Abstract: the continuation of price controls lost its value as a subject for political jockeying and led to public admission that most goods not only were but had been selling below the ceiling. Recognition of the true state of affairs quickly led to a gradual removal of price controls, which in many instances had become merely an annoyance and a source of increased cost of doing business. Wholesale prices, as measured by the U. S. Department of Labor index, made their highs in February and March of 1951 at 116.5, and retail prices, as measured by the U. S. Department of Commerce index, reached their peak in January of 1952 at 210.9. During the past two years there has been a steady decline in wholesale prices, and in certain sensitive raw commodities the decline has been drastic. For the past year retail prices have been stable to easier. Nevertheless, during this entire period that prices in general have been leveling off or declining, the cost of doing business has continued to rise. Hourly wage rates, for example, which constitute the largest single element of cost in the economy as a whole, as measured by the U. S. Bureau of Labor are up on an over-all basis about 6% since December of 1951. In spite of the evident petering out of the strong upward thrust on prices which occurred after the outbreak of war in Korea in mid 1950, the specter of sparked by the continued pressure toward higher wages keeps recurring and would seem still to be an important element in the formulation of monetary policy in Washington. What is the explanation of this apparent anomaly of rising costs and lower-to-stable prices? Although prices are affected by many different factors, there seems to be a reasonable explanation for the fact that prices have been declining with costs rising and a recurrent subject of discussion. In part, at least, it lies in the fact that our definition of is apt to be an extremely loose one. Our trouble is due to a failure to recognize that is essentially a monetary phenomenon and that rising costs are something entirely different which by no means in themselves assure higher prices. Our tendency to talk of inflation of wage rates, cost, and every other conceivable thing has gone a long way toward making this word one of the greatest bugaboos in our economic vocabulary. About the only thing that people in general seem to be able to agree on is that is something they fear. In the field of economics, should be reserved
Publication Year: 1953
Publication Date: 1953-05-01
Language: en
Type: article
Indexed In: ['crossref']
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