The Recent Growth Record of the American Economy:

Abstract

IN AN ARTICLE in this Journal,l Professor Wallace C. Peterson advances the hypothesis that the primary source of the substantial growth in real consumption per capita since World War II was a shift in the end-use of the nation's total output rather than a growth in real Gross National Product per capita. This shift was possible, it is explained, because of the tremendous growth in real GNP (54.5 per cent) and real GNP per capita (47.4 per cent) during World War II (i.e., in Peterson's discussion, the growth between 1940 and 1944). After the war a large proportion of the resources which had been used in the production of military goods were shifted to the production of consumer goods, so that real consumption per capita could increase without correlative increases in real GNP per capita. While real GNP per capita was $2,297 in 1944 and only $143 higher in 1960, real consumption per capita increased from $1,158 in 1944 to $1,651 in 1960, an increase of $493. Within the framework of Professor Peterson's reference, the large-scale shift of resources from wartime to peacetime production seems to be the only adequate explanation of how real consumption per capita could increase 42.6 per cent between 1944 and 1960, while real GNP per capita increased only 6.2 per cent in the same period.