Family Economics Review [Dec. 1958]

              ~ 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