Milford chronicle. [volume] (Milford, Del.) 1878-1974, 1959-07-10
Federal Reserve Bank of Phila.
Speaks about ''7'he Economy
at Mid Year: More Pressure
on the Consumer"

There is danger that too much is
being expected of the consumer, ac-
oording to an article in the June
Business Review of the Federal Re-
serve Bank of Philadelphia.
The fact is that government
spending and accumulation of in
ventOry have been strategic fac
tors in the recovery to date.
Government expenditures, since
the low quarter of the recession,
have grown by 9.4 per cent. Dur
ing comparable period in the 1854
SIS upturn, government spending
rose less than one per cent. ALI
other major types of spending ex-
cept spending for inventory have
risen less rapidly than in the COM
parable period in 1954-55.
Personal consumption expendi-
lures in the last recovery gained
rs per cent, as compared with just
so per cent this time. Each major
category of consumer spending
durables, non-durables, and serv-
ices bounced back more SLOW
ly this time. Spending on durable
goods-cars, appliances, furniture,
etc.-is only about one-half as siz-
able as the 81 per cent jump in the
1954-55 period.
Residential housing OUTLAWS and
plant and equipment spending sim
ilarly showed larger gains at this
stage of the 1954-55 recovery. When
these categories of spending are
combined with inventory spending
to form private domestic invest
ment, however, the present over
all gain measures 38 per cent COM
pared to a gain of just 81 per cent
in the earlier upturn.
Obviously, the switch from a
heavy rate of inventory reduction
to stockpiling in the present recov-
cry is sufficiently large to Offset the
slower gains in housing OUTLAWS and
plant and equipment spending. OF
course, a part of the squirt in in
ventory accumulation must be as
cribed to the unusually heavy de-
mand for steel. The possibility of
strike in that industry undoubt-
eddy induced steel users to stock
pile more than they would other
wise.
From the above, it could be con-
cluded that this recovery might
have been relatively sluggish were
it not for the strong surge in gov
eminent spending and "strike in
duced" stockpiling of steel. This
conclusion derives significance
from the observation that probably
neither of these forces will be work
ing as strongly from here on.
1t is apparent that private de-
mand- except for incentory accu-
mulation-has so far played a
smaller role and government spend
ing for goods and services much
larger one than was the case in
the 1954-55 upsurge. 1t is just as
apparent, that private demand, par
ticularly consumer demand, now is
going to have to assert itself.
Enter the Consumer
Everyone who writes about bust
ness conditions learns very early
in the game that the consumer is a
kind of sacred cow" Business
men, bankers, labor leaders, and
government officials may be either
hero or william depending on the
circumstances and the writer's
point of view. But the consumers
role is assured. He's the fastest
gun in a western, he's the clutch
hitter in a baseball saga, he's Cary
Grant in a romantic comedy, he's
the hero.
This enshrining of the consumer
is usually harmless enough. Some
times, however, it inhibits under
standing of what iS going on