SCB_101968

Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

OCTOBER 196S / VOLUME 48 NUMBER 10SUBVEY OF CURRENT BUSINESS

CONTENTS-

THE BUSINESS SITUATION

Summary 1

National Income and Product Tables 8The 1968 Automobile Model YearNear Record Output

and Sales 12Prices in 1968 14

State Personal Income in Mid-1968 17

ARTICLE

International Investment of the United States in 1967 19

CURRENT BUSINESS STATISTICS

General S1-S24

Industry S24-S40

Subject Index (Inside Back Cover)

U.S* Department of Commerce

C. R* Siriith / SecretaryWilliam H Chartener /Assistant Secretary

for Economic AffairsOffice of Business Economies

George Jaszi / DirectorMorris R. Goldman Louis J. Paradiso

Associate DirectorsMurray F, Foss / EditorLeo V. Barry* Jr. / Statistics EditorBilly Jo Hurley / Graphics

STAFF CONTRIBUTORS TO THIS ISSUE

Business Review and Features:Esther G. KittnerDavid R. Hull, Jr.Robert B. BretzfelderMarian B* Sacks

Article:Emil L. NelsonFrederick Cutler

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BUSINESS SITUATION

The advance in GNP slowed down alittle in the third quarter but the risewas still a substantial $18 billion, ac-cording to preliminary estimates. Itreflected a spurt in final sales that waspartly offset by a decrease in the rate ofinventory accumulation. The expansionin sales was dominated by a sharp risein consumer expenditures, which oc-curred in spite of the imposition of the10 percent surtax starting July. Duringthe quarter, retail sales rose in July andAugust but were little changed inSeptember.

DmIEING the summer quarter, theNation's output of goods and servicesrose $18 billion to reach a seasonallyadjusted annual rate of $871 billion.The production advance was smallerthan the large increases in the twopreceding quarters but the differencewas hardly striking. The third quarterrise reflected an upsurge in final sales$21 billionthat was especially pro-nounced for consumer buying, despitethe imposition of the 10 percent Federalsurtax on personal incomes starting inmid-July. According to estimates basedon incomplete source data, inventoriesrose less in the third quarter than inthe second; the reduction in inventoryinvestment thus partially offset therise in final sales.

Of the 2 percent gain in GNP, morethan 1 percent represented a rise inphysical volume and almost 1 percenta rise in prices. The physical volumeincrease, although not quite as largeas those in the first two quarters, con-tinued the very rapid advances thathave characterized 1968; physical vol-ume has increased nearly 4% percent

since the fourth quarter of 1967 oralmost 6 percent at an annual rate.The price rise was the fifth consecutivequarterly rise of approximately 1 per-cent, a reflection of both demand andwage pressures in an economy workingclose to full employment. Unemploy-ment in the third quarter was 3.6percent of the civilian labor force, thesame as in the first and second quartersand the lowest quarterly rate since1953. For married men, the rate wasa very low 1.6 percent.

Personal income and taxesPersonal income increased by a sub-

stantial $16 billion to a seasonallyadjusted annual rate of $694 billion-about the average of the increases inthe first and second quarters. Thesummer production rise brought asizable pickup in the demand for labor.Nonfarm establishments employed460,000 more workers in the thirdquarter than in the second; weeklyhours of work in private industry alsorose but not by much. With pressuresin labor markets unabated, rates ofpay continued their steady upwardtrend. Private payrolls advanced $7%billion over the quarter, about the sameas the average in the three precedingquarters. Government payrolls, withtheir largest rise for the year, were up$3% billion, partly the result of aFederal Government pay raise thatbecame effective in July. All othertypes of income increased over thequarter, most of them in line withrecent changes. Exceptions were trans-fer payments and farm income. Theformer rose $1% billion after twoquarterly gains of more than $2Kbillion that were due principally to

increases in social security benefits.Farm income rose more rapidly thanearlier in the year.

Personal taxes rose an unusual $9%billion in the third quarter, mainlybecause of the tax increase that wassigned into law on June 28. Federaltax receipts rose about $8% billion, ofwhich close to $5% billion reflectedthe effect of increased withholding

CHART 1

Third quarter GNP rose $18 billionBillion $ Change From Previous Quarter

30

20

10

GNP

An upsurge in final sales of $21 billion30

20

10

FINAL SALES

was partly offset by a decline in inventory investment

-10

-20

INVENTORY INVESTMENT

1966 1967 1968

Seasonally Adjusted at Annual RatesU.S. Department of Commerce, Office of Business Economics 68-10-1


SUEVEY OF CURRENT BUSINESS October 1968

rates on payrolls starting about mid-July, and about $% billion the effectof the tax surcharge on quarterlydeclarations made in September. Mostof the remainder was attributable tothe increased withholding of taxes atthe regular tax rates on the expandedlevel of wages and salaries.

Because of the sharp rise in taxes,disposable income rose only $6% bil-lionconsiderably less than the averagequarterly gain of $13% billion in thefirst half and below the average increaseof about $8% billion in 1967.

Large rise in consumptionDespite the small rise in disposable

income, there was little evidence that,for the quarter viewed as a whole, thetax increase had dampened the advancein consumer spending. Indeed, the $13%billion increase in consumption was thethird largest quarterly advance onrecord, exceeded only by the $17%billion rise in the first quarter of 1968and by a large rise in the secondquarter of 1950.

The largest percentage increase wasin durable goods and reflected gainsthat were pronounced for automobilesand parts and sizable for furniture andappliances. Third quarter sales of newdomestic-type cars were at an annualrate of 9 million units, up from 8.4 mil-lion in the second quarter. Importsrose 6 percent to an annual rate of 1million. (See pages 12-13 for a fullerdiscussion of the 1968 auto market.)

Sales of nondurables rose $4% billion,about the average of the large firstquarter advance and the small secondquarter gain. Higher spending for foodand clothing accounted for almost allof the rise. The rise in services$4)2billionwas about in line with therecent trend.

Decline in savingWith consumption rising much more

than income, personal saving declinedsharply and the personal saving ratefell to approximately 6 percent from7% percent in the second quarter. The6 percent figure was the average rateprevailing in 1964, 1965, and most of1966. However, the rate increased inthe fourth quarter of 1966 and re-

mained high for a year and a half at anaverage of about 7% percent.

It would be premature to concludethat the saving rate will remain at thethird quarter level and that the decisionof consumers to spend a larger fractionof their income will offset the expecteddampening influence of the tax rise. Ittakes some time for consumers to ad-just their spending to changed incomes,particularly in their purchases of dur-able goods, which are influenced notonly by current income but also by pastincome, among other things. For thosecategories of spending more dependenton current incomelike nondurables

Personal income rose $16 billionin the third quarter...

Billion $ Change From Previous Quarter

CHART 2

but the new tax law raised taxes sharply,10

-10

TAXES

and held down the gain in after-tax income

10 -

With consumption up more than incomePERSONAL CONSUMPTIONEXPENDITURES

the saving rate fell to about 6 percentPercent

10 - PERSONAL SAVING RATE

1966 1967 1968Seasonally Adjusted at Annual Rates

U.S. Department of Commerce, Office of Business Economics 68-10-2

it is worth noting that retail sales in non-durables goods stores, after rises in Julyand August, declined noticeably inSeptember, to judge from advanceestimates.Other final sales higher

Final sales other than consumptionrose $7% billion, a larger gain than theaverage quarterly increase in the pre-ceding year. Government purchases,nonresidential fixed investment, andnet exports all contributed to the rise,while housing outlays were unchanged.

National defense purchases, whichhad increased by more than $2 billionin each of the two preceding quarters,rose only $% billion in the July-Septem-ber period. A hike in military payrolls,due to the July pay raise, was partlyoffset by reductions in purchases of hardgoods and other items. On balance, thesmall rise in Federal nondefense pur-chases was also due to the Federal payraise. State and local government pur-chases continued their long term up-ward trend. Payrolls were up $1% bil-lion as a result of increased pay scalesand a rise in employment of 100,000.

Investment in nonresidential buildingand equipment increased by $3.2 billionin the third quarter after declining inthe second. According to the OBE-SEC survey, businessmen are planninga slight rise in outlays for the finalquarter of the year. Although cash flowhas been high, investment in 1968 hasbeen held down by the existence ofexcess plant capacity in key industries,notably manufacturing. In the secondquarter, for example, Federal Reservedata indicate that manufacturers wereoperating at less than 85 percent ofcapacity, well below the preferred ratesin the 92-94 percent range.

Housing expenditures leveled off inthe summer quarter. Although mone-tary policy was somewhat less restric-tive and credit conditions somewhateasier in the summer than in the spring,the spring tightening had an adverseeffect on homebuilders. Permits for newhousing units, after reaching a high inFebruary and March, fell almost 10percent over the next 2 months butleveled out in the summer. The sub-sequent decline in housing starts showedup in May and June; this decrease,however, was followed by a pickup in


October 1968 SURVEY OF CUEEENT BUSINESS

the summer months. Third quarterhousing expenditures, which principallyreflect starts in both the second and thethird quarters, were unchanged fromthe seconda development that tem-porarily halted the recovery in progresssince the beginning of 1967.

On the basis of data that are stillincomplete, both exports and imports ofgoods and services appear to haveimproved somewhat in the thirdquarter, with exports showing thelarger rise. Net exports rose to aseasonally adjusted annual rate of$2K billion, about $K billion more thanthe second quarter figure. So far thisyear, net exports have been running ata rate of $2 billion, well below the$5 billion rates of 1966 and 1967.

Decline in inventory investmentWith data for September not yet

available, it appears that third quarterinventory accumulation decreased to anannual rate of less than $8 billion, a $3billion decline from the second quarterrate. The reduction in accumulation,which showed up in durables and non-durables, was attributable to trade;manufacturers' stocks increased morein the third quarter than in the second.Both wholesale and retail stocks showedsizable gains in the spring quarter, whenthe advance in consumer buying sloweddown. With the third quarter upsurgein consumer spending, trade stockschanged little. The swing in auto stocks

was particularly large, from a sub-stantial accumulation to an equallylarge decumulation.September developments

Even though manufacturing activitywas sluggish, overall activity con-tinued to advance at the end of thequarter. With the steel industry stillreducing output in the wake of thelabor settlement and with auto pro-duction hampered by assembly lineproblems, industrial production inSeptember declined for the secondmonth in a row but much less than inAugust. However, auto producers havescheduled a record volume of assembliesfor October, and weekly figures suggestthat the decline in steel output isabout over.

The decline in industrial productionTable 1.Selected Measures of Economic

Activity: Change Over Previous Month(Seasonally adjusted)

Retail salesEmployment J

Unemploymentrate.*

Personal incomeWages and salaries..

Industrial production.Autos ... .Iron and steel

Wholesale pricesIndustrial com-

modities.

Unit

Percent.

Thous. ofpersons.

Percent

$BiL, annualrate.

$Bil., annualrate.

PercentPercent _ .Percent

Percent ...Percent

1968

July

1.11313.7

5.53.2

.1

.11.1

.4

.0

Aug.

1.01653.5

4.93.3

-1.0.7

22.4-.4

.1

Sept.*

-0.3123

3.6

4.53.1

-.3-3.0-6.0

.4

.3

*Data refer to actual rate, not change.1 Nonfarm establishments.

Preliminary.

resulted in employment cutbacks ofproduction workers in manufacturing7that partially offset employment gainsin nonmanufacturing. All told, nonfarmestablishments added about 125,000employees to their payrolls in Septem-ber. With hours of work and wage ratesalso increasing, wage and salary pay-ments advanced $3 billion (annualrate), not much different from the in-creases earlier in the quarter. Increasesin other income components, whichincluded advances in farm in.come andtransfer payments, added another $1.4billion to the income flow, for a rise of$4.5 billion in total personal income.This was a somewhat smaller rise thanoccurred in July and August, chieflybecause of a slower expansion in divi-dends and transfer payments.

According to advance reports, retailsales changed little from August toSeptember, with a decline in nondurablesales approximately offsetting a rise indurables. The increase in durablesreflected especially strong sales of newcars. Dealers' sales of new domestic-type automobiles were at a seasonallyadjusted annual rate of more than 9million units, as compared with 8.8million in August. Sales in the first 10days of October were maintained at thehigh September rate.

Preliminary estimates indicate thatwholesale prices of industrial commodi-ties rose considerably from August toSeptember after little change for severalmonths. Prices are discussed in greaterdetail on pages 14-16.


SUBVEY OF CUKBENT BUSINESS October 1968CHART 3

Third quarter GNP increased $18 billion, real GNP up 4-3/4 percent (annual rate) Employment and weekly hours rose in September-unemployment rate edged higher GNP deflator showed another sizable increase in 3rd quarter-wholesale prices increased in September after August decline

TOTAL PRODUCTIONBillion $900

850

800

750

700

CURRENT, DOLLAR GNP*

Tola!'.

^ Inventory ('..t. 'V'.t ' t . 1 -f I i..-.-.'..

Quarterly ( ffl )

Billion :40

"CURRENT BOUAR.GNP**^ >(Change From Previous Quarter)

30

20

Quarterly ( JE )

Billion $750

700

CONSTANT DOLLAR (1958) GNP*

Fmal SalesM.;,'

Inventory Change , ;

Quarterly ( HE)

Percent

-4

CONSTANT -DOLLAR (1958J.QJNP*- (GtiangeTrom Previous Quarter) --

liiLlilll1966 1967 1968

Quarterly ( ffl ) OBE* Seasonally Adjusted * * Seasonally Adjusted at Annual Rates

U.S. Department of Commerce, Office of Business Economics

THE LABOR MARKET PRICESMillion Persons

CIVILIAN LABOR FORCE ANDEMPLOYMENT*

1958 =100130

Monthly (Sept.) Quarterly (in )

Percent 1957-59=100

Monthly (Sept.) Monthly (Aug.)

Million Persons Billions 1957-59=100

NONFARM ESTABLISHMENTS(Employees)

115

110

105

100

WHOLESALE PRICES

Tola!

1 Industrial Commodities

39

38

37

36

PRODUCTION OR, NONSUPERV1SORY WORKERS(PRIVATE) ,, :

Average Weekly Hours*(left scale)

95 i. ) -.I-...M i I ' i.-t. -I..J.,, l i Lt i i I < LI ' j ...i . .Lt-i i i i J t. 1 . 1 i -iMonthly (Sept.) BIS

1957-59=100130

3.00 120 -

2.80

2.60 100

2.40 90

Farm Productst I I M I I I I ,1 ,1, I I { I i M I

1966 1967 1968Monthly (Sept.)

1966 1967 1968Monthly (Sept.) BLS


October 1968 SUEVEY OF GUEEENT BUSINESS

CHART 4

Personal income rose $4-1/2 billion in September, somewhat below recent monthly gains Consumption up sharply in 3rd quarter-September retail sales held at high August rate-an to sales buoyant Nonresidential fixed investment up in third quarter following 2nd quarter decline-housing unchanged

INCOME OF PERSONS CONSUMPTION AND SAVING

650 -

600 -

550

Billion $500

Monthly (Sept.)

450

400

350

300

WAGES AND SALARIES*

Total(left- scale)

Billion $550

525 -

500 -

475 -

450 I 1 1 L

Billion $35

PERSONAL'CONSUMPTIONEXPENDITURES**

Quarterly (ffi)

30

200 25

150 20

100 15

RETAIL STORE SALES*

Total

Excluding Automotive Group

I I I I I I I ! i iNew Series

i l l i i i t i | t i i t ill i i t tMonthly (Sept.) Monthly- (Sept.)

Monthly (Sept.) Trade Sources'& QBE

1958 $2,600

2,500

2,400

2,300

2,200

REAL PER CAPITA DISPOSABLEPERSONAL INCOME**

_ (In 1958 Dollars) ,

1966 19681967Quarterly (IH) QBE

* Seasonally Adjusted * * Seasonally Adjusted at Annual RatesU.S. Department of Commerce, Office of Business Economics

1967Quarterly (IE)

1968

FIXED INVESTMENTBillion $100

75

50

25

Producers' Durable Equipment**

\ ' ~-.",r~~~~

Nonresidential Structures**' ' \ "

, Residential Structures*

Quarterly (El)

Billion $

PLANT AND EQUIPMENTEXPENDITURES**

Quarterly (TV) OBE-SEC

Billion $6.5

MACHINERY AND EQUIPMENT*(Manufacturing Firms)

6.0

5.5

5.0

4.5

Million Units

Monthly (Aug.)

1966 1967 1968Monthly (Aug.) Census


6 SURVEY OF CUKKENT BUSINESS

In the 3rd quarter - Inventory investment declined by about $3 billion - Net exports showed small improvement - Total government purchases continued to rise-defense outlays recorded a small advance

October 1968

CHART 5

INVENTORIESBillion $40

CHANGE |N BUSINESS INVENTORIES*;|GNP: Basts): ; ;

30

20

10

Quarterly (Iff)

Billion $160

MANUFACTURING AND TRADE INVENTORIES*(Book Value, End of Month)

Total

150

uo

130

120 H i-i n, t , j f ,i.,u' M M n i h i i u.(, i,1\ 1 1 1 1 1 u iMonthly (Aug.) Census & QBE

Billion $

MANUFACTURING AND TRADEINVENTORIES* (BookValue,:End of, Month)

Monthly (Aug.) Census & QBE

Ratio2.2

INVENTORY/SALES RATIOS*

Manufacturing2.0

1.8

1.6

1.4 l-i-i.lJ.i.ljJ. I i ) I ' ( t ' ..:\ ...( I I I .J > I } j ' . . > I 1 > 1 ) I I

1966 1967 1968Monthly (Aug.) Census & QBE

* Seasonally Adjusted ** Seasonally Adjusted at Annual RatesU.S. Department of Commerce, Office of Business Economics

FOREIGN TRANSACTIONSBillion $8

NET EXPORTS*Goods and Services

Quarterly (Iff ) (II)

Billion $3.5

3.0

2.5

2.0

1.5

MERCHANDISE TRADE*

Exports

Imports

Monthly (Aug.) Census

Billion $

NET FLOW OF PRIVATE U.S. AND FOREIGN CAPITAL(Other than Liquid Funds)*

Inflow

-2

Billion $

Quarterly (IT)

-2

BALANCE OF PAYMENTS*

Official Reserve /' Transactions Basis /

1966 1967 1968

Quarterly ( n ) OBE

GOVERNMENTBillion $120

100 -

FEDERAL PURCHASES OF'GOODS AND SERVICES**

60 -

40

Billion $

Quarterly (Iff)

DEFENSE PRODUCTS1*(Manufacturing Firms)

Monthly (Aug.)

Billion $

200

175

150

125

FEDERAL BUDGET*(NIA Basis)

Expenditures

Surplus Receipts

Quarterly ( D I M E )

Billion $125

100

50

STATE AND LOCAL PURCHASES.OF GOODS ANO SERVICES**

1966 1967Quarterly (Iff)

1968QBE


October 1968 SURVEY OF CUERENT BUSINESS

Industrial production dropped in September for second straight month Bank credit expanded, growth in money supply halted

- interest rates and bond yields mixed in September

INDUSTRIAL PRODUCTION MONEY, CREDIT, AND SECURITIES MARKETS PROFITS AND COSTS1957-180

170

160

150

140

Perce100

95

90

85

80

Billic30

28

26

24

22

1957-200

180

160

140

120

59=100

.INDUSTRIAL PRODUCTION*

y^Totaf

^nt

)urab!e Manufactur

V ,\ 1

v-\

Nondurable MaiMl 1 I { M M l

SS ' ' "^ '

X '^ ' ' " ' ; "

Vufacturesi i t i t 1 I V t i i

Monthly (Sept.) FRB

RATIO, OUTPUT TO CAPACITY*

- -

i i i

>n$

\ - , '. ' ~ ,

Manufacturing

Quarterly (H) FRB

DURABLE GOODS MANUFACTURERS*; \ ,

.New Orders; A '*\W\ '''''."''"", ' . ^!/î:-'-/:lî^^'--::\

~ /\ A 1 \/ -V V/Y7 \

y-^J' V

ShipmentsI 1 M t 1 1 | 1 1 1

59=100

m\ /% --/. ^ /''T: ' - - . ' / -^ -- '

M i 1 |l | 1 II | | - 1 1 r i i l,i t ri iMonthly (Aug.) Census

INDUSTRIAL PRODUCTION* V; ; J / ;"/; /

VOVi.- 'rvi%0/iH//.-i^fe^r^/ Steel/ ;lv î i i i i hi r i ( i

1966

!p/!||I^rsM/

;': -A-* ' - / - ' - ' ' - " '

^W-'*ff-*\':'.'''L.

CP1 1 A\ \\\\ \

Billio.375

350

325

300

275

Bill2

1

0

-1

-2

Per10

8

6

4

2

1941140

120

100

80

z.n

1967 1968\Monthly (Sept.)

$epf ^^ FRB

1$

BANK CREDIT AND MONEY, SUPPLY* f ;

BankCre(left sea

i , M l - I i 1 M 1

.V ' ; " ' ' - ^/^

dif ^jS\'- /e); ^/ *s ': \

- ^ "*'. . ' , - ' - ,./ Money Supply

- (right scale) :

Monthly (Sept.) FRB

ion $

FREE RESERVES

, -

,, - ,; , ' ; _ ; ' ' ,

I 1 M 1 \ [ 1 1 M

' - , ' , ' " -

: ' - - - , " ' - . ' - ' - " ' ~

1 M t 1 1 1 1 M 1 M 1 1 1 1 1 1 I I 1

Monthly (Sept.) FRB

:ent

.MEREST :pi$XAND BOND; YIELDS"

Corporate Yields,! Moody's Aaa:-:- ; :. :'"/ ,U \ ' ' . . ;

1 II M':l 1 f 1 I'l

. : ' : / / , ;:>r-^^v,^_^^^'''-

:'S'"\

;:/?Vi'-/-::.';- ? : ' : -vv -;: ' ';f*?; 3-Month,Treasury Bills; ,.

1 1 I I I 1 M M l 1 M l 1 I II I I i

Monthly (Sept.)

-43=10

" ' ' , ' " . ."';..;./ = : , . " - ' ' ," -: ; STOCK ;PRICES/ : ;-,;;/' ;;;: Stahdajd,and Poor's (500) ' : : ; :

'' ' '/?;. -N^

^MYrUifiV

^ '' . ' , ' ' . ' ' ' , /,' ' ' - - ;' ' '/' ''

5 / '.,' , ' ' >' - ,'" -'' ' ''""" ' ' . "

, ^, -,.,,. ,,; ;-;'-v ,,,,- - ^ ,, -,, , - ; , / - - , ' '

1966 1967 1968Monthly (Sept.)

Billio

190 100

180 90

170 80

Billic

80

70

60

50

40

Per6

4

2

0

-2

Pet6

4

2

0

1$

CORPORATE -PROFITS**/ ;;; ^/ / ; / : :

"' '"'" ''* ' ' - - ' " ~'v' ' '- ' - -' ,- " '- ,'

- , ^ 'fi^ Tayiil^

' / - ' ''-''- ' -' '// - '/' - ' - ' ' ' ' - ; " - - ' ' ' ' -/"',/'"'" ,""'"'' ' .' \': . ^ : ':' '-:'H' /;A^ /:\ '%i " '"'^ ''.'' i;' ' '

Quarterly ( fl ) QBE

>n $

CORPORATE INTOTAL FUNDS AND PROFITS*^ :' ' ' , - - ' '; ' // \ .. ' ' '-'"''- ':''-*:*' ^-' ''" "; , ''

-_^^Nvfe^ :'':'

; .

:Mi^^\^,/^:^ :

- ' ' ' ' , / ./;.' '-'''.' ',.' ' '-' ' '"''."'.." r- '- '-v': ','.'/..

1 1 ' [ ' ' : , ' . ''i- -f 1 ' ~\" - ' \ 1 - "'(/'

Quarterly ( I ) OBE

cent

OUTPUT AND:COMPENSKlON PER I/IAN-HOUR, ;//PRIVATE ECONOMY*^/::/;/::/ v/; ; ---: j\-' /;- (Change From Previous Quartferf/

: / -; '" ',/" ' / ;; /;>': ,-.':-="- ' - ' - - ' . -;-'v'-s ''' ; -

lllljllfllff^^"v^^^ljSQuarterly ( IT ) BLScent

:/ UNIT tABOR CO /^'FRIOTE'l^ pMt^ //^ : ://;/i(â[t '^frdm'to]piis'QiiMr): ; /) ; ; :;

L:/ ' . ' - . /;; -/- ' . ;;"'!./:''."'' v- /""^..v/.-'f : -/V":' "' ; --'L' ' / -:~ , -''-'.^-| ";:-;-; /^ /'-/;- /^v/ , ,:,'X'--;.i:lfi< t^|S?lMpHKi?^-wPMiiifjl?ifiK*ife^/-"^-Ss^-fe/--;-;;-^?fe-;/s-;^^

1966 1967 1968Quarterly ( II ) BLS

* Seasonally Adjusted ** Seasonally Adjusted at Annual RatesU.S. Department of Commerce, Office of Business Economics


8 SUEVEY OF CUEEENT BUSINESS

NATIONAL INCOME AND PRODUCT TABLESOctober 1968

1966 1967

1967

II III IV

1968

II III

Seasonally adjusted at annual rates

Billions of current dollars

1966 1967

1967

II III IV

1968

II IIISeasonally adjusted at annual rates

Billions of 1958 dollars

Table 1.Gross National Product in Current and Constant Dollars (1.1, 1.2)Gross national product

Personal consumption expenditures

Durable goodsNondurable goods - -- _ _ -Services _

Gross private domestic investment

Fixed investment

Nonresidential _ -_Structures _ _ _ -Producers' durable equipment

Residential structures - _-Nonfarm _Farm

Change in business inventoriesNonfarm -Farm _ _ _ _

Net exports of goods and services --

Exports.. . _ _Imports

Government purchases of goods and services _ -

FederalNational defenseOther

State and local

747.6

465.5

70.5206.7188.3

120.8

106. 1

81.328.552.8

24.824.3

,514.714.9.2

5.143.138.1

156.2

77.460.616 8

78 8

789.7

492.2

72.6215.8203.8

114.3

108.2

83.627.955.7

24.624.0

.6

6.15.6.5

4.8

45.841.0

178.4

90.672.418 2

87 8

780.2

490.3

73.4215.3201.6

107.6

105.4

82.727.255.5

22.722.1

.62.32.2.1

5.145.540 4

177. 3

90.072.117 9

87.2

795.3

495.5

73.1216.4205.9

114.7

109. 3

83.327.755.6

26.025.4

.6

5.34.8.6

5.4

46.140.6

179. 6

91.372.918 4

88.4

811.0

502.2

74.2218.4209.6

121.8

113.5

85.027.757.3

28.527.9

.6

8.37.11.2

3.4

46.042.6

183.5

93.574.619 0

90.0

831.2

519.4

79.0226.5213.9

119.7

117.6

88.629.659.0

29.128.5

.6

2.11.6.4

1.547.546 0

190.5

97.176.820 3

93 4

852.9

527 9

81.0228.2218.7

127.3

116 5

87.028.558 5

29.528.9

.610.810.4

.4

2.0

49.947 9

195.7

100 079.021 0

95 6

870 8

541 3

85.3232.7223.3

127.4

119.6

90.228.461.8

29.428.8

.67.77.6.1

2.6

50.848.2

19?V5

101.179, 721.4

98.4

657.1

417 8

71.3186.9159.5

108.8

94.9

73.823.949.9

21.120.7

.513.914.1.2

4.040.136 1

126.5

65.2

61.3

673.1

430 5

72.4191.1167.0

99.5

93.6

73.722.651.1

19.919.5

.55.95.3.6

2.4

41.839.3

140.7

74.8

65.9

669. 2

431 2

73.7191.6165.9

94.2

92.0

73.322.151.1

18.718.2

.52.32.1.2

2.8

41.738.9

141. 0

75.1

66.0

675.6

431 8

72.6191.1168. 1

99.3

94.0

73.222.251.0

20.820.3

.55.24.5.7

3.1

42.139.1

141.4

75.6

65.8

681 8

434 1

73.0191.6169.5

104.7

96.7

74.022.152.0

22.722.2

.58.06.71.3

1.0

41.940.9

142.0

75.6

66.4

692 7

444 9

77.3196.5171.0

101.5

99 5

76.523.453.0

23.022.6

.52.01.6.4

44.044.1

146.5

78.1

68.4

703 4

447 5

78 9196.1172. 6

107.3

97 4

74.522.152.4

22.922.5

.59.99.6.4

-.6

44.745.4

149.2

80.1

69.1

712 0

Table 2.Gross National Product by Major Type of Product in Current and Constant Dollars (1.3, 1.5)Gross national product

Final salesChange in business inventories _. _ .

Goods output -

Final sales _ _ _Change in business inventories

Durable goods.Final sales-Change in business inventories

Nondurable goodsFinal sales _Change in business inventories

Services .

Structures. __

747.6

732 814.7

382 2

367.514.7

156.0145 710.2

226. 3221 8

4 5

288 0

77 3

789.7

783 66.1

396 9

390.86.1

159.3156 4

3.0237.6234 5

3.1314 8

77 9

780.2

778.02.3

394 1

391.82.3

157.7157 1

.6236.4234 7

1.7

310 975 3

795.3

789.95.3

398.9

393.65.3

161.1157 3

3.8237.8236 2

1.6317 5

78 8

811.0

802.78.3

404.8

396.58.3

164.1159 9

4.2

240.7236.6

4.1

324 7

81 5

831.2

829 12.1

414 9

412.82.1

168.2166 7

1.5246.7246 1

.6330 4

85 8

852.9

842.110.8

428 4

417.610.8

175.3169 1

6.2253.1248.5

4.6339.2

85 4

870.8

863 17.7

7.7

657.1

643.213.9

355.9

342.013.9

151.1141 5

9.6204.8200.5

4.3236 4

64 8

673.1

667.25.9

361.0

355.15.9

150.3147.6

2.7

210.7207.5

3.2249 6

62 5

669.2

666.92.3

360.3

358. 12.3

149.9149.3

.6210.5208.8

1.7

247.8

61.1

675.6

670.45.2

361.9

356.75.2

151.6148.2

3.4210.2208.5

1.8251.2

62.5

681.8

673.88.0

364.4

356.48.0

152.8149.0

3.8211.6207. 5

4.1

253.2

64.2

692.7

690.72.0

370.4

368.42.0

155.9154.5

1.4

214.5213.9

.6255.1

67.2

703.4

693.59.9

379.2

369.39.9

161. 2155.6

5.6218. 0213.7

4.3

258.7

65.5

712.0

Table 3.Gross National Product by Sector in Current and Constant Dollars (1.7, 1.8)Gross national product

Private

Business _ _ _ _ _ _ _ _Nonfarm _ _ _Farm _

Households and institutions ._

Rest of the world

General government..- _

747.6

671 1

646 7622 0

24 7

20.2

4 2

76 5

789.7

704 8

677 9653 7

24 2

22.3

4 6

84 8

780.2

696.7

670 7646 724 0

22.1

4.0

83 5

795.3

709.8

682 4658 024.4

22.5

5.085.4

811.0

722.3

694 1669 424.8

22.9

5.388.6

831. 2

740 3

712 4688 124 3

23.5

4.4

90 8

852.9

759.9

730 8706 124 7

24.2

4.9

93 0

870 8 657.1

602 1

583 4561 122 2

14.8

4 0

55 0

673.1

614.0

594 0569 924 1

15.5

4.559 0

669.2

610.6

591 2567.523.7

15.5

3.958.6

675.6

616.0

595.6571.224.4

15.6

4.959.6

681.8

621.7

600.8576.324.5

15.7

5.260.1

692.7

631.8

611.4587.823.6

16.1

4.3

60.9

703.4

641.6

620.5596.224.3

16.3

4.8

61.8

712.0

'Preliminary.


October 1968 SURVEY OF CURRENT BUSINESS 9

1966 1967 II

1967

III IV

1968

I II III*


Billions of dollars

Table 4.Relation of Gross National Product, National Income,and Personal Income (1.9)

Gross national product . . --Less: Capital consumption allowances.Equals: Net national productLess: Indirect business tax and nontax

liabilityBusiness transfer paymentsStatistical discrepancy

Plus: Subsidies less current surplus ofgovernment enterprises

Equals: National incomeLess: Corporate profits and inventory

valuation adjustmentContributions for social insur-

anceWage accruals less disburse-

ments. .-

Plus: Government transfer paymentsto persons

Interest paid by government(net) and by consumersDividends _ _Business transfer payments

Equals: Personal income. . . .

747.664.1

683.5

65.33.0

-3.3

2.3620.8

83.938.0

.0

41.022.321.73.0

586.8

789.769.2

720.5

69.63.1

-3.5

1.6652.9

80.4

41.9.0

48.623.622.93.1

628.8

780.268.4

711.8

69.03.1

-3.8

1.6645.1

79.6

41.6.0

48.3

23.223.23.1

621.6

795.370.0

725.3

70.13.2

-3.4

1.5656.9

80.2

42.1

.0

48.9

23.523.53.2

633.7

811.0

71.1

739.8

71.23.2

4.2

1.3670.9

82 3

43.0

.0

49.724 222.53.2

645.2

831.272.3

758.8

72.83.2

-4.7

.5688.1

83.8

45.8.0

52.524.923.63.2

662.7

852.973.7

779.1

74.83.3

-3.6

.7705. 4

89.2

46.5.0

55.025.724.43.3

678.1

870.874.9

795.9

76.73.3

.9

47.6.0

56.326.225.23.3

694.0

Table 5.Gross Auto Product in Current and Constant Dollars(1.15,1.16)

Gross auto product l .Personal consumption expenditures.Producers' durable equipmentChange in dealers' auto inventories. .Net exports . .

Exports _.Imports

Addenda:New cars, domestic 2 .New cars, foreign _

Gross auto product 1

Personal consumption expenditures.Producers' durable equipmentChange in dealers' auto inventories..Net exports

ExportsImports. .

Addenda:New cars, domestic 2New cars, foreign .

Billions of current dollars

30.3

25.34.5.3

.01.31.2

27.82.0

29.024.94.4-.5-.11.61.7

25.92.9

29.225.84.6

-1.3-.11.61.7

26.32.8

29.325.44.5

-1.0.1

1.91.8

26.03.1

31.3

25.34.51.4

-.21.82.0

28.03.4

33.7

28.45.0.6

-.61.62.2

30.04.0

36.1

29.05.12.3

-.52.32.9

32.84.2


30.925.74.6.3

0.01.31.3

28.62.0

29.024.84.4-.50.01.71.7

26.42.9

29.626.14.7

-1.4

0.01.61.7

27.02.8

29.225.24.5

-1.0.2

1.91.7

26.43.0

30.7

24.84.41.4

-.11.81.9

27.93.3

33.027.75.0.6

-.51.62.1

29.93.9

35.428.35.12.3

-.42.32.8

32.74.1

......

1966 1967

1967

II III IV

1968

I II III P


Billions of dollars

Table 6.National Income by Type of Income (1.10)National income _

Compensation of employeesWages and salaries . . .

PrivateMilitary _ _ . .Government civilian

Supplements to wages and salaries. _.Employer contributions for social

insuranceOther labor income

Employer contributions to pri-vate pension and welfare funds

OtherProprietors' income

Business and professionalIncome of unincorporated enter-

prises _. , . .Inventory valuation adjustment

Farm__ .. _ _. .. ..

Rental income of personsCorporate profits and inventory valua-

tion adjustmentProfits before tax

Profits tax liability _ _Profits aftertax

DividendsUndistributed profits

Inventory valuation adjustment.Net interest.

620.8435.6394.6316.914.663.1

41.1

20.2

20.817.43.5

60.744.8

45.1.315.919.8

83.9

85.634.651.021.729.3

-1.7

20.8

652.9468.2423.4337.116.370.0

44.8

21.523.3

19.53.8

60.746.3

46.6.314.4

20.3

80.4

81.633.548.122.925.2

-1.2

23.3

645.1

461.8417.6

332.815.968.844.2

21.3

22.9

60.546.1

14.4

20.2

79.680.3

33.047.323.224.1

-.7

22.9

656.9471.5426.3339.416.170.8

45.221.623.7

61.2

46.6

14.620.4

80.2

80.8

33.247.623.524.1

-.623.6

670.9482.7436.4346.017.173.3

46.2

22.1

24.2

61.146.8

14.3

20.5

82.3

85.435.150.322.527.9

-3.124.3

688. 1496.8448.3355.717.575.2

48.4

23.525.0

61.847.2

14.620.7

83.8

88.939.849.123.625.5

-5.125.0

705.4507.1457.6362.817.877.0

49.423.7

25.7

62.6

47.8

14.820.9

89.2

91.841.150.724.426.3

-2.7

25.8

519.5468.6370.618.979.150.824.3

26.5

63.448.0

15.421.0

25.2

-1.1

26.7

Table 7.National Income by Industry Division (1.11)All industries, total

Agriculture, forestry, and fisheriesMining and constructionManufacturing-..- _

Nondurable goodsDurable goods

Transportation _C ommunicationElectric, gas, and sanitary services.Wholesale and retail trade.Finance, insurance, and real estate.. ..ServicesGovernment and government enter-

prisesRest of the world.

620.822.538.5

191.873.2

118.625.012.512.291.567.171.084 64.2

652.921.439.7

196.675.8

120.826.113.112.996.870.977.093 64.6

645.121.339,3

194.474.9

119.425.913.112.895.970.276.392 04.0

656.921.639.7

196.675.9

120.726.313.213.197.971.577.794 35.0

670.921.440.3

201.077.6

123.4

26.513.313.299.773.079.298.05.3

688,121.941.3

207.780.1

127.7

27.313.713.5

101.874.581.3

100 54.4

705.422.242.6

214.482.1

132.3

27.913.713.6

104.576.282.6

102 84.9

Table 8.Corporate Profits (Before Tax) and Inventory ValuationAdjustment by Broad Industry Groups (6.12)

1. The gross auto product total includes government purchases, which amount to $0 2 billionannually for the periods shown.

'Pr ^ rr? frm the grSS aUt product total by the markuP on botfc used cars and foreign cars.

All industries, totalFinancial institutions

Mutual _Stock

Non financial corporationsManufacturing.. _ _ _

Nondurable goodsDurable goods

Transportation, communication,and public utilities

All other industries

83.910.22.18.2

73.7

42.818.824.1

12.018.8

80.4

10.3

1.98.4

70.1

39.218.021.2

11.819.0

79.610.2

69.539.117.921.2

11.818.6

80.210.3

69.938.517.920.612.019.4

82.310.6

71.7

39.918.021.911.920.0

83.811.0

72.941.319.022.3

12.519.0

89.211.2

77.9

44.919.725.212.520.6


10 SURVEY OF CUREENT BUSINESS October 1968

1966 1967

1967

II III IV

1968

I II HIP


Billions of dollars

Table 9.Gross Corporate Productl (1.14)Gross corporate product - -

Capital consumption allowancesIndirect business taxes plus transfer

Income originating in corporate busi-ness

Compensation of employeesWages and salaries. -Supplements

Net interestCorporate profits and inventory

valuation adjustmentProfits before tax

Profits tax liability -Profits after tax

DividendsUndistributed profits.

Inventory valuation adjustment-.Cashflow gross of dividends .Cash flow net of dividends -

Gross product originating infinancial institutions ...

Gross product originating innonfinancial corporations


payments less subsidiesIncome originating in nonfinancial

corporationsCompensation of employees

Wages and salaries. _ _ _ _ _Supplements

Net interest . _ _ _Corporate profits and inventory

valuation adjustment.Profits before tax

Profits tax liabilityProfits after tax

DividendsUndistributed profits

Inventory valuation adjustment-Cash flow, gross of dividendsCash flow net of dividends

Gross product originating innonfinancial corporations

Current dollar cost per unit of1958 dollar gross productoriginating in nonfinancialcorporations 2


payments less subsidies _Compensation of employeesNet interestCorporate profits and inventory valu-

ation adjustmentProfits tax liabilityProfits after tax plus inven-

tory valuation adjustment

432.739.7

38.2

354.8275.7246.129.6

-1.6

80.682.434.647.820.327.5

-1.7

87.567.1

18.9

413.838.6

36.5

338.7261.1233.327.7

7.2

70.472.230.441.819.122.7

-1.7

80.461.3

453.143.4

40.6

369.0293.3260.832.4

-1.0

76.878.033.544.521.323.1-1.2

87.966.6

20.0

433.042.2

38.8

351.9277.0246.830.2

8.5

66.467.628.838.820.118.8

-1.2

81.161.0

448.242.9

40.3

365.0289.6257.632.0-1.1

76.577.233.044.221.822.4-.7

87.165.3

19.7

428.541.7

38.5

348.3273.6243.829.8

8.3

66.367.028.338.720.518.1-.7

80.459.8

455.644.1

41.0

370.5295.3262.532.8

-1.0

76.276.833.243.621.721.9-.6

87.766.0

20.3

435.342.939.2

353.3278.7248.130.68.6

65.966.528.438.120.517.6-.6

80.960.5

464.644.9-

41.6

378.1

300.9267.533.4

-.9

78.181.235.146.120.625.5-3.1

91.070.4

20.9

443.743.739.7

360.3283.9252.831.1

8.9

67.570.630.240.419.421.0-3.1

84.064.6

477.745.742.6

389.4309.9274.935.1-.8

80.385.439.845.622.023.6-5.1

91.369.3

21.7

455.944.4

40.7

370.8292.5259.832.7

9.0

69.374.434.539.920.719.2

-5.1

84.363.6

491.146.7

43.7

400.7316.3280.435.8-.8

85.287.941.146.822.824.0-2.7

93.570.8

22.5

468.645.441.8

381.4

298.3264.933.4

9.1

74.076.635.641.021.419.6

-2.7

86.565.0

47.6

45.0

323.5286.636.9-.8

-1.1

46.343.0

304.7270.434.3

9.3

-1.1


385.5 392.3 390.1 393.4 397.2 405.9 413.5

Dollars

1.074

.100

.095

.677

.019

.183

.079

.104

1.104

.108

.099

.706

.022

.169

.073

.096

1.098.107

.099

.701

.021

.170

.073

.097

1.107

.109

.100

.708

.022

.168

.072

.095

1.117

.110

.100

.715

.022

.170

.076

.094

1.123

.109

.100

.721

.022

.171

.085

.086

1.133.110

.101

.721

.022

.179

.086

.093

1. Excludes gross product originating in the rest of the world.2. This is equal to the deflator for gross product of nonfinancial corporations, with the decimal

point shifted two places to the left.* Preliminary.

1966 1967

1967

II III IV

1968

I II III 9


Billions of dollars

Table 10.-Personal Income and Its Disposition (2.1)Personal income . _ _ __

Wage and salary disbursementsCommodity-producing industries. _

Manufacturing. ,J.^.Distributive industriesService industries __Government

Other labor incomeProprietors' income

Business and professionalFarm

Rental income of personsDividendsPersonal interest incomeTransfer payments

Old-age, survivors, disability, andhealth insurance benefits .

State unemployment insurancebenefits . _

Veterans benefitsOther

Less: Personal contributions forsocial insurance

Less: Personal tax and nontax pay-ments

Equals : Disposable personal income. . .Less: Personal outlays. _ . _

Personal consumption expenditures..Intftrfist paid by C-finsiiTTifirsPersonal transfer payments to for-

eigners _ -_. ..Equals: Personal saving

Addenda:Disposable personal income :

Total, billions of 1958 dollars .Per capita, current dollars..Per capita, 1958 dollars __

586.8394.6159.4128.093 963.677 7

20.8

60.744 815 919.821 743 1

43.920.8

1.85.7

15.6

17.8

75.3

511.6478.6465.512.5

.632.9

459.22,5982,332

628.8423.4166.6134.1100.570.086 3

23.360.746 314 4

20.322 946.8

51.725.72.16.6

17.3

20.4

82.5546.3506.2492.213.1

.840.2

478.02,7442,401

621.6417.6164.1132.399 669.184 7

22.960.546 114 4

20.223 246 151.425.82.16.6

16.9

20.3

80.1

541.5504.5490.313.1

1.237.0

476.32,7232,395

633.7426.3167.1134.6101.470.886 923.7

61.246 614 620.423 547 2

52.126.02.26.5

17.3

20.6

83.6550.0509.5495.513.2

.840.5

479.52,7582,404

645.2436.4170.5137.1103 172.490 4

24.2

61.146 814 320.522 548 552.926.4

2.06.8

17.7

20.9

85.6559.6516.1502.213.3

.743.4

483.72,7982,418

662 7448.3175.6141.2105 674.592 6

25.061 847 214 6

20.723 649 8

55.728 2

2.27.0

18.4

22.3

88.3574.4533.5519.413.4

.740.8

491.82,8662,454

678 1457.6178.6143.8108 076 294 8

25 762 647 814 820 924 451 458 330 51.97.1

18 8

22 8

91 9

586.3542 3527.913.6

.844.0

497 12,9182,474

694 0468.6181.4146 4111 078 298 026 563 448 015 421 025 252 9

59 531 0

2 17.1

19 3

23 2

101 4

592.6555 8541.313 8

.7

36 8

499 22 9412,478

Table 11.Personal Consumption Expenditures by Major Type (2.3)Personal consumption expendi-

tures

Durable goods.Automobiles and partsFurniture and household equipment.Other

Nondurable goods.. .Food and beveragesClothing and shoes _ __ __Gasoline and oilOther

ServicesHousing _ _Household operationTransportationOther ..

465.570 530.429.810.3

206 7106.439.816.643.8

188.3

67.327.113 680.4

492.272 630.431.410.9

215.8109.442.118. 146.2

203.870.929.015 088.9

490.373 431.231.211.0

215.3108.942.417.846.2

201.670.428.714 887.7

495.573.131.031.410.8

216.4109.142.818.346.2

205.971.229.215 190.4

502.274.231.431.811.1

218.4110.842.318.646.7

209.672.229.915.592.0

519.479.034.633.311.1

226.5113.644.619.748.5

213.974.030.316.293.3

527.981 035 433.911 7

228.2116.444.819.447.6

218.775.431.016.395.9

541.385 338 135.511 7

232 7

118 147.020 147.6

223 376.931.516 798.1

Table 12.Foreign Transactions in the National Income andProduct Accounts (4.1)

Receipts from foreignersExports of goods and services ..

Payments to foreignersImports of goods and services...Transfers to foreigners..

Personal .Government

Net foreign investment.. _ . _.

43.143.1

43.1

38.1

2.9.6

2 3

2.2

45.845.845.841.0

3.1.8

2.21.7

45.545.5

45.540.4

3.41.22 3

1.6

46.146.1

46.140.6

3.4.8

2.62.1

46.0

46.0

46.042.6

2.6.7

1.9.8

47.547.5

47.546.02.6.7

1.91.1

49.9

49.949.9

47.9

2.8.8

2.1-.8

50.850.850.848.2

2.9.7

2.2.3


October 1968 SURVEY OF CUEEENT BUSINESS 11

1966 1967

1967

II III IV

1968

I II HIP


Billions of dollars

1966 1967

1967

II III IV

1

I I

96S

I HID

Seasonally adjusted

Index numbers, 1958=100

Table 13.Federal Government Receipts and Expenditures (3.1, 3.2) Table 16.Implicit Price Deflators for Gross National Product (8.1)

Federal Government receiptsPersonal tax and nontax receiptsCorporate profits tax accrualsIndirect business tax and nontax

accrualsContributions for social insurance..

Federal Government expendituresPurchases of goods and services

National defense _.Other.

Transfer payments...To personsTo foreigners (net).

Grants-in-aid to State and local gov-ernments

Net interest paidSubsidies less current surplus of gov-

ernment enterprises. _Surplus or deficit (), national

income and product accounts

143.061.732.415.833.1

142.4

77.460.616.835.733.42.3

14.49.5

5.4

.7

151.267.330.916.236.8

163.690.672.418.242.340.12.2

15.710.3

4.8

-12.4

148.265.130.516.136.5

161.590.072.117.942.139.92.3

14.69.9

4.8

-13.3

152.268.230.616.337.0

165.191.372.918.442.940.32.6

15.910.2

4.8

-12.9

156.469.732.416.437.9

168.693.574.619.042.740.81.9

17.010.7

4.6

-12.2

166.672.037.017.040.5

175.1

97.176.820.345.143.21.9

17.711.3

3.9

-8.6

171.874.938.217.541.2

181.9184.8100.0101.179.021.047.745.62.1

18.311.8

4.1

-10.2

3.5

17.842.2

79.721.448.846.62.2

18.412.1

4.3

Gross national productPersonal consumption expenditures

Durable goodsNondurable goodsServices

Gross private domestic investmentFixed investment

NonresidentiaL.StructuresProducers' durable equipment _ _

Residential structuresNonfarmFarm

Change in business inventoriesNet exports of goods and services

Exports _.Imports

Government purchases of goods andservicesFederalState and local

113.8111.498.8

110.6118.1

111.8110.2119.0106.0117.4117.4116.4

107.6105.5

123.5118.8128.4

117.3114.3100.4112.9122.1

115.6113.5123.6109.1123.1123.1122.6

109.5104.2

126.8121.2133. 3

116.6113.799.6

112.4121.5

114.6112.9122.7108.6121.4121.4121.7

109.2103.9

125.7120.0132.2

117.7114.7100.7113.3122.5

116.2113.8124.6109.1124.8124.9123.4

109.3104.0

127.0120.7134.3

118.9115.7101.7114.0123.7

117.4114.9125.5110.3125.6125.7124.6

109.7104.1

129.2123.7135.5

120.0116.8102.2115.2125.1

118.3115.8126.3111.2126.3126.3125.4

107. 9104.3

130.1124 4136.6

121.2118.0102.7116.4126.7

119.6116.7128.8111.7128 9128.9128.4

111.6105 6

'131.1124 9138 4

122.3

Table 14.State and Local Government Receipts and Expenditures(3.3, 3.4) Table 17. Implicit Price Deflators for Gross National Product byMajor Type of Product (8.2)

State and local government receiptsPersonal tax and nontax receiptsIndirect business tax and nontax

accruals..Contributions for social insuranceFederal grants-in-aid

State and local government expendi-

Purchases of goods and servicesTransfer payments to personsLess: Current surplus of government

enterprisesSurplus or deficit ( ), national

income and product accounts

84.613.62.2

49.54.8

14.4

83.578.87.5.3

3.1

1.1

91.915.22.6

53.45.1

15.7

93.387.88.5.2

3.3

-1.4

90.015.02.5

52.85.1

14.6

92.687.28.4.2

3.3

-2.6

92.715.42.5

53.85.1

15.9

93.888.48.6.2

3.3

-1.1

95.515.82.7

54.75.1

17.0

95.890.09.0.2

3.3

-.4

97.816.32.8

55.85.2

17.7

99.593.49.2.2

3.4

-1.7

100.817.02.9

57.35.3

18.3

101.995.69.4.3

3.4

-1.1

Gross national product .17

'8 Goods output

-8 a Durable goodsg*j Nondurable goods

18. 4 Services

iA4 Q Structures104. 9qg . Addendum:

9> Gross auto product o

113.8107.4103.2110.5121.8119.3

98.1

117.3110.0

106.0112.8126.1124.6

100.0

116.6109.4105.2112.3125.5

123.2

98.5

117.7

110.2106.2113.1126.4

126.1

100.5

118.9111.1

107.4113.8128.2127.0

101.9

120.0112.0107.9115.0129.5127.7

102.1

121.2

113.0108.7116.1131.1130.2

102.0

122.3

3.4

Table 18. Implicit Price Deflators for Gross National Product bySector (8.4)

Table 15.Sources and Uses of Gross Saving (5.1)

Gross private savingPersonal savingUndistributed corporate profits...Corporate inventory valuation ad-justmentCorporate capital consumption

allowancesNoncorporate capital consumption

allowancesWage accruals less disbursements-.^

Government surplus or deficit (),national income and productaccounts

Federal.........State and local..

Gross investment..Gross private domestic investmentNet foreign investment

Statistical discrepancy.

124.632.929.3

-1.739.724.4

.0

1.7

.71.1

123.0120.8

2.2-3.3

133.340.225.2

-1.243.425.7

.0

-13.8-12.4-1.4116.0114,3

1.7-3.5

128.937.024.1-.742.925.5

.0

-15.9-13.3-2.6109.3107.6

1.6-3.8

134.140.24.1-.644.1

25.9.0

-14.0-12.9-1.1116.7

114.72.1

-3.4

139.443.427.9

-3.144.926.3

.0

-12.5-12.2

-.4122.6121.8

.8-4.2

133.640.825.5

-5.145.726.6

.0

-10.3-8.6-1.7118.7119.7-1.1-4.7

141.444.026.3

-2.746.727.0

.0

36.8

-1.147.627,3

.0

Gross national productPrivate

BusinessNonfarmFarm

Households and institutionsGeneral government

113.8111.4110.9110.8111.2136.6139.1

117.3114.8114.1114.7100.7143.7143.7

116.6114.1113.4114.0101.2

142.4

117.7115.2114. 6115.2100.2

143.4

118.9116.2115.5116.2101.1

147.6

120.0117.2116.5117.1103.2

149.1

121.2118.4117.8118.4101.9

150.5

122.3

-11.3-10.2-1.1126.5127.0127.3127.4

8

-3.6

"Preliminary.

HISTORICAL DATAHistorical national income and product data are available

from the following sources:1964-67: July 1968 SURVEY OF CURRENT BUSINESS.1929-63: The National Income and Product Accounts of the

United States, 1929-65, Statistical Tables (available from anyU.S. Department of Commerce Field Office or from the Super-intendent of Documents, U.S. Government Printing Office,Washington, D.C. 20402, price $1.00 per copy).


12 SURVEY OF CUEEENT BUSINESS October 1968

The 1968 Automobile Model YearNear-RecordOutput and Sales

Retail sales of domestic and importednew cars totaled more than 9 millionunits in the year ending in September1968. The 6 percent increase over thecomparable 1967 period reflected a 30percent rise in imports and a small gainin domestic cars.

THE 1968 model year (ending inSeptember) witnessed a recovery innew automobile production and salesfrom the reduced rate in 1967. Retailsales of domestic and imported newcars totaled 9.1 million units in the1968 model year, almost 6 percenthigher than in the preceding year andjust below the all time high of 9.2million in the 1966 model year (chart7). The improvement in total salesfrom 1967 to 1968 reflected a 30 percentincrease in imports and a gain of morethan 3K percent in domestic cars.

About 960,000 imports were sold inthe 12 months ending September 1968,as compared with 740,000 in the pre-ceding year.1 Imports have risensteadily for 6 consecutive years andhave almost tripled since 1962. The1968 gain was, by far, the largest forany single year since the upturn began.

Sales of domestic cars during the1968 model year were 8.2 million units.Last year, sales fell to 7.9 million fromthe record of 8.5 million cars in the1966 model year.

Rise in salesThe 1968 model year opened with

the plants of the Ford Motor Companyshut down by a strike. With theseplants not back to volume production

i Domestic-type cars imported from Canada are excludedfrom the figures on imports used in this article and are in-cluded in domestic sales. About 450,000 such cars were im-ported from Canada in the 12-month period ending in Sep-tember 1968, as compared with about 285,000 and 114,000 inthe-similar periods of 1967 and 1966 respectively.

until mid-November, sales of domesticsin the fourth quarter of 1967 were ata seasonally adjusted annual rate ofonly 7.3 million units, well below therates of the preceding two quarters.Sales improved steadily during theensuing three quarters of the modelyear. At seasonally adjusted annualrates, they were 8.2 million units inJanuary-March 1968, 8.4 million inApril-June, and 9.0 million in July-September. Sales of imports generallyrose throughout the model year, reach-ing a record 1-million rate in theJuly-September period.

The major factor in the increase innew car sales in 1968 was undoubtedlythe sharp increase in both consumer andbusiness income. The rise in disposablepersonal income was particularly largeup from a seasonally adjusted annualrate of $550 billion in the third quarterof 1967 to $593 billion in the thirdquarter of 1968.

Consumption expenditures for auto-mobiles and parts grew faster thandisposable personal income in the firstthree quarters of 1968. In real terms,consumption expenditures for auto-mobiles and parts were about 7 percentof disposable personal income, wellabove the 6.4 percent for the fullyear 1967 and very close to the record7.1 percent in 1955. It is interestingto note that spending for automobilesand parts is the only major type ofgoods consumption showing an ap-preciable increase relative to disposableincome from 1967 to the average ofthe first three quarters of 1968.

Production higherThe Nation's factories produced 8.6

million automobiles in the 12 monthsending in September 1968up from 7.7million in the previous year and ex-ceeded only in the 1965 and 1966 modelyears. Exports rose about 40,000 carsfrom 1967, with shipments to Canadaup about 50,000 and those to other

countries down slightly. In addition toincreased sales to domestic and foreignpurchasers, the 1968 production rise re-flected a swing in inventoriesfromdecumulation in the 1967 model year toaccumulation in 1968. On a seasonallyadjusted basis, stocks rose in the firstthree quarters of the 1968 model yearbut declined in the summer months, fora net increase over the year of about300,000 units. Stock-sales ratios offranchised dealers rose from 1.95 in thefinal quarter of 1967 to 2.05 last spring,and were reduced to 1.85 in the summerquarter. The ratio in mid-1968 wassufficiently high to maintain a strongsales pace during the factory change-over periodin contrast to the summerof 1967 when low inventories appar-ently restricted sales.

The improvement in auto output con-tributed significantly to the 1968 in-crease in the GNP. Gross auto product(which measures the value of domesti-cally produced cars plus the net valueadded by the distribution of new, used,and imported cars) was at a seasonallyadjusted annual rate of about $35 billionin the first three quarters of 1968 in both

CHART 7

New Car Sales Reached a record 10 million rate this summer Imports rose substantially and domestics

moderately from 1967 to 1968Million Units12

1960 62 64 66 68Model Years, Ending Sept. 30

*Quarterly, seasonally adjusted at annual rates.Note.- Domestic sales include and import sales exclude domestic-type cars

imported from Canada. See footnote 1 in text.U.S. Department of Commerce, Office of Business Economics 6[


October 1968 SUEVEY OF CUKEENT BUSINESS 13

current and 1958 dollars (table 1). Inreal terms, the auto product accountedfor 4.9 percent of the overall GNP inthis periodmuch above the 4.3 per-cent in 1967 and a larger share than theaverage for any year except 1955 and1965. It accounted for one-sixth of theoverall increase in real GNP in thefirst three quarters of 1968.

Auto price movements

New car prices in the 1968 modelyear were about 3 percent higher thanin the preceding model year as meas-ured by the Consumer Price Index ofthe Bureau of Labor Statistics. Pricesrose moderately in 1967 following smallsuccessive decreases from 1957 to 1966.

The BLS prices cars of fixed specifica-tions and mix. It is estimated that theaverage unit cost of a 1968 car in-creased 7 percent from the average costof a 1967 model, reflecting a 3 percentrise in price and an additional 4 percentarising from changes in quality, changesin the mix of models and makes, and alarger volume of optional equipmentper car. This trading up is a continua-tion of the trend in recent years: Inthe past 5 years, the average unit costof new car purchases has risen 20 per-cent despite a small decline in theconsumer auto price index.

Mandatory equipment, such as shoul-der harnesses, accounted for some ofthe increase in average prices duringthe past year. In addition, consumerdemand for factory-installed extrascontinued to grow, according to out-put data available for the first half ofthe 1968 model year. Air-conditioningwas factory installed in 45 percent ofdomestically produced cars, as com-pared with 38 percent of the 1967models and 29 percent of the 1966's.

All but about 10 percent of the 1968models had automatic transmission,and seven-eighths had V-8 engines-higher proportions than in the 1967

models. Power-steering was installed in81 percent of the 1968 cars and in 74percent of the 1967's.

Vinyl roofs, offered in only the mostexpensive cars as recently as 1966,were available in all but one make ofthe 1968's and were installed on almostone-third of all 1968 cars. The numberof cars with bucket seats, on the otherhand, declined to 18 percent of the1968 domestic total, a 5-year low.

Distribution of new cars by sizeTable 2 presents a percentage dis-

tribution of domestic production plusimports of new cars by size and originfor the 1960-68 model years: Importsrose from 9 percent of the total in1967 to 10 percent in 1968. Domestically

produced compacts, which made upabout 30 percent of the total in the1963 model year, fell to 16 percent in1968. At the same time, imports rosefrom 5 to 10 percent over this period.The total of imports and compacts,other than sport-type, generally thelowest priced cars available, has held16 percent of the market in the last3 model years, but imports havesuccessively replaced compacts in im-portance. The sport-type compactsalso slipped relatively in 1968 afterincreasing since 1963.

As the 1969 model year opened, automanufacturers reported plans to pro-duce small cars in the United States tocompete in size and price with thesmaller imports.

Table l.~Gross Auto Product and Gross National Product

I960 ....196119621963

196419651966 ....' . . . .1967

1968 I*II*

Billions of dollars

Gross autoproduct i

21.417.9

22.525.125.831.8

30.329.0

33.736.1

GNP

503.7520. 1560.3590. 5632. 4684. 9747.6789. 7

831. 2852.9

Gross autoproduct aspercent of

GNP

4.23.4

4.04.3

4.14.64.13.7

4.14.2


Gross autoproduct 1

21.017.522.024.7

25.531.830.929.0

33.035.4

GNP

487.7497.2529.8551.0

581.1617.8657.1673. 1692.7703. 4

Gross autoproduct aspercent of

GNP

4.33.54.24.54.45.14.74.3

4.85.0

*Seasomlly adjusted at Annual rates.1. Gross auto product is defined as the value of domestically produced cars plus the net value added by the distribution

of new, used, and imported cars.Source: U.S. Department of Commerce, Office of Business Economics.

Table 2.Percent Distribution of Domestic Production and Imports of New Automobiles,by Model Year and Sizel

StandardsIntermediatesSport-type compacts .Other compacts .

Imports 2

Production and imports.

1960

68

(3)

24

8100

1961

60

2

31

7

100

1962

565

331

5

100

1963

5953

28

5

100

1964

57154

19

5

100

1965

53199

13

6100

1966

5224g

9

7

100

1967

5022

127

9

100

1968

4925106

10

100

1. For imports, model years are defined as years ending in September.2. Imports in 1960-66 are based on registrations and in 1967-68 on dealers' sales; they exclude domestic-type cars produced

in Canada.3. Less than one-half of 1 percent.Source: U.S. Department of Commerce, Office of Business Economics on the basis of trade sources,


14 SURVEY OF CURRENT BUSINESS October 1968

Prices in 1968

Rising demand and cost pressuresthis year have brought the largest priceincreases in final markets since theKorean War. The GNP deflator hasrisen 1 percent for five successivequarters. Wholesale industrial prices,after a sharp rise last fall and winter,changed little for several months buthave displayed a renewed advance veryrecently. Farm prices are up this yearafter a decline in 1967.

THE 1968 price rise in final markets isthe largest since the Korean war.The GNP deflator has risen approxi-mately 1 percent each quarter this year,continuing the pattern of sharp ad-vances that set in after the middle of1967. Consumer prices in August were4.3 percent above their year-earlierlevel. Rising farm and wholesale foodprices have intensified this year's priceadvance. Wholesale industrial priceshave shown a mixed patternsharpincreases early in the year followed byseveral months of little change and,very recently, a renewed advance.

Price movements have reflected bothdemand and cost pressures. Increasesin wage rates this year have been ex-ceptionally largeconsiderably in ex-cess of productivity gainsand unitlabor costs have risen sharply over 1967.In general, the buoyant state of demandhas made it easier for cost increasesto be reflected in higher prices and, inmany instances, has permitted profitmargins to expand. The effects of thepolicy of fiscal restraint that wassigned into law in late June are yet to befelt. While the rise in GNP showedsome slowdown in the third quarter,the gain was still substantial enough toprevent any significant retardation inthe price rise.

Industrial pricesAlthough prices of wholesale indus-

trial commodities in September were2K percent higher than they were ayear earlier, most of this rise occurredin late 1967 and early 1968. Industrialprices had been stable during the firsthalf of 1967 when demand was some-what sluggish. With the recovery ineconomic activity after mid-1967 andcontinued advances in unit labor costs,prices resumed their upward move-ment and rose rapidly through thefirst quarter of 1968; from September1967 to March 1968, the advancecame to 2 percent. Over the next 6months, however, the price rise slowedto 0.6 percent, much of which tookplace from August to September. Asthe table below indicates, a lesseningof the price increase this spring andsummer was evident for most broadgroups of industrial commodities, andfor a few groups, price decreases wererecorded.

The advance in industrial pricesfrom September to March was as largea rise over a comparable period as hasoccurred since 1956. It reflected mainlyrising labor costs in manufacturingand a recovery in profit margins whichhad been reduced in the first half of1967 when manufacturing was de-pressed. In addition, special influencesrelating to strikes and strike threats(especially in metals) and the swiftrecovery in homebuilding last yeartemporarily added to the upward thrustof prices. The much slower rise inmanufacturing activity this spring andsummer in the face of continued costincreases apparently put some pressureon margins. In addition, settlementsof labor disputes brought improve-ments in supply conditions and lowerprices for some key commodities.

The recovery of residential buildingactivity last year and early this yearwas a major factor contributing to avery sharp rise in prices of lumber andplywood. Although starts failed to gainafter the first quarter, lumber produc-tion was restricted by a reduced supplyof logs at Western mills (resulting fromlast summer's drought) and by anextended strikerecently endedatBritish Columbia sawmills. In August,the price index for lumber and woodproducts was 13K percent above thelevel a year earlier. Lumber prices havereceded somewhat since mid-September,with only part of the drop due toseasonal factors. Since last fall, sub-stantial price rises but much smallerthan those for lumber, have also beenreported for such construction-relateditems as nonmetallic mineral products.

Uninterrupted monthly price in-creases over the past year have broughtcombined prices for textiles and apparelto a point 4 percent above their year-earlier level; this is in marked contrastto the annual price changes of less than1 percent in each of the years from1962 to 1967. A significant portion ofthe price rise can be attributed to higherwage rates, in part the result of thehike in minimum wages earlier thisyear and CPI escalator clauses in con-tracts covering large numbers of gar-ment workers. Over the past year,average hourly earnings in textiles andapparel have risen 9 to 10 percent.Textile prices have also reflected highercosts of raw materials, notably rawcotton. The price rise for cotton andsynthetic textiles has shown some slow-down since the spring.

Average Monthly Percent Changes inWholesale Price Indexes

All industrial commodities _ _ _Textile products and apparelHides, skins, leathers, and

leather productsFuels and related products, power.Chemicals and allied products. _Rubber and rubber productsLumber and wood productsPulp, paper and allied products.Metals and metal productsMachinery and equipmentFurniture and household dura-

blesNonmetallic mineral products. ..Miscellaneous products

Sept.1967-Mar.

1968

0.3.4

.5-.4

.1

.3

.8

.2

.7

.4

.6

.4

.2

Mar.1968-Aug.

1968

!0. 1.3

.3

.1-.1

.21.4-.1-.5

.2

.1

.3

.0

1. Based on March 1968-September 1968 (preliminary).


October 1968

The combined index of machineryand equipment prices has risen 3 per-cent over the past year, about the sameas the increases in 1966 and 1967.Prices rose rapidly last fall and winterfollowing a period of slow advanceearlier in 1967, but the increase hasdiminished since the spring. Despiterising costs, prices of farm machineryhave increased little this year becauseof sluggish demand. Similarly, the

CHART 8

Wholesale PricesOverall advance slowed aftersharp gain last winter

1957-59=100115

: Firm Prdfett ffecessed- ': foods pci Feeds

no

105

95 Hi l t ) Hilt HIM!HIM HI III nH I* Mi>h

noINDUSTRIAL

105

90 H M i h i M j MiUh-iiii n till i MM in hi inn. tunlm

120

115

110

FINISHED

95 "MM11 run1964 1965 1966 1967 1968

Latest data: Top panels, September (preliminary). Other panels, August.Data: BLS

U.S. Department of Commerce, Office of Business Economics 68-10-8,-

SUEVEY OF CUEEENT BUSINESS

price rise for construction machineryhas slowed down as a result of reducedactivity in heavy construction wheresuch equipment is most common. Incontrast, prices of metalworking andspecial purpose machinery have con-tinued to show steady advances.

Although price reductions amongindustrial commodities have been lim-ited, they have occurred among im-portant commodity groups. The indexof prices for chemicals and alliedproducts, which has been comparativelystable for several years, eased slightlyin each month from May throughAugust, reflecting declines in farmfertilizers and inedible fats and oils,where excess capacity has been a prob-lem; the chemical price index is nohigher now than it was in the summer of1967. However, price boosts announcedin late September will, if sustained, bereflected in the index in the comingmonths. Prices of pulp, paper, andallied products rose moderately lastfall and winter, but eased slightly inthe spring quarter and again this sum-mer because of overcapacity. As in thecase of chemicals, some increase islikely in the index of paper prices thisfall; most newsprint producers beganto raise prices approximately 3 percentin September.

The metals and metal products grouphas also displayed some price weaknessthis summer after very pronounced in-creases last fall and winter. Much ofthe 2% percent decline in prices sincethe spring resulted from a sharp dropin prices of copper products starting inApril. The decline was a reaction to theend of an 8% month strike that hadcaused a sharp runup in prices. Freemarket prices of silver have eased inrecent months, after the substantialadvance that took place when theTreasury abandoned a fixed-price policy.In addition, prices of steel scrap havedeclined considerably since Februaryand at present are close to a post-WorldWar II low. The selective increases forsteel mill products announced by themajor steel producers after the newlabor contract was agreed upon at theend of July did not substantially affectthe wholesale price index in August.

15Higher farm and food prices

Last year, a rather pronounced de-crease in farm prices served as a mod-erating influence in the overall pricepicture. Wholesale prices of processedfoods and feeds edged down, and retailprices of food rose less than 1 percent,the smallest annual advance since1959, when prices declined. This yearhas seen a reversal of last year's pattern.Wholesale prices of farm products andfoods rose sharply during the firsthalf, extending the rise that beganlate in 1967; however, prices recededsomewhat this summer if allowance ismade for normal seasonal fluctuations.In the first 9 months of 1968, prices offarm products and foods were 1.8 per-cent above those in the correspondingmonths of 1967. Eetail food prices haveshown a roughly similar pattern, risingmarkedly during the winter and earlyspring but easing slightly during thesummer. For the January-August pe-riod, they were 3.2 percent above thesame months of 1967.

Changes among the various com-modity groups have been mixed. Whole-sale and retail prices of fresh fruits andvegetables declined this summer aftera sharp rise during the winter andspring, which was caused mainly by areduced crop of citrus fruits; prices ofcanned and frozen fruits and vegetableshave not changed much. Larger cropharvests caused a further drop in pricesof grains, and quotations for theseitems are running 13 percent belowlast summer and one-fourth under thelevel of 2 years ago. However, thedecline in grain prices has not beenreflected in wholesale prices of cerealsand bakery products, which have risenin recent months. Meat and poultryprices have moved irregularly highermost of this year.

Food prices normally decline betweenlate summer and yearend, and a dropof at least seasonal proportions islikely this fall. Cattle marketings havecontinued at a high level and hogmarketings have recently increased; inearly October, hog prices had droppedto a 4-month low. Prices of broilers aresomewhat below the year-earlier level.Favorable weather conditions point toa substantial expansion in supplies of


16vegetables and noncitrus fruits thisfall, and prices for most of these prod-ucts are expected to drop more thanseasonally. However, price declinesarising from improved supplies of foodsmay continue to be partially offset byrising processing and distribution costs.

Consumer price rise acceleratesThe rate of advance in the consumer

price index has shown a considerablestep-up as compared with 1966 and

Consumer PricesThe 4 percent increase so far this year reflectsaccelerated rises in all major groups

Percent Change From Previous Year

ALL ITE

J

VIS

Fl

nFlnnnnf7!pn PI

R~

i__j

1956 58 60 62 64 66 68*

FOOD

- NONDURABLE COMMODITIES LESS FOOD

4 - DURABLE COMMODITIES

-2

6

4

2

la!

SERVICES

1956 58 60 62 64 66 68**First 8 months over corresponding period 1967. - . gic

.U.S. Department of Commerce, Office of Business Economics 68-10-9

SURVEY OF CUREENT BUSINESS

1967. During the first 8 months of 1968,the CPI averaged 4 percent above thecorresponding period of 1967 (chart 9),and in July and August, the year-to-year increase amounted to 4% percent.So far this year, all major commodityand service groups show higher ratesof price advance than those posted in1967. Apart from foods, prices of non-durable commodities have risen sub-stantially, and prices of durable goods,which had been relatively stable for anextended period before last year'sadvance, have increased further in1968. The rise in service prices so farthis year has exceeded the very largeincreases of 1966 and 1967.

Prices of nondurable commoditiesexcluding food increased at about the4 percent rate shown by the overallCPI in the first 8 months of this year.The most prominent item in this gainhas been apparel, where price advanceshave reflected the increases at whole-sale. In August, retail clothing priceswere more than 6 percent above a yearearlier; on a seasonally adjusted basis,the rise during the year showed noevidence of tapering. Price increaseshave been widespread for other non-durable consumer goods so far thisyear, with gains reported for a varietyof items such as textile housefurnish-ings, gasoline, newspapers, tobaccoproducts, and fuel oil.

In the first 8 months, prices of con-sumer durables averaged 3.3 percentabove the corresponding 1967 period;if this rate is maintained for the restof 1968, the full-year advance will bethe largest in more than a decade. Thisyear's increase mainly reflects thegenerally higher level of prices forthe 1968 model cars as compared with1967 models. However, prices of otherdurables are also up substantially.Prices of household durables haveadvanced fairly steadily each monthover the past year and in August were3.4 percent above their year-earlierlevel. These prices had been very stableover an extended period and last yearshowed their first significant riseabout 1% percentin a decade.

October 1968

The overall price index for durablegoods will soon reflect the increasesthat have been posted for the 1969model cars. After allowance for qualitychanges, the BLS has estimated thatthese boosts averaged about $40 perunit or slightly more than 1 percent.

The accelerated uptrend in consumerservice prices that began in 1966 hasextended through mid-1968. On theaverage, prices in the January-Augustperiod were 5 percent above the year-earlier months; if rents are excluded,the rise in service prices so far thisyear comes to 5.3 percent.

As in other recent years, the rise inthe costs of medical care service hasoutstripped by a considerable marginthe gains in other components of theservice price index. On balance, theseprices have averaged nearly 7% percentabove 1967 levels so far in 1968, withthe most sizable increase in hospitalservice charges. Although no detailedfigures are available, there are severalindications that stepped-up wage in-creases for both professional and non-professional staffs have been a keyfactor in the rise in these charges.

Prices of transportation services areup 3.8 percent so far this year, reflectingsubstantial increases in local transitfares and auto registration fees.Plane fares have edged up as airlinesdiscontinued some promotional arrange-ments, but auto insurance rates, whichhad been rising markedly, have in-creased very little so far in 1968.Prices of household services, excludingrent, have risen mgre than 5 percent onthe average in the first 8 months of1968. This increase is due to sharpadvances in such items as mortgageinterest rates, domestic service chargesfor general housework, and postalrates. Rents have been boosted about2 percent, reflecting lower vacancyrates in the first half of this year;although this represents an accelera-tion from the small increases in otherrecent years, the rent index is still oneof the slowest rising major componentsof the CPI.


October 1968 SUEVEY OF CURRENT BUSINESS 17

State Personal Ineome, First Half 1968Personal income in the 50 States

rose 2}i percent or $15J4 billion fromfirst quarter of 1968 to the second.Gains in five regionsNew England,Southeast, Mideast, Plains and theFar Westvaried little from thenational average. However, in theRocky Mountain and Southwest regionsincome spurted 4 percent, and in theGreat Lakes the gain was less than\% percent. The quarterly data onpage 18 conform to the revised annualestimates of State personal incomefor 1965-67 presented in the AugustSurvey.

REFLECTING gains in most majorincome sources, total personal incomein the United States rose 2% percent,or $15% billion at a seasonally adjustedannual rate, from the first quarter of1968 to the second. The major re-gional variations from the nationalrate of increase were the gains of over4 percent in the Rocky Mountain andthe Southwest regions, traceable mainlyto the ending of the copper miningstrike, and an advance of less than 1%percent in the Great Lakes States,stemming in part from the start of astrike in the construction industry insome of the States. Second quarterincome gains in the other five regionsNew England, Southeast, Mideast,Plains, and Far Westvaried from thenational average by less than half apercentage point, as income from mostmajor sources increased at a fairlyuniform rate in these regions.

The national rise in personal incomein the preceding quarter had beeneven sharper2% percent, or $17%billion. In that quarter, income spurted4 percent in the Great Lakes region,where auto production recovered fromthe fourth quarter strike. However,first quarter gains were well belowaverage in the Rocky Mountain States,where the copper strike continued andfarm income declined, and in NewEngland, where income gains wererelatively small.

First half 1968 changesBecause each of the first two quarters

included unusual developments of tem-porary duration, it is interesting toreview changes over the longer two-quarter span. Most of the erraticmovements in farm income are lesspronounced over two quarters thanover one, and the impact of the strikesis somewhat less.

The $33 billion or 5% percent rise inpersonal income from the fourth quarterof 1967 through the second quarter of1968 was the largest half-year expansionon record in dollar terms and thelargest since the Korean war in per-centage terms. Income during the firsthalf of 1968 was substantially higherin all eight regions and in 45 States,little changed in three States (Okla-homa, North Dakota, and Montana),and down significantly in two (Idahoand Wyoming). In the last two groupsof States, the decline or leveling in theincome flow is traceable directly toreductions in earnings from agriculture.Nonfarm income expanded 2% percentor more in every State.

On a regional basis, total personalincome rose at an above-average ratein the Southwest (6% percent); at nearthe national average rate of 5% percentin the Great Lakes, Far West, RockyMountain, Plains, Southeast, and theMideast; and at a less-than-averagepace in New England (4% percent).

As the accompanying tabulationshows, the major regional variationsin rates of income change in the firsthalf of 1968 reflect developments infarming, mining, and durable goodsmanufacturing. Nationally, incomechanges in these industries had littledifferential impact on the overall gainin income. Durable factory payrollsincreased at the same pace as totalincome. Farm income increased only3% percent and mining wages spurtedby 8% percent

SCB_101968

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