Economic Report of the President

Chart 8Personal Saving RatePERCENT15.012.5 -10.0 -2.5 -1969 70 71 72 73 74 75 76 77 78 79 80SOURCE: DEPARTMENT OF COMMERCE.The decline in consumption in 1980, which was largely the resultof a decline in credit-sensitive purchases—particularly durablegoods—was concentrated in the second quarter. In that quarter totalreal consumption fell at a record rate of 9.8percent. The improvementin household debt positions that had begun in late 1979 was acceleratedduring the late spring and early summer by the credit controlsprogram. Extensions of consumer credit in the second quarter fell atnearly a 60 percent annual rate. Outstanding consumer debt declinedfor 4 straight months from April to July, and for the second quarteras a whole it fell at a record 13.8 percent annual rate.The rapid drop in interest rates helped to bring a quick reversal ofthe second quarter's consumption decline. In June real retail salesgrew at a 17.8 percent annual rate; the gain in July was at an evengreater 27.3 percent pace. For the third quarter as a whole real consumptionadvanced at an annual rate of 5.1 percent, regaining nearlyone-half of the second quarter's drop. In the fourth quarter real consumptiongrew at a 3.3 percent annual rate.Durable Goods. Real expenditures on consumer durables fell 7.7 percentduring 1980, their second year of decline. The consumer durablescycle during 1979 and 1980 was much like that of the 1974-75recession. During the first half of 1980 real consumer durable goods139