ECONOMIC

TABLE 8.—Growth of real consumption expenditures and real disposable personalincome, 1975—76[Seasonally adjusted annual rates]PeriodReal personalconsumptionexpendituresReal disposablepersonalincomePercent change:1975 1 to 1975 IIIFrom preceding quarter:1975: IV .. _1976:1II . _ .IIIIV 15.64.58.84.03.65.47.24.96.14.7.73.71 Preliminary.Source: Department of Commerce, Bureau of Economic Analysis.first quarter of 1976, the rise in real disposable income slowed, especially inthe third quarter. Because the slowdown in income growth may have beenviewed initially as temporary and because a cushion was provided by thehigh savings of 1975, the slowdown in consumption was less pronounced andmore steady. The personal saving rate ^11 from 7.0 percent in the first half of1976 to 6.2 percent in the last half.Real expenditures for consumer durables have been the largest contributorto the recovery in final sales in the current expansion, growing by 23 percentfrom the very depressed last quarter of 1974 through the fourth quarterof 1976. After a 23 percent annual rate increase in the first quarter of 1976,however, the growth of real expenditures on durable goods slowed to a 3percent annual rate on average over the last 3 quarters. These movementsin durables were dominated by purchases of motor vehicles and parts, whichgrew 45 percent from the last quarter of 1974 through the first quarterof 1976. Growth slowed to 3.0 and 1.5 percent respectively in the secondand third quarters, and then declined by 9.0 percent at an annual rate inthe strike-affected fourth quarter.The significant slowdown in growth of real consumer durables sales in thesecond quarter, particularly sales of new domestic automobiles, was influencedby factors other than real disposable income. Shortages existed insome intermediate and large car lines. Changes in the relative price of automobilesmay also have had an effect. The deflator for new domestic autosgrew at a 9.4 percent annual rate from the third quarter of 1975 throughthe first quarter of 1976 as rebates and other discounts offered in 1975 werephased out and list prices on the 1976 domestic models increased. Some effectsof this inflation in new automobile prices apparently continued beyondthe first quarter. As individuals attempted to substitute used for new cars,the implicit deflator for used cars rose by an extraordinary 12.2 percentfrom the first quarter to the second and continued to rise strongly in thethird quarter. The increase in domestic auto prices would appear to havebeen a factor in the rise in foreign car sales after the first quarter.60