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For Release i n MORNING Newspapers of Monday, October 31, 1955 SECURITIES AND EXCHANGE COMMISSION Washington, D. C. STATISTICAL SERIES Release No. 13k0 VOLUME AND COMPOSITION OF INDIVIDUALS' SAVING, APR.-JUNE 1955 1 / Estimates of saving during the second q u a r t e r of 1955 showed t h a t i n d i v i d u a l s added $500 m i l l i o n more t o t h e i r debts than t o t h e i r f i n a n c i a l a s s e t s , according t o data r e l e a s e d today by the S e c u r i t i e s and Exchange Commission. 2 j Saving i n t h e form of s e c u r i t i e s , savings and loan a s s o c i a t i o n s h a r e s , insurance and savings d e p o s i t s i n banks continued t o expand* However, these savings were o f f s e t by a record q u a r t e r l y growth both i n i n d i v i d u a l s 1 mortgage debt and consumer indebtedness, r e f l e c t i n g the high l e v e l of r e s i d e n t i a l b u i l d i n g and consumer spending. During t h e second q u a r t e r , home c o n s t r u c t i o n including a l t e r a t i o n and a l s o c o n s t r u c t i o n by n o n - p r o f i t i n s t i t u t i o n s , amounted t o $4.3 b i l l i o n . Purchases of automobiles and other durable goods amounted t o $ 9 . 1 b i l l i o n . I n d i v i d u a l s ' n e t purchases of corporate s e c u r i t i e s amounted t o $700 m i l l i o n during t h e second q u a r t e r , s l i g h t l y lower than e i t h e r t h e f i r s t q u a r t e r of t h e y e a r or t h e second q u a r t e r of 1954. These investments were p r i m a r i l y i n debt s e c u r i t i e s which, however, included a l a r g e amount of debenture i s s u e s c o n v e r t i b l e i n t o common s t o c k . During the second q u a r t e r , n e t new bond i s s u e s t o t a l l e d $ 1 . 3 b i l l i o n of which almost o n e - t h i r d were c o n v e r t i b l e debentures. Of t h e t o t a l debt i s s u e s , i t i s estimated t h a t i n d i v i d u a l s bought almost $800 m i l l i o n while $500 m i l l i o n was absorbed by i n s t i t u t i o n a l i n v e s t o r s . Although about $200 m i l l i o n of common and p r e f e r r e d stock was added t o i n d i v i d u a l s ' accounts during t h e second q u a r t e r , borrowing on corporate s e c u r i t i e s increased by $250 m i l l i o n , r e s u l t i n g i n a small r e d u c t i o n i n i n d i v i d u a l s ' e q u i t y i n stock h o l d i n g s . I n a d d i t i o n t o t h e i r investment i n c o r p o r a t e s e c u r i t i e s , i n d i v i d u a l s added t o t h e i r saving $400, m i l l i o n of s t a t e and l o c a l bonds and $100 m i l l i o n of U. S . Savings bonds. Their holdings of other U. S . Government o b l i g a t i o n s were reduced by $250 m i l l i o n , E q u i t y i n p r i v a t e insurance rose by $1.3 b i l l i o n , $100 m i l l i o n more than i n t h e s i m i l a r p e r i o d of 1954* Saving try i n d i v i d u a l s through i n c r e a s e d e q u i t y i n Government insurance, i . e . , S o c i a l S e c u r i t y f u n d s , e t c . , amounted t o $1.2 b i l l i o n , t h e h i g h e s t i n t h r e e y e a r s , r e f l e c t i n g n o t only l a r g e r app r o p r i a t i o n s t o the v a r i o u s t r u s t funds during t h e p e r i o d but a l s o reduced unemployment b e n e f i t payments. 1 / I n d i v i d u a l s ' saving, i n a d d i t i o n t o personal h o l d i n g s , covers saving of unincorporated b u s i n e s s , t r u s t and pension f u n d s and n o n - p r o f i t i n s t i t u t i o n s i n t h e forms s p e c i f i e d . 2/ This s e r i e s i s no longer designated as " l i q u i d saving" b u t i s shown i n the accompanying t a b l e , item 9 , as "change i n n e t claims" of i n d i v i d u a l s . This end the change in the placement off the government insurance item are t e n t a t i v e . The changes have been made because t h e s e r i e s has f r e q u e n t l y , but i n c o r r e c t l y , been taken t o measure saving r e a d i l y a v a i l a b l e i n cash http://fraser.stlouisfed.org/ -form. Federal Reserve Bank of St. Louis - 2 - S - 1340 New investment i n savings and loan a s s o c i a t i o n s shares a l s o was a t record l e v e l s , amounting t o $ 1 , 4 b i l l i o n during the second q u a r t e r of t h i s year. ' Holdings of currency and bank d e p o s i t s of i n d i v i d u a l s i n c r e a s e d by $200 m i l l i o n , compared w i t h an i n c r e a s e of $1.4 b i l l i o n i n t h e second q u a r t e r of 19 5U. The s m a l l e r saving t h i s year was due t o a drop of $ 1 . 1 b i l l i o n i n checking accounts, i n p a r t r e f l e c t i n g the new income t a x payment d a t e . Time deposits grew by $900 m i l l i o n , a somewhat lower r a t e of i n c r e a s e than i n r e c e n t q u a r t e r s . On t h e other hand, currency holdings of i n d i v i d u a l s r o s e by $300 m i l l i o n , the h i g h e s t second q u a r t e r s i n c e 1952. Mortgage debt of i n d i v i d u a l s i n c r e a s e d by $3.3 b i l l i o n during t h e t h r e e months April-June 1955. This was 18 percent g r e a t e r than t h e previous r e c o r d during t h e f o u r t h q u a r t e r of 195U, and 62 p e r c e n t g r e a t e r when .compared w i t h the second q u a r t e r of 19 5U. As noted above, home c o n s t r u c t i o n was a t a r e c o r d l e v e l , t h e value of new non-farm dwellings completed being almost $ 1 . 0 b i l l i o n g r e a t e r t h a n i n the second q u a r t e r of 195U» Consumer indebtedness i n c r e a s e d by $2.2 b i l l i o n , exceeding by a small margin t h e previous r e c o r d expansion i n t h e f o u r t h q u a r t e r of 1952. This l a r g e r i s e i n c r e d i t was concentrated i n i n s t a l l m e n t debt and was c h i e f l y due t o t h e exceedingly l a r g e s a l e s of automobiles purchased an tiume. ' i | ' Besides the concept of saving presented h e r e , t h e r e a r e o t h e r concepts of i n d i v i d u a l s ' saving with d i f f e r e n t degrees of coverage c u r r e n t l y i n ude. The s e r i e s with t h e most complete coverage, the p e r s o n a l saving e s t i m a t e s of t h e Department of Commerce, i s derived as t h e d i f f e r e n c e between p e r s o n a l income and expenditures» Conceptually, Commerce saving i n c l u d e s t h e f o l l o w ing items n o t included with S.E.C. gross saving* unincorporated b u s i n e s s and farm items such as n e t p l a n t and equipment, changes i n n e t r e c e i v a b l e s and changes i n i n v e n t o r i e s . Government insurance and consumer dura bles are e x cluded from Commerce saving which, i n a d d i t i o n , r e f l e c t s d e p r e c i a t i o n on homes. 3 / A more r e s t r i c t e d concept of i n d i v i d u a l s ' saving i s t h e s e l e c t e d item s e r i e s of t h e Home Loan Bank Board. This s e r i e s covers t h e f o l l o w i n g components included i n S.E.C s a v i n g : time and savings d e p o s i t s , savings and loan a s s o c i a t i o n s , p r i v a t e l i f e insurance, and U. S . savings bonds. 3 / For a complete r e c o n c i l i a t i o n see Table 6 i n the J u l y 1955 i s s u e of t h e Survey of Current Business# Table 1 Saving by Individuals i n the United S t a t e s l / 1952 - 1955 ( B i l l i o n s of d o l l a r s ) Type of Saving 1. 1952 1953 195b Apr.June 1951i JulySept. 1955 1 1 Oct.Dec. Jan.Mar. 3.6 -0.1 2.8 1.0 | - j U.o 1 , , 0.8 2.U 0.8 -1.1 —0.8 -1.3 1.0 Currency and bank d e p o s i t s a . Currency b . Demand deposits c . Time and savings d e p o s i t s 6.8 1.1 1.5 ii.8 U.2 4.2 6.8 -0.3 2.7 UoU 2. Savings and loan a s s o c i a t i o n s 3.1 3.6 U.5 1.3 , 0.7 | l.li 3. Private insurance k.9 5.2 5.3 1.2 | 1.3 I U. Securities 2/ a . U . S . savings bonds b . Other U. S . Government c . S t a t e and l o c a l government d . Corporate and other U»0 0.1 (*) 0.8 5.1 1.6 0,8 -2.5 -1.0 0.1 ! 0.7 3.1 2.5 2.6 1 1 | —l.U 2.0 0.2 0.2 -1.3 0.5 0.8 ! 0.3 0.3 -0.3 0.6 1 1 1 -2.1+ 0.6 (*) 1! 5. Liquidation of mortgage debt 3 / -6.3 -7.0 -8.6 -2.0 6. Liquidation of debt not elsewhere c l a s s i f i e d k/ -3.8 -3.2 —0oU —0.6 1 1 l.U I 1 Subtotal ( 1 through 6) 7. 8,5 9.2 1.1 j I.U 1.6 1.5 ! le3 0.5 0.2 w 1 -0.1 2.0 0.3 0.7 0.2 0.8 1 1 1 1.0 0.1 -0.2 O.ij 0.7 1 -2.8 -2.6 1 -3.3 —0.1 1 -1.0 (*) -2.2 2.1 1 3.7 0.9 1 1 1 1 0.U 0.3 1.2 k.i 1.2 1-0.5 U.l 3.5 ; u.3 1 8.it 7.8 1 9.1 | 16.5 12.5 l 12.9 o.ii 3.3 2.6 0.9 | 0.7 Change i n n e t claims (7 + 8) 13.0 11.8 11.9 2.2 | 2.8 ! Nonfarm dwellings 5 / 11.6 12.3 U4.1 3.U 9. 11. Other durable consumers' goods 12. Gross Saving (9 + 10 + 11) NOTE: V 2/ J/ Sy ~ 26.8 51.U 29.7 53.8 28.9 54.9 U.l 7.5 1 6.8 13.1 1 13.7 1 1 1 Apr.June ] U.3 Government insurance 1 0.2 0.3 -1.1 0.9 1 8. 10. 8.7 1 1 1 1 -1.6 1 The e a r l i e r s e r i e s designated "liquid saving" has been discontinued f o r reasons outlined on page 1 , note 2 . The change i n net claims ( l i n e 9) i s conceptually the same as the e a r l i e r s e r i e s , I t includes a l l items t h a t are changes i n n e t claims a g a i n s t a s s e t s regardless of degree of " l i q u i d i t y . " Figures are rounded and w i l l not necessarily add t o t o t a l s . Asterisk (*) i n d i c a t e s l e s s than $50 m i l l i o n , The foregoing data have been compiled by the Commission from many d i f f e r e n t sources. Because of the nature of the f i g u r e s , current data are n e c e s s a r i l y estimates and, t h e r e f o r e , are subject t o revision. Includes unincorporated business saving of the types s p e c i f i e d . A f t e r deducting change i n bank loans made for the purpose of purchasing or carrying s e c u r i t i e s . Mortgage debt to i n s t i t u t i o n s on one-to four"family nonfami d w e l l i n g s . Largely a t t r i b u t a b l e t o purchases of automobiles and other durable consumers' goods, although including some debt a r i s i n g from Purchases of consumption goods. The other segments of i n d i v i d u a l s ' debt have been a l l o c a t e d t o the a s s e t s t o which they p e r t a i n , v i z . , saving i n insurance and s e c u r i t i e s . 5 / Construction of one- t o f o u r - f a m i l y nonfarm dwellings l e s s net a c q u i s i t i o n of p r o p e r t i e s by n o n - i n d i v i d u a l s ; a l s o i n c l u d e s a small amount of construction of n o n - p r o f i t i n s t i t u t i o n s .
