Family Economics Review [Dec. 1962]

              ~
MICS
EW
PROPEC">Ty OF THE
LIBRA - TYE
DEC 20 1962
WOMAN'S COLLEGE
UNIVERSITY OF NORTH CAROLINA
Consumer and Food Economics Research Division, Agricultural Research Servirt•,
U N I T E D S T A T E S D E P A R TM E N T 0 F A G R I C U L T U R E illllil~~~~illllii~!ffiirilllli~~Jflifr~¥i
A quarterly report on current developments in family and food economics and
economic aspects of home management, prepared for home demonstration agents
and home economics specialists of the Cooperative Extension Service.
ANNUAL OUTLOOK ISSUE
CONTENTS
Page
NATIONAL ECONOMIC OUTLOOK FOR 1963 ·························· 3
FAMILY LTIING ..........................•.........•....... · · . 4
OUTLOOK FOR FOOD SUPPLIES AND PRICES .•.•..•.•••.••..•.•.•.•. 6
SUPPLIES AND PRICES OF CLOTHING AND TEXTILES ·••········•···• 10
HOUSING, HOUSEHOLD FURNISHINGS, AND EQUIPMENT · · • · · · • • · · · • · • • 17
CURRENT AND FORESEEABLE TRENDS IN RURAL POPULATION ·•••···••· 26
ESTIMATED COST OF l WEEK'S FOOD ····•·•····•·•·•••···•·•·•••• 30
CONS't.ThmR PRICES ..•.... · · · · · · · · · · • · · · · · · · · · • · · · · · • · • · · · · · · •. ·
32
ARS 62-5
December 1962 Washington, D.C.
The articles making up this issue of
Family Economics Review are condensations
of talks given at the 40th Annual National
Agricultural OUtlook Conference , held in
Washington, D. C., November 13-16, 1962 .
NATIONAL ECONOMIC OUTLOOK FOR 1963
Rex F. Daly
Economic Research Service
The ~ecent slowing in economic activity and mixed trends for major
business indicators have brought some concern about the coming year. But a
modest gain in the level of economic activity is indicated for 1963. Prospec­tive
increases in purchases by consumers, businessmen, and the Government point
to some increase in economic activity, with gains in consumer purchasing power
and domestic demand for farm products. Consumer income per person after taxes
is up about 3.5 percent in 1962 from 1961. Increases in 1963 are expected to
be smaller.
Government purchases will continue to rise in 1963. Purchases by the
Federal Government, including new legislation, may total $4.0 to $4.5 billion
above 1962. Most of the increase will be due to increased spending for
national security and space activities. New legislation may add around
$3/4 billion to previously scheduled Federal spending. The new programs
include $900 million for accelerated public works in depressed areas, and $600
to $700 million for the new Federal pay increase. Appropriations also were
increased for the public roads program.
The uptrend in expenditures by State and local governments will continue
and may accelerate some in 1963. Growing demands for schools, hospitals,
roads, other facilities, and services are expected to increase spending more
than $4.5 billion. Thus, combined Government purchases of goods and services
in 1963 may total $8 to $9 billion above 1962.
Some reduction in revenues will result from stepped-up depreciation
allowances and the 7 percent tax credit for new investment. Social security
taxes are scheduled to increase about $2.0 billion per year (about $1 billion
each from employers and employees) beginning January 1963. Increases in
economic activity under present programs suggest some further rise in total
Government revenues in 1963, but expenditures are expected to increase more
rapidly than revenues.
Business spending for new plant and equipment may be rather sluggish in
coming months. Recent slackening in total demand, excess productive capacity
in some basic industries, little change in new orders, and some reduction in
order backlogs all point to a lack of vigor in business investment demand.
But demand may strengthen in the latter part of 1963. Business outlays for
new capital in 1963 probably will exceed those in 1962. Investment by manu­facturing
industries is indicated very little higher, but capital outlays by
the trade service and communication industries probably will continue upward
in 1963. ' These ind' ustries accounted for about one-third of total expenditures
for new plant and equipment in 1962.
-4-
Business inventories are generally well balanced relative to demand.
Production capacity is adequate, and stocks apparently are well controlled.
There is nothing in the domestic business picture to suggest a sharp turn up or
down in inventories. Current production rates for autos may result in some
stock buildup from the relatively small end-of-year stocks of 1962 models.
Housing demand in 1963 likely will maintain residential building close to
1962 levels. A relatively high rate of new family formation will continue in
1963. Rising numbers of young people in the marriageable age groups point to
an upward trend in the annual increase in new families . Consumer incomes are
expected to rise some in 1963. Continued ample supplies of mortgage funds and
reduced mortgage interest rates are in prospect for 1963.
Indicated increases in nonconsumption purchases by Government and business
point to a modest gain in economic activity in 1963. Increases in nonconsump­tion
spending usually step up output, employment, and incomes enough to result
in an approximately equal increase in consumer purchases .
Thus, barring any substantial change in international tensions , a modest
gain in economic activity and consumer expenditures is indicated for 1963.
Prospects for another good auto year and high residential construction activity
are expected to maintain the demand for durable goods. Increases in expendi­tures
are in prospect for food and other nondurable goods. The long-term
uptrend in demand for services will continue in 1963. These demand changes add
up to a moderate rise in consumer buying next year, which would accelerate if
there is a reduction in taxes on personal incomes.
Increases in output implied by the expected moderate expansion in demand
would be smaller than during 1962. Some rise in employment is expected,
particularly later in 1963. However, with rising productivity and increases
in the labor force, the unemployment rate may not show significant improvement
from recent months. Hourly earnings in manufacturing in the third quarter
averaged more than 2.5 percent above a year earlier, and a continued rise is
in prospect for 1963 . Gains in employment and earnings would result in an
increased flow of income to consumers. This moderate rise in economic activity
is not expected to exert upward pressure on prices. Thus, the general price
stability of recent years may well continue in 1963 .
FAMILY LIVING
Laura Mae Webb
Agricultural Research Service
Somewhat higher per capita disposable personal income and small increases
in retail prices during the past 12 months have provided U.S. families in­creased
purchasing power. It is expected that further increases in per capita
income, coupled with continuing slight advances in retail prices occasioned for
the most part by increased costs for consumer servic s, will contribute to
continuing improvement in levels of living in 1963 .
-5-
In recent years an increasing proportion of married women have augmented
their families' incomes by obtaining employment; in 1961, 61 percent of the
women in the labor force were married, compared with 52 percent in 1950. (See
chart below.) Although employed wives contribute substantially to the income
of their families, by no means all of the wife's gross earnings are available
for family living. Recent studies by the USDA indicate that about 40 percent
of the average employed wife's gross earnings are required for job-related
expenditures, including higher family income taxes occasioned by her earnings.
Job-related expenses are closely associated with family income and family type.
For employed women with children under 6 years of age, payments for child care
frequently are an important job-related expenditure; in March 1961, 46 percent
of the wives under 35 years of age had children in this age group. (See chart
on page 6.)
Recent legislation authori~ing Federal-Stat e programs to train unemployed
and underemployed workers in skills required by shifting employment needs is
expected to be of considerable assistance to persons in the farm population
seeking off-farm job opportunities. Only about 30 percent of the rural farm
population 25 years of age and over in 1960 had completed 12 years or more
schooling, as compared with 44 percent of the urban population in this age
group. Special training is especially needed to fit the worker without a high
school education for job opportunities of the future.
Substantial progress has been made in urban areas during the past two
years in constructing housing especially designed to meet the needs of senior
WOMEN IN THE LABOR FORCE
By Marital Status
1950
-Married, hus b on d present ~~Sin gle* ~ltiO<la Widowed, divorced
• 19)0 DATA IHCLUDE UHKHOWH MARITAL. STATUS. CEHSUS AHD BLS DATA .
u.S. DEPARTMENT Of AGRI CULTURE NEG. 62 (8) -S703A AGRICULTURAL RES EARCH SER VICE
AGE OF WIFE
14-34 YR.
-6-
MANY WORKING WIVES
HAVE CHILDREN
29%
20% Working wives
with youngest child--
35 YR . AND OVER
-Under 3 yr .
~ 3-5 yr.
I8SB!la 6-17 yr.
• 3%
~5%
39%
llS DATA. • WIVlS tHUSI AHD I'IIESEHTJ IH THE LA lOll FOitCE, MAitCH '"'·
U.S.. OEPAitTMEHT OF AGRICULTURE NEG, 62 (I)-5702A AGRICULTURAl RESEARCH SERVICE
citizens, but little such construction has as yet been initiated in rural
areas. Legislation passed by the recent Congress authorizing the establishment
of programs under USDA's Farmers Home Administration to assist in providing
suitable housing for senior citizens in rural farm and rural nonfarm areas is
expected to make an important contribution toward meeting the housing needs of
these people.
OUTLOOK FOR FOOD SUPPLIES AND PRICES
Thomas J. Ianahan~ Jr.
Economic Research Service
Our food supplies continue to be more than adequate to meet domestic
needs • In addition~ for most food groups, there will be enough food remaining
after domestic use to export near-record quantities of our food to other lands
and to have substantial reserves on hand at home.
For some foods~ such as most livestock products, we consume most of our
current production, but for others we have large reserves on hand. For
-7-
example, in 1962 we probably will consume 53 percent of our supply of food fats
and oils, 54 percent of our potatoes, 58 percent of our canned fruits and
vegetables, and 6 percent of our total grain supply. Some of the remaining
supplies go into nonfood uses, exports and Government holdings, but much is
also the normal carryover from year to year. If need be most of this could
be used domestically for food. '
Our abundant food supply makes it possible for us to be well fed--whether
considered on the basis of personal likes and dislikes or from a nutritional
standpoint. Per capita consumption of food as a whole--the various foods
weighted together with constant prices--will probably average a little higher
in 1962 than in 1961. The caloric value (food energy) of the food consumed
per capita in 1962 has changed little from 1961 and in 1963 probably will
average about the same. Of course, much of the increase in spending for food
per capita is for higher quality, more emphasis on higher cost items, and more
services with our foods either in processing or distributing the food.
Consumers continue to spend more in total dollars for food, but they use
a smaller proportion of their income for such outlays. According to latest
indications, they spend on the average about 19 percent of income for food
compared with 26 percent in 1947-49.
In 1962 consumer- spending for food probably will increase some 3.5 to
4.0 percent over 1961. This increase will be accompanied by a gain of around
5.0 percent in disposable income and an increase in average retail food prices
of almost 1.0 percent.
Consumers will probably increase their outlays for food again in 1963, but
not by as much as this year. Levels of economic activity in prospect for 1963
point to a modest gain in consumer income and in the demand for food. Con­sumption
of food as a whole and livestock products in particular, will likely
again register very small gains in 1963.
Barring a major worsening of international tensions, there is likely to be
little overall change in retail food prices in 1963 from this year. Retail
prices of livestock products may average slightly lower, and prices of foods
from crops fractionally higher. Prices of food consumed away from home, in­cluding
all the services that go with purchased meals, probably will continue
their long-term upward trend, while retail store prices of foods, aside from
the usual seasonal variations, are likely to change little.
The supply of meat per capita for the fourth quarter of 1962 is increasing
and is expected to total a little larger than in the fourth quarter of 1961.
This gain will include larger supplies of beef, pork, and veal. Next year,
another increase of about a pound is in prospect, with larger beef and pork
supplies only partially offset by smaller supplies of veal and lamb.
-8-
Retail prices of meat in 1963 may average close to 1962. Lower retail
prices for pork will be about oi~set by higher prices for lamb and possibly
slightly higher beef prices. Consumption of meat is expected to be well
maintained throughout 1963. Broiler supplies will likely be larger and offer
red meat more price competition, especially in the first half of the year.
Some increase is expected both in the marketing margin and in the demand for
beef. Therefore, despite slightly higher supplies of beef, the retail price
may average the same to slightly above 1962.
Veal per capita consumption in 1963 is expected to decline some from 1962,
and retail prices are expected to change little from 1962 levels.
Per capita pork consumption in 1962 probably will reach 63 pounds, about
three-fourths of a pound above 1961. Prospective pig crops this fall and next
spring indicate that supplies available will result in even larger pork con­sumption
in 1963. Larger supplies probably will lead to retail prices a little
below 1962 levels. The seasonal high in prices will still come in the summer,
and prices should continue rather stable throughout the entire year.
Lamb consumption per capita in 1963 is expected to be down--possibly a
half' pound from the 5. 0 pounds in 1962. Consumption in the winter of 1963 may
be as much as 20 percent lower than the unusually high consumption of a year
earlier. For 1963 as a whole, retail prices may average somewhat higher than
1962, if supplies are reduced as anticipated.
Per capita consumption of chicken for 1962 is estimated at slightly below
the record-high 1961 rate. Larger broiler output and lower retail prices are
now indicated for 1963, at least through the first half, maybe bringing about
a record-high level of per capita use.
Per capita use of turkey in 1962 is expected to total slightly under the
record consumption in 1961. Stocks of frozen turkey at the start of 1963 will
be down sharply from the very large year-earlier levels. Conse~uently1 in the
first half of 1963, turkey prices probably will be higher than in the same
period of 1962. For 1963 as a whole, another large turkey crop is in prospect,
probably second in size only to the record 1961 output. Much of this goes into
storage, and around two-thirds of annual production is consumed in the last
4 months of the year.
Per capita egg consumption in 1962 is now estimated at 324 eggs, about the
same as a year earlier for the first time in a decade. The downtrend in egg
consumption since 1951, despite generally lower prices and rising incomes,
reflects the steadily diminishing consumer demand for eggs.
Lower egg production is likely to continue through the early part of 1963.
Retail egg prices the first ~uarter of 1963 may average higher than in the same
period of 1962. But as 1963 progresses, egg production may increase faster
than a year earlier, possibly dampening the usual late spring-to-fall retail
price rise and resulting in l ower prices in the second half of 1963.
-9-
Per capita consumption of all forms of milk combined will average about
the same for 1962 as for 1961--after 6 straight years of declines. This is
due to increased use of dairy products per capita in Government distribution
programs and a slowdown in the sharp drop in per capita consumption of fresh
fluid milk since 1957. But average per capita consumption of all dairy
products combined from commercial sources--that is 7 excluding use in dis­tribution
programs--probably will decrease again in 1962. Next year the per
capita consumption of all dairy products combined from all sources likely will
resume the 1956-61 downtrend.
Cheese consumption might be up again in 1963 because of the Government
distribution programs, but use of evaporated milk, cream7 and fresh fluid milk
is expected to decrease. Use of nonfat dry milk7 ice cream7 and butter will
be close to the 1962 consumption rates.
Retail prices of fluid milk in the first quarter of 1963 may be lower
than in the same period of 1962. For the balance of 1963 they may average
about the same.
Per capita consumption of food fats and oils continues steady. Next
year, per capita consumption is likely to be about the same.
The downtrend in butter consumption appears to have slowed in 1962 as
increased amounts are being distributed through the welfare and school lunch
programs. This probably explains in part why margarine consumption declined
for the first time in 7 years. Consumption of cooking fats per capita in
1962 is up slightly, and is not expected to change much in 1963. Consumption
of cooking and salad oils increased sharply this year and is likely to at
least maintain the same rate next year. Retail prices of food fat products
are expected to average near current levels during most of 1963.
Supplies of fresh and processed fruit in the first half of 1963 probably
will be a little larger than in the same period of 1962. Prospects are for
supplies of fresh citrus fruit from now until next summer to be somewhat
larger than a year earlier.
Compared with a year earlier, retail prices for fresh fruit through this
winter probably will average a little higher for apples and lemons, lower for
oranges, and about the same for most other fruits. Among processed items,
prices are likely to be somewhat higher for dried fruits, moderately lower for
canned and frozen citrus juices, and not greatly changed for most canned and
frozen deciduous fruits.
Supplies of fresh vegetables are materially smaller than a year earlier.
Substantially larger supplies of canned vegetables probably will be available
into mid-1963 as a result of a larger carryover stock and a larger pack.
Barring a sharp upsurge in demand, these heavier supplies for the next 6
months are likely to mean slightly lower ·retail prices. Supplies of frozen
vegetables are likely to be a little smaller than a year ago through next
spring. Supplies of potatoes for fall and winter marketing are about 6
-10-
percent smaller, but still moderately larger than anticipated needs . Retail
prices of potatoes into spring are expected to continue near October levels ,
but above the low levels of a year earlier.
Consumption of cereal food products per capita in 1963 should average
about the same as in recent years. Retail prices of cereal and bakery
products in 1962 have continued their long-term upward trend, although
increasing at a somewhat faster rate than in 1961 . This general trend is
likely to continue as a result of increases in unit marketing costs and in
use of marketing services •
SUPPLIES AND PRICES OF CLOTHING AND TEXTILES
Virginia Britton
Agricultural Research Service
Supplies of clothing are large; prices have edged up slightly; and
clothing continues to decline in relative importance in the average budget.
Clothing consumption
There has been little change in the real value (value in constant
dollars) of clothing purchased per person in the last few years. From 1941
to 1961 it fluctuated within a relatively narrow range (about 12 percent
difference between the highest and lowest annual expenditure). The 1929
figure was also within this range.
Since disposable personal income increased considerably, clothing
expenditures (in constant dollars) declined from 13 percent of income in 1929
to 11 percent in 1941 and 8 percent in 1961. A special analysis by the
Department of Commerce in 1959 showed that the longrun decline has been
greater than that due to increased real income alone, indicating that other
forces are operating. Several reasons have been suggested for the declining
longrun trend in clothing expenditures: increased competition of other goods
and services, changing composition of the population, greater utility of
fibers used, today1s casual mode of dressing, and price changes in clothing
compared with those in other items.
-11-
Competition o~ other goods and services.--First, it seems clear that
consumers are ~indlng other attractive ways to spend their money. While
clothing expenditure has been declining, expenditure ~or gasoline and oil has
been increasing, according to Commerce's special analysis. Durable goods are
many and attractive and purchases are high. Housing and household operation
take a higher proportion o~ real income than be~ore the war. Perhaps the
house has replaced clothing as a status item.
Composition o~ the population.--The composition o~ the population has
been changing so as to include a higher ~roportion o~ those persons who
customarily spend less on clothing. Persons under 15 years o~ age and those
65 and over increased ~rom 32 percent o~ the population in 1940 to 40 percent
in 1960. (See table 1.)
Table 1.--Age groups in the u.s. population, 1940-70
Young and elderly 15 to 64 years old
Year Population
Total Under 15 65 and over Total 15-34 35-64
(M.illions } Percent Percent Percent Percent Percent Percent
1940 ....... 132 32 25 7 68 34 34
1950 ....... 151 35 27 8 65 30 35
1960 ....... 179 40 31 9 60 26 34
1970 ....... 214 41 32 9 59 28 31
(estimated)
Source: Bureau o~ the Census.
During recent decades there has been a decline in the proportion o~ the
population that is 15 to 34 years old. This may also help to explain the
declining importance o~ clothing expenditures since young adults are generally
the high clothing consumers, quick to accept and demand new styles. The in­creased
proportion in this age group expected in the coming years may help to
increase the per capita expenditure ~or clothing.
Utility o~ ~ibers.--The increasing use o~ manmade ~ibers, with their
"higher utility value per pound" (i.e., larger poundages o~ cotton and wool
would be required to make ~roducts that are presently composed o~ manmade
~ibers), has ~her helped to suppress an increase per person in pounds o~
~ibers used, according to trade sources. ~ The amount (per person) o~
y Textile Organon. January and November 1961.
-12-
manmade ~ibers used in clothing was twice as great in 1960 as in 1937. Never­theless,
cotton presently comprises about 67 percent of the total amount of
the three major ~ibers consumed, contrasted with 20 percent ~or manmade and 13
percent ~or wool. While silk is still a small proportion of ~ibers used, it
has increased in popularity ~or women 1s dresses in the last couple o~ years,
according to trade sources. g/
Casual modes.- -A relaxed attitude toward clothing as well as selection of
casual types o~ garments minimize increases in clothing expenditures. Many of
the casual items are less expensive than more formal onesj separates provide
greater variety and flexibility by mixing garments, and allow cheaper replace­ment
by replacing parts. For women, misses, and juniors, there is an increas­ing
popularity of skirts, blouses, and slacks. To some extent these sub­stitute
for housedresses, which are decreasing in popularity. Dresses in
higher price lines are more popular and suits are less popular.
For men, there has been an increase in popularity of separate trousers
and separate coats and a decline in suits overcoats, work shirts, and over­alls.
While sport shirts (woven and knit) presently comprise almost two-thirds
o~ all shirts purchased, the preliminary 1961 figures indicate some decline.
Perhaps the short-sleeved dress shirt is the current compromise. With regard
to footwear, an important change has been the high popularity of women's play
shoes and sandals, which constitute about a third of the shoes ~or women in
recent years in contrast with a ~i~th in 1947.
Full-~ashioned nylon hosiery ~or women has declined greatly in popularity
so that seamless hosiery now comprises two-thirds of the total . 1/ Knee-length
hose have decreased considerably and stretch hose increased slightly, but
neither type comprises a large part of total hosiery for women. For men, slack
socks and anklets are more popular, half-hose and work socks less popular.
Consumer prices
The news about the consumer price level for apparel is good. It rose only
1 percent in the past year (September 1961 to September 1962) and 3 percent in
the previous 10 years (1951 to 1961) . (See table 2.) This compares with the
Consumer Price Index for all items which rose 1.4 percent in the past year and
15 percent in the previous 10 years.
Prices in the fall and winter catalogs of ~our major Chicago mail-order
companies were practically unchanged ~rom recent editions , according to trade
sources. New York buying offices for department and specialty stores across
g( Trade sources include The Wall Street Journal, Textile Organon, and
Chemistry and the Home.
j} Textile Organon, p. 102. May 1962.
......
-13-
the Nation indicated that shoppers would find fall department store prices
mostly unchanged from a year ago. However, they expected prices of fur­trimmed
coats to be up 5 to 10 percent, some shoes up 5 to 7 percent and
handbags and gloves higher. Prices of men' s suits were expected to be the
same as in the fall of 1961.
From 1939 to 1948, the Bureau of Labor Statistics' Apparel Index climbed
more rapidly than the Consumer Price Index for all items, so that the Apparel
Index was 97 percent higher, the CPI 73 percent higher. Since 1948 the
Apparel Index has been climbing more slowly t han the CPI. By 1961 the Apparel
Index had increased 110 percent over 1939 and the CPI 115 percent.
Table 2.--Increase in selected indexes of consumer prices between specified
periods
1939 1939 1939 1951 Sept. 1961
Index to to to to to
1948 1957 1961 1961 Sept. 1962
Percent Percent Percent Percent Percent
Consumer Price Index ........ 73 102 115 15 1.4
Apparel Index ............. 97 lo4 110 3 1.0
By type:
Men's and boys' apparel 102 115 120 4 1.1
Women's and girls'
apparel ............. 90 82 84 -2 2.7
Footwear .............. 105 154 181 20 1.4
Other apparel ......... 167 127 129 -9 -.2
By fiber:
Cotton apparel .••••.•• 144 143 150 4 .8
Wool apparel ..•••••••• 83 110 116 5 .4
Manmade fibers apparel. 76 36 35 -12 .1
I
Source: Bureau of Labor Statistics.
Apparel subgroups.--Price indexes for apparel subgroups have not in­creased
at the same rates. Between September 1961 and September 1962, women's
and girls' apparel increased 2.7 percent , footwear and men's and boys' apparel
increased over 1 percent and "other apparel" (yard goods, infants' and
toddlers' clothing) declined fractionally. The major changes in the 10 years,
1951 to 1961, were a 20 percent increase for footwear and a 9 percent decrease
for "other apparel."
From 1939 to 1961 "other apparel" climbed by 129 percent whereas foot­wear
climbed 181 perce~t, men's and boys' apparel by 120 percent, and women's
and girls' apparel by 84 percent.
-14-
Price increases over the past year were less than l percent for cotton
apparel and even smaller for wool apparel and manmade fibers apparel than for
cotton. Over the previous 10 years, prices of wool and cotton apparel
advanced 5 and 4 percent, respectively, whereas apparel of manmade fibers
declined 12 percent.
The belief of some people that clothing prices have advanced decidedly
over a year ago and importantly over the last 10 years is not borne out by
changes in the Apparel Index. The feeling of increased prices may be due to
trading-up on q_uality as incomes advanced. Or it may be due to purchase of
different types or q_ualities of apparel than those priced for the CPI--those
purchased by city-wage earner and clerical-worker families. For the CPI, the
average q_uantities and q_ualities of the various goods and services priced are
held constant between major revisions.
Developments in retail distribution of apparel
Of interest to consumers are some recent developments in retailing. The
Nation's fourth largest producer of shoes was restrained from merging with the
largest retail shoe chain since it might lessen competition in the production
and retail sale of shoes. Discount stores have spread to shoe retailing, with
the use of self-service racks. Although discount shoe stores were almost
nonexistent 4 years ago, there are now more than 1,500 of them. These account
for 9 percent of all shoe sales, and are able to sell for 10 to 20 percent
less, according to trade sources.
A manufacturer of women's undergarments has recently withdrawn as operator
of leased apparel departments in ten discount stores owned by a chain. At the
same time, a large apparel chain which currently operates 186 conventional
stores and 41 leased discount departments has recently closed 30 apparel
stores, but is planning to open 4 new leased departments in discount stores.
This chain has been suffering from high rental costs and low operating results
in conventional downtown stores. Another way of avoiding high downtown costs
is door-to-door selling: One concern that sells door-to-door has recently
announced that it will add foundation garments to its cosmetics and toiletries
and may add other items later.
Wholesale prices of clothing and textiles
A look at wholesale prices may help in thinking about possible future
changes in consumer prices.
Wholesale prices for apparel were fractionally higher (0.5 percent) in
September 1962 than a year earlier. About the same small increase was shown
for women's, misses' and juniors' apparel, infants' and children's apparel,
and knit outerwear, while men's and boys' apparel and underwear and nightwear
increased about 1 percent.
-15-
Wholesale prices of wool and part-wool blankets remained constant but
housefurnishings of cotton were up 1 percent. In September 1962 most1major
producers of sheets and pillowcases announced price increases of1
2 to 3-1/2
percent for deliveries in late October, November, and December but may have
to back down if Cannon does not increase also, according to tr~de sources.
They gave increased costs for labor and cotton as the reason.
Wholesale prices of footwear went up 1 percent between September 1961 and
1962--led by an advance of almost 2 percent in the prices of men's and boys'
footwear. There was a 1 percent increase for women's and misses' footwear
and a 1 percent decrease for children's and infants' footwear.
New products
Stretch cotton fabric, which has been introduced recently, is expected to
be used in work clothes and everyday clothes, allowing stretching room across
the back, at knees and elbows. A major producer plans to introduce a new
stretch wool fabric in some of its men's winter suits retailing for about
$115. The fabric is said to spring back into shape after stretching. They
also plan to introduce a combination Dacron-wool stretch suit next spring to
have greater crease retention.
No-run seamless nylons were recently introduced, reputed to be no-run
even when scratched by cats. However, it is reported that the run-resistance
applies only to the legs, and the hose are not so sheer as others. These hose
retail at close to $2 a pair. Manufacturers say that throwaway nylons are on
the way. The low-price type is produced by omitting the knitting of the heel
pocket, then molding to shape on aluminum frames. They have been retailing at
59 cents a pair, and are expected to be 39 cents a pair by next year.
A new glass yarn, said to have much more resistance to abrasion and
breaking than other glass fibers, has been developed for apparel and home­furnishings
as well as industrial uses. A nylon zipper was introduced in
ready-to-wear garments a year ago and is now available for home sewing. The
new zipper is smaller, more flexible, less likely to catch threads and cloth,
and easy to extricate if it does.
An improved type of Pattina high-brilliance olefinic shoe material has
recently been used for high-gloss shoes. It resists cracking and scuffing
and can be cleaned with soap and water. "Poromeric 1 " a new manmade material
claimed to have the porous qualities of leather, has been tested and proposed
for use, first, in high-priced shoes for women. Research has also been under­way
to extract chemicals from hides and convert them into a continuous sheet
of material to eliminate some of the ·waste caused by the shape and imperfections
of natural leather .
-16-
Supplies and prices of raw materials and fabrics
Cotton.--This year's cotton crop is expected to be over 2 percent greater
than last year's, and consumption is expected to remain near the average of the
past 5 years. Stocks of cotton in the U.S. on August 1, 1962 were somewhat
above a year earlier, and were equal to about 85 percent of the amount used by
U.S. mills in the previous 12 months. Prices have changed little since last
September.
Trade reports indicate a continuing trend toward modernization of plants.
One large producer announced that it will close another cotton fabric plant by
December--the third it has closed this year--in order to consolidate operations
in more modern plants. Following an investigation and recommendation by the
Tariff Commission, the President recently rejected an import equalization fee
proposed by the USDA on imports of cotton in the form of textiles and productsj
the fee was designed to equalize the cost of cotton used in the manufacture of
imported textiles with costs which domestic mills are required to pay.
Manmade fibers.--Production capacity for manmade fibers seems ample. In
recent years production has been at only three-fourths of capacity and capacity
has been increasing. Several leading producers have recently announced
expansion of facilities to meet increased demand for nylon for sportswear
using nylon-cotton stretch fabric, as well as nylon for carpets and tires.
Price levels have changed little since last September. Those for fila­ment
yarns and fibers are about the same level as a year ago and spun rayon
increased 1 percent. For broadwoven goods of manmade fibers, wholesale prices
were 2 percent higher and knit goods were 4 percent higher. In September 1962
a price cut of more than 10 percent was announced for Orlon acrylic fibers and
a lesser cut for Acrilan acrylic fibers.
Wool.--In July raw wool stocks were relatively low in both the producing
and consuming countries. The USDA Crop Reporting Board estimated that
domestic shorn wool production in 1962 would be about 5 percent less than in
1961. World wool production is expected to be slightly above the record high
of last year. World consumption is at record levels and continuing strong.
U.S. mill consumption of apparel wool during January-August 1962 was 10 per­cent
greater than a year earlier, and imports of dutiable (apparel) raw wool
were up 36 percent over the same period of 1961.
Wool prices have generally increased. The average price for domestic
apparel wool in September was about 3 percent higher than a year ago, and
foreign apparel wool had increased almost as much. Wholesale prices for wool
yarns were almost 3 percent above a year ago, and prices were 1 percent higher
for broadwoven wool fabrics and 2 percent higher for knit outerwear fabrics.
Other.--World production of raw silk was up only 0.5 percent in 1961 over
1960, according to trade sources. More silk was used in the u.s. last year
than at any time since 1952, and imports of silk during the first 5 months of
-17-
1962 were nearly 10 percent above a year earlier. Prices of raw silk are
running at their highest level since 1924, and in September were 11 percent
above a year ago. For silk products, wholesale prices were 7 percent higher
than a year ago.
Prices of hides and skins were 9 percent lower in September 1962 than a
year earlier, and leather was 3 percent lower. The trend to play shoes and
imported shoes is considered to have contributed to this.
OUtlook
Increased per capita expenqiture for clothing is expected with increases
in the proportion of young adults in the population. Research will probably
develop new manmade fibers and new uses for old fibers, as well as blends,
heightening competition among them. Snfter and whiter colors next spring are
expected to replace this year's bright colors, according to trade sources. A
wider selection of lighter shades is to be introduced in men's suits next
spring and fall.
Retail prices of clothing and textile housefurnishings may edge up some­what
in 1963. Wholesale prices of apparel, cotton housefurnishings, and foot­wear
are some higher than a year ago. Prices of broadwoven goods of manmade
fibers, wool, and cotton are up, as are prices of silk products. Some in­creases
have already been announced. A major shoe manufacturer expects to
boost prices of its spring line by almost 1 percent--more on men's shoes and
less on women's. Price increases on men's worsted fabrics to be delivered to
manufacturers between February and July haye already been announced by one
manufacturer; and higher prices of men's suits are expected by next fall.
HOUSING, HOUSEHOLD FURNISHINGS, AND EQUIPMENT
Laura Mae Webb
Agricultural Research Service
Prices of the various goods and services related to housing continued to
advance slowly (0.9 percent) from September 1961 through September 1962,
according to the Consumer Price Index. Although this rate of increase was
greater than during the preceding year (0.5 percent), it was less than the
rate of increase of the total Consumer Price Index (1.4 percent). However,
prices of various goods and services included in this category moved at
different rates and in opposite directions during the period. !(
!( Throughout this paper the term 11retail prices 11 refers to the Bureau of
Labor Statistics' Consumer Price Index and 'manufacturers' prices 11 to the BIB
Wholesale Price Index.
-18-
Construction of housing remained high and the number of units started
during the first 9 months of 1962 exceeded the number started during the
similar period in 1961 by slightly more than 9 percent. Progress in the
construction of housing specially designed for senior citizens in urban areas,
and legislation passed by the recent Congress to provide Government assistance
to the more rapid development of such housing in rural areas, is of especial
interest to the approximately 21 million in our population that have reached
or passed their 62nd birthdays and to those concerned either directly or
indirectly with their welfare.
Appliances, TV's, and Radios
Retail prices for electrical appliances, televisions, and radios
continued their downward trend during the past year, ~ experiencing their
sharpest decline--3-7 percent--of any similar period since the mid-1950's.
Retail sales in household appliance, television, and radio stores for the
first 9 months of 1962 were about l percent lower than in the similar period
in 1961.
According to trade reports, several large manufacturers of electrical
appliances are endeavoring to improve their profit situation in the face of
higher costs and lower prices by reducing the number of models and colors
produced. Many large retailers are reported to be introducing, or devoting
more sales promotion to, electrical appliances carrying their own private
labels in an effort to maintain their profit margins. This trend is attri­buted
to their ability to maintain their traditional markup by selling private
label merchandise at about the same prices at which discount houses offer the
nationally advertised merchandise. Private label merchandise (often produced
by manufacturers of the nationally advertised brands) can be obtained at a
lower cost by the retailer because it does not have to bear any of the manu­facturers'
national advertising and other sales promotion costs. However,
since manufacturers generally will not produce private label merchandise
except on large orders, this method of competing with discount houses is
available only to large retailers.
Many leading manufacturers of household e~uipment have recently dis­continued
the practice of indicating a "suggested retail price" for their
products. Although there was already a trend in this direction, recent rulings
of the Federal Trade Commission on the advertising of suggested retail prices
no doubt hastened the discontinuance of this practice. The gist of these
Federal Trade Commission rulings is: The use of a suggested retail price in
preticketing, catalog insert sheets, price lists, or advertisements is false
and misleading if, in fact, the suggested retail price is in excess of the
price at which the merchandise is usually sold at retail in that trade area.
New types of appliances.--One large company has announced that it will
introduce a thermoelectric refrigerator for household use on the retail market
late in 1962. The model to be introduced soon is described by the manu­facturer
as re~uiring about one-third the space of a conventional 12 cubic
~ Unless otherwise noted, "past year" refers to September 1961-
September 1962.
-19-
foot refrigerator. It is a console style with walnut-grained vinyl exterior
intended for use in a living room or recreation room. One of the outstandin~
features of the thermoelectric refrigerator from the homemaker's point of view
is that, since it has no moving parts, it does not present the customary
servicing problems of a conventional unit.
As a result of a law passed in the last session of Congress, all
televisions manufactured for shipment in interstate commerce or imported into
this country after a date to be specified by the Federal Communications
Commission must be capable of receiving all 82 channels that have been al­located
to television in the United States, and must comply with certain
minimum standards as to noise and peak picture sensitivity. It is expected
that the equipping of all new sets to receive ultra-high-frequency TV channels
14 through 83, as well as the very-high-frequency channels 2 through 13, will
encourage the expansion of educational TV. Educational outlets apparently
have hesitated to use UHF channels to any great extent because of the small
proportion of TV sets equipped to receive programs on these frequencies. On
the other hand, in many areas there is very little room left for TV expansion
on VHF channels.
The FCC, after consulting with various industries involved, has proposed
that these new regulations become effecti~e April 30, 1964. All comments on
this proposed date were to have been submitted to FCC by November 1, so it is
expected that the official "cutoff" date on shipment of the more limited
receiving sets will be announced shortly. If April 30, 1964 is the designated
date, it is expected that the 1965 models--to be introduced on the retail
market about June 1964--will be all-channel sets. However, it is expected
that there will be a significant increase in the proportion of all-channel
sets produced in the interim.
Furniture and Rugs
Retail prices of furniture advanced 0.4 percent during the past year.
Manufacturers' prices increased 2.0 percent for wooden furniture and 1.6 per­cent
for upholstered furniture, but since some of this advance occurred in
mid-summer it may not have been fully reflected in retail prices by Sept ember.
Retail sales in furniture and homefurnishings stores exceeded those of the
similar period of 1961 by slightly more than 7 percent.
Tufted rugs are increasing in popularity at the expense of woven rugs.
For 1961 it is estimated that 75 percent of the room-size rugs (square yard
basis) shipped by domestic manufacturers were tufted varieties. This in­creasing
popularity of tufted rugs has no doubt resulted in part from the
lower prices due to lower production costs and greater use of lower cost
fibers. In 1958, only about 22 percent of the tufted rugs shipped, as
compared with 90 percent of the woven rugs, were wool or chiefly wool. Acetate
and rayon still account for a larger share of the tufted rug production than
any other fiber but the use of textured filament nylon yarns is apparently
J • increasing and the use of acetate and rayon decreaslng.
-20-
Meanwhile, shipments of domestic woven rugs have declined sharply--about
42 percent from 1947 to 1961. For several years manufacturers of woven rugs
in this country have been faced with increasing competition from imported woven
rugs. In 1958, 4.7 million square yards of machine woven rugs were imported
as compared with shipments of 51.4 million square yards of domestic manu­facture;
in 1961 the figures were 8.5 and 44.1 . Earlier this year, the U.S.
Tariff Commission reported that the imports of machine-woven velvet and Wilton
rugs were causing undue hardship to domestic manufacturers. Accordingly, duty
on these types of imported rugs was increased from 21 to 40 percent ad valorem,
effective June 17, 1962. As of September, this had not increased prices of
domestic rugs at the manufacturing level.
Housing
Urban residential rental units
During the past year, charges for residential rental units in urban areas
increased 1 .1 percent; thus the past year has witnessed a further slowing in
the rate of increase. The rate of increase in the same period 2 years earlier
was 1.5 percent and 1 year earlier 1.4 percent.
The third quarter 1962 vacancy rate of 7.3 percent for residential
rental units, compared with 7-9 percent for the third quarter of 1961,
provides evidence of a slight decrease in vacant units. The third quarter
1962 rate ranged from 3.8 percent in the Northeast to 9.0 percent in the West .
In the North Central area it was 8.2 percent, in the South 8.9.
Trade reports indicate higher vacancy rates in apartments , especially
those of a "luxury" type, in some cities. These reports seldom refer to
reductions in rental charges, but concessions such as a "rent free" period
in conjunction with a long-term lease, color TV in furnished apartments , or
free transportation to and from the apartment development during the rush
hours have been reported from several cities.
Construction and sales
Total housing starts (farm and nonfarm) were higher every month from
March through August in 1962 than in the corresponding month of 1961,
according to Department of Commerce estimates, but in September 1962 fell
below year earlier levels. For the first 9 months of 1962 they totaled
slightly more than 9 percent higher than during the similar period last year.
A new statistical series , "Sales of New One-Family Homes" (a joint
release of the Bureau of the Census , U.S . Department of Commerce, and the
Housing and Home Finance Agency) shows that of the total housing starts during
-21-
the first 6 months of 1962, 66 percent were private, nonfarm, one-family
homes; nearly two-thirds were built for sale. Of the new nonfarm one-family
homes sold during the first quarter, 44 percent were financed by conventional
type mortgages, 27 by Federal Housing Administration insured mortgages, and
16 percent by Veterans Administration insured mortgages, and only 5 percent
involved no mortgage financing. (For 8 percent the method of financing was
not reported.) The 1960 Census of Housing reports that 57 percent of the
nation's owner-occupied homes were mortgaged as of April 1960 compared with
44 percent in April 1950.
Probably many families purchasing a home for the first time assume that
the immediate financial problems have been taken care of when arrangements
have been made for the downpayment and the mortgage. But the various
payments associated with the traasfer of the property, such as cost of title
search, recording title policy, and settlement fees, may cost several hundred
dollars on a moderate-priced home. These costs vary by area and by sale
price. The table on page 22 shows charges for the various items included in
closing costs as reported in a recent Federal Housing Administration survey.
Housing for senior citizens
One of the most important developments in housing in the last few years
has been the acceleration in the construction of housing specifically designed
to meet the needs of our senior citizens. Most of the progress to date can be
attributed to the Housing and Home Finance Agency's several programs relating
to housing for this population group. The Senior Citizens Housing Act of 1962
provides new programs for senior citizen housing in rural farm and nonfarm
areas to be administered by the Farmers Home Administration of the U.S.
Department of Agriculture, and increased the authorization in the direct loan
program for senior citizen housing under HHFA.
Housing and Home Finance Agency's programs.--This agency has three major
programs for assisting in the providing of suitable housing for senior
citizens. Although the types of financial assistance provided are quite
different, there are several underlying assumptions relative to the type of
housing to be provided that are common to the three programs. These are:
(l) the housing unit shall provide for a continuation of active and in­dependent,
not bed-ridden, life; (2) nursing-home care, when needed, will be
provided elsewhere than in the housing project; (3) specially designed con­struction
features that can help overcome some of the physical limitations of
advancing age shall be provided in the unit; and (4) recreational and other
activities will be provided for the most part outside these projects. J/
J/ "Financing Non-Profit Housing for Older People." A paper prepared by
Sidney H. Woolner, Commissioner, Community Facilities Administration, HHFA,
for a meeting of The National Council on Aging, at Glenwood Springs, Colorado,
July 1962.
!!'able r.--AVl!r-e;e &Del. ranse of ind!Tidual itaa ot loc cloaiag coata on aortgagea on l-taall7 n"" and exiatiag baleo inoured b:r hderal llouaiag Mainiotration under aection 203 1n aelected areu,
October 1-201 1961
Locality y
1'JIA. Zone I
JU&ica, II.Y.
ATer-e;e ..... ..
lllulge ........ .
Bur li!!gton I Vt •
Aver-e;e .. . ...•
lllulge .........
JI'IIA Zone n
llevark, II.J.
Average •••.•••
lllulge .........
llilldagton, Del.
Average ...... .
lllulge ........ .
JI'IIA Zone Ill
XDOXT111e I Tenn .
Average .••..••
lllulge .........
Col\lllbia 1 S.C.
Averae;e • •. ••• •
lllulge .. .......
JI'IIA Zone IV
Grud Rapid&, Mich.
Average ••• •• •.
lllulge .........
lnd.1anapolla, Ind.
Average ....•..
lllulge .........
JI'HA Zone V
St . Louie, Mo .
Average .••.•.•
lllulge .........
Houa ton 1 Texas
Average •......
lllulge .........
FHA Zone VI
Reno 1 lle..-ada
Average ...... .
lllulge ........ .
Boiee, Idaho
Ave.ra.ge •••••• •
lllulge .........
Indirtdual itemo inclUded 1n clooiag coota
Title 1nour- Title tion of n ,
0
Title Prepara- tAttor-~ Eecrov ~ ReVl!nue tranoter Cloaiag lfot&r7 Record- cooooia- AdJuated r:a I Title I I I ~Jirol<er'•l
search ance abatract ~~m~a r:;. feea tax atppa tax tee feel ins :reel lion intereat
~~~~--~~~-----J----~-----L----~----L--=~~t-+d~o~ll&ro~~
27 I 147
10-105 45-225
21
20-45 ~
21 I 152
20-40 76-225
20 I 100
20-20 68-153
26 I 107
20-85 57-196
20 I 103
20-20 64-147
26 130
20-65 85-185
20 124
20-25 40-222
20 134
20-20 73-225
18 1o6
11-20 5-225
22
20-40
~
193
105-500
122
6o-197
19
10-40
~
22
20-45
5
5-5
~
~
18
8-20
20
4-31
~
Yy.
yY.
~
5
3-15
~
5
5-6
7
4-15
5
3-13
6
5-10
5
3-14
5
3-10
4
2-11
6
3-11
7
5-10
4
13-13
52
10-85
~
45
5-65
30
25-35
26
15-40
34
26-35
31
20-70
~3
10-25
33
5-50
20
5-30
Yy.
~
}/. 64 87 "if 8-170 18-158
~ ~ ~
Y. 191 79 y 10-36o 45-130
4 125 26
2-5 95-159 21-45
3
2-3
~
~
~
62
10·97
26
19-39
4 6 73
1-6 2-15 33-116
4 u 47
3-10 9-15 25-67
Yy.
~
26
15-42
~
~
~
~
10
3-26
4
1-7 ~
~
53 71
5
3-8
~
3
l-.1
15-153 30-110
23 6
3-133 6-6
18 I 81
8-40 ~8-178 ~
J.{ 27 ~
10-lo6
33
20-35
~
38
20-40
20
10-70
3
10-10
~
~
18
15-20
~
18
3-35
~
~
lo6 Y.
20-2o6 y
48 }/.
35-6o "if
205 1167
25-486 100-300
~I~
25 1112
l0-6o 29-307
103
64-147
~
~
77
17-205
19 I 33
10-35 25-40
~
~
~
j
~
5
2-15
39
21-70
~
73
23-113
~
~
~
~
~
~
16
11-30
~
~
~
~
~
~
~
~
10
4-15
4
3-6
~
Yy.
~
~
~
~
~
~
~
~
~
~
20
12-41
~
~
3
3-4
~
~
~
~
100
25-225
20
15-20
21
20-25
~
Yy.
30
25-35
30
25·35
~
~
~
~
~
~
3
1-4
~
~
~
~
2
1-4
~
2
2-2
~
13
4-26
9
8-11
15
10·33
13
10-20
36
23-74
5
2-5
~
~
~
~
~
~
8 691
3-11 130-1335
12 124
11-15 59-182
15
1-32
13
2-31
13
3-32
10
9-15
145
95-320
~
~
~
~
~
26
2-72
15
3-34
4
2-7
18
1-55
~
26
3-66
18
1-73
6
3-16
54
5-224
16
10-31
Otber y
9
3-65
~
~
8
5-10
161
113-225
~
33
3-122
17
5-37
5
1-26
~
~
~
IIQTI!l: Tlleoe data vere obtained by Uotiag clooiag coot• on all mortgagee inoured under section 203 by the reportiag office duriag tbe period October 1-20, 1961. The inoured 110rtgqea ranged up
to $25,000. The anrage and range tor each ot the i.ndiv.::l.dual items ot cloaing costa vas baaed upon those ca.aea which reported a charge tor the particular individual 1tea. Charge• for .ortgagea on
nev bc:aea (proposed con.atructioc) and exiati.ng bc8!ea vere combined 1D cc:mputins tbeae ave rase a and ransea.
y Tile firot city listed under each of :!11A.'• aix zonea represent• the area inouriag o:rfice reportiag the highest aver-e;e tot&l. loan c1oaiag costa 1n that zone; the oecond city re_preoento tbe area
inauriag office reportiag the lovest average total 1oa.n cloaiag coato 1n that zone.
gj llullber of caaea reported too small to ccmpute a meaningt'Ul average or range .
t3fJ/ lfo caoea reported. Other coste are for such items e.e certificate ot occupancy., miecellaneoua service tees, sever charges., coJIVeyance tee, entry bond, brokera' expenee11 utillt7 chargee.
SOURCE: hderal Housiag Admin1atration
I
(\)
(\)
I
-23-
The three programs of HHFA provide different types of assistance for
financing housing for the elderly, in recognition of the wide variation in
their ability to pay for suitable housing~ For the lowest income group there
is the program of special aids to local housing authorities for construction
and operation of public housing for the elderly. To meet the needs of the
group whose incomes are too high for public housing but too low to afford
suitable housing provided by the private housing market, there is a program of
direct loans for rental housing sponsored by nonprofit corporations, consumer
cooperatives, and certain public groups. For the upper income group, a
program of mortgage insurance is designed to protect private lenders against
losses on funds advanced for the construction of multiunit projects for the
elderly, or for purchase of dwellings by individual elderly families. These
three programs are described briefly below.
1. Public housing. Public housing is subsidized by the Federal
Government through its assumption of deficits incurred by local
housing authorities. The subsidies make up that part of the annual
principal and interest that is not covered by rental income. Amend­ments
to the public housing program within the past few years provide
favored treatment for senior citizens in several ways: (a) Higher
cost limits per room are permitted in units designed for the elderly
(these units may be in separate public housing projects for the
elderly, or in a project designed for all age groups); (b) The
Federal Government can pay an additional $10 per month subsidy for
units occupied by senior citizens, where necessary to enable a local
authority to lease to older persons at rentals they can afford and
still operate the project on a solvent basis; and (c) Single persons
62 years of age or older are eligible for occupancy of public housing
units; single persons in younger age groups are not eligible.
2. Direct loans for rental housing. HHFA is authorized to make loans
directly to private nonprofit organizations, consumer cooperatives,
and certain public agencies to provide suitable housing for senior
citizens whose incomes are too high for public housing but not high
enough to meet the cost of good housing on the conventional, com­pletely
private market. Loans under this program may run as long as
50 years and the current interest rate on them is 3t percent.
3. Mortgage insurance
(a) Rental housing. The Federal Housing Administration is
authorized to insure private lending institutions against losses on
mortgages used to finance the construction or rehabilitation of
multiple unit structures containing eight or more units, of which
at least 50 percent are especially designed for occupancy by older
persons.
There are limitations on the size of the mortgage and the
maximum loan ratio that the FHA will insure, depending on the kind
of sponsorship (public or private), the type of structure and size
-24-
of dwelling units, and whether or not the project is in an area
designated as high-cost. Sponsors of such projects must provide
evidence that there is sufficient demand for the type of housing
proposed, and that they possess sufficient income, or income­producing
assets, to reasonably assure the payment of debt and
operating expenses for the life of the mortgage.
The range in the type of housing and facilities permitted
under this program is greater than under the other programs. This
is accounted for in part by the fact that taxpayers' funds are not
used in the construction of such projects, and in part because they
are designed for persons who can afford more facilities if they
desire them. Some of the projects provide housing only; others
include hobby shops, social rooms, and health units, or even common
dining rooms, cafeterias, infirmaries, and various recreational
facilities.
Nonprofit organizations sponsoring projects are permitted to
charge the residents founders' fees under certain circumstances.~
In some cases founders' fees are charged to meet the cost of con­struction
in excess of the amount for which the particular type of
project is eligible for mortgage insurance; such costs may have
been incurred to provide facilities not eligible for financing
(e.g., an infirmary), or founders' fees may be used so that a
smaller mortgage debt will be required and thus make reduced rents
possible. If the sponsors use founders' fees to assure the donor of
lifetime care in the project, appropriate safeguards and restrictions
are placed upon them to protect the residents as well as the liability
assumed by FHA.
(b) Sales housing to the elderly. The Federal Housing Administration
is authorized to insure a private lender against loss on a mortgage
up to $25,000 for a single-family dwelling purchased by an elderly
person, even if the downpayment is made by a relative, friend, or
corporation. If the purchaser is unable to qualify as an acceptable
mortgage risk, FHA can insure the loan if an acceptable third party
becomes a cosigner of the ~ortgage. The mortgage may be for as long
as 35 years for a new home and 30 years for an existing home. The
current rate of interest is 5-l/4 percent, plus l/2 percent mortgage
insurance premium.
Farmers Home Administration's program.--The HHFA programs for assisting
in the construction of senior citizen housing are not limited by law to the
urban areas; nevertheless, little progress has been made in providing housing
~ The founder's fee--usually a rather substantial amount--is required as a
condition of occupancy. There is considerable variation between projects in
the rights conferred upon payment of this fee. It usually gives the payer the
right to occupy a unit--under stated conditions--as long as he lives, but not
to rent or sell the unit to anyone else; nor is any part of the fee normally
refunded to the heirs upon the occupant's death. Regular subsequent payments-­monthly
or annually--are usually required in addition to the founder's fee.
-25-
for the elderly in rural areas under these programs. It is expected that more
rapid progress will be made by Farmers Home Administration because of its
county office system, familiarity with housing needs in rural areas, and
association with personnel working with low-income rural families. These
types of assistance are to be provided by this USDA agency:
1. Mortgage insurance for rental housing.--This program will be similar
to the HHFA insurance program (3a). It is designed to assist in
providing housing for the elderly whose incomes are sufficient to
meet rental payments for housing financed with credit at market
rates. Capital for such construction will be provided by private
lenders and FHA will insure them against losses on these loans.
2. Direct loans for rental housing.--This program will be similar to the
HHFA (2) program. It will provide low-interest, direct loans to
private nonprofit corporations and consumer cooperatives to provide
housing for the elderly whose incomes are not high enough to meet
the cost of housing provided by private capital.
3. Direct loans to elderly families.--This type of aid is not found in
the HHFA program. The FHA has had authority to make housing loans
for constructing new homes on farms and in rural nonfarm areas to
rural residents who cannot secure credit for housing from conven­tional
sources under reasonable terms and conditions, but who can
qualify as a reasonable credit risk. The new law provides three
special advantages to the elderly under this existing program:
(a) They will be permitted to buy previously occupied homes as well
as build new homes for their own use; (b) in the case of elderly
applicants who are deficient in repayment ability, any person with
adequate repayment ability may be a cosigner; and (c) they may
finance the cost of both the land and the dwelling with the loan
(younger persons must own their land before they can apply for the
loan).
Programs beneficial, but not limited, to senior citizens
Nursing homes.--The Federal Housing Administration is authorized to
insure private lenders against losses on mortgages used for financing quali­fied
new or rehabilitated proprietary nursing homes. Admittance to such
homes is not limited to the elderly, but older persons make up by far the
greatest proportion of patients in nursing homes.
Homes under this program are privately owned, and each project must in­clude
a minimum of 20 nursing beds. FHA can insure a mortgage for a nursing
home only if it has received from the appropriate State agency a certificate
indicating the facility is needed and that reasonable minimum standards for
licensing and operating such establishments are in force in the area. The
insured mortgage cannot exceed $12.5 million, with a maximum loan value ratio
of 90 percent. The maximum amortization period is 20 years; the interest rate
is currently 5-1/4 percent, plus 1/2 percent mortgage insurance premium.
-26-
Farmers Home Administration loans for home improvements.--The Senior
Citizens Housing Act of 1962 authorizes Farmers Home Administration to in­crease
from $500 to $1,000 the loan that low-income families in rural areas
may obtain for making improvements in their homes that are necessary to in­sure
the health and safety of the occupants or the community. Only families
whose incomes are so low that they cannot qualify for loans from conventional
sources are eligible for these loans . It is expected that this higher ceiling
on such loans will be especially beneficial to elderly applicants.
Outlook
The current situation indicates that there will be ample supplies of
housefurnishings and equipment during the coming year, with prices remaining
at about present levels.
Private housing starts totaled higher for the first 9 months this year
than for the corresponding period last year. There are indications that the
1963 level may be somewhat below that of 1962, but there should be no
difficulty in meeting the demand for new units in view of the availability
of adequate supplies of construction materials and of credit at terms
favorable to buyers.
Construction of housing for the elderly during the next few years is
expected to exceed that of the past few years, as a result of the Federal
assistance provided in the Senior Citizens Housing Act of 1962 and the
emphasis on the need for even further expansion of the program by the Report
of the Senate Subcommittee on Housing for the Elderly. Persons now approach­ing
62 can look forward to increased availability of suitable housing for
their senior years--housing that will sustain their ability to live independ­ently
for as long as possible, and will encourage continuing meaningful
contributions to community life and to society.
CURRENT AND FORESEEABLE TRENDS IN RURAL POPULATION
Calvin L. Beale
Economic Research Service
The rapid growth pattern of general population in the United States has
not been typical of all elements of the population. The Nation had 541 054,000
rural people in 1960, comprising 30 percent of the total population. (This
includes all persons living in the open country plus those in places of less
than 2,500 inhabitants outside the densely settled suburban fringes of
metropolitan cities.) Essentially, the rural population was stationary
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during the 1950's~ but with large redistribution. The South Central and
Plains States had substantial rural losses. These losses were nearly offset
by gains in the Northeast~ the Lower Great Lakes Area~ Florida~ and the
Pacific States.
At the heart of the stationary overall level of rural population was the
extensive change in agriculture~ reflected by a rapid decline in the farm
population. Precise comparisons of farm population data over the last decade
are difficult, because a new definition of farm residence was adopted in 1960.
The official farm population figure for 1960, on the new definition, is
151 635~000. We estimate that the comparable figure in 1950 may have been as
high as 23 million.
Today's rural population is a very heterogeneous group. Hardly one­fourth
of it is farm residents. Ih the rural nonfarm majority there are
many people whose lives are closely linked with agriculture~ such as farm
laborers~ agricultural processors~ and suppliers of farm equipment. On the
other hand, there are millions of rural people without any meaningful
agricultural connections. They work in nonfarm industries, are retired,
or make up the population and staff of the colleges, institutions~ and
military installations that are located in rural territory. Rural people
may be living in densities of 40 or more households per square mile, as
they do throughout Southern New England, or in areas settled so thinly that
there is only one household for every 3 or 4 square miles~ as in Wyoming or
Nevada.
County trends.--In 1950 there were a little more than 2,400 counties in
the Nation that were entirely or primarily rural in their population. During
the following decade three-fifths of them declined in population, because of
migration of people to other areas. Of those that gained, the majority did
not gain enough population to equal their excess of births over deaths. In
other words, their population grew slowly, accompanied by the loss of some of
their people--usually young people--to other areas. Only 353 rural counties
(15 percent) had enough economic development to absorb all of their natural
population increase and possibly attract migrants from elsewhere. The most
important single influence producing growth in these was proximity to a
metropolitan area. Manufacturing was the second most common growth factor,
and military expansion third, followed by growth of institutions (such as
colleges, hospitals, and prisons) and recreation or retirement activities.
Ratio of males to females.--Rural areas still have somewhat more males
than females, in contrast to cities and suburbs where women are in the
majority at all ages above 15. One of the principal reasons for the retention
of men in the rural population is the fact that many of the most common rural
industries employ relatively few women, compared with urban-centered in­dustries.
But even among children under 15 years old the ratio of males to
females is higher in rural than in urban areas, a condition for which we have
no adequate explanation.
-28-
Fertility.--The sharp increase in marriage and child bearing among city
people in the last 20 years has greatly narrowed the gap between urban and
rural fertility, but has by no means closed it. Urban women in the 35 to 44
year age group are having an average completed fertility of 240 children per
100 women, rural women in this age group 310 children per 100 women. About
220 children per 100 women are necessary for population replacement. The
urban women can be said to have borne children at a rate about 10 percent above
the replacement level, the rural women about 40 percent above it. Among rural
farm women this excess is more than 55 percent.
We have had a movement of people out of rural areas, especially farming
areas. But, unless rural job opportunities expand, this migration will not
permanently resolve the surplus of labor emanating from rural areas. There
will be about 177 rural boys rea~hing age 20 during the 1960's for every 100
older rural men expected to vacate existing jobs through death or retirement.
Age and migration.--The total rural population does not vary greatly from
the urban population in its age distribution, except for a somewhat higher
proportion of children and lower proportion of adults of working age. However,
the rural farm population differs greatly from either the urban or rural non­farm
groups. (See table.) The farm population has a heavy base of children
up to age 18, then a very small young adult group 18 to 34, with the bulk of
the adult population being middle-aged. The largest 5-year age group of farm
people consists of those 45 to 49 years old. Farm people 60 to 69 years old
actually outnumber those 20-29. (By contrast, persons 20 to 29 outnumber
those 60 to 69 by 80 percent in the rural-nonfarm population and by 65 percent
in the urban population.) The curious age structure of the farm population is
the product of the heavy outmigration of young adults over the last 20 years.
The departure of young farm people has been so heavy that the number of
births in the farm population is declining. In fact, in some rural counties
(33 in 1959) the number of births has recently fallen below the number of
deaths. The natural decrease of population in the 33 counties results solely
from the distorted age structure which finds the older generation, from which
most deaths occur, much larger than the young generation to which children are
born.
The failure to understand the extent and pattern of recent migration from
the farm is a major defect in any proposal to speed up the movement of workers
out of agriculture as a means of improving the condition of these workers and
remaining farmers. The workers referred to in such proposals are those not
presently making a good income from farming. The bulk of all low-income
farmers are middle-aged or older, so an induced movement of low-income farmers
would have to be primarily focused on these older people. Quite aside from
the difficulty of providing reemployment opportunities for such people, they
are not likely on the average to be interested in uprooting themselves at
this stage of life. A recent study in Minnesota found that among 15 variables
assumed to be associated with the potential mobility of farmers " ... age
-29-
Distribution of U.S. population by age, by residence, 1960
Age
All ages ........•.•..•..••
Under 5 years ...•..••...
5 to 9 years .•.•••.....•
10 to 14 years ..•..•....
15 to 19 years .•......•.
20 to 29 years ......•.••
30 to 44 years •......•..
45 to 64 years ...•.....•
65 years and over .....•.
Total
Percent
100.0
11.3
10.4
9.4
7.4
12.1
·20.1
20.3
9.1
Urban Rural
nonfarm
Percent Percent
100.0 100.0
11.2 12.1
10.0 11.3
8 .8 10.3
7.0 8.0
12.5 12.2
20.7 19.0
20.6 18.1
9.1 8.9
Rural
farm
Percent
100.0
9.9
ll.O
11.6
9.4
8.4
17.0
23.3
9·3
exerted a more pervasive influence than any other factor, 11 with farmers over
45 having much less potential for mobility than young farmers. !/
The present decline in farm population--and the prospective decline for
at least the next l-5 years--is due principally to (l) the exodus of young
people recently out of school who leave before ever becoming farm operators,
and (2) the death or retirement of older people from small-to-medium-scale
farms, which are then either taken over by other operators for enlargement or
removed from agriculture altogether.
Future total rural population.--In the area of the United States now
classified as rural (farm and nonfarm combined), it can be said with assurance
that total population is increasing and will continue to do so, for as urban
places expand much of their growth takes place on land that is currently
rural. This is quite different, however, from asserting that the rural popu­lation
is increasing. The ultimate distinction between rural and urban is
density of settlement. As rural territory becomes suburbanized, the increased
density changes its character and requires that the area and its residents
must be reclassified as urban. In 1960, there were about 17 million people
1-rving in urban territory that was officially rural 10 years earlier. The
future size of the rural population, therefore, depends in part on decisions
as to what territory to classify as rural. In 1950, suburbs were classified
as urban if they had approximately 2,000 or more residents per square mile.
In 1960, the criterion was lowered to 11 000 or more persons per square mile,
with a consequent enlargement of the amount of area classed as urban.
!/ Baumgartner, H. w. 11Factors Associated with Potential Mobility Among
Farmers." Report delivered at 1962 Annual Meeting of the Rural Sociological
Society, Washington.
-30-
It would seem that nearly all of the net population gain that will accrue
to present rural areas in the 1960's will be urban in character and will be
reclassified as urban in 1970. Within the territory that remains rural in
both 1960 and 1970, population losses in farm and mining areas are likely to
offset most of the rural gains elsewhere. Barring changes in census pro­cedures,
the total rural population may be about 55 million in 1970--if the
1950-60 rural rates of change by counties persist in the 1960's .
During the 1970-80 decade, further losses in the rural farm and mining
populations should be more than offset by growth in other types of rural
population, and the rural population might rise to about 60 million in 1980.
Even this rise would represent a rate of growth less than half that expected
in the Nation as a whole. Rural people would comprise about 22 percent of
the Nation's total population.
Future farm population.--What proportion of the rural population will
consist of farm people by 1980? There is no precise way of forecasting such
a number for it will be primarily determined by the uncertain future pattern
of farm adjustment and human migration. In 1950 the farm population was
42 percent of the rural total and by 1960 it had fallen to 29 percent . Losses
between the present and 1980 will probably not be as large as those that have
occurred since 1950. By 1980 farm people may comprise between 15 and 20 per­cent
of the total rural population.
ESTIMATED COST OF 1 WEEK'S FOOD
The table on page 31 presents the estimated cost of 1 week's food to be
prepared and served at home. The estimate is based on quantities of food in
the low-cost, moderate-cost, and liberal plans. The plans are available as
a leaflet--Low-Cost, Moderate-Cost, and 'Liberal Food Plans , HHE(Adm. )-146 .
The cost of food for a specific family can be estimated from the table , since
costs are given for individuals of different ages.
-
-31-
Estimated Cost of l Week's Food, !/ October 1962--U.S.A. Average
Sex-age groups Low-cost Moderate- I Liberal
plan cost plan plan
i
Dollars Dollars Dollars
FAMILIES
Family of two, 20-34 years 'ij ............. 14.00 19.10 21.60
Family of two, 55-74 years 'ij ............. 12.40 17.30 19.40
Family of four, preschool .children J/ ..... 20.80 27.80 31.80
Family of four, school children !3} ........ 24.00 32.60 37.00
INDIVIDUAIB 21
Children:
Under l year ............................ 3.10 3.90 4.20
l-3 years ............................... 3.70 4.70 5.40
4-6 years ............................... 4.40 5-70 6.80
7-9 years ............................... 5.20 6.90 7-90
10-12 years ............................. 6.10 8.30 9-50
Girls, 13-15 years ........................ 6.40 8.80 10.10
16-19 years ............................. 6.50 8.70 10.00
Boys, 13-15 years ......................... 7.00 9.70 11.00
16-19 years ............................. 8.30 11.30 12.80
Women, 20-34 years ....................... 5-50 7.60 8.60
35-54 years .. ........................... 5-30 7.40 8.40
55-74 years ............................. 5.00 7.00 7-90
75 years and over ....................... 4.90 6.50 7.40
Pregnant ................................ 6.80 8.90 9-90
Nursing ................................. 8.60 - 11.00 12.20
Men, 20-34 years ......................... 7.20 9.80 11.00
35-54 years ............................. 6.70 9.10 10.20
55-74 years ............................. 6.30 8.70 9-70
75 years and over ....................... 6.10 8.30 9-30
!/ These estimates were computed from quantities in food plans published in
the October 1957 issue of Family Economics Review. Quantities for children
were revised January 1959 to comply with the 1958 NRC Recommended Dietary
Allowances. The cost of the food plans was first estimated by using the aver­age
price per pound of each food group paid by nonfarm survey families at
three selected income levels in 1955. These prices were adjusted to current
levels by use of Average Retail Prices of Food in 46 Large Cities Combined
released periodically by the Bureau of Labor Statistics.
g/ Ten percent added for family size adjustment. For derivation of factor
for adjustment, see September 1960 issue of Family Economics Review.
3/ Man and woman 20-34 yearsj children, l-3 and 4-6 years.
~ Man and woman 20-34 yearsj children, 7-9 and 10-12 years.
~ The costs given are for individuals in 4-person families. For individ­uals
in other size families, the following adjustments are suggested:
1-person--add 20 percentj 2-person--add 10 percentj 3-person--add 5 percentj
5-person--subtract 5 percentj 6-or-more-person--subtract 10 percent.
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CONSUMER PRICES
Table 1.--Index of Prices Paid by Farmers for Commodities Used in Family Living
(1957-59 = 100)
November 1961; March 1962-November 1962
Item Nov . ,Mar. !A
1961 19621 pr. May June July Aug. Sept . !oct. Nov.
All commodities ............. 1021 103 103 103 103 103 103 103 1~~ I
103
Food and tobacco .......... -- 103 -- -- 103 -- -- 103 --
Clothing .................. -- 107 -- -- 107 -- -- lo8 -- --
Household operation ....... -- 105 -- -- 105 -- -- 105 -- --
Household fUrnishings ..... -- 98 -- -- 97 -- -- 97 -- --
Building materials> house . -- 101 -- -- 100 -- -- 100 I -- --
Auto and auto supplies .... -- 101 -- -- 101 -- -- 100 -- --
Source: U.S. Department of Agriculture,. Agricultural Marketing Service.
Table 2.--Consumer Price Index for City Wage-Earner and Clerical-Worker Families
(1957-59 = 100)
October 1961; February 1962-0ctober 1962
Oct. Feb. I
Item
1961 1962
Mar. Apr. May June July Aug. Sept. Oct.
All items ................... 105 105 105 105 105 105 106 106 106 106
Food ...................... 102 103 103 103 103 104 104 104 105 104
Apparel ................... lo4 102 103 103 103 103 103 102 105 105
Housing ................... 104 105 105 105 105 105 105 105 105 105
Rent .................... 105 105 105 105 106 106 106 106 106 106
Gas and electricity ..... 108 108 108 108 ,108 108 108 108 108 108
Solid fuels and fuel oil. 102 lo4 104 102 1100 99 100 100 101 102
Housefurnishings ........ 100 99 100 99 1 99 99 99 98 99 99
Household operation ..... 106 107 107 107 107 107 108 107 108 108
Transportation •..•...•..•• 107 106 106 107 107 107 107 107 108 108
Medical care .............. 112 113 114 114 114 114 115 115 115 115
Personal care ............. 105 106 106 106 106 106 107 107 107 107
Reading and recreation .... 108 109 109 109 110 109 110 110 110 llO
Other goods and services .. 105 105 105 105 105 105 106 106 106 106
Source: U.S. Department of Labor, Bureau of Labor Statistics.