ERP Appendixes MY 1950 1

Appendix A

The Nation's Economic Budget

ContentsPage

A-l. The Nation's Economic Budget, 1949-50 105A-2. Consumer account, 1949-50 107A-3. Business account, 1949-50 108A-4. International account, 1949-50 108A-5. Government account (Federal, State, and local), 1949-50 . 109A-6. Federal cash receipts from the public other than borrowing,

1949-50 110A-7. Federal cash payments to the public by function, 1949-50 . 110A—8. Federal cash payments to the public by type of recipient and

transaction, calendar years 1949 and 1950 Ill

101

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


Appendix A

The Nation's Economic Budget

Estimates of incomes,, prices, and production have always been used as anaid in the study of economic trends and business cycles. The need for na-tional accounts on a systematic and current basis has become much morewidely recognized in the postwar world, however. A national economicpolicy, whether it be for the purpose of raising living standards, providingfor national security, obtaining a balance in international payments, main-taining full employment, or a combination of objectives requires informativeand reliable national accounting.

Consequently there has been a concerted effort all over the world todevelop better systems of measuring the sources and disposition of theNation's productive energies. In many countries these accounts are neededas a guide to internal development and investment policies, whether carriedout with foreign aid or by other means. In the United States the need fornational accounts is implied in the task prescribed by the Employment Actof 1946, which requires setting forth foreseeable trends as well as the levelsof employment, production, and purchasing power needed to carry outthe policy of the act.

The Nation's Economic Budget (table A-l) is a summary of the nationalaccounts. It contains a number of the most significant magnitudes, suchas (column 1) the income of consumers, the total cash revenues of theGovernment, and business receipts, which include corporate retained earn-ings and business reserves against depreciation. It also shows the grossoutput of the economy in current prices, and the portion of that outputwhich is bought by consumers, business, and Government (column 2).Column 3 in the Nation's Economic Budget, "excess of receipts or deficit,"includes consumer saving, the Government cash surplus or deficit, andthe excess of gross investment over business receipts. The total excessof receipts must equal the total deficit, since national income and productare conceptually equal. Consumer saving, for example, which is an excessof receipts, must be matched by a deficit of receipts of business or Govern-ment, or both.

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In the Nation's Economic Budget the main flows of income, those arisingfrom productive activity, are shown in roman type in column 1, andimportant supplementary flows, Government interest payments, and trans-fers to individuals, are shown in italics. The items in roman type, incomearising from current production, when added together, provide one measureof current output of the economy. This measure is matched by the sumof expenditures for current output which is shown in roman type in column2. Government cash payments are broken into Government expenditurefor goods and services (current output) and supplementary or transferpayments. The latter include transfers to individuals, Government interest,and cash loans to foreign countries or international organizations. Thereceipt of these items, as mentioned before, is shown in italics in column 1.Transfer payments are equal to receipts of transfers just as expendituresfor current production are equal to receipts.

While the Nation's Economic Budget gives a comprehensive view of theeconomy, additional detail is needed for analytical purposes. Such detailis shown in the tables that follow, the "accounts," or sectors of the Na-tion's Economic Budget. More complete statistics on national income andproduct and their constituents are published currently in the Survey ofCurrent Business, in the National Income and Product Supplements to theSurvey, and in the Budget of the United States. These are the primarysources from which the Nation's Economic Budget is drawn. See also theCouncil's Annual Review of January 1950, appendix A, for a more extendeddiscussion of the Nation's Economic Budget.

The tables A-2 to A-5, which follow, show the composition of the con-sumer, business, international, and Government accounts. Tables A-6, A-7,and A-8 deal with the cash transactions of the Federal Government, pro-viding information on receipts and expenditures which are useful for eco-nomic analysis.

104


TABLE A—1.— The Nation's Economic Budget, calendar years 1949 and 1950

[Billions of dollars, annual rates, seasonally adjusted]

Economic group

CONSUMERS

1 Disposable income relating to current production2. Government transfers and net interest payments

3. Disposable personal income4. Expenditures for goods and services5. Personal savings (-j-)

BUSINESS

6. Retained business receipts from current production7 Gross private domestic investment8. Excess of receipts (+) or investment ( — )

INTERNATIONAL

9. Government loan transfers abroad10. Net foreign investment11 Excess of receipts (-j-) or investment ( — )

GOVERNMENT (Federal, State, and local)

12 Tax payments or liabilities13» Adjustment to cash basis

14. Cash receipts from the public15 Purchases of goods and services16. Government transfers

17. Cash payments to the public18 Excess of receipts (+) or payments ( — )

ADJUSTMENTS

19 For receipts relating to gross national product20. Other adjustments -

21. Total: Gross national product - _ - ..

1949, first half

Receipts

172.816 0

189 0

29.7

1.7

55.81.7

57.5

— 1.4—3,8

257.0

Expend-itures

177.9

34 4

1.2

43.616.2

69.8

257.0

Excess ofreceipts(+)ordeficit(-)

+11 2

—4.7

.5

—2.S

-1.4-8.3

1949, second half

Receipts

169 316.5

186.0

30.8

.5

56.71.0

57.7

-2.8-.8

254.1

Expend-itures

179.8

31 6

—.3

43.017.6

60.6

254.1

Excess ofreceipts(-h)ordeficit(-)

+6.2

—.8

.6

—2.9

-2.8-.8

1950, first half *

Receipts

173.822.3

196.2

28.5

—.3

59.4-2.0

57.4

+3.5+.8

265.2

Expend-itures

183.4

42.2

-2.0

41.421.1

62.5

265.2

Excess ofreceipts(+)ordeficit(-)

+12.7

-13.7

1.7

-5.0

+3.5+.8

See footnote on following page.


i Estimates based on incomplete data; second quarter by Council of Economic Advisers.

NOTE.—Items relating to current production of goods and services are shown in roman type. Transfer payments and receipts and subtotals including them are in italics; they arenot included in the gross national product. Detail will not necessarily add to totals because of rounding.Explanatory notes:

Lines 1-5: See table A-2, Consumer Account.Lines 6-8: See table A-3, Business Account/Lines 9-11: See table A-4, International Account.Lines 12-18: See table A-5, Government Account.Line 19: Includes the statistical discrepancy and the current surplus of Government enterprises less Government subsidies. The statistical discrepancy represents the difference

between two in dependent estimates of gross national product: one arrived at by estimating the income received from current output and one by estimating expenditures for this output.The adjustment fof statistical discrepancy brings the estimate on the receipts side-into agreement with that on the expenditure side of the accounts.

Line 20: An adjustment is necessary to balance the sum of the transfers on the receipts side with that on the payments side because of the fact that somewhat different bases formeasurement have been used in estimating various components of receipts and payments. Most of the discrepancies reduce to a difference in timing between the recording of a receiptand a payment. A correction must be made for the difference between the time a tax liability is incurred or payments are made and the time a receipt is recorded by the Government.Payment is sometimes made for goods produced in a previous period; interest payments on a cash basis differ from the accrued interest shown under consumer receipts, etc.

Sources: This table is based on the national income and product statistics of the Department of Commerce and on Federal cash receipts from and payments to the public estimatedby the Bureau of the Budget. : ;


TABLE A—2.—Consumer account, calendar years 1949 and 1950


Receipts or expenditures

Personal income arising from current production of goods andservices

Wage and salary receipts and other labor incomeFarm proprietors' incomeBusiness and professional income 2 _ _ . _ _Dividends _Private interest and rental incomeBusiness transfer payments ...

Plus: Net interest paid by GovernmentDividend on National Service Life InsuranceOther Government transfers to individuals ..

Equals: Total personal income _

Less: Personal tax and nontax payments

Equals: Disposable personal income _ _ _

Less: Consumer expenditures.. _ _ _

Durable goodsAutomobiles a n d parts. _ _ _ _ _Other __ _

Nondurable goods..FoodClothing and shoes .Other

ServicesHousing _ _Other

Equals: Personal saving _ _ _ _ _ _ _ _ . _ _ _

ADDENDUM

Personal income arising from current productionLess: Personal tax and nontax paymentsEquals: Disposable income arising from current production

Total

189 8

134.913.421.07.8

12.0.7

4.7

11.6

206.1

18.7

187.4

178.8

23.89.5

14 398.558 618.621 356 517.239 3

8.6

189.818.7

171.1

1949

Firsthalf

191 5

135.414.321.37.8

12.0.7

4.6

11.4

207.7

18.7

189.0

177.9

22.78.6

14 099.358 919.221 255 917.039 0

11.2

191.518.7

172.8

Secondhalf

188.0

134.412.520.67.8

12.0.7

4.7

11.8

204.6

18.7

186.0

179.8

25.010.314 797.858 418.021 457 017.439 6

6.2

188.018.7

169.3

1950,firsthalf i

192 7

137.612.221.88 2

12.2.7

4.75 2

12.4

215.0

18.9

196.2

183.4

27.011.016 098.058 517.921 658 418.040 4

12.7

192.718.9

173.8

1 Estimates based on incomplete data; second quarter by Council of Economic Advisers.2 Includes adjustment for inventory valuation.

NOTE.—Detail will not necessarily add to totals because of rounding.

894762—5 107


TABLE A—3.—Business account, calendar years 1949 and 1950


Receipts or investment

Corporate profits before tax

Less: Corporate profits tax liabilities _ . _Dividends _ _.

Equals: Corporate undivided profits

Plus: Capital consumption allowances *Corporate inventory valuation adjustment 8 -

Equals: Retained business receipts from current production

Less: Gross private domestic investment

C onstructionResidential (nonfarm) - -Other private construction _ _ _ _ ._-

Producers' durable equipmentChange in inventories _ _ . _

Nonfarm only _ _

Equals: Excess of receipts} (+) or investment (—). _ _ . . _

Total

27.6

10.67.89.2

18.82.2

30.2

33.0

17.38.39.0

19.5-3.7-3.1

-2.8

1949

Firsthalf

27.4

10.47.89.1

18.42.2

29.7

34.4

17.07.79.3

19.9-2.5-2.2

-4.7

Secondhalf

27.9

10.77.89.4

19.22.2

30.8

31.6

17.58.98.6

19.0-5.0—4.0

—.8

first half i

30.1

11.88.2

10.2

19 9-1.6

28.5

42.2

20.211.38.9

20.41.62.4

—13.7

i Estimates based on incomplete data; second quarter by Council of Economic Advisers.3 Includes capital consumption allowance on corporate and noncorporate capital, including residences.3 This adjustment is required because corporate income is reckoned inclusive of changes in the book value

of inventory, as is customary in business accounting, whereas only the value of the real change in inventoriesis counted as current output in the gross national product.


TABLE A—4.—International account, calendar years 1949 and 1950

[Billions of dollars, seasonally adjusted annual rates]

Receipts or investment

Receipts:Net long-term loans *Payments to the International Monetary Fund and International

Bank ». _ .

Total Government loan transfers abroad

Investment:Surplus of exports of goods and services 4 .Less: Net unilateral transfers: 5

Government6 _Private

Equals: Net foreign investment. _ _ ,

Excess of receipts (+) or investment (—)_ . . . ,

Total

0.9

.2

1.0

6.2

5.3.5

.4

.6

1949

Firsthalf

1.6

.1

1.7

7.6

5.9.5

1.2

.5

Secondhalf

0.1

.2

.3

4.9

4.7.5

-.3

.6

1950,firsthalf

0.2

-.5

-.3

2.7

4.2.4

-2.0

1.7

1 Estimates based on incomplete data.* Includes only cash withdrawals under loan agreements. Does not include noncash transactions such as

lend-lease and surplus property credits.3 Cash payments on subscriptions. In the first half of 1950 the International Monetary Fund returned

over 500 million dollars of cash (annual rate) to the U. S. Treasury in exchange for United States notes.4 Includes a seasonal adjustment in services.* Net unilateral transfers are included with Government or private expenditures for goods and services.

For example, remittances (gifts) made by American citizens to relatives or charitable groups abroad areincluded with consumer expenditure. Government aid in the form of grants is included in Governmentpurchases of goods and services. Thus, net unilateral transfers must be deducted from the export surplusto avoid double counting.

6 Unilateral aid included in table A-8 is on a Daily Treasury Statement basis and is gross.


108


TABLE A—5.—Government account (Federal', State, and local), calendar years 1949 and 7950


Receipts or expenditures

Receipts:Tax and nontax payments or liabilities: 2

Federal .. .State and local _

Total . _ .Adjustment to cash basis:

Noncash receipts 3

Excess of cash receipts over tax liabilities or payments 4 .

Cash receipts from the public. _

Expenditures:Purchases of goods and services:

FederalState and local

Total

Other Government payments:Transfers to individualsCash interest payments to the public 5

Loans to foreign governments and subscriptions to the Inter-national Bank and International Monetary Fund 6

All other 7...

Total..

Cash payments to the public

Cash surplus (-}-) or deficit ( — )

AddendumFederal:

C ash paymentsCash receipts _ _

Surplus (+) or deficit (—) . _ _ _

State and local:Cash paymentsCash receipts _ . _ . _

Surplus (+) or deficit (— )

Total

39.217.0

56.2

—1.8+3.2

57.6

25.317.9

43.3

11.64.3

1.0

16.9

60.2

-2.5

42.641. 3

-1.3

17.516.3

-1.3

1949

Firsthalf

39.016.8

55.8

-1.8+3.5

57.5

26.017.6

43.6

11.44.3

1.7-1.2

16.2

59.8

-2.3

42.541.5

-1.0

17.316.0

—1.2

Secondhalf

39.417.3

56.7

-1.9+2.9

57.7

24.718.3

43.0

11.84.4

.3+1.1

17.6

60.6

-2.9

42.941.2

-1.6

17.816.5

—1.3

1950,first

half i

41.617.8

59.4

-1.7-.4

57.4

22.519.0

41.4

17.64.5

_ o

-.7

21.1

62.5

-5.0

43.340.4

-2.9

19.217.1

-2.1

1 Estimates based on incomplete data.2 Personal and indirect business tax payments, corporation tax liabilities, and contributions for social

insurance.3 Consists of deductions from Government employees' salaries for retirement funds, and Government

'contributions to retirement funds, national service life insurance and Government life insurance funds.4 Includes excess of corporation tax receipts over liabilities and excess of personal tax receipts over pay-

ments. Cash receipts also include some items of miscellaneous receipts not included in tax and non-tax pay-ments, such as receipts of sales from surplus property.

5 Does not agree with net interest paid by Government (table A-2) which is on a net accrual basis andincludes interest paid by Government corporations.

6 See table A-4, International account.7 Includes all other cash payments less noncash payments for goods and services. Other cash payments

include net payments by Government corporations (except capital formation), net prepayments, and theexcess of checks paid over checks issued. Noncash purchases of goods and services include deductions fromGovernment employees' salaries for retirement funds and the Government contribution to such funds.


Explanatory noteThis table reconciles cash receipts and payments to the public with estimates of Government receipts and

expenditures included in the national income and product accounts. Cash receipts or payments representthe consolidated cash accounts of the Federal Government, including the trust funds, and State-local govern-ments. All intragovernmental transactions are excluded. The receipts of Government corporations andthe Post Office are offset against expenditures and the net expenditure included as a cash payment. Grants-in-aid to] State and local governments are included as a cash payment of the Federal Government and notincluded as either a receipt or payment of the States or localities.

ICQ


TABLE A—6.—Federal cash receipts from the public other than borrowing, calendar years 1949 and1950


Cash receipts

Direct taxes on individuals 2

Direct taxes on corporationsEmployment taxes ..Excises and customsSurplus property receiptsDeposits by States, unemployment insurance ^ ^ _ _ _ ^Veterans' life insurance premiumsOther . _ . -Refunds of receipts _ _ ^ _

Total cash receipts _ _

Total

18.412.02.57.9.5

1.0.4

1.4-2.8

41.3

1949

Firsthalf

18.512.12.57.9.7.9.4

1.4-2.8

41.5

Secondhalf

18.311.92.58.0.3

1.1.4

1.4-2.8

41.2

1950,firsthalf

18.39.93.27.9.3

1.1.4

1.4—2.1

40.4

1 Estimates based on incomplete data.2 Includes personal income taxes, and estate and gift taxes.NOTE.—Detail will not necessarily add to totals because of rounding.

TABLE A-7.—Federal cash payments to the public by function, calendar years 1949 and 1950


Function

National defense . _International affairs and financeVeterans' services a n d benefits _ _ .Social welfare, health, and securityAgriculture and agricultural resourcesInterest on the public debt _ _ ._OtherDeduction from Federal employees' salaries for retirementClearing account for outstanding checks and telegraphic reports

Total Federal cash payments to the public _ . _ ..

Total

12.96 57.12.83.0

M.26.9-.3-.3

42.6

1949

Firsthalf

12.97.37.12.62.83.96.4

—.3-.2

42.5

Secondhalf

12.95 77.02.93.2

34.57.3

—.3—.3

42.9

1950,firsthalf1

12.0M.411.63.22.64.06.6

—.4—.7

43.3

1 Estimates based on incomplete data.2 This figure takes into account the return of excess cash of over .5 billion dollars (annual rate) to theU. S. Treasury by the International Monetary Fund for special United States notes. Without this trans-action, the figure would be 4.9 billion dollars.3 Includes over 2 billion dollars resulting from a nonrecurring change in the method of reporting interestpayments, amounting to 4.6 billion dollars at an annual rate in the last half of the year.


110


TABLE A—8.—Federal cash payments to the public by type of recipient and transaction, calendaryears 1949 and 1950


Payment

Direct cash payments for goods and services: 3Payments to individuals for services rendered:

Military 3 _ . _ _ _ _ . _Civilian wages and salaries (excluding Post Office):

Defense* _ _ . . _Other Federal 4

Grants and loans in aid for performance of specified services,net5 _

Total __.

Payments to business for goods and services:Public works:

DefenseOther Federal _ _Grants-in-aid and loans for public works

Other goods and services:Defense. _ _Civilian6

Payments to foreign countries and international institutions forgoods and services.-- . _ _

Total ....

Loans and transfer payments to individuals:Social insurance and public assistance:

Federal employees' retirement benefit payments .Old-age and disability benefit paymentsUnemployment insurance benefit payments. . _ _Grants-in-aid for public assistance _

Readjustment benefits, pensions, and other payments to veterans 7.Loans to home owners, netInterest 8—Other

Total

Loans, investments, subsidies, and other transfers to business and agri-culture:

Farmers:Price support, ne't (including supply programs)International wheat agreementOther loans and direct subsidies to farmers 10

Business:Home mortgage purchases from financial institutions. ..Loans, netDirect subsidy payments ..

Subsidy arising from postal deficitInterests

TotalLoans and transfer payments to foreign countries and international in-

stitutions:European recovery program loans and grants . -Other loans (net withdrawals)Other grants u _ _ .Subscriptions to the International Bank and Monetary Fund (net

cash withdrawals) . . _-

Total

Clearing account and adjustment to Daily Treasury Statement

Total Federal cash payments to the public

Total

3.8

2.42.5

.8

9.5

.21.4.4

5.4(fl)

.8

9.1

.21.01.91.15.6-.11.3.5

11 4

1 9(9)

.6

.7

.1(9)

.63.06.8

4.2(9)1.8

.2

6.2

-.3

42.6

1949

Firsthalf

3.7

2.42.4

.7

9.2

.21.3.3

5.4.9

.9

9.0

.2

.91.71.05.8-.11.2.4

11.1

1.8

.6

.5

.1(9)

.52.86.4

4.8(9)2.0

.1

7.0

-.2

42.5

Secondhalf

4.0

2.32.5

.9

9.7

.21.5.5

5.4(6)

.8

9.2

.31.02.01.15.4-.21.4.6

11.6

2 0(9)

.6

.8

.2(9)

.63.17.3

3.6(9)1.6

.2

5.4

-.3

42.9

1950,firsthalfi

4.0

2.12.7

.9

9.7

.31.6.6

4.7(6)

.6

8.1

.31.12.01.2

10.3-.31.3.3

16.1

1 118

41

(9).6

2.86.0

3.4.1

1.1

-.5

4.1

-.7

43.3

Footnotes on*following*page.

I l l


1 Estimates based on incomplete data.2 Differs from the national income concept of "Government purchases of goods and services" by excludingfarm price support expenditures and unilateral aid to foreign countries. Grants to States and localities forpublic works, here included as a Federal expenditure, would be included in the national income accountsas a State and local expenditure. There are other less significant differences between the two concepts.3 Excludes terminal leave pay and food and clothing allowances which are primarily paid in kind.4 Excludes payroll deductions for Federal employees' retirement.8 Includes all grants-in-aid and loans to public bodies for purposes other than public works and publicassistance. Includes, in addition, one-third of Federal expenditures for veterans' tuition, books, and supplies.

6 This figure is obtained as a residual by deducting all other expenditures from total cash payments to thepublic. Owing to the fact that data are incomplete for fiscal 1950, the residual would be subject to a highmargin of error and has not been computed.

7 Includes cashing of terminal-leave bonds, mustering-out pay, and national service and Government lifeinsurance refunds and benefits in addition to veterans' pensions and readjustment benefits. Includes onlyone-third of payments for veterans' tuition, books, and supplies.

s Includes a small amount of interest on tax refunds in addition to interest on the public debt. In addi-tion, it includes payments at an annual rate of 0.3 billion dollars to business and 0.1 billion dollars toindividuals in the last half of 1949 resulting from a nonrecurring change in the method of reporting interestpayments. Interest paid to business includes over 100 million dollars of interest paid each year by theFederal Government to State and local governments. Interest in table A-2 is net, and is on an accrualrather than a cash basis; it includes interest paid by State and local governments and by Governmentcorporations.9 Less than 50 million dollars.

10 Includes expenditures of Rural Electrification Administration, formerly considered a grant-in-aid forpublic works. REA and Farmers Home expenditures are included on a gross, rather than net, basis.

11 Includes expenditures for Mutual Defense Assistance Program except for payment of an estimated15 million dollars in the first half of calendar 1950 to the Department of Defense for stocks transferred abroad.


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Documents

ERP Appendixes MY 1950 1