Greenbook/Tealbook

Prefatory Note The attached document represents the most complete and accurate version available based on original copies culled from the files of the FOMC Secretariat at the Board of Governors of the Federal Reserve System. This electronic document was created through a comprehensive digitization process which included identifying the bestpreserved paper copies, scanning those copies, 1 and then making the scanned versions text-searchable. 2 Though a stringent quality assurance process was employed, some imperfections may remain. Please note that some material may have been redacted from this document if that material was received on a confidential basis. Redacted material is indicated by occasional gaps in the text or by gray boxes around non-text content. All redacted passages are exempt from disclosure under applicable provisions of the Freedom of Information Act. 1 In some cases, original copies needed to be photocopied before being scanned into electronic format. All scanned images were deskewed (to remove the effects of printer- and scanner-introduced tilting) and lightly cleaned (to remove dark spots caused by staple holes, hole punches, and other blemishes caused after initial printing). 2 A two-step process was used. An advanced optical character recognition computer program (OCR) first created electronic text from the document image. Where the OCR results were inconclusive, staff checked and corrected the text as necessary. Please note that the numbers and text in charts and tables were not reliably recognized by the OCR process and were not checked or corrected by staff. Content last modified 6/05/2009. CONFIDENTIAL (FR) SUPPLEMENT CURRENT ECONOMIC AND FINANCIAL CONDITIONS Prepared for the Federal Open Market Committee By the Staff Board of Governors of the Federal Reserve System September 9, 1966 SUPPLEMENTAL NOTES The Domestic Economy Business plans for new plant and equipment outlays in 1966 as a whole and in each of the last two quarters of the year are virtually unchanged from plans last spring, according to the Commerce-SEC survey taken in late July and August. crease from the February survey. The May survey had shown a small inThe August survey was the first since the summer of 1963 which did not show a significant upward revision in earlier plans of business. Business fixed investment this year will be 17 per cent more than last year, according to business plans. The indicated rise in the second half of this year, at an annual rate of 11.9 per cent, however, is considerably less than the 18.5 per cent in the first half. For manufacturing,the rate of increase in the second half of the year is only 13 per cent as compared to 23 per cent in the first half. Since the spring survey, durable goods manufacturers, nonrail transportation companies, and public utilities have increased investment plans, while nondurable goods manufacturers, railroads, and the communication-commercial-and-other grouping have reduced planned spending. Of the durable goods manufacturers, producers of both primary and nonferrous metals, transportation equipment, and electrical machinery and equipment have raised investment plans significantly and nonelectrical machinery producers have reduced theirs. At the end of June the carryover of projects by manufacturers totaled $18.1 billion, $2.1 billion more than a year earlier. For public utilities the carryover totaled $10 billion, also $2.1 billion more than at mid-1965. These projects while underway, may not all be completed NEW PLANT AND EQUIPMENT EXPENDITURES 1966 plans reported in August (billions of $'s) ALL INDUSTRIES Per cent increase 1966 from 1965 Actual plans reported in 1965 from 1964 February May August 60.86 17.1 17.0 15.9 15.7 Manufacturing Durable Nondurable 27.08 13.96 13.11 20.6 22.5 18.6 20.4 20.9 19.8 19.1 18.4 19.9 20.8 20.9 20.7 Nonmanufacturing Mining Railroad Nonrail trans. Public utilities Communications, com'l & other 33.80 1.46 1.96 3.62 8.16 14.5 12.3 13.3 28.8 17.6 14.3 9.2 18.2 24.3 15.1 13.4 16.3 5.5 12.0 15.8 11.8 9.3 23.1 18.4 11.7 18.60 11.2 12.4 13.3 10.6 in 1966. Only that portion of the carryover scheduled to be spent this year is included in 1966 anticipated outlays. According to the National Industrial Conference Board, new capital appropriations of manufacturers in the second quarter rose appreciably further, while capital expenditures rose only a little. Con- sequently, the backlog of unspent appropriations rose considerably. At the end of June the backlog in dollar terms was more than a fourth larger than a year earlier. The rise in new appropriations and in backlogs over the past year indicate, according to experience of the NICB survey, that capital expenditures will continue to rise through mid-1967. The NICB July survey also indicated that manufacturers expected capital appropriations in the second half of this year to be less than they were in the first half. But this decline does not necessarily indicate a decline in expenditures after mid-1967 because these appropriations are expected to continue to be larger than actual capital expenditures and backlogs are expected to rise further. - 3 International Developments U.S. balance of payments. Revised first-quarter and preliminary second-quarter balance-of-payments data are summarized in the table on the next page. (These data are confidential until published in the September Survey of Current Business. The balance on goods and services deteriorated less in the second quarter than the latest GNP estimates show, an annual rate of $5.3 billion in and is now put at that quarter rather than $4.7 billion. (In light of this revision, the staff projections for the second half of 1966 should be raised.) Military sales and investment income receipts were somewhat larger than earlier anticipated, and imports of services were somewhat smaller, although military expenditures abroad did rise about 8 per cent further. The net outflow of U.S. Government grants and capital remained at the $3.8 billion rate reached in the first quarter. The net outflow of U.S. private capital increased significantly, but that increase was more than matched by an increase in foreign borrowing to finance direct investments (such borrowing being shown in the table as an inflow of foreign capital). An additional large inflow of foreign nonliquid capital represented the shift of foreign-held U.S. assets from liquid to nonliquid forms that has been described in earlier Green Books. -4- (In U.S. Balance of Payments Summary, 1964-66 billions of dollars, at seasonally adjusted annual rates) 1966 Year Year 1964 1965 I(r) II(p) Exports of goods and services 1/ Merchandise Military sales Investment income receipts Other services 37.0 25.3 .7 5.4 5.5 39.0 26.3 .8 5.9 6.0 41.8 28.5 .8 6.2 6.4 42.3 28.4 1.0 6.4 6.4 -37.0 -25.0 -3.7 -1.7 -6.5 -28.5 -18.6 -2.8 -1.4 -5.6 -32.0 -21.5 -2.9 -1.6 -6.0 -35.7 -24.0 -3.4 -1.7 -6.5 Balance on goods and services 1/ 8.5 7.0 6.1 Remittances and pensions -. 9 -1.0 -. 9 U.S. Govt. grants and capital flow, net 2/ -3.6 -3.4 -3.8 -3.8 U.S. private capital flow, net Direct investments Foreign securities Claims reported by banks Claims reported by others -6.5 -2.4 -. 7 -2.5 -1.0 -3.7 -3.4 -. 8 .1 .3 -3.6 -2.7 -1.3 1.1 -. 6 -4.4 -3.8 .0 -. 5 -. 1 .2 1.1 1.1 .2 -. 2 3.6 3.6 .2 -. 3 Imports of goods and services Merchandise Military expenditures Investment income payments Other services Foreign capital flow, net, excluding change in liquid assets in U.S. Long-term investments Short-term claims Nonliquid claims on U.S. Govt. .7 .1 .1 .5 Errors and omissions, net -1.0 Balance on liquidity basis -2.8 Balance on basis of official reserve transactions -1.5 (r) (p) 1/ 2/ -. 2 .1 .2 5.3 -1.0 -1.1 -. 3 -1.4 -2.2 -. 6 -1.3 -1.0 -. 7 -.4 Revised; confidential until published in the Survey of Current Business, September 1966. Preliminary; confidential until published in the Survey of Current Business, September 1966. Excludes military transfers under grants. Excludes military grants. 

Federal Reserve (1966, September 12). Greenbook/Tealbook. Greenbooks, Federal Reserve. https://whenthefedspeaks.com/doc/greenbook_19660913_part3

@misc{wtfs_greenbook_19660913_part3,
  author = {Federal Reserve},
  title = {Greenbook/Tealbook},
  year = {1966},
  month = {Sep},
  howpublished = {Greenbooks, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/greenbook_19660913_part3},
  note = {Retrieved via When the Fed Speaks corpus}
}