42 Fed. Res. Bull. 1 (1956)

handle is hein.journals/fedred42 and id is 1 raw text is: FURTHER EXPANSION in business and con-
sumer demands in the latter part of 1955
was accompanied by increases in industrial
output and prices, to new record levels. In-
dustrial production in December, at 144 per
cent of the 1947-49 average, was 11 per
cent above a year earlier and 5 per cent
above the previous high of mid-1953, when
defense output was substantially greater.
Average prices of industrial materials ad-
vanced 4 per cent in the second half of 1955.
Prices of finished industrial products also
rose, as shown in the chart. Widespread ad-
vances among industrial commodities-
which together account for about four-fifths
of the value of all commodities in the whole-
sale price index-occur only in response to
strong and pervasive pressure of demands.
Meanwhile, with marketings of meat ani-
mals sharply expanded and with Federal
support levels for some important crops re-
duced, wholesale prices of farm and food
products on the average declined 7 per cent
further in the second half of the year. The
combined index of wholesale commodity
prices in December was 1 per cent above
midyear.
While production increased to record
highs in the latter part of 1955, the volume
of business inventory accumulation was rela-
tively small. Output of a number of indus-
trial materials reached capacity levels and
order backlogs accumulated. Increases in
the value of inventories have reflected in
pt the higher level of prices.
High level production with accompanying

pressures on prices of basic materials and
wage rates has also characterized recent
economic activity in Europe. Expansion in
outlays, especially for construction, business
equipment, and consumer durable goods,
has exerted upward pressure on such world
commodities as copper and rubber, and has
been reflected in sharp increases in the vol-
ume of United States exports of coal, steel
scrap, and steel mill products.

NOTE.-Federal Reserve groupings of BLS mid-month indexes
for all commodities other than foods and feeds, both raw and
processed, in the wholesale index. Latest figures shown are
for December 1955.
Expansion in consumer buying in the
United States has been supported by rising
incomes and more active use of credit. Con-
sumer incomes after taxes, which had been
maintained during the 1953-54 decline in
business activity, began to increase in the

Prices during the Economic Expansion

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