterly, Government or consumer spending. Of course, it Federal spending leveled out after declining is because that part of GNP assigned to business sharply in late 1953 and through most of 1954 as spending includes only those goods which busi a result of the end of the fighting in Korea. nessmen themselves will hold or make final use The outlook is for Federal spending to drift of. Businessmen invest in and make final use of slightly higher. Recent statements by Secretary capital equipment in order to be able to produce, of Defense Wilson have indicated that it will be and this is measured as business spending. In difficult if not impossible to reduce further our addition, business must hold inventory, and to spending on national security. Relief for farmers the extent this inventory increases or decreases and depressed areas makes increased non-defense this is counted as business investment or dis spending a good possibility. Then too, prices of investment. 5 business re v ie w Inventories BUSINESS SALES AND INVENTORIES The fact is that at any given time businessmen INDEXES, 1 9 4 7 -4 9 = 100 will hold a tremendous volume of inventory— at present around $80 billion worth— just as they own a gigantic block of plant and equipment. The important factor as far as the outlook is concerned, however, is not how much business holds presently but what is going to be their buy ing policy in the future. Are businessmen going to try to raise, lower, or maintain the level of current inventory holdings? When businessmen decide to lower their vol ume of inventory it means they are selling from their shelves. In other words, production does not feel the full pressure of final demand, and inventory policy is acting as a drag on economic activity. When businessmen maintain their in ventory positions they are a neutral factor. A policy of building up inventory adds to demand seen from the chart. But the recent increase in and causes the tempo of economic activity to sales of nondurables has brought the stock-sales quicken. ratio to the lowest level since 1950. One impor In 1955, businessmen stored up. They accum tant reason why inventories have not climbed so ulated inventory. This came on the heels of 1954 fast is the limited availability of supplies where when businessmen liquidated inventories. demand has been strongest. The big swing in inventory policy represented a If sales continue at the present pace in 1956, change from a $3 billion drag in 1954 to a $3 inventories could probably expand at the same billion drive in 1955— an upward thrust of $6 rate as in 1955 without seeming excessive. So billion. that businessmen’s spending on inventory in One thing we can be pretty sure of is that in 1956 may not be a drag on economic activity. ventory buying won’t provide another $6 billion On the other hand, it is doubtful that business fillip to demand in 1956. It may not, however, men will ehoose to accumulate inventory faster act as a drag on economic activity as many think than in 1955. it will. One yardstick against which we might measure the current volume of inventories is Plant and equipment spending sales. Using sales as a yardstick the current level of inventory appears low. part of business expenditures. Stocks are below their 1953 peak in durable Spending on plant and equipment is the other Generally this spending reflects businessmen’s appraisal of the goods lines, while sales are at record levels. The future. stock-sales ratio is at a four-year low. Nondur they expand their capacity and keep equipment able goods inventories are more stable as can be up to date. If the future does not look too bright 6 If they expect rising business activity b usin ess r e v ie w they might make only the most necessary re sensitive to changes in mortgage terms. Mort placements and modernizations. Plant and equip gage terms have recently stiffened somewhat— ment expenditures have been rising since the first terms are still generally easier than in 1953. But quarter of this year. even this slight tightening is apparently being The total for 1955 will probably exceed 1954 by about $2.5 billion. felt. This is a situation to watch. The best esti The recently completed McGraw-Hill survey mate seems to indicate that new housing starts of businessmen’s intentions for 1956 indicates a will be affected adversely in 1956 if the present 13 per cent increase in fixed investment outlays. situation in the mortgage market continues. On This would be the largest increase since 1951. the other hand, the decline in starts is not ex Plant and equipment expenditures of manufac pected to be drastic. Starts seem likely to reach turers are to rise 30 per cent according to this at least 1.1 million. survey. Assuming that businessmen spend as much on ing, however, the results might not be the same In terms of dollars spent on residential hous plant and equipment as they have indicated, the as for starts. Builders seem to be putting up a total of business spending may rise about $4 larger proportion of higher-priced homes. This billion in 1956. This assumes no change in the change in the “ housing mix” tends, at least par 1955 rate of inventory accumulation, and a $4 tially, to offset the reduction in the number of billion increase in spending on fixed investments. starts. In addition, spending for home modern ization is likely to be higher in 1956. CONSUMER INVESTMENT IN HOUSING These factors could well mean residential housing ex Money spent for new housing is a special form penditures will push about $1 billion higher of consumer spending. It is investment spending. next year. Historically, it has fluctuated violently, like busi ness investment spending. In the post-war period, CONSUMER SPENDING however, housing expenditures have been fairly Consumer spending is nearly twice as large as stable at a high level. Government, business and consumer investment This year, the number of private non-farm spending combined. As such it throws a lot of dwelling units started is expected to be about 1.3 weight in total spending. Which way will con million. This marks the seventh consecutive year sumer spending swing this year, up or down? housing starts have exceeded one million. The high point, 1.4 million, was achieved in 1950. Since 1950, the number of housing starts has No one knows— that’s for sure. But there is some reason to expect that if Government spend ing increases $3 billion and business spending been running way beyond the rate of household increases $4 billion and consumer investment in formation plus physical obsolescence. The dif creases $1 billion, that consumer spending will ference has been made up by more rapid replace increase proportionately. ment or a general upgrading. Factors, such as What is proportionately? Generally, what we rising income, high birth rate, migration, and mean is that consumers will tend to maintain ready availability of mortgage money, have pro their share of a growing volume of output. The pelled this rapid replacement demand. Replacement demand is postponable. consumers’ share o f our total output in prosper- It is ( Continued on page 10 ) 7 BUSINESS, FROM FORMER PEAK TO PRESENT LEVEL IN D E X 120 IN D E X IN D E X _ 120 120 110 100 no- 110 IN D E X IN D E X ^392 100 ' 3 6 9 * 5 - - --------------------------------- --------------------------------------------- 100 100 356 i 90 90 80 w 1 80 ■ - . 1953 1 1 ! 19 54 . 1 IN D E X i so 1 1 W 1955 Since the second quarter of 1953 total spending has proceeded through recession and recovery. 90 ~ 1953 2 1 1954 1 1 I 1 1955 Over this period consumer prices have been stable so that the dollar changes are generally "real." IN D E X U 1953 3 Business investment fluctuated widely mainly as result of a turn-around in inventory buying. IN D E X 4 954 I K/v* 1953 1955 Consumer spending on durable goods also moved in the same general direction as, but faster than, total spending. 5 1954 1955 Consumer investment in housing dipped briefly, but recovered sooner than general business activ ity. IN D E X IN D E X l20*aMB 90- 1953 6 1954 1955 Spending by state and local govern^ ments gathered strength through out the period. 1953 7 1954 1955 Consumer income after taxes was well maintained even through the reces sion. 1955 8 This ^enabled consumers to increase their spending on television repair, car insurance, air travel and other sendees. 9 Consumer spending on nondurables — food and clothing— pretty much followed the trend of after-tax in come. 1953 1955 954 Federal G o v e r n m e n t spending dropped off sharply in 1954, but has recently levelled. The charts above are drawn on an index basis with second quarter 1953 equal to 100. This allows us to get quickly a picture of relative changes. The figures within the charts are in billions of dollars, except for chart 2 which is an index of prices. 8 9 business re v ie w ous peacetime years usually varies somewhere from 70 per cent before Korea to 63 per cent in between 65 and 70 per cent. In 1955, consumer 1951, 1952, and 1953. Increased taxes, a higher spending absorbed about 65 per cent of our total rate of savings, and instalment credit restrictions output. If Government spending goes to $79 helped hold back consumer spending in these billion in 1956, business spending rises to $49 years. A reduction in taxes, a lower rate of sav billion, and consumer investment in housing ings, and easy instalment credit helped to restore pushes up to $17 billion; then consumer spend the consumer sector to around 65 per cent in ing would have to increase to $265 billion to 1954 and 1955. maintain its 65 per cent share of GNP. Strangely In the absence of another defense squeeze it enough, consumer spending of $265 billion would is doubtful whether the consumer will settle for bring total spending up to $410 billion for the less than 65 per cent of our total output. This year 1956. This would be exactly the level set proportion might in fact be too low if we assume as the speed limit in the early paragraphs of some further reduction in taxes. So that a con this article. ventional, sector-by-sector analysis of prospec tive spending for 1956 reveals that a GNP of GROSS NATIONAL PRODUCT B IL L IO N S $ $410 billion is likely. Our earlier discussion of the speed limit for 1956 showed it also to be highly desirable. IT’S CONVENTIONAL BUT IS IT REALISTIC? This article should probably end right here. After all we set up a speed limit for 1956 and then showed how it is not only possible but a good bet that we will drive at this limit. But is this the whole story? Haven’t we implic itly made some pretty broad assumptions and haven’t we omitted some important factors from consideration? Yes, we have. Any sector-by-sector analysis of this sort im plies certain independence of action that is un realistic. This is especially so for the business and consumer sectors. Consider for a moment The chart shows the level of total spending and the following: To a large extent business spend its composition for the years since 1948 with a ing depends on consumer spending; and on what projection for 1956. It shows that spending by business thinks the consumer will spend; and on consumers was squeezed when defense spending what Government does; and on what business rose after the Korean outbreak in 1950. The thinks Government will do in case of an eco total of consumer spending didn’t decline but it nomic setback. Exchange the words business and could not rise in proportion to the growing total consumer in the preceding sentence and we are production. The consumers’ share was reduced confronted by the same basic dilemma— the in to b usin ess re v ie w evitable interdependence of each sector on the others. It also hints at how important timing Maybe consumer demand exceeded expectations. In any event, business spending on plant and equipment increased in 1955 instead of decreas can be. Businessmen always seek to anticipate con sumer demand. In response to anticipated or ing as businessmen themselves said it would. This year the same thing could happen. Busi actual changes, business shifts resources from nessmen’s plans could change. areas of lesser to areas of greater demand. Some poised is business that 1956 could easily turn industries are growing while others are shrinking. inflationary or drift into recession. So delicately New industries and products come into the mar ket. Investment decisions are adjusted to chang Inflation in 1956? ing conditions. We will be entering 1956 with a great deal of The level of consumer spending ultimately de business momentum. Government and business Therefore, to some extent spending are sure to be at a high level for the consumer spending is dependent on business first few months at least. What, therefore, may pends on income. spending. But consumer expectations are impor be the effect of the hike in the minimum wage tant too. If jobs and income look secure and effective March 1? A comparison of this situa consumer goods appear attractive some people tion with the results of previous minimum wage will tend to spend more than their current in increases is not altogether valid. come. They reach into past savings or use instal versally in previous instances, actual wages were ment credit to supplement current earnings. If on the other hand, workers feel overtime will be very near if not above the minimum then estab lished. On March 1, 1956, about two million reduced or they fear being laid off, they go home workers will get an automatic pay boost. The and say to their wives, “ Y ou’d better start cutting hike in wages for these workers will average down and save wherever you can. I might be around 13 cents an hour. Of course, 25 cents an hour will be the maximum increase. next.” Almost uni An economy such as ours, where interrelation The workers getting this boost are low-income ships and expectations are so important, makes earners. That means— nine chances out of ten— some fluctuations in general business activity in that they are 100 per cent spenders. evitable— some departures from the speed limit. added income will ring cash registers. This is the price we pay for a dynamic economy, and it is not too high for what we gain. So this Then how about the indirect impact of the change. When the pay of workers in the lower bracket is raised the pay of workers in higher Saying isn’t doing brackets is likely to be adjusted upward to main Sure, businessmen say they are going to spend tain the differential. 13 per cent more for plant and equipment in took place in 1950 when the floor was raised to This sort of adjustment 1956 than they spent in 1955. But saying it isn’t 75 cents an hour. It may happen again on a the same thing as doing it. At this time in 1954, broader scale, since many more people will get businessmen said they were going to spend less raises under the new minimum wage than in in 1955 than they had actually spent in 1954. 1950. Something happened to change their plans. If this isn’t enough inflationary potential, 11 business re v ie w think of the companies employing those workers. confirmed pessimists— projected a level of car The firms won’t all be willing or able to absorb sales in the neighborhood of 5.8 million for 1955. the higher labor bill. Some will mark up prices The industry will probably sell nearly two mil to offset the hike in wages. lion more than that. That’s a miss of nearly 40 The adjustments to the change in the mini per cent on the up side. mum wage will be taking place largely in the Who would deny that this tremendous demand first half of 1956. Then suppose we get a reduc for cars, which exceeded expectation by 40 per tion in taxes effective July 1. This isn’t impos sible. A lot of people think we will. Most of cent, was a prime factor in the upward revision of business spending plans? them say it will take the form of a rise in per It was no accident, for example, that the rec sonal exemptions. If this is the case, most of the ord level of car production in 1955 was accom relief will flow to low-income receivers— the 100 panied by a record steel output and the decision per cent spenders. Again you have a good case of leading glass firms to expand to keep pace for additional demand and potential price spiral with demand. The automobile industry is impor ing pressures. tant. It exerts a great influence on our economy. And don’t forget businessmen’s spending is This year a consensus of the same automobile influenced by consumer spending. In 1955 busi demand experts would put car sales at about the nessmen spent more than they said they would, same level as in 1955. But what’s to prevent probably because consumers bought more than them from missing the mark by 40 per cent businessmen thought they would. Business spend again? This time on the under side. That’s no ing could exceed expectations again in 1956. prediction, but if you can miss going up you can All right, there is a case for inflation. These are not the only factors that could lead to rising prices, but we can’t explore every avenue. It may seem surprising but you can make a good case for recession too. Recession in 1956? What’s the basis for most of the optimistic fore casts for business activity next year? If you had to choose one factor, it would probably be busi miss coming down. Certain factors will be working against auto mobile sales in 1956. Style changes are few— instalment credit can’t get much easier— what will be the effect of the congressional hearings on the marketing of cars? These are imponder ables, but they could mean another year of sur prises in the automobile industry. A big factor is timing. If car dealers find nessmen’s plans to increase spending on plant themselves with skyrocketing inventories in the and equipment. But our experience only last early months of 1956, they’ll resist deliveries year illustrated the tentativeness of these plans. from manufacturers and production may have Businessmen watch consumer demand; it is an to be cut back, This might also cause other man understatement to say they are influenced by it. ufacturers and businessmen to take a second look Of all the surprises in 1955 probably none could surpass the size of consumer demand for automobiles. Late in 1954 a consensus of ex perts on automobile demand— none known to be 12 at their capital investment plans. It wouldn’t be an optimistic look. So there is one road that might lead us into recession. There are others. b usin ess re v ie w CONCLUSION This is especially the case when the economy is Three possible forecasts are implied in the fore running at the speed limit as we are in the final going. The first is for a year of unparalleled quarter of 1955. Any sudden turn in the road prosperity. A full year with the speedometer ahead can cause us to slow down or careen. registering right at the speed limit all the way. Businessmen, bankers, all of us must remain The second indicates demand may very well be flexible to cope with changing conditions. come excessive and that price rises will mar the Actually, however, everybody thinks he knows business scene. A year of crazy hot-rod speed what is most likely to happen. As good a guess ing. The third says that a recession is likely. A as any might be the first forecast. year with a sputtering engine. doubt many, feel this is the least likely. After The three forecasts make it obvious that Some, no all, how can we drive at the speed limit for the 1956 is a hard year to predict. They all are. entire year? There are just too many uncertain elements. tion, but it could happen in 1956. CURRENT It is difficult to answer that ques TRENDS Current business indicators are predominantly dollars. This year the spending pattern in these favorable. Employment,, production, and income establishments is being watched with more than are at high levels and the economy is operating very close to full capacity, as pointed out else passing interest. Shoppers’ response to gift mer where in this issue of the Business Review. How measure of consumer buying power than the ever, in agriculture the cost-price squeeze con historical fact that department store sales have tinues; consequently, farmers take a dim view been exceeding 1954 levels since the early spring. on the outlook for next year. That was to have been expected, because activity chandise being offered should provide a better One area of significant strength is consumer in many sectors of the economy, including retail spending, now highlighted by a Christmas shop trade, was in the “ doldrums” over much of last ping season that is proceeding under a full head year. It was not until the late fall of, 1954 that of steam. It is at this season that many observers decisive improvement came to retail lines. Then, watch retail volume more closely than some of the best Christmas season ever furnished the the other business indicators for possible clues basis for making a more significant comparison. to economic trends that may be in the making for the early weeks of a new year. In the period from Thanksgiving to Christmas, Third District department stores are optimistic business volume in department stores is one of As we go to press, the current Christmas shop the handiest measures of the ability and willing ping season has two weeks to run, so the impres ness of consumers to spend their hard-earned sions received in talking with department store 13 business r e v ie w executives seem to provide the best clue to the ber have helped a lot in the opinion of store ex full season’s expectations. “ Promising” to “ ex ecutives. The only real difference seems to have cellent” are the opinions most frequently ex been that some shoppers liked to look at these pressed regarding prospects of consumer spend checks a little longer than others. ing in Third District department stores for the All through 1955 consumers spent freely for whole period from Thanksgiving down to Christ expensive things like houses and automobiles. mas Day. Naturally, the current degree of en This took a lot of cash and at the same time thusiasm varies considerably from one city to meant substantial commitments against future the next, depending on the early-season response income. of the shoppers. volume seem to have been made in some areas other retail merchants, could not help wondering how much demand would be left by Christmas beginning the Friday after Thanksgiving, while time. in others that was just another shopping day mark, they tell us there is little cause for worry. Thus, gift selections in large noteworthy only for high store attendance. In places like Wilkes-Barre, Harrisburg, Christmas started With the season now past the half-way In some places gift selections indicate a very Lancaster, and shopping So the department stores, along with in earnest as early as mid-November, when pro definite preference for the higher quality— and more costly— merchandise. Here and there we found department stores that already had re motional sales of one sort or another brought in ordered on certain of these items. the bargain hunters. According to some store everywhere the proportion of luxury goods to Just about executives, these events not only met with an excellent response, but more importantly this for this season. Even the so-called “ big ticket” necessities demanded by shoppers seems normal early-season demand seemed to spill over into the items like furniture, television, and appliances strictly gift merchandise categories. do not appear to have suffered unduly as a result Philadel phia department stores experienced heavy shop of expenditures and commitments made earlier per attendance in their downtown establishments this year. the day after Thanksgiving, but a tally of dollar So, all in all, early-season results seem to point sales failed to uncover an unusual amount of to a good volume of business in our Third Dis buying. Similar conditions are said to have pre trict department stores. No one with whom we vailed in some of the smaller cities, including talked professed to see any significant evidence Trenton, Reading, and Scranton. of price consciousness. Although the old saying “ do your Christmas If anything, shoppers seemed to be putting price tags in a place of shopping early” was not taken too seriously secondary importance. If this Christmas season everywhere, early December sales measured in turns out better than the one in 1954— and al dollars and in number of transactions seem to most all the department store executives we have been a source of great encouragement to talked with thought it would— it augurs well for department stores in all Third District cities. the business trends we may look for in the early The Christmas clubs that paid off in late Novem months of the new year. 14 15 F O R THE R E C O R D . . . Factory* Third Federal Reserve District Per cent change SUMMARY U n ited States Per cent change O c to b e r 1 95 5 from mo. ago year ago 10 mos. 1955 from year ago O c to b e r 195 5 from mo. ago year ago <s_necK Payments Em ploy ment 10 mos. 1955 from year ago Payrolls EM PLOYM EN T A N D IN C O M E Factory employment ( T o ta l) .. . TRADE** Department store sales............ B A N K IN G ( A ll member banks) Deposits....................................... Loans............................................ Investments.................................. U.S. G ovt, securities.............. O th e r ......................................... Check payments......................... 8 + 3 9 + 13 + 16., + 13 + + + 3 -6 + 2 Per cent Per cent Per cent Per cent change change change change O c to b e r O c to b e r O c to b e r O c to b e r 1955 from 1955 from 195 5 from 19 5 5 from 0 0 -1 -1 16 A lle n to w n . . mo. ago + 1 + 8 + 2 year ago mo. ago year ago year ago mo. ago + 1 6 0 + 10 + 9 + 7 + 1 0 + + + 5 8 6 + + mo. ago year ago + 26 0 + 17 0 + 13 FHarrisburg. . 0 + 8 + 2 + 30 0 + 8 0 +15 + 2 + P h ila d e lp h ia . + 2 + 12 Per cent change O c to b e r 1955 from 0 0 0 + 7 +3 + 10 + 1 1 R e ading........ + 2 +6 + 8 +23 -3 + 7 +15 + -2 + 4 + 11 7 + 3 + 23 + 10 + 3 + 11 + 3 7 5 + 1 + 19 2 + 6 + 11 - 1 + 11 0 - 3 - 8 + 29 S cranton. . . . + 1 + 1 + 1 + 16 -1 -1 -1 + 1t -1 1 -1 0 -1 3 + 14t Ot ’ Based on 3-month moving averages. ••A d ju s te d for seasonal va ria tio n . + 11 + 23 + 18 3 year ago Lancaster. . . + 3 + 12 - 2 - 3 + 1 + 7t +1 +1 +1 +1 -1 + 4 ot 0 0 PRICES Consum er.................................... + 12 + + 10 Stocks Sales LOCAL CHANGES mo. ago O U TP U T 0 M anufactu rin g p ro d u ctio n . . . C onstruction c o n tra cts*........... - 5 C o a l m ining................................ - 4 Departm ent Store - n t2 0 C ities JPhiladelphia + 2 + 18 - 9 -1 2 + 3 + 15 + 2 0 0 +2 + 1 + + 4 + 12 + 1 - 1 + 9 + 8 T re n to n ......... + 2 +9 + 4 +19 W ilkes-B arre. + 1 +6 + 1 + 10 -5 +13 + 9 + 12 - W ilm in g to n . . -6 + 7 -6 +14 + 4 + 13 + 8 + 12 - 2 0 + 20 0 0 Y o rk .............. + 3 + 5 + 12 + 4 + 29 + 7 + 19 - 0 8 0 1 + 7 + 9 2 + 15 • N o t restricted to co rp o ra te limits o f cities but covers areas of one or more counties.
@FedFRASER