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90th Congress, 1st Session
1967
SUPPLEMENT TO
Economic Indicators
HISTORICAL AND DESCRIPTIVE
BACKGROUND
Prepared for the Subcommittee on Economic Statistics of 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
[JOINT COMMITTEE PRINT]
90th Congress, 1st Session
1967
SUPPLEMENT TO
Economic Indicators
HISTORICAL AND DESCRIPTIVE
BACKGROUND
Prepared for the Subcommittee on Economic Statistics of 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
U.S. GOVERNMENT PRINTING OFFICE
WASHINGTON : 1967
For sale by the Superintendent of Documents, U.S. Government Printing Office, Washington, D.C. 20402 - Price 70 cents
JOINT ECONOMIC COMMITTEE
(Created pursuant to Sec. 5(a) of Public Law 304, 79th Cong.)
WILLIAM PROXMIRE (Wisconsin), Chairman
WRIGHT PATMAN (Texas), Vice Chairman
SENATE
JOHN SPARKMAN (Alabama)
J. W. FULBRIGHT (Arkansas)
HERMAN E. TALMADGE (Georgia)
STUART SYMINGTON (Missouri)
ABRAHAM RIBICOFF (Connecticut)
JACOB K. JAVITS (New York)
JACK MILLER (Iowa)
LEN B. JORDAN (Idaho)
CHARLES H. PERCY (Illinois)
HOUSE OF REPRESENTATIVES
RICHARD BOLLING (Missouri)
HALE BOGGS (Louisiana)
HENRY S. REUSS (Wisconsin)
MARTHA W. GRIFFITHS (Michigan)
WILLIAM S. MOORHEAD (Pennsylvania)
THOMAS B. CURTIS (Missouri)
WILLIAM B. WIDNALL (New Jersey)
DONALD RUMSFELD (Illinois)
W. E. BROCK III (Tennessee)
JOHN R. STARK, Executive Director
JAMES W. KNOWLES, Director of Research
ECONOMISTS
WILLIAM H. MOORE
JOHN B. HENDERSON
GEORGE R. IDEN
DANIEL J. EDWARDS
DONALD A. WEBSTER (Minority)
Subcommittee on Economic Statistics
J. W. FULBRIGHT (Arkansas)
JACK MILLER (Iowa)
HERMAN E. TALMADGE (Georgia), Chairman
RICHARD BOLLING (Missouri)
MARTHA W. GRIFFITHS (Michigan)
THOMAS B. CURTIS (Missouri)
DONALD RUMSFELD (Illinois)
Suggested Identification
U.S. Congress, Joint Economic Committee,
1967 Supplement to Economic Indicators,
Government Printing Office, Washington, D.C. 20260
ii
LETTERS OF TRANSMITTAL
MAY 4, 1967.
To Members of the Joint Economic Committee:
For information of the members of the Joint Economic Committee and others interested there is transmitted herewith a seventh edition of the Supplement to the Committee's monthly publication Economic
Indicators. This report presents a description of the derivation, limitations, and uses of each indicator
published monthly in Economic Indicators along with selected charts and historical tables. 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 9,000 private subscribers, but
has also become an important teaching aid in college courses in statistics.
WILLIAM PROXMIRE,
Chairman, Joint Economic Committee.
MAY 2, 1967.
The Honorable WILLIAM PROXMIRE,
Chairman, Joint Economic Committee,
U.S. Senate, Washington, B.C.
DEAR MR. CHAIRMAN: Transmitted herewith is the 1967 Supplement to the Committee's monthly
publication Economic Indicators prepared in response to the Committee's instructions to the Subcommittee
on Economic Statistics.
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
distribution of over 10,000. 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, D.C., 20402. The domestic airmail subscription price is $5.40 per year.
Over the years the Joint Committee has welcomed comments directed toward making Economic Indicators and the Supplement more useful publications. Many suggestions are received and considered. This
1967 edition of the Supplement is the first to contain brief descriptions of the methods used in making seasonal
adjustments in the several series where adjustment is important. 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.
iii
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 1967 Supplement was prepared under the direction of Raymond
T. Bowman, Assistant Director for Statistical Standards, Bureau of the Budget, by 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 over the years in the development of both 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 interagency collaboration.
Sincerely,
HERMAN E. TALMADGE,
Chairman, Subcommittee on Economic Statistics.
IV
Foreword
This is the seventh edition of the Supplement to Economic Indicators which contains historical data
and a description of each series which appears in the monthly Economic Indicators, as well as references to
additional technical publications. Annual data are shown for each series in essentially the same tabular
form as published monthly in Economic Indicators. The sections and tables showing these data are numbered
to correspond to the pages in the monthly publication. 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, in December 1960, 1962, and 1964.
This issue of the Supplement reflects changes made in Economic Indicators through April 1967.
Both text and tables are brought up to date. The descriptive material gives the sources of data and statistical procedure 3 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, prepared by the Bureau of the Budget and available from the Superintendent of Documents,
Government Printing Office for $1 a copy.
Gross National Product or Expenditure in 1958 Prices, 1929-66
(Annual data.
Gross private investment includes net exports of goods and services)
BILLIONS OF DOLLARS
700
600
500
TOTAL GROSS
NATIONAL PRODUCT
400
GOVERNMENT PURCHASES
OF GOODS AND SERVICES
300
200
100
1929
1932
1935
1938
1941
1944
1947
1950
1953
1956
1959
1962
SOURCE OF DATA: DEPARTMENT OF COMMERCE
Growth of the Labor Force, 1929-66
(Annual data)
MILLIONS OF PERSONS
TOTAL LABOR FORCE
CIVILIAN LABOR FORCE
CIVILIAN EMPLOYMENT—.
NONAGRICULTURAL EMPLOYMENT
AGRICULTURAL EMPLOYMENTS
1938
SOURCE OF DATA: DEPARTMENT OF LABOR
VI
94
1944
1947
1962
1965
1965
Contents
TOTAL OUTPUT, INCOME, AND SPENDING
1. The Nation's Income, Expenditure, and Saving
2. Gross National Product or Expenditure
3. National Income
4. Sources of Personal Income
5. Disposition of Personal Income
6. Farm Income
7. Corporate Profits
8. Gross Private Domestic Investment
9. Expenditures for New Plant and Equipment
EMPLOYMENT, UNEMPLOYMENT, AND WAGES
10. Status of the Labor Force
11. Selected Measures of Unemployment and Part-Time Employment
12. Unemployment Insurance Programs
13. N on agricultural Employment
14. Weekly Hours of Work—Selected Industries
15. Average Hourly and Weekly Earnings—Selected Industries
PRODUCTION AND BUSINESS ACTIVITY
16 and 17. Industrial Production and Production of Selected Manufactures
18. Weekly Indicators of Production
19. New Construction
20. New Housing Starts and Applications for Financing
21. Business Sales and Inventories—Total and Trade
22. Manufacturers' Shipments, Inventories, and New Orders
23. Merchandise Exports and Imports
24 and 25. U.S. Balance of International Payments
PRICES
26. Consumer Prices
,
27. Wholesale Prices
28. Prices Received and Paid by Farmers
MONEY, CREDIT, AND SECURITY MARKETS
29. Money Supply
30. Selected Liquid Assets Held by the Public
31. Bank Loans, Investments, Debits, and Reserves
32. Consumer and Real Estate Credit
33. Bond Yields and Interest Rates
34. Common Stock Prices, Yields, and Earnings
FEDERAL FINANCE
35. Federal Administrative Budget Receipts and Expenditures
36. Federal Cash Receipts from and Payments to the Public
37. Federal Budget, National Income Accounts Basis
Page
1
5
9
12
14
17
21
25
28
32
39
41
45
49
52
55
61
64
70
76
80
84
89
94
97
101
107
109
111
115
119
122
125
128
131
Vll
List of Charts
Page
Gross National Product or Expenditures in 1958 Prices, 1929-1966
Growth of the Labor Force, 1929-1966
Gross National Product or Expenditure, 1947-1966
National Income, 1947-1966
Per Capita Disposable Income, 1947-1966
vi
vi
5
10
14
Farm Income, 1947-1966
Corporate Profits, 1947-1966
Gross Private Domestic Investment, 1947-1966
Expenditures for New Plant and Equipment, 1947-1966
Status of the Labor Force, 1947-1966
18
22
25
28
33
Rates of Insured Unemployment Under State Programs, U.S., 1949-1966
Employees in Nonagricultural Establishments, 1947-1966
Average Weekly Hours in Selected Industries, 1947-1966
Average Hourly Earnings in Selected Industries, 1947-1966
Industrial Production, 1947-1966
41
45
50
52
56
New Construction, 1947-1966
Nonfarm Private Housing Starts, 1947-1966
Retail Sales and Inventories, 1948-1966
Manufacturers' Shipments, Inventories, and New Orders, 1947-1966
Merchandise Exports and Imports, 1947-1966
65
71
79
81
85
U.S. Exports and Imports of Goods and Services, 1947-1966
U.S. Balance of International Payments, 1950-1966
Consumer Prices, 1947-1966
Wholesale Prices, 1947-1966
Prices Received and Paid by Farmers, 1947-1966
89
91
94
98
103
Loans and Investments at All Commercial Banks, 1948-1966
Consumer Credit Outstanding, 1947-1966
Bond Yields and Interest Rates, 1947-1966
Cash Receipts From and Payments to the Public, 1947-1966
Federal Expenditures, National Income Accounts Bases, 1947-1966
Federal Receipts National Income Accounts Basis, 1947-1966
112
116
119
129
132
135
Vlll
TOTAL OUTPUT, INCOME, AND SPENDING
1. THE NATION'S INCOME, EXPENDITURE, AND SAVING
businesses are included in the business account.
The actual or imputed rent of dwellings is included
The Nation's income, expenditure, and saving, in consumer expenditure; but residential construcrepresenting a summary of the Nation's economic tion, whether for owner occupancy or for rental
accounts, are shown in the accompanying table for purposes, is included with business investment.
In the business account, receipts or gross retained
the following sectors: persons, business, international, and government. The combined receipts of earnings include the undistributed profits of corporathese four categories is equal to their combined ex- tions after adjustment for inventory valuation, plus
penditures, which, in turn, comprises the gross the capital consumption allowances of both corponational product. It follows that for any period in rate and noncorporate enterprises and institutions,
which the receipts for any of the four categories ex- including residences. The capital consumption alceed expenditures, the difference will be offset by an lowances are added to net receipts since investment
excess of expenditures over receipts in another cate- is on a gross basis. Business investment includes
gory or categories. The relationship of receipts to additions to plant, equipment, and inventories of
expenditures for each of the four categories is shown corporate and noncorporate enterprises, as well as
in the first table in Economic Indicators. Important residential construction. Because of conceptual
expenditure components in terms of 1958 prices are difficulties and limitations in the data which prevent
differentiating investment items in the present conshown in the first chart in this volume.
The balancing of the combined receipts and ex- sumer and government accounts, business investpenditures reported for the four categories—persons, ment is the only investment item shown as such in
business, international, government—is conceptually this table.
exact. However, since the estimating procedure
In the international account, the expenditures item
involves independent data sources for receipts and represents the difference between exports of goods
expenditures it does not produce the identity which and services on the one hand, and imports of goods
is conceptually present. This requires a balancing and services on the other. The receipts item con"error" item or statistical discrepancy. In the ac- sists solely of government and personal net transfers
companying table, the total of personal and business to foreigners.
receipts, foreign net transfers by government, and
The government account shows receipts and exgovernment receipts plus the statistical discrepancy penditures on an income and product account basis,
equals the total of personal and business expendi- rather than on either a cash or a conventional budget
tures, government purchases of goods and services, basis, to be consistent with the receipts and expendiand net exports.
tures of consumers and business and with the gross
The personal account summarizes the more national product total. The government receipts
detailed statistics on personal income and con- include personal, corporate and indirect business
sumption shown elsewhere in Economic Indicators, taxes and nontaxes, and contributions for social
particularly in the table on Disposition of Personal insurance. Government interest charges and transIncome. It should be noted that although personal fer payments, such as social security and veterans'
income includes the income of unincorporated benefits and net transfers to abroad, are not included
businesses and farms, consumer expenditure includes in the gross national product, although some items
only expenditures for consumption purposes. In- are income to recipients. They are therefore subvestments of noncorporate as well as corporate tracted here from both receipts and expenditures.
DESCRIPTION OF SERIES
TABLE
I.-The Nation's Income, Expenditure, and Saving, 1929-1966
[Billions of dollars]
Persons
Government
Disposable personal income
Year
1929 _______
Net receipts
Less:
Equals: Personal Personal
Interest Total
consaving
paid and exclud- sumption or disTotal! transfer
ing
expend- saving
payinterest itures
(-)
ments
and
to for- transfers
eigners
Expenditures
Surplus
or deficit
(-),
Tax and Less:
Less:
Equals:
nontax Trans- Equals: Total TransPurreceipts
fers,
Net expend- fers,
chases
or
interest, receipts itures interest, of goods
accruals and suband suband
sidies 2
sidies 2 services
national
income
and
product
accounts
---
-
83.3
1.9
81. 4
77.2
4.2
11. 3
1.8
9.5
10.3
1.8
8.5
1.0
1930_______ 74.5
1931. ______ 64.0
1932_______ 48.7
1933 _______ . 45.5
1934_______ 52.4
1935 _______ 58.5
1936 _______ 66.3
1937 _______ 71. 2
1938_______ 65.5
1939_______ 70.3
1940_______ 75.7
194L _____ 92.7
1942_______ 116.9
1943_______ 133.5
1944_______ 146.3
1945_______ 150.2
1946 _______ 160.0
1947_______ 169.8
1948 _______ 189.1
1949 _______ 188.6
1950 ______ 206.9
1951. _____ 226.6
1952 ______ 238. 3
1953 ______ 252.6
1954 ______ 257.4
1955 ______ 275.3
1956 ______ 293.2
1957 ______ 308. 5
1958 ______ 318. 8
1959 ______ 337.3
1.2
.9
.7
.7
.6
.7
.8
.9
.8
.9
73.3
63. 1
48.0
44.9
51. 7
57.8
65.5
70.3
64.6
69.4
69.9
60.5
48.6
45.8
51. 3
55.7
61. 9
66.5
63.9
66.8
3.4
2.6
-.6
-.9
.4
2. 1
3.6
3.8
.7
2.6
10.8
9.5
8.9
9.3
10.5
11. 4
12.9
15.4
15.0
15.4
1.9
3. 1
2.6
2.7
3.1
3.4
4. 1
3.2
3.8
4.2
8.9
6.3
6.3
6.7
7.4
8.0
8.8
12.2
11. 2
11. 2
11. 1
12.4
10.6
10.7
12.9
13.4
16. 1
15.0
16.8
17.6
1.9
3.1
2.6
2.7
3. 1
3.4
4. 1
3.2
3.8
4.2
9.2
9.2
8. 1
8.0
9.8
10.0
12.0
11. 9
13.0
13.3
-.3
-2.9
-1.8
-1.4
-2.4
-2.0
-3.1
.3
-1.8
-2.2
1.0
1.1
.8
.8
.8
1.0
1.4
1.8
2.2
2.4
74.7
91. 6
116.1
132.7
145.5
149.3
158.6
168.0
186.9
186.2
70.8
80.6
88.5
99.3
108.3
119.7
143.4
160.7
173.6
176.8
3.8
11. 0
27.6
33.4
37.3
29.6
15.2
7.3
13.4
9.4
17.7
25.0
32.6
49.2
51. 2
53.2
50.9
56.8
58.9
56.0
4.4
4.0
4.4
4.7
6.5
10.4
18.5
17.3
18.8
21. 3
13.3
21. 0
28.2
44.4
44.7
42.8
32.4
39.5
40. 1
34.7
18.4
28.8
64.0
93.3
103.0
92.7
45.5
42.4
50.3
59. 1
4.4
4.0
4.4
4.7
6.5
10.4
18.5
17.3
18.8
21. 3
14.0
24.8
59.6
88.6
96.5
82.3
27.0
25. 1
31. 6
37.8
-.7
-3.8
-31. 4
-44.1
-51.8
-39.5
5.4
14.4
8.5
-3.2
2.9
3.1
3.5
4.3
4.6
5. 1
5. 9
6. 4
6.5
7.1
204.1
223.5
234. 8
248. 3
252. 9
270.2
287.2
302.2
312.3
330.3
191.0
206. 3
216.7
230.0
236.5
254.4
266.7
281. 4
290.1
311. 2
13. 1
17.3
18.2
18.3
16.4
15.8
20.6
20.7
22.3
19. 1
68.7
84.8
89. 8
94.3
89.7
100.4
109. 0
115.6
114.7
128.9
22.9
19.9
19.0
19.5
21. 9
23.4
25.5
28.7
33.0
34.0
45.8
64.9
70.8
74.8
67.8
76. 9
83.5
86. 8
81. 6
95.0
60. 8
79.0
93.7
101.2
96.7
97.6
104.1
114.9
127.2
131. 0
22.9
19.9
19.0
19.5
21. 9
23.4
25. 5
28.7
33.0
34.0
37.9
59.1
74. 7
81.6
74. 8
74. 2
78.6
86.1
94. 2
97.0
7.8
5. 8
-3.8
-6.9
-7.0
2.7
4.9
.7
-12.5
-2.1
7. 8
8. 1
8. 6
9.7
10.7
11. 9
13.3
342. 3
356. 3
376.6
394.9
425. 8
457.2
492.0
325. 2
335. 2
355.1
375.0
401. 4
431. 5
464.9
17.0
21. 2
21.6
19. 9
24. 5
25.7
27.0
139. 8
144.6
157.0
168.8
174.2
189.0
212.3
36.5
41.3
42.8
44.4
46.7
49.6
55.7
103.3
103.3
114.2
124.3
127.5
139.4
156.6
136. 1
149.0
159.9
166.9
175.6
185.8
208.7
36.5
41. 3
42.8
44.4
46.7
49.6
55.7
99.6
107.6
117. 1
122.5
128.9
136.2
153.0
3.7
-4.3
-2.9
1.8
-1.4
3.2
1960 ______
1961. _____
1962 ______
1963 ______
1964 ______
1965 ______
1966.. _____
350.0
364.4
385. 3
404.6
436.6
469.1
505. 3
v. ,)
<)
-
See footnotes on next page.
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
2
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 purchases of goods
are recorded, to the extent possible, at the time of
delivery rather than at the time payment is made.
TABLE
1.—-The Nation's Income, Expenditure, and Saving, 1929-1966—Continued
[Billions of dollars]
Business
Year
Gross
retained
earnings 3
International
Gross
private
domestic investment 4
Excess
of investment
(-)
Transfers to
foreigners
by persons
Net exports of goods
and services
and
Ex-
Government
ports
Less:
Imports
Excess
of
transfers or
Equals: of net
Net
exports
exports
(~)5
Total
income
or receipts
Statistical
discrepancy
Gross
national
product
or expenditure
1929.
11.2
16.2
-5. 1
0.4
7.0
5.9
1. 1
-0.8
102. 4
0.7
103. 1
1930.
1931
1932
1933.
1934
1935.
1936.
1937.
1938.
1939.
8.6
5.3
10.3
-1.6
5.4
3.6
2.5
2.4
3.0
3.3
3.5
1.0
.5
-.7
.2
4. 6
91.2
75. 1
57.7
55.0
64.5
72.5
81.3
90. 5
84. 1
89.2
-.8
-.3
2.2
1.8
1.9
*
.3
.3
.2
.2
.2
.2
.2
4.4
5.6
1.0
1.4
90.4
75.8
58.0
55.6
65. 1
72.2
82.5
90.4
84.7
90.5
1940.
1941.
1942
1943.
1944.
1945.
1946.
1947.
1948.
1949.
1950.
1951.
1952.
1953.
1954.
1955.
1956.
1957.
1958.
1959.
1960.
1961.
1962.
1963.
1964.
1965.
1966.
3.2
3.2
5.2
3.3
7.7
11.8
-1.8
-4.0
6.5
9.3
1.6
-.9
10.5
11.4
14.5
16.3
17. 1
15. 1
14.5
20.2
28.0
29.7
13. 1
17.9
9.8
5.7
7. 1
10.6
30.6
34.0
46. 0
-2.7
29.4
33. 1
35. 1
36. 1
39.2
46.3
47.3
49.8
49.4
56.8
54. 1
59.3
51.9
52.6
6.4
6.7
8.0
8.4
56.8
58.7
66.3
68.8
76.9
83.4
88.5
6.4
8.5
35.7
51.7
67.4
70.0
67.8
60.9
75.3
74.8
71.7
83.0
87. 1
93.0
106.6
117.0
-6.5
4.6
10. 6
10.0
4.6
-16. 1
-13.8
-18.0
-6.0
.2
.2
.2
.2
.2
.2
.3
.8
2.9
2.6
4.5
5.6
4.3
4. 4
5.4
5.9
4.8
4. 4
5.3
7.2
14.7
19.7
16.8
15.8
13.8
18.7
18.0
16. 9
-24.7
-26.2
-16.8
-16.5
-12.5
-21. 1
-22.8
-18. 1
-11.5
-18.5
4.0
3.5
2.5
2.5
2.3
2.5
2.4
2.3
2.4
19.8
23.6
26.5
23. 1
23.5
-18.0
-13.0
-16.8
-18.4
-16.0
-23. 1
-28.5
2.4
2.6
2.7
2.8
2.8
2.8
2.9
27.2
28.6
30.3
32.3
37.0
39.0
42.7
2. 4
17.8
3. 1
2. 1
2.0
2.4
3. 1
.4
.4
.6
.1
.1
-.2
-.2
-.2
-. 4
.1
.1
-. 1
-1. 1
3.4
4.3
3.0
3.4
.3
1.3
1. 1
-.9
3.6
4.6
4.8
6.5
1.7
1.3
*
-1.5
-1. 1
7. 1
7.9
7.2
8.2
10.3
-2.0
-1.8
-.6
7.5
11. 5
6.4
.2
2.2
2. 1
1.4
-4.6
-8.9
-1.9
9.6
6. 1
-.5
12.0
15. 1
15.8
16.6
15.9
17.8
19.6
20.8
20.9
23.3
1.8
3.7
2.2
2.2
-.2
.3
.4
2. 1
23.2
23. 0
25. 1
26.4
28.5
32.0
37.9
1.8
2.0
4.0
5.7
2.2
.5
.5
-1.5
-3.4
.2
.1
2.3
4. 0
-1.7
-3.0
-2.5
-3. 1
5.6
5. 1
5.9
8.5
7.0
4.8
-5.7
-4. 2
-1.8
98.7
124. 1
159.0
193.6
207.6
208.0
208.4
230.4
259.5
256.2
283.3
325. 1
343.3
361.6
362.1
395.9
420.4
441. 1
445.8
484. 5
504. 8
520.8
559.8
590.8
633. 1
682.8
739.6
.7
.3
.6
.5
-.2
1.2
*
.6
1.3
1.0
.4
-1. 1
-2.0
2.5
3.9
.1
.9
-2.0
.3
1.5
3.3
2. 2
3.0
2.7
2. 1
-1. 1
*
1.6
-.8
-1.0
-.8
.5
-.3
-1.4
-1.6
-.2
99.7
124.5
157.9
191.6
210. 1
211.9
208.5
231.3
257.6
256.5
284.8
328.4
345.5
364.6
364.8
398.0
419.2
441. 1
447.3
483. 7
503.7
520. 1
560.3
590. 5
631.7
681.2
739.6
1
Personal income less personal tax and nontax payments (fines, penalties, etc.)
2 Government transfer payments to persons, foreign net transfers by Government, net interest paid by government, and subsidies less current surplus of government enterprises.
3 Undistributed corporate profits, corporate inventory valuation adjustment, capital consumption allowances, and wage accruals less disbursements. Does not include retained earnings of unincorporated business, which are included in disposable personal income.
4
Private business investment, purchases of capital goods by private nonprofit institutions, and residential housing. See Table 8.
5
Net foreign investment with sign changed.
•Less than $50 million.
NOTE.—Data for Alaska and Hawaii included beginning 1960. Details may not add to totals because of rounding.
Source: Department of Commerce, Office of Business Economics.
Transactions in land and in financial assets and
liabilities 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 placing 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 quantitath e 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 inflationary and deflationary programs of government and private
economic groups.
(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 oj the Joint Committee
on ike 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.
2. 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 export of goods and services, and (4) government purchases of goods and services. The total
and its major components are charted below for the
period 1947-66. The goods and services included
in the GNP are for the most part within the framework of the market economy. There are some nonmarket items, 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 beginning 1960 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.
A portion of this amount is probably included in
the previous figures for the continental United
States because the data sources and statistical techniques employed were not sufficiently refined to exclude all Alaskan and Hawaiian product and income
from the estimates.
"Personal consumption expenditures" consists of
the market value of purchases of goods and services by persons and nonprofit institutions and the
Gross National Product or Expenditure, 1947-66
BILLIONS OF DOLLARS
800
600
500
PERSONAL CONSUMPTION EXPENDITURES
300
200
GOVERNMENT PURCHASES OF GOODS AND SERVICES
GROSS PRIVATE DOMESTIC INVESTMENT
100
NET EXPORTS OF GOODS AND SERVICES*
1947
1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965
SOURCE OF DATA: DEPARTMENT OF COMMERCE
1966
value of food, clothing, housing, and financial
services received by them as income in kind. It
includes the rental value of owner-occupied houses
but does not include purchases of dwellings, which
are classified as capital goods. This series is described below, in the section on Disposition of
Personal Income (p. 14).
"Gross private domestic investment'' consists of
the net acquisitions of fixed capital goods by private
business and nonprofit institutions; including commissions arising in the sale and purchase of new
and existing fixed assets, principally real estate;
and the value of the change in the volume of inventories by business. It covers all private dwellings including those acquired by persons for their
own occupancy. This component of GNP is described below, in a separate section (p. 25).
"Net exports of goods and services" measures the
balance on goods and services, excluding transfers under military grants, as reported in the U.S.
balance of payments statistics. Exports of goods
and services are included in the gross national
product because they are produced by the Nation's
economy. Since imports of foreign goods and services are included in the purchases of the various
market groups (consumers, government, etc.) distinguished in the GNP breakdown, they must be
deducted from the sum of these purchases to derive
a measure of output attributable to the Nation's
economy. 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. 89).
" Government purchases of goods and services"
consists of the net purchases of goods and services
by general government and of the gross investment
of government enterprises. General government
purchases comprises employee compensation and
net purchases from business and from abroad. They
exclude the acquisition of land, current outlays of
government enterprises, transfer payments, government interest, and subsidies, as well as transactions
in financial claims.
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
recorded. For a more extended discussion, see the
section below, "Federal Budget, National Income
Accounts Basis" (p. 131).
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. 64). 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 reports to other agencies. For
details of the methods used, reference should be made
to the comprehensive studies by the Department of
Commerce, e.g., the 1954 National Income Supplement to the Survey of Current Business, U.S. Income
and Output, 1958 and the August 1965 issue of the
Survey of Current Business.
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 and
Output, p. 95 ff.
The magnitude of the seasonal correction may be
illustrated by the accompanying comparison of the
GNP on an unadjusted seasonally adjusted basis
for the year 1965. The corrections shown in the
table are computed values reflecting the net results
of many individually corrected components underlying 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 1965," p. 8.)
TABLE
2.—Gross National Product or Expenditure, 1929-1966
[Billions of dollars]
Year
Person- Gross
Total
Net
Total al con- private exports
gross
sumpof goods
donational gross
and
mestic
product national tion
in 1958 product expend- invest- services
itures
ment
prices
Government purchases of goods and services
Federal1
Total
Total
National
defense 2
Other
State
and
local
Implicit
price
deflator
for total
GNP,
1358=
1003
1929.
203.6
103.1
77.2
16.2
1. 1
8.5
1.3
1.3
7.2
50.6
1930.
1931.
1932.
1933.
1934.
1935.
1936.
1937.
1938.
1939.
183.5
169.3
144.2
141.5
154.3
169.5
193.0
203.2
192.9
209.4
90.4
75.8
58.0
55.6
65.1
72.2
82.5
90.4
84.7
90.5
69.9
60.5
48.6
45.8
51.3
55.7
61.9
66.5
63.9
66.8
10.3
5.6
1.0
1.4
3,3
6.4
8.5
11.8
6.5
9.3
1.0
.5
.4
.4
.6
.1
.1
.3
1.3
1. 1
9.2
9.2
8.1
8.0
9.8
10.0
12.0
11.9
13.0
13.3
1.4
1.5
1.5
2.0
3.0
2.9
4.9
4.7
5.4
5.1
1.4
1.5
1.5
2.0
3.0
2.9
4.9
4.7
5.4
7.8
7.7
6.6
6.0
1.2
3.9
1940.
1941.
1942.
1943.
1944.
1945.
^1946.
1947.
1948.
1949.
227.2
263.7
297.8
337.1
361.3
355.2
312.6
309.9
323.7
324.1
99.7
124.5
157.9
191.6
210.1
211.9
208.5
231.3
257.6
256.5
70.8
80.6
88.5
99.3
108.3
119.7
143.4
160.7
173.6
176.8
13.1
17.9
9.8
5.7
7.1
10.6
30.6
34.0
46.0
35.7
1.7
1.3
*
-2.0
-1.8
-.6
7.5
11.5
6.4
6.1
14.0
24.8
59.6
88.6
96.5
82.3
27.0
25.1
31.6
37.8
6.0
16.9
51.9
81.1
89.0
74.2
17.2
12.5
16.5
20.1
2.2
13.8
49.4
79.7
87.4
73.5
14.7
9.1
10.7
13.3
3.8
3.1
2.5
1.4
1.6
.7
2.5
3.5
5.8
6.8
7.1
7.0
7.2
7.6
8.2
8.0
7.9
7.7
7.4
7.5
8.1
9.8
12.6
15.0
17.7
49.3
44.8
40.2
39.3
42.2
42.6
42.7
44.5
43.9
43.2
1950.
1951.
1952.
1953.
1954
1955
1956
1957
1958
1959
355.3
383.4
395. 1
412.8
407.0
438.0
446. 1
452. 5
447.3
475.9
284.8
328.4
345.5
364.6
364.8
398.0
419.2
441. 1
447.3
483.7
191. 0
206.3
216. 7
230.0
236.5
254.4
266.7
281. 4
290. 1
311. 2
54.1
59.3
51. 9
52.6
51.7
67.4
70.0
67.8
60.9
75.3
1.8
3.7
2. 2
.4
1.8
2.0
4. 0
5.7
2. 2
.1
37.9
59. 1
74.7
81.6
74.8
74. 2
78.6
86.1
94. 2
97.0
18.4
37.7
51. 8
57.0
47.4
44. 1
45.6
49. 5
53.6
53.7
14. 1
33.6
45. 9
48.7
41.2
38.6
40.3
44.2
45.9
46.0
4.3
4. 1
5.9
8.4
6.2
5.5
5.3
5.3
7.7
7. 6
19.5
21.5
22.9
24. 6
27.4
30. 1
33.0
36.6
40.6
43.3
80.2
85.6
87.5
88.3
89.6
90.9
94.0
97.5
100.0
101.6
1960
1961
1962
1963.
1964.
1965
1966.
487. 7
497.2
529.8
551. 0
580.0
614. 4
647.8
503.7
520.1
560.3
590.5
631.7
681. 2
739.6
325. 2
335.2
355. 1
375.0
401. 4
431. 5
464.9
74.8
71.7
83.0
87. 1
93.0
106.6
117. 0
4.0
5.6
5. 1
5.9
8.5
7.0
4.8
99.6
107.6
117. 1
122.5
128.9
136. 2
153.0
53.5
57.4
63.4
64. 2
65.2
66. 8
76.9
44.9
47.8
51.6
50.8
50.0
50. 1
60. 0
8.6
9.6
11.8
13.5
15.2
16. 7
16.9
46. 1
50.2
53.7
58.2
63. 7
69.4
76.2
103.3
104. 6
105.8
107.2
108. 9
110.9
114.2
a. 8
43.9
47.2
53.0
56.8
58.2
59.7
66.7
74.6
79.6
79.1
1
2
3
Net of Government sales.
This category corresponds closely to the national defense classification in the Budget of the United States Government for the Fiscal Year ending June SO, 1968.
Gross national product in current prices divided by gross national product in 1958 prices.
* Less than $50 million.
NOTE.—Data for Alaska and Hawaii included beginning 1960.
Source: Department of Commerce, Office of Business Economics.
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. 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 converted the
current dollar series to 1958 prices; 1958 prices are
used in presenting the constant dollar GNP in The
National Income and Product Accounts oj the United
States 1929-1965 and other publications of the
Department of Commerce.
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 the factors of production: 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).
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.
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
Seasonal Correction, Gross National Product, 1965
[Billions of dollars]
II
Gross national product
III
IV
Services
Gross private domestic investment. _
Fixed investment
Nonresidential
Residential structures
Change in business inventories. _
Net exports of goods and services
Exports
Imports
Government purchases of goods and
services
Federal
State and local
8
II
165.2 168.2 171. 6 176. 1 157.
Personal consumption expenditures. . 104.7 106.7 108.7 111. 3
Durable goods
Nondurable goods
Corrections, quarterly rates
(seasonally adjusted
minus unadjusted)
Unadjusted
Seasonally adjusted
98.
III
IV
II
III
IV
168.2 168.
187.7
8.0
.0
3.5
-11. 6
105. 5 105.!
121.2
5.8
1.2
2.8
-9.9
1.7
4.5
-. 1
1.4
1.4
1.5
-3»0
-7.2
-. 4
-. 1
.1
.3
.5
-1. 1
.2
.4
2.8
1.4
1.5
-1.0
-.6
-. 4
-.9
.1
-.9
-.9
-.7
-.2
-2.3
-. 1
1. 1
1.3
-.2
-.2
.9
-.6
.2
.4
-.3
-. 1
.6
-.3
-.5
.0
16.3
46. 1
42.3
16. 1
47.4
43.2
16. 7
47.9
44.2
17.0
49.3
45.0
14.
41.
42.
16.2
46.0
43.3
15.
46.
44.
20.0
56.5
44. 7
26. 0
25. 9
26. 7
28.0
25.
27.0
26.
27.6
23.6
24.0
24.5
25.4
20.
25.0
25.
26.3
16.7
6.9
17.0
7.0
17.6
7.0
18.5
6.9
15.
5.
17.6
7.4
17.
7.
19.2
2.4
1.9
2.2
2.6
4.
2.0
1.6
2.0
1.8
1.5
1.
2.2
8.8
7.2
10. 1
8. 1
10.0
8.2
10. 1
8.5
8.
6.
10. 4
8.2
32.9
33.6
34.4
35.3
31.0
33.6
34.8
36.9
1. 9
.0
-.4
-1.6
16. 1
16.8
16. 4
17.2
16.9
17.6
17.5
17.9
15.4
15.6
16.2
17.4
16.2
18.6
19.0
17.9
.7
1.2
.2
-.2
.7
-1.0
-1.5
.0
7. 1
1.3
2. 1
10.6
8.5
USES AND LIMITATIONS
The GNP total is the most inclusive 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 1958 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 p. 12, under National Income.
3. NATIONAL INCOME
DESCRIPTION OF SERIES
National Income is the aggregate of earnings by
labor and property which arise in 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 supplements to wages and salaries such
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. 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 (1) net
money income from rental of real property, (2)
imputed net rental value to homeowners of their
homes, and (3) royalties received from patents,
copyrights, and rights to natural resources.
"Net interest" measures the excess of interest
payments of the domestic business system over its
76-384 0—67-
interest receipts, plus net interest received from
abroad. Interest paid by consumers and by government, including government enterprises, is not added
into this computation because it is not treated as a
factor cost of production. In consequence, the net
interest component of national income falls short of
total interest accruing to persons from the business
system and from abroad by the amount of consumer
and government interest received by business. In
addition to monetary interest flows, net interest
includes imputed interest arising in connection with
the operations of financial intermediaries. A portion
of imputed interest is equal to the value of financial
services received by persons without explicit payment; the remainder represents property income
received by life insurance companies and noninsured
pension funds less profits of life insurance companies.
"Corporate profits" is the earnings of corporations
organized for profit which accrue to residents of this
Nation measured before Federal and State profit
taxes, but without deduction of depletion charges
and exclusive of capital gains and losses and intercorporate dividends. (For a more extended discussion, see section on Corporate Profits below,
p. 21.)
"Corporate inventory valuation adjustment"
measures the excess of the value of the change in
the physical volume of corporate inventories (valued
at average prices during the period) over the change
in terms of book values. This adjustment is made
to profits to remove the inventory profit or loss that
occurs in business accounting when the book cost
of inventories differs from the current replacement
cost. Valuation in current prices of the cost of
inventories used up puts sales and costs on a consistent basis, and is necessary to derive measures of
national output in current prices.
The accompanying chart shows the movements of
the national income by these major components since
1947.
"Compensation of employees"—reliable data are
available each year from the unemployment insurance system, with current monthly estimates resting
chiefly on employer reports on employment and earnings to the Bureau of Labor Statistics.
"Proprietors' income" is estimated from income tax
returns to the Internal Revenue Service with current
quarterly data derived from analysis of trends in noncorporate as well as corporate sales and corporate
STATISTICAL PROCEDURES
profits in individual industries.
The methods of estimation employed in the very
"Rental income of persons" is estimated from a
complex area of national income are described in variety of Census Bureau, Internal Revenue Service,
detail in the 1954 National Income Supplement to Department of Agriculture, and BLS data on rents
the Survey of Current Business. Further informa- paid and on the distribution of property ownership
tion is provided in U.S. Income and Output, 1958, and rental income between persons and business.
also issued as a supplement to the Survey and in the
"Net interest" is estimated from reports on interest
August 1965 Survey of Current Business. The follow- and debt to the Internal Revenue Service, Bureau of
ing indicates briefly the types of estimating proce- the Census, Board of Governors of the Federal
dures used:
Reserve System, and other agencies.
National Income, 1947-66
(Quarterly data.
Seasonally adjusted annual rates)
BILLIONS OF DOLLARS
700
600
500
TOTAL NATIONAL INCOME
400
COMPENSATION OF EMPLOYEES
300
200
PROPRIETORS' AND RENTAL INCOME
I .....I
1947
\
i
i
CORPORATE PROFITS AND INVENTORY VALUATION ADUSTMENT
I V...L.. I
I
'
1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965
SOURCE OF DATA DEPARTMENT OF COMMERCE
10
1966
TABLE
3.—National Income by Type of Income, 1929-66
[Billions of dollars]
Proprietors' income
Total
national
income
Year
Compensation of
employees 1
Farm
2
Rental
income of
persons
Business
and professional
Corporate profits and inventory
valuation adjustment
Net
interest
Total
Corporate Inventory
profits
valuation
before
adjust3
taxes
ment
1929
86.8
51. 1
6. 2
9. 0
5. 4
4. 7
10. 5
10. 0
0. 5
1930
1931
1932
1933
1934
1935
1936
1937
1938
1939
75.4
59.7
42.8
40. 3
49. 5
57. 2
65. 0
73. 6
67. 4
72. 6
46.8
39.8
31. 1
29. 5
34. 3
37. 3
42. 9
47. 9
45. 0
48. 1
4. 3
3. 4
2. 1
2. 6
3. 0
5. 3
4. 3
6. 0
4. 4
4. 4
7. 6
5.8
3. 6
3. 3
4.7
5. 5
6. 7
7. 2
6.9
7. 4
4.8
3.8
2. 7
2. 0
1. 7
1. 7
1. 8
2. 1
2. 6
2. 7
4.9
5. 0
4. 6
4. 1
4. 1
4. 1
3. 8
3. 7
3. 6
3. 5
7.0
2.0
-1. 3
-1. 2
1. 7
3. 4
5. 6
6. 8
4. 9
6. 3
3. 7
-. 4
-2. 3
1 0
2. 3
3. 6
6 3
6. 8
4. 0
7. 0
3. 3
2. 4
1. 0
—2 1
—. 6
— 2
1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
81. 1
104. 2
137. 1
170. 3
182. 6
181. 5
181.9
199. 0
224. 2
217. 5
52. 1
64. 8
85. 3
109. 5
121. 2
123. 1
117.9
128. 9
141. 1
141. 0
4. 5
6. 4
2.9
3. 3
3. 5
4. 5
5. 1
5. 4
5. 6
6. 6
7. 1
8. 0
8. 4
3.2
11. 7
11. 6
12. 2
14. 9
15. 2
17. 5
12. 7
8. 6
11. 1
14. 0
17. 0
18. 2
19. 2
21. 6
20. 3
22.7
22. 6
9.8
15. 2
20. 3
24. 4
23. 8
19. 2
19. 3
25. 6
33. 0
30.8
10. 0
17. 7
21. 5
25. 1
24. 1
19. 7
24. 6
31. 5
35. 2
28. 9
—. 2
—2 5
— 1. 2
—. 8
—. 3
—. 6
-5. 3
-5. 9
-2. 2
1. 9
1950
1951
1952
1953
1954 _
1955
1956
1957
1958
1959
241. 1
278. 0
291. 4
304. 7
303. 1
331.0
350. 8
366. 1
367.8
400. 0
154. 6
180.7
195.3
209. 1
208.0
224. 5
243. 1
256.0
24.0
26. 1
27. 1
27.5
27.6
30.3
31.3
32.8
33.2
35. 1
9.4
2.0
279. 1
13.5
15.8
15.0
13.0
12.4
11.4
11.4
11.3
13.4
11.4
10.3
11.5
12.7
13. 6
13.9
14.3
14.8
15.4
15.6
2.3
2.6
2.8
3.6
4. 1
4. 6
5.6
6.8
7. 1
37. 7
42.7
39.9
39.6
38.0
46. 9
46. 1
45. 6
41. 1
51. 7
42. 6
43. 9
38. 9
40. 6
38.3
48.6
48.8
47. 2
41. 4
52. 1
— 5. 0
-1. 2
1.0
— 1.0
-. 3
— 1. 7
-2. 7
— 1. 5
-. 3
—. 5
294.2
302.6
323.6
341. 0
365.7
392. 9
433.3
12.0
12.8
13.0
13. 1
12.0
15. 1
16.0
34.2
35.6
37.1
37. 9
39.9
40.7
41.8
15.8
16.0
16.7
17. 1
17.7
18. 3
18. 9
10. 0
11.6
13. 8
15. 5
17. 8
20.0
49. 9
50.3
55.7
58. 9
66. 6
74. 2
80.2
49. 7
50.3
55. 4
59. 4
67. 0
75. 7
82. 3
. 2
^
. 3
—. 5
—. 4
— 1. 5
-2. 1
1960
1961
1962 _
1963
1964
1965
1966
__
_
414. 5
427.3
457.7
481. 9
517.3
559.0
610. 1
• 257. 8
9.8
3. 1
2. 7
2.3
2.2
1. 5
1.9
1.8
1.9
8.4
— 7
*
1. 0
— 7
* Includes employer contributions for social insurance and to private pension, health, and welfare funds; compensation for injuries; directors' fees; pay of the military reserve; and a few other minor items.
2 Excludes income resulting from net reductions of farm inventories and gives credit in computing income to net additions to farm inventories during the period.
3
See Table 7 for corporate tax liability and profits after taxes.
NOTE.—Data for Alaska and Hawaii included beginning 1960.
Source: Department of Commerce, Office of Business Economics.
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 quarterly
basis.
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
11
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 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 oj Current
Business; a preliminary estimate is published in the
Survey in the first month after the close of the
quarter; revised figures for each quarter are shown
in a subsequent issue of the Survey. The figures also
appear in Economic Indicators. Preliminary annual
estimates are published by the Office of Business
Economics in the January issue of the Survey, revised
estimates in the July issue. Complete annual and
quarterly statistics for 1929-65 were published in
The National Income and Product Accounts oj the
United States, 1929-65.
A statistical evaluation report, Revisions oj First
Estimates oj Quarter-to-Quarter Movement in National
Income Series, 1947-1958 is available from the Office
of Statistical Standards, Bureau of the Budget.
4. SOURCES OF PERSONAL INCOME
DESCRIPTION OF SERIES
"Personal income" is the current income received
by persons from all sources, inclusive of transfer from
government and business but exclusive of transfers
among persons. Not only individuals (including
owners of unincorporated enterprises), but nonprofit
institutions, private trust funds, and private health
and welfare funds are classified as "persons." Personal income is measured on a before-tax basis, as
the sum of wage and salary disbursements, other
labor income, proprietors' and rental income, interest
and dividends, and transfer payments, minus personal
contributions for social insurance.
"Labor 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 sum of the "Net interest"
component of National Income, total interest paid
by consumers and net interest paid by Government
including government enterprises. "Transfer pay-
12
ments" include payments not resulting from current
production, such as social security benefits, military
pensions, corporate gifts to nonprofit institutions,
direct relief, and consumer bad debts.
Seasonally adjusted data, preferred for most
purposes, are derived directly from seasonally adjusted source materials for some national income
components. Unadjusted data are not available
for personal income or for national income.
RELATION TO OTHER SERIES
Personal income differs from national income by
including transfer payments (to persons and government) and consumer 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
TABLE
4.—Sources of Personal Income, 1929-66
[Billions of dollars]
Proprietors'
income
Total
personal
income
Wage
and
salary
disburse-1
ments
Other
labor
income*
1929
85. 9
50. 4
0. 6
9. 0
1930
1931
1932
1933
1934
1935
1936
1937
1938
1939
77. 0
65.9
50. 2
47. 0
54. 0
60. 4
68 6
74 1
68. 3
72 8
46. 2
39. 1
30. 5
29. 0
33. 7
36. 7
41. 9
46. 1
43. 0
45. 9
.6
.5
.5
.4
.4
.5
.6
.6
.6
.6
7. 6
5.8
3. 6
3. 3
4. 7
5. 5
6. 7
7. 2
1940
1941
1942
1943__. _
1944
19451946_ _
1947
1948
1949_
_-
78. 3
96.0
122.9
151. 3
165. 3
171. 1
178. 7
191. 3
210. 2
207. 2
49. 8
62. 1
82. 1
105. 6
116. 9
117. 5
112. 0
123. 0
135. 3
134. 6
1950_ _
1951
1952
195319541955
1956
1957
1958
1959
227.6
255.6
272.5
288.2
290. 1
310.9
333.0
351. 1
361.2
383.5
146.7
171.0
185. 1
198.3
196.5
211.3
227.8
238.7
239.9
258.2
1960 _ _-_
1961- _ --_
1962
1963
1964
1965
1966
401.0
416.8
442.6
465.5
496.0
535. 1
580.4
270.8
278. 1
296.1
311. 1
333.6
358.4
392.3
Year
Less:
Personal
contributions
for social
insurance
Nonagricultural
personal
income3
1. 5
0. 1
77. 6
6.8
6. 7
6. 3
5. 7
5.8
5. 7
5. 5
5. 6
5. 5
5. 5
1. 5
2. 7
2. 2
2. 1
2. 2
2. 4
3. 5
2. 4
3. 0
.
.
.
.
.
.
.
.
.
.
1
2
2
2
2
2
2
6
6
6
70.8
60. 8
46. 7
43. 2
49.8
53.9
63 0
66 7
62. 6
66 9
4.0
4. 4
4. 3
4. 4
4. 6
4. 6
5. 6
6. 3
7. 0
7. 2
5. 4
5. 5
5. 3
5. 3
5. 6
6. 3
6.8
7. 5
7. 9
8. 5
3. 1
3. 1
3. 1
3. 0
3. 6
6. 2
11. 3
11. 7
11. 2
12. 4
.7
.8
1. 2
1. 8
2. 2
2. 3
2. 0
2. 1
2. 2
2. 2
72.3
87. 8
111. 0
137. 3
151. 2
156.4
161. 0
173. 0
189. 4
191. 3
8.8
8.6
8.6
9.2
9.9
10.6
11.8
13.1
14.2
15. 1
12.5
13.0
14.0
16.0
17.3
2.9
3.4
3.8
15.7
17.6
18.9
20.7
23.4
18.5
21.4
25.7
26.6
28.5
6.9
7.9
210. 9
236.4
254. 1
271.9
274.7
296.4
318.5
336.6
344.3
368.5
9.3
9.6
10.3
11.8
12.5
13.2
17.6
385.2
400.0
425.5
448. 1
479.7
515. 6
559.7
Personal Transfer
interest
payincome ments
Rental
income
of persons
Dividends
6. 2
5. 4
5.8
7. 2
7. 4
4. 3
3. 4
2. 1
2. 6
3. 0
5. 3
4. 3
6. 0
4. 4
4. 4
4. 8
3.8
2. 7
2. 0
1. 7
1. 7
1. 8
2. 1
2. 6
2. 7
5. 5
4. 1
2.5
2. 0
2. 6
2.8
4. 5
4. 7
3. 2
3. 8
.7
.7
.9
1. 1
1. 5
1. 8
1. 9
2. 3
2. 7
3. 0
8. 6
11. 1
14. 0
17. 0
18. 2
19. 2
21. 6
20. 3
22. 7
22. 6
4. 5
6. 4
9.8
11. 7
11. 6
12. 2
14.9
15. 2
17. 5
12. 7
2.9
3. 5
4. 5
5. 1
5. 4
5. 6
6. 6
7. 1
8. 0
8. 4
3.8
4.8
5.3
24.0
26. 1
27.1
9.4
9.9
11.3
30.3
31.3
32.8
33.2
35.1
13.5
15.8
15.0
13.0
12.4
11.4
11.4
11.3
13.4
11.4
12.0
12.7
13.9
14.9
16.6
18. 5
20.8
34.2
35.6
37.1
37.9
39.9
40.7
41.8
12.0
12.8
13.0
13.1
12.0
15. 1
16.0
6.0
6.3
7.3
8.4
9.5
Business
and
professional
6.9
27.5
27.6
Farm
2
10.3
11.5
12.7
13.6
13.9
14.3
14.8
15.4
15.6
15.8
16.0
16.7
17.1
17.7
18.3
18.9
8.9
9.3
10.5
11.3
11.7
11.6
12.6
13.4
13.8
15.2
16.5
17.3
19.2
20.9
25.0
27.7
31.4
34.6
38.4
42.8
2.8
32.4
33.3
35.3
36.8
39.7
44. 6
4.0
4.6
5.2
5.8
6.7
1
The total of wage and salary disbursements and other labor income differs from compensation of employees in Table 3 in that it excludes employer contributions
for social insurance and excludes the excess of wage accruals over wage disbursements.
2 Excludes income resulting from net reductions of inventories and gives credit in computing income to net additions to inventories during the period.
3
Nonagricultural income is personal income exclusive of net income of unincorporated farm enterprises, farm wages, agricultural net interest, and net dividends
paid by agricultural corporations.
NOTE.—Data for Alaska and Hawaii included beginning 1960.
Source: Department of Commerce, Office of Business Economics.
nonmonetary items—imputed rent, interest, food,
fuel—should be noted, but the effect of these items
should not be overemphasized. They tend to make
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.
Disposable personal income, discussed in the next
section, is often used as a measure of income available
for spending. For measuring changes, in real terms,
i.e., in consumers' buying power, the estimates of
disposable income in constant prices are to be
preferred.
13
5. 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 outlays" is the sum of personal consumption expenditures, interest paid by consumers,
and personal transfer payments to foreigners. The
latter consists of personal remittances in kind and
in cash to abroad, net of such remittances from
abroad.
"Personal consumption expenditures" is the sum
of monetary 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.
More detail than is shown in Economic Indicators is
presented in Table 5B.
"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 purchases such as housing,
telephone, electricity, shoe repair, gas and water,
and also such items as the expense of handling life
insurance, and banking services furnished without a
specific charge.
"Personal saving" is equal to disposable personal
income less personal outlays. As such, it equals the
change in net worth of persons which may be further
viewed as the acquisition of financial claims (such
as cash and deposits, securities, and reserves of life
insurance companies and noninsured pension funds)
less the net increase in indebtedness, plus the acquisition of physical assets net of capital consumption
allowances.
Per Capita Disposable Income, 1947-66
{Quarterly data.
Seasonally adjusted annual rates)
PERSONAL INCOME IN 1958 PRICES
1,250
1,000
1947
1948 1949 1950
SOURCE OF DATA
1951 1952 1953 1954 1955 1956 1957
DEPARTMENT OF COMMERCE AND COUNCIL OF ECONOMIC ADVISORS
14
1958 1959 1960 1961
1962 1963 1964 1965
1966
TABLE
5A.—Disposition oj Personal Income, 1929-66
Less: Personal outlays
Year
Less:
Personal
Pertax
sonal
and
income
nontax
payments
Equals:
Personal consumption
Disposexpenditures 2
Total
able
perpersonal
sonal
income outlays Durable Nongoods durable Services
goods
Per capita disposable personal
income
Personal
Equals:
savings
Peras a
sonal
percent of
saving Current 1958 disposable
prices prices
income
Dollars
Billions of dollars
Population 3
Percent
Thousands
1929.__
85.9
2.6
83.3
79. 1
9. 2
37.7
30.3
4.2
683
1,236
5.0
121,875
1930___
1931___
1932._.
1933___
1934___
1935__
1936
1937___
1938___
1939___
77.0
2.5
1.9
1.5
1.5
1.6
1.9
2.3
2.9
2.9
2.4
74.5
71. 1
61. 4
49.3
46.5
52. 0
56.4
62.7
67.4
64.8
67.7
7. 2
34. 0
29. 0
22.7
22. 3
26.7
29.3
32.9
35.2
34.0
35. 1
28.7
26.0
22. 2
20. 1
20.4
21. 3
22.8
24. 4
24.3
25. 0
3.4
2.6
-.6
-.9
.4
2.1
3.6
3.8
.7
2.6
605
516
390
362
414
459
518
552
504
537
1,128
1,077
921
893
952
1,035
i, 158
1,187
1, 105
1,190
4.6.
4. 1
-1.3
-2.0
.7
3.7
5.4
5.3
1. 1
3.7
123, 188
124, 149
124, 949
125, 690
126, 485
127, 362
128, 181
128,961
129, 969
131, 028
1940___
1941.__
1942.__
1943___
1944___
1945___
1946.__
1947___
1948___
1949___
78.3
96.0
122.9
151.3
165.3
171. 1
178.7
191.3
210.2
207.2
2.6
3.3
6.0
75.7
17.8
18.9
20.9
18.7
21.4
21.1
18.6
92.7
116.9
133.5
146.3
150.2
160.0
169.8
189.1
188.6
71.8
81.7
89.3
100. 1
109. 1
120.7
144.8
162. 5
175. 8
179. 2
7.8
9.6
6.9
6.6
6.7
8. 0
15. 8
20.4
22.7
24.6
37. 0
42.9
50.8
58.6
64.3
71.9
82. 4
90.5
96.2
94. 5
26. 0
28. 1
30.8
34. 2
37.2
39. 8
45. 3
49.8
54.7
57.6
3.8
11.0
27.6
33.4
37.3
29.6
15. 2
7.3
13.4
9.4
573
695
867
976
1,057
1,074
1, 132
1,178
1,290
1,264
1,259
1,427
1,582
1,629
1,673
1,642
1,606
1,513
1,567
1,547
5. 1
11.8
23.6
25.0
25.5
19.7
9.5
4.3
7. 1
5.0
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.__
1955.__
1956___
1957.__
1958___
1959.__
227.6
255.6
272.5
288.2
290.1
310.9
333.0
351.1
361.2
383.5
20.7
29.0
34.1
35.6
32.7
35.5
39.8
42.6
42.3
46.2
206.9
226.6
238.3
252.6
257.4
275.3
293.2
308.5
318.8
337.3
193.9
209. 3
220. 2
234. 3
241. 0
259.5
272.6
287.8
296.6
318. 3
30. 5
29.6
29. 3
33.2
32.8
39.6
38.9
40.8
37.9
44.3
98. 1
108.8
114. 0
116.8
118. 3
123.3
129. 3
135.6
140.2
146.6
62. 4
67.9
73. 4
79.9
85.4
91.4
98. 5
105. 0
112. 0
120. 3
13.1
17.3
18.1
18.3
16.4
15.8
20.6
20.7
22.3
19.1
1,364
1,469
1, 518
1,583
1,585
1,666
1,743
1,801
1,831
1,905
1,646
1,657
1,678
1,726
1,714
1,795
1,839
1,844
1,831
1,881
6.3
7.6
7.6
7.2
6.4
5.7
7.0
6.7
7.0
5.6
151,
154,
156,
159,
162,
165,
168,
171,
174,
177,
684
287
954
565
391
275
221
274
141
073
1960___
1961___
1962___
1963___
1964.__
1965___
1966
401.0
416.8
442.6
465.5
496.0
535. 1
580.4
50.9
52.4
57.4
60.9
59.4
66.0
75.1
350.0
364.4
385.3
404.6
436.6
469.1
505.3
333. 0
343. 3
363. 7
384.7
412. 1
443. 4
478. 3
45. 3
44. 2
46. 5
53.9
59. 4
66. 1
69. 3
151.3
155.9
162. 6
168.6
178.9
190.6
206. 2
128.7
135. 1
143. 0
152.4
163. 1
174.8
189. 4
17.0
21.2
21.6
19.9
24.5
25.7
27.0
1,937
1,983
2,064
2, 136
2,272
2,411
2,567
1,883
1,909
1,968
2,013
2,116
2,214
2,294
4.9
5.8
5.6
4.9
5.6
5.5
5.3
180,
183,
186,
189,
192,
194,
196,
684
756
656
417
120
572
842
1
2
3
65.9
50.2
47.0
54.0
60.4
68.6
74.1
68.3
72.8
64.0
48.7
45.5
52.4
58.5
66.3
71.2
65. 5
70.3
5.5
3.6
3.5
4.2
5. 1
6. 3
6.9
5.7
6. 7
Includes personal consumption expenditures, interest paid by consumers, and personal transfer payments to foreigners.
See p. 16 for total personal consumption expenditures, and a breakdown of durable goods, nondurable, goods, and services.
Population of the United States including armed forces abroad. Annual data are for July 1; quarterly data are for middle of period, interpolated from monthly
data.
NOTE.—Data for Alaska and Hawaii included beginning 1960.
Sources: Department of Commerce (Office of Business Economics and Bureau of the Census) and Council of Economic Advisers.
"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 1958
prices is obtained by dividing the current dollar
series by the implicit deflator for personal consumption expenditures on a 1958 base used in the GNP
series.
The movements of the current and the constant
dollar per capita estimates since 1947 are shown in
the chart on page 14.
15
TABLE
5B.-Per8onal Oonsumption Expenditure8, 1929-66
[Billions of dollars)
Year
Total
personal
consumption Total
expenditures
Durable goods
Automobiles
and
parts
Nondurable goods
Services
FurniFood,
ture
exclud- Cloth- GasoHouseand
ing al- ing
line
Hous- hold Transhouse- Other Total coholic and
and Other Total ing 2 oper- porta- Other
hold
bever- shoes 1 oil
ation tion
equipages
ment
- - - - - - - - - - - - -- - - - - - - -
1929 _____
77. 2
9. 2
3. 2
4. 8
1.2
37. 7
19. 5
9. 4
1.8
7. 0
30.3
11.5
4. 0
2.6
12.2
1930 _____
193L ____
1932 _____
1933 _____
1934- ____
1935 _____
1936 _____
1931- ____
1938 _____
1939 _____
69. 9
60.5
48. 6
45. 8
51. 3
55. 7
61. 9
66.5
63.9
66.8
7. 2
5.5
3.6
3.5
4. 2
5. 1
6. 3
6.9
5.7
6.7
2.2
1.6
.9
1. 1
1.4
1.9
2.3
2. 4
1.6
2.2
3.9
3.1
2.1
1.9
2.2
2. 6
3.2
3.6
3.1
3. 5
1. 1
.9
.6
.5
.6
.7
.. 8
1.0
.9
1.0
34. 0
29.0
22.7
22. 3
26.7
29.3
32. 9
35.2
34. 0
35.1
18.0
14. 7
11.4
10. 9
12.2
13.6
15.3
16.5
15.6
15.7
8. 0
6.9
5. 1
4. 6
5. 7
6. 0
6.6
6. 8
6. 8
7.1
1.7
1.5
1.5
1.5
1.6
1.7
1.9
2. 1
2. 1
2. 2
6.3
5.7
4. 8
5. 3
7.2
7. 9
9.1
9. 8
9.5
10.1
28. 7
26.0
22.2
20.1
20.4
21.3
22.8
24. 4
24. 3
25.0
11.0
10. 3
9. 0
7. 9
7. 6
7.7
8. 0
8.5
8. 9
9.1
3. 9
3.5
3.0
2. 8
3.0
3.2
3. 4
3.7
3.6
3. 8
2.2
1.9
1.6
1.5
1.6
1.7
1.9
2.0
1.9
2.0
11.5
10.3
8. 6
7.9
8. 2
8.7
9. 5
10. 2
9.9
10.1
1940 _____
194L ____
1942 _____
1943 _____
1944 _____
1945 _____
1946 _____
1947 _____
1948 _____
1949 _____
70.8
80.6
88.5
99.3
108. 3
119. 7
143. 4
160.7
173.6
176. 8
7.8
9.6
6. 9
6. 6
6. 7
8.0
15.8
20. 4
22.7
24.6
2.7
3.4
.7
.8
.8
1.0
4. 0
6.2
7.5
9. 9
3. 9
4. 9
4. 7
3.9
3.8
4.6
8. 6
10.9
11.9
11.6
1.1
1.4
1.6
1.9
2.2
2.5
3.2
3.3
3.4
3.2
37.0
42. 9
50.8
58.6
64.3
71.9
82.4
90.5
96.2
94.5
16.6
19.2
23.3
27.4
29.9
33.2
39.0
43. 7
46.3
44. 8
7. 4
8. 8
11.0
13.4
14.4
16.5
18.2
18.8
20.1
19.3
2.3
2.6
2.1
1.3
1.6
1.8
3. 0
3. 6
4. 4
5. 0
10. 7
12.2
14.4
16.5
18.4
20.5
22.1
24. 4
25.4
25.4
26.0
28.1
30.8
34. 2
37. 2
39. 8
45. 3
49. 8
54. 7
57.6
9. 4
10.2
11.0
11.5
12.0
12.5
13.9
15.7
17.5
19.3
4. 0
4.3
4.8
5.2
5. 9
6.4
6. 8
7. 5
8.1
8. 5
2.1
2.4
2.7
3. 4
3. 7
4.0
5. 0
5.3
5.8
5.9
10.4
11.2
12.3
14.0
15.6
16.8
19. 7
21. 4
23.3
23. 9
1950 _____
195L ____
1952 _____
1953 _____
1954 _____
1955 _____
1956 _____
1957 _____
1958 _____
1959 _____
191. 0
206.3
216.7
230.0
236.5
254.4
266.7
281. 4
290. 1
311. 2
30.5
29.6
29.3
33.2
32.8
39.6
38.9
40.8
37.9
44.3
13.1
11. 6
11. 1
14.2
13.6
18.4
16.4
18.3
15.4
19.5
14. 1
14.4
14.3
14.9
15.0
16.6
17.5
17.3
17. 1
18.9
3.3
3.6
3.9
4. 1
4.2
4.6
5.0
5.2
5.4
5.9
98. 1
108.8
114.0
116.8
118.3
123.3
129.3
135.6
140.2
146.6
46.0
52. 1
54.7
55.5
56.5
58. 1
60.4
63.9
66.6
68.4
19.6
21. 2
21. 9
22. 1
22. 1
23. 1
24.1
24.3
24.7
26.4
5.4
6. 1
6.8
7.7
8.2
9.0
9.8
10.6
11. 0
11. 6
27.1 62.4
29.3 67.9
30.5 73.4
31. 6 79.9
31. 5 85.4
33.1 91. 4
34.9 98.5
36.7 105.0
37.9 112.0
40.2 120.3
21. 3
23.9
26.5
29.3
31. 7
33.7
36.0
38.5
41. 1
43.7
9.5
10.4
11. 1
12.0
12.6
14.0
15.2
16.2
17.3
18.5
6.2
6.7
7.1
7.8
7.9
8.2
8.6
9.0
9.3
10. 1
25.4
26.9
28.7
30.8
33.2
35.5
38.6
41. 3
44.3
48.0
1960 _____
196L ____
1962 _____
1963 _____
1964 _____
1965 _____
1966 _____
325.2
335.2
355.1
375.0
401. 4
431. 5
464.9
45.3
44.2
49.5
53.9
59.4
66. 1
69.3
20.1
18.4
22.0
24.3
25.8
29.8
30.0
18.9
19.3
20.5
22.2
25.1
27.1
30.1
6.3
6.5
6.9
7.5
8.5
9.1
9.3
151. 3
155.9
162.6
168.6
178.9
190.6
206.2
70. 1
72. 1
74.4
76.5
80.4
85.4
91. 3
27.3
27.9
29.6
30.6
33.6
35.9
40.3
12.3
12.4
12.9
13.5
14. 1
15. 1
16. 1
41. 6
43.5
45.7
48.0
50.8
54. 1
58.5
46.3
48.7
52.0
55.4
59.2
63.2
67.7
20.0
20.8
22.0
23. 1
24.3
25.6
27.2
10.8
10.6
11.0
11. 4
11.8
12.8
14.0
51,.6
54.9
58.0
62.5
67.8
73.3
80.5
128.7
135.1
143.0
152.4
163.1
174.8
189.4
1 Includes standard clothing Issued to military personnel.
, Includes imputed rental value of owner-occupied dwellings.
NOTE.-Data for Alaska and Hawal1 included, beginning 1960.
Source: Department of Commerce, Office of Business Economics.
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 and government or exported. To
the consumer portion of manufactured products is
16
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 Com-
mission 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 expenditures estimates rest chiefly on the trends shown
by the Census Bureau's Annual Survey of Manufactures and retail sales figures by kind of store, 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 sav-
ings 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 5.7 in The National Income and
Product Accounts of the United States, 1929-1965,
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.
6. 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 nonf arm 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 Govern-
ment payments and makes an allowance for the net
value of physical changes in farm 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.
Gross and net farm income from farming and farm
production expenses are estimated annually from
1910 and quarterly at seasonally adjusted annual
rates, 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 70 percent of realized gross
farm income, are the aggregate of all current farm
17
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
number of farms.
STATISTICAL PROCEDURES
Since the average farm family receives about a
third of its total personal 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 commodities.
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 and Commodity
Credit Corporation loan activity. 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,
Farm Income, 1947-66
(Quarterly data.
Seasonally adjusted annual rates)
BILLIONS OF DOLLARS
50
r
NET FARM INCOME (INCL. NET CHANGE IN INVENTORIES)
\ A
1S47
1948
1949 1950 19S1 1952 19S3 1954 1955 1956 1957 1958 1959 1960 1961 1962
SOURCE OF DATA: DEPARTMENT OF AGRICULTURE
18
1964
1963
1965 1966
TABLE 6.—Farm Income, 1929-66
Income received from farming
Personal income received
by total farm population
Realized gross
Year
From
all
sources
Cash
From
From
receipts
from
farm nonfarm Total i
marketsources sources
Production expenses
ings
Net income per farm,
Net to farm operators including net inventory
change 3
Excluding net
inventory
change
Including net
inventory
change 2
Billions of dollars
Current
prices
1966
prices 4
Dollars
1929.
(5)
(5)
(5)
13.9
11.3
7.7
6.3
6.2
945
1,929
1930.
1931.
1932.
1933
1934
1935.
1936.
1937.
1938.
1939
(5)
(5)
5
(5)
5
5
6.9
5.5
4.5
4.4
4.7
4.5
2.9
1.9
2.7
3.9
4.6
5. 1
5.2
4.2
4.3
4.3
3.3
2.0
2.6
2.9
5.3
4.3
6.0
4.4
4.4
651
506
304
379
431
775
639
905
668
685
1,415
1,297
894
1,115
1,105
1,987
1,638
2,207
1,713
1,803
1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
7.6
10.1
14.1
16.5
16. 6
17.2
20.0
21. 1
23.8
19.5
4.5
6.5
9.9
11.7
11.7
12.3
15. 1
15.4
17.7
12.8
706
1,031
1,588
1,927
1,950
2,063
2,543
2,615
3,044
2,233
1,858
2,515
3,379
3,636
3,482
3,557
3,973
3,487
3,805
2,900
1950
1951.
1952
1953
1954.
1955.
1956.
1957.
1958.
1959.
20.4
22.7
22.1
19.8
18.4
17.6
17.8
1960.
1961.
1962.
1963.
1964.
1965.
1966.
()
(5)
(5)
(5)
3.2
5.4
4.6
6.2
4.7
4.8
()
(5)
(5)
(5)
2.2
2.3
11.5
9. 1
8.4
6.4
7.1
8.6
9.7
6.4
2. 6
2.7
2.5
2.6
10.8
11.4
10.1
10.6
4.8
6.8
10.1
12. 1
12.2
12.8
15.5
15.8
18.0
13.3
2.8
3.3
3.9
4.4
4.4
4.4
4.6
5.3
5.8
6.2
11. 1
13.9
18.8
23.4
24.4
25.8
29.5
34. 1
34.7
31.6
11. 1
15.6
19.6
20.5
21.7
24.8
29.6
30.2
27.8
10.0
11.6
12.3
13. 1
14.5
17.0
18.8
18.0
4.2
6.1
8.8
11.8
12. 1
12.8
15.0
17.1
15.9
13.6
19.5
18.1
14.1
16.2
15.4
13.4
12.5
11.4
11.2
11.0
12.8
11.0
6.3
6.5
6.7
6.4
5.9
6.2
6.6
6.6
6.7
7.0
32.3
37.1
36.8
35.0
33.6
33.1
34.3
34.0
37.9
37.5
28.5
32.9
32.5
31.0
29.8
29.5
30.4
29.7
33.5
33.5
19.4
22.3
22.6
21.3
21.6
21.9
22.4
23.3
25.2
26. 1
12.9
14.8
14.1
13.7
12.0
11.2
11.9
10.7
12.711.4
13.7
16.0
15.1
13.1
12.5
11.5
11.4
11.3
13.5
11.5
2,421
2,946
2,896
2,626
2,606
2,463
2,335
2,590
3,189
2,795
3,104
3,466
3,367
3,089
3,030
2,864
2,914
2,878
3,504
3,071
18.7
19.0
19.2
18.7
17.9
20.6
21.3
11.4
12.1
12.2
12.0
11. 1
13.7
14.5
7.2
6.9
7.0
6.7
6.7
6.8
6.8
37.9
39.6
41. 1
42. 1
42.3
44.9
49.5
34.0
34.9
36.2
37.2
36.9
39.2
42.9
26.2
27.0
28.5
29.6
29.4
30.7
33.2
11.7
12.6
12.5
12.5
12.9
14.2
16.3
12.0
12.9
13.1
13.1
12.1
15.2
16.1
3,043
3,389
3,562
3,671
3,479
4,493
4,955
3,308
3,684
3,789
3,864
3,662
4,632
4,955
()
5.4
7.7
7.2
9.0
7.2
7.4
17.7
4.7
5.3
6.4
7.1
8.4
8.9
7.7
7.9
8.4
5. 1
5.6
6.2
5.9
6.3
6.9
7.8
1 Cash receipts from marketings, Government payments, and nonmoney income furnished by farms.
Inventory of crops and livestock valued at the average price for the year.
The number of farms (in millions) are 3.4 for 1965 and 3.3 for 1966.
Income in current prices divided by the index of prices paid by farmers for items used in family living on a 1966 base,
s Not available.
Source: Department of Agriculture.
2
3
4
19
valued at prices received by farmers for the sale of fourth quarter—requiring some fairly large seasonal
similar products. The gross rental value of farm adjustments.
dwellings is designed to represent the amount which
Except for cash receipts, however, monthly or
would have to be paid if the dwellings were rented quarterly information on components of farm income
separately from the farms. Government payments and expense is insufficient for the direct application
to farmers comprise all Federal payments made of ordinary methods of seasonal adjustment. While
directly to farmers in which a sale or title transfer cash receipts can be seasonally adjusted in the usual
to the Government is not involved—at the present manner, the other quarterly estimates are interpotime Feed Grain, Wheat, and Cotton Programs, lated from annual data largely in terms of price
Soil Bank, Cropland Adjustments, Conservation, changes, with the quantity factors either held conWool, and Sugar Act payments. Net Commodity stant throughout the year or varied in some reasonCredit Corporation loans are included in cash re- able manner.
ceipts from marketings; loans are counted as income
RELATION TO OTHER SERIES
in the month made and redemptions are subtracted
from income in the month redeemed.
The series on net income of farm operators includThe estimates of farm production expenses are
ing net change in farm inventories is the same as
based on about 40 separate series. Annual survey
data are available only for purchased livestock and farm proprietors' income in the national income
taxes on farm real estate. Some of the major operat- series. Presently the Department of Agriculture
ing expense series are based on data obtained in the series excludes Alaska and Hawaii while the DepartCensuses of Agriculture, with interpolations for inter- ment of Commerce includes an estimate for these
censal years; others are based on special surveys such States starting in 1960.
The Department of Agriculture also publishes
as the 1955 Expenditure Survey and trade informarelated series such as a net cash income of farm
tion. Depreciation charges on buildings, motor
vehicles and other farm machinery and equipment operators, the cash and other income of farm workers,
are estimated annually as the amount which farmers farm capital expenditures and Government payments
would have to pay if they replaced, at prices prevail- by programs.
ing during the year, the amount of plant and equipUSES AND LIMITATIONS
ment used up during the year. Estimates are also
The estimates of realized gross farm income are
made for other major expense accounts such as
interest on outstanding indebtedness, repairs and for the most part based on a comprehensive body of
operations, capital equipment, electricity, telephones, basic data and are considered to be reasonably accurate. The estimates of farm production expenses,
milk hauling and other items.
The net change in inventories reflects physical however, are based in part on incomplete data, less
changes in all livestock and crops on farms, except frequently collected, and are believed to be subject
crops under CCC loans, with the changes valued at to more error than the estimates of cash receipts
from farm marketings. Any errors in the expense
average prices for the year.
Annual estimates are made of the number of estimates are fully reflected in the estimates of net
farms, based on benchmark data from the Censuses income of farm operators.
Information on total farm income and on net
of Agriculture adjusted for underenumeration and
some of the Soil Bank farms excluded in the Census. income per farm, and on the per capita income of
National estimates for intercensal years utilize June farm people is useful as a general indicator of the
Enumerative Surveys of the Statistical Reporting economic well-being of a broad sector of the economy.
Its usefulness is limited, however, because of a wide
Service based on an area probability sample.
Quarterly estimates of cash receipts from farm variation in type-of-farming operations and in size
marketings are expanded to a seasonally adjusted of farms. Some segments of the farm economy may
annual rate. The normal quarterly distribution of prosper at the same time that other segments are
cash receipts in recent years has been 22 percent in seriously distressed. In order to supply more dethe first quarter, 19 percent in the second quarter, tailed data on how the different segments of the
26 percent in the third quarter, and 33 percent in the farm economy are affected by changing prices of farm
20
products and of farm production goods and services,
the Economic Research Service has developed data
on farm costs and returns for 42 of the more important type-of-f arming areas. The Economic Research
Service has also developed estimates of income for
commercial and for non-commercial farms and
distributions of farm income by value of sales classes
for 1959-65. Also, the Economic Research Service
has developed estimates of the income per farm
operator family from farm and off-farm sources by
value of sales classes for 1959-65.
REFERENCES
The basic release of the farm income data is the
Farm Income Situation, published 4 times a year by
the Economic Research Service. In addition, an
annual supplement is published showing State
estimates of farm income starting in 1949. Some of
the principal series on farm income are also published
in the Department of Agriculture's annual Agricultural Statistics. The methods used to estimate
farm 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; however, the section of this report dealing
with nonfarm comparisons is no longer valid.
The method used for the quarterly estimates,
seasonally adjusted annual rates, of farm income are
described in an article by Earnest W. Grove in the
July 1954 issue of Agricultural 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.
7. CORPORATE PROFITS
DESCRIPTION OF SERIES
The corporate profits and related series of the
Office of Business Economics, Department of Commerce, pertain to all United States corporations
organized for profit. Data are shown for broad
industry groups, and estimates are made of the distribution of profits between corporate tax liability,
dividends, and retained earnings. Corporate capital
consumption allowances and corporate cashflow(i.e.,
corporate profits after taxes plus capital consumption
allowances) are also shown. Capital consumption
allowances consist of depreciation, 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
the United States corporations. Profits are calculated inclusive of domestic 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 allowance estimates.) Capital gains and losses
are eliminated from profits because they do not
measure gains or losses originating from current
production. Bad debt expenses are measured by
actual losses, net additions to reserves; and the
profit or loss of bankrupt firms includes the gain
from unsatisfied debt. Adjustments for international flows affecting profits are made. In these
respects the national income measure of profits
differs from those shown in the Internal Revenue
Service tabulations of tax returns. The national
income profits measure also differs from those
commonly shown in company reports and from the
financial reports series of the Federal Trade Commission and Securities and Exchange Commission.
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 conceptually,
with other entries in the national income accounts.
The important conceptual accounting adjustments
are suggested by the statement above of differences
between the tax-return concept of profit and the
national income concept. In addition, the tax-return
figures are augmented by the audit adjustment, which
makes allowance for additional profit than would
be disclosed by a complete auditing of the income
tax returns by Internal Revenue. Mutual financial
intermediaries are not considered part of the corporate universe for national income purposes.
21
Seasonal Correction, Corporate Profits and Inventory Valuation Adjustment, 1965
[Billions of dollars]
I..
II_
III
IV.
Seasonally adjusted
quarterly rates
Unadjusted quarterly
rates
Correction, quarterly rates
(seasonally adjusted
minus unadjusted)
18.3
18.2
18.5
19.2
Quarters
17.0
19.1
18.1
20.1
1.3
-.9
.4
-.9
The adjustment of corporate profits estimates for
The estimates for the most recent year or two and
seasonal variation is difficult because of the volatility
for quarters are made by extrapolating the latest
available estimates based upon Internal Revenue of profits. A diversity in seasonal patterns exists
tabulations of corporation tax returns. The extrapo- among the various industries, so the adjustment is
lators for manufacturing corporations are based made in considerable industry detail. For most
upon the FTC-SEC Quarterly Financial Report; industry components the ratio-to-moving-average
those for Federally regulated industries are obtained method has been used. The correction for seasonal
from reports to the Federal regulatory agencies; variation is made in terms of the corporate profits
and those for other industries are based upon non- share of national income (i.e., corporate profits before
governmental surveys and upon miscellaneous tax, plus inventory valuation adjustment).
The magnitude of the corporate profits seasonal
sources of varying reliability. When the Internal
Revenue tabulations of tax returns for a given year correction may be seen in the comparison of unadbecome available, the estimates for that year are justed and seasonally adjusted quarterly data for the
revised to conform to the Internal Revenue tabu- year 1965 shown in the table.
lations.
Corporate Profits, 1947-66
{Quarterly data.
Seasonally adjusted annual rates)
BILLIONS OF DOLLARS
80
PROFITS AFTER TAXES i l i l l
194)
1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1969 1961 1962 1963 1964 19E5
22
1966
TABLE
7.-0orporate Profits, 1929-66
[Billions of dollars]
Corporate profits (before taxes) and inventory valuation adjustment 1
Manufacturing
Year
Transportation,
communication,
and
public
utilities
Corporate profits
after taxes
Corporate
profits
before
taxes
All
industries
Total
Durable
goods
industries
1929 ____ 10.5
5.2
2.6
2.6
1.8
3.4
10.0
1930 ____ 7.0
193L ___ 2.0
1932 ____ -1.3
1933 ____ -1.2
1934- ___ 1.7
1935 ____ 3.4
1936 ____ 5.6
1937 ____ 6.8
1938 ____ 4.9
1939 ____ 6.3
3.9
1.3
-.5
-.4
1.1
2.1
3.2
3.8
2.3
3.3
1.5
2.4
1.3
.5
1.2
.5
.2
3.7
-.4
-2.3
1.0
2.3
3.6
6.3
6.8
4.0
7.0
1940 ____
194L ___
1942 ____
1943 ____
1944 ____
1945 ____
1946 ____
1941- ___
1948 ____
1949 ____
9.8
15.2
20.3
24.4
23.8
19.2
19.3
25.6
33.0
30.8
5.5
9.5
11. 8
13.8
13.2
9.7
9.0
13.6
17.6
16.2
1950 ____
195L ___
1952 ____
1953 ____
1954 ____
1955 ____
1956 ____
1957 ____
1958 ____
1959 ____
37.7
42.7
39.9
39.6
38.0
46.9
46.1
45.6
41. 1
51. 7
1960 ____
196L ___
1962 ____
1963 ____
1964- ___
1965 ____
1966 ____
49.9
50.3
55.7
58.9
66.6
74.2
80.2
Nondurable
goods
industries
All
other 2
Corporate
tax
liability
1.4
DiviTotal dend
payments
Undistributed
profits
Corporate
capital
consumption
allowances 3
Profits
plus
capital
consumption
allowances 4
8.6
5.8
2.8
'l.2
12.8
.8
2.9
.5 -.9
.4 -2.7
.5
.4
.7
1.6
1.0
2.6
1.4
4.9
1.5
5.3
1.0
2.9
1.4
5.6
5.5
4. 1
2.5
2.0
2.6
2.8
4.5
4.7
3.2
3.8
-2.6
-4.9
-5.2
-1.6
-1.0
-.2
.4
.6
-.2
1.8
4.3
4.3
4.0
3.8
3.6
3.6
3.6
3.6
3.7
3.7
7.2
3.5
1.3
4.2
5.2
6.3
8.5
8.9
6.0
9. 3
.8
1.1
1.5
2. 1
1.6
1.7
.4
.4
.7
.8
.5
1.0
1.9
.2
-.9
-.8
.3
.9
1.7
2.2
2. 1
2.0
3.1
6.4
7.2
8. 1
7.4
4.5
2.4
5.8
7.5
8. 1
2.4
3.1
4.6
5.7
5.9
5.2
6.6
7.8
10.0
8. 1
1.3
2.0
3.4
4.4
3.9
2.7
1.8
2.2
3.0
3.0
3.0
3.7
5.1
6.2
6.7
6.7
8.5
9.9
12.5
11. 6
10.0
17.7
21. 5
25.1
24. 1
19. 7
24.6
31. 5
35.2
28.9
2.8
7.6
11. 4
14. 1
12.9
10. 7
9.1
11. 3
12.5
10.4
7.2
10.1
10. 1
11. 1
11. 2
9.0
15.5
20.2
22.7
18.5
4.0
4.4
4.3
4.4
4.6
4.6
5.6
6.3
7.0
7.2
3.2
5.7
5.9
6.6
6.5
4.4
9.9
13.9
15.6
11.3
3.8
4.2
5.0
5.4
6. 1
6.4
4.7
5.8
7.0
7.9
11. o
14. 4
15. 2
16. 4
17.2
15. 4
20. 2
26. o
29. 7
26. 5
20.9
24.6
21. 6
22.0
19.9
26.0
24.7
24.0
19.3
26.3
12.0
13.2
11. 7
11.9
10.5
14.3
12.8
13.3
9.3
13.6
8.9
11. 4
9.9
10.1
9.4
11.8
11. 9
10. 7
10.0
12.7
4.0
4.6
4.9
5.0
4.7
5.6
5.9
5.8
5.9
7.0
12.7
13.5
13.3
12.6
13.4
15.2
15.6
15.8
15.9
18.4
42.6
43.9
38.9
40.6
38.3
48.6
48.8
47.2
41. 4
52.1
17.8
22.3
19.4
20.3
17.7
21. 6
21. 7
21. 2
19.0
23.7
24.9
21. 6
19.6
20.4
20.6
27.0
27.2
26.0
22.3
28.5
8.8
8.6
8.6
8.9
9.3
10.5
11. 3
11. 7
11. 6
12.6
16.0
13.0
11. 0
11. 5
11.3
16.5
15.9
14.2
10.8
15.9
8.8
10.3
11. 5
13.2
15.0
17.4
18.9
20.8
22.0
23.5
33. 7
31. 8
31. o
33. 5
35. 5
44. 4
46. 1
46. 8
44. 3
52. o
24.4
23.3
26.6
28.8
32.4
37.8
4l. 0
12.0
11.4
14.1
15.8
17.9
22. 1
23.8
12.4
11. 9
12.5
13.0
14.5
15.7
17.3
7.5
7.9
8.5
9.5
10.4
11. 1
11.9
17.9
19. 1
20.5
20.6
23.8
25.3
27.2
49.7
50.3
55.4
59.4
67.0
75.7
82.3
23.0
23.1
24.2
26.3
28.4
31. 2
33.9
26.7
27.2
31. 2
33.1
38.7
44.5
48.4
13.4
13.8
15.2
16.5
17.3
19.2
20.9
13.2
13.5
16.0
16.6
21. 3
25.3
27.4
24.9
26.2
30.1
31. 8
33.9
36.3
38.8
51. 6
53. 5
61. 3
64. 8
72. 5
80.8
87.2
*
-1.0
-.4
.3
.9
1.7
1.7
.8
1.7
*
*
See table 3 (p. ll) on National Income for the inventory valuation adjustment.
, Includes all other industries and financial institutions.
Includes depreciation and accidental damages.
• Corporate profits after taxes plus corporate capital consumption allowances.
"Less than $50 million.
NOTE.-Beginning 1962 data reflect the new depreciation guidelines issued by the Treasury Department July ll, 1962, and the investment tax credit provided in
the Revenue Act of 1962.
Source: Department of Commerce, Office of Business Economics.
1
3
23
Quarterly 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 currently account for over one-half 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. As
such, undistributed profits equals the change in
corporate net worth stemming from current operations. It may also be viewed as purchases of physical assets plus net acquisition of financial assets less
capital consumption of allowances, borrowing, and
new stock issues.
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.
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.
RELATION TO OTHER SERIES
The corporate profits 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 income 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
limits the industrial comparability of profits 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
24
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 business. 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 statement
of the methods and the sources of data used in preparing these estimates is presented in the 1954
National Income Supplement to the Survey of Current
Business, U.S. Income and Output, 1958, and the
August 1965 Survey of Current Business.
8. GROSS PRIVATE DOMESTIC INVESTMENT
DESCRIPTION OF SERIES
Gross Private Domestic Investment is one of the
major components of gross national product. The
series consists of the net acquisitions of fixed capital
goods by private business and nonprofit institutions;
including commissions arising in the sale and purchase of new and existing fixed assets, principally real
estate; and the value of the change in the volume of
inventories held by business. I t covers all private
dwellings including those acquired by persons for
their own occupancy.
Separate statistical series are published for "Fixed
investment7' (which in turn consists of separate series
for "Nonresidential fixed investment" and "Residential structures77 and for "Change in business inventories.77 The "Structures77 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 esti-
mates for oil- and gas-well drilling, commissions
arising in the sale of new and existing structures, and
net purchases of structures from government.
The quarterly estimates of producers7 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 inventories77
series have sometimes been quite sizable, and have
resulted primarily from revisions in the basic book
value inventory aggregates.
STATISTICAL PROCEDURES
The principal method of estimation used for the
"Producers7 durable equipment77 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 producers7 durable goods, (2) tracing
Gross Private Domestic Investment, 1947-66
(Quarterly data.
Seasonally adjusted annual rates)
BILLIONS OF DOLLARS
120
100
GROSS PRIVATE DOMESTIC INVESTMENT
PRODUCERS' DURABLE EQUIPMENT
RESIDENTIAL STRUCTURES
^NON RESIDENTIAL STRUCTURES
CHANGE IN BUSINESS INVENTORIES
1947
1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 I960
1961 1962 1963 1964 1965
1966
SOURCE OF DATA: DEPARTMENT OF COMMERCE
76-384 0—67-
25
the flow of those goods through distribution channels,
(3) measuring their distributive costs, and (4) adding
the estimate of those distributive costs to manufactures' sale value to arrive at an estimate of the costs
of those goods to their purchasers.
For the years 1929-39, 1947, 1954, and 1958, data
available from the manufactures 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. -''Secondary" benchmark estimates
were developed for 1950-1953, 1955-57, and 1959-62
primarily from data collected by the Bureau of the
Census in its annual sample survey of manufactures.
Quarterly estimates for most of the period ending
1962 were interpolated by a series based on the OBESEC Plant and Equipment Expenditures Survey.
The survey results are adjusted to make them more
comparable with estimates of producers' durable
equipment, principally by excluding expenditures on
new plant, adding expenditures on new farm equipment, and adding an estimate of expenditures for
business passenger cars to the extent that they are
not already covered. Annual estimates for 1963 are
based both on preliminary reports from the 1963
Census of Manufactures and on the series derived
from the Plant and Equipment Expenditures Survey.
The latter and a series based largely on Manufacturers' shipment series jointly provide the basis for
the quarterly interpolation for 1963 and the quarterly
and annual extrapolation for the period since 1963.
The new estimates include purchases of equipment
by private business from government, dealers margins on the sale of used equipment, and capitalized
installation charges, and net of exports of used equipment and the sale of scrapped equipment.
The primary source for estimates of changes in the
nonfarm portion of business inventories is reported
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 to 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 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 Equip-
26
ment, to which it is most closely related, is discussed
in the following section.
The "Change in business inventories" series is most
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 producers' 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 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
TABLE
8.— Gross Private Domestic Investment, 1929-66
[Billions of dollars]
Change in
business
inventories
Fixed investment
Year
Total
gross
private
domestic
investment
Residential
structures
Nonresidential
Total
Producers'
durable
equipment
Structures
Total
Total
Nonfarm
1929
16.2
14.5
10.6
5.0
4.8
1930
1931
1932
1933
1934
1935
1936
1937
1938
1939
10.3
5.6
1.0
1.4
3.3
6.4
8.5
11.8
6.5
9.3
10.6
6.8
3.4
3.0
4.1
5.3
7.2
9.2
7.4
8.9
8.3
5.0
2.7
2.4
3.2
4.1
5.6
7.3
5.4
5.9
4.0
2.3
1.2
.9
1.0
1.2
1.6
2.4
1.9
2.0
1940.
1941.
1942.
1943.
1944.
1945.
1946.
1947
1948.
1949.
13.1
17.9
9.8
5.7
7.1
10.6
30.6
34.0
46.0
35.7
11.0
13.4
8.1
6.4
8.1
11.6
24.2
34.4
41.3
38.8
7.5
9.5
6.0
5.0
6.8
10.1
17.0
23.4
26.9
25.1
1950.
1951
1952
1953
1954
1955
1956
1957
1958.
1959.
54.1
59.3
51.9
52.6
51.7
67.4
70.0
67.8
60.9
75.3
47.3
49,0
48.8
52.1
53.3
61.4
65.3
66.5
62.4
70.5
1960.
1961.
1962.
1963
1964.
1965
1966.
74.8
71.7
83.0
87.1
93.0
106.6
117.0
71.3
69.7
77.0
81.3
88.3
97.5
105. 1
Total
Total
Nonfarm
Total
Nonfarm
Nonfarm
4.0
3.8
1.7
2.3
1.7
.7
.6
1.2
1.6
1.9
2.0
2.9
.9
2.2
1.6
.7
.5
.8
1.1
1.5
1.8
1.9
2.8
-.4
-1.1
-2.5
-1.6
-.7
1.1
1.3
2.5
-.9
.4
1.8
-.1
-1.6
-2.6
-1.4
.2
.4
2.1
1.7
-1.0
.3
4.6
5.6
3.5
3.2
4.2
6.3
9.2
14.0
15.5
13.7
3.4
3.9
2.1
1.4
1.3
1.5
7.2
11.1
14.4
13.7
3.2
3.7
1.9
.2
1.
1.1
1.4
6.7
10.4
13.6
12.8
2.2
4.5
1.8
-.6
-1.0
-1.0
6.4
-.5
4.7
-3.1
1.9
4.0
.7
-.6
-.6
-.6
6.4
1.3
3.0
-2.2
18.7
20.7
20.2
21.5
20.6
23.8
26.5
28.4
25.0
28.4
15.7
17.7
17.6
18.6
18.0
21.2
24.2
25.9
22.0
25.4
19.4
17.2
17.2
18.0
19.7
23.3
21.6
20.2
20.8
25.5
18.6
16.4
16.4
17.2
19.0
22.7
20.9
19.5
20.1
24.8
6.8
10.3
3.1
.4
-1.5
6.0
4.7
1.3
-1.5
4.8
6.0
9.1
2.1
1.1
-2.1
5.5
5. 1
.8
-2.3
4.8
30.3
28.6
32.5
34.8
39.7
44.8
51.4
27.7
25.8
29.4
31.2
35.9
40.6
46.3
22.8
22.6
25.3
27.0
27.6
27.8
25.8
22.2
22.0
24.8
26.4
27.0
27.2
25.3
3.6
2.0
6.0
5.9
4.7
9.1
11.9
3.3
1.7
5.3
5.1
5.3
8.1
12.2
3.9
2.3
1.2
.9
1.0
1.2
1.6
2.4
1.8
1.9
5.6
4.3
2.7
1.5
1.5
2.2
2.9
4.0
4.9
3.5
4.0
4.9
3.7
2.4
1.3
1.3
1.8
2.4
3.3
4.1
2.9
3.4
2.3
2.9
1.9
1.3
1.8
2.8
6.8
7.5
8.8
8.5
2.2
2.8
1.8
1.2
1.7
2.7
6.1
6.7
8.0
7.7
5.3
6.6
4.1
3.7
5.0
7.3
10.2
15.9
18.1
16.6
27.9
31.8
31.6
34.2
33.6
38.1
43.7
46.4
41.6
45.1
9.2
11.2
11.4
12.7
13.1
14.3
17.2
18.0
16.6
16.7
8.5
10.4
10.5
11.9
12.3
13.6
16.5
17.2
15.8
15.9
48.4
47.0
51.7
54.3
60.7
69.7
79.3
18.1
18.4
19.2
19.5
21.0
24.9
27.8
17.4
17.7
18.5
18.8
20.3
24.2
27.2
NOTE.—Data for Alaska and Hawaii included beginning 1960.
Source: Department of Commerce, Office of Business Economics.
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. Estimates of current 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, and the
August 1965 Survey of Current Business.
27
9. 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 profession, and non-profit and other
institutions) for new plant, machinery, and equipment for which depreciation accounts are maintained.
Expenditures charged off as current expenses 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 corporation which make over
90 percent of the 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
(Form 10K) to SEC was used for the first time and
adjustments were made for biases arising out of
changes in the business population.
Expenditures for New Plant and Equipment, 1947-66
(Quarterly data.
Seasonally adjusted annual rates)
BILLIONS OF DOLLARS
60
1947
1948 1949 1950 1951 1952 1953 1954 1955 1956- 1957 1958 1959 1960 1961 1962 1963 1964
SOURCE OF DATA
SECURTIES AND EXCHANGE COMMISSION, AND DEPARTMENT OF COMMERCE
28
1965
Implicit Adjustment Factors, Expenditures for New Plant and Equipment, 1966
Bias Adjustment Factors
Quarter
First
Second
ThirdFourth
_.
First anticipated expenditures estimate for
a given quarter
Second anticipated expenditures estimate for
the same quarter
0.98
.98
1.00
1.08
0.92
.97
.94
1.01
___
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 for 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 first quarter of
1966 were as follows: manufacturing 82; mining 50;
railroads 99; transport, except railroads, 72; public
utilities 83; communications 96; commercial 18; and
total 69.
Seasonal adjustment factors for the same quarter
0.88
1.02
1.02
1.08
The factors used for adjusting plant and equipment expenditures data for seasonal fluctuations are
derived from the X - l l version of the Census method
adjustment program. 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 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 1966 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
29
TABLE
9.—Expenditures for New Plant and Equipment, 1939 and 1945-67
[Billions of dollars]
Transportation
Manufacturing
Year
1939..
Total!
Total
Durable
goods
Nondurable goods
Mining
Railroads
Public
utilities
Other
Commercial and
other2
0.28
0.36
0.52
2. 08
.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
6. 78
7. 24
7.09
8.00
8.23
1.94
0.76
1. 19
0.33
3.98
6.79
8.70
9. 13
7. 15
1.59
3. 11
3.41
3.48
2.59
2.39
3.68
5.30
5.65
4.56
1945..
1946_.
1947_.
1948.
1949_.
5.51
8.69
14.85
20. 61
22. 06
19.28
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. 14
5. 17
5.61
5. 65
5.09
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
1955_
1956_
1957_
1958.
1959.
28.70
35.08
36.96
30.53
32.54
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
24
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
9.81
10.88
1960.
19611962.
1963.
1964.
35.68
34.37
37.31
39.22
44. 90
14.48
13.68
14.68
15.69
18.58
7. 18
6.27
7.03
7.85
9.43
7.30
7.40
7.65
7.84
9. 16
.99
.98
1.08
1.04
1. 19
1 03
67
85
1. 10
1. 41
1.94
1.85
2.07
1.92
2.38
5.68
5.52
5.48
5.65
6.22
11.57
11. 68
13. 15
13.82
15. 13
1965
1966
1967 (anticipated)3.
51.96
60.63
63. 00
22.45
26.99
27.94
11.40
13.99
14. 64
1.30
1.47
1.58
1.73
1.98
1.48
2. 81
3.44
3.94
6.94
8.41
9. 15
16.73
18.36
18. 91
11.05
13.00
13.30
1
2 Excludes agriculture.
3 Includes trade, service,finance,communications,
and construction.
Includes an anticipation for the fourth quarter.
NOTE.—Thesefiguresdo not agree precisely with the plant and equipment expenditures included in the gross national product estimates of the Department of
Commerce. The main difference lies in the inclusion in the gross national product of investment by farmers, professionals, real estate industry, and institutions;
transactions in used assets; and certain outlays 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.
Sources: Securities and Exchange Commission and Department of Commerce.
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 nonprofit and other institutions, and
real estate, whereas the Census estimates cover only
manufacturing, mining (1954, 1958, and 1963) and
the wholesale, retail and service trades (1958 and
1963).
The OBE-SEC series differs somewhat in concept from the "Producers' durable equipment'' and
"Nonresidential structures" components of gross
30
private domestic investment. Unlike the latter, the
OBE-SEC series is confined to nonagricultural industries, and excludes expenditures of institutions
and professional persons; 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 com-
parable 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. Then
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 covers 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 expected events as well as historical events are made. Expected capital outlays,
especially for the coming year, are of great importance in the analysis of business conditions. Expected 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 unexpected developments of major
importance have occurred, such as the outbreak of
Korean hostilities, both the annual data and the
quarterly expected 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.
31
EMPLOYMENT, UNEMPLOYMENT, AND WAGES
10. STATUS OF THE LABOR FORCE
DESCRIPTION OF SERIES
Each month the Bureau of Labor Statistics of the
Department of Labor publishes estimates of the labor
force and of total employment and unemployment.
In addition to the overall figures, detail is presented
on the characteristics of employed and unemployed
persons, such as age, sex, color, and marital status.
Employed persons are further subdivided into those
employed in agriculture or in other pursuits, and into
wage and salary workers or the self-employed.
Workers are also classified by broad occupation
groups, by hours worked during the survey week, and
by reasons for part-time work. Duration of unemployment is shown for the unemployed.
The information is obtained from a monthly
sample survey of households, conducted by the
Bureau of the Census, which represents all persons
in the United States except those living in institutions
(such as prisons or homes for the aged). On the
basis of responses to interviewers, all persons 16
years and over in the sample households are classified
as employed, unemployed, or not in the labor force
for the calendar week containing the 12th of the
month. Prior to July 1955, the reference week was
the calendar week containing the 8th of the month;
this change was made to improve comparability with
other series.
Counted as employed are all persons who, during
the survey week, were either (a) "At work"—those
who did any work for pay or profit, or those who
worked without pay for 15 hours or more on a family
farm or business; or (6) "With a job but not at
work"—those who did not work but had a job or
business from which they were temporarily absent
because of vacation, illness, industrial dispute, bad
weather, or for various other reasons.
Included as unemployed are persons who did not
work or have a job during the survey week and were
looking for work. Also included as unemployed are
32
those who did not work at all during the survey
week and (a) were waiting to be called back to a
job from which they had been laid off or (b) were
waiting to report to a new wage or salary job scheduled to start within the following 30 days.
The sum of the employed and the unemployed
constitutes the civilian labor force. The total labor
force also includes members of the Armed Forces
stationed either in the United States or abroad. All
other civilians 16 years of age and over are classified
as "not in the labor force" (mainly housewives,
students, and retired or disabled persons).
The sample survey described above was started in
March 1940. Prior to that date there was no periodic
direct enumeration of the labor force. The estimates
shown for 1939 and earlier years were prepared by
the Bureau of Labor Statistics, using information
such as the 1930 and 1940 Census of Population, and
employment trends from BLS and Department of
Agriculture series for intervening years. The techniques used in preparing the estimates for the earlier
years are described in "Labor Force, Employment,
and Unemployment, 1929-30: Estimating Methods,"
which appeared in the July 1948 issue of the Labor
Department's Monthly Labor Review.
The labor force survey, initiated by the WPA,
was conducted by the Bureau of the Census from
1942 through June 1959 as part of the Current
Population Survey. Since July 1959, the Bureau of
Labor Statistics has been responsible for monthly
statistics on the labor force, with the Bureau of the
Census acting as collecting and compiling agent.
In January 1967, an improved system for measuring employment and unemployment went into
effect. The improvements were in line with the
basic recommendations of the President's Committee
to Appraise Employment and Unemployment Statistics (the Gordon Committee), as set forth in its
1962 report, Measuring Employment and Unemployment.
Status of the Labor Force, 1947-66
(Monthly data.
Seasonally adjusted)
MILLIONS OF PERSONS 16 YEARS AND OVER
90
80
TOTAL LABOR FORCE
CIVILIAN LABOR FORCE
70
=f=C~^«
'~''"'
N0NA6RICULTURAL EMPLOYMENT
40
30
20
AGRICULTURAL EMPLOYMENT
-v
10
1948
1949 1950 1951 1952 1953
UNEMPLOYED 1954
1955 1956 1957
1958
1959 1960 1961 1962
1963
1964
1965
1966
SOURCE OF DATA: DEPARTMENT OF LABOR
Although the Gordon Committee approved of the
underlying concepts of labor force and unemployment being used in the Current Population Survey,
it pointed out that some of the procedures used to
measure these concepts were inadequate. In particular, the Committee considered that the measurement of unemployment relied in too many instances
on volunteered information and on questions not
sufficiently detailed. It recommended more precise
questioning. At the same time, the Gordon Committee urged that more information be collected on
persons who are reported as not in the labor force.
Beginning in April 1964, the Bureau of Labor
Statistics conducted an experimental program, in
cooperation with the Census Bureau, to design and
test questions which would implement these two
major recommendations of the Gordon Committee.
A separate panel of 17,500 households was utilized
for this purpose. At the same time, the accuracy of
other questions was tested, and the scope of the labor
force definition reviewed.
The changes in definition, which were implemented
in January 1967, increased the accuracy of the data
but did not substantially alter the underlying concepts. In particular, the concept of unemployment
relates to jobless individuals who are currently
available for work and seeking work.
The principal improvements in definition were as
follows:
(1) The lower age limit for official statistics on
employment, unemployment and other labor force
concepts was raised from 14 to 16 years of age.
Employed youngsters of 14 and 15 work mainly as
part-time newsboys, babysitters, etc., and are barred
from most occupations under the child labor laws.
Unemployment in this age group has little economic
or social significance. Insofar as possible, the historical series were revised to provide consistent labor
force information based on the population 16 years
and over.
(2) To be counted as unemployed, an individual
must be currently available for work. In the past,
the test of current availability was not applied. A
high school or college student, for example, who began
to look for summer work in April was counted as
unemployed in that month even though he didn't
want to work until the beginning of vacation in June.
(3) To be counted as unemployed, a person must
have engaged in some specific job-seeking activity
(such as going to the Employment Service, applying
to an employer, answering a want-ad) within the
past 4 weeks. (An exception is made for persons
waiting to start a new job in 30 days, or waiting to
be recalled from layoff.) In the past, the household
33
interview questionnaire was ambiguous as to the still considered to be experimental. As more experitime period for jobseeking, and there was no specific ence is gained in analyzing the results over time, the
question concerning methods of seeking work.
questions may well be expanded to provide still more
(4) Persons with a job are classified as employed, information.
even though they were absent from their jobs in the
STATISTICAL PROCEDURES
survey week and looking for other jobs. Previously,
persons absent from their jobs because of strikes, bad
Since the survey was instituted in 1940, there have
weather, etc., who were looking for other jobs were been a number of revisions in the series. In Novemclassified as unemployed. Now, such persons are ber 1943 an improved sample design was introduced
classified as employed—that is, among others "with and the estimates were revised back to 1940 using
a job but not at work."
the 1940 Census of Population figures as a benchmark
(5) "Probing questions" are asked in order to for that date. Starting in July 1945, a modified set
increase the reliability of information on hours of of questions was used which resulted in a more nearly
work, duration of unemployment, and the number of complete count of employed persons; the estimates
self-employed. For example, many working propri- were again revised back to 1940 to take account of
etors of small incorporated businesses tend to classify the improvement in interviewing procedure. Beginthemselves as self-employed, although actually they ning in 1953, 1950 population counts were introduced
are employees. Clarification of this point reduces the into the estimating procedure and no backward
discrepancy in number of wage and salary employees revisions were made. The 1953 changes raised the
between these data based on household reports and levels of labor force, total employment, and agriemployment statistics based on establishment data. cultural employment by about 350,000, affecting
The more extensive questioning on hours counteracts primarily the figures for totals and for males.
the tendency of some respondents to report scheduled
In 1954 the sample was spread from 68 sample
hours rather than actual hours of work.
areas to 230 sample areas (although retaining the
The elimination of 14 and 15 year-olds reduced overall size of about 21,000 interviewed households)
employment by about 1 million (mostly baby-sitters, in the interest of improving the reliability of the
newsboys, and persons who help out in a family estimates. The estimates for 1953, which were
business without pay), the number of unemployed deficient in certain respects, were revised to achieve
by about 100,000, and the unemployment rate by greater comparability with those from the new
about 0.1 percentage point.
sample. Estimates prior to 1953 are not exactly
The seasonal pattern of teenage unemployment comparable with those from the expanded sample,
was changed somewhat because those in school look- although for most major items the series can be
ing for summer jobs during the spring were elimi- regarded as reasonably consistent.
In May 1956, the sample was expanded from 230
nated. The number of teenage unemployed tends to
be lower in April, May, and June, and the annual to 330 sample areas and from 21,000 to 35,000
average level is about one percentage point lower as interviewed households, to improve further the
reliability of the statistics and to provide a basis for
a result.
The employment figures for persons 16 and over more detailed data for the Nation as a whole and
were not perceptibly affected by the new definitions. limited data for broad geographic regions. Full
However, the distribution of the employed by hours comparisons of the results from the 230- and 330of work and by "class of worker" (self employed, area samples—available for both April and May of
wage and salary employee, etc.) are substantially 1956—showed only small differences either in major
categories or in detailed groups. For most purposes,
changed because of the new probing questions.
Much more information is obtained on persons not therefore, the data from the expanded sample since
in the labor force, with special emphasis on their May 1956 can be used as a continuous series with
potential availability for work. Questions are asked earlier statistics.
Starting in Janaury 1957, certain limited changes
on when such persons last worked, why they left
their jobs, the nature of those jobs, why they are not were made in the definitions of employment and
looking for work at the present time, and what their unemployment, following a comprehensive interagency
intentions are to seek jobs in the future. These review of concepts in this field. The changes
questions asked of persons not in the labor force are involved primarily a transfer of two small groups
34
TABLE
10.—Status of the Labor Force, 1929-66
[In thousands]
Civilian labor force
Total
labor
force
Labor
Unemployed
Employed
Year
Total
Number 1
Total
Agriculture
N onagricultural
industries
Number
Percent
of labor
force
force
participation rate,
unadjusted 2
Persons 14 years of age and over
1929
1930
1931
1932
1933
140
980
250
500
390
15.9
23.6
24.9
21.7
20. 1
16.9
14.3
19.0
17.2
14.6
1939
1940- -_
1941
1942
1943_ __
_
1944_
1945
1946
1947. __
010
240
930
552
1,040
2,270
2,356
670
1. 2
1.9
3.9
3.9
38,
40,
45,
45,
2,311
2,276
3,637
3,288
2, 055
1,883
1,834
3, 532
2,852
2, 750
2,859
4,602
3,740
3,852
4, 714
3,911
4, 070
3, 786
3,366
2, 875
3.9
3.8
5.9
5.3
3.3
3. 0
2. 9
5. 5
4.4
4. 1
4.3
6. 8
5. 5
5. 5
6. 7
5. 5
5. 7
5. 2
4. 5
3.8
42, 477
42, 447
10, 450
10, 340
10, 290
10, 170
10, 090
37, 180
35, 140
32, 110
28, 770
28, 670
52, 230
52, 870
53, 440
54, 000
54, 610
40,
42,
44,
46,
44,
890
260
410
300
220
9, 900
10, 110
10, 000
9, 820
9, 690
30,
32,
34,
36,
34,
990
150
410
480
530
600
180
530
380
560
55, 230
55, 640
55, 910
56, 410
55, 540
45, 750
47, 520
50, 350
53, 750
54, 470
9, 610
9, 540
9, 100
9, 250
9, 080
36,
37,
41,
44,
45,
66, 040
65, 300
60, 970
61, 758
_ ___
__
47, 630
45, 480
42, 400
38, 940
38, 760
55,
56,
57,
60,
64,
_
_
49, 180
49, 820
50, 420
51, 000
51, 590
52, 490
53, 140
53, 740
54, 320
54, 950
_
1934. __
1935. _1936_ __
1937
1938
1,550
4,340
8,020
12, 060
12, 830
11,340
10, 610
9,030
7,700
10, 390
9,480
8,120
5,560
2,660
1,070
49, 440
50, 080
50, 680
51, 250
51, 840
54, 630
53, 860
57, 520
60, 168
53, 960
52, 820
55, 250
57, 812
8, 950
8, 580
8, 320
8, 256
45,
44,
46,
49,
3.2
8.7
9.9
4.7
1.9
(3)
(3)
(3)
(3)
(3)
(3)
(3)
(2)
(3)
(3)
(3)
44, 200
43, 990
42, 230
39, 100
590
230
550
850
Persons 16 years of age and over
1947
1948
__
1949
1950
1951
1952 4
1953
1954
1955
1956
1957
1958
_
60, 941
62, 080
__
-
_
-__
__
1959-5
1960
1961
1962 6 __
1963
__
__
1964
1965
1966
___
59, 350
60, 621
62,
63,
65,
65,
66,
903
858
117
730
560
61,
62,
62,
62,
63,
66,
68,
69,
69,
70,
039
341
647
914
957
247
176
7, 891
7, 629
49, 148
50, 711
286
208
017
138
015
57,
58,
57,
58,
59,
60,
61,
7, 656
7, 160
6, 726
6, 501
6, 261
49,
51,
53,
53,
54,
990
752
230
748
915
993
072
409
729
275
63, 643
65, 023
66, 552
66, 929
67, 639
60,
62,
63,
64,
63,
107
168
793
071
036
6, 206
6, 449
6, 283
5, 947
5, 586
53,
55,
57,
58,
57,
898
718
507
123
450
70, 921
72, 142
73, 031
73, 442
74, 571
68, 369
69, 628
70, 459
70, 614
71, 833
64,
65,
65,
66,
67,
630
778
746
702
762
59,
60,
60,
61,
63,
065
318
546
759
076
75, 830
77, 178
78, 893
73, 091
74, 455
75, 770
69, 305
71, 088
72, 895
5, 565
5, 458
5, 200
4, 944
4, 687
4, 523
4, 361
3, 979
64, 782
66, 726
68, 915
42,
42,
42,
43,
44,
708
787
604
093
041
44, 678
44, 660
44, 402
45, 336
46, 088
46,
47,
48,
49,
50,
960
617
312
539
583
51, 394
52, 058
52, 288
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 yeais of age and over, 1940-1947, and 16 years of age and over, 1947-1966.
3
Not available.
4
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 u:naffected.
5
Data for 1960 include Alaska and Hawaii and are therefore not strictly comparable with previous yeais. 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 6levels of other labor force categories were not appreciably changed.
Beginning in 1962, comparability with previous years is affected somewhat by the introduction of material from the 1960 census into the estimating procedure.
The level of labor force and employment was lowered by about 150,000.
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.
35
from the employed to the unemployed classification, white population. (For further information, see
(1) persons on layoff who had definite instructions the 1962 Report of the President's Committee To
to return to work within 30 days after the date of Appraise Employment and Unemployment Statislayoff (now classified as unemployed) and (2) those tics: Measuring Employment and Unemployment,
waiting to start new wage and salary jobs within Appendix E: "Revision of the Current Population
30 days (now classified either as unemployed or, Survey Sample, 1961-1963.")
In January 1967, other changes were made in the
if currently in school, as not in the labor force).
Statistics for major categories on both the old and definition of employment and unemployment, as
new bases were published by the Bureau of the discussed above. The sample was expanded from
Census for 1957 and adjustments carried back to 357 to 449 sample areas and from 35,000 to 52,500
1947. Starting in 1960, Alaska and Hawaii were households, improving further the reliability of the
included, increasing the number of sample areas statistics and providing a basis for more detailed
to 333. This inclusion resulted in an increase of data.
The panel of respondents is rotated. A single
about 300,000 in the labor force, four-fifths of this
in nonagricultural employment. The levels of household is interviewed for four consecutive months,
other labor force categories were not changed dropped for eight months, and picked up again for
the next four months. Thus, roughly three-fourths
appreciably.
In December 1961 a modification of the CPS of the sample is identical from one month to the next,
sample design was begun to incorporate gradually and one-fourth is added; and in any given month
information obtained from the 1960 Decennial Cen- about one-half of the sample is identical with that
sus. The transition was completed in March 1963. interviewed in the same month a year earlier.
The number of households interviewed each month
A composite estimating procedure is used. This
remained at approximately 35,000 but the number of method involves the preparation of two intermediate
geographical areas sampled was increased from 333 to estimates for a given item each month: (1) an esti357. The sampling areas continued to be stratified mate of month-to-month change based on those parts
according to the following criteria:
of the sample common to the current and the pre(1) Standard Metropolitan Statistical Area or not; ceding month (roughly 75 percent of the sample
(2) Rate of population change; (3) Percent of popula- units), and (2) an estimate based on the data for the
tion living in urban areas; (4) Percent of population current month only (prior to 1954 the sole estimain manufacturing; (5) Principal industries; (6) tion procedure used) each inflated to independent
Average value of retail trade; (7) Proportion of non- estimates of the population by age, sex, and color.
Current Seasonal Adjustment Factors for Labor Force Components for 1967
Series title
Jan.
Feb.
Mar.
Unemployed—Men 20 Years and
Over
_.
129. 6 132.8 121. 7
Unemployed—Women 20 Years and
Over
108. 0 108. 8 101. 6
Unemployed—Boys 16-19 Years
94.5 91.2 99.0
Unemployed—Girls 16-19 Years
82.0 82.3
88.2
Nonagricultural employment—Men
20 Years and Over
98.7 99. 1
98.4
Nonagricultural employment—
100.7 101.3
Women 20 Years and Over
99.6
Nonagricultural employment—Boys
86.7 85.3
16-19 Years
.._ ._
85.4
Nonagricultural employment—Girls
90.9 89.8 90.6
16-19 Years
Agricultural employment—Men 20
Years and Over
. 92.2 92. 1 95.6
Agricultural employment—Women
63.1 63.4 71.2
20 Years and Over
Agricultural employment—Boys
63.3 65.7 74.4
16-19 Years
Agricultural employment—Girls
16-19 Years..
. .
. 29.9 34.1 37.2
36
Apr.
May
102. 0 86.9
June
91.7
July
90.3
95. 2 93.7 101.8 96.4
85.6 72.7 163.4 146.3
182.9 145.3
77.1
70.8
100.8 100.9
99.7
100.3
101.6
98.9 96.6
101.7
90.8
115.6 133.4
96.0
88.9 90.5 101.8 122.8
Aug. Sept.
91.3
80.6
Oct.
78.5
Nov.
Dec.
89.4 105.5
97.3 103.4
79.8 86.3
93.6 106.0
86.7
95.0
81.4
101.0 100.5 100.5 100.3
99.8
105. 6 101.3
99.1 87.3
100.3 90.2
96.8
98.8 100.7 101.3 102. 1
93.7
130.2
96.3
94.7
91.8
123.2
97.2
99.7
99.4 105.0
99. 1 103.0 108.4 106.4 102.6 104.2 104.7 100.2
91.4
87.5 118,2 132.6 130.9 113.7 124.5 129.8
99.7
65.4
92.3 100.0 153.3 159.6 144.8 100.3 102.0
80.2
64.2
83.2 192.4 198.4 163.2 136.1 138.6
85.4
46.9
53.2
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 have been seasonally adjusted back to 1947 using a ratio-to-movingaverage method with a provision for "moving"
adjustment factors to take account of changing
seasonal patterns. The method used is described in
BLS Seasonal Factor Method, available upon request
to the Division of Statistical Standards, Bureau of
Labor Statistics, Washington, D.C.
RELATION TO OTHER SERIES
The labor force estimates of employment, obtained
from a sample of households, differ in a number of
respects from estimates 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 16 years of age are excluded
from the labor force estimates, whereas the payrollbased series have no age exclusions. An additional
difference arises from the fact that 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 t,he 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
unemployment 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 themselves 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, and 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.
37
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 in the
"Technical Note" of Employment and Earnings and
the Monthly Report on the Labor Force.
Average Standard Error of Major Employment Status Categories
[In thousands]
Average standard error of—
Employment status and sex
Monthly level
Month-to-month
change
(consecutive
months only)
hold. For this reason, as well as because of the
relatively small size of the sample, only broad occupational 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 cirterion
of "looking for work/' but no method has been as yet
developed which will insure consistent reporting of
activity month after month. 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
BOTH SEXES
Summary employment and unemployment figures
are released near the first of the month for the pre145
190
100 ceding month by the Bureau of Labor Statistics.
120
150 More detailed estimates are available a week or so
200
75
80
lated in Employment and Earnings and Monthly
MALE
Report on the Labor Force which presents the household labor force series, the employer nonagricultural
Labor force and total emploj'ment
75 employment series, and the insured unemployment
100
80
Agriculture95
95 series in a combined release. It also includes exNonagricultural employment
120
60 planatory notes describing the data and the methodUnemployment _
60
ology, indicating the reliability of the estimates, and
FEMALE
summarizing the seasonal adjustments. A more
Labor force and total employ115 detailed technical note is available on request to the
ment- - _
150
40 BLS. Supplementary information on work exAgriculture
50
115
Nonagricultural employment
150
55 perience during the preceding year, multiple jobUnemployment. _
50
holding, etc., is published by the BLS in a series of
Special Labor Force Reports. Related demographic
The user should also keep in mind that the infor- data from the Current Population Survey are pubmation is collected by personal interview, usually lished by the Bureau of the Census in special reports
with the housewife. She may not, in some cases, (Current Population Reports: Series P-60, Consumer
have exact knowledge for all members of the house- Income; Series P-20, Population Characteristics).
Labor force and total employment. _ _ _
Agriculture
Nonagricultural employment
Unemployment. _
38
11. SELECTED MEASURES OF UNEMPLOYMENT AND PART-TIME EMPLOYMENT
Unemployment Rates
In addition to unemployment rates for all workers,
it is often useful to have rates computed for specific
groups. The rate for experienced wage and salary
workers excludes unemployed new entrants into the
labor force, the self employed, and unpaid family
workers. This rate tends to be about the same as the
overall unemployment rate. The unemployment
rate for married men is sometimes considered to
indicate better "hardship" or "need" than the overall
rate b u t has many deficiencies for the purpose. For
example, widowers with family responsibilities and
women heads of households are not represented.
reasons, such as slack work, material shortages,
plant or machine repairs, new job started during
week, could find only part-time work; or (2) other
reasons, such as holidays, bad weather, own illness,
vacation, participation in labor dispute, did not want
full-time work, etc.
The average hours worked per week by persons
working part time in nonagricultural industries for
economic reasons differ according to whether such
persons usually work full time or usually hold parttime jobs. Annual averages are available since 1956
(based on workers 14 years of age and over):
usually work usually work
.
Other unemployment rates lor selected groups are
published in Employment and Earnings and Monthly
Report on the Labor Force.
full time
1Q56
1957
1958
1959
i960
part time
24 o
24.5
25.2
23.8
24.7
24 2
-
18 2
18.3
18.1
18.3
18.2
18 1
-
Labor Force Time Lost
This is a measure of productive hours lost to the
economy. Total labor force time lost is computed
on the assumption that those working part time for
"economic" reasons—i.e., reasons aside from personal
preference (see below)—lost the difference between
their average hours and 37.5 hours per week, that
those seeking full-time jobs lost the full 37.5 hours
per week, and that persons seeking part-time work
lost the average hours worked b y the voluntary parttime employed. "Time lost" is expressed as a percent
of potentially available man-hours. D a t a are available to compute this measure only since M a y 1955.
However, data regarding persons seeking part-time
work were not available on a monthly basis until
January 1963. This refinement in the measurement
of labor force time lost reduced the rate an average of
.3-.5 percentage points each month.
•n
. TAT i i_ TT
TAT i J
23 4
17 6
1965
23.3
17.6
1966
23.3
17.7
As explained above, the question on hours worked
w a s r e v i s e d in January, 1967. As a result of the
m o r e extended probing on hours of work, about 1.3
m i l l i o n more persons were identified as working less
At the same time about 0.6 million
t h a n 35 hours.
m o r e p e r s o n s were identified as working more than 40
hours. Virtually all of these extra part-time and
overtime workers moved out of the group that forThe net
m e r i y r e p O r t e d working precisely 40 hours.
e f f e c t o f a n t h e s e changes was to reduce average hours
for a u w o r k e r s and for nonfarm workers b y 0.2 hour.
About 900,000 or 70 percent of the 1.3 million
additional part-time workers were those who usually
Persons at Work, by Hours Worked
w o r k fuU
DESCRIPTION OF SERIES
As part of the collection of information on the labor
force, hours worked during the survey week at all
jobs are obtained. Those 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 these groups is then classified
according to whether the part-time work during the
survey week was the result of (1) "economic"
1961
1964
^
b u t i n t h esuryey wegk worked
^
35 hours for noneconomic reasons—mainly temporary
illness or miscellaneous personal reasons. The
probing question also raised the estimate of persons
on part time for economic reasons, as well as those
who usually work part time voluntarily, by about
200,000 each.
As a result of these changes the series on hours
worked and the numbers of workers on part time for
1967 and later years cannot be compared with those
prior to 1967.
39
TABLE
11.—Selected Measures oj Unemployment and Part-Time Employment, 1947-66
Unemployment rate (percent of
civilian labor force in group)
Year
All
workers
Experienced
wage and
workers 1
Married
men2
(wife
present)
Persons at work in nonagricultural industries
by hours worked per week 4
Labor force
time lost
through
unemployment and
part-time
work 3
Under 35 hours
Over 40
hours
35-40
hours
Part time for
economic reasons
Total
Usually
work
full
times
Usually
work
part
time 6
Millions of persons 16 years and over7
Percent
1947-.
1948..
1949-.
3.9
3.8
5.9
1950,.
1951-.
1952-.
1953_.
1954..
5.3
3.3
3.0
2.9
5.5
6.2
1955-.
1956-.
1957-.
19581959..
4.4
4.1
4.3
6.8
5.5
4.8
4.4
4.6
7.2
5.7
2.8
2.6
2.8
5.1
3.6
1960 9.
1961-.
1962-.
1963-.
1964..
5.5
6.7
5.5
5.7
5.2
5.7
6.8
5.6
5.5
5.0
3.7
4.6
3.6
3.3
2.8
5.1
5.3
8.1
6.6
6.7
8.0
6.7
10
6.4
5.8
1965..
1966-.
4.5
3.8
4.3
3.5
2.4
1.9
5.0
4.2
()
20.3
19.4
17.6
17.5
19.3
19.4
18.1
15.7
18.0
18.7
17.6
16.6
17.3
17.7
18.2
19.0
19.3
19.3
20.8
21.3
21.2
21.0
20.9
22.4
23.3
25.1
26.3
24.4
27.0
27.3
28.6
28.3
27.7
28.7
29.0
28.9
29.4
29.1
30.8
32.1
5.6
8.1
9.5
9.7
8.4
6.8
8.2
11.3
8.2
8.7
9.1
9.7
11.0
10.9
10.3
10.8
11.1
13.0
11.8
12.0
1.1
1.2
1.6
1.0
1.2
1.3
1.0
1.1
1.0
.9
.9
.9
1.
1.3
1.3
1.3
1.5
1.3
1.0
.8
* Includes all wage and salary workers who have worked at a job two weeks or more.
2 Data for 1955 and 1956 have not been adjusted to reflect changes in the definition of employment and unemployment adopted in January I960.
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 looking for full-time work and persons on part time for economic reasons would have worked 37.5 hours per week, and the unemployed looking for part-time work would have worked the average number of hours actually worked by the voluntary part-time workers.
4
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 5industrial disputes.
Includes persons who worked part time because of slack work, material shortages or repairs, new job started, or job terminated.
8
Primarily includes persons who could find only part-time work.
7
All persons ages 14 and 15 were assumed to be working part-time for noneconomic reasons in adjusting back data for period 1947-1963.
s Not available.
9
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
300,000 in the labor force, four-fifths of this in non-agricultural employment. The levels of other labor force categories were not appreciably changed.
10
If data had not been available as to whether unemployed persons sought full- or part-time work, the rate would have been 6.8 percent in 1963. (See discussion on
p. 39).
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.
USES AND LIMITATIONS
Changes in the number of persons working part
time for economic reasons may reflect changes in
economic conditions as soon as, or even earlier than,
the number of unemployed. Experience in interpreting the series on reasons for part-time employment
40
has been limited, since the figures have been available on a monthly basis only since May 1955.
Information on persons at work by hours worked is
also published classified by broad industrial 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
have reflected 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 page 38 above, under Status of the Labor Force.
12. UNEMPLOYMENT INSURANCE PROGRAMS
State programs for temporary extension of unemployment compensation. The data for "all proWeekly data on claims for benefits under employ- grams" also include in the national totals the proment security programs, obtained as a byproduct of gram of unemployment insurance administered by
operations, represent a measure of unemployment the Railroad Retirement Board. "State programs"
among workers covered by the programs. The series exclude the Federal employee, servicemen, and railare compiled by the Bureau of Employment Security road industry programs.
from reports from State employment security agenInsured unemployment represents the number of
cies covering State programs, the program of unem- covered workers totally or partially unemployed durployment compensation for Federal employees, and ing a given week for which they have filed unemploythe ex-servicemen's unemployment compensation ment insurance claims. Weekly insured unemployprogram. Figures also include World War II vet- ment figures are available for each State for the
erans who filed for benefits under the Servicemen's State, Federal employee (UCFE), and ex-serviceReadjustment Act of 1944, Korean War veterans men's (UCX) programs. Weekly averages for the
filing under the Veterans' Readjustment Assistance calendar month are also provided. In addition, for
Act of 1952, and claimants under the Federal and the week including the twelfth of each month, insured
DESCRIPTION OF SERIES
Rates of Insured Unemployment Under State Programs, United States, 1949-66
(Monthly data.
1949
SOURCE OF DATA
1950
Percent of covered employment)
1961
1962
1963
1964
1965
1966
DEPARTMENT OF LABOR
76-384 O—67~
41
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 programs, 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, certain 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 were 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,
could 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 Veter-
42
ans) 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 1962, 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
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-tomoving-average 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 1967
are:
January
February
March
April
May
June
140.1
137.2
125.8
107.8
90.1
82.5
July
August
September
October
November
December
86.0
81.6
73.1
75.3
87.9
112.3
RELATION TO OTHER SERIES
For a comparison with total unemployment, see
above, under Status of the Labor Force (p. 37).
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
TABLE
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 by-products of administrative records. In the first place, as
described above, workers in certain industries and
in the ve>ry small firms are not covered, at least in
some States. In addition, some groups of covered
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 were disqualified for various rea-
12.—Unemployment Insurance Programs 1940-66
All programs
Year
State programs
Insured
Covered unemploy- Benefits
employment
paid2
ment *
(weekly 2
averages)
Thousands
Mil. dol.
Insured
Insured
Initial Exhaus- unemployment
unemploy- claims
as percent of
tions
ment
covered employment
Weekly average, thousands
Percent
Benefits paid
Total
Average
weekly
check
Mil. dol.
Dollars
518.7
344.3
344. 1
79.6
62.4
10.56
11.06
12.66
13.84
15.90
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
36
16
18
15
34
25
20
23
50
33
4.6
2. QO
2.9
2. 8
5.2
3.5
3.2
3.6
6.4
4. 4
1, 373. 1
840.4
998. 2
962. 2
2, 026 9
1, 350. 3
1, 380. 7
1, 733. 9
3, 512. 7
2, 279. 0
20. 76
21.09
22.79
23. 58
24.93
25.04
27.02
28. 17
30.58
30.41
331
350
302
298
268
31
46
32
30
26
4.8
5.6
4.4
4.3
3.8
2,
3,
2,
2,
2,
7
7
4
7
1
32.87
33.80
34.56
35. 28
35.96
232
203
21
15
3.0
2.3
2, 166. 0
1, 771. 3
37. 19
39.76
19401941_
1942_
1943.
1944_
24,
28,
30,
32,
31,
291
136
819
419
714
1,331
842
661
149
111
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
1945.
1946_
1947_
1948.
1949.
30,
31,
33,
34,
33,
087
856
876
646
098
720
2,804
],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
1950.
19511952_
1953_
1954_
1955.
1956.
1957_
19581959_
34, 308
36, 334
37, 006
38, 072
36, 622
40, 018
42, 751
43, 436
44, 411
45, 728
1,605
1,000
1,069
1,065
2,048
1,395
1,318
1,567
3,269
2,099
1, 467. 6
862.9
1, 043. 5
1, 050. 6
2, 291. 8
1, 560. 2
1, 540. 6
1, 913. 0
4, 290. 2
2, 803. 0
1,503
969
1,024
995
1,865
1,254
1, 212
1,450
2,509
1,682
236
208
215
218
303
226
226
268
370
281
I960.
1961.
1962_
1963_
1964_
46,
46,
47,
48,
49,
2,067
2,994
1,946
1,973
1,753
3,
4,
3,
3,
2,
022. 7
358. 2
160. 0
025. 9
749. 2
1,906
2,290
1,783
1,806
1,605
196519663
51, 580
53, 700
1,450
1, 129
2, 343. 7
1, 890. 9
1,328
1,061
334
266
776
434
637
726.
422.
675.
774.
522.
1
2
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 1958 through June 1962.
3 Preliminary.
Source: Department of Labor.
43
sons, such as voluntary quitting without good cause,
discharge for misconduct, refusal of suitable work,
or temporary illness; persons who were eligible to receive benefits but for one reason or another did 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 unemploymeut, 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 morie. 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 1967,
twenty-one 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 a rescheduling of
the claimant's appearance at the local office. The
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, Puerto Rico, 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 unempolyment and initial claims during the first month
of each quarter in most States. Similarly, four
States which operate on a "uniform benefit year"
44
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 including the 12 th of the month is
included in Employment and Earnings and 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, Unemployment Insurance Review. 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.
13. 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 400 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 nonagricultural establishments are available quarterly.
Employment figures represent the total number of
persons employed in nonagricultural establishments
in the United States during a specified payroll period
which, for all industries except Federal Government
is that including the 12th 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
Employees in Nonagricultural Establishments, 1947-66
(Monthly data.
Seasonally adjusted)
MILLIONS OF PERSONS
14
I
I
I
DURABLE GOODS MANUFACTURING
NONDURABLE GOODS MANUFACTURING
1947
1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1S58 1959 1960 1961 1962 1963 1964 1965
1966
SOURCE OF DATA DEPARTMENT OF LABOR
45
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
THE SAMPLE
Current estimates depend on monthly reports from
a sample of employers. The sampling plan used is
an optimum a location design known as "sampling
proportionate to average size of establishment." Under this design, large establishments fall into the
sample with certainty, however, the proportion of
total employment covered varies considerably from
industry to industry. For example, sample coverage is high (65 percent on the average) in manufacturing industries in which a high proportion of total
employment is concentrated in relatively few establishments and which have a greater tendency to fluctuate from regular cyclical or seasonal patterns than
nonmanufacturing industries. On the other hand,
coverage is much lower (20 percent) in wholesale
and retail trade industries which are made up of
many small establishments.
The BLS establishment sample consists of about
150,000 reports and is, therefore, the largest monthly
sampling operation in the field of social statistics.
The sample design is based primarily on the needs
of the national program, however, it also provides
the technical framework within which State and area
sample needs are determined. Since the estimates
for States and areas are generally not prepared in
as much industry detail as the national estimates,
the national design usually provides sufficient reports
for the preparation of State and area estimates.
Occasionally, the national design may need to be
augmented by additional reports in order to satisfy
area sample requirements.
The present sample is designed to meet the major
requirements of the employment statistics program.
With its use the BLS is able to produce timely estimates within a few weeks after reports have been
mailed to respondents, in great industrial detail, and
for many geographic levels.
ESTIMATING PROCEDURE
The principal feature of the procedure used to
estimate employment for the industry statistics is
known as the "benchmark-link relative" technique
which is a form of ratio estimation. This technique
relies on a reasonably complete employment universe
46
count—the benchmark—which is prepared annually
from a number of sources (see section on benchmark data) and the "simple link" which is the ratio
of the current month's employment to that of the
previous month computed from the sample establishments reporting for both months.
This technique and the relatively large size of the
establishment sample assures a high degree of
accuracy for most estimates. However, since the
previous month's estimate is used as the base in
computing the current month's estimate, small
sampling and response errors may cumulate over
several months. Part of this error is removed on a
current basis through the use of small average
monthly bias adjustment factors applied before
publication. Any remaining accumulated error is
removed at the time the estimates are adjusted to
new benchmarks annually. In addition to the
sampling and response errors, the benchmark revision
adjusts the estimates for changes in the industrial
classification of individual establishments (resulting
from changes in their product). In fact, at the more
detailed industry levels, particularly within manufacturing, changes in classification are the major
cause of benchmark adjustments. Another cause of
differences, generally minor, arises from improvements in the quality of the benchmark data.
An approximation of the average standard deviation (based on the experience of the last several years)
of differences between benchmarks and estimates is
presented in the following table. The chances are
about 2 out of 3 that the revisions will be less than
the amount indicated for each size of estimate. The
chances are about 19 out of 20 that the revisions will
be less than twice the amount indicated.
Average Standard Deviation of Differences Between Benchmark
and Estimates
Size of employment estimate
50,
100,
200,
500,
1, 000,
1
000
000
000
000
000
Standard deviation 1
2,000
2, 500
4,000
7,500
12, 000
Assuming 12-month intervals between benchmark revisions.
Since these differences are established at the end of
12 monthly estimates, it follows that the deviation
between successive months during the year is much
smaller or approximately }{2 of the amount indicated.
The actual comparison made for March 1965, the
last benchmark date, indicated that the estimate
TABLE
13.—Nonagricultural Employment, 1929-66 l
[Thousands of wage and salary workers]
Nonmanufacturing, private
Manufacturing, private
Year
1929
Total
NonTotal Durable durable
goods
goods
31, 339 10, 702
Total
Government
Trans- Whole- Finance, Service
Contract porta- sale and insur- and misMining construc- tion and retail
Federal
ance,
tion
public
and real cellaneous
trade
utilities
estate
State
and
local
(2)
(2)
17, 572
1,087
1,497
3,916
6,123
1,509
3,440
533 2,532
2
(2)
(2)
(2)
(2)
2
()
16, 714
15, 215
13, 472
13, 148
14, 153
1,009
873
731
744
883
1,372
1,214
970
809
862
3,685
3,254
2,816
2,672
2,750
5,797
5,284
4,683
4,755
5,281
1,475
1,407
1,341
1,295
1,319
3,376
3,183
2,931
2,873
3,058
526
560
559
565
652
2,622
2,704
2,666
2,601
2,647
(2)
(2)
(2)
(2)
5,564
14, 503
15, 587
16/476
15, 886
16, 345
897
946
1,015
891
854
912
1,145
1,112
1,055
1,150
2,786
2,973
3,134
2,863
2,936
5,431
5,809
6,265
6,179
6,426
1,335
1,388
1,432
1,425
1,462
3,142
3,326
3,518
3,473
3,517
753
826
833
829
905
2,728
2,842
2,923
3,054
3,090
9,562
8,170
6,931
7,397
8,501
()
1935
1936
1937
1938
1939
27, 053 9,069
29, 082 9,827
31, 026 10, 794
29, 209 9,440
30, 618 10, 278
(2)
(2)
2
(2)
()
4,715
1940
1941
1942
1943
1944
32, 376 10, 985
36, 554 13, 192
40, 125 15, 280
42, 452 17, 602
41, 883 17, 328
5,363
6,968
8,823
11, 084
10, 856
5,622 17, 189
6,225 18, 702
6,458 19, 362
6,518 18, 771
6,472 18, 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
966
1,340
2,213
2,905
2,928
3,206
3,320
3,270
3,174
3,116
1945
1946
1947
1948
1949
40, 394 15, 524
41, 674 14, 703
43, 881 15, 545
44, 891 15, 582
43, 778 14, 441
9,074
7,742
8,385
8,326
7,489
6,450 18, 925
6,962 21, 376
7, 15922, 862
7,256 23, 659
6,953 23, 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
1,908
3,137
3,341
3,582
3,787
3,948
1950
1951
1952
1953
1954
45, 222 15, 241
47, 849 16, 393
48, 825 16, 632
50, 232 17, 549
49, 022 16, 314
8,094
9,089
9,349
10, 110
9,129
7,147 23, 955
7,304 25, 067
7,284 25, 585
7,438 26, 038
7,185 25, 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
1955
1956
1957
1958 3
1959 _._
50, 675 16, 882
52, 408 17, 243
52, 894 17, 174
51, 363 15, 945
53, 313 16, 675
9,541
9,834
9,856
8,830
9,373
7,340 26, 879
7,409 27, 887
7,319 28, 104
7,116 27, 580
7,303 28, 554
792
822
828
751
732
2,802
2,999
2,923
2,778
2,960
4, 141
4,244
4,241
3,976
4,011
10, 535
10, 858
10, 886
10, 750
11, 127
2,335
2,429
2,477
2,519
2,594
6,274
6,536
6,749
6,806
7,130
2,187
2,209
2,217
2,191
2,233
4,727
5,069
5,399
5,648
5,850
1960
1961
1962
1963
1964
54, 234 16, 796
54, 042 16, 326
55, 596 16, 853
56, 702 16, 995
58, 332 17, 274
9,459
9,070
9,480
9,616
9,816
7,336 29, 085
7, 256 29, 122
7,373 29, 853
7,380 30, 481
7,458 31, 461
712
672
650
635
634
2,885
2,816
2,902
2,963
3,050
4,004
3, 903
3,906
3,903
3,951
11, 391
11, 337
11, 566
11, 778
12, 160
2,669
2,731
2,800
2,877
2,957
7,423
7,664
8,028
8,325
8,709
2, 270
2, 279
2,340
2,358
2,348
6,083
6,315
6,550
6,868
7,249
1965
1966
60, 770 18, 032
63, 864 19, 081
10, 386
11, 186
7,645 32, 647
7,896 33, 934
632
628
3, 181
3,281
4,033
4, 137
12, 683
13, 220
3,019
3,086
9,098
9,582
2,378 7,713
2,565 8,283
1930
1931
1932
1933
1934
29, 424
26, 649
23, 628
23, 711
25, 953
(2)
(2)
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
including the 12th 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.
2
Not available.
3 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.
47
was within 0.5 percent of the benchmark. For
manufacturing, the discrepancy was only 0.2 percent;
in other industry divisions the discrepancy was less
than 1.0 percent, except for services and miscellaneous, which was 2.1 percent.
BENCHMARK DATA
Since 1939, the basic sources of benchmark information for "all employees" have been periodic tabulations of employment data by industry compiled by
State employment security agencies from reports of
establishments covered under State unemployment
insurance laws. Beginning with 1959, these data
were also compiled by size of establishments.
In recent years, unemployment insurance coverage
data accounted for three-fourths of the total benchmark. For the group of establishments exempt from
State unemployment insurance laws because of their
small size, and for certain classes of nonprofit organizations, data provided by the Federal old-age insurance program administered by the Social Security
Administration of the U.S. Department of Health,
Education, and Welfare are used.
For industries not covered, or only partially covered, by either of these two programs, benchmarks
are compiled from a number of special sources. The
most important of these are the Interstate Commerce
Commission (for data on interstate railroads), the
American Hospital Association (private nonprofit
hospitals), the Office of Education in the U.S. Department of Health, Education, and Welfare and the
National Catholic Welfare Conference (private
schools, colleges, and universities), the U.S. Civil
Service Commission (Federal Government), and the
Governments Division of the Bureau of the Census
in the U.S. Department of Commerce (State and
local Government).
SEASONAL ADJUSTMENT
The seasonal adjustment method used for these
series is an adaptation of the standard ratio-tomoving average method, with a provision for "moving" adjustment factors to take account of changing
seasonal patterns. 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 1966. The
adjusted series prepared by summing the aggregates
of the seasonally adjusted components will give
48
slightly different results from that which might be
obtained from an independent seasonal adjustment
of the total nonagricultural series.
Implicit Seasonal Adjustment Factors for Total Nonagricultural
Employment for 1966, by Months
January
February
March
April
May
June
98.4
98. 1
98.4
99.3
99.9
100.9
July
August
September
October
November
December
100.3
100.5
101. 1
101.1
100.9
101.3
RELATION TO OTHER SERIES
A comparison between the series discussed above
and the nonagricultural employment estimates compiled as a part of the labor force series can be found
in the section on Employment Status of the Labor
Force, as above, p. 37.
In addition to total employment in each industry,
BLS also prepares estimates of production worker
employment for mining and manufacturing industries,
for construction workers in contract construction,
and for nonsupervisory workers in some or all industry components of the other nonmanufacturing divisions except government. These estimates are comparable with the average hours and earnings series
(see below) which are prepared from information reported on the same questionnaires as the employment
figures.
Establishments reporting employment information are classified into industries on the basis of their
principal product or activity. All series are classified in accordance with the Standard Industrial Classification Manual (Bureau of the Budget, 1967).
In general, BLS employment estimates are comparable with other data collected from establishments, such as employment, production, and similar
data obtained by the Census Bureau in the manufacturing censuses and annual surveys. Some differences will be found, however, especially for individual
industries, caused chiefly by differences in definitions
of the industries covered, in the business units considered parts of an establishment, and in the industrial classification of some establishments.
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 company differ substantially from those in which each
establishment of the company has been assigned to
the industry of its principal activity. (See Corporate Profits, above, p. 21.)
USES AND LIMITATIONS
Current employment statistics are widely used as a
timely indicator of changes in economic activity in
various sectors of the economy. Comparable information for a large number of detailed industries is
provided within a few weeks. Furthermore, because
of the promptness with which basic information is
supplied in considerable industry detail, these estimates are frequently incorporated in other Federal
^statistical series, particularly in making current
estimates of production, productivity, and national
income.
The publication of comparable State and local
area estimates by the cooperating State agencies
using the same concepts and methods provides a
means whereby business trends can be followed for all
State and the District of Columbia and for nearly
200 labor market areas.
REFERENCES
Monthly summary data first appear in a press
release entitled "The Employment Situation". The
14. WEEKLY HOURS OF WORK—£
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 non-supervisory workers, including hours for
holidays, vacation time, or other employer-paid leave.
Data on average weekly hours, weekly earnings and
hourly earnings are currently published for all production and nonsupervisory workers in five of the
eight major divisions of industry—mining, contract
construction, manufacturing, trade and finance, insurance and real estate—and for 75 percent of such
workers in transportation and public utilities, 13
percent in service, and 25 percent in government.
Detailed statistics are regularly shown for 21 major
manufacturing groups and 246 manufacturing indus-
basic monthly release for the employment, hours, and
earnings series is the Employment and Earnings, and
Monthly Report on the Labor Force, which contains
national, State and area estimates and explanatory
notes. The National employment hours and earnings series for 13 months are also reprinted in the
Monthly Labor Review. Continuous data for the
entire history of the national series prior to June 1966
are available in Employment and Earnings Statistics
for the United States, 1909-66, BLS Bulletin 1312-4.
This is the fifth of a series of annual compendium
volumes. More detailed technical notes are available in "Measurement of Employment, Hours, and
Earnings in Nonagricultural Industries."
Historical State and area annual average data from
the earliest date of availability for all industry series
published by cooperating State agencies are available
in Employment and Earnings Statistics jor State and
Areas 19S9-65 BLS Bulletin 1370-3. This is the
fourth of a series of annual publications presenting
State and area data, and it contains more than 7,000
series on payroll employment by industry and over
3,000 series of hours and earnings of production
workers by industry.
INDUSTRIES
tries as well as for 82 nonmanufacturing groups and
divisions. For overtime hours (hours in excess of
regular hours for which premium payments were
made) series are prepared for 146 manufacturing
industries. The industries for which hours and
earnings estimates are not prepared are characterized
by small establishments (such as offices of physicians
and surgeons, religious organizations) with special
problems relating to data collection or definition.
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.
49
Average Weekly Hours in Selected Industries, 1947-66
(Monthly data for production workers or nonsupervisory employees. Seasonally adjusted)
HOURS OF WORK
44
DURABLE GOODS MANUFACTURING
NONDURABLE GOODS MANUFACTURING
I960
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:
1961 1962 1963 1964 1965
1966
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 for some industries (see description of the Index of Industrial Production, p. 55).
A limitation of the average hours series is that the
figures generally refer only to production or nonAverage Weekly Hours—Seasonal Adjustment Factors
supervisory workers.
100.0
January
99.5 July
Hours paid for as measured by these series differ
100.1 from hours worked, and from "plant man hours/'
February
99.5 August
100. 1
March
99.8 September
100.2 which do not include hours paid for vacation, sick
April
99.3 October
100. 1 leave, or holidays.
May
100. 1 November
In addition to average gross hours and average
100.9
June
100.7 December
overtime hours for a large number of industries,
USES AND LIMITATIONS
BLS also publishes indexes of aggregate weekly
man-hours in industrial and construction activities.
Changes in hours worked supplement the information on employment, since frequently hours worked
REFERENCES
are affected even before employment by changes in
See page 49, under Nonagricultural Employment.
economic activity. Hours in manufacturing are an
50
TABLE
14.—Weekly Hours of Work in Selected Industries, 1929-66 1
[Hours per week]
Manufacturing ]
Year
Total
Durable goods
Nondurable
goods
Contract construction x
Retail trade 1
1929
44.2
1930
1931
1932
1933
1934
42.1
40.5
38.3
38.1
34.6
32.5
34.7
33.8
41.9
40.0
35.1
1935
1936
1937
1938
1939
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
43.4
1940
1941
1942
1943
1944
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
43.2
42.8
41.8
40.9
41.0
1945
1946
1947
1948
1949
43.5
40.3
40.4
40.0
39. 1
44.0
40.4
40.5
40.4
39.4
42.3
40.5
40.2
39.6
38.9
38.2
38.1
37.7
40.9
41.3
41.0
40.9
41.0
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
39.7
39.5
39.7
39.6
39.0
37.4
38.1
38.9
37.9
37.2
41. 1
40.9
40.5
39.8
39.7
1955
1956
1957
1958
1959
40.7
40. 4
39.8
39.2
40.3
41.3
41.0
40.3
39.5
40.7
39.9
39.6
39.2
38.8
39.7
37. 1
37.5
37.0
36.8
37.0
39.6
39. 1
38.7
38. 7
38.7
1960
1961
1962
1963
1964
39. 7
39.8
40. 4
40. 5
40.7
40. 1
40.3
41. 1
41.4
39.2
39.3
39. 6
39.6
39.7
36.7
36.9
37. 0
37.3
37.2
38.5
38. 1
37. 9
37.8
37.0
1965
1966
41.2
41.3
42. 0
42. 1
40. 1
40.2
37.4
37.6
36.6
35. 9
o
40. 9
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 including paid holiday, vacation, and sick-leave hours.
2 Not available.
3
Data include Alaska and Hawaii beginning 1959. This inclusion has not significantly affected these weekly hours series.
* Data exclude eating and drinking places prior to 1964.
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.
51
15.
AVERAGE HOURLY AND WEEKLY EARNINGS—SELECTED INDUSTRIES
DESCRIPTION OF SERIES
The payroll figures on which these averages are
based are collected by BLS from employers on the
same form with the employment and hours figures,
described above. They are reported before deductions for taxes, social insurance, etc. They
include pay for overtime, holidays, vacations, and
sick leave paid directly by the firm but exclude
retroactive pay and bonuses, unless earned and paid
regularly each pay period.
STATISTICAL PROCEDURES
Average hourly earnings are derived by dividing
total payrolls by total manhours reported for each
industry. Average weekly earnings are obtained by
multiplying average weekly hours and average
hourly earnings for each industry. Only the sample
data are used, since there are no benchmarks available for hours and earnings. The tendency of the
optimum allocation sample design with its heavy
sampling of large establishments (see discussion under Nonagricultural Employment) to produce biased
estimates of the level of earnings for certain industries
is counteracted by a stratified estimating procedure
which makes use of establishment size and in some
cases regional stratification. Whenever a new em-
ployment benchmark becomes available, national
estimates of average weekly hours and average hourly
earnings, using eight size strata and four regional
strata (Northeast, North Central, South and West)
are prepared. These estimates are used as a standard against which the published averages are compared. This comparison may indicate that new
stratification patterns or modifications in existing
patterns are needed. New or revised patterns of
stratification are then introduced into the estimating
structure at the time of the next benchmark revision.
The series "adjusted hourly earnings" is constructed to show the relation between straight-time
hourly earnings in the base period, 1957-59, and
other years on the assumption that the proportion
of workers in each industry remains unchanged.
The object is to show changes in pay scales unaffected
by such factors as variations in the amount of overtime pay or shifts of workers into higher (or lower)
paying industries.
USES AND LIMITATIONS
Average hourly earnings figures are widely used
in collective bargaining, in "escalating" long-term
sales contracts (such as labor costs for equipment
which takes a number of months or years to build)
and in general economic analysis.
Average Hourly Earnings in Selected Industries, 1947-66
(Monthly data for production workers or nonsupervisory employees)
,
j
.v^__-_j
•
—\—\-T\
:t
NONDURABLE GOODS MANUFACTURING
RETAIL TRADE
,,!,, . . i . , ! , , ! , , , , I , , [ , , ! , , . . I , , ! . . ! . . . . I . . I . . I . .
1947
..I..I
1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 I960
SOURCE OF DATA: DEPARTMENT OF LABOR
52
I..!,,I..I.,I..L|M ..I.,!.......!..!..!.. ..I..I..I.,
,.l..l
1961 1962 1963 1964 1965
1966
TABLE
15.—Average Hourly and Weekly Earnings—Selected Industries, 1929-66 ]
Average hourly earnings—current prices
Year
Manufacturing industries
All
1929
1930
1931
1932
1933__-1934
1935
1936
1937
1938
1939
.546
.509
.441
.437
.526
(4)
(4)
(4)
(4)
(4)
$0. 492
.467
.550
(4)
$0. 412
.419
.505
(4)
(4)
(4)
(4)
(4)
.520
.519
.566
.572
.571
(4)
4
(4)
(4)
(4)
.544
.550
.617
.620
.627
(4)
4
(4)
(4)
(4)
.571
.580
.667
.679
.691
(4)
Manufacturing
industries
Manufacturing industries
Contract
conRetail
Nontrade
Durable durable struction
goods
goods
$0.560
Average weekly earnings—-current prices
()
All
Index of
Contract
adjusted
conRetail
hourly
Nontrade earnings,
Durable durable struction
1957-59=
goods
goods
1002
Average
weekly
earnings,
1957-59
prices3
(4)
$24. 76
$26. 84
$22. 47
(4)
(4)
(4)
(4)
(4)
23.00
20.64
16.89
16.65
18.20
24.42
20.98
15.99
16.20
18.59
21.40
20.09
17.26
16.76
17.73
(4)
(4)
4
(4)
(4)
()
4
(4)
(4)
(4)
()
(4)
(4)
(4)
(4)
(4)
(4)
(4)
4
(4 )
(4)
()
(4)
19.91
21.56
23.82
22.07
23.64
21.24
23.72
26.61
23.70
26.19
18.77
19.57
21.17
20.65
21.36
(4)
4
)
4
)
4
(4)
(4)
8
(4)
(4)
(4)
(4)
$0 484
(4)
(4)
(4)
(4)
(4)
)
4)
$21.01
(4)
(4)
(4)
(4)
32.2
(4)
(4)
(4)
$48. 84
21.34
22.17
23.37
24.79
26.77
4
()
33.4
37.5
40.8
43.7
51. 15
57.47
64. 58
71.43
74.55
45. 5
50.4
57.8
63.2
66. 1
70.49
63.71
63.20
63.39
64.92
494
518
559
606
653
24.96
29.48
36.68
43.07
45.70
28.07
33.56
42.17
48.73
51.38
21.83
24.39
28.57
33.45
36.38
(4)
699
(4)
797
901
972
1. 015
44.20
43.32
49. 17
53. 12
53.88
48.36
46.22
51.76
56.36
57.25
37.48
40.30
46.03
49.50
50. 38
$58. 87
65.27
67. 56
28.59
32.92
36.94
39.75
41.62
58.32
63.34
67. 16
53.48
56.88
59.95
62.57
63. 18
69.68
76.96
82.86
86.41
88.91
43. 16
46.22
47.79
49.75
51. 21
68.2
73.6
77.4
81.6
84.3
69. 59
69.99
72.61
75.61
75.31
57
70.47
70.49
75.70
78.78
81.59
82.71
88.26
62.43
68.48
72.63
76.63
76. 19
82. 19
85.28
88.26
89.27
96.05
66.63
70. 09
72.52
74. 11
78.61
90.90
96.38
100. 27
103. 78
108. 41
53.06
54.74
56.89
58.82
60.76
86. 9
91.5
96.2
100.2
103.5
81. 14
83. 19
83.26
82. 14
86.96
62
68
74
80
75
89. 72
92.34
96.56
99.63
102. 97
97. 44
100. 35
104. 70
108. 09
112. 19
80. 36
82. 92
85. 93
87.91
90. 91
113. 04
118. 08
122. 47
127. 19
132. 06
62. 37
64.01
65.95
68. 04
6
64.75
106. 6
109. 6
112. 3
115.2
118. 0
87. 02
88.62
91.61
93.37
95. 25
1. 82
1. 91
107. 53
111. 92
117. 18
121. 67
94.64
98. 49
138. 01
145. 51
66.61
68.57
121. 0
124. 9
97.84
99.20
1940
1941
1942
1943
1944
.655
.726
.851
.957
1.011
.716
.799
.937
1.048
1.105
.590
.627
.709
.787
.844
1945
1946
1947
1948
1949
1. 016
1. 075
1.217
1. 328
1. 378
1.099
1. 144
1.278
1.395
1.453
.886
. 995
1. 145
1.250
1.295
$1. 541
1.713
1.792
1950
1951
1952
1953
1954
1. 440
1.56
1.65
1. 74
1.78
1.519
1.65
1.75
1.86
1.90
1.347
1.44
1.51
1.58
1.62
1.863
2. 02
2. 13
2.28
2. 39
1.
1.
1.
1.
1.
050
13
18
25
29
1.86
1955
1956
1. 95
1957
2. 05
1958
2. 11
1959 5 __. 2. 19
1.99
2.08
2. 19
2.26
2.36
1.67
1.77
1.85
1.91
1.98
2. 45
2.57
2.71
2.82
2.93
1.
1.
1.
1.
1.
34
40
47
52
1960
1961
1962
1963
1964
2. 26
2. 32
2.39
2.46
2. 53
2. 43
2. 49
2.56
2.63
2. 71
2. 05
2. 11
2. 17
2.22
2. 29
3. 08
3.20
3. 31
3.41
3. 55
1.
1.
1.
1.
1.
1965
1966
2. 61
2.71
2.79
2.89
2. 36
2. 45
3.69
3.87
()
(4)
(4)
(4)
(4)
(4)
(4)
1
For manufacturing, data relates to production and related workers; for contract construction, to construction workers; and for retail trade to nonsupervisory
workers.
2
Earnings in current prices, adjusted to exclude overtime and interindustry shifts (April used for 1941-46).
3
Earnings in current prices divided by consumer price index on a 1957-59 base.
4
Not available.
5
Data include Alaska and Hawaii beginning 1959. This inclusion has not significantly affected these earnings series.
6
Excludes eating and drinking places prior to 1964.
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.
1947 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.
53
The hourly earnings figures reflect not only changes
in basic hourly and incentive wage rates, but also
such variable factors as premium pay for overtime
and late-shift work and changes in output of workers
paid on an incentive basis. The changing employment of workers as between relatively high-paid and
low-paid work, and relatively high-wage and lowwage industries, also affects the hourly earnings
averages.
Hourly earnings refer to the average actual return
to workers, and should not be confused with wage
rates, which represent the rates stipulated for a given
unit of work or time. Since certain types of payments (see above) as well as payments to workers
excluded from the production worker (or nonsupervisory employee) definition are not included, th§
earnings series should not be taken to represent labor
costs to the employer.
Average weekly earnings are affected by changes
in the length of the workweek as well as all of the
54
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.
The BLS has, during the last several years, increased its hours and earnings coverage to an increasingly wider band of industries and expects to begin
publishing a summary series of hourly and weekly
earnings in all nonagricultural establishments within
the next year.
REFERENCES
See above, under Nonagricultural Employment
(p. 49). Estimates of hourly earnings excluding overtime in manufacturing and of net spendable weekly
earnings in current and 1957-59 dollars for selected
industries are also published in Employment and
Earnings and Monthly Report on the Labor Force
PRODUCTION AND BUSINESS ACTIVITY
16 and 17. 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;
also, benchmark indexes 1958 to 1963 based on the
1963 Census of Manufactures are in the process of
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, nondurable 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
55
of the manufacturing establishments owned by the
MAEKET GROUPINGS
Atomic Energy Commission. It accounted, in the
The second system of classification is based on type
1957-59 base period, for 38 percent of the total
index. Mining activities, accounting for 8 percent of end-use, and has as its major categories consumer
of the index in this same period, include coal and goods, equipment, and materials. Each of the 207
metal mining, crude oil and natural gas extraction, monthly series is assigned to one of the market groupoil and gas well drilling, and production of sand, ings as well as to an iadustry grouping. For example,
clay, and other nonmetallic minerals. Utility out- the auto production series is a component of consumer
put of electricity and gas includes both private- and goods in the market classification and of transportagovernment-owned establishments, and accounted tion equipment in the industry classification. Truck
for 5 percent of the total index in the 1957-59 base production, which is also part of transportation
equipment in the industry grouping, is in equipment
period.
in the market grouping.
In the table "Production of Selected Manufactures" nine series selected from the component
The consumer goods grouping, accounting for 32
group indexes are shown for the period 1947-66. percent of the total index in the 1957-59 period,
These are among the major components of the index is further subdivided into automotive products,
of manufactures.
home goods (including appliances, furniture, teleIndustrial Production, 1947-66
(Monthly data.
Seasonally adjusted)
INDEX: 1957-59 = 100
170
150
140
130
120
100
NONDURABLE MANUFACTURING
80
70
60
50
40
LlnLijnlnLlJ
1947
Llnl
I,, I. ,1,1,.I
I., Illlnl ,1,1., I
Llnl
1.. I • • I , . I •, i,, I. • I . , I •. j,, I •. I
Llnl
I.. I,. I
1 1 1 1 l,,l,,l
1 •, I,, I,, I, ,1,, I „ I
In I „ I,, | „ 1 „ |, ,|,, | „ |
1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965
SOURCE OF DATA: BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
56
1966
vision, 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
1959 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.
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 is 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
Relative Importance oj Major Groupings in the Index oj 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
Nondurable Manufactures
Textiles, apparel, and leather
Paper and printing
Chemicals, petroleum, and rubber..
Food, beverages, and tobacco
76-384
Market group
Total index
Final products, total
Consumer goods
Equipment, including defense
Materials
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
7. 60
8. 17
11.54
11. 07
1957-59 base
period proportion
11. 63
3.41
Materials
Durable goods materials
Nondurable materials
26. 73
25.92
57
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-to-month
and seasonal variations. The first adjustment 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 75
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/7 published in
the Federal Reserve Bulletin for June 1941. Use has
been made of variations of the Census Method II
programs for seasonal adjustment by electronic computer, which are 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
58
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 through October 1962 in
addition to the new one for major groupings of the
index; and (5) adoption of the 1957 version of the
Standard Industrial 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 to an
average of the years 1957-59. At the same time
the index was updated for the period 1957 to 1961
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
were 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 were revised generally
beginning in 1959 and through 1961, though in a few
series some revisions were carried back to 1957 and
1958 as well. This resulted 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
degrees 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, however, that these are value or dollar-
TABLE
16.—Industrial Production, 1929-66
[1957-59=100]
Market groupings
Industry groupings
Year
Total
industrial
production
Final products
Manufacturing
Mining Utilities
Total
Total
NonDurable durable
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
2
73
2
89
2
86
47
58
64
71
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
76
79
80
84
84
83
91
91
93
90
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
1960.
1961.
1962.
1963.
1964.
109
110
118
124
132
109
110
119
125
133
109
107
118
125
134
1965.
1966.
143
156
145
159
148
165
40
58
80
103
101
2
2
2
2
2
2
Consumer
goods
Equipment
P)
P)
P)
P)
P)
P)
P)
P)
P)
o
P)
P)
P)
P)
P)
P)
P)
P)
P)
P)
P)
P)
P)
P)
P)
P)
P)
P)
P)
P)
P)
P)
P)
P)
P)
P)
P)
o
0)
P)
P)
P)64
o
P)
P)
p)
p)
p)
p)
p;
p)
p)
p)
Materials
P)
P)
P)
P)
P)
P)
P)
P)
P)
P)
P)
P)
P)
P)
P)
P)
P)
P)
55
58
52
67
70
65
79
78
80
85
84
56
78
94
101
89
77
84
84
93
94
98
99
95
106
93
96
97
96
107
95
104
105
91
104
99
102
102
93
105
116
122
131
140
151
110
111
120
125
132
111
113
120
125
132
108
108
120
124
132
108
108
117
124
133
161
173
143
155
140
147
147
173
144
157
67
65
67
69
69
50
56
61
67
72
73
79
84
90
86
99
105
105
96
100
80
88
94
98
108
110
113
120
125
133
102
103
105
108
112
141
151
115
120
1
Not available.
Indexes should be used with caution because of special conditions due to wartime activity.
Source: Board of Governors of the Federal Reserve System.
2
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
division as the unit; and the production index uses
value added as weights for the series whereas the
shipments series implicitly uses value of shipments.
59
TABLE
17.—Production oj Selected Manufactures, 1947-66
[1957-59=100]
Durable manufactures
Nondurable manufactures
Transportation
Primary Fabricated Machinery
metal
equipmetals
products
ment
Year
Lumber
and
products
Textiles,
apparel,
and
leather
Paper
and
printing
Chemicals, Foods,
petroleum, beverages,
and
and
rubber
tobacco
1947
1948
1949
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
1950
1951
1952
1953
1954
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
1960 _
1961
1962
1963
1964
101
99
105
113
129
108
107
117
123
133
111
110
124
129
141
108
104
118
127
131
102
101
106
109
113
108
108
115
119
125
109
112
117
120
128
114
119
131
142
153
107
110
113
117
121
1965
1966
138
143
148
163
161
184
149
168
117
119
136
142
135
146
165
182
123
128
1955
1956
1957
1958
1959
_ _
Source: Board of Governors of the Federal Reserve System.
The "consumer" and "business equipment" market
groupings of industrial production refer to many
of the sanie 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 pruchase as well as for domestic
business and consumers, and are weighted on the
basis of value added by industry in 1957. The deflated 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 1958, 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.
60
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
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 much of the 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 Serv-
ices, Board of Governors of the Federal Reserve
System, Washington, D.C., 20551. 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.
18. WEEKLY INDICATORS OF PRODUCTION
Steel Produced
Electric Power Distributed
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 series is based on current reports received from
more than 97 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.
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 imports 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 utilities or groups of interconnected
utilities) representing about 95 percent of the total
energy available for public consumption. The estimated 100-percent electricity output is obtained by
applying to the summarized reported data an adjustment factor derived from the ratio of the monthly
output of utilities 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 and electric space heating loads,
and total sales to residential and commerical consumers.
61
The weekly series is issued each Wednesday by
the Edison Electric Institute. The Institute also
publishes monthly statistics on the total electric
utility industry, 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. 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 lignite
has 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
62
industries and deliveries to retail dealers, and on
stocks of coal held by industries and retail dealers.
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
"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 week
of the preceding year. The number of cars loaded
with highway trailers or containers and the number
of such trailers and containers as well as estimated
ton-miles for all traffic are also included in the
reports to the AAR.
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.
TABLE
18.—Weekly Indicators of Production, 1929-66
[Weekly Averages]
Steel produced
Electric
power
distributed
(millions of
Thousands Index
of net
(1957-59 kilowatthours)
tons
= 100)
Year
1929
1, 184
1930
1931
1932
1933
1934
855
549
289
493
560
___ ___
Bituminous
coal mined
(thousands
of short
tons) 1
Freight
loaded
(thousands
of cars)
Paperboard
produced
(thousands
of tons)
Cars and trucks assembled
(thousands) 2
Total
Cars
Trucks
63. 5
1,733
1,740
1,016
82
103. 0
88.2
14.8
45.
29.
15.
26.
30.
9
5
5
5
1
1,714
1,646
1, 488
1,544
1,655
1,522
1,243
1, 007
L090
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
88
101
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
86. 8
93. 4
20.8
14. 5
15. 2
71. 7
72. 3
4. 0
(3)
15. 1
21. 0
16.9
14. 5
15. 2
1. 6
41. 5
68. 4
75. 2
98. 6
13.
18.
23.
26.
21.
5
1
8
3
8
___ _-_
. - - .__
_ . _ _
______
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
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
1945
1946
1947
1948
1949
1, 529
1,277
1, 628
1,695
1, 496
82. 0
68. 6
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
177
184
177
15.
59.
92.
101.
120.
154. 2
129. 8
106. 8
141. 1
125.6
128.
102.
83.
118.
106.
4
7
4
0
0
25.
27.
23.
23.
19.
9
2
4
2
7
0
2
0
8
9
1935
1936
1937
1938
1939
___ __.
107
95
114
138
147
153
1
6
2
5
4
(3)
1950
1951
1952
1953
1954
1,857
2, 016
1,782
2, 141
1,694
99.
108.
95.
114.
90.
7
3
7
9
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
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.
21.
21.
16.
21.
1,899
1,880
1, 886
2,096
2,431
101.9
100. 9
101. 2
112.5
130. 5
14,
15,
16,
17,
18,
424
139
325
490
728
1,390
1,353
1,414
1,535
1,630
585
550
552
555
558
306
322
343
358
384
151.8
127.8
157. 5
175.0
178. 8
128.8
106. 1
133. 4
146.9
148. 8
23.0
21.7
24. 1
28.1
30.0
2,521
2,572
135. 3
138. 1
20, 169
21, 971
1,735
1,791
562
410
446
213.7
199.2
179.4
165.4
34. 3
33.8
1960
1961
1962
1963_
1964
1965
1966
_ _
___ _ ___
_
570
* Daily average. Includes data for Alaska.
Production figures for 1929-63.
3 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, American Paper Institute,
and Ward's Automotive Reports.
2
Paperboard Produced
The weekly series on production of paperboard,
compiled by the Paperboard Group, American
Paper Institute, Inc., 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 Paperboard Group collects from
member companies of the American Paper Institute,
currently accounting for about 87 percent of total
63
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 Paperboard
Group 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.
The weekly data are issued by the Institute in a
one-page release on Wednesday of the week following
that to which the figures relate. More detailed statistics are presented in the American Paper Institute's,
annual Paperboard Industry Statistics. The Institute 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
Institute series, through the differences are not large.
Weekly data on paperboard production were
initiated in 1933. Comparable annual data are
available from 1925 from the Paperboard Group,
American Paper Institute, Inc.
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 1963 are average weekly production figures derived from annual totals in Ward's
yearbooks; and data for 1964 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.
19. 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. Annual data
for recent years and seasonally adjusted annual rates
of the data for recent months are published by the
Department of Commerce in current issues of Construction Report C30. Data are also included
currently in Economic Indicators.
New construction covers the erection or installation of, and additions and alterations to, buildings,
structures, and utilities, together with the necessary
service facilities, such as plumbing, heating, and
64
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.
New Construction, 1947-66
(Monthly data.
Seasonally adjusted annual rates)
BILLIONS OF DOLLARS
80
1947
1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965
1966
SOURCE OF OATA: DEPARTMENT OF COMMERCE
REVISIONS IN THE HISTORICAL SERIES
Since the publication of the 1964 Supplement to
Economic Indicators, new series were introduced for
two major components of the statistics on the
monthly value of new construction put in place.
These new series are based on the results of two new
and continuing surveys conducted by the Bureau of
the Census: the Survey of Monthly Construction
Progress, which covers new private nonfarm nonresidential buildings, and the quarterly survey of
expenditures on State and local government construction. The new statistics provide improved
measures of the short-term changes in the series
involved.
The new series replace the old series for these two
components of the total, beginning for private nonresidential buildings with data for July 1962 and for
State and local government construction with data
for January 1963. For private nonresidential buildings the new series has been made to be substantially
comparable in level with the old series (though the
month-to-month movements of the new series before
seasonal adjustment are very different from those of
the old series). For State and local government
construction, however, the new series estimates are
not entirely comparable in level with the old, and a
small break is therefore introduced between
December 1962 and January 1963. The extent of
this break in comparability is discussed in Construction Report C3O-65S.
Because of the sharp changes in the seasonal
patterns, new seasonal indexes have been computed
for the new series, and the seasonally adjusted data
for the new series are based on these new indexes.
The estimates for total public construction, total
private construction, and total construction have
been revised to reflect the new series data. These
revisions appear not only in the unadjusted series
but also in the seasonally adjusted data.
For a more complete discussion of these revisions,
see the introductory text and appendixes in the
Bureau of the Census January 1966 release, Construction Report C30-65S.
STATISTICAL PROCEDURES
Construction Report C30-65S describes the procedures used for obtaining the estimates for two new
series which were introduced in January 1966: (1)
65
New private nonfarm nonresidential buildings and
(2) State and locally owned public construction.
Both of these series are based on actual progress
data reported to the Census Bureau in continuing
sample surveys. For the private nonresidential
buildings category, reports are received monthly
showing the value of construction put in place during the month on a sample of active projects. For
the State and local series, reports are received quarterly showing the value of construction expenditures
during the quarter by a sample of State and local
governments and governmental agencies.
In addition to the procedures used for the two
new series, three general methods are used by the
Bureau of the Census in making the final estimates
of new construction activity, depending on the kind
of data available for the different types of construction. In some instances, a preliminary projection
is made based on related data or normal seasonal
changes, pending receipt of data required for the
final estimates.
The first method is used for the following types
of new private nonfarm construction: housing units,
nonhousekeeping residential and "all other private"
and for a few minor components of Federally owned
construction. It involves the derivation of estimates
of the value of work started and the translation of
those 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 work started monthly 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. 70) by average valuation figures derived from permit data. 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 for privately
owned construction are compiled by the F. W. Dodge
Company and for Federally owned construction by
the responsible Federal agency. The F. W. Dodge
Company data that are used cover awards in only
66
the 37 Eastern States. 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 13 Western States to the valuation of permits
issued in the 37 Eastern States for each of the types
of construction 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 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 telephone and telegraph
companies are obtained from the American Telephone
and Telegraph Company and the Western Union
Telegraph C ompany, respectively.
The third method is used for farm construction,
Federal highway construction, and most public
utility construction. This involves obtaining annual
construction expenditure estimates and fitting a
trend line to the estimates for 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 based on
data prepared by: The U.S. Department of Agriculture for farm construction; the Bureau of Public
Roads for Federal highway construction; the Federal
Power Commission, Rural Electrification Administration and Edison Electric Institute for electric light
and power construction; the Federal Power Commission and American Gas Association for construction of gas lines and gas plants; the Interstate Commerce Commission for: construction of Class I linehaul railroads, adjusted to an estimate for all
19.— New Construction, 1929-66
TABLE
Construction contracts 3
Private expenditures
Year
Total
expenditures Total
Residential
non-farm
Total
New
housing
units
Commercial and
industrial
Federal,
State,
and local
expenditures 2
Billions of dollars
Total value
Commercial
and industrial floor
space
(Index 195759=100)
Other
Millions of
square feet
1929_.
10. 8
8.3
3. 6
3. 0
2. 1
2. 6
2. 5
267
1930__
1931..
1932_.
1933..
1934_.
8. 7
6.4
3. 5
2. 9
3.7
5.9
3.8
1.7
2. 1
1. 6
.6
.5
.6
1. 6
1.4
2.4
1.3
.7
1. 5
.7
.5
.5
2.9
2.7
1.9
1. 6
2. 2
145
70
33
42
46
1935_.
1936..
1937__
1938..
1939..
4. 2
6.5
7. 0
7. 0
8. 2
2. 0
1. 0
1. 6
.7
1. 2
1. 5
1. 6
2. 2
3. 5
3. 1
3.4
3.8
56
97
123
67
93
1940..
1941..
1942..
1943..
1944_.
8.7
12. 0
14. 1
8.3
5.3
3. 6
5.8
10. 7
6.3
3. 1
162
294
520
128
96
1945..
1946..
1947_.
1948..
1949..
5.8
14.3
20.0
26. 1
26. 7
33.9
41. 1
43.7
221
354
243
211
147
1950..
1951..
1952..
1953..
1954_.
33. 6
35.4
36.8
39. 1
41. 4
237
225
197
235
238
1955..
1956..
1957..
1958..
1959 6
1959 6
46.5
47. 6
49. 1
50. 2
55. 0
55.3
1960..
1961..
1962..
1963..
19641965..
1966-
1. 2
1. 5
3.0
3.9
3. 6
1.9
2.0
.5
.3
.4
4.4
2. 7
2.3
5. 1
3. 0
3. 5
2. 6
3. 0
6.2
3.4
2. 0
2. 2
1.7
.9
.8
3.4
1.3
12. 1
6. 2
1.4
.7
.6
.3
.3
.4
.4
.6
.6
.5
.5
1. 1
1. 1
1. 2
.9
.9
.8
1.3
1. 2
.5
.2
1. 5
1. 2
.3
1. 1
.9
.8
1.3
2. 8
2. 7
3. 0
2.4
2. 2
3.3
4.7
6.3
9.9
.7
4.8
7.8
13. 1
12.4
10.5
10. 0
2.8
2. 2
5. 5
5. 9
18. 1
15.9
15.8
16. 6
18. 2
15. 6
13. 2
12.9
13.4
14. 9
2. 5
3. 6
3. 5
4. 0
4. 2
6. 1
6.7
6.8
7.3
7.2
6. 9
9.3
10. 8
11. 2
11.7
61.4
63. 4
66.8
69.5
76.2
34. 9
35. 1
34.7
39. 0
39. 2
21.9
20. 2
19. 0
19. 8
24. 1
24. 3
18. 2
16. 1
14. 7
15. 4
19. 1
19. 2
5. 6
6. 7
7. 1
6. 0
6. 0
6. 0
7.3
8. 0
9. 0
8. 9
11. 7
12. 7
14. 1
15. 5
16. 0
16. 1
91. 1
91. 6
93.2
101. 7
105. 1
53.9
55. 4
59. 7
63. 0
66. 2
38. 1
38.3
41.8
43. 6
45. 9
21. 7
21. 7
24.3
25. 8
26. 5
16. 4
16. 2
18. 6
20. 1
20. 6
7. 0
9.3
7.5
8. 0
9. 2
105. 2
107. 6
119. 7
132. 0
137. 0
461
443
500
534
599
71.9
74. 4
50. 0
50. 6
26. 7
24. 6
20. 8
18.8
142.8
145. 3
680
753
16.7
21.4
20.4
26.7
26. 2
26. 0
27.9
29. 7
34.8
4.2
8.9
8. 9
7.9
9.5
9.9
9. 0
10. 4
15.9
17. 1
17.9
19.3
20. 3
11.8
13.7
11. 5
12. 3
21. 9
23. 7
5
298
436
421
359
440
1
2
3
Includes nonhousekeeping residential buildings not shown separately.
Includes public residential construction.
Compiled by F . W. Dodge Company. Omits small contracts and covers rural areas less fully than urban. Also excludes floor space of some Atomic Energy
Commission projects, because of security reasons.
* Not available.
5
Revised series covering 48 States beginning January 1956; not comparable with early data covering 37 States.
6
Alaska and Hawaii included beginning 1959. Comparable data for 1959, exclusive of Alaska and Hawaii, also shown.
NOTE.—Detail may not add to totals due to rounding.
Source: New construction expenditures by U.S. Department of Commerce; construction contracts by F . W. Dodge Company.
67
railroads on the basis of Interstate Commerce Commission data on the value of gross investment in
railroad property by each class of railroad; and, 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.
For a complete and detailed discussion of the
procedures used for obtaining monthly estimates for
each of the individual series, see appendixes in
Construction Report C30-65S.
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 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 the contract construction industries 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
68
construction in 1957-59 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.
The statistics on the value of new construction put
in place are derived in part from direct measurements
and in part from indirect estimation. A series is
defined as derived from direct measurement when it
is based on direct reports of the actual value of construction progress or construction expenditures during a specific period (month, quarter or year) which
are obtained from a complete enumeration or from
a sample survey. All other series are defined as
derived from indirect estimation. The indirectly
estimated series are not calculated from direct measurements of construction progress or expenditures.
However, most of the series are derived from direct
measures (monthly, quarterly or annual) which are
in some way related to construction progress.
To the extent that the value-in-place statistics are
indirect estimates, the data cannot respond accurately to actual events, particularly over the span of a
few months. The indirectly estimated series probably reflect sustained trends reasonably well. However, except by chance, they cannot respond to
temporary departures from a continued trend or—
even more importantly—show correctly the precise
time at which a major turning point occurs.
In addition, 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.
Special limitations on data jor recent months.—In
each monthly repoit, the value-in-place data for the
most recent month are preliminary figures representing, almost entirely, projections of data reported
for recent prior months. In subsequent monthly
reports, varying from one month to more than a
year later, the projections for nearly all series are
replaced by revised estimates.
Use of the data for recent months is thus subject
to important special qualifications. For most series,
the projections for any given month rest on the
assumption of a continuation of the trend of the
seasonally adjusted annual rate of activity in the
most recent period for which value-in-place estimates based on direct measurement are available.
The month-to-month changes which will be indicated
by the final value-in-place estimates that are substituted, in subsequent months, for the projections
may be significantly different from those indicated
by the projections they replace.
For a more complete discussion of the nature of the
projections for recent months, see Construction Keport C30-65S, which was released in January 1966.
Extent oj direct measurement in final value-in-place
statistics.—As indicated above, data for the most
recent month are almost entirely projections which
are subsequently replaced by revised figures. For
series that account for about 50 percent of total new
construction, the estimates are ultimately based on
some type of directly measured data; as indicated in
more detail below, directly measured monthly data
are available for less than half of this 50 percent.
For series that account for about 40 percent of total
new construction, the estimates are ultimately based
entirely on indirect estimation and virtually all of
these revisions become available in the month following initial publication of projections.
For the series on private residential additions and
alterations, which accounts for less than 10 percent
of total new construction, projections are included in
the totals, although not shown separately, and no reported data for current periods are being used to
revise those projections.
The final estimates for the major component x of
the private nonresidential buildings series, for the
telephone and telegraph series and for nearly all of
the Federal series are based on direct measurements
of monthly construction activity. These series
account for about 20 percent of the total value of
new construction. The projections initially published for these series are replaced, almost entirely
in the following month, by estimates based on direct
measurement.
The final monthly estimates for the State and local
public construction series, which account for approximately 25 percent of total new construction activity,
are interpolated values based on directly measured
quarterly expenditure data. These final monthly
estimates become available and are substituted for
the previously published projections 4 to 6 months
after the projections are initially published.
1
At the present time, monthly reports of the actual value of construction
progress on private nonresidential buildings are being obtained only for projects
in the 37 Eastern States and the District of Columbia. Comparable data for the
remaining 13 States are indirectly estimated.
The final monthly estimates for the public utility
series (other than telephone and telegraph), which
account for about 5 percent of total new construction, are based on directly measured annual data
from which monthly values are interpolated. The
final monthly estimates are substituted for the previously published projections approximately 18 months
after the close of the year.
REFERENCES
Data on construction value put in place are published in detail by type of construction and ownership
in Construction Report C30, Value of New Construction
Put in Place, a monthly publication of the Bureau
of the Census. This publication also presents data
on a seasonably adjusted annual rate basis, both in
current dollars and in constant (1957-59) dollars.
These value in place data are also published in
Construction Review, a monthly publication of the
Business and Defense Services Administration, U.S.
Department of Commerce.
Historical monthly data for the 1939-1966 period
are published in the following reports: 1939-1945—
Construction Volume and Cost, 1915—1956, a statistical
supplement to Construction Review; 1946-1961—Construction Report C30-61 {Supplement); 1962-1964—
Construction Report C30-65S; 1965-1966—Current
issues of Construction Report C30. Although the statistics for the more recent years have been revised,
historical annual data back to 1915 appear in Construction Statistics 1915-1964 a supplement to Construction Review. More detailed descriptions of the
sources of data and the methods of compiling the
estimates are also published in Construction Report
CS0-65S.
F. W. Dodge Construction Contracts Series
DESCRIPTION OF SERIES
The total value index on construction contracts
compiled by the F. W. Dodge Company 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
69
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 and two-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 Company'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 on
information for building permits with valuations
adjusted to reflect actual construction costs. This
information is supplemented with project information
from secondary sources and field reports on project
construction. Small private construction projects
in building-wise inactive areas are estimated through
a sampling procedure.
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
Company's several subscription statistical services.
20. NEW HOUSING STARTS AND APPLICATIONS FOR FINANCING HOUSING STARTS
DESCRIPTION OF SERIES
The current series of housing starts is corn piled
by the Bureau of the Census. The series contains
data on the number of housing units on which construction is started in the United States. Until 1959
the data cover only nonfarm units. Beginning with
January 1959, the coverage of the series extends to
all new housing units including not only farm housing
but also seasonal, and possibly temporary units.
Breakdowns by public and private ownership are
provided.
The data beginning with 1959 are based on a
technique of direct measurements described below.
The estimates for the period from 1946 to 1958 reflect
an old series adjusted to provide comparability with
the data for the subsequent years (see Census Bureau
Construction Report, Series C20-60).
Independently of the Census (or BLS) compilation, the Federal Housing Administration and the
Veterans7 Administration provide reports on the
number of units involved in their respective programs.
70
The description which follows refers to the procedures used in deriving the current estimates of new
housing starts.
The current 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 accomodations (such as
transient hotels and motels) and units in primarily
nonresidential buildings. Also excluded is the manufacture of mobile homes.
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 PROCEDURE
Four steps are involved in preparing the monthly
estimates.
(a) Each month the Census Bureau mails questionnaires to some 4,000 local government officials
who issue building permits in incorporated places or
in counties and townships throughout the country.
Of these places, 3,500 account for approximately
90 percent of housing units authorized, the remaining
500 represent a sample of the approximately 8,500
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.
(6) The second step is to convert the permit authorizations to starts. The information required for
this conversion is obtained through a continuing
monthly sample survey of building permits conducted
in a sample of about 570 places. In this survey a
sample of building permits is selected each month and
then an inquiry is made of the owner or the builder
to find out whether and when the units covered by the
permits have been started. In case the units authorized by permits in a particular month are not
started by the end of that month, follow-up calls are
made in successive months to find out when the units
were actually started. From this sample of permits,
ratios are calculated of the number of units started
to the number of units authorized by permits, with
separate ratios for units started each month from
permits of that month and of each preceding month.
These ratios are then applied to the total number of
units authorized by permits in the same months to
provide estimates of the total number of units started
each month with permit authorization. This is done
separately for each of four major regions (Northeast,
North Central, South and West) of the United
States, and within each region by inside or outside
Standard Metropolitan Statistical Areas. Having
produced an estimate of the number of units started
in each month with permit authorization, an adjustment of 4.8 percent is added.to take care of units
started within permit-issuing areas but without permit authorization. This factor is based primarily
on information from the 1956 National Housing
Inventory, and, will be modified as current survey
information becomes available.
(c) Information on new private housing starts in
areas not covered by building permits is obtained
Nonfarm Private Housing Starts, 1947-66
(Monthly data. Annual rates)
THOUSANDS
2,500
h
NONFARM PRIVATE HOUSING STARTS
jUNADIUSTED)
(SEASONALLY ADJUSTED]
1,000
1947
1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965
1966
SOURCE OF DAT/
71
from field surveys in a sample of 95 primary sampling
units (counties or groups of counties). Visits are
made to a select group of persons who are most likely
to know about local housing activities. A list is
obtained from them of all residential buildings they
know to have been started within the nonpermit portions of these areas during the preceding month.
Next, the information provided by these sources is
verified by field visit or by telephone interview with
the owners or builders. In addition, within those
portions of the broad areas which are not covered
by building permits, a sample of 315 small land areas
is then canvassed intensively by Census employees
who look for all units started since the previous
month, identifying those not reported by the sources
as well as those reported by them. This canvass
provides a basis for estimating the number of units
not reported by the local sources. The number of
units not reported by local sources is then added to
the number of units reported by these sources, with
appropriate weighting, to provide an estimate of
total housing starts in areas not covered by building
permit systems.
The separate estimates for permit-issuing areas and
for nonpermit areas are added to produce the figures
for starts of privately-owned housing.
(d) Information on the number of public units
started is obtained from the Public Housing Agency,
which collects the data 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.
The seasonally adjusted annual rate of starts of
private units, published in current issues of Economic
Indicators, is based on almost 6 years of unadjusted
data for starts in both permit-issuing places and in
nonpermit areas (May 1959-April 1965). The rate
is obtained by making separate seasonal adjustments
of housing units started in permit-issuing places and
nonpermit areas in each of the four regions using the
standard X - l l modification of the Univac No. II
Census method for seasonal adjustment and then
adding the eight individual adjusted series. The
implicit seasonal factors for total private housing
starts for 1966 are as follows:
January
February
March
April
May
June
72
63.0
68; 4
96. 6
117.3
123.3
119.0
July
August
September
October
November
December
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 in part on a
sub-sample of permit-issuing places; and (6) not all
the results of the field survey used to convert housing
unit authorizations to starts are received in time to
be used. Revisions are made within the next two
months, and a final annual revision of all monthly
data is made about the middle of the following year.
The figures for the FHA and VA programs 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-4family home mortgages; the VA program covers only
homes to be built for occupancy by veteran owners.
RELATION TO OTHER SERIES
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 demolitions,
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 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
114.9 month of permit issuance rather than in the month
114.5 of start of construction and they exclude units in
103.1 nonpermit areas.
113.3
Data compiled for the housing starts series are
89.2
70. 2 used in the preparation of estimates for the series
TABLE
20.—New Housing Starts and Applications for Financing, 1946-66
[Thousands of units]
Housing starts
Government
programs
Private nonfarm
Total
private
and
public
(including
farm)
Year
1946
1947.
1948
1949
1950
1951
1952
1953
1954
Total
private
(including
farm)
FHA
(1-4
family
units)
VA
67.1
178.3
216.4
252.6
91.8
160.3
71.1
90.8
1, 908. 1
1, 419. 8
1, 445. 4
1, 402. 1
1,531.8
328.2
186.9
229.1
216.5
250.9
191.2
148.6
141.3
156.5
307.0
1, 516.8
1, 626. 6
1, 324. 9
1, 174. 8
1, 314. 2
1, 494. 6
1, 212. 1
282.5
268.7
183.4
150. 1
270.3
307.0
296. 0
365. 0
1 , 492. 4
1, 641. 0
1, 590. 7
1, 252. 1
1, 313. 0
1, 462. 7
1, 609. 2
1, 557. 4
1, 230. 1
1, 284. 8
1, 439. 0
1, 581. 7
1, 530. 4
972.7
946.2
967. 8
993. 2
944. 5
257. 4
338.6
471. 2
588. 5
585. 9
1, 542. 7
1, 251. 9
1, 505. 0
1, 220. 2
1, 482. 7
1, 196. 9
940. 0
770.5
542. 7
424.4
1 1
--_
__
1955
1956
1957
1958
1959.
4
1, 553. 5
4
1,
4
1,
4
1960
1961
1962
1963
1964
1965
1966 (preliminary)
Newprivate
housing
units
authorized by
building
permits
Total
1,015.2
1, 265. 1
1, 344. 0
1, 429. 8
1-family
2 or
more
families
I
I
Proposed home
construction
Applications for
FHA
commitments *
Requests
forVA
appraisals !
(2)
121.7
286.4
293.2
327.0
(2)
(2)
(2)
1, 056. 5
397.7
192.8
267.9
253.7
338.6
164.4
226.3
251.4
535.4
392.9
270.7
128.3
102.1
109.3
1, 152. 6
921.9
820.3
950.8
8
1, 208. 3
306.2
197.7
198.8
341.7
369.7
620.8
401.5
159.4
234.2
234.0
225. 7
198.8
197. 3
166. 2
154. 0
74. 6
83.3
77. 8
71. 0
59. 2
998. 0
1, 064. 2
1, 186. 6
3
1 , 334. 7
1, 285. 8
242. 4
243.8
221. 1
190. 2
182. 1
142. 9
177.8
171 2
139. 3
113. 6
159. 9
129. 1
52. 5
40.5
1, 240. 6
966.3
188. 9
153. 0
102. 1
99.2
3
1
2
Units in mortgage applications for new home construction.
Not available.
3 For 1954-58, coverage limited to 6,600 places; 1959-62,10,000 places; and for 1963—65,12,000 places.
* 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.
NOTE.—Monthly data on new nonfarm housing starts available beginning 1939, annual from 1889. Revised series, beginning with 1945, includes Alaska and
Hawaii, and beginning with 1959, includes farm as well as nonfarm housing starts.
Sources: Department of Labor prior to 1946, Department of Commerce, Federal Housing Administration (FHA), Veterans' Administration (VA).
on value of new construction put in place described
in the preceding section.
USES AND LIMITATIONS
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.
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 be-
76-384 0—67-
tween 3 and 4 percent. Secondly, it is possible that
there is still some understatement of starts due to the
difficulty of locating and identifying construction
projects in nonpermit areas.
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 under-
73
written. 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 underwitten by VA or by
neither agency. The FHA series on housing starts
includes units in buildings with 5 or more housing
units as well as those in buildings with 1-4 housing
units, whereas the FHA applications series covers
only l-to-4-family homes.
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 seasonally adjusted by
region and by type of structure, was introduced by
the Bureau of the Census in January 1964, presenting
data from January 1963. The new series pertains to
all of the approximately 12,000 places in the United
States which were identified in 1962 as having local
building permit systems. For earlier years, back to
1959, the series relates to the 10,000 places identified
REFERENCES
as permit-issuing in 1959. For 1954-59, available
Monthly data on housing starts are published in data relate to only 6,600 places. In 1963, the numgreater detail in Construction Reports, Housing Starts ber of housing units authorized in the 12,000 places
(Census Series C20). Related information on resi- was 3.9 percent greater than the number in the 10,000
dential housing units authorized by building permits places. The procedure followed in arriving at the
is published in Construction Reports, Housing Author- monthly building permit authorization totals inized in Permit-Issuing Places: Summary Statistics volves the cumulating of monthly data from all
(Census Series Cl$). Much of this information is permit-issuing places that authorized 50 or more
reprinted in Construction Review published monthly housing units (20 or more in some States) in a recent
by the Department of Commerce. Historical data year with estimates for the less active places based
for 1889 to 1964 may be found in: Housing Construc- on a stratified probability sample of these places.
tion Statistics, 1889-1964, U.S. Department of Annual totals are based on reports from all 12,000
Commerce, Bureau of the Census; Construction permit-issuing places. This 12,000 place universe
During Five Decades, Historical Statistics 1907-1952 accounts for a major portion of all residential building
(BLS Bulletin 114-6); Trends in Building Permit in the United States. About 83 percent of all
Activity (BLS Bulletin 1243) Nonfarm Housing private housing in 1965 was constructed within these
Starts 1889-1958 (BLS Bulletin 1260). A more 12,000 permit-issuing places.
detailed technical description of the methods used
These figures relate to new building intended for
to prepare the new series of housing starts may be occupancy on a housekeeping basis. They do not
found in the Census Report C20-11 (Supplement), include hotels, motels, and other structures for
May 1960. A description of the old series is given transient accommodation or group residential buildin Techniques of Preparing Major BLS Statistical ings such as nurses' homes and college dormitories.
Series {BLS Bulletin 1168), December 1954. A They also exclude additions, alterations, and repairs
series on Sales of New One-Family Homes (Census- to existing buildings, as well as conversions.
HUD Report Series C25) was initiated in 1962.
The building permit data are adjusted for seasonal
For the government programs, monthly data from variation by the use of moving seasonal indexes
1952 on starts and on proposed home construction (derived by the X - l l version of the Census Method
are given in current issues of Housing Statistics, a II, based on data from January 1959-December
monthly publication of the Department of Housing 1965). It is assumed that the 12,000 permit-issuing
place universe has seasonal movements which are
and Urban Development.
For the method of seasonal adjustment see The very little different (if different at all) from those
X - l l Variant of the Census Method II Seasonal that apply to the 10,000 place universe, since the
Adjustment Program by Julius Shiskin and others, additional places added about 4 percent to the units
published as Technical Paper No. 15 by U.S. reported by the 10,000 places.
Building permit seasonal adjustments take account
Department of Commerce, Bureau of the Census.
74
of the varying number of working days per month.
Working days are defined as the days from Monday
through Friday, excluding eight major holidays
(New Year's, Washington's Birthday, Memorial
Day, Independence Day, Labor Day, Veterans
Day, Thanksgiving, and Christmas). Each reported
monthly permit total is divided by the number of
working days in the month to arrive at a daily
average for that month. The seasonal adjustment
indexes are then applied to the daily average and
the results multiplied by the number of working
days in the year.
Building permit data are also presented in considerable geographic detail not available for the
housing starts series.
Number of new private housing units authorized by local building
permits in 10,000 and 12,000 permit-issuing places: Unadjusted and seasonally adjusted annual rates, 1959-66
In thousands of units
Period
Unadjusted
Seasonally adjusted annual rate
10,000 PERMIT-ISSUING PLACES
Annual totals:
1959
1960
1961
1962
1963
1,208.3
998.0
1, 064. 2
1, 186. 6
1,285.0
12,000 PERMIT-ISSUING PLACES
Annual totals:
1962
1963
1964__
1965
1966 _
Monthly:
1965—January __
February. _
March
April _
May_ _
June _
July
August-_
September. _ _
OctoberNovember
December
1966—January
February. __
March
April _
May___
June
July
August
September
OctoberNovember. __
December
1, 229. 5
1,334.7
1, 285. 8
1, 240. 6
966. 3
74.3
75.4
115.7
120. 6
115.0
122.0
108.6
108.9
104.2
105.7
99.3
90. 9
75.3
72.5
117.3
113.5
106.8
94.6
76.9
78.7
65.6
61. 1
55. 7
48. 5
Source: Department of Commerce, Bureau of the Census.
LIMITATIONS
OF DATA
The portion of residential construction measurable
from building records is inherently limited, since
such records obviously do not reflect construction
activity outside of areas subject to local permit
requirements. During 1965 about 17 percent of private housing units in the United States were constructed in areas not requiring building permits,
This proportion varies from State to State and among
the metropolitan areas. The reported statistics are
a so
^ influenced by the following factors :
1. Some new residential construction in buildi n g permit jurisdictions escapes recording. A
current measure of such incomplete filing is not
presently available.
.
2. Changes in boundaries of localities due to
annexation, new incorporations, etc., result in
problems in comparability over time, even for
the same places.
To the extent that these limiting factors apply
rather consistently over an extended period, they
may not seriously impair the usefulness of building
permit statistics as indicators of trends in residential
construction activity, although even in this connection the geographical limitations of the data
need to be kept in mind.
REFERENCES
1,273
1,226
1,245
1,204
1,243
1,245
1,234
1,228
1,180
1,244
1,280
1,292
1*268
1, 185
1,098
954
921
844
733
759
Monthly data are published in Construction
Reports, Series C20, "Housing Starts.'1 Building
permit authorizations by type of structure, and
covering the numbers of units as reported by individual permit-issuing places, appear in the C40
reports of the Bureau of the Census, Housing
Authorized in Individual Permit-Issuing Places.
Data showing authorizations by type of structure
and covering both numbers of units and permit valuations, for States and selected metropolitan statistical areas (based on 3,014 places), appear each
month in the C42 series of reports, Housing Authorized in Permit-Issuing Places: Summary Statistics.
Similar data covering all SMSA's and States, and
based on all of the approximately 12,000 permitissuing places in the United States, appear in the
annual summaries of the C42 series of reports,
Housing Authorized in Permit-Issuing Places: Summary Statistics.
75
Related Construction Data Reports
Housing Construction Statistics, 1889-1964, U.S.
Department of Commerce, Bureau of the
Census (annual and monthly data)
Construction Reports, Series C25: Sales of New
One-Family Homes (monthly)
Construction Reports, Series C30: Value of New
Construction Put in Place (monthly)
Construction Reports, Series C41: Authorized
Construction, Washington, D.C. Area (monthly)
21. BUSINESS SALES AND INVENTORIES-TOTAL AND TRADE
Total Business
For convenience in summarizing business trends,
total business sales and inventories as shown here
combine wholesale, retail, and manufacturers' data.
The series included are described in the individual
presentations which follow. It should be noted that
these data, when compared with the nonfarm business
statistics used in gross national product computations and elsewhere, are smaller, since they do not
include construction, utilities, or other nonindustrial
sectors.
Wholesale Trade
DESCRIPTION OF SERIES
The term "sales" as used here includes sale of
merchandise, after deducting returns, allowances,
and discounts, and receipts from repairs or other
services to customers. Inventories represent stocks,
at cost, of all merchandise owned by wholesalers and
available for sale. They do not include goods held
on a consignment basis nor do they include such items
as fixtures, equipment and supplies not held for sale.
The series on wholesale sales and inventories is
limited to merchant wholesalers as information on
other types of wholesalers is not available except for
years when the Census of Business is taken. The
1963 Census of Business indicated that merchant
wholesalers accounted for 44 percent of the sales and
74 percent of the inventories of all wholesale establishments. The areas of wholesale trade not covered
in this series include manufacturers sales offices and
branches, agents and brokers, petroleum bulk stations
and terminals and assemblers of farm products.
The wholesale series shown in issues of this report
prior to December 1963 included information for
some types of nonmerchant wholesalers but this
series has been discontinued. The revised series,
beginning with data for 1948 and limited to merchant
wholesalers was issued in December 1963.
76
STATISTICAL PROCEDURES
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
a probability sample of merchant wholesalers representing all kinds of business. The data for 1966
are based on a sample selected from the 1963 Census
of Business universe and supplemented by a sample
of new businesses obtained from Social Security
Administration lists. Data from 1959-1965, based
on samples selected from the 1958 and 1954 Censuses
of Business, have been adjusted by the Bureau of
the Census and Office of Business Economics to
yield a series comparable to the 1966 data.
The sales and inventory data are adjusted for
seasonal variation and, in the case of sales, also for
trading day differences using the X-11 version of the
Census Method II seasonal adjustment program.
The magnitude of these adjustments is suggested
by the following comparison of unadjusted and adjusted data for 1965 for merchant wholesalers, all
trades combined.
[Dollar figures in billions]
1965
Unadjusted
Sales
Jan
Feb
Mar
Apr
May
June
July_.__
Aug
Sept_.__
Oct
Nov
Dec
13.4
13.3
16.0
15.5
15.2
16.0
15.5
15.8
16. 2
16. 4
16.8
16.9
Inventories
17.3
17.3
17.6
17.6
17.7
17.8
17.8
17.8
18.1
18.4
18.5
18. 1
Seasonally adjusted
Sales
15.0
14.8
15.6
15.4
15. 5
15.5
15.7
15.6
15.7
15.8
16.2
16. 2
Inventories
17.3
17.4
17.6
17.7
17.9
17.9
17.9
17.9
18. 1
18. 1
18.2
18.3
Implicit seasonal
adjustment factors
Sales
Inventories
89.2
89.7
102.9
100.6
98. 1
103.2
98.7
101. 5
103.4
104.0
104. 1
104.6
100.0
99.5
99.9
99.6
99.2
99.3
99.3
99.4
100.3
101.8
101. 9
99.2
USES AND LIMITATIONS
The monthly wholesale trade series are important
economic indicators which reflect the level of eco-
TABLE
21.—Business Sales and Inventories—Total and Trade, 1929,1939,1940-66
[Billions of dollars]
Total business *
Retail 5
Wholesale 4
Inventories 3
Sales 2
Period
Sales 2
Inventories 3
Sales 2
Inventories 3
Total
NonDurable durable
goods
goods
stores
stores
Total
NonDurable durable
goods
goods
stores
stores
1929
(6)
(6)
(6)
(6)
4. 04
1.30
2. 74
(6)
(6)
1939
(6)
(6)
(6)
(6)
3. 50
0.94
2. 56
5. 53
2. 09
3.45
1940
1941 . _
1942
1943
1944_
6
(6)
(6)
(6)
(6)
(6)
(6)
(5)
(6)
6
(6)
(6)
(6)
(6)
6
(6)
(6)
(6)
(6)
6
3.86
4. 61
4.77
5.27
5.85
1. 13
1.43
1. 03
1. 02
1. 16
2.73
3. 17
3.74
4.25
4. 69
6.12
7.78
8. 02
7. 56
7. 64
2.47
3. 18
2.75
2.21
2. 24
3.65
4. 60
5. 27
5.35
5.40
1945
1946
1947
1948
1949
(6)
(6)
6
(6)
(6)
6
(6)
(6)
6
()
()
()
()
(6)
()
35.26
33.79
()
52.51
49.50
()
6.81
6.51
(6)
(6)
(6)
7.96
7.71
38.60
43.36
44.84
47.99
46. 44
59.82
70.24
72. 38
76. 12
73. 18
7.70
8. 60
8.78
9. 05
8.99
9.28
9.89
10. 21
10. 69
10. 64
12.27
13. 05
13. 53
14.09
14. 10
4. 52
4. 54
4. 61
5. 03
4. 85
7. 75
8.51
8.92
9. 06
9. 25
19. 46
21. 05
21. 03
21. 49
20.93
8. 29
9. 63
9.49
9.78
9. 27
11. 17
11.42
11. 54
11.71
11. 66
1955 _
1956
1957
1958
1959
51.69
54.06
55.88
54.23
59. 66
79.52
87.30
89.05
86.92
91.89
9.89
10.51
10.48
10.26
11. 49
11.68
13.26
12.73
12.74
13.88
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
22.77
23.40
24.45
24.11
25.30
10.53
10.50
11.28
10.53
11. 03
12.24
12.91
13.17
13.59
14. 28
1960
1961
1962
1963
1964
60.75
61. 11
65.59
68. 69
73.46
94.75
95.81
100. 63
105. 58
111. 05
11.66
11. 99
12. 67
13.38
14.53
14. 12
14. 49
14. 94
16. 05
16.98
18.29
18. 23
19. 61
20. 54
21. 80
5.88
5.58
6.21
6. 63
7. 01
12. 41
12. 65
13.40
13.91
14.79
26.81
26.24
27.94
29.38
31. 13
11.92
10.96
11.66
12.39
13. 14
14.89
15. 27
16. 28
17.00
17.99
1965
1966
79.53
86. 32
120. 90
135. 55
15. 60
16. 98
18.27
20. 69
23. 65
25. 31
7.81
8. 15
15.84
17. 16
34. 61
36. 96
15. 19
16. 54
19. 41
20. 43
1950
1951
1952
1953
1954
_
_
6. 50
8. 73
10.20
11. 14
11. 15
7
7
1.34
2. 35
3. 13
3. 57
3.75
7
5. 17
6. 38
7. 07
7. 56
7.40
8
7.95
12. 06
14. 24
16. 01
15.47
8
2.43
3. 85
5.35
6.57
6.26
8
5. 52
8. 21
8.90
9.44
9. 21
1
2
3
4
5
6
7
The term "business" here includes wholesale, retail, and manufacturing trade (see page 76).
Monthly average for year and total for month.
Book value, end of period, seasonally adjusted.
Merchant wholesalers. Beginning January 1961 data include Alaska and Hawaii.
Beginning January 1960 data include Alaska and Hawaii.
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.
8
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.
Source: Department of Commerce.
nomic activity at an intermediate stage of the distributive process. The wholesale data are also used
together with similar data for manufacturing and
retail trade to provide a consistent aggregate series
for total business.
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,
77
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 inventory data for merchant wholesalers, both unadjusted and adjusted, are published
in greater detail by kind of business by the Bureau
of the Census in its Monthly Wholesale Trade Report which also includes a detailed description of the
sample, estimation procedures and reliability of the
data. The data for the summary trade groups are
also published by the Office of Business Economics
in its Business News Reports series and in the Survey
of Current Business. Data from 1960 to date are
available from the Bureau of the Census; data from
1948 to 1959 are available from the Office of Business
Economics.
Additional information on the seasonal adjustment
of these series may be found in the references to the
retail trade section, page 80.
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 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 compaRetail Trade
rable in concept and coverage were prepared by the
Office of Business Economics back to January 1946.
DESCRIPTION OF SERIES
The new estimates are not linked to a census of
The series on retail sales and inventories represent business benchmark, a factor that accounts for most
sales and inventories of all establishments classified of the difference in level between the sales estimates
in retail trade. Sales are net, i.e., less discounts, for 1951 indicated by the old and new series. The
returns and allowances, and include all business new estimates from the probability sample of reportreceipts of the reporting establishments, not just ing firms are derived essentially by weighting the
receipts from sales of merchandise, as well as sales reported sales of each firm or store in the sample by
taxes and excises. Inventories are valued at the a value dependent upon its probability of selection.
cost of merchandise on hand. The separation of For a description of the current sample see the
estimates into "durable goods" and "nondurable Monthly Retail Trade Reports for 1966. Sales
goods" is based upon classifications of stores accord- estimates for the period January 1959 through Seping to the durability of the commodities accounting tember 1965 have been adjusted to yield a series
comparable to the current series.
for the major portion of their sales.
78
The year-end estimates of inventories prior to 1946
were based on the Censuses of Retail Trade for 1939
and 1948, the Internal Eevenue 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 primarily on sample data reported to
the Bureau of the Census.
The sales and inventories data are adjusted for
seasonal variation and, in the case of sales, also for
holidays and trading day differences, using the X - l 1
version of the Census Method I I seasonal adjustment
program. The magnitude of the seasonal adjustments is indicated by the following comparison of
unadjusted and seasonally adjusted data for 1965.
[In billions of dollars]
1965
Unadjusted
Sales
Jan
20.6
19.6
Feb
21.9
Mar
Apr
23.5
May
23.8
23.8
June
July.___ 24.1
23.0
Aug
22.7
Sept
25.1
Oct
25.2
Nov
30.6
Dec
Inventories
30.5
31.4
33.0
33.6
33.5
33.4
33.2
33.1
32.9
34.2
35.3
33.4
Seasonally adjusted
Sales
22.9
23. 1
22.9
22.8
23.3
23.3
23.7
23.6
23.8
24.3
24.6
24.8
Inventories
31.6
31.7
32.4
32.7
32.9
33.2
33.4
34.0
33.6
33.7
33.9
34.6
Implicit seasonal
adjustment factors
Sales
89. 7
85. 0
95. 9
103. 0
102. 0
102. 2
101. 9
97. 5
95. 7
103. 0
102. 1
123. 3
Inventories
96.6
99. 1
102.1
102.6
101.7
100.3
99.6
97.4
98.0
101.4
104.0
96.6
RELATION TO OTHER SERIES
Retail sales data reflect a substantial portion of
personal consumption expenditures and are, therefore, related to the personal consumption expenditure
Retail Sales and Inventories, 1948-66
(Monthly data.
Seasonally adjusted)
BILLIONS OF DOLLARS
20
I . , , , ! . , ! , , I . . . . 1 . . 1 , , ! . . , , l ,, I , , I , , , . ! , , l w l , , ,, I . , L i n
1948
. . J i i l i i l j . . i l , i l n l •• , , ! , , !
1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965
1966
SOURCE OF DATA' DEPARTMENT OF COMMERCE
79
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.
REFERENCES
Sales and inventories data for wholesale and retail
trade, seasonally adjusted as in current issues of
Economic Indicators^ are issued as monthly press
releases by the Office of Business Economics and are
published shortly thereafter in the Survey oj Current
Business. Retail sales data are also published by
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
USES AND LIMITATIONS
issued as a weekly report, generally on Thursday
following the week covered. Wholesale sales and inThe monthly retail trade series reflect the trend of ventories data are also published in the Monthly
a major part of personal consumption expenditures Wholesale Trade Report.
well in advance of the availability of more compreMore complete descriptions of these series have
hensive data. They and the inventories series are been published in the following issues of the Survey
useful indicators of probable future economic activity oj Current Business: June 1948, October 1951,
at the manufacturing and other earlier stages of pro- September and November 1952, January 1954, June
duction and distribution.
1957, December 1961, December 1963, May 1964,
Since the monthly retail sales estimates are based February, April and November 1966, and in the
on a probability sample, they are subject to sampling biennial Business Statistics, a supplement to the
variability, as well as such biases as nonresponse or Survey. The Monthly Retail Trade Report contains
reporting errors. The monthly sales estimates are a detailed description of the Census Bureau's monthly
compared with Census of Business data when those retail trade series. A description of the sample and
statistics become a\ ailable. Although differences for estimating procedure used for that series and addiindividual kinds of business occur, reflecting, among tional information on the reliability of the estimates
other things, differences in classification due to differ- are available in a Bureau of the Census pamphlet
ences in data collection methods, measures of total entitled "Description of the Sample for the Monthly
retail sales from these two sources have not differed Retail Trade Report."
significantly. To illustrate, the sum of the twelve
Additional information on the seasonal adjustment
monthly estimates of total retail sales as revised were of sales, including specifications for the X - l l seasonal
within one percent of the 1963 retail sales shown by adjustment program, are available from the Chief
the 1963 Census of Business.
Economic Statistician, Bureau of the Census.
The monthly retail inventories statistics are be- Adjustments for trading day differences are similar
lieved to be less accurate than the sales statistics, to that described in "Census Trading-Day Adjustsince fewer retailers maintain monthly records of ment Method", published in the May 1964 issue of
their inventories than monthly records of sales. Even Business Cycle Developments. A description of the
so, the monthly series estimate for December 1965 retail sales series and seasonal adjustment techniques
was within two percent of the Annual Retail Trade is also provided in the September 1964 issue of
Survey estimate for the same date.
Business Cycle Developments.
22. MANUFACTURERS' SHIPMENTS, INVENTORIES, AND NEW ORDERS
DESCRIPTION OF SERIES
Manufacturers' shipments, inventories, new orders,
and unfilled orders are estimated monthly by the
Bureau of the Census. In several respects, these
80
series are conceptually different from the monthly
"Industry Survey/' formerly published by the Office
of Business Economics, from which they were
evolved. The changes from the earlier series are
explained in detail in the Bureau of the Census com-
prehensive report, "Manufacturers' Shipments, Inventories, and Orders: 1947-1963 Revised." They
include: introduction of the Annual Survey of
Manufactures as a new benchmark level, broadened
coverage, revision of the sample design, refinement of
industry reporting, expansion in the number of
industry groups published, revision of seasonal
factors, and introduction of market groupings.
Totals for all manufacturing, durable goods industries, and nondurable goods industries, have been
carried back to 1947, while figures for detailed industry and market categories are shown back to
1953.
The term "shipments" as used here represents
manufacturers' receipts, billings, or the value of
products shipped, less discounts, returns, and allowances. Shipments for export as well as those for
domestic use are included. Shipments of foreign
subsidiaries are excluded, but shipments of a foreign
subsidiary by a domestic firm are included. The
shipment figures from the Annual Survey of Manufactures to which the current series is benchmarked,
include interplant transfers as well as commercial
sales. The new orders series represents new orders
net of cancellations received during the period.
Inventory data are book values of stocks on hand
at the end of the period, seasonally adjusted, and
include materials and supplies, goods-in-process, and
finished goods. Inventories associated with the nonmanufacturing activities of the company are excluded
from the benchmark in the revised series. In
general, inventories are valued at the lower of cost or
market price.
STATISTICAL PROCEDURES
Current estimates of manufacturers' shipments,
inventories, and orders are made on the basis of
reports received in the monthly manufactures program. The sample is defined as a subsample of the
1959 Annual Survey of Manufactures and was designed to provide estimates for approximately 55
detailed industry categories and to permit supplementary presentations of the data such as by market
groupings. As in the Annual Survey, all companies
engaged in manufacturing constituted the sampling
units. All manufacturing companies with 1,000 or
more employees were included with certainty, while
smaller companies were sampled with probabilities
proportional to their employment size within each
Manufacturers' Shipments, Inventories, and New Orders, 1947-66
(Monthly data.
Seasonally adjusted)
BILLIONS OF DOLLARS
80
/
y
INVENTORIES
\
.
y
y
-
•
-
-
•
/
SHIPMENTS
/
i ORDER S
W***
nliiliilii
Uillllllll
1947
,,,,.!
1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962
Hlnlnln
1963 1964 1965
1966
SOURCE OF DATA DEPARTMENT OF COMMERCE
81
industry category stratum. Approximately 7,500
companies were thus drawn for the sample.
Estimates of shipments, inventories, and unfilled
orders are obtained for each detailed category by
multiplying the estimate for the preceding month by
the link relatives based on a matched sample of
reporting companies. The data for each company
are inflated by their sampling weights before being
summarized. Estimates for higher levels (subtotals
and totals) are obtained by aggregating the related
component categories within the series.
The currently published shipments and inventory
estimates have been benchmarked to the 1962 level
of the Annual Survey of Manufactures. Work is
now underway to benchmark these estimates to the
levels of the 1963 Census of Manufactures and to
the Annual Survey of Manufactures for 1964 and
1965. Since comparable universe data are not
available for new and unfilled orders, a level for
unfilled orders was established as of August 1964 by
relating a modified ratio of unfilled orders to shipments obtained from the sample to the August 1962
shipments estimates by each detailed^ category.
Net new orders estimates are derived by adding the
change in unfilled orders to the shipments estimate.
All the component series were seasonally adjusted
by the Bureau of the Census using the X-9 and X-10
versions of Census Method II. In addition, the
series on shipments and new orders were adjusted for
the number of trading days and length of calendar
month prior to seasonal adjustment. The magnitude of the seasonal adjustments are suggested by
the comparison of shipments, orders, and inventories
data with and without seasonal adjustment for 1965
as shown below.
RELATION TO OTHER SERIES
The revised shipments and inventories series are
coordinated with a large number of monthly, quarterly, and annual surveys which are also conducted
by the Bureau of the Census on a product-oriented
basis. The shipments series is, in general, more
nearly comparable than before with the manufacturing component of the Federal Reserve Board's index
of industrial production.
The manufacturers' shipments and inventories
series are closely related to the sales and inventories
series for merchant wholesalers and retail trade. The
shipments and inventories series are not entirely
comparable to the sales and inventories series which
are compiled on a company-oriented basis, particularly the FTC-SEC "Quarterly Financial Report
for Manufacturing Corporations" and Internal Reve-
82
nue Service, "Statistics of Income, Corporation
Income Tax Returns."
The manufacturers' inventory data, together with
inventory data for retailers and merchant wholesalers, are the basic data used in computing estimates
of the "'change in business inventories" component
of Gross Private" Domestic Investment. In measuring the change in business inventories, 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 unfilled orders series, although they
are also akin to other anticipatory series such as new
plant and equipment expenditures, construction
contracts, etc.
Comparison of Shipments, Inventories, and Orders Data With
and Without Seasonal Adjustments, 1965
[In billions of dollars]
Without seasonal
adjustment
Jan
Feb___
Mar
Apr
May_ _
June__
July—
Aug___
Sept..
Oct...
Nov___
Dec___
Shipments
36.4
39.4
41.2
41.3
40. 1
41.9
37.8
39.4
41.2
42.2
41. 6
40. 8
Inventories
63.3
63.8
64. 1
64.4
64.8
65. 0
65. 1
65. 5
65.9
66.2
66.8
67.6
Seasonally adjusted
Shipments
38.9
38. 7
40. 3
40. 0
39.8
39. 9
41. 5
40. 5
40.2
40. 5
41.4
42.6
Inventories
63.2
63. 4
63. 7
64. 0
64. 3
64.6
65.4
65. 8
66.3
66. 6
67. 2
68. 0
Implicit seasonal
adjustment factors
Shipments
93.6
101. 8
102.2
103.3
100. 8
105. 0
91. 1
97.3
102. 5
104.2
100.5
95. 8
Inventories
100.2
100.6
100.6
100. 6
100.8
100.6
99. 5
99. 5
99.4
99.4
99.4
99. 4
USES AND LIMITATIONS
The manufacturers' shipments, inventories, and
orders series reflect present and prospective conditions in this vital sector of the economy. The
shipments 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 of manufactures;
the new orders series indicates the probable course of
manufacturers' activity in some industries in the
immediate future. Study of the chart showing
seasonally adjusted shipments, inventories, and new
orders will reveal the tendency of new orders to lead
shipments over the business cycle.
The market groupings provide a breakdown
between final products and materials and a further
division of final products between consumer goods
and equipment for business and government use.
Subtotals are shown for home goods and apparel and
for consumer staples within the consumer goods
TABLE
22.—Manufacturers' Shipments, Inventories, and New Orders, 1947-66
Shipments
New orders, net 1
Inventories 2
l
Durable goods
Year
Total
NonDurable durable
goods
goods
Total
NonDurable durable
goods
goods
Total
Total
Machinery
and
equipment
6,388
8,126
6,633
(4)
4
(4)
()
Nondurable
goods
Manufacturers'
inventory—
sales ratio 3
Millions of dollars
1947
1948
1949
15, 513
17, 316
16, 126
6,683
8,337
7, 167
8,819
9,738
8,935
25, 897
28, 543
26, 321
13, 061
14, 662
13, 060
12, 836
13, 887
13, 261
15, 256
17, 692
15, 614
1950
1951
1952
1953
1954
18, 634
21,714
22, 529
24, 843
23, 355
8,845
10, 493
11,313
13, 349
11,828
9,789
11,221
11,216
11, 494
11,527
31, 078
39, 306
41, 136
43, 948
41,612
15,
20,
23,
25,
23,
539
991
731
878
710
15, 539
18,315
17, 405
18, 070
17, 902
20,
23,
23,
23,
22,
110
907
203
533
313
10, 165
12, 841
12, 061
12, 105
10, 743
1955
1956
1957
1958
1959
26,
27,
28,
27,
30,
480
740
736
280
219
14, 071
14, 715
15, 237
13, 572
15, 544
12, 409
13, 025
13, 499
13, 708
14, 675
45, 069
50, 642
51, 872
50, 070
52, 707
26,
30,
31,
30,
31,
405
447
728
095
839
18,
20,
20,
19,
20,
664
195
143
975
868
27,
28,
27,
26,
30,
423
383
514
901
679
1960
1961
1962
1963
1964
30,
30,
33,
34,
37,
796
884
308
774
129
15,
15,
17,
18,
19,
14,
15,
16,
16,
17,
53,
55,
57,
60,
62,
32,
32,
34,
36,
38,
360
646
326
028
412
21,
22,
23,
24,
24,
454
441
427
119
532
30,
31,
33,
35,
37,
1965
1966
40, 279
44, 037
817
532
184
071
231
21, 020
23, 006
979
352
124
704
898
19, 258
21, 032
814
087
753
147
944
68, 015
77, 897
42, 324
50, 037
25, 691
27, 860
8,868
9,566
8,981
1.58
1.57
1.75
4
(4)
(4)
()
2,084
1,770
9,945
11, 066
11, 142
11, 428
11,570
1.48
1.66
1.78
1.76
1.81
14, 954
15, 381
14, 073
13, 170
15, 951
2,499
2,870
2,566
2,354
2,878
12, 469
13, 002
13, 441
13, 731
14, 728
1.62
1.73
1.80
1.84
1.70
115
061
167
036
697
15, 223
15, 664
17, 085
18, 300
19, 803
2,791
2,854
3,090
3,326
3,706
14, 892
15, 397
16, 082
16, 736
17, 895
1.76
1.74
1.70
1.69
1.64
41, 023
45, 182
21, 728
24, 153
4, 140
4,731
19, 295
21, 029
1.61
1.64
1
2
3
Monthly average for the year.
Book value, end of year, seasonally adjusted.
Ratio of weighted average inventories to average monthly shipments.
« Not available.
Source: Department of Commerce.
division, while materials, including supplies and
intermediate products are subdivided into construction materials and all other. Such economic time
series provide useful measures for isolating the impact
of changes in demand in various sectors of the
economy and facilitate analysis of cyclical and growth
developments.
The user should keep in mind the conceptual
differences between the new series and the old
monthly Industry Survey series. In summary, the
new series (1) reflects only manufacturing activities
from its Annual Survey benchmark basis, (2) is
based on the 1957 SIC system, (3) excludes significant
nonmanufacturing activities of companies, and (4)
includes interplant as well as intercompany sales.
Although the two series exhibited similar cyclical
movements and approximate the same levels on an
overall basis, the component series differed rather
substantially, particularly with regard to level.
Although the objectives of the Bureau ultimately
are to publish detail and sampling errors for approximately 54 industry categories and 12 market groupings, data are currently shown separately for only 14
two-digit major industry groupings, 16 detailed
industry categories, 6 market categories and 3
supplementary series. The current response rate
precludes the publication of sampling errors or
additional detail at this time, particularly in industries which are predominantly comprised of small
firms such as apparel, lumber, and furniture. In
addition, there are a few industry categories for
which the inclusion of secondary activities is considered to be too high and for which additional
divisional reporting is necessary. The Bureau of the
Census in studying various approaches to these
problems which would permit a gradual increase in
published data until the long-range goals are
achieved.
83
historical data are published in the background
report, Manufacturers1 ShipmentSj Inventories, and
Detailed data for manufacturers' shipments,
inventories, and orders are published by the Bureau Orders: 1947-1968 Revised. A supplementary chartof the Census in its Current Industrial Report MS-1, book shows seasonally adjusted data for each of the
"Manufacturers' Shipments, Inventories, and series published in its monthly M-3 survey, "ManuOrders." Selected series are published by the Office facturers' Shipments, Inventories, and Orders" for
of Business Economics in the Survey oj Current the years 1953-1963. Charts are provided for inBusiness and by the Census Bureau in Business dustry groupings, market groupings, and suppleCycle Developments. A detailed explanation of the mentary series such as machinery and equipment
revisions made to the survey as well as revised industries, consumer durables, and defense products.
REFERENCES
23. 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 merchandise 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 general commodity categories, is exclusive of reexports. Both series as presented here
include commercial shipments and shipments made
under U.S. Government economic aid programs.
Data on Department of Defense shipments of grantaid military equipment and supplies under the
Mutual Security Program (referred to below as
D.O.D. military shipments) are excluded from the
aggregate but included in the commodity data.
Shipments to United States armed forces and
diplomatic missions abroad for their own use are
excluded from all export data shown.
Export series covers all exports from within the
customs area of the United States, which includes
all of the States, the District of Columbia, 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
84
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. The value, as
defined, does not include costs, if any, of loading the
merchandise aboard the exporting carrier. Transportation and other costs beyond the United States
port of exportation are also excluded.
The import data shown are general imports which
represent total arrivals of merchandise, except for
in-transit shipments. Goods which enter Customs
bonded warehouses are included, as well as goods
released from customs custody immediately upon
arrival. Government 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, data 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.
For exports made by the Department of Defense
of grant-aid military equipment and supplies under
the Mutual Security Program (excluded from the
aggregates but included in the commodity data in
table 23) and for other Department of Defense shipments such as those under the civilian supply proSTATISTICAL PROCEDURES
gram, information is compiled by the Bureau of the
Export statistics (except for D.O.D. military aid Census from the records of the Department of Deshipments, as explained below) are obtained from the fense. In most instances, these records show values
Shipper's Export Declaration which exporters are f.o.b. point of origin. These are adjusted to show
required to file with the collectors of customs, giving value at the United States port of exportation.
a description of the merchandise, its classification
Import information is derived from the import
under the prescribed commodity classification for entry form prescribed by the Customs Bureau to be
exports, quantity, value, and other essential informa- filed by the importer for each shipment arriving in
tion. These declarations, after a preliminary review the United States, and on which importers report
for accuracy and completeness, are transmitted by value, country of origin, type of commodity, classithe Bureau of Customs to the Bureau of the Census, fied in accordance with the prescribed import comwhere they are sorted and coded prior to further modity classification, and other essential information.
processing. Data for smaller valued shipments, ac- After a review by Customs, the statistical copy of the
counting for a considerable proportion of the volume entry form is transmitted to the Bureau of the
of documents but a relatively small proportion of Census. Statistics covering low valued import shiptotal value, are based on estimating procedures. ments are estimated on the basis of a sample. The
Currently, shipments to Canada valued at $100- sampling procedures have varied. From January
$1,999 are sampled at a ratio of 10 percent while 1958 through June 1965, data on imports valued at
shipments to countries other than Canada valued less than $100 reported on formal entries and imports
at $100-$499 are sampled at a ratio of 50 percent. reported on informal entries (which generally conThese sampled shipments are distributed by com- tain items valued at not more than $250) were estimated from a 1-percent sample. Since July 1965,
modity.
Merchandise Exports and Imports, 1947-66
{Monthly data.
Seasonally adjusted)
BILLIONS OF DOLLARS
3.0
1948
1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 I960
1961 1962 1963 1964
1965
1966
SOURCE OF DATA' DEPARTMENT OF COMMERCE. AND DEPARTMENT OF DEFENSE
.L'SEE NOTE I ON TABLE
85
the 1-percent sample has been applied to all imports
valued at $250 and under reported on both formal
and informal entries. Sampled shipments (generally
amounting to less than 2 percent of total imports
per month), along with U.S. goods returned and
other commodities and transactions not classified
according to kind, are included in the total import
figures in table 23 but not in the commodity data.
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 1966 are:
Exports
excluding
MSP
Imports
January
February
March
April
May
June
July
August
September
October
November
December
95.7
102.9
103.5
105.2
106.3
100.6
92.6
91.3
93.3
101. 1
103.3
103.8
97.1
99. 4
102.6
100. 8
99. 0
103. 0
97.7
95. 3
98. 8
103. 6
101. 2
101.2
TABLE
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.
The merchandise exports and imports by commodity group shown in table 23 are combinations
of Bureau of the Census Schedules A and B sections—
food, beverages, and tobacco, 0 and 1; crude materials and fuels, 2-4; and manufactured goods, 5-8.
Section 9 is omitted from the commodity group
detail. The sections of Schedules A and B correspond to those of the Standard International Trade
Classification, Revised (SITC).
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
23.—Merchandise Exports and Imports, by Commodity Group, 1958-66
[Monthly averages in millions of dollars. Detail not adjusted to add to revised totals]
Merchandise imports
Merchandise exports
Year
1958
1959
1960
1961
1962
1963
1964
1965
1966
Total
exports
(including reexports)1 2 Total i 2
1,364
1,368
1,636
1,682
1,748
1,869
2, 141
2,225
2,450
1,351
1,353
1,620
1,662
1,725
1,845
2, 110
2, 196
2,413
General imports
Domestic exports
Food,
Crude
bever- materials
ages, and
and
tobacco
fuels 3
Manufactured
goods 4
258
252
329
322
280
315
361
356
367
927
897
1,047
1,062
1, 138
1, 188
1,366
1,449
1,593
225
239
264
289
312
349
387
377
433
Total 2
]L,
]L,
]L,
]L,
]L,
]L,
105
302
251
226
366
428
1 557
L,
1 780
I,
2, 129
Food,
Crude
bever- materials
ages, and
and
tobacco
fuels 3
296
298
283
288
306
322
335
334
382
338
382
365
359
387
391
415
449
473
Manufactured
goods 4
440
591
571
544
636
672
758
936
1,202
Gross
merchandise
trade 5
surplus
259
66
385
456
382
441
584
444
320
1
Total excludes Department of Defense shipments of grant-aid military equipment and supplies under military assistance programs.
2
Total includes and detail excludes firearms, ammunition, and certain low value shipments not classified by kind,
s Includes fats and oils.
4
Includes machinery, transportation equipment, chemicals, metals, and other manufactures. Export data for these items include military grant-aid shipments.
5
Surplus represents exports, excluding military grant-aid, f.a.s., less general imports, f.o.b. foreign port, as reported by the Bureau of the Census. Export values
include both commercially financed shipments and those financed under government assistance and relief programs.
Source: Department of Commerce.
86
TABLE
23A.—Merchandise Exports and Imports, by Economic Class, 1929-66
[Monthly averages in millions of dollars.
Detail not adjusted to add to revised totals.]
Merchandise imports
Merchandise exports
Domestic exports
Year
Total exports (including
eexports) :
Total
Finished
IndusFoodtrial
stuffs 2 materials manufactures 1
Total
Total imports FoodIndusFinished
general for con- stuffs 3 trial ma- manufac3
imports sumption
terials
tures 3
Gross
merchandise trade
surplus 4
1929
437
430
63
156
211
367
362
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
259
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
1,278
1,054
1,004
799
792
1,263
1,044
995
143
184
263
219
187
138
193
282
238
261
518
415
719
587
546
347
412
481
594
553
342
402
474
593
551
96
110
139
167
173
176
222
252
317
274
69
71
82
109
104
470
400
797
460
451
1950
1951-.1952___
1953-__
1954___
833
1, 164
1, 100
1,022
1,071
822
151
088
012
1,060
116
190
175
143
131
251
345
300
254
310
455
616
612
614
620
740
917
896
910
858
730
904
899
902
860
221
258
263
274
276
384
488
462
444
400
125
158
174
183
183
93
247
204
112
213
1955_
19561957_
1958_
1959_
1, 191
1,445
1,626
1,364
1,368
1,180
1,432
1,611
1,351
1,353
162
216
208
198
210
351
441
530
368
366
667
775
872
784
775
958
1,065
1,105
1, 105
1,302
954
1,056
1, 102
1, 101
1,285
260
267
274
287
285
477
521
534
486
569
217
268
294
325
431
233
380
521
259
66
I960.
19611962_
1963_
1964_
1,636
1,682
1,748
1,869
2, 141
1,620
1,662
1,725
1,845
2, 111
230
254
281
314
352
513
487
442
493
582
877
920
,002
,038
,176
1,251
1,226
1,366
1,428
1,557
1,251
1,221
1,354
1,417
1,550
274
277
297
310
321
539
522
561
575
622
438
423
496
532
614
385
456
382
441
584
19651966_
2,225
2,450
2, 196
2,413
346
399
576
617
,274
,397
1,780
2, 129
1,774
2, 114
324
369
717
787
739
974
444
320
1
Data exclude Department of Defense shipments of grant-aid military equipment and supplies under military assistance programs beginning in 1950. For 1941
and subsequent years, figures include shipments under other special programs, such as Lend-Lease, Department of the Army civilian supply program, U N R R A ,
Greek-Turkish Aid, AID and predecessor programs, and Food for Peace (PL-480).
2
Private relief shipments of foodstuffs are included in "Finished manufactures" prior to 1941 and in "Foodstuffs" thereafter.
3 Data are "General imports" for the years 1929-1932 and 1964-1966, and "Imports for consumption" for 1933-1964.
4
Surplus represents exports, excluding military grant aid, f.a.s., less general imports, f.o.b. foreign port, as reported by the Bureau of the Census. Export values
include both commercially-financed shipments and those financed under government assistance and relief programs.
Source: Department of Commerce.
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.)
Historical statistics on a comparable basis for the
general commodity categories shown in table 23 are
not available. However, during earlier years, data on
87
a somewhat similar basis were compiled in terms of
economic classes. Although differences exist between
the economic classes and the general commodity
categories included in the current series, a supplementary table 23A containing data on merchandise
exports and imports by economic class during 19291966 is presented in order to show developments over
time in the totals and in the type-of-commodity
content of export and import trade. As indicated by
the footnotes, Department of Defense shipments of
grant-aid military equipment and supplies under the
Mutual Security Program are completely excluded
from the export data in table 23A. For imports,
figures are shown for both 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.
The merchandise exports and imports by economic
class shown in table 23A are derived from the five
Department of Commerce classes of "crude foodstuffs" and "manufactured foods" (combined as
"foodstuffs"), "crude materials" and "semimanufactures" (combined as "industrial materials"), and
"finished manufactures."
The titles of the first two columns of tables 23. and
23A indicate some of the principal differences in the
content of those columns, and also help to show the
difference between the "manufactured goods" column
in table 23 and the "finished manufactures" in table
23A. Differences which may not be so apparent include the assignment of leather, yarn and thread,
metals, and semi-manufactured chemicals to the
"manufactured goods" column in table 23. These are
reflected in "industrial materials" in table 23A.
Also, lubricating oils and greases, included in table
23A as "finished manufactures," and edible fats and
oils, assigned to the "foodstuffs" column, are both
tabulated under the "crude materials and fuels"
heading of table 23.
The statistics in table 23 for the years 1958-1960
and table 23A for the years for 1942-1960 include
data on exports and imports of uranium, thorium, and
related material which are not included in the regular
foreign trade statistics released by the Bureau of the
Census. Data for these commodities have been released separately by the Bureau of the Census.
Indexes of quantity, unit value, and value of foreign trade, prepared by the Bureau of International
Commerce, are available for exports of domestic
merchandise on the basis of the series shown in
table 23A (i.e., net of D.O.D. military aid shipments)
and for imports for consumption through 1964
and general imports thereafter. Indexes are available
for the five economic classes and, for exports only,
for manufactured goods as defined in table 23.
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 four-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 should be given 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 and, effective January 1967, in FT 990.
(Former Summary Reports FT 930 E and I, 950 E
and I, and 970 E and I were discontinued with the
December 1966 issues.) Reports FT 900 E and I
and FT 990 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 in both reports.
Detailed commodity by country data are also
published by the Census Bureau. Supplementary in-
formation 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. Indexes of foreign
trade (quantity, unit value, and value) are computed
by the Bureau of International Commerce of the
Department of Commerce and published in its
Overseas Business Reports.
Summary explanations of the export and import
series appear in the introductory notes of Census
monthly bulletins FT 125, 135, 150, 155 for imports
and FT 410, 450, and 455 for exports. The last
comprehensive discussion of the series appeared in
the 1946-1963 edition of Foreign Commerce and Navigation of the United States (1965). A list of Census
foreign trade publications is available in the Census
Catalog.
24 and 25. UNITED STATES BALANCE OF INTERNATIONAL PAYMENTS
DESCRIPTION OF SERIES
The balance of payments of the United States is
a summary of the economic transactions between
residents of the United States and residents of the
rest of the world. The tables here presented are
derived from the more detailed regular quarterly
presentation published by the Office of Business
Economics, Department of Commerce.
All reported or recorded foreign transactions or
those which can be estimated on the basis of sample
data are summarized under general categories shown
in the balance of payments. Since not all transactions can be accurately measured or estimated, a
discrepancy between total payments and total
receipts regularly appears which is designated
"errors and unrecorded transactions."
Tables 24 and 25 summarize the detailed presentation of the balance of payments accounts published
quarterly in the Survey of Current Business by the
Office of Business Economics. Table 24 shows the
major transactions in goods and services between the
United States and foreign countries; table 25 shows
the principal types of private capital flows and U.S.
Government grants and capital, together with two
alternative measures of the balance in the accounts.
The "balance on liquidity basis" is measured by
changes in U.S. official reserve assets and in liquid
liabilities to all foreigners; the "balance on official
reserve transactions basis" is measured by changes
in U.S. official reserve assets and in liquid, and
certain nonliquid, liabilities to foreign central banks
and certain other government financial agencies.
U.S. Exports and Imports of Goods and Services, 1947-66
(Quarterly data.
Seasonally adjusted annual rates)
BILLIONS OF DOLLARS
50
EXPORTS OF GOODS AND SERVICES
20
IMPORTS OF GOODS AND SERVICES
1959
1960
1961
1962
1963
1964
1965
1966
Excluding transfer under military grant!
SOURCE DEPARTMENT OF COMMERCE
76-384 O—67-
89
The use of these two measures of balance was
adopted in December 1965, and follows the recommendation of the Executive Committee of the Cabinet Committee on Balance of Payments under the
chairmanship of the Bureau of the Budget. A revised tabular presentation of the balance of payments
TABLE
accounts was published, with back data in the June
1966 Survey of Current Business.
Transactions reflected in the "Balance on goods
and services" are shown in some detail and on a gross
basis in Table 24. They include mainly merchandise
trade, but also military sales and purchases, income
24.—U.S. Exports and Imports oj Goods and Services, 1929-66
[Millions of dollars]
Imports of goods and services
Exports of goods and services
Period
Total
Merchandise1
Military
sales
Income on
investments
Private
Government
Other
services 2
Total
Merchandise l
Military Other
expendi- servtures
ices 3
Balance
on goods
and
services
1929
7,034
5,347
982
157
548
5,886
4,463
50
1,373
1, 148
1930
1931
1932
1933
1934
5,448
3,641
2,474
2,402
2,975
3,929
2,494
1,667
1,736
2,238
876
674
460
417
437
164
92
67
20
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
539
2
1
2
2
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
46
634
840
1,034
831
911
128
115
297
1,291
1,066
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
2,410
6,413
11, 038
12, 452
5,245
5,073
5,979
7,563
6,879
2,434
493
455
799
621
2,553
1,425
1,774
1,987
2, 121
6,041
7,744
11, 529
6,440
6, 149
1940
1941
1942
1943
1944
5,355
4, 124
6,896
5,343
11, 769 9, 187
19, 134 15, 115
21, 438 16, 969
1945
1946
1947
1948
1949
16,
14,
19,
16,
15,
273
735
737
789
770
12, 472
11,707
16, 015
13, 193
12, 149
572
751
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
1950
1951
1952
1953
1954
13,
18,
17,
16,
17,
807
744
992
947
759
10, 117
14, 123
13, 319
12, 281
12, 799
109
198
204
252
272
2,097
2, 739
2,845
2,564
2, 551
12,
15,
15,
16,
15,
028
073
766
561
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
386
1,828
1955
1956
1957
1958
1959
19,
23,
26,
23,
23,
804
595
481
067
489
14,
17,
19,
16,
16,
280
379
390
264
295
192
182
200
161
375
300
302
1,484
1,684
1,624
1,658
1,955
2, 170
2,468
2,612
2,538
2,694
274
194
205
307
349
2,880
3,393
3,899
3,658
3,849
3,367
3,875
4,245
4,474
4,925
2,009
3,967
5,729
2,206
147
27,
28,
30,
32,
36,
244
575
278
339
958
19,
19,
20,
22,
25,
489
954
604
071
297
335
402
656
657
747
3,001
3,561
3,954
4, 156
4,932
349
380
471
498
460
4,070
4,278
4,593
4,957
5, 522
11, 527
12, 804
13, 291
12, 952
15,310
14, 732
14, 510
16, 187
16, 992
18, 621
2,901
2,949
3, 216
3,435
3, 107
I960
1961
1962
1963
1964
17, 795
19, 628
20, 752
20, 861
23, 342
23, 198
22, 954
25, 148
26, 442
28, 468
3, 069
2,981
3, 083
2,936
2,834
5,397
5,463
5,878
6,514
7,013
4,046
5,621
5, 130
5,897
8,490
1965
1966
38, 993 26, 276
42, 910 29, 180
844
908
5,389
5,585
512
595
5,972
6,642
32, 036 21, 488
37, 614 25, 507
2,881
3,649
7,667
8,458
6,957
5,296
1
2
3
4
Adjusted from Customs data for differences in timing and coverage.
Includes transportation, travel, fees and royalties from direct investments, and other services.
Includes transportation, travel, income paid on foreign assets in the U.S., and payments for other services.
Military transactions for cash and credit prior to 1953 are included in "Merchandise" and in "Other Services"
Source: Department of Commerce.
90
U.S. Balance of International Payments, 1950-66
(Quarterly data.
Seasonally adjusted annual rates)
BIL LIONS OF DOLLARS
15
\
\
10
\
,V-\
\
BALANCE ON GOODS AND SERVICES
\
- \
5
y
\
\
\
V
\
\
V
\
>
/
\
A
~-
•
-
BALAN CE, LIQ
UIDITY BASIS
-5
l
/t
- - '
r-
A.
v
1
r
ALANCE, OFFIC AL RES ERVE
TRAN SACTIO» S BASIS
/
/
V
\
V
1 -V
I
10
1947
1948
1949
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
I i
I960
1 1
1961
1 i 1 1
111
1962
1963
1 1
1964
1 1 1
1965
1
i
i i
1966
SOURCE OF DATA: DEPARTMENT OF COMMERCE
on investments, both private and governmental,
transportation services, travel expenditures, and
miscellaneous transactions.
In Table 25, the item "U.S. Government grants
and capital, net" includes Government grants other
than military under the various aid programs, and
the net outflow of U.S. Government capital through
various foreign lending programs. "U.S. private
capital" refers to investment of U.S. capital abroad,
and is classified as: (a) "direct investment," which
includes investments in foreign branches and subsidiaries; or (b) "other long-term", which includes
long-term security investments not entailing effective
control and loans with a maturity of more than one
year; or (c) "short-term" investment—i.e., in loans
or instruments with an original maturity of one year
or less. "Foreign capital" includes corresponding
foreign investments in the United States exclusive of
those investments which are accounted for as a component of the surplus or deficit.
The "balance" measured on the "liquidity" basis
is equal to the algebraic sum (with sign reversed) of
changes in official reserve assets, and changes in
liquid liabilities to foreigners and international organizations in the form of deposits, U.S. Government
securities, bankers acceptances, commercial paper,
and certain other short-term liabilities of the United
States.
The balance measured on the "Official Reserve
Transactions" basis is equal to the algebraic sum
(with sign reversed) of the changes in official reserve
assets, and changes in liquid and nonliquid liabilities
to foreign central banks and certain government
financial agencies.
STATISTICAL PROCEDURES
The preparation of the balance of payments involves the bringing together, and the 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 expendi-
91
TABLE
25.—United States Balance of International Payments, 1929-66
[Millions of dollars]
U.S. private capital, net
Government
grants
and
capital,
net 1
Direct
investment
Other
longterm 2
1929._
38
-602
-34
1930._
1931__
1932._
1933._
1934._
77
14
26
-7
-5
-294
-222
-16
32
-17
-70
350
267
-80
202
-191
628
227
42
104
66
66
-26
125
15
1935._
1936._
1937._
1938..
1939._
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
1940._
1941._
1942._
1943._
1944..
51
-1,323
-6,525
-12, 847
-14, 077
32
47
19
98
71
36
19
-84
-58
-62
177
21
96
-12
-85
1945._
1946..
1947._
1948..
1949..
-7,561
-5,293
- 6 , 121
-4,918
-5,649
-100
-230
-749
-721
-660
-354
127
-49
-69
-80
1950..
1951..
1952._
1953..
1954._
-3,640
- 3 , 191
-2,380
-2,055
-1,554
-621
-508
-852
-735
-667
1951..
1956..
1957_.
1958..
1959..
- 2 , 211
-2,362
-2,574
-2,587
-1,986
-823
-1,951
-2,442
-1, 181
-1,372
Year
Changes in selected
liabilities (decrease (—))6
Balance
Errors
Foreign and uncapital, •ecorded
trans- Liquidnet 3
Shortactions
ity
term
basis 4
Official
reserve
transactions
basis 5
Changes
in gold
convertible
currencies,
To foreign official
and IMF,
7
gold
holders
To other tranche
foreign 9 position
Non- holders
(increase
Liquid 8 liquid
-53
(10)
(10)
196
-143
320
99
79
61
412
598
1, 132
726
323
1, 140
(10)
(10)
(10)
(10)
(10)
(10)
-288
- 1 , 265
-677
-454
126
-310
133
-53
13
-1,266
364
157
425
249
788
1, 174
896
1,053
1,482
1, 915
(10)
(10)
(10)
(10)
(10)
648
376
311
317
1,259
-1,822
-1,272
-1, 364
-1,799
-3, 174
-90
-327
-84
-63
175
1,277
2,890
476
1, 119
-8
-205
34 -1,979
- 3 7 -1,859
(10)
(10)
(10)
(10)
(10)
1,353
-400
182
1,222
509
-4,243
-719
23
757
1,350
-96
-310
-189
-116
187
-104
-615
-432
-361
44
8 -2,737
218
993
949
4,210
1, 193
817
786
136
: 10 )
10-
2, 189
-370
-895
919
130
548
-623
-3,315
-1,736
-266
-495
-437
-214
185
-320
-149
-103
-94
167
-635
181
540
52
146
249
1,731
41
1,621
928
1,061
1,758
-33
-415
1,256
480
-241
-603
-859
-1, 444
-926
-191
-517
-276
-311
-77
297
615
545
186
736
1,060
1,842
587
1,073
2,835
182
-869
-1, 165
2,292
1,035
366
707
1,021
689
685
-200
I960..
1961..
1962._
1963..
1964..
2,769
2,780
3,013
3, 581
3,560
-1,674
-1,599
-1,654
-1,976
-2, 416
-863 -1, 348
1, 025 -1,556
1,227
-544
1,695
-785
1,961 -2, 146
1965..
1966._
3,375
3,396
-3,371
-3,363
1, 080
-213
358
761
194
-335 -2,168
-384
(10)
(10)
(10)
(10)
(10)
(10)
(10)
(10)
(10)
(10)
(10)
(10)
(10)
(10)
(10)
(10)
(10)
(io:
(10)
(10)
(10)
(10)
-3,489
-8
- 1 , 206
- 2 , 184
-1,541
(10)
(10)
(10)
(10)
(10)
515 - 1 , 242
568
-973
1, 184
578
511 -3,365
423 - 3 , 870
(10)
10)
(10)
10
)
(10)
(10)
(10)
-11
500
627
366
191
-941
-1,006
-1, 159
-352
-1,011
-3,881
-2,370
-2,203
-2,670
-2,798
-3,402
-1,347
-2,706
-2,044
-1,546
-429 -1,337
-589 -1,424
-1,305
271
1
2
3
4
(10)
(10)
(10)
(10)
(10)
(10)
(10)
(10)
8
1, 449
8
681
8
457
1,673
1,073
-17
-1,574
254
7
302
100
735
289
1,083
213
619
1,554
2, 143
606
1,533
378
171
132
2,430
1,222
568
Includes associated Government liabilities and loan repayments.
Includes banking claims.
Other than liquid funds; includes miscellaneous Government nonliquid liabilities.
Equals changes in liquid liabilities to foreign official holders, other foreign holders, and changes in official reserve assets consisting of gold, convertible currencies,
and 5the U.S. gold tranche position in the IMF.
Equals changes in liquid and nonliquid liabilities to foreign official holders and changes in official reserve assets consisting of gold, convertible currencies, and
the 6
U.S. gold tranche position in the IMF.
Includes short-term official and banking liabilities and foreign holdings of U.S. Government bonds and notes (other than nonmarketable, nonconvertible).
7
Central banks, governments, and U.S. liabilities to the IMF arising from reversible gold sales to, and gold deposits with, the United States.
8
Includes change in Treasury liabilities to certain foreign military agencies, 1960-1962.
a Private holders; includes banks and international and regional organizations. Excludes IMF. Data were not collected separately for liabilities to foreign officials
and 10 other holders prior to 1950.
to
Not available.
NOTE.—Data excludes military grant aid and, U.S. subscriptions to IMF.
Source: Department of Commerce.
92
tures in the United States, together 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.
Balance of payments series manifesting seasonal
variation are separately adjusted, including the unrecorded items, and the resultant effect of these
adjustments becomes the seasonal adjustment for
the balances. Series shown to the right of the
balances are not individually adjusted, and are shown
as unadjusted in the monthly Economic Indicators.
RELATION TO OTHER SERIES
Since the balance of payments statistics represent
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
semi-annual 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 are used as a component of the national income
and products accounts, summarized under the categories of exports and imports.
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 statistics present 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 " unrecorded transactions" reflect a significant
and fluctuating difference between the net surplus
or deficit figure arrived at independently by (a)
netting all measured payments and receipts on
account of gold, convertible currencies and liquid
liabilities to foreigners, and (b) netting all other
measured payments and receipts. 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: 1949-51, although
there have been subsequent developments in sources
and technique. Later, briefer statements of sources
may be found in Business Statistics, 1965 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), Revised Edition, 1963
gives detailed global figures by quarters for the
period 1919-1961 and by areas for 1946-1961.
Historical Statistics gives available, but fragmentary,
data back to 1790. The Survey of 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.
The Report of the Review Committee for Balance
of Payments Statistics, entitled The Balance of
Payments Statistics of the U.S., issued in 1965,
contains extended discussions of the concepts and
methodology of the accounts.
93
PRICES
26. 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 urban
wage earners and clerical workers. The index is
often called the "cost-of-living" index, but its official
name is Consumer Price Index for Urban Wage
Earners and Clerical Workers. Prior to January 1964
a complete name for the index was "Index of Change
in Prices of Goods and Services Purchased by City
Wage-Earner and Clerical-Worker Families to Maintain Their Level of Living." Through December
1963, the index applied only to families of two or more
persons. With the January 1964 index, the coverage
was extended to include single workers living alone.
The index covers prices of everything people buy
for living—food, clothing, automobiles, homes, housefurnishings, household supplies, fuel, drugs, and
recreational goods; fees to doctors, lawyers, beauty
shops, rent, repair costs, transportation fares, public
utility rates, etc. It deals with prices actually
charged to consumers, including sales and excise
taxes. It also includes real estate taxes on owned
homes, but it does not include income or social
security taxes.
The index is based upon prices of about 400 items
collected in 56 cities. The 400 items were selected
by the BLS as representative of the thousands of
commodities and services purchased by wage earners
and salaried clerical workers, as reported in a survey
conducted in 66 cities. Detailed specifications are
Consumer Prices, 1947-66
(Monthly data)
INDEX: 1957-59 = 100
125
„.***
- ^
FOOD
COMMODITY I H C
FOOD
V
-•*
\
S
Al!. SERV1C E
A L ITEMS
L
nh-n'n
1947
,1,
,
Mill, nln nil,
L L Illn nln nlii n > 1, n l i i
i l i 11in nin nil, nln M I I I L I M i l l
1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965
ii 1111 il ill i
nil i 1 i i
1
SOURCE OF OATA- DEPARTMENT OF LABOR
94
1
1966
TABLE
26.—Consumer Prices, by Special Groups, 1929-66
[1957-59=100]i
Services
Commodities
Year
All items
Commodities less food
All commodities
Food
All
Durable
Nondurable
All
services
Rent
Services
less rent
1929.
59.7
55.6
1930.
1931.
1932.
1933.
1934.
58.2
53.0
47.6
45.1
46.6
52.9
43.6
36.3
35.3
39.3
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
50.2
50.8
53.0
53.0
52. 1
47. 1
47. 8
50.8
51.7
50.6
48.8
49. 2
51.2
50.9
50. 1
52. 2
52.8
54.4
55.4
55.5
56.9
58.3
60.9
62.9
63.0
49.3
49.0
49.5
49.9
49.9
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
52.4
55.0
61.2
63.8
67. 3
50.2
53.6
60.9
62.9
68.7
50.6
52.8
58.4
60.9
64. 0
55.7
56.4
58.2
59. 3
60.7
63.2
64.3
65.7
65.7
65.9
50. 0
50.6
52.8
55. 2
57.9
1945.
1946.
1947.
1948.
1949
62.7
68.0
77.8
83.8
83. 0
62.6
69. 4
83.4
89.4
87. 1
58.4
66.9
81. 3
88. 2
84.7
70. 0
74.4
83.9
90. 3
89. 0
73.9
77.3
83.8
89.9
91. 2
66.3
71. 1
81.7
88. 0
86. 3
61. 5
62.7
65.3
69.4
72.6
66. 1
66.5
68. 7
73.2
76. 4
59. 1
61.2
64.3
68. 0
71.4
1950
1951
1952
1953
1954
83.8
90. 5
92. 5
93.2
93.6
87.6
95.5
96. 7
96.4
95. 5
85.8
95.4
97. 1
95.6
95. 4
88.9
95.6
96. 4
96.6
95.6
92. 2
99. 2
100. 5
99.8
97. 3
86.2
92.7
93.2
94.0
94.4
75. 0
78.9
82.4
86.0
88.7
79. 1
82.3
85.7
90.3
93.5
73.4
77.8
81. 5
84.9
87.4
1955.
1956.
1957.
1958.
1959
93.3
94.7
98. 0
100.7
101. 5
94.6
95.5
98. 5
100. 8
100.9
94. 0
94.7
97.8
101.9
100.3
94.9
95.9
98.8
99.9
101. 2
94. 4
96. 5
99. 1
99.8
101.0
90.5
92.8
96.6
100.3
103. 2
94.8
96.5
98.3
100. 1
101.6
89.4
91.9
96. 1
100.2
103.6
1960
1961
1962
1963.
1964.
103.
104.
105.
106.
108.
101.
102.
103.
104.
105.
7
3
2
1
2
101. 4
102. 6
103.6
105. 1
106. 4
101. 7
102. 0
102.8
103. 5
104.4
95.4
95.4
98.5
100. 0
101. 5
100.9
100.8
101.8
102. 1
103. 0
102. 6
103. 2
103.8
104.8
105.7
106. 6
108.8
110.9
113. 0
115. 2
103. 1
104.4
105.7
106.8
107.8
107. 4
110. 0
112. 1
114. 5
117. 0
1965.
1966
109.9
113. 1
106. 4
109. 2
108. 8
114. 2
105. 1
106. 5
102.6
102.7
107. 2
109. 7
117.8
122. 3
108. 9
110. 4
120. 0
125. 0
1
2
4
7
1
85.4
83. 1
78.7
70.6
60.8
57.0
1
Beginning in January 1964, the index structure has been revised. 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 such indexes from the
Bureau, upon request.
2
Not available.
NOTE.—The "all items" and "food" indexes are available monthly from 1913; "rent" annually from'1913 through 1918, for varied intervals (generally semi-annually
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.
used to identify each of the 400 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.
PRICING PROCEDURES
Current prices for the 400 items are collected regularly from a list of stores and service establishments
in the 56 cities. This list includes chain stores, independent stores, department stores, specialty stores,
95
and public utilities which have been selected by
BLS as representative of the types of outlets in
which wage-earner and clerical-workers make their
purchases. Prices are also collected on the services
of physicians and dentists, hospitals and beauty
parlors, repairmen and service contractors.
Prices for most items are collected at intervals
ranging from every month to every third month.
A few items are priced semiannually or annually.
Food pricing is conducted each month in all cities.
In the five largest cities most goods and services are
priced every month. Rent in these five cities is
priced every second month and some items such as
medical care, alcoholic beverages, tobacco and certain services are priced quarterly or semiannually.
In the remaining 51 cities, prices for foods and some
other goods and services, such as fuels, used cars,
streetcar and bus fares, and a few other important
items, are collected each month. For most of the
remaining items prices are collected every third
month. Pricing in these 51 cities is on a rotating
cycle, so that several cities of each size group are
priced each month. Prices for most unpriced items
are held constant between the scheduled pricing
periods in a given city 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.
STATISTICAL PROCEDURES
The purpose of the index is to measure price
change, i.e. 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 calculate for each city, a price relative for each
item by comparing 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 purchased by urban wage-earner and clericalworker families in the years 1960-61, 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
96
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
preceding 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 estimated
1960 population of urban wage earner and clerical
workers. Two-fifths of the weight is carried by the
12 largest cities; more than one-fourth by the 17
cities selected to represent the 56 cities with populations of 250,000 to 1,400,000; nearly 15 percent by
the 10 cities selected to represent the 145 cities with
populations of 50,000 to 250,000; and one-fifth by
the 17 cities selected to represent the over 3,000
towns with populations ranging from 2,500 to 50,000.
HISTORICAL SERIES
In addition to the national index, separate indexes
are computed for 23 of the 56 cities—monthly for
the 5 largest and quarterly for the other 18.
Beginning with the January 1962 index, the
Consumer Price Index was converted to the standard
reference base period of 1957-59=100 from the
former base 1947-49=100. No other aspects of
the index, such as weight structure, and city and
item samples, were changed in connection with the
rebasing. Historical tables of monthly and annual
price 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 and
group indexes will continue to be published on the
1947-49 = 100 base indefinitely.
National indexes are shown for all items and for
major commodities and services groupings back to
1935 in the accompanying table.
Over this period major revisions, incorporating
expenditure patterns for 1934-36 and 1950 and
other changes were introduced by linking—in 1940
and 1953 respectively; other minor revisions were
introduced at other points in the series. A third
major revision was completed with the release of the
January 1964 index; this incorporated a new weight
structure, and updated city, commodity and outlet
samples and certain improvements in statistical
procedures, such as greater use of probability
sampling and more flexible use of specification
pricing.
The relative importance of the various groups
shown in the table of indexes can be seen in the
following table which compares relative importances
in the old and new series for December 1963:
Relative Importance of Specified Groups in the CPI, December
1968, Old and New Series
Specified group
All items
All commodities
All food _
All commodities less food
All durable commodities
All nondurable commodities,
less food_
All services
Rent
Services less rent
New series
Old series
100.00
65.97
22.43
43.54
18.78
100.00
67.13
28.18
39.55
17.53
24.76
34.03
5.50
28.53
22.02
32.27
6. 16
26.11
USES AND LIMITATIONS
The index is designed to measure only changes in
prices, not expenditures resulting from changes in
purchasing habits or standards of living. Also, it
measures price changes for only a limited population
group: 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,
retired people, etc. The fixed market basket represents the average quantities bought by all wage
earners and clerical workers and is not necessarily
representative of the purchases made by any single
family or individual consumer.
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 has not been possible thus far to adjust completely for these effects.
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—semiannually, 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. Monthly indexes and average prices are
available for individual food and fuel items; quarterly indexes are available for selected groups of
items and for individual commodities and services
other than foods and fuels. Descriptions of the
procedures, uses, and limitations of the index are
presented in varying degrees of technical detail in
"The Consumer Price Index (Revised January 1964)—
A Short Description/' in BLS Handbook of Methods
for Surveys and Studies (BLS Bulletin 1458), in
u
Consumer Price Indexes in the United States, 1958-58
(BLS Bulletin 1256)," in the Consumer Price Index:
History and Techniques (BLS Bulletin 7517), and
in various articles, such as the "Statistical Structure
of the Revised Consumer Price Index," in the July
1964 issue of the Monthly Labor Review.
27. WHOLESALE PRICES
DESCRIPTION OF SERIES
The Wholesale Price Index, compiled by the
Bureau of Labor Statistics, is a measure of the change
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 2,300 commodities selected to represent all
commodities sold on primary markets in the United
States. All types of commodities, from raw ma-
terials to fabricated products, are included in the
index. For commodities traded on organized exchanges, such as livestock and gains, the quotations
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.
97
Wholesale Prices, 1947-66
(Monthly data)
INDEX: 1957-59=100
130
1947
1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965
1966
SOURCE OF DATA: DEPARTMENT OF LABOR
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.
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 specified types of purchasers. The prices
relate to a particular day of the month—usually
Tuesday of the week containing the 15th. Starting
in January 1967, prices usually will relate to the
Tuesday of the week containing the 13th.
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 (b :ain 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
98
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
quantity of shipments for sale in 1929-31 to 1947
value of shipments for sale; (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 were 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 in this
last weight revision. Weights based upon the 1963
industrial censuses were introduced in January 1967.
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
27 .—Wholesale Prices, 1929-66
TABLE
[1957-59=100]
Industrial commodities
All commodities
Year
Farm
products
Processed
foods
and
feeds
Industrial
All indus- Industrial intermedi- Producer
J
finished
crude
trials
materials ate mategoods
rials 2
51.7
1929
52. 1
63.9
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
1935
19361937
1938
1939__
43. 8
44. 2
47.2
43. 0
42.2
48. 0
49.4
52. 7
41.9
39.9
1940
1941
1942._
1943-.
1944
43.0
47.8
54.0
56.5
56.9
41. 3
50. 1
64.6
74.8
75.3
19451946
1947__
1948
1949
57.9
66. 1
81.2
87.9
83.5
78.3
90.6
109. 1
117. 1
101.3
92.6
99. 1
90.0
56. 3
61.7
75.3
81.7
80.0
1950
1951
1952
1953
1954
86.8
96.7
94.0
92.7
92.9
106.4
123.8
116.8
105.9
104.4
93.2
103. 5
102.3
97.6
99.3
82.9
91.5
89.4
90. 1
90.4
1955
1956
1957
1958
1959
93.2
96.2
99. 0
100.4
100.6
97.9
96.6
99. 2
103.6
97.2
95.0
94.8
97. 6
102.5
99.9
1960
1961
1962
1963
1964
100. 7
100.3
100.6
100.3
100. 5
96. 9
96.0
97.7
95.7
94. 3
102. 5
105.9
98.4
105.6
_ .
1965 4
1966
<>
•
i3
(8)
0
1
48. 1
42.4
39.7
40. 2
44. 2
44.0
44.9
48.1
46. 1
46.0
46. 8
50.3
53.9
54.7
55.6
<.,
?!
(3)
P)
(3)
Consumer finished
goods excluding food
$
(3)
(•)
(3)
?3
(>
(3)
3
(3)
(z)
()
c)
(3)
(|!
Nondurable
<>
•
<->
Durable
/3\
(3)
1 1
(3)
(3)
(3)
(Z)
(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
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
89.6
96.5
94. 1
95.0
95.3
92.4
96.5
99. 2
99.5
101.3
93.6
102.9
93. 1
92.4
88.0
96.6
102.3
100.9
96.9
102.3
92.5
97.0
99. 6
99.4
101.0
85.6
92.0
97.7
100.2
102. 1
92.8
95.9
98.7
100. 1
101.3
95.8
97.7
99.9
99.3
100.8
100. 0
101.6
102.7
103.3
103. 1
101.3
100.8
100.8
100.7
101 2
98. 3
97.2
95.6
94.3
97. 1
101. 4
100. 1
99.9
99.6
100. 2
102. 3
102.5
102.9
103. 1
104. 1
100. 9
100.5
100.0
99.5
99. 9
101. 5
101.5
101. 6
101.9
101. 6
106. 7
113.0
102. 5
104.7
100. 9
104.5
101. 5
103.6
105.4
108.0
99. 6
100.2
102. 8
104.8
86.5
92.0
88.2
1
2
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.
3 Not available for this classification prior to 1947.
Preliminary.
NOTE.—Monthly indexes available for some groups from January 1926 on the 1957-59=100 base and on the 1947-49=100 base through 1961. Monthly indexes
available for "all commodities" from 1890 through 1951 on the 1926=100 base.
Source: Department of Labor.
4
99
from the earliest date for which they were published
on the former base.
The relative importance of the groups and subgroups in the Wholesale Price Index in December
1960 (1958 weights) and December 1966 (1963
weights) are shown in the following table.
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 ea&h. item by its current price relative
and summing to pbtain the current aggregate. The
Relative Importance of Components of the Wholesale Price current aggregates are totaled by product classes,
Index, December 1960 and December 1966
subgroups, groups, and all commodities. The current index foj each of these is obtained by dividing
Commodity grouping
December 1966 December 1960
(1963 weights) (1958 weights)
the current aggregate by its appropriate value weight
in the base period.
100. 00
All commodities
100. 00
Farm products
10.59
10.64
Each commodity price series in the index, as
Processed foods and feedsl
17.69
16.53
representative of prices for a group of commodities,
Industrial commodities
72.25
72.83
2.70
Industrial crude materials
2.77 is assigned its own direct weight (the value of the
Industrial intermediate materi2
40.72
33.86 shipments for sale of that individual commodity),
als
9.67
Producer finished goods
11.09 plus the weight of other commodities it was selected
Consumer finished goods ex21. 17
21.31 to represent in the index. Weights for commodities
cluding food
8.22
7. 14 not priced for the index are assigned to commodities
Durables
12.95
14. 17 which are priced on the basis of available informaNondurables
tion on similarity of manufacturing process and
1 Excludes all farm products and foods; coverage of the subgroups does not
correspond exactly to coverage of this index.
price movements. Statistical studies and the advice
2 Excludes intermediate materials for food manufacturing and manufactured
animal feeds; includes, in part, grain products for further processing.
of experts in industry and elsewhere are utilized in
making these determinations.
In addition to the comprehensive index, BLS
USES AND LIMITATIONS
publishes a large number of subindexes in varying
degrees of detail. One series (see table) describes
The index is based for the most part on producers'
price changes at various stages of production. Com- prices; therefore, it should not be used as a measure
modities are first divided by stage of processing of price change at the wholesale market level.
among three categories: (1) crude materials for "Wholesale" as used in the title of this index refers
further processing; (2) intermediate materials, sup- to sales in large lots, not to prices paid or received by
plies, and components; and (3) finished goods. Each wholesalers, jobbers, or distributors.
A comparison of the movement of the subgroup
of these is further subdivided according to end-use
and durability. Another series consists of separate indexes of the Wholesale Price Index and the Conindexes for durable and nondurable goods which are sumer Price Index should not be used as a measure
published each month for all commodities, total of the change in retailers' margins for the specified
manufactures, and total raw or slightly processed groups of commodities, mainly because the two
goods. Indexes by commodity groupings are given indexes are based on different weighting patterns
and the lists of commodities priced are not identical.
each month for 15 major groups, such as farm prodThe index is designed to measure real pric6
ucts and processed foods; 90 subgroups such as grains
changes, that is, changes which are not occasioned
and cotton products; 314 product classes; and many by changes in quality, quantity, terms of sale, etc.
individual product series. In addition to the above, It is not designed to measure changes in manufacindexes for 25 other special commodity groups are turers' average realized prices which are affected by
regularly issued including an index of prices of product mix and terms of sale as well as by price
construction materials. Beginning in January 1967, movements.
some changes will be made in commodity classificaREFERENCES
tions to provide more index detail and to eliminate
some inconsistencies in the previous classification
The basic release of the index is the report entitled
system.
Wholesale (Primary Market) Price Index, usually
100
issued by the Bureau of Labor Statistics during the
second week of the month following the month to
which the figures relate. This release contains
indexes for groups and subgroups.
A more detailed report containing figures for all
levels of the index plus a review of the month's price
changes and special indexes is issued about three
weeks after the press release.
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 limitations is presented in BLS Handbook
of Methods for Surveys and Studies, Chapter 11
of BLS Bulletin 1458, October 1966. An article
in the February 1962 Monthly Labor Review (Reprint
No. 2384) and one of the detailed monthly reports
(January-May 1961) gives information concerning
the latest reweighting of the WPI and the effect
that it has on the index. The detailed report for
January 1962 contains information explaining the
rebasing of the index to 1957-59 = 100 and also a
table showing the conversion factors that are to be
used when converting a particular index from a
1947-49 = 100 base to the base of 1957-59 = 100 or
vice versa. In addition, statistical series and summaries as well as descriptions of the procedures, uses,
and limitations of the Wholesale Price Index and of
the various special indexes are in a series of annual
bulletins Wholesale Prices and Price Indexes, 1954-56
(Bulletin 1214) which contains a description of the
stage of processing series and the construction
materials index, Wholesale Prices and Price Indexes,
1957 (Bulletin 1235) which describes the indexes on
durability of product, Wholesale Prices and Price
Indexes, 1958 (Bulletin 1257) which supplies information on the most recent change in procedures for the
construction materials index, Wholesale Prices and
Price Indexes, 1959 (Bulletin 1295), Wholesale Prices
and Price Indexes, 1960 (Bulletin 1376), Wholesale
Prices and Price Indexes, 1961 (Bulletin 1382), Wholesale Prices and Price Indexes, 1962 (Bulletin 1411),
and Wholesale Prices and Price Indexes, 1963 (Bulletin
1513).
28. 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. For most commodities, it is based
on estimates of the average prices received for all
grades and qualities at the point of first sale—generally the local market—about the middle of the
month. For apples, peaches, pears, citrus, potatoes,
tobacco, wholesale milk, broilers, and wool, monthly
average prices rather than midmonth prices are used
in computing the index.
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/ 7 with 11 sub-
groups, 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 allcommodity 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 1953-57 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.
101
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, 1937-41,
and 1953-57:
Relative Weights for Index of Prices Received by Farmers
Commodity group
All farm products
Crops
Food grains
Feed grains and hay
Cotton
Tobacco
Oil-bearing crops
Fruit
Commercial vegetables
Potatoes, sweetpotatoes, and
dry edible beans
Livestock and products
Meat animals
Dairy products
Poultry and eggs
Wool
1924-29
1937-41
1953-57
100.0
100.0
i00. 0
48.0
8.9
7.5
13.9
2.6
2.3
6.0
3.5
42.2
7.0
6.7
8.3
3.7
3.1
5.8
4.8
45.2
7.9
9.1
8.4
4.1
4.9
4.7
4.2
3.3
52. 0
26.1
15.1
9.9
.9
2.8
57. 8
28.6
17.7
10.2
1.3
1.9
54. 8
29.1
14.6
10.7
.4
RELATION TO OTHER SERIES
This index should not be confused with the farmproduct component of the Wholesale Price Index.
There are significant differences. The Index of
Prices Received by Farmers measures changes in
prices at the point of first sale, and is based on average prices for all grades of a given commodity. The
Wholesale Price Index, on the other hand, in general
measures prices in selected central markets, and is
based on prices of specific grades or qualities.
Finally, there are differences in the weights and base
periods used in the two indexes.
USES AND LIMITATIONS
The index is widely used as a measure of changes
in average prices received by faimers for commodities
102
sold in local markets. It is a close approximation
to a measure of the price component of receipts by
farmers from the sale of farm products. It is used
in computation of adjusted base-period prices, which
are necessary for calculating parity prices under the
formula prescribed by the Agricultural Adjustment
Act of 1938, as amended.
The Index of Prices Received by Farmers is designed to measure the change in average prices for
all grades and qualities of the products sold by
farmers. Hence, the price changes it shows do not
result wholly from price changes for specific grades,
but may also reflect changes in the relative proportion of the various grades or qualities of commodities
sold.
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.
Relative Weights for the Index of Prices Paid by Farmers,
Including Interest, Taxes, and Farm Wage Rates
Item
Commodities, interest, taxes,
and cash wage rates.
Living
Food (including tobacco4)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
Weight base period
1924-291
1937-412
1955 3
100. 0
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
100. 0
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
100. 00
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
(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 1966, the
index of prices paid for items used in family living
included price series for 252 commodities and services, and the index for items used in farm production
included 253, with 42 series being used in both
indexes.
STATISTICAL PROCEDURES
The Index of Prices Paid by Farmers for commodities and services is based upon prices of commodities
3.7
2.7
5.20
2.7
3.1
4.11 reported by chain and independent stores and costs
3.3
3.3
3.66
1.0
1.7
2.55 of electricity and telephone services reported by
77. 6
85. 2
90. 40 farmers. Beginning in March 1953 the index has
5.7
3.8
2.04 been based primarily on price information collected
6.5
3.0
.96
10.2
8.0
6.60 monthly from chain stores and quarterly from inde11910 to March 1935.
pendent stores. Price changes for the independent
2 March 1935 to September 1952, inclusive.
3 Subsequent to September 1952.
stores in interquarterly months are estimated largely
* June 1935 forward.
from changes in chain-store prices. Information on
The most recent revision of the index was in Janu- average costs of electricity and telephone services is
ary 1959. The revised indexes are of the same gen- obtained in an annual survey of about 15,000
eral form as those of the preceding revision in 1950. farmers. The index base period 1910-14 is set by
There were two major changes in the revised series: law. As in the case of the Index of Prices Received
Prices Received and Paid by Farmers, 1947-66
(Monthly data)
INDEX:1957-59=1OO
130
PRICES RECEIVED FOR ALL FARM PRODUCTS
120
PRICES PAID FOR COMMODITIES, INTEREST
,, T.........I.........T I..,.L..I..,.L..I..,I,..I..,.L..I..,.L..,.J
1947
194« 1949 1950 I9S1 1952
1953 1954 1955 1956 1957 1951 1959 1960 1961
1962 1963 1964 1965 1966
SOURCE OF DATA- DEPARTMENT OF AGRICULTURE
103
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
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.
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 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.
RELATION TO OTHER SERIES
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
The Index of Prices Paid by Farmers for familyliving 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:
104
USES AND LIMITATIONS
TABLE
28.—Prices Received and
Paid by Farmers, 1929-66
•eceived by :
farmers
Prices I
Parity ratio l
Prices paid by farmers
All items,
Year
All farm
products
Crops
Livestock interest,
and
taxes, and
products wage rates
Family
living
items
Production
items
(parity
index)
Actual
percent
Adjusted
percent2
1957-59=100
1929
61
61
62
55
54
56
92
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
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
42
51
66
4
80
4
82
41
48
65
84
89
42
53
66
4
77
4
76
42
42
47
45
52
58
62
45
52
58
61
50
57
63
66
88
92
93
78
77
81
93
105
113
108
88
98
109
116
110
65
64
71
82
89
71
83
88
86
85
67
73
85
95
91
109
113
115
110
100
111
115
116
111
100
87
96
98
95
95
86
94
95
94
94
94
104
104
101
107
100
92
89
102
108
101
93
89
95
96
99
100
101
96
95
98
100
84
83
82
85
81
84
85
88
_________
1930
1931
1932
1933
1934
- -
1935
1936
1937
1938
1939
1940
1941
1942
1943
1944
_____
_______
_ _ _ _ __ _
_
_
_
_ _ _____
1945
_ _ _ _ _ _ _
1946 _____
__ _
1947
1948
1949
4
4
86
98
114
119
103
91
102
118
114
100
4
4
1950 - _
1951. 1952
1953
1954 _ _
107
125
119
105
102
104
119
120
108
108
108
130
119
104
96
95
104
105
101
100
90
88
94
106
99
100
94
95
98
100
102
99
99
101
100
98
99
102
104
107
107
98
98
99
95
91
102
103
105
107
107
102
102
103
104
105
101
101
103
104
103
102
110
104
105
101
113
110
114
107
110
105
108
_ _-_
_
_ -__
1955
1956
1957
1958
1959
1960
1961
1962
1963 _
1964
97
_ _ _
_
______
1965__ - - _ _ _ _
1966
___
104
99
82
94
111
122
106
97
97
97
102
80
79
80
78
76
77
80
(s)
66
80
95
95
97
83
85
85
82
81
83
83
81
80
82
86
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.
2 Not available.
3 The adjusted parity ratio reflects Governments payments made directly to farmers.
* 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 Janaury 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
comparison with other indexes.
Source: Department of Agriculture.
105
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. Revisions of the Parity Index
are published in "Agricultural Prices" in September
of each year; revised indexes of Prices Received by
Farmers, in May. 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 Statistical Reporting
Service of the U.S. Department of Agriculture—
Scope and Methods (Miscellaneous Publication No.
967 of the Department of Agriculture).
106
The Parity Ratio and the
Adjusted Parity Ratio
Parity Ratio.—The Parity Ratio is computed by
dividing the Index of Prices Received by Farmers
by the Index of Prices Paid by Farmers, 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. This is
strictly and solely a price comparison.
Adjusted Parity Ratio.—In view of the importance
of non-price income supplements of recent years,
such as payments from Federal farm programs, a
summary figure somewhat comparable to the Parity
Ratio that incorporates and reflects these supplements to farm income has been developed. It is
identified as an "Adjusted Parity Ratio". It
allows for direct Government payments made to
farmers, and starts with the year 1933, the first year
when such payments were made. See Agricultural
Prices, January 1967, for a more detailed explanation.
MONEY, CREDIT, AND SECURITY MARKETS
29. 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 deposits of individuals, partnerships, and corporations, as well as
TABLE
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 savings
29.—Money supply, 1947-66
[Averages of daily figures, billions of dollars]
Money supply
Money supply
End of year 1
Total
Currency
outside
banks
Demand
deposits
Time
deposits 2
Total
Currency
outside
banks
Demand
deposits
Time
deposits 2
U.S. Government
demand
deposits2
Unadjusted
Seasonally adjusted
1947
1948
1949
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
1950
1951
1952
1953
1954
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. 1
44. 5
48.3
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. 1
141. 9
27.8
28. 2
28.3
28. 6
28.9
107.4
108.7
107.6
112. 6
113. 1
50.0
51.9
57.4
65.4
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
1962
1963
1964
141. 1
145.5
147.5
153. 1
159.7
28.9
29.6
30.6
32.5
34.2
112. 1
116.0
116.9
120.6
125.4
72.9
82.7
97.8
112.2
126.6
144.7
149.4
151.6
157.3
164.0
29.6
30. 2
31.2
33. 1
35.0
115.2
119. 2
120.3
124. 1
129. 1
72. 1
81.8
96.7
111.0
125.2
4.7
4.9
5.6
5. 1
5.5
1965
1966 -
167.2
170.3
36.3
38.3
130.9
132. 1
146.9
158.0
172.0
175.2
37. 1
39.1
134. 9
136.2
145.2
156.3
4.6
3.5
_
1
Averages of daily December figures.
Deposits at all commercial banks.
Source: Board of Governors of the Federal Reserve System.
2
107
accounts of individuals and nonprofit organizations,
and other time deposits held by individuals, partnerships, corporations, states and political subdivisions,
and foreign central governments and official institutions. Certificates of deposit are redeemable after
30 days' notice, and prior notification of up to 30
days may also be required for withdrawals from
savings accounts. Banks may pay interest on time
deposits but not on demand deposits. The published series cover deposits at all commercial banks.
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. 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 semi-annual "call report" data from
non-member banks is added. From this aggregate
is deducted the Federal Keserve "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 cash 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 12
monthly periods for 1966 are shown in the table at
the top of the next column.
Estimates for time deposits and U.S. government
deposits, also shown in the table on page 107, are
arrived at in a similar manner.
108
Seasonal Adjustment Factors for 1966
Deposit
component
Currency
component
103.9
100.0
99.2
100.8
97.7
98.3
98.6
97.9
99.2
100.3
101.0
103.1
99.8
98.9
99.0
99.1
99.2
99.8
100.4
100.2
100.0
100.2
101.3
102.1
January _ _
February..
March
April
May
June
July
August
September
October
November.
December.
RELATION
TO
OTHER
Time
deposits
adjusted
99.7
100.1
100.5
100.5
100.6
100.3
100.3
100.2
99.9
99.9
99.2
98.9
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 data on deposits and
currency, also published by the Federal Reserve.
Thus, 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.
However, this older series provides a measure of
deposits and currency over a much longer time
period.
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.
The series on money supply in its present form
appeared first in 1962, with data revised back to
1947. It is similar to the series on deposits and
currency shown in the table on page 110 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.
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 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 table 30,
"Selected Liquid Assets Held by the Public."
REFERENCES
The money supply series are issued weekly by
Federal Reserve, and appear monthly in the Federal
Reserve Bulletin. An article in the August, 1962
Bulletin presents a technical discussion of the derivation of the series and a comparison with similar series.
Weekly and monthly average data for money supply,
time deposits, and U.S. Government demand deposits
were most recently revised in September 1966, when
data for the period 1959-1966 were published in the
Federal Reserve Bulletin, pages 1303-1315. Data for
the period 1947 to June 1964 appear in the Federal
Reserve Bulletin for June 1964. The related Consolidated Condition Statement continues to appear in
the monthly release J. 4 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 of the United
States from 1867.
30. 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 in commercial and
mutual savings banks and the Postal Savings Systemsavings and loan shares, savings bonds, and shortterm U.S. Government securities. Certain other
assets ordinarly 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 5
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.
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.
109
TABLE
30.—Selected Liquid Assets Held by the Public, 1946-66
[Amounts in billions of dollars, seasonally adjusted]
End of year
Total
selected
liquid
assets
Demand
deposits
and currency l
Time deposits
Commercial
banks
Mutual
savings
banks
Postal
Savings
System
Savings
and loan
shares
U.S. GovU.S. Gov- ernment
ernment securities
savings
maturing
bonds
within one
year2
1946
1947
1948.
1949__ _
239. 1
246.2
254. 1
262. 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
3. 3
3. 2
8.5
9.7
11. 0
12. 5
48. 6
50.9
53. 4
55. 0
19.4
16.6
21. 6
25. 5
1950._ _
1951
1952
1953
1954__ .
271. 4
281. 0
296.0
311. 5
320. 3
115. 5
120. 9
125.5
127. 3
130. 2
36. 6
38.2
41.2
44. 6
48.2
20. 1
20. 9
22. 6
24. 4
26. 3
2.9
2.7
2.5
2. 4
2. 1
14.0
16. 1
19.2
22. 8
27.2
55. 8
55. 4
55.7
55. 6
55. 6
26. 4
26. 8
29.3
34. 4
30.6
1955
1956
1957
1958___
1959
332. 5
343. 2
356. 0
373. 1
393. 9
133. 3
134. 6
133. 5
138. 8
139.7
49. 7
52. 0
57. 5
65. 4
67.4
28. 1
30. 0
31. 6
33.9
34.9
1. 9
1. 6
1. 3
1. 1
.9
32. 0
37.0
41.7
47.7
54.3
55. 9
54. 8
51. 6
50.5
47.9
31. 6
33. 2
38.8
35.6
48.8
1960
1961
1962
1963
1964
399. 2
424. 6
459. 0
495. 4
530. 5
138. 4
142. 6
144. 8
149. 6
156. 7
73. 1
82. 5
98. 1
112. 9
127. 1
36. 2
38. 3
41.4
44. 5
49. 0
.8
.6
.5
.5
.4
61.8
70.5
79.8
90.9
101. 4
47.0
47.4
47.6
49.0
49.9
41.9
42.6
46.8
48. 1
46. 1
1965. _
1966 (preliminary) __
572. 9
601. 0
164. 0
168. 2
147. 1
159.4
52.6
55. 1
.3
.1
109.7
113. 3
50.5
50.9
48.6
53. 9
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.
2 Excludes holdings of Government agencies and trust funds, domestic commercial and mutual savings banks, Federal Reserve Banks, and beginning February
1960, savings and loan associations.
Source: Board of Governors of the Federal Reserve System.
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, to 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 in concept from that
shown under "Money Supply" above only in the
deduction of deposits of mutual savmgs banks and
savings and loan associations.
no
"Currency outside banks" is again consistent in
concept 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 J~4 release and
the Federal Reserve Bulletin.
Time Deposits
Time deposits at commercial banks are roughly
the same in concept 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 "call report data" were used when available or Federal Reserve estimates were made for
those dates.
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 J-4 release
and are published in the Federal Reserve Bulletin,
with some subsequent adjustment of commercial
bank time deposits by the Federal Reserve.
Postal Saving System
Data are end-of-month totals for savings accounts,
obtained from the Post Office Department.
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 show par value and are partly estimated. They 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 show par value and are partly estimated. They 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. Figures
are as of the end of the month and are obtained from
the U.S. Treasury's survey of ownership of U.S.
Government securities.
31. 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 numbered 13,784 on November 30, 1966.
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 banks" series
has been increased by the addition of banks in
Alaska and Hawaii in January, April, and Angust,
1959, with an increase in total loans and investments
of approximately $650 million.
The series for "Weekly reporting member banks"
for which "business loans" are shown was revised
in July 1966. The revised series covers virtually all
member and nonmember commercial banks in the
U.S. with deposits over $100 million. There are
about 340 banks holding more than 61 percent of the
assets of all commercial banks (as of July 1966),
reporting in the revised series (see page 1137 of the
August 1966 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 1946 except those secured by real
estate or for the purpose of purchasing or carrying
securities arid 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 75 percent of business
loans at all commercial banks.
in
The series on bank debits outside New York City
covers debits to demand deposit accounts except interbank and U.S. Government accounts. Figures are
aggregates for approximately 1,700 reporting banks
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 4,800
nationally chartered banks ("National banks") plus
about 1,400 State chartered banks which have
chosen, and have been found eligible, to join the
Federal Reserve System. Member banks account
currently for about 82 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
has been 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 all 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 always as of
the last day of the month, and are estimated for those
years when call report data were not available for
December 31 (1962 and 1963). The same is true of
final June figures except that last Wednesday data
were used in years when June 30 call report data
were not available. 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.
* There have been no member mutual savings banks since 1962.
Loans and Investments at All Commercial Banks, 1948-66
(Monthly data.
Seasonally adjusted)
BILLIONS OF DOLLARS
300
INVESTMENTS IN U.S. GOVERNMENT SECURITIES
50
OTHER SECURITIES^
• I,,,!,..!,,,!,,,!,,
1948
1949 1950 1951 1952 1953
1954
1955
SOURCE OF DATA. BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
112
1956
1957 1958 1959 1960 1961 1962
1963 1964
1965
1966
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 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 18 percent of
commercial bank credit, on the basis of the relationTABLE
31.—Bank Loans, Investments, Debits, and Reserves, 1948-66
All commercial banks
(seasonally adjusted data)
End of period
ship 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 June estimates are
later replaced by "benchmark" figures, if available,
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
Investments
Total Loans,
loans excluding
and
Other
interinvest- bank 1 U.S. Gov- securiernment
ments 1
securities
ties 1
Weekly
reporting
large commercial
banks 2
Business
loans 3
All member banks 2 5
Bank
debits
outside
New York
City (232
SMSA's) 4
Borrowings at
Excess Federal
Free
reserves Reserve reserves
Banks
Total
reserves
Billions of dollars
Millions of dollars
1948
1949
113. 0
118. 7
41.5
42.0
62.3
66.4
9 2
.
10. 3
15.6
13.9
784
760
1950
1951
1952
1953
1954
124. 7
130: 2
139. 1
143. 1
153. 1
51. 1
56.5
62.8
66.2
69. 1
61. 1
60.4
62. 2
62.2
67.6
12. 4
13. 4
14. 2
14. 7
16. 4
17.9
21.6
23. 4
23.4
22.4
871
998
1,045
1, 126
1, 148
1955
1956
1957
1958
1959
157. 6
161. 6
166. 4
181. 2
185. 9
80.6
88. 1
91.5
95.6
107.5
60.3
57.2
56.9
65. 1
57.9
16. 8
16. 3
17. 9
20. 5
20. 5
26.7
30.8
31.8
31.7
30.7
1,277
1,385
1,468
1,481
1,656
1960
1961
1962
1963
1964
194. 5
209. 6
227. 9
246. 2
267. 2
113.8
120. 5
134. 1
149.7
167.4
59.8
65. 2
64.5
61.5
61. 1
20. 8
23. 9
29. 2
35. 0
38. 7
32.2
32.9
35.2
38.8
42. 1
1965
1966 (preliminary).
294. 4
310. 7
192. 0
208.2
57.7
54.3
44. 8
48. 3
50. 6
60.6
3
3
3
3
3
797
803
134
118
663
685
391
310
180
920
279
240
535
420
899
932
283
118
040
746
609
1,027
826
723
693
703
142
657
1,593
441
246
885
169
-870
252
457
594
652
577
516
482
$39
688
710
557
906
-245
-36
-133
-41
-424
1,736
1,832
2, 021
2, 199
2,706
17,
20,
21,
19,
19,
19,
19,
19,
18,
18,
19,
20,
20,
20,
21,
756
568
572
536
411
87
149
304
327
243
669
419
268
209
168
3,013
3,421
22, 719
23, 830
452
392
454
557
-2
-165
19, 990
16, 291
1
Effective June 9,1966, about $1.1 billion of balances accumulated for payment of personal loans were deducted from loans as a result of a change in Federal Reserve
regulations. Beginning June 30,1966, Commodity Credit Corporation certificates of interest and Export-Import Bank portfolio fund participation certificates totaling
an estimated $1 billion are included in "Other securities" rather than "Loans."
2
Member banks are all national banks and those State banks which have taken membership in the Federal Reserve System.
3
Commercial and industrial loans and prior to 1956 agricultural loans. Series revised beginning October 1955, July 1958, July 1959, April 1961, and July 1965.
4
Debits during period to demand deposit accounts except interbank and U.S. Government. Prior to 1955, relates to 344 centers outside New York City, between
1956 and 1963, to 343 centers, and beginning 1964, to 232 (new series) SMSA's (Standard Metropolitan Statistical Areas). For description of series, see Federal Reserve
Bulletin for March 1965, pp. 390-93.
5
Data are daily averages for December.
NOTE.—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.
113
for the relatively few uninsured banks. Interim
monthly estimates are revised semiannually to bring
them into line with the "call report7' benchmarks.
The debits series is a simple aggregate of the reports of reporting banks. Monthly data are seasonally 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 class
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
published 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
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 in 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.
114
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 the last
Wednesday of the month in a Federal Reserve
release J.4, 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 and
explanatory technical footnotes are presented in
Banking and Monetary Statistics. A Supplement to
Banking and Monetary Statistics, Section 1 Banks
and the Monetary System, published in 1962, contains
a tabulation of recent data.
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 June 1961 and August
1966 issues of the Federal Reserve Bulletin. Revisions in the bank debit and deposit turnover
series are discussed in the March 1965 issue 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. A Supplement to Banking and Monetary Statistics, Section 10,
Member Bank Reserves and Related Items, published
in 1962, contains a tabulation of recent data.
Banking and Monetary Statistics, published by the
Federal Reserve Board in 1943, contains technical
discussions of the general banking series, the weekly
reporting member bank series, and the data on reserves. Historical Statistics oj the United States,
Colonial Times to 1957 presents earlier banking
series, in part back to 1834.
32. CONSUMER AND REAL ESTATE CREDIT
DESCRIPTION OF SERIES
"Consumer credit" is defined as short- and intermediate-term 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 are made in total and for major types
of credit. They exclude home mortgage credit, which
is shown separately for one-to-four family homes in
the last column on the accompanying table.
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.
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
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 debt owed to financial institutions for repair and modernization of owner-occupied
home; 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 heating-oil accounts); single-payment loans;
and service credit extended by a variety of creditors
including hospitals, doctors, utilities, and service
establishments.
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.
115
nual or more frequent reports with complete coverage, and for others by occasional special surveys.
The several series are aggregates of separate esti- For example, a benchmark survey of sales and conmates of credit held (or extended and repaid) by sumer finance companies (or finance companies) was
various types of creditors—financial institutions, re- held as of June, 1965, to update the benchmark
tail and service establishments, and others. The derived from similar surveys in 1955 and 1960.
procedures vary but in general involve estimates Estimates of service credit vary but in general are
based on a benchmark and moved by monthly sam- based on less substantial data. The largest comple data. The 1948 Census of Business and subse- ponent, medical debt, is based on periodic data colquent annual surveys provide benchmarks for credit lected in a sample survey of consumers and an
held by the various retail lines. For the more im- estimated seasonal pattern. On the other hand,
portant credit-granting lines there are monthly and virtually complete reports on certain utility receivannual sample data on receivables. For some lines ables are available monthly or semiannually.
monthly receivables are estimated on the basis of
Estimates of instalment credit extended and reweighted sales adjusted annually to survey bench- paid are derived from currently reporting samples of
mark data. Monthly data on receivables are avail- lending and instalment-selling groups covering either
able from reporting samples of financial institutions collections or credit extended. These data are
engaged in consumer lending. Benchmarks for credit shown currently on a monthly basis by type of
outstanding are provided for certain holders by an- credit and major holder group. The imputed facSTATISTICAL PROCEDURES
Consumer Credit Outstanding, 1947-66
(Short- and intermediate-term.
End-of-month data)
BILLIONS OF DOLLARS
100
30
—
NONINSTALMENT CREDIT
1947
1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964
SOURCE OF DATA BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
16
1
1965
TABLE
32.—Consumer and Real Estate Credit, 1929-66
[Billions of dollars]
Consumer instalment credit extended
and repaid
Consumer credit outstanding *
Instalmem
Year
Total
Total 2
Automobile
paper
3.5
1.4
0.6
1.0
.7
.4
.6
.5
1929
7.1
1930
1931
1932
1933.
1934_
6.4
5.3
3.0
2.5
4.0
3.9
4.2
1.7
1.7
2.0
5.2
6.4
6.9
1935__ _
1936
1937
1938
1939.
1940
1941
1942_
1943
1944_
1945
1946_
1947 1948
1949
Personal
loans
Noninstalment3
(4)
3.3
2.9
.5
.6
.5
.4
.5
2.4
2.2
2.2
2.8
3.7
4.1
1.0
1.4
1.5
2.4
2.6
3.7
.6
.7
.9
.9
2.7
1.1
2.7
2.8
Mortgage
debt on
l-to4family
homes 1
Automobile
paper
Total
Extended
Repaid
(4)
(4)
w
((44))
(4)
?!4
((4))
Extended
18.9
4
«
4
()
(4)
(4)
4
(4)
(4)
?!4
((4))
?!4
((4))
()
Repaid
()
w
((44))
(4)
18.9
18.1
16.7
15.4
15.6
?!4
(
(*))
15.4
15.4
15. 5
15.8
16.3
7.2
4.5
1.1
1.5
_
8.3
9.2
6.0
4.9
5.1
5.5
6.1
3.2
2.1
2.2
2.1
2.5
.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
5.7
2.5
.5
1.0
3.2
5.4
5.1
4.2
1.0
1.5
4.2
8.5
6.7
9.0
11.6
1.9
3.0
4.6
1.9
2.2
2.4
4.9
12.7
15.6
18.1
6.8
_
8.4
11.6
14.4
17.4
10.2
13.3
15.5
3.7
5.2
7.0
2.7
4. 1
21. 5
22 7
27. 5
31.4
32. 5
14. 7
15. 3
19. 4
23.0
23.6
6. 1
6. 0
21. 6
23. 6
29.5
31.6
31. 1
18. 4
23. 0
25. 4
28.0
30.5
8.5
7. 7
9.8
9.8
2. 8
3. 4
4. 1
4.8
5. 4
9. 0
11. 8
13.0
11.8
7. 0
9. 1
10. 0
10.9
11. 8
45.
51.
58.
66.
38. 8
42. 3
45. 0
45. 1
51. 5
28. 9
31.7
33. 9
33. 6
39. 2
13.5
14.4
15. 3
14. 2
16.4
6. 1
6.8
33. 6
37.1
39. 9
40. 3
42. 6
16.7
15.5
16. 5
14. 2
17. 8
13. 1
14.6
15 5
9.4
10.6
11. 1
11. 5
12.3
39.0
39.9
42. 0
40. 1
48. 1
15. 4
15. 6
88. 2
99.0
107 6
117. 7
130. 9
56. 0
57.7
63. 2
70.5
78. 4
42. 8
43.5
48. 0
54. 2
60. 5
17. 7
17.2
19. 5
22.4
25. 2
10. 5
11.3
12. 6
14.5
16. 2
13. 2
14. 2
15. 1
16.3
17. 9
49. 6
48. 4
55. 1
61.3
67. 5
46. 0
47.7
50. 6
55.2
61. 1
17. 7
16. 0
19. 8
22. 3
24. 4
16. 4
16. 5
17. 5
19. 4
21 7
141. 3
153. 1
166. 5
182. 2
197. 6
87. 9
94. 8
68. 6
74.7
28.8
31.0
18.4
20.1
19.3
20. 1
75.5
78.9
67. 5
72.8
27. 9
28.5
24. 3
26.4
213.7
225.4
6.4
1950
1951
1952_
1953
1954
.
__
___
_.
19551956
1957
1958.
1959
1960
1961. _ _ _
1962
1963
- _1964
_ _ _
1965
1966
7. 1
6
8.
5.5
5.8
6.8
7.4
8. 1
8.4
8.9
9.9
2.5
3.4
2.7
1.1
.9
17.4
18.4
18.2
17.8
17.9
1.0
.9
2.0
1.4
18.6
23.0
28.2
33.3
37.6
3.1
3.8
1.0
.8
.9
5.4
2
7
5
1
75. 7
1 End of period, unadjusted.
Also includes other consumer goods paper, and repair and modernization loans, not shown separately.
Consists of single-payment loans, charge accounts, and service credit.
4
Not available.
NOTE.—Data for Alaska and Hawaii included beginning January and August 1959, respectively.
Source: Board of Governors of the Federal Reserve System and Federal Home Loan Bank Board.
2
3
117
tors for seasonal and trading day adjustment of
total instalment credit for the 12 months of 1965
are as follows:
Credit extended Credit repaid
January
February
March
April
May
June
July
August
September
October
November
December
85
84
102
105
101
110
102
102
95
97
101
116
97
93
107
101
97
103
100
99
98
98
102
105
Supplement to Banking and Monetary Statistics,
1965. Back figures are shown in the Supplement and
in the Federal Reserve Bulletin for May 1966. Consumer credit estimates appear originally in several
monthly Federal Reserve releases of which the basic
one is "Consumer Credit G-19." Current data
with selected historical data appear in detail in
monthly issues of the Bulletin supplemented by
periodic revisions.
Mortgage Debt Outstanding on Nonfarm
One-to-Four Family Properties
Estimates of mortgage debt on one-to-four family
nonfarm homes are available for the end of each
The series shown here are selected from a more year since 1925. The present series of quarterly
comprehensive body of consumer credit data pre- estimates, dating from the first quarter of 1949, are
pared by Federal Reserve, showing consumer credit prepared by the Federal Home Loan Bank Board in
outstanding by major types in greater detail; instal- cooperation with the Federal Reserve Board. Quarment credit outstanding by type of holder; and sup- terly estimates from 1949 to 1957 are available from
plementary tabulations of instalment credit of com- the Federal Reserve Board.
The major holders of mortgage debt are the saving
mercial banks, sales finance companies, and other
financial institutions, and of noninstalment credit and loan associations, commercial banks, mutual savby type of holder. Instalment credit extended and ings banks, and insurance companies. Estimates
repaid for major types, with changes in outstand- of the volume of mortgage debt held by these instiing credit, are shown on both an adjusted and an tutions rest on firm data, although the proportion
unadjusted basis. Related series may also be found of debt on one-to-four family properties to debt on
as components of the separate statistics published all residential properties is not a matter of record in
most cases and must be imputed from related
for banks, and other financial institutions.
information.
USES AND LIMITATIONS
Data on mortgage holdings by savings and loan
associations are compiled from reports of the associThe widespread interest in consumer credit is due ations to the FHLBB or to State supervisory authorin part to its importance as a source of consumer ities' mortgage holdings of life insurance companies
purchasing power and especially its significance in (which include all legal reserve companies) are based
the market for consumer goods frequently bought on direct reports from such companies to the FHLBB
on the instalment plan. In part it is due to the and the Institute of Life Insurance. Home mortgage
fact that consumer credit reflects one aspect of the debt held by commercial banks (including nondeposit
financial position of consumers. Consumer credit trust companies) are estimated by the Federal Reis also an important element in the demand for serve Board from related call report figures compiled
funds in the financial community.
by the Federal Reserve Board, the Federal Deposit
Because of the difficulty of adapting available data Insurance Corporation and the Comptroller of the
to the precise definition of consumer credit adopted, Currency. Estimates for mutual savings banks are
Federal Reserve faces problems of both over- and complied from FDIC call reports.
under-coverage, the net effect of which is probably
The mortgage debt series also covers holdings
some understatement of the true total of consumer recorded by the various Government agencies,
credit outstanding.
including the Federal National Mortgage Association, the Federal Housing Administration, the
REFERENCES
Veterans Administration, and the Home Owners'
General discussion of concepts and sources and Loan Corporation (for the period 1935-50).
The volume of mortgages held by real estate and
estimating techniques appear in a Federal Reserve
pamphlet "Consumer Credit7', Section 16 (new) of mortgage companies trust departments of commerRELATION TO OTHER SERIES
118
cial banks, pension funds, philanthropic institutions,
fraternal organizations, casualty and fire insurance
companies and 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 esti-
33.
mates of nonfarm mortgage recordings and 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.
BOND YIELDS AND INTEREST RATES
3-Month Treasury Bills
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 closest in
maturity to 3 months.
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.
Taxable Bonds
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 July 1964
was composed of six issues. On the same date, the
Bond Yields and Interest Rates, 1947-66
(Monthly data.
Percent per annum)
PERCENT
6,
CORPORATE AAA BONDS
(MOODY'S)
.TAXABLE GOVERNMENT BONDS
J
"hTrfF
'
i
PRIME COMMERCIAL
/ TREASURY BILLS
1947
1948 1949
1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965
SOURCE! MOODY'S INVESTORS SERVICE, BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, AND TREASURY
DEPARTMENT
119
1966
series on long-term bonds comprised twelve 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. Prior to April 1953 the
yields were computed on the basis of the mean of
closing bid and ask quotations. Table 33 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.
High-Grade Municipal Bonds
This series, compiled by Standard & Poor's
Corporation, is an arithmetic average of the yield to
maturity of 15 high-grade tax-exempt, general obligation domestic municipal bonds, each with approximately 20 years to maturity. The issues are selected
on the basis of quality, trading activity, and geographic representation. The bonds vary in quality,
however, as is indicated by the fact that the yield
sometimes exceeds that of U.S. taxable bonds.
The yields are based on Wednesday's closing bid
quotation, and the monthly figures are averages of
the four or five weekly figures for the month. Prior
to 1929 the monthly figures were based on an average
of the high and low prices for the month. The series
is available from 1929 on a weekly, and from 1900
on a monthly basis.
The series is published weekly in Standard &
Poor's Outlook and Bond Outlook. Monthly and
annual average figures back to 1900 and a descrip-
120
tion of the series and list of the issues used appear
in the 1964 edition of Standard & Poor's Security
Price Index Record.
Corporate Aaa and Baa Bonds
These series measure the currently prevailing
maturity yields on seasoned long-term corporate
bonds of the highest quality and of "lower medium
grade", as reflected in the yields of selected bonds
rated Aaa and Baa by Moody's Investors Service.
The series shown here are 2 of a group of similar series
computed by Moody's covering bonds classified by 4
rating groups (Aaa, Aa, A, Baa) and by 3 industrial
groups. The formula for these series was established
in 1928 to include for each rating 10 industrial, 10
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 7 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 the
dealers' asked quotation, adjusted as necessary for
occasional abnormally wide spreads between the bid
and asked quotation or for other temporarily distorting factors. 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 unweighted average of the 3 industrial-group averages.
Issues included in each average are selected to
represent typical long-term bonds in each rating
group. Occasional substitutions in the bond list
have been made when ratings have been changed,
when a bond has been called or sells too high above
its call price, or because of approaching maturity.
Suitable adjustments (usually small), which are
gradually amortized, are introduced to prevent such
substitutions from impairing the comparability of
the series.
These series are useful general indicators of the
level and movement of average yields of selected
seasoned bonds of the respective grades with suffi-
TABLE
33.—Bond Yields and Interest Rates, 1929-66
[Percent per annum]
Year
U.S. Government security yields High-grade
municipal
bonds
3-month
3-5 year
Taxable (Standard
& Poor's)
Treasury
issues2
bonds 3
bills *
Corporate bonds
(Moody's)
Aaa
Baa
Prime com- FHA new
mercial
home
paper, 4-6 mortgage
months
yields 4
4.27
1929.
4.73
5.90
5.85
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
19301931_
1932_
1933_
1934_
1.402
.879
.515
.256
2.66
2. 12
4.07
4.01
4.65
4.71
4.03
1935_
1936.
1937.
1938.
1939_
. 137
. 143
.447
.053
.023
1.29
1. 11
1. 40
.83
.59
3.40
3.07
3. 10
2.91
2.76
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
1940.
1941.
1942_
1943_
1944-
.014
. 103
.326
.373
.375
.50
.73
1.46
1.34
1.33
2.46
2.47
2.48
2.50
2. 10
2.36
2.06
1. 86
2.84
2.77
2.83
2.73
2.72
4.75
4.33
4.28
3.91
3.61
.56
.53
.66
.69
.73
19451946.
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
1.67
1.64
2. 01
2.40
2. 21
2.62
2.53
2.61
2.82
2.66
3.29
3.05
3.24
3.47
3.42
.75
.81
1.03
1. 44
1.49
4.34
195019511952.
19531954_
1.218
1.552
1.766
1.931
.953
1.50
1.93
2. 13
2.56
1.82
2.32
2.57
2.68
2.94
2.55
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. 15
4.23
4.30
4.65
4.60
1955.
1956.
1957.
19581959.
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
4.65
4.80
5.44
5.49
5.77
1960.
1961_
1962_
1963.
1964_
2.928
2. 378
2.778
3. 157
3.549
3.99
3.60
3.57
3.72
4. 06
4.02
3.90
3.95
4.00
4.15
3.73
3. 46
3. 18
3.23
3. 22
4.41
4.35
4. 33
4. 26
4.40
5.19
5.08
5.02
4.86
4.83
3.85
2.97
3.26
3.55
3.97
6. 16
5.78
5.60
5.46
5.45
1965.
1966.
3.954
4.881
4.22
5. 16
4.21
4. 65
3.27
3.82
4.49
5. 13
4.87
5.67
4.38
5.55
5.46
6.29
73
02
1
2
Rate on new issues within period.
Selected note and bond issues. Prior to 1941 these were tax-exempt issues.
3 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, bonds due or callable after 15 years.
4
Based on the maximum permissible interest rate (5K% since May 1961). Beginning 1962,30-year mortgages paid in 15 years and prior to 1962, 25-year mortgages £aid in 12 years.
5
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.
ciently long maturities and other features to afford
adequate measures of long-term interest rates. They
are not a measure of average yields of all Aaa or all
Baa bonds available to the investor, particularly
those on new offerings; nor do they reflect changes in
qualitative terms of borrowing such as call provisions.
The daily corporate bond yield averages are published weekly in Moody's Bond Survey, which includes from time to time the list of bonds. Historical
monthly data and annual averages for these two
series are available back to 1919, and are published
in Moody's Industrial Manual.
121
Prime Commercial Paper
Mortgages in this series carry FHA's maximum permissible interest rate, and, until 1961, a maturity of
This series measures the prevailing rate on prime
25 years, and the assumption is made that they will
4 to 6 months' commercial paper. It is useful as a
be prepaid at the end of 12 years. From 1962 the
measure of the cost of open-market short-term credit
series is based on 30-year mortgages that will be
available to large business borrowers of the highest
prepaid at the end of 15 years. Data on prices per
credit standing.
$100 of mortgage loan amount are based on FHA
The prevailing daily selling quotation is deterfield office opinion reports on transactions in market
mined by the Federal Reserve Bank of New York on
areas of insuring office cities as of the first of each
the basis of information obtained through continuing
month.
contacts with New York City dealers handling the
Transactions are for immediate delivery of home
bulk of the volume of commercial paper of the
mortgages in the secondary market and exclude
inventory type, and less frequent reports concerning
seasoned mortgages or deliveries to Federal National
rates outside New York. Monthly and weekly
Mortgage Association. Average prices are net after
figures are averages of daily prevailing rates.
discounts, commitment fees, or other charges.
Annual, monthly, and weekly figures for the period
Price quotations prior to January 1956 represent
since 1963 are available in the Federal Reserve Bultypical transactions; for the more recent period, they
letin, and the most recent data are shown in the
represent new-home mortgages with a 10 percent
advance Federal Reserve monthly release, G. 13.
downpayment and a 25-year maturity through 1961,
Annual and monthly data, 1890-1941, and weekly
and with minimum downpayments and a 30-year
data, 1919-41, may be found in Banking and Monematurity thereafter. Prior to March 1956, the
tary Statistics, and monthly data, 1941-63, may be
national average prices were unweighted; subfound in Section 12 of Supplement to Banking and
sequently, data have been weighted to reflect the
Monetary Statistics.
probable volume of transactions in the various
insuring office areas. After a regulatory change in
FHA New Home Mortgage Yields
FHA's maximum permissible interest rate, generally
Yields on mortgages on new homes insured by the a lapse of about two months is required before a
Federal Housing Administration are computed from national average price can be computed on a firm
a national average of secondary market prices. basis for mortgages bearing the new interest rate.
34. COMMON STOCK PRICES, YIELDS, AND EARNINGS
Price Indexes
tion into capital goods and consumers' goods groups),
railroads, and public utilities.
The Standard and Poor's composite price index
The index measures fluctuations in current market
measures the average price movement of a sample of
values of the sample. Each component stock is
common stocks listed on the New York Stock
Exchange. The sample, selected from the more weighted according to the number of shares outactively traded shares, currently includes 500 stocks, standing at the time of observations. Appropriate
accounting for about 85% of the total market value adjustments in these weights and/or base period
of all common stocks listed on the Exchange. The values are made on the occasion of stock dividends,
base of the index is the aggregate value of the shares splits, consolidations or similar events, to insure
of these securities in the period 1941—43, considered that the index will reflect only price movement.
The Standard & Poor's Corporation also provides
as equal to 10. Weekly figures shown in the monthly
Economic Indicators are averages of daily figures readings of the composite 500-stock index and of the
(except that for the capital and consumer goods three main sub-categories hourly, with closing and
series Wednesday figures are used). Monthly figures high and low values for the day.
are averages of daily figures, and annual figures are
It should be noted that this series covers active
averages of the twelve monthly indexes.
listed stocks on the New York Stock Exchange only,
The index is shown in Economic Indicators for three and may not reflect price movements on other exmain subgroups: industrials (with further classifica- changes or in over-the-counter issues.
122
TABLE
34.—Common Stock Prices, Yields, and Earnings, 1929-66
Price index 1
Industrials
Period
Total
Total
Capital
goods
Consumers'
goods
Public
utilities
Railroads
Dividend
yield 2
(percent)
Price/
earnings
ratios 3
1941-43=10
1929.
26.02
21.35
21. 48
22.49
59.33
46. 15
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
16.24
8.81
3.99
6.33
7.62
15.67
11. 41
6. 19
8.27
9.85
53.24
37. 18
20.65
19.72
15. 79
39.62
23.72
8.75
12.75
14.05
4.51
6. 15
7.43
4.21
3.72
15.81
13.31
16.80
22.95
19.39
1935
1936
1937
1938
1939
10.60
15.47
15.41
11.49
12. 06
10. 13
14.69
14.97
11.39
11.77
8.91
13.96
15.34
11. 26
11.91
11. 18
14.90
13.81
10.77
11.88
15. 15
22.47
19.07
14. 17
16.34
11.78
17.71
16.86
9. 15
9.82
3.82
3.44
4.86
5. 18
4.05
14. 18
15. 44
12.38
18.38
13.80
1940
1941
1942
1943
1944
11.02
9.82
8.67
11. 50
12.47
10.69
9.72
8.78
11. 49
12.34
11.07
10.21
8.93
10.87
11.23
11.34
9.80
8.56
11.65
13.43
15.05
10.93
7.74
11.34
12. 81
9.41
9.39
8.81
11. 81
13. 4*7
5.59
6.82
7.24
4.93
4.86
10.24
8.26
8.80
12.84
13.66
1945.
1946.
1947.
1948
1949.
15.
17.
15.
15.
15.
16
08
17
53
23
14. 72
16.48
14. 85
15.34
15. 00
13.66
15.86
14.27
14. 67
14. 14
16.46
19. 22
16.38
15.75
15.76
18. 40
22.34
24. 50
24. 73
29. 69
18.33
22. 68
24. 78
24.84
30.25
18.97
20.99
21. 40
21. 91
24.85
4. 17
3.85
4.93
5. 54
6. 59
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.
40. 49
46. 62
44.38
46. 24
57. 38
42. 40
49. 80
47. 63
49.36
61. 45
18. 07
22. 54
23. 04
23. 46
29. 93
42. 55
48.79
47. 01
47.93
63. 93
18. 21
19. 09
14. 02
15.27
12.83
15. 53
19.91
22. 49
22. 60
23.96
16. 33
17. 69
9.36
6.90
6. 64
1950
1951
1952
1953
1954
16.84
20.76
18. 01
16. 77
17.87
19.96
20. 59
22. 86
24. 03
27. 57
32. 28
34.55
32.48
36.33
47. 35
31.37
32. 25
32. 19
37. 22
44. 15
32.94
33. 65
28. 11
27. 05
35.09
4. 08
4. 09
4.35
3.97
3.23
11.
14.
12.
16.
17.
50
05
89
64
05
1960.
1961.
1962.
1963.
1964.
55. 85
66. 27
62. 38
69. 87
81.37
59. 43
69.99
65. 54
73.39
86. 19
59. 75
67. 33
58. 15
63.30
76. 34
47. 21
57.01
54. 96
62. 28
73.84
46. 86
60. 20
59. 16
64.99
69.91
30. 31
32.83
30. 56
37. 58
45. 46
3.47
2.98
3.37
3. 17
3. 01
17.
21.
16.
17.
18.
09
06
68
62
08
1965.
1966.
88. 17
85. 26
93.48
91. 09
85. 26
84. 78
81.94
74. 00
76. 08
68. 21
46. 78
46.34
3. 00
3. 40
17. 08
14.92
1
2
Includes 500 common stocks, 425 are industrials; 55 are public utilities; and 20 are railroads.
Aggregate cash dividends (based on latest known annual rate) divided by the aggregate monthly market value of the stocks in the group. Annual yields are
averages of monthly data. Weekly data are Wednesday figures.
3
Ratio of price index for last day in quarter to quarterly earnings (seasonally adjusted annual rate). Annual ratios are averages of quarterly data.
Source: Standard & Poor's Corporation.
Price-Earnings Ratios a n d Dividend Yields
ings, adjusted for seasonal influences and converted
to an annual rate. Since 1935, annual data are
The price-earnings ratio compares the aggregate averages of the four quarterly ratios. Prior to that
value of the stocks in the index as of the last day of time, annual data were based on annual earnings and
the quarter with the latest available quarterly earn- end of year prices.
123
Dividend yield, or dividend-price ratio, is the ratio
Standard & Poor's Stock Price Indexes are privately
of the current annual rate of cash aggregate dividends published. Indexes for the main groups appear
to aggregate market value based on Wednesday clos- hourly and daily on the tickers of stock exchanges
ing prices. Monthly yield figures are averages of the and are also sent over the wires of news services,
four or five weekly figures. Annual data are averages of the 12 monthly figures.
124
FEDERAL FINANCE
35. FEDERAL ADMINISTRATIVE 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.
"Administrative budget receipts," as shown in the
table on page 127, represents 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.
"Administrative budget expenditures" covers Government-owned 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. The transfer of capital from the general fund to revolving
funds and its return are excluded; the transfer of
dividends from the revolving funds to the general
fund is also excluded. 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.
Administrative budget expenditures do not include
retirement of Government debt nor do they include
investments of Government enterprises in United
States securities.
"National defense," shown in the table, is a major
classification of budget expenditures which is currently used in the budget. It comprises: (1) Department of Defense military functions; (2) military
assistance to other nations; (3) development and
control of atomic energy; and (4) 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 borrow-
125
ing directly from the public or the utilization of
their net receipts to repay such borrowing; and
(4) changes in the amount of checks outstanding.
(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
STATISTICAL PROCEDURES
Federal expenditures as reported by the Census
Data on budget receipts and expenditures for include actual disbursements for interest rather than
actual past periods are derived for the most part interest accruals.
from accounting records rather than statistical esti4. Federal receipts and expenditures in the
mating procedures. Budget receipts and expendi- national income accounts and Federal revenues and
tures are published each month by the Treasury expenditures as reported by Census exclude loans,
Department in the Monthly Statement of Receipts and loan repayments, and related financial investments
Expenditures oj the United States Government.
from both receipts and expenditures.
5. The Federal sector of the national income acUnder a reporting procedure instituted in February
1954 (which also covers comparative data for part of counts excludes receipts and expenditures of the
fiscal 1953), budget expenditures are reported on the District of Columbia, the Federal Land Banks and
basis of checks issued or cash payments made by the Federal home loan banks.
6. Census figures record transactions of some
Government disbursing officers, except that since
June 1955, interest on the public debt has been public enterprises such as the Post Office on a gross
rather than a net basis—that is, postal receipts
reported on an accrual basis.
Data for fiscal 1952 and earlier were reported on a are counted as revenue rather than as an offset to
different basis under which receipt and expenditure expenditures.
totals were derived primarily from daily telegraphic (b) Timing
reports from Federal Reserve Banks reporting de7. Budget receipts as well as cash receipts are
posits and withdrawals clearing through the a-ccounts
by-and-large on a cash basis, whereas Federal receipts
of the Treasurer of the United States.
in the national income accounts record tax revenues
Data on the public debt are published in the mainly on an accrual basis.
Daily Statement of the United States Treasury (with
8. Budget expenditures are on a checks-issued
details at the end of each month) as well as in the basis whereas payments to the public and Treasury
Monthly Statement.
cash withdrawals are recorded on a checks-paid basis.
9. Budget expenditures are largely measured at
RELATION T O OTHER SERIES
the time of payment, whereas that portion of Federal
Budget receipts and expenditures are one of the expenditures in the national income accounts which
five major series dealing with Federal Government consists of purchases of goods and services is reported
income and outgo. The others are:
at the time of delivery.
1. Cash receipts from and payments to the public.
2. Cash deposits in and withdrawals from the
USES AND LIMITATIONS
Account of the Treasurer of the United States.
The main use for budget receipts and expenditures
3. Federal receipts and expenditures in the na- is as a guide to executive and legislative budget and
tional income accounts.
tax policy. Budget receipts and expenditures figure
4. Federal revenue and expenditures as reported
prominently in the annual budget process, involving
by the Bureau of the Census.
the projection of fund requirements by Government
The differences among these various measures are
agencies, and preparation of an integrated executive
mainly ones of coverage and timing. Significant
budget including estimates under both existing law
specific differences are:
and under proposed changes in laws and programs.
(a) Coverage
The administrative budget also is the vehicle for
1. All four of the other measures encompass, in congressional review and enactment of annual approaddition to budget amounts, the very sizable trans- priation bills, agency financial management, and it
also is a prime consideration in changes in tax legislaactions of Federal trust funds with the public.
2. Transactions of five Government-sponsored tion. Moreover, the relationship between the totals
enterprises not included in the budget are included of budget receipts and budget expenditures usually
126
TABLE
35.—Federal Administrative Budget Receipts and Expenditures, 1929-66
[Billions of dollars]
Net budget Bxpenditures
National defense; 1
Net budget
receipts
Fiscal year
Total
Department
of Defense,
militaryfunctions
Total
3.9
3.1
0.7
0.7
1930
1931 4
1932
1933
1934.
4.1
3.1
1.9
2.0
3.0
3.3
3.6
.7
.7
.7
.6
.5
.7
.7
.7
.6
.5
1935
1936
1937
1938.
1939-
3.7
4.0
5.0
6.5
8.4
7.7
.7
.9
.9
.7
:9
.9
5.6
6.8
1.0
1.0
1.1
1.1
1929-
1940
1941
19421943. .
1944
. _
.
_ _
5.1
4.6
6.6
8.8
9. 1
1.5
1.5
6.1
6.0
24.0
63.2
23.6
62.7
Public debt
(end of
period) 3
Military
assistance 2
(5)
0.7
16.9
(5)
.7
-.5
-2.7
-2.6
-3.6
16.2
16.8
19.5
22.5
27.7
-2.8
-4.4
-2.8
-1.2
32.8
38.5
41.1
42.0
45.9
-3.9
48.5
55.3
77.0
140.8
202 6
a!
(5)
5
W
(*) 0.4
-3.9
-6.2
7.1
12.5
21.9
43.6
_ .
^
1955
1956.
1957
1958
1959
98.3
60.3
38.9
33.0
39.5
81.3
43.2
14.4
11.8
12.9
42.0
13.8
10.9
11.6
47.5
61.3
64.7
64.4
36.4
39.5
44.0
65.3
74.1
67.5
13.0
22.5
44.0
50.4
47.0
11.9
19.8
38.9
43.6
40.3
60.2
67.8
70.6
68.6
1950
1951
1952
1953
1954
13.3
34.0
79.4
95.0
44.4
39.6
39.7
41.4
37.7
._
19451946
1947
1948
1949-
1960
1961.
1962
1963
1964
5.0
4.7
Budget
surplus or
deficit ( - )
64.4
66.2
69.0
71.4
80. 3
40.7
40.7
43.4
44.2
46.5
35.5
35.8
38.4
39. 1
41. 2
2.3
2.6
2.4
2.2
77.8
77.7
45.7
47.5
51. 1
52.8
54.2
41.2
43.2
46.8
48.3
49.8
1.6
81.4
86.4
89.5
76.5
81.5
87.8
92.6
97.7
1.4
1.4
1.7
1. 5
-3.9
— 6.4
-6.3
-8.2
286.5
289.2
298.6
306.5
312.5
93.1
104.7
96.5
107.0
50.2
57.7
46.2
54.4
1.2
1.0
-3.4
-2.3
317.9
320.4
67.9
_
-_ _
19651966
76.8
75.8
80.0
.5
.9
-21.5
-57.4
-51.4
1.2
1.1
.3
.3
-53.9
-20.7
.8
8.4
.4
-1.8
259.1
269.9
258.4
252.4
252.8
.1
-3. 1
257.4
255.3
259.2
266. 1
271.3
1.0
2.4
4.0
3.6
2. 3
3.5
-4.0
-9.4
-3. 1
-4.2
1.6
1.6
-2.8
— 12.4
1.2
274.4
272.8
270.6
276.4
284.8
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, also includes Coast Guard.
2
Expenditures for 1941 through 1946 represent the part of defense aid (lend-lease) classified as military.
3
Includes guaranteed securities held outside the Treasury. Not all of tot al shown is subject to statutory debt limitation.
< Beginning in 1932, total budget receipts and expenditures have been adjusted to exclude certain intragovernmental transactions.
5
Not av ilable.
* Less tnan $50 million.
serves as the major determinant of increases or
decreases in the public debt. Finally, since this
series is prepared in detail based on the Govern-
ment'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.
127
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
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 oj 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 3.12 in
The National Income and Product Accounts of the
United States, 1929-1965 (Statistical Tables) and
Part 6, Special Analysis A, "Three Measures of
Federal Financial Transactions/' in the Budget of the
United States Government for fiscal 1968.
36. FEDERAL CASH RECEIPTS FROM AND PAYMENTS TO THE PUBLIC
DESCRIPTION OF SERIES
This series, often referred to as the consolidated
cash statement, presents information on the cash
flows between the public and the Federal Government as a whole. It represents, 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 (on a net basis) of
deposit funds and 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.
128
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,
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. Keceipts of the Government from exercise of the monetary authority—
seigniorage on coinage—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 a cash payment.
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 - l l method to the two totah—
cash receipts and cash payments. Quarterly data
from 1947 to date are adjusted using this Univac
method, a variant of the Univac II method.
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 services are recorded to the
maximum extent possible on the basis of time of delivery rather than time of payment.
RELATION TO OTHER SERIES
3. Federal Government employer and employee
The major differences between "cash receipts and contributions to employee retirement funds are conexpenditures" and "budget receipts and expendi- sidered intragovernmental transactions and are detures" were enumerated above. The cash series are ducted from both receipts and payments in arriving
very similar in general concept to the series on Treas- at the consolidated cash totals, whereas in the naury cash deposits and withdrawals published in the tional income accounts, payments of both employers
Daily Statement of the United States Treasury. Both and employees are counted both as receipts ("conseries and the reconciliation between the two are tributions for social insurance") and expenditures
published monthly in the Treasury Bulletin.
("purchases of goods and services—compensation of
Cash Receipts From and Payments to the Public, 1947-66
(Quarterly data.
Seasonally adjusted)
BILLIONS OF DOLLARS
1947
1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963
1964 1965
SOURCE OF DATA BUREAU OF THE BUDGET
129
1966
TABLE
36.—Federal Cash Receipts From and Payments to the Public, 1929-66
[Billions of dollars]
Cash
receipts
from the
public
Year
Fiscal year:
1929
1930
1931
1932
1933
1934
1935
1936
1937
1938
1939
1940
1941
1942
1943 1
1944
1945
1946
1947
1948
1949
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
I960.. ___
3. 8
4. 0
3. 2
2. 0
2. 1
3. 1
3. 8
4. 2
5. 6
7. 0
6. 6
6. 9
9. 2
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
Cash
payments
to the
public
2. 9
3. 1
4. 1
4.8
4. 7
6. 4
6.3
7.6
8. 4
7. 2
9.4
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. 5
80. 0
83. 5
94. 8
94. 3
Excess of
receipts ( + )
or payments ( —)
Cash
receipts
from the
public
Year
Fiscal year—Continued
1961
+ 0. 8
1962
__
+. 9
1963_
-1. 0
1964
-2.7
-2. 6
1965
1966
-3.3
Calendar 2
year:
-2.4
1943
-3.5
1944
-2. 8
1945
-. 1
1946
-2.9
1947_
-2. 7
1948
-4.8
1949
._
-19. 4
1950
-53. 8
1951 _
-46. 1
1952
-45. 0
1953
-18. 2
1954
+ 6. 6
1955
+ 8.9
1956
+ 1. 0
1957
-2.2
1958
+ 7.6
1959._
(*)
-5. 3
-.2
-2. 7
+ 4. 5
+2. 1
-1.6
-13. 1
+.8
1960
1961
1962
1963._
1964__ _
1965
1966
__
Cash
Excess of
payments receipts ( + )
to the
or paypublic
ments (—)
97. 2
101.9
109. 7
115.5
119. 7
134. 5
99. 5
107. 7
113. 8
120.3
122. 4
137. 8
— 2. 3
— 5. 8
— 4. 0
-4.8
— 2. 7
— 3. 3
37. 9
48. 1
49. 4
41. 4
44. 3
44. 9
41. 3
42. 4
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. 7
83. 4
89. 0
95. 6
94. 7
104. 7
111. 9
117. 2
120. 3
127. 9
150. 9
-51. 1
— 46. 7
-36. 7
.1
59. 3
71. 3
70. 2
68. 6
71.4
80. 3
84. 5
81.7
87. 6
98. 3
97.9
106.2
112. 6
115. 0
123. 4
145. 1
+ 5. 7
+ 8. 0
-1. 3
+. 5
+ 1. 2
-. 6
— 7. 2
-1. 1
-. 7
+ 5. 6
+ 1. 1
-7.2
-8. 0
+3. 6
-6. 8
-5.7
-4. 6
-5. 2
-4. 5
-5. 7
1 Data forfiscalyears prior to 1944 are not exactly comparable with those for later years in that only major intragovemmental transactions have been eliminated
in the earlier years.
2 First calendar year for which data are available.
* Less than $50 million.
Sources: Treasury Department and Bureau of the Budget.
employees")- In Federal revenue and expenditure
as recorded by the Census, the Federal Government's
contribution as employer is deducted as an intragovemmental transaction (but not employee contributions).
.4. Transactions of public enterprises such as the
Post Office are recorded gross in the Census tabulation of Federal levenue 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 measure of the impact of
Federal financial transactions on the economy than
budget receipts and expenditures. Moreover, since
if furnishes comprehensive totals of cash transactions,
the consolidated cash series in valuable for determining Government financing and net borrowing require-
130
ments 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.
Colonial Times to 1957. 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 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 the 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 Monthly Statement of Receipts
and Expenditures of the United States Government and
in the Treasury Bulletin. The adjustments made in
the annual figures are listed in detail in a release of the
REFERENCES
Bureau of the Budget entitled "Receipts From and
Unadjusted monthly data on Federal cash receipts Payments To the Public, Supporting Tables and
from and payments to the public appear in the Supplementary Information." This release is issued
Monthly Statement of Receipts and Expenditures of the in conjunction with the annual publication of the
United States Government, Treasury Bulletin, and the Budget of the United States Government. A summary
Federal Reserve Bulletin, and quarterly data in reconciliation of the differences between this series
Economic Indicators and the Federal Reserve Bulletin. and the Treasury cash deposits and withdrawals
Seasonally adjusted quarterly data also appeal* in series is published monthly in the Treasury Bulletin
Economic Indicators and the Federal Reserve Bulletin. and annually in "Receipts From and Payments To
Annual data by fiscal years back to 1929 are p»ub- the Public, Supporting Tables and Supplementary
lished in the Historical Statistics of the United States, Information/'
37. FEDERAL BUDGET, NATIONAL INCOME ACCOUNTS BASIS
DESCRIPTION OF SERIES
This series reports Federal transactions as they
are recorded in the U.S. income and output accounts.
The Federal sector data are designed to measure the
purchases of current output by the Federal Government and the relationship of Federal receipts and
other Federal expenditures to national, personal, and
disposable personal income. (See descriptions of
these concepts in prior sections of this Supplement.)
The Federal sector is recorded in a manner consistent
with the conceptual treatment of the personal,
business, and State and local government sectors in
the national income and output accounts.
Federal purchases of goods and services are measured, insofar as is possible, on a delivery basis
rather than on an obligation, checks-issued, or payments basis. This timing of purchases corresponds
more closely to current production. Receipts, by
and large, are on an accrual basis. For example,
corporate profits taxes are included on an accrual
basis, rather than when collected. There may be
a substantial lag between the accrual of a liability
and its collection.
As shown in the table, expenditures in the Federal
sector account are presented in a 5-way classification:
Federal purchases of goods and services is the only
category of Federal spending which is included in the
gross national product (GNP). These purchases
represent the value of the Nation's output bought
directly by the Federal Government. They include
the pay of military and civilian employees of the
Federal Government, outlays on equipment and
supplies for defense and other programs, new construction, and the capital formation of Government
enterprises.
Transfer payments and net interest paid by the
Federal Government are outlays in return for which
no current service is deemed to be obtained; the
most important transfer payments include such items
as old-age and survivors' insurance benefits, medicare benefits, unemployment compensation, and
military and veterans pensions. Although such pay-
131
Federal Expenditures, National Income Accounts Bases, 1947-66
(Quarterly data.
Seasonally adjusted annual rates)
BILLIONS OF DOLLARS
150
1947
1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 I960
1961 1962 1963 1964 1965
1966
SOURCE OF DATA: DEPARTMENT OF COMMERCE
ments are not included in GNP, they do enter into and accrued by resident corporations on their corpothe income stream and have an impact on national rate earnings during the specific year or period; (3)
output; they are reflected in the GNP in another indirect business tax and nontax accruals primarily
sector of the accounts when spent by the recipients. include liquor, tobacco, and other excise taxes, and
Federal grants-in-aid to State and local governments, customs duties; (4) contributions for social insurance
like transfer payments and net interest paid, have are composed chiefly of employment taxes, contributheir impact on GNP when respent by the recipient tions to the retirement funds for Government emgovernmental unit. Most grants are for highways, ployees, <and deposits by the States to the unemployment trust fund.
public assistance, education, and public health.
Private incomes are also affected by Federal
STATISTICAL PROCEDURES
subsidies and by the net surplus of Government
Data for the Federal sector account are based on
enterprises in their operations with the public.
These subsidies less current surplus of Government the Budget of the United States Government, reports of
enterprises reflect mainly Government payments to various agencies (particularly the Internal Revenue
farmers, certain outlays for the export and disposal Service), and (unlike other records of Federal transof surplus agricultural commodities, shipping sub- actions) to an extent, on estimates made by the
sidies, and the current operating deficit of the Post Department of Commerce. Thus, the results are
Office and other Government enterprises.
to be regarded as statistical estimates, rather than
The receipts of the Federal sector account are as accounting totals in the ordinary sense.
Data are available quarterly and annually for both
shown in a 4-way classification: (1) Personal tax and
nontax receipts consist mostly of individual income the fiscal and calendar years. The quarterly figures
taxes, estate and gift taxes, and certain payments are published in seasonally adjusted as well as in
such as fines, and penalties; (2) corporate profits tax unadjusted form. Both expenditures and receipts
accruals represent the Federal tax liability incurred are seasonally adjusted by applying the adjustments
132
TABLE
37.-Federal Government Receipts and Expenditures in the National Income and Product Accounts,
1929-66
[Billions of dollars]
Expenditures
Receipts
--'
Year
Total
Personal
tax
and
nontax
receipts
Corporate
profits
tax
accruals
Indirect
business
tax
and
nontax
accruals
Transfer
payments
Contributions
for
social
insurance
Total
Purchases
of
goods
and
services
To
persons
To
foreigners
(net)
Grantsin-aid
to State
and
local
governments
Net
interest
paid
Subsidies
less
current
surplus
of
government
enterprises
-- - - ---'
Surplus
or
deficit
(-),
national
income
and
product
accounts
---
Calendar
year
1929 __
3. 8
1.3
1.2
1.2
.1
2. 6
1.3
.7
(*)
.1
.4
.1
1.2
1930 __
193L_
1932 __
1933 __
3.0
2.0
1.7
2. 7
3. 5
1. 1
.6
.3
.5
.6
.7
.4
.3
.5
.6
1.0
.9
.9
1.6
2.2
·
·
·
·
·
1
1
1
1
1
2.
4.
3.
4.
6.
8
2
2
0
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 __
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.
8.
7.
8.
8.
5
7
4
6
9
2.9
4. 9
4.7
5.4
5.1
.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
-3.6
-.4
-2.1
-2.2
1940 __ 8. 6
194L_ 15.4
1942 __ 22. 9
1943 __ 39.3
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. 0
20. 5
56.1
85. 8
95. 5
6.0
16.9
51.9
81. 1
89.0
1.4
1.4
1.4
1.2
1.8
(*)
(*)
.1
-.1
-.1
.9
.8
.9
.9
.9
.7
.8
1.0
1.7
2. 4
.9
.7
.8
.9
1.4
-1.3
-5.1
-33.1
-46.6
-54.5
1945 __ 42.5
1946 __ 39. 1
1947 __ 43.2
1948 __ 43.3
1 949 __
38.9
19.4
17.2
19.6
19.0
16. 1
10.2
8.6
10. 7
11.8
9.8
7. 1
7.8
7.8
8.0
8.0
5.8
5.5
5. 1
4.5
4.9
84.6
35.6
29.8
34.9
41. 3
74.2
17.2
12.5
16.5
20. 1
4.3
9.2
8.8
7.6
8.7
.4
2.2
1.9
3.8
5. 1
.9
1.1
1.7
2.0
2.2
3.3
4.2
4.2
4.3
4.4
1.5
1.6
.6
.7
.8
-42.1
3.5
13.4
8.4
-2.4
1950 __
1 95L_
1952 __
1953 __
195L_
49.9
64.0
67.2
70.0
63.8
18. 1
26. 1
31. 0
32.2
29.0
17.0
21. 5
18.5
19.5
17.0
8.9
9.4
10.3
10.9
9. 7
5.9
7. 1
7.4
7.4
8. 1
40.8
57.8
71.0
77.0
69.7
18.4
37.7
51. 8
57.0
47.4
10.8
8.5
8.8
9.5
11.5
3.6
3. 1
2. 1
2.0
1.8
2.3
2.5
2.6
2.8
2.9
4.5
4.7
4.7
4.9
5.0
1.2
1.3
1.0
.8
1.1
9. 1
6.2
-3.8
-7.0
-5.9
1955 __
1956 __
1957 __
1958 __
1959 __
72. 1
77.6
81. 6
78. 7
89.7
31. 4
35.2
37.4
36.8
39.9
20.6
20.6
20.2
18.0
22.5
10.7
11.2
11.8
11. 5
12.5
9.3
10.6
12.2
12.4
14.8
68.1
71. 9
79.6
88.9
91. 0
44. 1
45.6
49.5
53.6
53.7
12.4
13.4
15.7
19.5
20.1
2.0
1.9
1.8
1.8
1.8
3. 1
3.3
4.2
5.6
6.8
4.9
5.3
5.7
5.6
6.4
1.5
2.4
2.6
2.7
2.1
4.0
5.7
2. 1
-10.2
-1.2
1960 __
196L_
1962 __
1963 __
1964 __
96.5
98.3
106.4
114.5
115. 1
43.6
44.7
48.6
51. 5
48.6
21. 7
21. 8
22.7
24.6
26.5
13.5
13.6
14.6
15.3
16.2
17.7
18.2
20.5
23.1
23.9
93.0
102.1
110.3
113.9
118.1
53.5
57.4
63.4
64.2
65.2
21. 5
24.9
25.5
27.0
27.8
1.9
2. 1
2.2
2.2
2.2
6.5
7.2
8.0
9. 1
10.4
7. 1
6.6
7.2
7.7
8.3
2.5
3.8
4.0
3.6
4.2
3.5
-3.8
-3.8
.7
-3.0
1965 __ 124.9
1966 __ JI42.5
54.2
61. 9
29. 1
31. 7
16.8
15.9
24.8 123.4
33.0 142.2
66.8
76.9
30.3
34.2
2.2
2.3
11. 2
14.5
8.7
9.6
4.2
4.7
1.6
.3
1934 __
1936 __
1937 __
1938 __
1939 __
194L_ 41. 0
.1
(*)
(*)
See footnotes at end of table, p. 134.
133
TABLE
37. Federal Government Receipts and Expenditures in the National Income and Product Accounts,
1929-66—Continued
[Billions of dollars]
Receipts
Per-
i ear
Total
sonal •
tax
and
nonre—
ceipts
Corporate
profits
tax
accruals
Expenditures
Indirect
business
tax
and
nontax
accruals
Transfer
payments
• Contributions
for
social
insurance
PurTotal
chases
of
goods
and
services
Grantsin-aid
To
persons
To
foreigners
(net)
to State
and
local
governments
Net
in-
terest
paid
Subsidies
less
current
surplus
of
government
enterprises
Surplus
or
deficit
(—)>
national
income
and
product
accounts
Fiscal
year
1946 _
1947__
1948__
1949_.
38. 4
42. 7
43.6
40. 0
16. 9
18.8
20. 0
16.3
8. 3
10.6
11. 2
11. 0
7. 4
7.9
7. 9
8. 0
5. 8
5.5
4.6
4.8
55. 5
29.5
30. 9
39.6
40. 1
13. 0
13.2
19.3
8.3
8. 7
8. 1
1.8
2.6
5.0
0. 9
1.5
1.8
2. 1
3. 7
4. 2
4.2
4.3
2. 1
.7
.5
.8
-17. 1
13. 2
12.7
.4
1950._
1951
1952"
1953._
1954__
42. 0
60.8
65. 1
69.3
65.8
16. 5
23. 2
28.8
31. 4
30. 3
11.9
21.5
19.3
19. 7
17.3
8. 2
9.5
9.7
10. 7
10.4
5. 5
6. 6
7.3
7. 5
7.8
42.4
44. 6
66. 0
75. 8
74.2
19. 0
25. 1
46.6
56. 1
53.2
11.3
8. 1
8. 5
9.3
10. 5
4.3
3. 1
2.6
2. 1
1.7
2.4
2.4
2. 5
2.8
2.9
4. 4
4.6
4.8
4.8
5. 0
1. 0
1.3
1. 1
.9
1. 0
—. 5
16.2
-1. 0
-6.5
-8.5
1955__
1956_1957__
1958__
1959__
67.2
75. 8
80. 7
77. 9
85. 4
29. 7
33. 6
36.7
36.3
38.2
18. 7
21. 1
20. 6
17.8
21.5
10. 0
10.8
11. 7
11.6
11. 9
8.7
10. 2
11.7
12. 2
13.8
67.3
69.8
76. 0
83. 1
90. 9
43.9
45.2
47.7
50. 7
54.7
12. 1
12.8
14. 4
17. 8
19.8
2. 1
1.8
1.9
1.7
1.8
3. 0
3.2
3.7
4. 7
6. 2
4.9
5. 1
5. 5
5. 7
5.9
1.3
1.7
2.8
2.5
2. 4
-. 1
6.0
4.7
-5. 1
-5. 5
1960__
1961
1962"!
1963__
1964__
94.8
95.3
104.2
110. 2
115. 5
42.5
43. 6
47.3
49. 6
50.7
22.3
20.3
22. 9
23. 5
25.6
13.2
13. 3
14.2
15. 0
15.6
16.7 91.3
18. 1 98. 0
19.9 106.4
22. 1 111. 4
23. 6 116. 9
52.7
55.5
60. 9
63. 4
65.7
20.6
23.6
25. 1
26. 4
27.3
1.8
2. 1
2. 1
2. 1
2. 2
6.8
6.9
7.6
8. 4
9.8
7. 0
6.8
6. 8
7. 5
8. 1
2.3
3. 2
3.8
3. 6
3.8
3.5
-2. 7
-2. 1
-1. 2
-1. 4
1965__ 120. 6
1966__ 132.6
51. 3
57. 9
27. 8
30.7
16. 9
15.9
24.6 118.3
28. 1 132.3
64.3
71. 7
28. 2
32. 0
2.2
2. 3
10. 9
12. 9
8. 5
9. 1
4. 1
4. 5
2. 3
.3
NOTE.—These accounts, like the cash budget, include the transactions of the trust accounts. Unlike both the administrative budget and the cash statement, they
exclude certainfinancialtransactions. In general, they do not use the cash basis for transactions with business. Instead, corporate profits taxes are included in receipts on an accrual instead of a cash basis; expenditures are timed with the delivery instead of the payment for goods and services; and CCC guaranteed price-support
crop loansfinancedby banks are counted as expenditures when the loans are made, not when CCC redeems them.
Data for Alaska and Hawaii included beginning 1960.
•Less than $50 million.
Sources: Department of Commerce (Office of Business Economics) and Bureau of the Budget.
individually to their many components having
marked seasonal variation. The seasonally adjusted
total is the sum of the several separately adjusted
components. Many statistical adjustment techniques are used including the X-II seasonal adjustment program of the Bureau of the Oensus. The
deficit or surplus is not seasonally adjusted separately. The seasonally adjusted deficit or surplus
is the difference between seasonally adjusted receipts
and expenditures.
134
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 financial transactions.
With respect to coverage, the Federal sector account, unlike the administrative budget, includes
the trust and deposit funds. It omits the revenues
Federal Receipts, National Income Accounts Basis, 1947-66
(Quarterly data.
Seasonally adjusted annual rates)
BILLIONS OF DOLLARS
150
PERSONAL TAXES
~**~ 1RP0RATE PROFITS TAX ACCRUALS
I
l \ I >^ i
I
—t
I
1947
1948 1949 1950 1951
1952
I
1953
J-^r^-
T F ^ CONTRIBUTIONS TO SOCIAL INSURANCE
I
I
I
I
I
I
I
I
1954 1955
I
I
I
I
I
1956
I
I
I
I
I
I
I
I
I
1957 1958
I
I I
I
1959
I
!
I
I
I
I
1960 1961
1962
1963 1964 1965
1966
SOURCE OF DATA: DEPARTMENT OF COMMERCE
and expenditures of the District of Columbia, which
are classified by the Department of Commerce in
the State and local government sector. Also omitted
are the net expenditures of the Federal Home Loan
Banks and Federal Land Banks which are treated as
private enterprises in the national income accounts.
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
collections. The principal timing adjustments for
expenditures are: (1) The Federal sector account
records Federal purchases in terms of the delivery
of goods and services to the Government, whereas
cash payments for these deliveries may precede or
follow; and (2) interest on savings bonds and
Treasury bills is treated as an expenditure by the
Government when the interest is accrued, rather
than when it is actually paid out in cash.
The financial transactions which are included in
budget receipts and expenditures and cash receipts
and payments are excluded from the Federal sector.
These are primarily net lending through mortgages,
subscriptions to international institutions, and other
claims; net borrowing through certificates of interest
issued by various government agencies; and pur-
135
chases of foreign currency by the Commodity Credit
Corporation to facilitate exports of surplus agricultural commodities. (CCC pays dollars to exporters in exchange for foreign currencies received
for the exports.)
The Federal sector account differs from the cash
budget in several other respects. For instance, it
excludes purchases and sales of land, as not representing current production. On the other hand, it
includes the purchases, sales, grants, interest receipts,
etc. recoided in the government's foreign currency
accounts, whereas the cash budget refers only to
transactions in the dollar 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 on the money and
USES AND LIMITATIONS
credit markets of the economy. Consequently, in
evaluating the economic impact of Federal GovernEach of the three major series on Federal finance—
the administrative budget, consolidated cash, and the ment activities, there is no substitute for complete
Federal sector account—is useful for specific kinds of and detailed analysis of the Government program in
analysis, and the selection of which to use should be all its aspects.
determined by the problem at hand. The Federal
REFERENCES
sector account is especially suited for an analysis of
fiscal policy. It was specifically designed to comCurrent estimates by quarters on both seasonally
plement the data on private expenditures and unadjusted and adjusted bases are published reguincomes contained in the national income accounts. larly by the Department of Commerce in the Survey
The accounts, however, exclude a substantial volume oj Current Business. Revised estimates for previous
of financial transactions through which the Federal years are generally published in the July issue. For
Government significantly affects the capital and the latest historical time series see The National
credit markets. As a result, for purposes of analysis Income and Product Accounts oj the United States,
of the Federal impact on such markets, the consoli- 1929-1965, published as a supplement to the Survey
dated cash statement may be more useful than the of Current Business in 1966.
national income accounts.
O
136
@FedFRASER