FINANCE FACTS - July 1975 - Inflation and the Family Budget

Sep 21, 2026

Finance Facts (July 1975) examines consumer financial behavior and macroeconomic conditions with emphasis on inflation’s effects on family spending and on government fiscal and economic indicators. It presents hypothetical family budgets to show how inflation changes consumption patterns across high, intermediate, and low consumption levels, and reports cost components such as food, shelter, transportation, and taxes. It also summarizes the federal fiscal position, consumer index movements, industrial production trends, wholesale prices, and regional personal income changes.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages5

Reading Time13 min

AccessFree to download

INFLATION AND THE FAMILY BUDGET

FEDERAL FISCAL POSITION

CONSUMER FINANCIAL BEHAVIOR

INDUSTRIAL PRODUCTION

WHOLESALE PRICES

PERSONAL INCOME BY REGIONS

# FINANCE FACTS A Monthly Publication on Consumer Financial Behavior Any or all the material in this publication may he quoted or reproduced. JULY 1975 INFLATION AND THE FAMILY BUDGET Inflation and the The Department of Labor has designed three hypothetical budgets rep-resenting different levels of consumption-high,intermediate,and low-in order to measure the impact of inflation on family consumptionpatterns. Family Budget Fixed budget for urban family ot four U.5.Avaroge Percan 1974 1973 lneraos Total Budoet 14.2 520.777 518.201 During the latter part of 1974,an income of about $20,800 was neededto sustain the lifestyle of the highest budget,which was 14.0%abovethe preceding year.The increment for the lowest budget was about 11.3 14,976 13.450 Taol Conumplion 10.8 4,453 4,020 Food 3,578 Food at home 10.5 3.238 874 782 Food away from home 11.8 9.1 3.495 3.204 Sheliar 12.5%higher,and moderately more than that for the intermediate budget. 1,40 Housefurnishings.operalions 18.9 1.182 1,521 15.7 Tronsporiation 1,315 L.456 9.1 1,589 Clothing Cost of goods and services for all three budgets rose by 11.3%whilepersonal income taxes were up by 26.6%.Housefurnishings rose by Pervonal 12.6 439 390 Medicol care 11.8 774 692 8.9 1.,297 1,191 Other consumplion 18.9%,transportation by 15.7%,shelter by 9.1%,and food-both at homeand away from home-by 10.8%Of the entire increment in 1974 in thecost of the high budget,slightly more than 37%was accounted for bypersonal income taxes and Social Security payments. 8.7 1,113 1,024 Other liems 25.7 4,686 3.727 Taxes Parsonal income foxze 26.6 3,899 3,080 787 647 Social Securily:Dincblily 21.6 otm Whare loms foll o odd up so indcned tonal,difeeces am duo o raunding boued ana welaied averoee of net ond owner coh.AJo ineedn alowane for Payroll withholding for taxes and Social Security now constitutes thesingle most important consumer expenditure,claiming 23%of the mostexpensive budget,and 16%of the least expensive budget.Seven yearsago those items claimed 17.5%and 12.5%,respectively,of aggregateoutlay. ledoling ooov from heme Sncdludererafios,tobace,duron. Indudn lHha lnurane and ocuealiehal espenes.gih,cosrlbulies Sonice uUS.Deenmdnt of Loben Te Cenlbiace bord ## FEDERAL FISCAL POSITION Federal Government expenditures outpaced growth in receipts in firstquarter 1975,and Federal deficit as measured in national incomeaccounts increased to $54.6 billion at a seasonally adjusted annual rate. Receipts in first quarter 1975 were $283.8 billion at an annual rate,down$10.9 billion from fourth quarter 1974.Personal tax payments de-creased $0.6 billion and corporate tax liabilities were down $11.9 bil-lion.Social insurance contributions increased $0.9 billion from fourthquarter 1974. Expenditures were at an annual rate of $338.4 billion,up $19.2 billionfrom the fourth quarter 1974.Over half the increase was in transferpayments resulting from higher unemployment benefits,civilian andmilitary retirement benefits,which were augmented by cost-of-livingincreases,food stamps,and veterans'benefits.Defense purchases rose $0.7 billion and non-defense purchases by $1.2 billion;grants increasedby $4.7 billion;and net interest paid remained unchanged at $19.7 bil-lion from fourth quarter 1974.Subsidies rose $1.2 billion as a result ofhigher postal deficit and railroad subsidy payments. ## CONSUMER FINANCIAL BEHAVIOR Most indexes were up in the first quarter of 1975.The only large per-centage decrease over fourth quarter was registered by personal savingsindex,down 26.2 index points(12.2%)from the revised fourth quarterfigure of 214.1 to 187.9.Greatest percentage increase was registered bydurable goods index,up 5.8 index points(3.5%)to 170.9. Personal income increased by 1.0 index points to 189.6 in first quarter1975.Disposable personal inco

FAQs

How does inflation affect the family budget across different consumption levels?

The publication uses three hypothetical budgets (high, intermediate, and low) to measure how inflation alters family consumption patterns and the distribution of spending. It highlights the role of major categories like food, shelter, transportation, and tax-related costs in driving changes.

What happened to the federal deficit and government receipts in first quarter 1975?

Federal government expenditures outpaced growth in receipts in the first quarter of 1975, increasing the deficit as measured in national income accounts. Receipts decreased from the prior quarter, while expenditures rose, widening the gap.

Which consumer financial behavior measures changed most in first quarter 1975?

Most indices increased, while the personal savings index showed a large decline from the revised fourth-quarter figure. The durable goods index rose the most in percentage terms, reflecting stronger growth relative to other indicators.

Sep 21, 2026

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