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BOARD OF GDVERNDRS
OF THE

R&S-1565 (On office

FEDERAL RESERVE SYSTEM

copies only)

WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD

May 19, 1948.

Dear Sir:
Attached for your confidential information is
a brief report on the preliminary findings of the 194-8
Survey of Consumer Finances* This material is not to be
released to the press or used in any outside publications
at this date. The findings are preliminary and there
will be changes, although minor, in a number of the
attached tables.
The publication schedule for results is roughly
as follows:
June Bulletin - Buying intentions and distribution
of income.
July Bulletin - Ownership and use of liquid assets;
and holdings of non-liquid assets.
August Bulletin + Consumer expenditures and net
saving*
September Bulletin - Housing expenditures and
finance.

Very truly yours,

Woodlief Thomas, Director,
Division of Research and Statistics.
TO HEADS OF RESEARCH AT ALL BANKS and Messrs. Rice,
Jones, Hostetler, Dcaaing, and Williams•
DMH:rds

CONFIDENTIAL
May 1 9 , X9U8
PRELIMINARY RESULTS OF THE I9I48 SURVEY OF CONSUlffiR FINANCES

Certain preliminary results from the 19U8 Survey of
Consumer Finances, conducted for the Board by the Michigan Research
Center, are presented here for your confidential information• This
survey was based on approximately 3,!>OO interviews taken throughout
the nation during January, February, and the first two weeks in
March, 19U8. No release of this information to the press should be
made at this time*
CONSUMER FINANCIAL STATUS STRONG BUT SHORTS WEAKENING
!• Of the total number of U8*U million consumer units,
about 2.S million more units in 19h7 than in 19U6 had money incomes
above $5,000, while about 3 million less consumer units had incomes
below 03*OOO« For consumers as a whole there was roughly a 10 per
cent rise in total money income but, of course, much of this increase
was offset by the higher cost of living.
2. Somewhat fewer spending "units held liquid assets (i«e»,
checking accounts, savings accounts, or Government bonds) in early
19U8 as compared to early 19U7* This is the first time since the end
of the war that there has been any decline in the number of spending
units holding liquid assets* Total liquid asset hidings of spending
units showed some increase, however, so that there was some increase
in the average holding•
3# Roughly 3*5 million fewer spending units had savings
bonds at the beginning of 19U8. This substantial decline in the
number of pavings bond holders extended the tendency noted in
and was the primary factor accounting for the smaller number of
people holding liquid assets• There was little or no change in the
number of people holding checking or savings accounts•
U» The total net amounts saved out of income by consumers
continued to decline in 19U7, reflecting further heavy dissaving
(i.e*, expenditures in excess of income) on the part of one-fourth
to one-third of all spending units and somewhat smaller amounts
saved by other spending units* The substantial dissaving in 191*7
was closely associated with the large increase in the volume of
consumer durable goods bought on credit or through use of liquid
assets* Increases in consumer expenditures to meet higher living
costs was another important factor in consumer dissaving last year.




-2. 5« In 19U6 dissavers were heavily concentrated in income
classes up to $3,000* In 19U7, however, the concentration extended
up to the $5*000 income level* Particularly noteworthy was the
significant rise in the number of dissavers with annual incomes of
$3,000 to $7,500*
CONSUMER OUTLOOK STILL OPTIMISTIC
1# Although somewhat less optimistic than was observed
in early 19U7, most consumers were still optimistic about both
their future income prospects and about future business conditions•
2* The break in commodity prices during the first week
in February appears to have had little dampening influence upon
consumers1 optimism* As many consumers expected their incomes to
rise and good times after the price break as before the price break.
HEAVY CONSUMER SPENDING FOR DURABLE GOODS IN 19l*7
1* Roughly two-fifths of all consumer units indicated
that they had purchased some consumer durable goods during 19h7«
The veteran of World War II continued to be a heavy spender on dur~
able itemsj in fact, almost three-fifths of spending units with
veterans bought some type of durable good,
2* About 7 million spending units bought automobiles in
19U7 and approximately 17 million spending units bought other
selected durable goods such as furniture, refrigerators, radios,
washing machines, ranges, sewing machines, and other large appliances1
3« About 8 million spending units used instalment credit
in purchasing these goods, almost twice as many as used credit for
buying such goods in 19U6*
CONSUMER BUYING INTENTIONS REiaAIN STRONG
!• At the beginning of 19U8 as many consumers planned to
buy automobiles and other selected durable goods as at the beginning
of 19ti7# There was some indication of a drop in the demand for new
c$rs on the part of spending units with incomes below $3*000 but
this was largely offset by an increase in the number of spending
units at higher income levels that planned to buy new cars* There
was a slight increase in the number of spending units that were
prospective buyers of durable goods other than cars*
2* There was no significant difference noted in purchasing plans for consumer- durable goods among interviews taken before
and after the commodity price break* Although there was a very
substantial shift in consumers1 general price expectations after




-3the commodity price break, with many more spending units anticipating
price declines, these price expectations were generally confined to
food prices» The price break appeared to have little effect upon
consumer expectations of durable goods prices, on which many spending
units anticipated declines as early as July 19it7*
3. Continuing tendencies noted in early 19U7* there was
a further softening in the prospective total demand for houses• Approximately 20 p§r cent less spending units in early 19U8 as compared
to 191*7 indicated some plans for buying houses. Again this slackening in buying intentions was most noteworthy on the part of spending
units with incomes below $2,000*
U« Buying plans were particularly strong, however, for
new houses, Somewhat more than 1 million spending units indicated
intentions to buy such houses in 19U8* This total is greater than
estimated completions of now houses for owner-occupancy for the year
19U8* The prices that prospective buyers indicated they would pay
for these houses were closely in line with prices paid in 19U7*
CONCLUSIONS
1. The general financial status of consumers showed the
first signs of weakening in 19U7« Fewer spending units held liquid
assets at the end of the year and there was a substantial increase
in total indebtedness• This weakening, however, should be considered
a danger signal only. Most consumers continue to have a strong
financial status since (1) employment and income are at peak levels,
and (2) well over two*thirds of all spending units still have liquid
assets in their possession with sizeable amounts held by people in
all income groups•
2# The outlook is that consumer expenditures for durables
will continue in expanding volume. Some tempering appeared in the
demand for new cars, but buying intentions still exceed expected
production* As a result of recently proposed armament expenditures,
it is probable that there has been a substantial increase in
immediate demand for certain types of durable goods since the survey
was taken.
3. There is a tendency for a greater proportion of consumer durable goods to be bought on a credit basis today than a year
ago and for a somewhat smaller proportion to be bought through use
of accumulated liquid savings. As the volume of consumer durable
goods purchased continues to rise, however, increasingly larger
amounts of liquid assets are being used in buying these goods and
there has been no slackening in the rate of turnover of such assets•




4* In order for spending units to satisfy their demand
for houses, particularly new houses, in 194-8, there will need be a
further substantial increase in the volume of mortgage credit*
Since veterans account for approximately half of the total housing
demand, no slackening in requests for GI mortgage loans can be
anticipated*
5* In general, consumer plans to buy both durable goods
and houses would indicate a continuation of heavy demand in those
areas which are strongly dependent upon availability of credit and
liquid assets for effective buying power.
6. Prospects in 1948 are for further heavy dissaving on
the part of at least one-fourth of all spending units and no substantial change in the aggregate amounts saved by other spending
unita* In this connection, while no change in motives for saving
is indicated by the general results of the survey, it is evident
that considerable efforts will be necessary to make the security
savings bond drive an outstanding success* Total saving out of current income will not be sufficient during the year to permit substantial increases in consumer holdings of these bonds* Purchase of
savings bonds by use of other liquid assets, particularly checking
accounts should be further encouraged to supplement purchases through
the pay roll deduction plan*

Attached are a number of preliminary tables presenting some
of the results discussed in this report*




Strictly confidential

TABLE 1
DISTRIBUTION OF SPENDING UNITS AND SHARE
OF MONEY INCOME RECEIVED, BY INCOME GROUPS,
1947, 1946, and 1945 2/
(per cent)

Annual money income
before taxes

7—
—I946-—1945—
Spending Share of Spending Share of Spending Share of
units
income
income
units
units
income

14

2

17

3

20

5

22

10

23

12

27

16

$2,000 - $2,999 . . .

23

17

25

21

23

23

$3,000 - $3,999 . . .

17

18

17

20

15

20

$4,000 - $4,999 • • .

10

13

8

13

7

12

$5,000 - 07,499 . . .

9

16

6

11

5

11

$7,500 and over . . .

5

24

4

20

3

13

All income groups •

100

100

100

100

100

100

Under $1,000

....

$1,000 - 01,999

..

Note: The share of incqme received by the highest 10 per cent of income
receivers was 29 per cent in 1945, 32 per cent in 1946, and 33 per
cent in 1947*
y Annual money income before taxes in 1947, 1946, and 1945.




Strictly Confidential

TABLE 2
DISTRIBUTION OF SPENDING UNITS BY SIZE OF
TOTAL LIQUID ASSET HOLDING,
EARLY 1948 AND EARLY 1947
(per cent)

Amount of liquid assets held




Early 19481/

Early 1947^/

27

24

01 - $199

15

14

$200 - 0499

12

12

$500 - 0999

11

14

$1,000 - 01,999 . . » •

11

U

|2,000 - ,,2,999

....

6

7

03,000 - $4,999

....

6

7

$5,000 - 09,999

....

5

5

$10,000 and over

....

4

3

Not ascertained*'

...

3

0

All spending units . .

100

100

3/ Amount held at time of interview in January-March 1948*
2/ Amount held at tin© of interview in January-March 1947*
*J The "not ascertained" cases have been distributed for
the early 1947 data but have not been distributed as
yet for the early 1948 data*

Strictly Confidential

TABLE 3
DISTRIBUTION OF SPENDING UNITS BY SIZE OP
SAVINGS ACCOUNT Aitt) SIZE OF A-F BOND HOLDING,
EARLY 194-8 AND EARLY 1947
(per cent)

Amount of asset held

Savings account
Early
fiarly
19472/

A-F bond "
'Early, Early/

60

58

53

44

$1 - $199

9

9

15

17

0200 - §499

8

8

11

15

§500 - 0999

7

8

8

11

$1,000 - 01,999 . . .

5

8

5

7

02,000 and over • • •

9

9

7

6

Not ascertained 2/ . .

2

0

1

0

All spending units »

100

100

100

100

U Amount held at time of interview in January-March 1948«
2/ Amount held at time of interview in January~March 1947•
2/ The ftnot ascertained" cases have been distributed for the
early 1947 data but have not been distributed as yet
for the early 1948 data*




Strictly confidential
TABLE 4
COMPARISON OF POSITIVE AND NEGATIVE SAVERS MTHIN
INCOME GROUPS, 1947 AND 1946
(percentage distribution of spending units within income group)

Saving group

Positive saversiz . . .

Income groups
%.-2,000- $3,000|;4 , 000-* ^,.5,000- 1*7,500 and All spendirg
41,000above
4.2,999
units
*7,499
t3,S99
4.1,999
1947 1946 1947 1946 1947 1946 1947 [1946 1947 1946 1947 1946 1947 1946 1947 1946
"Tinder
#1,COO

41

42

57

60

63

64

66

78

64

81

74

85

73

89

61

65

30

26

10

9

4

3

2

1

2

*

0

*

1

*

8

8

Negative savers*-/. . .

26

32

30

31

29

33

29

21

30

19

20

15

13

11

27

27

Not ascertained^/. . •

3

0

3

0

4

0

3

0

4

0

6

0

13

0

4

0

All spending units • 100 iioo 100

100

100

100

100

100

100

100

100

100

100

100

100

100

Note: The frequency of dissavers may be slightly understated in the 1947 distribution, particularly at
lower income levels, due to the omission of charge accounts and back bills from the 1947 saving
schedule* These items were included in the 1946 saving schedule*
Spending units with money income in excess of expenditures and taxes.
Spending units with expenditures and taxes in excess of money incomes•
iV The "not ascertained" cases have been distributed for the 1946 data but have not been distributed as
yet for the 1947 data. The experience of previous surveys indicates that most of these cases will
be treated as positive savers on the basis of obtained items of financial and nonfinancial information.




Strictly confidential
TABLE 5
CONSUMER ATTITUDES TOWARD FINANCIAL SITUATION AND
CONSUMER EXPECTATIONS CONCERNING THE GENERAL
ECONOMIC OUTLOOK AND INCOMES
Percentage distribution
of all spending units
Attitudes

19462/

19483/

Financial situation^
Better off
Same
Worse off
Uncertain .
Not ascertained

,

29
2$
39
2
2

,

100

31
30
34
2
3
100

47
19
26
8

55
21
22
2

. .

All cases . . . . . .

20

42
31
2
5
100

General economic outlook^'
Good times ahead
Uncertain, no change
Bad times ahead
Not ascertained

,

All cases

•

100

100

35
23
36
6
100

Income will be larger than in preceding year
Income will be about the same
.
Income will be smaller than in preceding year
Uncertain, "it depends" . . . . .
,
Not ascertained

27
47
13
9
4
100

26
42
12
18
2

25
34
23
13
5

100

100

Own incomes*/

All cases

........

1/ Based on interviews, in January-March 1948 (third survey).
z/ Based on interviews, in January-March 1947 (second survey).
%/ Based on interviews, in January-March 1946 (first survey).
U The question was: "Would you say that you people are better off or worse
off financially now than you were a year ago?"
*f The question was: "Now considering the country as a whole,do you think we
will have good times or bad times or what during the next 12 months or so?"
2/ The question was: "Let me see, in 1947 you made & n » Looking ahead now to
your income for the current year, 1948-»how large do you think your income
will be for the entire year, 1948?" Farm operators were not asked their
income expectations and are excluded from the above figures*




Strictly confidential

TABLE 6
CONSUMER PRICE EXPECTATIONS FOR THE YEAR AHEAD,
AS REPORTED AT INTERVALS IN 1948, 1947, AND 194.6
Percentage distribution of all spending units
reporting price expectations as of;
Price expectations!/

Feb. 14MarchA
19482/

January

Will go up

15

50

32

13

53

V/ill remain the same . . . * •

29

22

29

22

21

39

16

29

46

8

15

10

9

17

13

2

2

1

2

5

100

100

100

100

100

Conditional answers

Early

194.7 V 1947

Early
1946

%f The question was; "What do you think will happen to the prices of the
things you buy during __
(next 12 months ox y?.ar) —- do you think
they will go up, or down, or stay about where they are now?"
Based on interviews taken in 1948 Survey of Consumer Finances.
Based on spot survey (Interim purvey) taken in last two weeks of July
1947.




Strictly confidential
XABXE 7
CONSUMER INTENTIONS TO BUY IN 1948, 1947, AND 1946, AND ACTUAL PURCHASES IN 1947 AND 19462/
Estimated
Estimated
Median Average
Percentage of
number of
total
spending units spending units price
price
value
(In millions)
(In billions)

Type of purchase

Automobilest
New and used cars—total:
Purchases planned, 1948 . . . . .
Actual purchases, 1947
Purchases planned, 1947 . . . . .
Actual purchases, 1946 . . . . .
Purchases planned, 1946 . . . . .
New cars:
Purchases planned, 1948 . . . . .
Actual purchases, 1947 . . . . .
Purchases planned, 1947 . . . . .
Actual purchases, 1946 . . . . . .
Purohases planned, 1946 . . . . .
Used cars:
Purchases planned, 1948 • . . . »
Actual purchases, 1947 » • • • •
Purchases planned, 1947 . . . . .
Actual purchases, 1946 . • • • •
Purchases planned, 1946 * . . . .
Other selected durable
Purchases planned,
Actual purchases,
Purchases planned,
Actual purchases,
Purchases planned,

goods:
1948 • . . . •
1947 . . . . .
1947 . . . . .
1946 . . . . .
1946 . . . . .

#1,570 11,540
1,150
1,250
1,310
1,300
920
790
1,150
1,100

6.8-10.O
9.2
6.0- 8.1
4.6
4.8- 6.2

9.0-13.5
14.9
10.0-13.4
10.6
9.6-12 .2

4.4- 6.5
^7.2
.4.6- 6.2
2/5.0
4.4- 5.6

6.5- 9.4
5.8
7.3- 9.7
3.3
7.4- 9.3

3.1-4.5
2.8
3.4-4.5
1.&
3.4- 4.3

1,750
1,780
1,500
1,500

2.5- 4 . 1
9.1
2.7- 3.7
T.4
2.2- 2.9

1.2- 1.9
4.4
1.2- 1.7
3.5
1,0- 1.3

540
660
500
500

710
780
650
630

19.0-24.6
35.1
18.1-23.8
28.3
25.7-31.3

9.2-11.9
17.0
8.4-11.0
13,1
11.8-14.4

240
200
200
180
200

340
310
310
310
320

3.1- 4.0
5.3
2.6- 3.4
4.1
3.8- 4i6

4,0- 6.0
5.0
5.0- 7.5
6.5
7.5- 9.3

1.7- 2.6
2.2
2.1- 3.2
2.7
3.1- 3.9

6,580
6,010
5,110
(3)/

7,430
7,090
6,310
5,390
5,020

12.6-19.3
15.5
13.3-20.2
14.5
15.6-19.3

(3]/

1,860
1,950
1,540
1,620

iiy

5.8- 8.4
5.7
5.2- 7.0
2.3

13)/

0.9- 1.4
3*5
0.8- 1.1
2.3

13)/

Houses:f/
Purchases planned,
Actual purchases,
Purchases planned,
Actual purchases,
Purchases planned,




1948 .
1947 .
1947 .
1946 5 /
1946 .

. . . .
. . . .
. . . .
. . .
. . . .

w/

Intended purchases for the year 1948 and actual purchases during 1947 were ascertained i n the
third survey made early i n 1948. Intended purchases for 1947 and actuali purchases during
1946 were ascertained early i n 1947f while intended purchases for the year 1946 were ascertained early i n 1946*. In every case, the percentage of people expecting to buy includes
those who said definitely they would buy and those who said they probably would do so #
Intended purchases i n 1948 and actual purchases i n 1947 are related t o 1947 money income,
intended purchases for 1947 and actual purchases i n 1946 t o 1946 income, and intended purchases i n 1946 t o 1945 income*
This figure represents the number of cars bought, not the number of spending units that
bought cars*
Data not available•
$/ Farmers are excluded from the housing figures inasmuch as their purchases of housing are
usually incidental t o their purchases of farm land*
These are rough estimates which probably overstate purchases i n 1946 because seme buyers of
l o t s or summer cottages are included among house buyers • Estimates of 1947 purchases
exclude such transactions*




S t r i c t l y confidential
TABLE 8
isETHQB. OF PAYMENT FOR CONSUMER DURABLE GOODS AND HOUSES BY
PROSPECTIVE AHD ACTUAL BUYERS, 1 9 4 8 , 1947, AMD 1946

Type of purchase and method of payment

Automobiles:
F u l l cash (including trade-in allowances) . . . •
I n B t a l m e n t c r e d i t ( t o g e t h e r w i t h down p a y m e n t s - o a s h and t r a d e - i n a l l o w a n c e s )
. . . . . . . . .
U n c e r t a i n a s t o method
. . . . . . . . . . . . .

P e r c e n t a g e d i s t r i b u t i o n of buyee r s :
uy
P l a n s tar . A c t u a
Plans for
Plans for Actual
financing financing financing financing financing
i n 1947
i n 194?
i n 1946
i n 1948
i n 1946

53

56

54

77

57
10

34

37
9

21
2

100

100

100

100

49

58

56

65

42

42
0

38
6

35
0

. . . . . . . . . . . . . . . .

100

100

100

100

100

Houses:
Full cash
. . .
Mortgage
. . . . . . . . . . . . . . . . . . . .
U n c e r t a i n a s t o method . . . .
. . • . . ^ . . .

20
67
13

16

13
74
13

16

84
0

82
2

17
71
12

100

100

100

100

100

A l l buyers . . . . . . .
. . . .
.
Other s e l e c t e d d u r a b l e g o o d s :
Full eash (including trade-in allowances)
. . •
I n s t a l m e n t c r e d i t ( t o g e t h e r w i t h down p a y m e n t s c a s h and t r a d e - i n a l l o w a n c e s )
. . . . . . . .
U n c e r t a i n a s t o method
. . . . . . . . . . . . .
A l l buyers

A l l buyers

* . . . . . . . . .

1/ Not available*
2 / One-half of one per cent.




100