Economic Developments in United States in 1926

December 31, 1926

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Throughout the year 1926 activity in most lines of industry and trade was maintained at a. high level, and the aggregate volume of business for the year as a whole was the largest in the history of the country. Production in manufacturing and mining industries exceeded all previous records and yields of most crops were large. Employment was general in most industries; payrolls were high; and recorded corporate earnings for the first three quarters of the year indicated that earnings for the year as a whole would probably exceed those of 1925. Record freight car loadings and large sales of wholesale and retail firms indicated that the aggregate volume of goods passing to consumers was maintained at a high level. Exports averaged larger for the year than imports and reflected a continuation of large purchases abroad. Wholesale commodity prices, however, declined almost constantly during the year; the greatest declines were in the prices of agricultural commodities, and, as a result, the value of crops produced in 1926 was smaller than in 1925 and 1924.

Large Industrial Production

In addition to exceeding aggregate production of any previous year, the output of factories and mines was characterized by relatively small fluctuations during the year and, as a consequence, activity in general was steady at a very high level. Increased manufacturing activity was distributed throughout most industries but increases were pronounced in those engaged in the production of iron and steel, automobiles, petroleum, rubber tires, and building materials. Production of automobiles continued to expand throughout the first three quarters of 1926 and the demand arising from this industry for materials to be used in the construction of motor cars and trucks was an important factor in maintaining the high levels of industrial activity. Demand for building materials, in response to the continuation of a large volume of building construction increased steadily in 1926, and this industry and the automobile industry continued in 1926 to be two of the most important factors contributing to the general prosperity in many sections of the country. In the textile, leather and shoe, and food products industries, which are engaged primarily in the production of goods for immediate consumption, activity did not increase as much in 1926 as in industries engaged in the production of more durable goods, but it was slightly higher than in 1925.

Production of minerals for the year as a whole exceeded the output in 1925 and in 1924. Demand for bituminous coal which was stimulated in the last half of 1925 by the strike in the anthracite fields, continued large early in 1926, and following the strike in Great Britain in the spring foreign demand increased. As a consequence of these factors production of bituminous coal was exceptionally heavy throughout the year. Following the settlement of the strike in Pennsylvania early in 1926 production of anthracite began to increase and total output for the year was much larger than in 1925. A part of this large increase over 1925 in the production of anthracite however reflects the fact that in the last four months of 1925 operations in most of the anthracite mines were closed down and production was very small. To show in greater detail the course of production in certain manufacturing and mining industries in 1925, and the available data for 1926, the following table showing indexes published by the Federal Reserve Board is presented:

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