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Hugh D. Galusha, Jr.
November 16, 1965
Retail

Trade

Any discussion of retail trade prospects requires as a preliminary an
examination of consumer statistics. This can he a tedious exercise, albeit a
necessary one.

I will try to make it less so by discussing only the major

dimensions of the 1966 consumer, as these dimensions emerge by logical ex*
tension of what they are now. Admittedly, this is dangerous -- in a complex
fast moving economy like ours, numbers and the trends they portend are as fickle
as the weather •• about which there is an old Montana saying that only fools
and pilgrims predict the weather.
prediction, but a prolection.

Let me add then that this is not a

Besides, while 1 deny the first category, 1

must accept classification as a pilgrim to the wonderful world of economics.
The Important current dimensions appear to be these:
Consumer income
Employment levels
Debt service as a X of consumer Income
Savings as a

1.
2.
2a.

% of

consumer Income

Consumer income.
Non&gricultural employment - Twin Cities.
Nonagrlcultural employment - Minnesota, 9th Dist., United States.

_
3•

( Personal income.
( Per capita personal income.

.

( Mortgage debt outstanding.
( Debt service.
Savings as a Z of disp. personal income.

5.




Although only a general measurement, GNP this year will be In the
670 billion range, and Is estimated to be 700 or better In 1966.
These conclusions may be drawn, at least tentatively:
(a)

More consumers are working today than ever before, and the trend

Is up.

(b)

Pay scales are up.

(c)

Consumers have been spending more and saving less.

(d)

If these trends are not arrested, the current high level of

economic activity will continue well Into 1966.
As I said, these are projections based upon a logical extension of
known facts.

But It Is quite possible ,for these projections to be deflected

from their targets by external forces.

Certainly major among these would be

a sharp Increase In prices, which would trigger restrictive action by the Fed.
In no other area of the current economic scene Is there more confusion and
uncertainty.

Old Omar must have had the economists of 1965 In mind when he

wrote:
"Myself when young did eagerly freouent
Doctor and saint, and heard great argument
About It and about.
But ever more came out
By the same door w h e r e i n I w e n t .'1
How much is the economy heating up?

The pessimists see a number of

ominous signs -- notably, though, the consumer price index, which has increased
1.3Z this year.

Similar Increases have taken place In the wholesale price index,

after a five-year period of relative stability, where an Increase of 1.9% occurred
between January and August.

Food was the major component, showing an Increase of

4.5Z, most of which was prior to June.




Demand is pressing hard on our Industrial capacity.

Plants are

running full steam ahead, but the gap is closing.
(Christian ethic)
Yes, but the aptimists argue, the increase in the consumer price index
covers a number of components.
accounts for a goodly part
abnormal supply factors.

The food component increase last spring

of this increase, and that increase was caused by
Services have increased in price, in substantial

measure, because of limited numbers of young people entering the field -- a
trend of some years background.
September 1961 level.

Durable goods have actually declined to a

Also, they say, look at the increases in quality.

Finally, they say, we must have a measure of inflation, selectively expressed*
as a part of the price for full employment and good times.

Besides, the

President won't let it happen anyway.
1

must confess to a measure of uneasiness -- but at this moment, there

seem to be almost as many signs one way as the other.

Perhaps the major source

of uneasiness is the generally euphoric feeling that somehow we have licked the
business cycle.

Perhaps --

How about retailing specifically?

The numbers are impressive.

Minnesota

has generally stayed ahead of the nation this year, even though the District
as a whole only met the national increases in A out of the 8 months for which
complete data are available.

Looking at the components, there is an obvious

distortion in the totjals attributable to the extraordinary auto sales this year.
In the District, other area6 of retailing showed a far less spectacular
performance, with some categories running behind a year ago through August.,




By all Indications, though, this Christmas should be the best ever.
U. S. News & World Report, in a recent issue, stated sales rises of 5% to 10%
are generally anticipated.

Foreign goods, quality items, higher priced gifts,

are high on the shoppers' lists.

To auote from this article:

"The general boom also portends a record volume for Christmas.
There are more people at work this year at higher wages and salaries.
There are few signs of any halt to the prevailing prosperity. Sur­
veys indicate people are optimistic and in a mood to spend their
money on more of the things and services they want.
"People have shown a tendency to spend more of their income
and to save a bit less. That means more business for the nation's
-merchants."
Applying the close linkage between retail sales and the general health
of the nation, next year should ,be 4% to 5% ahead of 1965, based upon GNP
estimates.

I have quoted U. S. News with approval, for the linkage premise

is the one on which I have based my' reasoning in this talk.

If I am wrong,

I will have distinguished company.
But, lest you believe I, too, am from the Land of the Big Rock Candy
Mountain, like the rest of the optimists prophesying our entry into the
milennium of perpetual prosperity, I must warn you again that it ain't
necessarily so.

Clouds no larger today than an errant cipher on a computer

printout could develop in the next ninety days and force the Federal Reserve
to move restrictively to contain inflation breakouts, which, in turn, could
cause us to falter again in the smooth, even progression into an apparent
milennium.




EFFECTIVE BUYING POWER -- MINNEAPOLIS-ST. PAUL

Net
Dollars
(000's)

% ChS .

Per
Capita

% C h fi.

Per
HousehoId

% Chg.

$7,700

$2,275

1961

$3,498,221

1962

3,793,805

+8.4

2,376

+4.4

8,079

+4.9

1963

3,866,633

+1.9

2,435

+2.5

8,283

+2.5

1964

4,168,964

+7,8

2,590

+6 .4

8,836

+6.7

+• »3. J

3- £ * 7

//• /

$ 3Lo

//• £

SOURCE:

Sales M a n a g e m e n t , Survey of Buying Power.
/ /J

t

/

>

/

November 15, 1965
Research Department
Federal Reserve Bank
Minneapolis, Minnesota




55440

NONAG R I C U L T U R A L EMPLOYMENT —

TWIN CITIES M E T R O P O L I T A N A R E A

(in thousands)
Total
1962
1963
J anuary
February
March
April
May
June
July
August
September
October
November
December

587.9
598.1
579.9
578.2
581.7
594.0
600.0
604.8
599.2
603.2
608.6
611.2
607.9
608.8

1964
January
February
March
April
May
June
July
August
September
October
November
December

611.0
589.2
587.0
590.0
600.4
610.2
617.4
615.8
617.9
624.0
628.5
624.6
626.9

1965
January
February
M arch
April
Ma y
June
July
August
September

611.2
609.8
610.2
624.1
630.9
637.0
636.0
638.0
644.6

November 15, 1965
Research Department
Federal Reserve Bank
Minneapolis, Minnesota



55440

% Change from
a year earlier
+1.7

+2. 2
+1. 6

+1.5
+1.4
+1.1
+1.7
+2. 1
+2. 8
+2.4
+2.5
+2. 8
+2.7
+3.0
+3.7
+3.9
+3.4
+3.9
+ 3 .4

+3.2
+3.3
+3.3
+3.3

NONAGR I C U L T U R A L EMPLOYMENT IN MINNESOTA, N I N T H DISTRICT, AND UNITED STATES

(in thousands)

Minnesota

Ninth District

S-Chgi

United States

1,505.0

% Chs.

--

55,515

--

% Chg

1962

985.6

1963

1,002.8

+1.7

1,531.6

+1.8

56,643

+2.0

1964

1,027.4

+2.5

1,562.9

+2.0

58,188

+2.7

1965

1,058.6 H

+3.0

1,593.4 11

+2 .0

59,910 2 /

+3.0

_1/

Based on

2/

Based on nine-month average.

SOURCE:

ten-month

Department of Employment and Security.

November 15, 1965
Research Department
Federal Reserve Bank




average.

f7

e
>

L-tf-

9 1 ya
7 -v

()

or *

<_>

; * 7 7~




PER CAPITA PERSONAL INCOME
(in dollars)

Minnesota

% Chg.

1962

$2,208

--

1963

2,334

+5.7

1964

2,375

+1.8

SOURCE:

U. S. Department of Commerce.

November 15, 1965
Research Department
F e d e ra 1 R e se rv e 1 lnk
3'
Minneapolis, Minnesota

55440

Ninth District
$2,181

% Chg.

United States

% Chg,

--2.2

2,132
2,160

$2,367
2,448

+3.4

2,566

+4.8

+1.3




TOTAL PERSONAL INCOME
(millions of dollars)

Minnesota

Ninth District

% Chg^

United States

$12,130

% Chg.

--

$439,977

1962

$7,712

1963

8,152

+5.7

12,390

+2.1

461,670

1964

8,364

+2.6

12,670

+2.3

491,004
533,600 *

1965

*

Based on first nine months.

SOURCE:

Federal Reserve Bank of Minneapolis and U. S. Department of Commerce.

November 15, 1965
Federal Reserve Bank
Minneapolis, Minnesota

55440




MORTGAGE DEBT OUTSTANDING
(billions of dollars)

/
All Properties

1- to 4- Family Houses

1960

$206.8

$141.3

1961

226.3

153.1

1962

251.6

166.5

1963

280.8

182.2

1964

311.4

197.7

286.8
295.5
303.6
311.4

185.2
189.6
193.9
197.7

317.5
325.1

200.3

Quarter:

I

II
III
IV
1965
Quarter:

I

II

SOURCE:

Federal Reserve B u l l e t i n , Board of Governors of the
Federal Reserve System.

November 15, 1965
Research Department
Federal Reserve Bank

■'V

DEBT SERVICE
CONSUMER INSTALMENT CREDIT REPAID
(millions of dollars)
Monthly
Total

July
$5,058
5,094
August
September 5,104
October
5,097
5,155
November
5,256
December
1965
January
February
March
April
May
June
July
August

*

5,213
5,381
5,393
5,445
5,435
5,537
5,612
5,679

11.5
11.4
11.4
11.9
12.2

60,696*
61,128
61,248
61,164
61,860
63,072

12.4
12.4
12.3
12.3
12,3
12.5

62,556
64,572
64,716
65,340
65,220
66,444
67,344
68,148

12.2
12.5
12.5
12.5
12.4
12.6
12.7
12.8

Annual r a t e .

SOURCE:

Economic Indicators.

November 15, 1965
Research Department
Federal Reserve Bank




% of Total
Personal Income

$45,972
47,700
50,620
55,111
60,418

1960
1961
1962
1963
1964

Amount

SAVINGS IN THE U. S.

Savings as % of disposable
______personal income______
1960

4.9

1961

5.8

1962

5.6

1963

5.1

1964

6.0
Quarter:

I
II
III
IV

5.5
6.3.
5.7

I
II
III

5.3
5.0.
5.8

1965
Quarter:

SOURCE:

Economic Indicators

November 15, 1965
Research Department
Federal Reserve Bank




6 .6

This file contained a copyrighted article which has been removed.
The citation for the original is:
“Christmas Trade: Record Boom?” U.S. News & World Report 59, no. 19 (November 8, 1965): 37–39.