ABSTRACT
PCE remained unchanged during the second half of 1947 over its second quarter level, and while consumption per head was at the highest level ever reached in the U.S. economy such stability lasting for nine months was unusual. Furthermore, although this period undoubtedly marked the return to more normal economic and commercial conditions with the ending of most shortages of goods and the restocking of household inventories, the stability did not result from stability in the underlying determinants of consumer behaviour. The main trends in the volume of consumption until the middle of 1950 are shown in Fig. 4.1. Expenditures of food, clothing, other nondurables and services declined in 1947 IV and although they rose rapidly during the first half of 1948 the mid-1947 levels were not reached again until mid-1948. The early 1948 rise stopped during 1948 III, but was resumed in the last quarter of the year, continuing at a declining rate throughout 1949 until the first half of 1950 when a rapid growth occurred. Purchases of automobiles which had been declining slightly in mid-1947 increased in the final quarter of the year to a level which stayed roughly unchanged throughout 1948 (except for a drop in the second quarter). In 1949 I there began a large rise which continued throughout 1949 and 1950. Household expenditures on equipment, furnishings and other durable goods tended over these years to fluctuate slightly around a constant level. After a rise in 1948II they showed a slight tendency to decline in the second half of the year-a tendency which became a pronounced fall
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in the first half of 1949. These expenditures rose again in the second half of the year and were back at their early 1948 level during early 1950. In what follows I consider the movements of the main influences upon PCE-income, prices and the consumption ratio.
