Word: indexed
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Dates: during 1950-1959
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Widespread among economists and politicians are two standard beliefs about the behavior of prices in the U.S. in recent years: 1) from 1952 through 1955 the Government's cost-of-living index held steady only because an increase in the price of manufactured goods was balanced by a decrease in food prices; 2) today the main inflationary factor in the economy is a vicious circle in which big unions keep pushing up wages and big corporations keep pushing up prices...
...Mark. What really happened in 1952-55, reported Dale, after prowling through Government statistics, was that rising prices of non-goods-accounting for one-third of the average family's expenditures-balanced declines of other prices. And what happened in 1956, when the cost-of-living index zipped up a worrisome 3%, was that non-goods prices kept on rising, while prices of food and manufactured goods reversed their downward trend and inched upward...
True Average. A big advantage of the new index is that it will give the investor a true idea of the average price of a single share of stock-a figure that has been lost in the inflated statistics of almost all market averages. On Dec. 31, for instance, Standard & Poor's daily industrial index closed at 498.9 and the Dow-Jones industrial average at 499.47, yet the New York Stock Exchange reported that the average value of one share of stock on that date was only $49.12, or about one-tenth as much...
...remedy this discrepancy. Standard & Poor's will compile its total on a base of 10 instead of the present 100, junk the present 1935-39 base years in favor of a 1941-43 base, when the average price of a single stock was $10. Thus, the new index will start off with a figure very close to the actual average price of one share of stock, and its fluctuations will accurately reflect the price fluctuations in the market as a whole...
...floor, can recognize and signal mistakes in quotations in a matter of seconds. The system is so swift that it would be possible to average all the 1,500 shares listed on the exchange, on an hourly basis. But Standard & Poor's feels that the new index will do just as well, since the stocks not in the index are little traded, have little effect on the market...