The Reliability of Various Statistical Series as City and Regional Business Indexes

Abstract

Since the War this country has been deluged with new statistical series, but they have dealt with production and price to the almost complete neglect of the even more basic phenomena of consumer demand. However, the 1929 Census of Retail Distribution was an important step in the right direction. Department store sales have become established as a primary indicator of basic business conditions. Because of the wide range of products sold by department stores, a sufficient sampling of their sales volume should reflect retail trends affecting almost every kind of production. Also, the larger department stores are qualified to reflect accurately and sensitively consumer habits and preferences. Department store business is particularly important in the larger and medium-sized cities. However, it is thought that we have depended too much on the Federal Reserve index of department store sales as a general retail business measurement. The department stores reporting are too few in number and the volume of department store business is too small in relation to national consumption as a whole to furnish a reliable basis for inferences. In a metropolitan area, department store sales are good indicators of retail conditions. In fact, large metropolitan stores have been extending their influences in outlying districts either through opening branches or offering greater inducements to suburban shoppers in prices and styles. However, for an indicator of consumer buying in smaller urban centers and rural areas, sales data for dry goods stores, mail order houses, general chain stores, and variety stores should be considered in addition to those for department stores. The Department of Commerce is now making an effort to measure consumer buying through the use of food, automobile, variety chain, and mail order sales. I believe an index made up of such components will ultimately be more valuable as a measurement of consumer buying than the department store sales index.