SCB_091973

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

SEPTEMBER 1973 / VOLUME 53 NUMBER

SURVEY OF CURRENT BUSINESS

CONTENTS

THE BUSINESS SITUATIONCapital Spending 2

Export and Import Demand 3Inventories 5

Personal Income 5

National Income and Product Account Errata 6

National Income and Product Tables 11

ARTICLESCapital Expenditures Rise to Continue Through 1973 15

U.S. Direct Investment Abroad in 1972 20U.S. Balance of Payments Developments:

Second Quarter 1973 35Bureau of Economic Analysis Staff Papers 56

CURRENT BUSINESS STATISTICS

General S1-S24

Industry S24-S40

Subject Index (Inside Back Cover)

U.S. Department of Commerce

Frederick B. Dent / SecretarySidney L. Jones / Assistant Secretary

for Economic AffairsEdward D. Failor / Administrator, SESA

Bureau of Economic AnalysisGeorge Jaszi / DirectorMorris R. Goldman / Deputy DirectorLora S. Collins / EditorLeo V. Barry, Jr. / Statistics EditorBilly Jo Hurley / Graphics

Staff Contributors to This IssueRichard D. CarterLora S. CollinsDonald A. KingThomas W. Kraseman

Leonard A. LupoBarbara L. MilesJohn T. Woodward

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the BUSINESS SITUATION

J\S the annual forecasting seasonopens, there seems to be broad agree-ment that output growth will be slowerin 1974 than in 1973. The AmericanStatistical Association's quarterly poll,taken in August, showed a median fore-cast of 2.6 percent real growth from1973 to 1974 as compared with 6 percentexpected this year. While most fore-casters evidently consider a slowdownas highly probable, there appears to bea wide dispersion of views on the extentof that slowdown and on the path ofeconomic activity over the next 18months. If the uncertainty and dis-agreement are greater than usual thisyear, this probably reflects greater thanthan usual difficulty in assessing theimpact of monetary developments,price movements, and the ongoingprice-wage controls program. Price be-havior this year has been sharplydifferent from "normal"encompass-ing a steep rise in agricultural prices,as well as a temporary freeze and othercontrols that have affected price be-havior. Interest rate developments havealso been very different from past ex-perience, for the monetary authoritieshave in large measure permitted risinginterest rates to restrain credit demandand allocate credit (the prime rate isbeing raised to 10 percent at majorbanks as this issue of the SURVEY goesto press). In other recent periods ofcredit restraint, by contrast, the au-thorities have not allowed interest ratesto rise so much, and have operatedmore through curtailing the actualability of banks and other inter-mediaries to extend credit.

A major uncertainty in assessing thecurrent state of the economy, and theoutlook, is how inflation and highinterest rates are affecting consumerpropensity to spend. Consumer surveysthis year suggest a deterioration ofsentiment, but there was no evidence,at least through the summer, of anymarked weakening in the propensityto spend. The pace of auto sales, whichhas been extremely high this year, hasslowed in recent months but only alittle. The new 1974 models are nowbeing introduced, and their receptionwill be an important clue to the futurecourse of consumer demand.

The outlook for continued strongnear-term growth in capital investmentdemand was confirmed by the latestBEA survey of plant and equipmentspending expectations (see pp. 15 to19 for details). It found outlays ex-pected to rise 6% percent from thesecond quarter of this year to thefourth. The increase expected for thefull year 1973 was reported at 13.2percent, the same as the expectationreported 3 months earlier. Investmentin inventories, on the other hand,continues to be very modest, particu-larly when viewed in relation to strongsales growth.

Strong growth of foreign demand forU.S. output is an element in the currenteconomic situation that contrasts rathersharply with conditions in recent years.This country's price competitivenesshas improved very substantially as theresult of exchange rate changes overthe past 2 years and of relatively lessinflation here than abroad. A slowdown

Residential Construction andMobile Homes

CHART 1

Million units (Ratio scale)4

PRIVATE HOUSING STARTS

Total

ly and Aug. _

, I , , , I , , ,

1964 65 66 67 68 70 71 72 73

Seasonally Adjusted at Annual Rates

U.S. Department of Commerce, Bureau of Economic Analysis

Data: Census

73-9-1


SURVEY OF CURRENT BUSINESS September 1973

of growth in major foreign economiescould dampen the expansion of U.S.exports, but continued solid gains seemprobable.

On the other hand, homebuildingactivity has been weakening this year,with the starts rate down from about2% million units (seasonally adjustedannual rate) early in the year to anaverage of just over 2 million unitsin July and August (chart 1). Somedecline had been widely expected asan adjustment following the home-building boom that began in mid-1970, but recent developments in thecost and availability of mortgagecredit make it likely that the contrac-tion will be more severe than seemedprobable when the year began. Someanalysts expect the starts rate to fallas low as 1.5 million units by nextspring, although many do not expectsuch a severe decline. If starts shouldfall that far, the decline would amountto almost 40 percent, about the same asthe 1965-66 contraction but consider-ably more than the 25 percent declinein 1969-70.

Capital SpendingBEA's latest survey of plant and

equipment spending showed business-men expecting strong growth of outlaysin the second half of this year. Capitalspending is expected to rise $4 billionin the third quarter and $2.5 billionin the fourth. The behavior of variousmeasures related to investment spend-ing makes it appear that growth ofoutlays will in fact continue strong forthe remainder of this year and into1974 (table 1). As can be seen, the rateof increase in many of these measurescontinued to accelerate in the secondquarter.

If expectations for the remainderof this year are realized, the ninequarters of the current capital spendingrecovery, will have seen outlays rise29.2 percent above the level of the thirdquarter of 1971 when the capital spend-ing recovery began. That represents anaverage quarterly advance of 3% per-cent, and compares with an average

of 2% percent for the nine

quarters of the preceding capital spend-ing expansion (1968 11-1970 III) and4% percent in the first nine quarters ofthe expansion that began in the firstquarter of 1963.

Although capital spending has pro-vided an important thrust to aggregateeconomic activity in the past two years,its contribution to the expansion oftotal demand has been less than inprevious expansions. As can be seenfrom chart 2, outlays for plant andequipment rose faster than GNP inprevious cyclical upswings, so that theratio of plant and equipment spendingto GNP increased. In the currentexpansion, however, the ratio has shownlittle change and remains below earlierpeaks.

This difference between the currentcyclical expansion and earlier ones is

mainly traceable to manufacturing.Manufacturers7 markets are very sensi-tive to cyclical developments and theircapital outlays are consequently farmore volatile than outlays of nonmanu-facturing industries. In the past, periodsof rapid economic growth have seencapital outlays of manufacturers re-bound sharply and contribute the majorthrust to the increase in aggregate in-vestment. In the current expansion,however, the ratio of manufacturers'plant and equipment spending to GNPhas risen only modestly above the lowreached in 1972 and is far below thehighs reached in the mid-1960's (chart2). The basic reason for this is as fol-lows: Although manufacturers' invest-ment spending has maintained a fairlystable relationship over time to manu-facturing outputi.e., to GNP origi-

Plant and Equipment Spending as a Percent of GNP

CHART 2

Percent (Ratio scale)121

10

Nonmanufacturing, ExcludingUtilities & Communication

\ /

11111111111111111111n11111111111111111111111111111 i1111111111111111 ii 111111111111111111953 55 57 59 61 63 65 67 69 71 73

NOTE.Based on seasonally adjusted data.



September 1973 SURVEY OF CURRENT BUSINESS

Table 1.Selected Measures Relating to Current and Prospective Capital Spending

[Index, 1970 IV=100; seasonally adjusted]

Corporate cash flow including divi-dends

New orders, nondefense capital goods.Unfilled orders, nondefense capital

goods

New capital appropriations, manu-facturing (Conference Board)

Appropriations backlog, manufac-turing

New project starts, manufacturing(BEA)

New projects starts, public utilities.. .Project carryover, manufacturingProject carryover, public utilitiesCapacity utilization, major materials

industries

1971

108.6

99.4

96.8

97.3

96.8

102.3115.7

95.8105.5

101.5

I I

111.9

101.8

95.2

94.2

93.4

100.6117.1

91.5111.0

102.2

III

116.7

102.4

94.2

100.7

92.4

107.8144.4

90.8120.3

97.7

I V

117.8

110.5

94.5

100.7

90.7

111.6141.9

129.2

1972

122.4

114.7

94.3

111.1

93.1

117.8148.1

91.3138.1

102.3

I I

126.6

125.3

97.9

119.5

97.7

127.1142.6

95.5146.3

104.9

I I I

128.4

129.8

103.4

121.0

102.2

140.0175.7

103.1160.0

106.2

I V

134.3

138.0

110.9

141.0

111.4

146.8206.5

109.7178.6

107.8

1973

142.9

145.8

119.4

164.5

120.4

164.3183.8

119.7192.3

109.5

149.7

155.1

128.1

182.9

137.5

186.4231.5

135.7214.7

110.2

Source: BEA, Census, FRB, and Conference Board.

Table 2.Industry Share of Current Dollar Gross Product

[Percent]

Average:1953-19571958-19621963-1967

19681969197019711972

Contractconstruc-

tion

4.634.544.56

4.574.774.774.804.85

Manufac-turing

30.0628.3128.60

28.2727.4525.8224.9025.16

Publicutilities &commu-nication

3.974.624.59

4.484.564.634.784.89

Wholesaleand retail

trade

16.6416.7516.41

16.6216.8217.0317.1716.84

Finance,insurance &real estate

12.0413.4213.65

13.5313.8214.1014.4514.18

Services

8.739.90

10.57

10.9811.2911.6711.5211.50

Gov't &Gov't

enterprises

9.8810.7111.44

12.4712.6213.2413.3613.28

Other i

13.6811.9110.36

9.399.329.379.329.44

1. Includes agriculture, forestry, and fisheries, mining and, transportation, all of which individually have declining sharesand rest of the world, which has a fairly stable share of GNP.

nating in manufacturingthe share ofmanufacturing GNP in total GNP hasdeclined. The share was stable at nearly29 percent from the mid-1950's to 1968,but has since declined and was about25 percent in both 1971 and 1972 (table2).

Outside manufacturing, the rise inplant and equipment spending hasgenerally exceeded the rise in GNP sincethe early 1960's, although in the pastyear or so the two have about keptpace. The uptrend in the ratio of non-manufacturing outlays to GNP reflectsmajor expansion programs of publicutilities and the communications group,industries which have faced severecapacity shortages over the past decade.In other nonmanufacturing industries,capital spending has been increasingless rapidly than GNP since the mid-1960's. Within that aggregate, outlaysby all the major categories of the

transportation group (air, rail, andother) have increased less rapidly thanGNP while investment outlay in themining and "commercial and other"industries have increased about inline with GNP.

Export and Import Demand

The competitive strength of U.S.goods in foreign markets has increasedgreatly in the past year or so, while theappeal of foreign goods, especially con-sumer goods, in U.S. markets has beendampened. This is a consequence of thedevaluation of the dollar against othermajor currencies beginning in Decem-ber 1971, and of the generally greaterseverity of inflation abroad than in theUnited States. Foreign demand hasalso been strengthened by widespreadeconomic expansion. The result is thatexpanding export demand has become

a significant factor to a number ofAmerican industries, nonagricultural aswell as agricultural.

There has been some evidence ofdeceleration in import expansion asthis year has progressed, but the totalvalue of imports in the first half showeda percentage rise about equal to thepace last year. In volume terms, how-evergiven the faster rise in importprices this year than lastthere hasindeed been a deceleration. By con-trast, there has been a sharp accelera-tion of export expansion this year, evenafter adjustment for this year's fasterprice rise. Merchandise imports in thefirst half were at a seasonally adjustedannual rate of $66.5 billion (calculatedon the basis that BEA uses for the bal-ance of payments and GNP accounts),up 24 percent from the first half of 1972;this rise is little different from the in-crease of 22# percent from 1971 to 1972(to a total last year of $55.7 billion).Merchandise exports in the first halfwere at an annual rate of $64.1 billion,up 38 percent from the year-earlierperiod; last year, exports totaled $48.8billion, up 14 percent from 1971. As aresult of these developments, the tradedeficit dropped to $2.4 billion (annualrate) in the first half of 1973, comparedto $6.9 billion last year.

Higher prices have of course been afactor in the huge rise in the value ofagricultural exports, but there has alsobeen a very substantial real increase inthat category. Acceleration of the risein nonagricultural exports has beenbroadly based, but especially sharp forraw materials such as lumber and metalscrap (where price rises are also a fac-tor), and for capital goods. Even con-sumer durable goods are finding growingmarkets abroad. A slowdown of importexpansion this year has been noticeablein nonfood, nonautomotive consumergoods, both durable and nondurable.Capital goods imports have continued torise at the quite rapid rate first evi-denced in the fourth quarter of 1972.Expansion of imports of petroleum andof foods and feeds has acceleratedsharply this year, in part because ofrising prices.

As the trade balance deterioratedafter the mid-1960's, there was only aslight rise in the share of U.S. goods


SURVEY OF CURRENT BUSINESS September 1973

Table 3.Exports as Share of U.S. Production, Imports as Share of U.S. Domestic Demand[Percent; half-years seasonally adjusted]

Exports:1. Goods

Imports:2 Goods3. Autos.4. Nonautomotive capital goods.5. Food6. Nonfood, nonauto consumer goods7. Industrial supplies and materials

Average

1960-64

7.6

4.8

2.13.04.22.42.6

1965-69

7.8

5.9

5.95.64.33.52.6

1970

8.9

7.0

11.47.44.74.62.7

1971

8.6

7.4

11.78.24.74.92.8

1972

1st half

8.8

8.2

12.89.95.05.83.0

2d half

9.2

8.4

11.910.35.05.93.1

1973

1st half

10.7

9.011.811.65.66.03.4

NOTE.Exports and imports used in lines 1 and 2 of this table are as published by BEA in lines 8 and 15 of table 4 of theregular balance of payments tables. The imports used to calculate lines 3-7 of this table are, respectively, those shown in lines94, 80, 61, 97, and 66 of balance of payments table 4. The denominators of the ratios shown here are, by line number: (1) goodscomponent of GNP; (2) goods and structures component of GNP less net merchandise exports; (3) gross auto product less itsnet export component; (4) producers' durable equipment less autos, trucks, and buses; (5) personal consumption spending onfood; (6) personal consumption spending on goods except food, autos, and gasoline; (7) goods and structures componentsof GNP less net merchandise exports.

production (measured by the goodscomponent of GNP) exported, but asharp increase in the share of importedgoods in domestic demand. The recentimprovement of the trade balance ismainly reflected in a faster rise of theexport share. During 1972, the share ofU.S. goods production exported in-creased only moderately, but in thefirst half of 1973 it rose sharply (table3). On the other hand, the share ofimports in domestic demand has thusfar continued to rise at a fairly steadypace. The detail on imports in table 3shows a recent stabilization of theimport share in domestic demand forautos and other nonfood consumergoods, but a continued rise in theimport share in other demandcategories.

InventoriesThe behavior of inventories is of

great interest in the analysis of theeconomy this year. Inventory accumu-lation is normally a key element in aneconomic recovery, but accumulationin this recovery has remained unusuallylow. An acceleration of accumulationthis year has been universally expected,and is suggested by some of the dataon inventories; but it is not clearwhether growth has accelerated in realterms, or only in dollar value.

The Census Bureau's monthly dataon inventories in manufacturing andtrade measure the book value of inven-tories, and this can increase purelybecause of price rises. The considerably

sharper increase in industrial pricesthis year than last has obviously hada significant influence on the trend ofinventories measured in dollar terms.Nevertheless, these book value figuresare the only data available whichpermit examination of inventory ac-cumulation by industry and by stageof processing.

The book value of inventories inmanufacturing and trade was rising inthe first half of this year at a con-siderably faster rate than last year,and accumulation has kept pace withsales growth so that the ratio of in-ventories to sales has remained fairlysteady. Last year, sales growth faroutstripped increases in inventory ac-cumulation and the inventory salesratio fell to an exceptionally low level.

Although the ratio held steady duringmost of this year, it fell in July, butthe drop appeared to reflect specialfactors: because of heavy demand,metal manufacturers' production andshipments slowed less than is usual inmid-summer, so that shipments showeda sharp rise on a seasonally adjustedbasis; at retail, consumers made un-usually heavy purchases of food,especially meat, in anticipation ofhigher prices and shortages. BeforeJuly, the ratio of retail inventories tosales had risen somewhat, mostly re-flecting an easing of the tight inventorysituation at auto dealers. A lessening ofinventory pressure in manufacturing

may also be in the offing. According tothe latest Census Bureau quarterlysurvey, manufacturers are expectinginventories to rise nearly as much inthe second half of the year as in thefirst. On the other hand, sales areexpected to increase only 1% percentbetween the second and fourth quartersof this year, compared with 7 percentfrom last year's fourth quarter to thisyear's second. If these expectations arerealized, the ratio of manufacturers'inventories to sales will rise markedlyfrom its recent extremely low level.

The acceleration in inventory growthfrom last year has been sharper inmanufacturing than in trade. Theaverage monthly increase in trade

Table 4.Average Monthly Accumulationof Inventories in Manufacturing

[In billions of dollars]

Total manufacturingMaterials and supplies. _Goods in processFinished goods

Durable goodsMaterials and supplies. _Goods in processFinished goods

Stone, clay, and glassMaterials and supplies.Goods in processFinished goods

Primary metalsMaterials and supplies.Goods in processFinished goods

MachineryMaterials and supplies.Goods in processFinished goods

Transportation equip-ment

Materials and supplies.Goods in processFinished goods

Other durablesMaterials and supplies.Goods in processFinished goods

Nondurable goodsMaterials and supplies. _Goods in processFinished goods

ChemicalsMaterials and supplies.Goods in processFinished goods

Petroleum and coalMaterials and supplies.Goods in processFinished goods

Rubber and plasticsMaterials and supplies.Goods in processFinished goods

Other nondurablesMaterials and supplies.Goods in processFinished goods

1. Less than 0.005 () .

12monthsending

Jan. 1973

0.47.12.27

.36

.09

.25

.02

0)0)

.01

.01

.020

.020)

.15

.04

.09

.02

.110)

.13- . 0 2

0).07.05l).02

.11

.03

.02

.05

.010)0)0)- . 0 1

o0)- . 0 1

.010)0)

.01

.10

.03

.02

.05

3monthsending

April 1973

0.80.40.32

.54

.21

.27

.05

(0.01

- . 0 10

- . 0 5.01.01

- . 0 7

.30

.13

.13

.04

.13

.03

.07

.17

.04

.07

.06

.25

.19

.04

.02

0.01.02

- . 0 2

.03

.01

.02(0

- . 0 1(0

.23

.16

.02

.05

3monthsending

July 1973

1.13.60.30.23.70.32.25.13

.07

.02

.01

.04

.01

.020)

- . 0 1

0).31.18.13

.15

.09

.04

.02

.15

.02

.06

.07

.43

.28

.06

.10

.04

.05

.01

.01

.0200

.02

.05

.04

.01

.01

.31

.19

.04



stocks in the 6 months ending in Julywas less than 50 percent larger than theaverage in the 12 months ending inJanuary, while the average rise inmanufacturing inventories was twice aslarge. Average monthly accumulationby manufacturers amounted to $1.1billion (seasonally adjusted) in the 3months ending in July, compared with$800 million in the previous 3 monthsand less than $500 million per monthin the 12 months ending last January(see table 4). Recent inventory gainshave been sizable in both durables andnondurables manufacturing. Increaseshave been especially sharp in the motor

CHART 3

Manufacturers' Inventory Accumulationby Stage of Processing

(Average monthly change, seasonally adjusted)Million $

200 400 600

ALL MANUFACTURING

3 months endingJuly 1973

3 months endingApril 1973

12 months endingJanuary 1973

I I

Materials and SuppliesGoods in Process

Finished GoodsI I I

DURABLE GOODS I




I I

J 1NONDURABLE GOODS




rU.S. Department of Commerce, Bureau of Economic Analysis

vehicle, fabricated metal, stone-clay-glass, and rubber industries, withmachinery also showing gains somewhatabove the manufacturing average. Thesmallest inventory gains have occurredin some bf the industries where demandhas been pushing hard against availablecapacity, notably primary metals,paper, and chemicals. Inventories inthe steel industry have actually declinedthis year, after a slight increase lastyear.

The rise in manuf acturers7 inventoriesthis year has been mainly in materialsand supplies; finished goods stocks alsobegan to expand more rapidly in thesecond quarter, but goods in processhave continued to increase at about thesame rate as last year (see chart 3). Inthe 6 months ending in July, materialsand supplies accounted for more thanhalf of the increase in manufacturers7stocks, compared with one-fourth ofthe much smaller rise last year. Thebulk of the acceleration of materialsand supplies inventories has been inindustries that produce final product,with the largest part of that increase inthe hands of machinery and transpor-tation equipment manufacturers. Verylittle of the increase in materials andsupplies inventories occurred in the so-called "basic" industries, i.e., primarymetals, chemicals, petroleum, and paper.This pattern of change in inventoriesby stage of fabrication indicates boththe very strong demand for materialsand supplies in industries producing finalproducts, and the difficulty of meetingthat demand because of capacity limi-tations in the basic supplier industries.

For example, in steel, the pressure ofdemand has been so great that inven-tories have been shifted from this in-dustry into industries which consumesteel. The steel inventory situation wasespecially tight in the January-Aprilperiod, when stocks of steel at the steelmills fell by about 2 million tons ornearly 10 percent, with the drop dividedabout equally between finished steeland steel in process. Despite this sharpcut in inventories at the mills, heavyproduction by manufacturing con-sumers of steel prevented any increasein their holdings, which remained atthe exceptionally low levels to which

they had fallen late last year. However,there was a modest increase in January-April in stocks of steel wholesalers.

From April to July, the steel inven-tory situation showed signs of easingsomewhat. Finished steel stocks at themills fell an additional 1 million tons,but there was a nearly equal increasein inventories held by manufacturingconsumers of steeltheir first signifi-cant rise in 2 years. Steel in process atthe mills showed little further decline,and wholesalers7 stocks were also aboutsteady.

Personal Income

Strong expansion of personal incomecontinued during the summer months.The increase from June to August was11% percent at a seasonally adjustedannual rate, compared with 9% percentfrom March to June and 8K percentfrom December to March (table 5).The aggregate of wages and salarieswhich had been rising very strongly inthe first half of this year, slowed some-what during the summer, and otherlabor income increased at roughly thesame rate during the summer as earlierin the year; but the rise in most otherincome components accelerated. Farmproprietors7 income rose sharply in thesummer after only moderate gains inthe first half, while nonfarm proprietors7income continued to rise in line withthe trend earlier this year. Dividendsincreased very sharply in the summeras the Committee on Interest andDividends relaxed the stabilization pro-gram guidelines on dividend payments,and personal interest income also rosesteeply, reflecting the continuing ad-vance in interest rates, but rentalincome was little changed from Juneto August. The rise in income fromtransfer payments accelerated, mainlybecause disabled persons under 65 werebrought into the medicare program andbecause Federal civilian retirees re-ceived a cost-of-living increase in theirpensions.

There was some slowdown in thesummer in the rise of private wages andsalaries, reflecting a marked decelera-tion in manufacturing. Wages andsalaries in manufacturing increased 6


6 SURVEY OF CURRENT BUSINESS September 1973

percent (annual rate) from June toAugust, compared with 14 percent inthe second quarter and 11 percent inthe first. The factory workweek wasunchanged during the summer, in con-trast to a decline in the second quarter,and the rise in average hourly earningsaccelerated; however, employmentdropped and this caused the decelera-tion in the rise of manufacturing wagesand salaries (table 6).

Bureau of Labor Statistics data onthe number employed, average hourlyearnings, and hours of work can providea gauge of the relative contributions ofthese three factors to the movementover time of the wage and salary com-ponents of personal income. Over thecourse of the business cycle, the relativeimportance of the three factors changes,mainly because the number employedand the length of the workweek havegreater cyclical sensitivity than doaverage hourly earnings.

During the business slowdown in1970, private wage and salary incomecontinued to increase because averagehourly earnings continued to increase;both hours and employment declined(table 6). In the early part of the re-covery in 1971, the workweek beganto lengthen and employment to expand,and each of these factors contributedabout 5 percent to the increase inprivate wage and salary income; aver-age hourly earnings contributed about90 percent of the increase. In the secondhalf of 1971, the workweek lengthenedat the same rate as in the first half butemployment growth accelerated andaccounted for about 20 percent of theincrease in private wage and salaryincome. Throughout 1972 and the firsthalf of 1973, the workweek changedlittle but employment growth wasstrong and accounted for about 40percent of the increase in private wageand salary income; the rise in averagehourly earnings accounted for 60 per-cent of the increase.

In the cyclically sensitive manu-facturing sector, the pattern was some-what different. During the 1970 businessslowdown, wage and salary incomeactually declined, as a result of declines

(Continued on page 19)

Table 5.Percent Change in Personal Income and Components[Seasonally adjusted annual rate] l

Personal income plus social insurance con-tributions

Personal income. _ _Wages and salaries

PrivateManufacturingOther private

GovernmentOther labor incomeDividends and proprietors incomeRent and interestTransfers

1970

1st half 2dhalf

6.97.04.32.6

- 2 . 75.9

11.213.0

- 1 . 312.229.8

5.35.43.42.5

- 3 . 05.86.5

14.2- 2 . 010.119.2

1971

1st half 2dhalf

12.111.98.07.74.99.49.2

14.56.53.8

55.3

4.24.18.38.36.29.58.4

10.13.74.2

-17.7

1972

1st half 2dhalf

8.17.8

10.211.111.810.77.0

11.86.0

- 2 . 66.9

12.512.69.69.8

12.78.28.9

10.613.717.026.3

1973

1stquarter

10.58.3

10.911.011.210.810.58.7

14.57.86.9

2dquarter

9.5

10.611.814.110.46.38.54.9

13.25.3

Juneto

August

11.811.79.8

10.25.9

12.78.28.4

17.614.816.0

1. Percent changes calculated from the last month of each period.

Table 6.Percent Change in Earnings, Hours, and Employment[Seasonally adjusted annual rates l]

Private nonfarm economy:

Average hourly earnings-Average weekly hoursEmployment

Manufacturing:Average hourly earnings .Average weekly hoursEmployment

1970

1sthalf

5.2- 2 . 1- 1 . 7

5.6- 3 . 4- 6 . 1

2dhalf

6.3- 1 . 1- 1 . 8

4.8- 1 . 5- 7 . 1

1971

1sthalf

7.4.5.5

7.11.5

- 2 . 3

2dhalf

5.9.5

1.8

6.32.0

- . 2

1972

1sthalf

5.7.0

4.3

6.61.54.7

2dhalf

6.7- . 53.5

7.5.5

5.0

1973

1stquar-

ter

6.61.15.7

5.22.05.1

2dquar-

ter

6.4.0

3.5

6.2- 2 . 9

4.4

Juneto

Au-gust

8.0.0

2.1

9.2.0

- 1 . 4

1. Percent changes computed from last month of each period.

ERRATACorrections are shown here for certain items in the National Income and Product

tables published in the July 1973 SURVEY.

Period19721972-III1972-III1972-III19721972-11969-III1972-III1971

* * * * * * *

Errors have been found in Fixed A onresidential Business Capital in the United States,1925-1970, published in November 1971 as a supplement to the SURVEY. The errorsare on pages 425-427, 437-439, and 449-451, and involve the investment data for theyears 1867-1968 for manufacturing equipment, manufacturing equipment and structures,nonfarm nonmanufacturing equipment, and nonfarm nonmanufacturing equipment andstructures. Not affected by these errors are: investment data for manufacturing structuresand nonfarm nonmanufacturing structures, investment data for detailed types of equip-ment and structures, investment data for "farm" and "all industries, total," and allinvestment data prior to 1867. Also not affected are the measures of gross and net stocks,depreciation, discards, ratios of net to gross stocks, and average ages of gross and netstocks. Corrected copies of the pages cited above are available on request from theNational Income and Wealth Division, Bureau of Economic Analysis, U.S. Departmentof Commerce, Washington, D.C. 20230.

Table1. 14

2 .42. 42 . 42 .54. 28. 18.28.4

Line19

11213

footnote4343

Published609. 9128.026. 210.3

125.018.7

106.0119.2134. 47

Correct608.9182.026.610.4

125, 00818. 1

106. 6119.5134. 4


September 1973 SURVEY OF CURRENT BUSINESS 7

CHART 4

In August: Nonagricultural payroll employment increased 290,000 The jobless rate was virtually unchanged at 4.8 percent Wholesale prices rose sharply, after declining in July

TOTAL PRODUCTIONBillion $1,400

1,300

1,200

1,100

1.000

CURRENT DOLLAR 6NP **

-

-

" T o t a l N

1 t

Inventory Change J

. / ' ' F ina l Sales

i i i |

-

i i i

Quarterly (II) BEA

Billion $80

60

40

20

CURRENT DOLLAR 6NP(Change From Previous Quarter)*

Total Final

Quarterly (II) BEA

Billion $1,000

900 -

800 -

700 -

600

Percent

CONSTANT DOLLAR (1958) G N P * *

Inventory Change

Total ^tt*^*

- \Final Sales

1 1 i I i I

-

i I iQuarterly (II.) BEA

15

10

-5

CONSTANT DOLLAR (1958) GNP(Change From Previous Quarter)*

Final Saless Total

v \

1973 BEA1971 1972Quar te r l y (II)

*Seasonally Adjusted **Seasonally Adjusted at Annual RatesU.S. Department of Commerce, Bureau of Economic Analysis

THE LABOR MARKET PRICESMillion Persons92

88

84

80

76

CIVILIAN LABOR

Labor Force

:...-.,-'

1 1 1 1 1 1 1 1 1 1 1

FORCE AND EMPLOYMENT*

Employment

M 111 i 11111

-

1 1 1 1 1 1 1 1 1 1 1

Percent16

12

IMPLICIT PRICE DEFLATOR FOR GNP(Change From Previous Quarter)**

II.. LullMonthly (Aug.) BLS Quarterly (ll)

Percent8

6

4

2

0

UNEMPLOYMENT RATE*

-

1 1 1 1 1 1 1 1 | 1 1

Total

Married Men

i i 11 111 111 i

^ " ^

""*"*''*

1 1 1 1 i I M 1 1 1

Percent16

12

Monthly (Aug.)

CHAIN PRICE INDEX FOR GNP(Change From Previous Quarter)*

Ih. LullMillion Persons80

BLS

Billions 1967 = 100

Quarterly (II)

68

64

Hours45.0

42.5

40.0

37.5

35.0

NONFARM ESTABLISHMENTS

Employment*(left scale)

11 111 i 11 i i

Man-Hours**(right scale)i i 111 M 11 i i i 11 i 111 i

BEA

BEA

170 150

160 140

150 130

140 120

130 110

CONSUMER PRICES

/ - -

1 i it i ! ] l j, 1 1

? Retail Food*

11ii1111111

-

1111 111111 i

Monthly (Aug.) BLS

Dollars 1967=100

Monthly (July) BLS

PRODUCTION OR NONSUPERVISORYWORKERS (PRIVATE)* / "Average Hourly Earnings ^ / '

(right scale) v%*"** * *

.****"

AverageWeekly Hours

(left scale)

i i 11 111 i i

4.00 180

3.75 160

3.50 140

3.25 120

3.00 100

WHOLESALE PRICES I

Farm Products / vProcessed Foods ^ /

and Feeds \ /

1111 111 1111 11111111111

IndustrialCommoditiesi 11 i 111 11 i i

1971 1972Monthly (Aug.)

1973 BLS 1971 1972 1973 BLSMonthly (Aug.)


8 SURVEY OF CURRENT BUSINESS September 1973CHART 5

* In August: Personal income rose $10'/2 billion* Housing starts declined to a rate of 2 million units* Expenditures for plant and equipment expected to rise 4'/4 percent in third quarter and 2'/2 percent in fourth

INCOME OF PERSONS CONSUMPTION AND SAVING FIXED INVESTMENTBillion $1,100

1,000

900

800

700

PERSONAL

-

111 i i 11 i

INCOME**

/ I

I i I i 11 i 11 i i i i i

-

-

1 i i i i 1 i i i i i

Billion $850

800

750

700

650

Percent Billion $18 125

PERSONAL CONSUMPTION EXPENDITURES**AND PERSONAL SAVING RATE*

Personal Consumption SExpenditures /(left scale)

***** /Personal Savirg Rate

(right scale)i i 1 i i i i i i

14 100

10 75

50

Monthly (Aug.) BEA Quarterly (ll) BEA

Billion $ Billion $ Billion $700

650

600

550

*>00

WAGES AND SAURIES** S ^

- y

Total(left scale)

Manufacturing(right scale)

I 1 I I I 1J | I M i i I I I 1 i I l l I i I I I i 1 M i i 1

200

150

100

45

40

35

30

25

RETAIL STORE SALES *

-

T o t a l v ^

' Excluding Automotive Group

i 11 I I 11 i i i i I i i 1 1 1 1 i i

r

1 1 1

_

11111 1 1 II 1 1

Monthly (Aug.) BEA Monthly (Aug.)

Billion $900

850

800

750

700

DISPOSABLE

-

-

I I I

PERSONAL

i

INCOME**

/

1 1

/ -

-

-

1 1 1

Million Units12

Census

Million Units

10

NEW CAR SALES*

Imports(right scale)

\Domestic

(left scale)

Quarterly (II) BEA

Dollars3,000

2,900

2,800

2,700

2,600

REAL PER CAPITA DISPOSABLEPERSONAL INCOME**

- (In 1958 Dollars)

i I i i i i

-

-

-

i i i

4 I I M I I I I I I M I I I I I 1 I I I I I I I I I I I I 1 I I I I I I 0Monthly (Aug.) Trade Sources & BEA

Billion $3.2

2.4

1.6

NET CHANGE IN INSTALLMENTCREDIT OUTSTANDING*

1971 19731972Quarterly (ll) BEA

^Seasonally Adjusted **Seasonally Adjusted at Annual RatesU.S. Department of Commerce, Bureau of Economic Analysis

0 I i i I i i 1 i i i I i I I i i i i I I I i i i 1 i i I i I I I I i I I

1971 1972 1973Monthly (July) FRB

25

Producers' Durable Equipment *\

Residential Structures\

^Nonresidential Structures**i i i i i i i i i i i

Quarterly (II) BEA

Billion $110

100

90

80

70

PLANT AND

-

1 1 1

EQUIPMENT

x

1

EXPENDITURES**jar''

1 1

0 Expected _

1 1 1

Quar ter ly (IV) BEA

Billion $14

12

10

8

6

CAPITAL GOODS MANUFACTURERS*(NONDEFENSE)

New Orders , / '

J

i 11 i 111 i i i i

Shipments

1 I 1 1 1 1 1 1 1 M

1/ --

II 1 | 1 I 1 1 1 IIMonthly (July) Census

Million Units

3.5

3.0

1.5

PRIVATE HOUSING*

1*1 1 1 111 1 1 1 1 1 1 1 1 1 1 1 11 11 11 1 1 111 111 1


1973Census



In July: Manufacturing and trade firms added $1.5 billion to their stocks Merchandise trade balance shifted to a surplus In second quarter: Balance of payments position improved

INVENTORIESBillion $15

10

- 5

CHANGE IN BUSINESS INVENTORIES*(GNP Basis)

Hi i. ill iiQuarterly (II) BEA

Billion $210

200

190

180

170

MANUFACTURING AND TRADE /INVENTORIES* /

- (Book Value, End of Month) /

Total ^ /

" s*

1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 [ I 1

-

-

1 1 1 1 1 1 1 1 1 1 1

Monthly (July) Census & BEA

Billion $140

120

100

80

60

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

Manufacturing_ _ _ \ _ - 1-

Trade\

I 11 111 I t > i i 1 I M 1 ! 1 I 1 I I i 11 i 11 i i i i tMonthly (July) Census & BEA

Ratio2.6

2.2 -

1.8

1.4

1.0

INVENTORY-SALES RATIOS*

Manufacturing

Total Manufacturingand Trade

1 1 1 1 1 1 1 1 i 11 i i i i 11 i 11 11 i 111 i I i 11 111971 1972 1973

Monthly (July) Census & BEA*Seasonally Adjusted * *Seasonally Adjusted at Annual Rates


FOREIGN TRANSACTIONSBillion $10

5

0

-5

-10

NET EXPORTS **

-

\ Goods and Services

..W

Merchandisei i i

* '

i i i

-

/

/ /

i i iQuarterly (II) BEA

2 1 1 I M . ! I I I I I I 1 I I I I I 1 I I I I I I I I I I I I M I I I

Monthly (July) Census

Billion $10

- 5

-10

BALANCE OF PAYMENTS

Current Account

Current Account andLong-Term Capital

Quarterly (II) BEA

Billion $5

0

- 5

10

15

BALANCE OF PAYMENTS *

Net Liquidity A .-. kv Balance \ / ^ \ / ^ /

- WV x O f f i c i a l Reserve

Transactions Balance1 1 I i i i

\7

i l l1971 1972

Quarterly I1973

BEA

CHART 6

GOVERNMENTBillion $200

GOVERNMENT PURCHASES OFGOODS AND SERVICES**

Quarterly (ll)

Billion $320

280

240

200

FEDERAL BUDGET*(NIA Basis)

1 6 0 I I I I I 1 1 1

Receipts

Quarterly ( BEA

Billion $

-50Quarterly 00

Billion $

DEFENSE PRODUCTS MANUFACTURERS*

New Orders

\ kShipments

o 111111111 I I I I t I I I I I1971 1972

Monthly (July)1973

Census



1 CHART 7

* In August: Industrial production declined slightly* Bank credit increased sharply; money supply was unchanged* Interest rates and bond yields continued to rise

INDUSTRIAL PRODUCTION1967=100160

140

120

100

80

INDUSTRIAL PRODUCTION*

-

_ Total

* ^

i i I i i | | {[.I i

NondurableManufactures

\. J'!m*-r-< ^

DurableManufactures

1 1 1 1 1 1 f 1 1 1 1

1 1 1 1 1 1 1 1 1 1 1

Monthly (Aug.) FRB

1967=100150

INDUSTRIAL PRODUCTION*

m^ 'f

75

50 I i I I I I ( l I I I I I i I I I I I I I I i I I I I I I I I I I I I IMonthly (Aug.) FRB

Percent100

RATIO, OUTPUT TO CAPACITY*

Manufacturing

90

80

70

60 I I I I I I I I I I I IQuarterly (II) FRB

Billion $52

44

DURABLE GOODSMANUFACTURERS*

New Orders

20 I I I i I I I I i I i I 1 i i i i i 1 i i I I I I I I I I i I I i I i I1971 1972 1973

Monthly (July) Census"Seasonally Adjusted "Seasonally Adjusted at Annual Rates


MONEY, CREDIT, AND SECURITIES MARKETS PROFITS AND COSTSBillion $625

575

525

475

425

BANK CREDIT AND MONEY SUPPLY

_

Money Supply(right scale)

11111111111

/IBank Credit(left scale)

i 11 111 11 111

f* /

/ / " " -

-

I . I I I 1 1 < < 1 1

Billion $280

- 260

- 240

- 220

200

Billion $125

100

75

50

CORPORATE PROFITS AND IVA, BEFORE TAXES**

T \ ^ 1

-

i | |

V\

NonfinancialCorporations

i i i

" -

-

i i iMonthly (Aug.) Quarterly (II) BEA

Billion $

4 -

2 -

Billion $

-2

Billion $10

Monthly (Aug.)

INTEREST RATES AND BOND YIELDCorporate Aaa (Moody's)

90-DayCommercial Paper

v 3-Month f>Treasury Bills

I I I I I 1 M I I l l I I I I I I I I I I I M I I I I I I I I IMonthly (Aug.)

1941-43=10140

120

100

80

60

STOCK PRICES

" Standard and Poor's 500 s

-

i 11 i i I 1 1 1 1 j.

/

1 II 1 1 1 M 1 II

-

1 1 1 M 1 1 1 1 1 1


1973

125

100

75

50

?5

CORPORATE CASH FLOWAND PROFITS** .

^ -

Profits After\

1 i 1

Cash Row AfterDividends

Tax

i i i

i i iQuarterly (||) BEA

Percent24

16

-8

COMPENSATION AND REAL OUTPUT PER MAN-HOUR,PRIVATE ECONOMY(Change From Previous Quarter)**

Compensation Output

iJUJIilQuarterly (ll) BLS

Percent24

16

- 8

UNIT LABOR COSTS, PRIVATE ECONOMY(Change From Previous Quarter)**

!- I l l1971 1972

Quarterly (II)1973

BLS



NATIONAL INCOME AND PRODUCT TABLES11

1971 1972

1972

I 11 III IV

1973

I II

Seasonally adjusted at annual rates

Billions of current dollars

1971 1972

1972

I II III IV

1973

I II


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

NonresidentialStructuresProducers' durable equipment..

Residential structures.NonfarmFarm

Change in business inventories.NonfarmFarm

Net exports of goods and services

ExportsImports

Government purchases of goods and services

FederalNational defense..Other

State and local.

,055.5667.2103.6278.7284.9153.2147.1

104.437.966.542.742.2

6.14.51.6

66.365.5

234.3

98.171.626.5

136.2

1,155.2726.5117.4299.9309.2

178.3172.3118.241.776.554.053.5

6.05.6.4

- 4 . 6

73.578.1

255.0104.474.430.1

150.5

1,112.5700.2

111.5288.8300.0

167.5165.8114.041.073.1

51.851.2

1.71.4.4

- 5 . 570.375.8

250.3106.076.529.5

144.3

1,142.4

719.2115.1297.9306.2

174.7

169.2116.341.574.952.852.3

.5

5.54.8.7

- 5 . 7

69.975.6

254.2106.776.630.1

147.5

1,166.5734.1

120.2302.3311.6

181.5172.9118.341.377.054.553.9

8.78.4.3

- 3 . 8

74.077.7

254.7102.371.930.4

152.4

1,199.2752.6

122.9310.7319.0189.4181.2

124.343.081.2

56.956.4

.58.27.9.3

- 3 . 579.783.2

260.7

102.772.430.3

158.0

1,242.5779.4132.2322.2325.0194.5189.9130.945.385.559.058.4

4.64.4.2

.0

89.789.7

268.6105.574.331.2

163.0

1,272.0

795.6132.8330.3332.6

198.2193.7134.147.286.9

59.1.5

4.54.4.1

2.897.294.4

275.3107.374.233.1

168.0

745.4

496.392.2

211.6192.4

110.3

105.076.122.553.629.028.6

.4

5.33.81.4

.4

52.752.4

138.4

60.9

77.5

790.7526.8104.0220.9201.8122.9118.3

83.723.060.834.634.2

.4

4.64.5.1

- 2 . 0

56.458.4

143.0

60.8

82.2

768.0

512.599.2

215.0198.2

116.5115.481.523.058.434.033.6

.4

1.11.0.1

- 3 . 7

55.459.1

142.7

63.0

79.7

785.6523.4101.9220.7200.8

121.0116.782.523.059.534.233.9

.4

4.34.0.3

- 2 . 8

54.156.8

144.0

62.9

81.1

796.7

531.0105.8222.2202.9124.8118.2

83.422.760.7

34.734.3

.4

6.66.6.0

- . 956.657.5

141.8

58.8

83.0

812.3

540.5109.2225.8205.4129.1

122.887.523.164.3

35.335.0

.3

6.36.2.1

59.660.3

143.558.6

85.0

829.3552.7117.0228.8207.0130.2

126.991.223.867.4

35.635.3

.4

3.33.2.1

2.0

65.363.3

144.4

58.2

86.2

834.3

553.3116.2228.0209.1

130.2126.991.524.467.2

35.335.0

.33.43.3.1

5.666.661.1

145.258.2

87.0

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

Final sales. _Change in business inventories.

Goods output .

Final salesChange in business inventories..

Durable goods _Final sales.Change in business inventories..

Nondurable goods...Final salesChange in business inventories..

Services.Structure

1,055.51,049.4

6.1497.1

491.16.1

193.1191.1

2.0304.0299.9

4.1

447.4110.9

1,155.21,149.1

6.0541.4535.4

6.0

219.1214.1

4.9322.3321.2

1.1

487.3126.5

1,112.51,110. 8

1.7

516.9515.2

1.7

205.9205.5

.4

311.0309.7

1.3

471.8123.8

1,142.4

1,136. 95.5

536.4531.0

5.5214.6211.4

3.2

321.9319.6

2.3

481.5124.4

1,166.51,157. 8

8.7548.6539.9

8.7222.6216.8

5.8326.0323.1

2.9491.8126.2

1,199.2

1,191.08.2

563.6555.4

8.2233.2222.810.4

330.3332.52.2

503.9131.7

1,242.51, 237. 8

4.6589.6585.0

4.6242.5238.1

4.4

347.2346.9

.3514.8138.1

1,272.0

1,267.54.5

604.2599.6

4.5249.7242.4

7.3354.5357.3- 2 . 8527.7140.1

745.4740.1

5.3396.1

390.85.3

163.0161.3

1.7

233.1229.5

3.6280.169.-1

790.7786.1

4.6423.9419.3

4.6184.1180.2

3.9239.8239.1

.7

292.674.2

768.0766.9

1.1

407.3406.2

1.1173.5173.2

.3

233.8233.0

.8286.873.9

785.6781.3

4.3

421.5417.2

4.3180.4177.7

2.7

241.1239.5

1.6290.373.8

796.7790.0

6.6428.4

421.76.6

186.2181.8

4.4

242.2240.0

2.2

294.573.8

812.3

806.06.3

438.4

432.16.3

196.3188.0

8.2

242.1244.11.9298.875.1

829.3826.0

3.3

452.1448.7

3.3203.4200.3

3.2

248.7248.5

.2

300.676.7

834.3

831.03.4

453.9

450.53.4

207.1201.8

5.4246.7248.7- 2 . 0304.176.3

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

PrivateBusiness

Nonfarm _Farm

Households and institutions.Rest of the world

General government..FederalState and local

1,055.5S30.3889.9859.430.4

33.57.0

125.147.677.6

1,155.21,019.7

975.4941.034.4

36.87.5

135.450.385.1

1,112.5980.3937.8904.833.0

35.57.0

132.250.581.7

1,142.4

1,008.6965.2931.333.936.66.8

133.850.083.8

1,166.51,030.0

984.9951.033.937.57.6

136.550.286.4

1,199.21,060.01, 013. 6

976.936.737.88.7

139.250.588.7

1,242.51,098.91, 050. 51, 008. 9

41.639.39.1

143.552.591.1

1,272.01,126.21,076. 81,033. 5

43.3

40.58.9

145.852.293.6

745.4684.7662.2636.326.016.85.6

60.723.037.6

790.7729.5706.6682.024.617.45.5

61.121.839.3

768.0707.3684.7659.225.617.25.4

60.722.138.6

785.6725.0702.6677.425.217.45.0

60.621.738.9

796.7735.3712.3688.723.617.55.5

61.321.739.7

812.3750.3726.8702.524.2

17.46.2

62.021.740.3

829.3767.1742.9718.124.8

18.06.3

62.221.640.6

834.3772.0748.3725.922.4

18.25.5

62.421.441.0

HISTORICAL STATISTICSTHE national income and product data for 1929-63 are in The National Income and Product Accounts of the United States, 1929-1965,

Statistical Tables (available at $1 from Commerce Department District Offices or the Superintendent of Documents; see addresses insidefront cover). Each July SURVEY contains preliminary data for the latest 2 years and fully revised data for the preceding 2. The July 1973issue has data for 1969-72. Prior July issues have fully revised data as follows: 1968-69, July 1972; 1967-68, July 1971; 1966-67, July 1970;1965-66, July 1969; 1964-65, July 1968. BE A will provide on request a reprint of the fully revised data for the years 1964-69.



1971 1972

1972

I II III

Seasonally adjusted

Billions of dollars

IV

at

I

annual

1973

II

rates

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

Gross national productLess: Capital consumption

allowancesEquals: Net national product..

Less: Indirect business taxand nontax liability...

Business transfer pay-ments

Statistical discrepancy _.Plus: Subsidies less current

surplus governmententerprises

Equals: National income

Less: Corporate profits andinventory valuationadjustment

Contributions for socialinsurance

Wage accruals less dis-bursements

Plus: Government transferpayments to persons..

Interest paid by govern-ment (net) and byconsumers.,

DividendsBusiness transfer pay-

ments

Equals: Personal income

1,055.5 1,155.2 1,112.5 1,142.4

103.693.8961. 6 1,

102.44.3

- 3 . 4

1.2

859.4

80.1

64.6

88.9

31.025.1

4.3

863.5

102.4

,052.

109.5

4.6- 1 . 5

1.7

941.8

91.1

73.7- . 5

98.3

32.726.0

4.6939.2

98.4

,014. 2 1

106.54.5

- 6 . 7

1.2

911.0

86.2

71.7

- 1 . 4

94.3

31.625.7

4.

910.8

102.38 1,064.

108.44.6

- 1 . 0

1.5

928.3

88.0

72.9- . 4

95.3

32.625.9

4.6926.1

1,166.5 1,199.2 1,242.5 1,272.0

2 1,

110.54.71.6

1.8949.2

91.574.5- . 2

96.4

32.926.2

4.

943.7

105.1[,094.1

112.8

4.7.2

2.2 .9

978.6 1,015.0 1

75.8.0

107.3

33.7

26.4

4.7

976.1

106.9

1,135.

115.6

4.81.1

104.3

89.3

.0

108.8

34.726.94.8

996. 6 1

109.0,163.0

117.2

4.93.2

.4

1,038.2

107.9

90.9

- . 3

110.8

36.127.3

4.9[,019.0

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

Gross auto product L _ _Personal consumption ex-

penditures. - wProducers' durable equip-

rnent..Change in dealers' auto in-

ventoriesNet exports-

Exports...Imports...

Addenda:New cars, domestic2 .Newcars, foreign

Gross auto product KPersonal consumption ex-

pendituresProducers' durable equip-

ment.Change in dealers' auto in-

ventoriesNet exports.

Exports...Imports...

Addenda:New cars, domestic 2_New cars, foreign

Billions of current dollars

40.9

35.46.3

1.4

- 2 . 62.55.1

35.77.8

43.6

39.47.0

- . 5

- 2 . 73.05.7

37.98.6

40.1

36.66.5

- . 4

- 2 . 92.75.6

34.98.2

42.1

38.1

6.7

- . 4

- 2 . 82.85.6

36.98.2

46.5

41.87.4

- . 8

- 2 . 33.25.4

40.38.8

45.6

41.2

7.3

- . 4

- 2 . 93.36.2

39.59.4

51.5

45.18.0

.9

- 2 . 83.66.4

44.010.6

51.2

44.67.91.2

- 2 . 93.66.5

44.89.8


36.4

31.4

5.6

1.2

- 2 . 32.34.5

32.47.2

39.0

35.2

6.3

- . 4

- 2 . 42.65.0

34.67.9

36.1

32.8

5.8

- . 4

- 2 . 6 2.3

4.9

32.07.5

37.7

34.0

6.1

- . 3

- 2 . 42.44.8

33.57.5

41.0

36.76.5

- . 7

- 1 . 92.74.7

36.28.0

41.4

37.3

6.7

- . 3

- 2 . 63.05.5

36.78.8

46.4

40.4

7.2

. 8

- 2 . 43.25.6

40.69.9

45.5

39.6

7.0

1.0

- 2 . 53.15.6

40.79.0

1971 1972

1972

I II III IV

1973

I II


Billions of dollars

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

National income

Compensation of employees.Wages and salaries

PrivateMilitaryGovernment civilian.

Supplements to wages and salaries..Employer contributions for social

insuranceOther labor income..

Proprietors' incomeBusiness and professional.Farms

Rental income of persons

Corporate profits and inventory valua-tion adjustmentProfits before tax..

Profits tax liabilityProfits after tax

Dividends.Undistributed profits.

Inventory valuation adjustmentNet interest

859.4644.1

573.8449.7

19.4104.7

70.3

33.7

36.6

68.751.916.8

24.5

80.185.137.447.625.122.5

- 4 . 9

42.0

941.8707.1

627.3493.320.3

113.8

79.7

39.0

40.7

74.2

54.020.2

24.1

91.198.0

42.755.426.029.3

- 6 . 945.2

911.0684.3607.3476.420.9

110.0

77.0

37.9

39.1

72.5

53.119.524.1

86.2

92.840.652.225.726.5

- 6 . 6

43.9

928.3

699.6

620.8488.420.1

112.3

78.9

38.7

40.2

73.253.319.922.6

88.094.841.453.425.927.5

- 6 . 744.8

949.2

713.1632.5497.520.0

115.180.5

39.341.3

74.1

54.319.824.9

91.598.4

42.955.626.229.4

- 6 . 945.7

978.6731.2

648.7510.920.1

117.7

82.540.2

42.3

77.1

55.321.824.9

98.8106.1

45.960.326.433.9

- 7 . 3

46.6

1015.0757.4

666.7525.1

20.9120.7

90.847.4

43.3

80.6

56.324.324.7

104.3119.6

52.766.926.940.0

-15.447.9

774.9682.3538.7

20.5123.1

92.6

48.3

44.2

81.557.124.4

24.6

107.9128.957.471.627.344.2

-21 .1

49.4

Table 7.National Income by Industry Division (1.11)

All industries,total 859.4 941.8 911.0 928.3 949.2 978.6 1015.0 1038.2Agriculture, forestry, and fisheriesMining and constructionManufacturing

Nondurable goodsDurable goods..

Transportation..C ommunicationElectric, gas, and sanitary servicesWholesale and retail tradeFinance, insurance, and real estateServices -Government and government enter-

prises... Rest of the world..

26.253.7

226.491.8

134.532.817.816.5

130.9100.1109.8138.2

7.0

30.459.9

252.699.9

152.736.020.018.2

139.7107.9120.1149.5

7.5

29.558.3

241.396.4

144.935.219.217.2

136.7105.0115.9145.8

7.0

30.059.3

248.797.7

151.0

35.319.518.3

138.3105.7119.0147.6

6.8

29.960.4

253.9100.8153.136.220.418.5

140.5109.2121.8150.7

7.6

32.261.8

266.5104.6161.937.320.818.6

143.2111.6123.9153.9

8.7

34.764.0

280.8107.3173.538.220.919.1

146.9114.2128.4158.6

35.165.5

290.4109.9180.538.521.019.4

149.7117.3131.4

160.9

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

All industries, total.

Financial institutions

Federal Reserve banks

Other financial institutions

Nonfinancial corporations

ManufacturingNondurable goods.Durable goods

Transportation, communicationand public utilities.

All other industries.

80.115.2

3.311.964.932.517.814.7

8.623.9

91.117.5

3.414.173.640.120.020.2

9.324.2

86.2

16.63.4

13.3

69.637.318.618.7

8.523.8

88.017.33.4

14.070.7

38.718.520.2

8.923.1

91.517.63.4

14.273.9

39.920.419.5

9.824.1

98.818.63.4

15.280.244.722.422.3

9.925.7

104.319.83.9

16.0

84.549.722.826.99.2

25.6

107.921.4

4.417.0

86.552.423.928.58.5

25.6

1. The gross auto product total includes government purchases.2. Differs from the gross auto product total by the markup on both used cars and foreign


September 1973 SUEVEY OF CURRENT BUSINESS 13

1971 1972

1972

II III IV

1973

II

Seasonally adjusted at annual ratesBillions of dollars

Table 9.Gross Corporate Product* (1.14)

Gross corporate product.Capital consumption allowancesIndirect business taxes plus transfer

payments less subsidiesIncome originating in corporate busi-

Compensation of employees.Wages and salaries. _Supplements

Net interestCorporate profits and inventory

valuation adjustmentProfits before tax


DividendsUndistributed profits

Inventory valuation adjustment..Cash flow, gross of dividends..Cash flow, net of dividends

Gross product originating infinancial institutions

Gross product originating innonfinancial corporations

Capital consumption allowancesIndirect business taxes plus transfer

payments less subsidiesIncome originating in nonfinancial

corporationsCompensation of employees.

Wages and salariesSupplements

Net interestCorporate profits and inventory

valuation adjustmentProfits before tax


DividendsUndistributed profits

Inventory valuation adjustment..Cash flow, gross of dividends..Cash flow, net of dividends _.

Gross product originatingnonfinancial corporations..

Current dollar cost per unit of1958 dollar gross productoriginating in nonfinancialcorporations2

Capital consumption allowancesIndirect business taxes plus transfer

payments less subsidiesCompensation of employeesNet interestCorporate profits and inventory valu-

ation adjustmentProfits tax liabilityProfits after tax plus inven-

tory valuation adjustment..

586.760.4

57.7

468.6

389.2340.9

48.4

5.0

74.479.337.441.822.319.6

- 4 . 9102.280.0

32.6

554.1

58.155.1

440.9365.3320.345.016.5

59.264.129.734.420.314.1

- 4 . 9

92.572.2

644.365.9

60.8

517.6428.9373.8

55.1

3.8

84.991.842.749.123.325.8

- 6 . 9115.091.7

35.4

608.963.2

58.0

487.7403.0351.5

51.5

17.4

67.374.335.039.221.218.1

- 6 . 9102.581.3

621.563.4

59.3

498.7414.2360.953.3

3.8

80.787.340.646.723.223.5

- 6 . 6110.186.9

34.0

587.4

60.956.6

469.9389.1339.349.8

16.8

64.070.733.237.421.216.2

- 6 . 6

98.377.1

637.166.260.2

510.7

424.6370.0

54.6

3.8

82.389.141.447.723.424.3

- 6 . 7

113.890.5

35.1

601.963.557.4

481.0

398.8347.8

51.017.2

65.071.733.837.921.316.6

- 6 . 7101.580.2

648.6

66.061.2

521.4

432.4376.7

55.6

3.8

85.292.242.949.323.525.9

- 6 . 9115.491.9

35.7

612.963.358.4

491.3406.1354.1

51.917.5

67.774.635.239.421.418.1

- 6 . 9

102.781.4

670.1

68.062.5

539.5

444.6387.6

56.93.7

91.298.645.952.723.029.7

- 7 . 3120.797.7

36.8

633.265.2

59.6

508.4

417.8364.6

53.2

17.9

72.780.037.842.220.921.2

- 7 . 3107.386.4

695.4

69.3

64.3

561.9

461.6398.363.33.7

96.6111.952.759.223.635.6

-15 .4

128.5104.9

38.7

656.766.3

61.3

529.1434.1375.0

59.2

18.2

76.892.144.347.821.426.4

-15 .4114.192.7

78.899.948.251.721.929.8


442.7 475.5 462.3 471.9 477.8 489.8 503.4 509.6

Dollars

1.252

.131

.125

.825

.037

.134

.067

.067

1.281

.133

.122

.847

.037

.142

.074

.068

1.271

.132

.122

.842

.036

.139

.072

.067

1.276

.135

.122

.845

.036

.138

.072

.066

1.283

.132

.122

.850

.037

.142

.074

.068

1.293

.133

.122

.853

.037

.148

.077

.071

1.305

.132

.122

.862

.036

.152

.088

.064

1.320

.132

.122

.874

.037

.155

.095

.060

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.3. Personal saving as a percentage of disposable personal income.

1971 1972

1972

I II III IV

1973

I II

Seasonally adjusted at annual ratesBillions of dollars

Table 10.Personal Income and its Disposition (2.1)Personal income.

Wage and salary disbursementsCommodity-producing industries..

ManufacturingDistributive industriesService industriesGovernment

Other labor income..Proprietors' income..

Business and professional-Farm

Rental income of persons..DividendsPersonal interest income..

713.070.565.2

577.3

473.4408.764.6

3.7

100.2121.357.463.924.139.8

-21 .1

134.4110.3

40.5

672.557 5 Equals: Disposable personal income. . .62 2 Less: Personal outlays

Personal consumption expenditures..Interest paid by consumersPersonal transfer payments to for-

eigners

Transfer paymentsOld-age, survivors, disability, and

health insurance benefitsState unemployment insurance

benefitsVeterans benefitsOther.

Less: Personal contributions forsocial insurance.

Less: Personal tax and nontax pay-ments

542.8

445 4384.9 Equals: Personal saving.60*. 518.6 Addenda:

Disposable personal income:Total, billions of 1958 dollars.Per capita, current dollarsPer capita, 1958 dollars

Personal saving rate,3 percent.

863.5573.3206.3160.5138.3104.7123.9

36.6

68.751.916.8

24.525.173.093.244.5

5.711.231.8

10.9

117.5746.0685.8667.217.7

1.060.2

554.93,603

8.1

939.2

627.8226.0175.9151.5116.1134.2

40.7

74.254.020.2

24.126.078.0

103.049.6

5.512.735.1

34.7

142.2

797.0747.2726.519.71.0

49.7

577.93,8162,767

6.2

910.8608.8218.2168.9147.5111.6131.6

39.1

72.553.119.524.125.775.5

46.6

5.812.034.4

33.8

138.0

772.8720.0700.218.8

1.052.9

565.73,7112,716

6.8

926.1621.1223.7174.0150.0114.9132.6

40.2

73.253.319.922.625.977.4

99.947.3

6.312.134.1

34.3

140.7785.4739.5719.219.4

45.9

571.63,7652,740

5.8

943.7632.7227.3177.0152.5117.9135.0

41.374.154.319.824.926.278.6

101.148.0

5.312.635.2

35.2

142.8800.9755.1734.120.0

1.045.8

579.33,8312,771

5.7

976.1648.7234.8183.7156.0120.1137.8

42.3

77.155.321.824.926.480.3

112.056.44.7

14.136.8

35.7

147.4828.7774.3752.620.7

1.154.4

595.13,9552,841

996.66.7

241.6189.1159.5123.9141.6

43.3

80.656.324.324.726.982.7

113.658.34.1

13.337.8

41.9

145.1

851.5801.5779.421.2

.950.0

603.94,0572,878

5.9

1019.0682.6248.6194.8163.3126.9143.7

44.2

81.557.124.4

24.627.385.6

115.7

60.04.1

13.438.2

42.6

149.3869.7818.7795.622.01.0

51.0

604.84,1372,877

5.9

-21. l Table 11.Personal Consumption Expenditures by Major Type (2.3)119.297.3 Personal consumption expendi-

tures.Durable goods..

Automobiles and partsMobile homes.

Furniture and household equipment-Other....

Nondurable goodsFood and beverages.Clothing and shoes..Gasoline and oilOther

Services.HousingHousehold operation.TransportationOther

667.2

103.646.63.3

42.114.9

278.7

136.657.023.561.5

284.998.539.720.4

126.3

726.5117.4

52.84.1

48.116.5

299.9145.362.325.566.8

309.2105.543.821.8

138.0

700.2111.549.44.0

46.615.4

288.8141.059.424.763.6

300.0

103.141.821.6

133.5

719.2115.1

51.24.2

47.316.6

297.9144.761.725.066.6

306.2104.743.221.7

136.6

734.1120.255.03.7

48.616.6

302.3

146.562.925.867.2

311.6106.344.521.8

138.9

752.6122.955.74.4

50.017.3

310.7149.165.126.670.0

319.0107.945.722.2

143.1

779.4132.260.5

5.053.718.0

322.2

154.768.327.571.7

325.0110.646.522.8

145.1

795.6132.859.75.0

54.418.6

330.3

158.169.328.874.2

332.6

113.347.123.2

149.0

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

Receipts from foreignersExports of goods and services..Capital grants received by the United

StatesPayments to foreigners

Imports of goods and services..Transfers to foreigners..

PersonalGovernment

Net foreign investment..

67.0

66.3

.7

67.065.5

1.02.6

- 2 . 1

74.2

73.5

.7

74.2

78.13.71.02.7

- 7 . 6

71.1

70.3

.7

71.1

75.83.91.02.9

- 8 . 7

70.669.9

.7

70.675.6

2.8- 8 . 7

74.7

74.0

.7

74.7

77.7

3.81.02.8

- 6 . 9

80.479.7

.7

80.483.23.51.12.5

- 6 . 3

89.789.7

.089.789.73.0.9

2.1

- 3 . 0

97.297.2

.0

97.2

94.4

3.31.02.3

- . 5


14 SUKVEY OF CUREENT BUSINESS September 1973

1971 1972

1972

I II III IV

1973

I II


Billions of dollars

1971 1972

1972

I II III IV

1973

I II

Seasonally adjustedIndex 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 receipts-Personal tax and nontax receiptsCorporate profits tax accrualsIndirect business tax and nontax

accruals.Contributions for social insurance...

Federal Government expendituresPurchases of goods and services

National defenseOther

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 _SubsidiesCurrent surplus

Less: Wage accruals less disburse-ments

Surplus or deficit (), nationalincome and product accounts

198.989.933.320.455.2

221.0

98.171.626.5

74.972.32.6

29.113.6

5.33.9

-1 .4

. 0

-22.2

228.7

107.937.8

19.963.0

244.6104.474.430.1

82.980.12.7

37.713.56.15.5

- . 6. 0

-15.9

222.9105.636.0

19.761.5

236.6106.076.529.5

79.776.82.9

32.213.15.54.7

- . 8. 0

-13.8

225.4106.636.719.762.4

244.4

106.776.630.1

80.177.32.8

38.013.6

5.95.1

- . 8- . 1

-19.0

229.6

108.138.0

19.963.6

237.0

102.371.930.4

80.878.02.8

34.413.4

6.26.1

- . 1

. 0

-7 .4

236.9

111.340.7

20.364.6

260.3102.772.430.391.088.52.5

46.113.7

6.76.1

- . 6. 0

-23.4

253.6108.546.6

20.777.8

258.6105.574.331.291.889.72.1

41.114.7

5.54.6

- . 9. 0

-5 .0

262.4111.450.821.279.1

262.4

107.374.233.1

93.891.52.3

40.515.65.13.9

- 1 . 2

- . 1

.0

Table 14.State and Local Government Receipts and Expenditures(3.3, 3.4)

State and local government receiptsPersonal tax and nontax receiptsCorporate profits tax accrualsIndirect business tax and nontax

accruals...Contributions for social insurance. __Federal grants-in-aid

State and local government expendi-tures

Purchases of goods and servicesTransfer payments to personsNet interest paidSubsidies less current surplus of

government enterprisesSubsidiesCurrent surplus

Less: Wage accruals less disburse-ments

Surplus or deficit ( - ) , nationalincome and product accounts

152.327.74.1

82.09.4

29.1

148.3136.216.6- . 2

- 4 . 1.0

4.2

. 2

4.0

177.2

34.34.9

89.610.737.7

164.0150.518.2- . 4

-4 .4.0

4.5- . 1

13.1

166.232.44.6

86.810.232.2

157.8144.317.5- . 3

- 4 . 3.0

4.3

- . 6

8.4

175.934.14.7

88.710.538.0

160.8147.518.0- . 4

-4 .4.0

4.4

- . 1

15.2

175.334.64.9

90.610.934.4

165.9152.418.5- . 5

-4 .5.0

4.5. 0

9.5

191.236.15.2

92.511.346.1

171.6158.018.8- . 6

-4 .6.0

4.6. 0

19.6

190.236.66.1

94.911.641.1

176.4163.019.1

-1 .2

-4 .6.0

4.7

. 0

13.9

192.837.96.6

96.011.840.5

181.2168.019.4

-1 .6

-4.7.0

4.7

11.5

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

Gross private savingPersonal savingUndistributed corporate profitsCorporate inventory valuation ad-justmentCorporate capital consumption

allowancesNoncorporate capital consumption

allowancesWage accruals less disbursements

Government surplus or deficit (),national incomeandproductaccounts.

Federal...State and local.

Capital grants received by the UnitedStates

Gross investment

Gross private domestic investment-.Net foreign investment..

Statistical discrepancy.

171.960.222.5

-4 .960.4

33.4.4

-18.1-22.2

4.0

. 7

151.1153.2- 2 . 1

-3 .4

174.2

49.729.3

- 6 . 965.936.5- . 3

-2 .8

-15.913.1

. 7

170.6

178.3-7 .6- 1 . 5

170.252.926.5

-6 .6

63.4

34.9- . 9

-5 .4

-13.88.4

. 7

158.9167.5-8 .7-6 .7

170.0

45.927.5

- 6 . 766.2

37.5- . 2

-3 .9-19.015.2

. 7

165.9

174.7-8 .7-1 .0

170.345.829.4

-6 .966.0

36.3- . 2

2.0

-7 .49.5

. 7

174.7

181.5-6 .9

1.6

186.054.433.9

- 7 . 3

68.0

37.1.0

-3 .8-23.419.6

. 7

183.1189.4- 6 . 3

. 2

181.550.040.0

-15.4

69.3

37.7.0

8.9

-5 .013.9

. 0

191.5194.5- 3 . 0

1.1

183.051.044.2

-21.1

70.538.6- . 1

11.6.0

11.5

.0197.7198.2- . 53.2

Gross national product

Personal consumption expenditures. _Durable goodsNondurable goods.Services

Gross private domestic investment..Fixed investment

Nonresidential.StructuresProducers' durable equipment..

Residential structures.NonfarmFarm

Change in business inventories.Net exports of goods and services.

Exports.Imports.

Government purchases of goods andservi ces

FederalState and local.

141.

134.4112.3131.7148.0

60 146.10 144.85 145.42 146.42 147.

140.1

137.3168.4124.2

147.5147.5141.'

125.7125.0

169.2160.9175.8

137.9112.8135.7153.2

145.7

141.3181.7126.0156.3156.4150.8

130.2133.6

178.3171.7183.2

136.6

112.3134.3151.3

143.6

140.0178.2125.0152.4152.4147.2

127.0128.3

175.4168.2181.0

137.4112.9135.0152.5

145.0141.1180.4125.9154.4154.5149.0

129.2133.0

176.6169.8181.9

138.2113.5136.0153.5

146.3

141.8182.2126.8157.0157.1151.5

130.7135.2

179.6173.9183.7

r. 63

139.2

112.5137.155.3

147.

142.1

186.0126.3161.2161.3156.0

133.7137.8

181.6175.5185.9

149.81

141.0113.0140.8157.0

149.7

143.5190.7126.8165.6165.6159.2

137.4141.8

186.0181.2189.2

152.46

143.8114.3144.8159.0

152.7

146.5193.9129.3

168.6168.6162.7

145.9154.5

189.6184.4193.1

Table 17.Implicit Price Deflators for Gross National Product byMajor Type of Product (8.2)

Gross national product.Final sales

Goods output-

Durable goodsNondurable goods..

Services....Structures..Addendum:

Gross auto product.

141.60141.8125.5

118.5130.4

159.7160.4

112.4

146.10146.2127.7

119.0134.4

166.5170.6

111.7

144.85144.8126.9

118.7133.0164.5167.5

111.2

145.42145.5127.3

118.9133.5165.9168.6

111.9

146.42146.6128.1119.5134.6167.0170.9

113.4

147.63147.8128.6118. 8136.4168.6175.4

110.1

149.81149.9130.4

119.2139.6171.3180.1

111.1

152.46152.5133.1

120.5143.7173.5183.6

112.6

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

Gross national product

PrivateBusiness -

NonfarmFarm -

TTfYiispVirVlfte and institution11?Tfcpst of thp world

General government

FederalState and local

141.60135.88134.4135.1117.1

198.9

206.2

206.6206.0

146.10139.78138.0138.0139.5212.1

221.5230.5216.5

144.85138.59137.0137.3129.0

217.9

228.1212.0

145.42139.12137.4137. 5134.8

220.8229.9215.6

146.42140.07138.3138.1143.6

222.6

231.4217.8

147.63141.27139.5139.1151.3

224.6232.6220.2

149.81143.25141.4140.5167.6

230.8243.2224.2

152.46145.88143.9142.4193.0

233.9244.3228.4

Table 19.Gross National Product: Change from Preceding Period(7.7)

Gross national product;Current dollars - - - -.Constant dollarsImplicit price deflatorChain price index . .

Gross private product;Current dollarsConstant dollarsImplicit price deflator .Chain price index -. .

Percent

8.03.24.75.1

7.93.54.34.5

9.46.13.23.6

9.66.52.93.1

Percent at annual rate

10.94.95.75.2

10.65.44.94.0

11.29.51.62.6

12.110.41.62.2

8.75.82.83.2

8.75.82.73.2

11.78.13.33.9

12.28.43.53.9

15.28.76.17.1

15.59.35.76.5

9.92.47.37.0

10.32.57.67.2


By JOHN T. WOODWARD

Capital Expenditures Rise to Continue Through 1973

NEW plant and equipment expendi-tures are expected to rise 4.2 percentin the third quarter to a seasonallyadjusted annual rate of $101.9 billion,according to the survey of businessinvestment expectations conducted inlate July and August by the Bureauof Economic Analysis. Expendituresare expected to rise an additional 2.4percent in the fourth quarter to $104.4billion. Actual outlays in the secondquarter were at an annual rate of $97.8billion, up 1.6 percent from the first;this compares with increases of 4.6percent in the first quarter of 1973 and4.9 percent in the final quarter of 1972.

Outlays for the full year 1973 areexpected to total $100.2 billion, 13.2percent above last year; this would bethe most rapid annual advance since1966, and compares with increases of8.9 percent in 1972 and 1.9 percent in1971.* The latest projection of 1973outlays is virtually the same as thatreported in the survey taken 3 monthsearlier. Second quarter outlays were0.8 percent lower than expected in theearlier survey; the shortfall was prin-cipally in durable goods manufacturingand in public utilities. The thirdquarter expectation has not been re-vised while that for the fourth quarterhas been raised about 1 percent, largelyin manufacturing.

The second quarter rise in outlayswas the ninth quarterly increase sinceeconomic activity turned up in early1971. Following a sizable decline in thefourth quarter of 1970, outlays have

1. The expectations figures have been adjusted for sys-tematic biases (footnote 2, table 7). Before adjustment ex-pected 1973 expenditures were $100.85 billion for all industries,$38.50 billion for manufacturing and $62.35 billion for non-manufacturing. The adjustments were applied separatelyto each major industry; their net effect was to lower themanufacturing total by $1.06 billion and raise nonmanu-factunng by $0.40 billion.

moved upward at an average quarteilyrate of 2.2 percent.

The sizable rate of expansion incapital outlays expected for the re-mainder of 1973 appears to be supportedby the generally favorable influences offactors believed to affect investmentdecisions. Utilization of capacity inmanufacturing rose further in the sec-ond quarter; as measured by theFederal Reserve, the utilization ratereached 83 percent, about 6 percentagepoints above the second quarter lastyear. Perhaps more sharply pointingup the considerable pressure on capac-ity, a newly released Federal Reserveestimate for basic materials manu-facturing industries- shows a rate of94% percent in the second quarter, thehighest in the post-World War IIperiod. These pressures are reflected inthe results of this BEA survey, whichshows a continued sharp rise in the re-ported need by manufacturers for morecapacity (table 4). Corporate after-taxprofits have risen by almost two-thirdssince the upturn in economic activityin early 1971, partly reflecting substan-tial inventory profits generated by risingprices, and cash flowretained earningsplus capital consumption allowanceshas increased about 50 percent. Theseinternal sources of funds have beenbolstered also by the improved level ofbusiness activity and the enlarged capi-tal base as well as the accelerated de-preciation rules and investment taxcredit adopted in 1971 and the restric-tions on dividends imposed by theeconomic controls program.

Other confirmation of the second halfoutlay projection is found in the recentsharp advance in new orders placedwith nondefense capital goods indus-triesup about 6 percent per quarter

since last falland in the rapid ad-vances in starts of new investmentprojects by manufacturing and utilityfirms (table 5).Industry patterns

Outlays by manufacturers are ex-pected to rise 4.4 percent in the thirdquarter and 2.3 percent in the fourth;nonmanufacturing firms expect in-creases of 4.1 percent and 2.5 percent,respectively. This similarity in quarter-to-quarter movements is in sharp con-

Table 1.Plant and Equipment Expendi-tures, Annual Percent Changes 1972-73

All industries.Manufacturing l . . .

Durable goods 1 -

Primary metals *Blast furnace, steelworks.Nonferrous

Electrical machineryMachinery, except electri-

calTransporta t ion equip-

ment iMotor vehicles _Aircraft

Stone, clay, and glassOther durables i

Nondurable goods l

Food including beveraTextilePaperChemical.-Petroleum.Rubber..Other nondurables i . . .

Non manufacturing

Mining..Railroad..Air transportationOther transportation.Public utilities. .

ElectricGas and other_

CommunicationCommercial and other.

1972Actual

8.94.5

10.5- 1 . 1- 9 . 410.011.7

3.318.520.712.241.912.2

- . 7

- 5 . 118.610.5

.3-10.3

28.211.011.5

11.67.5

30.85.1

11.112.63.2

10.411.2

Expected 1973as reported in:

Feb. May Aug.

13.8

18.0

19.624.010.838.614.4

12.4

18.419.222.014.227.516.518.3

-6 .025.120.310.337.513.811.4

9.2- 6 . 8- 3 . 1

4.516.616.517.1