Full text of E.8 Volume and Composition of Individuals' Saving : May 1956

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

FEDERALRESERVf
For ReleJ^llYi24olllfi&G Newspapers of Monday, May 21, 1956

I LIBRARY 2

SECURITIES AND EXCHANGE COMMISSION

Washington, D, C«

STATISTICAL SERIES
RELEASE NO. 1379
VOLUME AND COMPOSITION OF INDIVIDUALS1 SAVING, 1955 1/
Individuals in the United States saved $8.0 billion during the year 1955
compared with $11*3 billion in 195U 2/ according to estimates made public today
by the Securities and Exchange Commission* The lower saving last year principally reflects the great amount of debt incurred by individuals in connection
with record expenditures for new homes and consumer durable goods.
During 1955 individuals' mortgage and consumer debts rose by the unprecedented amount of $18.2 billion, while the year before showed an increase of not
much more than half this amount. The other important change in the pattern of
individuals' saving as compared with 195U was the substantially larger investment in Government and corporate securities, amounting to $5.7 billion, the
highest amount since 19U5.
There was a continuation of the steady growth in private insurance and
pension reserves and in individuals! investment in saving and loan association
shares * However, individuals! bank accounts, particularly checking accounts,
did not expand as much as in 1951+ reflecting the greater flow of funds into
securities, housing, and consumers goods.
The volume and composition of saving for the years 1951 through 1955, together with quarterly data for 1955; are given in Table 1, while in Table 2
data are presented on the types and amounts of financial assets and liabilities
held by individuals at the end of the years 1950 through 1955.
Changes in presentation of saving data
With this release, due to the availability of comprehensive data on pension
funds, several important changes in the composition and form of presentation
have been initiated. It is possible for the first time to segregate individuals'
saving in the form of equity in corporate pension fund assets, as indicated in
Table 1. In previous surveys, it was necessary to include private pension fund
saving with individuals' saving in the form in which the fund assets were invested.
During the past year, the Commission completed a survey of self-insured plans
administered by corporations themselves. 3/ The results of this survey have
been incorporated in the study of individuals1 saving and are presented in
Tables 1 and 2, covering the years 1951 through 1955.
1/ Individuals"* saving, in addition to personal holdings, c overs saving of unincorporated business, trust funds, and non-profit institutions in the forms
specified.
2/ Represents change in net claims and includes individuals' saving in the form
of cash and deposits, savings and loan associations, securities and insurance,
net of the increase in individuals' debts *
3/ Preliminary results of this survey, covering the years 1951-195k, were made
public in Statistical Series Release No. 1335.




— 2 —

S - 1379

The principal change made possible by the new data on pension funds is in
regard to individuals1 equity in securities. Pension fund investment in this
form has been growing substantially in recent years with net purchases of securities by these funds in 1955 estimated at $1.9 billion. The availability of
separate data permits presentation of a more accurate picture of individuals'
saving in the form of securities.
Data also are presented for insured pension funds and lor stocks and bonds
separately, while data on time deposits and consumer and mortgage debt have been
adjusted to include credit unions® These changes, of course, affect only the
composition, and do not involve the aggregate volume of saving•
Besides these changes, the format of Table 1 has been altered in order to
show additional groupings of saving. The item "change in net claims" is equiva—
lent to the earlier series designated t!liquid saving,11 which was discontinued
a year ago. The term "liquid saving", as now used, consists of currency and
deposits, savings and loan association shares and securities• The addition
of insirance and pension reserves and the subtraction of individuals * debts re*-*
suits in the series now defined as "change in net claims" previously called
"liquid saving"o Aggregate saving exclusive of saving in the form of Government
insurance is also showm*
Individuals1 debts
Mortgage debt and consumer debt in 1955 rose by a record §18.2 billion,
compared with $9.7 billion in the preceding year. Mortgage debt owed by individuals increased $12.U billion compared with $9*2 billion in 19!?^* Consumers'
indebtedness, which had increased nominally in 195U* expanded $5.8 billion in
19^5. The previous record for this type of debt was $U<>1 billion in 1952 • The
sharp rise in consumer debt in 1955, primarily installment debt, was related to
the large sales of automobiles and other consumer goods. Expenditures for consumer durable goods aggregated $35.3 billion, an all time record amount, and
exceeded the high expenditures in recent years by a substantial margin* The growth
in mortgage debt was associated with the high level of home construction during
the year; expenditures for private residential building totalled about «i>l$«4 bil«
lion in 1955, as compared with $12.5 billion in 195U.
Net purchases of securities
As previously mentioned, individuals added considerably to their holdings
of Government securities, $300 million of U. S. Savings Bonds, $1.6 billion of
other U. S. Government issues, and $1.U billion of state and local obligations•
Net purchases of Savings Bonds were lower than in 195U but individuals* purchases
of other U. S. Government issues contrasted with net sales of almost $1.7 billion in 195U, Their net purchases of state and local securities compared with
195U purchases of $500 million. In that year, the volume of state and local
flotations was about one billion dollars higher than in 1955 but a substantial
part of the issues was comprised of revenue bonds generally more attractive to
institutional investors.




S - 1379
The increased saving by individuals in corporate and other securities,
amounted to $2.4 billion, $2.1 billion in bonds and $300 million in stock. The
larger saving reflects the fact that institutional investors as a whole did not
increase their net purchases relative to the larger volume of new issues available
in 1955• Aside from Federal agency issues which are included in this component,
it is estimated that individuals* net purchases of corporate debt issues in
1955 amounted to approximately one billion dollars. This figure compares with
little net change in corporate bond holdings by individuals in 195k „ The increased interest in bond issues by individuals in 1955 — not only in corporate
obligations but in U. S. Government, Federal agency, and state and local issues
as well
reflects the higher yields obtainable as compared with recent years.
Another factor contributing to the greater saving in corporate bonds was the
substantial amount of convertible issues offered during the year, It should
also be noted that non-profit institutions and personal trust funds which normally
are significant purchasers of bonds are included with individuals as here defined.
While individuals' net purchases of common and preferred s tock issues in
1955 amounted to one billion dollars, borrowing to purchase or carry securities
increased by over $700 million, resulting in an increase in individuals! equity
in stock issues of $300 million. Institutional investors purchased, on balance,
about the same amount of stock issues in 1955 &s in 1954* It is important to
note that saving as treated in this series excludes capital gains so that the
rise in stock prices in recent years is not reflected in the foregoing figures,
or in Table 1. However, figures used in Table 2 reflect market values at yearends •
Other components
Of the other components of liquid saving, individuals increased their
ownership of savings and loan association shares by a record $4*9 billion and
expanded their currency and bank deposits by $lu3 billion. Saving in this latter
form was considerably less than in 19 5U when individuals added $7.0 billion to
their currency and bank deposits. In 1955> time deposits rose $3.5 billion com-*
pared with over $4#5 billion in each of the three preceding years. In contrast
to a rise in checking accounts of $2.5 billion in 195U* individuals demand deposits were increased by only $400 million in 1955# Currency holdings were also
increased by $400 million.
Equity in private insurance and pension reserves continued to rise, amount"
ing to $ti .0 billion, and comprising the most important type of individuals!
saving in financial form in 1955. Equity in private life insurance increased by
$5.9 billion of which $1.3 billion represented enlarged pension reserves. Pri~
vate %on-insured pension .funds, according to preliminary estimates, grew by
approximately $2.1 billion, as compared with $1.8 billion in 195U. IndividualsT
equity in Government insurance and pension reserves, including Social Security
funds, etc., increased $3.2 billion.
Ownership of financial assets
In addition to the estimates of saving discussed above, data on accumulated
asset holdings of individuals have been prepared (Table 2) indicating the compos
sition of the financial assets held by individuals and their liabilities at the




- U~

S - 1379

end of each year, 1950 through 1955• At the end of 1950, individuals owned
approximately $320 billion worth of corporate stocks and bonds, together with
$U3U billion of other financial assets, i.e., cash, bank deposits, saving and
loan shares, insurance and government securities. Against these assets, individuals1 mortgage and consumer debt totalled $112 billion at the year end*
Other concepts of saving
Besides the concept of saving presented here, there are other concepts of
individuals1 saving with different degrees of coverage currently in use. The
series with the most complete coverage, the personal saving estimates of the
Department of Commerce, is derived as the difference between personal income and
expenditures. Conceptually, Commerce saving includes the following items not
included with S.E.C. gross saving: unincorporated business and farm items such
as net plant and equipment, changes in net receivables and changes in inventories.
Government insurance and consumer durables are excluded from Commerce saving
which, in addition, reflects depreciation on homes. 4/
A more restricted concept of individuals' saving is the selected item series
of the Home Loan Bank Board. This series covers the following components included in SoEoC. saving: time and savings deposits, savings and loan associations,
private life insurance, and U.S. Savings Bonds.

V For a complete reconciliation, see Table 6, in the July 1955 issue of the
Survey of Current Business0




- 5 -

S - 1379

Table 1
Saving by Individuals in the United States 1/
1951 - 1955
(Billions of dollars)

1951

1952

Currency and deposits
a. Currency
b. Demand deposits
c. Time and savings deposits 2/

6.1
.8
3.1
2.2

Savings and loan associations

Type of Saving
1.

2.
3.

Securities 3/
a. U. S. Savings bonds
b. Other U. S. Government
c. State and local Government
d. Corporate and other
(1) Bonds and notes
(2) Preferred and common stock

1955

1955
Jan.- | Apr.r- ' Julyj Sept.
Mar. j June

1953

1954.

7.2
1.1
1.5
4.5

5.1
.6
- .1
4.6

7.0
- .3
2.5
4.8

4.3
.4
.4
3.5

2.1

3.1

3.6

4.4

4.9

1.1

.7
- .5
- .8
.4
1.6
- .1
1.6

2.8
.1
*
.9
1.8
.4
1.4

3.4
.2
.6
1.6
1.1
.4
.7

- .6
.6
-1.7
.5
*
*
*

5.7
.3
1.6
1.4
2.4
2.1
.3

1.8 !
.2
l.i
.1
.1* 1 ,
.3 1
.1 | -

14.9

- 1.0 |
.4
- .8 j
.3
- 1.3 i - l . O
1.0 ;,u
|

.8
*
.1
.3
.3
.6
.2

Liquid saving (1+2+3)

8.9

13.0

12.2

10.9

5.

Private insurance and pension reserves
a. Insurance reserves
b. Insured pension reserves
c. Non-insured pension fynds

5.4
3.1
1.0
1.3

6.4
3.8
1.1
1.5

6.8
3.9
1.1
1.8

7.4
4.4
1.2
1.8

8.0
4.7
1.32.1,

Government insurance and pension
reserves 4/

It.2

4.4

3.2

2.7

6.

,

1.9

1

2.6

2.0
1.2
.3
.5

i
|
|
i

1.8
1.0
.3
.5

3.2

.5

!
1
!

1.0

3.0
.1
2.2
.7

'

1.5

1
4.

|
|

.7

1.6
| 1.3
I
.1
, -.5
.7
1 1.0
I
.8
|
.2

1

1
|
1

'

|

1
1

5.5

I
1

2.0
1.2
• .3
.5

'

1

1

7.2
6.6
.6

10.6
6.5
4.1

10.8
7.3
3.5

9.7
9.2
.5

18.2
12.4
5.8

2.7
2.7
*

8.

Change in net claims (4+5+6-7)

11.3

13.2

11.4

11.3

8.0

1.7

9.

Non-farm homes 7/

10.2

10.3

10.9

12.5

15.4

3.1

i

10.

Construction and equipment of
non-profit institutions

'.Z

lt.0

1.5

1.4

1.5

1.9

2.0

.5

J

.5

Consumer durable goods

27.1

26.8

29.7

28.9

35.3

7.8

i

9.1

12.

Total gross saving (8+9+10+11)

50.2

51.8

53.6

54.5

60.6

13.1

|

13.lt

13.

Change in net claims excluding
Government insurance (8-6)

7.1

8.8

8.1

8.6

4.8

1.2

Hi.

Total gross saving excluding
Government insurance (12-6)

45.9

47.4

50.3

51.8

57.4

12.6

|

1.0
5.3
3.6
1.7

j/
|

1

1
I
1
'
1
1
i

1

U.9
2.1
1.3
.3
.5
.7
Il .5
2.8
1.8

3.2

1

3.2

Ii.ii

!

3.9

1

lie

1
1

2.0
.7
.5
.7

1.8
*
.9
.3
.6
.3
.3

Increase in individuals debts
a. Mortgage
b. Consumer in(Ceb"tedness 6/

1

1
1

|
|

7.

debt^$/

Oct,
1 Dec.

i

1
1
5.6
!
3.it 1
j
2.3 I
i
- 1"
i
i
j j

1

1

1
.5

j

.5

8.7

i

9.7

| 16.8

| 17.3

'
| -1.2

1
1

'
|

'

|

'

1 15.8
1

I 16.6
1r
:

1 12.4
' rl

2.2

2.5

* Indicates less than $50 million.
1/ Includes unincorporated business saving of the types specified. Figures are rounded jancl, will, npt necessarily add,to jbotals.
~ The foregoing .data have been compiled try the Commission from many different sources. Because of the nature of the figures,
current data are necessarily estimates and, therefore, are subject to revision.
2/ Includes shares and deposits in credit unions and Postal Savings System.
3/ After deducting bhange in bank loans made for the purpose of purchasing or carrying securities.
U/ Includes Social Security funds and state and local retirement systems.
3/ Mortgage debt to institutions on one-to four-family nonfarm dwellings.
Z/ Consumer debt owed to corporations, largely attributable to purchases of automobiles and other durable consigners goods,
although including some debt arising from purchases of consumption goods. The other segments of individuals' debt have
been allocated to the assets to which they pertain, viz., saving in insurance and securities.
7/ Construction of one- to four-family nonfarm dwellings less net acquisitions of properties by non-individuals.




- 6 -

S - 1379

Table 2
Financial Assets and Liabilities of individuals in the United States 1/
Year end, 19$0 - 1955
(Billions of dollars)

1950

1951

1952

1953

1951*

1955

130.7
23.3
49.5

136.8
24.1
52.6

143.9
25.2
5U.2

H*9.0
25.8
54.1

156.0
25.5
56.6

160.4
2 5.9
57.0

57.8

60.0

64.5

69.1

73.9

77.4

14.0

16.1

19.1

22.8

27.2

3.2.1

76.0
49.6
16.8

75.3
49.1
16.1

76.3
49.2
16.1

78.7
49.4
16.8

78.0
50.0
14.9

81.3
50.2
16.6

9.6

10.1

11.0

12.6

13.1

14.5

68.0
57.1
5.4

73. k
60.2
6.U

79.9
64.1
7.5

86.6
68.0
8.6

94.5
72.9
9.8

102.7
77.7
11.1

5.U

6.8

8.2

10.0

11.8

13.9

5. Government insurance and
pension reserves

39.9

44.1

48.5

51.8

5U.U

57.6

Total financial assets
(1 through 5)

328.5

345.5

367.7

388.9

410.1

434.2

7. Mortgage debt

37.6

4U.3

50.8

58.1

67.3

79.6

8. Consumer debt

17.4

18.0

22.1

25.6

26.1

31.9

55.1

62.3

72.8

83.7

93 ok

111.6

273.4

283.3

294.8

305.2

316.8

322.6

Financial Assets
1. Currency and deposits
a. Currency
b. Demand deposits
c. Time and savings
deposits
2. Savings and loan
associations
3. Securities 1/
a. U. S. Savings bonds
b. Other U.S. Government
c. State and local
Government
4. Private insurance and
pension reserves
a. Insurance reserves
b. Insured pension reserves
c. Non-insured pension
funds

6.

Liabilities

9.

Total liabilities

10. Total individuals' net
equity (financial assets
less liabilities) 2/

l/ Does not include individuals * holdings of corporate securities. Rough estimates
indicate an order of magnitude of $320 billion at the end of 1955#
2/ The year to year changes in the above data are not exactly equivalent to saving
shown in Table 1 which includes investments in corporate securities, not included
above, and also reflects adjustments in certain of the components in order to

exclude revaluations and capital gains and losses.