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3 $1, 065 Billion as Goal and Forecast
--Herbert Stein
5 Some New USDA Publications
l
6 Agricultural Situation and Outlook for 1971
--Rex Daly
9 Clothing and Textiles: Supplies, Prices, and Outlook for 1971
--Virginia Britton
14 Outlook for Food Prices, Consumption, and Expenditures
16
17
18
--Hazen Gale
Price Indexes Have a New Base Period
Consumer Prices
The Who, What, and Where of Medical Care Spending
PR
PE:R ry F THE
11RRARY
APR 1 3 1971
UNIVI::.n~t I y 01-
'·'-'tt I r-,
--Barbara S. Cooper
22 The Effect of Consumer Credit on Food Expenditures AT GRF.£Nsao~~"11 '-'lli,A
--Joan C. Courtless 0 47
25 Seasonal Variations in U.S. Diets
--Arletta M. Beloian
30 The Expanded Food and Nutrition Education Program
--Robert E. Frye
33 Office of Consumer Affairs and Consumer Product Information
Coordinating Center
34 Cost of Food at Home, U.S. and Regions
ARS 62-5
March 1971
THE CONTENTS OF TillS ISSUE
This issue is made up, for the most part, of condensations of
papers prepared for the National Agricultural Outlook Conference,
held in Washington, D. C., February 23-25, 1971. For a
copy of the complete text, send your request--giving the title and
the author of the article--to the Consumer and Food Economics
Research Division, Agricultural Research Service, U.S. Department
of Agriculture, Federal Center Building, Hyattsville, Md.
20782. Please give your ZIP code with your return address.
Family Economics Review is a quarterly report on research of
the Consumer and Food Economics Research Division and on information
from other sources related to economic aspects of family
living. It is prepared primarily for home economics agents and
home economics specialists of the Cooperative Extension Service.
$1,065 BILLION AS GOAL AND FORECAST
Herbert Stein, Member, Council of Economic Advisers
The Budget Message and the Economic Report came out with projections that the
Gross National Product (GNP) in 1971 would be $1,065 billion. I think the number is
important both for this year's economic outlook and for the making of economic policy
in the future.
A total of $1,065 billion, an increase of $88 billion from the,previous year and a
discrepancy of $15 or $20 billion between our forecast and the conventional forecast all
seemed enormous numbers. But in fact, they are not enormous numbers. The forecast
increase in GNP is 9 percent from 1970 to 1971, compared with an average annual
increase of 6. 4 percent in the 20 years from 1950 to 1970. The increase in real output
is about 4.5 percent, compared with 3.6 percent average annual increase in the past two
decades. The difference between our forecast and the standard forecast is 1-1/2 to 2
percent of the GNP, which is not much beyond the average error of the standard forecast
in the past.
We are aiming at and forecasting a path for the economy that will significantly
reduce the rate of unemployment during 1971. The consensus forecast is of a languorous
revival that would leave unemployment at the end of the year around the 6 percent
with which the year opens. That indicates the real issue. Should we, can we, will we
reduce the unemployment rate during 1971, and how? The Administration is saying that
we should, can, and will--by expansive fiscal and monetary policy supplemented with
moderate direct restraints on particular prices and wages.
We are saying four things about the $1,065 billion.
1. We believe a path of the economy which amounts to a GNP of $1,065
billion in 1971 is a desirable path.
2.. Achievement of the $1,065 billion GNP in 1971 is the Administration's
goal.
3. We believe that achievement of the $1,065 billion GNP is feasible.
4. We believe that the goal will, in fact, be achieved.
I would like to discuss these points.
Is $1,065 billion a desirable outcome?--! have already indicated half of the reason
for considering a $1,065 billion GNP in 1971 as a desirable outcome, certainly more
desirable than the more commonly forecast outcome of $1,050 billion. That half of the
reason is the effect on unemployment--the achievement of a significant reduction of the
unemployment rate rather than continuation of the present rate. However, this invites
the question, why not $1,070 billion or $1,075 billion? Wouldn't they reduce unemployment
even more? The answer, of course, lies in the inflation problem. We believe
that $1,065 billion is betterthan, say $1,055 billion or $1,075 billion, because it is more
likely to be compatible with both a reduction of the inflation rate and a reduction of the
unemployment rate.
If we get a moderate reduction of the inflation rate during 1971, say to 3-1/2 per-cent
by the end of the year, the $1, ()65 billion GNP would mean an increase of real output
sufficient to reduce unemployment to about 5 percent by the end of the year. Such a
MARCH 1971
3
rate of increase of output and reduction of unemployment would, in turn, be consistent
with and help to bring about the moderate reduction of the inflation rate.
Achievement of a larger GNP than $1,065 billion might get the unemployment
rate down faster. But if the GNP were significantly larger--and it is no use talking
about one or two billion dollars anymore --we think the inflation risk would be greatly
increased--to the point where the inflation rate might be rising rather than falling. On
the other hand, rates of economic expansion significantly below the $1,065 billion GNP
path would probably worsen the unemployment performance substantially without much
gain on the inflation front.
Is $1, 065 billion feasible?-- It is sometimes said that $1,065 billion is a fine
target but is too optimistic. I must say that I do not look at the proposition in this way.
I would not regard the target as a good one if there were not a reasonable prospect of
achieving it, because I do not believe it is the proper business of Government to generate
expectations which will not be realized.
We believe, as we have said many times, that the $1,065 billion goal can be achieved
by the President's budget and a complementary monetary policy. The President's
budget is clear enough. It will run a deficit of $18.6 billion this year and $11. 6
billion in the next fiscal year. If the economy were operating at full employment in both
years the budget would be balanced in both years. As· we see it, this budget policy will
support the expansion of the economy at the desired rate but is not sufficient by itself
to produce the desired expansion. We depend heavily on the other part of the formula,
namely "complementary monetary policy."
The Administration has not undertaken to specify what a complementary monetary
policy is in the sense of specifying a rate of growth of money, or credit, or any
other quantity. It is the business of the Federal Reserve to determine such things. Our
goal is a certain growth of GNP, not a certain growth of money. However, what is
clearly implied in the Administration's statements is that there is a complementary
monetary policy. There is a monetary policy which when added to the fiscal policy will
reach the goal.
Will we do it?--We believe that $1, 065 billion GNP in 1971 is a desirable path
for the economy, we take it as the Administration's target and we believe it to be feasible.
Even if we are correct in these beliefs, the question whether the $1,065 billion
figure is probable remains. The question would boil down to this: Out of the division
of labor among the Administration, the Federal Reserve, and the Congress can a policy
be fashioned that will add up to the result the Administration has described as desirable?
Of course, no one can offer guarantees about this. Still our confidence that the
$1, 065 billion will be attained depends on the answer being affirmative. All of the parties
share the same general objectives, they fact the same facts, they are in communication
with each other, and they are reasonable people. We expect them to reach their
common objectives.
It is not in the nature of the Federal Reserve to specify its targets publicly far in
advance, either for the gross national product or for the monetary variable. Certainly
it is not my role to predict their policy. Yet certain very recent evidence may be cited.
Speakingbeforethe Joint Economic Committee, the Chairman of the Federal Re-
4 FAMILY ECONOMICS REVIEW
serve said that the System "will not stand idly by and let the American economy stagnate
for want of money and credit" and "will not become the architects of a new wave of inflation."
These objectives, of course, the Administration shares. Moreover, Chairman
Burns said that the $1,065 billion GNP figure for 1971 was admirable as a target.
More specifically, the Chairman said that "while a high rate of growth of the
narrowly defined money supply may well be appropriate for brief periods, rates of increase
above the 5 to 6 percent range--if continued for a long period of time--have typically
intensified inflationary pressures." He also pointed out that in the first year of
periods of recovery the income velocity of money has risen in the past by amounts ranging
from 5-1/2 to nearly 7 percent, and that if velocity did not rise in 1971 in line with
past cyclical patterns, then relatively larger supplies ofmoney andcreditmay be needed.
If we put together the increase in the money supply and the increase in velocity implied
by these statements, there is room for at least as rapid an increase in the GNP as the
Administration has contemplated.
I do not cite these statements to deduce from them anything more than they
plainly say. But I do want to suggest that the reporting of all such matters in the press
tends to give the picture of an intractable disagreement that does not really exist.
The problem with the Congress is different, not so much because there is more
disagreement, although that may be true, as because Congress is not organized to make
any unified decisions about policy from the standpoint of the national economy. There
is danger that in the pushing and pulling over particular expenditure programs we may
come out with a total that is far away, in either direction, from our economic requirements.
This would now seem to be a danger more for 1972 than for 1971, because the
open questions mainly relate to next year. The problem is going to require constant attention
but is probably not going to be decisive in its short-run effect.
I want to close by reemphasizing that we do not regard the $1,065 billion goal as
being assured simply because we have declared it to be our goal. We read the papers,
do the arithmetic, and think we know how hard it will be to achieve. But we think it is
important to achieve, feasible, and probable with determination.
u.s.
•
•
•
SOME NEW USDA PUBLICATIONS
(Please give your ZIP code in your retgrn address when you order these.)
Single copies of the following are available free from the Office of Information,
Department of Agriculture, Washington, D. C. 20250:
SELECTING AND FINANCING A HOME. HG 182 .
YOUR MONEY'S WORTH IN FOODS. HG 183 .
SIMPLE PLUMBING REPAffiS FOR THE HOME AND FARMSTEAD. FB 2202 .
The following are for sale by the Superintendent of Documents, U.S. Government
Printing Office, Washington, D.C. 20402:
• DIETARY LEVELS OF HOUSEHOLDS IN THE WEST, SPRING 1965. HFCS
Report No. 10. $1. 00.
• HOUSEHOLD CONSUMER ACCEPTANCE OF AN EXPERIMENTAL DRY WHOLE
MILK. MRR 880. 30 cents.
MARCH 1971
5
AGRICULTURAL SITUATION AND OUTLOOK FOR 1971
Rex F. Daly, Economic Research Service, USDA
Farmers can look forward to strengthening farm prices and incomes this year from recently depressed levels. Gross farm income will increase and net income of
farm operators is expected to improve later in 1971. However, realized net income for
the year probably will total slightlybelow 1970. Returns to livestock producers, particularly
for hogs, suffered in 1970 as prices fell due to sharply higher output, while feed
costs rose. The income position of crop farmers improved in 1970, partly offsetting declines in the livestock sector.
Farmers face prospects for continued large gains in livestock production well
into 1971. However, year-to-year gains are narrowing and may be marginal by late
summer and fall. Crop producers face more uncertainty than usual: Adjustments to
provisions of the new farm program, to a possible recurrence of Southern corn blight, and to a limited supply of resistent seed corn. Even so, a larger output of major crops
is now indicated. However, a big plus factor figures in the picture: reduced carryover
stocks of all major crops probably will keep supplies in close balance with markets despite
prospects for larger crops.
Net income realized per farm, which in 1970 held near the record high, is not
expected to change much in 1971. Also per capita income of farmpeople from farm and
nonfarm sources combined may improve modestly again this year. Even so, farm income
prospects are less promising than those for the nonfarm population.
Demand growth and prospects.--Growth in population and consumer buying power,
the major domestic demand shifters, will continue to expand domestic markets for
farm products in 1971. Although gains in the after-tax income of consumers probably
will not match the big increases in the first half of 1970, they will likely exceed gains
in recent months as well as those throughout the early 1960's. And, if the current apparent
stance holds relative to Government expenditures, monetary expansion. and lower
taxes, consumer incomes could accelerate later this year and in 1972 (figure 1).
In the first half of 1970 consumer dis-
GROSS NATIONAL PRODUCT
posable income per person exceeded a year
Change From Previous Quarter
AjOOUilUI 01/ A JIIfl:llltrf ~ ll f L/"/Hlol'( ,
UASOIUU.f "DJI/JTI:Olo!t!OitlloL IUfl:. I•UD 0111 Dol fA 0' Df,.t.llf•fiH 0' CD••fiiCI',
N[C. tu•nl-71 111 I COWO" IC UUAIIIOI S[ltVIC [
Figure 1
6
earlier by more than 8 percent; by the
final quarter the gain was 6 percent. Economic
growthprospects forthis year suggest
a per capita disposable income gain
of about 6 percent. But this year less of it will be due to price inflation. Such an
income advance is still rapid and will support
a strong domestic market for farm
products.
The rapidly expanding Food Stamp Program and other food distribution programs,
even though small relative to total
food use, have added significantly to the
FAMILY ECONOMICS REVIEW
demand for food. The value of food stamps and the number ofpeople participating about
tripled during the year ended last November. The Food Stamp Program along with Commodity
Distribution, School Lunch, School Breakfast, Special Milk, and Special Food Service
Programs now represent around 2-1/2 percent of the total consumer food market.
Expansion of special food programs, big increases in the number of participating
families, and larger disbursements under welfare programs undoubtedly bolstered
markets for food in 1970. These markets are not expected to expand as rapidly this year.
Expenditures for food.--The domestic market for food this year will account for
a volume (partly imported) equivalent to 85 to 90 percent of total farm output. Last
year food expenditures rose 8-1/2 percent to a total of $114 billion.
In 1971 a larger production of food and a smaller increase in retail food prices
will slow the rise in food expenditures. An expected increase around 5 percent looks
reasonable if consumers' after-tax incomes increase about 7 percent.
Food prices. --Larger supplies of food, particularly livestock products, and
prospects for a slower rise in margins for processing andmarketing point to much less
upward pressures on retail food prices, at least until later this year. Food prices at
grocery stores may average only a little above 1970, while the uptrend in prices for
food eaten away from home will continue as service costs increase. The combined index
of retail food prices for 1971 will likely increase only about half as much as the
5-1/2 percent rise from 1969 to 1970.
Nonfood expenditures .--Consumer spending on nonfood farm-based products continues
to grow with population and advances in consumer buying power. The volume of
farm products moving into nonfood uses (other than feed and seed) is equivalent to only
about 10 percent of total farm output. And a growing share of the raw material inputs
for nonfood products comes from synthetics and other nonfarm products.
Spending for alcoholic beverages, responding to advances in consumer income
and apparently to taste changes, climbed to a record $17-1/2 billion in 1970. Another
gain of perhaps a billion dollars is indicated for this year. Consumers increased their
outlays for clothing and shoes last year to $52. 3 billion, due mostly to higher prices.
Over the years, growing population, rising incomes, and fashion changes continue to
boost total purchases of clothing and shoes, but per capita use of domestic cotton and
wool is trending down because of competition from manmade fibers and imports. Per
capita use of tobacco apparently declined in 1970, but consumers spent more. Consumer
outlays for tobacco climbed more than a tenth to nearly $11-1/2 billion. The tail-
ing off in per capita use of cigarettes will likely continue in 1971 because of rising costs,
health considerations, and antismoking publicity.
Farm Income Outlook
Livestock product marketings will continue larger in the first half of 1971, perhaps
by 3 or 4 percent. However, gains will narrow late~ in the year, if ~og produc.tion
declines as indicated. An expanding domestic market w1ll strengthen pr1ces, particularly
later in the year, probably enough to hold livestock receipts near the record re-turns
of last year.
MARCH 1971
7
Crop receipts will increase sharply from 1970. In addition to larger 1971 crops,
continued relatively tight supplies for major crops will likely hold average crop prices
above 1970. _ ..,
Despite an estimated decline in Government payments, gross farm income pro- ><
jected for this year exceeds last year's record $56.2 billion, by around a billion dollars.
Production expenses.--Farm production expenses increase inexorably, due primarily
to rising prices for inputs. Although this trend will continue, prices paid by
farmers this year probably will not match the 4-1/2 percent increase in 1970. Outlays
for feed purchases and overhead costs probably will run larger. Interest rates will re- "cede though borrowing may increase. The farm wage bill may increase further as rising
wage rates more than offset the decline in hired workers.
The increase in farm production expenses probably will exceed the expected advance
in gross farm income. Thus, a further small decline in total net income is now
indicated for 1971 even though the farmer's income situation probably will improve as "
the year progresses .
. Economic position of farm people.--The economic position of livestock producers,
particularly hog raisers, slipped in 1970 primarily because of the big increase in
hog production. But incomes of crop farmers improved due in part to a blight-damaged 1970 corn crop. As a result, realized net farm income declined slightly from the nearrecord
1969 level. The smalldecline in farm income was offset by a gain in the income
of farm people from nonfarm sources. With the declining farm population, the per capita
income position of farm people improved in 1970, gaining slightly more than the,per
capita increase for nonfarm people.
Changes in aggregate net farm income, although an important indicator of the
economic position of farmers, do not give a complete picture. This is particularly true
for an industry like agriculture where demand expansion is relatively slow and productivity
advances are rapid. Similarly, a ratio of prices received to prices paid by farmers
is an indicator of the economic position of farmers, but not an accurate one especially
over a period long enough for big changes in efficiency, technology, and other
factors.
Prices received by farmers in January 1971 were at the 1947-49 average. But
the index of prices paid by farmers, including interest, taxes, and wages averaged 60
percent above 1947-49. On the 1947-49 base, the ratio of prices received to prices paid
in January this year was 63.
However, over the same period, the farm gross product per worker nearly tripled,
while the private nonfarm gross product per worker in 1970 was less than double
the 1947-49 average. The rapid increase in productivity per worker in farming reflects
greatly increased use of expensive capital and land resources. These trends suggest a
much more rapid increase of productivity in farming. But part of the gain, it should be
noted, is due to changes in the size structure of farm units and the resulting rapid decline
in the number of smaller, less efficient farms.
The rise in realized net income per farm operator family also reflects in part
big changes taking place in the structure of agriculture. Net income per farm in 1970,
of nearly $5,400, was about the same as the record level in 1969, and little change is
8 FAMILY ECONOMICS REVIEW
indicated for1971. But average net income perfarm for all farms increases more rapidly
than it does for any farm-size class. This seemingly strange statistical quirk may
require a moment's reflection. It is quite logical, however, for average income per
farm to rise more rapidly than for any size class when structural change moves many
of the small low-income farms into larger size classes.and, at the same time, greatly
reduces the total number of farms.
Income per farm operator family from all sources more than doubled from 1960
to 1969. The increase for farms with _sales of $40,000 and over was 56 percent. Income
payments per nonfarm family also increased 56 percent from 1960 to 1969.
Trends in income per farm show great improvement in the past 10 to 15 years,
but they also show that agriculture is no gravy train when compared with incomes in the
nonfarm sector of the economy. Personal income payments received by farmers and
nonfarmers provide a reasonable basis for comparison and show as well the contribution
of farm earnings from nonfarm sources. Compared with the favorable 1947-49 base
period for agriculture, per capita income payments to farm people from farming in 1970
totaled more than 2-1/4 times the 1947-49 average. But income payments to farm people
from nonfarm sources increased more than 5-fold. As a result, per capita income
payments to farm people from all sources in 1970 was nearly 3-1/2 times the 1947-49
average. In the same period, per capita income payments to the nonfarm population
from all sources increased a little more than 2-1/2 times.
But the farm population still has some way to go to match nonfarm incomes. On
an after-tax basis, per capita disposable incomes of the farm populationfrom all sources
increased further in 1970 to 78 percent of the per capita after-tax income of the nonfarm
population. This ratio compares with 75 percent in 1968 and 77 percent in 1969.
Realized net income per farm may change little from the highs in 1969 and 1970,
as declining farm numbers offset the indicated small reduc~ion in aggregate net income.
But with a sizable gain likely in the income of farm people from nonfarm sources, per
capita after-tax income of the farm population will likely increase again in 1971.
CLOTIDNG AND TEXTILES: SUPPLIES, . PRICES, AND OUTLOOK FOR 1971
Virginia Britton, Agricultural Research Service, USDA
Clothing expenditures andprices.--Per capita expenditures on clothing and shoes
reached an all-time high of $255 in 1970, according to preliminary data. Expenditures
in dollars of constant buying power, however, have changed little in recent years (table
1). Rising prices--an increase of 4.1 percent in the apparel component of the Consumer
Price Index (CPI) in 1970--account for almost all the apparent movement. While the
end of inflation is not yet in sight, it is tapering off in apparel. The rate of advance in
the apparel index declined in 1970 for the first time since 1964. The 1970 rate was not
only lower than the 1969 rate, but also lower than the 1968 rate and almost as low as the
1967 rate (table 2). As a result, the apparel and all-items indexes of the CPI are again
moving in their normal relationship--the apparel index rising less than the all-items
index.
MARCH 1971
9
Price movement within apparel has also been in its usual pattern. Increases for
footwear outpaced increases for men's and boys' and women's and girls' apparel. Increases
in these three apparel groups in 1970 were 5. 3 percent, 4. 1 percent, and 3. 8 percent, respectively. All indications point to continued rise in apparel prices in 1971 but probably at a
lower rate than we had before 1970 and possibly lower than in 1970, too. If incomes
rise in 1971 as expected, higher per capita expenditures on apparel will again result,
but there is no reason to expect any major shift in expenditure levels in terms of dollars
of constant value.
Supplies of raw materials.-- Details of fiber use in 1970 are not yet available.
However, 1970 was probably not greatlydifferent from 1969. Use in 1969 was 51 pounds
per capita--about one-half for clothing and one-quarter for home furnishings, roughly
the same proportions as in 1960. Total use in 1969 consisted of 21 pounds of cotton, 2
of wool, 8 of rayon and acetate, and 20 of noncellulosic fibers. Of the total, about 91
percent was produced in the United States and 9 percent was imported, partly in manufactured
products.
Because the manmade fibers have greater utility per pound than the natural fibers
and are increasingly important in the total, comparisons of total consumption over time
are most meaningful in terms of a measure of constant composition, cotton equivalent.
On this basis, total fiber use in recent years has increased sharply--to 66 pounds in
1969 from an average of 43 pounds in 1960-1963.
Our cotton usage is largely from domestically grown fiber. U.S. use plus exports
in the year beginning August 1, 1970, is expected to exceed the year's production
and so will eat into stocks. We should, however, end the year with more than a half
year's supply on hand for U.S. mills.
We normally produce a smaller proportion of the wool than of the cotton we use,
and our wool production in 1971 is expected to drop slightly. World supplies of wool are
expected to be ample, however.
U.S. production ofmanmade fibers increased 51percent from 1965 to1970. U.S.
mills probably used about the same amount of manmade fibers in 1970 as in 1969-- the
first significant pause in their advance in a decade. Competitive losses to manmade fibers
may be slowed during 1971 also, since cotton appears to be making a comeback in
big uses such as bedsheeting. By July 1971, U.S. production capacity for manmade fibers
is expected to be 43 percent greater than our actual production was in 1970.
U.S. production of hides (cattle and calves) will probably be about 2 percent
higher in 1971 than the 1970 figure, estimated at 40 million hides. U.S. leather production
is expected to increase also. Two additional factors are of major importance in the
supply of footwear. One is the use of leather substitutes. Shoes with leather or partleather
uppers constituted only 70 percent of U.S. production of nonrubber footwear in
1970, and shoes with leather soles only 16 percent. The other important factor is the
large imports of shoes, estimated at almost 30 percent of total U.s. supply in 1970.
Quotas on imports of textiles and shoes were provided in H. R. 18970 that was
approved by the House of Representatives late in 1970, but died with the adjournment of
the Congress in January 1971. Industry and labor organizations supported the proposals
10
FAMILY ECONOMICS REVIEW
as a protection against increasing amounts of low-cost imports, while importers opposed
the proposals. Imports of apparel had increased from about 5 percent of our total supply
in 1965 to 8 percent in 1969. Imports of nonrubber footwear increased from about
13 percent of domestic supply in 1965 to about 25 percent in 1969 and an estimated 30
percent in 1970. The domestic apparel industry with average hourly earnings of $2. 31
in 1969, claims it cannot compete with imports produced by labor paid as little as 26
cents an hour, as in Hong Kong, or 39 C?ents, as in Japan. In mid-1969, the average
wage of domestic shoe production workers was $2.29 an hour compared with about $1.04
in Italy and 56 to 58 cents in Spain and Japan.
Governor Brimmer of the Federal Reserve System has estimated that by 1975
the proposed quota system would raise retail apparel prices about 3. 5 percent and shoe
prices about 32 percent if this system introduced no change in the trend of total con'
sumption. !I His contention is that protectionist devices such as the quota system hurt
our efforts to fight inflation and to raise exports. "Excess demand with rising prices
is the basic cause of our trade problem, and we cannot expect to get relief from measures
that will keep prices high. " He thinks it is preferable to provide retraining and
transitional benefits for those who are displaced by competitive forces rather than to
maintain employment by use of a quota system.
Developments in standards and labels for textile products. -- The U.S. Department
of Commerce has revised procedures for the development of voluntary standards
for products so that it may now initiate development without a request from an outside
source when it deems this to be in the public interest. Current voluntary product standards,
developed at the request of industry, include body measurements for the sizing of
apparel for boys, girls, and women, and patterns for women's apparel. A request has
been made by an industry organization that Commerce' National Bureau of Standards
process a standard for how to measure garments.
Industry standards for knit fabrics, specifying the acceptable number of imperfections
in first quality goods, are expected to be ready in early 1971.
Public hearings were held by the Federal Trade Commission in January and
March 1970 on proposed Trade Regulation Rules requiring that labels telling how to care
for and clean fabrics be sewn to textile products. A report was submitted to the Commissioners
in February 1971 for their final decision.
Product developments. --USDA's Southern Marketing and Nutrition Research
Division (SMNRD) is working on a method to improve the whiteness and brightness of
cotton durable-press garments by adding selected polymers to the formulations used in
the durable-press process. These polymers remain on the surface of the fibers and aid
in the absorption of the optical brighteners that are in most laundry detergents. The
polymers also improve the smooth-drying appearance of thefabric. Because manypeople
find the odor of formaldehyde offensive and a few are sensitive to this chemical,
SMNRD has also developed a method to remove with superheated steam the free formal-dehyde
in cloth processed for durable press.
1/ See paper by Andrew F. Brimmer, Board of Governors of the Federal Reserve
Sy;tem, on "Import Controls and Domestic Inflation," November 11, 1970, 31 pp.
MARCH 1971
11
Research underway at SMNRD has developed a continuous process that simulta-neously
imparts stretch and wash-wear properties to cotton fabrics, along with dimen- sional stability. A fabric combining these three desirable properties may have advan- tages for general use because the "give" should help to overcome some of the strength
losses which commonly occur when cotton is crosslinked to enhance wrinkle recovery.
Methods of shrinkproofing wool by the corona and plasma treatments and polymer
processes developed at USDA's Western Marketing and Nutrition Research Division are
being evaluated by a manufacturer for commercial use with wool top and knitting yarns.
A vapor treatment process, Ameriset,g/, for imparting ·durable press to gar- ments made from cellulosic fibers, including cotton and rayon, is now available. Completed
and pressed apparel is placed in a reaction chamber for 20 minutes. A large reactor
will be available to apparel manufacturers, and a smaller for retail operations.
A gas treatment for silk yarn or fabric is said to make them wrinkle-resistant.
The Japanese developer also claims greater resistance to yellowing, to deterioration from exposure to the sun, and to shrinkage, and improved color fastness. Women's
suitings, scarfs, and other items of treated materials are to be marketed starting in
June 1971.
The market for Qiana, the luxury nylon fiber, is expected to be broadened by
price reductions announced in November 1970, the first since the yarn was marketed in mid-1968.
Antistatic nylon tricot has been developed by several producers who report accompanying
improvements such as greater whiteness, stain release, and moisture
absorbency.
Announcement has been made of the development of WD-2 polyester which is
claimed to have an improved hand, soil and stain release, and dyeability, and reduced
pilling.
The quality of leather from cattle hides may be improved by research underway
at USDA's Eastern Marketing and Nutrition Research Division. New evidence points to
the possible inheritance of a defect which causes the leather grain to crack open during
manufacture of shoe uppers and other products that require strong leather. Since the
defect shows up only after tanning, it causes a loss of $5 to $10 million annually. Control
of the amount of grease in hides--a cause of poor quality leather--is being sought
through diet.
Market developments. --Knit fabrics were estimated to constitute better than a
third of all apparel fabrics in 1969, and to reach a half by mid-1970. The present shift
to knits is comparable with the earlier shift from natural to manmade fibers for woven
fabrics. Double-knits showed the greatest growth--with the 1969 poundage almost double
that in 196 7. One prediction is that polyester I cotton blends will expand in the next
few years to 75percent of the men's and children's knitapparel that once was all cotton.
Y Trade names are used in this paper solely for the purpose of providing specific
information. Mention of a trade name does not constitute a guarantee or warranty of the
product by the U. S. Department of Agriculture or an endorsement by the Department
over other products not mentioned.
12 FAMILY ECONOMICS REviEW
Simplicity Pattern Co. estimates that more than 45 million home sewers make
some part of their own clothes. This number is the equivalent of about half of all females
12 years and over. Home sewing is especially popular among the younger age
group. Reports are that the average age of the home sewer has dropped to 23 and that
6 out of 7 teenage girls sew. Expenditures for fabrics, patterns, and notions amount to
about 7 percent of consumer expenditures for clothing and accessories. The use of fibers
in retail piece goods increased 51 percent from 1964 to 1969. Piece goods used
about 4 percent of the fibers devoted to Clothing in 1964 and about 6 percent in 1969.
Table 1.--Annual expenditures on clothing and shoes
Percent of Per capita expenditures Aggregate
Years Y expenditures for personal expenditures
consumption Billions Billions
1958 Current 1958 I Current of 1958 of current
dollars dollars dollars dollars dollars dollars
1929 -------- 149 77 13.0 12.1 18.2 9.4
1930-40 ----- 122 51 11.8 10.7 15.6 6.5
1941-46 ----- 151 100 11.8 12.9 20.7 13.7
1947-61 ----- 144 140 9.0 9.4 23.5 22.9
1962-65 ----- 160 170 8.4 8.3 30.6 32.4
1966 -------- 185 204 8.T 8.6 36.4 40.3
1967 -------- 185 213 8.6 8.6 36.8 42.5
1968 -------- 188 230 8.4 8.6 37.9 46.3
1969 -------- 189 245 8.2 8.6 38.5 49.9
1970 'ij ------ 188 255 8.1 8.5 38.7 52.3
!f Earlier years are grouped on basis of similarity in level of per capita
expenditures in 1958 dollars.
gj Preliminary figures.
Source: Department of Commerce.
Table 2.--Annual percentage change in selected indexes of consumer prices
Index 1966 1970
Consumer Price Index ------------ +2.9 +2.8 +4.2 +5.4 +6.0 Apparel and Upkeep Index !/ --- +2.6 +4.0 +5.4 +5.8 +4.1
+2.7 +3.6 +5.7 +6.4 +4.1
Men' s and boys ' apparel -----
+1.9 +4.6 +5.9 +5.5 +3.8
Women's and girls' apparel --
+5.9 +4.9 +5.3 +6.1 +5.3
Footwear --------------------
1 I Also includes infants' wear, sewing materials, je~elry, and
up~ke ep services for wh·l ch separat e l" ndexes are not avallable.
Source: Bure~u of Labor Statistics.
apparel
MARCH 1971
13
OUTLOOK FOR FOOD PRICES, CONSUMPTION, AND EXPENDITURES
Hazen F. Gale, Economic Research Service, USDA
Retail food prices .--The food price index rose 5-1/2 percent last year, the largest
increase since 1951. However, the large jump in the annual average conceals other
important developments.
The food -at-home component of the index rose 5 percent while prices of food
eaten away from home, which accounts for a fifth of all food, went up 7-1/2 percent.
These sharp advances reflect sharply higher wages and other operating costs as well as
3-1/2 percent higher wholesale prices of food.
Prices for food bought in grocery stores, although 5 percent higher for the year,
were relatively steady after the first quarter. They started off the year nearly 7-1/2
percent above the first quarter of 1969, but as the year progressed, the rate of advance
became smaller until prices reached a seasonal peak in the third quarter. A 1 percent
seasonal decline in the fourth quarter left retail store prices about the same as in the
first quarter and 2-1/2 percent higher than in the fourth quarter of 1969.
A 7 percent boost in marketing charges accounted for most of last year's increase
in retail food prices.· Prices of the farm products used for food averaged only
slightlyhigher than in 1969and contributed little to the overall increase. Sharplyhigher prices of fish and coffee, both nonfarm foods, also contributed to the higher retail prices
of food.
The small change in farm prices covers up the wide variation during 1969 and
1970. There was a 17 percent increase between the end of 1968 and the first quarter of
1970. Then prices fell just about as fast during the rest of 1970 and the fourth quarter
average was nearly the same as in early 1969. However, they still were more than 15
percent above the levels of a decade ago.
The sharp decline in farm prices after the first quarter of 1970 was accompanied
by an unusually large increase in the marketing margin. This large jump reflects higher
wages and costs of other goods and services bought by marketing firms and overcame
the smaller gains in the margin registered in 1969 when farm prices were rising so
quickly. Thus, inflationary pressures in the economy, which were mainly responsible
for the boost in marketing costs, overshadowed the effect of an increase in food supplies,
a major factor in the farm price decline.
The fourth quarter drop in food prices was in contrast to the continued rise for
many other goods and services.
The higher 1970 store prices of food reflected increases for all major product
groups except eggs and poultry, which decreased only slightly. Increases among individual
foods covered a wide range, with coffee (20 percent), fresh potatoes (10 percent),
fats and oils ( 10 percent), and fish ( 10 percent) leading the way. Although pork prices
averaged more than 6 percent higher for the year, they were almost 10 percent lower in
December last year than in the same month a year earlier. Meanwhile, the equivalent
price of hogs went down 40 percent, so the spread between farm and retail prices increased
from 32 cents per retail pound in December 1969 to 41 cents at the end of 1970.
Retail egg prices also dropped dramatically during 1970; large grade A eggs were selling
for 59 cents a dozen in December compared with 78 cents a year earlier.
14 FAMILY ECONOMICS REVIEW
Grocery store prices of food may average 1 to 2 percent higher in 1971, a sharp
reduction from the 5 percent increase in 1970. However, food eaten away from home
will again cost substantially more in 1971, but hopefully the rise will be less than the
7-1/2 percent jump last year. As a result, the 1971 total food price index will likely be
up 2 or 3 percent.
Lower average prices are expected for pork, poultry, eggs, potatoes, and some
fresh vegetables. Higher prices are indicated for fish, dairy products, cereal products,
sugar, and processed vegetables. ·
Prices likely will move up through the first three quarters of the year, reflecting
inflationary pressures as well as the normal seasonal increases in the late spring
and summer months. Prices may level off or decline in the fourth quarter as seasonally
large supplies of food come on the market.
Lower average farm prices are in prospect for 1971, but these will not offset
higher marketing charges which will increase at a slower pace than last year.
Per capita food consumption.--Per capita consumption of food rose nearly 1 percent
last year with animal products accountingfor much of the advance. Gains were recorded
for meat, poultry, fish, vegetable oils, processed potatoes, and sugar and sweeteners.
Egg consumption in 1970was nearly the same as in 1969. Consumption declined
for dairy products, animal fats, fresh potatoes, cereal products, and coffee. Larger
consumption of fresh vegetables did not quite counterbalance a decline--the first since
1959--for processed vegetables. A slight increase for fresh fruits and a larger one for
processed brought all fruit consumption up 1 percent over 1969.
Red meat consumption rose to a record 185. 5 pounds ( cr.rcass equivalent) in
1970, 3-1/2 pounds more than in 1969. Beef consumption totaled 113.4 pounds, a new
record and up a third from a decade ago.
Livestock consumption reached a seasonal low in the first quarter, near the level
of the same quarter in 1969. It then increased rapidly and by the fourth quarter was 2
percent higher than a year earlier.
Most of the quarterly increases for livestock products came from larger consumption
of meat and poultry as both reached new highs at the end of the year. Dairy
product consumption was lower than a year earlier in each of the last three quarters.
Butter and lard consumption continued to decline at a substantial rate.
For 1971, per capita food consumption may increase another 1 percent, continuing
the string of increases since 1965. Animal products will be the major source of
the increase again this year, and consumption of crop products is expected to increase
also. During the first half of the year consumption of livestock products will likely be
higher than in the same period of 1970, largely because of greater pork consumption.
By the end of the year, however, per capita consumption of all livestock products may
be near year-earlier levels.
The 1970-71 citrus crop suffered some freeze damage in late January, but pro-spective
output is still large with both oranges and grapefruit crops up more than a
tenth from last season.
Winter production of fresh vegetables had been running higher and prices lower
than a year ago. However, the freeze in Florida temporarily reduced crop prospects in
several areas, particularly for tender items like pepper and tomatoes. Prices of these
15
MARCH 1971
may rise closer to last winter's levels. Cabbage and celery are in larger supply. Potato
supplies are heavy and prices relatively low because of large storage stocks from the 1970 fall crop; winter potato production is running moderately below last year. Planting intentions indicate slightly more acreage for the spring than in 1970, and a
little less for the early summer crop.
Canned and frozen vegetable supplies for the 1970-71 season are running moderately
less than a year earlier. The slightly larger canned pack was more than offset by
a sharply reduced carryover.
Food spending and income.--Expenditures for food in 1970 totaled about $114 billion,
8-1/2 percent more than in 1969 and the largest increase in nearly 2 decades.
Higher prices accounted for most of the increase so expenditures adjusted for price
changes rose only about 3 percent, reflecting higher consumption rates and a larger
population. Expenditures for food at home and away from home each increased about
the same, but after adjustment for the rise in prices they went up 3. 3 and 1. 1 percent,
respectively.
Disposable income also increased substantially in 1970, averaging $685 billion,
nearly 8-1/2 percentabove 1969. There was an $18 billion increase in the second quarter
and only a $4 billion increase in the fourth quarter.
As economic activity picks up during 1971, disposable income will rise from the
low rate of advance in the fourth quarter, and together with population increases, and
larger Government expenditures on food stamps and other food programs, will contribute
to continuing strong demand for food. Larger food supplies may dampen the expansionary
effects, so food spending likely will increase at a slower rate in 1971 than in
1970.
The proportion of disposable income going for food expenditures held steady at
16.7 percent in 1969 and 1970, but the downward trend probably will resume in 1971. It
was 20 percent a decade ago.
PRICE INDEXES HAVE A NEW BASE PERIOD
In January 1971, the CPI moved to a reference base 1967 = 100, rather than
1957-59 = 100. The transfer of the Index of Prices Paid by Farmers for Family Living
items to the new base was noted in the last issue of FER. The change is in line with a
directive of the U.S. Office of Management and Budget establishing the new base for all
Government statistical series.
Reba sing an index alters its changes over time when expressed in index points,
but does not alter percentage changes, except for rounding differences. An example:
Dec. Dec. Increase 1965 1970 in index Percent
index index points increase
1957-59 base --- 111.0 138.5 27.5 24.8
1967 base ------ 95.4 119.1 23.7 24.8
16 FAMILY ECONOMICS REVIEW
CONSUMER PRICES
Consumer Price Index for Urban Wage Earners and Clerical Workers
(1967 = 100)
Group
All ltems ------------------------
Food --------------------------------
Food at home ---------------------Food
away from home ---------------
Housing ----------------------------Shelter
--------------------------Rent
----------------------------
Homeownership ------------------Fuel
and utilities ---------------Fuel
oil and coal --------------Gas
and electricity ------------Household
furnishings and operation
Apparel and upkeep -----------------Men's
and boys' ------------------Women's
and girls' ----------------
Footwear --------------------------
Transportation ----------------------
Private --------------------------Public
----------------------------
Health and recreation --------------Medical
care ---------------------Personal
care --------------------Reading
and recreation -----------Other
goods and services ----------
Jan.
1971
119.2
115.5
113.4
123.4
122 .7
128.0
112.9
133.4
112.1
116.7
111.5
115.4
117.6
118 .0
117.4
119.8
117.5
115.8
133 .9
119.8
124.9
115.3
117.3
118.9
Dec.
1970
119.1
115.3
113.4
122.8
122.6
127.9
112.6
133.4
111.3
114.9
110.7
115. 3
119. 2
119.6
120.5
119.8
116.9
115.2
133.4
119.1
124.2
115.0
116.2
118.5
Nov.
1970
118.5
114.9
113.0
122.5
121.9
127.1
111.8
132 . 5
110.7
113.9
109.9
115.1
119.0
119.7
120.5
119.4
116.0
114.2
132.5
118.7
123.4
114.5
116 .0
118 . 3
Source: U.S. Department of Labor, Bureau of Labor Statistic s .
Index of Prices Paid by Farmers for Family Living Items
(1967 = 100)
Jan.
1970
113.3
113.5
112.7
116 .2
114.7
118.4
107. 9
122.1
105.1
107.3
105.2
111.0
113.4
114.4
113.0
115.1
109.8
108 .2
125.0
113.2
116.3
111.3
110.8
113. 3
Feb. Jan. Dec. Nov. Oct. I Sept.l Feb .
Item 1971 1971 1970 1970 1970 j_ 1970 1970
All items ----------------- 116 116 116 115 115 115 112
Food and tobacco -------- - - 113 - - 114 -
Clothing ---------------- - - 123 - - 121 -
Household operation ----- - - 113 - - 111 -
Household furnishings --- -- -- 112 - - 111 -
Building materials, house - - 116 - - 115 -
Source: u.s. Department of Agriculture, Statistical Reporting Service.
MARCH 1971 17
THE WHO WHAT AND .WHERE OF MEDICAL CARE SPENDING
' '
Barbara S. Cooper, Social Security Administration, HEW
The past few years have witnessed sharp increases in the amounts spent for
medical care. The continuous spiralling of health expenditures has evoked great concern.
Are we receiving more and better services for our large outlays? Are rising
prices for medical care eating up the growing expenditures? Can efficiency in the health
industry be improved? The situation has reached crisis proportions and the answers to
these and other questions are being sought in an effort to discover means of supplying
quality medical care at a price the Nation can afford.
Total expenditures. --In fiscal year 1970, this Nation spent $67. 2 billion for
health and medical care-- an increase of $7 billion in the last year alone. This growth
in medica 1 care spending has been faster than the growth of the economy in general. In
fiscal 1950, medical care expenditures amounted to $12.1 billion and represented 4. 6
percent of the Gross National Product (GNP). In fiscal 1960, its share of GNP was 5.3
percent; 10 years later it had risen to 7. 0 percent. For each American, these large
expenditures meant an average 1970 health bill of $324--more than double the bill of just
10 years before and 4 times the average 1950 bill.
The substantial rise in national health expenditures is the result of many factors
--the growth in populatiop, the rising prices per unit of service, the increase in the
average per capita utilization of health services and supplies, and the rising level and
scope of services through new techniques, drugs, and treatment procedures. About 46
percent of the $47.6 billion increase between 1950 and 1970 in personal health care expenditures
(all outlays for health and medical services for the direct benefit of the individual,
such as for hospital care and physicians' services) can be attributed to the
rise in prices, another 17 percent was the result of population growth, and the remaining
37 percent was due to greater utilization of services and the introduction of new
medical techniques. The relative contribution of price, population, and all other factors
(per capita use and improvement in quality) in the increase for fiscal years 1950-70 is
compared below:
Factor
Total --------
Price ------------Population
--------
All other ---------
Aggregate increase
(in billions)
21.9
8.2
17.5
Percentage
distribution
100.0
46.0
17.2
36 .8
Medical care prices. --Since World War II, the consumer price index (CPI) and
its medical care component have been continuously rising, with the latter rapidly outpacing
the former. In recent years, however, the gap between the relative increases of
these two price indexes has widened considerably. From 1960 to 1966 medical care
prices jumped nearly twice as fast as prices for all consumer items. The disparity
18 FAMILY ECONOMICS REVIEW
...
continued in the 3-year period 1966-69, during which medical care prices increased at
the annual rate of 6. 4 percent while all consumer items grew 3. 8 percent annually.
In 1970, however, a different picture emerged. The recent inflationary pressures
in the general economy have changed the long-term relationship between the
prices for all consumer items and medical care prices. Fiscal year 1970 witnessed
little difference in the growth rates for all prices-- 6. 0 percent-- and medical care
prices--6. 4 percent.
Particular attention has been focused on the relationship between the accelerated
increases in medical care prices in 1966 and the introduction of Medicare and Medicaid
'
the two new public programs financing a large part of the medical care for the aged and
for the poor. The major areas contributing to the rise in prices are the costs of hospi-
1 tal care and physician services.
The major item in hospital costs is payroll which accounts for three-fifths of
total hospital expenses. Wages of hospital employees had lagged significantly behind
those in other sectors of the economy for many years. In February 1967 the minimum
wage law was extended to hospital employees. At about the same time there were grow-
ing demands for wage increases by professional nurse organizations and unions. The
ready availability of operating funds under Medicare and Medicaid allowed hospitals to
accede to wage demands, to make renovations, purchase equipment and supplies, and to
expand patient services. Over the period 1961-65, the net income of nongovernmental,
nonprofit hospitals averaged $112 million, or 1.9 percent of total revenues. From 1966
on, hospital costs rose rapidly but revenues rose more rapidly. Net income increased
to an average of $359 million for 1967-69, 3. 4 percent of total revenue.
A part of the rise in physicians' fees occurring early in 1966 was perhaps in anticipation
of the Medicare program. A more basic and continuing factor over the period
is the increase in demand for physician services without a corresponding increase in the
supply of physicians. The increasing awareness of the value of physician services and
the lowering of financial barriers to such services through widespread insurance cover-
age have served to produce a greater demand for services.
Rapidly accelerating medical care prices do not affect any single segment of the
population alone; rather, they affect every American who at some time may have to pay
for medical services. While it is true that those Americans of moderate-to-low incomes,
as well as those who require medical attention because of advanced age or severe disabilities,
are more drastically affected by excessive increases in medical prices, such
increases are not uniquely a problem of the poor, or the aged, or the chronically ill.
Public attention has been focused on the marked and tangible adverse impact of increased
medical care prices upon the costs of the Medicare program and its beneficiaries, but
the effect is in fact universal. The same effects are being experienced by other health
insurers who' are fa'c ed with the decision either to withhold additional protection or to
increase premiums to offset the increased costs. And, more dramatically, that segment
of the population which is unable to purchase adequate health insurance must in
many instances forego needed medical attention because of its prohibitive cost.
Age distribution. --Of the $52.6 billion spent for personal health care in fiscal
1969, one-fourth ($13. 5 billion) went for the medical care of the less than one-tenth of
the population who are aged. Only 16 percent of the outlays were spent on the youngest
lVIARCH 1971 19
age group (under 19) which represented 37 percent of the population. The remaining 58
percent was spent on the 19-64 age group representing 54 percent of the population.
The relatively large outlays spent for the aged reflect the fact that the aged have
more and costlier illnesses than the younger population. The average health expenditure
in fiscalyear 1969 for each aged person was six times that for a youth, and two and onehalf
times that for a person in the 19-64 age group:
Age
Total -----------
Under 19 years -------
19-64 ----------------
65 and over ----------
FY 1969 per
capita expenditures
112
277
692
Source of funds.--The average medicalcarebillof an individual today is financed
both publicly and privately. By far the larger share of the medical care dollar has always
come from private funds, but, as Medicare and Medicaid were added in fiscal 1967,
a shift to more public financing occurred. In fiscal 1966 (before Medicare and Medicaid)
Government spent 26~ of every medical care dollar. By fiscal 1970, Government's
portion had reached 37~, ~uch of this increase coming from Federal funds.
The public and private share of the medical care bill varies for each of the age
groups. In fiscal1969 almost three-quarters of an aged person's bill was funded by the
Government, compared with one-fifth of the bill of the average person in the 19-64 age
group, and one-fourth for a youth.
The private portion of a person's health bill does not all come directly out-ofpocket.
Private health insurance, philanthropy, and industry, through industrial inplant
services, help reduce these direct payments. Here, too, there is substantial
variation by age.
The average personal health care bill in fiscal 1969 was $256 per person. Private
health insurance paid $57 or 22 percent of the bill, philanthropy and industry contributed
another $4 or 2 percent, and when the Government's $91 or 36 percent share was
added, the amount remaining for the individual to pay directly was $104 or 41 percent.
For a person under age 65private health insurance played a larger role, financing
$60 (29 percent) of the average bill of $210. After deductions for Government, philanthropic,
and industrial spending, the person under 65 years of age directly spent an
average of $98.
With the substantial contributions of Medicare and Medicaid to the aged person's
health bill, his out-of-pocket expenses were only 24 percent or $163 of his $692 bill.
Private health insurance paid $26 ( 4 percent) and philanthropy and industry contributed another $4 ( 1 percent) of the bill.
With so much of the total public health funds coming from Medicare and Medicaid,
more than half of all the public personal health care outlays in fiscal 1969 was
spent on the aged. Of the private funds, however, more than seven-tenths was spent on
persons aged 19-64:
20 FAMILY ECONOMICS REVIEW
FY 1969 amount (in millions) Percentage distribution Age
Private Public Private Public
funds funds funds funds
Total ----- $33,835 $18,729 100.0 100.0
Under 19 ------- 6,189 .2,227 18.3 11.9
19-64 ---------- 23,884 6,776 70.6 36.2
65 and over ---- 3,762 9,726 ll.l 51.9
Type of expenditure. --The largest single item of expenditure--representing 43
percent of the average personal health care outlay-- was for hospital care, including
both inpatient and outpatient services. Expenditures for hospital care continue to be
one of the fastest-growing categories, rising an average 16. 8 percent per year in the
3-year period ending fiscal 1969. The rapid rise in hospital costs, together with an in-
crease in hospital use contributed to the large increase in outlays.
The second largest category of expenditure was for physicians 1 services which
comprised 23 percent of the total. This category was followed by drugs and drug sundries
(12 percent), other professional services (10 percent), nursing home care (5 percent)
and all other services ( 8 percent).
The proportion of outlays spent for each type of service varies considerably by
age. For persons in both the 19-64 and 65 and over age groups, hospital care is the
largest category, representing 45 and 48 percent, respectively. But for a youth, hospital
care is only one-quarter of his bill and physicians 1 services, comprising one-third,
is the largest. .
Nursing-home care is the second largest category for an aged person, with 16
percent of his bill being spent for this purpose. It is less than 1 percent of the bills for
persons in the younger age groups.
Although there are substantial differences in the amounts spent for each age
group, the extent of the differences varies by type of expenditure. The average hospital
expenditure of an aged person ($335) was more than 12 times that for a youth ($27) and
more than two and one-half times that for a person in the intermediate age group ( $126).
For physicians 1 services, the average expenditure for the aged person ( $107) was three
times that for a youth ($37) and less than twice that for a person in the intermediate age
group ( $64).
This paper has presented a brief description of spending in today1s medical care
system. With costs so high, it is evident that changes in the financing and delivery of
medical care are needed. The direction and magnitude of these changes are yet to be
determined.
MARCH 1971
21
THE EFFECT OF CONSUMER CREDIT ON FOOD EXPENDITURES There :::~c~:n°::et:: d:t:::l::::: :e~~:~c:::::::~ ~:::eping pace with increases in our material prosperity. Instead of the improved nutrition our higher real
incomes should make possible, the proportion of family diets meeting the 1963 Recommended
Dietary Allowance of the Food and Nutrition Board of the National Research
Council actually dropped 10 percent from 1955 to 1965.
The Household Food Consumption Surveys show that families are choosing to
drink more soft drinks and less milk, and to eat more snacks and less fruit and vegetables.
The average person's diet in 1965 was poorer than in 1955 by the equivalent of
1. 6 cups of milk and 4 servings of vegetables and fruits per week resulting in many
American diets that were below recommended levels in calcium, vitamin A value, and
ascorbic acid.
In addition, the level of spending for food has not risen as much as changes in
income levels and price levels would lead one to expect. Between 1955 and 1965 the per
capita value of food reported in the surveys increased by 23 percent while per capita in-:
come rose 60 percent and food prices 16 percent.
The work we are reporting today looks at the budgetary aspects of the problem
and tries to establish one--but not necessarily the only--reason why food expenditures
have not increased more than they have. Our hypothesis is that the use of consumer credit is cutting into the money available for food. Spreading payment for durable goods
over time through the use of installment credit has increased expenditures for durables.
Installments due on consumer debt and other fixed commitments such as house payments
(rent or mortgage and taxes) and insurance have a first lien on family income. Therefore,
if these sets of fixed commitments are high, food and the other categories of living
expenses met out of the residual must fall to compensate.
This explanation for the failure of food expenditures to increase more rapidly
suggests itself because the use of consumer credit has burgeoned in recent years. In
the sixties, per capita consumer installment debt outstanding more than doubled, rising
from $219 at the end of 1959 to $480 at the end of 1969. Moreover, the rate of increase
was steeper in the last 5 years than in the first five.
We have been able to explore this hypothesis as part of a small study in which we got from families very full information on their use of credit. By getting information
on the usual food expenditure as well, we have been able to determine whether there is a relation between the level of payment on debts and the level of food expenditures in
our small sample. The survey was made cooperatively by Consumer and Food Economics
Research Division and the College of Home Economics of Oklahoma State University,
in Enid, Oklahoma, a city with a population of about 45, 000. We limited our sample to
families in which there were both husband and wife and the husband was under 45 years
of age. This is the group in which the use of installment credit tends to be heaviest.
Of the 343 families used in this analysis, 81 percent were making payments on
consumer debts at some time during the survey year (July 1, 1968 -June 30, 1969).
About 44 percent of the 343 families allocated at least 10 percent of their after-tax in-
22 FAMILY ECONOMICS REVIEW
come to debt repayment and 27 percent paid ol:t over $1, 000 on consumer debt in the
survey year. The average annual food expenditure was $1,465.
In this sample, regression analysis indicates that each dollar of debt repayment
decreased food expenditure by $0.07 (see table). In other words, 7 percent of debt repayment
was being financed at the expense of food. Had this money been available and
used for food, families would have spent about $46 more per year on food, on the average.
This amount would have carried the ~verage family about 1-1/2 weeks.
Debt repayment did not affect food expenditures uniformly among families differing
in type and size. The effect was greatest in families consisting of husband and wife
only. Each dollar used by these couples in debt repayment cut food expenditures by
$0.25. At the average debt repayment level of these families the result was a reduction
. of $166 in their food expenditures, an amount that would have provided them food for 7
weeks at the level of spending they could have been expected to maintain if they had had
no consumer debt. In contrast, the food spending of families with one or two children
under 6 years of age was little affected by their debt repayment although they carried
almost as much consumer debt as husband-wife families.
The effect of debt repayment on food expenditures also differed over the range of
income. A dollar used for debtrepayment by families with after-tax incomes of $10,000
or more cut deeper into food expenditures than at the average income level, reducing
them by $0.13 rather than $0. 07. This, combined with a higher than average level of
debt repayment, resulted in a total reduction of $107 in food expenditures for the year,
the equivalent of almost 3 weeks' food money.
Among families with after-tax incomes of $5, 000 or less, debt repayment was
associated with increased rather than decreased food expenditures. A dollar used for
debt repayment resulted in $0. 09 more in food expenditures, giving these families an
additional $59 for use on food. To understand why consumer debt affected this class of
families in a way unlike any of the other classes examined, one must remember that the
classification of families is by the income they had in the survey year and that there is
considerable year-to-year variation in the income families receive, particularly if their
principal source of income is not salaries. Therefore, in such a classification there
will be two groups of families, those who are in their normal income position, more or
less, and those who are temporarily or newly displaced down the scale. When income
falls, families frequently do not adjust immediately to the new level. Instead, they use
savings or credit to maintain at least in part their old scale of living. Some of the families
studied may have done so. If by dipping into savings they were able to meet their
credit ~ommitments and eat better than families normally at this income level, and if
their credit commitments were in line with their old rather than their new incomes, then
a positive relation between food expenditure and debt repayment would result. If, in addition,
some maintained their higher food expenditures by borrowing, the positive relationship
would be even more marked. In the under-$5, 000 income class, new debt assumed
during the year was disproportionately high--24 percent of the yearYs income as
compared with 12 percent for the average family--suggesting that borrowing to main-tain
the level of living did take place.
These findings are tentative but indicate that further investigation on a larger
scale would be effort well spent. The proposed 1971-72 Survey of Consumer Expenditures
should provide excellent data with which to determine the effect of the level of use
MARCH 1971
23
of consumer credit not only on food expenditures but on all other living expenses and on
savings.
In this sample, the proportion of variation in food spending that is explained by
the level of credit used is very small. Credit and income together explain only 9 percent
of the variation in the total sample and in the high income group the proportion explained
fell to 2 percent. This should not be interpreted to mean that these are unimportant
factors. It is hardly necessary to labor the point that income is an important
determinant of the level of food expenditure. Rather it is an indication of the multiplicity
of factors acting upon food spending.
These preliminary findings may be useful in counseling with families as to the
ill effects involved in unwise and excessive use of credit. Families themselves often do
not realize how the debt they assume may affect their expenditures for living. In the
survey, only one in eight of the families who assumed new debt in the survey year expected
to have to cut their usual expenditures to meet their installment payments. But
36 percent of the families making payments on debts assumed earlier reported they had
had to make one or more unplanned cuts to meet payments. Although clothing and recreation
were mentioned as areas in which cuts were made, food was cited most frequently.
Food expenditures and peyments on consumer debt, by family tY})e and size and
after-tax income, Enid, Oklahoma, 1968-69
[Families of husband and wife, with or without children, in existence at
least ~ year. Husband under age 45 .]
Data
Families --------------no----
After-tax income ------dol---
Debt repeyment --------dol---
Debt acquired in year -dol---
Food expenditure ------dol---
Change in food expenditure
related to $1 increase in
debt-repeyment -------dol---
Total reduction in food ex-penditure
attributable to
debt repeyment -------dol---
Proportion of variation in
food expenditure explained
by variation in debt repay-ment
and income ------pet---
~ $0.005 or less.
gj $0.50 or less.
24
All
343
7,480
658
878
1,465
-.07
46
8.8
Selected family types and sizes Selected after-
Husband l or 2 children, 3 or 4 chil- tax inccme
& wife oldest dren, oldest classes only Under $10,000 Under 6T 6 - 17 6 - 17 $5.000 & over
49 94 74 95 67 51
7,344 6,231 8,061 8,240 3,996 12,376
663 626 637 704 655 824
1,057 906 870 761 960 1,088
l,o67 1,084 1,519 1,859 1,083 1,784
-.25 OJ) -.06 -.02 +.09 -.13
166 (?}) 38 14 59 107
5.6 8.4 8.5 4.4 5.4 1.7
FAMILY ECONOMICS REVIEW
J
SEASONAL VARIATIONS IN U.S. DIETS
Arletta M. Beloian, Agricultural Research Service, USDA
The 1965-66 Household Food Consumption Survey was conducted in each of the
four seasons to determine what variations in consumption and diets occurred from season
to season. Separate samples of households were interviewed in each. Y As there
were some differences in the size of households from season to season, the descriptive
data in this paper are based on per person averages.
The National Research Council's 1963 Recommended Dietary Allowances (RDA's)
were used to evaluate the household diets. The average daily nutritive content of each
household's food consumed in a week was compared with the total of the recommended
allowances for individuals based on their age and sex.
Seasonality in dietary adequacy. --In the spring of 1965 about half of the United
States household diets met the Recommended Dietary Allowances for all nutrients studied.
We ca l1 these "good diets." The proportion of good diets varied little from season
to season in the April 1965-March 1966 period. However, some seasonal variation was
evident in the incidence of "poor diets"-- those diets falling short of two-thirds of the
RDA's for one or more nutrients. For the spring, 21 percent of the diets in the United
States rated as "poor" compared with 18 percent in each of the other three seasons.
The U.S. seasonal pattern of a higher proportion of poor diets in the spring than
in the other seasons was found also in the Northeast, North Central, and South. In the
West, the only marked seasonal variation was a substantially smaller proportion of poor
diets in the fall (table).
In each of the three urbanizations also, we found relatively more poor diets in
the spring than in the other seasons. The proportion of poor diets during the spring
among urban households was somewhat lower than among rural nonfarm and farm households.
Compared with the other urbanizations, notably fewer farm diets were rated
poor in the summer, 13 percent compared with 18 percent in the urban and rural non-farm
categories.
The all-U.S. pattern of relatively more poor diets in the spring than in other
seasons was found also among low-income households; 36 percent of the low-income
diets were rated poor compared with 21 percent for all income groups.
When diets were rated poor in quality in the United States, it was mostfrequently
because they failed to provide two-thirds of the allowances recommended for ascorbic
acid, vitamin A, and calcium. Although these nutrients were a problem in every season,
diets short by one-third or more of the recommended amounts for ascorbic acid
and vitamin A value occurred more often in the spring; calcium shortages were more
frequent in the summer. Examination of the incidence of these nutrient shortages during
the spring revealed that the North Central and South had a higher proportion of diets
below two-thirds of RDA for ascorbic acid than the other regions and that the South had
relatively more diets low in vitamin A. Calcium shortages occurred more often in the
.!/ Reports on Food Consumption of Households, year 1965-66 and seasons, are in
preparation.
MARCH 1971
25
summer in the Northeast, North Central, and South, whereas in the West calcium was
more of a problem in the spring (table).
Iron was not a problem in the household diets when these were evaluated by the
1963 RDA's. However, there is a strong possibility that if the larger amounts recommended
for most age and sex groups in the 1968 allowances had been used as standards,
iron would be short of the allowance in a larger proportion of diets. More diets were below two-thirds of allowances for ascorbic acid and vitamin A
in the spring than in other seasons in each urbanization. Relatively more rural than
urban diets had problems with ascorbic acid and vitamin A in the spring. In contrast,
urban diets were more often below two-thirds of calcium allowances in the summer.
The proportion of rural nonfarm diets with calcium shortages in the summer fell between
those for rura 1 farm and urban diets.
Seasonality in food sources of problem nutrients.-- Nearly 90 percent of the
ascorbic acid in U.S. diets was supplied by vegetables and fruits, in almost equal shares,
for the year 1965-66. Fruits supplied more of the ascorbic acid in the winter and spring,
while vegetables supplied more in the summer and fall. The winter peak for fruit was predominantly associated with the availability of citrus. The summer peak in tomato
consumption brought the vegetable contribution of ascorbic acid to its high for the year.
In the fall quarter of the year, dark green and deep yellow vegetables made their greatest
contribution. During the year as a whole and in the spring quarter, diets in the
Northeast, North Centra[, and West derived more of their ascorbic acid from fruits,
whereas the South had more supplied by vegetables. In the urban and rura 1 nonfarm
categories the average amount of ascorbic acid supplied by fruit was lower in summer
and fall than in winter and spring. Farm supplies from fruit averaged lower in the fall
than the other three quarters. Fruit was substantially less important as a source of
ascorbic acid among farm households in every season than in urban households.
Vegetables contributed more vitamin A value than any other food group in each
of the four seasons, but the share of the U.S. average supply varied from 38 percent in summer to 48 percent in fall. The relative contribution of fruits swung more widely,
from 5 percent in the fall and winter to 16 percent in summer. The South showed the
most season-to-season variation in vitamin A supplied by vegetables, with the peak contribution
in the fall considerably larger than that in the other regions. In all four regions,
supplies of this nutrient from fruit were highest in the summer. Among the three
urbanizations, the seasonal swing in vitamin A value contribution from vegetables consumed
by farm households was much greater than in urban or rural nonfarm households.
The key element was, of course, the seasonal availability of home-produced supplies.
The seasonal variation in the contribution of fruits to vitamin A was also somewhat
greater among farm than urban households.
The third nutrient most often short in the household diets was calcium. Part of
the seasonal variation in the adequacy of diets with respect to calcium arose from the
slightly higher household requirements in summer months when school children ate more
of their meals at home. The average daily supply of calcium per person for all U.S.
households varied only 4percent from the summer low to the winter high. Consumption
of fresh fluid, canned, and dried milk contributed about 10 percent more calcium per
person in the winterthan in summer. The relative contributions of otl~erdairy products
26 FAMILY ECONOMICS REVIEW
and of enriched and whole-grain cereal products varied little from season to season.
Seasonal variations in calcium supplied by milk were wider in the Northeast than in the
other regions. The contribution of the enriched and whole-grain cereal products to the
South's calcium supply varied little among the four seasons, but it is notable that households
in the South obtained almost twice as much calcium from the enriched grain group
than in the other three regions. This results in large part from much greater use of
self-rising flour and cornmeal in that area than elsewhere. The calcium contributions
of milk products and the enriched and whole-grain cereal group varied seasonally in
about the same way and to the same minor degree for the three urbanizations.
Seasonality in food consumption averages.-- For the country as a whole, consumption
of fresh vegetables and fruits per person exhibited more seasonal variation
than other food groups. Summer consumption of fresh produce was considerably higher
than in any other season, as expected. During their peak production season, fresh vegetables
were consumed at a rate almost 50 percent greater than the annual average.
The situation was the same in the Northeast, North Central, and South (fig. 1). The
major element in the summer highs was greater consumption of tomatoes. Fall rates
for dark green and deep yellow vegetables were above the annual average except in the
North Central Region. Fresh vegetables varied much less in the West from season to
season. Farm households varied their fresh vegetable consumption substantially more
than either rural nonfarm or urban households. High consumption in the summer reflected
heavy use of home-produced supplies.
The relatively high proportion of farm households among low-income households
in the country contributed to the greater seasonal variability in the use of fresh vegetables,
especially tomatoes, by the low-income group than that exhibited by all U.S.
households. Low-income households consumed substantially more dark green and deep
yellow vegetables per person in a week in the fa 11 than in the year as a whole. This s.easonal
variation was greater than among all-U.S. households. It reflects the seasonal
changes in consumption by substantial numbers of low-income southern farm households.
Fruit use in the U.S. averaged almost 33 percent greater in the summer than any
other season. Consumption of fresh fruits per person in the several regions during the
summer quarter ranged from about 20 to 50 percent above the annual averages for each
region. Farm use by season varied much more than urban because of the greater variability
in use of deciduous fruits. Urban households used more citrus per person in
every season than rural households. Seasonal variation in fresh fruit use was substantially
greater among low-income households than the all-U.S. average.
Summer consumption of processed vegetables and fruits was consistently lower
than in other seasons in the United States and all regions (fig. 2). These lows occurred
when consumption rates for fresh vegetables and fruits were highest seasonally and the
quantity consumed per person was about six times greater than canned and frozen combined
(on an as-purchased basis). The summer shift by farm households to fresh produce
from processed was notably greater than among the urban or rural nonfarm groups.
Although season-to-season variation in per person consumption of dairy products
(except butter) was slight, dairy products are considered here because of their impact
on the diet and because some variations did occur in the use of fluid milk and ice cream.
The all-u.s. consumption averages for fluid milk in fresh and processed forms were
MARCH 1971
27
lower in the summer and higher in the fall and winter. The quantity of ice cream used
varied more from season to season than milk or cheese, averaging 18 percent higher in
the summer and 13 percent lower in the winter than the annual average. All four regions
followed the U.S. pattern of lower consumption of fluid milk per person in the
summer and higher in the fall and winter. The consumption rate in the Northeast for
fluid milk, however, varied more from season to season than the other three regions.
The South had the lowest rates per person in all four seasons. Families in the South
and North Central consumed more ice cream in the summer than the annual rate and had
more season-to-season variation than the Northeast and West. Low-income households
varied their fluid milk use somewhat more on a per person basis than did households
with higher incomes, the greatest difference occurring in the winter quarter.
Summary and implications.--The key findings regarding seasonality of diets and
food consumption pose challenges for consumer educators and for public policymakers.
Just what can be done to improve poor diets in the spring of the year when consumption
of citrus and of dark green and deep yellow vegetables is seasonally low? The problem
was particularly serious among rural households of the North Central and the South.
During summer most families used more fresh vegetables and fruits so that problems
with vitamin A and ascorbic acid were reduced. But the calcium problem became ag-:
gravated in many urban households across the country when children were eating more
meals at home.
Government administrators and scientists are already investigating possibilities
of changing standards for enrichment of white flour with iron and calcium. IndustryGovernment
discussions of the ascorbic acid content of fruit drinks have been started.
Public and scientific awareness of the specific needs for dietary improvements and insistence
on their activation are vital to widespread solution of these dietary problems .
Perhaps a special milk program for summer months could be developed to supplement
the school milk and school lunch programs. On the other hand, expansion of the Food
Stamp Program, the proposed Family Assistance Plan, or both, may be the preferred
way of supporting much-needed minimum levels for food budgets and diets.
FRESH VEGETABLES
Seasonal Variation by Region
NORTHEAST
N. CENTRAL
SOUTH
WEST
I
% OF 1965-66' 0
I I
50 100 150
• Spring
'04JAMrlrYHft,(fUOit ft(GI(Jiu,,I"'U$flfOLD$,1NA"'li.ICIIf(~SIASIOIII-U..
I.-09""TIIOI'JnOIA(OiliCU..lUIIf ..c;!IOCUll\llll.&l!lllf:AJIC!IIl""'IU
Figure 1
28
VEGETABLES AND FRUIT
Seasonal Variation for the U.S.
SPRING
Freth Vegetables
Fre1h Fruit
Y•o. & Fr~o~it: Canned
SUMMER
Fre1h Vegetable•
Fre1h fr11it
Veg. & Fr.., it: Conned
FALL
fresh Vegetable•
fresh fr\olit
Veg , & Fruit: Canned
WINTER
fresh Vegetable•
f reshfr11il
I
% 0 F 1965-66' 0 50 100
'OIJANriTYHitl'lllfDN t:AIINlDANOFIIOZl~ Vf.OlTAIUIAIII)TitUifCO.WilllltC(AUYMOClSUD
U.$1KHJSEHOUUINA •Utt iMLM:HS£....,1--
Figure 2
I
150
FAMILY ECONOMICS REVIEW
Percent of U. S. househol ds wit h diets provi di ng Recommended Dietary All owance (1963) and l ess than
two -thi rds of All owance , 1965-66, by season, for region and urbanization and for
Proporti on of allowance
met and season
Recommended allowance
for all nutrients y
Year -----------------
Spring ---------------
Summer ---------------
Fall -----------------
Wi nter --------------Less
than two-thirds of
all owance for 1 or more
nutrients 1J
Year -----------------
Spring ---------------
Summer ---------------
Fall -----------------
Winter ---------------
Recommended all owance
Year -----------------
Spring ---------------
Summer --------------Fall
-----------------
Winter --------------Less
than two-thirds of
allowance
Year -----------------
Spring ---------------
Summer --------------Fall
-----------------
Winter ---------------
Recommended allowance
Year -- - --------------
Spring ---------------
Summer --------------Fall
--------- - -------
Winter ---------------
Less than two-thirds of
allowance
Year --- - -------------
Spring ---------------
Summer --------------Fall
-----------------
Winter ---------------
Recommended allowance
Year -----------------
Spring ---------------
Summer --------------Fall
------------- - ---
Winter ----- - ---------
Less than two-thirds of
allowance
Year -------------- ---
Spring ---------------
Summer ---------------
Fall -- - --- - ----------
Winter - ------ - ----- - -
i ncomes bel ow $3,000 in preceding year
United
States Northeast
50 .3
49.5
50 .9
50 .7
50.0
18.6
21.0
17.9
17.5
17.7
75.1
73.0
77 .6
73.1
76 .5
10.3
12 .9
8.9
10.7
8.8
76 .5
74.2
78 .6
78 .1
74.8
7.7
9.5
6.7
6.9
7.8
69.4
69 .6
67 .5
71.0
70 .3
53 .1
52 .7
51.5
52 .9
55 .3
15 .4
17.4
14.9
15. 3
14.1
80.8
79 .1
82 .8
76.2
85.1
7.2
9.2
7.0
7.4
5.1
79 .0
76 .2
82 .1
79 .8
77 .9
6.3
7.7
4.6
5.9
7.1
69.2
69 .9
65 .5
69.3
72 .0
7.5
6.6
9.1
7.6
6.4
Region
North
Central i South West 1 Urban
48 . 3
48;1
52 .1
45 .4
47 .2
19.5
22 .2
17.6
19.6
18 ,6
72 .6
71,1
75 .7
69 .3
74 .2
10.9
14.5
8.2
12.4
8.1
73.8
72 .9
76.6
73.2
72 .1
8.0
8.7
7.5
7.0
9.0
68 .8
69.2
69.4
68 .9
67.9
8.0
8.2
9.8
5.9
7.7
7 NUTRIENTS Y
50. 3 49,0 49.9
47 .5 51 .5 50 .2
51 .1 47 .0 49 .7
52 .1 53 .5 50.7
50.8 43.9 48.9
21.1
24.2
19.9
20 .2
20 ,1
16 .5
18.0
18.7
12 .2
17 .1
18.1
20 .6
18 .4
16.8
16.7
ASCORBIC ACID
72.1 76 .6
68 .1 76 .7
75.4 77 .4
71.5 78 .7
72 .9 73 .7
12.9
15 .8
10 .3
13.8
11.9
9.0
10.0
9.9
6.6
9.4
76.6
75 .0
77 .7
75 .5
77 .8
9.4
12 .0
9.0
9-5
7.4
VITAMIN A VALUE
74.8 80 .9 77 .2
71.6 79 .4 75 .7
75.9 83.2 79 .6
77 .5 85.8 78.5
74.3 75 .3 75 .2
10.0
13.3
9.0
9·5
8.5
70.3
70 .4
68 .3
71.3
71.6
8.0
8.1
9.3
6.6
7.4
4.4
5.7
3.5
2.9
5.5
CALCIUM
69.8
68 .8
65 .4
76 .4
68 .2
6.8
8.4
7.3
4.6
7.0
7.0
8.6
5.9
6.4
7.2
67 .9
68 .0
66 .1
69 .0
68 . 3
8.1
8.4
10,1
6.8
7.3
50.4
47 .8
51.7
50 .0
52.2
20 .0
21.8
17 .8
19.4
20.9
71.4
68 .6
76 .2
67 .6
73.1
12 .3
14.8
9.0
13.5
12 .0
74.1
71.0
75 .8
76.2
73 .4
9.6
11.7
9.0
8.4
9.4
72 .8
73 .1
69 .6
74 .4
74.4
6.5
6.5
6.8
5.3
7.0
y Protein, calcium, iron, vitamin A value , thiamin, riboflavin, and ascorbic acid.
y Rated good, 1J Rated poor.
MARCH 1971
54.0
48.5
59.7
52 .9
54.4
18.1
22 .8
13.1
19.0
17 .8
72.2
65 .6
80 .3
68.4
73.9
12 .5
16 .7
7.7
13.7
12.5
76 .7
69.8
79 .7
81.2
75.9
8.1
11.7
6.1
6.6
8.2
76 .4
74 .9
75 .1
78.2
77 .6
5.9
6.8
6.4
5.3
5.1
Lowincome
38 .8
37 .ll
40 .6
41.7
35 .7
31.9
36.0
30.9
29 .6
30 .3
62.1
58 .3
67.5
61.6
61.9
20.4
25 .2
17.5
20 .4
17.3
66.5
63 .9
67.4
70.1
64.7
16.2
18.5
15 .2
14.8
16.1
62 .4
64. 4
62 .5
62.7
59.8
13.0
12.5
15.6
10.6
13.8
29
THE EXPANDED FOOD AND NUTRITION EDUCATION PROGRAM
Robert E. Frye, Economic Research Service, USDA
Food and nutrition educationhas always played a major role in the totalprogram
of the Federal and Cooperative State Extension Services. However, new dimensions and
emphasis were added when expanded activity in this area was authorized in November
1968 through the Expanded Food and Nutrition Education Program (EFNEP). Changes
include orientation of this educational effort toward hard-to-reach families in poverty
of which a large proportion are of minority groups living in urban areas. Also in contrast
to traditional Extension programs where professionals are the main contact with
clients, nonprofessionals are depended upon to deliver this program.
The program now reaches families in more than 1,000 counties, independent cities
and Indian reservations. It is now operating in all of the 50 States; District of Columbia,
Puerto Rico, and Virgin Islands. Plans call for considerable expansion of the
program during the current fiscal year.
Participation.-- At the end of September 1970, the latest month for which program
data are available, a total of 243, 881 families were participating. Betweep implementation
of the program in the early months of 1969 and October 1970, close to
386, 000 families-- averaging around 4. 8 persons per family-- have participated in the
program for some period of time. During the approximate 21-month period of program
operation ending September 1970, around 37 percent of the families enrolled left the
program. Reasons for families leaving the program are being examined through an
indepth study of a representative sample of program families, but findings are not yet
available.
The principal contact with program families is the program aides who work with
families individually or in small groups. Aides are generally persons who are indigenous
to the community or neighborhood in which the families they work with live. The
prime qualification looked for in an aide is an ability to identify and communicate with
needy families. During the peak month to date, May 1970, over 7, 000 aides were employed.
Programwide, aides worked about 75 percent of full time in September 1970,
thus representing slightly over 5, 000 full-time equivalent aides. The amount of time
worked by an aide varies considerably among the States ranging from less than half time
to full (40 hours per week). Between the time the first aides were hired in January 1969 I
through September 1970, over 13,000 aides have been employed in the program. During
this period over 5, 000 aides or about 45 percent of the total employed left the program.
Reasons for aides leaving the program are not known at this time although a study to examine
the role of the aide in more detail is now underway.
In addition to the work with program families (those from whom the aides obtained
specific family record information necessary to classify the family in this program),
considerable effort is directed to nonprogram families . Program wide, an average
of 42,000 nonprogram families have been contacted or worked with each month by
the aides since inception of the program. It is likely that in subsequent months many of
these families became program families. The cumulative monthly total of non program
30 FAMILY ECONOMICS REVIEW
families contacted by aides through September 1970 was over 840, 000. It should 'be
pointed out that this total does not necessarily represent the number of different families
contacted. The same family may be counted as a nonprogram family over an unknown
number of monthly reporting periods.
Families participating in the program at the end of September 1970 contained
over 700,000 children. In addition to being reached through their families' involvement
in the program, close to 53, 000 children from program families were being taught food
and nutrition through 4-H -type activities in ~eptember 1970. In addition to children from
program families, close to 38,000 children (generally 9-19 years of age) from nonprogram
families were involved in the youth component of the EFNEP. Since reporting began
in March 1969, between 50, 000 and 130, 000 children have been involved in the 4-H
component on a monthly basis. During the 3-month period, July-September, close to
190, 000 different youth were being worked with and close to 12,000 different volunteers
participated in this phase of the program.
Characteristics of program families.-- At the end of March 1970, 63 percent of
the families participating in the program had annual income of less than $3,000, and
less than 10 percent of the families had income of $5, 000 and over. Over 30 percent of
the families were on welfare and over 40 percent participated in either the Donated
Foods or Food Stamp Programs. Close to 60 percent of the program families lived in
urban areas, and less than 10 percent of the families reached by this Department of
Agriculture program lived on farms.
Classification of program families by ethnic group show that program wide, white
families constituted about a third of those being reached in March 1970, Negro families
close to one-half, and Spanish-American slightly under one-fifth. The ethnic or racial
profile of program families varied sharply among States, reflecting only in part the
States' total population composition. In several Western States, Spanish-American and
Indian families accounted for a substantial to major portion of the total families reached.
In most Southern States, a majority of the program families were Negro.
The challenge of the program as an educational effort is illustrated by the fact
that over 30 percent of the family homemakers reported less than 8 grades of schooling.
As the program has matured only minor changes appear to have taken place in
the characteristics of families being reached. There has been some increase in the
proportion of urban families; a slight increase in proportion of families with annual income
of over $3, 000, a slightly larger portion of Caucasian families (between March
1969 and September 1969) and a decrease in proportion of Negro families with an accompanying
increase in proportion of Spanish-American families. It can be surmised
that earliest program effort in the States was directed at areas where the need was
greatest. As the program was expanded within a given area as well as to new areas, it
was logical that less needy families would be recruited.
A comparison of families in the program and those leaving it, while not showing
extremely sharp difference, indicates that families leaving the program tend to be
smaller, without children, younger, more educated, white, urban, homeowners, with
higher family income, not on welfare or participating in USDA food assistance programs,
and not having a home garden.
MARCH 1971
31
Achievements of the program. --A strong case for claiming positive achievements
can be made on the basis that it has secured participation of a large number of
very low-income families, many in inner cities and in minority groups. Limited contacts
with these families in selected areas indicate favorable acceptance of the program
by participating families. To gain participation of many of these families and to establish
communication through the aide constitutes considerable achievement in itself. In 1
addition, the over 12, 000 aides who have worked in the program have, in addition to
gaining new knowledge with which to work with their program families, acquired knowledge,
skills, and experiences which are applicable to their own families and life style.
The primary objective of the EFNEP is to help families acquire the knowledge,
skills, and changed behavior to achieve more adequate diets. More specific objectives
are to increase families' knowledge of the needs and essentials of good nutrition and to
improve their ability and practices in selecting and buying foods and preparing and serving
them in nutritional and palatable meals. Supportive objectives include increased
participation of eligible families in USDA food assistance programs and other forms of
public or private assistance which may be available.
Assessment of the level and change of nutrition knowledge of program families
is based on the family homemaker's response to the question "What food and drink do
you think people should have to keep healthy?" The question is asked of homemakers
by the aide when the family enters the program and at approximate 6-month intervals.
Almost 47 percent named all four groups initially; 63 percent after being in the program
6 months; and 70 percent after 12 months. It is interesting to note that foods in the bread and cereal groups were named by a smaller proportion of the homemakers than
any other food group.
Food consumption of the homemakers is measured in a similar manner by taking
a 24-hour recall of the foods consumed by the homemaker. It is hypothesized that a
family's food consumption practices will likely be superior to that of its homemaker.
Initial food readings indicate that the programhomemakers have inadequate diets. Only
7 percent of homemakers joining the program during its first 3 months and 9 percent of
all homemakers joining through March 1970 had at least two servings each of milk and
meat and four each of fruit/ vegetables and bread/cereal during a 24-hour recall period.
Probably one of the greatest dietary deficiencies is reflected by the fact that around onethird
of the homemakers did not report consumption of foods in the milk group. Similarily,
less than one-fifth of the homemakers report at least four servings of fruits or vegetables during their initial 24-hour recall period. Slightly over a half of the homemakers
reported at least one serving from each of the four major food groups.
Food readings taken on all homemakers who had been in the program 6 months
showed almost 16 percent having the minimum adequate 2-2-4-4 diet, in contra~t to 9
percent at the initial reading. After 12 months in the program, 19 percent of the home- makers were at this level. However, it should be noted that the number of homemakers
for whom food readings were obtained dropped sharply for the second and third food
readings.
In evaluating the effectiveness of the EFNEP, the indications of achievement described
take on more significance when it is recognized that application of the education
and skills families gain from the program may be constrained by the limited food pur-
32 FAMILY ECONOMICS REVIEW
chasing power available to the participating families. Homemakers for whom food readings
were obtained between September 1969 and April 1970 reported average monthly
income of around $242 and food expenditures accounting for about 35 percent of income,
or $84. The Department estimated that in June 1970 the cost of its low-cost food plan
for a family of four with school children was $134. 50 per month.
To give families access to more food or more resources for acquiring their food
needs, program families that are eligible are encouraged to participate in USDA food
assistance programs. In the early months _of the program, the proportion of E FNEP
families participating in USDA food programs remained fairly stable at around 34 percent
but has since gradually increased until almost 45 percent of the families participated
in either food stamps or donated foods in September 1970. During 1970, participation
of EFNEP families in USDA food assistance programs has undoubtedly been encouraged
by greater availability of these programs and particularly more liberal purchase
requirements for food stamps.
OFFICE OF CONSUMER AFFAIRS AND CONSUMER PRODUCT
INFORMATION COORDINATING CENTER
President Nixon on February 24 created by executive order an Office of Consumer
Affairs in the Executive Office of the President. The new office replaces the President's
Committee on Consumer Interests. The Consumer Advisory Council is transferred to
the new office and will advise the Director on ( 1) policy matters relating to consumer
interests, ( 2) the effectiveness of Federal programs and operations that affect the interest
of consumers, and ( 3) problems of primary importance to consumers and ways
to meet unmet consumer needs through Federal Government action. Mrs. Virginia H.
Knauer, heretofore the President's special assistant for consumer affairs, was appointed
Director of the new office.
The new office will receive consumer complaints and channel them to the Federal
or other agency with the power to take corrective action. It will also represent the consumer
in an advisory capacity with other Federal agencies. It will develop information
concerning consumer problems and participate in consumer education programs and programs
to improve consumer products and services and consumer product information.
The order establishing the office also directs Federal agencies to give due consideration
to the valid interests of consumers in any action that might affect them.
On October 26 the President directed the General Services Administration to
establish a Consumer Product Information Coordinating Center. The Center is authorized
to collect and release Government documents containing product information of possible
use to consumers when this can be done in a manner fair to producers, vendors,
and the Government procurement processes.
MARCH 1971
33
COST OF FOOD AT HOME
Cost of food at home estimated for food plans at three
cost levels, December 1970, u.s. average !/
Cost for 1 week Cost for 1 month
Sex-age groups gj
Low-cost!Moderate- Liberal Low-costlModerate- Liberal
plan I cost plan plan plan jcost plan plan
FAMILIES
Dollars Dollars Dollars Dollars Dollars Dollars
Family of 2:
20 to 35 years ]/ ---- 18.30 23.20 28.50 79.10 100.60 123.40
55 to 75 years ]/ ---- 15.00 19.40 23.30 64.90 83.90 100.90
Family of 4: ·
Preschool children ~ 26.50 33.70 41.00 114.80 146.20 177.60
School children 2/ --- 30.70 39.30 48.20 133.30 170.40 208.70
INDIVIDUALS §../
Children, under 1 year - 3.60 4.50 5.00 15.40 19.40 21.70
1 to 3 years --------- 4.50 5.70 6.80 19.60 24.70 29.50
3 to 6 years --------- 5.40 6.90 8.30 23.30 30.00 35.90
6 to 9 years --------- 6.50 8.40 10.50 28.30 36.40 45.30
Girls, 9- to 12 years --- 7.40 9.60 ll.20 32.20 41.60 48.60
12 to 15 years ------- 8.20 10.60 12.90 35.60 46.10 55.70
15 to 20 years ------- 8.40 10.60 12.60 36.40 45.90 54.40
Boys, 9 to 12 years ---- 7.60 9.80 11.80 33.10 42.50 51.20
12 to 15 years ------- 8.90 11.70 14.00 38.80 50.90 60.60
15 to 20 years ------- 10.30 13.10 15.80 44.70 56.70 68.40
Women, 20 to 35 years -- 7.70 9.80 11.80 33.30 42.40 51.00
,,
35 to 55 years ------- :
55 to 75 years ------- t
75 years and over ---Pregnant
------------Nursing
-------------- '
Men, 20 to 35 years ----
35 to 55 years ------- :
55 to 75 years -------
75 years and over ----
7.40
6.30
5.70
9.10
10.60
8.90
8.30
7.30
6.90
9.40
8.10
7.20
11.40
13.20
11.30
10.50
9.50
9.20
11.30
9.70
8.80
13.50
15.50
14.10
12.90
11.50
11.00
32.00
27.20
24.70
39.60
46.10
38.60
35.90
31.80
29.80
40.90
35.10
31.30
49.50
57.30
49.10
45.60
41.20
39.70
49.10
41.90
38.20
58.50
67.00
61.20
55.70
49.80
47.90 )'
!/ Estimates computed from quantities in food plans published in Family Eco- #
nomics Review, October 1964. Costs of the plans were first estimated by using
average price per pound of each food group paid by urban survey families at
3 income levels in 1965. These prices were adjusted to current levels by use
of Retail Food Prices by Cities, released by the Bureau of Labor Statistics.
gj Persons of the first age listed up to but not including the second age.
3/ 10 percent added for family size adjustment.
![/ Man and woman, 20 to 35 years; children 1 to 3 and 3 to 6 years.
5/ Man and woman, 20 to 35 years; child 6 to 9; and boy 9 to 12 years.
§/ Costs given for persons in families of 4. For other size families, adjust
thus: 1-person, add 20 percent; 2-person, add 10 percent; 3-person, add 5 percent;
5-person, subtract 5 percent; 6-or-more-person, subtract 10 percent.
34 FAMILY ECONOMICS REVIEW
E 0
~
~
(0
-.::J
~
~
OJ
V ·
Table 2.--Cost of l week's food at home estimated for food plans at_3 cost
levels, December l970, for Northeast and North Central Regions~
Northeast North Central
Sex-age groups ?} Low-cost I Moderate- I Liberal Low-cost I Moderate- I Liberal
plan cost plan plan plan cost plan plan
Dollars Dollars Dollars Dollars Dollars Dollars
FAMILIES
Family of two, 20 to 35 years ]/---- 20.60 26.lO 30 •. 90 18.60 22.70 28.lO
Family of two, 55 to 75 years ]/---- l6.8o 21.80 25.30 l5.30 18.90 22.80
Family of four, preschool childr~ 29.90 38.lO 44.50 27.00 32.80 40.30
Family of four, school children 5 -- 34.70 44.30 52.40 3l.30 38.40 47 •. 50
INDIVIDUALS §/
Children, under l year ------------- 4.oo 5.10 5.50 3.60 4.30 4.90
l to 3 years ----.----------------- 5.10 6.50 7.4o 4.60 5.50 6.70
3 to 6 years --------------------- 6.l0 7.90 9.00 5.50 6.70 8.l0
6 to 9 years --------------------- 7.40 9.50 ll.4o 6.60 8.20 l0.30
Girls, 9 to l2 years --------------- 8.40 l0.90 12.20 7.50 9.30 ll.lO
l2 to l5 years ------------------- 9.30 l2.l0 l4.l0 8.30 l0.30 12.60
15 to 20 years ------------------- 9.50 l2.00 l3.80 8.50 10.30 l2.30
Boys, 9 to 12 years ---------------- 8.60 ll.lO l2.90 7.80 9.60 ll.70
12 to l5 years ------------------- lO.lO l3.40 l5.20 9.l0 ll.50 l4.oo
l5 to 20 years ------------------- ll.70 14.80 17.l0 l0.60 12.80 15.80
Women, 20 to 35 years -------------- 8.70 11.00 l2.80 7.80 9.50 ll.50
35 to 55 years ------------------- 8.30 l0.60 l2.30 7.50 9.20 ll.OO
55 to 75 years - ------------------ 7.00 9.l0 l0.60 6.40 7.90 9.40
75 years and over ---------------- 6.40 8.10 9.60 5.80 7.00 8.50
Pregnant ------------------------- 10.30 12.90 14.70 9.30 ll.lO 13.20
Nursing -------------------------- 12.00 l4.90 16.80 10.90 12.90 15.30
Men, 20 to 35 years ---------------- 10.00 12'.(0 15.30 9.10 ll.lO 14.00
35 to 55 years ------------------- 9.30 11.90 l3.90 8.50 10.30 12.80
55 to 75 years ------------------- 8.30 10.70 12.40 7.50 9.30 ll.30
75 years and over ---------------- 7.70 10.30 12.00 7.00 9.00 l0.90
------ --
See footnotes 1 to 6 of table 1, p.
CJ,:)
a;,
~ >
~
~
trj
0
~
0
~ til
~
trj
~
trj
~
Table 3.--Cost of 1 week's food at home estimated for food plans at 3 cost levels,
December 1970, for Southern and Western Regions !/
South West
Sex-age groups ?}
Another
Low-cost low-cost Moderate- Liberal Low-cost Moderate-plan
plan 11 cost plan plan plan cost plan
ll<ill.ans' Dollars Dollars Dollars Dollars Dollars
FAMILIES
Family of two, 20 to 35 years ]/ ---- 17.00 16.40 21.90 26.60 18.80 22~80
Family of two, 55 to 75 years 1/---- 14.10 13.20 18.40 21.80 15.30 19.10
Family of four, preschool childre~ 24.70 23.90 31.70 38.40 27.40 33.10
Family of four, school children 5 -- 28.70 27.60 37.00 45.10 31.80 38.50
INDIVIDUALS §./
Children, under 1 year ------------- 3.30 3.30 4.20 4.80 3.70 4.40
1 to 3 years --------------------- 4.20 4.10 5.30 6.40 4.70 5.60
3 to 6 years --------------------- 5.00 4.90 6.50 7.80 5.60 6.80
6 to 9 years --------------------- 6.10 6.oo 7.90 9.80 6.80 8.20
Girls, 9 to i2 years --------------- 6.90 6.50 9.00 10.60 7.70 9.40
12 to 15 years ------------------- 7.60 7.30 10.00 12.10 8.50 10.40
15 to 20 years ------------------- 7.80 7.50 10.00 ll.90 8.60 10.30
Boys, 9 to 12 years ---------------- 7.10 6.70 9.20 ll.lO 7.90 9.60
12 to 15 years ------------------- 8.30 8.10 ll.oo 13.10 9.30 ll.50
15 to 20 years ------------------- 9.60 9.20 12.30 14.80 10.60 12.80
Women, 20 to 35 years -------------- 7.20 6.90 9.30 ll.lO 7.90 9.60
35 to 55 years ------------------- 6.90 6.60 8.90 10.70 7.60 9.20
55 to 75 years ------------------- 5.90 5.40 7.70 9.10 6.40 8.00
75 years and over ---------------- 5.30 5.00 6.90 8.40 5.80 7.10
Pregnant ------------------------- 8.50 8.30 10.80 12.70 9.40 li.20
Nursing -------------------------- 9.90 9.70 12.40 14.40 10.90 12.90
Men, 20 to 35 years ---------------- 8.30 8.oo 10.60 13.10 9.20 ll.lO
35 to 55 years ------------------- 7.70 7.40 9.90 12.00 8.50 10.30
55 to 75 years ------------------- 6.90 6.60 9.00 10.70 7.50 9.40
75 years and over ---------------- 6.40 6.20 8.70 10.30 7.00 9.00
Liberal
plan
Dollars
28.30
23.10
40.40
47.60
4.80
6.60
8.10
10.30
ll.lO
12.60
12.40
n.6o
13.70
15.50
11.70
ll.30
9.60
8.80
13.30
15.20
14.00
12.70
ll.4o
10.90
-------·- --~
See footnotes 1 to 6 of table 1, p.
11 Special adaptation of low-cost plan especially suitable for food habits in the Southeastern States.
·-· .:!JI!I'"_ ,
