An Index of Trade for the United States

THE Index of Trade, presented in the folded chart opposite this page, is designed to give a view of the combined fluctuations of trade, transportation, manufacturing activity, and industrial employment in the United States, month by month since I903. The Index is based upon representative statistics, but certain statistics are not available throughout the entire period and others, being expressed in terms of dollars, do not accurately reflect fluctuations in the physical volume of trade since the war. Consequently, it has been necessary to use somewhat different selections of statistics for the intervals I903-I5,9I5-I9, and I9I9-23, and all statistics expressed in terms of dollars have been excluded since I9I4. The actual overlapping curves for I9I5 and I9I9 are shown on the chart, the initial years of the intervals I9I5-I9 and I9I9-23 being plotted as dotted lines. All the statistical series utilized throughout were adjusted for long-time trend and seasonal influences before averages were taken, so that the resulting index depicts the percentage deviations from normal of the combined figures for trade, transportation, manufacturing activity, and industrial employment. The Index is an average of the corrected figures of diverse statistical series, such as bank clearings outside New York City, the value of imports of merchandise, gross earnings of leading railroads, production of pig iron in tons, and the relative number of wage earners employed in industrial establishments. The justification for combining such diverse series into a single average is twofold: economic and statistical. The economic reason for averaging the series is that together they reflect wholesale and retail transactions, domestic and foreign trade, the volume of transportation of all classes of goods, the activity of railroads, the volume of manufacture, and the purchasing power of wage earners. In other words these particular series are selected from the available data because they are themselves indices of economic conditions in trade, transportation, manufacture, mining, and agriculture, and then they are combined because, taken together, they touch business at many more points than does any one series alone. The statistical reasons for combining the series are: First, the major movements accompanying the ebb and flow of industrial activity of these series are very similar as to the timing of advance and recession2 and, therefore, the average fluctuates in a manner representative of that of each constituent series. Second, the minor irregular variations accompanying strikes, transportation congestion, and the like of the various series are very much moderated when a number of corresponding items are averaged. The average, therefore, may be expected to soften or iron out minor variations and to throw into relief the general ebb and flow of trade. For the period since the outbreak of the war in I9I4, as has been said, we have not included in the Index of Trade statistical series expressed in terms of dollars bank clearings, for instance -although we did include such series previous to I914. The reason for this difference of treatment of the two periods is to be found in the nature of price fluctuations before and after the war: previous to I914 fluctuations in the dollar amount of transactions reflected (approximately, not exactly) corresponding fluctuations in the physical amount of trade, but after I9I4 the violent rise and fall of commodity prices destroyed this correspondence. It is possible to utilize as the material for a continuous index of the physical volume of trade for the last eight years of violent price changes only such series as are expressed in physical units. For the intervals I9I5-I9 and I9I9-23, therefore, only such series are selected for the Index. In the choice of the current group of series still another criterion has been used: since promptness is essential, only those data are utilized which become available for each month by the middle of the following month

Economics · Index (typography) · International economics · International trade · Computer Science · Economic Growth and Productivity