ECONOMIC

income do not appear to have played a major part in last year's upsurge inconsumer expenditures (Table 5).TABLE 5.—Disposition of disposable personal income, 1960—73[Percent of disposable personal income]Current dollarsDisposition of income1960-72average197219731Personal consumption expenditures:Food 2Durable goodsAutomobiles..All other expenditures17 413.74.859.915.714.74.960.715.714.94.960.6Total expenditures91.091.291.2Plus: Transfers and interestEquals: Total outlaysPlus: Saving ...Equals: Disposable income2.593.56.5100.02.693.86.2100.02.793.96.1100.0Constant (1958) dollarsPersonal consumption expenditures:Food 2Durable goodsAutomobiles..All other expenditures ...17.715.45.458.015.518.06.157.714.318.86.258.0Total expenditures91.191.291.2* Preliminary.2 Excludes alcoholic bever?ges.Source: Department of Commerce, Bureau of Economic Analysis.The influence on consumer spending of the overwithholding of Federalincome taxes in 1972, and their subsequent refunding in 1973, remains uncertain.When taxes were overwithheld in 1972, it was feared that the overwithholdingmight have an adverse effect on consumption. Perhaps it did,but if so, this effect was swamped by decisions of consumers to reduce theirsaving rate. The Council's position last year was that the overwithholdingwas viewed as temporary by consumers and that in accordance with the permanentincome hypothesis it affected saving rather than spending.At the start of 1973 the Administration expected that consumers wouldbegin to reduce their withholdings to some extent in order to eliminate theoverwithholding that had started a year earlier. This expectation did not materialize.In effect, consumers seem to have changed their pattern of payingincome tax liabilities for a given year. That is, they overpay in the year ofliability and prefer to receive refunds the following year, giving the Governmentsubstantial interest-free loans.Last year's refunds were not accompanied by a rise in the saving rate, butthe exact manner in which the refunds affected expenditures is not clear.Refunds by the Internal Revenue Service did not become very large until thesecond quarter of 1973. However, the upsurge in consumer spending camein the first quarter, and spending increases then subsided. If the refunds wereimportant in the spending rise of early 1973, the anticipation by consumers of54