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~ j_Fo_r_B __ Y_, MICS EW Institute of Home Economirs, Agricultural Research Service, UNITED STATES DEPARTMENT OF AGRICULTURE ---1§ Prepared for home agents and home economics specialists of the Agricultural Extension Service, this publication reports current developments in family and food economics, and economic aspects of home management. ANNUAL OUTLOOK ISSUE CONTENTS THE ·OUTLOOK FOR 1959 National Economic Situation and Outlook •••••••••••••••••• l The Agricultural Outlook................................. 4 Outlook for Family Living. • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • 8 The Outlook for Food..................................... ·9 Outlook for Clothing and Textiles •••••••••••••••••••••••• l2 Outlook for Housing and Household Equipment •••••••••••••• l9 ESTIMATED COST OF ONE WEEK'S FOOD ••••.•••••••••••••••••••••••• 28 CONS~R PRICES. . . • . • • . • • • • • • . • . . • • . . . . • . • • . • • • • . • • • • • • . • • . • • • 29 ARS 62-5 December l958 Washington, D. C. The articles making up this issue of Family Economics Review are condensations of talks given at -the 36th Annual National Agricultural Outlook Conference, held in Washington, D. c., November 17-21, 1958. NATIONAL :EXJONOMrC SITUATION AND OUTLOOK FOR 1959 Nathan M. Koffsky Agricultural Economics Division, Agricultural Marketing Service This year, in sharp contrast to last, we can look forward with considerable assurance to a growing economy over the year ahead. We are still recovering from the recession and we expect that recovery to be steadily reinforced by rising demands from consumers, from business and from all levels of government, including Federal, State and local units. Consumer incomes, which. were well maintained during the recession, have risen to a new high in recent months. A further significant gain is in prospect in 1959, and with recent price trends showing some degree of· stability, the purchasing power of the average consumer could well be enhanced. · The events of the past year divide rather neatly into two periods of about equal length--recession in the fall and winter a year ago and recovery since spring. The recession cut somewhat deeper into most economic indicators than did the declines of 1948-49 and 1953-54. Gross national product--the value of all goods and services produced--dropped $20 billion, or about 4-1/2 percent, between the third quarter of 1957 and the first quarter of 1958. Ai'ter allowing for the continued rise in pr~ces, the decline in real output was close to 6 percent. Total nonagricultural employment declined 5 percent from the 1957 summer high by April. Factory employment and output were down substantially more, particularly in the durable goods industries. Unemployment, aggravated by rapid growth of the labor force as well as reduced employment opportunities exceeded 5 million persons. The recovery, which developed sooner this time than in the previous postwar recessions, has brought significant gains in output and employment even though the 1957 summer highs have not yet been regained. Although gross national product was up some $14 billion between the first and third quarters of 1958, the physica.1 volume of goods and services produced in tre recent quarter was still 3 or 4 percent lower than in the third quarter of 1957, after adjusting for higher prices. In manufacturing, employment has not risen as fast as production, reflecting a lengthening in the work week and apparently a substantial increase in productivity per man-hour. In October the number unemployed totaled about 3.8 million compared with 2.5 million in October 1957. In recent months, the persistent rise in prices of the past several years appears to have leveled off. The Bureau of Labor Statistics wholesale commodity price index has changed little since midyear. Some declines in prices of farm products and processed foods offset slight increases in wholesale commodity prices. Similarly, the BLS consumer price index and the Agricultural Marketing Service index of prices paid by farmers for family living have moved in a relatively narrow range for some months, with a tendency toward lower prices of food but increases for automobiles and medical services. The price indexes show increases over the fall of 1957 of about 1 percent at wholesale and 2 percent at the consumer level. These rises were substantially less than those that occurred in the preceding 12-month period. -2,.. In the recession stage, from the third quarter high of 1957 to the first quarter low of 1958, most of the decline was concentrated in the business pri vate investment sector where the rate of expenditures was reduced by some $20 billion, or almost 30 percent. Consumer expenditures, in total, showed a decline of only $2 billion or less than 1 percent (table 1). Government outlays for goods and services increased $2.5 billion or about 3 percent. In the recovery phase so far, from the first quarter of 1958 to the third quarter, each of the sect ors has contributed to the recovery. The rate of consumer, expenditures rose almost $6 billion to a new high. Business investment outlays regained one-fourth of the preceding sharp drop. Government outlays rose 4 percent in the 6 month period, somewhat more than in the preced-ing 6 months • Table 1.--Personal Consumption Expenditures (Seasonally adjusted annual rates) 3rd 1st 3rd Change Item quarter quarter quarter 3rd 1957 1st 1958 1957 1958 1958 to to 1st 1958 3rd 1958 Billions of dollars Personal consumption expenditures . ............... 288.3 286.2 292.0 - 2.1 + 5.8 Durable goods ••••••••••••••• 4o.4 36.3 36.5 - 4.1 + 0.2 Nondurable goods •••••••••••• 140.5 139.8 143.0 - 0.7 + 3.2 Services . .................•. 107.4 110.1 112.5 + 2.7 + 2.4 Consumer disposable income •••• 308.7 305.0 314.0 - 3.7 + 9·0 Savings •• .....•...•...•••.••.• 20.4 18.8 22.0 - 1.6 + 3.2 Personal savings rate ••••••••• 6.6rf; 6.2rf; 7.()f/, - o.4rf; + o.8rf; Source: U. S. Department of Commerce. Weakness in the consumer sector in the recession period was limited largely to a sharp reduction in expenditures for durable goods, particularly for automobiles. Expenditures for nondurable goods showed only a slight reduction; within that group, expenditures for food increased substantially. Rising consumer spending for services, such as rent and medical . ~e, offset much of the drop in other consumer o~tlays. -3- Recently, consumer spending for nondurables and services has risen sharply, even though expenditures for durable goods have not improyed. Even with automobile sales running one-fourth below 1957, the total volume of goods and services purchased by consumers in the third quarter of this year was only slightly less than the total volume taken a year earlier. The aggregate flow of income to consumem was reduced very little during the recession period, and in recovery has been substantially enlarged. Much of the impact of the decline ·in wage and salary payments on the consumer markets was affset by larger unemployment compensation and social security payments and by a substantial improvement in farm income. Thus, consumer income after taxes in the first quarter of 1958 was only a little more than 1 percent below the prerecession peak. Dollar income in the third quarter of 1958 exceeded the previous high by 2 percent. However, with higher prices and increasing population the purchasing power per capita of that income was still somewhat below that of a year earlier. As usual during a recession, consumer spending was reduced somewhat less than income, and the rate of personal savings out of current income declined some by early 1958. Generally, in the early stages of recovery growth in income exceeds that of expenditures. Thus, the rate of savings increased between the first and third quarters of this year. Total consumer installment credit outstanding at the end of September was slightly less than a year earlier, in contrast to substantial increases each year since 1954. . • • During the recession, the government sector provided an increasing flow of expenditures to the economy. Federal purchases o:f goods and services in total were about the same in the :first quarter o:f 1958 as in the third quarter of 1957. Transfer payments, such as unemployment compensation, rose sharply while the :flow o:f taxes to the government was reduced. There was some reduction in outlays :for national security. Its seems clear that government outlays will continue to rise in 1959. State and local government expenditures :for schools, highways and other :facilities, particularly those associated with suburban growth, will very likely continue their strong uptrend. The Federal contribution to the highway program, according to estimates o:f the Bureau o:f Public Roads, will be much larger next year than this year and• will account :for 40 percent o:f total capital expenditures :for highways in 1959. Federal budget expenditures, according to the Budget Review of September, will total over $7 billion more in the current :fiscal year. A substantially larger budget de:fici t is being incurred this fiscal Year than in :fiscal 1957-58. Part o:f the increase in expenditures reflects increased outflows such as social security and unemployment compensation payments, and interest on the public debt. A further significant increase :from cur~ent levels is in prospect :for direct Federal purchases o:f goods and services, particularly for national defense. With prospects :for increased expenditures :from government and private investment sectors, we would expect output and employment to continue to improve and wage rates to rise further. Wage and salary income, currently near its Previous peak, will probably be increased substantially, although some part o:f -~ the increase may be offset by some drop in farmers' income from farming. Higher consumer incomes will most likely mean higher consumer spending, thus augmenting the rising demands in the other sectors of the economy. For nondurable goods such as foods, and for services, the increase in spending may be roughly proportional to the rise in the consumer income. Consumer expenditures for durable goods, however, may show a more substantial increase. This year automobile sales are totaling perhaps 4-1/2 million, including an increased proportion of fo reign makes, compared with close to 6 million in each of the 2 preceding years. The rate of sales this year is not much above the annual rate of scrappage of used cars. Consumer installment credit outstanding on automobiles has been substantially reduced over the past year. The rising rate of housing completions will likely strengthen demand for household appliances, as well as for household goods generally. These are the demand prospects for 1959 as we see them. They provide for continued gains in economic activity and in the level of living for the average consumer. The recent relative stability in prices could well continue into 1959 as supplies of some foods increase. Whether the residue of higher unemployment remains or diminishes depends substantially on how fast the labor force and productivity increase over the year ahead. It may be that our appraisal has been on the conservative side, especially for capital goods outlays and perhaps for automobile sales. These increased sharply in the boom which followed the 1954 recession. But we think they are likely to rise less this time. The history of these annual conferences in t he 1950's suggests that we should not underrate the cold war, which more often ·than not tightens the economy as well as international relations. We need to remember Korea, Suez, SputJJ.ik . and outer space(j and the Far East as economic: factors. · THE AGRICULTURAL OUTLOOK FOR 1959 Frederick V. Waugh Agricultural Economics Division, Agricultural Marketing Service Present indications are that net farm income in 1959 may be from 5 to 10 percent lower than in 1958, although substantially higher than in 1957. But the upward trend in land values, farm assets, and levels of farm living probably will continue. The expected drop in farm income is not due to any prospective weakening of demand. Domestic demand is strong and improving. Nonfarm income may set a new record high in 1959. Foreign demand is expected to about hold its own. Immediate reasons for the expected decline"in income are the present indications of larger hog marketings, the discontinuance of acreage-reserve payments, and somewhat higher production expenses. -5- Large· surpluses continue to be a difficult problem. foreign and domestic programs t~ move these surpluses into burdensome stocks of wheat and feed grains are increasing. crops and livestock products in 1958 set a new high record. In spite of large consumption, the The output of Even if weather conditions next year should be less favorable, a high total output of farm products now seems likely. Larger marketings of hogs, early vegetables, and a few other farm products may result in slightly lower average prices in 1959 than in 1958. In addition, there will probably be a drop in Soil-Bank payments and a somewhat further increase in farm costs. The increase of 20 percent in net farm income from 1951 to 1958 was due partly to several unusual factors that are not likely to operate in the same direction in 1959 • Farm income and prices This year, realized net farm income is up over $2 billion or 20 percent above 1957. Farmers' gross income increased close to $3-1/2 billion. Four main factors contributed to the increase: Substantial improvement in the livestock markets; record crop output, augmenting the flow of commodities to the CCC; the delayed harvests of 1957, which increased income earlier thJs year while lowering it last year; and some increase in Soil-Bank payments to farmers. Some of these factors will not operate in 1959. Production expenses were up over $1 billion, reflecting higher cost rates generally, but especially heavier expenses for feeder livestock and feed. For 1959, our best estimate at this time is for a decline in realized net farm income of perhaps 5 to 10 percent. We expect an increase in the volume of marketings to maintain cash receipts, even with somewhat lower average prices. Government payments to farmers will be reduced with the end of the acreage reserve of the Soil Bank this year. Production expenses will likely show a further small increase next year. Per capita income of farm people from all sources in 1958 may turn out to be the highest on record. Per·~~apita income of nonfarm people, however, may be so~ewhat smaller than the record high of last year, reflecting recession in the nonfarm economy. For next year these trends may be reversed. Co.sts per unit of production were slightly lower in 1958 than in 1957. In 1958, production expenditures will be about 6 percent larger than in 1957, but total output will be about 8 percent larger. Costs per unit of production therefore will be lower this year. A similar increase in production in 1959 is unlikely . Sq far this year, farm prices are averaging some 6 percent higher than in 1957, and are at the best level in 5 years. We expect prices in 1959 to average a little lower than this year. -6- Demand for and supply of farm products Domestic demand for farm products, now at a high level, will likely strengthen further in 1959. The recession of 1958 had little effect on the demand for food. Consumer incomes were well maintained, and sales at retail food stores in the first 9 months of this year averaged 6 percent above the same period of 1957. With higher marketing margins, as well as higher prices at the farm, the farmer's sha~e of the consumer's retail food dollar showed little change. In 1959, with continued improvement in the economy, consumer expenditures for food will rise, even though prices to the consumer may average a little lower. This year, farm output is a record high and surplus stocks are increasing. Supplies will continue · to be very large in 1959. Crop output in 1958 is 10 percent larger than in 1957, and a new record high. Crop yields are up 20 percent in the last 4 years with an ll percent increase recorded this year. Favorable weather was partly responsible, ~ but improvements in technology also contributed to the uptrend in yields. Even with average growing conditions, crop output could be about as large next year as this year, considering the continuing improvements in technology and the return to use of some 17 million acres withdrawn from wheat, cotton, corn, rice, and tobacco under the acreage reserve this year. Farm costs Prices paid for goods and services used in farm production are expected to be higher in 1959 than in 1958. They .were 5 percent higher in September 1958 than a year earlier, and are ~xpect.Erl to continue upward. Wage rates paid to hired labor and prices paid for nonfarm goods and services, except fertilizer, are still rising, and probably will average higher in 1959 than in 1958. Costs per unit of production were slightly ';lower in 1958 than in 1957. In 1958, production expenditures will b~ about 6 percent larger than in 1957, but total output will be about 8 percent larger. Costs per unit of production therefore will be lower this year. A similar increase in production in 1959 is unlikely. The ratio of prices received to cost rates probably will not be so favorable in 1959 as in 1958. Both prices paid by farmers and costs per unit of production are expected to be higher. With the prospect for higher cost rates next year and some decline in prices received, a renewal of the price-cost squeeze is likely. Farm credit and finances Farmers will begin 1959 in an improved credit and financial position. For the agricultural industry as a whole, the value of total assets will reach about $200 billion by January 1, 1959, up 7 percent from a year earlier. Equities of -7- farmers and other owners of agricultural property will be approximately $177 billion, or 89 percent of total assets. This is the result of the higher income farmers received in 1958, the rise in land values, and the more valuable inventories farmers will have at the beginning of 1959. Generally excellent crop and pastu~e conditions and favorable prices have resulted in good payoffs of loans. Debt delinquencies are generally low and farm foreclosures negligible. Farmers in general will have slightly larger financial reserves of cash, bank deposits, and U. S. savings bonds at the start of 1959. Many who are not increasing their savings have been spending more for both family and farm outlays. Replacement of farm machinery, improvements to buildings, and purchases for the home have been at higher levels this fall and will probably continue so into early 1959 at least. Federal income tax payments, payable in the early months of 1959, are expected to be about a fourth higher than in 1958. The year 1959 will bring another rise in farm property tax payments, about 6 percent more than in 1958. Land prices MOst of the forces behind the rise in prices of farm real estate sL~ce 1954 will be present in 1959. Effects of higher farm income in 1958 and continued recovery of the general economy are likely to give additional impetus to the rise through the winter and early spring of 1959. Even though the trend may lose some of its momentum in the last half of the year because of lower farm income, the increase in the index of land prices could be as large as the 6 percent rise in 1958. A significant number of farmers have shown a strong desire to enlarge their operating units when circumstances permitted. About 2 percent of the farms were larger in 1958 than in 1957, half by renting land, and half by buying land. Purchases for farm enlargement accounted for about two-fifths of all land transfers last;;year, about double the proportion of, 1950. There is no reason to expect a slackening in the demand for land for farm enlargement purposes. Recent changes in agricultural programs will have varying effects on the land market. Higher rates of payment under the 1959 Conservation Reserve Program may have encouraged retention of ownership of some farms that otherwise would have been sold. An assured annual income under this program, together with :Social 13ecurity. income, makes it possible for eligible farmers to retire and continue to live on the farm. Those not eligible for social security can continue to receive a return from their land whi~ working at nonfarm jobs. Both situations tend to reduce the number of farms that would otherwise have been offered for sale~ -8- THE OUTLOOK FOR FAMILY LIVING Faith Clark Household Economics Research Division, Institute of Home Economics Agriculture and the food industries are expected to supply U. S. cOnsumers with an abundant and varied food supply again next year. The nutritional quality of per capita food consumption in 1959 will be almost the same as in 1958. The expected increase in the consumption of citrus fruit and vegetables may provide slightly more vitamin C in the average consumer's diet. The average amount of this vitamin has been trending downward since the peak reached at the end of the war. It dipped perceptibly in 1958 because of the unfavorable weather conditions early in the year. The expected increase in pork supplies may result in slightly more thiamine. New forms and types of foods will continue to appear on grocery shelves and on the family table. Research--much of it in the USDA--has paved the way for several promising new items. One such item is potato flakes for mashed potatoes. Other possibilities include dehydro-frozen fruits and vegetables and fruit juice powders. On the other hand, there appears to be a goodly share of interest in creative cooking--in dishes made all the way from the old-fashioned ingredients or using some of the newer convenience foods. Cooking as a hobby, especially on outdoor grills, will continue to occupy some of the leisure time of the urban and suburban American male. He may also share more of the kitchen duties than formerly because of the away-from-home employment of his wife. Continued increases in the employment of many married women appear to be likely. The latest Census figures (1957) indicate that the proportion of married women (husband present) having paid employment is almost as high for rural farm families (26 percent) as for urban (31 percent). A recent fore~ ast 0f the Census Bureau indicates that by 1965 we can expect to have about a fifth more women employed than we have today. Many questions can be raised about the effects of the employment of women on family living. The money earned is not clear gain. A sample group of working wives in 4 small Georgia cities indicated that expenses directly or indirectly related to their jobs took about 4o percent of their earnings • • For the country as a whole, there is evidence that the recent slight decline in outstanding consumer installment credit has been reversed. This may indicate that more consumers are now ready to .. )I!B.ke purchases of autos and household durable goods than during 1958 or 1957. With reduced farm income forecast, however, it is not likely that farm families will participate in this upturn to the same degree as nonfarm families. -9- Changes in family practices in the replacement of consumer durables are reflected in differences in the estimates of the length of time families keep such articles, based on data collected in different years. Between 1956 and 1957 (the latter .a year marked by falling off of sales and the beginning of the business recession) these changes were sufficiently great among urban families to increase by a year the estimated life expectancy of nonautomatic washing machines. On the other hand, rural families, who as a group enjoyed as good incomes in 1957 as in 1956, made no change in their replacement practices on this item. Prices of goods and services purchased by farm and city families in 1959 may hold at approximately present levels. The expected slight decline in food prices should offset the possible continued rise in some of the services such as medical care. Though prices may hold relatively steady, many families, farm and nonfarm, will face the need for increased expenditures as the war and postwar babies grow up. These families are now in oP. entering upon the most expensive phase of their life cycle. If their young people go to college--and a larger than ever number will be ready for college in the school year 1959-60--there will be heavy demands on the family finances. Even if families do not plan for college, they can still expect greater expenditures for food, clothing, dwelling upkeep, transportation, and personal care than when these children were younger. THE OUTLOOK FOR FOOD IN 1959 Harry Sherr Agricultural Economics Division, Agricultural Marketing Service Supplies of food are expected to be somewhat heavier in 1959 than in 1958. Consumer demand for food will likely continue strong. Food consumption per capita probably will average slightly higher than estimated for this year, but around an eighth above the prewar (1935-39) average. Retail food prices are expected to average a little under the record high level reached in 1958. First, a review of the demand prospects for food in 1959. Expectations are that economic activity and employment will be higher than in 1958. With wage rates likely to advance fUrther, consumer income probably will be at a record level, up noticeably from this year. Consumer outlays for all goods and services are expected to be somewhat higher than in 1958. The probable small increase in expenditures for food will reflect mainly the larger population and the continued increase in the services purchased with food. The proportion of income spent for food will likely be a little lower than in 1958 since the increase in income will be relatively greater than that for food expenditures. -10- The expectation that ret~l food pri~es will average a little lower next year than in 1958 is based on the likelihood of larger supplies and lower prices to farmers for hogs and -- at least during the early part of 1959 -poultry products, fresh vegetables and potatoes. As usual, prices will vary during the year, reflecting seasonal differences in supplies. Part of any reduction in farm prices for foods will be absorbed by the expected further increase in processing and marketing costs. Retail food prices in 1958 were at a record high, rerlecting the somewhat smaller supplies of meat, fresh and processed citrus fruit and, in the early part of the year, fresh vegetables. Outlays for food were maintained at a highJevel ~despite lower average income per person during at least the first half of the year . Now for a longer look at the food supply and consumption prospects fo r next year. Expectations are that food supplies will be larger than in 1958 ·because of heavier stocks at the beginning of the year and, if weather is average, large food crops. There will be more livestock on farms and ranches this January l than last. Civilian consumption of meat is expected to be moderately above the rate of 152 pounds per person estimated for the present year. The prospective increase will be almost entirely in pork. Beef consumption will almost e~ual the 1958 rate. Some increase in canned meat is probable, continuing the longterm upward trend. Pork consumption in 1959 may reach 66 pounds per person, almost 10 perQent above this year's low rate. The increase over 1958 will begin in late winter. From then to early summer supplies will be from the 1958 fall pig crop, which is estimated to number 14 percent more than that of 1957 . After early summer, pork _supplies will be mainly from the 1959 spring pig crop. This crop also is expected to be substantially larger than the year-earlier one. Pork pric~s are expected to fall sharply early in 1959 to below the year~ago level, and to average lower than in 1958 during the remainder of t he year. The anticipated reduction in pork prices will likely be enough to bring the average price for all meats a little below that of 1958. Civilians are expected to have almost 80 pounds of beef per person next year, close to the rate for 19·58. Supplies will be a little larger, but the civilian population will be up pro_portionately more. The small rise in beef out put reflects the effect of the continued buildup of breeding stock . There will likely be a relatively high proportion of the better grades in the beef supply in 1959 too, as cattle slaughter is expected to include relatively more grain-fed animals but fewer cows and grass-fat cattle. Supplies of milk and other dairy products will continue plentiful in 1959· Stocks will be lower this January l than last. Milk production may exceed by a little the 126.1 billion P9unds indicated for 1958, and may be more nearly in balance with consumption of commercially marketed milk products than it has been in any year since 1952. -11- Consumption of milk and other dairy products per person is expected to be about the same next year as in 1958 -- around 75 pounds, in terms of total milk solids. Small differences for individual items are a possibility. Retail prices of dairy products are likely to average near those of the present year. _, Prospects are for more poultry Jneat and eggs than in 1958, particularly in the first half of the year. For chicken meat the increase will reflect both greater output of commercial broilers and increased sales of mature chickens from expanded fa.;nn flocks. M::>re turkey meat is probable because of the likelihood of a larger-than-usual number of birds available for slaughter next January-June, and January l cold-storage stocks equal to or even greater than the year-earlier record total. Indications of a . gr~ter number of chickens in the nation's egg-laying flock this January l than last point to a heaVier output of eggs, at least during the first 6 to 8 months. However, the civilian population will be up too, so consumption of eggs per person may number close to the 348 estimated for 1958. Poultry meat consumption next year may top slightly this year's record rate. Edible fats and oils will be in much heavier supply than in 1958. The increase will be in lard and the major vegetable oils. Civilian consumption . of food fats and oils products in 1959 is expected to be close to this year's rate of 45 pounds (fat content) per person. Retail prices of these products may average a little lower than in 1958, reflecting in part lower prices for the raw materials. Supplies of most food grains will be record high next year, and much in excess of anticipated domestic needs and exports. Civilian per capita consumption of cereal food products probably will be no higher than in 1958. Retail prices of these food products will likely average a little higher next year because of the prospective increase in processing and marketing costs. For fruits and vegetables we cannot look farther ahead than next spring with much confidence in our forecasts. Supplies of most commercially proces ·sed items are adequate to maintain civilian consumption during the remainder of this marketing year (which ends around mid-1959) close to last year's per capita rates, even though stocks of some items are below the year-ago high levels. Ci~rus products are the outstanding exception. Supplies will be less than adequate! until the new packs start moving to market in volume after January l. More fresh apples but fewer pears will be available in the first part of 1959. Fresh citrus will be in heavier supply next winter and spring than last, according to early-season indications. Substantially more fresh vegetables will be available next winter than last if weather is normal. Unfavorable weather last winter severely damaged the vegetable crop and sharply reduced citrus production in Florida. Imports next· winter will supplement supplies of fresh vegetables. Potatoes are expected to be in heavier supply and lower priced than a year earlier through most of the winter, due to the substantially larger crdp harvested this fall. -12- Military purchases of food in 1959 are expected to be about as large as this year, but exports will be up some. The increas~ will be in foods which are in heavy supply, including wheat, rice and the vegetable oils and oil-seeds. OUTLOOK FOR CLOTHING AND TEXTILES Harry Kahan Prices and Cost of Living Division, Bureau of Labor Statistics, U. S. Department of Labor Textile industry Cotton.--Cotton accounts for the major share of the textile market. In 1957 almost 4 out of every 5 yards of broadwoven goods were made of cotton. Despite th~ growth of man-made fibers, cotton has stood its ground remarkably well. At no time has cotton accounted for less than 76 percent of total broadwoven goods production, and in 1957 it was 79 percent. What happens to cotton, therefore, is of particular significance to textiles. From the end of World War II through 1957, total U. S. mill consumption of cotton fiber fluctuated from year to year, but per capita consumption exhibited a definite downward trend. Except for 1955, per capita mill consumption of cotton fiber has steadily declined since 1951 from 31.5 pounds to 23.7 in 1957· Some of ¢etten's losses may be attributed to inroads made by man-made fibers and other cotton substitutes such as paper and plastics. Cotton also shared in the general decline in per capita consumption of all the fibers. While the relative demand for cotton textile products has tended to decline, supplies have been dncreasing, especially during the past couple of years. In 1957 inventory in relation to production was up 80 percent over 1951. For the first 5 months of 1958 there were still lower mill activity and higher inventories than the comparable period last year. As may be expected from such a disparity between supply and demand, prices for cotton textiles have been somewhat depressed. The Bureau of Labor Statistics price index for cotton textile products has remained well below the base per~od 1947-49 level during most of the postwar period. In 1957 the average index was 90.7 and this year it looks as though the average- will wind up between 88 and 89. There appears to be an adequate raw cotton supply on hand to take care of domestic consumption and exports for almost two years. There are no definite signs of sharply increased demand for cotton textiles during the coming year. Current plant capacity to turn out cotton textiles is adequate to meet next year' s demands. There is no strong prospect for general or substantial wage hikes in the industry next year. -13- I do not foresee any significant change in the level of prices for cotton textile products next year. I believe that with improving general economic conditions, modest price rises may occur. Some ~ess may also be anticipated in efforts to bring inventories into more realistic alignment with demand. Man-made fibers. --Man-made fibers rank. second to cotton in importance. In 1957 man-made fibers accounted for 28 percent of total fiber consumption in pounds, as against 66 percent for cotton. (On a cotton equivalent basis--a method used for comparing relative yields from equivalent quantities of fiber-man- made fibers' share of total fiber consumption increases to 38 percent while cotton's declines to 58 percent. This occurs because a pound of man-made fiber goes farther than a pound of cotton. For example, it has been estimated that a pound of cotton will average 3.5 square yards of apparel fabric, while a pound of rayon or acetate will average 4.5 sq_uare ~ds and a pound of nylon 7 square yards • Man-made fibers fall into two main classifications: the cellulosics and the noncellulosics. The cellulosics consist lulo~s ics include nylon, Dacron, Orlan, fib er losics have been almost entirely responsible fiber textile industry since World War II. of rayon and acetate. The noncelglass, and others. The noncellufor the growth of the man-made During 1947-49, man-made fibers on a pound basis comprised about 18 percent of all textile fibers consumed. By 1957, consumption had risen about 55 percent to capture 28 percent of the market' for textile fibers. The noncellulosic fibers were primarily responsible for this phenomenal growth. The cellulosic fibers, rayon and acetate, expanded their market by about 10 percent in the 10 years from 1947 tQ 1957; the noncellulosics' share of the market soared more than 750 percent. Rayon's success in capturing the tire cord market is the principal reason why cellulosic consumption increased instead of declined. Production of ~yon and acetate broadwoven goods dropped from an average of 2.1 billion yards in 1947-49 to 1.5 billion in 1957. During the same period, production of broadwoven noncellulosics increased from 80 million to T79 million yards • In the first half of 1958 the use of rayon and acetate as a textile, (not as tire cord), was slightly higher, use of noncellulosics was slightly lower than in the comparable 1957 period. This downward turn for the latter fibers seems attributable chiefly to the recession, which has been protracted and severe in many segments of the textile industry. Despite this interim decline, the growing market for man-made textiles will take place chiefly in the noncellulosics. The properties which won t~em wide acceptance--such as dimensional stability, streng~, and easy laundering--have made noncellulosics particularly desirable for b~ending with other fibers. Along with wool and cotton, the man-made fiber textile industry has felt the effects of the recession which ,started in 1956 for the textile industry. The August 1958 Wholesale Price Index for man-made fiber textile products stood at 80, which is about 2 percent below the 1956 average and lower than at any time since 1947. Although producers have tried to balance supply and demand, the extent of the recession in textiles had created fairly large inven-tories in the man-made fiber industry. This situation has tended to keep -14- prices on the soft side. However, a whittling down of inventories and continued improvement in the general economic climate should encourage firmer prices. The increased emphasis on wash and wear fabrics should also contribute to a growing demand .for noncellulosics. The industry has anticipated this growth with expanded facilities; consequently, it seems unlikely that shortages will occur because of lack of capacity. Indeed, the entrance of more companies into this field should create a competitive environment that should tend to hold within modest bounds price increases encouraged by improved economic conditions. Wool.--The sharpest decline in prices and consumption has taken place in the woolen and worsted industry. The wholesale wool products pric~ index soared 61 percent between March 1950 and March 1951. This price bulge all but collapsed within the next 12 months. Then the price index drifted gradually downward until early 1956, when it returned to the March 1950 level of 102. During 1957 average wool prices were 6 percent above 1956, but they declined shortly thereafter to new low levels. The index now hovers around ·100. Woolen and worsted consumption has declined severely. The 1947-49 average U. S. mill consumption of wool was 4.3 pounds per person. In 1957, this figure was virtually halved to 2.2 pounds, and may be even lower for 1958. In only 3 years, during the 1930's, was lower per capita mill consumption of wool recorded. During the period 1947-49 to 1957 wool's share of all textile fiber consumption f'ell ,. f'rom 10.5 percent to 6. 2 percent. .Woolen and worsted broadwoven goods production fe~l from 476 million yards to 293 million, or about 38 percent. Present indications point to still lower yardages for 1958. The long-term decline in woolen and worsted consumption is traceable to factors which have be:e.m. operating in good times as well as bad. One is a trend, toward lighter weight clothing which has reduced the amount of wool used in garments. Men's year-round weight suit~ for example, are being made of lighter weight fabrics than formerly~ Another is the relative instability of wool prices. When prices of raw wool soared, manufacturera ·of woolen apparel fabrics were fearful that they would be priced out of the market and started to look around for more stable-priced fibers to blend with or substitute for wool. Alert to the opportunities provided by rising wool prices, man-made fiber manufacturers strongly promoted their products and engaged in extensive research to improve them. Another and more recent cause for declining wool consumption has been the poor business experienced by men's clothing manufacturers during the past few years. In 1957 production of men's suits was 1.3 percent below 1955 and 4 percent below 1956. The declines for overcoats and topcoats were much sharper: 35 percent below 1955 and 40 percent below 1956. Comparing the first 6 months of 1958 with the corresponding period in 1957, suit production was down 21 percent and coats down 9.2 percent. Since the men's clothing industry is a major market for woolens and worsteds, these declines seriously affected the industry. Perhaps the most devastating blow to the woolen and worsted industry has been dealt by man-made fibers, particularly the noncellulosics. Fabrics once 100 percent wool are now appearing in blends containing as high as 70 percent of the man-made fibers. The recent introduction of a type of' Dacron more suitable for blending in heavier fabrics threatens to make deep inroads in use of wool for year-round weight suits. -15- Since many of the man-made fibers have properties of dimensional stability, shape retention, and e8sy laundering, the increasing emphasis on wash and wear type fabrics will tend to improve their competitive position with respect to wool even more. In the third quarter of 1958 prices, production, and consumption of wool and wool products were off sharply. Although in absolute amounts apparel wool inventories are fairly mode~, the ratio of total stock to mil.l consumption as of the beginning of the year was the highest since 1948. What then is the outlook for wool in 1959? Further improvement in general economic conditions should serve to bolster prices and perhaps increase consumption slightly. But unless ways are found to impart "easy to care for" characteristics to wool fabrics, ~uch gains are likely to be limited in view of the aggre~sive and effective competition from man-made fibers. Summary. --The textile industry participated much less than most industries in the prosperity which prevailed during most of the past decade. From 194T"to 1957 the index for industrial production for all manufacturers rose 45 percent, but textile mill production declined almost 3 percent. Average weekly earnings rose 65 percent in all manufacturing as against 41 percent in the textile mill products industry. Since 1949 profit rates for the textile industry have compared quite unfavorably with rates for all manufacturing industries. In 1956 mill activity started to decline in the textile industry and the price level went down about l percent. The price leVel remained the same in 1957, but the decline in mill acti~ity continued at an accelerated pace. As of June 1958, price levels were down for all major textile products, and production and consumption had a&ain dropped. Keen competition prevails in most sectors of the textile industry and tends to hold prices down. This tendency is further reinforced by sharp competition among the fibers, with marketing programs and research being carried on vigorously to promote particular blends, finishes, and constructions. Competition is particularly keen in the wash and wear field. Per capita consumption of textile fibers fell from 45 pounds in 1950 to around 36 pounds in 1957. Only the noncellulosics--nylon, Dacron, etc.-increased in per capita consumption. Thus, in a decade when most industries fared quite well, the textile industry's performance was at best only fair. While many industries established new highs, in produc~ion and prices, those of the textile industry either lagged behind or ran counter to the trend. Further improvement in economic conditions should promote increased output and some firming of prices. But these improvem~nts are not expected to be of a magnitude to support any significant price increases next year. -16- Apparel The extent of the slowdown in the apparel industry during the recent recession is illustrated by the Federal Reserve Index of Froauction for Apparel and Allied Products, which showed a steady decline from August 1957 through March 1958. With the exception of blouses, all categories of apparel cuttings declined in the early months of 1958 from the preceding year. Though output improved slightly between March and June, the index was lower than for the comparable period in 1957. The July figure, however, showed an improvement ·over July 1957. The men's suit industry operated at 72 percent of capacity in August 1958, down from 81 percent in August 1957. Production of most categories of men's tailored clothing was off the first half of 1958 as compared with the corresponding period for 1956 and 1957. In general, the declines were more• pronounced in clothing made of 50 percent or more wool than in that of other types of fibers. Separate dress and sport trousers production declined 45 percen~ ·~rom last year for those made chiefly of wool, but increased 11 percent for those made of other materials. Production of women's, misses', and juniors' outerwear garments were all lower in the first half of 1958 than a year earlier. Declines ranged from 3 percent for skirts to 10 percent for suits. Hosiery shipments dropped slightly and shoe production was off in the first 6 months of 1958. Prices.--Apparel prices have shown a high degree of stability over the past several years in contrast to most hard goods. During the last 6 years, the yearly average Consumer Price Index for apparel fluctuated within a range of not more than 3 percent. As of midyear 1958, the consumer apparel index was but 1 percent above its average of 1952. Footwear prices rose considerably in the past several years. If footwear were excluded from the apparel index, the index would show a decline from 1952. One reason for the stability of appa~el prices is that its principal raw material--textiles--had been declining in price. This tended to either offset or dilute considerable increases in other costs of production. The widespread practice of selling at established price lines also tends td keep price fluctuations at a minimum. In addition, there has been no great surge in the demand for apparel. Aggregate demand for apparel has increased, but this has been keyed chiefly to population irowth. Consumers have shown little inclination to allocate a larger share of their increased incomes to apparel. This somewhat passive demand situation does not generally encourage price increases. Consumer expenditure pattern.--The share of the consumer dollar spent for clothing has dropped steadily from 11.4 percent in 1947 to 8.7 percent in 1957, and for the first half of 1958 has fallen below 8.5 percent. Per capita cloth~ ng and shoe ex~enditures rose from $131 in 1947 to $145 in 1957 c(in terms of 1947-49 dollars}. -17- As measured by aggregate or per capita expenditures, apparel bas not done very well compared with most other major categories of consumer goods. one reason is that apparel prices have advanced only moierately, as compared to prices of most other goods and services. Another is the change in the ratios of the different age groups in the population. The percentage of older people bas been increasing. Older people have smaller incomes and diminished clothing needs, so they spend less on clothing. The relative growth of this. sector of the population, therefore, tends to reduce per eapita expenditures for clothing. But the factor which seems most respOnsible for inhibiting the growth of apparel expenditures has been the competition from other types of goods and services. In parceling out his dollar for the vast and expanding array of goods and services available, the consumer has been assigning a declining importance to the role of apparel. There areno apparent signs that he will in the near future change his attitude toward the importance of clothing. It therefore appears quite unlikely that a significant reversal in the clothing expenditure pattern may take place next year. Clothing outlook for 1959.--There is a growing optimism among merchants and manufacturer~ · that apparel sales for 1958 may equal or exceed those for 1957'. Many are confident that the gains will continue through 1959. Gautious buying by both retailers and manufacturer~ during the recession have worked down inventories. A low inventory position favors an outlook for increased production of apparel. Women's and girls' clothing.--In the past 5 years, and so far this year, prices of women's and girls' apparel have fluctuated within a narrow range. Earlier this year, new wage agreements were negotiated covering most women's dress manufacturers. As a result, it has been estimated that labor costs would be increased approximately 12 to 20 percent. So far there is no clear evidence that this increase has affected retail price levels. The impact of the wage increase has been mitigated somewhat by two factors: (l) ample piece goods have been available at low pr~ces; · (2) the relatively simple styling of current fashions has held down labor costs. What may happen if piece goods prices rise or styles become more complex is open to conjecture. The almost infinite variations in styling and design which may be incorporated in fashion apparel, as well as the broad range of materials available, provide a high degree of maneuvarability in rearranging cost elements. The curtailment of trimmings, for example, is one of the economie-s adopted to compensate for increased labor costs. Active demand, together with wage increases, should help firm prices for sweaters and other knitwear next year. Coat and suit ordering is also up. No Price increases are anticipated for this category of apparel or for unde~ear. Men's and boys' apparel.--It appears that the relatively stable 1958 Prices for men's and boys' apparel will remain pretty much unchanged next year. The recent announcement by manufacturers of lower wholesale prices for men's suits supports this belief. Reductions at wholesale ranging from 50 cents to $1.50 reflect lower prices for woo-~en and worsted fabrics. It is difficult to -18- evaluate the extent to which these wholesale price reductions will be reflected in retail prices. Since th~ir operating costs are rising, retailers may find it advisable not to pass along small wholesale price reductions. The trend toward greater use of fabrics of fibers other than wool apparently will continue. While suits made of man-made and cotton fibers have dominated the summer weight suit market, wool's position in the year-round suit field had remained unchallenged. This season, however, year-round suits made ofDacron.-worsted blend have been put on the market in larger volume. Footwear.--Retail prices of footwear, according to the BLS index, are about 30 percent above the 1947-49 average. For the first 9 months of 1958, retail shoe prices advanced 0.8 percent as compared to 1.1 percent for the same period in 1957. Two major shoe manufacturers have recently indicated that they may raise prices further; others have been booling orders through next February at current prices. Indications are that shoe prices may be somewhat high~r next year. Wash and wear.--For several years, increasing effort has been devoted to the production of clothing requiring a minimum amount of care. The ultimate goal is the development of clothing which will look immaculately laundered and pressed after emerging from an automatic washer and dryer. Considerable strides have been made toward this goal. More and more clothing carries a wash-and-wear tag, stating that little or no ironing is necessary, or that perhaps a little touch may be required. But frequently the ease of care implied by the words wash and wear has fallen short of the claims made by the manufacturer. The industry is now attempting to formulate objective standards for evaluating the performance of wash-and-wear fabrics and clothing in order to remove confusion as to just what wash-and-wear means. Much work has yet to be done to overcome manufacturing problems which arise in making wash and wear clothes. These problems are engaging the attention of the textile and apparel industry, and next year should bring further advance in wash-and-wear technology. The sale of wash-and-wear fabrics and clothing has been very substantial. In 1957, 20 percent of cotton fabrics were treated for wash-and-weaE • . The proportion may double this year and increase still further in 1959. Although a comparative newcome~, wash-and-wear dress shirts may account for the major part of dress shirt production by the end of 1958, according to trade sources. Consumer preference has turned sharply toward children's apparel labeled washand- wear. Wash-and-wear should continue to be the most important development in textiles and apparel in 1959. -19- OUTLOOK FOR HOUSING AND HOUSEHOLD ~UIFMENT George G. Johnson Bureau of Labor Statistics, U. S. Department of Labor This year has been marked by extremes in the production rate of new homes. The number of dwelling units started dropped to a very low level in February and March. The seasonally adjusted annual rate for these months was 880,000 nonfarm units, the lowest since early 1949. By May the rate of starts was beginning to rise and has since increased steadily. The September total of 118,000 starts was the highest September figure since 1950. On the basis of this rise it seems likely that new homes for 1958 will exceed the levels of both 1956 and 1957. The reduced supply of credit and other signs of economic distress late last year caused builders to limit their plans for 1958. There was a sharp drop in co~tments for construction loans, purchases of land, and orders for materials. Since builders ordinarily plan ahead for a considerable period, several months of a recovering market passed before builders were able to get expanded programs under way. The spurt in housing acrti vi ty is demonstrated by the sizable increase in applications for Veterans Administration and Federal Housing Administration housing loans. In September the number of VA loan applications was several hundred percent above their low of April 1958. The number of FHA applications was over 200 percent above their ~ow point of December 1957. Encouraging as this picture is, the rate of new construction is probably still somewhat below an average of l. 5 million nonfarm units per year. This figure has been mentioned as that necessary to permit a satisfactory rate of demolition of substandard housing and to provide for new households. According to the 1956 National Housing Inventory of the Census Bureau, losses to the housing supply have been averaging about 480,000 dwellings per year from 1950. ~ Almost half of this total consists of transfers of dwellings into nonresidential space and losses through disaster. The South has registered the greatest losses of any area, but has also reported the highest additions to its housing inventory. The total addition to the housing stock between 1950 and 1956 averaged about 1.86 million per year, including new construction, changeover of nonresidential space to dwelling units, and conversions ;(dividing a single unit into two or more units). This includes an average of just under 100,000 new farm homes per year. These National Housing Inventory figures are not to be compared directly with the housing starts already mentioned. The inventory incl~des rural farm homes, mobile homes, and vacation dwellings,noneof which is included in the BLS series on starts. Y "Components of Change in the Housing Inventory of the United States," Construction Review, April 1958. -20- Credit The supply of credit vigorously affects housing construction and sales. The average mortgage debt has increased right along with the expansion of new housing in recent years. In l949, there were 9 million mortgaged homes with an average indebtedness of $3,700. By l957 the number had risen to l6 million, with an average debt of $6,lOO. FHA-insured and VA-guaranteed mortgages represent about two-fiths of outstanding home mortgages by dollar volume. During l956 and l957 there was an increasing scarcity of credit which caused interest rates to move upward. The increasing difference between interest rates for long-term loans (including conventional mortgages) and the regulated rates of Government-underwritten mortgages led to a decrease in dollar volume of new mortgage financing and contributed to a depression of housing activity. In August l957 the maximum interest rate of FHA-insured mortgages was increased to 5-l/4 percent, and down payments were lowered. In April l958 the VA-guaranteed mortgage rate was raised to 4-3/4 percent, following the enactment of the Emergency Housing Law. The act also authorized the Federal National Mortgage Association to buy at par $l billion of FHA and VA mortgages on new houses. At about the same time VA removed any down payment requirement. These measures, plus a slowdown in the rate of industrial. and commercial expansion, freed a large volume of investment funds and the mortgage market attracted a sizable share. Interest rates for conventional first mortgages declined 3 percent on the average for the first half of l958, according to Consumer Price Index data. There are signs at present that interest rates are again beginning to rise. Housing construction and sales next year will depend to a large degree on the adequacy of the credit supply. Within practical limits the Federal Reserve Board and the Treasury Department attempt to maintain the supply of money and credit so it is just adequate to provide for regular business activity and growth. As we all know, credit too readily available is inflationary; credit too scarce is inclined to drive up interest rates and inhibit residential mortgage activity. It appears at present that the supply of credit is beginning to be restricted again. The demand for housing Housing vacancies.--The demand for housing continues strong, as indi- , cated by a nationwide low rate of vacancies. Although mobility is high, the homes families vacate do not remain empty very long. The vacant available dwelling units represented less than 3 percent of the housing supply in the third quarter of l958, and only 0.6 percent were for sale. gj This compares g;·u. S. Bureau of the Census. Series H-lll, No. l4. October l958. -21- to an available vacancy rate in 1950 of 1.6 percent, with 0.5 percent for sale. The west reported the highest rate of available rentals and the North Central region the highest rate of houses for sale. Population mobility.--Population mobility has an important influence on demand for housing because movements of population from one area to another may stimulate purely local demand for the conatruction of additional housing. According to a census study, 1 of every 5 persons in the United states changed his residence in the 12 months ended April 1957. 1/ About one-third of the migrants moved to a different county or State. On the average between 1953 and 1957 3 of the 4 regions had a net loss due to an excess of out-migration over in-migration. Only the West gained through migration. In this region about 40 percent more people moved in than moved out over the period. Table 2.--Annual average number of in-migrants and out-migrants, by region 1953-1957 Region Northeast ••••••••••• North Central ••••••• Sc:Juth • ••••••.••••••• West •••••• •••••••••• In-migrants (000) 396 726 849 699 Source: Bureau of the Census. Out-migrants (ooo) 425 730 1,024 489 Household formation.--The rate of formation of new households is considered a significant indicator of the demand for housing. The number of households has increased for the last 2 or 3 years at an average rate of over 900,000 annually. The increase is entirely due to nonfarm households; the number of rural farm households dropped at an average annual rate of 150,000 from 1950 to 1957. !::/ The low marriage and birth rates from 1930 through the war years are expected to limit the net formation of new "husband-wife" households to less than the present rate from next year until the mid-1960's. The number of people coming to the marriageable age group of 20 to 29 years has been declining for several years. 2J However, the number of marriag~declined only slightly from year to year until 1957, when it dropped 3.4 percent as compared to 1956. §! The rate of decline for the first part of 1958 is e~en greater. Unemployment caused by the business downturn may be blamed for much of this. As unemployment diminishes the marriage rate may rise in the next 2 or 3 years. However, the annual rate will still be lower than that of 1956. ~ u. s. Bureau of the Census. Series P-20, No. 82. July 21, 1958. u. s. Bureau of the Census. Series P-20, No. 76. July 7, 1957· 2) u. s. Bureau of the Census. Series P-25, No. 146. November 12, 1956. §} U. S. Department of Health, Education, and Welfare. Monthly Vi tal Statistics Report, Provisional Vital Statistics for the United States. April 9, 1958. -22- There has been a decrease in the proportion of "doubled-up" married couples since right after World War II. In 1947, 8.7 percent of all married couples did not maintain their own households. By 1957, the figure had decreased to 3. 3 percent. 1} Doubling up is expected to decrease further over the next few years. The growth of retirement plans and social security has created a larger number of financially solvent aged husband-wife families than ever before. Retir~d families now fre~uently continue to maintain households, instead of giving .up independent living arrangements when their earning careers have ended. The proportion of retired families who are financially independent is expected to increase gradually. The trend toward larger families has caused demand for more space in detached owned houses. This implies only a change in tenure and not in the number of households. A recent study by the Census Bureau shows a 22 percent increase in the number of children born per 1, 000 women from 1950 to 1957. §} This is the result of a high level of prosperity and earlier marriages. We may expect a smaller rate of household formation during the next few years. The Bureau of the Census estimated av~rage annual increases ranging from 521,000 to 778,000 households from 1955 to 1960. 2/ However, even the latt-er estimate ,may prove to be somewhat low if the level of unemployment drops and real income continues to increase. A real boom in new households can be confidently predicted in about 6 or 7 years when the postwar crop of children reaches marriageable age. Cost of home ownership In 1950 the numbers of nonfarm renter-occupied and owner-occupied dwelling units were almost e~ual. Today about 6 out of 10 nonfarm occupied homes are owner-occupied. The FHA mortgage-insurance program and the VA loan guarantee program encouraged home ownership. Much of the success of these programs came about because families began to realize they could have the advantage of owning houses with monthly payments less than rent. Some of the advantages of ownihg a home are psychological or cultural, such as pride of ownershipj but many are more concrete. In general, living area and grounds are larger, there is more privacy, and homeowners often wield more influence in their communities. Homes are often considered investments and payments may represent a desirable form of forced savings. The prewar market value of most houses doubled or even tripled after the war. Home ownership thus began to be thought of as a hedge against inflation. U. S. Bureau of the Census. U. S. Bureau of the Census. U. S. Bureau of the Census. Series P-20, No. 76. Series P-20, No. 84. Series P-20, No. 69. July 5, 1957 • August 8, 1958. August 31, 1958· -23- The numerous expenses directly related to owning a home make a comparison of actual costs difficult for rented versus owned shelter. The Bureau of Labor Statistics estimated from its 1950 expenditure surveys that the avera~e annual cost for owners was $832 compared to $536 for renters. From December 1952 to September 1958 the costs for owners increased 13 percent on the average as compared to 14 percent for renters. ~ More than half the nonfarm families having incomes under $4,000 in 1958 rented their homes while more than half having incomes of $5,000 or over owned them. Families reporting incomes in the middle range of $4,000 to $4,999 were evenly divided between renters and owners. There is a strong tendency for a family to purchase a home as income rises. Over 65 percent of the families having a family head at least 35 years old own their homes. -gj The cost of building materials and construction workers' wages increased about 23 percent from 1950 to mid-1958, according to the Boeckh Construction Cost Index. During this period the average value of building lots as estimated by FHA, more than doubled, increasing from $1,035 to $2,148. This is only part of the story of the change in the cost of building a house, however. The average living area of new homes sold under the FHA program increased by a third, from 838 square fiet in 1950 to 1,105 square feet in 1957. The average home built in 1957 was one full room larger than the average of 4.8 rooms of the 1950 house. Lot sizes were larger, and over three-fourths of the new 1957 houses had garages as compared to less than half of the new houses of 1950. These physical changes plus the increase in the cost of materials, labor, and land raised the average price of FHA-insured new houses from $8,700 to $14,500 ( a 67 percent increase) over the period from 1950 to 1957. The tendency of builders to increase the size, quality, and content of their houses is often taken to mean that they have naTrowed the market for their product to ever higher income families. Actually, the median income of urban families increased about 64 percent--almost the same as the increase in new house prices-over the 7 years. Families receiving at least $7,500 per year in 1950 accounted for about 20 percent of new house sales in that year. The same income group purchased almost half the new homes in 1957 according to Consumer Finance Studies. Howeve~this income group represented a much larger proportion of all urban families in 1957--about a fourth, as compared to less than lO percent in 1950. The Federal Housing Administration computes the average ratio of housing expense to income for homes newly purchased under its mortgage insurance program~ It is not known how representative of housing purchases these are, but the average expense-income ratios for FHA purchases have declined from 1950 to 1957 for both new and existing homes. ~ U. S. Bureau of Labor Statistics, Consumer Price Index. -g) "1958 Survey of Consumer Finances, Purchases of Durable Goods," F~deral Reserve Bulletin, July 1958. 1950 .. ........ . 1957 .... ...... . -24- Percent of income spent for housing New homes Existing homes 21.6 19.7 20.3 19·9 The purchasers of new homes are frequently former owners who have considerable equity in their former houses. This equity, following the sale of the former house, may be reinvested in a new house, making smaller mortgage and smaller monthly payments possible. There have been reports from builders that their plans for the latter part of 1958 involve the construction of cheaper houses. Apparently the price reduction will be made possible by fewer built-ins, dry walls instead of plaster, and fewer special luxury items. A nationwide opinion survey of builders conducted in October gave an estimated average selling price of $14,300 for homes to be built in 1958 as compared to $14,800 a year earlier. ~ This trend may continue into 1959. Outlook for housing prices Some of the discussion so far has been concerned with average prices at different dates for different qua.li ties of housing. The Consumer Price Index measures price changes to renters and to homeowners over time for a fixed quality of housing. Changes for these may be more meaningful to the average family which maintains the same living arrangements for years. Rents for the same quality dwellings have been rising gradually but consistently and are expected to continue to rise in the foreseeable future. The frequency and size of rent changes are influenced by increases in landlords! costs. Property taxes and maintenance and repair are cost items which have risen considerably. As an example, the cost of a typical interior repainting job increased 4 percent in the past year and over 10 percent in the past 2 years ·as measured by the Consumer Price Index. The incidence and frequency of rent changes are directly traceable to mobility. A change in tenancy is the most frequent reason for individual rent changes in the samples of rental units used in the Consumer Price Index. This is because the renting of shelter often involves a different relationship between landlord and tenant than between a seller and buyer of commodities. This relationship may be formalized by a lease or consist merely of a verbal agreement. Therefore, the landlord frequently uses the occasion of a change in tenants to raise the rent. This, of course, assumes a condition of high demand for rental shelter and rising costs to the owner-landlord, as at present. ~ Survey of the National Association of Home Builders. Builders' Economic Council, October 1958. -25- The cost of owning a home to the owner occupant includes maintenance and repairs, fire and extended coverage insurance, property taxes, mortgage interest, and initial purchase. There are other costs, but these are the most significant and are measured directly for the Consumer Price Index. The cost to homeowners of maintaining and repairing a house has increased about 15 percent since 1952. In general, the repair or mainten~ce items involving a large amount of labor have increased most. For example, plumbing r~airs, interior repainting, and reshingling have risen more than 2~percent. Commodities, excluding service, such as replacement water heaters _and paint, have increased the least. These costs will probably continue upward in 1959. Fire and extended coverage insurance rates moved up slightly in 1956 and 1957 and increased sharply in 1958. Much of the increase oc.curred because of hurricane damage in east coast cities and floods on the west coast. storm damage was partly r~sponsible for Boston rates increasing 65 percent on the average in 1955. Seattle reported an average increase in rates of almost 50 percent in 1957 following floods in that area. Local residential property taxes have increased over 25 percent on the average for the United States since 1952. Many of the cities that have shown heavy growth have reported the largest increases. Portland, Oregon, Los Angeles, San Francisco, and Cleveland have averaged increases exceeding 30 percent. This increase is r~lated to expansion and installation of new water and sewer facilities, streets, and fire and police protection. Much of the change in the future will be related to new resident!~l construction and .suburban development • Interest rates on new first mortgages increased regularly from the early 1950's until the 6-month period March to September 1958. In this latter interval rates dropped an average of more than 2 percent. Interest rates will probably again begin to move up gradually in the months ahead as credit becomes in shorter supply. Prices of new houses are made up roughly of 50 percent cost of building ~aterials, 30 percent cost of labor, and 20 percent builder's profit and overhead. The total cost of building materials and wages in building construction has increased about 11 percent from December 1952 to mid-1958 according to the Boeckh Construction Cost Index. The actual price change of new houses does not necessarily follow the cost changes closely as the average profit to the builder of developer may vary considerably. However, in the long run rising costs have a direct effect on prices. There is reason to think that prices for housing will continue to move gradually upward. Household equipment The production of major household goods dropped considerably in the first half of 1958. !lJ Sales also decreased in volume. Much of the lull results from the drop in £he number of new homes constructed. No other single industry ~ Federal Reserve Bulletins, Output of Consumer Durable Goods. -26- has such a pervasive effect on the production of many commodities as housing . A decrease of 100,000 housing starts means a contraction in the production of building materials and a loss in appliance sales of 100,000 refrigerators, 100,000 kitchen ranges and water heaters, 34,000 garbag~ disposal units, 11, 000 dishwashers, 7,000 air conditioners, and 55,000 kitchen exhaust fans. ~ A slowdown in sales of houses also causes a drop-off in retail sales to consumers of some of these items. The American Home Laundry Manufacturer's Association reports that home laundry equipment sales for the first half of 1958--a period of fewer house purchases--were 13 percent below sales for the same interval a year earlier. As 1958 progressed into the second half indications of strengthening demand began to appear. Small appliances and housewares showed the most important gains in department store sales. As sales increase, there are signs that the curtailment of production of some of these items may have been overdone. However, it is possible th~t low inv~ntories may spur production and speed up recovery. Prices of household furnishings and equipment have shown an overall decline of about 4 percent since 1953. Price changes of items within this category were mixed. The price level of fUrniture is slight ly higher than in 1953 on the average, though it has been decreasing slightly but consist~ntly in 1958. Household appliances have shown the largest price decrease among homefUrnishings. These prices have dropped an average of 19 percent from 1953 and are showing little indication of strengthening. Several developments since 1953 influenced price levels. Sales of hous~hold durables were up in 1955 and 1956, sustained by vigorous construction of new··housing. More use of consumer credit helped to increase the volume of fUrniture sales. The growing popularity of discount stores stimulated sales of appliances and contributed to downward trends in prices. As discount store sales volume increased, competition began to hurt the· stores, which were caught in a squeeze between the discount prices of the new competitors and the fair tradelaws. As early as 1952 or 1953 the courts found certain State fair trade laws unenforceable. At the present time fair trading is Cbnsidered unenforceable in 16 States and the District of Columbia. Manufacturer$ of durable goods hav~ now generally abandoned price fixing policies. The outlook for household ~Uipment is for a higher level of sales than experienced recently. The recovery in the housing market and drop in unemployment signifies increased demand for these itmes. Short- and intermediate-term credit outstanding for consumer goods other than automobiles was at a higher level in July than in any month since last February. However, the decrease in new household formation does not justify prediction of a sales boom such as occurred in 1955 and 1956. ~ U. S. Bureau of Labor Statistics, "Survey of Characteristics of New One-Family Houses," Construction Review, April 1957. -27- ESTIMATED COST OF ONE WEEK'S FOOD Table 3 (page 28) presents the estimated cost of l week's food to be prepared and served at home. The estimate is based on quantities of food in the low cost, moderate cost, andliberal plans published in the October 1957 Family Economics Review. The plans are also available as a leaflet-Low Cost, Moderate Cost, and Liberal Family Food Budgets, Revised 1957, HHE (Adm.)-53· The cost of food for specific family can be estimated from table 3, since costs are given for individuals of different ages. These costs are based on averages of food prices collected by the Bureau of Labor Statistics in 46 cities, and may not apply to any specific city or region. CONSUMER PRICES The Index of Prices Paid by Farmers for Commodities Used in Family Living (table 4), and the Consumer Price Index for City Wage-Earner and Clerical-Worker Families (table 5) are on page 29. -28- Table 3.--Estimated Cost of One Week's Food, ~ October 1958 Sex-age groups FAMILIES Low-cost plan Dollars Family of two, 21-34 years of age gj..... 15.50 Family of two, 55-74 years of age gj..... 14.00 Family of four with preschool children 2J 21.00 Family of four, school age children~··· 24.00 INDIVIW.Al5 Children: UD.der l yea;r • •.••.••.••••••••••.••••••• 1-3 yeaxs ..•..•.•••••.•..••••..•... ••.• 4-6 years . ............................ . 7-9 years ............................. . Girls, 10-12 years . ..................... . 13-15 years . .......................... . 16-20 years . .......................... . Boys, 10-12 years .••.••.••••••••••.••••.• 13-15 years . ........ ·• ................. . 16-20 yea:rs • ••.••.•..••••.••••••••.•••• Women: 21.,. 34 years . .......................... . 3 5 -54 yeax s . . . . . . . . . . . • • . • . . . ..•..•.... 55-74 years ........................... . 75 years and over . .................... . Preg:rla.nt . ......•.............•......... Nursing . .............................. . Men: 21-34 years ........................... . 3 5 -54 years . . . . . . . . . . . . . . . . . . . . . ...... . 55-74 years ........................... . 7 5 years an.d over ..................... . 3.25 3·75 4.25 5.25 6.00 6.25 6.50 6.00 7.00 8.50 5.50 5.25 5.00 5.00 6.25 8.25 7·25 6.75 6.50 6.25 Moderatecost plan Dollars 21.00 19.00 27.50 32.50 4.00 4. 50 5.50 6.75 8.00 8.75 8.75 8.25 9·75 11.50 7·75 7·50 7.00 6.50 8.50 11.25 9·75 9.25 8.75 8.25 Liberal plan Dollars 23.50 21.00 31.50 37.00 4.25 5.25 6.50 7·75 9.00 10.00 10.00 9· 50 ll.OO 12.75 8.50 8.50 8.00 7 ·50 9.25 12.25 ll.OO 10.25 9.50 9.25 ~ These estimates were computed from quantities in low-cost, moderatecost, and liberal food plans published in tables'2 1 3, and 4 of the October 1957 issue of Family Economics Review. The cost of the food plans was first estimated by using the average prices per; pound of each food group paid by nonfarm survey families at 3 selected income levels. These prices were adjusted to current levels by use of Average Retail Prices of Food in 46 Large Cities Combined released periodically by the Bureau of Labor Statistics. Estimates for individuals have been rourided to nearest $0.25 and for families to the nearest half dollar. gj Twenty percent added for small families. 3/ Man and woman 21-34 years, children, l-3 and 4-6 years. ~ Man and woman 21-34 years, child 7-9; and boy, 10-12 years. -29- Table 4 .--Index of Prices Paid by Farmers for Commodities Used in Family Living (:1,.947-49 = 100) November 1957; March 1958-November 1958 Item Nov. Mar. A'¢. May 1957 1958 June July Aug. Sept. Oct. Nov. All commodities ••••••••••••• 118 120 120 120 120 120 119 119 119 120 Food and tobacco •••••••••• I -- 121 -- -- 122 -- -- 118 -- -- Clothing •••••••••••••••••• -- 114 -- -- 114 -- -- 115 -- -- Household operation ••••••• I -- 119 -- -- 119 -- -- 119 -- -- Household furnishings ••••• I -- lo8 -- -- 107 -- -- lo8 -- -- Building materials, house. -- 120 -- -- 120 -- -- 121 -- -- Auto and auto supplies •••• -- 139 -- -- 139 -- -- 137 -- -- Source: Agricultural Marketing Service. Table 5 .--Consumer Price Index for City Wage-Earner and Clerical-Worker Families (1947-49 = lOO) October 1957; February 1958-0ctober 1958 Item Joct. Feb. Mar. Apr. May June July Aug. Sept. Oct. 11957 1958 All ftemSeeoeoaeoeoeooooooee I 121 122 123 124 124 124 11 124 I 124 124 124 ! FOOdeoeooooeoeoooooeeooooo i 116 119 121 122 122 122 ' 122 121 120 120 Appareloeoooeooeoooooooeoo : lo8 107 107 107 107 107 107 107 107 107 HOUSing.oeooooooeooooooeoo ! 127 127 128 128 128 128 128 128 128 128 Rent •••••••••••••••••••• l 136 137 137 137 138 138 138 138 138 138 Gas and electricity •••• I 1141 116 116 116 116 117 117 118 118 118 Solid fuels and fuel oil I 138 137 137 134 132 132 132 134 135 136 I Housefurnishings •••••••• i 105 105 104 104 104 104 104 103 lo4 103 Househo~d operation ••••• 129 130 131 131 131 l3l l3l 132 132 132 Transportation •••••••••••• 136 138 139 138 139 139 140 l4l 141 143 Medical care •••••••••••••• 140 142 142 143 144 144 145 145 146 147 Personal care ••••••••••••• 126 128 128 128 128 129 129 129 129 129 Reading and recreation •••• 113 117 117 117 117 117 ll7 117 117 117 Other goods and services •• 127 127 127 127 127 127 127 127 127 127 i Source: Bureau of Labor Statistics. * U, S. GOYERNMI:NT PRINTING OPrtCE : 1151 o-•tooll
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Title | Family Economics Review [Dec. 1958] |
Date | 1958 |
Contributors (group) |
Institute of Home Economics (U.S.) United States. Agricultural Research Service Consumer and Food Economics Research Division Consumer and Food Economics Institute (U.S.) United States Science and Education Administration United States. Agricultural Research Service United States Agricultural Research Service Family Economics Research Group |
Subject headings | Home economics--Accounting--Periodicals |
Type | Text |
Format | Pamphlets |
Physical description | 8 v. ; $c 27 cm. |
Publisher | Washington, D.C. : U.S. Institute of Home Economics, Agricultural Research Service, U.S. Dept. of Agriculture |
Language | en |
Contributing institution | Martha Blakeney Hodges Special Collections and University Archives, UNCG University Libraries |
Source collection | Government Documents Collection (UNCG University Libraries) |
Rights statement | http://rightsstatements.org/vocab/NoC-US/1.0/ |
Additional rights information | NO COPYRIGHT - UNITED STATES. This item has been determined to be free of copyright restrictions in the United States. The user is responsible for determining actual copyright status for any reuse of the material. |
SUDOC number | A 77.708:Dec. 58 |
Digital publisher | The University of North Carolina at Greensboro, University Libraries, PO Box 26170, Greensboro NC 27402-6170, 336.334.5482 |
Full-text | ~ j_Fo_r_B __ Y_, MICS EW Institute of Home Economirs, Agricultural Research Service, UNITED STATES DEPARTMENT OF AGRICULTURE ---1§ Prepared for home agents and home economics specialists of the Agricultural Extension Service, this publication reports current developments in family and food economics, and economic aspects of home management. ANNUAL OUTLOOK ISSUE CONTENTS THE ·OUTLOOK FOR 1959 National Economic Situation and Outlook •••••••••••••••••• l The Agricultural Outlook................................. 4 Outlook for Family Living. • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • 8 The Outlook for Food..................................... ·9 Outlook for Clothing and Textiles •••••••••••••••••••••••• l2 Outlook for Housing and Household Equipment •••••••••••••• l9 ESTIMATED COST OF ONE WEEK'S FOOD ••••.•••••••••••••••••••••••• 28 CONS~R PRICES. . . • . • • . • • • • • • . • . . • • . . . . • . • • . • • • • . • • • • • • . • • . • • • 29 ARS 62-5 December l958 Washington, D. C. The articles making up this issue of Family Economics Review are condensations of talks given at -the 36th Annual National Agricultural Outlook Conference, held in Washington, D. c., November 17-21, 1958. NATIONAL :EXJONOMrC SITUATION AND OUTLOOK FOR 1959 Nathan M. Koffsky Agricultural Economics Division, Agricultural Marketing Service This year, in sharp contrast to last, we can look forward with considerable assurance to a growing economy over the year ahead. We are still recovering from the recession and we expect that recovery to be steadily reinforced by rising demands from consumers, from business and from all levels of government, including Federal, State and local units. Consumer incomes, which. were well maintained during the recession, have risen to a new high in recent months. A further significant gain is in prospect in 1959, and with recent price trends showing some degree of· stability, the purchasing power of the average consumer could well be enhanced. · The events of the past year divide rather neatly into two periods of about equal length--recession in the fall and winter a year ago and recovery since spring. The recession cut somewhat deeper into most economic indicators than did the declines of 1948-49 and 1953-54. Gross national product--the value of all goods and services produced--dropped $20 billion, or about 4-1/2 percent, between the third quarter of 1957 and the first quarter of 1958. Ai'ter allowing for the continued rise in pr~ces, the decline in real output was close to 6 percent. Total nonagricultural employment declined 5 percent from the 1957 summer high by April. Factory employment and output were down substantially more, particularly in the durable goods industries. Unemployment, aggravated by rapid growth of the labor force as well as reduced employment opportunities exceeded 5 million persons. The recovery, which developed sooner this time than in the previous postwar recessions, has brought significant gains in output and employment even though the 1957 summer highs have not yet been regained. Although gross national product was up some $14 billion between the first and third quarters of 1958, the physica.1 volume of goods and services produced in tre recent quarter was still 3 or 4 percent lower than in the third quarter of 1957, after adjusting for higher prices. In manufacturing, employment has not risen as fast as production, reflecting a lengthening in the work week and apparently a substantial increase in productivity per man-hour. In October the number unemployed totaled about 3.8 million compared with 2.5 million in October 1957. In recent months, the persistent rise in prices of the past several years appears to have leveled off. The Bureau of Labor Statistics wholesale commodity price index has changed little since midyear. Some declines in prices of farm products and processed foods offset slight increases in wholesale commodity prices. Similarly, the BLS consumer price index and the Agricultural Marketing Service index of prices paid by farmers for family living have moved in a relatively narrow range for some months, with a tendency toward lower prices of food but increases for automobiles and medical services. The price indexes show increases over the fall of 1957 of about 1 percent at wholesale and 2 percent at the consumer level. These rises were substantially less than those that occurred in the preceding 12-month period. -2,.. In the recession stage, from the third quarter high of 1957 to the first quarter low of 1958, most of the decline was concentrated in the business pri vate investment sector where the rate of expenditures was reduced by some $20 billion, or almost 30 percent. Consumer expenditures, in total, showed a decline of only $2 billion or less than 1 percent (table 1). Government outlays for goods and services increased $2.5 billion or about 3 percent. In the recovery phase so far, from the first quarter of 1958 to the third quarter, each of the sect ors has contributed to the recovery. The rate of consumer, expenditures rose almost $6 billion to a new high. Business investment outlays regained one-fourth of the preceding sharp drop. Government outlays rose 4 percent in the 6 month period, somewhat more than in the preced-ing 6 months • Table 1.--Personal Consumption Expenditures (Seasonally adjusted annual rates) 3rd 1st 3rd Change Item quarter quarter quarter 3rd 1957 1st 1958 1957 1958 1958 to to 1st 1958 3rd 1958 Billions of dollars Personal consumption expenditures . ............... 288.3 286.2 292.0 - 2.1 + 5.8 Durable goods ••••••••••••••• 4o.4 36.3 36.5 - 4.1 + 0.2 Nondurable goods •••••••••••• 140.5 139.8 143.0 - 0.7 + 3.2 Services . .................•. 107.4 110.1 112.5 + 2.7 + 2.4 Consumer disposable income •••• 308.7 305.0 314.0 - 3.7 + 9·0 Savings •• .....•...•...•••.••.• 20.4 18.8 22.0 - 1.6 + 3.2 Personal savings rate ••••••••• 6.6rf; 6.2rf; 7.()f/, - o.4rf; + o.8rf; Source: U. S. Department of Commerce. Weakness in the consumer sector in the recession period was limited largely to a sharp reduction in expenditures for durable goods, particularly for automobiles. Expenditures for nondurable goods showed only a slight reduction; within that group, expenditures for food increased substantially. Rising consumer spending for services, such as rent and medical . ~e, offset much of the drop in other consumer o~tlays. -3- Recently, consumer spending for nondurables and services has risen sharply, even though expenditures for durable goods have not improyed. Even with automobile sales running one-fourth below 1957, the total volume of goods and services purchased by consumers in the third quarter of this year was only slightly less than the total volume taken a year earlier. The aggregate flow of income to consumem was reduced very little during the recession period, and in recovery has been substantially enlarged. Much of the impact of the decline ·in wage and salary payments on the consumer markets was affset by larger unemployment compensation and social security payments and by a substantial improvement in farm income. Thus, consumer income after taxes in the first quarter of 1958 was only a little more than 1 percent below the prerecession peak. Dollar income in the third quarter of 1958 exceeded the previous high by 2 percent. However, with higher prices and increasing population the purchasing power per capita of that income was still somewhat below that of a year earlier. As usual during a recession, consumer spending was reduced somewhat less than income, and the rate of personal savings out of current income declined some by early 1958. Generally, in the early stages of recovery growth in income exceeds that of expenditures. Thus, the rate of savings increased between the first and third quarters of this year. Total consumer installment credit outstanding at the end of September was slightly less than a year earlier, in contrast to substantial increases each year since 1954. . • • During the recession, the government sector provided an increasing flow of expenditures to the economy. Federal purchases o:f goods and services in total were about the same in the :first quarter o:f 1958 as in the third quarter of 1957. Transfer payments, such as unemployment compensation, rose sharply while the :flow o:f taxes to the government was reduced. There was some reduction in outlays :for national security. Its seems clear that government outlays will continue to rise in 1959. State and local government expenditures :for schools, highways and other :facilities, particularly those associated with suburban growth, will very likely continue their strong uptrend. The Federal contribution to the highway program, according to estimates o:f the Bureau o:f Public Roads, will be much larger next year than this year and• will account :for 40 percent o:f total capital expenditures :for highways in 1959. Federal budget expenditures, according to the Budget Review of September, will total over $7 billion more in the current :fiscal year. A substantially larger budget de:fici t is being incurred this fiscal Year than in :fiscal 1957-58. Part o:f the increase in expenditures reflects increased outflows such as social security and unemployment compensation payments, and interest on the public debt. A further significant increase :from cur~ent levels is in prospect :for direct Federal purchases o:f goods and services, particularly for national defense. With prospects :for increased expenditures :from government and private investment sectors, we would expect output and employment to continue to improve and wage rates to rise further. Wage and salary income, currently near its Previous peak, will probably be increased substantially, although some part o:f -~ the increase may be offset by some drop in farmers' income from farming. Higher consumer incomes will most likely mean higher consumer spending, thus augmenting the rising demands in the other sectors of the economy. For nondurable goods such as foods, and for services, the increase in spending may be roughly proportional to the rise in the consumer income. Consumer expenditures for durable goods, however, may show a more substantial increase. This year automobile sales are totaling perhaps 4-1/2 million, including an increased proportion of fo reign makes, compared with close to 6 million in each of the 2 preceding years. The rate of sales this year is not much above the annual rate of scrappage of used cars. Consumer installment credit outstanding on automobiles has been substantially reduced over the past year. The rising rate of housing completions will likely strengthen demand for household appliances, as well as for household goods generally. These are the demand prospects for 1959 as we see them. They provide for continued gains in economic activity and in the level of living for the average consumer. The recent relative stability in prices could well continue into 1959 as supplies of some foods increase. Whether the residue of higher unemployment remains or diminishes depends substantially on how fast the labor force and productivity increase over the year ahead. It may be that our appraisal has been on the conservative side, especially for capital goods outlays and perhaps for automobile sales. These increased sharply in the boom which followed the 1954 recession. But we think they are likely to rise less this time. The history of these annual conferences in t he 1950's suggests that we should not underrate the cold war, which more often ·than not tightens the economy as well as international relations. We need to remember Korea, Suez, SputJJ.ik . and outer space(j and the Far East as economic: factors. · THE AGRICULTURAL OUTLOOK FOR 1959 Frederick V. Waugh Agricultural Economics Division, Agricultural Marketing Service Present indications are that net farm income in 1959 may be from 5 to 10 percent lower than in 1958, although substantially higher than in 1957. But the upward trend in land values, farm assets, and levels of farm living probably will continue. The expected drop in farm income is not due to any prospective weakening of demand. Domestic demand is strong and improving. Nonfarm income may set a new record high in 1959. Foreign demand is expected to about hold its own. Immediate reasons for the expected decline"in income are the present indications of larger hog marketings, the discontinuance of acreage-reserve payments, and somewhat higher production expenses. -5- Large· surpluses continue to be a difficult problem. foreign and domestic programs t~ move these surpluses into burdensome stocks of wheat and feed grains are increasing. crops and livestock products in 1958 set a new high record. In spite of large consumption, the The output of Even if weather conditions next year should be less favorable, a high total output of farm products now seems likely. Larger marketings of hogs, early vegetables, and a few other farm products may result in slightly lower average prices in 1959 than in 1958. In addition, there will probably be a drop in Soil-Bank payments and a somewhat further increase in farm costs. The increase of 20 percent in net farm income from 1951 to 1958 was due partly to several unusual factors that are not likely to operate in the same direction in 1959 • Farm income and prices This year, realized net farm income is up over $2 billion or 20 percent above 1957. Farmers' gross income increased close to $3-1/2 billion. Four main factors contributed to the increase: Substantial improvement in the livestock markets; record crop output, augmenting the flow of commodities to the CCC; the delayed harvests of 1957, which increased income earlier thJs year while lowering it last year; and some increase in Soil-Bank payments to farmers. Some of these factors will not operate in 1959. Production expenses were up over $1 billion, reflecting higher cost rates generally, but especially heavier expenses for feeder livestock and feed. For 1959, our best estimate at this time is for a decline in realized net farm income of perhaps 5 to 10 percent. We expect an increase in the volume of marketings to maintain cash receipts, even with somewhat lower average prices. Government payments to farmers will be reduced with the end of the acreage reserve of the Soil Bank this year. Production expenses will likely show a further small increase next year. Per capita income of farm people from all sources in 1958 may turn out to be the highest on record. Per·~~apita income of nonfarm people, however, may be so~ewhat smaller than the record high of last year, reflecting recession in the nonfarm economy. For next year these trends may be reversed. Co.sts per unit of production were slightly lower in 1958 than in 1957. In 1958, production expenditures will be about 6 percent larger than in 1957, but total output will be about 8 percent larger. Costs per unit of production therefore will be lower this year. A similar increase in production in 1959 is unlikely . Sq far this year, farm prices are averaging some 6 percent higher than in 1957, and are at the best level in 5 years. We expect prices in 1959 to average a little lower than this year. -6- Demand for and supply of farm products Domestic demand for farm products, now at a high level, will likely strengthen further in 1959. The recession of 1958 had little effect on the demand for food. Consumer incomes were well maintained, and sales at retail food stores in the first 9 months of this year averaged 6 percent above the same period of 1957. With higher marketing margins, as well as higher prices at the farm, the farmer's sha~e of the consumer's retail food dollar showed little change. In 1959, with continued improvement in the economy, consumer expenditures for food will rise, even though prices to the consumer may average a little lower. This year, farm output is a record high and surplus stocks are increasing. Supplies will continue · to be very large in 1959. Crop output in 1958 is 10 percent larger than in 1957, and a new record high. Crop yields are up 20 percent in the last 4 years with an ll percent increase recorded this year. Favorable weather was partly responsible, ~ but improvements in technology also contributed to the uptrend in yields. Even with average growing conditions, crop output could be about as large next year as this year, considering the continuing improvements in technology and the return to use of some 17 million acres withdrawn from wheat, cotton, corn, rice, and tobacco under the acreage reserve this year. Farm costs Prices paid for goods and services used in farm production are expected to be higher in 1959 than in 1958. They .were 5 percent higher in September 1958 than a year earlier, and are ~xpect.Erl to continue upward. Wage rates paid to hired labor and prices paid for nonfarm goods and services, except fertilizer, are still rising, and probably will average higher in 1959 than in 1958. Costs per unit of production were slightly ';lower in 1958 than in 1957. In 1958, production expenditures will b~ about 6 percent larger than in 1957, but total output will be about 8 percent larger. Costs per unit of production therefore will be lower this year. A similar increase in production in 1959 is unlikely. The ratio of prices received to cost rates probably will not be so favorable in 1959 as in 1958. Both prices paid by farmers and costs per unit of production are expected to be higher. With the prospect for higher cost rates next year and some decline in prices received, a renewal of the price-cost squeeze is likely. Farm credit and finances Farmers will begin 1959 in an improved credit and financial position. For the agricultural industry as a whole, the value of total assets will reach about $200 billion by January 1, 1959, up 7 percent from a year earlier. Equities of -7- farmers and other owners of agricultural property will be approximately $177 billion, or 89 percent of total assets. This is the result of the higher income farmers received in 1958, the rise in land values, and the more valuable inventories farmers will have at the beginning of 1959. Generally excellent crop and pastu~e conditions and favorable prices have resulted in good payoffs of loans. Debt delinquencies are generally low and farm foreclosures negligible. Farmers in general will have slightly larger financial reserves of cash, bank deposits, and U. S. savings bonds at the start of 1959. Many who are not increasing their savings have been spending more for both family and farm outlays. Replacement of farm machinery, improvements to buildings, and purchases for the home have been at higher levels this fall and will probably continue so into early 1959 at least. Federal income tax payments, payable in the early months of 1959, are expected to be about a fourth higher than in 1958. The year 1959 will bring another rise in farm property tax payments, about 6 percent more than in 1958. Land prices MOst of the forces behind the rise in prices of farm real estate sL~ce 1954 will be present in 1959. Effects of higher farm income in 1958 and continued recovery of the general economy are likely to give additional impetus to the rise through the winter and early spring of 1959. Even though the trend may lose some of its momentum in the last half of the year because of lower farm income, the increase in the index of land prices could be as large as the 6 percent rise in 1958. A significant number of farmers have shown a strong desire to enlarge their operating units when circumstances permitted. About 2 percent of the farms were larger in 1958 than in 1957, half by renting land, and half by buying land. Purchases for farm enlargement accounted for about two-fifths of all land transfers last;;year, about double the proportion of, 1950. There is no reason to expect a slackening in the demand for land for farm enlargement purposes. Recent changes in agricultural programs will have varying effects on the land market. Higher rates of payment under the 1959 Conservation Reserve Program may have encouraged retention of ownership of some farms that otherwise would have been sold. An assured annual income under this program, together with :Social 13ecurity. income, makes it possible for eligible farmers to retire and continue to live on the farm. Those not eligible for social security can continue to receive a return from their land whi~ working at nonfarm jobs. Both situations tend to reduce the number of farms that would otherwise have been offered for sale~ -8- THE OUTLOOK FOR FAMILY LIVING Faith Clark Household Economics Research Division, Institute of Home Economics Agriculture and the food industries are expected to supply U. S. cOnsumers with an abundant and varied food supply again next year. The nutritional quality of per capita food consumption in 1959 will be almost the same as in 1958. The expected increase in the consumption of citrus fruit and vegetables may provide slightly more vitamin C in the average consumer's diet. The average amount of this vitamin has been trending downward since the peak reached at the end of the war. It dipped perceptibly in 1958 because of the unfavorable weather conditions early in the year. The expected increase in pork supplies may result in slightly more thiamine. New forms and types of foods will continue to appear on grocery shelves and on the family table. Research--much of it in the USDA--has paved the way for several promising new items. One such item is potato flakes for mashed potatoes. Other possibilities include dehydro-frozen fruits and vegetables and fruit juice powders. On the other hand, there appears to be a goodly share of interest in creative cooking--in dishes made all the way from the old-fashioned ingredients or using some of the newer convenience foods. Cooking as a hobby, especially on outdoor grills, will continue to occupy some of the leisure time of the urban and suburban American male. He may also share more of the kitchen duties than formerly because of the away-from-home employment of his wife. Continued increases in the employment of many married women appear to be likely. The latest Census figures (1957) indicate that the proportion of married women (husband present) having paid employment is almost as high for rural farm families (26 percent) as for urban (31 percent). A recent fore~ ast 0f the Census Bureau indicates that by 1965 we can expect to have about a fifth more women employed than we have today. Many questions can be raised about the effects of the employment of women on family living. The money earned is not clear gain. A sample group of working wives in 4 small Georgia cities indicated that expenses directly or indirectly related to their jobs took about 4o percent of their earnings • • For the country as a whole, there is evidence that the recent slight decline in outstanding consumer installment credit has been reversed. This may indicate that more consumers are now ready to .. )I!B.ke purchases of autos and household durable goods than during 1958 or 1957. With reduced farm income forecast, however, it is not likely that farm families will participate in this upturn to the same degree as nonfarm families. -9- Changes in family practices in the replacement of consumer durables are reflected in differences in the estimates of the length of time families keep such articles, based on data collected in different years. Between 1956 and 1957 (the latter .a year marked by falling off of sales and the beginning of the business recession) these changes were sufficiently great among urban families to increase by a year the estimated life expectancy of nonautomatic washing machines. On the other hand, rural families, who as a group enjoyed as good incomes in 1957 as in 1956, made no change in their replacement practices on this item. Prices of goods and services purchased by farm and city families in 1959 may hold at approximately present levels. The expected slight decline in food prices should offset the possible continued rise in some of the services such as medical care. Though prices may hold relatively steady, many families, farm and nonfarm, will face the need for increased expenditures as the war and postwar babies grow up. These families are now in oP. entering upon the most expensive phase of their life cycle. If their young people go to college--and a larger than ever number will be ready for college in the school year 1959-60--there will be heavy demands on the family finances. Even if families do not plan for college, they can still expect greater expenditures for food, clothing, dwelling upkeep, transportation, and personal care than when these children were younger. THE OUTLOOK FOR FOOD IN 1959 Harry Sherr Agricultural Economics Division, Agricultural Marketing Service Supplies of food are expected to be somewhat heavier in 1959 than in 1958. Consumer demand for food will likely continue strong. Food consumption per capita probably will average slightly higher than estimated for this year, but around an eighth above the prewar (1935-39) average. Retail food prices are expected to average a little under the record high level reached in 1958. First, a review of the demand prospects for food in 1959. Expectations are that economic activity and employment will be higher than in 1958. With wage rates likely to advance fUrther, consumer income probably will be at a record level, up noticeably from this year. Consumer outlays for all goods and services are expected to be somewhat higher than in 1958. The probable small increase in expenditures for food will reflect mainly the larger population and the continued increase in the services purchased with food. The proportion of income spent for food will likely be a little lower than in 1958 since the increase in income will be relatively greater than that for food expenditures. -10- The expectation that ret~l food pri~es will average a little lower next year than in 1958 is based on the likelihood of larger supplies and lower prices to farmers for hogs and -- at least during the early part of 1959 -poultry products, fresh vegetables and potatoes. As usual, prices will vary during the year, reflecting seasonal differences in supplies. Part of any reduction in farm prices for foods will be absorbed by the expected further increase in processing and marketing costs. Retail food prices in 1958 were at a record high, rerlecting the somewhat smaller supplies of meat, fresh and processed citrus fruit and, in the early part of the year, fresh vegetables. Outlays for food were maintained at a highJevel ~despite lower average income per person during at least the first half of the year . Now for a longer look at the food supply and consumption prospects fo r next year. Expectations are that food supplies will be larger than in 1958 ·because of heavier stocks at the beginning of the year and, if weather is average, large food crops. There will be more livestock on farms and ranches this January l than last. Civilian consumption of meat is expected to be moderately above the rate of 152 pounds per person estimated for the present year. The prospective increase will be almost entirely in pork. Beef consumption will almost e~ual the 1958 rate. Some increase in canned meat is probable, continuing the longterm upward trend. Pork consumption in 1959 may reach 66 pounds per person, almost 10 perQent above this year's low rate. The increase over 1958 will begin in late winter. From then to early summer supplies will be from the 1958 fall pig crop, which is estimated to number 14 percent more than that of 1957 . After early summer, pork _supplies will be mainly from the 1959 spring pig crop. This crop also is expected to be substantially larger than the year-earlier one. Pork pric~s are expected to fall sharply early in 1959 to below the year~ago level, and to average lower than in 1958 during the remainder of t he year. The anticipated reduction in pork prices will likely be enough to bring the average price for all meats a little below that of 1958. Civilians are expected to have almost 80 pounds of beef per person next year, close to the rate for 19·58. Supplies will be a little larger, but the civilian population will be up pro_portionately more. The small rise in beef out put reflects the effect of the continued buildup of breeding stock . There will likely be a relatively high proportion of the better grades in the beef supply in 1959 too, as cattle slaughter is expected to include relatively more grain-fed animals but fewer cows and grass-fat cattle. Supplies of milk and other dairy products will continue plentiful in 1959· Stocks will be lower this January l than last. Milk production may exceed by a little the 126.1 billion P9unds indicated for 1958, and may be more nearly in balance with consumption of commercially marketed milk products than it has been in any year since 1952. -11- Consumption of milk and other dairy products per person is expected to be about the same next year as in 1958 -- around 75 pounds, in terms of total milk solids. Small differences for individual items are a possibility. Retail prices of dairy products are likely to average near those of the present year. _, Prospects are for more poultry Jneat and eggs than in 1958, particularly in the first half of the year. For chicken meat the increase will reflect both greater output of commercial broilers and increased sales of mature chickens from expanded fa.;nn flocks. M::>re turkey meat is probable because of the likelihood of a larger-than-usual number of birds available for slaughter next January-June, and January l cold-storage stocks equal to or even greater than the year-earlier record total. Indications of a . gr~ter number of chickens in the nation's egg-laying flock this January l than last point to a heaVier output of eggs, at least during the first 6 to 8 months. However, the civilian population will be up too, so consumption of eggs per person may number close to the 348 estimated for 1958. Poultry meat consumption next year may top slightly this year's record rate. Edible fats and oils will be in much heavier supply than in 1958. The increase will be in lard and the major vegetable oils. Civilian consumption . of food fats and oils products in 1959 is expected to be close to this year's rate of 45 pounds (fat content) per person. Retail prices of these products may average a little lower than in 1958, reflecting in part lower prices for the raw materials. Supplies of most food grains will be record high next year, and much in excess of anticipated domestic needs and exports. Civilian per capita consumption of cereal food products probably will be no higher than in 1958. Retail prices of these food products will likely average a little higher next year because of the prospective increase in processing and marketing costs. For fruits and vegetables we cannot look farther ahead than next spring with much confidence in our forecasts. Supplies of most commercially proces ·sed items are adequate to maintain civilian consumption during the remainder of this marketing year (which ends around mid-1959) close to last year's per capita rates, even though stocks of some items are below the year-ago high levels. Ci~rus products are the outstanding exception. Supplies will be less than adequate! until the new packs start moving to market in volume after January l. More fresh apples but fewer pears will be available in the first part of 1959. Fresh citrus will be in heavier supply next winter and spring than last, according to early-season indications. Substantially more fresh vegetables will be available next winter than last if weather is normal. Unfavorable weather last winter severely damaged the vegetable crop and sharply reduced citrus production in Florida. Imports next· winter will supplement supplies of fresh vegetables. Potatoes are expected to be in heavier supply and lower priced than a year earlier through most of the winter, due to the substantially larger crdp harvested this fall. -12- Military purchases of food in 1959 are expected to be about as large as this year, but exports will be up some. The increas~ will be in foods which are in heavy supply, including wheat, rice and the vegetable oils and oil-seeds. OUTLOOK FOR CLOTHING AND TEXTILES Harry Kahan Prices and Cost of Living Division, Bureau of Labor Statistics, U. S. Department of Labor Textile industry Cotton.--Cotton accounts for the major share of the textile market. In 1957 almost 4 out of every 5 yards of broadwoven goods were made of cotton. Despite th~ growth of man-made fibers, cotton has stood its ground remarkably well. At no time has cotton accounted for less than 76 percent of total broadwoven goods production, and in 1957 it was 79 percent. What happens to cotton, therefore, is of particular significance to textiles. From the end of World War II through 1957, total U. S. mill consumption of cotton fiber fluctuated from year to year, but per capita consumption exhibited a definite downward trend. Except for 1955, per capita mill consumption of cotton fiber has steadily declined since 1951 from 31.5 pounds to 23.7 in 1957· Some of ¢etten's losses may be attributed to inroads made by man-made fibers and other cotton substitutes such as paper and plastics. Cotton also shared in the general decline in per capita consumption of all the fibers. While the relative demand for cotton textile products has tended to decline, supplies have been dncreasing, especially during the past couple of years. In 1957 inventory in relation to production was up 80 percent over 1951. For the first 5 months of 1958 there were still lower mill activity and higher inventories than the comparable period last year. As may be expected from such a disparity between supply and demand, prices for cotton textiles have been somewhat depressed. The Bureau of Labor Statistics price index for cotton textile products has remained well below the base per~od 1947-49 level during most of the postwar period. In 1957 the average index was 90.7 and this year it looks as though the average- will wind up between 88 and 89. There appears to be an adequate raw cotton supply on hand to take care of domestic consumption and exports for almost two years. There are no definite signs of sharply increased demand for cotton textiles during the coming year. Current plant capacity to turn out cotton textiles is adequate to meet next year' s demands. There is no strong prospect for general or substantial wage hikes in the industry next year. -13- I do not foresee any significant change in the level of prices for cotton textile products next year. I believe that with improving general economic conditions, modest price rises may occur. Some ~ess may also be anticipated in efforts to bring inventories into more realistic alignment with demand. Man-made fibers. --Man-made fibers rank. second to cotton in importance. In 1957 man-made fibers accounted for 28 percent of total fiber consumption in pounds, as against 66 percent for cotton. (On a cotton equivalent basis--a method used for comparing relative yields from equivalent quantities of fiber-man- made fibers' share of total fiber consumption increases to 38 percent while cotton's declines to 58 percent. This occurs because a pound of man-made fiber goes farther than a pound of cotton. For example, it has been estimated that a pound of cotton will average 3.5 square yards of apparel fabric, while a pound of rayon or acetate will average 4.5 sq_uare ~ds and a pound of nylon 7 square yards • Man-made fibers fall into two main classifications: the cellulosics and the noncellulosics. The cellulosics consist lulo~s ics include nylon, Dacron, Orlan, fib er losics have been almost entirely responsible fiber textile industry since World War II. of rayon and acetate. The noncelglass, and others. The noncellufor the growth of the man-made During 1947-49, man-made fibers on a pound basis comprised about 18 percent of all textile fibers consumed. By 1957, consumption had risen about 55 percent to capture 28 percent of the market' for textile fibers. The noncellulosic fibers were primarily responsible for this phenomenal growth. The cellulosic fibers, rayon and acetate, expanded their market by about 10 percent in the 10 years from 1947 tQ 1957; the noncellulosics' share of the market soared more than 750 percent. Rayon's success in capturing the tire cord market is the principal reason why cellulosic consumption increased instead of declined. Production of ~yon and acetate broadwoven goods dropped from an average of 2.1 billion yards in 1947-49 to 1.5 billion in 1957. During the same period, production of broadwoven noncellulosics increased from 80 million to T79 million yards • In the first half of 1958 the use of rayon and acetate as a textile, (not as tire cord), was slightly higher, use of noncellulosics was slightly lower than in the comparable 1957 period. This downward turn for the latter fibers seems attributable chiefly to the recession, which has been protracted and severe in many segments of the textile industry. Despite this interim decline, the growing market for man-made textiles will take place chiefly in the noncellulosics. The properties which won t~em wide acceptance--such as dimensional stability, streng~, and easy laundering--have made noncellulosics particularly desirable for b~ending with other fibers. Along with wool and cotton, the man-made fiber textile industry has felt the effects of the recession which ,started in 1956 for the textile industry. The August 1958 Wholesale Price Index for man-made fiber textile products stood at 80, which is about 2 percent below the 1956 average and lower than at any time since 1947. Although producers have tried to balance supply and demand, the extent of the recession in textiles had created fairly large inven-tories in the man-made fiber industry. This situation has tended to keep -14- prices on the soft side. However, a whittling down of inventories and continued improvement in the general economic climate should encourage firmer prices. The increased emphasis on wash and wear fabrics should also contribute to a growing demand .for noncellulosics. The industry has anticipated this growth with expanded facilities; consequently, it seems unlikely that shortages will occur because of lack of capacity. Indeed, the entrance of more companies into this field should create a competitive environment that should tend to hold within modest bounds price increases encouraged by improved economic conditions. Wool.--The sharpest decline in prices and consumption has taken place in the woolen and worsted industry. The wholesale wool products pric~ index soared 61 percent between March 1950 and March 1951. This price bulge all but collapsed within the next 12 months. Then the price index drifted gradually downward until early 1956, when it returned to the March 1950 level of 102. During 1957 average wool prices were 6 percent above 1956, but they declined shortly thereafter to new low levels. The index now hovers around ·100. Woolen and worsted consumption has declined severely. The 1947-49 average U. S. mill consumption of wool was 4.3 pounds per person. In 1957, this figure was virtually halved to 2.2 pounds, and may be even lower for 1958. In only 3 years, during the 1930's, was lower per capita mill consumption of wool recorded. During the period 1947-49 to 1957 wool's share of all textile fiber consumption f'ell ,. f'rom 10.5 percent to 6. 2 percent. .Woolen and worsted broadwoven goods production fe~l from 476 million yards to 293 million, or about 38 percent. Present indications point to still lower yardages for 1958. The long-term decline in woolen and worsted consumption is traceable to factors which have be:e.m. operating in good times as well as bad. One is a trend, toward lighter weight clothing which has reduced the amount of wool used in garments. Men's year-round weight suit~ for example, are being made of lighter weight fabrics than formerly~ Another is the relative instability of wool prices. When prices of raw wool soared, manufacturera ·of woolen apparel fabrics were fearful that they would be priced out of the market and started to look around for more stable-priced fibers to blend with or substitute for wool. Alert to the opportunities provided by rising wool prices, man-made fiber manufacturers strongly promoted their products and engaged in extensive research to improve them. Another and more recent cause for declining wool consumption has been the poor business experienced by men's clothing manufacturers during the past few years. In 1957 production of men's suits was 1.3 percent below 1955 and 4 percent below 1956. The declines for overcoats and topcoats were much sharper: 35 percent below 1955 and 40 percent below 1956. Comparing the first 6 months of 1958 with the corresponding period in 1957, suit production was down 21 percent and coats down 9.2 percent. Since the men's clothing industry is a major market for woolens and worsteds, these declines seriously affected the industry. Perhaps the most devastating blow to the woolen and worsted industry has been dealt by man-made fibers, particularly the noncellulosics. Fabrics once 100 percent wool are now appearing in blends containing as high as 70 percent of the man-made fibers. The recent introduction of a type of' Dacron more suitable for blending in heavier fabrics threatens to make deep inroads in use of wool for year-round weight suits. -15- Since many of the man-made fibers have properties of dimensional stability, shape retention, and e8sy laundering, the increasing emphasis on wash and wear type fabrics will tend to improve their competitive position with respect to wool even more. In the third quarter of 1958 prices, production, and consumption of wool and wool products were off sharply. Although in absolute amounts apparel wool inventories are fairly mode~, the ratio of total stock to mil.l consumption as of the beginning of the year was the highest since 1948. What then is the outlook for wool in 1959? Further improvement in general economic conditions should serve to bolster prices and perhaps increase consumption slightly. But unless ways are found to impart "easy to care for" characteristics to wool fabrics, ~uch gains are likely to be limited in view of the aggre~sive and effective competition from man-made fibers. Summary. --The textile industry participated much less than most industries in the prosperity which prevailed during most of the past decade. From 194T"to 1957 the index for industrial production for all manufacturers rose 45 percent, but textile mill production declined almost 3 percent. Average weekly earnings rose 65 percent in all manufacturing as against 41 percent in the textile mill products industry. Since 1949 profit rates for the textile industry have compared quite unfavorably with rates for all manufacturing industries. In 1956 mill activity started to decline in the textile industry and the price level went down about l percent. The price leVel remained the same in 1957, but the decline in mill acti~ity continued at an accelerated pace. As of June 1958, price levels were down for all major textile products, and production and consumption had a&ain dropped. Keen competition prevails in most sectors of the textile industry and tends to hold prices down. This tendency is further reinforced by sharp competition among the fibers, with marketing programs and research being carried on vigorously to promote particular blends, finishes, and constructions. Competition is particularly keen in the wash and wear field. Per capita consumption of textile fibers fell from 45 pounds in 1950 to around 36 pounds in 1957. Only the noncellulosics--nylon, Dacron, etc.-increased in per capita consumption. Thus, in a decade when most industries fared quite well, the textile industry's performance was at best only fair. While many industries established new highs, in produc~ion and prices, those of the textile industry either lagged behind or ran counter to the trend. Further improvement in economic conditions should promote increased output and some firming of prices. But these improvem~nts are not expected to be of a magnitude to support any significant price increases next year. -16- Apparel The extent of the slowdown in the apparel industry during the recent recession is illustrated by the Federal Reserve Index of Froauction for Apparel and Allied Products, which showed a steady decline from August 1957 through March 1958. With the exception of blouses, all categories of apparel cuttings declined in the early months of 1958 from the preceding year. Though output improved slightly between March and June, the index was lower than for the comparable period in 1957. The July figure, however, showed an improvement ·over July 1957. The men's suit industry operated at 72 percent of capacity in August 1958, down from 81 percent in August 1957. Production of most categories of men's tailored clothing was off the first half of 1958 as compared with the corresponding period for 1956 and 1957. In general, the declines were more• pronounced in clothing made of 50 percent or more wool than in that of other types of fibers. Separate dress and sport trousers production declined 45 percen~ ·~rom last year for those made chiefly of wool, but increased 11 percent for those made of other materials. Production of women's, misses', and juniors' outerwear garments were all lower in the first half of 1958 than a year earlier. Declines ranged from 3 percent for skirts to 10 percent for suits. Hosiery shipments dropped slightly and shoe production was off in the first 6 months of 1958. Prices.--Apparel prices have shown a high degree of stability over the past several years in contrast to most hard goods. During the last 6 years, the yearly average Consumer Price Index for apparel fluctuated within a range of not more than 3 percent. As of midyear 1958, the consumer apparel index was but 1 percent above its average of 1952. Footwear prices rose considerably in the past several years. If footwear were excluded from the apparel index, the index would show a decline from 1952. One reason for the stability of appa~el prices is that its principal raw material--textiles--had been declining in price. This tended to either offset or dilute considerable increases in other costs of production. The widespread practice of selling at established price lines also tends td keep price fluctuations at a minimum. In addition, there has been no great surge in the demand for apparel. Aggregate demand for apparel has increased, but this has been keyed chiefly to population irowth. Consumers have shown little inclination to allocate a larger share of their increased incomes to apparel. This somewhat passive demand situation does not generally encourage price increases. Consumer expenditure pattern.--The share of the consumer dollar spent for clothing has dropped steadily from 11.4 percent in 1947 to 8.7 percent in 1957, and for the first half of 1958 has fallen below 8.5 percent. Per capita cloth~ ng and shoe ex~enditures rose from $131 in 1947 to $145 in 1957 c(in terms of 1947-49 dollars}. -17- As measured by aggregate or per capita expenditures, apparel bas not done very well compared with most other major categories of consumer goods. one reason is that apparel prices have advanced only moierately, as compared to prices of most other goods and services. Another is the change in the ratios of the different age groups in the population. The percentage of older people bas been increasing. Older people have smaller incomes and diminished clothing needs, so they spend less on clothing. The relative growth of this. sector of the population, therefore, tends to reduce per eapita expenditures for clothing. But the factor which seems most respOnsible for inhibiting the growth of apparel expenditures has been the competition from other types of goods and services. In parceling out his dollar for the vast and expanding array of goods and services available, the consumer has been assigning a declining importance to the role of apparel. There areno apparent signs that he will in the near future change his attitude toward the importance of clothing. It therefore appears quite unlikely that a significant reversal in the clothing expenditure pattern may take place next year. Clothing outlook for 1959.--There is a growing optimism among merchants and manufacturer~ · that apparel sales for 1958 may equal or exceed those for 1957'. Many are confident that the gains will continue through 1959. Gautious buying by both retailers and manufacturer~ during the recession have worked down inventories. A low inventory position favors an outlook for increased production of apparel. Women's and girls' clothing.--In the past 5 years, and so far this year, prices of women's and girls' apparel have fluctuated within a narrow range. Earlier this year, new wage agreements were negotiated covering most women's dress manufacturers. As a result, it has been estimated that labor costs would be increased approximately 12 to 20 percent. So far there is no clear evidence that this increase has affected retail price levels. The impact of the wage increase has been mitigated somewhat by two factors: (l) ample piece goods have been available at low pr~ces; · (2) the relatively simple styling of current fashions has held down labor costs. What may happen if piece goods prices rise or styles become more complex is open to conjecture. The almost infinite variations in styling and design which may be incorporated in fashion apparel, as well as the broad range of materials available, provide a high degree of maneuvarability in rearranging cost elements. The curtailment of trimmings, for example, is one of the economie-s adopted to compensate for increased labor costs. Active demand, together with wage increases, should help firm prices for sweaters and other knitwear next year. Coat and suit ordering is also up. No Price increases are anticipated for this category of apparel or for unde~ear. Men's and boys' apparel.--It appears that the relatively stable 1958 Prices for men's and boys' apparel will remain pretty much unchanged next year. The recent announcement by manufacturers of lower wholesale prices for men's suits supports this belief. Reductions at wholesale ranging from 50 cents to $1.50 reflect lower prices for woo-~en and worsted fabrics. It is difficult to -18- evaluate the extent to which these wholesale price reductions will be reflected in retail prices. Since th~ir operating costs are rising, retailers may find it advisable not to pass along small wholesale price reductions. The trend toward greater use of fabrics of fibers other than wool apparently will continue. While suits made of man-made and cotton fibers have dominated the summer weight suit market, wool's position in the year-round suit field had remained unchallenged. This season, however, year-round suits made ofDacron.-worsted blend have been put on the market in larger volume. Footwear.--Retail prices of footwear, according to the BLS index, are about 30 percent above the 1947-49 average. For the first 9 months of 1958, retail shoe prices advanced 0.8 percent as compared to 1.1 percent for the same period in 1957. Two major shoe manufacturers have recently indicated that they may raise prices further; others have been booling orders through next February at current prices. Indications are that shoe prices may be somewhat high~r next year. Wash and wear.--For several years, increasing effort has been devoted to the production of clothing requiring a minimum amount of care. The ultimate goal is the development of clothing which will look immaculately laundered and pressed after emerging from an automatic washer and dryer. Considerable strides have been made toward this goal. More and more clothing carries a wash-and-wear tag, stating that little or no ironing is necessary, or that perhaps a little touch may be required. But frequently the ease of care implied by the words wash and wear has fallen short of the claims made by the manufacturer. The industry is now attempting to formulate objective standards for evaluating the performance of wash-and-wear fabrics and clothing in order to remove confusion as to just what wash-and-wear means. Much work has yet to be done to overcome manufacturing problems which arise in making wash and wear clothes. These problems are engaging the attention of the textile and apparel industry, and next year should bring further advance in wash-and-wear technology. The sale of wash-and-wear fabrics and clothing has been very substantial. In 1957, 20 percent of cotton fabrics were treated for wash-and-weaE • . The proportion may double this year and increase still further in 1959. Although a comparative newcome~, wash-and-wear dress shirts may account for the major part of dress shirt production by the end of 1958, according to trade sources. Consumer preference has turned sharply toward children's apparel labeled washand- wear. Wash-and-wear should continue to be the most important development in textiles and apparel in 1959. -19- OUTLOOK FOR HOUSING AND HOUSEHOLD ~UIFMENT George G. Johnson Bureau of Labor Statistics, U. S. Department of Labor This year has been marked by extremes in the production rate of new homes. The number of dwelling units started dropped to a very low level in February and March. The seasonally adjusted annual rate for these months was 880,000 nonfarm units, the lowest since early 1949. By May the rate of starts was beginning to rise and has since increased steadily. The September total of 118,000 starts was the highest September figure since 1950. On the basis of this rise it seems likely that new homes for 1958 will exceed the levels of both 1956 and 1957. The reduced supply of credit and other signs of economic distress late last year caused builders to limit their plans for 1958. There was a sharp drop in co~tments for construction loans, purchases of land, and orders for materials. Since builders ordinarily plan ahead for a considerable period, several months of a recovering market passed before builders were able to get expanded programs under way. The spurt in housing acrti vi ty is demonstrated by the sizable increase in applications for Veterans Administration and Federal Housing Administration housing loans. In September the number of VA loan applications was several hundred percent above their low of April 1958. The number of FHA applications was over 200 percent above their ~ow point of December 1957. Encouraging as this picture is, the rate of new construction is probably still somewhat below an average of l. 5 million nonfarm units per year. This figure has been mentioned as that necessary to permit a satisfactory rate of demolition of substandard housing and to provide for new households. According to the 1956 National Housing Inventory of the Census Bureau, losses to the housing supply have been averaging about 480,000 dwellings per year from 1950. ~ Almost half of this total consists of transfers of dwellings into nonresidential space and losses through disaster. The South has registered the greatest losses of any area, but has also reported the highest additions to its housing inventory. The total addition to the housing stock between 1950 and 1956 averaged about 1.86 million per year, including new construction, changeover of nonresidential space to dwelling units, and conversions ;(dividing a single unit into two or more units). This includes an average of just under 100,000 new farm homes per year. These National Housing Inventory figures are not to be compared directly with the housing starts already mentioned. The inventory incl~des rural farm homes, mobile homes, and vacation dwellings,noneof which is included in the BLS series on starts. Y "Components of Change in the Housing Inventory of the United States," Construction Review, April 1958. -20- Credit The supply of credit vigorously affects housing construction and sales. The average mortgage debt has increased right along with the expansion of new housing in recent years. In l949, there were 9 million mortgaged homes with an average indebtedness of $3,700. By l957 the number had risen to l6 million, with an average debt of $6,lOO. FHA-insured and VA-guaranteed mortgages represent about two-fiths of outstanding home mortgages by dollar volume. During l956 and l957 there was an increasing scarcity of credit which caused interest rates to move upward. The increasing difference between interest rates for long-term loans (including conventional mortgages) and the regulated rates of Government-underwritten mortgages led to a decrease in dollar volume of new mortgage financing and contributed to a depression of housing activity. In August l957 the maximum interest rate of FHA-insured mortgages was increased to 5-l/4 percent, and down payments were lowered. In April l958 the VA-guaranteed mortgage rate was raised to 4-3/4 percent, following the enactment of the Emergency Housing Law. The act also authorized the Federal National Mortgage Association to buy at par $l billion of FHA and VA mortgages on new houses. At about the same time VA removed any down payment requirement. These measures, plus a slowdown in the rate of industrial. and commercial expansion, freed a large volume of investment funds and the mortgage market attracted a sizable share. Interest rates for conventional first mortgages declined 3 percent on the average for the first half of l958, according to Consumer Price Index data. There are signs at present that interest rates are again beginning to rise. Housing construction and sales next year will depend to a large degree on the adequacy of the credit supply. Within practical limits the Federal Reserve Board and the Treasury Department attempt to maintain the supply of money and credit so it is just adequate to provide for regular business activity and growth. As we all know, credit too readily available is inflationary; credit too scarce is inclined to drive up interest rates and inhibit residential mortgage activity. It appears at present that the supply of credit is beginning to be restricted again. The demand for housing Housing vacancies.--The demand for housing continues strong, as indi- , cated by a nationwide low rate of vacancies. Although mobility is high, the homes families vacate do not remain empty very long. The vacant available dwelling units represented less than 3 percent of the housing supply in the third quarter of l958, and only 0.6 percent were for sale. gj This compares g;·u. S. Bureau of the Census. Series H-lll, No. l4. October l958. -21- to an available vacancy rate in 1950 of 1.6 percent, with 0.5 percent for sale. The west reported the highest rate of available rentals and the North Central region the highest rate of houses for sale. Population mobility.--Population mobility has an important influence on demand for housing because movements of population from one area to another may stimulate purely local demand for the conatruction of additional housing. According to a census study, 1 of every 5 persons in the United states changed his residence in the 12 months ended April 1957. 1/ About one-third of the migrants moved to a different county or State. On the average between 1953 and 1957 3 of the 4 regions had a net loss due to an excess of out-migration over in-migration. Only the West gained through migration. In this region about 40 percent more people moved in than moved out over the period. Table 2.--Annual average number of in-migrants and out-migrants, by region 1953-1957 Region Northeast ••••••••••• North Central ••••••• Sc:Juth • ••••••.••••••• West •••••• •••••••••• In-migrants (000) 396 726 849 699 Source: Bureau of the Census. Out-migrants (ooo) 425 730 1,024 489 Household formation.--The rate of formation of new households is considered a significant indicator of the demand for housing. The number of households has increased for the last 2 or 3 years at an average rate of over 900,000 annually. The increase is entirely due to nonfarm households; the number of rural farm households dropped at an average annual rate of 150,000 from 1950 to 1957. !::/ The low marriage and birth rates from 1930 through the war years are expected to limit the net formation of new "husband-wife" households to less than the present rate from next year until the mid-1960's. The number of people coming to the marriageable age group of 20 to 29 years has been declining for several years. 2J However, the number of marriag~declined only slightly from year to year until 1957, when it dropped 3.4 percent as compared to 1956. §! The rate of decline for the first part of 1958 is e~en greater. Unemployment caused by the business downturn may be blamed for much of this. As unemployment diminishes the marriage rate may rise in the next 2 or 3 years. However, the annual rate will still be lower than that of 1956. ~ u. s. Bureau of the Census. Series P-20, No. 82. July 21, 1958. u. s. Bureau of the Census. Series P-20, No. 76. July 7, 1957· 2) u. s. Bureau of the Census. Series P-25, No. 146. November 12, 1956. §} U. S. Department of Health, Education, and Welfare. Monthly Vi tal Statistics Report, Provisional Vital Statistics for the United States. April 9, 1958. -22- There has been a decrease in the proportion of "doubled-up" married couples since right after World War II. In 1947, 8.7 percent of all married couples did not maintain their own households. By 1957, the figure had decreased to 3. 3 percent. 1} Doubling up is expected to decrease further over the next few years. The growth of retirement plans and social security has created a larger number of financially solvent aged husband-wife families than ever before. Retir~d families now fre~uently continue to maintain households, instead of giving .up independent living arrangements when their earning careers have ended. The proportion of retired families who are financially independent is expected to increase gradually. The trend toward larger families has caused demand for more space in detached owned houses. This implies only a change in tenure and not in the number of households. A recent study by the Census Bureau shows a 22 percent increase in the number of children born per 1, 000 women from 1950 to 1957. §} This is the result of a high level of prosperity and earlier marriages. We may expect a smaller rate of household formation during the next few years. The Bureau of the Census estimated av~rage annual increases ranging from 521,000 to 778,000 households from 1955 to 1960. 2/ However, even the latt-er estimate ,may prove to be somewhat low if the level of unemployment drops and real income continues to increase. A real boom in new households can be confidently predicted in about 6 or 7 years when the postwar crop of children reaches marriageable age. Cost of home ownership In 1950 the numbers of nonfarm renter-occupied and owner-occupied dwelling units were almost e~ual. Today about 6 out of 10 nonfarm occupied homes are owner-occupied. The FHA mortgage-insurance program and the VA loan guarantee program encouraged home ownership. Much of the success of these programs came about because families began to realize they could have the advantage of owning houses with monthly payments less than rent. Some of the advantages of ownihg a home are psychological or cultural, such as pride of ownershipj but many are more concrete. In general, living area and grounds are larger, there is more privacy, and homeowners often wield more influence in their communities. Homes are often considered investments and payments may represent a desirable form of forced savings. The prewar market value of most houses doubled or even tripled after the war. Home ownership thus began to be thought of as a hedge against inflation. U. S. Bureau of the Census. U. S. Bureau of the Census. U. S. Bureau of the Census. Series P-20, No. 76. Series P-20, No. 84. Series P-20, No. 69. July 5, 1957 • August 8, 1958. August 31, 1958· -23- The numerous expenses directly related to owning a home make a comparison of actual costs difficult for rented versus owned shelter. The Bureau of Labor Statistics estimated from its 1950 expenditure surveys that the avera~e annual cost for owners was $832 compared to $536 for renters. From December 1952 to September 1958 the costs for owners increased 13 percent on the average as compared to 14 percent for renters. ~ More than half the nonfarm families having incomes under $4,000 in 1958 rented their homes while more than half having incomes of $5,000 or over owned them. Families reporting incomes in the middle range of $4,000 to $4,999 were evenly divided between renters and owners. There is a strong tendency for a family to purchase a home as income rises. Over 65 percent of the families having a family head at least 35 years old own their homes. -gj The cost of building materials and construction workers' wages increased about 23 percent from 1950 to mid-1958, according to the Boeckh Construction Cost Index. During this period the average value of building lots as estimated by FHA, more than doubled, increasing from $1,035 to $2,148. This is only part of the story of the change in the cost of building a house, however. The average living area of new homes sold under the FHA program increased by a third, from 838 square fiet in 1950 to 1,105 square feet in 1957. The average home built in 1957 was one full room larger than the average of 4.8 rooms of the 1950 house. Lot sizes were larger, and over three-fourths of the new 1957 houses had garages as compared to less than half of the new houses of 1950. These physical changes plus the increase in the cost of materials, labor, and land raised the average price of FHA-insured new houses from $8,700 to $14,500 ( a 67 percent increase) over the period from 1950 to 1957. The tendency of builders to increase the size, quality, and content of their houses is often taken to mean that they have naTrowed the market for their product to ever higher income families. Actually, the median income of urban families increased about 64 percent--almost the same as the increase in new house prices-over the 7 years. Families receiving at least $7,500 per year in 1950 accounted for about 20 percent of new house sales in that year. The same income group purchased almost half the new homes in 1957 according to Consumer Finance Studies. Howeve~this income group represented a much larger proportion of all urban families in 1957--about a fourth, as compared to less than lO percent in 1950. The Federal Housing Administration computes the average ratio of housing expense to income for homes newly purchased under its mortgage insurance program~ It is not known how representative of housing purchases these are, but the average expense-income ratios for FHA purchases have declined from 1950 to 1957 for both new and existing homes. ~ U. S. Bureau of Labor Statistics, Consumer Price Index. -g) "1958 Survey of Consumer Finances, Purchases of Durable Goods," F~deral Reserve Bulletin, July 1958. 1950 .. ........ . 1957 .... ...... . -24- Percent of income spent for housing New homes Existing homes 21.6 19.7 20.3 19·9 The purchasers of new homes are frequently former owners who have considerable equity in their former houses. This equity, following the sale of the former house, may be reinvested in a new house, making smaller mortgage and smaller monthly payments possible. There have been reports from builders that their plans for the latter part of 1958 involve the construction of cheaper houses. Apparently the price reduction will be made possible by fewer built-ins, dry walls instead of plaster, and fewer special luxury items. A nationwide opinion survey of builders conducted in October gave an estimated average selling price of $14,300 for homes to be built in 1958 as compared to $14,800 a year earlier. ~ This trend may continue into 1959. Outlook for housing prices Some of the discussion so far has been concerned with average prices at different dates for different qua.li ties of housing. The Consumer Price Index measures price changes to renters and to homeowners over time for a fixed quality of housing. Changes for these may be more meaningful to the average family which maintains the same living arrangements for years. Rents for the same quality dwellings have been rising gradually but consistently and are expected to continue to rise in the foreseeable future. The frequency and size of rent changes are influenced by increases in landlords! costs. Property taxes and maintenance and repair are cost items which have risen considerably. As an example, the cost of a typical interior repainting job increased 4 percent in the past year and over 10 percent in the past 2 years ·as measured by the Consumer Price Index. The incidence and frequency of rent changes are directly traceable to mobility. A change in tenancy is the most frequent reason for individual rent changes in the samples of rental units used in the Consumer Price Index. This is because the renting of shelter often involves a different relationship between landlord and tenant than between a seller and buyer of commodities. This relationship may be formalized by a lease or consist merely of a verbal agreement. Therefore, the landlord frequently uses the occasion of a change in tenants to raise the rent. This, of course, assumes a condition of high demand for rental shelter and rising costs to the owner-landlord, as at present. ~ Survey of the National Association of Home Builders. Builders' Economic Council, October 1958. -25- The cost of owning a home to the owner occupant includes maintenance and repairs, fire and extended coverage insurance, property taxes, mortgage interest, and initial purchase. There are other costs, but these are the most significant and are measured directly for the Consumer Price Index. The cost to homeowners of maintaining and repairing a house has increased about 15 percent since 1952. In general, the repair or mainten~ce items involving a large amount of labor have increased most. For example, plumbing r~airs, interior repainting, and reshingling have risen more than 2~percent. Commodities, excluding service, such as replacement water heaters _and paint, have increased the least. These costs will probably continue upward in 1959. Fire and extended coverage insurance rates moved up slightly in 1956 and 1957 and increased sharply in 1958. Much of the increase oc.curred because of hurricane damage in east coast cities and floods on the west coast. storm damage was partly r~sponsible for Boston rates increasing 65 percent on the average in 1955. Seattle reported an average increase in rates of almost 50 percent in 1957 following floods in that area. Local residential property taxes have increased over 25 percent on the average for the United States since 1952. Many of the cities that have shown heavy growth have reported the largest increases. Portland, Oregon, Los Angeles, San Francisco, and Cleveland have averaged increases exceeding 30 percent. This increase is r~lated to expansion and installation of new water and sewer facilities, streets, and fire and police protection. Much of the change in the future will be related to new resident!~l construction and .suburban development • Interest rates on new first mortgages increased regularly from the early 1950's until the 6-month period March to September 1958. In this latter interval rates dropped an average of more than 2 percent. Interest rates will probably again begin to move up gradually in the months ahead as credit becomes in shorter supply. Prices of new houses are made up roughly of 50 percent cost of building ~aterials, 30 percent cost of labor, and 20 percent builder's profit and overhead. The total cost of building materials and wages in building construction has increased about 11 percent from December 1952 to mid-1958 according to the Boeckh Construction Cost Index. The actual price change of new houses does not necessarily follow the cost changes closely as the average profit to the builder of developer may vary considerably. However, in the long run rising costs have a direct effect on prices. There is reason to think that prices for housing will continue to move gradually upward. Household equipment The production of major household goods dropped considerably in the first half of 1958. !lJ Sales also decreased in volume. Much of the lull results from the drop in £he number of new homes constructed. No other single industry ~ Federal Reserve Bulletins, Output of Consumer Durable Goods. -26- has such a pervasive effect on the production of many commodities as housing . A decrease of 100,000 housing starts means a contraction in the production of building materials and a loss in appliance sales of 100,000 refrigerators, 100,000 kitchen ranges and water heaters, 34,000 garbag~ disposal units, 11, 000 dishwashers, 7,000 air conditioners, and 55,000 kitchen exhaust fans. ~ A slowdown in sales of houses also causes a drop-off in retail sales to consumers of some of these items. The American Home Laundry Manufacturer's Association reports that home laundry equipment sales for the first half of 1958--a period of fewer house purchases--were 13 percent below sales for the same interval a year earlier. As 1958 progressed into the second half indications of strengthening demand began to appear. Small appliances and housewares showed the most important gains in department store sales. As sales increase, there are signs that the curtailment of production of some of these items may have been overdone. However, it is possible th~t low inv~ntories may spur production and speed up recovery. Prices of household furnishings and equipment have shown an overall decline of about 4 percent since 1953. Price changes of items within this category were mixed. The price level of fUrniture is slight ly higher than in 1953 on the average, though it has been decreasing slightly but consist~ntly in 1958. Household appliances have shown the largest price decrease among homefUrnishings. These prices have dropped an average of 19 percent from 1953 and are showing little indication of strengthening. Several developments since 1953 influenced price levels. Sales of hous~hold durables were up in 1955 and 1956, sustained by vigorous construction of new··housing. More use of consumer credit helped to increase the volume of fUrniture sales. The growing popularity of discount stores stimulated sales of appliances and contributed to downward trends in prices. As discount store sales volume increased, competition began to hurt the· stores, which were caught in a squeeze between the discount prices of the new competitors and the fair tradelaws. As early as 1952 or 1953 the courts found certain State fair trade laws unenforceable. At the present time fair trading is Cbnsidered unenforceable in 16 States and the District of Columbia. Manufacturer$ of durable goods hav~ now generally abandoned price fixing policies. The outlook for household ~Uipment is for a higher level of sales than experienced recently. The recovery in the housing market and drop in unemployment signifies increased demand for these itmes. Short- and intermediate-term credit outstanding for consumer goods other than automobiles was at a higher level in July than in any month since last February. However, the decrease in new household formation does not justify prediction of a sales boom such as occurred in 1955 and 1956. ~ U. S. Bureau of Labor Statistics, "Survey of Characteristics of New One-Family Houses," Construction Review, April 1957. -27- ESTIMATED COST OF ONE WEEK'S FOOD Table 3 (page 28) presents the estimated cost of l week's food to be prepared and served at home. The estimate is based on quantities of food in the low cost, moderate cost, andliberal plans published in the October 1957 Family Economics Review. The plans are also available as a leaflet-Low Cost, Moderate Cost, and Liberal Family Food Budgets, Revised 1957, HHE (Adm.)-53· The cost of food for specific family can be estimated from table 3, since costs are given for individuals of different ages. These costs are based on averages of food prices collected by the Bureau of Labor Statistics in 46 cities, and may not apply to any specific city or region. CONSUMER PRICES The Index of Prices Paid by Farmers for Commodities Used in Family Living (table 4), and the Consumer Price Index for City Wage-Earner and Clerical-Worker Families (table 5) are on page 29. -28- Table 3.--Estimated Cost of One Week's Food, ~ October 1958 Sex-age groups FAMILIES Low-cost plan Dollars Family of two, 21-34 years of age gj..... 15.50 Family of two, 55-74 years of age gj..... 14.00 Family of four with preschool children 2J 21.00 Family of four, school age children~··· 24.00 INDIVIW.Al5 Children: UD.der l yea;r • •.••.••.••••••••••.••••••• 1-3 yeaxs ..•..•.•••••.•..••••..•... ••.• 4-6 years . ............................ . 7-9 years ............................. . Girls, 10-12 years . ..................... . 13-15 years . .......................... . 16-20 years . .......................... . Boys, 10-12 years .••.••.••••••••••.••••.• 13-15 years . ........ ·• ................. . 16-20 yea:rs • ••.••.•..••••.••••••••.•••• Women: 21.,. 34 years . .......................... . 3 5 -54 yeax s . . . . . . . . . . . • • . • . . . ..•..•.... 55-74 years ........................... . 75 years and over . .................... . Preg:rla.nt . ......•.............•......... Nursing . .............................. . Men: 21-34 years ........................... . 3 5 -54 years . . . . . . . . . . . . . . . . . . . . . ...... . 55-74 years ........................... . 7 5 years an.d over ..................... . 3.25 3·75 4.25 5.25 6.00 6.25 6.50 6.00 7.00 8.50 5.50 5.25 5.00 5.00 6.25 8.25 7·25 6.75 6.50 6.25 Moderatecost plan Dollars 21.00 19.00 27.50 32.50 4.00 4. 50 5.50 6.75 8.00 8.75 8.75 8.25 9·75 11.50 7·75 7·50 7.00 6.50 8.50 11.25 9·75 9.25 8.75 8.25 Liberal plan Dollars 23.50 21.00 31.50 37.00 4.25 5.25 6.50 7·75 9.00 10.00 10.00 9· 50 ll.OO 12.75 8.50 8.50 8.00 7 ·50 9.25 12.25 ll.OO 10.25 9.50 9.25 ~ These estimates were computed from quantities in low-cost, moderatecost, and liberal food plans published in tables'2 1 3, and 4 of the October 1957 issue of Family Economics Review. The cost of the food plans was first estimated by using the average prices per; pound of each food group paid by nonfarm survey families at 3 selected income levels. These prices were adjusted to current levels by use of Average Retail Prices of Food in 46 Large Cities Combined released periodically by the Bureau of Labor Statistics. Estimates for individuals have been rourided to nearest $0.25 and for families to the nearest half dollar. gj Twenty percent added for small families. 3/ Man and woman 21-34 years, children, l-3 and 4-6 years. ~ Man and woman 21-34 years, child 7-9; and boy, 10-12 years. -29- Table 4 .--Index of Prices Paid by Farmers for Commodities Used in Family Living (:1,.947-49 = 100) November 1957; March 1958-November 1958 Item Nov. Mar. A'¢. May 1957 1958 June July Aug. Sept. Oct. Nov. All commodities ••••••••••••• 118 120 120 120 120 120 119 119 119 120 Food and tobacco •••••••••• I -- 121 -- -- 122 -- -- 118 -- -- Clothing •••••••••••••••••• -- 114 -- -- 114 -- -- 115 -- -- Household operation ••••••• I -- 119 -- -- 119 -- -- 119 -- -- Household furnishings ••••• I -- lo8 -- -- 107 -- -- lo8 -- -- Building materials, house. -- 120 -- -- 120 -- -- 121 -- -- Auto and auto supplies •••• -- 139 -- -- 139 -- -- 137 -- -- Source: Agricultural Marketing Service. Table 5 .--Consumer Price Index for City Wage-Earner and Clerical-Worker Families (1947-49 = lOO) October 1957; February 1958-0ctober 1958 Item Joct. Feb. Mar. Apr. May June July Aug. Sept. Oct. 11957 1958 All ftemSeeoeoaeoeoeooooooee I 121 122 123 124 124 124 11 124 I 124 124 124 ! FOOdeoeooooeoeoooooeeooooo i 116 119 121 122 122 122 ' 122 121 120 120 Appareloeoooeooeoooooooeoo : lo8 107 107 107 107 107 107 107 107 107 HOUSing.oeooooooeooooooeoo ! 127 127 128 128 128 128 128 128 128 128 Rent •••••••••••••••••••• l 136 137 137 137 138 138 138 138 138 138 Gas and electricity •••• I 1141 116 116 116 116 117 117 118 118 118 Solid fuels and fuel oil I 138 137 137 134 132 132 132 134 135 136 I Housefurnishings •••••••• i 105 105 104 104 104 104 104 103 lo4 103 Househo~d operation ••••• 129 130 131 131 131 l3l l3l 132 132 132 Transportation •••••••••••• 136 138 139 138 139 139 140 l4l 141 143 Medical care •••••••••••••• 140 142 142 143 144 144 145 145 146 147 Personal care ••••••••••••• 126 128 128 128 128 129 129 129 129 129 Reading and recreation •••• 113 117 117 117 117 117 ll7 117 117 117 Other goods and services •• 127 127 127 127 127 127 127 127 127 127 i Source: Bureau of Labor Statistics. * U, S. GOYERNMI:NT PRINTING OPrtCE : 1151 o-•tooll |
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