Economic Marketing and INFORMATION
FOR INDIANA
FARMERS
Lafayette,  Indiana
March  27,   1952
Prepared by members of the Agricultural Staff of Purdue University
THE GENERAL ECONOMIC SITUATION
R. H. BAUMAN, Agricultural Economics
Gross National Product.
BILLIONS OF DOLLARS!
WHILE the general level
of prices remained
fairly steady in early 1952,
significant price weaknesses developed in some
commodities. Sharply rising prices are not expected, but we may have a
moderate increase in the
general level of prices, especially in the last half of
the year.
This increase will result
from a continued build-up
in expenditures for national defense. Such expenditures will keep the economy operating in high
gear and increase the supply of money relative to
the goods and services
available for consumers to
buy. Occasional and unpredictable price relapses
will probably continue.
Demand for farm products will become a little
Wronger later in the year, and the general level of
farm prices is expected to advance moderately. Some
farm products will be more plentiful than others, and
a" will not share the price rise equally. For individual
producers, commodity price changes may be more
"nportant than the over all farm price trend.
A Look Backward
Despite the fact that 1951 was a year of mobiliza-
}|on for defense and national security, it can be characterized as a year of rather remarkable economic
stability. The Nation's economy operated at a high
evel and the physical volume of production was
ar9e. There was approximately full employment and
'"comes were high. Most prices fluctuated within nar-
r°* limits.
The Nation produced goods and services at the rate
?g/319 billion  a  year  during  the  first  quarter  of
"1.  Production then leveled off to an annual rate
National Security
Expenditures
^
JSS
1950 1951 1951 1952 1952
4th Qtr 2Bd Qtr. 4th Qtr. 2nd Qtr. 4*h Qtr.
The cross-hatched section shows that the expenditures for national security were 8 percent of the total
goods and services produced in the fourth quarter of
1950 and are estimated at 18 percent for the fourth
quarter of 1952. ( +Estimated)
of around $330 billion for
the rest of the year, a variation of only 3 percent.
The index of industrial production, which was 221
(1935-39=100) in January
1951, rose slightly to 223
in April. After that, it declined moderately into the
summer months and finished the year at 218.
Civilian employment of
60 million at the beginning
of the year increased approximately a million during the year. This gave
practically full employment
at moderately increasing
wage rates during the period. The index of wholesale prices stood at 261
(1910-14=100) in January
1951. It rose about 3 percent to an index of 269 in
March, then declined moderately and ended the year
at 259, about where it started. The cost of living index increased about 4 percent during the year from
182 in January to 189 in December.
The Indiana farm price index, which was 284
(1910-14=100) at the beginning of 1951, rose rather
sharply to 303 in February. It then declined to 287
in December. Prices paid by farmers for farm operating expenses edged upward gradually throughout
the year from 272 in January to 287 in December.
This placed farmers in a less favorable operating position at the close of the year. The purchasing power
of Indiana farm products declined from 110 in February 1951 to 101 at the year's close.
The Economic Scene in 1952
Before attempting to appraise probable economic
developments between now and October 1952 (date
of the next annual outlook statement), it is necessary
that we face squarely such facts as we can see.
1.     International   tensions   and   the   amount   we