Full text of E.8 Volume and Composition of Individuals' Saving : September 1966

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UNITED STATES
SECURITIES A N D E X C H A N G E COMMISSION
W A S H I N G T O N , D C . 20549

QrP^3 R (jSS ,e

September 24, 1966

STATISTICAL SERIES

RELEASE NO.

2153

VOLUME AND COMPOSITION OF INDIVIDUAIS' SAVING, APRIL-JUNK 1966
The changing pattern of financial saving of individuals which emerged
in the early months of 1966 is confirmed by the new estimates for the second
quarter made public today by the Securities and Exchange Commission. Individuals, on net balance, saved $5 billion in financial form during the June
quarter, as they added slightly more than $11 billion to financial assets
while increasing their debt by about $6 billion in connection with purchases
of housing, consumer durables and securities.
The changed composition of saving in 1966 is most striking in the pattern
of asset accumulation. This is brought out in the following table presenting
savings flow data for the first half year in comparison with the results for the
same period in 1965.

Cash-type Assets
Currency and demand deposits
Time and savings deposits
Saving shares
Total "cash" assets

First-Half Year
1965
1966
($Billioas)
- .8
7.7
4.6
11.5

-4.1
5.3
2.4
3.6

Securities
U.S. Governments
State & local issues
Corporate and ether issues
Total securities

1.6
.8
.8
3.2

5.4
1.6
1.9
8.9

Insurance and pension reserves

8.3

23.0

20.8

Total financial assets

These estimates, which are not adjusted for normal seasonal changes,
show a distinct relative shift from cash assets into securities. The shift
undoubtedly reflects in large part the very attractive yields prevailing in
the securities markets during the period. Normally there is a decline in the
currency and demand deposits cosqponent of cash assets during the first part
of the year, but as may be seen from the above table, the net reduction in
individuals' holdings this year was far in excess of last year's decline.
It is also noteworthy that individuals accumulated substantially less savingstype cash assets in the first 6 months of 1966 than they did in the same
period a year ago.

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S-2153

The shift into securities has largely involved increased purchasing of
U.S. Government issues, although state and local securities were also bought in
larger amounts in the most recent period. While relatively heavy purchases
of investment company shares in the first half of 1966 more than offset the
continuing tendency for individuals to sell their direct holdings of corporate
equities, in the comparable period of 1965 the reverse was true; liquidation
of directly-held equity securities substantially exceeded the net inflow of
funds to investment companies. Met purchases of corporate debt issues were
about the same in the two periods.
In the first part of 1966,
insurance and pension reserves as
There has been a virtually steady
levelling in the growth primarily
affected to some extent by a rise

individuals saved about the same amount in
they did in the comparable period a year ago.
uptrend in such savings for many years. The
was in private pension reserves but also was
in life insurance policy loans.

Quarterly movements
Detailed estimates of individuals' quarterly financial savings are
presented in the attached table. These data, it should be noted, have not
been adjusted for seasonal variations. The most important changes from the
first to second quarters involve the substantially reduced takings of U.S.
Government securities in the second quarter. From the unusually large
accumulation of $4.4 billion in the first quarter, the net increase fell to
$.7 billion. Furthermore, second quarter net purchases of investment company
shares were lowered from the unusually high level which was attained in the
first three months of the year. Second quarter acquisition of such shares
were still moderately above those prevailing in the latter part of 1965. Partly
offsetting this development however, the net liquidation of directly-held
corporate equities in the second quarter was much less than in the preceding
four quarters.
Changing debt picture
While, as shown in the above text table, the net acquisition of financial
assets in the first six months of 1966 was somewhat lower than in the comparable
1965 period, there was also some tapering in the continuing climb of consumer
indebtedness. Although the increase in individuals' debt in the first quarter
of this year was somewhat larger than in the year-ago period, the $6.1 billion
increase in the second quarter was about $1 1/2 billion below that for the
similar period a year ago. This relative shift was most clearly apparent in
both the mortgage and consumer debt categories for which estimates are made.
It would appear that the extraordinarily stringent money and capital market
conditions prevailing in this period were a factor in these developments,
although it should also be pointed out that second quarter consumer buying of
automobiles was below a year ago, and this may have reflected considerations
other than the tightness of credit,
The increase in individuals' mortgage debt in the spring quarter —
about $3 billion — was the lowest for any quarter in the last four years. It
was more than $1 billion less than the average rate of expansion in the preceding three quarters, and one-half billion dollars less than in the year ago
quarter.

Other coacepts of

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S-2153

Estimates of individuals' saving as compiled in this report are derived
as the difference between the increase in individuals' financial assets and the
increase in selected debt instruments. The estimates do not reflect changes
in market values as the series excludes capital gains and losses. In the
report covering annual saving, however, market value data are also shown for
the accumulated financial assets and liabilities of individuals as of the end
of each year. The classification "individuals" herein used includes households, trust funds, nonprofit institutions, and unincorporated businesses.
An important omission in the calculations is the change in unincorporated
businesses* short-term debt.
There are other series on individuals' saving which differ conceptionally
and in coverage. The aggregate personal saving estimate of the Department of
Commerce is derived from a completely different procedure representing the
difference between personal income (after taxes) and expenditures. The Federal
Reserve Board's flow-of-funds system of accounts includes estimates of gross
saving and net financial investment of households. A comparison of the
Securities and Exchange Commission estimates and the Department of Commerce
series for the years 1962-65 appeared in the July Survey of Current
and the Commission's Statistical Bulletin.

SAVING BY INDIVIDUALS IN THE UNITED STATES i z
1962 - 1966
(Billions of dollars)

1962

1963

1964

1965

2.8

6.8

7.0

14.9

11.6

9.9

1966

1965

Apr.June

Jan.Mar.

Apr.June

JulySept.

Oct. Dec.

JanMar.

10.0

-2.7

1.9

3.8

7.1

-4.6

12.3

15.3

4.6

3.1

4.2

3.4

3.2

2.1

11.7

11.3

9.3

2.1

2.5

1.4

3.3

1.4

1.0

-.4

1.6

7.0

4.9

1.3

1.9

1.0

5.3

3.6

.9
-.5
.3
.3

1.6

1.2
-.3
3.3
2.4

.9
-.2
1.8
2.4

.3
-.1
1.0
-.1

.2
-.1
.3
.9

.1
-.1
.7
.5

.3
*
-.2
1.1

.2
-.1
4.4
.3

.3
-.1
.7
1.3

.4
.9
2.0
-2.5

.1
2.3
2.1
-4.4

.2
.3
.1
-.2

.6
1.2
.7
-1.3

-.2
.7
.7
-1.6

-.5
.2
.6
-1.3

.6
.8
1.6
-1.8

1.3
.7
.9
-.3

Type of Savipa

-1.5
-.1
2.0
-3.4

-.4
.7
1.8
i

U.S. savings bonds

4>-i H*

9.9

10.7

11.7

13.0

3.1

2.8

3.2

3.9

3.1

2.9

4.3

4.5

4.8

5.3

1.2

1.0

1.4

1.7

1.3

1.1

1.4

1.7

2.0

2.1

4.2

4.5

4.9

5.6

1.4

1.3

1.7

1.2

1.3

3.7

4.0

4.6

5.0

1.1

1.3

1.1

1.2

18.6

22.1

22.2

24.4

3.3

7.6

4.4

9.2

3.5

6.1

12.5

14.9

15.6

15.4

3.7

3.3

4.0

4.4

4.3

2.9

5.0

6.3

6.5

9.0

-.3

3.5

2.4

3.4

-.4

2.6

10.

1.1

-.1

-2.0

1.5

-.4

11.

22.1

24.3

31.7

33.1

6.1

6.0

10.6

10.3

6.0

5.1

*
1/
~
2/
3/
4/
5/
6/
7/
8/

Private insurance and pension reserves

Government insurance and pension reserves 5/

4
Indicates less than $50 million.
Includes unincorporated business savli* of the types specified. Figures are rounded and will not necessarily add to totals.
by the Commission from many different sources. Because of the nature of the figures, current data are necessarily estimates
Includes shares in savings and loan associations and shares and deposits in credit unions.
Includes nonguaranteed Federal agency securities.
Includes closed-end investment companies as well as mutual funds.
Includes civil service, railroad retirement and state and local retirement funds.
Mortgage debt to institutions on one-to-four-family nonfarm dwellings.
Consumer debt owed to corporations. Policy loans on life insurance have been deducted from that item of saving.
Change in bank loans to brokers and dealers and others made for the purpoee of purchasing <rr carrying securities.

The foregoing data have been conpiled
and, therefore are subject to revision.

Full text of E.8 Volume and Composition of Individuals' Saving : September 1966

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