Outlook for Capital Issues and Durable Goods

January 3, 1939

Report Outline
Investment and Durable Goods
The Capital of the United States
The Demand for Producers' Goods
New Investment and Recovery
Special Focus

Investment and Durable Goods

The slump in production of durable goods has been pointed out as the major factor in the 1929–33 depression, and the failure of durable goods production to return to prosperity levels has been regarded as a leading cause of the subsequent alternations of recession with recovery. This analysis of recent economic history was reiterated by Isador Lubin, federal commissioner of labor statistics, at the opening of hearings before the Temporary National Economic Committee, in testimony which set the keynote for its investigation.

Corresponding to the comparatively poor showing of heavy-industry, there has been a striking lack of investment of new capital in business during the last five years, as compared with parallel periods in the past. In the opinion of some observers, lack of confidence on the part of investors has been more or less directly responsible for the failure of business to expand its physical plant, and consequently for low consumption of durable goods.

According to George Soule, “In almost all other recoveries of which we have record the first thing that happened was a greatly enlarged total of new investment. In this one not only did consumers' spending lead the way, but investment in capital goods never caught up.” In the second major period of recovery which now seems to be getting under way, the production of durable goods and the demand for new capital will receive special attention. These two items may furnish an index of the nature and duration of the next period of prosperity.

ISSUE TRACKER for Related Reports
Economic Analyses, Forecasts, and Statistics
Manufacturing and Industrial Production