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[JOINT COMMITTEE PRINT]
87th Congress, 2nd Session
1962
SUPPLEMENT TO
Economic Indicators
HISTORICAL AND DESCRIPTIVE
BACKGROUND
Prepared for the Joint Economic Committee
by the Committee Staff and the
Office of Statistical Standards, Bureau of the Budget
Printed for the use of the Joint Economic Committee
UNITED STATES
GOVERNMENT PRINTING OFFICE
WASHINGTON : 1962
For sale by the Superintendent of Documents, U.S. Government Printing Office, Washington 25, D. C. - Price 65 cents
JOINT ECONOMIC COMMITTEE
(Created pursuant to Sec. 5(a) of Public Law 304, 79th Gong.)
WRIGHT PATMAN, Texas, Chairman
PAUL H. DOUGLAS, Illinois, Vice Chairman
SENATE
HOUSE OF REPRESENTATIVES
RICHARD BOLLING (Missouri)
HALE BOGGS (Louisiana)
HENRY S. REUSS (Wisconsin)
MARTHA W. GRIFFITHS (Michigan)
THOMAS B. CURTIS (Missouri)
CLARENCE E. KILBURN (New York)
WILLIAM B. WIDNALL (New Jersey)
JOHN SPARKMAN (Alabama)
J. WILLIAM FULBRIGHT (Arkansas)
WILLIAM PROXMIRE (Wisconsin)
CLAIBORNE PELL (Rhode Island)
PRESCOTT BUSH (Connecticut)
JOHN MARSHALL BUTLER (Maryland)
JACOB K. JAVITS (New York)
WM. SUMMERS JOHNSON, Executive Director
JOHN R. STARK, Clerk
SUBCOMMITTEE ON ECONOMIC STATISTICS
RICHARD BOLLING, Missouri
THOMAS B. CURTIS, Missouri
WILLIAM B. WIDNALL, New Jersey
WILLIAM PROXMIRE, Wisconsin, Chairman
PAUL H. DOUGLAS, Illinois
J. W. FULBRIGHT, Arkansas
JAMES W. KNOWLES, Economist
Suggested Identification
U.S. Congress, Joint Economic Committee,
1962 Supplement to Economic Indicators,
Government Printing Office, Washington 25, D.C.
ii
LETTERS OF TRANSMITTAL
DECEMBER 26,
1962.
To Members oj ike Joint Economic Committee:
For information of the members of the Joint Economic Committee and others interested there is
transmitted herewith a fifth edition of the Supplement to the Committee's monthly publication Economic
Indicators, containing selected charts and historical tables of the indicator series which are published
monthly, along with a description of the derivation, limitations, and uses of each indicator. These materials
were developed by the Committee staff and the Office of Statistical Standards, Bureau of the Budget, with
the cooperation of the agencies responsible for each series.
There has been continuing widespread interest in having this information available. The historical and
descriptive Supplement to Economic Indicators is used not only by Members of Congress and other users
of Economic Indicators, both within the Government and among the nearly 9,200 private subscribers, but
has also become an important teaching aid in college courses in statistics. It is believed that this new
revision of the original publication will be especially helpful because of the addition of several new series and
tables as well as the historical charts.
WRIGHT PATMAN,
Chairman, Joint Economic Committee.
DECEMBER 21,
1962.
The Honorable WRIGHT PATMAN,
Chairman, Joint Economic Committee,
U.S. Congress, Washington, D.C.
DEAR M R . CHAIRMAN: Transmitted herewith is the 1962 Supplement to the Committee's monthly
publication Economic Indicators prepared in response to the Committee's instructions to the Subcommittee
on Economic Statistics in its annual report filed with the Congress March 7, 1962 (House Report No. 1410,
87th Congress, 2d Session).
A brief explanation of the purpose and content of the Supplement is presented in the Foreword. It might
be helpful to point out for the benefit of persons not familiar with the monthly Economic Indicators that
this is a regular publication printed by the Congress in accordance with Public Law 120, 81st Congress,
1st session, Chapter 237. Economic Indicators was first published by the Joint Economic Committee as a
Committee Print in 1948 to provide its members with information on current economic trends and developments in a concise and graphic form. Knowing that other Members of the Congress, businessmen, farm
leaders, labor organizations, and representatives of the press also sought such information, the Joint Committee at the same time sponsored legislation which later resulted in authorizing publication on a permanent
basis. Economic Indicators is prepared each month for the Joint Economic Committee by the Council of
Economic Advisers.
The monthly Indicators is used widely by schools and libraries as a reference source and has an extensive
circulation of foreign subscribers, covering all major nations of the world. The publication currently has a
list of approximately 9,200 paid subscribers. Economic Indicators is available at 25 cents a single copy or by
subscription at $2.50 per year (foreign, $3.50), from the Superintendent of Documents, Government Printing Office, Washington 25, D.C. The domestic airmail subscription price is $5.40 per year.
iii
Over the years the Joint Committee has welcomed comments directed toward making Economic Indicators
and the Supplement more useful publications. Comments were solicited during a special review of the monthly
Indicators this year and many suggestions were received and considered. Beginning with the November issue
of Economic Indicators, a number of new series have been introduced and new tables added; this 1962 Supplement reflects these changes. Of necessity, materials included have to be limited to those series most widely
used by Members of Congress, executive Government agencies, and others. The Committee policy has
been to publish these data without interpreting them. Interpretations of the data often appear in other
publications of the Committee and Executive agencies.
The development and supervisory work on the first issue of the Supplement was done by the Committee
staff, with descriptions of the series written by members of the staff of the Office of Statistical Standards,
Bureau of the Budget, and tables prepared by Frances James of the Council of Economic Advisers and the
agencies compiling the original data. The 1962 Supplement was prepared under the direction of Raymond
T. Bowman, Assistant Director for Statistical Standards, Bureau of the Budget, by Mrs. Mary Smelker and
others of the staff of the Office of Statistical Standards in consultation with the Council of Economic Advisers
and with the cooperation of the agencies compiling the data.
I wish to express the appreciation of the Subcommittee to the Council of Economic Advisers, the Bureau
of the Budget, and other Government agencies and their staffs who have cooperated so ably and wholeheartedly with the Subcommittee in the development of both the 1962 revision of Economic Indicators and
this Supplement. Their cooperation has been a source of great satisfaction to each Member of the Committee. The monthly Economic Indicators and the biennial Supplement continue to give outstanding testimony to the benefits of this inter-agency collaboration. Mr. Knowles, the economist for the Subcommittee,
has expressed to me particular praise for the long, arduous, hours and exceptional contributions to the success
of these revisions made by Miss James of the Council of Economic Advisers and Mrs. Smelker of the Bureau
of the Budget.
Sincerely,
WILLIAM PROXMIRE,
Chairman, Subcommittee on Economic Statistics.
IV
Foreword
This is the fifth edition of the Supplement to Economic Indicators containing historical data and a
description of each series as well as references to additional technical publications. It shows annual data
for each series in the same tabular form as current data are published monthly in Economic Indicators. The
explanatory text accompanying each series is intended to meet the need for general information which cannot be repeated each month but which is essential for understanding and interpreting the significance of
the current data. The Supplement, along with the current issues of Economic Indicators, also meets a need
of teachers and students for a convenient source of information for keeping up with current economic
conditions and at the same time becoming familiar with basic sources and methods used to provide such
indicators.
The text accompanying each series provides in nontechnical language: a description of the series, an
explanation of how the data are obtained and the series derived, its relation to other series, and its principal
uses and limitations. References are also given to primary publications of the series, sources showing more
detailed data, and publications which contain more complete and technical explanations.
The Supplement was first published in December 1953. It was revised in November 1955, in September 1957, and again in December 1960. In the November 1962 issue of the Economic Indicators, a
number of new series were introduced and several new tables in the international and financial statistics
areas were added. This issue of the Supplement reflects all of those changes. Both text and tables are
brought up to date. The descriptive material gives the sources of data and statistical procedures now
being used in compiling the series. Brief explanations of the methods used in making seasonal adjustments
are also provided.
A more comprehensive guide to the organization of Federal statistics and the basic responsibilities of
the various Federal statistical agencies, as well as brief descriptions of the principal economic and social
statistics series collected by Government agencies, is contained in Statistical Services of the Federal Government, available from the Superintendent of Documents, Government Printing Office.
Gross National Product or Expenditure in 1961 Prices, 1929-61
(Annual data. Gross Private Investment includes net exports of goods and services)
BILLIONS OF DOLLARS
600
500
400
GOVERNMENT PURCHASES
OF GOODS AND
SERVICES iiiili
300
TOTAL GROSS
NATIONAL PRODUCT
200
SOURCE OF DATA: DEPARTMENT OF COMMERCE
Growth of the Labor Force, 1929-61
(Annual data)
MILLIONS OF PERSONS
80
TOTAL LABOR FORCE
70
CIVILIAN LABOR FORCE
CIVILIAN EMPLOYMENT
60
50
40
NONAGRICULTURAL EMPLOYMENT
30
20
WA AGRICULTURAL EMPLOYMENT
1929
1932
1935
SOURCE OF DATA: DEPARTMENT OF LABOR
VI
1938 1941
Contents
TOTAL OUTPUT, INCOME, AND SPENDING
The Nation's Income, Expenditure, and Saving
Gross National Product or Expenditure
National Income
Sources of Personal Income
Disposition of Personal Income
Farm Income
Corporate Profits
Gross Private Domestic Investment
Expenditures for New Plant and Equipment
Page
1
5
9
12
14
16
20
23
26
EMPLOYMENT, UNEMPLOYMENT, AND WAGES
Status of the Labor Force
Selected Measures of Unemployment and Part-Time Employment
Unemployment Insurance Programs
Nonagricultural Employment
Weekly Hours of Work—Selected Industries
Average Hourly and Weekly Earnings—Selected Industries
30
35
37
40
45
47
PRODUCTION AND BUSINESS ACTIVITY
Industrial Production and Production of Selected Manufactures
Weekly Indicators of Production
Nev Construction
New Housing Starts and Applications for Financing
Trade Sales and Inventories
Manufacturers' Sales, Inventories, and New Orders
Merchandise Exports and Imports
U.S. Balance of International Payments
U.S. Exports and Imports of Goods and Services
49
54
58
62
68
73
76
81
82
PRICES
Consumer Prices
Wholesale Prices
Prices Received and Paid by Farmers
86
89
93
MONEY, CREDIT, AND SECURITY MARKETS
Money Supply
Selected Liquid Assets Held by the Public
Bank Loans, Investments, Debits, and Reserves
Consumer and Real Estate Credit
Bond Yields and Interest Rates
Common Stock Prices, Yield, and Earnings
98
100
102
105
109
112
FEDERAL
Federal
Federal
Federal
115
118
122
FINANCE
Budget Receipts and Expenditures
Cash Receipts from and Payments to the Public
Budget, National Income Accounts Basis
vii
Contents—Continued
List of Charts
Page
Gross National Product or Expenditure in 1961 Prices, 1929-1961
Growth of the Labor Force, 1929-1961
Gross National Product or Expenditure, 1947-1962
National Income, 1947-1962
Per Capita Disposable Income, 1947-1962
Farm Income, 1947-1962
Corporate Profits, 1947-1962
Gross Private Domestic Investment, 1947-1962
Expenditures for New Plant and Equipment, 1947-1962
Status of the Labor Force, 1947-1962
Rates of Insured Unemployment under State Programs, U.S., 1949-1962
Employees in Nonagricultural Establishments, 1947-1962
Average Weekly Hours in Selected Industries, 1947-1962
Average Hourly Earnings in Selected Industries, 1947-1962
Industrial Production, 1947-1962
New Construction, 1947-1962
Nonfarm Private Housing Starts, 1947-1962
Retail Sales and Inventories, 1947-1962
Manufacturers' Sales, Inventories and New Orders, 1947-1962
Merchandise Exports and Imports, 1947-1962
U.S. Exports and Imports of Goods and Services, 1947-1962
U.S. Balance of International Payments, 1950-1962
Consumer Prices, 1947-1962
Wholesale Prices, 1947-1962
Prices Received and Paid by Farmers, 1947-1962
Loans and Investments at All Commercial Banks, 1948-1962
Consumer Credit Outstanding, 1947-1962
Bond Yields and Interest Rates, 1947-1962
Common Stock Prices, 1947-1962
Cash Receipts from and Payments to the Public, 1947-1962
Federal Expenditures, National Income Accounts Basis, 1947-1962
Federal Receipts, National Income Accounts Basis, 1947-1962
Vlll
vi
vi
6
10
14
17
20
24
27
31
38
41
45
47
50
59
63
70
74
78
81
83
87
91
94
103
106
109
113
119
123
124
TOTAL OUTPUT, INCOME, AND SPENDING
THE NATION'S INCOME, EXPENDITURE, AND SAVING
Description of series.—The Nation's income, ex- sumption shown elsewhere in Economic Indicators,
penditure, and saving, representing a summary of the particularly in the table on Disposition of Personal
Nation's economic accounts, are shown in the Income. It should be noted that although the
accompanying table for the following sectors: persons, personal income account includes the income of
business, international, and government. The ac- unincorporated businesses and farms, the consumer
counts shown here represent a statement of the expenditure account includes only expenditures for
national economy in terms of receipts and expendi- consumption purposes. Investments of noncorpotures for these four categories; for every dollar of rate as well as corporate businesses are included in
expenditure in any category there must be a dollar the business expenditure account. The actual or
of receipts in that category or one of the other imputed rent of dwellings is included in consumer
accounts. Thus the combined receipts (disposable expenditure; but residential construction, whether
personal income, gross retained earnings of business, for owner occupancy or for rental purposes, is
and government receipts) must equal the combined included with business investment.
expenditures (personal consumption expenditures,
In the business account, receipts or gross retained
gross private domestic investment, net exports and earnings include the undistributed profits of corporagovernment expendituie). It follows that for any tions after adjustment for inventory valuation, plus
period in which the receipts for any of the four cate- the capital consumption allowances of both corpogories exceed expenditures, the difference will be rate and noncorporate enterprises and institutions,
offset by an excess of expenditures over receipts in including residences. The capital consumption alanother category or categories. The relationship of lowances must be added to net receipts since investreceipts to expenditures for each of the four cate- ment is on a gross basis—i.e., before deduction for
gories is shown in the first table in Economic Indica- depreciation, capital outlays charged to current
tors. Important expenditure components in terms expense, and accidental damage to fixed capital.
of 1961 prices are shown in the first chart in this Business investment includes additions to plant and
volume.
equipment and inventories of both corporate and
The balancing of the combined receipts and noncorporate enterprises, as well as residential conexpenditures reported for the four categories—per- struction. Because of conceptual difficulties and
sons, business, international,
government—is limitations in the data which prevent differentiating
conceptually exact. However, since the estimating investment items in the present consumer and govprocedure involves independent data sources for ernment accounts, business investment constitutes
receipts and expenditures it does not produce the the only current savings of the Nation identified in
identity which is conceptually present. This requires tangible terms.
a balancing "error" item or statistical discrepancy.
In the international account, the expenditures item
In the accompanying table, the total of personal and represents the difference between exports of goods
business receipts, foreign net transfers by govern- and services on the one hand, and imports of goods
ment, and government receipts plus the statistical and services on the other. The receipts item condiscrepancy equals the total of personal and business sists solely of foreign net transfers by government.
expenditures, government purchases of goods and For 1929-45, foreign net transfers by government
services, and net exports.
were negligible. For that period, net exports of
The personal account summarizes the more goods and services have been equated with the excess
detailed statistics on personal income and con- of receipts or expenditures for this sector.
1
The Nation's Income, Expenditure, and Saving
[Billions of dollars]
Business
Persons
Year
International
Gross
Dispos- Personal Personal
conGross private
saving
able
sumpor
retained
doperearn-2
mestic
tion
dissonal
exings
invest-3
insavpendi- ing ( - )
ment
come x
tures
Excess
of investment
(-)
Foreign
net
transfers by
Government4
1929
83. 1
79.0
4.2
11.5
16.2
-4. 7
(4)
1930
1931
1932.
1933___
1934
74. 4
63. 8
48. 7
45.7
52.0
71.0
61.3
49. 3
46. 4
5L9
3.4
2. 5
8.8
5. 2
1,0.3
5. 5
.9
1.4
2.9
-1. 5
-. 3
1. 8
1. 2
2.0
4
58. 3
66. 2
71. 0
65. 7
70. 4
56.3
62. 6
67. 3
64. 6
67. 6
2.0
3. 6
3. 7
1. 1
2. 9
6.3
6. 5
7.8
.1
-1. 9
-4. 0
1. 2
-1.0
(4)
8. 3
6. 3
8. 4
11. 7
6. 7
9. 3
(4)
(4)
(4)
()
76. 1
93.0
117. 5
133.5
146. 8
71.9
81.9
89. 7
100. 5
109.8
4. 2
11. 1
27.8
33.0
36.9
10.4
11.5
14. 1
16.3
17.2
13. 2
18. 1
9.9
5.6
7. 1
-2.8
-6.6
4.3
10.7
10. 1
1945
1946.
1947
1948
1949.
150. 4
160.6
170. 1
189. 3
189. 7
121. 7
147. 1
165. 4
178. 3
181. 2
28. 7
13.5
4. 7
11. 0
8. 5
15. 6
13. 1
18. 9
26. 6
27. 6
10. 4
28. 1
31. 5
43. 1
33. 0
5. 2
-15. 1
-12. 6
-16. 5
-5. 4
1950___
1951
1952
1953
1954._
207. 7
227. 5
238. 7
252.5
256.9
195.0
209. 8
219. 8
232. 6
238.0
12.6
17. 7
18. 9
19.8
18.9
27.7
31. 5
33. 2
34.3
35.5
50.0
56. 3
49.9
50.3
48.9
-22.3
-24.8
-16.6
-16.0
-13.4
2.8
1955
1956._
1957
1958
1959
274. 4
292. 9
308. 8
317. 9
337. 1
256. 9
269.9
285. 2
293. 2
313. 5
17. 5
23.0
23. 6
24. 7
23. 6
42. 1
43.0
45. 6
44. 8
51. 3
63. 8
67.4
66. 1
56.6
72. 7
1960
1961-_
349. 4
363.6
328. 5
338. 1
20. 9
25.6
52. 1
53.6
72.4
69.3
-21. 8
-24.3
-20.5
-11.9
-21.4
-20.3
-15.6
__
1935
1936
1937
1938
1939
1940.__
1941
1942___
1943___
1944__.
_ _
-.6
-.6
.1
2.7
2.6
4.9
7.8
Net exports of goods
and
services4
Net
exports Exports Imports
Excess of
transfers
or of net
exports
(~)5
0.8
7.0
6.3
-0.8
.7
.2
.2
.2
.4
5.4
3. 6
2. 5
2.4
4.8
3. 4
2. 3
2.3
2.5
-.7
_ 2
2
-.2
-. 4
3. 3
.1
1. 1
.9
3. 3
3. 6
4 5
3. 2
3. 5
1
3. 5
4. 6
4. 3
4. 4
— i
—1 1
—9
(4)
(4)
(4)
(4)
(4)
1.5
1. 1
-.2
-2.2
-2. 1
5.4
6.0
4.9
4.5
5.4
3.8
4.8
5. 1
6.8
7.5
-1. 5
-1. 1
.2
2.2
2. 1
(4)
— 1. 4
4.9
9. 0
3. 5
3. 8
7. 4
12.8
17. 9
14. 5
14. 0
8. 8
7.9
8. 9
11. 0
10. 2
1. 4
-4.6
—8 9
— 1. 9
—. 5
2. 1
1. 5
1.6
1.4
.6
2. 4
1. 3
-. 4
1.0
13. 1
17. 9
17. 4
16.6
17.5
12. 5
15. 5
16. 1
17.0
16. 5
2. 2
—. 2
.2
2.0
.4
1. 5
1. 5
1. 5
1. 1
2.9
4. 9
19. 4
23. 1
26. 2
22.7
22. 9
18. 3
20.2
21. 3
21. 5
23. 6
.4
-1. 5
-3. 5
.1
2. 3
26. 4
27.3
23. 5
23.3
-1.3
-2.4
()
(*)
4
(4)
()
(4)
4
0.3
.1
1. 6
3.2
—. 1
i
1.3
1.2
i: 5
-. 8
1.6
1.6
4.0
2. 9
3.0
1
See footnotes at end of table on next page.
The government account shows receipts and expenditures on an income and product account basis,
rather than on either a cash or a conventional budget
basis, to be consistent with the receipts and expenditures of consumers and business and with the gross
national product total. The government receipts
include personal, corporate and indirect business
taxes, and contributions for social insurance. Government interest charges and transfer payments,
such as social security and veterans' benefits and
net transfers to abroad, are not included in the gross
national product, although some items are income
to recipients. They are therefore subtracted here
from both receipts and expenditures.
The government income and product accounts are
on a consolidated basis, just as the cash accounts are,
but they depart from the latter because of the timing
of the items included in each and because of conceptual differences. The income and product accounts
of the government are designed to be in accord with
The Nation's Income, Expenditure, and Saving—Continued
[Billions of dollars]
<Grovernment
Surplus
or
deficit
PurTrans- ( - ) o n
Tax and Transincome
fers,
chases
Total
nontax
Net
fers,
and
receipts receipts interest, of goods expendi- interest,
tures and subproduct
and
or
and sub6
6
sidies
account
services
accruals sidies
Expenditures
Net receipts
Year
1929 __ _. _
9.5
11.3
1930
1931
1932
1933
1934
8.9
6.4
10.8
_ _
19351936
1937
1938
1939
. _
__ _
8.0
_ _
8. 9
12. 3
11. 2
11.2
9. 3
10. 5
11.4
12. 9
15. 4
15.0
15.4
8.5
10. 2
1.8
9.2
9.2
2.5
2.6
8. 1
8.0
9.8
11.0
12. 3
10.6
10.7
12.8
10.0
11. 8
11. 7
12. 8
13.3
13.3
15.9
14.8
16. 6
17.5
18.5
28.8
64.0
93. 4
103. 1
4.3
3. 1
3. 1
3.4
4. 1
3. 1
3.8
4.2
1. 7
1.8
3. 1
2.5
2.6
3. 1
3.4
4. 1
3. 1
3.8
4.2
17. 7
25. 0
32.6
49. 2
51. 2
4. 4
4. 0
_ __ _
13. 3
21. 0
28. 3
44. 4
44. 6
4. 8
6.5
14. 1
24.8
59. 7
88.6
96.5
_ _ ___ _
_ _ . __
43. 1
34. 6
41.6
42. 8
37. 0
53.2
51. 1
57. 1
59. 2
56. 4
10. 1
16.5
15.4
16. 5
19. 4
82.9
30.5
28.4
34. 5
40.2
92.9
47.0
43.8
51. 0
59.5
10. 1
16.5
15.4
16. 5
19. 4
1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
6. 4
6. 7
7. 4
9.5
8.9
1. 7
_ _ _ _ __ _
__
4.3
4.4
4. 0
4. 8
6.5
1950
1951
1952
1953
1954
_______
_ __
47.2
66.6
72. 2
75. 7
68.5
69.3
85.5
90. 6
94.9
90.0
22. 1
18.9
18.4
19. 2
21.5
39.0
60.5
76. 0
82.8
75.3
61. 1
79. 4
94. 4
102.0
96.7
22. 1
18.9
18.4
19.2
21.5
1955
1956
1957
1958
1959
_ _
78.4
84. 2
87.5
82. 0
95.7
101. 4
109. 5
116.3
115. 1
130.2
23.0
25.3
28. 7
33. 1
34. 4
75.6
79.0
86. 5
93. 5
97.2
98.6
104.3
115.3
126. 6
131.6
23.0
25.3
28.7
33. 1
34. 4
103. 8
103.0
141.0
144.8
37. 1
41. 9
99.7
107.4
136.8
149.3
37. 1
41. 9
1960
1961
_ _
__ _
_
Total
StatisGross
income
tical
national
or
discrep- product or
receipts
ancy
expenditure
1.0
104.2
0.3
104. 4
-.3
92. 1
75.4
57.7
91. 1
56. 0
65. 0
72. 5
82. 7
90.8
85. 2
91. 1
-2.8
-1.7
-1.4
-2.4
55.0
64.2
-1.0
.8
.8
.9
.7
-2.0
-3.0
.6
-1.6
-2. 1
72.7
81.6
91.0
84.8
89.9
-.2
1. 1
2
.5
1.2
-. 7
-3.8
-31.4
-44. 2
-51.9
99.8
125. 4
160.0
194. 2
208. 6
.8
.4
-. 8
— 1. 7
2.8
100. 6
125. 8
159. 1
192. 5
211. 4
-39.7
4. 1
13.3
209. 1
208.6
230. 7
260. 3
257. 5
4. 5
2. 1
3.5
—. 8
.5
213.6
210. 7
234. 3
259. 4
258. 1
285.3
327. 7
345. 6
364. 1
362.3
-. 7
1. 2
1. 4
1.3
.9
284. 6
329. 0
347. 0
365.4
363. 1
-1. 5
396.5
421.6
443. 4
446. 0
485.7
1.0
-2. 4
-.6
-1. 5
-3.0
397. 5
419. 2
442.8
444.5
482. 7
4.2
-4. 4
506.8
521.8
—3.4
-3. 1
503.4
518.7
8.2
-3. 1
8.2
6. 1
-3. 9
-7. 1
-6.7
2.9
5.2
1.0
-11. 4
76. 3
58. 5
* Personal income less personal taxes and nontax payments (fines, penalties, etc.).
2 Undistributed corporate profits, corporate inventory valuation adjustment, capital consumption allowances, and excess of wage accruals over disbursements.
Private business investment, purchases of capital goods by private nonprofit institutions, and residential housing.
Net foreign investment with sign changed.
* For 1929-45, net exports of goods and services and net foreign investment have been equated.
« Government transfer payments to persons, foreign net transfers by Government, net interest paid by Government, and subsidies less current surplus of Government enterprises.
8
6
NOTE.—Data for Hawaii and Alaska introduced in 1960.
Source: Department of Commerce.
the accrual records maintained by private business.
Thus, business taxes, especially those on corporate
profits, are recorded on an accrual rather than a collections basis, and government expenditures for goods
are corrected for the lag between deliveries and payments therefor. Capital transactions, such as receipts from the sale of government property and
changes in loans and investments of government
credit agencies, are excluded from the income and
product accounts although such transactions are included in both the cash and conventional budgets.
Uses and limitations.—A set of economic accounts
for the Nation reduces the voluminous detail of economic activity to understandable proportions by providing the factual background for seeing in perspective the operations of the major categories of the
economy—persons, business, international, and government—and the interrelationships or transactions
between and among them. A statement of these accounts serves a number of purposes:
(1) In summarizing the pattern of change in the
economy over recent periods, the statement indicates
what one should look for among the other charts and
tables included in Economic Indicators.
(2) The accounting methodology needed to prepare this statement helps to assure that the various
estimates, such as income, expenditures, savings, investment, in the other charts and tables are consistent.
(3) It is frequently necessary to project and evaluate the likely economic impact of public and private
programs on the economy. These accounts make possible the quantitative expression of the combination
of such public and private plans within a framework
of the flows of incomes and expenditures of various
groups in the economy so as to measure inconsistencies or imbalances among them, and inconsistencies
between and among the assumptions upon which
these plans are based.
Preparation of a Nation's economic budget for a
future period, using these accounts, is especially helpful when government programs are of such magnitude and importance that they dominate changes in
the economy; in other words, when government
spending and tax plans are the main forces making
for changes in the economy. At other times, its
main benefit is in identifying and measuring inflationary and deflationary programs of government
and private economic groups and in pointing out
areas in which adjustments are necessary to achieve
economic stability and growth.
(4) Another use, related to the preceding, is that
of enabling those who must make actual forecasts,
such as business firms, private economists, and others,
to check their forecasts for consistency with past
patterns of fluctuations in activity in both the economy as a whole and in its various segments, and consistency among the various assumptions as to income,
savings, investment, prices, and employment that underlie the forecast.
Certain limitations must be recognized in using;
these economic accounts. In the first place, the
statistics do not throw light on all aspects of the
economy but only on broad summary categories;
thus they must be supplemented by the use of additional economic information, such as that contained
in other parts of Economic Indicators. Second, since
the data are national in coverage, their trends and
changes must be carefully interpreted and supplemented by other data for use in the analysis of
regional or individual industry problems. Third,
they do not, of course, provide the assumptions or
the reasons which one should have for explaining or
projecting economic changes; they provide only the
relevant statistical background for intelligent reasoning and judgment. Finally, it must be recognized
that for some of these categories estimates for both
receipts and expenditures rest upon data collected
for other purposes, or upon indirect estimates in
cases where no direct survey is regularly conducted.
Thus there will be times when it will be difficult to
interpret the meaning of some of the changes in the
accounts if statistical discrepancies arising from
technical problems in estimating various items are
so large that they throw doubt on the importance of
movements in the accounts.
. References.—The estimates included in the Nation's economic accounts are all taken from the
national income and product statistics of the
Department of Commerce: see references below,
under National Income.
See also Technical Notes on the Nation's Economic
Budget, Appendix A: Report of the Joint Committee
on the Economic Report on the January 1952 Economic
Report of the President, Senate Report No. 1295, 82d
Congress, 2d session, pages 99-105, and statistical
materials prepared by the Council of Economic
Advisers for inclusion with the Economic Report of
the President.
GROSS NATIONAL PRODUCT OR EXPENDITURE
Description of series.—Gross National Product
(often called GNP) represents the total national output of goods and services at current market prices.
It measures this output in terms of the expenditures
by which these goods are acquired. These expenditures are the sum of four major items: (1) personal consumption expenditures, (2) gross private
domestic investment, (3) net exports of goods and
services, and (4) government purchases of goods and
services. The total and its major components are
charted below for the period 1947-62. The goods
and services included in the GNP are for the most
part those actually bought for final use in legal
markets. There are a number of exceptions, the
most important of which is the imputed rental value
of owner-occupied dwellings.
The GNP series measures the product attributable
to the factors of production—labor and property—
supplied by residents of the nation. For the most
part these factors are located in this country, but
the GNP total also includes earnings of American
employees of the United States Government stationed abroad, foreign interest and dividends received by Americans, and the profits from foreign
branches of American business.
The national income and product estimates for
1960 and 1961 are defined to include Alaska and
Hawaii; those for prior years do not. This does
not significantly affect the comparability of the data
for most purposes. The gross product of the two
new states amounted to roughly $2% billion in 1960
(their income originating to $2}i billion and personal
income to $2 billion). But about one-half billion
dollars of these aggregates was already included in
the previous figures for the continental U.S. since
the series were defined to include contributions of
Federal Government employees and other residents
working temporarily in Alaska and Hawaii. Further, the GNP total included another $1 billion of
Alaskan and Hawaiian product because the statistics
had not been sufficiently refined to exclude it.
On balance, the explicit additions ^to GNP that
were made in order to cover the two new states
amounted to about $1 billion in 1960, or only about
0.2 percent of the total. Half of this was in consumption, about $0.3 billion in State and local
government purchases, and about $0.2 billion in
construction. About $1% billion had to be explicitly
added to the income series, largely to the labor
component.
"Personal consumption expenditures" measures the
sum of money and imputed expenditures made by
consumers (individuals, nonprofit institutions such as
hospitals, etc.) for goods and services. This series is
described below, in the section on Disposition of
Personal Income (p. 12).
"Gross private domestic investment" consists of
new construction, purchases of producers' durable
equipment, and the change in business inventories.
This-component of GNP is described below, in a
separate section (p. 23).
"Net exports of goods and services" measures the
excess of "exports" of goods and services (domestic
output sold abroad, and the production abroad
credited to United States-owned resources) over "imports" (United States purchases of foreign output,
production in the United States credited to foreignowned resources, and net private cash remittances to
abroad). The items are obtained from the official
balance of payments series; reconciliations of the
GNP measures with the balance of payments are
shown in U.S. Income and Output, A Supplement to
the Survey of Current Business (1958), Table IV-4
and in the July issue of the Survey of Current Business. See also the sections of this report dealing
with the U.S. Exports and Imports of Goods and
Services and the U.S. Balance of Payments (p. 81).
"Government purchases of goods and services" are
those made by Federal, State, and local governments. They include (1) net purchases of new goods
(such as school buildings and armaments), (2) payments for services (principally compensation for
government employees), (3) gross investment by
government enterprises, and (4) net government
purchases from abroad. Items which do not represent current productive activity—such as transfer
payments (e.g., social security, veterans' payments,
and net transfers to abroad), government interest,
subsidies, loans, and other financial transfers—are
excluded. The GNP series on government purchases
differs from expenditures shown in the Federal
Budget, which include many but not all of these
items. Differences may also arise because of variation in the time at which expenditures occur and are
Gross National Product or Expenditure, 1947-62
{Quarterly data in current prices.
Seasonally adjusted annual rates)
BILLIONS OF DOLLARS
600
500
GROSS NATIONAL PRODUCT
400
PERSONAL CONSUMPTION EXPENDITURES
300
200
GOVERNMENT PURCHASES OF GOODS AND SERVICES
GROSS PRIVATE DOMESTIC INVESTMENT
100
NET EXPORTS OF GOODS AND SERVICES
I . ...'-.
1947
1941 1949 1950 19S1
1952
1953
1954
i
1955 1956 1957 1951 1959 1960 1961
1962
SOURCE OF DATA: DEPARTMENT OF COMMERCE
recorded. For a more extended discussion, see the
section below, "Federal Budget, National Income
Accounts Basis" (p. 122).
Statistical procedures.—Hundreds of basic economic series are evaluated, adjusted, and combined
in the process of preparing the GNP estimates. For
example, consumer expenditures are estimated for
benchmark years primarily from data in the Censuses
of Business and Manufactures, reports of the Department of Agriculture, Internal Revenue Service,
and Interstate Commerce Commission, with current
annual and quarterly estimates carried forward by
using the Census Bureau's Annual Survey of Manufactures and Monthly Report on Retail Trade, and
data from other sources. Construction activity is
estimated as described below in the section on New
Construction (p. 58). Investment in producers' durable equipment is estimated for benchmark years
from Census of Manufactures and related data, with
current quarterly and annual totals estimated principally from sample surveys and construction data
of the Department of Commerce and financial re6
ports to other agencies. For details of the method e
used, reference should be made to the comprehensiv
studies by the Department of Commerce, e.g., the
1954 National Income Supplement to the Survey of
Current Business, and U.S. Income and Output,
1958.
Revisions currently underway will not be
published until the latter part of 1963.
The methods used to eliminate seasonal variation
differ with the particular series to be adjusted. For
most components the conventional ratio-to-movingaverage method has been employed. However, when
satisfactory results have not been obtained, resort has
been made to more refined methods. For further
information see the section "Measurements of Quarterly and Monthly Movements," U.S. Income a,nd
Output, p. 95 ff.
The magnitude of the seasonal correction may be
illustrated by the accompanying comparison of the
GNP on an unadjusted and seasonally adjusted basi~
for the year 1961. The corrections shown in thn
table are computed values reflecting the net results
of many individually corrected components under-
Gross National Product or Expenditure
Government purchases of goods and services
Net
Personal Gross
Total
private exports
conTotal
gross
sump- domestic of goods
national gross
investtion
and
product national
in 1961 product expend- ment services
itures
prices
Year
Federal
Total
Total i National2
defense
Other
State
Implicit
price
deflator
for total
GNP,
1961 = 1003
and
local
Billions of dollars
209. 1
1929
104.4
79.0
16. 2
0. 8
8.5
1.3
91. 1
76. 3
58. 5
56.0
65.0
71.0
61. 3
49. 3
46. 4
51.9
10.3
5. 5
.9
1. 4
2.9
.7
.2
.2
.2
.4
9.2
1.4
9.2
1.5
1.5
2.0
9. 8
3.0
6.3
-. 1
-. 1
.1
1. 1
.9
10.0
11.8
11.7
12. 8
13.3
2. 9
1.5
14. 1
24. 8
189.7
175. 5
149. 5
146.0
160.0
1930
1932
1933
1934 _ _
1935
1936
1937 _ _
1938
1939
175. 3
200. 1
210.5
201.2
217. 7
72. 5
82.7
90.8
85.2
91. 1
56.3
62.6
67.3
64.6
67.6
1940
1941
1942
1943
1944
236. 3
275. 5
315. 5
355. 7
381. 6
100. 6
125. 8
159. 1
192. 5
211. 4
71.9
81.9
89.7
100.5
109.8
13.2
18. 1
1945 _ _
1946
1947
1948
1949
374. 1
324. 8
324.2
336. 7
337. 6
213.6
210.7
234.3
259. 4
258. 1
121.7
147. 1
165. 4
178.3
181. 2 .
10.4
28. 1
31.5
43. 1
33.0
-1.4
365. 6
395.8
411. 1
429.9
421.2
284.6
329.0
347.0
365.4
363. 1
195.0
209.8
219. 8
232.6
238.0
454. 1
463. 8
472.6
465. 1
496.2
397.5
419.2
442.8
444. 5
482.7
509. 4
518.7
503. 4
518.7
1950
1951
1952
1953
1954
1955 .
1956 _ .
1957
1958
1959
1960
1961
_ .
_
-_-
8.4
11.7
6.7
9.3
8. 1
8.0
4.8
4.6
5.3
5.2
«
«
7.2
49.9
(4)
(4)
(4)
(4)
(*)
(4)
«
7.8
7. 7
6. 6
6. 0
&. 8
48.0
43. 5
39. 1
38. 3
40.6
7. 1
7.2
7.5
8. 2
41. 4
41. 3
43. 1
42.4
41. 8
7.9
7. 8
7. 7
7. 4
7. 5
42. 6
45. 7
50. 4
54. 1
55. 4
w
(4)
1.3
3.9
4.0
3.2
6.2
2.2
16.9
52.0
81.2
89.0
13.8
49. 6
80. 4
88. 6
74.8
3. 5
3.8
82.9
30.5
28.4
34. 5
40.2
20.6
15.6
19. 3
22.2
75.9
18.8
11. 4
11. 6
13.6
50.0
56.3
49.9
50.3
48.9
.6
2.4
1.3
-.4
39.0
60.5
76.0
82.8
14. 3
33. 9
46. 4
49.3
41. 2
256.9
269.9
285. 2
293. 2
313.5
63.8
67.4
66. 1
56.6
72.7
2.9
4.9
328. 5
338. 1
72. 4
69.3
9.9
5.6
7. 1
1. 1
59.7
-.2
-2.2
-2. 1
88.6
96.5
4.9
9.0
1. 0
75.3
19.3
38.8
52.9
58.0
47.5
1. 1
-.8
75.6
79.0
86. 5
93. 5
97.2
45.3
45. 7
49.7
52.6
53.6
39. 1
40. 4
44. 4
44. 8
46. 2
2.9
4.0
99. 7
107.4
53. 2
57.0
45. 7
49. 0
1. 2
(4)
2. 7
1. 5
1. 6
1. 0
4.5
5.4
8. 2
8.9
5. 2
5. 2
6. 7
9.0
6.7
6. 6
5. 7
5. 7
8.3
7.9
8. 1
8.7
7.0
8. 1
9. 9
12.7
15. 2
17. 9
57.
64.
72.
77.
76.
19.7
21. 7
23. 2
24. 9
27.7
77. 8
83. 1
84. 4
85. 0
86. 2
30.
33.
36.
40.
43.
87.
90.
93.
95.
97.
3
2
8
8
6
46 5
50.4
1
9
3
0
5
5
4
7
6
3
98 8
100.0
i Less Government sales.
* These expenditures correspond closely with budget expenditures for national defense, shown in the table on Federal Budget Receipts and Expenditures.
3 Gross national product in current prices divided by gross national product in 1961 prices.
* Not available.
NOTE.—Data for Alaska and Hawaii included beginning 1960.
Source: Department of Commerce.
lying the published series. It follows from this that
the magnitude of the correction will vary somewhat
from year to year as the result of shifts in the relative importance of the component series. The summary results may also be modified by changes in the
seasonal patterns of the individual component series,
which regularly come under review. (See table,
"Seasonal Correction, GNP 1961," p.8.)
The GNP is also "deflated" or expressed in dollars
of constant purchasing power. The procedure in
general is to divide components of the current dollar
GNP by appropriate price indexes, utilizing as fine a
product breakdown as possible, and then to sum the
components to obtain the constant dollar GNP.
The price information, which in most cases is available in greater detail than the current dollar esti-
mates, is combined into composite indexes applicable
to the various current dollar series. The deflation
makes use of price indexes and other information
from such sources as the Bureau of Labor Statistics,
Agricultural Marketing Service, Interstate Commerce Commission, etc.
Weights for constructing the composites, approximating expenditures for the products represented by
the price series, have been obtained from the detailed
industrial censuses. Expenditure weights in some
instances have been broken down between urban
and rural areas in order to incorporate price data of
the agricultural marketing service. Quantity data
also are utilized in lieu of price deflation in a number
of instances, most notably in the case of government
employment (man-hours, to the extent available).
The GNP implicit deflator is an index of price changes
in the GNP, and is computed by dividing the deflated estimates into the corresponding current dollar
estimates.
The basic work in deflating the GNP reduced the
current dollar series to 1954 prices; 1954 prices are
used in presenting the constant dollar GNP in "U.S.
Income and Output" and other publications of the
Department of Commerce. For convenience in cur-
rent business analysis, the GNP has been converted
to 1961 dollars in Economic Indicators.
In shifting from a 1954 price base to a 1961 base
a short-cut procedure is used. The major components of the GNP are shifted from 1954 to 1961
prices separately and then summed to obtain an
estimate of the GNP in 1961 prices. This is believed
to give a close approximation to the results which
would be obtained if each sub-component of the GNP
used in the deflation to 1954 prices were shifted
individually.
Relation to other series.—Two other series widely
used as indicators of the general level of economic
activity are National Income and the Federal Reserve
Index of Industrial Production. Gross national product and national income are compiled from the same
series of accounts, but whereas the former measures
the market value of total output, the latter measures
only the earnings of labor and property (net of capital consumption) which flow from that output. National income is smaller than the gross national product chiefly because the former is a "net" estimate
excluding (1) allowances for depreciation and other
capital consumption, and (2) indirect taxes (such as
sales and excise taxes).
Seasonal Correction, Gross National Product, 1961
[Billions of dollars]
Seasonally adjusted
quarterly rates
Unadjusted quarterly
rates
Component
I
Gross national product
II
III
IV
I
II
III
IV
125.2 128.3 130. 6 134. 7 120. 6 128. 1 128. 9 141. 2
Correction, quarterly rates
(Seasonally adjusted
minus unadjusted)
I
II
III
4.6
1.0
1.3
-6.5
IV
Personal consumption expenditures. _ 82. 6
83. 9
85.0
86.5
78. 8
83.0
83.0
93.3
3.8
.9
2.0
-6. 8
10. 2
38. 4
34. 0
10. 9
38. 5
34. 5
11. 0
39.0
35. 0
11. 7
39.3
35. 6
9. 1
35.3
34.4
10. 9
37.5
34. 5
10. 2
37.9
34. 9
13. 6
44. 5
35. 2
1. 1
3. 1
—. 4
1. 0
.8
1. 1
.1
— 1. 9
-5. 2
.4
Gross private domestic investment _ _ 15.0
16.9
18. 1
19. 1
15. 3
17. 1
18.4
18.5
-.3
9. 8
New construction
Producers' durable equipment. __ 6. 1
Change in business inventories __ - . 9
10. 2
6.2
.5
10.7
6. 5
1. 0
10. 8
6.9
1.5
8. 6
5.6
1. 1
10. 5
6.6
.0
11. 5
6. 1
.8
11. 0
1. 2
7.2
.5
.2 - 2 . 0
1.3
1.0
.7
1.0
1.3
1. 1
.3
1.3
6.8
5.5
6. 6
5.6
6.7
6.0
7. 1
6. 1
6. 6
5.4
6.8
5.7
6. 5
6.2
7. 4
6. 1
26. 2
26.5
26.7
28.0
25.3
26.9
27. 1
13. 8
12.3
14. 2
12. 3
14. 1
12. 6
14. 9
13. 1
13. 7
11.6
14. 4
12. 5
14. 2
12.9
Durable goods
Nondurable goods
Services
Net exports of goods and services
Exports
Imports
Government purchases of goods and
services
Federal
State and local
8
-.2
-.3
-. 3
4
.5
-. 1
-. 8
.4
.2
.4
-.3
.2
.1
-.2
.1
.2
.2
-.3
28. 1
.9
-. 4
-. 4
—. 1
14. 7
13.4
.1
.7
-.2
—. 1
g
-.3
.6
—. 2
-. 4
1.3
. 2
The GNP measures total output, whereas the Federal Reserve Index of Industrial Production covers
selected sections of the economy—manufactures,
mining, electricity, and gas. The products in the
GNP series are final product, whereas the Federal
Reserve index includes both final and intermediate
product, and thus may show an increase or decrease
in activity to be reflected later or not at all in the
flow of final output. The GNP series in current
prices combines price and volume changes, whereas
the Federal Reserve index measures only physical
volume.
Uses and limitations.—The GNP total is the most
inclusive monetary measure of trends in the economy
as a whole which is currently estimated. It also has
high value as an analytic tool, since the movements
of many sectors of the economy, including the sales
of many industries and enterprises, are quite closely
related to changes in the level of GNP.
The GNP in current dollars combines the effects
of changes in both the price level and the physical
volume of output. Movements in the total from
quarter to quarter should not be interpreted as necessarily representing changes in the physical quantity
of goods and services produced by the economy.
GNP estimates corrected for price changes ("deflated GNP") show annual and quarterly changes in
the total volume of national output as well as in the
major components. The accompanying table shows
the trend in GNP in terms of 1961 prices since 1929,
and the implicit deflator. One of the most important
characteristics of the GNP is that changes in the total
can be analyzed by examination of changes in its
components, notably purchases by consumers, private business investment, government expenditures,
and the movement of foreign trade. It thus provides a useful framework for economic projections.
References.—See below, under National Income.
NATIONAL INCOME
Description of series.—National Income is the aggregate of earnings by labor and property from the
current production of goods and services by the Nation's economy. It is the sum of five major items:
(1) compensation of employees, (2) proprietors' income, (3) rental income of persons, (4) net interest,
and (5) corporate profits and inventory valuation
adjustment.
"Compensation of employees" is the sum of wages,
salaries, and certain supplements, such as employer
contributions for social insurance.
"Proprietors' income" measures the monetary earnings and income in kind of sole proprietorships (including doctors, lawyers, and other self-employed),
partnerships and producers' cooperatives, exclusive
of capital gains or losses on inventory or other asset
holdings. The farm proprietors' income shown here
is conceptually the same as farm operators' net income including adjustment for inventory change, as
shown below in the section on Farm Income. Some
variations between the two series prior to 1952 result
from differences in the timing of revisions. The
supplementary income which individuals obtain from
renting property does not appear here, but under
rental income of persons.
"Rental income of persons" consists of.(l) net
money income from rental of real property, (2) esti-
91491 O—62
mated net rental value to homeowners of their homes,
and (3) royalties received from patents, copyrights,
and rights to natural resources.
"Net interest" measures both the money interest
and the imputed interest accruing to the Nation's
residents from private business and from abroad,
minus government interest disbursements to business
which appear as part of business incomes. Imputed
interest consists of the value of financial services
received by persons without explicit payment, and of
property income withheld by life insurance companies and mutual financial intermediaries on account
of persons.
"Corporate profits" are the earnings of corporations organized for profit, measured before Federal
and State profit taxes, but without deduction of depletion charges and exclusive of capital gains and
losses. (For a more extended discussion, see section
on Corporate Profits below, p. 20.)
"Corporate inventory valuation adjustment"
measures the excess of the value of change in the
volume of corporate inventories (in terms of average
prices during the period) over the change in terms
of book values. This adjustment is required since,
as is customary in business accounting, corporate
profits are reported inclusive of inventory profits or
loss, whereas only the value of the real change in
inventories is counted as current output in the national product. A parallel adjustment is made to
"proprietors' income" for noncorporate inventories.
The accompanying chart shows the movements of
the national income by these major components
since 1947.
Statistical procedures.—The methods of estimation
employed in the very complex area of national income are described in detail in the 1954 National
Income Supplement to the Survey of Current Business. Further information is provided in U.S. Income and Outputj 1958, also issued as a supplement
to the Survey. The following indicate briefly thB
types of estimating procedures used:
"Compensation of employees"—reliable data are
available each year from the social security system,
with current monthly estimates resting chiefiy on
employer reports on employment and earnings to
the Bureau of Labor Statistics.
"Proprietors' income"—estimated from income tax
returns to the Internal Revenue Service, usually ob-
tained every second year, with current quarterly data
derived from analysis of trends in noncorporate as
well as corporate sales and corporate profits in individual industries.
"Rental income of persons" is estimated from a
variety of Census Bureau, Internal Revenue Service,
Department of Agriculture, and BLS data on rents
paid and on the distribution of property ownership
and rental income between persons and business.
"Net interest" is estimated from reports to the
Internal Revenue Service, Bureau of the Census,
Board of Governors of the Federal Reserve System,
and other agencies on interest and debt.
Seasonal adjustments are not available for the income components of the national accounts, with the
exception of corporation profits. This is so because
the basic data sources do not provide a completely
unadjusted monthly series for wages and salaries,
and because in the case of proprietors' income, actual
net income data are lacking altogether on a monthly
and quarterly basis.
National Income, 1947-62
{Quarterly data.
Seasonally adjusted annual rates)
BILLIONS OF DOLLARS
500
400
TOTAL NATIONAL INCOME
300
COMPENSATION OF EMPLOYEES
V
200
100
CORPORATE PROFITS AND INVENTORY VALDATION ADDSTMENT
PROPRIETORS' AND RENTAL INCOME
I
|
Hi;T INTEREST v I
i _,
,
,
:
.,
<
i-i»»f-»i"rrrr,••-.—!-:"H''i"1"iT'iTT I I I I I I I I I I I 1 I 1 I I I I I 1 I I I I I
1947
1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961
SOURCE OF DATA: DEPARTMENT OF COMMERCE
10
1962
National Income
[Billions of dollars]
Proprietors' income
Corporate profits and inventory
valuation adjustment
Total
national
income
Compensation
of em- 1
ployees
87. 8
51. 1
6.0
8.8
5.4
6.4
10. 1
9. 6
0. 5
1930
1931
1932
1933
1934
75. 7
59. 7
42.5
40.2
49. 0
46. 8
39.7
31. 1
29.5
34.3
4. 1
7.4
4. 8
5. 6
3.8
1. 6
3.3
-.8
3.4
3.2
2.7
2.0
6.0
5.8
5.4
5.0
4.9
6.6
3.2
1.9
2.4
2.4
-2.0
-3.0
.2
3.3
2.4
1.0
1935
1936
1937
1938
1939
57. 1
64.9
73. 6
67.6
72. 8
37.3
42.9
47.9
45.0
48. 1
5.0
4.0
1940
1941
1942 .
1943
1944
81. 6
104.7
137. 7
170. 3
182. 6
1945
1946
1947
1948
1949
Year
1929
__
Farm
Business
and professional
Rental income of
persons
4. 6
1.7
5.4
1.7
1.8
Net interest
Total
2.9
2. 1
6.2
3. 1
5.7
6.2
4.3
5.7
3.3
6.4
9. 1
14.5
19. 7
23.8
23.0
17.0
20.9
24. 6
23.3
18.4
17.3
23. 6
30. 8
22.6
5. 6
4.3
4.3
6.8
7.3
2.6
4. 6
2.7
4.6
52. 1
64.8
85. 3
109. 6
121.3
4. 6
6. 5
10.0
11. 4
11. 5
8.4
2.9
4. 5
10.9
13.9
16.8
18.0
3. 5
4. 5
5. 1
4.5
4.3
3.7
3.3
181. 2
180.9
198.2
223.5
217.7
123.2
117.7
128. 8
141.0
140.8
11.8
15. 3
15. 5
17.8
12.9
19.0
21.3
19.9
5.6
6.2
6.5
7.3
8.3
3.2
1950
1951
1952
1953
1954
241.9
279.3
292. 2
305. 6
301. 8
154.2
180.3
195. 0
208.8
207.6
14. 0
16.3
15.3
13.3
1955
1956 _ _
1957
1958__
1959
330. 2
350. 8
366. 9
367.4
400. 5
1960
1961
415. 5
427.8
5.4
3. 1
3.8
4.2
4.8
5.0
9.0
9.4
5.5
6.3
35.7
41. 0
10.2
10. 5
10.9
7. 1
8.2
9. 1
37.7
12.7
22.4
22.7
23.5
26.0
26.9
27.4
27.8
223. 9
242. 5
255. 5
257. 1
278. 5
11.8
11. 6
11.8
13.5
11. 4
30.4
32. 1
32.7
32.5
35. 1
10.7
10.9
11.9
12. 2
11.9
293.7
302.2
12.0
13. 1
34.2
34.8
11.9
12.3
28.2
Inventory
valuation
adjustment
-2. 1
-. 6
1.7
4.8
4.7
4.7
6, 5
7. 1
__
-2.0
1. 1
Profits
before
tax
9.3
19.0
29.5
33.0
26.4
-.2
-.7
2
()
1.0
-. 7
-.2
-2.5
-1.2
o
-. 3
-. 6
-5. 3
-5.9
-2.2
1.9
37.3
33.7
40.6
42.2
36.7
38.3
34. 1
-5. 0
-1.2
1. 0
-1.0
10. 4
11.7
13.4
14.8
16. 4
43. 1
42.0
41.7
37.2
47. 2
44. 9
44.7
43. 2
37.4
47. 7
-1. 7
-2. 7
-1. 5
^
5
18. 1
20.0
45. 6
45.5
45.4
45. 6
.2
-.3
.0
1
Includes employer contributions for social insurance. (See also table on Sources of Personal Income),
a Less than $50 million.
NOTE.—Quarterly data available beginning 1939; annual from 1929. Data for Alaska and Hawaii included beginning 1960.
Source; Department of Commerce.
Uses and limitations.—The national income is a
useful measure of the rate of flow of earnings from
current output. By definition it excludes income
from the revaluation of past output—e.g., capital
gains and losses. The movements of this series correspond with movements in production. However,
the value of the national income series lies more in
the composition than in the total. It may mean little
to know that national income (unadjusted for price
changes) has gone up; but it may be very important
to know the relative contribution of wages and profits
to that increase.
The chief cautions for use result partly from the
definitions used, and partly from the nature of the
basic data. With respect to the first, care must be
taken not to interpret movements in the series as
measuring something other than they are intended
to measure. For example, variations in wages and
profits do not necessarily indicate changes in the
welfare of workers or in the ability of corporations
ii
to provide new capital. For such purposes, these
variations must be considered in the light of other
factors such as the cost of living and the cost of new
plant and equipment. With respect to the second—
which is particularly applicable to the current data
on proprietors' income, rental income of persons, and
the corporate inventory valuation adjustment—it
should be recognized that many of the available data
permit only fair approximations of the phenomena
being measured, and therefore too great reliance
should not be placed on these statistics as instruments of precise measurement.
References.—The official quarterly estimates for
the series included in the national income and product accounts are published by the Office of Business
Economics, Department of Commerce, in the Survey
of Current Business: first quarter in the May issue,
second quarter in August, third quarter in November, and fourth quarter in the following February.
Preliminary quarterly estimates by the Council of
Economic Advisers appear in Economic Indicators
in the month following the end of each quarter.
Preliminary annual estimates are published by the
Office of Business Economics in the February issue
of the Survey, revised estimates in the July issue.
Complete annual and quarterly statistics for 192945, with and without seasonal adjustment, and a
detailed explanation of fundamental concepts and
underlying procedures are given in the 1954 National
Income Supplement to the Survey of Current Business. Further information and detailed statistics for
1946-55 are presented in U.S. Income and Output, a
1958 supplement to the Survey. Annual and quarterly data for 1956-61 are published in the July 1962
Survey. For personal income, detailed State estimates are presented in Personal Income by States
Since 1929, issued as a supplement to the Survey in
1957. These statistical data are updated each year
in the August Survey.
A statistical evaluation report, "Revisions of First
Estimates of Quarter-to-Quarter Movement in National Income Series, 1947-1958" is available from
the Office of Statistical Standards, Bureau of the
Budget.
SOURCES OF PERSONAL INCOME
Description of series.—" Personal income" is composed of income received currently by individuals,
unincorporated businesses, and nonprofit institutions
(including pension, trust, and welfare funds). This
income is divided into labor income, proprietors' income, rental income of persons, dividends, personal
interest, and transfer payments. Capital gains and
losses are excluded. Most of the income is in monetary form, but there are important exceptions—
chiefly rental value to owner-occupants of homes and
value of food produced and consumed on farms.
" Lab or income" is principally wages and salaries.
It excludes employer contributions for social insurance. "Proprietors' income" and "Rental income
of persons" are defined above, in the section on National Income. "Dividends" are cash dividend disbursements by corporations organized for profit to
stockholders who are United States persons. "Personal interest income" is the "Net interest" component of National Income plus net interest paid by
Government. "Transfer payments" include payments not resulting from current production, such as
social security benefits, military pensions, corporate
gifts to nonprofit institutions, direct relief, and con-
12
sumer bad debts. They do not include govern ment
interest.
Seasonally adjusted data, preferred for most purposes, are derived directly from seasonally adjusted
national income data. Unadjusted data are not
available.
Relation to other series.—Personal income differs
from national income by including transfer payments and government interest and by excluding contributions for social insurance (by employee and
employer), the corporate inventory valuation adjustment, and corporate profits tax liability and
undistributed corporate profits.
Uses and limitations.—The estimates for personal
income and components and for disposable income
measure trends in spending power of individuals.
The inclusion of substantial nonmonetary items—
imputed rent, interest, food, fuel—should be noted
but the effect of these items should not be overemphasized. They tend to make the income estimates
more stable, but have little effect on the ability of
the estimates to show when a change is occurring
and the direction of the shift.
Sources of Personal Income
[Billions of dollars]
Proprietors'
income
Total
personal
income
Wage
and
salary
disburse-l
ments
Other
labor
income 2
85. 8
50. 4
0. 6
6. 0
8. 8
76. 9
65. 7
50. 1
47. 2
53. 6
46. 2
39. 1
30. 5
29. 0
33. 7
.
.
.
.
.
6
5
5
4
4
4. 1
3. 2
1.9
2. 4
2. 4
60. 2
68. 5
73. 9
68. 6
72. 9
36. 7
41. 9
46. 1
43. 0
45. 9
.5
.6
.6
6
.6
5.0
4, 0
5. 6
4. 3
4. 3
78. 7
96.3
123. 5
151. 4
165. 7
49. 8
62. 1
82. 1
105. 6
117. 0
.7
.7
.9
1. 1
1. 5
4. 6
6. 5
10.0
11. 4
11. 5
1945 _1946
1947
1948
1949
171. 2
179. 3
191. 6
210. 4
208.3
117. 6
111. 9
122. 8
135. 2
134. 4
1. 8
1. 9
2 3
2. 7
3. 0
1950
1951
1952
1953
1954
228. 5
256.7
273. 1
288. 3
289. 8
146. 4
170. 7
184. 9
198. 1
196. 3
3. 8
4. 8
5. 3
1955
1956
1957
1958
1959_
310. 2
332.9
351. 4
360.3
383. 9
400. 8
416. 4
Year
1929
_ _
1930
1931
1932
1933
1934
__ _
1935__1936
1937
1938
1939
1940
1941
1942
1943
1944 __
1960
1961.
-
__
__ _
_ -_
__
Rental
income
of
Business persons
and professional
Less:
Personal
contributions
for
social
insurance
Nonagricultural
personal
income 3
Dividends
Personal
interest
income
Transfer payments
5.4
5. 8
7. 4
1. 5
0. 1
77. 7
7.4
5. 6
3.4
3. 2
4. 6
4. 8
3. 8
2. 7
2. 0
1. 7
5. 5
4. 1
2. 6
2. 1
2. 6
6. 9
6. 9
6. 6
6. 2
6. 1
1. 5
2. 7
2. 2
2. 1
2. 2
.1
.2
.2
2
70. 8
60. 9
46. 9
43 6
49 8
5.4
6.5
7. 1
6. 8
2. 9
4. 5
4. 7
3. 2
3. 8
5. 9
5.8
5.9
5. 8
5. 8
2. 4
3.5
2. 4
2. 8
3. 0
.2
.2
.6
6
7.3
1. 7
1. 8
2. 1
2. 6
2. 7
8. 4
10. 9
13.9
16.8
18.0
2. 9
3. 5
4. 5
5. 1
5. 4
4. 0
4. 5
4. 3
4. 5
4. 7
5. 8
5. 8
5.8
5. 8
6. 2
3. 1
3. 1
3. 1
3.0
3. 6
.8
1. 2
1. 8
2. 2
72 6
88.0
111. 5
137. 6
151. 6
11. 8
15. 3
15. 5
17.8
12.9
19. 0
21. 3
19. 9
22. 4
22. 7
5. 6
6. 2
6. 5
7. 3
8. 3
4.7
5. 8
6. 5
7. 2
7. 5
6. 9
7. 6
8. 2
8. 7
9. 4
6. 2
11.4
11. 8
11.3
12. 4
2.3
2. 0
2 1
2. 2
2. 2
156. 8
161. 2
172 8
189. 2
192. 1
6. 2
14. 0
16.3
15. 3
13. 3
12. 7
23. 5
26. 0
26. 9
27. 4
27.8
9. 0
9.4
10. 2
10. 5
10. 9
9. 2
9. 0
9. 0
9. 2
9.8
10. 3
11. 2
12. 1
13. 4
14. 6
15. 1
12. 6
13. 2
14. 3
16. 2
2 9
3.4
3 8
3. 9
4. 6
211 3
237.0
254 3
271 5
273. 8
210. 9
227.6
238. 5
239. 8
258. 5
7. 1
8. 1
9. 1
9.4
10. 4
11. 8
11. 6
11. 8
13. 5
11. 4
30. 4
32. 1
32. 7
32.5
35. 1
10. 7
10.9
11. 9
12. 2
11. 9
11. 2
12. 1
12. 6
12. 4
13. 7
15. 8
17.5
19. 6
21.0
23. 5
17. 5
18.8
21.9
26.3
27. 5
5 2
5. 8
6. 7
6. 9
7. 9
295 0
317. 9
336. 1
343. 0
368. 6
271. 3
278. 8
11. 0
11. 4
12. 0
13. 1
34. 2
34. 8
11. 9
12. 3
14. 4
15.0
25. 8
27. 4
29. 4
33. 4
9. 2
9. 7
384. 7
399. 1
6,0
Farm
4
2
6
7
53. 9
63. 2
67.0
62 8
67 1
1
Compensation of employees (see National Income table, p. 11) excluding employer contributions for social insurance and the excess of wage accruals over disbursements.
2
Employer contributions to private pension, health, and welfare funds: Compensation for injuries; directors' fees; military reserve pay; and a few other minor items
3
Personal income exclusive of net income of unincorporated farm enterprises, farm wages, agricultural net interest, and net dividends paid by agricultural corpoporations.
* Includes $2.7 billion National Service Life Insurance dividend, most of which was paid in the first half of the year.
NOTE.—Quarterly data available beginning 1939; annual from 1929. Data for Hawaii and Alaska included beginning 1960.
Source: Department of Commerce.
Disposable personal income, discussed in the next changes, in real terms, i.e., in consumers' buying
section, gives a more direct measure of income avail- power, the estimates of disposable income in constant
able for spending, since it approximates take-home prices are to be preferred.
income, than does personal income. For measuring
References.—See above under National Income.
13
DISPOSITION OF PERSONAL INCOME
Description of series.—"Disposable personal income" is equal to personal income less taxes on
individuals (including income and other taxes not
deductible as business expense) and other general
government revenues received from individuals as
individuals.
"Personal consumption expenditures" is the sum of
money and imputed expenditures made by persons
(individuals, nonprofit institutions such as hospitals,
etc.) for goods and services. The expenditure total
covers total purchase cost to persons including general sales taxes. The full cost of automobiles, refrigerators, furniture, and the like is included in the
period when sold—quarter or year—regardless of
when payments are made or completed. The purchase of homes is not included as an expenditure;
instead the estimated rental value to the homeowner
is included if he occupies the home.
"Durable goods" are those items which generally
last three years or longer in use. "Nondurable
goods" are tangible commodities with a shorter life.
"Services" include housing, telephone, electricity,
shoe repair, gas and water, and also such items as the
expense of handling life insurance, and banking serv-
ices furnished without payment (such as free checks
where a minimum balance is maintained).
"Personal saving" is equal to disposable personal
income less personal consumption expenditures. As
such, it conceptually includes not merely cash and
bank deposits but changes in reserves of life insurance companies, increase in equity of farmers (e.g.,
land, machinery), homeowners, etc.
"Per capita disposable personal income" is the disposable personal income series divided by the Census
Bureau estimate of total population for the middle
of the period covered.
Per capita disposable personal income in 1961
prices is obtained by dividing the current dollar
series by the implicit deflator for personal consumption expenditures on a 1961 base used in the GNP
series. The movement of the current and the constant dollar per capita estimates since 1947 are shown
in the chart below.
Statistical procedures.—Most personal consumption expenditures for goods are estimated for benchmark years from the value of the output of specified
items as reported in the Census of Manufactures,
less the portion of this output bought by business
Per Capita Disposable Income, 1947-62
(Quarterly data.
Seasonally adjusted annual rates)
DOLLARS
2,250
PER CAPITA DISPOSABLE
PERSONAL INCOME IN 1961 PRICES
2,000
1,750
1,500
1,250
1,000
SOURCE OF DATA: DEPARTMENT OF COMMERCE AND COUNCIL OF ECONOMIC ADVISERS
14
Disposition of Personal Income
,
Equals:
DisposLess:
able
Personal Personal
l
Year income taxes personal
income
Less : Persona . consumption
expenditures
Total
Durable
goods
Per capita disEquals posable personal
income
Personal
saving
Current
1961
Nondurable Services
prices prices 2
goods
Billions of dollars
Dollars
Saving as
percent of
disposable
income
Percent
Population 3
Thousands
1929_.
85.8
2.6
83. 1
79.0
9.2
37. 7
32. 1
4.2
682
1, 227
5. 1
121, 875
1930._
1931
1932^
1933__
1934_ .
76.9
65.7
50. 1
47.2
53.6
2.5
1.9
1.5
1.5
1.6
74. 4
63. 8
48.7
45.7
52.0
71.0
61.3
49. 3
46. 4
51. 9
7.2
5.5
3.6
3.5
4.2
34.0
28.9
22.8
22.3
26.7
29.8
26.9
22.9
20.7
21.0
3.4
2.5
-.6
-.6
604
514
390
364
411
1, 137
1, 087
933
903
958
4.6
3.9
123, 188
124, 149
124,949
125, 690
126, 485
1935. .
1936__
1937__
1938._
1939. .
60.2
1.9
2.3
2.9
2.9
2.4
58.3
66.2
71.0
65. 7
70. 4
56.3
62.6
67.3
64.6
67. 6
5. 1
21.9
23.5
25. 1
25.0
25.8
2.0
3.6
5.7
6. 7
29.3
32.8
35.2
34.0
35. 1
458
516
551
506
537
1,
1,
1,
1,
1,
046
167
200
129
209
1940__
1941._
1942._
1943._
1944-_
78. 7
96.3
123.5
151. 4
165. 7
2. 6
71.9
81.9
89.7
100.5
109.8
7.8
9.7
7.0
37.2
43.2
51.3
59.3
65.4
26.9
29.0
31. 5
34. 7
37.7
4.2
17.8
18.9
76. 1
93.0
117.5
133.5
146.8
576
697
871
976
1,061
1,
1,
1,
1,
1,
283
452
625
668
720
171.2
179.3
191.6
210.4
208. 3
20.9
18.7
21. 5
21. 1
18.7
150.4
160.6
170. 1
189.3
189.7
121. 7
147. 1
165.4
178.3
181.2
8. 1
15.9
20.6
22. 7
24.6
73.2
84.8
93.4
98. 7
96.6
40.4
46.4
51. 4
56. 9
60.0
28.7
13.5
4. 7
11.0
8.5
1,075
1, 136
1, 180
1,291
1,272
1,
1,
1,
1,
1,
680
644
545
598
588
30.4
29.5
29. 1
32.9
32.4
99.8
110. 1
115. 1
118.0
119.3
64.9
70.2
75.6
81.8
86.3
12. 6
17.7
18.9
19.8
18.9
1,369
1,475
1,521
1,582
1,582
1,
1,
1,
1,
1,
686
703
719
772
754
1945._
1946._
1947. .
1948-_
1949._
68.5
73.9
68.6
72.9
3.3
6.0
6.3
6.9
6.6
6.8
.1
3.7
1. 1
2.9
11. 1
27.8
33.0
36.9
-1. 2
-1.3
.2
3.4
5.4
5.2
1.7
4. 1
5.5
11.9
23. 7
24.7
25. 1
19. 1
8. 4
2.8
5.8
4. 5
127, 362
128, 181
128, 961
129, 969
131, 028
132, 122
133, 402
134, 860
136, 739
138, 397
139, 928
141, 389
144, 126
146, 631
149, 188
1950__
1951__
1952__
1953__
1954__
228.5
256.7
273. 1
288.3
289.8
20.8
29. 2
34. 4
35.8
32. 9
207.7
227.5
238.7
252.5
256.9
195.0
209. 8
219.8
232.6
238.0
1955__
1956__
1957__
1958._
1959._
310.2
332.9
351.4
360. 3
383.9
35.7
40.0
42.6
42.3
46.8
274.4
292.9
308.8
317.9
337. 1
256.9
269.9
285.2
293.2
313. 5
39.6
38.5
40. 4
37.3
43. 6
124.8
131.4
137.7
141.6
147. 1
92.5
100.0
107. 1
114. 3
122.8
17.5
23.0
23.6
24. 7
23.6
1,660
1,741
1,803
1,825
1,904
1,
1,
1,
1,
1,
832
890
902
889
947
7. 9
7. 6
7.8
7.0
165, 276
168, 225
171,278
174, 154
177, 080
I960..
1961__
400. 8
416. 4
51. 4
52.8
349.4
363. 6
328.5
338. 1
44. 8
43. 7
151. 8
155. 2
131. 9
139. 1
20. 9
25.6
1,934
1,979
1, 950
1, 979
6. 0
7.0
180, 676
183, 742
6. 1
7.8
7.9
7.8
7. 4
6.4
151,
154,
156,
159,
162,
689
283
947
559
388
1 Includes also such items as fines and penalties.
2 Income in current prices divided by the implicit price deflator for personal consumption expenditures on a 1961 base.
s Population of the United States as of July 1, excluding Alaska and Hawaii prior to 1960; includes armed forces abroad.
NOTE.—Quarterly data available beginning 1939; annual from 1929.
Source: Department of Commerce.
and government or exported. To the consumer portion of manufactured products is added the value
of nonmanufactured consumer goods (for example,
nonprocessed foods) to derive producers' output for
consumers. Successive adjustments are added for
transportation, imports and exports, wholesale and
retail inventory changes, wholesale and retail markups, and sales taxes. Transportation charges are
computed from data on transportation compiled by
the Interstate Commerce Commission and other
sources. Wholesale and retail markups are derived
from Census of Business and Internal Revenue Service data. For service items a great variety of sources
and procedures are used.
Estimates of consumption expenditures for years
between benchmarks and quarterly consumption ex-
15
penditures estimates rest chiefly on the trends shown
by the Census Bureau's Annual Survey of Manufactures and retail sales figures by kind of store, Federal
Reserve Board data for department stores, State
sales tax reports, and other source data.
For information on seasonal adjustments, see the
discussion in the sections on Gross National Product
or Expenditure, and National Income.
Relation to other series.—Estimates of personal
consumption expenditures will show much the same
movements from quarter to quarter as the figures for
total retail sales. However, personal consumption
expenditures also include a wide variety of services
and such items as food produced and consumed on
farms which are outside of retail trade. Conversely,
retail trade includes some commodity items, such as
building materials and trucks, which are not part of
personal consumption expenditures.
The estimate of personal net saving and the net
claims estimate of the Securities and Exchange Commission differ in level and trend. The chief reason
for the difference is the inclusion in the personal savings series (and not in the net claims estimates) of net
purchases of nonfarm residences and net increases in
persons' equities in farms and other unincorporated
businesses. (For a detailed reconciliation of the two
series, see table V-9 in U.S. Income and Output,
which is carried forward each year in the July issue
of the Survey.)
Uses and limitations.—The estimates of personal
consumption expenditures represent a generally useful, reliable measure of trends in consumer purchases.
They may be used to study trends in the ratio of
wages, or more generally of income, to expenditure,
and to review the division of the national output between consumer takings, business capital formation,
and government defense or other expenditures.
The estimates of personal saving are among the
least satisfactory of the significant series which appear in the national income accounts. They are the
residual from two larger estimates. The errors and
limitations present in the hundreds of series, developed for other purposes, which must be used
at present in estimating the national income do not
completely cancel out. To this extent these errors
are transmitted into the saving estimate. Quarterto-quarter changes for recent periods are, however,
subject to revision as better data become available.
References.—See above, under National Income.
FARM INCOME
Description of series.—There are two major concepts of farm income. One, a personal income concept, relates to all the people who live on farms and
the incomes they receive from nonfarm as well as
farm sources. The other views agriculture as a
business and measures the gross and net income received from farming. The Economic Research
Service of the Department of Agriculture prepares
estimates relating to both concepts.
Estimates of the personal income received by the
total farm population are available only on an annual
basis back to 1934. The personal income of the
farm population from farm sources covers the net
income of resident farm operators from farming plus
farm wages received by farm resident workers less
contributions to social insurance. It includes Government payments and makes an allowance for the
net change in value of physical inventories of crops
and livestock. Personal income from nonfarm
sources includes salaries and wages, interest, dividends, rents, royalties, and transfer payments, such
as unemployment compensation and veterans'
benefits.
16
Gross and net farm income from farming and farm
production expenses are estimated annually from
1910 and quarterly from 1929. Realized gross income from farming is the sum of (1) cash receipts
from farm marketings, (2) the value of farm products
consumed directly in farm households, (3) the imputed gross rental value of farm dwellings, and (4)
Government payments to farmers. Farm production expenses, which now offset about 2/3 of realized
gross farm income, are the aggregate of all current
farm operating expenses and overhead costs. Farm
operators' net income excluding the net change in
inventories is the remainder of realized gross farm
income after farm production expenses have been
deducted. Farm operators' net income including
net change in inventories takes into account changes
in farmers' holdings of livestock and crops, as shown
on the accompanying chart. Net income per farm
is calculated by dividing the U.S. income totals by
the Department of Agriculture series on estimated
numbers of farms.
Statistical procedures.—Since the average farm
family receives about a third of its total personal
Farm Income, 1947-62
{Quarterly data.
Seasonally adjusted annual rates)
BILLIONS OF DOLLARS
50
40
30
20
A y v NET FARM INCOME (INCL. NET CHANGE IN INVENTORIES]
\
V
10
1947
1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961
1962
SOURCE OF DATA: DEPARTMENT OF AGRICULTURE
income in the form of earnings from employment in
nonfarm occupations or as returns from investments
in nonfarm property, the measurement of these
items is obviously important as a supplement to the
regular measures of farm income. Estimates of
income received by the farm population from nonfarm sources are tied to benchmark estimates from
sample surveys for several scattered years and
interpolated or extrapolated for other years. Since
the first benchmark surveys were for the years
1934-36, the series starts there and does not extend
back to 1910 along with many other series on farm
income. Totals derived from various surveys covering the years 1946, 1950, 1955 and 1960 have been
used as benchmarks or as supplementary check data.
For the computation of gross farm income, the
estimates of cash receipts from marketings are based
on information collected by the Department of Agriculture on the quantity sold and average prices
received by farmers for the various farm commodi-
ties. The current estimates of monthly crop marketings are based on estimated production, the normal percentage of the crop sold, and the usual
seasonal movement to market, supplemented by
available current data on market receipts. For most
of the important livestock items, current reports on
production or market receipts are available and are
used to estimate current livestock marketings. The
estimates of cash receipts from marketings are later
revised as more complete data on production, cropyear sales and monthly marketings become available.
The value of farm products consumed directly in
farm households is estimated on the basis of information obtained from farmers (annually for important
products and less frequently for other products) on
the volume of home consumption, valued at prices
received by farmers for the sale of similar products.
The gross rental value of farm dwellings is designed
to represent the amount which would have to be
paid if the dwellings were rented separately from the
17
farms. Government payments to farmers comprise
all Federal payments made directly to farmers in
which a sale or title transfer to the Government is
not involved—at the present time, Feed Grain and
Wheat Programs, Soil Bank, Conservation, Wool,
and Sugar Act payments. Net Commodity Credit
Corporation loans and purchase-agreement deliveries
are included in cash receipts from marketings.
The estimates of farm production expenses are
based on about 40 separate series. Some of the
operating expenses series are based on data obtained
in the Censuses of Agriculture, with interpolations
for intercensal years; others are based on special
surveys and trade information. Depreciation charges
on buildings, motor vehicles, and other farm machinery and equipment are estimated annually as
the amount which farmers would have had to pay if
they had replaced, at prices prevailing during the
year, the amount of plant and equipment used up
during the year. Estimates are also made for taxes
on farm property, interest on outstanding indebtedness, and net property-insurance premiums.
The net change in inventories reflects physical
changes in all livestock and crops on farms, except
crops under CCC loan, with the changes valued at
average prices for the year.
Annual estimates are made of the number of farms,
based on benchmark data from the Censuses of
Agriculture adjusted for underenumeration. National estimates for intercensal years are the sum of
separate State estimates. They are based on data
which vary from State to State.
Quarterly estimates of cash receipts from farm
marketings are expanded to a seasonally adjusted
annual rate. The normal quarterly distribution of
cash receipts in recent years has been 21 percent in
the first quarter, 20 percent in the second quarter,
27 percent in the third quarter, and 32 percent in
the fourth quarter—requiring some fairly large
seasonal adjustments.
Except for cash receipts, however, monthly or
quarterly information on components of farm income and expense is insufficient for the direct application of ordinary methods of seasonal adjustment.
While cash receipts can be seasonally adjusted in
the usual manner, the other quarterly estimates are
interpolated from annual data largely in terms of
price changes, with the quantity factors either held
constant throughout the year or varied in some
reasonable manner.
18
Relation to other series,—The series on net income
of farm operators including net change in inventories
is conceptually the same as farm proprietors' income
in the national income series, although some variations exist prior to 1946 because of differences in the
timing of revisions.
The Department of Agriculture also publishes other
estimates such as the net cash income of farm operators, the income of farm workers, farm capital
expenditures, and related series.
Uses and limitations.—The estimates of realized
gross farm income are for the most part based on a
comprehensive body of basic data and are considered
to be reasonably accurate. The estimates of farm
production expenses, however, are based in part on
incomplete data, less frequently collected, and may
be subject to a fair-sized margin of error. Any errors
in the expense estimates are fully reflected in the
estimates of net income of farm operators.
Information on total farm income and on net
income per farm and per capita is useful as a general
indicator of the economic well-being of a broad sector
of the economy. Its usefulness is limited, however,
because of a wide variation in type-of-farming operations and in size of farms. Some segments of the
farm economy may prosper at the same time that
other segments are seriously distressed. In order
to supply more detailed data on how the different
segments of the farm economy are affected by changing prices of farm products and of farm production
items, the Economic Research Service has developed
data on farm costs and returns for 39 of the more
important type-of-farming areas. The Economic
Research Service has also developed some preliminary
estimates of income for commercial and for noncommercial farms.
References.—The basic release of the farm income
data is The Farm Income Situation, published four
times a year by the Economic Research Service.
The annual series are also published, with other
principal series relating to agriculture, in the Department of Agriculture's annual Agricultural Statistics.
The methods used to estimate farm operators'
income are described in detail in Major Statistical
Series of the U.S. Department of Agriculture, Volume
3—Gross and Net Farm Income, published in 1957.
The methods used for the quarterly estimates of
farm operators' income in terms of seasonally adjusted annual rates are described in an article by
Ernest W. Grove in the July 1954 issue of Agricul-
Farm Income
Income received by farm operators from farming
Personal income received
by total farm population •
Realized gross
Year
From
all
sources
From
farm
sources
From
nonfarm
sources
Realized net
Cash
Producreceipts tion ex- Excluding
net inpenses
Total * from
marketventory
ings
change
Net income per farm
including net inventory change 8
Including
net inventory2
change
Billions of dollars
w
1929
1930
1931
1932
1933
1934
<•>
<•»
(5)
(5)
5. 4
3. 2
(5)
(5)
(5)
2.2
7. 7
(5)
(5)
1935 ._
1936
1937
1938
1939
7.2
5.4
4.6
2.3
2.6
9. 0
7. 2
7. 4
6. 3
4. 7
4. 8
2.7
2. 5
1940 __
1941
1942
1943
1944
7. 6
10. 1
14. 0
16. 3
16. 5
4.9
6.9
10. 2
12. 2
12. 3
1945
1946 _
1947
1948
1949
17. 1
20. 1
21. 0
23. 5
19.0
12. 9
15. 7
16. 0
18. 1
13. 5
4.2
4.4
1950
1951
1952
1953
1954
20. 4
22. 8
22.3
20. 0
19. 0
14. 3
16. 5
15.7
13. 8
13. 2
6. 1
18. 3
18. 6
18. 8
20. 5
19. 0
12. 2
12.0
12. 2
13.8
11. 8
19.6
20.3
12.4
13. 3
6. 1
6. 6
6. 6
6.7
7. 1
7.2
1955_
1956
1957
1958 _
1959
___ _ _
_
1960
1961
2.6
2.7
3.2
3.8
4. 1
4. 2
5. 0
5. 4
5. 5
6.3
6.6
6. 3
5. 8
7.0
11.3
7.6
11. 4
7. 1
9.0
6. 4
4. 8
5. 3
8.6
6.4
9.7
10.7
11. 3
10. 1
10.6
1961
prices 4
Dollars
13.9
8.4
6.4
Current
prices
6.3
6. 1
943
1,779
6.9
4. 5
4. 3
650
5.5
4.4
2.9
1.9
3.3
2.0
1, 327
1,205
4. 3
2. 6
4.7
2. 8
3. 9
2.9
506
305
382
434
7. 1
5. 1
4.6
778
5.6
5. 1
5.3
8.4
8.9
4.3
5.2
6. 0
4. 4
4. 5
643
911
7.7
7.9
6. 1
5.8
6.2
4. 3
4. 4
4.3
6.2
8.8
847
1, 032
1, 033
675
697
1,852
1,531
2,070
1,607
1, 700
1,756
2,373
3, 137
3, 407
3, 278
11.0
13.8
18.8
23.4
24.4
11. 1
15. 6
19. 6
20. 5
6. 7
7. 7
9. 9
11. 5
12.2
11.9
12.2
9. 9
11.8
11.8
720
1,044
1, 600
1, 942
1,967
25.8
29.7
34. 3
34.9
31.8
21. 7
24. 8
29. 6
30.2
27.8
12.9
14. 5
17. 0
18.8
18.0
12.8
15.2
17. 3
16. 1
13.8
12.4
15.3
15. 5
17.8
12.9
2,080
2,574
2,648
3,065
2,259
3,302
3,677
3, 269
3, 564
2,722
32.5
37.4
37.0
35.3
33.9
28. 5
33.0
32.6
31. 1
30.0
19.3
22.2
22.6
21. 4
21. 7
13.2
15. 2
14. 4
13. 9
12. 2
14. 0
16.3
15. 3
13. 3
12.7
2, 479
3,009
2,951
2,664
2,645
2, 951
3,271
3, 173
2,896
2, 875
33.3
34. 6
34. 4
37.9
37. 5
29.6
30. 6
29. 8
33. 4
33. 5
21.9
22. 6
23. 4
25.3
26. 2
11. 5
12. 0
11. 0
12. 6
11. 3
11.8
11.6
11. 8
13. 5
11. 4
2,529
2, 574
2, 695
3,201
2, 775
2,749
2,737
2, 778
3,266
2, 803
37.9
39. 9
34. 0
35.2
26. 2
27. 1
11. 7
12.8
12.0
13.0
3,044
3,422
3,075
3,422
8.4
4. 6
6.6
1
2
Cash receipts from marketings, Government payments, and nonmoney income furnished by farms.
Data prior to 1946 differ from "Farm properietors' income" in the table "Sources of Personal Income" (p. 13) because of revisions by the Department of Agriculture not yet incorporated into the national income accounts of the Department of Commerce. Inventory of crops and livestock valued at the average price for
the 3year.
Based on the 1960 Census of Agriculture definition of a farm. The numbers of farms (in millions) are 3.9 for 1960 and 3.8 for 1961.
*5 Income in current prices divided by the index of prices paid by farmers for items used in family living on a 1961 base. Series on personal income begins in 1934.
Source: Department of Agriculture.
tural Economic Research, published by the Agricultural Marketing Service (now published by the
Economic Research Service). The individual studies
of commercial family-operated farms by types and
location are published annually by the Economic
Research Service in Farm Costs and Returns.
19
CORPORATE PROFITS
Description of series.—The corporate profits and
related series of the Office of Business Economics,
Department of Commerce, contains profits estimates
for past years and recent quarters for all United
States corporations organized for profit. Data are
shown for broad industry groups, and estimates are
made of the distribution of profits between dividends
and retained earnings, as well as corporate tax liability (Federal and State corporate income and excess
profits taxes), corporate capital consumption allowances and corporate cash flow (i.e., corporate profits
after taxes plus capital consumption allowances).
Capital consumption allowances consist of depreciation, capital outlays charged to current expense and
accidental damage to fixed capital.
The national income concept of profit is used in
these series. Dividends received, by corporations are
deducted from profits (and dividends) to obtain
unduplicated totals reflecting income originating in
United States corporations. Profits are calculated
inclusive of depletion, which is not considered an
element of capital consumption in the national income and product accounts. (Depletion allowances
are not included in the capital consumption allow-
ance estimates.) Capital gains and losses are
eliminated from profits because they do not measure
gains or losses originating from current production.
Adjustments for international flows affecting profits
are made. In these respects the national income
measure of profits differs from those commonly used
in company reports and shown in such other profits
series as the Internal Revenue Service tabulations
and the financial report series of the Federal Trade
Commission
and Securities
and
Exchange
Commission.
A significant revision of the corporate profit series
was undertaken for the period 1948-1957. This involved a change in the data base used in evaluating
the effects of Internal Revenue Service audit on the
underlying income tax statistics, the inclusion of an
allowance for profits of speculative builders, and
certain minor statistical improvements.
Statistical procedures.—The annual data published
in the corporate profits series are, except for the most
recent year or two, based upon tabulations by the
Internal Revenue Service of unaudited corporate income tax returns. The data in these tabulations are
adjusted to make them comparable, statistically and
Corporate Profits, 1947-62
{Quarterly data.
Seasonally adjusted annual rates)
BILLIONS OF DOLLARS
60
10
1947
1948 1949 1950 1951 1952
SOURCE OF DATA: DEPARTMENT OF COMMERCE
20
19531954
1955 1956 1957 1958 1959 1960 1961
1962
Seasonal Correction, Corporate Profits and Inventory Valuation Adjustment, 1961
[Billions of dollars]
Quarters
Seasonally adjusted
quarterly rates
Unadjusted quarterly
rates
Correction, quarterly rates
(seasonally adjusted
minus unadjusted)
I
II
III
IV
10.0
11.2
11.5
12. 8
conceptually, with other entries in the national income accounts. The important conceptual accounting adjustments are suggested by the statement
above of differences between the conventional accounting concept of profit and the national income
concept. Another important adjustment of the tabulations is the audit adjustment which makes allowance for additional profits disclosed by auditing of the
income tax returns by Internal Revenue. Mutual
financial intermediaries are not considered part of
the corporate universe, for national income purposes,
and profits of these companies are removed from the
tax return tabulations.
The estimates for the most recent year or two and
for quarters are made by extrapolating the benchmark estimates, i.e., the latest available estimates
based upon Internal Revenue tabulations of corporation tax returns. The extrapolators for manufacturing corporations are based upon the FTC-SEC
Quarterly Financial Report; those for Federally regulated industries are obtained from reports to the
Federal regulatory agencies; and those for other
industries are based upon nongovernmental surveys
and upon miscellaneous sources of varying reliability.
When the Internal Revenue tabulations of tax returns for a given year become available, the estimates for that year are revised to conform to the
Internal Revenue tabulations.
The adjustment of corporate profits estimates for
seasonal variation is difficult because of the volatility
of profits. A diversity in seasonal patterns exists
among the various industries, so the adjustment is
made in considerable industry detail. While for
most industry components the ratio-to-moving-average method has been used, a clearer seasonal pattern
has been obtained in certain industries by using
linear regressions of the unadjusted data for the
given quarter of each year against trend, plus cyclical
values for the same period. The seasonal patterns
in corporate profits have been subject to periodic
revision as the postwar experience lengthened. The
correction for seasonal variation is made in terms of
the corporate profits share of national income (i.e.,
corporate profits before tax, plus inventory valuation
adjustment) which experience has shown to permit
a more meaningful basis of adjustment than profits
before taxes alone.
The magnitude of the corporate profits seasonal
correction may be seen in the comparison of unadjusted and seasonally adjusted quarterly data for the
year 1961 shown in the table.
Corporate income tax liability estimates are derived by multiplying the quarterly estimates of profits before taxes by annual tax ratios. For current
quarters the ratios of taxes to profits before tax for
the latest full year are used with any necessary adjustments, such as to allow for new Federal tax legislation. Quarterly net corporate dividends are estimated from a sample of publicly reported dividends
which account for three-fourths of total dividend disbursements. Other profit components are estimated
as residuals: profits after tax being equal to profits
before tax less corporate income tax liability, and undistributed corporate profits being equal to profits
after tax less dividends.
In general, the valuation of the capital consumption allowance charges reflects the type of accounting
practices followed in arriving at the corporate profits reported to the Internal Revenue Service. Tabulations of Federal income tax returns data are the
primary source of the estimates of depreciation,
which account for about 90 percent of corporate
capital consumption allowances. Pending the availability of tax return data for the latest two years,
the same sources used to estimate corporate profits
are used to estimate depreciation charges. Estimates of capital outlays charged to current expense
are prepared in two parts: drilling and development
costs of oil and gas wells, which are included in the
new construction component of gross private domes-
9. 4
11. 7
11. 4
13. 1
0. 6
—. 5
.1
-.3
21
Corporate Profits
[Billions of dollars]
Corporate profits (before taxes) and inventory
valuation adjustment l
Corporate Drofits
iifter taxes
Manufacturing
Period
All
industries
Transportation,
commuDurable Nongoods durable nications,
Total indusgoods and public
utilities
tries
industries
All
other
industries
Corporate
profits
before
taxes
liability
Corporate
income
tax
2.6
2.5
2.0
3.0
9.6
1.4
8.3
5.8
6. 6
1.6
-2.0
-2.0
1. 1
3.9
1.3
-.6
1.5
.0
-1. 1
-.5
.2
2.4
1.3
.4
.0
.7
1.2
.6
.2
1. 5
2
-l! 5
-1. 5
3.3
.8
2.5
5.5
4. 1
2.6,
2. 1
1935
1936
1937
1938
1939
2.9
5.0
6.2
4.3
5.7
2.0
.9
1.7
1.7
.7
1. 6
1. 1
.5
.7
1940
1941
1942
1943
1944
9. 1
14. 5
19.7
23. 8
23.0
1945
1946
1947
1948
1949
18.4
17.3
23.6
30.8
28.2
1950
1951
1952
1953
1954
35.7
41.0
37.7
37.3
33. 7
1955
1956
1957
1958
1959
43. 1
42. 0
41.7
37.2
47.2
25.0
23.5
22.9
18.3
25.4
14.2
12.6
13. 1
10.8
10.9
5.4
5.6
9.0
9.8
9.3
13.4
1960
1961
45.6
45.5
24.0
23. 5
12. 2
11.7
10. 1
1930
1931
1932
1933
1934
. 0
.9
3. 1
3.6
2. 2
3.2
5.4
9.3
11.7
13.7
13.0
9. 5
8.4
12.8
16.8
15.3
20. 4
24.4
21. 1
21.4
18. 4
1.4
2.0
1. 4
1. 5
.1
.4
o
. o
-3.0
.2
1.7
-.2
.5
1. 2
.8
.6
1.0
1.8
1.0
5.7
1. 4
6.2
3.3
1. 5
1. 5
6. 4
3. 0
6.3
7. 1
8. 0
7.3
2.3
3.0
4.5
5.6
1.3
2.0
3.5
2. 4
9.3
3.2
4.5
4. 4
5. 7
3.9
5. 7
6. 1
17.0
20. 9
24. 6
23.3
4.5
2. 1
5.3
7.4
7.9
5.0
6.3
7.4
9.4
7.4
2.8
1.8
8.4
4.0
4.5
4.8
12.0
13.5
11.8
12. 1
10. 1
2. 1
6. 1
7. 1
8.7
11.2
10. 1
.5 - 1 . 3
. 4 -3.4
.5 - . 4
1.0
.7
3. 1
19. 0
22.6
1.5
1.0
1.4
2.8
7.6
Profits
plus
capital
consumption
allow-3
ances
2.4
4.4
12.7
-3.0
-5.4
-6.0
-2.4
-1.6
4.4
4.3
4.0
3.8
3.6
6.9
3.0
.6
3.4
4.6
-.7
-. 2
.0Q
3.7
3.7
3.8
3.8
3.9
5.9
8.0
4.0
4.5
5. 1
5.5
6.3
10.5
13. 9
14. 6
16. 0
16.7
6.7
5.2
6.3
7.7
15.0
18.6
24.5
28.2
24.5
Divi- Undisdend tributed
Total pay- profits
ments
5. 1
1929
Corporate
capital
consumption
allow-2
ances
2.6
2.2
4.3
2.9
4.5
4. 7
4.7
3.2
3.8
2.3
5.0
6. 5
9.4
9.5
11.4
14. 1
12. 9
10. 5
10. 4
10.7
9. 1
11.3
12. 5
10.4
13.4
18. 2
20.5
16.0
8.3
1.2
4.0
4. 5
4.3
4.5
4.7
2. 4
4.7
5.8
6.5
7.2
7. 5
3.6
7.7
4.9
5.2
6.0
5.7
29.5
33.0
26.4
40. 6
42.2
36.7
38.3
17.9
22. 4
19.5
20.2
9.2
9.0
9.0
9.2
17. 2
22. 8
19.7
17.2
18. 1
16. 8
11.9
44.9
44.7
43. 2
37.4
47.7
21. 8
21. 2
20. 9
18.6
23. 2
23.0
23.5
22. 3
18.8
24.5
11.2
12. 1
12. 6
12.4
13. 7
11.8
11.3
5.6
6.7
12.8
12. 9
13.3
13. 3
15. 1
11. 8
11. 7
7.0
7.4
14. 6
14.7
45. 4
45. 6
22. 4
22.3
23. 0
23.3
14. 4
15.0
10.9
9.3
9.3
8. 3
2.9
2.9
4.9
4. 4
5. 5
11.3
12.0
11.8
11.0
11. 0
34. 1
9. 8
11.7
13.3
8. 5
13.6
10.7
8.5
8. 5
6. 1
8.9
11.0
12. 3
14. 1
15. 8
32.2
30.7
29. 6
32. 2
32. 7
6. 4
10.8
18.4
20.0
21. 8
22. 7
24.3
41. 4
43. 5
44. 1
41.4
48. 7
8.6
8.3
25.9
27.5
48.9
50. 8
8.3
8.9
7.0
9.7
9.4
1 See table on National Income (p. 11) for the inventory valuation adjustment.
2 Includes depreciation, capital outlays charged to current accounts and accidental damages.
3 Corporate profits after taxes plus corporate capital consumption allowances.
NOTE.—Data for Alaska and Hawaii included beginning 1960.
Source: Department of Commerce.
tic investment; and purchases of producers7 durable
goods charged to current account, of which hand tools
are an example. Estimates of accidental damage to
fixed capital are compiled from fire loss, accident loss
and other relevant loss reports.
Relation to other series.—The corporate profits
22
series is designed primarily to measure the contribution of corporate profits to the national income. It
is as consistent with the concepts of the national income accounts, and with other series which are a part
of those accounts, as the basic data permit, and can
be used in conjunction with the other national in-
come series (e.g., net interest, proprietors' and rental
income, compensation of employees, etc.) with confidence in their conceptual comparability.
The corporate profits series is based upon reports
from companies rather than establishments. This
results in noncomparability with series based upon
reports from establishments. Furthermore, surveys
based upon the establishment unit of classification
are not confined to establishments of corporations
but include establishments of other forms of organization as well. The corporate profits series, or any
other series based upon company reports, cannot
safely be assumed to be directly comparable with
these establishment series unless the reports on the
different bases have been reconciled. These factors
are more important when series for specific industries are being compared, however, than when the
broad aggregates published in Economic Indicators
are compared.
The series on expenditures for new plant and
equipment and sales and inventories are also based
primarily upon company reports. The plant and
equipment expenditures and the sales and inventories
series, however, cover unincorporated as well as incorporated businesses. These three series cover
closely related economic phenomena and can be used
to supplement one another analytically.
Uses and limitations.—The corporate profits series
is an important economic indicator, reflecting the
state of health of a substantial part of the Nation's
business community. Certain limitations of the
series require that it be used with caution, however.
(1) As its title indicates, the series measures only
the profits of corporations. It does not, therefore,
portray fully the profit position of all business.
(2) The corporate profits series contained in
Economic Indicators are rather broad aggregates
and need to be supplemented by data pertaining to
specific industries for some analytical uses.
(3) The quarterly corporate profits estimates are
less reliable than the annual estimates, especially the
annual estimates for periods more than two years
prior to the current year. There are two principal
reasons for this: (a) quarterly income statements,
upon which the quarterly series must be based, are
inherently less reliable than annual income statements; and (b) wide gaps in the financial data available quarterly for some industries, such as trade and
services, make the underlying basis of the quarterly
estimates weaker than that of the annual estimates.
References.—See above under National Income. A
complete statement of the methods and the sources
of data used in preparing these estimates is presented
in pages 92-97 of the 1954 National Income Supplemtnt to the Survey of Current Business, and pages
93-94, 100-101, and 105 of U.S. Income and Output,
also a supplement to the Survey of Current Business.
GROSS PRIVATE DOMESTIC INVESTMENT
Description oj series.—Gross Private Domestic Investment is one of the major components of gross
national product. The series measures gross fixed
investment and net changes in business inventories,
as shown in the accompanying chart. Gross fixed
investment (or gross fixed capital formation) is
defined as all newly produced durable goods (i.e.,
those with an average life exceeding one year)
acquired by their ultimate business users. New residential construction purchased by owner-occupants
is also included because homeownership is treated as
a business in the national accounts. The "Change
in business inventories" series measures physical
changes in business inventories valued at current
replacement cost.
Separate statistical series are published for "Fixed
investment" (which in turn consists of separate series
for "New construction" and "Producers' durable
equipment") and for "Change in business inven-
tories." The "New Construction" series used in computing gross private domestic investment is based
on the private construction component of the new
construction series described below, with the addition of estimates for oil- and gas-well drilling.
A major revision of the "Producers' durable equipment" series was undertaken in conjunction with the
preparation of the 1954 National Income Supplement to the Survey of Current Business. The estimates were revised for the entire period since 1929.
Further significant revisions covering the period beginning with 1946 are described in U.S. Income and
Output.
The quarterly estimates of producers' durable
equipment and change in business inventories are revised annually to reflect more complete data than
were available when the initial estimates were made.
The revisions in the "Change in business inventories"
series have sometimes been quite sizable, and have
23
resulted primarily from revisions in the basic book
value inventory aggregates.
Statistical procedures.—The principal method of
estimation used for the "Producers' durable equipment" series is the commodity-flow technique. In
brief, this technique consists of (1) analyzing total
manufacturing output to obtain an estimate of the
proportion that consisted of finished producers' durable goods, (2) tracing the flow of those goods
through distribution channels, (3) measuring their
distributive costs, and (4) adding the estimate of
those distributive costs to manufacturers' sales value
to arrive at an estimate of the costs of those goods to
their purchasers.
For the years 1929-39, 1947, and, to a lesser extent,
1954,
data available from the manufacturers and
trade censuses made it possible to carry out the commodity-flow technique of estimating purchases of
producers' durable equipment in greater detail than
was possible in other years. New benchmark estimates of producers' durable equipment for 1954 were
developed on the basis of Census data, and it has
been possible to develop annually for 1955-57 "secondary" benchmark estimates primarily from data
collected by the Bureau of the Census in its annual
sample surveys of manufacturers. Annual estimates
for the years 1955-57 take into account both^ the secondary benchmarks and the series used in making
the quarterly estimates. The quarterly estimates and
the annual estimates of producers' purchases of durable equipment for 1957 and later years are derived
largely by interpolation and extrapolation based on
the OBE-SEC Plant and Equipment Expenditures
Survey (see next section). The Survey results are
adjusted to make them comparable with estimates of
producers' durable equipment, principally by excluding expenditures on new plant, including expenditures on new farm equipment and adding an estimate
of expenditures for business passenger cars to the
extent that they are not covered. The Plant and
Equipment Expenditures Survey has been used to
estimate the quarterly movement of producers' durable equipment for the period 1947 to date. The
quarterly estimates for earlier years are based mainly
on selected industry sales data from the Department
of Commerce Monthly Industry Survey, except for
the 1950-52 period when data from the National
Production Authority were utilized.
The primary source for estimates of changes in
the nonfarm portion of business inventories is re-
Gross Private Domestic Investment, 1947-62
{Quarterly data.
Seasonally adjusted annual rates)
BILLIONS OF DOLLARS
80
GROSS PRIVATE DOMESTIC INVESTMENT
60
40
20
PRODUCERS' DURABLE EQUIPMENT
J
\r
w
CHANGE IN BUSINESS INVENTORIES
I
-20
1947
I
I
I
I
I
I
I I I
I I I I I I I I I I I I I I I I l I I I I I I
l
i
l
l
l
i
l
1948 1949 1950 1951 1S52 1953 1954 1955 1956 1957 1958 1959 1960 1961
SOURCE OF DATA-DEPARTMENT OF COMMERCE
24
1962
Gross Private Domestic Investment
[Billions of dollars]
Fixed investment
Total
gross
private
domestic
investment
Year
Change in business
inventories
New construction *
Producers' durable
equipment
Total
Total
Total
Residential
nonfarm
Other
2
Total
Nonfarm
Nonfarm
1929
16. 2
14. 6
8.7
3.6
5. 1
5.8
5.2
1. 7
1. 8
1930 .
1931
]932
1933 _
1934
10. 3
5. 5
.9
1.4
2.9
10.6
6.2
4.0
2. 1
4. 1
4. 5
1.6
2.4
.6
.5
.6
1. 2
1.0
1. 1
4.0
2.6
3.5
3.0
4.0
1.9
1. 4
1.7
2.8
1.6
1.6
2.3
1.4
1.5
2. 1
—. 4
-1. 3
-2. 6
-1.6
-1. 1
—. 1
-1. 6
-2.6
-1. 4
.2
1935
1936
1937
1938
1939
6. 3
8.4
11.7
6.7
9.3
5. 4
7. 4
9.5
7.6
8.9
2.3
1.0
1.3
3.3
4.4
4.0
4.8
1. 6
1.9
2.0
2. 7
1. 7
2.5
2.0
2. 1
3. 1
4.2
5. 1
3.6
4.2
2.7
.9
1.0
2. 2
-.9
.4
.4
2. 1
1. 7
-1.0
.3
1940 _
1941
1942
1943
1944
13. 2
18. 1
9. 9
5. 6
7. 1
11.0
13.6
8. 1
6. 4
8. 2
5.5
6.6
3. 7
2. 3
2. 7
3.0
3.5
1. 7
.9
.8
2.5
3. 1
2. 0
5. 5
4. 9
6. 1
3. 7
3. 5
4. 7
2. 2
4. 5
1. 8
— 1. 0
1. 9
4. 0
7
—6
—6
10.4
28. 1
31. 5
43. 1
33.0
11.5
21. 7
32. 0
38. 4
36.0
3.8
11.0
15. 3
19. 5
18.8
1. 1
4.8
7. 5
10.1
2:7
6.3
7. 7
7.7
10.7
9.6
9.3
9.2
16. 7
18. 9
17.2
6.9
9. 8
14. 9
16. 4
14. 4
-1. 1
6. 4
—. 5
4. 7
-3. 1
-.6
6. 4
1. 3
3. 0
-2. 2
50. 0,
56. 3*
49. 9
50.3
48.9
43.2
46. 1
46. 8
49.9
50.5
24.2
24. 8
25.5
27.6
29. 7
14. 1
12. 5
12.8
13.8
15. 4
10.1
12. 3
12. 7
13.8
14. 3
18.9
21. 3
21.3
22.3
20.8
16. 2
18. 4
18. 6
19. 5
18.5
6. 8
10. 2
3. 1
.4
-1. 6
9. 1
2. 1
1. 1
-2. 1
63.8
67. 4
66. 1
56.6
72. 7
58. 1
62.7
64.6
34.9
35.5
36. 1
18.7
40. 2
22. 3
16. 2
17.8
19.0
17.4
17. 9
23. 1
27.2
28.5
23. 1
25. 9
20.6
25. 0
26.2
66. 2
17. 7
17.0
18.0
23. 1
5.8
4. 7
1. 6
-2.0
6. 6
5.
5.
.
-2.
6.
72.4
69. 3
68.3
67. 1
40.7
41. 6
21. 1
21.0
19.7
20.5
27.6
25.5
25. 1
23.0
4. 1
2. 1
1945
1946
1947
1948
1949
.
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
__
_ _
1960
1961
6.8
58.6
35.5
1.4
1.9
6.9
4. 3
4. 0
5. 4
3.6
4. 5
3. 1
3.7
20.3
—. 8
6.0
5
1
8
9
5
3.7
1.9
1
Revisions in the "New construction" series shown in table "New Construction" (p. 61) have not yet been incorporated into these accounts.
Includes petroleum and natural gas well drilling, which are excluded from "New construction" estimates.
NOTE.—Quarterly data available beginning 1939; annual from 1929. Detail will not necessarily add to totals because of rounding.
Source: Department of Commerce.
2
ported accounting data on the book value of inventories at the beginning and end of the period for
which the estimates are made. Because inventory
calculation by individual business firms varies widely
in method, numerous adjustments in the reported
data are necessary to arrive at an estimate consistent with the basic concept. The principal adjustment is that of removing the price-change element
91491 O—62
in the reported figures and revaluing inventory
change in current dollars.
Relation to other series.—The relationship between
the "Producers' durable equipment" series and the
estimated equipment series implied in Expenditures
for New Plant and Equipment, to which it is most
closely related, is discussed in the following section.
The "Change in business inventories'' series is most
25
closely related to the estimates of "Business Inventories," discussed later. A basic difference between
these series is that the series on business inventory
change, included here, measures changes in inventories over a period of time, whereas the inventories
series presented below measures the level of inventories at a given point in time. The series also differ
conceptually in their measurement of inventories:
the inventories series is based upon data as reported
by the reporting companies, whereas in the inventory-change series in the income accounts a uniform
method of valuation is used.
The producers7 durable equipment series and the
change in business inventories series are seasonally
adjusted primarily by use of the ratio-to-movingaverage method. Modifications in this seasonal adjustment method are made when appropriate, and
improvements in the seasonal adjustment factors are
instituted when experience suggests that they are
desirable. The magnitude of the gross private domestic investment seasonal correction may be seen
in the accompanying table on page 8.
Uses and limitations.—Changes in business investment are a major—if not the major—factor determining business conditions.
Unfortunately, there are many shortcomings in
the data on which both fixed investment and inventory changes are based, especially for current
quarters.
The absence of reliable current data on government purchases of producers' durable equipment
constitutes a special problem. The limitations of
the data on manufacturers' commodity sales and on
new plant and equipment expenditures affect the
current estimates of investment in producers' durable
equipment. The rate of investment in construction
is also subject to many data inadequacies, requiring
the use of "phasing patterns" and other synthetic
statistical techniques.
The figures on "Change in business inventories,"
although rough estimates to a considerable degree,
are useful indicators of the physical volume change in
inventories during the period under review. A serious limitation in the series is inherent in the basic
method of calculation that must be used. The estimates are calculated as the difference between large
and possibly volatile inventory totals at two points
in time. Even small errors in the estimates of total
inventories can lead to large relative errors in the estimates of inventory change. This limitation contributes appreciably to the difficulty of determining
seasonal patterns in the quarterly changes in business inventories. Because comprehensive accounting
data on inventories become available only after a lag
of about two years, current estimates of inventory
change are based upon less satisfactory data than
are the estimates for past years.
References.—See above, under National Income.
For a full discussion of the concepts and statistical
methods, see particularly pages 43-45 and 122-138
in the 1954- National Income Supplement, and pages
82-85 and 97-98 of U.S. Income and Output.
EXPENDITURES FOR NEW PLANT AND EQUIPMENT
Description of series.—The series on expenditures
for new plant and equipment, published jointly by
the Office of Business Economics (Department of
Commerce) and the Securities and Exchange Commission, measures the expenditures by all private
business (except farming, real estate, the professions,
and non-profit and other institutions) for new plant,
machinery, and equipment for which depreciation
accounts are maintained. Expenditures charged
off as current expense are excluded. Estimates are
made quarterly for actual plant and equipment expenditures and for anticipated expenditures for two
succeeding quarters and the calendar year. These
estimates are based upon information contained in
annual reports of all corporations registered with
SEC and quarterly reports from a group of registered corporations which make over 90 percent of the
26
capital expenditures by registered corporations; in
annual and quarterly reports by a group of unregistered mining, manufacturing, trade, service, and
construction companies to OBE, and by regulated
railroads, motor carriers, water carriers, and pipeline
companies to the Interstate Commerce Commission.
In 1960 a large expansion was made in the sample
of financial organizations.
The last major revision in the series was published
in two parts, the revision for manufacturing industries in the December 1951 issue of the Survey of
Current Business and the revision for nonmanufacturing industries in the August 1952 issue. The revision established a new set of benchmark data and
introduced improvements in the estimating procedures being used. For example, information contained in the annual mandatory financial reports
Expenditures for New Plant and Equipment, 1947-62
(Quarterly data.
Seasonally adjusted annual rates)
BILLIONS OF DOLLARS
40 1
30
20
MANUFACTURING
v-'-\
10
COMMERCIAL AND OTHER
1947
1948 1949 1950 1951 1952 1953 1954 1955 1951 1957 1951 1959 1910 1911
19S2
SOURCE OF DATA: SECURTIES AN0 EXCHANGE COMMISSION, AND'DEPARTMENT OF COMMERCE
(Form 10K) to SEC was used for the first time and
adjustments were made for biases arising out of
changes in the business population.
Statistical procedures.—The benchmarks for the
estimates were developed by applying weights derived from reports to the Internal Revenue Service
for the tax year 1948 to sample expenditure figures
for the benchmark period (i.e., 1948). Actual plant
and equipment expenditures data were not available
for the universe of all firms, so it was necessary to
derive a benchmark by using pieces of related information which were complete—specifically, total
assets for corporations and total sales and operating
receipts for unincorporated business. Ratios of
plant and equipment expenditures to total assets or to
sales and operating receipts were computed from
the reporting sample and from other sources. These
ratios were multiplied by IRS universe assets, or
sales and operating receipts, to determine universe
estimates of plant and equipment expenditures in
1948.
The estimations of year-to-year and quarter-toquarter movements in these expenditures are made by
extrapolating the benchmark estimates on the basis of
the annual and quarterly reports received by SEC,
OBE and ICC. Essentially, the estimation procedure is as follows: given a universe estimate lor one
period, the universe estimate for the next period is
derived by multiplying the first given universe
estimate by a link relative which is derived from
aggregates for the first period and the period following for a matched sample of reporting companies. The group of reporting companies accounts
for at least two-thirds of aggregate investment in
plant and equipment, although the sample is not
randomly selected. Coverage varies considerably by
industry groups. Sample expenditures as a percent of
estimated universe expenditures in the third quarter
of 1957 were as follows: manufacturing 79; mining
37; railroads 99; transport, except railroads, 50; public utilities 82; communications 95; commercial 11;
and total 66.
The factors used for adjusting plant and equipment expenditures data for seasonal fluctuations
are based on the ratio-to-moving-average technique.
These seasonal adjustment factors are applied both to
the estimates of anticipated expenditures for a given
quarter and to the estimates of actual expenditures for
that quarter. The seasonally adjusted estimates of
anticipated expenditures are further adjusted for
27
the systematic biases of underestimation or overestimation that have been found in the reported data.
The seasonal adjustment factors and the bias adjustment factors have remained relatively stable for
any given quarter during recent years, but they are
modified as circumstances warrant. The bias adjustment factors are applied as multipliers; the seasonal adjustment factors are applied as divisors. The
magnitudes of the seasonal and bias adjustments
made in the 1961 quarterly estimates are suggested
by the implicit adjustment factors shown in the
table below.
*
Relation to other series.—The OBE-SEC series on
actual plant and equipment expenditures utilizes the
same definitions of investment as those of the Census
of Manufactures, Census of Business, and the annual
survey of manufactures of the Bureau of the Census.
There are substantial differences between the Census
Bureau data on expenditures for plant and equipment and the OBE-SEC series, however. Most
important, the OBE-SEC series supplies both actual
and anticipatory data on a quarterly and annual
basis, whereas the Census data relate only to annual
expenditures in past periods. In addition, the
OBE-SEC series obtains reports on companywide
outlays, whereas the Census Bureau obtains reports
on outlays of establishments. Thus, the Census
Bureau's annual series on manufacturers covers only
establishments whose primary activity is manufacturing, whereas the OBE-SEC quarterly and annual
manufacturing series covers all activities, manufacturing as well as nonmanufacturing, of companies
whose primary activity is manufacturing; and excludes manufacturing activities of companies whose
primary activity is nonmanufacturing. Finally, the
OBE-SEC estimates cover all industries except agriculture, the professions and non-profit and other
institutions, and real estate, whereas the Census estimates cover only manufacturing, mining (1954 and
1958) and the wholesale, retail and service trades
(1958).
The OBE-SEC series, covering all industries,
differs somewhat in concept from the "Producers'
durable equipment" and "New construction" components of gross private domestic investment. Unlike the latter, the OBE-SEC series is confined to
nonagricultural industries, and excludes expenditures
of institutions and professional persons and plant
and equipment outlays charged off as current expenses; it is based on a survey requesting information
on expenditures charged to capital account, for
which depreciation accounts are maintained. The
current estimates of investment in producers'
durable equipment are for the most part derived
indirectly by extrapolating benchmarks on the basis
of percent-change estimates developed from the
equipment expenditures portion of the OBE-SEC
series; and the estimates of new private construction
are developed from both direct and indirect sources.
The OBE-SEC series on manufacturers' expenditures for new plant and equipment is directly comparable in classification and scope with the CensusOBE series on manufacturers' sales, new orders,
and inventories, although the comparability will diminish somewhat as the sales, orders and inventories
survey reports for large multi-industry firms are
shifted from a company to a divisional basis. The
OBE series has a different scope from the Federal
Trade Commission-Securities and Exchange Commission manufacturing, financial reports series, mainly
in that the FTC-SEC estimates of balance sheet and
income statement items cover only corporations, and
a different degree of consolidation is involved.
Uses and limitations.—This series is one of the
very few economic series in which estimates of anticipated events as well as historical events are made.
Anticipated capital outlays, especially for the coming
year are of great importance in the analysis of
Implicit Adjustment Factors, Expenditures for New Plant and Equipment, 1961
Bias Adjustment Factors
Quarter
First
Second
Third
Fourth
_ _
28
__ _
First anticipated expenditures estimate for
a given quarter
Second anticipated expenditures estimate for
the same quarter
0.97
.97
.98
1.06
0.92
.96
.93
1.01
Seasonal adjustment factors for the same quarter
0.89
1.03
1.00
1.08
Expenditures for New Plant and Equipment
[Billions of dollars]
Manufacturing
Year
Total
Transportation
1
Total
Durable
goods
Nondurable goods
1939
5. 51
1. 94
0. 76
1. 19
1945
1946
1947
1948
1949
8. 69
14.85
20. 61
22.06
19. 28
3. 98
6. 79
8. 70
9. 13
7. 15
1. 59
3. 11
3. 41
3.48
2. 59
2.
3.
5.
5.
4.
1950
1951
1952
1953
1954
20. 60
25. 64
26. 49
28. 32
26.83
7.49
10.85
11. 63
11. 91
11. 04
3.
5.
5.
5.
5.
1955
1956
1957
1958
1959
28. 70
35.08
36. 96
30. 53
32. 54
1960
1961
1962 (anticipated)
35.68
34. 37
37. 41
Mining
Railroads
Other
Public
utilities
Commercial and
other 2
0. 33
0. 28
0. 36
0. 52
2.08
39
68
30
65
56
. 38
.43
. 69
.88
. 79
. 55
. 58
. 89
1. 32
1. 35
. 57
.92
1. 30
1. 28
.89
50
. 79
1. 54
2.54
3. 12
2 70
5. 33
7. 49
6.90
5.98
14
17
61
65
09
4. 36
5. 68
6.02
6. 26
5. 95
.71
.93
.98
.99
.98
1. 11
1. 47
1. 40
1. 31
. 85
1.21
1.49
1. 50
1. 56
1. 51
3. 31
3. 66
3. 89
4. 55
4. 22
6. 78
7. 24
7. 09
8. 00
8. 23
11.44
14. 95
15. 96
11. 43
12.07
5.44
7. 62
8. 02
5.47
5. 77
6. 00
7. 33
7. 94
5.96
6. 29
.96
1. 24
1. 24
.94
. 99
.92
1. 23
1. 40
.75
. 92
1. 60
1.71
1. 77
1.50
2. 02
4. 31
4.90
6 20
6. 09
5. 67
9. 47
11. 05
10 40
9.82
10. 88
14. 48
13. 68
14. 80
7. 18
6. 27
7. 15
7. 30
7.40
7. 65
.99
.98
1. 11
1.03
.67
.86
1. 94
1. 85
2.04
5. 68
5. 52
5.47
11. 57
11. 68
13. 13
1
Excludes agriculture.
Includes trade, service, finance, communications, and construction.
NOTE.—These figures do not agree precisely with the plant and equipment expenditures included in the gross national product estimates of the Department of
nmerce. The main difference lies in the inclusion in the gross national product of investment by farmers, professionals, and institutions, and of certain outlays
Commerce
charged to current expense.
Data on expenditures for new plant and equipment are not available for the years prior to 1939 and for the years 1940-44.
2
Sources: Securities and Exchange Commission and Department of Commerce.
business conditions. Anticipated expenditures for a
period differ from actual expenditures for the same
period for a number of reasons. Nevertheless,
except in a few periods in the past when unanticipated developments of major importance have
occurred, such as the outbreak of Korean hostilities,
both the annual data and the quarterly anticipatory
data adjusted for seasonal variations and systematic
biases have proved a reliable indicator of the overall
trend of capital expenditures. The survey has generally reflected the cyclical turning points in the
postwar period.
There are two principal deficiencies in the statistical procedures employed in making the estimates of
expenditures for new plant and equipment. One of
these, mentioned above, is the inadequacy of the sample for some industries. This is so despite the fact
that within the past few years the coverage in some
of these industries—notably: mining, finance, service,
construction, trade, and transportation other than
rail and air—has been strengthened considerably.
The second deficiency is that in several areas,
especially trade, services and construction, the
benchmark data are either out of date or of limited
reliability.
References.—These estimates are published quarterly in Department of Commerce and Securities and
Exchange Commission press releases and in the
Survey of Current Business. Annual data and quarterly data for the preceding four years are shown in
Business Statistics, the biennial statistical supplement to the Survey of Current Business. For a fuller
description of the methods employed in making the
estimates and of the latest revisions in the series, see
the December 1951 and August 1952 issues of the
Survey of Current Business. Further elaboration on
the methods employed and a qualitative evaluation
of the series for the years 1948-1958 is contained in
Statistical Evaluation Reports, Report No. 1, "An Appraisal of OBE-SEC Estimates of Plant and Equipment Expenditures, 1947-1958," published by the
Office of Statistical Standards, Bureau of the Budget.
29
EMPLOYMENT, UNEMPLOYMENT, AND WAGES
STATUS OF THE LABOR FORCE
Description of series.—Each month the Bureau of
Included as unemployed are persons who did not
Labor Statistics of the Department of Labor pub- work at all during the survey week and were looking
lishes estimates of the labor force and of total em- for work. Also included as unemployed are those
ployment and unemployment. In addition to the who did not work at all during the survey week and
overall figures, detail is presented on the characteris- (a) were waiting to be called back to a job from
tics of employed and unemployed persons, such as which they had been laid off; or (b) were waiting
age, sex, color, marital status, and veteran status. to report to a new wage or salary job scheduled to
Employed persons are further subdivided into those start within the following 30 days (and were not in
employed in agriculture or in other pursuits, and school during the survey week); or (c) would have
into wage and salary workers, or the self-employed. been looking for work except that they were temWorkers are also classified by broad occupation porarily ill or believed no work was available in their
groups, by hours worked during the survey week and line of work or in the community.
by reasons for part-time work. Duration of unemThe sum of the employed and the unemployed conployment is shown for the unemployed.
stitutes the civilian labor force. The total labor
The information is obtained from a monthly sample force also includes members of the Armed Forces
survey of households, conducted by the Bureau of stationed either in the United States or abroad. All
the Census, which represents all persons in the United other civilians 14 years of age and over are classified
States except those living in institutions (such as pris- as "not in the labor force" (housewives, students, reons or homes for the aged). On the basis of responses tired or disabled persons, those doing less than 15
to interviewers, all persons 14 years and over in the hours of unpaid family work, and the voluntarily
sample households are classified as employed, un- idle).
employed, or not in the labor force for the calendar
The sample survey described above was started in
week containing the 12th of the month. Prior to March 1940. Prior to that date there was no periodic
July 1955, the reference week was the calendar week direct enumeration of the labor force. The estimates
containing the 8th of the month; this change was shown for 1939 and earlier years were prepared by
the Bureau of Labor Statistics, using information
made to improve comparability with other series.
Counted as employed are all persons who, during such as the 1930 and 1940 Censuses of Population,
the survey week, were either (a) "At work"—those and employment trends from BLS and Department
who did any work for pay or profit, or those who of Agriculture series for intervening years. The
worked without pay for 15 hours or more on a family techniques used in preparing the estimates for the
farm or business; or (b) "With a job but not at earlier years are described in "Labor Force, Emwork"—those who did not work and were not look- ployment, and Unemployment, 1929-39: Estimating
ing for work but had a job or business from which Methods," which appeared in the July 1948 issue of
they were temporarily absent because of vacation, the Labor Department's Monthly Labor Review.
The labor force survey, initiated by the WPA, was
illness, industrial dispute, bad weather, or for various
other reasons. Prior to 1957, this group also included conducted by the Bureau of the Census from 1942
persons on layoff who had definite instructions to through June 1959 as part of the Current Population
return to work within 30 days after the date of layoff Survey. Since July 1959, the Bureau of Labor Sta(now classified as unemployed) and those waiting to tistics has been responsible for monthly statistics on
start new wage and salary jobs within 30 days (now the labor force, with the Bureau of the Census acting
classified either as unemployed or, if currently in as collecting and compiling agent.
Statistical procedures.—Since the survey was instischool, as not in the labor force).
30
Status of the Labor Force, 1947-62
(Monthly data.
MILLIONS OF PERSONS
80
Seasonally adjusted)
TOTAL LABOR FORCE
CIVILIAN LABOR FORCE
70
60
50
NONAGRICUL URAL EMPLOYMENT
40
30
20
AGRICULTURAL EM LOYMENT
10
1947
1948 1949
1950
1951
1952 1953 1954 1955 1956 1957 1958 1959 1960 1961
1962
SOURCE OF DATA: DEPARTMENT OF LABOR
tuted in 1940, there have been a number of revisions although for most major items the series can be
in the series. In November 1943 an improved regarded as reasonably consistent.
sample design was introduced and the estimates were
In May 1956, the sample was expanded from 230
revised back to 1940 using the 1940 Census of Popu- to 330 sample areas and from 21,000 to 35,000 interlation figures as a benchmark for that date. Starting viewed households, to improve further the reliability
in July 1945, a modified set of questions was used of the statistics and to provide a basis for more dewhich resulted in a more nearly complete count of tailed data for the Nation as a whole and limited data
employed persons; the estimates were again revised for broad geographic regions. Full comparisons of
back to 1940 to take account of the improvement in the results from the 230- and 330-area samples—
interviewing procedure. Beginning in 1953, 1950 available for both April and May of 1956—showed
population counts were introduced into the estimat- only small differences either in major categories or in
ing procedure and no backward revisions were made. detailed groups. For most purposes, therefore, the
The 1953 changes raised the levels of labor force, data from the expanded sample since May 1956 can
total employment, and agricultural employment by be used as a continuous series with earlier statistics.
about 350,000, affecting primarily the figures for
Starting in January 1957, certain limited changes
totals and for males.
were made in the definitions of employment and unIn 1954 the sample was spread from 68 sample employment, following a comprehensive interagency
areas to 230 sample areas (although retaining the review of concepts in this field. The changes inoverall size of about 21,000 interviewed households) volved primarily a transfer of two small groups from
in the interest of improving the reliability of the the employed to the unemployed classification, as
estimates. The estimates for 1953, which were described in the definitions given above. Statistics
deficient in certain respects, were revised to achieve for major categories on both the old and new bases
greater comparability with those from the new have been published by the Bureau of the Census for
sample. Estimates prior to 1953 are not exactly 1957 and adjustments carried back to 1947. Starting
comparable with those from the expanded sample, in 1960, data include Alaska and Hawaii increasing
31
the number of sample areas to 333. This inclusion
has resulted in an increase of about 300,000 in
the labor force, four-fifths of this in nonagricultural
employment. The levels of other labor force categories were not changed appreciably.
In December 1961 a modification of the CPS
sample design was begun to gradually incorporate
information obtained from the 1960 Decennial
Census. The transition will be completed by March
1963. The number of households interviewed each
month will remain at approximately 35,000 but the
number of geographical areas sampled will increase
from 333 to 357. The sampling areas will continue
to be stratified according to the following criteria:
(1) Standard Metropolitan Statistical Area or not;
(2) Rate of population change; (3) Percent of population living in urban areas; (4) Percent of population
in manufacturing; (5) Principal industries; (6) Average value of retail trade; (7) Proportion of non-white
population. (For further information, see the 1962
Report of the President's Committee to Appraise
Employment and Unemployment Statistics: "Measuring Employment and Unemployment," Appendix E:
"Revision of the CPS Sample 1961-1963/0
The panel of respondents is rotated. A single
household is interviewed for four consecutive
months, dropped for eight months, and picked up
again for the next four months. Thus roughly threefourths of the sample is identical from one month to
the next, and one-fourth is added; and in any given
month about one-half the sample is identical with
that interviewed in the same month a year earlier.
A composite estimating procedure is used. This
method involves the preparation of two intermediate
estimates for a given item each month: (1) an estimate obtained by applying to the final estimate for
the preceding month an estimate of month-to-month
change based on those parts of the sample common to
the 2 months (roughly 75 percent of the sample
units); and (2) an estimate based on the data for the
current month only, inflated to independent estimates
of the population by age, sex, and color (prior to 1954
the sole estimation procedure used). The final estimate is then obtained from a weighted average of the
intermediate estimates (1) and (2), achieving a substantial reduction in sampling variability for most
items.
The major labor force categories (using the definitions as revised in 1957) have been seasonally adjusted back to 1947 using a ratio-to-moving-average
method with a provision for "moving" adjustment
factors to take account of changing seasonal patterns.
The methods used are described in "New Seasonal
Adjustment Factors for Labor Force Components''
by Morton S. Raff and Robert L. Stein in the August
1960 issue of the Monthly Labor Review and Measuring Employment and Unemployment, Appendix
G, "The BLS Seasonal Factor Method." Factors in
use during 1962 for the years 1961 and 1962 indicate
the range of magnitude of the seasonal fluctuations
in the series.
Relation to other series.—The labor force estimates
of employment, obtained from a sample of households, differ in a number of respects from estimates
Seasonal Adjustment Factors for the Labor Force and Major Components, To Be Used for the Period 1961-62
Employmenib
Civilian
labor force
Month
January
February
March
April
May
June
July
August
_-
______
September
October
November
December
32
-_
97.6
97.9
98.5
99.0
100. 1
103. 2
102.8
101.8
100.2
100.4
99.8
99.0
Total
96. 7
96.9
97.6
99.0
100.4
102. 7
102. 7
102. 3
101.2
101.5
100.3
99.3
Agriculture
81.0
81.7
86.0
94.4
104. 1
121. 2
117.9
111. 7
109.9
109.0
97.9
84.9
Unemployment
Nonagricultural
industries
98.3
98.4
98.8
99.4
100.0
100.8
101. 1
101.3
100.3
100.8
100.5
100. 7
Males
Age 14
to 19
92.9
90.9
93.9
88. 1
92.8
178.3
139.6
101.3
77. 7
77.5
80.3
88.5
Females
Age 20
and over
125.8
129.4
125. 5
105. 1
92. 9
90.6
91.5
87. 1
79.5
78.3
90.6
103.8
Age 14
to 19
74. 1
74.3
80. 1
86. 1
105. 9
210. 8
142. 2
98. 4
87. 7
77.5
89. 1
73.7
Age 20
and over
107. 9
108. 8
106. 0
99. 2
97. 3
102. 9
104. 2
99. 4
93. 1
93. 5
97. 8
89.5
of employment prepared from reports of employing
establishments and based on payroll records, such
as the Bureau of Labor Statistics current nonagricultural employment series and the Department of
Agriculture estimates of farm employment. Because of these differences and variability in sampling
and response, changes in the various series may not
always be consistent. The labor force estimates provide information .on the work status of the population: persons employed at more than one job either
because they hold more than one job concurrently or
because they changed jobs during the survey week,
are counted only once and are classified according
to the job at which they work the greatest number
of hours during the week. Estimates based on reports from business establishments and farms, on the
other hand, count persons who work for more than
one establishment as many times as the number of
different payrolls on which their names appear. The
labor force estimates relate to all types of workers,
including domestic service workers, unpaid family
workers (working 15 hours or more during the week)
and self-employed persons, groups which are excluded from nonagricultural employment series based
on establishment reports. On the other hand, workers less than 14 years of age are excluded from the
labor force estimates whereas the payroll-based series
have no age exclusions. An additional difference
arises from the fact that certain persons with a job
but not at work are included with the employed in the
labor force estimates, whereas only part of this group
(those receiving pay while away from work) are
included in the payroll estimates.
For a number of reasons, the unemployment estimates are not directly comparable with statistics
derived from unemployment insurance operations.
In the first place, some unemployed persons are not
eligible for unemployment insurance, particularly
young persons looking for their first jobs, domestic
servants, most former State and local government
workers, agricultural workers, and persons who lost
their jobs in firms too small to be covered by the
various State unemployment insurance laws. Unemployed persons who have already received all of the
benefits to which they are currently entitled are not
included in the insured unemployment figures. Also,
the qualifications for drawing unemployment insurance differ from the definition of unemployment used
in the labor force series. For example, some persons
with a job but not at work and persons working only
a few hours during the week are eligible for unem-
ployment insurance, but are classified in the labor
force series as employed. Furthermore, some persons may be reported to the Census Bureau interviewers as not looking for work even though they
may be registered at public employment offices,
consider themsleves available for jobs and may be
eligible for unemployment insurance.
The effect of differences in these series is analyzed
in Chapter IV, A Comparison of Estimates from the
Different Sources, in Measuring Employment and
Unemployment.
Uses and limitations.—One of the chief advantages
of the household labor force, employment and unemployment estimates is that they provide the only
comprehensive figures covering the employment
status of the whole population. The data are collected monthly and published promptly. The estimates of unemployment, in particular, are used as
a current indicator of the general health of the
economy.
Another advantage of the household enumeration
method of obtaining labor force information is the
possibility of relating work status to other personal
and family characteristics. Classifications are made
not only by broad occupation and industry groups,
but also by sex, age, and color, by marital status and
number of children. For example, changes in the
employment of married women, and of married
women with small children, can be studied. By asking supplementary questions from time to time other
information concerning the family can be similarly
estimated, such as family incomes and the amount
of migration during the course of a year. All these
analyses throw light on the changing size and composition of the labor force.
Since the estimates are prepared from a relatively
small sample, the user should not attach significance
to very small changes. Estimates of sampling variability in the data are regularly published. The relative standard sampling error for the 333-area sample
is estimated at about 0.3 to 0.5 percent for summary
estimates of the civilian labor force, total employment, and nonagricultural employment; and roughly
2.5 to 3.5 percent for agricultural employment and
total unemployment.
The user should also keep in mind that the information is collected by personal interview, usually
with the housewife. She may not, in some cases,
have exact knowledge for all members of the household. For this reason, as well as because of the relatively small size of the sample, only broad occupa-
33
Employment Status of the Labor Force
Civilian employment
Year
Total labor
force (including
armed
forces) *
Civilian
labor
force
Total
Agricultural
Unemployment
Nonagricultural
Number
Thousands of persons 14 ;years of age and over
Percent
1929
49, 440
49, 180
47, 630
10, 450
37, 180
1930
1931
1932
1933
1934
50, 080
50, 680
51, 250
51, 840
52, 490
49, 820
50, 420
51, 000
51, 590
52, 230
45,
42,
38,
38,
40,
480
400
940
760
890
10, 340
10, 290
10, 170
10, 090
9,900
35,
32,
28,
28,
30,
1935
1936
1937
1938
1939
53, 140
53, 740
54, 320
54, 950
55, 600
52, 870
53, 440
54, 000
54, 610
55, 230
42,
44,
46,
44,
45,
260
410
300
220
750
10, 110
10, 000
9,820
9, 690
9,610
32,
34,
36,
34,
36,
1940 _- __
1941 _ __
1942
1943
1944
56,
57,
60,
64,
66,
180
530
380
560
040
55, 640
55, 910
56, 410
55, 540
54, 630
47, 520
50, 350
53, 750
54, 470
53, 960
1945 _ _-_
1946
1947
1948
1949
65, 300
60, 970
61, 758
62, 898
63, 721
53, 860
57, 520
60, 168
61, 442
62, 105
52,
55,
57,
59,
58,
1950
1951
1952 _
1953 *
1954
64,
65,
66,
67,
67,
1955 .
1956
1957
1958
1959 - .
68, 896
70, 387
70, 744
71, 284
71, 946
I960
1961
6
749
983
560
362
818
73, 126
74, 175
Percent of
civilian
labor force
Labor
force
participation
rate 2
1,550
3. 2
140
110
770
670
990
4, 340
8, 020
12, 060
12, 830
11, 340
8. 7
15. 9
23. 6
24. 9
21. 7
150
410
480
530
140
10, 610
9,030
7,700
10, 390
9,480
20.
16.
14.
19.
17.
9,540
9, 100
9,250
9,080
8,950
37, 980
41, 250
44, 500
45, 390
45, 010
8, 120
5,560
2, 660
1,070
670
1. 2
820
250
812
117
423
8,580
8,320
8,256
7,960
8,017
44, 240
46, 930
49, 557
51, 156
50, 406
1,040
2, 270
2,356
2,325
3, 682
1. 9
3. 9
3. 9
3. 8
5.9
57.4
57.9
58.0
63, 099
62, 884
62, 966
63, 815
64, 468
59, 748
60, 784
61, 035
61, 945
60, 890
7,497
7,048
6,792
6,555
6,495
52, 251
53, 736
54, 243
55, 390
54, 395
3,351
2,099
1,932
1,870
5. 3
3. 3
3. 1
2.9
5.6
58. 4
58. 9
58. 8
58.5
58.4
65,
67,
67,
68,
69,
62, 944
64, 708
65,011
63, 966
65, 581
6,718
6,572
6,222
5,844
5,836
56,
58,
58,
58,
59,
225
135
789
122
745
2,904
2,822
2,936
4,681
3,813
4.4
4.2
66, 681
66, 796
5,723
5, 463
60, 958
61, 333
3, 931
4,806
5.6
6.7
58.7
59.3
58. 7
58. 5
58.3
58.3
58.0
848
530
946
647
394
70, 612
71, 603
3,578
1
9
3
0
2
14. 6
9. 9
4. 7
1.9
4. 3
6. 8
5.5
(3)
(3)
(3)
(3)
«
(3)
(8)
(3)
8
56. 0
56. 7
58. 8
62. 3
63. 1
61. 9
57. 2
1 Data for 1940-52 revised to include about 150,000 members of the armed forces who were outside the United States in 1940 and therefore were not enumerated in
the 1940 census and were excluded from 1940-52 estimates.
2 Total labor force as percent of noninstitutional population 14 years of age and over. ^
3 Not available.
• Beginning 1953, labor force and employment figures are not strictly comparable with previous years as a result of the introduction of material from the 1950 Census
into the estimating procedure. Population levels were raised by about 600,000; labor force, total employment, and agricultural employment by about 350,000, primarily affecting the figures for total and males. Other categories were relatively unaffected.
« Data for 1960 include Alaska and Hawaii and are therefore not strictly comparable with previous years. This inclusion has resulted in an increase of about half
a million in the noninstitutional population 14 years of age and over, and about 300,000 in the labor force, four-fifths of this in nonagricultural employment. The
levels of other labor force categories were not appreciably changed.
NOTE.—Monthly labor force data available beginning March 1940. Annual data are averages of monthly figures. Data for 1947 forward adjusted to reflect new
definitions of employment and unemployment adopted in 1957.
Source: Department of Labor.
tional and industry groupings of the data are
published. Finally, the measurement of unemployment is in some cases difficult, since it depends in part
on the attitude of the person interviewed. The
classification of a person as unemployed has been
made as objective as possible, by using the criterion
34
of "looking for work/' but no method has been as
yet developed which will insure consistent reporting
of activity month after month. Some marginal
(usually very small) groups may be reported as unemployed in some circumstances where they would
be reported as not in the labor force in others. Most
of these problems of measurement affect persons
whose attachment to the labor force is casual or intermittent, especially married women and youths still
in school looking for part-time jobs.
References.—Summary employment and unemployment figures are released near the first of the
month for the preceding month by the Bureau of
Labor Statistics. More detailed estimates are available a week or so later in the Monthly Report on the
Labor Force which presents the household labor force
series, the employer nonagricultural employment
series, and the insured unemployment series in a
combined release. The same labor force data, together with additional details, are published monthly
in Employment and Earnings which also includes explanatory notes describing the data and the methodology, indicating the reliability of the estimates and
summarizing the seasonal adjustments. A more detailed technical note is available on request to the
BLS. Annual summaries and supplementary information on work experience during the preceding
year, multiple jobholding, etc., are published by the
BLS in a series of "Special Labor Force Reports."
Related demographic data from the Current Population Survey are published by the Bureau of the
Census in special reports (Current Population Reports, Series P-60, Consumer Income; Series P-20,
Population Characteristics).
SELECTED MEASURES OF UNEMPLOYMENT AND PART-TIME
EMPLOYMENT
Unemployment Rates
! ,.,.
.
,
, £
n
!
T
In addition to unemployment rates lor ail workers,
,,
J? l i. T_
x
*. J £
-ix
it is often useful to have rates computed lor specific
rrn
, ..
.
i
j l
groups. The rate for experienced wage and salary
i
ii
11
,
, . , .,
workers excludes unemployed new entrants into the
T I P
,,
i/.
i
i
i
• i P -i
labor force, the self-employed and unpaid family
i
mi- i . 4 . j 4 . u i . 4 . ^
4-u
workers. This rate tends to be about the same as the
n
i
4. 4. rpi
I
.
overall unemployment rate. The unemployment
, «
. ,
.
,.
•i
i .
rate for married men is sometimes considered to
i ,, . ,. , //i i i • ,, "u i,, ,i
.i
n
better indicate "hardship" or "need' than the overall
, i , i
, « . . / <i
TTI
rate but has many deficiencies for the purpose. For
*> . j
.,i P .i
.i.v,.
i
example, widowers with family responsibilities and
working less than 35 hours a week are divided first
into two groups, those who usually work full time
, ,
„
,
.
^ , „
and those who usually work part time. Each of
,
,
', -~ i
T
I I
these groups is then classified according to whether
&
B
.F
. . .
,
,
.
the part-time work during the survey week was the
5] , , . ...
. ,,
f
_ .
result oi (1) economic reasons, such as slack work,
. v,'
> .
.
'
material shortages, plant or machine repairs, new
.,
i i ? i
i i ^ i ,
•
]ob started during week, could find only part-time
J
&
J F
'
work; or (2) other reasons, such as holidays, bad
'
-n
•
• • • \ i_
weather, own illness, vacation, participation in labor
' ,
Pn •
i
dispute, did not want lull-time work, etc.
^
'
>
l n e average hours worked per week by persons
fe
.
.F
i • j . • *
i ,
p,
i ii
,
, i
women heads of households are n o t represented.
^x,
T
.. p
i , ,
Other unemployment ratios lor selected groups are
UT u J • TT. i
* JT? •
published m Jirmployment and Earnings.
working part time m nonagricultural industries lor
& F
&
.
economic reasons differ according to whether such
„
, * « A.
„ i 11
persons usually work lull time or usually hold partI•
• T_
A
i
-i 11 • f^^/>
time jobs. Annual averages are available since 1956:
Labor Force Time Lost
This is a measure of productive hours lost to the
economy. Total available labor time is computed
•
•
1956
195
^
1958
usually work
u§uaiiywork
full time
part time
24. 0
24# 5
25 2
18. 2
18# 3
18 1
on the assumption that those working part-time for 1ftKn
"Q
1Q"
economic reasons—i.e. reasons aside i r o m personal
IQQQ
24.7
18.2
preference (see below)—and the unemployed would 1961
24.2
18.1
have worked an average of 37.5 hours per week had
.
M
...
™
•
^i
i_ £
TT
77
., , ,
, ... \
., i ,
u™. T ,,,
Uses and limitations.—Changes m the number ot
&
suitable opportunities been available.
lime lost
is then compared with total labor time available. Persons working part time for economic reasons may
Data are available to compute this measure only r e f l e c t changes in economic conditions as soon as, or
even e
since May 1955.
&rlier than, the number of unemployed. Experience in interpreting the series on reasons for partPersons at Work, by Hours Worked
t i m e employment has been limited, since the figures
Description of series.—As part of the collection of n a v e been available on a monthly basis only since
information
on the labor force, hours worked during May 1955. Information on persons at work by hours
the survey week at all jobs are obtained. Those worked is also published classified by broad indus
35
trial and occupational groups and by selected
personal characteristics.
The monthly labor force survey is the only source
of information on hours covering all industries. In
analyzing these data, and comparing them with the
results of the establishment survey, it should be
remembered that the labor force survey includes
hours worked at all jobs during the survey week,
and that the hours reported by the household
respondent may reflect in some cases scheduled hours
rather than actual hours worked. The establishment
survey, on the other hand, includes hours paid for but
not worked as well as hours worked, and the average is affected by turnover during the payroll period.
References.—See above, under Status of the Labor
Force.
Selected Measures? oj Unemployment and Part-time
Unemployment rate
Year
Experienced
wage and
salary
workers x
All
workers
Employment
Persons at work in nonagricultural industries
by hours worked per week 4
Married
men2
Labor force
time lost
through unemployment
and parttime work 3
Under 35 hours
Over 40
hours
Part time for
economic reasons
35-40
hours
Total
Usually
work full
time 8
Percent
Millions of persons 14 years of age and over
14. 6
9. 9
4.7
1.9
1.2
(7)
(7)
(7)
(7)
(7)
(7)
(7)
(7)
(7)
(7)
1945
1.9
(7)
1946
1947
1948
1949
3. 9
3. 9
3.8
5.9
7
1950
1951
1952
1953
1954
5.
3.
3.
2.
5.
1940
1941
1942
1943
1944
- -
_
1955
1956
1957
1958
1959
1960
1961
- -
-
9
()
(7)
4.2
6.7
Usually
work part
time 8
o7
(7)
(7)
(7)
()
c>7
(7)
(7)
(7)
()
o7
(7)
(7)
(7)
()
31 . 5
35. 2
38 . 2
39 . 7
38 . 1
(7)
(77)
(7)
(7)
36 . 5
21.4
20.3
19.4
17.6
18. 1
21. 2
21. 0
20.9
17. 5
19.3
19. 4
18. 1
15.7
()
c)
(77)
(7)
(7)
()
5. 6
5. 2
(77)
()
4. 6
5. 4
(7)
(7)
5.9
(7)
5. 4
6.0
8. 5
9. 9
7
()
(7)
(7)
(7)
22. 4
23.3
25. 1
26.3
24. 4
10. 2
8.9
7.3
8. 6
11. 8
o
(77)
(7)
()
(7)
27.0
27.3
28.6
28.3
8. 7
9. 4
9.7
10.4
11.7
n\
5. 3
3
3
1
9
6
6.0
3.7
3.3
3.2
6. 0
4. 4
4. 2
4.3
6.8
5. 5
4. 8
4. 4
4. 5
7.2
5.6
2. 5
2.3
2.8
5. 1
3.6
8 4.8
5. 1
5.3
8. 1
6.6
18.0
18.7
17.6
16. 6
17.3
5. 6
6.7
5.7
6.8
3.7
4.6
6. 7
8.0
17.7
27.7
28.7
18.2
29.0
11. 5
11. 1
(7)
*
1. 1
1.2
1. 6
1.0
1.2
1.3
(7)
(7)
(7)
(7)
(7)
(7)
8
c)
(77)
( 7)
()
(77)
( )0 . 9
1.0
1.3
1.3
1.3
1. 5
i Includes all persons who have worked at a job two weeks or more.
* Data for 1955 and 1956 have not been adjusted to reflect changes in the definition of employment and unemployment adopted in January 1960.
3 This ratio relates man-hours lost to man-hours which would have been worked had there been no unemployment and no involuntary part-time employment.
It is assumed that the unemployed and part-time workers would have worked 37.5 hours per week.
* Differs from total employed in nonagricultural industries which includes persons with jobs but not at work for such reasons as illness, vacation, bad weather,
and industrial disputes.
* Includes persons who worked part time because of slack work, material shortages or repairs, new job started, or job terminated.
« Primarily includes persons who could find only part time work.
7 Not available.
»9 Average of 8 months (May-December).
Data include Alaska and Hawaii beginning 1960 and are therefore not strictly comparable with previous years. This inclusion has resulted in an increase of
about half a million in the noninstitutional population 14 years of age and over, and about 300,000 in the labor force, four-fifths of this in nonagricultural employment. The levels of other labor force categories were not appreciably changed.
NOTE.—Monthly data on persons at work by hours worked per week available monthly beginning 1940, and numbers classified by reason for part-time work
available monthly beginning May 1955.
Source: Department of Labor.
36
UNEMPLOYMENT INSURANCE PROGRAMS
Description of series.—Weekly data on claims for
benefits under employment security programs, obtained as a byproduct of operations, represent a
measure of unemployment among workers covered by
the programs. The series are compiled by the Bureau
of Employment Security from reports from State
employment security agencies covering State programs, the program of unemployment compensation
for Federal employees, and the ex-servicemen's unemployment compensation program. Figures also
include World War II veterans who filed for benefits
under the Servicemen's Readjustment Act of 1944,
Korean War veterans filing under the Veterans'
Readjustment Assistance Act of 1952, and claimants
under the Federal and State programs for temporary
extension of unemployment compensation. The data
for "all programs" also include in the national totals
the program of unemployment insurance administered by the Railroad Retirement Board. "State
programs" exclude the Federal employee, servicemen, and railroad industry programs.
Insured unemployment represents the number of
covered workers totally or partially unemployed during a given week for which they have filed unemployment insurance claims. Weekly insured unemployment figures are available for each State for the
State, Federal employee (UCFE) and ex-servicemen's (UCX) programs. Weekly averages for the
calendar month are also provided. In addition, for
the week ending nearest the fifteenth of each month,
insured unemployment figures for 145 major labor
market areas are provided, including State programs,
UCFE, and UCX.
Initial claims are notices of the beginning of a
period of unemployment for which benefits may later
be claimed. These data are also available on a weekly
basis for each State. This series provides a measure
of the volume of new unemployment emerging under
the State, UCFE, and UCX programs. Data on initial claims are not added to the insured unemployment count, however, since such claims do not certify
to completed weeks of unemployment.
Exhaustions are a count of the number of claimants who have drawn the final weekly benefit payment to which they are entitled in a given benefit
year under provisions of the State unemployment
insurance laws.
Covered employment under all programs includes
the employment of workers covered by State pro-
grams, and the Railroad Retirement Board programs
from the beginning of the series, the employment of
Federal government workers since 1955, and the
armed forces since 1958, when the UCX program
became operative. Although coverage of the Federal
and State unemployment insurance programs has expanded until it now includes about 80 percent of all
wage and salary workers in nonagricultural industries, fcertain groups of workers are excluded—
namely, self-employed persons, unpaid family workers, and persons employed in specific industries, such
as agriculture, domestic service, many nonprofit organizations, and most State and local governments.
Also, within the "covered" industries, employees of
firms below a specified size (fewer than four employees) are excluded in many States.
Prior to 1958, members of the armed forces are excluded from the count of covered employment
because it was impossible to estimate the numbers
actually eligible in any given year under the various
programs which were in effect beginning with World
War II. Between September 1940 and July 1947, an
estimated 16.5 million different individuals served in
the Armed Forces. These persons, upon discharge,
couljd have drawn benefits under the Servicemen's
Readjustment Act between September 1944 and
September 1951 if unemployed and otherwise eligible.
Between June 1950 and January 1955, an estimated
6.8 million individuals served in the armed forces
during the Korean conflict. These individuals, upon
discharge, could have drawn benefits under the UCV
program (Unemployment Compensation for Veterans) beginning October 1952. The rights for most
such veterans under this program were terminated in
July 1958. However, a small number, depending
upon their discharge dates, were still eligible for UCV
benefits through January 1960. Persons eligible for
benefits under the UCX program include ex-servicemen who entered the armed forces after January
31, 1955, as well as veterans who entered prior to that
date but were discharged after October 27, 1958.
The annual covered employment series is the average of 12 mid-monthly employment figures for the
year. In 1959, workers covered by State programs
accounted for about 87 percent of the total. Insured
unemployment as a percent of covered employment
(shown here for the State programs only) relates
insured unemployment to the average covered employment for a preceding 12-month period, the period
37
Rates of Insured Unemployment Under State Programs, U.S., 1949-62
(Monthly data.
Percent of covered employment)
PERCENT
1152
1953
1912
1954 1955
SOURCE OF DATA: DEPARTMENT OF LABOR
approximating the time when the wage credits were
earned on which benefits were based.
Under State programs, the average weekly check
is obtained by dividing the number of weeks compensated for total unemployment into the amount
of benefits paid for total unemployment.
Statistical procedures.—The insured unemployment figures are complete counts of completed weeks
of unemployment for which benefits are claimed (by
the filing of continued claims). The BES sums the
data reported by the State employment security
agencies and the Railroad Retirement Board to get
national totals weekly. Generally, a continued claim
filed in a given week certifies to unemployment in the
preceding week. Therefore, the weeks of unemployment claimed in a given week are assumed to represent insured unemployment in the preceding week,
i.e., the week in which the unemployment actually
occurred.
Insured unemployment as a percent of covered employment is seasonally adjusted by a ratio-to-movingaverage method, using the same techniques as are
used in the labor force and nonagricultural employees
series, noted above. The seasonal adjustment factors for the rate of insured unemployment, State programs, for use with data for 1961 and 1962 are:
38
January
February
March
April
May
June
130. 8
132.4
124.7
115.4
101. 7
91.7
July
August
September
October
November
December
90.6
81. 6
74. 6
73. 1
80. 5
103. 2
Relation to other series.—For a comparison with
total unemployment, see above, under Status of the
Labor Force. (P. 30.)
Uses and limitations.—The BES series are derived from administrative records and provide complete counts of claims-taking transactions, on a
weekly basis and with minimum delay. The insured
unemployment figures serve two purposes as economic indicators. First, since they are available
weekly they provide the most up-to-date information
on current trends in unemployment. Second, they
provide geographic detail for labor market areas as
well as for States. In using these figures as economic
indicators, however, certain inherent limitations must
be kept in mind.
The limitations of the series, as well as their unique
advantages, stem from the fact that they are byproducts of administrative records. In the first place, as
described above, workers in certain industries and
in the very small firms are not covered, at least in
some States. In addition, some groups of covered
Unemployment Insurance Programs
State programs
All programs
Year
Covered
employment 1
Insured
unemployment
(weekly 5
averages)
Thousands
Insured
Insured
unemployment
unemploy- Initial Exhaus- as percent of
ment
claims
covered emtions
ployment
Benefits
paid 2
Weekly average, thousands
Mil. dol.
Percent
Benefits paid
Total
Average
weekly
check
Mil. dol.
Dollars
534.7
358.8
350.4
80. 5
67. 2
1, 282
814
649
147
105
214
164
122
36
29
50
30
21
4
2
5.6
3. 0
2. 2
. 5
.4
518.7
344.3
344. 1
79. 6
62.4
720
2,804
1, 805
1,468
2,479
574.9
2, 878. 5
1, 785. 0
1, 328. 7
2, 269. 8
589
1,295
1,009
1,002
1,979
116
189
187
210
322
5
38
24
20
37
2. 1
4.3
3. 1
3.0
6.2
445. 9
1, 094. 9
775. 1
789.9
1, 736. 0
18.77
18.50
17.83
19.03
20.48
308
334
006
072
622
1,605
1,000
1,069
1,065
2,048
1, 467. 6
862. 9
1, 043. 5
1, 050. 6
2, 291. 8
1,503
969
1,024
995
1,865
236
208
215
218
303
36
16
18
15
34
4.0
2.8
2.9
2.8
5.2
1, 373. 1
840.4
998. 2
962. 2
2, 026. 9
20.76
21.09
22.79
23. 58
24.93
018
633
436
412
728
1,395
1,318
1,567
3, 269
2,099
1, 560.
1, 540.
1, 913.
4, 209.
2, 803.
1,254
1, 212
1,450
2,509
1,682
226
226
268
370
281
25
20
23
50
33
3. 5
3. 2
3. 6
6. 4
4.4
1, 350.
1, 380.
1, 733.
3, 512.
2, 279.
25.04
27.02
28. 17
30. 58
30. 41
46, 334
42, 264
2,067
2,994
3, 022. 7
4, 358. 1
1,906
2,290
331
350
31
46
4. 8
5. 6
2, 726. 7
3, 422. 7
1940
1941
1942
1943
1944
24, 291
28, 136
30, 819
32, 419
31,714
1,331
842
661
149
111
1945
1946
1947
1948
1949
30,
31,
33,
34,
33,
087
856
876
646
098
1950
1951
1952
1953
1954
34,
36,
37,
38,
36,
1955
1956
1957
1958
1959
40,
42,
43,
44,
45,
1960
1961
2
6
0
2
0
3
7
9
7
0
10. 56
11. 06
12.66
13.84
15.90
32.87
33.80
1 For definitions of persons covered under various programs, see accompanying text.
Includes among others, persons covered by Federal and State programs for temporary extension of benefits from June 1968 through June 1962.
Source: Department of Labor.
2
workers may not be included in the data on insured
unemployment because they are not eligible for benefits. These groups include unemployed workers
whose previous jobs were in covered industries but
who did not earn sufficient wage credits or were not
employed the required length of time; unemployed
covered workers who are disqualified for various reasons, such as voluntary quitting without good cause,
discharge for misconduct, refusal of suitable work,
or temporary illness; persons who are eligible to receive benefits but for one reason or another do not
apply; and finally, workers who have exhausted their
benefit rights. In a period when unemployment is
substantial and of long duration, the volume of exhaustions may have an important bearing on the
magnitude of the insured unemployment level. Unlike total unemployment, the insured unemployment
series does not include new entrants into the labor
market, who are looking for, but have not yet found
work.
These limitations vary over time as well as between States. During the years since 1939, exclusions due to "size-of-firm" provisions have declined. Originally, State unemployment insurance
programs excluded workers in firms with fewer than
eight employees. In January 1956, amendments to
the Social Security Act resulted in coverage of workers in firms employing four or more. In addition,
changes in many State laws during these years have
resulted in the coverage of workers in firms employing fewer than four. At the beginning of 1962,
twenty States had "size-of-firm" provisions of one or
more.
Weekly data are subject to some variation from
week to week as holidays call for a rescheduling of
the claimant's appearance at the local office. The
39
effects of this factor, however, have been reduced
considerably since 1959, when nearly all the States
adopted procedures for adjusting "weeks claimed"
totals affected by holidays. Monthly data are presented as "average weekly volume of insured unemployment" and are not significantly affected by holiday weeks. The monthly data, however, are influenced to some extent by administrative factors.
Forty-six States and the District of Columbia operate on an "individual benefit year" basis. In such
States a worker who previously had insufficient wage
credits may become eligible for benefits when the
earnings of a new quarter become a part of his base
period. This administrative factor exerts an upward
influence on both insured unemployment and initial
claims during the first month of each quarter in
most States. Similarly, four States which operate on
a "uniform benefit year" usually show an administrative rise in insured unemployment at the beginning
of the new benefit year.
Exhaustion of benefits reflects both economic conditions and duration provisions of the various State
unemployment insurance laws. While a count of
the number of claimants who have exhausted their
benefit rights is a useful economic indicator, it is
difficult to determine how long unemployment continues after the claimant has exhausted his benefits.
It may be assumed that some exhaustees will find new
employment shortly after their benefits for a given
benefit year have been exhausted, while others will
remain unemployed for varying periods of time.
Consequently, a knowledge of the number of persons
who have exhausted benefits in the past gives no indication of the number who are still unemployed,
and hence does not provide an estimate which can
be added to insured unemployment to estimate a
total count of unemployment from covered industries. Furthermore, in interpreting monthly figures
on exhaustions, the usual seasonal increase in the late
winter months should be kept in mind.
References.—The basic release of the weekly data
is the BES Unemployment Insurance Claims, which
contains initial claims as well as insured unemployment for the State, Federal employee and ex-servicemen programs by States, and nationally for the Railroad Retirement Board program. Insured unemployment for the week ending nearest the 15th of
the month is included in The Monthly Report on the
Labor Force for the States and for major labor market areas. Weekly figures, monthly averages, and
actual and seasonally adjusted insured unemployment rates are also published in the BES monthly
periodical, The Labor Market and Employment Security. Weekly data back to July 1945 are available
upon request from the BES. A comprehensive summary of technical notes, "Insured Unemployment
and Wage Statistics; Their Source, Nature and Limitations," appears in the March 1960 issue of The
Labor Market and Employment Security. Reprints
of this summary of technical notes are available upon
request to the BES.
NONAGRICULTURAL EMPLOYMENT
Description of series.—Current monthly series on
employment in nonagricultural establishments, with
related information on hours and earnings (see below),
are prepared by the Bureau of Labor Statistics.
Employment estimates are published for about 365
separate industry groups and subgroups as well as
8 major industry divisions (manufacturing, mining,
trade, etc.). Annual average data for all the major
industry divisions are available on a comparable
basis back to 1919. For the 21 major groups in
manufacturing, all series go back to 1947 and for
most groups to 1939. Estimates of women employed
in manufacturing industries and selected nonmanufacturing industries are available quarterly.
Employment figures represent the total number of
persons employed in nonagricultural establishments
in the United States durifig a specified payroll period
40
which, for all industries except Federal Government
is that ending nearest the 15th of the month. Employed persons include all those who worked during
or received pay for any part of the payroll period,
including part time as well as full time, temporary
as well as permanent, employees. Workers on an
establishment's payroll who are on paid sick leave,
paid holiday or paid vacation, or who work a part
of a specified pay period and are unemployed or on
strike during the other part are considered employed.
Persons on the payroll of more than one establishment during the pay period are counted each time
reported. On the other hand, persons are not considered employed who are laid off, on leave without
pay, or on strike for the entire pay period. Proprietors, the self-employed and unpaid family workers, and domestic workers in households are not
included. Government employment statistics refer
to civilian employees only, but include employees of
State and local governments as well as Federal.
Information on employment, hours and earnings is
collected each month from a sample of establishments under cooperative arrangements with State
agencies (primarily State employment security agencies affiliated with the Bureau of Employment
Security). The cooperating State agencies mail
questionnaires to the reporting establishments and
edit them when returned, before passing the information on to the BLS. To eliminate duplicate
reporting, the same establishment reports are used
for preparing State, area, and national estimates.
Durable goods manufacturing industries include:
ordnance and accessories, lumber and wood products,
furniture and fixtures, stone, clay and glass products,
primary metal industries, fabricated metal products,
machinery, electrical equipment and supplies, transportation equipment, instruments, and miscellaneous
manufacturing industries. All other manufacturing
industries are included in the nondurable manufacturing estimates. Employees of government-operated
manufacturing establishments, such as ordnance
plants and shipyards, are included under government.
Statistical procedures.—Current estimates depend
on monthly reports from a sample of employers.
The sample of establishments employing collectively
about 25,000,000 workers, is designed to obtain
reports from most if not all the large establishments
in each industry but the proportion of total employment covered varies considerably from industry to
industry. It is high (66 percent) in manufacturing,
for example, and much lower in wholesale and retail
trade (19 percent) and service industries (16 percent).
In order to compute total employment from the
sample reports, month-to-month changes in the
sample establishments are applied to a total employment figure (benchmark) separately for each industry. The benchmark figures are obtained from
sources which, singly or in combination, insure
either a complete count of employment for the specified benchmark period, or an estimate of reasonable
accuracy. This method takes advantage of benchmark data which are byproducts of other governmental functions.
Since 1939 the basic sources of benchmark information have been periodic tabulations of employment data by industry compiled by State agencies
from reports of establishments covered under State
unemployment insurance laws. Employment in
Employees in Nonagricultural Establishments, 1947-62
(Monthly data.
Seasonally adjusted)
MILLIONS OF PERSONS
14
12
WHOLESALE AND RETAIL TRADE
DURABLE GOODS MANUFACTURING
10
NONDURABLE GOODS MANUFACTURING
.-—~
I
"• l \
I
CONTRACT CONSTRUCTION
I
1947
1948 1949 1950
19511952
AJ.
1953 1954 1955 1956 1957 1958 1959 1960 1961
1962
SOURCE OF DATA: DEPARTMENT OF LABOR
91491 0—62
4
41
small-size establishments exempt from State unemployment insurance laws is based on data obtained
from the United States Bureau of Old-Age and
Survivors Insurance. For industries which are not
covered or are largely exempted by either of the two
programs, benchmarks are compiled from other
sources: for example, for interstate railroads, from
information reported to the Interstate Commerce
Commission; for State and local government, from
data reported to the Bureau of the Census; for the
Federal Government, from -data compiled by the
Civil Service Commission; for private hospitals,
American Hospital Association data; for private
schools, colleges, and universities, data from the U.S.
Office of Education and from the National Catholic
Welfare Conference. For charitable and certain
other types of nonprofit organizations, benchmarks
are derived from statistics on employment in organizations which elect voluntary coverage under the
Old-Age and Survivors and Disability Insurance
program (OASDI) and from various studies and
surveys. Establishments are classified into the
same industrial groupings for benchmark purposes
as for monthly reporting. The most recent benchmark adjustment was to data for March 1959
(published in November 1961).
The sample design is that of a modified cut-off
sample. In such a design, all establishments for an
industry in which an estimate is to be prepared are
listed in sequence by number of employees. A cutoff point is selected in terms of the number of
employees in an establishment, and only establishments above the cut-off point are included in the
design. This simple procedure has been modified
by BLS in two significant respects: (1) The cut-off
selection is applied independently for each industry
for which an estimate is to be prepared, at either the
area, State, or national level. The State samples
are thus combinations of independently selected
samples for the areas, and the national sample is a
combination of State samples. The sample for any
category is a total of all sample reports classified in
that category. (2) If any establishment above the
cut-off point fails to report, the next largest plants
immediately below the cut-off are solicited as replacements.
This sampling plan permits timely data at minimum cost from a large number of respondents who
report on a voluntary basis. Preliminary estimates
are available for many industries and geographic
areas within a few weeks. Frequent revisions to
42
benchmark estimates prevent possible biases in the
system from cumulating over an extended period of
time. The system works well for the many important industries which are characterized by large
establishments, less well for those industries composed of large numbers of very small establishments.
Experience with the program has shown that the
monthly employment data in some industries tend
to have an increasing bias for the successive months
between two benchmarks. Although this error
cannot be adjusted precisely on a current basis,
average adjustment is made through the use of small
bias adjustment factors before publication. Appropriate changes in employment levels are also made,
when necessary, at the next revision to new benchmarks.
Since "cut-off" sampling rather than a probability
design has been used, it is not possible to calculate
the sampling variability of the monthly estimates.
The size of the revision to benchmarks provides a
rough basis for measuring the accuracy of the original
estimates. The comparison made for March 1959,
the last benchmark date, indicated that the estimate
was within 0.6 percent of the benchmark. For
manufacturing, the discrepancy was 0.9 percent; in
other industry divisions the discrepancy was 1.5
percent or less, except for contract construction,
which was 4.9 percent, and mining, which was 3.8
percent. These differences, which developed over a
two year interval, reflect sampling errors, response
errors, and changes in the industrial classification of
individual firms, which are not incorporated into
employment levels until the benchmarks are revised.
Changes in industrial classification of firms affect
primarily the detailed industry estimates.
The national industry statistics were converted
to the 1957 SIC late in 1961, at the time of the revision to 1959 benchmark information.
Since 1959, data include estimates for Hawaii and
Alaska.
Seasonally adjusted employment aggregates are
prepared by a ratio-to-moving-average method.
The seasonal factors, prepared for "two-digit" manufacturing industries and for the nonmanufacturing
industry divisions, are available from the Bureau of
Labor Statistics on request. The magnitudes of the
adjustments may be judged from the implicit seasonal adjustment factors for total nonagricultural
employment for 1961. The adjusted series prepared by summing the aggregates of the seasonally
adjusted components will give slightly different re-
suits from that which might be obtained from an
independent seasonal adjustment of the total nonagricultural series.
The BLS establishment-based series are not comparable with those based on reports from companies
because the industry totals that result when a single
industry classification is assigned to an entire comImplicit Seasonal Adjustment Factors for Total Nonagricultural pany differ substantially from those in which each
Employment for 1961, by Months
establishment of the company has been assigned to
January
98. 7 July
99.8 the industry of its principal activity. (See Corporate
February
98. 2 August
100.4 Profits, above, p. 20.)
101. 2
March
98. 6 September
Uses and limitations.—Current employment sta101.3
April
99. 1 October
101.1 tistics are widely used as a timely indicator of changes
May
99.7 November
101.9 in economic activity in various sectors of the econJune
100. 5 December
Relation to other series.—A comparison between omy. Comparable information for a large number
the series discussed above and the nonagricultural of detailed industries is provided within a few weeks.
employment estimates compiled as a part of the Furthermore, because of the promptness with which
labor force series can be found in the section on basic information is supplied in considerable industry
Employment Status of the Labor Force, see above detail, these estimates are frequently incorporated
in other Federal statistical series, particularly in
(p. 31).
making current estimates of production, producIn addition to total employment in each industry,
tivity, and national income.
BLS also prepares estimates of production worker
The publication of comparable State and local area
employment for mining and manufacturing indusestimates
by the cooperating State agencies using
tries for construction workers in contract constructhe
same
concepts
and methods provides a means
tion, and for nonsupervisory workers in some or all
whereby
business
trends
can be followed for all
industry components of the other nonmanufacturing
States
and
the
District
of
Columbia and for 146
divisions except government. These estimates are
labor
market
areas.
comparable with the average hours and earnings
The employment estimates are not all of uniform
series (see below) which are prepared from informaquality,
however, either on a national or a local area
tion reported on the same questionnaires as the embasis.
In
general, those for manufacturing industries
ployment figures.
are
most
reliable
and extensive industry detail is
Establishments reporting employment information
shown.
For
certain
nonmanufacturing industries,
are classified into industries on the basis of their
especially
in
the
services
sector, the estimates are less
principal product or activity. Prior to publication
reliable
and
little
industry
detail is presented.
of State and area data for January 1959, all national,
References.—Monthly
summary
data first appear
State and area employment, hours, and earnings
series were classified in accordance with the following: in The Monthly Report on the Labor Force. The basic
(1) for manufacturing, the Standard Industrial Clas- monthly release for the employment, hours, and
sification, 1945, and (2) for nonmanufacturing, the earnings series is the Employment and Earnings,
Industrial Classification Code, Social Security Board, which contains national, State, and area estimates
1942. Beginning with January 1958, national, State and explanatory notes. The national employment,
and area series are classified under the revised hours and earnings series for 13 months are also
Standard Industrial Classification, 1957.
reprinted in the Monthly Labor Review. Continuous
In general, BLS employment estimates are com- data for the entire history of the national series prior
parable with other data collected from establish- to July 1961 are available in Employment and Earnments, such as employment, production, and similar ings Statistics for the United States, 1909-60, BLS
data obtained by the Census Bureau in the manuBulletin 1312. This is the first of a series of annual
facturing censuses and annual surveys. Some differences will be found, however, especially for individual compendium volumes. The June 1962 Annual Supindustries, caused chiefly by differences in definitions plement issue of Employment and Earnings provides
of the industries covered, in the business units con- data for the last half of 1961 and 1961 annual
sidered parts of an establishment, and in the indus- averages for all national industry series. State and
area annual averages are shown for 1959-61. More
trial classification of some establishments.
43
Nonagricultural Employment1
[Thousands of wage and salary workers]
Manufacturing, private
Year
Nonmanufacturing, private
Total
Durable NonTotal goods durable Total
goods
Government
Trans- Whole- finance, Service
Contract porta- sale and insur- and misMining construc- tion and retail
ance,
cellane- Federal
ous
tion
trade and real
public
estate
utilities
State
and
local
1929
31, 339 10, 702
(2)
(2)
17, 572
1,087
1,497
3,916
6, 123
1,509
3,440
533
2,532
1930
1931
1932
1933
1934
29,
26,
23,
23,
25,
424
649
628
711
953
9,562
8, 170
6,931
(2)
(2)
(2)
(2)
(2)
(2)
(2)
(2)
(2)
(2)
16,
15,
13,
13,
14,
714
215
472
148
153
1,009
873
731
744
883
1,372
1, 214
3,685
3, 254
2,816
2,672
2,750
1,475
1, 407
1,341
1,295
1, 319
3,376
3, 183
2,931
526
560
559
2,873
3,058
565
652
1935
1936
1937
1938
1939
27,
29,
31,
29,
30,
053 9,069
082 9,827
026 10, 794
209 9,440
618 10, 278
(2)
(2)
(2)
(2)
(2)
(2)
(2)
(2)
14,
15,
16,
15,
5,564 16,
503
587
476
886
345
897
946
1,335
1,388
1,432
1,425
1,462
3,142
3,326
3,518
3,473
3,517
753
1940
1941
1942
1943
1944
32,
36,
40,
42,
41,
376 10,
554 13,
125 15,
452 17,
883 17,
985
192
280
602
328
5,363
6,968
8,823
11,084
10, 856
5,622 17,
6,225 18,
6,458 19,
6,518 18,
6,472 18,
1945
1946
1947
1948
1949
40,
41,
43,
44,
43,
394 15,
674 14,
881 15,
891 15,
778 14,
524
703
545
582
441
9,074
7,742
8,385
8,326
7,489
2,622
2, 704
2,666
2,601
2,647
2,728
2,842
2,923
3,054
3,090
3,206
3,320
3,270
3,174
3, 116
3, 137
3,341
3, 582
1950
1951
1952
1953
1954
45,
47,
48,
50,
49,
222 15,
849 16,
825 16,
232 17,
022 16,
241
393
632
549
314
1955
1956
1957
1958 3
1959 __-
50,
52,
52,
51,
53,
675 16,
408 17,
904 17,
423 15,
380 16,
1960
1961
1,015
891
854
1, 145
1, 112
1,055
1, 150
2,786
2,973
3, 134
2,863
2,936
5,797
5,284
4,683
4,755
5,281
5,431
5,809
6,265
6,179
6,426
189
702
452
771
511
925
957
992
925
892
1,294
1,790
2, 170
1,567
1,094
3,038
3,274
3,460
3,647
3,829
6,750
7,210
7, 118
6,982
7,058
1,502
1,549
1,538
1,502
1,476
3,681
3,921
4,084
4, 148
4, 163
1,340
2,213
2,905
2,928
6,450 18,
6,962 21,
7,159 22,
7,256 23,
6,953 23,
925
376
862
659
481
836
862
955
994
930
1, 132
1,661
1,982
2, 169
2, 165
3,906
4,061
4, 166
4, 189
4,001
7,314
8,376
8,955
9,272
9,264
1,497
1, 697
1,754
1,829
1,857
4,241
4,719
5,050
5,206
5,264
2,808
2,254
1,892
1,863 3,787
1,908 3,948
8,094
9,089
9,349
10, 110
9,129
7, 147 23,
7,304 25,
7,284 25,
7,438 30,
7,185 25,
955
067
585
648
957
901
929
898
866
791
2,333
2,603
2,634
2,623
2, 612
4,034
4,226
4, 248
4,290
4,084
9,386
9,742
10, 004
10, 247
10, 235
1,919
1,991
2,069
2, 146
2,234
5,382
5, 576
5,730
5,867
6,002
1,928
2, 302
2,420
2, 305
2, 188
4,098
4,087
4, 188
4,340
4,563
882
243
174
945
667
9,541
9,834
9,856
8, 830
9,369
7,340 26,
7,409 27,
7,319 28,
7, 116 27,
7,298 28,
879
887
104
585
523
792
822
828
751
731
2,802
2,999
2,923
2,778
2,955
4, 141
4, 244
4, 241
3,976
4,010
10,
10,
10,
10,
11,
535
858
886
750
125
2,335
2,429
2, 477
2,519
2,597
6,274
6,536
6, 749
6,811
7, 105
2, 187
2,209
2, 217
2, 191
2,233
4, 727
5,069
5, 409
5,702
5,957
54, 347 16, 762
54, 077 16, 267
9,441
9,042
7,321 29, 065
7, 225 28, 983
709
666
2,882
2,760
4,017
3,923
11, 412
11, 368
2, 684
2,748
7,361
7,516
2,270 6,250
2, 279 6,548
7,397
8,501
4, 715
970
809
862
912
826
823
829
905
996
1
Includes all full- and part-time wage and salary workers in nonagricultural establishments who worked during or received pay for any part of the pay period
ending nearest the 15th of the month. Excludes proprietors, self-employed persons, domestic servants, unpaid family workers, and personnel of the armed forces.
Total derived from this table not comparable with estimates of nonagricultural employment of the civilian labor force which include proprietors, self-employed persons, unpaid family workers, and domestic servants, which count persons as employed when they are not at work because of industrial disputes, bad weather, etc.,
and which are based on a sample survey of households, whereas the estimates in this table are based on reports from employing establishments.
32 Not available.
Data include Alaska and Hawaii beginning 1959. This inclusion has resulted in an increase of 212,000 (0.4 percent) in the nonagricultural total for the March
1959 benchmark month.
NOTE.—Monthly data available beginning January 1939 and annual from 1919 for all major industry divisions.
Source: Department of Labor.
detailed technical notes are available on "Measure- fication structure used prior to conversion to the
ment of Employment, Hours, and Earnings in Non- 1957 SIC.
The following Guides, free upon request, provide
agricultural Industries." A Guide to Employment
Statistics of BLS (1961) is also available upon re- information on the availability of State and area
quest. The Guide shows the beginning date of each employment, hours and earnings data: Guide to
industry series published on a national basis and State Employment Statistics (1960); Guide to Area
gives each industry definition, both on the 1957 Employment Statistics (1960); and Area Guide to
Standard Industrial Classification and on the classi- Industry Employment Statistics (1960).
44
WEEKLY HOURS OF WORK—SELECTED INDUSTRIES
Average Weekly Hours
Description of series.—With the employment figures for the specified -payroll period, described in the
preceding section, BLS collects from the sample
establishments total man-hours for which pay is
received by production or nonsupervisory workers,
including hours for holidays, vacation time, or other
employer-paid leave. Data on average weekly
hours, weekly earnings and hourly earnings are
regularly published for 21 major manufacturing
groups and about 240 manufacturing industries, as
well as about 65 nonmanufacturing groups and divisions. Many of the nonmanufacturing industries for
which estimates are not prepared are characterized
by small establishments creating special collection
problems; for other industries, such as insurance
and real estate, collection presents difficult problems
as to definition. For overtime hours (hours in excess
of regular hours and for which premium payments
were made) series are prepared for 143 manufacutring
industries.
Statistical procedures.—The average hours figures
are obtained by dividing the number of production
and related workers (or nonsupervisory workers in
industries other than mining and manufacturing)
into the total man-hours reported for each industry.
The average hours are normally less than scheduled
hours because of such factors as absenteeism, labor
turnover, part-time work, and stoppages.
Seasonally adjusted series are prepared in a manner similar to that for nonagricultural employment.
The magnitude of the seasonal adjustments is illustrated by the seasonal adjustment factors for average
hours of manufacturing production workers, which
are:
Average Weekly Hours—Seasonal Adjustment Factors
January
February
March
April
May
June
99. 7
99. 2
99. 4
99. 1
99.7
100. 6
July
August
September
October
November
December
100. 1
100.6
100. 6
100.6
100.1
100.4
Uses and limitations.—Changes in hours worked
supplement the information on employment, since
frequently hours worked are affected even before
employment by changes in economic activity.
Hours in manufacturing are an important leading
indicator. The hours figures are used in compiling
the average earnings figures discussed below. They
also serve as a basis for current production estimates
Average Weekly Hours in Selected Industries, 1947-62
(Monthly data for production workers or nonsupervisory employees. Seasonally adjusted)
HOURS OF WORK
44
DURABLE GOODS MANUFACTURING
\
42
NONDURABLE GOODS MANUFACTURING
A .
iV
40
38
—»—|rf—
36
(V
CONTRACT CONSTRUCTION
34
• 1
•I..I..I.,
.IMIMIM
1947
1S4I
•I..I
..I..1..I.J..I.,I..I
..I..I..I.
•l.,Lln ..I..I..I.. nlnlnl..
.,I,,LI..LIHI,,I,.
1949 1950 19S1 1952 1953 1954 1955 1956 1957 1951 1959 1960 1961
,,..5
1962
SOURCE OF DATA. DEPARTMENT OF LABOR
45
Weekly Hours of Work in Selected Industries 1
[Hours per week]
Manufacturing
Contract construction
Year
Total
1929
1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
_
_ _
_ _
_.
____-
_ _
-_
.
__-
___
_
. _
_
_ __ __
(3)
(3)
44 2
1930
1931
1932
1933
1934
1935
1936
1937
1938
1939
Durable goods
Retail trade2
Nondurable
goods
(33)
(3)
(3)
(3)
()
42 1
40 5
38 3
38. 1
34. 6
32 5
34. 7
33.8
41. 9
40. 0
35. 1
36. 6
39 2
38. 6
35. 6
37. 7
37.2
40 9
39.9
34.9
37.9
36. 1
37. 7
37.4
36. 1
37.4
38 1
40 6
43 1
45 0
45.2
39. 2
42. 0
45 0
46 5
46. 5
37. 0
38. 9
40. 3
42. 5
43.1
(3)
(3)
(3)
43. 2
42.8
41.8
40.9
41. 0
43
40
40
40
39
44.
40.
40.
40.
39.
0
4
5
4
4
42.
40.
40.
39.
38.
3
5
2
6
9
(3)
(3)
U
38. 2
38. 1
37. 7
40.9
41.3
41. 0
40. 9
41. 0
5
3
4
0
1
a\
(3)
<•>
m
(33)
()
43.4
1950
1951
1952
1953
1954
40 5
40. 6
40 7
40 5
39. 6
41 1
41. 5
41 5
41. 2
40. 1
39.
39.
39.
39.
39.
7
5
7
6
0
37.4
38. 1
38. 9
37. 9
37. 2
41. 1
40.9
40.5
39. 8
39.7
1955
1956
1957
1958 4
________
_ ___ .
1959 _ _
_________
40 7
40 4
39 8
39. 2
40. 3
41. 3
41. 0
40. 3
39. 5
40. 7
39.
39.
39.
38.
39.
9
6
2
8
7
37.
37.
37.
36.
37.
1
5
0
8
0
39. 6
39. 1
38.7
38. 7
38.7
I960
1961
39. 7
39.8
40. 1
40. 2
39.2
39.3
36. 7
36.9
38.5
38. 1
_
_____
_
___ _
1 For manufacturing, data relate to production and related workers; for contract construction, to construction workers, and for retail trade to nonsupervisory
workers. Hours are hours paid for inculding paid holiday, vacation, and sick-leave hours.
23 Data exclude eating and drinking places.
Not available.
* Data include Alaska and Hawaii beginning 1959. This inclusion has not significantly affected these weekly hours series.
NOTE.—Monthly data on average weekly hours available beginning 1932 for manufacturing industries, 1947 for contract construction, and 1939 for retail trade.
Annual data for total manufacturing industries available for years 1909 and 1914 and on continuous basis beginning with 1919.
Source: Department of Labor.
for some industries (see description of the Index of
Industrial Production, p. 49).
Important limitations of the average hours series
are (1) that the figures refer only to production or
nonsupervisory workers and (2) that summary series
are not available for all nonagricultural workers because data are not collected for a number of important industries.
Hours paid for as measured by these series differ
46
from hours worked, and from "plant man-hours/'
which do not include hours paid for vacation, sick
leave, or holidays.
In addition to average gross hours and average
overtime hours for a large number of industries,
BLS also publishes indexes of aggregate weekly
man-hours in industrial and construction activities.
References.—See above, under Nonagricultural
Employment.
AVERAGE HOURLY AND WEEKLY EARNINGS—SELECTED INDUSTRIES
Description of series.—The payroll figures on which time pay or shifts of workers into higher (or lower)
these averages are based are collected by BLS from paying industries.
Uses and limitations.—Average hourly earnings
employers on the same form with the employment
and hours figures, described above. They are figures are widely used in collective bargaining, in
reported before deductions for taxes, social insurance, "escalating" long-term sales contracts (such as labor
etc.
They include pay for overtime, holidays, costs for equipment which takes a number of months
vacations, and sick leave paid directly by the firm or years to build) and in general economic analysis.
The hourly earnings figures reflect not only changes
but exclude retroactive pay and bonuses, unless
in
basic hourly and incentive wage rates, but also
earned and paid regularly each pay period.
such
variable factors as premium pay for overtime
Statistical procedures.—Average hourly earnings
and
late-shift
work and changes in output of workers
are derived by dividing total payrolls by total manpaid
on
an
incentive
basis. The changing employhours reported for each industry. Only the sample
ment
of
workers
as
between
relatively high-paid and
data are used, since there are no benchmarks availlow-paid
work,
and
relatively
high-wage and lowable for hours and earnings.
wage
industries,
also
affects
the
hourly earnings
Average weekly earnings are obtained by multiplyaverages.
ing average weekly hours and average hourly earnings
Hourly earnings refer to the actual return to the
for each industry.
worker for a stated period of time, and should not be
The series " adjusted hourly earnings" is con- confused with wage rates, which represent the rates
structed to show the relation between straight-time stipulated for a given unit of work or time. Since
hourly earnings in the base period, 1957-59, and certain types of payments (see above) as well as payother years on the assumption that the proportion ments to workers excluded from the production
of workers in each industry remains unchanged. worker (or nonsupervisory employee) definition are
The object is to show changes in pay scales unaffected not included, the earnings series should not be taken
by such factors as variations in the amount of over- to represent labor costs to the employer.
Average Hourly Earnings in Selected Industries, 1947-62
(Monthly data for production workers or nonsupervisory employees)
DURABLE GOODS MANUFACTURING
NONDURABLE GOODS MANUFACTURING
I,, I, 11. • i . l n L l n
1947
nil . L i
1M L i n
, ilnlnl,,
MI,,I,IIM
,J M L L ,
, , I,, I, , | , ,
, , I, ,| , , | , i , , I , , 1 , ,
1,,
. , I,, I , , I,,
, , I , , I ,, 1 ,,
,,|
1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961
1962
SOURCE OF DATA: DEPARTMENT OF LABOR
47
Average Hourly and Weekly Earnings—Selected Industries
.
*
Average hourly earnings—current prices
Manufacturing industries
Year
Average weekly earnings—current prices
Manufacturing industries
Contract
Retail
conDurable Nonstruc- trade 2
goods durable
tion
P
All
All
goods
1929
1930
1931_____
1932
1933
1934
1935
1936
1937
1938
1939
1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
1950
1951
1952
1953
1954
1955
1956
1957
1958
19596____
1960
1961
$0. 560
. 546
.509
. 441
.437
.526
.544
.550
.617
.620
. 627
. 655
.726
.851
. 957
1. Oil
1.016
1.075
1. 217
1.328
1.378
1. 440
1.56
1. 65
1.74
1.78
1.86
1.95
2. 05
2. 11
2. 19
2. 26
2. 32
(5)
(5)
(5)
(5)
(5)
(55)
()
$0. 412
. 419
.505
.520
.519
.566
.572
.571
.590
. 627
.709
.787
.844
.886
.995
1. 145
1.250
1.295
1.347
1. 44
1.51
1. 58
1.62
1.67
1.77
1.85
1. 91
1.98
2. 05
2. 11
(55)
()
(5)
(5)
(5)
(5)
(5)
(5)
(5)
(5)
(5)
C5)
(5)
$0. 492
.467
.550
.571
.580
.667
.679
.691
.716
.799
.937
1.048
1. 105
1.099
1. 144
1.278
1.398
1.453
1.519
1. 65
1.75
1.86
1.90
1.99
2.08
2. 19
2.26
2.36
2. 43
2. 49
(5)
(5)
(5)
(5)
(5)
(5)
(5)
5
( )
(5)
5
( )
(5)
$1. 541
1.713
1.792
1.863
2. 02
2. 13
2.28
2. 39
2. 45
2.57
2.71
2. 82
2.93
3. 07
3. 19
(55)
()
$0. 484
. 494
. 518
.559
. 606
.653
. 699
. 797
.901
.972
1.015
1.050
1. 13
1. 18
1.25
1.29
1.34
1. 40
1.47
1. 52
1.57
1. 62
1.68
S24. 76
23.00
20.64
16.89
16. 65
18. 20
19.91
21.56
23.82
22.07
23.64
24.96
29.48
36.68
43.07
45. 70
44. 20
43.32
49. 17
53. 12
53.88
58.32
63.34
67. 16
70.47
70. 49
75.70
78. 78
81. 59
82.71
88. 26
89. 72
92.34
Contract
Retail
construc- trade 2
Durable Nontion
goods durable
goods
$26. 84
24.42
20.98
15. 99
16.20
18.59
21.24
23. 72
26.61
23. 70
26. 19
28.07
33.56
42. 17
48. 73
51. 38
48. 36
46.22
51. 76
56. 36
57.25
62. 43
68.48
72.63
76.63
76. 19
82. 19
85. 28
88.26
89. 27
96. 05
97. 44
100. 10
$22. 47
21.40
20.09
17.26
16.76
17. 73
18.77
19.57
21. 17
20.65
21.36
21.83
24.39
28.57
33.45
36.38
37.48
40.30
46.03
49. 50
50.38
53. 48
56.88
59.95
62.57
63. 18
66. 63
70.09
72.52
74. 11
78. 61
80. 36
82.92
Index of
adjusted
hourly
earnings,
1957-59=
100 3
(5)
(5)
(55)
()
(55)
()
(5)
(5)
(5)
(5)
(5)
(5)
(5)
Manufacturing
industries
•
(
5
)
(5)
(5)
(5)
5
(5)
(5)
(5)
(5)
(5)
(5)
(5)
(5)
(5)
(5)
(5)
( )
(5)
(5)
(5)
(5)
5
( )
(5)
(5)
(5)
$58. 87
65. 27
67.56
69.68
76.96
82.86
86.41
88.91
90.90
96.38
100. 27
103. 78
108. 41
112. 67
117. 71
$21. 01
21.34
22. 17
23.37
24.79
26. 77
28.59
32.92
36.94
39. 75
41.62
43. 16
46.22
47.79
49.75
51.21
53.06
54. 74
56.89
58.82
60. 76
62. 37
64. 01
32.2
(5)
33.4
37.5
40. 8
43. 7
45. 5
50.4
57. 8
63. 2
66. 1
68.2
73. 6
77.4
81. 6
84.3
86.9
91. 5
96. 2
100.2
103. 6
107. 0
110. 0
Average
weekly
earnings,
1961
prices 4
$43. 21
41. 14
40.55
36.96
38.45
40.72
43.38
46.47
49.62
46.86
50.95
53. 33
59. 92
67.30
74. 39
77. 72
73. 42
66. 34
65. 82
66. 07
67. 60
72.54
72. 89
75.63
78.83
78.50
84.58
86. 67
86.80
85.62
90. 62
90. 72
92.34
1 For manufacturing, data relates to production and related workers; for contract construction, to construction workers, and for retail trade to nonsupervisory
workers.
2
Excludes eating and drinking places.
3
Earnings in current prices, adjusted to exclude overtime and interindustry shifts (April used for 1941-46).
4
Earnings
in current prices divided by consumer price index on a 1961 base.
6
Not available.
6
Data include Alaska and Hawaii beginning 1959. This inclusion has not significantly affected these earnings series.
NOTE.—Average hourly earnings monthly data available beginning 1932 for manufacturing industries, 1947 for contract construction, and 1939 for retail trade.
Annual data for total manufacturing industries available for years 1909 and 1914 and on continuous basis beginning with 1919.
Average weekly earnings monthly data available beginning June 1914 for all manufacturing industries, 1923 for durable and nondurable goods manufacturing,
1934 for building construction, and 1939 for retail trade. Annual data for all manufacturing industries also available for the years 1909 and 1914.
Source: Department of Labor.
Average weekly earnings are affected by changes in
the length of the workweek as well as all of the factors
which affect average hourly earnings. While they
represent what the worker has earned for the week,
they do not represent take-home pay, since they are
subject to deductions for income and social security
taxes, group insurance, occupational supplies, union
dues, or other items.
Since hours and earnings data are not collected for
48
all industries, there are no summary series for average
hourly or weekly earnings in all nonagricultural
establishments.
References.—See above, under Nonagricultural
Employment (p. 40). Estimates of hourly earnings
excluding overtime and of net spendable weekly
earnings in manufacturing and earnings in 1957-59
dollars for selected industries are also published in
Employment and Earnings.
PRODUCTION AND BUSINESS ACTIVITY
INDUSTRIAL PRODUCTION AND PRODUCTION OF SELECTED
MANUFACTURES
Description of series.—The index of industrial production is prepared monthly by the Board of Governors of the Federal Reserve System. It is designed
to measure changes in the physical volume or quantity of output of manufacturing and mining establishments and electric and gas utilities. The industries covered by the index produce about 35 percent
of the value of the total output of goods and services
in the United States.
The monthly indexes are based on figures compiled
by government agencies and by various trade organizations and publications. The component series are
selected to represent the industries, industry groups,
and other subdivisions in the index, and where necessary and possible they include adjustments for undercoverage or other deficiencies in the basic series. For
example, series based on shipments data are adjusted,
where feasible, for inventory changes; and those
based on man-hours data for estimated changes in
output per man-hour. In all, there are 207 monthly
series, combined according to relative value added
in 1957 adjusted to 1957-59 for the period beginning
in 1953.
The monthly series are adjusted periodically to
levels indicated by more reliable and comprehensive
annual indexes and, for manufactured goods, Census
benchmark indexes. The most recent benchmark
indexes were based on quantity and value data for
thousands of individual products covered in the
Censuses of Manufactures for 1947 and 1954.
Benchmark indexes 1954 to 1958 based on the 1958
Census of Manufactures are now being calculated.
Annual indexes which are based on more information than is available monthly but generally less
than is available at Census intervals are also used
to adjust many of the monthly series.
The Census benchmark indexes were based very
largely on physical product data, and to a minor
degree on value data deflated by price indexes and
materials consumption data. The annual indexes
rely more heavily on deflated value data, although
they are still predominantly physical product measures. A little less than half of the monthly series are
based on physical product data, and about half are
based on man-hour data adjusted for estimated
changes in output per man-hour. Man-hour series
are of very minor importance in the annual indexes,
and were not used at all in the Census benchmark
indexes.
INDUSTRY GROUPINGS
The 207 monthly series are grouped in two separate classifications, permitting two alternative ways
of accounting for changes in the total index. One of
the two, based largely on the 1957 edition of the
Standard Industrial Classification (SIC), has as its
principal categories durable manufactures, nonduable manufactures, mining, and utilities. Durable
manufactures include 11 of the SIC major groups—
primary metals; fabricated metal products; nonelectrical machinery; electrical machinery; transportation equipment; instruments; ordnance; stone, clay,
and glass; lumber; furniture; and miscellaneous
manufactures. It also includes measures of the
manufacturing activities of the Department of Defense. It accounted, in the 1957-59 base period,
for 48 percent of the weight of the total index.
Nondurable manufactures include 10 SIC major
groups—food and beverages, tobacco, textiles, apparel, paper, printing, chemicals, petroleum, rubber
and plastics, leather, and also includes representation
of the manufacturing establishments owned by the
Atomic Energy Commission. It accounted, in the
1957-59 base period, for 38 percent of the total
index. Mining activities, accounting for 8 percent
of the index in this same period, include coal and
metal mining, crude oil and natural gas extraction,
oil and gas well drilling, and production of sand,
clay, and other nonmetallic minerals. Utility output of electricity and gas includes both private- and
49
government-owned establishments, and accounted
for 5 percent of the total index in the 1957-59 base
period.
In the table "Production of Selected Manufactures" nine series selected from the component
group indexes are shown for the period 1947-1961.
These are among the major components of the index
of manufactures.
home goods (including appliances, furniture, television, etc.), apparel, and consumer staples. The
first two of these categories, automotive and home
goods, include the series which comprised the consumer durables sector of the index previous to the
revision and the combination of these two is now
published as a supplementary grouping of the regular
production index. The equipment series, accounting
for 15 percent of the total in 1957-59, are further
divided between business equipment and an unpublished defense equipment category.
The materials component consists of two major
categories, durable goods materials and nondurable
materials. Durable goods materials, accounting for
27 percent of the total index in 1957-59, include all
industries producing materials or components used
primarily in the manufacture of finished durable
goods; they range from metal mining and logging to
electronic tubes and original equipment auto tires.
Nondurable materials, comprising 26 percent of the
total in 1957-59, include business fuel and power,
containers, and other business supplies as well as
textiles, industrial chemicals, paper, and other basic
nondurable materials.
MARKET GROUPINGS
The second system of classification is based on type
of end-use, and has as its major categories consumer
goods, equipment, and materials. Each of the 207
monthly series is assigned to one of the market groupings as well as to an industry grouping. For example,
the auto production series is a component of consumer
goods in the market classification and of transportation equipment in the industry classification. Truck
production, which is also part of transportation
equipment in the industry grouping, is in equipment
in the market grouping.
The consumer goods grouping, accounting for 32
percent of the total index in the 1957-59 period,
is further subdivided into automotive products,
Industrial Production, 1947-62
(Monthly data.
Seasonally adjusted)
SMDEX: 1957-59 = 100
130
120
100
NONDURABLE MANUFACTURING
DURABLE MANUFACTURING
nllllllllllllllllllllllMllllnlllliailllllllllllllllllllllllllllllllllllllllllllllllllllllllllll.lllllMlllllllllllllllllllllllll.llllllllllllllnl.llll lilllllllll .. I t ll • . I 1.1 J ll 11 1 . 1 11 .
1947
1948
1949
1950
1951 1952
1953
1954
SOURCE OF DATA: BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
50
1955 1956 1957 1958 1959
1960
1961
155
Statistical procedures.—The method used in combining the individual series is the weighted average
of relatives. This consists of (1) reducing each
series into relatives with the average for the base
period, 1957-59, as 100; (2) multiplying each series
of relatives by a base-year weight factor; and (3)
adding the products (series of relatives multiplied
by weights) for any one month to obtain the index
number for the month. The weights used are percentage weight factors, that is, percentage of the
weight assigned to each series to the total weight
assigned to all series in the base period. Since the
total of the percentage weight factors is equal to
100, the sum of the products of all series for any one
month (all series times their respective weight
factors) gives the index of industrial production for
that month. The products of the component series
and their weights give the number of points contributed to the index by individual series. This
method of computation facilitates analysis of the
changes in the index. For example, it makes it
possible to observe the points contributed by each
series or group of series, and therefore to determine
which series or group of series are responsible for the
month-to-month changes in the total index or in the
index for any group or subgroup of industries.
The weights used are based on value added—the
difference between the value of production and the
cost of materials or supplies consumed—in individual
industries in 1957 adjusted to 1957-59. The valueadded data for mining are based on the 1954 Census
of Mineral Industries and on Department of Commerce national income estimates by industry for 1954
and 1957. The value-added figures for manufacturing were obtained mainly from the Census Bureau
Annual Survey of Manufactures for 1957. Weights
for utility series were derived from Federal Power
Commission data. In many cases, value-added data
are available only for groups of two or more individual
series in the index; the assumption usually made in
these cases is that value added is proportional to
value of product within each group. The 1957-59
proportions (or the relative importance of the major
groupings based on the 1957 weights) shown here
for major groupings are given in detail in Industrial
Production—1957-59 Base, Board of Governors of
the Federal Reserve System.
Components of the index are adjusted for two
kinds of short-time recurring fluctuations—differences
in the number of working days from month-tomonth and seasonal variations. The first adjust-
ment is accomplished by reducing reported quantity
figures to average daily output in the month. For
this purpose, only regular weekend closings—where
in effect—are treated as nonworking days. No allowance is made for holiday shutdowns, whose effects
on production are adjusted by the seasonal variation
factors. The adjustment, in effect, leads to monthly
estimates of output on a daily-average basis. No
working day adjustment is needed for the man-hour
series which are reported in terms of weekly rates.
Adjustment for seasonal variation is made for 76
series or groupings of series, about half of them in
the industry classification and half in the market
classification. Seasonally adjusted indexes for larger
aggregates in both classifications and for total industrial production are weighted combinations of these
groupings. Seasonal factors have been developed by
the ratio-to-moving-average method described in
"Adjustment for Seasonal Variation," published In
the Federal Reserve Bulletin for June 1941. Use has
been made of variations of the Census Method II
program for seasonal adjustment by electronic computer, which is a mechanical version of the ratio-tomoving-average technique. A description of the
editing and professional review which accompanies
the mechanical procedure is described in Industrial
Production 1959 Revision published by the Board of
Governors of the Federal Reserve System.
REVISIONS IN THE INDEX
Since its first publication in 1927, the index has
undergone several major revisions. A major revision
was completed in 1959, with revised indexes and new
groupings carried back to January 1947. The principal changes were: (1) adjustment of individual
monthly series to levels shown by Census of Manufactures and other data; (2) broadening of coverage
to include electric and gas utility output, and introduction of new component series in a number of
manufacturing and mining industries; (3) introduction of new market groupings of production series
described above; (4) selection of 1957 as weight year
for the period beginning with January 1953, and as
a new reference base period; the old reference base
of 1947-49 was continued in addition to the new one
for major groupings of the index; and (5) adoption of
the latest (1957) version of the Standard Industry
Classification, prepared under the auspices of the
U.S. Bureau of the Budget.
The 1962 revision of the index of industrial
production shifted the comparison base from 1957
51
Relative Importance of Major Groupings in the Index of Industrial Production—1957-59 Comparison Basis
Industry group
Total index
Manufacturing, total
Durable
Nondurable
Mining
Utilities
1957-59 base
period proportion
100. 00
86.45
48.07
38.38
8.23
5.32
Durable Manufactures
Primary metals
Fabricated metal products
Machinery
Transportation equipment
Lumber and products
Other durable manufactures
6.95
5.37
14. 80
10. 19
1.73
9.03
7. 60
8. 17
11. 54
11.07
to an average of the years 1957-59. At the same
time the index has been updated since 1957 by a
general revision in seasonal factors and interim
adjustments in the levels of eight series (see Federal
Reserve Bulletin, October 1962). The 1957 value
added continues to be the basis for the weights.
Shifting the comparison base has raised the total
index by less than 1 percent. The annual levels of
eight series in the apparel, food, and chemical groups
have been revised since 1957 to take account of additional information based on more comprehensive
annual data. These eight series of the 207 component series account for about 5 percent of the total
index, and since these changes were largely offsetting, the total index and its major divisions of market
and industry groupings were not generally affected.
Seasonal adjustment factors have been revised for
the period since 1957, resulting in substantially modified cyclical patterns for some of the component
indexes and a slight raising of the first quarter and
a slight lowering of the third quarter in the total
index.
Relation to other series.—As an important general
economic indicator, the index of industrial production is related in varying degree to other general
economic indicators. Among the more important
series to which the index is closely related are those
on manufacturers' sales. It should be observed, how-
52
Total index
Final products, total
Consumer goods
Equipment, including defense
M at erials
1957-59 base
period proportion
100. 00
47.35
32. 31
15.04
52.65
Consumer Goods
Automotive products
Home goods
Apparel, including knit goods and shoes
Consumer staples
3.21
4.59
5.41
19. 10
Equipment
Business equipment
Defense equipment
Nondurable Manufactures
Textiles, apparel, and leather
Paper and printing
Chemicals, petroleum, and rubber. _
Food, beverages, and tobacco
Market group
11.63
3.41
Materials
Durable goods materials
Nondurable materials
26.73
25.92
ever, that these are value or dollar-volume series, and
are therefore influenced by price as well as quantity
changes. The industrial production index, on the
other hand, being a measurement of physical volume,
registers quantity changes only. Differences in
movement between the production index for manufacturing and the shipment series for manufacturing are also possible for other reasons: production
differs from shipments because of changes in factory
inventories; the production index uses the establishment as the unit for the industry classification,
whereas the shipment series uses the company as the
unit; and the production index uses value added as
weights for the series, whereas the shipments series
implicitly uses value of shipments.
The " consumer" and " business equipment" market
groupings of industrial production refer to many
of the same goods as the consumer goods and producers' durable equipment categories of the gross
national product. Even after these gross national
product categories are deflated for price changes,
however, there are conceptual and statistical differences from the production series which should be
kept in mind in comparing the two. The production
series include production for inventory, for export,
and for government purchase as well as for domestic
business and consumers, and are weighted on the basis
of value added by industry in 1957. The deflated
Industrial Production
[1957-59=100]
Industry groupings
Year
Total
industrial
production
Market groupings
Manufacturing
Final products
Materials
Mining Utilities
Total
Durable
Nondurable
Total
Consumer
goods
Equipment
(l)
0)
0)
0)
0)
0)
0)
0)
0)
0)
0)
0)
0)
0)
0)
0)
0)
C1)
0)
C1)
C1)
0)
0)
0)
0)
0)
0)
0)
0)
0)
0)
0)
0)
0)
0)
0)
0)
0)
0)
0)
0)
0)
0)
0)
0)
0)
0)
0)
0)
0)
(')
0)
0)
0)
0)
1929
38
39
38
38
54
13
1930.
1931.
1932.
1933.
1934.
32
27
21
24
27
32
26
20
24
26
28
20
12
16
19
35
33
29
33
34
47
40
34
39
40
13
13
12
12
12
1935.
1936.
1937.
1938
1939
31
36
40
31
38
31
36
40
31
38
24
31
35
23
31
37
42
44
39
45
44
50
57
49
54
13
15
16
17
18
1940
1941
1942
1943
1944
44
56
69
83
82
44
58
40
58
2 80
2
103
2
101
47
58
64
2 71
2
68
60
65
67
69
74
20
23
26
28
30
1945
1946
1947
1948
1949
71
60
66
68
65
73
60
66
69
65
78
55
64
67
61
66
65
67
70
68
73
72
80
84
75
31
32
37
41
43
1950
1951
1952
1953
1954.
75
81
84
91
86
76
82
85
93
86
74
84
89
100
88
76
79
80
84
84
83
91
91
93
90
50
56
61
67
72
73
79
84
90
86
79
78
80
85
84
56
78
94
101
89
77
84
84
93
86
1955.
1956.
1957.
1958.
1959.
97
100
101
94
106
97
100
101
93
106
102
104
104
90
106
92
95
97
97
107
99
105
105
96
100
80
88
94
98
108
94
98
99
95
106
93
96
97
96
107
95
104
105
91
104
99
102
102
93
105
109
110
109
110
109
107
110
113
102
103
116
123
110
111
111
113
108
108
108
108
1960.
1961.
;
2
73
2
89
2
86
2
(')
C1)
0)
0)
0)
0)
0)
0)
0)
0)
0)
0)
0)
0)
0)
0)
0)
64
67
65
67
69
69
55
58
52
67
70
65
1 Not available.
2
Indexes should be used with caution because of special conditions due to wartime activity.
Source: Board of Governors of the Federal Reserve System.
consumer goods and equipment expenditure series
in the gross national product include imported goods
but not goods for export, inventory, or government
use. They are implicitly weighted on the basis of
final purchase price in 1954, including value added
by transportation, trade, and other sectors as well
as industry. The basic data used to calculate the expenditure series, furthermore, differ in concept and
coverage from the basic production data.
Uses and limitations.—The total index of industrial production is probably most widely used as a
business barometer. Both in whole and in detail it
is used with related data on employment, inventories,
trade, prices, and other economic variables, in analyzing short- and long-run developments in the economy.
The component indexes are used to determine the
areas in which the occurrence of important changes
accounted for the observed changes in the total index.
They are also used in analyses relating to individual
industries. Many companies, for instance, make
continuing studies of their own output and sales
figures in relation to the output movements of the
53
Production of Selected Manufactures
[1957-59 = 100]
Nondurable manufactures
Durable manufactures
Primary
metals
Year
1947
1948
1949
1950 . _ _
1951
1952
1953
1954 _
1955
1956
1957
1958
1959
_
_
_
1960
1961
TransporFabricated
tation
Machinery
metal
equipproducts
ment
Lumber
and
products
Textiles,
apparel,
and
leather
Paper
and
printing
Chemicals, Foods,
petroleum, beverages,
and
and
rubber
tobacco
91
94
79
76
77
70
65
67
59
43
47
47
88
92
81
81
85
81
67
69
69
48
51
49
81
80
81
100
109
99
113
91
85
91
89
100
90
73
83
92
101
88
56
63
73
92
84
98
98
97
102
100
89
87
90
91
87
77
79
78
83
85
61
67
70
75
75
84
85
87
88
90
118
116
112
88
100
98
99
102
93
106
97
107
104
89
107
102
97
106
90
104
110
105
96
96
109
96
98
97
95
108
93
97
98
97
105
87
91
96
96
109
93
97
97
99
104
101
99
108
107
111
110
108
104
102
101
108
108
109
112
114
119
107
110
Source: Board of Governors of the Federal Reserve System.
industry. They also use the industry and product
series in studies of potential markets, and in other
types of research.
The coverage of the index is limited to manufacturing, mining, and electric and gas utilities. It should
not be used as a measure of total production, because
agriculture, construction activity, and the various
service sectors are not included. It might be noted,
however, that changes in the output of manufactures,
minerals, and utilities are especially significant, in
part because they account for such a large part of
variation in the total of all economic activity.
References.—The index of industrial production is
published monthly in the Business Indexes release,
available on request from the Division of Administrative Services, Board of Governors of the Federal
Reserve System, Washington 25, D.C. Each issue
shows all the groupings and individual indexes published on a 1957-59 base. Indexes on a 1957-59
base for groupings, but not for individual series, are
shown in the monthly Federal Reserve Bulletin. A
detailed description, including historical tables for
the revised indexes on the new base from January
1947 through December 1961 is found in a Federal
Reserve Board publication, Industrial Production—
1957-59 Base.
WEEKLY INDICATORS OF PRODUCTION
Steel Produced
The weekly series on steel production is compiled
by the American Iron and Steel Institute. It includes steel for ingots and castings produced by openhearth, Bessemer, basic oxygen, and electric-furnace
processes, except for the small amount of steel for
castings produced in foundries operated by companies which do not produce ingots. The small quantity of crucible steel now produced is included with
the production of electric furnaces.
54
The series is based on current reports received from
more than 95 percent of the industry, giving actual
production for the preceding week.
The Institute publishes the weekly series each
Monday, showing production for the preceding week,
year to date, and preceding year to date. Also
issued are indexes for each of the 11 steelmaking
districts, but only for the previous week's production.
The Institute also publishes each month detailed production of steel by types of furnaces, whether ingots
or castings, and volume of carbon alloy and stainless
steel. Monthly production of blast furnaces shows
volume of pig iron and ferroalloys produced. Both
series are supplemented with statistics showing States
in which the steel and iron were produced Annual
statistics in similar detail are presented in the
Institute's Annual Statistical Report.
With its weekly, monthly, and annual figures on
production, the Institute publishes an "Index of
Ingot Production, 1957-59 = 100." The index provides an accurate comparative measure of the volume of steel production from one period to another.
The weekly series was initiated in October 1933.
Comparable annual data on steel production are
available from 1867.
Electric Power Distributed
The weekly series on electric power distributed is
compiled by the Edison Electric Institute. It may
be defined as the energy sold to ultimate consumers
plus energy lost, including unaccounted-for losses; or
as net generation by the total electric utility industry
plus net import over international boundaries plus
purchases from industrial sources. It includes operations of all private, municipal, cooperative, and
governmental enterprises engaged in the production
or distribution of electricity for the use of the public;
it does not include energy generated by captive
plants of industrial establishments.
The weekly figures are collected by the Institute
by telegraph from approximately 110 reporting utilities (either companies or groups of interconnected
companies) representing about 98 percent of the
total energy available for public consumption. The
estimated 100-percent production is obtained by
applying to the summarized reported data an adjustment factor derived from the ratio of the monthly
output of both companies reporting for the week to
the output of all utilities as collected and presented by
the Edison Electric Institute for the previous month.
The weekly series is useful in economic analysis,
because it is available promptly and is a reliable
measure of net energy distribution to the public
supply. It is not a sensitive measure of important
changes in industrial activity, however, since it includes energy used for nonindustrial purposes, such
as air-conditioning loads, requirements of the Atomic
Energy Commission, and sales to residential consumers.
The weekly series is issued each Wednesday by
the Edison Electric Institute. The Institute also
publishes monthly research statistics, including additional data on source and disposal of energy, for
which the data on generation are obtained from the
Federal Power Commission. The Federal Power
Commission issues a monthly bulletin on Electric
Power Statistics, with monthly and annual data on
production, fuel consumption, requirements, and
supply.
The weekly series was initiated in 1928. Annual
data on the production of electrical energy are available from 1902.
Bituminous Coal Mined
The series on production of bituminous coal is
compiled weekly by the Bureau of Mines, Department of the Interior. It includes bituminous coal
and lignite, and is a very close approximation of total
production in the United States.
The figures are estimated on the basis of carloadings and river shipments. The method of estimation consists of raising the rail and river shipment
figures by factors to represent the coal that is not
transported by, rail or river, such as truck shipments,
local sales, colliery fuel, and coal produced by small
mines for local use. The weekly estimates are adjusted annually by the actual figures on production
of coal and lignite collected each year from all producers by the Bureau of Mines. The correction is
negligible—within less than one-half of 1 percent.
The daily average for the week is obtained by dividing the weekly production by the maximum number
of working days (not days actually worked) in that
week.
Although bituminous coal is still an important industrial fuel, its importance has decreased in recent
years. In 1920 it accounted for 67.4 percent of the
total supply of energy from mineral fuels, in 1940 for
47.2 percent, and in 1959 for 22.4 percent. The
series on production of bituminous coal and lignitehas other weaknesses as an indicator of industrial
activity. Coal mines normally operate at a fraction
of their capacity—about 3 days a week—and the
coal-using industries carry considerable stocks to
allow for changes in industrial activity, with resultant changes in coal consumption, without regard to
the ups and downs in coal output. The figures on
coal production should therefore be analyzed in conjunction with related series, also compiled by the
Bureau of Mines, on the consumption of coal by industries and deliveries to retail dealers, and on stocks
of coal held by industries and retail dealers.
55
Weekly Indicators of Production
[Weekly Averages]
Steel produced
Year
Thousands Index
of net
(1957-59
tons
= 100)
Electric
power
distributed
(millions of
kilowatthours)
Bituminous
coal mined
(thousands
of short
tons) !
Freight
loaded
(thousands
of cars)
Paperboard
produced
(thousands
of tons)
Cars and trucks assembled
(thousands) 2
Total
Cars
Trucks
1929
1, 184
63.5
1,733
1, 740
1,016
82
103.0
88.2
14.8
1930
1931
1932
1933
1934
855
549
289
493
560
45.9
29.5
15.5
26.5
30. 1
1,714
1,646
1,488
1,544
1,655
1, 522
1,243
1,007
1,090
1 173
882
714
542
562
593
76
73
64
76
76
64.5
45.9
26.3
37.0
52.9
53.5
37.9
21.8
30.3
41.8
11.0
8.0
4.5
6.7
11. 1
1935
1936
1937
1938
1939
732
1,023
1,086
609
1,013
39.3
54.9
58.3
32.7
54.4
1,793
2,037
2,256
2, 148
2,398
1,217
1,432
1,456
1, 139
1, 293
606
694
724
586
652
88
103
107
95
114
75.9
85. 7
92.5
47.9
69.5
62.5
70.6
75.3
38.5
55.7
13.4
15. 1
17.2
9.4
13.8
1940
1941
1942
1943
1944
1,281
1, 589
1,650
1, 704
1,715
68.8
85.3
88.6
91.5
92.0
2,684
3, 142
3,552
4, 155
4,385
1,503
1,695
1,909
1,907
2,009
699
814
823
816
835
122
152
138
147
153
86.8
93.4
20.8
14.5
15.2
71.7
72.3
4.0
15. 1
21.0
16.9
14.5
15.2
1945
1946
1947
1948
1949
1,529
1,277
1,628
1,695
1,496
82. 1
68. 5
87.4
91.0
80.3
4, 244
4,235
4,821
5, 313
5,498
1,891
1,745
2,058
1,948
1,427
806
795
856
822
691
153
163
180
184
177
15. 1
59.6
92. 2
101.5
120.4
1.6
41. 5
68.4
75.2
98.6
13.5
18. 1
23.8
26.3
21.8
1950
1951
1952
1953
1954
1,857
2,016
1,782
2, 141
1,694
99. 7
108.3
95.7
114.9
90.9
6, 183
6,958
7,450
8,237
8,859
1,687
1,772
1,548
1, 521
1,303
748
779
730
735
652
214
229
212
241
236
154.2
129.8
106.8
141. 1
125.6
128.4
102.7
83.4
118.0
106.0
25.9
27. 2
23.4
23.2
19.7
1955
1956
1957
1958
1959
2,245
2,204
2, 162
1,635
1, 792
120.5
118.3
116.0
87.8
96. 2
10, 315
11, 292
11,873
12, 082
13, 297
1,542
1,693
1,644
1,380
1,380
724
728
683
581
596
270
276
273
274
307
176.7
132.8
138. 6
98.4
129.5
152.7
111.6
117.6
81. 6
107.6
24.0
21.2
21.0
16. 8
21. 9
1960
1961
1,899
1,880
101.9
100.9
14, 424
15, 139
1,390
1,353
585
550
306
322
151.8
127.8
128.8
106. 1
23.0
21.7
1
Daily average. Includes data for Alaska,
a Production figures for 1929-61.
a Less than 500.
NOTE.—Detail will not necessarily add to totals because of rounding.
Sources: American Iron and Steel Institute, Edison Electric Institute, Department of the Interior, Association of American Railroads, National Paperboard
Association, and Ward's Automotive Reports.
The weekly estimates of total production and average production per working day and series on consumption and consumer's stocks are published in the
Bureau of Mines multilithed Weekly Coal Report.
Detailed annual data and monthly data for the
current and preceding years, as well as a description
of the method used in making the estimates, are
published in the Bureau of Mines Minerals Yearbook.
Prior to publication of the bound volumes of the
Yearbook, this information is also available in the
56
"preprint" of the Yearbook chapter distributed as a
separate publication.
Weekly data on production of bituminous coal and
lignite are available from 1917, annually from 1807.
Freight Loaded
The weekly revenue freight cars loaded series, compiled by the Association of American Railroads, was
initiated in 1919 as an operations report for railroad
officers. The published data are totals of weekly
reports received by the AAR from all class I railroads. Revisions in the data are necessary in only a
very few cases, usually when a preliminary estimate
is filed to meet the reporting deadline and then is
corrected when a final figure is available. The
weekly revenue freight loaded report to the AAR
contains information on carloads of revenue freight by
eight broad commodity groups and on total loads received from connections by railroad geographical
districts and by individual class I railroads. Comparisons are shown for the corresponding weeks of
each of the two preceding years.
The weekly revenue freight loaded series is widely
used by business analysts as one of the indicators of
general business activity. It should be remembered,
however, that long-term changes in the series inadequately reflect business activity, especially because
of the increased importance of competing means of
transportation (primarily truck).
The detailed data are published by the AAR in its
CS-54A report, "Revenue Freight Loaded and Received from Connections." The report is published
weekly on the Thursday following the week to which
the data relate.
The freight loaded data are available from 1919.
Paperboard Produced
The weekly series on production of paperboard,
compiled by the National Paperboard Association,
measures the production of container board, folding,
set-up, special food board, special paperboard, and
other miscellaneous types of paperboard. The data
are obtained from weekly reports which the Association collects from member companies, currently
accounting for about 87 percent of total production.
The estimated 100 percent production is calculated
on the basis of the ratio of the annual production
of the companies which submit weekly reports to
total production for the previous year. The figures
on total annual production are a summation of
annual data reported to the Association by practically
all mills. Because of the extensive use of paperboard
in the manufacture of containers and boxes for
packaging and shipping numerous products, the production of paperboard moves closely with general
economic activity.
91491 O—62
The weekly data are issued by the Association in
a one-page release on Wednesday of the week following that to which the figures relate. More detailed
statistics are presented in the Association's annual
Paperboard Industry Statistics. The Association
also publishes a series on "percent of activity" based
on industry reports of the time in use of the machines
on an inch-hour basis (1 inch of machine width
operated for 1 hour).
Comprehensive monthly and annual data on pulp,
paper, and paperboard are collected by the Bureau
of the Census and published in its Current Industrial
Reports series. The paperboard component of the
Census series is not completely comparable with the
Association series, though the differences are not
large.
The Association's weekly data on paperboard production were initiated in 1933. Comparable annual
data are available from 1925.
Cars and Trucks Assembled
The weekly series on output of cars and trucks is
compiled by Ward's Reports, Inc., and is based on
information received from each of the individual
producers in the United States. It is published each
Monday in Ward's Automotive Reports, which shows
a breakdown of the weekly total by cars and trucks
and by makes, current and cumulative monthly
totals, and corresponding figures for the previous
year, with similar data for Canada. Summary data
are presented in Ward's Automotive Yearbook.
Monthly and annual data on factory sales are compiled and published by the Automobile Manufacturers Association. The sales figures differ somewhat from the production figures, principally because
they include some units produced in earlier periods
and exclude some units produced in the current
month.
In the accompanying historical table, data for the
years 1929 through 1958 are average weekly production figures derived from annual totals in Ward's
yearbooks; and data for 1959 are taken from the
weekly reports.
The weekly production figures have been published
by Ward's since 1925. Annual data on factory sales
of cars and trucks are available from 1900.
57
NEW CONSTRUCTION
Value of New Construction Put in Place
Description of series.—The series on the value of
new construction put in place are compiled monthly
and represent estimates of the dollar value of construction work installed or erected on the site during
each month. Effective July 1959, responsibility
for compilation of new construction estimates was
transferred from the Business and Defense Services
Administration of the Department of Commerce
and the Bureau of Labor Statistics of the Department
of Labor to the Bureau of the Census of the Department of Commerce. Pending revisions of concepts
and methods, the Bureau of the Census is continuing
the existing series. Annual data for recent years
and seasonally adjusted annual rates of the data for
recent months are published in current issues of
Economic Indicators.
New construction covers the erection or installation
of, and additions and alterations to, immobile
buildings, structures, and utilities, together with the
necessary service facilities, such as plumbing,
heating, and elevators. Construction also covers
certain types of immobile equipment which are
primarily assembled or erected on the site, such as
blast furnaces and fractionating towers. New construction does not include maintenance and repair,
drilling of oil and gas wells, digging and shoring of
mines, and operations which are an integral part of
farming such as plowing, terracing, and digging
drainage ditches.
The distinction between private and public
(Federal, State, and local) construction is made on
the basis of ownership, not source of funds. Residential construction includes housekeeping units and
nonhousekeeping facilities such as hotels, motels,
and dormitories.
Revisions in the historical series.—Since the publication of the 1960 Historical and Descriptive Supplement to Economic Indicators there have been several
revisions in the series on new construction. A major
change involved the introduction of a new series on
the value of private nonfarm residential additions
and alterations beginning with January 1959. The
other revisions resulted from the availability of
improved source data.
The new series on the value of private nonfarm
residential additions and alterations, beginning with
January 1959, was introduced by the Bureau of the
Census in July 1961. This revision consisted of the
58
incorporation of new higher estimates based on a
continuing quarterly survey, initiated in 1960, and
covering expenditures for residential additions, alterations and repairs in the 50 States. Comparable
data for 1959 were estimated by linking the new 1960
level to the previous base year—1950. These revisions resulted in an increase of 11 percent in the
1959 value put in place estimates for new private
nonfarm residential additions and alterations. The
1959 total of expenditures for private nonfarm residential construction, which includes new dwelling
units and nonhousekeeping residential buildings—
as well as additions and alterations—was thereby
increased about 2 percent.
Three additional changes in the series on new construction beginning with January 1959 were introduced in the 1960 Historical and Descriptive Supplement to Economic Indicators. The changes were as
follows:
First, in May 1960, the Census Bureau introduced
a new series on housing starts beginning with January
1959, representing a more complete coverage of
residential construction in the 48 States plus the
addition of estimates for Alaska and Hawaii. To
reflect this new higher level of housing starts the
value in place estimates for new private nonfarm
housing units were revised back to January 1959.
As a result of these revisions, the 1959 value in place
estimates for this category were increased about
12 percent.
Second, the surveys which resulted in the revised
housing starts series also yielded information on
new farm housing starts in all 50 States. The farm
housing value put in place estimates were revised
back to January 1959 to reflect the survey information plus a proportionate allowance for additions and
alterations to farm housing.
Third, estimates for Alaska and Hawaii were introduced in the value put in place series for all other
types of construction back to January 1959. This
resulted in increases of about one-half of one percent
over the original 1959 estimates.
In making comparisons of current data with those
for years prior to 1959, these revisions should be
taken into account. For a more complete discussion
of these revisions, see Technical Note in the Bureau
of the Census releases, Construction Report, C30-13
and C30-25 (Supplement).
New Construction, 1947-62
(Monthly data.
Seasonally adjusted annual rates)
BILLIONS OF DOLLARS
70
TOTAL NEW CONSTRUCTION
30
PRIVATE RESIDENTIAL (NONFARM)
20
10
1947
1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961
1962
SOURCE OF DATA: DEPARTMENTS OF COMMERCE AND LABOR
Statistical procedures.—Three general methods are
used by the Bureau of the Census in making the
estimates of new construction activity, depending on
the kind of data available for the different types of
construction. In some instances, the first estimate
for a period is a preliminary projection, based on
related data or normal seasonal changes, pending
receipt of data required for the final estimates.
The first method.—This method is used for most
types of private and non-Federal public construction.
It involves the derivation of estimates of the value of
work started and the translation of these estimates
into value of work put in place by the application of
phasing patterns. Phasing patterns are estimates
of the monthly rate at which the total value of
construction work is put in place from the start to
the completion of construction. Separate patterns
have been developed which vary by type of construction, project valuation, and month in which the
work is started. The estimates of value of work
started are derived by two separate procedures, as
follows: (1) For new housing units, an estimate of
the value of work started is obtained by multiplying
the number of units reported in the new nonfarm
housing starts series (p. 62) by average valuation
figures derived from building permit data and from
surveys in nonpermit areas. The building permit
valuations are first adjusted to reflect the relationship
between permit valuation figures and construction
costs. (2) For the remaining categories for which the
first method is used, data representing the value of
contracts awarded in the 37 Eastern States are compiled by the F. W. Dodge Corporation. Contract
awards for State and locally owned projects in the
Western States, including Alaska and Hawaii, are
compiled by the Bureau of the Census from various
construction publications. An estimate of the value
of contracts awarded for privately owned projects
in the 13 Western States is obtained by applying a
factor derived from building permit statistics to the
Dodge contract award data. The factor represents
the ratio of the value of building permits issued in
the 37 States to the valuation of permits issued in
all 50 States for each of the major types of construe-
59
tion involved. The sum of these data, which
represents the estimated value of contracts awarded
in the 50 States is adjusted for undercoverage—
chiefly small projects and work done on force
account—and for architectural and engineering fees.
The resulting adjusted value of contracts awarded
each month is assumed to represent the value of work
started in the following month.
The second method.—This method is used for most
Federally owned programs and for some public utility
construction. The Census Bureau obtains monthly
reports of construction expenditures made, or of the
estimated value of physical progress, on Federally
owned construction from the Federal agencies administering the various programs. Monthly estimates of construction by railroads are obtained from
the Interstate Commerce Commission. Monthly
estimates of construction by telephone and telegraph
companies are obtained from the American Telephone and Telegraph Company and the Western
Union Telegraph Company, respectively.
The third method.—This method is used for farm
service buildings, some highway construction, and
most public utility construction. As a first step,
this involves obtaining annual estimates and fitting
a trend line to the estimates of the value of construction expenditures in successive years. Monthly value
put in place estimates are then derived by applying
appropriate seasonal indexes to the monthly values
described by the annual trend line. The annual
estimates for the current year are based on forecasts
of construction expenditures and are later revised to
reflect estimates of construction actually accomplished.
The annual forecasts and estimates are prepared
by: The U.S. Department of Agriculture for farm
service buildings construction; the Bureau of Public
Roads for highway construction; the Edison Electric Institute for electric light and power construction; the American Gas Association for construction
of gas lines and gas plants; the Interstate Commerce
Commission for construction of interstate petroleum
pipelines, inflated to include an estimate for intrastate companies on the basis of data prepared by
the Chase Manhattan Bank, on the ratio of gross
investment in carrier properties by interstate companies to gross investment in all carrier properties.
Relation to other series.—The new construction activity series is one of the components in the gross
national product series and in the gross private
domestic investment series. The series differ in one
60
respect, however: gas and oil well drilling is included in the new construction series in the national
accounts, but not in the series shown here.
The definition of construction used in the new construction series is more inclusive than that in some of
the series pertaining to labor. The nonagricultural
employment series contains a component for employment in contract construction only, excluding employment on construction performed by force account. (For a fuller discussion of noncomparability
of these data, see the Technical Note in the March
1955 issue of Construction Review.) The series on
average weekly hours and average hourly and weekly
earnings cover contract construction of buildings
only.
Uses and limitations.—Although the new construction series indicates the current volume of this segment of economic activity, it does not serve the same
purpose as would a series on new work started. The
future trend in the series is determined to a considerable extent by past commitments made.
The new construction figures cannot be used as an
indicator of the physical volume of construction
without extensive adjustment for changes in price
and wage rates, technological advances, and other
relevant factors. Also, since the series does not include maintenance and repair, it cannot be related
directly to the total use of construction labor and
materials. Seasonally adjusted annual rates of new
construction in 1947-49 dollars, which reflect some
of these adjustments, are published monthly in Construction Report C30 and in Construction Review.
In addition, annual estimates of the value of maintenance and repairs are published in Construction
Review.
While extensive adjustments are made for undercoverage of the source data now used, there is
no satisfactory factual basis for making these adjustments, and much reliance is placed on judgment
and opinion. The construction patterns used in
translating work started into work put-in-place may
be obsolete and do not reflect short-run changes due
to such factors as weather or the labor and materials
supply situation. The Bureau of the Census is developing plans for improvements in concepts and
methods for estimating the value put-in-place data.
Pending the introduction of such improvements, the
existing series are being continued.
Because of these limitations resulting from the
many different sources of data and the kinds of estimating procedures used, the error in the estimates
New ( Construction
Construction contracts 3
Private expenditures
Year
Total
expend- Total
itures
Residential non-farm
Commercial and
Additions
New
industrial
and
Total housing Alteraunits
tions l
Other
Federal,
State,
and local
expenditures 2
Billions of dollars
10. 8
1929
8. 3
3. 6
3.0
0. 6
2. 1
2. 6
267
2. 9
2. 7
145
.2
.4
.5
1.9
1.6
2.2
.4
.6
.9
.6
.9
2.2
3.5
2. 7
2. 3
.4
.5
.5
1. 1
1. 1
1. 2
3. 1
1.6
.3
.4
.4
.4
5. 1
6. 2
3. 4
2. 0
2. 2
3. 0
3. 5
1. 7
.9
.8
2. 6
.4
.5
.3
.2
.2
.8
1. 3
1. 5
5.8
12. 6
17. 9
23.2
24.2
3.4
10. 4
14. 6
18. 5
17. 9
1. 3
4. 8
7. 5
10. 1
9.6
.7
3.3
5.5
7. 5
7.3
.6
1. 5
2. 1
2. 6
2.4
1950
1951
1952
1953
1954
29. 9
32. 7
34. 7
37.0
39.2
23. 1
23.4
23.9
25.8
27. 6
14. 1
12.5
12. 8
13. 8
15. 4
11. 5
9.8
9.9
10.6
12. 1
1955
1956
1957
1958
1959 (old
series)
1959 (new
series)
44. 2
45. 8
47.8
49.0
32.4
33. 1
33. 8
33. 5
18. 7
17. 7
17.0
18.0
54. 1
38.0
56. 6
40.3
1960
1961
55.6
57.4
2. 1
1. 6
.6
.5
.6
1. 6
1. 3
.5
.3
.4
1935
1936
1937
1938
1939
4. 2
6. 5
2.0
3.0
3.9
3.6
1.0
1. 6
.7
1.2
1.9
2.0
1. 5
8. 2
4. 4
1940
1941
1942
1943
1944 _
8. 7
12.0
14. 1
8. 3
5. 3
1945
1946
1947
1948
1949
7.0
7.0
_ _ __
3.0
1. 4
.7
.6
1.2
.5
.2
.3
1. 5
.7
.5
1.2
.9
1. 1
Millions of
square feet
(4)
2.4
5. 9
3. 8
1. 7
1. 2
1. 5
(Index 195759=100)
(4)
1. 4
.7
.3
.3
8. 7
6. 4
3. 5
2. 9
3. 7
Commercial
and industrial floor
space
2. 5
.5
.2
.1
.2
1930
1931
1932
1933
1934
Total value
(4)
(A)
(4)
(4)
3.4
3. 8
70
33
42
46
w4
((4))
((44))
97
123
67
93
u\
162
294
520
128
56
(4)
3.6
5. 8
10.7
6. 3
3. 1
(4)
I
96
2. 4
2.2
2.2
1.3
2.8
4. 4
5. 6
6. 1
4. 7
6.3
33. 9
41. 1
43.7
2. 6
2. 7
3.0
3.2
3.3
2. 5
3. 6
3.5
4.0
4.2
6. 5
7.3
7.6
8.0
7.9
6. 9
9.3
10. 8
11.2
11. 7
61. 4
63.4
66. 8
69.5
76.2
15.0
13.5
12. 6
13. 6
3.7
4. 1
4.4
4. 5
5.6
6. 7
7. 1
6.0
8.1
8.7
9. 6
9.5
11.7
12. 7
14. 1
15.5
91. 1
91. 6
93.2
101.7
22. 3
17. 1
5.2
6.0
9.7
16. 1
25.0
19.2
5. 7
6.0
9.3
16. 2
39. 6 *22. 5
40. 4 22. 5
16.4
16. 2
6. 1
6.3
7.0
7.4
10.0
10. 4
16.0
17.0
.8
2. 8
2. 7
2.8
3.3
1
221
354
243
211
147
6
5
8
6
237
225
197
235
238
298
436
421
359
105. 1
440
105.2
107.6
461
443
1
2
3
Includes nonhousekeeping residential buildings not shown separately.
Includes public residential construction.
Compiled b y F . W. Dodge Corporation. Omits small contracts and covers rural areas less fully than urban.
•8 Not available.
Excludes floor space of Atomic Energy Commission projects, because of security reasons. Valuation of projects for which floor space was omitted (in millions):
1951,$980;1952,
$923;1953,$479.
6
Revised series beginning January 1956; not comparable with earlier data.
Source: New construction expenditures by U.S. Department of Commerce; construction contracts by F. W. Dodge Corporation.
cannot be statistically measured. Caution should
be exercised in drawing conclusions from relatively
small month-to-month or year-to-year changes.
References.—Data on construction value put-in-
place are published in more detail by type of construction and ownership in Construction Report
C30, Value oj New Construction Put-in-Place, a
monthly publication of the Bureau of the Census.
61
This publication also presents data on a seasonally
adjusted annual rate basis, both in current dollars
and in constant (1947-49) dollars. Construction Review, a monthly publication of the Business and Defense Services Administration, U.S. Department of
Commerce, publishes value put-in-place data for new
public construction, by source of funds, in addition
to the value put-in-place data shown in Construction
Report C30.
Historical monthly data for 1939-44 are published
in Construction Volume and Costs, 1915-1956, a
statistical supplement to Construction Review and
for 1945-57 in a pamphlet prepared jointly by the
U.S. Department of Commerce and the U.S. Department of Labor entitled, Value oj New Construction
Put-in-Ptace, 1945-58. The latter publication is
available upon request to the Bureau of the Census.
Data for 1958, 1959, 1S60, and 1961 are published in
Construction Report C30, issue numbers 4, 25 (supplement), and 32, respectively.
More detailed descriptions of the sources of data
and the methods of compiling the estimates are published in Construction Volume and Costs, 1915-1956.
F. W. Dodge Construction Contracts
Series
Description oj series.—The total value index on
construction contracts compiled by the F. W. Dodge
Corporation covers private and public ownership
for residential buildings, nonresidential buildings,
public works, and utilities construction. The series
includes additions and alterations, but not maintenance and repair. Coverage is not complete, particularly for force-account work and smaller construction projects. Farm construction is excluded,
and rural nonfarm construction is probably covered
less fully than urban. Prior to 1956, Dodge construction statistics covered only the 37 Eastern
States. Beginning in January 1956, coverage was
expanded to 48 States and the value index, together
with its 1947-49 base, was adjusted back to 1947.
Current issues of Economic Indicators show the
annual index for recent years and seasonally adjusted data for recent months.
The major segments of the Dodge series on construction contracts are compiled by several methods.
Data on privately owned one-family houses are based
upon a combination of building permits in the most
active building permit areas and a sample in all other
areas. Permit costs are adjusted to reflect estimated
actual construction costs. In the 37 Eastern States,
data for all other project types in the Dodge series
are based upon the Corporation's news reporting
service: interviews with architects, contractors,
owners, real estate brokers and others, to obtain information on construction jobs being planned and
the awarding of construction contracts. In the 11
Western States, the corresponding segment of the
series is based predominantly upon information from
building permits in a sample of geographic areas,
adjusted to reflect actual construction costs. This
information is supplemented with data from secondary sources and field reports on public construction and on private construction in nonpermit
portions of the sample areas.
In the series showing square feet of commercial
and industrial construction, the Dodge category of
"Commercial" includes store buildings, restaurant
buildings, office and bank buildings, nonindustrial
warehouses and storage structures, and commercial
garages and service stations. The category of "Industrial" includes the manufacturing facilities (less
cost of processing equipment) and warehouses built
by companies classified by the Bureau of the Budget
in their Standard Industrial Classification as "Manufacturing" and covered by the major group codes
19 through 39.
Data on construction contracts are available
monthly in more detail by type of construction, geographic location, and ownership in F. W. Dodge
Corporation's several subscription statistical services.
NEW HOUSING STARTS AND APPLICATIONS FOR FINANCING
Housing Starts
Description oj series.—The "new series" of housing
starts, containing data starting with January 1959,
on both the total number and the number of nonfarm new housing units on which construction is
started in the United States each month, with the
62
breakdown by public and private ownership, is
compiled by the Bureau of the Census. The old
series was prepared by the Bureau of Labor Statistics
until June 1959 at which time the Census Bureau
assumed responsibility for construction statistics,
and continued the old series until April 1960. Con-
sequently, data are available for both the old and
new series for the 16-month period January 1959 to
April 1960, although Economic Indicators shows the
overlap only for 1959. The description which follows refers to the new series. Differences from the
old series are also presented. Independently of the
Census (or BLS) compilation, the Federal Housing
Administration and the Veterans' Administration
provide reports on the number of units involved in
their respective programs.
The new series is a comprehensive measure of the
number of new housing units in housekeeping residential buildings on which construction has started
in the United States each month. Start of construction is defined as the beginning of excavation for
the footings or foundation of the building. A housing unit is defined as a room or group of rooms
intended for occupancy as separate living quarters
by a family, by a group of unrelated persons living
together, or by a person living alone. A housekeeping residential building is a building consisting primarily of housing units.
The housing starts series exclude group quarters
(such as dormitories, fraternity houses, nurses'
homes, etc.), transient accommodations (such as
transient hotels and motels) and units in primarily
nonresidential buildings. Also excluded is the manufacture of mobile homes or house trailers.
Housing units are classified as public or private on
the basis of ownership. They are classified as farm
or nonfarm on the basis of responses of builders of a
sample of units to questions regarding the intended
use of the land on which the building is located.
Statistical procedures.—Four steps are involved in
preparing the monthly estimates.
(a) Each month the Census Bureau mails questionnaires to some 3,500 local government officials
who issue building permits in incorporated places or
in counties and townships throughout the country.
Of these places, 3,014 account for approximately 90
percent of housing units authorized; the remaining
500 represent a sample of the approximately 7,000
other permit issuing places accounting for the remaining 10 percent. Information is requested, among
other things, on the number of privately owned
housing units authorized by building permits issued
during the month.
(b) The second step is to convert the permit authorizations to starts. The information required for
this conversion is obtained through a continuing
Nonfarm Private Housing Starts, 1947-62
(Monthly data.
Annual rates)
THOUSANDS
2,000
NONFARM PRIVATE HOUSING STARTS
^
(UNADJUSTED)
— NEW SERIES BEGINS
11
1,500
1,000
500
1347
1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 I960
1961
1SG2
SOURCE OF DATA= DEPARTMENTS OF COMMERCE AND LABOR
63
monthly sample survey of building permits conducted
in a sample of about 435 places. In 1961, the average
monthly sample was approximately 14,000 housing
units for which permits were issued. For each
housing unit in the sample, information is obtained
on the month in which construction started, establishing it as either prior to the month the permit
was issued, during the month of permit issuance,the
following month, etc. The number of starts in any
given month is then calculated by applying the
proportion of actual starts of units authorized during
the month, the proportion of units started during
the given month but authorized in the previous
month, etc., to the estimates of the total number of
housing units authorized during these months in all
10,000 places, as estimated from the 3,500 place
sample. This is done separately for each of four
major regions (North East, North Central, South,
and West) of the United States, and within each
region by inside or outside Standard Metropolitan
Statistical Areas. Finally, an adjustment of 4.8
percent is added to take account of the estimated
number of housing units started without permit
authorization. This factor is based primarily on
information from the 1956 National Housing Inventory and, if necessary, will be modified as current
survey information now being collected becomes
available.
(c) Information on new private housing starts in
areas not covered by building permits is obtained
from field surveys in a sample of 95 primary sampling
units comprising (1) all or part of Standard Metropolitan Statistical Areas, (2) individual counties, or
(3) groups of counties. In the survey, data on starts
are first obtained through contacts with previously
identified individuals or organizations familiar with
construction activity in these areas. This information is then checked by field visits to the sites of
reported construction. As a final step, estimates of
starts not provided by the sources are prepared on
the basis of an intensive canvass by interviewers of
a subsample of 193 land areas within the 95 primary
areas.
The separate estimates for permit-issuing areas
and for nonpermit areas are added to produce the
figures for privately-owned housing.
(d) Information on the number of public units
started is obtained directly from the sponsoring Federal, State, and local agencies. This figure, added to
the estimate for private units, gives the estimate of
the total number of housing units started each month.
64
The seasonally adjusted annual rate of starts of
private units, published in current issues of Economic
Indicators, is based upon stable seasonal factors calculated from data for the period 1954-1960. The
rate is obtained by making separate seasonal adjustments of housing units started in permit-issuing
places in each of the four regions using the standard
Univac No. II Census method for seasonal adjustment, and of total nonpermit starts and then adding
the five individual adjusted series. The average
implicit seasonal factors for total private nonfarm
housing starts for 1959-1961 are as follows:
January
February
March
April
May
June
July
August
September
October
November
December
Permit
places
77. 1
79. 3
99. 9
113.3
115.5
114.3
110.0
111.4
105.2
104.7
91. 5
79. 2
Nonpermit
areas
60. 6
73. 1
83. 9
118.8
126.9
il8. 4
120.6
130.8
112.1
100.0
89. 9
64. 7
A preliminary estimate is issued 15 to 20 days
following the end of the month. The preliminary
estimate differs somewhat from the final figures for
the following reasons: (a) it is based on a sample
of about 1,700 permit-issuing places; (b) not all the
results of the field survey used to convert housing
unit authorizations to starts are received in time to
be used; and (c) housing units started prior to the
issuance of permits may not be adequately accounted
for. Final revisions are made within the next two
months.
The figures for the FHA and VA programs under
"New nonfarm housing starts" are based on administrative reports of the number of units on which
first compliance inspections have been made by those
agencies. The first inspection is usually made after
the footings are in—normally only a slight lag from
the time construction is considered started in the
Census series. The FHA and VA figures for "Proposed home construction" are also based on administrative reports of the two agencies. The number
of units for which FHA has received applications is
limited to those on l-to-4-family home mortgages,
thus making it more nearly comparable with the
VA series since the VA program covers only homes
to be built for occupancy by veteran owners.
Relation to other series.—The "new series" on housing starts is not directly comparable with the series
issued previously for several reasons. The major
definitional change is the inclusion of farm construction in the new series (although nonfarm figures are
shown separately, as well as total) whereas the old
series was intended to cover only nonfarm housing.
The new series also includes seasonal, low-value and
possibly temporary units, formerly excluded. In
addition, it includes data for Alaska and Hawaii.
Another reason for the difference in the level of the
two series results from the more nearly complete
coverage of the new series of construction in areas
formerly classified as nonpermit.
There are also major differences between the two
series arising from the nature of the measurement
process. Beginning with 1960, the new series undertakes to make direct measurements of housing units
started within each month. The old series represented more nearly a measurement of the number of
housing units which would have been started in a
particular month if the time lag between permits
and the actual start of construction found in some
past survey period had prevailed in the particular
month.
The series on new housing starts has a limited
relationship to Census of Housing figures. Units
started should not be added to housing inventory
figures without an adjustment to allow time for completion. Also, although new construction usually accounts for the greater part of the difference in inventory reported in successive housing censuses, there
are other changes, too, such as demolition, disaster
losses, and additions and losses due to conversions or
mergers. The magnitudes of these factors are indicated in the National Housing Inventory of 1956.
The Census of Housing also includes certain types of
residences which are not counted in the new housing
starts series, such as living quarters in trailers or
mobile homes and in institutions or primarily nonresidential or transient structures.
The Census Bureau also publishes data on the
number of housing units authorized by building
permits each month. These figures differ from
housing starts in that the units are reported in the
month of permit issuance rather than start of construction and they exclude units in nonpermit areas.
Data compiled for the housing starts series are used
in the preparation of estimates for the series on value
of new construction put-in-place described in the
preceding section.
Uses and limitaticns.—The series on housing starts
serves as an important guide in the formulation of
national housing policy and as an indicator of residential building activity. The fact that current
data are not directly comparable to those for years
prior to 1959, for the reasons stated above, may limit
their usefulness to some degree. However, statistics
for 1959 on both bases are published as a bridge between the two series. It must be recognized that
the current estimates have a number of limitations:
First, both the level of the estimates and the measures
of month-to-month change are subject to sampling
error. The standard error for the monthly estimate
of total housing is between 3 and 4 percent. Secondly, although the new series is at a higher level
than the old one, it is possible that there is still some
understatement of starts due to the difficulty of locating and identifying construction projects in nonpermit areas. A third limitation is in the seasonal
adjustment factors which of necessity are based
mostly on the old series for which the seasonal movements may have been somewhat different; after
sufficient time has elapsed the seasonal factors will,
of course, be based entirely on the new series.
The FHA and VA series indicate the importance of
these government programs in the field of new home
construction. Certain limitations in these series
should be observed, however, particularly in their
relation to other data. Although FHA and VA may
make inspections during construction and the units
may be counted as FHA or VA "starts," the permanent financing after completion may not be underwritten. Also, some applications for FHA commitments or requests for VA appraisals lapse. There
is some duplication of units in application for FHA
commitments and requests for VA appraisals. In
cases where both agencies issue valuation commitments, FHA makes the compliance inspection and
the unit is reported as an FHA start, even though
the mortgage may finally be underwritten by VA or
by neither agency. As mentioned above, the FHA
series on housing starts includes rental housing,
whereas the FHA applications series covers only
l-to-4-family homes.
References.—Monthly data on housing starts are
published in somewhat greater detail in Construction
Reports, Housing Starts (Census series C-20). Related information on residential housing units
authorized by building permits is published in Construction Reports, Building Permits, New Residential
Construction Authorized in Permit-Issuing Places
(Census series C-4-2). Much of this information is
reprinted in Construction Review published monthly
65
by the Department of Commerce. Historical data
for 1889 to 1958 may be found in: Construction
During Five Decades, Historical Statistics 19071952 (BLS Bulletin 1146); Trends in Building Permit
Activity (BLS Bulletin 1248); Nonfarm Housing
Starts 1889-1958 (BLS Bulletin 1260). A more
detailed technical description of the methods used
to prepare the new series of housing starts may be
found in the Census Report C-20 No. 11 (Supplement),
May 1960. A description of the old series is given
in Techniques of Preparing Major BLS Statistical
Series (BLS Bulletin 1168), December 1954. A
series on Sales of New One-Family Homes (CensusHHFA Report series C-25) was initiated in 1962.
For the government programs, monthly data
from 1952 on starts and on proposed home construction are given in current issues of Housing
Statistics, a monthly publication of the Housing and
Home Finance Agency.
For the Census Univac II method of seasonal adjustment see Electronic Computers and Business
Indicators by Julius Shiskin, published as Occasional
Paper No. 57 by the National Bureau of Economic
Research, especially Appendix A.
New Private Housing Units
Authorized in Permit Places
Description of series.—A revised monthly series on
the number of new private housing units authorized
by local building permits, unadjusted, and with
seasonally adjusted annual rates, was introduced by
the Bureau of the Census in July 1961, presenting
data from January 1959. Similar series based on
a more restricted coverage, and not comparable with
the present statistics, had been compiled for earlier
years.
The new series pertains to all of the approximately
10,000 places in the United States which were
identified as having local building permit systems
in 1959. Beginning with January 1960, this series
has been obtained by cumulating the total of reports
from 3,014 of the more active permit-issuing places
in the country with estimates for the remaining 7,000
places prepared from a sample of 500 of them.
Annual totals are based on reports from all 10,000
permit-issuing places. Data for 1959, which are
partly estimated, were derived from reports for the
full year from about 7,300 places, plus reports,
covering part of the year, from about 2,700 places.
66
These figures relate to new buildings intended for
occupancy on a housekeeping basis. They do not
include hotels, motels, and other structures for
transient accommodation, or group residential buildings such as nurses' homes and college dormitories.
They also exclude additions, alterations, and repairs
to existing buildings, as well as conversions.
The building permit data are adjusted for seasonal
variation by the use of moving seasonal indexes
(derived by Univac Method II, using data for the
Number of New Private Housing Units Authorized by Local
Building Permits in 10,000 Permit-Issuing Places: Unadjusted and Seasonally Adjusted Annual Rates, 1959-62
Period
Annual totals:
1959
1960
1961
Monthly:
1959—January
February__
March
April
May
June
July
August
SeptemberOctober
November.
December.
1960—January. __
February..
March
April
May
June
July
August
September.
October. __
November.
December.
1961—January
February. _
March
April
May
June
July
i
August
September,
October
November.
December.
1962—January.
February._
March
April
May
June
Unadjusted
(000)
Seasonally
adjusted
annual rate
(000)
1, 208. 3
997. 6
1, 064. 2
75.7
79.0
119.0
127.8
120.8
120. 9
112. 3
106.4
102. 5
94.6
75.8
73. 5
62.3
68. 1
89.0
101. 1
103.4
94. 8
86.3
93.6
84.9
81.6
73. 9
58. 6
59. 7
58. 8
92.7
94. 0
105. 4
104.6
92.9
108. 6
90. 3
98.0
87. 3
71.7
72. 7
74. 2
100. 8
120. 3
116. 9
106. 4
1,243
1,293
1,337
1, 258
1,230
1, 234
1, 186
1, 190
1, 154
1,088
1,083
1, 147
1,070
1,066
959
1,036
1,044
964
997
951
952
979
995
949
973
974
1,005
1, 007
1,013
1,063
1,072
1, 102
1,061
1, 123
1, 118
1,215
1, 135
1,236
1, 151
1, 229
1, 128
1. 137
Housing Starts and Applications for Financing
[Thousands of units!
Housing starts
Total
Total
private
private
and
public (including
(includfarm)
ing 1
farm)
Proposed home
construction
Private nonfarm
Total
2 or
1-family more
familv
Government
programs
FHA
VA
New
private
housing
units Applica- Requests
authortions for for VA
ized2
FHA
appraiscommitals 2
2
ments
1929
509. 0
316. 0 193. 0
1930
1931
1932
1933
1934
330. 0
254. 0
134.0
93.0
126.0
227.0 103.0
187.0 67.0
16. 0
118.0
17.0
76.0
17.0
109.0
1935
1936
1937
1938
1939
215. 7
304. 2
332.4
399.3
458.4
182.2
238. 5
265. 8
316.4
373. 0
33. 5
65. 7
66. 6
82. 9
85.4
118. 7
158. 1
20. 6
47. 8
49. 8
131. 1
179.8
1940
1941
1942
1943
1944
529. 6
619. 5
301.2
183. 7
138. 7
447. 6
533.2
252. 3
136.3
114.6
82.0 180. 1
86. 3 220.4
48.9 165.7
47.4 146. 2
24. 1 93.3
231. 2
288. 5
2.38. 5
144.4
62. 9
1945
1946
1947
1948
1949
208. 1
662.5
845. 6
913. 5
988.8
184.6 23.5
41. 2
9.0
590.0 72.5
69.0 92.0
740.2 105. 4 229. 0 160.0
763.2 150. 3 294. 1 71.0
792.4 196. 4 363.8 91.0
56. 6
121. 7
286.4
293.2
327.0
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959 (old series)1959 (new series)
1960
1961
, 352. 2 1, 150. 7 201. 5
, Q20. 1
892. 2 127.9
068. 5
939. 1 129.4
068. 3
932. 8 135.5
1, 201. 7 1, 077. 3 124. 4
14.0
49. 4
60. 0
486.7
263.5
279.9
252.0
276.3
191.0
148. 6
141. 3
156. 6
)
307. 0 1, 056. 5
1, 309. 5 1, 190. 0 119.5 276.7 392.9 1, 152. 6
1, 093. 9
980. 7 113. 2 189.3 270. 7
921. 9
992. 8
840.2 152. 6 168.4 128.3
820.3
1, 141. 5
932. 5 209. 0 295. 4 102. 1
950. 8
1, 342. 8 1, 078. 5 264.3 332. 5 109. 3 1, 081. 1
1, 553. 5 1, 516. 8 1, 494. 6 1,211. 7 282. 9 332.5 109.3 1, 208. 3
972.3 257.4 260. 9 74. 6
1, 296. 0 1, 252. 1 1, 230. 1
997.6
1, 365. 0 1, 313. 0 1, 284. 8
946. 4 338.6 244.3 83.3 1, 064. 2
397.7
192. 8
267. 9
253.7
338.6
()
164.4
226. 3
251.4
535. 4
306.
197.
198.
341.
369.
2
7
8
7
7
620.8
401. 5
159.4
234. 2
234.0
369. 7
242. 4
243. 8
234. 0
142.9
177.8
1
Military housing starts including those financed with mortgages insured by FHA under Section 803 of the National Housing Act, are included in publicly
financed
starts but excluded from the privately financed starts for FHA and Government programs.
2
Units in mortgage applications for new home construction.
3
Not available.
NOTE.—Monthly data on new nonfarm housing starts available beginning 1939; annual from 1889. In May 1960 the Bureau of the Census issued a new housing
starts series which provided an overlap with the old series to January 1959. The new series is issued monthly and covers farm as well as nonfarm housing starts.
For the year 1961 according to the new series, total housing starts, farm and nonfarm, public and private, were 1,355,000 of which 1,309,500 were private.
Sources: Department of Labor prior to June 1959, Department of Commerce, Federal Housing Administration (FHA), Veterans' Administration (VA).
67
period 1954-1960) applied to the average number of may not seriously impair the usefulness of building
housing units authorized per working day in each permit statistics as indicators of trends in residential
month. The working day adjustment significantly construction activity, although even in this conreduces the irregular movements in the series.
nection the geographical limitations of the data
Building permit data are also presented in con- need to be kept in mind.
siderable geographic detail not available for the
References.—Monthly data are published in Conhousing starts series.
struction Reports, Series C20, "Housing Starts.7'
Limitations of data.—The portion of residential Building permit authorizations by type of structure,
construction measurable from building records is and covering the numbers of units as reported by
inherently limited, since such records obviously
do not reflect construction activity outside of areas individual permit-issuing places, appear in the Ansubject to local permit requirements. During 1961, nual C40 reports of the Bureau of the Census, New
about 18 percent of the housing units in the United Housing Units Authorized by Local Building PerStates were constructed in areas not requiring build- mits.
Data showing authorizations by type of structure
ing permits. However, this proportion varies from
State to State and among the metropolitan areas. and covering both numbers of units and permit valuThe reported statistics are also influenced by the ations, for States and selected metropolitan statistical areas (based on 3,014 places), appear each month
following factors:
1. Some new residential construction in build- in the C42 series of reports, New Residential Construcing permit jurisdictions escapes recording. A tion Authorized in Permit-Issuing Places. Similar
current measure of such incomplete filing is not data covering all SMSA's and States, and based on
approximately all of the 10,000 permit-issuing places
presently available.
2. Changes in boundaries of localities due to in the United States, appear in the annual summaries
annexation, new incorporations, etc., result in of the C42 series of reports, New Residential Construcproblems in comparability over time, even for tion Authorized in Permit-Issuing Places.
Related Construction Data Reports
the same places.
Construction Reports, Series C25: Sales of New
3. Some building permit jurisdictions close
One-Family Homes (occasional)
their books a few days before the end of the
Construction
Reports, Series C30: Value of New
month, so that the time reference for permits is
not, in all cases, strictly the calendar month.
Construction Put in Place (monthly)
Construction Reports, Series C41: AuthorTo the extent that these limiting factors apply
ized Construction, Washington, D.C. Area
rather consistently over an extended period, they
(monthly)
TRADE SALES AND INVENTORIES
term "sales77 as used here signifies essentially sales or
Description of series.—The series on wholesale sales shipments, although some respondents probably reand inventories represent sales and inventories of port orders (bookings) as sales. Sales are net, i.e.,
all establishments classified in wholesale trade and less discounts, returns and allowances, and include all
are based on the definitions and classifications of the business receipts of the reporting establishments, not
Standard Industrial Classification, which are used just receipts from sales of merchandise. The invenin the Censuses of Business, except that: (1) oper- tory estimates are based on the values carried on the
ations of manufacturers7 sales branches and offices books of the reporting establishments, usually the
and marketing stations of petroleum refiners have cost of merchandise on hand.
Both the sales and inventories series were revised
been excluded, since sales and inventories of these
establishments are covered in the manufacturing beginning with data for January 1946; these new
series, and (2) sales of agents and brokers are in- series are not comparable with the old series for the
cluded on the basis of actual receipts of the agents period 1939 through 1945, primarily because the data
and brokers rather than as the total value of goods for the later years exclude wholesale establishments
sold as reported in the Censuses of Business. The with no paid employees. These establishments ac-
Wholesale Trade
68
counted for less than two percent of total wholesalers'
sales in 1948.
Statistical procedures.—The revised series which
begin with data for January 1946 were introduced
in August 1957. They incorporate benchmark data
from the 1954 Census of Business, with 1948 data
adjusted to the scope of the 1954 Census, e.g., to exclude data for establishments with no paid employees
and to take into account certain changes in classification. The current series are derived by extrapolating modified 1954 Census of Business data on the
basis of monthly reports to the Bureau of the Census.
Sales and inventories of merchant wholesalers are
compiled and released by the Bureau of the Census,
on the basis of dollar estimates reported monthly by
its probability sample of merchant wholesalers representing all kinds of business. Sales and stocks of
all other types of wholesalers, i.e., farm assemblers,
agents and brokers, and petroleum bulk stations
other than refiner-marketers, are derived by OBE by
extrapolating the sales reported by these segments in
the 1954 Census of Business on the basis of the current movements as reported to the Bureau of the
Census by the merchant wholesalers.
The sales and inventories data are seasonally adjusted by using the ratio-to-moving-average method
with appropriate modifications. The magnitudes of
the seasonal adjustments are suggested by the following comparisons of unadjusted and seasonally adjusted data for 1961.
Unadjusted
Inventories
Sales l
Inventories
[Billions of dollars]
Sales
Jan
Feb___
Mar___
Apr
May___
Jun
July.__
Aug___
Sept_,_
Oct
Nov
Dec___
1
Seasonally adjusted
11. 4
11.3
12.8
11. 7
12. 7
12.8
11.9
13.3
12. 6
13. 7
13.6
12. 9
13. 1
13. 1
13.4
13. 3
13.3
13.3
13.3
13.5
13. 6
13. 7
13.8
13. 5
12. 2
12.4
12.5
12. 1
12. 8
12. 8
12.5
12. 8
12. 1
12.9
13. 1
12.7
13.2
13.2
13.3
13. 5
13.5
13.5
13. 6
13.6
13. 5
13.4
13.3
13.5
Implicit seasonal
adjustment factors
Sales i
Inventories
93.0
91. 0
101.7
96. 3
99.3
100.2
94.8
104. 2
104.4
106.4
104. 0
101.2
100.0
99. 5
100.8
99. 2
99.2
98. 6
98.2
99. 5
100.7
102. 3
103.2
100.0
Includes adjustments for trading day differences.
Relation to other series.—The wholesale sales and
inventories series are most similar to, and are largely
based upon, the trends reported in the monthly
merchant wholesale trade series of the Bureau of
the Census. The level estimates of sales and inventories differ in that the coverage of the series that
appear in Economic Indicators is greater, including
as they do wholesalers other than merchant wholesalers. Because of the position of wholesale trade
in the distribution system of our economy, wholesale
sales and inventories data are most meaningful when
used together with similar data for manufacturing
and retail trade. The wholesale, retail, and manufacturing sales and inventories series can be summed
to obtain consistent aggregate series for total business, although there is a considerable amount of
duplication in the sales total.
Uses and limitations.—The monthly wholesale
trade series are important economic indicators which
reflect the lsvel of economic activity at an intermediate stage of the distributive process. The importance
of wholesalers in our economy varies by industry,
and this fact should be recognized when using the
data, especially since the operations of manufacturers' sales branches and offices and marketing stations
of petroleum refiners are excluded entirely from the
estimates for wholesalers.
The monthly estimates of sales and inventories
are based upon a sample and are therefore subject
to sampling variability. In addition, they are subject to nonsampling errors, such as the failure of
respondents to submit reports in time for tabulation,
to submit correct figures, or to respond at all. The
estimates of sales are more accurate than the estimates of inventories. The statistics on inventories
are based on estimates by respondents or imputations
due to nonresponse to a greater extent than are sales
statistics, reflecting the fact that wholesalers do not
keep inventory records on a monthly basis to the
same extent that they keep monthly sales records.
Comparisons of the monthly estimates with the
Census of Business data indicate that the monthly
estimates are subject to some undercoverage due
primarily to the time lag in representing births in
the monthly survey. This undercoverage, however,
is not considered sufficiently serious to affect the
reliability of short term trend comparisons made
from these data.
References.—Sales and inventories data for wholesale trade, seasonally adjusted as in current issue of
Economic Indicators are issued first as monthly press
releases by OBE and are published shortly thereafter
in the Survey of Current Business. Comparable
monthly data from 1946, are available on request
to OBE. Both unadjusted and seasonally adjusted
sales and inventories data are published for merchant
wholesalers, by kind of business, by the Census
Bureau in the Monthly Wholesale Trade Report.
69
More complete descriptions of these series have
been published in the following issues of the Survey
of Current Business: August 1948, October 1951,
October 1952, December 1953, and August 1957,
and in the biennial Business Statistics, a supplement
to the Survey. The Monthly Wholesale Trade Report
contains a detailed description of the Census Bureau's
monthly series covering merchant wholesalers.
Retail Trade
Description of series.—The series on retail sales
and inventories represent sales and inventories of
all establishments classified in retail trade. Sales
are net, i.e., less discounts, returns and allowances,
and include all business receipts of the reporting
establishments, not just receipts from sales of merchandise, as well as sales taxes and excises. Inventories are valued at the cost of merchandise on hand.
The separation of estimates into "durable goods"
and "nondurable goods" is based upon classifications
of stores according to the durability of the commodities accounting for the major portion of their sales.
In 1951 a basic change in the method of estimating retail sales was introduced. The "new"
series, which started in January 1951, was not comparable with the sales figures for earlier periods. In
early 1957 the new series was revised back to January 1951 to exclude data for milk dealers engaged in
processing on the premises; this exclusion conforms
to a change made in the Standard Industrial Classification. Estimates of retail sales in Alaska and
Hawaii are included beginning with data for 1960.
In mid-1961 the sales data for 1946-50 were revised
for comparability with the latest revised series. A
"new" series on inventories, comparable in concept
and coverage to the latest series on sales begins with
January 1946. The new series is not comparable
with the series for years prior to 1946.
Statistical procedures.—Census of Retail Trade
data for the years 1929, 1933, 1935, 1939, and 1948
were used as benchmarks for the sales series for the
period 1929-1951. Sales estimates for the intercensus years between 1935 and 1951 were based in
large part on changes in sales-tax collections of 20
States (whose sales accounted for 40 percent of total
retail sales) supplemented by data from special Internal Revenue Service tabulations, Federal Reserve
System data on department stores, and data on the
Retail Sales and Inventories, 1947-62
(Monthly data.
Seasonally adjusted)
BILLIONS OF DOLLARS
INVENTORIES-NONDURABLE
\
RETAIL SALES-NONDURABLE
1947
1941 1949 1950
SOURCE OF DATA! DEPARTMENT OF COMMERCE
70
19S1
1959
1960 1911
1962
taxable quantity and average price of gasoline. In
developing these estimates, use was also made of
monthly estimates of sales derived from data reported to the Bureau of the Census by a constant
sample of large independent retailers and chain
stores.
Beginning with January 1951 monthly estimates
have been prepared by the Census Bureau directly
from probability sample data. Estimates comparable in concept and coverage were prepared by the
Office of Business Economics back to January 1946.
The new estimates are not linked to a census of
business benchmark, a factor that accounts for most
of the difference in level between the sales estimates
for 1951 indicated by the old and new series. The
new estimates from the probability sample of reporting firms are derived essentially by weighting the
reported sales of each firm or store in the sample by
a value dependent upon its probability of selection.
The year-end estimates of inventories prior to 1946
were based on the Censuses of Retail Trade for 1939
and 1948, the Internal Revenue Service's Statistics
of Income, Part 2, and Federal Reserve data on department store inventories. Retail inventories estimates beginning with December 1946 utilize as
benchmarks the data in the Annual Retail Trade
Reports of the Bureau of the Census. Monthly estimates are made by the Office of Business Economics
and are based on sample data reported to the Bureau
of the Census and on the Federal Reserve System's
monthly data on inventories of department stores.
The sales and inventories data are seasonally adjusted by the Office of Business Economics, using the
ratio-to-moving-average method, modified where appropriate. The magnitude of the seasonal adjustments are indicated by the following comparison of
unadjusted and seasonally adjusted data for 1961.
Unadjusted
Sales Inventories
Seasonally adjusted
Sales i Inventories
[Billions of dollars]
Jan.. 15. 8
25. 8
17.8
26.8
F e b . 15. 1
26.3
17/8
26. 6
Mar. 18. 0
26.7
18. 1
26. 1
Apr. 17.4
26.9
26.2
17.9
May. 18. 5
26. 7
18.0
26.2
June. 18.9
26.2
18.2
26. 2
July. 17.9
26. 1
18.0
26. 3
18.2
Aug. 18. 3
25. 7
26.0
Sept. 18. 2
26.3
18. 1
26. 3
Oct.. 18.8
27. 0
26.4
18. 6
Nov. 19.2
27. 7
19. 1
26. 8
Dec. 22.9
25. 8
18. 8
26. 8
1
Includes adjustments for trading day differences.
Implicit seasonal
adjustment factors
Sales i
Inventories
88.9
84. 7
98.9
97. 4
103. 0
103.9
99.4
100.8
100. 1
100.9
100. 6
121.5
96.3
99. 0
102.3
102. 6
101.8
100. 0
99. 1
98.9
99. 7
102. 3
103. 6
96. 0
Relation to other series.—Retail sales data reflect
a substantial portion of personal consumption expenditures and are, therefore, related to the personal
consumption expenditure estimates that appear in the
national accounts. They are different from personal
consumption expenditures in that they include purchases by others than households and exclude such
major expenditures as household expenditures for
personal services, rent, medical services, etc. Retail
sales and inventories data are closely related to wholesale trade and manufacturers' sales and inventories
data, reflecting as they do the activities of the final
stage of distribution in our economy.
Uses and limitations.—The monthly retail trade
series reflect the trend of a major part of personal
consumption expenditures well in advance of the
availability of more comprehensive data. They and
the inventories series are useful indicators of probable
future economic activity at the manufacturing and
other earlier stages of production and distribution.
Since the monthly retail sales estimates are based
on a probability sample; they are subject to sampling variability, as well as such biases as nonresponse or reporting errors. The monthly sales
estimates are compared with Census of Business
data when those statistics become available. Although differences for individual kinds of business
occur, reflecting, among other things, differences in
classification due to differences in data collection
methods, measures of total retail sales from these two
sources have not differed significantly. To illustrate, the sum of the twelve monthly estimates of
total retail sales were within one-half of one percent
of the 1958 retail sales shown by the 1958 Census
of Business.
The monthly retail inventories statistics are
believed to be less accurate than the sales statistics.
Fewer retailers maintain monthly records of their
inventories than monthly records of sales, and, consequently, the sources of data on current inventories
are not so good. Even so, the monthly series estimate for December 1958 was also within one-half
of one percent of the Annual Retail Trade Survey
estimate for the same date.
References.—Sales and inventories data for retail
trade, seasonally adjusted as in current issues of
Economic Indicators, are issued first as monthly
press releases by Office of Business Economics and
are published shortly thereafter in the Survey of
Current Business. Sales data are also published by
71
the Bureau of the Census in the Monthly Retail Trade
Report. Advance estimates are published ten days
after the report month in the Advance Monthly
Retail Sales Report. Beginning with data for
January 1962, estimates of weekly sales of retail
stores are issued as a weekly report.
More complete descriptions of these series have
been published in the following issues of the Survey
of Current Business: June 1948, October 1951,
September and November 1952, January 1954, June
1957, December 1961, and in the biennial Business
Statistics, a supplement to the Survey. The
Monthly Retail Trade Report contains a detailed
description of the Census Bureau's monthly retail
trade series. A description of the sample and
estimating procedure used for that series and additional information on the reliability of the estimates
are available in a Bureau of the Census pamphlet
entitled ''Description of the Sample for the Monthly
Retail Trade Report."
Trade Sales and Inventories
Wholesale
Retail
Department stores
Inventories 2
Sales
Year
Sales ]
Inventories 2
Total
Durable
goods
stores
Nondurable
goods
stores
Total
Durable
goods
stores
Nondurable
goods
stores
1929.
(4)
(4)
4.04
1. 30
2. 74
(4)
(4)
1939.
2. 19
3.05
3. 50
0. 94
2. 56
5. 53
2.09
1940.
1941.
1942
1943
1944
2. 41
3.03
3. 43
3.83
4. 15
3.24
4. 04
3. 78
3. 68
3. 91
3.86
4. 61
4. 77
5. 27
5. 85
1. 13
1. 43
1.03
1. 02
1. 16
2.
3.
3.
4.
4.
6. 12
7. 78
8.02
7. 56
7. 64
2. 47
3. 18
2.75
2. 21
2.24
4.48
66
6. 91
7. 55
7.21
7
5.
7
7
7
4. 56
6. 20
7. 12
7.87
7. 59
6. 50
8. 73
10.20
11. 14
11. 15
5
5
1.
2.
3.
3.
3.
34
35
13
57
75
5
73
17
74
25
69
5. 17
6. 38
7.07
7. 56
7.40
Inven- 3
tories
Index, 1957-59=100
Billions of dollars
1945
1946.
1947.
1948
1949
Sales 3
6
7.95
12. 06
14. 24
16.01
15.47
6
2.43
3. 85
5. 35
6. 57
6.26
25
30
3. 45
23
2?
3.65
4. 60
5. 27
5. 35
5.40
25
29
33
37
42
24
29
40
34
36
5.52
8. 21
8. 90
9.44
9.21
47
60
66
70
67
37
48
59
67
62
11. 17
11. 42
11. 54
11. 71
11.66
72
76
78
80
80
82
76
82
80
6
1950
1951
1952
1953
1954.
8. 42
9.37
9. 56
9.81
9. 73
9. 12
9. 71
10.01
10. 47
10. 39
12. 27
13.05
13. 53
14. 09
14. 10
4. 52
4. 54
4. 61
5.03
4. 85
7. 74
8.51
8. 92
9.06
9.25
1955
1956
1957
1958
1959
10. 62
11. 27
11. 27
11. 09
12.29
11. 44
12. 95
12. 71
11.99
12. 65
15. 32
15. 81
16. 67
16. 70
17.95
5. 58
5. 48
5. 70
5. 28
5.97
9. 74
10.33
10. 97
11. 41
11.98
22.
23.
24.
24.
25.
77
43
57
29
54
10. 53
10. 53
11.41
10. 71
11.27
12.
12.
13.
13.
14.
24
90
16
58
27
88
94
96
99
105
85
94
99
98
103
1960.
1961.
12. 33
12. 56
13.21
13.48
12. 40
12. 63
27. 18
26.86
12.33
11. 52
14.85
15. 34
106
109
109
110
8
18. 29
18.23
8
5.89
5. 61
8
19. 46
21.05
21.03
21. 49
20.93
8. 29
9. 63
9.49
9. 78
9.27
1 Monthly average for year.
Book value, end of period, seasonally adjusted.
3 Based .on retail value, monthly average for year.
*8 Not available.
In 1951, a basic change in the method of estimating retail sales directly from sample data (rather than linked to a Census of Retail Trade) was introduced. The
"new"
series, which begins with data for 1946, is not comparable with sales figures for earlier periods.
6
Retail inventory estimates beginning with year-end 1946 utilize as benchmarks the Retail Trade Annual Reports of the Bureau of the Census, are based on the
latest (1957) Standard Industrial Classification, and include data for Alaska and Hawaii. The "old" estimates for 1939 through 1945 are based on the Censuses of
Business for 1939 and 1948 and are not comparable with the "new" series.
7 Data for wholesale trade sales and inventories for 1946 and later years are not strictly comparable with earlier data. In 1961 the series for 1946 and 1947 were
revised for comparability with subsequent years. The estimates were revised beginning with 1948 in 1957 to conform to the 1954 Census of Wholesale Trade, with
19488data adjusted to the scope of the 1954 Census.
Beginning January 1960, figures for retail sales include data for Alaska and Hawaii. Beginning with 1961, wholesale trade data include Alaska and Hawaii.
Source: Department of Commerce and Board of Governors of the Federal Reserve System.
2
72
Department Stores
Description of series.—Monthly indexes of department store sales and inventories are prepared by the
Board of Governors of the Federal Reserve System,
based on data collected and published by the twelve
Federal Reserve Banks. The sales index relates to
the average daily sales of the department stores, including sales of services as well as of merchandise.
The inventory index relates to end-of-month inventories at retail value. The selection of the department stores from which the data are collected is made
by the individual district banks, in order to provide
data for some cities or areas within the districts, as
well as an index for each district as a whole.
Statistical procedures.—Reports from the individual
department stores are mailed directly to the appropriate district bank. The U.S. indexes of department store sales and inventories are computed by
weighting each of the district indexes according to
the relationship of total department store sales or
inventories in the district to the total for the United
States for the years 1957-59. The method of seasonal
adjustment used is a variant of the ratio-to-movingaverage method. It allows for changes in the seasonal pattern over time and relies less on mathematical formulae as the final determinants of the
seasonal adjustment factors than do most other
methods.
Relation to other series.—The Federal Reserve indexes of department store sales and inventories and
the Census-Office of Business Economics dollar estimates of retail trade sales and inventories, including
the separate dollar estimates of department store
sales and inventories, are not entirely comparable
conceptually. The Census-OBE sales data include
retail sales taxes and retail excise taxes, whereas the
Federal Reserve series exclude both. Inventories are
valued at cost for the Census-OBE series, at retail
value in the Federal Reserve series. Both the
Census-OBE and the Federal Reserve monthly series
are adjusted for seasonal variation and, in the case of
sales, for the number of trading days in the month.
The latter adjustment also is made in the seasonally
unadjusted Federal Reserve series.
Uses and limitations.—Considerable use is made of
the Federal Reserve indexes of department store sales
and inventories, especially at the local level. While
they are valuable indicators of the relative sales and
inventory positions of this limited but important
segment of retail trade, they do not reflect the characteristics of all retail trade. The month-to-month
changes in the "retail" and "department store" series
have on occasion moved in opposite directions, and
even when the movements have been in the same
direction the magnitudes of the changes may be
substantially different.
References.—The indexes of department store sales
and inventories for the United States and for each of
the Federal Reserve districts are published monthly
in the Federal Reserve Bulletin. Monthly d&ta for
periods prior to those shown in Economic Indicators
are available from the Board of Governors of the
Federal Reserve System. A detailed description of
the series was presented in the December 1957 issue of
the Bulletin and was supplemented in the July 1962
issue by a description of revisions made in the series
at that time. A description of the method of seasonal adjustment used by Federal Reserve was in the
June 1941 issue of the Bulletin. More recently a
computer adaptation of this method has been used
by most of the Reserve Banks.
MANUFACTURERS' SALES, INVENTORIES, AND NEW ORDERS
Description of series.—Manufacturers' sales, inventories, and new orders are estimated monthly in
a program conducted jointly by the Office of Business
Economics ^nd the Bureau of the Census. The term
"sales" as used here represents manufacturers' receipts, billings or the value of shipments to customers. Sales are net, i.e., less discounts, returns and
allowances, and were adjusted for renegotiation of war
contracts in the relevant years. For years prior to
1963, the figures represent sales and receipts Associated with any activity, including nonmanufacturing
activities, of companies classified as manufacturers.
91491 O—62-
Sales for export as well as those for domestic use
are included. Sales of foreign subsidiaries are excluded, but sales to a foreign subsidiary by a domestic firm are included.
A new series to be issued early in 1963 will contain
data that are restricted, to the extent possible, to
sales and receipts from manufacturing activities. In
addition, this new series will utilize ''Divisional" reports from large multi-industry firms so that more
detailed as well as "purer" industry statistics can be
shown.
73
Inventory data are book values of stocks on hand
at the end of the period and include purchased materials, goods-in-process, and finished goods. All inventories owned by a company or division of a company, when the division is the reporting unit, are
covered, including those in warehouses, manufacturers' sales branches, etc., as well as in factories. In
general, inventories are valued at the lower of cost or
market price. About 15 percent of manufacturers'
inventories are valued on a last-in, first-out (LIFO)
basis.
The new orders series represents new orders (net
of cancellations) received during the period.
Statistical procedures.—Current estimates of manufacturers' sales and inventories are made on the
basis of reports received in the Monthly Industry
Survey program, under which information on sales,
inventories, and new orders is collected from a sample of manufacturing companies. Collection and
tabulation of this survey were transferred in March
1957 from OBE to the Bureau of the Census. These
tabulations are used by OBE to extrapolate benchmark estimates based on annual corporate data
through 1954 published by the Internal Revenue
Service in Statistics of Income, Corporation Income
Tax Returns, and on Internal Revenue Service noncorporate data for alternate years 1945 through 1953
and 1954.
New orders estimates are obtained indirectly.
Unfilled orders estimates as of the end of the years
1947, 1952, and 1954 were made, and movements
from these points were computed. To derive estimates of levels, the reporting sample was stratified
by industry and size; and in each stratum, the sample ratio of unfilled orders on December 31 to annual
sales was applied to total sales for that year. The
month-to-month percentage changes in unfilled orders shown by the sample are used to obtain the
monthly movements of total backlogs in each
stratum. Net new orders are then computed by
adding the estimated monthly sales to the change in
unfilled orders.
The series are seasonally adjusted by the Office of
Business Economics, using the ratio-to-movingaverage method, modified when necessary. The
magnitudes of the seasonal adjustments are suggested by the following comparison of unadjusted
and adjusted sales and inventories data for 1961.
Manufacturers' Sales, Inventories, and New Orders, 1947-62
(Monthly data.
Seasonally adjusted)
BILLIONS OF DOLLARS
60
. I H L I M
1947
1948 1949 1950
SOURCE OF DATA: DEPARTMENT OF COMMERCE
74
1951
, ,I.I I. ,1•• N I M I M I M
M I M I M I M
M I U I M I M
..l.ilnl.. ,,I,,I,.I,I
. . I . • I • , I ,. , • I • . I •. I I . I . • 1 •. 1 ,, t
1961
1962
Unadjusted
Sales
Jan
Feb___
Mar___
Apr
May___
June___
July_._
Aug___
Sept___
Oct
Nov
Dec___
1
27. 7
27.4
31. 3
29.4
31. 5
32.2
28.5
32.0
32.0
33.4
32. 2
31. 2
Implicit seasonal
adjustment factors
Seasonally adjusted
Inventories Sales i Inventories
[Billions of dollars]
54. 1
54. 1
53. 8
53.7
53. 8
53. 6
53.2
53.6
53. 8
54. 2
54. 6
55. 2
28. 7
29.0
29. 6
30. 1
30. 7
30. 8
31. 1
31.4
31.4
31. 8
32.2
32.4
53.7
53. 6
53.3
53.4
53.4
53. 4
53. 5
54.0
54.4
54.8
55. 0
55. 2
Sales i
96.6
94.5
105. 8
97.6
102. 4
104. 5
91.5
102.0
102. 1
105.3
100. 0
96.3
Inventories
100.7
100.9
100.9
100.7
100.7
100. 4
99.4
99.2
98. 7
99.0
99. 2
100. 0
Includes adjustments for working day differences.
Seasonal adjustment factors as well as calendar
month adjustment factors will be developed for the
"new" series. Revised adjusted data on this new
basis will be shown for a number of back years.
Relation to other series.—The manufacturers' sales
and inventories series are closely related to the sales
and inventories series for wholesale trade and retail
trade. When summed these series constitute consistent series for total nonfarm business. The sales
and inventories series are similar to the sales and
inventories items in the FTC-SEC Quarterly Financial Report for Manufacturing Corporations. The
two series are not entirely comparable, especially for
specific industries, because of differences in coverage
(e.g., the Quarterly Financial Report covers only
corporations) and differences in consolidation of the
reporting units.
The inventory data, as well as those for retailers
and wholesalers, are the basic data used in computing
estimates of changes in the book value of business
inventories, which reflect changes in replacement
costs as well as changes in physical volume. In
measuring inventory investment as part of the gross
national product, the book value inventory change
data are adjusted to remove the effect of changes in
replacement costs.
The new orders estimates are most closely related
to the Census-OBE unfilled orders series, although
they are also akin to other anticipatory series, such
as new plant and equipment expenditures, construction contracts, etc.
Uses and limitations.—The manufacturers' sales,
inventories, and orders series reflect present and
prospective conditions in this vital sector of the
economy. The sales series reflect the demand for the
goods and services of manufacturers; trends in the
inventories and changes in inventories series reflect
the difference between production and shipments (or
sales) of manufacturers; the new orders series indicates the probable course of manufacturers' sales in
some industries in the immediate future. Study of
the chart showing seasonally adjusted sales, inventories and new orders will reveal the tendency of new
orders to lead sales over the business cycle.
The estimates for such aggregates as total manufacturers' jsales and inventories, and estimates for
many industry groups, have proved generally accurate when compared against more comprehensive
data available at a later time. Occasionally in the
past, preliminary estimates, especially for some of
the industries, have been changed appreciably by
later data.
Improvements in the quality of the estimates can
be expected from refinements in the data collection
procedures that already have been made and others
that will be incorporated with the introduction of
the "new" series. For example, in the "new"
series the industry estimates will be brought closer
to the content of the category as described in its
title through benchmarking to industry data obtained from the Annual Survey of Manufactures and
through the tabulation of large multi-industry company reports on a divisional basis instead of for the
company as a whole.
Production on order is not characteristic of some
industries (especially some of the nondurable goods
industries), and the new orders series for them consists almost entirely of sales. Analysis of the unfilled orders series for those industries in which production on order is characteristic should be a useful
supplement to analysis of the new orders series
published in Economic Indicators.
References.—Manufacturers' sales, inventories,
and orders series are published by OBE in the
monthly Industry Survey and in the Survey of
Current Business. More complete descriptions of
these series are contained in the following issues of
the Survey of Current Business: October 1951,
October 1952, December 1953, and May 1955, and in
the biennial Business Statistics, a supplement to the
Survey.
Note: This description of the Census-OBE manufacturers' sales, inventories and new orders series
pertains to the series covering the period 1939-1962.
As referred to above, early in 1963 a "new" series
using an Annual Survey of Manufacturers benchmark will be introduced. A description of the new
series will accompany its publication.
75
Manufacturers y Sales, Inventories, and New Orders
Sales 1
Year
Total
Inventories2
NonDurable durable
goods
goods
Total
New orders, net
NonDurable durable
goods
goods
Durable goods
Total
Total
Machinery
and
equipment
Nondurable
goods
Manufacturers '
inventory—3
sales ratio
Billions of dollars
1929.
5.86
2.31
3.55
(4)
(4)
(4)
(4)
(4)
1930.
1931.
1932.
1933.
1934.
4. 76
3. 59
2. 57
2. 86
3.60
1.
1.
.
.
1.
3.07
2.46
1.90
2.06
2.48
(44)
(4>
(4>
(>
(4)
(44)
(4)
()
(44)
(4)
(4)
(4)
()
(44)
(4)
()
(44)
(4)
()
(4)
(4)
1935.
1936.
1937.
1938.
1939.
4. 19
5. 01
5.48
4.49
5. 11
1.42
1. 84
2. 12
1.49
1.95
2.78
3. 16
3.36
2.99
3. 16
(44)
(4>
(>
10. 75
11. 46
(4)
(4)
(4)
(4)
(4)
5.02
5.33
5.73
6. 13
(4)
(4)
(4)
(4)
(4)
5.35
2. 17
()
3. 19
()
2. 11
1940.
1941.
1942.
1943.
1944.
5.86
8. 17
10.43
12. 83
13. 78
2.47
3.80
5. 16
6. 86
7.34
3.39
4.37
5.27
5.96
6.45
12. 82
16. 96
19. 29
20. 10
19. 51
6.30
8.60
10.44
11. 18
10.43
6. 52
8.36
8. 85
8.92
9.07
6. 81
9. 80
13.34
12.70
11.91
3.37
5.32
8.05
6.77
5.47
3.43
4. 48
5.30
5.93
6.43
2.06
1.78
1.77
1.51
1.45
1945
1946
1947
1948.
1949
12. 87
12. 62
15.92
17. 63
16.42
6.27
4.99
6. 70
7.59
7.07
6. 60
7. 63
9. 22
10. 04
9.35
18. 39
24. 46
28. 87
31. 69
28. 86
8.77
12.00
14.30
15.74
13.97
9. 62
12. 46
14. 58
15.96
14.89
10.53
13. 69
15. 62
17.35
15.90
3.94
5.94
6.36
7. 48
6.59
1. 84
6.59
7.75
9.26
9. 87
9.31
1.48
1.66
1. 71
1.72
1.86
1950.
1951.
1952.
1953.
1954.
19. 28
22.31
22. 85
24. 52
23.53
8.80
10.38
10. 94
12.38
11. 24
10.48
11.93
11. 92
12. 14
12. 29
34. 31
42. 82
43. 80
45. 43
42. 98
16.78
22. 81
24.41
26. 24
24.08
17. 53
20.01
19.39
19. 19
18. 99
20. 98
24. 51
23. 58
23. 11
22.48
10.32
12. 68
11.69
11.03
10. 16
3. 25
4. 16
3. 48
3.34
3. 13
10. 66
11. 84
11. 90
12.08
12. 32
1. 57
1. 77
1. 90
1. 84
1.86
1955
1956
1957
1958
1959
26. 34
27.71
28.38
26. 23
29. 74
13. 08
13. 80
14. 16
12.38
14.51
13.
13.
14.
13.
15.
26
91
22
85
23
46. 36
52. 30
53. 52
49. 18
52. 43
26. 66
30. 66
31. 15
27. 82
30.08
19. 70
21. 64
22. 37
21.36
22.34
27.
28.
27.
25.
30.
17
32
26
90
13
13. 85
14. 44
13.08
12. 04
14.85
4.
4.
4.
3.
4.
20
74
36
92
95
13.32
13.88
14. 17
13. 86
15. 28
1.68
1. 79
1.89
1. 93
1.72
1960
1961
30. 41
30. 73
14.68
14. 54
15.73
16. 18
53. 74
55. 20
30. 86
31. 47
22. 88
23. 72
29. 90
30. 96
14. 24
14. 74
4. 95
5. 24
15. 66
16. 23
1. 79
1. 75
69
13
66
80
12
(4)
(4)
(4)
(4)
(4)
(4)
(4)
(4)
1
Monthly average for year.
2 Book value, end of period, seasonally adjusted.
3 Ratio of weighted average inventories to average monthly sales.
* Not available.
Source: Department of Commerce.
MERCHANDISE EXPORTS AND IMPORTS
Description of series.—The several export series
cover exports of merchandise (except in-transit merchandise) from the United States to foreign countries. The larger aggregate, total exports (including
re-exports), includes exports of domestic merchan-
76
dise and re-exports of foreign merchandise, defined
to cover commodities of foreign origin which have
entered the United States as imports and which at
the time of exportation are in the same condition as
when imported. Imported foreign merchandise
which has undergone some change in form in the
United States is included under exports of domestic
merchandise. The smaller aggregate, for total exports of domestic merchandise, shown also by economic class, is exclusive of re-exports. Both series
as presented here are sometimes designated "commercial" because of the exclusion of data on Department of Defense shipments of grant-aid military
equipment and supplies under the Mutual Security
Program (referred to below as D.O.D. military aid
shipments), but are not strictly "commercial" because they include other government sponsored shipments as noted in the table. Shipments to United
States armed forces and diplomatic missions abroad
for their own use are also excluded.
Export series covers all exports from within the
customs area of the United States, which includes
all of the States and Puerto Rico (and included the
Territories of Alaska and Hawaii prior to their admission to statehood). Other possessions are not
included in the customs area, nor are shipments between the United States and these possessions included in the export series.
Excluded are certain special types of shipments as
follows: gold and silver, oil and coal bunkers laden
in the United States on vessels engaged in foreign
trade, and some items of relatively small importance
such as low valued or noncommercial shipments by
mail and gifts valued at less than $100.
Export shipments are valued at the time and place
of export—that is at actual selling price, or at cost if
not sold, including inland freight, insurance, and
other charges to the place of export. Transportation
and other costs beyond the United States port of exportation are excluded.
Imports are shown on two bases, "general imports" and "imports for consumption." Both series
cover merchandise which is released from customs
custody immediately upon arrival. They differ in
their treatment of merchandise which enters into
customs bonded warehouses. Such merchandise is
included in "general imports" when it enters such
warehouses on arrival. It enters into imports for
consumption only when withdrawn from the warehouse for consumption. Governmental imports are
included. Import coverage is in terms of the customs area (as explained above) and, as in the case of
exports, in-transit shipments, gold and silver, and
items of small importance are excluded.
Imports are valued in accordance with the Tariff
Act of 1930, as amended, which defines the value of
imports of merchandise generally as the market value
in the foreign country and should exclude United
States import duties, ocean freight, and marine insurance. Prior to January 1962, in actual practice
only the values reported for imports subject to an ad
valorem rate of duty (a percentage of the value)
tended to conform precisely to the valuation definition.
For merchandise not subject to an ad valorem rate
of duty (80-90 percent of imports), the reported
values prior to 1962 may not be in accordance with
the market value in the foreign country. For
example, ocean freight may be included inadvertently
in the values, values for shipments between allied
firms may reflect arbitrary values, etc. Beginning
January 1962, procedures were inaugurated for the
verification by Customs examiners of statistical
factors on import entries, and close conformity with
the Tariff Act value definition is expected regardless
of whether the item involved is dutiable at an ad
valorem rate. In general, import values approximate an f.o.b. exporting country basis.
Statistical procedures.—Export statistics (except
for D.O.D. military aid shipments, as explained below) are obtained from the Shipper's Export Declaration which exporters are required to file with the
collectors of customs, giving a description of the
merchandise, its classification under the prescribed
commodity classification for exports, quantity,
value, and other essential information. These
declarations, after a preliminary review for accuracy
and completeness, are transmitted by the Bureau of
Customs to the Bureau of the Census, where they are
sorted and coded prior to further processing. Data
for smaller valued shipments, accounting for a
considerable proportion of the volume of documents
but a relatively small proportion of total value, are
based on estimating procedures. Currently, shipments valued at from $100 to $499 are sampled at a
ratio of 50 percent, except for exports to Canada,
which are sampled at a ratio of 10 percent. The
value of shipments valued at below $100, accounting
in 1961 for about 1 percent of total exports by value,
are estimated and shown in this table under "finished
manufactures."
For exports made by the Department of Defense
of grant-aid military equipment and supplies under
the Mutual Security Program (excluded from the
series in this table) and for other Department of
Defense shipments such as those under the civilian
supply program, information is compiled by the
77
Merchandise Exports and Imports, 1947-62
(Monthly data.
Seasonally adjusted)
: .UiONS OF DOLLARS
2.5,
SEASONALLY ADJUSTED
2.0
MERCHANDISE EXPORTS
1.5
1.0
.5
vykyy^
i l l , J i l l , I
1948
n l n l u l n
n l n l u l n
n l n l n l n
N l n l u l n
n l n l u l n
l l l n l . i l , .
i i l n l n l i l
i l l n l n l i i
l i l i l l n l n
n l n l i l J H
i l l i . l n l i .
n l n l n l i .
M I M I M I M
n l n l l i l ,
1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961
1962
i / S E E NOTE I ON TABLE.
SOURCE OF DATA: DEPARTMENT OF COMMERCE. AND DEPARTMENT OF DEFENSE.
Bureau of the Census from the records of the Department of Defense. In most instances, these records
show values f.o.b. point of origin. These are adjusted to show value at the United States port of
exportation.
Import information is derived from the import
entry form prescribed by the Customs Bureau to be
filed by the importer for each shipment arriving in
the United States, and on which importers report
value, country of origin, type of commodity, classified in accordance with the prescribed import commodity classification, and other essential information.
After a review by Customs, the statistical copy of the
entry form is transmitted to the Bureau of the
Census. Statistics covering low valued import shipments are estimated on the basis of a sample. The
sampling procedures have varied. Currently a one
percent sample is taken of all imports valued at less
than $100 on formal entries and of all imports
reported on informal entries (which may include
shipments valued at not more than $250). Sampled
shipments (estimated for 1961 at about 0.9 percent
of total imports) are distributed by country and
78
allocated to the commodity class "finished manufactures."
With respect to both exports and imports, coverage
for a given calendar month approximates fairly
closely all shipments departing or entering during
the calendar month. Documents arriving too late
for inclusion, as well as those rejected for verification, are included in the total for a subsequent
month, usually the following month.
The seasonally adjusted series have been adjusted
for working days as well as seasonal variation. The
seasonal adjustment factors are derived by a ratioto-moving-average method. The seasonal adjustment factors used in 1962 are:
January
February
March
April
May
June
July
August
September
October-..
November
December
.
Imports
Exports
excluding
MSP
99. 5
94. 0
105.1
98. 3
101. 3
102. 9
98. 5
95. 8
96. 0
102.8
100. 2
105. 8
95. 7
93. 3
106.8
102. 8
106. 1
99. 9
96. 7
95. 9
91. 4
105.1
101. 8
103. 8
Relation to other series.—Statistics of exports and
imports are available in Census and other Government publications on bases varying with respect to
the treatment of re-exports, of D.O.D. military aid
shipments, of goods entering into or withdrawn from
Customs bonded warehouses and other matters, depending on the purpose of the presentation. The
series here shown are among those presented in
monthly Census releases, with certain qualifications.
Thus, monthly Census data for exports by economic classes are for total exports of domestic merchandise, in contrast with the series shown here exclusive of D.O.D. military aid shipments; however,
this affects only the category of "finished manufactures," since all D.O.D. military aid shipments are
allocated to this class (military aid shipments
amounting to somewhat less than 4 percent of total
exports in 1961). The seasonally adjusted series
was published for the first time in 1960.
The economic classes as presented here are derived from the five Census classes of "crude foodstuffs" and "manufactured foodstuffs" (combined as
"foodstuffs"), "crude materials" and "semimanufactures" (combined as "industrial materials"), and
"finished manufactures." The indexes of quantum,
value, and unit value for foreign trade, prepared by
the Bureau of International Commerce, Department
of Commerce, are available by economic class for exports of domestic merchandise on the same basis as
the corresponding series shown here (i.e., net of
D.O.D. military aid shipments) and for imports for
consumption. The indexes are also available for
total domestic exports inclusive of such D.O.D. shipments.
Series for merchandise exports and imports appear
as major components of the balance of international
payments. They are combined with series covering
various other current transactions to form the larger
aggregates for exports and imports of "goods and
services." The merchandise series used are based on,
and roughly equivalent to, the series shown here for
total exports (including re-exports) net of D.O.D.
military aid shipments and for general imports. The
series are further adjusted by exclusion of other
military shipments and by other adjustments, with
respect to coverage, valuation, and timing, for consistency with balance of payments concepts. The
seasonally adjusted quarterly figures for merchandise exports and imports will not necessarily agree
precisely with corresponding quarterly totals compiled from the seasonally adjusted monthly series
in the balance of payments because they differ in
content. (See discussion in Balance of Payments
Section which follows.)
Uses and limitations.—These summary series provide useful monthly indicators of the movement of
merchandise exports and imports. As a measure of
cyclical or long-term movement, monthly foreign
trade data, even after seasonal adjustment, are
erratic. While these data will necessarily be followed
by users from month to month, judgments as to trend
are more properly based on derived series for longer
periods such as quarterly or three-month moving
totals.
Although merchandise trade bulks large among the
sources of international payments, the balance of payments can be comprehended only in terms of the full
range of merchandise, service, capital, unilateral and
other transactions. Undue importance should not be
attached to the trade figures alone or to the surplus
or deficit in merchandise trade.
Because of the variety of bases on which foreign
trade data are presented the user must be attentive
to the precise specifications of particular series,
especially when they are to be used with or compared
with other series. Similarly, when U.S. trade statistics are compared with those of other countries, special attention is due to the extent to which the series
differ as to valuation and coverage.
References.—Totals for exports of domestic and
foreign merchandise, general imports and imports
for consumption are published monthly in the Census
Bureau's United States Foreign Trade summary reports (FT 900 E and I, 930 E and I, 950 E and I, and
970 E and I). These reports give monthly data for
the current and preceding years. Separate data on
Department of Defense shipments of grant-aid military equipment and supplies are provided monthly in
FT 900E, Total Export Trade. Cumulative totals
are provided in the Quarterly Summary of Foreign
Commerce of the United States, which also contains
index numbers for several export and import series.
Detailed commodity by country data are also published by the Census Bureau. Supplementary information is available on such items as unusual transactions appearing in the statistics, changes in the types
of shipments included in the statistics, and special
problems of valuation, commodity classification, and
the like. This information, formerly published in a
monthly pamphlet Foreign Trade Statistics Notes, has
been carried since January 1961 in the statistical
reports themselves.
79
Merchandise Exports and Imports
[Millions of dollars monthly average]
Merchandise imports
Merchandise exports
Year
Imports for consumption
Domestic exports
Total
(includingl
re-exports)
Total i
Foodstuffs 2
Finished
Indusmanufactrial
materials tures l
General
imports
Total 3
Foodstuffs
Finished
Industrial
manufacmaterials
tures
Merchandise trade
surplus
1929
437
430
63
156
211
367
367
80
204
83
70
1930
1931
1932
1933
1934
320
202
134
140
178
315
198
131
137
175
45
31
20
17
19
112
74
59
69
83
158
93
52
51
73
255
174
110
121
138
255
174
110
119
136
58
44
34
35
43
134
85
48
59
64
63
46
28
27
29
65
28
24
19
40
1935
1936
1937
1938
1939
190
205
279
258
265
187
202
275
255
260
18
17
24
36
26
86
89
117
92
95
83
96
135
127
139
171
202
257
163
193
170
202
251
163
190
53
61
71
48
50
83
102
134
80
103
34
39
46
35
37
19
3
22
95
72
1940
1941
1942
1943
1944
335
429
673
1,080
1, 188
328
418
667
1,070
1, 180
20
42
83
140
150
114
94
111
146
138
194
281
472
784
892
219
279
230
282
327
212
268
232
283
324
47
58
52
84
114
131
175
142
143
149
34
35
38
56
62
116
150
443
798
861
1945
1946
1947
1948
1949
817
812
1,203
1,054
1,004
799
792
1, 188
1,044
995
143
184
192
219
187
138
193
276
238
261
518
415
719
587
546
347
412
480
594
552
342
402
472
591
549
110
139
167
173
176
222
251
315
273
69
71
82
109
104
470
400
723
460
452
1950
1951
1952
1953
1954
833
1, 164
1, 100
1,022
1,071
822
1, 151
1,088
1, 012
1,060
116
190
175
143
131
251
345
300
254
310
455
616
612
614
620
738
914
893
910
858
729
901
896
898
853
221
258
263
274
276
383
485
459
441
394
125
158
174
183
183
95
250
207
112
214
1955
1956
1957
1958
1959
1, 191
1,445
1, 626
1,364
1,367
1, 180
1,432
1,611
1,351
1,352
162
216
208
198
210
351
441
530
368
366
667
775
872
784
776
958
, 064
, 105
, 105
,302
954
056
102
101
284
260
267
274
288
285
477
521
534
489
569
217
268
294
326
431
234
380
521
260
65
1960
1961
1,634
1,672
1,617
1, 652
230
254
510
486
877
911
1, 251
1, 227
1,251
1,220
274
277
539
520
438
423
383
445
1,
1,
1,
1,
1
Starting with 1950, figures shown exclude Department of Defense shipments of grant-aid military equipment and supplies under the Mutual Security
Program. For 1941 and subsequent years, figures include shipments under special programs, including I.C.A. and predecessor programs, UNRRA, Lend-Lease
(1941-1947), Greek-Turkish Aid (1947-1952), interim aid (1947-1948), and United States foreign relief (1947-1948). Figures for 1948 and subsequent years also include
Department
of the Army civilian supply shipments.
2
The grant-aid military shipments excluded beginning with 1950 (see note 1 above) have been deducted entirely from "Finished manufactures." Private relief
shipments of foodstuffs are included in "Finished manufactures" prior to 1941 and in "Foodstuffs" thereafter.
3 "General imports" through 1932, "Imports for consumption" thereafter.
Source: Department of Commerce.
Summary explanations of the export and import
series appear in the introductory notes of Census
monthly bulletins FT 410 and 420 (exports) and FT
110 and 120 (imports). The last comprehensive
discussion of the series appeared in the 1946 edition
80
of Foreign Commerce and Navigation of the United
States and is still generally applicable. A complete
list of all Census publications in the field of foreign
trade is available in the Catalog of United States
Foreign Trade Statistical Publications.
UNITED STATES BALANCE OF INTERNATIONAL PAYMENTS
Description of series.—The balance of payments of as explained below, are the components of the overall
the United States is a summary of the economic balance, whether surplus or deficit (—). This total
transactions between residents of the United States "overall balance" is the algebraic sum of all other
and residents of the rest of the world. The tables payments or receipts, as summarized under major
here presented are derived from the more detailed categories in the columns to the left of the "total"
regular quarterly presentation published by the (although some transactions, notably remittances
Office of Business Economics, Department of Com- and pensions resulting in recent years in net payments of $800 million to £900 million per year, are
merce.
All reported or recorded foreign transactions or not shown separately but are included in the total.)
those which can be estimated on the basis of sample It should be noted that for all but the columns to
data are summarized under general categories shown the right of the total, net receipts are shown as within the balance of pa ments. Since not all transac- out sign and net payments as (—); for the columns
tions can be accurately measured or estimated, a to the right no sign means a gain in liquidity through
discrepancy between total payments and total re- increased holdings of gold or convertible currency of
ceipts regularly appears which is designated "errors a decrease in liabilities, while (—) means the reverse.
Transactions reflected in the "Balance on goods
and omissions" or, as in this presentation, "unreand services" are shown in more detail and on a gross
corded transactions."
The presentation shown here emphasizes the rela- basis in the accompanying table. They include
tion of international transactions to the international mainly merchandise trade, but also military sales
liquidity position of the United States as measured and purchases, income on investments, both private
by changes in holdings of gold and convertible cur- and governmental, transportation services, travel
rencies and in liquid liabilities to foreigners, which, expenditures, and miscellaneous transactions.
U.S.
Exports and Imports of Goods and Services, 1947-62
{Quarterly data.
Seasonally adjusted annual rates)
BILLIONS OF DOLLARS
50
SEASONALLY ADJUSTED ANNUAL RATES
EXPORTS OF GOODS AND SERVICES
10
IMPORTS OF GOODS AND SERVICES
i i i
i
i
i
i
i
i
i
i
i
i
i
i
M
I
i
i
i
M
I
i
i
i
i
i
i
i
i
I960
i
i
i
1961
i
i
i
i
1962
SOURCE: DEPARTMENT OF COMMERCE
81
United States Exports and Imports oj Goods and Services
[Millions of dollars]
Exports of goods and services
Period
Total
Merchandise l
Military
sales
Imports of goods and services
Income on investments
Private Government
Other
services
Total
Merchan-1
dise
Military expenditures
Other
services
Balance on
goods
and
services
1929
7,034
5,347
982
157
548
5,886
4,463
50
1,373
1, 148
1930
19311932
1933
1934
5,448
3,641
2, 474
2,402
876
674
460
417
437
164
92
67
20
2,975
3,929
2,494
1,667
1,736
2,238
479
381
280
229
300
4,416
3, 125
2, 067
2,044
2,374
3, 104
2, 120
1,343
1,510
1,763
49
48
47
41
34
1,263
957
677
493
577
1,032
516
407
358
601
1935
1936
1937
1938
1939
3, 265
3,539
4,553
4, 336
4,432
2, 404
2,590
3,451
3, 243
3,347
521
567
576
583
340
380
525
508
544
3, 137
3,424
4,256
3, 045
3, 366
2, 462
2,546
3, 181
2, 173
2, 409
41
38
41
41
539
2
1
2
2
46
634
840
1, 034
831
911
128
115
297
1 291
1 066
1940
1941
1942
1943_
1944_ ._ _
5,355
6,896
11, 769
19, 134
21, 438
4, 124
5,343
9, 187
15, 115
16, 969
561
535
496
497
556
3
9
18
12
17
667
1,009
2, 068
3,510
3,896
3,636
4,486
5,356
8,096
8,986
2,698
3,416
3,499
4,599
5,043
61
162
953
1,763
1,982
877
908
904
1,734
1,961
1,719
1945
1946
1947
1948
1949
16, 273
14, 735
19, 737
16, 789
15, 770
12, 473
11, 707
16, 015
13, 193
12, 149
(2)
(2)
572
(2)
1,036
1,238
1,297
17
21
66
102
98
3, 211
2, 256
2, 620
2,256
2,226
10, 232
6, 991
8,208
10, 349
9,621
5, 245
5, 073
6,979
7,563
6,879
2, 434
493
455
799
621
2, 553
1, 425
1, 774
1,987
2, 121
1950
1951
1952_
1953
1954
13, 807
18, 744
17, 992
16, 947
17, 759
10, 117
14, 123
13, 319
12, 281
12, 799
(2)
1, 484
1, 684
1,624
1,658
1, 955
109
198
204
252
272
2, 097
2,739
2,845
2,564
2, 551
12, 028
15, 073
15, 766
16, 561
15, 931
9, 108
11, 202
10, 838
10, 990
10, 354
576
1,270
2, 054
2,615
2,642
2, 344
2,601
2, 874
2,956
2,935
1, 779
3,671
2, 226
19, 804
_ 23, 595
26, 481
23, 067
23, 476
14, 280
17, 379
19, 390
16, 264
16, 282
200
274
302
2, 170
2, 468
2, 612
2,538
2, 694
349
2,880
3, 393
3, 899
3,658
3,849
17,
19,
20,
20,
23,
795
628
752
861
342
11,527
12, 804
13, 291
12, 952
15,310
2,901
2, 949
3,216
3,435
3, 107
3, 367
3, 875
4,245
4,474
4,925
2, 009
3, 967
5,729
2,206
134
27, 013
28, 066
19, 459
19, 915
335
406
2,873
3,303
349
379
3,997
4, 063
23, 188
22, 923
14, 723
14, 514
3,048
2,947
5,417
5, 462
3,825
5, 143
1955
1956
1957
1958
1959
1960
1961-
_ ___
.
192
182
161
375
300
751
1
Adjusted from customs data for difference in timing and coverage.
2 Not shown separately.
Source: Department of Commerce.
82
194
205
307
(22)
C)
(2)
(2)
7, 744
11,529
6, 440
6, 149
386
1,828
The item "Government grants and capital" includes Government grants other than military under
the various aid programs, and the net outflow of
long-term capital through various foreign lending
programs. "U.S. private capital" refers to investment of U.S. capital abroad, and is classified as:
(a) "direct investments," which includes investments
in foreign branches and subsidiaries; or (6) "longterm portfolio", which includes long-term security
investments not entailing effective control; or (c)
"short-term" investment—i.e., in instruments with
an original maturity of one year or less. "Foreign
capital" includes corresponding foreign investments
in the United States, exclusive of certain liquid investments which are, as explained below, accounted
for as a component of the surplus or deficit. Foreign
capital movements have usually resulted in the past
in net "receipts," but do not necessarily do so.
The "overall surplus" (or "deficit"), results in and
can be measured by the gain (or loss) of monetary
gold and official convertible currency holdings by the
monetary authorities and the decrease (or increase)
in liquid liabilities to foreigners and international
institutions in the form of deposits, U.S. Government
U.S.
securities, bankers acceptances, commercial paper,
and certain other short-term liabilities of the United
States.
Statistical procedures.—The preparation of the
balance of payments involves the bringing together,
and adjustment to balance of payments concepts,
of data from a variety of sources, including direct
reports to the Office of Business Economics. The
largest components are those for merchandise imports
and exports, as published by the Bureau of the
Census, subject to certain adjustments for coverage,
valuation, and timing. Other sources include quarterly reports by U.S. companies with branches or
subsidiaries abroad and by branches and subsidiaries
of foreign companies in the United States; occasional
"benchmark" surveys of U.S. investments abroad
and of foreign investments in the United States;
reports from U.S. Government agencies on their
foreign transactions, including grants, loans, and
purchases and sales; reports from U.S. and foreign
shipping lines and financial data from the Maritime
Administration; reports from U.S. travelers on their
expenditures abroad and from foreign travelers on
their expenditures in the United States, together
Balance of International Payments, 1950-62
(Quarterly data.
Seasonally adjusted annual rates)
BILLIONS OF DOLLARS
SEASONALLY ADJUSTED ANNUAL RATES
10
BALANCE ON 600DS AND SERVICES
^x
0 X /
-10
-20
-^
s
BALANCE ON OTHER TRANSACTIONS
\
i i i 1 i 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 11 i i i 1 1 1 1
10
\
/
*
•
111111111111 11 1
OVERALL BALANCE (Surplus or Deficit ( - )
uu
"•••I
-10
1 1 1
/
i
i i 1 i i i I i i i I i ,i i I i i i
1950
1951
1952
1953
UDD0DDDDuH[] Ll[f
i i i I i i i I i i i I i i i I i i I 1 i i i I i i i 1 i i i
19541955
1956
1957
1958
1959
1960
1S61
1962
SOURCE: DEPARTMENT OF COMMERCE
83
with travel statistics of the Immigration and Naturalization Service; reports to the Treasury Department on international claims and liabilities; and a
variety of other sources including Government administrative data, and questionnaire surveys of the
Office of Business Economics.
Individual series of the more detailed balance of
payments statement are seasonally adjusted separately, according to varying techniques as deemed
appropriate. Many major items, are adjusted by
means of a regression technique involving derivation of an equation expressing the relationship between quarterly aggregates and a trend line established on the basis of moving averages. The adjustment for merchandise trade is based on the same
factors as used by Census for merchandise exports
and imports. The series for Unrecorded transactions" is independently adjusted, while the "adjusted" series for the balance on recorded transactions and for gold and foreign dollar reserves are
both derived from the other adjusted series. Individual series are balanced to annual totals.
The separate components of liquid liabilities are
not seasonally adjusted, and consequently the total
surplus or deficit is shown in the quarterly tables on
both an adjusted and an unadjusted basis.
Relation to other series.—Since the balance of payments is a synthesis of data from a variety of sources,
a close relationship exists between various components of the balance of payments and certain other
bodies of published data. Because of technical
adjustments to balance of payments concepts,
which cannot be detailed here, the components will
ordinarily differ somewhat from the related sources.
Among the important bodies of related data are: data
on merchandise exports and imports published by
the Bureau of the Census; data on U.S. Government
aid as published in the Office of Business Economics
quarterly bulletin Foreign Grants and Credits of the
United States; annual estimates of the international
debtor-creditor position of the United States as
published in the Survey of Current Business; and data
on international capital transactions of the United
States as published by the Treasury Department in
the Treasury Bulletin. Balance of payments data
with certain further adjustments are used as a component of the national income and products account,
summarized under the categories of exports and im-
84
ports. [However, the concepts in the national income accounts for imports and exports of goods and
services are not in complete agreement with those
used here.]
The regular quarterly balance of payments presentation in the Survey of Current Business shows transactions with major areas of the world, and gives a
more detailed classification of transactions by type.
Uses and limitations.—The balance of payments
presents an integrated summary of international
transactions and their relation to the international
financial position of the United States. A major
contribution is the presentation of individual components in their proper context in the total flow of
international transactions. [The interrelationships
within the balance of payments are complex and no
discussion of analytical technique can be attempted
here.]
The balance of payments lends itself to more than
one form of presentation, and variations from the
form here used may be found in the regular quarterly
articles of the Survey of Current Business.
The "unrecorded transactions" reflect a significant
and fluctuating difference between the net surplus
or deficit figure arrived at by netting all measured
payments and receipts and that arrived at independently from data on gold, convertible currencies,
and liquid liabilities to foreigners. The reduction
of the errors and omissions through more complete
reporting presents considerable difficulty because of
the elusiveness of many international transactions,
and some caution is indicated in the interpretation
of the balance of payments and its components.
References.—The most complete discussion of
balance of payments concepts used and of statistical
sources and techniques is contained in the 1952
Supplement to the Survey of Current Business
entitled Balance of Payments of the United States:
194-9—51, although there have been subsequent
developments in sources and technique. Later
briefer statements of sources may be found in
Business Statistics, 1959 Edition, and in the Census
publication, Historical Statistics of the United States:
Colonial Times to 1957. A Balance of Payments
Statistical Supplement (to the Survey of Current
Business) of 1958 gives detailed global figures by
quarters for the period 1919-1956 and by areas for
1946-1956. Historical Statistics gives available, but
fragmentary, data back to 1790. The Survey oj
Current Business carries balance of payments data
regularly, with quarterly and annual detailed tables
and explanatory text, as well as regular articles
detailing developments in major components of
balance of payments accounts.
United States Balance of Inte? national Payments
[Millions of dollars]
U.S. private capital, net
Balance
Period on goods
Government
and
grants and
services capital, net
Direct
investments
Long-term
portfolios
Shortterm
Overall aalance (surplus or deficit ( —))
Foreign
capital 1
Unrecorded
transactions
Total 2
Liquid liabilities 3
Gold and
convertible
currencies To moneTo
tary
other
authorities and foreign 5
holders
institutions 4
1929.__
1, 148
38
-602
-34
-200
358
-384
-53
1930___
1931__.
1932...
1933.__
1934.__
1,032
77
14
26
7
-294
-222
-191
-5
-16
32
-17
-70
350
267
-80
202
628
227
42
104
66
66
-26
125
15
320
99
79
61
412
598
1, 132
-726
323
1, 140
-131
1,266
-126
1935.__
1936__1937.__
1938.__
1939___
128
115
297
1, 291
1, 066
1
3
2
-9
-14
34
-12
35
16
9
82
189
241
24
104
427
52
43
36
226
320
600
245
57
-86
364
157
425
249
788
1, 174
896
1,053
1, 482
1, 915
1,822
1,272
1,364
1,799
3, 174
— 648
-376
-311
-317
-1,259
1940___ 1, 719
1941___ 2,410
1942.__ 6,413
1943.._ 11,038
1944___ 12, 452
-51
32
47
19
98
71
36
19
-84
-58
-62
177
21
96
-12
-85
-90
- 3 2OA7
1,277
2, 890
1, 119
-205
-1,979
-1,859
4, 243
- 1 , 323
-6,525
- 1 2 , 847
- 1 4 , 077
-1,353
1945.-- 6,041
1946-__ 7,744
1947-__ 11,529
1948.__ 6, 440
1949___ 6, 149
-7,561
-5,293
- 6 , 121
-4,918
-5,649
-100
-230
-749
-721
-660
-354
127
-49
-69
-80
-96
-310
-189
-116
-104
-347
-75
-173
83
1950___
1951.__
1952___
1953-__
1954_-_
1,779
3,671
2, 226
- 3 , 640
- 3 , 191
-2,380
-2,055
- 1 , 554
-621
-508
-852
-735
-667
-495
-43?
-214
-149
-103
185
-94
167
-320
1955___
1956___
1957___
1958__1959___
2,009
3, 967
5,729
2,206
134
- 2 , 211
-2,362
-2,574
-2,587
-1,986
-823
-1,951
-2,442
- 1 , 181
-1,372
1960__1961___
3,825
5, 143
-2,769
-2,777
- 1 , 694
-1,475
516
407
358
601
386
1,828
187
Oi
-63
175
476
-8
34
-37
8
195
936
1, 179
775
143
-196
310
-133
53
719
-23
-757
-1,350
288
1,265
673
454
400
— 182
— 11, 222
-509
-2,737
1,261
4,567
1, 005
175
-548
623
2,850
- 1, 530
164
- 2 , 189
638
1, 717
-525
11
90
243
212
-21
-635
178
240
477
601
339
173
-3,580
305
-1,046
- 2 , 152
- 1 , 550
- 1 , 743
53
379
- 1 , 161
-298
— 1, 837
-358
- 1 , 425
— 991
-1,252
-241
-603
-859
-1,444
-926
-191
-517
-276
-311
-77
394
653
487
22
863
503
543
- 1 , 145
-935
1, 157
488
412
-3,529
-3,743
-41
306
798
-2,275
-731
— 1, 104
— 1, 241
— 278
— 1, 254
-3,012
-850
-1,006
-1,338
-1,472
335
606
-592
-602
-3,925
-2,461
-1,702
-742
520
-1,862
-517
-361
-1,202
1
2
Other than liquid funds.
Equals changes in U.S. gold and convertible currencies and liquid liabilities to foreigners. Remittances and pensions, not shown separately in this table, are
included in over-all balance and amounted to $878 million in 1961.
3 Minus indicates increases in liabilities.
8* To International Monetary Fund (IMF) and foreign central banks and governments and other foreign holders through 1959.
To foreign commercial banks and other international and regional institutions not listed in footnote 4, and other foreigners.
Source: Department of Commerce.
NOTE.—Data exclude military aid and U.S. subscriptions to IMF.
85
PRICES
CONSUMER PRICES
Description of series.—The Consumer Price Index,
compiled by the Bureau of Labor Statistics, is a
measure of changes in prices of goods and services
purchased by families of wage earners and salaried
clerical workers in cities. The goods and services
included in the index are those required to maintain
the level of living characteristic of such families in
the year ending June 1952. In 1950 these families
represented about 64 percent of all people living in
urban places, and about 40 percent of the total
United States population.
The index is based upon prices of about 300 items
collected in 46 cities. The 300 items were selected
by the BLS as representative of the thousands of
commodities and services purchased by families of
wage earners and salaried clerical workers, as reported in a survey conducted in 91 cities. Detailed
specifications are used to identify each of the 300
items so that, insofar as possible, prices are obtained
for articles of the same quality in successive periods.
Revisions in the specifications are made from time to
time as production changes and descriptions become
obsolete.
Current prices for the 300 items are collected
regularly from a list of stores and service establishments in the 46 cities. This list includes chain
stores, independent stores, departm^iit stores, specialty stores, and public utilities which have been
selected by BLS as representative of the types of
outlets in which wage-earner and clerical-worker
families make their purchases. Prices are also
collected on the services of physicians and dentists,
hospitals and beauty-parlors. Sales and excise
taxes are included in the retail prices for commodities on which they are imposed. Property taxes are
included in the cost of homeownership, and implicitly included in rental costs. The index does
not include income taxes or social security taxes.
Prices are collected at intervals ranging from every
month to every third month. In the 5 largest cities
86
all goods and services except rent are priced every
month. Rent is priced every second month. In
the remaining 41 cities prices for some goods and
services—such as foods, fuels, used cars, streetcar and
bus fares and a few other important items—are collected every month. For the remaining items prices
are collected every third month. Pricing of these
goods and services in the 41 cities is on a rotating
cycle, so that several cities of each size group are
priced each month. Between the periodic pricing
periods in a given city, the price change for unpriced
groups of items is estimated for use in the computation of the monthly national index.
Prices for practically all of the commodities and
most of the services are collected by personal interview. A few prices (e.g., public utility rates and
fuel prices) are collected by mail.
In addition to the national index, separate indexes
are computed for the 20 largest of the 46 cities—
monthly for the 5 largest and quarterly for the other
15.
A major revision of this series was introduced with
the release of the January 1953 index. The principal
changes from the old series were: (1) a change in the
weighting pattern to reflect current purchasing
habits; (2) a change in the list of items priced to
reflect current purchasing habits; (3) an increase in
the number of items priced from about 225 to about
300, including for the first time used cars, home
purchase and maintenance, and restaurant meals;
(4) a revision and expansion of the list of cities in
which prices are collected, to reflect price changes
affecting wage-earner and clerical-worker families in
all urban areas; and (5) a change of the reference
base period of the index from 1935-39 to 1947-49.
Beginning with the January 1962 index, the Consumer Price Index was converted to the standard
reference base period of 1957-59=100. No other
aspects of the index, such as the weight structure,
and city and item samples, were changed in connec-
Consumer Prices, 1947-62
(Monthly data)
INDEX: 1957-59 = 100
125
115
105
95
85
FOOD
pflMiinnmrc
uuirimvwiiii
<f\
'M
M
ALL ITEMS
75
Y
iccc Fflnn
rUUII
*
y
.il.ilnl.i
65
1947
MI.IIM!..
nlJuli,
^~-V***
\
All. SERVICES
,1,
MIML.I..
nli.lnl.. . . I n I n t . .
,.!..
..In
nlnlnl..
1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961
1962
SOURCE OF DATA; DEPARTMENT OF LABOR
tion with the rebasing. Historical tables of monthly
and annual prices indexes on the 1957-59 base are
available upon request to the Bureau of Labor
Statistics. As a convenience to users of the index,
the all-items index will continue to be published on
the 1947-49=100 base indefinitely.
Effective with the January 1964 index, a comprehensively revised Consumer Price Index will be
introduced incorporating a new weight structure and
updated city, commodity and outlet samples. The
revised index will continue to be based on 1957-59=
100.
In the accompanying table, for the year 1929 the
weights used are averages representing 1917-19 and
1934-36 expenditure patterns; for 1930-49 the
weights used are 1934-36 expenditures; for 1950-52,
estimates of 1950 expenditure patterns; and from
1953 to date, estimated expenditure patterns for the
year ending June 1952. With the introduction of
the 1934-36 weighting pattern in 1940, a modified
weighting pattern was carried back to smooth the
transition, but this was not done when the 1950
weights were introduced in 1951 or when the fiscal
year 1952 weighting pattern was introduced in
January 1953. In these instances the new weights
were linked into the index as of a single month.
The relative importance of the various groups
shown in the table for January 1950 and for December
1961 can be seen in the following table:
Relative Importance of Specified Groups in the CPI, January
1950 and December 1961
Specified group
All items
All commodities
Allfood
All commodities less food
All durable commodities
All nondurable commodities
less food
All Services
Rent__
Services less rent
Jan. 1950
100.
68.
33.
35.
10.
0
7
3
4
8
24.
31.
11.
19.
6
3
6
7
Dec. 1961
100.
63.
28.
35.
13.
0
3
1
2
0
22. 2
36. 7
6. 2
30. 5
Statistical procedures.—The purpose of the index is
to show how much more or less it would cost to
purchase the same quantities and qualities of goods
and services in one period than in an earlier period.
The first step in the index computation is to calcu-
87
late, for each city, a price relative for each item by
comparing the sum of the prices reported for that
particular item by the same retail outlets as in the
preceding period. This relative change for the item
is next multiplied by the estimated cost in the preceding period for a fixed quantity of the item. (The
fixed quantity, or weight, for each item is determined
by the average annual quantity of that item pur-
chased by urban wage-earner and clerical-worker
families in the year ending June 1952, plus the purchases of those unpriced commodities it represents
in the index.) These calculations are then totaled
for all items in a group—all food items, for example,
are^ combined into a total showing the food cost for
the fixed quantities in the current period. This
total is compared with the food total for the pre-
Consumer Prices
[1957-59=100]*
Services
Commodities
Year
All items
All commodities
Commodities less food
Food
All
Durable
Nondurable
C1)
0)
0)
0)
0)
0)
0)
0)
0)
0)
0)
0)
0)
C1)
0)
0)
0)
0)
All
services
1929.
59. 7
1930_
1931.
1932_
1933.
1934.
58. 2
53.0
47. 6
45. 1
46. 6
1935.
1936.
1937.
1938.
1939.
47.8
48.3
50.0
49. 1
48. 4
45. 0
45. 6
47.4
45. 6
44. 7
42. 1
42. 5
44.2
41. 0
39.9
50.
51.
53.
53.
52.
4
0
2
2
3
48. 1
48. 8
51.9
52. 8
51. 7
48.8
49. 2
51. 2
50. 9
50. 1
1940.
1941.
1942.
1943.
1944.
48. 8
51.3
56.8
60.3
61.3
45. 1
48. 2
55. 2
60. 1
60.8
40. 5
44.2
51.9
57. 9
57. 1
52. 6
55.2
61. 4
64. 0
67. 5
51.3
54. 8
62. 2
64.3
70. 2
50.6
52.8
58. 4
60. 9
64.0
1945.
1946_
1947.
1948.
1949.
62.
68.
77.
83.
83.
62. 6
69.4
83.4
89. 4
87. 1
58. 4
66. 9
2
6
2
6
3
75. 5
79. 0
85. 6
66.3
71. 1
88. 2
84. 7
70.
74.
84.
90.
89.
1950.
1951.
1952.
1953.
1954_
83.8
90. 5
92. 5
93. 2
93. 6
87.
95.
96.
96.
95.
6
5
7
4
4
85.8
95. 4
97. 1
95. 6
95. 4
89. 2
95. 9
96.7
96. 8
95. 6
94.2
101. 4
102. 7
101. 6
97. 7
1955.
1956.
1957.
19581959_
93.3
94. 7
98.0
100. 7
101. 5
94.
95.
98.
100.
101.
4
3
4
7
0
94.0
94. 7
97.8
101. 9
100.3
94. 6
95. 9
98.9
99.8
101.3
94.
94.
98.
99.
102.
9
9
2
7
0
1960.
1961.
103. 1
104. 2
101. 7
102. 4
101.4
102. 6
101.8
102. 1
100. 7
100. 5
7
0
8
8
0
0)
C1)
0)
C1)
0)
0)
55. 6
52. 9
43.6
36. 3
35.3
39.3
81. 3
91. 9
93. 2
Services
less rent
Rent
0)
0)
0)
0)
0)
C1)
85. 4
83.
78.
70.
60.
57.
1
7
6
8
0
0)
0)
0)
(l)
0)
0)
56. 9
58. 3
60.9
62. 9
63. 0
50.
50.
50.
51.
51.
63.
64.
65.
65.
65.
2
3
7
7
9
51. 4
52. 0
54.3
56. 7
59. 5
81. 7
88.0
86.3
62. 7
63. 9
66. 5
70. 7
74.0
66.
66.
68.
73.
76.
1
5
7
2
4
60.
62.
66.
69.
73.
86.
92.
93.
94.
94.
76.
80.
84.
87.
89.
4
4
0
5
8
79. 1
82.3
85. 7
90. 3
93. 5
75.4
80. 0
83. 8
87.0
89. 1
94. 4
96. 5
99. 1
99.8
101.0
91.4
93. 4
97. 0
100.3
102. 7
90. 8
92. 8
96. 7
100.3
102. 9
102.6
103. 2
105. 6
107. 6
94.8
96. 5
98.3
100. 1
101. 6
103. 1
104. 4
2
7
2
0
4
53. 2
53. 8
55.4
56. 5
56. 6
56. 8
57. 5
59.3
60. 4
61. 9
7
4
9
3
3
7
9
1
9
4
106. 1
108. 3
i Not available.
*The Bureau of Labor Statistics converted the Consumer Price Index series from a 1947-49=100 base to a 1957-59=100 as of January 1962. Index users who desire
to maintain previous index series on a 1947-49 base may obtain the necessary conversion factors from the Bureau, upon request.
NOTE.—The "all items" and "food" indexes are available monthly from 1913; "rent" annually from 1913 through 1918, for varied intervals (generally semiannually
or quarterly) from 1919 through September 1940, monthly from October 1940 through September 1944, quarterly from December 1944 through January 1947, and monthly
from February 1947 to date; all other groups, selected months for 1935 and 1936, quarterly from 1937 through 1955, and monthly from 1956 to date.
Source: Department of Labor.
ceding period to give a measure of the average price
change for all foods, from which the index number of
food for each city is computed. Similar calculations
are made for apparel, rent, and all other groups of
items priced.
The national index is calculated by combining the
city totals, with weights based on the 1950 population of urban wage-earner and clerical-worker families. Two fifths of the weight is carried by the 12
largest cities; one fifth by the 9 cities selected to
represent the 42 cities with populations of 240,000
to 1,000,000; one-fifth by the 9 cities selected to
represent the 216 cities with populations of 30,500
to 240,000; and one-fifth by the 16 small cities
selected to represent the 2,527 towns with populations ranging from 2,500 to 30,500.
Uses and limitations.—The index is designed to
measure only those changes in the spending of urban
families which result from changes in prices, not
those which result from changes in purchasing habits
or standards of living. Also, it measures price
changes for only a limited population group: the
families of wage earners and salaried clerical workers
living in urban areas. Other qualities of commodities and weights would have to be used to measure
price changes for other groups, such as farm families,
single workers, retired people, etc. The "fixed
market basket represents the average quantities
bought by all wage-earner and clerical-worker
families, and is not necessarily representative of the
purchases made by any single family.
The city indexes indicate the difference in the rate
of price movement in the various cities, but should
not be used to compare price levels in one city with
those in another. For instance, if the index for city
A is 113 and that for city B is 115, it does not necessarily follow that prices are higher in city B than in
city A, since the base-period prices may have been
higher in city A. These indexes do show that prices
have increased more rapidly since the base period in
city B than in city A.
Although efforts are made to minimize the effects
of quality changes on the "fixed market basket," it
is impossible in any index to measure these effects
very accurately.
References.—The basic release of the index is the
report entitled "Consumer Price Index," issued by
the Bureau of Labor Statistics toward the end of the
month following the month to which the figures relate. The periodic indexes—semiannual, quarterly,
or monthly—for periods earlier than those shown in
current issues of Economic Indicators are available
from the Bureau of Labor Statistics upon request.
Quarterly indexes are available upon request for
selected groups of items and for individual commodities and services (except foods and fuels); monthly
indexes and average prices are available for individual
food and fuel items. Descriptions of the procedures,
uses, and limitations of the index are presented in
varying degrees of technical detail in The Consumer
Price Index—A Short Description (in BLS Bulletin
1140) January 1959; in Techniques of Preparing
Major BLS Statistical Series (BLS Bulletin 1168);
and in an article in the February 1953 issue of the
Monthly Labor Review. Upon request, the Bureau
of Labor Statistics will furnish "The Consumer Price
Index, A Short Description."
WHOLESALE PRICES
Description of series.—The Wholesale Price Index,
compiled by the Bureau of Labor Statistics, is a
measure of the general rate and direction of the composite of price movements in primary markets, and
of the specific rates and directions of price movements for individual commodities and groups of
commodities.
The index is based on price quotations for approximately 2,200 commodities selected to represent all
commodities sold on primary markets in the United
States. All types of commodities, from raw materials to fabricated products, are included in the
index. For commodities traded on organized exchanges, such as livestock and grains, the quotations
91491 O—62
are furnished by the exchanges or Government
agencies, or are taken from published sources. For
some standardized commodities, such as certain
chemicals and specified constructions of cotton gray
goods, quotations are taken from authoritative trade
publications. For the majority of fabricated products, prices are reported to the Bureau of Labor
Statistics by producers.
Initial contacts with manufacturers to solicit
their cooperation in reporting prices on specified
commodities are made by personal interview; subsequent price reports are mailed to Washington by
the reporting firm.
89
Prices are quoted at the level of the first significant
commercial transaction, and, for each commodity,
the reporter is requested to quote the price which he
charges to the channel of distribution to which he
sells the largest volume of this particular commodity.
The prices relate to a particular day of the month—
usually Tuesday of the week containing the 15th.
Insofar as possible, identical qualities of the commodities are priced from period to period so that
the index will measure only real price changes, not
changes due to differences in qualities or terms of
sales. When commodities of identical qualities are
not available for pricing in successive periods, it is
sometimes possible to obtain information on the cost
of the features added to or removed from the original
article. This can frequently be done, for example,
when new models of machinery are introduced. In
such cases it is possible to estimate the true price
change, excluding the effect of changes due to specification modifications. When adequate estimates of
the true price change cannot be made, the new
commodity is substituted for the original in such a
way that the level of the index is not affected by the
difference in their prices. To the extent that identical
qualities are not available in successive periods and
no adjustment can be made, the index may not
precisely measure price changes.
A major revision of this index was introduced with
release of the January 1952 index. The principal
changes from the old series were: (1) increase in the
number of items priced, from approximately 900 to
about 2,000; (2) change in the basis for weights from
average value of shipments for sale in 1929-31 to
1947 averages; (3) change of the base period from
1926 to 1947-49; and (4) modification of the classification system. Weights based upon the industrial
censuses for 1947 are used in the index from January
1947 through December 1954. Adjustments were
made in January 1955 to bring the major groups
weight totals into agreement with the 1952-53 average shipment values. New weights were introduced
in January 1958 based upon the industrial censuses
for 1954. Weights based upon the 1958 censuses
were introduced early in 1961. Data from Alaska
and Hawaii were included.
With release of data for January 1962, the indexes
were shifted to a new base (1957-59—100). Data
which had previously been available for each series
on the 1947-49 base are available on the new base
from the earliest date for which they were published
on the former base.
90
The relative importance of the groups, subgroups,
and items in the index at any one period depends on
the relationship among value aggregates as of that
period. As of December 1957, using the 1954
weights, the relative importance of "Farm Products"
was 10.7 percent, of "Processed foods," 12.7 percent
and of "Other than Farm Products and Foods"
(machinery, nonmetallic minerals, fuels, etc.) 76.6
percent. Following introduction of the 1958 weights
in December 1960 the corresponding percents giving
the relative importance of the three groups named
were 10.6, 14.0, and 75.4, respectively.
The following table indicates the relative importance of the chief economic-sector components in
December 1957, and in December 1960, the effective
date of the most recent revision.
Relative Importance of Components of the Wholesale Price
Index, December 1957 and December 1960
Commodity grouping
All commodities
Farm products
Processed foods1
All industrials
Industrial crude materials
Industrial
intermediate materials 2
Producer finished goods
Consumer finished goods excluding food
Durables
Nondurables
December December
1960 (1958 1957 (1954
weights)
weights)
100. 00
10. 59
14. 04
75. 37
2. 77
100. 00
10. 69
12. 73
76/58
2. 96
38. 86
11. 09
40. 33
11. 23
21.31
7. 14
14. 17
21. 35
7. 69
13. 66
» Excludes all farm products and foods; coverage of the subgroups does not
correspond
exactly to coverage of this index.
2
Excludes intermediate materials for food manufacturing and manufactured
animal feeds; includes, in part, grain products for further processing.
In addition to the comprehensive index, BLS
publishes a large number of subindexes in varying
degrees of detail. One series (see table) describes
price changes at various stages of production. Commodities are first divided by stage of processing
among three categories: (1) crude materials for
further processing; (2) intermediate materials, supplies, and components; and (3) finished goods. Each
of these is further subdivided according to end-use
and durability. Another series consists of separate
indexes for durable and nondurable goods which are
published each month for all commodities, total
manufactures, and total raw or slightly processed
goods. Indexes by commodity groupings are given
each month for 15 major groups, such as farm products and processed foods; 86 subgroups such as grains
Wholesale Prices, 1947-62
(Monthly data)
INDEX: 1957-59=100
130
115
100
COMMODITIES OTHER THAN FARM PRODUCTS AND FOODS
85
y '
70
ALL COMMODITIES
MIIIIMIM illlilnln
n l n l i l l l i ulJnln MIMLL ,1,1,11, ilhll.il,, nlnlull nliiLln
1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961
1962
nil, I M I M I H I I I I M I M I M I M I M L J M I M I I I I M
1947
1948
SOURCE OF DATA" DEPARTMENT OF LABOR
and cotton products; 284 product classes; and many
individual product series. In addition to the above,
indexes for 27 other special commodity groups are
regularly issued, including an index of prices of
construction materials.
Statistical procedures.—Basically, the same statistical method is used in computing the Wholesale
Price Index and the Consumer Price Index. The
individual price series are combined into the index
by multiplying the value weight assigned each item by
its current price relative, and summing to obtain the
current aggregate. The current aggregates are totaled by product classes, subgroups, groups, and all
commodities. The current index for each of these
is obtained by dividing the current aggregate by the
appropriate value weight in the base period.
Each commodity price series in the index, as
representative of prices for a group of commodities,
is assigned its own direct weight (the value of the
shipments for sale of that individual commodity),
plus the weight of other commodities it was selected
to represent in the index. Weights for commodities
not priced for the index are assigned to commodities
which are priced on the basis of available information on similarity of price movements. Statistical
studies and the advice of experts in industry and
elsewhere are utilized in making these determinations.
Relation to other series.—The BLS publishes a
weekly index of wholesale prices based on that
week's prices for a small sample (about 260) of the
commodities included in the monthly index and an
estimate of prices for all other commodities. The
weekly index is calculated as an estimated percentage change from the latest published monthly
comprehensive index. The weekly index is not
maintained as a continuous series.
Uses and limitations.—The index is based for the
most part on producers' prices; therefore, it should
not be used as a measure of price change at the
wholesale market level. "Wholesale" as used in the
title of this index refers to sales in large lots, not to
prices paid or received by wholesalers, jobbers, or
distributors.
A comparison of the movement of the subgroup
indexes of the Wholesale Price Index and the Consumer Price Index should not be used as a measure
of the change in retailers' margins for the specified
groups of commodities, mainly because the two
indexes are based on different weighting patterns
91
Wholesale Prices
[1957-59=100]
Commodities other than farm products and foods (industrial)
Year
All commodities
Farm
products
Processed
foods
All industrials 1
1929
52. 1
63. 9
54.3
51. 7
1930
1931
1932
1933
1934 .
47. 3
39. 9
35. 6
36. 1
41.0
54. 0
39. 6
29. 4
31.3
39.9
49. 5
41. 6
33. 9
33.7
39. 6
48. 1
42. 4
39. 7
40. 2
44. 2
1935
1936
1937
1938
1939
43. 8
44. 2
47. 2
43. 0
42. 2
48.
49.
52.
41.
39.
0
4
7
9
9
48. 3
46. 4
48. 6
42. 3
40. 2
44.
44.
48.
46.
46.
1940
1941
1942
1943__
1944
43.
47.
54.
56.
56.
0
8
0
5
9
41. 3
50. 1
64. 6
74. 8
75.3
40. 4
46. 7
54.8
57. 2
56.0
46.8
50. 3
53. 9
54. 7
55. 6
1945
1946
1947
1948 _
1949__
57.9
66. 1
81. 2
87. 9
83. 5
78.3
90. 6
109. 1
117. 1
101.3
56. 4
71.7
91. 1
98.4
88.8
56.3
61. 7
75.3
81.7
80.0
1950
1951 . _
1952
1953
1954
86.
96.
94.
92.
92.
106. 4
123. 8
116. 8
105.9
104. 4
92. 6
103.3
100. 9
97.0
97. 6
82.
91.
89.
90.
90.
97.
96.
99.
103.
97.
9
6
2
6
2
94. 3
94.3
97. 9
102. 9
99. 2
92.
96.
99.
99.
101.
96.9
96.0
100.0
100. 7
101.3
100.8
8
7
0
7
9
1955
1956
1957
1958
1959
93. 2
96. 2
99.0
100.4
100. 6
1960
1961
100. 7
100. 3
0
9
1
1
0
Industrial Industrial
intermedicrude
materials ate materials 2
(3)
(3)
(3)
8
(3)
Durable
Nondurable
o
<-,
(3)
(3)
(3)
(33)
()
(3)
(3)
(3)
(3)
(3)
(3)
e>
<•>
Consumer finished
goods excluding food
<•»
8
(3)
S?(3)
/3\
Producer
finished
goods
§
8
(33)
/3\
m
(z)
(3)
(3)
(3)
v3)
(3)
3( )
(3)
(3)
(3)
(3)
(3)
79. 2
92. 5
84 0
73. 4
79. 8
77.8
61. 8
67. 4
70.7
75. 9
81. 1
83.2
9
5
4
1
4
93. 6
102.9
93. 1
92. 4
88. 0
81.4
91. 2
88.3
89.4
89. 8
72. 4
79. 5
80.8
82. 1
83. 1
84. 1
89.7
90.4
91. 1
91. 8
4
5
2
5
3
96.
102.
100.
96.
102.
6
3
9
9
3
92. 5
97.0
99. 6
99. 4
101. 0
85. 6
92. 0
97.7
100. 2
102. 1
92
95.
98.
100.
101.
98. 3
97. 2
101. 4
100. 1
102.3
102. 5
100.9
100. 5
8
9
7
1
3
(3)
86. 5
92.0
88. 2
89. 6
96. 5
94. 1
95. 0
95.3
95.
97.
99.
99.
100.
8
7
9
3
8
101. 5
101. 5
1
2
8
Excludes all farm products and foods; coverage of the subgroups does not correspond exactly to coverage of this index.
Excludes intermediate materials for food manufacturing and manufactured animal feeds; includes, in part, grain products for further processing.
Not available for this classification prior to 1947.
NOTE.—Monthly indexes available for most groups from January 1926 on the 1957-59=100 base and on the 1947^9=100 base. Monthly indexes available for "all
commodities" and major groups from 1890 and for subgroups from 1913 on the 1926=100 base.
Source: Department of Labor.
and the lists of commodities priced are not identical.
The index is designed to measure real price
changes, that is, changes which are not occasioned
by changes in quality, quantity, terms of sale, etc.
It is not designed to measure changes in manufacturers' average realized prices which are affected by
product mix and terms of sale as well as by price
movements.
92
References.—The basic release of the index is the
report entitled Wholesale (Primary Market) Price
Index, usually issued by the Bureau of Labor Statistics during the second week of the month following
the month to which the figures relate. Monthly
indexes for periods earlier than those shown in current issues of Economic Indicators are available from
the Bureau of Labor Statistics upon request. A
detailed description of the index and its uses and vice versa. In addition, statistical series and sumlimitations is presented in the February 1952 maries as well as descriptions of the procedures, uses,
Monthly Labor Review (Reprint No. R. 2067) and in and limitations of the Wholesale Price Index and of
Techniques of Preparing Major BLS Statistical the various special indexes are in a series of annual
Series (Bulletin 1168), December 1954. An article bulletins Wholesale Prices and Price Indexes, 1954-56
in the February 1962 Monthly Labor Review (Bulletin 1214) which contains a description of the
(Reprint No. 2384) and one of the detailed monthly •stage of processing series and the construction
reports (January-May 1961) gives information con- materials index, Wholesale Prices and Price Indexes,
cerning the latest reweighting of the WPI and the IS57 (Bulletin 12&5) which describes the indexes on
effect that it has on the index. The detailed report durability of product, Wholesale Prices and Price
for January 1962 contains information explaining Indexes, 1258 (Bulletin 1257) which supplies informathe rebasing of the index to 1957-59 = 100 and also tion on the most recent change in procedures for the
a table showing the conversion factors that are to be construction materials index, and Wholesale Prices
used when converting a particular index from a and Price Indexes, 1959 (Bulletin 1295) the latest
1947-49=100 base to the base of 1957-59=100 or annual bulletin.
PRICES RECEIVED AND PAID BY FARMERS
Prices Received by Farmers
Description of series.—The Index of Prices Received by Farmers is computed by the Statistical
Reporting Service (SRS) of the Department of
Agriculture as a measure of the change from month
to month in average prices of farm products. It is
based on estimates of the average prices received for
all grades and qualities of the important agricultural
commodities at the point of first sale—generally the
local market—about the middle of the month.
The index is based on prices for 55 commodities
which accounted for about 93 percent of the total
cash receipts from marketings of all farm commodities in the years 1953-57. The price data are obtained chiefly by mail on a voluntary basis from
buyers of farm products (e.g., country elevators,
creameries and milk plants, cooperative marketing
organizations, and local dealers) and other persons
with a knowledge of farm product prices (for example, local bankers and farmers).
In addition to the index for "all farm products,"
indexes are prepared for "all crops," with 11 subgroups, and for "livestock and products/' with 4 subgroups. Five of these subgroup indexes (fresh fruit;
fresh vegetables; potatoes, sweetpotatoes, and dry
edible beans; dairy products; and poultry and eggs)
are published also on a seasonally adjusted basis.
Statistical procedures.—Weights based on average
quantities sold during 1953-57 have been used since
September 1952 to combine the United States average prices for individual commodities into subgroup
indexes. In combining the subgroup indexes into
group and all-commodity indexes, the index numbers
are weighted by the percentages that cash receipts
from marketings for the particular commodity subgroups bear to total cash receipts for the same period—1953-57. For the official index the subgroups
and group indexes are then converted from the 195357 to a 1910-14= 100 base, the base period prescribed
by law.
The accompanying tables show the Index converted to 1957-59=100 to facilitate comparison
with other indexes.
Revisions have been made in the index series from
time to time, mainly involving revisions in basic price
series or changes in weights. A major revision in
January 1950 put the index on a basis more consistent
with that of the Parity Index, improved the weighting structure, and made minor changes in commodity
coverage. Minor revisions in January 1954 incorporated revisions in component price series and reflected
some revisions in the 1937-41 weight data. The
latest major revision was made in January 1959 at
which time the weight base period was shifted from
1937-41 to 1953-57, and improvements were made in
the weighting and pricing system for vegetables and
for noncitrus fruits. The new weighting structure
was made effective as of September 1952. The
following table shows the percent weights for important categories for the three periods 1924-29,
1937^1, and 1953-57:
93
Relative Weights for Index of Prices Received by Farmers
grades or qualities. Finally, there are differences
in the weights and base periods used in the two
All farm products.
100. 0
100.0
100.0
indexes.
Crops
Uses and limitations.—The index is widely used
45. 2
42. 2
48.0
Food grains
7.9
8.9
7. 0
as
a measure of changes in average prices received by
6.7
7.5
Feed grains and hay
9. 1
8.3
Cotton
8. 4 farmers for commodities sold in local markets. It
13. 9
Tobacco
3.7
4. 1
2. 6
4.9
2.3
Oil-bearing crops
is a close approximation to a measure of the price
3. 1
4.7
6.0
Fruit
5. 8
Commercial vegetables.
3.5
4. 2 component of receipts by farmers from the sale of
4. 8
Other vegetables.
1.9
3.3
2. 8
farm products. It is used in computation of adLivestock and products
52.
54. 8
57.8
52.00
justed
base-period prices, which are necessary for
Meat animals
29. 1
28. 6
26. 1
Dairy products
15.
14. 6 calculating parity prices under the formula pre17.7
15. 1
9.9
Poultry and eggs
10. 7
10. 2
.9
Wool
1.3
. 4 scribed by the Agricultural Adjustment Act of 1938,
as amended.
Relation to other series,—This index should not be
The Index of Prices Received by Farmers is deconfused with the farm-product component of the
signed to measure the change in average prices for
Wholesale Price Index. There are significant differences. The Index of Prices Received by Farmers all grades and qualities of the products sold by
measures changes in prices at the point of first sale, farmers. Hence, the price changes it shows do not
and is based on average prices for all grades of a result wholly from price changes for specific grades,
given commodity. The Wholesale Price Index, on but may also reflect changes in the relative proporthe other hand, in general measures prices in selected tion of the various grades or qualities of commodities
central markets, and is based on prices of specific sold.
Commodity group
1924-29
1937-41
1953-57
Prices Received and Paid by Farmers, 1947-62
{Monthly data)
INDEX: 1957-59=100
130
PRICES RECEIVED FOR ALL FARM PRODUCTS
120
110
100
90
PRICES PAID FOR COMMODITIES, INTEREST,
TAXES AND WA6E RATES
80
70
1947
1948
1949
1950 1951
SOURCE OF DATA: DEPARTMENT OF AGRICULTURE
94
1
I
AJ.
1953
1952
1954
1955
1956
1957 1958 1959
19SI
1981
1962
As noted above, the index is based on commodities
which account for about 93 percent of the total value
of farmers' sales. Adequate marketing and price
data are not available for most of the other 7 percent
(timber and other forest products, greenhouse products, and a number of miscellaneous and minor commodities), but these omissions are probably not significant with respect to the index as a whole.
References.—See below, under Prices Paid by
Farmers.
Prices Paid by Farmers
Description of series.—The Index of Prices Paid
by Farmers for Commodities and Services, Including
Interest, Taxes, and Farm Wage Rates (commonly
called the Parity Index) is computed by the Statistical Reporting Service (SRS) of the Department of
Agriculture. It is a measure of the changes in
prices paid by farm families for a list of commodities
and services used for family living and farm production.
The index is composed of five major groups: (1)
prices paid for items used in family living, (2) prices
for items used in farm production, (3) interest on
indebtedness secured by farm mortgages, (4) taxes
on farm real estate, and (5) rates of wages paid hired
farm labor. The percents of the total weight which
are accounted for by the groups and their principal
components at different periods are given in the following table. Those utilized in the indexes subsequent to September 1952 are shown in the last column
of the table.
The most recent revision of the index was in January 1959. The revised indexes are of the same general form as those of the preceding revision in 1950.
There were two major changes in the revised series:
(1) a weighting pattern based on farmers' expenditures during 1955 was adopted for the period subsequent to September 1952, in place of the previous
weighting pattern which related to 1937-41; and (2)
the commodity content of the various groups was
modernized and expanded. As of June 1962, the
index of prices paid for items used in family living
included price series for 235 commodities and services, and the index for items used in farm production
included 244, with 42 series being used in both
indexes.
Statistical procedures.—The Index of Prices Paid
by Farmers for commodities and services is based
Relative Weights for the Index of Prices Paid by Farmers,
Including Interest, Taxes, and Farm Wage Rates
Weight base period
Item
Commodities, interest, taxes,
and cash wage rates
1924-29 1
1937-412
1955 3
100. 0
100. 0
100. 00
41.2
14. 8
12.5
4. 5
3. 9
2. 4
3. 1
36.4
10.1
4.4
3. 9
3.9
3.4
44.0
16. 7
8.6
6. 9
5. 9
4. 0
1. 9
41.2
10.2
5.3
5. 2
5.2
4.5
39.50
13. 40
6.34
5. 63
5. 77
3. 99
4. 37
50.90
12.80
4.60
8. 39
4.38
5.21
3.7
2. 7
3. 3
1.0
77. 6
5.7
6.5
10.2
2.7
3. 1
3. 3
1.7
85. 2
3.8
3.0
8.0
5.20
4. 11
3. 66
2.55
90. 40
2.04
.96
6.60
Living
_ _
Food (including tobacco 4)__Clothing
Autos and auto supplies
Household operations
Household furnishings
Building materials, house
Production
Feed
Livestock
Motor supplies
Motor vehicles
Farm machinery
Building and fencing materials
Fertilizer and lime
Equipment and supplies
Seeds
Total commodities
Taxes
Interest
Cash wage rates
1 1910 to March 1935.
23 March 1935 to September 1952, inclusive.
Subsequent to September 1952.
* June 1935 forward.
upon prices of commodities reported by chain and
independent stores and costs of electricity and telephone services reported by farmers. Beginning in
March 1953 the index has been based primarily on
price information collected monthly from chain
stores and quarterly from independent stores. Price
changes for the independent stores in interquarterly
months are estimated largely from changes in chainstore prices. Information on average costs of electricity and telephone services is obtained in an annual survey of about 20,000 farmers. The index base
period 1910-14 is set by law. As in the case of the
Index of Prices Keceived by Farmers, the Parity
Index also is shown in the table on a 1957-59=100
base to facilitate comparisons with other indexes.
Price reports for independent dealers are received in the SRS State offices, where average prices
for the State are calculated for each item. Chain
store prices and farm utility costs are reported directly to the Washington office of SRS. Where appropriate, they are combined with State averages of
independent store prices. Final estimates by States
and commodities are combined into national averages
for each item by weighting each State price estimate
by an estimate of the amount of that commodity purchased by farmers in that State. These estimates of
purchases are based upon the distribution of farm
95
population, farm income, farm expenditures and
other available information.
From the national averages for each item the
SRS computes subgroup indexes for 15 types of expenditures. Six subgroup indexes (food and tobacco,
clothing, autos, and auto supplies, household operations, household furnishings, and building materials
for farm homes) are combined into the index of
prices paid by farmers for items used in family living; and 9 subgroup indexes (feed, livestock, motor
supplies, motor vehicles, farm machinery, building
and fencing materials, fertilizer and lime, equipment
and supplies, and seed) are combined into the index
of prices paid for items used in farm production.
These two group indexes of prices paid for items
used in family living and farm production are then
combined with the indexes for interest, taxes, and
wage rates to form the Parity Index. The index of
interest charges is developed annually on the basis
of data obtained from lending agencies and special
surveys. The tax index is developed annually from
data obtained in special surveys. The wage-rate
index is based on information collected in a quarterly mail survey of farmers.
Relation to other series.—The Index of Prices Paid
by Farmers for family-living items is frequently used
with the Consumer Price Index (CPI) to compare
the movements of retail prices as they affect farmers
and urban workers, respectively. Even though in
some periods the movements of the two indexes have
been quite similar, there are important differences
between the two indexes which on occasion give rise
to differences in movements. Some of the principal
differences are:
1. The lists of commodities included in the two
indexes are not identical, and different weights are
used for individual commodities, since the CPI is
based on the purchasing habits of urban families
and the farm family-living index on those of farm
families.
2. Expenditures for all major commodity and service groups purchased by urban families are represented in the weights for the CPI. It has not been
possible to include in the family living component of
the Parity Index price series for certain types of
farm family-living expenditures. For example, medical care, utilities, public transportation, and personal care, are directly represented in the CPI; but
of these only telephone and electricity costs are represented in the farm family-living index. Since few
farmers rent homes other than those that are rented
96
with the farm, the farm family-living index does not
include residential rents. The CPI price series represent various costs of homeownership—purchase,
repairs and maintenance, and insurance; whereas the
prices of building materials for houses comprise the
only representation of this expenditure group which
it has been possible to include in the farm familyliving index.
3. Although both the CPI and the farm familyliving index are composed of a fixed list of items for
any two successive dates, the CPI measures price
changes in successive periods for narrowly specified
descriptions of the items, whereas the Index of Prices
Paid by Farmers is designed to measure average price
changes for those qualities of each item which are
currently purchased in greatest volume by farmers.
These qualities may change in response to (a)
changes, resulting from technological developments
and other causes, in the quality or types of commodity stocked by merchants, or (b) changing levels of
farm income.
Uses and limitations.—The Index of Prices Paid
by Farmers for Commodities and Services, including interest, taxes, and farm wage rates is based
for the most part upon data relating to the middle
of a given month. For certain uses, in accordance
with statutory formulae, it constitutes the Parity
Index for the following month; that is, the Index
and parity prices of individual commodities computed
from it are the legally applicable index and parity
prices for the month following that to which the
prices-paid data relate. Agricultural support programs are in many cases based on these parity prices.
The Index of Prices Paid by Farmers including
interest, taxes, and farm wage rates is a close
approximation to a measure of the price component
of aggregate expenditures by farmers for living and
production purposes.
References.—The Parity Index and the Index of
Prices Received by Farmers are published monthly by
SRS in Agricultural Prices. Supplements to Agricultural Prices in January and February 1959 present
the revised Indexes of Prices Received by Farmers,
the Parity Index, and subgroup indexes for both
prices received and prices paid. A comprehensive
discussion of the January 1959 revision of the price
indexes is presented in the April-July 1959 issue of
Agricultural Economic Research. A detailed description of the price series is presented in The Agricultural Estimating and Reporting Services of the
United States Department of Agriculture (Miscel-
laneous publication No. 703 of the Department of
Agriculture).
Parity Ratio
The Parity Ratio is computed by dividing the
Index of Prices Received by Farmers by the Index
of Prices Paid, Including Interest, Taxes, and Farm
Wage Rates. It measures the extent to which prices
farmers receive for farm products are on the average
higher or lower in relation to the prices they pay for
goods and services than they were in the base period,
1910-14.
Prices Received and Paid by Farmers
Prices received by farmers
Year
All farm
products
Crops
Prices paid by farmers
Livestock
and
products
All items,
interest,
taxes, and
wage rates
(parity
index)
Family
living
items
Production
items
Parity
ratio 1
1957-59=100
1929
61
61
62
55
54
56
92
1930
1931
1932
1933
1934
52
36
27
29
37
52
34
26
32
44
52
38
28
27
32
52
44
38
37
41
50
43
37
38
43
52
43
38
38
44
83
67
58
64
75
1935
1936
1937
1938
1939
45
47
51
40
39
46
49
53
36
37
44
46
49
43
41
42
42
45
42
42
43
43
45
43
42
46
46
50
47
46
1940
1941
1942
1943
1944
42
51
66
2
80
2
82
41
48
65
84
89
42
53
66
42
45
52
58
62
42
45
52
58
61
47
50
57
63
66
88
92
93
78
77
81
93
105
113
108
1945
1946
1947
1948
1949.
2
86
98
114
119
103
65
71
82
89
86
64
71
83
88
85
67
73
85
95
91
109
113
115
110
100
1950
1951
1952
1953
1954
88
97
98
95
95
86
94
95
94
94
94
104
104
97
97
101
107
100
92
89
277
2
76
91
102
118
114
100
2
82
107
125
119
105
102
104
119
108
120
108
108
130
119
104
97
1955
1956
1957
1958
1959
96
95
97
104
104
105
101
100
99
90
88
94
106
100
94
95
98
100
102
94
96
99
100
101
96
95
98
101
101
84
83
82
85
80
1960
1961
98
99
99
101
98
97
102
103
101
102
101
101
80
80
2
2 94
111
122
106
1
Percentage ratio of Index of Prices Received by Farmers to Index of Prices Paid, including interest, taxes, and wage rates on 1910-14 base.
Includes wartime subsidies paid on beef cattle, sheep, lambs, milk, and butterfat between October 1943 and June 1946.
NOTE.—For the Index of Prices Received by Farmers, monthly and annual data available from January 1910; for the Indexes of Prices Paid, annual data available
from 1910, quarterly from 1923, and monthly from January 1937.
The official indexes are published on a 1910-14=100 base as required by law. The indexes have been converted to 1957-59=100 for the above tables to facilitate
comparisons with other indexes.
Source: Department of Agriculture.
2
97
MONEY, CREDIT, AND SECURITY MARKETS
MONEY SUPPLY
Description of series.—"Money supply" is defined
here as the total of the public's holdings of coin,
currency, and demand deposits. The currency
component is the total of coin and currency in circulation outside the Treasury and Federal Reserve
Banks, from which has been deducted the vault
cash holdings of commercial banks (but not that of
other financial institutions). The deposit component includes commercial bank demand deposit
liabilities to nonbank financial institutions, mutual
savings banks, foreign banks, and State and local
governments, but excludes those to other commercial
banks (with minor exceptions) and to the Federal
government (these being shown as a separate series).
Foreign balances with Federal Reserve banks also
are included in the deposit component.
Time deposits are not included in the "money
supply" but are nevertheless closely related because
of their high liquidity. They consist of certificates
of deposit and savings accounts of individuals.
Certificates of deposit are redeemable after 30 days'
notice, and prior notification of up to 30 days may
also be required for the withdrawal of savings
accounts. Banks may pay interest on time deposits
but not on demand deposits. The series cover
deposits at all commercial banks except those due to
other domestic commercial banks and the U.S.
Government.
All monthly and semi-monthly data are shown as
averages of daily figures while annual data are represented by averages of daily figures for December.
In general the series cover all banks in the United
States, with upward adjustments (amounting to
approximately $400 million for demand deposits)
during 1959 for the admission of Alaska and Hawaii
to statehood.
Statistical procedures.—The total of demand deposits is derived, on the basis of daily figures reported
by member banks, as follows: from the total of
reported demand deposits of member banks (excluding interbank deposits of domestic commercial
banks) cash items in process of collection and U.S.
98
Government demand deposits are deducted. An
estimate of deposits in nonmember banks based on
reported daily figures from "country" member banks
(those outside the larger centers) in conjunction
with quarterly "call report" data from non-member
banks is added. From this aggregate is deducted
the Federal Reserve float, the resulting figure being
the estimate for commercial bank demand deposits.
Foreign balances with Federal Reserve Banks are
added to the commercial bank demand deposits.
"Currency" is derived from daily Treasury figures
for money "in circulation" (i.e., outside Treasury
and the Federal Reserve Banks) from which is
deducted an estimate of vault holdings of commercial
banks, based on reported member bank data and an
estimate for vault holdings of non-member banks
prepared by a method similar to that for estimating
deposits.
Seasonal adjustment is made separately for the
two components, using a ratio-to-moving-average
procedure. Adjustment factors applied to the 24
semimonthly periods for 1961 are as follows:
Seasonal Adjustment Factors for Money Supply Series: 1961
Period
Jan. 1
2
Feb. 1
2
Mar. 1
2
Apr. 1
2
May 1
2
June 1
2
July 1__
2
Aug. 1
2
Sept. 1
2
Oct. 1
2
Nov. 1
2
Dec. 1
2 _
.
Deposit
Component
Currency
Component
103.0
102.6
101. 1
99.1
99.3
98.8
99.5
101.0
99.1
97.7
98.9
98. 5
98.2
99.2
99.4
98.1
99. 6
99.5
99.5
100. 9
101.2
100.6
102. 2
103. 1
100.5
98.7
99. 1
98.4
99.2
98.7
99.6
98.6
99.5
99.0
99.9
99. 4
101.1
100.0
100.7
100.0
100. 9
99.8
100.8
100. 0
101.0
101.0
101. 9
102. 3
Estimates for time deposits and U.S. government
deposits, also shown in the accompanying table, are
arrived at in a similar manner.
Relation to other series.—The measure of "money
supply" presented here is to be distinguished sharply
from the well-known Treasury figure for "money in
circulation." The latter is a much smaller aggregate
covering only paper money and coin outside the
Treasury and Federal Reserve Banks, and does not
include the much larger volume of demand deposits.
Nor is the Treasury figure identical with the currency
component of the money supply figure, since the
latter excludes from the total "in circulation" the
relatively small amount of vault cash held by commercial banks.
The money supply series here presented differs
also from certain other similar aggregates of deposits
and currency, also published by the Federal Reserve.
As part of its Consolidated Condition Statement for
Banks and the Monetary System, the Federal Reserve presents money supply estimates as of the last
Wednesday of each month which differ in certain
technical respects from the series shown here. How-
ever, this older series provides a measure of deposits
and currency over a much longer time period.
The series on money supply in its present form
appeared first in 1962, with revised back data to
1947. It is similar to the series on deposits and
currency shown in the table below as one of the
components of "Selected Liquid Assets Held by the
Public." However, the latter is net of deposits held
by mutual savings banks and savings and loan
associations.
Also, as part of the Flow of Funds accounts
published in the Federal Reserve Bulletin, quarterly
figures on changes in demand deposits and currency
are presented, again with certain technical differences
from the series here presented.
Uses and limitations.—Changes in the total of
deposits and currency, whether regarded as causative
or symptomatic, are important factors in the analysis
of economic change and of monetary policy. The
definition of money supply here used has been chosen
from among alternative definitions as one closely
related to the mechanism through which money is
created or extinguished. The money supply series
Money supply
[Averages of daily figures, billions of dollars]
Money supply
Money supply
End of year *
Total
Currency
outside
banks
Demand
deposits
Time
deposits
2
Total
Demand
deposits
U.S.
Government
demand
deposits 2
Unadjusted
Seasonally adjusted
1947
1948
1949
Currency
outside
banks
Time
deposits 2
113. 1
111. 5
111.2
26. 4
25.8
25. 1
86. 7
85.8
86.0
35. 4
36. 0
36.4
115. 9
114. 3
113.9
26.8
26.2
25.5
89. 1
88. 1
88.4
35. 1
35. 7
36. 1
1.0
1. 8
2.8
116.2
122. 7
127. 4
128.8
132.3
25.0
26. 1
27. 3
27. 7
27.4
91.2
96. 5
100. 1
101. 1
104. 9
36.7
38.2
41. 2
44. 6
48. 4
119.2
125.8
130.8
132. 1
135. 6
25.4
26.6
27.8
28. 2
27. 9
93.8
99.2
103.0
103. 9
107. 7
36.4
38.0
40.9
44. 2
48. 0
2.4
2. 7
4.9
3.8
5. 0
1955
1956
1957
1958
1959
135.2
136. 9
135.9
141.2
142.0
27.8
28. 2
28.3
28.6
28.9
107.4
108. 7
107.5
112. 6
113.2
50.2
52. 1
57. 5
65.5
67.4
138. 6
140.3
139.3
144. 7
145.6
28.4
28.8
28.9
29. 2
29.5
110. 2
111.5
110.4
115.5
116. 1
49. 6
51.4
56.7
64. 6
66.6
3.4
3.4
3. 5
3.9
4.9
1960
1961
141.2
145.7
28.9
29.6
112.2
116. 1
72. 7
82. 5
144. 7
149. 4
29.6
30.2
115.2
119. 2
72. 1
81.8
4. 7
4.9
1950
1951
1952
1953
1954
_ __
1 Averages of daily December figures.
2
Deposits at all commercial banks.
Source: Board of Governors of the Federal Reserve System.
99
permit a reasonably adequate measurement of the
level and movement of this aggregate. They should
be considered in the light of changes in the use of
deposits as measured in the series on bank debits.
For analytical uses requiring attention to a broader
group of highly liquid assets possessing some of the
attributes of money, the reader may turn to the table
on liquid assets held by the public.
References.—The new money supply series are
issued semimonthly by Federal Reserve, and appear
monthly in the Federal Reserve Bulletin. An article
in the August, 1962 Bulletin presents semimonthly
figures beginning with 1947, with a technical discussion of the derivation of the series and a comparison
with similar series. The related Consolidated Condition Statement continues to appear in the monthly
release G.7 and in the Bulletin, with data for most
component series for selected years back to 1929.
Historical data on deposits and currency are available
in Banking and Monetary Statistics from 1892 and
in Historical Statistics oj the United States from 1867.
SELECTED LIQUID ASSETS HELD BY THE PUBLIC
Description of series.—The accompanying table
shows public holdings of major types of liquid
assets—that is, cash or assets readily convertible into
cash with minimum risk of loss. In addition to
currency and demand deposits, the table includes
time deposits at commercial and mutual savings
banks and the Postal Savings System, savings and
loan shares, savings bonds, and short-term U.S.
Government securities. Certain other assets ordinarily regarded as important liquidity instruments,
particularly prime commercial paper, bankers acceptances, and credit union shares, have been omitted
because adequate data are not available. However,
these assets would add less than 3 per cent to the
existing total.
For purposes of this table, public holdings include
all holdings except those of the United States
Government, Government agencies and trust funds,
Federal Reserve Banks, and domestic commercial
banks. The principal holders are individuals, partnerships, and nonbank corporations, State and local
governments, corporate pension funds, non-profit
institutions, and foreign holders, including foreign
banks, Governments, and international institutions.
There are substantial differences in the ownership
characteristics of the various types of assets. Deposits in mutual savings banks and the Postal
Savings System, savings and loan shares, and savings
bonds are almost entirely personal savings of individuals, while short-term U.S. Government securities
are held mainly as liquidity reserves by financial and
nonfinancial businesses. Although the bulk of
commercial bank time deposits are savings accounts
of individuals, substantial amounts of other time
deposits are also held by businesses, State and local
governments, and foreign banks and international
institutions.
100
All of the series were adjusted for seasonal variation by the X-9 variant of Method II developed by
the Bureau of the Census. Demand deposits and
currency were independently adjusted for seasonal
variation and then combined into a single seasonally
adjusted series. For these two series special adjustments were made for those months in which the
seasonal movement is greatly affected by the date on
which the last Wednesday falls. The rationale
for these adjustments is contained in an article in
the Federal Reserve Bulletin for February 1960,
page 133.
Demand deposits and currency.—The figures are a
combination of two series—"demand deposits adjusted" and "currency outside banks".
By "demand deposits adjusted" is meant total
demand deposits at commercial banks in the United
States less demand deposits due to the U.S. Government, to other domestic commercial banks, mutual
savings banks, or to savings and loan associations.
Demand deposits held by mutual savings banks and
savings and loan associations are deducted to avoid
double counting, since liquid assets held by the
public in these two types of institutions are shown
separately. Cash items reported as in process of
collection and Federal Reserve float have been
eliminated. The series differs from that shown under
"Money Supply" above only in the deduction of
deposits of mutual savings banks and savings and
loan associations.
"Currency outside banks" is again consistent
with that shown under "Money Supply" except that
it excludes cash in the vaults of mutual savings banks
as well as commercial banks in the United States.
Demand deposits and currency are as of the close
of business of the last Wednesday of the month and
are available in the Federal Reserve G-7 release and
the Federal Reserve Bulletin.
Time deposits.—Time deposits at commercial banks
are roughly the same as shown in the "Money Supply" table, but do exclude postal savings redeposited in commercial banks. Figures are as of the
last Wednesday of each month, except that June 30
and December 31 data are used when available.
Deposits at mutual savings banks are as of the end
of the month and are supplied to the Federal Reserve
by the National Association of Mutual Savings
Banks. They include a small amount of demand
deposits.
Figures for both commercial and mutual savings
banks are included in the Federal Reserve G-7
release and are published in the Federal Reserve
Bulletin, with some subsequent adjustment of commercial bank time deposits by the Federal Reserve.
Savings and loan shares.—Data are end of month
figures compiled by the Federal Savings and Loan
Insurance Corporation and are published in the
Federal Reserve Bulletin, except that prior to 1955
data are Federal Reserve estimates based on monthly
figures of inflow of new savings and withdrawal of
savings capital compiled by the Federal Home Loan
Bank Board.
United States savings bonds.—Figures include all
types of savings bonds held by investors other than
domestic commercial banks and United States Government agencies and trust funds. To avoid double
counting, holdings of mutual savings banks are excluded throughout and holdings of savings and loan
associations beginning February 1960. Figures—
which show par value and are partly estimated—are
as of the end of month and are obtained from the
United States Treasury Department's survey of
ownership of U.S. Government securities.
United States Government securities maturing within
one year.—Beginning December 1950 figures include
Treasury marketable securities and Federal agency
securities maturing within one year, except holdings
of domestic commercial, mutual savings, and Federal
Reserve Banks, Government agencies and trust
funds, and beginning February 1960, savings and loan
associations. Figures—which are par value and are
partly estimated—have been adjusted to include
partially tax-exempt securities 12 months prior to
first call date, and, prior to 1956, nonmarketable
Treasury savings notes with maturities up to 36
months. Prior to December 1950 figures for marketable issues include securities callable within one
year.
Selected Liquid Assets Held by the Public
[Amounts in billions of dollars, seasonally adjusted]
Time deposits
End of year
Total
selected
liquid
assets
Demand
deposits
and currency l
Commercial
banks
Mutual
savings
banks
Postal
Savings
System
Savings
and loan
shares
U.S. GovU.S. Gov- e rnment
ernment se curities
maturing
savings
within one
bonds
year
11.0
12. 5
48. 6
50.9
53. 4
55.0
19.4
16.6
21. 6
25.5
2. 9
2. 7
14.0
16. 1
19.2
22. 8
55. 8
55.4
55. 7
55.6
26.4
26.8
29.3
34.4
26.3
28. 1
30.0
31.6
2. 1
27.2
32.0
37.0
41. 7
55. 6
55.9
54.8
51.6
30.6
31.6
33.2
38.8
33.9
34. 9
36.2
38.3
1. 1
47. 7
54.3
61. 8
70.5
50.5
47.9
47.0
47.4
35.6
48.8
41.9
42.6
1946.
1947.
1948.
1949.
239.
246.
254.
262.
1
2
1
1
108. 5
112.4
110. 5
110.4
33.9
35.3
35.9
36.3
16. 9
17.8
18.4
19.3
3. 3
3. 4
8. 5
3.3
3.2
1950.
1951
1952
1953.
271. 4
281.0
296. 0
311.5
115. 5
120.9
125. 5
127.3
36. 6
38.2
41.2
44. 6
20. 1
20.9
22. 6
24. 4
1954
1955
1956
1957
320.3
332.5
343.2
356.0
130.2
133.3
134. 6
133.5
48.2
49.7
52.0
57.5
1958
1959
1960
1961
373. 1
393.9
399.2
424. 6
138.8
139.7
138. 4
142.6
65. 4
67.4
73. 1
82.5
2.5
2.4
1.9
1.6
1.3
.9
.8
.6
9.7
1
Agrees in concept with money supply, except for deduction of demand deposits held by mutual savings banks and savings and loan associations. Data for last
Wednesday of month.
Source: Board of Governors of the Federal Reserve System.
101
BANK LOANS, INVESTMENTS, DEBITS, AND RESERVES
Description of series.—Major loan and investment
categories are shown for all commercial banks in the
United States. Commercial banks are in general distinguished from other lending institutions by the fact
that they accept deposits subject to check or withdrawal on demand. They number approximately
13,500. Mutual savings banks are not included, nor
are savings and loan associations or, in general, any
other "banking" institutions which do not receive demand deposits. The "all commercial bank" series
has been increased by the addition of banks in Alaska
and Hawaii in January, April, and August 1959, with
an increase in total loans and investments of approximately $659 million.
The "weekly reporting member banks" for which
"business loans" are shown comprise approximately
350 banks which are members of the Federal Reserve
System (see below) and are located in (or with head
offices in) approximately 100 cities. They account
currently for over half of the total commercial banking loans and investments. The cities are the more
important banking centers within each Federal Reserve district, and within each city the reporting
banks constitute a voluntary sample, usually accounting for over 90 percent of member bank resources.
The weekly reporting member bank series has been
revised from time to time, most recently in July 1959
and in April, 1961, with significant expansion in coverage (see page 654 of the June 1961 Federal Reserve
Bulletin).
The category of "business loans" is a major component of total loans. In general, it includes all commercial and industrial loans (and agricultural loans
prior to 1956) except those secured by real estate or
for the purpose of purchasing or carrying securities,
and loans to financial institutions. The exclusion of
the latter category was accomplished by the revision
of July 1959, when such loans were reclassified, with
a reduction of approximately 14 percent in the total
of commercial and industrial loans. Data prior to
July 1959 are not available on the revised basis.
The weekly reporting banks currently account for
about 70 percent of business loans at all commercial
banks.
The series on bank debits outside New York City
covers debits to demand deposit accounts, except interbank and U.S. Government accounts. They are
aggregates for approximately 1,700 reporting banks
102
in the 343 leading centers and cover substantially all
debits in those centers.
Data on reserves and borrowings and free reserves
are reported for all member banks of the Federal
Reserve System. With few exceptions these are
commercial banks, and comprise approximately
4,500 nationally chartered banks ("National banks")
plus about 1,600 State chartered banks which have
chosen, and have been found eligible, to join the Federal Reserve System. Member banks account currently for about 85 percent of the total loans and
investments and total deposits of commercial banks.
Required reserves are minimum balances required
to be maintained by member banks pursuant to Federal Reserve regulations, measured as a percent of
deposit liabilities and varying with the type of deposits and the classification of the bank; these reserve requirements vary from time to time. Prior
to December 1959, the only permissible legal reserves
were balances with the Federal Reserve Banks; since
then, the inclusion of vault cash has been allowable.
At first only limited amounts could be included, but
since November 24, 1960 all vault cash is allowed as
reserves. Excess reserves are member bank balances
of these types maintained in excess of the required
minimum.
Member bank reserves have been affected by the
inclusion of banks in Alaska and Hawaii—as have
those for commercial banks.
Monthly figures shown for commercial banks and
weekly reporting member banks are as of the last
Wednesday of the month, except that final December
figures for "all commercial banks" are as of the last
day of the month. The same is true of final June
figures when a "call date" falls on or near the last
day of June. Beginning in 1948, seasonally adjusted
monthly data for loans and investments at all commercial banks are available. Reserves and borrowings are shown as averages of daily figures during the
period.
Statistical procedures.—The "All commercial
banks" and "Weekly reporting member banks" series
are closely related. The weekly series is based on
weekly reports filed with Federal Reserve Banks and
compiled cooperatively by these banks and the Board
of Governors. Published figures are simple aggregates for the reporting banks. The monthly estimates for all commercial banks are prepared, also
Loans and Investments at All Commercial Banks, 1948-62
(Monthly data, seasonally adjusted)
BILLIONS OF DOLLARS
250
200
^
TOTAL LOANS AND INVESTMENTS^
—r—
150
*
^
^
BANK LOANS
/
100
INVESTMEN TS IN U S. GOVE NMENT SECURITI ES
^
.
" ^
"
50
OTHER SECURITI
———_.
T,TXOXT!iri,,i..l,,i.,
1948
1949
1950
1951
ulnlnln
1952
1953
..1..1..1.. .. f . 1 . . i.
..IMIMIM
1954
1955
1956
1957
1958
. : ! . . 1.. 1.. . . I . . I . . I . ,
1959
1980
Li,,
1961
1962
SOURCE OF DATA: BOARO OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
by the Federal Reserve System, on the basis of the
weekly series, monthly reports from all other member banks, and other information. Estimates are
made for nonmember banks, accounting currently for
about 17 percent of commercial bank credit, on the
basis of the relationship between the movement of
"country" member banks (those outside the major
cities) and that of the nonmember banks, as determined semiannually when complete reports for the
banking system are available. The December (and
when appropriate the June) estimates are later replaced by "benchmark" figures for all commercial
banks. These benchmarks are compiled by the Federal Deposit Insurance Corporation on the basis of
compulsory "call reports" filed by all banks subject
to Federal supervision (national banks, State member banks, and nonmember insured banks) with one
or another of the Federal bank supervisory agencies,
and of information obtained from State banking authorities and other sources for the relatively few uninsured banks. Interim monthly estimates are revised only when some substantial error of estimate is
suggested by the benchmarks.
The debits series is a simple aggregate of the reports of reporting banks. Monthly data are season-
ally adjusted by means of a modified ratio-to-movingaverage procedure. The series shown is a composite
of adjusted series derived separately for each of six
major centers and for the aggregate of the other
centers.
The series on total and excess reserves and member
bank borrowing is based on reports of deposits, reserves, and borrowing from all member banks, filed
biweekly or more frequently, depending on the clas s
of bank. "Free reserves" for the member banks as
a group are computed by netting total borrowings
at Federal Reserve Banks against excess reserves.
Relation to other series.—The Federal Government
publishes a variety of statistical series covering all
or part of the banking system. For purposes of
general analysis, these may conform closely in trend
and lead to similar conclusions, but the differences
should be kept in mind. Thus, the all-commercialbank series should be distinguished from the somewhat larger "all-bank" series which includes some
500 mutual savings banks; and from smaller aggregates such as those for national banks and insured
commercial banks. The all-commercial-bank aggregates here are for the United States, exclusive of
possessions, and may differ slightly from totals which
103
include banks in the possessions, published by the
Comptroller of the Currency and the FDIC.
The weekly series includes most of the larger banks
in larger cities and covers a substantial segment of
total commercial bank resources. Although the
series is not identical in coverage with any published
call report aggregate, it is similar in coverage to the
aggregate for all member banks other than "country"
banks. The "business loans" series is shown in
Federal Reserve publications as "commercial and
industrial loans." A more recently developed Federal Reserve series showing changes in commercial
and industrial loans by type of business of borrower,
weekly from 1951, is based on a subsample of the
weekly reporting banks and ties in with the aggregate
commercial and industrial loan figure.
The series on reserves and member bank borrowings, being averages of daily figures, are not directly
comparable with week-end or month-end member
bank or Reserve bank statistics.
Uses and limitations.—The all-commercial-bank
figures are useful indicators of business activity and
trends in bank credit use. Data for the weekly reporting member banks are more frequent and more
prompt than those for all commercial banks and
provide the more detailed category of "business
loans." The weekly series also is a more sensitive
indicator of developments in the short-term money
market, because it covers the larger banks in the more
important centers.
The series on reserves and borrowing are a partial
reflection of the credit potential of the banking system. Excess reserves are available, to the banks
holding them, for further credit expansion. Member
bank borrowing from the Reserve banks reflects the
extent to which some banks (not holding excess reserves) have borrowed temporarily to meet minimum
reserve requirements. "Free reserves" may be
computed by subtracting borrowings from excess
reserves. The series on required and excess reserves
forms an integral part of the significant weekly and
monthly Federal Reserve tabulation entitled "Member Bank Reserves, Reserve Bank Credit and
Related Items," which shows interrelationships
among various sources and uses of reserve funds.
Users should recognize that there is a seasonal movement in the data on loans and reserves.
References.—The monthly estimates for all commercial banks appear initially about two weeks after
104
the last Wednesday of the month in a Federal Reserve release G.7, showing the major balance sheet
items and changes during the past month and year
for all banks, all commercial banks, and member
banks. The Federal Reserve Bulletin also carries the
estimates for recent months, with call report data for
selected years back to 1941. Historical data to 1914
anci. explanatory technical footnotes are presented in
Banking and Monetary Statistics.
The Wednesday data for the weekly reporting
member banks appear initially on the following
Wednesday in a Federal Reserve release (H.4.2),
showing also changes in assets and liabilities over the
last week and year. The Federal Reserve Bulletin
carries the weekly data for the last two months and
for the comparable month a year ago. Historical
data from 1919 appear in Banking and Monetary
Statistics. The most recent revisions of the weekly
series are discussed in the August 1959 and June 1961
issues of the Federal Reserve Bulletin.
Debits figures appear in an advance monthly release G.6, showing aggregates for all centers, for
Federal Reserve districts, and for individual centers,
and in an annual summary release, G.5. A summary table appears monthly in the Federal Reserve
Bulletin, with annual data for about eight years.
The last major revision of the debits series is discussed in the April 1953 Bulletin. Back data may be
traced in current and past issues of the Federal Reserve Bulletin, and historical data, though not wholly
comparable, are presented in Banking and Monetary
Statistics back to 1919.
Figures for member bank reserves and borrowings
appear first in the weekly release H.4.1, showing
weekly averages of daily figures, available the day
following the end of the weekly period. The biweekly release J.I gives similar data for biweekly
periods (semimonthly periods prior to 1959) available with a lag of about twenty days. Weekly and
monthly data appear in the Bulletin, and back data
may be traced in current and past issues and in Banking and Monetary Statistics back to 1914.
Banking and Monetary Statistics, published by the
Federal Reserve Board in 194*3, contains technical
discussions of the general banking series, the weekly
reporting member bank series, and the data on reserves. Historical Statistics of the United States
Colonial Times to 1957 presents earlier banking series,
in part back to 1834.
Bank Loans, Investments, Debits, and Reserves
Weekly
reporting
member
banks
All commercial banks
(seasonally adjusted data)
End of period
Total
loans
Investments
Loans,
and
excluding
investinter- U.S. Gov- Other
securiernment
ments
bank
ties
securities
Business
loans 2
All member banks
Bank
debits
outside
New York
City (343
centers)3
Total
reserves
113.0
118. 7
124. 7
130. 2
139. 1
143. 1
153. 1
157. 6
161.6
166.4
181.0
185. 7
194. 5
209. 6
41.5
42.0
51. 1
56. 5
62. 8
66. 1
69.0
80. 5
88.0
91.4
95. 6
107.8
114.2
121. 1
62.3
66. 4
61. 2
60.4
62. 2
62.3
67. 7
60.4
57. 3
57.0
64. 9
57. 6
59.6
64.7
9.2
10. 2
12.4
13. 4
14.2
14. 7
16. 4
16.7
16. 3
17.9
20. 5
20.4
20.7
23. 8
Borrowings at
Excess Federal
Free
reserves Reserve reserves
Banks
Millions of dollars
Billions of dollars
1948
1949
1950
195f
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961
l4
15.6
13.9
17. 9
21. 6
23.4
23. 4
22. 4
2
26. 7
30. 8
31. 8
2
31. 7
2
30. 5
32.2
2
32. 9
784
760
871
998
1,045
126
148
,277
,385
,468
,481
,656
,736
1,832
19, 990
16, 291
17, 391
20, 31Q
21, 180
19, 920
19, 279
19, 240
19, 535
19, 420
18, 899
18, 932
19, 283
20, 118
797
803
1,027
826
723
693
703
594
652
577
516
482
756
568
134
118
142
657
1,593
441
246
839
688
710
557
906
87
149
663
685
885
169
-870
252
457
-245
-36
-133
-41
-424
669
419
1 Member banks are all national banks and those State banks which have taken membership in the Federal Reserve System.
2 Commercial and industrial loans and prior to 1956 agricultural loans. Series revised beginning October 1955, July 1958, July 1959, and A^ril 1961.
» Debits during period to demand deposit accounts except interbank and U.S. Government. Prior to 1955, relates to 344 centers outside New York City.
« Data are daily averages for December.
NOTE.—Series for all commercial banks have been revised to show seasonally adjusted data.
Between January and August 1959, series for all commercial banks expanded to include data for all banks in Alaska and Hawaii. Data for all member banks
Include Alaska and Hawaii beginning 1954 and 1959, respectively.
Source: Board of Governors of the Federal Reserve System.
CONSUMER AND REAL ESTATE CREDIT
Description of series,—These series are estimates
of short- and intermediate-term consumer credit, in
total and for major types. "Consumer credit" is defined as all credit used to finance the purchase of
commodities and services for personal consumption
or to refinance debts originally incurred for such
purposes. Credit covers both loans and sales involving deferred payment. Personal consumption
is defined to exclude consumption by businesses and
by nonprofit organizations. The estimates of consumer credit exclude home mortgage credit, which is
shown separately for 1-4 family homes in the last
column on the accompanying table.
Instalment credit, accounting for the bulk of consumer credit, is that scheduled to be repaid in two
or more payments. Instalment credit classified as
"automobile paper" includes credit for the purchase
of automobiles regardless of whether originating as
loans or as credit sales, and regardless of whether the
91491 0—62-
paper is held by a dealer or a financial institution.
Other components of total instalment credit are
"other consumer goods paper/' defined analogously
to automobile paper; "repair and modernization
loans" representing credit for repair and modernization of owner-occupied homes (but not the relatively
small amounts held by retail outlets, which are included in other consumer goods paper); and "personal loans" comprising loans by financial institutions
for all other consumer purposes, such as to consolidate
debts, to pay medical expenses, or for education.
"Noninstalment credit" comprises three major types:
charge accounts (including service station and miscellaneous credit-card accounts and home heatingoil accounts); single-payment loans; and service
credit (including that extended by a variety of
creditors including hospitals, doctors, utilities, and
service establishments).
105
Consumer Credit Outstanding, 1947-62
(Short- and intermediate-term.
End-of-month data)
BILLIONS OF DOLLARS
60
TOTAL CONSUMER CREDIT
AUTOMOBILE PAPER
\ J
10
I..I..1..I..!,.!..I,.I..I..!.,!,.[..I,,I..I
1948
1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961
1962
SOURCE CF DATA BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
The above definition is followed generally but not
rigidly in the construction of the series. In the
absence of sufficiently refined data, certain arbitrary
decisions have been made. For example, all bank
credit to farmers is excluded even though an undetermined part is for consumption. Credit for the
purchase of passenger automobiles by individuals
probably includes a relatively small amount of
credit on vehicles that are used for business purposes.
The several series on instalment credit extended
and repaid measure the gross flows of lending and
repayment which determine changes in the level of
instalment credit outstanding. The monthly series
for extensions and repayments, as shown in Economic
Indicators, are adjusted for trading day and seasonal
variation.
Data for Alaska were added in January, and for
Hawaii in August, of 1959, with an increase in total
consumer credit of approximately $180 million.
Statistical procedures.—The several series are
aggregates of separate estimates of credit held (or
extended and repaid) by various types of creditors—
financial institutions, retail and service establishments, and others. The procedures vary but in
general involve estimates based on a benchmark and
moved by monthly sample data. The 1948 Census
106
of Business and subsequent annual surveys provide
benchmarks for credit held by the various retail lines.
For the more important credit-granting lines there
are monthly and annual sample data on receivables.
For some lines monthly receivables are estimated on
the basis of weighted sales adjusted annually to
survey benchmark data. Monthly data on receivables are available from the more important
financial institutions engaged in consumer lending.
Benchmarks for credit outstanding are provided for
certain holders by annual or more frequent reports
with complete coverage, and for others by occasional
special surveys. For example, a benchmark survey
of sales and consumer finance companies (or finance
companies) was held as of June 1960, to update the
benchmark derived from a similar survey in 1955.
Estimates of service credit vary but in general are
based on less substantial data. The largest component, medical debt, is based on periodic data collected
in a sample survey of consumers and an estimated
seasonal pattern. On the other hand, virtually
complete reports on certain utility receivables are
available monthly or semiannually.
Estimates of instalment credit extended and repaid are derived from currently reporting samples of
lending and instalment-selling groups covering either
collections or credit extended. These data are
shown currently on a monthly basis by type of
credit and major hofder group. The adjustment
factors for total instalment credit for the 12 months
of 1961 are as follows:
January
February
March
April
May
June
July
August
September
October
November
December
Credit extended
Credit repaid
89
83
100
98
108
110
100
105
96
101
99
110
101
94
105
96
104
102
99
101
97
102
100
99
Relation to other series.—The series shown here
are selected from a more comprehensive body of consumer credit data prepared by Federal Reserve,
showing consumer credit outstanding by major types
in greater detail; instalment credit outstanding by
type of holder; and supplementary tabulations of
instalment credit of commercial banks, sales finance
companies, and other financial institutions, and of
noninstalment credit by type of holder. Instalment
credit extended and repaid for major types, with
changes in outstanding credit, are shown on both an
adjusted and an unadjusted basis. Related series
may also be found as components of the separate
statistics published for banks, and other financial
institutions.
Uses and limitations.—The widespread interest in
consumer credit is due in part to its importance as
a source of consumer purchasing power and especially its significance in the market for consumer
goods frequently bought on the instalment plan. In
part it is due to the fact that consumer credit reflects
one aspect of the financial position of consumers.
Consumer credit is also an important element in the
demand for funds in the financial community.
Because of the difficulty of adapting available data
to the precise definition of consumer credit adopted,
Federal Reserve faces problems of both over- and
under-coverage, the net effect of which is probably
some understatement of the true total of consumer
credit outstanding.
References.—General discussions of concepts and
sources and estimating techniques appeared in the
Federal Reserve Bulletin for April 1953 and October
1956. Consumer credit estimates appear originally
in several monthly Federal Reserve releases of which
the basic one is " Consumer Credit." Current data
with selected historical data appear in detail in
monthly issues of the Bulletin supplemented by
periodic revisions. The data are revised regularly
in the fourth quarter of each year far the preceding
year or two. A more comprehensive revision based
on the survey of finance companies in mid-1960 was
published in the December 1961 Bulletin. Historical
Statistics oj the United States, Colonial Times to 1957
contains selected data back to 1929.
Mortgage Debt Outstanding on Nonfarm One-toFour Family Properties.—Estimates of mortgage
debt on one-to-four family nonfarm homes are available for the end of each year since 1925. The present series of quarterly estimates, dating from the
first quarter of 1949, are prepared by the Federal
Home Loan Bank Board in cooperation with the
Federal Reserve Board. Quarterly estimates from
1949 to 1957 are available from the Federal Reserve
Board.
The major holders of mortgage debt are the saving
and loan companies, commercial banks, and insurance companies. Estimates of the volume of mortgage debt held by these institutions rest on firm data,
although the proportion of debt on one-to-four family properties to debt on all residential properties is
not a matter of record in most cases and must be
imputed from related information.
Data on mortgage holdings by savings and loan
associations are compiled from reports of the associations to the FHLBB or to State supervisory authorities; mortgage holdings of life insurance companies
(which include all legal reserve companies) are based
on direct reports from such companies to the FHLBB
and the Institute of Life Insurance. Home mortgage
debt held by commercial banks (including nondeposit
trust companies) are estimated by the Federal Reserve Board from related call report figures compiled
by the Federal Reserve Board, the Federal Deposit
Insurance Corporation and the Comptroller of the
Currency. Estimates for mutual savings banks are
compiled from FDIC call reports.
The mortgage debt series also covers holdings
recorded by the various Government agencies,
including the Federal National Mortgage Association, the Federal Housing Administration, the
Veterans Administration, and the Home Owners'
Loan Corporation (for the period 1935-50).
The volume of mortgages held by real estate and
mortgage companies, trust departments of commercial banks, pension funds, philanthropic institutions,
fraternal organizations, casualty and fire insurance
107
companies and by individuals is more difficult to
determine with certainty. Estimates for this miscellaneous group are based on the 1950 Census
Bureau Survey of Residential Financing, updated by
estimates of nonfarm mortgage recordings aiid related
information.
The FHLBB publishes estimates of home mortgage
debt in a quarterly release, "Estimated Home Mortgage Debt and Financing Activity," and the Federal
Reserve Board publishes estimates of various categories of real estate debt regularly in the Bulletin.
Consumer and Real Estate Credit
[Billions of dollars]
Consumer credit outstanding (end of
period; unadjusted)
Year
Instalment
Total
AutoTotal 1 mobile
paper
6.4
5.8
4.8
3. 6
3.5
3.9
3.2
2.7
2.2
1. 5
1.6
1.9
1. 4
1.0
.7
.4
.5
.6
4. 9
6. 1
6.7
6. 3
7. 2
2. 7
3.6
4.0
3. 7
4. 5
8. 3
9.2
6. 0
4. 9
5. 1
Personal
loans
Noninstalment 2
Consumer instalment credit
e x t e n d e d and
repaid
(seasonally adjusted)
Total
Automobile
paper
Mortgage
debt on
1- to 4family
homes 3
ExExtended Repaid tended Repaid
(*)
(4)
3.3
3. 1
2.6
2. 0
1.9
2.0
5.8
4.8
3.9
2. 4
2.5
3. 1
5.4
5.3
4.3
3. 1
2.4
2.8
2.6
1.9
1.3
.6
.8
1.0
2.3
2.3
1.6
1. 0
.7
.9
18.9
18.9
18. 1
16. 7
15.4
15.6
1. 0
1. 4
1. 5
1. 1
1. 5
i?
1. 1
2. 2
2.5
2.7
2. 6
2. 7
4. 2
5.6
6.3
5. 4
6. 9
3. 4
4. 7
5.9
5. 7
6. 1
1. 6
2.2
2. 4
1. 6
2. 3
1. 3
1.8
2.3
2. 0
1. 9
15. 4
15.4
15.5
15. 8
16. 3
5. 5
6. 1
3. 2
2. 1
2.2
2. 1
2.5
0. 7
.4
.4
1. 2
1.3
1. 0
.8
.9
2. 8
3. 1
2. 8
2. 8
2.9
8. 2
9.4
5. 2
4. 6
4.9
7. 2
8.9
8. 2
5. 6
4.9
3. 1
3.8
1. 0
2. 5
3.4
2. 7
1. 1
.9
17. 4
18.4
18. 2
17. 8
17.9
5. 7
8. 4
11. 6
14. 4
17. 4
2. 5
4. 2
6. 7
9. 0
11. 6
.5
1. 0
1. 9
3. 0
4. 6
1. 0
1. 5
1. 9
2. 2
2. 4
3. 2
4. 2
4. 9
5. 5
5. 8
5. 4
8. 5
12. 7
15. 6
18. 1
5. 1
6. 8
10. 2
13. 3
15. 5
1. 0
2. 0
.9
1. 4
2.7
4. 1
5. 4
18. 6
23. 0
28.2
33. 3
37. 6
1950
1951
1952
1953
1954
21. 5
22. 7
27. 5
31. 4
32. 5
14. 7
15. 3
19. 4
23. 0
23. 6
6. 1
6. 0
7. 7
9. 8
9. 8
2.8
6.8
18.4
23. 0
25. 4
28. 0
30. 5
7.0
7. 4
8. 1
8. 4
8. 9
21.6
23. 6
29. 5
31. 6
31. 1
8. 5
3. 4
4. 1
4. 8
5. 4
9.0
11. 8
13. 0
11. 8
9. 1
10. 0
10. 9
11. 8
45.2
51.7
58. 5
66. 1
75. 7
1955
1956
1957
1958
1959
38. 8
42. 3
44. 8
45. 0
51. 3
28. 9
31. 6
33. 7
33. 5
39. 0
13.4
14. 3
15. 2
14. 0
16. 2
6. 1
6. 8
7. 6
8. 1
9. 4
10. 6
11. 1
11. 5
12. 3
38.9
39. 8
41. 9
40. 0
47.8
33. 6
37. 0
39. 8
40. 2
42. 4
16. 7
15. 4
16. 3
14. 1
17. 5
13. 1
14. 5
15. 5
15. 3
15. 4
88.2
99. 0
107. 6
117. 7
130. 9
55. 8
57. 1
42. 6
43. 2
17.4
17.0
10. 5
11. 3
13. 2
14. 0
49.3
48.0
45. 8
47.4
17.4
15.8
16.2
16.3
141.3
153.4
1929 _
1930
1931
1932
1933
1934
_
_ __
1935
1936_
1937
1938
1939
1940
1941
1942
1943
1944 . _
.. _
-__
_-_
_ __
1945
1946
1947 _
1948
1949
1960
1961
- -
__ _
9.9
1 Also includes other consumer goods paper, and repair and modernization loans, not shown separately.
Consists of single-payment loans, charge accounts, and service credit.
End of period, unadjusted.
* Not available.
NOTE.—Data for Alaska and Hawaii included beginning January and August 1959, respectively.
2
8
Source: Board of Governors of the Federal Reserve System and Federal Home Loan Bank Board.
108
.8
.9
3.7
5. 2
7.0
BOND YIELDS AND INTEREST RATES
3-Month Treasury Bills
Taxable Bonds
Treasury bills are issued weekly. An average discount rate is computed for each weekly issuance, on
the basis of the varying prices at which portions of
the issue are awarded, in order, to the highest bidders.
The monthly series presented in Economic Indicators
is a simple average of the average rates for the 4 or 5
issues during the month.
The series is useful as a measure of a short-term
rate on relatively riskless borrowing. Issuance or
"auction" rates are related to but not typically
identical with average "market" rates, also published
by Federal Reserve, which are averages based on
daily trading quotations for the issue of longest
maturity.
The monthly averages are issued in an advance
Federal Reserve release, G. 13, and are published in
the Federal Reserve Bulletin. Fuller information
on the individual issues appears in the Treasury
Bulletin. Textual discussion appears in Banking
and Monetary Statistics, with yield data back to
1929.
Treasury Notes and Bonds
Two series of market yields on longer-term Treasury obligations are computed—3-5 year issues and
long-term bonds. The series covering 3-5 year issues
includes both notes and bonds and in December 1962
was composed of seven issues. On the same date,
the series on long-term bonds comprised ten issues,
all due or callable in more than 10 years. Prior to
April 1953 this series incorporated bonds due or
callable after 12 years and prior to April 1952 bonds
due or callable after 15 years.
Since 1942 both series have included fully taxable
issues. The maturity distribution of the obligations
entering into the averages varies with the passage of
time and as new issues are added or old issues
removed.
Both series are based on daily closing-bid quotations in the over-the-counter market as reported to
the Federal Reserve Bank of New York by leading
dealers in New York City, for the period April 1953 to
date. Prior to this period the yields were computed
Bond Yields and Interest Rates, 1947-62
(Monthly data.
Percent per annum)
PERCENT
5
CORPORATE AAA BONDS
(MOODY'S]
TAXABLE GOVERNMENT
PRIME COMMERCIAL PAPER
liilnlii
1947
ninLiln
nllilnl
ulnLln
1941 1949 ISSt
.hll.llll
I
MIMLI,
NIJUII, l . l . l l n l .
• Inlnl,
1U ilnlniu
nlnlnl.
ilnUi
ulilllllM
iiluluU
1951 1952 1953 1954 1955 1956 1957 1951 1959 19M 1961
1962
SOURCE! MOODY'S INVESTORS SERVICE, BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, AND TREASURY DEPARTMENT
109
on the basis of the mean of closing bid and ask quotations. The table shows averages of daily figures, each
of which is an unweighted average of yields on the
individual bonds.
The long-term series is published monthly in the
Treasury Bulletin. A similar series is published in the
Federal Reserve Bulletin, and in the Federal Reserve
release G. 13, Open Market Money Rates and Bond
Prices. The two series differ only in that the series in
the Treasury Bulletin includes yields based on "when
issued" prices for new issues. The difference is
generally very small and is limited to those months in
which new securities appear in the market. The 3-5
year series is published in the Federal Reserve Bulletin
and the G. 13 release.
railroad, and 10 public utility bonds. Since 1935,
however, there have not always been 10 suitable
bonds for each classification. The Aaa series currently includes 8 industrials, 6 railroads, and 10
public utilities; and the Baa 10 industrials, 10 railroads, and 10 public utilities.
The series were calculated on a monthly basis
from 1919 through 1931, and have been calculated
daily beginning in 1932. Weekly and monthly figures are averages of daily figures; annual figures are
averages of 12 monthly figures.
The daily yield for each selected bond is computed on the basis of closing price, as reported in
dealers' quotations. For each of the rating classifications the 10 (or fewer) individual yields for each
industrial group are averaged, without weighting;
and the corporate index is computed as the unHigh-Grade Municipal Bonds
weighted average of the 3 industrial-group averages
This series, compiled by Standard & Poor's CorIssues included in each average are selected to
poration, is an arithmetic average of the yield to represent typical long-term bonds in each rating
maturity of 15 high-grade domestic municipal bonds, group. Occasional substitutions in the bond list
each with approximately 20 years to maturity. The have been made when ratings have been changed,
issues are selected on the basis of quality, trading when a bond has been called or sells too high above
activity, and geographic representation. The bonds its call price, or because of approaching maturity.
vary in quality, however, as is indicated by the fact Suitable adjustments (usually small), which are
that the yield sometimes exceeds that of U.S. taxable gradually amortized, are introduced to prevent such
bonds. The yields are based on Wednesday's closing substitutions from impairing the comparability of
prices, and the monthly figures are averages of the the series.
four or five weekly figures for the month. Prior to
These series are useful general indicators of the
1929 the monthly figures were based on an average level and movement of average yields of selected
of the high and low prices for the month. The series seasoned bonds of the respective grades with suffiis available from 1929 on a weekly, and from 1900 ciently long maturities and other features to afford
on a monthly basis.
adequate measures of long-term interest rates. They
The series is published weekly in Standard & are not a measure of average yields of all Aaa or all
Poor's Outlook and Bond Outlook. Monthly and Baa bonds available to the investor particularly those
annual average figures back to 1900 and a descrip- on new offerings; nor do they reflect changes in qualition of the series and list of the issues used appear tative terms of borrowing such as call provisions.
in the 1962 edition of Standard & Poor's Security
The daily corporate bond yield averages are pubPrice Index Record.
lished weekly in Moody1 s Bond Survey, which includes from time to time the list of bonds. Historical
Corporate Aaa and Baa Bonds
monthly data and annual averages for these two
These series measure the currently prevailing
series are available back to 1919, and are published
maturity yields on seasoned long-term corporate
in Moody1 s Industrial Manual.
bonds of the highest quality and of "lower medium
grade," as reflected in the yields of selected bonds Prime Commercial Paper
rated Aaa and Baa by Moody's Investors Service.
This series measures the prevailing rate on prime
The series shown here are 2 of a group of similar series
4
to
6 months' commercial paper. It is useful as a
computed by Moody's, covering bonds classified by 4
measure
of the cost of open-market short-term credit
rating groups (Aaa, Aa, A, Baa) and by 3 industrial
groups. The formula for these series was established available to large business borrowers of the highest
in 1928 to include for each rating 10 industrial, 10 credit standing.
no
The prevailing daily selling quotation is determined by the Federal Reserve Bank of New York on
the basis of information obtained through continuing contracts with New York City dealers handling
the bulk of the volume of commercial paper of the
inventory type, and less frequent reports concerning
rates outside New York. Monthly and weekly figures
are averages of daily prevailing rates.
Annual, monthly, and weekly figures for the period
since 1941 are available in the Federal Reserve Bulletin, and the most recent data are shown in the
advance Federal Reserve monthly release, G. 13.
Annual and monthly data, 1890-1941, and weekly
data, 1919-41, may be found in Banking and Monetary Statistics.
Bond Yields and Interest Rates
[Percent per annum]
U.S. Government
security yields
Year
3-month
Treasury
bills i
3-5 year
issues 2
Taxable
bonds 3
High-grade
municipal
bonds
(Standard
& Poor's)
Corporate bonds
(Moody's)
Aaa
Prime commercial
FHA new
paper, 4-6 home mortmonths
gage yields4
Baa
1929
4.27
4.73
5.90
5. 85
1930
1931
1932
1933
1934
2. 66
2. 12
4.07
4.01
4. 65
4. 71
4. 03
4. 55
4.58
5.01
4. 49
4. 00
5.90
7.62
9.30
7. 76
6. 32
3.59
2. 64
2.73
1. 73
1. 02
3. 60
3. 24
3.26
3. 19
3. 01
5. 75
4. 77
5.03
5. 80
4. 96
75
. 75
.94
81
. 59
4. 75
4.33
4. 28
3. 91
3. 61
.56
. 53
. 66
. 69
. 73
1. 402
.879
. 515
. 256
(5)
(5)
(5)
(5)
1935
1936
1937
1938
1939
.
.
.
.
.
137
143
447
053
023
1. 29
1. 11
1.40
. 83
. 59
3.
3.
3.
2.
2.
1940
1941
1942
1943
1944
.014
. 103
. 326
. 373
. 375
.50
.76
1. 13
1.34
1.33
2. 46
2. 47
2. 48
2.50
2. 10
2. 36
2. 06
1. 86
2.
2.
2.
2.
2.
1945
1946
1947_
1948
1949
. 375
. 375
.594
1. 040
1. 102
1. 18
1. 16
1.32
1. 62
1.43
2. 37
2. 19
2.25
2. 44
2. 31
1.
1.
2.
2.
2.
67
64
01
40
21
2. 62
2. 53
2. 61
2.82
2. 66
3.
3.
3.
3.
3.
29
05
24
47
42
. 75
. 81
1.03
1. 44
1. 49
1. 218
1.552
1. 766
1.931
. 953
1. 50
1.93
2. 13
2.56
1. 82
2.
2.
2.
2.
2.
32
57
68
94
55
1. 98
2.00
2. 19
2. 72
2. 37
2. 62
2.86
2. 96
3.20
2. 90
3. 24
3.41
3. 52
3.74
3. 51
1. 45
2. 16
2. 33
2.52
1. 58
4. 17
4.21
4. 29
4. 61
4. 62
1. 753
2.658
3. 267
1.839
3. 405
2. 50
3. 12
3.62
2.90
4.33
2. 84
3.08
3. 47
3.43
4. 08
2. 53
2.93
3. 60
3.56
3.95
3. 06
3.36
3. 89
3.79
4. 38
3. 53
3.88
4. 71
4. 73
5. 05
2. 18
3.31
3. 81
2.46
3. 97
4. 64
4. 79
5. 42
5. 49
5.71
2. 928
2.378
3.99
3.60
4. 02
3. 90
3. 73
3. 46
4. 41
4.35
5. 19
5.08
3. 85
2.97
5.81
1950
1951_
1952
1953
1954
1955
1956
1957
1958
1959
_
__
_ _
.
1960
1961
40
07
10
91
76
84
77
83
73
72
(5)
(5)
(5)
(5)
(5)
(5)
(5)
(5)
(5)
4. 34
6. 18
1 Rate on new issues within period.
Selected note and bond issues. Prior to 1941 these were tax-exempt issues.
Series includes: April 1953 to date, bonds due or callable 10 years and after; April 1952-March 1953, bonds due or callable after 12 years; October 1941-March 1952,
bpnds due or callable after 15 years.
*5 Based on the maximum permissible interest rate (5J4% since May 1961), and 25-year mortgages paid in 12 years.
Not available.
Sources: Treasury Department, Board of Governors of the Federal Reserve System, Federal Housing Administration, Standard &• Poor's Corporation, and
Moody's Investors Service.
2
3
Ill
FHA New Home Mortgage Yields
Yields on mortgages on new homes insured by the
Federal Housing Administration are computed from
a national average of secondary market prices.
Mortgages in this series carry FHA's maximum permissible interest rate, and a maturity of 25 years, and
the assumption is made that they will be prepaid
at the end of 12 years. Data on prices per $100 of
mortgage loan amount are based on FHA field office
opinion reports on transactions in market areas of
insuring office cities as of the first of each month.
Transactions are for immediate delivery of home
mortgages in the secondary market and exclude
seasoned mortgages or deliveries to Federal National
Mortgage Association. Average prices are net after
discounts, commitment fees, or other charges.
Price quotations prior to January 1956 represent
typical transactions; after that date, they represent
new-home mortgages with a 10 percent downpayment and a 25-year maturity. Prior to March 1956,
the national average prices were unweighted; subsequently, data have been weighted to reflect the probable volume of transactions in the various insuring
office areas. After a regulatory change in FHA's
maximum permissible interest rate, generally a lapse
of about two months is required before a national
average price can be computed on a firm basis for
mortgages bearing the new interest rate.
COMMON STOCK PRICES, YIELD, AND EARNINGS
SEC Common Stock Prices
through 1959. (The indexes were formerly related to
a 1939 base year but were revised to the present
Description of series.—These indexes measure average price movement of 300 of the more active com- 1957-1959 base in October 1960.) Each industry is
mon stocks listed on the New York Stock Exchange. weighted in the larger aggregates according to the
The indexes, as presently constituted, are based upon value of the selected issues, and not necessarily acthe average weekly market prices in the years 1957- cording to the value of all listed issues in the industry.
When the number of outstanding shares of an
1959. The stocks, classified in Economic Indicators
issue
is changed an adjustment of the index is made
only by broad categories, are also classified in the
only
if
such change involves a change in the invested
basic releases under 32 selected industry groups.
capital.
The base value of the issue is then revised
These groups and the individual stocks in them were
in
the
ratio
of the new to the old capitalization so that
selected on the basis of common stock trading acthe
index
will
reflect only price movement.
tivity on the Exchange in 1959. Each year the entire
Uses
and
limitations.—This
is a moderately sensicommon stock list is reviewed and newly active stocks
tive
weekly
index
presented
in
terms of categories
substituted for the less active issues in the indexes
comparable
with
the
Standard
Industrial
Classificawhen appropriate. The selected groups correspond in
tion—a
feature
which
facilitates
use
in
conjunction
general to classifications in the Standard Industrial
Classification. The stocks thus selected from a total with other series so presented. The indexes will not
of approximately 1,100 listed common stocks ac- necessarily reflect weekly price movements of stocks
count for over 70 percent of the value of common- not listed on the New York Stock Exchange.
References.—The SEC data are first published in a
stock trading activity on the New York Stock
release
issued each Monday entitled "SEC Indexes of
Exchange.
Weekly
Closing Prices of Common Stocks on the New
The prices reflected in the indexes are for the last
York
Stock
Exchange," showing data for the 2 presales of the respective stocks during the week as revious
weeks,
with percent change. The monthly
ported in the financial press. Monthly and annual
SEC
Statistical
Bulletin shows price and change data
figures are averages of weekly figures.
for
the
4
or
5
latest
weeks. Data back to 1939 on a
Statistical procedures.—The index for each of the
weekly
and
monthly
basis are available on request.
32 industry groups measures the total current market
A
release
entitled
"Computation
of SEC Index,"
value of the included issues (i.e., number of shares
which
includes
a
list
of
the
selected
stocks, may be
outstanding times price) as a percentage of their
average weekly total market value in the years 1957 obtained from SEC.
112
Common Stock Prices, 1947-62
(Monthly data)
INDEX 1957-59 = 100
200
150
TRADE, FINANCE AND SERVICE
100
MANUFACTURING
I..!..!.. .iliilnl.i ..I.IIMII. filiililln nliilnlu ..loll.I.. ..I..I..In nluI..l.i i.l.il..!.. ..I..I..I.. . . I . . ..In ..I..I..I.. ..I..I.,I,, ..I,.I..I..
T947
1949
1951 1951 195? 1953 1954 1955 1956 1957 1958 1959 1960 1961
1962
SOURCE OF DATA: SECURITIES AND EXCHANGE COMMISSION
Standard & Poor's Indexes
is weighted according to the number of shares outstanding in the base period. Appropriate adjustPrice Indexes
ments in weights and/or base period values are made
The Standard & Poor's price index shown here on the occasion of stock dividends, split-ups, consoliis the basis for the computation of the price-earnings dations or similar events, to insure that the index
and dividend-price ratios of the same organization. will reflect only price movement.
The Standard & Poor's Corporation provides
The composite price index measures the average price
movement of a sample of common stocks listed on also stock price indexes for the four main categories
the New York Stock Exchange. The sample cur- hourly, with closing and high and low prices for the
rently includes 500. The sample is not a random day.
The SEC and S & P composite stock indexes are
one, but is selected from the more actively traded
generally
similar in coverage, concept, and moveshares. The index is currently based on 1941-^3
ment.
It
should be noted that both series cover
weights, for which period the aggregate value of the
active
listed
stocks on the New York Stock Exchange
shares of the securities is considered equal to 10.
only,
and
may
not reflect price movements in other
Weekly, monthly and annual figures are averages of
exchanges
or
over-the-counter
issues.
daily figures.
The index is computed also for three main sub- Price-Earnings Ratio and Yields
groups: industrials (also shown separately in Economic Indicators), rails, and utilities; and for 101 The price-earnings ratio compares the aggregate
industry groups.
value of the stocks in the index as of the last day of
The index measures fluctuations in current market the quarter with quarterly earnings, adjusted for
values of the covered stocks. Each component stock seasonal influences and converted to an annual rate.
113
Since 1935, annual data are averages of the four
quarterly ratios. Prior to that time annual data
are based on annual earnings and end of year prices.
Yield, or dividend-price ratio is the ratio of the
current annual rate of cash dividends to Wednesday
closing prices. Annual data are monthly averages of
the weekly series. The current annual cash dividends will depend on recent dividend pay-outs
adjusted for such seasonal or irregular factors as
S. & P. deems appropriate.
References: Standard & Poor's Corporation, New
York City.
Common Stock Prices, Yield, and Earnings
Securities and Exchange Commission price index
Year
Price index 2
Manufacturing
Composite 1
Total
Durable
Nondurable
Transportation
Standard & Poor's common stock
data
Utilities
Total
1957-59-100
Industrial
Dividend
Price/
yield 3 earnings
(perratio 4
cent)
1941 43=10
1929...
26.02
21.35
3.47
13.32
1930—
1931___
1932___
1933—
1934—
21.03
13. 66
6.93
8.96
9. 84
16.42
10.51
5.37
7.61
9.00
4. 51
6. 15
7.43
4.21
3.72
15.81
13.31
16.80
22.95
19. 39
1935__.
1936___
1937___
10. 60
15.47
15. 41
11. 49
12.06
10. 13
14. 69
14.97
11.39
11.77
3.82
3. 44
4.86
5. 18
4.05
14. 18
15. 44
12. 38
18.38
13.80
11.02
9.82
8. 67
11.50
12.47
10. 69
9. 72
8.78
11. 49
12.34
5.59
6.82
7. 24
4. 93
4.86
10.24
8. 26
8.80
12. 84
13. 66
1938—
1939—
26.8
21.2
22.3
20.3
33.8
1944—
1945—
1946—
1947—
1948—
1949—
25.3
23.0
20. 1
26.6
29.0
19. 8
18.0
16. 0
21.0
22. 7
20.6
18. 2
16.4
21. 1
23. 4
19. 1
17. 9
15. 7
21. 0
22.2
33. 5
32. 6
30.7
42.3
47. 6
()
55.4
55. 4
49. 4
38.7
50.2
54.9
35.2
40. 1
35. 1
35. 6
34.3
27.4
31.
28.
29.
28.
1
1
1
1
28.8
30.9
26.8
27. 7
25.9
26.3
31. 4
29.4
30.2
29.9
64.2
68. 4
50. 4
53.4
46.0
62. 6
67. 1
58. 5
55.0
54. 4
15. 16
17.08
15. 17
15.53
15. 23
14.72
16. 48
14.85
15.34
15. 00
4. 17
3. 85
4.93
5. 54
6. 59
16. 33
17. 69
9.36
6. 90
6. 64
1950—
1951—
1952—
1953—
1954—
41. 4
49.6
52.3
51.9
61. 7
35.2
43.9
46. 8
46.7
57. 6
33. 5
39. 8
42. 1
43.0
54. 7
36. 6
47. 4
50. 7
49. 8
60.0
54. 1
67.3
74.6
73. 9
78.6
60. 4
62. 4
65. 4
67.3
75.3
18. 40
22. 34
24. 50
24. 73
29.69
18.
22.
24.
24.
30.
33
68
78
84
25
6. 57
6. 13
5. 80
5.80
4. 95
6. 63
9. 27
10. 47
9. 69
11. 25
1955—
1956—
1957—
1958—
1959___
81.8
92.6
89.8
93.2
116.7
79. 5
93.2
90.7
92.5
116.5
78. 7
91. 5
88.5
90.4
120.8
80. 1
94. 5
92.8
94. 4
112. 6
108.2
110. 6
93. 2
91.0
115.6
84.8
86.4
86. 3
95.8
117.6
40. 49
46.62
44. 38
46.24
57.38
42. 40
49.80
47.63
49. 36
61.45
4.08
4.09
4.35
3. 97
3.23
11.50
14. 05
12.89
16. 64
17. 04
I960—
1961 —
113. 9
134. 2
110.9
126.7
117. 3
129.2
104.9
124. 4
95.8
105. 7
129.3
168.4
55. 85
66.27
59.43
69. 99
3.47
2.98
17.08
21. 18
1940___
1941__
1942___
1943—
1
2
3
4
Includes 300 common stocks: manufacturing, 193; transportation, 18; utilities, 34; trade, finance, and service, 45; mining, 10.
Includes 500 common stocks of which 425 are industrials. Average of daily figures.
Annual yields are averages of monthly data.
Annual ratios are averages of quarterly data,
s Not available.
Sources: Securities and Exchange Commission and Standard & Poor's Corporation.
114
FEDERAL FINANCE
FEDERAL BUDGET RECEIPTS AND EXPENDITURES
Description of series.—Budget receipts and expenditures are frequently referred to as the conventional or administrative budget, to distinguish them
from other budget concepts. They measure the
financial transactions of all federally-owned Government funds. Budget receipts are derived mainly
from individual and corporate income taxes, but also
from excise taxes, estate and gift taxes, customs
duties, and from miscellaneous sources such as rents,
fines, fees, sales of products and services, and collections on certain loans and investments. Budget
expenditures primarily include outlays for goods and
services, transfer payments to individuals, aids to
States, loans, purchases of financial and other existing
assets, and Government contributions as employer
to civilian retirement and social security trust funds.
Transactions of trust funds, representing monies
held in trust by the Government for specific purposes,
are excluded from both budget receipts and
expenditures.
"Net budget receipts," as shown in the table on the
following page, represent the total revenues collected
for the general fund and for special federally owned
funds whose receipts are earmarked under law for
specific purposes, less (a) refunds of receipts, (b)
transfers of receipts to trust funds in those cases
where the law provides an indefinite appropriation
to a trust fund in an amount based on certain tax
receipts, and (c) certain interfund transactions,
namely those general or special fund receipts which
are also expenditures of a Government-owned fund.
Budget receipts do not include money obtained from
borrowing; nor do they include receipts of public
enterprise revolving funds (such as the postal fund
and most Government corporations) or of intragovernmental revolving and management funds,
since these funds are included on a net expenditure
basis in budget expenditures figures.
"Net budget expenditures" cover Governmentowned funds; namely, the general fund, the special
funds, the public enterprise revolving funds, and the
intragovernmental revolving and management funds.
Expenditures for the public enterprise funds and for
the intragovernmental funds are included in the totals
on a net basis—that is, their collections are deducted
from gross expenditures and the net results are
budget expenditures. Certain interfund transactions
(namely, general or special fund receipts which are
also expenditures of a Government-owned fund) are
deducted to avoid double counting. Interest paid to
the Treasury by such funds is the major category of
this kind. Payments to the general fund of earnings
and dividends on capital of revolving funds, and the
return of such capital to the general fund, are also
excluded to avoid double counting.
Net budget expenditures do not include retirement
of Government debt, nor do they include investments
of Government enterprises in United States securities.
"National defense/7 shown in the table, is a major
classification of budget expenditures which is currently used in the budget. It comprises: (1)
military activities of the Department of Defense,
including military functions and military assistance
to other nations; (2) development and control of
atomic energy; and (3) stockpiling and certain other
defense-related activities.
The "budget surplus or deficit" represents the
difference between budget receipts and budget
expenditures.
The "public debt" figures shown consist of all
securities issued or guaranteed by the U.S. Government, excluding guaranteed securities held by the
Treasury.
The budget surplus or deficit is not the only factor
which affects the size of the public debt, although
it is generally the major factor. The other factors
affecting the size of the debt are: (1) changes in
Government cash balances; (2) trust fund transactions; (3) the use of Government corporation borrowing directly from the public or the utilization of
115
their net receipts to repay such borrowing; and
(4) changes in the amount of checks outstanding.
Statistical procedures.—Data on budget receipts
and expenditures for actual past periods are derived
for the most part from accounting records rather
than statistical estimating procedures. Budget receipts and expenditures are published each month
by the Treasury Department in the Monthly Statement of Receipts and Expenditures of the United
States Government.
Under a reporting procedure instituted in February
1954 (which also cover* comparative d^ta for part of
fiscal 1953), budget expenditures are reported on the
basis of checks issued or cash payments made by
Government disbursing officers, except that since
June 1955, interest on the public debt has been
reported on an accrual basis.
Data for fiscal 1952 and earlier were reported on a
different basis under which receipt and expenditure
totals were derived primarily from daily telegraphic
reports from Federal Reserve Banks reporting deposits and withdrawals clearing through the accounts
of the Treasurer of the United States.
The public debt is published in the Daily Statement of the United States Treasury (with details at
the end of each month) as well as in the Monthly
Statement.
Relation to other series.'—Budget receipts and expenditures are one of the five major series dealing
with Federal Government income and outgo. The
others are:
1. Cash receipts from and payments to the public.
2. Cash deposits in and withdrawals from the
Account of the Treasurer of the United States.
3. Federal receipts and expenditures in the national income accounts.
4. Federal revenue and expenditures as reported
by the Bureau of the Census.
The differences among these various measures are
mainly ones of coverage and timing. Significant
specific differences are:
(on a net basis) in cash payments to the public and
(to the extent such transactions affect the Treasurer's
cash position) in cash withdrawals.
3. Cash withdrawals, payments to the public, and
Federal expenditures as reported by the Census
include actual disbursements for interest rather than
interest accruals.
4. Federal receipts and expenditures in the
national income accounts and Federal revenue and
expenditure as reported by Census exclude loans,
loan repayments, and related financial investments
from both receipts and expenditures.
5. Federal expenditures in the national income
accounts exclude purchases of existing physical
assets.
6. Census figures record transactions of some
public enterprises such as the Post Office on a gross
rather than a net basis—that is, postal receipts
are counted as revenue rather than as an offset to
expenditures.
(b) Timing
7. Budget receipts as well as cash receipts are
by-and-large on a cash basis, whereas Federal receipts
in the national income accounts record tax revenues
mainly on an accrual basis.
8. Budget expenditures are on a checks-issued
basis whereas payments to the public and Treasury
cash withdrawals are recorded on a checks-paid basis.
9. Budget expenditures are largely measured at
the time of payment, whereas that portion of Federal
expenditures in the national income accounts which
consists of purchases of goods and services is reported
at the time of delivery.
Uses and limitations.—The main use for budget
receipts and expenditures is as a guide to executive
and legislative budget and tax policy. Budget
receipts and expenditures figure prominently in the
annual budget process, involving the projection of
fund requirements by Government agencies, and
preparation of an integrated executive budget including estimates under both existing law and
(a) Coverage
under proposed changes in laws and programs.
The administrative budget also is the vehicle for
1. All four of the other measures are more com- congressional review and enactment of annual approprehensive than budget receipts and expenditures, priation bills, agency financial management, and it
since they encompass, in addition to budget amounts, also is a prime consideration in changes in tax legislathe very sizable transactions of Federal trust funds tion. Moreover, the relationship between the totals
of budget receipts and budget expenditures usually
with the public.
2. Transactions of five Government-sponsored serves as the major determinant of increases or
enterprises not included in the budget are included decreases in the public debt. Finally, since this
116
series is prepared in detail based on the Government's
financial accounts, it is a basic source of data for
various other series on Federal financial transactions
which are more important for economic analysis.
For purposes of appraising the effect of Federal
financial transactions on the economy, however, this
series has important limitations. For example, the
operations of the trust funds and Governmentsponsored enterprises play an important role in the
economy which is not reflected in the budget figures.
Moreover, business activity may be influenced by
Government financial operations long before such
Federal Budget Receipts and Expenditures
[Billions of dollars]
Net budget expenditures
Fiscal year
Net budget
receipts
National defense 1
Total
Department
of Defense
military 2
Total
Budget surplus or
deficit ( —)
Public debt
(end of
period) 3
1929 _
3.9
3. 1
0.7
0. 7
0.7
16.9
1930_
1931.
1932.
1933 _
1934 _
4. 1
3. 1
1.9
2.0
3. 1
3.3
3.6
4.7
4.6
6. 7
.7
.7
.7
.6
.5
.7
.7
.7
.6
.5
.7
-.5
-2.7
-2.6
-3.6
16.2
16.8
19.5
22.5
27.7
1935 _
1936 _
1937.
19381939.
3.7
4. 1
5.0
5.6
5.0
6.5
8.5
7.8
6.8
8.9
.7
.9
.9
1.0
1. 1
.7
.9
1.0
1. 1
-2.8
-4.4
-2.8
-1.2
-3.9
32.8
38. 5
41. 1
42. 0
45.9
1940.
1941.
1942 _
1943_
1944.
5. 1
7. 1
12. 6
22. 0
43.6
9. 1
13.3
34.0
79.4
s)5. 1
1.5
6. 1
24. 0
63.2
76.8
1.5
6.0
23.9
63.2
76.7
-3.9
-6.2
-21.5
-57.4
-51.4
48. 5
55.3
77.0
140.8
202. 6
1945.
1946.
1947 4_
1948
1949.
44. 5
39.8
39.8
41. 4
37.7
98.4
60.4
39.0
33.0
39.5
81.3
43.2
14.4
11.8
12.9
81.2
43.2
14.2
11.2
12.0
-53.9
-20.7
.8
8.4
-1.8
259. 1
269.9
258.4
252.4
252. 8
1950.
1951.
1952_
1953,
1954_
36.4
47.5
61. 3
64.7
64. 4
39. 5
44. 0
65.3
74. 1
67.5
13.0
22. 5
44. 0
50.4
47. 0
12. 0
20.8
41.3
47. 6
44. 0
-3. 1
3.5
-4.0
-9.4
-3. 1
257.4
255.3
259.2
266. 1
271.3
1955.
1956.
19571958.
1959-
60. 2
67. 8
70.6
68.5
67.9
64. 4
66.2
69.0
71.4
80.3
40. 7
40.7
43. 4
44.2
46.5
37.8
38. 4
40.8
41.3
43.6
-4. 2
1.6
1. 6
-12. 4
274. 4
272.8
270. 6
276.4
284.8
1960.
19611962«
77.8
77.7
81.4
76.5
81. 5
87.7
45.7
47.5
51. 1
42.8
44.7
48.2
1.2
-3.9
-6.3
286. 5
289. 2
298. 6
.9
9 ft
1 Includes military functions of Department of Defense, military assistance, Atomic Energy Commission, stockpiling, defense production expansion, and certain
other defense-related activities. For 1942-46, ?lso includes Coast Guard.
23 Military functions and military assistance.
Includes guaranteed securities held outside the Treasury. Not all of total shown is subject to statutory debt limitation.
* Beginning in 1948, total budget receipts and expenditures have been adjusted to exclude certain intragovernmental transactions.
« Preliminary.
Sources: Treasury Department and Bureau of the Budget.
117
operations are reflected in the figures on budget
expenditures or receipts; some of the economic impact
is reflected at the stage when contracts for goods and
services are let, i.e., when obligations are incurred, or
when tax liabilities accrue. In addition, Federal
guaranties and insurance of private loans also influence the economy, although they have a relatively
minor effect on budget receipts or expenditures.
References.—The basic release of the budget receipts and expenditures data is made in the Monthly
Statement of Receipts and Expenditures of the United
States Government issued by the Treasury Department. A description of the basis for this statement
is summarized in current issues of the Treasury
Bulletin, page II. Annual data are available in the
Budgets of the United States Government issued by
the Bureau of the Budget, and are also reported in
the Combined Statement of Receipts, Expenditures,
and Balances of the United States Government, issued
by the Treasury Department. Data beginning with
1789 are published in the Annual Report of the Secretary of the Treasury on the State of the Finances. For
further detail on the relation of Federal Government
receipts and expenditures in the national income
accounts to the Budget, see table 111-10 in the U.S.
Income and Output and Part 6, "Special Analyses"
in the Budget of the United States Government for
fiscal 1963.
FEDERAL CASH RECEIPTS FROM AND PAYMENTS TO THE PUBLIC
Description of series.—These series, often referred
to as the Consolidated cash statement, present information on the cash flows between the public and the
Federal Government as a whole. They represent, in
effect, a consolidated statement of Federal cash
transactions with the public—other than borrowing.
The public is defined to include individuals, banks,
other private corporations and associations, unincorporated businesses, the Federal Reserve System,
the Postal Savings System, State and local governments, foreign governments, and international organizations. The Government includes, in addition
to the Federal funds comprising budget receipts and
expenditures, the transactions of trust and deposit
funds and of Government-sponsored enterprises.
Statistical procedures.—Annual totals and unadjusted monthly and quarterly cash receipts from
and payments to the public are taken from accounting records rather than statistical estimates. These
series are based on data published in the Monthly
Statement of Receipts and Expenditures of the United
States Government and the Daily Statement of the
United States Treasury.
The figures on Federal cash receipts from and payments to the public are derived from the conventional
budget data by making three basic adjustments: (1)
adding receipts and expenditures of Federal trust and
deposit funds, and certain net transactions of Government-sponsored enterprises which are not considered a part of the Government in the conventional
budget figures (the enterprises are the Federal Deposit Insurance Corporation, Federal land banks,
Federal home loan banks, banks for cooperatives,
118
and—after January 1, 1959—the Federal intermediate credit banks); (2) eliminating intragovernmental
transactions which do not involve any flow of money
with the public; and (3) shifting to a cash basis (i.e.,
a checks-paid basis) certain noncash transactions
recorded as receipts or expenditures in the budget
and trust accounts. For example, the semiannual
increase in the redemption value of Series E savings
bonds, although a part of budget expenditures, is deducted from cash payments while interest actually
paid in cash to the public on savings bonds redeemed
during the years is added. Receipts of the Government from exercise of the monetary authority—
seigniorage on silver—are subtracted as are payments
to certain international organizations made in the
form of notes. When the notes are redeemed, this
constitutes a cash outflow and is cash payments.
Historical data have been adjusted wherever possible for conceptual and statistical revisions of this
series. Data beginning with fiscal year 1953 and
calendar year 1954 are on the reporting basis instituted in February 1954.
Seasonally adjusted data published in Economic
Indicators have been derived by applying the Census
Bureau's Univac X-3 and X-9 methods to the two
totals—cash receipts and cash payments. Data
from 1960 to date are adjusted using the Univac
X-9 method, while earlier years' data are adjusted
by the Univac X-3 method. (Both of these methods
are variants of the Univac II method.) The data for
the earlier years have not been revised to the X-9
method because of the small differences involved and
Cash Receipts From and Payments to the Public, 1947-62
{Quarterly data.
Seasonally adjusted)
BILLIONS OF DOLLARS
30
25
20
15
ri
/
10
EXCESS OF RECEIPTS OR PAYMENTS ( -
-5
1 , I , I , 1 • I , 1 , I , I , I , I , I • I • I , 1 i 1, 1, I , 1 , I , 1 , I , I , I , I ,
1947
,
I
i
1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961
J_
1962
SOURCE OF DATA: BUREAU OF THE BUDGET
the experimental nature of the seasonal adjustment
procedures for this series.
Relation to other series.—The major differences
between "cash receipts and expenditures" and
"budget receipts and expenditures" were enumerated
above. The cash series are very similar in general
concept to the series on Treasury cash deposits and
withdrawals published in the Daily Statement oj the
United States Treasury. Both series and the reconciliation between the two are published monthly in
the Treasury Bulletin.
Principal differences between the cash receipts
and payments series and the other major series
have been discussed in the section on the administrative budget and are as follows:
1. Federal Government receipts and expenditures
in the national income accounts and Federal revenue
and expenditure as reported by the Census exclude
loans, loan repayments, mortgage purchases, and
similar financial investments.
2. That part of Federal expenditures for goods
and services in the national income accounts consisting of purchases of goods and are recorded to the
maximum extent possible on/ the basis of time of
delivery rather than time-of payment.
3. Federal Government employer and employee
contributions to employee retirement funds are considered intragovernmental transactions and are deducted from both receipts and payments in arriving
at the consolidated cash totals, whereas in the
national income accounts, payments of both employers and employees are counted both as receipts
("contributions for social insurance") and expenditures ("purchases of goods and services—compensation of employees"). In Federal revenue and expenditure as recorded by the Census, the Federal
Government's contribution as employer is deducted
as an intragovernmental transaction (but not employee contributions).
4. Transactions of public enterprises such as the
Post Office are recorded gross in the Census tabulation of Federal revenue and expenditure but net in
Federal cash receipts from and payments to the
public.
Uses and limitations.—The series on receipts from
and payments to the public is a more complete
119
Federal Cash Receipts From and Payments to the Public
[Billions of dollars]
Year
Fiscal year:
1929—
Cash receipts
from the
public
Cash payments to
the public
Q
3.8
2
1930.
1931_
1932.
1933.
1934.
4.0
3.2
2.0
3. 1
4. 1
2. 1
3. 1
4.8
4.7
6.4
1935.
1936.
1937.
1938.
1939.
3.8
4.2
5.6
7.0
6.6
6.3
7.6
8.4
7.2
9.4
1940..
1941..
1942..
1943.
1944 i
6.9
9.2
1945.
1946.
1947.
1948.
1949.
1950.
1951.
1952.
1953.
1954.
1955
1956
1957
1958
1959
1960
1961
19623
Calendar year:
1943 4
1944
1945.
1946.
1947.
1948.
1949.
1950.
1951.
1952.
19531954_
15. 1
25. 1
47.8
50.2
43. 5
43.5
45.4
41.6
40.9
53.4
68.0
71.5
71.6
67.8
77. 1
82. 1
81.9
81.7
95. 1
97.2
101.9
37.9
48. 1
49.4
41.4
44. 3
44.9
41.3
42.4
59.3
71.3
70.2
68.6
71.4
80. 3
84. 5
81.7
87.6
98.3
97.9
9.6
14.0
34.5
78.9
94.0
95.2
61.7
36.9
36.5
40.6
43. 1
45.8
68.0
76.8
71.9
70.5
72.6
80.0
83.4
94.8
94.3
99.5
107.6
89.0
94.8
86. 1
41.4
38.6
36.9
42. 6
42.0
58.0
72.0
77.4
69.7
72.2
74.8
83.3
89.0
95.6
94.7
104.7
Excess of
receipts
or payments ( —)
0.8
.9
-1.0
-2.7
-2.6
-3.3
-2.4
-3.5
-2.8
-. 1
-2.9
-2.7
-4.8
-19.4
-53.8
-46. 1
-45.0
-18.2
6.6
8.9
1.0
-2.2
7.6
-5.3
-. 2
-2.7
4. 5
2. 1
-1.5
-13. 1
.8
-2.3
-5.7
-51. 1
-46.7
-36.7
5.7
8.0
-1.3
.5
1.2
-.6
-7.2
-1. 1
-. 7
1955...
1956...
5.5
1957-.
1.2
1958—
-7.3
1959-.
-8.0
I960...
3.6
1961 3_
-6.8
i Data forfiscalyears prior to 1944 are2 not exactly comparable with those for later years in that only major intragovernmental transactions have been eliminated in the earlier years.
Less than $50 million.
3 Preliminary.
* First calendar year for which data are available.
Sources: Treasury Department and Bureau of the Budget.
120
measure of the impact of Federal financial transactions on the economy than budget receipts and
expenditures. Moreover, since it furnishes comprehensive totals of cash transactions, the consolidated
cash series is valuable for determining Government
financing and net borrowing requirements and for
analyzing the financial impact of the Government's
overall program. Nevertheless, for purposes of
economic analysis the cash receipts and payments
series has certain shortcomings.
Any series on overall Government transactions is
necessarily an aggregation of many different kinds
of transactions with widely varying economic effects.
Government loans and purchases of existing assets in
most cases do not have the same impact as an equivalent sum expended for Government purchases of
currently produced goods and services. Equivalent
sums collected from income taxes or estate taxes
may also be expected to vary in effect. The date of
accrual of tax liabilities may have a more important
impact on the economy than the actual tax payment.
Other steps in the Federal financial process may
be important indicators of economic impact. An
expansion in new appropriations and in Government
orders can stimulate business activity before the
authorized funds are paid to the public. Likewise,
the enactment of a tax measure may affect business
activity before the cash flows involved between the
Federal Government and the public take place.
Finally, other financial activities have important
economic effects. For example, Federal guaranties
and insurance of private loans influence the economy
even though they normally have little or no immediate impact on Federal receipts from and payments to the public. Aside from the significance
of interest payments to the public, the management of
the public debt is a factor which has particular impact in the money and credit markets of the economy.
References.—Unadjusted monthly data on Federal
cash receipts from and payments to the public
appear in the Treasury Bulletin and the Federal
Reserve Bulletin, and quarterly data in Economic
Indicators and the Federal Reserve Bulletin. Seasonally adjusted quarterly data also appear in
Economic Indicators and the Federal Reserve Bulletin.
Annual data by fiscal years back to 1929 are published in the Statistical Abstract. Starting with the
1944 budget each year the Budget of the United States
Government has also presented data for the most
recent fiscal year and estimates for the current and
following fiscal years. The data have also been included in the annual Budget Review, prepared by the
Bureau of the Budget each fall. The closely related
series on Treasury cash deposits and withdrawals is
published in the Daily Statement of the United States
Treasury, and monthly in the Treasury Bulletin.
Adjustments made in data on budget receipts and
expenditures to arrive at Federal cash receipts from
and payments to the public on a monthly basis are
summarized in the Treasury Bulletin. The adjustments made in the annual figures are listed in detail
in a release of the Bureau of the Budget entitled
"Receipts From and Payments To the Public,
Supporting Tables and Supplementary Information. " This release is issued in conjunction with the
annual publication of the Budget of the United States
Government and the Budget Review. A summary
reconciliation of the differences between this series
and the Treasury cash deposits and withdrawals
series is published monthly in the Treasury Bulletin
and "Receipts From and Payments To the Public,
Supporting Tables and Supplementary Information."
121
91491 0—62
FEDERAL BUDGET, NATIONAL
INCOME ACCOUNTS BASIS
Although such transfer payments are not included in
GNP, they do enter into the income stream and have
an impact on national output; they are reflected in
Description of series.—This series reports Federal the GNP in another sector of the accounts when
transactions as they are recorded in the U.S. income respent by the recipients.
and output accounts. The Federal sector data are
Federal grants-in-aid to State and local governments,
designed to measure the purchases of current output like transfer payments and net interest paid, have
by the Federal Government and the relationship of their impact on GNP when respent by recipients.
Federal receipts and other Federal expenditures to Most grants are for highways, public assistance, and
national, personal, and disposable personal income. public health.
(See descriptions of these concepts in prior sections
Private incomes are also affected by Federal
of this Supplement.) The Federal sector is recorded subsidies and by the net surplus of Government
in a manner consistent with the conceptual treat- enterprises in their operations with the public.
ment of the personal, business, and State and local These subsidies less current surplus of Government
government sectors in the national income and out- enterprises reflect mainly Government payments to
put accounts.
farmers, certain outlays for the export and disposal
Federal purchases of goods and services are meas- of surplus agricultural commodities, shipping subured, insofar as is possible, on a delivery basis, sidies, payments to air carriers, and the deficit of the
rather than on an obligation, checks-issued, or pay- Post Office and Government enterprises.
ments basis. This timing of purchases corresponds
The receipts of the Federal sector account are
more closely to current production. Receipts, by shown in a 4-way classification: (1) Personal tax and,
and large, are on an accrual basis. For example, nontax receipts consist mostly of individual income
corporate profits taxes are included as liabilities when taxes, estate and gift taxes, and charges for Governincurred, rather than when collected. There may ment services, fines, and penalties; (2) corporate
be a substantial lag between the accrual of a liability profits tax accruals are the most cyclically volatile
and its collection.
component of the Federal sector account because of
As shown in the table, expenditures in the Federal the great variability of corporate profits; (3) indirect
sector account are presented in a 5-way classification: business tax and nontax accruals include liquor,
Federal purchases of goods and services is the only tobacco, and other excise taxes, customs duties, and
category of Federal spending which is included in the rents and royalties; (4) contributions for social insurgross national product (GNP). These purchases ance are composed chiefly of employment taxes, conrepresent the value of the Nation's currently pro- tributions to the retirement funds for Government
duced output bought directly by the Federal Gov- employees, and deposits by the States to the unemernment. They include the pay of military and ployment trust fund.
civilian employees of the Federal Government,
Statistical procedures.—Data for the Federal sector
outlays on equipment and supplies for defense and account are based on the Budget of the United States
other programs, new construction, and the capital Government, reports of various agencies, particularly
formation of Government enterprises.
the Internal Revenue Service, and (unlike other
Transfer payments and net interest paid by the
records
of Federal transactions) to a large extent, on
Federal Government are outlays in return for which
estimates
made by the Department of Commerce.
no current service is deemed to be obtained; the
most important transfer payments are old-age and Thus, the results are to be regarded as statistical
survivors' insurance benefits, unemployment com- estimates, rather than as accounting totals in the
pensation, and military and veterans pensions. ordinary sense.
122
Federal Expenditures, National Income Accounts Basis, 1947-62
{Quarterly data.
Seasonally adjusted annual rates)
BILLIONS OF DOLLARS
120
100
GRANTS TO STATE & LOCAL GOVERNMENT
1947
1341 1S49 1951
1951
1952 1953
1954 1955
1958 1957
1951
1959
1960
1961
1962
80URCE OF DATA: DEPARTMENT OF COMMERCE
Data are available quarterly and annually for both
the fiscal and calendar years. The quarterly figures
are published in seasonally adjusted, as well as in
unadjusted form. Both expenditures and receipts
are seasonally adjusted by applying the adjustments
individually to their many components having
marked seasonal variation. The seasonally adjusted
total is the sum of the several separately adjusted
components. Many adjustment techniques are used
including the moving average, Univac, and least
squares methods. The deficit or surplus is not
seasonally adjusted separately. The seasonally adjusted deficit or surplus is the difference between
seasonally adjusted receipts and expenditures.
Relation to other measures.-—The Federal sector
account differs from the budget receipts and expenditures series and the consolidated cash series
in several major respects: (1) coverage, (2) netting
and consolidation, (3) timing, and (4) the exclusion
of capital transactions.
With respect to coverage, the Federal sector account, unlike the administrative budget, includes
the trust and deposit funds. It omits the revenues
and expenditures of the District of Columbia, which
are classified by the Department of Commerce in
the State and local government sector.
As to netting and consolidation, the national income
accounts record both interest paid by the Government and Government purchases on a net basis.
Accordingly, interest received by the Government is
excluded from receipts and subtracted from Federal
interest payments; and receipts from sales of Government products are similarly subtracted from
Government purchases. Neither adjustment affects
the surplus or deficit, for, in effect, both receipts and
expenditures are decreased by the same amount.
Adjustments for consolidation are needed to reflect
in the Federal sector account a few transactions such
as employer and employee contributions to Federal
employees' retirement funds. These contributions
are part of the total compensation of Government
employees, but are excluded from the consolidated
cash statement. Again, the deficit or surplus is
unaffected by the adjustment, since total receipts
and expenditures are both increased by the same
amount.
With respect to timing, business taxes are recorded
in the national income accounts as they are accrued
by the private sector, rather than when they are
collected by the Government. The accrued liability
is more likely to coincide with the effects of corporate
taxes on corporate spending decisions than are the
123
Many capital transactions of a financial nature
collections. The principal timing adjustments for
expenditures are: (1) The Federal sector account which are included in budget receipts and expendirecords Federal purchases in terms of the delivery tures and cash receipts and payments are excluded
of goods and services to the Government, whereas from the Federal sector. These items are primarily
cash payments for these deliveries may precede or loans, mortgages, other financial claims, and subfollow. (2) The account also records guarantees of scriptions to international lending institutions. Also
nonrecourse loans by the Commodity Credit Cor- excluded are purchases and sales of existing assets,
poration as purchases at the time the guarantees are such as land and secondhand property. These exmade, rather than when the collateral is surrendsred. clusions neither represent the production of current
(3) Interest on savings bonds and Treasury bills is output nor incomes earned in production.
Uses and limitations.—Each of the three major
treated as an expenditure by the Government when
the interest is accrued, rather than when it is actually series on Federal finance—the administrative budget,
paid out in cash. (4) Certain foreign currency consolidated cash, and the Federal sector account—
activities of the Commodity Credit Corporation re- is useful for specific kinds of analysis, and the selecquire an adjustment. The Corporation facilitates tion of which to use should be determined by the
exports of surplus agricultural commodities by paying problem at hand. The Federal sector account is
exporters in dollars and, in return, accepting foreign especially suited for an analysis of fiscal policy. It
currencies for the exports. Expenditures in the was specifically designed to complement the data on
Federal sector account are recorded only at the time private expenditures and incomes contained in the
these foreign currencies are subsequently used for national income accounts. The accounts, however,
Government programs. The consolidated cash state- exclude a substantial volume of financial transactions
ment, on the other.hand, includes the dollar pay- through which the Federal Government significantly
ments to exporters but excludes both the receipt and affects the capital and credit markets. As a result,
th° subsequent expenditure of a large part of these for purposes of analysis of the Federal impact on
such markets, the consolidated cash statement may
foreiga currencies.
Federal Receipts, National Income Accounts Basis, 1947-62
(Quarterly data.
Seasonally adjusted annual rates)
BILLIONS OF DOLLORS
120
110
100
/
*-.
90
TOTAL
80
70
60
50
PERSONAL TAXES
40
INDIRECT BUSINESS TAXES
30
CORPORATE PROFITS TAX ACCRUALS
20
10
I_I_1_L
1S47
. I
•
•
. 1 •
^ C O N T R I B U TI I Oi Ni Si TO
SOCIAL INSURANCE
I i
1341 1948 1951 1951 1952 1953 1954 1955 195S 1957 1951 1959 1966 1961
SOURCE OF DATA: DEPARTMENT OF COMMERCE
124
1962
be more useful than the national income accounts.
For certain types of problems, no overall measure
of receipts and expenditures will serve adequately.
Since the various receipt and expenditure transactions have different economic effects, a given aggregate will have an economic impact which depends
largely on the composition of the total. In addition,
many Government activities besides receipts and
expenditures affect the economy. For example, a
rapid expansion in new appropriations and in
Government orders could stimulate a rise in business
activity well before either the delivery of goods, the
performance of services, or the payment for them.
The management of the public debt is a further
factor which has a significant impact in the money
and credit markets of the economy. Consequently,
in evaluating the economic impact of Federal
Government activities, there is no substitute for
Federal Budget, National Income Accounts Basis
[Billions of dollars]
Federal Government receipts
Calendar
year
CorPersonal porate
Total tax and profits
tax
nontax
receipts accruals
Federal Government expenditures
Indirect Contribusiness butions
tax and to social
nontax
insuraccruals
ance
Total
Subsidies
PurGrants
less
chases Transfer to State
Net
current Surplus
of goods payand
interest surplus
or
and
ments
local
paid
of Gov- deficit
governservices
ernment
(-)
ments
enterprises
1929 _
3.8
1.3
1.2
1.2
0. 1
2.6
1.3
0.7
0. 1
0.4
0. 1
1.2
1930
1931 _
1932
1933
1934
3. 0
2.0
1.7
2. 7
3. 5
1. 1
.6
.3
.5
.6
.7
.4
'.i
1. 1
.9
.9
1.6
. 56
2.2
.1
.1
.1
.1
.1
2.8
4.2
3.2
4.0
6. 4
1. 4
1.5
1.5
2.0
3. 0
.7
1.7
.9
.7
.6
.1
.3
.1
.5
1. 6
.4
.4
.5
.5
.6
.1
.2
.2
.3
.6
3
-2. 1
-1.5
-1. 3
— 2. 9
1935
1936
1937
1938
1939
4.0
5.0
7. 0
6. 5
6. 7
.8
1. 1
1. 7
1. 6
1. 2
.8
1.3
1. 3
.9
1. 3
2. 2
2.3
2.4
2. 2
2. 3
.1
.4
1.6
1. 7
1. 9
6. 5
8.5
7. 2
8. 5
9. 0
2. 9
4.8
4. 6
5. 3
5. 2
.6
2. 1
.8
1. 2
1. 2
1. 7
.7
.8
.8
1. 0
.5
.5
.6
.6
.6
.7
.4
.5
.6
.9
-2. 6
-3.5
-. 2
— 2. 0
-2. 2
1940.__ _ _
1941
1942
1943 -_
1944
8.6
15. 4
22.9
39.3
41. 0
1.4
2. 0
4.7
16.5
17.5
2.6
7. 3
11. 1
13.6
12.5
2.6
3. 6
4.0
4.9
6.2
2.0
2. 5
3.2
4.2
4.8
10. 1
20. 5
56. 1
86.0
95.6
6.2
16. 9
52.0
81.2
89.0
1. 4
1. 4
1. 4
1.2
1.8
.9
.8
.9
.9
.9
.7
.8
1.0
1.7
2.4
.9
.7
.8
.9
1.4
-1. 4
—5 1
-33.2
-46. 7
-54. 6
1945
1946
1947
1948
1949
42. 5
39. 2
43. 3
43. 4
39. 1
19. 4
17. 2
19. 7
19. 0
16.2
10. 2
8. 6
10. 7
11. 8
9. 8
7. 1
7. 9
7. 9
8. 1
8.2
5. 8
5. 5
5. 1
4. 5
4.9
84. 8
37.0
31. 1
35. 4
41. 6
74. 8
20. 6
15. 6
19. 3
22.2
4. 3
9. 5
9.0
9. 2
12. 0
.9
1. 1
1.7
2. 0
2.2
3. 3
4. 2
4.2
4. 3
4.4
1. 5
1. 6
.6
.6
.7
— 42. 3
2. 2
12. 2
8 0
-2.5
1950
1951
1952
1953
1954
50. 2
64. 5
67.7
70. 3
63. 8
18.2
26. 3
31. 2
32.4
29. 2
17. 1
21. 6
18. 6
19. 4
16. 5
9.0
9. 5
10. 5
11.2
10. 1
5.9
7. 1
7.4
7.4
8. 1
41.0
58. 0
71.6
77. 7
69. 6
19.3
38. 8
52. 9
58.0
47. 5
13.7
10. 8
10. 4
11.3
13.0
2.3
2. 5
2. 6
2. 8
2. 9
4. 5
4. 7
4. 7
4.8
5. 0
1. 2
1. 3
1.0
.8
1. 2
9. 2
6. 4
-3.9
-7.4
-5. 8
1955
1956
1957
1958
1959
72. 8
77. 5
81. 7
78. 5
90. 3
31. 5
35.2
37. 3
36.6
40.4
20.9
20.2
19.9
17. 7
22.0
11.0
11.6
12.2
11. 9
13.0
9. 3
10.6
12.2
12.4
14.9
68. 9
71.8
79.7
87. 9
91.4
45.3
45. 7
49. 7
52.6
53.6
14.0
14. 9
17.4
21. 3
22.2
3.0
4.9
5.2
1. 6
2. 7
3. 8
5. 7
5. 7
5. 6
2.8
3.0
1960
1961
96. 9
98.3
44. 0
45.0
21.2
21.0
14. 1
13.9
17.6
18.4
93. 1
102. 1
53.2
57.0
23.8
27.4
__
3. 3
4. 1
5.4
6. 7
6.4
2. 5
6.3
7.0
7. 1
6. 6
4. 1
2.8
2.0
-9.4
-1. 1
3.8
-3.8
Source: Department of Commerce.
125
the July issue. The July 1962 issue contains
statistics for the years 1956 through 1961 on a
quarterly and annual basis. Estimates from 1946
through 1957 may be found in U.S. Income and
Output, also published by the Department of
Commerce.
complete and detailed analysis of the Government
program in all its aspects.
References.—Current estimates by quarters on
both seasonally unadjusted and adjusted bases are
published regularly by the Department of Commerce
in the Survey of Current Business. Revised estimates for previous years are generally published in
o
126
@FedFRASER