The Economic Situation: Chapter I. the Home Economy

The reflationary measures taken in mid-July have had an immediate and substantial effect on consumer credit, and on demand for cars and other durable goods. Although demand in other sectors of consumer spending has, on the showing of the retail sales figures, continued to be rather weak, it seems likely that consumers' expenditure as a whole was over 1¼ per cent higher in the third quarter of the year than it had been in the second quarter, and some 2½ per cent higher than the average reached in the first half year. A good rise was also registered in exports in the third quarter, the volume of exports of goods and services probably increasing by about 1 per cent on the second quarter level. At the same time, the volume of imports declined. Although fixed investment and public authorities' current expenditure probably contributed little or nothing to the expansion of demand, the increases in exports and consumption are big enough to suggest a rise in total final sales (excluding stockbuilding) of about 1 per cent between the second and third quarters: against the average of the first half year, which is a fairer comparison to make, the increase was probably about 2 ¾ per cent.