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SURVEY OF CUEEENT BUSINESS August 1947 Chart 3.—Gross National Product BILLIONS OF DOLLARS 250 200 - 150 - 100 - 1945 5- 1946 1947 QUARTERLY TOTALS, SEASONALLY ADJUSTED, AT ANNUAL RATE 47-399 Source of data: Office of Business Economics. 1947, American business and foreign countries made a net addition of more than 24 billion to the income stream. This was offset by personal savings of 11 billion and a government surplus (calculated according to national income definitions) of 13 billion. In the second quarter of 1945, a Government deficit of 48 billion dollars was the main expansionary factor. Consumers, businesses, and foreign countries had an excess of receipts over expenditures offsetting the government deficit. Heavy postwar consumption and investment demand, bidding for a diminished labor supply in the framework of a productive organization that had not yet made a complete adjustment to postwar conditions, was sufficient in terms of dollars not only to offset the sharp reduction of government demand for war output, but, in addition, to give rise to Table 2.—National Income and Product, First and Second Quarters of 1947 [Billions of dollars] earlier, under the influence of wartime incentives, shortages, and price controls, they had saved 34 billion dollars, or three times as much, out of a disposable income of only 153 billion. This postwar shift in consumption outlays, influenced to a considerable extent by the shortages created by war, was one of the most important factors supporting economic activity at a high level after Government demand for war output had been withdrawn. The high volume of domestic business investment has been another. As can be seen from the table, domestic business investment, at an annual rate of 29 billion dollars, represented 13 percent of gross national product in the second quarter of the current year. In the second quarter of 1945 it amounted to only 8 billion, or 3 percent of total production. It will be recalled, of course, that at that time the capital formation privately financed measured only a fraction of total additions to capital equipment. The increase in net sales to foreign countries, also rebuilding their peacetime economies, further added to the postwar demand for the output of American business. In the second quarter, the net demand on this score was 11 billion dollars, as contrasted with a negative of 3 billion dollars two years earlier, when the rest of the world was, on balance, a seller of goods to the United States. The shift in the situation is also shown by the net receipts and expenditures of each sector. In the second quarter of Seasonallyadjusted, at annual rates Unad* justed II 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 income 2 Business and professional Farm Rental income of personsCorporate 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 48.9 30.9 29.5 24.9 1.2 3.4 0) 31.6 30.1 25.7 1.0 3.4 197.6 C1) 124.9 125.8 119.4 120.3 101.5 103.0 4.6 4.1 13.3 13.1 1.4 1.4 5.4 5.5 11.8 5.6 4.4 1.8 11.8 5.5 4.5 1. 47.0 22.4 17.6 7.0 47.0 21.8 18.0 7.2 5.5 0) 22.4 0) 7.1 C1) 29.0 C1) 2.9 0) 0) 11.6 4.3 0) •0) - 1 . 7 -1.0 - 6 . 6 -4.1 3.3 3.3 .8 .8 4.5 4.3 17.5 16.7 GROSS NATIONAL PRODUCT OR EXPENDITURE Gross national product Personal consumption expenditures Durable goods Nondurable goods Services Gross pri\ate domestic investment New construction R esidential nonfarm Other Producers' durable equipment Change in business inventories Net foreign investment Government purchases of goods and services Federal Less: Government sales-State and local 53.5 55.5 222.2 226.0 36.5 4.1 21.5 11.0 39.2 156.8 159.0 4.8 19.0 20.0 23.4 94.0 95.0 11.0 43.8 44.0 8.0 2.1 .9 1.3 6.5 2.4 1.0 1.3 1.7 2.3 -.3 2.7 6.7 4.4 .6 2.8 7.1 4.4 .5 3.1 29.6 10.3 4.4 5.8 28.8 9.5 4.1 5.4 17.8 2.7 9.2 26.6 17. 2.2 11.2 1.5 10.6 27.6 17.7 1.8 11.7 Table 2.—National Income and Product, First and Second Quarters of 1947— Continued [Billions of dollars] Seasonally adjusted, at annual rates Unadjusted 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 48.0 190.9 191.6 8.1 .5 38.5 3.8 .41 21.4 19.8 1.6 21.6 20.0 1.6 44.3 169.4 170.0 36.5 39.2 150.8 159.0 2.0! 5.01 12.6 11.0 RELATION OF GROSS NATIONAL PRODUCT, NATIONAL INCOME, AND PERSONAL INCOME Gross national product 53.5 Less: Capital consumption allowances 2.9 Indirect business tax and nontax liability 4.1 Business transfer payments .1 Statistical discrepancy -2.6 Plus: Subsidies less current surplus of government enterprises .0 48.9 Equals: National income Less: Corporate profits and inventory valuation adjustment 5.5 Contributions for social 1.5 insurance Excess of wage accruals .0 over disbursements Plus: Government transfer 2.8 payments Net interest paid by Gov1.1 ernment Dividends 1.4 Business transfer payments .1 Equals: personal income47.1 55., 226.0 3.0 11.8 4.1 16.8 .1 .5 -4.5 0) .0 16.6 .5 0) .1 0) -.2 197.6 0) C1) 22.4 C1) ! 1.5 5.9 .0 .o! .0 10.4 10.1 1.3 1.5 .1 5.9 4.5 4.5 6.2 6.2 .5 .5 190.9 191.6 1 2 Not available. Includes noncorporate inventory valuation adjustment. NOTE.—Amounts of less than 50 million dollars shown as .0 in the table. heavy inflationary pressures which after the abolition of price controls pushed prices up to the extent shown in chart 4. As can be seen from this chart, the rise in prices had levelled off in the few months prior to June. Further price increases, however, have occurred recently both in farm and industrial markets. They have been called forth less by general demand factors than by particular supply shortages and by increases in costs. In conjunction with the movement of prices, the progressive slackening in those types of demand which have propelled national output to its present levels is of particular significance. This slackening is revealed by a study of the main branches of the expenditure stream summarized in the chart on the introductory page of this issue. Inventory Rise Slackens The behavior of business inventories constituted one of the main contrasts
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