Considering the whole Nation, total expenditures must equal the total receipts, because what any individual or group spends becomes receipts of other individuals or groups.  Such equality can be achieved on either a high level of incomes or on a low or depression level of incomes.

Tremendous orders for munitions during the war shifted production and employment into high gear.  Total goods produced and services rendered for private as well as for Government purposes—­the Nation’s budget-reached about 200 billion dollars in the calendar year 1944.  Federal, State, and local government expenditures represented half of this total.

Corresponding estimates for the past 3 months depict the national economy in the process of demobilization and reconversion.

The wartime annual rate of Federal expenditures has been reduced by 32 billion dollars, while the Nation’s budget total has dropped only half as much.  The drop in total value of production and services has been less drastic because increasing private activities have absorbed in large measure the manpower and materials released from war production and war services.

The largest increase in private activities has occurred in business investments, which include residential and other construction, producers’ durable equipment, accumulation of inventories, and net exports.  Under conditions of global war, expenditures for private construction and equipment were held to a minimum and inventories were depleted.  With the beginning of reconversion these developments have been reversed.  Residential construction and outlays for plant and equipment are on the increase; inventories, too, are being replenished.  International transactions (excluding lend-lease and international relief which are included under war expenditures) showed an import surplus under conditions of global war.  In the past 3 months private exports have been slightly in excess of imports, for the first time since 1941.

Consumers’ budgets show a significant change.  On the income side, their total has declined but little because the reduction in “take-home” pay of war workers is, to a large extent, offset for the time being by the mustering-out payments received by war veterans and by unemployment compensation received by the unemployed.  On the expenditure side, however, consumers’ budgets, restricted during the war, have in creased substantially as a result of the fact that scarce goods are beginning to appear on the market and wartime restraints are disappearing.  Thus, consumers’ current savings are declining substantially from the extraordinarily high wartime rate and some wartime savings are beginning to be used for long-delayed purchases.

THE GOVERNMENT’S BUDGET AND THE NATION’S BUDGET

Calendar year 1944 and October-December 1945

Oct.-Dec. 1945 (start of

reconversion) (in seasonally