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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demand for war output had been withdrawn.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

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