Full text of Economic Review (Federal Reserve Bank of Cleveland) : June 1971

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ECONOMIC REVIEW

Additional copies of the ECONOMIC REVIEW may
be obtained from the Research Department, Federal
Reserve Bank of Cleveland, P. O. Box 6387,
Cleveland, Ohio 44101. Permission is granted to
reproduce any material in this publication providing
credit is given.

JUNE 1971

CAPITAL SPENDING
IN MAJOR
METROPOLITAN AREAS
OF THE FOURTH DISTRICT
The most recent semiannual survey o f expected plant
and equipment spending was conducted by the Federal
Reserve Bank of Cleveland in the spring o f 1971 among
manufacturing and selected other business firms in the
three largest metropolitan areas o f the Fourth Federal
Reserve D istrict.1 The results are generally in line w ith the
findings o f recent nationwide surveys, including the latest
quarterly survey by the Commerce Department and the
Securities and Exchange Commission (SEC). Manufacturing
firms in the Cleveland, Cincinnati, and Pittsburgh metro
politan areas, like manufacturers in the entire country,

IN THIS ISSUE

expect to spend less for new capital equipment in 1971
than in 1970. In contrast, public utilities in the three areas,
as in the nation, plan to exceed their actual 1970 outlays in

Capital Spending in Major
Metropolitan Areas
of the Fourth D is tric t. . 3

1971. The area survey also indicates that in 1972-a period
not covered by the nationwide survey—manufacturing firms
in the three areas plan to increase their capital outlays
above the expected 1971 level, while public utilities expect
a further increase in spending only in Cincinnati, and
reductions in the other two areas.

Consumer Income, Spending,
and Saving, 1960-1970 .10

The Pittsburgh area survey was conducted fo r the Federal Reserve
Bank o f Cleveland by the University o f Pittsburgh.

ECONOMIC REVIEW

The latest Commerce-SEC survey showed lower
expected spending for

1971 and lower actual

spending in 1970 than the nation's manufacturing
concerns had indicated at the time of the pre
ceding quarterly

survey.

TABLE I
Capital Spending by Cleveland Area Firms
(Spring 1971 Survey)
Year-to-Year Percent Changes

A similar downward

revision by area manufacturing firms of both their
actual capital outlays in 1970 and their spending

actually spent in 1970 (see Table I). In com

M A N U F A C T U R IN G
Durable goods*
Primary metals
Fabricated
metals
Machinery
Electrical
equipm ent
Transportation
equipm ent
Nondurable goods*
Food
Printing and
publishing
Chemicals
Rubber and
plastics
PUBLIC U T IL IT IE S

parison, public utilities in the Cleveland area are

TOTAL

plans for 1971 occurred in two o f the three areas,
as shown by a comparison of the results of the
most recent survey w ith those of the preceding
one.

CLEVELAND AREA
Manufacturing firms in the four-county Cleve
land metropolitan area that participated in the
most recent survey expect to spend 20 percent less
for new plant and equipment in 1971 than they

planning a 21-percent increase in capital spending
in 1971.
These findings of the latest survey represent a
downward

revision

manufacturers'

* Includes industries
disclosure.

1970 (actual)
to
1971 (planned)

1971 (planned)
to
1972 (planned)

-2 0 %
-2 4
-3 0

+18%
+22
+61

-2 2
-2 9

+27
-1 1

+41

-3 4
+10
+32

- 3
- 8
+30

-1 9
+22

+27
-3 5

+31
+21

+16
- 9

+ 4%

not

5%
listed

separately

avoid

Source: Federal Reserve Bank o f Cleveland

earlier

spending expectations fo r 1971 as reported in the

survey dates, reflecting the pressing need for

survey conducted in the fall of 1970. A t that time,

expansion in the utilities industry.

only a 10-percent reduction from the 1970 level of

The spending reductions planned for 1971 are

spending had been predicted for 1971. More than

concentrated in the durable goods section of the

one-half of the individual manufacturing firms

manufacturing industries. All but one of the major

participating in both surveys reported a smaller

industries in that section indicate smaller outlays

figure for 1971 in the latest survey. The actual

for 1971 than fo r 1970. The substantial rise in

spending for 1970 was also pared from estimates

spending planned for 1971 in the electrical equip

made in the previous survey; and more than

ment industry actually reflects the plans of only

one-half of the manufacturing concerns showed

one or two large establishments, while capital

lower amounts of actual spending in 1970. Public

investments of the remaining firms in the industry

utilities also spent less in 1970 than the returns of

are expected to fall short of the 1970 level.

the fall 1970 survey had indicated—in their case, it

Producers of nondurable goods, in contrast, plan

meant a smaller increase over the preceding year

to raise their spending in 1971 10 percent above

than originally planned. They, however, did not

1970, or 9 percentage points more than they had

trim spending plans for 1971 between the two

predicted in the fall o f 1970.

JUNE 1971
TABLE II

the Cleveland area to 11 percent below the actual

Capital Spending by Cleveland Area Firms
(Spring 1971 Survey)
Percent Distribution o f Total Spending by Type1
(Between Structures and Equipment and
Between Expansion and Modernization)

level o f spending in 1970.

Expansion^

S tructurest

1970 1971 1972 1970 1971 1972
M A N U F A C T U R IN G
Durable goods §
Primary metals
Fabricated
metals
Machinery
Electrical
equipm ent
Transportation
equipm ent
Nondurable goods §
Food
Printing and
publishing
Chemicals
Rubber and
plastics
PUBLIC U T IL IT IE S

Although public utilities in the Cleveland area
are planning to cut spending back by 9 percent in
1972, the level of spending would still be 10
percent above actual spending in 1970.
Only about $1 o f every $5 of total capital
investment by Cleveland manufacturing concerns

19%
17
12

19%
16
11

16%
15
14

56%
56
67

42%
39
51

39%
39
65

25
22

2
15

39
8

52
54

9
31

9
22

few construction projects of any great size appear

this, the share of manufacturers' total spending

15
29
49

27
31
56

15
19
23

47
55
66

53
48
57

49
39
63

designated for expansion of existing production

51
24

24
31

56
12

30
71

29
57

39
39

3
25

16
27

4
22

44
86

26
79

18
71

is earmarked fo r construction in 1971; and only
$1 in every $6, in 1972 (see Table II), as relatively
to be scheduled for 1971 or 1972. In line w ith

facilities is somewhat smaller in 1971 than in
previous years and is expected to diminish still
further in 1972.
The continued nationwide downward trend in
manufacturing capacity utilization rates is borne
out by the response to the latest Fourth District

TOTAL

22%

23%

19%

65%

57%

53%

* Based only upon returns in which these breakdowns
were supplied.
t Spending fo r equipm ent equals 100 percent less the
percent shown fo r structures.
$ Spending fo r m odernization equals 100 percent less the
percent shown fo r expansion.
§ Includes industries not listed separately to avoid
disclosure.

survey. While the proportion of firms reporting
insufficient capacity is approaching zero, "to o
much” capacity was reported by almost one-half
of all manufacturing concerns replying to the
question on capacity and by more than one-half of
durable goods producers in the group.
Manufacturing concerns that supplied infor

Source: Federal Reserve Bank o f Cleveland

mation on methods o f financing their capital
investments indicated they expect to finance more

For 1972, spending plans for the durable and

than 90 percent of their planned spending in 1971

the nondurable goods portions of the manufac

and 1972 from internal sources of funds, as they

turing sector w ill be reversed in comparison with

did in 1970. More than four of every five firms

plans fo r 1971. Producers of hard goods plan to

responding to the question plan to rely solely on

spend 22 percent more in 1972 for new plant and

internal sources of funds in both 1971 and 1972,

equipment than in 1971, while producers of soft

as in 1970.

goods expect to reduce outlays by 8 percent (see
Table I). The resulting 18-percent increase for the

C IN C IN N A TI AREA

entire manufacturing sector w ill partially restore

Manufacturing concerns in the seven-county

the level of spending by manufacturing firms in

Cincinnati metropolitan area that participated in

ECONOMIC REVIEW
TABLE III

downward,

Capital Spending by Cincinnati Area Firms
(Spring 1971 Survey)
Year-to-Year Percent Changes

addition, spending plans for 1970 appear to have

1970 (actual)
to
1971 (planned)
M A N U F A C T U R IN G
Durable goods*
Primary and
fabricated
m etalst
Machinery
Electrical
equipm ent
T ransportation
equipm ent
Nondurable goods*
Food
Paper
Printing and
publishing
Chemicals
PUBLIC U T IL IT IE S

upward revisions or no changes in their plans. In
been cut back during the latter part of 1970. In

1971 (planned)
to
1972 (planned)

while the other one-half made either

+23%

+ 5

+13

+40
-4 4

+ 14
+40

+59

+46

+19

+ 8

-2 7

+30
+37
-1 0

-2 4
8
+40

+28
+30
+ 14

+219

+ 17%

the spring

1971 survey, over one-half of the

p a r tic ip a tin g

manufacturing

firms

reported

amounts actually spent in 1970 that were lower
than their estimates in the fall survey.
Public utilities in the area also scaled down
their 1970 capital outlays after the fall survey.
But, unlike the manufacturing group, they sharply
raised their spending plans for 1971 which, at the

+ 6

TOTAL

time of the fall 1970 survey, had provided for
virtually no increase in spending above the 1970
level.
Within

the

manufacturing sector, spending

plans for 1971 d iffer considerably between the
hard goods and the soft goods industries. Most
major industries in the hard goods group, except

* Includes industries not listed separately to avoid
disclosure.
t Combined in order to preclude disclosure o f individual
establishment data.
Source: Federal Reserve Bank o f Cleveland

machinery, plan to spend more in 1971 than in
1970, while spending reductions predominate in
the soft goods group.
For 1972, the outlook fo r increased invest
ments appears favorable among both manufac
turing and public utilities firms. Manufacturers as a

the spring 1971 survey expect virtually no change

group anticipate a 23-percent rise in capital

in the

level o f spending for new plant and

spending, in which all major industries in both the

equipment in 1971, compared w ith their actual

durable and nondurable goods groups, w ith the

spending in 1970. Public utilities in the area, on

exception of the paper industry, are expected to

the other hand, plan to spend 40 percent more in

share. Public utilities also plan to invest a substan

1971 than in 1970 (see Table III).

tially greater amount in new plant and equipment

revealed

the

most

recent

survey,

Cincinnati manufacturers have lowered their sights

in 1972 than in 1971.
The proportion of total spending by manufac

since the date of the previous survey in the fall of

turers that is earmarked for new structures is

1970, when they expected to raise capital invest

expected to remain the same in 1971 as in 1970,

ments in 1971 7 percent above the 1970 level. In
the interval between the two surveys, one-half of
the

manufacturing firms participating in both

surveys revised their spending plans fo r 1971
6

In particular, one project reported in the fall 1970
survey, involving several m illio n dollars fo r expansion and
m odernization o f a plant in the prim ary and fabricated
metals group, apparently was cancelled or postponed.

JUNE 1971
TABLE IV

turing capacity and restore that share to its 1970

Capital Spending by Cincinnati Area Firms
(Spring 1971 Survey)
Percent Distribution of Total Spending by Type*
(Between Structures and Equipment and
Between Expansion and Modernization)

size of 60 percent.

S tru ctu re s!

Expansion^

1970 1971 1972 1970 1971 1972
M A N U F A C T U R IN G
Durable goods§
Primary and
fabricated
metals#
Machinery
Electrical
equipm ent
Transportation
equipment
Nondurable goods §
Food
Paper
Printing and
publishing
Chemicals
PUBLIC U T IL IT IE S

the preceding six months. As was the case at the
time o f the previous survey, almost three out of
every ten manufacturing firms that replied to the
question

adequacy

of present production

60%
34

51%
27

60%
23

2
9

17
46

3
21

3
26

firms indicated adequate facilities.

financing capital spending from

37 - - 0 19
36
16
23
10
10

n.a.
72
46
15

n.a.
62
32
40

n.a.
75
56
32

21%
24

27%
8

11
30

4
1

20%
24

The latest survey revealed no significant change
in manufacturers' capacity utilization rates during

facilities in the spring 1971 survey reported too
much capacity, and about six out of every ten

26
17
21
26

Replies

the

firms—including

few

question

methods

manufacturing

nationwide corporations—

suggest improved prospects for internal financing
of capital outlays in 1971 and 1972. Nine out of
every ten responses indicate that respondents plan

16
16
39

26
20
45

6
42
51

52
82
45

27
73
54

37
83
54

27%

31%

38%

54%

53%

57%

the share of total spending to be financed from

n.a. Not available.
* Based on ly upon returns in which these breakdowns
were supplied.
t Spending fo r equipm ent equals 100 percent less the
percent shown fo r structures.
^Spending fo r m odernization equals 100 percent less the
percent shown fo r expansion.
§ Includes industries n o t listed separately to avoid
disclosure.
#C om bined in order to preclude disclosure of individual
establishment data.

internally generated funds by responding manufac

TOTAL

Source: Federal Reserve Bank o f Cleveland

to use internal sources of funds exclusively, a
larger proportion than in 1970. Correspondingly,

turers is expected to rise from about 85 percent in
1970 to 95 percent in 1971 and even higher in
1972.

PITTSBURGH AREA
The 1971 outlook for capital spending by
business

firms

metropolitan

in
area

the

four-county

improved

Pittsburgh

the

interval

between the two surveys, from the fall of 1970 to
the spring of 1971. Manufacturing firms partici
about $1 out o f every $5 (see Table IV). That

pating in the fall survey expected to spend 13

proportion should rise in 1972 to more than $1 in

percent less fo r new plant and equipment than in

every $4, as several producers of nondurable

1970, while public utilities and firms in selected

goods, particularly in the chemical industry, have

other nonmanufacturing industries were planning

scheduled

The

to increase their capital investments by 16 percent

pickup in new plant construction in 1972 w ill

over 1970. According to the most recent survey,

result in a reversal of the decline in the share of

Pittsburgh area manufacturing concerns now plan

total outlays designated for expansion of manufac

to reduce their spending in 1971 by only 7

sizable

construction

projects.

ECONOMIC REVIEW

TABLE V

in the transportation industry, as the previous

Capital Spending by Pittsburgh Area Firms
(Spring 1971 Survey)
Year-to-Year Percent Changes

survey had already indicated.

1970 (actual)
to
1971 (planned)
M A N U F A C T U R IN G
Durable goods*
Stone, clay.
and glass
Primary metals
Fabricated
metals
Machinery
Electrical
equipm ent
Nondurable goods*
Food
NONM ANUFAC
T U R IN G
Transportation
Public u tilitie s
Retail trade

TOTAL

+11 %

* Includes industries
disclosure.

1971 (planned)
to
1972 (planned)

reduction in spending for the second consecutive

36
+ 43

-2 6
-2 0
+60

+ 18
45
—
1

year.

40
16

Within the nonmanufacturing group, capital
investment in 1972 w ill rise at a high rate in the
transportation industry, but is expected to drop

back in public utilities and trade. This w ill leave
total outlays by the group in 1972 virtually at the

1
+128
—
20
- 55

+19
+ 61
+ 6
-6 1

be due solely to expected higher spending by
while producers o f soft goods as a group expect a

-1 3
+23

facturing firms as a group. The improvement w ill
producers of hard goods (notably primary metals),

+ 8%
+ 18

7%
5

-5 1
+ 7

not

For 1972, an 8-percent rise over the 1971 level
of spending is expected by Pittsburgh area manu

—

listed

separately

1971 level.
Spending fo r

1971 w ill

continue to account for almost 30 percent of total

2%
to

new structures

capital spending by participating Pittsburgh area
avoid

manufacturing firms. The proportion is expected
to drop to about 20 percent in 1972, as only a few

Sources: University of Pittsburgh and Federal
Bank o f Cleveland

Reserve

large new construction projects appear to be
scheduled

percent, while nonmanufacturing firms expect a

fo r

1972, except in the fabricated

metals industry (see Table VI). Among nonmanu

19-percent increase in their capital outlays for

facturing firms, the proportion of total spending

1971 (see Table V).
Some individual firms among the participants

designated for new structures is expected to rise in
both 1971 and 1972.

of both surveys curtailed their spending plans for

The share of total outlays used by manufac

1971 between the two survey dates, but a slightly

turing concerns to expand productive capacity is

larger number o f firms made upward revisions in

expected to increase from about one-third in 1970

their 1971 plans. A t the same time, however, 1970

to almost one-half in 1972. The primary and

outlays were kept below the level planned in the

fabricated

fall of 1970 by a predominant number of respon

sustaining the high proportion of spending for

dents.

expansion. Public utilities w ill also continue to use

The expected reduction in spending in 1971 is
greater

among

producers

soft goods

metal

industries

particular

are

a large share of total spending to expand their

(20

services.

percent) than o f hard goods (5 percent), while the

Less

than

two

out o f every three firms

expected rise in spending by nonmanufacturing

responding to the question concerning adequacy

firms reflects especially large increases in outlays

of manufacturing facilities considered their present

JUNE 1971
TABLE VI

much capacity and two-thirds considered their

Capital Spending by Pittsburgh Area Firms
(Spring 1971 Survey)
Percent Distribution of Total Spending by Type*
(Between Structures and Equipment and
Between Expansion and Modernization)

capacity adequate.

S tructures!

Expansion $

1970 1971 1972 1970 1971 1972
M A N U F A C T U R IN G
Durable goods §
Stone, clay.
and glass
Primary metals
Fabricated
metals
Machinery
Electrical
equipm ent
Nondurable goods §
Food
NONM ANUFAC
T U R IN G
Transportation
Public utilitie s
Retail trade
TOTAL

28%
28

29%
30

21%
22

32%
31

38%
37

48%
50

31
17

10
19

9
22

26
17

45
22

42
54

61
25

70
39

57
7

73
32

71
62

56
48

12
28
5

10
22
4

6
2
5

13
42
22

18
45
25

16
29
23

20
19
21
#

22
32
17
#

41
69
30
#

39
21
69
#

63
63
63
1

63
57
73
1

23%

24%

35%

36%

52%

56%

Four out of every five manufacturing firms
answering the question on methods of financing
expect to finance their capital investments entirely
from internal sources of funds in 1971 and in
1972, the same proportion as in 1970. In absolute
dollar totals, however, the rise in the proportion of
internally-financed capital investments,from below
70 percent in 1970 to an expected 90 percent in
1972, indicates expectations o f renewed growth of
internal funds in 1971 and 1972.

CONCLUDING COMMENTS
Capital spending in the nation, as indicated by

* Based only upon returns in which these breakdowns
were supplied.
t Spending fo r equipm ent equals 100 percent less the
percent shown fo r structures.
| Spending fo r m odernization equals 100 percent less the
percent shown fo r expansion.
§ Includes industries n o t listed separately to avoid
disclosure.
#Less than 1%.

the most recent quarterly surveys, is not expected
to resume a vigorous pace in 1971. While in some
parts

the

economy—public

example—spending

w ill

increase

utilities,

for

significantly,

overall spending is only expected to keep pace
with prices; and spending in the manufacturing
sector is not expected to come up to the level of
1970.
Aside from differences in the relative size of
changes in spending, capital outlays in the three
areas o f the Fourth D istrict are in line w ith the

Sources: University o f Pittsburgh and Federal Reserve
Bank o f Cleveland

national pattern. Manufacturing firms in the three
areas not only reduced their actual 1970 outlays,

capacity about adequate, while nearly one in every

but also their previous spending plans for 1971,

three firms reported "more than needed" capacity.

which are now below the 1970 spending levels.

These proportions suggest some deterioration of

Public utilities in the three areas expect a con

utilization rates since the fall of 1970 when only

tinued rise in capital investments this year, as they

one-fifth of the responding firms reported too

do nationwide.

ECONOMIC REVIEW

CONSUMER INCOME, SPENDING, AND SAVING,

1960-1970
During
income,

the

1960-1970

spending,

and

period,

saving

consumer

approximately

doubled in current dollar terms and continued to

PERSONAL INCOME AND CONSUMER
PURCHASING POWER
Personal income may be broadly defined as

display their generally stable long-term interrela

current income

tionships. Consumer spending accounted for about

persons. It is measured on a before-tax basis as the

62 to 64 percent of total spending in the economy

sum of wages, salaries and other labor income,

and fo r

90 to 93 percent of

proprietors' income, rental income, dividends and

consumer after-tax income. Despite this apparent

interest, and transfer payments, minus personal

stability

contributions fo r social insurance (see Table I).

approximately

in the relationships between income,

from

all

sources received by

spending, and saving, changes have occurred in

During the 1960-1970 period, personal income

recent years in the sources of consumer income

increased nearly tw ofold, or at an average annual

and the nature of consumer purchases. This article

rate of 7.2 percent. On a year-to-year basis, the

reviews

recent

trends

consumer

income,

spending, and saving and discusses the most
s ig n ific a n t

changes

that

occurred

For purposes o f national income accounting, private

during

trust funds and private health and welfare funds are

1960-1970. These changes include: (1) an almost

classified as "persons." "O th e r labor incom e" includes

continuous decline in the share of total personal
income derived from proprietors' income and an
appreciable increase in the proportion of income
resulting from transfer payments; (2) a marked

compensation fo r injuries, em ployer co n trib u tio n s under
private pension and related programs, and other items
such as pay o f m ilita ry reservists and directors' fees.
"P roprietors in co m e " is the income o f unincorporated
enterprises.

"Transfer paym ents" include benefit pay

ments made under government social security, unem ploy

slowing in recent years in the rates of growth of

ment and veterans programs, and miscellaneous payments

both

by business, including consumer bad debts. It should also

real disposable personal income and real

aggregate

consumer

purchasing

power;

(3)

continuation of the postwar decline in the ratio of

be noted th a t personal income includes certain nonmone
tary items such as im puted rent, interest, food, and fuel.
For more complete d e fin itio ns o f terms and a discussion

total consumer spending to disposable personal

of the techniques o f measurement, see Supplem ent to

income reflecting reduced spending on nondurable

Econom ic Indicators, prepared fo r the Subcom m ittee on

goods that more than offsets increased spending

Economic Statistics o f the J o in t Econom ic Com m ittee by
the Com m ittee S ta ff and O ffice o f Statistical Standards,

on durable goods; and (4) a concomitant rise in

Bureau o f the Budget, (Washington, D. C.: U. S. Govern

the rate o f personal saving.

ment Printing O ffice, 1967).

JUNE 1971

growth of personal income generally reflected the

percent of total personal income. This continued

pace of overall economic activity. For 1960 and

stability was partially due to the fact that the

1961, the rate of growth in personal income

rapid increase of earnings in 1970 was largely

averaged only 4.3 percent. In 1967 and 1970, the

offset by reductions in the length of the average

growth rates slowed from approximately 9 percent

workweek

to about 7 percent. In 1970, however, the slowing

employment—particularly

and

slower

reduced

rates

in the manufacturing

in the rate of growth of personal income was

and construction industries. Income from transfer

cushioned by increases in social security benefits

payments, however, has increased as a share of

and Federal employees' pay. Combined, these

total personal income in recent years, particularly

increases boosted personal income by nearly $7

in 1967 and 1970. These increases reflected both

billion. Other factors that helped to offset weak

the automatic stabilizing effects of unemployment

nesses in the growth of personal income in the

compensation, which tend to increase as economic

private sector during
mental

pay

1970 included a supple

increase for

activity declines, as well as enlarged average social

postal workers and

security benefits. The category of rental income,

increases in benefits fo r retired Federal workers

dividends, and interest income also increased on

and railroad retirement system pensioners.

balance during 1960-1970, although since 1965,

Despite the slowing o f the personal income

this category has shown little change in its relative

growth rates in 1967 and 1970 and the sharp rise

importance as a source of income. The largest

in personal contributions for social insurance since

relative change among the sources of personal

1966, there has been a significant increase in the

income occurred

in proprietors' income. Since

overall rate of growth o f personal income in recent

1961, proprietors' income has shown an almost

years. During 1965-1970, personal income grew at

continuous decline as a percent of total personal

an average annual rate of 8.2 percent, compared

income.

w ith 6.1 percent during 1960-1965. The rather

Although the effects of these changes in the

sizable gain in recent years was due primarily to

sources of income are not certain, they have

increases in the components o f wages, salaries and

probably contributed to some extent to changes in

other labor income and the income from transfer

the behavior and nature of consumer expenditures.

payments. During 1965-1970, wages, salaries and

For purposes of evaluating trends in consumer

other labor income increased at an average rate of

spending, however, disposable personal income is

8.6 percent, compared w ith 6.0 percent during

usually considered to be a more directly related

1960-1965, while the average rate of growth of

concept than personal income.

than

Disposable personal income may be briefly

As a share of total personal income, however,

defined as personal income minus personal tax and
o
nontax payments. Thus, the growth pattern of

income

from

transfer

payments

doubled during the most recent period.
the category of wages, salaries and other labor
income has increased only moderately in recent
years (see Table II). Despite the rapid advance of

"Personal tax and nontax paym ents” include income

taxes and other taxes not deductible as business expense,

hourly earnings in 1970, wages, salaries and other

and other general governm ent revenues received from

labor

individuals.

income

remained

relatively

stable as a

Ibid., p. 14.
11

ECONOMIC REVIEW
disposable personal income reflects changes in the

inclusive measure of the amount o f funds available

tax laws as well as changes in the sources of

for consumption, attempts have been made to

personal income and the pace of overall economic

devise alternative

activity. For example, the Revenue A ct of 1964

chasing power. One such measure developed by

reduced personal tax liabilities by more than $6

The Conference Board estimates aggregate con

billion in that year, thereby bolstering disposable

sumer purchasing power as the sum of disposable

personal income. The rate o f growth o f disposable

personal income, net household credit, and credits

personal income in current dollars jumped from 5

from government insurance and other adjustments

percent in 1963 to a rate of more than 8 percent

(see Table IV ).3 Net household credit is defined as

measures o f consumer pur

in 1964 (see Table III). Conversely, the Revenue

net changes in outstanding consumer debt—that is,

and Expenditure Act of 1968 increased tax liabili

the difference between extensions and repayments

ties and held down the gains in disposable personal

of consumer instalment credit, consumer non-

income by varying amounts in 1968 and 1969.

instalment credit, household mortgage credit, and

Nevertheless, the average annual growth rate of

other household credit. The category of credits

disposable personal income during the 1965-1970

from government insurance and other adjustments

period (7.7%) was considerably higher than during

includes government life insurance and retirement

the 1960-1965 period (6.2%).

fund transactions w ith households and capital

In real terms (1958 dollars), however, the
average annual

rate of growth

of disposable

gains dividends

paid

investment funds to

households. Viewed in this manner, the growth of

personal income was significantly slower during

consumer purchasing power during

the

1960-1965 period (5.0%). The slowing in the rate

followed the same general pattern as the growth in
disposable personal income. During 1965-1970,

of growth of real disposable personal income

the average annual rate of growth of aggregate

1965-1970 period

(4.0%) than during the

1960-1970

coincided w ith the most recent period of inflation.

consumer purchasing power in terms of current

From a peak of 7.0 percent in 1964, the growth

dollars

was 7.0 percent, compared

w ith

6.5

rate o f real disposable personal income substan

percent fo r the 1960-1965 period. In real terms,

tially declined to a rate of 2.5 percent in 1969. In

however, the average annual rate of growth in

1970, the growth rate edged back up to 3.6

aggregate consumer purchasing power was only 3.4

percent, reflecting prim arily the reduction and

percent during

expiration of the surtax. The record $53.2 billion

percent for the 1960-1965 period. In 1969 and

1965-1970, compared w ith 5.4

increase in current dollar disposable personal
income in 1970 more than offset the continued
strong

advance o f

prices.

Despite this slight

rebound in the rate of growth of real disposable

For a more complete discussion o f “ Aggregate Consumer

Purchasing Pow er," see Discretionary Spending, Technical
Paper Number 17, a research report o f The Conference

personal income in 1970, the rate of growth of

Board, 1966, pp. 6-10. It should be noted th a t there are

consumers' real purchasing power as measured by

conceptual differences among the com ponent categories

real disposable personal income has been generally
declining in recent years.
Since disposable personal income is not an all
12

o f "aggregate consumer purchasing p o w e r." For example,
disposable personal income represents funds available fo r
spending, w hile "n e t household c re d it" represents actual
spending.

JUNE 1971

1970, the particularly slow growth o f aggregate

Instead, consumers reduced their rate of personal

real

saving in late 1968 and offset the effect of the

consumer

purchasing

power

primarily

reflected sharp declines in net household credit

higher tax payments by further reducing their

and an acceleration

saving rate in 1969. This adjustment in personal

in consumer prices. The

sluggish growth of consumer loan extensions and a

saving enabled consumers to continue to increase

continued high rate of loan repayments through

their spending at very high rates in 1968 and 1969.

out 1970, however, suggest that the sharp decline

In 1970, the rate of growth in consumer spending

in net household credit in 1970 may have been
due more to depressed consumer sentiment and a

slowed appreciably, despite the large increase in
current dollar disposable income. This sluggishness

lack of demand fo r consumer type credit than to

in consumer spending in 1970 was probably due,

limitations on the amount o f potential purchasing

in part, to the nature of the increases in personal

power available from that source.

income and disposable income. Sudden increases

On a per capita basis, disposable personal

in income—such as those that occurred in 1970 as

income and aggregate consumer purchasing power

the result o f the lump sum payments of retroactive

social

current

dollar terms

increased $1,400 or

security

and

Federal

Government pay

approximately 70 percent during 1960-1970 (see

raises—frequently result in a temporary surge in

Table V). In real terms, however, the increases

saving and a more gradual rise in spending. Other

were only about half as large. Perhaps of greater

factors such as employment prospects can also

significance fo r purposes o f evaluating consumer

delay or reduce the spending response.

spending is the fact that aggregate consumer

Much o f the current dollar increase in consumer

purchasing power in real terms and on a per capita

spending during recent years reflects strong gains

basis has shown virtually no increase during the

in purchases of nondurable goods and services (see

past two years.

Chart 1). During 1965-1970, the average growth

CONSUMER SPENDING

goods and services increased approximately two

rates of current dollar outlays fo r nondurable
The

growth

1960-1970

generally

consumer spending during
followed

the growth

disposable personal income (see Table VI). During

percentage points. In real terms, however, the
average annual growth

rates o f spending for

nondurable goods and services remained essentially

1965-1970, total personal consumption expendi

unchanged between the two periods 1960-1965

tures increased at an average annual rate o f 7.3

and 1965-1970.

percent, compared w ith a rate of 5.9 percent
during 1960-1965. The more rapid rate of growth
in

spending

apparently

during

the

most

recent

reflected

the

surge

The rate o f growth of expenditures fo r durable
goods

was

very

volatile

during

the

entire

period

1960-1970 period. This overall vo la tility and the

disposable

recent slowing in such outlays was due largely to

personal income that resulted from the tax cut in

fluctuations in automobile purchases. The growth

1964 and the acceleration in economic activity.

of durable good purchases excluding automobiles

The imposition o f the surtax in 1968, however,

was considerably more stable than the growth of

does not appear to have had an appreciable, or at

total durable goods expenditures. Excluding autos,

least not an immediate, effect upon spending.

durable goods purchases in current dollars grew

Chart 1.
CHANGES IN PERSONAL CONSUMPTION EXPE N D ITU R E S A ND COMPONENTS

PERSONAL CONSUMPTION EXPE N D ITU R E S
CURRENT DOLLARS
CONSTANT DOLLARS

'62

1960

'64

III
Kill
'68

'66

f
1960

'62

'64

. I I u

I. p. i i i i i i i
2.0
0.0

II
'68

'64

1960

'70

'66

. I. I, i

II I I I I II II II II II Ii
'62

1960
LAST EN T R Y :

'64

1970

SOURCE: U. S. DEPARTM ENT OF COMMERCE

'66

'68

'70
ANNUAL

JUNE 1971
slightly

rapidly

during

1965-1970 than

pared w ith 92.2 percent during 1960-1965.4 As a

during 1960-1965. In real dollars, however, there

percent o f aggregate purchasing power, the decline

was a marked decline during the most recent

was

period, particularly in 1967, 1969, and 1970.

1960-1965 to 85.5 percent during 1965-1970.

from

averages

86.2

percent

during

Although spending on nondurable goods in

The decline in the ratio of personal consump

current dollars grew rapidly during recent years, it

tion expenditures to disposable personal income

actually declined, in terms of both current and

(in constant dollars) was due prim arily to an

constant dollars, relative to total personal con

almost continuous decline in nondurable goods as

sumption expenditures (see Chart 2). That is, less

a percent of disposable personal income (see Chart

of the total consumer dollar was spent for nondur

3). From a high o f 44 percent in 1960, nondurable

able goods. During 1960-1965, nondurable goods

goods purchases declined as a percent of dispos

purchases

fo r an average o f 45.4

able income to a low of only about 39 percent in

accounted

percent of total purchases in terms of current

1970. Outlays fo r services, on the other hand,

dollars and 46.3 percent in terms of constant

generally increased as a percent of disposable

dollars. These percentages declined, however, to

income, particularly during 1967-1970. Durable

43.5 percent and 44.0 percent in current and

goods purchases generally fluctuated on an upward

constant dollars, respectively, during 1965-1970.

trend w ithin a range o f 12 to 16 percent of

These declines in nondurable goods purchases

disposable personal income during 1960-1970.

reflected a marked slowing in the rate of growth of
spending for food and beverages relative to the

SAVING

growth of total personal consumption expendi
tures.

Personal saving is equal to disposable personal
income less personal outlays—the sum of personal

In terms of current dollars, the decline in the

consumption expenditures, interest paid by con

relative size o f nondurable goods purchases during

sumers, and transfer payments to foreigners. As

1965-1970 was offset by some increase in durable

such, it is a residual that represents the change in

goods purchases and a larger increase in outlays for

net worth of persons. It may further be viewed as

services. Between 1960 and 1970, the share of

the acquisition o f financial claims (such as cash

total consumer purchases attributable to services

and deposits, securities, and reserves of life insur

rose from less than 40 percent to more than 42

ance companies and noninsured pension funds)

percent. In real terms, however, the decline in the
relative size o f outlays for nondurable goods
during

1965-1970 was offset entirely

increase in durable goods purchases.
Total personal consumption expenditures as a

4
The relationships between to ta l personal consum ption
expenditures and disposable personal income (in 1958
dollars) were estimated by least-squares regression fo r the
periods 1950-1960 and 1960-1970 to determ ine if there

percent of both disposable personal income and

had been any

aggregate consumer purchasing power have been

between the tw o periods. The results suggest a possible

declining slightly in recent years (see Table V II).

downward sh ift o f the entire consum ption fu n ctio n . The

During 1965-1970, consumers spent an average of
90.8 percent o f disposable personal income, com

estimates

fo r

noticeable

the

change in the relationships

1950-1960

period,

were

PCE =

.9169DPI + .0020; and, fo r the period 1960-1970, PCE =
.9134DPI - .0049.

Chart 2.
COMPONENTS OF PERSONAL CONSUMPTION EX PE NDITURES AS A PERCENT OF T O T A L
PERCENT
20.0

18.0

16.0

14.0

12.0
10.0
8.0
6.0

DURABLE GOODS (LESS

i ll ll il ll il II II II II I
1960

'64

'66

'68

'70

1960

'64

'66

'68

'70

50.0
48.0

46.0

44.0

42.0

40.0
44.0

42.0

40.0

38.0
36.0

111111Ii li (i ll

1960
LAST EN T R Y :

'62

'64

1970

SOURCE : U. S. D EPARTM ENT OF COMMERCE

'66

'68

'70
ANNUAL

Chart 3.
THE R E LA TIO N S H IP BETWEEN PERSONAL CONSUMPTION EXPENDITURES
AN D DISPOSABLE PERSONAL INCOME 1960-1970 (1958 D O LLAR S )
PERCENT
93.0

T O T A L PERSONAL CONSUMPTION E X P E N D ITU R E S /
DISPOSABLE PERSONAL INCOME

92.0

91.0

_czz2za_

90.0
1960

'62

'64

18.0

'66

'68

'70

D U R A B LE GOODS/DISPOSABLE PERSONAL INCOME

16.0

14.0

12.0
1960
45.0

'62

'64

'66

'68

'70

N O N D U R A B LE GOODS/DISPOSABLE PERSONAL INCOME

43.0

41.0

39.0
37.0
SERVICES/DISPOSABLE PERSO NAL INCOME

36.0

35.0

34.0
1960
'62
'64
'66
'68
'70
LAST EN T R Y : 1970
ANNUAL
SOURCES: U. S. DEPARTM ENT OF COMMERCE A N D F E D E R A L RESERVE B A N K OF C L E V E L A N D

ECONOMIC REVIEW
less the net increase in indebtedness, plus the
acquisition of physical assets net of capital con
sumption allowances.5

SUMMARY
The growth o f personal income during the
period

1960-1970 was characterized by rapid

During 1960-1970, the current dollar value of

advances in wages, salaries and other labor income

personal saving increased nearly threefold (see

and a sharp acceleration in transfer payments. In

Table V III). When measured as average annual

terms of the composition

rates of growth, however, personal saving increased

personal

slightly from 10.8 percent during 1960-1965 to

changes were a decline in proprietors' income and

12.1 percent during 1965-1970. In real terms the

a sharp rise in income from transfer payments.

of the growth of

income, however, the most apparent

average rate of growth in personal saving declined

Despite the rapid growth in both pre-tax and

from 9.7 percent during 1960-1965 to 8.3 percent

after-tax consumer income, the growth of real

during 1965-1970.

disposable personal

The fact that in recent years personal saving has

income and aggregate con

sumer purchasing power has slowed markedly in

risen faster than disposable personal income has

recent years. On a per capita basis, the slowing in

resulted in an appreciable increase in the saving

the rate of growth o f purchasing power has been

rate. Personal saving as a percent of disposable

even more pronounced.

personal income rose from an average of 5.5

During

the

1960-1970

period,

consumer

percent during 1960-1965 to 6.6 percent in the

spending did not keep pace w ith the growth of

1965-1970 period. In 1970, the relatively large

consumer income.

increase in disposable personal income, accom

saving rate has trended upward. The decline in the

panied by only moderate growth in consumer

ratio between spending and income reflected an

purchases, pushed

almost continuous decline throughout the period

personal saving close to a

20-year record rate.

Consequently, the personal

in nondurable goods purchases, relative to dispos
able personal

income, that more than offset

increases in the ratio of spending fo r durable goods
5
Supplem ent to Econom ic Indicators, 1967#op. cit.

and services.

1960-1970
(Billions of Dollars and
Percent Change from Previous Year)

Personal
Year ______Income

_
~

Wages, Salaries, and
Other Labor Income

Proprietors'
Income_____ +

Rental Income,
Dividends, and
Personal
Personal Interest
Income From
C ontributions
_____ Income_______ + Transfer Payments ~ fo r Social Insurance

(Bit. o f $) (% Change) (Bil. o f $) (% Change) (Bil. o f $) (% Change) (Bil. o f $) (% Change) (Bil. o f $) (% Change) (Bil. o f $) (% Change)
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970

$401.0
416.8
442.6
465.5
497.5
538.9
587.2
629.3
688.7
748.9
801.0

4.6%
3.9
6.2
5.2
6.9
8.3
9.0
7.2
9.4
8.7
7.0

$282.8
290.8
310.0
326.0
350.3
377.6
415.2
445.4
489.7
536.6
570.5

4.9%
2.8
6.6
5.2
7.5
7.8
10.0
7.3
9.9
9.6
6.3

$46.2
48.4
50.1
51.0
52.3
57.3
61.3
62.1
64.1
66.9
67.6

-0 .9 %
4.8
3.5
1.8
2.5
9.6
7.0
1.3
3.2
4.4
1.0

$ 52.7
54.8
59.6
65.0
70.6
77.5
84.4
90.5
98.6
106.3
113.1

7.8%
4.0
8.8
9.1
8.6
9.8
8.9
7.2
9.0
7.8
6.4

$28.5
32.4
33.3
35.3
36.7
39.9
44.1
51.8
59.0
65.1
77.6

7.1%
13.7
2.8
6.0
4.0
8.7
10.5
17.5
13.9
10.3
19.2

$ 9.3
9.6
10.3
11.8
12.5
13.4
17.7
20.5
22.8
26.0
27.8

17.7%
3.2
7.3
14.6
5.9
7.2
32.1
15.8
11.2
14.0
6.9

Average Annual Rates of Change During Period:
1 9 6 0 - 1970
1 9 6 0 - 1965
1 9 6 5 - 1970

7.2%
6.1
8.2

7.3%
6.0
8.6

3.9%
4.4
3.4

7.9%
8.0
7.9

10.5%
7.0
14.2

11.6%
7.6
15.7

NOTE: Components may not add to totals because o f rounding.
Source: U. S. Departm ent o f Commerce

1960-1970
(Percent o f Total)

Year

Personal
Income

1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970

100.0%
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0

Wages,
Salaries,
and Other
Labor Income

Proprietors'
Income

Rental Income,
Dividends, and
Personal Interest
Income

Income From
Transfer
Payments

70.5%
69.8
70.0
70.0
70.4
70.1
70.7
70.8
71.1
71.7
71.2

11.5%
116
11.3
11.0
10.5
10.6
10.4
9.9
9.3
8.9
8.4

13.1%
13.1
13.5
14.0
14.2
14.4
14.4
14.4
14.3
14.2
14.1

7.1%
7.8
7.5
7.6
7.4
7.4
7.5
8.2
8.6
8.7
9.7

70.6%
70.1
70.9

10.3%
11.1
9.6

14.0%
13.7
14.3

8.0%
7.5
8.4

Average During Period:
1 9 6 0 - 1970
1 9 6 0 - 1965
1 9 6 5 - 1970

NOTE: Personal con trib u tio n s fo r social insurance have n o t been deducted from
the com ponent sources o f personal income; therefore, the sums o f the
components o f personal income are greater than the to ta l.
Source: U. S. Departm ent o f Commerce

TABLE HI
Disposable Personal Income
1960-1970
(Billions of Dollars and
Percent Change from Previous Year)

Year

1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970

Personal Tax
and
Nontax Payments

Personal
_______ Income_______ ~
(Bil. of $)

(% Change)

(B il. of $)

$401.0
416.8
442.6
465.5
497.5
538.9
587.2
629.3
688.7
748.9
801.0

4.6%
3.9
6.2
5.2
6.9
8.3
9.0
7.2
9.4
8.7
7.0

$ 50.9
52.4
57.4
60.9
59.4
65.7
75.4
83.0
97.5
117.3
116.3

Disposable
Personal Income
(Current $)

_
~

(% Change)

(Bil. o f $)

10.2%
2.9
9.5
6.1
- 2.5
10.6
14.8
10.1
17.5
20.3
- 0.9

$350.0
364.4
385.3
404.6
438.1
473.2
511.9
546.3
591.2
631.6
684.8

Disposable
Personal Income
(1958 $)

(% Change)
3.8%
4.1
5.7
5.0
8.3
8.0
8.2
6.7
8.2
6.8
8.4

(B il. of $)
$340.2
350.7
367.3
381.3
407.9
435.0
458.9
477.5
499.0
511.5
529.8

(% Change)
2.2%
3.1
4.7
3.8
7.0
6.6
5.5
4.1
4.5
2.5
3.6

Average Annual Rates of Change During Period:
1 9 6 0 - 1970
19 6 0 - 1965
1 9 6 5 - 1970

7.2%
6.1
8.2

8.6%
5.2
12.1

6.9%
6.2
7.7

4.5%
5.0
4.0

NOTE:: Components may not add to totals because o f rounding.
Source : U. S. Departm ent o f Commerce

TABLE IV
Aggregate Consumer Purchasing Power
1960-1970
(Billions of Dollars and
Percent Change from Previous Year)

Disposable
Personal
Income

Year

Net
Household
Credit

Credits From
Government
Insurance
and Other
Adjustm ents

Aggregate
Consumer
Purchasing
Power
(Current $)

Aggregate
Consumer
Purchasing
Power
(1958 $)

(Bil. o f $) (% Change) (Bil. o f $) (% Change) (Bil. o f $) (% Change) (Bil. o f $) (% Change) (Bil. o f $) (% Change)
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970

$350.0
364.4
385.3
404.6
438.1
473.2
511.9
546.3
591.2
631.6
684.8

3.8%
4.1
5.7
5.0
8.3
8.0
8.2
6.7
8.2
6.8
8.4

$17.8
16.9
21.0
27.1
28.1
30.2
23.6
23.7
34.8
30.7
20.4

-1 9 .1 %
- 5.3
24.3
29.0
3.7
7.5
- 2 1 .9
0.4
46.8
- 1 1 .8
- 3 3 .6

$ 3.7
4.0
4.1
4.2
4.8
5.7
6.6
7.0
8.4
8.7
10.3

8.8%
8.1
2.5
2.4
14.3
18.8
15.8
6.1
20.0
3.6
18.4

$371.5
385.3
410.5
435.9
470.9
509.2
542.3
577.1
634.4
671.0
715.5

2.4%
3.7
6.5
6.2
8.0
8.1
6.5
6.4
9.9
5.8
6.6

$359.6
368.4
388.0
406.6
438.5
468.0
486.4
504.5
535.4
543.3
553.4

0.7%
2.4
5.3
4.8
7.8
6.7
3.9
3.7
6.1
1.5
1.9

Average Annual Rates o f Change During Period:
1 9 6 0--1970
1 9 6 0--1965
19 6 5 --1970

6.9%
6.2
7.7

1.4%
11.1
- 7.6

10.8%
9.0
12.5

NOTE : Components may n o t add to totals because o f rounding.
Sources: U. S. Departm ent o f Commerce and The Conference Board

6.8%
6.5
7.0

4.4%
5.4
3.4

TABLE V
Per Capita Income and Purchasing Power
1960-1970
(Dollars and Percent Change from Previous Year)
Per Capita
Disposable Personal Income
Year

(Current $)

(1958 $)

(% Change)
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970

$1,937
1,983
2,064
2,136
2,280
2,432
2,599
2,744
2,947
3,117
3,344

1.7%
2.4
4.1
3.5
6.7
6.7
6.9
5.6
7.0
5.8
7.3

Per Capita
Aggregate Consumer Purchasing Power
(Current $)

(% Change)
$1,883
1,909
1,968
2,013
2,123
2,235
2,331
2,398
2,487
2,525
2,587

(1958 $)

(% Change)

0.1%
1.4
3.1
2.3
5.5
5.3
4.3
2.9
3.4
1.8
2.5

$2,056
2,096
2,199
2,301
2,451
2,617
2,754
2,899
3,163
3,312
3,494

0.8%
1.9
4.9
4.6
6.5
6.8
5.2
5.3
9.1
4.7
5.5

(% Change)
$1,990
2,004
2,078
2,147
2,283
2,405
2,470
2,534
2,669
2,682
2,702

-0 .9 %
0.7
3.7
3.3
6.3
5.3
2.7
2.6
5.3
0.5
0.7

Average Annual Rates o f Change During Period:
1 9 6 0 -1 9 7 0
1 9 6 0 -1 9 6 5
1 9 6 5 -1 9 7 0

5.6%
4.7

3.2%
3.5
3.0

6.6

5.4%
5.0
5.9

3.19
3.9
2.3

Sources: U. S. Departm ent o f Commerce and The Conference Board

TABLE VI
Consumer Spending
1960-1970
(Billions of Dollars and
Percent Change from Previous Year)

Y ear

1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970

Disposable
Personal
________ Income________

Personal
Consumption
Expenditures

(Bil. o f $)

(% Change)

(Bil. o f $)

$350.0
364.4
385.3
404.6
438.1
473.2
511.9
546.3
591.2
631.6
684.8

3.8%
4.1
5.7
5.0
8.3
8.0
8.2
6.7
8.2
6.8
8.4

$325.2
335.2
355.1
375.0
401.2
432.8
466.3
492.1
535.8
577.5
616.7

(% Chan
4.5%
3.1
5.9
5.6
7.0
7.9
7.7
5.5
8.9
7.8
6.8

Interest Paid
by Consumers,
and Personal
Transfer Payments
_
to Foreigners______ “
(Bil. o f $)
$ 7.8
8.1
8.6
9.7
10.7
12.0
13.0
13.9
15.0
16.5
17.9

Personal
Saving

(% Change)

(Bil. o f $)

(% Change)

9.9%
3.8
6.2
12.8
10.3
12.1
8.3
6.9
7.9
10.0
8.5

$17.0
21.2
21.6
19.9
26.2
28.4
32.5
40.4
40.4
37.6
50.2

-1 1 .0 %
24.7
1.9
- 7.9
31.7
8.4
14.4
24.3
-0 - 6.9
33.5

Average Annual Rates o f Change Duri ng Period:
1 9 6 0 -1 9 7 0
1 9 6 0 -1 9 6 5
1 9 6 5 -1 9 7 0

6.9%
6.2
7.7

Source U. S. Departm ent o f Commerce

6.6%
5.9
7.3

8.7%
9.0
8.3

11.4%
10.8
12.1

TABLE V II
Relationships Between Income,
Purchasing Power, and Consumption
1960-1970
Personal Consumption Expenditures
(Current Dollars)

Year

Percent o f
Disposable
Personal
Income

Percent of
Aggregate
Consumer
Purchasing
Power

1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970

92.2%
92.0
92.2
92.7
91.6
91.5
91.1
90.1
90.6
91.4
90.1

87.5%
87.0
86.5
86.0
85.2
85.0
86.0
85.3
84.5
86.1
86.2

Average During Period:
1 9 6 0 -1 9 7 0
1 9 6 0 -1 9 6 5
1 9 6 5 -1 9 7 0

91.5%
92.2
90.8

Sources: U. S. Departm ent
Conference Board

85.9%
86.2
85.5
of

Commerce

and

The

TABLE V III
Personal Saving
1960-1970
(Billions of Dollars and
Percent Change from Previous Year)

Year

_______ Current Dollars______

Percent of
Disposable
Income

1958 Dollars

(Bit. o f $)

(% Change)

(Bil. o f $)

(% Change)

$17.0
21.2
21.6
19.9
26.2
28.4
32.5
40.4
40.4
37.6
50.2

-1 1 .0 %
24.7
1.9
- 7.9
31.7
8.4
14.4
24.3
-0 - 6.9
33.5

$16.4
20.3
20.4
18.6
24.4
26.1
29.1
35.3
34.1
30.4
38.0

-13.2%
23.8
0.5
- 8.8
31.2
7.0
11.5
21.3
- 3.4
-10.9
27.6

4.9%
5.8
5.6
4.9
6.0
6.0
6.3
7.4
6.8
6.0
7.3

9.0%
9.7
8.3

6.1%
5.5
6.6

1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970

Average Annual Rates o f Change During Period:
1 9 6 0 -1 9 7 0
1 9 6 0 -1 9 6 5
1 9 6 5 -1 9 7 0

11.4%
10.8
12.1

* Personal saving divided by im p lic it price d eflator fo r personal consum ption
exnenHitcires
Source: U. S. Departm ent o f Commerce

JUNE 1971

RECENTLY PUBLISHED ECONOMIC COMMENTARIES
OF THE FEDER AL RESERVE BANK OF CL EV EL AND

"Asset Composition at Fourth District Member Banks—1970"
May 24, 1971

"Bank Credit"
May 31, 1971

"Business Economists Reexamine the Outlook for 1971"
June 7, 1971

"Recent Patterns in Corporate Financing"
June 14, 1971

"Federal Agency Borrowing"
June 21, 1971

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Full text of Economic Review (Federal Reserve Bank of Cleveland) : June 1971

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