Review

Excessive growth of total demand for goods and services has maintained intense upward pressure on prices. The Federal budget legislation of late June, which was designed to moderate inflationary pressures, has not yet slowed appreciably the advance of total demand. Consumer spending has risen sharply in recent months, and growth of Government purchases has continued. While the tax surcharge has reduced the portion of each dollar of income available for private spending, consumers have evidently reduced their rate of saving, and have made increased use of installment credit to augment their purchasing power. In addition, monetary expansion has remained rapid, at least until recently, suggesting continued stimulus to private demand for goods and services.