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etween money supply and expenditures was one of the most significantfinancial developments of the year.Second, there was a decline in the amount of new funds availablefrom insurance companies, savings and loan associations, and mutualsavings banks, resulting from the lower liquidity of these institutions andthe smaller flow of new savings through them. Their purchases of Stateand local securities and corporate issues were somewhat greater than in 1956,but this was made possible only by a large reduction in their purchases ofmortgages.Third, despite a slightly smaller volume of total personal saving, directpurchases by individuals of corporate, State and local, and other marketablesecurities were almost $3 billion larger in 1957 than in 1956. Thiswas due partly to the attractiveness of yields on these securities for individuals.An important source of funds for these greatly enlarged purchases,though not a net addition to new savings, was a reduction of almost$2 billion in individuals' holdings of United States Savings Bonds, primarilyby investors sensitive to the higher yields generally available in the market.Fourth, the Federal budget during the calendar year 1957 contributedless than during 1956 to making additional funds available to the securitiesmarkets through financial institutions and individuals. In 1956, a reductionof $6.4 billion in the publicly held United States debt was an importantfactor in the ability of financial institutions and individuals to add to theirloan and security portfolios. They did so by reducing their holdings of UnitedStates Government securities. In 1957, only $2.9 billion of the publicly helddebt was retired; thus the ability of this group of investors—especiallyfinancial institutions—to provide funds by further reducing their holdingsof Government securities was decreased.Reflecting the more limited supply of new funds relative to the demandsfor them in 1957,, interest rates rose during much of the year (Chart 10).The rise was especially rapid in June and August, when money marketpressures became unusually heavy. In August, the rate on Treasury billswas close to 3J/2 percent, major banks raised their prime rate from 4 percentto 4^4 percent, and the Federal Reserve Banks raised the discount rate from3 percent to 3*/ 2 percent.After the Federal Reserve Banks announced lower discount rates inNovember, interest rates and bond yields declined significantly, in manycases one-half of 1 percent or more. This reflected a reduction in demand forloans that had already been apparent and some easing of pressure on bankreserves. By the end of the year, credit in both the long-term and shorttermsectors of the markets had eased appreciably, though the impact oncertain sectors of the market, notably the mortgage market, was slowin developing.The rise in stock prices to July brought the average yield on common stocksto 4 percent, about the same as the yields then available on high-grade bonds.
CHART 10Interest Rates and Bond YieldsShort-term interest rates rose through most of 1957 but declinedafter mid-November.PERCENT PER ANNUMINTEREST RATESSHORT-TERM BUSINESSLOANS BY BANKS .* FEDERAL RESERVE BANKDISCOUNT RATETREASURY BILLS(NEW ISSUES)0 M I 1 I I 1 I I I I I 1 I 1 I I I I I I I I I I I I I 1 I I I I I I ILong-term rates rose sharply in the spring and summer and declinedat the year end.PERCENT PER ANNUM6BOND YIELDSCORPORATE AaaU.S. GOVERNMENT(10 YEARS AND OVER) 11 HIGH-GRADE MUNICIPAL0 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 I I I I i I I I I1955 1956 1957SOURCES: BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, MOODY'S INVESTORSSERVICE, TREASURY DEPARTMENT, AND STANDARD a POOR'S CORPORATION.33
Page 3 and 4: Economic Reportof the PresidentTRAN
Page 5 and 6: LETTER OF TRANSMITTALTHE WHITE HOUS
Page 8 and 9: commercial demands and reduce the f
Page 10: APPENDIXESPageA. Summary of Recomme
Page 13 and 14: present consumption standards. Even
Page 15 and 16: favored by temporary conditions or
Page 17 and 18: Federal fiscal policies were also d
Page 19 and 20: growth with reasonable stability of
Page 21 and 22: The decline which became apparent i
Page 23 and 24: CHART 2Shifts in Major Components o
Page 25 and 26: 1957 than in 1956, but in the secon
Page 27 and 28: though there was no significant inc
Page 29 and 30: CHART 4—ContinuedEmployment and I
Page 31 and 32: week was 39.3 hours and average ove
Page 33 and 34: CHART 5Price ChangesWholesale price
Page 35 and 36: CHART 6Consumer PricesAfter declini
Page 37 and 38: few decades and the still higher av
Page 39 and 40: CHART 7The Pattern of Credit Expans
Page 41: CHART 9Member Bank ReservesMember b
Page 45 and 46: CHART 11Indicators of Agricultural
Page 47 and 48: various forms. On dollar sales of w
Page 49 and 50: Because of the high level of privat
Page 51 and 52: TABLE 7.—World industrial product
Page 53 and 54: CHART 13World and U. S. Foreign Tra
Page 55 and 56: CHART 14U. S. Balance of PaymentsTh
Page 57 and 58: a still larger outflow of capital.
Page 59 and 60: Chapter 4Economic Opportunities and
Page 61 and 62: of the sources of strength for the
Page 63 and 64: The strength of our financial insti
Page 65 and 66: Chapter 5A Legislative Program To H
Page 67 and 68: growth and stability. Although Fede
Page 69 and 70: housing loans insured by the Federa
Page 71 and 72: directions, without sacrificing eit
Page 73 and 74: medical and dental teaching facilit
Page 75 and 76: standards and help maintain the inc
Page 77 and 78: funds, on financial dealings betwee
Page 79 and 80: on basic crops and dairy products.
Page 81 and 82: partners, and particularly on the s
Page 83: FEDERAL ECONOMIC STATISTICSA well-c
Page 87 and 88: Summary of Recommendations in the E
Page 89 and 90: e) Authorize the Secretary of Labor
Page 91: Appendix BREPORT TO THE PRESIDENT O
Page 95 and 96:
Report to the President on the Acti
Page 97:
Advisory Board on Economic Growth a
Page 101 and 102:
Program for Improving Federal Stati
Page 103 and 104:
various divisions. Improvements in
Page 105 and 106:
InventoriesSeparate stage-of-fabric
Page 107:
Appendix DTHE CONSUMER PRICE INDEX9
Page 110 and 111:
total market basket since the base
Page 112 and 113:
described are applied whenever poss
Page 114 and 115:
were employed under contracts conta
Page 117 and 118:
Productivity StatisticsThe terms "p
Page 119 and 120:
5 percent. Some improvement over th
Page 121:
Appendix FSTATISTICAL TABLES RELATI
Page 124 and 125:
Prices:PageF-36. Wholesale price in
Page 127 and 128:
NATIONAL INCOME OR EXPENDITURETABLE
Page 129 and 130:
TABLE F-2.—Gross national product
Page 131 and 132:
TABLE F—4.—Gross national produ
Page 133 and 134:
TABLE F—6.—The Nation's income,
Page 135 and 136:
TABLE F-8.—Gross private domestic
Page 137 and 138:
TABLE F-10.—Relation of gross nat
Page 139 and 140:
TABLE F-12.—Sources of personal i
Page 141 and 142:
TABLE F-14.—Total and per capita
Page 143 and 144:
TABLE F—16.—Sources and uses of
Page 145 and 146:
TABLE F-17.—Noninstitutional popu
Page 147 and 148:
TABLE F—19.—Employed persons no
Page 149 and 150:
TABLE F-21.—Unemployment insuranc
Page 151 and 152:
TABLE F-22.—Number of wage and sa
Page 153 and 154:
1929.193019311932193319341935193619
Page 155 and 156:
TABLE F-26.—Average weekly hours
Page 157 and 158:
TABLE F-28.—Labor turnover rates
Page 159 and 160:
TABLE F-29.—Industrial production
Page 161 and 162:
TABLE F-31.—New construction acti
Page 163 and 164:
TABLE F-33.—Housing starts and ap
Page 165 and 166:
TABLE F-35.—Manufacturers* sales,
Page 167 and 168:
TABLE F-36.—Wholesale price index
Page 169 and 170:
TABLE F-37.— Wholesale price inde
Page 171 and 172:
TABLE F—39.—Consumer price inde
Page 173 and 174:
TABLE F—41.—Loans and investmen
Page 175 and 176:
TABLE F-43.—Bond yields and inter
Page 177 and 178:
TABLE F—44.—Short- and intermed
Page 179 and 180:
TABLE F-46.—Mortgage debt outstan
Page 181 and 182:
GOVERNMENT FINANCETABLE F—48.—U
Page 183 and 184:
TABLE F-50.—Federal budget receip
Page 185 and 186:
TABLE F-52.—Government cash recei
Page 187 and 188:
TABLE F—54.—Reconciliation of F
Page 189 and 190:
CORPORATE PROFITS AND FINANCETABLE
Page 191 and 192:
TABLE F-58.—Relation of profits a
Page 193 and 194:
TABLE F-59.—Sources and uses of c
Page 195 and 196:
TABLE F-61.—State and municipal a
Page 197 and 198:
Period19291930193119321933193419351
Page 199 and 200:
TABLE F-65.—Farm population, empl
Page 201 and 202:
TABLE F—67.—Indexes of prices r
Page 203 and 204:
TABLE F—70.—Selected indicators
Page 205 and 206:
TABLE F—72.—United States balan
Page 207 and 208:
TABLE F—73.—United States merch
Page 209:
TABLE F—75.—U. S. Government gr
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