The Economic Situation
at Midyear 1950
A Report to the President
By the
COUNCIL OF ECONOMIC ADVISERS
LETTER OF TRANSMITTAL
COUNCIL OF ECONOMIC ADVISERS,
Washington, D. C., July 24,1950.
The PRESIDENT:
SIR : The Council of Economic Advisers herewith submits a report,, The
Economic Situation at Midyear 1950, in accordance with section 4 (c) (2)
of the Employment Act of 1946.
Respectfully,
jZe^x^f^
Chairman.
/W
Contents
Page
I. FIVE YEARS IN RETROSPECT
25
Five phases of postwar economic development
27
The transitional phase: from the war's end to early
1946
27
The expansion phase: from early 1946 to late 1947...
27
The climax of inflation: from late 1947 to beginning of
1949
29
The recessionary phase: the first seven months of 1949.
31
The process of recovery: since mid-1949
33
What we have learned from the record
37
II. THE PROBLEMS AHEAD
40
The economic impact of international developments
40
The tasks of private adjustment
43
The range of public policy
45
III. ECONOMIC DEVELOPMENTS IN THE FIRST HALF OF 1950
50
The course of employment and production
50
Employment
50
Unemployment
52
Production
53
Relation between production and employment
55
Prices, wages, and profits
56
Prices
56
Wages and related matters
60
Profits
63
Money and credit
66
The flow of goods and purchasing power
68
Personal
income, consumption expenditures, and
saving
68
Business investment and
finance
76
International transactions
82
Government transactions
88
Summary: The Nation's Economic Budget
95
APPENDIXES
A. THE NATION'S ECONOMIC BUDGET
101
B. STATISTICAL TABLES RELATING TO EMPLOYMENT, PRODUCTION,
AND PURCHASING POWER
113
THE recent international developments require us to take stock of our
economic position. This we propose to do in three parts: (1) A
general interpretation of the economic events of the past five years and
of their current significance; (2) an analysis of problems ahead and of
desirable policies; and (3) a detailed description of economic trends during
the first half of 1950.
I. Five Years i