Forecasting General-Business Trends
What do we mean by "general business"? Is there such a thing? It is important to have a definite concept.
By "general business" we shall mean the activity in basic industries; that is, industries such as iron, steel, copper, textiles, and automobiles, which are so important that their fluctuations affect te earnings and employment of the average man. The term is not limited to any fixed group, but should designate a sufficient number of industries to affect the average. For example, in recent years textiles, leather, shipping, and coal have been in a more or less depressed condition while booms in general business have occurred.
Clearly the concept of general business is a loose one. Sometimes the movements of the several basic industries are more uniform than they are at others. Occasionally there may even be doubt as to whether the indexes of industrial production tell a true story, automobile and steel production sometimes rising sufficiently to offset the more general declines elsewhere.
Again, what allowance should be made for the "condition" of industry -- its profitableness? May rising general-business activity not occur at the expense of prosperity?
In answer, it can be truly said that experience shows little practical difficulty in these respects. The composites, or averages, of industrial activity are remarkably consistent and logical in their performance; they rarely do what seems to a well-posted observer to be queer or erroneous; their movements conform to the theory of business cycles. They