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The net result of the first two years of price regulation in 

 the United States was to retard rather than to halt the rise 

 in commodity prices. Some folks refer to it as a delaying ac- 

 tion; others, as a disorderly retreat. 



Inflationary Gap vs. Statistical Gap 



Recently some people have become alarmed about the ex- 

 istence of an "inflationary gap." This "gap" is the calculated 

 difference between the number of dollars in the pockets of 

 consumers and the amount of consumable goods multiplied 

 by their ceiling price. The difference between the two sup- 

 posedly represents idle dollars in the hands of consumers and 

 the threat of inflation. The "inflationary gap" is calculated 

 in billions of dollars, the amount depending upon the indi- 

 vidual who makes the calculations and the purpose for which 

 the calculations are made. 



Others say that there is no inflationary gap; it is merely 

 a statistical gap, and that the official index numbers do not 

 measure the amount of inflation. They contend that such 

 index numbers contain automobiles not now made, and crude 

 rubber at a ceiling price instead of the cost of synthetic rub- 

 ber, which is above this ceiling. There is a deterioration in 

 the quality of clothes, meat, and many other goods and serv- 

 ices. Trade discounts have been eliminated, black-market 

 prices are not included, and the general tendency is to report 

 the ceiling price. A large part of the military end-products 

 are not under control. The index numbers do not include the 

 increasing importance and rising prices of second-hand goods. 

 All of these factors indicate that prices have risen more than 

 the official indexes show. 



This should not be construed as a criticism of the makers 

 of official index numbers. They are just as well acquainted 

 with this problem as the critics. Furthermore, they cannot 

 control all the uses that are made of their index numbers. 



