The Annual Economic
Review
January 1952
A Report to the President
By the
COUNCIL OF ECONOMIC ADVISERS
33
LETTER OF TRANSMITTAL
COUNCIL OF ECONOMIC ADVISERS,
Washington, D. C., January 11, 1952.
The PRESIDENT:
SIR: The Council of Economic Advisers herewith submits a report, the
Annual Economic Review: January 1952, in accordance with section
4 (c) (2) of the Employment Act of 1946.
Respectfully,
' . /
Chairman.
(
35
C o n t e n t s
Page
I. THE ECONOMIC STRATEGY OF THE DEFENSE PROGRAM
39
II. DETAILED DEVELOPMENTS DURING 1951
46
The basic security build-up
47
Production and employment
49
Production
49
Employment
52
Prices, wages, and profits
55
Prices
55
Wages
61
Profits
64
Credit and money supply
66
Credit
66
Money supply
68
The flow of goods and purchasing power
69
Personal income, consumption expenditures, and saving .
69
Investment and finance
74
International transactions
84
Government fiscal operations
88
III. CENTRAL PROBLEMS FOR 1952
95
Advancing the security build-up
95
The proposed build-up
95
Speed of the build-up.
97
Allocating scarce materials
98
The availability of metals
98
Major required adjustments
100
Major problems in materials allocation
102
Increasing production
103
Production and inflation
103
Factors limiting increase of total production
104
Increasing the supply of raw materials.
105
Enlarging the labor supply
106
Guiding investment
108
Increasing agricultural production
112
Over-all production objective for 1952
113
Minimizing business dislocation
114
Minimizing local unemployment and geographical
dislocations
'
114
Utilization of small business
115
37
III. CENTRAL PROBLEMS FOR 1952—Continued
page
Supplying consumer needs
117
Outlook for consumer goods
117
Housing
118
Essential public services
120
Helping to strengthen other free nations
121
Western European developments and their appraisal. .
122
The economically underdeveloped countries
126
Sharing of scarce commodities
128
World aspects of inflation and stabilization
130
Financing the Govern