Full text of Economic Report of the President : 1982
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Economic Report of the President Transmitted to the Congress February 1982 TOGETHER WITH THE ANNUAL REPORT OF THE COUNCIL OF ECONOMIC ADVISERS UNITED STATES GOVERNMENT PRINTING OFFICE WASHINGTON : 1982 For sale by the Superintendent of Documents, U.S. Government Printing Office Washington, D.C 20402 CONTENTS Page ECONOMIC REPORT OF THE PRESIDENT 1 ANNUAL REPORT OF THE COUNCIL OF ECONOMIC ADVISERS* 11 CHAPTER 1. ECONOMIC POLICY FOR THE 1980s 21 CHAPTER 2. GOVERNMENT AND THE ECONOMY 27 CHAPTER 3. MONETARY POLICY, INFLATION, AND EMPLOYMENT 47 CHAPTER 4. FEDERAL BUDGET ISSUES 78 CHAPTER 5. TAX POLICY AND ECONOMIC GROWTH 109 CHAPTER 6. REFORMING GOVERNMENT REGULATION OF ECONOMIC ACTIVITY 134 CHAPTER 7. THE UNITED STATES IN THE INTERNATIONAL ECONOMIC SYSTEM 167 CHAPTER 8. REVIEW AND OUTLOOK 192 APPENDIX A. REPORT TO THE PRESIDENT ON THE ACTIVITIES OF THE COUNCIL OF ECONOMIC ADVISERS DURING 1981 217 APPENDIX B. STATISTICAL TABLES RELATING TO INCOME, EMPLOYMENT, AND PRODUCTION 227 *For a detailed table of contents of the Council's Report, see page 15. (Ill) ECONOMIC REPORT OF THE PRESIDENT ECONOMIC REPORT OF THE PRESIDENT To the Congress of the United States: In the year just ended, the first decisive steps were taken toward a fundamental reorientation of the role of the Federal Government in our economy—a reorientation that will mean more jobs, more opportunity, and more freedom for all Americans. This long overdue redirection is designed to foster the energy, creativity, and ambition of the American people so that they can create better lives for themselves, their families, and the communities in which they live. Equally important, this redirection puts the economy on the path of less inflationary but more rapid economic growth. My economic program is based on the fundamental precept that government must respect, protect, and enhance the freedom and integrity of the individual. Economic policy must seek to create a climate that encourages the development of private institutions conducive to individual responsibility and initiative. People should be encouraged to go about their daily lives with the right and the responsibility for determining their own activities, status, and achievements. This Report reviews the condition of the American economy as it was inherited by this Administration. It describes the policies which have been adopted to reverse the debilitating trends of the past, and which will lead to recovery in 1982 and sustained, noninflationary growth in the years to follow. And, finally, this Report explains the impact these policies will have on the economic well-being of all Americans in the years to come. The Legacy of the Past For several decades, an ever-larger role for the Federal Government and, more recently, inflation have sapped the economic vitality of the Nation. In the 1960s Federal spending averaged 19.5 percent of the Nation's output. In the 1970s it rose to 20.9 percent, and in 1980 it reached 22.5 percent. The burden of tax revenues showed a similar pattern, with increasingly high tax rates stifling individual initiative and distorting the flow of saving and investment. The substantially expanded role of the Federal Government has been far deeper and broader than even the growing burden of spending, and taxing would suggest. Over the past decade the government has spun a vast web of regulations that intrude into almost every aspect of every American's working day. This regulatory web adversely affects the productivity of our Nation's businesses, farms, educational institutions, State and local governments, and the operations of the Federal Government itself. That lessened productivity growth, in turn, increases the costs of the goods and services we buy from each other. And those regulations raise the cost of government at all levels and the taxes we pay to support it. Consider also the tragic record of inflation—that unlegislated tax on everyone's income—which causes high interest rates and discourages saving and investment. During the 1960s, the average yearly increase in the consumer price index was 2.3 percent. In the 1970s the rate more than doubled to 7.1 percent; and in the first year of the 1980s it soared to 13.5 percent. We simply cannot blame crop failures and oil price increases for our basic inflation problem. The continuous, underlying cause was poor government policy. The combination of these two factors—ever higher rates of inflation and ever greater intrusion by the Federal Government into the Nation's economic life—have played a major part in a fundamental deterioration in the performance of our economy. In the 1960s productivity in the American economy grew at an annual rate of 2.9 percent; in the 1970s productivity growth slowed by nearly one-half, to 1.5 percent. Real gross national product per capita grew at an annual rate of 2.8 percent in the 1960s compared to 2.1 percent in the 1970s. This deterioration in our economic performance has been accompanied by inadequate growth in employment opportunities for our Nation's growing work force. Reversing the trends of the past is not an easy task. I never thought or stated it would be. The damage that has been inflicted on our economy was done by imprudent and inappropriate policies over a period of many years; we cannot realistically expect to undo it all in a few short months. But during the past year we have made a substantial beginning. Policies for the 1980s Upon coming into office, my Administration set out to design and carry out a long-run economic program that would decisively reverse the trends of the past, and make growth and prosperity the norm, rather than the exception for the American economy. To that end, my first and foremost objective has been to improve the performance of the economy by reducing the role of the Federal Government in all its many dimensions. This involves a commitment to reduce Federal spending and taxing as a share of gross national product. It means a commitment to reduce progressively the size of the Federal deficit. It involves a substantial reform of Federal regulation, eliminating it where possible and simplifying it where appropriate. It means eschewing the stop-and-go economic policies of the past which, with their short-term focus, only added to our long-run economic ills. A reduced role for the Federal Government means an enhanced role for State and local governments. A wide range of Federal activities can be more appropriately and efficiently carried out by the States. I am proposing in my Budget Message a major shift in this direction. This shift will eliminate the "freight charge" imposed by the Federal Government on the taxpayers' money when it is sent to Washington and then doled out again. It will permit a substantial reduction in Federal employment involved in administering these programs. Transfers of programs will permit public sector activities to be more closely tailored to the needs and desires of the electorate, bringing taxing and spending decisions closer to the people. Furthermore, as a result of last year's Economic Recovery Tax Act, Federal taxation as a share of national income will be substantially reduced, providing States and localities with an expanded tax base so that they can finance those transferred programs they wish to continue. That tax base will be further increased later in this decade, as Federal excise taxes are phased out. These initiatives follow some common sense approaches to making government more efficient and responsive: • We should leave to private initiative all the functions that individuals can perform privately. • We should use the level of government closest to the community involved for all the public functions it can handle. This principle includes encouraging intergovernmental arrangements among the State and local communities. • Federal Government action should be reserved for those needed functions that only the national government can undertake. The accompanying report from my Council of Economic Advisers develops the basis for these guidelines more fully. To carry out these policies for the 1980s, my Administration has put into place a series of fundamental and far-reaching changes in Federal Government spending, taxing, and regulatory policy, and we have made clear our support for a monetary policy that will steadily bring down inflation. Slowing the Growth of Government Spending Last February I promised to bring a halt to the rapid growth of Federal spending. To that end, I made budget control the cutting edge of my program for economic recovery. Thanks to the cooperation of the Congress and the American people, we have taken a major step forward in accomplishing this objective, although much more remains to be done. The Congress approved rescissions in the fiscal 1981 budget of $12.1 billion, by far the largest amount ever cut from the budget through this procedure. Spending for fiscal 1982 was subsequently reduced . by another $35 billion. The Omnibus Budget Reconciliation Act of 1981 also cut $95 billion from the next 2 fiscal years, measured against previous spending trends. Many of these cuts in so-called "uncontrollable" programs were carried out by substantive changes in authorizing legislation, demonstrating that we can bring government spending under control—if only we have the will. These spending cuts have been made without damaging the programs that many of our truly needy Americans depend upon. Indeed, my program will continue to increase the funds, before and after allowing for inflation, that such programs receive in the future. In this undertaking to bring spending under control, I have made a conscious effort to ensure that the Federal Government fully discharges its duty to provide all Americans with the needed services and protections that only a national government can provide. Chief among these is a strong national defense, a vital function which had been allowed to deteriorate dangerously in previous years. As a result of my program, Federal Government spending growth has been cut drastically—from nearly 14 percent annually in the 3 fiscal years ending last September to an estimated 7 percent over the next 3 years—at the same time that we are rebuilding our national defense capabilities. We must redouble our efforts to control the growth in spending. We face high, continuing, and troublesome deficits. Although these deficits are undesirably high, they will not jeopardize the economic recovery. We must understand the reasons behind the deficits now facing us: recession, lower inflation, and higher interest rates than anticipated. Although my original timetable for a balanced budget is no longer achievable, the factors which have postponed it do not mean we are abandoning the goal of living within our means. The appropriate ways to reducing the deficit will be working in our favor in 1982 and beyond: economic growth, lower interest rates, and spending control. Reducing Tax Burdens We often hear it said that we work the first few months of the year for the government and then we start to work for ourselves. But that is backwards. In fact, the first part of the year we work for ourselves. We begin working for the government only when our income reaches taxable levels. After that, the more we earn, the more we work for the government, until rising tax rates on each dollar of extra income discourage many people from further work effort or from further saving and investment. As a result of passage of the historic Economic Recovery Tax Act of 1981, we have set in place a fundamental reorientation of our tax laws. Rather than using the tax system to redistribute existing income, we have significantly restructured it to encourage people to work, save, and invest more. Across-the-board cuts in individual income tax rates phased-in over 3 years and the indexing of tax brackets in subsequent years will help put an end to making inflation profitable for the Federal Government. The reduction in marginal rates for all taxpayers, making Individual Retirement Accounts available to all workers, cutting the top tax bracket from 70 percent to 50 percent, and reduction of the "marriage penalty" will have a powerful impact on the incentives for all Americans to work, save, and invest. These changes are moving us away from a tax system which has encouraged individuals to borrow and spend to one in which saving and investment will be more fully rewarded. To spur further business investment and productivity growth, the new tax law provides faster write-offs for capital investment and a restructured investment tax credit. Research and development expenditures are encouraged with a new tax credit. Small business tax rates have been reduced. Regulatory Reform My commitment to regulatory reform was made clear in one of my very first acts in office, when I accelerated the decontrol of crude oil prices and eliminated the cumbersome crude oil entitlements system. Only skeptics of the free market system are surprised by the results. For the first time in 10 years, crude oil production in the continental United States has begun to rise. Prices and availability are now determined by the forces of the market, not dictated by Washington. And, helped by world supply and demand developments, oil and gasoline prices have been falling, rather than rising. I have established, by Executive order, a process whereby all executive agency regulatory activity is subject to close and sensitive monitoring by the Executive Office of the President. During the first year of my Administration, 2,893 regulations have been subjected to Executive Office review. The number of pages in the Federal Register, the daily publication that contains a record of the Federal Government's official regulatory actions, has fallen by over one-quarter after increasing steadily for a decade. But the full impact of this program cannot be found in easy-tomeasure actions by the Federal Government. It is taking place outside of Washington, in large and small businesses, in State and local governments, and in our schools and hospitals where the full benefits of regulatory reform are being felt. The redirection of work and effort away from trying to cope with or anticipate Federal regulation toward more productive pursuits is how regulatory reform will make its greatest impact in raising productivity and reducing costs. Controlling Money Growth Monetary policy is carried out by the independent Federal Reserve System. I have made clear my support for a policy of gradual and less volatile reduction in the growth of the money supply. Such a policy will ensure that inflationary pressures will continue to decline without impairing the operation of our financial markets as they mobilize savings and direct them to their most productive uses. It will also ensure that high interest rates, with their large inflation premiums, will no longer pose a threat to the well-being of our housing and motor vehicle industries, to small business and farmers, and to all who rely upon the use of credit in their daily activities. In addition, reduced monetary volatility will strengthen confidence in monetary policy and help lower interest rates. The International Aspects of the Program The poor performance of the American economy over the past decade and more has had its impact on our position in the world economy. Concern about the dollar was evidenced by a prolonged period of decline in its value on foreign exchange markets. A decline in our competitiveness in many world markets reflected, in part, problems of productivity at home. A strengthened domestic economy will mean a faster growing market for our trading partners and greater competitiveness for American exports abroad. At the same time it will mean that the dollar should increase in its attractiveness as the primary international trading currency, and thus provide more stability to world trade and finance. I see an expansion of the international trading system as the chief instrument for economic growth in many of the less developed countries as well as an important factor in our own future and that of the world's other major industrial nations. To this end, I reaffirm my Administration's commitment to free trade. International cooperation is particularly vital, however, in confronting the challenge of increased protectionism both at home and abroad. My Administration will work closely with other nations toward reducing trade barriers on an even-handed basis. I am sensitive to the fact that American domestic economic policies can have significant impacts on our trading partners and on the entire system of world trade and finance. But it is important for all concerned that the United States pursue economic policies that focus on our long-run problems, and lead to sustained and vigorous growth at home. In this way the United States will continue to be a constructive force in the world economy. 1981: Building for the Future In 1981 not only were the far-reaching policies needed for the remainder of the 1980s developed and put into place, their first positive results also began to be felt. The most significant result was the contribution these policies made to a substantial reduction in inflation, bringing badly needed relief from inflationary pressures to every American. For example, in 1980 the consumer price index rose 13.5 percent for the year as a whole; in 1981 that rate of increase was reduced substantially, to 10.4 percent. This moderation in the rate of price increases meant that inflation, "the cruelest tax/' was taking less away from individual savings and taking less out of every working American's paycheck. There are other, more indirect but equally important benefits that flow from a reduction in inflation. The historically high level of interest rates of recent years was a direct reflection of high rates of actual and expected inflation. As the events of this past year suggested, only a reduction in inflationary pressures will lead to substantial, lasting reductions in interest rates. In the 6 months preceding this Administration's taking office, interest rates had risen rapidly, reflecting excessively fast monetary growth. Since late last summer, however, short- and long-term interest rates have, on average, moved down somewhat in response to anti-inflationary economic policies. Unfortunately, the high and volatile money growth of the past, and the high inflation and high interest rates which accompanied it, were instrumental in bringing about the poor and highly uneven economic performance of 1980 and 1981, culminating in a sharp fall in output and a rise in unemployment in the latter months of 1981. This Administration views the current recession with concern. I am convinced that our policies, now that they are in place, are the appropriate response to our current difficulties and will provide the basis for a vigorous economic recovery this year. It is of the greatest importance that we avoid a return to the stop-and-go policies of the past. The private sector works best when the Federal Government 9 intervenes least. The Federal Government's task is to construct a sound, stable, long-term framework in which the private sector is the key engine to growth, employment, and rising living standards. The policies of the past have failed. They failed because they did not provide the environment in which American energy, entrepreneurship, and talent can best be put to work. Instead of being a successful promoter of economic growth and individual freedom, government became the enemy of growth and an intruder on individual initiative and freedom. My program—a careful combination of reducing incentive-stifling taxes, slowing the growth of Federal spending and regulations, and a gradually slowing expansion of the money supply—seeks to create a new environment in which the strengths of America can be put to work for the benefit of us all. That environment will be an America in which honest work is no longer discouraged by ever-rising prices and tax rates, a country that looks forward to the future not with uncertainty but with the confidence that infused our forefathers. (\ x &^*&d^ \ CJL^KJXK^ February 10, 1982 10 THE ANNUAL REPORT OF THE COUNCIL OF ECONOMIC ADVISERS LETTER OF TRANSMITTAL COUNCIL OF ECONOMIC ADVISERS, Washington, D.C., February 6, 1982. MR. PRESIDENT: The Council of Economic Advisers herewith submits its 1982 Annual Report in accordance with the provisions of the Employment Act of 1946 as amended by the Full Employment and Balanced Growth Act of 1978. Sincerely, Murray L. Weidenbaum CHAIRMAN William A. Niskanen 13 358-691 0 - 82 - 2 : QL3 CONTENTS Page CHAPTER 1. ECONOMIC POLICY FOR THE 1980s The Legacy of "Stagflation" The President's Program for Economic Recovery A Summary of Economic Conditions Prospects for Recovery Organization of this Report CHAPTER 2, GOVERNMENT AND THE ECONOMY The LimitecJ Case for Government Intervention Externalities Monopoly Public Goods Income Redistribution ,.'. Macroeconomic Stability The Division of Roles in a Federal System Limits on the Exercise of the Federal Role The Political Process Supply by Government Agencies Diversity of Conditions and Preferences Limits on Information Time Horizon Principles Guiding the President's Economic Program Emphasis on Personal Responsibility Reform of Regulation Federalism Long-Run Focus Increased Reliance on the Market Emphasis on the General Welfare CHAPTER 3. MONETARY POLICY, INFLATION, AND EMPLOYMENT The Legacies , The Legacy of Economic Stabilization Policy The Legacy of "Stagflation" The Business Cycle and Rising Inflation Legacy The Nature of the Inflation Process The Costs of Inflation The Costs of Reducing Inflation Money and Monetary Policy 15 21 21 23 23 25 26 27 29 30 31 33 33 35 36 37 37 39 40 41 41 42 42 43 44 44 44 45 47 48 48 50 52 54 56 58 61 Page Money Creation and Federal Finance Money Versus Credit Monetary Policy Objectives and Strategy Institutionalization of a Noninflationary Monetary Policy.... Gold Standard A Monetary Rule The Future Challenge CHAPTER 4. FEDERAL BUDGET ISSUES The Overall Level of Federal Spending Reallocation of Budget Priorities Defense Social Security Strengthening the Federal System Federal Credit Activity Federal Deficits in Perspective Why Deficits Matter Measuring the Deficit An Analysis of Deficits and Debt Financing The Deficit and Politics of the Budget Appendix to Chapter 4: A Broader Perspective on the Federal Debt CHAPTER 5. TAX POLICY AND ECONOMIC GROWTH Economic Growth; Past Performance and Future Potential. Measuring Growth Economic Growth—The Historical Record Explaining the Productivity Slowdown Prospects for Growth in the 1980s Increasing Factor Supply The Economic Effects of Tax Policy The Structure of the Tax System The Personal Income Tax Taxation of Income from Business Investment Tax Treatment of Depreciable Property Leasing Provisions Effects of Tax Act on Housing and Consumer Durables Implicit Taxation of Labor Supply by the Social Security and Welfare Systems Monetary Policy as a Fiscal Instrument Structural Tax Policy and Economic Growth CHAFFER 6. REFORMING GOVERNMENT REGULATION OF ECONOMIC ACTIVITY The Growth of Federal Regulation Reasons for Regulation An Overview of Regulation 16 61 62 63 68 69 74 75 78 80 83 85 88 90 92 95 95 96 97 101 102 109 Ill Ill 112 114 115 115 117 118 119 122 122 125 126 127 129 182 134 134 135 137 Page Benefit-Cost Analysis of Government Regulation Quantification The Evolution of Regulatory Review The Clean Air Act and Economic Analysis Long-Range Transport Ambient Air Standards Technology-Based Stationary Source Standards Mobile Source Standards Hazardous Emissions Standards The Control of Health Care Costs: A Contrast of Approaches The Industry v Proposals for Reform Regulatory Reform in the Agencies Financial Institutions Agriculture Energy Transportation Telecommunications Antitrust Guidelines for Regulatory Reform CHAPTER 7. THE UNITED STATES IN THE INTERNATIONAL ECONOMIC SYSTEM International Financial Markets The Dollar in the International Setting Exchange-Rate Movements Official Intervention in the Exchange Markets Implications for U.S. Monetary Policy Trade Issues and Policies 147 147 150 150 150 153 156 161 163 164 165 167 168 168 169 172 173 174 Trade in the U.S. Economy The Stance of U.S. Trade Policy Changing Attitudes Toward International Trade The Significance of External Imbalances Development, Adjustment, and International Institutions... The Heritage and the Challenges Meeting the Challenges Evolving Role of International Institutions Appendix to Chapter 7: U.S. Policies on Exchange-Rate Intervention Since 1973.... CHAPTER 8. REVIEW AND OUTLOOK Overview of 1981 Major Sectors of Aggregate Demand Personal Consumption Expenditures Residential Investment 137 139 140 143 143 144 144 145 146 17 174 176 177 179 181 181 183 184 189 192 192 196 197 198 Page Business Fixed Investment Inventory Accumulation Net Export The Farm Economy Labor Market Developments Wages, Prices, and Productivity Credit Markets.... Interest Rates and Monetary Developments International Capital Flows Thrift Institutions 1 Prospects for 1982 and 1983 Prospects Beyond 1983 APPENDIXES A. Report to the President on the Activities of the Council of Economic Advisers During 1981 B. Statistical Tables Relating to Income, Employment and Production 198 199 199 199 201 203 205 206 208 209 209 213 217 227 List of Tables and Charts Tables 1-1, Major Economic Conditions and the Federal Role, 196080 3-1. Wholesale Price Indexes, 1814-1913 3-2. Comparison of the Behavior of Price Level, Real Output, and Money Growth in the United Kingdom and the United States, Selected Periods, 1821-1979 3-3. Changes in Gold Output and the Price Level, 1800-1980. 4-1. Structure of Federal Government Expenditures, NIPA, Calendar Years, 1951-83 4-2. Composition of Federal Unified Budget Outlays, Selected Fiscal Years, 1960-87 4-3. Federal and Federally Assisted Credit Programs, Fiscal Years 1970-81 4-4. Total Federal Budget and Off-Budget Surplus or Deficit and Gross National Product, Fiscal Years 1958-87 4-5. Illustrative Measures of Federal Government's Net Liabilities, 1950-80 4-6. Comparisons of Total Measured Federal Government's Indebtedness, Unfunded Social Security Retirement Liabilities, and Household Wealth, 1950-77 5-1. Average Annual Growth Rates of Real GNP, Total Factor Productivity, and Factor Inputs, 1959-79 5-2. Average Annual Consumption and Saving Rates, 195180 18 22 71 71 72 82 83 94 98 104 107 113 116 List of Tables and Charts—Continued Tables Page 5-3. Comparison of Marginal Personal Income Tax Rates by Real Income Level Under the Economic Recovery Tax Act of 1981 and Old Law, 1979-86 119 5-4. Marginal Personal Income Tax Rates for Four-Person Families, Selected Years, 1965-84 120 5-5. Real Before-Tax Rate of Return Required to Provide a 4 Percent Real After-Tax Return, 1955-86 123 5-6. Real Before-Tax Rate of Return Required to Provide a 4 Percent After-Tax Return in 1986 at Selected Rates of Inflation 124 5-7. Effective Tax Rates on New Depreciable Assets, Selected Industries, 1982 l 124 5-8. Sources of Changes in Federal Government's Real Net Financial Liabilities, 1966-80 131 6-1. Regulatory Outlays of Federal Agencies, Fiscal Years 1974-81 136 6-2. Domestic Crude Oil Production and Drilling Activity, 1973-81 157 6-3. Domestic Crude Oil Production, 1980-81 157 6-4. Imports of Crude Oil and Refined Products, 1980-81 158 7-1. U.S. Merchandise Exports, Imports, and Balance, 197781 175 7-2. U.S. International Transactions, 1977-81 180 7-3. Real GNP Growth Rates, 1950 to 1980 182 8-1. Performance in 1981 Compared to January 15 Projections 195 8-2. Growth in Major Components of Real Gross National Product, 1977-81 196 8-3. Labor Market Developments, 1977-81 201 8-4. Measures of Compensation, 1978-81 203 8-5. Changes in Productivity and Unit Labor Costs, 1977-81 .. 204 8-6. Measures of Price Change, 1977-81 204 8-7. Alternative Measures of Changes in Real Earnings Per Hour, 1979-81 205 8-8. Economic Outlook for 1982 210 8-9. Economic Projections, 1982-87 214 Charts 3-1. 3-2. 3-3. 3-4. 4-1. 6-1. Inflation and Unemployment Rate The Inflation Ratchet (CPI) Money and GNP Growth Jevons-Sauerbeck Index of Wholesale Commodity Prices . Defense Outlays as Percent of GNP Growth of Federal Regulatory Agencies 19 51 54 64 70 85 135 List of Tables and Charts—Continued Charts Page 7-1. Nominal and Real Effective Foreign Exchange Value of the Dollar 7-2. U.S. External Terms of Trade 8-1. Growth Rates of Money Stock, Real GNP, and GNP Deflator 8-2. Employment Ratio and Unemployment Rate 8-3. Interest Rates in 1981 20 170 171 193 203 207 CHAPTER 1 Economic Policy for the 1980s THE YEAR JUST ENDED was an especially significant one for the economy and for economic policymaking. When future Reports are written, we hope that 1981 will be described as the watershed year in which the more than decade-old rising trend of inflation was finally arrested. This development should contribute to more rapidly rising standards of living, more productive patterns of investment and saving, and a strengthened U.S. position in the world economy. At the same time that inflation was moderating, a far-reaching set of economic policies was being developed to provide a framework for growth and stability in the years ahead, reversing more than a decade of declining productivity growth and wide swings in economic activityThe speed with which the economy adjusts to the Administration's policies will be largely determined by the extent to which individuals, at home and at work, believe the Administration will maintain, unchanged, its basic approach to personal and business taxation, Federal spending and regulation, and monetary policy. When public expectations fully adjust to this commitment, a necessary condition for both reduced inflation and higher growth will be fully established. In short, as this Report attempts to demonstrate, what some people have referred to as "monetarism" and "supply-side economics" should be seen as two sides of the same coin—compatible and necessary measures to both reduce inflation and increase economic growth. THE LEGACY OF "STAGFLATION" Over the last 15 years the U.S. economy has experienced progres-; sively higher rates of inflation and unemployment, a combination of conditions commonly called "stagflation." This development was associated with a substantial increase in the Federal Government's role in the economy. Federal spending and tax revenues absorbed an increasing share of national output, Federal regulations were extended to a much broader scope of economic activity, and the rate of money growth increased substantially. Table 1-1 contrasts economic conditions during the 1960-65 period (the last business cycle prior to the 21 Vietnam war), the 1974-79 period (the most recent extended business cycle), and 1980. TABLE 1-1.—Major economic conditions and the Federal role, 1960-80 [Percent; annual average, except as noted] Item 1960-1965 1974-1979 1980 Economic conditions: Productivity increase 26 07 Unemployment rate 5.5 68 7.1 Inflation 1.6 75 90 Interest rate 44 87 119 -02 The Federal role: Spending shar^ of GNP 18.8 217 22.9 Revenue share of GNP 18.6 197 206 Regulation increase 76 139 123 Money supply increase 3.0 6.6 7.3 Note. For this table, the following are used: Productivity—Output per hour, private nonfarm business, all employees. Unemployment rate—unemployment as percent of civilian labor force, persons 16 years of age and over. Inflation—Change in implicit price deflator for gross national product (GNP). Interest rate—Corporate Aaa bond yield. Spending share—Federal expenditures, national income and product accounts (NiPA), as percent of GNP. Tax share—Federal receipts (NIPA) as percent of GNP. ' Regulation—Number of pages in the Federal Register. Money supply—Ml (fourth quarter to fourth quarter). Sources: Department of Commerce (Bureau of Economic Analysis), Department of Labor (Bureau of Labor Statistics), Board of Governors of the Federal Reserve System, Office of the Federal Register, and Moody's Investors Service. As this table illustrates, economic conditions worsened between the early 1960s and the late 1970s, and deteriorated sharply during the recession year 1980, Part of the decline in U.S, economic performance was clearly attributable to developments not affected by Federal economic policy, such as the oil price increases of the 1970s. Such developments, however, explain only a small part of the decline in overall U.S. economic performance. A full explanation of stagflation in the United States and other countries has yet to be developed. An important lesson of this period, however, is that there is no long-term tradeoff between unemployment and inflation. The increasing role of the Federal Government in the economy—whether that role was to aid the poor and aged, to protect consumers and the environment, or to stabilize the economy—contributed to our declining economic performance. Most of the increase in Federal spending over the past 15 years has been in the form of transfer payments, which tend to reduce employment of the poor and of older workers. A combination of increases in some tax rates and inflation raised marginal tax rates on real wages and capital income. The rapid growth in regulatory activity—however measured—has significantly increased production costs. The Federal Government bears the most direct responsibility for the increases in 22 inflation and interest rates, which were due to excessive expansion of the money supply. In short, Federal economic policies bear the major responsibility for the legacy of stagflation. THE PRESIDENT'S PROGRAM FOR ECONOMIC RECOVERY For the economy, the most important event of 1981 was the dramatic change in Federal policy. On February 18 the President announced a long-term program designed to increase economic growth and to reduce inflation. The key elements of the proposed program were: • cutting the rate of growth in Federal spending; • reducing personal income tax rates and creating jobs by accelerating depreciation for business investment in plant and equipment; • instituting a far-reaching program of regulatory relief; and • in cooperation with the Federal Reserve, making a new commitment to a monetary policy that will restore a stable currency and healthy financial markets. Over the year, with the support of the Congress and the Federal Reserve System, most of this program was approved and implemented. The Federal Government's budget underwent its most significant reorientation since the mid-1960s. The rate of increase in total Federal outlays declined from 17.5 percent in fiscal 1980 to 14.0 percent in fiscal 1981 and to an anticipated 10.4 percent in fiscal 1982. The composition of Federal spending was also substantially changed. Real defense spending was accelerated, real spending for the major transfer programs for the poor and aged was maintained, and most of the spending reductions were made in other domestic programs. The Congress approved the major features of the President's tax proposal while adding a number of other provisions. The long-term increase in Federal regulation was significantly slowed, as suggested by a 27 percent decline in the number of pages in the Federal Register, and the Federal Reserve reduced the rate of money growth to 4.9 percent during 1981. As finally implemented, the change in Federal economic policies was more substantial than during any recent Administration. The new policies comprise an innovative approach to reducing the rate of inflation while providing incentives to achieve sustained and vigorous economic growth. While such a development would be somewhat unusual in light of historical experience, we believe that a consistent policy of monetary restraint, combined with the Administration's spending and tax policies, and reinforced by 23 continuing regulatory relief, will provide the policy framework for both reduced inflation and increased economic growth, A SUMMARY OF ECONOMIC CONDITIONS General economic conditions during 1981 reflected the transitory effects of the necessary changes in Federal economic policies. The major elements of the Administration's economic policy are designed to increase long-term economic growth and to reduce inflation. Uniformly favorable near-term effects were not expected. The primary redirection of economic policy that affected economic conditions during the year was the reduction in the growth of the money supply relative to the record high rate of growth in late 1980. This monetary restraint reduced inflation and short-term interest rates but also influenced the decline in economic activity in late 1981. Beginning in late 1979, substantial variability in money growth rates was associated with unusually large swings in interest rates. By the end of 1980, as a result of an unprecedented degree of monetary stimulus, interest rates had risen to new peaks. In December 1980 the Federal funds rate reached more than 20 percent, the prime rate was 21V2 percent, and 3-month Treasury bills had doubled in yield from their midyear lows. Long-term interest rates had risen by as much as 3 full percentage points from their midyear lows. The rise in interest rates that began in late 1979 gradually produced an ever-widening circle of weakness centering on the most interest-sensitive industries, notably homebuilding and motor vehicles. Falling demand for housing and autos gradually affected an increasing number of other sectors, ranging from forest products to steel and rubber to appliances and home furnishings. The high interest rates also contributed to a squeeze on farm incomes—already under pressure from weaker farm prices—and weakness in industries and services closely tied to the farm sector. Excessive monetary expansion in the latter half of 1980 helped to drive interest rates to record highs. Rates were kept at those levels for the next 6 months or so by a variety of factors, including the transitory impact of the shift to monetary restraint. Rates then fell because of the monetary restraint that characterized Federal Reserve policy during most of 1981. The high interest rates were an important factor in precipitating the downturn in the final quarter of 1981, when real output fell at an annual rate of 5.2 percent. In short, the conflict between continued expectations of rising inflation, based on the history of the last 15 years, and the more recent monetary restraint explains many recent problems. Continued mone- 24 tary restraint and a reduction of the within-year variability of money growth, however, are necessary both to reduce inflation and provide the basis for sustained economic growth. PROSPECTS FOR RECOVERY The series of tax cuts enacted in 1981 provides the foundation for increased employment, spending, saving, and business investment. Inflation and short-term interest rates are now substantially lower than they were at the beginning of 1981. At the time this Report was prepared, it appeared that the recession which started in August—as determined by the National Bureau of Economic Research—will be over by the second quarter of 1982. This would make it about average in length for a post-World War II downturn. Output and employment are expected to increase slightly in the second quarter and at a brisk pace through the rest of the year, when growth in output is expected to be in excess of a 5 percent annual rate. Inflation is likely to continue to decline and to average about 7 percent for the year, with further reductions in 1983 and beyond. The outlook for 1983 and subsequent years is based on continuation of the Administration's spending, tax, and regulatory policies, continued monetary restraint, and broader public recognition that the Administration is committed to each of these key elements of its program. Prospective budget deficits are a consequence of the difference in the timing of the spending and tax policy actions, and of the impact on nominal gross national product growth of continued monetary restraint. Although the prospective deficits are undesirably high, they are not expected to jeopardize the economic recovery program. Concerns have been expressed that the Federal Reserve's targets for money growth are not compatible with the vigorous upturn in economic activity envisioned later in 1982. Any such upturn, it is feared, will lead to a renewed upswing in interest rates and thus choke off recovery. We believe that such fears, while understandable on the basis of recent history and policies, are unjustified in light of current policies and the Administration's determination to carry them through. Interest rates, after more than a decade of rising inflation, contain sizable premiums to compensate lenders for the anticipated loss in value of future repayments of principal. It is our estimate, however, that such premiums will decline over the course of 1982 and beyond. Such a decline would occur while "real" (inflation-adjusted) interest rates remain high as a result of private and public sector credit demands even as private saving flows increase. In other words, the 25 market rate of interest is likely to continue on a downward trend, even though short-run fluctuations around the trend can be expected. A critical element in this outlook is the assumption that inflationary expectations will, in fact, continue to recede. If they recede at a relatively fast rate, market rates of interest will decline significantly, wage demands will continue to moderate, and the pro-inflationary biases that have developed throughout the economy over the past decade will quickly disappear. Thus, the greater the degree of cooperation between the Administration, the Congress, and the Federal Reserve in continuing to support a consistent, credible anti-inflation policy, as embodied in the Administration's program, the more rapidly will real growth and employment increase. ORGANIZATION OF THIS REPORT This Report presents the economic basis for the key elements of the President's economic program. Chapter 2 develops a general framework for the economic role of the Federal Government consistent with the principles of the President's program. Chapter 3 develops a framework for a stable, noninflationary monetary policy. Chapters 4 and 5 analyze the major effects of Administration policies on Federal spending, taxes, and deficits. Chapter 6 summarizes the major features of the program for regulatory reform, while Chapter 7 summarizes the international implications of the Administration's economic policies for monetary conditions, trade, and international organizations. Finally, Chapter 8 reviews economic conditions in 1981 and the outlook for the near future in somewhat more detail than in this opening chapter. We hope that this Report will help both the public and our fellow economists to understand the basis, the importance, and the effects of the dramatic changes in Federal economic policy initiated by the President in 1981. 26 CHAPTER 2 Government and the Economy POLITICAL FREEDOM AND ECONOMIC FREEDOM are closely related. Any comparison among contemporary nations or examination of the historical record demonstrates two important relationships between the nature of the political system and the nature of the economic system: • All nations which have broad-based representative government and civil liberties have most of their economic activity organized by the market. • Economic conditions in market economies are generally superior to those in nations (with a comparable culture and a comparable resource base) in which the government has the dominant economic role. The evidence is striking. No nation in which the government has the dominant economic role (as measured by the proportion of gross national product originating in the government sector) has maintained broad political freedom; economic conditions in such countries are generally inferior to those in comparable nations with a predominantly market economy. Voluntary migration, sometimes at high personal cost, is uniformly to nations with both more political freedom and more economic freedom. The reasons for these two relationships between political and economic systems are simple but not widely understood. Everyone would prefer higher prices for goods sold and lower prices for goods bought. Since the farmer's wheat is the consumer's bread, however, both parties cannot achieve all they want. The most fundamental difference among economic systems is how these conflicting preferences are resolved. A market system resolves these conflicts by allowing the seller to get the highest price at which others will buy and the buyer to get the lowest price at which others will sell, by consensual exchanges that are expected to benefit both parties. Any attempt by one party to improve his outcome relative to the market outcome requires a coercive activity at the expense of some other party. The politiciza- 27 tion of price decisions—whether of wages, commodities, or interest rates—tends to reduce both the breadth of popular support for the government and the efficiency of the economy. A rich nation can tolerate a good bit of such mischief, but not an unlimited amount. One should not be surprised that all nations in which the government has dominant control of the economy are run by a narrow oligarchy and in most economic conditions are relatively poor. In the absence of limits on the economic role of government, the erosion of economic freedom destroys both political freedom and economic performance. Only a few dozen nations now guarantee their citizens both political and economic freedom. The economic role of government in these nations differs widely, without serious jeopardy to political freedom. Within the range of experience of the United States and the other free nations, the relation between the political system and the government's economic role is more subtle. Expansion of the economic role of the government tends to reduce both the level of agreement on government policies and the inclination to engage in political dissent. The link between political and economic freedom is important. Increasing economic freedom will also provide greater assurance of our political freedom. A major objective of this Administration's economic program is to reduce the Federal Government's role in economic decisionmaking while strengthening the economic role of individuals, private organizations, and State and local governments. This shift will entail substantial reductions in the size and number of Federal spending programs, significant reductions in both personal and business Federal tax rates, major reforms of Federal regulatory activities, and a reduced rate of money growth. While an important element in this redefinition of the Federal Government's economic role is a political judgment about the appropriate relationship among individuals, the States, and the Federal Government, this redefinition also is supported by an extensive body of economic analysis. This chapter discusses the extent to which government intervention in economic matters is appropriate, why concern over "too much government" appears to have emerged so strongly in recent decades, and why the Administration's program is an appropriate response. In probing the role of government in the economy, economists usually start by analyzing the effects of a competitive economy on economic efficiency. In a rough sense, economic efficiency refers to the ability of an economy to satisfy each person as much as possible, consistent with the preferences of others. For such a competitive economy to be completely efficient, however, certain assumptions 28 would have to be satisfied that are never fully satisfied in the real world. Therefore, it is often argued that government intervention is justified in order to correct the inefficiencies which occur when the desired conditions are not achieved. However, failure to satisfy certain assumptions is not sufficient to justify government intervention. To show that a perfectly functioning government can correct some problem in a free economy is not enough, for government itself does not function perfectly. Moreover, many current interventions cannot be explained easily by arguments based on the alleged failure of the operation of free markets. Many current interventions, in other words, cannot be justified by any efficiency criterion. The following section of this chapter discusses situations in which some types of government intervention in the economy may be justified, The section on The Division of Roles in a Federal System discusses the considerations involved in determining the appropriate level of government at which such intervention should take place. The section on Limits on the Exercise of the Federal Role discusses the political process and argues that government intervention will not always be consistent with the principles developed in the prior sections; that is, this section focuses on the possibility of "government failure" in intervening in the economy. The last section, Principles Guiding the President's Economic Program, discusses the Administration's economic program in light of the preceding analysis. THE LIMITED CASE FOR GOVERNMENT INTERVENTION Under certain assumptions discussed below, a competitive economy can be shown to lead to general economic efficiency. In standard economics, an economy is said to be "efficient" if it is impossible to make anyone better off without making someone else worse off. That is, there is no possible rearrangement of resources, in either production or consumption, which could improve anyone's position without simultaneously harming some other person. If there is a possibility of such a rearrangement occurring, then this means that, someone could be made better off without harming anyone else. If such a possibility does exist, then the economy is not efficient. Each person in such an economy is considered to be concerned primarily with his or her own welfare. Since there is no central authority directing the course of this economy, whatever results occur are the unintended consequences of millions of individual actions. Nonetheless, the outcome of this undirected but self-interested behavior is efficient in the sense mentioned above. Despite the absence of any central direction, it can be shown that an economic order is 29 generated which has the desirable characteristic of being economically efficient. Moreover, an efficient economic system is responsive to individual wants; that is, efficiency is defined in terms of each person achieving his or her own goals. Such a system relies on the ability of people to trade freely with each other, for a bargain entered into voluntarily by two individuals is expected by both of them to make both of them better off. Two conditions must be fulfilled for such trades to occur. First, individuals must have the right to enter freely into whatever bargains they wish; that is, there must be freedom of contract. Second, property rights must be well defined in all cases except those where the cost of enforcing the right would be greater than the value of the right. Certain additional characteristics must be present if the economy is to be efficient. The most important of these characteristics are: the absence of externalities, the absence of significant monopolies, and the appropriate provision of public goods. Though such an economy is efficient, "efficiency" says nothing about the distribution of income which results from the process. By some criteria the market-generated distribution of income in an efficient economy may be unacceptable. Thus, government intervention may be justified to correct market failures or to change the resulting distribution of income. It is also possible that an efficient economy may be less stable than is generally considered desirable. EXTERNALITIES An externality is said to exist where an economic agent (be it producer or consumer) either does not bear the full marginal costs of an economic action or does not gain its full marginal benefits. Therefore, these agents may not undertake the activity at its optimal economic level. If there are external costs, the agent may undertake too high a level of the activity. If there are external benefits, the agent may not undertake enough of the activity. An example of an activity with external benefits is education. Because some of the benefits of living in a nation of people with a common language and culture are external, individuals considering only their own benefit from education will most likely buy too little. The standard example of an activity that imposes external costs is manufacturing that results in pollution. Consider a factory which pollutes the air. Those who live near the factory will suffer the costs of the pollution, but the factory owner will probably not consider these costs in deciding how much to produce. Since the factory owner does not bear these costs, the product made in the factory will be underpriced in relation to its true economic cost. Hence, too much of the good, and too much pollution, will probably be produced. Govern- 30 ment intervention may therefore be justified where either marginal costs or benefits are external. Private transactions between parties may sometimes be adequate to solve externality problems, but this requires that transaction costs be low. This requirement will not in general be satisfied when many parties are involved. Since externality problems occur because decisionmakers either do not pay all the costs of their actions or do not reap all of the benefits, the most efficient way to correct the problem is to change the marginal costs and benefits. With respect to education the conventional solution has been to establish systems of public education paid for by taxes and offered below cost to students. This solution itself creates problems, since the creation of a tax-subsidized producer of education may lead to the producer having a monopoly over education. But monopoly is inefficient, whether it is public or private. An alternative would be to grant a "voucher," with the amount of this voucher equal to the difference between private benefit (the benefit to the student) and total benefit (the benefit which accrues to other members of society as well as to the student). This would avoid the problem of monopoly and might generate pressures for more efficient schools. To deal with the external costs of pollution, the conventional solution has been regulation of pollution control technology by government agencies. Since this form of regulation often does not take account of differences in abatement costs for different polluters, it is often inefficient in that the public pays more than is necessary for a given amount of pollution reduction (or a smaller reduction in pollution is achieved for a given expenditure than would be possible with a more efficient scheme). Two ways of reducing pollution more efficiently have been identified. One is to charge those who pollute a fee based on the cost imposed on others by the pollution. This method has been used in West German waterways and has been quite effective. Another alternative is for the government to create property rights in air or water. These rights would then be purchased by those who valued them most—that is, by those who would pay the highest cost to reduce their pollution. These two methods, if implemented correctly, would probably lead to the same outcome. MONOPOLY One of the conditions of market efficiency is that there must be enough buyers and sellers of a good so that each of them has little influence on its price. This condition is not always satisfied, however. Sometimes technical and cost conditions in an industry are such that 31 there will be room for only one or a few firms. Two approaches have been taken in the United States to this problem. In cases of natural monopoly, direct government regulation or ownership is common. In industries where only a few firms exist, the antitrust laws are more commonly used to avoid the costs of monopoly. Most of the natural monopolies arise from the need to provide public utility services, such as electricity and water. Regulation of most of these natural monopolies occurs primarily at the State and local level and is not covered in this Report, but there are some monopolies regulated at the Federal level. In some cases of natural monopoly, however, newer technology may so change technical and cost considerations that additional firms would enter the market if permitted to do so by regulatory authorities. In an industry with few firms it may be possible for the firms to act in collusion and thus behave as a monopoly. When this occurs, the profits of the firms are increased, but efficiency losses are imposed on the economy. Even though such collusions are unstable, losses of efficiency occur during their existence. The antitrust laws make such behavior illegal. The effects of mergers on economic efficiency are more difficult to discern than the effects of illegal monopoly. Two firms in the same industry may merge for any of at least three reasons. First, a merger may be an attempt to obtain monopoly power. When this occurs the merger will be inefficient and should be stopped. But, firms may also decide to merge to take advantage of economies of scale or because one is better managed and can therefore increase efficiency in resource use. In these latter two cases a merger is likely to improve efficiency and should be allowed. The difficulty, of course, is that it is not always obvious whether monopoly or an increase in efficiency will be the dominant effect of any given merger. Though there are difficult cases, this Administration has already made some changes in policy in the administration of Federal aridtrust laws, changes based on economic analysis. First, a merger between two firms which have a relatively small share of the market should be allowed, for there is little danger of monopoly. Second, no significant economic problems are likely to arise from a merger of firms in unrelated industries (a conglomerate merger); such a merger will not create any significant monopoly power. Third, there is little danger of monopoly and therefore no reason for Federal intervention when a firm merges with another firm that is a customer or a supplier of the first (a vertical merger). Finally, a firm that obtains a large share of a market by being a more efficient competitor is acting in a desirable fashion and should not be punished by antitrust action on the part of the Federal Government. In recent years, those in 32 charge of administering Federal antitrust laws sometimes have behaved as if they viewed their function as protecting existing firms from competition. From an economic viewpoint the purpose of the antitrust laws is to maintain competition, even if competition leads to the decline of firms which are less efficient. PUBLIC GOODS A public good has two distinctive characteristics. The first is that consumption of the good by one party does not reduce consumption of the good by others, and the second is that there is no effective way to restrict the benefits of such goods to those who directly pay for them. The standard example of a public good is national defense. If national defense deters a foreign aggressor, everyone in the country benefits. This means that no individual will have sufficient incentive to spend his own resources on national defense, since he will benefit from his neighbor's spending. Hence, such public goods as national defense are usually provided by some action of the national government. Government action is usually necessary for the optimal provision of many public goods, and this point does not arouse controversy among economists. Sometimes there are debates, however, about whether a particular good is sufficiently public in nature to justify its being provided by the government. Another public good is information. If one person learns some valuable fact and tells someone else, the use of the information by one does not reduce the use of the same information by the other. If a consumer organization spends resources to find out which products are best and sells a publication that provides this information to subscribers, these subscribers may then pass the information on to others who did not pay for it. This can be shown as a market failure, in the sense that the private market did not generate enough information; if the organization could capture all of the returns, it would provide additional information. Patents and copyrights are designed to reduce this problem by giving inventors and writers property rights in their product, thus providing incentives for production, but there are still cases where the private market does not generate sufficient information. This provides the rationale for government financing of certain kinds of research. INCOME REDISTRIBUTION In a market economy, individual income depends upon what one has to sell and on the amount which others are willing to pay for it. What most people sell on the market is their labor. About 75 percent of national income is in the form of wages and salaries and other forms of labor remuneration. Others have capital or land to rent, and 33 their return is interest and dividends, or rent income. Most people earn income from both capital and labor over their lifetimes. But some persons may have few or no valuable things to sell, and these persons will have low incomes. A decision may then be made to transfer income to such people directly through government. Two justifications can be presented for such transfers of income, one based on the social value of providing certain forms of income insurance, the other based on benevolence. We consider each. Anyone may lose his ability to earn income. A worker may become physically disabled or find that technological progress has made his or her skills obsolete. Or an investor may find that changing market conditions have eroded the return on capital. Since individuals generally do not like the risk of losing their ability to earn income, they often seek to insure themselves against such a possibility. But there are difficulties in providing insurance against falling incomes by way of private-market mechanisms. A major difficulty is what is called "adverse selection/* Assume that some insurance company offered actuarily fair insurance against this risk and charged all persons the same premium. (That is, the amount of the premium equals the expected cost of having a low income.) Since most persons are averse to risk, they might buy this insurance even though the premium would be somewhat greater than the expected cost because of the expense of writing the insurance. Some persons would be better risks than average, and new insurance companies would compete with the first company for these better risks. This would leave the original company insuring only the bad risks, which the company would then find financially intolerable. Ultimately, one class of persons would be unable to obtain any insurance. This would be an example of market failure and an argument for government provision of insurance, since the government can force everyone to join the same insurance pool. The appropriate form of insurance to those who experience a temporary loss of income is a cash grant. Welfare payments and unemployment compensation may be viewed as just this sort of insurance. The second argument for government transfers to the poor is an argument based on benevolence. Many people prefer not to live in a society where there is poverty and thus have an incentive to transfer some of their resources to the poor voluntarily. When one individual performs such a transfer, all individuals who dislike poverty benefit. Thus, most people will have an incentive to reduce their contributions to the poor and rely on the contributions of others. In all likelihood, such voluntary transfers would be too low to keep people out of poverty; it may become necessary for the government to do it. 34 In cases where transfers of income are desirable, economic theory can indicate the most efficient form of transfer. One goal should be to minimize interference in private markets. Price controls on gasoline and laws decreeing minimum wages, for example, are considered by many economists to be inefficient ways of helping the poor. The way in which resources should be transferred to the poor depends on the goal of the donors. If the goal is simply to improve the welfare of the poor, the most efficient solution probably would be a system of cash transfers, since it can be assumed that recipients are best able to determine the pattern of spending that maximizes their welfare. But if the donor is more concerned with the specific goods which the recipient consumes, a direct transfer of goods may be preferable. In this case the argument can be made for using some form of voucher. A voucher is essentially a coupon usable only for the purchase of a specific type of good. Food stamps are one example. Use of vouchers instead of a direct transfer of goods allows recipients to determine their own consumption but restricts the type of goods which the recipient may purchase. Regardless of the form of transfer, there is still an efficiency cost. Transfers reduce the incentive of recipients to work, and the taxes imposed on the rest of society to finance these transfers also cause losses in efficiency. There are also costs of administering the program. Economists are able to give advice on ways of transferring income which may serve to minimize these effects, but the decision as to the amount of the transfers is a political decision, not an economic one. MACROECONOMIC STABILITY A market system may sometimes be subject to unacceptably large fluctuations in income. When this occurs, it has implications for the general welfare. First, average income levels may be smaller with fluctuations than if the level of activity is more stable. Second, even if the average level of incomes is unaffected by such fluctuations, people are generally risk-averse. That is, most people prefer a steady stream of income to a fluctuating stream, even if their total income is the same over a period of time. For these reasons, government may have a role in helping to provide stability. An alternative view is that a market economy is inherently quite stable. According to this view, government actions are the primary destabilizing factors in the economy. That is, many fluctuations in income which seem to be caused by private sector actions are actually caused by attempts to outguess the government. (This issue is discussed in more detail in Chapter 3.) 35 Macroeconomic stability also involves the question of what to do about money. Money performs several functions in an economy. Its use economizes on transaction costs and on information costs, since all persons accept the same money and are aware of its value. However, the government must be careful in its money creating function not to exacerbate cyclical fluctuations. Excess creation of money leads to inflation, which reduces money's value. Although the Federal Government is the appropriate agent for stabilizing the economy, the limits of such action must be understood. This Administration believes that "fine tuning" of the economy—attempting to offset every fluctuation—is not possible. The information needed to do so is often simply not available, and when it becomes available it is quite likely that underlying conditions will already have changed. As a result, a policy of fine tuning the economy is as likely to be counterproductive as it is to be helpful. Though it is necessary for the government to have macroeconomic policies, including both monetary and fiscal policies designed to achieve some desired growth of income, such policies are not suitable for correcting small fluctuations in economic activity. THE DIVISION OF ROLES IN A FEDERAL SYSTEM The preceding sections have discussed situations where government intervention in private economic activities may be appropriate. An equally important concern is determining the level of government at which intervention, when desirable, should take place. Our system of government is a Federal system, one in which certain powers have been granted to the Federal Government while other powers have been granted to the States. In recent decades, however, there has been a substantial centralization of power at the national level. One constraint on the power of any government to impose costs on its citizens is the ability of those citizens to move elsewhere. Thus, one argument for reliance on State government is essentially the argument that it restricts the power of government, since any State which passed laws which were sufficiently inefficient would probably find itself losing residents. The long-term increase in the power of the Federal Government at the expense of the State governments has probably weakened this constraint on governmental power. Another argument for federalism is that State and local governments are more likely to choose the amount and quality of governmental services preferred by their voters, whose preferences and resources vary greatly. This argument has important implications for both the types of services that should be provided at the different 36 levels of government and the structure of the tax system. Decisions on government services that benefit people throughout the Nation, such as national defense and the protection of basic constitutional rights, are appropriately made by the Federal Government, and such services should be financed by Federal taxes. But, government services that provide benefits only or predominantly to residents of a specific region, such as urban transit and sewer systems, can probably be provided more efficiently by State or local governments and financed by State and local taxes or user charges on those persons directly benefited. In this view, Federal grants-in-aid to State and local governments should be restricted to services provided by these governments that have significant benefits for residents in other regions of the country. Over the last several decades, however, Federal grants-in-aid have not been directed at assisting such services. Instead, these grants have in many cases reduced the State or local "tax price" of a wide range of other services and therefore have increased their utilization beyond that which most local residents would prefer. Consequently, the relative growth of Federal financing of State and local services has probably increased the total size of government in the United States while reducing its efficiency and responsiveness. The case for a return to a more balanced federalism is a case for both efficiency in the provision of public services and for greater individual freedom and choice in the Federal system. LIMITS ON THE EXERCISE OF THE FEDERAL ROLE So far, this chapter has summarized the theoretical reasons for a limited role of the Federal Government in the economy. Even when the government justifiably undertakes certain activities, however, there are reasons for believing that it is unlikely to do a perfect job. Just as there sometimes are reasons for expecting "market failure," sometimes there also are reasons for expecting "government failure." In this section we discuss some of these reasons. THE POLITICAL PROCESS For several reasons the political process is overly responsive to special interest groups. One cause of this is the high cost of information. Consider, for example, an import quota program that will give rather large benefits to firms and workers in the industry to be protected by the quota. Although such a program will impose only small costs on everyone else in the economy, it will be inefficient because the sum of the losses will be greater than the sum of the gains. However, each of the losers will lose so little that it will often not 37 pay to spend the resources necessary to learn about the losses. The average voter would have to make a detailed study of law and economics, for example, to determine how much government-induced cartelization of the trucking industry costs him. It is quite rational for the average voter not to bother to learn about this cost, for the resources spent in doing so would probably be greater than the per capita cost of the government activity that led to cartelization. (Economists refer to this as "rational ignorance/') On the other hand, the beneficiaries of government policies gain substantial amounts, and it pays for them to spend resources in learning about government activities. Thus, trade associations hire lobbyists whose job includes informing members of an industry about political decisions which may affect their operations. Moreover, even if the average voter had the information required to make a rational decision on how to vote in the next election, it is not clear what effect this would have. Assume that a citizen knows that his or her legislative representative voted for an import quota that will cost the voter $50 but also voted for some other bill which will benefit the voter's own special interest group and give him or her a benefit worth $500. The rational behavior of the voter will therefore be to vote for the reelection of the representative. That is, there are good reasons for expecting the political process to be responsive to special interests. It is possible for a representative to be elected by favoring a set of special interest policies, each of which appeals only to a minority of the electorate. Moreover, achieving a victory with such a "coalition of minorities" would be possible even if all the voters had all the information they needed to make a reasoned choice. That is because the gains from such special interest policies will be concentrated among the majority, while the costs will be borne by members of both the majority and the minority. Therefore, it is possible for a majority coalition made up of several special interest groups to gain benefits for themselves, even if the sum of the costs to all affected parties is greater than the sum of the benefits. The same arguments also apply to other political activities. It will pay for concentrated special interests (including both business and unions) to make campaign contributions to those who vote for benefits for people in the industry, but it will not, in general, pay for citizens to make contributions to representatives who vote against such bills. This is because the losses suffered by each voter are small and because overturning inefficient legislation is a public good. It does not generally pay to contribute voluntarily to the provision of a public good that affects a large number of people. 38 The fact that the political process is likely to be overly responsive to interest groups constitutes an argument for limiting the power of government to intervene in the economy. Each citizen would like to use government to transfer resources to himself but is often skeptical or hostile when the government transfers resources to others. Moreover, the net result of all such transfers is an efficiency loss. One of the ways by which particular special interest programs can be constrained is to limit the power of government to provide any such programs. For a long period the Federal Government behaved as if constraints on such legislation were binding. More recently, its power to intervene in many areas has been greatly expanded, and the amount of transfers, and of resources spent on obtaining transfers, has increased to a marked degree. The essence of the problem is that each individual has an incentive to take actions which, considered in their entirety, have a net negative impact on society, even though they are generally rationalized as being in the public interest. Intervention begets intervention. Only by changing the general principles which encourage intervention in many areas can we resist the multiple appeals for special interest laws which, taken as a whole, reduce the general welfare. SUPPLY BY GOVERNMENT AGENCIES When government directly provides some service, the service is ordinarily performed by government employees. Government employees are sometimes criticized for being inefficient and sometimes praised, for being dedicated to the public interest. Most theories of bureaucratic behavior make neither of these assumptions. Rather, it is assumed that government employees behave like everyone else and are concerned primarily with promoting their own interests. Thus, to study the effects of government provision of goods and services, it is important to study the incentives that motivate government employees. There are several incentives for government managers to increase the size and power of their agency. First, the salary and promotion prospects of a manager depend in good measure on the size and influence of the agency, as does the manager's power. Second, even when government employees are motivated by their perceptions of the public interest, this often leads to the same desire to enlarge their agency's size and influence. Once a person goes to work for an agency which fulfills his vision of the public interest, he will then be likely to want to expand the power of the agency, independent of his own self-interest, because he believes such expan- 39 sion will benefit the public. This is a partial explanation of the relatively long life of agencies and the difficulty in terminating them— those who work for the agency become a special interest group. It is also a partial explanation for overspending by government. It can be argued that the risk structure arising from government regulation also creates perverse incentives for agency managers. Two errors can occur, for example, when a government official must decide whether to approve a new drug. If the official approves a drug which is unsafe, some persons who use it will suffer harmful side effects. Alternatively, the official may fail to approve some safe drug, in which case some persons will suffer needlessly from a disease. These types of errors will always be possible, no matter what decisionmaking process is used. Nonetheless, the official faces an asymmetric situation. If the drug is approved and someone dies from having used it, the official will be blamed for approving an unsafe drug. Conversely, if the drug is not approved, those who would benefit from using it are not likely to know that the drug has been disapproved. Thus, in circumstances like these, agency managers can be expected to be overly risk-averse—not because of the nature of the manager but because of the incentive structure in which the official must operate. Since these types of responses by agency managers are predictable, they must be considered in designing programs. We must begin with the realization that government will not function perfectly and then attempt to determine if a predictably imperfect government program will achieve better results than those of an unregulated market. DIVERSITY OF CONDITIONS AND PREFERENCES One advantage of a market economy, mentioned earlier, is that such an economy is responsive to varying consumer demands. Individuals have different preferences and desire different goods and services. Tastes differ. If these desires are matched by a willingness to pay for them, then firms will find satisfying them worthwhile. The market will produce diverse products in response to diverse demands. If a good is a public good, however, this diversity will probably not be found. We are all provided the same amount of national defense, whether we are pacifists or hawks. That is the nature of public goods, and for true public goods there is no alternative. However, government sometimes treats goods which could be private as if they were public goods only. Thus, students from families that are not willing to pay the full cost of private school tuition have no choice but to attend the same public school system. Voucher plans are attempts to 40 get around this problem, as are proposals for refundable tuition tax credits. Detailed government regulation of technology also works to reduce the responsiveness of the economy to changed conditions. Such regulation, by not allowing entrepreneurs to take advantage of new technologies, retards economic progress. LIMITS ON INFORMATION If government policies are to achieve their goals, they must be based on correct information, a condition which is not always satisfied. Examples of problems in obtaining the information needed to formulate and implement macroeconomic policy were discussed above. Sometimes the problem is that policymakers cannot predict the extent to which individuals will respond to changes in policy. The imposition of credit controls in 1980 had surprisingly rapid and perverse effects on the economy. Policymakers also underestimated the extent to which the cost of medical care would rise as a result of the medicare and medicaid programs. As a result, there were substantial unanticipated budgetary consequences. In general, it can be predicted that people will respond to new rules or regulations by trying to minimize the adverse impact of such regulations on themselves. However, it is generally difficult or impossible to predict the exact nature of this response, since there may be millions of individuals affected by a given regulation and some of them will think of alternatives which did not occur to the policymakers. The myriad of ways in which individuals subvert price controls is illustrative. One solution is to attempt to devise policies which make use of incentives. Too often, regulation takes the form of specific rules which ignore the possibility of unexpected responses. One critical advantage of a market economy is that it is "informationally efficient." That is, a market will function well even if each individual knows only his own preferences and opportunities. When government controls an activity, on the other hand, much more information must be collected. This is an expensive process, and sometimes the necessary information is simply not available. This places another restriction on the ability of the government to achieve its goals. TIME HORIZON Elected officials are generally interested in reelection. Thus, it is often argued that a program which imposes costs today in return for future benefits will be overly discounted by elected representatives, even if the program has a positive net present value. ("Net present 41 value" refers to the sum of benefits less costs, adjusted for the time value of money.) Conversely, elected officials are likely to prefer programs with near-term benefits and deferred costs. In such cases, costs may not be appropriately discounted and net benefits may be overstated. In the private market, on the other hand, projects with a positive value over an extended time period are more likely to be undertaken because the benefits of such projects can be capitalized and the property rights sold. Although government does undertake some such projects, it is more often preoccupied with short-term effects. Recently, for example, some analysts have detected a "political business cycle" in which government spending projects or programs initiated just before an election lead to higher taxes or inflation which do not occur until after the election. This is a predictable result of the political process. Wage and price controls, which produce short-run moderation in the rate of inflation, lead to longer term losses because they reduce the responsiveness and flexibility of the economy. Since some of these ill effects occur long after controls are imposed, there sometimes are incentives to impose such controls just before an election. The short time horizon inherent in a political process with nontransferable property rights is another obstacle to the development of truly effective programs. PRINCIPLES GUIDING THE PRESIDENT'S ECONOMIC PROGRAM The problems discussed in this chapter have prompted the new economic policies of the Administration. In this section the Administration's Program for Economic Recovery is related to general principles concerning the proper role of government in the economy and to the necessary constaints on government action discussed above. EMPHASIS ON PERSONAL RESPONSIBILITY Many government programs, such as detailed safety regulations or the provision of specific goods (rather than money) to the poor, are best described as paternalistic. Paternalism occurs when the government is reluctant to let individuals make decisions for themselves and seeks to protect them from the possible bad effects of their own decisions by outlawing certain actions. Paternalism has the effect of disallowing certain preferences or actions. This Administration rejects paternalism as a basis for policy. There is no reason to think that commands from government can do a better job of increasing an individual's economic welfare than the individual can by making choices himself. Moreover, the long-term cost of paternalism may be to destroy an individual's ability to make decisions for himself. 42 As discussed above, there are economic arguments for transferring resources to the poor. However, if the primary concern is the welfare of the poor, the most efficient form of transfer is probably cash rather than benefits in kind. (Examples of benefits in kind are public housing, food stamps, and medical care.) Poor people given money can best determine for themselves what goods to buy. If they are given goods or services instead, their ability to learn to make their own choices is limited. REFORM OF REGULATION As discussed above, many current regulations cannot be based on allegations of market failure, and many regulations which do have such justification are administered inefficiently. Efforts are being made by the Administration to cut back the scope of the first kind of regulation and to improve the workings of the second. One area where there has been a major effort at reducing the scale of government intervention is energy, which is discussed in Chapter 6. The Administration is also involved in a careful review of Federal enforcement of the antitrust laws. The purpose of these laws is to maximize consumer satisfaction by reducing monopoly power. In the past, however, the laws often have served both to protect smaller businesses and to penalize larger ones, even when greater size was due to increased efficiency. Efforts are being made at both the Federal Trade Commission and the Department of Justice to reform the enforcement of the antitrust laws to make them more consistent with the promotion of economic efficiency. Because property rights in air and water have not been sufficiently extensive there are .grounds for government intervention to alleviate pollution. However, the form of much prior intervention was inefficient. Most of this regulation has been carried out by specifying the allowable pollution control technology rather than by defining property rights or by charging fees for polluting. This Administration is also making a major effort to emphasize the use of benefit-cost analysis in regulation. Regulation which imposes more costs than benefits is inefficient. For example, regulations that limit entry to a potentially competitive industry, such as interstate trucking, generate high transportation costs which are ultimately borne by consumers. The most elementary benefit-cost analysis would demonstrate the inefficiency of such regulation. Even if used as well as possible, however, benefit-cost analysis is only the second best solution. The best solution is to respect the judgment of the private market whenever k is available. Jn many areas of safety regulation, for example, the best solution would probably be to rely on market judgments about the value of safety. Where 43 this may not be possible, benefit-cost analysis can improve the information on which regulation is based. In areas such as environmental regulation, where the market will not work unaided, benefit-cost analysis may be necessary to identify the optimal degree and form of pollution control. Even if a system of effluent charges were used, for example, an analysis of costs and benefits would be necessary to determine the optimal charge. If a system of pollution rights were used, the amount of rights to be created would have to be determined in some similar way. FEDERALISM One important principle of this Administration is an increased reliance on State and local governments to carry out necessary governmental activities. The replacement of many categorical grant programs by large block grants is one example of this policy change. A longer term policy of the Administration is to shift a substantial number of programs—and a portion of the Federal tax base—to the States. As indicated earlier, there are economic reasons for this increased reliance on State governments. States are generally more responsive to voters in their jurisdiction than is the Federal Government and can make better judgments about local conditions, LONG-RUN FOCUS As discussed above, the political process has placed its major emphasis on the achievement of short-term goals. This Administration intends to place emphasis on long-run policies. For example, the Economic Recovery Tax Act of 1981 cuts tax rates over a 3-year period, after which the personal income tax structure will be indexed so that inflation will not increase marginal tax rates on real income. The Administration is also seeking a long-term solution to the financial problems facing the social security system. However, there is a more fundamental sense in which emphasis is being placed on long-term goals. Many of the Administration's policies have reduced government expenditures for various groups or provided less of an increase in such outlays than has been expected. The fundamental premise behind these reductions is that they ultimately will lead to substantial and sustainable economic growth. This has particular relevance for the poor, most of whom probably have historically benefited more from sustained economic growth than from government transfer programs. INCREASED RELIANCE ON THE MARKET Another principle mentioned several times in this chapter is an increased reliance on market-like devices when appropriate gov- 44 ernment interventions are undertaken. Since this is an important principle, an indication of how such a principle will be translated into action will demonstrate some relationships between seemingly disparate changes in the forms of intervention. First, consider the reason for reliance on devices which simulate market operations where intervention is the desired policy. The only alternative is direct regulation, which puts the government in an adversarial position to the party being regulated. Such adversary relationships create ill will between the government and business or other regulated parties. Ill will is also created when, for example, government employees monitor and control the spending of welfare recipients. Besides creating ill will, monitoring of behavior is expensive. Yet monitoring allows regulators to achieve their goals only imperfectly, since there are millions of regulated individuals, businesses, and other private institutions, and regulators will be able to monitor only a small fraction of these agents. The advantage of market-like devices is that they can create incentives to behave in the desired way. That is, if we can simulate an effective market, we can rely on self-interest to achieve the desired goals. This will reduce the cost of achieving the regulatory goal and also increase the extent to which the goal will be achieved. A good example is provided by comparing government safety regulation of firms with private market insurance against risks. In the case of government regulations, violators are punished, commonly with a fine, which may create incentives for the regulated firms to conceal possible violations and to avoid cooperation with safety inspectors. If, on the other hand, a firm which is insured can make its operations safer, it will usually benefit by having its insurance premium reduced. Thus, such firms have an incentive to cooperate with insurance company inspectors and adopt any recommendations which are made. This is but one example of how a market device, by eliciting cooperation, is more efficient in achieving desired goals than is regulation, which elicits conflict. EMPHASIS ON THE GENERAL WELFARE As stressed throughout this chapter, many current programs provide benefits to special interest groups. These programs are inefficient in that the gains to the beneficiaries are generally less than the cost to the public as a whole. Nonetheless, the political process, if unconstrained, would continue to establish such programs. In recent years effective constraints have been reduced. But if these special interest programs could be eliminated, almost everyone would benefit because of the losses in economic efficiency caused by these programs. However, it is extremely difficult politically to reduce such 45 programs one at a time, since the beneficiaries would then perceive their losses clearly and seek to regain them. The alternative, which this Administration adopted in both its spending and tax cuts, is to reduce a large number of programs simultaneously. If enough cuts in both spending and tax rates can be made simultaneously, most individuals may recognize that, while they may lose from cuts in a specific program, they gain enough from cuts in other programs and in lower taxes to compensate for their losses. Thus, the principles of optimal government intervention explain why the Administration insisted on very broad cuts in spending. Congressional approval of much of this plan indicates that this strategy was appropriate. A general reduction in special interest programs is a necessary step to meet the constitutional charge to "promote the general Welfare. . . ." 46 CHAPTER 3 Monetary Policy, Inflation, and Employment THE ECONOMIC STORY of the late 1960s and the 1970s was a story of rising inflation, slackening growth, and rising unemployment. The challenge of the 1980s is to eliminate inflation, restore growth, and reduce unemployment. Despite differences over the precise combination of policies that will do the job, there is widespread agreement that inflation can and must be reduced if the economy is to operate successfully. The obstacles to successful implementation of an anti-inflation policy have been largely political, although public understanding of this has been complicated by the economic consequences of the oil price shocks of 1974-75 and 1979-80. The proper policy would be one based on a careful weighing of the long-term benefits of ending inflation against the costs which are essentially short run. It is the nature of the political process, however, to focus primarily on the short-run costs of dealing with inflation, as these appear to be more easily quantifiable, and to ignore the more distant but equally important benefits of price stability. As the acute costs of rising inflation have become more widely recognized, the public has demanded action. That has made possible the implementation of the current set of fiscal and monetary policies aimed at reducing inflation. The decision to end inflation over a period of several years will be sustained by this Administration, even though short-run costs will be suffered before long-term benefits begin to accrue. A broad public understanding of the nature of the immediate but transitory costs and the longer run benefits of reducing inflation can contribute to the overall success of the current policies. On the other hand, any perception that the policies may soon be reversed would cause transitional costs to rise, since upward adjustments in inflation expectations—and, subsequently, prices and wages—would then be realized. In short, any lack of credibility would greatly extend the period of adjustment, thereby increasing the size and duration of short-term costs. Chapters 1 and 2 reviewed the economic policies and problems inherited by this Administration and the challenges that its economic recovery program poses. This chapter focuses first on the legacies re- 47 suiting from macroeconomic policymaking over the past two decades before turning to a discussion of monetary policy issues whose successful resolution is central to the Administration's economic recovery program. The concluding section of the chapter outlines the challenge to policymakers to improve upon the past. THE LEGACIES THE LEGACY OF ECONOMIC STABILIZATION POLICY To policymakers in the early 1960s, the main solutions to future economic problems seemed to be in hand. The Eederal Government was thought to have all of the tools needed for economic stabilization, along with the skills to use them. Recessions might still occur because investment shifted erratically or because the response to government action was variable, but it was believed that a discretionary stablization policy could successfully limit the frequency and magnitude of recessions. Inflation might result from decisions to reduce unemployment and increase output beyond the point consistent with price stability, but for the most part inflation seemed manageable. Essentially, it was thought that the economy could be kept on a steadily rising trend by "fine tuning" government actions. Three key elements characterized policy prescriptions. Greater use was made of models and forecasts of short-term economic activity, prices, and interest rates. Policy decisions were based on a perceived short-run tradeoff between inflation and unemployment, and there was some belief that a long-run tradeoff between inflation and unemployment could also be exploited. Greater emphasis was given to planned changes in budget deficits or surpluses as a means of achieving annual (and sometimes quarterly) targeted rates of inflation and unemployment. To avoid a potentially painful reliance on fiscal and monetary discipline, budget policy was supplemented by other programs. One approach, the creation of guideposts, was designed to influence changes in individual prices and wages. The belief was that guideposts announced by the government could improve the tradeoff between inflation and unemployment. Proponents of guideposts regarded them as efficient devices for slowing inflation during periods of rising employment and expanding output, and controlling, in the language of the time, "cost-push" inflation. Another program, aimed at reducing the U.S. balance of payments deficit and sustaining an international monetary system based on fixed-exchange rates, involved levying taxes on interest payments from foreign sources to Americans and restricting the amount of U.S. Government and private spending abroad. 48 Both policy and theory have undergone substantial change since then. A major reason for the change is that additional research revealed the errors and limitations of earlier policy recommendations. Although there was some research that supported the activist policies implemented in the past two decades, many subsequent studies have cast doubt on those findings. The major failure of the late 1960s and 1970s was to give insufficient weight to the long-term effects of economic policies. For example, the so-called Phillips curve—the observed inverse relationship between wage inflation and unemployment—and its implication that a tradeoff is possible was one of the key notions relied on by economic advisers. But nothing in Phillips' work or in subsequent studies showed that higher inflation was associated with sustainable lower unemployment, and nothing in economic theory gave reason to believe that the relationship uncovered by Phillips was a dependable basis for policies designed to accept more inflation or less unemployment. Nevertheless, Phillips curves jumped quickly from scholarly journals to the policy arena. The speed with which the case made for this tradeoff was accepted as a cornerstone of economic policy contrasts with the slow acceptance of both neoclassical economic theory and the substantial body of evidence which suggests that there is no lasting tradeoff between inflation and unemployment. The economic policies which are now being implemented by the Administration are grounded in this tradition. Another example of policy failure was the imposition of direct controls on prices, which were defended on grounds that they would bring about lower unemployment in an economy subject to "costpush" inflation without imposing uneven burdens on the various sectors of the economy. The decision to impose these controls was based on the presumably favorable effects they would have on the expectations of consumers, unions, and businessmen. Neither guideposts nor price controls, however, have succeeded in stopping inflation. The failures of these approaches have not been failures of economic theory. Instead, they have shown that political expediency or guesses about expectations of inflation are a less reliable guide to successful policy than sound economic analysis. While economic analysis provides a framework for policy recommendations designed to reduce inflation, increase efficiency, and expand long-run growth of output and employment, policy recommendations based on the notion that it is possible to "fine tune" the economy from quarter to quarter or year to year promise more than economics can deliver. The events of the past 15 years are a good illustration of the dangers of pursuing economic policies based on short-run analysis and focused on immediate problems. Sound policy 49 requires emphasis on a time horizon during which the sometimes lengthy, and usually unpredictable, lags in economic processes can work. Good economic policy means long-run economic policy, In light of the political incentives that place a premium on quick results, good economic policy also means resisting the previous tendency in our system to change the course of policies prematurely. THE LEGACY OF STAGFLATION The irony of the 1970s was that the attempt to trade inflation for employment resulted in more inflation and rising unemployment. This period was characterized by relatively high unemployment rates and high rates of inflation, a phenomenon often called "stagflation/' The growth of real output in the United States was slower than during the preceding two decades, even though the growth rate of the labor force increased. The rate of increase in the productivity of labor declined, in part because of the effects of externally imposed oil price shocks. The combination of inflation with progressive income tax rates led to steady increases in actual and prospective taxes on real income in the latter part of the 1970s. Government appeared unable to reduce inflation without increasing unemployment or to reduce unemployment without, sooner or later, increasing inflation. The actual result was that rates of inflation and unemployment rose with each succeeding round of expansion and recession, and measured productivity growth was disappointing at best (Chapter 5). There are those who argue that a permanent reduction in the rate of inflation brings about a permanent rise in the unemployment rate. But the lesson to be learned from the experience of the United States since World War II is that high rates of unemployment can coexist with either high or low inflation. There is no reason to expect a systematic association between the average unemployment rate and the average rate of price-level change, and none is found in the data when one considers periods of several years or longer (Chart 3-1). Many factors influence the average rate of unemployment over an extended period of time. Demographic factors—age, work experience, marital status, and other characteristics of the population— affect the supply of labor and entry into and exit from the active work force. Economic policies can either reinforce or offset these demographic factors by influencing the real wage at which workers choose between labor and leisure and the price at which potential investors choose between consumption and capital accumulation. As is discussed in Chapters 4 and 5, government taxes and expenditures have increased relative to national output during the past quarter century, reducing on the margin the incentive to work and the "cost" of leisure. 50 Chart 3-1 Inflation and Unemployment Rate INFLATION (PERCENT)1 101 74 3 4 J I 5 6 7 8 9 UNEMPLOYMENT RATE (PERCENT) 1 PERCENT CHANGE IN GNP IMPLICIT PRICE DEFLATOR. SOURCES: DEPARTMENT OF COMMERCE AND DEPARTMENT OF LABOR. During 1977 and 1978 there was emphasis on idle resources and an output gap that was to be closed by expansive economic policies. The belief was that stimulative policies would be less inflationary as long as excess capacity existed. The amount of idle capacity was probably overestimated for a variety of reasons—errors in assessing the effects of the 1974 oil price shock, failure to account for the effects of regulation, and the effects of tax and income transfer policies on unemployment and potential output. The presumed gap, however, was not a reliable buffer that would permit additional output without provoking an increase in the rate of inflation. The effort to reduce the unemployment rate by stimulating aggregate demand led to a much higher inflation rate, higher interest rates, and a sharp depreciation of the dollar, but it had no lasting effect on the unemployment rate. The primary reason for the increase in the underlying rate of inflation in 1979-81 was the excessive fiscal and monetary expansion of 1977-78. Moderate policies probably would have left us with an average rate of unemployment no higher, and possibly lower, coupled 51 with lower inflation. The average rate of unemployment and the average rate of inflation are best regarded as unrelated in the longterm. The failure of previous policymakers to accept this conclusion is one of the principal reasons we have had a decade of stagflation. THE BUSINESS CYCLE AND RISING INFLATION LEGACY A shift toward less inflationary economic policies usually affects output and employment first. Inflation, and people's expectations about future inflation, only start to fall after restraint has been maintained for some time. The more persistent and variable past rates of inflation have been, the less credible the new noninflationary policies will be and, hence, the longer it will take for those policies to achieve the intended results. Conversely, an abrupt policy shift toward greater stimulus first affects output, then employment, and later prices. The lag in the response of prices to stimulative policy also varies; a history of high inflation and frequent policy reversals will tend to shorten these lags. Cyclical fluctuations in business activity occur primarily because prices and wage rates (that is, nominal magnitudes) do not adjust immediately to change, whether it is change in government policy or change in economic factors, such as the price of raw materials. In the past, this pattern of delayed response was used to justify aggregatedemand management. Most cyclical changes in employment were regarded as "involuntary," the result of insufficient spending by the private sector. The loss to society was deemed equal to what the unemployed would have produced if they had continued to work. Hence, government policies to reduce unemployment were regarded as having low costs and large social benefits. Because the rate of inflation was slow to adjust, policymakers acted as if there was no reason to expect inflation to increase significantly until after a high level of employment had been reached. Repeated attempts to use fiscal and monetary policy to stimulate output, all the while assuring the public that inflation would be slowed later, left a residue of higher inflation. These attempts, in turn, generated expectations about future trends. The entrenchment of expectations of further inflation induced policymakers to respond with another episode of restraint, thereby creating another recession, followed by another attempt at stimulus—in short, repeated rounds of stop-and-go policy and performance. So long as economic policy had a short-run perspective, this alternating cycle of restriction and stimulus persisted. Meanwhile, the trend in the rate of inflation moved steadily upward. The costs of adjusting to a low-inflation environment are often underestimated. Policymakers are impatient with the transitory costs ac- 52 companying such a change. Even when policymakers fully intend to make a permanent change, workers are unable to distinguish immediately between permanent and transitory changes in market conditions affecting their industry. They do not know whether a layoff is temporary or permanent, or whether the real wages prevailing in their industry will be sustainable in the future. Immediate reductions in wages are therefore resisted, and workers are often willing to experience a period of unemployment while waiting to be called back to work in the same industry and at the same wages, rather than change occupation or relocate. Although changes in labor market conditions do occur, it is not always obvious to those affected whether the changes are permanent. Workers and employers must decide on a course of action while laboring under a high degree of uncertainty. Accepting a lower real wage will entail a reduction in lifetime income if the reduction in demand is temporary. But failing to cut real wages when the reduction in demand proves to be permanent also will mean a reduction in lifetime income as a consequence of lost jobs. The proper choice is usually not obvious at the time. This is a major reason why businesses and workers are slow to adjust prices and wages. For at least two decades the government has responded to recessions by pushing up Federal spending and monetary growth to stimulate the economy. Each time this has been done, output has recovered and employment has risen. Meanwhile, however, the rate of inflation has been higher in each trough than in the previous trough, and higher at each peak than at the previous peak (Chart 3-2). The public has apparently drawn two lessons from this experience. First, people have come to expect on average that the rate of price and wage change will rise from cycle to cycle. As a result, resistance to price and wage reduction relative to the increase in the general price level has increased through successive recessions. As anticipated inflation increased, the pressure for higher wages intensified. Second, all recessions are expected to be offset by stimulative government policies, and the costs of unemployment are expected to be reduced by unemployment compensation and related benefits. Thus, there are fewer incentives to look for employment at lower real wages and more reasons to wait for stimulative policies to restore employment in the old jobs at the same real wages. Discretionary monetary and fiscal policies have added an additional element of uncertainty to economic life. People who want to know whether tax rates will rise or fall must guess whether the bulge in government spending during a recession is a portent of permanently higher spending and tax rates or simply an indication of temporarily higher spending. Past experience gives imperfect guidance. Yet dif- 53 Chart 3-2 The Inflation Ratchet (CPI) i t i i i i t i i i i t i i i i 1961 63 65 67 69 71 73 75 77 79 81 NOTE. — YEAR-TO-YEAR CHANGE IN CONSUMER PRICE INDEX FOR ALL URBAN CONSUMERS, SOURCE: DEPARTMENT OF LABOR. ferences in anticipated tax rates often have been a key factor in decisions to invest in durable capital, to invest in land or other tax-sheltered capital, or to consume. We have been through four cycles in the past 15 years. Each time, government has made a renewed commitment to conquer inflation. But people's decisions concerning consumption, saving, and investment are now conditioned by the expectation that these cycles will continue to occur in the future, just as they have in the past. THE NATURE OF THE INFLATION PROCESS Inflation is essentially a monetary phenomenon. This is not to deny the importance of other factors, such as changes in the price of petroleum, in causing increases in the general price level. What the statement does deny, however, is that persistent inflation can be explained by nonmonetary factors. 54 Monetary policy actions affect primarily nominal quantities—exchange rates, the price level, national income, and the quantity of money—as well as the rate of change in nominal quantities. But central bank actions do not have significant long-run effects in achieving specific values of real magnitudes—the real rate of interest, the rate of unemployment, the level of real national income, the real quantity of money—or rates of growth of real magnitudes. Economists recognized long ago that output and employment may be no higher when prices are high than when they are low. A main point of Adam Smith's Wealth of Nations is that a country's wealth and income depend on the country's real resources and the way in which production is organized, and not on the level of prices. It was realized that changes in the price level had some short-term effects on output, but these effects were recognized as the result of transitory changes in demand. The classical gold-standard mechanism embodied these principles. Unanticipated increases in the flow of gold from abroad stimulated domestic production but gradually raised domestic prices relative to foreign prices. The rise in domestic prices then reduced exports and raised imports, thereby lowering domestic production and employment and eventually lowering prices. The continuous ebb and flow of gold was expected, but the timing of the movements could not be predicted accurately. Inability to predict the movements was recognized as a cause of changes in prices and output. Once people anticipate that prices will rise, they seek higher wages for their labor and higher prices for their products. The increase in employment produced by stimulative policies vanishes, but the inflation remains. Attempts to reduce unemployment by increasing inflation will work only if people are fooled by the changes in policy. Once people learn to expect inflation, the short-run gains in employment disappear. It is often stated that inflation is an intractable problem, caused by forces beyond our control. But the monetary nature of inflation suggests that this is not so. More importantly, it suggests that a decrease in money growth is the necessary strategy to end inflation. Frequent use of monetary policy to reduce unemployment at certain times and inflation at others would raise the prospect of generating the same kind of cyclical behavior in economic activity that we have experienced in the past and analyzed in the previous section. Stop-and-go policies cause uncertainty, hamper the ability of monetary authorities to achieve noninflationary conditions, and ultimately 55 raise the transitional costs of eliminating inflation. The next section discusses in detail the nature of these costs. THE COSTS OF INFLATION Over the last decade, as inflation worsened, the attention of the general public: focused on the detrimental effects that rapidly rising prices have on economic performance. These effects were felt in many ways, but the mechanisms by which inflation generated them were not well understood. The effects of inflation fall into two general categories: (1) those that occur because no one is able to predict the precise rate of inflation; and (2) those that occur even when the rate of inflation is fully anticipated. The concept of a "fully anticipated inflation" implies a rate of inflation that people can predict and hence take action to minimize its effects. But it is doubtful that a high rate of inflation that was also predictable could ever exist because the same lack of monetary discipline which leads to unacceptably high inflation is also likely to lead to more variable inflation. Indeed, periods of high inflation rates generally have been associated with periods of higher variability of inflation rates. It would take at least as much monetary discipline to maintain a constant high inflation rate as it takes to maintain pricelevel stability. Once a positive rate of inflation is accepted it becomes difficult to argue against a slightly higher rate. One of the most important costs of unanticipated inflation is its arbitrary redistribution of wealth and income. Economic transactions are often formalized in contracts that require one party to pay a fixed dollar amount to the other party at some point in the future. When both parties anticipate inflation during the life of the contract, these future dollar payments will be adjusted upward to compensate for their expected lower real value. This upward adjustment is the socalled inflation premium. If, however, the actual rate of inflation turns out to be different from the anticipated rate, the real terms of the contract will have been altered arbitrarily. If the actual rate is higher than anticipated, the fixed payments in dollars will have a lower than expected real value, and the debtor will gain at the expense of the creditor. The same kind of arbitrary transfer occurs when workers and firms agree to wage contracts that implicitly or explicitly assume rates of inflation which later turn out to be incorrect. In a market economy, changes in the price of one good relative to another signal changes in demand and supply conditions among various markets. An uncertain rate of inflation obscures these signals and thereby reduces economic efficiency. Since prices are rising more 56 or less together during a general inflationary period, the fact that a price has risen is no guarantee that it has risen relative to other prices. The difficulty of distinguishing between relative and absolute price changes increases as inflation and its variability increase. This leads people to use more time and resources to attempt to decipher relative price changes, as opposed to engaging in more productive activities. Differently stated, inflation tends to make the economic information that people accumulate through experience more rapidly obsolescent than when prices are stable. Perhaps more importantly, inability to correctly anticipate inflation creates confusion about relative prices over time and compounds the problem of efficient resource allocation. Economic decisionmaking, especially in the private sector, is inherently forward-looking. Decisions made today determine tomorrow's levels of capital stock, production, and consumption. Decisions based on correct anticipation of future relative prices lead to a more efficient allocation of resources over time. High and variable inflation, on the other hand, leads to divergent inflation expectations, and therefore to a larger proportion of incorrect decisions. Because inability to anticipate the rate of inflation correctly increases the uncertainty associated with economic decisions, especially those that involve fixed-dollar commitments far into the future, it leads to a shortening of the time horizon over which such commitments are made. In the financial markets, uncertainty about inflation causes a relative decline in the volume of long-term bond financing. Neither borrowers nor lenders are willing to compensate the other adequately for the risk. Consequently, the sales volume of fixed-rate long-term debt instruments shrinks and the volume of real investment normally financed in this way decreases. More generally, productive activities yield a relatively lower real return than activities aimed at "beating" inflation. Hence, as more and more resources are devoted to coping with the uncertainty that accompanies inflation, fewer resources are available for real productive activities. Two costs of anticipated inflation have been widely recognized. In the economics literature they have been dubbed "menu" and "shoe leather" costs. Because inflation requires frequent changes in published (that is, "menu") prices, these changes absorb resources that could be used in other activities. "Shoe leather" costs are those incurred by people attempting to minimize their money holdings by more frequent trips to the bank. Since a great deal of money is held as a noninterest-bearing asset, its real value declines with inflation. People therefore make more strenuous efforts to realize the highest return on their assets and hence they economize on noninterest-bearing balances. 57 The interaction of a nonindexed tax system with inflation would impose costs even if the rate of inflation were correctly anticipated. Imperfect adjustment for inflation in the taxation of both current labor income and income from capital causes changes in inflation to affect real after-tax levels of income. These, in turn, alter the level and composition of these activities relative to each other and relative to activities on which the return is not distorted. One analyst has estimated the unavoidable costs from this cause alone to be 0,7 percent of gross national product (GNP), and perhaps as high as 2 to 3 percent of GNP. The indexation of tax brackets beginning in 1985, as legislated by the Economic Recovery Tax Act of 1981, will substantially reduce this problem. The interaction between the tax system and inflation also affects capital formation because of the way in which depreciation allowances are treated. Depreciation allowances for capital assets are based on historical cost rather than current replacement cost. During periods of high inflation the difference between historical cost and replacement cost widens rapidly, leading to allowances smaller than would be considered justifiable. Since deductions for depreciation are determined on the basis of the actual purchase price, smaller real deductions mean higher capital costs. This, in turn, reduces the pace of investment and hence of economic growth. (See Chapter 5 for an extended discussion of these issues.) THE COSTS OF REDUCING INFLATION There is, as noted above, a short-lived tradeoff between unemployment and the rate of inflation. This means that policies designed to reduce inflation significantly will temporarily increase unemployment and reduce output growth. The temporary decline in output growth induced by anti-inflation policies forms a rough benchmark against which the subsequent benefits of reduced inflation can be compared. The extent of these costs of reducing inflation depends on four factors: (1). the institutional process of setting wages and prices; (2) the role of expectations in this process; (3) the policy instruments employed to reduce inflation; and (4) the initial rate of inflation. Flexibility in wages and prices reduces the transitional costs of ending inflation. A policy-induced decline in the growth rate of monetary aggregates will be associated with a decline in the growth of real output, but the more rapidly this decline in output is followed by a moderating of inflation, the more rapidly will output growth return to a rising trend. One important factor affecting the flexibility of wages and prices is the institutional environment in which they are determined. The costs of continuously negotiating and resetting prices and wages, for example, has given rise to the common practice 58 of changing wage and price agreements relatively infrequently. While this practice makes economic sense for individuals and firms, it builds a degree of inertia into the system. Wage contracts in major industries in the United States typically cover a 2- or 3-year period. Since these contracts specify basic wage increases over the life of the contract, the current rate of wage inflation was determined in part as long as 3 years ago. Because major wage contracts are staggered over approximately 3 years, wage settlements in the first year of each "3-year round" tend to set the pattern for settlements in the following 2 years. This extends the influence of any year's wage settlements beyond the lives of the contracts. In addition, many contracts include automatic cost-of-living adjustments that preclude downward wage flexibility, even when it might be justified by conditions specific to a particular industry or firm. Government regulations or standards that dictate prices or wages, reduce competition, or otherwise reduce the flexibility of firms and workers in responding to economic conditions also add to the inflexibility of wages and prices. Programs now under way to bring regulatory relief to industries that have been overregulated in the past should diminish this source of rigidity (Chapter 6). Decisions concerning the determination of prices and wages are dominated by perceptions of future market conditions, such as the expected rate of inflation. Workers will accept nominal wage increases that, given their expectation of inflation, imply an acceptable real wage. If their expectations about inflation are revised downward in light of announced policies to end inflation, wage and price increases will moderate. The pace of this adjustment in expectations is an indication of the degree of public confidence in anti-inflationary policies. The primary policy tool for ending inflation is a decrease in the rate of growth of money. The question of how rapidly the monetary deceleration should proceed must be answered in the context of public expectations. In view of past experience, when efforts to reduce inflation were abandoned as the short-run costs began to accrue, the public has come to expect that such policies will continue to be short-lived and that inflation will persist. Frequent swings from restrictive to stimulative policy and back have led to a "wait and see" attitude on the part of the public. The mere announcement of new policies is not sufficient to convince people that they will be carried out. Rather, public expectations regarding the future course of policy are adjusted only gradually as policy actions turn out to be consistent with policy pronouncements. The credibility of policy authorities, like the credibility of anyone else, is enhanced when they do what they say they are going to do. For the Federal Reserve, this means setting 59 money growth targets consistent with a sustained decrease in the rate of inflation and then adhering to those targets. The more success the Federal Reserve has in meeting those targets, the less time it will take before the public is convinced of the policy's credibility. In the current environment, even if a successful effort is made to reduce money growth, past experience with high and variable inflation will affect the speed at which financial markets reflect progress toward a long-run noninflationary policy. Having repeatedly suffered sizable capital losses on their holdings of long-term bonds, investors will be unwilling to commit new funds to these markets unless they are compensated for the risk that the current commitment to overcome inflation might be abandoned. Without adequate compensation for this risk, individuals will continue to prefer to invest in short-lived rather than long-lived financial assets. While this preference may prevent investors from maximizing the expected return on their assets, it allows them to minimize the adverse effects of future increases in inflation and interest rates. Present concern about future monetary growth, inflation, and interest rates is related to the knowledge that the Federal budget will continue to show large deficits for the next several years. Financial investors fear that these deficits will cause either a sharp increase in interest rates—which would slow the recovery from recession—or an increase in monetary growth if the Federal Reserve attempts to hold interest rates down by adding reserves to the banking system through open market purchases of government securities. Interest rates that are considerably higher than the current rate of inflation can have an adverse effect on investment and real economic growth. The level of long-term interest rates at the end of 1981 did not reflect investor willingness to believe that inflation will decline over the next several years. The presumably large but unmeasurable premiums being demanded by investors constitute a major obstacle to achieving rising output and employment with falling inflation. Expectations about future rates of money growth, like expectations of future inflation, are likely to be more divergent the greater the variability of past money growth. These expectations should converge more rapidly as the Federal Reserve improves its ability to control money growth. More precise control of money growth around the target path will reduce the difficulty of inferring from actual growth rates whether or not the announced targets are, in fact, a reliable indicator of future money growth. In such an environment, variations in money growth will reflect only random and short-lived deviations, which would have little effect on either short- or long-run expectations about monetary policy. But failure to achieve more precise monetary control, by impeding a rapid adjustment of expectations, 60 would significantly raise the costs of reducing inflation. Thus, the payoffs of greater precision could be quite large. In summary, high and varying inflation imposes costs on society by reducing future standards of living. These costs, though presumed to be large and pervasive, are not easily calculated. There is a temporary output loss in the initial stage of a transition to price stability. Such loss, however, must be weighed against the future increases in output that would be achieved by ending inflation. The policies of the Administration are based on the view that the cost of continuing to endure the high rates of inflation of the 1970s would be greater than the costs of implementing a successful noninflationary policy. MONEY AND MONETARY POLICY MONEY CREATION AND FEDERAL FINANCE The deficit of the Federal Government is financed by the issuing of interest-bearing liabilities, such as Treasury bills and long-term bonds, and noninterest-bearing liabilities, which include currency and bank reserves held as deposits with the Federal Reserve System. The noninterest-bearing liabilities constitute the monetary base. When there is unanticipated inflation, holders of the interest-bearing liabilities are implicitly taxed because the nominal interest rates on their holdings no longer fully compensate for inflation. Holders of currency and reserves, however, bear an implicit tax even when inflation is anticipated. Banks usually seek to shift some of the implicit tax on their reserves to depositors. The portion of the tax ultimately absorbed by depositors depends on the administrative limits on interest paid on these deposits, and on the degree of competitiveness in the banking industry. The purchasing power of the dollar declines over time when the growth of the money stock exceeds the growth of demand for real money balances. As a result, holders of money incur a loss that is related to the rate of inflation. As discussed more fully in Chapter 5, the Federal Government benefits from anticipated inflation because the real value of its noninterest-bearing liabilities falls. It also benefits from unanticipated inflation because the nominal interest on its interest-bearing debt does not fully compensate for the decline in the purchasing power of money. The revenues obtained in this fashion by the Federal Government serve as a substitute for other, more direct taxes. This "inflation tax" may be more or less efficient than other taxes in financing government expenditures, but while all other taxes are legislated by the Congress (or State and local governments), the inflation tax is not. 61 One troublesome aspect of the inflation tax is not so much its existence as uncertainty about its amount. Historically, high average rates of inflation have been associated with high volatility—that is, large swings in inflation rates from year to year. Financial markets readily incorporate expected rates of inflation into interest rates, but they are unable to price that portion of the inflation rate that is unanticipated. MONEY VERSUS CREDIT Discussions of monetary policy frequently fail to take account of the difference between money and credit. Money is an asset that people generally accept as payment for goods and services. It consists of coins, currency, and checkable deposits. Credit, in contrast, is one party's claim against another party, which is to be settled by a future payment of money. Confusion about the difference between money and credit arises because people can increase their spending either by reducing their money balances or by obtaining credit. The market for money is distinct from the market for credit. The supply of and demand for credit influence primarily the interest rate, which is the price of credit. The supply of and demand for money, on the other hand, determine the purchasing power of money. Additional confusion about the difference between money and credit arises because the monetary authorities create money primarily by purchasing credit market instruments. These actions tend to increase the supply of available bank credit and consequently tend to lower interest rates, at least initially. Over a longer period of time, however, the creation of money has important effects on economic activity that tend to raise interest rates. Monetary expansion leads to an expansion in nominal income and economic activity, which in turn generates an increased demand for credit, thus reversing the initial decline in interest rates. In addition, a sustained higher rate of monetary growth will soon produce higher nominal interest rates to compensate lenders for the expected decline in the real value of their wealth. When interest rates are high, credit is often said to be "tight," meaning that it is expensive. This does not necessarily mean that money is tight in the sense that its quantity is restricted. Indeed, quite the opposite is likely to be the case. "Easy" money, in the sense of rapid growth in the stock of money, may very well be the underlying reason for a tight credit market. Conversely, tight money in the sense of slow growth in the stock of money is likely to lead eventually to a fall in nominal interest rates as inflation expectations subside. But it is credit, not money, that is easy. Over the long run, the effect of the growth of money on the real volume of credit is essentially 62 neutral. Monetary expansion can succeed in driving up the nominal supply of credit as well as other nominal magnitudes. But it cannot significantly alter the real supply of credit or the real interest rate (the nominal rate adjusted for inflation), except indirectly through the uncertainty associated with inflation and because of the effects of an unindexed tax system. Monetary expansion can permanently reduce the purchasing power of money, but not the real price of credit. It is often stated that such financial innovations as money-market funds undermine the conduct of monetary policy. Statistical support for this assertion is dubious. What would have to be demonstrated is that financial innovation—which is to a large extent the result of policy-imposed constraints on the financial system in an inflationary environment—has made it more difficult to achieve a given monetary target, and that the link between changes in nominal GNP and changes in the monetary aggregates—that is, changes in velocity—has become less predictable. The evidence does not seem to support either proposition. A study recently published by the Federal Reserve suggests that the monetary authorities have the ability to control the measure of transactions balances known as Ml with a reasonable degree of precision. Furthermore, changes in velocity do not appear to be any more volatile than they have in the past. Indeed, changes in the trend of the growth rate of nominal GNP over the period 1960 to 1981 are almost entirely attributable to changes in the trend of the growth rate of the money stock, (Ml), as opposed to changes in the trend of the growth rate of velocity (Chart 3-3). It is inflation and a highly regulated financial system that have spurred financial innovation. Inflation, and consequent higher interest rates, have also raised the real cost of reserve requirements for financial institutions. At the same time, the public has tended to economize on noninterest-bearing money balances. Thus, incentives were created for the public to demand, and for financial institutions to supply, substitutes for existing transactions accounts that are subject neither to reserve requirements nor interest rate restrictions. But innovations which are attractive only because they provide a means of avoiding existing regulations waste resources. The inefficiencies which such innovations are designed to circumvent could have been minimized by payment of interest on required reserves and on transactions balances. These inefficiencies will be greatly reduced when price level stability is restored. MONETARY POLICY OBJECTIVES AND STRATEGY A slow and steady rate of money growth is one of the four basic elements of the Administration's economic recovery program. While the formulation and implementation of monetary policy is the re- 63 Chart 3-3 Money and GNP Growth PERCENT CHANGE (ANNUAL RATE)1 AVERAGE ANNUAL PERCENT CHANGE Velocity 1959101970 1970la 1981 1959 to 1981 16 2,8 6.7 5.2 14 MONEY GROWTH PLUS AVERAGE VELOCITY GROWTH2 12 10 8 6 4 2 0 1961 63 65 67 69 71 73 75 77 79 81 1 PERCENT CHANGE IN 4-QUARTER MOVING AVERAGES OF SEASONALLY ADJUSTED MONEY STOCK (M1) AND GNP. 2 AVERAGE VELOCITY GROWTH IS AVERAGE ANNUAL PERCENT CHANGE OVER THE PERIOD 1959 TO 1981. NOTE.—SHADED AREAS INDICATE RECESSIONS AS DEFINED BY THE NATIONAL BUREAU OF ECONOMIC RESEARCH. SOURCES: DEPARTMENT OF COMMERCE AND BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM. sponsibility of the Federal Reserve, the Administration believes the announced policy of the Federal Reserve is consistent with the economic recovery program. Thus, the Administration expects that the Federal Reserve will achieve an orderly reduction in the trend of money growth to a noninflationary rate, (See .Chapter 8 for a discussion of recent monetary developments.) We have discussed in the previous section how large risk premiums—the inflationary psychology—impose costs on the economy and constitute a major obstacle to achieving a high rate of saving and investment and rapidly rising standards of living. Announced changes in policy cannot lower these risk premiums in the short run. Credibility must be earned by performance. The longer the heritage of inflation, the longer it will take to demonstrate the credibility of current policy. Controlling Monetary Aggregates Some basic principles can be used to evaluate monetary policy actions. First, the monetary aggregate that is selected for policy purposes should be chosen with two factors in mind. One is that growth 64 of the aggregate should be closely related to a primary objective of policy, which is to reduce inflation. This means that the aggregate must be closely related to national income in current prices. The second factor is that the Federal Reserve should be able to control the aggregate. Although a broader monetary aggregate may bear a closer relationship to nominal income than a narrower one, it is not appropriate for the Federal Reserve to emphasize the broader aggregate if it cannot be controlled as closely. Such a broader aggregate, however, may be a useful indicator of the effects of policy if timely data are available. As has already been discussed, the Federal Reserve has the ability to control the Ml aggregate with a reasonable degree of precision. Success in controlling monetary aggregates is in part dependent on prevailing exchange-rate policy. A policy designed to maintain a given value of the dollar on foreign exchanges is inconsistent in the long run with a policy of achieving given monetary targets. As will be discussed in detail in Chapter 7, the policy of the Administration is to permit exchange rates to be determined by market forces. Such a posture relaxes an important constraint on the ability of the monetary authorities to set and achieve monetary targets. Financial innovations in recent years have complicated the evaluation of the inflationary potential of monetary growth. The development of new financial instruments necessitated a recent redefinition of the monetary aggregates used by the Federal Reserve. The new measure of transactions balances (Ml), in addition to including the public's holdings of currency and demand deposits at commercial banks, also includes the new types of checkable deposits offered by financial institutions, such as negotiable order of withdrawal (NOW) accounts. These interest-bearing checkable deposits are clearly used for transaction purposes and thus properly belong in Ml. Under the operating procedures of the Federal Reserve, accuracy in controlling a particular monetary aggregate depends upon the reserve requirement structure. In principle, reserve requirements should be applied uniformly to all deposits included in the monetary aggregate that the Federal Reserve is most committed to controlling and held at zero on deposits the Federal Reserve is less interested in controlling. Since the existing structure of reserve requirements was originally specified for other reasons, such as bank safety and allocation of credit, it does not meet this principle. As a result, the Federal Reserve must continuously monitor and compensate for the shifting relationships between the various monetary aggregates and total bank reserves. This problem, which has been severe in the past, will be reduced greatly over the next few years. A restructuring of reserve require- 65 ments that will allow closer control of Ml is currently being carried out under provisions of the Depository Institutions Deregulation and Monetary Control Act of 1980. After complete implementation of these provisions is achieved by 1988, reserve requirements on transaction accounts will be nearly uniform, and those on most other accounts could be eliminated. Interest Rates Versus Money Stock Targets Prior to the 1970s the Federal Reserve (like most central banks) judged the appropriateness of monetary policy primarily by looking at credit conditions and interest rates—specifically, by watching short-term interest rates as an indicator of money-market conditions. However, the problem raised by this procedure was the difficulty in knowing exactly how much to vary interest rates in order to stabilize the economy. In times when credit demand was strong, too small an increase in interest rates generated spending in excess of the economy's capacity to produce, thereby fueling inflation. Similarly, interest rates might be allowed to decline by too little at times of weak credit demand, contributing to a recession. In practice, monetary policymakers tended to be cautious in attempting to change interest rates, with the result generally being too much expansion of money when credit demand was strong and too little expansion when credit demand was weak. This procyclical money growth has tended to exacerbate, rather than dampen, business cycle fluctuations (Chart 3-3). The procyclical growth in money was accompanied by a secular growth in money and increases in inflation. As the rate of inflation soared in the 1970s, market interest rates became an even less reliable guide to monetary policy. Market interest rates tend to be high when the inflation rate is high and low when inflation is low, given private and public borrowing demand. Consumption and investment decisions are based on real (inflation-adjusted) interest rates, not nominal interest rates. High nominal interest rates do not necessarily mean that *'money is tight." High interest rates, in fact, may go hand-in-hand with "easy money." Since it is difficult to measure inflation expectations, it is difficult to know how much of an adjustment to make in nominal interest rates to determine the real interest rate. For these reasons, monetary policy is more appropriately based on changes in the growth of money than on changes in market interest rates. When the Federal Reserve first adopted monetary targets in the early 1970s, it attempted to alter interest rates to achieve a desired rate of monetary growth. The growth of money was controlled through the marginal cost to banks of acquiring additional reserves, as indicated by the Federal funds rate, rather than through direct 66 control of the quantity of reserves. (The Federal funds rate is the rate at which banks borrow excess reserves from each other.) In 1975, however, the Congress urged the Federal Reserve to adopt annual targets for monetary growth. With passage of the Full Employment and Balanced Growth Act of 1978 (the Humphrey-Hawkins Act), the requirement for money growth targeting became more specific. Since then, monetary authorities have been modifying their procedures in order to achieve their monetary targets. On October 6, 1979, the Federal Reserve adopted a new approach which put much less emphasis on fluctuations in short-term interest rates. Instead, the new procedure placed primary emphasis on the amount of bank reserves as an operating target and allowed interest rates to be determined more freely by the market. What the Federal Reserve decided to do at that point was to control the quantity of reserves, rather than their price. Under the old procedures the average Federal funds rate typically did not vary by much more than one-half of a percentage point between monthly meetings of the Federal Open Market Committee. But after October 1979 the allowable range of the Federal funds rate was increased. Enhancing Monetary Control Stable monetary growth will serve to stabilize prices, act as an automatic stabilizer against temporary output fluctuations, and help to make public expectations about inflation consistent with the underlying rate of monetary growth. Achievement of stable monetary growth will require adequate control over total bank reserves. Two types of reserves are available. Nonborrowed reserves are owned outright by banks and are supplied by the Federal Reserve through open market operations. Borrowed reserves are supplied through temporary loans from the discount window of the Federal Reserve. The monetary authorities can directly control the amount of nonborrowed reserves, but they have only indirect control over the small but potentially volatile amount of reserves which bank borrow at the discount window. Although borrowed reserves constitute, on average, only 2 to 3 percent of total reserves, fluctuations in borrowing can contribute significantly to short-run changes in total reserves. Reform of the discount window has therefore been proposed to make borrowed reserves more controllable and thus more predictable. Under these conditions, the Federal Reserve would be able to meet its targets for total banks reserves and the monetary base more accurately. The volatility in borrowed reserves could be reduced by tying the discount rate to market rates so as to reduce variability in the incentive to borrow. To keep such variability to an absolute minimum, the Federal Reserve would also have to set its discount rate somewhat 67 above market interest rates—that is, to act as a penalty. A penalty discount rate would be especially effective when the Depository Institutions Deregulation and Monetary Control Act of 1980, which makes reserve requirements significantly more uniform, is fully implemented. An even more successful operation of a penalty rate would require a switch from the Federal Reserve's lagged reserve-requirement rule to a system of contemporaneous reserve requirements. The current rule, which became effective in 1968, states that in any given week institutions must hold reserves (as deposits at a Federal Reserve Bank or vault cash) in prescribed percentages of their various types of deposits 2 weeks earlier. The earlier system of contemporaneous reserve accounting required banks to hold reserves based on the current week's deposits. Under lagged reserve accounting, the amount of borrowed reserves fluctuates considerably over the short run. During any 2-week period the total reserve requirement is predetermined by deposits 2 weeks earlier. This means that reserves must be supplied within the period, either borrowed or nonborrowed. Under current operating procedures, the Federal Reserve controls the growth of total reserves in future periods by varying the mix between borrowed and nonborrowed reserves. If a penalty discount rate tied to market interest rates were introduced, borrowed reserves would probably shrink to a small and relatively constant amount. The Federal Reserve Board has requested public comment on its proposal to return to a system of contemporaneous reserve accounting. An important reason for going back to contemporaneous accounting would be to permit greater flexibility in the discount rate, at a penalty level or otherwise, which in turn would provide more precise short-run control over total reserves by reducing the volatility of borrowings. Even in the absence of a penalty discount rate, however, contemporaneous reserve accounting would allow open market operations to have a more immediate effect on total bank reserves. INSTITUTIONALIZATION OF A NONINFLATIONARY MONETARY POLICY The existence of high and varying rates of inflation, high and varying rates of interest, and volatile exchange rates for more than a decade clearly suggests that monetary management can be improved in the future. The Administration has supported and will continue to support the pursuit of a noninflationary monetary policy. The issue discussed in this section is: Once inflation has been eliminated, how can price-level stability be maintained? 68 Price stability is an objective that is arrived at through the political process, but it often conflicts with other political and economic objectives in the short run. It has therefore been difficult to establish institutional arrangements that will ensure price-level stability. The traditional argument for an independent monetary authority is that insulation from politics enables the central bank to resist pressures for inflating, even when the government would find an inflationary policy politically appealing. Existing institutional arrangements have not ensured price stability. In the past 17 years, gold reserve clauses related to demand deposits at commercial banks, and then to currency held by the public, have been terminated. The Bretton Woods fixed exchange-rate system began to break down in the late 1960s, and the last link between the U.S. dollar and gold was formally severed in 1971. Since then, the monetary authorities have had considerable discretion in determining the rate at which new money is created. As a result of the rising and volatile inflation of the past, economists have been evaluating alternative approaches to achieving and maintaining a noninflationary monetary policy. The congressional mandate to create a Gold Commission is symptomatic of a desire to find institutional arrangements that will ensure price-level stability. The remainder of this section discusses two approaches to the problem. One would involve some linkage of our monetary system to the official U.S. gold stock. The other would involve statutory or constitutional rules limiting monetary growth or requiring a stable price level. It is important to keep in mind that alternatives to the present arrangement should be evaluated in terms of the answers they provide to these two questions: Is the rule or norm perceived to be credible by the public? Will departures from the stated norm impel policymaking institutions to correct them? If the answer to either question is "no," institutional change would not have served its purpose. GOLD STANDARD Some economists and elected officials have recently been advocating a return to a gold standard as a lasting way to restore confidence in the U.S. monetary system. The basic idea is that excessive money creation could be prevented by anchoring money to a scarce resource. In addition, it is argued that the establishment of a gold standard would induce savers to accept lower nominal rates of return on their assets. This would occur because fiat money would be convertible into gold at a fixed price, and thus an effective constraint would be placed on growth of the money stock and the rate of inflation. Lower rates of interest, in turn, would result in a rapid resump- 69 tion of economic growth. So, in essence, the contention is that restoration of a gold standard would not only stabilize prices but also raise and stabilize output growth. It is useful to review at this point how gold standards actually performed in the past. The evidence does not suggest that it achieved greater stability in price levels or growth. Much of the claimed pricelevel stability achieved under previous gold standards is based on Gustav Cassers observation that "the general level of prices in 1910 was practically the same as in 1850." l Professor Phinney of Harvard was one of the first to point out that "unfortunately, when Cassel came to choose base years, he completely forgot the distinction between the secular and the cyclical to which he had called attention/* 2 Chart 3-4 Jevons-Sauerbeck Index of Wholesale Commodity Prices 1830_~ 100. 120 100 80 60 1820 I 1830 I 1840 I 1850 I 1860 I 1870 I 1880 I\>C/ I 1890 1900 I 1910 NOTE,—INDEX OF PRICES IN BRITISH POUNDS OF A SELECTED GROUP OF INTERNATIONALLY TRADED COMMODITIES. SOURCE: REPRODUCED FROM J. T. PHINNEY, "GOLD PRODUCTION AND THE PRICE LEVEL: THE CASSEL THREE PERCENT ESTIMATE," QUARTERLY JOURNAL OF ECONOMICS, VOL. 47, 1932-33, pp. 647-679. Chart 3-4 reproduces the Jevons-Sauerbeck index which appeared in the Phinney article. The index shows large and extremely long swings in prices lasting up to 30 years. Increases and decreases were on the order of 30 to 50 percent. The chart reveals very little evidence of long-run price-level stability. More information can be gleaned by considering the wholesale price indexes of four countries for the period 1814-1913 (Table 3-1). Perusal of the table leads to two conclusions. First, the gold-standard period was very deflationary on 1 "The Supply of Gold," in Interim Report of the Gold Delegation of the Financial Committee, Geneva, 1930, p. 72. See also his Theory of Social Economy, p. 441. 2 J. T. Phinney, "Gold Production and the Price Level: The Cassel Three Percent Estimate," Quarterly Journal of Economics, Vol. 47, 1932-33, p. 650. 70 the whole, with the price levels in the United States and the United Kingdom dropping by 44 percent. Second, price-level cycles were deep and protracted. TABLE $-\.—Wholesale price indexes, 1814-1913 United States Item United Kingdom Germany France Italy Indexes (1913=100): 1814 1849 1872 1896 1913 . 178 80 133 67 100 178 90 125 76 100 129 71 111 71 100 -55 66 -50 49 -49 39 -39 32 45 56 -36 41 -44 -44 -22 U32 96 124 71 100 74 100 -27 29 -43 41 35 Percent change: 1814 1849 1872 1896 to 1849 to 1872 to 1896 to 1913 .. 1814 to 1913 2 -24 ' Data are for 1820. Change from 1820. Source: Robert Triffin, "The Evolution of the International Monetary System: Historical Reappraisal and Future Perspective," Princeton Studies in International Finance No. 12,1964, p. 13. 2 Table 3-2 compares the sample mean and coefficient of variation [standard deviation divided by sample mean] of the rate of change of the wholesale price level for the United States and the United Kingdom for three different periods. TABLE 3-2.—Comparison of the behavior of price level, real output, and money growth in the United Kingdom and the United States, selected periods, 1821-1979 The Interwar Period The Gold Standard » Item (1) Average annual percent change in the price level (2) Coefficient of variation of annual percent changes in the price level (ratio) United States United States United Kingdom United States 1870-1913 (1821-1913) 1879-1913 (1834-1913) 1919-38 1919-40 1946-79 1946-79 -0.7 (-.4) 0.1 (-.1) -4.6 -2.5 5.6 2.8 -14.9 (-16.3) 17.0 (6.5) -3.8 -5.2 1.2 1.3 2.5 3.5 4.9 5.5 1.4 1.6 (3) Coefficient of variation of annual percent changes in real per capita income (ratio) (4) Average level of the unemployment rate (percent) Post- World War II United Kingdom United Kingdom 2 4.3 36.8 13.3 11.3 2.5 5.0 (5) Average annual percent change in the money supply 1.5 6.1 .9 1.5 5.9 5.7 (6) Coefficient of variation of annual percent changes in the money supply (ratio) 1.6 .8 3.6 2.4 1.0 .5 'Data for the longer periods (in parentheses) were available only for the price level. Years 1838-43 and 1861-78 were excluded for the United States. 2 1888-1913. 3 1890-1913. • Note.—Lines 1 and 5 calculated as the time coefficient from a regression of the logarithm of the variable on a time trend. Lines 2, 3, and 6 calculated as the ratio of the standard deviation of annual percent changes to their mean. Source: Michael David Bordo "The Classical Gold Standard: Some Lessons for Today", Federal Reserve Bank of St. Louis Review, May. 1981, Vol. 63, No. 5, 71 Again, the evidence is clear that the achievement of low (and often negative) rates of inflation over the long run during previous goldstandard periods came at the cost of a high variability in inflation rates. To the extent that deviations of the price level from its long-run equilibrium were unanticipated, growth would be expected to be more variable than in periods when inflation rates were more stable. The third line of Table 3-2 bears on this question. The coefficient of variation of the growth rate of real per capita income was about twice as high in the pre-World War I gold-standard period as in the postWorld War II period. In addition, recessions in the United States lasted twice as long, on average, from 1879 to 1913 than from 1945 to 1980, while periods of expansion and recovery were about one-third shorter. Finally, the measured unemployment rate during the pre-World War I goldstandard period was on the average two-thirds higher than during the post-World War II period in the United Kingdom and was onethird higher in the United States. Under a gold standard, the rate of growth in the supply of monetary gold depends on the rate of gold production and the rate at which demand for gold for nonmonetary uses increases. Gold production depends in part on the purchasing power of gold (the ratio of the gold price in dollars to the average price level). Table 3-3 contains data on the yearly production of gold from 1800 to 1980. The numbers encompass a wide range, from a maximum average annual growth rate of 7,1 percent for the period 1834-1848 to a minimum of —1.6 percent for the most recent period 1969-1980. TABLE 3-3.—Changes in gold output, 1800-1980 [Percent change per year] Period Gold output 0,4 7.1 6.2 1800-33 1834-48 1849-70 1871-89 1890=1913 1920-33 .. . . .. ... . . . ... , —> 3 6.0 3.4 7.0 2.7 -1.6 1934=40 1950-68 1969-80 Source: Anna J. Schwartz, National Bureau of Economic Research, Inc., Memorandum of September 10, 1981 to Members of the Gold Commission. Even during the pre-World War I gold standard period, monetary gold was only a fraction of the total money stock, the bulk of which consisted of paper currency and bank deposits. The last two lines of Table 3-2 show the sample mean and coefficient of variation of the 72 annual growth rate of ML The average growth rate of Ml for the United Kingdom during the pre-World War I gold standard period was one-fourth of the average during the post-World War II period. For the United States the two sample means are approximately the same. However, the variability of Ml growth was over 50 percent higher in the gold-standard period than in the post-war period. In sum, the evidence presented indicates that previous gold-standard periods were characterized by: (1) lower average inflation and money supply growth; (2) greater fluctuations in inflation, money supply growth, and output growth; and (3) higher unemployment rates than in the period 1946 to 1979. Although comparisons across time periods are difficult to make because of the difficulty of controlling for differences, including the effects of wars, droughts, and other shocks to the economy, it is far from clear that gold standards produced better overall results than those produced during the post-World War II period. Could the United States forge a better gold standard now? There are two options: restore some form of gold cover requirement without convertibility or restore a gold cover requirement with convertibility; either with partial or full gold backing. The first option prevailed from 1934 until 1968, a period during which Federal Reserve Banks were required to keep a minimum of legal value gold certificates (valued at $35 an ounce) behind each $1 of their note liabilities. A more structured variant would be to restrain money creation by linking the central bank's ability to create liabilities to a legislated schedule of changes in the official price of gold and changes in the amount of gold reserves required for each dollar of central bank liabilities. Central to such a proposal would be a requirement that the actual gold stock remain fixed in size and that changes in its value occur only through variations in the official or bookkeeping price of gold. Not only would there be no requirement to buy and sell gold at the official price, the Treasury would be prohibited from doing so. In other words, there would be a gold reserve requirement for the money supply, but no convertibility regardless of whether the official price of gold was below, at, or above the market price. In sum, this option would essentially constrain the annual growth of the monetary base. Under the second option the United States would fix permanently the dollar price of gold—that is, make the dollar convertible into gold—without concern for whether or not other countries would follow our example. The difference between a partial and a full backing would be that, whereas full backing would establish a one-to-one link between the gold stock and the money stock, partial backing would not. But in both cases, random shocks in the gold markets 73 would create serious problems in controlling monetary aggregates and hence the general price level, A MONETARY RULE Enactment of a statute or constitutional amendment requiring the monetary authorities to abide by a rule regarding monetary growth or inflation is another method that has been suggested for dealing with the problem of maintaining long-run price stability. Such a rule would free the Federal Reserve from having to interpret either the "social welfare function'* of the country or, more practically, the objectives of current elected officials. The rule could be stated either in terms of an ultimate objective for inflation, as it is in some industrial countries, or in terms of a monetary growth target that would be consistent with the maintenance of price-level stability. A rule fixing a final outcome for inflation would oblige the monetary authorities to maintain monetary conditions consistent with the stability of a broad index of commodity and service prices (for example, the consumer price index). One might argue that the HumphreyHawkins Act implicitly incorporates such a rule. This legislation has as goals the reduction of "the rate of inflation to no more than 3 per centum" in the interim and ultimately to zero. The act, however, does not make the Federal Reserve responsible for the achievement of price-level stability. Furthermore, it mandates that "policies and programs for reducing the rate of inflation shall be designed so as not to impede achievement of goals and timetables" for reducing unemployment. In sum, there is no recognition in the act of a division of responsibilities that would include assigning responsibility for price-level stability exclusively to the Federal Reserve. The advantage of formulating a rule on the final outcome for inflation is that the monetary authorities would be free to devise the best monetary strategy to achieve the mandated outcome. The disadvantage would be the rule's potential inflexibility. Temporary changes in the price level can be caused by a variety of shocks for which the monetary authorities cannot be held accountable. One approach would be to state the final outcome in terms of the average rate of growth of the consumer price index or nominal GNP over a period of several years. The alternative of a target rule for monetary growth would have to be specified in such a way as to be consistent with price-level stability, again, over a period of several years. The rule could be revised from time to time in light of any changes in the relation of money growth to inflation. Such calibration would be the job of the central bank. Of course, the mere enactment of a rule would not ensure its successful implementation. Suitable institutional constraints would 74 have to be present to correct for possible deviations from desired outcomes. At this time it is not clear which rule, if any, would be optimal and likely to prove preferable over a long period. Hence, the Federal Reserve's current policy of gradually reducing the target growth rate of money over several years is providing a transition to a less inflationary environment. One of the Administration's long-run objectives is the elimination of inflation. The implementation of a monetary policy that is consistent with this objective can be viewed in the following way. Each year, the monetary authorities would announce the rate of growth of the money supply that is consistent with achieving their medium-term objectives for nominal income and inflation. Over the longer run the rate of growth of the money supply must v be consistent with the achievement of the rate of nominal income implied by the inflation objective. To implement this procedure, the Federal Reserve would determine the rate of growth of total bank reserves that was consistent with the targeted growth of the deposit component of Ml. Open market operations by the Federal Reserve would expand the monetary base by a sufficient amount to provide total bank reserves and the currency component of targeted Ml growth. Ultimately, the Federal Reserve would set a reserve growth path consistent with the desired price level performance on the basis of estimates of several parameters. These would include the trend path of real output, the trend of Ml velocity, and the trend of the ratio of Ml to the monetary base. As these changed, the targets for nominal income, Ml growth, and growth of the monetary base would be altered to maintain a stable price level. Unexpected changes in any of these parameters could be offset to maintain long-run price stability, THE FUTURE CHALLENGE A few basic propositions about inflation can summarize the role of monetary policy in the future. First, there is more agreement now than there was a decade ago that inflation is essentially a monetary phenomenon. In addition, events that occurred during the 1970s showed the importance of distinguishing between a transitory change in the rate of inflation occasioned by a "real shock" and the underlying rate of inflation. Second, an assumption of a positive but predictable rate of inflation is not very realistic. For the past 20 years the United States has experienced several cycles around a rising trend of inflation. We are now experiencing a cyclical decline in inflation. A major objective of the Administration's economic recovery program is to achieve the elimination of inflation in the long run. The ulti- 75 mate costs of adjusting to a significantly less inflationary environment will be influenced by how rapidly expectations about future inflation are revised downward. Finally, in a world where the U.S. dollar is the dominant international currency, many other countries* policy options are influenced by the success of U.S. anti-inflation policies. Most other countries find it difficult to maintain an inflation rate that is significantly below that of the United States, although Germany, Japan, and Switzerland have done so in recent years. Realization of that fact has increased the sense of urgency felt in the United States about achieving and maintaining a low rate of inflation. The appropriate policy for reducing the inflation rate is a decrease in the rate of money growth. Unfortunately, a slowing of money growth in the past has tended to reduce output and employment within roughly two quarters, while as many as eight quarters typically have had to pass before monetary restraint produced a significant reduction in the inflation rate. However, the whole process of renewed economic growth without inflation can be speeded up if the policy of monetary restraint is believed by the public, since it is an unanticipated decrease in the rate of money growth that significantly affects output and employment in the short run. If the decrease is generally anticipated, wages and prices will begin to rise more slowly and the adverse short-run effects on output and employment will be minimized. That is why it is so important for the public to be convinced that an anti-inflationary monetary policy has finally been adopted. The Federal Reserve can maximize the credibility of its monetary policy, and hence reduce the transition costs of eliminating inflation, by announcing a specific target for the rate of money growth and by minimizing short-run deviations from that target. Theoretically, restrictive monetary policy could achieve price-level stability regardless of fiscal policy. As a practical matter, however, reducing the growth of government spending and reducing deficits in the Federal budget will help to strengthen the belief that anti-inflationary policies will be maintained. That, in turn, will help lower the costs of adjusting to lower rates of inflation. In short, the credibility of monetary policy is influenced by the fiscal policy that accompanies it. The monetary system is evolving toward one in which the Federal Reserve will have very close control over Ml, suitably redefined from time to time, through control of reserves. With uniform reserve requirements on transaction accounts, there will be relatively little variability in the ratio of Ml to the monetary base. Longer term movements in this ratio can be offset by open market operations. Mone- 76 tary aggregates other than Ml may serve as useful indicators of the effects of policy actions, but they will not be directly controllable by the Federal Reserve and therefore will not be useful as short-run targets. A policy of providing slow and steady growth of money will not permit the central bank to attempt to offset the effects of transitory shocks to aggregate demand or productivity. In other words, shortrun fluctuations in inflation and output growth will occur: economic expansion and contraction induced by changes in productivity or price shocks cannot be completely avoided. What can be avoided are the procyclical changes in the growth of the money supply that have occurred in the past. 77 CHAPTER 4 Federal Budget Issues THE FEDERAL BUDGET presents economic policymakers with three fundamental questions. First, how much should the Federal Government spend? Second, how should that spending be allocated? Third, how should the spending be financed—by current taxes only, by borrowing to cover a deficit in tax revenues, or by adding to the monetary base. Without spending there would be no need to impose taxes or to borrow to cover deficits. The composition of a given level of spending has implications for how it should be financed. And the choice of the level of spending is influenced by the recognition that government spending cannot indefinitely grow faster than the economy and that the financing mechanisms available to the government impose costs on the economy. This chapter examines issues related to the size and allocation of the Federal budget and explores the implications for the economy of financing a part of Federal spending through budgetary deficits. Financing Federal spending through various forms of taxation, together with related issues, are the subject of Chapter 5. The Administration's spending policies rest on both philosophical beliefs and economic judgments. As discussed in Chapter 2, the view that the size and scope of the Federal Government are too large reflects the belief that most individuals know best what they want and how best to attain it. In the aggregate their actions will generally result in the most appropriate distribution of our economic resources. This belief is accompanied by the judgment that resources left in the private sector generally are more effective in generating growth and productive employment than resources moved to the public sector. Because of these philosophical beliefs and economic judgments, the Administration has initiated a major transformation of the role of the Federal Government in the U.S. economy. The Administration's economic recovery program will change both the size and the nature of government involvement, reversing the trend of recent decades when the Federal budget usually grew faster than the rest of the economy as the Federal Government took upon itself responsibilities 78 that had previously been left to the private sector or to State and local governments. Federal spending is a highly visible form of government involvement in the economy, and the Administration's economic program calls for a slowdown in the growth of Federal spending. Federal spending rose from 20.2 percent of the gross national product (GNP) in 1970 to 23.0 percent in 198L By fiscal 1987, Federal spending is projected to fall to 19.7 percent of GNP. Federal tax rates on individuals and businesses will also fall, as will the share of gross national product used to pay Federal taxes. By 1987, Federal tax revenues will represent 2.3 percentage points less of the gross national product than they did in 1981. At the same time the Federal budget deficit also will shrink relative to the size of the economy, dropping from 2.0 percent of GNP in 1981 and 3.2 percent in 1982 to 1.1 percent by 1987, In 1981 the Congress and the Administration took important steps toward achieving this shift in emphasis from the public to the private sector. The enactment of the Economic Recovery Tax Act of 1981 will reduce income tax rates over the next few years, and the Omnibus Budget Reconciliation Act of 1981 will restrain the growth of many open-ended entitlement programs. This shift will be incomplete, however, without further Federal spending restraint in the years ahead. The shift in the role of the Federal Government is more than a reduction in size. It also encompasses a restructuring of priorities at the Federal level and a reallocation of responsibilities and resources between the Federal and the State and local levels of government. Within the Federal budget, spending will shift toward those activities that, in this Administration's view, reflect truly national needs, such as strengthening the Nation's defenses and maintaining the integrity of the social insurance programs. Economic criteria will be applied to various spending programs to help ensure that the resulting benefits offset the costs to the taxpayers who ultimately must bear them. These criteria should apply not only to direct Federal spending, but also to on- and off-budget credit activities. Such Federal credit programs reallocate national resources by financing activities that might not be attractive to investors in the private market. The first step in the realignment of responsibilities among Federal, State, and local jurisdictions was the consolidation of a number of categorical grant programs into block grants in fiscal 1982. The second step, proposed in the budget for fiscal 1983, is to shift responsibility for some programs now jointly operated by the States and the Federal Government either to the States or to the national 79 government, and to turn some other programs that are now wholly federally funded back to the States. The proposed restructuring of functions would be accompanied by a phased withdrawal of the Federal Government from the excise tax base. These proposals are intended to strengthen the Federal system by improving the operation of government at all levels, making it more responsive to the people. THE OVERALL LEVEL OF FEDERAL SPENDING The benefits of many types of Federal spending are easily seen. Parks are built, research is conducted, and the sick and the elderly are supported with Federal dollars. Yet Federal spending in the aggregate also imposes many costs on the economy. First, costs arise through the mechanisms used to pay for what the government spends. The government can raise taxes now or in the future to obtain the funds it needs, or it can obtain those funds indirectly through monetary expansion. As discussed in Chapter 5, taxes tend to reduce growth in the private sector by transferring productive resources from private to public hands, using tax methods that generally distort the decisions of households and firms to supply labor and capital to the economy. Deficits also impose real costs on the economy (as explored later in this chapter), whether financed by lower future spending, higher future taxes, or by expanding the money supply. For government spending to be economically justified, therefore, the benefits resulting from that spending—whether in terms of more economic growth or the enhanced well-being of the society— must exceed the costs. Discretionary changes in the level of government spending made in the attempt to offset cyclical fluctuations in the economy can impose additional costs. Such changes, which increase the uncertainty faced by households and firms in making their economic decisions, can discourage the supply of productive factors to the economy. Furthermore, attempts to implement discretionary countercyclical policy can in fact prove to be procyclical. A third way in which Federal spending can impose costs on the economy is by altering the allocation of resources, both currently and over time. For a given level of spending and method of financing, the allocation of federal resources between current consumption and investment can affect economic growth. Government spending can be divided into four categories: consumption, transfers, investment (both defense and nondefense investment), and other (which mainly includes interest payments and grants to State and local governments). Government spending may absorb private sector resources for use by the public sector or reallo- 80 cate resources within the private sector, or both; the predominant effects differ by category. Transfer payments do not absorb resources aside from administrative costs, but they may have strong allocative effects within the economy. Transfer payments may lead recipients to change their work or saving behavior, and they may change the composition of the demand for goods and services. (Examples of the factor supply response are discussed in Chapter 5.) Federal grants to State and local governments affect the use of resources in the economy through their effect on the behavior of those jurisdictions. State and local governments may respond to the Federal grants by changing the level of spending and taxing, as well as the composition of the outlays. The direct effect of government purchases of goods and services for either consumption or investment is to absorb resources from the private sector. To the extent that such spending substitutes for private purchases public sector purchases may also redirect the use of resources within the private sector. For example, public provision of education or police services reduces the private demand for such activities. The dominant effect that government purchases have on the economy, however, is likely to be through absorption rather than reallocation of private sector resources. Since a dollar of government consumption spending is unlikely to substitute fully for a dollar of private consumption, an increase in government consumption spending would tend to increase the share of total consumption in GNP (apart from any effects of the financing arrangements). Similarly, government investment tends to increase the share of total investment in the economy. Furthermore, government consumption and investment spending is likely to alter the composition of both consumption and investment in the economy from what would have prevailed if the resources had stayed in private hands. In practice, the distinction between government consumption and investment is difficult to make. The government consumption figures shown in Table 4-1 include various expenditures to promote education, training, and research and development. Like physical capital, these activities contribute to economic growth. Published measures of government investment expenditures encounter similar problems. For example, current Federal investment expenditures mainly comprise purchases of military hardware and structures, whose acquisition will provide future benefits in terms of stronger national security that cannot be captured in GNP. Although services of government capital are not counted in GNP, the future services resulting from the construction of airports, highways, and other civilian investment outlays are reflected in part in the recorded output of private sector 81 users. In practice, therefore, statistics that allocate government purchases between consumption and investment must be viewed with caution. TABLE 4-1.—Structure of Federal Government expenditures, NIPA, calendar yean 1951-83 [Percent of GNP] Period Total Federal Government expenditures Federal Government consumption 1 Federal Government transfer payments 2 Federal Government investment 3 Defense Nondefense Other Federal expenditures 4 1951-60 18.7 7.5 3.8 4.6 0.2 2.6 1961-70 19.5 7.6 5.2 2.7 .3 3.7 5.3 1971-80 21.5 6.2 8.4 1.3 .3 1981 5 23.4 6.1 9.8 1.3 .3 5.9 1982 6 24.0 6.4 10.1 1.4 .3 5.8 1983° 22.9 5.9 9.6 1.7 .2 5.5 1 Purchases of goods and services except durables and structures. 2 Includes transfers to foreigners. "Purchases of durables and structures. The allocation between defense and nondefense was estimated for years before 1972 by Council of Economic Advisers. 4 Primarily interest payments and grants to State and local governments, 5 Preliminary. 6 Estimated by Council of Economic Advisers. Note.—Based on data from the national income and product accounts (NIPA). Expenditures by the Federal Government include offbudget items such as the Postal Service and the Federal Financing Bank as well as regularly budgeted expenditures. Sources: Department of Commerce {Bureau of Economic Analysis), Office of Management and Budget, and Council of Economic Advisers. Despite these limitations, the statistics in Table 4-1 are a useful summary of changes in Federal spending in these categories in recent years and how these categories are likely to change under the Administration's current budget plans. Total Federal spending (on a national income accounts basis) as a percent of GNP rose nearly 3 percentage points between the 1950s and the 1970s. The category with the largest growth was Federal transfer payments. Most of the increase there—77 percent—represented expansion of the social security system (discussed later in this chapter). This increase in transfers was partially offset by a drop in Federal consumption as a share of GNP. Measured Federal expenditures on investment goods have fallen substantially, largely because less of the Nation's output in the 1970s was spent on defense hardware than in the earlier postwar decades. The Administration's budget plans for fiscal 1983 envision a reversal in the trend of transfer payments rising as a share of GNP. Federal consumption expenditures should resume their decline as a share of GNP, Government spending classified here as investment will increase in relative importance primarily because of rising defense outlays. 82 REALLOCATION OF BUDGET PRIORITIES A substantial shift in the composition of the budget has accompanied the expansion of the Federal role in the economy since 1960. Table 4-2 shows how the priorities of the Federal Government have evolved over the last 20 years and how this Administration intends to restructure them. TABLE 4-2.—Composition of Federal unified budget outlays, selected fiscal years-, 1960-87 [Percent] Fiscal years Item 1960 1965 1970 1975 1980 1981l 1982 2 1983 2 19872 Defense 3 48.2 38.9 38.7 24.5 21.5 22.2 23.8 27.0 35.4 Payments for individuals4 26.4 28.4 33.7 48.3 49.1 50.2 50.5 50.5 49.0 17.0 3.0 1.2 3.9 1.5 19.6 2.4 1.5 4.2 .8 20.4 1.7 6.3 3.8 1.5 26,7 4.2 8.3 5.9 3.2 27.1 3.1 10.1 5.9 2.8 28.1 3.3 10.5 5.4 3.0 28.4 4.0 10.7 4.9 2.5 29.2 3.7 11.0 4.1 2.5 29.7 2.0 12.0 3.4 1.9 Retirement4 Unemployment Medical care Food, nutrition, and public assistance Other . . . . Interest 9.0 8.7 9.4 9.5 11.2 12,6 13.7 14.9 11.9 Other 3 16.2 23.9 19.9 17.7 18.2 15.0 12.0 7.6 3.7 4.7 2.2 2.8 2.0 4.4 1.0 .2 -1.1 6.0 2.7 3.3 1.9 4.9 1.8 3.6 2.1 2.6 2.3 3.6 4.2 .3 1.2 4.0 2.9 .5 2.9 3.2 4.4 2.2 -2.4 3.4 3.5 .8 3.1 3.6 4.5 1.5 -2.2 3.1 3,6 .8 2.7 3.5 3.8 1.0 -3.7 2.9 2.6 1.2 2.2 2.9 3.0 .9 -3.6 2.9 1.9 .6 1.5 2.5 1.8 1.0 -4.6 2.2 1.1 .3 .9 2.0 1.4 .8 -4.8 7.6 9.2 12.3 15.4 15.9 14.4 12.6 10.7 8.9 4.9 5.9 7.7 10.1 10.0 8.3 6.8 5.8 4.1 international, justice, general government. Energy, natural resources, environment. Agriculture Commerce and community development,. . Transportation Education and training General fiscal assistance Other, net of offsetting receipts . 3.1 Addendum: Grants to State and local governments.- Total Not for individuals 1 2 3 4 s Preliminary. Estimated by Council of Economic Advisers. Excludes military retirement. Includes military retirement. Includes grants to State and local governments other than payments for individuals. Note.—Detail may not add to 100 percent due to rounding. Sources: Office of Management and Budget and Council of Economic Advisers. The most notable change over this period was the substantial reduction in the share of the budget going to national defense, from nearly one-half to less than one-quarter. While the defense share was falling, transfer payments to individuals were growing. In 1960 transfer payments absorbed about one-quarter of the budget, whereas by 1981 they accounted for one-half. Most of this growth came in two types of programs: (1) retirement programs, principally social security, but also outlays for military and civil service pensions, and (2) the medical assistance programs of medicare for the elderly and medicaid for the poor. (A section of Chapter 6 examines factors contributing to medical cost increases.) The third notable shift in the composition of the budget was the greater fraction of Federal revenues transferred to State and local governments through such programs as 83 general revenue sharing. (In Table 4-2, grants to State and local governments are included with direct Federal spending in each of the functional categories.) This Administration has a different set of spending priorities than those reflected in the budgets of the recent past. This difference is expressed in the following guidelines used in developing the Administration's plans for restraining the growth of Federal spending: • Strengthen the national defense. • Maintain the integrity of social insurance programs while reforming entitlement programs to ensure that they serve those in greatest need. • Reduce subsidies to middle- and upper-income groups, • Apply sound economic criteria to programs where subsidies are justified. • Recover costs that can clearly be allocated to users of services provided by Federal programs. • Strengthen the Federal structure of government. • Reduce the Federal role in allocating credit by restraining onand off-budget credit activities. The Administration's estimate of 1987 budget outlays reflects these guidelines, which are consistent with the role for the Federal Government described in Chapter 2. Despite the substantial changes accomplished in the budget for fiscal 1982, reforming the budget cannot be achieved in a year or two. The difference in priorities can best be seen by comparing the Administration's projections for fiscal 1987 with the budget that ended September 30, 1981. As Table 4-2 indicates, the Administration intends to raise significantly the share of the budget spent on defense, from 22.2 percent of total outlays in 1981 to 35.4 percent in 1987. Funding for retirement programs will increase as a share of the budget while other payments to individuals are being reduced. An example of a program in this latter category is trade adjustment assistance, which has provided more generous unemployment benefits to workers who may have been displaced by foreign competition than to other unemployed workers. Increases in the share of the budget going to retirement programs and decreases in the share of other transfer programs will mean that total payments for individuals will account for approximately the same fraction of Federal spending in 1987 as in 1981. The reordering of Federal priorities raises a number of issues that warrant special attention. First, what will be the economic effects of the large increase in defense spending? Second, what caused the substantial expansion in retirement programs, and what issues should be addressed for the future? Third, what advantages can be expected 84 from reallocating responsibilities between the Federal Government and the State and local governments? Finally, how will changes in Federal credit activity affect the economy? DEFENSE Real military spending is expected to grow 9 percent annually between 1981 and 1987. Over that period, military spending (including military retirement) will rise from 5.6 percent to 7.8 percent of GNP, and from 25 percent to 37 percent of total Federal spending. As is clear from Chart 4-1, such an increase would not even restore defense spending to its pre-Vietnam share of GNP. Although the military's shares of national output and Federal spending will not be as high as in the early 1960s, the buildup will be a sharp reversal of the trend of the last decade. As a result, some concern has been expressed about whether this increase could adversely affect the economy. Any economic effects, however, must be assessed in the context of the overriding need for maintaining the level of defense spending necessary for national security. Chart 4-1 Defense Outlays as Percent of GNP r/i M I I I 1 I I I I I I I I I 1 I I I I I I I I I I I I I I I ( I I I 1 I r 1950 1955 1960 1965 1970 1975 1980 FISCAL YEARS SOURCES: DEPARTMENT OF COMMERCE, OFFICE OF MANAGEMENT AND BUDGET, AND COUNCIL OF ECONOMIC ADVISERS 85 1985 The concern over the economic impact of defense spending has probably been overstated. The U.S. economy as a whole should be able to accommodate the projected expansion in defense spending without experiencing an increase in the general inflation rate. Monetary and budget policies can offset the impact of a large increase in government spending for national security, although unusual growth in any spending category, military or civilian, makes the goal of overall restraint that much more difficult to achieve. Moreover, the economy currently has ample slack to accommodate the beginning of a major expansion in defense work. As the economy emerges from the current recession, however, growth in the defense program will compete with expanding demands in the private sector. As the Administration's economic recovery program begins to take full effect, private demand for producer durables should rise significantly. Expenditures for defense also will be concentrated in the durables sector. Real purchases of defense durables (research and development and procurement of major weapon systems) will grow at an estimated rate of 16 percent annually between 1981 and 1987. This exceeds the 14 percent annual rate of increase that occurred during the 3 peak years of the Vietnam buildup. The current defense buildup thus will add to pressures on the durable manufacturing sector in these years. Although it is difficult to predict which industrial markets will be especially affected, three results of the defense buildup can be anticipated. First, the substantial transfer of resources in the durables sector to defense production may increase relative prices in at least some of the affected industries. Both the Department of Defense (DOD) and private purchasers may have to pay more for goods from these industries. Second, increased demand may produce delays in the delivery of military goods. Delivery timetables that seem realistic today may in some cases become obsolete as producers try to accommodate the defense buildup and vigorous expansion in civilian investment at the same time. A third effect may be some temporary crowding out of private investment. Defense procurement and associated production equipment use many of the same physical resources needed for private investment in civilian producer durables. Some private firms may turn to foreign sources for materials while others may cancel or postpone plans for expansion. The Department of Defense is attempting to minimize the potentially adverse economic effects of the defense buildup through longterm planning, better management of defense contracts, and the development of more comprehensive cost estimates. This long-term planning will help defense industries increase their capacity in anticipation of new orders. The department's plans to place greater reli- 86 ance on multiyear contracts will also help defense contractors operate more efficiently, especially by providing incentives to increase capacity and to plan optimal production rates. In the private sector, competition tends to prevent inefficient producers from passing their higher costs on to consumers. In the defense sector the function of encouraging efficiency is largely performed by DOD analysts of contract negotiations and administration. Their jobs are always difficult because of unanticipated problems in developing high technology equipment, lack of competition among suppliers, and a history of erratic fluctuations in defense procurement levels. The defense buildup will therefore increase the challenge to DOD administrators. Careful planning, tight management, and accurate cost estimates can reduce the adverse consequences of the buildup, but some problems may arise. Economic Impact of Increased Military Manpower Over the next 5 years the armed services plan to increase their active duty forces by 9 to 10 percent. Quality standards for recruits are also scheduled to rise. Declining unemployment rates and a reduction in the available manpower pool because of the decline in the recruiting-age population will make these goals difficult to achieve and will increase pressure to shift the costs of achieving them from taxpayers onto the young—that is, by reinstituting the draft. As the Administration's economic recovery program begins to take effect, increases in the number of civilian jobs will make it harder for the military to attract personnel. The problem of attracting first-time recruits is likely to be especially serious. Between 1980 and the end of the decade the number of 18-year-old males will fall by 19 percent, from 2.1 million to 1.7 million, with the bulk of that decline occurring before 1985. Thus, the armed services will need to attract a considerably higher percentage of high school graduates than it does today. Although a considerably smaller U.S. population supported a somewhat larger military throughout the 1950s, the United States had a draft in those years. Just as the potential supply of recruits will be diminishing, the demand—especially for high-quality recruits—will be rising. Without the right combination of incentives, the costs of military compensation may rise sharply while a shortage of recruits may create pressures for a return to a peacetime draft. To prevent such problems, bonuses for recruits in certain areas and for experienced military personnel with special skills may have to be raised. Resumption of the draft would bring about an increase in force levels at substantially lower budget outlays. However, the real costs to the economy would not disappear; they would simply be moved out of DOD's budget and onto the draftees, and the costs would 87 probably rise in the process. The output that the draftees would have produced as members of the civilian work force would be lost in any case. SOCIAL SECURITY Over the past 20 years, 29 percent of the growth in Federal spending has been due to increases in retirement programs, with most of the growth occurring in the social security program. Over the next 5 years the retirement portion of social security will rise nearly 50 percent faster than the total Federal budget. Because of the large fraction of Federal resources devoted to the social security program, its rapid growth, and the program's importance to so many Americans, it is useful to understand the causes of its growth and the problems that may occur in the future. Three major factors apart from inflation have contributed to the growth in social security retirement expenditures over the past two decades, First, there are 9 million more people 65 or over today than there were 20 years ago, an increase of 54 percent. Second, social security eligibility has been broadened steadily since the system began in the 1930s. In 1960, 66 percent of the elderly received social security benefits, compared to 93 percent in 1980. Furthermore, the number of people between 62 and 65 who received retirement benefits more than tripled between 1960 and 1980. Third, the level of social security benefits, after adjusting for inflation, has also risen substantially. The average real benefit paid to a retired worker was $191 a month in 1960 (in 1980 dollars) and $341 in 1980. In part, this increase reflects growth in the real wages that the average worker earns over a lifetime and therefore in 4:he retirement benefit for which the worker is eligible. The growth in eligibility for survivor and dependent benefits, and their levels, has also been substantial. Much of this liberalization in benefits came in the late 1960s and early 1970s when the Congress, faced with projected and growing surpluses in the social security trust funds, chose to raise benefits. In 1972 the Congress sought to index benefits to inflation, in part to discourage discretionary increases that had been raising benefits faster than inflation. However, the Congress effectively "double-indexed" them through a technical flaw in the indexing procedure. As a result, nominal social security benefits continued to rise faster than consumer prices. Congressional action in 1977 corrected the technical problem but did not return real individual benefits to their 1972 level. Expansion of the social security system has substantially improved the lot of the elderly poor. The system has been a major factor in reducing both the percentage and the absolute number among the 88 elderly with incomes below the official poverty line. In 1959, 35.2 percent of individuals age 65 and over were classified as poor, compared to 22.4 percent of the total population. There was a substantial decline in poverty during the 1960s, so that by 1970, 24.5 percent of the elderly and 12.6 percent of the rest of the population had measured incomes below the poverty line. During the 1970s the percentage of those classified as poor among the general population stopped declining but continued to decline for the elderly. Thus, by 1980 only 15.7 percent of those 65 and over were formally considered to be living in poverty, compared to 13.0 percent of the rest of the population. In addition to reducing poverty among the elderly, the indexing of social security benefits in 1972 assured them that inflation would not erode at least that part of their incomes. The social security system now faces serious problems, however, both in the short run and in the long run. The short-run problem is that the Old-Age and Survivors Insurance Trust Fund is in danger of running out of money. Because of high unemployment and slow growth in earnings, relative to the consumer price index by which benefits are automatically adjusted, trust fund receipts have not kept pace with the rise in outlays required by indexing. In 1981 the Congress authorized borrowing among the Old-Age Survivors Insurance, Disability Insurance and Hospital Insurance Trust Funds. This action will ease the short-run problem, which is expected to disappear as economic growth resumes and inflation subsides. The long-term problem in the social security system arises from the fact that the baby-boom generation will begin to reach retirement age around the year 2010. The ratio of the working-age population (20 to 64) to the elderly (65 and over) will fall from 5.1 today to 4.7 in 2005, and to 3.0 in 2030. After the turn of the century, contributors will not be able to support beneficiaries at today's retirement age, replacement rates, and payroll tax rates. Because of this shift in age distribution, today's young workers are unlikely to receive the same rate of return on their contributions to social security that their parents received. Thus, some combination of an increase in the retirement age, a decrease in benefits relative to prior earnings, and an increase in contribution rates will almost certainly be necessary in the long run. The President has established a National Commission on Social Security Reform to examine the problems and propose solutions to both the short-run and long-run problems by January 1983. Indexing in General The practice of adjusting benefits automatically for inflation raises a set of issues that applies to all indexed Federal programs. Currently, 30 percent of Federal outlays rise automatically with inflation. Indexing benefit payments to inflation has been intended to preserve 89 the real purchasing power of benefits—to serve as a kind of insurance against inflation. Experience with indexing has revealed problems, however. One problem is the accuracy of the consumer price index (CPI) as a measure of inflation. In recent years at least, the method of computing the CPI has caused it to overstate increases in the cost of living. In October 1981 the Bureau of Labor Statistics announced its intention to correct these technical deficiencies. The correction will first affect Federal outlays in fiscal 1985. The cumulative effect of mismeasurement may have increased the real level of benefits paid by as much as $10 billion in 1981 alone. These same measurement problems should have the opposite effect over the next few years, however, as interest rates come down. There are more fundamental problems with indexing. Since a continuous inflation is caused by excessive money growth, all incomes tend to rise proportionally, so that increases in other incomes tend to keep pace with indexed benefits. However, when supply shocks, such as the Organization of Petroleum Exporting Countries (OPEC) oil price increases of the 1970s, cause changes in the price level, wage incomes typically do not keep pace with inflation. In such circumstances, recipients of indexed benefits have an advantage, since most taxpayers who pay for the benefits have no such protection for their incomes. Several proposals have suggested that, when real wages fall, it would be more equitable to adjust benefit payments only by the amount of increases in wages. Automatic increases in benefit payments also give recipients an advantage in times of budget stringency, when the real levels of other programs are being reduced. STRENGTHENING THE FEDERAL SYSTEM A central feature of the Administration's budget policies is a commitment to strengthening the concept and the practical application of federalism. The goal is a system that includes an effective central government interacting with effective and responsive State governments. As the Federal Government has extended its involvement in the economy in recent years, it has tended to reduce the autonomy of State governments and to centralize the responsibility for a number of social, economic, and regulatory programs. In the Administration's view, the result has made the entire public sector less effective and less efficient. There are four major reasons for seeking to create a stronger and more balanced Federal system. First, such a system would encourage diversity among State and local governments. The diversity that exists among communities and regions requires a structure of government that recognizes the differences in circumstances, prefer- 90 ences, and demands for public services. Many services that are appropriately provided by the public sector generate benefits sufficiently limited geographically that they are properly the responsibility of State or local governments. This permits the individuals who will benefit from and pay for a given service to decide whether it should be provided and if so, in what quantity. That diversity also permits a "portfolio" approach to solving problems that are common to many communities, in that a single approach—the Federal Government's approach—is not the only method that can be tried. As different jurisdictions choose different strategies for handling similar problems, the chances of finding superior solutions increases. This portfolio approach means that some methods will fail, possibly more severely than the single method that the national government would have chosen. But each jurisdiction can learn from the experience of others, and the portfolio approach should help the public sector function more effectively. A second reason for strengthening the Federal system is to make the public sector more accountable for its actions. Accountability comes from matching the responsibility for providing services with the resources for financing them. It can be argued that voters can see more clearly at the State and local levels of government the connection between their tax bills and the use to which government funds are put. Greater accountability would make for a more informed balancing of the costs and benefits of public spending and, again, a more efficient allocation of resources. The current array of Federal programs reflects some desire for both greater accountability and diversity. Revenue sharing is an example of a Federal attempt to promote diversity with Federal tax dollars by distributing Federal funds to local governments (and formerly to State governments too) to use essentially as they wish. Although such a strategy may achieve substantial diversity, it lacks accountability. Local officials who run revenue sharing programs do not have to answer at the next election to the taxpayers who pay for the programs. Block grants suffer from some of the same failings. The usual Federal solution to accountability has been through regulation that by its nature effectively limits diversity. Even where several levels of government are involved in operating a program—such as medicaid—diversity is often hindered by the need for accountability. This need has been used to justify the imposition of many complex and burdensome regulations, and thereby administrative costs, on lower levels of government. Thus a third reason for the Administration's commitment to federalism is to reduce some of the administrative burdens that Washington now places on State and local governments participating in Federal programs. 91 Finally, a heightened role for State and local governments is consistent with the Administration's shift in Federal budget priorities toward clearly national needs, such as defense. In a time of budget restraint at the Federal level, State and local government may well want to assume responsibility for some of the activities that can no longer be financed by the Federal budget. The consolidation of a number of categorical grant programs into block grant programs in the fiscal 1982 budget was the first in a series of steps toward revising the role of the central government in the Federal system. The Administration is proposing further consolidations of categorical programs in the 1983 budget. A more historic step toward strengthening the Federal system is the Administration's proposal to turn back the excise tax base to the States and to produce a clearer division of labor between the States and Washington. Beginning in 1984, for example, the States would become responsible for the major income-based transfer programs for able-bodied residents, while the Federal Government would assume full responsibility for medicaid, the major program of medical assistance to the poor. One reason for this revised division of labor is a basic tenet of the Administration that income redistribution is not a compelling justification in the 1980s for Federal taxing and spending programs. It is the Administration's view that the Federal Government can do more to provide lasting assistance to the disadvantaged by assuring strong and less inflationary economic growth than through income transfer programs. FEDERAL CREDIT ACTIVITY Although Federal credit programs, unlike direct Federal purchases of goods and services, do not take resources out of the private sector of the economy, they do redirect the allocation of resources within the private sector. In some instances this redirection can improve the efficiency of the economy if the private market fails to realize the full range of benefits that would result from extending particular types of credit. Otherwise, however, Federal credit programs provide funds for projects that bring a lower rate of return than if those funds had been lent by the private sector, thereby reducing the overall efficiency of the economy. In addition, many Federal credit activities add to the Treasury's borrowing requirements. Three types of Federal and federally assisted loan programs have proliferated in recent years. First, there are direct loans by both onbudget and off-budget agencies, which amounted to an estimated $26.1 billion in net lending in 1981. Direct lending activity includes credit extensions by such agencies as the Export-Import Bank and 92 the Small Business Administration. These loans must be financed by Treasury borrowing from the public if tax receipts are not sufficient to cover them. At one time the unified budget deficit reflected the outlays of most of these direct Federal lending programs, but in recent years borrowing to supply the loan programs of off-budget Federal entities has increased dramatically. Most of this borrowing has been undertaken through the Federal Financing Bank which in turn receives its funds from Treasury borrowing. The Farmers Home Administration and the Rural Electrification Administration originate the bulk of the off-budget direct loans. The effects of direct Federal loan programs on the national allocation of credit depend upon the degree of subsidy involved. When a loan is subsidized, it is equivalent to providing the loan at market rates and giving borrowers a cash grant equal to the present value of the subsidy. The Office of Management and Budget estimates a $14.5 billion present value of subsidy on $57.2 billion in new obligations for direct Federal loans in 1981. The second major type of federally related lending activity consists of loans for which the Federal Government (wholly or partly) guarantees or insures the payment of loan principal or interest. The interest rate on guaranteed loans is below market rates because Federal participation removes any default risk and because the government promises to pay a share of the interest in some cases. The oldest and best known examples are FHA-insured and VA-guaranteed mortgages. However, in recent years Federal guarantees and insurance have increasingly been used outside the housing sector. Net guaranteed and insured loans amounted to $28.0 billion in 1981. The Office of Management and Budget has estimated a $4.3 billion present value of subsidy on $7.8 billion of the most heavily subsidized new guaranteed and insured loan obligations. The third major type of loan activity is the lending generated by government-sponsored but privately owned enterprises, including the farm credit system, the Federal Home Loan Bank system, the Federal National Mortgage Association, and the Federal Home Loan Mortgage Corporation. Like federally owned corporations, these sponsored enterprises channel credit to certain sectors of the economy, primarily through purchases of loans in the private sector. In 1981, borrowing by federally sponsored agencies amounted to $34.8 billion. Loans by government-sponsored institutions typically provide a smaller subsidy to borrowers than either direct Federal loans or guaranteed loans. The subsidy in the former type of loan is created by the ability to sell the obligations of sponsored agencies at interest rates only slightly above the rates on comparable U.S. Treasury issues. In the area of housing it has been estimated that for every $1 93 billion infusion of mortgage credit by sponsored agencies, the stock of home mortgages has increased* by only $150 million, indicating a relatively smaller subsidy. The addition to the stock of home mortgages is much smaller than the amount of debt issued by the sponsored agencies largely because their debt issues draw funds away from thrift institutions. As shown in Table 4-3, the importance of Federal credit programs has greatly increased in recent years. Government redirection of part of the Nation's credit resources has added to the financing costs borne by private borrowers who do not receive Federal credit assistance. TABLE. 4.3—Federal and federally assisted credit program, fiscal years 1970-81 [Billions of dollars, except as noted] Fiscal years Item 1970= 74 1 Total funds raised in U.S. credit ma rkets Total Federal credit activity Direct loans Guaranteed loans Government-sponsored loans.... Total Federal credit activity as percc nt of total funds raised (percent) 197579l 1980 1981 156.9 309.4 344.7 361.0 22,0 42.6 79.9 86.5 2.6 14.4 5.0 14.9 14.8 12.9 24.2 31.6 24.1 26.1 28.0 32.4 14.0 13.8 23.2 24.0 Sources: Board of Governors of the Federal Reserve System and Office of Management and Budget (OMB). This, in turn, leads to reduced demand for credit by unassisted borrowers. Increasingly, therefore, political judgments, rather than marketplace judgments, have been responsible for allocating the supply of credit. As the discipline of the marketplace is replaced by the political process, less efficient economic activities are financed, and productivity in the economy declines. The Administration is committed to reducing Federal credit programs. A plan for reducing new Federal loan guarantee commit- 94 ments by $20.3 billion for the 1982 fiscal year is already in place. Further actions are being proposed to reduce Federal and federally assisted credit commitments in fiscal 1983 and 1984. In addition, the Administration strongly supports efforts to formalize a Federal credit budget and to incorporate it into the budget process. FEDERAL DEFICITS IN PERSPECTIVE The President and the Congress together determine the annual level of government spending and tax rates. These decisions, when carried out in the context of prevailing economic conditions, determine the size of the Federal budget deficit. The deficit cannot be known in advance; it can only be projected using assumptions about the future course of the economy. During the last year, better-thanexpected progress on inflation has reduced taxable income, slowing the growth of revenues below earlier projections. The recession has temporarily slowed the growth of the tax base while increasing outlays for employment-related programs. In addition, the projected decline in inflation increases the projected deficit because the associated reduction in revenue growth precedes the later reduction in spending growth, largely as a result of the indexing of government programs. All these factors together have contributed to projected deficits. Thus, the fiscal 1983 Budget projects the unified Federal deficit at $98.6 billion in fiscal 1982, $91.5 billion in 1983, and $82.9 billion in 1984. WHY DEFICITS MATTER The Administration is strongly committed to reducing the projected deficits in the years ahead. A variety of economic reasons, as well as considerations of practical policymaking, make deficits a cause for continuing concern. In particular, the magnitude of the projected deficits demands attention to their current and prospective economic impacts. Financing a budget deficit may draw on private saving and foreign capital inflows that otherwise would be available to the private sector. The Federal Government's demand for funds is insensitive to changes in interest rates—that is, the Treasury will raise the funds that it requires regardless of interest rates. Weak and marginal borrowers may be "rationed" out of the market by higher interest rates unless saving flows are adequate. The impact of a specific deficit will vary, however, depending on the conditions that lead to it. For example, during a recession—as now exists—the borrowing requirements of business and consumers tend to be relatively small. At such a time a given deficit can be fi- 95 nanced with less pressure on interest rates than during a period of growth, when business and consumer demands for credit are increasing. This is why it is important for the government to reduce the budget deficit in fiscal 1983 and beyond, a period of anticipated rapid economic growth when private investment demands are expected to rise substantially. The impact of a deficit of a given size will also depend on the extent of private saving in the economy. An economy with a higher saving rate can absorb the demands of public sector borrowing more easily than one with lower saving and still accommodate the needs of private borrowers. Much of the Administration's tax program is designed to increase the private saving of the Nation. As a consequence, both public and private borrowing will be accommodated more easily. A higher volume of Federal borrowing to finance deficits makes the task of the Federal Reserve System more difficult when it is following a policy of monetary restraint. However, maintenance of monetary restraint is a key part of the Administration's program and hence the potentially inflationary effects of monetizing the Federal deficit will not be realized. Continued budget deficits may generate uncertainty about the ability of government to control spending. Any increases in interest rates which reflect this uncertainty, in turn, will tend to increase further the size of the deficit. In contrast, the maintenance of a long-term policy to reduce the size of budget deficits—the policy of the Administration—will tend to counterbalance the pressures for further increases in government spending. MEASURING THE DEFICIT It is important to recognize that there are several measures of the deficit. The unified deficit, the figure generally cited as "the deficit," includes only the deficit arising from on-budget expenditures. But the Federal Government borrows to finance off-budget activities as well. Including off-budget activities, the Federal deficit for fiscal 1985 is projected to be $107 billion. Of course, the Federal Government constitutes only one part of the public sector; State and local budgets affect the economy in a fashion similar to the Federal budget. Given the large transfers of federally raised funds to State and local budgets, Federal, State, and local deficits should be considered jointly. Because the other levels of government have been accumulating funds to meet employee pension obligations, their budgets tend to be in current surplus (although some States and localities are generating unfunded liabilities for future retirement payments). In calendar year 1981, when the Federal Government reported a total deficit of $62 billion (on the 96 national income and product accounts basis), the State and local sector showed a surplus of $37 billion. A broader perspective on the Federal debt is contained in the appendix to this chapter. Regardless of how inclusive the definition of the deficit, it is not only the annual deficit that affects the economy but also the trend in deficits over the business cycle and beyond. Because of the structure of certain spending and tax programs, deficits tend to vary inversely with the economy. To some extent, deficits that are generated when the economy is weak can be made up when the economy is strong. It is the trend of deficits that serves as an indicator of fiscal discipline. The relative size of the deficit is far more important than the dollar magnitude. To the extent that deficits affect the economy, the effects of a given deficit will be relatively small in a large economy and large in a small economy. From an historical perspective, the projected budget deficits for fiscal years 1982-1984 are clearly substantial, yet they are not unprecedented when measured against the size of the economy. In recent years only the fiscal 1976 deficit was larger, as a share of GNP, than the projected deficit for fiscal 1982, as Table 4-4 indicates. However, the ratio is projected to decline fairly rapidly so that by 1985 the deficit, relative to GNP, will be below the average for the decade of the 1970s. In view of concern over the current projections of a large deficit during economic recovery in 1982, it is worth noting that the 1976 deficit also occurred during a period of economic recovery. In the four quarters ending in June 1976, nominal GNP rose 12 percent, real output gained 6 percent, and interest rates were essentially unchanged. AN ANALYSIS OF DEFICITS AND DEBT FINANCING A given deficit is consistent with different levels of spending and taxes. Even if economic conditions do not change, a deficit may increase because spending is increased and tax rates are not increased to yield the necessary added revenues, or because spending is unchanged but tax rates are reduced, or because spending is reduced but lower tax rates reduce revenues by a greater amount. These three circumstances may yield the same deficit but have quite different effects. The effects will depend on the timing, level, and composition of government spending as well as the means used to pay for that spending. The spending imposes a cost on the economy by taking resources away from private use. As discussed earlier, government spending may augment or it may substitute for private spending. It will therefore alter decisions about private spending. Each of the methods of financing spending imposes costs in addition to the simple transfer of resources from the private sector to the 97 TABLE 4-4.—-Total Federal budget and off-budget surplus or deficit and gross national product, fiscal years 1958-87 [Amounts in billion of dollars] Total Federal budget and off-budget surplus or deftcit (-) Fiscal year Amount 1958 1959 I960 . 1961 1962 1963 1964. . 1965 1966 1967 1968 1969 ... As percent of GNP -2.9 -=12.9 -0.7 -2.7 .3 -3.4 -7.1 -4.8 -5.9 .1 = .7 -1.3 -7.0 = .2 -1.6 = 3.8 =8,7 -25.2 3.2 — 11 =2.8 -23.0 -23.4 -14.9 -6.1 = .3 -2.2 -2.1 -1.2 -.4 -^53.2 -73.7 -53.6 -59.2 -40.2 -3.6 -4,5 -2.9 -2,8 -1.7 1980 1981 1982 1983 1984 = 73.8 = 78.9 = 118.3 -107.2 -97.2 -2.9 -2.8 -3.8 -3.1 -2.6 1985 1986 1987 =82.8 -77.0 -62.5 -2.0 -1.7 -1.3 1970 1971 1972. 1973 1974 ... .. 1975 1976 1977 1978 1979 . . . . ... .. -s!o .4 1 Estimates. Sources: Department of Commerce (Bureau of Economic Analysis), Department of the Treasury, Office of Management and Budget, and Council of Economic Advisers, public sector. The manner of financing, like the type of government spending, will alter the incentives which determine private resource allocation and hence may reduce economic efficiency. If the government wants to pay for its spending on a current basis, it can set tax rates so that revenues equal outlays. As discussed in Chapter 5, however, the distorting effects of the tax system will reduce total output, now and in the future. At recent marginal tax rates the associated cost may be quite high. If the government issues bonds instead of raising taxes, it must pay interest on the added debt. Furthermore, government debt-creation can impose added costs by absorbing private saving and hence reducing growth. Economic growth will not be reduced to the extent that an increase in private saving offsets the decline in government saving measured by growing Federal indebtedness. Private saving may increase, for example, if households anticipate that their future taxes 98 will increase and they respond by setting aside additional saving to pay for the expected increase in tax liabilities. Since individuals* saving also tends to be affected by what services they perceive they are getting from the government, the composition of government spending associated with the deficit will play a key role in determining the response of saving. Distortions may also occur in the allocation of resources if the government chooses to finance deficits by adding excessively to the monetary base. This burdens the economy with inflation in ways discussed in Chapter 3. Whichever approach, or combination of approaches, the government chooses to pay for its spending, it cannot avoid the reality that government spending, while it may confer benefits on the economy, also imposes costs. The choice among financing mechanisms depends on which is the least-cost approach, or on which approach imposes the most appropriate patterns of costs on the economy over time. Evaluating these costs is not a simple matter. Since deficits affect expectations about the future course of economic policies, only part of the effect of a deficit is an immediate consequence of what the increases in debt do to markets. Deficits also work indirectly through the changes they produce in individual expectations and the resultant changes in their behavior. Neither the direct effect nor the effect on expectations is readily observable. In addition, analysts differ in their views about the relative effects of different conditions on inflation, investment, and economic growth. Unless these differences in opinion are recognized, debates that ostensibly focus on the deficit often mask broader, underlying debates on how the economy works. Deficits and Inflation As discussed in Chapter 3, it is now generally agreed that continued excessive growth in the money supply will cause sustained inflation. Thus, deficits financed by money creation will have persistent inflationary consequences. Additional government debt might also raise the price level through its impact on desired money balances. If the increased supply of government bonds raises interest rates, households and firms will respond by reducing their money balances and increasing total nominal spending. This implies an increase in velocity. Unless the monetary authorities offset the higher velocity by reducing the monetary base, both the price level and output will rise in the short run, although the mix of increases in the price level and in output is indeterminate. To the extent workers and firms believe that deficits are inflationary, however, and bargain accordingly, the relative effects on the price level will be correspondingly larger. The magnitude of the increase in aggregate demand that results from added government debt will depend both on the responsiveness of money demand to interest rates and on the size of the increase in interest rates. For the former, empirical studies consistently show the demand for money to be only weakly responsive to interest rates, so that any given increase in interest rates will result in a relatively small increase in nominal spending. As to the size of the increase in interest rates resulting from the added debt, the evidence is less clear cut. There are two forces moderating any increase. First, market interest rates equate the demand for financial assets with their supply. In any given year, added debt represents only a small increment to the total stock of government debt, and is also small by comparison with the market value of other assets in the economy. Second, a higher interest rate today means that saving is more attractive and current consumption relatively less attractive. Thus, the effect of additional government debt on interest rates will tend to be moderated by an increase in the flow of private saving attracted by the higher rates. On the other hand, two factors may add to the increase in interest rates. If participants in financial markets believe that deficits are inflationary, long-term bond rates may include an additional inflation premium in response to larger deficits. The incremental uncertainty caused by deficits may also increase real interest rates. This results in large measure from the past history of discretionary, countercyclical policies. The prospect of large deficits contributed to uncertainty in the financial markets in 1981 and may have raised market interest rates to a higher level than they otherwise would have been. If added debt does raise the price level through its effect on desired money balances, this is not equivalent to continued inflation. For the price level to increase in a sustained fashion, the annual increments to government debt would have to grow continually at a rate faster than the growth of the economy. Thus, deficits will be inflationary only if the monetary authorities monetize the debt or if the added debt continually grows as a share of GNP. This is precisely why the Administration is determined to reduce the budget deficit in fiscal 1983 and beyond. The maintenance of monetary restraint will ensure that deficits will not be monetized and that the potentially inflationary effects that might otherwise result from government borrowing will not be realized. Debt Financing, Crowding Out, and Growth It has been argued that net government borrowing may preempt credit that otherwise would have been used to finance private investment. Unless the supply of private saving expands to provide com- 100 pletely for the increased government borrowing, thereby preventing a rise in real interest rates, the additional government debt will tend to deter some private investment. Some saving could also come from abroad. If international credit flows respond sufficiently to only slightly higher interest rates, significant crowding out of U.S. private investment may be prevented. When private saving rates are relatively high (perhaps because of a tax system that fosters saving rather than consumption), a larger deficit can be accommodated more easily than if saving rates are low. In recent years, for example, Japan and a number of Western European nations have experienced larger budget deficits (measured as a percent of their Gross Domestic Product) than has the United States. As a result of higher rates of saving, however, their ratios of private investment to GNP have also been higher. As discussed in Chapter 5, a dominant thrust of the Economic Recovery Tax Act of 1981 is to provide increased incentives to household and business saving. Any current increase in government debt leaves future generations facing either a higher tax bill or lower government services, or a combination of the two, than would otherwise have prevailed. This reduces their economic well-being in two ways. First, if current generations do not provide their successors with the resources to pay for the accumulated debt, current deficits make future generations worse off. But even if later generations inherit the additional resources to meet the tax bill, the tax revenues are likely to be collected in ways that distort their economic choices and impair the efficient operation of their economy. There is, then a tradeoff between these later distortions and the distortions from taxing now. Again, a choice of the less costly alternative must be made. In the case of government spending in war time, for example, it has long been recognized that the cost of taxing all at once may be significantly larger than the cost of issuing debt and paying the debt with taxes spread over many years. THE DEFICIT AND POLITICS OF THE BUDGET Perhaps the most damaging effects of deficits are not directly economic but result from the political process. There are many advocates for government spending because the beneficiaries of spending have an interest in promoting it. At the same time, those who pay for additional government spending through taxes have an interest in holding taxes down. But the interests of future taxpayers are not well represented in our political process. Deficit spending allows government to be financed in a way that is almost invisible to the taxpayer, and the pull and tug of the political process may result in more government spending than is generally desired. To counteract this tend- 101 ency, many have argued that policymakers ought to follow a rule— such as balancing the budget each year (that is, financing it only through taxes) or limiting Federal revenues to a fixed percent of GNP—to restrain the tendency toward excessive government spending. Perhaps the most useful and practical of these rules is the simplest rule: balance the budget. Even this needs to be seen as a long-run rule, however, since the business cycle does cause variations that are difficult to calculate and offset. Furthermore, a strategy of reducing taxes in advance of spending cuts implies that it will take some time to achieve the desired level of deficits. Enforcing a trend toward a balanced budget would impose the fiscal discipline necessary to restrain the growth of government and send a message of governmental restraint to private individuals who can incorporate this essential information into their planning. In sum, government spending can never be costless. Although the government can use direct taxes, debt finance, or money creation to pay its bills, each imposes costs on the economy. The goal of fiscal policy is to achieve the mix of financing that minimizes these costs. Given the high cost of further direct taxes on capital and labor income, and the high costs imposed on society by excessive expansion of the monetary base, the Administration has chosen what it views at this time as the least costly means of financing government spending. But its current actions are an essential part of a long-term strategy of reducing the scope of the Federal Government. To achieve this end, the Administration will continue to enforce a trend toward a balanced budget. APPENDIX TO CHAPTER 4 A BROADER PERSPECTIVE ON THE FEDERAL DEBT The Federal debt is the sum of past budget deficits—the cumulative excess of past spending over past tax receipts. As discussed in Chapter 4, increases in government debt can alter the Nation's rate of capital formation as well as real interest rates. Deficits can also influence the distribution across generations of the burden of paying for government spending. This appendix discusses different measures of the Federal Government's debt. The broadest measure first subtracts the government's assets from its liabilities to determine the government's net liabilities. It uses market prices rather than book values of those assets and takes account of the erosion of the real value of the debt through inflation by measuring net liabilities in constant dollars rather than current dollars. This measure of government debt also includes most of the implicit liabilities of the social security system. Table 4-5 pre- 102 sents estimates of these measures over time in constant (1980) dollars. In 1980 the book value of the financial liabilities of the U.S. Government and its' credit agencies equaled $1.046 trillion, of which approximately two-thirds was privately held. Because the book value does not change as interest rates fluctuate, the market value is a better measure of the claim on tax resources that would be needed to pay off the outstanding debt. The market value in 1980 was $981 billion, $65 billion less than the gross book liability. Although government debt increases when spending exceeds tax revenues, some of that spending purchases assets that should be considered as well, To the extent that the government has marketable assets—financial assets in particular, such as gold, U.S. Government securities, and mortgages—these assets could be sold to finance its expenditures and thus obviate (at least for a while) the need for taxes. In 1980 the market value of the government's financial liabilities less the market value of its financial assets equaled $450 billion. Valuing tangible assets is particularly difficult. The conventional approach is to value government buildings, highways, dams, etc., on a depreciated cost basis, although this value may differ substantially from the asset's value to the economy. Although certain tangible assets may not be marketable, they provide a stream of services that would otherwise have to be purchased through additional taxes. One private estimate, presented in Table 4-5, values the government's tangible assets—reproducible capital plus land—at $727 billion. This estimate does not include the value of mineral resources on Federal property. Mineral wealth is especially difficult to estimate since it can change both with fluctuations in the prices of minerals and with new information on the size of the mineral reserves. In light of these problems, estimates of the replacement cost of the government's net tangible assets should be viewed with caution. Government debt issued by the Treasury means delaying taxation to pay for government expenditures. The purchasers of official government debt are not adversely affected by these transactions, but future generations may be if they have to reduce government services or pay higher taxes to meet interest payments on the accumulated debt. If crowding out also occurs future generations will have a smaller capital stock with which to produce goods and services. A similar delay in taxation occurs in the case of implicit debt associated with the social security system and the civil service and military retirement programs. The social security system is financed on a "pay as you go" basis; the program collects money from younger people to pay retirement and other benefits to older people and 103 other beneficiaries. Unlike other taxes, which reduce lifetime income, some economists view social security "tax" contributions as purchases of implicit government pledges of similar benefits in the future. The contributions do not cover both current outlays and the expected future benefits. In this manner the levying of taxes to cover these future benefits is delayed. Hence, succeeding generations may end up paying for these implicit shortfalls by receiving a lower rate TABLE 4-5.—Illustrative measures of Federal Government's net liabilities, 1950-80 [Billions of 1980 dollars] Year Book value of gross financial liabilities' Market value of gross financial liabilities2 Market value of net financial 3 liabilities Replacement value of tangible assets4 Value of unfunded social security retirement3 liabilities Total net liabilities including social security retirement liabilities ® 1950 1951 1952 .. 1953 1954 792 750 758 769 767 797 743 753 769 769 650 582 590 605 616 372 370 414 474 523 240 358 611 702 829 564 618 840 889 983 1955 1956 1957 1958 1959 752 718 693 710 720 742 696 689 688 686 581 542 535 540 525 549 565 550 549 536 1,054 1,029 1,055 1,238 1,298 1,150 1,069 1,100 1,288 1,340 1960 1961 1962 1963 1964 710 728 739 744 752 704 715 733 731 740 536 539 546 535 537 535 537 546 558 567 1,310 1,240 1,288 1,326 1,322 1,363 1,292 1,334 1,349 1,339 1965 1966 1967 1968 1969 751 754 768 776 751 730 738 740 744 702 520 516 521 512 464 571 570 579 583 592 1,421 1,492 1,356 1,673 1,576 1,414 1,485 1,352 1,658 1,510 1970 1971 1972 1973 .. 1974 760 776 785 792 782 746 773 773 771 763 491 514 506 465 416 584 578 580 600 621 2,012 2,366 2,504 3,086 3,405 1,982 2,364 2,493 3,013 3,258 1975 1976 1977 1978 1979 851 921 961 1,004 1,011 842 933 949 963 962 511 581 587 552 456 613 622 647 676 706 3,629 3,749 4,018 3,580 3,757 4,000 PI HI 1980 1,046 981 450 727 . 0) 1 The sum of total liabilities of the U.S. Government and federally sponsored credit agencies as reported In the flow of funds accounts of the Federal Reserve. 2 Estimates of the market, value of liabilities of the U.S. Government and credit agencies prepared by Eisner and Pieper. 3 Estimates by Eisner and Pieper of market value of financial liabilities less market value of financial assets held by the U.S. Government and credit agencies. 4 Estimates of the replacement value of tangible assets owned by the government prepared by Eisner and Pieper. Total includes land as well as depreciable assets. s Estimate of unfunded social security retirement liabilities by Leimer and Lesnoy. This series assumes social security benefits kept pace with income growth and uses the legislated social security taxes of the period. Social security unfunded retirement liabilities equals the estimated present value of future retirement benefits less future taxes for the adult population less the value of the OASI trust fund. 11 Total net liabilities equals the market value of net financial liabilities plus the Leimer and Lesnoy estimated unfunded social security liabilities less U.S. Government tangible assets plus the OASI trust fund. 7 Not available. Note.—Data converted to 1980 dollars using GNP implicit price deflator. Sources: Department of Commerce (Bureau of Economic Analysis); Board of Governors of the Federal Reserve System; Robert Eisner and Paul Pieper, "Government Net Worth: Assets, Liabilities and Revaluations" (1982); and Dean Leimer and Selig Lesnoy, "Social Security and Private Saving: A Reexamination of the Time Series Evidence Using Alternative Social Security Wealth Variables" (1980). 104 of return on their contributions to social security than they would, on average, have received on money invested elsewhere. There are important differences, however, between implicit and explicit debt. These implicit promises to pay social security benefits are not legal commitments; as a consequence, they have a different legal standing from explicit forms of government debt. Social security benefits can be, and have been, changed. Although the social security system has become an enduring feature of U.S. society, and sizable social security benefits will be paid to current generations when they retire, the amount of those benefits cannot be predicted with certainty. In addition, most individuals do not know precisely the retirement benefits to which they would be entitled-under existing law. A given amount of implicit liabilities is, therefore, likely to reduce saving by a smaller amount than would the same amount of explicit debt. Social security and Federal employee retirement programs are not the only implicit future liabilities that the Federal Government is firmly committed to pay. The Department of the Treasury lists three categories of financial commitments that are not fixed, legally binding liabilities: undelivered orders, long-term contracts, and contingencies. These vary in the likelihood that they will become legal obligations and in the time when they are apt to mature into liabilities. The implicit -pension liabilities are by far the largest component in any of these categories. Although there is no single correct way to measure total implicit and explicit government liabilities, one reasonable approach would be to separate other nonbinding commitments from the unfunded social security and other pension liabilities because of their size and their possible effects on household saving. The data presented in Table 4-5 are rough but reasonable illustrations that are useful in examining trends and making general comparisons. Tangible assets are valued at replacement cost, since market values are not available; the replacement costs of the government's tangible assets, however, can vary substantially from their potential market value, which is ultimately the measure of interest in terms of the broader concept of debt described here. Estimates of the unfunded implicit retirement liabilities are extremely sensitive to assumptions concerning real interest rates, future birth, death, and immigration rates, labor force participation rates, and benefit to earnings ratios. The unofficial figures reported in Table 4-5 as estimates of social security's unfunded retirement liabilities include types of benefits that represent about two-thirds of total social security unfunded liabilities. While actuaries of the social security, civil service, and military retirement systems have made recent estimates of their unfunded liabilities that range from $3.5 to $6.5 trillion, depending on the interest rate 105 assumed in the calculations, they have no historical data that could be included in this table. The estimates in the table refer to unfunded social security retirement liabilities associated with workers and retirees currently in the social security system. These figures do not include either expected future benefit payments to or future tax receipts from generations not yet in the system. Hence, these estimates reflect a snapshot of the system at one point in time in order to evaluate the current net claims against it, that is, the current trust fund that would be necessary to fully fund the system. The first two columns of Table 4-5 compare the government's gross financial liabilities in 1980 dollars, measured at book and market values, for the years 1950 through 1980. While the columns are generally quite similar in many years, the difference in these values has been growing recently. Column 3 presents the market value, in constant 1980 dollars, of the Federal Government's net financial liabilities. The government's real financial debt in 1980 equaled $450 billion, having fallen fairly steadily from $650 billion in 1950. Simultaneous with this decline in real net financial debt has been an increase in the value of the government's tangible assets, measured at replacement cost, from $372 billion in 1950 to $727 billion in 1980. While these components of the broader concept of government debt suggest an improving fiscal position, the sixth column of Table 4-5 suggests that Federal debt, broadly defined, has increased enormously over the past three decades. While the constant dollar market value of financial liabilities only rose from $797 billion in 1950 to $949 billion in 1977, unfunded social security retirement debt, according to this estimate, rose from $240 billion in 1950 to over $4 trillion by 1977. In 1981, actuaries of the social security system officially estimated the system's total unfunded liabilities to be $5.9 trillion. Broadly defined, government debt is large relative to total household net worth, even when household net worth is also broadly defined to include expected claims to future retirement benefits net of future contributions to these retirement systems for individuals currently in social security. Table 4-6 presents the ratio of Federal Government total net liabilities to this broad measure of household wealth. The ratio equaled 0.17 in 1950 and rose to 0.35 by 1977. The table also presents the ratio of unfunded social security retirement liabilities to the estimate of total Federal net liabilities. In 1950, this ratio was less than one-half; by 1977 the unfunded social security retirement liabilities represented almost all of total Federal Government net liabilities. 106 TABLE 4-6.—Comparisons of total measured Federal Government's indebtedness, unfunded social security retirement liabilities, and household wealth, 1950-77 [Ratio] Ratio of Federal Government's total net liabilities (including social security retirement liabilities) to household wealth Year 1950. 1951 1952 1953 1954 0.166 .172 212 .217 . 218 231 1955 1956 1957 1958 1959 .210 .219 .230 231 . 1970 1971 1972 1973 1974 1975. 1976 1977 . . . . . ... .917 .962 .959 .961 .969 .212 .202 .201 .210 .183 .203 193 1.005 1.005 1.002 1.009 1.044 .241 .267 .265 .304 .326 1.015 1.001 1.005 1.024 1.045 .344 1.014 .998 1005 220 1965 1966. 1967 1968 1969 0.426 .579 .727 .790 .843 .961 .959 .965 .983 .988 .234 .211 1960 1961 1962 1963 1964 Ratio of unfunded social security retirement liabilities to total net liabilities 342 350 Note.—Federal Government's total net liabilities equals the market value of net financial liabilities plus estimated unfunded social security retirement liabilities less U.S. Government tangible assets plus the OASI trust fund. Tangible assets are valued at replacement cost. Net financial liabilities are valued at market prices. These estimates include liabilities of the U.S. Treasury held by the OASI. Unfunded social security retirement liabilities equals the present value of projected retirement benefits less the present value of projected tax contributions to social security less the value of the OASI trust fund. Retirement benefits and tax contributions are projected for the adult population separately for each year from 1950 through 1977. Household net worth as estimated by the Board of Governors of the Federal Reserve System plus unofficial estimates of social security retirement wealth prepared by Leimer and Lesnoy. Sources.- Department of Commerce (Bureau of Economic Analysis); Board of Governors of the Federal Reserve System; Robert Eisner and Paul Pieper, "Government Net Worth; Assets, Liabilities and Revaluations" (1982); and Dean Leimer and Selig Lesnoy, "Social Security and Private Saving: A Reexamination of the Time Series Evidence Using Alternative Social Security Wealth Variables" (1980). Conclusion These adjustments to the traditional book value measure of government liabilities put projected official government deficits in some perspective. When government's explicit debt is adjusted to take account of inflation and assets, its real net liabilities show a decline over the last twenty years. Official deficits that merely offset the devaluation of the debt due to inflation or that finance the purchase of assets do not increase the government's claim on private resources. Since 1960, however, implicit liabilities have grown considerably so that by some estimates they greatly overshadow the explicit liabilities. Under the broader measure that includes implicit debt, total Federal debt tripled between 1967 and 1977. Compared to historical in- 107 creases in the broad measure of government debt, the unified deficits projected for the 1980s are small. If the effect of implicit liabilities on economic behavior is similar to the effect of explicit liabilities, the effects of the official projected deficits on national investment and real interest rates would be small relative to the impact of the accumulation of total explicit and implicit debt over the last 20 years. Thus, when inflation, government holdings of assets, and implicit debt are taken into account in measuring Federal debt, government deficits in the range of those projected for the 1980s will add only marginally to the burden of the debt. 108 CHAPTER 5 Tax Policy and Economic Growth THE ADMINISTRATION, in cooperation with the Congress, brought about a fundamental change in Federal tax policy in 1981. The new policy involves far more than simply reducing tax burdens. The Economic Recovery Tax Act of 1981 has changed the basic character of the tax system by shifting the burden of taxation away from capital income, thereby providing substantially greater incentives for capital investments and personal saving. This tax policy is a sharp break from the policies of the recent past. It reflects a different understanding of the way tax policy affects the U.S. economy. This chapter provides a framework for analyzing the effects of the Administration's tax policy on the economy. The Administration's fiscal policy has two key characteristics. First, the Administration views the principal fiscal policy instruments—spending, taxing, and deficit—chiefly in terms of their impact on the individual decisions of households and businesses, since it is these decisions that ultimately generate employment and growth. The second key element that distinguishes current policies from those of the past is that they are fundamentally long term in nature. Economic growth is a long-run process that is determined by technological change and the supply and allocation of such productive factors as raw materials, labor, and capital. Households and businesses look to the future in making current economic decisions. The government has some direct influence on factor inputs, but its main influence is through the indirect and long-term incentives it provides to work and save. The fact that households and businesses make long-term as well as day-to-day decisions underscores the importance of consistency in government policy. Frequent changes in policy generate uncertainty about the probable duration of current policies and jeopardize the chances that any particular policy will succeed. Since the long run is simply a sequence of short runs, short-run policies that deviate from long-run goals ultimately mean abandoning long-run goals. The current economic policies, more than those of any recent Administration, are policies for the long term. 109 Fiscal policy involves three interrelated choices. One is choosing an expenditure policy—how much to spend, and what kind of expenditures to make. The second is taxation—how much to collect, and which tax instruments to use, including implicit taxation through the creation of money, to raise revenues. The third, deficit policy, involves deciding on the size and distribution of the deficit over time; that is, the difference in the time pattern of receipts and expenditures. The governments long-term budget constraint provides a framework for considering the coordination of fiscal and monetary policy, for understanding the impact of deficits on economic growth, and for discussing the allocation across generations of the burden of taxation. The American people must eventually pay for what the government spends. While the government can borrow from the private sector to delay payment for its spending on consumption and transfer payments, such borrowing is subject to a limit. Eventually the government must either reduce spending or raise tax revenues to pay the interest payments on past accumulations of debt. When the government borrows, and thereby delays levying taxes to pay for its current spending, it shifts the burden of paying for its current spending to future generations. The government uses explicit taxation, such as personal and corporate income taxes, to raise revenue. As will be shown in this chapter, it also raises revenue with implicit taxes. By increasing the supply of money, for example, the Federal Government, in effect, creates some of the dollars needed to pay for current expenditures. But excessive expansion of the money supply results in a rise in prices that reduces the real value of the existing stock of money held by the private sector. This is one way in which the money creation process transfers real resources from the private to the public sector. A second way is that the inflation produced by excessive monetary expansion reduces the real value of the nominal government debt held by the private sector. By creating inflation the government can pay off its obligations in cheaper dollars. The purchasers of government bonds require higher interest rates to compensate for the expected inflation. Consequently, the government collects real resources from devaluing the stock of nominal bonds only when the actual inflation rate exceeds the expected inflation rate. The reduction in the real value of outstanding debt that results from inflation means that the government requires less revenue from explicit taxes. The Administration's program is based on a commitment to reducing both explicit and implicit taxation. The fact that explicit taxation and money creation are alternative ways to finance government expenditures means that conventional 110 fiscal and monetary policy must be coordinated. If the government does not pay for its expenditures with explicit taxes, now or in the future, it will eventually be forced to resort to the printing press, Hence, the ultimate path to lower explicit and implicit taxation is a reduction in the growth of government spending. The Administration^ with the support of the Congress, has significantly changed national macroeconomic policy. However, the ultimate success of the Administration's policy will depend on the degree to which it is credible in the eyes of the public. Households will increase their long-term saving and labor supply in response to lower taxes on capital and labor income if they believe those taxes will remain low. Workers and employers will agree to moderate nominal wage increases only to the extent that they believe inflation will moderate. Businesses will raise prices at slower rates only if they know that other prices—primarily those of their competitors—are also increasing at slower rates. In short, the problem of coordinating the private sector's response to government policy is a problem of convincing the public that the Federal Government will be steadfast in maintaining its new economic course. ECONOMIC GROWTH: PAST PERFORMANCE AND FUTURE POTENTIAL Economic growth in the United States has been unusually low since 1973. Annual growth in real disposable per capita income between 1973 and 1979 slowed to 1.6 percent from an average rate of 3.0 percent in the period 1959 to 1973. The country is now experiencing its third recession since 1973. Our recent economic performance has been unsatisfactory not only in comparison with our own postwar experience but also in comparison with the economic performance of our principle trading partners. In the 1970s, annual rates of increase in real per capita income among the other developed countries exceeded U.S. rates by nearly one-fourth. Other indications of economic malaise were declines in the measured growth rates of total output, capital input, and total factor productivity. While the period from 1959 to 1973 witnessed average annual growth rates in real gross national product (GNP) of 4.0 percent, the rate from 1973 to 1979 was only 2.8 percent. MEASURING GROWTH Economic growth reflects increases in factor inputs and total factor productivity. Each of these concepts, as well as output itself, is difficult to quantify. The growth of productivity is not directly observable. Rather, it is a measure of the real economic growth that is not 111 accounted for by growth of the labor force or growth in the capital stock. Several problems in defining both output and input must therefore be addressed in any attempt to measure economic growth and productivity growth. The measure of output—real GNP—primarily reflects the value placed on goods and services traded in the marketplace. While pollution control devices and similar capital goods designed to improve the quality of life are counted in the input figures, the output figures exclude such items as cleaner air and water. In addition, there are problems in measuring the true quantities and qualities of some goods and services. One problem, for example, is determining the value of government output. Government services are measured in terms of their labor costs, which may differ substantially from their marginal value; other government outputs, such as the value of the services from tangible assets, are not counted in GNP at all. Quality changes in tangible commodities also present difficult problems in measuring productivity growth. Today's color television set technologically surpasses the 1960 model, and 1981 computers differ greatly from their 1970 predecessors. These changes in quality are not adequately reflected in government reports of GNP growth. The procedures followed for some products ignore quality changes, in effect, counting a computer as a computer regardless of its year of manufacture. There are also difficulties in quantifying inputs. Private capital is typically measured as the sum of accumulated investment expenditures, with allowances for depreciation rather than as the amount of capital actually in productive use. In addition, the amount of capital available for use is miscounted when changes in the longevity of investments are not recognized and depreciation allowances are not adjusted accordingly. The statistics on labor input also fail to capture many changes in the quality and quantity of labor services. There is, for example, little available data indicating the intensity with which workers actually work within any given period of time. ECONOMIC GROWTH—THE HISTORICAL RECORD Table 5-1 shows the historic growth rates in real gross national product, capital input, labor input, and total factor productivity. Because of the problems of aggregating private and public outputs and inputs, the table also shows growth in the private economy, excluding the farm and housing sectors. These data, based on estimates prepared by the Council of Economic Advisers, are presented for four periods. Each of these periods encompasses a full economic cycle. 112 TABLE 5-1.—Average annual growth rates of real GNP, total factor productivity, and factor inputs, 1959-79 [Percent] Real GNP Period Total factor productivity Labor Capital Total GNP 1959 1965 1969 1973 to to to to 1965.... 1969 1973 1979 1959 1965 1969 1973 to 1965 . . to 1969 to 1973 to 1979 4.3 4.0 3.6 2.8 2.5 1.9 2.3 1.2 3.8 4.1 3.5 2.5 0.9 1.2 .4 1.6 Private nonfarm nonhousing GNP . . . 4.4 4.0 4.1 2.8 . 2.5 1.3 2.4 .6 4.1 5.8 4.2 3.2 1.0 1.3 .7 1.8 Sources: Department of Commerce (Bureau of Economic Analysis); Gollop, Frank and Jorgenson, Dale, "U.S. Productivity Growth By Industry 1947-1973"; and Council of Economic Advisers. Labor input is measured as total annual hours worked, adjusted by age and sex. In accounting for total GNP growth, labor input includes agricultural workers, government and civilian workers, and military personnel. Capital input includes government capital plus private residential, nonresidential, and agricultural capital. For private GNP, factor inputs are taken to be only those specific to this segment of the economy. The growth rate of total factor productivity is computed for both total GNP and private GNP assuming a simple production relationship between output and the supplies of capital and labor. Some of the poorer growth performance in recent years reflects a slowdown in capital formation. The Nation's total net capital stock, including both private and government capital, but excluding consumer durables, grew at an average annual rate of 3.8 percent during the period 1965 to 1973, but at only 2.5 percent per year between 1973 and 1979. The slowdown in capital formation was equally pronounced in the private nonfarm nonhousing sector; the 1973 to 1979 growth rate was less than two-thirds of the growth rate from 1965 to 1973. This reduction in the rate of capital formation coincided with a decline of nearly one-fourth in the Nation's saving rate. The Nation's saving rate is defined here as the share of net national product not consumed by either the government or household sectors. Household consumption includes purchases of consumer durables. Since 1973 the growth of labor input has greatly exceeded that experienced in the previous 25 years. Adjusted for age and sex, labor input grew at only 0.7 percent per year between 1950 and 1973, less than half the rate of growth between 1973 and 1979. The primary causes of the acceleration of labor input are the rapid rise in female employment rates, particularly for women aged 25 to 44, a rise in the 113 population aged 18 to 35, and a leveling off of employment rates for males aged 65 and over. Table 5-1 indicates a sizable reduction in productivity growth rates during the middle and late 1970s in comparison with prior years. This reduction reflected a combination of a lower growth rate for other, nonmeasured inputs and a less efficient allocation of resources. Measured productivity growth of total GNP declined by 48 percent between these periods; the decline for the private nonfarm nonhousing sector was 73 percent. By itself, the slower productivity growth from 1973 to 1979 can account for a 1.1 percentage point decline in GNP growth from that experienced in the previous 14 years. This method of growth accounting attributes a 1.8 percentage point decline in the growth of private nonfarm nonhousing output to the productivity slowdown between these periods. EXPLAINING THE PRODUCTIVITY SLOWDOWN There have been concerted efforts to explain the measured slowdown. These efforts have met with only limited success. While there are a number of possible explanatory variables, available studies suggest that none separately nor in combination is capable of explaining more than half of the decline. Capital expenditures for pollution abatement equipment (which provides no measurable output) appear responsible for a small fraction of <he slowdown. Another explanation is the growth of productive factors other than capital and labor that are typically not included as inputs in growth accounting. As a result, changes in the availability or use of such inputs as energy or improved land are measured as a change in productivity. The reductions in the use of energy following the 1974 and 1979 oil price shocks also explain some fraction of the measured productivity slowdown. Other possible, but less well-documented, explanations include a decline in economic efficiency associated with higher levels of distorting taxes and increased levels of government regulation. Regulation of energy in the 1970s was a prime example of the way in which government intervention in the private economy reduced economic efficiency. Productive efficiency can also be reduced by tax policies that distort the allocation of inputs. Federal subsidies to particular industries permit them to gain more access to productive inputs than is economically efficient, and differential tax treatment of productive inputs can also result in economic inefficiency. For example, if the return on capital expenditures of a particular type, such as spending for equipment, is taxed at a lower rate than the return on other-capital expenditures, such as those for plant, business investment will shift 114 toward the favorably treated input. Hence, the composition of the capital stock will be altered, and national output would be produced less efficiently from what would occur with neutral tax treatment. One-time changes in regulation or the tax structure that impair the efficient operation of the economy are more likely to produce a onetime decline in output than permanently alter the growth rate. During the period in which output drops, however, measured productivity growth will be smaller. Hence, the drop in measured productivity shown in Table 5-1 may reflect, in part, the progressive increase in regulation and effective marginal tax rates through the 1970s. PROSPECTS FOR GROWTH IN THE 1980s The Administration projects a 3.2 percent annual rate of growth in real GNP over the period 1979 through 1987. While higher than the rate from 1974 to 1979, this rate is one-fifth lower than the rate experienced from 1959 to 1973. An increase in the rate of capital formation from the 1973-79 rate of 2.5 percent per year to the 1969-73 rate of 3.5 percent per year would, by itself, raise output growth to 3.1 percent, even if productivity and labor growth rates remained constant. Given the incentives for capital formation provided by the Economic Recovery Tax Act of 1981, a 3.5 percent growth in capital over this period seems attainable. Growth in output will also be stimulated by demographic changes. Between 1979 and the mid-1980s a large segment of the baby-boom generation will become fully integrated into the U.S. labor market. The associated changes in the age and sex composition of the labor force should, by themselves, account for a 0.3 percent annual rate of growth in output between 1979 and 1986. Growth in labor input is expected to exceed this, however, as the Administration's new incentives for additional labor supply lead to longterm increases in employment rates and hours worked. A growth in total factor productivity greater than the 1.2 percent experienced from 1973 to 1979 is not essential to meet the Administration's 1987 GNP projection, but it is likely to occur as a result of the reduction in the general level of distorting taxation and the new regulatory environment. INCREASING FACTOR SUPPLY Current and future supplies of labor and capital to the economy primarily reflect the long-term supply and demand decisions of households and firms. At any point in time the aggregate supplies of labor and capital depend not only on the number and types of workers and the amount of plant and equipment available, but also on the rate of utilization of these productive factors. People can work and 115 machines can be worked more or less within any period of time. In the very short run, changes in the supplies of factor services involve changes in factor utilization rates. In the longer run, the number and quality of workers, and the quantity and quality of structures and equipment, are variable. Near-term increases in the stock of physical capital require producing or importing more capital goods in the current period. But producing more capital goods means producing fewer goods for consumption. Hence, one way to expand the stock of physical capital is for the household and government sectors to reduce their combined demands for current consumption. Another way to expand capital formation is simply to expand current output faster than current consumption. A third way is to import capital. The Administration seeks to increase capital formation by both raising the level of output and reducing the fraction of output consumed. A reduction in the Federal Government's own rate of consumption is an important element in this equation, but creating an environment where households choose to save a larger share of their income is of paramount importance. The figures in Table 5-2 illustrate this point. Table 5»2 presents historical data on household and government consumption rates and the rate of total net national saving. These consumption and saving rates are useful for portraying aggregate saving behavior. The household consumption rate is defined as household (private sector) consumption divided by the difference between net national product and total government consumption. National output less government consumption provides a measure of the private sector's effective disposable income, because the private sector must pay for the government's current consumption, either now or in the future. TABLE 5-2.—Average annual consumption and saving rates, 1951-80 [Percent of net national product (NNP)] Period Total Government consumption as percent of NNP Federal Government consumption as percent of NNP Household consumption as percent of nongovernmental NNP Net national saving as percent of NNP 1951=60 141 82 810 164 1961-70 167 83 81 7 152 1971-80 18.9 70 855 117 Sources: Department of Commerce (Bureau of Economic Analysis) and Council of Economic Advisers. Government consumption is defined here as government expenditures on goods and services immediately consumed. Government purchases of capital goods are not included. The table also indicates 116 average rates by decade of net national saving, defined as net national product less household and government consumption, divided by net national product. From the 1960s to the 1970s the Nation's total net saving rate fell from 15.2 percent to 11.7 percent. Changes in both government and household consumption rates played a role in reducing the saving rate, but the changes in the household consumption rate were far more important. If the rate of household consumption out of total disposable income—output less government consumption—had not changed over this period, the Nation's saving rate would have fallen by only 0.4 percentage point rather than by 3.5 percentage points, despite an increase in government consumption as a share of net national product from 16.7 to 18.9 percent. Thus, to achieve higher national saving rates it is important to lower the household consumption rate. There are two ways in which the household consumption rate can be reduced and the national saving rate increased. One way is for households to increase total output by supplying more labor without at the same time increasing current consumption proportionately. The other is for households to maintain their current supply of labor (and therefore output) but reduce their levels of consumption. In either case the household consumption rate falls, and the economy saves more. THE ECONOMIC EFFECTS OF TAX POLICY In making the decisions that determine national output and capital formation households consider their options. Each household makes decisions on consumption, saving, and work based on the household's current and future resources. These include the household's net worth (the current market value of all financial and real assets minus liabilities), the household's expected inheritances, the household's expected receipt of government transfer payments, and the household's human capital endowment. The endowment of human capital is the present value of after-tax income the household would earn if it was solely interested in maximizing its labor earnings. Household choices between consumption and saving and between work and leisure are influenced by after-tax wage rates and after-tax rates of return on capital. When the government changes either the level or the structure of taxes, it ultimately alters household decisions about consumption, saving, and work effort. All aspects of the tax system, including both personal and business taxes, influence these decisions. For example, higher after-tax returns on capital income make present consumption more expensive than future consumption; 117 forgoing a dollar of consumption today and investing that dollar provides more than a dollar of consumption tomorrow, with the additional amount determined by the after-tax return on the investment. It is customary to associate taxes on wage income with changes in incentives to work and to associate taxes on capital income with changes in incentives to consume or to save. Wage taxes also influence consumption and saving decisions, however, and taxes on capital income influence labor and leisure decisions. Lowering taxes on capital income raises the after-tax return on that income. The larger after-tax return effectively lowers the cost of enjoying leisure as well as consuming in the future relative to the present. Hence, a reduction in taxes on capital income increases the incentive to work now and can thus stimulate the supply of labor. U.S. households and businesses face, at best, a highly uncertain economic environment resulting from continuing changes in preferences, prices, and productivity. Uncertainty with respect to government fiscal and monetary policy increases the uncertainty under which households make current and future consumption and labor supply decisions. In such an environment, households may choose to postpone supplying labor and businesses may decide to postpone new investment until the economic environment is more settled. The Administration and the Congress have greatly reduced uncertainty with respect to the tax policy. The Economic Recovery Tax Act of 1981 clearly spells out the major features of the U.S. tax system for the next several years; the indexation of the Federal income tax slated to begin in 1985 will reduce the uncertainty associated with inflation pushing households into higher marginal tax brackets. THE STRUCTURE OF THE TAX SYSTEM The United States has a complex tax system that influences the choices households make between current and future consumption and current and future work effort. The tax system also influences the types of investments businesses undertake and the set of commodities households choose to purchase. The Federal personal and corporate income taxes, the social security program, the welfare system, and the money creation process all affect the economic behavior of firms and households. This section describes the changes introduced by the Economic Recovery Tax Act of 1981 to the personal and corporate income tax systems, and discusses the likely effects of these changes on labor supply and saving rates. Tax aspects of the social security system, the welfare system, and monetary policy are also addressed. 118 THE PERSONAL INCOME TAX Last year's tax legislation made three important changes in the Federal personal income tax. First, marginal tax rates on given levels of nominal income will be reduced, in three stages, by 23 percent by 1984. Beginning in 1985 the personal income tax structure will be indexed to inflation. In addition, the top rate on income from capital was reduced from 70 percent to 50 percent. Table 5-3 presents marginal tax rates (excluding the social security tax on earnings) at various levels of real income for the next 5 years, based on Administration projections of future inflation. This table also presents the marginal tax rates that would have occurred in the absence of the Economic Recovery Tax Act of 1981. TABLE 5-3.—Comparison of marginal personal income tax rates by real income level under the Economic Recovery Tax Act of 1981 and old law, 1979-86 1 [Percent] Real income (1979 dollars) 1979 1980 19812 1982 1983 1984 1985 1986 Single: $10,000: Old law 21 21 21 21 24 22 24 19 24 18 24 18 26 18 30 30 34 34 34 31 34 28 34 26 39 26 39 26 39 39 39 39 44 40 44 36 49 38 49 38 49 34 49 50 50 49 50 50 50 45 50 48 50 48 50 48 $10,000: Old law New law 16 16 18 18 18 16 18 15 18 14 18 14 18 14 $20,000: Old law New law 21 24 24 24 24 22 28 19 28 22 28 18 28 18 28 32 32 32 32 29 37 26 37 28 37 28 43 28 43 43 43 42 49 44 49 40 49 38 49 38 49 38 New law $20,000: Old law New law .. $30,000: Old law New law $50,000: Old law New law . Married, two workers: $30,000: Old law New law $50,000: Old law New law., 1 Excludes 2 social security taxes and State and local income taxes. Tax rates for 1981 under new law rounded to nearest whole percent. Source: Department of the Treasury, Office of Tax Analysis. Two points are clear from this table. First, without the tax cut, marginal tax rates for low- and middle-income households would have been 30 percent to 50 percent higher. Second, although the tax cut will significantly lower marginal tax rates at all levels of income, tax rates at given levels of real income will decline by much less. Bracket creep will offset much of the effect of the tax cut between 119 1981 and 1985. Under the Administration's inflation projections, most households will still face marginal tax rates that are high by historical standards. Table 5-4 presents past and projected marginal tax rates for households at 3 points in the income distribution from 1965 to 1984. For the projected inflation path, marginal tax rates for median income households in 1984 will decline to roughly their 1977-80 levels, but will remain considerably above earlier rates. Thus, despite the substantial reductions introduced by the 1981 tax cut, most rates in 1984 will remain near the historical high rates on real income. TABLE 5-4.—Marginal personal income tax rates for four-person families, selected years, 1965-84 1 [Percent] Family income Year One-half median income Median income Twice median income 1965 14 17 22 1970 15 20 26 1975 17 22 32 1980 18 24 43 Under Economic Recovery Tax Act of 1981 1981 1982 1983 1984 17.8 16 15 16 1981 1982 1983 1984 18 18 18 21 27.7 25 23 25 42.5 39 40 38 Under old law 28 28 28 32 43 43 49 49 1 Excludes social security taxes and State and local income taxes. Source: Department of the Treasury, Office of Tax Analysis. To discuss the effects of the tax cuts on labor supply and saving decisions, it is necessary to understand the various incentives on household behavior created by reductions in marginal tax rates. Cutting tax rates increases an individual's after-tax wage rate. With the Federal Government taking a smaller share of the last dollar of earnings, the return to an individual from an extra hour of work or a more demanding job will increase, strengthening the incentive to work more hours, or accept a more demanding job. Similarly, cutting tax rates increases after-tax interest rates. The higher the after-tax interest rate, the higher the level of future consumption possible for a given reduction of current consumption. The increase in after-tax interest rates resulting from the tax cuts will thus tend to decrease present consumption, including consumption of leisure as well as goods. In other words, households will tend both to work more and to save more. 120 Operating in the other direction is the effect of the tax cut on household income. As marginal tax rates fall, the total tax bill paid by a household will fall and its after-tax income will rise. As disposable incomes rise, both in the present and in the future, consumption of both goods and leisure will rise. Thus the effect of increased income will tend to decrease saving and decrease work effort. The net effect of the tax cut on saving and labor supply will vary according to household circumstances. The preponderance of empirical studies suggests that the labor supply effects of a tax cut are small for married men, somewhat larger for unmarried people, and substantial for married women. The most important effect of these changes in personal marginal income tax rates may thus be to increase labor force participation rates and hours of work by married women. The second important change in the personal income tax introduced by last year's tax legislation was the extension of the opportunity to use Individual Retirement Accounts (IRAs) to all working households. Under the new law, each worker may contribute up to $2,000 to these accounts regardless of whether the worker is already covered under an employer-sponsored pension plan. One-earner couples can contribute up to $2,250. IRAs provide two tax advantages to contributors. First, contributions are deductible from taxable income. Second, returns on IRA investments accumulate tax-free as long as the funds are not withdrawn from the account. Given the sizable tax savings available from IRAs, the total amount of money invested in them can be expected to rise sharply. Some of this money will simply be transferred from other types of savings, including stocks, bonds, and savings accounts. However, for many households without sufficient liquid assets to transfer to IRAs, the last dollar contributed to an IRA will correspond to their marginal saving. That is, the last dollar of current consumption forgone will correspond to the last dollar invested in an IRA. Since the marginal tax rate on capital income obtained from these accounts is quite low, this provision is expected to increase the national saving rate as well as contribute to an increase in the labor supply. The prospect of moving into higher marginal income tax brackets biases households away from activities that would generate higher future incomes. Hence, income tax progressivity encourages current consumption and leisure and discourages saving for the future. In the presence of inflation and an unindexed tax system, "bracket creep" strengthens this disincentive for generating future income. Indexation of the tax system in 1985 will, therefore, provide further stimulus for saving and economic growth. 121 Other changes in the tax code will also provide taxpayers with greater incentives to join the work force. The new law provides married couples filing a joint 1982 return with a 5 percent deduction in 1982 and a 10 percent deduction starting in 1983 on the earnings up to $30,000 of the lower earning spouse. If the couple's marginal tax rate would otherwise be 30 percent, the 10 percent deduction after 1982 will reduce the marginal tax rate on earnings of the second spouse to 27 percent. The spousal deduction will also place certain households in lower marginal tax brackets, thus further lowering marginal tax rates. This change should help sustain the growth of female labor force participation. TAXATION OF INCOME FROM BUSINESS INVESTMENT The Economic Recovery Tax Act of 1981 also made major changes in the taxation of business income. The most important change is the more generous treatment of the way in which capital can be depreciated for tax purposes, known as the accelerated cost recovery system (ACRS). A second change was the introduction of leasing rules that provide businesses with temporarily low taxable income the same investment incentives as other businesses. A third provision of the act is an increase in the investment tax credit for some types of equipment. Finally, a fourth provision allows small businesses to expense up to $5,000 of new investment in 1982 and 1983. The $5,000 limit will rise to $7,500 in 1984 and 1985, and $10,000 thereafter. These changes should substantially increase business investment by increasing the after-tax return available on new business projects. TAX TREATMENT OF DEPRECIABLE PROPERTY The ACRS will encourage business investment by shortening the period over which assets can be fully depreciated and by allowing firms to claim more of the depreciation early in the tax life of the asset. Before the adoption of ACRS, businesses were permitted to write off industrial equipment over an average period of 8.6 years. The ACRS asset life for this equipment is 5 years. For industrial plant, asset lives have been reduced by 37 percent, from an average of 23.8 years to 15 years. The ACRS depreciation schedules represent a combination of the declining balance and straightline method of depreciation through 1984. For 1985 and beyond, declining balance switching to sum of years digits is used. The depreciation schedules for the years after 1984 provide increasingly more acceleration'of depreciation. The combined result of the ACRS and the investment tax credit will be a decline in effective tax rates on new investment over the period 1982 to 1987. 122 Table 5-5 shows historic and projected before-tax real rates of return in new capital investment required to provide a 4 percent after-tax real return. This real return is a commonly used analytical assumption. These numbers reflect the combined effect of the depreciation provisions and the investment tax credit. Historical numbers are based on historical rates of inflation.. Rates of return in future years are based on the Administration's inflation projections. A before tax rate of return of 8 percent, for example, implies an effective tax rate of 50 percent on new investments. The calculations assume the new investment is equity financed. Hence, the tax advantages from the deduction of interest expense associated with debt financing are not included. TABLE 5-5.—Real before-tax rate of return required to provide a 4 percent real after-tax return, 1955-86 [Percent] Period Construction machinery General industrial equipment Trucks, buses, and trailers Industrial buildings Commercial buildings 1955-59 8.9 9.5 108 80 80 1960-64 7.4 7.8 8.7 79 79 76 1965-69 65 6.9 75 76 1970-74 6.6 6.7 76 86 8.4 1975-79 6.1 6.4 76 90 87 1981 . .. 34 35 35 66 62 1982 31 33 31 64 61 6.0 1983 2.9 3.2 3.0 6.4 1984 2.9 3.1 2.9 6.4 60 23 27 26 63 60 22 26 25 63 60 1985 .. 1986 Note.—Data for 1955-79 are based on Auerbach and Jorgenson calculations of expected inflation in each year. Data for 1981-86 are based on the Administration's projections of inflation (year-over-year percent change in the GNP implicit price deflator): 1982, 7,9; 1983, 6.0; 1984, 5.0; 1985, 4.7; 1986, 4.6; and 1987 and beyond, 4.5. Sources: Auerbach, Alan and Jorgenson, Dale, "Inflation Proof Depreciation of Assets," Harvard Business Review, Sept -Oct 1980 (1955-79), and Council of Economic Advisers (1981-86, based on Economic Recovery Tax Act of 1981). Under the assumptions made here, in comparison with the years 1975 to 1979, the 1982 real before-tax rate of return required to justify a new investment in general industrial equipment has been reduced from 6.4 to 3.3 percent. For investment in plant the required rate of return estimated here declines from 9.0 to 6.4 percent. The effective tax rates associated with these numbers decline between 1982 and 1986. This reflects both the more favorable depreciation schedules after 1984 and projections of continued declines in inflation. Since depreciation allowances are not indexed, higher rates of inflation will raise effective tax rates. Table 5-6 presents the before-tax rates of return required in 1986 to provide a 4 percent after-tax 123 return under different assumptions about the rate of inflation prevailing in 1986 and beyond. The table shows that a reduction in inflation from 8 percent to 5 percent will lower the required before-tax rate of return from 3.2 percent to 2.7 percent in general industrial equipment and from 6.9 percent to 6.4 percent on plant. Conversely, a 1986 level of inflation of 12 percent would raise required before-tax rates of return to 3.7 percent for equipment and 7.4 percent for plant. TABLE 5-6.—Real before-tax rate of return required to provide a 4 percent after-tax return in 1986 at selected rates of inflation [Percent] Inflation rate (percent) Type of capital 12 8 5 Construction machinery 2.3 2.9 3.7 General industrial equipment 2.7 3.2 3.7 Trucks, buses and trailers 2.5 3.1 3.7 Industrial buildings 6.4 6.9 7.4 Commercial buildings 6.1 6.5 6.9 Source: Council of Economic Advisers. Tables 5-5 and 5-6 also indicate that the ACRS does not treat all types of business investment equally. Although favorable to all new investment, ACRS is relatively more favorable to investment in equipment. As a consequence, industries for which short-lived equipment represents a large fraction of their total capital will face lower effective tax rates than industries with a low equipment-intensive capital structure. Table 5-7 presents calculations of industry specific tax rates on new investment for 1982. There are two sets of numbers; the first indicates the tax rates that would have prevailed under the old law, while the second column indicates tax rates in 1982 under the Accelerated Cost Recovery System. TABLE 5-7.—Effective tax rates on new depreciable assets, selected industries, 1982J Industry Old Law Agriculture Mining Primary metals . Machinery and instruments. Motor vehicles . Food Pulp and paper. Chemicals. Petroleum refining. Transportation services. Utilities Communications . Services and trade 32.7 28.4 34.0 38.2 25.8 44.1 28.5 28.8 35.0 31.0 43.2 39.8 532 1 Industries chosen had at least $5 billion in new investment in 1981. Note.—Assumes a 4 percent real after-tax rate of return and 8 percent inflation. Source: Department of the Treasury, Office of Tax Analysis. 124 New law 16.6 -3.4 7.5 18.6 -11.3 20.8 .9 8.6 1.1 -2.9 30.6 14.1 371 The table shows substantial reductions in tax rates for all industries, but differences among industries in the rate of tax reduction. The effect on each industry is different because each industry uses a different mix of capital. Tax rates vary across industries, from a high of 37 percent in the services and trade sector to a low of -11 percent in the motor vehicle industry. Effective tax rates on new investment are negative for some industries. The result will be lower total corporate tax liabilities rather than direct payments by the Treasury. These differential rates of taxation at the industry level will probably lead to relatively more investment in industries with lower tax rates. LEASING PROVISIONS The ACRS provides the same investment incentives to firms with taxable income and those with nontaxable income. The leasing provision of the Economic Recovery Tax Act of 1981 should enhance efficient allocation of capital across industries and across firms within the same industry. The fundamental principle underlying the leasing provisions is that investment incentives should be equal for all businesses in a given industry and across industries; that is, investment incentives should not favor investment in one firm over another. Prior to the establishment of these leasing provisions, firms with temporary tax losses (a condition especially characteristic of new enterprises) were often unable to take advantage of investment tax incentives. The reason was that temporarily unprofitable companies had no taxable income against which to apply the investment tax deductions. As a result, these companies were placed at a relative disadvantage, although the new investment undertaken by these companies was potentially as profitable as investment undertaken by firms with temporarily positive profits. The leasing provisions will permit companies with no current taxable income to take advantage of investment incentives by transferring their tax credits and additional deductions associated with investment to firms with taxable income. For example, American automobile manufacturers who are currently reporting losses will now be able to take the same advantage of the incentives as more profitable firms. In the absence of the leasing provisions, investment would probably be too low in the automobile industry relative to the most productive mix of investment. The leasing provisions will also have the advantage of reducing incentives for mergers. Under the old law, companies with positive taxable income had an incentive to merge with companies with tax losses because these tax losses could be used to offset the parent 125 358-691 0 - 82 - 9 : QL3 company's taxable income. The leasing provisions, by permitting companies with positive taxable income to effectively purchase the negative taxable income of other companies, will eliminate this motivation for mergers. EFFECTS OF TAX ACT ON HOUSING AND CONSUMER DURABLES The 1981 act will alter the allocation of existing capital and labor among industries. It will also affect the allocation of new business investment, the fraction of investment allocated to business as opposed to residential investment, and the division of consumption between durable commodities—such as residential real estate, automobiles, and furniture—and nondurable commodities. The Tax Act improves the attractiveness of business investment relative to other forms of investment. As relative returns rise for business investment, financial institutions will tend to increase their business lending and decrease their consumer and mortgage lending. Households themselves will tend to lower their investments in these goods in order to put more of their savings directly into business capital by purchasing corporate stocks and bonds, or indirectly by placing their savings with financial institutions who will make these investments for them. In either case, more money will be channeled to business investment and less to housing and consumer durables than would have occurred without the ACRS. To understand the effects of the new depreciation system on the consumption of durables versus nondurables, one must first realize that the implicit price of consuming durable goods is the after-tax return the owners of these durables would otherwise receive if they sold these assets and invested the proceeds. The sizable reductions in tax rates on capital income mean that real after-tax returns on household saving will be substantially higher than they have been in the recent past. As a result, the implicit price of consumer durables has risen, and a long-run shift in demand away from housing, automobiles, and other consumer durables may result. While housing and durables provide important service flows, the tax treatment of service flows from durables may have led to overinvestment in them in the 1970s. Much of the spectacular rise in housing prices during the last decade was associated with the increasingly pro-durables bias imbedded in a very inflation-senstive system of capital income taxation. As inflation rose, so did effective taxes on capital income. This rise lowered the relative price of consuming durables because it lowered the opportunity costs of holding these durables. As a result, the demand for consumer durables in general, and housing in particular, was greatly stimulated. In the short run, housing prices were bid up dramatically, reflecting the tax-induced in- 126 creased demand for housing services. The higher housing prices, in turn, stimulated construction of new housing, since it increased the price at which newly constructed houses could be sold. An offsetting consideration with respect to the durables industries is the relatively more favorable treatment of the motor vehicle industry under the 1981 Tax Act (Table 5-7). The effective tax rate on the return to new investment in the motor vehicle industry has been cut from 26 to — 11 percent. Another pertinent point is that the tax structure is simply one of numerous determinants of the demand for different commodities. The surge in new family formation resulting from the baby-boom of the 1950s will lead to a strong demand for housing that could well swamp the effects of the tax change on residential investment. The same is likely to be true of other durables that are in relatively greater demand by young families setting up a household. IMPLICIT TAXATION OF LABOR SUPPLY BY THE SOCIAL SECURITY AND WELFARE SYSTEMS It is ironic that the social security and welfare programs may, themselves, contribute to the relatively low income levels of the elderly and the poor. Social security and welfare recipients may well face the highest marginal tax rates of any members of our society. These systems provide very small incentives to work. Not surprisingly, therefore, relatively few beneficiaries of these two programs work, especially at full-time jobs. There is mounting evidence that the social security earnings test has contributed significantly to the dramatic increase in early retirement. In 1950 the labor force participation rate of males 65 and over was 46 percent; today it is only 20 percent. Not only are there fewer older men working on any given day during the year, but there are fewer older men who work at any time during the year. The fraction of men 65 to 69 who are completely retired has risen from 40 percent to 60 percent since 1960. For males 60 to 64 the retirement rate is now 30 percent, double the 1960 figure of 15 percent. Those older males who do choose to work are working fewer hours. Since 1967 the fraction of working males 65 and over who work part-time has increased from one-third to almost one-half. This reduction in work has occurred despite a substantial increase in the general health of people in this age group. The social security earnings test currently reduces benefits by 50 cents for every dollar of earnings above $6,000 and represents a 50 percent implicit tax for workers aged 65 to 72. In combination with the Federal and State income taxes and the social security payroll tax, this 50 percent tax on earnings penalizes the work effort of the 127 elderly at rates that can easily exceed 80 percent. These exceedingly large tax rates extend over a wide range of the typical older worker's potential supply of labor hours. Eliminating the earnings test, as has been proposed by the Administration, would unquestionably increase the incomes of older workers as well as generate tax revenues that would offset a portion of the costs of doing so. Because of impending changes in the demographic structure of the population, it is important to reverse the trend toward early retirement. By the year 2025 the proportion of the population age 62 and over will rise to 24.5 percent, compared to 13.6 percent in 1981. The ratio of workers paying social security taxes to retired beneficiaries will fall from a current level of 3.7 to 2.4. If the work disincentives for older citizens were reduced, U.S. per capita income would rise more rapidly and social security's long-run financial position would be improved. Current provisions of the social security system also generate work disincentives for a significant fraction of married women. While married women are joining the labor force in increasing numbers, the typical wife's earnings are still one-third to one-half that of husbands. Hence, the marginal tax contributions to social security of many wives will yield them no marginal social security benefits because they will collect benefits based on their husband's earnings record. (This applies only to retirement and medicare benefits. A wife who becomes disabled cannot currently Collect disability benefits based on her husband's account.) The combined employer-employee retirement and medicare tax rates total 11.75 percent and represent a pure marginal tax on the work effort of married women. The response to females to the level of net compensation is estimated to be quite high. Hence, the bias in the current structure regarding dependent and survivor benefits may represent a significant disincentive to the participation of married females in the labor force. Similar work disincentives potentially reduce the labor supply of welfare recipients. Welfare recipients do not face a single and easily understood tax schedule relating their gross earnings to their net disposable income. Instead, they are confronted with eight different and highly complicated implicit and explicit tax schedules. These include the work and income tests of Aid to Families with Dependent Children (AFDC), food stamps, housing assistance, social security insurance and medicaid, the earned income tax credit, the Federal income tax, and State income taxes. Each of the welfare programs has its own eligibility requirements, its own definition of income, its own set of deductions and exclusions, and its own tax rates. These explicit and implicit tax systems differ across States as well. Even within a State, implicit tax schedules vary, depending on both the charac- 128 teristics of the recipient and the discretion of the social service worker. The result of all this is a complex set of uncoordinated rules and regulations that surely leave welfare recipients confused and dismayed. Past reforms of the system simply added more and more programs, with little emphasis on how the work disincentives of new programs would interact with those of old programs. The efficacy of any particular income transfer program cannot be determined in isolation from the rest of the system. Analyses of marginal tax rates arising from the combined earnings tests of the various welfare programs and the explicit Federal and State tax systems suggest that typical welfare recipients, namely single mothers with children, face marginal tax rates in excess of 75 percent. Reductions in these very high implicit and explicit tax rates might generate a sufficiently large addition to their labor supply to pay for themselves. As State and local governments assume fuller responsibility for the welfare system, they could effectively offset these high, marginal tax rates by providing additional work incentives. As this section has shown, many households still face considerable work disincentives, despite the substantial changes enacted in the Economic Recovery Tax Act of 1981. Future reforms of social security and welfare policy should take account of these concerns. MONETARY POLICY AS A FISCAL INSTRUMENT The inclusion of monetary policy in a discussion of taxation may seem out of place, but monetary policy is an important instrument of taxation in the U.S. economy. Increases in the supply of money raise revenues for the Federal Government in three ways. First, faster growth of monetary aggregates leads to higher rates of inflation. Since the Federal personal income tax will not be indexed until 1985, inflation will continue to raise real taxes through the process of "bracket creep." Inflation pushes taxpayers into higher marginal tax brackets, although their real incomes may not have changed—i.e., their increase in nominal income may only have kept pace with inflation. Higher inflation rates also raise effective tax rates on capital income earned by corporate and noncorporate business (Table 5-6). This is due to the nonindexation of depreciation allowances, and, in many cases, the reduction in real tax deductions resulting from changes in inventories valued at historic rather than current cost. A reduction in inflation will have the effect of lowering marginal personal income tax rates and effective taxation of capital income. The second way monetary policy acts as a fiscal instrument involves the interaction between deficit financing by the government and central bank open market operations. In the past the Treasury has paid in part for goods and services, by selling bonds to the 129 public. When the Federal Reserve purchases Treasury bonds, it increases the monetary base. The net effect of these'transactions is that the government acquires goods and services while the private sector is left holding a larger stock of money. The larger stock of money for the same amount of goods and services in the economy translates into a higher price level. The increase in prices then lowers the real purchasing power of the money held by the private sector, and the transfer of resources from the private sector to the government is complete. A third way in which the government "taxes" the private sector through expansion of the monetary base is that the ensuing higher prices devalue nominal outstanding debt. The real capital losses experienced by the private sector on their holdings of outstanding government liabilities correspond to the real capital gains accruing to the government. Private investors are not, however, so foolish as to purchase government bonds in an inflationary environment without requiring higher interest payments to offset expected real capital losses on the nominal value of these bonds. Given this fact, the government collects real revenues from "watering down*' the value of nominal debt only if the actual inflation rate exceeds the rate expected by the private sector. Actual rates of inflation in excess of expected rates appear to have been the case for much of the 1970s. Standard government accounting procedures fail to record either the increase in base money or the real capital gains on outstanding nominal government debt as sources of financing government expenditures. Even when actual inflation equals expected inflation, an alternative method of bookkeeping would suggest entering the government's real capital gain as revenue, since the higher nominal interest payments required because of expected inflation are entered on the government's books as current real expenditures. The failure to use accounting procedures that recognize the impact of inflation disguises the government's actual method of financing its expenditures. There are a variety of possible ways of analyzing changes in the government's net liabilities. Table 5-8 presents estimates of changes in the real market value of outstanding Federal net financial liabilities from 1966 to 1980. The table relates changes in the Federal Government's real net financial debt (valued at market prices) in 1980 dollars to the differences between its real expenditures and its real taxes, including taxation associated with money creation. 130 TABLE 5-8.—Sources of changes in Federal Government's real net financial liabilities, 1966-80 [Billions of 1980 dollars] Sources of Government finances Year Expenditures ' Tax revenues 2 Change in monetary base 3 Revaluation of net financial debt 4 Other revenue sources plus statistical discrepancy5 Change in Federal Government's net financial liabilities 6 1966 1967 1968 1969 331.9 367.4 388.0 385.1 327.7 337.8 374.9 402.4 9.2 8.3 10.1 6.3 7.9 21.9 24.0 27.4 -3.2 -.4 -7.5 -4.1 -9.7 -.2 -13.5 -47.0 1970 1971 1972 1973 1974 396.3 407.6 433.5 443.5 461.9 372.3 367.0 403.7 434.1 444.2 10.1 13.9 6.0 12.6 9.1 -10.3 12.1 31.7 46.0 55.9 -.2 =-2.8 -.7 -.8 -.5 24.5 17.4 = 7.2 -48.3 -46.8 1975 1976 1977 1978 1979 504.0 516.8 534.9 544.9 555.0 406.1 445.6 476.0 510.3 538.9 10.2 8.3 15.0 18.0 10.4 -5.9 .1 57.0 73.7 105.2 -7.V -6.2 -11.9 -11.1 -11.7 101.5 68.9 -1.1 -46.0 -87.8 1980 602.0 540.9 9.3 57.8 -2.5 -3.4 1 Total expenditures, national income and product accounts (NIPA) basis. 2 Total receipts, NIPA basis, deflated by GNP implicit price deflator. 3 Changes in the monetary base equal the sum of changes in member bank reserves, vault cash of commercial banks, and currency outside banks, flow of funds accounts. 4 Capital gains accruing to the Federal Government on its net financial liabilities, 5 Other revenue sources include Federal sales of mineral rights and household insurance credits and the surplus of federally sponsored credit agencies' flow of funds accounts. 6 The value of the Federal Government's net financial liabilities equals total liabilities minus financial assets valued at market prices. Liabilities of the Treasury held by the Federal Reserve as well as the social security trust funds are excluded from this series. Sources: Department of Commerce (Bureau of Economic Analysis); Board of Governors of the Federal Reserve System; Eisner, Robert and Pieper, Paul, "Government Net Worth: Assets, Liabilities and Revaluations (1982)"; and Council of Economic Advisers. In terms of this accounting framework, taxes associated with money creation—changes in the real monetary base and in the real worth of net financial debt—were quite significant in many of the last 30 years. In 1979, for example, these sources are estimated to have yielded $115.6 billion of real revenues to the government, or 18.0 percent of total 1979 revenue. According to these calculations, in 1979 the Federal Government's real net financial liabilities declined by $87.8 billion. In contrast, using the deflated statistics shown in Table 5-8, the difference between explicit expenditures and explicit tax revenues, was a $16.1 billion increase in government debt. The estimates in Table 5-8 show that the Federal Government's real net financial assets increased in 11 of the 15 years between 1965 and 1980 in part as a result of the use of money creation to finance its expenditures. Official reports indicated a decline in government debt only in 1969. Given the financial markets' interests in increases in government debt, this approach to analyzing the Federal Government's financial status should be of interest. While this concept of Federal debt suggests an improving fiscal position over the 1970s, a broader concept of Federal debt discussed in the appendix to Chapter 4 indicates that the Federal Government's total explicit and implicit liabilities have risen enormously over the 131 last 20 years. The narrower focus of this section and objective of Table 5-7 is to point out that monetary growth raises sizable real taxes for the Federal Government. Monetary growth is a form of taxation. It is an insidious form of taxation. It is taxation that is not legislated by the Congress, it is taxation that is hard to understand, and it is taxation that inhibits economic growth by raising effective marginal tax rates on wages and on saving. STRUCTURAL TAX POLICY AND ECONOMIC GROWTH Structural tax policy probably constitutes the Federal Government's most powerful tool for influencing economic growth. If households anticipate their own and their descendants' future tax liabilities, changes in the tax structure generating the same revenue have only "substitution" effects on their decisions; "income" effects are zero or negligible. If households consider only their own future tax liabilities and not those of their descendants, income effects do arise for different age groups, but they are largely offsetting. Such changes in the tax structure do not change household budgets, in the aggregate, but they do change household incentives to work and save. The rate of savings and capital formation can be increased significantly by switching away from taxes on capital income to some other tax base, such as wages or consumption. As described earlier, reductions in the tax rates on capital income reduce the relative cost of future consumption and leisure and encourage the substitution of future consumption and leisure for current consumption and leisure. Such substitution leads to increases in the current supplies of both capital and labor. The 1981 Tax Act's reduction in marginal tax rates on capital income under both personal and corporate income taxes, the provision for substantial increases in Individual Retirement Accounts and Keogh accounts, and the recent expansion of pension fund savings all constitute major reductions in taxation of capital income. These historic changes in the structure of taxation, assuming they are maintained for the indefinite future, are expected to lead to a significant long-term rise in the private business capital stock and increases in labor supply over what would otherwise be the case. While capital formation and economic growth are predicted to be enhanced, it should be emphasized that the choice of a tax base should be determined on grounds of economic welfare and efficiency, rather than simply the effect of structural tax change on factor supplies. Economic research suggests that rather sizable efficiency and welfare gains are available from switching from the taxation of wage and capital income to the taxation of consumption. In contrast, 132 there is evidence that switching from wage and capital income taxation to wage taxation alone can reduce economic welfare and efficiency, even though this structural tax change would lead to more capital formation. In recent years, Federal tax policy has increasingly moved away from marginal taxation of capital income toward an alternative structure that can best be described as a hybrid mixture of wage and consumption taxation. The change in the structure of taxation will increase labor supply and capital formation over time, provided there is no significant deterioration in the government's real net debt position. While the move away from marginal capital income taxation is necessary to stimulate saving, the Nation still retains a tax system that is overly complex, that is still sensitive to inflation (especially with respect to effective business taxation), that is administratively expensive, and that absorbs too much talent in the fundamentally nonproductive endeavor of what is gently termed "tax planning." In short, there is a need for further simplification and rationalization of the U.S. tax code. 133 CHAPTER 6 Reforming Government Regulation of Economic Activity GOVERNMENT REGULATION OF ECONOMIC ACTIVITY expanded rapidly during the 1970s. Although regulation can serve useful purposes, changes in the world and national economies have aroused increasing concern that regulation is imposing excessive burdens on individuals and businesses. This chapter focuses on the Administration's efforts to reform the regulatory process. The present scope of Federal regulation is reviewed, and a framework is presented for judging the desirability of specific regulations. This framework is then used in reviewing the status of regulation in a number of important industries and sectors of the economy. The chapter concludes with a set of guidelines for regulatory reform. THE GROWTH OF FEDERAL REGULATION The number and size of the agencies devoted to carrying out Federal regulation have expanded rapidly during the past 15 years. Since the mid-1960s we have seen the formation of the Consumer Product Safety Commission, the Environmental Protection Agency, the Department of Energy, and the Occupational Safety and Health Administration, to cite just the better known ones. The recent growth in the number and size of regulatory agencies has been greater than that which took place during the New Deal period (Chart 6-1). The direct costs of Federal regulatory activities to the taxpayers are large. As shown in Table 6-1, the regulatory expenses of Federal agencies were $2.8 billion in fiscal 1974 and increased to $5.5 billion in fiscal 1979. A further increase to $7.1 billion was budgeted for 1981van amount 50 percent higher in constant dollars than the 1974 total. It is apparent that the biggest budgets are not those for the independent regulatory commissions, such as the Interstate Commerce Commission or the Federal Communications Commission. The largest proportion of funds in recent years has been devoted to broader regulatory activities, such as those conducted by the Environmental Protection Agency, and the Department of Agriculture (mainly food inspection). 134 Chart 6-1 Growth of Federal Regulatory Agencies NUMBER OF AGENCIES 60 I 50 40 30 20 10 Pre1900 1900 to 1909 1910 to 1919 1920 to 1929 1930 to 1939 1940 to 1949 1950 to 1959 1960 to 1969 1970 to 1980 SOURCE: CENTER FOR THE STUDY OF AMERICAN BUSINESS, REASONS FOR REGULATION Why do governments become involved in regulating private economic activity? The question is not, of course, a simple one to answer, and numerous justifications for public intervention in the private sector have been offered. The basic reason advanced by economists is the occurrence of "market failure"—that is, the failure of competitive market forces to function efficiently in the allocation of goods and services. When there is no market failure, most economists would conclude that decentralized market decisions are superior to centralized government regulation. 135 Although regulation is often used by the government as a means of correcting market failure, regulatory action is not necessarily the only means available. For instance, consumers can be provided with information about goods or services offered for sale. Special taxes can be levied on polluters, or property rights could be extended to include the resources subject to pollution as discussed in Chapter 2. TABLE 6-1.—Regulatory outlays of Federal agencies, fiscal years 1974-81 [Fiscal years; millions of dollars] Agency 1974 1975 1976 1977 1978 1979 1980 4,916 1981 * 2,834 3,268 3,598 4,062 5,518 6,526 7,088 Agriculture 410 447 475 590 921 979 1,258 1,213 Commerce 76 75 86 94 99 115 129 147 Defense 10 16 22 32 38 43 41 45 Energy 33 6 40 49 79 82 132 144 TOTAL 165 201 218 245 276 300 326 347 Interior 5 6 9 13 22 55 105 184 Justice 22 30 31 35 45 66 62 60 Labor 208 257 314 332 373 446 486 539 Transportation 466 460 506 603 679 767 865 971 Treasury 161 166 185 246 267 288 317 335 89 81 91 103 101 99 117 147 1 11 13 14 15 16 19 65 77 83 91 97 113 127 Health and Human Services Civil Aeronautics Board Commodity Futures Trading Commission Comptroller of the Currency Consumer Product Safety Commission Environmental Protection Agency 50 19 34 38 40 40 39 44 42 629 850 772 718 885 1,024 1,259 1,321 EQual Employment Opportunity Commission 42 56 59 72 74 92 131 Federal Communications Commission 38 48 52 56 64 70 76 80 Federal Deposit Insurance Corporation 58 66 74 88 105 115 116 130 Federa! Energy Regulatory Commission 27 34 36 41 38 50 67 79 6 7 8 8 9 10 11 12 32 39 44 52 59 63 68 69 Federal Maritime Commission .. Federal Trade Commission 140 7 8 10 n 12 12 14 18 Interstate Commerce Commission 38 44 47 59 65 67 77 77 National Labor Relations Board 55 61 68 81 90 97 109 119 8 9 11 13 16 15 18 18 80 86 180 231 271 309 378 435 Securities and Exchange Commission 35 44 51 54 61 66 74 78 All other 65 71 83 100 122 137 117 192 International Trade Commission National Transportation Safety Board Nuclear Regulatory Commission ... 1 Data for 1981 are estimated using the budget revisions made in March 1981. Source: "Directory of Federal Regulatory Agencies," Center for the Study of American Business, 3rd Edition, 1981. Outside the realm of market failure, it is often claimed that "distributive justice," a concern about political or social equity, is a reason for governmental intervention. In other words, the govern- 136 merit's involvement is seen primarily as a way of bringing about a transfer of wealth to a worthy segment of society. But in practice a small group (that is, a "special interest'*) usually benefits at the expense of the mass of consumers. This type of regulation is different from that designed to correct market failure, although the stated rationale may be similar. Although economics cannot provide sufficient guidance to resolve equity issues, it can assist by identifying the costs and benefits of alternative policies addressed to these issues. AN OVERVIEW OF REGULATION Many Federal rules have yielded benefits to the public. The automobile emission standards, for example, have substantially reduced emissions from this source. Regulations, however, can also impose substantial costs on society. Regulations themselves can create problems which call for additional regulations. Furthermore, the resources used to comply with regulations are diverted from other activities, with a resultant loss in productivity and economic growth. Restrictions on the development of nuclear energy, for example, have resulted in expanding coal mining, which increases the probability that coal miners will be injured. Nor is it likely that the costs and benefits of regulations will be evenly shared. One group in society may receive the bulk of the benefits from a Federal regulation, while the costs are borne primarily by some other group. For example, regulations making it uneconomical to use low sulfur (low-polluting) coal have been supported by people in areas producing high sulfur coal. To the extent that these regulations have been successful in making low sulfur coal uneconomical, the producers in the low sulfur coal areas and consumers generally are losers as a result. BENEFIT-COST ANALYSIS OF GOVERNMENT REGULATION Interest has risen in efforts to determine more precisely the benefits and the costs of regulation. The motive for incorporating benefitcost analysis into the regulatory decisionmaking process is to achieve a more efficient allocation of government resources by subjecting the public sector to the same type of efficiency tests used in the private sector. In making an investment decision, for example, business executives compare the costs to be incurred with the expected revenues. The investment is likely to be pursued only if the expected costs are less than the expected revenues. The government agency decisionmaker does not face the same array of economic incentives and constraints. If the costs of an agency action exceed the benefits, the result may not have an imme- 137 diate adverse impact on the agency. Analytical information on economic costs has in the past rarely existed in the public sector, so that, more often than not, the governmental decisionmaker has not been aware of approving a regulation that is economically inefficient. The aim of requiring agencies to perform benefit-cost analysis is to make the regulatory process more efficient and to eliminate regulatory actions that, on balance, generate more costs than benefits. This result is not assured by benefit-cost analysis, since political and other important considerations may dominate the decisionmaking. Even in those cases, however, benefit-cost analysis may provide valuable guidance. The review of a proposed Federal regulatory activity should involve analysis of three types of questions. The first is whether some form of market failure has occurred that warrants the imposition of regulation. The second is whether Federal regulation, in contrast to State and local regulation, is appropriate. The last question, assuming the response to the first two is positive, is whether a specific regulation will increase net benefits to society. Traditionally, much of the responsibility for answering the first two questions has fallen on the Congress, while the last question has been addressed by the regulatory agencies. Careful analysis of the first two questions, unfortunately, has often been neglected. Such analysis should address itself to whether there is any significant market imperfection in the absence of regulation. Observed differences in safety conditions among workplaces, for example, are not sufficient evidence of a market imperfection, because employer and employee knowledge of these conditions may lead to compensating differences in wages and employment conditions. Observed differences in economic outcomes among demographic groups are not sufficient evidence of discrimination because these differences may be the result of nondiscriminatory processes. More careful analysis of these types of issues is necessary to determine the existence and nature of any market imperfection. For Federal regulations, in addition, it is important to determine whether the nature of the imperfection is such that Federal regulation, rather than State or local regulation, is appropriate. Federal regulation is most likely to be appropriate where the externalities of an activity in one State have substantial effects in other States or countries, the activity affects basic constitutional rights, or interstate commerce would be significantly disrupted by varying local regulations. In the absence of these conditions, State and local regulation is likely to be more efficient by more accurately reflecting local preferences and conditions. 138 When some Federal regulation is clearly appropriate, an analysis of its benefits and costs can provide valuable information to help select the form and extent of the regulation. In practice, a benefit-cost analysis will not always be a sufficient basis for resolving all controversy about the regulation. Given the increasing concern about the efficiency of Federal regulations, however, a more general use of benefitcost analysis can contribute to a broader consensus on appropriate changes in the nature and degree of Federal regulations. QUANTIFICATION The benefits and costs attributable to regulation are the difference between the benefits and costs that would occur because of regulation and those that would prevail in its absence. Although this idea may seem straightforward, its application can be complex. Determining what would occur in the absence of regulation may involve a considerable amount of judgment. Sometimes the indirect effects of regulation may be as important as the direct ones. Consider, for example, the question of tighter standards on emissions from new automobiles. Higher new car prices, attributable in part to these tighter standards, have reduced the rate at which older cars with higher emissions are being scrapped. A recent study indicates that the tighter emission standards implemented in the 1981 model year may increase total emissions for several years as a result of this process. Even when it is not possible to put a dollar sign on benefits, a cost-effectiveness analysis still can be helpful by ranking the relative economic efficiency of alternatives. By using this method, originally developed for military programs, estimates can be made of the costs of different ways to accomplish an objective. Cost-effectiveness analyses permit policymakers to identify least-cost solutions. In this more limited approach, the analyst begins with the assumption that the regulatory objective is worth achieving. This approach may be particularly useful in dealing with programs to reduce personal hazards. Instead of dealing with such a difficult conceptual question as the economic value of human life, the emphasis shifts to identifying regulatory approaches that would maximize the number of lives saved for a given amount of resources. Reliable measures of costs and benefits are not easily achieved or always possible. Should the loss of a forest, for example, be measured only by the value of the timber cut? What of the beauty destroyed? What of the area's value as a wildlife habitat? Such unquantifiable questions usually arise in the course of making a decision about any Federal regulation. 139 However, the difficulties involved in estimating benefits or costs need not serve as a deterrent to analysis. Merely identifying important but often overlooked impacts may be useful to the decisionmaking process. An example on the cost side is the beneficial drugs that are not available because of regulatory obstacles. An example on the benefit side is the more productive work force that results from a lower rate of accidents on the job. THE EVOLUTION OF REGULATORY REVIEW The last decade has been marked by a shift in emphasis from industry-specific regulations to rules affecting specific aspects of the operation of virtually all industries, such as occupational safety and environmental protection. The recent expansion of Federal regulatory activity has occurred despite the fact that the Federal Government has no explicit power to regulate intrastate economic activity. The 10th amendment, which reserves to the States and the people all powers not delegated to the United States, confirms the States' powers to enact laws to protect public health, safety, morals, and general welfare. The Federal Government was not given comparable power, except as such activity affects interstate commerce. The recent growth of Federal regulation of economic activities has been based largely on broadened judicial interpretation of the scope of the "commerce clause," which gives the Congress the power "to regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes." Until the Great Depression, Federal regulation of the economy was small in comparison to control exercised by the States. Since that time, however, Federal regulation has expanded and numerous Federal regulatory agencies have been created and given broad discretion by the Congress to regulate the economic activity of private institutions. But the Congress and the executive branch have been limited in their ability to control the specific decisions of regulatory agencies, although both can exert some control through the appointments process, the budget, and changes in enabling statutes. Concern has grown that many of the decisions of regulatory agencies are economically inefficient. Explicit guidance to an agency to weigh the costs and benefits of its decisions has been Federal law since it was included in the Rivers and Harbors Act of 1902. The benefit-cost procedure was explicitly required for the first time under the Flood Control Act of 1936. Until the 1970s, however, the benefitcost technique was used with regularity only in reviewing expenditure programs. 140 In 1975 a major expansion in the use of benefit-cost analysis occurred when the President directed regulatory agencies to prepare "inflation impact statements" to accompany proposed rules. Under the next Administration this approach was modified to require "regulatory analyses,'* However, it was stressed that its requirements for regulatory analysis should not be interpreted as subjecting proposed rules to a benefit-cost test. Regulatory relief is a key element of the President's economic recovery plan, along with expenditure restraint, tax cuts, and monetary stability. Executive Order 12291, issued on February 17, 1981, directs agencies, to the extent permitted by law, to use benefit-cost analysis when promulgating new regulations, reviewing existing regulations, or developing legislative proposals concerning regulation. Administrative decisions on regulations are to be based on adequate information concerning the need for the regulations and their economic consequences. Not only must the benefits from the regulation exceed the costs, but the Executive order requires that the approach selected (where alternative approaches exist) should be chosen to maximize net benefits. In the case of major rules, agencies must publish preliminary and final regulatory impact analyses (RIAs) that set forth conclusions regarding the benefit-cost balance and feasible alternatives. Major rules consist of those that will have any of the following three effects: (1) an annual effect of $100 million or more; (2) a major increase in costs or prices; or (3) a significant adverse effect on a specific industry or on the economy in general. Regulatory impact analyses are to include: (1) a description of the potential costs and benefits of the proposed rule; (2) a determination of its potential net benefits; and (3) a description of feasible cheaper alternatives with an explanation of the legal reasons why such alternatives, if proposed, could not be adopted. The analyses and rules must be submitted to the Office of Management and Budget before publication in the Federal Register. In addition, regulatory agencies must review rules currently in effect and prepare regulatory impact analyses for those which are classified as major. The Executive order also requires agencies to publish semiannual calendars of proposed regulations and current regulations that are under review. To spearhead the Administration's regulatory relief efforts, the President created the Task Force on Regulatory Relief, which is chaired by the Vice President. The task force reviews proposed regulations, using the guidelines established by Executive Order 12291, and is assessing existing regulations with an eye toward their revision. During 1981 the task force earmarked 100 existing rules and paperwork requirements for review, and more than a third of those 141 reviews have already resulted in formal proposals or final action to eliminate or revise the rules and programs involved. The task force will designate other existing programs for review, and it will continue to press for formal action to implement the conclusions of the reviews. Through December 31, 1981, the Office of Management and Budget (OMB) had reviewed 2,715 proposed regulations and had approved 2,546 as being consistent with the Executive order. These numbers do not reflect the number of regulations that were evaluated within the agencies and found to be inconsistent with the Executive order and therefore not submitted to OMB. Agencies have issued 40 major regulations. Nineteen were supported by regulatory impact analyses, while analyses of the 21 others were waived for such reasons as emergency conditions. Although the Executive order is an important procedural reform, some important regulatory areas are still immune from OMB review. These are areas under the regulatory authority of independent agencies, such as the Federal Trade Commission, and programs under the authority of executive branch agencies which are guided by other standards based on their enabling legislation. In these areas it will take legislative changes to open up regulatory activities to OMB review. Recent court decisions have demonstrated the importance of including specific economic efficiency criteria in the enabling legislation of agencies. In its June 1981 decision on standards established for acceptable levels of cotton dust in textile plants, the Supreme Court held that an agency must meet the standard of "feasibility" if that is the standard established by its enabling legislation, whether or not the regulation is reasonable on the basis of other criteria, such as economic efficiency. Just as a standard of feasibility can cause agencies to make inefficient regulatory decisions, so can a standard of reasonableness. For example, the Fifth Circuit Court held that Interstate Commerce Commission (ICC) guidelines that allowed motor carriers to seek the removal of restrictions on which commodities they might carry, but only by choosing to carry commodities in one of three categories, exceeded ICC's authority under the Motor Carrier Act of 1980 to "reasonably broaden" existing carrier certificates. Although the guidelines could be supported on economic grounds as increasing competition, they were rejected by the court because they failed to meet the legal definition of "reasonable." Although the agency can still exercise some discretion in broadening categories, substantial further deregulation of the for-hire trucking industry may be dependent on a 142 change in the law that would eliminate limitations on the commodities that a certificated carrier can transport. The Administration has also been working with the Congress on legislation that would require economic analysis of proposed regulations. The Congress has held extensive hearings on several bills that would require all Federal regulatory agencies to analyze the costs and benefits of their major regulations. The Administration is supporting S. 1080, which would codify the requirements of Executive Order 12291 so that it would apply to all agencies. In addition, the bill would require that each major rule be reviewed every 10 years. THE CLEAN AIR ACT AND ECONOMIC ANALYSIS The most important regulatory enabling legislation now being reviewed by the Congress is the Clean Air Act. Many of the questions that permeate social regulation arise in the case of this landmark law. The Council of Economic Advisers has developed three general principles which illustrate the role of economic analysis in designing a regulatory program such as the Clean Air Act. First, Federal regulation should focus on situations where there is a clear national problem. An example of this approach would be strengthening Federal responsibility for dealing with air pollution transported across State and national boundaries while leaving air pollution problems that are local in nature to State or local governments whenever practical. Second, the benefits and costs of regulation should be considered in designing a new regulatory program. For example, various emission standards could be set at levels at which the incremental benefits are equal to the incremental costs, and benefits and costs could be considered when determining State implementation strategies. Third, consumers, businesses, and State and local governments should be granted flexibility in the way they meet Federal standards. Thus, those subject to regulation would be encouraged to use the lowest cost means for achieving standards. The following discussion shows how these three principles relate to several important provisions of the Clean Air Act. LONG-RANGE TRANSPORT The pollution control programs established under the current Clean Air Act focus on improving ground-level air quality relatively near the sources of pollution. Although the act contains provisions for States to notify the Environmental Protection Agency (EPA) if a neighboring State is "exporting" its pollution, EPA's authority to order remedies is limited. Moreover, the States typically have been 143 unable to arrive independently at appropriate and inexpensive solutions to such problems through negotiation or litigation. Therefore, a case can be made for strengthening Federal involvement in air pollution problems which transcend State or national boundaries. AMBIENT AIR STANDARDS The Clean Air Act requires EPA to set uniform primary and secondary National Ambient Air Quality Standards (NAAQS) for several pollutants that are considered to endanger public health and welfare. The primary NAAQS are to be set at levels adequate to "protect the public health," with an "adequate margin of safety** to account for scientific uncertainties. However, a Federal court has ruled that the consideration of costs in setting the primary standards is prohibited. The secondary standards are to be set at levels that protect the public welfare, which covers such things as property damage. The consideraton of costs is also constrained in setting secondary standards. If the Federal Government were given effective authority to regulate pollution that crosses State and national boundaries, then the States could play a major role in establishing the primary air quality standards and an exclusive role in establishing secondary standards. The Federal Government could set a presumptive primary ambient air standard, but the States would be free to modify the national primary standard applicable to them in light of local conditions. The setting of secondary standards could be left entirely to the States. The desirability of such changes, of course, depends on a variety of factors in addition to economic impact. TECHNOLOGY-BASED STATIONARY SOURCE STANDARDS The Clean Air Act requires EPA and the States to establish emissions standards for stationary sources. EPA must set new source performance standards primarily on the basis of the cost and availability of control technologies and the financial strength of the individual industries. The current system of technology-based emissions standards, however, creates numerous difficulties. EPA does not consider benefits when setting stationary source standards. The standards are set primarily on the basis of the feasibility of the control technology, subject to an industry's ability to pay for the controls. The benefits and costs of air pollution control are, therefore, only considered indirectly. Second, under these standards the marginal cost of emission controls may vary widely among different sources within a given region, thereby unnecessarily increasing the total costs of abatement. For ex- 144 ample, more stringent controls on new sources than on existing sources often lead to a much higher marginal cost per ton of pollutant removed in new plants than in old, even though a ton of pollutant causes comparable health damage, regardless of its source. The requirement for more stringent standards on new sources may inhibit plant modernization and, by delaying the replacement of older plants, may even increase near-term pollution. Many students of the subject have urged that the current system be changed to a system in which marketable permits would be used as the principal means of achieving control over stationary source emissions. Under a marketable permit system, the State or local pollution control authority would issue a number of emissions permits consistent with ambient air quality goals. In areas currently within the standards but experiencing economic growth, the operators of existing sources of pollution would have an incentive to sell their permits to new polluters when the market value of the permits exceeded the costs of controlling existing sources of pollution. This would ensure that ambient standards were achieved at lowest total cost. In areas not yet meeting the standard, some of the emissions permits would expire on a predetermined schedule to bring the area into compliance. In this view, the trading of permits among sources would help to assure that the standard was reached using the most efficient controls. EPA has been moving toward a transferable permit system with its "bubble," "emission banking/' and "offset" policies. However, EPA's efforts are seriously constrained by statutory directives that require the establishment of various technology-based standards for different types of sources of air pollution. In addition, the 1977 amendments to the act require new source performance standards for fossil-fuel-fired stationary sources to be set in terms of a percentage reduction from uncontrolled emissions rates rather than as a maximum allowable emissions rate. Hence, the percentage reduction in emissions must be the same for both low and high sulfur coal. Since low sulfur coal is generally more expensive than high sulfur coal and the legislation requires that the percentage reduction in emission rates be the same for sources using either type of coal, the legislation creates an incentive to burn high sulfur coal even though low sulfur coal might be the most cost-effective method of meeting the goals of the legislation. MOBILE SOURCE STANDARDS The Clean Air Act directs EPA to enforce uniform national standards for motor vehicle emissions. California has been allowed to maintain a more stringent set of standards for vehicles sold in that 145 State. In the view of some analysts, the uniform Federal standards result in overcontrolling motor vehicle emissions in some relatively clean areas and perhaps undercontrolling emissions in some relatively polluted areas. An alternative approach would be to allow EPA to issue two sets of standards: a stringent set for autos registered in areas with severe air pollution problems, and a less stringent set for autos registered in relatively clean areas. Each State would decide which of the two sets of standards its cars would be required to meet, which would depend on the State's ambient air standards. According to its proponents, such a strategy would not cause significant environmental or health damage, since ttye less stringently controlled vehicles would be registered in areas where additional automotive emissions would not violate the standards. Moreover, studies show that such a strategy might substantially reduce the national costs of controlling automotive emissions. The Clean Air Act has been interpreted to mean that every automobile line must meet applicable national emissions standards. This prevents EPA from allowing the manufacturers to meet the standards by averaging the results of different model lines. An alternative approach, allowing EPA to use an averaging procedure in determining compliance, might save consumers millions of dollars. Such a change would not increase overall emissions and thus presumably would leave average public health conditions unaffected. The Clean Air Act requires that, smarting in the 1984 model year, all cars and light trucks must meet the act's high altitude standards, regardless of the area in which the vehicles are sold. This requirement will have the effect of significantly increasing the amount of emissions control required of all cars. Since only 3.5 percent of the country's cars are sold at the specified high altitudes (principally in and around Denver), this uniform national requirement may require a large amount of unnecessary expenditures. HAZARDOUS EMISSIONS STANDARDS The Clean Air Act instructs EPA to prepare a list of air pollutants that may cause serious damage to human health and to set emissions (but not ambient) standards for them. The emissions standards are to be set at levels which provide "an ample margin of safety to protect the public health." Consideration of benefits and costs is not prohibited in listing the pollutants or setting emissions standards, but it is not required either. In its rulemakings to date and in its proposed "Airborne Carcinogens Policy," EPA has not always balanced the benefits of air pollution control against its costs. 146 THE CONTROL OF HEALTH CARE COSTS: A CONTRAST OF APPROACHES The policies of this Administration toward the health care industry offer an interesting contrast to the policies of earlier Administrations. Few analysts doubt that there are serious economic problems in this industry. The previous Administration attempted to solve these problems by proposing a Hospital Cost Containment Act, but the Congress did not pass the proposed bill, which would have imposed a detailed regulatory scheme on hospital managements. This Administration has examined the basic causes of inefficiencies in medical care and is attempting to change the factors which lead to them. These inefficiencies are due to inappropriate tax policy and to inadequate incentives for both consumers of medical services and providers of health care to reduce costs. In this section the structure of the industry will be examined to show the nature of the problems, and the changes proposed by the Administration to resolve these problems are discussed. THE INDUSTRY The health care industry is large, and it is growing rapidly. In 1980 the Nation spent nearly $250 billion on health, representing 9.4 percent of the total gross national product (GNP), substantially more than the $42 billion and 6.0 percent of GNP in 1965. Prices for health care have risen more rapidly than prices as a whole throughout the postwar period. From 1975 to 1980 prices in the health sector rose at an annual rate of 9.1 percent, compared to a rise of 7.4 percent for all personal consumption. Rising expenditures resulted in a larger quantity and a higher quality of health care, as well as better access for the poor and elderly to medical services. But because of the structure of the health care industry, this expansion caused a substantial amount of waste. Were the rising expenditures simply due to changing consumer preferences, rising incomes, or improved technology, there would be no policy problem. The manner in which people choose to make unsubsidized purchases is generally not a policy matter. Much of the increase, however, has been due to perverse incentives that are built into the medical system. A set of arrangements for buying and selling health services has developed which insulates the participants from the economic consequences of their actions and raises serious questions about the effectiveness of these increased expenditures in buying more "health." The major problems are the prevalence of third-party payments and the exclusion of employer contributions for health insurance from the taxable income of employees. 147 A major defect of the system is a lack of competitive forces among those who supply health care. Providers of care who are paid according to the costs they incur—cost-based reimbursement—have little incentive to provide care in a cost-effective manner. Retrospective payments, where payments are based on expenses previously incurred, require large administrative bureaucracies in the private as well as.the public sectors, and provide little reward for attempts to improve efficiency. Health maintenance organizations (HMOs), which provide virtually complete coverage for a flat premium, have introduced an element of competition into the supply side of the industry. The incentives for efficient use of health resources rest with the HMOs, not the patients, and health maintenance organizations appear to have succeeded in reducing hospitalization use among their members. Third-Party Payments Meanwhile, third-party payments by private insurance companies or through government programs lower the prices of medical services to people covered by the programs, thus increasing the quantity of medical services which they seek and bidding up total medical costs. The larger the fraction of costs borne by third parties, the larger the effect of third-party payments on the price and quantity of services consumed. Two-thirds of the personal health care expenditures of $218 billion in 1980 were paid by third parties. One hundred and seventy million people have private insurance for hospital care, 18 million of the nonelderly poor are covered under medicaid, and 24 million elderly receive medical care under the medicare program. (There is some overlap among people in these categories, particularly private plans and medicare.) About 23 million people in the country do not have public or private insurance coverage. The particular provisions of insurance plans determine the prices that individual patients face and the effect of third-party payments on demand. For example, a system of deductibles and copayments makes the individual share in the costs. It leads to a more efficient use of resources than a plan that covers all medical expenses, beginning with the first dollar of expense. With "first-dollar'* coverage, the individual has no financial incentive not to seek treatment if it has any chance of being beneficial, regardless of its cost. First-dollar coverage is necessarily more "shallow" than cost-sharing plans with the same premium and provides less insurance against unexpected serious illnesses. The extent of first-dollar coverage and its costs to the individual vary greatly, but it is prevalent in the private sector. In the public sector one finds medicare, which, like first-dollar coverage, is not de- 148 signed to encourage efficient use of health care resources. The medicare program only imposes cost sharing late in the hospital stay, when the patient can least afford it and when it is least likely to influence doctor or patient behavior, and it puts no limit on the out-ofpocket costs people can incur. States are required to provide basic services to medicaid recipients but are unable to require even minimal copayments. Instead, nonmarket mechanisms, such as regulation and rationing of services, are used to restrain utilization and costs. Since most people are risk-averse they seek to avoid large and uncertain costs, such as those which may be imposed by a serious illness. This is why individuals buy insurance, even though the cost of insurance is greater than the expected value of the benefits. Expenses which are relatively small and predictable, on the other hand, are generally not covered by insurance. It is not rational for medical insurance to provide first-dollar coverage, since much of this insurance would be for predictable routine expenses. Rational medical insurance would contain coverage against catastrophic occurrences where medical expenses might bankrupt an individual. The reality is quite different from the logical arrangement just outlined. Some private plans provide first-dollar coverage but no catastrophic coverage. This is also true of medicare. The inefficient use of resources that results from third-party payments leads to higher insurance premiums, even though the insurance is sold in the private market, where competitive forces presumably would lead to a lower premium. One reason why this does not happen is that employer contributions for health insurance premiums are not subject to payroll or income taxes. Tax Exclusion This tax exclusion lowers the price of health insurance to employers and employees, thereby leading to greater spending on insurance than if employer contributions for health care were included in taxable income or if individuals bought insurance with their own money. For the employee in the 30 percent income tax bracket paying social security tax of 6.65 percent, a $100 contribution by the employer to health insurance costs the worker in effect only $63.35 compared to receiving the $100 as taxable income and buying the insurance directly. Even though the worker may not want to spend another $100 of his own money on health insurance, if he values the additional insurance at more than $63.35, he will prefer that his employer put the $100 into health insurance rather than into his taxable earnings. For workers in higher tax brackets the amount of inefficiency is even greater. Employers also prefer to put the $100 into insurance premiums rather than into wages, since they do not pay social security and unemployment insurance taxes on the premiums. 149 The dilution of competition in the health care industry and the resultant inefficiencies have frequently led consumers to purchase more health care than they would have purchased if compelled to pay true costs. The lack of competition means that people receive less "health" for their expenditures, and by spending so much on health they have less to spend on other goods and services. It is difficult to quantify this loss in efficiency, but recent estimates place it in the range of $25 billion a year. PROPOSALS FOR REFORM Policymakers have recognized these inefficiencies and have attempted to devise solutions, but the standard solution chosen has been detailed regulation of the behavior of participants in the system. The alternative to that kind of regulation, as discussed in Chapter 2, is to give participants in the medical care system more incentive to use resources efficiently. This Administration is adopting this approach. A proposal is under consideration which would require medicare beneficiaries to pay a part of the costs for each day they are in the hospital. In addition, a catastrophic health insurance plan which would guarantee that annual costs to the patient would not exceed a certain amount is also being considered. These proposals would reduce many inefficiencies in the system. Other proposals aimed at increasing competition in the medical care system are currently under development. Some analysts have suggested replacing medicare with a voucher scheme. Recipients would be given a voucher nearly equal to the current cost of medicare and would be able to use this voucher to buy whatever form of medical insurance they desired, subject to certain constraints. This would give beneficiaries an incentive to purchase more efficient forms of medical insurance, since they would reap the savings. REGULATORY REFORM IN THE AGENCIES The current status of Federal regulation can be illustrated by a review of the situations in five key areas: financial institutions, agriculture, energy, transportation, and telecommunications. FINANCIAL INSTITUTIONS Federal regulation of financial institutions was initially designed to assure that savings channeled into investments were protected and that investors had enough information to make rational decisions on investments. The early regulatory statutes, however, reflected an am- 150 bivalent attitude toward competition in the financial industry. Restrictions on bank mergers and interstate branch banking were imposed to prevent banking monopoly, but at the same time restrictions on types of assets, entry, and rates of interest paid to depositors were imposed to limit competition and dissuade managers from risky ventures. A legal separation of depository institutions and securities firms was written into law in response to concern about conflicts of interest. Over the last decade, however, technological innovation, high inflation, and the slowness of some regulatory bodies to adjust their regulations to conditions in the financial markets have made traditional depository institutions less attractive to depositors. They have found it more advantageous to shift their funds among institutions or, in many cases, to move them outside the banking system itself. Thrift Institutions The principal cause of the thrift industry's current problems is the imbalance between increasingly rate-sensitive liabilities and long-term fixed-rate assets. Time and savings deposits, the major sources of funds for thrift institutions, have traditionally been subject to Federal interest rate ceilings. These funds enabled the thrifts to make longterm loans, for such things as residential mortgages, at fixed rates of interest during times of steady and low interest rates. As interest rates began to rise in the 1970s, however, regulation prevented the thrift institutions from increasing the interest they paid on deposits to compete with other institutions, which had begun to offer a higher return on alternative instruments. Some regulatory changes then were made to allow thrifts to pay market rates of interest on certain types of deposits as well. These changes, however, did not eliminate the long-term problem faced by many thrifts. The need to finance large numbers of fixed-rate long-term loans at low interest rates with deposits on which they paid higher interest rates severely strained many thrift institutions. The removal of two restrictions provided some relief for thrifts. In 1979 they were given limited authority to make loans at variable rates of interest, and in 1981 most restrictions on variable-rate loans were lifted. Meanwhile, they have also obtained permission to invest in the futures markets as a way of hedging their risks. The Administration supports proposed legislation that would give thrift institutions greater flexibility in carrying out their operations. Various proposals would give thrift institutions many of the same powers to vary their assets and liabilities that commercial banks now have. Thrift institutions would be permitted to make additional shortterm consumer and commercial loans in addition to residential mortgage loans, and alternative mortgage instruments would be estab- 151 lished to make real estate lending more attractive. Other provisions of proposed legislation would clarify the authority to utilize interstate and interindustry mergers to rescue troubled thrifts and commercial banks, thereby leading to stronger financial institutions. Commercial Banks Under the Glass-Steagall Act of 1933, depository institutions and securities firms became legally separate entities offering quite different types of services. In recent years, however, high interest rates have led securities firms to offer investors the opportunity to invest in money-market mutual funds, a change that has, in effect, circumvented the 1933 act. The funds invested in money-market funds, unlike those deposited in commercial bank and thrift institution savings accounts, are not subject to interest rate ceilings, and investors are generally allowed limited checkwriting privileges. As a result, depositors over the last several years have withdrawn substantial amounts of funds from low interest accounts at banks and thrifts to place their money in high yielding money-market instruments, including money-market funds and government securities. Within the bounds of their statutory constraints, banks have been trying to meet this new form of competition. They have, for example, been offering their customers access to market-level rates of interest through repurchase agreements against their portfolios of government securities. In many respects, however, the regulations that apply to banks remain more restrictive than those that apply to securities firms. The Administration has proposed that commercial banks be permitted to engage in some activities previously reserved for securities firms through the establishment of bank holding company subsidiaries. Commercial banks would be authorized to set up these subsidiaries to underwrite and deal in municipal revenue bonds and to sponsor and underwrite shares in mutual funds. Such a change would help to equalize competition for funds between commercial banks and securities firms. The use of the holding company subsidiary would help separate the riskier securities activities of a bank from its federally insured depository activities. Regulatory Relief Thrift institutions, commercial banks, and securities firms should be allowed to compete on an equal basis, without the restrictions that prevent them from offering similar services and paying competitive rates. The Congress has recently passed laws that should go further toward achieving a competitive environment, and the regulatory agencies themselves have taken decisions to bring about more competition. 152 Under the Depository Institutions Deregulation and Monetary Control Act of 1980, interest rate ceilings on time and savings deposits are to be raised over a period of 6 years, after which the ceilings will be abolished. The same law permitted depository institutions to offer negotiable order of withdrawal (NOW) accounts, and certain State usury ceilings were preempted. Uniform reserve requirements on transactions liabilities at all depository institutions are being phased in, and the Federal Reserve System has begun charging banks for certain services previously provided without charge. The Depository Institutions Deregulation Committee, created under authority of the 1980 act, adopted two significant deregulatory actions in 1981. It removed the ceiling on interest rates paid on 2J/2 to 4-year small saver certificates, resulting in a 50 percent increase in purchases of such certificates between August and the end of 1981, and it authorized a 1 %-year account that would not be subject to interest rate ceilings for Individual Retirement Accounts (IRAs) and Keogh deposits. During the last decade, the financial regulatory system has not adapted quickly to a changing economic environment. To ensure the future adaptability of financial institutions to evolving technology and competitive forces, regulation of the financial industry needs to be reviewed and reformed. AGRICULTURE Three important regulatory programs relating to agriculture present important issues: food safety, Federal marketing orders, and meat inspection. Food Safety Certain food safety laws and regulations are outdated and fail to show adequate recognition of the fact that there is a degree of risk inherent in providing an economical and sufficient food supply. These points can be illustrated by a discussion of the problems that have arisen in connection with the Delaney anticancer clauses of the 1958 Food Additives amendment to the Federal Food, Drug, and Cosmetic Act. The Delaney clauses prohibit the use of any chemical substance in any amount as a food additive if the substance has been found, by appropriate tests, to induce cancer in people or laboratory animals. Scientific progress since the Delaney clauses were enacted in 1958 has brought about a quantum improvement in the ability of scientists to measure chemical substances. It is now possible to detect parts per trillion of a chemical substance in food. This is significant, since uncertainty exists regarding the degree of risk to human beings from exposure to extremely low levels of carcinogens, and strict enforce- 153 ment can result in ignoring severe impacts on food availability and preservation. It seems clear that the zero-risk approach embodied in the Delaney clauses has become untenable. Policymakers and scientists need to establish procedures for defining levels of food contaminants that represent acceptable levels of risk for consumers, develop ways to help consumers protect themselves against significant risks when such risks are found to exist for particular foods, and give firms incentives to develop safe food additives and to reduce contaminants. Marketing Orders Legislative authority for Federal marketing orders is contained in the Agricultural Marketing Agreement Act of 1937. The orders originally were designed partly to reflate farm prices and thus increase farmer income during the 1930s. Federal marketing orders for fruits, vegetables, and specialty crops establish restrictions on the quality and quantity of products that can be marketed. Those restrictions vary, but they may include minimum grade and size requirements, limits on product shipments during all or part of the marketing season, limits on quantities entering the fresh market, restrictions on total marketings (in a few cases), and rules on packaging standards. During 1980 commodities marketed under the orders had a farm value of $5.2 billion. As a part of the Department of Agriculture's regulatory reform effort, a team comprised of Department of Agriculture and university economists was appointed during 1981 to examine the economic effects of marketing orders for fruits, vegetables, and specialty crops. The study revealed that Federal orders for hops, spearmint oil, California-Arizona navel oranges, Valencia oranges, and lemons (and perhaps those for walnuts and filberts) had been used in ways that resulted in significant resource misallocation. Marketing allotments, market allocation provisions, and season-long prorates were the provisions identified as having the greatest capacity for causing misallocation. It was also reported that marketing orders can increase economic efficiency by stabilizing returns to growers, providing quality assurance for buyers, and facilitating research and container standardization. Early in 1982, Department of Agriculture officials issued policy guidelines on marketing orders calling for changing the procedures to curb the supply restrictions resulting from the use of producer allotments, to lessen restrictions on handler shipments caused by prorate provisions, to reduce supply restrictions caused by stockpiling of reserves, and to limit the incentives for chronic overproduction. If carried out, these changes will produce substantial efficiencies. 154 Federal milk orders establish the minimum prices that milk processors pay farmers for Grade A milk. Basically, these orders are price discrimination (classified pricing) devices. Approximately two-thirds of the milk marketed in the United States (valued at $12.2 billion at the plant level) was priced under Federal milk orders in 1981. Without this kind of regulation, some milk processors would have an incentive to purchase concentrated milk products (e.g., unsalted butter and nonfat dry milk) from lower cost sources and add water to produce a reconstituted fluid milk product. Little reconstituted milk is now sold in the United States, partly because Federal milk order regulations strongly encourage processors to buy fresh milk. During 1979 the Department of Agriculture was asked to hold a hearing on the question of whether to make reconstituted milk less expensive for use by processors. This also would have reduced retail milk prices, since market forces would tend to force processors to pass along a portion of their savings to consumers. After extensive study, the Department denied the request for a hearing in April 1981, chiefly because the proposal would have undermined the classified pricing system, caused losses to dairy farmers that would have exceeded the gains to consumers and the Federal Government, and ignored the fact that consumers presently have a lower cost alternative to fresh milk priced under the orders—that is, to buy dry milk and add the water themselves. These are important considerations. However, if new technologies for handling concentrated milk products are to be accommodated under the Federal orders, this issue will deserve reexamination in the future. Meat Inspection The Department of Agriculture has developed draft legislation to increase the flexibility and reduce the costs of its meat and poultry inspection programs. Present meat and poultry inspection laws— some of which date back to the early 1900s—emphasize continuous, on-site inspection of slaughtering and processing plants. The proposed change would permit periodic inspection—for example, once a week or once a month—of meat and poultry processing plants which have good quality control systems, while retaining continuous inspection of slaughtering plants. The proposed change would reduce the Department of Agriculture's costs as well as those of plants with effective quality control systems. While this proposed legislation would produce savings in the Federal meat inspection program, where costs now run to $300 million a year, other methods might permit still larger savings and produce other efficiencies. Such alternative programs would include user fees to cover certain meat and poultry inspection costs, licensed and bonded private inspectors rather than government inspectors, inspec- 155 tion and insurance arrangements that would give meat processors incentives to maintain effective quality control systems to qualify for low-cost product liability insurance, and periodic rather than continuous inspection of poultry slaughtering plants. ENERGY Many of the past energy policies of the government have not been consistent with the general principles presented in Chapter 2 for government intervention. The actual effects of such policies have been highly adverse to the interests of the Nation. The policy of this Administration is to remove the inconsistency, inefficiencies, and uncertainty caused by inherited policy, and thereafter to facilitate the operation of market forces as the guiding and disciplining constraints shaping investment, production, and consumption decisions in the energy sector. Decontrol of the Petroleum Markets Beginning with the Economic Stabilization Program of 1971, the petroleum sector has been subject to continuous price and allocation controls. Because price controls increase quantities demanded and reduce quantities supplied, they must be accompanied by nonprice rationing mechanisms. The complex system of controls included entitlements regulations, the "buy-sell" program, and other rules serving that purpose. These made the task of efficiently allocating available supplies of crude oil and refined products much more difficult. Other rules gave special consideration to small refiners and other interests, thus introducing additional distortions into the system. In particular, the rules provided strong disincentives to prepare for possible future supply interruptions. As the inefficiencies and other adverse effects of the controls became increasingly manifest, the Congress enacted a law to phase out all petroleum controls by September 30, 1981. Using the legal discretion available to him, the President moved the date of full decontrol forward by about 8 months. It is instructive to review the data on some of the more salient effects of full decontrol. The steady decline in domestic production (excluding oil from Prudhoe Bay) during the price control period has been reversed (Tables 6-2 and 6-3). November 1981 marked the fourth consecutive month of production increases over year-earlier levels, a feat not observed in the United States for 10 years. Furthermore, oil-drilling activity in 1981 was almost 40 percent greater than in 1980 (Table 62). There has also been a reduction in petroleum imports, part of which is probably due to other factors (Table 6-4). The entitlements regulations provided artificial incentives to import crude oil and residual fuel oil; the abolition of the regulatory framework has removed 156 that incentive. The end of artificially high oil import levels has had a favorable effect upon exchange rates, and thus upon the prices of foreign goods in the United States. This reduced price of the foreign goods basket is a major benefit of oil decontrol to the domestic economy. One study has estimated the value of this wealth gain at almost $6 billion a year. TABLE 6-2.—Domestic crude oil production and drilling activity, 1973-81 Production (thousands of barrels per day) Period 1973 1974 1975 1976 1977 1978 1979 . ., ... . . . . . . 1980 1981 1981: January February March... April May June . , 1 . ... ... 9902 12,784 8,375 8,132 7,937 7,618 7,269 16,408 17,059 18,912 17,775 19,383 27,026 37,645 7,076 7,050 1 1 1,789 2,462 3,102 1 2,905 1 2,604 '3497 1 1 '2790 1 3,137 1 3416 1 3,775 1 3,587 * 4,581 6,902 7,054 7,117 1 7,107 1 7,082 1 7,095 ... . ., 9,208 8,774 7,020 7,068 7,069 7,020 7,001 7,072 . .. ... July August September October November December Oil wells drilled (excludes dry holes) \ 1 Preliminary. Note.—Production data exclude Prudhoe Bay. Sources: Department of Energy and American Petroleum Institute. TABLE 6-3.—Domestic crude oil production, 1980-81 [Thousands of barrels per day] Month 1980 January February March April May June July . August September October * . November * December 1 , . .. . . . . . 1 Preliminary. Note.—Data exclude Prudhoe Bay. Sources.- Department of Energy and American Petroleum Institute. 157 1981 Change 7121 7 168 7 155 7130 7103 7,012 7020. 7068 7069 7020 7001 7,072 101 100 86 110 102 60 7041 6906 7,102 7045 7033 7 102 6902 7054 7ill7 7 107 7082 7095 139 148 15 62 49 7 TABLE 6=4.—/w/w>r/.y of crude oil and refined products, 1980-81 [Thousands of barrels per day] Month Crude oil Total Refined products 1980: January February March April May June . . . . ... . .... July August September October November December 8342 6359 7,847 7,509 6,985 6,549 6,893 5,936 5,785 5,555 5,071 5,480 1,983 1,911 1,724 1,430 1,478 1,413 6,046 6,102 6,128 6,173 6,253 6,660 4,645 4,723 4,653 4,570 4,524 I 4,848 1,401 1,379 1,475 1,603 1,729 1,812 6,709 6,697 5,887 5,370 5,317 5,104 4,817 4,793 4,382 4,060 3,881 3,766 1,892 1,904 1,505 1,310 1,436 1,338 5,634 5,480 5,891 5,027 5,436 5,532 4,161 3,908 4,279 3,957 3,972 3,844 1981: January February March April May June., „ .... ... .. . July. August September October ' November » December * 1,473 1,572 1612 1,070 1,464 1,688 1 Preliminary. Note.—Data exclude Strategic Petroleum Reserve. Source: American Petroleum Institute. Natural Gas Policy Wellhead prices of natural gas sold in interstate commerce have been regulated by the Federal Government since 1954. Because intrastate gas prices were not subject to control, a two-market system resulted. This led to shortages in the interstate market because interstate pipeline companies were hampered in competing for gas supplies, while the artificially low prices encouraged consumers to demand more natural gas than otherwise would have been the case. Rising oil prices in the 1970s exacerbated the shortage of gas in the interstate market, leading to nonprice rationing. Existing industrial users of gas were curtailed during periods of particularly intense shortages, and many potential new users, both at the industrial and residential level, were proscribed from using gas. The cold winter of 1977 produced a severe shortage of interstate gas, thus illustrating vividly the adverse effects of the regulations. In short, the wellhead price controls produced serious inefficiencies: (1) underproduction of gas for the interstate market, and (2) inefficient allocation of gas, both between the interstate and intrastate markets and between different users within the interstate market. Natural gas regulation was changed substantially with passage of the 1978 Natural Gas Policy Act (NGPA). A small amount of (high 158 cost) new gas was deregulated under the NGPA almost immediately, and the price of between 40 and 60 percent of all gas is scheduled to be deregulated on January 1, 1985. The price of a smaller volume of gas will be deregulated on July 1, 1987. Under the NGPA, price controls were extended to gas sold in intrastate markets. About 20 categories of gas were created, each with its own ceiling price and inflation adjustment or other escalation factor. Because of the various price categories of gas under the NGPA, producers receive distorted signals and incentives affecting development and production decisions. Instead of producing the lowest cost gas first and moving successively to higher cost sources, producers have been induced by the different price categories to produce highcost sources first in many cases, and otherwise to shift their production efforts away from those most efficient. This means that total gas production will consume more resources than necessary. The current boom in drilling for high-cost (deep) gas is illustrative of this process. Another problem is likely to arise because the prices for new gas that are scheduled to be decontrolled in 1985 and 1987 are tied until then by the NGPA to 1978 oil prices. Since oil prices have roughly doubled since then, and are not likely to fall substantially, partial decontrol will generate a sharp increase in delivered gas prices, as consumers bid up gas prices to levels equivalent to those of close substitutes, such as oil. The Department of Energy estimates that average domestic wellhead prices in 1980 dollars per thousand cubic feet will rise under the NGPA from $2.27 in 1982 to $4.45 in 1985. Because the prices of decontrolled gas can be averaged (rolled in) with those of controlled gas, and because consumer demands are determined in substantial part by the prices of substitute fuels, average 1985 prices under the NGPA are not likely to differ greatly from those that would evolve under full decontrol. This implies that the prices of decontrolled gas will be bid up well above the levels that would be observed in a fully decontrolled market. Indeed, decontrolled high-cost gas is now being sold at the wellhead for over $9, while the Department of Energy estimates that the average 1985 price under full decontrol would be $4.65. The high prices that will be paid for decontrolled gas in 1985 and thereafter imply that gas consumers in general will not be the beneficiaries of the remaining controls. Instead, the beneficiaries will be the producers of decontrolled gas. However, under the NGPA different groups of consumers will fare differently. Pipeline companies with access to substantial quantities of price-controlled gas will be able to bid deregulated gas away from other pipelines because the higher prices on decontrolled gas can be averaged with the lower 159 prices paid for gas still subject to controls. This means that different consumers may well pay substantially different average prices, and that large quantities of gas will be reallocated artificially because of differential access to controlled gas. In particular, the intrastate pipelines will have relatively little access to controlled gas, and so a very substantial amount of gas will shift out of the intrastate market into the interstate market. Interstate pipelines also will vary in their ability to bid for decontrolled gas. In short, in addition to the resource waste involved in gas production under the NGPA, both controlled and decontrolled gas will be allocated inefficiently. The Department of Energy estimates that the efficiency gain to the economy from full gas decontrol in 1982 would be about $10 billion. The prospect of a sharp price increase in 1985, along with the other problems inherent in the NGPA, may provide an impetus toward extension of price controls on all gas beyond 1985. This would resurrect all of the additional consumption and production inefficiencies experienced before passage of the NGPA. If price controls were extended, gas production would be reduced and oil consumption and imports would be stimulated. Furthermore, the total net decrease in proved domestic gas reserves from 1971 through 1979 was almost 96 trillion cubic feet. Extension of controls therefore would have very serious effects upon future domestic gas reserves. Some observers have argued that decontrol would make producers better off at the expense of consumers, and that decontrol would hurt the poor. Both of these assertions are subject to serious question. Compared to conditions under the NGPA, decontrol would make some producers and consumers better off and some worse off. The averaging of controlled and uncontrolled prices under the NGPA results in high prices for some producers and lower ones for others. Decontrol would move all prices toward the common marketclearing level. Similarly, the NGPA forces some consumers implicitly to subsidize others, so that consumers as a group would be no better off under the NGPA than under full decontrol. Moreover, decontrol would benefit a wide class of individuals and groups, including the poor, by improving the productive efficiency of the economy as a whole. Hence, decontrol would make some poor individuals worse off, but others better off. Price controls are a costly and inefficient method of avoiding the adverse effects of rising fuel prices. Some commentators have argued that gas decontrol ought to be accompanied by a "windfall profits" tax, perhaps patterned after the crude oil "windfall profits" tax. It should be noted that the latter tax is not based on profits, windfall or otherwise. It is actually an excise tax on domestic crude oil production. A "windfall profits" tax on gas 160 would be likely to generate the same sort of inefficiencies: reduced domestic production, increased imports, and consumption of more resources in domestic production than otherwise would be the case. Other taxes, such as severance taxes on old gas, may be less harmful if they generate only small distortions in incremental production incentives. TRANSPORTATION The reduction in Federal economic regulation of the transportation industry is promoting a more efficient transportation system. The airline, motor carrier, railroad, and intercity bus industries are not now characterized by any of the market failures discussed in Chapter 2. There are many competitors in each industry. Transportation is not a public good, since individuals pay for each trip or shipment. There are no external costs or benefits that would warrant the regulation of prices or the number of competitors. Since 1978 the Congress has passed three major pieces of legislation to reduce the regulation of these industries. A phased deregulation of the airlines is now being carried out and will be completed with the elimination of the Civil Aeronautics Board (CAB) on January 1, 1985. The Motor Carrier Act of 1980 and the Staggers Rail Act of 1980 provide the authority to eliminate significant portions of the economic regulation of trucks and railroads, but they do not prescribe an end to regulation. Both require definite action by the Interstate Commerce Commission to eliminate as much regulation as the law permits. A bill to reform regulation of the intercity bus industry passed the House of Representatives in November 1981. Airlines Deregulation of domestic airlines continued in 1981 according to the schedule of the Airline Deregulation Act of 1978. On December 31, 1981, the Civil Aeronautics Board lost the power to determine the routes of individual airlines. Earlier in the year CAB approved a proposal to allow the airlines to file only maximum fares. In the past they have been required to include in their tariff filings every price that they offered to the public. A pending prohibition on U.S. airline participation in the International Air Transport Association conference, which determines air fares between the United States and Europe, became a bargaining point in multilateral meetings with European governments. A tentative interim agreement was reached in December 1981. If implemented, greater price flexibility could allow airlines to offer new discount fares for flights to and from Europe. In exchange, U.S. airlines will be able to participate in the conferences to set prices. 161 Intercity Trucking The regulatory framework for the motor carrier industry was changed by the Motor Carrier Act of 1980. The act's provisions were rapidly implemented initially by ICC. A large number of applications for authority to provide service were granted, the geographic and commodity authority in new certificates was broadened, and price reductions occurred in both the truckload and less-than-truckload sectors. The industry, although not fully deregulated, appears to be much more competitive than in the past. More recently, however, the pace of regulatory reform has slowed. Restrictions on the scope of new certificates have increased, and some applications for rate reductions have been rejected by the ICC. Discounts offered to shippers have been called "blatantly illegal/' Railroads The deregulatory provisions of the Staggers Rail Act of 1980 have helped to increase the efficiency of the railroads and to improve their performance. A new standard of revenue adequacy, based on the current cost of capital, gives greater rate flexibility to railroads with inadequate revenues. Despite an improved financial position during the last year, almost all railroads are currently considered as having inadequate revenues. Significant changes in ICC regulation of the rail industry have been implemented as a result of the Staggers Rail Act of 1980. Contracts between railroads and individual shippers are now legal and are virtually free of any ICC regulation. Approximately 550 such contracts were filed at the ICC during the first year of the new law. Rates that are less than 165 percent of variable cost are not regulated. Rates and practices for shipping trailers or containers on flatcars are now exempt from regulation. Rates and practices for shipping fresh fruits and vegetables have been exempt since 1979. In addition, four railroad mergers have been submitted and two have received ICC approval without the attachment of the traditional restrictive conditions to protect affected railroads. Intercity Buses Federal regulation of the intercity bus industry began almost accidently in 1935, when motor carriers of passengers (buses) were included under ICC regulation of intercity trucks. In November 1981 the House of Representatives passed a bill that would provide for some regulatory reform of the bus industry. The bill would eliminate one of the many criteria that the ICC uses to determine whether a bus company can begin new service. It would also allow more price flexibility by establishing a zone in which the ICC cannot reject fare changes, but the rate bureau, which sets collective rates for the in- 162 dustry, would continue. The Administration will work with the Senate during 1982 to strengthen the deregulatory initiatives in the Housepassed legislation. TELECOMMUNICATIONS Government regulation of telecommunications affects both broadcasters, including owners of cable television systems, and common carriers. Broadcasting The Federal Communications Commission (FCC) exercises control over broadcasting through the issuance of radio and television broadcasting licenses. There were 4,575 commercial AM, 3,272 commercial FM, and 751 commercial TV stations (518 VHF and 233 UHF) on the air on November 30, 1980. Because no party can own more than 7 AM, 7 FM, and 7 TV licenses, ownership is fairly unconcentrated. Cable television (CATV) had approximately 17 million subscribers in 1980, with the five largest firms having about 30 percent of the subscribers. The economic justification for government regulation of this industry has been based on perceived rather than actual conditions. The usual justification has been scarcity of available broadcasting frequencies. Closer examination, however, reveals that the scarcity was a product of government action as much as it was a product of natural causes. This was apparent in the manner in which the FCC allocated channels for TV stations in 1952 to protect existing VHF licensees. Whatever the justification for regulation in the past, the growth of CATV, pay TV, and the possibility of direct satellite transmissions are reducing the importance of the frequency spectrum. The FCC has made several moves toward deregulation. In February 1981 the Commission deregulated most commercial radio broadcasting, while in May it introduced a simplified renewal application which has only five questions. On the other hand, the FCC withdrew its proposal to allow AM radio stations to broadcast at intervals of 9 kilohertz rather than the present 10 kilohertz. This change would have increased the number of AM stations, although at some cost to existing AM stations. The standard in most of the world has become 9 kilohertz. The Congress also contributed to the deregulation of broadcasting by including some important provisions in the Omnibus Budget Reconciliation Act of 1981. This act extended the length of TV licenses from 3 to 5 years and radio licenses from 3 to 7 years, while establishing a lottery to determine who will get new licenses. In September 1981 the Commission transmitted legislative proposals to the Congress designed to streamline FCC operations and allow 163 it to rely on market forces as the primary factor in telecommunications policymaking. These proposals would be an important step forward in the deregulation of broadcasting. Common Carrier At the present time there is no competition in the provision of local telephone service. Such service is provided on a franchised monopoly basis by American Telephone and Telegraph (AT&T) (80 percent) and independent telephone companies (20 percent). AT&T handles 95 percent of long-distance telephone calls, but it now faces competition in this area from other suppliers, such as MCI and Southern Pacific. The growth of effective competitors for AT&T, especially in customer equipment and long-distance service, has eroded some of AT&T's ability to cross-subsidize from high-profit to low-profit activities. Since regulation has been based on the assumption that the cross-subsidy would be maintained, the market's new conditions have made the existing regulatory framework inappropriate. A restructuring of the industry has come from three directions. In 1980 the FCC permitted AT&T to start selling customer equipment and enhanced services through a fully separate subsidiary to be established by March 1, 1982. That date has been shifted to January 1, 1983, Meanwhile, the Congress has been considering legislation that would alter the structure of AT&T by separating it into regulated and unregulated components under the same corporate framework. More recently, the Justice Department's antitrust suit against AT&T, which had sought full divestiture of the company's potentially monopolistic services, was resolved by a tentative agreement that AT&T would divest itself of all of its local operating companies in exchange for an end to the court suit. Since the local operating companies are regulated monopolies, their divestiture is an essential development for the remainder of AT&T to be a truly competitive force. ANTITRUST There has been a dramatic shift in antitrust policy under this Administration. Enforcement will focus on the critical areas implied by the analysis in Chapter 2: horizontal mergers among dominant firms in an industry, and price-fixing agreements among competing firms. Meanwhile, antitrust enforcement actions whose benefits are questionable are under continuous review. The Robinson-Patman Act, which prohibits price discrimination, can restrict the ability of wholesale producers to give quantity discounts to retail sellers. Because sellers find it hard to erect long-term barriers to competition from other sellers, it is illogical for them to try to carry on the predatory prac- 164 tices which the law seeks to prohibit. Vertical mergers and agreements, which can be illegal under the Clayton Act, generally are motivated more by a desire for greater economic efficiency than a wish to eliminate competition. For example, it is a common practice for a dealer to sell the product of one firm after obtaining the contractual protection of having an exclusive right to make sales in a given territory. Without territorial protection, a dealer would have only a limited incentive to advertise the qualities of the product, since much of the benefit of advertising would be captured by competitors. Since advertising is an important source of information for buyers, territorial restrictions can promote its dissemination. Enforcement of the antitrust laws has now taken a clearly economic orientation in both the Antitrust Division of the Department of Justice and the Federal Trade Commission. In the Antitrust Division, decisions on which companies to investigate and what cases to pursue are carefully scrutinized to determine whether the cases are economically sound. The department has also been developing a new set of merger guidelines that would follow broader economic criteria than the present set, which focuses almost exclusively on concentration ratios and market shares within an industry. In addition to the tentative agreement in the AT&T case mentioned above, the Department of Justice settled its longstanding case against International Business Machines (IBM) in early 1982. The IBM case was dismissed because the Department of Justice decided that the government's case was without merit. The restructured AT&T will be an important new competitive element in the markets that have been served by IBM. GUIDELINES FOR REGULATORY REFORM During its first year in office the Administration has attempted to establish a new regulatory environment. The Administration's goal is to eliminate wasteful or outdated regulation and to make necessary regulation more efficient and more flexible. This effort includes three tasks: (1) review of the basic statutes authorizing regulation; (2) review of existing regulations; and (3) review of proposed regulations. The Administration's program has not yet focused on the first of these tasks (except for the Clean Water Act construction grants program and the Clean Air Act), but it will do so next year after it has completed its review of the major existing regulatory programs. In pursuit of the goal of better Federal regulation, several guidelines may be useful. 1. Individuals should have maximum opportunity for personal choice. Regulation is not a substitute for efficient markets but an alternative to 165 unregulated markets which have failed to allocate resources efficiently. Therefore, regulation should be limited to cases where market failure has-been demonstrated and the cost of government intervention is less than the benefits of improved resource allocation. Even though there is a need for government regulation of some markets, the means used should maintain consumer sovereignty to the maximum extent possible. 2. Regulation should take place at the appropriate level of government The primary economic reason for most regulation is the existence of external effects. The costs or tolerance of these external effects may vary among locations. Economic efficiency, therefore, calls for the degree and type of regulation to vary also. National standards tend to be too severe in some regions, while being too lax in others. Federal regulation should be limited to situations where the actions in one State have substantial external effects in other States, constitutional rights are involved, or interstate commerce would be significantly disrupted by differences in local regulations, 3. Wherever possible, the government should provide incentives rather than directives. Regulation occurs within a dynamic environment. The lowest cost technology for pollution abatement at the present time, for example, will certainly be obsolete at some time in the future. Directives do not create incentives for commercial firms to search for lower cost technologies, unlike such approaches as the establishment of marketable rights in pollution emissions, which would create a continuing incentive for firms to search for methods to achieve lower levels of pollution. Benefit-cost analysis can be a valuable tool in evaluating alternative regulatory schemes. 166 CHAPTER 7 The United States in the International Economic System THE SUCCESSFUL IMPLEMENTATION OF POLICIES to control inflation and restore vigorous real growth in the United States will have a profound and favorable impact on the rest of the world. As the President told delegates at the 1981 Annual Meetings of the World Bank and International Monetary Fund, ". . . the most important contribution any country can make to world development is to pursue sound economic policies at home." More generally, the Administration's approach to international economic issues is based on the same principles which underlie its domestic programs: a belief in the superiority of market solutions to economic problems and an emphasis on private economic activity as the engine of noninflationary growth. This chapter reviews three areas important to U.S. international economic policy: the role of the dollar in the international monetary system, the increased importance of international trade and finance for the U.S. economy, and the evolving role of international institutions in promoting a more open international economic environment. During much of the postwar period, under what was known as the Bretton Woods system, most governments held their exchange rates fixed against the dollar by intervening in the exchange markets whenever supply of and demand for their currencies were not in balance at the prevailing exchange rate. The U.S. Government usually did not intervene in the exchange markets, but stood ready to buy and sell gold against dollars at a fixed price with foreign official agencies. In 1973 the Bretton Woods system of fixed but periodically adjustable exchange rates collapsed. An increasingly expansionary U.S. monetary policy and a decline in U.S. economic performance accelerated that collapse, but the end of the fixed-rate system probably would have occurred in any case. Although the role of the dollar in international markets has declined somewhat over the past three decades, it remains the central currency of the international monetary system. Consequently, both the United States and the rest of the world benefit from having a strong and stable dollar, that is, one with stable purchasing power. 167 This cannot be met through government intervention in exchange markets. Rather, it requires that the United States pursue noninflationary economic policies designed to strengthen its economic performance. A strong economy requires the maintenance of open markets both at home and abroad. Open trade based on mutually agreed upon rules is consistent with, indeed integral to, the Administration's commitment to strenthening the domestic economy. The maintenance of open markets has become increasingly important in recent years as the shares of foreign trade and investment have grown relative to the size of the U.S. economy. International institutions have contributed greatly to the economic prosperity the world has enjoyed since World War II by helping to promote increased international trade and investment and to strengthen individual economies. In his World Bank-International Monetary Fund speech President Reagan also remarked that, "The Bretton Woods institutions and the General Agreement on Trade and Tariffs (GATT) established generalized rules and procedures to facilitate individual enterprise and an open international trading and financial system. They recognized that economic incentives and increased commercial opportunities would be essential to economic recovery and growth." As the economic environment in which these institutions operate continues to change, we must assure that these institutions continue to evolve in a manner suitable to maintaining and strengthening the open international economic system from which we all benefit. INTERNATIONAL FINANCIAL MARKETS THE DOLLAR IN THE INTERNATIONAL SETTING The availability of a stable and convertible dollar for use as a store of value and a medium of international exchange contributed significantly to the sustained world economic recovery following World War II. The U.S. dollar still holds a major position in world financial markets. However, this position was weakened by high and varying inflation in the United States relative to that abroad during the 1970s. Poor U.S. economic performance and stronger records in such countries as Japan and West Germany led to a depreciation of the dollar in foreign exchange markets and to the diversification of private and official asset holdings in international financial markets into other currencies. When the purchasing power of the dollar became less stable than the purchasing power of other major currencies, foreigners did not want to continue to hold as large a share of 168 their wealth in dollar-denominated assets or rely as much on the dollar as the standard currency in international transactions. The dollar remains the principal currency for international commercial and financial transactions. Because of this, both the United States and the rest of the world would benefit from a stronger and more stable U.S. dollar. The strength and stability of the dollar depend directly on the ability of the United States to pursue noninflationary economic policies. In the late 1960s and the 1970s the United States failed to meet this objective. A continuing high and varying rate of inflation led to a sharp decline in the dollar's foreign exchange value during the late 1970s and to the dollar crisis of 1978, which threatened the stability of international financial markets. It would be desirable to lessen the differences in economic policies and performance at home and abroad which have caused much of the exchange-rate volatility in the recent past. Formal arrangements which peg exchange rates, however, cannot guarantee lasting coordination, as was demonstrated by the history of the Bretton Woods system. As a general proposition, one way to achieve compatibility of policies is for countries voluntarily to adopt the monetary rule of a large country whose avowed goal is to stabilize prices. Such a commitment becomes a de facto affiliation which will last as long as that larger country performs its task reliably and the smaller countries determine the arrangements to be beneficial. The larger country must be aware that a systematic oversupply of its money will erode confidence and hence reduce the foreign exchange value of its currency. In international markets, where there is competition among monies, high confidence monies eventually replace low confidence monies. EXCHANGE-RATE MOVEMENTS Changes in exchange rates, like changes in stock market prices, are largely unpredictable in the short run. New infomation continuously leads exchange-market participants to revise their forecasts of the state of the economy and the stance of economic policies. Exchange rates can exhibit large short-run fluctuations in response to such changes in economic outlook. Over a longer period, exchange-rate changes reflect differences in inflation rates between countries; that is, purchasing power parity should hold in the long run. In Chart 7-1, measures of the nominal and the real effective exchange rates are shown for the United States from 1973 to 1981. The real effective exchange rate is here defined as the nominal effective foreign exchange value of the dollar (a tradeweighted exchange rate) multiplied by the ratio of the U.S. consumer price index (CPI) to the foreign consumer price index (March 1973=100). Purchasing power parity holds when the real effective 169 exchange rate is 100; below 100 the dollar depreciates in real terms; above 100 the dollar appreciates in real terms. Two observations about the graph are in order. First, there were substantial and persistent deviations from purchasing power parity but a tendency for the real effective exchange rate to gravitate around the 100 line. Second, nominal and real effective exchange rates generally moved in the same direction. Chart 7-1 Nominal and Real Effective Foreign Exchange Value of the Dollar MARCH 1973-100 120 115 110 105 100 95 90 85 80 75 iimlmiiliiMiliimliiiiiliiiiiliimliiiiilimihiiiih 1973 1974 1975 1976 1977 1978 1979 1980 1981 NOTE.—THE EFFECTIVE EXCHANGE RATE IS COMPUTED USING MULTILATERAL TRADE SHARES OF THE G-10 COUNTRIES PLUS SWITZERLAND. THE REAL EXCHANGE RATE IS CALCULATED BY ADJUSTING THE NOMINAL INDEX FOR RELATIVE MOVEMENTS IN CONSUMER PRICES (THIS IS ONE AMONG VARIOUS WAYS TO MEASURE REAL EXCHANGE RATES). SOURCES: DEPARTMENT OF LABOR AND BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM. The substantial movement in this measure of real exchange rates, however, does not invalidate the long-term purchasing power parity relationship. There are three main reasons why short-run deviations from long-run purchasing power parity occur. First, changes in the general price level, accompanied by changes in the ratio of traded to nontraded commodities prices (the internal terms of trade), affect real exchange rates. This is so because the net export surplus (deficit) of the country experiencing an improvement in the relative price of traded goods rises (falls). For a given price level, the exchange rate must adjust to restore long-run equilibrium in the current account. 170 Movements in real exchange rates also can take place because the "terms of finance" change. That is, there may be shifts in the currency preferences and risks faced by participants in international financial markets which in turn affect expected yields on assets denominated in various currencies. Finally, real exchange rates tend to move in the same direction as nominal exchange rates because prices change more slowly than nominal exchange rates. As a consequence, changes in monetary policy quickly affect nominal interest rates in financial markets, and more gradually, the price level. Thus, changes in monetary growth affect both real and nominal exchange rates in the short run. Over the longer term, however, monetary growth does not influence real exchange rates. All of these forces have been present during the last decade. Over this period the U.S. economy has been subjected to significant changes in the prices of internationally traded goods, especially oil. For instance, the external terms of trade, measured by the ratio of the price deflator for exports of goods and services to the price deflator for imports of goods and services, fell sharply in 1973 and in 1979 as the two oil price shocks of the 1970s left their marks on the U.S. economy (Chart 7-2). In addition, the U.S. economy became Chart 7-2 U.S. External Terms of Trade 1973 1974 1975 1976 1977 1978 1979 1980 1981 NOTE.—DATA ARE RATIO OF IMPLICIT PRICE DEFLATOR FOR EXPORTS OF GOODS AND SERVICES TO IMPLICIT PRICE DEFLATOR FOR IMPORTS OF GOODS AND SERVICES. SOURCE: DEPARTMENT OF COMMERCE. 171 much more open in the 1970s than it used to be. As an example, exports as a proportion of gross national product (GNP) nearly doubled during the 1970s. Historically, real exchange rates generally have moved in the direction of restoring long-term equilibrium in external accounts. In the 1977-78 period the United States had a cumulative current account deficit of $28.2 billion. The United States and foreign central banks then intervened massively in an effort to contain the depreciation of the dollar. Foreign net purchases of dollars were more than double the amount of the cumulative current account deficit. Yet the dollar continued to depreciate, both in nominal and real terms. Market participants judged the intervention to be ineffective and viewed the deterioration in the U.S. current account as an accurate reflection of underlying U.S. economic policies and performance. The depreciation was pronounced and persistent, but achieved the expected result of redressing the current account imbalance during 1979 and 1980. In 1981 the dollar appreciated sharply, both in nominal and real terms. The nominal appreciation of the dollar on a trade-weighted basis relative to other major currencies was 15.6 percent. This movement is explained only in part by the current account surplus of the United States relative to that of its trading partners. Another factor was a shift toward dollar-denominated assets, which may have been a consequence of the President's economic recovery program. Large sales of dollar assets by foreign central banks and an increase in foreign interest rates relative to U.S. interest rates did little to prevent the dollar from rising. The growing preference for dollar-denominated assets relative to other assets reflected a positive response to underlying economic policies of the Administration. OFFICIAL INTERVENTION IN THE EXCHANGE MARKETS There is a long tradition among monetary authorities of intervening in the foreign exchange markets to prevent what is known as overshooting, undershooting, or, more generally, disorderly market conditions. But there is no conclusive evidence that official intervention in the past has achieved its purpose. The large purchases of dollar-denominated assets by foreign central banks in 1977-78 did not prevent the dollar from depreciating, and their large sales of dollar assets in 1980-81 did not prevent the dollar from appreciat- 172 ing. Moreover, intervention may have been counterproductive. Market participants did not know whether it signaled a change in monetary policy, thereby leading to increased uncertainty on their part. When the previous Administration left office, intervention by the United States was being conducted at a relatively high volume, virtually on a day-to-day basis, with the objective of using the periods of dollar strength first to cover outstanding foreign currency liabilities and later to build foreign currency reserves. This was the first time, at least in recent history, that the United States had embarked on a deliberate policy of acquiring substantial foreign currency reserves. (For a brief history of U.S. Government intervention in the exchange markets, see the appendix to this chapter.) Early in 1981 the new Administration scaled back U.S. intervention in foreign exchange markets. In conjunction with a strong emphasis on economic fundamentals, this Administration has returned to the policy of intervening only when necessary to counter conditions of severe disorder in the market. As in the past, no attempt has been made to define disorderly market conditions in advance. When making a decision on whether exchange-market conditions justify intervention, the U.S. Government will consult closely with the governments of other major industrial countries. Also as in the past, the Department of the Treasury and the Federal Reserve will keep the public informed regarding U.S. exchange-market intervention policy. Although the Administration does not expect intervention in the exchange markets to occur on a regular basis, it will continue to monitor closely developments in those markets. With the President's economic program firmly in place, and with the Federal Reserve following a policy of gradually reducing the rate of monetary growth to a noninflationary level, the occurrence of disorderly conditions is likely to be significantly less in the future than in the past. But unforeseen circumstances at home or abroad could cause disorderly conditions, and intervention may at times be necessary. IMPLICATIONS FOR U.S. MONETARY POLICY In Chapter 3 it was argued that monetary authorities have the ability to achieve given values and growth rates of nominal magnitudes 173 and that price stability is the principal objective of monetary policy. Under such a policy, interest rates cannot be fixed. But market interest rates and exchange rates are related by what is known as interest rate parity: the premium in the forward exchange markets approximates the difference between comparable domestic and foreign interest rates, It follows that as interest rates change over time, nominal exchange rates will vary as well. A stable price level, therefore, may not necessarily imply constant nominal interest rates or constant exchange rates. Price stability in the United States might lessen considerably the dispersion of inflation rates now prevailing in the world, but cannot eliminate them altogether. Economic policies and performance will continue to differ from country to country. Hence, exchange rates will adjust to reflect such differences. But even if differences in inflation were to disappear, exchange rates would have to accommodate changes in relative prices. Real exchange rates cannot be held constant in dynamic economies. The greatest contribution that U.S. price stability will make to the exchange market is that it will act to reduce exchange rate volatility. Current U.S. monetary and intervention policies are not expressions of "benign neglect/' That notion was based on the premise that the foreign trade sector of the United States was so small relative to the rest of the economy that it could be ignored. By contrast, the Administration stresses the pivotal role of the United States in the world. TRADE ISSUES AND POLICIES TRADE IN THE U.S. ECONOMY Foreign trade has become a vital factor in U.S. business activity and employment. In 1980 exports and imports of goods and services each represented over 12 percent of the gross national product. Twenty years ago exports were less than 6 percent of GNP; imports, less than 5 percent. Much of this shift has occurred in the last decade, during which exports and imports as shares of GNP have about doubled. In real terms, however, the rate of growth in U.S. imports of goods and services was stronger in the 1960s than in 1970s, while U.S. export growth was stronger in the 1970s than in the 1960s. The improved export performance reflects two key factors apart from the evolving ramifications of the trade liberalization of the postwar period and the real depreciation of the dollar in the 1970s: our increased trade with developing countries, whose real .GNP growth slowed less in the 1970s than that of the developed countries, 174 and our specialization in exports of high technology products, agricultural products, and services. Recent movements in merchandise trade are shown in Table 7-1; they reflect in part cyclical factors. The sharp decline in real GNP during the second quarter of 1980 was accompanied by a substantial drop in U.S. merchandise imports. From a seasonally adjusted total of $65 billion in the first quarter of 1980, merchandise imports fell to $59 billion in the third quarter. At the same time, demand for U.S. exports remained buoyant, yielding in the third quarter of 1980 the smallest merchandise trade deficit since 1976—$11.6 billion at an annual rate. Thereafter, the rebound in U.S. economic activity from the extremely weak level in the second quarter of 1980, coupled with a slowing of growth abroad and the lagged impact of dollar appreciation on U.S. international competitiveness, acted to widen the deficit. By the the last quarter of 1981, it had risen to $37.0 billion at an annual rate. TABLE 7-1.—U.S. merchandise exports, imports, and balance, 1977-81 [Billions of dollars; f.a.s.J Imp orts Exp >rts Period Agricultural Nonagriculturai Petroleum and products Nonpetroleum Balance 1977 1978 1979 24.3 299 35.6 96.5 1122 148.9 45.0 42.3 60.5 106.7 133.5 151.3 -30.9 -33.8 -27.3 1980 1981 1 422 442 1817 192.0 78.9 77.6 170.4 186.4 -253 27.8 1980: 1 II Ill IV 103 10.1 10.8 11 1 446 45.6 454 461 21.2 21.0 17.4 193 43.9 41.4 41.8 434 -10.1 -6.7 -2.9 -56 12.7 11.0 100 104 483 49.3 479 464 20.8 21.2 17.9 177 44.9 46.1 470. 484 -4.7 -6.9 -7.0 -9.3 1981: | II II! 1 . . IV 1 Preliminary. Note.—Data are on a balance of payments basis and exclude military. Quarterly data are seasonally adjusted. Data contain revisions for the first three quarters of 1981. Detail may not add to balance due to rounding. Source: Department of Commerce, Bureau of Economic Analysis. A very broad breakdown of trade by major commodity groups is also shown in Table 7-1. Until recently, agricultural goods accounted for about 20 percent of total U.S. exports. Quarterly changes in the value of U.S. imports during 1980 and 1981 were determined largely by movements in the value of petroleum imports. Petroleum import volume in 1981 declined 13 percent compared to 1980, in the face of an increase in price of 12 percent. The value of petroleum imports fell dramatically in the last half of 1981, with both volume and price declining. The latter reflected reduced worldwide demand for oil 175 due to the continued appreciation of the U.S. dollar and the downturns in economic activity in the United States and Europe, all in tandem with adjustments to oil inventories. While the dollar price of oil has fallen, the appreciation of the dollar has caused the price of oil in European and Japanese currencies to rise. For Europe and Japan, therefore, oil import values rose more rapidly than in the United States during 1981 and a parallel increase in their concern with their own trade balances has added to protectionist pressures in some of those countries. Although cyclical factors have played and will continue to play an important role in movements of the trade account, the strong appreciation of the dollar through much of 1981 has already begun to be reflected in trade flows. While changes in economic activity are quickly translated into movements of exports and imports, changes in relative prices generally take more time to alter trade flows. Hence, trade flows in early 1982 will continue to be influenced by the earlier sharp real appreciation of the dollar. In some instances the impact of exchange-rate changes in 1981 was stronger than cyclical effects. U.S. imports of nonpetroleum products grew steadily throughout 1981, despite the weakening of U.S. economic activity. The volume of nonpetroleum imports grew very strongly, while their price fell during the year, both reflecting the appreciation of the dollar. THE STANCE OF U.S. TRADE POLICY The Administration spelled out in its July 1981 "Statement on U.S. Trade Policy" its commitment to pursue, at home and abroad, policies aimed at achieving open trade and reducing trade distortions. There are five central components to that policy. • Restoring strong noninflationary growth at home. Fundamental to any effective trade policy is carrying out domestic programs that increase the incentives to invest, to raise productivity, and to reduce costs, thus helping to lower inflationary pressures. These policies will strengthen the ability of American firms to respond to changes in domestic and international markets. • Reducing self-imposed trade disincentives. Confusing and needlessly complex laws and regulations that inhibit exports and imports will be reformed. • Effective and strict enforcement of U. S. trade laws and international agreements. Our policy toward other nations' barriers to trade and to investment or export subsidies is one of strong opposition. Our trading partners must recognize that it is in their own interest, as well as ours, to assure that international trade and investment remain a two-way street. 176 • A more effective approach to industrial adjustment problems. In a healthy economy some industries and regions will grow more rapidly than others, and some sectors will experience more difficulty. If unhindered, the market will signal these changes and provide incentives for adjustments. Market forces, rather than government bail-outs, will be relied upon to make appropriate adjustments. • Reducing government barriers to the flow of trade and investment among nations. To this end it is necessary to continue efforts to improve and expand existing international trade rules, particularly into the areas of services and investment. At home, as well as in other nations, public policy discussions about international trade often lead to disagreement. The direct beneficiaries of import relief or export subsidy are usually few in number, but each has a large individual stake in the outcome. Thus, their incentive for vigorous political activity is strong. But the costs of such policies may far exceed the benefits. It may cost the public $40,000-$50,000 a year to protect a domestic job that might otherwise pay an employee only half that amount in wages and benefits. Furthermore, the costs of protection are widely diffused—in the United States, among 50 States and some 230 million citizens. Since the cost borne by any one citizen is likely to be quite small, and may even go unnoticed, resistance at the grass-roots level to protectionist measures often is considerably less than pressures for their adoption. The decisions taken in trade cases inevitably reflect political and social forces as well as basic economic considerations. The record of decisions, not surprisingly, continues to be mixed. For example, the extension of the Multifiber Arrangement, agreed upon in December 1981, is more restrictive than open-trade advocates might have preferred, but the principle of openness was adhered to closely in the decision concerning the nonrubber footwear industry. A similar contrast can be found in the automobile and industrial fastener cases. CHANGING ATTITUDES TOWARD INTERNATIONAL TRADE The gradual opening of the world economy to trade in the postwar period has brought major benefits both to the United States and to our trading partners. Long experience has shown that the benefits of trade tend to be mutual. Competition, whether domestic or international, fosters the allocation of resources to relatively more productive activities. Better products, at lower prices, appear in the marketplace. Consumer choice is expanded. Technologies are more readily diffused. Inflationary pressures are reduced. With time, productivity, and hence income, rise. 177 The benefits from open trade are derived as much from reductions in barriers to imports as from expansion of exports. American exporters seek foreign buyers who have access to the U.S. dollars necessary to buy U.S. goods and services. While the U.S. dollar is a convertible currency that, is widely used in a variety of international transactions, significant amounts of dollars are made available when Americans import foreign goods and services, paying in U.S. dollars. Put simply, our imports put U.S. dollars into the hands of foreigners who then use those dollars—be it to buy U.S. goods, services, or assets, or to exchange currencies with others who want dollars. In the short run, we can, and in many cases do, lend foreigners the dollars to finance their purchases of our exports. When such loans are made at market rates of interest, trade is advanced. But when governmentsubsidized credit is provided, instead, such funds are denied to other, more productive uses. Restricting U.S. imports would reduce the amount of dollars available to those in other countries who would buy our wheat, aircraft, chemicals, or machinery unless we made up the difference by loans to foreigners. In some cases, the connection between imports and exports is even more direct. Import restraints can reduce employment and profits in our more productive export industries. The nonrubber footwear industry offers one such example. U.S. exporters of hides to foreign shoe producers suffered as a result of our restraints on imports of foreign shoes. More generally, import restriction by one country may invite others to retaliate. Pressures for retaliation, which tend to strengthen when, as now, output growth rates are declining and unemployment is rising, are one of a number of forces threatening to stem the growth of world trade. In the last year or so, the U.S. automobile, footwear, steel, and textile industries have been among those actively seeking relief from import competition. There are similarly strong pressures for government subsidy of export expansion—for example, in agriculture and in high technology industries. Such pressures for further government intervention reflect a potentially troublesome "neomercantilist" view which stresses export expansion to the near exclusion of all other factors in a healthy international trading climate. If the U.S. Government, the reasoning runs, were to take steps to favor sectors with export potential, the domestic economy would benefit. In this view, a large surplus in the merchandise trade account is deemed an unmitigated "good/* a deficit "bad." There is a fundamental inconsistency between such neomercantilism and the overall economic philosophy of the Administration, which is committed to the goal of less, not more, government inter- 178 ference in the marketplace. It is just as easy to waste taxpayer dollars and scarce economic resources on subsidizing exports as it is to waste them on better-known examples of Federal profligacy. What is desirable, indeed necessary, is that, consistent with the Administration's "Statement on U.S. Trade Policy/' the U.S. Government assure the proper enforcement of trade laws, remove any unnecessary domestic impediments to trade, and likewise seek elimination of foreign trade barriers which effectively limit our exports. Competitiveness that is impaired by market forces should not be restored by raising tariffs or subsidizing export industries. Such actions simply protect the trade-dependent industries, inviting them to postpone the steps necessary to meet world competition while raising costs to consumers and reducing the choices available in the marketplace. Policymakers can design and implement policies that invite improvements in investment, productivity, and employment, but the decision on whether to make such improvements is best left to the private sector. THE SIGNIFICANCE OF EXTERNAL IMBALANCES In most circumstances a trade deficit by itself should not cause concern. A trade deficit is a narrow concept. Goods are only part of what the world trades; another major part of trade is composed of services. Hence, the current account, which includes both, better indicates the country's international payments position. But the current account balance is not a complete measure of international competitiveness either. What also matters is how current account deficits are financed. Table 7-2 sets out the major components of the current account of the U.S. balance of payments: exports and imports (from Table 7-1), services, and unilateral transfers. The growing importance of trade in services is evident. The major contributor, by far, to the surplus on services is investment income. Net investment income rose from less than $18 billion in 1977 to almost $33 billion in 1980. As has been the case in the recent past, large surpluses in the services account offset large deficits in the merchandise account, yielding a small surplus in the current account for the first three quarters of 1981. Concern with the country's international payments position is appropriate when the basis of that concern is that the country is simultaneously experiencing a sustained deficit in its current account and a persistent depreciation of its currency in the exchange markets. The joint occurrence of these two events should alert economic policymakers to the possibility that the country may be losing competitiveness. 179 TABLE 7-2.—I'.S. international transactions, 1977-81 [Billions of dollars] Exports Imports Balance Exports Imports Balance Unilateral transfers, net 1977 1978 1979 120.8 142.1 184.5 151.7 175.8 211.8 -30.9 -33.8 -27.3 63.5 79.0 104,5 42.1 54.2 70.1 21.4 24.8 34.4 -4.6 -5.1 -5.6 1980 y 1981 224.0 236.1 249.3 264.0 -25.3 -27.8 120.7 84.6 36.1 -7.1 3.7 55.0 55.7 56.3 57.1 65.0 62.4 59.2 62.7 -10.1 ^6.7 =2.9 -5.6 30.9 28.0 30.4 31.5 21.0 20.4 21.0 22.2 9.9 7.5 9.4 9.3 -1.9 -1.3 -1.5 =2.3 -=2.1 0.5 5.0 1.4 61.0 60.4 57.9 56.8 65.7 67.3 65.0 66.1 =4.7 = 6.9 = 7.0 -9.3 33.3 34.6 36.2 23.9 25.0 25.2 9.5 9.6 11.0 -1.5 -1.5 -1.9 Services Merchandise * Period 1980; It til IV 1981: II ".'. . Ill 2 |V a ' " ' ' . " . ! .' '. Current account balance - 14,1 -14.1 1.4 3.3 1.1 2.1 1 Excludes 2 military. Preliminary, Note.—Data are on a balance of payments basis. Quarterly data are seasonally adjusted. Merchandise trade data contain revisions for the first three quarters of 1981. Detail may not add to balances due to rounding. Source: Department of Commerce, Bureau of Economic Analysis. It is particularly important not to become unduly preoccupied with the trade or current account balances with a single foreign country. Any policy to reduce a bilateral imbalance by restricting imports is likely to reduce the absolute volume of trade, and in consequence, the level of economic well-being of both countries, and could have wider repercussions. A far more constructive approach would be for the nations with restrictive trade practices and institutional barriers to imports to reduce systematically those obstacles to the freer flow of trade and investment. Actions like those recently taken by Japan, for example, should prove far more beneficial than measures by the United States to restrict imports. More broadly, and setting aside the sometimes significant statistical discrepancies, global current account imbalances must add up to zero. All countries cannot possibly run surpluses simultaneously. If each nation tried to achieve such a goal, strong deflationary forces would be set in motion. Today, for example, the Organization of Petroleum Exporting Countries (OPEC) continues to report large current account surpluses; these have to be matched by current account deficits in other countries. Given the important role of the United States in world financial markets, one need not be concerned if the U.S. current account moves into deficit as domestic economic policies begin to revitalize the economy. With strong domestic performance, U.S. import demand will also strengthen; the effects of this revitalization on U,S. exports will take more time. Thus, a deficit on current account will simply reflect the adjustment process at work. 180 Nor should a current account deficit that is comfortably financed by net inflows of capital evoke concern. The relationship is straightforward: goods and services comprise one aspect of international commerce, financial and real assets another. If foreigners purchase more U.S. real and financial assets in the United States—land, buildings, equities, and bonds—then the United States can afford to import more goods and services from abroad. To look at one aspect without considering the others is misleading. In sum, the macroeconomic significance of a current account deficit depends on what gave rise to it and how it is financed. It is in itself neither good nor bad. Nor should exchange-rate changes required by long-term current account considerations be viewed as, in themselves, good or bad; the costs to society of suppressing exchange-rate movements must be compared to the costs of allowing those movements. It is for these reasons that interference with market mechanisms—whether in markets for goods or markets for foreign exchange—is not part of the Administration's policy. DEVELOPMENT, ADJUSTMENT, AND INTERNATIONAL INSTITUTIONS THE HERITAGE AND THE CHALLENGES In his speech to the World Affairs Council of Philadelphia on October 15, 1981, President Reagan said: "The postwar international economic system was created on the belief that the key to national development and human progress is individual freedom—both political and economic. This system provided only generalized rules in order to maintain maximum flexibility and opportunity for individual enterprise and an open international trading and financial system." The record of this economic system is a record of more achievements than failures. As Table 7-3 shows, the industrialized world has not been the only beneficiary of an open international trading and financial system. A number of developing countries have done well too. The real per capita GNP of 60 middle-income countries rose about as fast as that of the industrial countries over the period 1950 to 1980, while GNP in those middle-income countries grew over 30 percent faster than in the industrial countries. On the other hand, there are many low-income countries whose economic progress has been disappointing. As a result of faster economic growth abroad than in the United States, the U.S. share of world output declined substantially over the same period. Immediately after World War II this share was estimated to be approximately 40 percent. By 1950, with Europe and Japan 181 back on their feet, it had declined to one-third. It dropped to 25 percent by 1970 and further declined to 23 percent by 1980. TABLE 7-3.—Real GNPgrowth rates, 1950 to 1980 [Average annual percent change] Country grouping GNP per capita GNP Industrial countries 4.2 3.2 Market No n market 4.2 45 3.1 34 Developing countries Middle-income countries Low-income countries .. Capital-surplus oil exporters 5.5 3.2 5.6 5,1 3.1 2.9 11.2 7.9 Note,—Country groupings are classified according to World Development Report, 1981, World Bank. Source: National Foreign Assessment Center. Despite this favorable record for much of the rest of the world and the United States, the open international system today faces three major challenges. The first challenge arises from the conflict between each country's short-term internal domestic objectives and mutual longer term external interests. In the past, leadership in meeting such a challenge was provided by large countries. The United Kingdom fulfilled this role for much of the 19th century up to World War I, while the United States played a larger role after World War II. Under U.S. leadership the Western alliance developed a nuclear "umbrella,** achieved massive reductions of tariffs and other impediments thus giving major impetus to world trade, and created an international monetary system which provided rules of conduct for adjusting balance of payments imbalances. In today's environment, addressing issues such as defense and the evolution of international economic arrangements are part of this challenge. The nature and mutual importance of these issues implies that solutions to these problems must be arrived at through consultation. The second challenge is to maintain an open international economic system. A new wave of protectionism has taken the form of quotas, subsidies, international cartels, administrative delays, and burdensome enforcement of product standards. Imposition of such measures has increased dramatically since the international negotiations in the Kennedy Round (completed in 1967) sharply reduced both tariffs and the scope for their future use. The gains made in opening markets for international trade, investment, and finance are now threatened. The third challenge is to respond to the aspirations of the developing countries for greater growth and development. Work under the rubric of the New International Economic Order, as well as the 182 Brandt Commission report and the Tinbergen report, have focused global attention on important development and resource issues before the world community. While these reports make an effective case for aid to the least developed countries, they in general place too much emphasis on resource transfer and not enough emphasis on resource development through private market mechanisms. Indeed, these reports tend to downplay the role of the private sector in the development process and instead rely on governments and international organizations as the best vehicles to promote development. As already noted, a sizable number of developing countries have done well in the post-World War II era. On the other hand, developing countries continue to be justified in claiming that the world trading system discriminates against them. Some industrial countries have restricted trade in sensitive sectors of particular export interest to developing countries, such as textiles. MEETING THE CHALLENGES The U.S. response to these challenges is based on an explicit shift toward market-oriented solutions to economic problems. Solutions to common problems in the world economy should be found through continued efforts at cooperation and consultation among nations. These efforts should aim at a renewed resolve to fight inflation and secure higher investment with sustainable growth. At the Ottawa Summit in July 1981 the President, along with other Western leaders, reaffirmed "our common objectives and our recognition of the need to take into account the effects on others of policies we pursue. We are confident in our joint determination and ability to tackle our problems in a spirit of shared responsibility . . ." International cooperation is particularly vital in stemming the drive for greater protectionism both at home and abroad. The response of many countries during the recent period of sluggish worldwide growth has been to call for or impose new barriers to investment and trade flows. The United States will continue to resist these tactics and work for reductions in trade barriers through the General Agreement on Tariffs and Trade (GATT) and through bilateral relationships. In approaching the challenge to contribute to the needs of the developing world, the Administration seeks to emphasize the important and historically dominant roles of trade and investment in economic development. Although economic assistance on concessionary terms continues to be a vital part of U.S. policy, establishment of a vibrant private sector through trade and investment offers the best hope for sustained noninflationary growth. The program for action that the 183 President put forth at the Cancun Summit in October 1981 contains five guiding principles for development policy: • stimulating international trade by opening up markets; • tailoring particular development strategies to specific needs and regions; • guiding assistance toward the development of self-sustaining productive capacities; • improving the climate in many developing countries for private investment and technology transfer; and • creating a political climate in which practical solutions can move forward rather than founder on the reef of government policies that interfere unnecessarily with the marketplace. In line with these principles, the major goal of concessional foreign aid programs should be to help those poorer countries which, for reasons beyond their control, have not been able to improve their standards of living. The rationale for aid to countries whose low economic performance results more from inappropriate domestic policies than from external factors needs to be reexamined. EVOLVING ROLE OF INTERNATIONAL INSTITUTIONS The United States recognizes the important roles and specialized functions of the international financial institutions and believes these institutions must continue to evolve. It is important to review the roles of these institutions to ensure that they remain effective in the years ahead. Most importantly, these institutions should be directed toward promoting market-oriented rather than government-administered solutions to international and domestic economic problems. General Agreement on Tariffs and Trade The General Agreement on Tariffs and Trade has served the world well in promoting and monitoring progress toward a liberalized trading system. Originally written in the immediate post-World War II era with a small number of Western industrial countries as Contracting Parties, the GATT system has had to adapt to the changing world economy. During the 1960s a Part V was added to the General Agreement to take into account the special problems of developing countries and to allow many of them to be brought within the GAIT system. Special Protocols of Accession were drafted to bring Eastern European nonmarket economies under the GATT umbrella as well. Over the years, the emphasis of GATT has been altered to cope with the ingenuity of governments and interest groups in devising new forms of economic protectionism. The first several rounds of ne- 184 gotiations under GATT were concerned mainly with reducing high tariff levels. The Kennedy Round, in addition to achieving sizable tariff reductions, made a modest attempt to negotiate other commitments—including one on antidumping—while the principal focus of the Tokyo Round (completed in 1979) was on extending GATT discipline to areas other than tariffs. These agreements proved decisively that the GATT system is flexible and can be improved over time. However, GATT now faces a challenge because of increasing protectionist pressures worldwide and because the effectiveness of GATT rules, which formally include all goods, has tended in practice to be limited to trade in manufactures. GATT must now address areas of international commerce where existing norms are inadequate, such as agriculture, and must define its role in establishing norms in areas which traditionally have not been dealt with in GATT, such as trade in services. Another area where distortions exist and where greater international efforts are needed is in international investment. Finally, steps to integrate developing countries more completely into the GATT framework should be made, along with efforts to encourage nonmembers to join agreements under GATT. A new political impetus among developed and developing countries is required to revitalize GATT. The GATT Ministerial meeting set for November 1982 will offer the international community an opportunity to maintain momentum toward a more open trading system. The World Bank The International Bank for Reconstruction and Development (IBRD) was created to lend funds for reconstruction of the war-ravaged economies and for economic development. Having accomplished the first task admirably, it has, over the last quarter century, come to focus heavily on the second. With the creation in 1956 of the International Finance Corporation—mandated to promote private sector enterprise in developing countries—and in 1960 by the establishment of the International Development Association (IDA) to lend on highly concessional terms to the poorest countries, the World Bank group was formed. During the 1970s these three institutions underwent rapid growth and innovation, some of which has been controversial. President Reagan indicated at the 1981 World Bank-International Monetary Fund Annual Meetings that because the United States strongly supports the World Bank, the Administration also feels "a special responsibility to provide constructive suggestions to make it more effective." A major U.S. policy reassessment of the World Bank and the regional development banks was thus carried out during 1981 and the final report was recently released. 185 That study strongly endorses the overall performance of the multilateral development banks, but also identifies key aspects which require improvement. Loan quality, not quantity, should have highest priority. In addition, renewed attention should be focused on the criteria under which countries "mature" from soft loan window to hard loan window, and "graduate" to unsubsidized participation in international capital markets. The study recommends that the United States should begin to reduce its contributions to the soft loan facilities, noting that such reductions would not adversely affect users of these facilities as long as strengthened "maturation" and "graduation" policies are followed, In further assessing how the World Bank can be most effective, it is useful to distinguish between its soft loan window (IDA) and its hard loan window (IBRD), since these give it the capacity to tailor its financing to a broad range of developing countries. There is no dispute that a good many countries need development assistance. But views do vary on how best to give assistance—that is, through loans or grants—and whether assistance should be on a multilateral or bilateral basis. A multilateral approach to official aid has the presumed advantages of being cost-effective (that is, greater volumes of resources can be obtained for a given budget dollar), of allowing politics to be bypassed to some extent, and of facilitating policy reform by conditioning loans and grants on certain changes. An arguable disadvantage is that taxpayers in donor countries lose some control both over where aid goes (since decisions are made collectively) and how it is used. Verification of the effectiveness of aid is an issue which was emphasized at times during the 1970s when the Bank itself was among the chief spokesmen for larger aid programs. In light of these considerations, the Council takes the view that official aid would be more effective on a bilateral basis, and the Administration has repeatedly stressed its intention to pursue a larger bilateral aid program. In any case, soft loan resources disbursed by the World Bank should be directed to countries which are making serious attempts to develop their economies on a rational basis but have inadequate debt-servicing capacity and hence have little or no access to credit markets. Part of the inability of some countries to achieve greater development can be traced to their domestic policies, and aid from both the soft and hard loan windows should be more explicitly conditioned on improvements in those policies. In practice, there has been resistance in some recipient countries to adopting policies which reduce government intervention and allow a fuller play of market forces. The chances that more efficient development will take place 186 are improved to the extent that the lending activities of the Bank are designed so as to generate an increase in privately produced output. Finally, there remain unresolved questions about the future size and emphasis of World Bank activities. The success of the Bank should not be measured by its ability to obtain funds from donor countries, but rather by its performance in fostering economic growth in developing countries. The International Monetary Fund The International Monetary Fund (IMF) currently provides a framework in which governments can consult and cooperate in determining the structure and functioning of the international monetary system. In particular, the Fund extends technical assistance and temporary balance of payments financing to members, in part conditioned on the implementation of economic policy measures designed to correct the factors underlying their balance of payments imbalances. In addition, it serves as a means for monitoring the exchange rate arrangements and policies of member governments. Finally, the IMF is also charged with reviewing the adequacy of international liquidity and with supplementing reserves, when necessary, through the allocation of Special Drawing Rights. The Administration's approach to the IMF reflects a basic view of the world economy which focuses on economic fundamentals, support for timely adjustment, and recognition of the pervasiveness and benefits of market forces. The IMF Articles of Agreement recognize that exchange-rate stability requires stability in the underlying economic and financial determinants of exchange rates. Although nations may differ on the appropriate degree of exchange-market intervention, there is consensus that exchange-rate developments are influenced fundamentally by domestic economic conditions within member countries. The Administration strongly supports further development under the IMF surveillance procedures of what has become known as the Article IV consultation process. Under the second amendment to the Articles of Agreement, the Fund set forth a set of principles to govern developments and policy actions that are consistent with an open international economic system. In cases where the Fund believes that these principles may not have been honored, it may send a staff mission to a member's capital to discuss the member's economic policies with government officials. IMF Article IV consultations contribute to international stability in a number of ways. First, such consultations provide information to member governments regarding the national economic policies of 187 other member governments. Such information may be helpful in shaping each member's domestic policies as well as useful in avoiding conflicts because of misundertandings. Second, Article IV consultations provide a valuable base of information for Fund staff assessments of global economic and exchange-rate developments which in turn provide useful information for national economic authorities. Third, Article IV consultations provide a framework for frank critiques among the representatives of member governments. Fourth, Article IV consultations provide a base from which all nations can develop a better understanding of the economic linkages among nations. And finally, these consultations can help a country to identify and address emerging payments problems at an early stage. The Administration, however, has encouraged the Fund to give renewed attention to the kinds of financial programs that it supports in member countries. The U.S. Government has stressed the importance of effective IMF conditionality in promoting balance of payments adjustments. The justification for IMF financing is to encourage appropriate payments adjustment. With the emergence of very large imbalances in world payments since 1974, a major effort was made to expand access to IMF resources and to enhance the Fund's ability to support its members* adjustment efforts. The access of individual countries to IMF financing has been increased significantly. In addition, IMF resources have been expanded through the implementation of a 50 percent quota increase at the end of 1980 and through the establishment of IMF borrowing arrangements with Saudi Arabia and a few other countries. The duration of IMF adjustment programs has been lengthened in many cases because of the structural nature and depth of countries' adjustment problems. Also, greater emphasis is being placed on structural change—the reduction of economic distortions and disincentives, and enhancement of factors that will lead to greater saving, innovation, investment, and growth. The IMF must ensure that its increased resources are used in a manner that is consistent with its Articles of Agreement. Traditionally, this has meant that access to IMF resources is available on a temporary basis to countries confronted with an external imbalance and willing to undertake economic policy adjustments to eliminate these imbalances and repay the Fund. Effective balance of payments adjustment frequently requires wider acceptance of market-oriented solutions. Import and export restrictions, price controls, rigid exchange rates, and excessive government regulation often prevent a country from achieving a sustainable balance of payments over time as well as higher domestic growth rates. 188 Finally, the Administration has looked closely at the justifications for a new proposed allocation of Special Drawing Rights. This issue is controversial, given some countries1 financing problems and differences of opinion about the meaning and role of international liquidity. Although many countries have advocated an increase in holdings of this international reserve asset, the United States has opposed such an allocation at this time, given world inflation and the current level of world liquidity. Even a modest new allocation of Special Drawing Rights in present circumstances would appear to conflict with the policies of monetary restraint being pursued in many countries. Most international institutions were created after World War II, each with clear objectives to satisfy. Over the last three and a half decades the economic environment has changed dramatically, and the member governments of these institutions have had to reach agreement on how to reorganize the priorities and functions of the institutions. These institutions continue to play vital roles in the world economy. But to guarantee their ongoing viability, member governments must continue to review the approaches and goals of these institutions in light of the changing economic environment. APPENDIX TO CHAPTER 7 U.S. POLICIES ON EXCHANGE-RATE INTERVENTION SINCE 1973 The current era of floating exchange rates formally began in March 1973, when most major industrial countries abandoned their efforts to maintain fixed-exchange rates against the dollar. Although rates were no longer held fixed, many governments outside the United States continued to intervene in exchange markets from time to time to influence their exchange rates. Initially the United States adopted a policy of nonintervention, but substantial changes in dollar exchange rates led the United States to intervene during the summer of 1973 and from late 1974 to early 1975. In July 1973 the U.S. Government adopted a policy of active intervention at whatever times and in whatever amounts were appropriate for maintaining orderly market conditions. In November 1975, as part of the "Declaration of Rambouillet" following an economic summit meeting, the heads of the industrial countries announced that they had agreed to act to counter disorderly market conditions or erratic fluctuations in exchange rates. Although the difference between the statements may appear to be only one of nuance, the latter statement more accurately reflected what in effect was a limited intervention policy on the part of the United States. 189 The previous Administration also began its term of office supporting limited intervention in exchange markets. Official U.S. statements, however, were interpreted as favoring a decline in the dollar to reduce the U.S. current account deficit (that is, "benign neglect*' of the dollar). Using Federal Reserve swap arrangements, the United States intervened in support of the dollar, beginning in September 1977.* In total, the United States sold (net) $2.6 billion in foreign currencies in support of the dollar between September 1977 and March 1978, financed by Federal Reserve and Department of the Treasury drawings under swap agreements. When the dollar recovered in the second and third quarters of 1978, the United States was able to acquire $2.1 billion in foreign currencies, permitting repayment of a substantial portion of the earlier swap drawings. In April 1978, pursuant to the notification provisions of the amended IMF Articles of Agreement, the United States notified the IMF that, ". . . exchange rates are determined on the basis of demand and supply conditions in the exchange markets. However, the [U.S.] authorities will intervene when necessary to counter disorderly conditions in the exchange markets." The definition of disorderly markets was left open and of necessity subject to interpretation by officials. Although at times intervention was heavy, it is fair to characterize U.S. policy until late 1978 as one in which intervention was the exception, and not the rule. In late 1978, however, the character of U.S. intervention changed. In August 1978 pressure on the dollar renewed amid spreading recognition of serious U.S. economic problems—including inflation and inadequate energy adjustments—and growing skepticism over the effectiveness of the previous Administration's plans to deal with them. President Carter announced a dollar support package on November 1, 1978. A major element of this program was a commitment to a more active intervention policy, to be funded by mobilizing large foreign currency resources, including the issuance of foreign currency securities (which became known as "Carter bonds"). From November 1, 1978, until shortly after the Administration took office in January 1981, U.S. intervention in exchange markets often reached massive proportions by historical U.S. standards (although not by the more activist standards of many foreign governments). As of March 1981, the U.S. Government had acquired $11.9 billion worth of foreign currencies. Since the values of these currencies dropped dra*Under a swap agreement, the Federal Reserve and Department of the Treasury borrow foreign currencies from foreign central banks and then use the currencies to intervene in foreign exchange markets. The United States has used swap agreements with Belgium, France, Germany, Japan, the Netherlands, and Switzerland since July 1973, all but Belgium and the Netherlands since November 190 matically relative to the U.S. dollar in 1981, as of October 31, 1981, the government (Federal Reserve System plus Treasury) sustained a bookkeeping loss on these holdings of $661 million. This loss would have been realized had the United States sold these currency holdings and repaid its liabilities. 191 CHAPTER 8 Review and Outlook ECONOMIC DEVELOPMENTS IN 1981 reflected the inflationary economic policies of more than a decade and the transitory effects of reversing those policies. Past policies alternated periodically between short-run efforts to reduce unemployment and short-lived attempts to fight inflation. Economic forecasting, however, was not sufficiently accurate to produce finely tuned countercyclical policies that made proper allowance for the lag between policy actions and their effects. Stimulative policies had relatively immediate effects on employment, followed by delayed effects in the form of higher inflation. Restrictive policies for fighting the inflation were not seen by the public as part of a credible long-term commitment and therefore were not expected to be sustained. Consequently, they tended to have a more severe impact on output and employment than on inflation. The result has been a ratcheting-up in the trend rate of inflation from one cycle to the next. This legacy of stop-and-go policies prevented a direct move to lower inflation and higher real growth in 1981. During the first half of 1980, restrictive policies—in the form of credit controls and a sharp reduction in monetary growth—had produced a brief, sharp recession. The subsequent removal of these controls and a postwar record high rate of monetary growth then led to an unsustainable rate of economic expansion through early 1981. OVERVIEW OF 1981 The historical patterns of monetary growth, inflation, and real output are shown in Chart 8-1. The average growth of money over 5-year periods (solid line) has trended upward since the 1960s; this is reflected in the rising rate of inflation. The two-quarter growth rate of money (dashed line) has fluctuated sharply, compared to the underlying growth trend, and has contributed to rapid expansions and contractions of real economic growth, after a one- or two-quarter lag. Variations in money growth result in changes in spending and nominal income growth. During short periods, such changes show up as changes in real income growth since inflation responds to money growth only after a considerable lag. 192 Chart 8-1 Growth Rates of Money Stock, Real GNP, and GNP Deflator PERCENT CHANGE (ANNUAL RATE) 1965 66 81 PERCENT CHANGE (ANNUAL RATE) GNP IMPLICIT PRICE DEFLATOR .' ' 20-QUARTER GROW /V REAL GNP 2-QUARTER GROWTH -10 1965 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 NOTE.—BASED ON SEASONALLY ADJUSTED DATA. SHADED AREAS INDICATE RECESSIONS AS DEFINED BY THE NATIONAL BUREAU OF ECONOMIC RESEARCH. SOURCES: DEPARTMENT OF COMMERCE AND BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM. 193 81 This pattern held true in 1981 as well. In the last half of 1980 the money stock, as measured by Ml, rose at a 12.9 percent annual rate, a postwar record. Then, in the first quarter of 1981, the rate of growth in nominal gross national product (GNP) leaped by 19.2 percent, with growth in real output rising 8.6 percent. Money growth in the first two quarters of 1981 receded to a 6.9 percent rate, followed by a further reduction to 3 percent in the final two quarters. These decelerations in monetary growth led to a sharp decline in real output in the final quarter of the year. Continued business investment demand and high inflation in early 1981 sustained a rise in short-term interest rates, which peaked during the spring. Long-term interest rates peaked in early fall. These increases had their most adverse effects on the most creditsensitive industries—housing, consumer durables, and, to a lesser extent, business investment. The sharp reduction in money growth in the summer and fall led to a sharp decline in total output and interest rates. By December 1981, short-term interest rates were about 5 to 6 percentage points lower than in December 1980, while longterm interest rates were about one point higher. The average level of real GNP in 1981 was 1.9 percent higher than in 1980, but this increase for the year as a whole masked a pattern of declining output for two of the final three quarters. After growing at an unsustainable rate in the first quarter, the economy remained on a plateau for a time: a modest annual rate of decline of 1.6 percent in the second quarter and an increase of 1.4 percent in the third. In the final quarter the economy dropped sharply, with real GNP declining at an annual rate of 5.2 percent. The unemployment rate at the close of 1980 had been 7.3 percent, and it averaged around 7.4 percent through the first 9 months of 1981. But the weakening of the economy in the last quarter brought with it a rapid increase in the unemployment rate to 8.8 percent in December. Civilian employment grew slowly, from 99.6 million at year-end 1980 to over 101 million by May 1981, before dipping to 99.6 million at year-end 1981. Meanwhile, however, the deceleration in monetary growth began to produce declining inflation in 1981. The growth of Ml slowed to 4.9 percent during 1981, compared to an average growth rate of 7.8 percent over the previous 4 years. The GNP deflator advanced 8.6 percent through 1981, down from 9.8 percent during the four quarters of 1980, while the consumer and producer price indexes slowed more sharply. The producer price index for finished goods, which had risen 12.4 percent during 1980, rose at a 10.1 percent annual rate in the first two quarters of 1981 and at only a 4.4 percent rate in the last two quarters. 194 TABLE 8-1.—Performance in 1981 compared to January 15 projections Projected Item Actual Projected Actual Fourth quarter to fourth quarter Year to year Percent change: 0.9 Real GNP Consumer price indexl 12,5 1.9 10.2 1.7 12.6 0.7 9.4 Fourth quarter Year Level: 7.8 Unemployment rate (percent) 7.6 7.7 8.3 1 Consumer price index for urban wage earners and clerical workers. Sources: Actual data: Department of Commerce (Bureau of Economic Analysis) and Department of Labor (Bureau of Labor Statistics); projected data.- Office of Management and Budget (January 15, 1981). As shown in Table 8-1, the average performance of the economy in 1981 was better than had been predicted by the prior Administration. Actual real GNP in 1981 was 1.9 percent higher than in 1980, compared with a 0.9 percent growth rate forecast by the prior Administration. Consumer prices in 1981 exceeded their 1980 level by 10,2 percent, but this was significantly less than the 12.5 percent rate of inflation that had been forecast. In addition, the average rate of unemployment for 1981 turned out to be 0.2 percentage point less than had been forecast. However, real growth from the fourth quarter of 1980 to the fourth quarter of 1981 was lower than forecast, and unemployment in the fourth quarter of 1981 was greater than forecast as a result of the decline in output and employment late in the year. Although the Administration was able to effect some reductions in the growth of Federal spending in fiscal 1981, such spending as a share of GNP continued to rise. In nominal terms, Federal spending growth (including off-budget outlays) in 1981 slowed to 14.8 percent, from 17.4 percent in fiscal 1980, one of the largest peacetime increases in history. The real Federal tax burden was increased by the scheduled payroll tax increase on January 1, 1981, and the tax burden drifted upward during most of the year as inflation contributed to higher nominal incomes and rising marginal tax rates. The Economic Recovery Tax Act of 1981, however, provided an initial 5 percent cut in marginal tax rates for individuals, effective October 1. This had the effect of reducing marginal tax rates by only 1*/4 percent over the full 1981 tax year, not large enough to prevent a substantial increase in the total tax burden. For business, however, many of the changes in the tax code were retroactive to the beginning of the year. Since tax revenues as a share of GNP will decline by about 2 percentage points over the next few years and budget outlays will not yet have been reduced as much, large Federal budget deficits can be expected unless the growth of Federal spending is reined in even 195 more. The possibility of large deficits received much attention in the financial markets during 1981. The concern was that these deficits might engender an acceleration of inflation and higher interest rates. Fear of inflation kept long-term interest rates at high levels, although some decline did occur in the final months of the year. In the climate of high interest rates, investments in money-market funds provided savers with some of the highest yields in history. Many thrift institutions were not able to compete successfully for deposits, and the resulting outflow of funds contributed to a reduction in the availability of mortgages and construction financing. Mortgage rates on new homes remained above 15 percent throughout 1981. In consequence, home sales and housing starts were among their postwar lows. The motor vehicle industry also suffered from the high cost of credit. MAJOR SECTORS OF AGGREGATE DEMAND Mirroring the small expansion in real output during 1981 was the slow expansion in the real growth of consumer expenditures (1.2 percent), business fixed investment (1.4 percent), and total government purchases (1.2 percent). Purchases of consumer durables declined 4.4 percent, partially offsetting modest gains in purchases of other consumer items. As shown in Table 8-2, residential construction decreased by a dramatic 21.9 percent. Net exports also declined last year, as real exports declined 1.0 percent while imports increased 9.5 percent. TABLE 8-2.—Growth in major components of real gross national product, 1977-81 [Change, fourth quarter to fourth quarter] Component 1977 1978 1979 1980 198 11 Percent change: Real gross national product .... . . Personal consumption expenditures Business fixed investment Residential fixed investment Government purchases of goods and services 58 5.3 1.7 =0.3 0,7 50 135 125 3.6 48 90 20 29 -61 1.9 .6 =-43 -129 12 14 219 1.2 3.3 2.1 1.7 4.1 .1 59 44 1.7 -.3 5.9 -55 2.3 12.6 -11.3 11.7 5.0 2.7 Federal State and local Real domestic final sales 2 -0 1.6 -1.3 1.6 6.6 -2.0 4 Change in billions of dollars: Inventory investment Net exports of goods and services 1 2 . . . . . Preliminary. GNP excluding change in business inventories and net exports of goods and services. Source: Department of Commerce, Bureau of Economic Analysis. 196 =6.5 6.3 15.7 -118 PERSONAL CONSUMPTION EXPENDITURES Although the rising costs of borrowing discouraged purchases of consumer durables, growth in personal income was sufficient to sustain purchases of nondurables and services. The latter categories managed to show a modest increase for the year. But durables purchases (approximately 20 percent of which are expenditures on new autos) exhibited sharp swings from quarter to quarter, with the fourth quarter level 4.4 percent below the same quarter in 1980. The slow pace of durables purchases ensured a modest improvement in the consumer debt burden, as the ratio of consumer installment credit to personal income declined from its recent peak in May 1979 of 14.9 percent to 13.2 percent in November. The personal saving rate, after dropping one-half of a percentage point to 4.6 percent in the first quarter, recovered somewhat in the next two quarters and rose sharply to 6 percent in the final quarter of the year. Real expenditures on consumer durables declined for the third consecutive year. The pace of durables purchases had been stalled by the imposition of credit controls in the first half of 1980, but rebounded sharply in the last two quarters of 1980 and the first quarter of 1981. Then came the termination of rebates on auto sales and rapidly rising interest rates, resulting in a sharp 23.3 percent reduction in durables purchases at an annual rate in the second quarter. A moderation in interest rates in the third quarter, in conjunction with factory subsidized financing and further rebates, then helped to stimulate auto sales, allowing outlays for consumer durables to rise moderately. Although the fourth quarter saw a significant drop in interest rates, it was not enough to boost total durables purchases. The result was another steep decline in such purchases, this time at a 19.2 percent annual rate. At the beginning of 1981 new cars were being sold at an annual rate of about 10 million units, some of this relatively high volume being attributable to manufacturers' rebates. In the second quarter sales dropped to an annual rate of 7.8 million units; they then rose to 9.1 million units in the third quarter, before falling to 7.4 million units in the final quarter. Sales of American cars accounted for about 73 percent of all U.S. car sales for the year. In order to defuse protectionist pressures in the United States, the Japanese government instituted an export restraint program, which limited Japanese car exports to the United States to 1.68 million units during its first year. Because of the weak U.S. market, however, the limit probably has not been binding. 197 RESIDENTIAL INVESTMENT Investment in residential structures during 1981 continued a decline that started in 1979. The decline was evident in the construction of both single-family homes and multiple units. By the fourth quarter of 1981, starts of new single-unit structures had declined 44.8 percent below their year-earlier level, and multiple-unit construction declined 34.5 percent. In the last quarter of 1981 the inventory of new private homes waiting to be sold was about eight times the monthly sales pace. During the latter half of the 1970s the inventory-sales ratio typically was less than that, approximately six times sales. The continued slow pace of residential construction was primarily due to tightness in the financial markets in which the housing industry competes for funds. Mortgage rates on new homes rose to over 18 percent in October, up from 15 percent at the beginning of the year. By year-end, however, the rate had fallen to 17 percent. Home purchase prices were essentially unchanged during 1981. Thus, there was a significant decrease in the real price of housing— that is, housing prices in relation to the general price level. In contrast the rapid increase in house prices from 1977 to 1980 had reflected rising expectations about inflation and a growing tendency to view real estate as a good hedge against inflation. BUSINESS FIXED INVESTMENT Real business fixed investment finished the year above the previous year's fourth quarter level. This fact, however, masks the underlying variations that occurred during the year. Business investment varied from quarter to quarter in the same direction as real GNP, but the percentage deviations were much larger. Real business investment rose at a 13.3 percent annual rate in the first quarter of 1981, remained relatively flat in the second and third quarters, and then fell 10.9 percent in the fourth quarter. Producers' durable equipment was responsible for most of the variation in business fixed investment, with fleet sales of cars and trucks accounting for a large part of this instability. The structures component of investment maintained a steady increase that began in the fourth quarter of 1980. Though investment in structures is less than half as large as investment in producer's durable equipment, its increase of 7.5 percent from the fourth quarter of 1980 to the fourth quarter of 1981 more than offset the decline in the latter, allowing a modest increase in total real business investment. 198 INVENTORY ACCUMULATION Inventory levels at the start of 1981 were lean. Real business inventory levels in the fourth quarter of 1980, after declining for four of the five previous quarters, were equivalent to 2.7 months of output. In the first quarter of 1981, real output rose to nearly match final sales so that the real level of inventories declined only $1.4 billion at an annual rate. In the second quarter inventory accumulation was led by a rise in new car inventories, and there was also some buildup in other stocks in the third quarter. The speed with which output declined in the fourth quarter prevented an excessive accumulation of stocks at year-end. NET EXPORTS Economic growth abroad was subdued during 1981, contributing to a small decline in real exports from the United States. In contrast to 1980, the volume of non-oil imports grew briskly during the year due in part to the steady appreciation of the dollar from the latter part of 1980 through August 1981. For the year as a whole, net exports (measured in 1972 dollars) slipped $7.7 billion below the level of 1980. Measured in current dollars, the merchandise trade deficit (NIPA basis) increased $4.2 billion from the $27.7 billion registered for 1980. Merchandise exports increased moderately in the first quarter and then declined to post a small gain for the year, while merchandise imports rose during most of the year. Growth in the value of agricultural exports was weak, as a strong U.S. dollar and better harvests abroad dampened foreign demand. The strong growth in the value of imports of nonpetroleum products was only partly offset by a drop in imports of petroleum and related products. Average net oil imports in the first three quarters of 1981 fell to their lowest level since 1972, partly as a result of reduced domestic consumption. That, in turn, was due primarily to higher oil prices. Net service inflows for 1981 increased $4.8 billion over 1980 to $55.8 billion. Almost all of this increase was due to a rise in net receipts of factor income. This continued strong performance on the service account produced an overall net export surplus for 1981 of $23.8 billion in current dollars. THE FARM ECONOMY Record large crops, sluggish demand for farm products, high interest rates, and a nearly constant tonnage of agricultural exports limited the recovery of farm incomes and created cash flow problems for some farmers during 1981. In nominal terms, farm exports totaled a 199 record $43 billion in 1981; however, the tonnage of farm exports for the year was about the same as in 1980. According to Department of Agriculture forecasts, net farm income for 1981 in current dollars will be approximately $23 billion. This figure is about $3 billion higher than the comparable income figure for 1980, but approximately $10 billion lower than the total for 1979, which was a prosperous year for U.S. farmers. For 1981, real net farm income is forecast to exceed the 1980 total by about 4 percent. The value of large crop inventories, which is reflected in the 1981 income figures, accounts for part of the increase. Large grain stocks and weakness in the demand for certain livestock and crop products are expected to exert downward pressure on farm prices and net farm incomes during much of the first half of 1982, but the expected recovery of the economy should expand the demand for farm products during the final two quarters of 1982. Also, farm price support payments provided under the Agriculture and Food Act of 1981 will supplement the incomes of farmers during 1982. The statistics on aggregate farm income mask how different groups of farmers fared during 1981. Farmers carrying small amounts of debt experienced a less severe cash flow squeeze than highly leveraged operators. Many in the latter group had cash flow problems because of high interest rates and lower commodity prices. However, some farmers who experienced cash flow problems used equity accumulated from rapid appreciation of their farmland to refinance their operations. As usual, income earned by farmers from off-farm sources, which recently has comprised over 60 percent of the average farmer's income and a substantially larger share of the income of small farmers, supplemented farm incomes. Food prices generally exerted a moderating influence on the consumer price index during 1981, although two minor supply shocks produced temporary increases in food prices. The first was a midJanuary freeze in Florida, which pushed up prices for citrus products and tomatoes last winter and spring. The second was a reduction in meat supplies during the summer. Food prices for the fourth quarter of 1981 were 5.0 percent higher than in the fourth quarter of 1980. This increase was 5.2 percentage points less than the comparable year earlier figure. The moderate increases in food prices largely reflected supply phenomena. Supplies of many raw food products, including poultry, dairy products, sugar, and grain were abundant during 1981, as were beef supplies during the first half of the year. Data available so far suggest that marketing costs, which account for about two-thirds of 200 every dollar spent for food, were about 9 percent higher for the fourth quarter of 1981 than a year earlier. LABOR MARKET DEVELOPMENTS Changes in employment during 1981 lagged slightly behind changes in real output. Total civilian employment during the year reached a peak of 101 million workers in May before declining to 99.6 million at year-end. The ratio of civilian employment to the total noninstitutional working-age population also declined in the last half of the year. Declines in employment during the year were initially limited to interest-sensitive sectors, such as motor vehicles and residential construction and their suppliers. By the end of 1981, however, the decline had spread to other manufacturing industries as well. The overall unemployment rate, which was 7.4 percent at the beginning of last year, fluctuated between 7.2 and 7.6 through September, then rose sharply to 8.8 percent in December. TABLE 8-3.—Labor market developments, 1977-81 1977 IV Component 1978 IV 1979 IV 1980 IV Percent change from year earlier 4.5 Increase in civilian employment (16 years and over) 3.8 2.3 1981 IV 1 -0.2 0.6 .2 2.8 -8.9 Males 20 years and over . Females 20 years and over . Both sexes 16-19 years.. 3.5 5.4 8.0 2.7 5.6 2.7 1.5 4.0 -.8 -.6 1.6 -6.6 White Black and other . 4.4 5.2 3.3 7.3 2.2 3.3 -.1 -.6 .6 .1 Percent 2 Unemployment rate (16 years and over) 3 6.6 5.9 6.0 7.5 8.3 Males 20 years and over Females 20 years and over Both sexes 16-19 years 4.8 6.7 16.6 4.1 5.8 16.3 4.4 5.7 16.2 6.3 6.7 18.2 7.2 7.2 21.1 White Black and other 5.7 13.2 5.1 11.5 5.2 11.2 6.6 13.8 7.3 15.4 62.6 63.5 63.8 63.7 63.8 79.9 48.6 56.7 79.9 50.1 58.2 79.6 51.0 57.9 79.3 51.5 56.3 78.9 52.3 54.6 62.8 61.2 63.6 62.4 64.0 62.3 64.0 61.9 64.2 61.5 Participation rate (16 years and over)4 Males 20 years and over Females 20 years and over Both sexes 16-19 years White Black and other f 1 Changes for 1978 IV adjusted for the increase of about 250,000 in employment and labor force in January 1978 resulting from changes in the sample and estimation procedures introduced into the household survey. 2 Seasonally adjusted. 3 Unemployment as percent of civilian labor force. 4 Civilian labor force as percent of civilian noninstitutional population. Source: Department of Labor, Bureau of Labor Statistics. As Table 8-3 indicates, employment growth during 1981 varied considerably by demographic group. Adult female employment rose by 2.8 percent, while adult male employment rose by 0.2 percent; teenage employment fell by a dramatic 8.9 percent. The unemploy- 201 ment rate for adult men, who tend to work in disproportionate numbers in cyclically sensitive industries, rose from 6.1 percent in December 1980 to 7.9 percent in December 1981. The unemployment rate for adult women, who work in industries that exhibit more cyclical stability, rose 0.7 of a point, from 6.7 percent to 7.4 percent, during the same period. The teenage unemployment rate increased, from 17.8 percent to 21.5 percent, over the year. The age-sex composition of the unemployed depends on the unemployment rates of different demographic groups and on their share of the total labor force. Teenagers, for instance, have relatively high unemployment rates, but in December 1981 they comprised only 7.9 percent of the labor force. Adult men have relatively low unemployment rates, but in 1981 they constituted 52.8 percent of the labor force. Thus, 19.4 percent of the unemployed in December 1981 were teenagers, 47.5 percent were adult men, and 33.2 percent were adult women. The unemployment insurance system is designed to moderate the financial burden placed on experienced workers who lose their jobs by providing income until they can find employment. However, the system does not cover recent entrants to the labor market or workers who quit their jobs voluntarily. In December 1981 the number of individuals receiving unemployment compensation was 41 percent of the total unemployed. This was partly because 44.2 percent of the unemployed had left their jobs voluntarily or had no recent work experience. Over two-thirds of the people who had lost their jobs involuntarily were receiving unemployment benefits. The percentage of take-home pay replaced by unemployment benefits varies widely according to an individual's weekly earnings, marginal tax rate, and State of residence. Replacement rates are generally higher for lower paid workers than for higher paid workers. However, several studies suggest that the average replacement rate is about one-half of take-home pay. A combination of cyclical and secular trends produced disparate changes in labor force participation rates during 1981. Labor force participation rates continued to increase for adult women, and by the fourth quarter 52.3 percent of all women 20 or older were in the civilian labor market, an increase of 0.8 of a percentage point over 1980. Meanwhile, the labor force participation rates of adult men continued their long-term downward trend. The ratio of civilian employment to the total working-age population varied inversely with the unemployment rate. The number of employed rose from 58.3 percent of the noninstitutional population in December 1980 to 58.8 percent in May 1981, but fell to 57.5 percent in December. Although this percentage was less than the last peak of 59.3 percent, reached in the fourth quarter of 1979, it exceeded the previous 1973 peak (Chart 8-2). 202 Chart 8-2 Employment Ratio and Unemployment Rate PERCENT PERCENT 1961 1 2 EMPLOYMENT AS PERCENT OF NONINSTITUTIONAL POPULATION. UNEMPLOYMENT AS PERCENT OF CIVILIAN LABOR FORCE. NOTE. —DATA RELATE TO PERSONS 16 YEARS OF AGE AND OVER; SEASONALLY ADJUSTED QUARTERLY AVERAGES. SOURCE: DEPARTMENT OF LABOR. WAGES, PRICES, AND PRODUCTIVITY Wage increases showed moderation in 1981. As indicated in Table 8-4, the average hourly earnings index, compensation per hour, and wages set in larger collective bargains slowed significantly, while the employment cost index increased at about the same rate as in 1980. TABLE 8-4.—Measures of compensation, 1978-81 [Percent change, fourth quarter to fourth quarter, except as noted] Measure 1978 2 1979 1980 1981 * 77 87 90 3 91 80 76 90 85 109 80 3 99 88 Average hourly earnings index4 84 80 96 83 Compensation per hour5 90 99 102 93 Wage changes in large collective bargaining agreements (total effective adjustment) 8.2 9.1 9.9 9.1 Employment cost index Union Nonunion 1 3 Preliminary. Data are for wages and salaries of all private nonfarm workers. Changes are from third quarter to third quarter. 4 Data are not seasonally adjusted. 5 Data are for private business sector, all employees. Source: Department of Commerce (Bureau of Economic Analysis), Department of Labor (Bureau of Labor Statistics), and Council of Economic Advisers. 2 3 203 Labor productivity declined by 0.5 percent during 1981 (Table 85). This was the fourth successive year of little change in productivity. Chapter 5 has discussed various reasons for the disappointing trends in productivity over the last decade. In addition, during the last 3 years, total output growth has been low, which has also tended to depress productivity performance. The near-zero productivity result meant that unit labor costs, the largest single cost in production, had to increase roughly one-for-one with total compensation last year. TABLE 8-5.—Changes in productivity and unit labor costs, 1977-81 [Percent change, fourth quarter to fourth quarter] 1977 Item 1978 1979 1980 1981 1 Output per hour 21 -05 -06 02 -05 Unit labor costs 5.2 9.5 10.5 9.9 9.8 1 Preliminary. Note.—Data relate to private business sector, all employees. Sources: Department of Labor (Bureau of Labor Statistics) and Council of Economic Advisers. During a year in which unit labor costs rose by 9.8 percent, prices could not rise at a substantially lower rate without sharply squeezing profits. The GNP deflator rose by 8.6 percent during 1981, somewhat lower than the 9.8 percent increase experienced during 1980 (Table 8-6). TABLE 8-6.—Measures of price change, 1977-81 [Percent change, fourth quarter to fourth quarter] Item 1977 1978 1979 1980 1981 » Implicit price deflators.-2 6.1 59 5.7 Gross national product Personal consumption expendituresPrivate nonfarm business output 8.5 78 8.3 8.1 95 8.3 9.8 101 100 86 78 93 Consumer prices: CPI-U, X-l 6.2 7.8 106 108 88 CPI-U 6.6 9.0 12.7 126 96 64 82 89 6.1 175 75 134 7.5 73 365 198 80 135 189 178 98 52 126 119 92 71 88 128 124 72 7.7 110 64 11.1 76 569 94 83 292 18 152 76 Farm value of food Energy3 Home purchase and finance4 All other Producer prices of finished goods .. Food Energy All other 74 80 11 1 1 Preliminary. Seasonally adjusted data. Includes only prices for direct consumer purchases of energy for the home and for motor vehicles. 4 Consists of home purchase and financing, taxes, and insurance on owner-occupied homes. 2 3 Sources: Department of Agriculture, Department of Commerce (Bureau of Economic Analysis), and Department of Labor (Bureau of Labor Statistics). 204 The deflator for personal consumption expenditures rose only 7.8 percent last year, down significantly from the year before. Inflation, as measured by the consumer price index for urban workers (CPI-U), declined even more, from 12.6 percent during 1980 to 9.6 percent during 1981. The CPI-U is widely recognized as having an upward bias in a period of rising mortgage interest rates, due to its treatment of owner-occupied housing. Some of the components that are used to measure the cost of homeownership—finance, insurance, and taxes—jumped quite sharply during much of 1981. An alternative measure of consumer prices known as "CPI-U, X-l" more appropriately measures the consumer cost of owner-occupied homes. It advanced only 8.8 percent. In late 1981 the Bureau of Labor Statistics announced plans to incorporate this alternative method of measuring the rise or fall in homeowner costs into the index. As shown in Table 8-7, real compensation per hour, computed on the basis of either the deflator for personal consumption expenditures or the alternative CPI measure, rose in 1981 after declining for 2 straight years. TABLE 8-7.—Alternative measures of changes in real earnings per hour, 1979-81 [Percent change, fourth quarter to fourth quarter] Item 1979 1980 1981 1 -4.2 -2.4 -2.1 -2.6 -1.1 -1.1 -25 -.7 -21 -.6 Average hourly earnings index: Deflated by: CPI-U.. CPI-U, X-l Fixed-weight price index for personal consumption expenditures (PCE). -.9 -.5 .2 Compensation per hour: 2 Deflated by: CPI-U CPI-U, X-l Fixed-weight price index for PCE 1 2 _ 4 _ 4 _ 2 .4 1 1 Preliminary. Data are for the private nonfarm business sector, all employees. Sources: Department of Commerce (Bureau of Economic Analysis) and Department of Labor (Bureau of Labor Statistics). CREDIT MARKETS During the first three quarters of 1981, total funds raised in U.S. credit markets rebounded from the depressed levels of a year earlier, when credit controls and the recession restrained borrowing. Nevertheless, borrowing by all private domestic nonfinancial sectors remained well below the pace reached in 1979. High interest rates discouraged borrowing for purchases of consumer durables and housing and resulted in a rate of household debt accumulation, although up from 1980, only about three quarters of that experienced in 1979. Borrowing by the nonfinancial business sector grew only modestly 205 358-691 0 - 8 2 - 1 4 QL3 during the first three quarters of 1981. This sector relied heavily on short-term financing, as extremely high and rising long-term bond rates restrained net bond issues to only half the total of the previous year. As a result, bank loans to businesses and the volume of outstanding commercial paper surged. Borrowing by State and local governments declined modestly in 1981, as growth of expenditures slowed relative to tax receipts. However, Federal Government borrowing was up from 1980, and at more than double the rate of 1979. Federal borrowing totaled $79.3 billion, of which approximately $55.6 billion was used to finance expenditures on goods and services or transfer payments, while the rest was used for relending. Federally guaranteed loans declined in 1981, but borrowing by federally sponsored enterprises grew by almost two-thirds. Overall Federal participation in the credit markets rose to approximately the level of the previous peak in 1976. INTEREST RATES AND MONETARY DEVELOPMENTS One of the four key elements of the Administration's program is support for a policy of continued gradual reductions in the rate of monetary growth to bring down inflation. This restraint was more important to the 1981 economy than other features of the Administration's program, which are aimed at encouraging long-term growth. From the fourth quarter of 1979 to the fourth quarter of 1980, Ml (currency plus checkable deposits) grew at a 7.3 percent annual rate. The Administration assumes a gradual but steady reduction in the growth of money to one-half that rate by 1986. After a period of adjustment, sustained declines in inflation and nominal interest rates are expected. Federal Reserve policy in 1981 did produce a substantial reduction in monetary growth (as measured by Ml) on a fourth-quarter to fourth-quarter basis—from 7.3 percent during 1980 to 4.9 percent in 1981. Nonetheless, interest rates remained high on average. The yield on 3-month Treasury bills, which had averaged 15.5 percent in December 1980, fell in early 1981, then rose again and peaked at 16.3 percent in May 1981. The prime rate charged by commercial banks declined from a peak of 21.5 percent in January 1981 to 17 percent in April 1981 before rising again to 20.5 percent by the end of May. By year-end, the prime rate had declined to 15.75 percent. Given that prices were advancing at somewhat less than double-digit rates, real short-term interest rates (that is, adjusted for inflation) were unusually high during most of 1981 (Chart 8-3). 206 Chart 8-3 Interest Rates in 1981 PERCENT PER ANNUM 22 20 18 16 14 30-YEAR GOVERNMENT BONDS 12 (CONSTANT MATURITIES) 10 _ I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I II I I I I I I I I I I I I I I I I I I > JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC 1981 SOURCES: DEPARTMENT OF THE TREASURY AND BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM. When allowance is made for the effects of taxes on interest rates, the high average level of short-term rates becomes more understandable. In an environment of high expected inflation, interest rates tend to rise sufficiently to compensate lenders for the anticipated loss in purchasing power of their money. Under the U.S. tax system, interest payments are deductible, and interest receipts are taxed as ordinary income. We would expect market interest rates to exceed a given real after-tax interest rate by .more than the expected inflation. For example, if the real after-tax interest rate is 3 percent and the applicable income tax rate is 30 percent, an expected inflation rate of 10 percent would tend to produce a nominal interest rate of 19 percent—not very different from the peaks in short-term rates actually experienced in 1981. Viewed in this light, the question is not why short-term interest rates were so high in 1981, but why they were so low in the 1970s. At least a partial answer to this question is that in the 1970s low State usury and Regulation Q, ceilings prevented the effects of expected inflation from being fully reflected in interest rates, while the inflation that actually occurred was probably more than had been anticipated. Also, the oil price shocks of the 1970s, coupled with in- 207 creasing regulatory and tax burdens, may have reduced the expected real return on capital. With the change in the investment outlook brought about by the Administration's program, this negative influence on real interest rates began to disappear. However, as the Federal Reserve's program of bringing down the rate of monetary growth succeeds in reducing current and expected rates of inflation, nominal interest rates will fall somewhat more than the expected rate of inflation, even as real after-tax interest rates rise somewhat. INTERNATIONAL CAPITAL FLOWS High real returns on U.S. securities helped to attract foreign investment to the United States during 1981. The dollar's foreign exchange value rose 23 percent on a trade-weighted average basis from January through August before falling back slightly through December. Net foreign private purchases of U.S. securities during the first three quarters of 1981 totaled $8.3 billion, an increase of 68 percent over the same period a year earlier. A large part of this increase was in purchases of U.S. stocks, possibly suggesting confidence abroad in the medium-term potential of U.S. industry and the Administration's program. Direct U.S. investment abroad in the first three quarters of 1981 slowed somewhat from its 1980 rate, making 1981 the second year of decline. The drop was due in part to sluggish foreign economic activity. In contrast, foreign direct investment in the United States remained strong during 1981 and may have approached the record levels of 1979. Monetary flows associated with official transactions between the United States and other industrialized countries swung from a moderate net inflow in late 1980 to a substantial net outflow in the first three quarters of 1981. These net outflows primarily reflected sales of dollar-denominated assets by foreign central banks (mainly U.S. Treasury securities) related to intervention in foreign exchange markets. Changes in official U.S. reserve assets moved from net acquisitions of foreign currencies in late 1980 and the first quarter of 1981 to negligible acquisitions from the second quarter on. This reflected the decision by this Administration to adopt a policy of nonintervention in foreign exchange markets, except in conditions of severe disorder. (The issues involved in this policy are discussed in Chapter 7.) Net capital flows between the United States and the Organization of Petroleum Exporting Countries (OPEC) recently have been quite stable relative to flows between the United States and the industrialized countries. The capital movements between the OPEC countries and the United States have been net inflows since early 1979 and generally have taken the form of investments in U.S. Treas- 208 ury securities, although investments in real estate and energy-related industries have risen during the past year. THRIFT INSTITUTIONS High interest rates and regulatory restrictions had an adverse effect on thrift institutions in 1981. From November 1980 to November 1981, the net worth of thrifts dropped over $5.7 billion, or approximately 13 percent. Net new deposits also declined. In response to the plight of the thrift institutions, the Congress included in the Economic Recovery Tax Act a provision authorizing those institutions, as well as commercial banks, to issue All-Savers Certificates. The certificates were given tax-exempt status so as to provide thrifts and banks with a lower cost of funds. From October to December, the first 3 months of issuance, thrift institutions issued approximately $24 billion in certificates. Their impact on the net deposit inflows of the thrifts is in some doubt, however, since the availability of the certificates caused some savers to transfer funds from other thrift accounts, such as passbook savings, 6-month moneymarket certificates, and small savers' certificates. Meanwhile, delinquent loans rose and liquidity ratios for insured savings and loans deteriorated. The delinquent loan ratio—the dollar amount of mortgage loans and contracts delinquent 60 days or more as a percentage of total mortgages and contracts held at the end of each month—increased steadily last year. The ratio rose from just over 1 percent in late 1980 to almost P/2 percent in late 1981. The liquidity ratio—cash and other liquid assets as a percent of savings deposits plus loans payable in a year or less—declined from almost 9 percent to about 8.5 percent in late 1981. The deterioration of these ratios was not surprising in light of historically high inflation and interest rates and the weakness of the economy in the past couple of years. The financial condition of thrift institutions can be expected to improve substantially, however, as inflation expectations and interest rates fall and financial asset prices rise. PROSPECTS FOR 1982 AND 1983 The current recession is expected to end early in 1982, followed by a resumption of growth by mid-year. The moderating pattern of price increases which began last year should become more generalized and significant this year. With money growth expected to be moderate, the extent of the deceleration of inflation will become the critical factor in sustaining economic recovery beyond 1982. Apart from the very high rate of expected inflation reflected in current in- 209 terest rates, the economy is generally free of impediments to expansion. The proportion of employed working-age adults will turn upward by this summer, reversing the general decline that began in 1979. Even at the expected low point of the employment ratio this spring, the proportion of people with jobs will be significantly higher than at the trough of all past recessions, except the very short 1980 contraction. The strong economic recovery this year and next is expected to expand civilian employment to over 103.5 million for 1983, well above the 98.8 million employed in 1979 before output declined. The key areas of rebound in the economy this year are expected to be consumer goods, housing, autos, and defense (Table 8-8). The principal areas that are anticipated to lead the expansion next year are business investment, inventories (including a rising trend of defense work in progress), and a further acceleration in defense deliveries. TABLE 8-8.—Economic outlook for 1982 Forecast range 1982 1981 » Item Growth, fourth quarter to fourth quarter (percent): Real gross national product . . . . Personal consumption expenditures Nonresidential fixed investment Residential investment Federal purchases State and local purchases . . . . . . . .... 0.7 12 14 -219 66 -20 . GNP implicit price deflator 86 Compensation per hour2 9.3 Output per hour2 3.0 2Vfe BVz 24 -2 — IVfe to 31/2 to 7V2 to 27 to -1 to —¥2 7 to 7V2 8 to 9 _ 5 1 tO 1V2 83 .9 1 to 1V2 Level, fourth quarter:3 Unemployment rate (percent) Housing starts (millions of units)4 84 1 Preliminary. Private business, all employees. Seasonally adjusted. 4 Annual rates. 2 3 Sources: Department of Commerce (Bureau of Economic Analysis), Department of Labor (Bureau of Labor Statistics), and Council of Economic Advisers. The decline in inflation, which has so far been most evident in the consumer price index and in producer prices, will influence trends in wages as 1982 progresses. But the expected 1 to l*/2 percentage point slowdown of inflation in product prices will be only slightly less than the slowdown of labor costs. Therefore, the currently narrow margin of corporate profits is likely to recover only modestly during the year. The unemployment rate is expected to reach the vicinity of 9 percent this spring until growth strengthens in the summer. Thereafter, the rapid pace of expansion should pull the unemployment rate down between one-quarter and one-half of a percentage point a quarter. 210 The growth in household consumption was restrained last year by high interest rates as well as by modest income growth. By the last quarter of 1981, consumption was approximately 1 percent higher in real terms than a year earlier, and new auto sales had fallen to an annual rate of 7.4 million. The decline in interest rates that began last fall, and improvements in household financial positions due to the reduced consumer debt burden and the first step of the personal tax cut, should lead to increased consumption early this year. The second step of the tax cut and the scheduled step-up in social security benefits will raise household disposable income roughly 2 percent this summer. It is difficult to predict how much of this increase will be allocated to saving or consumption. If between one-quarter and one-half of it is saved and the remainder is spent, the addition to the growth rate of consumption in the second half of this year would be about 3 percent at an annual rate. A large share of this would be expected to be used for the purchase of durables, whose annual growth rate in the second half is projected to approach 10 percent. The recent improvement in early indicators of housing activity presages a rapid recovery that should be apparent by spring and proceed through the year. In 1980 the decline in housing early in the year was quickly reversed, and the ensuing recovery was quite rapid. Though the second reversal in the housing industry in as many years has forced some builders out of business, a rapid expansion this year is still possible. The necessary capital equipment remains, and additions to the stock of construction equipment and tools can be made rapidly. Though the supply of unsold homes relative to monthly sales is large, the absolute number of available new homes is not. Hence, rising sales will quickly generate faster building activity. While housing starts for 1982 as a whole may only exceed last year's by 10 percent, the increase during the year could exceed 50 percent. This would raise the pace of new housing starts from about 900,000 at an annual rate for the last quarter of 1981 to the vicinity of 1.5 million by the end of this year. Business fixed investment has been maintained at a reasonably high level during the past year. The stimulus of the Accelerated Cost Recovery System depreciation package should make itself felt when recovery begins. Since businesses have not allowed inventories to build by large amounts, stepped-up sales this spring and summer will translate quite directly into rising output. The Administration's program of strengthening U.S. defense capabilities will continue to be reflected in the overall economy as 1982 progresses. Deliveries of defense goods and services in real terms will 211 rise about 8l/2 percent during this fiscal year, about twice the increase in 1981. The rise in procurement of military hardware will be steeper. It will also generate stepped-up economic activity prior to deliveries. Defense industries are beginning to build up inventories of work in progress as components and materials move through the stages of fabrication toward delivery to the Department of Defense. Though this step-up has not yet become particularly evident in statistics of work in progress, this type of inventory accumulation will be strengthened in coming quarters. Nondefense Federal purchases increased 10.7 percent in real terms during 1981 but may shrink as much as 9 percent during 1982 as the Administration's fiscal 1982 budget cuts take effect. The much larger volume of purchases by State and local governments is also expected to decline slightly in real terms. Taken in aggregate, the budgets of State and local units of government have shown small operating surpluses in the past 2 years. Increased revenue from economic growth is expected to more than offset declines in Federal grants, permitting a modest increase in nominal spending by State and local units. Earlier parts of this Report have emphasized the relative size of the prospective Federal deficits in comparison to GNP. While it is helpful to standardize deficits against the size of the economy, this relation gives little feel for the distribution through the economy of the flow of government securities. These are purchased by banking, other corporate, household, and foreign savers, who are also filling their portfolios with privately issued notes for everything from consumer loans to mortgages to loans for business capital projects. It is anticipated that each of these groups will not be called upon to raise their holdings of U.S. Government securities disproportionately. Thus, household purchases of U.S. securities should be about one-quarter of the volume of personal saving, which is near historic rates, and domestic financial institution purchases should be near 1.5 percent of GNP, also close to historic experience. While foreign investors also can be expected to take some of the securities issued, these two domestic sectors likely will account for most U.S. security purchases. The net export balance of the United States is expected to be boosted by rising exports of goods and services as the economic recovery abroad strengthens but depressed by a large expansion of imports as growth picks up here later this year. Continued market adjustments to last year's appreciation of the dollar may also depress net exports. Depending on the timing of these effects, net exports of the United States may decline from a surplus of $23.8 billion last year to an approximate balance this year. Because the United States earns much more abroad through the export of services than it 212 spends on services imports, our net export position is stronger than the frequently cited trade balance on merchandise alone would suggest. That balance will move to a sizable negative position by yearend. With a continuation of monetary restraint and further significant downward adjustments in inflationary expectations, 1982 and 1983 should become the first of several years of prosperous growth and declining inflation occurring simultaneously. While business investment and defense will continue to expand more rapidly than other sectors, the total growth in the economy should be sufficient to accommodate further sizable increases in the output of consumer durables, motor vehicles, and housing. PROSPECTS BEYOND 1983 Continuing deceleration in money growth, fairly rapid adaptation of expectations to lower inflation, and growth aided by tax policies that are weighted toward investment are expected to be characteristic of the mid1980s. The combination of growth-oriented fiscal policy and antiinflationary monetary policy should mean substantial progress toward the economic goals embodied in the Full Employment and Balanced Growth Act of 1978. The general objectives of this act—and those of the Administration—are to achieve full employment, growth in productivity, price stability, and a reduced share of governmental spending in the Nation's output. The act states clearly that ultimate price stability means eliminating inflation altogether. Although it does not define full employment as any specific unemployment rate, the act establishes as a national goal "the fulfillment of the right to full opportunities for useful paid employment at fair rates of compensation of all individuals able, willing, and seeking to work." It places emphasis on encouraging capital formation and relying on the private sector to meet the act's objectives of full employment, growth in productivity, and price stability. It requires an annual Investment Policy Report, which is provided in Chapters 4 and 5 of this volume. In addition, the act responds to the widespread desire for reduced governmental intervention by calling for steady reductions in the share of the Nation's output accounted for by governmental spending, and for the ultimate reduction of Federal outlays to 20 percent of GNP. To provide a focus for the government in its effort to achieve these general objectives, the Full Employment and Balanced Growth Act requires that the Administration set annual numerical goals for key indicators over a 5-year horizon leading toward a group of interim goals set forth by the Congress. Table 8-9 responds to this require- 213 ment, based on the economic outlook for 1982 and 1983, and the longer term economic projections included in the fiscal 1983 budget. The act sets an interim goal for Federal outlays equal to 21 percent of GNP for 1981, and interim goals of a 4 percent unemployment rate and a 3 percent inflation rate for 1983. However, according to the act, the President may, if he deems it necessary, recommend modification of the timetable for achievement of the interim and final goals for unemployment, inflation, and Federal outlays as a share of GNP. The prior Administration extended the timetable for achieving all three goals beyond its 5-year planning horizon. TABLE 8-9.—Economic Projections, 1982-1987 Item | 1985 1986 106.2 108.6 110.9 7.9 7.1 6.4 5.8 5.3 22.1 21.3 21.0 20.4 19.7 1982 1983 100.9 103.8 8.9 23.5 | 1984 1987 Level Employment (millions) * Unemployment rate (percent) Federal outlays as percent of GNP (fiscal year basis) 113.0 Percent change, fourth quarter to fourth quarter Consumer prices 6.6 5.1 4.7 4.6 4.6 4.4 Real GNP 3.0 5.2 4.9 4.6 4.3 4.3 Real disposable income 4.3 4.1 2.7 4.6 4.0 4.0 .6 2.3 2.7 2.6 2.6 2.6 Productivity 2 1 Includes 1980 census benchmark. 2 Real GNP per hour worked. Source: Council of Economic Advisers. Economic projections consistent with this Administration's policies indicate attainment of the interim and final goals for Federal outlays as a share of GNP within a 5-year horizon. The interim goal for Federal outlays as a share of GNP is expected to be met by 1985. The act's final goal of a 20 percent share of Federal outlays in GNP is anticipated to be achieved by 1987. Significant progress toward the interim goals for unemployment and inflation is also anticipated within this period. The economic expansion will reduce unemployment rates for significant subgroups of the labor force as well, including youth, women, minorities, handicapped persons, veterans, and middle-aged and older persons. The Council emphasizes two points about the setting of a timetable for reaching these goals and about targeting economic performance in general. First, as has been emphasized elsewhere in this Report, the speedy adaptation of inflationary expectations to the antiinflationary monetary regime set for the 1980s is of central importance in turning away from the rising inflation and unemployment of the last decade to an extended period of declining inflation with prosperous growth. However, as this Report points out—particularly 214 in Chapter 3—government efforts to intervene directly in wage and price setting in the private sector are essentially destabilizing and do not alter the longer term path of the economy. Second, the Federal Government cannot fully anticipate the course of the economy; neither can it direct economic outcomes precisely. In view of these limits, the annual goals should best be viewed as benchmarks of economic progress. 215 Appendix A REPORT TO THE PRESIDENT ON THE ACTIVITIES OF THE COUNCIL OF ECONOMIC ADVISERS DURING 1981 LETTER OF TRANSMITTAL COUNCIL OF ECONOMIC ADVISERS, Washington, D.C., December 31, 1981. MR. PRESIDENT: The Council of Economic Advisers submits this report on its activities during the calendar year 1981 in accordance with the requirements of the Congress, as set forth in section 10(d) of the Employment Act of 1946 as amended by the Full Employment and Balanced Growth Act of 1978. Sincerely, MURRAY L. WEIDENBAUM, Chairman JERRY L. JORDAN WILLIAM A. NISKANEN 219 Report to the President on the Activities of the Council of Economic Advisers during 1981 The Employment Act of 1946 (P.L. 304-79th Congress), as amended, provides the statutory base for the activities of the Council of Economic Advisers. The Council, through the Chairman, provides advice to the President on a wide range of domestic and international economic policy issues, assists in the preparation of the President's Economic Report to the Congress, and conducts analyses and studies on a wide range of economic issues in support of its primary mission. The membership of the Council of Economic Advisers changed early in 1981, following the inauguration of President Reagan. Murray L. Weidenbaum was designated Chairman of the Council on January 23, and was formally sworn in on February 27, 1981, replacing Charles L. Schultze, who returned to the Brookings Institution. The Chairman is on leave of absence from Washington University (St. Louis), where he holds the Mallinckrodt Distinguished University Professorship. William A. Niskanen and Jerry L. Jordan became Members on June 12, 1981, and July 14, 1981, respectively. They succeeded George C. Eads, who returned to the Rand Corporation, and Stephen G. Goldfeld, who returned to Princeton University. Mr. Niskanen is on leave of absence from a position as a professor at the University of California, Los Angeles. Mr. Jordan is on leave of absence from the University of New Mexico, where he was the Dean of the Anderson Schools of Management. 358-691 0 - 8 2 - 1 5 : Q L 3 221 Council Members and their dates of service are listed below: Position Name Edwin G. Nourse Leon H. Keyserling John D. Clark Roy Blough Robert C Turner Arthur F Burns Neil H Jacoby Walter W Stewart Raymond J Saulnier Joseph S Davis Paul W McCracken Karl Brandt Henry C Wallich Walter W Heller James Tobin. . . . Kermit Gordon.. .. Gardner Ackley . . . . . . . John P. Lewis Otto Eckstein . . . . Arthur M. Okun James S. Duesenberry Merton J. Peck Warren L Smith . . Paul W. McCracken Hendrik S. Houthakker Herbert Stein Ezra Solomon Marina v N. Whitman Gary L Seevers William J. Fellner Alan Greenspan Paul W. MacAvoy Burton G. Malkiel Charles L Schultze William D Nordhaus Lyle E. Gramley George C Eads Stephen M. Goldfeld Murray L. Weidenbaum William A. Niskanen Jerry L. Jordan . Chairman Vice Chairman Acting Chairman Chairman Member Vice Chairman Member Member Chairman Member Member Member Chairman Member Member Member Member Chairman Member Member Member Chairman Member Member Member Chairman Member Member Member Chairman Member Member Chairman Member Member Member Member Chairman Member Chairman Member Member Member Member Chairman Member Member Oath of office date August 9, 1946 August 9, 1946.. November 2 1949 May 10, 1950. August 9, 1946. May 10, 1950 June 29 1950 September 8 1952 March 19 1953 September 15 1953 December 2, 1953 April 4 1955 December 3, 1956 May 2, 1955 December 3, 1956 . November 1, 1958. May 7, 1959. January 29, 1961 , January 29, 1961 January 29, 1961 August 3, 1962.. November 16, 1964. May 17, 1963. September 2, 1964. November 16, 1964. February 15, 1968. February 2, 1966. February 15, 1968 July 1, 1968 February 4, 1969. February 4, 1969.. February 4 1969 January 1, 1972 September 9, 1971. March 13, 1972. July 23, 1973. October 31, 1973. September 4, 1974. June 13, 1975. July 22, 1975. January 22 1977 March 18 1977 March 18, 1977.. June 6, 1979 August 20, 1980. February 27, 1981 June 12 1981 July 14, 1981 Separation date November 1, 1949. January 20, 1953. February 11, 1953. August 20 1952 January 20 1953 December 1 1956 February 9 1955 April 29, 1955. January 20, 1961 October 31, 1958 January 31, 1959 January 20, 1961. January 20, 1961. November 15, 1964. July 31, 1962. December 27, 1962. February 15, 1968. August 31, 1964. February 1, 1966. January 20, 1969. June 30, 1968. January 20, 1969. January 20, 1969. December 31, 1971. July 15, 1971. August 31 1974 March 26, 1973 August 15, 1973 April 15, 1975. February 25, 1975. January 20, 1977. November 15, 1976. January 20, 1977. January 20 1981 February 4 1979 May 27, 1980. January 20 1981 January 20, 1981. MACROECONOMIC POLICIES As is its tradition, during 1981 the Council devoted much of its time to assisting the President in the formulation of broad economic policy objectives and the programs to carry them out. The development of economic assumptions and monitoring of current developments, under Council Member Jordan, were an area of major interest. Monetary policy developments received especially close attention. Council Member Jordan chaired the interagency subcabinet "Troika" forecasting group, consisting of representatives from the Department of the Treasury and the Office of Management and Budget, with participation by the Department of Commerce. The Chairman of the Council continued his responsibility for presenting to the President the economic assumptions developed with the Office of Management and Budget and the Department of the Treasury. 222 Council Members chaired or participated in numerous Cabinet Council working groups dealing with such issues as economic statistics, financial industry deregulation, conditions in the thrift industry, and the balance of payments. The Chairman actively participated during the early months of the Administration, and then during the late fall budget cycle, in Cabinet level reviews of agency budget requests and appeals. MICROECONOMIC POLICIES A wide variety of microeconomic issues received Council attention during the year. Council Member Niskanen chaired Cabinet Council working groups dealing with the Alaska National Gas Pipeline and employee pension legislation. Trade issues were an area of continuing attention. Early in the year the Council studied in depth the impact of automobile import quotas on the economy. The Council assisted in the preparation of agency guidelines for implementing Executive Order 12291 dealing with Executive Office review of agency regulatory proposals, and worked closely with the Office of Management and Budget on selected regulatory issues. INTERNATIONAL ECONOMIC POLICIES The President's economic recovery program evoked considerable interest on the part of U.S. friends and allies, and the Council devoted considerable effort to explaining the program to interested parties in the United States and abroad. Council Members and staff assisted in the preparations for the Ottawa Economic Summit in June. Members and staff also participated in the various working parties of the Organization for Economic Cooperation and Development (OECD) dealing with economic and financial issues. The Chairman served as Chairman of OECD's Economic Policy Committee. PUBLIC INFORMATION The Council's Annual Report is the principal medium through which the Council informs the public of its work and its views. It is also an important vehicle for presenting and explaining the Administration's domestic and international economic policies. Distribution of the Report in recent years has averaged about 50,000 copies. The Council also assumes primary responsibility for the monthly Economic Indicators, a publication prepared by the Council's Statistical Office under the supervision of Catherine H. Furlong. The Joint Economic Committee issues the Indicators, which has a distribution of approximately 10,000 copies. Information is also provided to members of the public through speeches and other public appearances by the Chairman, Members, and staff economists of the Council. In 1981 the Chairman 223 and Members made 25 appearances before Committees of the Congress to testify on Administration economic policies. ORGANIZATION AND STAFF OF THE COUNCIL OFFICE OF THE CHAIRMAN The Chairman is responsible for communicating the Council's views to the President. This function is carried out through direct consultation with the President, and through written memoranda and reports on economic developments and on particular programs and proposals. The Chairman exercises ultimate responsibility for directing the work of the professional staff. He represents the Council at meetings of the full Cabinet and the various Cabinet Councils, and the Trade Policy Committee. Chairman Weidenbaum also served as a member of the President's Task Force on Regulatory Relief, the congressionally established Gold Commission, and the President's Task Force on Military Manpower. COUNCIL MEMBERS The two Council Members are responsible for all subject matter covered by the Council, including direct supervision of the work of the professional staff. Members represent the Council at a wide variety of interagency and international meetings and assume major responsibility for selecting issues for Council attention. In practice, the small size of the Council permits the Chairman and Council Members to work as a team in most circumstances. There was, however, an informal division of subject matter among them in 1981. Mr. Jordan assumed primary responsibility for domestic and international macroeconomic analysis, economic projections, and monetary and financial issues. He also served, with the Chairman, on the Gold Commission. Mr. Niskanen is primarily responsible for microeconomic and sectoral analysis, international trade questions, and regulatory issues. PROFESSIONAL STAFF At the end of 1981 the professional staff consisted of the Special Assistant to the Chairman, who also acts as staff director, the Senior Statistician, 13 senior staff economists, and 5 junior staff economists. The professional staff and their special fields at the end of 1981 were: James B. Burnham Special Assistant to the Chairman Senior Staff Geoffrey O. Carliner William D. Dobson Economists Labor and Pensions Agriculture and Food Policy 224 Michele U. Fratianni Steven H. Hanke Laurence J. Kotlikoff Michael J. McKee David C. Munro Susan C. Nelson Allen M. Parkman Paul H. Rubin Elinor Y. Sachse Adrian W. Throop Benjamin Zycher Monetary Economics and International Finance Natural Resources and Environment Taxation and Social Security Macroeconomic Analysis, Productivity, and Prices Macroeconomic Analysis, Forecasting, and Economic Statistics Public Finance, Taxes, Social Security, and Health and Welfare General Microeconomics and Regulation General Microeconomics and Regulation International Trade Money, Banking, and Financial Institutions Energy and Microeconomics Statistician Catherine H. Furlong Senior Statistician Junior Economists Lawrence B. Lindsey Robert G. Murphy Dan C. Roberts Chris P. Varvares F. Katharine Warne Public Finance International Trade and Finance Financial Institutions and Markets Macroeconomic Analysis and Forecasting Regulation Catherine H. Furlong, Senior Statistician, continued to be in charge of the Council's Statistical Office. Mrs. Furlong has primary responsibility for managing the Council's statistical information system. She supervises the publication of Economic Indicators and the preparation of all statistical matter in the Annual Report. She also oversees the verification of statistics in memoranda, testimony, and speeches. Natalie V. Rentfro, Linda A. Reilly, and Barbara L. Sibel assist Mrs. Furlong. Serving as consultants during the year were Martin J. Bailey (University of Maryland), William L. Breit (University of Virginia), Karl Brunner (University of Rochester), Robert Eisner (Northwestern University), A. Nicholas Filippello (Monsanto Company), Arthur G. Gandolfi (Citibank), Henry P. Korytkowski (Citibank), Marvin H. Kosters (American Enterprise Institute), and James F. Smith (Union Carbide). In preparing the Annual Report the Council relied upon the editorial assistance of John Phillip Sawicki. 225 SUPPORTING STAFF The Administrative Office of the Council of Economic Advisers provides general support for the Council's activities. Serving in the Administrative Office were Elizabeth A. Kaminski, Staff Assistant to the Council, and Catherine Fibich. Members of the secretarial staff for the Chairman and Council Members during 1981 were Carolyn L. Bazarnick, Patricia A. Lee, Georgia A. O'Connor, and Alice H. Williams. Secretaries for the professional staff were Catherine Fibich, Bessie M. Lafakis, Rosemary M. Rogers, Margaret L. Snyder, and Lillie M. Sturniolo. Elizabeth A. Cralle, Secretary, and Joseph Henley, Clerk, provided assistance during the summer months. DEPARTURES The Council's professional staff members are in most cases on leave from universities, other government agencies, or research institutions. Their tenure with the Council is usually limited to 1 or 2 years. Senior staff economists who resigned during the year and their subsequent affiliations were William T. Boehm (the Kroger Company), Marshall L. Casse (Department of State), Stephen H. Brooks (Consultant), Jose A. Gomez-Ibanez (Harvard University), Val L. Koromzay (Organization for Economic Cooperation and Development), Robert A. Leone (Harvard University), Perry D. Quick (staff of Senator Gary Hart), and Andrew J. Strenio (Federal Trade Commission). Susan J. Irving, Special Assistant to the Chairman, joined the International Monetary Fund. Junior Economists who resigned in 1981 were Martin A. Asher (Joel Popkin and Associates), Elizabeth J. Jensen (Massachusetts Institute of Technology), Stephen A. O'Connell (Massachusetts Institute of Technology), David H. Romer (Massachusetts Institute of Technology), and Robert W. Turner (Massachusetts Institute of Technology)Retired during the year were Nancy F. Skidmore, Administrative Officer, Joyce A. Pilkerton, Secretary, and Earnestine Reid, Statistical Assistant. Pauline H. Thompson, secretary, resigned from the Council staff. 226 Appendix B STATISTICAL TABLES RELATING TO INCOME, EMPLOYMENT, AND PRODUCTION CONTENTS NATIONAL INCOME OR EXPENDITURE: B-l. Gross national product, 1929-81 B-2. Gross national product in 1972 dollars, 1929-81 B-3. Implicit price deflators for gross national product, 1929-81 B-4. Fixed-weighted price indexes for gross national product, 1972 weights, 1959-81 B-5. Changes in gross national product and GNP price measures, 192981 B-6. Gross national product by major type of product, 1929-81 B-7. Gross national product by major type of product in 1972 dollars, 1929-81 B-8. Gross national product by sector, 1929-81 B-9. Gross national product by sector in 1972 dollars, 1929-81 B-10. Gross national product by industry, 1947-80 B-ll. Gross national product by industry in 1972 dollars, 1947-80 B-12. Gross domestic product of nonfinancial corporate business, 192981 B-l3. Output, costs, and profits of nonfinancial corporate business, 1948-81 B-14. Personal consumption expenditures, 1929-81 B-15. Gross private domestic investment, 1929-81 B-16. Gross and net private domestic investment, 1929-81 B-17. Inventories and final sales of business, 1946-81 B-18. Inventories and final sales of business in 1972 dollars, 1947-81 B-l9. Relation of gross national product, net national product, and national income, 1929-81 B-20. Relation of national income and personal income, 1929-81 B-21. National income by type of income, 1929-81 B-22. Sources of personal income, 1929-81 B-23. Disposition of personal income, 1929-81 B-24. Total and per capita disposable personal income and personal consumption expenditures in current and 1972 dollars, 1929-81 B-25. Gross saving and investment, 1929-81 B-26. Saving by individuals, 1946-81 B-27. Money income (in 1980 dollars) and poverty status of families and unrelated individuals by race of householder, 1952-80 POPULATION, EMPLOYMENT, WAGES, AND PRODUCTIVITY: B-28. Population by age groups, 1929-80 B-29. Noninstitutional population and the labor force, 1929-81 B-30. Civilian employment and unemployment by sex and age, 1947-81 .. B-31. Selected employment and unemployment data, 1948-81 B-32. Civilian labor force participation rate by demographic characteristic, 1954-81 B-33. Unemployment rate by demographic characteristic, 1948-81 229 Page 233 234 236 238 239 240 241 242 243 244 245 246 247 248 250 251 252 253 254 255 256 258 260 261 262 263 264 265 266 268 269 270 271 Page B-34. B-35. B-36. B-37. B-38. B-39. B-40. B-41. Unemployment by duration, 1947-81 Unemployment by reason, 1967-81 Unemployment insurance programs, selected data, 1946-81 Wage and salary workers in nonagricultural establishments, 192981 Average weekly hours and hourly earnings in selected private nonagricultural industries, 1947-81 Average weekly earnings in selected private nonagricultural industries, 1947-81 Productivity and related data, private business sector, 1947-81 Changes in productivity and related data, private business sector, 1948-81 PRODUCTION AND BUSINESS ACTIVITY: B-42. Industrial production indexes, major industry divisions, 1929-81 .... B-43. Industrial production indexes, market groupings, 1947-81 B-44. Industrial production indexes, selected manufactures, 1947-81 B-45. Capacity utilization rate in manufacturing, 1948-81 B-46. New construction activity, 1929-81 B-47. New housing units started and authorized, 1959-81 B-48. Nonfarm business expenditures for new plant and equipment, 1947-82 B-49. Sales and inventories in manufacturing and trade, 1947-81 B-50. Manufacturers' shipments and inventories, 1947-81 B-51. Manufacturers' new and unfilled orders, 1947-81 PRICES: B-52. B-53. B-54. B-55. B-56. B-57. B-58. B-59. B-60. Consumer price indexes, major expenditure classes, 1929-81 Consumer price indexes, selected expenditure classes, 1939-81 Consumer price indexes, commodities, services, and special groups, 1939-81 Changes in consumer price indexes, commodities and services, 1948-81 Changes in special consumer price indexes, 1958-81 Producer price indexes by stage of processing, 1947-81 Producer price indexes by stage of processing, special groups, 1974-81 Producer price indexes by major commodity groups, 1940-81 Changes in producer price indexes for finished goods, 1948-81 MONEY STOCK, CREDIT, AND FINANCE: B-61. Money stock measures and liquid assets, 1959-81 B-62. Components of money stock measures and liquid assets, 1959-81... B-63. Commercial bank loans and investments, 1939-81 B-64. Total funds raised in credit markets by nonfinancial sectors, 197381 B-65. Federal Reserve Bank credit and member bank reserves, 1929-81.... B-66. Aggregate reserves and monetary base, 1959-81 B-67. Bond yields and interest rates, 1929-81 B-68. Consumer credit outstanding and net change, 1950-81 B-69. Consumer installment credit extended and liquidated, 1950-81 B-70. Mortgage debt outstanding by type of property and of financing, 1939-81 B-71. Mortgage debt outstanding by holder, 1939-81 230 272 273 274 275 276 277 278 279 280 281 282 283 284 286 287 288 289 290 291 292 293 295 296 297 299 300 302 303 304 305 306 308 309 310 312 313 314 315 GOVERNMENT FINANCE: Page B-72. Federal budget receipts, outlays, and debt, fiscal years 1971-83 316 B-73. Federal budget receipts and outlays, fiscal years 1929-83 317 B-74. Relation of Federal Government receipts and expenditures in the national income and product accounts to the unified budget, 1980-83 319 B-75. Government receipts and expenditures, national income and product accounts, 1929-81 320 B-76. Federal Government receipts and expenditures, national income and product accounts, 1958-83 321 B-77. State and local government receipts and expenditures, national income and product accounts, 1946-81 322 B-78. State and local government revenues and expenditures, selected fiscal years, 1927-79 323 B-79. Interest-bearing public debt securities by kind of obligation, 196781 324 B-80. Estimated ownership of public debt securities, 1967-81 325 B-81. Maturity distribution average length and of marketable interestbearing public debt securities held by private investors, 1967-81. 326 CORPORATE PROFITS AND FINANCE: B-82. Corporate profits with inventory valuation and capital consumption adjustments, 1929-81 B-83. Corporate profits by industry, 1929-81 B-84. Corporate profits of manufacturing industries, 1929-81 B-85. Sales, profits, and stockholders' equity, all manufacturing corporations, 1950-81 B-86. Relation of profits after taxes to stockholders' equity and to sales, all manufacturing corporations, 1947-81 B-87. Relation of profits after taxes to stockholders' equity and to sales, all manufacturing corporations, by industry group, 1979-81 B-88. Determinants of business fixed investment, 1955-81 B-89. Sources and uses of funds, nonfarm nonfinancial corporate business, 1946-81 B-90. Current assets and liabilities of U.S. corporations, 1939-81 B-91. State and municipal and corporate securities offered, 1934-81 B-92. Common stock prices and yields, 1949-81 B-93. Business formation and business failures, 1929-81 AGRICULTURE: B-94. Farm income, 1929-81 B-95. Farm output and productivity indexes, 1929-81 B-96. Farm input use, selected inputs, 1929-81 B-97. Indexes of prices received and prices paid by farmers, 1940-81 B-98. U.S. exports and imports of agricultural commodities, 1940-81 B-99. Balance sheet of the farming sector, 1929-82 INTERNATIONAL STATISTICS: B-100. Exchange rates, 1967-81 B-101. U.S. international transactions, 1946-81 B-102. U.S. merchandise exports and imports by principal end-use category, 1965-81 B-103. U.S. merchandise exports and imports by area, 1973-81 231 327 328 329 330 331 332 333 334 335 336 337 338 339 340 341 342 343 344 345 346 348 349 Page B-104. U.S. merchandise exports and imports by commodity groups, 1958-81 B-105. International investment position of the United States at year-end, selected years, 1970-80 B-106. World trade: Exports and imports, 1965, 1970, 1975, and 197881 B-107. World trade balance and current account balances, 1965, 1970, 1975, and 1978-81 B-108. International reserves, selected years, 1952-81 B-109. Growth rates in real gross national product, 1960-81 B-110. Industrial production and consumer prices, major industrial countries, 1960-81 B-lll. Unemployment rate and hourly compensation, major industrial countries, 1960-81 General Notes Detail in these tables may not add to totals because of rounding. Unless otherwise noted, all dollar figures are in current dollars. Symbols used: p Preliminary. —Not available (also, not applicable). 232 350 351 352 353 354 355 356 357 NATIONAL INCOME OR EXPENDITURE TABLE B-l.—Gross national product, 1929-81 [Billions of dollars, except as noted; quarterly data at seasonally adjusted annual rates] Net exports of goods and services Year or quarter Personal Gross Gross conprivate national sumption jomestic product expendi- investNet tures ment exports Government purchases of goods and services Federal Exports Imports Total NonTntal loiai National defense defense State and Inral lOCdl Percent change from preceding period, gross national product 1 1929 103.4 77.3 16.2 1.1 7.0 5.9 8.8 14 7.4 6.5 1933 55.8 45.8 1.4 .4 2.4 2.0 8.2 2.1 6.1 -4.2 1939 90.9 67.0 9.3 1.2 4.6 3.4 13.5 5.2 1.2 3.9 8.3 7.0 1940.. 1941. 1942 1943 1944 1945 1946 1947 1948 1949 100.0 125.0 158.5 192.1 210.6 212.4 209.8 233.1 259.5 258.3 71.0 80.8 88.6 99.4 108.2 119.5 143.8 161.7 174.7 178.1 13.1 17.9 1.8 1.5 .2 2.2 16.9 52.0 81.3 89.4 74.6 17.6 12.7 16.7 20.4 13.7 49.4 79.7 87.4 73.5 14.8 10.0 25.0 26.7 21.3 10.7 13.2 3.9 3.2 2.6 1.6 2.0 1.1 2.8 3.7 6.0 7.2 8.1 8.0 7.8 7.5 7.6 8.2 9.9 11.9 3.6 4.7 4.8 6.5 7.2 7.9 7.3 8.3 6.1 10.6 30.7 34.0 45.9 35.3 5.4 6.1 5.0 4.6 5.5 7.4 12.8 15.3 18.0 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 286.5 330.8 348.0 366.8 366.8 400.0 421.7 444.0 449.7 487.9 192.0 207.1 217.1 229.7 235.8 253.7 266.0 280.4 289.5 310.8 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 506.5 524.6 565.0 596.7 637.7 691.1 756.0 799.6 873.4 944.0 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 P.. 6.9 6.5 15.1 20.2 17.5 16.3 10.5 9.8 14.2 24.9 59.8 88.9 97.0 82.8 27.5 25.5 32.0 38.4 53.8 59.2 52.1 53.3 52.7 68.4 71.0 69.2 61.9 78.1 2.2 4.4 3.2 1.3 2.5 3.0 5.3 7.3 3.3 1.4 14.4 19.7 19.1 18.0 18.7 21.0 25.0 28.1 24.2 24.8 12.2 15.3 15.9 16.7 16.2 18.0 19.8 20.8 21.0 23.4 38.5 60.1 75.6 82.5 75.8 75.0 79.4 87.1 95.0 97.6 18.7 38.3 52.4 57.5 47.9 44.5 45.9 50.0 53.9 53.9 14.0 33.5 45.8 48.6 41.1 38.4 40.2 44.0 45.6 45.6 4.7 4.8 6.5 8.9 6.8 6.0 5.7 5.9 8.3 8.3 19.8 21.8 23.2 25.0 27.8 30.6 33.5 37.1 41.1 43.7 10.9 15.5 324.9 335.0 355.2 374.6 400.5 430.4 465.1 490.3 536.9 581.8 75.9 74.8 85.4 90.9 97.4 113.5 125.7 122.8 133.3 149.3 5.5 6.6 6.4 7.6 28.9 29.9 31.8 34.2 38.8 41.1 44.6 47.3 52.4 57.5 23.4 23.3 25.4 26.6 28.8 32.3 38.1 41.0 48.1 53.3 100.3 108.2 118.0 123.7 129.8 138.4 158.7 180.2 199.0 208.8 53.7 57.4 63.7 64.6 65.2 67.3 78.8 90.9 98.0 97.6 44.5 47.0 51.1 50.3 49.0 49.4 60.3 71.5 76.9 76.3 9.3 10.4 12.7 14.3 16.2 17.8 18.5 19.5 21.2 21.2 46.5 50.8 54.3 59.0 64.6 71.1 79.8 89.3 101.0 111.2 3.8 3.6 7.7 5.6 6.9 8.4 9.4 5.8 9.2 8.1 992.7 1,077.6 1,185.9 1,326.4 1,434.2 1,549.2 1,718.0 1,918.0 2,156.1 2,413.9 621.7 672.2 737.1 812.0 888.1 976.4 1,084.3 1,205.5 1,348.7 1,510.9 144.2 166.4 195.0 229.8 228.7 206.1 257.9 322.3 375.3 415.8 14.2 13.4 26.8 13.8 -4.2 13.4 65.7 68.8 77.5 109.6 146.2 154.9 170.9 183.3 219.8 281.3 59.0 64.7 76.7 95.4 132.8 128.1 157.1 187.5 220.4 267.9 220.1 234.9 253.1 270.4 304.1 339.9 362.1 394.5 432.6 473.8 95.7 96.2 101.7 102.0 111.0 122.7 129.2 143.9 153.4 167.9 73.6 70.2 73.1 72.8 77.0 83.0 86.0 93.3 100.0 111.2 22.2 26.0 28.5 29.1 33.9 39.7 43.2 50.6 53.4 56.7 124.4 138.7 151.4 168.5 . 193.1 217.2 232.9 250.6 279.2 305.9 2,626.1 2,922.2 1,672.8 1,858.1 395.3 450.6 23.3 23.8 339.8 366.7 316.5 342.9 534.7 198.9 589.6 228.6 131.7 153.3 67.2 75.2 335.8 361.1 2,340.6 2,374.6 2,444.1 2,496.3 1,454.1 1,478.0 1,529.1 1,582.3 408.3 423.2 421.7 410.0 19.9 259.1 266.8 293.1 306.3 239.2 258.6 275.2 298.7 458.2 465.1 475.4 496.4 164.8 163.6 165.1 178.1 106.0 108.1 112.0 118.7 58.8 55.5 53.1 59.4 293.4 301.6 310.4 318.3 12.7 2,571.7 2,564.8 26373 2,730.6 1,631.0 1,626.8 16822 1,751.0 415.6 390.9 377 1 397.7 337.3 333.3 3424 346.1 329.1 316.2 2979 322.7 516.8 530.0 5335 558.6 190.0 198.7 1949 212.0 125.0 128.7 1314 141.6 64.9 70.0 326.8 331.3 12.6 -1.1 635 3386 118 70.4 346.6 14.9 2,853.0 28858 2,965.0 2,984.9 1,810.1 18291 1,883.9 1,909.5 437.1 4586 463.0 443.6 367.4 3682 368.0 363.0 338.2 3475 338.7 347.1 576.5 5774 588.9 615.7 221.6 2195 226.4 246.7 145.2 1482 154.1 165.8 76.4 354.9 19.2 713 3579 47 72.2 81.0 362.5 369.0 11.4 9.9 5.8 7.2 -1.9 -1.7 -.5 7.8 10.1 8.8 6.5 6.3 4.3 4.2 6.7 4.1 .7 -.6 9.0 9.6 .9 -1.2 11.1 11.3 -.5 5.2 5.4 .0 9.0 5.4 5.3 1.3 8.5 5.2 8.6 10.1 11.8 8.1 8.0 10.9 11.6 12.4 12.0 8.8 11.3 1979 1 II III IV. 8.2 17.9 7.6 5.9 12.2 8.8 1980: 1 II Ill IV 8.2 17.1 445 23.3 1981: 1 II III IV P 29.2 208 29.3 16.0 1 2.7 Changes are based on unrounded data and therefore may differ slightly from changes computed from data shown here. Source: Department of Commerce, Bureau of Economic Analysis. 233 TABLE B-2.—Gross national product in 1972 dollars, 1929-81 [Billions of 1972 dollars, except as noted; quarterly data at seasonally adjusted annual rates] Gross private domestic investment Personal consumption expenditures Year or quarter Gross national product Fixed investment Total Durable goods NonHurohlo ouraoie goods Services Nonresidential Tntal lOTdl Total Total oiruc- Producers' durable tures equipment Qtrnr 16.4 1929 315.7 215.1 20.9 98.1 96.1 55.8 51.2 37.5 21.1 1933 222.1 170.5 10.7 82.9 76.9 8.4 13.2 10.4 5.0 5.5 1939 319.8 219.8 18.6 115.1 86.1 33.6 32.0 20.9 8.7 12.1 1940. 1941 1942 1943 1944 1945 1946 1947 1948 1949 344.1 400.4 461.7 531.6 569.1 560.4 478.3 470.3 489.8 492.2 229.9 243.6 241.1 248.2 255.2 270.9 301.0 305.8 312.2 319.3 21.2 24.2 15.7 14.0 13.0 14.4 25.4 30.1 32.5 35.5 119.9 127.6 129.9 134.0 139.4 150.3 158.9 154.8 155.0 157.4 88.8 91.8 95.5 100.2 102.8 106.3 116.7 120.9 124.7 126.5 44.5 55.8 29.5 18.1 19.7 27.7 70.9 70.0 82.1 65.4 38.3 43.8 24.3 18.0 22.0 31.4 58.7 70.2 76.6 69.8 25.8 30.4 17.6 14.0 18.7 27.6 42.1 48.9 51.1 46.0 10.0 12.0 6.8 4.2 5.5 8.3 18.9 17.4 18.4 17.9 15.8 18.5 10.9 9.8 13.2 19.2 23.2 31.5 32.6 28.1 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 534.8 579.4 600.8 623.6 616.1 657.5 671.6 683.8 680.9 721.7 337.3 341.6 350.1 363.4 370.0 394.1 405.4 413.8 418.0 440.4 42.6 39.1 38.0 42.1 42.5 51.1 48.8 48.6 45.3 50.7 161.8 165.3 171.2 175.7 177.0 185.4 191.6 194.9 196.8 205.0 132.9 137.2 140.9 145.6 150.5 157.6 165.0 170.3 175.9 184.8 93.5 93.9 83.0 85.3 83.1 103.8 102.6 97.0 87.5 108.0 83.0 80.2 78.7 83.8 85.3 96.1 96.8 95.5 89.3 100.9 50.0 52.9 52.1 56.3 55.4 61.3 65.4 66.2 59.3 63.6 19.2 20.7 20.6 22.6 23.6 25.4 28.3 28.4 26.8 27.4 30.8 32.2 31.5 33.7 31.8 35.9 37.0 37.8 32.5 36.2 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 737.2 756.6 800.3 832.5 876.4 929.3 984.8 1,011.4 1,058.1 1,087.6 452.0 461.4 482.0 500.5 528.0 557.5 585.7 602.7 634.4 657.9 51.4 49.3 54.7 59.7 64.8 72.6 78.4 79.5 88.3 91.8 208.2 211.9 218.5 223.0 233.3 244.0 255.5 259.5 270.5 277.3 192.4 200.2 208.8 217.8 229.8 240.9 251.8 263.7 275.6 288.8 104.7 103.9 117.6 125.1 133.0 151.9 163.0 154.9 161.6 171.4 101.2 100.9 109.7 117.5 125.9 140.1 146.2 142.7 152.6 160.4 66.9 66.7 72.0 75.1 82.7 97.4 108.0 105.6 109.5 116.8 29.5 30.2 31.6 31.9 34.4 40.6 43.4 42.0 42.8 45.0 37.4 36.5 40.4 43.1 48.3 56.8 64.5 63.6 66.8 71.8 1970 1971 1972. 1973 1974 1975 1976 1977 1978 1979 1,085.6 1,122.4 1,185.9 1,255.0 1,248.0 1,233.9 1,300.4 1,371.7 1,436.9 1,483.0 672.1 696.8 737.1 768.5 763.6 780.2 823.7 863.9 904.8 930.9 89.1 98.2 111.1 121.3 112.3 112.7 126.6 138.4 146.3 146.6 283.7 288.7 300.6 308.0 303.3 308.2 322.5 334.0 345.7 354.6 299.3 309.9 325.3 339.2 348.0 359.3 374.7 391.5 412.8 429.6 158.5 173.9 195.0 217.5 195.5 154.8 184.5 213.5 229.7 232.6 154.8 165.8 184.8 200.4 183.9 161.5 176.7 201.2 215.8 222.5 113.8 112.2 121.0 138.1 135.7 119.3 125.6 140.6 153.4 163.3 43.9 42.8 44.1 47.4 43.6 38.3 39.5 40.5 44.6 48.5 69.9 69.3 76.9 90.7 92.1 81.1 86.1 100.0 108.8 114.8 1980 1981" 1,480.7 1,509.6 935.1 959.1 135.8 139.4 358.4 367.4 440.9 452.4 203.6 215.0 206.6 206.8 158.4 161.6 48.4 50.7 110.0 110.8 14799 1,473 4 1,488 2 1,490.6 9255 9228 933.4 941.6 1496 1442 1467 146.0 351 1 350'6 3554 361.3 4248 4280 431.3 434.3 237J 2387 232.6 221.5 222.3 2204 225.'0 222.2 161.4 1613 166.4 164.1 45.8 48^0 494 50.7 115.6 113^2 1170 113^5 1,501 9 1,463 3 14719 1,485.6 9434 9193 9308 946.8 1454 126.2 1326 139.1 3615 3566 3549 360.4 4365 436.5 4433 447'.3 2183 200'.5 1953 200'.5 2192 199^2 200.2 207^6 1650 1561 155.5 157^0 505 48'7 46.8 47^8 114.5 1074 108 8 109*3 1,516.4 15104 1,515.8 1,495.6 960.2 9551 962.8 958.3 146.8 1374 140.3 133.0 364.5 3670 368.8 369.2 4489 4507 453.7 456.1 211.6 2197 221.5 207.1 213.1 2089 206^5 198.7 1620 161 1 163!9 159.2 496 504 5L5 51.4 112.4 110 7 1124 107.8 1979: 1 II .... Ill IV 1980: I.. II Ill IV 1981: 1 II III IV p See next page for continuation of table. 234 TABLE B-2.—Gross national product in 1972 dollars, 1929-81—Continued [Billions of 1972 dollars, except as noted; quarterly data at seasonally adjusted annual rates] Gross private domestic investmentcontinued Net exports of goods and services Government purchases of goods and services Fixed investment— continued Year or quarter Residential Total Nonfarm structures Farm structures Producers' durable equipment Change in business inventories Net exports Exports Imports Total Federal State and local Percent change from preceding period, gross national product 1 1929 13.7 13.0 0.6 0.1 4.6 3.7 16.7 12.9 41.0 7.0 33.9 6.6 1933 2.8 2.5 .2 .1 -4.9 .4 9.1 8.6 42.9 10.9 32.0 -2.2 1939 11.1 10.4 .6 .1 1.6 3.4 14.3 10.9 63.0 22.8 40.3 7.8 1940 1941 1942 1943 1944 1945 1946 1947 1948 1949 12.5 13.3 6.7 4.0 3.4 3.8 16.6 21.3 25.6 23.8 11.6 12.3 6.0 3.5 3.0 3.4 15.3 19.7 23.8 22.1 .8 .9 .6 .4 .4 .3 1.1 1.3 1.5 1.4 .1 .2 .1 .0 .0 .1 .2 .3 .3 .3 6.2 12.0 5.2 .1 -2.3 -3.6 12.2 -.2 5.5 -4.4 4.4 3.2 -.6 -5.9 -6.2 -3.7 13.2 18.9 10.8 10.7 15.5 16.4 11.4 9.8 10.5 13.8 27.3 32.2 26.3 25.8 11.1 13.2 12.0 15.7 16.8 17.5 14.0 13.3 15.5 15.2 65.3 97.8 191.6 271.3 300.4 265.4 93.1 75.7 84.7 96.8 26.7 61.0 157.4 239.6 269.7 233.7 58.2 36.3 42.8 49.2 38.6 36.8 34.3 31.7 30.7 31.7 34.9 39.4 41.9 47.5 7.6 16.3 15.3 15.1 7.1 -1.5 -14.7 -1.7 4.1 .5 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 33.0 27.3 26.6 27.5 29.9 34.8 31.5 29.2 30.0 37.4 31.3 25.7 25.1 26.1 28.5 33.5 30.0 27.8 28.6 35.9 1.3 1.3 1.2 1.2 1.1 .9 1.0 1.0 .9 1.0 .3 .3 .3 .3 .3 .4 .4 .4 .5 .6 10.6 13.7 4.3 1.5 -2.2 7.7 5.8 1.5 -1.8 7.0 5.9 10.1 7.9 4.8 6.9 7.3 10.1 11.8 5.6 2.7 23.6 28.6 27.9 26.6 27.8 30.7 35.3 38.0 33.2 33.8 17.7 18.5 20.0 21.8 20.9 23.4 25.2 26.1 27.6 31.1 98.1 133.7 159.8 170.1 156.0 152.3 153.5 161.2 169.8 170.6 47.3 82.2 107.2 114.7 96.1 88.2 86.8 90.6 93.4 91.4 50.8 51.5 52.7 55.3 59.9 64.1 66.7 70.6 76.4 79.2 8.7 8.3 3.7 3.8 -1.2 6.7 2.1 1.8 -.4 6.0 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 34.2 34.3 37.7 42.5 43.1 42.7 38.2 37.1 43.1 43.6 32.9 32.8 36.3 40.9 41.5 41.2 36.6 35.4 41.3 41.7 .8 1.0 .9 .9 .9 .8 .9 .9 .8 .9 .5 .5 .6 .6 .7 .7 .8 .8 .9 1.1 3.5 3.0 7.8 7.5 7.1 11.8 16.8 12.2 9.0 11.1 7.7 8.5 7.5 9.4 12.8 10.1 6.5 5.4 1.9 .9 38.4 39.3 41.8 44.8 50.3 51.7 54.4 56.7 61.2 65.0 30.7 30.9 34.3 35.4 37.5 41.6 47.9 51.3 59.3 64.1 172.8 182.9 193.2 197.6 202.6 209.8 229.7 248.5 260.2 257.4 90.4 95.3 102.8 101.8 100.2 100.3 112.6 125.1 128.1 121.8 82.4 87.5 90.4 95.8 102.4 109.5 117.1 123.4 132.1 135.6 2.2 2.6 5.8 4.0 5.3 6.0 6.0 2.7 4.6 2.8 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 41.0 53.7 63.8 62.3 48.2 42.2 51.2 60.6 62.4 59.1 39.2 51.6 61.5 59.9 45.3 39.8 48.7 57.8 59.5 56.2 .6 .7 .7 .6 1.1 .8 .8 1.0 1.0 .9 1.1 1.3 1.5 1.7 1.7 1.6 1.7 1.8 1.9 2.0 3.8 8.1 10.2 17.2 11.6 -6.7 7.8 12.3 14.0 10.2 3.9 1.6 .7 15.5 27.8 32.2 25.4 21.9 24.6 37.7 70.5 71.0 77.5 97.3 108.5 103.6 110.1 113.2 127.5 146.9 66.6 69.3 76.7 81.8 80.7 71.4 84.7 91.3 103.0 109.2 251.1 250.1 253.1 253.5 261.2 266.7 266.8 272.3 277.8 281.8 110.6 103.7 101.7 95.9 96.6 97.4 96.8 100.7 99.8 101.7 140.5 146.4 151.4 157.6 164.5 169.3 170.0 171.6 178.0 180.1 -.2 3.4 5.7 5.8 -.6 -1.1 5.4 5.5 4.8 3.2 1980 1981 P 48.1 45.2 45.2 42.2 .9 1.0 2.0 2.0 -2.9 8.2 52.0 44.3 161.1 160.0 109.1 115.8 290.0 291.2 108.1 111.0 181.9 180.2 -.2 1.9 60.8 59.1 58.6 58.1 58.1 56.3 55.5 54.9 .8 .8 .9 1.1 2.0 2.0 2.1 2.1 15.4 18.4 7.6 -.7 36.0 31.6 41.1 42.2 141.1 140.5 151.3 154.8 105.1 108.8 110.2 112.6 280.6 280.3 281.1 285.3 102.9 100.8 99.9 103.1 177.7 179.4 181.2 182.2 3.9 -1.7 4.1 .6 II Ill IV 54.2 43.1 44.7 50.6 51.2 40.3 41.9 47.5 1.0 .8 .7 1.0 2.1 2.0 2.0 2.0 -.9 1.3 -5.0 -7.2 50.1 51.7 57.6 48.5 165.9 160.5 160.5 157.4 115.8 108.9 102.8 108.9 290.1 291.9 288.2 289.8 107.6 110.7 106.9 107.4 182.5 181.2 181.3 182.4 3.1 -9.9 2.4 3.8 1981: 1 II Ill IV p 51.0 47.8 42.7 39.5 48.0 44.8 39.7 36.4 .9 .9 1.0 1.0 2.1 2.0 2.0 2.0 -1.4 10.8 14.9 8.5 50.9 46.2 43.2 36.7 162.5 161.5 160.1 155.9 111.6 115.4 116.9 119.2 293.6 289.5 288.3 293.4 111.2 108.7 109.6 114.5 182.5 180.7 178.8 178.8 8.6 -1.6 1.4 -5.2 .... 1979: 1 || III IV 1980: I 1 Changes are based on unrounded data and therefore may differ slightly from changes computed from data shown here. Source: Department of Commerce, Bureau of Economic Analysis. 235 TABLE B-3.—Implicit price deflators for gross national product, 1929-81 [Index numbers, 1972=100, except as noted; quarterly data seasonally adjusted] Gross private domestic investment 1 Personal consumption expenditures Year or quarter Fixed investment Gross national product * Total Nondurable goods Durable goods Nonresidential Services Total Total Structures Producers' durable equipment 1929 32.76 35.9 44.2 38.4 31.6 28.3 28.3 24.3 33.4 1933 25.13 26.9 32.5 26.8 26.1 22.4 22.9 19.2 26.2 1939 28.43 30.5 35.9 30.5 29.2 27.7 28.2 23.0 32.0 1940. 1941. 1942. 1943. 1944. 1945. 1946. 1947. 1948. 1949. 29.06 31.23 34.32 36.14 37.01 37.91 43.88 49.55 52.98 52.49 30.9 33.2 36.7 40.1 42.4 44.1 47.8 52.9 56.0 55.8 36.7 40.0 43.7 46.7 51.3 55.5 62.1 67.8 70.3 70.5 30.9 33.6 39.1 43.7 46.2 47.8 52.1 58.7 62.3 60.3 29.5 30.8 32.4 34.2 36.1 37.3 38.8 41.7 44.4 46.0 28.5 30.7 33.5 35.7 37.0 37.2 41.3 49.0 53.7 54.9 29.1 31.0 33.9 35.9 36.8 36.7 40.0 46.9 51.5 53.0 23.4 24.9 28.4 32.4 33.8 33.9 36.6 44.0 48.8 48.4 32.8 34.9 37.3 37.3 38.0 37.9 42.8 48.6 53.0 56.0 1950. 1951 1952. 1953. 1954. 1955. 1956. 1957. 1958. 1959. 53.56 57.09 57.92 58.82 59.55 60.84 62.79 64.93 66.04 67.60 56.9 60.6 62.0 63.2 63.7 64.4 65.6 67.8 69.2 70.6 72.2 76.3 76.7 77.2 75.0 75.6 77.7 80.9 81.3 83.8 60.7 65.8 66.5 66.3 66.6 66.3 67.3 69.4 71.0 71.4 47.4 49.9 52.6 55.4 57.2 58.4 60.1 62.2 64.1 66.0 56.7 60.9 62.3 63.1 63.6 65.0 68.5 71.1 71.0 71.8 54.5 59.1 60.1 61.2 61.7 62.9 67.3 71.0 70.9 72.2 49.3 55.1 56.3 57.4 56.5 57.6 62.4 64.9 63.9 64.2 57.8 61.7 62.6 63.8 65.5 66.6 71.1 75.5 76.6 78.3 1960. 1961 1962. 1963. 1964. 1965. 1966. 1967. 1968. 1969. 68.70 69.33 70.61 71.67 72.77 74.36 76.76 79.06 82.54 86.79 71.9 72.6 73.7 74.8 75.9 77.2 79.4 81.4 84.6 88.4 83.8 84.3 85.4 86.2 87.1 86.8 86.7 88.2 91.1 93.3 72.6 73.3 73.9 74.9 75.8 77.3 80.1 81.9 85.3 89.4 67.9 69.0 70.4 71.7 72.7 74.2 76.4 78.7 81.9 86.0 72.1 71.8 72.2 72.3 72.9 74.0 76.3 78.8 82.2 87.0 72.5 72.0 72.5 73.1 73.8 74.7 76.9 79.5 82.8 86.7 63.7 63.3 63.6 64.1 64.9 66.4 69.2 72.2 75.8 81.5 79.4 79.3 79.4 79.7 80.1 80.6 82.1 84.3 87.2 89.9 1970. 1971. 1972 . 1973. 1974. 1975. 1976. 1977. 1978. 1979. 91.45 96.01 100.00 105.69 114.92 125.56 132.11 139.83 150.05 162.77 92.5 96.5 100.0 105.7 116.3 125.2 131.6 139.5 149.1 162.3 95.7 99.0 100.0 101.7 108.2 117.3 123.9 129.2 136.2 144.8 93.6 96.6 100.0 108.3 123.1 132.1 137.0 143.4 153.2 169.8 90.5 95.6 100.0 104.7 113.0 121.6 129.6 139.9 1501 162.1 91.1 95.7 100.0 105.5 116.7 131.9 139.2 149.7 163.7 179.1 91.3 96.2 100.0 103.8 115.4 132.2 138.6 146.2 157.7 171.3 88.2 94.5 100.0 107.7 128.2 144.8 149.0 159.4 176.4 198.6 93.2 97.2 100.0 101.8 109.3 126.2 133.9 140.9 150.1 159.7 1980. 1981 *.. 177.36 193.58 178.9 193.7 156.0 166.5 188.6 202.4 178.1 195.1 194.2 209.1 186.8 202.5 224.7 246.4 170.2 182.3 158.16 161.17 164.23 167.47 157.1 160.2 163.8 168.0 142.0 143.9 145.4 148.0 162.9 167.3 172.1 176.9 157.7 159.9 163.3 167.4 172.8 177.0 181.5 184.9 165.5 169.2 173.4 176.8 190.6 194.0 201.4 207.4 155.6 158.7 161.5 163.2 171.23 175.28 179.18 183.81 172.9 177.0 180.7 184.9 151.9 154.1 157.5 160.5 182.9 186.2 190.0 195.2 171.6 176.0 180.3 184.3 188.5 192.5 196.4 199.9 180.5 185.7 189.1 192.4 214.3 222.4 229.5 233.3 165.6 169.0 171.7 174.5 188.14 191.06 195.61 199.58 188.5 191.5 195.7 199.3 162.3 165.4 168.3 170.2 199.2 200.4 203.7 206.1 188.4 192.2 197.6 202.2 203.1 208.4 210.9 214.4 195.0 201.4 204.5 208.9 236.2 244.1 249.2 255.6 176.8 182.0 184.0 186.6 1979: 1 II. Ill IV. 1980: 1 II. Ill IV. 1981: 1 II. III. IV. See next page for continuation of table. 236 TABLE B-3.—Implicit price deflators for gross national product, 1929-81—Continued [Index numbers, 1972 = 100, except as noted; quarterly data seasonally adjusted] Gross private domestic investment l— continued Exports and imports of goods and services 1 Fixed investment— continued Government purchases of goods and services Residential Year or quarter Total Nonfarm structures Farm structures Producers' durable equipment Exports Imports Total Federal State and local Percent change from preceding period, gross national product implicit price deflator 2 1929 28.2 27.8 28.6 77.2 42.2 45.5 21.5 20.5 1933 20.7 19.8 19.5 58.8 26.5 23.6 19.2 19.4 19.1 -2.1 26.6 26.3 23.4 61.1 32.1 31.0 21.4 22.7 20.7 -.8 1940. 1941. 1942. 1943. 1944. 1945. 1946. 1947. 1948. 1949. 27.4 30.0 32.4 34.9 38.1 40.8 44.6 53.7 58.1 58.7 27.2 29.7 31.8 34.3 37.3 40.0 43.9 53.0 57.5 58.1 23.6 26.6 30.7 35.7 40.8 42.9 46.6 52.8 57.3 58.0 59.6 63.8 71.3 71.4 75.0 84.6 95.2 105.6 111.5 107.9 34.9 37.3 43.6 46.8 51.9 53.6 55.4 62.8 66.5 63.1 32.8 35.4 40.0 41.3 42.7 44.9 51.8 62.3 67.8 64.6 21.7 25.5 31.2 32.8 32.3 31.2 29.6 33.6 37.7 39.7 22.7 27.8 33.0 34.0 33.1 31.9 30.2 35.0 39.0 41.4 20.9 21.7 22.8 23.7 24.8 25.8 28.5 32.4 36.4 37.8 2.2 7.5 9.9 5.3 2.4 2.4 15.7 12.9 6.9 -.9 1950. 1951. 1952. 1953. . 1954. 1955. 1956. 1957. 1958. 1959. 60.0 64.4 66.4 66.9 67.1 68.7 71.0 71.4 71.2 71.1 59.5 63.8 65.8 66.3 66.6 68.2 70.5 70.9 70.7 70.6 59.4 63.8 65.7 66.2 66.5 68.3 70.6 70.9 70.8 70.7 107.4 114.9 114.6 114.2 112.4 109.1 104.3 103.4 101.9 101.8 61.0 68.8 68.6 67.5 67.2 68.5 71.0 74.0 73.1 73.5 68.8 82.6 79.9 76.7 77.2 77.1 78.4 79.6 76.1 75.2 39.2 45.0 47.3 48.5 48.6 49.2 51.7 54.0 56.0 57.2 39.6 46.6 48.9 50.1 49.9 50.4 52.9 55.1 57.7 59.0 38.9 42.3 44.1 45.2 46.5 47.6 50.2 52.6 53.8 55.1 2.1 6.6 1.4 1.6 1.2 2.2 3.2 3.4 1.7 2.4 1960. 1961. 1962. 1963. 1964. 1965. 1966 1967. 1968 1969. 71.4 71.3 71.5 70.9 71.2 72.3 74.6 77.0 80.7 87.7 70.9 70.9 71.1 70.5 70.8 72.0 74.3 76.7 80.5 87.5 71.1 70.7 71.2 70.6 70.9 72.2 74.2 76.7 80.6 87.5 100.8 99.0 96.8 95.3 94.3 92.1 90.8 91.0 93.5 95.7 75.2 76.1 76.0 76.3 77.2 79.4 81.9 83.5 85.5 88.5 76.1 75.5 74.2 75.2 76.8 77.7 79.4 79.9 81.1 83.2 58.0 59.1 61.1 62.6 64.1 66.0 69.1 72.5 76.5 81.1 59.4 60.2 62.0 63.5 65.1 67.1 70.0 72.7 76.5 80.1 56.5 58.0 60.1 61.6 63.1 64.9 68.2 72.4 76.4 82.0 1.6 .9 1.8 1.5 1.5 2.2 3.2 3.0 4.4 5.1 1970. 1971. 1972 1973. 1974. 1975 1976. 1977. 1978 1979. 90.5 94.8 100.0 109.1 120.3 131.0 140.7 158.0 178.3 200.5 90.3 94.7 100.0 109.4 120.8 131.6 141.3 159.0 179.8 202.7 90.6 95.0 100.0 109.2 120.5 131.9 140.7 157.2 179.0 202.0 97.8 99.3 100.0 100.6 106.8 116.9 122.7 126.6 132.7 140.3 93.2 97.0 100.0 112.7 134.7 149.6 155.2 161.9 172.4 191.5 88.6 93.3 100.0 116.7 164.6 179.5 185.5 205.4 214.0 245.4 87.7 93.9 100.0 106.7 116.4 127.5 135.7 144.8 155.7 168.1 86.6 92.7 100.0 106.3 114.9 126.0 133.5 142.9 153.7 165.1 88.6 94.7 100.0 106.9 117.4 128.3 137.0 146.0 156.9 169.8 5.4 5.0 4.2 5.7 8.7 9.3 5.2 5.8 7.3 8.5 1980 1981 ".. 218.6 232.8 221.7 236.3 219.9 235.0 149.4 159.4 211.0 229.2 290.1 296.2 184.4 202.5 183.9 205.9 184.7 200.4 9.0 9.1 1979 1 II. III. IV 191.9 198.4 204.6 207.7 193.7 200.4 207.0 210.1 192.1 199.7 205.5 207.7 138.4 139.7 140.5 142.4 183.7 189.9 193.7 197.9 227.7 237.6 249.8 265.2 163.3 166.0 169.2 174.0 160.1 162.2 165.2 172.8 165.1 168.1 171.3 174.7 8.4 7.8 7.8 8.1 1 II. Ill IV 212.6 217.4 221.9 223.3 215.2 220.7 225.2 226.3 213.6 219.4 223.1 224.2 145.5 148.5 151.1 152.4 203.4 207.6 213.4 219.9 284.2 290.4 289.7 296.4 178.1 181.6 185.1 192.8 176.5 179.5 182.4 197.4 179.1 182.8 186.7 190.0 9.3 9.8 9.2 10.7 1981 1 II III IV 228.7 231.8 235.4 236.7 231.8 235.0 239.1 240.7 229.6 233.4 237.6 239.0 155.2 158.0 161.5 163.1 226.1 228.0 229.8 232.9 303.1 301.2 289.8 291.2 196.4 199.5 204.2 209.9 199.4 201.9 206.6 215.4 194.5 198.0 202.8 206.4 9.8 6.4 9.9 8.4 1939. 1980: . 21.8 1 Separate deflators are not calculated for gross private domestic investment, change in business inventories, and net exports of goods and services. 2 Changes are based on unrounded data and therefore may differ slightly from changes computed from data shown here. Quarterly changes are at annual rates. Source: Department of Commerce, Bureau of Economic Analysis. 358-691 0 - 8 2 - 1 6 : Q L 3 237 TABLE B-4.—Fixed-weighted price indexes for gross national product, 1972 weights, 1959-81 [Index numbers, 1972 = 100; quarterly data seasonally adjusted] Exports and imports of goods and services1 Gross private domestic investment 1 Year or quarter Gross national product Personal consumption expenditures Fixed investment Total Nonresidential Residential Exports Imports Government purchases of goods and services State Total Federal and local Percent change from preceding period, gross national product fixedweighted price index 2 1959 69.8 73.1 74.4 74.1 74.9 73.4 75.0 56.9 58.5 55.8 1960 1961 1962 1963 1964 70.8 71.6 72.4 73.2 74.1 74.1 74.8 75.5 76.3 77.2 74.7 74.4 74.2 74.0 74.3 74.5 74.3 74.4 74.7 75.3 74.9 74.7 73.9 72.6 72.6 75.0 76.0 76.0 76.3 77.1 76.0 75.2 73.7 74.7 76.3 58.3 59.5 61.3 62.8 64.4 59.6 60.5 61.7 63.3 65.3 57.4 58.9 61.0 62.5 63.9 1.5 1.1 1.2 1.1 1.2 1965 1967 1968 1969 75.3 77.5 79.8 83.1 87.3 78.2 80.1 82.0 85.0 88.7 75.2 77.0 79.3 82.5 87.3 76.1 77.9 80.3 83.3 87.0 73.5 75.3 77.5 81.0 87.8 79.4 81.8 83.3 85.5 88.5 77.1 78.8 79.3 80.7 83.0 66.2 69.2 72.4 76.4 81.3 67.1 69.6 71.5 75.7 79.8 65.6 68.8 73.1 76.9 82.3 1.7 2.9 3.0 4.1 5.0 1970 1971 1972 1973 1974 91.8 96.2 100.0 105.9 115.8 92.7 96.6 100.0 106.0 117.0 91.2 95.8 100.0 105.8 117.9 91.6 96.3 100.0 104.0 116.5 90.6 94.9 100.0 109.2 120.5 93.1 97.0 100.0 112.6 137.4 88.4 93.3 100.0 116.7 161.5 87.9 94.0 100.0 106.9 117.7 86.7 92.9 100.0 106.7 117.0 88.7 94.8 100.0 107.0 118.2 5.2 4.8 4.0 5.9 9.4 1975 1976 1977 1978 1979 126.3 133.6 142.1 153.0 167.3 126.2 132.9 141.3 151.5 166.0 132.3 140.2 151.8 167.1 185.0 132.9 139.9 148.5 161.1 176.7 131.2 140.8 158.0 178.3 200.9 151.7 156.9 164.1 174.8 196.7 175.0 178.7 195.0 210.1 244.2 128.9 136.9 146.4 157.2 171.8 128.0 135.4 145.4 154.8 169.0 129.5 137.9 147.1 158.8 173.6 9.0 5.8 6.4 7.6 9.4 1980 1981 p 183.3 184.3 201.0 203.8 220.7 195.5 213.6 219.6 234.4 217.1 237.2 302.9 320.9 190.8 209.1 191.2 213.2 190.5 200.4 206.3 9.6 9.4 1979: i II Ill IV 161.9 165.4 168.9 173.1 160.2 163.7 167.8 172.4 177.8 182.8 187.9 191.7 170.3 174.4 178.8 183.0 192.1 198.6 205.1 208.1 188.0 195.4 199.5 203.4 225.6 235.5 250.9 264.3 166.1 169.0 173.2 179.3 162.8 165.2 169.8 179.3 168.3 171.6 175.5 179.3 9.3 8.9 8.8 10.3 177.1 181.1 185.1 189.7 177.8 182.1 186.3 190.8 196.7 202.4 207.1 209.7 188.0 193.9 198.6 202.0 213.2 218.4 223.1 224.3 209.9 290.3 299.4 308.7 184.4 188.4 192.1 198.2 184.5 187.8 190.8 201.2 184.3 188.8 193.0 196.2 9.7 9.3 9.0 10.4 206.7 229.7 232.9 233.1 237.3 238.8 239.0 202.7 206.9 210.6 216.2 205.5 211.8 216.1 219.7 200.7 204.3 208.6 10.2 7.9 9.5 8.3 1980: I II Ill . IV 213.2 219.1 226.6 315.5 1981: 1 II Ill IV. 194.4 198.1 195.8 198.9 214.6 219.1 202.6 206.7 202.9 206.3 223.4 226.3 236.1 241.0 324.4 324.8 318.6 316.9 210.8 213.7 222.9 211.7 Separate deflators are not calculated for gross private domestic investment, change in business inventories, and net exports of goods and services. 2 Quarterly changes are at annual rates. Source: Department of Commerce, Bureau of Economic Analysis. 238 TABLE B-5.—Changes in GNP and GNPprice measures, 1929-81 [Percent change from preceding period; quarterly data at seasonally adjusted annual rates] Personal consumption expenditures Gross national product Period Current dollars Constant (1972) dollars Implicit price deflator Chain price index Fixedweighted price index (1972 weights) Current dollars Constant (1972) dollars Implicit price deflator Chain price index Fixedweighted price index (1972 weights) 1929 6.6 6.6 0.0 1933 -4.2 -2.2 -2.1 -5.7 -2.0 -3.8 1939. 7.0 7.8 -.8 4.6 5.3 -.7 1940. 1941. 1942. 1943. 1944. 10.0 25.0 26.7 21.3 9.6 7.6 16.3 15.3 15.1 7.1 2.2 7.5 9.9 5.3 2.4 6.0 13.8 9.7 12.2 8.8 4.6 5.9 -1.0 2.9 2.8 1.3 7.4 10.8 9.0 5.8 1945. 1946. 1947. 1948. 1949. .9 -1.2 11.1 11.3 -.5 -1.5 -14.7 -1.7 4.1 .5 2.4 15.7 12.9 6.9 — .9 10.5 20.3 12.5 8.0 1.9 6.2 11.1 1.6 2.1 2.3 4.1 8.3 10.7 5.8 -.3 1950. 1951. 1952. 1953. 1954. 10.9 15.5 5.2 5.4 .0 8.7 8.3 3.7 3.8 -1.2 2.1 6.6 1.4 1.6 1.2 7.8 7.9 4.8 5.8 2.7 5.6 1.3 2.5 3.8 1.8 2.0 6.5 2.3 1.9 .9 1955. 1956. 1957. 1958 1959. 9.0 5.4 5.3 13 8.5 6.7 2.1 1.8 _4 6.0 2.2 3.2 3.4 17 2.4 7.6 4.9 5.4 32 7.4 6.5 2.9 2.1 10 5.4 1.0 1.9 3.3 22 1.9 1960. 1961. 1962. 1963. 1964. 3.8 3.6 7.7 5.6 6.9 2.2 2.6 5.8 4.0 5.3 1.6 .9 1.8 1.5 1.5 1.6 1.2 1.4 1.3 1.4 1.5 1.1 1.2 1.1 1.2 4.5 3.1 6.0 5.5 6.9 2.6 2.1 4.5 3.8 5.5 1.9 1.0 1.5 1.6 1.4 1.7 1.1 1.1 1.4 1.2 1.5 .9 .9 1.2 1.1 1965. 1966. 1967. 1968. 1969. 8.4 9.4 5.8 9.2 8.1 6.0 6.0 2.7 4.6 2.8 2.2 3.2 3.0 4.4 5.1 1.9 3.1 3.0 4.3 5.0 1.7 2.9 3.0 4.1 5.0 7.5 8.1 5.4 9.5 8.4 5.6 5.1 2.9 5.3 3.7 1.8 2.9 2.4 4.0 4.5 1.5 2.7 2.5 3.8 4.5 1.3 2.4 2.4 3.6 4.4 1970. 1971. 1972. 1973. 1974. 5.2 8.6 10.1 11.8 8.1 -.2 3.4 5.7 5.8 -.6 5.4 5.0 4.2 5.7 8.7 5.3 4.9 4.1 5.9 9.1 5.2 4.8 4.0 5.9 9.4 6.9 8.1 9.6 10.2 9.4 2.2 3.7 5.8 4.3 -.6 4.6 4.3 3.7 5.7 10.1 4.6 4.3 3.6 6.0 10.3 4.5 4.2 3.5 6.0 10.4 1975. 1976. 1977. 1978. 1979. 8.0 10.9 11.6 12.4 12.0 -1.1 5.4 5.5 4.8 3.2 9.3 5.2 5.8 7.3 8.5 9.2 5.7 6.2 7.5 8.7 9.0 5.8 6.4 7.6 9.4 9.9 11.0 11.2 11.9 12.0 2.2 5.6 4.9 4.7 2.9 7.6 5.2 6.0 6.8 8.9 7.7 5.3 6.3 7.1 9.3 7.8 5.3 6.3 7.2 9.6 1980. 1981 P.. 8.8 11.3 -.2 1.9 9.0 9.1 8.6 9.3 9.6 9.4 10.7 11.1 .5 2.6 10.2 8.3 10.6 9.0 11.0 9.1 12.7 5.9 12.2 8.8 3.9 -1.7 4.1 .6 8.4 7.8 7.8 8.1 8.9 8.2 7.3 8.6 9.3 8.9 8.8 10.3 11.0 6.7 14.6 14.7 .9 -1.2 4.7 3.6 10.0 8.0 9.4 10.7 9.8 8.8 9.9 10.9 10.3 9.2 10.4 11.4 12.6 -1.1 11.8 14.9 3.1 -9.9 2.4 3.8 9.3 9.8 9.2 10.7 8.7 8.8 9.3 10.5 9.7 9.3 9.0 10.4 12.9 -1.0 14.3 17.4 .8 -9.8 5.1 7.0 12.0 9.8 8.8 9.7 12.5 9.7 9.5 10.1 13.2 9.9 9.5 10.1 19.2 4.7 11.4 2.7 8.6 -1.6 1.4 -5.2 9.8 6.4 9.9 8.4 9.8 7.7 10.0 8.4 10.2 7.9 9.5 8.3 14.2 4.3 12.5 5.6 5.8 -2.1 3.3 -1.8 8.0 6.5 9.0 7.5 10.3 6.5 8.7 7.3 10.9 6.5 8.2 7.0 1979: 1. II. III. IV. 1980: 1 II III IV 1981: 1. tl III. IV P Note.—Changes are based on unrounded data and may differ slightly from changes computed from data shown elsewhere in these tables. Source: Department of Commerce, Bureau of Economic Analysis. 239 TABLE B-6.—Gross national product by major type of product, 1929-81 [Billions of dollars; quarterly data at seasonally adjusted annual rates] Goods Year or quarter Gross national product Final sales Durable goods Total Inventory change Total Final sales Inven- Final Inventory tory change sales change Nondurable goods Final sales Inventory change Services Structures Auto output 1929 103.4 1.7 56.1 54.4 1.7 16.1 1.4 38.3 0.3 35.9 11.4 1933 55.8 57.4 -1.6 27.0 28.6 -1.6 5.4 -.5 23.2 -1.1 25.9 2.9 1939 90.9 90.5 .4 49.0 48.6 .4 12.4 .3 36.2 .1 34.4 7.5 1940 1941 1942 1943 1944 1945 1946 1947 1948 1949 100.0 125.0 158.5 192.1 210.6 212.4 209.8 233.1 259.5 258.3 97.8 120.6 156.7 192.8 211.6 213.5 203.5 233.5 254.8 261.4 2.2 4.5 1.8 -.6 -1.0 -1.0 6.4 -.5 4.7 -3.1 56.0 72.5 93.7 120.4 132.3 128.9 125.3 139.8 154.4 147.7 53.8 68.0 91.9 121.0 133.3 129.9 118.9 140.3 149.7 150.8 2.2 4.5 1.8 -.6 -1.0 -1.0 6.4 -.5 4.7 -3.1 15.4 23.8 34.5 54.2 58.5 50.1 31.8 44.4 48.0 50.0 1.2 3.1 1.0 .0 -.6 -1.3 5.3 1.4 1.0 -1.8 38.4 44.2 57.4 66.8 74.8 79.8 87.1 95.9 101.7 100.9 1.0 1.4 .7 -.6 -.3 .2 1.1 -1.9 3.7 -1.3 35.7 40.8 50.8 63.0 72.3 77.0 68.8 71.6 77.2 82.2 8.3 11.8 14.0 8.7 6.1 6.5 15.7 21.7 28.0 28.4 7.2 8.8 11.9 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 286.5 330.8 348.0 366.8 366.8 400.0 421.7 444.0 449.7 487.9 279.7 320.5 344.8 366.3 368.4 394.1 417.0 442.6 451.2 482.2 6.8 10.3 3.1 .4 -1.5 6.0 4.7 1.3 -1.5 5.7 162.4 189.5 194.6 203.1 196.1 214.5 223.3 232.3 228.2 248.5 155.6 179.2 191.5 202.7 197.6 208.5 218.6 231.0 229.7 242.9 6.8 10.3 3.1 .4 -1.5 6.0 4.7 1.3 -1.5 5.7 56.2 66.4 72.5 77.8 73.9 81.4 85.9 91.3 84.4 90.8 3.6 6.1 1.2 1.5 -2.5 3.4 2.1 .5 -2.8 3.1 99.4 112.8 119.0 124.9 123.7 127.1 132.7 139.6 145.3 152.1 3.2 4.2 2.0 -1.1 1.0 2.6 2.6 .8 1.3 2.5 88.5 103.5 113.9 121.6 126.2 136.1 146.2 158.7 167.7 179.8 35.6 37.8 39.4 42.0 44.5 49.5 52.2 53.0 53.8 59.5 15.4 13.3 12.0 16.1 14.7 21.2 16.9 19.4 14.4 19.4 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 506.5 524.6 565.0 596.7 637.7 691.1 756.0 799.6 873.4 944.0 503.6 522.2 558.8 590.7 632.1 681.2 741.9 789.3 865.5 934.2 3.0 2.3 6.3 6.0 5.6 9.9 14.1 10.3 7.9 9.8 254.2 257.4 278.5 290.3 309.8 338.4 375.0 389.4 421.3 450.2 251.3 255.0 272.2 284.3 304.2 328.5 360.9 379.1 413.4 440.4 3.0 2.3 6.3 6.0 5.6 9.9 14.1 10.3 7.9 9.8 93.3 92.7 102.9 109.4 118.9 131.6 147.0 153.5 167.9 178.5 158.0 162.4 169.3 174.9 185.3 196.9 213.9 225.6 245.5 261.9 1.3 2.4 2.8 3.3 1.6 3.2 3.9 4.9 3.1 3.4 193.8 207.0 222.0 237.1 255.0 273.3 299.0 326.5 358.2 391.9 58.5 60.2 64.5 69.3 72.9 79.3 82.0 83.6 94.0 101.8 21.3 17.8 22.5 25.2 25.9 31.2 30.4 28.0 35.1 34.9 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 992.7 1,077.6 1,185.9 1,326.4 1,434.2 1,549.2 1,718.0 1,918.0 2,156.1 2,413.9 989.5 1,070.0 1,175.7 1,307.9 1,420.1 1,556.1 1,706.2 1,897.0 2,133.9 2,396.4 3.2 7.7 10.2 18.5 14.1 -6.9 11.8 21.0 22.2 17.5 456.6 459.9 477.7 485.3 519.4 529.6 604.1 585.6 646.7 632.5 694.0 700.9 771.1 759.3 831.6 852.6 924.4 946.6 1,055.9 1,038.5 3.2 7.7 10.2 18.5 14.1 -6.9 11.8 21.0 22.2 17.5 179.2 187.1 207.4 237.6 250.7 279.4 312.5 353.9 392.0 439.7 1.6 -.1 3.4 2.7 4.0 6.7 10.2 5.5 4.7 6.4 _} 2'.8 7.2 13.1 12.0 -8.4 7.7 8.8 17.8 11.5 277.5 290.6 312.0 348.0 381.8 421.5 446.7 477.7 532.5 598.8 3.3 429.9 4.8 472.0 3.0 519.0 5.3 571.5 2.2 636.1 1.5 705.2 4.2 779.3 12.2 869.0 4.4 976.2 6.0 1,097.2 102.9 120.3 137.3 150.8 151.4 150.0 167.6 196.4 233.2 260.8 28.7 39.1 41.6 46.2 39.2 40.7 55.9 65.3 69.6 68.0 1980 1981 P 2,626.1 2,922.2 2,632.0 2,904.0 -5.9 18.2 1,130.4 1,136.3 1,271.2 1,253.0 -5.9 18.2 462.6 498.0 -4.0 9.0 673.7 754.9 -1.8 1,229.6 9.2 1,370.3 266.0 280.7 60.2 70.2 2,340.6 2,374.6 2,444.1 2,496.3 2,316.2 2,341.5 2,430.8 2,497.1 24.3 33.1 13.3 -.8 1,038.6 1,041.9 1,064.9 1,078.3 1,014.3 1,008.8 1,051.6 1,079.1 24.3 33.1 13.3 -.8 434.7 426.4 449.2 448.4 18.9 20.9 6.7 -.4 579.5 582.4 602.4 630.7 5.5 12.2 6.6 -.5 1,055.5 1,078.5 1,112.0 1,142.8 246.5 254.2 267.3 275.1 76.0 69.5 64.9 61.8 2,571.7 2,564.8 2,637.3 2,730.6 2,569.1 2.5 2,557.4 7.4 2,653.4 -16.0 2,748.0 -17.4 1,116.9 1,106.4 1,129.4 1,169.0 1,114.4 2.5 1,099.0 7.4 1,145.4 -16.0 1,186.3 -17.4 468.2 -11.8 441.3 3.3 464.9 -8.4 .7 476.0 646.2 657.7 680.5 710.3 14.3 4.1 -7.7 -18.1 1,178.6 1,205.6 1,249.0 1,285.3 276.2 252.8 258.9 276.4 64.4 53.6 54.3 68.8 2,853.0 2,885.8 2,965.0 2,984.9 2,848.5 2,862.5 2,937.6 2,967.3 1,247.5 1,257.0 1,298.3 1,282.0 1,243.1 1,233.7 1,270.8 1,264.4 505.5 498.3 506.6 481.6 737.5 735.3 764.2 782.8 8.6 4.8 8.9 14.6 1,317.1 1,344.7 1,390.5 1,429.0 288.4 284.1 276.3 273.9 68.1 73.6 76.8 62.3 101.7 1979: 1 II Ill IV 1980: 1 II Ill IV 1981: 1 II Ill IV P. 4.5 23.3 27.5 17.6 4.5 23.3 27.5 17.6 Source.- Department of Commerce, Bureau of Economic Analysis. 240 -4.2 18.5 18.6 3.1 TABLE B-7.—Gross national product by major type of product in 1972 dollars, 1929-81 [Billions of 1972 dollars; quarterly data at seasonally adjusted annual rates] Goods Gross Year or quarter national product Final sales Inventory change Durable goods Nondurable goods Services Structures Total Total Inventory change Final sales Final sales Inventory change Final sales 99.3 Auto output Inventory change 127.4 43.9 1929 315.7 311.0 4.6 144.3 139.7 4.6 40.4 1933 222.1 227.0 -4.9 97.5 102.3 -4.9 17.5 -2.1 84.9 -2.8 110.7 14.0 1939. 319.8 318.2 1.6 154.3 152.7 1.6 35.5 .7 117.2 .9 135.2 30.3 1940 1941 1942 1943 1944 1945 1946 1947 1948 1949 344.1 400.4 461.7 531.6 569.1 560.4 478.3 470.3 489.8 492.2 337.9 388.4 456.5 531.5 571.4 564.0 466.1 470.6 484.3 496.6 6.2 12.0 5.2 .1 -2.3 -3.6 12.2 -.2 5.5 -4.4 171.7 198.6 221.4 263.3 287.3 278.5 238.3 237.7 244.8 240.3 165.5 186.6 216.2 263.3 289.6 282.2 226.2 237.9 239.4 244.7 6.2 12.0 5.2 .1 -2.3 -3.6 12.2 -.2 5.5 -4.4 43.1 57.8 75.7 118.8 135.9 121.2 60.3 75.5 77.3 78.3 3.4 8.2 3.5 .7 -1.8 -3.7 10.8 1.4 1.6 -2.9 122.4 128.7 140.5 144.4 153.7 161.0 165.8 162.4 162.1 166.4 2.8 3.8 1.7 -.6 -.5 .1 1.3 -1.6 3.8 -1.5 139.9 158.5 193.9 242.0 263.7 263.0 200.8 188.1 192.5 198.3 32.5 43.3 46.3 26.2 18.1 18.8 39.1 44.6 52.4 53.6 12.3 13.9 18.0 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 534.8 579.4 600.8 623.6 616.1 657.5 671.6 683.8 680.9 721.7 524.2 565.6 596.5 622.1 618.2 649.8 665.8 682.2 682.7 714.7 10.6 13.7 4.3 1.5 -2.2 7.7 5.8 1.5 -1.8 7.0 261.5 283.7 292.1 306.8 292.7 316.7 320.9 321.7 311.6 332.5 250.9 270.0 287.8 305.3 294.9 309.0 315.1 320.2 313.4 325.5 10.6 13.7 4.3 1.5 -2.2 7.7 5.8 1.5 -1.8 7.0 86.1 98.2 107.9 116.2 109.0 117.2 117.8 119.4 109.2 113.6 5.5 9.0 1.7 2.3 -3.7 4.5 2.9 .9 -3.4 3.9 164.8 171.8 179.9 189.1 185.9 191.9 197.2 200.8 204.3 211.9 5.1 4.7 2.6 -.8 1.5 3.2 2.9 .6 1.6 3.1 207.4 231.3 243.2 247.5 249.1 260.1 270.2 282.4 287.6 299.4 65.9 64.3 65.5 69.3 74.3 80.7 80.5 79.7 81.7 89.8 23.0 19.3 17.1 22.6 21.6 29.8 23.0 24.5 18.6 23.2 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 737.2 756.6 800.3 832.5 876.4 929.3 984.8 1,011.4 1,058.1 1,087.6 733.7 753.7 792.4 825.0 869.3 917.5 968.0 999.2 1,049.1 1,076.6 3.5 3.0 7.8 7.5 7.1 11.8 16.8 12.2 9.0 11.1 335.8 338.0 361.3 372.2 393.8 422.6 456.4 463.4 483.1 496.0 332.3 335.0 353.5 364.7 386.7 410.8 439.6 451.2 474.1 484.9 3.5 3.0 7.8 7.5 7.1 11.8 16.8 12.2 9.0 11.1 115.6 114.7 125.7 132.5 143.0 157.2 174.0 178.3 187.4 193.0 2.0 -.1 4.2 3.4 5.1 8.2 12.3 6.6 5.4 7.2 216.6 220.3 227.8 232.2 243.7 253.6 265.6 272.9 286.7 291.9 1.6 3.0 3.7 4.2 1.9 3.6 4.5 5.6 3.6 3.9 312.5 326.9 341.5 356.2 374.0 390.7 412.6 434.1 453.0 469.2 89.0 91.7 97.4 104.1 108.6 116.0 115.9 113.9 122.0 122.5 25.3 21.2 26.0 28.7 29.4 35.7 34.8 31.8 38.5 37.4 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1,085.6 1,122.4 1,185.9 1,255.0 1,248.0 1,233.9 1,300.4 1,371.7 1,436.9 1,483.0 1,081.8 1,114.3 1,175.7 1,237.8 1,236.4 1,240.6 1,292.7 1,359.3 1,422.9 1,472.9 3.8 8.1 10.2 17.2 11.6 -6.7 7.8 12.3 14.0 10.2 486.9 497.2 529.6 573.0 564.0 549.2 588.9 628.8 655.9 674.5 483.2 489.1 519.4 555.8 552.4 555.9 581.1 616.5 641.9 664.3 3.8 8.1 10.2 17.2 11.6 -6.7 7.8 12.3 14.0 10.2 187.5 188.7 207.4 236.1 234.1 230.3 242.8 264.2 278.6 290.2 .0 3.0 7.2 12.7 9.4 -6.4 5.4 5.8 10.9 6.7 295.7 300.4 312.0 319.7 318.3 325.7 338.3 352.3 363.3 374.1 482.4 497.8 519.0 542.9 563.0 576.4 595.6 618.2 649.0 678.0 116.3 127.3 137.3 139.1 121.0 108.3 116.0 124.6 132.1 130.6 29.8 38.9 41.6 46.4 37.1 35.7 45.3 50.7 50.2 46.8 1980 1981 " 14807 l!509'.6 14836 l!5014 —29 8'.2 665 2 685ll 668 1 67619 —2 9 8^2 9 81 3 2783 — 19 3^8 386 8 398i6 3.7 5.1 3.0 4.5 2.2 -.3 2.4 6.5 3.0 3.5 11 4.4 695 7 7074 1198 117'.1 386 4L9 14799 1,4734 14882 1,490.6 14644 1,455'.0 14806 1,491.3 154 184 76 -.7 6818 669'.! 6736 6713 6664 650i8 6660 674'.0 154 18'.4 7.6 _'l 2950 283^8 292 1 289'.9 114 1L9 38 -!3 3713 367^0 3738 384J 40 64 38 -'.4 669 1 674!8 6830 684^9 129 0 129i5 1316 1324 532 484 440 414 1,501.9 1,502 8 14633 14620 1,471.9 1,476.9 1,485.6 1,492.7 _9 13 -5.0 -7.2 6821 6581 657.5 662.9 6830 6568 662.4 670.1 _9 13 -5.0 -7.2 295.2 2701 2784 281.5 -4.6 7 -3.8 .3 387.7 3867 384iO 388.6 3.7 6 -U —7.5 6907 6906 699i9 701.7 129.1 1146 114.'5 121.0 42.5 346 34.6 42.8 15164 1,510.4 1,515.8 1,495.6 -14 10.8 14.9 8.5 6889 686.3 6919 673.1 6903 675.5 6770 664.7 -14 2925 279J 2792 261.8 -3 1 8.9 78 1.5 3979 395.8 3978 402.8 17 1.9 71 7.0 7036 7047 7099 711.2 1239 1194 1140 111.2 428 44^3 448 35.8 1979: I II Ill IV 1980: 1 II III IV 3.5 1981: 1 II Ill IV * 15178 1,499.6 1,500.9 1,487.1 10.9 149 8.5 Source: Department of Commerce, Bureau of Economic Analysis. 241 1.1 TABLE B-8.—Gross national product by sector, 1929-81 [Billions of dollars, except as noted; quarterly data at seasonally adjusted annual rates] Gross domestic product Year or quarter Gross national product Business Total Total Nonfarm 1 Farm Households and instidiscrep- tutions ancy Cfatk Oldllotiral llCdl Government 2 Total Federal State and local Percent change from Poet K6SI precedof the ing world period, gross national product 3 1929. 103.4 102.6 95.4 84.7 9.7 1.1 2.9 4.3 0.9 3.5 0.8 6.6 1933. 55.8 55.5 49.1 43.8 4.6 .7 1.7 4.7 1.2 3.5 .3 -4.2 1939. 90.9 90.5 80.6 72.9 6.3 1.4 2.3 7.6 3.4 4.2 .5 7.0 1940., 1941. 1942. 1943. 1944. 1945. 1946. 1947. 1948. 1949. 100.0 125.0 158.5 192.1 210.6 212.4 209.8 233.1 259.5 258.3 99.6 124.5 157.9 191.6 210.1 212.0 209.0 231.8 257.9 256.9 89.4 112.6 139.9 162.8 174.2 172.8 183.8 210.0 234.9 231.5 81.8 103.1 127.7 149.3 156.2 152.7 164.4 188.2 213.1 212.2 6.4 8.9 13.0 15.3 15.3 16.0 18.8 20.2 23.3 18.8 1.1 .6 -.8 -1.8 2.7 4.1 .5 1.5 -1.6 .6 2.4 2.5 2.9 3.2 3.7 4.1 4.5 5.1 5.6 5.9 7.8 9.4 15.1 25.6 32.2 35.2 20.8 16.7 17.4 19.4 3.5 5.0 10.6 20.9 27.2 29.8 14.6 9.4 8.9 10.0 4.3 4.4 4.5 4.7 4.9 5.4 6.2 7.3 8.5 9.4 .4 .5 .5 .5 .5 .4 .8 1.2 1.6 1.4 10.0 25.0 26.7 21.3 9.6 .9 -1.2 11.1 11.3 -.5 1950. 1951. 1952. 1953. 1954. 1955. 1956. 1957. 1958. 1959. 286.5 330.8 348.0 366.8 366.8 400.0 421.7 444.0 449.7 487.9 284.8 328.7 345.7 364.6 364.5 397.3 418.5 440.5 446.6 484.6 257.5 294.4 307.3 324.9 323.9 354.0 372.1 390.8 393.1 428.3 236.3 268.3 283.4 302.3 302.3 333.9 355.7 373.7 372.2 410.6 20.0 22.9 22.2 20.3 19.7 18.8 18.6 18.4 20.7 19.0 1.3 3.2 1.7 2.3 2.0 1.3 -2.1 -1.2 .2 -1.3 6.4 6.9 7.2 7.8 8.1 9.1 9.8 10.5 11.4 12.3 20.9 27.4 31.2 31.9 32.5 34.2 36.6 39.1 42.1 44.0 10.7 16.2 18.9 18.6 17.8 18.4 19.0 19.6 20.5 20.9 10.1 11.2 12.3 13.3 14.7 15.8 17.6 19.6 21.6 23.1 1.6 2.1 2.3 2.2 2.3 2.8 3.2 3.5 3.0 3.3 10.9 15.5 5.2 5.4 .0 9.0 5.4 5.3 1.3 8.5 1960. 1961. 1962. 1963 1964. 1965 1966. 1967 1968. 1969. 506.5 524.6 565.0 596.7 637.7 691.1 756.0 799.6 873.4 944.0 502.9 520.7 560.5 591.8 632.3 685.2 750.3 793.7 866.7 937.1 442.0 455.7 490.6 517.2 551.6 598.4 652.6 685.1 745.4 803.2 424.2 435.7 468.1 495.0 532.2 577.7 628.4 663.3 725.0 782.1 20.2 20.2 20.4 20.5 19.3 21.9 22.8 22.1 22.6 25.1 -2.4 -.1 2.1 1.7 .1 -1.2 1.4 -.3 -2.1 -3.9 13.8 14.4 15.5 16.6 17.8 19.2 21.1 23.4 26.1 29.4 47.1 50.5 54.3 58.0 62.9 67.6 76.5 85.1 95.2 104.5 21.7 22.6 24.1 25.2 27.0 28.3 32.4 35.6 39.3 41.9 25.5 27.9 30.2 32.9 35.9 39.3 44.1 49.5 55.9 62.6 3.6 3.9 4.6 4.9 5.5 5.9 5.6 5.9 6.7 6.9 3.8 3.6 7.7 5.6 6.9 8.4 9.4 5.8 9.2 8.1 1970. 1971. 1972. 1973. 1974. 1975. 1976.. 1977. 1978. 1979. 992.7 1,077.6 1,185.9 1,326.4 1,434.2 1,549.2 1,718.0 1,918.0 2,156.1 2,413.9 985.4 1,068.5 1,175.0 1,310.4 1,414.4 1,531.9 1,697.5 1,894.5 2,126.2 2,370.1 837.3 907.1 998.6 1,118.7 1,206.4 1,301.7 1,447.3 1,623.1 1,829.4 2,046.3 813.1 875.4 963.4 1,068.0 1,155.0 1,247.3 1,396.3 1,571.1 1,765.1 1,974.1 25.8 27.6 31.9 49.9 47.7 48.9 45.9 47.6 57.9 70.0 -1.5 4.1 3.3 .8 3.7 5.5 5.1 4.4 6.4 2.2 32.3 35.4 38.6 42.1 45.8 50.6 55.6 61.0 67.5 75.7 115.8 126.0 137.8 149.6 162.2 179.6 194.6 210.4 229.2 248.1 44.8 46.8 50.1 51.9 54.9 59.0 62.4 66.3 71.7 75.8 71.1 79.3 87.7 97.7 107.3 120.6 132.3 144.0 157.5 172.3 7.3 9.2 10.9 16.0 19.8 17.3 20.5 23.5 29.9 43.8 5.2 8.6 10.1 11.8 8.1 8.0 10.9 11.6 12.4 12.0 1980. 1981 ".. 2,626.1 2,922.2 2,576.5 2,868.2 2,221.2 2,477.2 2,153.7 2,405.8 68.1 72.2 -.7 -.8 85.9 97.7 269.3 293.3 81.9 90.0 187.4 203.3 49.7 54.0 8.8 11.3 1979 1 II. Ill IV 2,340.6 2,374.6 2,444.1 2,496.3 2,301.0 2,333.7 2,396.0 2,449.7 1,987.3 2,014.2 2,069.8 2,113.9 1,913.5 1,942.9 1,996.5 2,043.6 68.0 70.6 70.4 71.0 5.8 .7 2.8 -.7 72.3 74.2 76.9 79.4 241.4 245.4 249.4 256.4 74.6 74.6 74.9 79.0 166.8 170.8 174.5 177.3 39.6 40.9 48.1 46.6 12.7 5.9 12.2 8.8 1980: 1 II. Ill IV 2,571.7 2,564.8 2,637.3 2,730.6 2,520.2 2,516.7 2,586.9 2,682.0 2,176.9 2,166.4 2,230.0 2,311.4 2,106.4 2,100.8 2,159.1 2,248.6 67.7 67.5 67.9 69.4 2.8 -1.9 3.0 -6.6 82.1 84.4 86.9 90.4 261.2 265.9 269.9 280.3 79.6 80.5 80.7 87.1 181.6 185.4 189.3 193.3 51.5 48.1 50.5 48.6 12.6 -1.1 11.8 14.9 1981 1 II III IV.. 2,853.0 2,885.8 2,965.0 2,984.9 2,800.7 2,835.5 2,909.4 2,927.3 2,420.8 2,449.2 2,517.6 2,521.2 2,350.1 2,383.7 2,442.2 2,447.0 67.3 72.4 75.2 74.1 3.4 -6.9 .2 .2 93.9 96.4 98.4 102.0 285.9 289.9 293.5 304.0 87.9 88.2 88.5 95.3 198.0 201.6 205.0 208.7 52.3 50.4 55.6 57.6 19.2 4.7 11.4 2.7 1 Includes compensation of employees in government 2 Compensation of government employees. 3 enterprises. Changes are based on unrounded data and therefore may differ slightly from changes computed from data shown here. Source: Department of Commerce, Bureau of Economic Analysis. 242 TABLE B-9.—Gross national product by sector in 1972 dollars, 1929-81 [Billions of 1972 dollars, except as noted; quarterly data at seasonally adjusted annual rates] Gross domestic product Government 2 Business Gross national product Year or quarter Statisti- Total Total Nonfarm l Farm ral Cdl Households and instidiscrep- tutions ancy State Total Federal and Rest of the world local Percent change from preceding period, gross national product 3 1929 315.7 313.2 271.5 244.7 23.6 3.1 15.6 26.2 5.2 21.0 2.4 6.6 1933 222.1 220.9 180.0 152.5 24.9 2.6 12.2 28.8 6.6 22.1 1.3 -2.2 1939 319.8 318.2 261.0 231.3 25.2 4.6 15.1 42.1 16.9 25.2 1.6 7.8 1940.. 1941 1942 1943 1944 1945 1946 1947 1948 1949 344.1 400.4 461.7 531.6 569.1 560.4 478.3 470.3 489.8 492.2 342.8 398.7 460.1 530.3 567.7 559.3 476.4 467.8 486.8 489.4 282.7 327.6 361.8 385.6 403.6 397.9 385.5 393.8 412.0 409.8 254.6 299.8 335.3 362.1 370.1 362.8 358.6 367.0 389.0 383.4 24.5 26.2 28.6 27.7 27.1 25.6 25.8 24.0 25.8 25.6 3.6 1.6 16.1 15.9 16.4 15.2 15.1 15.0 15.1 16.0 16.7 17.3 44.0 55.2 81.9 129.4 149.1 146.4 75.9 58.0 58.1 62.3 18.6 29.6 56.7 105.0 125.2 121.8 49.7 29.8 29.2 31.3 25.4 25.6 25.2 24.5 23.9 24.6 26.2 28.2 29.0 31.0 1.4 1.7 1.5 1.3 1.4 1.1 1.8 2.5 3.0 2.7 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 534.8 579.4 600.8 623.6 616.1 657.5 671.6 683.8 680.9 721.7 531.8 575.6 596.9 619.8 612.1 653.0 666.5 678.3 676.2 716.8 448.7 478.0 492.8 515.6 508.5 547.0 557.4 566.1 561.7 600.0 419.4 447.2 463.7 484.3 477.0 516.0 531.5 539.5 532.0 574.0 27.0 25.8 26.4 27.7 28.4 29.3 28.9 28.2 29.3 27.8 18.3 18.7 18.6 19.3 19.4 21.4 22.5 23.1 24.2 24.7 64.7 79.0 85.5 85.0 84.1 84.6 86.7 89.1 90.3 92.2 32.7 46.2 51.6 49.6 47.2 45.9 45.6 45.8 44.5 44.5 32.0 32.8 33.9 35.4 36.9 38.6 41.0 43.3 45.8 47.7 3.0 3.7 3.9 3.7 4.0 4.5 5.1 5.5 4.6 4.9 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 737.2 756.6 800.3 832.5 876.4 929.3 984.8 1,011.4 1,058.1 1,087.6 732.0 751.0 793.8 825.6 868.9 921.4 977.5 1,003.9 1,050.0 1,079.7 610.1 625.1 663.2 691.6 730.3 777.7 824.0 842.0 882.1 907.1 584.2 596.3 631.5 659.7 701.3 749.6 794.1 812.8 855.6 881.9 29.2 28.9 28.8 29.6 28.8 29.8 28.2 29.5 29.0 29.5 -3.3 26.6 27.0 28.1 28.9 29.8 30.9 32.6 34.3 35.4 37.0 95.3 98.9 102.5 105.2 108.8 112.7 120.8 127.7 132.4 135.7 45.2 46.2 48.3 48.2 48.5 48.7 53.0 57.2 58.0 58.2 50.1 52.7 54.3 57.0 60.4 64.0 67.9 70.5 74.4 77.4 5.2 5.7 6.5 6.9 7.5 7.9 7.4 7.5 8.2 7.9 2.2 2.6 5.8 4.0 5.3 6.0 6.0 2.7 4.6 2.8 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1,085.6 1,122.4 1,185.9 1,255.0 1,248.0 1,233.9 1,300.4 1,371.7 1,436.9 1,483.0 1,077.6 1,112.8 1,175.0 1,239.9 1,230.7 1,220.0 1,284.8 1,354.7 1,416.8 1,455.9 904.8 938.6 998.6 1,061.4 1,049.1 1,034.7 1,097.6 1,165.1 1,222.6 1,258.3 875.4 901.7 963.4 1,029.1 1,014.1 996.7 1,061.6 1,128.9 1,185.5 1,222.1 31.1 32.6 31.9 31.6 31.8 33.6 32.1 33.0 32.9 34.9 -1.7 4.2 3.3 .7 3.2 4.4 3.9 3.2 4.2 1.4 36.7 37.6 38.6 39.4 39.3 40.5 40.9 41.3 42.3 43.7 136.1 136.7 137.8 139.1 142.3 144.9 146.3 148.4 151.9 153.9 55.2 52.5 50.1 48.2 48.5 48.4 48.5 48.6 49.3 49.0 80.9 84.2 87.7 90.8 93.8 96.5 97.8 99.7 102.6 104.9 8.0 9.5 10.9 15.1 17.3 13.9 15.6 16.9 20.1 27.2 -.2 3.4 5.7 5.8 -.6 1980 1981 " 1,480.7 1,509.6 1,452.4 1,481.4 1,251.8 1,279.6 1,216.8 1,242.2 35.3 37.8 -.4 -.4 45.4 47.0 155.2 154.9 49.2 49.0 106.0 105.9 28.3 28.1 1,479.9 1,473.4 1,488.2 1,490.6 1,454.6 1,447.8 1,458.6 1,462.4 1,258.8 1,250.8 1,260.0 1,263.6 1,221.8 1,215.0 1,223.2 1,228.2 33.3 35.3 35.1 35.8 37 .5 1.7 _.4 429 1529 153.7 154.4 154.5 491 43.3 44.2 44.4 49.0 49.0 48.9 1038 104.7 105.3 105.6 25.6 29.6 28.1 1,501.9 1,463.3 1,471.9 1,485.6 1,471.5 1,435.5 1,443.4 1,458.9 1,271.9 1,235.2 1,242.3 1,257.5 1,233.3 1,198.5 1,207.6 1,227.9 37.0 37.8 33.1 33.2 1.6 -3.6 44.8 44.9 45.6 46.1 154.8 155.4 155.5 155.3 49.0 49.4 49.4 48.9 105.8 105.9 106.1 106.3 30.4 27.8 28.5 26.7 1,516.4 1,5104 1,515.8 1,495.6 1,488.4 1,483 8 1,487.1 1,466.4 1,286.4 12818 1,285.7 1,264.4 1,250.9 1,248 9 1,246.2 1,222.7 33.6 1.8 -36 .1 .1 46.7 155.3 1552 154.6 154.5 49.0 106.4 1062 105.6 105.4 28.0 46.8 47.5 -2.1 -4.2 6.4 9.4 1.1 2.9 -2.8 .8 2.4 5.0 2.6 3.6 3.1 1.8 -3.0 -1.7 .3 -1.9 -.2 2.9 2.3 .2 -1.6 1.7 -.3 -2.5 -4.4 7.6 16.3 15.3 15.1 7.1 -1.5 -14.7 -1.7 4.1 .5 8.7 8.3 3.7 3.8 -1.2 6.7 2.1 1.8 4 e'.o -1.1 5.4 5.5 4.8 3.2 -.2 1.9 1979: 1 II Ill IV 1980: 1 II Ill IV , -1.1 1.7 253 39 -1.7 4.1 .6 3.1 -9.9 2.4 3.8 1981: 1 II Ill IV * 365 39.4 41.6 1 2 469 490 49.0 49.1 266 28.7 29.2 8.6 -16 1.4 -5.2 Includes compensation of employees in government enterprises. Compensation of government employees. 3 Changes are based on unrounded data and therefore may differ slightly from changes computed from data shown here. Source: Department of Commerce, Bureau of Economic Analysis. 243 TABLE B-10.—Gross national product by industry, 1947-80 [Billions of dollars] Gross domestic product Gross nationYear al product Manufacturing Agriculture, forestry, Mining and Construction Total Dura- Non- ble durable goods goods fisheries 1947 1948 1949 259.5 258.3 20.8 24.0 19.5 6.8 9.4 8.1 1950 1951 1952 1953 1954 286.5 330.8 348.0 366.8 366.8 20.8 23.8 23.1 21.3 20.7 1955 1956 1957 1958 1959 400.0 421.7 444.0 449.7 487.9 1960 1961 1962 1963 1964 9.1 Transportation UUhrtlo wnoie- and public utilities and retail trade sale Finance, insurance, Services and real estate Government and Statist!pal cai governdiscrepment ancy enterprises 1.5 Rest of the world .6 1.2 1.6 1.4 1.3 3.2 1.7 2.3 2.0 1.6 2.1 2.3 2.2 2.3 1.3 2.8 3.2 3.5 3.0 3.3 66.2 74.7 72.1 33.5 38.1 37.1 32.7 36.5 35.0 20.5 23.1 23.4 44.2 48.4 48.0 23.2 26.2 28.6 20.2 21.9 22.6 19.3 20.2 22.5 10.2 10.1 10.6 10.9 13.0 83.7 15.4 98.7 16.6 103.0 17.1 112.1 17.2 106.4 45.8 55.4 58.9 65.9 60.8 37.9 43.3 44.1 46.2 45.6 25.7 29.2 31.0 32.9 32.6 51.3 56.4 58.5 59.8 60.8 31.9 35.2 38.7 42.8 46.5 24.0 25.9 27.5 29.4 30.5 23.8 30.8 35.3 36.4 36.9 19.9 19.7 19.5 21.9 20.2 12.4 13.4 13.5 12.4 12.3 18.5 120.9 20.6 126.8 21.4 131.4 21.0 123.8 22.8 141.3 70.6 73.7 77.7 69.7 81.2 50.3 53.2 53.7 54.1 60.0 35.6 38.3 40.2 40.4 43.7 66.2 70.4 73.9 75.2 81.9 50.0 53.5 57.6 62.4 67.3 34.0 37.3 40.2 42.3 46.3 38.5 40.7 44.0 47.1 50.0 506.5 524.6 565.0 596.7 637.7 21.4 21.5 21.9 22.0 21.0 12.6 12.7 12.8 13.1 13.4 23.2 24.0 25.7 27.4 29.8 143.8 144.4 157.9 167.4 179.4 82.1 81.3 91.5 97.6 105.3 61.7 63.1 66.4 69.8 74.2 45.8 47.4 50.2 53.0 56.3 84.2 86.3 92.1 96.1 104.7 71.6 75.4 80.6 85.3 91.0 49.2 52.3 56.1 60.0 65.3 53.4 56.7 61.1 65.9 71.2 -2.4 3.6 3.9 4.6 4.9 5.5 1965 1966 1967 1968 1969 691.1 756.0 799.6 873.4 944.0 23.8 24.8 24.2 25.0 27.8 13.5 14.2 14.6 15.3 16.1 32.8 35.9 37.5 41.3 46.3 197.7 216.6 222.3 242.8 256.7 118.0 130.4 133.6 146.0 154.5 79.7 86.3 88.7 96.8 102.2 60.5 65.3 68.6 74.0 80.0 112.6 121.5 130.1 144.4 157.0 98.0 105.9 114.2 123.8 133.6 70.8 78.4 86.1 94.2 105.3 76.7 86.4 96.3 108.1 118.2 -1.2 5.9 5.6 5.9 6.7 6.9 1970 1971 1972 1973 1974 992.7 1,077.6 1,185.9 1,326.4 1,434.2 28.6 30.8 35.4 53.8 52.2 17.6 17.4 19.0 21.7 32.2 48.9 53.6 59.4 66.3 69.2 252.2 265.6 292.5 146.2 153.9 173.2 195.9 201.3 105.9 111.7 119.3 130.2 139.4 85.7 93.8 104.3 114.3 122.9 166.5 181.4 199.5 221.5 241.5 142.4 156.4 169.8 184.9 202.0 114.4 123.6 136.5 153.1 167.5 130.5 141.8 155.4 167.8 182.7 -1.5 1975 1976 1977 1978 1979 1,549.2 1,718.0 1,918.0 2,156.1 2,413.9 53.3 51.2 53.8 65.2 78.4 38.8 43.0 48.6 53.6 69.4 69.9 76.6 86.7 99.9 113.1 358.2 410.4 462.4 519.0 569.5 207.6 240.0 276.6 135.7 152.6 170.5 192.8 211.7 266.2 291.4 322.5 355.3 392.0 216.2 238.6 274.0 310.0 350.8 186.2 317.9 350.6 150.6 170.4 185.8 201.1 218.9 208.2 234.3 264.7 302.5 1980 2,626.1 77.2 94.1 119.7 591.1 354.9 236.3 234.5 421.7 392.0 343.5 233.1 9.3 11.5 11.5 326.1 340.7 -1.6 -2.1 -1.2 .2 -1.3 -.1 2.1 1.7 .1 1.4 -.3 -2.1 -3.9 7.3 9.2 4.1 3.3 .8 3.7 10.9 16.0 19.8 202.0 220.4 237.2 259.2 280.7 5.5 5.1 4.4 6.4 2.2 17.3 20.5 23.5 29.9 43.8 303.4 -.7 49.7 Note.—The industry classification is on an establishment basis and is based on the 1972 Standard Industrial Classification. Source: Department of Commerce, Bureau of Economic Analysis. 244 TABLE B-ll.—Gross national product by industry in 1972 dollars, 1947-80 [Billions of 1972 dollars] Gross domestic product Year Gross national product Agriculture, forest- ry, and fisher- Trans- Manufacturing Mining por- lA/hnlo wnoie- Con- tation sale struction and ble durable public utilgoods goods ities and retail trade Non- Dura- Total ies Finance, insurance, and Government Services real estate and government enterprises Statistical discrepancy -.6 2.5 3.0 2.7 2.4 5.0 2.6 3.6 3.1 .8 .2 2.6 4.1 4.6 3.0 3.7 3.9 3.7 4.0 1.8 4.2 3.4 .9 4.5 4.0 4.5 5.1 5.5 4.6 4.9 3.1 4.4 -.2 3.2 2.9 2.3 -1.5 .2 1.7 5.2 5.7 6.5 6.9 7.5 2.3 3.0 6.7 6.2 4.6 7.9 7.4 7.5 8.2 7.9 4.7 1.2 4.2 .0 3.3 .7 -1.8 3.2 -4.8 10.9 15.1 17.3 4.4 -2.0 2.0 3.9 5.4 3.2 .3 4.2 1.4 -2.4 13.9 15.6 16.9 20.1 27.2 1.9 28.3 2.9 -7.4 1947 1948 1949. 470.3 489.8 492.2 26.3 28.2 28.0 10.8 11.3 9.9 22.9 26.5 26.5 114.9 121.4 115.1 68.5 72.0 66.3 46.4 49.4 48.8 42.3 42.1 39.2 75.9 78.0 79.8 54.7 56.6 59.8 55.9 57.5 57.6 68.7 69.2 73.3 1950 1951 1952 1953 1954 534.8 579.4 600.8 623.6 29.3 28.4 29.2 30.5 31.3 11.1 12.1 11.9 12.2 11.8 29.3 32.5 33.8 34.8 36.0 131.1 78.1 146.0 89.9 150.8 94.3 161.1 102.6 149.6 91.7 53.0 56.1 56.5 58.5 57.9 41.2 45.5 45.5 46.6 45.8 87.5 88.3 91.0 93.9 94.5 63.9 66.7 70.9 73.9 77.3 59.7 60.8 61.6 62.7 62.9 75.6 90.0 96.9 96.3 95.2 1955 1956 1957 1958 1959 657.5 671.6 683.8 680.9 721.7 32.1 31.7 31.1 32.2 30.6 13.2 13.9 13.8 12.7 13.3 38.2 40.9 40.9 42.1 45.5 165.7 166.9 167.7 153.3 171.2 103.4 102.5 102.9 88.8 100.9 62.3 64.4 64.8 64.5 70.3 49.7 52.1 53.2 51.9 55.4 103.1 106.2 107.9 107.8 115.4 81.8 85.8 89.8 93.4 98.5 67.6 70.9 74.1 76.2 80.8 95.7 97.8 100.4 101.7 104.0 1960 1961 1962 1963 1964 737.2 756.6 800.3 832.5 876.4 32.1 31.8 31.7 32.5 31.8 13.5 13.6 13.9 14.5 15.1 46.1 46.7 48.4 49.9 52.2 171.8 172.0 186.7 202.2 216.7 101.0 99.5 110.0 119.5 129.8 70.8 72.5 76.7 82.8 86.8 57.5 58.6 61.5 65.0 68.1 117.5 118.7 126.3 131.1 139.1 102.7 107.3 113.3 116.8 122.1 83.5 86.6 90.3 94.0 98.8 107.7 111.6 115.5 118.7 123.1 -3.3 1965 1966 1967 1968 1969 929.3 984.8 1,011.4 1,058.1 1,087.6 32.8 31.3 32.6 32.1 32.7 15.7 16.5 17.0 17.6 18.2 54.4 54.6 53.4 56.9 55.8 236.7 254.9 254.3 268.2 277.2 144.6 157.3 157.4 165.5 170.3 92.0 97.6 96.9 102.7 106.8 73.4 79.4 81.6 88.2 92.6 148.2 156.3 160.1 169.9 173.6 128.5 133.9 139.4 145.7 152.9 103.1 109.0 115.0 118.8 124.0 127.8 136.9 144.1 148.9 152.5 -1.6 1970 1971 1972 1973 1974 1,085.6 1,122.4 1,185.9 1,255.0 1,248.0 34.4 35.9 35.4 35.3 35.8 18.9 18.4 19.0 19.2 19.2 53.4 57.9 59.4 60.1 53.3 261.2 155.2 156.4 173.2 194.2 186.3 94.9 106.0 110.4 97.9 119.3 104.3 131.1 110.6 125.3 111.9 176.4 185.5 199.5 211.1 207.0 155.8 162.6 169.8 177.2 184.5 126.7 128.4 136.5 144.8 147.9 152.9 153.9 155.4 157.2 161.2 -1.7 266.8 292.5 325.3 1975. 1976 1977 1978 1979 1,233.9 1,300.4 1,371.7 1,436.9 1,483.0 37.1 35.8 36.8 37.2 39.6 18.9 19.1 19.8 20.5 21.0 48.3 52.8 55.3 58.8 58.3 289.6 168.8 317.4 187.2 338.7 202.9 356.9 217.4 368.0 223.5 120.8 130.1 135.8 139.5 144.5 113.5 118.6 125.2 134.3 141.1 209.7 220.2 230.8 208.9 242.1 248.1 148.5 154.7 162.4 218.9 171.2 227.5 178.6 164.3 165.7 168.1 172.3 174.9 1980 1,480.7 40.2 22.1 54.4 351.0 208.7 142.3 144.0 243.0 236.4 183.5 176.3 616.1 311.7 187.9 194.8 Poet Kesi of the world ual ! Resid- -2.8 .8 -3.0 -1.7 .3 -1.9 1.7 -.3 -2.5 -4.4 -.4 -1.2 8.0 9.5 1 Equals GNP in constant dollars measured as the sum of incomes less GNP in constant dollars measured as the sum of gross product by industry. Note.—The industry classification is on an establishment basis and is based on the 1972 Standard Industrial Classification. Source: Department of Commerce, Bureau of Economic Analysis. 245 TABLE B-12.—Gross domestic product of nonfinancial corporate business, 1929-81 [Billions of dollars; quarterly data at seasonally adjusted annual rates] Net domestic product Year or quarter Gross domestic product of nonfinancial corporate business Capital consumption allowances with capital consumption adjustment Domestic income Total Indirect business tax, etc.1 Corporate profits with inventory valuation and capital consumption adjustments Total CompenProfits Inven- Capital Net sation tory interof Profits after tax Prof- Profvalua- consump- est employ- Total its its tion tion ees Undisadjustbe- tax Divi- tributed adjustment fore lia- Total dends ment profits tax bility 0.5 1.4 8.4 1.2 7.3 5.1 .6 .5 .1 2.0 4.2 6.1 1.4 4.7 3.3 1.4 -.7 -1.1 1.5 31.2 39.8 51.0 62.2 65.1 61.9 67.2 79.1 87.8 85.3 7.4 12.7 17.7 21.8 21.6 17.1 13.8 19.7 25.6 22.9 8.8 16.4 20.1 23.6 22.2 17.8 22.0 29.1 31.8 24.9 2.7 7.5 11.2 13.8 12.6 10.2 8.6 10.8 11.8 9.3 6.1 9.0 8.9 9.8 9.6 7.6 13.4 18.3 20.0 15.6 3.5 3.9 3.7 3.9 4.1 4.1 4.8 5.5 6.0 6.0 2.6 5.0 5.2 5.8 5.6 3.5 8.6 12.8 14.0 9.6 -.2 -2.5 -1.2 -.8 -.3 -.6 -5.3 -5.9 -2.2 1.9 -1.2 -1.3 -1.2 -.9 -.3 -.2 -3.0 -3.5 -4.0 -3.9 1.4 1.3 1.3 1.1 1.0 1.0 .7 .8 .9 1.0 125.2 144.7 149.7 160.0 156.6 178.4 189.0 196.1 188.8 214.8 94.7 110.2 118.3 128.7 126.5 138.5 151.4 159.1 155.9 171.6 29.6 33.4 30.2 30.0 28.6 38.3 35.9 34.9 30.2 40.1 38.5 39.1 33.8 34.9 32.1 42.0 41.8 39.8 33.7 43.1 16.9 21.2 17.8 18.5 15.6 20.2 20.1 19.1 16.2 20.7 21.6 17.9 16.0 16.4 16.4 21.8 21.8 20.7 17.5 22.4 7.5 7.1 7.1 7.3 7.4 8.5 9.0 9.3 9.3 10.0 14.1 10.8 8.8 9.1 9.0 13.4 12.7 11.4 8.2 12.4 -5.0 -1.2 1.0 -1.0 -.3 -1.7 -2.7 -1.5 -.3 -.3 -3.9 -4.6 -4.5 -3.9 -3.2 -2.0 -3.2 -3.4 -3.2 -2.7 .9 1.1 1.2 1.3 1.5 1.6 1.7 2.2 2.7 3.1 221.9 227.3 249.9 266.8 289.3 319.8 353.0 369.5 406.1 439.1 181.1 185.1 199.8 210.7 226.3 246.1 273.5 291.9 322.8 358.5 37.4 38.3 45.6 51.2 57.7 67.7 72.2 68.8 73.3 67.5 39.7 39.5 44.2 48.9 55.4 65.2 70.3 66.3 72.9 69.4 19.2 19.5 20.6 22.8 24.0 27.2 29.5 27.7 33.4 33.1 20.5 20.1 23.5 26.2 31.4 38.0 40.8 38.6 39.5 36.2 10.6 10.6 11.4 12.6 13.7 15.6 16.8 17.5 19.1 19.1 9.9 9.5 12.2 13.5 17.7 22.4 24.0 21.2 20.4 17.1 -.2 .3 .0 .1 -.5 -1.2 -2.1 -1.6 -3.7 -5.9 -2.1 3.5 -1.5 3.9 1.4 4.5 2.3 4.8 2.9 5.3 3.7 6.1 3.9 7.4 4.0 8.7 4.0 10.1 4.0 13.1 63.4 448.1 70.5 482.1 538.7 76.7 83.7 607.9 89.7 649.7 97.1 697.9 105.3 791.2 897.8 115.1 125.2 1,015.8 133.6 1,135.9 378.4 402.0 447.0 506.2 556.5 581.1 654.4 738.2 841.4 954.0 52.7 62.1 72.7 78.6 63.6 86.1 107.3 126.3 137.6 136.7 56.8 65.4 76.6 96.0 105.3 107.3 135.0 153.5 174.3 193.4 27.0 29.8 29.8 35.6 33.6 43.0 40.0 56.0 42.0 63.3 41.2 66.1 52.6 82.3 59.4 94.1 67.3 107.0 69.7 123.7 18.5 18.5 20.1 21.1 21.4 25.7 30.1 31.9 36.0 37.3 11.3 17.1 22.9 35.0 41.9 40.4 52.2 62.2 70.9 86.3 -6.6 -4.6 -6.6 -20.0 -40.0 -11.6 -14.7 -15.8 -24.3 -42.6 1929 50.1 5.5 44.5 3.4 41.2 32.3 1933 24.4 4.3 20.2 3.8 16.3 16.7 -2.1 1939 43.7 4.8 39.0 5.1 33.9 28.2 1940 1941 1942 1943 1944 1945 1946 1947 1948 1949 50.4 65.6 82.9 98.7 102.1 95.3 99.3 120.0 137.3 133.5 4.9 5.4 6.1 6.2 6.3 6.5 7.6 9.3 10.9 11.7 45.4 60.2 76.8 92.4 95.8 88.8 91.8 110.7 126.4 121.8 5.5 6.4 6.8 7.3 8.1 8.9 10.1 11.2 12.1 12.6 40.0 53.8 70.0 85.2 87.7 79.9 81.6 99.6 114.3 109.2 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 151.9 174.5 182.3 195.0 191.9 216.7 231.6 242.3 236.3 266.0 12.6 14.6 15.8 16.8 17.9 19.1 21.8 23.8 24.8 25.8 139.3 159.9 166.6 178.2 174.0 197.6 209.8 218.5 211.6 240.2 14.1 15.2 16.8 18.2 17.4 19.2 20.8 22.4 22.8 25.4 I960..... 1961 1962 1963 1964 1965 1966 1967 1968 1969 277.0 285.0 311.3 331.8 358.4 393.6 431.5 454.1 500.2 544.1 26.8 27.5 28.4 29.4 30.8 32.7 35.6 38.9 42.6 47.1 250.2 257.5 283.0 302.3 327.6 360.9 395.9 415.2 457.6 497.0 28.3 30.1 33.0 35.6 38.4 41.1 42.9 45.8 51.5 58.0 7.5 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 563.7 609.9 678.0 759.4 818.9 890.0 1,001.3 1,129.5 1,270.7 1,417.0 52.2 511.4 57.3 552.6 62.6 615.5 67.9 691.6 79.5 739.4 94.9 795.1 104.8 896.5 116.6 1,012.8 129.7 1,141.0 147.5 1,269.5 1980 1981 ". 1,535.2 1,730.6 165.9 186.6 1,369.3 1,544.0 152.5 183.4 1,216.9 1,037.2 123.6 183.8 63.1 120.6 40.4 1,360.6 1,152.2 144.1 182.0 57.9 124.1 50.6 1,378.7 1,399.5 1,432.1 1,457.7 140.5 1,238.2 146.0 1,253.5 150.7 1,281.5 152.9 1,304.8 130.9 131.5 134.8 137.3 1,107.3 1,122.0 1,146.7 1,167.5 919.9 939.8 965.2 991.1 146.0 138.6 134.8 127.3 195.7 191.4 195.5 191.1 71.2 68.9 70.5 68.4 124.5 122.5 125.0 122.7 38.2 37.9 34.9 38.2 1 II Ill IV 1,502.1 1,496.3 1,537.7 1,604.7 158.2 1,343.9 163.6 1,332.7 168.6 1,369.1 173.0 1,431.7 141.7 147.7 155.4 165.1 1,202.3 1,185.0 1,213.6 1,266.6 1,017.3 1,018.0 1,034.8 1,078.5 132.6 112.5 121.2 128.2 207.2 158.6 177.9 191.3 74.3 52.0 60.3 65.9 132.9 106.6 117.6 125.4 36.9 41.1 40.8 42.7 1981: 1 II Ill IV ". 1,690.1 1,716.3 1,760.3 177.1 183.7 189.7 195.9 2.2 -1.9 -2.1 -1.4 -.6 1.7 2.4 1.3 2.7 2.6 -1.8 -9.7 -13.0 -11.4 -12.4 -14.1 17.0 18.0 19.1 23.0 29.6 30.8 29.5 33.2 36.8 45.2 80.3 -45.7 73.5 -27.3 -14.4 -10.5 56.1 64.2 86.3 84.5 90.1 84.5 -35.3 -37.9 -46.5 -50.8 -14.4 -14.8 -14.2 -13.0 41.4 43.5 46.7 49.1 96.0 65.5 76.8 82.7 -61.4 -31.1 -41.7 -48.4 -13.1 -14.9 -15.0 -14.7 52.3 54.4 57.6 59.9 87.9 -39.2 75.4 -24.0 75.2 -25.3 -20.9 -11.6 -11.4 -9.9 -9.1 60.5 63.4 65.8 67.4 1979: 1 II Ill IV 1980: 1 1,513.1 1,532.6 1,570.6 179.2 1,333.9 1,121.3 152.1 202.9 68.1 134.8 46.9 182.1 1,350.5 1,140.6 146.5 181.9 57.8 124.1 48.8 185.7 1,384.9 1,167.2 152.0 187.2 59.5 127.6 52.5 186.6 1,1798 54.2 Indirect business tax and nontax liability plus business transfer payments less subsidies. Source: Department of Commerce, Bureau of Economic Analysis. 246 TABLE B-13.—Output, costs, and profits of nonfinancial corporate business, 1948-81 [Quarterly data at seasonally adjusted annual rates] Year or quarter Gross domestic product of nonfinancial corporate business (billions of dollars) Current-dollar cost and profit per unit of output (dollars) ' Total cost and profit 2 Capital consumption allowances with capital consumption adjustment Indirect business tax, etc.3 Compensation of employees Corporate profits with inventory valuation and capital consumption adjustments Net interest Profits tax liability Profits after tax 4 Output per hour of all employees (1972 dollars) Compensation per hour of all employees (dollars) Current dollars 1972 dollars 1948 1949 137.3 133.5 229.7 219.9 0.598 .607 0.047 .053 0.053 .057 0.382 .388 0.112 .104 0.051 .042 0.060 .062 0.004 .004 1950 1951 1952 1953 1954 151.9 174.5 182.3 195.0 191.9 247.5 270.2 275.2 292.0 283.4 .614 .646 .663 .668 .677 .051 .054 .057 .058 .063 .057 .056 .061 .062 .061 .383 .408 .430 .441 .446 .120 .124 .110 .103 .101 .068 .079 .065 .063 .055 .051 .045 .045 .040 .046 .004 .004 .004 .004 .005 1955 1956 1957 1958 1959 216.7 231.6 242.3 236.3 266.0 315.1 324.1 328.3 313.4 347.4 .688 .715 .738 .754 .766 .061 .067 .073 .079 .074 .061 .064 .068 .073 .073 .439 .467 .484 .497 .494 .122 .111 .106 .097 .116 .064 .062 .058 .052 .060 .057 .049 .048 .045 .056 .005 .005 .007 .009 .009 5.206" 5.433 2.589 2.684 1960 1961 1962 1963 1964 277.0 285.0 311.3 331.8 358.4 358.4 367.2 399.7 426.3 455.6 .773 .776 .779 .778 .787 .075 .075 .071 .069 .068 .079 .082 .083 .083 .084 .505 .504 .500 .494 .497 .104 .104 .114 .120 .127 .054 .053 .052 .053 .053 .051 .051 .062 .067 .074 .010 .011 .011 .011 .012 5.536 5.727 5.997 6.248 6.469 2.797 2.887 2.998 3.089 3.213 1965 1966 1967 1968 1969 393.6 431.5 454.1 500.2 544.1 495.2 530.7 543.0 578.9 604.0 .795 .813 .836 .864 .901 .066 .067 .072 .074 .078 .083 .081 .084 .089 .096 .497 .515 .538 .558 .594 .137 .136 .127 .127 .112 .055 .056 .051 .058 .055 .082 .080 .076 .069 .057 .012 .014 .016 .017 .022 6.673 6.776 6.847 7.076 7.098 3.316 3.492 3.680 3.946 4.213 1970 1971 1972 1973 1974 563.7 609.9 678.0 759.4 818.9 599.6 626.8 678.0 731.9 708.2 .940 .973 1.000 1.038 1.156 .087 .091 .092 .093 .112 .106 .113 .113 .114 .127 .631 .641 .659 .692 .786 .088 .099 .107 .107 .090 .045 .047 .049 .055 .059 .043 .052 .058 .053 .030 .028 .029 .028 .031 .042 7.126 7.467 7.688 7.891 7.622 4.498 4.788 5.068 5.458 5.989 1975 1976 1977 1978 1979 890.0 1,001.3 1,129.5 1,270.7 1,417.0 694.2 745.5 799.0 845.1 873.3 1.282 1.343 1.414 1.504 1.623 .137 .141 .146 .153 .169 .140 .141 .144 .148 .153 .837 .878 .924 .996 1.092 .124 .144 .158 .163 .157 .059 .071 .074 .080 .080 .065 .073 .084 .083 .077 .044 .040 .042 .044 .052 7.881 8.132 8.348 8.384 8.384 6.596 7.138 7.713 8.347 9.159 1980 1981 P. 1,535.2 1,730.6 867.2 896.0 1.770 1.931 .191 .208 .176 .205 1.196 1.286 .143 .161 .073 .065 .070 .096 .065 .072 8.432 10.085 I II Ill IV 1,378.7 1,399.5 1,432.1 1,457.7 874.7 870.8 874.3 873.4 1.576 1.607 1.638 1.669 .161 .168 .172 .175 .150 .151 .154 .157 1.052 1.079 1.104 1.135 .167 .159 .154 .146 .081 .079 .081 .078 .086 .080 .074 .067 .047 .050 .053 .056 8.396 8.404 8.388 8.338 8.830 9.071 9.260 9.462 1980: 1 II Ill IV 1,502.1 1,496.3 1,537.7 1,604.7 878.2 853.2 860.4 876.9 1.710 1.754 1.787 1.830 .180 .192 .196 .197 .161 .173 .181 .188 1.158 1.193 1.203 1.230 .151 .132 .141 .146 .085 .061 .070 .075 .066 .071 .071 .071 .060 .064 .067 .068 8.369 8.359 8.496 8.496 9.694 9.973 10.218 10.450 1,690.1 1,716.3 1,760.3 901.0 901.2 901.1 1.876 1.904 1.954 .197 .204 .211 .199 .202 .206 1.244 1.266 1.295 .169 .163 .169 .076 .064 .066 .093 .098 .103 .067 .070 .073 8.628 8.674 8.660 10.737 10.978 11.216 Total 1979: 1981: 1 II Ill 1 Output is measured by gross domestic product of nonfinancial corporate business in 1972 dollars. This is equal to the deflator for gross domestic product of nonfinancial corporate business with the decimal point shifted two places to the left. 3 Indirect business tax and nontax liability plus business transfer payments less subsidies. 4 With inventory valuation and capital consumption adjustments. Sources: Department of Commerce (Bureau of Economic Analysis) and Department of Labor (Bureau of Labor Statistics). 2 247 TABLE B-14.—Personal consumption expenditures, 1929-81 [Billions of dollars; quarterly data at seasonally adjusted annual rates] Nondurable goods Durable goods Year or quarter Personal consumption expenditures Durable goods Nondurable goods Services Motor vehicles and parts Furniture and household noiu equipment Other Food Clothing and shoes 1929 77.3 9.2 37.7 30.3 3.3 4.7 1.2 19.5 9.4 1933 45.8 3.5 22.3 20.1 1.1 1.9 .5 11.5 4.6 1939 67.0 6.7 35.1 25.2 2.3 3.4 1.0 19.1 7.1 1940 1941 1942 1943 1944 1945 1946 1947 1948 1949 71.0 80.8 88.6 99.4 108.2 119.5 143.8 161.7 174.7 178.1 7.8 9.7 6.9 6.5 6.7 8.0 15.8 20.4 22.9 25.0 37.0 42.9 50.8 58.6 64.3 71.9 82.7 90.9 96.6 94.9 26.2 28.2 31.0 34.3 37.1 39.6 45.3 50.4 55.3 58.2 2.8 3.5 .7 .8 .8 1.0 4.1 6.6 8.0 10.6 3.8 4.8 4.6 3.9 3.8 4.5 8.4 10.6 11.5 11.3 1.1 1.3 1.6 1.9 2.1 2.5 3.2 3.3 3.4 3.2 20.2 23.4 28.4 33.2 36.7 40.6 47.4 52.3 54.2 52.5 7.5 8.8 11.0 13.4 14.6 16.5 18.2 18.8 20.1 19.3 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 192.0 207.1 217.1 229.7 235.8 253.7 266.0 280.4 289.5 310.8 30.8 29.8 29.1 32.5 31.8 38.6 37.9 39.3 36.8 42.4 98.2 108.8 113.9 116.5 118.0 122.9 128.9 135.2 139.8 146.4 63.0 68.5 74.0 80.6 86.1 92.1 99.2 105.9 112.8 121.9 13.7 12.2 11.3 13.9 13.0 17.8 15.8 17.2 14.8 18.9 13.7 14.0 14.0 14.6 14.6 16.2 17.1 16.9 16.6 17.8 3.3 3.6 3.9 4.1 4.2 4.6 5.0 5.2 5.4 5.8 53.9 60.4 63.4 64.4 65.4 67.2 69.9 73.6 76.4 79.1 19.6 21.2 21.9 22.1 22.1 23.1 24.1 24.3 24.7 26.1 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 324.9 335.0 355.2 374.6 400.5 430.4 465.1 490.3 536.9 581.8 43.1 41.6 46.7 51.4 56.4 63.0 68.0 70.1 80.5 85.7 151.1 155.3 161.6 167.1 176.9 188.6 204.7 212.6 230.6 247.8 130.7 138.1 147.0 156.1 167.1 178.7 192.4 207.6 225.8 248.2 19.7 17.8 21.5 24.4 26.1 30.0 30.4 30.1 36.3 38.7 17.7 17.9 18.9 20.3 22.8 24.7 27.7 29.5 32.3 34.1 5.8 5.8 6.3 6.7 7.6 8.3 9.9 10.5 11.8 13.0 81.1 83.2 85.5 87.8 92.7 98.9 106.6 109.6 118.7 127.5 26.7 27.4 28.7 29.5 31.9 33.5 36.6 38.2 42.1 45.5 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 621.7 672.2 737.1 812.0 888.1 976.4 1,084.3 1,205.5 1,348.7 1,510.9 85.2 97.2 111.1 123.3 121.5 132.2 156.8 178.8 199.3 212.3 265.7 278.8 300.6 333.4 373.4 407.3 441.7 479.0 529.8 602.2 270.8 296.2 325.3 355.2 393.2 437.0 485.7 547.7 619.6 696.3 36.2 45.4 52.4 57.1 50.4 55.8 72.6 85.0 94.3 95.5 35.2 37.2 41.7 47.1 50.6 53.5 59.1 65.8 72.9 81.1 13.9 14.6 16.9 19.2 20.5 22.9 25.2 28.0 32.1 35.8 138.9 144.2 154.9 172.1 193.7 213.6 230.6 250.3 276.4 312.1 46.8 50.6 55.4 61.4 64.8 69.6 75.3 82.1 91.9 98.9 1980 1981" 1,672.8 1,858.1 211.9 232.0 675.7 743.4 785.2 882.7 89.9 98.2 84.6 92.7 37.3 41.2 345.7 382.1 104.8 115.9 1,454.1 1,478.0 1,529.1 1,582.3 212.5 207.4 213.3 216.1 571.8 586.4 611.5 639.2 669.9 684.2 704.3 727.0 100.1 91.7 94.7 95.4 78.0 80.1 82.4 83.8 34.4 35.6 36.2 37.0 299.1 306.0 314.3 329.0 95.8 97.0 100.3 102.5 1,631.0 1,626.8 1,682.2 1,751.0 220.9 194.4 208.8 223.3 661.1 6640 674.2 703.5 749.0 7684 799.2 824.2 100.6 775 87.0 94.6 83.6 813 84.6 88.9 36.8 356 37.2 39.8 336.2 3384 347.7 360.4 102.2 1023 105.3 109.4 1,810.1 1,829.1 1,883.9 1,909.5 238.3 227.3 236.2 226.4 7260 735.3 751.3 760.9 8458 866.5 896.4 922.2 1054 93.4 101.6 92.3 923 92.4 93.2 93.0 406 41.6 41.4 41.1 3725 377.8 386.5 391.6 1134 115.8 117.5 116.8 1979: 1. II III. IV. 1980: 1 II Ill IV 1981: 1 II Ill IV P See next page for continuation of table. 248 TABLE B-14.—Personal consumption expenditures, 1929-81—Continued [Billions of dollars; quarterly data at seasonally adjusted annual rates] Services Nondurable goods— cont'd Year or quarter 1929.. Gasoline and oil Fuel oil and coal Household operation Other Housing ' Total Electricity and gas Other Transportation Other Total Medical care 1.8 1.6 5.4 11.7 4.0 1.2 2.9 2.6 12.0 1.5 1.2 3.5 8.1 2.8 1.1 1.7 1.5 7.7 1.5 1939.. 2.2 1.4 5.3 9.4 3.8 1.4 2.4 2.0 10.0 2.1 1940.. 1941.. 1942 1943.. 1944 1945.. 1946 1947 1948 1949 2.3 2.6 2.1 1.3 1.4 1.8 3.4 4.0 4.8 5.3 1.5 1.7 1.9 2.0 2.0 2.2 2.5 3.0 3.4 3.1 5.6 6.4 7.5 8.7 9.6 10.8 13.8 15.8 17.5 17.7 9.7 10.4 11.2 11.8 12.3 12.8 14.2 16.0 17.9 19.6 4.0 4.3 4.8 5.2 5.9 6.4 6.8 7.5 8.1 8.5 1.5 1.5 1.6 1.7 1.8 1.9 2.1 2.3 2.6 2.9 2.6 2.7 3.2 3.5 4.1 4.5 4.7 5.1 5.4 5.6 2.1 2.4 2.7 3.4 3.7 4.0 5.0 5.3 5.8 5.9 10.3 11.2 12.2 13.9 15.2 16.4 19.4 21.7 23.6 24.1 2.2 2.4 2.6 2.9 3.3 3.6 4.5 5.5 6.3 6.4 1950 1951 1952 1953 1954 1955.. 1956 1957 1958 1959 5.5 6.1 6.8 7.4 7.8 8.6 9.4 10.2 10.6 11.3 3.4 3.5 3.4 3.4 3.5 3.8 3.9 4.1 4.2 4.0 19.2 21.1 21.8 22.7 22.6 24.1 25.5 27.1 28.2 29.9 21.7 24.3 27.0 29.8 32.2 34.3 36.7 39.3 42.0 45.0 9.5 10.4 11.1 12.0 12.6 14.0 15.2 16.2 17.3 18.5 3.3 3.7 4.1 4.5 5.0 5.5 6.1 6.5 7.1 7.6 6.2 6.7 7.0 7.5 7.6 8.5 9.2 9.7 10.2 10.9 6.2 6.7 7.1 7.8 7.9 8.2 8.6 9.0 9.3 10.1 25.6 27.0 28.8 31.0 33.3 35.6 38.7 41.4 44.3 48.3 6.9 7.3 8.0 8.9 9.7 10.3 11.0 12.0 13.1 14.3 1960 1961 1962 1963.. 1964 1965.. 1966 1967 1968 1969.. 12.0 12.0 12.6 12.9 13.5 14.7 16.0 17.0 18.6 20.7 3.8 3.7 3.7 4.0 4.1 4.4 4.7 4.8 4.7 4.5 31.3 32.7 34.8 36.8 38.7 41.6 45.6 47.8 51.1 54.1 48.1 51.2 54.7 58.0 61.4 65.5 69.5 74.1 79.8 87.0 20.1 21.0 22.2 23.4 24.8 26.3 28.0 30.0 32.2 35.0 8.3 8.8 9.4 9.9 10.4 10.9 11.5 12.2 13.1 14.2 11.8 12.2 12.8 13.6 14.4 15.4 16.5 17.8 19.2 20.8 10.7 11.2 11.7 12.2 12.8 13.7 15.0 16.2 17.6 19.5 51.7 54.8 58.3 62.5 68.1 73.3 79.9 87.2 96.2 106.8 15.4 16.4 18.0 19.5 22.3 23.9 26.0 28.4 31.4 36.5 1970.. 1971 1972 1973 1974 1975 1976 1977 1978 1979 22.4 23.9 25.4 28.6 36.6 40.4 44.0 48.2 52.7 68.4 4.4 4.5 5.0 6.2 7.7 8.2 9.8 10.6 11.7 16.0 57.6 60.1 64.9 71.2 78.2 83.7 91.9 98.4 108.8 122.9 93.9 102.7 112.5 123.8 137.4 149.8 166.5 186.8 213.1 241.9 37.7 41.0 45.2 49.6 55.2 63.3 71.6 80.8 89.5 98.7 15.4 17.0 18.8 20.5 24.0 29.2 32.9 38.2 42.4 47.3 22.2 24.0 26.4 29.1 31.2 34.1 38.7 42.6 47.1 51.3 22.0 25.1 27.5 28.8 30.9 33.2 38.6 45.3 51.0 57.2 117.2 127.4 140.1 153.0 169.8 190.7 209.0 234.8 266.0 298.5 41.0 45.9 51.4 57.4 64.5 73.7 83.3 97.8 109.4 124.3 1980 1981 "... 89.0 94.5 19.8 21.0 136.2 150.9 272.0 306.7 111.6 126.3 55.7 62.8 56.0 63.5 64.1 68.8 337.5 380.9 143.6 169.5 1979 1 II III. IV. 60.6 63.2 72.1 77.6 13.1 14.9 17.9 18.1 116.3 120.3 124.9 130.0 231.4 238.1 244.9 253.0 96.1 96.4 99.5 102.7 46.4 45.9 47.3 49.8 49.7 50.6 52.2 52.9 54.4 56.5 58.2 59.9 288.0 293.2 301.7 311.4 120.4 122.2 125.0 129.8 1980 1 II III IV. 89.4 90.9 85.3 90.5 18.8 19.2 20.7 20.5 133.3 132.4 136.0 143.3 259.8 267.3 275.7 285.3 104.2 109.3 116.1 116.9 50.0 54.5 59.3 58.8 54.2 54.8 56.8 58.2 61.4 61.6 65.8 67.5 323.7 330.2 341.5 354.5 135.3 141.2 145.0 152.8 1981 1 II III. IV P 93.5 92.4 95.1 97.1 20.5 21.0 21.3 21.0 146.6 149.4 152.1 155.5 293.6 302.1 310.9 320.3 118.1 123.4 130.5 133.1 58.4 61.5 65.5 65.8 59.7 61.9 65.0 67.3 67.6 67.9 69.6 70.1 366.5 373.0 385.4 398.8 159.9 165.6 172.9 179.5 1933.. 1 Includes imputed rental value of owner-occupied housing. Source: Department of Commerce, Bureau of Economic Analysis. 249 2.2 TABLE B-15.—Gross private domestic investment, 1929-81 [Billions of dollars; quarterly data at seasonally adjusted annual rates] Fixed investment Year or quarter Gross private domestic investment Total Total Change in business inventories Residential Nonresidential Structures Producers' durable equipment Total Nonfarm structures ProFarm ducers' durstruc- able tures equipment 1929 16.2 14.5 10.6 5.1 5.5 3.9 3.6 0.2 0.1 1933 1.4 3.0 2.4 1.0 1.4 .6 .5 .0 .0 Total 1.7 -1.6 Nonfarm 1.8 -1.4 1939 9.3 8.8 5.9 2.0 3.9 2.9 2.7 .1 .1 .4 .3 1940.. 1941 1942 1943 1944 1945 1946 1947 1948 1949 13.1 17.9 9.9 5.8 7.2 10.6 30.7 34.0 45.9 35.3 10.9 13.4 8.1 6.4 8.1 11.7 24.3 34.4 41.1 38.4 7.5 9.4 6.0 5.0 6.9 10.1 16.9 23.0 26.3 24.4 2.3 3.0 1.9 1.4 1.9 2.8 6.9 7.7 9.0 8.7 5.2 6.4 4.1 3.7 5.0 7.3 9.9 15.3 17.3 15.7 3.4 4.0 2.2 1.4 1.3 1.5 7.4 11.4 14.9 13.9 3.2 3.6 1.9 1.2 1.1 1.4 6.7 10.4 13.7 12.8 .2 .2 .2 .2 .1 .1 .5 .7 .9 .8 .1 .1 .1 .0 .0 .0 .2 .3 .3 .3 2.2 4.5 1.8 -.6 -1.0 -1.0 6.4 -.5 4.7 -3.1 1.9 4.0 .7 -.6 -.6 -.6 6.4 1.3 3.0 -2.2 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 53.8 59.2 52.1 53.3 52.7 68.4 71.0 69.2 61.9 78.1 47.0 48.9 49.0 52.9 54.3 62.4 66.3 67.9 63.4 72.5 27.3 31.3 31.3 34.5 34.2 38.5 44.0 47.0 42.0 45.9 9.5 11.4 11.6 12.9 13.4 14.6 17.7 18.4 17.2 17.6 17.8 19.9 19.7 21.5 20.8 23.9 26.3 28.6 24.9 28.3 19.8 17.6 17.7 18.4 20.1 23.9 22.3 20.9 21.4 26.6 18.6 16.4 16.5 17.3 19.0 22.8 21.2 19.7 20.3 25.3 .8 .8 .8 .8 .7 .6 .7 .7 .7 .7 .4 .4 .4 .4 .4 .4 .5 .5 .5 .6 6.8 10.3 3.1 .4 -1.5 6.0 4.7 1.3 -1.5 5.7 6.0 9.1 2.1 1.1 -2.1 5.5 5.1 .8 -2.3 5.7 1960 1961. 1962 1963 1964 1965 1966 1967 1968 1969 759 74.8 85.4 90.9 97.4 113.5 125.7 122.8 133.3 149.3 72.9 72.5 79.2 84.9 91.7 103.7 111.6 112.5 125.4 139.5 485 48.0 52.2 54.8 61.0 72.7 83.1 83.9 90.7 101.3 188 19.1 20.1 20.5 22.4 27.0 30.1 30.3 32.4 36.7 297 28.9 32.1 34.4 38.7 45.8 53.0 53.7 58.2 64.6 245 24.5 27.0 30.1 30.7 30.9 28.5 28.6 34.8 38.2 23.3 23.2 25.8 28.9 29.4 29.6 27.1 27.2 33.3 36.5 .6 .7 .6 .7 .7 .6 .7 .7 .6 .7 5 .5 .5 .6 .6 .7 .7 .7 .9 1.0 30 2.3 6.3 6.0 5.6 9.9 14.1 10.3 7.9 9.8 27 2.0 5.5 5.2 6.2 8.9 14.3 9.6 7.8 9.7 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 144.2 166.4 195.0 229.8 228.7 206.1 257.9 322.3 375.3 415.8 141.0 158.8 184.8 211.3 214.5 213.0 246.0 301.3 353.2 398.3 103.9 107.9 121.0 143.3 156.6 157.7 174.1 205.5 242.0 279.7 38.7 40.5 44.1 51.0 55.9 55.4 58.8 64.6 78.7 96.3 65.2 67.4 76.9 92.3 100.7 102.3 115.3 140.9 163.3 183.4 37.1 50.9 63.8 68.0 57.9 55.3 72.0 95.8 111.2 118.6 35.4 48.9 61.5 65.6 54.8 52.4 68.8 91.9 106.9 113.9 .6 .7 .7 .7 1.3 1.0 1.1 1.5 1.8 1.8 1.1 1.3 1.5 1.7 1.8 1.9 2.1 2.3 2.6 2.9 3.2 7.7 10.2 18.5 14.1 -6.9 11.8 21.0 22.2 17.5 3.1 6.4 9.6 15.2 16.0 -10.5 13.9 20.2 21.8 13.4 1980 1981 P 395.3 450.6 401.2 432.4 296.0 327.1 108.8 125.0 187.1 202.0 105.3 105.3 100.3 99.8 2.0 2.3 3.0 3.2 -5.9 18.2 -4.7 15.9 408.3 4232 421.7 410.0 384.0 3901 408.3 410.8 2673 2729 288.5 290.2 873 932 99.6 105.1 1799 1797 189.0 185.1 116.7 1172 119.8 120.6 112.5 1129 114.9 115.4 2.Q 1.6 16 2.3 2.7 28 2^9 3.0 24.3 33 1 13^3 -.8 20.8 292 7.'8 -4.4 4156 390.9 3771 397.7 4131 383.5 3932 415.1 2978 289.8 2940 302.1 1082 108^4 1073 111.5 1897 181.4 1868 190.7 1152 93.6 992 113.0 110 1 88.9 945 107'.6 22 1.8 17 2'.2 30 2^9 30 3'.1 — 160 -17'.4 -123 437.1 4586 463.0 443.6 432.7 4353 435.6 426.0 315.9 3246 335.1 332.6 117.2 123 1 128.3 131.4 198.7 201 5 206.8 201.2 116.7 1107 100.5 93.4 111.4 1054 94.9 87.7 2.2 21 2.3 2.5 3.2 32 3'.3 3.3 4.5 233 27'.5 17.6 6.8 215 23^1 12.2 1979: 1 II III IV 1980: 1 II Ill IV 25 1A 15 e!i -RO 1981: 1 II iv p Source: Department of Commerce, Bureau of Economic Analysis. 250 TABLE B-16.—Gross and net private domestic investment, 1929-81 [Billions of dollars] Equals: Net private domestic investment Gross private domestic investment Less: Capital consumption allowances with capital consumption adjustment 1929 16.2 9.7 1933 1.4 7.4 1939 9.3 8.7 .6 .1 -.6 1940 1941 1942 1943 1944 1945 1946 1947 1948 1949 13.1 17.9 9.1 1.9 3.4 .7 10.6 30.7 34.0 45.9 35.3 10.0 11.2 11.5 11.7 12.2 14.0 17.3 20.2 21.8 4.1 7.9 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 53.8 59.2 52.1 53.3 52.7 68.4 71.0 69.2 61.9 78.1 23.5 27.2 29.3 31.0 32.7 34.8 38.7 41.7 43.5 44.9 30.3 32.0 22.8 22.4 20.0 33.6 32.3 27.5 18.4 33.2 23.5 21.7 19.7 21.9 21.6 27.6 27.6 26.1 19.9 27.5 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 75.9 74.8 85.4 90.9 97.4 113.5 125.7 122.8 133.3 149.3 46.3 47.5 49.0 50.6 52.9 56.0 60.7 65.9 72.1 80.0 29.6 27.3 36.5 40.3 44.5 57.5 65.0 57.0 61.2 69.3 26.7 24.9 30.2 34.4 38.9 47.6 50.9 46.6 53.3 59.5 12.3 10.9 14.0 15.3 19.7 28.9 35.4 31.9 33.6 38.1 12.9 14.8 13.8 14.5 16.6 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 144.2 166.4 195.0 229.8 228.7 206.1 257.9 322.3 375.3 415.8 88.1 96.5 106.4 116.5 136.0 159.3 175.0 196.0 221.2 253.6 56.2 69.9 88.6 113.3 92.7 46.8 82.8 126.3 154.2 162.2 52.9 62.3 78.4 94.8 78.5 53.7 71.0 105.3 132.0 144.7 33.9 31.1 37.0 51.9 49.2 30.3 34.3 50.1 68.0 80.9 1980 1981 ".. 395.3 450.6 287.3 321.5 108.1 129.1 114.0 110.9 69.4 71.6 Year 9.9 5.8 7.2 Net fixed investment Total Total Total 6.5 -6.0 -1.3 -5.7 -4.6 -1.6 16.6 16.6 25.6 13.5 4.8 -4.5 -3.0 -5.0 -3.6 -.6 10.3 17.1 20.9 16.6 Structures 3.1 -3.5 2.0' -2.5 -3.5 -1.7 1.3 6.6 10.2 11.3 8.1 9.6 10.7 9.1 10.8 9.1 11.9 13.9 14.3 8.1 10.6 Source: Department of Commerce, Bureau of Economic Analysis. Residential Nonresidential 251 1.7 -1.6 Producers' durable equipment 1.4 -1.8 Total 1.7 -1.0 Nonfarm structures 1.7 Farm structures -0.1 Producers' durable equipment 0.0 -.9 -.1 -.0 Change in business inventories 1.7 -1.6 .3 .8 .8 -.0 .0 .4 1.2 1.5 -.6 1.1 1.4 -.5 .0 .0 -.0 -.1 -.1 -.1 .1 .2 .2 .1 2.2 4.5 1.8 -.6 2.4 2.1 2.7 2.3 1.4 2.2 -.7 -.9 .3 2.4 4.2 8.2 8.6 5.8 2.9 3.9 3.8 4.8 5.1 5.9 7.9 7.9 6.4 6.4 7.3 7.3 7.9 7.8 9.1 -1.0 _ 7 3.7 6.8 9.7 8.5 3.4 6.4 9.1 7.9 .0 .0 -.1 -.1 -.1 -.2 .2 .3 .4 .4 6.7 6.7 5.3 6.0 4.0 6.0 6.0 6.4 1.8 4.2 13.9 11.0 10.6 11.1 12.5 15.7 13.7 11.8 11.8 16.9 13.4 10.6 10.3 10.8 12.2 15.6 13.4 11.7 11.6 16.7 .3 .3 .3 .3 .2 .0 .1 .1 .1 .1 .2 .1 .1 .1 .1 .1 .1 .1 .1 .2 5.0 3.6 6.1 7.5 10.6 16.0 20.6 18.2 19.1 21.5 14.4 14.0 16.2 19.0 19.1 18.7 15.5 14.7 19.8 21.3 14.3 13.9 16.1 18.8 18.9 18.6 15.3 14.5 19.6 21.0 -.0 .1 .0 .0 .0 -.0 .0 .0 -.1 -.0 .1 .1 .1 .1 .2 .2 .2 .2 .3 .4 16.3 15.6 16.6 20.7 18.9 13.1 14.1 16.2 23.2 32.1 17.6 15.5 20.4 31.2 30.3 17.3 20.2 34.0 44.8 48.9 19.0 31.2 41.3 42.9 29.3 23.4 36.8 55.1 64.0 63.8 18.9 30.9 40.9 42.5 28.4 23.1 36.5 54.5 63.3 63.1 -.2 .2 -.2 -.2 .1 .1 -.0 .4 .5 .6 .7 .7 .5 .5 .6 .6 .7 10.2 18.5 14.1 -6.9 11.8 21.0 22.2 17.5 35.2 42.7 34.2 28.9 44.5 39.3 44.1 38.7 -.2 .1 .6 .6 -5.9 18.2 -'.3 -1.7 -2.6 -2.0 -1.2 -1.6 -1.9 -1.8 -1.4 -1.7 -1.6 _ 2 -.2 -A -1.0 -1.0 6.4 -.5 4.7 -3.1 6.8 10.3 3.1 .4 -1.5 6.0 4.7 1.3 -1.5 5.7 3.0 2.3 6.3 6.0 5.6 9.9 14.1 10.3 7.9 9.8 3.2 7.7 TABLE B-17.—Inventories and final sales of business, 1946-81 [Billions of dollars, except as noted; seasonally adjusted] Inventory— final sales ratio Inventories * Year and quarter Fourth quarter: 1946 1947. 1948 1949 Nonfarm Total Farm Total Manu- Wholesale facturing trade Retail trade Final sales 2 Other Total Nonfarm 3 72.0 82.6 87.2 78.7 22.7 25.1 22.9 19.8 49.3 57.5 64.3 59.0 26.7 29.3 32.5 28.9 10.1 10.5 11.7 11.8 11.4 13.1 15.1 14.0 3.5 4.6 5.0 4.3 16.0 18.3 19.6 19.5 4.50 4.51 4.44 4.03 3.08 3.14 3.27 3.02 1950 1951 1952 1953 1954 98.0 110.5 109.2 110.1 107.6 26.1 28.3 26.0 24.6 23.8 71.9 82.2 83.19 85.5 83.9 35.2 43.4 44.4 46.4 44.3 13.8 14.6 14.8 15.0 15.3 17.5 18.0 17.7 18.3 18.5 5.4 6.1 6.2 5.8 5.9 21.7 24.6 26.1 27.2 27.5 4.53 4.49 4.18 4.05 3.91 3.32 3.34 3.18 3.15 3.05 1955 1956 1957 1958 1959 114.8 124.0 127.6 127.3 132.0 22.5 22.9 24.3 25.6 24.4 92.2 101.0 103.3 101.7 107.6 48.8 54.5 54.8 53.2 55.7 16.6 17.9 18.2 18.3 20.0 20.9 21.7 22.9 22.9 23.9 6.0 6.9 7.3 7.3 8.0 29.7 31.4 32.7 33.7 35.6 3.86 3.95 3.90 3.77 3.71 3.10 3.22 3.16 3.01 3.02 1960 1961 1962 1963 1964 136.0 137.9 144.6 150.4 156.2 25.6 25.9 27.3 27.6 26.5 110.4 112.1 117.3 122.7 129.7 56.6 57.7 60.9 62.9 66.4 20.4 20.9 21.5 23.1 24.4 25.3 24.9 26.3 27.6 29.0 8.1 8.7 8.6 9.2 9.9 36.9 38.8 41.1 43.7 46.2 3.69 3.55 3.52 3.44 3.38 2.99 2.89 2.85 2.81 2.81 1965 1966. 1967. 1968. 1969. 170.5 187.4 199.4 213.5 234.6 29.9 29.6 29.5 30.6 33.3 140.6 157.8 169.9 182.9 201.3 71.5 81.7 88.7 95.2 104.8 26.3 29.9 32.4 34.3 37.7 31.9 34.6 35.3 39.0 42.8 10.9 11.6 13.5 14.4 16.0 51.0 54.1 57.6 63.3 67.4 3.34 3.46 3.46 3.37 3.48 2.76 2.92 2.95 2.89 2.99 1970. 1971. 1972. 1973. 1974. 244.0 260.8 288.7 357.7 434.4 32.3 36.7 45.6 66.6 62.4 211.6 224.1 243.1 291.2 372.0 108.4 109.9 116.8 141.1 189.6 41.7 44.9 49.4 60.2 76.9 44.3 50.5 55.7 64.8 74.1 17.3 18.8 21.2 25.0 31.3 70.8 77.2 85.8 94.5 102.0 3.45 3.38 3.37 3.79 4.26 2.99 2.90 2.83 3.08 3.65 1975. 1976. 1977. 1978. 1979. 439.4 473.6 520.9 600.5 710.1 64.5 60.6 61.4 76.0 84.3 374.9 413.0 459.5 524.5 625.9 189.8 207.5 225.6 254.7 311.2 77.3 86.9 98.5 114.2 134.6 74.6 82.9 93.7 108.4 122.6 33.3 35.7 41.6 47.2 57.5 113.6 124.1 139.2 159.3 176.2 3.87 3.82 3.74 3.77 4.03 3.30 3.33 3.30 3.29 3.55 1980.. 1981 '.. 785.4 834.9 92.6 84.0 692.8 750.9 344.2 373.7 151.7 164.2 130.3 141.0 66.5 71.9 194.1 208.6 4.05 4.00 3.57 3.60 626.2 654.5 681.9 710.1 79.4 80.5 83.4 84.3 546.7 574.0 598.5 625.9 267.6 281.9 295.0 311.2 118.8 123.9 129.4 134.6 111.3 116.3 119.7 122.6 49.0 51.9 54.5 57.5 163.6 165.1 171.4 176.2 3.83 3.96 3.98 4.03 3.34 3.48 3.49 3.55 724.5 740.4 765.8 785.4 77.8 81.8 92.6 92.6 646.6 658.5 673.2 692.8 325.0 331.2 335.3 344.2 138.5 142.0 146.3 151.7 122.8 124.0 127.3 130.3 60.3 61.3 64.3 66.5 181.2 179.9 187.2 194.1 4.00 4.12 4.09 4.05 3.57 3.66 3.60 3.57 796.9 811.3 825.6 834.9 86.9 86.7 85.1 84.0 710.0 724.6 740.5 750.9 355.2 363.2 369.7 373.7 155.7 158.8 160.6 164.2 129.8 132.6 139.2 141.0 69.4 70.0 71.0 71.9 201.4 202.2 207.5 208.6 3.96 4.01 3.98 4.00 3.53 3.58 3.57 3.60 1979: 1. II III. IV. 1980: 1. II III IV 1981: 1 II. III. IV ".. 1 End of quarter. 2 Quarterly totals at monthly rates. Business final sales equals final sales less gross product of households and institutions, government, and rest of the world, and includes a small amount of final sales by farms. 3 Ratio based on total business final sales, which includes a small amount of final sales by farms. Note.—The industry classification of inventories is on an establishment basis and is based on the 1972 Standard Industrial Classification (SIC) beginning 1948 and on the 1942 SIC prior to 1948. Source: Department of Commerce, Bureau of Economic Analysis. 252 TABLE B-18.—Inventories and final sales of business in 1972 dollars, 1947-81 [Billions of 1972 dollars, except as noted; seasonally adjusted] Inventories J Year and quarter Fourth quarter: 1947 1948 1949. Inventory— final sales ratio Nonfarm Total Farm Total Manu- Wholesale facturing trade Retail trade Final sales 2 Total Other Nonfarm 3 1161 121.6 117.2 257 26.7 26.2 905 94.8 91.0 47.4 48.8 46.2 160 17.2 17.2 18.3 20.3 19.8 8.7 8.6 7.8 33.2 34.4 34.6 3.50 3.53 3.38 2.73 2.76 2.63 1950. 1951. 1952, 1953, 1954, 127.7 141.4 145.7 147.2 145.0 27.5 29.1 30.4 30.2 31.1 100.2 112.3 115.4 117.1 114.0 49.3 60.0 62.7 64.5 60.9 19.2 19.7 20.1 20.3 20.6 23.0 23.0 23.0 23.6 23.7 8.7 9.5 9.6 8.7 8.8 36.9 39.8 41.6 43.0 43.1 3.46 3.55 3.51 3.42 3.36 2.72 2.82 2.78 2.72 2.64 1955, 1956.. 1957. 1958.. 1959.. 152.8 158.6 160.1 158.3 165.3 31.5 30.7 31.4 32.4 32.4 121.2 127.8 128.7 125.9 132.9 64.3 69.1 68.7 66.1 69.1 22.1 22.8 22.5 22.5 24.6 26.5 26.8 27.8 27.5 28.7 8.4 9.2 9.8 9.8 10.5 45.6 46.5 47.1 48.1 49.7 3.35 3.41 3.40 3.29 3.33 2.66 2.75 2.73 2.62 2.68 I960.. 1961, 1962, 1963. 1964, 168.8 171.8 179.7 187.2 194.3 32.8 33.2 34.5 35.7 35.1 136.1 138.6 145.2 151.5 159.Z 69.9 71.7 75.6 78.2 82.0 25.1 25.7 26.6 28.4 29.9 30.3 29.8 31.6 33.0 34.5 10.7 11.4 11.4 12.0 12.8 50.7 53.1 55.3 58.3 60.9 3.33 3.24 3.25 3.21 3.19 2.68 2.61 2.62 2.60 2.61 1965, 1966, 1967, 1968. 1969 206.1 222.9 235.1 244.1 255.1 36.2 36.0 36.8 37.0 37.3 169.9 186.8 198.3 207.0 217.8 87.0 97.2 104.1 108.4 112.8 31.6 35.3 37.8 38.9 41.2 37.4 40.0 40.0 43.0 45.9 13.8 14.3 16.3 16.8 17.9 66.1 67.5 70.1 73.8 74.7. 3.12 3.30 3.36 3.31 3.41 2.57 2.77 2.83 2.81 2.92 1970. . 1971. 1972 1973 1974 258.9 267.0 277.2 294.4 306.0 37.7 39.2 39.8 42.1 41.8 2212 227.8 237.4 252.3 264.2 112.9 111.8 114.4 121.8 130.9 440 45.9 47.9 50.4 54.1 461 51.2 54.6 58.8 58.3 18.2 19.0 20.5 21.4 20.9 752 78.9 84.7 87.3 85.1 344 3.38 3.27 3.37 3.59 2.94 2.89 2.80 2.89 3.10 1975 1976 1977 1978 1979 299.2 307.0 319.3 333.3 343.5 43.0 41.1 41.1 41.1 43.5 256.3 265.9 278.3 292.2 300.0 127.1 130.9 133.9 139.1 145.9 52.2 55.5 59.5 63.2 64.2 55.8 58.8 63.0 66.8 66.8 21.1 20.8 21.9 23.0 23.1 88.3 92.4 97.9 103.1 105.4 3.39 3.32 3.26 3.23 3.26 2.90 2.88 2.84 2.83 2.85 1980 1981 P 340.6 348.7 43.0 44.2 297.6 304.6 145.0 147.8 64.7 66.9 64.6 66.5 23.4 23.3 105.4 104.7 3.23 3.33 2.82 2.91 337.2 341 7 343.7 343.5 41.6 422 43.0 43.5 295.5 2995 300.7 300.0 141.8 1439 145.0 145.9 63.9 64 1 64.5 64.2 66.8 684 68.' 1 66.8 23.0 232 23.1 23.1 103.6 1027 104.4 105.4 3.25 333 3.29 3.26 2.85 292 2.88 2.85 343.3 3436 342.3 340.6 43.6 438 43.4 43.0 299.6 2998 299.0 297.6 147.3 1472 145.9 145.0 64.1 645 64.7 64.7 64.9 647 651 64.6 23.4 234 23.4 23.4 106.1 1028 1039 105.4 3.24 334 329 3.23 2.82 292 2.88 2.82 340.2 342.9 346.6 348.7 42.7 42.9 43.5 44.2 297.5 300.0 303.2 304.6 146.1 146.3 147.7 147.8 64.4 65.2 65.8 66.9 63.5 65.2 66.4 66.5 23.4 23.2 23.3 23.3 107.3 105.9 105.9 104.7 3.17 3.24 3.27 3.33 2.77 2.83 2.86 2.91 1979: L II III IV 1980: I if". Ill IV 1981: 1. II. Ill IV". 1 End of quarter. 2 Quarterly totals at monthly rates. Business final sales equals final sales less gross product of households and institutions, government, and rest of world, and includes a small amount of final sales by farms. 3 Ratio based on total business final sales, which includes a small amount of final sales by farms. Note.—The industry classification of inventories is on an establishment basis and is based on the 1972 Standard Industrial Classification (SIC) beginning 1948 and on the 1942 SIC prior to 1948. Source: Department of Commerce, Bureau of Economic Analysis. 253 358-691 0 - 82 - 17 : QL3 TABLE B-19.—Relation of gross national product, net national product, and national income, 1929-81 [Billions of dollars; quarterly data at seasonally adjusted annual rates] Less: Less-. Year or quarter Gross national product consumption allowances with capital consumption adjustment PIUS: CnhciHioc Equals: Net national product Indirect business tax and nontax liability Business transfer payments Statistical discrepancy less current surplus of government enterprises Equals: National income 1929 1034 9.7 93.7 7.1 0.6 11 -02 84.8 1933 558 74 48.4 7.1 .7 .7 -0 39.9 1939 909 87 82.2 9.4 .5 1.4 .4 71.4 1940. 1941 1942. 1943 1944 1945 1946. 1947 1948 1949 100.0 125.0 158.5 192.1 210.6 212.4 209.8 233.1 259.5 258.3 9.1 10.0 11.2 11.5 11.7 12.2 14.0 17.3 20.2 21.8 91.0 115.0 147.3 180.7 198.9 200.2 195.8 215.7 239.3 236.5 10.1 11.3 11.8 12.8 14.2 15.5 17.1 18.4 20.1 21.3 .4 .5 '.5 .5 .5 .5 .6 .7 .8 1.1 .6 -.8 -1.8 2.7 4.1 L5 -1.6 .6 .4 .1 .1 .1 .6 .7 .9 79.7 102.7 135.9 169.3 182.1 180.7 178.6 194.9 219.9 213.6 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 286.5 330.8 348.0 366.8 366.8 400.0 421.7 444.0 449.7 487.9 23.5 27.2 29.3 31.0 32.7 34.8 38.7 41.7 43.5 44.9 263.0 303.6 318.7 335.8 334.1 365.3 383.0 402.3 406.2 443.0 23.4 25.3 27.7 29.7 29.6 32.2 35.1 37.5 38.7 41.8 .8 .9 1.0 1.2 1.1 1.2 1.4 1.5 1.6 1.8 1.3. 3.2 1.7 2.3 2.0 1.3 -2.1 -1.2 .2 -1.3 .1 -.1 237.6 -.5 302.1 301.1 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 506.5 524.6 565.0 596.7 637.7 691.1 756.0 799.6 873.4 944.0 46.3 47.5 49.0 50.6 52.9 56.0 60.7 65.9 72.1 80.0 460.2 477.0 516.1 546.1 584.8 635.0 695.3 733.7 801.3 864.0 45.4 48.0 51.6 54.6 58.8 62.6 65.3 70.2 78.9 86.6 2.0 2.0 2.1 2.4 2.7 2.8 3.0 3.1 3.4 3.9 -2.4 -.1 2.1 1.7 -1.2 1.4 -.3 -2.1 -3.9 .4 1.7 1.8 1.1 1.7 1.6 2.5 1.6 1.4 1.9 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 992.7 1,077.6 1,185.9 1,326.4 1,434.2 1,549.2 1,718.0 1,918.0 2,156.1 2,413.9 88.1 96.5 106.4 116.5 136.0 159.3 175.0 196.0 221.2 253.6 904.7 981.1 1,079.5 1,209.9 1,298.2 1,389.9 1,543.0 1,722.0 1,934.9 2,160.3 94.3 103.7 111.5 120.9 129.1 140.1 151.7 166.0 178.1 188.4 4.1 4.4 4.9 5.5 5.8 7.4 7.9 8.2 8.7 9.4 -1.5 4.1 3.3 .8 3.7 5.5 5.1 4.4 6.4 2.2 2.9 2.6 3.8 3.4 1.1 2.4 1.0 3.1 3.6 3.1 963.6 1,086.2 1,160.7 1,239.4 1,379.2 1,546.5 1,745.4 1,963.3 1980 1981 p 2,626.1 29222 287.3 3215 2,338 9 26007 2123 2512 105 7 116 8 46 51 23437 23406 23746 24441 2,496.3 2401 2498 2596 265.1 21005 2 1248 2'l84 6 2 231.2 1845 1858 1900 1935 91 58 7 28 24 30 40 27 19036 19320 19862 203l'3 25717 2,564.8 26373 2,730.6 2746 283.7 2918 2989 22971 2281 1 23455 24317 1989 2063 2158 2280 10 1 28 19 30 66 31 20885 20700 28530 28858 29650 29849 3065 3167 3265 3361 25464 25691 26385 26488 2455 2494 2540 2558 11 2 34 69 2 47 2 291 1 51 2 377 6 1979: 1 || III IV 93 96 98 _ 7 ~'.l -'.Q .7 .7 1.1 .1 274.1 287.9 330.5 349.4 365.2 366.9 400.8 415.7 428.8 462.0 488.5 524.9 572.4 628.1 662.2 722.5 779.3 810.7 871.5 21214 1980: 1 II Ill . . IV 103 106 109 37 63 54 2 1224 22048 1981: 1 II Ill IV P Source: Department of Commerce, Bureau of Economic Analysis. 254 115 118 12 1 57 48 23209 TABLE B-20.—Relation of national income and personal income, 1929-81 [Billions of dollars; quarterly data at seasonally adjusted annual rates] Year or quarter National income Equals: Plu S: Le SS: Corporate profits with inventory valuation and capital consumption adjustments Net interest 9.0 4.7 0.2 0.0 0.9 6.9 5.8 0.6 85.0 4.1 .3 .0 1.5 5.5 2.0 .7 47.0 GovernWage Contribu- accruals ment Personal Personal Business Personal transfer tions for dividend transfer less payments interest social income income payments income disburseto insurance ments persons 1929. 84.8 1933. 39.9 1939. 71.4 5.3 3.6 2.1 .0 2.5 5.4 3.8 .5 72.4 1940. 1941. 1942. 1943. 1944.. 1945. 1946. 1947 1948. 1949. 79.7 102.7 135.9 169.3 182.1 180.7 178.6 194.9 219.9 213.6 8.6 14.1 19.3 23.5 23.6 19.0 16.6 22.3 29.4 27.1 3.3 3.3 3.1 2.7 2.4 2.2 1.8 2.3 2.4 2.7 2.3 2.8 3.5 4.5 5.2 6.1 6.1 5.8 5.4 5.9 .0 .0 .0 .2 -.2 .0 -.0 .0 .0 -.0 2.7 2.6 2.7 2.5 3.1 5.6 10.8 11.2 10.6 11.7 5.3 5.3 5.2 5.1 5.2 5.9 6.6 7.6 8.1 8.7 4.0 4.4 4.3 4.4 4.6 4.6 5.6 6.3 7.0 7.2 .4 .5 .5 .5 .5 .5 .5 .6 .7 .8 77.9 95.4 122.6 150.8 164.5 170.0 177.6 190.1 209.0 206.4 237.6 274.1 287.9 302.1 301.1 330.5 349.4 365.2 366.9 400.8 33.9 38.7 36.1 36.3 35.2 45.5 43.7 43.3 38.5 49.6 3.0 3.5 4.0 4.4 5.3 5.9 6.6 7.9 9.6 10.3 7.1 8.5 9.0 9.1 10.1 11.5 12.9 14.9 15.2 18.0 .0 .1 -.0 -.1 .0 .0 .0 .0 .0 .0 14.4 11.6 12.1 12.9 15.1 16.2 17.3 20.1 24.3 25.2 9.7 10.5 11.2 12.5 13.7 14.9 16.7 18.8 20.3 22.5 8.8 8.5 8.5 8.8 9.1 10.3 11.1 11.5 11.3 12.2 .8 .9 1.0 1.2 1.1 1.2 1.4 1.5 1.6 1.8 227.2 254.9 271.8 287.7 289.6 310.3 332.6 351.0 361.1 384.4 1960 1961. 1962. 1963. 1964. 1965. 1966. 1967. 1968. 1969. 415.7 428.8 462.0 488.5 524.9 572.4 628.1 662.2 722.5 779.3 47.6 48.6 56.6 62.1 69.2 80.0 85.1 82.4 89.1 85.1 11.4 13.0 14.7 16.4 18.3 21.0 24.4 27.6 30.0 34.8 21.1 21.9 24.3 27.3 28.7 30.0 38.8 43.4 47.9 55.0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 27.0 30.8 31.6 33.4 34.8 37.6 41.6 49.5 56.4 62.8 25.0 26.4 29.0 32.2 35.6 39.7 44.4 48.3 53.4 61.1 12.9 13.3 14.4 15.5 17.3 19.1 19.4 20.2 21.9 22.4 2.0 2.0 2.1 2.4 2.7 2.8 3.0 3.1 3.4 3.9 402.3 417.8 443.6 466.2 499.2 540.7 588.2 630.0 690.6 754.7 1970. 1971. 1972. 1973. 1974. 1975. 1976. 1977. 1978. 1979. 810.7 871.5 963.6 1,086.2 1,160.7 1,239.4 1,379.2 1,546.5 1,745.4 1,963.3 71.4 83.2 96.6 108.3 94.9 110.5 138.1 164.7 185.5 196.8 41.4 46.5 51.2 60.2 76.1 84.5 87.2 100.9 115.8 143.4 58.6 64.6 74.2 92.4 104.3 110.9 126.0 140.6 161.8 187.1 .0 .6 .0 _i -.5 .0 .0 .0 .2 -.2 76.1 90.0 99.8 114.0 135.4 170.9 186.4 199.3 214.6 239.9 69.4 74.8 80.9 93.9 112.4 123.2 132.5 151.6 173.2 209.6 22.2 22.6 24.1 26.5 29.1 29.9 36.5 38.7 43.1 48.6 4.1 4.4 4.9 5.5 5.8 7.4 7.9 8.2 8.7 9.4 811.1 868.4 951.4 1,065.2 1,168.6 1,265.0 1,391.2 1,538.0 1,721.8 1,943.8 1980 1981" 2 1214 2,343.7 1827 189.0 1798 215.0 2037 238.9 -0 .0 2838 321.3 2563 308.6 544 61.3 105 11.6 21602 2,403.6 1,903.6 1,932.0 1,986.2 2,031.3 201.9 196.6 199.5 189.4 133.4 136.9 146.8 156.5 182.3 185.3 188.5 192.2 .1 -.9 -.1 .2 226.3 232.0 248.3 253.3 195.8 202.6 214.3 225.7 47.5 48.3 48.6 50.1 9.1 9.3 9.6 9.8 1,864.6 1,906.3 1,972.3 2,032.0 2,088.5 2,070.0 2,122.4 2,204.8 200.2 169.3 177.9 183.3 165.4 175.3 185.3 193.3 198.8 199.5 204.1 212.3 — .2 '.Q .5 _.5 261.6 270.3 300.1 303.1 239.9 253.6 261.8 269.7 52.4 54.2 55.1 56.1 10.1 10.3 10.6 10.9 2,088.2 2,114.5 2,182.1 2,256.2 2,291 1 2,320.9 23776 2030 190.3 1957 2008 211.0 2202 228.1 233.7 236.3 2406 244.9 0 0 .2 — 1 3084 312.7 3304 333.6 2887 3009 3157 329.0 580 60.2 630 64.1 112 11.5 118 12.1 23198 2,368.5 24417 2,484.4 1950. 1951. 1952. 1953. 1954. 1955. 1956. 1957. 1958. 1959. . -1.7 1979: 1 II Ill IV 1980: 1 II Ill IV 1981: 1 II Ill IV Source: Department of Commerce, Bureau of Economic Analysis. 255 TABLE B-21.—National income by type of income, 1929-81 [Billions of dollars; quarterly data at seasonally adjusted annual rates] Proprietors' income with inventory valuation and capital consumption adjustments Compensation of employees Year or quarter National income l Total Wages and salaries Supplements to wages and salaries 2 Farm Total Total Nonfarm Capital Propri- consumpetors' tion in- 3 adjustcome ment Total Inven- Capital Propri- tory consumpetors' valuation intion come4 adjust- adjustment ment 1929 84.8 51.1 50.5 0.6 15.0 6.1 6.3 -0.2 8.9 8.8 0.1 1933 39.9 29.5 29.0 .5 5.9 2.5 2.6 -.0 3.3 3.9 -.5 .0 1939 71.4 48.1 46.0 2.1 11.8 4.4 4.5 -.1 7.4 7.6 -.2 -.0 1940 1941 1942 1943 1944 1945 1946 1947 1948 1949 79.7 102.7 135.9 169.3 182.1 180.7 178.6 194.9 219.9 213.6 52.1 64.8 85.3 109.5 121.2 123.1 118.1 129.2 141.4 141.3 49.9 62.1 82.1 105.8 116.7 117.5 112.0 123.1 135.5 134.7 2.3 2.7 3.2 3.8 4.5 5.6 6.0 6.1 5.9 6.6 13.0 17.5 24.2 29.1 30.4 31.8 36.7 35.9 40.9 36.4 4.4 6.4 10.1 12.0 12.0 12.4 14.9 15.1 17.6 12.8 4.5 6.5 10.3 12.2 12.2 12.7 15.2 15.7 18.2 13.5 -.1 — 2 -.2 -.2 -.3 -.3 8.6 11.7 14.4 17.1 18.3 19.3 23.3 21.8 23.1 22.2 -.0 -.6 -.4 -.2 -.1 -.1 -1.7 -1.5 -.4 .5 .0 .0 .1 .2 .2 -^5 -.6 -.7 8.6 11.1 14.1 17.1 18.4 19.4 21.8 20.8 23.3 23.6 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 237.6 274.1 287.9 302.1 301.1 330.5 349.4 365.2 366.9 400.8 154.8 181.0 195.7 209.6 208.4 224.9 243.5 256.5 258.2 279.6 147.0 171.3 185.3 198.5 196.8 211.7 228.3 239.3 240.5 258.9 7.8 9.7 10.4 11.0 11.6 13.2 15.2 17.2 17.7 20.6 38.7 43.2 43.4 41.8 41.2 42.9 43.9 45.3 47.7 47.6 13.7 16.1 15.1 13.1 12.5 11.5 11.2 11.1 13.2 10.9 14.4 16.9 16.0 13.9 13.3 12.2 12.1 12.1 14.1 11.9 -.7 -.8 -.8 -.8 -.8 -.8 -.9 -.9 -.9 -1.0 25.0 27.2 28.2 28.6 28.7 31.4 32.7 34.2 34.5 36.7 25.1 26.4 26.9 27.6 27.6 30.5 31.8 33.1 33.2 35.3 -1.1 -.3 .2 -.2 -.0 -.2 -.5 -il -.0 1.0 1.0 1.1 1.2 1.2 1.2 1.4 1.4 1.4 1.4 1960 1961 1962 1963 1964 .. 1965 1966 1967 1968 . 1969 415.7 428.8 462.0 488.5 524.9 572.4 628.1 662.2 722.5 779.3 294.9 303.6 325.1 342.9 368.0 396.5 439.3 471.4 519.9 572.9 271.9 279.5 298.0 313.4 336.1 362.0 398.4 427.0 469.6 515.7 23.0 24.1 27.1 29.5 31.8 34.5 40.9 44.4 50.3 57.2 47.2 48.6 49.9 50.5 52.5 56.9 60.5 61.2 64.0 67.0 11.7 12.1 12.3 12.0 10.8 13.1 14.1 12.6 12.7 14.6 12.6 12.9 13.0 12.8 11.5 13.8 14.9 13.5 13.7 15.7 -.9 -.8 -.8 -.7 -.7 -.7 -.8 -.9 -1.0 -1.2 35.5 36.5 37.6 38.5 41.7 43.8 46.4 48.6 51.3 52.5 34.2 35.3 36.4 37.2 40.2 42.7 45.3 47.5 50.6 51.9 .0 .0 -.0 -.0 -.1 -.2 -.2 -.2 -.4 -.5 1.3 1.2 1.2 1.4 1.5 1.3 1.3 1.3 1.1 1.1 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 810.7 871.5 963.6 1,086.2 1,160.7 1,239.4 1,379.2 1,546.5 1,745.4 1,963.3 612.0 652.2 718.0 801.3 877.5 931.4 1,036.3 1,152.3 1,299.7 1,460.9 548.7 581.5 635.2 702.6 765.2 806.4 889.9 983.8 1,105.4 1,235.9 63.2 70.7 82.8 98.7 112.3 125.0 146.4 168.5 194.3 225.0 66.2 69.4 76.9 93.8 88.7 90.0 94.1 103.5 117.1 131.6 14.3 15.0 18.7 32.8 26.5 24.6 19.1 18.4 26.1 30.8 15.6 16.4 20.4 34.6 29.0 28.0 22.8 22.6 31.0 36.6 -1.3 -1.4 -1.6 -1.8 -2.5 -3.4 -3.7 -4.3 -4.9 -5.8 51.9 54.4 58.1 61.0 62.2 65.4 75.0 85.1 91.0 100.7 51.7 54.5 58.1 62.3 65.8 67.4 77.1 87.1 93.8 105.2 -.5 ^.6 -.7 -2.0 -3.7 -1.2 -1.2 -1.3 -2.2 -3.4 .8 .4 .8 .6 .1 -.8 -.9 7 -.6 -1.0 1980 1981 ». 2,121.4 2,343.7 1,596.5 1,771.7 1,343.6 1,482.9 252.9 288.8 130.6 134.4 23.4 22.0 30.3 29.7 -6.9 -7.7 107.2 112.4 112.7 116.0 -3.7 -1.6 -1.9 -2.1 1979: | II. . Ill IV 1,903.6 1,932.0 1,986.2 2,031.3 1,409.9 1,439.0 1,476.7 1,518.1 1,194.9 1,217.8 1,248.5 1,282.4 215.0 221.2 228.2 235.7 127.8 129.4 132.9 136.3 30.9 32.6 30.2 29.5 36.3 38.3 36.2 35.7 -5.4 -5.7 -5.9 -6.2 96.8 96.8 102.7 106.8 100.5 100.6 107.3 112.2 30 -3.1 -3.5 -4.0 -.7 -.8 -1.2 -1.5 1 II III IV 2,088.5 2,070.0 2,122.4 2,204.8 1,558.0 1,569.0 1,597.4 1,661.8 1,314.5 1,320.4 1,342.3 1,397.3 243.5 248.6 255.0 264.5 133.7 124.9 129.7 134.0 25.7 23.3 22.1 22.5 32.3 30.2 29.0 29.6 -6.5 -6.9 -6.9 -7.2 107.9 101.6 107.6 111.6 114.8 105.5 113.1 117.5 -5.3 -2.0 -3.5 -4.0 -1.6 -1.9 -2.0 -2.0 1981: 1 || III IV " 2,291.1 2,320.9 2,377.6 1,722.4 1,752.0 1,790.7 1,821.7 1,442.9 1,467.0 1,498.7 1,522.9 279.5 285.1 292.0 298.9 132.1 134.1 137.1 134.1 18.9 21.7 24.7 22.7 26.1 29.3 32.6 30.9 -7.2 -7.6 -7.9 -8.2 113.2 112.5 112.4 111.5 117.4 115.7 115.9 115.2 -2.5 -1.2 -1.4 -1.3 -1.7 -2.0 22 -2.4 -0.1 '.2 .5 .6 .9 1980: See next page for continuation of table. 256 TABLE B-21.—National income by type of income, 1929-81—Continued [Billions of dollars; quarterly data at seasonally adjusted annual rates] Rental income of persons with capital consumption adjustment Year or quarter Total Rental Capital conincome sumption : of persons adjust ment Corporate profits with inventory valuation and capital consumption adjustments Profits with inventory valuation adjustment and without capital consumption adjustment Prnfitc rTOlllS Total Total Profits Profits tax before taxes liability Inventory valuation UndisadjustDividends tributed ment profits Profits after tax Total Capital Not roei consumption interest adjustment 4.9 2.2 2.6 2.7 3.1 4.0 4.4 4.5 4.6 5.5 5.3 5.7 6.1 7.1 7.7 8.8 10.0 11.0 11.3 11.6 12.2 12.9 13.6 14.5 15.0 15.8 16.5 17.1 18.0 18.7 19.7 19.5 19.6 19.7 20.2 21.0 22.6 23.5 23.0 23.5 25.1 27.4 30.5 5.7 2.3 3.1 3.3 3.9 5.0 5.6 5.9 6.2 7.3 7.7 8.5 8.9 10.0 11.0 12.2 13.4 14.4 14.8 15.2 15.9 16.7 17.4 18.0 18.4 19.1 19.7 20.2 21.2 22.3 23.6 24.0 25.2 25.8 27.1 29.0 32.1 35.3 36.8 39.2 44.2 50.8 58.9 -0.8 -.1 -.6 -.6 -.8 -1.0 -1.2 -1.4 -1.6 -1.8 -2.5 -2.8 -2.8 -2.9 -3.3 -3.4 -3.4 -3.3 -3.5 -3.6 -3.6 -3.8 -3.8 -3.5 -3.4 -3.4 -3.2 -3.2 -3.3 -3.6 -3.9 -4.5 -5.6 -6.1 -6.9 -8.0 -9.5 -11.8 -13.8 -15.6 -19.1 -23.4 -28.3 9.0 -1.7 5.3 8.6 14.1 19.3 23.5 23.6 19.0 16.6 22.3 29.4 27.1 33.9 38.7 36.1 36.3 35.2 45.5 43.7 43.3 38.5 49.6 47.6 48.6 56.6 62.1 69.2 80.0 85.1 82.4 89.1 85.1 71.4 83.2 96.6 108.3 94.9 110.5 138.1 164.7 185.5 196.8 10.5 -1.2 6.5 9.8 15.4 20.5 24.5 24.0 19.3 19.6 25.9 33.4 31.1 37.9 43.3 40.6 40.2 38.4 47.5 46.9 46.6 41.6 52.3 49.7 50.0 55.1 59.7 66.0 76.0 80.9 78.1 84.9 80.8 68.9 82.0 94.0 105.6 96.7 120.6 151.6 176.7 199.0 212.7 10.0 1.0 7.2 10.0 17.9 21.7 25.3 24.2 19.8 24.8 31.8 35.6 29.2 42.9 44.5 39.6 41.2 38.7 49.2 49.6 48.1 41.9 52.6 49.8 49.7 55.0 59.6 66.5 77.2 83.0 79.7 88.5 86.7 75.4 86.6 100.6 125.6 136.7 132.1 166.3 192.6 223.3 255.4 1.4 .5 1.4 2.8 7.6 11.4 14.1 12.9 10.7 9.1 11.3 12.4 1€.2 17.9 22.6 19.4 20.3 17.6 22.0 22.0 21.4 19.0 23.6 22.7 22.8 24.0 26.2 28.0 30.9 33.7 32.5 39.2 39.5 34.2 37.5 41.6 49.0 51.6 50.6 63.8 72.6 83.0 87.6 8.6 .4 5.7 7.2 10.3 10.3 11.2 11.3 9.1 15.7 20.5 23.2 19.0 25.0 21.9 20.2 20.9 21.1 27.2 27.6 26.7 22.9 28.9 27.1 26.9 31.1 33.4 38.5 46.3 49.4 47.2 49.4 47.2 41.3 49.0 58.9 76.6 85.1 81.5 102.5 120.0 140.3 167.8 5.8 2.0 3.8 4.0 4.4 4.3 4.4 4.6 4.6 5.6 6.3 7.0 7.2 8.8 8.5 8.5 8.8 9.1 10.3 11.1 11.5 11.3 12.2 12.9 13.3 14.4 15.5 17.3 19.1 19.4 20.2 22.0 22.5 22.5 22.9 24.4 27.0 29.9 30.8 37.4 39.9 44.6 50.2 2.8 -1.6 2.0 3.2 5.8 6.0 6.7 6.7 4.5 10.2 14.2 16.2 11.8 16.2 13.4 11.8 12.1 11.9 16.9 16.6 15.2 11.6 16.7 14.3 13.6 16.6 17.9 21.2 27.2 29.9 27.0 27.3 24.7 18.8 26.1 34.5 49.6 55.2 50.7 65.1 80.1 95.7 117.6 0.5 -2.1 -.7 -.2 -2.5 -1.2 -.8 -.3 -.6 -5.3 -5.9 -2.2 1.9 -5.0 -1.2 1.0 -1.0 -.3 -1.7 -2.7 -1.5 -.3 -.3 -.2 .3 .0 .1 -.5 -1.2 -2.1 -1.6 -3.7 -5.9 -6.6 -4.6 -6.6 -20.0 -40.0 -11.6 -14.7 -15.8 -24.3 -42.6 -1.4 -.6 -1.1 -1.2 -1.3 -1.2 -1.0 -.3 -.2 -3.0 -3.6 -4.0 -3.9 -4.0 -4.6 -4.5 -3.9 -3.2 -2.0 -3.2 -3.4 -3.2 -2.7 -2.0 -1.4 1.5 2.5 3.1 4.0 4.2 4.3 4.3 4.3 2.5 1.3 2.7 2.7 -1.8 -10.1 -13.5 -12.0 -13.5 -15.9 4.7 4.1 3.6 3.3 3.3 3.1 2.7 2.4 2.2 1.8 2.3 2.4 2.7 3.0 3.5 4.0 4.4 5.3 5.9 6.6 7.9 9.6 10.3 11.4 13.0 14.7 16.4 18.3 21.0 24.4 27.6 30.0 34.8 41.4 46.5 51.2 60.2 76.1 84.5 87.2 100.9 115.8 143.4 31.8 33.6 64.9 69.8 -33.1 -36.2 182.7 189.0 199.8 202.9 245.5 230.2 82.3 76.4 163.2 153.9 56.0 63.1 107.2 90.7 -45.7 -27.3 -17.2 -13.9 179.8 215.0 1979 1 II. Ill IV 30.7 30.1 30.3 31.0 56.7 57.6 59-.7 61.4 -26.0 -27.5 -29.4 -30.4 201.9 196.6 199.5 189.4 217.8 213.0 215.6 204.5 253.1 250.9 262.0 255.4 88.5 86.4 88.4 87.2 164.6 164.6 173.6 168.2 49.0 49.8 50.2 51.6 115.5 114.8 123.5 116.6 -35.3 -37.9 -46.5 -50.8 -15.9 -16.4 -16.1 -15.1 133.4 136.9 146.8 156.5 1980 1 II III IV 31.2 31.5 32.0 32.4 62.9 64.5 65.9 66.4 -31.6 -33.0 -33.9 -33.9 200.2 169.3 177.9 183.3 215.6 186.9 195.9 201.0 277.1 217.9 237.6 249.5 94.2 71.5 78.5 85.2 182.9 146,5 159.1 164.3 53.9 55.7 56.7 57.7 128.9 90.7 102.4 106.6 -61.4 -31.1 -41.7 -48.4 -15.4 -17.6 -17.9 -17.8 165.4 175.3 185.3 193.3 1981 1 II. Ill IV P. 32.7 33.3 339 34.5 68.2 69.3 705 71.2 -35.5 -35.9 -366 -36.7 203.0 190.3 1957 217.7 205.1 2091 257.0 229.0 2344 87.7 76.4 781 169.2 152.7 1563 59.6 62.0 648 66.0 109.6 90.6 915 -39.2 -24.0 -253 -20.9 -14.7 -14.7 -134 -12.8 200.8 211.0 2202 228.1 1929. 1933. 1939. 1940 1941. 1942 1943 1944 1945 1946 1947. 1948. 1949. 1950. 1951. 1952. 1953. 1954. 1955. . 1956 1957. 1958 1959. 1960. 1961. 1962. 1963. 1964. 1965 1966 1967. 1968 1969. 1970 1971. 1972. 1973 1974. 1975 1976 1977. 1978 1979 - 1980 1981 * .. . 1 National income is the total net income earned in production. It differs from gross national product mainly in that it excludes depreciation charges and other allowances for business and institutional consumption of durable capital goods and indirect business taxes. See Table B-19. 2 Employer contributions for social insurance and to private pension, health, and welfare funds; workmen's compensation; directors' fees; and a few other minor items. 3 With inventory valuation adjustment and without capital consumption adjustment. 4 Without inventory valuation and capital consumption adjustments. Source: Department of Commerce, Bureau of Economic Analysis. 257 TABLE B-22.—Sources of personal income, 1929-81 [Billions of dollars; quarterly data at seasonally adjusted annual rates] Wage and salary disbursements1 Year or quarter Personal income Commodityproducing industries Total Total Manufacturing Distributive industries Service industries G vern ment and government enterprises Other labor income l Proprietors' income with inventory valuation and capital consumption adjustments Farm Nonfarm 1929 85.0 50.5 21.5 16.1 15.6 8.4 5.0 0.5 6.1 8.9 1933 47.0 29.0 9.8 7.8 8.8 5.2 5.2 .4 2.5 3.3 1939.. 72.4 46.0 17.4 13.6 13.3 7.1 8.2 .6 4.4 7.4 1940 1941 1942 1943 1944 1945 1946 1947 1948 1949 77.9 95.4 122.6 150.8 164.5 170.0 177.6 190.1 209.0 206.4 49.9 62.1 82.1 105.6 116.9 117.5 112.0 123.1 135.5 134.8 19.7 27.5 39.1 49.0 50.4 45.9 46.0 54.2 61.1 57.8 15.6 21.7 30.9 40.9 42.9 38.2 36.5 42.5 47.1 44.6 14.2 16.3 18.0 20.1 22.7 24.8 31.0 35.2 37.5 37.7 7.5 8.1 9.0 9.9 8.5 4.4 6.4 10.9 11.9 14.3 16.1 17.9 18.5 10.2 16.0 26.6 33.0 34.9 20.7 17.5 19.0 20.8 .6 .7 .9 1.1 1.5 1.8 2.0 2.4 2.7 2.9 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 227.2 254.9 271.8 287.7 289.6 310.3 332.6 351.0 361.1 384.4 147.0 171.3 185.4 198.6 196.8 211.7 228.3 239.3 240.5 258.9 64.8 76.3 82.0 89.6 85.7 93.1 100.6 104.2 100.0 109.6 50.3 59.3 64.1 71.2 67.5 73.8 79.4 82.4 78.6 86.8 39.8 44.3 46.9 49.7 50.1 53.4 57.7 60.5 60.8 64.8 19.8 21.5 23.1 24.9 26.1 28.6 31.3 33.6 35.6 38.5 22.6 29.2 33.3 34.4 34.9 36.6 38.8 41.0 44.1 46.0 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 402.3 417.8 443.6 466.2 499.2 540.7 588.2 630.0 690.6 754.7 271.9 279.5 298.0 313.4 336.1 362.0 398.4 427.0 469.6 515.7 113.1 113.7 121.8 126.9 135.4 146.0 161.0 168.3 183.4 199.6 89.7 89.8 96.7 100.6 107.1 115.5 128.0 134.1 145.8 157.5 68.2 69.3 72.8 76.3 81.4 87.2 94.4 100.9 110.0 120.8 41.4 44.1 47.2 50.2 54.4 58.9 64.7 71.3 79.6 89.7 49.2 52.4 56.3 60.0 64.9 69.9 78.3 86.4 96.6 105.5 1970 1971. 1972 1973 1974 1975 1976 1977 1978 1979 811.1 868.4 951.4 1,065.2 1,168.6 1,265.0 1,391.2 1,538.0 1,721.8 1,943.8 5487 580.9 635.2 702.7 765.7 806.4 889.9 983.8 1,105.2 1,236.1 2030 208.3 227.3 254.3 274.7 275.0 307.3 343.5 389.1 437.9 1582 160.3 175.4 196.2 211.4 211.0 237.4 266.0 299.2 333.4 1303 139.4 152.1 168.3 184.6 195.6 216.6 239.4 270.5 303.0 983 106.7 118.2 131.3 145.6 159.7 177.4 198.6 226.1 259.2 117 1 126.5 137.5 148.7 160.9 176.1 188.7 202.3 219.4 236.1 1980 1981 ».. 2,160.2 2,403.6 1,343.7 1,482.8 465.4 512.7 350.7 387.4 328.9 361.1 295.7 335.1 253.6 273.9 1,864.6 1,906.3 1,972.3 2,032.0 1,194.8 1,218.6 1,248.6 1,282.2 425.1 434.3 441.6 450.4 326.1 331.7 335.5 340.4 292.8 297.5 306.5 315.0 247.0 252.6 263.4 273.7 2,088.2 2,114.5 2,182.1 2,256.2 1,314.7 1,320.4 1,341.8 1,397.8 461.7 456.0 460.1 484.0 347.9 343.2 346.7 364.9 322.6 323.2 329.2 340.6 2,319.8 2,368.5 2441.7 2,484.4 14429 1,467.0 14985 1,522.9 5013 508.1 5202 521.2 3774 3867 3939 391.4 3519 357'8 3653 369.5 8.6 10.1 12.0 12.0 12.4 14.9 15.1 17.6 12.8 11.1 14.1 17.1 18.4 19.4 21.8 20.8 23.3 23.6 10.6 13.7 16.1 15.1 13.1 12.5 11.5 11.2 11.1 13.2 10.9 25.0 27.2 28.2 28.6 28.7 31.4 32.7 34.2 34.5 36.7 11.2 11.8 13.0 14.0 15.7 17.8 19.9 21.7 25.2 28.5 11.7 12.1 12.3 12.0 10.8 13.1 14.1 12.6 12.7 14.6 35.5 36.5 37.6 38.5 41.7 43.8 46.4 48.6 51.3 52.5 325 143 519 36.7 43.0 48.8 55.8 64.5 75.9 89.0 102.2 118.6 15.0 18.7 32.8 26.5 24.6 19.1 18.4 26.1 30.8 54.4 58.1 61.0 62.2 65.4 75.0 85.1 91.0 100.7 137.1 154.2 23.4 22.0 107.2 112.4 229.8 234.2 237.1 243.1 111.6 115.9 120.9 126.0 30.9 32.6 30.2 29.5 96.8 96.8 102.7 106.8 283.6 290.8 298.7 310.0 246.8 250.5 253.9 263.3 130.9 135.1 139.1 143.5 25.7 23.3 22.1 22.5 107.9 101.6 107.6 111.6 3225 330'.5 3385 348^8 267 1 270!5 2745 283'.4 148.0 1518 1563 160^5 217 247 22J 18.9 113 2 112*5 112 4 lll'.S 3.7 4.6 5.2 5.9 6.1 7.0 8.0 9.0 9.4 1979: 1. II III IV 1980: 1, II III IV 1981: 1 II Ill IV See next page for continuation of table. 258 TABLE B-22.—Sources of personal income, 1929-81—Continued [Billions of dollars; quarterly data at seasonally adjusted annual rates] Year or quarter Rental income of persons Personal Personal with interest capital dividend income income consumption adjustment Transfer payments Total Old-age, GovernGovern- Aid to survivors, ment ment families disabilunem- Veterans employwith ity, and ployment ee dependbenefits health insurretireent insurance ment children ance benefits (AFDC) benefits benefits Other Less: Personal contributions for social insurance Nonfarm personal income 2 1929 4.9 5.8 6.9 1.5 0.6 0.1 0. 8 0.1 1933 2.2 2.0 5.5 2.1 .6 .2 1. 4 .2 1939 2.6 3.8 5.4 3.0 0.0 0.4 .5 .3 1.7 .6 1940 1941 1942 1943 1944 1945 1946 1947 1948 1949 2.7 3.1 4.0 4.4 4.5 4.6 5.5 5.3 5.7 6.1 4.0 4.4 4.3 4.4 4.6 4.6 5.6 6.3 7.0 7.2 5.3 5.3 5.2 5.1 5.2 5.9 6.6 7.6 8.1 8.7 3.1 3.1 3.1 3.0 3.6 6.2 11.3 11.7 11.3 12.5 .0 .1 .1 .2 .2 .3 .4 .5 .6 .7 .5 .4 .4 .1 .1 .4 1.1 .8 .9 1.9 .5 .5 .5 .5 1.0 3.0 7.0 7.0 5.9 5.3 .3 .3 .3 .4 .4 .5 .7 .7 .7 .9 1. 7 1. 8 1.8 1. 8 2. 0 2. 0 21 .3 .4 .5 2.5 2.9 3.3 .7 .8 1.2 1.8 2.2 2.3 2.0 2.1 2.2 2.2 159.9 171.9 188.2 190.4 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 7.1 7.7 8.8 10.0 11.0 11.3 11.6 12.2 12.9 13.6 8.8 8.5 8.5 8.8 9.1 10.3 11.1 11.5 11.3 12.2 9.7 10.5 11.2 12.5 13.7 14.9 16.7 18.8 20.3 22.5 15.2 12.6 13.1 14.1 16.2 17.5 18.7 21.6 25.9 27.0 1.0 1.9 2.2 3.0 3.6 4.9 5.7 7.3 8.5 10.2 1.5 .9 1.1 1.0 2.2 1.5 1.5 1.9 4.1 2.8 7.7 4.6 4.3 4.1 4.2 4.4 4.4 4.5 4.7 4.6 1.0 1.1 1.2 1.4 1.5 1.7 1.9 2.2 2.5 2.8 .6 .6 .7 .8 .9 3.5 3.6 3.8 4.1 4.1 4.3 4.5 4.9 5.3 5.8 2.9 3.4 3.8 4.0 4.6 5.2 5.8 6.7 6.9 7.9 210.2 235.4 253.1 271.3 273.9 295.5 318.0 336.6 344.4 369.8 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 14.5 15.0 15.8 16.5 17.1 18.0 18.7 19.7 19.5 19.6 12.9 13.3 14.4 15.5 17.3 19.1 19.4 20.2 21.9 22.4 25.0 26.4 29.0 32.2 35.6 39.7 44.4 48.3 53.4 61.1 28.9 32.8 33.8 35.8 37.4 40.4 44.7 52.6 59.8 66.7 11.1 12.6 14.3 15.2 16.0 18.1 20.8 25.5 30.2 32.9 3.0 4.3 3.1 3.0 2.7 2.3 1.9 2.2 2.1 2.2 4.6 5.0 4.7 4.8 4.7 4.9 4.9 5.6 5.9 6.7 3.1 3.4 3.7 4.2 4.7 5.2 6.1 6.9 7.6 8.7 1.0 1.1 1.3 1.4 1.5 1.7 1.9 2.3 2.8 3.5 6.2 6.4 6.7 7.3 7.8 8.3 9.2 10.2 11.1 12.5 9.3 9.7 10.3 11.8 12.6 13.3 17.8 20.6 22.9 26.2 386.7 401.6 427.1 449.7 483.7 522.6 568.9 611.9 672.1 733.9 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 19.7 20.2 21.0 22.6 23.5 23.0 23.5 25.1 27.4 30.5 22.2 22.6 24.1 26.5 29.1 29.9 36.5 38.7 43.1 48.6 69.4 74.8 80.9 93.9 112.4 123.2 132.5 151.6 173.2 209.6 80.1 94.4 104.7 119.5 141.2 178.3 194.3 207.5 223.3 249.4 38.5 44.5 49.6 60.4 70.1 81.4 92.9 104.9 116.2 131.8 4.0 5.8 5.7 4.4 6.8 17.6 15.8 12.7 9.7 9.8 7.7 8.8 9.7 10.4 11.8 14.5 14.4 13.8 13.9 14.4 10.2 11.8 13.8 16.0 19.0 22.7 26.1 29.0 32.7 37.0 4.8 6.2 6.9 7.2 7.9 9.2 10.1 10.6 10.7 11.0 15.0 17.4 19.0 21.1 25.6 32.8 35.1 36.5 40.1 45.4 27.9 30.7 34.5 42.6 47.9 50.4 55.5 61.1 69.6 80.6 790.0 846.5 925.3 1,023.7 1,131.8 1,229.1 1,359.3 1,505.0 1,679.2 1,892.9 1980 1981 * 31.8 33.6 54.4 61.3 256.3 308.6 294.2 332.9 153.8 180.3 16.0 15.4 15.0 16.0 42.8 48.6 12.4 13.2 54.3 59.4 30.7 30.1 30.3 31.0 47.5 48.3 48.6 50.1 195.8 202.6 214.3 225.7 235.4 241.3 257.8 263.1 123.6 126.5 137.8 139.3 9.2 9.4 9.8 10.6 14.4 14.2 14.4 14.6 35.0 36.4 37.3 39.2 10.7 10.8 11.1 11.5 42.5 44.1 47.3 47.8 79.0 80.0 81.2 82.4 1,814.8 1,853.9 1,921.5 1,981.2 31.2 31.5 32.0 32.4 52.4 54.2 55.1 56.1 239.9 253.6 261.8 269.7 271.7 280.7 310.7 313.9 142.0 144.7 163.2 165.3 11.4 16.0 19.0 17.5 14.8 14.6 14.9 15.5 40.2 42.3 43.1 45.7 11.7 12.0 12.8 13.1 51.6 51.0 57.7 56.8 86.2 85.9 88.1 91.2 2,039.6 2,067.3 2,135.3 2,208.3 32.7 33.3 33.9 34.5 58.0 60.2 63.0 64.1 288.7 300.9 315.7 329.0 319.6 324.2 342.2 345.7 169.8 172.0 188.5 191.1 15.6 15.6 14.8 15.7 15.9 15.9 15.9 16.4 46.7 48.5 48.9 50.1 13.3 13.6 13.4 12.4 58.3 58.7 60.5 60.1 102.3 103.1 105.0 106.5 2,274.5 2,319.2 2,388.2 2,431.4 .6 .6 .5 !e 87.9 104.2 2,112.6 2,353.3 1979: 1 II Ill IV 1980: 1. II III IV 1981: 1 II III. IV " 1 The total of wage and salary disbursements and other labor income differs from compensation of employees in Table B-21 in that it excludes employer contributions for social insurance and the excess of wage accruals over wage disbursements. 2 Personal income exclusive of farm proprietors' income, farm wages, farm other labor income, and agricultural net interest. Note.—The industry classification of wage and salary disbursements and proprietors' income is on an establishment basis and is based on the 1972 Standard Industrial Classification (SIC) beginning 1948 and on the 1942 SIC prior to 1948. Source: Department of Commerce, Bureau of Economic Analysis. 259 TABLE B-23.—Disposition of personal income, 1929-81 [Billions of dollars, except as noted; quarterly data at seasonally adjusted annual rates] Less: Personal outlays Year or quarter Personal income Less: Personal tax and nontax payments Equals: Disposable personal income Total Percent of disposable personal income Personal Interest Personal paid by transfer payconments sumption consumto to expendi- ers busitures forness eigners (net) 1929 85.0 2.6 82.4 79.1 77.3 1.5 0.3 1933 47.0 1.4 45.6 46.5 45.8 .5 .2 1939 72.4 2.4 70.0 67.8 67.0 .7 .2 1940 1941 1942 1943 1944 1945 1946 1947 1948 1949 77.9 95.4 122.6 150.8 164.5 170.0 177.6 190.1 209.0 206.4 2.6 3.3 5.9 17.8 18.9 20.8 18.7 21.4 21.0 18.5 75.3 92.2 116.6 133.0 145.6 149.1 158.9 168.7 188.0 187.9 72.0 81.8 89.4 100.1 109.0 120.4 145.2 163.5 176.9 180.4 71.0 80.8 88.6 99.4 108.2 119.5 143.8 161.7 174.7 178.1 .8 .9 .7 .5 .5 .5 .7 1.0 1.4 1.7 .2 .2 .1 .2 .4 .5 .7 .7 .7 .5 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 227.2 254.9 271.8 287.7 289.6 310.3 332.6 351.0 361.1 384.4 20.6 28.9 34.0 35.5 32.5 35.4 39.7 42.4 42.1 46.0 206.6 226.0 237.7 252.2 257.1 275.0 292.9 308.6 319.0 338.4 194.7 210.0 220.4 233.7 240.1 258.5 271.6 286.4 295.4 317.3 192.0 207.1 217.1 229.7 235.8 253.7 266.0 280.4 289.5 310.8 2.3 2.5 2.9 3.6 3.8 4.4 5.1 5.5 5.6 6.1 1960 1961 1962 1963 1964 1965 1966 1967 1968. . 1969 402.3 417.8 443.6 466.2 499.2 540.7 588.2 630.0 690.6 754.7 50.4 52.1 56.8 60.3 58.6 64.9 74.5 82.1 97.2 115.7 352.0 365.8 386.8 405.9 440.6 475.8 513.7 547.9 593.4 638.9 332.3 342.7 363.5 384.0 411.0 442.1 477.7 503.6 551.5 598.3 324.9 335.0 355.2 374.6 400.5 430.4 465.1 490.3 536.9 581.8 1970. 1971 1972 1973 1974 1975 1976 1977 1978 1979 811.1 868.4 951.4 1,065.2 1,168.6 1,265.0 1,391.2 1,538.0 1,721.8 1,943.8 115.8 116.7 141.0 150.7 170.2 168.9 196.8 226.5 258.8 302.0 695.3 751.8 810.3 914.5 998.3 1,096.1 1,194.4 1,311.5 1,462.9 1,641.7 639.5 691.1 757.7 835.5 913.2 1,001.8 1,111.9 1,237.5 1,386.6 1,555.5 1980 1981 " 2,160.2 2,403.6 338.5 388.2 1,821.7 2,015.4 1,864.6 1,906.3 1,972.3 2,032.0 284.4 293.5 308.4 321.8 2,088.2 2,114.5 2,182.1 2,256.2 2,319.8 2,368.5 2,441.7 2,484.4 1979: 1 || III IV Personal outlays Equals: Personal saving Total Consump- Personal tion saving expenditures 96.0 93.8 102.0 100.5 2.2 96.9 95.6 3.1 3.4 10.3 27.2 32.9 36.6 28.7 13.7 5.2 11.1 7.5 95.5 88.8 76.7 75.3 74.8 80.8 91.4 96.9 94.1 96.0 94.2 87.6 76.0 74.7 74.3 80.1 90.5 95.9 93.0 94.8 4.5 11.2 23.3 24.7 25.2 19.2 8.6 3.1 5.9 4.0 .4 .4 .4 .5 .5 .4 .5 .5 .4 .4 11.9 16.1 17.4 18.5 17.0 16.4 21.3 22.3 23.6 21.1 94.2 92.9 92.7 92.7 93.4 94.0 92.7 92.8 92.6 93.8 92.9 91.6 91.3 91.1 91.7 92.3 90.8 90.9 90.7 91.8 5.8 7.1 7.3 7.3 6.6 6.0 7.3 7.2 7.4 6.2 7.0 7.3 7.8 8.8 9.9 11.1 12.0 12.5 13.8 15.6 .4 .4 .5 .6 .6 .7 .7 .9 .8 .9 19.7 23.0 23.3 21.9 29.6 33.7 36.0 44.3 41.9 40.6 94.4 93.7 94.0 94.6 93.3 92.9 93.0 91.9 92.9 93.6 92.3 91.6 91.8 92.3 90.9 90.5 90.5 89.5 90.5 91.1 5.6 6.3 6.0 5.4 6.7 7.1 7.0 8.1 7.1 6.4 621.7 672.2 737.1 812.0 888.1 976.4 1,084.3 1,205.5 1,348.7 1,510.9 16.7 17.7 19.5 22.3 24.1 24.4 26.7 31.1 37.1 43.7 1.1 1.1 1.1 1.3 1.0 .9 .9 .9 .8 1.0 55.8 60.7 52.6 79.0 85.1 94.3 82.5 74.1 76.3 86.2 92.0 91.9 93.5 91.4 91.5 91.4 93.1 94.4 94.8 94.8 89.4 89.4 91.0 88.8 89.0 89.1 90.8 91.9 92.2 92.0 8.0 8.1 6.5 8.6 8.5 8.6 6.9 5.6 5.2 5.2 1,720.4 1,908.8 1,672.8 1,858.1 46.4 49.5 1.2 1.2 101.3 106.6 94.4 94.7 91.8 92.2 5.6 5.3 1,580.2 1,612.8 1,663.8 1,710.1 1,496.3 1,521.9 1,574.5 1,629.4 1,454.1 1,478.0 1,529.1 1,582.3 41.4 43.1 44.5 45.8 .8 .8 .9 1.3 83.8 90.9 89.3 80.7 94.7 94.4 94.6 95.3 92.0 91.6 91.9 92.5 5.3 5.6 5.4 4.7 323.1 330.3 341.5 359.2 1,765.1 1,784.1 1,840.6 1,897.0 1,678.7 1,674.1 1,729.2 1,799.4 1,631.0 1,626.8 1,682.2 1,751.0 46.7 46.3 46.0 46.8 1.0 1.0 1.0 1.6 86.4 110.0 111.4 97.6 95.1 93.8 93.9 94.9 92.4 91.2 91.4 92.3 4.9 6.2 6.1 5.1 372.0 382.9 399.8 398.0 1,947.8 1,985.6 2,042.0 2,086.4 1,858.9 1,879.0 1,935.1 1,962.3 1,810.1 1,829.1 1,883.9 1,909.5 47.8 48.9 50.3 51.1 1.0 1.0 1.0 1.6 88.9 106.6 106.9 124.1 95.4 94.6 94.8 94.0 92.9 92.1 92.3 91.5 4.6 5.4 5.2 6.0 3.3 -0.9 4.0 -2.0 1980: 1 II Ill IV 1981: 1 II Ill IV * Source: Department of Commerce, Bureau of Economic Analysis. 260 TABLE B-24.—Total and per capita disposable personal income and personal consumption expenditures in current and 1972 dollars, 1929-81 [Quarterly data at seasonally adjusted annual rates, except as noted] Disposable personal income Year or quarter Total (billions of dollars) Current dollars 1972 dollars 1929 82.4 1933 45.6 1939 1940 1941 1942 1943 1944 1945 1946 1947 1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 Personal consumption expenditures Per capita (dollars) Current dollars 1972 dollars 229.5 676 169.6 363 70.0 229.8 75.3 92.2 116.6 133.0 145.6 149.1 158.9 168.7 188.0 187.9 244.0 277.9 317.5 332.1 343.6 338.1 332.7 318.8 335.8 336.8 206.6 226.0 237.7 252.2 257.1 275.0 292.9 308.6 319.0 338.4 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 Total (billions of dollars) Per capita (dollars) Population (thousands) 1 1972 dollars Current dollars 1972 dollars 1,883 77.3 215.1 634 1,765 121,878 1,349 45.8 170.5 364 1,356 125,690 534 1,754 67.0 219.8 511 1,678 131,028 570 691 865 973 1,052 1,066 1,124 1,170 1,282 1,259 1,847 2,083 2,354 2,429 2,483 2,416 2,353 2,212 2,290 2,257 71.0 80.8 88.6 99.4 108.2 119.5 143.8 161.7 174.7 178.1 229.9 243.6 241.1 248.2 255.2 270.9 301.0 305.8 312.2 319.3 537 605 657 727 781 854 1,017 1,122 1,192 1,194 1,740 1,826 1,788 1,815 1,844 1,936 2,129 2,122 2,129 2,140 132,122 133,402 134,860 136,739 138,397 139,928 141,389 144,126 146,631 149,188 362.8 372.6 383.2 399.1 403.2 426.8 446.2 455.5 460.7 479.7 1,362 1,465 1,515 1,581 1,583 1,664 1,741 1,802 1,832 1,903 2,392 2,415 2,441 2,501 2,483 2,582 2,653 2,660 2,645 2,697 192.0 207.1 217.1 229.7 235.8 253.7 266.0 280.4 289.5 310.8 337.3 341.6 350.1 363.4 370.0 394.1 405.4 413.8 418.0 440.4 1,266 1,342 1,383 1,439 1,452 1,535 1,581 1,637 1,662 1,747 2,224 2,214 2,230 2,277 2,278 2,384 2,410 2,416 2,400 2,476 151,684 154,287 156,954 159,565 162,391 165,275 168,221 171,274 174,141 177,888 352.0 365.8 386.8 405.9 440.6 475.8 513.7 547.9 593.4 638.9 489.7 503.8 524.9 542.3 580.8 616.3 646.8 673.5 701.3 722.5 1,947 1,991 2,073 2,144 2,296 2,448 2,613 2,757 2,956 3,152 2,709 2,742 2,813 2,865 3,026 3,171 3,290 3,389 3,493 3,564 324.9 335.0 355.2 374.6 400.5 430.4 465.1 490.3 536.9 581.8 452.0 461.4 482.0 500.5 528.0 557.5 585.7 602.7 634.4 657.9 1,797 1,823 1,904 1,979 2,087 2,214 2,366 2,467 2,674 2,870 2,501 2,511 2,583 2,644 2,751 2,868 2,979 3,032 3,160 3,245 180,760 183,742 186,590 189,300 191,927 194,347 196,599 198,752 200,745 202,736 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 695.3 751.8 810.3 914.5 998.3 1,096.1 1,194.4 1,311.5 1,462.9 1,641.7 751.6 779.2 810.3 865.3 858.4 875.8 907.4 939.8 981.5 1,011.5 3,390 3,620 3,860 4,315 4,667 5,075 5,477 5,954 6,571 7,293 3,665 3,752 3,860 4,083 4,013 4,055 4,161 4,266 4,409 4,493 621.7 672.2 737.1 812.0 888.1 976.4 1,084.3 1,205.5 1,348.7 1,510.9 672.1 696.8 737.1 768.5 763.6 780.2 823.7 863.9 904.8 930.9 3,031 3,237 3,511 3,831 4,152 4,521 4,972 5,472 6,058 6,712 3,277 3,355 3,511 3,626 3,570 3,612 3,777 3,922 4,064 4,135 205,089 207,692 209,924 211,939 213,898 215,981 218,086 220,289 222,629 225,106 1980 p 1981 1,821.7 2,015.4 1,0184 1,040.2 8,002 8,768 4,473 4,525 1 672.8 1,858.1 9351 959.1 7,348 8,084 4108 4,172 227,654 229,868 1,580.2 16128 1,663.8 1,710.1 1,005 7 10069 1,015.7 1,017.7 7,049 7 176 7i381 7,563 4,487 4480 4,506 4,501 1,454.1 14780 1,529.1 1,582.3 9255 9228 933.4 941.6 6487 6577 6,783 6,998 4129 4106 4,141 4,164 224,152 224 737 225,418 226,117 1,765.1 1,784.1 1,840 6 1,897.0 1,021.0 1,008.2 1,0185 1,025.8 7,785 7,848 8074 8,299 4,503 4,435 4468 4,488 1,631.0 1,626.8 1,682.2 1,751.0 943.4 919.3 9308 946.8 7,194 7,156 7,379 7,660 4,161 4,044 4,083 4,142 226,727 227,332 227 977 228,578 1,947.8 1,985.6 2,042 0 2,086.4 1,033 3 1,036.8 10436 1,047,1 8,504 8,651 8873 9,042 4,511 4,517 4,535 4,538 1,810.1 1,829.1 18839 1,909.5 9602 955.1 9628 958.3 7,903 7,969 8,186 8,276 4,192 4,161 4183 4,153 229,051 229,537 230 142 230,741 Current dollars 1979: I || III IV 1980: 1 II Ill IV 1981: 1 Ill II IV. 1 Population of the United States including Armed Forces overseas; includes Alaska and Hawaii beginning 1959. Annual data are for July 1 through 1958 and are averages of quarterly data beginning 1959. Quarterly data are average for the period. Data beginning 1970 reflect results of the 1980 census of population. Source: Department of Commerce (Bureau of Economic Analysis and Bureau of the Census). 261 TABLE B-25.—Gross saving and investment, 1929-81 [Billions of dollars; quarterly data at seasonally adjusted annual rates] Gross investment Gross saving Year or quarter Capital Government surplus or deficit ( - , national income grants Gross private saving and product accounts received by the State United Gross and States2 Federal Total Total Personal l saving business local (net) saving Total -.2 _1 17.0 16.2 0.8 -1.3 1.6 1.4 .2 .7 -2.2 .0 10.3 9.3 1.0 1.4 -3.8 -31.4 -44.1 -51.8 -39.5 5.4 14.4 8.4 -3.4 -1.3 -5.1 331 -46.6 -54.5 -42.1 3.5 13.4 8.3 -2.6 .6 1.3 1.8 2.5 2.7 2.6 1.9 1.0 .1 14.7 19.2 9.8 3.7 5.2 9.3 35.6 43.2 48.3 36.2 13.1 17.9 9.9 5.8 7.2 10.6 30.7 34.0 45.9 35.3 1.5 1.3 -.1 -2.1 -2.0 -1.3 4.9 9.3 2.4 .9 1.1 .6 -.8 -1.8 2.7 4.1 .5 1.5 -1.6 .6 30.7 34.8 37.4 38.2 41.1 47.9 49.4 52.0 51.7 58.7 8.0 6.1 -3.8 -6.9 -7.1 3.1 5.2 .9 -12.6 -1.6 9.2 6.5 -3.7 -7.1 -6.0 4.4 6.1 2.3 -10.3 -1.1 -1.2 -.4 -.0 .1 -1.1 -1.3 -.9 -1.4 -2.4 -.4 52.0 60.1 52.7 52.1 52.9 68.8 73.8 74.0 62.8 77.0 53.8 59.2 52.1 53.3 52.7 68.4 71.0 69.2 61.9 78.1 -1.8 .9 .6 -1.3 .2 .4 2.8 4.8 .9 -1.2 1.3 3.2 1.7 2.3 2.0 1.3 -2.1 -1.2 19.7 23.0 23.3 21.9 29.6 33.7 36.0 44.3 41.9 40.6 58.3 60.0 67.2 71.0 76.7 86.0 92.7 95.6 100.0 103.0 3.1 -4.3 -3.8 3.0 -3.9 -4.2 .1 —4 '.5 -2.3 -3^3 -L3 -14.2 -6.0 9.9 -L8 -13.2 -6.0 8.4 LO -.0 .5 -1.1 78.7 78.6 88.8 95.3 104.2 119.0 128.7 125.4 133.9 149.7 75.9 74.8 85.4 90.9 97.4 113.5 125.7 122.8 133.3 149.3 2.8 3.8 3.4 4.4 6.8 5.4 3.0 2.6 .6 .4 -L3 24 -.1 2.1 1.7 .1 -1.2 1.4 -.3 -2.1 -3.9 158.6 180.3 189.2 227.7 234.5 282.7 294.4 322.4 355.4 398.9 55.8 60.7 52.6 79.0 85.1 94.3 82.5 74.1 76.3 86.2 102.8 119.7 136.6 148.7 149.4 188.4 211.9 248.3 279.1 312.7 106 -19.4 -3.3 7.8 -4.7 -63.8 -36.5 -18.3 -.2 11.9 -12.4 -22.0 168 -5.6 -11.5 -69.3 -53.1 -46.4 -29.2 148 1.9 2.6 13.5 13.4 6.8 5.5 16.6 28.1 29.0 26.7 0.9 .7 .7 .0 4 -2.0 .0 .0 .0 .0 1.1 147.4 165.7 189.9 236.3 231.5 224.4 263.0 308.4 361.6 414.1 144.2 3.2 166.4 -.7 195.0 51 229.8 6.5 228.7 2.9 206.1 18.3 257.9 5.1 322.3 -13.9 375.3 -13.8 415.8 -1.7 -1.5 4.1 3.3 .8 3.7 5.5 5.1 4.4 6.4 2.2 401.9 453.6 432.9 477.6 101.3 106.6 331.6 371.0 32 1 -25.1 -61.2 -61.6 29.1 36.5 1.1 1.1 401.2 452.9 395.3 450.6 5.9 2.3 — 7 -'.8 407.4 416.2 422.3 402.0 388.2 401.2 409.8 396.4 83.8 90.9 89.3 80.7 304.4 310.3 320.5 315.7 18.1 13.9 11.3 4.4 -11.5 -8.1 -15.2 -24.5 29.5 21.9 26.5 28.9 1.1 1.1 1.1 1.1 413.2 416.9 425.1 401.3 408.3 423.2 421.7 410.0 4.9 -6.3 3.4 -8.7 5.8 .7 2.8 -.7 404.5 394.5 402.0 406.7 413.0 435.9 446.5 436.4 86.4 110.0 111.4 97.6 326.7 325.8 335.1 338.8 -9.6 -42.5 -45.6 -30.8 -36.3 665 -74.2 679 26.6 23.9 28.6 37.1 1.1 1.1 1.1 1.1 407.3 392.5 405.0 400.1 415.6 390.9 377.1 397.7 83 1.7 27.8 2.3 2.8 -1.9 3.0 -6.6 442.6 465.3 469.4 451.1 475.3 486.2 88.9 106.6 106.9 124.1 362.2 368.7 379.3 -9.7 112 -17.9 -46.6 -47.2 -55.7 36.9 36.1 37.8 1.1 1.1 1.1 1.1 446.0 458.3 469.6 437.6 437.1 458.6 463.0 443.6 8.8 2 6.5 -6.1 3.4 -6.9 .2 1929 15.9 14.9 3.3 11.6 1933 .9 2.2 -.9 3.1 1939 8.8 11.0 2.2 8.8 1940 1941 1942 1943 1944 1945 1946 1947 1948 1949 13.5 18.6 10.7 5.4 2.4 5.2 35.1 41.7 49.8 35.6 14.2 22.4 42.0 49.6 54.3 44.7 29.6 27.3 41.4 39.0 3.4 10.3 27.2 32.9 36.6 28.7 13.7 5.2 11.1 7.5 10.8 12.1 14.8 16.7 17.6 16.0 15.9 22.1 30.2 31.5 1950 1951 1952 1953 1954..!! 1955 1956 1957 1958 1959 50.7 56.9 51.0 49.8 50.9 67.5 75.9 75.2 62.6 78.3 42.7 50.8 54.8 56.7 58.1 64.4 70.7 74.3 75.3 79.9 11.9 16.1 17.4 18.5 17.0 16.4 21.3 22.3 23.6 21.1 81.1 78.7 86.7 93.6 104.0 120.2 127.3 125.7 136.0 153.6 78.0 83.0 90.5 92.9 106.3 119.7 128.6 139.9 142.0 143.6 148.9 161.6 186.6 235.5 227.8 218.9 257.9 304.0 355.2 411.9 1980 1981 * 1979: II III IV 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970.. 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980: II. Ill IV 1981: 1 II III IV ' . 1.0 -1.4 -2.2 7 Total StatisGross tical Net private foreign discrepdomestic invest- ancy invest- ment 3 ment 1.2 L5 1.1 1 Undistributed corporate profits with inventory valuation and capital consumption adjustments, corporate and noncorporate capital consumption allowances with capital consumption adjustment, and private wage accruals less disbursements. 2 Allocations of special drawing rights (SDRs), except as noted in footnote 4. 3 Net exports of goods and services less net transfers to foreigners and interest paid by government to foreigners plus capital grants receivedbytheUnitedStates.net. 4 In February 1974, the U.S. Government paid to India $2,010 million in rupees under provisions of the Agricultural Trade Development and Assistance Act. This transaction is being treated as capital grants paid to foreigners, i.e., a -$2.0 billion entry in capital grants received by the United States, net. Source-. Department of Commerce, Bureau of Economic Analysis. 262 TABLE B-26.—Saving by individuals, 1946-81l [Billions of dollars; quarterly data at seasonally adjusted annual rates] Net investment 7 Increase in financial assets Checkable deposTotal its and currency Time and savings deposits 24.6 20.1 24.3 20.9 18.8 5.6 .1 13.2 9.1 -2.9 99 -2.0 6.3 3.4 2.2 26 -1.5 1.6 1.3 1.8 30.6 34.7 31.3 325 28.2 13.7 19.1 23.2 228 22.2 2.6 4.6 1.6 10 2.2 2.4 4.7 78 81 9.1 -.1 -.6 2.5 2.5 1.0 1955 1956 1957 1958 1959 34.1 37.2 36.5 34.1 38.0 28.0 30.2 28.6 31.6 37.4 1.2 8.6 1.8 9.4 III -.4 11.9 3.8 13.9 1.0 11.0 5.8 3.9 2.3 -2.5 10.1 1960 1961 1962 1963 1964 36.7 359 42.0 467 57.8 32.1 1.0 9 354 40.1 -1.2 466 4 2 55.7 5.3 12.0 183 26.1 262 26.1 1965 1966 1967 1968 1969 66.7 74.4 79.4 844 77.7 7.6 58.8 2.4 57.9 9.9 69.8 756 11 1 65.2 -2.5 27.8 19.0 III 35.3 31 1 9.1 1970 1971 1972 1973 1974 92.2 104.0 123.5 147.9 140.8 81.5 102.1 131.5 148.9 144.5 8.9 12.2 13.9 14.1 7.4 43.6 67.7 74.4 63.6 55.7 1975 1976 1977 1978 1979 164.0 175.5 182.1 204.2 213.9 171.7 211.2 234.3 270.5 286.0 6.9 15.7 21.3 22.3 23.4 83.4 107.5 107.5 100.1 79.2 1980 251.2 303.8 I II Ill IV 196.8 229.3 215.9 213.9 265.7 317.5 289.8 271.2 1980: 1 II Ill IV 248.8 247.9 255.4 253.0 Year or quarter 1946 1947 1948 1949 1950 1951 1952 1953 1954 .. 1979: 1981: 1 II Ill Total Money market fund shares Less: Net increase in debt Consumer durables Noncorporate business assets8 3.6 6.1 6.7 9.0 9.1 9.8 8.4 10.6 2.3 1.8 6.9 1.8 3.6 4.7 4.6 4.4 3.1 3.7 3.2 3.2 -0.4 2.2 2.8 2.2 Securities InsurMiscel- Ownerance laneous occuGovern- Corpo- Other and pied ment rate securi- pension financial 4 reassets 6 homes equisecurities 2 ties 3 ties serves5 Mortgage debt Con- Other 89 on sumer non- credit debt farm homes 1.1 -0.9 1.1 -.8 1.0 .0 .7 -.4 5.3 5.4 5.3 5.6 2.8 2.4 2.2 1.6 .7 1.8 1.6 1.0 .8 -.7 .3 .0 .3 -.9 6.9 6.3 7.7 7.9 7.8 1.9 1.9 2.0 2.1 2.1 11.8 11.7 11.3 12.3 12.7 14.8 11.3 8.6 10.1 7.1 6.8 4.5 2.3 1.0 1.9 6.7 6.6 6.2 7.6 8.7 4.8 1.6 5.3 4.2 1.5 5.0 3.7 2.7 1.9 5.5 1.0 2.0 1.5 1.5 .5 .8 1.2 1.0 1.1 -.3 8.5 9.5 9.5 10.4 11.9 2.1 2.5 2.8 3.5 3.3 16.7 15.6 13.2 12.3 16.3 12.2 8.5 7.7 3.6 7.3 2.9 11.2 2.7 2.6 5.0 12.2 1.2 8.9 9.5 12.8 7.2 3.9 2.9 .5 8.0 6.4 3.2 3.8 6.0 7.2 2.2 -.6 1.4 .3 1.3 -2.1 .6 -2.6 4.8 -.2 2.4 .1 .1 1.4 .4 11.5 12.1 12.7 13.9 16.1 3.6 4.3 3.2 2.9 3.2 14.8 12.7 13.5 14.3 15.0 7.0 4.3 8.5 11.8 15.0 3.6 4.7 7.5 9.8 9.2 11.7 12.2 14.1 16.2 17.5 4.4 2.5 6.3 8.9 9.8 4.9 6.5 7.2 10.7 9.8 3.7 11.3 -1.2 5.2 25.9 -2.1 -.7 -4.7 -7.5 -2.8 1.3 2.4 5.2 7.9 10.0 16.9 19.2 18.6 19.8 21.5 3.7 4.4 6.7 8.1 4.0 14.5 13.5 11.7 15.7 16.3 20.2 23.1 21.1 27.0 26.3 13.3 10.8 10.2 10.0 12.7 17.0 13.8 12.5 16.9 18.6 10.6 6.5 5.7 11.5 10.8 12.6 10.6 15,1 15.4 13.3 -5.4 -12.2 2.7 23.8 28.1 2.4 -1.7 -5.5 -5.1 -5.8 -.6 6.9 6.5 4.9 11.1 6.8 23.9 27.4 29.4 33.0 36.2 5.4 5.8 11.4 9.1 8.5 13.6 20.7 28.0 31.0 25.2 20.0 26.6 34.6 40.4 28.4 11.5 17.5 20.6 26.6 10.6 14.1 26.2 41.4 47.3 35.4 5.4 14.7 19.8 24.3 9.9 14.9 21.9 30.0 27.6 22.6 1.3 -.0 .2 6.9 34.4 24.9 12.3 15.4 32.5 54.2 -3.8 -4.6 -4.3 -5.8 -16.8 4.4 8.6 5.9 13.4 17.8 43.5 52.4 66.1 73.8 66.9 11.1 19.3 22.0 27.3 26.9 23.5 36.1 52.1 63.6 67.5 26.5 40.0 50.2 56.3 52.4 5.8 3.3 14.7 17.1 18.8 38.0 61.5 93.0 107.6 114.6 9.6 25.4 40.2 47.6 46.3 15.8 28.2 36.0 48.0 49.8 11.0 131.2 29.2 23.5 -1.9 -4.0 89.0 25.7 48.2 33.8 7.5 83.4 2.3 56.4 15.4 74.4 37.2 67.2 28.0 107.2 12.9 68.0 28.8 31.6 33.1 44.1 58.9 88.1 22.1 47.9 18.7 12.1 25.8 14.6 58.2 70.7 65.5 73.2 22.3 29.4 27.6 28.5 68.1 68.8 67.0 66.1 58.9 49.9 51.4 49.5 19.1 20.3 20.0 15.7 113.2 124.5 115.9 104.9 57.8 44.1 40.0 43.2 44.0 58.6 56.3 40.4 4.6 85.5 61.3 315.1 1.1 55.0 _ 7 248.8 -3.8 100.8 62.5 -14.5 2!e -14.3 321.8 46.4 114.7 .1 5.1 29.8 -4.1 329.8 -3.2 224.0 -11.9 23.7 -5.3 -3.1 83.6 93.0 101.5 78.1 24.7 22.4 28.4 27.5 59.9 50.4 39.5 43.2 49.8 19.0 28.5 37.7 13.1 104.2 23.2 2.1 64.7 -33.4 3.6 80.9 8.3 11.0 83.8 11.1 61.7 41.1 48.8 73.8 79.1 104.9 100.2 24.0 24.6 26.5 49.0 50.4 43.6 48.2 32.0 37.8 12.8 10.2 10.1 65.2 68.0 52.7 232.0 292.1 58.1 2.8 148.4 6.3 93.2 59.9 222.0 305.1 249.3 315.1 -22.1 47.7 137.3 -11.0 -18.6 -19.4 -18.1 -2.1 -9.5 -8.5 66.6 -41.2 -9.2 99.7 -46.0 -28.4 1 Saving 2 77.5 76.8 67.4 27.5 30.9 37.3 by households, personal trust funds, nonprofit institutions, farms, and other noncorporate business. Consists of U.S. savings bonds, other U.S. Treasury securities, U.S. Government agency securities and sponsored agency securities, mortgage pool securities, and State and local obligations. 3 Includes mutual fund shares. 4 Corporate and foreign bonds and open market paper. 5 Private life insurance reserves, private insured and noninsured pension reserves, and government insurance and pension reserves. 6 Other assets consists of security credit, mortgages, accident and health insurance reserves, and nonlife insurance claims for households and consumer credit, equity in sponsored agencies, and nonlife insurance claims for noncorporate business. 7 Purchases of physical assets less depreciation. 8 Includes data for corporate farms. 9 Other debt consists of security credit, policy loans, and noncorporate business debt. Source: Board of Governors of the Federal Reserve System. 263 TABLE B-27.—Money income (in 1980 dollars) and poverty status of families and unrelated individuals by race of householder, 1952-80 Total Year Total number (millions) FAMILIES 1 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 4 1974 . 1975 1976 1977 1978 s 1979 . 1980«. Median income 408 $12,076 412 13,070 420 12775 42.9 13,596 435 14493 43.7 14,539 442 14497 45.1 15,314 3 15,637 45.5 3 46.4 15,797 M7.1 3 47.5 3 48.0 3 48.5 3 49.2 3 50.1 3 50.8 3 51.6 3 52.2 53.3 54.4 55.1 55.7 56.2 56.7 57.2 57.8 58.4 60.3 16,225 16,818 17,451 18,169 19,124 19,579 20,445 21,203 20,939 20,926 21,895 22,346 21,559 21,004 21,652 21,769 22,280 22,320 21,023 1952 . . . . 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 4 1974 1975 1976 1977 1978 1979 1980 Below $25,000 and poverty over level Total number (millions) 84 10.5 10.6 11.9 14.3 13.5 18.5 18.1 18.1 17.2 15.9 15.0 13.9 11.8 11.4 10.0 97 10.1 10.0 9.3 8.8 8.8 9.7 9.4 9.3 9.1 9.1 10.3 382 39.0 39.5 39.7 143 402 17.2 18.9 20.2 21.6 23.7 26.1 27.7 31.4 33.0 35.6 37.9 37.5 37.4 40.7 41.9 40.7 38.7 40.4 41.6 43.1 42.6 39.3 40.9 41.1 41.9 42.4 42.7 43.1 43.5 44.1 44.8 45.4 46.0 46.5 47.6 48.5 48.9 49.4 49.9 50.1 50.5 50.9 51.4 52.7 Median income $12,772 13,551 13,300 14,196 15,166 15,130 15,104 15,953 16,235 16,474 16,990 17,623 18,219 18,937 19,868 20,322 21,167 22,014 21,722 21,714 22,748 23,354 22,404 21,845 22,490 22,763 23,200 23,275 21,904 9.7 9.5 9.7 9.9 9.8 10.4 10.9 10.9 3 11.1 3 11.2 3 11.0 3 11.2 3 12.1 3 12.2 3 12.5 3 13.2 3 13.9 3 14.6 3 15.5 16.3 16.8 18.3 18.9 20.2 21.5 23.1 24.6 25.6 27.1 4,374 4,301 3,746 4,053 4,324 4,371 4,235 4,402 4,786 4,831 4,775 4,844 5,268 5,623 5,815 5,871 6,599 6,588 6,657 6,747 6,935 7,665 7,691 7,474 7,780 8,032 8,469 8,585 8,296 46.1 45.2 45.9 45.4 44.2 42.7 39.8 38.3 38.1 34.0 34.0 32.9 31.6 29.0 25.6 24.1 25.1 24.9 22.6 22.1 21.8 22.9 56 5.7 5.9 6.4 7.5 9.0 9.5 9.8 10.8 12.3 13.4 14.2 15.4 16.6 16.4 17.8 20.2 20.3 21.1 20.8 22.0 23.6 22.6 21.9 23.0 24.0 25.3 24.8 24.5 Percent with incomes— Below $25,000 poverty and level over Total number (millions) "".'"!!!!"!! 15.2' 14.9 14.8 13.9 12.8 12.2 11.1 9.3 9.0 8.0 7.7 8.0 7.9 7.1 6.6 6.8 7.7 7.1 7.0 6.9 6.8 8.0 8.3 8.5 8.5 8.9 9.2 9.3 9.6 9.6 9.5 9.7 10.4 10.5 10.7 11.3 12.0 12.5 13.4 14.2 14.5 15.8 16.3 17.5 18.6 19.9 21.3 22.1 23.4 4,716 4,539 4,032 4,308 4,439 4,678 4,537 4,704 5,175 5,192 5,110 5,079 5,547 5,863 6,114 6,096 6,992 6,918 6,967 7,050 7,242 7,918 7,969 7,807 8,115 8,337 8,879 8,895 8,763 60 6.8 7.0 73 8.3 $7,258 7, 598 7,407 2 7,829 2 7,980 2 8,089 2 7,737 2 8,241 2 8,987 2 8,789 2 9,066 2 9,326 2 10,196 2 10,428 2 11,911 12,032 12,695 13,484 13,325 13,103 13,520 13,479 13,378 13,441 13,378 13,004 13,741 13,219 12,674 3.8 2 3.9 2 4.0 2 4.0 2 2 40 4.2 4.3 4.5 2 4.6 2 4.8 2 4.8 2 4.8 2 5.0 2 2 4.6 4.6 4.8 4.9 5.2 5.3 5.4 5.5 5.6 5.8 5.8 5.9 6.0 6.3 and over 2 1.5 2.4 2.1 2 1.8 2 2.6 2 2.8 2 3.7 2 4.2 2 6.7 2 7.2 2 6.5 2 6.8 2 9.9 2 10.3 2 12.9 13.6 16.4 16.9 18.5 17.9 20.7 19.7 19.8 19.4 20.6 20.9 22.6 22.1 19.8 2 2 2 2 2 2 48.1 49.0 49.0 2 48.0 2 43.7 2 40.0 2 39.7 35.5 33.9 29.4 27.9 29.5 28.8 29.0 28.1 26.9 27.1 27.9 28.2 27.5 27.6 28.9 2 2 Below $15,000 poverty and over level i'Df 2 2 14 1.3 1.5 2 10.3 2 10.8 11.7 13.5 14.8 15.5 16.4 17.8 17.8 19.2 21.6 21.7 22.5 22.2 23.0 24.4 23.7 22.8 24.0 25.1 26.5 25.6 25.8 2 105 44.1 43.0 43.2 42.7 42.0 40.7 38.1 36.1 36.5 32.2 32.1 30.8 29.6 27.1 23.7 21.8 22.7 22.7 20.4 19.8 19.6 20.4 Below $25,000 poverty level 2 9.2 11.3 11.4 13.0 15.4 14.6 15.4 18.7 20.3 21.7 23.4 25.6 27.8 29.7 33.4 34.9 37.5 40.1 39.6 39.5 42.9 44.4 42.8 40.7 42.7 44.0 45.4 45.0 41.6 Percent with incomes— Median income Below $15,000 poverty and level over Below $15,000 and poverty level over UNRELATED 6 INDIVIDUALS Black White Percent with incomes— 16 1.6 1.5 2 1.6 2 1.5 2 1.5 2 1.6 2 1.7 2 1.6 2 1.6 1.7 1.8 1.7 1.9 2.0 2.2 2.4 2.4 2.6 2.9 2.9 3.1 3.2 2 2 2 2 2 0.5 2 3 263 3,568 2,676 2 2 877 2 3,296 2 2,972 2 3 078 2 3,039 2 2,972 2 3,187 2 3,411 2 3,485 2 3,802 2 4,275 2 3,844 4,344 4,652 4,734 4,492 4,578 5,060 5,850 5,375 5,032 5,456 6,032 5,571 6,188 5,394 31 0.5 2 2 13 2.7 1.5 2 2 57.0 59.3 2 62.7 2 62.1 2 58.3 2 55.0 2 50.7 54.4 49.3 46.3 46.7 48.3 46.0 42.9 37.9 39.3 42.1 39.8 37.0 38.6 36.9 41.0 2 22 2 5 3.5 4.5 5.5 2 5.2 2 5.1 2 8.2 2 8.6 2 6.9 2 2 8.7 11.0 10.9 11.0 11.0 14.4 18.0 15.0 14.2 15.6 16.3 16.5 17.5 14.2 1 The term "family" refers to a group of two or more persons related by blood, marriage, or adoption and residing together; all such persons are considered members of the same family. 2 Data for "black" include "other" races. 3 Revised using population controls based on the 1970 census. Such controls are not available by race. 4 Based on revised methodology; comparable with succeeding years. 5 Based on householder concept. Restricted to primary families. 6 The term "unrelated individuals" refers to persons 15 years old and over as of March 1980 and 1981 and 14 years old and over for previous years (other than inmates of institutions) who are not living with any relatives. Note.—The poverty level is based on the poverty index adopted by a Federal interagency committee in 1969. That index reflects different consumption requirements for families based on size and composition, sex and age of family householder, and farm-nonfarm residence. The poverty thresholds are updated every year to reflect changes in the consumer price index. For further details see "Current Population Reports," Series P-60, Nos. 127, 129, and 130. Source: Department of Commerce, Bureau of the Census. 264 POPULATION, EMPLOYMENT, WAGES, AND PRODUCTIVITY TABLE B-28.—Population by age groups, 1929-80 [Thousands of persons] Age (years) July 1 Total Under 5 5-15 16-19 20-24 25-44 45-64 65 and over 1929 121,767 11,734 26,800 9,127 10,694 35,862 21,076 6,474 1933 125,579 10,612 26,897 9,302 11,152 37,319 22,933 7,363 1939 130,880 10,418 25,179 9,822 11,519 39,354 25,823 8,764 1940 1941 1942 1943 1944 132,122 133,402 134,860 136,739 138,397 10,579 10,850 11,301 12,016 12,524 24,811 24,516 24,231 24,093 23,949 9,895 9,840 9,730 9,607 9,561 11,690 11,807 11,955 12,064 12,062 39,868 40,383 40,861 41,420 42,016 26,249 26,718 27,196 27,671 28,138 9,031 9,288 9,584 9,867 10,147 1945 1946 1947 1948 1949 139,928 141,389 144,126 146,631 149,188 12,979 13,244 14,406 14,919 15,607 23,907 24,103 24,468 25,209 25,852 9,361 9,119 9,097 8,952 8,788 12,036 12,004 11,814 11,794 11,700 42,521 43,027 43,657 44,288 44,916 28,630 29,064 29,498 29,931 30,405 10,494 10,828 11,185 11,538 11,921 1950 1951 1952 1953 1954 152,271 154,878 157,553 160,184 163,026 16,410 17,333 17,312 17,638 18,057 26,721 27,279 28,894 30,227 31,480 8,542 8,446 8,414 8,460 8,637 11,680 11,552 11,350 11,062 10,832 45,672 46,103 46,495 46,786 47,001 30,849 31,362 31,884 32,394 32,942 12,397 12,803 13,203 13,617 14,076 1955 1956 1957 1958 1959 165,931 168,903 171,984 174,882 177,830 18,566 19,003 19,494 19,887 20,175 32,682 33,994 35,272 36,445 37,368 8,744 8,916 9,195 9,543 10,215 10,714 10,616 10,603 10,756 10,969 47,194 47,379 47,440 47,337 47,192 33,506 34,057 34,591 35,109 35,663 14,525 14,938 15,388 15,806 16,248 1960 1961 1962 1963 1964 180,671 183,691 186,538 189,242 191,889 20,341 20,522 20,469 20,342 20,165 38,494 39,765 41,205 41,626 42,297 10,683 11,025 11,180 12,007 12,736 11,134 11,483 11,959 12,714 13,263 47,140 47,084 47,013 46,994 46,958 36,203 36,722 37,255 37,782 38,338 16,675 17,089 17,457 17,778 18,127 1965 1966 1967 1968 1969 194,303 196,560 198,712 200,706 202,677 19,824 19,208 18,563 17,913 17,376 42,938 43,702 44,244 44,622 44,840 13,516 14,311 14,200 14,452 14,800 13,746 14,050 15,248 15,786 16,480 46,912 47,001 47,194 47,721 48,064 38,916 39,534 40,193 40,846 41,437 18,451 18,755 19,071 19,365 19,680 1970 1971 1972 1973 1974 204,878 207,053 208,846 210,410 211,901 17,148 17,177 16,990 16,694 16,288 44,774 44,441 43,948 43,227 42,538 15,275 15,635 15,946 16,310 16,590 17,184 18,089 18,032 18,345 18,741 48,435 48,811 50,254 51,411 52,593 41,975 42,413 42,785 43,077 43,319 20,087 20,488 20,892 21,346 21,833 1975 1976 1977 1978 1979 213,559 215,152 216,880 218,717 220,584 15,879 15,345 15,248 15,378 15,649 41,956 41,459 40,575 39,623 38,643 16,793 16,928 16,966 16,935 16,838 19,229 19,630 20,077 20,461 20,726 53,735 55,129 56,706 58,380 60,161 43,546 43,707 43,795 43,876 43,910 22,420 22,954 23,513 24,064 24,658 1980 19802 222,807 227,020 16,344 (>) 38,997 17.U 0) 21,523 «£} «£i (') 25,544 1 Not available. As of April 1; based on 1980 census. Note.—includes Armed Forces overseas beginning 1940. Includes Alaska and Hawaii beginning 1950. Data for 1970-79 have not yet been revised to be consistent with the results of the 1980 census. 2 Source: Department of Commerce, Bureau of the Census. 265 TABLE B-29.—Noninstitutional population and the labor force, 1929-81 [Monthly data seasonally adjusted, except as noted] Civilian labor force Year or month Noninstitutional population 1 Armed Forces * Employment Total Total Agricultural Nonagricultural Unemployment Unemployment rate (percent of civilian labor force) 47,630 10,450 37,180 1,550 3.2 51,590 38,760 10,090 28,670 12,830 24.9 55,230 45,750 9,610 36,140 9,480 17.2 260 49,180 1933 250 1939 370 Total Males Females Percent Thousands of persons 14 years of age and over 1929 Civilian labor force2 participation rate 1940 1941 1942 1943 1944 100,380 101,520 102,610 103,660 104,630 540 1,620 3,970 9,020 11,410 55,640 55,910 56,410 55,540 54,630 47,520 50,350 53,750 54,470 53,960 9,540 9,100 9,250 9,080 8,950 37,980 41,250 44,500 45,390 45,010 8,120 5,560 2,660 1,070 670 14.6 9.9 4.7 1.9 1.2 55.7 56.0 57.2 58.7 58.6 83.7 84.3 85.6 86.4 87.0 28.2 28.7 31.3 36.0 36.5 1945 1946 1947 105,530 106,520 107r608 11,440 3,450 1,590 53,860 57,520 60,168 52,820 55,250 57,812 8,580 8,320 8,256 44,240 46,930 49,557 1,040 2,270 2,356 1.9 3.9 3.9 57.2 55.8 56.8 84.8 82.6 84.0 35.9 31.2 31.0 Thousands of persons 16 years of age and over 103,418 104,527 105,611 1,591 1,459 1,617 59,350 60,621 61,286 57,038 58,343 57,651 7,890 7,629 7,658 49,148 50,714 49,993 2,311 2,276 3,637 3.9 3.8 5.9 58.3 58.8 58.9 86.4 86.6 86.4 31.8 32.7 33.1 1950 1951 1952 1953 3 1954 106,645 107,721 108,823 110,601 111,671 1,650 3,100 3,592 3,545 3,350 62,208 62,017 62,138 63,015 63,643 58,918 59,961 60,250 61,179 60,109 7,160 6,726 6,500 6,260 6,205 51,758 53,235 53,749 54,919 53,904 3,288 2,055 1,883 1,834 3,532 5.3 3.3 3.0 2.9 5.5 59.2 59.3 59.0 58.9 58.8 86.4 86.5 86.3 86.0 85.5 33.9 34.6 34.7 34.4 34.6 1955 1956 1957 1958 1959 112,732 113,811 115,065 116,363 117,881 3,049 2,857 2,800 2,636 2,552 65,023 66,552 66,929 67,639 68,369 62,170 63,799 64,071 63,036 64,630 6,450 6,283 5,947 5,586 5,565 55,722 57,514 58,123 57,450 59,065 2,852 2,750 2,859 4,602 3,740 4.4 4.1 4.3 6.8 5.5 59.3 60.0 59.6 59.5 59.3 85.3 85.5 84.8 84.2 83.7 35.7 36.9 36.9 37.1 37.1 I9603 1961 1962 3 1963 1964 119,759 121,343 122,981 125,154 127,224 2,514 2,572 2,828 2,738 2,739 69,628 70,459 70,614 71,833 73,091 65,778 65,746 66,702 67,762 69,305 5,458 5,200 4,944 4,687 4,523 60,318 60,546 61,759 63,076 64,782 3,852 4,714 3,911 4,070 3,786 5.5 6.7 5.5 5.7 5.2 59.4 59.3 58.8 58.7 58.7 83.3 82.9 82.0 81.4 81.0 37.7 38.1 37.9 38.3 38.7 1965 1966 1967 .. 1968 1969 129,236 131,180 133,319 135,562 137,841 2,723 3,123 3,446 3,535 3,506 74,455 75,770 77,347 78,737 80,734 71,088 72,895 74,372 75,920 77,902 4,361 3,979 3,844 3,817 3,606 66,726 68,915 70,527 72,103 74,296 3,366 2,875 2,975 2,817 2,832 4.5 3.8 3.8 3.6 3.5 58.9 59.2 59.6 59.6 60.1 80.7 80.4 80.4 80.1 79.8 39.3 40.3 41.1 41.6 42.7 1970 1971 1972 1973 1974 140,273 143,032 146,575 149,422 152,349 3,188 2,816 2,449 2,326 2,229 82,771 84,382 87,034 89,429 91,949 78,678 79,367 82,153 85,064 86,794 3,463 3,394 3,484 3,470 3,515 75,215 75,972 78,669 81,594 83,279 4,093 5,016 4,882 4,365 5,156 4.9 5.9 5.6 4.9 5.6 60.4 60.2 60.4 60.8 61.3 79.7 79.1 78.9 78.8 78.7 43.3 43.4 43.9 44.7 45.7 1975 1976 1977 1978 1979 155.333 158,294 161,166 164,027 166,951 2,180 2,144 2,133 2,117 2,088 93,775 96,158 99,009 102,251 104,962 85,846 88,752 92,017 96,048 98,824 3,408 3,331 3,283 3,387 3,347 82,438 85,421 88,734 92,661 95,477 7,929 7,406 6,991 6,202 6,137 8.5 7.7 7.1 6.1 5.8 61.2 61.6 62.3 63.2 63.7 77.9 77.5 77.7 77.9 77.8 46.3 47.3 48.4 50.0 50.9 1980 1981 169,847 172,272 2,102 2,142 106,940 108,670 99,303 100,397 3,364 3,368 95,938 97,030 7,637 8,273 7.1 7.6 63.8 63.9 77.4 77.0 51.5 52.1 1947 . 1948 1949 ... See next page for continuation of table. 266 TABLE B-29.—Noninstitutional population and the labor force, 1929-81—Continued [Monthly data seasonally adjusted, except as noted] Civilian labor force participation rate 2 Civilian labor force Year or month Noninstitutional population1 Armed Forces l Employment Unemployment Total Total Agricultural Unemployment rate (percent of civilian labor force) Total Males Females Nonagricultural Thousands of persons 16 years of age and over Percent 1979: Jan Feb Mar &::::::= June 165,610 165,820 166,117 166,244 166,537 166,797 2,094 2,094 2,090 2,082 2,078 2,076 104,036 104,421 104,524 104,114 104,237 104.597 97,930 98,273 98,416 98,038 98,324 98,684 3,313 3,367 3,359 3,261 3,286 3,334 94,617 94,906 95,057 94,777 95,038 95,350 6,106 6,148 6,108 6,076 5,913 5.913 5.9 5.9 5.8 5.8 5.7 5.7 63.6 63.8 63.7 63.4 63.4 63.5 78.2 78.3 78.0 77.8 77.6 77.8 50.5 50.8 50.9 50.5 50.6 50.7 July Aug Sept Oct Nov Dec 167,052 167,288 167,523 167,906 168,143 168,389 2,082 2,090 2,092 2,093 2,092 2,089 105,039 105,151 105,601 105,724 105,825 106,366 99,054 98,853 99,428 99,431 99,570 99,957 3,348 3,385 3,379 3,326 3,410 3,396 95,706 95,468 96,049 96,105 96,160 96,561 5,985 6,298 6,173 6,293 6,255 6,409 5.7 6.0 5.8 6.0 5.9 6.0 63.7 63.7 63.8 63.8 63.7 64.0 77.9 77.7 78.0 77.7 77.6 77.7 50.9 51.1 51.1 51.3 51.3 51.6 June 168,625 168,845 169,074 169,289 169,495 169,735 2,081 2,086 2,090 2,092 2,088 2,092 106,493 106,548 106,321 106,482 107,022 106,809 99,833 99,913 99,607 99,112 98,963 98,785 3,327 3,392 3,402 3,280 3,411 3,302 96,506 96,521 96,205 95,832 95,552 95,483 6,660 6,635 6,714 7,370 8,059 8,024 6.3 6.2 6.3 6.9 7.5 7.5 63.9 63.9 63.7 63.7 63.9 63.7 77.7 77.8 77.5 77.4 77.8 77.4 51.6 51.4 51.3 51.4 51.5 51.4 July Aug Sept Oct Nov Dec 170,031 170,217 170,418 170,624 170,814 171,007 2,099 2,114 2,121 2,121 2,119 2,124 107,221 107,159 107,232 107,437 107,600 107,531 98,891 98,920 99,208 99,328 99,534 99,632 3,345 3,253 3,449 3,363 3,370 3,486 95,546 95,667 95,759 95,965 96,164 96,146 8,330 8,239 8,024 8,109 8,066 7,899 7.8 7.7 7.5 7.5 7.5 7.3 63.8 63.7 63.7 63.8 63.8 63.7 77.5 77.3 77.3 77.4 77.3 77.2 51.6 51.6 51.5 51.5 51.6 51.6 171,229 171,400 171,581 171,770 171,956 172,172 2,125 2,121 2,128 2,129 2,127 2,131 107,923 108,034 108,364 108,777 109,293 108,434 99,901 100,069 100,406 100,878 101,045 100,430 3,445 3,346 3,343 3,470 3,405 3,348 96,456 96,723 97,063 97,408 97,640 97,082 8,022 7,965 7,958 7,899 8,248 8,004 7.4 7.4 7.3 7.3 7.5 7.4 63.8 63.8 63.9 64.1 64.4 63.8 77.2 77.1 77.2 77.3 77.6 76.7 51.8 51.9 52.0 52.2 52.5 52.2 172,385 172,559 172,758 172,966 173,155 173,330 2,139 2,160 2,165 2,158 2,158 2,164 108,688 108,818 108,494 109,012 109,272 109,184 100,864 100,840 100,258 100,343 100,172 99,613 3,342 3,404 3,358 3,378 3,372 3,209 97,522 97,436 96,900 96,965 96,800 96,404 7,824 7,978 8,236 8,669 9,100 9,571 7.2 7.3 7.6 8.0 8.3 8.8 63.8 63.9 63.6 63.8 63.9 63.8 76.7 76.8 76.8 76.8 76.8 76.9 52.3 52.2 51.8 52.2 52.3 52.0 1980: Jan Feb Mar 1981: Jan Feb Mar May June July Aug Oct Nov Dec 1 Not seasonally adjusted. Civilian labor force as percent of civilian noninstitutional population. Not strictly comparable with earlier data due to population adjustments as follows: Beginning 1953, introduction of 1950 census data added about 600,000 to population and about 350,000 to labor force, total employment, and agricultural employment. Beginning 1960, inclusion of Alaska and Hawaii added about 500,000 to population, , about 300,000 to labor force,, and about 240,000 to , , , nonagricultural employment. Beginning 1962, introduction of 1960 census data reduced population by about 50,000 and labor force and employment by about 200,000. Beginning 1972, introduction of 1970 census data added about 800,000 to civilian noninstitutional population and about 333,000 to labor force and employment. A subsequent adjustment based on 1970 census in March 1973 added 60,000 to labor force and to employment. Beginning 1978, changes in sampling and estimation procedures introduced into the household survey added about 250,000 to labor force and to employment. Unemployment levels and rates were not significantly affected. Note.—Data for 1970-81 revised based on 1980 census of population. Labor force data in Tables B-29 through B-35 are based on household interviews and relate to the calendar week including the 12th of the month. For definitions of terms, area samples used, historic comparability of the data, comparability with other series, etc., see "Employment and Earnings." Source: Department of Labor, Bureau of Labor Statistics. 2 3 267 TABLE B-30.—Civilian employment and unemployment by sex and age, 1947-81 [Thousands of persons 16 years of age and over; monthly data seasonally adjusted] Employment Unemployment Females Males Year or month Total ' Total 16-19 years 20 years and over Total Females Males 20 16-19, years years and over Total Total 16-19 years 20 years and over Total 16-19 years 20 years and over 1947 1948 1949 57,038 40,995 58,343 41,725 57,651 40,925 2,218 38,776 16,045 2,345 39,382 16,617 2,124 38,803 16,723 1,691 1,683 1,588 14,3.54 14,937 15,137 2,311 2,276 3,637 1,692 1,559 2,572 270 255 352 1,422 1,305 2,219 619 717 1,065 144 152 223 475 564 841 1950 1951 1952 1953 » 1954 58,918 59,961 60,250 61,179 60,109 41,578 41,780 41,682 42,430 41,619 2,186 2,156 2,106 2,135 1,985 39,394 39,626 39,578 40,296 39,634 17,340 18,181 18,568 18,749 18,490 1,517 1,611 1,612 1,584 1,490 15,824 16,570 16,958 17,164 17,000 3,288 2,055 1,883 1,834 3,532 2,239 1,221 1,185 1,202 2,344 318 191 205 184 310 1,922 1,029 980 1,019 2,035 1,049 834 698 632 1,188 195 145 140 123 191 854 689 559 510 997 1955 1956 1957 1958 1959 62,170 63,799 64,071 63,036 64,630 42,621 43,379 43,357 42,423 43,466 2,095 2,164 2,117 2,012 2,198 40,526 41,216 41,239 40,411 41,267 19,551 20,419 20,714 20,613 21,164 1,548 1,654 1,663 1,570 1,640 18,002 18,767 19,052 19,043 19,524 2,852 2,750 2,859 4,602 3,740 1,854 1,711 1,841 3,098 2,420 274 269 299 416 398 1,580 1,442 1,541 2,681 2,022 998 1,039 1,018 1,504 1,320 176 823 209 832 197 821 262 1,242 256 1,063 I9601 . . 65,778 43,904 65,746 43,656 1961 66,702 44,177 1962 » 1963 67,762 44,657 1964 69,305 45,474 2,360 2,314 2,362 2,406 2,587 41,543 41,342 41,815 42,251 42,886 21,874 22,090 22,525 23,105 23,831 1,769 1,793 1,833 1,849 1,929 20,105 20,296 20,693 21,257 21,903 3,852 4,714 3,911 4,070 3,786 2,486 2,997 2,423 2,472 2,205 425 479 407 500 487 2,060 2,518 2,016 1,971 1,718 1,366 1,717 1,488 1,598 1,581 286 349 313 383 386 1,080 1,368 1,175 1,216 1,195 1965 1966 1967 1968 1969 1970 1971 l 1972 1973 » 1974 46,340 46,919 47,479 48,114 48,818 48,990 49,390 50,896 52,349 53,024 2,918 3,252 3,186 3,255 3,430 3,409 3,478 3,765 4,039 4,103 43,422 43,668 44,293 44,859 45,388 45,581 45,912 47,130 48,310 48,922 24,748 25,976 26,893 27,807 29,084 29,688 29,976 31,257 32,715 33,769 2,118 2,469 2,497 2,525 2,686 2,735 2,730 2,980 3,231 3,345 22,630 23,510 24,397 25,281 26,397 26,952 27,246 28,276 29,484 30,424 3,366 2,875 2,975 2,817 2,832 4,093 5,016 4,882 4,365 5,156 1,914 1,551 1,508 1,419 1,403 2,238 2,789 2,659 2,275 2,714 479 432 448 427 441 599 693 711 653 757 1,435 1,120 1,060 993 963 1,638 2,097 1,948 1,624 1,957 1,452 1,324 1,468 1,397 1,429 1,855 2,227 2,222 2,089 2,441 395 404 391 412 412 506 568 598 583 665 1,056 921 1,078 985 1,016 1,349 1,658 1,625 1,507 1,777 1975 . . . 85,846 51,857 1976 88,752 53,138 1977 92,017 54,728 1978 » 96,048 56,479 98,824 57,607 1979 3,839 3,947 4,174 4,336 4,300 48,018 49,190 50,555 52,143 53,308 33,989 35,615 37,289 39,569 41,217 3,263 3,389 3,514 3,734 3,783 30,726 32,226 33,775 35,836 37,434 7,929 7,406 6,991 6,202 6,137 4,442 4,036 3,667 3,142 3,120 966 939 874 813 811 3,476 3,098 2,794 2,328 2,308 3,486 3,369 3,324 3,061 3,018 802 780 789 769 743 2,684 2,588 2,535 2,292 2,276 1980 1981 4,085 53,101 42,117 3,815 53,582 43,000 3,625 38,492 3,411 39,590 7,637 8,273 4,267 4,577 913 962 3,353 3,615 3,370 3,696 755 2,615 800 2,895 71,088 72,895 74,372 75,920 77,902 78,678 79,367 82,153 85,064 86,794 99,303 57,186 100,397 57,397 1980: Jan Feb Mar % June 99,833 99,913 99,607 99,112 98,963 98,785 57,711 57,888 57,631 57,149 57,015 56,824 4,250 4,243 4,303 4,159 4,091 4,076 53,461 53,645 53,328 52,990 52,924 52,748 42,122 42,025 41,976 41,963 41,948 41,961 3,760 3,674 3,635 3,596 3,622 3,607 38,362 38,351 38,341 38,367 38,326 38,354 6,660 6,635 6,714 7,370 8,059 8,024 3,538 3,483 3,612 4,098 4,606 4,608 816 801 786 822 976 964 2,722 2,682 2,826 3,276 3,630 3,644 3,122 3,152 3,102 3,272 3,453 3,416 752 769 751 694 813 763 2,370 2,383 2,351 2,578 2,640 2,653 July Aug Sept Oct Nov Dec 98,891 98,920 99,208 99,328 99,534 99,632 56,828 56,772 56,906 57,091 57,185 57,285 4,059 3,904 3,995 3,986 3,970 3,973 52,769 52,868 52,911 53,105 53,215 53,312 42,063 42,148 42,302 42,237 42,349 42,347 3,625 3,551 3,645 3,619 3,574 3,597 38,438 38,597 38,657 38,618 38,775 38,750 8,330 8,239 8,024 8,109 8,066 7,899 4,774 4,708 4,698 4,607 4,564 4,384 1,002 977 942 1,000 969 908 3,772 3,731 3,756 3,607 3,595 3,476 3,556 3,531 3,326 3,502 3,502 3,515 817 780 738 718 735 732 2,739 2,751 2,588 2,784 2,767 2,783 Jan Feb Mar Apr May June 99,901 100,069 100,406 100,878 101,045 100,430 57,323 57,331 57,531 57,792 57,793 57,279 3,981 3,948 3,913 3,972 3,909 3,682 53,342 53,383 53,618 53,820 53,884 53,597 42,578 42,738 42,875 43,086 43,252 43,151 3,549 3,527 3,510 3,550 3,515 3,394 39,029 39,211 39,365 39,536 39,737 39,757 8,022 7,965 7,958 7,899 8,248 8,004 4,456 4,419 4,375 4,300 4,571 4,415 995 986 965 963 976 918 3,461 3,433 3,410 3,337 3,595 3,497 3,566 3,546 3,583 3,599 3,677 3,589 762 783 796 803 806 765 2,804 2,763 2,787 2,796 2,871 2,824 July Aug Sept Oct Nov Dec 100,864 100,840 100,258 100,343 100,172 99,613 57,640 57,551 57,471 57,266 57,051 56,725 3,766 3,760 3,778 3,672 3,697 3,603 53,874 53,791 53,693 53,504 53,354 53,122 43,224 43,289 42,787 43,077 43,121 42,888 3,414 3,448 3,361 3,263 3,243 3,175 39,810 39,841 39,426 39,814 39,878 39,713 7,824 7,978 8,236 8,669 9,100 9,571 4,171 4,385 4,506 4,798 5,133 5,578 873 926 937 947 1,028 1,035 3,298 3,459 3,569 3,851 4,105 4,543 3,653 3,593 3,730 3,871 3,967 3,993 781 768 812 854 858 818 2,872 2,825 2,918 3,107 3,109 3,175 1981: 1 See footnote 3, Table B-29. Note.—Data for 1970-81 revised based on 1980 census of population. See Note, Table B-29. Source: Department of Labor, Bureau of Labor Statistics. 268 TABLE B-31.—Selected employment and unemployment data, 1948-81 [Percent; monthly data seasonally adjusted] Unemployment rate 2 Employment as percent of population 1 By sex and age Both Males FeBlack Year or month sexes 20 males White and Total 16- years 20 and other 19 years years over and over All workers By selected groups Both sexes 1619 years Males 20 years and over Females 20 years and over Experienced wage and salary workers Married men, spouse present 3 Women who maintain families Fulltime work-4 ers 558 546 455 43.0 839 81 6 307 30.6 3.8 5.9 9.2 13.4 3.2 5.4 3.6 5.3 4.3 6.8 3.5 5.4 55? 557 55.4 55.3 53.8 55.1 56.1 55.7 54.2 54.8 43.8 449 44.1 43.9 40.1 41.3 42.7 41.1 37.6 38.1 81 9 816 80.8 80.6 78.8 80.0 80.8 80.2 78.0 79.0 31.6 32.6 33.0 32.9 32.3 33.8 34.9 35.0 34.6 35.1 5.3 3.3 3.0 29 5.5 4.4 41 4.3 6.8 5.5 12.2 8.2 8.5 76 12.6 11 0 11 1 11.6 15.9 14.6 4.7 2.5 2.4 25 4.9 3.8 34 3.6 6.2 4.7 5.1 4.0 3.2 29 5.5 4.4 42 4.1 6.1 5.2 6.0 3.7 3.3 32 6.2 4.8 44 4.6 7.2 5.7 4.6 1.5 1.4 17 4.0 2.8 26 2.8 5.1 3.6 5.0 2.6 2.5 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 54.9 54.2 54.2 54.1 54.5 55.0 55.6 55.8 56.0 56.5 39.0 37.5 37.6 35.8 35.8 37.7 40.7 40.4 40.6 42.1 78.7 77.6 77.4 77.3 77.7 77.9 77.6 77.4 77.1 76.9 35.7 35.5 35.8 36.2 36.9 37.6 38.6 39.3 40.0 41.1 54.0 54.3 54.8 55.4 55.7 55.9 56.5 55.2 56.1 56.8 57.2 56.9 56.6 56.7 5.5 6.7 5.5 5.7 5.2 4.5 3.8 3.8 3.6 3.5 14.7 16.8 14.7 17.2 16.2 14.8 12.8 12.9 12.7 12.2 4.7 5.7 4.6 4.5 3.9 3.2 2.5 2.3 2.2 2.1 5.1 6.3 5.4 5.4 5.2 4.5 3.8 4.2 3.8 3.7 5.7 6.8 5.6 5.5 5.0 4.3 3.5 3.6 3.4 3.3 3.7 4.6 3.6 3.4 2.8 2.4 1.9 1.8 1.6 1.5 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 56.1 55.5 56.0 56.9 57.0 55.3 56.1 57.1 58.6 59.2 41.2 40.4 42.6 44.8 45.0 42.3 43.2 45.1 47.4 47.7 76.1 75.3 75.8 76.3 75.7 72.9 73.2 73.7 74.5 74.7 41.2 40.8 41.3 42.2 42.7 42.3 43.5 44.7 46.5 47.6 56.2 55.7 56.4 57.3 57.5 55.9 56.8 57.9 59.3 60.0 55.5 53.8 53.2 54.0 53.3 50.4 51.0 51.5 53.7 54.0 4.9 5.9 5.6 4.9 5.6 8.5 7.7 7.1 6.1 5.8 15.3 16.9 16.2 14.5 16.0 19.9 19.0 17.8 16.4 16.1 3.5 4.4 4.0 3.3 3.8 6.8 5.9 5.2 4.3 4.2 4.8 5.7 5.4 4.9 5.5 8.0 7.4 7.0 6.0 5.7 4.8 5.7 5.3 4.5 5.3 8.2 7.3 6.6 5.6 5.5 1980 1981 58.5 58.3 45.8 43.7 72.9 72.3 48.0 48.5 59.4 59.3 52.4 51.4 7.1 7.6 17.8 19.6 5.9 6.3 6.4 6.8 1980Jan Feb Mar Apr May June 59.2 59.2 58.9 58.5 58.4 58.2 47.3 46.8 46.9 45.9 45.7 45.5 74.1 74.2 73.7 73.1 72.9 72.5 48.2 48.2 48.1 48.0 47.9 47.9 60.1 60.1 59.8 59.5 59.3 59.1 53.2 53.1 52.6 52.2 52.2 52.1 6.3 6.2 6.3 6.9 7.5 7.5 16.4 16.5 16.2 16.4 18.8 18.4 4.8 4.8 5.0 5.8 6.4 6.5 July Aug Sept Oct Nov Dec 58.2 58.1 58.2 58.2 58.3 58.3 45.6 44.3 45.5 45.3 45.0 45.3 72.4 72.4 72.4 72.5 72.6 72.6 47.9 48.0 48.0 47.9 48.0 47.9 59.0 58.9 59.1 59.1 59.2 59.2 52.4 52.5 52.3 52.3 52.3 52.0 7.8 7.7 7.5 7.5 7.5 7.3 19.1 19.1 18.0 18.4 18.4 17.8 Jan Feb Mar Apr May June 58.3 58.4 58.5 58.7 58.8 58.3 45.0 44.8 44.6 45.3 44.8 42.8 72.6 72.5 72.7 72.9 72.9 72.4 48.2 48.3 48.5 48.6 48.8 48.7 59.3 59.4 59.5 59.7 59.8 59.4 52.1 51.7 51.9 52.3 52.0 51.2 7.4 7.4 7.3 7.3 7.5 7.4 July Aug Sept Oct Nov Dec 58.5 58.4 58.0 58.0 57.9 57.5 43.5 43.8 43.5 42.9 42.4 41.6 72.6 72.4 72.2 71.8 71.5 71.1 48.7 48.7 48.1 48.5 48.5 48.3 59.6 59.6 59.1 59.1 58.9 58.5 51.3 51.1 51.1 51.0 51.0 50.7 1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1981: . ::::::: 5.2 3.8 3.7 4.0 7.2 Bluecollar work-5 ers 4.2 8.0 7.2 3.9 3.6 3.4 7.2 5.8 5.1 6.2 10.2 7.6 4.9" 4.4 4.4 5.5" 4.9 4.2 3.5 3.4 3.1 3.1 7.8 9.2 7.4 7.3 6.3 5.3 4.2 4.4 4.1 3.9 2.6 3.2 2.8 2.3 2.7 5.1 4.2 3.6 2.8 2.8 5.4 7.3 7.2 7.1 7.0 10.0 10.1 9.4 8.5 8.3 4.5 5.5 5.1 4.4 5.1 8.1 7.3 6.6 5.6 5.3 6.2 7.4 6.5 5.4 6.7 11.7 9.4 8.1 6.9 7.0 6.9 7.3 4.2 4.3 9.2 10.4 6.9 7.3 10.0 10.3 5.8 5.9 5.8 6.3 6.4 6.5 5.9 5.9 6.1 6.7 7.3 7.3 3.5 3.2 3.5 4.1 4.5 4.6 8.9 8.6 8.8 9.1 8.4 8.6 5.8 5.8 6.0 6.6 7.2 7.3 8.2 8.0 8.3 9.7 10.8 11.0 6.7 6.6 6.6 6.4 6.3 6.1 6.7 6.7 6.3 6.7 6.7 6.7 7.4 7.4 7.3 7.3 7.2 7.1 4.9 4.9 4.7 4.6 4.4 4.3 8.8 9.3 9.1 10.2 9.8 10.2 7.6 7.5 7.3 7.3 7.3 7.2 11.4 11.2 10.8 10.8 10.6 10.4 18.9 19.1 19.2 19.0 19.4 19.2 6.1 6.0 6.0 5.8 6.3 6.1 6.7 6.6 6.6 6.6 6.7 6.6 7.1 7.1 7.0 6.9 7.2 7.0 4.2 4.1 5.1 3.8 4.0 4.2 10.3 9.8 9.6 9.9 10.4 10.7 7.2 7.1 7.1 6.9 7.1 7.1 10.2 10.2 10.0 9.7 9.9 9.8 7.2 18.7 7.3 19.0 7.6 19.7 8.0 20.4 8.3 21.4 8.8 21.5 5.8 6.0 6.2 6.7 7.1 7.9 6.7 6.6 6.9 7.0 7.2 7.4 6.8 6.9 7.3 7.6 8.0 8.5 3.9 4.0 4.4 4.8 5.2 5.7 11.2 10.1 10.7 10.6 10.8 10.5 6.8 6.9 7.3 7.7 8.1 8.7 9.5 9.5 10.2 10.9 11.8 12.7 1 67" Civilian employment as percent of total noninstitutional population. Unemployment as percent of civilian labor force in group specified. Data for 1949 and 1951-54 are for April; 1950, for March. 4 Data for 1949-61 are for May. 5 Includes craft and kindred workers, operatives, and nonfarm laborers. Data for 1948-57 are based on data for January, April, July, and October. Note.—Data revised for 1970-81 based on 1980 census of population. See footnote 3 and Note, Table B-29. Source: Department of Labor, Bureau of Labor Statistics. 2 3 358-691 0 - 82 - 18 : QL3 269 TABLE B-32.—Civilian labor force participation rate by demographic characteristic, 1954-81 [Percent 1 , monthly data seasonally adjusted] Black and other White Year or month All workers Total Females Males Total 16-19 years 20 years Total and over 16-19 years Males 20 years Total Total and over 16-19 years Females 20 years Total and over 16-19 years 20 years and over 1954 58.8 58.2 85.6 57.6 87.8 33.3 40.6 32.7 64.3 85.2 61.2 87.1 46.1 31.0 47.7 1955 1956 1957 1958 1959 59.3 60.0 59.6 59.5 59.3 58.7 59.4 59.1 58.9 58.7 85.4 85.6 84.8 84.3 83.8 58.6 60.4 59.2 56.5 55.9 87.5 87.6 86.9 86.6 86.3 34.5 35.7 35.7 35.8 36.0 40.7 43.1 42.2 40.1 39.6 34.0 35.1 35.2 35.5 35.6 64.2 64.9 64.4 64.8 64.3 85.0 85.1 84.3 84.0 83.4 60.8 61.5 58.8 57.3 55.5 87.8 87.8 87.0 87.1 86.7 46.1 47.3 47.2 48.0 47.7 32.7 36.3 33.2 31.9 28.2 47.5 48.4 48.6 49.8 49.8 1960 1961 1962 . . 1963 1964 .. . 59.4 59.3 58.8 58.7 58.7 58.8 58.8 58.3 58.2 58.2 83.4 83.0 82.1 81.5 81.1 55.9 54.5 53.8 53.1 52.7 86.0 85.7 84.9 84.4 84.2 36.5 36.9 36.7 37.2 37.5 40.3 40.6 39.8 38.7 37.8 36.2 36.6 36.5 37.0 37.5 64.5 64.1 63.2 63.0 63.1 83.0 82.2 80.8 80.2 80.0 57.6 55.8 53.5 51.5 49.9 86.2 85.5 84.2 83.9 84.1 48.2 48.3 48.0 48.1 48.5 32.9 32.8 33.1 32.6 31.7 499 50.1 49.6 49.9 50.7 1965 1966 1967 1968 . 1969 58.9 59.2 59.6 59.6 60.1 58.4 58.7 59.2 59.3 59.9 80.8 80.6 80.7 80.4 80.2 54.1 55.9 56.3 55.9 56.8 83.9 38.1 83.6 39.2 83.5 40.1 83.2 40.7 83.0 41.8 39.2 42.6 42.5 43.0 44.6 38.0 38.8 39.8 40.4 41.5 62.9 63.0 62.8 62.2 62.1 79.6 79.0 78.5 77.6 76.9 51.3 51.4 51.1 49.7 49.6 83.7 83.3 82.9 82.2 81.4 48.6 49.3 49.5 49.3 49.8 29.5 33.5 35.2 34.8 34.6 51.1 51.6 51.6 51.4 52.0 1970 1971 1972 1973 1974 60.4 60.2 60.4 60.8 61.3 60.2 60.1 60.4 60.8 61.4 80.0 79.6 79.6 79.4 79.4 57.5 57.9 60.1 62.0 62.9 82.8 82.3 82.0 81.6 81.4 42.6 42.6 43.2 44.1 45.2 45.6 45.5 48.1 50.1 51.7 42.2 42.3 42.7 43.5 44.4 61.8 60.9 60.2 60.5 60.3 76.5 74.9 73.9 74.0 73.5 47.4 44.7 46.0 46.3 47.2 81.4 80.0 78.6 78.6 78.0 49.5 49.2 48.8 49.3 49.3 34.1 31.2 32.3 34.4 34.1 51.8 51.8 51.2 51.4 51.5 1975 1976 1977 1978 1979 61.2 61.6 62.3 63.2 63.7 61.5 78.7 61.8 78.4 62.5 78.5 63.3 78.6 63.9 78.6 61.9 62.3 64.0 65.0 64.8 80.7 80.3 80.2 80.1 80.1 45.9 46.9 48.0 49.4 50.5 51.5 52.8 54.5 56.7 57.4 45.3 46.2 47.3 48.7 49.8 59.6 59.8 60.4 62.2 62.2 71.9 71.2 71.6 72.6 72.5 42.9 42.3 43.6 45.4 44.0 76.8 76.1 76.2 77.1 77.1 49.4 50.4 51.2 53.5 53.7 35.6 33.6 33.6 38.0 37.8 51.4 52.8 53.6 55.6 55.8 1980 1981 63.8 63.9 64.1 64.3 78.2 77.9 63.7 62.4 79.8 79.5 51.2 51.9 56.2 55.4 50.6 51.5 61.7 61.3 71.5 70.6 43.5 41.7 75.9 75.0 53.6 53.6 35.9 34.5 55.9 56.1 63.9 63.9 63.7 63.7 63.9 63.7 64.3 64.3 64.0 64.1 64.3 64.1 78.5 78.7 78.5 78.4 78.7 78.3 64.7 64.5 65.2 63.7 64.5 64.3 80.1 80.3 79.9 80.0 80.3 79.9 51.3 51.1 50.9 51.1 51.1 51.1 57.6 56.3 55.8 55.2 56.6 56.1 50.6 50.6 50.5 50.7 50.6 50.6 61.7 61.5 61.0 61.1 61.8 61.5 71.4 71.3 70.5 70.8 71.0 71.4 42.7 42.3 41.3 40.6 43.6 43.7 75.9 75.9 75.1 75.6 75.3 75.8 53.7 53.5 53.1 53.2 54.2 53.3 37.6 39.6 36.7 34.3 36.8 35.5 55.9 55.3 55.3 55.6 56.4 55.6 63.8 64.1 637 64.0 63.7 64.0 63.8 64.0 63.8 64.1 63.7 63.9 78.3 78.1 78.0 78.1 78.1 77.9 64.4 62.9 62.2 63.4 62.8 62.3 79.8 79.8 79.7 79.7 79.8 79.6 51.2 51.1 51.2 51.2 51.3 51.2 56.8 55.3 56.4 56.5 56.2 56.3 50.6 50.7 50.7 50.7 50.8 50.7 62.3 62.0 62.0 62.1 61.9 61.5 72.3 71.8 72.4 72.2 72.0 71.3 44.9 40.9 46.5 46.1 45.8 44.1 76.6 76.6 76.4 76.2 76.1 75.4 54.0 54.0 53.5 53.9 53.7 53.5 37.3 35.2 36.3 33.8 33.6 34.2 56.2 56.4 55.8 56.5 56.3 56.0 May June 63.8 64.2 63.8 64.3 63.9 64.3 64.1 64.5 64.4 64.8 63.8 64.2 78.1 78.1 78.2 78.3 78.5 77.7 63.7 64.2 63.5 63.6 63.4 60.2 79.6 79.6 79.7 79.9 80.1 79.5 51.6 51.7 51.7 52.0 52.3 51.9 55.9 56.4 55.9 56.9 56.7 54.4 51.1 51.2 51.3 51.5 51.9 51.7 61.1 60.8 61.4 61.7 61.6 61.0 70.6 70.2 70.4 70.9 71.2 69.9 45.6 41.8 41.2 44.0 44.0 40.2 74.5 74.6 74.9 75.0 75.3 74.5 53.3 53.1 54.0 54.1 53.7 53.7 36.0 33.4 35.6 36.2 34.7 34.1 55.5 55.6 56.3 56.4 56.1 56.1 July Aug Sept Oct Nov Dec 63.8 63.9 63.6 63.8 63.9 63.8 77.7 77.7 77.6 77.7 77.8 77.6 60.7 61.7 61.9 62.3 62.7 61.4 79.5 79.4 79.3 79.3 79.3 79.3 52.1 52.0 51.5 51.9 52.0 51.7 55.2 55.8 55.1 54.1 54.4 53.4 51.8 51.6 51.2 51.7 51.8 51.6 60.8 61.3 61.3 61.6 61.5 61.5 69.9 71.0 70.8 70.8 70.7 70.8 40.0 41.7 39.8 39.5 40.8 41.5 74.5 75.5 75.5 75.5 75.1 75.2 53.3 53.3 53.5 54.0 54.0 53.8 33.1 31.5 33.8 37.4 35.0 33.1 55.9 56.0 56.0 56.1 56.4 56.4 1980: Jan Feb Mar May June July AuL::::::: Sept.... Oct Nov Dec. 1981: Jan Feb Mar 64.3 64.2 64.0 64.2 64.3 64.1 1 Civilian labor force as percent of civilian noninstitutional population in group specified. Note.—Data for 1970-81 revised based on 1980 census of population. See footnote 3 and Note, Table B-29. Source: Department of Labor, Bureau of Labor Statistics. 270 TABLE B-33.—Unemployment rate by demographic characteristic, 1948-81 [Percent;1 monthly data seasonally adjusted] White Year or month All workers Total Black and other Males Females Total 20 16-19 years Total and years over 20 16-19 years Total Total and years over Females Males 16-19 years 20 years Total and over 20 16-19 years years and over 1948 1949 3.8 5.9 3.5 5.6 3.4 5.6 3.8 5.7 5.9 8.9 5.8 9.6 6.1 7.9 1950. 1951 1952 1953 1954 4.9 3.1 2.8 2.7 5.0 4.7 2.6 2.5 2.5 4.8 13.4 4.4 5.3 4.2 3.3 3.1 5.5 10.4 5.1 9.0 5.3 5.4 4.5 9.9 9.4 4.9 5.2 4.8 10.3 14.4 99 8.4 6.1 5.7 4.1 9.2 20.6 8.4 1955 1956 1957 1958 1959 5.3 3.3 3.0 2.9 5 5 -, 4.4 4.1 4.3 6.8 5.5 3.9 3.6 3.8 6.1 4.8 3.7 3.4 3.6 6.1 4.6 11.3 10.5 11.5 15.7 14.0 3.3 3.0 3.2 5.5 4.1 4.3 4.2 4.3 6.2 5.3 9.1 9.7 9.5 12.7 12.0 3.9 3.7 3.8 5.6 4.7 8.7 8.3 7.9 12.6 10.7 8.8 7.9 8.3 13.7 11.5 13.4 15.0 18.4 26.8 25.2 8.4 7.4 7.6 12.7 10.5 8.5 8.9 7.3 10.8 9.4 19.2 22.8 20.2 28.4 27.7 7.7 7.8 6.4 9.5 8.3 1960 1961 1962 1963 1964 5.5 6.7 5.5 5.7 5.2 4.9 6.0 4.9 5.0 4.6 4.8 5.7 4.6 4.7 4.1 14.0 15.7 13.7 15.9 14.7 4.2 5.1 4.0 3.9 3.4 5.3 6.5 5.5 5.8 5.5 12.7 14.8 12.8 15.1 14.9 4.6 5.7 4.7 4.8 4.6 10.2 12.4 10.9 10.8 9.6 10.7 12.8 10.9 10.5 8.9 24.0 26.8 22.0 27.3 24.3 9.6 11.7 10.0 9.2 7.7 9.4 11.9 11.0 11.2 10.7 24.8 29.2 30.2 34.7 31.6 8.3 10.6 9.6 9.4 9.0 1965 1966 1967 1968 1969 4.5 3.8 3.8 3.6 3.5 4.1 3.3 3.4 3.2 3.1 3.6 2.8 2.7 2.6 2.5 12.9 10.5 10.7 10.1 10.0 2.9 2.2 2.1 2.0 1.9 5.0 4.3 4.6 4.3 4.2 14.0 12.1 11.5 12.1 11.5 4.0 3.3 3.8 3.4 3.4 8.1 7.3 7.4 6.7 6.4 7.4 6.3 6.1 5.6 5.3 23.3 21.3 23.9 22.1 21.4 6.0 4.9 4.3 3.9 3.7 9.2 8.7 9.1 8.3 7.8 31.7 31.3 29.6 28.7 27.6 7.5 6.6 7.1 6.3 5.8 1970 1971 1972 1973 1974 4.9 5.9 5.6 4.9 5.6 4.5 5.4 5.1 4.3 5.0 4.0 4.9 4.5 3.8 4.4 13.7 15.1 14.2 12.3 13.5 3.2 4.0 3.6 3.0 3.5 5.4 6.3 5.9 5.3 6.1 13.4 15.1 14.2 13.0 14.5 4.4 5.3 4.9 4.3 5.1 8.2 9.9 10.0 9.0 9.9 7.3 9.1 8.9 7.7 9.2 25.0 28.8 29.7 26.9 31.5 5.6 7.3 6.9 5.8 6.9 9.3 10.9 11.4 10.6 10.8 34.5 35.4 38.4 34.4 34.5 6.9 8.7 8.8 8.2 8.5 1975 1976 1977 1978 1979 8.5 7.7 7.1 6.1 5.8 7.8 7.0 6.2 5.2 5.1 7.2 6.4 5.5 4.6 4.5 18.3 17.3 15.0 13.5 13.9 6.2 5.4 4.7 3.7 3.6 8.6 7.9 7.3 6.2 5.9 17.4 16.4 15.9 14.4 14.0 7.5 6.8 6.2 5.2 5.0 13.8 13.1 13.1 11.9 11.3 13.6 12.7 12.3 11.0 10.4 35.2 35.1 36.6 34.0 31.3 11.6 10.6 10.0 8.7 8.5 13.9 13.6 13.9 13.0 12.3 38.3 38.8 39.6 38.1 35.6 11.5 11.3 11.7 10.6 10.2 1980 1981 7.1 7.6 6.3 6.7 6.1 6.5 16.2 17.9 5.3 5.6 6.5 6.9 14.8 16.6 5.6 5.9 13.1 14.2 13.2 14.1 34.4 37.5 11.3 12.1 13.1 14.3 36.5 38.3 11.1 12.4 Jan Feb Mar Apr May June 6.3 6.2 6.3 6.9 7.5 7.5 5.4 5.4 5.5 6.1 6.7 6.7 5.0 4.9 5.2 6.0 6.7 6.7 14.2 13.6 13.3 15.0 17.4 17.7 4.2 4.1 4.4 5.2 5.8 5.7 6.0 6.2 6.0 6.3 6.7 6.6 14.0 14.3 14.8 14.1 16.0 15.0 5.1 5.2 5.0 5.5 5.6 5.7 11.9 11.8 11.9 12.7 13.6 13.4 11.4 11.7 11.4 12.4 13.4 13.8 31.9 34.3 31.5 28.8 33.1 32.7 9.6 9.7 9.6 11.0 11.6 12.1 12.4 11.9 12.4 13.0 13.9 13.0 36.6 39.4 35.1 34.6 38.6 36.1 10.2 9.4 10.4 11.2 11.8 11.1 July Aug Sept. .. Oct Nov Dec 7.8 7.7 7.5 7.5 7.5 7.3 6.9 6.8 6.6 6.7 6.6 6.4 6.9 6.8 6.7 6.7 6.6 6.2 17.9 18.0 16.2 17.7 17.6 15.8 5.9 5.9 5.9 5.7 5.7 5.4 6.8 6.9 6.5 6.7 6.6 6.6 15.5 15.9 14.0 14.6 14.8 14.6 5.8 5.9 5.7 5.8 5.7 5.8 14.0 13.5 13.8 13.9 13.8 13.6 14.3 14.2 15.0 14.0 13.7 13.5 34.7 36.9 37.4 37.3 34.9 38.3 12.4 12.3 12.9 11.8 11.7 11.3 13.7 12.7 12.5 13.7 13.8 13.8 38.7 34.8 37.6 34.8 36.3 35.3 11.5 10.9 10.4 12.1 12.1 12.1 J&I~Z" June 7.4 7.4 7.3 7.3 7.5 7.4 6.6 6.5 6.4 6.4 6.7 6.4 6.4 6.4 6.3 6.2 6.5 6.2 17.5 18.0 111 17.3 17.9 17.7 5.5 5.4 5.3 5.2 5.6 5.3 6.8 6.7 6.6 6.8 7.0 6.7 15.5 16.3 15.7 16.6 17.0 15.9 5.9 5.7 5.7 5.7 5.9 5.7 12.8 13.2 13.6 13.2 13.7 14.2 12.8 12.9 12.8 12.9 13.6 14.3 38.6 35.7 33.6 36.5 34.6 38.8 10.4 11.0 11.0 10.8 11.7 12.3 12.8 13.5 14.4 13.6 13.8 14.0 33.5 35.2 40.1 34.6 34.0 37.6 11.1 11.8 12.4 11.9 12.2 12.2 July Aug Sept Oct. . Nov Dec . . 7.2 7.3 7.6 8.0 8.3 8.8 6.3 6.2 6.6 7.0 7.4 7.7 5.9 6.1 6.4 6.9 7.4 7.9 16.6 16.7 17.5 17.9 19.6 20.2 5.0 5.2 5.5 5.9 6.4 6.9 6.8 6.4 6.9 7.1 7.4 7.4 16.2 15.4 16.8 17.5 18.3 17.7 5.8 5.5 5.9 6.1 6.3 6.4 13.8 14.7 14.8 15.2 15.2 15.7 13.7 14.8 14.5 15.0 15.6 16.3 37.4 43.5 36.8 38.4 39.0 37.4 11.8 12.4 12.8 13.1 13.7 14.6 13.9 14.7 15.0 15.5 14.9 15.0 35.8 41.8 38.8 45.0 41.3 40.8 12.2 12.7 13.2 13.0 12.8 13.1 . .. 1980: 1981: Jan Feb Mar 1 Unemployment as percent of civilian labor force in group specified. Note.—Data for 1970-81 revised based on 1980 census of population. See footnote 3 and Note, Table B-29. Source: Department of Labor, Bureau of Labor Statistics. 271 TABLE B-34.—Unemployment by duration, 1947-81 [Monthly data seasonally adjusted1] Year or month Total unemployment Less than 5 weeks Duration of unemployment 5-14 15-26 weeks weeks 27 weeks and over Average (mean) duration in weeks Thousands of persons 16 years of age and over 2,311 2,276 3,637 1947 1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 I960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1980 Jan. Feb Mar. May June. July Aug Sept Oct Nov Dec 1981Jan. Feb Mar. t June July Aug Sept . Nov Dec oct : :: i..::.::::.:":::". 1,210 1,300 1,756 1,450 1,177 1,135 1,142 1,605 704 669 1,194 1,055 574 516 482 1,116 815 805 891 1,396 1,114 234 193 428 164 116 256 425 166 148 132 495 357 137 84 78 317 8.6 10.0 12.1 9.7 8.4 8.0 11.8 366 301 321 785 469 336 232 239 667 571 13.0 11.3 10.5 13.9 14.4 1,176 1,376 1,134 1,231 1,117 503 728 534 535 491 454 804 585 553 482 12.8 15.6 14.7 14.0 13.3 983 779 893 810 827 404 287 271 256 242 351 239 177 156 133 3,288 2,055 1,883 1,834 3,532 2,852 2,750 2,859 4,602 3,740 3,852 4,714 3,911 4,070 3,786 3,366 2,875 2,975 2,817 2,832 4,093 5,016 4,882 4,365 5,156 7,929 7,406 6,991 6,202 6,137 7,637 8,273 1,628 1,573 1,634 1,594 1,629 2,139 2,245 2,242 2,224 2,604 2,940 2,844 2,919 2,865 2,950 3,295 3,449 1,290 1,585 1,472 1,314 1,597 428 668 601 483 574 235 519 566 343 381 11.8 10.4 8.8 8.5 7.9 8.6 11.3 12.0 10.0 9.8 2,484 2,196 2,132 1,923 1,946 2,470 2,539 1,303 1,018 913 766 706 1,052 1,122 1,203 1,348 1,028 648 535 820 1,162 14.2 15.8 14.3 11.9 10.8 11.9 13.7 6,660 6,635 6,714 7,370 8,059 8,024 8,330 8,239 8,024 8,109 8,066 7,899 3,206 3,121 3,069 3,373 3,732 3,388 3,457 3,422 3,175 3,265 3,176 3,148 2,053 2,181 2,255 2,399 2,620 2,888 2,748 2,654 2,654 2,562 2,555 2,247 803 841 832 972 1,017 1,048 549 511 620 695 726 778 876 917 958 1,056 1,130 1,152 10.5 10.6 11.0 11.3 10.7 11.7 8,022 7,965 7,958 7,899 8,248 8,004 7,824 7,978 8,236 8,669 9,100 9,571 3,290 3,267 3,277 3,189 3,378 3,303 3,323 3,326 3,529 3,707 3,852 4,037 2,324 2,379 2,408 2,472 2,606 2,423 2,312 2,469 2,585 2,686 2,882 3,016 1,123 1,072 1,057 1,048 1,061 1,227 1,268 1,250 1,212 1,139 1,170 1,136 1,074 1,139 1,102 1,126 1,135 1,183 14.4 14.1 13.9 13.7 13.3 14.3 1,335 1,412 1,408 1,753 1,585 1,719 1,806 1,663 1,751 1,697 1,118 1,232 1,338 1,244 1,211 1,249 1,096 1,078 1,146 1,166 1,229 1,189 1 Because of independent seasonal adjustment of the various series, detail will not add to totals. Note.—Data for 1970-81 revised based on 1980 census of population. See footnote 3 and Note, Table B-29. Source: Department of Labor, Bureau of Labor Statistics. 272 11.9 12.4 13.0 13.2 13.5 13.6 14.1 14.3 13.7 13.6 13.1 12.8 TABLE B-35.—Unemployment by reason, 1967-81 [Monthly data seasonally adjusted1] Total unemployment Year or month Job losers Job leavers Reentrants New entrants Thousands of persons 16 years of age and over 1967 1968 1969 2,975 2,817 2,832 1,229 1,070 1,017 438 431 436 1970 1971 1972 1973 1974 4,093 5,016 4,882 4,365 5,156 1,811 2,323 2,108 1,694 2,242 550 590 641 683 768 1,228 1,472 1,456 1,340 1,463 504 630 677 649 681 1975 1976 1977 1978 1979 7,929 7,406 6,991 6,202 6,137 4,386 3,679 3,166 2,585 2,635 827 903 909 874 880 1,892 1,928 1,963 1,857 1,806 823 895 953 885 817 7,637 8,273 3,947 4,267 891 923 1,927 2,102 872 981 May June. 8,022 7,965 7,958 7,899 8,248 8,004 3,982 4,050 3,989 3,958 4,032 4,173 923 911 901 903 1,004 896 2,051 2,020 2,069 2,044 2,106 2,039 1,015 943 988 988 956 973 July Aug. Sept Oct Nov Dec 7,824 7,978 8,236 8,669 9,100 9,571 3,867 4,106 4,426 4,573 4,905 5,343 926 879 921 976 916 923 2,078 2,034 2,058 2,178 2,339 2,244 940 971 977 1,002 996 1,021 1967 1968 .... 1969. 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1981 Jan Feb Mar. 3.8 3.6 3.5 1.6 1.3 1.2 0.6 .5 .5 1.2 1.2 1.2 0.5 .5 .5 4.9 5.9 5.6 4.9 5.6 8.5 7.7 7.1 6.1 5.8 7.1 7.6 2.2 2.8 2.4 1.9 2.4 .7 .7 '.S .8 1.5 1.7 1.7 1.5 1.6 .6 .7 .8 .7 .7 4.7 3.8 3.2 2.5 2.5 .9 .9 .9 .9 .8 2.0 2.0 2.0 1.8 1.7 .9 .9 1.0 .9 .8 3.7 3.9 .8 .8 1.8 1.9 .8 .9 7.4 7.4 7.3 7.3 7.5 7.4 3.7 3.7 3.7 3.6 3.7 3.8 .9 .8 .8 .8 .9 .8 1.9 1.9 1.9 1.9 1.9 1.9 .9 .9 .9 .9 .9 .9 7.2 7.3 7.6 8.0 8.3 8.8 3.6 3.8 4.1 4.2 4.5 4.9 .9 .8 .8 .9 .8 .8 1.9 1.9 1.9 2.0 2.1 2.1 .9 .9 .9 .9 .9 .9 . 1980 ... 1981 1981: Jan Feb.. Mar. .... 945 909 965 396 407 413 Percent of civilian labor force £ June, July Aug Sept Oct Nov Dec 1 Because of independent seasonal adjustment of the various series, detail will not add to totals. Note.—Data for 1970-81 revised based on 1980 census of population. See footnote 3 and Note, Table B-29. Source: Department of Labor, Bureau of Labor Statistics. 273 TABLE B-36.—Unemployment insurance programs, selected data, 1946-81 All programs Year or month Covered employ-1 ment State programs Insured Total unemploy- benefits ment paid (weekly (millions of average) « » dollars) 2 4 Thousands 1946 1947 1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 8. 1980: Jan Feb. Mar May June. July Aug Sept Oct Nov Dec 1981: Jan Feb Mar £ June. July Aug. Sept Oct Nov Dec 31,856 33,876 34,646 33,098 34,308 36,334 37,006 38,072 36,622 40,018 42,751 43,436 44,411 45,728 46,334 46,266 47,776 48,434 49,637 51,580 54,739 56,342 57,977 59,999 59,526 59,375 66,458 69,897 72,451 71,037 73,459 76,419 88,804 92,062 92,659 2,804 1,793 1,446 2,474 1,605 1,000 1,069 1,067 2,051 1,399 1,323 1,571 2,773 1,860 2,071 2,994 1,946 7 1,973 1,753 1,450 1,129 1,270 1,187 1,177 2,070 2,608 2,192 1,793 2,558 4,937 3,846 3,308 2,645 2,592 3,837 2,878.5 1,785.5 1,328.7 2,269.8 1,467.6 862.9 1,043.5 1,050.6 2,291.6 1,560.2 1,540.6 1,913.0 4,290.6 2,854.3 3,022.8 4,358.1 3,145.1 3,025.9 2,749.2 2,360.4 1,890.9 2,221.5 2,191.0 2,298.6 4,209.3 6,154.0 5,491.1 4,517.3 6,933.9 16,802.4 12,344.8 10,998.9 9,006.9 9,401.3 17,252.5 3,740 3,730 3,652 3,629 3,680 3,790 4,140 3,911 3,961 3,661 3,726 4,085 1,368.2 1,307.0 1,323.8 1,378.3 1,338.3 1,592.6 1,579.5 1,441.8 1,503.0 1,432.0 1,516.6 1,618.1 4,621 4,264 3,948 3,453 3,111 2,949 3,012 2,874 2,680 2,753 3,220 1,762.9 1,565.9 1,662.6 1,420.7 1,192.8 1,191.3 1,190.7 1,081.0 1,088.2 1,063.9 1,130.5 Insured unemployment Initial claims Exhaus-5 tions Weekly average; thousands 1,295 189 997 187 980 200 1,973 340 1,513 236 969 208 1,044 215 218 990 304 1,870 1,265 226 227 1,215 270 1,446 2,510 369 1,684 277 331 1,908 350 2,290 302 1,783 7 7 1,806 298 1,605 268 1,328 232 1,061 203 1,205 226 201 1,111 1,101 200 1,805 296 2,150 295 261 1,848 247 1,632 2,262 363 3,986 478 2,991 386 2,655 375 2,359 346 2,434 388 3,350 489 ** ** 2,801 419 2,793 401 2,928 466 3,239 539 3,623 624 3,881 579 3,737 511 3,648 504 3,675 488 3,540 452 3,351 430 3,167 423 3,053 2,920 2,954 2,949 2,904 2,897 2,767 2,844 2,961 3,159 3,428 3,583 424 415 435 405 408 407 397 435 482 522 541 567 38 24 20 37 36 16 18 15 34 25 20 23 50 33 31 46 32 30 26 21 15 17 16 16 25 39 35 29 37 81 63 55 39 39 59 47 48 52 59 57 59 65 62 58 66 65 70 70 69 66 66 57 56 54 51 47 46 48 Benefits paid Insured unemployment as Average Total percent of weekly (millions check covered of 4 employ- dollars) (dollars) « ment 4.3 1,094.9 3.1 775.1 3.0 789.9 6.2 1,736.0 4.6 1,373.1 2.8 840.4 2.9 998.2 2.8 962.2 5.2 2,026.9 3.5 1,350.3 3.2 1,380.7 3.6 1,733.9 6.4 3,512.7 4.4 2,279.0 4.8 2,726.7 5.6 3,422.7 4.4 2,675.4 4.3 2,774.7 3.8 2,522.1 3.0 2,166.0 2.3 1,771.3 2.5 2,092.3 2.2 2,031.6 2.1 2,127.9 3.4 3,848.5 4.1 4,957.0 3.5 4,471.0 2.7 4,007.6 3.5 5,974.9 6.0 11,754.7 4.6 8,974.5 3.9 8,357.2 3.3 7,717.2 2.9 8,612.9 3.9 14,590.3 ** 3.3 1,283.9 3.3 1,229.9 3.4 1,218.2 3.8 1,232.2 4.2 1,196.8 4.5 1,213.6 4.3 1,397.5 4.2 1,244.4 4.3 1,144.9 4.1 1,125.6 3.9 934.4 3.6 1,244.0 3.5 3.4 3.4 3.4 3.3 3.3 3.2 3.3 3.4 3.6 3.9 41 1,416.5 1,313.5 1,393.6 1,226.8 1,006.3 1,009.8 1,061.9 1,004.9 1,001.2 997.2 18.50 17.83 19.03 20.48 20.76 21.09 22.79 23.58 24.93 25.04 27.C2 28.17 30.58 30.41 32.87 33.80 34.56 35.27 35.92 37.19 39.75 41.25 43.43 46.17 50.34 54.02 56.76 59.00 64.25 70.23 75.16 78.79 83,67 89.67 98.92 96.41 98.39 99.19 99.52 99.55 99.88 98.75 99.68 99.86 92.32 101.96 101.43 102.34 101.89 105.63 105.98 105.49 101.69 103.47 105.94 107.39 108.87 110.44 "Monthly data are seasonally adjusted. 1 Includes persons under the State, UCFE (Federal employee, effective January 1955), and RRB (Railroad Retirement Board) programs. Beginning October 1958, also includes the UCX program (unemployment compensation for ex-servicemen). 2 Includes State, UCFE, RR, UCX, UCV (unemployment compensation for veterans, October 1952-January 1960), and SRA (Servicemen's Readjustment Act, September 1944-September 1951) programs. Also includes Federal and State extended benefit programs. Does not include FSB (Federal supplemental benefits) and SUA (special unemployment assistance) programs. 3 Covered workers who have completed at least 1 week of unemployment. 4 Annual data are net amounts and monthly data are gross amounts. 5 Individuals receiving final payments in benefit year. 6 For total unemployment only. 7 Programs include Puerto Rican sugarcane workers for initial claims and insured unemployment beginning July 1963. 8 Latest data available for all programs combined. Workers covered by State programs account for about 97 percent of wage and salary earners. Source: Department of Labor, Employment and Training Administration. 274 TABLE B-37.— Wage and salary workers in nonagricultural establishments, 1929-81 [Thousands of persons; monthly data seasonally adjusted] Year or month Total wage and salary workers Manufacturing Total Durable goods Non- Mining Construction durable goods Transpor- Wholetation sale and and public retail trade utilities Finance, insurance, Services and real estate Government Federal State and local 1929 1933 1939 1940 1941 1942 1943 1944 1945 1946 1947 1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 31,324 23699 30,603 32,361 36,539 40,106 42,434 41,864 40,374 41,652 43,857 44,866 43,754 45,197 47,819 48,793 50,202 48,990 50,641 52,369 52,853 51,324 53,268 54,189 53,999 55,549 56,653 58,283 60,765 63,901 65,803 67,897 70,384 70,880 71,214 73,675 76,790 78,265 76,945 79,382 82,471 86,697 89,823 10,702 7,397 10,278 10,985 13,192 15,280 17,602 17,328 15,524 14,703 15,545 15,582 14,441 15,241 16,393 16,632 17,549 16,314 16,882 17,243 17,174 15,945 16,675 16,796 16,326 16,853 16,995 17,274 18,062 19,214 19,447 19,781 20,167 19,367 18,623 19,151 20,154 20,077 18,323 18,997 19,682 20,505 21,040 4,715 5,363 6,968 8,823 11,084 10,856 9,074 7,742 8,385 8,326 7,489 8,094 9,089 9,349 10,110 9,129 9,541 9,833 9,855 8,829 9,373 9,459 9,070 9,480 9,616 9,816 10,405 11,282 11,439 11,626 11,895 11,208 10,636 11,049 11,891 11,925 10,688 11,077 11,597 12,274 12,760 5,564 5,622 6,225 6,458 6,518 6,472 6,450 6,962 7,159 7,256 6,953 7,147 7,304 7,284 7,438 7,185 7,341 7,411 7,321 7,116 7,303 7,337 7,256 7,373 7,380 7,458 7,656 7,930 8,007 8,155 8,272 8,158 7,987 8,102 8,262 8,152 7,635 7,920 8,086 8,231 8,280 1,087 744 854 925 957 992 925 892 836 862 955 994 930 901 929 898 866 791 792 822 828 751 732 712 672 650 635 634 632 627 613 606 619 623 609 628 642 697 752 779 813 851 958 1512 824 1,165 1,311 1,814 2,198 1,587 1,108 1,147 1,683 2,009 2,198 2,194 2,364 2,637 2,668 2,659 2,646 2,839 3,039 2,962 2,817 3,004 2,926 2,859 2,948 3,010 3,097 3,232 3,317 3,248 3,350 3,575 3,588 3,704 3,889 4,097 4,020 3,525 3,576 3,851 4,229 4,463 3916 2672 2,936 3,038 3,274 3,460 3,647 3,829 3,906 4,061 4,166 4,189 4,001 4,034 4,226 4,248 4,290 4,084 4,141 4,244 4,241 3,976 4,011 4,004 3,903 3,906 3,903 3,951 4,036 4,158 4,268 4,318 4,442 4,515 4,476 4,541 4,656 4,725 4,542 4,582 4,713 4,923 5,136 6,123 4,755 6,426 6,750 7,210 7,118 6,982 7,058 7,314 8,376 8,955 9,272 9,264 9,386 9,742 10,004 10,247 10,235 10,535 10,858 10,886 10,750 11,127 11,391 11,337 11,566 11,778 12,160 12,716 13,245 13,606 14,099 14,705 15,040 15,352 15,949 16,607 16,987 17,060 17,755 18,516 19,542 20,192 1494 1280 1,447 1,485 1,525 1,509 1,481 1,461 1,481 1,675 1,728 1,800 1,828 1,888 1,956 2,035 2,111 2,200 2,298 2,389 2,438 2,481 2,549 2,629 2,688 2,754 2,830 2,911 2,977 3,058 3,185 3,337 3,512 3,645 3,772 3,908 4,046 4,148 4,165 4,271 4,467 4,724 4,975 3,425 2861 3,502 3,665 3,905 4,066 4,130 4,145 4,222 4,697 5,025 5,181 5,240 5,357 5,547 5,699 5,835 5,969 6,240 6,497 6,708 6,765 7,087 7,378 7,620 7,982 8,277 8,660 9,036 9,498 10,045 10,567 11,169 11,548 11,797 12,276 12,857 13,441 13,892 14,551 15,303 16,252 17,112 533 565 905 996 1,340 2,213 2,905 2,928 2,808 2,254 1,892 1,863 1,908 1,928 2,302 2,420 2,305 2,188 2,187 2,209 2,217 2,191 2,233 2,270 2,279 2,340 2,358 2,348 2,378 2,564 2,719 2,737 2,758 2,731 2,696 2,684 2,663 2,724 2,748 2,733 2,727 2,753 2,773 2,532 2,601 3,090 3,206 3,320 3,270 3,175 3,116 3,137 3,341 3,582 3,787 3,948 4,098 4,087 4,188 4,340 4,563 4,727 5,069 5,399 5,648 5,850 6,083 6,315 6,550 6,868 7,248 7,696 8,220 8,672 9,102 9,437 9,823 10,185 10,649 11,068 11,446 11,937 12,138 12,399 12,919 13,174 1980 1981 * 90,564 91,542 20,300 20,262 12,181 12,137 8,118 8,125 1,020 1,104 4,399 4,307 5,143 5,150 20,386 20,737 5,168 5,331 17,901 18,597 2,866 2,772 13,383 13,282 Jan Feb Mar Apr May June 90,687 90,865 90,871 90,817 90,446 90,087 20,836 20,801 20,773 20,545 20,262 20,033 12,591 12,614 12,603 12,387 12,136 11,973 8,245 8,187 8,170 8,158 8,126 8,060 993 1,000 1,003 1,009 1,018 1,024 4,556 4,562 4,462 4,417 4,382 4,345 5,185 5,176 5,174 5,173 5,156 5,129 20,337 20,400 20,374 20,328 20,316 20,266 5,090 5,102 5,119 5,128 5,143 5,156 17,582 17,667 17,720 17,760 17,813 17,816 2,790 2,824 2,882 3,100 2,960 2,951 13,318 13,333 13,364 13,357 13,396 13,367 July Aug 89,960 90,219 90,461 90,668 90,844 90,949 19,877 19,990 20,060 20,110 20,188 20,175 11,859 11,907 11,968 12,013 12,090 12,077 8,018 8,083 8,092 8,097 8,098 8,098 1,004 1,008 1,023 1,032 1,052 1,069 4,270 4,324 4,362 4,379 4,389 4,387 5,119 5,126 5,124 5,129 5,114 5,118 20,355 20,413 20,450 20,461 20,464 20,470 5,173 5,188 5,206 5,221 5,235 5,254 17,940 17,981 18,043 18,087 18,160 18,240 2,893 2,808 2,784 2,795 2,796 2,800 13,329 13,381 13,409 13,454 13,446 13,436 Jan Feb Mar Apr May June 91,091 91,258 91,347 91,458 91,564 91,615 20,174 20,177 20,191 20,332 20,414 20,424 12,084 12,074 12,099 12,207 12,254 12,278 8,090 8,103 8,092 8,125 8,160 8,146 1,083 1,091 1,098 950 957 1,110 4,390 4,389 4,416 4,418 4,334 4,284 5,124 5,135 5,139 5,161 5,148 5,149 20,529 20,600 20,635 20,636 20,714 20,717 5,268 5,283 5,293 5,316 5,326 5,331 18,300 18,343 18,371 18,475 18,540 18,560 2,799 2,795 2,781 2,767 2,779 2,781 13,424 13,445 13,423 13,403 13,352 13,259 July Aug Sept Oct Nov Decp 91,880 91,901 92,033 91,798 91,522 91,096 20,535 20,505 20,496 20,227 20,017 19,750 12,333 12,332 12,311 12,108 11,932 11,727 8,202 8,173 8,185 8,119 8,085 8,023 1,132 1,151 1,162 1,164 1,172 1,176 4,272 4,275 4,272 4,260 4,229 4,191 5,167 5,170 5,186 5,164 5,147 5,109 20,796 20,862 20,872 20,910 20,838 20,725 5,344 5,354 5,366 5,359 5,355 5,367 18,642 18,667 18,774 18,782 18,838 18,848 2,777 2,770 2,765 2,756 2,748 2,738 13,215 13,147 13,140 13,176 13,178 13,192 1980: 1Nov1'.:::: Dec 1981: Note.—Data in Tables B-37 through B-39 are based on reports from employing establishments and relate to full- and part-time wage and salary workers in nonagricultural establishments who worked during or received pay for any part of the pay period which includes the 12th of the month. Not comparable with labor force data (Tables B-29 through B-35), which include proprietors, self-employed persons, domestic servants, and unpaid family workers; which count persons as employed when they are not at work because of industrial disputes, bad weather, etc., even if they are not paid for the time off; and which are based on a sample of the working-age population. For description and details of the various establishment data, see "Employment and Earnings." Source: Department of Labor, Bureau of Labor Statistics. 275 TABLE B-38.—Average weekly hours and hourly earnings in selected private nonagricultural industries, 1947-81 [For production or nonsupervisory workers; monthly data seasonally adjusted] Average gross hourly earnings, current dollars Average weekly hours Wholesale and retail trade Total private nonagricultural » Manufacturing 38.2 38.1 37.7 40.5 40.4 40.5 $1.131 1.225 1.275 $1.216 1.327 1.376 $1.540 1.712 1.792 40.5 40.6 40.7 40.5 39.6 37.4 38.1 38.9 37.9 37.2 40.5 40.5 40.0 39.5 39.5 1.335 1.45 1.52 1.61 1.65 1.439 1.56 1.64 1.74 1.78 39.6 39.3 38.8 38.5 39.0 40.7 40.4 39.8 39.2 40.3 37.1 37.5 37.0 36.8 37.0 39.4 39.1 38.7 38.6 38.8 1.71 1.80 1.89 1.95 2.02 1960 1961 1962 1963 1964 38.6 38.6 38.7 38.8 38.7 39.7 39.8 40.4 40.5 40.7 36.7 36.9 37.0 37.3 37.2 38.6 38.3 38.2 38.1 37.9 1965 1966 1967 1968 1969 38.8 38.6 38.0 37.8 37.7 41.2 41.4 40.6 40.7 40.6 37.4 37.6 37.7 37.3 37.9 1970 1971 1972 1973 1974 37.1 36.9 37.0 36.9 36.5 39.8 39.9 40.5 40.7 40.0 1975 1976 1977 1978 1979. 36.1 36.1 36.0 35.8 35.7 Year or month Total private nonagricultural* Manufacturing 1947 1948 1949 40.3 40.0 39.4 40.4 40.0 39.1 1950 1951 1952 1953 1954 39.8 39.9 39.9 39.6 39.1 1955 1956 1957 1958 1959 Construction Construction Wholesale and retail trade Adjusted hourly earnings, total private nonagricultural 2 Index, 1977 = 100 Percent change from a year earlier 4 Current dollars 1977 dollars 3 Current dollars 1977 dollars $0.940 1.010 1.060 21.6 23.4 24.5 58.5 58.9 62.3 8.3 4.7 0.7 5.8 1.863 2.02 2.13 2.28 2.38 1.100 1.18 1.23 1.30 1.35 25.4 27.3 28.7 30.3 31.3 64.0 63.6 65.5 68.7 70.5 3.7 7.5 5.1 5.6 3.3 2.7 -.6 3.0 4.9 2.6 1.85 1.95 2.04 2.10 2.19 2.45 2.57 2.71 2.82 2.93 1.40 1.47 1.54 1.60 1.66 32.4 34.0 35.7 37.2 38.5 73.3 75.9 76.9 78.0 80.0 3.5 4.9 5.0 4.2 3.5 4.0 3.5 1.3 1.4 2.6 2.09 2.14 2.22 2.28 2.36 2.26 2.32 2.39 2.45 2.53 3.07 3.20 3.31 3.41 3.55 1.71 1.76 1.83 1.89 1.97 39.8 41.0 42.4 43.6 44.8 81.4 83.0 85.0 86.3 87.5 3.4 3.0 3.4 2.8 2.8 1.8 2.0 2.4 1.5 1.4 37.7 37.1 36.6 36.1 35.7 2.46 2.56 2.68 2.85 3.04 2.61 2.71 2.82 3.01 3.19 3.70 3.89 4.11 4.41 4.79 2.04 2.14 2.25 2.41 2.56 46.4 48.4 50.8 53.9 57.5 89.0 90.3 92.2 94.0 95.0 3.6 4.3 5.0 6.1 6.7 1.7 1.5 2.1 2.0 1.1 37.3 37.2 36.5 36.8 36.6 35.3 35.1 34.9 34.6 34.2 3.23 3.45 3.70 3.94 4.24 3.35 3.57 3.82 4.09 4.42 5.24 5.69 6.06 6.41 6.81 2.72 2.88 3.05 3.23 3.48 61.3 65.7 69.8 74.1 80.0 95.7 98.3 101.2 101.1 98.3 6.6 7.2 6.2 6.2 8.0 .7 2.7 3.0 -.1 -2.8 39.5 40.1 40.3 40.4 40.2 36.4 36.8 36.5 36.8 37.0 33.9 33.7 33.3 32.9 32.6 4.53 4.86 5.25 5.69 6.16 4.83 5.22 5.68 6.17 6.70 7.31 7.71 8.10 8.66 9.27 3.73 3.97 4.28 4.67 5.06 86.7 92.9 100.0 108.1 116.8 97.6 99.0 100.0 100.5 97.4 8.4 7.2 7.6 8.1 8.0 -.7 1.4 1.0 .5 -3.1 35.3 35.2 39.7 39.8 37.0 36.8 32.2 32.1 6.66 7.25 7.27 7.98 9.92 10.75 5.48 5.92 127.3 93.5 9.0 -4.0 Jan Feb Mar Apr May June 35.4 35.4 35.3 35.3 35.2 35.2 40.1 40.0 39.7 39.8 39.5 39.3 37.2 37.1 36.4 36.9 36.8 37.0 32.5 32.4 32.3 32.1 32.1 32.0 6.39 6.44 6.51 6.54 6.57 6.64 6.94 6.99 7.07 7.11 7.16 7.22 9.44 9.63 9.71 9.76 9.80 9.87 5.28 5.30 5.37 5.39 5.42 5.46 121.7 122.8 124.1 124.7 125.8 127.0 94.3 93.9 93.7 93.3 93.4 93.4 7.9 8.2 8.8 8.5 9.0 9.4 -5.3 -5.3 -5.1 -5.3 -4.6 -4.3 July Aug Sept Oct Nov Dec 35.1 35.2 35.3 35.3 35.3 35.3 39.2 39.5 39.6 39.7 39.8 39.9 36.8 36.6 37.3 37.1 37.2 37.1 32.0 32.1 32.1 32.1 32.2 32.1 6.66 6.72 6.76 6.83 6.90 6.94 7.29 7.36 7.41 7.49 7.59 7.63 9.93 10.02 10.05 10.15 10.21 10.30 5.50 5.54 5.57 5.61 5.66 5.69 127.6 128.7 129.4 130.6 132.1 132.6 93.8 93.9 93.3 93.2 93.3 92.7 9.2 9.3 8.9 9.7 9.9 9.3 -3.4 -3.0 -3.2 -2.6 -2.5 -2.8 35.3 35.2 35.3 35.4 35.3 35.2 40.1 39.8 39.9 40.2 40.3 40.1 38.3 36.4 37.4 37.1 36.8 36.3 32.2 32.2 32.2 32.3 32.1 32.1 6.99 7.04 7.09 7.14 7.18 7.23 7.69 7.74 7.80 7.90 7.95 7.99 10.39 10.44 10.49 10.52 10.57 10.69 5.72 5.78 5.81 5.84 5.89 5.91 133.8 135.0 135.8 136.7 137.7 138.4 92.8 92.7 92.8 93.0 93.1 92.9 10.0 9.9 9.5 9.6 9.5 9.0 -1.6 -1.3 -.9 35.3 35.2 34.9 35.0 35.0 34.9 40.0 40.0 39.3 39.5 39.3 39.0 36.9 36.6 35.0 36.5 37.4 37.0 32.2 32.1 32.1 31.9 32.0 31.9 7.26 7.34 7.37 7.39 7.45 7.44 8.02 8.08 8.14 8.14 8.18 8.18 10.77 10.85 10.88 10.99 11.09 11.16 5.93 5.99 6.05 6.02 6.05 6.07 139.0 140.7 141.5 141.9 143.2 143.3 92.2 92.7 92.1 92.0 92.4 92.1 8.9 9.3 9.3 8.6 8.4 8.1 -1.7 -1.3 -1.3 -1.3 -.8 -.6 1980 1981p ... 1980: 1981: Jan Feb Mar fc= June July Aug Sept Oct Nov Dec" :. 1 Also includes other private industry groups shown in Table B-37. 2 Adjusted for overtime (in manufacturing only) and for interindustry 3 -'.5 employment shifts. Current-dollar earnings index divided by the consumer price index for urban wage earners and clerical workers on a 1977= base. 4 Monthly data are computed from indexes to two decimal places and are based on data not seasonally adjusted. Note.—See Note, Table B-37. Source: Department of Labor, Bureau of Labor Statistics. 276 100 TABLE B-39.—Average weekly earnings in selected private nonagricultural industries, 1947-81 [For production or nonsupervisory workers; monthly data seasonally adjusted] Average gross weekly earnings Total private nonagricultural1 Construction (current dollars) Wholesale and retail trade (current dollars) Percent change from a year earlier, total private nonagricultural3 Current dollars 1977 dollars2 Manufacturing (current dollars) $45.58 49.00 50.24 123.52 123.43 127.84 $49.13 53.08 53.80 $58.83 65.23 67.56 $38.07 40.80 42.93 7.5 2.5 -0.1 3.6 1950 1951 1952 1953 1954 53.13 57.86 60.65 63.76 64.52 133.83 134.87 138.47 144.58 145.32 58.28 63.34 66.75 70.47 70.49 69.68 76.96 82.86 86.41 88.54 44.55 47.79 49.20 51.35 53.33 5.8 8.9 4.8 5.1 1.2 4.7 .8 2.7 4.4 .5 1955 1956 1957 1958 1959 67.72 70.74 73.33 75.08 78.78 153.21 157.90 158.04 157.40 163.78 75.30 78.78 81.19 82.32 88.26 90.90 96.38 100.27 103.78 108.41 55.16 57.48 59.60 61.76 64.41 5.0 4.5 3.7 2.4 4.9 5.4 3.1 .1 -.4 4.1 1960 1961 1962 1963 1964 80.67 82.60 85.91 88.46 91.33 164.97 167.21 172.16 175.17 178.38 89.72 92.34 96.56 99.23 102.97 112.67 118.08 122.47 127.19 132.06 66.01 67.41 69.91 72.01 74.66 2.4 2.4 4.0 3.0 3.2 .7 1.4 3.0 1.7 1.8 1965 1966 1967 1968 1969 95.45 98.82 101.84 107.73 114.61 183.21 184.37 184.83 187.68 189.44 107.53 112.19 114.49 122.51 129.51 138.38 146.26 154.95 164.49 181.54 76.91 79.39 82.35 87.00 91.39 4.5 3.5 3.1 5.8 6.4 2.7 .6 .2 1.5 .9 1970 1971 1972 1973 1974 119.83 127.31 136.90 145.39 154.76 186.94 190.58 198.41 198.35 190.12 133.33 142.44 154.71 166.46 176.80 195.45 211.67 221.19 235.89 249.25 96.02 101.09 106.45 111.76 119.02 4.6 6.2 7.5 6.2 6.4 -1.3 1.9 4.1 -.0 -4.1 1975 1976 1977 1978 1979 163.53 175.45 189.00 203.70 219.91 184.16 186.85 189.00 189.31 183.41 190.79 209.32 228.90 249.27 269.34 266.08 283.73 295.65 318.69 342.99 126.45 133.79 142.52 153.64 164.96 5.7 7.3 7.7 7.8 8.0 -3.1 1.5 1.2 .2 -3.1 1980 1981" 235.10 255.20 172.74 170.13 288.62 317.60 367.04 395.60 176.46 190.03 6.9 8.6 -5.8 -1.5 1980 Jan. Feb. Mar. Apr. May June. 226.21 227.98 229.80 230.86 231.26 233.73 175.36 174.43 173.56 172.80 171.69 171.99 278.29 279.60 280.68 282.98 282.82 283.75 351.17 357.27 353.44 360.14 360.64 365.19 171.60 171.72 173.45 173.02 173.98 174.72 6.9 6.6 6.5 8.3 6.4 6.4 -6.1 -6.7 -7.1 -5.5 -6.9 -6.9 July. Aug. Sept Oct Nov Dec 233.77 236.54 238.63 241.10 243.57 244.98 171.89 172.53 172.05 172.09 171.89 171.19 285.77 290.72 293.44 297.35 302.08 304.44 365.42 366.73 374.87 376.57 379.81 382.13 176.00 177.83 178.80 180.08 182.25 182.65 5.7 6.4 6.3 7.3 8.2 7.9 -6.4 -5.6 -5.6 -4.7 -3.9 -4.1 Jan Feb. Mar Apr May June. 246.75 247.81 250.28 252.76 253.45 254.50 171.12 170.20 170.96 172.06 171.37 170.92 308.37 308.05 311.22 317.58 320.39 320.40 397.94 380.02 392.33 390.29 388.98 388.05 184.18 186.12 187.08 188.63 189.07 189.71 9.5 9.1 9.2 9.5 9.9 9.2 -2.0 -2.1 -1.2 -.4 .1 -.3 July Aug Sept Oct Nov p Dec 256.28 258.37 257.21 258.65 260.75 259.66 170.06 170.20 167.45 167.74 168.23 166.98 320.80 323.20 319.90 321.53 321.47 319.02 397.41 397.11 380.80 401.14 414.77 412.92 190.95 192.28 194.21 192.04 193.60 193.63 10.0 9.8 8.1 7.7 6.7 6.0 -.7 -.9 -2.5 -2.1 -2.0 -2.5 Year or month 1947., 1948 1949 Current dollars 1977 dollars 1981: 1 Also includes other 2 Earnings in current 3 private industry groups shown in Table B-37. dollars divided by the consumer price index for urban wage earners and clerical workers on a 1977=100 base. Based on unadjusted data. Note.—See Note, Table B-37. Source: Department of Labor, Bureau of Labor Statistics. 277 TABLE B-40.—Productivity and related data, private business sector, 1947-81 [1977=100] Hours of 2all persons Output 1 Year Output per hour of all persons Compensation per hour 3 Unit labor cost Implicit price deflator 4 Private Nonfarm Private Nonfarm Private Nonfarm Private Nonfarm Private Nonfarm Private Nonfarm business business business business business business business business business business business business sector sector sector sector sector sector sector sector sector sector sector sector 1947. 1948. 1949 35.1 37.2 36.5 34.0 36.1 35.4 80.4 80.9 78.3 68.3 69.4 66.8 43.6 46.0 46.7 49.8 51.9 53.0 17.0 18.4 18.7 18.5 20.0 20.6 38.9 40.0 40.1 37.1 38.6 38.9 38.2 40.8 40.4 36.6 39.1 39.5 1950. 1951. 1952 1953. 1954. 39.9 42.2 43.6 45.4 44.6 38.7 41.2 42.6 44.4 43.5 79.2 81.5 81.6 82.4 79.7 68.8 72.0 72.8 74.6 72.1 50.3 51.7 53.4 55.1 56.0 56.2 57.2 58.5 59.5 60.3 20.0 22.0 23.4 24.9 25.7 21.8 23.7 25.0 26.4 27.3 39.8 42.5 43.8 45.2 45.9 38.8 41.5 42.8 44.5 45.2 41.0 44.1 44.6 45.0 45.4 40.2 42.8 43.6 44.4 45.0 1955, 1956, 1957 1958, 1959 48.2 49.4 49.9 49.1 52.7 47.1 48.4 49.0 48.0 51.9 82.7 84.0 82.7 79.0 82.1 75.1 77.0 76.6 73.4 76.6 58.2 58.8 60.3 62.2 64.2 62.7 62.8 63.9 65.5 67.6 26.3 28.1 29.9 31.2 32.5 28.3 29.9 31.7 32.9 34.2 45.2 47.7 49.6 50.2 50.7 45.1 47.7 49.5 50.2 50.5 46.1 47.6 49.3 49.9 50.9 46.0 47.6 49.3 49.8 50.9 1960, 1961. 1962. 1963. 1964, 53.6 54.5 57.5 60.0 63.6 52.6 53.6 56.7 59.2 62.9 82.3 81.0 82.3 82.8 84.2 77.1 76.3 78.0 78.9 80.7 65.1 67.2 69.8 72.4 75.5 68.2 70.2 72.7 75.0 78.0 33.9 35.2 36.8 38.1 40.1 35.6 36.8 38.3 39.6 41.4 52.1 52.3 52.7 52.7 53.1 52.3 52.4 52.6 52.8 53.1 51.7 51.9 52.7 53.3 53.8 51.7 52.0 52.7 53.4 54.0 1965, 1966, 1967. 1968. 1969, 67.9 71.6 73.2 76.9 79.2 67.3 71.3 72.8 76.7 78.9 86.8 88.9 88.8 90.3 92.7 83.7 86.5 86.7 88.5 91.3 78.2 80.6 82.4 85.2 85.4 80.4 82.4 83.9 86.7 86.4 41.7 44.6 47.0 50.6 54.2 42.8 45.4 47.8 51.4 54.8 53.3 55.3 57.0 59.5 63.5 53.2 55.1 57.0 59.3 63.4 54.8 56.5 58.0 60.3 63.3 54.9 56.4 58.2 60.5 63.4 1970. 1971. 1972. 1973. 1974. 78.5 80.9 86.2 92.0 90.2 78.1 80.4 85.9 91.9 90.1 91.2 90.7 93.4 97.0 97.4 90.0 89.7 92.5 96.4 96.8 86.1 89.2 92.4 94.8 92.7 86.7 89.6 93.0 95.3 93.1 58.2 62.0 66.0 71.3 78.0 58.6 62.5 66.6 71.7 78.4 67.6 69.5 71.5 75.2 84.2 67.6 69.7 71.7 75.2 84.3 66.2 69.1 71.5 75.3 82.4 66.4 69.4 71.4 74.1 81.6 1975. 1976. 1977. 1978. 1979. 88.5 94.1 100.0 104.7 107.7 88.1 94.0 100.0 104.9 107.7 93.4 96.1 100.0 104.9 108.2 92.7 95.9 100.0 105.1 108.7 94.8 97.9 100.0 99.8 99.5 95.0 98.1 100.0 99.8 99.1 85.5 92.9 100.0 108.4 119.3 86.0 93.0 100.0 108.5 119.0 90.2 94.8 100.0 108.6 119.9 90.5 94.8 100.0 108.7 120.0 90.4 94.7 100.0 107.4 116.9 89.9 94.5 100.0 107.0 116.2 106.8 108.9 106.8 108.7 107.5 108.5 108.1 109.1 99.3 100.4 98.8 99.7 131.5 144.6 130.8 143.9 132.4 144.1 132.4 144.4 127.6 139.3 127.4 139.6 107.7 107.1 107.7 108.2 107.9 107.1 107.8 108.2 108.1 107.4 108.4 109.1 108.4 108.0 109.0 109.4 99.7 99.7 99.4 99.1 99.5 99.1 98.9 98.8 115.0 118.1 120.7 123.2 114.9 117.7 120.2 123.0 115.4 118.5 121.4 124.3 115.4 118.7 121.5 124.4 113.4 115.8 118.1 120.2 112.6 115.1 117.4 119.7 108.7 105.4 105.7 107.5 108.5 105.1 105.8 107.7 109.2 106.4 106.3 108.4 109.7 107.0 106.9 108.8 99.5 99.1 99.4 99.1 98.9 98.2 99.0 99.0 126.4 130.1 133.1 135.9 126.0 129.4 132.3 135.4 127.0 131.3 133.9 137.1 127.4 131.8 133.6 136.8 123.0 126.1 129.1 132.2 122.9 126.3 128.8 131.9 109.5 109.5 109.4 107.3 109.7 109.4 109.0 106.7 109.2 108.2 108.4 108.4 109.7 109.0 109.1 108.8 100.3 101.2 100.9 99.0 100.0 100.4 99.9 98.0 139.8 143.3 146.5 148.5 139.2 142.4 145.7 148.0 139.4 141.6 145.2 150.0 139.1 141.9 145.8 151.0 135.4 137.5 140.9 143.5 135.3 137.5 141.2 144.3 . 1980. 198F.. 1979: 1. II. III. IV, 1980: 1 II. Ill IV 1981: 1. II III IV 1 Output 2 refers to gross domestic product originating in the sector in 1972 dollars. Hours of all persons engaged in the sector, including hours of proprietors and unpaid family workers. Estimates based primarily on establishment data. 3 Wages and salaries of employees plus employers' contributions for social insurance and private benefit plans. Also includes an estimate of wages, salaries, and supplemental payments for the self-employed. 4 Current dollar gross domestic product divided by constant dollar gross domestic product. Source: Department of Labor, Bureau of Labor Statistics. 278 TABLE B-41.—Changes in productivity and related data, private business sector, 1948-81 [Percent change from preceding period] 1948. 1949 1950 1951. 1952. 1953. 1954. 1955 1956. 1957. 1958. 1959. 6.1 -1.9 9.1 5.8 3.3 4.3 -1.8 7.9 2.6 1.0 -1.6 7.3 6.0 -1.9 9.4 6.5 3.4 4.2 -2.0 8.2 2.8 1.2 -1.9 7.9 1.6 1.7 5.5 4.3 6.0 1.5 1.8 5.8 4.4 6.4 1965. 1966 1967. 1968. 1969. 6.8 5.5 2.2 5.1 2.9 6.9 5.9 2.1 5.3 2.9 1970. 1971. 1972 1973. 1974. -.8 3.0 6.6 6.6 1980. 1981'.. 1979 1 II III IV IV -1.0 2.9 6.9 6.9 -1.9 -1.9 -1.9 -2.2 6.3 6.3 4.7 2.8 -.8 1.9 4.0 -2.2 2.4 1.7 1980 1 II III Compensation per hour 3 Unit labor cost Implicit price deflator* Private Nonfarm Private Nonfarm Private Nonfarm Private Nonfarm Private Nonfarm Private Nonfarm business business business business business business business business business business business business sector sector sector sector sector sector sector sector sector sector sector sector 1960 1961. 1962 1963. 1964. 1975. 1976 1977. 1978 1979. Output per hour of all persons Hours of all persons 2 Output 1 Year 1.8 -11.5 11 6.9 6.7 6.4 4.9 2.7 g L8 4.1 -3.0 2.6 1.5 1.4 -12.1 29 7.1 5.3 1.5 4.3 2.0 8.5 1.6 8.6 2.9 3.0 .1 4.1 .9 7.9 2.8 3.2 3.2 1.6 6.0 1.7 2.3 1.7 1.4 7.1 9.8 6.4 6.4 3.2 5.8 8.8 5.5 5.6 3.2 -.8 6.9 3.0 3.1 1.6 -.2 6.9 3.1 3.9 1.7 1.6 7.4 1.1 .9 1.0 1.7 6.6 1.8 2.0 1.4 4.0 1.0 2.5 3.1 3.2 3.9 .3 1.7 2.4 3.4 2.5 6.5 6.5 4.4 4.3 3.6 6.0 5.7 3.8 4.0 5.5 3.9 1.3 1.0 -.3 5.7 3.9 1.4 .6 1.6 3.3 3.5 1.3 2.0 2.2 3.5 3.6 .9 2.3 1.6 .6 1.6 2.2 1.1 2.4 1.5 3.3 3.8 3.7 4.3 .8 2.9 3.6 3.2 3.9 4.2 3.8 4.6 3.7 5.2 4.3 3.2 4.0 3.5 4.5 2.7 .5 .7 .0 .8 3.5 .3 .4 .2 .6 1.4 .6 1.5 1.1 1.0 1.5 .6 1.5 1.2 1.2 3.2 2.3 .0 1.7 2.6 3.7 3.4 .3 2.0 3.2 3.5 3.1 2.2 3.3 .2 3.1 2.5 1.9 3.3 -.3 3.9 7.0 5.3 7.8 7.0 3.4 6.0 5.5 7.5 6.5 .3 3.8 3.0 4.4 6.7 .3 3.5 3.5 4.1 6.8 1.9 3.0 2.7 4.0 4.9 1.6 2.8 3.2 4.0 4.7 .9 3.6 3.5 2.7 .3 3.3 3.7 2.5 7.4 6.6 6.5 8.0 9.4 7.0 6.6 6.7 7.6 9.4 6.4 2.9 2.9 5.2 6.6 3.1 2.8 4.9 4.8 4.5 3.0 3.7 11.9 12.1 4.5 4.4 3.4 5.4 9.4 9.6 8.6 7.7 8.4 9.6 8.1 7.6 8.5 9.7 7.2 5.1 5.5 8.6 7.4 4.7 5.5 8.7 10.4 10.4 9.9 10.4 10.3 0.7 -3.3 1.1 2.9 .1 1.0 -3.3 3.8 1.5 -1.5 -4.5 3.9 .2 -1.5 -1.7 — 5 3!o 3.9 .4 1.6 -3.8 3.1 4.6 1.0 2.5 -3.4 4.1 2.5 -.5 -4.2 4.4 .6 -1.1 -1.4 -.4 3.1 4.2 .4 -2.3 2.9 4.0 4.9 3.1 3.4 4.3 5.1 3.4 2.3 3.3 2.1 -.2 -.3 -.6 .9 -.6 .9 -.2 1.0 -4.1 4.8 -2.3 3.6 2.8 -4.2 5.0 -1.5 3.7 1.8 -.8 .1 -1.2 -1.0 .2 1.1 -9.9 _ 2 -9.5 _ 7 -1.8 8.1 7.3 -1.1 -2.4 13 2.1 3.2 2.0 2 -7 10.1 -.3 .9 10.2 10.0 10.1 8.9 -.9 11.6 11.3 10.9 10.4 8.9 8.6 8.6 9.7 12.4 11.2 10.2 10.8 12.3 10.3 11.3 -1.6 -1.1 -.2 .3 1.6 -1.4 -2.9 36 -.2 95 8.6 90 9.S 9.8 9.1 11.9 12.1 9.7 9.9 7.0 -1.0 10.3 9.2 9.2 9.7 9.5 8.8 8.4 8.2 7.4 8.1 8.9 8.5 7.8 11.3 11.3 9.0 9.9 9.7 14.6 10.5 9.8 10.1 10.1 9.7 4.7 5.6 7.4 8.8 14.4 81 53 6.8 .9 5.1 5.8 7.0 8.6 98 9.9 10.0 82 1981: 1. II III IV 7.9 -.1 -.3 -7.5 7.9 -1.1 -1.4 -8.4 3.0 -3.6 .8 -.2 3.4 -2.5 .4 -.9 4.7 3.5 -1.1 -7.2 1 Output 2 4.4 1.4 -1.8 -7.6 11.9 10.4 9.3 5.7 11.7 9.6 9.5 6.5 6.9 6.6 7.0 8.1 10.0 11.0 10.6 14.0 11.5 15.2 10.4 7.5 11.4 6.2 6.5 8.9 refers to gross domestic product originatini in the sector in 1972 dollars, Hours of all persons engaged in the sector, includ I g hours of proprietors and unpaid family workers. Estimates based primarily on establishment data. 3 Wages and salaries of employees plus employers' contributions for social insurance and private benefit plans. Also includes an estimate of wages, salaries, and supplemental payments for the self-employed. 4 Current dollar gross domestic product divided by constant dollar gross don domestic product. Note.—Percent changes are based on original data and therefore may differ slightly from percent changes based on indexes in Table B-40. Source: Department of Labor, Bureau of Labor Statistics. 279 PRODUCTION AND BUSINESS ACTIVITY TABLE B-42.—Industrial production indexes, major industry divisions, 1929-81 [1967=100; monthly data seasonally adjusted] Year or month Total industrial production Manufacturing mining lltrli Ullll- 35.97 23.2 19.9 26.1 27.5 33.3 34.6 37.1 38.6 38.5 39.7 41.3 42.7 42.0 46.7 48.3 49.2 51.2 51.6 57.2 60.1 61.1 61.6 67.7 69.3 71.5 75.8 80.0 85.2 90.9 96.7 100.0 106.2 111.5 112.3 116.6 126.5 133.8 134.6 126.4 141.8 150.5 156.9 164.0 161.2 164.8 6.36 43.1 30.6 42.1 46.8 49.7 51.3 52.5 56.2 55.1 54.2 61.3 64.4 57.1 63.8 70.0 69.4 71.2 69.9 77.9 82.0 82.1 75.3 78.7 80.3 80.8 83.1 86.4 89.9 93.2 98.2 100.0 104.2 108.3 112.2 109.8 113.1 114.7 115.3 112.8 114.2 118.2 124.0 125.5 132.7 142.4 5.69 7.4 6.7 10.7 11.8 13.3 14.9 16.5 17.5 17.8 18.6 20.1 22.4 23.9 27.2 31.0 33.7 36.5 39.3 43.9 48.2 51.5 53.9 59.3 63.4 67.0 72.0 77.0 83.6 88.7 95.5 100.0 108.4 117.3 124.5 130.5 139.4 145.4 143.7 146.0 151.7 156.5 161.4 166.0 168.3 169.0 144.8 144.4 143.5 138.5 133.3 129.9 128.7 129.9 132.1 135.7 139.2 140.3 166.0 165.8 164.3 161.6 158.1 155.1 154.6 157.6 161.0 162.1 163.0 165.0 133.2 132.9 133.1 132.7 132.7 132.6 130.6 129.6 130.7 132.1 135.1 138.6 163.4 166.3 171.1 167.2 165.2 167.1 169.6 172.6 170.6 167.7 169.9 167.9 151.1 151.2 151.6 152.0 152.8 152.4 141.0 140.8 142.1 142.5 143.5 143.2 165.6 166.2 165.3 165.9 166.4 165.8 140.4 143.1 143.2 135.2 135.4 141.7 167.6 166.4 167.8 167.6 170.7 172.7 153.2 153.2 151.1 148.2 145.1 141.7 143.6 143.4 140.9 137.9 134.4 131.0 167.1 167.3 165.9 163.2 160.5 157.2 146.5 146.0 145.0 145.7 144.0 143.8 173.1 171.9 167.8 168.4 167.9 167.0 Min Total Durable Nondurable 100.00 216 13.7 21.7 25.0 31.6 36.3 44.0 47.4 40.7 35.0 39.4 41.1 38.8 44.9 48.7 50.6 54.8 51.9 58.5 61.1 61.9 57.9 64.8 66.2 66.7 72.2 76.5 81.7 89.8 97.8 100.0 106.3 111.1 107.8 109.6 119.7 129.8 129.3 117.8 130.5 138.2 146.1 152.5 147.0 151.0 87.95 22.8 14.0 21.5 25.4 32.4 37.8 47.0 50.9 42.6 35.3 39.4 40.9 38.7 45.0 48.6 50.6 55.2 51.5 58.2 60.5 61.2 57.0 64.2 65.4 65.6 71.5 75.8 81.0 89.7 97.9 100.0 106.4 111.0 106.4 108.2 118.9 129.8 129.4 116.3 130.3 138.4 146.8 153.6 146.7 150.4 51.98 22.5 9.1 17.7 23.5 31.4 39.9 54.2 59.9 45.2 31.6 37.7 39.3 35.7 43.5 48.9 51.9 58.7 51.8 59.2 61.1 61.6 53.9 61.9 62.9 61.8 68.6 73.1 78.3 89.0 98.9 100.0 106.5 110.6 102.3 102.4 113.7 127.1 125.7 109.3 122.3 130.0 139.7 146.4 136.7 140.5 153.0 152.8 152.1 148.2 143.8 141.4 140.3 142.2 144.4 146.6 149.2 150.4 153.5 153.1 152.0 148.0 143.5 140.2 139.3 141.2 143.9 146.5 148.9 150.4 May June. 151.4 151.8 152.1 151.9 152.7 152.9 July. Aug. Sept Oct Nov ".. Dec ".. 153.9 153.6 151.6 149.2 146.4 143.3 1967 proportion 1929 1933. 1939. 1940. 1941. 1942. 1943. 1944. 1945. 1946. 1947. 1948. . 1949. 1950. 1951. 1952. 1953. 1954. 1955. 1956. 1957. 1958. 1959. 1960. 1961. 1962. 1963. 1964. 1965. 1966. 1967. 1968. 1969. 1970. . 1971, 1972. 1973. 1974. 1975. 1976. 1977. 1978. 1979. 1980. 19811 ties 1980: Jan. Feb.. Mar. Apr May.. June. July. Aug. Sept Oct Nov. Dec. 1981 Jan. Feb., Mar. 1 Preliminary estimates by Council of Economic Advisers. Source: Board of Governors of the Federal Reserve System. 280 TABLE B-43.—Industrial production indexes, market groupings, 1947-81 [1967=100; monthly data seasonally adjusted] Materials3 Final products Year or month 1967 proportion Total industrial production Total Automotive products Intermediate products Business Equipment Consumer goods ' Total Home goods Total 2 Total Dura- Nonble durable goods goods 100.00 47.82 27.68 2.83 5.06 20.14 12.63 12.89 39.29 20.35 10.47 39.4 41.1 38.8 44.9 48.7 50.6 54.8 51.9 58.5 61.1 61.9 57.9 64.8 66.2 66.7 72.2 765 81.7 89.8 97.8 100.0 106.3 111.1 107.8 109.6 119.7 129.8 129.3 117.8 130.5 138.2 146.1 152.5 147.0 151.0 38.6 40.0 38.8 43.7 47.2 50.7 54.1 51.3 55.4 58.6 60.3 57.6 63.2 65.3 65.8 71.4 75.5 79.7 87.6 95.9 100.0 106.2 109.6 105.3 106.3 115.7 124.4 125.1 118.2 127.6 135.9 142.2 147.2 145.3 149.5 42.4 43.7 43.4 49.6 49.1 50.2 53.2 52.9 59.0 61.2 62.6 62.1 68.1 70.7 72.2 77.1 81.3 85.9 92.6 97.3 100.0 105.9 109.8 109.0 114.7 124.4 131.5 128.9 124.0 137.1 145.3 149.1 150.8 145.4 148.0 45.3 47.4 47.0 59.1 52.3 47.1 59.5 55.4 73.6 60.6 63.5 50.5 63.3 72.5 66.1 80.1 87.7 91.9 113.3 112.8 100.0 119.4 118.1 98.8 124.4 141.4 153.0 132.8 125.8 155.7 175.6 179.9 167.7 132.8 138.1 37.5 39.1 36.2 49.9 43.0 43.0 48.6 44.9 53.0 55.7 54.5 51.4 59.0 59.4 61.3 66.5 71.8 78.4 88.9 97.9 100.0 106.4 113.2 110.2 115.6 129.5 142.5 136.8 118.8 134.1 141.9 147.7 149.2 138.9 142.0 30.6 32.2 28.7 31.1 43.3 51.9 56.3 49.3 50.4 55.3 57.5 51.5 56.5 58.1 57.3 63.7 67.5 71.4 80.7 94.0 100.0 106.5 109.3 100.1 94.7 103.8 114.5 120.0 110.2 114.6 123.0 132.8 142.2 145.2 151.6 38.0 39.5 34.5 37.0 45.2 51.2 53.3 46.8 50.8 58.8 61.1 51.5 57.9 59.4 57.7 62.7 65.8 73.7 84.4 97.7 100.0 105.5 112.5 107.0 104.1 118.0 134.2 142.4 128.2 135.4 147.8 160.3 171.3 173.2 180.8 41.9 44.3 42.0 48.8 51.3 50.9 54.5 54.3 61.7 64.4 64.4 63.0 69.5 70.0 71.4 75.7 79.9 85.2 90.6 96.2 100.0 106.3 112.9 112.9 116.7 126.5 137.2 135.3 123.1 137.2 145.1 154.1 160.5 151.9 154.6 39.5 41.2 37.6 45.0 49.8 50.5 56.1 51.8 61.3 62.8 62.8 56.5 65.2 66.1 66.2 72.1 76.7 82.9 92.4 100.7 100.0 106.5 112.5 109.2 111.3 122.3 133.9 132.4 115.5 131.7 138.6 148.3 156.4 147.6 151.5 38.3 39.4 35.3 44.4 50.5 51.6 60.3 52.0 63.7 63.9 63.8 53.7 64.0 64.8 63.3 70.4 75.1 81.9 93.8 103.3 100.0 106.2 112.1 103.8 104.9 117.7 134.6 132.7 109.1 128.0 136.1 149.0 157.8 143.0 149.2 45.9 52.5 54.9 54.7 54.4 62.1 63.2 65.8 71.3 75.6 82.2 90.3 97.5 100.0 108.8 115.7 115.4 120.2 132.9 142.2 142.6 126.6 147.8 155.6 165.6 175.9 171.5 174.6 153.0 152.8 152.1 148.2 143.8 141.4 140.3 142.2 144.4 146.6 149.2 150.4 147.2 147.7 147.5 145.4 142.9 142.2 142.4 143.3 144.1 145.7 147.4 147.8 147.9 148.2 148.0 145.2 142.1 141.8 142.1 142.9 144.5 146.3 148.1 147.1 132.6 143.2 140.9 126.9 118.6 121.3 127.5 120.7 131.2 140.9 146.1 139.0 148.8 146.2 146.2 141.8 134.5 131.8 128.3 132.6 134.7 137.8 141.8 142.6 146.1 147.1 146.8 145.8 144.0 142.8 142.8 143.7 143.6 144.8 146.5 148.8 175.2 176.5 176.2 174.5 171.8 169.7 169.5 171.1 170.7 171.9 173.9 177.1 160.9 159.2 158.5 150.3 145.5 143.7 144.6 148.9 151.2 152.4 153.4 155.4 157.6 156.9 155.7 150.9 144.2 139.8 136.4 138.8 142.5 145.9 150.1 152.2 156.3 155.2 154.6 147.9 140.0 134.2 129.0 131.3 133.9 139.5 146.1 147.4 182.2 180.8 177.7 173.3 165.4 159.5 157.1 161.3 171.3 174.3 175.1 179.6 151.4 151.8 152.1 151.9 152.7 152.9 153.9 153.6 151.6 149.2 146.4 143.3 147.8 148.2 149.0 149.9 151.3 151.4 152.1 151.5 150.0 149.1 147.5 145.5 146.9 147.8 148.3 148.9 150.7 150.3 150.7 149.6 147.8 146.9 145.0 142.3 130.4 133.9 139.2 142.9 151.8 153.1 147.6 137.6 139.1 132.8 122.4 120.4 145.6 145.2 146.1 145.0 144.8 145.0 145.8 145.3 141.1 138.2 133.9 126.7 149.1 148.7 150.0 151.4 152.1 153.0 154.1 154.0 152.9 152.2 151.0 149.9 177.7 177.5 179.3 181.0 182.0 183.6 184.8 184.4 182.7 180.5 178.4 176.3 157.5 157.7 157.1 156.3 156.1 154.9 156.2 156.8 154.6 151.4 149.2 147.0 153.8 154.3 154.4 152.9 153.4 154.0 155.3 155.2 152.5 148.5 144.1 139.5 150.0 150.6 152.2 151.8 152.8 152.4 153.6 154.3 150.4 145.6 140.4 134.9 180.2 179.9 177.5 179.3 179.0 176.9 176.5 175.4 175.5 170.6 164.4 158.5 1947. 1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 4 1981 . 1980 Jan Feb Mar. Apr May June. July. Aug. Sept Oct Nov. Dec. 1981 Jan Feb Mar. Apr May June. July. Aug. Sept. Oct Nov.. Dec ".. 1 Also includes clothing and consumer staples, not shown separately. Also includes defense and space equipment, not shown separately. Also includes energy materials, not shown separately. 4 Preliminary estimates by Council of Economic Advisers. Source: Board of Governors of the Federal Reserve System. 2 3 281 TABLE B-44.—Industrial production indexes, selected manufactures, 1947-81 [1967 = 100; monthly data seasonally adjusted] Durable manufactures Year or month Primary metals Total Iron and steel Fabricated metal products NonElectrielecral Cdl trical machinmachinery ery Nondurable manufactures Transportation equipment Total Motor vehicles and parts 4.50 Lumber Apparel Printing Chemicals and dilU and prod- publishand products proding ucts ucts Foods 1.64 3.31 4.72 7.74 8.75 58.9 57.8 43.3 19.7 55.8 1967 proportion 6.57 5.93 9.15 8.05 9.27 1947 1948 1949 63.3 49.9 39.0 31.8 658 508 392 22.2 230 348 613 603 454 213 55.4 45.8 33.4 21.6 34.9 54.1 59.7 46.6 21.0 55.9 1950 1951 1952 1953 1954 69.7 56.1 477 29.6 41.8 65.7 64.3 48.9 26.2 758 599 37.5 57.9 69.2 78.5 63.5 70.1 58.5 66.0 59.4 51.9 54.0 46.1 34.0 39.0 34.7 54.2 68.0 59.2 60.5 64.7 68.4 68.0 66.3 67.2 66.4 49.7 52.0 54.1 31.1 33.6 34.1 60.2 61.4 62.7 1955 1956 1957 1958 1959 82.5 82.0 78.5 62.3 72.7 93.2 91.5 88.2 66.5 76.5 67.8 68.8 70.6 63.3 71.0 50.6 58.0 57.9 48.6 56.7 39.9 43.1 42.8 39.2 47.6 68.0 66.0 70.7 55.8 63.2 81.2 65.8 69.0 51.0 66.2 75.9 75.0 68.8 69.9 79.3 73.3 75.0 74.9 72.8 80.1 59.5 63.2 65.4 63.9 68.2 39.8 42.7 45.2 46.6 54.3 66.3 70.1 71.1 72.9 76.5 1960 1961 1962 1963 1964 72.4 71.1 76.3 82.3 92.8 77.7 74.2 77.3 84.3 95.9 71.1 69.4 75.4 77.8 82.6 56.9 55.4 62.1 66.3 75.6 51.6 54.8 62.9 64.7 68.4 65.4 61.5 71.1 78.0 80.0 74.7 65.5 79.8 88.3 90.7 74.7 78.2 82.5 86.3 92.7 81.7 82.2 85.5 89.1 92.2 71.0 71.3 73.9 77.8 82.6 56.4 59.2 65.7 71.8 78.8 78.6 80.9 83.4 86.4 90.4 1965 1966 1967 1968 1969 102.1 108.4 100.0 104.3 113.8 105.2 108.4 100.0 103.2 112.6 90.8 97.2 100.0 105.6 107.9 85.0 98.8 100.0 101.8 109.3 81.7 97.9 100.0 105.5 111.9 95.1 102.0 100.0 111.1 108.4 115.9 113.9 100.0 120.3 116.5 96.3 100.0 100.0 105.5 107.9 97.4 99.9 100.0 102.9 106.7 87.9 94.6 100.0 103.2 107.4 87.8 95.7 100.0 109.5 118.4 92.4 96.0 100.0 102.6 106.1 1970 1971 1972 1973 1974 106.6 100.2 112.1 126.7 123.1 104.7 96.1 107.1 122.3 119.8 102.4 103.5 112.1 124.7 124.2 104.4 100.2 116.0 133.7 140.1 108.1 107.7 122.2 143.1 143.8 89.5 97.9 108.2 118.3 108.7 92.3 118.6 135.8 148.8 128.2 105.6 113.8 120.8 126.0 116.2 101.4 104.7 109.4 117.3 114.3 107.0 107.1 112.7 118.2 118.2 120.4 125.9 143.6 154.5 159.4 108.9 112.8 116.8 120.9 124.0 1975 1976 1977 1978 1979 96.4 109.7 111.1 119.9 121.3 95.8 104.8 103.8 113.2 1132 109.9 123.9 131.0 141.6 148.5 125.1 134.5 143.6 153.6 163.7 116.5 134.8 145.4 159.4 175.0 97.4 111.1 122.2 132.5 135.4 111.1 142.0 161.1 169.9 159.9 107.6 123.2 131.2 136.3 136.9 107.6 125.7 134.2 134.2 134.4 113.3 122.5 127.6 131.5 136.9 147.2 170.9 185.7 197.4 211.8 123.4 133.0 138.8 142.7 147.5 1980 1981 *. 102.3 107.9 92.4 134.1 136.2 162.8 171.0 172.8 178.3 116.9 116.0 119.0 122.2 119.3 127.0 139.6 1441 207.1 149.6 117.7 113.6 115.2 107.0 96.8 91.3 108.9 105.6 108.1 97.8 85.1 76.4 144.8 145.3 144.8 140.6 132.2 125.0 167.1 167.0 166.5 163.2 162.1 158.3 181.3 179.5 179.9 177.4 171.1 166.2 122.0 126.0 123.9 116.0 110.0 110.0 127.0 134.6 130.1 116.2 106.7 106.8 131.7 130.9 126.6 104.4 104.9 110.2 131.7 130.7 133.5 130.0 128.7 126.1 138.5 139.9 139.1 136.7 135.6 135.3 218.2 217.3 212.9 208.7 198.9 191.5 149.9 149.4 148.6 148.1 148.6 149.3 83.3 86.9 90.6 99.6 113.2 111.5 68.7 76.0 80.4 92.0 107.6 103.0 122.6 124.8 128.8 131.7 132.3 135.7 159.1 159.6 159.5 160.9 162.9 166.9 165.8 166.8 167.4 169.8 173.0 175.1 110.3 108.5 113.3 118.3 121.8 120.4 107.0 104.1 113.7 123.2 129.2 125.7 113.8 120.2 121.6 121.4 123.7 123.6 123.6 125.5 123.5 121.7 125.7 122.7 139.2 141.7 140.9 142.5 142.1 143.0 190.8 198.2 208.2 209.4 211.7 220.5 149.1 148.7 149.9 151.1 151.6 151.0 114.1 114.5 114.9 110.6 111.9 107.4 108.7 108.4 108.0 103.4 105.6 98.5 135.8 137.6 139.2 139.5 138.4 139.3 167.3 168.3 169.2 169.7 172.1 174.1 177.6 174.9 177.4 178.8 179.9 180.1 117.4 116.1 119.5 121.3 123.7 123.4 120.0 119.9 127.1 130.7 136.4 137.5 127.4 126.2 125.6 126.3 126.2 122.5 123.8 121.6 120.2 121.6 122.6 121.1 143.9 144.8 142.7 141.6 141.3 143.1 218.9 219.8 218.5 219.8 220.6 218.4 151.9 152.5 152.4 151.9 152.2 151.3 109.4 113.1 108.6 102.0 96.3 89.9 99.7 105.1 99.2 91.8 86.8 140.1 140.0 136.8 133.7 129.0 125.1 176.7 176.4 173.9 170.2 168.1 164.3 180.9 182.6 180.0 179.6 175.7 170.2 119.8 115.4 114.2 110.6 105.4 103.9 130.5 123.1 120.4 113.8 104.3 100.9 122.9 119.1 113.2 109.6 1062 122.6 122.6 122.5 118.4 144.4 146.1 145.9 145.9 1435 144.0 221.5 219.2 216.3 209.7 2037 151.6 151.9 150.7 151.6 1524 1980 Jan. Feb Mar. Apr May June. July. Aug Sept Oct Nov. Dec 1981Jan. Feb Mar Apr May June. July. Aug Sept Oct Nov ".. Dec ".. 4.21 298 1 Preliminary estimates by Council of Economic Advisers. Source: Board of Governors of the Federal Reserve System. 282 466 655 631 497 297 552 590 TABLE B-45.—Capacity utilization rate in manufacturing, 1948-81 [Percent; quarterly data seasonally adjusted] Year or quarter 1948 1949.. 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981", 1976 1 II III IV. 1977 1 II III. IV. 1978 1 II III. IV. Wharton series3 Commerce series2 FRB series ' AdPrimary- AdvancedTotal NonTotal NonTotal Primary vanced manufac- process- processprocessed processed manufac- Durable manufac- Durable goods durable goods durable ing turing goods goods .goods goods turing turing ing 82.5 74.2 82.8 85.8 85.4 89.2 80.3 87.1 86.4 83.7 75.2 81.9 80.2 77.4 81.6 83.5 85.6 89.6 91.1 86.9 87.1 86.2 79.3 78.4 83.5 87.6 83.8 72.9 79.5 81.9 84.4 85.7 79.1 78.5 87.2 76.2 88.5 90.2 84.9 89.4 80.6 92.1 89.7 84.7 75.4 83.4 79.8 77.9 81.6 83.8 87.8 91.1 91.4 85.7 87.7 88.5 82.9 82.3 88.2 92.5 87.8 73.7 81.9 84.0 86.9 88.1 78.5 78.4 80.0 73.3 79.8 83.4 85.9 89.3 80.1 84.3 84.5 83.1 75.1 81.1 80.4 77.2 81.7 83.4 84.6 88.9 91.2 87.6 86.8 85.0 77.4 76.3 81.0 85.0 81.5 72.5 78.2 80.8 83.0 84.3 79.4 78.5 78.4 79.5 80.0 80.0 81.0 81.9 82.6 82.1 80.7 82.1 82.4 82.6 85.3 88.3 85.3 81.6 68.0 73.7 71.9 67.7 71.8 73.4 75.5 82.3 88.0 86.2 88.8 89.4 80.5 78.0 84.0 91.3 88.4 75.5 81.4 84.2 88.5 90.7 83.5 92.4 93.8 91.6 87.4 83.0 86.2 84.0 82.4 83.2 83.7 85.1 86.8 88.4 87.8 89.6 90.9 88.5 88.7 92.5 94.5 91.9 83.8 90.1 92.1 92.6 93.1 89.1 78 78 82 85 82 76 81 84 84 83 77 85 86 85 86 86 83 83 85 86 84 79 82 82 83 82 79 89 88 87 86 87 83 82 85 89 85 76 82 83 84 84 77 85 85 83 84 84 79 80 82 84 82 77 81 83 84 82 78 88.2 90.6 87.9 84.0 74.1 78.9 76.8 73.7 76.5 77.6 79.5 84.2 88.2 86.9 89.1 90.0 83.8 82.3 87.5 92.6 89.8 78.9 84.9 87.4 90.1 91.7 85.8 82 82 80 81 81 83 79 81 82 81 82 82 83 83 82 80 81 82 79 82 84.2 85.0 85.3 85.3 79.9 81.5 82.2 81.9 90.3 90.1 89.7 90.3 79.8 80.8 81.3 81.3 83 84 82 82 84 86 82 82 82 82 82 82 83 84 82 82 84 84 82 83 86.2 87.6 87.8 88.1 82.4 84.3 84.8 85.3 91.8 92.4 92.3 92.1 84.0 86.3 87.9 89.5 80.9 82.7 83.7 84.6 84 84 83 84 84 85 83 85 83 82 82 83 83 84 84 85 84 84 82 84 87.7 89.7 90.8 92.3 85.1 87.7 89.4 91.6 91.5 92.6 92.8 93.4 86.9 85.9 85.3 84.4 89.0 88.2 88.3 86.9 85.7 84.7 83.7 83.0 84 83 82 81 85 84 82 80 83 82 82 82 85 84 83 83 84 83 81 80 92.9 91.8 91.4 90.8 92.3 91.0 90.1 89.6 93.7 93.0 93.2 92.4 1980 1 It III. IV. 83.4 77.9 75.9 79.1 85.5 76.4 73.1 79.3 82.5 78.7 77.4 78.8 80 76 76 78 80 74 75 78 81 78 78 78 81 75 74 78 80 76 77 78 90.2 84.3 82.5 86.1 88.8 82.1 79.3 84.0 92.3 87.6 87.2 89.2 1981 1 II III IV" 79.9 79.8 79.3 74.8 81.3 80.3 79.4 72.8 79.1 79.6 79.2 75.8 78 78 76 77 77 74 79 80 78 78 78 76 78 78 76 87.1 86.6 86.5 85.5 85.4 84.9 89.6 88.5 88.8 86 86 84 85 85 81 80 83 86 83 77 81 83 84 83 78 88 87 83 84 84 77.0 78.1 78.5 78.8 82.2 84.4 84.5 84.7 82.0 83.9 85.2 86.4 1979: 1 II III IV. 1 2 For description of the series, see "Federal Reserve Measures of Capacity and Capacity Utilization," February 1978. Quarterly data are for last month in quarter. Annual data are averages of the four indexes, except for 1965 (December index) and 1966-67 (averages of June and December indexes). For description of the series, see "Survey of Current Business," July3 1974. Annual data are averages of quarterly indexes. For description of the series, see F. Gerard Adams and Robert Summers, "The Wharton Index of Capacity Utilization: A Ten Year Perspective," 1973 Proceedings of the Business and Economic Statistics Section, American Statistical Association. Sources: Board of Governors of the Federal Reserve System, Department of Commerce (Bureau of Economic Analysis), and Wharton School of Finance. 283 TABLE B-46.—New construction activity, 1929-81 [Value put in place, billions of dollars; monthly data at seasonally adjusted annual rates] Public construction Private construction Year or month Total new construction Nonresidential buildings and other construction 1 Residential buildings ' Total Total 2 New housing units Total Total Commercial 3 Industrial Other 4 Federal State and local 5 2.3 1929 10.8 8.3 3.6 3.0 4.7 1.1 0.9 2.6 2.5 0.2 1933 2.9 1.2 .5 .3 .8 .1 .2 .5 1.6 .5 1.1 1939 8.2 4.4 2.7 2.3 1.7 .3 .3 1.2 3.8 .8 3.1 1940 1941 1942 1943 1944 8.7 12.0 14.1 5.1 6.2 3.4 2.0 2.2 3.0 3.5 1.7 .9 .8 2.6 3.0 1.4 .7 .6 2.1 2.7 1.7 1.1 1.4 .3 .4 .2 .0 .1 .4 .8 .3 .2 .2 1.3 1.5 1.2 .9 1.1 3.6 5.8 10.7 6.3 3.1 1.2 3.8 9.3 5.6 2.5 2.4 2.0 1.3 .7 .6 .7 4.8 2.1 5.8 .2 1.2 .6 1.7 1.3 3.0 2.4 2.2 1.7 .9 .7 1.4 8.3 5.3 5.8 3.4 14.3 12.1 1.3 6.2 1947 1948 1949 20.0 26.1 26.7 16.7 21.4 20.5 9.9 7.8 13.1 12.4 10.5 10.0 6.9 8.2 8.0 1.0 1.4 1.2 1.7 1.4 1.0 4.2 5.5 5.9 3.3 4.7 6.3 .8 1.2 1.5 2.5 3.5 4.8 1950 1951 1952 1953 1954 33.6 35.4 36.8 39.1 41.4 26.7 26.2 26.0 27.9 29.7 18.1 15.9 15.8 16.6 18.2 15.6 13.2 12.9 13.4 14.9 8.6 10.3 10.2 11.3 11.5 1.4 1.5 1.1 1.8 2.2 1.1 2.1 2.3 2.2 2.0 6.1 6.7 6.8 7.3 7.2 6.9 9.3 10.8 11.2 11.7 1.6 3.0 4.2 4.1 3.4 5.2 6.3 6.6 7.1 8.3 1955 1956 1957 1958 1959 46.5 47.6 49.1 50.0 55.4 34.8 34.9 35.1 34.6 39.3 21.9 20.2 19.0 19.8 24.3 18.2 16.1 14.7 15.4 19.2 12.9 14.7 16.1 14.8 15.1 3.2 3.6 3.6 3.6 3.9 2.4 3.1 3.6 2.4 2.1 7.3 8.0 9.0 8.8 9.0 11.7 12.7 14.1 15.5 16.1 2.8 2.7 3.0 3.4 3.7 10.0 11.1 12.1 12.3 1960 1961 1962 1963 1964 54.7 56.4 60.2 64.8 68.0 38.9 39.3 42.3 45.5 47.7 23.0 23.1 25.2 27.9 28.0 17.3 17.1 19.4 21.7 21.8 15.9 16.2 17.2 17.6 19.7 4.2 4.7 5.1 5.0 5.4 2.9 2.8 2.8 2.9 3.6 8.9 8.7 9.2 9.7 15.9 17.1 17.9 19.4 20.4 3.6 3.9 3.9 4.0 3.9 12.2 13.3 14.0 15.4 16.5 1965 1966 1967 1968 1969 74.1 76.8 78.5 87.5 94.3 52.0 52.8 52.9 59.9 66.3 27.9 25.7 25.6 30.6 33.2 217 19.4 19.0 24.0 25.9 24.1 27.1 27.3 29.3 33.1 22 1 24.0 7.8 9.4 6.0 6.8 180 200 221 15.5 16.9 27.6 28.0 40 4.0 35 3.4 3.3 1970 1971 1972 1973 1974 95.2 110.3 124.4 138.4 139.2 67.1 80.4 94.2 105.9 100.9 31.9 43.3 54.3 59.7 50.4 24.3 35.1 44.9 50.1 40.6 35.3 37.2 40.0 46.2 50.5 9.8 11.6 13.5 15.5 15.9 6.5 5.4 4.7 6.2 7.9 19.0 20.1 21.8 24.5 26.7 28.1 29.9 30.2 32.5 38.3 3.3 4.0 4.4 4.9 5.3 24.8 25.9 25.8 27.6 33.0 1975 1976 1977 1978 1979 135.9 151.1 173.8 205.6 230.8 95.1 112.0 135.7 159.7 181.7 46.5 60.5 81.0 93.4 99.0 34.4 47.3 65.7 75.8 78.6 48.6 51.4 54.7 66.2 82.7 12.8 12.8 14.8 18.6 24.9 8.0 7.2 7.7 11.0 15.0 27.8 31.5 32.2 36.7 42.8 40.9 39.1 38.2 45.9 49.1 6.3 7.0 7.3 8.4 8.9 34.6 32.1 30.9 37.5 40.2 1980 1981" 230.3 236.3 174.9 182.8 87.3 85.7 63.1 61.9 87.6 97.1 29.9 33.3 13.8 16.8 43.9 46.9 55.4 53.5 10.0 10.7 45.4 42.8 1945 1946 New series See next page for continuation of table. 284 10.7 255 8.9 24.2 24.6 TABLE B-46.—New construction activity, 1929-81—Continued [Value put in place, billions of dollars; monthly data at seasonally adjusted annual rates] Private construction Year or month Total new construction Residential buildings1 Total Public construction Nonresidential buildings and other construction l Total Total 2 New housing units Total Commercial 3 Industrial Other 4 Federal State and local5 1980: Jan Feb Mar Apr May June 257.5 248.3 240.8 228.6 221.6 218.5 196.9 191.4 183.0 173.5 167.0 163.1 103.5 99.2 93.9 85.3 78.8 75.0 79.0 73.7 68.7 62.3 56.8 53.3 93.4 92.2 89.1 88.2 88.2 88.1 32.0 31.2 30.8 30.3 30.5 29.4 15.6 15.7 13.9 14.0 14.2 14.8 45.9 45.3 44.4 43.8 43.6 43.9 60.6 57.0 57.8 55.1 54.6 55.4 9.9 9.5 10.6 10.0 9.9 9.7 50.7 47.4 47.2 45.1 44.7 45.7 July Aug Sept Oct Nov Dec 216.4 217.9 224.6 228.9 234.3 245.4 161.5 163.5 169.1 174.9 180.9 187.9 75.6 79.3 84.5 89.8 95.6 98.9 53.1 56.3 60.7 64.2 68.1 70.4 85.9 84.2 84.7 85.1 85.3 89.0 29.1 29.0 28.7 29.1 29.6 30.8 13.3 12.8 12.9 12.4 12.9 14.3 43.6 42.3 43.1 43.6 42.8 43.9 54.9 54.4 55.5 54.0 53.4 57.6 10.9 9.7 10.2 9.5 9.7 10.6 44.0 44.7 45.2 44.5 43.7 47.0 1981: Jan Feb. Mar Apr May. June 259.0 254.5 250.3 246.5 235.9 234.0 193.9 193.2 189.6 189.9 184.1 181.8 100.7 99.7 96.3 95.2 89.7 86.0 74.2 75.1 73.0 72.9 67.7 64.3 93.2 93.5 93.4 94.7 94.4 95.8 33.0 33.4 33.3 33.4 32.4 32.4 15.3 15.1 15.4 15.5 15.5 16.2 44.9 45.0 44.7 45.8 46.5 47.2 65.2 61.3 60.6 56.6 51.8 52.2 11.4 11.4 10.3 10.9 10.5 10.7 53.8 49.9 50.4 45.7 41.3 41.5 233.9 229.8 230.9 229.9 231.6 229.3 182.3 180.6 178.6 178.2 179.2 177.3 82.9 80.5 78.5 78.2 78.1 78.9 60.5 58.1 55.9 52.8 51.0 50.4 99.4 100.0 100.1 100.0 101.1 98.4 34.0 33.7 33.4 33.0 34.5 33.8 17.2 18.3 18.3 18.6 18.4 17.2 48.2 48.0 48.4 48.4 48.2 47.4 51.6 49.3 52.2 51.6 52.4 52.0 10.8 9.5 10.7 11.2 10.4 10.8 40.8 39.8 41.6 40.4 42.0 41.2 July Aug. Sept. Oct Nov Dec " 1 Beginning 1960, farm residential buildings included in residential buildings; prior to 1960, included in nonresidential buildings and other construction. 2 Total includes additions and alterations and nonhousekeeping units, not shown separately. 3 Office buildings, warehouses, stores, restaurants, garages, etc. 4 Religious, educational, hospital and institutional, miscellaneous nonresidential, farm (see also footnote 1), public utilities, and all other private. 5 Includes Federal grants-in-aid for State and local projects. Source: Department of Commerce, Bureau of the Census. 358-691 0 - 82 - 19 : QL3 285 TABLE B-47.—New housing units started and authorized, 7959-87 [Thousands of units] New private housing units authorized 2 New housing units started Year or month Private and public 1 Private (farm and nonfarm) l Total (farm and Nonfarm nonfarm) Type of structure Total 1 unit 2to4 units Type of structure Total 5 units or more 28:J.O 1959 . 1,553.7 1,53 1.3 1,517.0 1,234.0 1960 1961 1962 1963 1964 1,296.1 1,365.0 1,492.5 1,634.9 1,561.0 1,27 4.0 1,32 6.8 1,46 8.7 1,61 4.8 1,52 4.0 1,252.2 1,313.0 1,462.9 1,603.2 1,528.8 994.7 974.3 991.4 1,012.4 970.5 1965 1966 1967 1968 1969 1,509.7 1,195.8 1,321.9 1,545.4 1,499.5 1,48 7.5 Ul 2.8 1,2S 8.8 1,52 1.4 1,48 2.3 1,472.8 1,164.9 1,291.6 1,507.6 1,466.8 963.7 778.6 843.9 899.4 810.6 86.6 61.1 71.6 80.9 85.0 1,433.6 2,052.2 2,356.6 2,045.3 1,337.7 812.9 1,151.0 1,309.2 1,132.0 888.1 1,171.4 1,547.6 2,001.7 2,036.1 1,760.0 1,160.4 1,537.5 1,987.1 2,020.3 1,745.1 892.2 1,162.4 1,450.9 1,433.3 1,194.1 1,312.6 1,102.8 1,292.2 1,086.6 852.2 706.1 1,389 1,273 1,040 1,044 938 1,184 965 111 628 650 651 760 119 98 89 99 87 77 305 398 323 295 200 347 1,277 1,411 1,482 1,519 1,550 1,535 867 971 1,032 1,009 1,019 974 83 133 140 121 143 131 1,660 1,215 1,297 1,332 1,158 1,039 993 791 838 897 764 688 1,047 941 916 867 863 978 704 606 645 510 569 579 . . 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1,469.0 2,084.5 2,378.5 2,057.5 1,352.5 1 1980 1981" 1980: 3 3 3 3 3 : Jan Feb Mar Apr May June 73.8 80.8 86.8 96.8 93.0 117.7 July Aug Sept Oct Nov Dec 121.6 131.7 147.0 153.7 113.5 96.3 3 Jan Feb Mar Apr May June 85.2 72.5 108.9 124.0 110.6 107.0 3 3 July Aug Sept Oct Nov Dec" 101.0 87.3 90.9 88.2 64.4 62.7 3 1981: * 3 3 3 3 3 3 3 3 3 3 3 3 3 3 ) 3} 1 unit 2 to 4 units 5 units or more 1,208.3 938.3 77.1 192.9 998.0 1,064.2 1,186.6 1,334.7 1,285.8 746.1 722.8 716.2 750.2 720.1 64.6 67.6 87.1 118.9 100.8 187.4 273.8 383.3 465.6 464.9 422.5 325.1 376.1 527.3 571.2 1,239.8 971.9 1,141.0 1,353.4 1,323.7 709.9 563.2 650.6 694.7 625.9 84.8 61.0 73.0 84.3 85.2 445.1 347.7 417.5 574.4 612.7 84.8 120.3 141.3 118.3 68.1 535.9 780.9 906.2 795.0 381.6 1,351.5 1,924.6 2,218.9 1,819.5 1,074.4 646.8 906.1 1,033.1 882.1 643.8 88.1 616.7 132.9 885.7 148.6 1,037.2 117.0 820.5 64.3 366.2 64.0 85.9 121.7 125.0 122.0 204.3 289.2 414.4 462.0 429.0 939.2 1,296.2 1,690.0 1,800.5 1,551.8 675.5 893.6 1,126.1 1,182.6 981.5 63.9 93.1 121.3 130.6 125.4 199.8 309.5 442.7 487.3 444.8 710.4 561.2 114.5 100.0 365.7 319.5 1,302 1,196 998 824 864 1,094 798 727 579 485 508 641 110 108 97 69 87 101 394 361 322 270 269 352 327 307 310 389 388 430 1,232 1,355 1,518 1,351 1,366 1,249 763 840 884 820 809 753 114 133 144 135 142 130 355 382 490 396 415 366 149 112 105 92 106 88 518 312 354 343 288 263 1,214 1,165 1,153 1,186 1,167 963 715 677 678 689 654 567 132 113 108 122 110 101 367 375 367 375 403 295 86 76 60 81 82 88 257 259 211 276 212 311 913 865 850 722 723 807 528 494 453 398 401 458 97 88 80 84 75 92 288 283 317 240 247 257 25-r.4 33!*.7 47] .5 59().8 108.4 450.0 109.5 330.5 1,190.6 91.6 288.9 980.8 Seasonally adjusted annual rates 1 Units in structures built by private developers for sale upon completion to local public housing authorities under the Department of Housing and Urban Development "Turnkey" program are classified as private housing. Military housing starts, including those financed with mortgages insured by FHA under Section 803 of the National Housing Act, are included in publicly owned starts and excluded from total private starts. 2 Authorized by issuance of local building permit: in 16,000 permit-issuing places beginning 1978; in 14,000 places for 197277;3 in 13,000 places for 1967-71; in 12,000 places for 1963-66; and in 10,000 places prior to 1963. Not available separately beginning January 1970. Source: Department of Commerce, Bureau of the Census. 286 TABLE B-48.—Nonfarm business expenditures for new plant and equipment, 1947-82 [Billions of dollars; quarterly data at seasonally adjusted annual rates] Plant and equipment Year or quarter Total Plant Equipment Manufacturing Total Nonmanufacturing DuraNonble durable goods goods Total Mining Transpor- Public utilitation ties Trade and services1 Communication and other 2 1947 1948 1949 21.80 25.46 23.54 8.45 10.35 10.20 13.35 15.11 13.34 8.73 9.25 7.32 3.39 3.54 2.67 5.34 5.71 4.64 13.07 16.21 16.22 0.69 .93 .88 2.21 2.66 2.30 1.64 2.67 3.28 6.13 6.92 7.13 2.40 3.04 2.63 1950 1951 1952 1953 1954 25.32 30.83 31.59 33.58 33.13 10.94 13.08 13.14 13.82 14.09 14.37 17.74 18.45 19.76 19.03 7.73 11.07 12.12 12.43 12.00 3.22 5.12 5.75 5.71 5.49 4.51 5.95 6.37 6.72 6.51 17.59 19.76 19.47 21.16 21.13 .84 1.11 1.21 1.25 1.29 2.38 3.05 2.99 2.97 2.42 3.42 3.75 3.96 4.61 4.23 8.37 8.83 8.05 8.94 9.59 2.58 3.03 3.25 3.38 3.60 1955 1956 1957 1958 1959 36.58 44.76 48.12 42.17 44.78 15.97 19.34 20.94 19.41 19.89 20.60 25.42 27.19 22.76 24.89 12.50 16.33 17.50 12.98 13.76 5.87 8.19 8.59 6.21 6.72 6.62 8.15 8.91 6.77 7.04 24.08 28.43 30.62 29.19 31.02 1.31 1.64 1.69 1.43 1.35 2.60 3.07 3.35 2.34 3.17 4.26 4.78 5.95 5.74 5.46 11.49 13.64 13.68 14.11 15.40 4.42 5.30 5.96 5.58 5.63 1960 1961 1962 1963 1964 48.63 47.82 51.28 53.25 61.66 20.94 21.12 22.12 22.23 24.96 27.70 26.70 29.16 31.03 36.70 16.36 15.53 16.03 17.27 21.23 8.28 7.43 7.81 8.64 10.98 8.08 8.10 8.22 8.63 10.25 32.28 32.29 35.25 35.99 40.43 1.29 1.26 1.41 1.26 1.33 3.19 2.82 3.26 3.36 4.46 5.40 5.20 5.12 5.33 5.80 16.15 16.53 18.27 18.57 20.38 6.25 6.48 7.19 7.47 8.46 1965 1966 1967 1968 1969 70.43 82.22 83.42 88.45 99.52 27.24 32.21 32.22 35.51 40.54 43.19 50.01 51.20 52.94 58.99 25.41 31.37 32.25 32.34 36.27 13.49 17.23 17.83 17.93 19.97 11.92 14.15 14.42 14.40 16.31 45.02 50.84 51.18 56.11 63.25 1.36 1.42 1.38 1.44 1.77 5.46 6.43 6.34 6.79 7.04 6.49 22.13 7.82 24.69 9.33 23.02 10.52 25.31 11.70 28.31 9.58 10.49 11.11 12.06 14.43 1970 1971 1972 1973 1974 105.61 108.53 120.25 137.70 156.98 44.24 46.60 49.35 56.66 64.29 61.36 61.93 70.89 81.04 92.69 36.99 33.60 35.42 42.37 53.21 19.80 16.78 18.22 22.75 27.44 17.19 16.82 17.20 19.62 25.76 68.62 74.93 84.82 95.33 103.78 2.02 2.67 2.88 3.31 4.62 6.95 5.93 6.72 7.41 8.23 13.03 29.77 14.70 34.20 16.26 40.00 17.97 45.53 19.83 47.79 16.85 17.43 18.96 21.12 23.30 1975 1976 1977 1978 1979 157.71 171.45 198.08 231.24 270.46 65.21 71.20 80.31 92.70 105.73 92.50 100.25 117.77 138.54 164.73 54.92 59.95 69.22 79.72 98.68 26.33 28.47 34.04 40.43 51.07 28.59 31.47 35.18 39.29 47.61 102.79 111.50 128.87 151.52 171.77 6.10 7.44 9.24 10.21 11.38 8.68 8.89 9.40 10.68 12.35 19.98 22.37 26.79 29.95 33.96 46.23 49.30 56.54 68.66 79.26 21.80 23.51 26.90 32.02 34.83 1980 3 19813 1982 295.63 322.61 346.42 117.55 178.08 115.81 128.26 139.34 58.91 62.94 67.81 56.90 65.32 71.53 179.81 194.35 207.08 13.51 16.80 18.79 12.09 12.07 13.39 35.44 37.94 39.86 81.79 86.27 91.16 36.99 41.27 43.88 291.89 294.36 296.23 299.58 115.96 116.50 117.59 120.27 175.93 177.86 178.64 179.32 111.77 115.69 116.40 118.63 58.28 59.38 58.19 59.77 53.49 56.32 58.21 58.86 180.13 178.66 179.83 180.95 11.89 12.81 13.86 15.28 12.47 12.09 12.23 11.70 36.26 35.03 35.58 34.96 82.17 81.07 81.19 82.91 37.34 37.66 36.97 36.11 312.24 316.73 328.25 332.06 128.57 131.05 136.40 183.67 185.68 191.85 124.50 125.49 130.11 132.22 61.24 63.10 62.58 64.73 63.27 62.40 67.53 67.50 187.74 191.24 198.13 199.84 16.20 16.80 17.55 16.59 11.74 11.70 11.61 13.20 36.05 37.84 39.55 38.09 83.43 85.88 87.55 88.27 40.32 39.02 41.89 43.69 136.47 140.58 66.26 68.34 70.21 72.24 208.98 214.25 17.23 17.81 11.79 40.14 13.89 40.29 95.12 96.29 44.71 45.97 1980: 1 tl III IV 1981: 1 II Ill 3 IV ... . 1982:3 I3 II 345.46 35483 'Wholesale and retail trade; finance, insurance, and real estate; and personal, business, and professional services. 2 "Other" consists of construction; social services and membership organizations; and forestry, fisheries, and agricultural services. 3 Planned capital expenditures reported by business in late October-December 1981, corrected for biases. Source.- Department of Commerce, Bureau of Economic Analysis. 287 TABLE B-49.—Sales and inventories in manufacturing and trade 1947-81 [Amounts in millions of dollars-, monthly data seasonally adjusted] Total manufacturing and trade Manufacturing Merchant wholesalers Retail trade Year or month Inven-2 Sales ' tories Ratio3 Sales' Inventories2 Ratio3 Sales' 3 Inventories2 Ratio Sales' Inventories2 Ratio3 1947 1948.. 1949 35,260 33,788 52,507 49,497 1.42 1.53 15513 17,316 16,126 25,897 28,543 26,321 158 1.57 1.75 6,808 6,514 7,957 7,706 1.13 1.19 10,200 11,135 11,149 14241 16,007 15,470 126 1.39 1.41 1950 1951 1952 1953 1954 38,596 43,356 44,840 47,987 46,443 59,822 70,242 72,377 76,122 73,175 1.36 1.55 1.58 1.58 1.60 18,634 21,714 22,529 24,843 23,355 31,078 39,306 41,136 43,948 41,612 1.48 1.66 1.78 1.76 1.81 7,695 8,597 8,782 9,052 8,993 9,284 9,886 10,210 10,686 10,637 1.07 1.16 1.12 1.17 1.18 12,268 13,046 13,529 14,091 14,095 19,460 21,050 21,031 21,488 20,926 1.38 1.64 1.52 1.53 1.51 1955 1956 1957 1958 1959 51,694 54,063 55,879 54,201 59,729 79,516 87,304 89,052 87,093 92,129 1.47 1.55 1.59 1.60 1.50 26,480 27,740 28,736 27,247 30,286 45,069 50,642 51,871 50,241 52,945 1.62 1.73 1.80 1.84 1.70 9,893 10,513 10,475 10,257 11,491 11,678 13,260 12,730 12,739 13,879 1.13 1.19 1.23 1.24 1.15 15,321 15,811 16,667 16,696 17,951 22,769 23,402 24,451 24,113 25,305 1.43 1.47 1.44 1.43 1.40 1960 1961 1962 1963 1964 60,827 61,159 65,662 68,995 73,682 94,713 95,594 101,063 105,480 111,503 1.56 1.54 1.50 1.49 1.47 30,879 30,923 33,357 35,058 37,331 53,780 54,885 58,186 60,046 63,409 1.75 1.74 1.70 1.69 1.64 11,656 11,988 12,674 13,382 14,529 14,120 14,488 14,936 16,048 17,000 1.22 1.20 1.16 1.15 1.14 18,294 18,249 19,630 20,556 21,823 26,813 26,221 27,941 29,386 31,094 1.45 1.43 1.38 1.39 1.40 1965 1966 1967 1968 1969 80,283 87,187 90,348 98,104 105,003 120,907 136,790 145,340 156,167 169,833 1.45 1.47 1.56 1.54 1.55 40,995 44,870 46,487 50,228 53,501 68,185 77,952 84,664 90,618 98,202 1.60 1.62 1.76 1.74 1.77 15,611 16,987 19,448 20,846 22,609 18,317 20,765 25,377 26,604 29,114 1.15 1.15 1.25 1.25 1.23 23,677 25,330 24,413 27,030 28,893 34,405 38,073 35,299 38,945 42,517 1.39 1.44 1.43 1.38 1.41 1970 1971 1972 1973 1974 107,448 116,017 130,030 153,412 177,625 178,321 188,544 203,103 233,237 285,807 1.62 1.58 1.50 1.41 1.45 52,805 55,906 63,023 72,937 84,794 101,651 102,658 108,238 124,628 157,792 1.90 1.83 1.67 1.58 1.65 23,943 26,257 29,584 38,014 47,748 32,803 35,823 39,786 45,372 56,948 1.29 1.30 1.27 1.11 1.07 30,700 33,853 37,422 42,462 45,082 43,867 50,063 55,079 63,237 71,067 1.41 1.41 1.40 1.40 1.48 1975 1976 1977 1978 1979 182,230 204,277 229,623 258,724 294,733 288,375 318,544 350,678 395,252 444,224 1.57 1.48 1.46 1.44 1.43 86,595 98,802 113,201 126,953 143,941 159,934 175,193 189,157 210,079 241,572 1.84 1.69 1.61 1.57 1.57 46,623 50,694 55,987 64,715 76,264 56,697 64,078 72,311 83,492 93,817 1.21 1.19 1.21 1.21 1.17 49,012 71,744 54,781 79,273 60,435 89,210 67,057 101,681 74,529 108,835 1.44 1.38 1.39 1.42 1.43 1980 1981" 320,540 475,202 1.45 153,828 166,515 257,979 277,172 1.65 1.62 86,991 105,529 1.14 79,721 111,694 87,126 1.38 Jan. Feb Mar. Apr May June. 318,101 317,901 312,469 305,440 302,071 305,326 448,535 452,803 455,920 461,445 462,979 464,187 1.41 1.42 1.46 1.51 1.53 1.52 154,409 155,396 152,250 147,791 145,625 145,768 245,669 248,198 251,485 255,047 256,129 256,421 1.59 1.60 1.65 1.73 1.76 1.76 84,131 83,606 82,616 81,245 80,471 81,714 94,719 95,813 95,594 96,654 97,351 98,328 1.13 1.15 1.16 1.19 1.21 1.20 79,561 78,899 77,603 76,404 75,975 77,843 108,147 108,792 108,841 109,744 109,499 109,438 1.36 1.38 1.40 1.44 1.44 1.41 July. Aug. Sept Oct Nov Dec 315,633 317,906 327,758 335,873 339,049 343,752 466,828 468,943 471,500 473,617 474,884 475,202 1.48 1.48 1.44 1.41 1.40 1.38 150,332 151,188 156,915 161,038 162,384 163,719 257,207 256,740 256,837 256,218 257,042 257,979 1.71 1.70 1.64 1.59 1.58 1.58 85,810 86,889 90,223 93,282 93,901 96,591 99,618 101,920 102,953 104,293 105,203 105,529 1.16 1.17 1.14 1.12 1.12 1.09 79,491 79,829 80,620 81,552 82,764 83,443 110,003 110,283 111,710 113,106 112,639 111,694 1.38 1.38 1.39 1.39 1.36 1.34 349,018 350,334 349,898 350,923 349,245 354,442 478,451 484,069 485,467 487,060 490,254 494,226 1.37 1.38 1.39 1.39 1.40 1.39 164,588 165,508 165,804 167,491 167,527 171,494 261,752 264,496 266,524 267,506 269,260 269,709 1.59 1.60 1.61 1.60 1.61 1.57 98,967 98,016 96,486 97,577 96,217 95,564 104,909 106,066 105,539 105,591 105,568 107,210 1.06 1.08 1.09 1.08 1.10 1.12 85,463 86,810 87,608 85,855 85,501 87,385 111,790 113,507 113,404 113,963 115,426 117,307 1.31 1.31 1.29 1.33 1.35 1.34 354,759 352 783 353,717 345,287 344,683 498,098 502 458 508,132 511,682 515,138 1.40 142 144 1.48 1.49 170,324 169 518 168 581 164,085 161,979 161,629 271,872 273 361 276*616 278,440 279,544 277,172 1.60 161 l'64 1.70 1.73 1.71 97,085 94674 96437 94,542 95,471 106,402 107,820 109297 109,757 111,697 1.10 1.14 1 13 U6 1.17 87,356 88,593 88'699 86*660 87,233 87541 119,824 121,277 122*219 123*485 123,897 1.37 1.37 138 l'.42 1.42 v 1980: 1981 Jan. Feb. Mar. May June July Aug Sept Oct Nov Dec" 1 Monthly average for 2 Seasonally adjusted, 3 year and t9tal for month. end of period. Inventory/sales ratio. For annual periods, ratio of weighted average inventories to average monthly sales; for monthly data, ratio of inventories at end of month to sales for month. Note.—Earlier data are not strictly comparable with data beginning 1958 for manufacturing and beginning 1967 for wholesale and retail trade. The inventory figures in this table do not agree with the estimates of change in business inventories included in the gross national product since these figures cover only manufacturing and trade rather than all business, and show inventories in terms of current book value without adjustment for revaluation. Source: Department of Commerce (Bureau of Economic Analysts and Bureau of the Census). 288 TABLE B-50.—Manufacturers' shipments and inventories, 1947-81 [Millions of dollars; monthly data seasonally adjusted] 1 Inventories2 Shipments Year or month Total Durable goods industries Nondurable goods industries Durable goods industries Total Total Materials and supplies Work in process Nondurable goods industries Finished goods Total Materials and supplies Work in process Finished goods 1947 1948 1949 15,513 17,316 16,126 6,694 7,579 7,191 8,819 9,738 8,935 25,897 28,543 26,321 13,061 14,662 13,060 12,836 13,881 13,261 1950 1951 1952 1953 1954 18,634 21,714 22,529 24,843 23,355 8,845 10,493 11,313 13,349 11,828 9,789 11,221 11,216 11,494 11,527 31,078 39,306 41,136 43,948 41,612 15,539 20,991 23,731 25,878 23,710 8,966 7,894 10,720 9,721 6,206 6,040 15,539 18,315 17,405 18,070 17,902 8,317 8,167 2,472 2,440 7,409 7,415 1955 1956 1957 1958 1959 26,480 27,740 28,736 27,247 30,286 14,071 14,715 15,237 13,563 15,609 12,409 13,025 13,499 13,684 14,677 45,069 50,642 51,871 50,241 52,945 26,405 30,447 31,728 30,258 32,077 9,194 10,417 10,608 10,032 10,776 10,756 12,317 12,837 12,387 13,063 6,348 7,565 8,125 7,839 8,239 18,664 20,195 20,143 19,983 20,868 8,556 8,971 8,775 8,662 9,080 2,571 2,721 2,864 2,828 2,944 7,666 8,622 8,624 8,491 8,845 1960 1961 1962 1963 1964 30,879 30,923 33,357 35,058 37,331 15,883 15,616 17,262 18,280 19,637 14,996 15,307 16,095 16,778 17,694 53,780 54,885 58,186 60,046 63,409 32,371 32,544 34,632 35,866 38,506 10,353 10,279 10,810 11,068 11,970 12,772 13,203 14,159 14,871 16,191 9,245 9,063 9,662 9,925 10,344 21,409 22,341 23,554 24,180 24,903 9,082 9,493 9,813 9,978 10,131 2,946 3,110 3,296 3,406 3,511 9,380 9,738 10,444 10,796 11,261 1965 1966 1967 1968 1969 40,995 44,870 46,487 50,228 53,501 22,221 24,649 25,267 27,659 29,437 18,774 20,220 21,220 22,570 24,064 68,185 77,952 84,664 90,618 98,202 42,257 49,920 55,005 58,875 64,739 13,325 15,489 16,455 17,376 18,693 18,075 21,939 25,005 27,336 30,408 10,854 12,491 13,547 14,163 15,639 25,928 28,032 29,659 31,743 33,463 10,448 11,155 11,715 12,289 12,724 3,806 4,204 4,421 4,848 5,122 11,674 12,673 13,523 14,606 15,617 1970 1971 1972 1973 1974.. 52,805 55,906 63,023 72,937 84,794 28,188 29,954 34,024 39,686 44,228 24,617 25,952 29,000 33,250 40,567 101,651 102,658 108,238 124,628 157,792 66,780 66,289 70,250 81,398 101,739 19,182 29,848 19,759 28,650 20,860 30,788 26,028 35,545 35,151 42,603 17,751 17,880 18,601 19,823 23,985 34,871 36,368 37,988 43,230 56,053 13,150 13,683 14,676 18,132 23,699 5,274 5,665 5,982 6,707 8,175 16,448 17,019 17,330 18,391 24,179 1975 1976 1977 1978. 1979 86,595 43,656 98,802 50,689 113,201 59,267 126,953 67,848 143,941 75,803 42,939 48,113 53,934 59,104 68,138 159,934 175,193 189,157 210,079 241,572 102,874 112,581 121,646 137,712 161,390 33,920 43,369 37,548 46,345 40,274 50,619 45,181 58,554 53,496 70,462 25,586 28,690 30,752 33,977 37,434 57,060 62,612 67,511 72,367 80,182 23,542 25,833 27,429 29,357 33,362 8,837 9,933 10,966 11,842 12,871 24,681 26,846 29,116 31,168 33,949 1980 1981 " 153,828 78,003 75,825 166,515 84,995 81,520 257,979 277,172 171,603 185,789 53,808 56,830 77,935 84,912 39,860 44,047 86,376 91,383 35,572 37,285 14,108 14,328 36,696 39,770 Jan Feb Mar Apr May June 154,409 79,670 74,739 155,396 80,649 74,747 152,250 77,508 74,742 147,791 74,720 73,071 145,625 72,302 73,323 145,768 71,908 73,861 245,669 248,198 251,485 255,047 256,129 256,421 163,618 164,917 166,715 169,235 169,818 169,769 54,376 54,836 54,954 55,551 55,022 54,624 71,501 72,037 73,329 74,348 75,105 75,512 37,741 38,044 38,431 39,336 39,690 39,634 82,051 83,281 84,770 85,812 86,311 86,652 34,077 34,433 34,850 35,238 35,405 35,339 13,281 13,469 13,829 13,919 13,923 13,848 34,693 35,379 36,091 36,655 36,983 37,465 July Aug Sept Oct Nov Dec 150,332 75,554 151,188 75,485 156,915 79,735 161,038 82,518 162,384 83,229 163,719 83,482 257,207 256,740 256,837 256,218 257,042 257,979 170,391 170,540 170,163 169,781 170,275 171,603 54,427 53,734 53,587 53,338 53,181 53,808 75,952 76,705 76,691 76,588 77,298 77,935 40,013 40,101 39,885 39,855 39,797 39,860 86,816 86,200 86,674 86,437 86,767 86,376 35,393 34,683 35,114 35,222 35,294 35,572 13,835 13,892 13,957 13,825 13,832 14,108 37,588 37,625 37,603 37,390 37,641 36,696 1980: 74,778 75,703 77,180 78,521 79,155 80,236 1981: Jan Feb Mar Apr May June 164,588 165,508 165,804 167,491 167,527 171,494 83,329 84,215 85,058 86,327 86,664 88,770 81,259 261,752 81,293 264,496 80,746 266,524 81,164 267,506 80,863 269,260 82,724 269,709 174,223 175,620 176,229 177,123 177,635 178,676 55,293 55,870 55,495 55,857 55,282 55,816 79,743 80,090 80,584 81,000 81,933 81,769 39,188 39,660 40,149 40,265 40,420 41,091 87,529 88,876 90,295 90,383 91,625 91,033 36,113 36,381 36,412 36,656 36,673 36,311 14,401 14,682 14,782 14,799 14,979 14,607 37,014 37,813 39,103 38,927 39,973 40,115 July Aug Sept Oct Nov Dec* 170,324 169,518 168,581 164,085 161,979 161,629 87,319 86,841 86,179 82,583 81,641 81,275 83,005 82,677 82,402 81,502 80,338 80,354 180,855 182,221 185,140 186,718 187,275 185,789 56,867 56,594 57,495 57,648 57,740 56,830 82,431 82,996 84,083 84,986 85,574 84,912 41,557 42,631 43,562 44,084 43,961 44,047 91,017 91,140 91,476 91,722 92,269 91,383 36,786 36,421 36,692 36,716 37,022 37,285 14,573 14,772 14,568 14,222 14,063 14,328 39,658 39,947 40,216 40,784 41,184 39,770 271,872 273,361 276,616 278,440 279,544 277,172 1 Monthly 2 average for year and total for month. Book value, seasonally adjusted, end of period. Note.—Data beginning 1958 are not strictly comparable with earlier data. Source: Department of Commerce, Bureau of the Census. 289 TABLE B-51.—Manufacturers' new and unfilled orders, 1947-81 [Amounts in millions of dollars; monthly data seasonally adjusted] New orders1 Unfilled orders—3 shipments ratio Unfilled orders2 Durable goods industries Year or month Total Total 1947 1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966... . 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981" NonCapital durable goods goods indus- industries tries, nondefense Total NonDurable durable goods goods industries industries Total NonDurable durable goods goods industries industries 6,903 7,660 6,738 7,444 8,622 10,971 12,673 11,011 12,799 15,276 19,450 22,510 22,548 23,490 8,868 9,566 8,981 9,945 11,066 11,143 11,439 11,566 12,469 13,003 13,448 13,712 14,720 14,932 15,345 16,061 16,815 17,705 18,823 20,225 21,231 22,571 24,079 24,650 25,986 29,104 33,330 40,415 43,130 48,145 53,951 59,254 68,223 75,795 81,462 34,473 30,736 24,045 41,456 67,266 75,857 61,178 48,266 60,004 67,375 53,183 47,370 52,732 45,080 47,407 48,577 54,327 66,882 80,071 98,401 104,547 109,926 115,422 106,158 107,147 121,061 161,256 191,102 173,829 182,499 204,814 261,082 304,963 319,729 320,123 28,579 26,619 19,622 35,435 63,394 72,680 58,637 45,250 56,241 63,880 50,352 44,559 49,373 42,514 44,375 45,965 51,270 63,691 76,298 94,575 100,576 105,950 111,250 101,566 102,119 114,725 153,876 185,560 165,930 174,211 196,356 250,825 293,668 308,815 309,900 5,894 4,117 4,423 6,021 3,872 3,177 2,541 3,016 3,763 3,495 2,831 2,811 3,359 2,566 3,032 2,612 3,057 3,191 3,773 3,826 3,971 3,976 4,172 4,592 5,027 6,336 7,380 5,542 7,898 8,288 8,458 10,257 11,295 10,913 10,223 3.42 3.63 3.87 3.35 3.09 3.01 2.78 2.63 2.69 2.80 3.10 3.33 3.81 3.70 3.85 3.75 3.65 3.38 3.31 3.91 4.19 3.80 3.34 3.29 3.61 3.92 3.74 3.73 4.12 4.27 4.55 4.00 3.69 3.54 3.37 3.13 3.24 3.37 3.72 3.95 4.55 4.40 4.65 4.50 4.39 4.06 3.90 4.63 5.03 4.57 3.99 3.92 4.24 4.66 4,45 4.51 0.96 1.12 1.04 .85 .86 .94 .72 .79 .68 .73 .72 .80 .76 .73 .69 .69 .77 .77 .88 .93 .64 .84 .76 .70 .78 .77 .68 .60 83,585 83,152 79,387 73,379 69,005 70,331 80,209 76,785 82,162 83,364 83,971 86,577 24,835 21,976 23,089 22,443 20,233 21,105 23,524 21,283 22,518 21,625 23,350 24,664 74,907 74,792 74,898 72,872 72,957 73,506 74,605 75,872 77,334 78,560 79,049 80,323 309,045 311,592 313,627 312,087 308,426 306,494 310,977 312,446 315,027 315,912 316,547 319,729 297,583 300,085 301,963 300,623 297,327 295,750 300,405 301,705 304,133 304,978 305,720 308,815 11,463 11,507 11,663 11,465 11,099 10,744 10,572 10,740 10,895 10,933 10,827 10,913 3.80 3.80 3.90 3.98 4.04 4.04 3.98 4.01 3.81 3.76 3.73 3.74 4.50 4.50 4.64 4.76 4.83 4.87 4.78 4.80 4.55 4.46 4.42 4.45 .75 .76 .77 .76 .75 .71 .69 .71 .69 .70 .69 .68 84,208 85,446 86,729 87,180 88,164 88,303 89,696 87,350 86,278 77,804 79,956 80,184 24,823 21,185 24,460 24,723 23,865 23,230 24,226 24,700 23,026 20,996 23,813 22,807 81,216 81,541 80,632 81,404 81,176 82,610 82,915 82,713 82,166 81,201 79,967 80,093 320,566 322,045 323,602 324,694 326,508 325,918 328,206 328,757 328,613 323,538 321,478 320,123 309,695 310,926 312,598 313,450 314,954 314,477 316,853 317,369 317,460 312,681 310,995 309,900 10,870 11,119 11,005 11,244 11,554 11,441 11,353 11,388 11,153 10,857 10,483 10,223 3.74 3.70 3.68 3.69 3.69 3.62 3.65 3.67 3.68 3.74 3.72 3.73 4.45 4.42 4.39 4.41 4.40 4.30 4.36 4.37 4.41 4.49 4.49 4.51 .67 .67 .66 .67 .69 .68 .66 .67 .65 .64 .62 .60 15,256 17,693 15,614 20,110 23,907 23,204 23,586 22,335 27,465 28,368 27,559 27,002 30,724 30,235 31,104 33,436 35,524 38,357 42,100 46,402 47,056 50,687 53,950 52,038 55,983 64,167 76,259 87,268 85,149 99,543 115,027 131,612 147,576 155,059 166,556 6,388 8,126 6,633 10,165 12,841 12,061 12,147 10,768 14,996 15,365 14,111 13,290 16,003 15,303 15,759 17,374 18,709 20,652 23,278 26,177 25,825 28,116 29,871 27,388 29,998 35,064 42,930 46,853 42,019 51,398 61,076 72,358 79,353 79,264 85,094 158,492 157,944 154,285 146,251 141,962 143,837 154,815 152,657 159,496 161,924 163,020 166,900 165,423 166,987 167,361 168,584 169,340 170,913 172,611 170,063 168,444 159,005 159,923 160,277 1980: Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec 1981: Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec " 1 Monthly average for 2 Seasonally adjusted, 3 year and total for month. end of period. Ratio of unfilled orders at end of period to shipments for period; excludes industries with no unfilled orders. Annual figures relate to seasonally adjusted data for December. Note.—Data beginning 1958 are not strictly comparable with earlier data. Source: Department of Commerce, Bureau of the Census. 290 TABLE B-52.—Consumer price indexes, major expenditure classes, 1929-81 [1967=100] Year or month All items Housing Food and beverages Total » Food Total 2 Rent, residential Other Apparel Trans- Medical Entergoods and Home Fuel and care tainment and portation upkeep other ownerservices ship utilities3 Ener- gy 4 1929 1933 1939 51.3 38.8 41.6 483 30.6 34.6 52.2" 76.0 54.1 56.0 48.5 36.9 42.4 43.0 36.7 1940 1941 1942 1943 1944 1945 1946 1947 1948 1949 42.0 44.1 48.8 51.8 52.7 53.9 58.5 66.9 72.1 71.4 35.2 38.4 45.1 50.3 49.6 50.7 58.1 70.6 76.6 73.5 52.4 53.7 56.2 56.8 58.1 59.1 60.6 65.2 69.8 70.9 56.2 57.2 58.5 58.5 58.6 58.8 59.2 61.1 65.1 68.0 42.8 44.8 52.3 54.6 58.5 61.5 67.5 78.2 83.3 80.1 42.7 44.2 48.1 47.9 47.9 47.8 50.3 55.5 61.8 66.4 36.8 37.0 38.0 39.9 41.1 42.1 44.4 48.1 51.1 52.7 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 72.1 77.8 79.5 80.1 80.5 80.2 81.4 84.3 86.6 87.3 74.5 82.8 84.3 83.0 82.8 81.6 82.2 84.9 88.5 87.1 72.8 77.2 78.7 80.8 81.7 82.3 83.6 86.2 87.7 88.6 70.4 73.2 76.2 80.3 83.2 84.3 85.9 87.5 89.1 90.4 75.0 76.3 77.0 78.3 81.7 83.5 84.4 83.0 83.5 85.1 87.3 89.9 91.7 93.8 79.0 86.1 85.3 84.6 84.5 84.1 85.8 87.3 87.5 88.2 68.2 72.5 77.3 79.5 78.3 77.4 78.8 83.3 86.0 89.6 53.7 56.3 59.3 61.4 63.4 64.8 67.2 69.9 73.2 76.4 90.1 90.3 91.8 88.7 89.6 90.6 91.7 92.9 945 97.2 100.0 104.2 109.8 103.6 108.8 88.0 89.1 89.9 91.2 92.4 94.4 99.1 100.0 103.6 108.9 90.2 90.9 91.7 92.7 93.8 94.9 97.2 100.0 104.0 110.4 91.7 92.9 94.0 95.0 95.9 96.9 98.2 100.0 102.4 105.7 86.3 86.9 87.9 89.0 90.8 92.7 96.3 100.0 105.7 116.0 95.9 97.1 97.3 98.2 98.4 98.3 98.8 100.0 101.3 103.6 89.6 90.4 90.9 91.9 92.7 93.7 96.1 100.0 105.4 111.5 89.6 90.6 92.5 93.0 94.3 95.9 97.2 100.0 103.2 107.2 79.1 81.4 83.5 85.6 87.3 89.5 93.4 100.0 106.1 113.4 100.0 105.7 111.0 100.0 105.2 110.4 94.2 94.4 94.7 95.0 94.6 96.3 97.8 100.0 101.5 104.2 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 116.3 121.3 125.3 133.1 147.7 161.2 170.5 181.5 195.4 217.4 114.7 118.3 123.2 139.5 158.7 172.1 177.4 188.0 206.3 228.5 114.9 118.4 123.5 141.4 161.7 175.4 180.8 192.2 211.4 234.5 118.2 123.4 128.1 133.7 148.8 164.5 174.6 186.5 202.8 227.6 110.1 115.2 119.2 124.3 130.6 137.3 144.7 153.5 164.0 176.0 128.5 133.7 140.1 146.7 163.2 181.7 191.7 204.9 227.2 262.4 107.6 115.0 120.1 126.9 150.2 167.8 182.7 202.2 216.0 239.3 116.1 119.8 122.3 126.8 136.2 142.3 147.6 154.2 159.6 166.6 112.7 118.6 119.9 123.8 137.7 150.6 165.5 177.2 185.5 212.0 120.6 128.4 132.5 137.7 150.5 168.6 184.7 202.4 219.4 239.7 116.7 122.9 126.5 130.0 139.8 152.2 159.8 167.7 176.6 188.5 116.8 122.4 127.5 132.5 142.0 153.9 162.7 172.2 183.3 196.7 107.0 111.2 114.3 123.5 159.7 176.6 189.3 207.3 220.4 275.9 1980 1981 246.8 272.4 248.0 267.3 254.6 274.6 263.3 293.5 191.6 314.0 278.6 352.7 319.2 178.4 186.9 249.7 280.0 265.9 294.5 205.3 208.2 214.5 235.7 361.1 410.0 233.2 236.4 239.8 242.5 244.9 247.6 237.5 238.6 243.8 244.9 247.3 247.3 250.5 254.5 257.9 292.5 296.3 302.0 307.7 266.7 184.1 185.6 186.6 187.0 188.9 191.1 312.9 320.4 258.6 263.8 268.0 270.5 275.9 282.2 171.0 171.9 176.0 177.3 177.5 177.2 233.5 239.6 243.7 246.8 249.0 249.7 253.9 257.9 260.2 262.0 263.4 264.7 206.3 208.1 208.9 209.8 211.2 212.5 327.9 344.6 355.0 358.8 363.2 367.8 247.8 249.4 248.3 252.0 254.2 255.5 257.4 259.3 254.8 258.7 265.1 265.8 267.7 271.1 273.8 276.9 192.1 193.2 195.1 197.1 198.3 199.6 315.4 315.4 317.6 323.8 329.4 334.2 285.5 286.8 288.2 287.6 285.7 289.9 176.2 178.6 182.2 183.9 184.8 183.9 251.0 252.7 254.7 256.1 259.0 261.1 266.6 268.4 270.6 272.8 274.5 275.8 206.6 208.0 209.8 210.9 211.2 212.0 213.5 214.5 220.6 221.5 222.8 224.6 370.4 370.7 261.1 262.4 264.5 266.4 261.4 263.7 265.0 265.7 265.4 266.5 268.6 270.8 272.2 272.9 272.5 273.6 279.1 280.9 282.6 284.8 288.5 292.2 200.9 201.9 203.0 204.2 205.9 206.8 335.8 335.8 336.8 339.3 345.0 350.4 296.7 304.5 308.4 310.5 314.9 320.2 181.1 182.0 185.1 186.4 186.4 185.8 264.7 270.9 273.5 275.3 277.8 279.9 279.5 282.6 284.7 287.0 289.0 214.4 216.7 218.2 219.2 220.3 220.8 226.2 227.4 228.7 229.9 232.2 233.4 381.7 401.1 409.3 409.8 411.3 414.0 268.9 276.2 277.4 278.0 277.6 297.0 299.7 303.7 303.5 304.2 305.2 207.8 358.0 361.8 367.8 366.7 367.2 367.8 184.7 187.4 190.7 191.5 191.3 190.5 282.6 283.7 285.2 287.2 295.6 299.3 221.1 210.3 211.9 213.6 215.0 216.5 325.1 327.8 331.1 330.1 329.8 331.8 234.4 235.6 243.0 245.2 245.9 246.7 415.7 416.1 417.1 414.9 414.1 414.6 1960 1961 1962 1963 1964 .. 1965 1966 1967 1968 . 1969 . zzz ioo.o" 221.4 1980: Jan Feb Mar April May June July Aug Sept Oct Nov Dec 1981: Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec 251.7 253.9 256.2 258.4 260.5 263.2 265.1 266.8 269.0 271.3 274.4 276.5 279.3 279.9 280.7 281.5 241.0 242.8 244.1 245.7 270.1 270.7 270.3 269.9 270.5 249.1 250.4 252.0 277.1 277.8 261.7 1 289.1 289.8 291.5 301.7 304.8 308.2 310.2 195.3 197.8 200.6 202.5 204.0 205.3 222.3 224.0 225.5 226.8 227.3 370.1 368.0 366.1 370.4 Includes alcoholic beverages, not shown separately. Includes other items not shown separately. Series beginning 1967 not comparable with series for earlier years. Fuel oil, coal, and bottled gas; gas (piped) and electricity; and other utilities and public services. 4 Fuel oil, coal, and bottled gas; gas (piped) and electricity; and motor fuel, motor oil, coolant, etc. Note.—Data beginning 1978 are for all urban consumers; earlier data are for urban wage earners and clerical workers. Source: Department of Labor, Bureau of Labor Statistics. 2 3 291 TABLE B-53.—Consumer price indexes, selected expenditure classes, 1939-81 [1967=100] Homeownership Food and beverages Fuel and other utilities Household fuels Food Year or month Total 1 Total At home Away from home Total Home purchase Financing, taxes, and insurance Maintenance and repair Total Total Other Fuel utilioil, Gas ties coal, (piped) and and and public bot- electric- servtled ity ices gas 1939.. 34.6 37.1 82.9 1940 1941 1942 1943 1944 1945 1946 1947 1948 1949 35.2 38.4 45.1 50.3 49.6 50.7 58.1 70.6 76.6 73.5 73.5 79.8 76.7 38.2 40.5 43.1 45.2 47.1 48.0 51.3 58.4 68.6 70.3 82.1 81.4 81.0 80.6 80.3 79.6 77.4 77.1 79.1 81.0 1950 1951 1952 1953, 1954 1955 1956 1957 1958 1959 74.5 82.8 84.3 83.0 82.8 81.6 82.2 84.9 88.5 87.1 77.6 86.3 87.8 86.2 85.8 84.1 84.4 87.2 91.0 88.8 68.9 70.1 70.8 72.2 74.9 77.2 79.3 750 76.3 77.0 78.3 81.7 83.5 84.4 865 87.1 87.3 87.6 90.0 91.3 91.3 71.2 72.4 74.1 77.2 80.5 81.8 83.2 72.7 76.5 78.0 81.5 81.2 82.3 85.9 903 88.7 89.8 81.2 81.5 82.6 84.2 85.3 87.5 88.4 893 92.4 94.7 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 100.0 103.6 108.8 88.0 89.1 89.9 91.2 92.4 94.4 99.1 100.0 103.6 108.9 89.6 90.4 91.0 92.2 93.2 95.5 100.3 100.0 103.2 108.2 81.4 83.2 85.4 87.3 88.9 90.9 95.1 100.0 105.2 111.6 86.3 86.9 87.9 89.0 90.8 92.7 96.3 100.0 105.7 116.0 91.8 92.3 93.2 94.2 95.7 97,0 98.6 100.0 102.8 109.5 l6o.o" 108.3 123.7 84.6 85.9 86.5 87.7 89.5 91.3 95.2 100.0 106.1 115.0 95.9 89.2 97.1 91.0 97.3 91.5 98.2 93.2 98.4 92.7 98.3 94.6 98.8 ............... 97.0 100.0 100.0 101.3 101.4 103.1 103.6 103.4 105.6 98.6 99.4 99.4 99.4 99.4 99.4 99.6 100.0 100.9 102.8 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 114.7 114.9 113.7 119.9 128.5 118.3 118.3 118.4 116.4 126.1 133.7 124.8 123.2 123.5 121.6 131.1 140.1 130.0 139.5 141.4 141.4 141.4 146.7 132.7 158.7 161.7 162.4 159.4 163.2 142.7 172.1 175.4 175.8 174.3 181.7 160.3 177.4 180.8 179.5 186.1 191.7 168.4 188.0 192.2 190.2 200.3 204.9 179.5 206.3 211.4 210.2 218.4 227.2 196.7 228.5 234.5 232.9 242.9 262.4 223.1 142.3 143.5 150.8 160.6 181.1 201.9 212.8 227.2 257.8 308.9 124.0 107.6 107.9 110.1 133.7 115.0 115.3 117.5 140.7 120.1 120.1 118.5 151.0 126.9 128.4 136.0 171.6 150.2 160.7 214.6 187.6 167.8 183.8 235.3 199.6 182.7 202.3 250.8 214.7 202.2 228.6 283.4 233.0 216.0 247.4 298.3 256.4 239.3 286.4 403.1 107.3 114.7 120.5 126.4 145.8 169.6 189.0 213.4 232.6 257.8 107.4 114.7 120.6 124.1 130.3 137.1 145.4 152.0 158.3 159.5 1980 1981 248.0 254.6 251.5 267.0 314.0 267.3 274.6 269.9 291.0 352.7 254.3 267.7 396.0 472.5 285.7 314.4 278.6 349.4 319.2 407.0 556.0 675.9 301.8 345.9 165.2 181.0 Jan Feb Mar Apr May June 237.5 238.6 241.0 242.8 244.1 245.7 243.8 244.9 247.3 249.1 250.4 252.0 240.6 241.3 243.6 245.3 246.5 248.0 256.1 258.3 260.9 263.0 264.6 266.6 292.5 296.3 302.0 307.7 312.9 320.4 242.1 243.0 244.0 246.5 249.7 252.6 359.8 367.7 379.9 390.6 399.7 416.1 270.6 273.7 278.8 282.9 284.9 285.9 258.6 263.8 268.0 270.5 275.9 282.2 318.0 327.1 333.9 337.8 346.4 355.8 514.0 539.1 553.4 556.4 556.0 558.7 273.0 278.8 284.0 288.0 298.2 308.8 161.5 161.3 161.9 162.3 163.1 164.9 July Aug Sept Oct Nov Dec 248.3 252.0 254.2 255.5 257.4 259.3 254.8 258.7 261.1 262.4 264.5 266.4 251.5 256.3 258.9 260.0 262.1 263.9 267.8 269.5 271.4 273.1 275.3 277.7 315.4 315.4 317.6 323.8 329.4 334.2 253.9 258.1 261.5 265.5 267.3 267.2 399.6 393.6 393.5 404.7 416.9 429.4 287.6 288.5 291.6 292.8 294.2 296.8 285.5 360.8 286.8 362.5 288.2 364.5 287.6 362.8 285.7 358.7 289.9 364.7 560.4 561.5 561.5 558.7 567.0 585.3 314.3 316.1 318.4 317.1 310.5 313.9 165.9 166.5 167.1 167.8 169.0 170.6 Jan Feb Mar Apr May June 261.4 263.7 265.0 265.7 265.4 266.5 268.6 270.8 272.2 272.9 272.5 273.6 265.6 267.3 268.6 268.7 267.7 268.7 280.9 284.7 286.1 288.2 289.3 290.6 335.8 335.8 336.8 339.3 345.0 350.4 266.2 263.0 261.1 260.7 263.0 266.6 435.2 437.1 441.1 447.1 458.3 467.2 296.8 302.8 306.1 309.3 312.9 315.5 296.7 304.5 308.4 310.5 314.9 320.2 375.4 387.4 393.7 396.5 403.3 411.7 625.9 675.6 693.4 690.6 685.8 682.0 318.5 322.9 326.7 330.6 339.6 350.2 171.9 173.6 174.0 175.1 176.2 177.1 July Aug Sept Oct Nov Dec 268.9 270.1 270.7 270.3 269.9 270.5 276.2 277.4 278.0 277.6 277.1 277.8 271.6 272.8 273.2 272.1 271.0 271.7 292.4 293.7 294.8 296.2 297.2 297.7 358.0 271.4 361.8 272.6 367.8 274.5 366.7 272.5 367.2 270.2 367.8 270.5 480.0 488.3 501.8 501.8 505.6 506.3 319.3 320.5 321.6 320.8 322.8 324.1 325.1 327.8 331.1 330.1 329.8 331.8 417.2 419.5 422.4 419.0 417.6 420.0 677.9 674.6 673.4 672.7 676.1 682.5 357.6 360.8 364.5 360.6 358.3 359.9 180.8 183.7 187.4 189.4 190.7 191.9 1980: 1981: See next page for continuation of table. 292 83.0 83.5 85.1 87.3 89.9 91.7 93.8 iiz ...._ 101.2 104.0 TABLE B-53.—Consumer price indexes, selected expenditure classes, 1939-81—Continued [1967=100] Transportation Medical care Private transportation Year or month 1939 1940.. 1941 1942 1943 1944 1945 1946 1947 1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1980 Jan. Feb Mar. Apr May June. July Aug. Sept Oct Nov Dec. 1981Jan. Feb Mar. Apr. May June. July. Aug. Sept. Oct. Nov Dec 1 2 3 Total Total New cars Used cars Motor2 fuel Automobile maintenance and repair 89.2" 75.9 71.8 69.1 77.4 80.2 89.5 83.6 86.9 94.8 96.0 100.1 99.4 97.0 100.0 (3) 103.1 104.3 110.2 110.5 117.6 122.6 146.4 167.9 182.8 186.5 201.0 208.1 256.9 49.0 48.1 50.5 534 54.0 54.2 53.8 54.9 62.2 70.4 72.3 71.8 73.9 75.8 80.3 82.5 83.6 86.5 90.0 88.8 89.9 92.5 91.4 91.9 91.8 91.4 94.9 97.0 100.0 101.4 104.7 105.6 106.3 107.6 118.1 159.9 170.8 177.9 188.2 196.3 265.6 369.1 410.9 43.1 43.0 44.9 488 49.4 50.0 50.4 52.0 56.4 59.6 61.1 62.3 67.0 68.6 72.3 74.8 76.5 79.5 82.4 83.7 85.5 87.2 89.3 90.4 91.6 92.8 94.5 96.2 100.0 105.5 112.2 120.6 129.2 135.1 142.2 156.8 176.6 189.7 203.7 220.6 242.6 268.3 293.6 173.9 175.3 175.0 177.0 178.9 178.5 179.2 181.1 181.7 181.9 184.3 184.5 197.2 195.3 195.2 196.7 199.3 200.7 203.4 206.4 214.6 222.7 230.8 234.4 334.6 357.6 370.9 374.7 375.4 376.2 376.7 375.9 373.0 370.5 370.5 373.3 185.3 184.8 182.9 186.1 190.9 192.2 192.5 191.9 191.3 192.5 195.3 197.0 234.0 385.2 234.3 410.8 235.4 420.7 239.1 419.3 245.2 416.5 252.9 414.4 260.3 412.9 266.9 411.7 272.8 Mll.l 278.2 409.9 281.4 409.5 281.9 408.4 43.0 42.7 44.2 48.1 47.9 47.9 47.8 50.3 55.5 61.8 66.4 68.2 72.5 77.3 79.5 78.3 77.4 78.8 83.3 86.0 89.6 89.6 90.6 92.5 93.0 94.3 95.9 97.2 100.0 103.2 107.2 112.7 118.6 119.9 123.8 137.7 150.6 165.5 177.2 185.5 212.0 249.7 280.0 44.2 43.6 45.9 52.3 51.4 51.4 51.3 54.3 61.5 68.2 72.3 72.5 75.8 80.8 82.4 80.3 78.9 80.1 84.7 87.4 91.1 90.6 91.3 93.0 93.4 94.7 96.3 97.5 100.0 103.0 106.5 111.1 116.6 117.5 121.5 136.6 149.8 164.6 176.6 185.0 212.3 249.2 277.5 43.2 43.3 46.6 69.2" 75.6 82.8 83.4 87.4 94.9 95.8 94.3 90.9 93.5 98.4 101.5 105.9 104.5 104.5 104.1 103.5 103.2 100.9 99.1 100.0 102.8 104.4 107.6 112.0 111.0 111.1 117.5 127.6 135.7 142.9 153.8 166.0 179.3 190.2 233.5 239.6 243.7 246.8 249.0 249.7 251.0 252.7 254.7 256.1 259.0 261.1 233.5 239.8 244.0 247.0 249.2 249.7 250.5 251.6 253.2 254.5 257.4 259.4 264.7 270.9 273.5 275.3 277.8 279.9 282.6 283.7 285.2 287.2 289.1 289.8 262.9 269.4 271.7 273.4 276.0 277.9 279.6 280.5 281.9 283.9 285.8 286.5 Other Public transportation Total Medical care commodities Medical care services 100.0 103.4 109.7 119.2 128.4 129.1 127.8 132.4 141.2 163.1 177.3 184.6 198.6 222.6 241.3 33.1 33.1 33.1 33.3 33.4 33.5 33.5 34.4 36.0 40.7 45.2 48.9 54.0 57.5 61.3 65.5 67.4 70.0 72.7 76.1 78.3 81.0 84.6 87.4 88.5 90.1 91.9 95.2 100.0 104.6 112.7 128.5 137.7 143.4 144.8 148.0 158.6 174.2 182.4 187.8 200.3 251.6 312.0 36.7 36.8 37.0 38.0 39.9 41.1 42.1 44.4 48.1 51.1 52.7 53.7 56.3 59.3 61.4 63.4 64.8 67.2 69.9 73.2 76.4 79.1 81.4 83.5 85.6 87.3 89.5 93.4 100.0 106.1 113.4 120.6 128.4 132.5 137.7 150.5 168.6 184.7 202.4 219.4 239.7 265.9 294.5 71.1 70.8 71.4 73.0 73.5 74.3 74.8 76.2 81.8 86.1 87.4 88.5 91.0 91.8 92.6 93.7 94.7 96.7 99.3 102.8 104.4 104.5 103.3 101.7 100.8 100.5 100.2 100.5 100.0 100.2 101.3 103.6 105.4 105.6 105.9 109.6 118.8 126.0 134.1 143.5 153.8 168.1 186.5 32.5 32.5 32.7 33.7 35.4 36.9 37.9 40.1 43.5 46.4 48.1 49.2 51.7 55.0 57.0 58.7 60.4 62.8 65.5 68.7 72.0 74.9 77.7 80.2 82.6 84.6 87.3 92.0 100.0 107.3 116.0 124.2 133.3 138.2 144.3 159.1 179.1 197.1 216.7 235.4 258.3 287.4 318.2 255.1 258.2 260.9 264.1 266.1 267.3 269.0 271.1 273.8 276.0 278.4 280.1 209.8 212.6 216.5 221.3 224.5 225.0 224.5 224.7 226.0 226.5 228.8 231.0 226.8 229.5 232.1 235.9 239.5 242.2 250.5 261.5 271.0 273.6 277.0 280.1 253.9 257.9 260.2 262.0 263.4 264.7 266.6 268.4 270.6 272.8 274.5 275.8 160.5 162.1 163.5 164.9 166.4 167.9 169.1 170.2 171.3 172.5 173.8 175.1 274.4 279.0 281.5 283.4 284.7 285.9 288.0 289.8 292.3 294.8 296.6 297.9 282.7 285.4 287.7 289.0 290.8 291.9 293.5 295.5 298.7 301.3 302.8 304.1 232.4 234.2 234.7 236.3 238.9 241.0 242.9 243.0 244.2 247.5 249.5 250.6 286.4 288.1 293.9 297.2 297.7 303.9 323.1 326.5 329.1 330.8 333.2 333.8 279.5 282.6 284.7 287.0 289.0 291.5 295.6 299.3 301.7 304.8 308.2 310.2 176.7 179.2 180.7 182.4 184.7 186.3 187.7 189.4 190.8 192.1 193.1 194.9 302.1 305.2 307.5 309.8 311.7 314.4 319.2 323.4 326.1 329.7 333.7 335.7 Includes alcoholic beverages, not shown separately. Includes direct pricing of diesel and gasohol beginning September 1981. Not available. Note.—Data beginning 1978 are for all urban consumers; earlier data are for urban wage earners and clerical workers. Source: Department of Labor, Bureau of Labor Statistics. 293 TABLE B-54.—Consumer price indexes, commodities, services, and special groups, 1939-81 [1967=100] Services Commodities Special indexes Commodities less food Year or month All All comitems modities Food All All Non- services Durable durable Rent Services less rent All items less food All items All less items food Ener-1 less and gy energy energy 1939 41.6 40.2 34.6 47.7 48.5 44.3 43.5 56.0 38.1 47.2 1940 1941 1942 1943 1944 1945 1946 1947 1948 1949 42.0 44.1 48.8 51.8 52.7 53.9 58.5 66.9 72.1 71.4 40.6 43.3 49.6 54.0 54.7 56.3 62.4 75.0 80.4 78.3 35.2 38.4 45.1 50.3 49.6 50.7 58.1 70.6 76.6 73.5 48.0 50.4 56.0 58.4 61.6 64.1 68.1 76.8 82.7 81.5 48.1 51.4 58.4 60.3 65.9 70.9 74.1 80.3 86.2 87.4 44.7 46.7 51.6 53.8 56.6 58.6 62.9 72.2 77.8 76.3 43.6 44.2 45.6 46.4 47.5 48.2 49.1 51.1 54.3 56.9 56.2 57.2 58.5 58.5 58.6 58.8 59.2 61.1 65.1 68.0 38.1 38.6 40.3 42.1 44.2 45.1 46.7 49.0 51.9 54.5 47.3 48.7 52.1 53.6 55.7 56.9 59.4 64.9 69.6 70.3 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 72.1 77.8 79.5 80.1 80.5 80.2 81.4 84.3 86.6 87.3 78.8 85.9 87.0 86.7 85.9 85.1 85.9 88.6 90.6 90.7 74.5 82.8 84.3 83.0 82.8 81.6 82.2 84.9 88.5 87.1 81.4 87.5 88.3 88.5 87.5 86.9 87.8 90.5 91.5 92.7 88.4 95.1 96.4 95.7 93.3 91.5 91.5 94.4 95.9 97.3 76.2 82.0 82.4 83.1 83.5 83.5 85.3 87.6 88.2 89.3 58.7 61.8 64.5 67.3 69.5 70.9 72.7 75.6 78.5 80.8 70.4 73.2 76.2 80.3 83.2 84.3 85.9 87.5 89.1 90.4 56.0 59.3 62.2 64.8 66.7 68.2 70.1 73.3 76.4 79.0 71.1 75.7 77.5 79.0 79.5 79.7 81.1 83.8 85.7 87.3 88.7 89.6 90.6 91.7 92.9 94.5 97.2 100.0 104.2 109.8 91.5 92.0 92.8 93.6 94.6 95.7 98.2 100.0 103.7 108.4 88.0 89.1 89.9 91.2 92.4 94.4 99.1 100.0 103.6 108.9 93.1 93.4 94.1 94.8 95.6 96.2 97.5 100.0 103.7 108.1 96.7 96.6 97.6 97.9 98.8 98.4 98.5 100.0 103.1 107.0 90.7 91.2 91.8 92.7 93.5 94.8 97.0 100.0 104.1 108.8 83.5 85.2 86.8 88.5 90.2 92.2 95.8 100.0 105.2 112.5 91.7 92.9 94.0 95.0 95.9 96.9 98.2 100.0 102.4 105.7 81.9 83.9 85.5 87.3 89.2 91.5 95.3 100.0 105.7 113.8 88.8 89.7 90.8 92.0 93.2 94.5 96.7 100.0 104.4 110.1 88.3 88.3 94.2 89.3 89.3 94.4 90.4 90.5 94.7 91.6 91.6 95.0 92.9 93.0 94.6 94.3 94.3 96.3 97.3 96.6 97.8 100.0 100.0 100.0 104.4 104.6 101.5 110.3 110.7 104.2 116.3 121.3 125.3 133.1 147.7 161.2 170.5 181.5 195.4 217.4 113.5 117.4 120.9 129.9 145.5 158.4 165.2 174.7 187.1 208.4 114.9 118.4 123.5 141.4 161.7 175.4 180.8 192.2 211.4 234.5 112.5 116.8 119.4 123.5 136.6 149.1 156.6 165.1 174.7 195.1 111.8 116.5 118.9 121.9 130.6 145.5 154.3 163.2 173.9 191.1 113.1 117.0 119.8 124.8 140.9 151.7 158.3 166.5 174.3 198.7 121.6 128.4 133.3 139.1 152.1 166.6 180.4 194.3 210.9 234.2 110.1 115.2 119.2 124.3 130.6 137.3 144.7 153.5 164.0 176.0 123.7 130.8 135.9 141.8 156.0 171.9 186.8 201.6 219.4 244.9 116.7 122.1 125.8 130.7 143.7 157.1 167.5 178.4 191.2 213.0 117.0 122.0 126.1 133.8 146.9 160.2 169.2 179.8 193.8 213.1 246.8 272.4 233.9 253.6 254.6 274.6 222.0 241.2 210.4 227.1 235.2 257.5 270.3 305.7 191.6 208.2 285.1 324.3 244.0 270.6 238.0 232.8 361.1 261.7 257.1 410.0 Jan Feb .... Mar Apr May June 233.2 236.4 239.8 242.5 244.9 247.6 222.4 225.2 228.0 229.9 231.4 232.8 243.8 244.9 247.3 249.1 250.4 252.0 210.4 213.8 216.7 218.6 220.2 221.4 201.3 202.1 203.0 204.9 207.1 208.6 220.5 227.3 232.6 234.6 235.5 236.3 253.1 256.8 261.3 265.3 269.2 274.2 184.1 185.6 186.6 187.0 188.9 191.1 266.1 270.2 275.4 280.0 284.4 290.0 229.9 233.5 237.1 239.9 242.6 245.5 225.9 228.0 230.8 233.4 235.7 238.3 220.6 222.8 225.7 228.5 231.0 233.7 327.9 344.6 355.0 358.8 363.2 367.8 July Aug Sept Oct Nov Dec 247.8 249.4 251.7 253.9 256.2 258.4 234.1 236.7 239.0 240.7 242.5 243.8 254.8 258.7 261.1 262.4 264.5 266.4 222.2 224.2 226.6 228.3 230.0 231.0 209.8 212.4 215.3 218.1 220.6 221.1 236.6 237.8 239.3 239.6 240.5 242.0 272.4 272.5 274.8 277.9 280.9 284.7 192.1 193.2 195.1 197.1 198.3 199.6 287.6 287.4 289.8 293.2 296.4 300.7 245.1 246.3 248.6 250.9 253.2 255.5 238.3 240.0 242.5 245.1 247.7 249.7 233.1 234.3 236.9 239.7 242.4 244.5 370.4 370.7 370.1 368.0 366.1 370.4 Jan Feb Mar Apr May June 260.5 263.2 265.1 266.8 269.0 271.3 245.4 248.3 249.8 250.8 251.9 253.2 268.6 270.8 272.2 272.9 272.5 273.6 232.4 235.4 237.0 238.0 239.6 241.1 221.0 220.3 219.8 221.1 223.9 226.6 245.3 253.2 257.5 258.1 258.2 258.0 287.7 290.1 292.5 295.4 299.6 303.5 200.9 201.9 203.0 204.2 205.9 206.8 304.2 306.9 309.5 312.8 317.4 321.9 257.6 260.4 262.3 264.2 267.0 269.5 251.2 252.5 253.8 255.6 257.9 260.2 245.7 246.8 248.1 250.1 253.0 255.6 381.7 401.1 409.3 409.8 411.3 414.0 July Aug Sept Oct Nov Dec 274.4 276.5 279.3 279.9 280.7 281.5 255.0 256.2 257.7 257.9 258.0 258.4 276.2 277.4 278.0 277.6 277.1 277.8 242.6 243.8 245.5 245.9 246.2 246.5 229.6 230.9 232.6 232.9 233.2 233.7 257.5 258.4 260.3 260.7 261.1 261.1 308.8 312.2 317.3 318.6 320.6 321.8 207.8 210.3 211.9 213.6 215.0 216.5 328.1 331.7 337.5 338.7 340.8 342.0 272.7 274.9 278.2 279.0 280.1 280.8 263.5 265.6 268.6 269.4 270.4 271.1 259.0 261.3 264.8 265.9 267.2 267.9 415.7 416.1 417.1 414.9 414.1 414.6 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 ... . . . ... .... ... . 1980 1981 1980: 1981: 83.9 86.3 87.0 83.3 85.2 87.0 117.6 123.1 126.9 131.3 142.2 155.3 165.5 175.8 188.7 207.0 90.1 90.3 91.8 107.0 111.2 114.3 123.5 159.7 176.6 189.3 207.3 220.4 275.9 1 Fuel oil, coal, and bottled gas; gas (piped) and electricity; and motor fuel, motor oil, coolant, etc. Note.—Data beginning 1978 are for all urban consumers; earlier data are for urban wage earners and clerical workers. Source: Department of Labor, Bureau of Labor Statistics. 294 TABLE B-55.—Changes in consumer brice indexes, commodities and services, 1948-81 [Percent change] All items Year or month Dec. to Dec.1 Year to year Dec. to Dec.1 Dec. to Dec.1 Year to year 1.7 7.2 -0.8 2.7 7.8 -1.8 -1.0 -4.1 -2.6 -3.7 1948 1949 1950 1951 1952 1953 1954 5.8 5.9 .9 .6 -.5 1955 1956 1957 1958 1959 .4 2.9 3.0 1.8 1.5 7.7 1.0 5.9 7.9 2.2 -.7 .8 -.6 .5 -1.4 _ 4 -.4 2.6 L5 3.6 2.6 2.7 1.3 .8 .6 Commodities less food Food Total Year to year Energy 2 Services Commodities Dec. to Dec.1 Year to year Dec. to Dec.1 Year to year 5.3 7.7 8.5 -4.0 -4.8 -1.5 6.1 3.6 6.3 4.8 1.4 .6 9.6 5.7 -.1 9.0 7.4 11.1 4.6 7.5 .9 1.3 -1.1 1.8 -.5 -.3 -1.3 -1.5 .2 .2 -.9 -1.6 -.2 -1.4 -1.1 3.6 5.2 4.6 4.2 1.9 3.2 5.3 4.4 4.3 3.3 —9 !9 3.1 2.3 .1 Dec. to Dec.1 -.9 -1.4 3.1 .7 2.8 3.3 2.2 4.2 -.8 -1.6 0 2.5 2.2 .8 1.5 -.7 1.0 3.1 1.1 1.3 2.3 3.1 4.5 2.7 3.7 2.0 2.5 4.0 .............. 3.8 4.3 2.9 Year to year 0.2 1.7 1.5 .7 1.2 1.6 1.2 1.6 1.0 1.1 1.2 1.3 1.1 0 1.0 1.4 .8 .9 .5 .9 .9 1.1 3.1 -.9 1.5 1.9 1.4 1.0 1.3 .9 1.4 1.3 —3 .7 1.2 .4 .4 .3 .7 .7 .8 2.7 1.9 1.7 2.3 1.8 3.3 2.0 1.9 2.0 1.9 1.5 -1.1 2.1 -.8 -.2 '.3 -A 1965 1966 1967 1968 1969 1.9 3.4 3.0 4.7 6.1 1.7 2.9 2.9 4.2 5.4 1.6 2.5 2.5 3.8 5.5 1.2 2.6 1.8 3.7 4.5 3.4 3.9 1.2 4.3 7.2 2.2 5.0 .9 3.6 5.1 .7 1.9 3.1 3.7 4.5 .6 1.4 2.6 3.7 4.2 2.6 4.9 4.0 6.1 7.4 2.2 3.9 4.4 5.2 6.9 2.0 1.8 1.4 1.7 3.1 1.8 1.6 2.2 1.5 2.7 1970 1971 1972 1973 1974 5.5 3.4 3.4 8.8 12.2 5.9 4.3 3.3 6.2 11.0 4.0 2.9 3.4 10.4 12.7 4.7 3.4 3.0 7.4 12.0 2.2 4.3 4.7 20.1 12.2 5.5 3.0 4.3 14.5 14.4 4.8 2.3 2.5 5.0 13.2 4.1 3.8 2.2 3.4 10.6 8.2 4.1 3.6 6.2 11.3 8.1 5.6 3.8 4.4 9.3 4.5 3.1 2.8 16.8 21.6 2.7 3.9 2.8 8.0 29.3 1975 1976 1977 1978 1979 7.0 4.8 6.8 9.0 13.3 9.1 5.8 6.5 7.7 11.3 6.3 3.3 6.1 8.9 13.0 8.9 4.3 5.8 7.1 11.4 6.5 .6 8.0 11.8 10.2 8.5 3.1 6.3 10.0 10.9 6.2 5.1 4.9 7.7 14.3 9.2 5.0 5.4 5.8 11.7 8.1 7.3 7.9 9.3 13.7 9.5 8.3 7.7 8.5 11.0 11.6 6.9 7.2 8.0 37.4 10.6 7.2 9.5 6.3 25.2 1980 1981 12.4 8.9 13.5 10.4 11.1 6.0 12.2 8.4 10.2 4.3 8.6 7.9 11.5 6.7 13.8 8.6 14.2 13.0 15.4 13.1 18.1 11.9 30.9 13.5 1960 1961 1962 1963 1964 . !e 2.6 .2 Change from preceding month SeaSeaSeaSeaSeaSeaUnad- sonally Unad- sonally Unad- sonally Unad- sonally Unad- sonally Unad- sonally justed ad- justed ad- justed ad- justed ad- justed ad- justed adjusted justed justed justed justed justed 1980: i!o .7 .5 .6 0.1 -.2 .9 .5 .4 .5 1.5 1.6 1.4 .9 .7 .5 1.8 1.7 1.2 .5 .5 .4 1.5 1.5 1.8 1.5 1.5 1.9 1.5 1.4 1.7 1.5 1.5 1.7 4.5 5.1 3.0 1.1 1.2 1.3 .6 1.2 1.3 .9 1.0 .7 1.1 1.5 .9 .5 .8 .7 1.0 1.9 1.7 .9 1.2 1.0 .4 .9 1.1 .8 .7 .4 .5 .9 1.1 .9 .9 .6 -.7 .0 .8 1.1 1.1 1.4 -.6 .1 .7 1.2 1.3 1.4 .7 .1 -.2 -.6 -.5 1.2 .7 1.2 .6 .4 .4 .5 .6 1.1 .5 0 .2 .4 .8 .8 .5 .3 -.1 .4 -.1 .3 .4 0 -.2 .2 .6 1.3 .7 .4 .7 .6 1.0 1.4 .5 0 .4 .4 1.1 .8 .8 1.0 1.4 1.3 .9 .8 .8 1.0 1.4 1.2 3.1 5.1 2.0 .1 .4 .7 .7 .5 .6 .1 .0 .2 .8 .6 .9 .3 .2 1.0 .4 .2 -.1 _2 .8 .8 1.0 .3 .2 .4 .6 .5 .7 .2 .1 .1 .7 .5 .8 .4 .2 1.7 1.1 1.6 .4 .6 .4 1.8 1.2 1.5 .4 .8 .5 .4 .1 .2 -.5 -.2 .1 Jan Feb.. Mar. Apr May June. 1.4 1.4 1.4 1.1 1.0 1.1 1.4 1.3 1.3 .9 .9 1.0 1.4 1.3 1.2 .8 .7 .6 1.4 1.1 1.1 .5 .4 .4 0.9 July. Aug. Sept. Oct Nov. Dec .1 .6 .9 .9 .9 .9 .1 .8 1.0 1.0 1.1 1.0 .6 1.1 1.0 .7 .7 .5 Jan Feb Mar Apr May June. .8 1.0 .7 .6 .8 .9 .7 1.0 .6 .4 .7 .7 July Aug Sept Oct Nov Dec 1.1 .8 1.0 .2 .3 .3 1.2 .8 1.2 .4 .5 .4 1981: 1 Changes from December to December are based on unadjusted indexes. Fuel oil, coal, and bottled gas; gas (piped) and electricity; and motor fuel, motor oil, coolant, etc. Note.—Data beginning 1978 are for all urban consumers; earlier data are for urban wage earners and clerical workers. Source: Department of Labor, Bureau of Labor Statistics. 2 295 TABLE B-56.—Changes in special consumer price indexes, 1958-81 [Percent change] All items less food All items All items less energy All items less food and energy All items less food, energy, and home purchase and finance 2 Year or month Dec. to Dec.1 Year to Year Dec. to Dec.1 Year to Year Dec. to Dec.1 Year to Year Dec. to Dec.1 Year to Year Dec. to Dec.1 Year to Year All items X-l3 Dec. to Dec.1 Year to Year 1958 1959 18 1.5 27 .8 16 2.3 23 1.9 19 1.4 2.9 .8 1.8 2.2 23 2.1 1960 1961 1962 1963 1964 1.5 .7 1.2 1.6 1.2 1.6 1.0 1.1 1.2 1.3 1.0 1.1 1.2 1.6 1.0 1.7 1.0 1.2 1.3 1.3 1.4 .8 1.2 1.8 1.3 1.5 1.1 1.2 1.3 1.4 .8 1.5 1.1 1.8 1.2 1.5 1.1 1.3 1.2 1.5 1965 1966 1967 1968 1969 1.9 3.4 3.0 4.7 6.1 1.7 2.9 2.9 4.2 5.4 1.6 3.3 3.5 4.9 5.7 1.4 2.3 3.4 4.4 5.5 1.9 3.5 3.1 4.9 6.4 1.5 3.2 2.8 4.4 5.7 1.5 3.3 3.9 5.1 6.1 1.4 2.4 3.5 4.6 5.8 4.6 5.2 4.5 4.9 3.9 5.2 3.7 4.4 1970 1971 1972 1973 1974 5.5 3.4 3.4 8.8 12.2 5.9 4.3 3.3 6.2 11.0 6.5 3.1 3.0 5.6 12.2 6.0 4.6 3.0 3.9 9.9 5.6 3.3 3.5 8.3 11.5 6.1 4.3 3.4 6.1 9.8 6.6 3.1 3.0 4.7 11.3 6.2 4.7 3.1 3.5 8.3 5.7 3.4 2.9 4.0 11.1 5.2 5.0 2.7 3.3 7.8 4.5 3.5 3.3 8.5 11.1 4.9 4.3 3.1 6.2 10.1 1975 1976 1977 1978 1979 7.0 4.8 6.8 9.0 13.3 9.1 5.8 6.5 7.7 11.3 7.1 6.2 6.3 8.5 14.0 9.3 6.6 6.5 7.2 11.4 6.7 4.6 6.8 9.2 11.1 9.1 5.6 6.3 7.8 10.0 6.7 6.1 6.4 8.5 11.3 9.2 6.6 6.2 7.3 9.7 6.3 6.8 5.5 6.9 7.5 8.7 6.8 6.1 6.0 7.3 6.6 5.1 6.3 7.9 10.8 8.3 5.7 6.4 6.8 9.6 1980 1981 12.4 8.9 13.5 10.4 12.9 9.9 14.6 10.9 11.7 8.6 11.7 10.0 12.1 9.6 12.5 10.4 9.9 9.4 9.0 9.5 10.8 8.5 11.2 9.5 Unadjusted Seasonally adjusted Unadjusted Seasonally adjusted 0.7 .9 1.1 .9 .7 .5 0.8 .9 1.0 .7 .6 .6 1.2 1.3 1.2 .7 .9 .7 1.2 1.0 1.2 .5 .7 .7 1.0 !e 1.1 11 1.1 .5 .8 1.3 .7 8 .5 .7 .7 1.2 .8 8 .8 .6 .8 1.0 .6 6 .6 .6 1.0 1.0 .7 .8 .8 Change from preceding month Unadjusted Seasonally adjusted Unadjusted Seasonally adjusted Unadjusted Seasonally adjusted Unadjusted Jan Feb Mar Apr May June 1.4 1.4 1.4 1.1 1.0 1.1 1.4 1.3 1.3 .9 .9 1.0 1.5 1.6 1.5 1.2 1.1 1.2 1.7 1.5 1.5 1.0 1.0 1.0 1.0 .9 1.2 1.1 1.0 1.1 1.0 .8 1.1 1.0 .9 1.1 1.1 1.0 1.3 1.2 1.1 1.2 July Aug Sept Oct Nov Dec .1 .6 .9 .9 9 .9 .1 .8 1.0 1.0 11 1.0 -.2 .5 .9 .9 9 .9 -.1 .5 .9 1.0 11 1.0 .0 .7 1.0 1.1 11 .8 .1 .8 1.2 1.1 12 1.0 -.3 .5 1.1 1.2 11 .9 June. fc .8 1.0 .7 .6 .8 .9 .7 1.0 .6 .4 .7 .7 .8 1.1 .7 .7 1.1 .9 1.0 1.1 .7 .5 .9 .8 .6 .5 .5 .7 .9 .9 .6 .3 .4 .5 .8 .9 .5 .4 .5 .8 1.2 1.0 .6 .4 .4 .6 1.1 1.0 .5 .8 .7 .9 .8 .7 .5 .8 .6 .8 .6 .7 .9 1.3 .8 .6 .6 .6 .8 1.0 .8 .4 .4 .6 July. Aug Sept Oct Nov Dec 1.1 .8 1.0 .2 .3 .3 1.2 .8 1.2 .4 .5 .4 1.2 .8 1.2 .3 .4 .2 1.3 .8 1.2 .4 .5 .4 1.3 .8 1.1 .3 .4 .3 1.4 .9 1.2 .4 .4 .5 1.3 .9 1.3 .4 .5 .3 1.4 .9 1.2 .4 .5 .5 .9 .8 1.1 .7 .7 .4 1.2 .7 1.0 .7 .5 .7 .8 .7 .8 .4 .4 .4 .8 .9 .8 .7 .5 .5 1980: 1981: Jan Feb. Mar. 1 Seasonally adjusted 1.3 1.0 1.2 1.1 1.1 1.2 1 Changes from December to December are based on unadjusted indexes. All items less food, energy, and home purchase and financing, taxes, and insurance; estimated series. An experimental measure using a rental equivalence approach for homeownership costs. Effective with data for January 1983, the consumer price index for all urban consumers will incorporate a rental equivalence measure. Note.—Data beginning 1978 are for all urban consumers; earlier data are for urban wage earners and clerical workers. 2 3 Source: Department of Labor, Bureau of Labor Statistics. 296 TABLE B-57.—Producer price indexes by stage of processing, 1947-81 [1967=100] Finished goods Finished goods excluding consumer foods Consumer foods Year or month Total finished goods Total Crude Processed Consumer goods Total Total Capital equipment Total finished consumer goods 80.5 86.5 82.5 83.9 91.8 90.7 89.2 89.1 88.5 89.8 92.4 94.4 93.6 94.5 94.3 94.6 94.1 94.3 96.1 99.4 100.0 102.7 106.6 109.9 112.9 116.6 129.2 149.3 163.6 169.7 180.7 194.9 217.9 248.9 271.2 Durable Nondurable 74.6 79.7 81.8 82.7 88.2 88.9 89.6 90.3 91.2 94.3 97.1 98.4 99.6 99.2 98.8 98.3 97.8 98.2 97.9 98.5 100.0 102.2 104.0 106.9 110.8 113.3 115.4 125.9 138.2 144.5 152.8 166.9 183.2 206.2 218.5 80.7 85.8 82.3 83.6 90.0 87.8 88.6 88.9 91."f 93.2 92.6 94.0 94.7 94.7 94.8 95.1 94.8 95.9 97.8 100.0 102.2 105.0 108.3 111.7 113.6 120.5 146.8 163.0 174.8 189.3 200.0 231.3 283.9 319.4 55.4 60.4 63.4 64.9 71.2 72.4 73.6 74.5 76.7 82.4 87.5 89.8 91.5 91.7 91.8 92.2 92.4 93.3 94.4 96.8 100.0 103.5 106.9 112.0 116.6 119.5 123.5 141.0 162.5 173.4 184.6 199.2 216.5 239.8 264.3 74.0 79.9 77.6 79.0 86.5 86.0 85.1 85.3 85.5 87.9 91.1 93.2 93.0 93.7 93.7 94.0 93.7 94.1 95.7 98.8 100.0 102.8 106.6 110.3 113.7 117.2 127.9 147.5 163.4 170.6 181.7 195.9 217.7 247.0 269.8 82.8 90.4 83.1 84.7 95.2 94.3 89.4 88.7 86.5 86.3 89.3 94.5 90.1 92.1 91.7 92.5 91.4 91.9 95.4 101.6 100.0 103.6 110.0 113.5 115.3 121.7 146.4 166.9 181.0 180.4 189.9 207.2 226.2 239.5 253.5 99.4 107.1 101.3 92.2 105.9 112.8 105.2 94.7 98.8 98.7 97.4 103.5 94.3 100.6 96.1 97.0 95.5 98.2 98.6 104.8 100.0 107.5 116.0 116.3 115.8 121.2 160.7 180.8 181.2 193.9 201.0 216.8 233.1 237.2 263.6 80.2 87.6 80.1 83.4 93.2 91.3 86.7 87.6 84.4 84.3 87.9 93.1 89.5 90.7 90.9 91.7 90.7 90.8 94.9 101.0 100.0 103.0 108.9 113.1 115.1 121.7 143.9 164.6 181.3 177.8 187.3 204.6 223.8 237.8 250.6 100.0 102.6 105.4 109.1 113.1 115.4 120.1 139.3 156.2 166.1 177.7 190.7 213.3 247.8 273.2 79.0 84.0 82.2 83.5 89.5 88.3 89.1 89.4 90.1 92.3 94.6 94.7 95.9 96.3 96.2 96.0 96.0 95.9 96.6 98.1 100.0 102.1 104.6 107.7 111.4 113.5 118.6 138.6 153.1 162.6 174.3 186.7 211.5 250.8 276.3 Jan Feb Mar Apr May June 234.4 237.7 240.0 242.1 243.4 244.9 231.8 232.1 233.6 230.1 231.9 233.0 225.9 . 221.2 230.6 224.1 229.1 224.5 230.4 231.2 232.0 228.8 230.3 231.8 233.7 238.0 240.6 244.5 245.6 247.3 235.2 240.8 243.8 247.7 249.0 250.9 200.1 202.6 200.8 202.3 201.9 204.1 260.4 268.6 275.6 281.5 284.2 285.9 229.1 230.5 232.2 236.2 236.7 237.8 235.8 239.7 242.2 243.7 245.2 246.8 July Aug Sept Oct Nov Dec 249.3 251.4 251.4 255.4 256.2 257.2 241.6 246.5 247.4 248.0 248.9 249.3 240.9 247.0 259.8 237.8 250.5 254.8 239.7 244.4 244.3 246.9 246.7 246.7 250.2 251.4 251.1 256.2 257.0 258.2 253.9 255.0 254.6 258.7 259.5 260.9 207.5 208.1 206.2 214.0 213.1 213.5 288.4 290.0 290.9 291.7 293.9 296.2 240.6 241.9 241.8 249.2 250.2 250.9 251.7 254.1 254.1 257.0 257.9 258.9 Jan Feb Mar Apr May June 260.9 263.3 266.0 268.5 269.6 270.5 251.0 251.3 252.6 251.9 252.8 253.8 257.9 265.6 279.7 279.3 263.1 258.9 248.4 247.9 248.1 247.4 249.8 251.3 262.4 265.5 268.7 272.1 273.3 274.1 265.1 268.5 272.5 276.1 277.0 277.7 214.9 215.1 214.0 216.6 218.1 218.2 302.7 308.4 316.0 320.4 321.0 322.0 254.6 256.7 258.1 260.8 262.5 263.8 262.5 265.0 268.2 270.6 271.5 272.3 July Aug Sept Oct Nov Dec 271.8 271.5 271.1 274.0 274.5 275.3 257.6 256.3 255.5 253.7 252.7 253.0 262.7 256.9 253.0 253.3 259.5 273.4 255.0 254.2 253.7 251.7 250.0 249.1 274.7 274.6 274.4 278.7 279.7 280.6 277.9 277.7 277.4 281.3 282.0 282.8 218.1 218.3 215.6 224.3 224.3 225.0 322.5 322.1 323.5 323.8 325.0 325.9 265.4 265.8 265.6 271.4 272.9 274.1 273.5 273.0 272.6 274.7 274.9 275.6 1947 1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 * 1980: 1981:i See next page for continuation of table. 297 TABLE B-57.—Producer price indexes by stage of processing, 1947-81—Continued [1967=100] Crude materials for further processing Intermediate materials, supplies, and components Materials and components ProcFoodessed fuels Con- Supplies Total stuffs and For and tainers For feedmanufacconlubristuffs turing struction cants Other Total Foods and Other feeds « 1947. 1948 1949 72.4 78.3 75.2 70.0 76.1 74.2 72.1 77.8 74.5 66.0 73.1 73.2 85.5 96.9 88.2 66.8 69.8 70.1 77.5 101.2 111.7 81.0 110.9 120.8 76.3 96.0 100.3 1950 1951 1952 1953 1954 78.6 88.1 85.5 86.0 86.5 77.7 87.0 84.3 85.3 85.7 78.1 88.5 84.8 86.2 86.3 77.0 84.3 83.7 85.1 85.5 89.9 93.9 92.8 93.4 93.3 72.0 84.5 79.9 80.0 81.5 78.9 88.8 88.8 84.3 86.3 107.6 124.5 117.2 104.9 104.9 77.9 79.4 79.9 82.7 79.0 104.7 120.7 104.6 100.1 98.2 1955 1956 1957 1958 1959 88.1 92.0 94.1 94.3 95.6 88.3 92.6 95.0 94.8 96.4 88.4 92.6 94.8 95.2 96.5 88.9 93.3 93.5 96.2 94.0 101.9 96.0 94.0 96.6 95.6 82.6 88.6 92.5 94.7 94.2 84.8 97.1 95.1 87.1 97.6 93.1 88.0 99.8 97.2 90.0 102.0 103.0 99.4 96.2 91.2 78.8 84.4 89.2 90.3 91.9 103.8 107.6 106.2 102.2 105.8 1960 1961 1962 1963 1964 95.6 95.0 94.9 95.2 95.5 96.8 95.5 95.3 95.0 95.6 96.5 95.3 94.7 94.9 95.9 95.9 94.6 94.2 94.5 95.4 98.2 99.4 99.0 98.1 96.0 95.5 94.7 95.9 94.7 94.0 90.7 91.8 93.8 95.2 94.3 97.0 96.5 97.5 95.4 94.5 92.8 92.6 92.1 93.2 92.8 101.4 102.5 102.0 100.7 102.4 1965 1966 1967 1968 1969 96.8 96.9 99.2 98.9 100.0 100.0 100.0 102.3 99.4 102.5 105.8 102.7 106.1 97.4 99.3 100.0 102.2 105.8 96.2 97.4 98.8 99.2 100.0 100.0 105.0 97.6 110.8 98.5 95.8 98.4 100.0 102.4 106.3 95.2 99.4 100.0 101.0 102.8 99.3 105.7 100.0 101.6 108.4 97.1 93.5 104.5 105.9 .............. 96.3 106.7 100.0 100.0 100.0 101.3 102.2 102.3 102.1 109.3 106.8 106.6 106.9 1970 1971 1972 1973.... 1974 109.9 114.1 118.7 131.6 162.9 109.1 111.7 118.5 168.4 200.2 109.9 114.3 118.9 128.1 159.5 110.0 112.8 117.0 127.7 162.2 112.6 119.7 126.2 136.7 161.6 105.0 115.2 118.9 131.5 199.1 111.4 116.6 121.9 129.2 152.2 108.0 111.0 115.6 140.6 154.5 112.3 115.1 127.6 174.0 196.1 112.0 114.2 127.5 180.0 189.4 112.7 117.0 128.0 162.5 208.9 122.6 139.0 148.7 164.5 219.4 109.8 110.7 121.9 161.5 205.4 1975 1976 . 1977 1978 1979 180.0 189.1 201.5 215.6 243.2 195.3 185.3 190.5 203.1 226.1 178.6 189.4 202.3 216.5 244.4 178.7 185.4 195.4 208.7 234.4 176.4 188.4 203.4 224.7 247.4 233.0 250.1 282.5 295.3 364.8 171.4 180.2 188.3 202.8 226.8 168.1 179.0 188.7 198.5 218.2 196.9 202.7 209.2 234.4 274.3 191.8 190.2 192.1 216.2 247.9 206.9 228.5 245.0 272.3 330.0 271.5 305.3 372.1 426.8 507.6 188.3 206.7 212.2 233.1 284.5 280.3 252.6 282.3 . . . 306.0 250.7 310.1 265.7 286.2 268.3 503.0 287.5 595.0 254.5 276.2 244.5 304.6 259.2 401.0 615.0 346.1 263.9 329.1 257.4 482.6 751.5 413.9 Year or month 1980 1 1981 - . 1980: 104.6 120.1 110.3 101.9 101.0 Total Fuel Other 66.6 90.6 78.7 100.7 78.3 91.6 95.1 93.8 95.7 92.9 90.8 Jan Feb Mar Apr May. June 266.2 271.9 274.3 275.7 277.0 278.8 228.3 239.3 235.3 229.5 239.7 242.0 268.9 274.2 277.1 279.1 279.6 281.5 255.3 259.6 259.6 260.6 262.5 264.3 258.0 262.5 265.9 265.5 265.2 266.9 450.0 471.1 489.8 496.6 498.2 502.0 244.8 245.7 247.4 253.2 254.4 256.2 230.9 237.3 239.4 239.7 240.0 241.2 287.8 298.5 293.6 286.2 289.3 288.4 243.6 253.1 246.5 235.8 243.0 243.0 381.6 394.7 393.8 393.4 387.5 384.6 559.0 579.8 579.8 591.4 600.0 604.0 334.9 346.0 344.9 342.0 333.3 328.9 July Aug Sept Oct . Nov Dec 281.6 284.3 285.3 287.7 289.1 291.9 251.4 263.7 265.9 280.3 285.7 270.0 283.8 285.8 286.6 288.2 289.3 293.5 265.6 268.9 269.5 273.3 273.9 275.7 269.6 271.4 271.7 272.4 274.0 276.6 514.2 517.4 519.5 516.2 521.3 539.4 257.0 257.4 257.9 260.1 259.5 260.6 245.3 247.7 250.3 252.3 255.2 255.0 304.3 317.0 319.3 322.8 324.6 323.5 263.4 276.8 276.6 279.1 277.3 271.6 390.8 401.9 409.8 415.4 424.9 433.8 615.1 626.3 639.1 650.9 664.9 670.2 333.9 344.8 351.4 355.6 363.9 373.3 Jan Feb Mar Apr May June 296.1 298.3 302.0 305.8 306.7 307.2 270.9 261.3 255.6 254.9 253.1 253.2 298.0 301.0 305.4 309.5 310.7 311.2 279.6 280.3 281.6 284.1 285.1 285.8 279.2 280.3 282.7 288.0 288.5 289.6 551.9 569.8 598.3 608.5 608.7 605.7 264.6 268.2 270.9 274.3 276.4 277.2 257.8 257.8 258.9 262.4 264.0 264.6 328.0 336.5 334.2 336.3 334.4 335.4 270.7 267.1 262.1 263.5 260.6 264.3 450.1 484.9 488.4 492.1 492.4 487.4 677.4 697.7 703.6 716.6 738.4 759.2 391.0 427.9 430.9 432.5 428.3 418.1 July Aug Sept Oct. Nov Dec. 308.5 310.1 309.6 309.3 309.0 309.6 251.1 250.2 243.7 240.6 236.9 236.4 312.7 314.5 314.5 314.5 314.3 315.1 287.9 289.8 290.2 290.3 289.6 289.7 290.4 290.7 289.9 289.8 289.9 290.8 602.0 607.8 600.1 595.1 594.2 597.7 278.8 280.3 280.8 281.1 280.7 280.6 266.0 266.1 266.1 267.1 267.4 268.7 337.3 333.0 327.7 320.3 314.1 311.6 267.2 261.8 253.4 245.6 238.3 233.7 487.2 485.3 486.8 480.5 476.9 479.1 781.2 766.7 790.6 779.7 792.6 814.7 413.1 413.9 410.7 405.5 398.5 396.4 1981:1 1 Data have been revised through August 19131 to reflect the availability of late reports and corrections by respondents. All data are subject to revision 4 months after original publication. 2 Intermediate materials for food manufacturing and feeds. Source: Department of Labor, Bureau of Labor Statistics. 298 TABLE B-58.—Producer price indexes by stage of processing, special groups, 1974-81 [1967=100] Intermediate materials, supplies, and components Finished goods Crude materials for further processing Excluding food and energy Year or month 1974 1975 . 1976 , ... 1977 1978 1979 1980 2 1981 1980: Jan Feb Mar.. .. Apr May June July Aug. . . Sept . . . . Oct Nov. .. Dec 1981:2 Jan Feb .. Mar .. Apr.. . . May . June, July . Aug Sept Oct. . Nov. Dec . Total Food Energy 147.5 163.4 170.6 181.7 1959 217.7 247.0 269.8 166.9 181.0 180.4 189.9 2072 226.2 239.5 253.5 252.4 282.3 326.7 347.7 469.9 234.4 237.7 240.0 242.1 243.4 244.9 231.8 232.1 233.6 230.1 231.9 233.0 241.6 246.5 247.4 248.0 248.9 249.3 249,3 251.4 251.4 255.4 256.2 257.2 260.9 263.3 266.0 268.5 269.6 270.5 271.8 271.5 271.1 274.0 274.5 . . . 275.3 251.0 251.3 252.6 251.9 252.8 253.8 257.6 256.3 255.5 253.7 252.7 253.0 215.2 FoodConstuffs sumer Foods Capi- goods Total and 1 Energy Other Total and Energy Other feedtal excludfeeds Total equipstuffs ing ment food and energy 133.3 141.0 162.5 173.4 184.6 1992 216.5 239.8 264.3 141.0 148.1 156.6 1680 183.3 204.2 220.0 196.6 199.0 198.9 200.8 201.2 203.1 205.7 206.6 206.0 210.4 210.7 211.2 214.4 215.4 215.8 218.3 219.3 219.7 220.3 220.9 220.1 224.6 225.3 225.7 701.3 835.5 148.5 156.8 166.3 178.7 194.7 216.4 235.0 601.0 640.9 676.8 701.3 712.4 714.3 207.9 209.9 210.4 213.0 213.4 215.1 720.1 724.3 726.1 724.9 731.4 741.8 217.8 218.8 218.3 223.7 224.2 224.8 229.1 230.5 232.2 236.2 236.7 237.8 240.6 241.9 241.8 249.2 250.2 250.9 758.1 790.2 838.7 853.9 854.2 857.3 228.2 229.5 230.2 232.8 234.0 234.7 254.6 256.7 258.1 260.8 262.5 263.8 852.4 842.0 848.0 841.5 842.0 847.9 235.5 236.1 235.5 240.4 241.3 241.9 265.4 265.8 265.6 271.4 272.9 274.1 129.1 162.9 180.0 189.1 201.5 2156 243.2 280.3 306.0 200.2 188.7 156.7 196.1 189.4 223.0 198.3 195.3 185.3 190.5 203.1 226.1 252.6 250.7 174.7 185.0 196.1 2104 234.2 484.9 261.8 573.3 283.4 196.9 202.7 209.2 2344 274.3 304.6 329.1 191.8 190.2 192.1 216.2 247.9 259.2 257.4 266.9 283.1 323.5 3625 439.9 266.2' 271.9 274.3 275.7 277.0 278.8 228.3 239.3 235.3 229.5 239.7 242.0 252.5 256.2 257.5 258.8 259.3 260.8 287.8 298.5 293.6 286.2 289.3 288.4 270.7 286.6 281.7 272.7 257.2 247.1 251.4 263.7 265.9 280.3 285.7 270.0 262.2 264.2 264.9 266.9 267.6 270.6 304.3 317.0 319.3 322.8 324.6 323.5 243.6 253.1 246.5 235.8 243.0 243.0 263.4 276.8 276.6 279.1 277.3 271.6 538.3 547.9 552.3 563.4 570.6 577.2 281.6 284.3 285.3 287.7 289.1 291.9 432.1 453.3 471.2 478.9 481.0 485.6 496.6 499.6 501.2 498.1 502,7 519,0 583.3 596.6 604.6 614.2 632.0 652.2 253.5 263.1 271.0 273.8 277.2 277.9 296.1 298.3 302.0 305.8 306.7 307.2 308.5 310.1 309.6 309.3 309.0 309.6 270.9 261.3 255.6 254.9 253.1 253.2 532.0 548.8 575.4 585.3 586.0 583.4 274.3 275.9 277.8 281.3 282.6 283.4 328.0 336.5 334.2 336.3 334.4 335.4 696.0 782.6 785.1 790.5 798.2 793.5 251.1 250.2 243.7 240.6 236.9 236.4 580.6 585.9 578.6 574.0 573.2 576.4 285.5 287.0 287.7 288.2 288.1 288.6 337.3 333.0 327.7 320.3 314.1 311.6 274.1 271.1 275.5 277.9 272.7 267.5 267.0 269.0 264.0 259.9 250.3 246.5 1 2 220.8 236.8 267.3 280.3 348.6 270.7 267.1 262.1 263.5 260.6 264.3 267.2 261.8 253.4 245.6 238.3 233.7 165.0 191.0 190.1 2092 253.0 586.1 269.4 783.5 266.3 793.6 786.4 796.6 787.2 791.3 801.4 : Intermediate materials for food manufacturing and feeds. Data have been revised through August 1981 to reflect the availability of late reports and corrections by respondents. All data are subject to revision 4 months after original publication. Source: Department of Labor, Bureau of Labor Statistics. 299 TABLE B-59.—Producer price indexes for major commodity groups, 1940-81 [1967-100] Industrial commodities Farm products and processed foods and feeds Year or month Total Farm products Processed foods and feeds Total Hides, skins, leather, related products Fuels and related products, and power * Chemicals and allied products » 139.1 137.9 148,2 154.0 159.8 168.7 183.5 199.6 45.2 48.4 52.8 52.7 52,2 52.9 61.1 83.3 84.2 79.9 86.3 99.1 80.1 81,3 77.6 77.3 81.9 82.0 82.9 94.2 90.8 91.7 92.7 90.0 90.3 94.3 103.4 100.0 103.2 108.9 110.3 114.1 131.3 143.1 145.1 148.5 167.8 179.3 200.0 252.4 248.9 261.5 51.4 54.6 56.2 57.8 59.5 60.1 64.4 76.9 90.5 86.2 87.1 90.3 90.1 92.6 91.3 91.2 94.0 99.1 95.3 95.3 96.1 97.2 96.7 96.3 93.7 95.5 97.8 100.0 98.9 100.9 106.2 115.2 118.6 134.3 208.3 245.1 265.6 302.2 322.5 408.1 574.0 694.4 52.4 57.0 63.3 64.1 64,8 65.2 70.5 93.7 95.9 87.6 88.9 101.7 96.5 97.7 98.9 98.5 99.1 101.2 102.0 101.6 101.8 100.7 99.1 97.9 98.3 99.0 99.4 100.0 99.8 99.9 102.2 104.1 104.2 110.0 146.8 181.3 187.2 192.8 198.8 222.3 260.3 287.8 Textile products and apparel and 414 50.3 64.8 75.0 75.5 78.5 90.9 109.4 94.3 ' 117.5 101.5 101.6 89.6 106.7 93.9 124.2 106.9 117.2 102.7 106.2 96.0 104.7 95.7 98.2 91.2 96.9 90.6 99.5 93.7 . 103.9 98.1 97.5 93.5 97.2 93.7 96.3 93.7 98.0 94.7 96.0 93.8 94.6 93.2 97.1 98.7 105.9 103.5 100.0 100.0 102.5 102.4 109.1 108.0 111.0 111.7 112.9 113.9 125.0 122.4 176.3 159.1 187.7 177.4 186.7 184.2 191.0 183.1 192.5 188.8 212.5 206.6 241.4 229.8 249.4 244.7 254.9 251.5 82.9 88.7 80.6 83.4 92.7 91.6 87.4 88.9 85.0 84.9 87.4 91.8 89.4 89.5 91.0 91.9 92.5 92.3 95.5 101.2 100.0 102.2 107.3 112.1 114.5 120.8 148.1 170.9 182.6 178.0 186.1 202.6 222.5 241.2 248.7 44.0 47.3 50.7 51.5 523 53.0 58.0 70.8 76.9 75.3 78.0 86.1 84.1 84.8 85.0 86.9 90.8 93.3 93.6 95.3 95.3 94.8 94.8 94.7 95.2 96.4 98.5 100.0 102.5 106.0 110.0 114.1 117.9 125.9 153.8 171.5 182.4 195.1 209.4 236.5 274.8 304.1- 231.9 237.0 234.9 229.3 233.8 234.3 246.6 255.1 256.5 259.4 260.5 257.0 236.4 242.3 239.3 228.9 233.5 233,4 254.3 263.8 267.0 263.6 264.9 265.3 228.5 233.1 231.6 228.6 233.1 233.9 241.5 249.4 249.8 256.1 257.2 251.5 260.6 265.9 268.6 271.3 271.9 273.5 276.2 278.2 278.8 282.0 283.4 286.6 175.2 176.5 179.3 181.2 182.0 183.0 184.7 185.6 186.6 188.1 189.6 190.4 255.7 250.9 246.8 243.5 240.7 240.9 245.1 251,3 247.8 251.2 255.4 256.9 508.0 532.7 553.5 566.6 572.1 576.5 585.5 590.6 593.5 592.9 600.2 615.7 246.0 248.7 252.8 259.8 262.5 262.8 263.3 264.4 263.4 264,8 266.7 268.1 Jan Feb Mar Apr May June 257.9 255.1 253.5 253.8 252.9 254.3 264,5 262.4 260.7 263.3 259.6 260,7 253.3 250.2 248.5 247.6 248.2 249.9 291.5 295.7 299.6 303.5 304.7 305.1 193.1 193.9 195.2 197.6 199.2 200.1 258.2 257.7 261.2 263.5 263.7 261.6 634.6 667.5 696.5 707.2 709.0 707.6 274.3 277.6 280.4 286.0 288.6 290.5 July Aug. Sept 256.8 254.2 250.0 246.1 242.7 241.2 263.3 257.9 251.0 243.3 237.4 234.5 252.2 251.2 248.4 246.6 244.7 244.0 306.2 307.2 307.2 308.8 309.1 310.1 201.3 202.4 202.5 203.0 203.2 203.1 261.1 261.3 263.0 262.7 261.7 262.7 704.9 704.3 703.2 697.2 697.5 702.7 291.3 293.3 293.3 292.8 292.5 292.7 1940 1941 1942 1943 1944 1945 1946... ... . 1947. . . 1948 1949. . . . 1950. . 1951 .. . 1952.. .. . . 1953 . . 1954 1955 1956 . . . 1957 . 1958 1959 1960 1961 . 1962 . .. .. 1963... . 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 s 1981 1980: Jan Feb Mar. Apr May... ., June July Jug Sept Oct Nov Dec 1981: 1036 108.1 • 98.9 102.7 114.6 103.4 100.8 98.6 98.7 98.7 98.8 97.0 98.4 99.5 97.7 98,6 98.5 99.2 99.8 100.1 100.0 103.7 106.0 107.1 109.0 113.6 123;8 2 Oct.:::::::::::;::::::::::::::::. Nov Dec 1 Prices for some items in this grouping are lagged and refer to 1 month earlier than the index month. Data have been revised through August 1981 to reflect the availability of late reports and corrections by respondents All data are subject to revision 4 months after original publication. 2 300 TABLE B-59.—Producer price indexes for major commodity groups, 1940-81—-Continued [1967=100] Industrial commodities—Continued Year or month Transportation equipRubber Lumber Metals Machinery Furniture Nonment: and and and and metallic and and Motor plastic metal equipment household mineral vehicles wood allied products products products products durables products and equipment 3 Pulp, paper, Miscellaneous products 57.1 61.5 71.6 73.6 72.7 70.5 70.8 70.5 72.8 70.5 85.9 105.4 95.5 89.1 90.4 102.4 103.8 103.4 103.3 102.9 103.1 99.2 96.3 96.8 95.5 95.9 97.8 100.0 103.4 105.3 108.3 109.1 109.3 112.4 136.2 150.2 159.2 167.6 174.8 194.3 217.4 232.8 27.4 32.7 '•"••"-'"""• 35.6 37.7 40.6 41.2 47.2 72.5" 73.4 75.7 84.0 72.4 77.7 74.3 89.3 88.0 97.2 85.7 94.4 85.5 94.3 85.5 92.6 87.8 97.1 93.6 98.5 95.4 93.5 92.4 96.4 97.3 98.8 98.1 95.3 95.2 91.0 96.3 91.6 95.6 93,5 95.4 95.4 96.2 95.9 98.8 100.2 100.0 100.0 113.3 101.1 104.0 125.3 108.2 113.6 110.1 127.3 113.4 144.3 122.1 177.2 151.7 183.6 170.4 176.9 179.4 205.6 186.4 236.3 195.6 276.0 219.0 300,4 288.9 249.2 273.7 292.8 37.8 38.5 39.1 39.0 39.0 39.6 44.3 54.9 62.5 63.0 66.3 73.8 73.9 76.3 76.9 82.1 89.2 91.0 90.4 92.3 92.4 91.9 91.2 91.3 93.8 96.4 98.8 100.0 102.6 108.5 116.6 118.7 123.5 132.8 171.9 185.6 195.9 209.0 227.1 259.3 286.4 300.4 41.4 42.1 42.8 42.4 42.1 42.2 46.4 53.7 58.2 61.0 63.1 70.5 70.6 72.2 73.4 75.7 81.8 87.6 89.4 91.3 92.0 91.9 92.0 92.2 92.8 93.9 96.8 100.0 103.2 106.5 111.4 115.5 117.9 121.7 139.4 161.4 171.0 181.7 196.1 213.9 239.8 263.1 53.8 57.2 61.8 61.4 63.1 63,2 67,1 77.0 81.6 82.9 84.7 91.8; 90.1 91.9 92.9 93.3 95.8 98.3 99.1 99.3 99,0 98.4 97.7 97.0 97.4 96.9 98,0 100,0.. 102.8 104.9 107.5 110.0 111.4 115.2 127.9 139.7 145.6 151.5 160.4 171,3 187.7 198.4 49.1 50.2 52.3 52.4 53.5 55.7 59.3 66.3 71.6 73.5 75.4 80.1 80.1 83.3 85.1 87.5 91.3 94.8 95.8 97.0. 97.2 97.6 97.6 97.1 97.3 97.5 98.4 100.0 103.7 107.7 112.9 122.4 126.1 130.2 153.2 174.0 186.3 200.5 222.8 248.6 283.0 309.5 40.4 432 47.2 472 47.5 48.3 56.0 64.1 70.8 75.7 75.3 79.4 84.0 83.6 83.8 86.3 91.2 95.1 98.1 100.3 98.8 98.6 98.6 97.8 98.3 98.5 98.6 100.0 102.8 104,8 108,7 114.9 118.0 119.2 129.2 144.6 153.8 163.7 176.0 190.5 208.8 237.5 73.5 76.5 78.0 79.2 83.9 83.4 85.6 86.4 86.5 87.6 90.2 92.0 92.2 93.0 93.3 93.7 94.5 95.2 95.9 97.7 100.0 102,2 105.2 109.9 112.9 114.6 119.7 133.1 147.7 153.7 164.3 184.3 208.7 258.8 265.6 Jan Feb Mar Apr May June. . 207.8 210.7 212.7 214.1 215.0 217.3 290.0 294.7 294.9 275.6 272.1 279.8 237.4 239.2 242.6 247.8 249.2 251.1 284.6 288.9 286.8 284.4 281,8 281.9 227.6 230.2 232.5 236.4 237.6 239.2 183.4 185,6 185.7 184.4 185.4 186.5 268.4 274.0 276.5 283.7 284.0 283.4 200.7 200.1 200.7 205.4 204.5 205.2 242.9 262.9 256.1 252.8 251.7 258.0 July Aug Sept Oct . Nov Dec 1981: 2 Jan . Feb.... Mar Apr May. .. June 218.8 220.5 222.0 222.8 223.4 223.3 289.2 296.1 292.2 289.0 293.4 299.4 251.7 252.4 252.8 254.3* 255.0 256.7 282.5 285.1 287.3 291.9 291.1 290.6 241.5 242.6 244.7 246.8 248.3 249.8 188.0 188.9 189.5 190.9 191.5 193.1 284.8 286.0 286.8 288.6 288.7 291.2 208.6 211.7 205.6 218.2 218.6 226.2 261.7 260.1 265.1 266.0 263.6 265.3 224.8 226.4 228.4 230.8 231.8 233.4 296.5 294.7 294,4 299.4 298.4 298.1 264.4 267.2 269.0 271.4 272.1 272.9 294.0 294.0 296.4 298.8 299.1 298.4 253.3 255.3 257.5 259.6 260.7 262.1 194.0 195.2 195.8 196.4 197.4 197.3 296.6 297.9 300.9 310.8 312.0 313.6 229.0 230.9 229.5 233.9 236.0 236.7 264.3 264.9 264.0 266.0 266.9 266.3 July . Aug Sept Oct. . Nov. .. Dec.. .. 232.1 234.1 236.0 237.7 238.7 239.0 296.5 294,5 289,1 284.4 283.0 285.2 274.9 275.9 276.9 279.1 280.2 280.7 302.0 304.1 305.1 305.5 303.9 303.6 264.8 266.2 267.8 268.8 270.0 271.6 199.5 199.6 200.7 201.4 201.6 202.2 314.3 314.1 313.1 313.1 313.5 313.6 237.4 238.4 232.6 247.5 248.6 249.2 263.2 262.6 266.7 268.0 267,2 267.3 1940 1941 1942 1943 1944 1945 1946 1947 1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 2 1981 . .. ... . , 1980: . 2 Data have been revised through August 1981 to reflect the availability of late reports and corrections by respondents. All data are subject to revision 4 months after original publication. '" 3 Index for total transportation equipment is'not shown but is available beginning December 1968. Source: Department of labor, Bureau of Labor Statistics. 301 TABLE B-60.—Changes in producer &rice indexes for finished goods, 1950-81 [Percent change] Finished consumer foods Total finished goods Total Year or month Dec. to Dec.' Year Dec. Year to to to year Dec.1 year Dec. to Dec.1 1.9 13.3 5.3 12.4 -5,9 — 9 .5 ~l!o = 2.2 -5^2 g 1 2 19 10.4 2.9 -2.2 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973... . 1974 1975 1976. .. 1977 1978 ... . 1979 1980 19812 1.2 4.2 3.2 .5 -.4 1.8 -.5 .1 —2 !s 3.3 2.2 1.6 3.1 4.8 2.2 3.2 3.8 11.8 18.3 6.6 3.7 6.9 9.2 12.8 11.8 7.0 Consumer goods Year to year 1.8 9.5 .2 -2.9 3.6 2.8 5.3 3.6 2.3 — 2 -3.7 8 5.2 0 -1.8 — 3 -n .4 !4 9.1 1.7 1.4 3.2 1.2 -.4 4.8 2.8 8.2 3.7 3.5 -2.5 5.9 3.1 8.0 3.1 9.1 22.5 15.3 13.0 5.5 10.8 4.4 = 2.5 6.5 6.9, 7.8 11.7 7.4 11.1 7,5 13.5 9.2 1.5 Finished energy goods Finished goods excluding consumer foods ::::: -2.5 -=,2 3.5 5.8 -4.7 2.2 -.4 .9 .... -1.2 .5 3.8 6.5 -1.6 3.6 ' "2.4 ' 26 2.7 3.4 6.2 3.5 3.2 4.3 2.1 3.7 1.6 2.1 2.0 5.6 6.6 20.3 4.1 16.0 14.0 21.2 7.2 12.1 8.4 6.2 6.3 6,9 7.0 "£3 8.3 7.3 9.1 9.2 14.8 11.9 5,9 13.3 16.2 8.7 10.3 5.8 Dec. to Dec.1 Capital equipment Year to year 8.2 1.6 .9 7.2 -1.1 -1.3 .9 1.6 .3 .8 1.7 2.4 2.5 1.7 2.5 .2 .8 1.3 4 4 — 3 -.1 'l 2 ,1 0 .1 -.1 .7 .9 1.6 1.7 2.1 1.9 2.1 2.0 2.4 2.9 3.0 3.9 3.4 2.0 2.0 1.9 4.5 7.4 20.5 16.9 6.7 10.5 6.2 6.0 7.2 6.7 7.1 8.5 17.5 13.3 14.2 18.6 8.4 10.2 Dec. to Dec.1 Year to year 10.3 3.4 .8 2.3 1.1 5.6 8.3 4.3 1.3 1.0 1 3 !9 1.5 3.9 3.1 3.0 4.6 4.9 2.4 2.0 5.3 22.6 8.2 6.4 7.3 7,9 8.8 11.4 9.2 2.4 9.7 1.7 1.7 1.2 3.0 7.4 6.2 2.6 1.9 2 .1 4 .2 1.0 1.2 2.5 3.3 3.5 3.3 4.8 4.1 2.5 3.3 14.2 15.2 6.7 6.5 7.9 8.7 10.8 10.2 Finished goods excluding food and energy Dec. Year Dec. Year to to to to Dec.1 year Dec.1 year ."."..:.: .:"":. 16,4 11.5 12.1 8.5 58.0 27.8 14.3 '...'..".' '...'.".". 17.3 11.8 15.7 6.4 35.1 49.2 19.1 6.1 5.6 6.3 8.3 9.4 10.7 7.6 11.4 5.6 6.1 7.5 9.0 11.1 8.6 Percent change from preceding month Sen SeaSeaSeaSeaSeaUnad- sonUnad- son- Unad- son- Unad- son- Unad- son- Unad- sonally justed justed justed 111' justed ad- justed ally justed justed adjusted justed justed justed justed justed justed SeaUnad- son- S 1980: Jan Feb. . Mar Apr May.. June. July... . Aug. Sept . Oct.. . Nov Dec. ... 1981: a Jan Feb.. Mar..., [Jay" June July Aug Sept Oct Nov Dec . !. 1.9 1.4 10 .9 .5 .6 1.8 8 0 1.6 .3 .4 1.4 .9 1.0 .9 .4 .3 .5 ^ -1 1.1 .2 ,3 3 » 1.6 -0.0 =0.6 =.6 1.3 1.0 '.6 l.i .8 -1.5 -1.3 .4 .8 .5 .6 .8 3.7 3.7 1.7 2.6 1.8 l.i 1.6 1.2 .3 .9 .7 .4 2.0 .4 .2 .4 .2 2.7 .5 .7 .3 .0 .4 .7 1.2 .5 -.1 2.0 .3 .5 1.2 .8 1.2 .8 .4 .5 .4 .2 .1 .6 .5 .3 .7 .1 .1 -.6 1.0 =.1 .1 .5 1,4 .3 -.3 -.2 -.5 .1 1.6 1.2 1.2 1.3 .4 .3 .2 -.0 -.1 1.6 .4 .3 -!3 .4 .4 1.5 ~'.3 -.7 -.4 .1 S 2.5 1.9 1.2 1.5 .5 .9 1.1 .7 .2 1.1 .8 .4 2.9 2.4 1,2 1.6 .5 .8 1.2 .4 = .2 1.6 .3 .5 2.9 2.4 1.3 1.4 .5 1.0 1.0 .6 1.7 .6 .7 1.7 .2 .5 1.2 .5 -.0 3.1 .4 .3 1.5 .8 ,9 1,6 .3 .7 1.2 1.0 .1 1.7 .6 .4 1.5 1.2 1.3 1.1 .4 .5 .1 .2 .2 .8 .8 .3 1.6 1.3 1.5 1.3 .3 ,3 .1 -.1 = .1 1.4 .2 .3 1.6 1.3 1.5 1.1 1.5 .8 .5 1.0 .7 .5 .6 .2 -.1 2.2 .6 .4 1.2 ,9 .7 .9 .7 ,7 .7 .6 .1 .9 .8 .6 1 a .2 .8 .9 .4 '.4 -.1 .0 .2 .7 .8 .2 3.5 6.6 5.6 3.6 1.6 .3 .8 ,6 .2 —2 '.9 1.4 4.0 6.8 5.6 3.3 1.0 .1 .3 .3 .2 ,2 1.8 1.5 2.6 2.2 4.2 4.3 6.1 6.1 1.4 1.8 .0 = .4 !2 -.6 -1.0 -1.2 -1.5 .7 .7 -.8 , , 4 .1 '.9 .7 .7 2,4 1.0 1.2 .2 .8 1.3 .5 -.2 2.5 .2 .3 1.5 .6 .3 1.1 !3 .3 .3 -=.3 2.1 .4 .2 2.2 1.1 .3 1.1 .3 1.1 1.3 .8 .2 1.2 .6 .3 1.2 .6 .3 1.0 .6 .6 .3 .5 .1 1.0 .8 .2 Changes from December to December are based on unadjusted indexes. Data have been revised through August 1981 to reflect the availability of late reports and corrections by respondents. All data are subject to revision 4 months after original publication. Source: Department of Labor, Bureau of Labor Statistics. 302 MONEY STOCK, CREDIT, AND FINANCE TABLE B-<$1.—Money stock measures and liquid assets, 1959—81 [Averages of daily figures; billions of dollars, seasonally adjusted] Year and month December: 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 .. 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981". .. . . . . 1980: Jan . . . . Feb Mar Apr May June July Aug Sept Oct " Nov Dec 1981: Jan Feb Mar Apr. A,..: ..:...:.: -...-..."T :.:.../ June July Aug Sept Oct Nov . . Dec* . M3 L Ml M2 Sum of currency, demand deposits, travelers' checks, and other checkable deposits 1 (OCD) Ml-B plus overnight RPs and Eurodollars, shares, and savings and small time deposits 2 141.2 142.2 146.7 149.4 154.9 162.0 169.6 173.8 185.2 199.5 205.9 216.8 231.0 252.4 266.4 278.0 291.8 311.1 336.4 364.2 390.5 415.6 441.9 297.1 311.7 334.4 361.7 392.0 423.4 457.9 479.2 524.4 567.1 588.6 626.4 711.1 803.2 859,8 908.0 1,024.4 1,169.4 1,296.4 1,404.2 1,525.2 1,669.4 1,841.2 298.3 313.7 338.3 368.7 402.9 438.7 479.1 502.9 556.5 606.2 611.4 672.9 771.1 879.5 977.9 1,060.4 1,163.0 1,302.3 1,462.5 1,625.9 1,775.6 1,965.1 2,187.2 388.0 402.9 429.5 465.0 502.4 538.9 583.0 614.6 668.0 731.7 762.6 814.2 900.7 1,020.3 1,140.3 1,246.0 1,373.5 1,528.9 1,722.7 1,936.8 2,151.7 2,378.4 392.7 396.9 396.7 391.0 391.3 394.9 399.3 406.9 411.8 416.3 419.1 415.6 1,538.7 1,553.4 1,559.6 1,553.6 1,568.2 1,589.3 1,614.0 1,633.4 1,644.9 1,654.0 1,668.5 1,669.4 1,792.0 1,811.5 1,819.1 1,817.5 1,833.5 1,852.6 1,873.6 1,897.4 1,912.8 1,928.3 1,951.0 1,965.1 419.2 421.2 425.7 433.3 431.3 428.8 430.1 432.8 431.8 433.0 437.9 441.9 1,680.8 1,695.7 1,718.4 1,737.7 1,743.2 1,749.3 1,760.1 1,777.2 1,786.8 1,798.9 1,824.7 1,841.2 1,989.3 2,009.1 2,027.0 2,045.7 2,060.7 2,079.0 2,094.0 2,117.5 2,133.7 2,144.2 2,168.9 2,187.2 MWMF M2 plus large time deposits and term RPs M3 plus other liquid . assets Percent change from year or 6 months earlier 3 Ml M2 M3 0.7 3.2 1.8 3.7 4.6 4.7 2.5 6.6 7.7 3.2 5.3 6.5 9.3 5.5 4.4 5.0 6.6 8.1 8.3 7.2 6.4 6.3 4.9 7.3 8.2 8.4 8.0 8.1 4.7 9.4 8.1 3.8 6.4 13.5 13.0 7.0 5.6 12.8 14.2 10.9 8.3 8.6 9.5 10.3 5.2 7.8 9.0 9.3 8.9 9.2 5.0 10.7 8.9 .9 10.1 14.6 14.1 11.2 8,4 9.7 12.0 12.3 11,2 9.2 10.7 11.3 2,175.3 2,199.5 2,210.9 2,218.8 2,232.1 2,246.6 2,264.4 2,291.3 2,309.0 2,326.0 2,355.6 2,378.4 5.6 6.6 5.4 2.0 1.3 2.3 3.4 5.1 7.8 13.4 14.7 10.8 7.7 7.9 7.1 5.7 6.8 8.6 10.0 10.6 11.2 13.3 13.2 10.3 9.2 9.4 7.9 6.6 7.8 8.9 9.3 9.7 10.6 12.6 13.2 12.5 2,408.7 2,433.6 2,445.1 2,457.4 2,479.9 2,502.8 2,519.4 2,550.8 2,574.4 10.2 7.2 6.9 8.3 5.9 6.5 5.3 5,6 2.9 -.1 3.1 6.2 8.4 7.8 9.1 10.4 9.2 9.8 9.7 9.8 8.1 7.2 9.6 10.8 12.7 12.1 12.3 12.5 11.6 11.9 10.8 11.1 10.8 9.9 10.8 10.7 1 Net of demand deposits due to foreign commercial banks and official institutions. Ml differs from the sum of components presented in Table B-62 by the amount of demand deposits held by thrift institutions at commercial banks that are estimated to be used in servicing thrift OCD liabilities. 2 M2 differs From the sum of components presented in Table B-62 by the amount of demand deposits held by thrift institutions at commercial banks. 3 Monthly percent changes are from 6 months earlier at a compound annual rate. Note.—See Table B-62 for components. Source: Board of Governors of the Federal Reserve System. 303 TABLE B-62.—- Components of money stock measures and Iiqt4id assets, 1959-81 [Averages of daily figures; billions of dollars, seasonally adjusted, except as noted] Period Other Demand Travel- checkaers' ble Currency deposits1 checks deposits Overnight repurchase agreements (RPs) (net) Money Term Small Large repurOver- market Shortdenom- chase Term night mutual Savings denomEuro- Savterm Bankers Commerination agree- dollars Eurofund deposits ination ings Treasury cial time time ments (net) bonds securi- acceptdollars (MMMF) ances paper Ho HP. (HJirc- (RPs) NSA NSA shares ties 2 nnclte * 2 posus pQSitS NSA NSA December: 1959.... 28.9 111.8 0.4 0.1 0.0 0.0 I960..,. 1961.... 1962.,.. 1963.... 1964,.. 29.0 29.6 30.6 32.5 34.2 112.7 116.6 118,2 121.7 127.0 .4 .4 .4 .2 .2 .2 .3 .3 .0 .0 .0 .0 .0 .0 .0 .0 .0 •0. .0 .0 .0 .0 .0 157.8 173.9 193.1 212.6 233.3 1965 1966 1967 1968 1969 36.3 38.3 40.4 43.5 46.1 132.4 134.5 143.7 154.9 158.6 .6 .6 .7 .8 .8 .3 .3 .3 .4 .4 .0 .5 1.1 1.6 2.5 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 1970 1971 1972 1973 1974 49.0 52.6 56.9 61.6 67.8 166.4 176.8 193.6 202.5 207.4 1.0 1.1 1.3 1.5 1.8 .4 .5 .6 .8 .9 1.4 2.5 3.1 6.8 7.2 .0 .0 .0 .0 .0 .0 .0 .0 .1 2.3 1975 1976 1977 1978 1979 73.8 80.6 88.6 97.4 106.1 214.1 224.4 239.7 253.9 262.8 2.3 2.8 3.1 3.5 3.8 1.6 7.5 3.4 13.6 5.0 17.6 9.4 21.9 17.8 21.8 .0 .0 1.0 2.0 3.6 3.6 3.4 3.8 10.3 43.6 1980 116.1 267.4 1981"... 123.1 236.8 (j Ij 4.2 28.1 4.5 77.9 27.9 27.5 4.5 6.7 3.6 5.1 11.5 1.2 0.0 0.7 46.1 38.7 0.5 12.6 14.8 20.2 25.7 29.3 2.0 4.0 7.1 10.9 15.3 .0 .0 .0 .0 .0 .8 1.4 1.6 1,9 2.4 45.7 46.5 46.9 48.1 49.0 36.8 37.1 39.9 40.7 38.5 .8 1.0 1.0 1.1 1.2 5.2 6.8 7.7 9.1 255.0 34.5 251.1 55.1 261.4 78.1 266.3 101.1 261.0 120.7 21.3 23.2 31.1 37.6 20.4 .0 .5 1.0 1.5 2.4 1.7 2.1 2.1 2.9 2.7 49.7 50.2 51.2 51.8 51.7 40.7 43.2 38.7 46.1 59.5 1.5 1.6 1.7 2.2 3.2 10.2 14.4 17.8 22.5 34.0 256.7 287.5 317.2 322.4 333.9 153.0 191.8 232.6 266.4 288.9 45.1 57.6 73.1 111.0 144.0 1.4 2.5 3.3 7.1 8.4 2.2 2.7 3.6 5.4 8.0 52.0 54.3 57.5 60.4 63.2 49.3 36.3 41.1 50.0 53.6 3.3 3.5 3.3 4.7 10.6 34.5 32.7 35.2 41.9 50.1 383,9 447.8 486.5 475.5 416.5 340.1 396.2 453.8 533.3 652.7 129.6 117.9 145.1 194.0 219.7 9.0 15.0 21.0 27.7 30.7 9.7 13.1 18.7 29.9 42.9 67.2 77.1 71.8 81.1 76.4 90.1 80.3 99.6 79.6 129.3 8.4 8.8 11.9 21.7 27.0 48.1 51.8 63.1 79.4 97.3 75.8 393.0 756.8 256.8 184.5 335.6 848.6 298.4 38.9 47.6 48.4 72.3 159.9 32.5 100.2 0.0 145.2 1980: Jan Feb Mar Apr May June 107.3 108,1 108.9 109.1 110.4 111.1 263.3 265.2 263.8 257.1 256.1 258.7 3.8 18.4 3.8 19.9 3.8 20.3 3.8 21.1 3.8 21.0 3.8 21.4 23.1 24.3 22.9 19.5 20.6 22.3 4.4 3.5 3.4 2.5 2.8 3.0 49.1 56.7 60.9 60.4 66.8 74.2 412,6 406.4 396.0 381.9 377.7 384.6 660.4 669.2 683.5 702.2 712.9 714.1 222.8 227.5 230.2 234.4 235.9 233.3 30.5 30.6 29.2 29.5 29.4 30.0 45.6 49.4 49.1 50.1 50.2 48.9 79.2 78.2 77.0 75.4 74.2 73.7 132.4 134.2 138.3 146.3 148.6 145.1 27.6 98.6 27.1 99.0 28.1 99.3 28.9 100.6 29.2 96.5 29.6 96,7 July Aug Sept Oct Nov Dec 112.1 113.4 113.8 114.9 115.7 116.1 260.7 265.4 268.6 271.2 271.6 267.4 3.8 3.9 4.0 4.0 4.1 4.2 22.8 24.2 25.5 26.3 27.9 28.1 26.0 27.9 29.3 28,3 28.1 27.9 3.6 3.8 3.7 4.4 4J 4.5 80.6 80.7 78.2 77.4 77.0 75.8 395.9 404.6 407.9 407.8 406.1 393.0 712.6 713.6 718.1 724.0 738.0 756.8 228.2 229.6 233.4 237.7 245,4 256.8 31.4 34.5 34.5 36.5 37.1 38.9 48.3 48.3 45.1 45.2 46.3 48.4 73.5 73.2 73.0 72.8 72.6 72.3 143.5 146.7 149.9 150.2 154.6 159.9 29.3 96.2 28.8 96.8 29.7 98.5 30.6 98.9 31.3 99.8 32.5 100.2 Jan Feb Mar Apr May June 116.6 117.2 117.9 118.9 119.8 119.9 254.4 245.8 243.5 243.1 240.7 237.9 4.2 44.3 4.2 54.3 4.2 60.2 4.3 67.3 4.3 66.9 4.2 67.1 27.5 27.0 28.7 29.3 31.8 33.3 5.2 4.9 4.6 5.0 6.5 6.4 80.7 92.4 105.6 117.1 118.1 122.8 376.9 370.8 368.3 367.0 361.1 354.0 775.7 783.3 789.4 790.0 798.4 807.7 268.0 273.9 271.0 269.5 277.2 287.3 40.4 39.5 37.6 38.5 40.2 42.4 50.2 52.2 52.2 52.6 57.0 57.9 71.9 71.1 70.7 70.4 69.9 69.7 165.1 169.9 164.6 157.6 157.5 160.3 33.0 32.0 33.0 34.6 35.7 36.5 July Aug Sept Oct Nov Dec" 120.8 121.2 121.1 121.4 122.1 123.1 236.4 236.7 234.4 234.7 235.9 236.8 4.1 4.4 4.5 4,5 4.6 4.5 69.0 70.8 72.2 72.8 75.6 77.9 32.3 32.4 29.8 26.9 27.1 27.5 6.9 7.8 6.9 5.9 6.5 6.7 134.3 145.4 157.0 166.4 176.6 184.5 349.1 340.7 334.5 329.6 331.5 335.6 811.3 821.9 830.7 841.1 849.0 848.6 290.3 296.6 299.9 298.9 296.5 298.4 43.5 58.7 69.3 160.7 43.7 61.0 68.8 161.8 47.1 61.2 68.4 167.8 46.4 47.8 47.6 1981: 99.2 99.4 97.6 96.5 99.1 99.3 37.2 99.6 36.9 104.8 37.0 106.2 1 Demand deposits at all commercial banks other than those due to domestic banks, the U.S. Government, and foreign banks and official institutions less cash items in the process of collection and Federal Reserve float. 2 Small denomination and large denomination deposits are those issued in amounts of less than $100,000 and more than $100,000, respectively. Note.—NSA indicates data are not seasonally adjusted. See also Table B-61. Source: Board of Governors of the Federal Reserve System. 304 TABLE B-63.—Commercial bank loans and investments, 1939-81 [Billions of dollars] Total loans and investments Year and month Loans Total Investments Commercial and industrial U.S. Treasury securities Other securities Loans plus loans sold to bank affiliates End of month > 1939- Dec 40.7 17.2 16.3 7.1 43.9 50.7 67.4 85.1 105.5 18.8 21.7 19.2 19.1 21.6 17.8 21.8 41.4 59.8 77.6 7.4 7.2 6.8 6.1 6.3 1945: Dec 1946- Dec 1947: Dec 1948: Dec 124.0 114.0 116.3 114.3 26.1 31.1 38.1 42.5 Seasonally adjusted 90.6 74.8 69.2 62.6 7.3 8.1 9,0 9.2 1948: Dec 1949: Dec 113,0 118.7 41.5 42.0 62.3 66.4 9.2 10.3 1950: Dec 1951: Dec 1952- Dec 1953: Dec 1954: Dec 124.7 130.2 139.1 143.1 153.1 51.1 56.5 62.8 66.2 69.1 61.1 60.4 62.2 62.2 67.6 12.4 13.4 14.2 14.7 16.4 157.6 161.6 166.4 181.2 188.7 80.6 88.1 91.5 95.6 110.5 39.4 60.3 57.2 56.9 65.1 57.7 16.8 16.3 17.9 20.5 20.5 1960: Dec 1961- Dec . .. 1962: Dec 1963: Dec 1964: Dec 197.4 212,8 231.2 250.2 272.4 116.7 123.6 137.3 153.7 172.9 42.1 43.9 47.6 52.1 58.4 59.9 65.3 64.7 61.5 60.8 20.8 23.9 29.2 35.0 38.7 1965: Dec 1966- Dec 1967: Dec 1968- Dec 1969: Dec 300.1 316.1 352.0 390.2 401.7 198.2 213.9 231.3 258.2 279.4 69.5 78.6 86.2 95.9 105.7 57.1 53.5 59.4 60.7 51.2 44.8 48.7 61.3 71.3 71.1 283.3 1970; Dec 1971- Dec 1972: D e c . . . 435.5 485.7 558.0 292.0 320.9 378.9 110.0 116.2 130.4 57.8 60.6 62.6 85.7 104.2 116.5 ' 294.7 323.7 381.5 1972: Dec 1973: Dec 1974: Dec 572.6 647.8 713.6 390.5 460.5 520.1 137.5 165.4 196.9 65.8 58.5 53.6 116.3 128.8 139.9 393.1 464.8 524.8 1975: Dec 1976: Dec 1977: Dec 1978: Dec 1979: Dec 745.2 804.6 891.5 1,013.5 1,135.9 517.4 555.0 632.5 747.0 849.9 189.6 190.9 210.9 245.9 291.2 82.2 100.8 99.8 93.8 94.5 145.6 148.8 159.3 172.8 191.5 521.8 558.7 637.1 750.7 852.9 1980: Dec 3 1981- Dec 1,239.6 1,317.7 915.1 974.9 326.8 357.9. 110.0 110.9 214.4 231.8 917.8 977.7 Jan . . . . Feb Mar Apr flfay. June 1,251.4 1,255.7 1,261.0 1,267.9 1,285.1 1,295.4 921.6 924.4 928.8 934.5 948.5 957.1 330.0 330.0 331.4 332.8 339.4 345.1 113.2 113.4 112.9 113.9 116.0 116.7 216.6 217.9 219.4 219.5 220.6 221.6 924.3 927.2 931.5 937.2 951.3 960.0 July Aug Sept Oct Nov Dec.3 1,302.8 1,312.2 1,317.5 1,323.8 1,327.5 1,317.7 964.0 972.8 978.8 982.6 986.0 974.9 350.9 356.7 360.5 363.6 363.5 357.9 116.4 115.6 113.2 112.5 110.3 110.9 222.3 223.8 225.6 228.7 231.2 231.8 966.7 975.4 981.5 985.3 988.8 977.7 19401941: 1942: 1943: 1944: Dec Dec. . Dec Dec Dec 1955- Dec 1956: Dec 1957: Dec 1958: Dec 1959: Dec . . .. . . ... Average for month 2 1981: 1 Data are for December 31 call dates. 3 Data are prorated averages of Wednesday figures for domestically chartered banks and averages of current and previous month-end data for foreign-related institutions. Lease financing receivables are included in total loans and investments and in total loans. 3 Shifts of foreign loans and securities from U.S. banking offices to international banking facilities reduced the December levels for several items as follows: total loans and investments, $23.4 billion; total loans, $23.1 billion; commercial and industrial loans, $11.0 billion; and other securities, $0.3 billion. Source.- Board of Governors of the Federal Reserve System. 305 TABLE B-64.—Total funds raised in credit markets by nonfinancial sectors, 1973-81 [Billions of dollars] Item 1973 1974 1975 1976 1977 1978 1979 1980 371.9 2024 191.3 211.8 2736 336,6 395.6 387.0 U S Government 83 11.8 85.4 690 56.8 53.7 37.4 79.2 Foreign 61 14.8 11.5 19.6 13.9 33.2 21.0 29.3 188.0 164.8 114.9 185.0 266.0 308.7 328.6 263.4 79 180.1 4.1 160.7 9.9 105.0 10.5 174.5 27 263.2 -.1 308.8 -7.8 336.4 12.9 250.6 1051 98.0 98.4 123.7 172.2 193.7 200.1 179.4 14.7 9.2 81.2 16.5 19.7 61.9 16.1 27.2 55.0 15.7 22.8 85.2 21.9 21.0 129.3 26.1 20.1 147.5 21.8 21.2 157.2 26.9 30.4 122.1 46.4 10.4 18.9 5.5 34.8 6.9 15.1 5.0 39.5 -.0 11.0 4.6 64.0 3.9 11.6 5.7 96.3 7.4 18.5 7.1 108.5 9.4 22.1 7.5 113.7 7.8 24.4 11.3 81.7 8.5 22.4 9.5 115.1 Total funds raised by nonfinancial sectors Private domestic nonfinanclal sectors Corporate equities Debt instruments Debt capital instruments State and local government obligations.. Corporate bonds Mortgages Home Multi-family residential Commercial Farm Other debt instruments . . . . . Consumer credit Bank loans n.e.c. . Open-market paper Other. ... By borrowing sector: Total. State and local governments Households . . . Nonfinancial business Farm . Nonfarm noncorporate Corporate,. Debt instruments Equities 75.1 62.7 6.6 50.7 91.0 136.3 71.1 24.3 37.0 2.5 11.3 9.9 32.6 6.6 13.5 9.6 -10.5 -2.6 10.1 25.4 4.4 4.0 16.9 40.2 26.7 2.9 21.3 47.6 37.1 5,2 25.1 46.3 49.2 11.1 29.7 2.3 37.3 6.6 24.9 188.0 164.8 114.9 185,0 266.0 308.7 328.6 263.4 13.2 78.4 96.4 15.5 51.3 98.0 137 49.6 51.6 15.2 89.6 80.2 17.3 139.1 109.5 20.9 164.3 123.5 18.4 170.6 139.6 25.3 101.7 136.5 9.9 136 72.9 7.8 74 82.8 8.5 14 41.7 10.2 57 64.3 12.3 127 84.6 15.0 153 93.2 20.8 140 104.8 14.5 158 106.1 65.0 7.9 78.7 4.1 31.8 9.9 53.7 10.5 81.9 2.7 93.3 112.6 -7.8 93.2 12.9 202.4 191.3 211.8 273.6 336.6 395.6 387.0 371.9 140.3 1206 145.3 173.9 1864 213.3 245.1 235.5 1022 737 101.2 1334 1485 152.1 152.6 182.3 Checkable deposits and currency Time and savings deposits . Money market fund shares 14.6 75.6 8.5 65.3 15.6 83.3 17.8 111.7 25.5 119.3 13 -0 2 25.6 110.1 6.9 27.2 82.9 34.4 14.5 131.2 29.2 Security repurchase agreements 11.0 6.5 Total funds supplied to nonfinancial sectors Financed directly or indirectly by: Private domestic nonfinancial sectors Deposits and currency Foreign deposits Credit market instruments Corporate equities . Foreign funds At banks Credit and equity instruments U.S. Government-related loans, net U.S. Government cash balances Private insurance and pension reserves Other sources 24 .2 2.3 2.2 7.5 6.6 1.2 -.2 .8 1.7 1.3 2.0 1,5 .9 43.9 47.5 47.9 45.1 42.2 67.0 109.3 55.1 -58 -6 -38 -4.6 -43 64 218 21 132 435 467 212 31 31 101 -4.7 17.9 12 6.3 •42.3 40.5 25.6 -4.4 -22.3 25.4 17.6 27.2 31.8 -2.2 3.4 11.7 -8.7 10.8 123 191 23.2 19.5 28 397 30 477 9 595 14.2 -46 334 1.0 16.3 28.7 -15 307 See next page for continuation of table. 306 -1.3 -5.8 -16.8 -1.9 29.1 3.7 666 5 587 -36 802 38.1 29.6 27.7 TABLE B-64.—Total funds raised in credit markets by nonfinancial sectors, 1973-81—Continued [Billions of dollars] 1981 unadjusted quarterly flows Item 1 Total funds raised by nonfinancial sectors U.S. Government II Private domestic nonfinancial sectors Corporate equities Debt instruments Debt capital instruments. State and local government obligations Corporate bonds Mortgages Home mortgages Multi-family residential Commercial ... Farm. .. Other debt instruments 433.5 400.2 18.5 127.0 50.9 59,7 10.7 32.3 38.2 34.7 Debt instruments Equities 85.3 76.1 274.2 311.0 282.9 3.0 -6.2 82.3 11.9 45.5 -2.5 87.8 262.3 -10.0 321.1 -24.8 307.7 33.0 41.5 36.3 174.9 149.6 117.4 31.0 28.5 24.6 12.6 4.5 6.3 7.3 4.9 6.9 1.8 22.2 29.3 27.6 13.9 18.8 18.7 Total funds supplied to nonfirtancial sectors 115.3 15.4 5.3 112.4 96.8 79.9 72.4 61.4 20.7 24.6 9.7 17.6 12.3 46.0 87.5 171.5 190.3 12.0 20.0 27.5 12.5 19.4 28.2 30.9 80.2 14.4 46.0 37.3 78.3 34.6 40.2 85.3 76.1 274.2 311.0 282.9 4.0 6.5 6.3 29.4 21.2 18.3 26.1 30.9 47.9 35.6 34.2 5.2 3.0 .. 8.6 48.4 48.4 Farm Nonfarm noncorporate Corporate 377.4 105.3 1.6 5.4 8.0 State and local governments Households Nonfinancial business III 91.3 -2.5 By borrowing sector: Total II -2.6 12.5 Consumer credit Bank loans n e e Open-market paper 1 35.8 1,3 4.3 2.7 . III 89.9 5.6 Foreign 1981 seasonally adjusted annual rates 1.3 6.0 3.2 46.3 9.3 18.4 5.8 12.9 8.6 5.0 1,4 4.7 2.8 8.1 5.9 6.1 2.3 5.1 9.7 5.7 123.6 121.3 130.0 159.8 22.2 14.2 5.6 12.7 124.3 146.0 24.1 17.9 34.3 25.8 23.8 19.4 78.1 123.5 9.8 112.0 15.0 3.0 36.8 -2.5 32.0 -6.2 66.2 11.9 133.5 -10.0 136.8 -24.8 89.9 91.3 105.3 433.5 400.2 377.4 Financed directly or indirectly by: Private domestic nonfinancial sectors Deposits and currency Checkable deposits and currencyTime and savings deposits Money market fund shares 57.6 39.8 59.5 290.0 205.3 253.7 45.1 31.8 45.6 263.1 142.1 183.6 74.9 12.6 57 14.5 15.0 -3.7 16.4 34.3 148.4 -.4 -1.0 -8.0 9.2 37.1 Security repurchase agreements . 4.2 Foreign deposits 2.6 4.8 16.9 16 -.4 10.2 -8.1 -1.6 19.2 25.4 36.4 104.4 116.0 -11.6 -9.5 -41.2 -46.0 17.7 70.6 7.0 32.7 37.9 36.3 -29.3 21.9 -9.7 95.5 16.6 -16.8 13.1 Corporate equities -.6 -11.2 6.4 8.0 At banks Credit and equity instruments U.S. Government-related loans net U S Government cash balances Private insurance and pension reserves Other sources 10.8 -1.8 -43.0 3.3 17 11.1 11.8 18.4 23.5 20.7 25.1 24.1 75.2 5.9 Source.- Board of Governors of the Federal Reserve System. 307 9.1 5.0 3.0 -4.8 11.2 -9.5 61.5 137.3 -2.0 Credit market instruments Foreign funds 97.7 59.9 6.7 2.2 2.8 1.6 60.6 1.3 -4.1 49.1 81.0 3.4 TABLE B-65.—-Federal Reserve Bank credit and member bank reserves, 1929-81 [Averages of daily figures; millions of dollars] Year and month Total Reserve Bank credit outstanding Member bank U.S. borrowings Government and Federal agency Seasonal Total securities Other1 Total 801 95 3 396 142 99 3 5 4 90 265 334 157 224 134 118 114 180 482 658 654 702 822 729 842 607 142 657 1,593 441 246 839 688 710 557 906 87 149 304 327 243 454 557 238 765 1,086 116 53 1,119 1,380 1,306 1,027 1,154 1,412 1,703 1,494 1,543 1,493 1,725 1,970 2,368 2,554 2,504 2,514 2,547 2,139 3,316 5,514 4,699 4,990 4,708 4,643 6,585 7,416 7,242 7,876 11,112 12,147 13,738 13,634 2,395 2,588 11,473 14,049 12,812 13,152 12,749 14,168 16,027 16,517 17,261 19,990 16,291 17,391 20,310 21,180 19,920 19,279 19,240 19,535 19,420 1B.899 18,932 19,283 20,118 20,040 20,746 21,609 22,719 23,830 25,260 27,221 28,031 29,265 31,329 31,353 35,068 36,941 34,989 35,136 36,471 41,572 43,972 « 40,097 42,013 120 148 197 161 259 291 248 220 222 152 79 53 13,240 13,847 13,066 13,522 13,236 13,551 13,705 12,177 11,682 12,614 13,509 13,634 41,514 39,650 39,752 40,153 40,344 40,648 41,057 41,024 40,579 40,555 40,906 42,013 446 2,432 2,510 2,188 2,219 5,549 11,166 18,693 23,708 23,767 21,905 23,002 18,287 20,345 23,409 24,400 25,639 24,917 24,602 24,765 23,982 26,312 27,036 27,248 29,098 30,546 33,729 37,126 40,885 43,760 48,891 52,529 57,500 61,688 69,158 71,094 79,701 86,679 92,108 100,328 107,948 117,344 126,276 127,895 137,796 321 107 1,049 1,298 703 127 62 558 874 1,473 1,617 642 41 32 13 12 54 134 82 1980: Dec 1981: Dec" 1,643 2,669 2,612 2,305 2,404 6,035 11,914 19,612 24,744 24,746 22,858 23,978 19,012 21,606 25,446 27,299 27,107 26,317 26,853 27,156 26,186 28,412 29,435 29,060 31,217 33,218 36,610 39,873 43,853 46,864 51,268 56,610 64,100 66,708 74,255 76,851 85,642 93,967 99,651 107,632 116,382 129,330 139,896 143,250 152,072 1381: Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec." 142,819 140,373 140,919 143,648 144,065 144,999 147,405 146,892 145,511 145,960 148,339 152,072 128,174 125,248 126,849 128,783 128,675 129,410 131,949 133,307 132,356 132,197 134,135 137,796 1,405 1,278 1,004 1,343 2,154 2,038 1,751 1,408 1,473 1,149 695 642 1929: Dec, 1933: Dec 1939: Dec . 1940: Dec 1941: Dec 1942: Dec 1943: Dec 1944: Dec 1945: Dec 1946: Dec 1947: Dec 1948: Dec 1949; Dec 1950- Dec 1951: Dec 1952- Dec 1953; Dec 1954- Dec 1955- Dec 1956- Dec 1957: Dec 1958: «0ec 1959: Dec I960- Dec. 1961: Dec 1962: Dec 1963; Dec 1964- Dec 1965: Dec 1966: Dec 1967: Dec 1968- Dec 1969: Dec 1970: Dec 1971- Dec 1972: Dec 1973- Dec 1974: Dec... 1975: Dec 1976: Dec 1977- Dec 1978: Dec 1979- Dec Member bank reserves2 1 2 Required Excess 2,347 1,822 6,462 7,403 9,422 10,776 11,701 12,884 14,536 15,617 16,275 19,193 15,488 16,364 19,484 20,457 19,227 18,576 18,646 18,883 18,843 18,383 18,450 18,514 19,550 19,468 20,210 21,198 22,267 23,438 24,915 26,766 27,774 28,993 31,164 31,134 34,806 36,602 34,727 34,964 36,297 41,447 43,578 40,067 41,614 48 3766 5,011 6,646 3,390 2,376 1,048 1,284 1,491 900 986 797 803 1,027 826 723 693 703 594 652 577 516 482 769 568 572 536 411 452 392 345 455 257 272 165 219 262 339 262 172 174 125 394 5 30 399 41,025 39,448 39,372 40,071 40,213 40,098 40,675 40,753 40,179 40,438 40,591 41,614 489 202 380 82 131 550 382 271 400 117 315 399 3 Mainly float. Beginning December 1959, part of currency and cash held by member banks allowed as reserves; beginning November 1960 all such currency and cash allowed. Beginning November 1972, includes reserve deficiencies on which Federal Reserve Banks were allowed to waive penalties for a transition period in connection with bank adaptation to Regulation J as amended effective November 9, 1972. Transition period ended after second quarter 1974. Effective November 1975, includes reserve deficiencies on which penalties are waived over a 24-month period when a nonmember bank merges into an existing member bank, or when a nonmember bank joins the Federal Reserve System. 3 Data are for licensed banks only. 4 Includes all reserve balances of depository institutions plus vault cash at institutions with required reserve balances plus vault cash equal to required reserves at other institutions. •' Reserve balances with Federal Reserve Banks plus vault cash used to satisfy reserve requirements less required reserves. (This measure of excess reserves is comparable to the old excess reserves concept published historically.) Source: Board of Governors of the Federal Reserve System. 308 TABLE B-66.—Aggregate reserves and monetary base, 1959-81 [Averages of daily figures; billions of dollars, seasonally adjusted] Adjusted for changes in reserve requirements Seasonally adjusted Year and month . Reserves of depository institutions1 Total 2 Nonborrowed Required Not seasonally adjusted Monetary base^ Reserves of depository institutions1 Total 2 Nonborrowed Required Monetary base3 1959- Dec 15.19 14.25 14.68 44.6 15.48 14.54 14.97 45.5 I960- Dec 1961- Dec 1962- Dec 1963- Dec 1964: Dec 15.41 15.98 16.43 16.91 17.57 15.34 15.85 16.17 16.58 17.31 14.67 15.39 15.86 16.42 17.17 44.9 46.1 47.6 50.0 52.5 15.70 16.28 16.71 17.16 17.84 15.62 16.15 16.45 16.83 17.57 14.96 15.70 16.13 16.67 17.43 45.8 47.1 48.5 51.0 53.5 1965: 19661967: 19681969: Dec Dec Dec Dec Dec 18.37 18.47 20.28 21.60 21.53 17.93 17.94 20.05 20.85 20.42 17.95 18.13 19.90 21.17 21.25 55.4 57.5 61.5 65.9 68.5 18.66 18.80 20.59 21.62 21.53 18.22 18.27 20.36 20.87 20.41 18.24 18.46 20.21 21.19 21.24 56.5 58.7 62.6 66.8 69.5 1970- Dec 1971: Dec 1972- Dec 1973: Dec 1974: Dec 23.08 24.72 27.66 29.35 31.22 22.75 24.60 26.61 28.05 30.49 22.83 24.54 27.38 29.04 30.96 73.1 78.4 85.8 92.3 100.6 23.10 24.78 27.69 29.47 31.40 22.77 24.65 26.64 28.17 30.67 22.86 24.60 27.41 29.17 31.14 74.1 79.5 86.9 93.6 102.0 1975: 197619771978: 1979: 31.28 31.82 33.27 35.21 36.58 31.15 31.77 32.70 34.34 35.11 31.02 31.55 33.08 34.98 36.25 106.8 114.3 123.8 134.9 145.3 31.58 32.13 33.71 35.66 36.97 31.45 32.07 33.14 34.80 35.50 31.31 31.85 33.52 35.43 36.65 108.4 116.2 126.0 137.4 147.9 1980: Dec* 1981: Dec" 39.19 40.80 37.50 40.17 38.72 40.49 158.2 166.0 39.66 41.25 37.97 40.61 39.19 40.94 161.0 169.0 1980: Jan Feb Mar Apr May June 36.75 36.55 36.59 36.67 36.59 36.57 35.51 34.89 33.77 34.21 35.57 36.19 36.50 36.34 36.41 36.47 36.41 36.36 146.6 147.4 148.3 148.5 149.6 150.4 38.28 36.35 36.05 36.68 36.19 36.13 37.04 34.70 33.23 34.22 35.17 35.75 38.03 36.14 35.86 36.48 36.01 35.93 147.6 145.8 146.6 148.0 148.7 149.9 36.72 37.17 37.86 38.04 39.19 39.19 36.33 36.52 36.55 36.73 37.13 37.50 36.44 36.87 37.60 37.83 38.67 38.72 151.5 153.2 154.3 155.6 157.7 158.2 36.82 36.85 37.55 38.02 39.19 39.66 36.42 36.19 36.24 36.71 37.13 37.97 36.53 36.54 37.29 37.82 38.67 39.19 152.2 153.2 154.0 155.6 158.7 161.0 1981. Jan Feb Mar Apr May June 39.18 38.95 39.07 39.27 39.54 39.35 37.79 37.65 38.07 37.93 37.31 37.31 38.87 38.67 38.82 39.14 39.37 39.10 158.7 159.0 159.5 160.5 161.7 161.6 40.60 38.82 38.59 39.23 39.23 38.96 39.21 37.52 37.59 37.89 37.00 36.93 40.29 38.54 38.34 39.10 39.05 38.72 159.6 157.4 157.8 159.9 160.8 161.2 July Aug . Sept Oct Nov Dec" 39.61 39.88 40.62 40.27 40.26 40.80 37.93 38.46 39.16 39.09 39.60 40.17 39.36 39.68 40.29 40.08 40.01 40.49 162.7 163.4 164.0 163.9 164.7 166.0 39.55 39.39 40.00 40.13 40.25 41.25 37.87 37.97 38.54 38.95 39.58 40.61 39.30 39.19 39.67 39.94 39.99 40.94 163.3 163.2 163.3 163.8 165.6 169.0 Dec Dec Dec Dec Dec July Aug Sept . . . . Oct Nov* Dec . . . . 'Reserve aggregates include required reserves of member banks and Edge Act corporations and other depository institutions. Discontinuities associated with the implementation of the Monetary Control Act, the inclusion of Edge Act corporation reserves, and other changes in Regulation D have been removed. Beginning with the week ended December 23, 1981, reserves aggregates have been reduced by shifts of reservable liabilities to international banking facilities (IBFS). An estimate of the size of this impact will be published when available on the basis of reports of liabilities transferred to IBFS by U.S. commercial banks and U.S. agencies and branches of foreign banks. 2 Reserve balances with Federal Reserve Banks (which exclude required clearing balances) plus vault cash at institutions with required reserve balances plus vault cash equal to required reserves at other instititions. 3 Includes reserve balances and required clearing balances at Federal Reserve Banks in the current week plus vault cash held two weeks earlier used to satisfy reserve requirements at all depository institutions plus currency outside the U.S. Treasury, Federal Reserve Banks, the vaults of depository institutions, and surplus vault cash at depository institutions. 4 Reserve measures from November 1980 to date reflect a one-time increase—estimated at $550 to $600 million—in required reserves associated with the reduction of week-end avoidance activities of a few large banks. Source: Board of Governors of the Federal Reserve System. 309 TABLE B-67 .—Bond yields and interest rates, 1929-82 [Percent per annum] Corporate bonds (Moody's) U.S. Treasury securities Year or month Bills (new issues) 1 36month month 1929 1933 1939 1940 1941 1942 1943 1944 1945 1946 1947 1948 1949 1950 1951 1952 1953 1954 Constant maturities 2 3 years .. "."". Baa 5.90 4.27 7.76 4.71 .023 4.73 4.49 3.01 4.96 .014 103 .326 .373 .375 2.84 2.77 2.83 2.73 2.72 4.75 4.33 4.28 3.91 3.61 375 375 .594 1.040 1.102 2.62 2.53 2.61 2.82 2.66 3.29 3.05 3.24 3.47 3.42 1.218 1.552 1.766 . 1.931 .953 3.24 3.41 3.52 3.74 3.51 2.76 2.50 2.10 2.36 2.06 1.86 1.67 1.64 2.01 2.40 2.21 1.98 2.00 2.19 2.72 2.37 0.515 .. Aaa 10 years Highgrade Prime Newmunici- hntnp compal mortgage mercial bonds paper, views (Stand- (FHLBB)a 4-6 ard & months Poor's) I.:.".'.'. " • 2.47' 1.63 2.85 2.40 2.62 2.86 2.96 3.20 2.90 1955 1956 1957 1958 1959 1.753 2.658 3.267 1.839 3.405 ""1832" 2.47 3.19 3.98 2.84 4.46 2.82 3.18 3.65 3.32 4.33 3.06 3.36 3.89 3.79 4.38 3.53 3.88 4.71 4.73 5.05 1960 1961 1962 1963 1964 2.928 2.378 2.778 3.157 3.549 3.247 2.605 2.908 3.253 3.686 3.98 3.54 3.47 3.67 4.03 4.12 3.88 3.95 4.00 4.19 4.41 4.35 4.33 4.26 4.40 5.19 5.08 5.02 4.86 4.83 1965 1966 1967 1968 1969 3.954 4.881 4.321 5.339 6.677 4.055 5.082 4.630 5.470 6.853 4.22 5.23 5.03 5.68 7.02 4.28 4.92 5.07 5.65 6.67 4.49 5.13 5.51 6.18 7.03 4.87 5.67 6.23 6.94 7.81 1970 1971 1972 , 1973 1974 6.458 4.348 4.071 7.041 7.886 6.562 4.511 4.466 7.178 7.926 6.122 5.266 5.510 7.572 10.017 11.374 13.811 7.29 5.65 5.72 6.95 7.82 7.35 6.16 6.21 6.84 7.56 8.04 7.39 7.21 7.44 8.57 9.11 8.56 8,16 8.24 9.50 7.49 6.77 6.69 8.29 9.72 7.99 7.61 7.42 8.41 9.44 8.83 8.43 8.02 8.73 9.63 10.61 9.75 8.97 9.49 10.69 11.55 14.44 11.46 13.91 11.94 14.17 13.67 16.04 1975 1976 1977 1978 1979 5.838 4.989 5.265 7.221 10.041 1980 1981 11.506 14.077 See next page for continuation of table. 310 2.53 2.93 3.60 3.56 3.95 3.73 3.46 3.18 3.23 3.22 3.27 3.82 3.98 4.51 5.81 6.51 5.70 5.27 5.18 6.09 6.89 6.49 5.56 5.90 6.39 8.51 11.23 Prime rate charged by banks* Discount rate, Federal Federal funds6 Reserve Bank of 4 rate New York 5.85 1.73 .59 .56 .53 .66 .69 .73 5Vfe-6 .75 .81 1.03 1.44 1.49 1.45 2.16 2.33 2.52 1.58 1.50 1.50 1V6-IV4 l%-2 2.00 2.18 3.31 3.81 2.46 3.97 3.16 3.77 4.20 3.83 4.48 1.89 2.77 3.12 2.15 3.36 1.78 2.73 3.11 1.57 3.30 3.85 2.97 3.26 5.89' 3.55 5.83 3.97 5.81 4.38 6.25 5.55 6.46 5.10 5.90 6.97 7,81 7.83 8.45 7.71 7.74 5.11 7.60 4.73 7.96 8.15 9.84 8.92 9.00 6.32 9.00 5.34 9.02 5.61 9.56 7 7.99 10.78 10.91 12.66 12.29 14.70 14.76 4.82 4.50 4.50 4.50 4.50 3.53 3.00 3.00 3.23 3.55 4.04 4.50 4.19 5.16 5.87 3.22 1.96 2.68 3.18 3.50 lVa-4 1.50 1.50 1.50 1.50 1.50 1.50 2.07 2.56 3.00 3.17 3.05 4.54 5.63 5.61 6.30 7.96 7.91 5.72 5.25 8.03 10.81 7.86 6.84 6.83 9.06 12.67 15.27 18.87 5.16 2.56 1.00 1.00 1.00 •1.00 •1.00 •1.00 •1.00 •1.00 Ill 1.00 1.34 1.50 1.59 1,75 1.75 1.99 1.60 5,95 4,88 4,50 6.44 7.83 6.25 5.50 5.46 7.46 10.28 11.77 13.41 4.07 5.11 4.22 5.66 8.20 7.18 4.66 4,43 8.73 10.50 5,82 5.04 5.54 7.93 11.19 13.36 16.38 TABLE B-67.—Bond yields and interest rates, 1929-81—Continued [Percent per annum] Corporate bonds (Moody's) U.S. Treasury securities Year or month 1979: Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec 1980: Jan Feb . . . Mar.. . Apr May.. . . June . . . July Aug Sept . .. . Oct.... Nov ... . Dec 1981: Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec Bills (new issues) l 36month month Constant maturities 2 3 10 years years 9.351 9.265 9.457 9.493 9.579 9.045 9.262 9.450 10.182 11.472 11.868 12.071 9.501 9.349 9.458 9.498 9.531 9.062 9.190 9.450 10.125 11.339 11.856 11.847 9.50 9.29 9.38 9.43 9.42 8.95 8.94 9.14 9.69 10.95 11.18 10.71 9.10 9.10 9.12 9.18 9.25 8.91 8.95 9.03 9.33 10.30 10.65 10.39 12.036 12.814 15.526 14.003 9.150 6.995 8.126 9.259 10.321 11.580 13.888 15.661 11.851 12.721 15.100 13.618 9.149 7.218 8.101 9.443 10.546 11.566 13.612 14.770 10.88 12.84 14.05 12.02 9.44 8.91 9.27 10.63 11.57 12.01 13.31 13.65 10.80 12.41 12.75 11.47 10.18 9.78 10.25 11.10 11.51 11.75 12.68 12.84 14.724 14.905 13.478 13.635 16.295 14.557 14.699 15.612 14.951 13.873 11.269 10.926 13.883 14.134 12.983 13.434 15.334 13.947 14.402 15.548 13.01 13.65 13.51 14.09 15.08 14.29 15.15 16.00 16,22 15.50 13.11 13.66 12.57 13.19 13.12 13.68 14.10 13.47 14.28 14.94 15.32 15.15 13.39 13.72 15.057 14.013 11.530 11.471 Aaa 9.25 Baa 9.26 9.37 9.38 9.50 9.29 10.13 10.08 10.26 10.33 10.47 10.38 9.20 9.23 9.44 10.13 10.76 10.74 10.29 10.35 10.54 11.40 11.99 12.06 11.09 12.38 12.96 12.04 10.99 10.58 12.42 13.57 14.45 14.19 13.17 12.71 11.07 11.64 12.02 12.31 12.97 13.21 12.65 13.15 13.70 14.23 14.64 15.14 12.81 13.35 13.33 13.88 14.32 13.75 15.03 15.37 15.34 15.56 15.95 15.80 14.38 14.89 15.49 15.40 14.22 14.23 16.17 16.34 16.92 17.11 16.39 16.55 1 Rate on new issues within period; bank-discount basis. z Yields on the more actively traded issues adjusted to constant 3 Highgrade Prime Discount Mewmunici- home com- Prime rate rate, pal mortgage mercial charged Federal Federal funds6 4by bonds yields Reserve banks (StandBank of rate _ r j &p (FHLBB) 3 rrmntho arc monins New York 4 Poor's) "&• 6.25 6.19 6.16 6.14 6.10 5.99 6.05 6.10 6.40 6.98 7.19 7.09 10.18 10.20 10.30 10.36 10.47 10.66 10.78 11.01 11.02 11.21 11.37 11.64 7.21 8.04 9.09 8.40 7.37 7.60 8.08 8.62 8.95 9.11 9.55 10.09 11.87 11.93 12.62 13.03 13.68 12.66 12.48 12.25 12.35 12.61 13.04 13.28 9.65 10.03 10.12 10.55 10.73 10.56 11.03 12.13 12.86 12.67 11.71 12.77 13.26 13.54 14.02 14.15 14.10 14.67 14.72 15.27 15.29 15.65 16.38 15.87 7 10.32 10.01 9.96 9.87 9.98 9.71 11%-11% 11%-11% H /4-ll /4 11 ¥4-11% 11%-11% 9.82 10.39 11.60 13.23 13.26 12.80 llV2-ll 3 /4 12.66 13.60 16.50 14.93 9.29 8.03 3 3 im-im n%-i2y4 12V4-13V2 13y2-15 15V4-15V2 15V2-15V4 15V4-15V4 15V4-16% 16%-19Vii 19V2-19V2 8 18V2-14 14 -12 9 ¥2 9V2 9V2 9Va 9V3 -9V2 -9V2 -9V2 -9y2 -9V6 9y2 -9y2 9*2-10 10 -lOVs 10V2-11 11 12 12 -12 -12 -12 12 -12 12 -13 13 -13 13 -13 13 -12 12 -11 8.29 9.61 11.04 12.32 14.73 16.49 12 -11 11 -11 Vz 11V2-13 13V2-14V2 14y2-173A 173/4-21V2 11 10 10 11 11 12 15.10 14.87 13.59 14.17 16.66 15.22 21V2-20 20 -19 19 -17 V2 17V2-18 18 -20y2 20V2-20 13 -13 13 -13 13 -13 13 -13 13 -14 14 -14 16.09 16.62 15.93 14.72 11.96 12.14 20 -20y2 20V2-20V2 20*2-19^ 19V2-18 18 -16 15%-15% 14 =14 14 =14 14 =14 14 -14 14 -13 13 -12 -10 -10 -11 -11 -12 -13 10.07 10.06 10.09 10.01 10.24 10.29 10.47 10.94 11.43 13.77 13.18 13.78 13.82 14.13 17.19 17.61 10.98 9.47 9.03 9.61 10.87 12.81 15.85 18.90 19.08 15.93 14.70 15.72 18.52 19.10 19.04 17.82 15.87 15.08 13.31 12.37 maturities by the Treasury Department. Effective rate (in the primary market) on conventional mortgages, reflecting fees and charges as well as contract rate and assuming on the average, repayment at end of 10 years. Rates beginning January 1973 not strictly comparable with prior rates. 4 For monthly data, opening and closing rate. Prime rate for 1929-33 and 1947-48 are ranges of the rate in effect during the period. * Since July 19, 1975, the daily effective rate is an average of the rates on a given day weighted by the volume of transactions at these rates. Prior to that date, the daily effective rate was the rate considered most representative of the day's transactions, usually the6 one at which most transactions occurred. From October 30, 1942, to April 24, 1946, a preferential rate of 0.50 percent was in effect for advances secured by Government securities maturing in 1 year or less. 7 Beginning November 1979, data are for 6-months paper. 8 On May 1, range of 18V2-19 was in effect. Sources: Department of the Treasury, Board of Governors of the Federal Reserve System, Federal Home Loan Bank Board (FHLBB), Moody's Investors Service, and Standard & Poor's Corporation. 311 TABLE B-68.—Consumer credit outstanding and net change, 1950-81 [Millions of dollars] Amount outstanding (end of month) Installment credit > Year and month Total Total Automobile Mobile Revolving 2 home3 2,461 7,226 9,526 13,580 14,642 14,434 14,573 14,945 15,235 16,838 17,327 9,488 10,262 12,835 14,569 15,144 16,798 18,687 19,971 21,081 24,491 26,968 28,428 31,070 34,987 39,755 44,526 48,347 52,017 55,228 60,495 61,614 61,982 66,085 76,047 82,005 85,301 94,056 93,434 108,454 121,887 119,919 10,080 10,972 11,983 12,354 13,147 14,890 15,864 16,461 17,059 19,268 19,656 21,178 22,448 24,458 26,459 28,670 29,606 31,343 34,149 35,283 35,935 39,540 44,466 47,969 48,833 51,144 55,391 58,569 64,260 71,335 72,224 3,271 1,537 =-57 717 4,250 1,677 3,784 2,050 637 62 5,378 3,724 2,902 1,013 988 2,272 -104 -1,214 5,784 2,374 3,928 1,451 976 =484 4,967 2,325 6,835 2,918 7,743 2,975 8,309 3,538 5,458 1,637 3,809 139 8,533 3,217 9,480 2,598 4,367 =621 12,727 4,194 14,918 7,343 21,935 5,910 494 9,486 7,402 2,976 21,529 10,465 37,039 15,204 43,081 18,736 38,379 14,715 1,411 =35 Seasonally adjusted * 1,505 892 1,011 371 793 1,743 974 §97 598 2,209 388 1,522 1,270 2,010 2,001 2,211 936 1,737 2,806 1,134 652 3,605 4,926 3,503 864 2,311 4,247 3,178 5,691 7,075 889 116,719 56,256 117,202 55,269 117,642 54,269 117,502 53,690 117,058 53,225 116,456 53,042 116,125 53,036 116,868 53,771 116,781 54,406 116,657 54,598 116,517 55,304 116,327 59,862 16,832 16,875 16,944 16,974 16,912 16,988 17,004 17,068 17,113 17,276 17,293 17,327 121,205 120,803 120,272 119,665 118,593 117,913 117,688 118,056 118,626 118,691 118,937 119,919 70,215 2,878 2,727 1,538 69,966 2,403 982 1,685 70,395 1,532 654 513 69,966 -2,109 -1,671 =-643 69,369 -3,296 -2,677 = 1,041 69,163 -2,200 -2,045 -1,026 69,732 -154 -1,199 = 717 355 70,493 1,048 489 84 71,112 1,524 1,055 201 71,618 702 685 72,020 1,048 839 245 302 985 1,619 72,224 151 = 718 878 = 438 = 619 .455 1,045 559 469 = 17 209 = 634 115,262 58,985 115,677 57,566 117,517 56,831 118,479 57,322 118,932 57,524 119,685 58,470 121,002 58,976 123,219 59,745 125,646 60,415 126,235 60,651 125,929 61,166 17,244 17,189 17,273 17,422 17,626 17,724 17,784 17,988 18,157 18,329 18,385 119,063 118,756 119,145 120,196 121,383 122,580 123,124 123,701 124,078 123,611 123,464 71,570 71,486 72,409 73,138 73,503 73,998 74,426 74,931 75,476 75,688 76,862 338 297 256 980 447 686 1,014 215 471 = 331 1,055 25,583 27,192 32,453 36,608 38,038 45,159 49,035 51,904 52,398 60,391 64,707 67,205 73,442 82,287 92,031 102,551 108,945 114,491 125,830 136,444 141,463 157,795 177,639 203,077 213,427 223,140 248,916 289,133 337,905 383,359 385,659 15,503 6,015 16,220 5,958 7,635 20,470 9,685 24,254 9,747 24,891 13,471 30,269 33,171 14,484 35,443 15,472 35,339 14,258 41,123 16,632 45,051 18,083 46,027 17,599 19,924 50,994 57,829 22,842 65,572 25,817 73,881 29,355 79,339 30,992 83,148 31,131 91,681 34,348 2405 101,161 36,946 3,720 105,528 36,325 5,128 118,255 40,519 8,528 133,173 47,862 9,700 155,108 53,772 11,709 164,594 54,266 . 13,681 171,996 57,242 15,019 193,525 67,707 17,189 230,564 82,911 39,274 273,645 101,647 48,309 312,024 116,362 56,937 313,435 116,327 59,862 381,227 380,115 379,522 377,797 375,157 373,562 373,585 376,256 378,038 378,840 380,071 385,659 311,012 310,149 309,127 307,831 305,788 304,399 303,853 305,763 306,926 307,222 308,051 313,435 382,124 310,554 Jan 380,674 309,188 Feb Mar 383,175 310,766 386,557 313,419 May,. ,'.. " 388,968 315,465 June 392,457 318,459 July 395,312 320,886 399,584 324,653 Aug Sept. .. , 403,772 328,296 Oct 404,514 328,826 Nov.. 405,806 328,944 1950: Dec .. 1951: Dec 1952: Dec 1953: Dec 1954: Dec 1955: Dec 1956: Dec 1957: Dec 1958: Dec 1959: Dec I960: Dec .. 1961: Dec 1962: Dec 1963: Dec 1964: Dec 1965: Dec 1966: Dec . . . . 1967: Dec 1968: Dec 1969: Dec 1970: Dec 1971: Dec 1972: Dec 1973: Dec 1974: Dec 1975: Dec 1976: Dec 1977: Dec 1978: Dec 1979: Dec 1980: Dec 1980: Jan Feb Mar ft-:.June July Aug Sept Oct Nov Dec Other Net change from preceding period Installment NoninNonin* credit » stallment Total stallment 4 credit Autocredit* Total mobile •I:'.':. 4,776 1,609 5,261 4,155 1,430 7,121 3,876 2,869 494 7,993 4,316 2,498 6,237 8,845 9,744 10,520 6,394 5,546 11,339 10,614 5,019 16,332 19,844 25,438 10,350 9,713 25,776 40,217 48,772 45,454 2,300 1981: 1,207 2,293 3,364 3,311 1,793 2,616 2,968 3,074 3,290 683 1,397 869 1,996 3,108 2,331 1,346 1,930 1,954 2,859 2,819 1,014 342 =63 979 1,682 428 = 195 57 1,208 2,115 2,282 962 274 1 Installment credit covers most short- and intermediate-term credit extended to individuals through regular business channels, usually to finance the purchase of consumer goods and services or to refinance debts incurred for such purposes, and scheduled to be repaid (or with the option of repayment) in two or more Installments. 2 Consists of credit cards at retailers, gasoline companies, and commercial banks, and check credit at commercial banks. Prior to 1968, included in "other," except gasoline companies, included in noninstallment credit prior to 1971. Beginning 1977, includes openend credit at retailers, previously included in "other. Also beginning 1977, some retail credit was reclassified from commercial into consumer credit. Credit secured by real estate is generally excluded. 3 Not reported separately prior to July 1970. 4 Because of inconsistencies in the data and infrequent benchmarking, series on noninstallment credit is no longer published by the Federal Reserve Board on a regular basis. Data are shown here as a general indication of trends. s For installment credit, computed as the difference between extensions and liquidations (both seasonally adjusted); see also Table B-69. For noninstallment credit, computed as the change from one month to another in the seasonally adjusted amount outstanding. Source: Board of Governors of the Federal Reserve System. 312 TABLE B-69.—Consumer installment credit extended and liquidated, 7950-87 [Millions of dollars; monthly data seasonally adjusted] Total Year or month 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 . .. 1980: Jan Feb Mar Apr May June July AUB s of... .••...::..: Nov Dec 1981Jan Feb Mar Apr fay June July Aug Sept Oct Nov Automobile ExLiquitended dated Revolving » LiquiExtended dated Extended Liquidated 22,130 24,583 30,616 32,579 32,265 40,263 40,886 43,101 40,956 49,134 50,827 50,598 57,562 64,660 72,445 79,918 83,821 89,058 101,426 109,422 115,007 138,046 152,275 173,035 172,765 180,083 210,740 257,600 297,668 324,777 305,887 18,861 23,867 26,355 28,794 31,625 34,882 37,899 40,759 41,290 43,395 47,022 49,735 52,601 57,822 64,616 71,616 78,365 85,194 92,075 99,945 110,352 127,789 136,787 152,817 163,276 172,675 189,179 222,138 254,589 286,396 304,477 8,445 8,951 11,610 12,740 11,741 16,732 15,572 16,554 14,287 18,008 18,112 16,477 20,164 22,617 24,792 27,913 27,844 27,623 32,228 33,686 30,857 36,706 43,702 49,606 46,514 52,420 63,743 75,641 87,981 93,901 83,002 27,923 27,581 25,881 23,220 22,093 22,349 23,997 26,176 27,064 27,365 25,991 27,149 25,196 25,178 25,227 24,891 24,770 24,394 25,196 25,687 26,009 26,663 25452 25,530 8,441 7,973 7,372 5,922 5,533 5,550 6,068 7,400 7,518 7,544 7,117 7,234 6,903 6,991 6,859 6,565 6,574 6,576 6,785 7,045 7,434 7,343 6,872 6,932 10,500 10,756 10,634 10,347 10,302 10,341 10,679 10,700 11,143 11,124 10,953 11,614 27,059 28,706 29,822 28,878 28,149 29,005 28,750 28,399 29,428 26,952 27,499 26,190 26,710 26,714 26,547 26,803 27,075 26,796 26,040 26,609 25,938 27,157 7,237 8,333 8,700 7,205 7,320 7,442 8,178 8,573 9,176 7,139 7,748 7,300 7,354 7,018 6,777 7,515 7,385 6,970 6,458 6,894 6,177 7,474 11,483 11,867 12,071 12,352 11,904 12,668 12,190 11,964 12,335 12,208 11,861 6,906 9,008 9,932 10,689 11,679 13,008 14,559 15,567 15,501 15,638 16,661 16,960 17,840 19,699 21,815 24,386 26,206 27,482 2,726 29,013 3,481 4,567 6,182 31,090 7,278 8,689 31,414 32,512 21,862 20,818 38,081 24,659 23,485 43,696 28,702 26,699 46,019 33,213 31,243 49,444 36,956 35,616 53,278 43,934 41,764 60,437 87,596 81,348 69,245 105,125 96,090 79,186 120,174 111,546 83,037 129,580 126,655 Mobile home2 LiquiExdated tended ... 612 2,521 5,121 7,061 5,788 4,326 4,859 5,712 5,412 6,471 Other ExLiquitended dated . 13,685 15,632 19,006 19,839 20,524 23,531 25,314 26,547 26,669 31,126 32,715 34,121 37,398 42,043 47,653 52,005 55,977 61,435 65,717 69,554 74,849 76,957 78,793 87,666 87,250 86,381 98,204 88,651 99,150 104,231 88,207 11,955 14,859 16,423 18,105 19,946 21,874 23,340 25,192 25,789 27,757 30,361 32,775 34,761 38,123 42,801 47,230 52,159 57,712 60,366 64,288 71,188 72,705 72,246 78,238 81,294 83,079 89,417 75,012 84,128 90,796 90,175 7,904 7,756 7,615 7,266 7,258 7,016 7,407 7,841 7,511 8,097 7,192 7,187 7,557 7,474 7,659 7,850 7,368 7,641 7,729 7,749 7,305 7,591 7,435 5,098 478 1,754 2,975 4,184 4,720 4,536 4,720 5,341 5,126 4,868 4,610 9,971 10,034 10,373 10,677 10,589 10,436 10,641 10,419 10,665 10,851 10,688 10,998 522 452 435 397 299 424 418 397 380 383 349 366 377 415 442 513 424 479 363 382 399 372 400 413 8,460 8,400 7,440 6,554 5,959 6,034 6,873 7,661 7,961 8,184 7,497 7,822 10,926 11,426 11,484 11,514 11,554 11,650 11,713 11,473 12,042 11,818 11,808 383 409 641 551 609 488 451 536 543 487 498 407 456 553 406 366 399 384 360 368 352 440 7,956 8,097 8,410 8,770 8,316 8,407 7,931 7,826 7,374 7,118 7,392 'Consists of credit cards at retailers, gasoline companies, and commercial banks, and check credit at commercial banks. Prior to 1968, included in "other," except gasoline companies, included in noninstallment credit prior to 1971. Beginning 1977, includes openend credit at retailers, previously included in ''other." Also beginning 1977, some retail credit was reclassified from commercial into consumer credit. Credit secured by real estate is generally excluded. 2 Not reported separately prior to July 1970. Note.—Installment credit covers most short- and intermediate-term credit extended to individuals through regular business channels, usually to finance the purchase of consumer goods and services or to refinance debts incurred for such purposes, and scheduled to be repaid (or with the option of repayment) in two or more installments. Liquidated credit includes repayments, chargeoffs, and other credit. See also Table 8-68. Source: Board of Governors of the Federal Reserve System. 313 TABLE B-70.—Mortgage debt outstanding by type of property and of financing, J 959-81 [Billions of dollars] Nonfarm properties by type of mortgage Nonfarm properties Farm All proper- properties ties End of year or quarter Total Multi1- to 4- family family properhouses ties Commercial 2 properties 1 Total 1- to 4-f3mily houses Total 14.5 3.0 3.7 4.1 4.2 3iC 3.7 4.1 4.2 15.1 15.4 14.5 13.7 13.7 42 .6.1 9.8 13.6 17.1 4.3 6.1 9^ 12.5 15.0 4.1 3.7 3.8 &9 0.2 2.4 55 7.2 8.1 26.5 30.6 34.1 37.3 40.0 14.3 16.9 18.9 20.8 22.6 11.5 12.5 13.4 14.5 16,3 22.1 26.6 29.3 32.1 36.2 18.9 22.9 25.4 28.1 32.1 8.6 9.7 10.8 12.0 12.8 10.3 13.2 14.6 16.1 19.3 44.6 49.0 54.9 61.5 69.2 26.3 28.8 33.1 38.0 43.6 14.3 14,9 15.3 16.8 18.7 18.3 20.7 23.2 26.1 29.2 42.9 47.8 51.6 55.1 59.3 38.9 43.9 47.2 50.1 53.8 14.3 15.5 16.5 19.7 23.8 24.6 28.4 30.7 30.4 30.0 78.0 86.8 94.6 105.5 119.4 49.3 55.1 60.4 67.6 77.0 141.9 154.7 169.3 186.4 203.4 20.3 23.0 25.8 29.0 33.6 32.4 36.4 41.1 46.2 50.0 62.3 65.6 69.4 73.4 77.2 56.4 59.1 62.2 65.9 69.2 26.7 29.5 32.3 35.0 38.3 29.7 29.6 29.9 30.9 30.9 132.3 148.5 166.9 188.2 209.8 85.5 95.6 107.1 120.5 134.1 312.1 333.4 356.1 383.5 412.2 220.5 232.9 247.3 264.8 282.8 37.2 40.3 43.9 47.3 52.3 54.5 60.1 64.8 71.4 77.1 81.2 84.1 88.2 93.4 100.2 73.1 76.1 79.9 84.4 90.2 42.0 44.8 47.4 50.6 54.5 31.1 31.3 32.5 33.8 35.7 231.0 249.3 267.9 290.1 312.0 147.4 156.9 167.4 180.4 192.7 30.3 32.2 35.8 41.3 46.3 443.8 494.3 567.7 641.1 696.2 298.1 60.1 85.6 328.3 70.1 95.9 372,2 82.8 112.7 416.2 93.1 131.7 449.4 100.0 146.9 109.2 120.7 131.1 135.0 140.2 97.3 105.2 113.0 116.2 121.3 59.9 65.7 68.2 66.2 65.1 37.3 39.5 44.7 50.0 56.2 334.6 373.5 436.5 506.0 556.0 200.8 223.1 259.2 300.0 328.1 750.7 832.2 957.4 1,098.2 1,244.2 490.8 556.5 655.9 765.2 878.9 100.6 104.5 111.8 121.1 128.9 159.3 171.2 189.7 211.9 236.5 147.0 154.1 161.7 176.4 199.0 127.7 133.5 141.6 153.4 172.9 66.1 66.5 68.0 71.4 81.0 61.6 603.7 67.0 678.0 73.6 795.7 82.0 921.8 92.0 1,045.2 363.0 422.9 514.3 611.8 706.0 1,353.8 960.1 137.2 256.5 225.1 195.2 93.6 101.6 1,128.7 764.9 84.5 944.4 85.8 981.0 89.2 1,014.4 92.0 1,045.2 629.5 658.2 684.1 706.0 28.9 16.3 5.6 7.0 1.8 1.8 6.5 6.4 6.0 5.4 4.9 30.0 31.2 30.8 29.9 29.7 17.4 18.4 18.2 17.8 17.9 5.7 55 5^8 5.8 5.6 6.9 7.0 6.7 6.3 6.2 2.3 3.0 3.7 4.1 4.2 2.3 1945. . 1946 . 1947 1948 1949. 35.5 41.8 48.9 56.2 62.7 4.8 4.9 5.1 W 30.8 36.9 43.9 50.9 57.1 18.6 23.0 28.2 33.3 37.6 5.7 6.1 6.6 7.5 8.6 6.4 7.7 9.1 10.2 10.8 72.8 82.3 91.4 101.3 113.7 6.1 6.7 7.2 7.7 8.2 66.7 75.6 84.2 93.6 105.4 45.2 51.7 58.5 66.1 75.7 10.1 11.5 12.3 12.9 13.5 129.9 144.5 156.5 171.8 190.8 9.0 9.8 10.4 11.1 12.1 120.9 134.6 146.1 160.7 178.7 88.2 99.0 107.6 117.7 130.9 207.5 228.0 251.4 278.5 305.9 12.8 13.9 15.2 16.8 18.9 194.7 214.1 236.2 261.7 287.0 333.3 356.5 381.2 410.9 441.4 21.2 23.1 25.1 27.4 29.2 474.2 526.5 603.4 682.3 742.5 801.5 888.7 1,021.1 1,169.0 1,326.9 1955 1956 1957 1958 1959 1960 1961. 1962 1963 1964 .. 1965 1966 1967. . 1968 . .. 1969 1970 1971 1972 1973. 1974 . . . .... l-to4family houses 27.7 28.2 27.1 25.8 25.5 6.6 36.5 37.6 36.7 35.3 34.7 . Total 27.1 35.5 1940 1941.. 1942 1943. . 1944 ... VA FHA guarinsured anteed 1.8 1939 1950 1951 1952. 1953 1954 Conventional ;) Government underwritten 1980, .. 1,445.7 50.9 56.6 63.6 70.8 82.7 91.9 1979 1 II lit IV 1,201.5 1,246.0 1,289.5 1,326,9 74.2 77.9 80.8 82.7 1,127.4 1,168.1 1,208.7 1,244.2 787.9 820.4 852.3 878.9 122.9 125.0 126.8 128.9 216.5 222.7 229.6 236.5 183.0 187.1 194.3 199.0 158.4 162.2 168.2 172.9 73.9 76.4 79.1 81.0 1980: 1 .. || III IV 1,356.4 1,378.6 1,411.4 1,445.7 85.8 88.8 90.2 91.9 1,270.6 1,289.8 1,321.2 1,353.8 898.0 910.4 935.7 960.1 130.3 132.7 134.8 137.2 242.4 246.7 250.7 256.5 207.5 211.6 218.9 225.1 180.8 184.1 190.0 195.2 86.0 94.8 87.4 96.7 90.6 99.4 93.6 101.6 1,063.1 1,078.2 1,102.3 1,128.7 717.1 726.2 745.7 764.9 1,372.6 972.2 138.6 261.8 1,399.1 990.4 140.1 268.6 1,423.6 1,008.3 141.7 273.6 229.1 233.6 237.0 198.8 95.7 103.1 1,143.5 202.7 98.1 104.6 1,165.5 205.9 100.0 105.9 1,186.7 773.4 787.7 802.4 1975 1976 1977 . . 1978 1979 1981: 1 II m . . 1,467.0 94.4 1,496.4 97.3 1,523,6 100.0 1 2 3 Includes negligible amount of farm loans held by savings and loan associations. Includes FHA insured multifamily properties, not shown separately. Derived figures. Total includes multifamily and commercial properties, not shown separately. Source: Board of Governors of the Federal Reserve System, based on data from various Government and private organizations. 314 TABLE B-71.—Mortgage debt outstanding by holder, 1939-81 [Billions of dollars] Major financial institutions End of year or quarter Total 1939 1940 35.5 1941 1942 1943 1944 36.5 37.6 36.7 35.3 34.7 1945 1946 1947 1948 1949 35.5 41.8 48.9 56.2 62.7 1950 1951 1952 1953 1954.' 72.8 82.3 91.4 101.3 113.7 1955 1956 1957 1958 1959,. 129.9 144.5 156.5 171.8 190.8 Total 18.6 19.5 20.7 20.7 20.2 20.2 21.0 26.0 31.8 37.8 42.9 51.7 59.5 66.9 75.1 85.7 99.3 111.2 119.7 131.5 145.5 157.6 172.6 192.5 217.1 241.0 Savings and loan associations Other holders Mutual savings banks Commercial banks < Life insurance com- panies Federal and related agen-2 cies 3.8 4.8 4.3 5.7 5.0 4.1 4.6 4.6 4.6 4.8 4.9 4.8 4.6 4.4 4.3 4.6 4.9 4.7 4.5 4.4 6.0 6.4 6.7 6.7 6.7 4.9 4.7 4.3 3.6 3.0 5.4 7.1 8.9 10.3 11.6 4.2 4.4 4.9 5.8 6.7 4.8 7.2 9.4 10.9 11.6 6.6 7.2 8.7 10.8 12.9 2.4 2.0 1.8 1.8 2.3 13.7 15.6 18.4 22.0 26.1 8.3 9.9 11.4 12.9 15.0 13.7 14.7 15.9 16.9 18.6 16.1 19.3 21.3 23.3 26,0 2.8 3.5 4.1 4.6 4.8 31.4 35.7 40.0 45.6 53.1 17.5 19.7 21.2 23.3 25.0 21.0 22.7 23.3 25.5 28.1 29.4 33.0 35.2 37.1 39.2 5.3 6.2 7.7 8.0 10.2 60.1 68.8 78.8 90.9 101.3 26.9 29.1 32.3 36.2 40.6 28.8 30.4 34.5 39.4 44.0 41.8 44.2 46.9 50.5 55.2 1965 1966 1967 1968 1969 333.3 356.5 381.2 410.9 441.4 264.6 280.8 298.8 319.9 339.1 110.3 114.4 121.8 130.8 140.2 44.6 47.3 50.5 53.5 56.1 49.7 54.4 59.0 65.7 70.7 60.0 64.6 67.5 70.0 72.0 1970 1971 1972 1973 1974 474.2 526.5 603.4 682.3 742.5 355.9 394.2 450.0 505.4 542.6 150.3 174.3 206.2 231.7 249.3 57.9 62.0 67.6 73.2 74.9 73.3 82.5 99.3 119.1 132.1 74.4 75.5 76.9 81.4 86.2 1975 1976 1977 1978 1979 801.5 888.7 1,021.1 1,169.0 1,326.9 647.5 745.0 848.2 938.6 581.2 278.6 323.0 381.2 432.8 475.7 77.2 81.6 88.1 95.2 98.9 136.2 151.3 179.0 214.0 245.2 89.2 91.6 96.8 106,2 118.8 11.5 12.2 12.6 11.8 12.2 13.5 17.5 20.9 25.1 31.1 38.3 46.4 54.6 64.8 82.1 101.0 116.6 140.3 170.4 216.4 1960 1961 'I. 1962 1963 1964 ""'..'. 207.5 228.0 251.4 278.5 305.9 Individuals and others 11.9 12.0 12.2 11.7 11.5 11.5 12.1 13.8 15.3 16.6 17.5 18.4 19.3 20.4 21.7 23.2 25.3 27.1 29.1 32.3 35.1 38.4 43.1 46.3 49.5 52.7 55.2 58.2 61.4 65.9 71.2 1980 1,445.7 996.8 502.8 99.9 263.0 131.1 256.6 79.9 85.9 98.9 112.2 117.8 119.3 124.7 135.7 150.5 172.0 192.3 1979: ) II " Ill IV 1,201.5 1,246.0 1,289.5 1,326.9 919.3 865.6 893.6 441.4 456.5 468.2 475.7 96.1 97.2 97.9 98.9 219.7 228.8 238.8 245.2 108.4 111.1 114.4 118.8 203,6 181.1 192.2 216.4 154.8 160.3 166.6 172.0 1980: t II Ill (V 1,356.4 1,378.6 1,411.4 1,445.7 951.2 958.7 977.3 996.8 479.0 481.0 491.9 502.8 99.2 99.2 99,3 99.9 250.7 253.0 258.0 263.0 122.4 125.6 128.1 131.1 228.6 238.2 247.1 176.7 181.7 187.0 192.3 1981: 1 II Ill 1,467.0 1,496.4 1,523.6. 1,006.8 1,023.3 1,036.4 507.2 514.8 518.4 99.7 100.0 99.0 266.7 273.2 281.1 133.2 135.3 137.0 263.5 196.7 201.6 938.6 1 Includes 2 256.6 271.4 279.9 206.8 loans held by nondeposit trust companies, but not by bank trust departments. Includes former Federal National Mortgage Association (FNMA) and new Government National Mortgage Association (QNMA), as well as Federal Housing Administration, Veterans Administration, Public Housing Administration, Farmers Home Administration, and in earlier years Reconstruction Finance Corporation, Homeowners Loan Corporation, and Federal Farm Mortgage Corporation. Also includes GNMA Pools and U.S.-sponsored agencies such as new FNMA, Federal Land Banks, and Federal Home Loan Mortgage Corporation. Other U.S. agencies (amounts small or current separate data not readily available) included with "individuals and others." Source: Board of Governors of the Federal Reserve System, based on data from various Government and private organizations. 315 GOVERNMENT FINANCE TABLE 3-72.—Federal budget receipts, outlays, and debt, fiscal years 1972-83 [Millions of dollars; fiscal years] Actual Description Transition quarter 1977 1972 1973 1974 1975 1976 207,309 230,799 263,224 279,090 298,060 81,232 355,559 148,846 71,619 -13156 161,357 90,766 =21 325 181,219 103,138 = 21,133 187,505 116,683 -=-25,098 201,099 131,750 34,789 54,085 31,530 -4,383 241,312 150,560 -36,313 230,681 245 647 267,912 324,245 364,473 94,188 400,506 178110 65J27 -13,156 186 951 80,021 -21,325 199,918 89,126 -=21,133 240,081 109,261 = 25,098 269,921 129,341 - 34,789 65,088 33,482 -4,383 295,756 141,063 -36,313 BUDGET RECEIPTS AND OUTLAYS: Total receipts Federal funds Trust funds Interfund transactions Total outlays Federal funds Trust funds Interf und transactions Total surplus or deficit ( — } Federal funds Trust funds -23,373 = 14,849 -4,688 -45,154 -=66,413 -12,956 =44,948 -29 264 5,892 -25 594 10,745 - 18,699 14,011 -52,576 7,422 -68,822 2,409 = 11,004 -1,952 = 54,444 9,496 OUTSTANDING DEBT, END OF PERIOD: Gross Federal1 debt 437,329 468,426 486,247 544,131 631,866 646,379 709,138 Held by Government agencies Held by the public 113,559 323,770 125,381 343 045 140,194 346,053 147,225 396,906 151,566 480,300 148,052 498,327 157,295 551,843 Federal Reserve System Other . 71,426 252,344 75,181 267,863 80,648 265,405 84,993 311,913 94,714 385,586 96,702 401,625 105,004 446,839 207,309 230,779 263,224 279,090 298,060 81,232 355,559 94,737 32,166 103,246 36,153 118,952 38,620 122,386 40,621 131,603 41,409 38,801 8,460 157,626 54,892 52,574 15,477 5436 3,287 63,115 16260 4917 3,188 75,071 16,844 5035 3,334 84,534 16,551 90,769 16,963 5,216 4,074 25,219 4,473 1,455 1,212 106,485 17,548 7,327 5,150 3,252 380 3495 425 4,845 523 5777 935 5,451 2,576 1,500 111 5,908 623 230 681 245 647 267 912 324 245 364 473 94188 400,506 76,550 4,693 74,541 4066 77,781 5,681 85,552 6922 89,430 5,554 22,307 2,191 97,501 4,819 4173 1*270 4,235 5,280 2,216 8388 3^422 4030 1,179 4,763 4852 924 9065 4',595 3,977 837 5,670 2,227 3,925 9172 4,134 3989 2,169 7,336 1,659 5,607 10388 3,738 4,370 3,127 8,124 2,502 3,792 13,435 4,767 1,161 794 2,532 584 1,392 3304 1,340 4,677 4,172 10,000 5,526 98 14,636 6,348 12519 16127 63,913 10730 1650 2415 673 20,563 12735 17405 72,965 12013 2131 2568 7,351 22782 12344 20'364 84,437 13,386 2462 3243 6,890 28,032 15870 25742 108,576 16597 2942 3133 7,187 30,911 18,737 31,503 127,390 18,432 3,320 2948 7|235 34,511 5,162 32,797 3,962 859 883 2,092 7,216 20,985 36,582 137,900 18,038 3,600 3,169 9,499 38,009 -8,137 -12,318 -16,651 -14,075 -14,704 -2,567 15,053 -2,768 -5,089 -2927 -5,436 = 3319 = 6!583 -3980 -7,667 -4,242 -7,800 =985 -270 -4,548 -8,131 -279 -3,956 -6,748 -2,428 -2,662 -1,311 -2,374 BUDGET RECEIPTS Individual income taxes Corporation income taxes Social insurance taxes and contributions Excise taxes . Estate and gift taxes Customs duiies Miscellaneous receipts: Deposits of earnings by Federal Reserve System All other BUDGET OUTLAYS National defense International affairs .. ... . General science, space, and technology Energy Natural resources and environment Agriculture , Commerce and housing credit Transportation Community and regional development... Education, training, employment and social services Health Income security Veterans benefits and services Administration of justice General government General purpose fiscal assistance Interest Allowances Undistributed offsetting receipts Composition of undistributed offsetting receipts: Employer share, employee retirement Interest received by trust funds.... Rents and royalties on the Outer Continental Shelf See next page for continuation of table. 316 4611 3,676 8181 TABLE B-72.—Federal budget receipts, outlays, and debt, fiscal years 1972-83^Continued [Millions of dollars; fiscal years} Estimates Actual Description 1981 1982 1983 517,112 599,272 626,753 666,118 350,856 210,930 -44,674 410,422 239,413 -50,563 412,817 274,710 -60,774 433,664 296,650 -64,195 490,997 576,675 657,204 725,331 757,638 362,396 168,653 -40,052 419,220 202,129 -44,674 475,171 232,596 -50,563 523,936 262,169 -60,774 540,604 281,229 -64,195 1978 1979 1980 399,561 463,302 270,490 165,568 -36,498 316,366 186,988 -40,052 448,368 331,991 152,874 -36,498 BUDGET RECEIPTS AND OUTLAYS: Total receipts Federal funds Trust funds Interfund transactions Total outlays Federal funds Trust funds Interfund transactions Total surplus or deficit { , .. ) federal funds Trust funds -48,807 -27,694 -59,563 -57,932 -98,578 -91,520 -61,501 12,694 -46,030 18,335 -68,364 8,801 -64,749 6,817 -111,119 12,541 -106,940 15,421 780,425 833,751 914,317 1,003,941 1,134,186 1,258,405 169,477 610,948 189,162 644,589 199,212 715,105 209,507 794,434 220,752 913,434 236,971 1,021,434 115,480 495,468 115,594 528,996 120,846 594,259 124,466 669,968 399,561 463,302 517,112 599,272 626,753 666,118 180,988 59,952 120,967 18,376 5,285 6,573 217,841 65,677 138,939 18,745 5,411 7,439 244,069 64,600 157,803 24,329 6,389 7,174 285,917 61,137 182,720 40,839 6,787 8,083 298,578 46,752 206,481 42,993 7,162 8,870 304r533 65,269 222,510 41,663 5,948 9,390 6,641 778 8,327 925 11,767 981 12,834 956 14,974 943 15,809 996 448,368 490,997 576,675 657,204 725,331 757,638 105,186 5,922 4,742 5,861 10,925 7,731 3,331 15,445 11,070 117,681 6,091 5,041 6,856 12,091 6,238 2,579 17,459 9,542 135,856 10,733 5,722 6,313 13,812 4,762 7,788 21,120 10,068 159,765 11,130 6,359 10,277 13,525 5,572 3,946 23,381 9,394 187,497 11,074 6,942 6,413 12,626 8,633 3,265 21,228 8,366 221,068 11,968 7,633 4,215 9,911 4,494 1,591 19,628 7,263 26,463 41,232 146,180 18,974 3,802 3,706 9,601 43,966 29,685 46,962 160,159 19,928 4,153 4,093 8,372 52,556 30,767 55,220 193,100 21,183 4,570 4,505 8,584 64,504 31,402 65,982 225,099 22,988 4,698 4,614 6,856 82,537 -15,772 -18,488 -21,933 -30,320 27,770 73,437 250,870 24,155 4,521 5,146 6,417 99,095 -624 -31,502 21,552 78,105 261,736 24,383 4,592 5,008 6,686 112,536 -1,257 -43,474 -4,983 -8,530 -5,271 -9,950 -5,787 -12,045 = 6,371 -13,810 -7,560 -16,080 -8,353 -16,122 -2,259 -3,267 -4,101 -10,138 =7,861 -18,000 OUTSTANDING DEBT, END OF PERIOD: Gross Federal debt Held by Government agencies Held by the public Federal Reserve System Other BUDGET RECEIPTS Individual income taxes, . . Corporation income taxes Social insurance taxes and contributions. Excise taxes Estate and gift taxes Customs duties.. . . .... Miscellaneous receipts: Deposits of earnings by Federal Reserve System All other BUDGET OUTLAYS National defense International affairs General science, space, and technology Energy. Natural resources and environment Agriculture. . Commerce and housing credit Transportation Community and regional development. Education, training, employment, and social services. . . Health Income security Veterans benefits and services. Administration of justice . . General government General purpose fiscal assistance Interest Allowances. . , Undistributed offsetting receipts. . .... Composition of undistributed offsetting receipts; Employer share, employee retirement Interest received by trust funds Rents and royalties on the Outer Continental Shelf Note.—Under provisions of the Congressional Budget Act of 1974, the fiscal year for the Federal Government shifted beginning with fiscal year 1977. Through fiscal year 1976, the fiscal year was on a July 1-June 30 basis. Beginning October 1976 {fiscal vear 1977). the fiscal year is on an October 1-September 30 basis. The period July 1, 1976 through September 30, 1976 is a separate fiscal period known as the transition quarter. Refunds of receipts are excluded from receipts and outlays. See "Budget of the United States Government, Fiscal Year 1983" for additional information. Sources: Department of the Treasury and Office of Management and Budget. 317 TABLE B-73-—Federal budget receipts and outlays, fiscal years 1929-83 [Millions of dollars] Fiscal year 1929... 1933 1939 1940... . 1941 1942.... 1943 1944 1945 1946.., 1947 1948 1949... . 1950 1951 1952... 1953 1954.., 1955 1956 ... 1957 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 . 1971 1972 1973 1974.... 1975 1976 Transition quarter 1977 1978 1979.... 1980 .. ... 1981 . 1982 1> 1983 . . . .. .... . . ... , , .. .. . .. . . Receipts Outlays 3,862 1,997 4,979 6,361 8,621 14,350 23,649 44,276 45,216 39,327 38,394 41,774 39,437 39485 51646 66,204 69,574 69,719 65,469 74,547 79,990 79,636 79,249 92,492 94389 99,676 106,560 112,662 116,833 130,856 148,906 152,973 186,882 192,807 187,139 207,309 230,799 263 224 279,090 298,060 81232 355!559 399 561 463)302 517 112 599 272 626,753 666,118 3,127 4,598 8,841 9,456 13,634 35,114 78,533 91,280 92,690 55,183 34,532 29,773 38,834 42,597 45,546 67,721 76,107 70,890 68,509 70,460 76,741 82,575 92,104 92,223 97795 106,813 111,311 118,584 118,430 134,652 157,608 178,134 183,645 195,652 210,172 230,681 245,647 267 912 324,245 364,473 94 188 400,506 448,368 490,997 576 675 657*204 725,331 757,638 Surplus or deficit (-) 734 - 2,602 -3,862 =3,095 -5,013 =20,764 =54,884 =47,004 =47,474 = 15,856 3,862 12,001 603 -3 112 6,100 -1,517 ~=6,533 -1,170 -3,041 4087 3,249 -2,939 - 12,855 269 -3406 -7',137 -4,751 =5,922 -1596 -3,796 -8,702 -25,161 3,236 -2,845 = 23,033 -23,373 -14,849 4688 =45,154 -66,413 12956 -44^948 =48,807 -27,694 -59563 57932 =98,578 -91,520 1 Estimates. Note.—Under provisions of the Congressional Budget Act of 1974, the fiscal year for the Federal Government shifted beginning with fiscal year 1977. Through fiscal year 1976, the fiscal year was on a July 1-June 30 basis; beginning October 1976 (fiscal year 1977), the fiscal year is on an October 1-September 30 basis. The 3-month period from July 1, 1976 through September 30, 1976 Is a separate fiscal period known as the transition quarter. Data for 1929-39 are according to the administrative budget and those beginning 1940 according to the unified budget. Refunds of receipts are excluded from receipts and outlays. See "Budget of the United States Government, Fiscal Year 1983" for additional information. Sources: Department of the Treasury and Office of Management and Budget. 318 TABLE B-74.—Relation of Federal Government receipts and expenditures in the national income and product accounts to the unified budget, fiscal years 1981-83 [Billions of dollars; fiscal years] Estimate Receipts and expenditures 1981 1982 1983 599.3 626.8 666.1 9.4 9.4 -2.8 -1.3 -1.0 10.8 10.2 -4.8 -1.5 -.5 11.3 11.9 -1.8 -1.6 -.3 613.0 641.0 685.7 RECEIPTS Total budget receipts . ,. Government contribution for employee retirement (grossing) Other netting and grossing Adjustment to accruals Geographic exclusions Other . Federal sector, national income and product accounts, receipts EXPENDITURES 657.2 725.3 757.6 Lending and financial transactions Government contribution for employee retirement (grossing) Other netting and grossing Defense timing adjustment Bonuses on Outer Continental Shelf land leases Geographic exclusions Other -7.4 9.4 9.4 -1.4 7.9 -4.6 -2.6 -3.5 10.8 10.2 -.3 4.9 -4.7 -1.3 -2.5 11.3 11.9 -3.3 14.7 -4.5 2.3 Federal sector, national income and product accounts, expenditures ., 667.9 741.4 787.6 Total budget outlays Note.—See Note, Table 8-73. See Special Analysis B, "Special Analyses, Budget of the United States Government, Fiscal Year 1983" for description of these categories. Sources: Department of Commerce (Bureau of Economic Analysis), Department of the Treasury, and Office of Management and Budget. 319 TABLE B-75.—Government receipts and expenditures, national income and product accounts, 1929-BJ [Billions of dollars; quarterly data at seasonally adjusted annual rates] Total government Surplus or deficit Calendar year or quarter Receipts Expenditures State and local government Federal Government national income and product accounts Receipts Expenditures Surplus or deficit national income and product accounts Receipts Surplus or deficit (-), Expend^ national income lures and product accounts 1929 11.3 10.3 1.0 3.8 2.6 7.8 =0.2 9.3 10.7 = 1.4 2.7 4.0 1.2 -1.3 7.6 1933 7.2 7.2 ~.l 1939 15.4, 17.6 =2,2 6.7 8.9 -2.2 9.6 9.6 .0 1940 1941 1942 1943 1944 1945 1946 1947 1948 1949 17.7 25.0 32.6 49.2 51.2 53.2 51.0 56.9 58.9 55.9 18.4 28.8 64.0 93.3 103.0 92.7 45.6 42.5 50.5 59.3 — 7 -3^8 = 31.4 =44.1 =51.8 = 39.5 5.4 14.4 8.4 =3.4 8.6 15.4 22.9 39.3 41.0 42.5 39.1 43.2 43.2 38.7 10.0 20.5 56.1 85.8 95.5 84.6 35.6 29.8 34.9 41.3 -1.3 = 5.1 =33.1 =46.6 -54.5 -42.1 3.5 13.4 8.3 -2.6 10.0 10.4 10.6 10.9 11.1 11,6 13.0 15.4 17.7 19.5 9.3 9.1 8.8 8.4 8.5 9.0 11.1 14.4 17.6 20.2 .6 1.3 1.8 2.5 2.7 2.6 1.9 1.0 .1 = .7 69.0 85.2 90.1 94.6 89.9 101.1 109.7 116.2 115.0 129.4 61.0 79,2 93.9 101.6 97.0 98.0 104.5 115.2 127.6 131.0 8.0 6.1 = 3.8 = 6.9 = 7.1 3.1 5.2 .9 = 12.6 -1.6 50.0 64.3 67.3 70.0 63.7 72.6 78.0 81.9 78.7 89.8 40.8 57.8 71.1 77.1 69.8 68.1 71.9 79.6 88.9 91.0 9.2 6,5 =3.7 =7.1 -6.0 4.4 6.1 2.3 = 10.3 = 1.1 21.3 23.4 25.4 27.4 29.0 31.7 35.0 38.5 42.0 46.4 22.5 23.9 25.5 27.3 30.2 32.9 35.9 39.8 44.3 46.9 -1.2 = .4 = .0 .1 = 1.1 = 1.3 -.9 = 1.4 =2.4 — 4 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 139.5 144.8 156.7 168.5 174.0 188.3 212.3 228.2 263.1 296.7 136.4 149.1 160.5 167.8 176.3 187.8 213.6 242.4 269.1 286.8 3.1 =4.3 = 3.8 .7 =2.3 96.1 98.1 106.2 114.4 114.9 124.3 141.8 150.5 174.4 196.9 93.1 101.9 110.4 114.2 118.2 123.8 143.6 163.7 180.5 188.4 3.0 =3.9 =4.2 49.8 54.4 58.0 62.8 68.5 75.1 84.3 94.7 107.2 118.7 .1 «-.4 .5 -L8 = 13.2 -.6.0 8.4 49.9 54.0 58.5 63.2 69.5 75.1 84.8 93.6 107.3 120.2 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979.. 302.8 322,6 368.3 413.1 455.2 470.5 538.4 605.7 681.6 765.2 313.4 342.0 371.6 405.3 460.0 534.3 574.9 624.0 681.3 753.2 = 10.6 = 19.4 -3.3 7.8 =4.7 =63.8 = 36.5 = 18.3 1L9 191.9 198.6 227.5 258.6 287.8 287.3 331.8 375.1 431.5 494.4 204.3 220.6 244.3 264.2 299.3 356.6 384.8 421.5 460.7 509.2 = 12.4 = 22.0 = 16.8 ^5.6 = 11.5 =69.3 -53.1 =46.4 -29.2 =14.8 135.4 153.0 178.3 195.0 211.4, 237.7 267.8 298.0 327.4 351.2 133.5 150.4 164.8 181.6 204.6 232.2 251.2 270.0 298.4 324.4 1.9 2.6 13.5 13.4 6.8 5.5 16.6 28.1 29.0 26.7 1980 1981" 836.8 954.6 869.0 979.7 =32.1 =25.1 540.8 624.8 602.0 686.4 =61.2 =61.6 384.0 416.8 355.0 380.3 29.1 36.5 1979 1 It Ill IV 739.7 750.9 775.3 794.7 721.7 737.0 764.0 790.3 18.1 13.9 11.3 4.4 477.0 485.9 500.6 514.0 488.4 494.0 515.8 538.6 = 11.5 =8.1 -15.2 = 24.5 340.9 342.7 355.4 365.6 311.4 320.8 328.9 336.7 29.5 21.9 26.5 28.9 815.0 807.6 839.9 884.7 824.6 850.2 885.5 915.5 -9,6 =42.5 -45.6 =30.8 528.4 520.9 540.8 573.2 564.7 587.3 615.0 641.1 = 36.3 =66.5 = 74.2 = 67.9 372.1 373.9 386.8 403.4 345.4 350.0 358.2 366.3 26.6 23.9 28.6 37.1 938.9 945,0 972.5 948.6 956.2 990.4 1,023.6 =9.7 -11.2 = 17.9 617.4 621.0 638.3 664.0 668.2 694.0 719.4 =46.6 =47,2 -55.7 411.7 413.6 419.6 374.8 377.5 381.8 387.1 36.9 36.1 37.8 . 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1980: 1 II . Ill IV . . . ... '. . . ... -n -14.2 = 6.0 9.9 = 13 l!fl --.0 -I'.l L5 1981: II . Ill IV" ' ' . . ' . Note.—Federal grants-in-aid to State and local governments are reflected in Federal expenditures and State and local receipts. Total government receipts and expenditures have been adjusted to eliminate this duplication. Source: Department of Commerce, Bureau of Economic Analysis, 320 TABLE B-76.—Federal Government receipts and expenditures, national income and product accounts, 1958-83 [Billions of dollars; quarterly data at seasonally adjusted annual rates] Expenditures Receipts Net inter* est paid Subsidies less current surplus of government enterprises Surplus or deficit <-), national income and product accounts Transfer payments Year or qu.arter GrantsContriPurIndirect butions irt-aid to Personal Corpochases rate business State and for Total tax tax and social Total ' of goods and nontax profits To and tax nontax local To receipts accruals accruals insurservices persons foreign- governance ers ments Fiscal year: 2 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 .. 1975 1976 1977 1978 1979 1980 1981 1982 33 1983 78.1 85.4 94.8 95.0 104.0 110.0 115.6 120.0 132.7 146.0 159.9 189.8 194.8 192.4 213.4 240.7 271.6 283.4 314.9 365.9 414.2 480.7 527.3 613.0 641.0 685.7 36.3 38.2 42.5 43.6 47.3 49.6 50.7 51.4 57.5 64.4 71.4 90.2 94.0 87.9 100.5 107.4 122.7 127.5 137.2 166.4 186.4 223.1 249.7 290.7 303.5 307.7 17.9 21.4 22.3 20.0 22.7 23.3 25.7 27.1 30.8 30.3 33.1 36.8 32.9 31.9 34.2 41.2 43.4 41.8 52.5 58.8 67.2 75.8 70.6 69.6 58.7 78.1 11.6 12.0 13.2 13.3 14.2 15.0 15.6 16.9 15.5 15.8 17.1 18.6 19.2 20.0 19.9 20.7 21.4 22.2 24.3 24.5 27.2 29.1 35.7 56.6 57.4 57.5 12.3 13.9 16.7 18.1 19.9 22.1 23.6 24.5 28.9 35.5 38.3 44.2 48.8 52.6 58.9 71.5 84.2 91.9 101.0 116.2 133.4 152.7 171.3 196.1 221.4 242.4 82.8 91.2 91.3 98.1 106.2 111,7 117.2 118.5 132.7 154.9 172.2 184.6 195.5 212.9 232.7 255.7 278.2 328.8 370.7 411.7 450.5 494.7 578.2 667.9 741.4 787.6 51.1 54.8 52.9 55.8 61.0 63.7 65.9 64.6 72.4 86.0 95.0 98.0 97.1 94.9 100.6 101.1 104.5 117.9 125.1 140.3 150.7 163.4 190.2 218.3 249.0 272.9 17.8 19.9 20.6 23.6 25.1 26.5 27.4 28.4 31.8 37.2 42.7 48.7 55.0 67.7 76.1 87.2 101.8 131.4 153.8 166.6 178.7 197.8 234.7 273.9 306.0 324.6 1.7 1.8 1.8 2.1 2.1 2.1 2.2 2.2 2.3 2.2 2.1 2.2 2.0 2.3 2.8 2.7 3.0 3.1 3.0 3.2 3.5 4.0 4.6 5.8 6.1 6.2 4.7 6.2 6.9 6.9 7.6 8.3 9.8 10.9 12.7 14.8 17.8 19.2 22.6 26.8 32.6 40.4 41.6 48.4 57.5 68.3 74.7 79.1 86.7 90.1 86.3 76.8 5.4 5.6 6.8 6.4 6.4 7.1 7.7 8.2 8.7 9.6 10.4 11.9 13.5 14.0 14.0 15.7 19.6 21.7 25.2 28.4 33.5 40.6 51.2 66.9 81.4 95.9 2.4 2.5 2.4 3.3 4.1 4.0 4.1 4.3 4.8 5.2 4.1 4.7 5.5 7.0 6.5 9.2 7.6 6.0 6.2 7.0 9.6 9.8 10.8 13.0 12.5 11.2 -4.7 -5.8 3.4 -3.1 -2.2 -1.7 -1.5 1.4 .0 -8.9 -12.3 5.2 -.1 -20.5 -19.2 -14.9 -6.6 -45.4 -55.8 -45.8 -36.3 -14.0 -50.9 -54.9 -100.4 -101.9 Calendar year: 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 p . 78.7 89.8 96.1 98.1 106.2 114.4 114.9 124.3 141.8 150.5 174.4 196.9 191.9 198.6 227.5 258.6 287.8 287.3 331.8 375.1 431.5 494.4 540.8 624.8 36.8 39.9 43.6 44.7 48.6 515 48.6 53.9 61.7 67.5 79.7 95.1 92.6 90.3 108.2 114.7 131.3 125.8 147.3 170.1 194.9 231.4 257.8 296.2 18.0 22.5 21.4 21.5 22.5 24.6 26.1 28.9 31.4 30.0 36.1 36.1 30.6 33.5 36.6 43.3 45.1 43.6 54.6 61.6 71.2 74.6 70.2 64.9 11.5 12.5 13.4 13.6 14.6 153 16.2 16.5 15.6 16.3 18.0 19.0 19.3 20.4 20.0 21.2 21.7 23.9 23.4 25.0 28.1 29.4 40.6 61.3 12.4 14.9 17.6 18.3 20.5 231 24.0 25.0 33.1 36.7 40.7 46.7 49.3 54.4 62.7 79.5 89.8 94.1 106.5 118.5 137.2 159.0 172.2 202.5 88.9 91.0 93.1 101.9 110.4 1142 118.2 123.8 143.6 163.7 180.5 188.4 204.3 220.6 244.3 264.2 299.3 356.6 384.8 421.5 460.7 509.2 602.0 686.4 53.9 53.9 53.7 57.4 63.7 646 65.2 67.3 78.8 90.9 98.0 97.6 95.7 96.2 101.7 102.0 111.0 122.7 129.2 143.9 153.4 167.9 198.9 228.6 19.6 20.1 21.6 25.0 25.6 270 27.9 30.3 33.5 40.1 46.0 50.6 61.3 72.7 80.5 93.3 114.5 146.3 158.8 169.6 181.8 204.9 244.9 279.3 1.8 1.8 1.9 2.1 2.2 22 2.2 2.2 2.3 2.2 2.1 2.1 2.2 2.6 2.7 2.6 3.2 3.1 3.2 3.2 3.8 4.2 4.9 5.1 5.6 6.8 6.5 7.2 8.0 91 10.4 11.1 14.4 15.9 18.6 20.3 24.4 29.0 37.5 40.6 43.9 54.6 61.1 67.5 77.3 80.4 88.0 87.0 5.2 6.2 6.8 6.2 6.8 73 8.0 8.4 9.2 9,8 11,3 12,7 14,1 13.8 14.4 18.0 20.7 23.1 26.8 29.1 35.2 42.3 53.3 73.3 2.8 2.1 2.6 4.0 4.2 39 4.5 4.6 5.5 4.7 4.5 5.2 6.5 6.3 7.9 7.8 5.5 6.9 5.8 8.2 9.3 9.4 12.0 13.2 -10.3 = 1.1 3.0 =3.9 =4.2 3 -3.3 .5 -1.8 -13.2 -6.0 8.4 -12.4 -22.0 -16.8 = 5.6 -11.5 -69.3 -53.1 -46.4 -29.2 -14.8 =61.2 -61.6 1980: I It III IV 528.4 520.9 540.8 573.2 246.9 252.0 259.4 272.9 80.5 60.9 66.7 72.6 31.9 38.7 42.9 49.1 169.2 169.3 171.8 178.6 564.7 587.3 615.0 641,1 190.0 198.7 194.9 212.0 224.4 232.2 260.4 262.6 4.5 3.8 4.9 6.4 85.5 87.2 87.7 91.8 50.3 54.4 53.5 55.2 10.1 11.0 13.7 13.1 =36.3 -66.5 = 74.2 -67.9 617.4 621.0 638.3 283.3 293.2 306.4 3019 74.6 64.8 66.4 60.6 198.9 62.6 200.4 61.8 . 203.7 60.2 206.9 664.0 668,2 694.0 719.4 221.6 219.5 226.4 246.7 267.3 270.7 287.8 291.4 4.7 4.1 5.8 5.7 90.2 89.6 85.4 82.9 67.7 70.4 75.6 79,4 12.6 13.9 13.3 13.1 ^46.6 -47.2 -55.7 1981: 1 II Ill IV ' 1 2 Includes an item for the difference between wage accruals and disbursements, not shown separately. Under provisions of the Congressional Budget Act of 1974, the fiscal year for the Federal Government shifted beginning with fiscal year 1977. Through fiscal year 1976, the fiscal year was on a July 1-June 30 basis; beginning October 1976 (fiscal year 1977), the fiscal year is on an October 1-September 30 basis. The 3-month period from July 1, 1976 through September 30, 1976 is a separate fiscal period known as the transition quarter. 3 Estimates. Sources: Department of Commerce (Bureau of Economic Analysis) and Office of Management and Budget. 321 TABLE B-77.—State and local government receipts and expenditures, national income and product accounts, 1946-81 [Billions of dollars; quarterly data at seasonally adjusted annual rates] Receipts Calendar year or quarter Total Expenditures Indirect Personal Corporate business Contribufor Federal tax and profits tax and tions social grants-mnontax tax nontax aid receipts accruals accruals insurance Total » Subsidies Net Pur- Transless fer interest current chases paypaid surplus of less goods ments of divito and per- dends governservices sons ment received enterprises Surplus or deficit (»), national income and product accounts 1946.. 1947. 1948.. 1949 13.0 15.4 17.7 19.5 1.7 2.1 2.4 1.5 0.5 .6 .7 .6 9.3 10.7 12.2 13.3 0.6 .7 .8 .9 1.1 1.7 2.0 2.2 11.1 14.4 17.6 20,2 9.9 12.8 15.3 18.0 1.7 2.3 3.0 3.0 0.2 .1 .1 .1 =0.7 ~,8 -.8 -.9 1.9 1.0 .1 -7 1950 1951 1952 1953 1954 21.3 23.4 25.4 27.4 29.0 2.5 2.8 3.0 3.2 3.5 .8 .9 .8 .8 .8 14.6 15.9 17.4 18.8 19.9 1.1 1,4 1.6 1.7 2.0 2.3 2.5 2.6 2.8 2.9 22.5 23,9 25.5 27.3 30.2 19,8 21.8 23.2 25.0 27.8 3.6 3.1 3.3 3.5 3.6 .1 .0 .0 .0 .1 -.9 -1.0 -1.1 = 1.2 -1.3 -1.2 = .4 -,0 .1 -1.1 1955 1956 1957 . . 1958 1959 31.7 35.0 385 42.0 46.4 3.9 4.5 50 5.4 6.1 1.0 1.0 10 1.0 1.2 21.6 23.8 257 27.2 29.3 2.1 2,3 26 2,8 3.1 3.1 3.3 42 5.6 6.8 32.9 35.9 398 44.3 46.9 30.6 33.5 371 41.1 43.7 3.8 3.9 43 4.8 5.1 .1 .1 .1 .1 .1 -1.5 = 1.6 =1 7 -17 ^2.0 -1.3 -.9 —14 -24 1960, . . 1961 1962 1963 1964 49.9 54.0 58.5 63.2 69.5 6.7 7.4 8.2 8.8 10.0 1.2 1.3 1.5 1.7 1.8 32.0 34.4 37.0 39.4 42.6 3.4 3.7 3.9 4.2 4.7 6.5 7.2 8.0 9.1 10.4 49.8 54.4 58.0 62.8 68.5 46.5 50.8 54.3 59.0 64.6 5.4 5.8 6.0 6.4 6.9 .1 .1 .1 .1 «.l =2.2 =2.3 =2.5 = 2.8 =2.8 .1 --.4 .5 .5 1.0 75.1 84.8 93.6 107.3 120.2 10.9 12.8 14.6 17.5 20.6 2.0 2.2 2.5 3.1 3.4 46.1 49.7 54.0 60.9 67.6 5.0 5.7 6.7 7.2 8.3 1U 14.4 15.9 18.6 20.3 75.1 84.3 94.7 107.2 118.7 71.1 79.8 89.3 101.0 111.2 7.3 8.1 9.4 10.5 12.2 -.3 = .7 -.9 -1.1 -1.4 = 3.0 =3.0 =3.1 -3.2 = 3.3 =n .1 1970 1971 1972.. . 1973 1974 135.4 153.0 178.3 1950 211.4 23.2 26.4 32.8 360 39.0 3.5 4.1 5.0 58 6.5 75.0 83.3 91.5 997 107.4 9.2 10.2 11.5 130 R6 24.4 29.0 37.5 406 43.9 133.5 150.4 164.8 1816 204^6 124.4 138.7 151.4 1685 193!l 14.7 17.3 19.3 207 20^9 = 2.0 -1.7 -1.9 = 3.6 =3.7 =4.2 =43 = 4> 1.9 2.6 13.5 134 6i8 1975 1976.. 1977.. . 1978 1979 237.7 267.8 298.0 327.4 351.2 43.1 49.6 56.4 63.9 70.6 7.1 9.3 11.0 11.7 13.0 116.2 128.3 141.0 149,9 159.0 16.8 19.5 22.1 24.6 28.1 54.6 61.1 67.5 77.3 80,4 232.2 251.2 270.0 298.4 324.4 217.2 232.9 250.6 279.2 305.9 24.6 27.6 29.7 32.8 35.0 -4.5 -4.8 = 5.1 -5.7 = 6.3 5.5 16.6 28.1 29.0 267 1980 1981 » . 1979: 1 II III.. IV... 384.0 416.8 80.7 91.9 12.2 11.5 171.6 189.9 31.5 36.4 88.0 87.0 355.0 380.3 335.8 361.1 38.9 42.0 -5.1 -4.5 -5,2 =-7.7 -10.3 -12.4 -14.6 -7,4 = 8.2 Z9.1 36.5 340.9 342.7 355.4 365.6 67.7 67.8 72.3 74.7 13.2 12.9 13.1 12.9 155.1 156.4 160.6 163.9 26.8 27.9 28.6 29,2 78.2 77.8 80.8 84.9 311.4 320.8 328.9 336.7 293.4 301.6 310.4 318.3 33.8 34.5 35.4 36.4 -9.4 -9.9 -10.6 -11.2 =6.0 -6.2 -6.5 =6.7 29.5 21.9 26.5 28.9 372.1 373.9 386.8 403.4 76.2 78.3 82.1 86.3 13.7 10.6 11.7 12.6 167.0 167.7 173.0 179.0 29.6 30.2 32.3 33.7 85.5 87.2 87.7 91.8 345.4 350.0 358.2 366,3 326.8 331.3 338,6 346.6 37.2 38.1 39.7 40.5 -11.8 -12.2 -12.7 =-13.0 -7.0 -7.2 -7.5 -7.7 26.6 23.9 28.6 37.1 411 7 413.6 419.6 886 89.7 93.3 96.1 ire 13 1 1849 18&9 192.3 195.6 348 35l9 36.9 38.0 90 2 89^6 85.4 82.9 374 8 37L5 381.8 387.1 3549 357!9 362.5 369.0 41 2 42ll 42.6 42.2 — 13 4 -K2 -15.1 = 15.8 —7 9 -87 = 8.2 -8.3 369 36! 1 37.8 1965 1966, . . 1967 1968 1969 .... 1980: 1 II III IV 1981: | || III IV '. * " 11.7 1 Includes an item for the difference between wage accruals and disbursements, not shown separately. Source: Department of Commerce, Bureau of Economic Analysis. 322 = 33 -si) = .0 1.5 TABLE B-78.—State and local government revenues and expenditures, selected fiscal years, 1927-80 [Millions of dollars] General expenditures by function 2 General revenues by source2 Fiscal year 1 Total Sales Revenue and Individu- Corpofrom ration al All 3 Property gross net Federal other taxes reincome income Governceipts taxes ment taxes taxes Total Education Highways Public welfare All other 4 1927 7,271 4,730 470 70 92 116 1,793 7,210 2,235 1,809 151 3,015 1932 1934 1936 1938 7,267 7,678 8,395 9,228 4,487 4,076 4,093 4,440 752 1,008 1,484 1,794 74 80 153 218 79 49 113 165 232 1,016 948 800 1,643 1,449 1,604 1,811 7,765 7,181 7,644 8,757 2,311 1,831 2,177 2,491 1,741 1,509 1,425 1,650 444 889 827 1,069 3,269 2,952 3215 3,547 1940 1942 1944 1946 1948 9,609 10418 10,908 12,356 17,250 4,430 4537 4,604 4,986 6,126 1,982 2,351 2,289 2,986 4,442 224 276 342 422 543 156 272 451 447 592 945 858 954 855 1,861 1,872 2123 2,269 2,661 3,685 9,229 9,190 8,863 11,028 17,684 2,638 2586 2,793 3,356 5,379 1,573 1490 1,200 1,672 3,036 1,156 1,225 1,133 1,409 2,099 3,862 3889 3,737 4,591 7,170 1950 1952 1953 1954 20,911 25,181 27,307 29,012 7,349 8,652 9,375 9,967 5,154 6,357 6,927 7,276 788 998 1,065 1,127 593 846 817 778 2,486 2,566 2,870 2,966 4,541 5,763 6,252 6,897 22,787 26,098 27,910 30,701 7,177 8,318 9,390 10,557 3,803 4,650 4,987 5,527 2,940 2,788 2,914 3,060 8,867 10,342 10619 11,557 1955 1956 1957 1958 1959 31,073 34,667 38,164 41,219 45,306 10,735 7,643 11,749 8,691 12,864 9,467 14,047 9,829 14,983 10,437 1,237 1,538 1,754 1,759 1,994 744 890 984 1,018 1,001 3,131 7,584 3,335 8,465 3,843 9,250 4,865 9,699 6,377 10,516 33,724 36,711 40,375 44,851 48,887 11,907 13,220 14,134 15,919 17,283 6,452 6,953 7,816 8,567 9,592 3,168 3,139 3,485 3,818 4,136 12,197 13,399 14,940 16,547 17,876 1960 1961 . 1962 1963. 50,505 54,037 58,252 62,890 16,405 18,002 19,054 20,089 11,849 12,463 13,494 14,456 2,463 2,613 3,037 3,269 1,180 1,266 1,308 1,505 6,974 7,131 7,871 8,722 11,634 12,563 13,489 14,850 51,876 56,201 60,206 64,816 18,719 20,574 22,216 23,776 9,428 9,844 10,357 11,136 4,404 4,720 5,084 5,481 19,325 21,063 22,549 24,423 1962-638 1963-6456 1964-65 62,269 68,443 74,000 19,833 14,446 21,241 15,762 22,583 17,118 3,267 3,791 4,090 1,505 8,663 14,556 1,695 10,002 15,951 1,929 11,029 17,250 63,977 69,302 74,546 23,729 26,286 28,563 11,150 11,664 12,221 5,420 5,766 6,315 23,678 25,586 27,447 1965-66 55 1966-67 1967-685 1968-69* 1969-70« 83,036 91,197 101,264 114,550 130,756 19,085 20,530 22,911 26,519 30,322 4,760 5,826 7,308 8,908 10,812 2,038 13,214 2,227 15,370 2,518 17,181 3,180 19,153 3,738 21,857 19,269 21,197 23,598 26,118 29,971 82,843 93,350 102,411 116,728 131,332 33,287 37,919 41,158 47,238 52,718 12,770 13,932 14,481 15,417 16,427 6,757 8,218 9,857 12,110 14,679 30,029 33,281 36,915 41,963 47,508 1970-71 « 1971-72* 1972-73s5 1973-74 6 1974-75 144,927 37,852 33,233 166,352 42,133 37,488 190,214 45,283 42.047 207,670 47,705 46,098 228,171 51,491 49,815 11,900 15,237 17,994 19,491 21,454 3,424 4,416 5,425 6,015 6,642 26,146 31,253 39,256 41,820 47,034 32,374 35,826 40,210 46,541 51,735 150,674 166,873 181,227 198,959 230,721 59,413 64,886 69,714 75,833 87,858 18,095 19,010 18,615 19,946 22,528 18,226 21,070 23,582 25.085 28^55 54,940 61,907 69,316 78,096 92,180 1975-765 1976-77 « 1977-7855 1978-79 5 1979-80 256,176 285,796 315,960 343,278 382,322 24,575 29,245 33,176 36,932 42,080 7,273 9,174 10,738 12,128 13,321 55,589 62,575 69,592 75,164 83,029 57,191 61,673 68,436 79,864 95,466 256,731 274,388 296,983 327,517 369,086 97,216 102,805 110,758 119,448 133,211 23,907 23,105 24,609 28,440 33,311 32,604 35,941 39,140 41,898 47,288 103,004 112,537 122,476 137,731 155,277 24,670 26,047 27,747 30,673 34,054 57,001 62,535 66,422 64,944 68,499 54,547 60,595 67,596 74,247 79,927 1 2 Fiscal years not the same for all governments. See footnote 5. Excludes revenues or expenditures of publicly owned uttfities and liquor stores, and of insurance-trust activities. Intergovernmental receipts and payments between State and local governments are also excluded. 3 Includes licenses and other taxes and charges and miscellaneous revenues. 4 Includes expenditures for health, hospitals, police, local fire protection, natural resources, sanitation, housing and urban renewal, local parks and recreation, general control, financial administration, interest on general debt, and unallocable expenditures. 5 Data for fiscal year ending in the 12-month period through June 30. Data for 1963 and earlier years include local government amounts grouped in terms of fiscal years ended during the particular calendar year. Note.—Data are not available for intervening years. Source.- Department of Commerce, Bureau of the Census. 323 TABLE B-79.—Interest-bearing public debt securities by kind of obligation, 1967-8 J [Millions of dollars] End of year or month Fiscal year: 1967 , . 1968.. . . 1969 1970 1971 1972 1973 1974 Nonmarketabte Marketable Total interestbearing public debt securities Treasury bonds > us Total Treasury bills Treasury notes 58,535 64,440 68,356 76154 86',677 94,648 100,061 105,019 128,569 161,198 156,091 160,936 161,378 199,832 223,388 49,108 71,073 78,946 93489 104,807 113,419 117,840 128,419 150,257 191,758 241,692 267,865 274,242 310,903 363,643 97,418 91,079 78,805 62956 53,989 49,135 45,071 33,137 36,779 39,626 45,724 56,355 71,073 83,772 96,178 111,614 117,808 125,623 136,426 150,816 168,158 193,382 206,663 216,516 226,673 254,121 281,816 312,314 311,896 313,286 51,213 51,712 51,711 51,281 53,003 55,921 59,418 61,921 65,482 69,733 75,411 79,798 80,440 72,727 68,017 4 Total savings bonds Foreign govern ment and public2 series Government account series Other ^ 1,514 3,741 4,070 4,755 9,270 18,985 28,524 25,011 23,216 21,500 21,799 21,680 28,115 25,158 20,499 56,155 59,526 66,790 76,323 82,784 89,598 101,738 115,442 124,173 130,557 140,113 153,271 176,360 189,848 201,052 2,731 2,828 3,051 4,068 5,759 3,654 3,701 4,289 3,644 4,883 16,797 27,067 27,400 24,164 23,718 1975 1976 1977 1978 1979 322,286 344,401 351,729 369,026 396,289 425,360 456,353 473,238 532,122 619,254 697,629 766,971 819,007 1980 1981 906,402 996,495 210,672 226,592 226,107 232,599 245,473 257,202 262,971 266,575 315,606 392,581 443,508 485,155 506,693 594,506 683,209 846,517 853,366 862,211 868,866 873,529 876,275 880,395 888,733 906,402 906,948 909,371 928,912 535,658 540,636 557,493 564,869 567,560 566,735 576,145 583,419 594,506 599,406 605,381 623,186 175,522 177,422 190,780 195,296 195,387 184,684 191,491 199,306 199,832 202,309 208,721 216,104 283,990 286,814 290,390 291,831 291,532 301,455 302 626 300,251 310,903 311,927 311,119 321,634 76,147 76,400 76,323 77,741 80,641 80,596 82,027 83,861 83,772 85,170 85,541 85,449 310,859 312,730 304,718 303,997 305,968 309,539 304,250 305,314 311,896 307,542 303,989 305,726 78,247 77,338 75,643 73,889 73,247 73,072 72,968 72,853 72,727 72,669 72,524 72,217 30,045 29,643 26,901 26,250 25,925 25,460 25,779 25,845 25,158 24,805 24,501 24,034 174,904 178,415 175,451 179,652 182,642 186,842 181,479 182,447 189,848 185,665 182,447 185,092 27,664 27,336 26,722 24,207 24,156 24,165 24,022 24,170 24,164 24,404 24,518 24,385 929,825 946,455 963,207 962,779 964,792 969,921 . . 972,053 978,920 ... . 996,495 999,451 1,011,936 1,027,300 628,482 642,905 661,142 657,906 656,185 660,769 666,405 673,765 683,209 689,578 704,819 720,293 220,423 228,972 235,315 225,849 224,514 218,786 217,532 219,854 223,388 229,061 233,905 245,015 321,176 86,883 324,540 89,393 336,505 89,323 341,052 91,006 338,419 93,252 348,788 93,196 354,005 94,868 357,603 96,308 363,643 96,178 362,649 97,867 370,794 100,119 375,332 99,946 301,343 303,550 302,065 304,873 308,608 309,152 305,647 305,155 313,286 309,874 307,117 307,007 71,057 70,443 70,057 69,518 69,229 68,934 68,719 68,355 68,017 67,718 67,739 67,837 23,804 23,986 24,162 24,411 24,789 23,514 21,943 21,431 20,499 20,471 20,309 19,025 182,197 185,020 183,833 186,979 190,839 192,962 191,647 192,060 201,052 198,053 195,541 196,665 24,287 24,102 24,015 23,965 23,750 23,741 23,339 23,310 23,718 23,632 23,529 23,480 1980: Jan Feb Mar Apr May June July ' *.. Aug, Sept. . Oct Nov Dec 1981: Jan Feb Mar .. . May June. July., Aug Sept Oct. Nov. Dec 1 Includes Treasury bonds and minor amounts of Panama Canal and postal savings bonds. 8 Nonmarketable certificates of indebtedness, notes, bonds, and bills in the Treasury foreign series of dollar-denominated and foreigncurrency denominated issues. 3 Includes depository bonds, retirement plan bonds, Rural Electrification Administration bonds, State and local bonds, and special issues held only by U.S. Government agencies and trust funds and the Federal home loan banks. 4 Includes $5,610 million in certificates not shown separately. Note.—Through fiscal year 1976, the fiscal year was on a July 1-June 30 basis; beginning October 1976 (fiscal year 1977) the fiscal year is on an October 1-September 30 basis. Source: Department of the Treasury. 324 TABLE B-80.—Estimated ownership of public debt, securities, 1967-81 [Par values;1 billions of dollars] Public debt securities Held by private investors End of year or month Fiscal year: 1967 1968 1969 1970 1971 1972. 1973 1974 . 1975 1976 1977. . . . 1978 1979 . . . 1980 1981 Mutual savings banks ComCorporaand mercial4 insurtions 6 banks ance companies Held by Government accounts Hetdby Federal Reserve Banks 322.9 345.4 352.9 71.8 76.1 84.8 46.7 52.2 54.1 204.4 217.0 214.0 55.5 59.7 55.3 13.2 12.5 11.6 370.1 397.3 426.4 457.3 474.2 95.2 102.9 111.5 123.4 138.2 57.7 65.5 71.4 75.0 80.5 217.2 228.9 243.6 258.9 255.6 52.6 61.0 60.9 58.8 53.2 533.2 620.4 698.8 771.5 826.5 145.3 149.6 155.5 167.9 187.7 84.7 94.4 104.7 115.3 115.5 303.2 376.4 438.6 488.3 523.4 907.7 997.9 197.7 208.1 120.7 124.3 Total 2 State and local govern-6 ments Individuals 7 Miscellaneous investors 3 8 11.0 12.0 11.1 23.6 25.1 26.4 70.4 74.2 77.3 30.7 33.4 32.3 10.4 10.3 10.2 9.6 8.5 8.5 7.4 9.3 9.8 10.8 29.0 25.9 26.9 28.8 28.3 81.8 75.4 73.2 75.9 80.7 35.0 49.1 63.2 76.0 74.2 69.0 92.5 99.8 94.4 92.5 10.6 16.0 20.5 21.2 21.5 13.8 24.7 21.2 18.1 22.1 31.7 39.3 48.2 63.8 66.5 86.8 96.2 106.5 113.9 115.5 91.3 107.7 142.4 176.9 205.3 589.2 665.4 109.7 112.2 24.3 26.2 25.9 37.8 77.0 86.2 123.0 140.3 229.3 262.7 Total ^ 1980: Jan Feb Mar Apr .. May June July Aug Sept Oct Nov Dec 847.7 854.6 863.5 870.0 877.9 877.6 184.5 187.8 186.3 188.2 190.7 194.9 116.3 115.2 116.7 118.8 124.3 124.5 546.9 551.6 560.5 563.0 562.9 558.2 97.0 98.2 98.1 96.3 97.7 100.3 21.1 21.5 22.6 22.6 22.6 22.3 23.0 23.1 23.2 23.0 22.8 22.6 70.3 75.5 70.7 70.7 70.7 71.1 117.0 113.8 124.8 125.3 124.3 120.2 218.5 219.5 221.1 225.1 224.8 221.7 881.7 893.4 907.7 908.2 913.8 930.2 189.2 189.8 197.7 193.4 189.8 192.5 119.6 119.8 120.7 121.5 120.8 121.3 573.0 583.8 589.2 593.3 603.2 616.4 101.4 106.1 109.7 113.2 111.4 116.0 23.2 23.4 24.3 24.7 25.4 25.5 23.7 24.3 25.9 25.9 25.8 25.7 72.9 74.7 77.0 76.8 78.3 78.8 121.2 124.1 123.0 122.9 125,3 129.2 230.6 231.2 229.3 229.8 237.0 241.2 1981Jan . Feb Mar Apr May June 934.1 950.5 964.5 964.0 968.5 971.2 189.5 192.0 190.9 193.9 197.8 199.9 117.2 118.9 119.0 119.7 118.3 120.0 627.4 639.6 654.6 650.4 652.3 651.2 117.2 116.4 117.5 113.5 113.2 113.3 25.5 25.3 23.7 23.7 25.3 24.0 30.4 35.2 40.0 40.4 38.8 38.7 77.3 80.4 82.3 83.6 85.1 83.0 134.2 136.2 138.6 138.2 139.9 139.6 242.8 246.1 252.5 251.0 250.0 252.6 973.3 980.2 997.9 1,005.0 1,013.3 1,028.7 198.6 199.0 208.1 204.9 202.1 203.3 123.4 124.5 124.3 123.0 126.5 129.9 651.3 656.7 665.4 677.2 684.6 695.5 114.2 115.0 112.2 111.3 110.0 25.4 26.1 26.2 24.7 24.5 37.8 38.0 37.8 38.6 38.3 86.0 86.2 86.2 88.3 87.5 139.5 140.2 140.3 141.0 141.6 248.4 251.2 262.7 273.3 282.6 .. July Aug Sept... . Oct Nov Dec. 1 U.S. savings 2 bonds, series A-F and J, and U.S. savings notes are included at current redemption value. As of July 31, 1974, public debt outstanding has been adjusted to exclude the notes of the International Monetary Fund to conform with the Budget presentation. This adjustment applies to the 1967-81 data in this table. 3 For comparability with 1975-81 published data, published data for 1967-74 have been adjusted to exclude notes of the International Monetary Fund. These adjustments amounted to $3.3 billion in 1967, $2.2 billion in 1968, and $0.8 billion in each year 1969 through 1974. These adjustments were necessary in order to add to the total public debt figures as published by the Department of 4the Treasury. Includes commercial banks, trust companies, and stock savings banks in the United States and Territories and island possessions,figures exclude securities held in trust departments. 6 Exclusive of banks and insurance companies. 6 Includes trust, sinking, and investment funds of State and local governments and their agencies, and of Territories and possessions. 7 Includes partnerships and personal trust accounts. 8 Includes savings and loan associations, nonprofit institutions, corporate pension trust funds, dealers and brokers, certain government deposit accounts and government-sponsored agencies, and investments of foreign balances and international accounts in the United States. Note.—Through fiscal year 1976, the fiscal year was on a July 1—June 30 basis; beginning October 1976 (fiscal year 1977), the fiscal year is on an October 1—September 30 basis. Source: Department of the Treasury. 325 TABLE B-81.—Maturity distribution and average length of marketable interest-bearing public debt securities held by private investors, 1967-81 End of year or month Amount outstanding, privately held nelQ Maturity class Average length Within lyear 5 to 10 years Ito5 years 10 to 20 years 20 years ana over Millions of dollars Fiscal year: 1967 1968 1969 150,321 159,671 156,008 56,561 66,746 69,311 53,584 52,295 50,182 21,057 21,850 18,078 1970 1971 1972 1973 1974 ... 157,910 161,863 165,978 167,869 164,862 76,443 74,803 79,509 84,041 87,150 57,035 58,557 57,157 54,139 50,103 1975 1976 1977 1978 1979 1980 1981 210,382 279,782 326,674 356,501 380,530 115,677 151,723 161,329 163,819 181,883 463,717 549,863 1980: Jan Feb. Mar Apr May June. . July Aug Sept Get Nov Dec 1981 Jan Feb Mar Apr . . . . May June July Aug Sept.. Oct.. Nov Dec Years Months 5 4 4 3 3 3 3 2 1 5 2 8 6 3 1 11 2 2 2 3 3 3 8 7 11 3 9 10 8 8 10 10 9 10 9 9 10 9 12,968 12,670 12,337 8,286 14,503 16,033 16,385 14,197 6,153 6,110 6,097 7,876 6,357 6,358 8,741 9,930 65,852 89,151 113,319 132,993 127,574 15,385 24,169 33,067 33,500 32,279 8,857 8,087 8,428 11,383 18,489 220,084 256,187 156,244 182,237 38,809 48,743 25,901 32,569 4,611 6,652 10,531 14,805 20,304 22,679 30,127 408 300 414,647 430,036 435,283 433,175 431,893 192 829 195,694 208,542 207,942 209,899 198,365 135,132 137,442 137,514 142,011 140,835 147,756 36,793 37,593 40,151 40,111 36,317 39,715 21,247 21,794 21,725 23,140 22,270 22,229 22,299 22,124 22,104 22,079 23,854 23,828 446,255 454,063 463,717 467,845 475,365 492,294 210,106 218,977 220,084 222,346 230,987 239,697 149,215 150,764 156,244 156,712 154,434 159,585 39,426 35,652 38,809 38,747 38,021 41,175 23,682 25,948 25,901 27,338 27,266 27,250 23,826 22,722 22,679 22,702 24,657 24,587 3 3 3 3 3 3 3 3 3 3 3 3 502,248 515,178 532,800 528,992 529,057 531,525 247,958 256,007 263,208 254,533 258,101 252,489 156,845 160,163 167,226 167,570 167,865 172,784 43,969 43,382 46,786 49,616 43,842 47,032 27,241 28,690 28,662 28,587 30,296 30,268 26,235 26,936 26,918 28,685 28,953 28,952 3 3 3 3 3 3 9 10 9 10 11 11 533,778 540,228 549,863 558,169 569,534 580,670 251,307 251.533 256,187 263,717 266 163 275,322 171,504 180,669 182,237 177,834 189,570 188,422 50,242 48,743 52,201 47,615 50,851 30,172 32,602 32,569 32,536 34,164 34,055 30,553 30,127 30,127 31,881 32,022 32,020 4 4 4 4 4 4 0 1 0 0 1 0 45,297 8,272 7,645 6,922 4,564 3,481 4 9 3 Note.—All issues classified to final maturity. Through fiscal year 1976, the fiscal year was on a July 1- June 30 basis; beginning October 1976 (fiscal year 1977), the fiscal year is on an October 1—September 30 basis. Source: Department of the Treasury. 326 CORPORATE PROFITS AND FINANCE TABLE B-82.—Corporate profits with inventory valuation and capital consumption adjustments, 1929-81 [Billions of dollars; quarterly data at seasonally adjusted annual rates] Profits after tax with inventory valuation and capital consumption adjustments Corporate profits with inventory valuation and capital consumption adjustments Corporate profits tax liability 1929 9.0 1.4 7.7 5.8 1.9 1933 -1.7 .5 -2.3 2.0 -4.3 Year or quarter Total Dividends Undistributed profits with inventory valuation and capital consumption adjustments 1939 5.3 1.4 3.9 3.8 .1 1940 1941 1942 1943 1944 1946 1947 1948 1949 8.6 14.1 19.3 23.5 23.6 16.6 22.3 29.4 27.1 2.8 7.6 11.4 14.1 12.9 9.1 11.3 12.4 10.2 5.8 6.5 7.9 9.5 10.7 7.5 11.0 17.0 16.9 4.0 4.4 4.3 4.4 4.6 5.6 6.3 7.0 7.2 1.8 2.1 3.6 6.1 6.1 1.9 4.7 10.0 9.7 33.9 38.7 36.1 36.3 35.2 17.9 22.6 19.4 20.3 17.6 16.0 16.1 16.7 16.0 17.5 8.8 8.5 8.5 8.8 9.1 7.2 7.6 8.2 7.2 8.4 45.5 43.7 43.3 38.5 49.6 22.0 22.0 21.4 19.0 23.6 23.4 21.8 21.8 19.5 26.0 10.3 11.1 11.5 11.3 12.2 13.1 10.7 10.3 8.2 13.8 1960 1961 1962 1963 1964 47.6 48.6 56.6 62.1 69.2 22.7 22.8 24.0 26.2 28.0 24.9 25.8 32.6 35.9 41.2 12.9 13.3 14.4 15,5 17.3 12.1 12.5 18.2 20.4 23.9 1965 1966 1967 1968 1969 80.0 85.1 82.4 89.1 85.1 30.9 33.7 32.5 39.2 39.5 49.1 51.4 49.9 50.0 45.6 19.1 19.4 20.2 22.0 22.5 30.0 32.0 29.7 27.9 23.1 1970 1971 1972 1973 1974 71.4 83.2 96.6 108.3 94.9 34.2 37.5 41.6 49.0 51.6 37.2 45.7 55.0 59.3 43.3 22.5 22.9 24.4 27.0 29.9 14.8 22.8 30.5 32.3 13.4 110.5 138.1 164.7 185.5 196.8 50.6 63.8 72.6 83.0 87.6 59.9 74.3 92.2 102.5 109.2 30.8 37.4 39.9 44.6 50.2 29.1 36.9 52.3 57.9 59.1 1980 1981" 182.7 189.0 82.3 76.4 100.3 112.6 56.0 63.1 44.3 49.5 1979: I II III IV 201.9 196.6 199.5 189.4 88.5 86.4 88.4 87.2 113.3 110.2 111.1 102.2 49.0 49.8 50.2 51.6 64.3 60.5 60.9 50.6 200.2 169.3 177.9 183.3 94.2 71.5 78.5 85.2 106.0 97.8 99.5 98.1 53.9 55.7 56.7 57.7 52.1 42.1 42.8 40.4 203.0 190.3 195.7 87.7 76.4 78.1 115.3 114.0 117.6 59,6 62.0 84.8 55.7 52.0 52.8 1950 1951 1952 1953 1954 .... .. . . . . 1955 1956 1957 1958 1959 1975 1976 1977 1978 1979 ' ... . v 1980: \ || Ill IV 1981: 1 II HI Source: Department of Commerce, Bureau of Economic Analysis. 327 TABLE B-83.—Corporate profits by industry, 1929-81 [Billions of dollars; quarterly data at seasonally adjusted annual rates] Corporate profits with inventory valuation adjustment and without capital consumption adjustment Domestic industries Year or quarter Financial l Total Total Nonfinancial Total Federal Reserve banks Other Total Manufacturing' Wholesale and retail trade Utilities 3 Other Rest , of the world 10.5 10.2 1.3 0.0 1.3 8.9 5.2 1.0 1.8 0.9 0,2 -1.2 6.5 -1.2 ,3 .0 .3 -1.5 = .4 -.5 .0 -.7 .0 6.1 .8 .0 .8 5.3 3.3 .7 1.0 .3 .3 1940. . 1941... 1942 1943 1944 1945 . 1946 . . . 1947.,. 1948 . 1949 9.8 15.4 20.5 24.5 24.0 19.3 19.6 25.9 33.4 31.1 9.6 15.0 20.1 24.1 23.5 18.9 18.9 24.9 32.2 29.9 1.0 1.1 1.2 1.3 1.6 1.7 2.1 1.7 2.6 3.1 .0 .0 .0 .0 .9 1.0 1.2 1.3 1.6 1.6 2.0 1.6 2.3 2.9 8.6 14.0 18.9 22.8 21.9 17.3 16.8 23.2 29,6 26,8 5.5 9.5 11.8 13.8 13.2 9.7 9.0 13.6 17.6 16.2 1.2 1.4 2.2 3,0 3.2 3.3 3.8 4.6 5.5 4.5 1.3 2.0 3.4 4.4 3.9 2.7 1.8 2.2 3.0 3.0 .6 1.1 1.5 1.6 1.6 1.5 2.1 2.9 3.6 3.1 .3 .4 .4 .4 .4 .3 .7 1.0 1.3 1.1 1950 1951 ,,.. 1952 1953, ... 1954 1955 1956 1957 1958 1959 37.9 43.3 40.6 40.2 38.4 47.5 46.9 46.6 41.6 52.3 36.7 41.5 38.7 38.4 36.4 45.1 44.1 43.5 39.1 49.6 3.1 3.6 4.0 4.5 4.6 4.8 5.0 5.2 5.7 6.8 .2 .3 .4 .4 .3 3.0 3.3 3.7 4.1 4.3 4.5 4.5 4.6 5.1 6.0 33.5 37.9 34.7 33.9 31.8 40.3 39.1 38.3 33.5 42.9 20.9 24.6 21.7 22.0 19.9 26.0 24.7 24.0 19.4 26.4 5.0 5.0 4.8 3.8 3.8 5.0 4.5 4.4 4.6 5,9 4.0 4.6 4.9 5.0 4.7 5.6 5.9 5.8 5.9 7.0 3.6 3.7 3.3 3.1 3.4 3.6 4.1 4.0 3.6 3.6 1.3 1.7 1.9 1.8 2.0 2.4 2.8 3.1 2.5 2.7 1960 1961 1962 . 1963.. . 1964 1965 .. 1966 1967 1968 . 1969 49.7 50.0 55.1 59.7 66.0 76.0 80.9 78.1 84.9 80.8 46.7 46.8 51.5 55.8 61.8 71.5 76.7 73.7 79.7 74.6 7.2 7.0 7.3 6.8 6.9 7.5 8.5 9.0 10.4 11.1 1.0 .8 .9 1.0 1.1 1.4 1.7 2.0 2.5 3.1 6.2 6.3 6.4 5.8 5.8 6.2 6.8 7.0 7.9 8.0 39.5 39.8 44.2 49.0 54.9 64.0 68.2 64.8 69.3 63.5 23.6 23.3 26.0 29.3 32.3 39.3 41.9 38.5 41.2 36.6 4.9 5.0 5.8 5.9 7.5 8.1 8.2 9.1 10.4 10.5 7.4 7.8 8.4 9.3 10.0 11.0 11.8 10.7 10.8 10.3 3.6 3.7 3.9 4.4 5.1 5.6 6.3 6.5 6.9 6.1 3.0 3.2 3.6 3.9 4,2 4.5 4.2 4.4 5.2 6.1 1970 . .. 1971 . . 1972 . 1973.. . 1974 .. . 1975 1976 1977 . ,, 1978 1979 . ... 68.9 82.0 94.0 105.6 96.7 120.6 151.6 176.7 199.0 212.7 62.4 74.9 85.3 92.0 80.4 107.6 137.4 161.2 179.3 182.4 12.1 14.1 15.3 15.9 15.0 11.8 17.1 23.5 29.3 31.6 3.6 3.3 3.4 4.5 5.7 5.7 6.0 6.2 7.7 9.6 8.6 10.7 11.9 11.4 9.3 6.2 11.1 17.3 21.6 22.0 50.2 60.8 70.0 76.0 65.4 95.8 120.3 137.7 150.0 150.8 26.6 34.1 40.7 45.5 39.0 52,6 69.2 76.2 85.3 88.9 9.5 11.7 13.4 13.9 12.5 21.3 22.4 27.0 24.5 23.0 8.2 8.5 9.0 8.7 6.1 10.0 14.5 17.8 20.7 18.0 5.9 6.5 6,9 8.0 7.9 11.9 14.2 16.7 19.5 20.8 6.5 7.1 8.6 13.7 16.3 13.0 14.3 15.5 19.7 30.3 1980 1981 » 199.8 202.9 168.7 178.9 30.6 24.2 11.9 14.6 18.7 9.7 138.1 154.7 74,5 • 81.9 20.9 27.8 18,5 20.5 24.1 24.5 31.1 24.0 1979: I || Ill IV 217.8 213.0 215.6 204.5 191.7 184.4 180.5 172.9 31.3 31.0 31.5 32.6 8.8 9.2 9.7 10.5 22.5 21.8 21.7 22.1 160.4 153.4 149.0 140.3 99.4 91.5 84.4 80.2 21.0 22.9 25.6 22.6 20.8 19.2 17.1 14.9 19.1 19.7 22.0 22.6 26.0 28.5 35.1 31.7 1980: 1 II Ill IV 215.6 186.9 195.9 201.0 179.0 157.5 165.0 173.4 33.3 30.1 28.7 30.5 11.9 12.7 11.3 12.0 21.4 17.4 17.4 18.5 145.7 127.5 136.2 142.9 92.1 61.3 68.5 76.2 14.8 25.9 20.4 22.6 16.1 16.6 22.5 18.8 22.7 23.7 24.8 25.2 36.6 29.3 30.9 27.7 217.7 205.1 209.1 192.3 182.3 184.6 28.6 24.3 22.7 13.5 14.3 15.2 15.1 10.1 7.5 163.7 158.0 161.9 90.4 84.4 85.1 27.5 28.4 30.1 20.8 20.0 21.6 25.1 25.1 25.2 25.4 22.8 24.5 1929 .. 1933 1939 1981: I II Ill . . !l .1 .2 !6 .6 1 Consists of the following industries: Banking; credit agencies other than banks; security and commodity brokers, dealers, and services; insurance carriers; regulated investment companies; small business investment companies; and real estate investment trusts. 2 See Table B-84 for industry detail. 3 Consists of transportation, communication, and electric, gas, and sanitary services. Note.=The industry classification is on a company basis and is based on the 1972 Standard Industrial Classification (SIC) beginning 1948, and on the 1942 SIC prior to 1948. Source: Department of Commerce, Bureau of Economic Analysis. 328 TABLE B-84.—Corporate profits of manufacturing industries, 1929-81 [Billions of dollars; quarterly data at seasonally adjusted annual rates] Corporate profits with inventory valuation adjustment and without capital consumption adjustment Durable goods Year or quarter Total manufacturing Total Primary metal industries Fabricated metal products Nondurable goods Machin- Electric Motor and ery, elec- vehicles except tronic and electri- equip- equipcal ment ment Other Total Food and kindred products Chemicals and allied products Petroleum and coat products ' "1.9 1,6 1.7 1.8 2.8 1.9 3.7 2.8 Other 2.6 1929 5.2 2.6 1933 -4 _4 .0 1939 3.3 1.7 17 1940 1941 1942 1943 1944 1945 1946 1947 1948 1949 5.5 9.5 11.8 13.8 13.2 3.1 6.4 7.2 8.1 74 9.0 13.6 17.6 16.2 2.4 5.8 7.5 8.1 "i.6 1.5 .8 .7 '"l.2~ 1.3 '.B 2.1 1.8 1.7 4.6 5.7 59 5.2 66 7.8 10.0 8.1 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 20.9 24.6 21.7 22.0 19.9 26.0 24.7 24.0 19.4 26.4 12.0 13.2 11.7 11.9 10.5 14.3 12.8 13.3 9.3 13.7 2.3 3.1 1.9 2.5 1.7 2.9 3.0 3.0 1.9 2.3 1.1 1.3 1.0 1.0 .9 1.0 1.1 1.1 .9 1.1 1.6 2,3 2.3 1.9 1.7 1.7 2.1 2.0 1.4 2.1 1.2 1.3 1.5 1.4 1.2 1.1 1.2 1.5 1.3 1.7 3.1 2.4 2.4 2.6 2.1 4.1 2.2 2.6 .9 3.0 2.6 2.8 2.6 2.6 2.9 3.5 3.2 3.1 2.9 3.5 8.9 11.4 9.9 10.1 9.4 11.8 11.9 10.7 10.0 12.7 1.6 1.4 1.7 1,8 1.6 2.2 1.8 1.8 2.1 2.4 2.3 2.8 2.3 2.2 2.2 3.0 2.8 2.8 2.5 3.5 2.3 2.7 2.3 2.8 2.7 3.0 3.3 2.6 2.1 2.5 2.7 4.4 3.6 3.3 2.9 3.6 4.1 3.6 3.3 4.3 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 23.6 23.3 26.0 29.3 32.3 39.3 41.9 38.5 41.2 36.6 11.6 11.4 14.0 16.3 17.9 23.0 23.8 20.9 22.2 18.9 2.0 1.6 1.6 2.0 2.5 3.1 3.6 2.7 1.9 1.4 .8 1.0 1.1 1.3 1.4 2.0 2.4 2.4 2.3 2.0 1.8 1.9 2.3 2.5 3.3 3.9 4.5 4.1 4.1 3.7 1.3 1.3 1.5 1.6 1.7 2.7 3.0 2.9 2.8 2.3 3.0 2.5 4.0 4.9 4.7 6.2 5.1 3.9 5.5 4.7 2.7 3.1 3.5 4.0 4.4 5.1 5.2 4.9 5.7 4.9 12.0 11.9 12.0 13.1 14.4 16.3 18.1 17.6 19.1 17.7 2.2 2.3 2.3 2.7 2.7 2.8 3.2 3.2 3.2 3.0 3.1 3.2 3.2 3.6 4.0 4.6 4.9 4.3 5.2 4.5 2.5 2.2 2.2 2.1 2.4 2.9 3.2 3.9 3.7 3.2 4.2 4.1 4.3 4.6 5.3 6.0 6.8 6.3 7.0 6.9 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 26.6 34.1 40.7 45.5 39.0 52.6 69.2 76.2 85.3 88.9 10.2 16.3 22.4 24.3 13.2 18.9 30.4 36.0 43.0 39.5 .8 .7 1.6 2.2 5.4 2.9 2.1 1.3 3.2 4.2 1.1 1.5 2.1 2.5 1.6 3.0 3.8 4.5 4.8 5.0 2.9 2.9 4.3 4.6 2.9 4.7 6.3 7.6 8.9 8.8 1.2 1.9 2.8 3.0 .4 2.1 3.4 5.4 6.3 6.3 1.2 5.0 5.9 5.7 l!9 7.2 9.2 8.9 4.3 2.9 4.3 5.7 6.2 2.9 4.3 7.6 8.0 11.0 10.8 16.5 17.8 18.3 21.2 25.8 33.6 38.8 40.2 42.3 49.4 3.2 3.5 2.9 2.4 2.8 8.6 6.9 6.7 5.9 6.9 3.9 4.4 5.2 6.0 5.6 6.5 8.3 8.0 8.3 . 8-2 3.5 3.5 3.0 5.0 10.5 9.6 12.6 11.8 12.6 18.3 5.9 6.4 7.2 7.8 6.8 8.9 11.0 13.7 15.4 16.0 1980 1981". 74.5 81.9 20.9 26.4 3.1 3.9 3.9 4.2 6.3 7.9 5.3 6.5 -4.3 -1.1 6.5 5.0 53.7 55.4 7.3 9.2 7.5 8.5 24.6 23.2 14.3 14.6 99.4 91.5 84.4 80.2 50.9 43.0 34.8 29.3 4.8 4.7 4.5 2.8 5.5 5.3 4.6 4.8 9.3 8.8 9.2 8.0 7.1 6.4 5.8 5.7 11.8 6.6 -.8 12.4 11.1 11.1 8.8 48.5 48.5 49.6 50.9 6.6 7.5 6.7 6.7 9.4 8.8 7.8 6.6 15.0 16.9 17.7 23.7 17.4 15.4 17.4 13.8 92,1 61.3 68.5 76.2 28.1 10.1 19.4 25.8 5.9 2.0 .7 3.8 5.2 1.7 3.9 4.8 7.3 5.7 6.2 6.1 6.6 3.8 5.5 5.3 -2.9 -8.8 -4.8 -.8 6.0 5.6 8.0 6.6 64.0 51.2 49.1 50.4 8.2 6.7 5.7 8.6 8.8 6.0 7.0 8.1 31.0 25.3 22.2 19.9 16.0 13.2 14.2 13.8 90.4 84.4 85.1 31.5 31.9 26.0 5.1 3.8 3.7 4.1 4.6 4.7 8.7 8.2 8.6 8.4 6.2 6.6 -1.6 2.7 22 6.8 6.3 4.7 58.9 52.5 59.0 10.4 9.5 8.9 10.1 8.3 8.5 21.6 19.6 26.4 16.8 15.1 15.2 1979: I II Ill IV 9.7 ... . 2.4 31 . ., 4.5 .. .. ...^ 1980: I II Ill IV .. 1981: 1 II Ill Note.—The industry classification is on a company basis and is based on the 1972 Standard Industrial Classification (SIC) beginning 1948, and on the 1942 SIC prior to 1948. Source: Department of Commerce, Bureau of Economic Analysis. 329 TABLE B-85.—Sales, profits, and stockholders' eqtrity, all manufacturing corporations, 1950-81 [Billions of dollars] Year or quarter Profits Sales (net) 1950 181.9 245.0 1951.... 250.2 1952 265.9 1953..... 1954.... 248.5 278.4 1955 307.3 1956.... 1957 320.0 1958.,, 305.3 1959 338.0 345.7 I960.... 356,4 1961 .... 1962,.., 389.4 1963..,. 4127 1964.... 443.1 1965 492.2 1966 554.2 1967.,. 575.4 631.9 1968 694.6 1969 708.8 1970 1971 751.4 1972 849.5 1973 1,017.2 1973: IV.... . 275.1 TgTsTIvT. Before After income1 income taxes taxes 23.2 27.4 22.9 24.4 20.9 28.6 29.8 28.2 22.7 29.7 27.5 27.5 31.9 34.9 39.6 46.5 51.8 47.8 55.4 58.1 48.1 52.9 63.2 81.4 21.4 12.9 11.9 107 11.3 11.2 15.1 16.2 15.4 127 16.3 15.2 15.3 177 19.5 23.2 27.5 30.9 29.0 32.1 33.2 28.6 31.0 36.5 48.1 13.0 13.2 58.7 49.1 64.5 70.4 81.1 98.7 92.4 Stockholders'2 equity 83.3 98.3 103.7 Nondurable goods industries Durable goods industries All manufacturing corporations Profits Sales (net) 86.8 116.8 122.0 Before After incomel income taxes taxes 12.9 Stockholders'2 equity Profits Sales (net) Before After income1 income taxes taxes Stockholders' equity * 15.4 12.9 14.0 11.4 16.5 16.5 15,8 11.4 15.8 14,0 13.6 16.8 18.5 21.2 26.2 29.2 25.7 30.6 31,5 23.0 26.5 33.6 43.6 10.8 6.7 6.1 5.5 5.8 5.6 8.1 8.3 7.9 5.8 8.1 7.0 6.9 8.6 9.5 11.6 14.5 16.4 14.6 16.5 16.9 12.9 14.5 18.4 24.8 6.3 39.9 47.2 49.8 52.4 54.9 58.8 65.2 70.5 72.8 77.9 82.3 84.9 89.1 93.3 98.5 105.4 115.2 125.0 135.6 147.6 155.1 160.4 171.4 1887 1947 95.1 128.1 128.0 128.0 1257 136.3 147.8 154.1 156.7 168.5 171.8 181.2 194.1 203.6 216.8 235.2 262.4 274.8 296.4 328.1 345.7 369.3 4137 489.9 135.0 10.3 12.1 10.0 10.4 9.6 12.1 13.2 12.4 11.3 13.9 13.5 13.9 15.1 16.4 18.3 20.3 22.6 22.0 24.8 26.6 25.2 26.5 29.6 37,8 10.6 6.1 5.7 5.2 5.5 5.6 7.0 7.8 7.5 6.9 8.3 8.2 8.5 9.2 10.0 11.6 13.0 14.6 14.4 15.5 16.4 157 16.5 18.0 23.3 67 43.5 51.1 53.9 55.7 58.2 61.3 66.4 70.6 74.6 79.2 83.1 87.7 92.3 96.3 101.3 106.3 115.1 122.6 130.3 142.3 1517 160.5 172.0 185.4 1917 6.2 24.7 21.4 30.8 34.8 41.8 45.2 35.6 113.9 185.8 531.6 196.0 208.1 544.1 224,3 6137 239.9 670.8 262.6 7357 292.5 876.1 316.0 1,013.8 10.5 51.0 44.6 54.3 57.2 62.9 81.8 88.2 7.0 34.1 277 33.7 35.5 39.3 53.5 56.9 182.1 199,0 215.3 238.4 256.8 277.9 308.0 348.9 108.2 113.1 120.1 131.6 141.1 147.4 157.1 165.4 172.6 181.4 1897 199.8 211.7 230.3 247.6 265.9 289.9 306.8 320.8 343.4 374.1 386.4 137.9 122.8 142.1 159.5 166.0 148.6 169.4 173.9 175.2 195.3 209.0 226.3 257.0 291.7 300.6 335.5 366.5 363.1 381.8 435.8 527.3 140.1 368.0 395.0 1227 529.0 423.4 4627 496.7 540.5 600.5 664.9 521.1 589.6 657.3 7607 865.7 883.0 10.1 41.1 35.3 507 57,9 69.6 72.4 57.2 1974.... 236.6 1,060.6 1975 1976 1977.,.. 1978 1979 1980 1,065.2 1,203.2 1,328.1 1,496.4 1,741.8 1,896.8 20.6 92.1 79.9 104.9 115.1 132.5 154.2 145.4 340.3 3775 376.9 401.8 26.9 360 33.4 36.3 16.0 221 20.4 22.6 518.7 5333 547'.8 562.3 170.1 1950 1897 205.9 13.6 198 17J) 19.1 7.9 120 10^3 11.6 250.3 2591 2667 274.4 170.3 1824 187.2 195.9 13.3 162 16*.4 17.1 8.1 101 lO'.l 11.0 268.4 2742 28U 287.8 406.6 436.4 437.5 461.2 36.5 42.6 38.2 36.8 22.7 26.8 247 24.5 576.2 592.5 609.2 624.0 207.5 222.6 213.6 221.9 18.8 21.6 16.4 157 11.4 13.3 10.3 10.1 281.9 289.3 296.5 302.1 199,1 213.8 223,9 239.3 17.7 21.1 21.9 21.2 11.2 13.5 14.4 294.3 303.2 312.6 3Z1.9 4657 466.3 464.2 500.6 39.5 35.9 33.2 36.8 24.8 22.4 21.0 24.3 643.9 658.1 670.5 687.1 219.8 2187 212.6 231.9 15.8 13.5 11.9 16.0 97 8.2 7.2 10.4 308.0 312.6 317.2 326.1 245.9 247.6 251.6 2687 23.7 22.4 21.3 20.8 14.2 13.7 13.9 15.1 335.9 345.5 353.3 360.9 503.5 528.9 521.4 37.8 45.4 39.2 23.6 29.0 24.7 702.1 721.8 735.9 229.0 250.5 239.3 16.1 20.3 15.8 9.8 12.5 10.0 333.4 342.3 347.8 274,5 278.5 282.1 217 25.1 23.3 13.8 16.5 147 3687 379.5 388.1 1978: | ti in IV 1979: | li'Z IIIIV 1980: I. II Ill IV 1981; t II Ill 14.4 1 In the old series, "income taxes" refers to Federal income taxes only, as State and local income taxes had already been deducted. In 8the new series, no income taxes have been deducted. Annual data are average equity for the year (using four end-of-quarter figures). Note,—Data are not necessarily comparable from one period to another due to changes In accounting procedures, industry classifications, sampling procedures, etc. For explanatory notes concerning compilation of the series, see "Quarterly Financial Report for Manufacturing, Mining, and Trade Corporations, Federal Trade Commission. Source: Federal Trade Commission. 330 TABLE B-86.—Relation of profits after taxes to stockholders' equity and to sales, all corporations, 1947-81 Ratio of profits after income taxes (annual rate) to stockholders' equity— percent ' Year or quarter manufacturing Profits after income taxes per dollar of sales— cents All manufacturing corporations Durable goods industries Nondurable goods industries All manufacturing corporations Durable goods industries Nondurable goods industries 15.6 16.0 11.6 15.4 12.1 10.3 10.5 9.9 12.6 12.3 10.9 8.6 10.4 9.2 8.9 9.8 10.3 11.6 14.4 15.7 12.1 16.9 13.0 11.1 11.1 10.3 13.8 12.8 11.3 8.0 10.4 8.5 8.1 9.6 10.1 11.7 16.6 16.2 11.2 14.1 11.2 9.7 9.9 9.6 11.4 11.8 10.6 9.2 10.4 9.8 6.7 7.1 6.4 7.7 5.3 4.5 4.2 4.6 5.7 5.2 4.8 3.9 4.8 4.0 3.9 4.4 4.5 5.1 6.7 6.8 5.4 13.0 13.4 11.7 12.1 11.5 9.3 9.7 10.6 12.8 13.4 13.8 14.2 11.7 12.2 11.4 8.3 9.0 10.8 13.1 12.9 10.4 11.5 12.2 12.7 11.8 11.9 11.5 10.3 10.3 10.5 12.6 14.0 6.7 7.0 5.8 7.1 4.9 4.3 4.3 4.5 5.4 5.3 4.8 4.2 4.8 4.4 4.3 4.5 4.7 5.2 5.6 5.6 5.0 5.1 4.8 4.0 4.1 4.3 4.7 4.7 5,7 5.6 4.8 4.9 4.6 3.5 3.8 4.2 4.7 4.5 14.3 14.9 11.6 13.9 14.2 15.0 16.4 13.9 13.3 12.6 10.3 13.7 14.5 16.0 15.4 11.3 15.3 17.1 12.9 14.2 13.8 -14.2 17.4 16.3 5.6 5.5 4.6 5.4 5.3 5.4 5.7 4.9 5.0 4.7 4.1 5.2 5.3 5.5 5.2 4.0 6.1 6.4 5.1 5.5 5.3 5.3 6.1 5.6 1 II III., IV 12.4 16.7 14.9 16.1 12.7 18.7 15.5 17.0 12.1 14.8 14.4 15.3 4.7 5.9 5.4 5.6 4.7 6.2 5.4 5.6 4.8 5.6 5.4 5.6 1979: | || III IV 15.7 18.1 16.3 15.7 16.2 18.4 14.0 13.4 15.3 17.8 18.4 17.9 5.6 6.1 5.7 5.3 5.5 6.0 4.8 4.6 5.6 6.3 6.4 6.0 1980: I II . . . . Ill IV 15.4 13,6 12.5 14.1 12.6 10.6 9.1 12.7 18.0 16.4 15.6 15.4 5.3 4.8 4.5 4.8 4.4 3.8 3.4 4.5 6.1 5.7 5.5 5.2 13.4 16.1 13.4 11.8 14.6 11.5 14.9 17.4 15.2 4.7 5.5 4.7 4.3 5.0 4.2 5.0 5.9 5.2 1947 1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971. . 1972 . . . 1973 1973: IV New series: 1973: IV 1974 1975 1976 1977 1978 1979 1980 . . . ... .. .. .... . 1978: 1981: II Ill U 6.5 4.5 4.1 4.3 4.4 5.1 5.3 4.9 4.4 4.9 4.8 4.7 4.7 4.9 5.4 5.5 5,6 5.3 5.2 5.0 4.5 4.5 4.4 4.8 5.0 1 Annual ratios based on average equity for the year (using four end-of-quarter figures). Quarterly ratios based on equity at end of quarter only. Note.—Based on data in millions of dollars. See Note, Table B-85. Source: Federal Trade Commission. • 331 TABLE B-87.—Relation of pro/its after taxes to stockholders' equity and to sales, all corporations, by industry group, 1980-81 Ratio of profits after income taxes (annual rate) to stockholders' equity— percent * Industry 1980 III All manufacturing corporations Durable goods industries Stone, clay, and glass products Primary metal industries Iron and steel Nonferrous metals Fabricated metal products Machinery, except electrical Electrical and electronic equipment Transportation equipment2 Motor vehicles and equipment Aircraft, guided missiles, and parts Instruments and related products Other durable manufacturing products , ,., Nondurable goods industries Food and kindred products Tobacco manufactures Textile mill products Paper and allied products Printing and publishing Chemicals and allied products2 Industrial chemicals and synthetics Drugs Petroleum and coal products... Rubber and miscellaneous plastics products , Other nondurable manufacturing products 1 II 1980 III III 1981 IV 1 II III 12.5 14.1 13.4 16.1 13.4 4.5 4.8 4.7 5.5 4,7 9.1 12.7 1L8 14.6 11.5 3.4 4.5 4.3 5.0 4.2 14.4 5.6 11.5 12.5 5.3 12.8 12.6 14.5 12.1 13.1 5.4 2.2 4.4 4.4 2.3 4,4 4.8 4.8 4.6 4.7 3.4 8.8 11.7 13.6 12.2 13.6 14.9 13.9 17.6 6.3 1.2 3.6 3.8 5.6 3.9 5.4 4.5 5.3 5.8 2.6 12.3 13.7 13.5 16.6 13.6 13.8 17.0 15.2 14.4 14,0 3.8 6.2 4.1 7.3 4.2 6.1 5.0 6.6 4.3 6.4 14.1 -6.2 15.6 3.4 16.2 4.3 15.8 12.6 12.9 1.5 4.8 -2.1 5.2 1.0 5.7 1.3 5.4 3.4 4.5 .4 -18.0 -3.0 -4.3 10.0 -7.1 -6.9 = .9 2.7 -2.3 15.4 15.5 20.4 17.0 13.9 4.3 4.0 5.7 4.5 4.0 -1.4 17,8 17.9 17,9 17.5 17.7 9.5 9.4 10.0 9.2 9.4 12.0 11.2 7.4 9.9 9.8 3.6 3.2 2.3 2.8 2.9 15.6 15.4 14.9 17.4 15.2 5.5 5.2 5.0 5.9 5.2 15.2 22.3 6.6 10.6 17.2 17.4 15.3 8.6 11.6 16.7 12.6 21.2 8.8 12.5 13.6 14.1 19.2 13.8 13.7 15.2 14.1 18.8 9.8 9.9 15.6 3.5 13.0 1.8 4.5 5.8 4,0 8.8 2.2 4.9 5.5 3.0 12.5 2.3 5.3 4.8 3.4 10.4 3.3 5.6 5.2 3.4 10.8 2,5 4.1 5.2 15.2 13.7 16.5 15.7 14.0 7.1 6.4 7.3 6.9 6.5 10.5 22.6 10.9 16.9 15.6 16.4 13.8 16.1 11.3 16.0 5.0 15.1 4.9 11.3 6.6 10.4 5.9 10.9 5.1 10.2 17.8 17.3 16.4 21.8 17.8 7.2 6.2 5.7 8.1 6.6 5.4 9.2 12.0 14.8 11.6 1.6 2.7 3.6 4,2 3.4 16.3 14.6 11.5 13.8 14.7 3.3 3.2 2.7 3.2 3.4 1 Ratios based on equity at end of quarter. * Includes other industries not shown separately. Source; Federal Trade Commission. Profits after income taxes per dollar of sales— cents 1981 IV manufacturing 332 TABLE B-88.—Determinants of business fixed investment 1955-81 [Percent, except as noted] Nonfinancia! corporations Real investment as percent of real GNP utifization rate in manufactur- Cash flow as percent of2 GNP . . . 9.3 9.7 9.7 8.7 8.8 87.1 86.4 83.7 75.2 81.9 9.3 8.9 8.9 8.6 9.3 19.8 16.8 15.2 12.8 16.4 9.8 7.9 7.4 6.5 8.5 13.1 11.4 10.4 8.4 10.5 6.2 5.2 4.9 3.9 5.1 0.851 .843 .784 .813 .979 . . . . . . . 9.1 8.8 9.0 9.0 9.4 80.2 77.4 81.6 83.5 85.6 8.9 8.8 9.4 9.7 10.1 15.0 15.1 17.4 18.8 20.2 8.0 8.2 10.3 11.2 12.5 9.9 9.6 11.2 12.1 13.3 4.9 4.7 6.1 6.7 7.8 .953 1.055 1.000 1.103 1.180 1965 1966 1967 1968 1969 10.5 11.0 10.4 10.4 10.7 89.6 91.1 86.9 87.1 86.2 10.6 10.3 10.0 9.4 8.6 22.1 21.8 19.3 18.9 16.5 14.0 13.7 12.4 11.3 9.7 15.4 15.5 13.5 14.0 12.7 9.5 9.2 8.2 8.0 7.2 1.257 1.132 1.143 1.182 1.059 1970 1971 1972 1973 1974 10.5 10.0 10.2 11.0 10.9 79.3 78.4 83.5 87.6 83.8 7.8 8.3 8.6 8.0 7.0 12.8 13.5 14.3 14.3 11.0 7.9 8.5 9.1 8.7 6.1 8.8 10.1 11.1 13.8 12.7 4.7 5.8 6.6 9.0 8.6 .865 .941 1.016 .933 .666 1975 1976 1977 1978 1979 9.7 9.7 10.2 10.7 11.0 72.9 79.5 81.9 84.4 85.7 9.0 9.3 9.6 9.3 8.9 11.9 12.9 13,7 13.3 12.3 7.7 7.9 8.6 8.2 7.6 9.5 9.5 11.0 11.6 11.6 6.0 5.4 6.8 7.3 7.7 .660 .746 .657 .609 .561 1980 1981*. 10.7 10.7 79.1 78.4 8.6 9.3 10.7 11.1 6.9 8.0 9.6 (6) 6.5 (6) .531 (6) Year 1955 1956 1957. 1958 1959 1960 1961 1962. 1963 1964 . . . . . Capac- ing ' 1 Federal Reserve Board index. 2 Cash flow calculated as after-tax 3 Rate of return on depreciable assets3 Before tax After tax Rate of return on stockholders' equity 4 Before tax After tax Ratio of market value to replacement cost of net assets5 profits plus capital consumption allowance plus inventory valuation adjustment. Profits plus capital consumption adjustment and inventory valuation adjustment plus net interest paid divided by the stock of depreciable assets valued at current replacement cost. In previous Economic Reports, depreciable assets included inventories. 4 Profits corrected for inflation effects divided by net worth (physical capital component valued at current replacement cost). 5 Equity plus interest-bearing debt divided by current replacement cost of net assets. • Not available. Sources: Department of Commerce (Bureau of Economic Analysis), Board of Governors of the Federal Reserve System, and Council of Economic Advisers. 333 TABLE B-89.—Sources and uses of funds, nonfarm nonfmancial corporate business, 1946-81 [Billions of dollars; quarterly data at seasonally adjusted annual rates] Uses Sources External Credit market funds Year or quarter Total Internal ' Total Total Securities and mortgages Loans and shortterm paper Other 2 Total Capital expenditures 3 DiscrepIncrease ancy (sources in financial less uses) assets 1946 1947 1948 1949 18.7 27.0 28.9 19.9 8.1 12.9 19.1 19.5 10.6 14.1 9.7 .4 6.9 8.4 6.5 3.1 3.6 5.4 6.7 4.9 3.3 3.0 -.2 -1.8 3.7 5.8 3.3 -2.7 16.8 25.6 25.3 18.3 18.1 17.3 20.3 14.8 «1.4 8.4 5.0 3.5 1.9 1.4 3.6 1.6 1950 1951 1952 1953 1954 42.1 36.4 29.9 27.8 29.6 18,0 20.2 21.9 21.7 23.9 24.0 16.2 8.0 6.1 5.7 8.1 10.5 9.5 5.7 6.5 4.2 6.4 8.0 6.0 6.7 3.9 4.1 1.4 = .4 -.2 15.9 5.7 -1.5 ~'.B 40.4 37.6 29.2 28.0 27.8 24.0 30.2 24.6 25,7 22.9 16.4 7.4 4.6 2.3 4.9 1.7 ^1.2 .6 = .1 1.8 1955 1956 1957 1958 1959 52.7 44.9 43.4 41.9 56.3 29.5 29.5 31.5 30.3 36.0 23.2 15.4 11.9 11.7 20.2 10.2 12.8 12.3 10.5 12.3 6.4 7.5 10.4 10.5 8.1 3.7 5.3 1.9 -.0 4.2 13.1 2.5 -.4 1.2 7.9 49.1 40.8 39.1 38.5 51.2 32.6 36.8 34.9 27.7 37.0 16.5 4.0 4.2 10.8 14.2 3.5 4.1 4.3 3.4 5.0 1960 1961 1962 1963 1964 48.6 56.3 60.1 68.4 74.9 35.4 36.5 42.8 46.5 51.8 13.2 19.8 17.3 22.0 23.1 12.1 12.9 12.8 12.5 15.1 7.5 10.7 9.4 8.4 8.8 4.6 2.2 3.4 4.0 6.2 1.2 6.9 4.6 9.5 8.0 41.4 51,0 55.5 60.4 64.9 37.5 36.7 43.2 44.7 50.1 3,9 14.2 12.3 15.7 14.8 7.2 5.3 4.6 8.0 10.0 1965 1966 1967 1968 1969 93.5 99.2 97.2 117.4 121.6 58.5 62.6 63.6 65.0 64.4 35.0 36.6 33.6 52.4 57.2 20.2 25.3 30.3 31.5 38.4 9.3 15.9 21.6 18.9 20.7 11.0 9.5 8.7 12.6 17.7 14.8 11.2 3.3 20.9 18.8 82.7 91.3 88.5 106.0 115.3 61.0 74,7 72.2 75.4 83.7 21.8 16.6 16.3 30.6 31.6 10.8 7.9 8.7 11.4 6.3 1970 1971 1972 1973 1974 108.1 133.7 165.8 208.7 202.9 61.8 73.5 85.0 91.7 85.6 46.3 60.2 80.8 117.0 117.3 41.1 45.6 57.6 72.9 82.8 32.1 41.2 40.7 36.9 39.1 9.0 4.4 16.9 36.0 43.6 5.3 14.6 23.2 44.0 34.5 98.7 122.7 149.1 191.9 190.1 80.0 86.0 99.0 121.5 137.9 18.7 36.7 50.1 70.5 52.2 9.4 11.0 16.7 16.7 12.9 1975 1976 1977 1978 1979 167.9 223.4 264.2 320.4 366.7 119.7 134.2 156.1 171.9 190.6 48.3 89.2 108.1 148.5 176.1 41.7 64.3 84.6 93.2 104.8 49.7 48.0 48.1 45.8 39.5 -8.0 16.3 36.5 47.4 65.3 6.5 24.9 23.5 55.3 71.4 150.9 201.4 228.5 290.9 340.6 109.7 148.3 174.1 199.2 220.9 41,2 53.0 54.4 91.7 119.7 17.0 22.0 35.7 29.5 26.2 1980.... .. 336.2 196,8 139.3 106.1 66.5 39.7 33.2 291.7 216.9 74.9 44.5 369.1 362.6 403.2 332.0 188.8 190.7 195.6 187.3 180.3 171.9 207.6 144.8 105.4 113.2 112.9 87.6 38.8 35.3 41.1 42.5 66.6 77.9 71.8 45.0 74.9 58.7 94.7 57.2 343.1 337.1 374.8 307.4 219.6 224.6 223.6 215.9 123.5 112.5 151.2 91.5 26.0 25.6 28.4 24.7 359.6 265.4 325.4 394.3 194.9 192.9 199.2 200.3 164.7 72.5 126.3 194.0 126.7 70.1 93.3 134.3 65.9 62.3 63.5 74.1 60.8 7.8 29.8 60.2 37.9 2.4 33.0 59.6 310.6 224.8 289,1 342.4 224.1 212.0 207.1 224.3 86.5 12.8 82.0 118.2 49.0 40.7 36.3 51.9 340.7 396.6 393.1 222.0 228.2 233.0 118.8 168.4 160.1 78.1 123.5 112.0 62.1 29.0 -4.1 16.0 94.5 116.1 40.7 44.9 48.1 319.4 356.3 362.9 231.6 265.4 276.1 87.8 90.9 86.8 21.4 40.3 30.1 1979: | II III.. IV . 1980: 1 II III.. IV 1981: ill . " . Ill P. . 1 Undistributed profits (after inventory valuation and capital consumption adjustments), capital consumption allowances, and foreign branch profits, dividends, and subsidiaries' earnings retained abroad. 2 Consists of tax liabilities, trade debt, and direct foreign investment in the United States. 3 Plant arid equipment, residential structures, inventory investment, and mineral rights from U.S. Government. Source: Board of Governors of the Federal Reserve System. 334 TABLE B-90.—Current assets and liabilities of U.S. corporations, 1939-81 [Billions of dollars] Current liabilities Current assets End of year or quarter Total Cash 1 U.S. Government 2 securities Net Notes Current Notes Other working Other and and current capital ratio 3 accounts Invencurrent Total accounts liabiltories receivassets payable ities able All corporations4 SEC series: 5 1939 1940 1941 1942 1943 1944 1945 1946 1947 1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 .. 1960 1961 54.5 10,8 2.2 22.1 18.0 1.4 30.0 21.9 8.1 24.5 1.817 60,3 72.9 83.6 93.8 97.2 97.4 108.1 123.6 133.0 133.1 13.1 13.9 17.6 21.6 21.6 21.7 22.8 25.0 25.3 26.5 2.0 4.0 10.1 16.4 20.9 21.1 15.3 14.1 14.8 16.8 24.0 28.0 27.3 26.9 26.5 25.9 30.7 38.3 42.4 43.0 19.8 25.6 27.3 27.6 26.8 26.3 37.6 44.6 48.9 45.3 1.5 1.4 1.3 1.3 1.4 2.4 1.7 1.6 1.6 1.4 32.8 40.7 47.3 51.6 51.7 45.8 51.9 61.5 64.4 60.7 23.2 26.4 26.0 26.3 26.8 25.7 31.6 37.6 39.3 37.5 9.6 14.3 21.3 25.3 24.9 20.1 20.3 23.9 25.0 23.3 27.5 32.3 36.3 42.1 45.6 51.6 56.2 62.1 68.6 72.4 1.838 1.791 1.767 1.818 1.880 2.127 2.083 2.010 2.065 2.193 161.5 179.1 186.2 190.6 194.6 224.0 237.9 244.7 255.3 277.3 28.1 30.0 30.8 31.1 33.4 34.6 34.8 34.9 37.4 36.3 19.7 20.7 19.9 21.5 19.2 23.5 19.1 18.6 18.8 22.8 56.8 61.5 67.4 68.5 73.6 88.9 97.7 102.2 109.7 120.6 55.1 64.9 65.8 67.2 65.3 72.8 80.4 82.2 81.9 88.4 1.7 2.1 2.4 2.4 3.1 4.2 5.9 6.7 7.5 9.1 79.8 92.6 96.1 98.9 99.7 121.0 130.5 133.1 136.6 153.1 48.3 54.9 59.3 59.5 61.7 76.1 83.9 86.6 90.4 101.0 31.6 37.8 36.8 39.4 38.0 '45.0 46.6 46.5 46.2 52.0 81.6 86.5 90.1 91.8 94.9 103.0 107.4 111.6 118.7 124.2 2.024 1.934 1.938 1.927 1.952 1.851 1.823 1.838 1.869 1.811 289.0 306.8 37.2 41.1 20.1 20.0 129.2 139.2 91.8 95.2 10.6 11.4 160.4 171.2 106.8 114.6 53.6 56.6 128.6 135.6 1.802 1.792 Nonfinancial corporations 6 5 SEC series: 1961 1962 1963 1964 1965 1966 1967 1968 1969 . 254.7 269.7 288.2 305.6 336.0 364.0 386.2 426.5 473.6 34.8 37.1 39.8 40.5 42.8 41.9 45.5 48.2 47.9 16.5 16.8 16.7 15.8 14.4 13.0 10.3 11.5 10.6 97.9 103.2 110.5 119.9 134.1 146.6 155.3 173.9 197.0 95.0 100.5 106.8 113.1 126.6 142,8 153.1 166.0 186.4 10.5 12.1 14.4 16.3 18.1 19.7 22.0 26.9 31.6 123.7 132.4 145.5 156.6 178.8 199.4 211.3 244.1 287.8 84.4 88.7 97.0 104.9 121.5 137.5 147.1 168.8 199.2 39.3 43.7 48.5 51.7 57.3 61.9 64.2 75.3 88.6 131.0 137.3 142.7 149.0 157.2 164.6 174.9 182.4 185.7 2.059 2.037 1.981 1.951 1.879 1.825 1.828 1.747 1.646 1970 1971 1972 1973 1974 492.3 529.6 599.3 697.8 790.7 50.2 53.3 59.0 66.3 71.1 7.7 11.0 10.6 12.8 12.3 206.1 221.1 248.2 288.5 322.1 193.3 200.4 225.7 263.9 313.6 35.0 43.8 55.8 66.4 71.7 304.9 326.0 375.6 450.9 530.4 211.3 220.5 282.9 340.3 402.3 93.6 105.5 92.7 110.7 128.1 187.4 203.6 223.7 246.9 260.3 1.615 1.625 1.595 1.548 1.491 735.4 759.0 826.8 902.1 1,030.0 1,200.9 73.2 82.1 88.2 95.8 104.5 116.1 11.1 19.0 23.4 17.6 16.3 15.6 265.8 272.1 292.8 324.7 383.8 456.8 319.5 315.9 342.4 374.8 426.9 501.7 65.9 69.9 80.1 89.2 98.5 110.8 453.4 451.6 494.7 549.4 665.5 809.1 269.8 264.2 281.9 313.2 373.7 456.3 183.6 187.4 212.8 236.2 291.7 352.8 282.0 307.4 332.2 352.7 364.6 391.8 1.622 1.681 1.672 1.642 1.548 1.484 1,281.6 121.0 17.3 491.2 525.4 126.7 877.2 498.3 378.9 404.4 1,461 1,234.0 1,232.2 1,254.9 1,281.6 110.5 111.5 113.4 121.0 15.2 14.0 16.4 17.3 470.3 463.4 478.7 491.2 518.9 525.0 524.5 525.4 119.2 118.3 121.9 126.7 836.5 826.0 850.5 877.2 467.7 463.0 477.2 498.3 368.8 363.1 373.4 378.9 397.5 406.2 404.3 404.4 1.475 1.492 1.475 1.461 1,321.2 1,317.4 1,349.2 120.5 118.5 118.3 17.0 17.7 16.0 507.3 507.4 519.7 542.8 540.0 557.2 133.6 133.7 138.1 910.9 908.1 951.1 504.0 500.8 529.1 406.9 407.2 422.0 410.3 409.3 398.1 1.450 1.451 1.419 FTC-FRB series:7 1974 1975 1976 1977 1978 1979 1980 1980: 1 (1 Ill IV. . . . 1981: 1 II Ill 1 Includes time certificates of deposit. Includes Federal agency issues. Total current assets divided by total current liabilities. 4 Excludes banks, savings and loan associations, and insurance companies. 5 Based on data from "Statistics of Income," Department of the Treasury. 6 Excludes banks, savings and loan associations, insurance companies, investment companies, finance companies (personal and commercial), real estate companies, and security and commodity brokers, dealers, and exchanges. 1 Based on data from "Quarterly Financial Report for Manufacturing, Mining, and Trade Corporations," Federal Trade Commission. See "Federal Reserve Bulletin," July 1978, for details regarding the series. 2 3 Note.—SEC series not available after 1974. Sources-. Board of Governors of the Federal Reserve System, Federal Trade Commission, and Securities and Exchange Commission. 335 TABLE B-91.—State and municipal and corporate securities offered, 1934-81 [Millions of dollars] Corporate securities offered for cash State and Industry of corporate issuer Type of corporate security municipal securities Total offered Electric, Transporfor cash corporate Common Preferred Bonds CommuniManufacgas, and2 and {princi- offerings cation tation 3 turing l stock stock water notes pal amounts) Year or quarter 939 1934. 397 19 6 372 67 Other 133 176 21 103 1939. 1,128 2,164 87 98 1,979 604 1,271 186 1940 1941 . 1942 . 1943 19441 ' 1,238 956 524 435 661 2,677 2,667 1,062 1 170 3^202 108 2,386 2,389 917 990 2,670 992 848 539 510 1,061 1,203 1,357 472 477 1,422 324 366 48 161 609 159 96 4 21 109 795 1 157 2|324 2,690 2,907 6011 6*900 6!577 7,078 6,052 34 56 163 397 891 779 614 736 183 167 112 124 369 758 1 127 '762 492 425 4855 4*882 5,036 5,973 4,890 2026 3701 2,742 2,226 1,414 2319 2158 3,257 2,187 2,320 1454 711 286 755 800 571 211 329 293 1,008 946 3,532 3,189 4,401 5,558 6,969 6,362 7,741 9,534 8,898 9,516 811 1,212 1,369 1,326 1,213 631 838 564 489 816 4,920 5,691 7,601 7,083 7,488 1,200 3,122 4,039 2,254 2,268 2,649 2,455 2,675 3,029 3,713 813 494 992 595 778 399 612 760 882 720 1,300 1,058 1,068 2,138 2,037 5,977 5,446 6,958 7,449 7,681 10,240 10,939 12,884 11,558 9,748 2,185 2,301 2,516 1,334 2,027 635 636 411 571 531 7,420 8,002 9,957 9,653 7,190 2,994 3,647 4,234 3,515 2,073 2,464 2,529 3,938 3,804 3,258 893 724 824 824 967 1,132 1,419 1,462 1,424 717 2,757 2,619 2,426 1,991 2,733 7,230 8,360 8,558 10,107 10,544 10,154 13,165 10,705 12,211 13,957 1,664 3,294 1,314 1,011 2,679 409 450 422 343 412 8,081 9,420 8,969 10,856 10,865 2,152 4,077 3,249 3,514 3,046 2,851 3,032 2,825 2,677 2,760 718 694 567 957 982 1,050 1,834 1,303 1,105 2,189 3,383 3,527 2,761 3,957 4,980 11148 11,089 14,288 16,374 11,460 14,782 17,385 24,014 21,261 25,997 1473 1,901 1,927 3,885 7,640 724 12,585 580 14,904 881 21,206 636 16,740 691 17,666 5,414 7,056 11,069 6,958 6,346 2,934 3,666 4,935 5,293 6,715 702 1,494 1,639 1,564 1,779 945 2,003 1,975 1,775 2,172 4,787 3,167 4,396 5,671 8,985 1970 .. 1971, 1972 1973 1974 17,762 24,370 22,941 22,953 22,824 37,451 43,229 39,705 31,680 37,820 7,037 9,485 10,707 7,642 4,050 1,390 3,683 3,371 3,341 2,273 29,023 30,061 25,628 20,700 31,497 10,647 11,651 6,398 4,832 10,511 11,009 11,721 11,314 10,269 12,836 1,253 1,148 860 811 1,005 5,291 5,840 4,836 4,872 3,932 9,252 12,867 16,298 10,897 9,632 1975., 1976 1977 1978 1979 29,326 33,845 45,060 46,215 42,261 53,632 53,314 54,229 48,212 53,084 7,414 8,305 8,047 7,937 8,709 3,459 2,803 3,916 2,832 3,525 42,759 42,206 42,266 37,443 40,850 18,652 15,496 13,757 11,062 11,563 15,893 14,418 13,704 12,253 13,736 3,637 4,649 3,218 2,696 3,297 4,466 3,562 4,443 3,640 4,694 10,983 15,194 19,113 18,565 19,803 1980 . 1981: First 3 quarters 47,133 78,889 18,996 3,634 56,259 24,398 15,940 3,745 7,385 27,424 32,402 51,161 19,801 1,515 29,845 13,315 10,482 2,202 5,418 19,254 7,836 15,356 12,869 11,072 17,777 25,236 19,043 16,833 5,354 3,462 3,858 6,322 942 807 897 988 11,481 20,967 14,288 9,523 6,591 7,169 6,157 4,481 4,614 4,191 4,016 3,119 893 860 1,175 817 1,324 2,142 2,011 1,908 4,354 10,877 5,684 6,509 9,159 13,361 9,882 15,737 23,640 11,784 5,008 9,634 5,159 811 437 267 9,918 13,569 6,358 5,303 6,057 1,955 2,631 4,806 3,045 792 986 424 1,338 2,273 1,807 5,183 9,519 4,552 .. '. . 1945. 1946 194?' ., ". 1948 1949 . 1950.. 1951, 1952 1953., 1954 . '.. .!. . . . 1955 1956 1957 1958. 1959 . . 1960 .. 1961 1962. ... 1963 . . 1964 . . 1965 1966 . 1967 1968 .. . 1969 . . 1980: 1 II 111 IV . 1981: 1 . II III . . . . no 1 Prior 2 Prior 3 "902" to 1948, also includes extractive, radio broadcasting, airline companies, commercial, and miscellaneous company issues. to 1948, also includes telephone, street railway, and bus company issues. Prior to 1948, includes railroad issues only. Note.—Covers substantially alt new issues of State, municipal, and corporate securities offered for cash sale in the United States in amounts over $100,000 and with terms to maturity of more than 1 year; excludes notes issued exclusively to commercial banks, intercorporate transactions, and issues to be sold over an extended period, such as employee-purchase plans. Closed-end investment company issues are included beginning 1973. Sources: Securities and Exchange Commission, "The Commercial and Financial Chronicle," and "The Bond Buyer." 336 TABLE B-92.—Common stock prices and yields, 1949-81 Common stock 5yields (percent) Common stock prices1 New York Stock Exchange indexes (Dec. 31, 1965=50) 2 Year or month Composite 1949 Industrial Transportation Utility ' Finance 6.59 15.48 18.40 22.34 24.50 24.73 29.69 40.49 46.62 44.38 46.24 57.38 6.57 6.13 5.80 5.80 4.95 4.08 4.09 4.35 3.97 3.23 13.99 11.82 9.47 10.26 8.57 7.95 7.55 7.89 6.23 5.78 44.45 49.82 65.85 70.49 618.04 691.55 639.76 714.81 834.05 910.88 873.60 879.12 906.00 876.72 55.85 66.27 62.38 69.87 81.37 88.17 85.26 91.93 98.70 97.84 3.47 2.98 3.37 3.17 3.01 3.00 3.40 3.20 3.07 3.24 5.90 4.62 5.82 5.50 5.32 5.59 6.63 5.73 5.67 6.08 37.24 39.53 38.48 37.69 29.79 31.50 36.97 40.92 39.22 38.20 60.00 70.38 78.35 70.12 49.67 47.14 52.94 55.25 56.65 61.42 753.19 884.76 950.71 923.88 759.37 802.49 974.92 894.63 820.23 844.40 83.22 98.29 109.20 107.43 82.85 86.16 102.01 98.20 96.02 103.01 3.83 3.14 2.84 3.06 4.47 4.31 3.77 4.62 5.28 5.47 6.45 5.41 5.50 7.12 11.59 9.15 8.90 10.79 12.03 13.46 60.61 72.61 37.35 38.91 64.25 73.52 891.41 932.92 118.78 128.05 5.26 5.20 12.66 37.08 36.22 33.38 35.29 37.31 38.53 38.77 38.18 38.77 38.44 38.35 37.84 64.22 61.84 54.71 57.32 61.47 65.16 66.76 67.22 69.33 68.29 67.21 67.46 860.74 878.22 803.56 786.33 828.19 869.86 909.79 947.33 946.67 949.17 971.08 945.96 110.87 115.34 104.69 102.97 107.69 114.55 119.83 123.50 126.51 130.22 135.65 133.48 5.41 5.24 5.87 6.05 5.77 5.39 i'4.98 78.67 82.15 84.92 88.00 92.32 90.37 52.61 57.92 51.77 48.62 51.07 54.04 59.14 62.48 65.89 70.76 77.23 75.74 76.24 73.52 76.46 77.60 76.28 76.80 89.23 85.74 89.39 90.57 88.78 88.63 74.43 72.76 77.09 80.63 76.78 76.71 38.53 37.59 37.82 38.34 38,27 39.23 70.04 68.48 72.82 74.59 74.65 79.79 962.13 945.50 987.18 1,004.86 979.52 996.27 74.98 75.24 68.37 69.40 71.49 71.81 86.64 86.72 78.07 78.93 80.86 81.70 74.42 73.27 63.67 65.65 67.68 68.27 38.90 40.22 38.17 38.87 40.73 40.22 74.97 73.76 69.38 72.56 76.47 74.74 947.94 926.25 853.38 853.25 860.44 878.28 132.97 128.40 133.19 134.43 131.73 132.28 129.13 129.63 118.27 119.80 122.92 123.79 30.01 35.37 33.49 3751 43.76 47.39 46.15 50.77 55.37 54.67 46.18 51.97 58.00 57.44 50.26 "53.51 50.58 46.96 45.41 45.43 44.19 42.80 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 45.72 54.22 60.29 57.42 43.84 45.73 54.46 53.69 53.70 58.32 48.03 57.92 65.73 63.08 48.08 50.52 60.44 57.86 58.23 64.76 32.14 44.35 50.17 37.74 31.89 31.10 39.57 41.09 43.50 47.34 1980 1981 68.10 74.02 78.70 85.44 63.74 66.06 59.52 58.47 61.38 65.43 68.56 70.87 73.12 75.17 78.15 76.69 72.67 76.42 68.71 66.31 69.39 74.47 Jufy. . Aug Sept Oct. Nov Dec 1981: Jan Feb Mar t :•:::.•: ...... June July Aug Sept Oct Nov Dec „ Earningsprice ratio' 15.23 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 way ::. ;...~'." June Dividendprice ratio 8 179.48 10.87 13.08 .'."....'."... 13.81 13.67 16.19 21.54 24.40 23.67 24.56 30.73 Jan Feb Mar Apr Standard & Poor's composite index (194143=10)* 216.31 257.64 270.76 275.97 333.94 442.72 493.01 475.71 491.66 632.12 9.02 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1980: DowJones industrial3 average .1. '.' 1 5.20 5.06 4.90 4.80 4.63 4.74 4.80 5.00 4.88 4.86 4.98 5.03 13.08 ii'.67 10.92 10.72 11.48 5.18 5.16 5.69 5.65 5.54 5.57 Averages of daily closing prices, except New York Stock Exchange data through May 1964 are averages of weekly closing prices. Includes all the stocks (more than 1,500) listed on the New York Stock Exchange. Includes 30 stocks. 4 Includes 500 stocks. 5 Standard & Poor's series, based on 500 stocks in the composite index. 6 Aggregate cash dividends (based on latest known annual rate) divided by aggregate market value based on Wednesday closing prices. Monthly data are averages of weekly figures; annul data are averages of monthly figures. 7 Quarterly data are ratio of earnings (after taxes) for 4 quarters ending with particular quarter to price index for last day of that quarter. Annual ratios are averages of quarterly ratios. Note.—All data relate to stocks listed on the New York Stock Exchange. Sources: New York Stock Exchange, Dow-Jones & Co., Inc., and Standard & Poor's Corporation. 2 3 337 TABLE B-93.—Business formation and business failures, 1929-81 Business failures l Year or month 1929 1933" 1939 s 1940 1941 1942 1943 1944 1945 1946 1947 1948 1949 1950 1951 1952... 1953 1954... . 1955 1956 ... . 1957 1958 1959 1960 1961 1962 1963 1964 1965 , 1966 1967 1968 . . 1969 1970 .. . 1971 1972 . 1973 .. 1974 1975 . . 1976 1977 1978 1979 1980 Index of net business formation (1967^ 100) Amount of current liabilities (millions of dollars) New business incorporations (number) Business failure2 rate ' 104.8" 86.4 90.8 90.1 94.5 92.4 90.8 98.2 95,4 91.4 91.1 98,1 94.5 91.1 92.8 94.7 98.0 99.5 98.9 100,0 107.6 113.5 107.1 109.5 115.5 115.5 111.2 108.8 117.2 126.5 132,9 131.7 132,916 112,897 96,346 85,640 93,092 83,778 92,946 102,706 117,411 139,915 141,163 137,112 150,781 193,067 182,713 181,535 182,057 186,404 197,724 203,897 200,010 206,569 233,635 274,267 264,209 287,577 316,601 329,358 319,149 326,345 375,766 436,170 478,019 524,565 103.9 100.3 69.6 63.0 54.4 44.6 16.4 6.5 4.2 5.2 14.3 20.4 34.4 34.3 30.7 28.7 33.2 42.0 41.6 48.0 51.7 55.9 51.8 57.0 64.4 60.8 56.3 53.2 53.3 51.6 49.0 38.6 37.3 43.8 41.7 38.3 36.4 38.4 42.6 34.8 28.4 23.9 27.8 22,909 19,859 14,768 13,619 11,848 9,405 3,221 1,222 809 1,129 3,474 5,250 9,246 9,162 8,058 7,611 8,862 11,086 10,969 12,686 13,739 14,964 14,053 15,445 17,075 15,782 14,374 13,501 13,514 13,061 12,364 9,636 9,154 10,748 10,326 9,566 9,345 9,915 11,432 9,628 7,919 6,619 7,564 22,165 18,880 14,541 13,400 11,685 9,282 3,155 1,176 759 1,003 3,103 4,853 8,708 8,746 7,626 7,081 8,075 10,226 10,113 11,615 12,547 13,499 12,707 13,650 15,006 13,772 12,192 11,346 11,340 10,833 10,144 7,829 7,192 8,019 7,611 7,040 6,627 6,733 7,504 6,176 4,861 3,712 3,930 744 979 227 219 163 123 66 46 50 126 371 397 538 416 432 530 787 860 856 1,071 1,192 1,465 1,346 1,795 2,069 2,010 2,182 2,155 2,174 2,228 2,220 1,807 1,962 2,729 2,715 2,526 2,718 3,182 3,928 3,452 3,058 2,907 3,634 121.1 533,520 42.1 11,742 5,682 Number of failures Total Liability size class Under $100,000 $100,000 and over Liability size class Total Under $100,000 $100,000 and over 483.3 457.5 182.5 166.7 136.1 100.8 45.3 31.7 30.2 67.3 204.6 234.6 308.1 248.3 259.5 283.3 394.2 462.6 449.4 562.7 615.3 728.3 692.8 938.6 1,090.1 1,213,6 1,352.6 1,329,2 1,321.7 1,385.7 1,265.2 941.0 1,142.1 1,887.8 1,916.9 2,000.2 2,298.6 3,053.1 4,380.2 3,011.3 3,095.3 2,656.0 2,667.4 261.5 215.5 132.9 119.9 100.7 80.3 30.2 14.5 11.4 15.7 63.7 93.9 161.4 151.2 131.6 1313 167.5 211.4 206.4 239.8 267.1 297.6 278.9 327.2 370,1 346.5 321.0 313.6 321.7 321.5 297.9 241.1 231.3 269.3 271.3 258.8 235.6 256.9 298.6 257.8 208.3 164.7 179.9 221.8 242.0 49.7 46.8 35.4 20.5 15.1 17.1 18.8 51.6 140.9 140.7 146.7 97,1 128.0 151.4 226.6 251.2 243.0 322.9 348.2 430.7 413.9 611.4 720.0 867.1 1,031.6 1,015.6 1,000.0 1,064.1 967,3 699.9 910.8 1,618.4 1,645.6 1,741.5 2,063.0 2,796.3 4,081.6 2,753.4 2,887.0 2,491.3 2,487.5 6,060 4,635.1 272.5 4,362.6 Seasonally adjusted 1980: Jan Feb Mar fc•..::•: June 131.0 129.8 125.8 120.5 117.8 114.8 44,447 44,583 42,615 42,461 41,974 39,746 30.9 27.5 36.2 42.2 39.3 48.7 729 677 925 1,068 975 1,094 363 330 452 525 452 522 366 347 473 543 523 572 243.1 190.8 274.2 428.2 381.1 436.7 17.0 15.5 21.7 24.4 22.0 25.2 226.2 175.3 252.5 403.8 359.2 411.5 July Aug Sept Oct Nov Dec 115.3 117,7 120.6 119.6 119.2 121.3 44,058 43,266 46,488 47,225 46,888 48,297 52.0 45.4 45.0 56.8 39.2 46.8 1,141 1,009 926 1,323 860 1,015 531 486 465 632 403 521 610 523 461 691 457 494 445.7 345.4 1,002.9 359.2 239.3 288.3 26.3 23.2 22.2 30.4 18.9 25.6 419.4 322.2 980.7 328.8 220.4 262,7 118.1 117.2 117.8 118.2 115.5 114.4 45,864 47,662 47,927 49,574 48,907 48,489 48.6 47.8 47.6 61.8 62.0 1,109 1,133 1,212 1,557 1,464 559 546 572 736 730 550 587 640 821 734 421.4 789.2 485.3 536.9 428.2 27.6 25.7 28.0 44.8 35.1 393.8 763.5 457.3 492.1 393.1 113.4 111.9 114.1 112.3 50,433 47,483 48,792 47,859 1981: Jan Feb Mar May ' ' '. '.. June July Aug Sept Odt . . 1 Commercial and industrial failures only. Excludes failures of banks and railroads and, beginning 1933, of real estate, insurance, holding, and financial companies, steamship lines, travel agencies, etc. 2 Failure rate per 10,000 listed enterprises. 3 Series revised; not strictly comparable with earlier data. Sources: Department of Commerce (Bureau of Economic Analysis) and Dun & Bradstreet, Inc. 338 AGRICULTURE TABLE B-94.—Farm income 1929-81 [Billions of dollars; quarterly data at seasonally adjusted annual rates] Income of farm operators from farming Gross farm income Net farm income Cash marketing receipts Year or quarter Total ' Total Livestock and products Crops Value of inventory changes2 Production expenses Current dollars 1967 dollars3 1929 1933 1939 13.8 6.9 10.7 11.3 5.3 7.9 6.2 2.8 4.5 5.1 2.5 3.3 -0.1 -.2 .1 7.7 4.4 6.3 6.2 2.6 4.4 12.0 6.6 10.6 1940 1941 1942 1943 1944 1945 1946 1947 1948 1949 11.3 14.3 19.9 23.3 24.0 25.4 29.6 32.4 36.5 30.8 8.4 11.1 15.6 19.6 20.5 21.7 24.8 29.6 30.2 27.8 4.9 6.5 9.0 11.5 11.4 12.0 13.8 16.5 17.1 15.4 3.5 4.6 6.5 8.1 9.2 9.7 11.0 13.1 13.1 12.4 .3 .4 1.1 -.1 -.4 -.4 .0 -1.8 1.7 -.9 6.9 7.8 10.0 11.6 12.3 13.1 14.5 17.0 18.8 18.0 4.5 6.5 9.9 11.7 11.7 12.3 15.1 15.4 17.7 12.8 10.7 14.7 20.2 22.7 22.2 22.8 25.8 23.0 24.5 17.9 33.1 38.3 37.8 34.4 34.2 33.5 34.0 34.8 39.0 37.9 28.5 32.9 32.5 31.0 29.8 29.5 30.4 29.7 33.5 33.6 16.1 19.6 18.2 16.9 16.3 16.0 16.4 17.4 19.2 18.9 12.4 13.2 14.3 14.1 13.6 13.5 14.0 12.3 14.2 14:7 .8 1.2 .9 -.6 '.2 -.5 .6 .8 .0 19.5 22.3 22.8 21.5 21.8 22.2 22.7 23.7 25.8 27.2 13.6 15.9 15.0 13.0 12.4 11.3 11.3 11.1 13.2 10.7 18.9 20.5 18.8 16.2 15.4 14.1 13.8 13.1 15.2 12.3 1960 1961 1962 1963 1964. 1965 1966 1967 1968 1969 38.9 40.5 42.3 43.4 42.3 46.5 50.5 50.5 51.8 56.4 34.2 35.2 36.5 37.5 37.3 39.4 43.4 42.8 44.2 48.2 19.0 19.5 20.2 20.0 19.9 21.9 25.0 24.4 25.5 28.6 15.3 15.7 16.3 17.4 17.2 17.5 18.4 18.4 18.7 19.6 .4 .3 .6 .6 -.8 1.0 -.1 .7 .1 .1 27.4 28.6 30.3 31.6 31.8 33.7 36.5 38.2 39.5 42.1 11.5 12.0 12.1 11.8 10.5 12.9 14.0 12.3 12.3 14.3 13.0 13.3 13.3 12.8 11.3 13.7 14.4 12.3 11.8 13.0 1970. 1971 1972 1973 1974 1975 1976 1977 1978 1979 58.6 62.0 71.0 98.9 98.3 100.3 101.8 108.7 127.5 151.9 50.5 52.9 61.2 87.1 92.4 88.2 94.8 96.3 112.9 131.9 29.6 30.6 35.7 45.9 41.4 43.0 46.1 47.6 59.2 68.5 21.0 22.3 25.5 41.1 51.1 45.1 48.7 48.7 53.7 63.4 .0 1.4 .9 3.4 -1.6 3.4 -2.4 1.0 .6 5.3 44.4 47.4 52.3 65.6 72.2 75.9 83.1 90.3 101.1 119.2 14.2 14.6 18.7 33.3 26.1 24.5 18.7 18.4 26.5 32.7 12.2 12.1 14.9 25.1 17.7 15.2 11.0 10.1 13.5 15.0 1980 4 1981 150.5 164.4 136.4 142.5 67.4 68.8 69.0 73.7 -2.0 4.0 130.7 141.5 19.9 22.9 8.0 8.4 1979: I || Ill IV 148.2 152.8 152.5 154.1 129.8 132.8 131.4 133.6 70.0 69.5 67.1 67.5 59.8 63.3 64.3 66.1 4.4 5.1 6.6 5.1 114.8 116.9 120.2 124.9 33.4 35.9 32.3 29.2 16.1 16.8 14.6 12.8 II Ill IV 149.3 145.8 151.9 155.1 133.0 131.9 139.2 141.5 66.3 64.0 68.9 70.4 66.7 67.9 70.3 71.1 .9 -1.9 -3.7 -3.3 125.9 128.9 132.2 135.6 23.4 16.9 19.7 19.5 9.9 6.9 7.9 7.6 1981: 1 || Ill IV* 159.2 163.9 167.6 166.8 142.5 143.1 143.8 140.5 69.8 68.9 69.4 67.0 72.7 74.2 74.4 73.5 -.5 3.4 6.0 7.1 139.3 141.0 142.9 142.8 19.9 22.9 24.7 24.0 7.5 8.5 8.9 8.5 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 . . . . 1980: I . 'Cash marketing receipts and inventory changes plus Government payments, other farm cash income, and nonmoney income furnished by farms. 2 Physical changes in end-qf-period inventory of crop and livestock commodities valued at average prices during the period. 3 Income in current dollars divided by the consumer price index (Department of Labor). 4 Forecast. Source: Department of Agriculture, except as noted. 339 TABLE B-95-—Farm output and productivity indexes, 1929-81 [1967-100] Farm output Crops2 Year Productivity indicators Farm output per hour of farm work Farm Crop output proLiveper duction unit of per stock and total acre* Total Crops input products Total » Feed grains Food grains Oil crops Livestock and products2 62 55 48 44 52 36 11 53 52 56 26 57 53 50 16 16 16 51 15 25 59 59 60 19 20 27 60 64 71 77 73 60 62 68 66 67 62 63 70 64 68 20 21 24 24 24 21 23 25 24 25 27 28 30 31 30 73 71 70 68 72 68 71 68 74 71 67 71 66 75 69 26 27 28 31 32 31 32 33 34 35 75 78 78 79 82 71 71 74 75 76 68 70 72 72 71 34 35 38 39 42 27 29 29 33 33 36 35 39 40 42 37 39 40 41 43 Total1 1929 1933 1939 53 58 64 51 48 1940 1941 1942 1943 1944.. . 1945 1946 1947 1948.. 1949 1950 1951 1952 1953 1954 1955 1956.. 1957 1958 1959 1960 1961.... 1962 1963 1964.. 1965.. 1966.. 1967 1968 1969 1970 1971 1972 1973 1974 60 62 70 69 71 67 68 76 71 75 52 56 64 59 62 52 60 63 54 67 70 71 69 76 74 60 65 50 72 63 70 72 85 81 70 74 76 79 79 80 73 77 73 83 79 76 78 81 81 79 64 59 63 61 64 65 64 83 76 67 8 25 29 29 40 41 36 36 34 39 47 45 46 47 46 47 49 82 82 81 87 88 82 82 80 89 89 68 68 74 80 84 63 66 62 91 73 53 60 58 69 64 84 84 83 84 88 78 80 80 87 87 74 76 76 86 85 44 47 51 57 59 45 48 53 61 61 46 48 50 54 58 91 91 92 96 95 93 91 92 96 94 87 78 79 86 75 87 80 74 77 86 68 77 78 81 81 87 91 92 95 97 90 91 92 96 95 89 91 95 97 95 65 67 71 77 81 66 68 72 77 79 62 66 71 77 82 98 95 100 102 102 101 110 110 112 106 114 117 119 122 129 122 134 99 95 100 103 104 88 89 100 95 99 89 116 112 115 93 114 120 126 135 148 123 154 88 88 100 106 98 91 107 102 114 120 142 ' 141 132 125 144 157 188 95 97 100 114 116 117 121 131 155 127 153 132 175 182 219 171 199 95 97 100 100 101 100 97 100 102 103 102 110 110 111 105 115 115 114 116 119 115 126 100 97 100 105 106 102 112 115 116 104 112 111 116 121 129 116 132 89 92 100 106 110 115 128 136 140 136 152 162 170 182 198 194 209 90 94 100 106 108 111 126 135 138 128 142 146 157 166 182 165 192 86 93 100 105 112 121 128 137 144 156 160 178 189 204 222 240 244 , . .. . . . . . 1975 1976 1977.. .. . 1978.. . 1979 1980 1981" 100 112 113 119 110 121 121 129 131 144 131 152 105 106 107 105 106 101 105 106 106 109 113 115 1 Farm output measures the annual volume of net farm production available for eventual human use through sales from farms or consumption in farm households. a Gross production. 3 Includes items not included in groups shown. 4 Computed from variable weights for individual crops produced each year. Source: Department of Agriculture. 340 TABLE B-96.—Farm input use, selected inputs, 1929-81 farm population April1 As perNumcent ber of (thou- total sands) population2 Year Farm employment (thousands 3 Total Selected indexes of input use (1967=100) Crops harvested Fam- Hired (mil- Total \work- lions of workers acres) * ers Farm labor Feed, Meseed, AgriFarm chanical and power cultural livereal and chemi-8 stock estate machincals purery chases8 102 329 103 38 10 96 321 97 32 6 28 2,727 365 340 331 98 294 102 40 11 41 23.1 22.6 21.4 19.2 17.9 10,979 8,300 2,679 10,669 8,017 2,652 10,504 7,949 2,555 10,446 8,010 2,436 10,219 7,988 2,231 341 344 348 357 362 100 100 103 104 105 293 288 296 292 289 103 102 100 98 98 42 44 51 55 57 13 14 15 17 20 42 45 48 52 52 17.5 18.0 17.9 16.6 16.2 10,000 10,295 10,382 10,363 9,964 7,881 2,119 8,106 2,189 8,115 2,267 8,026 2,337 7,712 2,252 354 352 355 356 360 103 101 101 103 105 271 260 246 240 231 98 102 103 103 104 58 57 64 72 80 20 21 23 25 27 54 53 55 56 61 23,048 21,890 21,748 19,874 19,019 9,926 15.2 9,546 14.2 9,149 13.9 12.5 . 8,864 11.7 8,651 7,597 2,329 7,310 2,236 7,005 2,144 6,775 2,089 6,570 2,081 345 344 349 348 346 104 107 107 106 105 217 218 208 200 192 105 105 105 105 105 84 90 94 96 96 29 32 35 36 37 63 67 69 69 71 1955 1956 1957 1958 1959 19,078 18,712 17,656 17,128 16,592 11.5 11.1 10.3 9.8 9.3 8,381 7,852 7,600 7,503 7,342 6,345 5,900 5,660 5,521 5,390 2,036 1,952 1,940 1,982 1,952 340 324 324 324 324 105 103 101 100 102 185 174 162 156 151 105 102 102 100 101 97 98 97 97 98 39 41 41 43 49 72 75 74 79 84 1960 1961 1962 1963 1964 15,635 14,803 14,313 13,367 12,954 8.6 8.1 7.7 7.1 6.7 7,057 6,919 6,700 6,518 6,110 5,172 5,029 4,873 4,738 4,506 1,885 1,890 1,827 1,780 1,604 324 302 295 298 298 101 100 100 100 100 145 139 133 -129 122 100 100 100 100 100 97 94 94 93 93 49 53 58 65 71 84 88 90 90 92 1965 1966 1967 1968 1969 12,363 11,595 10,875 10,454 10,307 6.4 5.9 5.5 5.2 5.1 5,610 5,214 4,903 4,749 4,596 4,128 3,854 3,650 3,535 3,419 1,482 1,360 1,253 1,213 1,176 298 294 306 300 290 98 98 100 100 99 110 103 100 97 93 99 99 100 99 98 94 96 100 101 101 75 85 100 105 111 93 97 100 97 101 1970 1971 1972 1973 1974 9,712 9,425 9,610 9,472 9,264 4.7 4.5 4.6 4.5 4.3 4,523 3,348 4,436 3,275 4,373 3,228 4,337 3,169 4,389 3,075 1,175 1,161 1,146 1,168 1,314 293 305 294 321 328 100 100 100 101 100 89 86 82 80 78 101 99 98 97 95 100 102 101 105 109 115 124 131 136 140 104 111 113 116 107 4.1 3.8 3,026 2,997 2,863 2,689 2,501 1,317 1,377 1,307 1,268 1,273 336 337 344 337 349 100 103 105 105 108 76 73 71 67 66 96 97 99 97 96 113 116 120 126 130 127 145 154 161 184 101 110 112 115 120 2.7 3,705 2,402 1,303 2.5 ' (8) <8) (•) 352 367 106 106 65 64 96 97 128 127 174 175 119 120 1929 30,580 25.1 12,763 9,360 1933 32,393 25.8 12,739 9,874 2,865 1939 30,840 23.5 11,338 8,611 30,547 30,118 28,914 26,186 24,815 - 24,420 25,403 25,829 24,383 24,194 1940 1941 1942 1943 1944 ... 1945 1946 1947 1948 1949 1950 1951 1952 1953 1954 1975 1976 1977. 1978 1979 1980 1981 P. ., .. . .. 8,864 8,253 7 6,194 7 6,501 7 6,241 6,051 5,800 4,342 4,374 4,170 3,957 2.8 3,774 7 2.8 7 2.9 7 7 7 3,403 31 ^arm population as defined by Department of Agriculture and Department of Commerce, i.e., civilian population living on farms, regardless of occupation. See also footnote 7. 2 3 Total population of United States, including Armed Forces overseas. Data revised to incorporate results of the 1980 census. Includes persons doing farmwork on all farms. These data, published by the Department of Agriculture, differ from those on agricultural employment by the Department of Labor (see Table B-29) because of differences in the method of approach, in concepts of 4employment, and in time of month for which the data are collected. 6Acreage harvested plus acreages in fruits, tree nuts, and farm gardens. Fertilizer, lime, and pesticides. 6 Nonfarm constant dollar value of feed, seed, and livestock purchases. 7 Based on new definition of a farm. Under old definition of a farm, farm population (in thousands and as percent of total population) for 19/7, 1978, and 1979 is 7,806 and 3.5; 8,005 and 3.6; and 7,553 and 3.4, respectively. 6 Report discontinued. Sources: Department of Agriculture and Department of Commerce (Bureau of the Census). 341 TABLE B-97.—Indexes of prices received and prices paid by farmers, 1940-81 [1977 = 100] Prices received by farmers All Year or month farm products 1940 1941. ' . .',' . 1942. 1943. 1944 1945. 1946. .. 1947 1948. 1949 1950.. . 1951.. . .. 1952 1953 1954, 1955 1956 1957 1958 1959.. 1960 1961 ., 1962 1963.. 1964., .. 1965.. . 1966 1967.. . . 1968.. 1969.. . 1970... 1971 1972.. ., 1973.. 1974 1975 .... 1976 1977 1978 1979 1980 1981 1980: Jan. . Feb Mar Apr.. . May. . June July Aue Sept Oct. Nov Dec Crops Livestock and products All comrnodities, services, interest, taxes, and wage rates * Prices paid by farmers Production items Tractors and Fuels selfFertilTotal2 proand izer pelled energy machinery 22 27 35 42 43 45 52 60 63 55 56 66 63 56 54 51 50 51 55 53 52 53 53 53 52 54 58 55 56 59 21 25 34 43 46 47 53 61 59 52 54 61 62 55 56 53 54 52 52 51 51 52 54 55 55 53 55 52 52 50 23 29 36 41 41 44 50 60 65 56 58 70 64 56 52 49 47 51 57 53 53 52 53 51 49 54 60 57 60 67 18 19 22 25 26 28 30 35 38 36 37 41 42 40 40 40 40 42 43 43 44 44 45 45 45 47 49 49 51 53 60 62 69 98 105 101 102 100 115 132 134 138 52 56 60 91 117 105 102 100 105 116 125 134 67 67 77 104 94 98 101 100 124 147 144 142 55 58 62 71 81 89 95 100 108 123 138 150 21 22 26 28 30 30 33 39 43 41 42 47 47 44 44 43 43 44 46 46 46 46 47 47 47 48 50 50 50 52 54 57 61 73 83 91 97 100 108 125 138 148 130 131 128 123 125 127 135 140 141 142 145 145 115 115 115 113 117 118 125 130 132 133 141 143 144 146 141 133 133 136 144 150 150 150 149 148 132 134 136 135 135 137 138 139 141 142 143 143 144 144 143 143 142 142 142 137 133 130 130 128 144 144 145 143 142 138 138 129 120 119 121 122 145 144 141 143 141 146 146 145 146 140 138 133 147 148 149 150 150 150 150 151 151 150 150 150 "39" 40 42 44 47 37 37 41 44 44 45 45 50 55 56 54 57 59 59 59 58 57 58 58 57 57 58 58 57 57 57 56 55 52 48 49 51 54 58 68 82 91 100 109 122 136 152 48 50 52 56 92 120 102 100 100 108 134 144 49* 49 50 50 51 52 53 54 57 79 88 93 100 105 137 188 213 132 134 135 135 135 136 137 140 141 142 144 144 127 127 133 133 133 137 137 137 142 142 142 142 123 123 135 135 137 137 137 137 137 136 136 136 171 181 187 190 191 192 192 190 191 190 191 193 126 126 126 126 126 126 128 128 128 128 128 128 146 146 147 149 149 150 148 148 148 147 147 145 142 142 146 146 146 155 155 155 159 159 159 159 136 136 145 145 147 147 147 147 147 144 144 143 201 212 216 217 216 215 214 214 214 214 214 214 140 140 140 135 135 135 135 135 135 135 135 135 ."'.:.'.'/. ' 1981: Jan .... Feb ... Mar. Apr May June July Aug Sept Oct.... Nov Dec . . "". ".'.'. , Wage rates3 Addendum: Average farm real estate value per acre4 7 8 10 14 17 19 20 22 23 22 22 25 26 27 27 27 28 29 30 32 33 33 34 35 36 38 41 44 48 53 7 7 7 8 9 10 It 13 14 14 14 16 18 18 18 19 19 21 22 23 24 25 26 27 29 31 33 35 38 40 57 59 63 69 79 85 93 100 107 117 127 136 42 43 47 53 66 75 86 100 109 125 145 158 145 158 ' Includes items used for family living, not shown separately. 2 Includes other items not shown separately. 3 Seasonally adjusted; annual data are averages of seasonally adjusted data. 4 Average for 48 States. Annual data are for March 1 of each year through 1975 and for February 1 beginning 1976. Monthly data are for first of month. Source: Department of Agriculture, 342 TABLE B-98.—U.S. exports and imports of agricultural commodities, 1940-81 [Billions of dollars] mports Exports Year Food Feed Total » grains grains 2 1940 . . 1941 1942 0.5 1943 1944 , 1945 1946 1947 1948 1949 1950 1951 1952 1953 1954 12 2.1 2.1 . 2.3 3.1 40 .. . 4 4 4 4 4 () <o'{ .. . 1955 1956 1957 1958 1959 I960 1961 1962 1963. . 1964. . .. , .. . . . .3 .9 .3 .6 1.1 1.1 ,7 .5 .2 1.0 1.1 .9 .4 5 .5 .4 .6 .6 .6 .7 .8 1.0 1.0 12 .5 2.9 4.0 3.4 2.8 3.1 .2 3.2 4.2 4.5 3.9 4.0 .3 .4 .3 '.6 .6 1.0 1.0 .8 .9 4.8 5.0 5.0 5.6 6.3 .5 .5 .8 .8 .9 1.2 1.4 1.3 1.5 1.7 6.2 .2 1.1 1.4 2 '.2 2 .3 4 .5 1.0 .7 .4 .9 .6 1965 1966 1967 1968 1969 . . 6.9 6.4 6.3 6.0 1.3 1.1 .9 .9 1.8 1.5 1.4 1.2 1.2 1.3 1.3 1.3 .4 .5 .5 1970 1971. , . 1972 1973 .. 1974 7.3 7.7 94 17.7 22.0 1.1 1.0 15 3.5 46 1.4 1.3 18 4.7 54 1.9 2.2 24 4.3 57 .4 .6 1975 . .. . 1976 . 1977 1978 , . . . 1979 21.9 23.0 23.6 29.4 34.7 5.2 6.0 4.9 59 7.7 6.2 4.7 3.6 55 6.3 1980 1981 41.2 43.3 9.8 94 7.9 96 .. .2 .8 1.7 2.3 28 !i .1 "i .4 .4 4 !3 .3 '6 .4 .8 .7 1.1 .7 .6 .5 .9 .9 .7 1.1 1.5 ( 4 .5 3.1 2.9 .2 .3 .3 .2 .3 .3 .3 .5 4.0 5.2 4.5 4.2 4.0 .2 .4 .3 .4 .4 .3 .6 .2 .7 .5 .6 4.0 4.0 4.0 3.9 4.1 .4 .4 .4 .4 .4 .6 .6 .6 .7 .8 3.8 3.7 3.9 4.0 4.1 .2 .4 .8 .4 ,4 4.1 '.2 .2 .2 '.2 2 .3 .3 .3 .4 .3 -0.8 -1.0 =.1 .6 .3 4 4 4 4 4 <o* .8 1.2 .1 .7 1.1 1.4 1.4 1.5 1.5 .2 .2 .2 .2 .3 -1.1 -1.1 -1.1 -1.3 -.9 .5 .4 .5 .7 .8 1.4 1.4 1.4 1.2 1.1 .2 .2 .2 .2 .2 =.8 .2 .6 .6 .7 .9 .9 .8 1.0 1.0 1.0 1.0 1.2 .2 .2 .2 .2 .2 1.0 1.3 1.2 1.6 2.3 .9 1.1 1.1 1.0 1.2 .9 1,2 1.2 13 1.7 16 .1 2.1 2.4 1.9 1.3 1.1 1.5 1.9 29 9.3 118 1.7 2.9 4.2 4.0 4.2 4.2 2.9 .5 .6 1.0 1.4 1.2 '.5 .6 4.5 4.5 5.0 5.0 .4 .4 .5 1.2 1.1 1.3 1.4 .9 1.0 11 1.6 18 5.8 5.8 65 8.4 102 .5 .6 .9 13 .5 .5 7 .7 9 .8 8 1.6 1.5 18 2.6 22 4.5 5.1 6.6 82 8.9 1.0 1.0 1.5 17 2.2 .9 .9 1.1 14 1.2 1.7 2.4 2.7 3.0 3.8 9.3 11.0 13.4 148 16.7 .8 .9 1.2 15 2.1 1.8 2.3 2.3 31 3.9 9.4 96 2.9 23 1.3 15 3.8 4.2 17.4 168 2.1 26 3.8 35 1 Total includes items not shown separately. 2 Rice, wheat, and wheat flour. 3 includes nuts, fruits, and vegetable preparations. 4 0.1 '.2 AgriCocoa cultural beans trade and prod- balance ucts 2 .6 .7 .7 .7 .8 .5 Coffee 0.2 '5 .2 .4 3 .3 Crops, Anifruits, mals and and vege- prodtables 3 ucts o'l ( ) .2 .1 .4 .7 14 0.1 Total 1 1.3 1.7 13 1.5 1.8 ti.1 PI !i Animals and products 0.1 .3 .8 1.2 1.3 S3 .1 '.3 <4) Tobacco Cotton 0.2 .1 1 .2 .1 ft4 3.5 3.6 Oilseeds and products ,2 .1 .2 .2 .2 .3 .2 2 '5 .9 .9 .3 l'{ 12.6 12.0 10.2 14.6 18.0 23.8 265 Less than $50 million. Note.—Data derived from official estimates released by the Bureau of the Census, Department of Commerce. Agricultural commodities are defined as (1) nonrnarine food products and (2) other products of agriculture which have not passed through complex processes of manufacture. Export value, at U.S. port of exportation, is based on the selling price and includes inland freight, insurance, and other charges to the port. Import value, defined generally as the market value in the foreign country, excludes import duties, ocean freight, and marine insurance. Source.- Department of Agriculture. 343 TABLE B-99.—Balance sheet of the farming sector, 1929-82 [Billions of dollars] Claims Assets Financial assets Other physical assets Beginning of year Total Household DeposInvestLive- 1 MachinReal U.S. its in estate stock ery and Crops2 equipand savings ments ment coopermotor cur- bonds atives and vehicles furnish- rency ings ^ Total Real estate debt Other debt Proprietors' equities . 1929 48.0 6.6 3.2 9.8 1933 30.8 3.0 2.5 8.5 1939 34.1 5.1 3.2 53.0 54.8 62.9 736 844 33.6 34.4 37.5 416 48.2 5.1 5.3 7.1 96 9.7 3.1 3.3 4.0 4.9 5.4 2.7 3.0 3.9 5.1 6.1 4.2 4.1 4.8 4.8 4.7 3.2 3.5 4.2 5.5 6.6 0.3 .3 .5 1.1 2.2 0.8 .9 .9 1.0 1.1 53.0 54.8 62.9 73.6 84.0 6.6 6.5 6.4 6.0 5.4 3.4 3.9 4.1 3.9 3.5 43.0 44.4 52.4 63.7 75.1 93.8 102,9 115.9 127.4 134.6 53.9 61.0 68.5 73.7 76.6 9.0 9.7 11.9 13.2 14.4 6.5 5.4 5.3 7.4 10.1 6.7 6.3 7.1 9.0 8.5 5.2 5.5 7.2 8.1 8.9 7.9 9.4 10.2 9.9 9.6 3.4 4.2 4.2 4.4 4.6 1.2 1.4 1.5 1.7 1.9 93.8 102.9 115.9 127.4 134.6 4.9 4.7 4.9 5.1 5.3 3.4 3.2 3.5 4.1 6.1 85.5 95.0 107.4 118.1 123.2 1950. . . . 1951 1952 1953 1954 ,. 134.5 154.3 170.1 167.6 164.6 77.6 89.5 98.4 100.1 98.7 12.9 17.1 19.5 14.8 11.8 12.2 14.1 16.7 17.4 18.4 7.6 7.9 8.8 9.0 9.2 8.4 9.6 10.1 9.6 9.5 9.1 9.1 9.4 9.4 9.4 4.7 4.7 4,7 4.6 4.7 2.0 2.3 2.5 2.7 2.9 134.5 154.3 170.1 167.6 164.6 5.6 6.1 6.7 7.2 7.7 6.8 6.9 8.0 8.9 9.2 122.1 141.3 155.4 151.5 147.7 1955. 1956 1957. . . . 1958 . . .. 1959. 168.8 173.6 182.8 191.3 208.4 102.2 107.5 115.7 121.8 131.1 11.2 10.6 11.0 13.9 17.7 18.6 19.3 20.2 20.1 21.8 9.6 8.3 8.3 7.6 9.3 9.7 10.0 9.6 9.6 9.4 9.4 9.5 9.4 9.5 10.0 5.0 5.2 5.1 5.1 5.2 3.1 3.2 3.5 3.7 3.9 168.8 173.6 182.8 191.3 208,4 8,2 9,0 9.8 10.4 11.1 9.5 9.8 9.5 10.0 12.6 151.2 154.8 163.5 170.9 184.8 1960 1961 1962 1963 1964 210.2 210.8 219.3 227.7 235.8 137.2 1385 144.5 150.2 158.6 15.3 15.6 16.4 17.3 15.9 22.7 22.2 22.5 23.5 23.9 7.7 8.0 8.8 9.3 9.8 9.2 8.7 8.9 8.8 8.8 9.2 87 8.8 9.2 9.2 4.7 4.6 4.5 4.4 4.2 4.2 4.5 4.9 5,0 5,4 210.2 210.8 219.3 227.7 235.8 12.0 12.8 13.9 15.2 16.8 12.8 13.4 14.6 16.2 17.6 185.4 184.6 190.8 196.3 201.4 1965 1966 .. . . 1967 . . 1968. 1969 . . 243.8 260.8 274.2 288.0 302.8 167.5 179.2 189.1 199.7 209.2 14.5 17.6 19.0 18.9 20.2 24.8 26.0 27.4 29.8 31.3 9.2 9.7 10.0 9.6 10.6 8.4 8.4 8.3 8.8 9.4 9.6 10.0 10.3 10.9 11.5 4.2 4.0 3.9 3.8 3.8 5.6 5.9 6.2 6,5 6.8 243.8 260.8 274.2 288.0 302.8 18.9 21.2 23,1 25.1 27.4 17.9 19.5 20.9 22.3 23.1 207.0 220.1 230.1 240.6 252.3 1970. 1971 1972 1973 . . . 1974 314.9 326.0 351.8 394.8 478.5 215.8 223.2 239.6 267.3 327.7 23.5 23.7 27.3 34.1 42.4 32.3 34.4 36.6 39.3 44.2 10.9 10.7 11.8 14.5 22.1 9.6 10.0 10.8 11.9 12.3 11.9 12.4 13.2 14.0 14.9 3.7 3.6 3.7 4.0 4.1 7.2 8.0 8.8 9,7 10.8 314.9 326.0 351.8 394.8 478.5 29.2 30.3 32.2 35.8 41.3 23.8 24.2 26.9 29.5 32.8 261.9 271.5 292.7 329.5 404.4 503.8 576.3 664.0 737.1 872.9 359.8 418.2 496.4 554.6 655.1 24.5 29.4 29.0 31.9 51.3 54.7 64.0 71.0 76.9 85.1 23.3 21.3 22.1 24.8 28.0 12.6 12.8 13.7 15.5 18.0 14.0 14.5 14.8 15.2 15.5 3.8 3.9 3.9 3.9 4.2 11.0 12.2 13.1 14.3 15.7 503.8 576.3 664.0 737.1 872.9 46.3 51.1 56.5 63.7 70.8 35.5 39.8 46.1 55.6 65.3 421.9 485.5 561,4 617.8 736.8 1,004.4 1,090.3 1,176.5 756.2 828.7 894.5 61.4 60.9 63.0 96.7 102.3 109.5 33.5 36.4 42.8 19.4 22.0 23.7 15.9 16.2 16.6 4.0 3.8 3.9 17.3 20.0 22.0 1,004.4 1,090.3 1,176.5 82.7 92.0 103.4 75.2 82.6 91.1 846.5 915.7 982.1 1940.. . . 1941 . 1942 1943 1944 1945 1946. .. 1947 1948 1949 . .. . . . 1975 1976 3 1977 1978 1979. 1980 1981 . 1982 « . 6.8 ..j with 1961, horses and mules are excluded. 3Includes all crops held on farms and crops held off farms 4 Beginning 1977, data are for farms included in the new farm Forecast. Note, Beginning 1960, data include Alaska and Hawaii. Source: Department of Agriculture. by farmers as security for Commodity Credit Corporation loans. definition, that is, places with sales of $1,000 or more annually. 344 INTERNATIONAL STATISTICS TABLE B-100.—Exchange rates, 1967-81 [Cents per unit of foreign currency, except as noted] Year and month Belgian franc Canadian dollar French franc German mark Italian lira Japanese yen March 1973,, 2.5378 100.333 92.689 92.801 92.855 35.548 25.084 25.048 25.491 0.38190 2.0125 2.0026 1.9942 22.191 20.323 20.191 19.302 0.17604 1967 1968 1969 .16022 .16042 .15940 .27613 .27735 .27903 1970 1971 1972 1973 1974 2.0139 2.0598 2.2716 2.5761 2.5713 95.802 99.021 100.937 99.977 102.257 18.087 18.148 19.825 22.536 20.805 27.424 28.768 31.364 37.758 38.723 .15945 .16174 .17132 .17192 .15372 .27921 .28779 .32995 .36915 .34302 1975 1976 1977 1978 1979 2.7253 2.5921 2.7911 3.1809 3.4098 98.297 101.410 94.112 87.729 85.386 23.354 20.942 20.344 22.218 23.504 40.729 39.737 43.079 49.867 54.561 .15338 .12044 .11328 .11782 .12035 .33705 .33741 .37342 .47981 .45834 1980 . 1981 3.4247 2.7007 85.530 83.408 23.694 18.489 55.089 44.362 .11694 .08842 .44311 .45432 3.4768 3.4417 3.5164 3.2625 85.904 85.442 86.302 84.461 24.117 23.738 24.273 22.643 56.409 55.241 56.332 52.387 .12136 .11750 .11856 .11048 .41074 .43213 .45514 .47484 2.9633 2.6899 2.5157 2.6465 83.784 83.427 82.547 83.918 20.609 18.484 17.247 17.682 48.009 43.958 41.170 44.508 .09995 .08827 .08232 .08352 .48644 .45491 .43173 .44572 1980: 1 f| ill .... IV 1981: 1 II IN IV Netherlands guilder Swedish krona Swiss franc United Kingdom pound Multilateral trade-weighted value of the U.S. dollar (March 1973 = 100) Real 1 Nominal March 1973 34.834 1967 1968 1969 27.759 27.626 27.592 22.582 19.373 19.349 19.342 23.104 23.169 23.186 247.24 275.04 239.35 239.01 100.0 120.0 122.1 122.4 1970. 1971 1972 „ . 1973 1974 27.651 28.650 31.153 35.977 37.267 19.282 19.592 21.022 22.970 22.563 23.199 24.325 26.193 31.700 33.688 239.59 244.42 250.08 245.10 234.03 121.1 117.8 109.1 99.1 101.4 98.8 99.2 1975 1976 1977 1978 1979 39.632 37.846 40.752 46.284 49.843 24.141 22.957 22.383 22.139 23.323 38.743 40.013 41.714 56.283 60.121 222.16 180.48 174.49 191.84 212.24 98.5 105.6 103.3 92.4 88.1 93.9 97.3 93.1 84.2 83.2 1980 1981 50.369 40.191 23.647 19.860 59.697 51.025 232.58 202.43 87.4 102.9 84.8 100.7 51.228 50.274 51.680 48.295 23.698 23.533 24.088 23.269 60.123 59.398 61.247 58.050 225.26 228.24 238.16 238.55 87.4 87.8 85.4 89.0 84.2 85.3 82.9 86.8 43.864 39.567 37.057 40.500 21.976 20.520 18.866 18.096 52.817 49.097 47.756 54.726 230.96 207.92 183.62 188.22 94.5 103.1 110.1 105.3 92.3 100.3 108.1 102.2 1980: I II II!., . IV 1981: 1 .. || III IV 31.084 1 Adjusted by the consumer price index for all urban consumers. Source: Board of Governors of the Federal Reserve System. 345 100.0 TABLE B-101.—U.S. international transactions, 1946-81 [Millions of dollars; quarterly data seasonally adjusted, except as noted] Investment income 3 Merchandise » 2 Year or quarter Exports Imports Net Receipts Net Payments Remittances, Net (rave! Net pensions Balance on and Other onBalance military transporgoods and other current 4 services, and 1 4 unilateral transac- tation account ' net» services tions transfers ' receipts 4,885 8,992 2,417 873 1946 1947 1948 1949 11,764 16,097 13,265 12,213 -5,067 -5,973 -7,557 -6,874 6,697 10,124 5,708 5,339 772 1,102 1,921 1,831 -212 -245 -437 --476 560 857 1,484 1,355 =493 -455 -799 -621 733 946 374 230 310 145 175 208 7,807 11,617 6,942 6,511 1950 1951 1952 1953 1954 10,203 14,243 13,449 12,412 12,929 -9,081 -11,176 -10,838 -10,975 -10,353 1,122 3,067 2,611 1,437 2,576 2,068 2,633 2,751 2,736 2,929 -559 -583 -555 -624 -582 1,509 2,050 2,196 2,112 2,347 -576 -1,270 -2,054 -2,423 -2,460 = 120 298 83 =238 = 269 242 254 309 307 305 2,177 4,399 3,145 1,195 2,499 -4,017 -1,840 884 =3,515 614 =2,531 = 2,481 -1,286 -2,280 219 1955 1956" 1957 1958 1959.,. 14,424 -11,527 17,556 -12,803 19,562 "13,291 16,414 -12,952 16,458 -15,310 2,897 4,753 6,271 3,462 1,148 3,406 3,837 4,180 3,790 4,132 -676 -735 -796 -825 -1,061 2,730 3,102 3,384 2,965 3,071 -2,701 -2,788 -2,841 -3,135 -2,805 = 297 = 361 -189 -633 -821 299 447 482 486 573 2,928 5,153 7,107 3,145 1,166 -2,498 430 2,730 = 2,423 =2,345 4,762 = 2,361 784 -2,448 -1,282 1960 1961 1962 1963 1964 19,650 20,108 20,781 22,272 25,501 = 14,758 -14,537 -16,260 -17,048 -18,700 4,892 5,571 4,521 5,224 6,801 4,616 4,999 5,618 6,157 6,824 -1,237 -1,245 -1,324 -1,561 -1,784 579 3,379 -2,752 =964 3,754 =2,596 -978 594 4,294 = 2,449 -1,152 809 4,596 -2,304 -1,309 960 5,040 -2,133 -1,146 1,041 5,132 6,346 6,025 7,167 9,604 =2,308 = 2,524 -2,638 -2,754 ^2,781 2,824 3,822 3,387 4,414 6,823 1965 1966 1967 1968 1969. 26,461 29,310 30,666 33,626 36,414 =21,510 -25,493 -26,866 -32,991 -35,807 4,951 7,437 3,817 7,528 3,800 8,020 635 9,368 607 10,912 -2,088 -2,481 -2,747 -3,378 -4,869 5,349 -2,122 = 1,280 5,047 -2,935 = 1,331 5,273 -3,226 4,750 5,990 -3,143 -1,548 6,043 -3,328 -1,763 1,387 1,365 1,612 1,630 1,833 8,285 5,963 5,708 3,563 3,393 =2,854 = 2,932 --3,125 •=2,952 -2,994 5,432 3,031 2,583 611 399 1970... 1971 1972, . 1973, 1974... 2,603 11,747 42,469 -39,866 43,319 -45,579 = 2,260 12,707 49,381 -55,797 = 6,416 14,764 911 21,808 71,410 -70,499 98,306 = 103,649 -5,343 27,587 1975. 1976 1977 1978 1979 107,088 114,745 120,816 142,054 184,473 1980 223,966 -249,308 -25,342 75,936 1979: I j| III IV 1980: 1 II ill IV 1981: 1 II III". -98,041 = 124,051 = 151,689 = 175,813 = 211,819 9,047 -9,306 = 30,873 =33,759 -27,346 25,351 29,286 32,179 43,265 66,699 -2,922 -2,625 -4,525 -5,638 -5,516 6,231 = 3,354 - 5,436 7,271 = 2,893 -6,572 8,192 =3,420 -9,655 12,153 = 2,070 -12,084 15,503 -1,653 -2,038 -2,345 -3,063 -3,158 = 3,184 2,180 2,495 2,766 3,184 3,986 5,625 2,269 -1,941 11,021 9,309 =3,294 2,331 =3,701 -1,433 -3,854 =5,795 7,140 = 3,881 5 2,124 = 7,186 12,787 -746 15,975 559 1,528 17,962 21,400 738 33,463 -1,947 -2,792 -2,558 -3,293 -3,178 -2,622 4,598 4,711 5,182 5,792 5,460 22,893 9,382 -9,493 -9,008 7,008 ^4,613 18,280 - 4,998 4,384 -4,617 -14,110 -5,067 44,075 1,414 -5,593 -798 6,674 10,779 -.7,056 3,723 1,228 679 1,052 -189 = 12,564 = 13,311 = 14,217 =21,865 =33,236 =43,174 32,762 -2,515 -46,766 51 117 -54,210 - 59,726 =4,730 =7283 -6|974 -=8,359 14,111 15582 18',055 18,952 -7,351 —7948 -8>34 -9,203 6,760 7 634 9!321 9,749 -134 —324 = 565 -923 -678 — 677 =722 -545 1,322 1353 l',393 1,390 2,539 702 2,453 1,312 -1,311 = 1381 -l',401 -1,501 54,898 -65,024 55,667 -62,411 56,252 -59,154 57,149 -62,719 -10,126 =6,744 -2,902 -5,570 20,465 16,860 18,850 19,764 -10,629 = 10,342 -10,697 -11,507 9,836 6,518 8,153 8,257 -918 -427 -455 -715 -532 -152 -38 -76 1,523 1,592 1,719 1,838 -217 787 6,478 3,734 -1,878 = 2,095 -1,332 -545 -1,503 4,975 -2,344 1,390 -65,775 =4,677 21,566 -67,387 -6,910 22,399 - 65,079 =7,042 23,610 -12,513 -13,666 -14,120 9,053 8,733 9,490 ~568 -698 = 72 -668 1,650 =245 1,780 -66 1,684 4,790 2,660 3,994 -1,527 -1,518 -1,894 42,036 43834 47J236 51,367 61,098 60,477 58,037 1 Excludes 2 Adjusted a 3,263 1,142 2,100 military. from Census data for differences in valuation, coverage, and timing. Fees and royalties from U.S. direct investments abroad or from foreign direct investments in the United States are excluded from investment income and included in other services, net. 4 In concept, balance on goods and services is equal to net exports and imports in the national income and product accounts (and the sum of balance on current account and allocations of special drawing rights is equal to net foreign investment in the accounts), although the series differ because of different handling of certain items {gold, extraordinary military shipments, etc,), revisions, etc. (See next page for continuation of table,) 346 TABLE B-101.—U.S. international transactions, 1946-81—Continued [Millions of dollars; quarterly data seasonally adjusted, except as noted] U.S. assets abroad, net [increase/capital outf low (-)] Year or quarter Total 1946 1947.. . 1948 1949... . U.S. official Other U.S, Government reserve assets assets8 Foreign assets in the U.S., net [increase/capital inflow { + )] U.S. private assets Total Foreign official assets Other foreign assets Allocations of special drawing rights (SDRs) Statistical discrepancy Total (sum of the items with sign reversed) Of which: Seasonal adjustment discrepancy 623 -3,315 -1,736 -266 1950 1951 1952 1953 1954 Z'". .. .! 1955 1956 1957 1958 1959.. . . 1,758 -33 -415 1,256 480 •• 182 -869 -1,165 2,292 1,035 ... . -4,099 -5,538 -4,174 -7,270 -9,560 2,145 607 1,535 378 171 -1,100 -910 -1,085 -1,662 -1,680 -5,144 -5,235 -4,623 -5,986 -8,050 2,294 2,705 1,911 3,217 3,643 1,473 765 1,270 1,986 1,660 821 1,939 641 1,231 1,983 -1,124 -360 -907 -5,716 -7,321 -9,757 -10,977 -11,585 1,225 570 53 -870 -1,179 -1,605 -1,543 -2,423 -2,274 -2,200 -5,336 -6,347 -7,386 -7,833 -8,206 742 3,661 7,379 9,928 12,702 134 -672 3,451 -774 -1,301 607 4,333 3,928 10,703 14,002 -458 629 -205 438 -1,516 ZZZZ -9,337 -12,475 14497 -22,874 -34,745 2,481 2,349 -4 158 -1,467 -1,589 -1,884 -1,568 -2,644 5 366 -10,229 =-12,940 -12,925 -20,388 -33,643 6,359 22,970 21,461 18,388 34,241 6,908 26,879 10,475 6,026 10,546 -550 -3,909 10,986 12,362 23,696 -219 -9,779 -1,879 -2,654 -1,620 zzzz 1975 1976 .. 1977. 1978 1979 -39,703 -51,269 -34,785 -61,070 -62,639 -849 -2,558 -375 732 -1,133 -3,474 -4,214 -3,693 -4,644 -3,767 -35,380 -44,498 -30,717 -57,159 -57,739 15,670 36,518 51,218 63,748 38,946 7,027 17,693 36,816 33,561 -13,757 8,643 18,826 14,403 30,187 52,703 7,139" 5,753 10,367 -2,323 11,398 21,140 1980.... -84,776 -8,155 -5,165 -71,456 50,261 15,492 34,769 1,152 29,640 -8,057 -15,639 -24,942 -14,003 -3,585 322 2,779 -649 -1,093 -971 -778 -925 -3,379 -14,990 26943 12*429 2,259 7,007 24,345 5,335 = 8,688 =9,785 6,011 -1,295 10,948 16,792 18,334 6,630 1,139 3,430 9,309 =455 8,857 =42 1,165 -3,122 2,000 -12,639 24837 -19,302 -27,995 -3,268 502 -1,109 -4,279 -1,456 -1,187 -1,427 -1,094 -7,915 24152 -16,766 -22,622 7,509 7,232 11,651 23,870 -7,462 7,557 7,686 7,711 14,971 -326 3,965 16,158 1,152 6,073 18,151 2,676 2,736 -206 1,355 -3,291 2,139 -22,397 -21,971 -18,004 -4,529 -905 -4 -1,395 -1,485 -1,242 -16,473 -19,581 -16,758 7,140 12,888 15,056 5,503 -2,779 -5,847 1,637 15,667 20,903 1,093 10,901 7,941 848 -340 1,222 =2,592 1960 1961,. 1962 1963 1964 1965 1966 1967 1968 1969 ... . 1970 1971 1972 1973.. 1974 . .. . 1979: II .." Ill IV. .. 1980 if* Ill IV 1981 if..... lllp.. . . 6 9 -1,019 989 867 717 710 Includes extraordinary U.S. Government transactions with India. Consists of gold, special drawing rights, convertible currencies, and the U.S. reserve position in the International Monetary Fund (IMF). Note.—Quarterly data for U.S. official reserve assets and foreign assets in the United States are not seasonally adjusted. Source: Department of Commerce, Bureau of Economic Analysis. 347 TABLE B-102.—U,S. merchandise exports and imports by principal end-use category, 1965-81 [Millions of dollars; quarterly data seasonally adjusted] Exports Imports Nonagricuitural Nonpetroleum Year or quarter Total Agricultural Total Capital goods, except automotive Total Other goods Petroleum and products Total Industrial supplies and materials Other goods 1965 1966 1967 1968 1969 26,461 29,310 30,666 33626 36,414 6,305 6,949 6453 6297 6,096 20,156 22,361 24,213 27329 30,318 8,052 8,907 9,934 11 111 12,369 12,104 13,454 14,279 16218 17,949 21,510 25,493 26866 32*991 35,807 2,034 2,078 2,091 2384 2,649 19,476 23,415 24,775 30607 33458 9,123 10,235 9956 12,027 11 798 10,353 13,180 14,819 18580 2l'360 1970 1971 1972 19731 1974 42,469 43,319 49,381 71,410 98,306 7,374 7,831 9,513 17,978 22,412 35,095 35,488 39,868 53,432 75,894 14,659 15,372 16,914 21,999 30,878 20,436 20,116 22,954 31,433 45,016 39,866 45,579 55,797 70,499 103,649 2,927 3,650 4,650 8,415 26,609 36,939 41,929 51,147 62,084 77,040 12,416 13,794 16,308 19,634 27,819 24,523 28,135 34,839 42,450 49,221 1975 1976 1977 1978 1979 107,088 114,745 120,816 142,054 184,473 22,242 23,381 24,331 29,902 35,594 84,846 91,364 96,485 112,152 148,879 36,639 39,112 39,767 46,470 58,84