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Economic Report
of the President

Transmitted to the Congress
January 1987
TOGETHER WITH

THE ANNUAL REPORT
OF THE

COUNCIL OF ECONOMIC ADVISERS

UNITED STATES GOVERNMENT PRINTING OFFICE
WASHINGTON : 1987

For sale by the Superintendent of Documents, U.S. Government Printing Office
D.C. 20(02







C O N T E N T S
Page

ECONOMIC REPORT OF THE PRESIDENT

1

ANNUAL REPORT OF THE COUNCIL OF ECONOMIC
ADVISERS*

9

CHAPTER 1. GROWTH AND ADJUSTMENT IN THE UNITED STATES
ECONOMY

19

CHAPTER 2. BUDGET CONTROL AND TAX REFORM

65

CHAPTER 3. GROWTH, COMPETITIVENESS, AND THE TRADE DEFICIT.

97

CHAPTER 4. OPENING INTERNATIONAL MARKETS

125

CHAPTER 5. TOWARD AGRICULTURAL POLICY REFORM

147

CHAPTER 6. RISK AND RESPONSIBILITY

179

CHAPTER 7. WOMEN IN THE LABOR FORCE

209

APPENDIX A. REPORT TO THE PRESIDENT ON THE ACTIVITIES OF
THE COUNCIL OF ECONOMIC ADVISERS DURING 1986

227

APPENDIX B. STATISTICAL TABLES
EMPLOYMENT, AND PRODUCTION

237

RELATING TO INCOME,

*For a detailed table of contents of the Council's Report, see page 13.




Ill







ECONOMIC REPORT
OF THE PRESIDENT




ECONOMIC REPORT OF THE PRESIDENT
TO THE CONGRESS OF THE UNITED STATES:

For 6 years, my Administration has pursued policies to promote
sustained, noninflationary growth and greater opportunity for all
Americans. We have put in place policies that are in the long-term
best interest of the Nation, policies that rely on the inherent vigor of
our economy and its ability to allocate resources efficiently and generate economic growth. Taming the Federal Government's propensity to overtax, overspend, and overregulate has been a major element
of these policies.
THE CURRENT EXPANSION

Our market-oriented policies have paid off. The economic expansion is now in its fifth year, and the growth rate of the gross national
product, adjusted for inflation, should accelerate to 3.2 percent in
1987. By October, the current expansion will become the longest
peacetime expansion of the postwar era.
Since the beginning of this expansion, the economy has created
more than 12 million new jobs. In each of the past 2 years, the percentage of the working-age population with jobs was the highest on
record. Although I am encouraged by the fall in the overall unemployment rate to 6.6 percent in December 1986, I will not be satisfied until all Americans who want to work can find a job.
Our efforts to reduce taxes and inflation and to eliminate excessive
regulation have created a favorable climate for investing in new
plant and equipment. Business fixed investment set records as a
share of real gross national product in 1984 and 1985, and remains
high by historical standards.
Despite the economy's tremendous gains in employment and production, inflation has remained below or near 4 percent for the past
5 years and, in 1986, declined to its lowest rate in 25 years. Although
last year's low inflation rate in part reflected the substantial decline
in energy prices during 1986, we expect inflation in 1987 to continue
at the moderate pace experienced during the first 3 years of the expansion. The financial markets have acknowledged our progress in
reducing inflation from its double-digit levels, and interest rates declined during 1986, reaching their lowest levels in 9 years. To sustain
these developments, the Federal Reserve should continue to pursue




monetary and credit policies that serve the joint goals of growth and
price stability.
In short, since 1982, we have avoided the economic problems that
plagued our recent past—accelerating inflation, rising interest rates,
and severe recessions. Production and employment have grown significantly, while inflation has remained low and interest rates have
declined. This expansion already has achieved substantial progress
toward our long-term goals of sustainable economic growth and price
stability.
THE ECONOMIC ROLE OF GOVERNMENT

Government should play a limited role in the economy. The Federal Government should encourage a stable economy in which people
can make informed decisions. It should not make those decisions for
them, nor should it arbitrarily distort economic choices by the way it
taxes or regulates productive activity. It should not and cannot continue to spend excessively, abuse its power to tax, and borrow to live
beyond its means.
The Federal Government should provide certain goods and services, public in nature and national in scope, that private firms cannot
effectively provide—but it should not try to provide public goods and
services that State or local governments can provide more efficiently.
When government removes decisions from individuals and private
firms, incentives to produce become dulled and distorted; growth,
productivity, and employment suffer. Therefore, to the greatest
extent possible, the Federal Government should foster responsible
individual action and should rely on the initiative of the private
sector.
TAX REFORM

My 1984 State of the Union Message set tax reform as a national
priority. After more than 2 years of bipartisan effort, we achieved our
goal last fall when I signed into law the Tax Reform Act of 1986.
Tax reform broadens the personal and corporate income tax bases
and substantially reduces tax rates. These changes benefit Americans
in at least three ways.
First, by reducing marginal tax rates, tax reform enhances incentives to work, save, and invest. Second, by reducing disparities in tax
rates on income from alternative capital investments, tax reform encourages more efficient deployment of investment funds. Investment
decisions will now reflect the productive merits of an activity more
than its tax consequences, leading to a more efficient allocation of
resources, higher growth, and more jobs. Finally, tax reform makes
the tax system more equitable. The simpler, lower rate structure will




make compliance easier and tax avoidance less attractive. Americans
will know that everyone is now paying his or her fair share and is not
hiding income behind loopholes or in unproductive shelters. Tax
reform will especially benefit millions of working poor by removing
them from the Federal income tax rolls.
REMAINING CHALLENGES OF ECONOMIC POLICY

We have successfully reformed the tax code, controlled inflation,
and reduced government intervention in the economy. The result has
been an expansion of production and employment, now in its fifth
year, which we fully expect will continue with greater strength in
1987. Although much has been accomplished, we must and will address the remaining challenges confronting the economy. We must
continue to reduce the Federal budget deficit through spending restraint. We must reduce the trade deficit, while avoiding protectionism. We must strengthen America's productivity and competitiveness
in the world economy. And we must reform our costly, inefficient,
and unfair agricultural programs.
Control Federal Spending

For the first time since 1973, Federal spending in 1987 will fall in
real terms. As a result, the Federal budget deficit will decline from its
1986 level by nearly $50 billion. My budget for 1988 continues this
process by meeting the Gramm-Rudman-Hollings deficit target of
$108 billion.
Deficit reduction must continue and must be achieved by restraining the growth of Federal spending—not by raising taxes, which
would reduce growth and opportunity. Large and persistent Federal
deficits shift the burden of paying for current government spending
to future generations. Deficit reduction achieved through spending
restraint is essential if we are to preserve the substantial benefits of
tax rate reduction and tax code reform; it is also essential for reducing our international payments imbalances. Finally, spending on
many programs exceeds the amounts necessary to provide essential
Federal services in a cost-effective manner.
Besides exercising spending restraint, we must reform the budget
process to build a check on the Federal Government's power to overtax and overspend. I support a constitutional amendment providing
for a balanced peacetime budget, and I ask the Congress to give the
President the same power that 43 Governors have—the power to
veto individual line items in appropriations measures.
Maintain Free and Fair Trade

One of the principal challenges remaining for the U.S. economy is
to reduce our trade deficit. However, we cannot accomplish this, or




make American firms more competitive, by resorting to protectionism. Protectionism is antigrowth. It would make us less competitive,
not more. It would not create jobs. It would hurt most Americans in
the interest of helping a few. It would invite retaliation by our trading partners. In the long run, protectionism would trap us in those
areas of our economy where we are relatively weak, instead of allowing growth in areas where we are relatively strong.
We cannot gain from protectionism. But we can gain by working
steadfastly to eliminate unfair trading practices and to open markets
around the world. This year, I will continue to press to open foreign
markets and to oppose vigorously unfair trading practices wherever
they may exist. In addition, I will ask the Congress to renew the
President's negotiating authority for the Uruguay Round under the
General Agreement on Tariffs and Trade. These talks offer an important and promising opportunity to liberalize trade in areas critical
to the United States; trade in services, protection of intellectual
property rights, fair rules governing international investment, and
world trade in agricultural products.
More remains to be done to end our trade deficit. We must sustain
world economic growth, increase productivity, and restrain government spending. For U.S. exports to grow, the economies of our trading partners must grow. Therefore, it is essential that our trading
partners enact policies that will promote internally generated economic growth. At the Tokyo Economic Summit last year, the leaders
of the seven largest industrial countries continued efforts, begun at
the Versailles Economic Summit in 1982, to increase international
coordination of economic policies. We must also continue to encourage developing countries to adopt policy reforms to promote growth
and restore creditworthiness.
Here in the United States, we must restrain government spending.
Our trade deficit in goods and services reflects that, over the past
several years, we have spent more than we have produced—and we
have spent too much because of the profligacy of the Federal Government. As the Congress reviews my proposed 1988 budget, it
should remember that a vote for more government spending is a
vote against correcting our trade deficit.
Strengthen Productivity and Competitiveness

We must work to improve our international competitiveness
through greater productivity growth. The depreciation of the dollar
since early 1985 has done much to restore our competitiveness.
However, we do not want to rely on exchange-rate movements alone.
Productivity growth provides the means by which we can strengthen
our competitiveness while increasing income and opportunity. Since




1981, U.S. manufacturing productivity has grown at a rate 46 percent
faster than the postwar average. This is a solid accomplishment, but
still more remains to be done. We must encourage continued
productivity growth in manufacturing and in other sectors of our
economy.
One way to strengthen our global competitiveness is to free American producers from unnecessary regulation. My Administration has
sought to deregulate industries in which increased competition will
provide greater benefits to consumers and producers. It has also
streamlined the Federal Government's regulatory structure. Americans have benefited significantly from the deregulation of airlines, financial services, railroads, and trucking. I will resist any attempt to
reregulate these industries. Our economy will benefit further if we
eliminate natural gas price controls, remaining trucking regulations,
and unnecessary labor market restrictions. Also, without compromising the Nation's air quality, we should eliminate the bias that exists in
current air pollution regulations against cleaner and more efficient
new factories and power facilities. Where regulation is necessary, its
costs should be balanced against its benefits to ensure that regulatory
efforts are applied where they do the most good and to avoid placing
American firms at a competitive disadvantage in the world marketplace.
Privatization shifts the production of goods and services from government ownership to the private sector. Privatization can also improve American competitiveness because private firms can produce
better quality goods and services, and deliver them to consumers at
lower cost, than can government. For these reasons, Americans benefit when government steps aside. Like deregulation and federalism,
privatization embodies my Administration's belief that the Federal
Government should minimize its interference in the marketplace and
in local governance. We must return more government activities to
the competitive marketplace by selling or transferring governmentowned businesses. In 1986, the Congress authorized the Department
of Transportation to sell Conrail in a public offering, which we hope
will take place this year. Other businesses suitable for privatization
include the Naval Petroleum Reserves, the Alaska Power Administration, and Amtrak.
Reform Agricultural Policies

Another high priority in 1987 must be to reform our agricultural
programs. Besides costing taxpayers $34 billion this year alone, these
programs divert land, labor, and other resources from their most
productive uses. Most farm programs are costly and unfair because
they give literally millions of dollars to relatively few individuals and




corporations while many family farmers—who are those most often in
need—receive little. In the process, farm programs raise the prices of
many food items for all Americans, rich and poor.
Farm income support should not be linked to production through
direct subsidies or propped-up prices for agricultural products. My
Administration will seek a market-oriented reform package with two
goals: gradually separating farm income support from farm production, and focusing that income support on those family farmers who
need it most.
CONCLUSION
The economic policies of my Administration have created greater
economic freedom and opportunity for men and women, private
firms, and State and local governments to pursue their own interests
and make their own decisions. These policies have produced a sustained economic expansion with low inflation, lower tax rates and a
simpler tax code, the unshackling of industries from regulation, a
surge in investment spending, and more than 12 million new jobs.
The American people demand a sound, productive, growing economy. Therefore, I shall continue to pursue policies to encourage
growth, reduce the Federal budget deficit, correct the trade deficit, and
strengthen the competitiveness of American producers. The American
people will not tolerate a replay of the failed economic policies of the
past. Therefore, I shall resist proposals to adopt any economic policy
that abandons the accomplishments of tax reform, stymies growth,
fuels inflation, perpetuates needless government interference in the
marketplace, or fosters protectionism. With the help and cooperation
of the Congress, we can sustain and strengthen the current economic
expansion, and preserve and extend the economic achievements of the
past 6 years.

(j \ cnAJ^aA. \ CjL-tKjQ^-v
January 29, 1987







THE ANNUAL REPORT
OF THE
COUNCIL OF ECONOMIC ADVISERS




LETTER OF TRANSMITTAL
COUNCIL OF ECONOMIC ADVISERS,
Washington, D.C.January 23, 1987.
MR. PRESIDENT:
The Council of Economic Advisers herewith submits its 1987
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,




Beryl W. Sprinkel
Chairman

Thomas Gale Moore
Member

Michael L. Mussa
Member

11




C O N T E N T S
Page

CHAPTER 1. GROWTH AND ADJUSTMENT IN THE UNITED STATES
ECONOMY
Overview of the Report
The Macroeconomic Setting
Fiscal Policy
International Imbalances
Free and Fair Trade
Reform of Agricultural Policies
Risk, Regulation, and Safety
Women in the Labor Force
The U.S. Economy in 1986
Components of Demand
The Oil Price Decline
Sectoral Performance
Regional Developments
This Expansion in the Postwar Context
Relative Prices and Structural Change
Relative Farm Product Prices
Relative Import and Export Prices
Relative Capital Goods Prices
Effects of Relative Price Changes
Real Interest Rates, Net Worth, and Saving
The Behavior of Real Interest Rates
Real Asset Values and Net Worth
Debt and Saving
Productivity Growth and Real Per Capita GNP
Labor Productivity Growth
Sectoral Productivity Performance
Prospects and Policies for Productivity Growth
Economic Policies and Outlook
Financial Deregulation, Velocity, and Monetary Policy.
The Macroeconomic Effects of Deficit Reduction
Economic Forecast for 1987
Economic Projections 1988-92
Underlying Trends in Economic Growth
Conclusion




13

19
19
20
21
21
22
23
23
23
24
24
25
26
27
29
31
31
32
33
34
35
36
41
43
45
46
47
48
50
50
56
57
60
62
63

Page

CHAPTER 2. BUDGET CONTROL AND TAX REFORM
Spending Restraint and Deficit Reduction
Reasons for Deficit Reduction
Growth of the Federal Budget Deficit
Prospects for Deficit Reduction
Proposals for Spending Reductions
Other Revenue Measures
Budget Concepts and Fiscal Authority
Tax Reform
Overview
The Conditions Leading to Tax Reform
Marginal Tax Rates and Economic Efficiency
A Microeconomic Analysis of the Tax Reform Act
TRA's Effect on Long-Run Economic Growth
The Short-Run Macroeconomic Effects of TRA
Summary
Conclusion
CHAPTER 3. GROWTH, COMPETITIVENESS, AND THE TRADE DEFICIT
The Macroeconomic Character of the U.S. Payments Position
Economic Growth and the Trade Deficit
Foreign Industrial Countries
Developing Countries
Growth and the Trade Deficit
The Saving-Investment Balance
The Private Saving-Investment Balance
The Government Deficit
International Capital Flows
Exchange Rates and Competitiveness
Sources of Real Exchange-Rate Movements
Productivity and Competitiveness
Policy Coordination and Exchange-Rate Stability
Current Requirements for Policy Coordination
CHAPTER 4. OPENING INTERNATIONAL MARKETS
The Case for Free Trade
Sectoral Market Opening Initiatives
Section 301 Actions
Market-Oriented, Sector-Selective Talks
Reciprocal Market Opening Initiatives
Free-Trade Area Negotiations
The New GATT Round
Administration Aims in the New GAIT Round
Conclusion




14

65
66
66
69
70
72
73
74
79
79
79
82
83
90
93
95
96
97

98
101
103
105
106
107
108
109
Ill
113
113
116
119
120
125
127
131
131
136
136
137
139
140
145

Page

CHAPTER 5. TOWARD AGRICULTURAL POLICY REFORM
Changes in U.S. Agriculture
Market, Government, and Resource Risk
The Structure of American Farms
Current Agricultural Policy: Problems and Outlook
Financial Stress and Economic Waste
Promising Developments
Global Distortions in Agriculture
International Costs of Agricultural Policies
Export-Market Responsiveness
Reform of U.S. Agricultural Policy
Supply Management Bias
A Coherent Long-Term Agricultural Policy
Conclusion
CHAPTER 6. RISK AND RESPONSIBILITY
Protection Against Risk
Government Management of Risk
Personal Responsibility
Smoking: The Greatest Avoidable Risk
Automobile Safety
The Tort System
The "Liability Crisis"
Tort Reform
Consumer Products and the Workplace
Consumer Product Safety
The Regulation of New Drugs
Occupational Safety
Environmental Risk
Control of Air and Water Pollution

Control of Environmental Risks
Conclusion
CHAPTER 7. WOMEN IN THE LABOR FORCE
Employment
Unemployment
Home Work Versus Market Work
Occupational Choice
Occupational Distributions
Earnings Differential
Trends in the Pay Gap
Conclusion
APPENDIXES
A. Report to the President on the Activities of the Council
of Economic Advisers During 1986
B. Statistical Tables Relating to Income, Employment,
and Production




15

147
147
149
151
152
157
160
163
168
170
170
173
174
177
179
181
182
184
184
187
190
191
192
192
192
194
195
201
201

202
207
209
210
212
213
217
218
220
221
225
227
237

List of Tables and Charts
Tables
1-1.
1-2.
1-3.
1-4.
1-5.
1-6.
2-1.

Real Household Assets and Liabilities, 1965-86
GNP, Productivity, and Employment Measures, 1948-86
Labor Productivity Growth Rates by Sector, 1948-86
Economic Outlook for 1987
Administration Economic Assumptions, 1987-92
Accounting for Growth in Real GNP, 1948-92
Marginal Personal Income Tax Rates for Four-Person
. Families, Selected Years, 1965-88
2-2. Effects of the Tax Reform Act of 1986 on Federal Tax Liabilities and Average Federal Tax Rates, by Income
Class, 1988
2-3. Percent Change in Cost of Capital under the Tax
Reform Act of 1986
2-4. Within-Sector and Between-Sector Variation in the Cost
of Capital
2-5. The Cost of Capital under the Tax Reform Act of 1986
for an 8-Percent Inflation Rate: Percent Change from
Case of 3-Percent Inflation
2-6. Average Marginal Tax Rates on Labor Income, Capital
Income, and Output
2-7. The Long-Run Simulated Effect of the Tax Reform Act
of 1986
3-1. U.S. Trade in Manufactures, 1982 and 1985
3-2. U.S. Exports and Imports of Goods and Services, 198086
3-3. Growth in Real Domestic Demand and Real GNP in
Major Industrial Countries, 1970-86
3-4. Real GNP Growth in Developing Countries
3-5. Private Saving and Investment
3-6. National Saving, Investment, and Net Capital Inflow
3-7. U.S. and Foreign Unit Labor Costs, 1980-85
4-1. Summary of Cases under Section 301
5-1. Direct Government Payments for 1986 Agricultural Programs
5-2. Annual Gains and Losses from Income-Support Programs under the 1985 Food Security Act and Trade
Restrictions
5-3. Sources of Producer Support Equivalents for Selected
Countries and Major Commodities, 1982-84
5-4. Who Bore the Cost of Support to Producers, 1982-84 ...
6-1. Estimated Risks of Various Activities




16

42
45
46
58
61
62
80

85
87
89

90
91
92
100
101

104
105
108
112
118
132
157

159
164
167
184

List of Tables and Charts—Continued
Tables

7-1. Labor Force Participation Rates of Women, by Age,
1890-1986
7-2. Labor Force Participation Rates of Women by Age of
Youngest Child, March of Selected Years, 1970-86
7-3. Young Women's Work Expectations for Age 35: Trends
and Current Participation Rates
7-4. Percent Female in Selected Occupations, 1970, 1980,
and 1986
7-5. Earnings of Females as Percent of Earnings of Males, by
Age, 1979, 1982, and 1985

211
211
215

219
222

Charts

1-1.
1-2.
1-3.
1-4.
1-5.
1-6.
2-1.
2-2.
3-1.
3-2.
3-3.
3-4.
5-1.
5-2.
5-3.
5-4.
5-5.
6-1.
6-2.
6-3.
7-1.
7-2.
7-3.
7-4.

Manufacturing Shares in Real GDP and Employment
Nonfarm Payroll Employment by State
Relative Price Movements
Proxy Measure of Real Long-Term Interest Rates
Ex Ante Real Long-Term Interest Rates
Velocity of Ml
Federal Outlays and Receipts as Percent of GNP
Federal Outlays as Percent of GNP
U.S. Trade and Current Account Balances
Real Domestic Demand in Selected Industrial Countries
Private Saving-Investment Balance, Government Deficit,
and Current Account Balance
Real Exchange Rate and Relative Price of Imports
Corn: Target Price, Loan Rate, and Market Price
Average Direct Government Payments per Farm by
Sales Class, 1985
Distribution of Financially Distressed Farms by Sales
Class
Carryover Stocks of Coarse Grains and Wheat
Shares of Total U.S. Consumption of Sweeteners
Rates of Accidental Deaths by Cause
Rates of Home and Work Deaths Due to Accidents
Motor Vehicle Deaths as Percent of Total Work Deaths .
Women's Real Annual Earnings
Percent of Earned Degrees Received by Women
Ratio of Female to Male Earnings for Full-time Workers
Ratio of Black and Other Women's Earnings to White
Women's Earnings




17

27
28
32
37
39
52
67
70
99
102
110
114
154
156
158
160
166
180
181
200
214
216
221
224




CHAPTER 1

Growth and Adjustment
in the United States Economy
THE UNITED STATES ECONOMY is in the fifth year of the current expansion, and an acceleration of real growth with continued
moderate inflation is projected for 1987 and beyond. While the pace
of economic growth remained moderate in 1986, expansion proceeded on a broad front. Real gross national product (GNP) rose by 2.2
percent during the year, with output expanding in most sectors. Due
in large part to a sharp decline in energy prices, inflation fell to the
lowest rate in more than two decades. Rising real personal income
and significantly lower interest rates contributed to strong growth of
consumption and of residential investment. Despite a decline in business fixed investment and further deterioration of the trade balance,
the unemployment rate fell to 6.6 percent and total employment
grew by more than 2Va million persons. In each year of this expansion, more jobs were created in the United States than in the combined
economies of the next six largest industrial democracies.
More than 4 years of economic expansion, with the inflation rate
remaining near or below 4 percent and interest rates declining to
their lowest levels in 9 years, have laid the foundation for sustainable
real growth with moderate inflation. The problems that remain in the
U.S. economy are primarily sectoral and structural: the Federal Government controls too much of the Nation's resources; a large trade
deficit adversely affects many trade-sensitive industries and encourages protectionist sentiment; the domestic oil and gas industry and
local areas heavily dependent on it are suffering the consequences of
the decline in world oil prices; conditions remain depressed in much
of American agriculture; and excessive and inappropriate regulation
continues to burden business and consumers.
OVERVIEW OF THE REPORT
This Report analyzes the structural and sectoral problems that
remain in the U.S. economy. It assesses policies to deal with these
problems, while maintaining a sustainable rate of overall growth and




19

making continued progress in moderating inflation. This chapter
begins with a summary of the Report.
THE MACROECONOMIC SETTING

The broad economic forces that shape the overall performance of
the U.S. economy and of its major sectors are the focus of Chapter 1.
This chapter first reviews the main economic developments of 1986
in the context of the current expansion and in comparison with past
expansions and with economic performance in other countries. This
leads to an examination of the main forces that have influenced the
performance and current problems of important sectors of the U.S.
economy.
Wide swings in relative product prices are among these forces. The
oil and gas industry and agriculture benefited from increases in the
relative prices of their products in the 1970s, and have suffered as
these relative prices declined in the 1980s. The problems of many
trade-sensitive industries are directly related to the 28 percent decline in the relative price of imports between 1980 and 1986 and to
the downward pressure of a strong dollar on the relative price of
U.S. exports. On the positive side, lower relative prices of oil, agricultural products, and imports have benefited consumers. Also, a declining relative price of capital goods during this expansion has permitted strong growth of real investment without a corresponding
drain on national saving.
Another critical factor influencing sectoral problems and structural
change is the wide swing in real interest rates and real asset values
that occurred in the 1970s and 1980s. During the period of rising inflation in the 1970s, real interest rates—the difference between nominal interest rates and anticipated inflation rates—were low and sometimes even negative. Borrowers benefited from low real borrowing
costs and real values of tangible assets rose, while holders of fixedinterest rate instruments and equities experienced real capital losses.
As often happens during periods of disinflation, during the 1980s real
interest rates have been high by postwar standards. Borrowers have
often suffered, while holders of financial assets including equities have
enjoyed large gains that have contributed to substantial increases in
real household net worth.
Differential productivity growth also drives important structural
changes. Since 1981, productivity growth in manufacturing has accelerated above the postwar trend, while productivity growth in the
service sector has remained sluggish. These differential rates of productivity growth, together with the relative constancy of the share of
manufacturing output in real GNP, have induced a decline in the




20

share of manufacturing in total employment—a development that
might be less decried if its underlying causes were better understood.
Advancing technology and wide swings in interest rates and inflation rates, together with financial deregulation, have contributed to
structural change in the banking and financial services industry and
to instability in the relationship between money growth and nominal
income growth. This instability has complicated the conduct of monetary policy in its dual tasks of restraining inflation and avoiding disruption of real economic growth.
The prospect of gradual resolution of the economy's structural and
sectoral problems contributes to the forecast of stronger economic
growth discussed at the end of this chapter. The growth rate of real
GNP is projected to increase to 3.2 percent in 1987 and somewhat
higher in 1988-89. Because of the wearing off of the temporary, inflation-reducing effects of the decline in oil prices and the delayed
effects of dollar depreciation on import prices, the inflation rate is
projected to rise moderately in 1987. Subsequently, the inflation rate
should resume its decline, provided that the Federal Reserve continues to manage monetary policy in a manner consistent with sustainable real economic growth and with gradual reduction of the inflation rate toward the long-run goal of price stability.
FISCAL POLICY

Chapter 2 examines two elements of fiscal policy, budget control
and tax reform, that influence both the sectoral and overall performance of the U.S. economy. Better control of the Federal budget is required to reduce the Federal deficit, primarily by reducing the share
of Federal spending in GNP. Realization of the long-run benefits of
the Tax Reform Act of 1986 is one of the many important reasons
for pursuing this approach to deficit reduction. This Act improves
overall incentives for economic activity and reduces disparities in
rates of taxation on different forms of economic activity. In the long
run, after the transition problems of some sectors are resolved, this
Act is estimated to increase net national product by approximately 2
percent. Evaluated at current levels of national income and product,
this implies approximately a $600 gain in the annual income of the
average American family, without any loss of Federal revenue.
INTERNATIONAL IMBALANCES

Chapter 3 demonstrates that the large U.S. trade deficit is primarily a
macroeconomic phenomenon. This phenomenon is fundamentally
related to the rapid growth of domestic demand in the United States
relative to the growth of U.S. output and relative to demand and
output growth in the rest of the world. It is also related to the




21

appreciation of the U.S. dollar between 1980 and 1985, which reduced the international competitiveness of U.S.-produced goods and
services. And it is related to the deterioration of the U.S. national
saving-investment balance, which reflects not abnormal behavior of
the private saving-investment balance, but rather the persistence of a
large Federal deficit late into the current expansion.
Stronger internally generated growth in other industrial countries,
reduction of the Federal deficit through spending restraint, and
policy reforms that encourage growth and restore credit worthiness
in developing countries are critical elements in the global strategy to
reduce international trade imbalances. Stronger internally generated
growth in foreign countries is essential to maintain satisfactory rates
of real growth in the world economy. This is especially important
during a period when the growth of domestic demand is slowing in
the United States and when improvements in the relative competitive
position of U.S. tradable goods industries are shifting world demand
toward U.S. products. International coordination of economic policies, especially among the leading industrial countries, can help to
ensure that payments imbalances decline in an environment of greater exchange-rate stability and sustainable, noninflationary growth in
the world economy.
FREE AND FAIR TRADE

Protectionism is a false solution to the U.S. trade imbalance. However justified are the claims of unfair trade practices by other countries, the massive deterioration of the U.S. trade balance clearly has
not occurred primarily because foreign trade practices have become
vastly more unfair. Moreover, starting a world trade war by resorting
to protectionism would be especially imprudent at a time when the
improving competitiveness of U.S. industries appears likely to bring
significant expansion of U.S. exports.
As is discussed in Chapter 4, the Administration's policy of free
and fair trade is to avoid protectionism at home while opening markets to U.S. products abroad. This policy fits well with the broader
strategy of reversing the tide of macroeconomic forces principally responsible for the deterioration of the U.S. trade balance. Administration efforts to improve market access have brought significant results
in bilateral negotiations with Japan on sector-specific trade problems
and in cases initiated by the Administration against unfair foreign
trade practices under Section 301 of the Trade Act of 1974.
Major initiatives to extend the Administration's trade policy include bilateral discussions with Canada to move toward a free-trade
area and the new round of multilateral trade negotiations under the
General Agreement on Tariffs and Trade (GATT). The agreed pur-




22

pose of the new GATT round is to secure a standstill or rollback of
existing protectionist policies, to improve GATT procedures for enforcing fair rules of international trade, and, most importantly, to enhance or extend GATT rules in areas of critical interest to the
United States: trade in services, protection of intellectual property
rights, rules governing international investment, and trade in agricultural products.
REFORM OF AGRICULTURAL POLICIES

The problems of U.S. agriculture are the focus of Chapter 5. Government policies have directly or indirectly subsidized agricultural
production in the United States and in many other industrial countries. These policies have stimulated excess production that has depressed agricultural product prices in world markets. Government
intervention has wasted resources by encouraging farmers to incur
costs in order to produce commodities for which only the government provides a market. Much of the money spent on agricultural
support programs has been dissipated in outright waste or delivered
to owners of large farms that invariably receive the largest subsidy
payments.
The solution is to reform agricultural programs by gradually decoupling farm income support from farm production and linking it to
financial need. Simultaneous reform of agricultural policies in the
United States, the European Community, and Japan would reduce
the economic waste and budgetary cost of agricultural support programs for all countries.
RISK, REGULATION, AND SAFETY

Regulation is another mechanism through which the government
influences the performance of different sectors of the economy and
broader aspects of individual behavior. Chapter 6 discusses examples
of excessive and inappropriate regulations that unduly limit individual choice, raise costs, and discourage economic activity. In some
cases, regulations even work against their intended purposes. Rigid
rules, such as some designed to reduce workplace hazards, can
reduce production and employment opportunities without a corresponding gain in occupational safety. In this and other areas where
government intervention may be indicated, the costs of regulations
should be weighed against their likely benefits. Reliance on personal
responsibility and market incentives often provides the best methods
for reducing risk.
WOMEN IN THE LABOR FORCE

The final chapter of this Report examines one of the most important structural changes in the U.S. economy—increasing participation




23

of women in the labor force. Over the past decade, women have accounted for 62 percent of total labor force growth. Increasing labor
force participation of women has not led to large increases in unemployment rates for either men or women, and has made an important
contribution to growth of real per capita income. Because many
women now plan longer careers and acquire the requisite education,
experience and skills, wages of women relative to those of men have
been rising in the 1980s. These developments testify to the flexibility
of U.S. labor markets and to the capacity of the market-oriented U.S.
economy to generate productive and rewarding jobs for an expanding labor force.
THE U.S. ECONOMY IN 1986
Economic growth proceeded at a moderate pace in 1986, while significant declines were recorded in both the inflation rate and interest
rates. Between the fourth quarter of 1985 and the fourth quarter of
1986 (preliminary estimate), real GNP rose by 2.2 percent. While the
unemployment rate declined by only 0.3 of a percentage point
during the year and remained relatively high by postwar standards,
the employment-population ratio for persons over 16 years of age
reached a new postwar peak of 61.3 percent at the end of 1986.
Given the impact of declining oil prices, the inflation rate, measured
by the consumer price index (CPI), turned negative in the first quarter. Over the entire year, the CPI rose by only 1.1 percent, the lowest
inflation rate in more than 20 years. Nominal interest rates fell sharply early in the year and by yearend were near their lowest levels for
the year and since 1977.
COMPONENTS OF DEMAND

On the demand side, real GNP may be decomposed into real consumption spending, real investment spending, real government
spending, and real net exports. Strong growth of real consumption
spending was the driving force behind demand growth for most of
1986. Real consumption spending rose at a 4.0 percent annual rate
in 1986, fourth quarter to fourth quarter.
After rising nearly $14 billion in the fourth quarter of 1985, real
nonresidential fixed investment declined by $19 billion in the first
quarter of 1986 and then fell an additional $6.8 billion in the next
three quarters. Real residential investment grew strongly, recording a
9.8 percent increase during the year. The continuing congressional
debate over tax reform and final passage of the Tax Reform Act of
1986, together with the effect of lower oil prices on the domestic
energy industry, apparently affected the pace and pattern of invest-




24

ment spending in 1986. Anticipated repeal of the investment tax
credit, with an effective date of January 1, 1986, may have contributed to the sharp rise in real nonresidential fixed investment in the
fourth quarter of 1985 and to its decline in the first quarter of 1986.
The likelihood of an increase in business taxes and uncertainty about
the final shape of tax reform may have helped to depress this category of real investment spending for the remainder of 1986. Lower
mortgage interest rates contributed to strong growth of residential
investment during 1986.
Real purchases by State and local governments grew 4.6 percent
during 1986. Real Federal purchases followed a somewhat erratic
path primarily because of fluctuations in defense purchases and purchases by the Commodity Credit Corporation, and ended the year
1.8 percent above their level in the fourth quarter of 1985. Overall,
growth of real government purchases contributed 0.7 percent to real
GNP growth in 1986.
Real net exports of goods and services improved by $6.1 billion in
the first quarter of 1986, and then declined by $28 billion in the
second quarter and by a further $9.4 billion in the third quarter,
before recovering by $7.7 billion in the fourth quarter. Net exports
in nominal terms showed much less deterioration during 1986 than
real net exports. Specifically, between the fourth quarter of 1985 and
the third quarter of 1986, real net exports declined by $31.3 billion
of 1982 dollars, while nominal net exports declined by only $3.6 billion of current dollars. The reason for this difference is the low relative price of imports and the further decline in this relative price
during 1986, attributable primarily to the decline in the price of imported oil.
THE OIL PRICE DECLINE

Probably the most important special factor affecting the U.S. economy in 1986 was the sharp drop in world oil prices, which was
promptly reflected in domestic oil prices. Between November 1985
and April 1986, the spot price of West Texas Crude fell from $30.90
to $13.75 per barrel. A further $2.45 per barrel decline in domestic
oil prices occurred between April and July, before prices recovered
to $17.60 per barrel in December. The sharp decline in oil prices
had pronounced adverse effects on the domestic oil and gas industry.
Real investment in this industry declined by more than $10 billion in
the first half of 1986, accounting for more than half of the decline in
real business fixed investment. Employment in the domestic oil and
gas industry fell by nearly 150,000, mainly in the first half. Further
employment losses occurred in regions heavily dependent on the oil
and gas industry.




25

For the rest of the economy, the decline in oil and gas prices had
important beneficial effects. The CPI fell at an annual rate of 4.3 percent between January and April, the first significant decline in this
index since 1954. The decline in consumer prices was clearly attributable to lower oil and gas prices, because the CPI excluding energy
rose at an annual rate of 2.9 percent between January and April. The
decline in consumer prices contributed to strong gains in real disposable personal income that, in turn, fueled the strong growth of consumer spending, which was the mainstay of overall economic growth.
The fall in oil prices, inflation, and inflationary expectations also
played a critical role in the sharp decline in nominal interest rates.
Interest rates on 10-year Treasury securities fell from 9.26 percent in
December 1985 to 7.30 percent in April 1986, and declined a further
19 basis points by yearend. Interest rates on 91-day Treasury bills
fell somewhat less, moving down from 7.10 percent in December
1985 to 6.06 percent by April 1986 and to 5.53 percent by yearend.
The sharp decline of interest rates spread rapidly to mortgage interest rates.
Assuming no further substantial change in domestic oil prices,
most of the negative effects of lower oil prices have probably been
absorbed, while the beneficial effects are yet to be fully realized.
Lower energy costs will contribute to lower production costs in many
important domestic industries. Productivity growth may be enhanced
in the long run as firms adopt more efficient energy-using technologies, partially reversing the adverse productivity effects of higher
energy prices in the 1970s.
SECTORAL PERFORMANCE

The effects of economic advance were widespread across industries
and regions. Output expanded at about the same rate in goods-producing and service-producing industries. Industrial production data
show increases in output in 18 of the 28 major industries for which
results are reported. Because of strong productivity gains in manufacturing industries, however, employment increases were concentrated primarily in service-producing industries.
The relative constancy of the share of manufacturing in total
output, combined with a declining share of manufacturing in total
employment, is a longstanding phenomenon. It does not reflect a
long-term weakness in the growth of output of manufacturing industries relative to the total economy. Rather, it reflects the general
tendency (discussed later in this chapter) for labor productivity
growth in manufacturing to exceed labor productivity growth for the
rest of nonfarm business.




26

For analytical purposes, this phenomenon is most appropriately assessed by comparing the behavior of the ratio of value added in manufacturing to real nonagricultural gross domestic product (GDP) with
the ratio of manufacturing employment to nonfarm employment, as
illustrated in Chart 1-1. Data for value added by industry, which are
available annually through 1985, were used to construct the chart.
Data on final expenditure by sector, which are available quarterly
through 1986, confirm the general relationship illustrated in Chart 11. Specifically, in 1986, when labor productivity growth in manufacturing remained substantially above that in total nonfarm business,
the share of final expenditures on goods output (which are dominated by manufacturing) remained essentially constant, while the share
of manufacturing in nonfarm employment continued to decline.
Chart 1-1

Manufacturing Shares rn Real GDP and Employment
Percent
32

30

28

Employment Share ^

26
24
22

Real GDP Share &

20
n< . . . . I
1965
1960

i
1970

i

I I I
1975

i I
1980

i

i
1985

-is Manufacturing as percent of nonfarm payroll employment.
-^Manufacturing as percent of real gross domestic product less agriculture, forestry, and fisheries.
Sources: Department of Commerce and Department of Labor.

REGIONAL DEVELOPMENTS

While GNP data are not available on a regional basis, data on employment by State provide a reasonably good impression of the regional economic performance of nonagricultural business. The re-




27

gional pattern of employment gains for 1986 is illustrated in Chart
1-2. The chart is constructed using data from the establishment
survey on employment in nonfarm business by State. The change in
employment from the same month a year ago is used to control for
seasonal factors, and the results for the 3 most recent months for
which data are available (September, October, and November) are
averaged in order to limit the effects of sampling error.
Chart 1-2

Nonfarm Payroll Employment by State
Percent Change September-November 1985 to September-November 1986

Percent Change
jj] 2 and above
^ Oto2
Q] Less than 0 to-1
ill -1 and below
Source: Department of Labor.

In 39 States and the District of Columbia, increases in employment
were recorded for the period covered by Chart 1-2. In 36 States, employment increased by at least 1 percent, and in 24 States, employment increased by at least 2 percent. In 11 States, employment fell
and in 6 States the decline in employment exceeded 1 percent. Not
surprisingly, States where the oil and gas industry is important,
Alaska, Louisiana, Oklahoma, Texas, and Wyoming, are among those
that recorded significant employment losses. If Chart 1-2 were extended to cover the period since the last cyclical peak (July 1981 to
November 1986), employment gains would be shown in all but 5
States. Employment gains of 10 percent or more would be shown in




28

24 States and gains exceeding 5 percent would be shown in 40
States.
Widespread employment gains across most of the country do not
imply an absence of economic problems in some industries and regions. Agriculture, mining, the oil and gas industry, and other tradesensitive industries have experienced problems for some time, and
particularly for the oil and gas industry, these problems have recently
deepened. In areas heavily dependent on declining firms and industries, economic problems have spread to the support and service industries. However, assertions that the United States is becoming a
"bicoastal economy" with broad areas of economic depression across
the Nation's midsection, are greatly exaggerated. Economic progress
has been widespread. Remaining economic problems tend to be concentrated in particular industries and in specific areas of the country.
THIS EXPANSION IN THE POSTWAR CONTEXT

The performance of the U.S. economy in 1986 should be assessed
in the broader context of the current expansion, in comparison with
economic performance in other industrial countries, and with earlier
postwar expansions in the United States. Viewed in this context, it is
important to note that despite a moderate pace of overall growth
since mid-1984 and continuing problems in some sectors, steady
progress has been made in reducing inflation and interest rates. The
foundation for sustainable real economic growth, with continued
moderate inflation, has been strengthened.
In other leading industrial countries, substantial progress has also
been made in reducing the rate of inflation during the 1980s. As is
discussed in Chapter 3, however, other industrial countries have generally recovered less strongly from the worldwide recession of the
early 1980s than has the United States. This is especially the case
when recovery is calibrated in terms of growth of real domestic
demand, which measures total real spending by the residents and
government of a country. Moreover, the deterioration of U.S. real
net exports during the current expansion contributed significantly to
economic growth in other countries, while limiting real GNP growth
in the United States. In contrast, during earlier postwar expansions,
growth rates of real GNP in most other industrial and in many developing countries typically exceeded the U.S. growth rate.
Comparison of unemployment rates in the United States and Western Europe dramatically illustrates the relative strength of U.S. economic performance during the current expansion. At 6.6 percent, the
total U.S. unemployment rate remains relatively high by postwar
standards, but is well down from its cyclical peak of 10.7 percent in
December 1982. In Western Europe, unemployment rates typically




29

ran well below U.S. rates during the 1960s and 1970s. During the
1980s, despite recovery from the recession of 1980-82, the average
unemployment rate in the major countries of the European Community has risen persistently, reaching 12 percent in early 1986.
The situation in the U.S. economy today should also be compared
with that prevailing at similar stages of earlier postwar expansions. In
the later stages of the long expansion of the 1960s, real growth remained strong. However, after the slowdown in 1967, the inflation
rate and interest rates (although still low by recent standards) resumed their upward movement. Tightening of monetary and fiscal
policy undertaken to curb rising inflation at the end of the expansion
of the 1960s probably contributed to the recession of 1969-70. The
expansion that began in 1970 was barely a year old when rising inflation and a deteriorating balance of payments led to the imposition of
price and wage controls and to devaluation of the dollar. With the
removal of controls, the inflation rate and interest rates rose in 1973,
exacerbated at the end by the surge in world oil prices. Shortly thereafter, the economy collapsed into one of the deepest recessions of
the postwar period.
In the recovery from the 1974-75 recession, the inflation rate and
interest rates continued on a downward path for the first six quarters
of the expansion, and short-term interest rates kept falling for an additional two quarters. However, by the fourth year of the expansion
(comparable to 1986 during the current expansion), the inflation rate
and short-term interest rates were more than 3 percentage points
above their minimum levels for the expansion, and this was before
the second oil price shock (in early 1979) contributed to a further
upsurge of inflation and interest rates.
This expansion ended in a double crescendo of rising inflation and
interest rates and falling economic activity. The tightening of monetary policy in late 1979 and early 1980 and the brief recession in
1980 brought only temporary respite from high inflation and interest
rates at the cost of a sharp rise in unemployment. Following the reacceleration of monetary growth in mid-1980, the inflation rate and
interest rates rose to new peaks in 1981, while economic activity collapsed into a deep recession.
Fortunately, the cure applied in 1981 proved more enduring, even
if more painful, than that attempted and aborted in 1980. Average
annual real GNP growth during the first 4 years of the current expansion has been 0.7 of a percentage point below that for the 4 years
from 1975 to 1979 (4.0 versus 4.7 percent). However, the inflation rate
and interest rates have continued to decline during the current expansion, in contrast with behavior in the late 1970s. Currently, there are




30

no signs of the developments associated with the unfortunate conclusions of earlier expansions. The destructive sequence of business
cycles with progressively rising inflation rates and interest rates,
punctuated by severe recessions, has been broken. With appropriate
macroeconomic policies, the U.S. economy need not suffer, once
again, the painful process of wringing entrenched inflation out of the
economic system.
RELATIVE PRICES AND STRUCTURAL CHANGE
The 1970s and 1980s saw not only wide swings in the overall rate
of price inflation, but also dramatic movements in relative prices
among important sectors of the economy. Such relative price movements are generally associated with important structural changes and
with adjustment problems for particular sectors of the economy. Sectors experiencing relative price increases usually enjoy rapidly growing output and employment with rising incomes and asset values,
while sectors facing relative price declines often suffer stagnating
output and employment with falling incomes and asset values.
Movements in relative prices for several important sectors of the
U.S. economy over the past 30 years are illustrated in Chart 1-3. For
each sector, the relative price is the ratio of that sector's implicit
price deflator to the implicit price deflator for total GNP. The important message conveyed by Chart 1-3 is that relative price movements
have been much larger in the 1970s and 1980s than they typically
were between 1955 and 1970.
RELATIVE FARM PRODUCT PRICES

After 15 years of modest fluctuations, the relative price of farm
products rose sharply in the early 1970s, declined substantially in the
mid-1970s, and then rose again until 1979, as shown in Chart 1-3
(top panel). Since 1979, the relative price of farm products has been
on a declining path, and in 1986 was below the 1955-70 average.
These movements in the relative price of farm products in the United
States were correlated with similar relative price movements in world
markets.
The rise in the relative price of farm products in the 1970s was
associated with substantial gains in real farm incomes and large increases in the real value of farmland. This development encouraged
large-scale and sometimes excessive borrowing to finance purchases
of farm equipment and farmland. With the decline of the relative
price of farm products in the 1980s, however, farm incomes and land
values fell. Many farmers who borrowed heavily in the late 1970s




31

Chart 1-3

Relative Price Movements
Index, 1982 = 1.00
1.60
Farm Products —W

1.40

\

1.20
1.00
.80
.60

Index, 1982 = 1.00 (Enlarged scale)
1.30
1.20
1.10

Personal Consumption Expenditures
for Services

1.00

-

^1=^%
X

\

\

.90

Capital Goods
(Nonresidential Fixed Investment)

.80 __
.70

t

I 1 I I 1 1 I 1 I t 1 I i I t i I i I i t i i

1955

1960

1965

1970

1975

1 1 1 1 1 1
1980

1985

Note.—Ratio of component implicit price deflator to GNP implicit price deflator.
Sources: Department of Commerce and Council of Economic Advisers.

with the expectation of rising farm incomes and land values have experienced severe economic difficulties. The role of government
policy in creating these problems, and in correcting them, is discussed in Chapter 5.
RELATIVE IMPORT AND EXPORT PRICES

Movements in the relative price of products imported into and exported from the United States followed a pattern broadly similar to
that of farm products. The relative prices of imports and exports
were quite stable during the late 1950s and the 1960s, before rising
sharply in the early 1970s. After declining moderately between 1974




32

and 1976, the relative prices of imports and exports rose again in the
late 1970s. Since 1980, the relative prices of imports and exports
have been declining and relative export prices are now near levels
typical of the period around 1960.
Increases in the relative price of imported oil contributed significantly to the sharp rise in the relative price of all imports in 1973^-74
and again in 1979-80. However, movements in the relative price of
imported oil do not account for all of the movement in relative
import prices; the same general pattern is observed in the relative
price of non-oil imports (also shown in the top panel of Chart 1-3).
An important exception is that the relative price of non-oil imports
started to rise modestly in 1986, but the sharp decline in the price of
imported oil caused the relative price of total imports to continue to
decline.
As is discussed further in Chapter 3, movements in the relative
prices of both imports and exports have tended to mirror movements
in the real foreign exchange value of the U.S. dollar. The depreciation of the dollar in 1971 and especially in 1973 contributed to increases in the relative price of imports and eased the competitive situation of U.S. exporters relative to their foreign rivals. The very
weak dollar in the late 1970s and 1980 had similar effects. In contrast, the strong real appreciation of the dollar between 1980 and
early 1985 was associated with a sharp decline in relative import
prices and placed U.S. exporters under severe pressure vis-a-vis foreign competitors. The substantial decline in the real foreign exchange value of the dollar that started in early 1985 began to be reflected in a higher relative price of non-oil imports only in 1986, and
is not yet clearly apparent in relative export prices. This may be
partly because relative import and export prices never fully reflected
the very high dollar, as well as because of longer than normal delays
in the adjustment of relative goods prices to a lower dollar.
RELATIVE CAPITAL GOODS PRICES

After 25 years of only very modest movements (Chart 1-3, bottom
panel), the relative price of capital goods (nonresidential fixed investment) fell by 12 percent between 1982 and 1986. This decline is
probably related to the same forces that depressed the relative prices
of many manufactured goods, especially those linked strongly to
international trade. The decline in the relative price of capital goods
made possible very strong growth of real business fixed investment
during the current expansion without correspondingly strong growth
of demand for investment financing. Specifically, between the fourth
quarter of 1982 and the fourth quarter of 1985, the ratio of real business fixed investment to real GNP rose from 11.2 percent to a post-




33

war peak of 13.2 percent. Over this period, the share of nominal
spending on business fixed investment rose from 11.0 to only 11.6
percent. Thus, the decline in the relative price of capital goods allowed the share of real business fixed investment spending in real
GNP to rise by 2 percentage points, while the share of such spending
in nominal GNP rose by only 0.6 of a percentage point.
The lower relative prices of capital goods presumably made investment spending more attractive by reducing the cost of acquiring productive assets. This contributed to the strong growth of real investment during the current expansion. As is discussed in Chapter 3, the
decline in the cost of capital goods allowed a given increase in real
investment to be financed with a smaller drain on national saving and
hence a smaller demand for foreign borrowing than would otherwise
have been the case.
EFFECTS OF RELATIVE PRICE CHANGES

In assessing the effects of relative price changes, it is important to
remember that the weighted average of the relative prices of all
the components of GNP or of total domestic spending is always constant. If the relative prices of some components increase, this must
be offset by declines in the relative prices of other components. In
particular, as is shown in Chart 1-3, the relative price of services
(which constitute about one-third of GNP and of total domestic
spending) generally moves in the opposite direction from the other
relative prices (which refer to components of smaller magnitude).
This relationship is especially apparent in the 1980s, when all of the
other relative prices in this chart are declining.
The economic fortunes of particular industries have been strongly
influenced by movements in their own relative prices. Agriculture did
very well when the relative price of farm products and farm exports
rose in the 1970s, and has suffered with their decline in the 1980s.
The domestic oil and gas industry boomed during the period of high
relative oil prices, and has experienced severe difficulties since the
recent sharp decline in oil prices. Consumers of food and energy
have been on the other side, losing during the period of rising relative prices of these products in the 1970s, and gaining during the
period of falling relative prices in the 1980s.
A similar story applies generally for many U.S. manufacturing industries that must compete with imports of foreign products at home
or that seek to export their products to foreign markets. Under the
shelter of the weak dollar and high relative import prices in the
1970s, many of these industries prospered. Despite sluggish productivity growth in many manufacturing industries, output, employment,
and exports of many manufacturing industries expanded substantially




34

in the 1970s. This situation reversed during the period of the strong
dollar and declining relative import and export prices in the 1980s.
Many U.S. manufacturing industries came under heavy pressure from
foreign competitors in both domestic and foreign markets, despite an
acceleration of productivity growth. Consumers of manufactured
products, of course, suffered from higher prices of these products
than probably would have prevailed if the dollar had remained
stronger in the 1970s. Consumers have recently benefited from significantly lower relative prices of these products supplied by both
foreign and domestic producers.
Although movements of relative prices are often associated with problems of particular industries, they play an essential role in the effective and efficient functioning of the economic system. When real economic conditions change because of changes in taste or technology
or the availability of productive resources, relative price changes
signal the need to alter patterns of consumption and production.
However, wide swings in relative prices that are associated with the
process of inflation and disinflation generate significant problems not
only for individual industries, but also for the economy as a whole.
To attempt to restrain relative price movements by any direct means
is no solution. Such attempts often generate surpluses or shortages
of products whose relative prices are controlled. They injure the
economy by limiting its flexibility to respond to economic and technological change. In the end, they create worse problems than they
resolve. The solution to the excessive and unnecessary volatility of
relative prices generally associated with inflation and disinflation is to
avoid the macroeconomic policies that contribute to inflation and to
the subsequent need to disinflate.
REAL INTEREST RATES, NET WORTH, AND SAVING
In addition to wide swings in relative goods prices, the past 15
years have witnessed substantial movements in real asset values and
rates of return. Anticipated real rates of return are important factors
in decisions about borrowing and lending and about saving and investing. Wide swings in the real values of assets strongly influence
real household net worth and therefore consumption and saving as
well. The causes and effects of these movements in real interest rates
and real asset values need to be understood within the context of the
process of inflation and disinflation that has dominated economic
events since the late 1960s.




35

THE BEHAVIOR OF REAL INTEREST RATES

The real rate of interest on a loan or security is the nominal interest rate less the inflation rate realized over the life of the loan or security. Thus the real rate of interest is the return paid by borrowers
to lenders, measured in real goods and services. The ex ante real interest rate is the nominal rate of interest on the loan or security
minus the rate of inflation that is anticipated when the loan is made
or the security is purchased. Ex ante real interest rates, however, are
often difficult to measure because of the lack of reliable and consistent information about expected inflation. A useful proxy measure of
ex ante real interest rates can be constructed by assuming that the
anticipated rate of future inflation corresponds reasonably closely to
recent past rates of inflation. This proxy measure of ex ante real interest rates is probably most reliable during periods when the actual
inflation rate is stable, and anticipated rates of future inflation are
likely to correspond reasonably closely to recent past inflation rates.
The long-run behavior of this proxy measure of ex ante real interest rates is illustrated in Chart 1-4. The yield on railroad bonds is
used to measure nominal interest rates from 1857 to 1936, augmented by a composite of long-term government bond yields since 1919.
The annualized rate of increase in the CPI over the preceding 2 years
is subtracted from these nominal interest rates to construct the proxy
measure of the real interest rate. The CPI for early years is not completely comparable with the index used today, but this is not likely to
affect seriously the main results discussed below. For the past two
decades, the behavior of the proxy measure of real interest rates depicted in Chart 1-4 is broadly consistent with that shown by other
measures of real interest rates.
The real interest rate on long-term government bonds shown in
Chart 1-4 was in the range of 2 percent during the 1960s before declining, sometimes to negative levels, in the middle and late 1970s.
Starting in 1981, real interest rates rose substantially above the levels
of the 1960s; the proxy measure shown in Chart 1-4 reached a peak
of 8.25 percent in 1984. Although high by postwar standards, the
level of real interest rates in the 1980s is not unprecedented over a
longer historical period. Over the period since 1857, the proxy real
long-term rate shown in Chart 1-4 averaged 3.11 percent; in the
1982-86 period, it averaged 6.13 percent. However, during a prolonged period in the late 1800s, real long-term rates were higher
than in the 1980s; during the 15-year period ending in 1880, the
real rate on railroad bonds shown in the chart averaged 10.44 percent. Since 1900, there have been two periods (in the early 1920s
and again in the early 1930s) when real rates rose to levels as high as
in the early 1980s. There have also been several periods when the




36

Chart 1-4

Proxy Measure of Real Long-Term Interest Rates
Percent per annum

2-Year Change in CPI

Real U.S. Government
Composite Bond Rate J/

Real Railroad Bond Rate-!/

II III I I'll IIII ll III11II! IIIII ill I! Ill III IIIII11IIII! III III! I III III II Illll 111 II III I III 1111 ill III III 111 I 111 It IIII III 111 III! III till I!

1857

1872

1887

1902

1917

1932

1947

1962

1977

1986

^ Nominal yield minus the average annual percent change in the consumer price index over the
preceding 2 years.
Sources: Department of Commerce, Department of Labor, and Department of the Treasury.

proxy measure of real interest rates was significantly negative, as occurred in the 1970s.
High real interest rates in the second half of the 19th century are
sometimes attributed to the rapid growth in the U.S. economy and
high prospective rates of return on investment that attracted capital
from overseas to finance the industrial boom. Similarly, the rise in
real interest rates in the early 1980s has been attributed to an improved climate for capital investment in the United States, resulting
from the business tax cuts enacted in 1981, the decline in the inflation rate, and strong real economic growth early in the expansion.
Other explanations relate high real rates in the early 1980s to the
emergence of large actual and prospective budget deficits and to a
shift to disinflationary monetary policy. Although most analysts agree
on the direction of the influence of budget deficits on interest rates,
the evidence of the strength of that influence is by no means unambiguous. The budget deficit increased in 1980 and 1981, but very
large budget deficits did not emerge until 1982, after much of the




37

apparent rise in real interest rates had taken place. The increase in
real interest rates before 1982, therefore, would need to be related
to expectations of large future budget deficits.
It is plausible that restrictive monetary policy contributed to higher
real interest rates in 1980-82 and perhaps again in the second half of
1984. However, given rapid monetary growth over most of the expansion, it is difficult to see restrictive monetary policy as the persistent
and predominant cause of high real interest rates (except insofar as
monetary policy has continued to contribute to the moderation of inflation). Moreover, the rising stock market and the boom in investment spending since 1982 are somewhat difficult to reconcile with
large budget deficits or disinflationary monetary policy as the exclusive explanations of high real interest rates.
One apparent regularity in the behavior of the proxy measure of
real interest rates illustrated in Chart 1-4 is the strong inverse relationship between movements in the real interest rate and movements
in the inflation rate. During periods of rapidly changing inflation
rates, expectations of future inflation may differ substantially from
recent past inflation. Hence, caution is called for in interpreting
measures of the ex ante real rate such as those shown in Chart 1-4.
Recognizing this limitation, it is nevertheless the case that since
1857, all periods of high or rising inflation, including the middle and
late 1970s, were associated with sharp declines in the proxy measure
of the real interest rate. During all periods of sharply declining inflation or deflation, including the early 1920s, the early 1930s, and the
early 1980s, the real interest rate turns strongly positive. When
placed in a longer historical context, neither the negative real interest rates in the 1970s nor the rise of real interest rates in the 1980s
is particularly unusual, given the sharp movements in the inflation
rate that were also occurring. Although many factors have probably
contributed to movements of real interest rates in the past decade,
the evidence suggests that these movements are consistent with past
experience and should be viewed as normal concomitants of the
process of inflation and disinflation.
Adjustment of Inflation Expectations

The relationship between changes in the inflation rate and the
proxy measure of the real interest rate is consistent with a lag in the
adjustment of inflation expectations behind the actual inflation rate.
The potential effect of this adjustment lag is illustrated in Chart 1-5,
which compares two measures of the ex ante real long-term interest
rate during the past 8 years. The "proxy measure" is constructed by
subtracting the annual rate of change in the CPI over the preceding
2 years from the nominal yield on 10-year Treasury securities. The
"expectations measure" is calculated by subtracting from the same




38

nominal yield a measure of 10-year inflationary expectations taken
from a survey of financial experts. Both measures of the ex ante real
interest rate in Chart 1-5 indicate that long-term real interest rates
rose sharply in the early 1980s and that real long-term interest rates
have been declining since 1984.
Chart 1-5

Ex Ante Real Long-Term Interest Rates
10-Year Treasury Securities
Percent per annum
10
Expectations Measure J/

-2

I i i
19781V

I I

I I i i I i i 1 I I I I I
19801V
19821V

I i I
19841V

I i i
19861V

-l/ The expectations measure is the yield on 10-year Treasury securities (constant maturity) minus 10-year
inflation expectations from the Decision-Makers Poll by Richard B. Hoey, Drexel Burnham Lambertjnc.
-2/The proxy measure is the yield on 10-year Treasury securities (constant maturity) minus the
average annual percent change in the consumer price index over the preceding 8 quarters.
Sources: Department of the Treasury and Department of Labor, except as noted.

The relative movement in the two measures of the ex ante interest
rate indicates a lag in the adjustment of long-term inflation expectations to actual inflation rates. During the period of high inflation, and
even 2 years after the inflation rate began to fall, the long-term expected inflation rate remained below the 2-year moving average of
the CPI. Accordingly, through 1982 the expectations measure of the
real interest rate remained above the measure based on actual inflation. Long-term inflationary expectations began declining in 1981;
but because of the lag in the adjustment of such expectations, they fell
less rapidly than the 2-year moving average of the CPI. Since 1982, the
expected inflation rate has been consistently above the 2-year average
actual inflation rate. Accordingly, after 1982, the proxy measure
of the real interest rate is above the expectations measure.




39

Thus, the divergence of the two measures of ex ante real interest
rates depicted in Chart 1-5 reflects the failure of inflation expectations to adjust quickly both to the rise in actual inflation in the 1970s
and to its subsequent decline in the 1980s.
The lag in the adjustment of inflationary expectations helps to explain why nominal interest rates remain relatively high in comparison
with actual inflation rates during periods of disinflation, and why
nominal interest rates tend to decline only gradually with the persistence of lower actual inflation rates. Borrowers and lenders who continue to anticipate relatively high future inflation rates agree to loans
with nominal interest rates that reflect these expectations, rather than
lower actual rates of current inflation. As evidence of lower inflation
accumulates, inflation expectations are revised downward, and this
translates into lower nominal interest rates.
The steady and substantial decline since mid-1984 in the real interest rates shown in Chart 1-5 reflects this process of the decline in
nominal interest rates in the context of a gradual, albeit uneven,
downward adjustment of inflation expectations. The expectations
rate in Chart 1-5 remains considerably below the real interest rate
measured with current inflation, reflecting the persistence of inflation
expectations that exceed recent actual inflation. To a large extent,
the difference between current and anticipated inflation in 1986 can
be attributed to the effects of the oil price declines on current inflation, which are largely temporary. During the last 6 months of 1986,
10-year inflation expectations of 5 to 5Vi percent are apparently incorporated into nominal rates, which implies a 10-year anticipated
real interest rate of just over 2 percent. This is generally consistent
with the level of the proxy measure of the real long-term interest rate
recorded in the 1960s.
Consequences of Real Interest Rate Changes

The wide swings in real interest rates associated with the inflation
and disinflation of the past 15 years have had important, often adverse, effects on the economy and on the financial system. In the
1970s, when actual inflation accelerated ahead of what had been anticipated, lenders earned lower real rates of return than they had expected and suffered large capital losses as increases in nominal interest rates depressed the market value of existing fixed-rate securities.
Borrowers generally benefited from paying lower (even negative) real
interest rates than they had anticipated, and enjoyed capital gains
from the reduced real value of their debts.
These wealth transfers between borrowers and lenders did not directly affect total wealth, but such arbitrary and unexpected redistributions may have interfered significantly with the efficient functioning of national and international credit markets. Lenders, having ex-




40

perienced losses, likely became less willing to extend credit unless
compensated for the uncertainty about future inflation. The borrowers most willing to continue to borrow at higher nominal rates implicitly assumed continued high future inflation.
With disinflation in the 1980s, the situation of the 1970s was reversed. Borrowers experienced capital losses and lenders realized
gains as the real cost of credit rose above what had been anticipated.
When borrowers could not fulfill their obligations, lenders also faced
losses. In many cases (including loans to energy producers, agriculture, and developing countries) debt problems were exacerbated by
declining relative commodity prices associated with disinflation.
The general association of wide swings in real interest rates with
the process of inflation and disinflation suggests that the high real
interest rates and associated difficulties of the 1980s are intimately
related to the inflation of the 1970s. In an environment of variable
inflation, it is more difficult for the public to foresee accurately
changes in the inflation rate. Hence, the public is likely to base lending, borrowing, saving, and investment decisions on information
about future real rates of interest that turns out to be incorrect. The
result is unanticipated capital gains and losses that can distort incentives to borrow and lend or save and invest. The prescription to diminish the likelihood of a recurrence of these problems is to avoid
policies that contribute to a return of high inflation and therefore to
the painful consequences of subsequent disinflation.
REAL ASSET VALUES AND NET WORTH

Wide swings in real asset values have been another important
counterpart of the process of inflation and disinflation. Generally,
tangible assets such as farmland and owner-occupied housing that
provide reasonably good hedges against inflation rose substantially in
real value during the 1970s. During the 1980s, real farmland values
have declined, and the real value of owner-occupied housing has leveled off. In contrast, the real value of financial claims against the productive assets used by nonfarm businesses (the real value of bonds
and equities) declined during the period of rising inflation, and recovered strongly during the period of disinflation.
These swings in real asset values are reflected in the composition
of household net worth, as reported in Table 1-1. Between the third
quarter of 1965 (when the inflation rate was still under 2 percent)
and the third quarter of 1978 (just before the second oil price shock
and second surge of double-digit inflation), the ratio of household
net worth to GNP declined from 321 percent to 290 percent. Among
the components of net worth, the value of owner-occupied housing
grew more rapidly than GNP, while the values of consumer durables,




41

noncorporate businesses (farm and nonfarm), pension fund and life
insurance reserves, other financial assets, and total household liabilities maintained essentially constant ratios to GNP. Thus, the decline
in the ratio of the value of household holdings of corporate equities
to GNP more than accounted for the decline in the ratio of household net worth to GNP. Indeed, the real value of such holdings fell
absolutely by $755 billion of 1982 dollars between the third quarters
of 1965 and 1978.
TABLE \-\.—Real household assets and liabilities, 1965-86
[Outstanding, end of period]
Level1
(billions of 1982 dollars)

Item

Percent of real GNP

1965 III

1978 III

1986 II

1965 III

1978 III

1986 II

7,763

10,675

14,273

370

340

390

1,102
685
436

2,017
1,091
955

2,175
1,261
1,197

53
33
21

64
35
30

59
34
33

5,540

6,611

9,640

264

211

263

527
805
1,809
753
1,647

838
1,169
1,054
1,122
2,428

491
1,625
2,074
1,901
3,550

25
38
86
36
79

27
37
34
36
77

13
44
57
52
97

1,028

1,577

Total assets
Owner-occupied housing
Consumer durables
Other tangible assets
Total financial assets
Equity in noncorporate businesses:
Farm
Nonfarm
Corporate equities
Pensions and life insurance
Other financial assets

50

62

1,335
608
310

29
14
6

30
14
6

36
17
8

9,098

12,021

321

290

328

627

Household net worth

49

954
432
191

6,735

Home mortgages
Installment and other consumer credit
Other liabilities

2,253

618
294
116

Total liabilities

670

1,317

30

21

36

ADDENDUM:
Net Federal Government debt2
1

Deflated by GNP implicit price deflator.
2
Debt of Federal Government held by the public less Federal debt held by the Federal Reserve System.
Note.—Data include households, personal trusts, and nonprofit institutions.
Sources.- Department of Commerce (Bureau of Economic Analysis) and Board of Governors of the Federal Reserve System.

Next, consider the changes in net worth and its components between the third quarter of 1978 and the second quarter of 1986
(each the 14th quarter of its respective expansion). Real household
net worth rose by $2.9 trillion of 1982 dollars in just under 8 years,
exceeding its real gain during the 13 years between 1965 and 1978.
The ratio of household net worth to GNP rose to 328 percent, more
than recovering the ground lost between 1965 and 1978. Among the
components, consumer durables maintained a constant ratio to GNP.
The ratio of owner-occupied housing to GNP declined modestly, but
remained above that recorded in 1965. The real value of equity in
noncorporate farm business fell absolutely and as a share of GNP. Liabilities grew more rapidly than GNP, but so did total assets. The
value of financial assets primarily representing claims on nonfarm
business (equity in nonfarm noncorporate business, corporate equi-




42

ties, pension and life insurance reserves, and other financial assets)
all grew significantly more rapidly than GNP. The combined increase
in the real value of these financial assets exceeded the gain in real
household net worth.
To some extent, gains in the real value of holdings of these financial assets reflected household saving and business retained earnings.
However, a substantial part of these gains was due to increases in the
real market value of existing financial claims against nonfarm business. These capital gains reflect substantial increases in the real value
of the existing stock of productive capital employed by nonfarm business. Thus, the reversal of the earlier downward movement in the
real value of claims on business enterprises played the key role in the
recent growth of real household net worth and in the recovery of the
ratio of net worth to GNP. As will be discussed below, this gain in
real household net worth has implications for the recent behavior of
household consumption and saving.
The nature and source of this gain also has potentially important
implications for business investment. One prominent theory of business investment holds that when the market value of claims against
existing businesses is high relative to the cost of new investment,
there is a strong incentive for further business investment. According
to this theory, therefore, the combination of strong gains in the real
value of financial claims against nonfarm businesses with the recent
low relative price of capital goods (discussed earlier in this chapter)
implies the likelihood of renewed strength of business investment.
DEBT AND SAVING

In the second quarter of 1986, the ratio of household debt to disposable personal income was at a postwar high of 86.2 percent. The
ratio of total consumer debt to disposable personal income was also
at a postwar high. Over the 4 years of the current expansion, the personal saving rate (the ratio of personal saving to disposable personal
income) has averaged only 5.2 percent, versus a postwar average of
6.8 percent. In 1986, the personal saving rate was only 3.9 percent—
the lowest personal saving rate since 1949. The concern is often expressed that with high levels of debt and low saving rates, households may not be able to sustain the growth of consumption spending that has been the mainstay of the current expansion. Even more
worrisome, in the event of an economic downturn, households might
be forced to cut back sharply on consumption, and difficulties might
arise for the financial system if debtors could not meet their financial
obligations in a timely manner.
Although these concerns have merit, especially for some heavily indebted households, their importance for the general economy should




43

not be exaggerated. Real household net worth—the excess of the real
value of household assets over the real value of household liabilities—has been growing strongly. The current ratio of household net
worth to GNP or to disposable personal income is high by the
standards of the 1970s. For the aggregate of all U.S. households,
increased borrowing over the past 8 years has, in effect, financed
increased gross asset holdings, rather than increased consumption. For
the reverse to be true, real household net worth would need to have
fallen, rather than risen both absolutely and relative to GNP and
disposable personal income. The fact that some of the growth of real
household net worth has been accounted for by nonprofit institutions
somewhat diminishes, but does not overturn, the force of this point.
In assessing saving behavior, it is important to take account of
business saving from retained earnings and depreciation that is not
counted as part of personal saving, but is part of private saving and
of national saving. During this expansion, gross business saving has
averaged 13.5 percent of GNP, exceeding the postwar average of
12.0 percent. The ratio of gross private saving (personal saving plus
gross business saving) to GNP in this expansion, has averaged 17.3
percent, versus a postwar average of 16.7 percent.
Further, in assessing private saving behavior, it is important to take
account of significant changes in real household net worth. Studies
have shown that at a given level of disposable personal income,
higher household net worth induces higher consumption spending.
Alternatively, it might be that when households enjoy gains in net
worth due to increases in the value of assets they already own, they
decide to save less of their income. Either story fits reasonably well
with the recent experience of large gains in real household net
worth, strong growth of real consumption expenditures, and a low
personal saving rate.
Some potential remains for further capital gains on existing productive assets. For example, the ratio of the New York Stock Exchange Common Stock Price Index to the GNP implicit price deflator
increased 77 percent between 1982 and 1986, but is still below the
peaks recorded in the 1960s. However, much of the recovery of real
asset values, due to the decline in inflationary expectations and renewed optimism in future U.S. economic performance, may already
have been realized. Moreover, in the 1950s and 1960s, when households enjoyed significant capital gains on equity holdings and the ratio
of net worth to disposable personal income was as high as it is now, the
personal saving rate was above levels recorded recently.
At some point, therefore, the measured rate of personal saving will
probably need to rise above its 1986 level to maintain strong gains in
real household net worth. This suggests that while growth of con-




44

sumer spending can continue to make significant contributions to
total demand growth, at some point real consumer spending will
need to grow less rapidly than real disposable personal income and
real GNP. The economic projections discussed at the end of this
chapter take account of these likely developments.
PRODUCTIVITY GROWTH AND REAL PER CAPITA GNP
Productivity growth is the main determinant of the economy's
long-run capacity to generate increases in real living standards, as
measured by the growth of real per capita GNP. When labor productivity (output per hour) was growing at a relatively strong 2.8 percent
annual rate between the cyclical peak in 1948 and the cyclical peak in
1973, real per capita GNP grew at a relatively strong 2.2 percent
annual rate. However, as reported in Table 1-2, when the growth
rate of labor productivity fell after 1973, so did the growth rate of
real per capita GNP.
TABLE 1-2.—GNP, productivity, and employment measures, 1948-86
[Average annual percent change]
Period

Real
per capita
GNP

Real
GNP

Employmenttotal population
ratio2

Labor
productivity1

1948 IV to 1973 IV

37

22

28

03

1973 IV to 1981 III

22

1.1

.7

.9

1981 III to 1986 III

2.5

1.5

1.2

.8

1
Output
2

per hour of all persons engaged in the business sector.
Ratio of business sector employment to population including Armed Forces overseas.
Sources: Department of Commerce (Bureau of Economic Analysis), Department of Labor (Bureau of Labor Statistics), and
Council of Economic Advisers.

Factors other than labor productivity growth also influence growth
of real per capita GNP and hence growth of real living standards.
The broadest aggregate for which labor productivity is measured is
the business sector of the economy, which currently accounts for
about 80 percent of real GNP. Changes in the relative size of the
business sector affect the relationship between growth of measured
labor productivity and growth of real per capita GNP. This relationship is also affected by changes in average hours worked and in the
ratio of people employed to the total population. In particular, since
1973, the growth rate of the ratio of employment to total population
has exceeded the rate of decline of average hours worked. This has
contributed to stronger growth of real per capita GNP than of labor
productivity. Demographic developments suggest, however, that this
source of growth of real per capita GNP will not be much stronger
over the next decade than it has been over the past decade. Hence,
prospects for maintaining the growth rate of real per capita GNP,




45

and for securing increases in this measure of the growth of real living
standards, depend critically on maintaining and strengthening growth
of labor productivity.
LABOR PRODUCTIVITY GROWTH

Labor productivity is influenced by several important factors: the
human capital of the labor force (education, training, experience, and
skill); the amount of physical capital, land, and other resources available to cooperate with labor in the production of goods and services;
and the technical efficiency of production processes. In the short run,
labor productivity is also affected by cyclical fluctuations because
businesses typically cut output more than employment during recessions and achieve large increases in output without comparable increases in employment during strong expansions. To assess underlying trends in labor productivity, it is useful to abstract from these cyclical influences. This calculation is provided in Table 1-3 by comparing periods whose endpoints correspond to business cycle peaks
(treating the third quarter of 1986 as an end point).
TABLE 1-3.—Labor productivity growth rates by sector, 1948-86
[Average annual percent change]
Business sector
Nonfarm

Period
Farm

Total

Manufacturing

Total

Nonmanufacturing

1948 IV to 1973 IV

2.8

5.1

2.3

2.7

2.1

1973 IV to 1981 III

.7

4.3

.6

1.5

.1

1981 III to 1986 III

12

13

1 1

38

1

2.2

45

18

26

1.5

Postwar trend:
1948 IV to 1986 III

. .

Note.—Data are for output per hour of all persons.
Sources: Department of Labor (Bureau of Labor Statistics) and Council of Economic Advisers.

Several factors contributed to the slowdown in labor productivity
growth that began in the early 1970s. Entry into the labor force of
large numbers of new workers who, on average, were less skilled and
less experienced than existing workers, tended to depress labor productivity. Growth of capital-labor ratios in the private business sector
slowed somewhat during the 1970s. Large increases in the price of
energy in the middle and late 1970s diminished the economic efficiency of much existing capital, and required that new investment
and research and development be directed toward improving energy
efficiency.
The general rate of technological advance also appears to have
slowed since the early 1970s. Although difficult to measure, this




46

slowdown in technological progress seems to have affected most industrial countries. Other factors, such as slower growth of real outlays for research and development, and the rising costs of regulatory
compliance, have also been linked to the decline in productivity
growth during the 1970s. Most economists conclude, however, that a
large portion of the decline in productivity growth remains unexplained, except by a decline in technological progress that is difficult
to attribute to any identifiable source.
SECTORAL PRODUCTIVITY PERFORMANCE

In the current business cycle, the labor productivity growth in both
total business and in nonfarm business has picked up from the preceding two cycles, but remains well below the postwar average. In
manufacturing, the increase in labor productivity growth has been
much more dramatic. Over the past 5 years, the annual rate of labor
productivity growth in manufacturing has been 46 percent above the
postwar average and is more than double the rate of increase recorded in the previous two cycles.
Labor productivity growth in manufacturing is critical for the international competitiveness of the U.S. economy because exports and
imports of manufactures dominate U.S. trade. As is discussed in
Chapter 3, weak productivity growth is not the cause of the deterioration of the international competitive position of U.S. manufacturing, although stronger productivity growth could always help improve this position. In fact, the combination of strong labor productivity growth and restrained wage growth (in comparison with productivity and wage developments in other leading industrial countries) has reduced the relative unit labor costs of U.S. manufacturers—
a fact that has been concealed until recently by the strong appreciation
of the U.S. dollar between 1980 and early 1985.
During the current cycle, productivity growth remained near zero
in nonfarm business outside manufacturing. Although no official estimates are published, very sluggish productivity growth in service-producing industries (which produce nearly 90 percent of real GDP
of nonfarm nonmanufacturing industries) must primarily account for
this poor performance. The addition of large numbers of younger,
less-experienced, less-skilled workers to service sector employment
probably contributed to sluggish productivity growth in this sector.
Although many employees in service sector industries (such as health
care, and banking and finance) are high-skill, high-wage workers,
wage rates in service sector industries are generally below average
wage rates in manufacturing, indicating that skill levels are also
lower. Specifically, wage rates are relatively low in the two service




47

sector industries (retail trade and personal and business services) that
have recorded the strongest employment gains since 1981.
Problems in measuring productivity in service-producing industries
may be partly responsible for low measured productivity growth in
this sector. To measure productivity growth, it is necessary to divide
increases in the nominal value of an industry's product into increases
in price and quantity. It is difficult to make this distinction when the
composition and quality of an industry's output is changing, particularly for service-producing industries where no easy way exists to
define and measure a unit of output of constant quality. Indeed, for
some service industries, such as certain types of medical care and private education and research, it is assumed that labor productivity
growth is zero. There is little evidence, however, that the slowdown
in measured service-sector productivity growth since the early 1970s
is attributable to more severe measurement problems. Nevertheless,
it should be recognized that a shift of output toward lower productivity service industries would reduce measured productivity growth for
all business.
PROSPECTS AND POLICIES FOR PRODUCTIVITY GROWTH

Slower measured labor productivity growth since mid-1984, relative to that recorded earlier in this expansion, probably partly reflects
the usual cyclical effect of slower output growth on productivity
growth. If real output growth accelerates in accord with Administration
projections (discussed in the next section), then productivity growth
should increase. Thus, the macroeconomic developments and policies
that underlie the Administration's forecast of moderately stronger real
GNP growth are critical for near-term prospects for stronger productivity growth.
Four important developments also seem likely to contribute to
stronger long-term productivity growth. First, as the labor force on
average grows older and more experienced over the next 15 years,
labor productivity is likely to advance more rapidly. Second, the
recent decline in energy prices should allow for some labor productivity improvement, especially in energy-intensive industries. Third,
expenditures on research and development, which declined as a
share of GNP in the 1970s, have been increasing since 1978 and
should contribute to a higher rate of technological progress. Fourth,
as is discussed in Chapter 2, tax reform may have a small negative
effect on the long-run capital stock, which would tend to depress
labor productivity. However, tax reform will also reduce distortions
affecting the distribution of capital among productive activities. A
more efficient distribution of capital should contribute to higher productivity.




48

Productivity can be promoted by avoiding policies that inhibit the
efficient functioning of private businesses and competitive markets.
For example, productivity is impeded by subsidies that keep unprofitable and inefficient firms in business, at the expense of more profitable and efficient firms that must ultimately finance such subsidies.
This applies not only to direct subsidies, but also to tax subsidies and
to protectionist measures that provide subsidies by forcing consumers to pay higher prices. Particularly troublesome are protectionist
measures applied to intermediate products. They increase production
costs and diminish economic efficiency for industries that use these
products, injuring their ability to compete with foreign firms, as is
discussed further in Chapter 4. Government can also contribute to
stronger productivity growth by eliminating or reducing burdensome
and inappropriate regulation. A number of initiatives in this area are
discussed in Chapter 6.
Government has a critical role to play in education, which equips
individuals with the basic knowledge and skills to be productive
workers and lays the basis for much scientific and technical advance.
The key governmental responsibility in education is that of State and
local governments that fund and operate most of the Nation's primary and secondary schools, as well as its public colleges and universities. In this regard, it is noteworthy that standardized measures of
educational performance in the Nation's primary and secondary
schools have been improving for about the past 10 years, following a
long period of decline during the 1960s and 1970s. Improved incentives for educational performance through enhanced merit pay for
teachers might contribute to these developments. Increased parental
influence over school performance through tuition voucher systems
also might contribute to this end.
The Federal Government has an important role in funding basic
scientific research. Such research can contribute to technological advance in the longer term. However, its benefits are often too diffuse
and difficult to profit from for it to be undertaken by private business.
Included in this category are basic and some applied research in
biomedicine that not only contribute directly to human welfare, but
also help to improve the health component of human capital.
The ultimate objective of policies to improve productivity is to
enhance human welfare and increase real living standards. Government policies serve these objectives by encouraging investment in
human and physical capital, improvement of productive technology,
and allocation of resources to their highest valued uses. The President
will soon present initiatives to enhance the Federal Government's
contribution in these areas. This will aid in the reversal that is already
under way of the forces that previously limited productivity growth.




49

There is good reason to believe that rising labor productivity and a
falling unemployment rate will further raise real per capita GNP and
the real living standards of Americans in 1987 and beyond.
ECONOMIC POLICIES AND OUTLOOK
The future performance of the U.S. economy depends primarily on
the productive activities of individuals and businesses. Government
policies enhance economic performance by allowing the private enterprise system to function as freely as possible, by maintaining a
stable macroeconomic environment, by providing essential public
goods and services and support for the needy, and by correcting externalities, distortions, and deficiencies in the operation of the economic system. Policies that serve these vital purposes are examined
throughout this Report. Two broad areas of macroeconomic policy—
monetary policy and fiscal policy—require specific discussion before
presenting the Administration's economic projections.
FINANCIAL DEREGULATION, VELOCITY, AND MONETARY POLICY

The movements in real interest rates, inflation, and asset prices, as
well as structural and regulatory changes in the financial services industry, have altered the institutional environment in which monetary
policy is conducted. Apparently as a result of both deregulation and
disinflation in the 1980s, the velocity of money has behaved unusually, and measures of the monetary aggregates that historically have
been most reliable have become less dependable guides to monetary
policy. The velocity of money is the ratio of nominal GNP to the
money supply. If velocity behavior is reasonably predictable, then
control of monetary aggregates is a useful approach to the conduct
of monetary policy, and measures of the monetary aggregates can
provide important information about the likely economic impact of
monetary policy. The unusual behavior of velocity and the monetary
aggregates in recent years implies increased uncertainty about the
meaning and appropriateness of a given rate of money growth.
With higher inflation and nominal interest rates in the 1970s, the
effectiveness of interest rate ceilings and other restrictions on deposits was gradually eroded. In many cases, competitive market forces
found ways to circumvent these regulations, and the effects of existing regulations were widely perceived as inequitable or destabilizing.
In response, the Depository Institutions Deregulation and Monetary
Control Act of 1980 and the Garn-St Germain Depository Institutions Act of 1982 mandated elimination of most of the regulations on
deposit interest rates that had been in place since the 1930s. The deregulation of deposit interest rates was largely completed in 1986




50

when the remaining regulations on consumer-owned transactions accounts were removed in January and the interest rate ceiling on passbook savings accounts was removed in March. Depository institutions
are now free to pay market-determined rates on all consumer-owned
deposits, and no legal restrictions remain on the maturity or minimum size of such deposits.
These and previous regulatory changes, as well as shifts in consumer preferences in response to changes in inflation and interest
rates, have altered the composition of the monetary aggregates. For
example, interest-bearing transactions deposits accounted for less
than 10 percent of Ml (currency plus transactions deposits) before
1981; since then, interest-bearing transactions deposits have grown
to nearly one-third of M1, while non-interest-bearing demand deposits have declined from their historical share of 75 to 80 percent of
Ml to approximately 40 percent at the end of 1986. Similarly, the
composition of the broader monetary aggregate, M2, has been affected by the availability of interest-bearing transactions deposits and the
relaxation of interest rate ceilings on time deposits. Passbook savings
deposits, for example, accounted for more than one-half of M2 in the
mid-1960s, but for only about 13 percent of M2 by the end of 1986.
The Behavior of Velocity

As illustrated in Chart 1-6, for most of the postwar period until
recently, the growth of Ml velocity has been reasonably stable. On a
quarter-to-quarter basis, of course, Ml velocity has always experienced sizable fluctuations, and Ml velocity historically has shown a
cyclical component. Nevertheless, over longer periods, Ml velocity
has not deviated very far from its long-term trend. However, in the
1980s and particularly since the cyclical trough of 1982, Ml velocity
has fallen markedly below its postwar growth path. For the broader
monetary aggregates, velocity was typically less stable than Ml velocity earlier in the postwar period, and a sharp downturn in velocity for
these broader aggregates has also occurred in the 1980s.
The recent aberrant behavior of velocity raises important questions
for the conduct of monetary policy. Is the behavior of velocity in the
1980s evidence of a permanent breakdown of any reliable relationship between money and income growth? Or, is that basic relationship intact, with its characteristics altered (temporarily or permanently) by deregulation of bank deposits, declining inflation and interest
rates, or some combination of the two? If so, can a measure of the
money supply be devised that preserves a reliable relationship between it and GNP growth? Although considerable empirical research
has investigated these and related questions, it offers no completely
satisfactory explanation of recent velocity behavior. However, some
inferences can be drawn from the evidence currently available.




51

Chart 1-6

Velocity of M1
Ratio of Nominal GNP to M1
Ratio
9
_

Trend Fit 1948 IV Peak to 1981 III Peak
(3.4 Percent at Annual Rate)

imiiiimiiiimiiiimiii^

1947

1953

1959

1965

1971

1977

1983 1986

Sources: Department of Commerce and Board of Governors of the Federal Reserve System.

The available evidence does not justify the conclusion that the
basic money-income relationship has become permanently unreliable.
To the contrary, some researchers have specified stable demand for
money functions or expressions for velocity that are robust to
changes in income variables, interest rate variables, and sample periods. For example, recent empirical research identifies a break in the
trend growth of velocity in the third quarter of 1981, and once that
change is accounted for statistically, the relationship is stable.
It is much less clear, however, what caused the shift in the trend of
velocity. The change in the trend of velocity apparently occurred too
late to be attributable to the 1979 change in Federal Reserve operating procedures. Similarly, the shift is not closely associated in time
with increased volatility of interest rates. Also, the evidence suggests
that the record trade deficits of the 1980s have contributed little to
the observed decline in velocity.
A number of empirical studies indicate that the decline in Ml velocity in the 1980s is not primarily a reflection of shifts of funds into
Ml induced by the introduction of new types of deposit accounts.
This view is supported by the fact that a similar shift in the trend




52

growth of velocity is observed if velocity is calculated using either
currency held by the public or the monetary base. In addition, if velocity is measured using a monetary aggregate that excludes the interest-bearing accounts now included in Ml, some evidence remains
of a decline in velocity, albeit a less steep decline. Moreover, even
though M2 would be expected to be less distorted by financial deregulation, M2 velocity has also behaved atypically during the 1980s,
although its aberration has been less pronounced than that for Ml.
It appears that inclusion of interest-bearing deposits in Ml has increased the interest-elasticity of the demand for money. With an increased interest-elasticity, declining interest rates of the past 4 years
would explain more of the decline in velocity than can be explained
with lower interest-elasticities. It is also possible that the decline in
expected inflation in recent years has exerted additional downward
pressure on velocity growth, beyond the effect of expected inflation
on interest rates. Much of the empirical evidence available at this
time suggests that an increased interest-elasticity of the demand for
money in combination with the fall in interest and inflation rates may
well in time provide the best explanation of the unusual velocity behavior of the 1980s.
Finally, the demand for money balances is presumably affected by
the spread between market interest rates and those paid on deposits.
After a long history of legal restrictions on deposit interest rates,
these rates have been relatively slow to adjust to changing market
conditions since the restrictions were removed. It is therefore plausible that part of the Ml growth that occurred in 1985 and 1986 is
related to declines in market interest rates that reduced the opportunity cost of holding Ml balances. Over time, additional changes in
market rates relative to deposit rates would be expected to affect the
demand for Ml. But with only limited experience in a deregulated
environment, it is difficult to predict how deposit rates will be adjusted to changes in market interest rates and how the public will respond to changes in relative interest rates.
Federal Reserve Policy

Two opposing types of risk are inherent in the conduct of monetary policy. One risk is that monetary policy might be too expansionary and that excess monetary growth will ultimately generate higher
inflation and the subsequent need to disinflate. The second risk is
that inadequate monetary growth might constrain the growth of real
economic activity. While the balancing of these two types of risk is
never easy, the task has been made more difficult in recent years by
the unusual pattern of velocity behavior, which reflects a less reliable
relation between money and nominal GNP growth.




53

In 1986, monetary policy was influenced by a wide range of economic and financial market developments. In the first 4 months of
1986, market interest rates declined substantially as the oil price declines and other price developments had favorable effects on the
near-term outlook for inflation. In this period, the Federal Reserve
Board reduced the discount rate twice in order to realign it with
lower market rates. Money growth was relatively modest early in the
year as M1 expanded along the upper bound of its target range and
the broader aggregates were within or below their prescribed ranges.
As evidence of economic weakness emerged in the second quarter
and inflation remained subdued, the Federal Open Market Committee (FOMC) voted in July to ease reserve conditions and the Federal
Reserve Board approved another cut in the discount rate, again
largely in response to additional downward movements in market interest rates that had occurred in June. Even though Ml growth accelerated rapidly beginning in the spring, these accommodative policy
actions were judged appropriate in light of the fact that the broader
monetary aggregates remained within their target ranges, and uncertainty continued about the reliability of the linkage between Ml and
nominal income growth.
Similar policy actions were adopted again in August as economic
activity continued to appear sluggish and the broader aggregates still
grew at moderate rates, despite very rapid Ml growth. Because each
of the discount rate cuts in 1986 occurred after general declines in
market interest rates, the discount rate followed, rather than led, interest rate movements. However, following the April and August discount rate cuts, market interest rates generally increased. In addition,
in the 2 months immediately following the August discount rate cut,
long-term interest rates rose both absolutely and relative to shortterm rates, resulting in a steepening of the yield curve. This illustrates the limitations on the capacity of discount rate cuts to secure
lasting reductions in market interest rates.
By the summer of 1986, the broader monetary aggregates were
also growing more rapidly and M2 reached the upper bound of its
target range in August. The FOMC appeared to become more concerned about the inflationary potential of money growth, a concern
that had been apparently discounted earlier in the year when Ml
alone was growing rapidly. Implicit in these decisions was the judgment that with the uncertainty about Ml velocity, the broader monetary aggregates were more reliable guides to monetary policy than
Ml. From the fourth quarter of 1985 to the fourth quarter of 1986,
Ml growth averaged more than 15 percent, well above the Federal
Reserve's target range of 3 to 8 percent. M2 growth from the fourth




54

quarter of 1985 to the fourth quarter of 1986 was just at the upper
bound of its 6 to 9 percent target range.
Although the full consequences of monetary policy actions are
often not felt for more than a year afterwards, the record in 1986
suggests that the Federal Reserve did a reasonably good job in balancing the risk of inadequate money growth against the long-term inflationary risk of too much money creation. As the economy expanded more slowly than expected during the year and inflation continued to be moderate, the Federal Reserve allowed Ml growth to
exceed its predefined target range and relied more heavily on a
broader range of economic data. Further depreciation of the dollar in
1986 was apparently not interpreted as a signal of the need for
slower money growth, probably because real dollar depreciation was
widely regarded as desirable to improve U.S. international competitiveness, and because the lower dollar had little visible effect on the
inflation rate. In the context of moderate real growth, very low
inflation, and falling inflation expectations and given the uncertainty
about the behavior of velocity, the de-emphasis of Ml in favor of other
variables to gauge the conduct of monetary policy appears to have
been an appropriate judgment.
Despite weaker-than-expected economic growth in 1986, no evidence suggests that the Federal Reserve has erred on the side of
monetary restriction. Based on money growth, interest rates, or exchange rates, it is not reasonable to conclude that monetary policy
was "too tight" in 1986. The failure of the real economy to perform
as well as most forecasters had predicted is clearly related to sectoral
problems, and is not the result of inadequate monetary expansion. In
particular, the adverse effects on the energy sector of the oil price
declines, the further deterioration of the trade balance, and the continued stress in the agricultural sector together appear to have limited economic growth in 1986.
One cannot dismiss the fact, however, that by historical standards,
Ml growth in 1986 was high. It substantially exceeded the Federal
Reserve's own target range, as well as most analysts' a priori views of
appropriate money growth. Until a more reliable relationship between Ml and nominal income growth is reestablished, however, the
implications of this rapid Ml growth remain uncertain. Given the various factors discussed above that appear to be working to alter—at
least temporarily—the relationship between money and GNP growth,
rates of monetary expansion that would have previously implied a resurgence of inflation appear to have been necessary in recent years
to satisfy an increase in the demand for real money balances relative
to income. Although the nature of the change in velocity behavior is
not fully understood at this time, no plausible assessment of the




55

change in velocity growth would imply a permanent need for such
rapid money growth. Analysts agree that at some point the rate of
monetary growth must be reduced if the ultimate goal of price stability is to be achieved. The difficult policy issue is one of timing—to
assess when sufficient money growth has been provided to satisfy increased demand for money balances and to determine the extent to
which money growth should be decelerated.
From the outset, the Administration has emphasized the importance of promoting sustainable real economic growth within an environment of long-run price stability. With a continuation of slower
than expected economic growth, moderate inflation, and serious
stress in some sectors of the economy, the dangers of a monetary restriction of economic activity are real and important. Given the economic dislocation associated with the rise of inflation in the 1970s
and its reduction in 1981-82, the Nation also cannot afford to ignore
the dangers of allowing a reacceleration of inflation and the inevitable
economic cost of disinflation.
THE MACROECONOMIC EFFECTS OF DEFICIT REDUCTION

In fiscal 1986, the Federal deficit amounted to 5.3 percent of GNP.
Under the provisions of the Balanced Budget and Emergency Deficit
Control Act of 1985, commonly referred to as Gramm-Rudman-Hollings (GRH), the deficit is scheduled to decline gradually to zero by
fiscal 1991. As outlined in the President's 1988 budget, it is assumed
that deficit reduction will be achieved primarily through restraining
Federal spending, not by raising taxes. In the long run, this approach
to deficit reduction should contribute to economic growth by freeing
resources that would have been used by the Federal Government for
more efficient use by the private sector. Also, by avoiding tax increases, this approach protects private incentives to work, save, and
invest.
The analysis of the prospects for reducing the Federal deficit, presented in Chapter 2 of this Report, provides several facts relevant for
assessing the probable short-term macroeconomic effects of deficit
reduction. First, net interest expense of the Federal Government as a
share of GNP will decline by 1 percentage point, implying an equal
reduction in the Federal deficit as a share of GNP. This decline in
net interest expense will occur provided that the economy grows and
interest rates decline in accord with the Administration's projections,
and provided that growth of the stock of Federal debt is slowed by
reducing the Federal deficit in accord with the GRH targets. Second,
Federal receipts as a share of GNP are projected to rise by 0.9 of a
percentage point between fiscal years 1986 and 1991. A small part of
this rise is due to already scheduled increases in social security pay-




56

roll taxes, but most is due to the expected revenue benefits of continued economic growth. Third, excluding net interest expense and
social security benefits (which are projected to maintain approximately a constant share of GNP), the composite of all other Federal
spending amounted to $655 billion in fiscal 1986, or 15.7 percent of
GNP. If real spending on this composite stayed constant at fiscal
1986 levels, projected real economic growth between fiscal years
1986 and 1991 would reduce the share of such spending in GNP by
2.4 percentage points.
It is plausible to suppose that these three sources of deficit reduction, which jointly account for 81 percent of the required reduction
in the Federal deficit as a share of GNP, will not generate any significant, short-run, negative macroeconomic effects. Reaching the GRH
target of a balanced budget by fiscal 1991, however, will require
more than holding constant real government spending on the composite that excludes net interest and social security benefits. It will
also require a cut of about $39 billion in real spending from this
composite. As is discussed in Chapter 2, achieving such real expenditure reductions while providing for increased real Federal spending
in critical areas of national need will require hard political choices.
However, this magnitude of real Federal spending cuts, spread over
several years, should not have serious adverse consequences for overall economic activity.
Further, it should be recognized that at some time, the Federal
deficit must be reduced as a share of GNP. The potential negative
macroeconomic consequences of deficit reduction are minimized by
achieving deficit reduction gradually, when other economic forces
appear likely to sustain economic expansion. As improved U.S. international competitiveness contributes to a smaller trade deficit, the
likelihood increases that resources that might otherwise be used to
satisfy rising Federal expenditures will find other uses. A noninflationary monetary policy that fosters permanent reduction in interest
rates also eases the task of deficit reduction by contributing to lower
net interest expense for the Federal Government.
ECONOMIC FORECAST FOR 1987

The Administration forecasts a strengthening of economic growth
with continued moderate inflation in 1987. The impediments to economic growth that brought past expansions to a halt are not evident:
inflation and interest rates remain low, inventory stocks are relatively
lean, and resource constraints and production capacity pressures are
absent. Table 1-4 summarizes key aspects of the Administration's
forecast for 1987. The Administration's estimate of real GNP growth
this year is 3.2 percent, measured fourth quarter to fourth quarter,




57

compared with a growth rate of 2.2 percent in 1986. For 1987,
strong growth in employment is forecast to continue and the total
unemployment rate is predicted to be 6.5 percent in the fourth quarter. An improved balance of trade, an increase in inventory investment, and cessation of the economic deterioration caused by the
drop in oil prices should contribute to stronger growth in 1987.
The inflation rate in 1987 is forecast to return to the 3.5 to 4 percent range of recent years, before the decline in oil prices temporarily depressed the inflation rate in 1986. Specifically, the GNP deflator
is forecast to rise at a 3.6 percent annual rate during 1987, after a
2.2 percent rate of increase during 1986. During 1987, the CPI is expected to increase at a slightly faster rate than the GNP implicit price
deflator, reversing the pattern in 1986. This is because the CPI embodies import prices more directly than does the GNP implicit price
deflator, and import prices are expected to rise more rapidly than
domestic prices because of the continuing effects of depreciation of
the dollar.
TABLE 1-4.—Economic outlook for 1987
1987
forecast

19861

Item

Percent change, fourth quarter to fourth quarter
2.2

Personal consumption expenditures
Nonresidential fixed investment
Residential investment
Federal purchases of goods and services
State and local purchases of goods and services

3.2

4.0
54
9.8
1.8
4.6

Real gross national product.. .

2.3
2.5
1.5
25
2.7

GNP implicit price deflator

2.2

3.6

Compensation per hour2

2.6

4.8

Output per hour2

1.1

1.9

Fourth quarter level
Unemployment rate (percent)3.

6.8

6.5

Housing starts (millions of units, annual rate)

1.7

1.8

1
2
3

Preliminary.
Nonfarm business, all persons; fourth quarter 1986 estimated.
Unemployed as percent of labor force including resident Armed Forces.

Sources: Department of Commerce (Bureau of the Census and Bureau of Economic Analysis), Department of Labor (Bureau of
Labor Statistics), and Council of Economic Advisers.

The Administration's forecast embodies the following assessments
for the four main components of GNP: consumption, investment,
government spending, and net exports. First, growth of real consumption spending is forecast to slow from the 4.0 percent annual
growth rate in 1986, but is still expected to make a substantial contribution to real GNP growth in 1987. As discussed earlier, a rapid increase and high level of real household net worth tend to raise con-




58

sumption spending. However, the relatively low personal saving rate
in 1986 suggests that households may wish to hold growth of consumption spending below that of disposable personal income in
order to restore personal saving rates to more normal levels. Moreover, the boost to real disposable personal income, and hence to real
consumption spending, from the sharp decline in oil prices in 1986, is
unlikely to be repeated in 1987.
Second, real investment is expected to strengthen because of gains
in nonresidential fixed investment and inventory investment, despite a
substantial slowdown in residential investment growth. Real nonresidential fixed investment fell in 1986, partly because of the problems
of the oil and gas industry and perhaps also because of some shortrun adverse effects of the tax reform process. Lower interest rates,
rising corporate profits, stronger economic growth, and (as previously explained) a high ratio of the market value of financial claims for
ownership of business enterprises to the price of capital goods
should contribute to some strengthening of real nonresidential fixed
investment in 1987. Real residential investment, however, seems unlikely to repeat the strong growth performance of 1986. In particular,
high vacancy rates and the effects of tax reform may inhibit growth
of multifamily housing construction. Concerning inventory investment, it is noteworthy that manufacturing inventories have generally
been falling for more than a year and a half and the inventory-sales
ratio is currently low for other sectors as well. With continued
growth of domestic sales and improvement in net exports, producers
should begin accumulating inventories at a faster pace.
Third, given their relatively strong budget positions, continued
modest growth of real spending by State and local governments
seems probable. In contrast, the program to reduce the Federal fiscal
deficit should lead to a modest reduction in real Federal purchases of
goods and services in 1987.
Fourth, after deducting 0.7 percent from economic growth in 1986,
real net exports are expected to contribute a similar amount to
growth in 1987. The falling dollar appears finally to be influencing
the prices of non-oil imports. The fixed-weighted price index for
non-oil imports rose 9.4 percent during 1986 and further increases
are expected in 1987. Higher relative prices for goods imported into
the United States and lower relative prices of U.S. exports in foreign
markets should improve U.S. net exports.
A special factor that should aid real GNP growth in 1987 is the end
of the decline of production and investment in the domestic oil and
gas industry. Following the oil price drop in early 1986, drilling operations for gas and oil plummeted, pulling down nonresidential
fixed investment for most of the year. If oil prices remain near year-




59

end levels, declining activity in the domestic oil and gas industry
should not continue to detract from real GNP growth in 1987. While
the direct effects of lower oil prices were largely completely absorbed
by the economy in 1986, secondary benefits may still be forthcoming.
ECONOMIC PROJECTIONS FOR 1988-92

The Administration's longer term economic projections represent
expected trends and should not be interpreted as year-to-year forecasts. They reflect the long-run economic policy goals of the Administration and long-run trends in the economy. Specifically, it is assumed that the incentives for economic activity embodied in the reduced marginal tax rates contained in the Tax Reform Act of 1986
are preserved and that further gains are made in reducing government spending and the burden of government regulation. Also, the
Federal Reserve is assumed to continue a policy that is both consistent with gradual achievement of the long-term goal of price stability
and not so restrictive as to impair economic growth.
The Full Employment and Balanced Growth Act of 1978 requires
the Economic Report of The President, together with the Annual Report of
the Council of Economic Advisers, to include an Investment Policy Report
and review progress in achieving goals specified in the Act. The projections for 1987 through 1992 summarized in Table 1-5 constitute
the "...annual numerical goals for employment and unemployment,
production, real income, productivity and prices...", prescribed by
this Act. The projections go far in achieving the goals specified in the
Act for unemployment and inflation, while achieving many other aims
of the legislation such as balanced growth, reduced Federal spending,
adequate productivity growth, an improved trade balance, and increased competitiveness of agriculture, business, and industry. Although the goal of 4 percent unemployment, specified in the legislation, is not attained by 1992, this does not indicate a lack of commitment to achieving full employment. On the contrary, the Administration is dedicated to bringing about full employment and stable prices
by creating an environment conducive to healthy and sustained economic growth. There are no quick fixes to reach the legislation's
stated goals; government best serves these goals by allowing private
enterprise to flourish, thereby generating long-term growth and full
utilization of resources in a noninflationary environment.
Specifically, the Administration's economic projections detailed in
Table 1-5 show real GNP growth rising to 3.6 percent in 1989 and
declining slowly to 3.4 percent in 1992. Stronger real growth reflects
the long-term benefits of tax reform, as well as factors that will improve growth in the current year and carry forward in later years.
Further improvements in real net exports are expected, especially in




60

TABLE 1-5.—Administration economic assumptions, 1987-92
[Calendar years]
item

1987

1988

1989

1990

1991

1992

Percent change, year to year
Real GNP

2.7

3.5

3.6

3.6

3.5

3.4

Real compensation per hour1

.8

2.0

1.8

1.7

1.8

1.9

Output per hour1

.9

2.2

2.0

1.9

1.9

1.9

3.0

3.6

3.6

3.2

2.8

2.2

113.5

115.8

118.0

120.2

122.0

123.9

5.8

5.6

5.5

Consumer price index2

Annual level
Employment (millions)8
Unemployment rate (percent)4

6.7

6.3

6.0

1

Nonfarm business, all persons.
For urban wage earners and clerical workers.
Includes resident Armed Forces.
4
Unemployed as percent of labor force including Armed Forces.
Source: Council of Economic Advisers.
2
3

1988. Higher production will lift incomes and consumption, and
business investment should strengthen further in 1988 and beyond.
Production is projected to grow sufficiently rapidly to lower the unemployment rate to 5.5 percent by 1992. Consistent with gradual
achievement of the long-term goal of price stability, the inflation rate
is projected to decline to 2.2 percent by 1991. Productivity growth is
projected to improve from recent levels because of the normal cyclical effect of stronger output growth and because of expected improvements (discussed earlier) in the trend rate of growth of labor
productivity. Coincident with this improvement in productivity
growth, increases are expected in real compensation per hour.
These projections reflect the Administration's policies to promote
long-term, noninflationary growth by encouraging investment in
physical and human capital and improvements in productive technology. The Administration believes that creating an economic environment that provides strong incentives for work and production is the
best policy for promoting investment and productivity growth. Reducing disparities in the rate of taxation on different economic activities contributes to this result by encouraging resources to be allocated to activities where they can be used most productively. Chapter 2
describes how the Tax Reform Act of 1986 promotes these goals.
Also, as is discussed in Chapter 2, Federal spending restraint will free
resources to be invested more productively to support growing domestic and foreign demands for U.S. products. Chapters 3 and 4 describe policies to improve the U.S. trade balance.




61

UNDERLYING TRENDS IN ECONOMIC GROWTH

Long-run growth in the economy is governed by expansion in the
economy's capacity to produce. Growth in the working-age population, in labor force participation rates, and in output per person all
play a role in this expansion. Table 1-6 outlines the contributions to
growth of these factors for historical periods beginning and ending at
cyclical peaks, for the current cycle so far, and for the projection
period. The table presents a simple progression of steps from population growth to GNP growth.
TABLE 1-6.—Accounting for growth in real GNP, 1948-92
[Average annual percent change]
1948 IV
to
1981 III

Item

1973 IV
to
1981 III

1981 III
to
1986 IV •»

1986 IV i
to
1992 IV

GROWTH IN:
1) Civilian noninstitutional population aged 16 and over
2) PLUSCivilian labor force participation rate

15
2

18
.5

12

9
6

3) EQUALS- Civilian labor force
4) PLUS: Civilian employment rate

18

24
-.4

1.7

1.5

5) EQUALS: Civilian employment
6) PLUS: Nonfarm business employment as share of civilian employment

1.7

2.0

1.8

1.8

.1

.1

.2

.2

7) EQUALS- Nonfarm business employment
8) PLUS* Average weekly hours (nonfarm business)

1.7

2.1

2.0

.

.

-4

6

2.0
_1

9) EQUALS: Hours of all persons (nonfarm business)
10) PLUSOutput per hour (productivity, nonfarm business)

1.4
1.9

1.5
.6

1.9
1.1

1.9
1.9

11) EQUALS: Nonfarm business output
12) LESSNonfarm business output as share of real GNP

3.3
0

2.0
1

3.0
5

3.8
3

13) EQUALS- Real GNP

33

22

24

35

1

1

Data for 1986 IV are preliminary.
Note.—Based on seasonally adjusted data. Detail may not add to totals due to rounding.
Sources: Department of Commerce (Bureau of the Census and Bureau of Economic Analysis), Department of Labor (Bureau of
Labor Statistics), and Council of Economic Advisers.

First, the sum of population growth and growth in the labor force
participation rate determines growth in the labor force. While
growth of the adult population has been slowing for some time as
the last of the baby-boom generation passes into working age, the
participation rate continues to climb. Continued growth in the participation rate of women and the incentives for increased work effort
provided by tax reform imply growth of the labor force well into the
1990s. A growing labor force coupled with further reductions in the
unemployment rate (represented by increases in the employment rate
in the table) determine employment growth for 1987-92 that is expected to match the 1981-86 experience.
In order to use published productivity figures, employment is adjusted to cover nonfarm business only, and then translated into
growth in total hours worked. The addition of growth in total hours
and output per hour (labor productivity) determines growth in nonfarm business output. Recently, productivity gains in sectors other




62

than manufacturing have been disappointing. Expectations of future
gains, although above recent productivity growth, have been scaled
back somewhat from previous projections. Productivity is projected
to increase at approximately 1.9 percent, on average, over the 198792 period, up 0.8 of a percentage point from rates experienced in the
current cycle to date. After adjustment for the stronger relative rate of
growth of the nonfarm business sector, the growth rate of real GNP is
given in the last line of Table 1-6. The calculations in the table indicate
that the projected improvement in productivity growth (output per
hour) from 1.1 to 1.9 percent per year is the key to stronger real GNP
growth and to the gains in real living standards that this growth will
generate.
CONCLUSION
Although 1986 was not an outstanding year in terms of real GNP
growth, the economic expansion proceeded on a broad front through
its fourth year, and important progress was made in expanding employment and reducing inflation and interest rates. The problems
that kept overall growth below expectations were largely sectoral: a
decline in world oil prices that depressed employment and investment in the domestic oil and gas industry; continued difficulties in
U.S. agriculture; and a further deterioration of the U.S. trade balance. Nowhere evident were the problems that usually portend the
end of expansions. Rather, the economic developments of 1986
affirm that the destructive sequence of progressively rising inflation
rates and interest rates, interrupted by severe recessions, has been
broken. The foundation for sustainable growth of production and
employment, accompanied by gradually declining inflation and unemployment, has been strengthened.
For the future, real economic growth is projected to accelerate. Inflation is projected to resume its gradual decline, after a modest
upturn because of erosion of the temporary effects of the recent oil
price decline. Continuation of stable macroeconomic policies is essential to realizing these projections and to avoiding cycles of inflation and disinflation that are associated with unnecessary swings in
relative prices, real interest rates, and real asset values, and ultimately
with many of the structural and sectoral problems that still beset the
U.S. economy. In particular, monetary policy faces a difficult task in a
period when the traditional guideposts for its conduct have become
less reliable. It must continue to tread cautiously between the risk of
inadequate money and credit creation that would jeopardize economic expansion in the short run, and the risk of excessive monetary




63

growth that would reignite inflation and seriously damage economic
performance in the long run.
Ultimately, the long-run growth rate of the economy and the
growth of real living standards depend primarily on the productivity of individuals and businesses operating in the private sector. As
discussed here and in later chapters of this Report, government has an
important role to play in enhancing the efficiency and productivity of
the economic system. Its principal contribution is to maintain a stable
macroeconomic environment and to allow the natural incentives of
the flexible, private enterprise system to stimulate individuals and
businesses to increase the quantity and enhance the quality of productive resources, to improve the efficiency of production processes,
and to deploy the Nation's resources to their highest valued uses.




64

CHAPTER 2

Budget Control and Tax Reform
GOVERNMENT TAX AND EXPENDITURE POLICIES strongly
influence the economy's long-run performance. Government-provided goods and services improve economic performance if their value
exceeds their cost, as measured by the value of the private goods and
services they displace. The cost of government-provided goods and
services, in turn, depends on the efficiency of the tax system. An efficient tax system entails low and unvarying marginal tax rates that
have minimal effects on private investment and consumption choices.
The Administration is committed to a policy of restructuring Federal fiscal activities to serve the national interest more effectively.
Tax reform, the Administration's number one domestic priority for
the past several years, has been accomplished. The Tax Reform Act
of 1986 significantly lowers tax rates and will decrease tax-induced
distortions in private economic decisions. Progress has also been
made in Federal spending restraint. The upward trend in Federal
Government expenditures as a share of gross national product (GNP),
which had persisted for most of two decades, was reversed in 1984. For
the first time since 1973, real Federal Government expenditure is
projected to fall in fiscal 1987. Further spending restraint, however,
will be necessary to achieve the future deficit targets set in the
Balanced Budget and Emergency Deficit Control Act of 1985 (popularly known as Gramm-Rudman-Hollings), targets to which the Administration is firmly committed.
This chapter surveys both the Administration's accomplishments
and its future agenda concerning the restructuring of Federal fiscal
activities. The chapter begins with a discussion of the Federal budget
deficit, the need for Federal spending restraint, and proposed
changes in the budgetary process. It argues that the objective of balancing the budget by 1991 can be achieved without a general tax increase and without sacrificing programs essential to the national interest. This task will require uncompromising efforts to eliminate all
unnecessary Federal spending, efforts that could be aided by appropriate reforms of the budgetary process. The chapter then turns to
an assessment of the economic effects of the Tax Reform Act of
1986. It finds that tax reform, while entailing minor transition costs,




65

significantly improves the economy's long-run economic performance. Specifically, it is estimated that national net output of goods
and services increases approximately 2 percent because of the longrun consequences of tax reform. In 1986, this would have amounted
to an increase of approximately $600 in the income of the average
American family.
SPENDING RESTRAINT AND DEFICIT REDUCTION
The current economic expansion marks the first occasion in the
postwar period when Federal deficits have exceeded 5 percent of
GNP, and when very large deficits have persisted into the
third and fourth years of an expansion. At comparable periods
during the expansions of the 1960s and 1970s, the Federal deficit as
a share of GNP was generally less than one-half the level of 1985 and
1986. The underlying cause of the growing Federal deficit is illustrated in Chart 2-1. The share of Federal spending in GNP has continued on an upward trend, while the secular trend in the share of Federal revenues has remained virtually flat.
Under the provisions of Gramm-Rudman-Hollings, significant deficit reduction will occur in fiscal 1987. With moderately good economic performance and absent large new spending initiatives, the
Office of Management and Budget projects that the Federal deficit
will decline by almost $50 billion between fiscal 1986 and fiscal 1987,
equivalent to more than a full percentage point of GNP. The Administration's proposed budget for 1988 provides for another important
step in the process of deficit reduction, to the target of $108 billion,
along a path to reach a balanced Federal budget by 1991. Five critical reasons explain why this process of deficit reduction must continue and why deficit reduction should be achieved primarily through
spending restraint.
REASONS FOR DEFICIT REDUCTION

First, persistent large Federal deficits, except during periods of
severe economic difficulty or extraordinary national need, constitute
an unfair burden on future generations. The principle that "there is
no free lunch" applies to lunches charged on Uncle Sam's credit
card. In the end, all Federal spending must be paid for by some form
of explicit or disguised taxation. Finance of current expenditures
through the issuance of Federal debt merely postpones the inevitable
day when the bill for current services (plus accumulated interest)
must ultimately be paid, either through higher taxes or through reduced public services. More specifically, interest payments on the
Federal debt must ultimately be financed by some combination of re-




66

Chart 2-1

Federal Outlays and Receipts as Percent of GNP
Percent of GNP
25
Outlays/\

24

v \

23
22
Outlays Trend

21

/ ^-^\

\--"f

>

~~V

20
19
18
17

Receipts

n

I

1960

i

1963

i

I

i

1966

i I

1969

i

1972

I i i
i i i i i
i I
1987
1975
1978
1981
1984

Fiscal Years
Note.—Data for 1987 are estimates.
Sources: Department of Commerce, Office of Management and Budget,
and Council of Economic Advisers.

during the growth of noninterest Federal outlays below the growth of
GNP or by higher future taxes relative to GNP. The longer large
deficits persist, the larger grows the outstanding stock of Federal
debt and hence the greater is the ultimate required adjustment in
future noninterest outlays or taxes. Thus, the choice is not whether
to reduce the budget deficit, but rather when and by what means.
Second, deficit reduction through spending restraint is essential to
preserve the long-term economic benefits of the low marginal tax
rates established in the Tax Reform Act of 1986. This chapter later
analyzes the gains to national income and national welfare from tax
reform. These long-run benefits will begin to emerge, however, only
if marginal tax rates are lowered as promised in 1988, and only if
individuals and businesses believe that these tax rates will not be increased in the future.
Third, persistent large Federal deficits throughout an economic expansion could pose a difficult dilemma for macroeconomic policy in
the event of a significant economic downturn. In such a downturn,
Federal receipts automatically decline and transfer payments expand.




67

Either a sharply contractionary fiscal policy would need to be adopted during a recession to prevent a further increase in the Federal
deficit, or the share of the deficit in GNP would have to be allowed
to expand to levels not previously experienced in the United States
in peacetime. As is discussed in Chapter 1, there is no reason now to
expect a recurrence of the economic difficulties that contributed to
the steep recessions of 1974-75 and 1980-82. Nevertheless, it would
be imprudent to permit the persistence of large Federal deficits
throughout an economic expansion in light of the dilemma such deficits could create in the future.
Fourth, reduction of the Federal deficit through spending restraint
is an essential component of the strategy to reduce international
payments imbalances. Substantial progress has already been made on
one component of this strategy—exchange-rate realignments that improve the international competitive positions of many U.S. industries
and promise significant reductions in the U.S. trade deficit in 1987 and
beyond. As is discussed in Chapter 3, however, reduction of the U.S.
trade deficit and of the corresponding trade surpluses of other countries also requires that domestic demand in the United States grow
more slowly than U.S. GNP and conversely for foreign countries. Simultaneously, the United States must improve its national saving/investment balance (private saving less the sum of private investment
and the government deficit). Reduction of the Federal budget deficit
through spending restraint is a key U.S. contribution to achieving
these results in a manner consistent with sustainable, noninflationary
growth of the world economy. Furthermore, as discussed in Chapter
1, significant reductions in the trade deficit increase the likelihood
that resources that might otherwise be used to meet the demands
arising from Federal purchases will shift rapidly to meet the demands
of sectors producing exports and import substitutes.
Fifth, deficit reduction through spending restraint is required because Federal spending in many areas remains above levels necessary
to provide essential Federal services on an efficient and cost-effective
basis. Much has been accomplished during the past 6 years in cutting
back inessential, ineffective, and inefficient Federal programs. Larger
cutbacks can and should be made in a number of Federal programs
that serve special interests but whose benefits to the American
people do not justify the costs imposed on current or future taxpayers. Equally important, new spending initiatives should be limited to
critical areas of national need in the realm of Federal responsibility.
Deficit reduction is ultimately an issue of priorities. The long-run
benefits of stronger economic growth from the relatively low marginal tax rates provided in the Tax Reform Act of 1986 can be pre-




68

served only if the share of Federal spending in GNP is gradually reduced. Alternatively, Federal spending can be maintained and expanded on programs that serve a variety of special interests, at the
expense of current and future consumption by American families and
investment by American businesses. In making the politically difficult
choices required for deficit reduction, however, damage to Federal
programs that promote peace, maintain national security, or provide
essential support to the poor and elderly is neither necessary nor desirable.
GROWTH OF THE FEDERAL BUDGET DEFICIT

The tax rate reductions mandated by the Economic Recovery Tax
Act of 1981 (ERTA) reduced the share of Federal receipts in GNP to
the average of the 1960s and 1970s. In 1986, this share stood at 18.5
percent, virtually the same as in 1978 (also the fourth year of an economic expansion). Between 1978 and 1981, the share of Federal tax
collections rose to a postwar high of 20.1 percent, primarily as the
result of bracket creep. A significant contribution of ERTA was the
indexation of tax brackets, standard deductions, and personal exemptions, effective in 1985, which ensured that future inflation could not
once again push up the share of Federal revenues without an explicit
and visible decision to raise tax rates.
On the spending side of the Federal budget, total spending growth
has not been adequately restrained, but the distribution of Federal
spending has changed in important respects. Between 1978 and
1986, Federal spending rose from 21.1 to 23.8 percent of GNP. The
key changes in the distribution of Federal spending that occurred between 1978 and 1986 are illustrated in Chart 2-2 and may be summarized as follows:
• The share of defense spending increased from 4.8 percent of
GNP to 6.6 percent, ending the long period of erosion of national defense capabilities.
• The share of social security benefits increased by 0.5 percent of
GNP, maintaining a critical commitment to older and disabled
Americans and their families.
• The share of medicare expenditures increased by 0.7 percent of
GNP, reflecting both increased health care benefits and the partial success of efforts to limit the increasing cost of providing
such benefits.
• The share of net interest payments increased by 1.7 percent of
GNP, reflecting higher interest rates and the growing stock of
Federal debt.
• The share of general nondefense programs (except social security, medicare, and net interest) declined by 1.8 percent of GNP.




69

Chart 2-2

Federal Outlays as Percent of GNP
Percent
11

National Defense

10

'X

9

/^

S
7
6
5
4

Social Security

A---"

3
2
1

. i
1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986
Fiscal Years
Sources: Department of Commerce and Office of Management and Budget.

• Within the broad category of general domestic programs, funds
were reallocated away from inefficient, ineffective, low-priority
programs and toward programs serving important national
needs. For example, funding for community and regional development was reduced substantially and general revenue sharing
was eliminated, while outlays for health research and Federal law
enforcement activities increased significantly.
Despite the substantial progress already achieved in reorienting
budget priorities, important work remains to be done. Elimination or
curtailment of inessential, inefficient, and ineffective Federal programs is required to contribute to reduction of the share of Federal
spending in GNP and to allow room for expansion of programs that
serve critical national needs.
PROSPECTS FOR DEFICIT REDUCTION

The Administration is committed to achieving the targets for deficit reduction prescribed by Gramm-Rudman-Hollings (GRH). The
first important step in this process will be taken during the current
fiscal year, with a reduction of the Federal deficit to almost $50 bil-




70

lion below its fiscal 1986 level. Meeting the GRH deficit targets for
1988 and later fiscal years will not be an easy task, even with the continuation of reasonably strong economic growth and with further
moderation of inflation and interest rates. However, as the following
analysis suggests, the task is achievable provided the economic climate remains favorable.
In fiscal 1986, Federal spending amounted to 23.8 percent of GNP,
while Federal receipts absorbed 18.5 percent of GNP, leaving a deficit of 5.3 percent of GNP. Under the Administration's economic projections, continued economic growth and previously legislated increases in social security payroll taxes will increase the share of Federal receipts to 19.4 percent of GNP by 1991. These projections
imply that spending restraint must reduce the share of Federal
spending in GNP by 4.4 percent by 1991 to achieve a balanced
budget without general tax rate increases.
The President is firmly committed to no reductions in social security retirement benefits. Fulfilling this commitment means that the
share of social security expenditures will remain virtually unchanged
at 4.5 percent of GNP. Reductions in the share of total Federal
spending in GNP must come from other sources.
Net interest payments amounted to 3.3 percent of GNP in fiscal
1986. If the economy grows and interest rates decline as projected,
and if growth in the outstanding stock of Federal debt is slowed by
deficit reduction in accord with GRH targets, then net interest expense will decline by at least 1 percentage point of GNP by 1991.
This process is the reverse of that through which a rapidly growing
stock of Federal debt (fed by large Federal deficits) and rising interest rates contributed to the growth of net interest expense as a share
of GNP. To reverse this process, however, it is absolutely essential to
place the ratio of Federal debt to GNP on a descending path, mainly
through progress in spending reduction in categories other than net
interest expense. The sooner this task is accomplished, the easier will
be the subsequent task of deficit reduction.
The projected reduction of 1 percent in the share of net interest
expense and the relative constancy in the share of social security benefits imply that to reach a balanced Federal budget, the combined
share of all other categories of Federal expenditure must decline
from 15.7 percent of GNP in 1986 to roughly 12.5 percent in 1991.
Total Federal spending in this broad composite amounted to $655
billion in fiscal 1986. If real spending in this composite remained
constant at the 1986 level, projected economic growth between 1986
and 1991 would reduce its share in GNP from 15.7 to 13.3 percent.
Thus, an absolute reduction of real spending in this composite of




71

about $39 billion of 1986 dollars is required to achieve a balanced
budget.
Cutting $39 billion or 6.0 percent from composite spending of
$655 billion should not be an insurmountable task. The difficulty of
this task is heightened, however, by the need to accommodate real
spending increases in areas of critical national need and primary Federal responsibility. In particular, in the 1988 budget, the President
has identified the following major areas as requiring increased expenditures: national defense, foreign affairs (including foreign aid
and embassy protection), scientific and health research (including acquired immune deficiency syndrome research), drug abuse control
and treatment, space exploration, and implementation of the new immigration law. Increasing expenditures in these critical areas will require deeper cuts in less essential Federal programs if the deficit reduction targets are to be met.
PROPOSALS FOR SPENDING REDUCTIONS

The Administration's proposals for program reductions and terminations are described in detail in the President's 1988 budget. A
brief review of some of these proposals helps to place the economic
issues associated with deficit reduction into proper perspective.
Spending on farm support programs has been the most rapidly
growing major category of Federal spending, increasing from $4 billion in 1981 to $25.8 billion in 1986. The desire to assist farm families during a period of severe economic difficulty accounts for much
of this increased spending. However, total farm support spending has
now reached a level that would finance a direct payment of more
than $16,000 annually to each of 1.6 million farm families, or an
annual payment of more than $42,000 for each of the 619,000 commercial-sized farms in the United States. By comparison, median
income for all U.S. families is less than $30,000. Moreover, most
farmers receive little or no financial assistance from Federal farm
price-support programs. Of the 34 percent of American farmers who
did receive direct assistance in 1985, one-fifth received almost 70
percent of the payments. In the cotton program in 1986, 12 percent
of the participants received more than one-half of the total payments,
with some receiving millions of dollars. The 50 largest rice producers
will each receive more than $1 million in 1986 payments.
As is discussed in Chapter 5, Federal farm support programs are
not only expensive to the taxpayer and ineffective in channeling support to the most needy, but they also generate huge economic waste.
Because current Federal programs link financial support to farm
output, they encourage production of crops for which there is no effective market. Appropriate reform of farm support programs can




72

reduce economic waste and lower Federal expenditures while maintaining income support for distressed farm families.
The Federal Government continues to subsidize activities for which
the original rationale has disappeared or where no persuasive case
for Federal involvement can be made in the first place. For example,
mass transit systems can provide important benefits in the local areas
where they operate, but generally no good rationale exists for Federal subsidies that distort local choices concerning the construction and
operation of such systems. The Administration proposes elimination
of discretionary grants for new mass transit systems.
Another example is the Rural Electrification Administration (REA),
which has gone well beyond its original purpose of encouraging extension of electrical supply in rural areas. Since 1935, when the
Agency was founded, farms receiving electric service through REA
have increased from 12 percent of all farms to 99 percent. Rural telephone service (added as an REA responsibility in 1949) now extends
to 95 percent of all farms. REA's original goals have been achieved,
but it lives on, offering subsidized loans to electric cooperatives serving prosperous urban and suburban areas such as Atlanta, Georgia;
Denver, Colorado; Manassas, Virginia; and Minneapolis, Minnesota.
Loans have also been provided for electrification in exclusive resorts
such as Aspen, Steamboat Springs, and Vail in Colorado, and Hilton
Head Island, Kiawah Island, and Myrtle Beach in South Carolina.
The Administration proposes to curtail these practices by imposing
appropriate limits on REA lending and loan guarantees.
OTHER REVENUE MEASURES

The Administration's proposals for deficit reduction also involve
increasing Federal revenues by levying equitable user fees for Federal
services provided to identifiable beneficiaries, by selling some federally owned assets, and by instituting other relatively minor programs
to generate revenues. Both user fees and asset sales serve the dual
purpose of raising revenue for the Federal Government and encouraging economic efficiency. Efficiency in the use of services provided
by the Federal Government that are similar to services provided by
private business is encouraged when the user of the service, rather
than the general taxpayer, pays the cost of providing the service.
Economic efficiency is also often advanced when business-like operations are shifted from the Federal Government to the private sector,
where the profit motive and force of competition promote efficiency.
Major Administration proposals concern increased user fees for
guaranteed student loans and for home loans guaranteed by the Veterans Administration (VA) and the Federal Housing Administration
(FHA), and for mortgage-backed securities guaranteed by the Gov-




73

ernment National Mortgage Association (GNMA). Costs associated
with defaults on guaranteed student loans have run well ahead of
revenues from current fees—a situation that should be corrected.
The same is true for VA home loans. For FHA and GNMA, evidence
suggests that their association with the government provides an implicit subsidy that allows them to charge less for their services than a
private business would have to charge for the same service.
In addition to continuing sales from the Federal Government's
loan portfolio, major proposals for asset sales include the sale of
Amtrak and the phaseout of subsidies to Amtrak, sale of the Naval
Petroleum Reserve, and sale of the Alaska Power Administration.
Transfer of these programs to the private sector would lead to more
efficient operation, as well as generating revenue.
Asset sales are a one-time source of revenue. Indeed, sales of loans
from the Federal portfolio and sales of government enterprises that
earn a profit increase current revenue at the expense of future revenue. Such asset sales effectively transfer part of the task of deficit reduction from the present to the future. If adequate progress is being
made in attacking the core of the deficit problem, however, partial
transfer of this problem into the future through asset sales may be
desirable.
Once the budget is balanced on a cash basis, the nominal stock of
Federal debt will not grow and the ratio of Federal debt to GNP will
decline. As the ratio of Federal debt to GNP declines (assuming constant interest rates), the share of net interest expense in GNP will decline at a moderate pace. This development will allow room for other
categories of Federal spending to rise, absolutely and as a share of
GNP, without any increase in tax rates. Lost revenues from prior
asset sales can be made up under these circumstances without absolute cuts in spending programs or tax rate increases. This strategy
works, however, only if asset sales play a limited role in the total
strategy of deficit reduction, as they do in the President's 1988
budget, and if the other elements of that strategy are pursued consistently and effectively.
BUDGET CONCEPTS AND FISCAL AUTHORITY

Gramm-Rudman-Hollings significantly alters the congressional
budget process. It imposes targets for the Federal budget deficit in
each of fiscal years 1986-91 as well as a timetable and procedures for
meeting these targets. A number of other proposals have recently
been made to reform the process by which budget decisions are deliberated and implemented as well as to change the coverage and
content of the budget itself. Proposals to modify the coverage and
content of the Federal budget are motivated by the concern that the




74

current budget does not adequately reflect the economic costs of
Federal credit programs or capital investments made by the government. The line-item veto and a balanced budget amendment to the
Constitution are proposed reforms of the budget process that are
motivated by the fact that, absent the temporary Gramm-RudmanHollings procedures that expire in 1991, congressional decisions to
increase outlays are not directly related to decisions affecting expected tax receipts.
Federal Credit Programs

The accounting for Federal credit programs is a major weakness in
the present budget. Currently, the budget costs of direct loan programs are measured by the net outlays of those programs, that is,
total disbursements and interest paid minus repayments and interest
received. Congressional appropriations for direct loan programs are
generally only necessary when new disbursements exceed repayments. Loan guarantees do not result in recorded outlays except in
case of default. A loan guarantee represents a contingent liability of
the government that induces lenders to invest in particular loans,
thus allocating capital for federally determined purposes. Thus, a
loan guarantee may provide as large a subsidy as a direct loan obligation.
The budget neither measures nor controls the most salient aspect
of Federal credit—the size of the subsidy offered the borrower. Without some means of measuring and controlling this subsidy, neither
the executive branch nor Congress can make informed decisions
about Federal credit programs, either by comparing one with the
other or by comparing them with noncredit expenditure programs.
Some inadequacies of the budget treatment of Federal credit programs were rectified by introduction of the Federal credit budget
in 1980. The Federal credit budget measures direct loan obligations
and guaranteed loan commitments. Although it is a step forward, the
credit budget does not restrain the total volume of Federal credit effectively. Only about 55 percent of the credit budget totals for 1985
were capped by appropriation act limitations. Moreover, the credit
budget does not measure the subsidy costs, nor does it directly restrict the level of subsidy that a program offers the borrower.
The Administration proposes to change the budget treatment of
direct loans and loan guarantees. Legislation for this purpose will be
sent to the Congress in the spring of this year. The Administration's
proposal would divide the face value of a new direct loan into two
parts: the market value of the loan and the present value of Federal
subsidies. A Federal Credit Revolving Fund would be established
under the direction of the Treasury. Before an agency could make
direct loans, Congress would have to appropriate funds to that




75

agency for the provision of direct loan subsidies. As loans were
made, the agency would provide the Fund with the information required to estimate the present value of the direct loan subsidies. The
central revolving account would be charged for the market value, or
nonsubsidized component, of direct loans. The agency would then be
charged for the subsidy component of direct loans.
In the case of loan guarantees, Congress would first make appropriations to the agency. As the agency granted loan guarantees, it
would provide the Fund with the information necessary to estimate
the present value of the guarantee subsidies. The agency would be
charged for the value of the subsidy and would also transmit to the
Fund any fees paid by the borrowers. The Fund would then assume
the contingent liability for the guarantees.
To establish an objective measure of direct loan subsidies, newly
made direct loans would be sold to the public without recourse. Similarly, new loan guarantees would be reinsured with private insurers.
Adoption of the Administration's proposal would ensure that the
budget reflected the true economic costs of Federal credit programs.
It would provide the President and Congress with the information
necessary to make informed decisions about the allocation of budget
resources to these programs.
A Capital Budget

The Federal budget is a comprehensive statement of expected cash
outlays and cash receipts. The budget includes both operating and
investment outlays, but does not report separate operating and capital budget subtotals. However, details of Federal investment outlays
are presented in a special analysis that is published with the budget.
The comprehensive outlay and receipt totals are indispensable for
evaluating the effect of Federal policies on the level and composition
of aggregate economic activity. The unified budget deficit, which is the
difference between total Federal outlays and receipts, figures prominently in macroeconomic analysis precisely because it measures the
government's demand for private domestic and foreign saving as well
as the change in the outstanding stock of government debt.
For many years, proposals have been made to separate the unified
Federal budget into an operating budget and a capital budget. Although the proposals differ in important respects, all share the essential feature that Federal receipts and outlays would be disaggregated
into their operating and capital components. In general, investment
outlays would not be charged against operating receipts in the calculation of the operating deficit, and only the subsidy component of
direct loans and loan guarantees would be considered an operating
outlay. Investment expenditures and the market value of direct loans




76

would constitute the outlays used in calculating the capital budget
deficit.
Several arguments have been made in favor of a capital budget.
First, it would provide the information and incentives necessary to
promote economically efficient government capital planning. Second,
borrowing to finance capital outlays would spread the cost of government investments more equitably among current and future beneficiaries and thus link the payment for a government investment with its
use. For this reason, it has been argued that operating and capital
budget subtotals should be calculated separately so as to distinguish
between Federal borrowing that finances current operations from
borrowing that finances capital investments yielding future benefits.
Opponents argue that the capital budget would not promote economically efficient capital planning. Because capital outlays would
not be deducted from receipts in the calculation of the operating deficit, the constraint on capital outlays might be relaxed to such an
extent that budget decisions would be biased in favor of capital
spending. Furthermore, technical disagreement over the definition of
capital outlays would likely occur, such as whether expenditures for
research and development or education should be included in the
capital budget and thus not be charged against receipts in calculating
the operating budget deficit. More generally, opponents argue that a
unified budget is needed to hold public officials accountable for appropriations of tax receipts. Separate capital and operating budgets
would, according to this view, invite manipulation to hide and
expand Federal spending.
It is important that the long-term benefits of government capital
investments be adequately assessed against the current budget cost
of the resulting capital outlays. However, it is at least equally critical
that budget deliberations take into account the effect of proposed
policies on total outlays, receipts, and the unified budget deficit.
The Line-Item Veto

The line-item veto would authorize the President to veto individual
line items in appropriation bills, subject to the current provisions for
overriding a veto of any bill. Governors in 43 States now have such
authority. Congress has approved such authority for the Governors
of the Commonwealth of Puerto Rico and the Trust Territories and
for the Mayor of the District of Columbia—but not for the President.
For more than a century, Congress has rejected Presidential requests for this authority in order to maintain the opportunity to package spending proposals that the President would otherwise veto in
broader appropriations that the President would approve. Appropriations are presented to the President in only 13 general appropriation
bills. Indeed, last year Congress did not pass a single one of the 13




77

appropriation bills, but instead passed one 389-page omnibus spending bill. Because Congress had not completed action on the annual
appropriation bills, the President was compelled by law to shut down
the Federal Government. Such abrogation of a responsible budget
process by Congress not only discourages careful, prudent legislation—it encourages excessive spending and waste.
Effective use of the line-item veto would change the composition
and level of Federal expenditure. A Member of Congress is elected
by voters in a specific congressional district or State, while the President is elected by the voters of the Nation. As a consequence, a
Member of Congress has stronger preferences for programs and
projects that benefit his or her regional constituency, especially because only a fraction of the cost of such programs and projects are
borne by his or her constituency. The expected result of granting approval for a line-item veto would be a decrease in expenditures on
programs and projects whose regional benefits do not exceed the
cost to the Nation's taxpayers. This result should be a sufficient basis
for early approval of Presidential authority for a line-item veto.
Balanced Budget Amendment

The President has endorsed the concept of a balanced budget/tax
limitation amendment to the Constitution. The objective is to change
the rules by which decisions are made to borrow or to increase the
size of Federal outlays and receipts relative to national income. Although several amendments have been proposed, two that have been
considered in the Senate share the following provisions:
• A requirement that total outlays be no greater than total receipts, unless three-fifths of the whole number of both Houses of
Congress decide otherwise in a vote devoted solely to that subject;
• A prohibition on increases in the public debt, absent approval by
three-fifths of the whole number of both Houses of Congress;
• A requirement that all or some revenue-increasing bills be enacted by a majority of the whole number of both Houses of Congress by roll call vote; and
• The authority for Congress to waive these requirements in the
event of war.
Approval of this proposed amendment would be a recognition that
each generation may need to bind itself to responsible fiscal decisions in the interests of the current and future American community.
The line-item veto and a balanced budget amendment cannot substitute for the hard choices necessary to restrain the growth of Federal expenditure and to reduce the Federal deficit. Early approval of
these proposals, however, could force a resolution of the choices necessary to resolve major near-term fiscal issues.




78

TAX REFORM
This section assesses the economic effects of the Tax Reform Act
of 1986. The purpose of this assessment is twofold: to forecast the
effects that tax reform will have on future macroeconomic activity
and, by demonstrating the substantial benefits of tax reform, to
guard against possible future changes in the tax code that would
undo the important progress that has been made.
OVERVIEW

The Tax Reform Act of 1986 fundamentally alters the structure of
the Federal income tax. It broadens the personal and corporate
income tax bases and substantially lowers tax rates. These changes
will significantly alter private incentives and, accordingly, will influence the economy's performance through three principal channels:
• Lower marginal tax rates on personal income, in conjunction
with a broader tax base, will increase labor effort and reduce the
exploitation of tax loopholes.
• More uniform tax rates on income from alternative capital investments will induce a more efficient allocation of investment
funds.
• A somewhat higher overall marginal tax rate on capital income
will modestly reduce the economy's long-run capital intensity.
The analysis in this section indicates that tax reform will significantly
improve the economy's long-run performance. This improvement will
come from several sources, most of which have not been explicitly
quantified. Estimates that have been made, however, suggest that the
Nation's output of goods and services will permanently increase by
approximately 2 percent because of the long-run consequences of tax
reform.
This section begins with a discussion of the conditions leading to
tax reform and a brief explanation of the importance of marginal tax
rates for economic efficiency. The chapter then turns to an assessment of the Tax Reform Act of 1986 (TRA). This assessment begins
with a description of the major provisions of TRA and an analysis of
their microeconomic implications. Finally, the chapter explores the
implications of TRA for long-run economic growth and short-run
macroeconomic activity.
THE CONDITIONS LEADING TO TAX REFORM

Despite legislated "tax reductions" during the 1960s and 1970s,
marginal tax rates rose substantially as inflation pushed taxpayers
into higher tax brackets. As is shown in Table 2-1, a family of four
with median earnings in 1965 paid 17 cents in tax on the last dollar




79

of income earned. Such a family, therefore, had a marginal tax rate
of 17 percent. The marginal tax rate for a similar family in 1980, in
contrast, had risen to 24 percent due to bracket creep. The growth in
marginal tax rates was more dramatic at higher incomes: a family
with twice the median income in 1980 had a marginal tax rate almost
double that of a similar family in 1965.
TABLE 2-1.—Marginal personal income tax rates for four-person families, selected years,
1965-881
[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

1986

14

22

38

15

15

28

1988 (TRA)
1

...

Excludes social security taxes and State and local income taxes.

Source: Department of the Treasury, Office of Tax Analysis.

For income from capital gains, inflation not only increases the statutory rate of tax because of bracket creep, but it also causes the effective tax rate to exceed the statutory tax rate. This phenomenon
was particularly important in the 1970s, when inflation rates were
high. In 1979, for example, a 1-year investment yielding a 10 percent
nominal capital gain yielded, after 9 percent inflation, a 1 percent
real capital gain. Federal taxes, however, are levied on nominal capital gains. A taxpayer in the 70 percent tax bracket who received a 10
percent nominal capital gain, therefore, earned a 7.2 percent nominal
after-tax return (taking the 60 percent capital gains exclusion into account). After 9 percent inflation, this translates to a minus 1.8 percent real after-tax return. Hence, for this hypothetical investor, inflation increased the effective tax rate on the 1 percent real pretax capital gain from 28 percent to 280 percent. This phenomenon is entirely independent of bracket creep and, for the taxation of capital gains,
is quantitatively much more important.
Inflation also distorts the taxation of corporate bond interest. The
nominal rate of return on bonds includes an inflation premium that
is not distinguished, for tax purposes, from the real return. Corporations can deduct nominal bond interest paid from their taxable
income and individual bondholders must include nominal bond interest received in their taxable income. Inflation, therefore, decreases
(increases) the effective rate of tax on debt-financed corporate invest-




80

ment if the corporate tax rate exceeds (is less than) the marginal tax
rate of the marginal bondholder. Because of the offsetting effects of
the corporate and personal tax systems, inflation affects the taxation
of real corporate bond interest much less than it does the taxation of
real capital gains.
The high inflation rates of the 1970s distorted the taxation of capital income in still another way. Deductions for the depreciation of a
capital asset, which are properly subtracted from gross capital income
to determine taxable income, are set in accordance with the purchase
price of the asset. Inflation therefore reduces the real value of depreciation deductions. This phenomenon, in addition to the taxation of
inflationary capital gains, caused the effective rate of tax on equityfinanced investments to rise substantially during the 1970s.
It became increasingly apparent in the late 1970s that these inflation-induced increases in effective tax rates were stifling private incentives to work and to save and were impeding economic growth.
To restore private production incentives, therefore, the Administration proposed, and Congress passed, the Economic Recovery Tax
Act of 1981. ERTA called for a phased reduction in personal tax
rates that, when completed in 1984, substantially reduced personal
marginal tax rates (see the 1986 tax rates in Table 2-1). The top
marginal tax rate was reduced from 70 to 50 percent. ERTA also extended eligibility for individual retirement accounts (IRAs) to individuals with other pension plans. Beginning in 1985, the rate schedule,
the zero bracket amount, and the personal exemption were indexed
to the price level. ERTA also included substantial investment incentives. Although these incentives were scaled back somewhat by
TEFRA, the Tax Equity and Fiscal Responsibility Act of 1982, ERTA
and TEFRA together significantly lowered the effective tax rate on
income from most capital investments.
ERTA-TEFRA substantially reduced marginal tax rates but left two
particularly undesirable features of the income tax. First, ERTATEFRA's investment incentives increased the opportunities for tax
avoidance. Second, ERTA-TEFRA did not help to equalize marginal
tax rates on alternative capital investments. In particular, investments
in corporate equipment retained their tax advantages over investments in corporate structures. Uneven tax rates on income from alternative capital investments result in a misallocation of capital and a
lower value of output than would otherwise be obtainable.
To correct these problems and others, and to reduce marginal tax
rates further, the President submitted to Congress detailed proposals
for income tax reform in May 1985. These proposals became the
basis for congressional deliberations that culminated in TRA. This
law differs somewhat from the President's proposals but retains their




81

overall thrust. TRA lowers marginal tax rates, broadens the personal
and corporate tax bases, and helps to equalize marginal tax rates on
alternative income-producing activities.
MARGINAL TAX RATES AND ECONOMIC EFFICIENCY

Marginal tax rates—the rates paid on the last dollar earned from
income-producing activities—influence the incentives to engage in
productive activities and, hence, are extremely important elements of
the tax system. The marginal tax on labor income, for example,
drives a tax wedge between the value of output that an additional
unit of labor produces and the after-tax wage received by workers,
thereby discouraging additional labor effort. A reform of the tax
system that lowers the marginal tax rate on labor income, while raising the same total revenue, therefore increases labor effort and economic well-being. Economic well-being is increased because the value
of total output is increased by more than the total value of leisure is
decreased. Likewise, the marginal tax on investment income drives a
tax wedge between the pretax return to investment and the after-tax
return to saving. Additional saving that would be induced by a lower
marginal tax rate on capital income increases the total value of
output by more than it increases the inconvenience cost of postponing consumption.
A uniform tax on investment income distorts the overall savings
decision. A nonuniform tax on capital income introduces an additional distortion in the allocation of saving and investment. Because investment funds tend to be directed toward assets with the highest expected after-tax returns and because the return to a particular asset
type declines with its quantity, alternative investments tend, in equilibrium, to yield equal after-tax returns. Hence, the pretax return on
a particular investment tends to be higher, the higher is the effective
marginal tax rate. Unequal marginal tax rates on alternative capital
investments, therefore, result in an output loss. That is, the value of
output would be increased if investment funds were shifted away
from investments with low marginal tax rates and low pretax returns,
and toward investments with high marginal tax rates and high pretax
returns. The greater are the differentials among marginal tax rates
on alternative capital investments, the greater is the resulting output
loss.
High marginal tax rates on labor income also encourage excessive
consumption of untaxed employee fringe benefits. A worker with a
30-percent marginal tax rate, for example, gives up 70 cents in takehome pay for each dollar of (untaxed) fringe benefits he or she receives. The worker, or the worker's union, therefore rationally seeks




82

an amount of fringe benefits that have a value, at the margin, equal
to only 70 percent of their true cost.
More generally, high marginal tax rates increase incentives to
engage in tax avoidance and evasion. Tax avoidance occurs when taxpayers make legitimate investment or consumption choices that are
influenced by the desire to reduce tax liabilities. As was demonstrated for the case of untaxed employee fringe benefits, tax avoidance
leads to an inefficient allocation of resources and is apt to increase
with the marginal tax rate on ordinary income. Tax evasion, conversely, is the failure to comply with the tax laws. The incentive to
hide income from the tax authorities, so as to evade taxes, increases
with the marginal tax rate. Tax evasion, like tax avoidance, ordinarily
results in wasteful expenditures of time, energy, and tangible resources.
A MICROECONOMIC ANALYSIS OF THE TAX REFORM ACT
The Personal Income Tax

TRA significantly lowers tax rates on personal income. When the
law is fully effective in 1988, two tax brackets, set at 15 and 28 percent, will replace the 14 that ranged from 11 to 50 percent. The 15percent bracket and the personal exemption are phased out for highincome returns, which results in an implicit 33-percent tax rate for a
broad income range. As is shown in Table 2-1, TRA reduces marginal tax rates to levels that are similar to those that prevailed in 1965.
These rate reductions are made possible, in part, by TRA's basebroadening measures. TRA broadens the personal tax base, or taxable personal income, to include the following: all long-term capital
gains, State and local sales taxes, IRA contributions for high-income
individuals with employer-provided pension plans, nonmortgage consumer interest payments, miscellaneous itemized deductions less than
2 percent of adjusted gross income, net losses from passive investments, and net losses from active real estate investments for highincome taxpayers. These base-broadening measures are partially
offset by substantial increases in the standard deduction and personal
exemption. By 1988, the personal exemption is nearly doubled and
the standard deduction is increased 36 percent for joint returns and
21 percent for single returns.
An important feature of TRA is its strong limitations on tax-sheltered activities, which have grown greatly over the past several years.
Two factors are largely responsible for the recent growth in tax shelters; first, the high inflation rates of the late 1970s and early 1980s
increased the real value of nominal interest deductions on leveraged
investments, and second, ERTA-TEFRA substantially accelerated depreciation deductions. These factors increased the opportunities for




83

claiming early losses in exchange for later capital gains that have the
advantages of tax deferral and a lower tax rate.
TRA limits tax shelters directly and indirectly. The elimination of
the capital gains preference, the deceleration of tax depreciation deductions, more stringent limitations on investment interest deductions, and the lowering of marginal tax rates all serve indirectly to
make tax shelters less attractive. Moreover, any remaining tax avoidance opportunities are subjected to TRA's provisions concerning passive business losses and real estate losses. In particular, net losses
from passive business investments and real estate investments for
high-income taxpayers cannot be deducted from ordinary income;
they must be carried forward and deducted from net income from
like activities in later years.
These tax-shelter limitations not only make the personal income
tax more equitable, but they should also result in more economically
efficient investment decisions. Investments that previously provided
opportunities for tax avoidance are put on a more equal footing with
other investments. Investment funds, therefore, should have a greater tendency to flow to their most highly valued uses.
The elimination of the nonmortgage consumer interest deduction
should also improve the current allocation of investment funds. Consumer durables yield a flow of services that, unlike alternative investments yielding monetary income, is untaxed. By disallowing nonmortgage consumer interest deductions, TRA partially eliminates the
tax preference that is currently afforded to consumer durables. TRA,
therefore, puts consumer durables on a more equal footing with alternative investments and should lead to more efficient investment
decisions.
Allowing State and local taxes to be deducted from the Federal
income tax base is both inefficient and inequitable. It is inefficient
because it reduces the perceived cost of State and local government
services and, except possibly in cases where State spending generates
appreciable spillover benefits, encourages excessive State and local
spending. It is inequitable because it causes residents of low-tax localities, who enjoy relatively small amounts of State and local government services, to pay a disproportionate share of Federal taxes. TRA
ameliorates these problems in two ways: it disallows the State and
local sales tax deduction, and, by lowering the marginal Federal tax
rate, it lowers the value of other State and local tax deductions.
TRA disallows IRA deductions for high-income individuals with
employer-provided pension plans. However, TRA still allows most
working individuals to deposit $2,000 (nondeductible) each year in
IRAs and defer tax on accrued interest until the funds are withdrawn




84

at retirement. This tax advantage is substantial, accounting for a
large portion of the tax savings afforded by deductible IRAs.
Although TRA significantly limits itemized deductions, it substantially raises the standard deduction. As a result, TRA is estimated to
reduce the number of itemized personal Federal income tax returns
in 1988 by 11.5 million, thereby yielding an approximate $1.3 billion
reduction in compliance costs.
Equity. TRA will cut total personal income taxes by about 6.6 percent
in 1988. Table 2-2 gives the percentage tax cut for eight income
classes. The estimates are based on an expanded definition of income
that equals adjusted gross income plus such items as excluded capital
gains, passive business losses, and tax-exempt bond interest.
TABLE 2-2.—Effects

of the Tax Reform Act of 1986 on Federal tax liabilities and average Federal
tax rates, by income class, 1988
Percent change
in income
tax liability

Income class (1986 dollars)1

Average tax rate (percent)

TRA

Prereform

0 to

10 000

-56.2

2.0

0.9

10,000 to

15,000

-27.8

5.4

3.9

15 000 to

20 000

-14.8

7.0

6.0

20 000 to

30 000

-8.5

8.9

8.1

30 000 to

50 000

-7.1

11.0

10.3

13.9

13.7

17.4

17.1

13.6

13.4

10.3

9.6

50,000 to 100,000

-.9

100,000 to 200,000

-1.0

200 000 and over

-.9

ALL INCOME CLASSES

-6.6

1

The income concept (modified expanded income) is one of many possible income classifiers and was used by the Joint
Committee on Taxation to present the distributional effects of the Tax Reform Act of 1986. An alternative measure, "economic
income," was used in the Treasury Department's The President's Tax Proposals in 1985.
Note.—Distributions reflect most but not all of the provisions of the individual income tax code.
Source: Department of the Treasury, Office of Tax Analysis.

The percentage tax cut under TRA is largest for low-income returns. The number of poor families paying Federal income tax is estimated to fall by 4.3 million in 1988 under TRA. With one small
exception, the estimated percentage tax cut under TRA steadily falls for
higher income returns. Thus, these estimates indicate that TRA actually
increases the effective progressivity of the personal Federal income tax
despite a less graduated rate structure. This result is shown in the
last two columns of Table 2-2, which give the estimated average tax
rate for each income class under TRA and the prereform tax law.
TRA cuts the average tax rate much more for taxpayers with income
less than $50,000 than it does for higher income taxpayers.
Table 2-2 concerns only personal Federal income taxes. Because
all taxes are ultimately paid by individuals, a complete analysis of tax




85

incidence would allocate undistributed corporate income and Federal
corporate taxes to the various income classes. Exactly how this
should be done, however, is uncertain. Current evidence is not conclusive, but it suggests that part of the corporate tax burden is borne
by workers and that the majority is borne by owners of capital. If this
inference is correct, it would imply that high-income taxpayers, who
earn a disproportionate share of capital income, bear a relatively
large share of the corporate tax burden. Because TRA shifts 6.6 percent of the individual income tax burden to corporations, it would
follow that a proper imputation of corporate taxes to the various
income classes would probably reinforce the conclusion that TRA enhances the effective progressivity of the Federal income tax.
TRA increases the long-run horizontal equity of the Federal
income tax. Horizontal equity concerns the degree to which taxpayers with equal amounts of economic income have equal tax liabilities.
Because of TRA's limitations on tax preferences, including the elimination of the capital gains preference, the limitations on tax shelters,
and a stricter minimum tax, it substantially reduces the variation in
the amount of tax paid by taxpayers with the same real income.
As does any significant reform of the tax system, TRA will cause a
one-time change in asset values that will redistribute wealth. Existing
assets that received tax preference under ERTA-TEFRA and have
their tax preferences curtailed under TRA suffer capital losses. Contrariwise, any existing assets that are taxed less heavily under TRA
than they were under ERTA-TEFRA enjoy capital gains. Special transition rules make these changes in asset values less severe in some
cases. The deductions for passive business losses and real estate
losses attributable to assets acquired prior to tax reform, for example, are phased out gradually over 4 years. The same is true for deductions of interest payments on preexisting nonmortgage loans.
This phenomenon of changing asset values is one reason why
changes in the tax law should be infrequent and implemented only
for compelling reasons. Investments tend to be inherently risky; further riskiness introduced by frequent changes in the tax law unnecessarily destabilizes the business environment.
Business Taxes

The proper measurement of economic income from investments in
real assets requires that deductions be made for the decline in real
asset values attributable to depreciation. Since 1954, tax law has allowed investors to deduct for more rapid depreciation on most assets
than actually occurs. Accelerating depreciation in this manner lowers
the cost of capital, which is defined as the minimum pretax investment return that is profitable. The cost of capital has also been reduced by the investment tax credit, which applied primarily to equip-




86

ment assets and allowed investors to deduct a percentage of an
asset's purchase price immediately from tax liabilities.
TRA repeals the investment tax credit, allows less accelerated depreciation, and lowers the corporate tax rate from 46 to 34 percent.
These provisions taken together have two general effects: they tend
to raise the cost of capital overall, and they tend to equalize the cost
of capital for alternative capital investments. The latter effect is due
primarily to more equal effective rates of tax on investments in corporate equipment and corporate structures.
Table 2-3 gives the estimated percent change in the cost of capital
brought about by TRA for three sectors of the economy and for various assets within the corporate sector. For the corporate sector, the
calculations take into account corporate, property, and personal
taxes. Investments are taxed differently depending on whether they
are financed with debt or equity. Table 2-3 gives results for three
different modes of finance; for debt, equity, and a combination of
debt and equity.
TABLE 2-3.—Percent change in cost of capital under the Tax Reform Act of 1986
Financing mode
Debt and equity

Equity

Sector

Debt

Corporate sector

Old view1

New
view1

Old view1

view1

48.6

48

4.7

2.8

11.9

197.3

Equipment
Nonresidential structures
Public utilities . . .
Residential structures
Inventories
Nonresidential land
Residential land

26.6

43.7
10.6
16.2

43.7

62.2
16.6
22.2

1.0
6.5

7.7

44.5
47.9
24.2
21.1
19.3
16.5

-18.6
-18.0
170

Noncorporate business sector

4.7

.6

.6

1.9

1.9

Owner-occupied housing

3.3

1.6

1.6

2.2

2.2

28

3.0

2.4

7.4

2.7

2.3

6.2

Total business

22.1

TOTAL

16.8

-5.7

-2.1

2.1
110
-10.6
-9.9

13.3

-.4
130
-12.5
116

6.5

-5.8
-5.5

51

1
See text for explanation of the old view and the new view of dividend taxation.
Note.—Changes are relative to the prereform tax law. The computations take into account corporate taxes, property taxes, and
personal taxes at all levels of government.
Source: Department of the Treasury, Office of Tax Analysis.

As is shown in the first column of the table, TRA substantially increases the cost of debt-financed capital investments. This result follows largely because the value of interest deductions falls with the
fall in corporate and personal tax rates.
There are currently two views in the economics profession concerning the relative importance of taxes on capital gains and on dividends for determining the cost of equity capital. The "new view" of
dividend taxation maintains that taxes on capital gains are very important, while taxes on dividends are nearly irrelevant, for determin-




87

ing the cost of equity capital. The "old view" of dividend taxation,
conversely, maintains that taxes on dividends, as well as taxes on capital gains, are important for the cost of equity capital. It follows that
TRA, which raises the marginal tax rate on capital gains and lowers
the marginal tax rate on dividends, increases the cost of capital more
under the new view of dividend taxation than under the old view. No
consensus has formed as to which of these two views is correct. Although the new view gained wide acceptance when first introduced,
recent empirical evidence does not uniformly support either view
over the other.
The estimates in Table 2-3 indicate that the overall cost of equityfinanced investment falls under the old view and rises under the new
view. The cost of corporate equipment rises much more than the cost
of corporate structures. This finding also applies to the noncorporate
sector and is attributable to the repeal of the investment tax credit.
Because TRA reduces corporate and personal tax rates, the cost of
capital falls dramatically for nondepreciable capital assets, such as inventories and land.
Historically, approximately one-third of investment is financed with
debt and two-thirds with equity. The last two columns of Table 2-3
use these weights to obtain overall percentage changes in the cost of
capital for both views of dividend taxation. These calculations indicate that the overall cost of capital rises by 2.3 to 6.2 percent. Because debt finance becomes relatively more expensive under TRA,
and the financing shares are not allowed to respond to this change,
these estimates tend to overstate the rise in the cost of capital. On
the other hand, these estimates do not incorporate tax-shelter limitations or changes in accounting rules, provisions of TRA that raise the
cost of capital.
TRA substantially evens the cost of capital across assets within
each sector. This effect is shown in the first part of Table 2-4, which
concerns the variation in the cost of capital within the corporate
sector. For every asset, TRA is estimated to reduce the magnitude of
the percentage deviation of the cost of capital from the overall average cost of capital in the corporate sector. Because relative costs of
capital within each sector depend primarily on the investment tax
credit and depreciation allowances, and these features of the tax law
are the same for the corporate and the noncorporate sectors, these
conclusions also apply to the noncorporate sector.
However, TRA does not alleviate the intersectoral distortions in
the capital income tax, as is shown in the second part of Table 2-4.
The corporate sector is taxed most heavily, followed, in order, by the
noncorporate sector and owner-occupied housing.




88

TABLE 2-4.— Within-sector and between-sector variation in the cost of capital
Old view1

New view1

Sector
Prereform

TRA

Prereform

TRA

Percent deviation from average
corporate cost of capital
Corporate sector:
Equipment
Nonresidential structures
Public utilities
Residential structures
Inventories .
Nonresidential land
Residential land

-34.9
69
-8.8
21.9
21.4
26.0
35.4

-8.9
-2.5
.5
18.1
2.7
7.4
16.5

-37.2
-6.3
-7.6
24.8
21.5
27.0
37.9

-8.9
-2.3
.9
18.8
2.4
7.3
17.0

Percent deviation from overall
average cost of capital
Corporate sector

16.3

Noncorporate business sector

16.8

-5.9
-17.6

Owner-occupied housing

-17.7

7.2

-6.2

.5
-12.0

12.9

36
-15.3

1
See text for explanation of the old view and new view of dividend taxation.
Note.—Assumes financing is one-third debt and two-thirds equity.
Source: Department of the Treasury, Office of Tax Analysis.

A recent study indicates that eliminating the uneven taxation of
assets within sectors, and retaining the intersectoral distortions,
would cause investment funds to be reallocated so as to increase real
net national product—real GNP less capital depreciation—permanently by about 0.2 percent. Because TRA reduces the within-sector
variance in the cost of capital by about 60 percent, this finding suggests that this particular feature of TRA will, after a period of adjustment, permanently increase net national product by about 0.1 percent.
This estimate of the neutrality gains under TRA omits two important factors. First, the cost-of-capital estimates do not take into account the possible "churning" of assets. Churning occurs when a
used asset is sold and redepreciated, for tax purposes, by the new
owner. Under ERTA-TEFRA, this investment strategy was viable only
for assets that have an active resale market, most particularly commercial structures and rental housing. TRA's limitations on tax shelters substantially reduce the tax preference afforded to such assets.
Therefore, the quantified neutrality gains under TRA are mismeasured to the extent that TRA's neutrality gains associated with churnable structures are different than TRA's neutrality gains associated
with other structures. Second, TRA increases the relative tax preference given to intangible assets, such as expenditures on marketing,
advertising, and research and development. This result follows from
the fact that TRA increases the overall cost of tangible capital, and
income from intangible capital assets is entirely untaxed (at the
margin) at the corporate level under both ERTA-TEFRA and TRA.




89

Because intangible assets are not included in the cost of capital computations, the quantified neutrality gains from TRA tend to be overstated.
Under both TRA and the prereform tax law, corporations are able
to deduct interest payments. Because dividend payments are not deductible, equity finance is put at a disadvantage relative to bond finance, which presumably encourages corporate borrowing. The estimates of the cost of capital indicate that TRA reduces the tax advantage of financing corporate investments with debt rather than equity
by about 25 percent. TRA, therefore, should reduce the incentive for
corporate borrowing, thereby reducing bankruptcy costs and other
economic costs attributable to the issuance of corporate debt.
Under TRA as well as the prereform tax law, inflationary returns
to capital investments are taxed. Also, depreciation allowances are
not indexed for inflation. The cost-of-capital estimates in Tables 2-3
and 2-4 assume that the inflation rate is 3 percent. If the inflation rate
should rise, the cost of capital would increase. Table 2-5 gives the
percentage change in the cost of capital under TRA caused by a 5percentage-point increase in the inflation rate. The overall cost of
capital rises 3.2 percent under the new view of dividend taxation and
5.1 percent under the old view. Higher inflation would also exacerbate
the tax-induced distortion in the choice of debt and equity finance.
Inflation must be kept low, therefore, to maintain appropriate investment and financing incentives.
TABLE 2-5.—The cost of capital under the Tax Reform Act of 1986 for an 8-percent inflation rate:
Percent change from case of 3- percent inflation
Percent
change

Financing mode
Debt

„

-13.8

Equity:
Old view11
New view

12.0

95

Debt and equity:
Old view11
New view

51
32

1
See text for explanation of the old view and the new view of dividend taxation.
Source: Department of the Treasury, Office of Tax Analysis.

TRA'S EFFECT ON LONG-RUN ECONOMIC GROWTH

It has been argued that TRA will lead to more efficient consumption and investment decisions and, for fixed aggregate quantities of
productive inputs, will lead to an increase in output and economic
well-being. This section analyzes TRA's effects on the long-run supplies of capital and labor and the implications for economic growth




90

and economic well-being. This section abstracts from issues concerning the composition of the capital stock and of output, topics that
were discussed in earlier sections.
Table 2-6 gives the marginal tax rate (averaged over taxpayers) for
all levels of government on labor income, capital income, and output
under TRA and the prereform tax law. So as to estimate conservatively the long-run gains under TRA, the effective marginal tax rate
on capital income assumes that the new view of dividend taxation applies. The average marginal tax rate on labor income takes account
of the social security and medicare payroll taxes. In so doing, the
linkage between these payroll taxes and future benefits is assumed to
be sufficiently weak and uncertain that these payments are regarded
as taxes. As is shown in the table, TRA lowers the marginal tax rate
on labor and raises it on capital. The marginal tax rate on output,
which is a weighted average of the marginal tax rates on labor and
capital, falls 4.3 percent under TRA.
TABLE 2-6.—Average marginal tax rates on labor income, capital income, and output
TRA

Prereform

Item

41.6

38.0

25.8

21.7

4.9
109

10.9

Capital income 3

345

38.4

Output 4

398

381

Labor income
Federal income tax
State and local income and sales tax *
Social security and medicare payroll tax 2

5.4

1

Rate is the statutory tax rate (measured as State and local income and sales taxes divided by net national product in 1985)
adjusted down in accordance with the deducibility of State and local taxes (except sales taxes under TRA) from the Federal
income tax base.
2
Social security and medicare payroll tax rate, for both employees and employers, multiplied by the portion of total labor
income earned by individuals who are subject to the payroll tax at the margin.
3

Includes taxes at all levels of government.

4
Tax rate on labor income multiplied by .labor's share of income (0.75) plus the tax rate on capital income multiplied by
capital's share of income (0.25).
Sources: Department of the Treasury (Office of Tax Analysis) and Council of Economic Advisers.

The immediate effect of TRA will be to raise the net wage by 6.2
percent and lower the net return to saving by 5.9 percent. These
changes will increase labor effort and depress saving as a portion of
an enlarged pool of labor income. Relative to their baseline growth
paths, therefore, labor input will increase and capital input may increase or decrease. Capital input is more likely to increase the more
labor compensation, and hence total income, increases. In any case,
the ratio of capital to labor is decreased.
The long-run economic effect of TRA is most appropriately measured in terms of real net national product. The effect of TRA on net
national product depends on its effects on capital and labor input.
Net national product is more likely to rise the more labor supply responds to the after-tax wage, and the less the supply of savings re-




91

spends to the after-tax return to capital. The change in economic
welfare, or individual well-being, depends on changes in consumption and leisure. Because changes in net national product and consumption may come at the expense of less leisure, net national product is an imperfect measure of economic welfare.
These factors have been analyzed in the context of a formal model
of economic growth. The assumptions of the model, among them
that population and productivity grow at constant rates, are extremely simple. None of the assumptions, however, is expected to lead to
biased results. That is, no a priori reason exists to believe that plausible alternative assumptions would yield qualitatively different conclusions. The model therefore gives useful guidance, but the precision
of its estimates should not be overstated.
Table 2-7 summarizes the results of this analysis. The point estimates of TRA's long-run effects are given in the first column of the
table. Relative to their baseline growth paths, it is estimated that real
net national product rises 2.2 percent, aggregate consumption rises
3.6 percent, capital input falls 0.4 percent, and labor input rises 3.1
percent. Because the value of consumption is raised more than the
value of leisure is decreased, economic welfare is increased. In fact,
TRA is estimated to increase individual well-being by as much as
would an annual distribution, from an outside source, equal to 1.2
percent of net national product.
TABLE 2-7.—The long-run simulated effect of the Tax Reform Act of 19861
Point estimate2

Item

Plausible range3

Percent change in:

22
3.6

-4.6
20

-

1.3
38

34
42

-

6
52

1.2

Annual welfare change as percent of net national product

29
4.3

26
49

Net capital return

-

31

Capital input
Labor input

04
1.5

_.4

Net national product
Consumption

.4

-

1.9

1

The simulation model is adapted from Lawrence H. Summers, "Capital Taxation and Accumulation in a Life Cycle Growth
Model," American Economic Review, September 1981. The Summers model is extended to allow for endogenous labor supply and
an unfunded social security system.
2
Elasticity of substitution in production (ESP) = 0.75. Elasticity of intertemporal substitution (EIS) = 0.20. The
uncompensated elasticity of labor supply is zero for all cases.
3
ESP varies between 0.5 and 1.0 and EIS varies between 0.05 and 1.0.
Source: Council of Economic Advisers.

The point estimates incorporate assumptions about production
technology and behavior that, while consistent with the existing empirical literature, are subject to error. The second column of Table
2-7 gives ranges for the long-run changes under TRA that correspond to alternative plausible assumptions. All plausible assumptions




92

lead to the conclusion that TRA increases economic welfare, net national product, and consumption.
An important factor that has been omitted in this analysis is TRA's
effect on productivity growth. The returns to education come, in
large part, through higher future wages. Because TRA decreases the
marginal tax rate on labor income, the incentive to invest in education and other forms of human capital is increased. Hence, TRA
should lead to more human capital investment and consequently to
higher levels of productivity and output growth.
Also, the model underlying the long-run simulations assumes a
closed economy with no trade. The tax rates reported in Table 2-6,
however, reflect on TRA's effect on U.S. production costs relative to
those of other countries. The average marginal tax rate on output in
the United States is estimated to decline by 4.3 percent under TRA.
Hence, while TRA may cause the composition of U.S. exports to shift
toward labor-intensive goods and away from capital-intensive goods,
it should not adversely affect the overall U.S. current account trade
balance for given exchange rates and given after-tax returns to U.S.
factors of production.
THE SHORT-RUN MACROECONOMIC EFFECTS OF TRA

Although TRA will increase long-run economic growth, it may
cause some short-run adjustment problems. First, TRA will slow the
growth of investment to a modest extent as the capital stock adjusts
to its new long-run equilibrium growth path. Hence, unless consumption or net exports takes up the slack, aggregate demand growth will
be dampened somewhat. Second, TRA will cause a reallocation of investment that, in the short run, will cause some industries to grow
less rapidly. Other industries, of course, will grow more rapidly
under TRA, but possibly with a short lag.
Aggregate Investment

The long-run simulation results illustrate the relationship between
investment and changes in the long-run equilibrium capital stock. If
the point estimates given in Table 2-7 are correct, TRA will induce a
0.4 percent decline in the long-run capital stock relative to its baseline growth path. This result would imply that net and gross investment also fall 0.4 percent in long-run equilibrium. In the transition
to the long-run equilibrium, however, net investment would fall an
additional amount equal to 0.4 percent of the current capital stock,
or a total of about $50 billion. Assuming a short 5-year adjustment
period, this result would imply that TRA will cause gross investment
to fall by less than 2 percent from baseline in each of the next 5
years. After this initial period of adjustment, however, TRA should
have a minimal effect on investment.




93

This method of estimating TRA's effect on short-term investment
encounters two problems. First, it assumes that the economy is currently on the long-run equilibrium growth path associated with the
substantial investment incentives included in ERTA-TEFRA. Recent
estimates, however, suggest that only about one-half of the additional
desired capital accumulation induced by ERTA-TEFRA has been
completed. This finding implies that Table 2-7 overestimates the
percentage decline in the long-run capital stock. Second, the simulation results give a broad range for the probable change in the longrun capital stock. In fact, a relatively small change in assumptions
raises the implied decline in the long-run capital stock from 0.4 to
1.0 percent. However, the conclusions regarding changes in economic welfare and net national product are robust with respect to alternative assumptions.
An alternative upper-bound estimate of TRA's effect on investment
is suggested by the observation that the equilibrium capital stock
path under TRA is significantly above that which would have prevailed under the 1980 tax law, prior to ERTA. This conclusion follows from estimates indicating that, relative to the 1980 tax law, TRA
results in a similar cost of capital (the cost of equity capital, however,
is much lower under TRA) and a substantially lower cost of labor.
The resulting higher supply of labor under TRA, relative to what
would have prevailed under the 1980 tax law, will simultaneously increase the demand for investment and the supply of savings. It follows that TRA only partially scales back the investment incentives included in ERTA-TEFRA. An extreme upper-bound estimate of the
fall in the equilibrium capital stock under TRA, therefore, is the net
addition to the capital stock that has been induced by ERTA-TEFRA
over the past 6 years.
A recent econometric study concludes that ERTA-TEFRA's business tax cuts increased gross nonresidential fixed investment by
about $28 billion in the first 2 years of the current economic expansion. Extrapolating this result to each of the past 6 years, and assuming the same proportionate effect on multifamily housing investment,
leads to the conclusion that ERTA-TEFRA's business tax cuts increased gross investment by about $90 billion over the past 6 years.
After adjustment for depreciation, this change in gross investment
implies a $64 billion increase in the capital stock. TRA, therefore,
will cause the equilibrium capital stock to decline, relative to baseline, by much less than $64 billion. Assuming a short 5-year adjustment period, the implied upper-bound reduction in annual gross investment from baseline over the next 5 years is less than 2 percent.
An investment decline of this magnitude amounts to only 0.3 percent
ofGNP.




94

Investment in 1987 will be influenced by two additional factors.
Because the corporate tax rate is 40 percent in 1987 and 34 percent
thereafter, an incentive exists to shift investment from 1988 to 1987
so that the first year's depreciation allowances are written off against
the higher 1987 tax rate. On the other hand, some investment that
would have been made in 1987 may have been shifted to 1986 to
take advantage of more accelerated depreciation allowances.
It is important not to confuse the short-run effects of TRA with its
long-run effects. In the long run, investment will be little affected by
TRA and, because of an increased labor supply and more efficient
investment decisions, output and economic welfare will increase.
Transition Costs

A major advantage of TRA is that it evens effective marginal tax
rates on alternative capital investments, thereby improving the
economy's long-run allocative efficiency. Unfortunately, this evening
of tax rates entails short-run transition costs.
TRA will cause investment to shift away from assets that enjoyed
favorable tax treatment under ERTA-TEFRA. This shifting will directly affect producers of capital inputs. Construction, in particular,
will be adversely affected because the new tax rules will limit the ability of individuals to deduct net losses on investments in commercial
structures and rental housing in exchange for later capital gains.
These provisions of TRA have probably contributed to the recent
slowdown in the construction industry. New nonresidential construction expenditures were unchanged between 1985 and 1986 after
having risen at a 7-percent annual rate between 1982 and 1985. Likewise, multifamily housing starts in 1986 were down 12 percent from
the pace of 1985.
TRA may also induce a minor restructuring of the market for final
goods and services. The general increase in business taxes under TRA
does not significantly affect the relative cost of capital for the various
producers of final goods and services, but it will raise the relative cost
of capital-intensive goods and services. The mix of goods and services,
therefore, will shift toward more labor-intensive goods. The magnitude of this change, however, will be small. The overall cost of capital
rises less than 7 percent, which sets an upper limit on the increase in
the price of one industry's output relative to another.
SUMMARY

TRA will lead to substantial long-run increases in economic welfare. Relative to net national product, the approximate changes in
economic welfare that have been quantified are 0.1 percent for a
more efficient allocation of investment funds and 1.2 percent for
changing long-run factor supplies. Additional welfare gains, which
have not been quantified, will result from greater levels of human
capital investment; from less tax bias toward corporate debt; from
less excessive consumption of employee fringe benefits, consumer
95



durables, and State and local government services; and from less tax
evasion.
TRA will increase the long-run fairness of the income tax. All
income classes receive a personal income tax cut and the percentage
tax cut tends to be largest for low-income taxpayers. TRA also severely limits the opportunities for tax avoidance and will tend to
equalize effective tax rates within income classes.
TRA will inflict some short-run costs on the economy as resources
are reallocated to more highly valued uses. However, these transition
costs will be minor relative to the permanent long-run gains.
CONCLUSION
The Tax Reform Act of 1986 is perhaps the most important
reform of the Federal income tax since its inception in 1913. TRA
restores incentives to work, save, and invest, and will substantially
boost economic growth and individual well-being.
Important progress has recently been made in restraining the
growth in Federal spending. More must be done. It is imperative that
the Federal budget deficit be brought under control in accord with
the provisions of Gramm-Rudman-Hollings. To preserve the gains of
tax reform, and to free more resources for use in the private sector,
deficit reduction should be accomplished primarily through additional spending restraint. This task will be difficult but it can be achieved
without sacrificing essential government services. The effort could be
aided by appropriate reforms of the budgetary process.




96

CHAPTER 3

Growth, Competitiveness, and the Trade
Deficit
THE DETERIORATION OF THE U.S. TRADE BALANCE has
been a disturbing feature of the current recovery. From a surplus
equivalent to almost 1 percent of real gross national product (GNP)
in 1982, U.S. real net exports of goods and services declined sharply
to a deficit equivalent to more than 4 percent of real GNP in 1986,
far larger than the deficit recorded in any postwar year before 1984.
The growing U.S. trade deficit is often cited as a principal cause of
the slowdown of real GNP growth since mid-1984 and of the problems of many trade-sensitive industries. This chapter assesses the
causes and effects of the growing U.S. trade deficit and discusses
policies adopted by the United States and other countries that will
gradually reduce international trade imbalances in a manner consistent with sustainable growth in the world economy.
The increase in the U.S. trade deficit is a macroeconomic phenomenon. Imports have grown strongly and exports have stagnated
primarily because of the strong growth of the U.S. economy (especially in terms of demand growth) relative to other countries, the difficulties faced by many developing countries in managing their external debts, and the fall in U.S. price competitiveness associated with
the large appreciation of the dollar between 1980 and early 1985.
Underlying these developments are several macroeconomic imbalances, including the deterioration in the U.S. saving-investment balance that has resulted from the failure of the Federal Government to
bring its expenditures in line with revenues.
Initially, the deterioration of the U.S. trade balance was associated
with developments that had favorable effects for the U.S. economy
(reduced inflation because of dollar appreciation and reduced
upward pressure on interest rates because of a capital inflow). It certainly had favorable effects for the rest of the world, which was suffering from sluggish economic growth. More recently, however, large
trade and payments imbalances have been recognized to pose substantial problems for the world economy, including the stimulation of
protectionist sentiments.




97

Important policy actions have been taken in the United States and
other countries to reduce international trade and payments imbalances. Better convergence of performance and policies and efforts at
policy coordination have brought about exchange-rate adjustments
that improve the price competitiveness of U.S. industries. However,
there is a lag in the effect of exchange-rate adjustments on trade
flows.
Further efforts are needed to reduce current payments imbalances.
The United States must press forward in reducing the Federal fiscal
deficit through restraint on the growth of Federal spending. At the
same time, other industrial countries must undertake policies that
will strengthen internally generated economic growth. Developing
countries need to adopt growth-oriented strategies for resolving their
economic difficulties. The overall strategy is to reduce international
imbalances in a manner consistent with sustainable economic growth,
in the United States, in other industrial countries, and in the developing countries, rather than by moving toward protectionism that
would injure all countries.
THE MACROECONOMIC CHARACTER OF THE U.S.
PAYMENTS POSITION
By any measure, the United States has experienced an unprecedented deterioration in its international payments position. The U.S.
current account deficit—i.e., the excess of imports of goods and services over exports, plus net transfers made to foreign residents—widened from $9 billion in 1982 to an estimated $145 billion in 1986
(Chart 3-1). Almost all of this change is attributable to the increase
in the merchandise trade deficit, which rose to an estimated record
$150 billion in 1986.
The deterioration of the U.S. trade balance has been across-theboard. Between 1982 and 1986, the U.S. merchandise trade balance
(census basis) worsened in 9 of the 10 major product groups used to
classify trade, including such disparate sectors as chemicals, food and
live animals, and machinery and transport equipment. Among these
major product groups, the U.S. merchandise trade balance improved
only in the mineral fuels and lubricants sector. This exception, however, has clearly resulted from special factors, the most important
being the decline in oil imports following the 1979-80 oil shock and
the recent drop in petroleum prices.
Similarly, deteriorations in U.S. bilateral trade balances have been
widespread. Between 1982 and 1986, the U.S. bilateral trade position
worsened against all of the top 10 U.S. trading partners (based on
total trade) and 19 of the top 20. The widening of the U.S. bilateral




98

Chart 3-1

U.S. Trade and Current Account Balances
Billions of dollars
40
Current Account Balance

20
0
-20
-40
Merchandise Trade Balance \

L

-80 -

-100 -120 -140 1601 I I I I I I l I I I I I I I I l I I I I I I I I I I I 1 I I I I I I I I
1950
1955
1960
1965
1970
1975
1980
1985
Note.—Data for 1986 are first 3 quarters at an annual rate; seasonally adjusted.
Source: Department of Commerce.

trade deficit with Japan from $19 billion in 1982 to more than $55
billion in 1986 has attracted the most public attention, but this deterioration is not unique. The change in the U.S. bilateral trade balance with Western Europe has been about as large, falling from a
surplus of $5 billion to a deficit of more than $30 billion. Substantial
deteriorations in U.S. bilateral trade positions have also been recorded with Latin America and the newly industrializing countries of East
Asia, in each case exceeding $10 billion.
Special factors have undoubtedly influenced bilateral trading patterns and some markets are more open to U.S. exports than others.
It is not correct, however, to place primary blame for the more than
$100 billion increase in the U.S. trade deficit over the past 4 years on
unfair trading practices by U.S. trading partners. The deterioration of
the U.S. trade balance is too pervasive to be credibly explained by
analyses focused on a product-by-product, country-by-country, basis.
Rather, the great bulk of the widespread deterioration must be
viewed as a product of general macroeconomic developments in the
United States and the rest of the world.




99

This point is demonstrated by recent developments in U.S. trade in
manufactures. Between 1982 and 1985, the U.S. deficit in manufactures trade widened by $101 billion. Imports of manufactures increased $112 billion. This increase in manufactures imports has been
a focus for protectionist pressures in the United States, especially regarding Japan. However, as shown by Table 3-1, most of the change
in U.S. bilateral balances in manufactures trade during this period reflects general movements in imports and exports, not country-specific changes in bilateral trading relations. Although the U.S. balance of
manufactures trade with Western Europe deteriorated by $21 billion
between 1982 and 1985, Western Europe provided virtually the same
percentage of total U.S. imports of manufactures and absorbed the
same percentage of total U.S. exports of manufactures in both periods. Japan supplied a somewhat higher share of U.S. imports of manufactures in 1985 than in 1982. This increase in market share, however, accounts only for about one-sixth of the $32-billion increase in
Japanese exports of manufactures to the United States during this
period. At the same time, the share of total U.S. exports going to
Japan increased. Clearly, general movements in U.S. imports and exports, not changes in bilateral trade relations, represent the proper
focus for understanding the deterioration of the U.S. international
payments position.
TABLE 3-1.—U. S. trade in manufactures, 1982 and 1985

Country/Area

Canada
Japan .

Change in
bilateral
balances,
1982 to
1985
(billions of
dollars)
-4.6
298

Percent share in
U.S. exports

U.S. imports
1982

1985

1985

1982

20.1

18.8

19.8

25.1

26.6

6.6

26.2
7.6

26.0

26.1

26.7

26.7

Western Europe

-21.1

Latin America

-10.4

6.1

6.2

12.2

12.9

East Asian NICs1

-16.4

14.6

15.0

7.0

7.2

1

Newly industrializing countries: Hong Kong, Singapore, South Korea, and Taiwan.
Source: Department of Commerce, Bureau of the Census.

The general movements in U.S. imports and exports are summarized in Table 3-2. Growth of U.S. spending on imports, while
strong, has not been especially rapid given the growth of the U.S.
economy. Imports of goods and services (on a national income and
product accounts basis) rose from 10.6 percent of nominal GNP in
1982 to 11.4 percent in 1986. Non-oil imports grew more rapidly,
but this was partly offset by a decline in the oil import bill. This
"normal" growth of import expenditures, however, masks a substantial increase in import volumes. Import prices have fallen sharply rel-




100

ative to other goods (most recently due to falling petroleum prices)
and real imports rose 55 percent between 1982 and 1986. Real exports, however, grew less than 3 percent during this period even
though real export prices have fallen significantly. This absence of
export growth, combined with continued import spending and rapid
growth of import volumes, accounts for the deterioration of the U.S.
trade balance.
TABLE 3-2.—U.S. Exports and imports of goods and services, 1980-86
Relative prices
(1982 = 100)1

As percent of GNP
Year

Current dollars

1982 dollars
Exports

Exports

Imports

Exports

Imports

Imports

12.8
12.5
11.4
,w.4
10.2

1985
19862

11.7
11.4
10.6
10.5
11.7

12.2
12.1
11.4
10.6
10.6

10.4
10.6
10.6
11.2
13.0

105.3
103.7
100.0
97.5
95.9

112.0
108.1
100.0
93.7
90.3

9.2
8.9

1980
1981
1982
1983
1984

11.2
11.4

10.1
10.1

13.1
14.2

91.6
87.7

85.6
80.3

1

Implicit price deflator for exports or imports relative to GNP implicit price deflator.
Preliminary.
Source: Department of Commerce, Bureau of Economic Analysis.
2

In summary, the deterioration of the U.S. trade balance over the
past 4 years is a macroeconomic phenomenon. The trade balance has deteriorated against virtually all major trading partners and
in virtually all major product categories. This deterioration has been
associated with a stagnation in the growth of U.S. exports, strong
growth of U.S. imports in volume terms, but only about normal
growth of domestic spending on imports. The fundamental explanation of these developments is to be found in the relatively strong
performance of the U.S. economy during the current expansion, in
the factors that underlie the deterioration of the U.S. national savings-investment balance, and in the forces that generated the strong
appreciation of the U.S. dollar and the associated loss of competitiveness of U.S. tradable goods industries during the early 1980s.
ECONOMIC GROWTH AND THE TRADE DEFICIT
A striking feature of the current expansion—and certainly one of
the key factors in assessing world economic performance—is that the
United States has enjoyed a strong expansion while the recovery of
economic activity in most foreign countries has been weak. This difference in growth has been especially marked in total national spending, known as domestic demand. As indicated in Chart 3-2, total domestic demand grew much more rapidly in the United States than in
other countries during the first six quarters of the expansion




101

(through mid-1984). Since then, differentials between U.S. and foreign demand growth have narrowed considerably, but a large cumulative gap in domestic demand growth remains. This gap reflects the
fact that the current recovery of U.S. domestic demand is one of the
strongest of the postwar period. It also reflects the fact, however,
that the recovery of domestic demand abroad has been one of the
weakest.
Chart 3-2

Real Domestic Demand in Selected Industrial Countries
Index, 1982=100
125 ~

120

115

110

105

100
~

95

"T i

1980

I

i

i

i

I

Four Largest European
Countries-!/

.**•

1981

i

i

i

1982

I

i

i

i

1983

I

i

i

i

1984

I

i

i

i

1985

I

i

i

1986

-I/France, Italy, United Kingdom, and West Germany, weighted by GNP.
consumption expenditures, gross private domestic
Note.—Domestic demand is the sum of personal consumi
investment, and government purchases of goods and services.
serv
Sources: Department of Commerce and country sources.

These differences in output and demand growth have contributed
to the deterioration of the U.S. international payments position in
several ways. At an accounting level, the U.S. deficit on goods and
services trade signifies that total expenditures on goods and services
in the United States (domestic demand) exceed U.S. production of
goods and services (GNP), and that the United States is importing
the difference. Intuitively, the strong U.S. recovery—especially in
terms of domestic demand—has boosted expenditures on imports as
well as on domestically produced goods. Relatively weak growth
abroad, however, has limited the expansion of U.S. export markets.




102

Weak foreign growth has been a critical problem for the world
economy. Assessments of the U.S. recovery and the deterioration of
the U.S. payments position must take account of this weakness and of
the importance of the U.S. expansion to sustaining world growth.
Similarly, domestic demand growth abroad needs to be assessed not
only in terms of its effect on the U.S. trade balance, but also in its
role in sustaining foreign growth as the U.S. economy adjusts. This
section, therefore, reviews the recent economic performance of foreign industrial countries, developing countries, and the United
States, and analyzes the deterioration of the U.S. trade balance in
this regard.
FOREIGN INDUSTRIAL COUNTRIES

In the 1980s, the industrial countries faced critical economic challenges of reducing inflation rates generally from double-digit levels,
adjusting to the second oil shock of 1979-80, recovering from the
world recession, and halting or reversing the growth in government
expenditures. All countries achieved substantial reductions in inflation, but experienced varying success in meeting other challenges.
Western Europe's recovery from world recession has been slack.
Between 1982 and 1985, real GNP in Western Europe grew at an average annual rate of about 2.2 percent, one-half of the growth rate
experienced in the United States, Canada, or Japan (Table 3-3).
Annual growth of domestic demand was slightly weaker, averaging
only about 1.8 percent. This slow growth has coexisted with rising
unemployment during much of the recovery. In 1986, the average
unemployment rate for the four largest European countries (France,
Italy, the United Kingdom, and West Germany) was about 10 percent, roughly double its 1980 rate.
This slow growth is especially disappointing given the stimulus to
world growth provided by the strong U.S. recovery and the appreciation of the dollar (which increased these countries' relative competitiveness). Most Western European countries, however, generally
coped successfully with the depreciation of the dollar in 1986. The
rapid passthrough of lower petroleum prices increased consumer incomes and both consumption and investment strengthened. This
strengthening of domestic demand enabled many Western European
countries to enjoy a slight acceleration of GNP growth despite a
weakening of real net exports. The cumulative growth rate of Western European domestic demand over the course of the expansion,
however, remains low, especially for West Germany (despite strong
growth in 1986), where the level of domestic demand in 1985 was
only slightly above its 1980 level.




103

TABLE 3-3.—Growth in real domestic demand and real GNP in major industrial countries,
1970-86
[Average annual percent change]
1970 t() 1980
Country

Real
domestic
demand1

1982 t() 1985

1980 t ) 1985
Real
domestic
demand1

Real
GNP2

Real
domestic
demand1

Real
GNP2

Real
GNP2

1985 III
tc
1986 III
Real
domestic
demand1

Real
GNP2

United States

25

28

34

24

56

4.2

3.6

2.3

Canada

49

46

21

25

42

42

33

3.5

Japan

42

47

28

39

31

4.3

38

2.3

France

37

36

12

12

8

1.2

(3)

(3)

Germany

27

27

2

13

19

2.4

36

23

Italy

2.9

3.1

.4

.9

1.5

1.7

4.5

3.0

United Kingdom

1.7

1.9

1.9

1.9

3.1

3.1

3.3

2.0

1

Domestic demand is the sum of personal consumption expenditures, gross private domestic investment, and government
purchases of goods and services.
2
Data for Canada, France, Italy, and United Kingdom are real GDP.
3
Not available.
Sources: International Monetary Fund and country sources.

Unlike Western Europe, Japan grew at a 4.3 percent annual rate
between 1982 and 1985. Much of this growth, however, was exportled. Following the 1979 oil shock, domestic demand in Japan slowed
markedly as the country adjusted to the higher oil import bill. During
the first half of the 1980s, the average rate of domestic demand
growth was only about one-half its 1970-79 average. Rising exports,
however, enabled GNP to grow more than 1 percentage point higher
than domestic demand. This excess of output over demand growth
was reversed in 1986 as real Japanese exports fell in the wake of the
sharp appreciation of the yen. Japanese internal demand increased
somewhat, but not enough to offset the decline in exports, and
Japan's rate of GNP growth slowed to under 3 percent.
Despite differences in their growth rates, Western Europe and
Japan shared similar policies and challenges. They both faced the
sudden increase in petroleum prices while shifting to anti-inflationary
monetary policies. They both moved generally toward fairly austere
fiscal policies by restraining government expenditures. While the resulting reduction in inflation and increased budgetary room for tax
cuts should provide a good foundation for stronger growth in the
long run, the initial effect of these developments was to depress economic activity.
In Western Europe, these developments interacted with structural
rigidities that, in addition to reducing long-run growth, intensified
and prolonged the effect of macroeconomic shocks. Substantial nonwage labor costs and excessively expensive job security arrangements




104

discouraged labor mobility and new hiring. High marginal tax rates,
various regulatory burdens, and large subsidies to declining industries and to agriculture impeded adjustment and growth by retarding
the flow of investment toward high-growth sectors.
In Japan, structural rigidities did not prevent the economy from
growing strongly over much of the 1980s. They did, however, hold
domestic demand below what it could have been, giving the economy
a bias toward export-led growth. Restrictions that have prevented the
efficient use of scarce land, combined with mortgage instruments that
require substantial downpayments, have made housing less affordable. Limitations on consumer credit markets have dampened the
demand for consumer durables, discouraging investment aimed at
producing for local markets.
DEVELOPING COUNTRIES

Slack growth of output and demand during the 1980s has not been
confined to foreign industrial countries. With the exception of developing countries in Asia, growth in the developing world has been
particularly weak. Between 1980 and 1986, annual real GNP growth
in Latin America averaged 1 percent, less than one-fifth the average
growth rate enjoyed during the 1970s (Table 3-4). Real GNP grew
equally slowly in Africa over this period; in the Middle East, real
GNP declined. This slow growth has depressed U.S. exports. Developing countries are important trading partners for the United States.
In 1981, developing countries purchased 41 percent of all U.S. merchandise exports. By 1985, however, their trade share had fallen to
34 percent.
TABLE 3-4.—Real GNP growth in developing countries
[Average annual percent change]
Region

1970

Western Hemisphere

1980

58

Africa

1983

1983

1980

to
19861

to

1980

1986

tol

to

10

11

10

Middle East

64

Asia.

4

47

32
1.7

6
4.1

1

Preliminary estimates.
Source: International Monetary Fund.

The slow growth of many developing countries is the product of
many forces. The recession in the industrial countries in the early
1980s, followed by the slack recovery of domestic demand in Japan
and Europe, reduced the demand for many exports by developing
countries. Exporters of primary commodities suffered particularly, as
the shift from the inflation of the 1970s to the disinflation of the




105

1980s, combined with sluggish world growth, depressed prices for
these products. Since 1980, the dollar price of raw agricultural commodities has fallen 20 percent; mineral prices have declined 30 percent.
With the appreciation of the dollar, the real burden of the dollardenominated debt of many developing countries increased considerably. Much of this debt was contracted at floating rates, making debtservice payments highly sensitive to the sharp rise in nominal and
real interest rates in the early 1980s. These developments caused
many lenders to doubt the capacity of several developing countries to
meet their obligations, and to end abruptly the access of these countries to international capital markets.
The policies of many developing countries were an important
cause of the interruption of voluntary lending flows. Overvalued exchange rates, price controls, arid schemes to boost real wages by legislative fiat made the production of many goods unprofitable and reduced the international competitiveness of many developing countries. Maintenance of substantially negative real interest rates, as well
as tax and regulatory policies that discouraged investment, induced
capital flight instead of encouraging the inward flows of capital
needed to promote more rapid development. Reliance on inefficient
public enterprises to produce a wide variety of goods and services
continued to be important drains on government budgets. These
drains further increased external deficits in these countries while failing to engender the productive investment needed to increase their
capacity to service the associated external debts.
Whatever the cause, the cessation of voluntary lending flows forced
developing countries with debt-management problems to cut import
spending rapidly in order to reduce their borrowing needs. Between
1981 and 1983, the value of U.S. merchandise exports to Mexico fell
$9 billion, a drop of almost 50 percent. Exports to the rest of Latin
America fell nearly 37 percent, or about $8 billion. In contrast, U.S.
exports to industrial countries fell 10 percent. Since 1983, exports to
Latin America have recovered somewhat but still remain below 1980
levels.
GROWTH AND THE TRADE DEFICIT

The strong recovery in the United States—and the resulting deterioration of the U.S. international payments position—was a powerful
stimulant to growth in both industrial and developing countries. This
growth, which took place against the background of world recession,
provided a vibrant market for foreign exporters at a time when many
developing countries, suddenly facing credit constraints, needed to
expand exports to finance imports sufficient to maintain politically




106

acceptable levels of output and income. In contrast, sluggish growth
in most other industrial countries limited increases in their imports.
Between 1982 and 1984, the United States absorbed about 95 percent of the increase in merchandise exports by Latin American countries to industrial countries, much more than would be implied by the
normal 50 percent U.S. share of Latin American exports to industrial
countries.
At Crst, the deterioration of the U.S. payments position helped as
well as hurt the U.S. economy. During the first six quarters of the
expansion, real GNP grew at a healthy 6.8 percent annual rate; domestic demand grew even faster, averaging 8.8 percent. In effect,
growing net imports allowed desired increases in spending to be satisfied without pushing production growth to levels that would have
caused bottlenecks. Although the strong appreciation of the dollar
reduced U.S. international competitiveness, the resulting decline in
import prices boosted real incomes in the United States and helped
to ameliorate inflationary pressures.
Since mid-1984, domestic demand has grown at a 3.1 percent
annual rate. However, despite this slowing of demand growth to
more sustainable levels, increases in imports continued to outpace
exports, and the annual rate of real GNP growth from the second
quarter of 1984 to the fourth quarter of 1986 averaged only 2.4 percent. Insofar as the expanding capacity of the U.S. economy was
more than sufficient to meet increases in total U.S. demand, the expansion of the U.S. trade deficit during this period was an important
factor limiting growth. This negative consequence has stimulated
protectionist sentiment in the United States, especially because the
burden of the resulting adjustment has not been spread evenly
through the economy. Industries that account for about 70 percent
of U.S. GNP produce either services that do not enter into international trade or products that are largely nontradable. The deterioration in the U.S. balance in goods and services trade between 1980
and 1986, amounting to 5.7 percent of real GNP, was therefore
concentrated in sectors of the economy that account for only about 30
percent of GNP. Moreover, the distribution of the adjustment within
these sectors was not even.
THE SAVING-INVESTMENT BALANCE
The deterioration of the U.S. international payments position has
also been closely associated with movements in national saving and
investment. As discussed in the previous section, the U.S. deficit in
goods and services trade signifies that total spending in the United




107

States on goods and services exceeds U.S. production of goods and
services. This necessarily implies that the United States is absorbing
foreign saving to finance the difference between expenditures and
income or, equivalently, that U.S. investment exceeds U.S. saving.
For example, in 1986, gross national saving in the United States was
$537 billion; gross private investment was $686 billion. The difference was financed by a net capital inflow of nearly $150 billion from
abroad.
THE PRIVATE SAVING-INVESTMENT BALANCE

The national saving-investment balance is the excess of the private
saving investment balance—the difference between gross private
saving and gross private domestic investment—over the general (Federal, State, and local) government deficit. Between 1982 and 1986,
the private saving-investment balance fell from 3.5 percent of GNP to
—0.1 percent. This decline reflected the strength of consumption
and investment growth, as is normal for a recovery. Given the length
of the current expansion, the current level of the private savinginvestment balance is not unusually low. The private saving-investment
balance was lower in 1969 and 1979 than it was in 1986.
Between 1982 and 1985, the gross private saving rate—defined as
gross private saving divided by GNP—fell less than one-half percentage point (Table 3-5). The ratio of private saving to GNP fell significantly, but this decline was more than offset by increases in net business saving. Such offsetting movements in household and business
saving are not surprising, since households are the ultimate owners of
all wealth, including the capital owned by businesses.
TABLE 3-5.—Private saving and investment
As percent of GNP
Year

Gross private
domestic investment

Private saving
Gross1

Personal

Business
(net)2

1982
dollars

Relative price
of investment
(1982=100)8

Current
dollars

1979

17.8

4.7

2.5

18.0

18.1

100.6

1980
1981
1982
1983
1984

17.5
18.0
17.6
17.4
17.9

5.0
5.2
4.9
3.8
4.5

1.4
1.4
.6
1.9
2.4

16.0
16.8
14.1
15.4
18.7

16.0
16.9
14.1
14.7
17.6

100.1
100.6
100.0
96.0
94.1

1985
19864

17.2
16.2

3.6
2.8

2.7
2.8

18.1
17.9

16.5
16.3

91.8
90.9

1

Gross private saving is personal saving plus net business saving and capital consumption.
Net business saving is undistributed corporate profits plus inventory valuation and capital consumption adjustments.
Implicit price deflator for gross private domestic investment relative to GNP implicit price deflator.
4
Preliminary.
Source: Department of Commerce (Bureau of Economic Analysis) and Council of Economic Advisers.
2

3

The gross private saving rate fell sharply in 1986. However, even
with the drop in private saving, most of the decline in the private




108

saving-investment balance during the current expansion is accounted
for by strong investment growth. Real gross private domestic investment rose 46 percent between 1982 and 1984, boosting the share of
real investment in real GNP from a near record low of 14.1 percent to a
near record high of 18.7 percent. Although investment growth has
been sluggish since 1984, the share of real investment in real GNP has
remained near cyclical highs.
This strength in real investment spending, however, was partially
offset by a substantial decline in the relative price of investment
goods. As reported in Table 3-5, the relative price of investment
goods fell 9.1 percent between 1982 and 1986. In 1986, nominal expenditures on gross private domestic investment accounted for 16.3
percent of GNP, well below 1978-79 levels and only 0.3 percentage
point above the average share of nominal investment expenditures
experienced over the past 25 years. Thus, the lower relative price of
investment goods allowed large increases in real investment to occur
with only moderate demands on nominal saving. This development
produced a normal cyclical decline in the private saving-investment
balance, despite the decline in the gross private saving rate and the
strength of real investment.
THE GOVERNMENT DEFICIT

The large increase in the general government budget deficit, however, stands in marked contrast to its normal cyclical behavior. The
general (Federal, State, and local) government budget deficit averaged 3.4 percent of GNP in 1986. This deficit/GNP ratio, although
large, is not the largest experienced during the past 15 years. The
general government budget deficit exceeded 3.4 percent of GNP in
both 1975 and 1982. The 1975 and 1982 deficits, however, occurred
during sharp recessions; the current large deficit comes in the fourth
year of an expansion.
As indicated in Chart 3-3, until recently the general government
budget deficit has tended to track the private saving-investment balance during cyclical expansions and declines. National saving has approximated national investment and the current account balance has
been small. In recessions, government budget deficits typically widen
as a result of declining tax revenues and increased expenditures associated with income support. The private saving-investment balance,
however, usually increases by more than the cyclically induced decline in the general government budget deficit (because of weak investment and consumption spending), and the current account balance tends to improve. In the sharp 1975 recession, for example, the
largest general government budget deficit in the postwar era (meas-




109

ured as a percent of GNP) coincided with one of the largest U.S.
current account surpluses.
Chart 3-3

Private Saving-Investment Balance, Government Deficit,
and Current Account Balance
Percent of GNP

Private Saving-Investment Balance

2 -

-2
4
2

-2 _
-4

/\

~ ^
^

0

Current Account Balance

I

I I I 1

1955

I I

1960

I t 1

I I I I 1

1965

I I I

1970

I i

I i

1975

\

i I

1

I I

1980

I I 1 I

1985

Note.—For current account balance, data for 1986 are first 3 quarters at an annual rate; seasonally adjusted.
Source: Department of Commerce.

Similarly, strong investment growth during an expansion usually
outstrips increases in private saving, and the private saving-investment balance declines. The associated growth in tax revenues, however, traditionally lowers the general government budget deficit, and
the deterioration in the U.S. current account deficit usually remains
modest. This pattern has not been followed in the current expansion.
The increased surpluses of State and local governments have been
more than offset by the large growth of the Federal Government
budget deficit. This unprecedented deterioration of the U.S. fiscal
position during an expansion, combined with a normal cyclical decline in the private saving-investment balance, has been reflected in
an unprecedented deterioration in the U.S. current account balance.
It is important to emphasize that the government budget deficit
and the U.S. international payments position are the product of many
forces and that the link between them is complex. As noted above,
increases in the government budget deficit that result from a cyclical




110

decline are typically associated with improvements in the U.S. international payments position. Clearly it is incorrect to say that movements in budget deficits always cause equal movements in the U.S.
current account balance. It is equally clear, however, that the persist-"
ence of the Federal deficit late into the current expansion is one of
the most important factors contributing to the growth of the trade
deficit.
It is also important to emphasize that the desirability of any fiscal
measure taken to reduce the current large budget and trade deficits
depends critically on whether the measure is desirable in its own right.
Federal outlays have remained at a high percentage of GNP. Sustained
efforts to control Federal spending are needed not only to preserve the
benefits of tax reform but also to reduce the U.S. international
payments imbalance. The key point is that a substantial reduction in
the U.S. current account deficit will require restraint of U.S. domestic
demand growth relative to GNP growth. If this restraint does not come
from controlling government spending, it must come from the other
components of domestic demand—consumption and investment. Tax
increases are not the answer. Higher tax rates would not only lower
GNP growth in the short run, but would also continue to dull economic
incentives and to reduce growth far into the future. This would make
even more painful the necessary adjustment of consumption and
investment to bring domestic demand in line with GNP in the long run.
INTERNATIONAL CAPITAL FLOWS

The link between the current account balance and the national
saving-investment balance also helps to emphasize the importance of
international capital markets and net capital flows in the development
of the U.S. current account deficit. The counterpart to the U.S. current
account deficit is a capital account surplus; developments influencing
one account significantly influence the other. On the one hand, deep,
liquid international capital markets have represented a ready source of
financing for the large shortfall of U.S. saving relative to U.S. investment. On the other hand, changes in the desirability of holding U.S.
assets, particularly dollar-denominated assets, have had substantial
effects on exchange rates, thereby affecting the current account.
International capital markets channel resources from the ultimate
savers in the world economy to those countries that offer the most
attractive opportunities to invest. For example, through most of the
19th century, the inflow of capital from abroad helped the United
States to exploit its vast productive potential much more quickly than
if U.S. capital formation had been limited to U.S.-based saving. In




111

this case, the associated current account deficit was part of a process
that invigorated a then-young economy.
Similarly, the capital inflows now associated with the U.S. current
account deficit have once again become an important source of investment financing. Several factors have made the United States one
of the most attractive places in which to invest funds. The strong
growth of the U.S. economy during the first six quarters of this
expansion stood in marked contrast to the sluggish performance
abroad, especially in Europe. This growth, combined with the reduction in capital taxation embodied in the Economic Recovery Tax Act of
1981 (ERTA), surely increased the relative attractiveness of investment
in the United States.
It is important to recognize, however, that the development of the
U.S. current account deficit has also been associated with a sharp drop
in the national saving rate (relative to the cyclical peak in either 1979
or 1981). Between 1981 and 1986, the national saving rate fell more
than 4 percentage points (Table 3-6). This drop has made the
United States increasingly dependent on net capital inflows to finance U.S. investment. In 1986, net capital inflows—and the associated buildup of foreign claims on the United States—equaled one-half
of U.S. net capital formation. To the extent that the drop in the national saving rate is not desirable, this dependence on net capital inflows to finance U.S. investment is also not desirable. Part of the decline in the national saving rate has resulted from the failure to bring
government expenditures in line with revenues. Part of the increased
dependence on capital inflows to finance U.S. investment, therefore,
ought to be viewed as a by-product of a fiscal stance that should be
corrected by gradually reducing the share of Federal expenditures in
GNP.
TABLE 3-6.—National saving, investment, and net capital inflow
[Percent of GNP]
Year

Gross
private
saving

Government
saving1

Gross
national
saving

Gross
private
domestic
investment3

Net
capital
inflow2

1979

178

183

01

181

1980
1981
1982
1983
1984

175
180
176
174
179

-1.3

16.3

16.0

-10
35
-38
27

171

-.3

152

1.1
24

1985
19864

172
162

-34
34

138
128

27
35

1

Federal, State, and local governments.
Includes statistical discrepancy.
Nominal prices.
4
Preliminary.
Source: Department of Commerce, Bureau of Economic Analysis.
2

3




112

05

14 1
13.6

_ 2

o

169
14 1
14.7

176
165
163

This conclusion, however, in no way minimizes the role capital
markets have played in driving the current account. Exchange rates
are determined in asset markets. As is discussed in the next section,
the strong increase in the demand for dollar-denominated assets
during the first half of the 1980s, and the consequent appreciation of
the dollar between 1980 and early 1985, was a key factor underlying
the deterioration of the U.S. current account balance.
EXCHANGE RATES AND COMPETITIVENESS
Exchange-rate changes are a direct channel through which international divergences in economic policy are transmitted to domestic
economic performance. Exchange-rate movements that persistently
exceed international inflation differentials—real exchange-rate movements—change the prices of a country's imports relative to domestically produced goods and alter the ability of its producers to compete in world markets. This section reviews the behavior of the real
foreign exchange value of the dollar and the relative price of U.S. imports over the past decade, investigates the sources of these real exchange-rate movements, and assesses the effect of these exchangerate movements on the international cost competitiveness of U.S.
manufacturers.
SOURCES OF REAL EXCHANGE RATE MOVEMENTS

The past decade has been characterized by wide swings in the foreign exchange value of the dollar and in the relative price of imports.
Chart 3-4 presents an index of the foreign exchange value of the
dollar against a trade-weighted basket of currencies from 18 other industrial and 22 developing countries. The index is adjusted for differences in wholesale price inflation in each country and thus measures changes in the real foreign exchange value of the dollar. Also
presented is an index of the relative price of non-oil imports, computed as the ratio of the import price deflator excluding petroleum
to the total GNP price deflator. As can be seen from the chart, broad
movements in the dollar's real exchange rate and the relative price of
imports over the past decade can be divided into three phases.
During the late 1970s, the real value of the trade-weighted dollar
depreciated and the relative price of imports increased by roughly 10
percent. According to many observers, the weakness of the dollar in
the late 1970s was directly related to the perception that the United
States was embarked on significantly more inflationary policies than
were Japan and many West European countries. This perception led
to depreciation of the dollar not only in nominal terms, but also in
real terms. The nominal foreign exchange value of the dollar fell




113

Chart 3-4

Real Exchange Rate and Relative Price of Imports
Index, 1977:1=100

140

130
Real Exchange Rate1'/

120

110

Relative Price of Imports
Less Petroleum1/

100

-4.

90

80

I I I i II
1977

II
1979

I IIIi
1981

I Ii II I I III
1983

1985

-VTrade-weighted value of the dollar adjusted by relative wholesale prices.
-2/Ratio of implicit price deflator for imports less petroleum to GNP implicit price deflator.
Sources: Morgan Guaranty Trust Company of New York and Department of Commerce.

more than was justified by the actual excess of inflation in the United
States over inflation in other countries, because the exchange rate responds to expected future inflation as well as to current and past inflation.
The relatively weak dollar during the late 1970s benefited many
trade-sensitive industries in the United States. The real depreciation
of the dollar shielded these industries from their foreign competitors
because, as is shown in Chart 3-4, import prices increased faster than
did the prices of domestically produced goods and services. This allowed some manufacturing industries to remain profitable while increasing real wage rates substantially more rapidly than in the rest of
the United States economy, despite slow productivity growth. The insulation from foreign competition that the weak dollar provided to
many trade-sensitive industries in the United States in the 1970s left
many of these industries poorly prepared to deal with such competition in the 1980s.




114

The first half of the 1980s was marked by an unprecedented surge
in the real foreign exchange value of the dollar. From the third quarter of 1980 through the first quarter of 1985, the real value of the
trade-weighted dollar appreciated by some 47 percent and the relative price of imports declined by 22 percent. Although some observers have claimed that the dollar's appreciation can be attributed to a
single cause, several factors contributed to the sustained rise in the
dollar between 1980 and early 1985.
The shift in monetary policy from one of perceived ease and accommodation to an actual and ultimately perceived anti-inflationary
stance in the early 1980s was likely critical to the reversal during
1981 and 1982 of the real depreciation of the dollar that had occurred in the late 1970s. Between the third quarter of 1980 and the
fourth quarter of 1981, the dollar appreciated in real terms back to
its early 1977 level. The dollar appreciated an additional 12 percent
in real terms in 1982. This appreciation was likely due, at least in
part, to increasingly persuasive evidence that the Federal Reserve was
committed to an anti-inflationary monetary policy.
From the trough of the recession in the fourth quarter of 1982
through the first quarter of 1985, the dollar appreciated an additional 15 percent in real terms. The initial dramatic decline and subsequent stability of inflation, in conjunction with the strong growth in
real GNP in comparison with both past expansions and growth in
most other industrial countries, probably played an important role in
the further appreciation of the dollar during 1983-84.
The excess of real domestic demand over real domestic output that
has characterized the current expansion translates into an excess of
real domestic investment over real domestic saving that, in turn,
equals the real net inflow of foreign capital. At least a portion of this
capital inflow and the appreciation of the dollar during 1983-84 likely
resulted from the increase in the after-tax profitability of physical investment in the United States during this period. The increase in the
after-tax profitability of investment resulted from the interaction of
the ERTA tax reductions with the decline in inflation, which increased the value of original cost depreciation.
Real business fixed investment grew much more rapidly relative to
real GNP in the first 2 years of the expansion than in previous cyclical upswings. Indeed, the share of real business fixed investment in
real GNP achieved a postwar record in 1984. This strength occurred
despite high real interest rates and concern that the Federal budget
deficit would crowd out private investment. Furthermore, the real
valuation of the corporate capital stock by the equity markets also
surged during this period. As discussed in previous Economic Reports,
these facts are consistent with the view that changes in the tax law




115

raised the value in equity markets of new physical capital and the attractiveness of foreign investment in the United States.
Since the first quarter of 1985, the real value of the trade-weighted
dollar has fallen by 20 percent, back to its late 1981 level. Although the
causes of this steep depreciation of the dollar are difficult to isolate
with precision, the decline in real GNP growth in the United States
since mid-1984 likely contributed to the dollar's fall. In addition, the
announced intentions of the Group of Five to seek a lower dollar in
the Plaza Agreement and subsequent actions to back up these intentions, especially the continuation of the easing of U.S. monetary
policy that began in late 1984, probably contributed to further dollar
depreciation after September 1985. More generally, the convergence
of economic performance and economic policies of the leading industrial countries in 1985 and 1986 was probably necessary to support a
significant adjustment of exchange rates.
So far, little evidence exists of the effect of the substantial depreciation of the dollar on U.S. trade flows. Several factors help to explain this limited impact. Existing empirical evidence indicates that
import prices respond with a lag of up to 2 years to even large
changes in exchange rates. This phenomenon results from the choice
of foreign producers to boost profit margins as their currencies depreciate against the dollar and to allow these margins to narrow so as
to maintain market share as their currencies appreciate against the
dollar. According to one study, foreign producers widened their
profit margins considerably during the 1980-84 appreciation of the
dollar. This provided them ample room to narrow profit margins by
limiting price increases and thus maintain market share as the dollar
depreciated. Indeed, as is shown in Chart 3-4, non-oil import prices
actually declined in 1985 and began to rise only in 1986.
Another factor that has limited the immediate effect of the depreciation of the dollar on U.S. trade flows is that the dollar has not in fact
depreciated substantially against the currencies of several important
trading partners. Total imports from Canada, Korea, and Taiwan
exceed imports from Western Europe or Japan, yet the dollar
has depreciated less than 7 percent against the currencies of Canada
and Taiwan and has actually continued to appreciate against the
Korean won.
PRODUCTIVITY AND COMPETITIVENESS

Declining international competitiveness of the U.S. economy, especially manufacturing industries, is often cited as an important cause
of the deterioration of the U.S. trade balance. Programs to revive
supposedly sagging productivity growth are often recommended as a
means of improving competitiveness and reducing the trade deficit.




116

In fact, as is discussed in Chapter 1, productivity growth in manufacturing during the current cycle has exceeded the postwar average
and substantially exceeded the sluggish rate of productivity growth
during the 1970s. Since the business cycle peak in the third quarter
of 1981, output per hour in manufacturing has grown at an average
annual rate of 3.8 percent, 46 percent faster than the postwar average of 2.6 percent per year and more than twice the annual average
rate of 1.5 percent recorded between 1973 and 1981. Furthermore,
real wage growth in the manufacturing sector has exhibited notable
restraint during the current cycle. Since the business cycle peak, real
hourly compensation in manufacturing has grown at an average
annual rate of 1.0 percent, 50 percent slower than the postwar average annual rate of 2.0 percent.
As the result of restrained wage increases and strong productivity
growth, unit labor costs in manufacturing have increased at an average annual rate of only 0.7 percent since the 1981 peak and have actually declined at an average annual rate of 0.8 percent since the recession trough in the fourth quarter of 1982. By contrast, unit labor
costs in manufacturing have grown at an average annual rate of 3.4
percent over the entire postwar period and grew at an average
annual rate of 8.2 percent between 1973 and 1981.
Table 3-7 compares movements in unit labor costs in the United
States with a trade-weighted average of unit labor costs in 11 of the
largest foreign industrial countries. As is shown in the second
column of the table, when measured on a national currency basis,
growth in unit labor costs during the first half of the 1980s was 5
percentage points higher abroad than in the United States. In the absence of other developments, the relatively better U.S. performance—which was a product of surging productivity growth and restrained wage increases—would have improved U.S. international
cost competitiveness. However, the cost competitiveness of U.S. manufacturers also depends upon the dollar exchange rate. Foreign importers can charge a lower dollar price to cover the same level of national currency costs when the dollar appreciates against their own
currencies.
As indicated by the third column of Table 3-7, the appreciation of
the dollar during the first half of this decade overwhelmed the other
determinants of international cost competitiveness. In national currency terms, unit labor costs in the 11 largest foreign industrial countries rose more than 16 percent during the first half of the 1980s; in
dollar terms, foreign unit labor costs fell nearly 20 percent. Instead
of experiencing a 5 percent improvement in U.S. international cost
competitiveness between 1980 and 1985, the strong appreciation of




117

TABLE 3-7.—U. S. and foreign unit labor costs, 1980-85
[1980=100]
Eleven foreign industrial countries1
United
States

Year

National
currency basis

Dollar
basis

1980

100.0

100.0

100.0

1981

107.3

108.2

96.9

1982

114.0

114.4

91.6

1983 .

111.1

115.4

88.5

1984

110.5

115.1

81.9

1985

111.2

116.3

80.3

1

Trade-weighted average of Belgium, Canada, Denmark, France, Germany, Italy, Japan, Netherlands, Norway, Sweden, and
United Kingdom.
Source: Department of Labor (Bureau of Labor Statistics) and Council of Economic Advisers.

the dollar boosted the ratio of U.S. unit labor costs to foreign unit
labor costs by 39 percent.
This gap between the unit labor costs in U.S. manufacturing industries relative to manufacturing industries in most other industrial
countries has been narrowed significantly by the depreciation of the
dollar that began in early 1985. According to the International Monetary Fund, the ratio of unit labor costs in the United States to a
trade-weighted average of unit labor costs expressed in dollars in
other industrial countries fell almost 30 percent to its 1981 level between the first quarter of 1985 and the second quarter of 1986.
In sum, the deterioration of international cost competitiveness in
U.S. manufacturing during the first half of this decade was the result
of the real appreciation of the dollar, not sagging productivity growth
or excessive wage increases. This fact does not imply, however, that
the United States can or should rely solely on exchange-rate movements to improve further its international cost competitiveness. Exchange-rate depreciation can increase competitiveness in the intermediate run by making foreign-produced products more expensive, but
at the cost of slower real income growth. By contrast, improving
international cost competitiveness through greater productivity and
economic efficiency increases real income growth. The United States
should seek to strengthen international competitiveness by implementing policies that increase productivity. The President is sending
to the Congress a package of initiatives to enhance further U.S. productivity and competitiveness, including increased funding for basic
and applied scientific research, reforms of Federal regulations to
reduce business costs while continuing to serve important regulatory
goals, and efforts to improve access for U.S. products and services in
foreign markets.




118

POLICY COORDINATION AND EXCHANGE RATE STABILITY
There is general agreement among economists that better convergence of economic performance and better coordination of economic
policies among the leading industrial countries is both desirable and
essential for achieving greater stability of exchange rates. At the
Tokyo Economic Summit, the leaders of the seven largest industrial
countries agreed to a flexible approach to improving the international monetary system by providing more effective procedures for the
coordination of economic policies. The approach adopted in Tokyo
represents an important step down the path to greater convergence
of economic performance and better coordination of economic policies—a path that was charted at earlier Economic Summits and Ministerial Meetings, including especially the Versailles Economic Summit
and the Group of Five meeting of September 1985. Three features of
the approach outlined at the Tokyo Summit deserve particular emphasis.
First, efforts at policy coordination will not focus narrowly on
achieving specific values or ranges for exchange rates. Policymakers
are to consider a broad class of indicators of economic performance
and economic policy: GNP growth rates, inflation rates, interest rates,
unemployment rates, fiscal deficit ratios, current account and trade
balances, monetary growth rates, reserves, and exchange rates. This
approach should help to avoid the inherent weakness of pegged exchange-rate systems: rigid commitments to particular exchange-rate
values or ranges become too expensive in terms of other important
policy objectives and ultimately collapse under the pressure of policy
conflicts. The Tokyo Summit leaders explicitly stated that the objectives of policy coordination are much broader than limiting exchange-rate movements. Objectives include "promoting non-inflationary economic growth, strengthening market-oriented incentives
for employment and productive investment, opening the international trading and investment system and fostering greater stability of exchange rates."
Second, individual nations are responsible for formulating their
economic objectives and forecasting the critical indicators of economic policy and performance. Collective assessment of the mutual compatibility of objectives and forecasts is required as the essence of
policy coordination, and the managing director of the International
Monetary Fund is assigned his traditional role in assisting multilateral
surveillance. However, no agency is asked to undertake the essentially impossible task of forcing sovereign nations to pursue policies contrary to their perceived national interests. Instead, the onus is on individual nations to live up to their own commitments and forecasts.




119

Third, when significant deviations from the intended and agreed
upon course arise, individual nations are pledged "to make their best
efforts to reach understanding on appropriate remedial measures. . . ."
This pledge is not an effort to fine-tune the world economy to correct for all of the minor and inevitable deviations from its forecasted
path. The emphasis is on "significant deviations from intended
course." Further, the Summit leaders agreed that remedial efforts
should "focus first on underlying policy fundamentals. . . ." This agreement does not preclude official intervention in foreign exchange
markets, when such intervention would be useful. However, it does
place the emphasis for policy coordination where it belongs—on the
economic policies that ultimately influence important developments
in the world economy.
Experience with the operation of this new system of policy coordination will contribute to its further development. Even at this stage,
however, it is clear that better policy coordination offers the promise
of more stable exchange rates, reduced external imbalances, and a
more favorable economic environment for developing countries.
CURRENT REQUIREMENTS FOR POLICY COORDINATION

In the period ahead, the principal challenge of policy coordination
is to reduce present international payments imbalances in a manner
that will support sustained, noninflationary growth in the world economy. Unilateral actions by the United States are not sufficient to accomplish this goal. Although a sharp U.S. recession would probably
improve the U.S. trade balance, it would not only injure economic
well-being in the United States, but would also sharply curtail prospects for growth in the rest of the world. Massive dollar depreciation,
by shifting world demand toward U.S.-produced goods, would help
reduce the U.S. external deficit but at a cost of increased inflationary
pressures in the United States and depressed output growth in the
main U.S. trading partners. Put simply, reduction of the U.S. current
account deficit requires that real GNP in the United States grow
more strongly than domestic demand. This implies that real GNP
growth abroad will fall short of foreign domestic demand growth.
Unless foreign domestic demand strengthens, improvement in the
U.S. current account balance will necessarily be associated with reduced foreign growth. Given the size of the potential adjustment in
the U.S. current account, the risk is that foreign growth would be
sharply reduced.
An essential element of any program to reduce current external
imbalances, therefore, is that other industrial countries must achieve
stronger, domestic-led growth. Stronger domestic demand growth is
needed primarily to maintain satisfactory output and employment




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growth in these countries while the United States adjusts. It is also
needed to engender the much needed expansion of U.S. export markets without having to rely on further massive depreciation of the
dollar. Finally, strengthened foreign domestic demand is needed to
maintain the growth of demand for the exports of many developing
countries. Many of these countries, especially those with debt service
problems, face considerable pressures to improve their external positions. The United States, however, will be reducing, not increasing,
its external deficit; thus, further improvements of the developing
countries' payments positions must come from the other industrialized countries.
Because the reduction of the U.S. current account deficit will take
time, strengthened foreign growth must be sustained over the
medium term. Achieving such long-lasting improvements requires the
elimination of those structural (i.e., microeconomic-based) distortions
that have impeded growth. In particular, to ease adjustment in the
traded goods sectors, efforts must be redoubled to eliminate not only
those practices that have restrained domestic demand but also those
rigidities that have reduced the mobility of labor and capital between
sectors. In Western Europe, where the recent economic recovery has
coexisted with sustained rises in unemployment—in some countries
to depression levels—there is a clear need to reform those policies
that have reduced labor flexibility and have rendered employment
unprofitable. In Japan, where the emphasis has been on export-led
growth, the need is to eliminate those policies that have hindered domestic demand. In many countries there is a need to consider tax reforms that would substantially lower marginal tax rates, without necessarily reducing government revenues in the long run. These measures are desirable not simply because they would indirectly help
reduce present external imbalances; they are desirable because they
would improve long-term economic performance and well-being.
Efforts by foreign industrial countries to effect a growth-oriented
reduction in external imbalances must be matched by corresponding
efforts by the United States. Reductions in the U.S. current account
deficit require that domestic demand in the United States grow less
rapidly than GNP and that national saving increase by more than national investment. The United States can make a critical contribution
to achieving these results by reducing the Federal deficit through expenditure restraint. Restraint on Federal spending would help slow
domestic demand growth, but the effects of this slowing would not
significantly reduce GNP growth, provided that stronger growth of
demand abroad and the lagged effects of dollar depreciation boost
U.S. exports.




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The preferred approach to unwinding current external imbalances
calls for continued growth of world demand, but with a smaller contribution coming from the United States and a larger contribution
from surplus countries. Domestic demand growth abroad would
expand faster than potential GNP, while domestic demand in the
United States would grow more slowly than potential output. Movements in exchange rates would offset the effect of these changes in
the sources of world demand for any one country's products. In the
•United States, the reduced size of the government would allow for a
greater percentage of the Nation's output to be devoted toward private investment and consumption.
Two other elements are also essential for the effective implementation of this program. First, developing countries, especially those
with external debt problems, need to adopt more growth-oriented
policies. The critical issue here is really for developing countries
themselves to make the reforms necessary to support long-term
growth. However, the industrial countries and the international financial system have an important role to play in assisting countries that
are moving toward more growth-oriented reforms. This role is the
essence of the program articulated by the Secretary of the Treasury
in October 1985 to deal with the problems of debtor countries. The
long-term goal of this approach is to restore the access of these
countries to international capital markets by increasing their capacity
to service their debts. By taking the measures needed to restore their
access to international credit markets, these countries will not only be
pursuing policies that will promote long-term growth with existing
resources, but will also restore the capital inflows needed to underwrite additional investment and growth. These developments would
primarily benefit the developing countries themselves. They would
also expand markets for the products of the industrial countries.
Meanwhile, industrial countries can contribute to growth-oriented adjustment in developing countries by sustaining a growing market for
their exports. (For a detailed analysis of this subject, see Economic
Report of the President: 1986, Chapter 2.)
Finally, all countries must avoid new protectionist measures and
work to reduce and eventually dismantle existing barriers to international trade in both goods and services. Much attention has recently
focused on growing protectionist sentiment in the United States.
Progress in reducing the U.S. trade deficit, combined with efforts
abroad to reduce protectionism in foreign markets, are clearly important in resisting protectionist actions in the United States.
Similarly, efforts in the United States to resist protectionism are
needed to prevent the awakening of protectionist forces abroad.
International trade, after all, is dominated by trade in goods. Just as




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most of the deterioration of the U.S. trade balance was in manufactures, improvements in the U.S. trade balance will come about largely from a swing in manufactures trade. This development will present
serious adjustment problems for U.S. trading partners, especially as
the performance of manufactures output in many countries, notably
Western European countries, has been weak. It would be singularly
unfortunate, therefore, if the United States were to suggest—just as
its trade position was beginning to improve—that protectionist measures were an acceptable response to these adjustment pressures. In
the end, all countries share an important common interest in the liberal system of international trade and must work to protect and
expand that system.
International policy coordination will always be made difficult by
intercountry differences in economic situation and policy priorities.
At a minimum, however, it is important to identify those situations in
which joint actions will reinforce efforts to achieve individual as well
as common goals. Clearly, it is in every nation's interest that international payments imbalances unwind in an environment of continued
world growth. Actions by other nations to strengthen their domestic
demand and to reduce structural rigidities that have impeded adjustment, combined with resolute action by the United States to restrain
Federal spending, offer a means of accomplishing this goal.




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CHAPTER 4

Opening International Markets
ONE OF THE MORE REMARKABLE FEATURES of the past 40
years has been the rapid increase in real income per capita in many
parts of the world. This economic expansion has been fueled in large
part by a tremendous growth in world trade. In turn, growth in world
trade has resulted from a major effort led by the United States and
other countries to reduce global barriers to international commerce.
These events stand in direct contrast with the decade preceding
the start of World War II. Then, stagnation in the domestic economies of major nations was compounded by the spread of import barriers, export subsidies, trade wars, and a general emphasis on closing
domestic markets to foreign competition.
Determined not to see this scenario unfold again after the war, the
United States sparked a move to establish a world trade system complete with firm rules to govern trade practices and to ensure that
trade policies would not degenerate into beggar-thy-neighbor protectionism. International organizations were created to guide the world
economy along this new path. Among them was the General Agreement on Tariffs and Tra<Jt? (GATT)^et up to initiate a reduction of
trade barriers and to mediate-commercial disputes between member
nations.
GATT has presided over seven multilateral rounds of negotiations
that have produced historic global tariff reductions. As tariffs have
come down, the volume of international trade has increased much
faster than world production. Unfortunately, while GATT has been
expanding trading opportunities among countries, largely through
tariff reductions, these efforts have been undermined by new and
much less transparent protectionist measures.
The world thus stands at a crossroads similar to the one it faced 40
years ago. The commercial playing field is littered with government
policies aimed at protecting various industries from the rigors of
international competition. Trade in major product sectors—including
steel, automobiles, electronics, textiles, apparel, and footwear—is becoming increasingly regulated by measures such as voluntary export
restraints and orderly marketing agreements. The cost of these policies is enormous while the benefits reach only a few. Unless some-




125

thing reverses the trend toward government-sponsored trading arrangements, the growth enjoyed by world economies over the past
four decades could be severely curtailed.
The United States, as the largest participant in world trade and as
a long-time champion of free trade, stands in a unique position to
fight this move toward greater protectionism. From its start, the Administration has supported free trade. Most recently, it reaffirmed
this position in a policy statement issued on September 23, 1985,
which contained a multipronged program to enhance and strengthen
the international trading environment. Elements of the program included macroeconomic policies aimed at dollar realignment, fiscal
deficit reduction, and an effort to ease the debt burden of developing
countries.
With respect to trade policy, the statement proposed that the
United States undertake a number of bilateral measures aimed at reducing foreign trade barriers. A second thrust of U.S. trade policy
would be to rekindle the GATT process by urging fellow members to
enter into a new round of multilateral trade talks.
More than a year has passed since these policies were announced.
Using a series of self-initiated cases under Section 301 of the Trade
Act of 1974, the Administration has sought to eliminate certain
unfair trading practices of foreign governments. A fund of money has
been established to support Export-Import Bank loans as part of an
effort to persuade foreign countries to restrict and eliminate commercial subsidy elements of their foreign aid grants. Bilateral talks
aimed at establishing free-trade areas have been concluded with
Israel and begun with Canada.
And because of a leading role taken by the Administration, a new
round of multilateral trade liberalization talks—held under the auspices of GATT—has commenced in Geneva. This new round presents an important opportunity for rolling back interventionist measures and for strengthening rules of conduct in international trade.
Indeed, it offers prospects to rein in the various new forms of protection that have arisen because of current weaknesses in the GATT
process. The new round also provides the opportunity to extend
rules of commercial relations to areas previously exempted from or
not covered by GATT, including agriculture, services, direct foreign
investment, and intellectual property rights.
This chapter reviews the Administration's trade policy initiatives of
the past year, especially as they relate to efforts to open foreign markets. The fundamental premise behind these efforts is that free trade
offers Americans the greatest hope for a prosperous future. Consequently, this chapter begins by reviewing the benefits of free trade.




126

THE CASE FOR FREE TRADE
Governments have long interfered with the exchange of goods
across their boundaries. One purpose of their barriers was to collect
revenues through tariffs or tolls. Local industry usually supported
and benefited from the protective effect of these policies. Indeed, in
many instances, pressure from domestic producers induced governments to shelter them from foreign competition with trade restrictions. Another purpose was to achieve trade surpluses through
export subsidies and import restrictions. These policies, whose ostensible goal was to increase and preserve domestic wealth at the expense of other countries, became known as mercantilism.
For more than 200 years, many economists have argued against
mercantilist policies and made the case for free trade. They generally
believe that restrictions on commercial activity reduce wealth rather
than increase it. Conversely, the argument for free trade is relatively
simple yet compelling.
The case for free international trade is much the same as the case
for free internal trade. Commerce between the United States and
Japan benefits Americans as does commerce between New York and
California. The exchange of goods, internally or internationally,
arises as a natural outcome of specialization. Because of factors such
as climate, natural resource endowments, or technology, different
economic regions possess different abilities to produce certain goods.
Individuals, firms, and industries within these regions tend to concentrate their efforts in the goods and services that they are best able
to produce. Then their output is exchanged in the marketplace for
that of other economic agents.
Specialization allows for a more efficient use of scarce resources
and permits improved productivity of the economy. The larger the
size of the market, the greater are the possibilities for specialization
and for increasing the wealth of the community. The extent of specialization in international trade is related to the forces of international competition. As barriers between markets are lowered, some
domestic producers will face increased competition from abroad.
Other producers will exploit export opportunities as accessible markets expand. Hence, production will tend to contract in industries
where foreign goods are superior relative to domestic goods on a
price and/or quality basis. In those industries where domestic goods
are relatively superior to foreign, local output will expand. These
latter industries are said to have a comparative advantage.
In essence, comparative advantage means that an industry will
export if it is more efficient relative to other domestic industries. An
industry's productivity relative to other industries within the same




127

country determines its ability to command scarce resources within
that economy and, thereby, to export to the rest of the world. Thus,
a local industry's efficiency compared with that industry in foreign
countries is not the main determinant of whether it exports or faces
import competition.
Because comparative advantage refers to an internal ranking of
productivity, a country may import goods even if the local producing
industry is more efficient than its foreign rival. A country will tend to
concentrate production in those industries in which it has the greatest comparative advantage. Standards of living rise as resources are
put to their most productive uses. One sign of rising standards of
living, of course, is a rise in real wages.
A common misconception about international trade is that it is
unfair. For instance, some argue that because U.S. wages are high
relative to wages in other countries, U.S. producers cannot compete.
This argument is true for some industries, but not true in general.
U.S. wages are high because American workers are in general rnqre
productive than their foreign counterparts. The relatively high U.S.
productivity comes about from this Nation's enormous stock of physical and human capital. As U.S. productivity levels increase, so do
wages paid to workers. This puts upward pressure on wages even in
relatively inefficient sectors of the economy. But if wages rise and
productivity does not keep pace, then American firms will have trouble competing.
An instructive example comes from the U.S. steel industry. From
1965 to 1981, wages rose much faster than labor productivity in steel
and faster than wages and labor productivity in overall manufacturing. As a consequence, unit labor costs increased dramatically, and
the comparative advantage of U.S. steel products deteriorated badly.
In other sectors where wages are relatively high but productivity remains strong, such as aircraft and computers, U.S. products compete
successfully in world markets.
In addition to raising the general standard of living, the forces of
free trade also produce dynamic gains for the economy. These benefits accrue because, in the absence of government intervention, investment in new plant and equipment and in research and development tends to concentrate in the most efficient sectors of the economy. This increases the rate of growth of the economy. Conversely, in
an economy riddled with protectionist policies, investment is often
diverted from more efficient industries because of government-induced distortions in relative rates of return.
Finally, political gains arise from free-trade policies. As countries
rely more on each other for goods and services, they are more likely
to settle international disputes through negotiation rather than hos-




128

tile action. An example is the remarkable reduction in national tensions between the countries of Western Europe since the adoption of
internal free-trade policies following World War II.
It is sometimes argued that the benefits of free trade depend upon
special assumptions about economic behavior. But the case for free
trade is quite general. Early arguments for free trade assumed that
industries were perfectly competitive and that trade arose from climatic or technological differences between countries. Later, economists focused on trade resulting from relative differences in national
endowments of factors of production, such as labor and capital. In
both instances, the free-trade outcome was one where production expanded along the lines of comparative advantage and countries enjoyed the consequent gains of trade.
More recent theories of international trade flows stress the importance of imperfectly competitive market structures arising from such
phenomena as increasing returns to scale and domestic barriers to
entry. Even here, however, free international trade is beneficial. Expansion of markets because of freer trade may allow a firm to realize
economies of scale from an output level higher than would be expected in the absence of trade. These economies can then be passed
on to the consumer as lower prices. Expansion of markets through
free trade also leads to an erosion of monopoly power enjoyed by
those industries where both significant barriers to domestic entry and
foreign competitors exist. Another source of gain is the benefit to
consumers from an increase in product diversity, in both quality and
variety.
The benefits of free trade are relatively independent of actions
taken by foreign countries. In particular, it is often argued that because protectionist policies exist in foreign countries the United
States must follow suit. This argument is generally false. The benefits
to the United States flow from buying goods and services for which
foreign producers have a comparative advantage and selling U.S.
goods and services where U.S. companies have a comparative advantage. To the extent that foreign policies reduce these trade possibilities, those countries and the United States gain less.
Furthermore, the benefits of free trade do not require that trade
be balanced at any point in time. Indeed, overall trade balances and
the associated international capital flows allow countries the mutual
benefit of trading goods and services over time. Countries with overall trade deficits borrow from the rest of the world. Such borrowing
can provide the requisite funds for financing investment expenditures
crucial to economic growth. Countries with overall surpluses lend to
the rest of the world. This lending raises the wealth of the country if
it is allocated to projects that earn higher rates of return than would




129

otherwise be possible. However, neither borrowing nor lending can
go on indefinitely, and economic forces will work over time to ensure
that imbalances are closed. Thus, trade in goods and services between any country and the rest of the world tends to be in balance
over the long run.
On the other hand, trade between any two countries may never be
in balance. For a variety of reasons, countries tend to amass surpluses with some countries and deficits with others. Unfortunately, interest in bilateral trade balances—essentially a mercantilist trait—remains great. In May 1986, the House of Representatives passed an
omnibus trade bill, H.R. 4800, that called for the President to identify countries that have "excessive" trade surpluses with the United
States and then to negotiate with or take actions against these countries, regardless of the underlying causes of the surpluses. The President labeled the bill "kamikaze legislation" and promised to veto the
measure, but it died when the 99th Congress adjourned.
Despite the obvious benefits of a liberal trading order, various
forms of protection abound and are proliferating at an alarming rate.
Why do governments continue to pursue these policies? Various justifications have been put forward by governments to defend protectionist policies. Examples include government revenue, national defense, unfair foreign trade practices, preservation of certain ways of
life, and short-term aid to revitalize industry.
Whatever the motive, protection in any form redistributes income
and wealth. And because the redistributive effects are usually not
readily apparent, special interest groups sometimes favor and governments often choose these methods over other more visible and much
less costly forms of subsidy. Protection raises the price of imports
and domestically produced import-competing products. But, consumers are seldom aware of the tax imposed upon them by protection
because they rarely have the opportunity to observe the difference
between domestic and world prices. The cost of protection to consumers can be quite dramatic. For instance, the Council of Economic
Advisers estimated that if Congress had been successful in its attempt
to override the President's veto of the Textile and Apparel Trade Enforcement Act of 1985, Americans would have had to pay up to an
additional $44 billion for textiles and apparel over the next 5 years.
Given these considerations, the Administration supports policies
designed to improve the efficiency and productivity of the U.S. economy. Such steps should make Americans more prosperous. These
policies include retraining for displaced workers, reforming antitrust
laws, and strengthening property rights, both domestically and
abroad. Other initiatives include the repeal or reform of regulations
that unnecessarily impinge upon U.S. competitiveness.




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SECTORAL MARKET OPENING INITIATIVES
SECTION 301 ACTIONS

Trade imbalances are largely macroeconomic phenomena, not related directly to market access barriers or unfair trade practices by
foreigners. But trade barriers and unfair practices distort economic
activity and generally harm economic efficiency. For this reason, the
Administration is committed to eliminating foreign trade policies that
pose a significant burden on U.S. exports.
Section 301 of the Trade Act of 1974, as amended, provides the
authority and procedures for the President to act against certain
unfair trading practices of U.S. trading partners. The President must
first find that action is appropriate to enforce U.S. rights under any
trade agreement, or to respond to any act, policy, or practice of a
foreign country that (a) is inconsistent with the provisions of, or otherwise denies the United States benefits under, any trade agreement,
or (b) is unjustifiable, unreasonable, or discriminatory and burdens
or restricts U.S. commerce. If he so finds, then he is authorized to
act to enforce these rights or to eliminate the act, policy, or practice.
Unjustifiable practices are those that violate or are inconsistent
with U.S. international rights. The term "unreasonable" refers to
acts, policies, or practices that are not necessarily illegal or inconsistent with U.S. international legal rights, but are viewed as being
unfair. The act applies not only to practices that harm U.S. trade in
goods and services, but also to actions against U.S. direct foreign investment that affect trade in goods or services.
Section 301 is administered by the Office of the U.S. Trade Representative (USTR). Petitions may be filed by any interested party or
they may be "self-initiated" by USTR on its own or at the request of
the President. Once an investigation has been opened, USTR, in cooperation with other U.S. Government agencies, determines the
extent of harm to domestic interests and recommends action for the
President. At the same time, USTR consults with the foreign government involved in the complaint and attempts to negotiate a settlement.
Depending upon the specific nature of the alleged practice, USTR
has up to 12 months to conclude the investigation and recommend
action to the President. If no solution is reached, USTR may recommend that the President impose duties or other restrictions on imports from the foreign country or take any other action authorized by
law. Retaliatory actions taken under Section 301 may be nondiscriminatory or solely against the goods and services of the foreign country involved in the dispute. The products subject to retaliation need
not correspond to the products related to the dispute.




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Between January 1975 and November 1986, 57 cases had been initiated under Section 301. Table 4-1 details the disposition of these
cases. In addition, numerous firms and industry groups have consulted with USTR regarding the Section 301 process or have filed and
then withdrawn their petitions before a case could be initiated. More
than 60 percent of initiated cases were begun under the current Administration. Until 1985, all of these came as the result of privately
filed complaints. Recently, however, the role of Section 301 as an
active component of U.S. trade policy has grown, with the President
directing USTR to self-initiate four investigations and three trade actions aimed at the practices of several U.S. trading partners. Five of
the seven proceedings have been favorably resolved, while two are
pending. Brief descriptions of the circumstances of these self-initiated
cases follow.
TABLE 4-1.—Summary of cases under Section 301
[January 1975 to November 1986]
Number

Category

Petitions considered

. . .

..

57
6

Petitions withdrawn
Cases terminated:

20
4

Due to resolution of dispute
Due to other reasons

12

Cases resulting in retaliation

3

Cases suspended

15

Cases pending

Note.—Case resolutions do not equal number of petitions considered because cases may fall into more than one category.
Source: Compiled by Council of Economic Advisers from data provided by Office of the U.S. Trade Representative.

Self-initiated Section 301 Cases

On September 16, 1985, at the request of the President, an investigation was begun into practices that act as a barrier to U.S. cigarette
sales in Japan. These practices included tariffs combined with internal ad valorem excise taxes, an absolute prohibition on the manufacture of foreign cigarettes in Japan, discriminatory treatment in the
collection of excise taxes, and restrictions on the distribution of foreign cigarettes. Bilateral consultations were held between representatives of USTR and the government of Japan. Japan promised to suspend altogether tariffs on cigarette imports. It also agreed to eliminate the discriminatory deferral in collecting excise taxes, terminate
discriminatory distribution practices, and make its price approval
system virtually automatic. On October 6, 1986, the President suspended the investigation with the intent that it be terminated upon
full implementation of the agreement.




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In the autumn of 1985, the President directed USTR to self-initiate
two Section 301 investigations against the practices of Korea. The
first involved restrictions on the ability of U.S companies to sell fire
and life insurance in Korea. The second was aimed at the lack of effective protection of U.S. intellectual property rights, such as copyright protection for literary and artistic works, including computer
software, and patent protection for chemical and pharmaceutical
products. Bilateral consultations resulted in agreements covering
both complaints. The first increased U.S. market access to Korea's insurance market by allowing U.S. insurers to underwrite both life and
other insurance. The second promised to expand dramatically the
protection of intellectual property rights. The President approved the
agreements in August 1986, and the investigations were terminated.
On August 1, 1986, the President determined that Taiwan's practice of calculating customs duties based on prices listed in dutypaying tables violated a trade agreement or was unjustifiable and a
burden on U.S. trade. In effect, this practice had led to increased
duties paid to Taiwan, because the prices in the tables often exceeded transactions values. Before USTR could recommend an appropriate method of retaliation, Taiwan agreed to stop the practice.
In October 1985, Taiwan agreed to provide greater market access
for U.S. exports of beer, wine, and cigarettes within 6 to 12 months.
In particular, Taiwan agreed to lift an import ban on beer and to
allow U.S. products to be sold at all retail outlets where Taiwanese
products were sold. It also agreed to limit retail markups on U.S.
products to the level applied to local products and to allow market
forces to determine the levels of importation of U.S. products.
On October 27, 1986, the President determined that Taiwan had
not honored the agreement and accordingly found the Taiwanese
practices to be unreasonable and a burden on U.S. commerce. He directed USTR to retaliate. On December 5, 1986, before the retaliation could be implemented, Taiwan agreed to settle the dispute and
the President ordered the case terminated.
On March 31, 1986, the President announced his intention to
impose quotas on several European Community (EC) products in response to EC restrictions affecting U.S. exports of oilseeds and
grains to Portugal. He also vowed to increase tariffs on certain products if the EC did not provide compensation for reduced U.S. exports of corn and sorghum to Spain as a result of the replacement of
Spain's 20-percent tariff on these products by the EC's variable levy.
The EC had taken its actions in connection with the accession of
Spain and Portugal to the EC.
On May 15, 1986, the President imposed quotas on EC imports in
response to the Portuguese import restrictions. However, to date,




133

these actions have not restricted trade. On July 2, 1986, the EC and
the United States reached an interim agreement, and the quotas were
lifted to permit continued sales of corn and sorghum to Spain for an
additional 6 months. Both sides had agreed to December 31, 1986,
as a deadline for the final agreement. Unfortunately, subsequent negotiations have failed to produce a settlement. Consequently, on December 30, 1986, the President announced that ad valorem tariffs of
200 percent would be placed on certain products, primarily imported
from the EC, with a trade value approximately equal to the estimated
loss of corn and sorghum exports. The tariffs will be implemented
no earlier than January 31, 1987, thus allowing additional time for
negotiations.
On September 16, 1985, at the President's direction, USTR began
a Section 301 investigation into all aspects of Brazil's computer and
computer-related (informatics) products policies. Included in the investigation were practices concerning import restrictions, limitations
on U.S. investment, and failure adequately to protect intellectual
property rights. On October 6, 1986, the President announced that
Brazil's informatics policy was unreasonable and a burden or restriction on U.S. commerce, but ordered that the case be continued until
December 31, 1986, to give both sides more time to reach an agreement. In the meantime, he requested that USTR notify GATT of
U.S. intentions to suspend the application of tariff concessions to
Brazil and to effect such suspensions when appropriate.
In the weeks that followed the Presidential announcement, some
progress was achieved on certain procedural aspects of Brazil's informatics policy. Consequently, on December 30, 1986, the President
suspended those aspects of the investigation. In addition, he ordered
a further extension, until July 1, 1987, to give negotiators additional
time to settle remaining issues in the case.
Analysis of Section 301 Actions

The Administration's decision to self-initiate several Section 301
cases has sent important signals. First, U.S. industries know that if
they encounter unreasonable trade barriers in foreign markets, a
mechanism exists to help them overcome these barriers. Moreover,
both the self-initiations and actions in cases initiated in response to
industry filings demonstrate U.S. concern to its trading partners
about their commercial policies. The message of the Section 301
process is that in the products and countries involved in the various
cases, the United States thinks its comparative advantage is being unfairly denied.
Section 301 puts the weight of the President behind disputes over
specific, narrowly defined trade practices abroad. This attention
sharpens the focus of the dispute and allows pressure to build on a




134

clear and remediable problem. The threat of retaliation can provide
leverage to negotiate an end to unfair foreign practices. Section 301
also encompasses a greater range of issues (in goods, services, investment, and intellectual property rights) than does GAIT.
Section 301 should be used with caution. Actions taken under it may
be perceived as an intrusion into the policies of a foreign government.
And, while these policies may clearly be egregious and often lower the
economic welfare of the foreign country, in some cases the threat of
retaliation may not provide the best incentive for successful resolution
of the issue.
Political leaders may not want to appear to be vulnerable to foreign threats and may resist a mutually beneficial agreement to preserve national pride. Thus, Section 301 cases are most likely to succeed in areas that have little economic and political significance to
foreign governments, and retaliation is more likely in those cases
with significant foreign national interest.
The level of contentiousness is even higher when the process is initiated at the President's direction without a petition filed by a U.S.
firm or industry. In these cases, it is most unlikely that the investigation will lead to any finding other than unreasonableness. The possibility of abandoning the case because the costs of retaliation are too
high is limited.
U.S. retaliation may inflict as much or more harm on the American
economy as it does on its target. In addition, unless carefully handled, it is likely to violate GAIT rules, undermining an already weak
international dispute settlement process. Moreover, retaliation does
not always stop with the issue at hand, but may escalate into further
rounds of retaliation and counter-retaliation. The potential for mutually destructive trade wars rises with the magnitude of the case and
with the size of the trading partner.
While the focus of a Section 301 case is usually on a specific product, the effects of a settlement may extend to other related areas. For
instance, the recently concluded agreement with Japan over trade in
semiconductor products has led, at least temporarily, to increases in
the prices of these products. As semiconductor prices rise, the competitiveness of industries using these products as inputs may diminish.
Several proposed trade bills recently considered by the 99th Congress would have amended the Section 301 decisionmaking process.
Most of these proposals are ill-advised. For instance, Senate bill
S.I860 would have mandated the President to self-initiate several
Section 301 investigations each year. It would also have required the
President to retaliate if settlement were not reached after a fixed
period of time. Such requirements add inflexibility to areas where




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flexibility is vital, and do nothing to address the fundamental problem of opening foreign markets. The decision to self-initiate raises
the stakes in the negotiating process. Section 301 currently allows the
President to lend the force of his office in those situations where it
most benefits the outcome of the process.
Finally, the credibility of U.S. complaints about foreign trade barriers depends in part on the extent of its own barriers. U.S. tariffs are
low on average, but tariffs on certain products remain high and nontariff barriers affect a significant percentage of total imports. For example, the United States participates in the international Multifiber
Arrangement, which authorizes complex bilateral trade-restricting
agreements between exporters and importers of textiles and clothing.
The United States has asked its trading partners to limit their exports
of steel and machine tools and uses nontariff barriers or high tariffs
to restrict trade in sugar, dairy products, lumber products, motorcycles, and a number of other goods.
MARKET-ORIENTED, SECTOR-SELECTIVE TALKS

A much less confrontational approach to bilateral market opening
is represented by a series of sectoral negotiations between the United
States and Japan. Following the successful conclusion of talks to liberalize Japanese financial markets, both governments sought to address the often contentious issue of commercial trade with Japan. In
1985, high-level discussions, called Market-Oriented, Sector-Selective
(MOSS) talks, began with the purpose of identifying and removing
impediments to market access in Japan. Sectors initially chosen for
discussion were telecommunications, electronics, medical equipment
and pharmaceuticals, and forest products. Transportation machinery
was added later.
The MOSS talks have shown substantial progress. Japan has implemented reforms in telecommunications, forest products, and medical
equipment and pharmaceuticals. MOSS discussions on electronics
were largely preempted by the semiconductor agreement. Negotiations in transport machinery, especially involving trade in automobile
parts, still continue.
RECIPROCAL MARKET OPENING INITIATIVES
Opening markets on a piecemeal basis is difficult and inefficient. A
more fruitful approach is to enter into discussions with foreign governments to open all markets reciprocally. These discussions can occur
on a bilateral or multilateral basis. Important progress was made on
both fronts in 1986.




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FREE-TRADE AREA NEGOTIATIONS

A free-trade area (FTA) is an arrangement between two or more
countries to remove barriers to trade among themselves but to maintain separate barriers with respect to nonmember countries. The
benefits from FTAs resemble those attributed to free trade in general: expansion of market size can lead to efficiency gains through specialization. Consumers gain because they pay lower prices for certain
goods because of increased competition.
Conclusion of FTA agreements can help to maintain the momentum for liberalizing trade. When the international climate does not
permit widespread reductions of trade barriers, liberalization among
like-minded nations promotes free trade. When nations that refuse to
reduce their trade barriers see that others will achieve gains from
trade by reducing barriers bilaterally, they might reconsider their
commercial policies and join the effort to open markets.
FTAs have their problems. The potential cost of FTAs relative to
freer trade in general arises from the fact that FTAs discriminate in
favor of trade between member nations and against trade with nonmember countries. Hence, the source of trade may be diverted away
from the lowest cost world producer in favor of a higher cost FTA
member.
Both the Administration and Congress, however, think that freetrade area arrangements are worthwhile. The Administration's 1985
trade policy statement noted that bilateral negotiations are no substitute for multilateral negotiations, but that "such agreements could
complement our multilateral efforts and facilitate a higher degree of
liberalization, mutually beneficial to both parties, than would be possible within the multilateral context/' Congress, for its part, has
granted the Administration authority to enter into bilateral trade-liberalizing negotiations.
FTA Agreement with Israel

The Trade and Tariff Act of 1984 specifically authorized the President to conclude an FTA agreement with Israel. Formal talks began
in January 1984. An agreement was signed in April 1985 and the first
stage of liberalization went into effect in September 1985.
The agreement covers both tariff and certain nontariff barriers that
exist between the two countries. Although most substantive elements
of the agreement address liberalized trade in goods, some relate to
trade in services and protection of intellectual property rights.
The U.S.-Israel FTA is the first such agreement reached by the
U.S. Government. One motivating factor for negotiating this agreement was Israel's previous entry into a similar agreement with the EC
covering trade in manufactured products. By negotiating an FTA




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with Israel, the United States regained the competitive advantage that
U.S. exporters had lost to their European competitors.
FTA Talks with Canada

More trade passes between the United States and Canada than between any two other countries. In 1985, this trade totaled about $120
billion. Canada is this country's largest foreign market, accounting
for 22 percent of total merchandise exports. The United States is
Canada's largest market, purchasing more than 75 percent of total
Canadian exports. The two countries engage in substantial trade in
services. In addition, about 20 percent of U.S. direct foreign investment is in Canada.
Over the course of U.S.-Canada relations, special trade pacts have
periodically been considered. From 1855 to 1866, trade between the
two countries was governed by special treaty. Since 1965, the United
States and Canada have had a sectoral agreement covering trade in
automobiles. However, more comprehensive and longstanding agreements have eluded American and Canadian negotiators for decades.
Recently, a new effort to reinforce U.S.-Canada economic ties
began. On September 26, 1985, the Prime Minister of Canada called
for negotiations between the United States and Canada to achieve
"the broadest possible package of mutually beneficial reductions in
barriers to trade in goods and services." The Administration welcomed this proposal and formally notified Congress in December
1985 of its intent to enter into negotiations under the negotiating authority established in the Trade and Tariff Act of 1984. These negotiations were begun in May 1986.
After consultations with advisory committees representing industry,
labor, and agriculture, the Administration developed objectives for
the talks. The first objective is the elimination of Canadian tariffs. A
second broad goal is the elimination of nontariff barriers to certain
U.S. exports. The United States is also interested in eliminating barriers to foreign investment in Canada, liberalizing trade in services,
and protecting intellectual property rights.
Canadian objectives include reducing U.S. tariffs and improving
access to the government procurement process, both Federal and
State, from which Canadian vendors have often been excluded because of various Buy American provisions. Both sides seek a dispute
settlement mechanism that could be used to enforce any agreement
emerging from these negotiations and to deal with individual disputes in the future.
The mutual economic gains of liberalized trade with Canada are
likely to be substantial. The United States would benefit because Canadian tariffs are quite high and hence reduction of these barriers
could lead to increased market access for U.S. exporters. Canada




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would gain from taking advantage of the economies of scale that it
could achieve through producing for a market ten times larger than
its own. Both countries also stand to gain in many nonquantifiable
ways, not the least of which is the reduction of commercial tensions.
Since 1981, the Administration has concluded or examined comprehensive bilateral trading arrangements with several countries. Although such arrangements are better, in general, than sectoral negotiations between countries—and far better than negotiations conducted under threat of retaliation (such as Section 301)—multilateral
trade talks are the most efficient and all-encompassing means by
which to reduce global trade barriers. Hence, the Administration has
placed strong emphasis on a new round of GATT talks.
THE NEW GATT ROUND

An important Administration success in trade policy has been the
launching of a new round of talks in GATT to reduce barriers to
international trade and to strengthen and improve the global trading
system. The announcement of an agreement to begin this new round
was made at an international gathering of trade ministers at Punta
del Este, Uruguay, on September 20, 1986. Organized discussions
began on October 27, 1986; the negotiations are scheduled to continue for 4 years.
The Uruguay Round holds considerable promise for U.S. commercial interests. In addition to traditional areas, new topics that will be
considered in the negotiations include trade in services, treatment of
foreign investment, and protection of intellectual property rights.
The Administration played a key role in ensuring that these issues
would be included in the talks.
History of GATT

GATT was created at the end of World War II as one of several
international agreements designed to promote world peace and development. It serves both as a forum for trade liberalization talks and
international commercial dispute settlement and as a multilateral
body that sets rules of conduct in international commerce. Countries
that agree to follow GATT rules are said to be contracting parties.
As of December 1986, GATT comprised 92 contracting parties, including all developed Western economies. In addition, numerous developing countries, as well as several Eastern-bloc countries, are
GATT contracting parties. Together, GATT members account for
about 85 percent of international trade.
As a code of commercial conduct, GAIT prohibits quantitative restrictions on trade in goods, and the GATT subsidies code outlaws
government export subsidies for nonagricultural products. It does
permit certain protective measures for balance of payments reasons,




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to provide temporary relief for local industries in distress (i.e., safeguards protection), or to promote infant industries in developing
countries. GATT has procedures for settling disputes arising between members. The dispute settlement process may sometimes be
long and problems over compliance with decisions may develop. In
the Uruguay Round, the United States hopes to streamline and
strengthen the dispute settlement process.
Since 1947, GATT has served as a forum for seven rounds of talks
aimed at reducing international barriers to trade. Perhaps the two
most successful and well-known are the Kennedy Round of the 1960s
and the Tokyo Round of the 1970s. The major achievement of the
Kennedy Round was across-the-board tariff cuts, averaging 35 percent, on manufactured products. In the Tokyo Round, manufactured
goods tariffs were cut again, this time an average of 31 percent. In
addition, codes concerning nontariff barriers, such as government
procurement practices and customs valuation procedures, were established.
The operating principle underlying the agreements to cut tariffs is
the unconditional most favored nation (MFN) treatment among countries. This notion holds that if a contracting party grants trade concessions to another contracting party or to a nonmember country, it
must grant the same concessions to all contracting parties. The economic basis for this principle is sound. Because all countries belonging to GATT are treated alike, and because GATT members account
for most of world trade, trade flows will tend to occur along the lines
of comparative advantage. Thus, potentially trade-distorting discriminatory treatment is minimized. The MFN rule also protects small
countries by preventing big countries from negotiating exclusive
mutual concessions. Thus, less developed countries benefit from the
full weight of U.S. influence in negotiating trade concessions. The
MFN rule is extremely efficient in that it enables countries to avoid
the huge administrative costs of conducting the thousands of bilateral
trade agreements that are the effective equivalent of a multilateral
GATT round.
ADMINISTRATION AIMS IN THE NEW GATT ROUND

Talks in the new round will be conducted on the basis of a comprehensive agenda in two parallel areas, one involving trade in goods
and the other trade in services. The negotiations involving trade in
goods represent an extension of previous negotiations. Topics to be
addressed include tariff and nontariff barriers, trade in tropical and
natural resource based products, textiles and clothing, agriculture,
and trade-related investment and intellectual property rights issues.
In addition, negotiations will seek to strengthen GATT rules related




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to subsidies, dispute settlement, and safeguards protection. The talks
involving trade in services represent the first multilateral negotiations
ever undertaken on this issue.
Dispute Settlement

GATT acts as a forum for the settlement of disputes concerning
the rules and obligations set out in the GATT agreement. In the first
years of GATT, the dispute settlement process was effective in interpreting the rules of GATT and pressing countries to adhere to
GATT rules. Beginning about 1960, however, confidence in GATT
procedures and compliance with its rules began to wane. The Tokyo
Round attempted to tighten the dispute settlement process, but significant problems remain.
Basic weaknesses pervade the settlement process. The fundamental
problem is delay. It is not atypical for cases to drag on for several
years. Under current arrangements, parties to a dispute can block
adoption of settlement recommendations, thereby compounding the
problem of unsuccessful resolutions. Furthermore, the process is
least effective where GATT rules themselves are weak or ambiguous,
as with agriculture.
The United States is strongly committed to repairing and improving the dispute settlement system. The Administration supports new
rules and procedures designed to restore international confidence in
the system. Included in these rules would be the development of new
arrangements to ensure compliance with GAIT rules and rulings.
New and strengthened trade rules make no sense for the world trading system without effective enforcement.
Trade in Services

From 1950 to 1985, the production of services increased as a share
of total U.S. output from 47 to 57 percent. As employment in manufacturing was falling as a share of total employment, employment in
the services sector was rising faster than total employment. Today,
about 60 percent of American jobs are in the nongovernmental
services sector. Between 1950 and 1980, real service exports rose
faster than real GNP. Other developed economies have shared similar experiences. In the economies of developed countries, on average, services now account for about 50 percent of value added and
constitute approximately 20 percent of international trade.
Despite the growing • importance of the production and trade of
services in the U.S. economy and the economies of other developed
countries, little has been done to limit government policies that restrict or distort trade in services. A key element of the Ministerial
Declaration at Punta del Este was the establishment of a negotiating




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group on services: the object is to fashion a legal framework to
reduce barriers to and govern trade in services.
The agreement to consider trade in services required considerable
effort by U.S. negotiators. Opposition to negotiations over services
was largely related to issues of national sovereignty. Several countries
remain concerned about their ability, in the face of foreign competition, to develop domestic services industries in such sectors as telecommunications and insurance. Moreover, these countries fear that
without domestically supplied services they will be at risk. These familiar mercantilist arguments have no more validity in this instance
than they do with trade in goods.
The Administration has stated objectives regarding talks in services. It would like to see a legal framework that consists of at least
the following elements: transparency of restrictions, so that all parties
to the agreement are aware of laws and regulations in place to protect local industry; open regulatory procedures; limitations on the activities of local monopolies; a dispute settlement process; and a commitment to pursue liberalization in future talks.
Negotiators will still face the appropriate definition of the service
sectors. The Administration seeks a framework covering activities
readily traded internationally, including but not limited to, insurance,
telecommunications, data processing, shipping, aviation, construction, and engineering. A second and potentially more difficult problem lies with the measurement of production and trade in services.
For most countries, adequate data on trade in services do not exist.
Developing better measures of activity in the services area could be
an important by-product of the Uruguay Round.
Investment

The international diversification of capital through direct foreign
investment raises economic welfare around the world. In countries
that receive the investment, standards of living rise because real
wages rise, resources are used more efficiently, and technology levels
increase. Countries that export financial capital under free market
conditions also benefit because they allocate their capital to projects
that earn higher rates of return than could have been earned otherwise. Thus, the international flow of capital between countries is mutually beneficial, in a fashion similar to the free exchange of goods.
Governments that unnecessarily restrict the location and operation
of foreign capital lower the welfare of their citizens by lowering their
incomes. All investment policies that distort or impede trade alter the
pattern of trade away from that dictated by comparative advantage
and lower the economic well-being of both the countries that impose
the laws and the rest of the world.




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The United States has traditionally welcomed foreign investment
and only limits it in a few sensitive areas, generally on essential national security grounds. Many countries have established free-trade
zones and offer incentives to potential foreign investors. In effect,
they subsidize direct foreign investment in their countries and thereby distort capital and trade flows. Typical trade-distorting incentives
include performance requirements, which establish minimum export
levels expected of the foreign corporation. Laws that require the use
of domestic parts or labor, exchange controls, controls on technology
transfer, local equity requirements, and regulations on licensing, research, and development are other common restrictions. In the Uruguay Round, the United States will seek to develop effective multilateral disciplines over the whole range of trade-distorting investment
measures.
Intellectual Property Rights

Economic growth is spurred through the inventive, innovative, and
creative activities of individuals and companies. When the resulting
ideas are disseminated widely, the ideas of one person often contribute to the creative activities of others. In order to encourage this
process, countries establish systems of laws to promote and protect
inventions, literary and artistic works, trademarks, and other forms of
intellectual property. These patent, copyright, and trademark laws
provide incentives to create intellectual property by granting exclusive rights to their creators. For instance, patents afford inventors
time to recover their investment and the costs of creating and marketing inventions. Copyrights give authors control for a period of
time over the reproduction, dissemination, and public performance
of their works. Trademarks assure consumers about product characteristics such as quality.
Different countries provide different levels of intellectual property
protection. The United States seeks comprehensive protection for all
forms of intellectual property. Certain other nations afford little protection to foreign holders of intellectual property or limit protection
in several important areas. Some countries provide only minimal protection and use compulsory licensing to acquire foreign technology
or reproduce copyrighted works. This problem is becoming increasingly important as U.S. producers expand the marketing of items
such as computer software and pharmaceutical products abroad.
The Administration hopes the conclusion of an enforceable multilateral trade agreement will eliminate trade-distorting practices arising from inadequate protection of intellectual property. Part of this
agreement would seek the adoption by GATT members of minimum
standards of protection contained in existing international conventions where the United States perceives standards to be adequate. In




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areas where no convention exists or the standards under existing
conventions are considered inadequate, the Administration will seek
greater protection.
Agriculture

Trade policies affecting agricultural products are perhaps the most
difficult and contentious issues awaiting the new round. Virtually all
countries distort their trade in agriculture through tariffs, quotas, and
export subsidies.
Industrialized countries adopt domestic agricultural policies aimed
at raising farm income. Instead of providing farmers with income
transfers decoupled from production, governments employ price-distorting policies that encourage agricultural production. In order to
limit the cost of these programs, governments typically will also
impose import tariffs or nontariff barriers, such as quotas or variable
levies, and may subsidize the export of unwanted surpluses of domestic production. Thus, a direct relationship exists between domestic agricultural policies and the distortion of agricultural trade.
The cost of these policies, to both consumers and taxpayers, is exceedingly high. Consumers are often forced by their governments to
pay several times more than world price for the same product. For
instance, the price of sugar in the United States has recently been
300 percent above the world price. Japanese consumers currently pay
eight times the world price for rice. Beef prices in the EC are currently more than twice world prices.
The budget costs are also enormous and are worsening. Trade in
agricultural products should be determined by comparative advantage; instead it is determined by which government is willing to tax
its own citizens the most in order to subsidize domestic producers.
This situation has prompted competitive, countersubsidy trade wars
among the industrial countries in an effort to capture world markets.
It is not surprising that the predominate source of all GAIT dispute
settlement cases has been agricultural trade. The same is true for
Section 301 cases. Current rules on agricultural trade are weak,
vague, and easily circumvented. Practices are tolerated that GATT
has elsewhere forbidden.
The keen interest of the United States in negotiating tougher rules
to govern agricultural trade stems in part from its role as a major exporter of agricultural products. In 1985, U.S. farm exports totaled
$29.6 billion, accounting for 13.9 percent of U.S. merchandise exports. U.S. agricultural exports have been declining rapidly, however.
In 1981, the peak year for U.S. trade in this area, exports totaled
$43.8 billion, 18.7 percent of all U.S. merchandise exports. Some of
the loss of export markets can be attributed to the strength of the
dollar. In addition, recent technological advances in agricultural pro-




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duction have allowed countries that were only recently net importers
of agricultural products to increase their production levels and
become net exporters. High support prices in other countries have
had similar effects. For example, in the mid-1970s, the EC was a net
importer of 25 million tons of grains—20 percent of world trade in
these products. By 1985, largely because of its internal farm policies,
the EC had become a net exporter of 16 million tons, a swing of 41
million tons in the world market in a decade.
Some of the lost market for U.S. products has been caused by the
production and export subsidy practices of certain competing nations. In order to stave off this reduction in markets, the United
States has resorted to subsidizing exports. The Uruguay Round
offers the opportunity to end this costly and counterproductive subsidy war. Stable, undistorted world agricultural markets offer the best
opportunity for America's farmers to export their products.
The United States seeks to improve the climate of international agricultural markets by bringing them under effective and enforceable
multilateral rules. The United States hopes the Uruguay Round will
make progress in reducing import restrictions on agricultural products, in outlawing export subsidies, and in reducing other forms of
market barriers in developed and developing countries alike. Clearly,
the key to achieving fundamental reform in this area will be for countries to agree to eliminate distorting domestic agricultural policies.
CONCLUSION
The Administration seeks to open foreign markets to U.S. exporters. Administration actions include the increased use of Section 301,
which attacks specific foreign trade practices; the initiation of negotiations leading to bilateral free-trade areas between the United States
and several important trading partners; and the achievement of a new
round of multilateral trade liberalization talks in GAIT.
The Administration's approach stands in sharp contrast to efforts
proposed by some to attack the trade imbalance with protectionist
policies. Instead of bilateral market opening, these forces recommend
bilateral restrictions. Instead of multilateral trade liberalization, they
call for general import surcharges. Calls for protection ignore its cost
to consumers, its deadening effect on the efficiency of U.S. industry
and the global economy, its invitation to counter-retaliation that
stings U.S. exporters, and the inspiration it gives to other industries
to seek government assistance in the guise of import relief. Raising
trade barriers would only reduce the opportunities to open world
markets for American products. Through its efforts to contain and
reverse the growth of protectionism both at home and abroad, the
Administration hopes to ensure that the postwar expansion continues
in the years to come.




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CHAPTER 5

Toward Agricultural Policy Reform
U.S. AGRICULTURAL PROGRAMS have resulted in enormous
budgetary costs, benefits that do not reach those most in need, huge
surpluses of farm products, major trade disputes with other countries, and great harm to well-functioning international markets. Programs instituted at the Federal level have distorted economic incentives sufficiently to create serious long-term problems. Programs for
some commodities have imposed substantial losses on consumers.
Chronic surpluses of major commodities exist throughout the world,
largely because of high U.S. Government target prices and heavy
subsidization of agricultural production by most other developed
countries.
Despite the massive taxpayer and consumer costs of current programs, the U.S. agricultural sector faces its most severe economic
crisis since the 1930s. Instability within the sector continues, with
little improvement apparent in the financial condition of many family
farms and rural banks. Soil erosion and the pollution of surface and
groundwater with toxic waste continue with only moderate signs of
relief.
Agricultural policies have become contentious issues of immense
importance to all countries. The shift in U.S. agriculture from its
prosperous state in the inflationary period of the 1970s to its unsettled existence in the 1980s is linked to events abroad and to the policies pursued in both the agricultural sector and the U.S. economy in
general. For these reasons, this chapter focuses on the current state
of U.S. and world agriculture, how the Nation arrived at this state,
and what public policies would foster a healthy U.S. farm economy.
CHANGES IN U.S. AGRICULTURE
Over much of the 20th century, agriculture has been one of the
most innovative and productive sectors of the U.S. economy. In the
1930s, no perceptible difference in crop yields was visible among the
United States, England, India, and Argentina. In the subsequent 50
years, however, U.S. agricultural productivity has increased dramati-




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cally. It has grown faster than other industries and, until the mid1970s, faster than agricultural productivity in other countries.
Farmers in the United States represent less than 3 percent of the
civilian labor force, but they produce enough food to feed the entire
domestic population, while maintaining the capacity to export large
quantities to the rest of the world. Farming operations represent only
one component of a total food and fiber system that embraces all activities from the provision of farm inputs through commodity production and on to final consumption. Defined in this fashion, the food
and fiber system accounts for approximately one-fifth of the Nation's
gross national product (GNP) and slightly more than one-fifth of
total labor force employment.
Factors that affect U.S. agriculture can be categorized as follows:
macroeconomic, financial, and exchange-rate factors; demand and
supply; and agricultural and food public policies. The interaction of
these three forces, along with the inherent instability of the U.S. agricultural sector, explain the changes in the U.S. food and fiber system.
During the 1970s, the combination of these forces had the effect of
pushing agricultural prices and incomes to record levels. In the
1972-73 period, the fall in the U.S. dollar, the emergence of a wellintegrated international capital market to finance trade, the lack of
supply response in many foreign countries due to trade barriers, and
the growth in real income around most of the world boosted demand
sharply for U.S. farm output. The elimination of the huge U.S. governmental stocks in 1972 that had accumulated during the 1960s
made the system more vulnerable to shocks.
Throughout the 1970s, supply and demand worked both to expand
world agricultural trade and to increase the U.S. share in trade at an
unprecedented pace. Foreign food consumption grew by 34 million
tons per year while the annual average increase in foreign grain production was only 24 million tons. For the decade as a whole, world
trade expanded -fourfold while U.S. exports increased sixfold. By
1980, more than one-third of U.S. cropland was committed to producing for export, while 2 out of every 5 tons of farm products
traded were produced in the United States.
Rapid inflation in 1973-74 and again in 1978-80 boosted nominal
agricultural prices and helped drive up the price of agricultural land.
Higher land prices made additional borrowing more attractive, which
was further stimulated during much of this period by negative real
interest rates.
In the early 1980s, the forces that stimulated the agricultural prosperity of the 1970s reversed direction. The need to control inflation
led to a mix of U.S. fiscal and monetary policies that drove ex post
real interest rates to postwar highs. The rise in the value of the




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dollar in the first half of the 1980s, the worldwide recession that reduced demand for U.S. exports, the increase in supplies of agricultural products from other countries, and record U.S. crops in 1981,
1982, and 1985 all combined to reduce world prices and U.S. export
sales. The Food and Agricultural Act of 1981 made it more profitable
for U.S. farmers to forfeit their output to the Commodity Credit Corporation (CCC) at rigidly fixed loan rates than to export at lower
world prices. This imbalance led to larger and larger stocks and, in
turn, to larger and larger acreage reduction programs, which culminated in 1983 with more cropland idled in the United States than all
of Western Europe planted to crops.
The decline in the growth rate of worldwide consumption in the
1980s was attributable to the low rate of income growth in much of
the world and, in many countries, the high interest costs of large external debt. The rate of growth of consumption decreased from 34
million tons of grain to 19 million a year. With foreign grain output
increasing 29 million tons per year during the 1980s, the 10-millionton yearly increase in net foreign grain imports of the 1970s was replaced by a 10-million-ton annual decline during the 1980s.
Throughout the developed world, increasing self-sufficiency has severely contracted available export markets. For example, during the
1970s, the European Community (EC) was a large net importer of
grains. In particular, in the mid-1970s, the EC imported about 25
million tons of grain, a fifth of world trade. By 1985, the EC was exporting 16 million tons. That change reduced the annual size of the
world market available to the United States by 41 million tons a year
in a single decade.
With falling rates of return to agricultural production during the
1980s and the increasing attractiveness of financial instruments, the
value of agricultural assets, particularly land, dropped sharply. The
change in asset values resulted in a loss of owners' equity since 1981
of almost $300 billion. Owners' equity can no longer shield many
farmers from their debt repayment problems, resulting in an increased frequency of farmer bankruptcies and rural bank failures.
MARKET, GOVERNMENT, AND RESOURCE RISK

The special characteristics of U.S. agriculture include inherent instability and uncertainty because of unpredictable weather patterns,
the lack of complete insurance markets for sharing risk, the immobility of certain resources in farming, and particular environmental effects of farming on the Nation's resource base.
Some human resources are trapped in farming with few off-farm
rural employment opportunities. Despite falling commodity prices
and widespread overcapacity, many farmers are reluctant to enter




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other occupations. This reluctance is reinforced by government policies that encourage an overcommitment of resources to the agricultural sector. However, the immobility of farmers has declined as a
distinguishing characteristic of U.S. agriculture as farms have grown
larger and have become more integrated into the rest of the economy.
Macroeconomic developments induce increased volatility of commodity prices. Because agricultural prices are generally more flexible
than nonagricultural prices—due to product homogeneity, modern
integrated markets, biological time lags, and shorter contracts—monetary shocks cause agricultural prices to respond sharply while leaving other prices relatively unchanged. This phenomenon helped fuel
the explosion of agricultural prices in the 1970s and their dramatic
fall in the early 1980s.
Public policies have been designed to reduce the risk associated
with high variations in commodity prices and production in the agricultural sector. Farm policies, such as price stabilization schemes and
crop insurance, are supposed to help the agricultural sector cope
with the capricious nature of its physical and economic environment.
When the government guarantees farmers a certain price, for instance, it absorbs risk and eliminates some of the uncertainty faced
by many in the agricultural sector.
While government policies have absorbed risk in many instances,
government itself has also created risks by contributing to commodity market instability. The Food and Agriculture Act of 1977
changed commodity programs to permit a wider fluctuation in prices.
The export embargo of 1980, variations on the rules of the FarmOwned Reserve program since 1980, the payment-in-kind program of
1983, and the issuance of generic certificates of 1986, to name but a
few large government agricultural programs, make it clear that policy
uncertainty can be a major contributor to private commodity market
instability. In addition, the mere existence of governments is one
reason why private stockholders may not store commodities for extreme contingencies and, thus, provide needed price stabilization.
If complete risk markets existed, the inherent instability and uncertainty within the agricultural sector would not be sufficient justification for public policy. One reason more comprehensive risk markets
do not exist within the agricultural sector is because of heavy government involvement. So much of the risk is borne by the public sector
that little incentive exists for the emergence of private institutions to
manage inherent instabilities and risk. For example, the introduction
of commodity futures options markets has provided an important
mechanism for hedging risk. Options markets allow agricultural producers, merchants, and processors to take advantage of favorable
prices while limiting the risk associated with harmful price move-




150

ments. These risk-transfer mechanisms offer distinct advantages to
producers relative to traditional futures markets because of the avoidance of margin calls and their associated demands on liquidity. However, because of government policy most farmers have little if any incentive to use these options markets.
Government policy, while perhaps achieving its direct goal, may
have side effects and consequences that are unanticipated and unintended. Once it is known that the government intends to redistribute
income from one group to another, specific economic groups lobby
the government to gain these lucrative transfers for themselves. If,
for instance, the government has reduced the downside risk in producing certain commodities, farmers will specialize in these commodities because they offer a less variable rate of return than was previously the case. Farmers will then also have an economic incentive to
push for the political maintenance of that government program from
which they benefit.
Environmental effects of farming activities justify some corrective
public policy. Some lands currently under cultivation are highly erodible. Current irrigation levels with average precipitation result in
"mining" of more than 22 million acre feet of water from aquifers in
the Western United States. Nationally, nearly a quarter of the
groundwater used by agriculture is not replenished. Groundwater
contamination from agricultural as well as nonagricultural sources
has also become serious in many parts of the country. Western irrigation practices have raised groundwater salinity. Perhaps one-quarter
of the lands currently under irrigation in the West depend heavily on
nonrenewable water supplies, and the productivity of several million
additional acres is threatened by rising salt levels. Excessive application of fertilizer, pesticides, and other chemical uses in agricultural
production generate much of these off-farm environmental risks and
adversely affect the quality of groundwater and surface water.
THE STRUCTURE OF AMERICAN FARMS

Today, slightly more than 2 million farms in this country have
gross sales exceeding $1,000, a third of the number 50 years ago. Although the rate of decline has slowed, fewer but bigger farms are expected in the future. Over the past 50 years, average farm size has
increased in terms of sales, acreage, and the real value of assets.
The population of farms can be divided into three groups. First, a
large number (1.6 million) of farms have gross sales under $40,000
per year. More than one-third of all farms have sales less than
$5,000, and three-fifths have sales less than $20,000. The farms with
sales under $40,000 per year account for 72 percent of all farms,
but only generate 10.3 percent of gross farm income. Net farm




151

income is usually a minor component of average income for these
farms—in fact, averaging a $1,635 loss in 1985. But off-farm income
averaged $20,740 per farm. These farms are minimally affected by
agricultural policies and, in fact, receive only 9.5 percent of government payments.
A second class of farms have sales from $40,000 to $250,000, constitute about a fourth of all farms (544,000), and account for 40.9
percent of gross farm income. For these enterprises, farming is the
major occupation and livelihood of their owners, and family members
provide most of the labor. Off-farm income amounts to 55 percent of
net farm income, and they receive 58.6 percent of direct government
assistance to agriculture.
Finally, a small number of farms (93,000, or only 4.1 percent of all
farms) have gross sales of more than $250,000 and account for 48.8
percent of gross farm income. Off-farm income constituted only 10.2
percent of net farm income for this group. The largest farms gain
disproportionately from government support. Those with sales over
$250,000 receive 32 percent of government payments, while those
with sales over $500,000, representing 1.2 percent of all farms, receive 13.3 percent of such assistance.
In terms of income and assets, farming is not as badly off as is
sometimes popularly portrayed. Individual hardship cases do indeed
exist. Compared with the past, however, poverty or low farm income
is not as important a rationale for farm policy as it once was.
Average net cash income per farm was $11,745 in 1960, or 58 percent of median family income, but, in 1985, stood at $19,256, 69 percent of median family income (all figures in 1985 dollars). In 1986,
government payments were high enough to pay an equivalent of
$42,000 to each U.S. commercial farm (those with sales above
$100,000) while U.S. median family income was $27,735.
The current financial stress suffered by farmers has focused attention on the debt/asset position of farming as a whole. The agricultural sector had $866.8 billion worth of assets, primarily in land, and
$204.9 billion of debt as of December 31, 1985. Because of the dramatic declines in land values and the large accumulation of debt
during the 1970s, the debt relative to net farm income currently is
almost twice as high as 15 years ago.
CURRENT AGRICULTURAL POLICY: PROBLEMS AND
OUTLOOK
Public policy has played a major and, in some instances, dominant role in U.S. agriculture over the past 50 years. The Food Security Act of 1985 is the most recent omnibus farm law that provides the




152

basic authority for implementing U.S. food and agricultural programs. Like the 1981 act, the 1985 legislation provides income support to farmers through deficiency payments. Deficiency payments
are computed as the difference between the target price, which is set
by law, and the higher of the basic loan rate or the average price received by farmers over the first 5 months of the marketing year. Loan
rates for each commodity are announced by the Secretary of Agriculture before the commencement of the marketing year. The Secretary
has some discretion in the case of feedgrains and wheat to lower the
loan level up to 20 percent below the basic loan rate. For soybeans,
the loan level can be lowered no more than 5 percent. For cotton
and rice, the effective loan is set at world market prices. As a result,
cotton and rice farmers participating in government programs can
first pledge their output as collateral for a loan at the basic rate, and
at maturity repay the loan at the then world market price if it is lower
than the basic rate.
The payment base for each farmer is determined by base acreage
and "program" yield (based on the individual's or county's past
yields), adjusted for any acreage reduction programs. For the 1987
crop year, deficiency payments are limited to $50,000 and loan deficiency payments, based on the difference between the basic loan rate
and the Secretary of Agriculture's announced loan rate, are limited to
$200,000. For cotton and rice, the $200,000 limit pertains to the difference between the basic loan and the marketing loan repayment
rate. Chart 5-1 shows the recent history and current legislative provisions for target prices, loan rates, and market prices for corn.
As with previous legislation, the 1985 act requires acreage reduction programs in an attempt to manage total market supply. In essence, the government induces farmers to participate voluntarily by
offering subsidies in the form of deficiency payments. In return, the
government asks the farmer to idle some portion of the farm's land.
By idling land, the government hopes to reduce supply to markets,
thereby raising market prices and indirectly lowering the amount of
deficiency payments.
Some features of the 1985 act allow market discipline to operate
while other features have moved U.S. agriculture farther away from
the free market. The former features include the dramatic reduction
in operative loan rates for several important commodities. In the case
of cotton and rice, the introduction of the marketing loans has eliminated price supports. This particular feature, however, has increased
significantly the cost of these commodity programs to the government.
Moreover, the use of generic commodity certificates has reduced
the effectiveness of the loan rate as a price floor for corn and wheat.




153

Chart 5-1

Corn: Target Price, Loan Rate, and Market Price
Dollars per bushel
3.60

3.20-

2.80-

2.40

1981

1982

1983

1984

1985

1986

1987

1988

1989

Crop Years
-l/Set by the Secretary of Agriculture within mandated limits.
Source: Department of Agriculture.

The negotiable generic commodity certificate allows the holder of
the certificate to take ownership within a specified period of time,
usually 9 months, of most commodities that are held in CCC stocks.
The certificates may also be exchanged for cash or used to redeem
outstanding commodity loans. The certificates are specified in dollars
and can be exchanged for a quantity of the commodity based on
local market prices. Thus, CCC stocks can be placed on the market
even when prices are below loan levels.

The reduction in price supports has made the United States more
competitive internationally and, in the case of some commodities,
lowered prices for U.S. consumers. Other features of the act also
gradually lower direct income support for some commodities. In particular, the act allows a producer to receive deficiency payments on
92 percent of permitted acreage if 50 percent or more of eligible
land is planted. In this instance, permitted acreage is defined as the
acreage that remains after land has been idled under an acreage reduction program.
The 50-92 provision provides a partial decoupling of the link between deficiency payments and planted acreage. Because farmers can




154

collect payments on 92 percent of the permitted acreage, the only
reason to plant more than 50 percent is if the market price or the
loan rate exceeds variable production costs. However, if farmers
choose to plant less than 92 percent of eligible acreage, they cannot
grow other crops on the land that is idled. Very little use was made
of the 50-92 provision during the 1986 crop year, in part because of
the large setup costs associated with planting any portion of a farmer's acreage base.
Another instance of partial decoupling is the freezing of historical
program yields in the determination of deficiency payments. This
change means that farmers no longer have an incentive to manipulate
their yields in current and future years in order to increase the level
of production on which deficiency payments are determined.
Between 1981 and 1985, the Federal Government spent about $60
billion on farm price and income-support programs. The original estimate for farm program outlays for 1986 was significantly below the
actual cost of $25.9 billion associated with CCC activities to support
the agricultural sector. Other related programs also support agricultural production and rural America; in 1986 the outlays for these
programs amounted to approximately $14 billion. The largest single
item was Farmer Home Administration outlays at $8 billion.
Other features of current programs act directly or indirectly on the
demand for farm output. Major trade programs include amendments
to the Agricultural Trade Development and Assistance Act of 1954
(Public Law 480), short- and intermediate-term trade credit guarantees, targeted export assistance, and the export enhancement program. In fiscal 1986, the value of commodities exported under Public
Law 480 (both Titles I and II) amounted to $1.4 billion; $2.5 billion
of export guarantees were provided; and the export enhancement
program that subsidizes U.S. agricultural sales abroad cost the U.S.
Government nearly $0.75 billion. In the domestic market, food assistance programs cost $20.2 billion in fiscal 1986; the bulk of this expenditure supports the food stamp program and the women, infants,
and children feeding program.
Target prices, the remaining partial coupling of deficiency payments to production, and the implied export subsidies have continued to cause distortions in economic incentives and further misallocations of economic resources. Moreover, the 1985 act has continued
to impose waste and economic losses on the American economy in
other commodity programs, especially sugar and dairy. Over much of
the 1980s, taxpayer costs of government programs designed to support U.S. agriculture have been at record levels. In 1980, government outlays for corn, wheat, and rice represented less than 7 percent of the crop value. This share grew to about 57 percent by 1986.




155

Given the current level of the Federal budget deficit, growth in the
outlays for agriculture simply cannot be sustained. Unfortunately,
program expenditures are not expected to improve much during
fiscal 1987 with CCC outlays for direct income and price supports
projected to be between $23 billion and $28 billion.
Furthermore, the distribution of program benefits is viewed by
many as inequitable. The benefits provide little assistance to those
suffering the greatest financial hardship. As is shown in Chart 5-2,
government payments are concentrated among the larger farming
operations, with the average payment to all farmers having annual
sales exceeding $500,000 per year being almost $40,000. Since many
large farms do not produce commodities eligible for government
programs, participating farms receive considerably more than this
$40,000.
Chart 5-2

Average Direct Government Payments per Farm
by Sales Class, 1985

Thousands of dollars
40

30

20

10

Less than
10

10 to 20

20 to 40 40 to 100

100 to
250 to
250
500
Farm Size by Annual Sales (Thousands of Dollars)

Over 500

Source: Department of Agriculture.

The commodity programs with the largest outlays include corn,
wheat, cotton, and rice. Table 5-1 shows how much is going to the
growers of various crops and what proportion of farmers are receiving




156

large payments. One large California cotton producer is expected to
receive more than $12 million in CCC payments; the crown prince of
Liechtenstein as a partner on a Texas rice farm received a subsidy of
more than $2 million; and 112 dairy producers in California, Florida,
Idaho, Texas, and Arizona received payments exceeding $1 million
each under the dairy termination program.
TABLE 5-1.—Direct government payments for 1986 agricultural programs
Payments
Program

Total
(millions of
dollars)

Payees receiving over $50,000

Average
payment to
all payees

Portion
received of
total payments

Portion
of
all payees

Percent
Corn

6,147

$8,000

6

Wheat

3,454

6,000

1

9

Cotton

1,523

14,000

12

55

814

25,000

20

61

Rice

24

Note.—Data are estimates for 1986 crop year.
Source: Office of Management and Budget.

FINANCIAL STRESS AND ECONOMIC WASTE

Financial stress in U.S. agriculture continues to be a serious problem. Approximately 11 percent of all farms were in serious trouble at
the beginning of 1986. The Department of Agriculture considers a
farm to be financially distressed if its debt/asset ratio exceeds .40
and it cannot generate sufficient cash to pay its bills. A comparison
of Chart 5-3 with Chart 5-2 shows that much of the money spent on
Federal agricultural programs does not go to distressed farmers,
partly because many farms are not eligible for commodity programs.
Even though the participation rate among farms eligible for commodity programs wras very high in 1986, only about 30 percent of all
farms had access to direct government payments. Financial stress is
concentrated among family-size commercial farms; farms with sales
between $40,000 and $250,000 represent about 25 percent of the
total number of farms, but include in their numbers more than 50
percent of all financially stressed farms.
The benefits received by farmers include not only the government
outlays for agricultural programs, but also the gains from higher
prices that are the result of government policies. Such policies, even
if they do riot entail government outlays, impose extra costs on consumers and taxpayers that exceed the amount of income transferred.




157

Chart 5-3

Distribution of Financially Distressed Farms by Sales Class
January 1, 1986
Percent

30

25

20

15

10

Less than

10 to 20

10

20 to 40

40 to
100

100 to
250

250 to
500

Over 500

Farm Size by Annual Sales (Thousands of Dollars)
Note.- -Financially distressed farms are defined as those with debt/asset ratio over 40 percent and
negative cash flow.
Source: Department of Agriculture.

The higher prices result from price supports, acreage reduction programs, or trade barriers.
The benefits to farms are directly tied to output. Taxpayer transfers are specifically tied to the acreage base of each farmer. The
larger the stream of future subsidies, the higher the value of land.
This feature of government programs increases the cost of production and makes the United States less competitive relative to other
exporting countries.
Table 5-2 summarizes estimates of the consumer and taxpayer
costs and producer gains from the major commodity programs. In most
instances, economic resources are wasted because producer gains are
less than the sum of losses to consumers and taxpayers. Most of
these estimates assume U.S. policies do not affect world prices, when
in fact the United States is an influential agricultural producer and
consumer whose public policies can affect world prices. For example,
U.S. sugar policies have such a large influence on world prices that
Table 5-2 includes estimates of the costs and gains, taking account of




158

such changes. If U.S. sugar prices were determined by a free market,
the world price would rise; thus, producer gains and consumer losses
would be lower because the gap between the internal and world price
would be narrower.
TABLE 5-2. —Annual gains and losses from income-support programs under the 1985 Food Security
Act and trade restrictions
[Billions of dollars]
Commodity

Taxpayer
cost1

Consumer
loss

Corn

05

Sugar I3
Sugar II3

18 - 25
11 - 18

Milk

16

Cotton

- 31

1 ..

105

- 109

06 - 07

0
0

1.5 - 1.7
1.0 - 1.4

.3
.7
.1 - .4

10

1 5 - 2 4

1 1 - 1.7

104

2.1

(2)

Wheat
Rice

11

Net
loss

Producer
gain

3

02 -

06

Peanuts

2 - 4

Tobacco

. 4 - 7

1.2

- 1.6

.5 - .9

4.7

3.3

- 3.6

1.4 - 1.5

1 1

8

- 1.1

o

15 -

.1

.1 -

.06-

.32

40

0 - 0 5

.2

.4 -

.6

1

Includes CCC expenses after cost recovery.
2
Less than $50 million.
3
Case I assumes U.S. policies do net affect world sugar prices. Case II takes into account the fact that U.S. policies reduce
world sugar prices. The value of sugar import restrictions to those exporters who have access to the U.S. market (that is, value
of quota rents) is $250 million.
Note.—All figures reflect Gramm-Rudman-Hollings.
Source: Compiled by the Council of Economic Advisers from various sources.

Given the incentives provided by agricultural policy in the United
States, it is no surprise that surpluses have become burdensome. At
the beginning of the 1981-82 crop year, the world's wheat exporters
held 49.5 million metric tons of wheat stocks, of which the United
States held more than half. At the end of the 1985-86 year, stocks of
the major world wheat exporters were estimated to be 83.2 million
tons, of which the United States held 62 percent (Chart 5-4) or the
equivalent of about 2 years of domestic consumption. Of the amount
stored in the United States, most was held by the government (32.6
million tons). For coarse grains, at the end of 1986-87, it is estimated that U.S. stocks, which will be about 76 percent of world stocks,
will represent approximately 1 year's domestic consumption and
almost four times the amount of U.S. exports of coarse grains in any
given year.
The overcapacity that exists and the chronic surpluses of major
commodities continue to be sources of bad news for the future of
American agriculture. During the 1980s, world stocks of sugar have
risen 45 percent; world butter stocks have soared to a massive 2.1
million metric tons, which is approximately 33 percent of annual consumption, and prices have fallen by 50 percent; stocks of beef within
the EC have risen to more than 30 percent of total world trade.




159

Chart 5-4

Carryover Stocks of Coarse Grains and Wheat
Millions of metric tons
300
Wheat
Coarse Grains
250

United
States
200

United
States

150

Rest of
World
100

United
States
50

1980/81

1982/83

1986/87

Note.—Data are for crop years; 1986/87 data are preliminary estimates.
Source: Department of Agriculture.

Within the United States, overcapacity is in the neighborhood of onethird of recent annual production of corn, wheat, and rice; and in
1985 overcapacity in the dairy industry was approximately 10 percent
of total milk production.
PROMISING DEVELOPMENTS

Several developments engender hope that the current overcapacity
in the U.S. agricultural sector may begin to ease. The Tax Reform
Act of 1986 eliminated or severely curtailed many of the tax shelter
features that led to an overcommitment of resources in agriculture.
Special tax rates for capital gains have been eliminated, so the capital
gain benefits for breeding and dairy livestock no longer will apply.
Opportunities provided by cash accounting have also been restricted.
Farmers will be able to deduct the costs of prepaid feed, seed, fertilizer, and similar supplies when they are purchased only to the extent
that they are 50 percent or less of total farm expenses; those exceeding 50 percent will have to be deducted when used. In addition, only
those involved in farming on a regular, continuous, and substantial
basis can now use farm losses to offset wage and salary income.




160

Growth in the use of many inputs has fallen significantly. Investment in machinery and structures has been below replacement levels
since 1981 and thus should act to curtail capacity. The demand for
new credit, which already has declined approximately 20 percent,
should continue to slow as farmers pursue cost-cutting strategies.
The dramatic drop in energy prices will offer farmers large savings in
production costs. Furthermore, the changes in how government deficiency payments are computed should lead to reduced output.
The declines in interest and exchange rates have begun to improve
the outlook for the U.S. agricultural sector. Because farming is extremely capital intensive and debt-to-asset ratios have risen steeply,
movements in real interest rates have significant effects on the cost
structure facing agricultural production. In 1985, interest accounted
for 16 percent of farm production expenses, excluding depreciation.
Storable commodity prices are particularly sensitive to changes in interest rates; for nonstorable commodities (for example, cattle and
hogs), breeding stocks are interest-rate sensitive.
The downturn in outstanding farm debt that began in 1983 continued through 1986. The large drop in interest rates during 1986 ultimately should offer improved returns to farming by eliminating several billion dollars of interest expense. The fall in production expenses is expected to boost net cash income about 14 percent in
1987 over 1986.
From a longer term perspective, existing overcapacity in the U.S.
agricultural sector today can be altered by increases in demand or by
the introduction of new cost-reducing technologies. Unfortunately,
relief from current surplus conditions is unlikely to come from a
growth in U.S. demand for food. Over the past quarter of a century,
there has been no appreciable growth in per capita U.S. food consumption. On the other hand, U.S. agricultural productivity has been
growing at a significant rate. The divergence between these two
trends highlights the need to find markets for U.S. agricultural
output beyond U.S. borders, or else experience further shrinkage of
the farm sector. Fortunately, the rather steady growth in foreign food
markets since 1960 provides a major outlet for U.S. excess supply.
One major source of world trade growth is the developing countries. Developing countries' effective demand for food has significantly outpaced their growth in food production. The result is large increases in trade; for example, during the period 1961-80, the 29 developing countries with the fastest growth rates in staple food production increased net imports of staple foods SVa-fold. Between 1970
and 1980, less developed country (LDC) net grain imports increased
from 18 million to 53 million tons. Unlike the EC and centrally
planned countries, LDC imports have continued to grow in the




161

1980s, reaching 68 million tons in 1984. Even though growth has
stagnated over the past few years, the developing countries still
remain the major potential growth market for U.S. exports.
Foreign economic growth rates are likely to increase over the next
several years because of improved macroeconomic and financial conditions. Expanding incomes and global trade, declining inflation, and
lower interest rates are providing the basis for recovery in purchasing
power. Moreover, the world will add another 80 million people per
year in the late 1980s. As a result, the growth rate of foreign demand
for agricultural products could more than double the early 1980s'
rate of 1 to 1.5 percent per year.
To enhance their rate of growth, LDCs must be encouraged to implement effective strategies, including those that improve the performance of their own agricultural sectors. Recent studies have demonstrated that such policies do not lead to reduced export demand
for U.S. agricultural products. On the contrary, by fueling domestic
growth and increasing rural income, many developing countries
become better customers for some agricultural products that only the
United States and other developed countries can provide.
Another promising development is on the emerging technology
front. The United States is at the threshold of a revolution in biotechnology and genetic engineering. This revolution has the potential to increase agricultural productivity and reduce unit cost of production to levels that will significantly enhance U.S. trade competitiveness. The expected technological advances will result in some
painful adjustments that, when completed, should eliminate the overcapacity that exists within the industry, provided that market signals
are not distorted by government policies.
In addition, more intensive use of resources, more effective management, and regional shifts in production patterns could, under the
right circumstances, expand the production of agricultural products
within the United States. These potential changes have led to a 2.4
percent productivity growth rate forecast for U.S. agriculture as a
whole, which is significantly above the rate of growth for the sector
since 1950. Countries that allow market incentives to operate and
that effectively manage commercialization of biotechnology and genetic engineering are expected to lower their costs of production and
reap substantial benefits as a result of their greater international
competitiveness.
Conditions may now be in place for an eventual economic and financial recovery of the U.S. agricultural sector. Nevertheless, the
painful adjustment process currently underway will continue. Given
appropriate reforms in government policies, these adjustments will
eventually lead to a lower cost structure for the sector, fewer farmers,




162

ultimately higher incomes per farmer, and an improved financial
structure for American agriculture.
GLOBAL DISTORTIONS IN AGRICULTURE
Not only has the United States subsidized its agricultural sector,
but other developed countries have also pursued similar strategies.
Until the Food Security Act of 1985, however, one major difference
existed because of high and inflexible price supports within the
United States: U.S. commodity programs frequently encouraged
farmers to turn their commodities over to the government. As a
result, much of this supply became locked up in public stocks and did
not enter the export market. Some countries, using the high U.S.
price as an umbrella, promoted expansion of production and exports
that would be otherwise unprofitable. Accordingly, U.S. agricultural
exports fell from their 1981 peak of more than $43 billion to a level
of $26 billion in 1986.
In fact, the net agricultural trade balance for the United States was
negative for several months during 1986. Although this fact may be
surprising, especially in light of the recent decline in the foreign exchange value of the dollar, several reasons contributed to this deficit.
The dollar fell against major currencies, but not against the currencies of major agricultural exporters such as Argentina, Australia,
Brazil, and Canada. Also, the recession of the early 1980s, from
which many Third World countries have still not recovered, reduced
economic growth abroad. Large harvests in a number of countries
(e.g., Soviet Union) also played an important role. And because the
Food Security Act of 1985 dramatically lowered price supports from
one crop year to another (1985 to 1986), major importers during the
first half of 1986 had no incentive to purchase supplies from the
United States until new dollar price supports took effect. For example, at the end of July 1986, cotton was priced in the United States at
approximately 64 cents per pound; at the beginning of the new crop
year, August 1, cotton cost about 31 cents.
But the fundamental difficulty behind U.S. export performance is
pervasive government intervention in domestic agricultural markets.
World agricultural markets have been distorted by government policies in both the developed and the developing world. Policies in
some industrial countries support and protect domestic farmers and
shrink potential import markets. Sometimes the policies are so drastic as to turn net importers into net exporters. A dramatic rise in the
yen against the dollar will have little impact on U.S. agricultural exports to Japan if trade barriers restrict the flow of such goods, regardless of price.




163

As a general rule, developed countries raise farm prices above
market levels through policies that lead to an overcommitment of resources to agriculture. On the other hand, developing countries have
taxed the agricultural sector, forcing prices below levels that would
be generated by the market, often causing local shortages. Thus, developed countries are pushed toward a net export position and developing countries toward a net import position—regardless of underlying comparative advantages.
In the industrialized world, governments generally increase the size
and scope of the agricultural sector. Often the underlying goal of industrialized countries is to raise farm income, which is achieved
through schemes that protect their small but sacred agricultural
sector against foreign competition. For example, Japan protects its
inefficient rice producers through trade barriers, the EC protects
almost all of its farmers, arid the United States shields components of
its agricultural sector from import competition and assists its exports
through subsidization (Table 5-3).
TABLE 5-3.—Sources of producer support equivalents for selected countries and major commodities,
1982-84
Commodity

Japan

European Community

United States

Grains

State trading

Price supports maintained
by intervention
purchases
Variable levy
Export refunds

Deficiency payments
PIK entitlements
CCC inventory operations
and commodity loans

Oilseeds

Deficiency payments

Deficiency payments

CCC inventory operations
and commodity loans

Dairy

Price supports through
government
stockholding and trade
barriers
Some deficiency
payments

Price supports maintained
by intervention
purchases
Variable import levies
Export refunds

Price supports maintained
by tariffs, quotas, and
government purchases

Livestock

BeefQuotas
Tariff
Domestic price
stabilization
Pork:
Variable levy
Poultry:
Tariff

Price supports maintained
by intervention
purchases
Variable import levies
Export refunds

BeefTariff
Other:
General (research and
development,
inspection, etc.)

Sugar

Price stabilization
Import levy

Price supports maintained
by intervention
purchases
Variable import levies
Export refunds
Production quotas

Price supports
Import quotas

Source: Department of Agriculture, Economic Research Service.

The cost of the "common agricultural policies" in the EC is enormous, with about the same budgetary costs as in the United States.
The direct subsidy cost of the EC agricultural policy during 1986 is
estimated to have been $23 billion, with as much as $3 billion spent




164

on surplus disposal. Taxpayers and consumers together subsidized
farmers in the EC by up to $40 billion a year during 1984. This subsidy
is now significantly higher. In Japan, which has about half the GNP of
the United States or the EC, taxpayers subsidized farmers by $10.5
billion in 1985, but as consumers they paid many orders of magnitude above this amount. Japanese consumers pay food prices that are
estimated to be around 60 percent higher than would be the case if
the fall in world prices and the yen appreciation since 1980 had been
reflected in internal agricultural prices.
For the early 1980s, a recent World Bank study found that if all
the subsidies and protectionism throughout the industrialized world
were removed, taxpayers and consumers would save $100 billion a
year, while farmer incomes would fall slightly more than $50 billion.
For 20 or so developed countries, current taxpayer and consumer
costs are in the neighborhood of $150 billion per year.
Government price supports give rise to incentives to import those
goods, potentially displacing the farmers the government seeks
to help. Thus, governments have two choices: introduce barriers
to trade, or purchase domestic and imported supplies until the world
market price is bid up to the internal level. Because the latter policy
would require extraordinary government outlays, most governments
impose trade restrictions that involve no budgetary expenditures but
impose losses on consumers. With few exceptions, trade restrictions
instituted through border measures are in place solely to validate domestic farm programs. Hence, a country's agricultural trade policy is
derived largely from its domestic support programs.
Import quotas are quite common because they are more binding in
their protection. A classic example is the impori quota that the
United States imposed recently to maintain internal price supports
for sugar at three to four times the world price. As the differential
between internal sugar and world prices has increased, the import
quota has become more binding, as shown in Chart 5-5. Sugar imports have fallen dramatically, while use of a major substitute, corn
sweeteners, has increased significantly because of the high internal
prices of sugar. The high price not only makes the production of
substitutes more profitable, but induces consumers to switch consumption away from expensive sugar. Furthermore, protection for
sugar has led to protection for other goods. In 1985, the United
States put quotas on processed goods that contain sugar (e.g., cakes
and pancake mixes) because sugar quotas encouraged their import.
The large gap between the U. S. and the world price of sugar even
made it profitable to extract the sugar from these goods and sell it in
the United States.




165

Chart 5-5

Shares of Total U.S. Consumption of Sweeteners

Corn Syrup and other Sweeteners

20

Oi
1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

Note.—Data are for crop years; 1986-87 are preliminary estimates.
Source: Department of Agriculture.

Protection in the industrial countries has, to some extent, prevented the developing world from sending more agricultural products
abroad. This result, combined with the export subsidies used to dispose of surplus production, has allowed the export share of industrial countries to rise from about 42 percent in the early 1960s to about
63 percent in the mid-1980s.
By contrast, agricultural policies in developing countries are, in
general, biased against the agricultural sector, regardless of the country's net export or import position. Government interventions tend
to shift resources out of agriculture by lowering its profitability relative to industry and manufacturing. Because of the large size of the
agricultural sector compared with other sectors in many developing
country economies, agriculture is taxed heavily to raise government
revenue. Export taxes in the range of 50 to 75 percent are not unusual. This taxation reduces the country's exports and market share
in world trade.
One way to quantify the effect of government policies on agriculture in developed and developing countries is to compare producer




166

subsidy equivalent levels and consumer subsidy equivalent levels.
These ratios indicate the net effect of government policies on producer and consumer incentives. Producer subsidy equivalents measure, as a percent of crop revenues, the value to producers of trade
and domestic policies. The most recent producer subsidy equivalents
(1982-84) indicate clearly that all developed countries subsidize their
agricultural producers. Across all commodities, the weighted producer subsidy equivalents (in percentage terms) for some of the major
industrial countries over the period 1982-84 are as follows: Japan,
70; EC, 41; U.S., 22; Canada, 24; and Australia, 6. In 1986, these
figures for all countries have increased, especially the U.S. subsidy
equivalents. In the case of wheat, beef, and dairy, the cost of producer support is borne mainly by consumers in the EC and japan, while
the United States and other developed countries use budget contributions (except in dairy or sugar support) to assist producers (Table
5-4).
TABLE 5-4,—Who bore the cost of support to producers, 1982-84
[Percent of producer support]
Commodity
Wheat

Dairy

Beef

European Community

67
34

92
8

77
23

63
37

76
24

58
42

29
71

Borne by consumers
Budget contribution

42
58

95
5

Japan
Borne by consumers
Budget contribution
United States
Borne by consumers
Budget contribution

Note.—Data are for crop years.
Sources: Department of Agriculture (Economic Research Service) and Council of Economic Advisers.

Consumer subsidy equivalents measure the value, as a percent of
consumer costs, of government policies to consumers, with negative
figures indicating consumer taxation. Consumer subsidy equivalents
show that developed countries tax consumers almost uniformly
across commodities. For example, these equivalents for beef, pork,
and poultry are around — 5 for the United States and range between
— 1 and —25 for the EC. The developing countries are divided again:
East Asian newly industrialized countries generally tax consumers,
whereas some countries such as India, Argentina, and Nigeria often
subsidize consumers.
The importance of the disincentives inflicted upon agriculture in
LDCs can best be dramatized when those disincentives are removed.
After two decades of sluggish growth, agricultural output in the Peo-




167

pies Republic of China has soared since 1978, when regulations were
liberalized and prices were allowed to rise and approach market-determined levels. This remarkable expansion, making China now the
largest wheat producer in the world, was achieved almost entirely
through productivity gains. The amount of land (including irrigated)
under cultivation and the use of tractors for farming declined between 1978 and 1983; the major change was the incentive system.
Nations that have not liberalized their agricultural policies, particularly those in Africa, have suffered from food shortages and even
widespread malnutrition and famine. When the enormous surpluses
of the developed economies are juxtaposed with the situation of
poorer LDCs, the world agricultural imbalance seems particularly
galling. The problem is not one of agricultural supply, however, but
one of allocation. The poorer countries are not underfed because
they need more agricultural production, but because they lack the
income to buy more food on world markets. By liberalizing their agricultural policies and allowing market incentives to motivate their
farmers, poorer LDCs can not only increase domestic production in
products for which they have comparative advantage, but they can
also increase rural incomes so they may trade for the foodstuffs essential for a healthy populace.
INTERNATIONAL COSTS OF AGRICULTURAL POLICIES

Even though agricultural policies may be aimed at domestic concerns, their effects spill over to the rest of the world. For example,
the distorted price incentives in industrialized countries stimulate
production that directly or indirectly depresses world prices. The depressive effect is particularly pronounced when a government subsidizes the sale of stocks on the world market, makes concessional
sales, or simply donates the food as aid.
Sugar is a glaring example of the international cost of industrialized country policies. The EC and the United States have both guaranteed high prices for domestic sugar producers, which has led to
growing domestic production. The EC sugar program turned the
Common Market from a net importer to a net exporter in 1977. The
United States, under its current sugar policy, may make the same
change soon. The U.S. and EC sugar policies have placed great burdens of adjustment on many developing countries. These sugar policies have not only eliminated a major importing market for countries
whose climate is more naturally suited for sugar production, but also
promise to make the EC and the United States export competitors.
One study estimates that industrialized countries' sugar policies cost
the developing countries about $7.4 billion in lost export revenue
during 1983, reduced their real income by about $2.1 billion, and in-




168

creased price instability in the residual world market for sugar by approximately 25 percent. The list of sugar-producing countries that
suffer from these policies almost coincides with the list of countries
and regions that are of utmost interest to American policymakers,
e.g., Philippines, Brazil, and Central America.
In essence, by expanding output and depressing domestic demand,
the agricultural protectionist policies of industrialized countries
reduce world prices and distort the relative prices of agricultural
versus other goods. Prices for the most highly protected products are
depressed more than prices of other agricultural products. These distorted prices make the use of resources in world agriculture even less
efficient. If Japan were to reduce its protection of the rice varieties in
which other Asian countries have a comparative advantage, they—
and Japan—could achieve greater efficiency and higher income.
When fanners in the Netherlands produce vegetables in greenhouses
because energy costs are subsidized, they indirectly discourage farmers in Mediterranean countries from pursuing their natural advantages in the production of these products.
Differential rates of subsidization also create particular difficulties
for LDCs when the rate of support for processed agricultural products exceeds that for raw products. In industrialized countries, tariff
and nontariff barriers tend to be higher on more processed forms of
a particular good. As a result, escalating support of agri-processing
severely disrupts economic development by blocking the most natural
step toward industrialization. Such policies have resulted in industrialized countries exporting larger quantities and importing smaller
quantities of processed products than of related raw materials. For
example, the EC accounts for 11.4 percent of world wheat exports,
but 48.9 percent of wheat flour exports. Developing countries often
respond to such policies by subsidizing local processing industries,
which inevitably encourages further inefficiencies and compounds the
direct harm arising from industrial countries' tariffs.
Any one country's competitiveness depends not only on its own efficiency but also on the political decisions of other countries. The returns to a country from the world market may be undermined by increased direct and indirect subsidies. For example, high target prices
for U.S. rice coupled with marketing loans have resulted in large
U.S. exports imposing significant costs on Thailand, a major rice exporter. The same basic policies for cotton have generated similar, although riot as dramatic, effects for Egypt, Bangledesh, Mexico, Guatemala, Paraguay, and other cotton-exporting countries.




169

EXPORT-MARKET RESPONSIVENESS

During the policy debates on the Food Security Act of 1985, supporters of the legislation emphasized the dependence of the U.S. agricultural sector on foreign markets. The general view was that exports led to the boom of the 1970s and the bust of the early 1980s.
As a result, if American agriculture were to escape its plight, exports
would have to lead the way once again. Unfortunately, the length of
time before lower price supports would improve U.S. agricultural
export performance was underestimated.
The effectiveness of the new policy in enhancing exports of U.S.
agriculture depends critically upon the responsiveness of export
demand to price. The evidence shows that the short-run responsiveness of export demand for many commodities from the United States
is relatively weak. As a result, increases in export volume will lead to
lower total values of exports in the short run because the fall in
prices will be sharp enough to offset the increase in volume sold.
Over the longer run, 3 to 5 years in the case of many commodities,
lower prices can be expected to drive inefficient producers out of the
market, force some government policy changes, and stimulate greater
consumption, thereby increasing export sales at higher prices.
Exports of agricultural products depend heavily on government behavior throughout the industrialized world. Only if protectionist policies are curbed will it be possible to increase demand for farm products from those countries that have comparative advantages. Certainly over the next few years, major competitors of the United States
can be expected to make some adjustments in their production. However, if total market demand increases only moderately in response to
declining market prices and slow growth in foreign income, any significant increase in either the U.S. share of world trade or in the
volume of exports is unlikely. Some increase in share and some gain
in volume might occur, of course, but they may not correspond to
the dramatic reduction in U.S. price support levels. The current protectionist policies that are pursued throughout the world, the large
overcapacity in place, and the worldwide market fragmentation will
serve to limit growth of U.S. exports over the balance of the 1980s.
REFORM OF U.S. AGRICULTURAL POLICY
The Food Security Act of 1985 and its predecessors have helped to
create many new problems that afflict the U.S. agricultural sector,
and have failed adequately to solve many old problems. The
fundamental flaw is that Federal farm subsidy payments are linked directly to farm production. Because farmers are paid subsidies (explicit or implicit) that are proportional to their output, they are encour-




170

aged to produce even more. Excess production must either be stockpiled by the government, dumped on v/orld markets, or restrained
through inefficient land or production restrictions.
To the extent that price supports are above market-clearing prices,
government stocks accumulate while exports fall. This design has
also contributed to instability and uncertainty on private markets. For
example, government management of commodity generic certificates
can exacerbate the volatility of wheat and corn markets. If no further
generic certificates are released, the market will expect corn and
wheat prices to rise above current loan rates, because most stocks
will be held in government hands rather than by the private sector.
In contrast, if the Department of Agriculture releases a large number
of generic certificates, market prices will fall below the loan rates.
Two of the major features of the Food Security Act of 1985 are the
high target prices and the relationship between government incomesupport payments and production decisions. Under the act, target
prices are set at high levels and are not permitted to decline until
1988 for feedgrains and wheat and 1987 for cotton and rice; furthermore, the scheduled reductions in target prices are far too small (2,
3, and 5 percent, respectively, for the years 1988, 1989, arid 1990 in
the case of feedgrains and wheat). The limited decoupling of government income payments and production decisions provided by the 5092 provision is insufficient. This small step in the direction of decoupling is not expected to have any major effect on the current chronic
surpluses and overcapacity within the sector.
The Administration seeks major revisions in the 1985 act in order
to reduce budget exposure, provide fairness, restore a sense of proportion to agricultural policy, attempt to set loan rates at or below
market-clearing levels, and move more meaningfully in the direction
of decoupling production from payments. Specifically, the Administration proposes to extend the 50-92 provision to a 0-92 provision;
administratively and legislatively tighten the definition of a "person"
for purposes of the payment limitations; limit the total payments to
$50,000 per person; reduce target prices from 1987 by 10 percent
per year through 1990; and provide more flexibility in establishing
loan rates for program crops.
Under the 0-92 provision, farmers would receive payments based
on historical acreage, without being required to plant the program
crop on those acres. To ease the adjustment from chronic surpluses,
any land that might be idled under this provision could not be used
to produce any other crop. Hence, this provision does not allow total
decoupling of program payments and farmer production decisions.
The proposed revision simply means that participating farmers can
collect 92 percent of what their income subsidies would be under full




171

production, even though all of their land is idle. Current law requires
that at least half of their land be planted.
The proposed $50,000-per-person payment limitation pertains to
deficiency and land diversion payments, as well as to marketing loan
payments in the case of cotton and rice, and loan deficiency payments
for other program crops. Under current law, the 1987 limit is
$250,000. Tightening the definition of a person will achieve consistency and fairness in the application of payment limitations by closing
loopholes that circumvent current legislative intent. The current
loose definition of "person" has fostered a proliferation of overlapping partnerships and other farm reconstitutions in order to qualify
for multiple payment limits.
The proposed reduction in target prices is expected to lead to a
decline in agricultural program outlays by $13 billion over fiscal 1988
through 1990. This action would reduce the current incentive to
overproduce and also contribute to reductions in the budget deficit.
If loan rates are above market prices, incentives will still remain to
plant for the government and not the market. Thus, an important
step in decoupling is to reduce loan rates to below market prices.
Under the proposed revisions, the Secretary of Agriculture could
reduce loan rates by up to 10 percent per year. Current law establishes loan rates by formula (75 percent of 5-year moving average,
dropping the high and low price), but superimposes a limit on how
fast annual adjustments can be made to the computed formula loan
rate. The current limit is 5 percent, after a special provision of 20
percent for some commodities. The proposed revision would allow
U.S. prices to be more competitive, reduce incentives to produce for
the loan rate itself, and make the decoupling more effective.
Because the program for crop year 1987 has been largely determined, many of the revisions can be adopted only for years 1988
through 1990. The 0-92 decoupling provision could, however, be instituted immediately. The proposed revisions for the past 3 years of
the current legislation would provide an effective transition to a more
comprehensive and coherent agricultural policy.
The Administration also proposes changes in the U.S. sugar program to deal with the distortions generated by current policy. The
proposed reform would lower the price-support loan rate to 12 cents
a pound while providing transition payments to cane and beet producers over a 4-year period. Prices paid by domestic sugar consumers
will fall as a result. By modifying the incentives that distort domestic
production and consumption, U.S. sugar policy moves slowly toward
a more market-oriented position.




172

SUPPLY MANAGEMENT BIAS

The cornerstone of any comprehensive reform of agricultural
policy is the elimination of incentives to produce for government
programs rather than for the market. As long as such incentives exist,
surpluses will be generated. As a consequence, the government will
attempt to manage supply by acreage reduction programs, voluntary
diversion, acreage set-asides, or production quotas.
Given the changes that have occurred within agriculture, the
supply management bias of current programs is doomed to failure.
The sector's capacity to produce under the stimulus of favorable economic conditions and large government subsidies is extremely high.
As a result, the cost of agricultural commodity policies that attempt
to restrain production and enhance prices through land controls are
in short, toweringly expensive. Moreover, a program attempting to
limit supply by renting land from farmers, by outright purchases of
farm commodities, or by mandatory supply controls cannot avoid directing its benefits to the largest producers. For a given supply reduction, most of the idled land or the eliminated production must
come from the 15 to 20 percent of all producers who account for approximately two-thirds of total production.
Attempts to limit supply fail to exploit the continued growth in
world food markets. Although increases in the acreage reduction and
the voluntary diversion programs can provide some short-term assistance in reducing current chronic surpluses, this benefit can only be
achieved by incurring other costs. These other costs include the
losses imposed upon consumers, the reduction in markets for the
farm supply industry, and the increase in costs for food processing
and distribution. Moreover, acreage controls result in the excessive
use of other inputs, which partially offsets the desired production
cutback. Such programs are not cost-effective in terms of government
outlays.
Mandatory acreage controls could be more effective than current
voluntary programs in managing the total amount of land allocated
to a particular crop but at a high social cost. Recent Department of
Agriculture studies show that a 125-million-acre reduction in cropland would be required to raise commodity prices 30 to 40 percent.
This program would discourage domestic use, cut exports sharply,
devastate the farm supply industry, raise costs for the entire food
processing and distribution chain, and impose huge losses on U.S.
consumers. This option applied to feedgrains would reduce earnings
for livestock producers throughout the United States. Exports of
farm commodities could be expected to fall 40 percent. This mandatory control program would reduce GNP by $64 billion and eliminate
approximately 2.2 million jobs, a number almost equal to all the




173

farmers in the United States. The greatest impact would fall on the
poor, who spend the largest portion of their income on food. Moreover, in comparison with current programs, the concentration of benefits among large producers would be even greater, with no effective
payment limitation.
Subsidies could be offered to counteract some of the adverse effects, such as those on the U.S. livestock industry and on export
sales. Such subsidies, however, would drive the cost of the mandatory
acreage control program above even the high costs that were incurred during fiscal 1986.
All attempts to limit production will impede the international competitiveness of the U.S. agricultural sector, both in cost and output.
In acreage reduction programs, for example, farmers must retire a
certain fraction of their acreage base, e.g., 20 percent in the case of
corn, to receive deficiency payments. Thus, every firm in the industry
is asked to spread its total fixed cost over 80 percent of its potential
output. This scheme raises the average cost of production, relative to
competitors who suffer from no such constraints. Moreover, supply
management policies create an artificial scarcity of farmland, bidding
up its price to a higher level than otherwise would have occurred.
Finally, limiting output places the United States in the position of
being the residual supplier to world commodity markets. Whatever
growth occurs in world food markets is allowed to be tapped by
major competitors. Moreover, the supply management bias of agricultural programs in the United States lowers the costs to other
countries of subsidizing their agricultural sectors. As a result, U.S.
programs operate to improve the position of major competitors in
terms of both their access to major markets and the cost of their agricultural policies.
A COHERENT LONG-TERM AGRICULTURAL POLICY

A comprehensive policy to foster and maintain a vital and progressive U.S. agricultural sector would contain four major components:
complete decoupling, targeting, resource conservation, and negotiation and trade cooperation.
Complete Decoupling

Under complete decoupling, payments to farmers would not be
linked to current production either through subsidies or artificially
high prices. Production decisions would be based on economic incentives, not governmental policy. Set-asides and acreage reduction programs could be phased out over a specified period of time. Distortions such as intensive use of inputs would diminish, and budgetary
outlays would largely be known in advance.




174

Decoupling could be phased in by allowing increasing discretion
with regard to the use of idle land. For example, after a period of
time in which idle land could not be used for any other crop, 20 percent of the land could be planted in any crop, then 40 percent, and
finally 100 percent. Income support could also be decoupled from
prices. Farmers should receive a known payment regardless of what
they plant and the market price they receive. The income support
that has been decoupled from production and prices should be
phased out.
Targeting

Separating payments from production and prices would make it
possible to target such transfers so as to preserve the family farm and
rural communities while protecting the rural landscape. Targeted
income-deficiency payments would preserve some farms unable to
manage the riskiness of their operations, and would ease the costs of
labor adjustment from agriculture for other farmers. Income supports
targeted at those who rely more heavily on farm income and yet do not
have the immediate resources for retraining, job searching, etc., would
ease the inevitable pain of change and improve the long-term flexibility
of U.S. agriculture.
Targeted farmers should receive income supports unconditionally.
Farmers could then employ their support in whatever fashion they
considered most appropriate—from retraining to remaining in farming. One possible method of targeting would be to have payments
based on current acreage and historic yields with a limit to the qualifying farm size.
Resource Conservation

One feature of the Food Security Act of 1985 that is in the longrun interest of the United States is the provision for placing highly
erodible land in the conservation reserve. Under the 1985 legislation,
lands that pose significant off-farm environmental threats—for example, water quality damage—can also be included in the conservation
reserve program. It is the largest conservation program in the history
of Federal agricultural policy, calling for the voluntary, gradual enrollment of 40 million to 45 million acres of land. Under this program, landowners agree not to produce on qualifying cropland for 10
years in exchange for an annual rental payment. Unfortunately, this
program is hampered by competing supply management programs.
In essence, the government is bidding against itself to idle farmland.
Currently, most farmers are better off collecting deficiency payments
or diversion payments for idling acreage under commodity programs




175

than by idling land on a long-term basis under the conservation reserve program.
Over the period that supply constraints are being phased out, difficulties stemming from the concurrent operation of the conservation
reserve program and the price-support programs must be resolved.
The joint operation could be effectively managed by the introduction
of a land-targeting scheme. Lands declared eligible for the conservation reserve program would be declared ineligible for the acreage reduction program.
A redesigned conservation reserve program, combined with decoupled and targeted income support, would reduce incentives for intensive land use that arise when farmers seek to increase their immediate cash incomes. Finally and most significantly, the elimination of
commodity programs that connect income supports to production
levels would ease the extensive and intensive use of land and other
resources in production. The significant reductions in the use of pesticides and other chemical inputs resulting from these program
changes would also reduce environmental damage.
Negotiation and Trade Cooperation

The current state of agricultural trade can be described as one in
which many countries feel trapped. If any country reduces its export
subsidies or limits its farm support, it will lose market share. Its own
action will rarely be sufficient to induce a significant rise in world
prices. Thus, the rewards to individual countries from unilateral agricultural policy reform often seem too little to encourage change.
Simultaneous action by many countries might break this trap. The
Administration began a coordinated move to raise the issue of agricultural protectionism at the last economic summit. How to achieve
multilateral, systematic rationalization of policies across sovereign
states with different resource endowments and policy mechanisms, if
not policy objectives, remains a major challenge.
The difficulty of international cooperation in adjustments, however, does not excuse delay in U.S. policy reform. Reform is in the selfinterest of the United States and should be initiated regardless of
whether trading partners act as well. In addition, the reformed policies
would eventually stimulate other protectionist countries to make
similar adjustments.
Although sound economic grounds exist for greater market orientation even with no action by other countries, the chances of significantly reducing the degree of protection provided to U.S. agriculture
are far better if coordinated moves also occur in other major agricultural exporting countries. The political feasibility of implementing
decoupled and targeted deficiency payments is greatly enhanced if
other industrialized countries would pursue similar actions,




176

A cooperative effort of major agricultural exporting countries
could involve coordinated and lockstep moves in decoupling. The
possibility of such cooperative ventures is much higher in today's environment because of the huge subsidization under the Food Security
Act of 1985. In contrast with the U.S. legislation governing the early
1980s, many exporting countries, including Australia, Canada, and
Argentina, now have far more incentive to enter a cooperative effort
to reduce worldwide protectionist trade policies.
CONCLUSION
Today's highly complex patchwork of agricultural policies has
become increasingly antiquated and unproductive. Agriculture and
rural communities have become so vastly different in structure and in
their relationships to the domestic and world economies that the
premises underlying current policies are no longer valid. Besides
costing taxpayers and consumers billions of dollars and representing
a significant portion of the Federal deficit, agricultural policies divert
land, labor, and other resources from more to less productive uses.
The huge surpluses generated in the United States and throughout the
world harm U.S. allies and less developed countries, while providing
huge windfalls to powerful economic interest groups. These programs
are unfair, with some individuals receiving millions of dollars from the
government.
The policy reforms outlined here would correct the major imbalances that exist within U.S. agriculture. Other reforms are also
needed. For example, some Federal marketing orders attempt to
maintain or enhance commodity prices by restricting either the
amount produced or the amount marketed. These market regulations
tend to tax consumers in order to generate extra profits for established producers of the protected commodities. Such marketing
orders should be deregulated. In contrast, marketing orders that
focus on research, promotion, and providing timely information to
producers and consumers should continue to be supported. The
Farm Credit System faces huge losses and is currently unable to diversify the risk of its loan portfolio; it needs to be restructured. Federal and State governments must address problems such as depleted
aquifers, groundwater contamination, water salinity, and the excessive use of irrigation water attributable to inappropriately administered prices. The challenge facing both the public and private sector
is to invent the means for enhancing agricultural productivity while
reducing the cost of environmental externalities.
To be sure, the Food Security Act of 1985 will not yield easily to a
major overhaul. These policies, after all, are tied to a long series of




177

legislative precedents, deeply embedded goals and objectives, and
the vested interests of powerful groups. Major opposition will doubtless arise to the reforms outlined here, which are in the best interest
of the U.S. taxpayer and consumer. Reforming agriculture would lead
to huge gains not only here in the United States but in the rest of the
world.




178

CHAPTER 6

Risk and Responsibility
RISK IS A FACT OF LIFE. Every person balances risks of accident
and injury against the attainment of other goals, and trades off some
kinds of hazards against others. Whether to smoke, take a particular
job, travel by automobile or airplane, use a safety belt while driving,
or engage in a dangerous recreational activity are all decisions that
involve risk. People are subject to hazards from the actions of other
individuals as well. Determination of the proper role of government
with regard to personal risk is a complex and important public policy
issue.
Health and safety have improved dramatically in the United States
during the 20th century. Life expectancy at birth increased from 47.3
years in 1900 to 62.9 years in 1940 and, by 1983, had risen to 74.7
years. Much of this improvement is attributable to the decline in
infant mortality, but adult life expectancy has also increased. In 1900,
a 40-year old could expect to live to age 67.9. This expectation increased to 71 by 1940, and rose further to 77.2 by 1983. This represents a gain of 9.3 years, or a 33 percent increase in the expected
number of years remaining at age 40.
Accident fatality rates have declined at the same time. Chart 6-1
shows annual fatality rates from motor vehicle and all other accidental causes. The rate from all causes other than motor vehicles
dropped from 82.4 per hundred thousand population in 1910 to 20.9
in 1982. Motor vehicle deaths per hundred thousand population generally have been steady since the late 1930s. Automobile travel has
increased substantially over this period, however, and traffic fatalities
per hundred million vehicle miles have fallen almost 80 percent,
from 10.89 in 1940 to 2.47 in 1985.
Both the home and workplace have become safer. The home accidental death rate per hundred thousand population decreased from
21.2 in 1948 to 8.6 in 1985. The accidental death rate at work has
fallen by more than two-thirds since the 1930s (Chart 6-2). Work-related death rates differ across industries, and one cause of reductions
in the overall rate has been the change in employment patterns as
production has shifted from agriculture and other relatively danger-




179

Chart 6-1

Rates of Accidental Deaths by Cause
Deaths per 100,000 Population
90

80
70
60
50
40
30
2C
10
ill l 1 1 1 1 1 i i 1 1 1 1 1 l l 1 1 l 1 1 1 1 1 1 1 1 1 1 1 1 l I 1 1 l 1 1 l i 1 1 1 1 l l l ! i l 1 1 ! l 1 1 l 1 1 i 1 1 I l 1 1 l 1 1 l l i I
1960
1910
1920
1930
1940
1950
1980
1970
Sources: Public Health Service and National Safety Council.

cms goods-producing industries to the relatively safer service industries.
The underlying source of these improvements in health and safety
is economic growth and a rising standard of living. Higher incomes
enable people to purchase better nutrition, clothing, and shelter as
well as more and better medical care. A higher standard of living enables consumers to purchase safer products, safer forms of transportation (including safer automobiles), and safer living environments.
Increased wealth supports improved public health measures, from
vaccinations to water and sewage treatment. Economic progress has
been a major factor leading to advances in science and medicine that
have mitigated or eliminated many dread diseases and have improved
the treatment of accident victims.
But accidents, injuries, and disease can never be avoided entirely.
Individuals do not seek to avoid all risks, and the human lifespan
cannot be extended without limit. Increases in health and safety often
cannot be achieved without cost, and are only one way in which economic progress can be translated into greater well-being.




180

Chart 6-2

Rates of Home and Work Deaths Due to Accidents
Deaths per 100,000 Persons
40

35
30
25

Work (per 100,000 Workers)

"-•••'~--j
/"

20
15

Home (per 100,000 Resident Population)

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 I I I I I I I I I I I I I I i I i I i I I
1935 1940 1945 1950 1955 1960 1965 1970 1975 1980 1985
Note.—A change in classification resulted in a break in the home accident series in 1948.
Source: National Safety Council.

PROTECTION AGAINST RISK
Every individual can reduce risk by exercising personal care. If responsible adults voluntarily undertake risky activities, such as hang
gliding, their choices must be respected in a society that values individual liberty and autonomy. This general principle of respecting
personal choice is compatible, however, with governmental action to
reduce risk in particular circumstances, especially when the actions of
some increase the risks to others.
The institutional means for increasing safety and reducing risk are
provided through three social arrangements—markets, the legal
system, and government regulation. Markets create incentives for safe
behavior and allow individual choice in decisions involving risk. Consumers can purchase reductions in risk directly by choosing safer
products. Safety is a desirable product characteristic, like durability
and energy efficiency. Companies that earn reputations for making
unsafe products face retribution in the marketplace, just as if they
charged excessive prices or offered shoddy goods. The market also




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promotes safety in the workplace. All other things equal, employers
must pay higher wages for riskier jobs, which creates an incentive to
reduce occupational hazards.
Private insurance enables individuals and firms to protect themselves against the costs of various risks. Consumers purchase insurance against losses from death, illness and accidents, and some kinds
of natural disasters. Manufacturers insure against product liability
lawsuits, and professional practitioners insure against liability for
malpractice. By spreading the costs of risk, insurance can also undermine incentives for safe behavior; but where premiums are closely
linked to the likelihood of events insured against, safety incentives
are substantially preserved.
Markets cannot entirely protect an individual from being harmed
by the actions of others. The legal system, specifically tort law, provides victims the opportunity to be compensated. By transferring to
those who cause harm the costs they impose on others, tort law creates incentives for individuals to behave responsibly.

GOVERNMENT MANAGEMENT OF RISK
Government provides the legal and judicial framework for the
market and tort systems, offers insurance against some risks, imposes
regulatory standards, and operates programs to control risk directly.
Government protects the integrity of the marketplace by prohibiting
dissemination of false or fraudulent information by sellers. Government supports basic health research, and informs the public about
health and safety characteristics of products.
Several circumstances may provide a rationale for government regulation. First, consumers may lack the information or the ability to
assess particular risks accurately. Second, individuals or firms fail in
some cases to take account of the costs of harm they impose on
others. The tort system may not be able to force a person who
causes harm to bear these costs if the person's wealth is insufficient
to compensate the victim, the cost of using the tort system is too
high, or the person who caused the harm cannot be identified. Third,
if markets and the tort system cannot adequately control externalities
such as those leading to environmental pollution, government regulation may be warranted. Government regulates risk and safety through
agencies such as the National Highway Traffic Safety Administration
(NHTSA), the Consumer Product Safety Commission (CPSC), the
Occupational Safety and Health Administration (OSHA), and the Environmental Protection Agency (EPA).
Regulatory policy encompasses both risk assessment (determination of the probabilities of harm) and risk management. Risk manage-




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ment should reduce and not merely displace risk. If one dangerous
product is banned, more harmful ones may be used. Substitutions of
this sort can exchange known risks for unknown ones. Effective risk
management assesses the relative benefits and costs of actions to
reduce particular risks. The benefits of regulation include avoidance
of deaths, injuries, and property damage, as well as saving resources
that otherwise would be used to mitigate these adverse consequences. Costs of regulation include the resources, both public and
private, that must be devoted to meeting regulatory standards, as
well as reduced competition in some cases. Government regulation
sometimes restricts freedom of individual choice by imposing
common standards. Regulation may, in addition, retard innovation
and investment, thus slowing economic growth.
If some regulations show a much lower cost per life saved or accident avoided than others, adoption of the more cost-effective ones
would save more lives for a given level of risk-reduction costs. Regulatory actions with the highest expected net gains should be undertaken first, leading to consistency in cost-effectiveness across regulations. A policy of consistency should apply to all activities of government that affect risk: for example, statutes and regulations; Federal
programs that directly affect safety, such as air traffic control and the
oversight of aircraft maintenance; and State and local activities, such
as highway construction and firefighting. Complete consistency, however, is neither attainable nor desirable. States determine their own
regulatory policies in many areas, in accordance with principles of
federalism. Special significance may be attached to reducing particular types of risks, such as those faced by children, or risks that are
not assumed voluntarily.
Statutory language sometimes impedes the realization of consistency by setting goals that do not take account of costs. Examples are
portions of the Clean Air Act, Clean Water Act, and Occupational
Safety and Health Act, as well as the Delaney Clause of the Food,
Drug, and Cosmetic Act. Agencies may also fail to promote consistency in their rulemaking by implicitly assigning widely differing
values to saving a life. A recent study shows that the average cost per
life saved varies across regulations from as little as $100,000 for
NHTSA's 1967 steering column protection rule to $132 million for
the Food and Drug Administration's 1979 ban on diethylstilbestrol
(DES) in cattle feed. Some proposed regulations have even higher
costs, such as EPA's proposed restrictions on the disposal of dioxins
and solvents on land, estimated to cost $3.5 billion per life saved.
The regulatory review and coordination process implemented by this
Administration is designed to improve consistency across Federal
regulations, to the extent permitted by law.




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Regulatory review established under Executive Orders Nos. 12291
in 1981 and 12498 in 1985 is meant to ensure that regulations are
worth their costs and that the most cost-effective regulatory activities
are given priority. The oversight process is based on the principle
that government regulations, when such interventions are appropriate, should maximize the net benefits to society. Where regulation is
excessive, deregulation is indicated.
PERSONAL RESPONSIBILITY
Individuals can mitigate or eliminate many of the most serious
risks they face by exercising personal choice. Government can inform
individuals about the nature of risks, alter incentives that influence
individuals' decisions, or require safe behavior. Two risky activities—
cigarette smoking and automobile use—illustrate these points.
SMOKING: THE GREATEST AVOIDABLE RISK

Smoking presents the largest single source of health risk in America. Table 6-1 lists risks of various activities in terms of the annual
fatalities for every 1 million exposed individuals. The fatality risk of
smoking is more than 26 times greater than that of work.
TABLE 6-1.—Estimated risks of various activities
Annual fatalities
per 1 million
exposed persons

Activity or cause

Active smoking
Alcohol
Accident
Disease
Motor vehicles
Alcohol-invoived
Non-alcohol-involved
Work
Swimming
Passive smoking1
All other air pollutants1
Football
Electrocution
Lightning ....
DES in cattlefeed
Bee sting
Basketball
All causes
All cancers
1

,

2,950

541
275
266
187
95
9?
113
22
19
6
6
2
05
03
02
002

,

,. .

8748
1917

Cancer deaths only.

Note.—Activities are not mutually exclusive; there are overlaps between categories. Differences in fatalities do not imply
proportionate differences in years of life lost.
Sources: Office of Management and Budget and Council of Economic Advisers.

Every annual report of the Surgeon General since 1964 has identified cigarette smoking as the single most important source of premature mortality among Americans. Studies estimate that of the 565,000
deaths each year from heart disease, 170,000 result from cigarette
smoking. Of the 412,000 deaths each year from cancer, 125,000




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result from cigarette smoking, with more than 100,000 of these from
lung cancer alone. A 25-year-old man who smokes one pack of cigarettes per day can expect to live 4.6 fewer years than one who does
not smoke at all, and one who smokes two packs per day can expect
his life to be shortened by 8.3 years. Life insurance companies usually charge smokers higher premiums reflecting their greater mortality
risk. Some health insurance carriers have also introduced premium
differentials based on smoking.
The issue of smoking goes beyond matters of individual choice;
secondary smoke affects others. The Surgeon General reports that a
nonsmoker whose spouse smokes more than one pack of cigarettes
per day has a risk of lung cancer 1.3 to 1.9 times higher than a nonsmoker whose spouse is a nonsmoker. Passive smoking results in an
estimated 2,500 fatal cancers per year. Children of smokers have
more respiratory problems, and are more frequently hospitalized for
bronchitis, pneumonia, and respiratory allergies. Smoking-related
fires led to 1,500 deaths and another 4,000 injuries in 1984.
It is not clear whether the pleasures of smoking outweigh the
health risks and other costs, even for smokers themselves. When surveyed, more than 90 percent of smokers say they want to quit, and
the majority of smokers have tried to quit at least once and failed.
Most smokers begin to smoke as adolescents. Studies of why
people start smoking identify the influences of parents, siblings, and
friends as the most important causal factors. School curricula in the
past tried to discourage smoking by emphasizing its long-term health
effects. Newer curricula, targeted at ages 10 through 14, focus on the
social influences that encourage the initiation of smoking. Such programs aim at helping children acquire the behavioral skills to resist
these influences and at changing perceptions that smoking is mature
and sophisticated. Students who participate in these programs have
started smoking at rates 15 to 50 percent lower than those in control
groups.
The price of cigarettes also influences whether people smoke.
Higher prices discourage young people from starting to smoke, but
have a much smaller effect on habitual users. The Federal excise tax
on cigarettes was raised from 8 cents per pack to 16 cents per pack
in 1983, but was scheduled to revert to 8 cents in 1985. Instead, the
tax was maintained at 16 cents, and as a result an estimated 1.9 million fewer people smoke, including more than a million fewer under
age 25.
Current Federal agricultural policies toward tobacco do not undermine public health efforts to discourage smoking. A system of allotments allows farmers to produce only specified quantities of tobacco
and limits the amount they can market. The net effect of the allot-




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ments plus price supports and other subsidies is to hold tobacco
prices slightly higher, and quantities slightly lower, than they would
be in the absence of these programs.
Evidence suggests that information on the consequences of smoking influences behavior. The largest decline in per capita sales of
cigarettes, a fall of 8.9 percent, occurred during 1953-54, following
publication of two retrospective epidemiological studies that linked
lung cancer to smoking and the first laboratory demonstration that
the tar in cigarette smoke could cause cancer in animals. During this
time, tobacco companies competed vigorously by advertising purportedly less harmful brands, indirectly reminding smokers of the
dangers of smoking. The second largest decline in per capita sales
occurred in 1968-69, during the height of the antismoking campaigns on television. The largest decline in the number of smokers
followed the 1964 Surgeon General's report.
The effects of tobacco advertising are complex. There is little evidence that advertising results in additional smoking. As with many
products, advertising mainly shifts consumers among brands. Evidence from other countries suggests that banning tobacco advertising
has not discouraged smoking. Four industrialized countries with
market economies—Italy, Finland, Iceland, and Singapore—have
completely banned advertising for tobacco products, yet have experienced a rise in the per capita consumption of tobacco, Sweden and
Denmark enacted partial advertising bans, yet achieved greater success in reducing consumption than did Norway and Finland, which
imposed total advertising bans. After the broadcast advertising ban in
the United States, cigarette use continued to decline, but at a slower
rate than before the ban.
The ban on broadcast advertising was supported by the large tobacco companies. Tobacco advertising expenses were about 35 percent lower in the 5 years following the ban. It is likely that reduced
access to public attention made it harder for new brands of cigarettes
to enter the market, thus solidifying the market shares of existing
companies and brands. Moreover, with no tobacco advertising on television, the antismoking messages required under the Fairness Doctrine were eliminated.
Increased awareness of the health risks of smoking has brought a
change in public attitudes and government policies. Forty-two States
and the District of Columbia restrict smoking in public places, including government workplaces. Twelve States restrict smoking by public
employees and also by those in private businesses. New rules for
Federal employees prohibit smoking in nearly all public work areas,
including general office space, and permit smoking only in designated areas.




186

AUTOMOBILE SAFETY

Many automobile deaths stem from avoidable behavior such as
drunk driving and failure to wear a safety belt. In 1985, about 44,000
Americans died in motor vehicle accidents, including 6,800 pedestrians and 890 bicyclists. Nearly half of the fatalities involving occupants of motor vehicles occurred in single-vehicle crashes. Despite
this substantial loss of life, 1985 was the safest year on record for
motorists: the death rate per hundred million vehicle miles traveled
(HMVM) was 2.47, down from 5.50 in 1966 and 21.0 in 1923.
Drunk Driving

Alcohol impairs physical coordination and can increase aggressive
behavior. Alcohol contributes to many kinds of accidents and injuries
and is involved in more than 50 percent of fatal automobile accidents. Drunk driving is the leading cause of death for persons in the
15-to-24 age group. About one-half of all single-vehicle crashes and
two-thirds of nighttime single-vehicle crashes involve alcohol-intoxicated drivers. In 1982, 63 percent of those killed in alcohol-related
automobile accidents were drivers, bicyclists, or pedestrians who had
been drinking. Twenty percent were passengers (both drinking and
sober) of drinking drivers. The remaining 17 percent, nearly 4,000
people, were sober victims.
Evidence from other countries and recent experience in the United
States suggest that programs to deter drivers from drinking by increasing penalties and enforcement tend to succeed in the short run
to the extent that they alter drivers' perceptions of the certainty of
punishment. But the ability of such programs to achieve lasting reductions in drunk driving fatalities has not been established. This
may be because none of the programs or experiments to date has
been able to sustain an increase in the probabilities of apprehending
and punishing drunk drivers.
State and local actions to restrict the availability of alcohol to
young people by raising the minimum drinking age have contributed
to reduced traffic fatalities. In 1982, 31 States allowed people under
21 to buy alcoholic beverages, but by 1985, only 7 States did. In
those 3 years, motor vehicle fatality rates fell 3.0 percent for the general population, but 6.3 percent for drivers aged 24 and under. If the
traffic fatality rate for this group had fallen only by the same amount
as for the general population, approximately 600 additional young
drivers would have died in automobile accidents in 1985.
Higher alcohol taxes would also reduce fatalities. Federal excise
taxes on beer and wine have remained constant in nominal terms
since 1951. As a result of this and other factors, the real price of
beer fell 27 percent, of wine 21 percent, and of hard liquor 48 per-




187

cent between 1951 and 1983. Studies of teenage drunk driving indicate that if the real excise tax on beer were at its 1951 level, an estimated 1,000 fewer deaths per year would result, primarily of persons
aged 18 to 21.
Safety Belts

Motor vehicle occupants who wear a safety belt are less than half
as likely to die in the event of an automobile accident as those who
do not. If all occupants of motor vehicles wore safety belts, 12,000 to
15,000 fewer persons would die annually. Safety belt use is a clear
example of how an individual can reduce risk by taking a simple precaution. For this reason, some State courts, although not going so far
as to hold that an accident victim's failure to wear a safety belt constitutes contributory negligence, have reduced the unbelted victim's
damage award on the grounds of failure to mitigate the harm.
Even though voluntary safety belt use is an extremely low-cost way
to reduce deaths and injuries, as of 1984 only about 12.5 percent of
passenger car drivers were estimated to use them. Usage among
teenagers appears to be particularly low. Since 1984, 26 States and
the District of Columbia have enacted laws requiring use of safety
belts (although two States recently repealed theirs). Safety belt usage
increases after passage of a belt law, but the longer term effect does
not appear to be as great as the initial response.
Compliance with child safety seat laws has been much higher than
compliance with safety belt laws, and has been effective in reducing
fatalities among young children. In 1977, the first child safety seat
law went into effect. Now all 50 States require safety seats for small
children. Compliance rates are between 50 and 60 percent. The
motor vehicle fatality rate for the overall population fell 10 percent
between 1975 and 1985, but for children under 5 it fell 32 percent.
Air bags and automatic safety belts are passive restraints that do
not require the cooperation of the driver or passengers. Air bags are
more costly to install than either automatic or conventional safety
belts. Moreover, their cost-effectiveness relative to safety belts falls
with more widespread belt usage. Even if air bags were required in
all new cars, they would not come into nearly universal use until
about 10 years later. Current Department of Transportation regulations require phased installation of passive restraint systems unless
States comprising two-thirds of the U.S. population enact safety belt
laws.
The 55-Miles Per Hour Speed Limit

The driver who speeds assumes a higher risk of death and injury
but also increases risk for others. It is because of this externality that




188

a maximum speed limit is in the interest of most drivers. The main
cost of a lower speed limit is more time spent traveling.
The primary goal of the National Maximum Speed Limit Act of
1974 was energy conservation. Today, with low real oil prices, debate
concerning the 55-miles per hour (MPH) speed limit focuses more on
safety than energy conservation. From 1973 to 1974, the overall
death rate per HMVM dropped 14 percent from 4.12 to 3.53. (A
similar drop of 13 percent in the death rate, from 3.17 to 2.76 per
HMVM, occurred between 1981 and 1982.) Although drivers have
gradually increased their average speed since the 55-MPH limit was
introduced, they have not returned to the speeds at which they were
driving before the Federal limit was enacted. The fatality rate per
HMVM, however, has continued to fall, suggesting that factors other
than speed are important in the declining fatality trend.
Variations in fatality rates across States and types of roads suggest
that speed limits should be tailored to local conditions. In 1985, the
automobile accident fatality rate ranged from 4.1 deaths per HMVM
in New Mexico to 1.6 in North Dakota. The safest roads are the
interstate highways in urban areas, with a fatality rate of 1.01 deaths
per HMVM. Local rural roads are the least safe, with a fatality rate of
4.99. Driving at night is three times more risky than driving during
the day.
Although it left enforcement of the 55-MPH speed limit to the
States, the Federal Highway Safety Act of 1978 directed withholding
a portion (up to 10 percent) of a State's Federal highway funds if it
failed to achieve at least 50 percent compliance. As a result, States
assign their highway patrol officers to enforcing the 55-MPH limit,
diverting them from other efforts that would be more effective in
saving lives. To reach compliance, States have an incentive to allocate
most officers to work during the day, when traffic is the heaviest, rather
than at night, when a majority of motor vehicle deaths occur. State
discretion in the regulation of highway speeds could improve safety
more than centralized Federal regulation.
The Unintended Hazards of Fuel Economy Regulation

Like the 55-MPH speed limit, the Corporate Average Fuel Economy (CAFE) regulations are a vestige of the "energy crisis/' The
CAFE standards (enacted as part of the Energy Policy and Conservation Act of 1975) established minimum average levels of fuel economy for passenger cars sold by each automobile manufacturer. To
meet the standards, manufacturers took a number of steps, including
switching to lighter materials and reducing the weight and size of
cars. Market forces also shifted the automobile fleet in the direction
of smaller cars while gasoline prices remained high. Automobiles




189

have become safer as design has improved. Other things equal, however, small automobiles are less safe than large ones.
In single-vehicle crashes, occupant death rates are inversely related
to car size. In multiple-car crashes involving cars of the same size,
occupants of small cars have a death rate higher than occupants of
large cars. In crashes between cars of different size, the occupants of
the larger car have a better chance of survival than if they had been
involved in a crash with a car the same size, but occupants of the
smaller car have a worse chance of survival than if they had been in a
crash with another small car.
There is evidence that drivers of small cars attempt to mitigate
their increased risk by driving more carefully. One study indicates
that, taking age into account, drivers of small cars are somewhat less
likely to be involved in an accident than are drivers of larger cars.
Even so, the fatality rate associated with small cars is higher than that
of large cars.
The "energy crisis" has passed, but Federal regulation of automobile fuel economy persists. To the extent that CAFE has reduced the
size of cars driven by Americans, it also has indirectly reduced automobile safety.
THE TORT SYSTEM
In addition to self-inflicted injury, harm can result from the actions
of others. Tort law, the civil law governing harms other than breach
of contract, serves to compensate persons injured by the negligent or
wrongful conduct of others, and also to deter such conduct.
Two general rules of liability guide accident law—negligence and
strict liability. Negligence is determined by reasonableness of conduct. If the injurer acted unreasonably, that is, failed to exercise due
care, then ordinarily the injurer would be required to compensate the
victim. Strict liability, on the other hand, focuses on whether a product that caused an injury was defective in such a way as to make it
unreasonably dangerous for its intended use. Both standards seek to
impose a duty of care; strict liability, however, allows demonstration
of the breach of that duty by examination of the product itself.
The product user's degree of care also can affect the risk of accidents. In certain instances, the user can more easily eliminate or
reduce the risk of injury than can the manufacturer. The rule of contributory negligence limits the scope of liability so that an injurer is
not liable for harm that could have been avoided had the victim not
been negligent. Many States have adopted the rule of comparative
fault, under which an injurer is liable only for that share of the harm
corresponding to the injurer's share of responsibility. Determining




190

the reasonableness of a party's conduct depends in part on the costs
of avoiding the accident. When both parties can affect the probability
or seriousness of an accidental injury, the rule of negligence (or the
rule of strict liability accompanied by the defense of contributory
negligence or comparative fault) leads both the potential injurer and
potential victim to behave reasonably to avoid accidents.
THE "LIABILITY CRISIS"

During the past several years, products and services as diverse as
vaccines and skating rinks have been withdrawn from the market because of the greatly increased price or unavailability of liability insurance. Investment in product innovations, such as new pharmaceuticals, has been retarded because of potential liability costs. Some explanations of the "liability crisis" attribute the scarcity of liability insurance to an expansion in liability exposure under tort law. In particular, the alleged crisis has been linked to trends in legal rules on
fault and causation and to larger jury verdicts for damages.
In the early 1960s, courts began to replace traditional common law
rules of negligence with strict liability. It was argued that expanding
liability would encourage the supplier of a good to prevent accidents;
in addition, the supplier would provide insurance for unpreventable
injuries. Some courts went so far as to say that business defendants
could spread the cost of compensating victims across all consumers
simply by charging higher prices for their goods and services. This
viewpoint assumed that society would benefit from replacing personal responsibility for accidental injuries with expanded liability for
those supplying goods and services. Carried to its extreme, this approach would entirely remove the issue of fault or wrongdoing from
the determination of liability.
The growing trend toward no-fault liability has increased defendants' expected tort costs and, therefore, their need for insurance coverage. Historically, tort law required a plaintiff to prove a direct
cause-and-effect relationship between the defendant's act and the
plaintiffs harm. This requirement of proximate cause eroded as
some courts allowed plaintiffs to recover an entire judgment award
from any of a number of parties who might have contributed to the
harm. This application of joint and several liability to product liability
cases increased the potential financial exposure of defendants and
further weakened the traditional legal requirements of fault and
proximate causation. In practical terms, joint and several liability
threatens any defendant having substantial financial resources with
the risk of having to pay the entire damage award in a lawsuit involving multiple defendants, even if this defendant was only slightly at
fault for the plaintiffs injury.




191

TORT REFORM

Many States have enacted or are considering reforms in tort law.
The Administration has also supported legislation to address the factors that have led to the high price and scarcity of product liability
insurance. This legislation would ensure that fault remains a basis for
determining legal liability for injury caused by a defective product.
For a manufacturer to be found liable under strict product liability,
the product would have to be defective and unreasonably dangerous
because of its defect. This reform would limit strict product liability
to situations in which the doctrine originally applied, before the expansion of no-fault liability.
Another provision of the Administration's tort reform proposal
would make joint and several liability inapplicable to product liability
cases. A manufacturer found liable for damages would be responsible
for at most those damages directly attributable to its share of fault
for the injury; the manufacturer could not be held responsible for
damages arising from another party's share of fault. However, joint
and several liability would still be available where two or more defendants consciously acted together in a common scheme or plan
that directly caused the plain tiffs injury.
These proposals seek to ensure that fault and wrongdoing continue to be essential to determining liability for defective products.
These reforms should lessen the unpredictability of product liability
awards for manufacturers and insurers and, by emphasizing the importance of personal responsibility, reduce accidents.
CONSUMER PRODUCTS AND THE WORKPLACE
Of the 92,500 accident fatalities in the United States in 1985,
about half were caused by motor vehicle crashes, 22 percent by accidents at home, and 13 percent by accidents at work. In an effort to
improve safety, the government requires consumers and private firms
to devote resources to meeting regulatory standards, develops and
disseminates information, requires controlled testing of new drugs,
and requires injury compensation insurance for workers. Government
rules also modify market incentives for safe behavior.
CONSUMER PRODUCT SAFETY

Markets generate strong incentives for the production and safe use
of consumer products. Safer products may be more expensive, because of superior materials, product design, and quality control.
Many consumers are willing to pay higher prices for safer products as
long as they perceive that the benefits of improved safety exceed the
additional costs. Consumers acquire safety information through per-




192

sonal experience and word of mouth, as well as from manufacturers,
specialized testing laboratories, and consumer groups. The risks of
unsafe products generally are borne directly by consumers, with little
spillover of hazards beyond the immediate household. Thus, market
incentives will guide manufacturers to produce products as safe as
consumers' willingness to pay allows.
The Food and Drug Administration (FDA) regulates food, drugs,
and cosmetics. Its standard-setting and inspection activities are designed to reduce hazards about which it is difficult to obtain information in the marketplace. Examples include the safety of food additives
and the safety and efficacy of pharmaceuticals.
The Delaney Clause of the Food, Drug, and Cosmetic Act has been
interpreted to ban all food additives found by the FDA "to induce
cancer in man or animal." In effect, this restriction has grown more
stringent over the years, as advances in chemistry have permitted the
detection of extremely small amounts of substances in additives. In
1985, the FDA proposed that methylene chloride be banned in hair
spray, but that it be allowed as a decaffeinating agent in coffee because its risk in that use is negligible. This de minimis interpretation
of no-risk statutory provisions is intended to reduce regulation that is
overly costly. Recognizing the excessively restrictive nature of the
Delaney Clause, Congress has exempted saccharin from its reach.
The Consumer Product Safety Commission (CPSC) has broad authority to set standards and order bans, recalls, and modifications. Its
purpose is to reduce hazards by improving products' technological
safety characteristics. Such activities, however, may fail to benefit
consumers and can have adverse effects. Sometimes safer products
are more costly, and regulation may impose higher safety levels than
consumers are willing to purchase. To reduce the likelihood of this
result, the law mandates cost-benefit analysis for formal CPSC rulemakings. The CPSC has adopted cost-benefit criteria for its other activities, such as implementing voluntary standards.
Even if a product standard meets a cost-benefit test, the market
might have achieved an equivalent level of product safety. Moreover,
even if the estimated costs of regulation match the benefits, regulated product standards may not be desirable because benefits that stem
from product diversity will be lost. Consumers value safety, like other
product characteristics, differently, in part because not all consumers
use products in the same way. If a household appliance is to be used
by children, parents may buy a safer model at a higher price than
they would otherwise. Individuals benefit from the opportunity to
make their own tradeoffs based on price, quality, and safety.
When product regulation reduces competition and thereby increases prices, it restricts consumers' choices. For example, in 1975




193

fev.J

the CPSC issued a bicycle standard that imposed numerous technical
design features that would increase costs and exclude some bicycles
from the market. Some of these specifications, such as the one that
handlebars be between 14 and 28 inches wide, were overturned in
court for lack of evidence that their absence would pose an unreasonable risk of injury.
The effectiveness of product regulation in improving safety can be
undermined and even reversed by risk displacement. For example,
manufacturers of children's sleepwear used the flame-retardant
chemical Tris to comply with the flammability standard issued in
1973. Later, when it was discovered that Tris can be carcinogenic, the
sale of Tris-coated sleepwear was banned. Some consumers may stop
buying products whose prices rise as a result of safety regulation,
only to substitute alternatives that are more dangerous.
THE REGULATION OF NEW DRUGS

Advances in pharmacology have produced drugs that prolong life
and improve health. Many diseases that took a substantial toll in the
past, such as polio and pneumonia, are now inexpensively prevented
or treated with vaccines or drugs.
Regulation of the introduction and use of new drugs poses difficult
policy questions. Government oversight of the testing and approval
of new drugs has both therapeutic benefits and costs. It is not in the
public interest to introduce a drug with side effects or risks more
severe than the disease it is intended to treat. The relative efficacy of
a new drug compared with existing therapies cannot be established
without controlled experiments, including clinical trials. However,
the time spent in testing means that some potential beneficiaries of a
new drug are not able to obtain it. Unnecessarily stringent regulatory
requirements can lead to more deaths and lower health levels.
The 1962 amendments to the Food, Drug, and Cosmetic Act
added a proof-of-effectiveness requirement that expanded the experimental and testing procedures required by the FDA for new drug approval. Some evidence indicates that the result was a delay in the introduction in the United States during the 1970s of certain innovative therapeutic drugs by as much as 3 to 6 years after their introduction in Great Britain. The 1962 amendments increased costs to pharmaceutical companies of introducing a new drug, and also lengthened the approval process, shortening the time that a manufacturer
could retain patent protection. Incentives to innovate were thereby
reduced.
Recent legislative and administrative changes have expedited drug
review. Legislation in 1984 allowed an abbreviated approval process
for generic versions of drugs previously proven safe and effective,




194

and restored patent life lost during FDA review. In 1985, the FDA
rewrote approval procedures for new drugs to reduce paperwork and
allow expanded use of valid data from foreign studies. The FDA has
also allowed controlled use of experimental drugs that show substantial promise in treating fatal diseases. Limited use of azidothymidine
(AZT) has been permitted for treatment of acquired immune deficiency syndrome (AIDS). In certain cases, the agency also allows use
of experimental drugs by patients suffering from serious diseases
when there is no alternative treatment.
OCCUPATIONAL SAFETY

Risks of death from work accidents, along with other types of
safety hazards, have declined sharply. Injury rates, which are less reliably measured than death rates, have also declined, but less rapidly.
As people demanded better working conditions and safety on the
job, they also sought increased government regulation of workplace
safety. Among the many laws and regulations that address job safety,
the major ones are State workers' compensation acts and the Federal
Occupational Safety and Health Act. Both workers' compensation
and the OSHA statute were expected to reduce work injuries, but
many of their possible effects on costs were overlooked.
Labor Market Safety Incentives

Work-related accidents and diseases impose costs on employees
that include premature death and disability, suffering, loss of earnings, and medical expenses. Safety and health on the job are not produced by employers alone, but are determined jointly by the actions
of workers and employers. Individuals can reduce job risks by acquiring information about job safety and using that information to bargain for safer working conditions, as well as by exercising personal
care. Workers and employers can enter into contracts or labor agreements that specify safe working conditions or payments to be made
in the event of an injury.
The labor market provides strong incentives for employers to improve safety. In order to make a hazardous job attractive to workers,
a firm must offer higher wages than it would have to pay otherwise.
Wage premiums are a critical device for controlling job hazards because they provide employers with incentives to reduce hazards in
order to reduce wage costs. Additional incentives for employers to
increase job safety include the desire to reduce work accidents and
injuries in their firms and the costs associated with job hazards—absence from work, interruptions in production, and employee turnover. The level of workplace safety is determined in a way that equates
the marginal cost of additional safety measures with their marginal




195

benefit to employers, as indicated by savings in wage premiums and
other costs.
In efficient labor markets, wage premiums result in appropriate
matching of workers and jobs based on risk and other factors. Workers who are more risk-averse will demand higher wage premiums for
risky jobs than workers who are less risk-averse, and thus will be less
likely to take jobs with relatively high probabilities of injury. Similarly, the labor market offers incentives to both workers and employers
to implement job matches based on differing personal vulnerabilities
to job hazards. For example, if short police officers face greater risks
of assault, smaller people will be less likely to take police jobs for a
given wage. To some extent, however, legal prohibitions against discrimination limit the ability of firms to screen workers on the basis of
vulnerability to job risks.
Imperfect information may militate against fully efficient labor
market outcomes, thus providing a rationale for regulation or other
government intervention. However, studies have found evidence that
job safety information, although not perfect, is generally adequate.
Workers have reasonably accurate perceptions of risks, and if they acquire new information suggesting risks greater than they originally
had expected, their likelihood of quitting increases.
Workers' knowledge of health risks is probably less accurate than
their knowledge of safety risks. It is more difficult to link disease and
work than accidental injuries and work because of the delayed onset
of symptoms, difficulty of detecting many harmful agents, multiplicity
of causes, and uncertainties in the relationship between exposure
levels and health effects. Workers, however, are often aware of health
hazards, and in some cases perceive very high risks from possible carcinogens in the workplace.
Government also has limited knowledge of occupational health
hazards, but it can improve the information available to both employees and employers by supporting research on job safety and disseminating the results. Government, however, has no clear advantage
over workers, labor unions, and employers in using this information
to determine appropriate levels of workplace safety or the best way
to reduce hazards.
Pecuniary costs of job injuries are commonly shifted to the general
public by income transfers such as social security disability payments,
welfare, and food stamps. This reduces firms' incentives to take
safety measures, by enabling them to pay lower wage premiums.
Even where information is not perfect or pecuniary externalities
exist, however, wage premiums serve a useful function in providing
safety incentives and in matching workers with jobs.




196

Workers' Compensation

Workers' compensation statutes were enacted in most States early
in the 20th century. Before that, the principal recourse of workers
who suffered job injuries was to sue their employers for compensation. Proving that the employer had been negligent and that the
worker had not contributed to the accident was difficult, however,
and damage awards were highly uncertain. Under workers' compensation, employers assumed no-fault but limited liability for work injuries, and industrial accident victims gained the right to prompt compensation for a portion of lost wages and medical expenses.
Except for the largest firms, which are allowed to self-insure, employers must buy insurance from a private carrier or a State insurance fund to cover their workers' compensation liabilities. Some
State funds are exclusive carriers, but others compete with private insurers. Premiums are experience-rated—that is, linked to past loss
experience—only for larger firms. The smallest firms generally are
rated by industrial-occupational classifications; the degree of experience rating increases with firm size. Most workers are employed by
firms that are either experience-rated to some degree or self-insured.
Although the impetus for adoption of workers' compensation was
to replace employers' tort liability with a no-fault system, safety incentives were an additional consideration. Workers' compensation
was expected to induce employers to provide greater workplace
safety because each firm would assume the costs of its workers' injuries more predictably than under tort liability. The costs of industrial
injuries thus would be included among other business costs, and employers would be motivated to reduce them by increasing job safety.
This expectation of improved safety, however, overlooked factors
that would undermine safety: reduced wage premiums in response to
lower but more certain recovery of damages, and reduced incentives
for employers to increase safety when workers' compensation premiums are not closely related to the injuries suffered by employees.
A growing body of research has found that workers' compensation
benefits have unfavorable effects on safety. Higher benefits appear to
increase both the frequency of work injuries and the number of compensation claims filed. One explanation for the positive connection is
the claim effect. Even if actual injuries remain constant, workers are
more likely to file claims when benefits are higher, thereby producing
more reported injuries.
Lack of experience rating of workers' compensation premiums reduces an employer's incentives to invest in safety measures. A firm
that is not forced to bear the full costs of compensating its workers
for their injuries has a diminished incentive to make expenditures
that promote safety. Recent research has found that increased bene-




197

fits produce a smaller increase in injury rates in firms whose premiums are more highly experience-rated than in firms that pay class
rates. Employers' safety incentives could be strengthened by requiring them to make a deductible payment and copayment on each
claim. Many insurance companies maintain staffs that help their clients correct occupational health and safety problems, such as worksite fire hazards. To the extent that private carriers provide more accident-prevention services than exclusive State insurance funds, more
of such services would become available by allowing private insurers
to compete with or supplant such funds.
Workers' compensation has improved the reliability of compensation to injured workers. By replacing lost wages, it also has enabled
injured workers to recuperate more fully before returning to work.
There is evidence, however, analogous to findings on the effects of
unemployment insurance, that higher levels of workers' compensation benefits create work disincentives. Recipients whose benefits are
relatively high compared with their previous wages have longer durations of work disability. Work disincentive effects can be important:
because benefits are not taxable, the after-tax rate of wage replacement for some workers exceeds 100 percent of their prior wages.
Although one goal of workers' compensation was to reduce the
high transactions costs of litigation, many workers' compensation
claims are still contested. Workers, moreover, are making liability
claims with increasing frequency against suppliers of inputs, commonly in situations where adverse effects on health, such as those related to cancer, may be delayed. Such suits are not barred under the
no-fault workers' compensation system.
Regulation of Job Safety

The Occupational Safety and Health Act's sweeping mandate is to
ensure that "so far as possible every working man and woman in the
Nation [has] safe and healthful working conditions." OSHA has
issued several thousand workplace standards, the large majority of
which were adopted soon after OSHA's formation and formalized existing industry practices. Some of the most obviously ineffective of
these have since been revoked. Most of OSHA's rules deal with safety
rather than health hazards. Employers continue to complain that
OSHA's regulations are costly, but no comprehensive estimates of
compliance costs have been made.
Compared with the magnitude of safety incentives provided in the
market, OSHA's fines and enforcement activities are small. One estimate of wage premiums generated by job risks is approximately $90
billion per year, which compares with about $9 million in OSHA
fines. By comparison, workers' compensation benefits are about $20
billion annually.




198

A number of studies have found that OSHA's activities have not
been effective in promoting workplace safety. Before the establishment of OSHA, evidence was lacking that working conditions were
safer or healthier in States with stricter regulatory standards. Over
recent decades, the job fatality rate has declined fairly steadily by
more than 2 percent per year. OSHA has not made an identifiable
difference in this rate of decline. One recent study, however, has
found that OSHA's activities have resulted in a small reduction in
work injuries. It is more difficult to assess OSHA's effects on health,
because of the time lag between a worker's exposure to a toxic chemical or environmental hazard and the manifestation of disease. This
Administration has taken steps to enhance the effectiveness and
reduce the burdens of OSHA's inspections. Inspections are now less
confrontational and are targeted toward high-risk firms and serious
workplace hazards.
OSHA's effects on health and safety may be small because of the
type of regulations it has promulgated. Many require specific changes
in the physical work environment rather than encouraging safe behavior. For example, OSHA has not required the use of automobile
safety belts, although motor vehicle fatalities account for about onethird of total work deaths (Chart 6-3). Even in manufacturing, motor
vehicle deaths are close to 20 percent of work deaths. Executive
Order No. 12566, issued in 1986, requires safety belt use by Federal
employees.
Although precise causation of work injuries is difficult to establish,
studies show that individual behavior is a major factor in many work
accidents. Studies of occupational fatalities have found that 9 to 40
percent are alcohol-related.
Executive Order No. 12291 broadly requires the use of cost-benefit
criteria for agency rulemaking, to the extent permitted by law. The
Supreme Court has interpreted OSHA's legislative mandate as prohibiting the balancing of costs and benefits in formulating health regulations. OSHA has adopted a restricted cost-effectiveness approach
in accordance with this decision, allowing lowest cost methods of
compliance in achieving a given technical standard. Studies of past
OSHA rules show that costs typically exceed expected benefits. The
recent OSHA hazard communication standard, requiring that workers
be informed of workplace hazards, is an important exception.
A major criticism of OSHA is that many of its regulations have unnecessarily increased costs by preventing employers from using flexible means to meet health and safety goals. In contrast, OSHA's
hazard communication rule requires that workers be informed about
chemical hazards, but leaves employers leeway in implementation.
OSHA regulations have tended to specify technical characteristics of




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Chart 6-3

Motor Vehicle Deaths as Percent of Total Work Deaths
Percent
40

35
30
25
20
15
10

I l I l I I I I i I I I I I l I
1950

1955

1960

I I I I I I I I I I I I I I I

1965

1970

1975

1980

1985

Source: National Safety Council.

workplace design. Performance standards, which define acceptable
levels of workers' exposure to hazards and allow employers to find
the most cost-effective ways to meet them, are often at least as effective. In the case of the cotton dust standard, for example, the risk of
lung disease could be reduced by allowing the use of disposable
masks. OSHA's preference for engineering controls rather than personal protective equipment is based, among other factors, on concerns that protective devices may be cumbersome, may not be used
consistently, and may not provide adequate protection over long periods of time.
OSHA's preference for engineering controls is particularly costly in
the case of noise control. Relatively inexpensive ear plugs can often
protect workers as effectively as reducing the noise level, which generally can be achieved only through costly modifications in work
processes, machinery, or plant design. It has been estimated that allowing greater flexibility in methods of compliance would reduce the
cost of occupational health regulations by 20 to 80 percent.
Many of OSHA's standards increase costs and reduce productivity
and competitiveness. Where OSHA's rules increase capital require-




200

ments, they also reduce employment opportunities, by encouraging
the substitution of capital for labor. Where OSHA's rules specify
characteristics of workplace design, they impose fixed costs that tend
to favor larger firms over smaller ones.
The evidence on whether workers' compensation and OSHA have
improved safety is mixed at best. Most studies indicate that these
programs have failed to reduce job injuries in the aggregate. Although workers' compensation achieved some of its goals, it also may
have undermined safety incentives. Both workers' compensation and
OSHA have generated costs and indirect effects that have tended to
reduce productivity.
ENVIRONMENTAL RISK
Environmental externalities stem from the release of harmful substances into a common resource, such as the air, a lake, a river, or
the ocean. Lack of private ownership of such resources makes it difficult for those injured or inconvenienced to charge polluters for the
losses suffered. The costs of organizing those harmed by pollution
hampers the use of tort remedies. Also, the cause of the harm is frequently impossible to identify. The same pollutant may be produced
by automobiles, utilities, industrial plants, and natural processes.
Management of environmental risk entails dealing with large uncertainties in the magnitude of potential losses. Environmental risks
frequently involve effects extending over a wide area or across international boundaries, and sometimes include effects that may occur
far in the future.
CONTROL OF AIR AND WATER POLLUTION

Direct controls have been the most common regulatory strategy for
reducing pollution in the United States. Alternatively, if emissions
were taxed or if permits for emissions were in a form that could be
traded, emitters would take account of the costs of pollution they
produce. Actual or implicit market valuation of these permits would
induce firms to include the costs of pollution among their other costs
of production. A market in pollution permits would result in a reduction of emissions to the required level at the lowest total cost. The
Environmental Protection Agency has begun to implement marketbased control programs, including "bubbles," which allow several
sources to be considered as a group in meeting emissions targets.
These emissions-trading strategies ensure that sources having the
lowest costs of control will reduce emissions most.
The United States has devoted considerable resources to reducing
pollution. In 1984, total public and private expenditures for pollution




201

abatement and control were approximately $68.5 billion (1984 dollars), or 1.8 percent of GNP. Of these expenditures, 45 percent was
for control of air emissions and 38 percent for water pollution control.
Measurable improvements in environmental quality have been
achieved. Average concentrations of the six atmospheric pollutants
subject to National Ambient Air Quality Standards (NAAQS) have
declined over the past decade (1975-84). The NAAQS have been
reached in almost all parts of the country for sulfur dioxide, nitrogen
dioxide, and lead. In some areas, carbon monoxide and total suspended particulates standards have not been met. Surface-level
ozone is the largest remaining problem, although most people live in
counties that meet the ozone standard. Significant improvements in
water quality have also been reported. It is difficult to determine,
however, whether these gains carry with them benefits larger than
the costs of their attainment.
Misallocations of capital and reduced productivity result from certain features of current environmental regulation. One example of
this sort of distortion is the "new source bias." New plants must
meet more stringent air emissions standards than old ones. Another
example is that regions with air that is cleaner than national standards must regulate new sources to achieve "prevention of significant
deterioration" of their already superior air quality. The first of these
requirements gives an economic advantage to older plants compared
with newer ones, while the second favors particular regions over
others. Both discourage investment in more modern facilities.
CONTROL OF ENVIRONMENTAL RISKS

Management of environmental risk addresses more than the failure
of markets to motivate firms and individuals to take account of the
effects of their actions on the environment. Insufficient scientific
knowledge often makes it difficult to balance the costs and benefits
of alternative environmental policies.
Stratospheric Ozone Depletion

Stratospheric ozone has been a focus of research and policy concern since the 1970s. Certain otherwise useful and harmless chemicals—primarily chlorofluorocarbons (CFCs)—released into the atmosphere eventually diffuse to the stratosphere, where they may interact
with and break down the ozone layer. A reduction in the amount of
stratospheric ozone would allow more biologically damaging ultraviolet radiation to reach the Earth's surface. Increased ultraviolet radiation has been associated with deleterious effects on health, including
various forms of skin cancer, and with reductions in the yields of




202

some crops. CFCs also are greenhouse gases, like carbon dioxide,
which may contribute to global warming.
CFCs and related compounds are stable chemicals used in refrigeration, air conditioning, and fire extinguisher systems; in foam production; as aerosol propellants; and in electronics manufacture.
Annual world output of the two most important CFCs increased
almost fivefold from 1960 to 1985. Worldwide production of these
two chemicals peaked in 1974 and then declined until 1982, primarily
because of reduction in their use as aerosol propellants in the United
States (which banned nonessential aerosol applications in 1978) and
a few other countries. Nonaerosol usage accounts for approximately
70 percent of all CFG applications, however, and total world production of the main CFCs has grown since 1982 by approximately 5.3
percent per year. Because of the long lifetime of the molecules, emissions may affect the ozone layer for many years.
Although the consequences of stratospheric ozone depletion may
be extremely serious, estimates of the magnitudes of the potential
damages are highly uncertain. The largest unknowns involve forecasts of future emissions of CFCs and other greenhouse gases, the
physical and chemical mechanisms of ozone depletion, and the effects of increased ultraviolet radiation on living organisms. The
recent discovery of large changes in the seasonal pattern of ozone
levels over Antarctica raises doubts about the current state of knowledge about stratospheric ozone dynamics and chemistry. Some scientists claim that CFCs are the cause of these changes, but others believe they have a natural cause.
Ozone depletion is a global issue. Most world CFC production is
concentrated in the industrialized countries, with the U.S. share
slightly over 30 percent in recent years. Unilateral action to control
CFCs is not likely to be effective, and could even reduce the opportunity for international cooperation by removing some of the incentive for other nations to reduce CFC release. International agreement
on controls would prevent the loss of competitiveness that could
result if the United States were to act alone to control CFCs further.
In 1985, the United States signed the Vienna Convention for the
Protection of the Ozone Layer, which provides for international cooperation in research, monitoring, and information exchange. The
United States is currently participating in negotiations to implement
this agreement, and has proposed a near-term freeze on ozone-depleting emissions, a long-term reduction of emissions, and periodic
review of controls. In view of the uncertainties regarding the extent
and consequences of ozone depletion, it is appropriate that emissions
reduction policy provide for periodic reassessment of the levels and
effectiveness of controls as new information becomes available.




203

Acid Rain

Acid deposition, known as acid rain when it takes the form of
liquid precipitation, is another major environmental concern. Acid
deposition may have a number of adverse effects on the environment, but few are well established. Emissions of some air pollutants
contribute to the acidification of certain sensitive lakes and streams,
but other cause-and-effect relationships are not clearly understood.
Combustion of many types of fossil fuels produces oxides of sulfur
and of nitrogen. These combustion products can be chemically transformed into acidic compounds, sometimes after being transported
hundreds of miles from their source. Rain is naturally acidic, but
manmade contributions to acid deposition are much greater than natural sources in industrial regions such as the Eastern United States
and Southeastern Canada.
Air pollutants that are precursors of acid deposition are regulated
under the NAAQS. The direct effects of these pollutants, such as
soot, smog, and haze, as well as their possible hazards to health, are
distinct from their indirect effects through acid deposition. Thus, reducing these primary pollutants would have benefits beyond those
associated with the resulting reduction of acid rain.
The mechanisms of atmospheric transport in the acid deposition
process are not well understood. The areas of North America that
show apparent effects of acid deposition are generally downwind of
the power plants, smelters, and urban areas that are the main sources
of precursor emissions. But it is not known specifically what fraction
of acid deposition in the Adirondacks, for example, originates in particular regions. Further, deposition varies from site to site and from
year to year at the same site because of meteorological variations.
Uncertainty also surrounds the effects of acid deposition. Visible
damage to U.S. forests appears to be confined largely to trees in the
East, with most of the damage occurring at higher elevations. The hypotheses that have been advanced to account for the decline of these
forests include the effects of climate cycles and other air pollutants as
well as acid deposition. The effects of acid precipitation on surface
waters are complex. Damage to lakes and streams can occur only if
they are sensitive to acidification, that is, only if they lack naturally
occurring neutralizing chemicals in their watersheds. Most large lakes
in the Eastern United States are not acidified, either because they are
not sensitive or are not located in areas of sufficient acid deposition.
Although higher acid concentrations present a potential danger of
dissolving heavy metals in municipal water supplies, no such contamination has been established in the United States. Adverse effects of
acid rain on crops and soils have been suggested, but have not been
shown to be significant.




204

Transboundary deposition is of major concern to Canada. The
usual difficulties of assessing environmental risks and internalizing
costs are magnified because some costs and benefits occur in another
country. Acid rain has been the subject of high-level discussions between the United States and Canada, and the U.S. Government has
endorsed a recommendation that it undertake a 5-year, $5-billion
program in conjunction with private industry to develop a more extensive set of commercial control technologies than is now available.
Some proposals to control acid precursor emissions have been
made that go far beyond these demonstration projects. Acid rain
control programs that have been proposed in Congress would
impose costs of $3 billion to $9 billion per year. Sulfur dioxide control methods include switching to coal with lower sulfur content, removing some of the sulfur before combustion (coal washing), or removing the sulfur during or after combustion. Costs tend to be lower
for programs that involve switching from high-sulfur to low-sulfur
coal, but switching would disrupt the regions that mine high-sulfur
coal.
Current regulations and laws might be modified to alleviate acid
deposition at relatively low cost. The Powerplant and Industrial Fuel
Use Act of 1978, for example, prohibits use of natural gas in new industrial or electricity-generating facilities without a special exemption. Natural gas combustion releases minimal levels of sulfur dioxide
and fewer oxides of nitrogen than coal burning. Use of coal is also
encouraged by obstacles to the construction of nuclear power plants.
More stringent air quality emissions standards for new sources have,
along with other factors, prolonged the useful lifetime of older power
plants, which produce relatively more acid precursors.
A large and rapid reduction in emissions nationwide would be very
expensive. Low-cost options, such as liming of lakes, may be able to
mitigate acidification in some cases. Identifiable economic benefits of
lower levels of acid deposition in the United States appear to be
small, although reducing acid precursors might benefit urban areas
by improving ambient air quality. For any large-scale control effort,
questions remain as to how best to achieve the desired results. For
example, better understanding of atmospheric transport mechanisms
is necessary to decide whether to target emissions from particular regions. The costs of undertaking an ambitious emissions control program need to be balanced against the relatively low risks of waiting
to resolve the scientific uncertainties surrounding the causes and effects of acid deposition.
Biotechnology

Biotechnology is the use of biological systems and organisms in
household, agricultural, and industrial production. In its broadest




205

context, it is an ancient practice that includes such familiar applications as the use of yeast in baking bread and brewing beer and the
use of cultures in making cheese and yogurt. The most recent advances include genetic manipulation technologies, such as recombinant DNA, recombinant RNA, and cell fusion, that allow more precise and predictable methods of producing old products or creating
new ones.
The benefits of biotechnology to society are substantial, and include opportunities for new and better medicines and therapies for
disease, more efficient food production, and pollution control. Biotechnology has already provided new drugs and improved existing
drugs and vaccines. It has reduced the cost of insulin and interferon.
Health and safety concerns related to use of living organisms include the effects of accidental release from contained facilities and
the side effects of environmental applications. Releases that occur
commonly in facilities using low-risk microorganisms to produce
products such as penicillin, tetracycline, or industrial enzymes are not
harmful to persons or the environment. More stringent containment
conditions are employed for hazardous organisms.
Introduction of new plants, animals, and microorganisms into the
environment has long been commonplace. It occurs whenever new
crop varieties are planted or animals are selectively bred. Microorganisms are released as pesticides and to improve plant growth. For example, large numbers of genetically improved nitrogen-fixing bacteria are added to agricultural soils in the United States each year.
The environmental risk from the release of a genetically engineered organism is that it may have unforeseen effects on plants, animals, or human beings. Because living organisms are self-replicating,
it might be difficult to control the spread of an organism whose
harmful effects were discovered only after its release. Adverse consequences from bringing an alien species into a new environment, however, are not confined to cases of genetic manipulation. The kudzu
vine was introduced to the United States for soil conservation, but
rapidly spread, becoming a pest in some areas. Other imported species, such as the gypsy moth, have caused environmental damage.
A framework for coordinating Federal regulation of biotechnology
was established in 1986. This framework built on existing legislation
and practices, but imposed additional levels of Federal review for
certain environmental applications, particularly of new microorganisms. To the greatest extent possible, responsibility for regulating a
specific product will be placed with a single agency. Regulatory coordination should reduce uncertainty, encourage consistency in the
rigor of scientific reviews across agencies, and provide the flexibility
to modify regulations as scientific knowledge advances. The aim of




206

the Administration's regulatory policy is to safeguard public health
and the environment without blocking the development and commercial use of this highly productive new technology.
CONCLUSION
Government regulation can reduce some risks significantly, but it
can also reduce productivity, personal income, and individual choice.
Risks ordinarily cannot be controlled without cost. The resources
used to reduce them are not available for alternative improvements
in safety or well-being. When government regulates, makes public expenditures, or requires private expenditures to reduce risk, the cost
of these actions should be weighed against their likely benefits.
It is not possible to eliminate all hazards to safety and health, nor
is it desirable for the government to attempt to reduce risks that
could be controlled in less costly ways. In many cases, government
control of risk is neither efficient nor effective. Markets accommodate
individual preferences for avoiding risk and produce information that
helps people make informed choices. Markets and the legal system
provide powerful incentives for reducing personal hazards; government regulatory actions should avoid diminishing the incentives for
safety that markets and tort law provide. Because many of the greatest risks are subject to personal control, government regulation can
never replace the need for responsible individual action.




207




CHAPTER 7

Women in the Labor Force
WOMEN NOW CONSTITUTE 44 percent of the U.S. labor force.
They provide services that range from teaching, air traffic control,
medicine, and legal advice to administrative and technical support.
Women have always played a major productive role in American society. In this century, however, they have increasingly shifted their productive activities from the home to the marketplace. This shift was
accomplished through market processes, without the intervention of
government in either job training or job placement activities.
In the early 20th century, about 20 percent of women worked outside the home, and those who did were typically single or widowed.
By 1986, the majority of adult women (two-thirds of those between
the ages of 25 and 54) worked outside the home and most were married. Female employment increased throughout the century, but the
pace has accelerated since World War II. In the postwar period, the
number of women working in the United States has risen from 16
million to 49 million. That this important structural change was accomplished in an environment of rising real wage rates underscores
the flexibility and resilience of the U.S. economy. The chapter examines these extraordinary changes from an economic perspective.
Care and management of the home have always been important to
society. One major reason that more women are able to enter the
work force today is that household management requires less time than
it did in the early 20th century. Previously, it required one full-time
person (generally the woman) to perform necessary household tasks.
Improvements in technology have increased the number of laborsaving devices in the home, and more goods that were formerly
produced in the home can now be purchased outside it. Moreover, the
decline in the birth rate has also reduced work demands in the home
and provided more time for work in the market.
As demands on women in the household were falling, women's
wages in the market were rising. The changes in technology that
made labor-saving devices in the home widely available also altered
the nature of market work and increased the returns to labor. Physical strength became less important in many jobs, service sector employment grew, and wages and salaries increased.




209

Changes in the household and the market meant that the wages
women could command outside the home rose relative to the value
of time spent in the home. This growing market opportunity encouraged women to enter the labor force. Real earnings of men increased
throughout the 1950s and 1960s, at a time when married women
were rapidly entering the labor force, implying that family standards
of living would have risen even without the earnings of the wife.
Thus, while higher real incomes for male wage earners meant less financial need for their wives to work, the attraction of higher wages
and less need for women to work at home drew women into the
labor market. In some years in the 1970s, however, real wages for
both men and women fell. Then, many married women probably did
enter the labor market to maintain family incomes. The 1980s have
brought increases in both women's real earnings and women's earnings relative to men's, changes that further encouraged work in the
marketplace.
The remainder of the chapter is divided into three sections. The
first section describes the increase in women's labor force participation and the changes in their employment patterns. The second section discusses factors that affect occupational choice, and chronicles
changes in the occupational distribution of employed women. The
third section analyzes earnings differentials, and examines the pay
gap between men and women.
EMPLOYMENT
The percent of the U.S. labor force that is female has risen from
18 percent in 1900 to 29 percent in 1950 to 44 percent in 1986.
Table 7-1 shows the rapid rise of women's participation in the labor
force since the turn of the century. As women entered the labor
force, the market responded and a variety of new opportunities were
created. The market also accommodated the preferences of many of
these women for part-time work or flexible scheduling of hours.
Dramatically increased participation of women in the labor market
is not a phenomenon confined to the United States. A recent study
of 12 major industrialized countries shows similar patterns of socioeconomic change: urbanization, decreasing birth rates, increasing
female education, and the growth of the service sector.
But the U.S. economy displayed a far greater capacity than the
economies of other industrialized countries to absorb additional
workers and create new jobs. Between 1960 and 1984, job growth in
the United States increased by an average of 2 percent per year,
double the rate for Japan. Over the same time period, there was vir-




210

TABLE 7-1.—Labor force participation rates of women, by age, 1890-1986
[Percent]
Women 20-64
Year

All

White

All women
Black and
other

20-24

25-34

1890
1900

17.4
19.3

14.9
16.5

38.4
41.0

30.2
31.7

16.8
19.4

1920
1930
1940
1950
1960
1970
1980

22.9
25.4
29.4
33.3
42.3
50.0
60.8

20.7
23.3
27.9
32.2
40.9
49.1
60.5

43.1
44.1
42.9
43.2
54.0
57.2
62.8

37.5
41.8
45.6
43.6
46.1
57.7
68.9

23.7
27.1
33.3
32.0
36.0
45.0
65.5

1986

66.4

66.3

66.4

72.4

71.6

Source: There is some controversy over the Census counts of women workers in the 1890-1940 time period. Data here for
1890-1950 are from Bureau of the Census monograph, Gertrude Bancroft, The American Labor Force, New York, Wiley, 1958.
Data for 1960-86 are from Department of Labor, Bureau of Labor Statistics.

tually no job growth in Great Britain or Italy, and employment in
West Germany fell.
In recent years, a pattern of increased employment of married
women with young children has emerged in most industrialized countries. As Table 7-2 shows for the United States, the historical pattern
of married women staying home to care for children, especially small
children, has changed considerably in recent decades. Women who
maintain families alone have had high rates of market participation
throughout the postwar period, and although participation rates for
these mothers have grown, the major increase in female employment
in recent decades has come from married women. The sharpest increases have been for wives with very young children. About 54 percent of wives with children under the age of 6 participate in the labor
force. The rate for wives with infants is almost 50 percent, more than
double the percentage in 1970.
TABLE 7-2.—Labor force participation rates of women by age of youngest child, March of selected
years, 1970-86
[Percent]
Women
maintaining
families
alone,

Wives, husband present
Presence and age of child

1970

1975

1980

1986

1986

Total

40.8

44.5

50.2

54.6

62.1

With children under 18 years

39.8

44.9

54.3

61.4

69.5

30.3
25.8
24.0
36.9
49.2
47.0

36.8
32.6
30.8
42.2
52.4
51.8

45.3
41.5
39.0
51.7
62.0
62.6

53.9
51.0
49.8
58.5
68.5
68.0

57.9
50.9
44.7
64.5
76.8
74.5

Under 6 years
Under 3 years
1 year and under
3-5 years
6-17 years
6-13 years

.. ..
».

. ..

Source: Department of Labor, Bureau of Labor Statistics.




211

Although marital status and age of children are less important predictors of market participation than they were in the past, they still
influence behavior, most notably for full-time employment. In
monthly survey data for 1986, 36 percent of married women with
children under 18 years of age worked full time, but 47 percent of
widowed, divorced, separated, or never-married mothers with children in the same age group did so. The proportion of women who
worked full time was lowest for those with very young children.
Among married women with children aged 6 to 17, 45 percent work
full time. But among those with children under 6, only one-third
work full time.
Probably because of family responsibilities, more women than men
work part time (fewer than 35 hours per week). Although the number
of women who are working part time has increased, the proportion
of the adult female labor force that wants part-time jobs has not
changed since 1970. And, over this same time period, approximately
one-third of all women who worked in a year worked part time. However, the percent of women with the strongest time commitment to
the labor force (full-time and full-year) is rising, while the percent
with the weakest time commitment to the labor force (part-time and
part-year) is falling. In 1985, virtually half of women who worked in
the market worked full time for the entire year, while only 12 percent
worked part time for part of the year.
UNEMPLOYMENT

In the 1950s and 1960s, unemployment rates were higher for
women than men, even though women tended to be employed in industries and occupations where layoffs were less common. Women's
higher unemployment rates can be attributed primarily to their more
frequent movement into and out of the labor force. Moreover, because men tend to work in industries that are more affected by business cycles, differences between male and female unemployment
rates widened in upswings and narrowed during recessions. In the
late 1960s, a period of generally low overall unemployment, the unemployment rate for women was about 70 percent greater than that
for men. In the 1980s, however, overall rates of unemployment are
higher than in the 1960s and male and female unemployment differences have narrowed considerably. In 1982 and 1983, the female unemployment rate fell below the male rate for the first time in the
postwar period.
Seasonally adjusted unemployment rates were 6.6 percent for both
men and women in December 1986. Equal male and female unemployment rates, however, reflect the outcome of two opposing forces:
a higher proportion of female new entrants and reentrants, which in-




212

creases women's rates relative to those of men, and occupational and
industrial employment patterns that lower women's unemployment
rates relative to male rates.
HOME WORK VERSUS MARKET WORK

Individuals tend to split their hours between home and market
work such that an additional hour spent in each will furnish roughly
equal benefits. Urban residence, fewer children, and labor-saving
household appliances decrease the time required to produce a given
level of benefits from work in the home, and thereby reduce the
number of hours necessarily devoted to home work. More education
and previous labor market experience raise market productivity and
the value of market time, providing additional incentives for work
outside the home.
The marginal rate at which income is taxed influences decisions
about market work, nonmarket work, and leisure. Taxes create a differential between the individual return to an hour of market work
(the after-tax wage) and the productive return to society (the beforetax wage). In 1980, the top marginal Federal tax rate on labor
income was 50 percent, and in some special cases was even higher.
With this marginal rate, individuals could have been considerably
more productive in market than in nonmarket work, but would have
been better off working an extra hour in the home than in the workplace because the output was not taxed. Under the Tax Reform Act
of 1986, the top marginal rate will be 28 percent, although a surcharge on certain relatively high incomes will make it 33 percent.
Therefore, the tax reforms that the Administration is implementing
should reduce the disincentives against market work built into previous tax rates.
Although labor-saving devices played an important role in reducing
the number of hours women spent doing housework in the 1940s
and 1950s, working wives still spend substantial time doing housework. Survey estimates from the mid-1970s indicate that wives employed full time averaged 25 hours of work in the home and 39
hours of work in the market each week, while husbands employed full
time averaged 13 hours of work in the home and 47 hours of work in
the market. (Work in the market includes commuting time.) As
women have increased their market work and reduced their nonmarket work over the past two decades, men have done the opposite. Between the mid-1970s and the early 1980s, men aged 25 to 44 cut
their market work by 1 hour a week and increased their work in the
home by almost 3 hours a week, while women in the same age group
increased their market work by 4 hours and cut their work in the
home by a little more than an hour.




213

The Role of Wages in Increased Participation

Researchers estimate that over half the growth in female employment between 1950 and 1980 was in response to the real wage increases illustrated in Chart 7-1. Real wage growth affected market
participation both directly, through the attraction of more income,
and indirectly, through reductions in the number of births. The indirect effects were estimated to be as large as the direct effects. The
peak of the postwar baby boom in 1957 was 3.8 births per woman,
but over the past decade the rate has been about 1.8 births per
woman.
Chart 7-1

Women's Real Annual Earnings
Thousands of 1985 Dollars
16

15

14

13
12

11

m i i i i I i i i i I i i i i I i i i i 1 i i i i I i i i i I I
1955
1960
1965
1970
1975
1980
1985
Note.—Data are median wage or salary income of year-round, full-time, civilian workers (14 years
and over through 1978 and 15 years and over after 1978). Self-employed persons are
excluded. Data beginning 1975 are not strictly comparable with earlier figures.
Data are converted to 1985 dollars using the consumer price index for all urban consumers.
Sources: Department of Commerce, Department of Labor, and Council of Economic Advisers.

The rest of the growth in female employment is related to factors
such as decreases in the time required for household work and
changes in husbands' income. Between 1973 and 1981, husbands'
real earnings fell about 10 percent and, in response, wives probably
increased their work effort. In addition, as work expectations generally increased, labor supply decisions were probably based more
on long-term individual wage expectations than on year-to-year
changes in wages. Finally, some of the growth in women's participa-




214

tion can be attributed to the fact that proportionately more women
were single, divorced, or widowed.
The Role of Expectations

Along with changes in labor market opportunities and in wages,
people's attitudes about work have changed greatly. Questions concerning women working appeared in at least six polls in the 1930s,
and fewer than 25 percent of the respondents in any of the polls approved of married women working outside the home. In a 1960 national survey, slightly more than one-third of husbands had either favorable or qualifiedly favorable attitudes toward their wives working.
By the 1980s, however, the overwhelming proportion—nearly twothirds—of both men and women reported that it is less important for
a wife to help her husband's career than to have one of her own.
Table 7-3 shows how young women's expectations about future
work in the market changed between 1968 and 1979. In 1985,
women surveyed in 1968 would have been between 31 and 41 years
old; thus, the table also shows 1985 labor force participation rates for
women in these age groups. With the dramatic increase in labor
force participation rates, more women were working than had expected to work. The differences between expectations and actual later behavior were considerably greater for white than for black women,
probably because the increase in labor force participation has been
so much greater for white women.
TABLE 7-3.— Young women's work expectations for age 35: Trends and current participation rates
[Percent]

Race

Percent of young women
expecting to work at age 35
1968 sample

1979 sample

1985 labor force participation
rate by age
25-34

35-44

White

27.5

71.7

70.9

71.4

Black

55.6

85.9

72.4

74.8

Sources: The 1968 data are from the 1968 National Longitudinal Survey of 5,000 women aged 14-24 years. The 1979 data are
from the 1979 National Longitudinal Survey of Youth Labor Market Experience, a survey of over 12,000 young men and women
aged 14-21 years (over 6,000 women). The tabulations exclude those answering "don't know" or "other." All survey data were
weighted to a nationally representative sample. The 1985 labor force participation rates are from Department of Labor, Bureau of
Labor Statistics.

What and how long women study, what jobs they take, and what
occupations they choose depend, in part, upon how long and remunerative they expect their careers to be. The dramatic increases in
women's employment were unanticipated. Not surprisingly, many
women seriously underestimated how many years they would work in
the marketplace. As a result, women, on average, were less trained
for labor market activities than they would have been had they anticipated their future work histories. Today, young women expect to




215

spend a much greater fraction of their adult lives working in the
labor market than their mothers did.
Young women are changing their training and initial job plans as
they anticipate greater commitment to the labor force. This is evident
in the increased proportion going to college. As Chart 7-2 illustrates,
women now receive about half of the bachelor's and master's and
more than one-third of the doctoral degrees. The sharpest growth in
the past decade has been in professional degrees. In 1985, women
received 30 percent of the degrees in medicine (up from 13 percent
in 1975), 21 percent in dentistry (up from 3 percent in 1975), and 38
percent in law (up from 15 percent in 1975).
Chart 7-2

Percent of Earned Degrees Received by Women

20 10 -

Bachelor's
Degrees

Doctoral
Degrees

Master's
Degrees

Professional
Degrees

Note.—Data are for 12-month period ending June 30 of year shown. Data for professional degrees
are for first professional degrees, and are primarily in law, medicine, and dentistry.
Source: Department of Education.

Women's college major choices are converging toward those of
men. In 1960, 46 percent of degrees awarded to women were in education. Since then, the increased commitment of women to the labor
force has led them to choose a greater variety of college majors. In
the fall of 1985, only 10 percent of women beginning college intended to major in education, while 28 percent opted for business,
making it the most popular major for women as well as for men.




216

Roughly equal numbers of male and female college graduates now
major in the arts and humanities, as well as in the biological sciences
and management. Although considerably fewer women major in education than before, 76 percent of education majors are women.
Women represent only 13 percent of engineering majors, but a
decade earlier they represented a mere 2 percent.
OCCUPATIONAL CHOICE
Work performed in the home would, under paid circumstances, be
categorized in the service sector. Women made an occupational shift
during the postwar period, as many left full-time homemaking. In
terms of the proportions of the labor market involved, the shift away
from homemaking is greater than the migration of the workforce out
of agriculture that occurred earlier in this century. Both structural
shifts in employment were massive and, again, the market-oriented
U.S. economy accommodated them in an environment of generally
rising wages.
Occupational choices seem to be driven not only by expectations
regarding lifetime hours of work, but also by tradeoffs among the
characteristics of different occupations. For example, individuals balance wages against job characteristics such as riskiness, effort, work
environment, and fringe benefits. Characteristics such as amount of
training required, usual hours, and rate of skill atrophy are also important. Women who expect to have long and continuous work careers make choices different from those who expect more disruptions
in their labor market work because of family demands. Women's divergent goals are reflected in the differing characteristics of the occupations they choose. And the market provides individuals with the
opportunity to choose among occupations with very different features.
The amount and type of training women acquire signal expectations for lifetime hours of work. Women who plan continuous careers
are more likely to choose apprenticeship training or make specific investments in schooling as preparation for a particular occupation.
The amount of additional training undertaken while employed also
depends on the expected length of labor market participation, as
women who expect lengthy and continuous careers are more likely to
undertake career investments that enhance future earnings.
The type of training also affects working wives' occupational
choices. Some couples invest more heavily in the career of the husband than of the wife; if the wife chooses to work, she must find employment wherever the family locates and is thus less likely to acquire
job-specific or nontransferable skills. Similarly, occupations in which




217

skills deteriorate or require knowledge of a rapidly changing body of
information, may not be good choices for women who plan substantial interruptions in their labor market careers for marriage or childbearing. The cost of taking time off is much greater in engineering
than in editing, because the decay of knowledge is much greater.
Job characteristics valued by many, especially women with children,
are work-time flexibility and shorter work hours. Women have long
dominated elementary and secondary school teaching, occupations
that allowed them to spend summers and holidays with family.
Workers in the clerical fields, where women have often been employed
full time throughout the year, generally work fewer hours per week
than the average full-time worker.
Physical strength, access to financing, societal expectations, and
legal barriers constrain occupational choices for both men and
women. Barriers to entry for women have included Federal regulations prohibiting certain work in the home, State "protective" legislation barring entry into occupations requiring heavy or dangerous
work, certain military occupations (because of congressional bans on
women in combat), and employer or union discrimination. Employer
or union discrimination on the basis of sex, race, or age is now
against the law, and virtually all State "protective" legislation has
been repealed. Federal regulations still prohibit the manufacture of
some types of goods within the home. The Department of Labor in
1984 partially lifted the ban and in 1986 proposed further liberalization of these rules.
Some argue that women's occupational choices have also been affected by what is broadly called sex-stereotyping of occupations. Although occupational choices of women are changing, most employed
women are still found in a relatively small cluster of occupations.
Women have often chosen these occupations because they require
general skills that were easily transferable and could be used in the
home, and because the occupations permitted the flexibility in hours
or labor force discontinuity that many women wanted. Few legally
valid restrictions to occupational choice remain. And as women raise
their expectations about their work time in the market, they are increasingly entering occupations considered nontraditional.
OCCUPATIONAL DISTRIBUTIONS

Women's tendency to choose clerical, service, and social service
fields over crafts and manufacturing is a phenomenon not confined
to the United States. A study of Great Britain, Sweden, the United
States, and West Germany in the 1960s and 1970s indicated that
these patterns were strongest in Sweden. Gender differences in occupational choice narrowed only slightly in the United States between




218

1950 and 1970. During the 1970s and increasingly in the 1980s,
women have been choosing a greater variety of occupations. Table
7-4 shows the percentage of women in the labor force, in the six
broad census occupational groupings, and in a variety of more detailed occupations. Women are increasing their participation in
highly skilled occupations that traditionally had been almost exclusively male. For example, in 1970, when 38 percent of the total workforce was female, only 5 percent of lawyers and judges were female.
By 1986, women constituted 45 percent of employed workers under
35 years of age and 29 percent of lawyers and judges.
TABLE 7-4.—Percent female in selected occupations, 1970, 1980, and 1986
[Female workers as percent of total workers]
19 86

Occupation

1970

1980

Under
35 years

All

Percent of employment that is female

38

43

44

45

Managerial and professional
Mathematical and computer scientists
Natural scientists
Health diagnosing occupations
Physicians
Health assessment and treating occupations
Registered nurses
.
Lawyers and judges .
.

34
17

.

14
8
10
85
97
5

41
26
20
12
13
86
96
14

43
36
23
15
18
85
94
18

49
41
28
24
(i)
85
(i)
29

.

....

59
34
9
41
73
97
25

64
44
17
49
77
98
30

65
47
18
48
80
98
34

66
48
22
54
80
98
40

.

60
6
21
91
67

59
13
44
88
57

61
14
49
85
51

7
8

8
14

9
17

58
(i)
(i)
(i)
I1)
8
(i)

26
5
28
14

27
g
49
27

25
11
50
28

22
10
(i)
(i)

9

15

16

14

Technical, sales, and administrative support
Technicians and related support
Engineering and related technologists and technicians
Sales occupations
Administrative support, including clerical
Secretaries stenographers, and typists
Mail and message distributing
...
Service occupations
Sheriffs bailiffs, other law enforcement officers
Bartenders .
..
Waiters and waitresses
..
Cooks except short-order

..

.

.

Precision production, craft, and repair
Precision woodworking occupations
Operators fabricators, and laborers
Motor vehicle operators
Bus drivers
Printing machine operators
Farming forestry and fishing

.

1

Not available.
Note.—All data are based on the 1980 Census job classification system.
Sources: Department of Commerce (Bureau of the Census) and Department of Labor (Bureau of Labor Statistics).

Women are also expanding their roles as entrepreneurs. Femaleoperated nonfarm sole proprietorships have grown about twice as
rapidly as all such proprietorships since 1977. In 1983, female entrepreneurs operated 28 percent of nonfarm sole proprietorships, up
sharply from earlier periods. Most of these businesses are in areas
such as retail trade, insurance, and real estate, but an increasing
number are in areas considered nontraditional.




219

EARNINGS DIFFERENTIALS
Differences in earnings arise partly because of differences in
demand for the goods and services provided by particular jobs, and
partly because of differences in the number of qualified individuals
willing to take those jobs. Different skills that stem from past training, work histories, motivation, and talent all contribute to variation
in earnings. Continuous work histories and longer job tenures with
particular employers lead to higher earnings. Jobs that begin with
comparatively more on-the-job training also pay less at first than jobs
that offer no training; individuals seek jobs with training because of
the potential for future wage growth.
Within race and sex categories, individual characteristics (hours of
work, education, age, union membership, urban location, etc.) explain some of the variation in earnings. Adding those factors to other
readily measured characteristics—such as actual work experience,
interruptions in work experience, tenure with employer, and occupation, job, or industry characteristics—explains about half of the earnings variation.
The average employed man has more work experience, fewer interruptions in that work experience, and longer tenure with his current
employer than does his female counterpart of a comparable age.
However, these differences are now beginning to narrow. For example, in 1963, women's median years of tenure with their current employer were 2.7 years less than men's; 20 years later, in 1983, the difference was 1.4 years. For women 25 to 34 years old, the tenure differences were 1.5 years and 0.6 years respectively.
Just as unexplained earnings differentials exist among men or
among women whose readily measured characteristics are identical,
unexplained earnings differentials also exist between men and
women. These pay differences can result from the failure to measure
all of the gender differences that affect market productivity, or from
discrimination, or from both.
One example of a characteristic that is not generally measurable is
anticipated future market work time. Such information, however, is
available from the 1968 survey of young women discussed previously
in this chapter. Because the survey was longitudinal and the same
basic question was asked each year, it was possible to compare the
earnings of women who had consistently expected to be working at
age 35 with those who had not. Recent analysis of these data shows
that the earnings in 1980 of women who had answered the question
in the affirmative throughout the first 7 years of the survey (1968
through 1975) were almost 30 percent higher than the earnings of
women who had not, but who were comparable in other respects. No




220

doubt many of those who expected to be working continuously chose
different occupations and made greater investments in their skills and
careers than those who believed otherwise.
TRENDS IN THE PAY GAP

Two data series, illustrated in Chart 7-3, are often used to compare male and female earnings. The first series, the ratio of female to
male median wage or salary income for year-round, full-time workers,
was 58 percent in 1939 (not shown), rose to 64 percent in the mid1950s and then fell to 58 percent in the mid-1960s. From the mid1960s to 1981, it drifted in a narrow range. Since 1981, it has begun
to climb, reaching 64 percent in 1985. The ratio for the second data
series, median usual weekly earnings of full-time wage and salary
workers, shows a similar pattern for the available time period. Since
1979, it has risen steadily, reaching 69 percent in 1986. Although
both series are for full-time workers, gender differences occur in
hours worked even for full-time workers. In 1985, full-time women
workers averaged 6 percent fewer hours than full-time male workers.
Chart 7-3

Ratio of Female to Male Earnings for Full-Time Workers
Ratio
0.70

.68
.66
Usual Weekly Earnings-^

.64

.62
.60

Annual Wage or
Salary Earnings &

.58

.56 tr

1955

I I I I I
1960
1965

I I l I 1

1970

1975

1980

_y Median usual weekly earnings of all full-time workers, 16 years and over. Excludes selfemployed persons whose businesses are incorporated. For details on data consistency, see
Bureau of Labor Statistics Bulletin 2239, February 1986.
-2/ Median wage or salary income of year-round, full-time, civilian workers (14 years and over
through 1978 and 15 years and over after 1978). Self-employed persons are excluded.
Data beginning 1975 are not strictly comparable with earlier data.
Sources: Department of Commerce, Department of Labor, and Council of Economic Advisers.




221

1985

Recent research has examined the reasons why the ratio of median
earnings did not rise until the 1980s. The 1950s, 1960s, and 1970s
were decades of increasing female participation in the labor force.
The sharp increases in market participation by women with little previous market work experience depressed the average experience level
of women workers for much of the postwar period, widening the experience gap between the typical male and female worker. A modest
reduction in the experience gap occurred in the 1970s, particularly
among younger workers, but by 1980, a typical employed female had
only a few months more experience than in 1940. Education played a
somewhat similar role as the schooling levels of male workers increased relative to female workers in the 1950s and 1960s, stimulated, in part, by the GI bill. As the work experience of women relative
to men as well as the educational differential between working men
and women widened, the median earnings ratio fell. Because both experience and educational differences are now narrowing, the ratio is
rising, as Chart 7-3 shows. And the underlying trends in women's
work commitments discussed in this chapter suggest that the ratio
should continue to rise.
The pay gap is smaller for younger workers. Table 7-5 shows the
ratio of female to male earnings for full-time, year-round workers in
different age groups. Earnings ratios are not only higher, but are increasing rapidly for younger workers.
TABLE 7-5.—Earnings of females as percent of earnings of males, by age, 1979, 1982, and 1985
[Percent]
Age of workers
Year

20-24
years

1979
1982

25-34
years

35-44
years

45-54
years

76.7

58.2

57.0

72.0

61.1

60.0

85.7

1985

67.5

82.4

.

75.1

63.2

59.6

Note.—Data relate to median usual weekly earnings of full-time wage and salary workers.
Source: Department of Labor, Bureau of Labor Statistics.

As mentioned above, employed men and women differ in many of
the basic characteristics that influence earnings, such as labor market
experience and employee tenure. When these differences in characteristics are accounted for, almost half of the gap between men and
women is explained. In general, studies that sample only younger
workers or those in similar jobs find smaller pay gaps. Some recent
research, incorporating work expectations of men and women into an
analysis of the pay gap, suggests that as much as 90 percent of the
differences in male and female earnings can be explained when




222

gender differences in work expectations are included in the calculations. Accurate measurement of work expectations, however, is extremely difficult, and these results should be considered tentative.
Discrimination

Some observers attribute all, or almost all, of the unexplained portion of the wage gap between women and men to discrimination.
Other observers attribute all, or almost all, to unmeasured or difficult-to-measure differences in characteristics between men and
women. There is no consensus on the magnitude of discrimination.
Discrimination is illegal. The Equal Pay Act of 1963 and Title VII of the
Civil Rights Act of 1964 contain remedies for discrimination. The Equal
Pay Act requires equal pay for equal work and thus outlaws gender wage
discrimination. The 1964 legislation prohibits gender barriers to entry,
and thus outlaws discrimination in hiring or promotion.
Discrimination also reduces gross national product. Resources are
allocated most efficiently when prices are determined by the free
interplay of supply and demand. Barriers to entry based upon characteristics such as sex, age, or race, impede the workings of the market,
reduce allocative efficiency, and retard economic growth. These barriers are also costly to business. A firm that hires or promotes a less
competent man over a more competent woman has higher costs of
production than one that hires or promotes the most competent person.
Barriers may include unequal educational opportunity or occupational,
union, and trade association restrictions. Breaking down barriers that
remain and promoting equal opportunity are commitments of this
Administration.
The Earnings of Black Women

The relative constancy of the ratio of median earnings for all fulltime workers disguises the sharp increases in earnings experiencedby black women in the postwar period. Since black women's earnings
are not available in separate series until the late 1960s, Chart 7-4 illustrates the earnings ratio of black and other women to white
women from the mid-1950s to the present. (In years when black and
other female earnings and black earnings are both available, the two
series are virtually identical.) While Chart 7-1 showed sharp real increases in the earnings of all women, Chart 7-4 shows that the earnings of women in the black and other category were growing considerably faster than the earnings of all women.
There are at least three important reasons for this extraordinary
increase in black women's earnings. First, black women had high
labor force participation rates throughout the postwar period, and
the increases in their participation were much smaller than those for
white women. The median work experience of employed black




223

women grew during the period because it was not diluted by a high
proportion of new entrants, and this contributed to the growth in
black women's earnings.
Chart 7-4

Ratio of Black and Other Women's Earnings to
White Women's Earnings

Ratio
1.0

.9

.8
.7

.6

.5 -

ril i i i i
1955

I
1960

1965

1970

1975

1980

1985

Note.—Data are median wage or salary income of year-round, full-time, civilian workers (14 years
and over through 1978 and 15 years and over after 1978). Self-employed persons are excluded.
Black women constitute the great majority of the category black and other women.
Data beginning 1975 are not strictly comparable with earlier data.
Sources: Department of Commerce and Council of Economic Advisers.

Second, and more important, schooling levels of black women
workers increased sharply throughout the period. In 1940, only
about 7 percent of black women over the age of 25 had completed
high school. By 1960, the percent had almost tripled and today it is
about 60 percent. Finally, in the early postwar period, a great majority of employed black women worked in only two occupations, private
household worker and farm laborer. While in 1940 more than 70
percent of black working women were in these two occupations, by
1960 the fraction had fallen to below 40 percent. By 1970, the fraction was below 20 percent; today it is about 5 percent.
The increase in black female education, and the changes in their
occupational distribution in the past 40 years have been dramatic.
Real wage changes for black women have been larger than those for
any other group. In 1939, the earnings ratio depicted in Chart 7-4




224

was 0.38; by 1960, it was 0.70; and since the mid-1970s, the ratio has
fluctuated between 92 and 99 percent.
The growth in the real earnings of black and other women was as
rapid in the late 1950s and the early 1960s as it has been since 1964.
The increases in black women's schooling, and their movement out
of the occupations of private household worker and farm laborer,
contributed significantly to the growth in these earnings.
CONCLUSION
This chapter tells two stories. The first is about women and their
shift from work in the home to work in the market. The number of
women in the labor force has tripled, women's real earnings are
rising, and women are increasingly entering higher paid occupations.
Women have successfully integrated work in the market with work in
the home, making important contributions to both their family's
income and the Nation's output.
The second story, which underlies the story of women's economic
achievements, is about the adaptability and flexibility of U.S. labor
markets in accommodating such a major structural change. Not only
has the economy created over 30 million additional jobs filled by
women since World War II, but it has also created jobs that interest
and attract women: in business and the professions, science and technology, and the service sector. The market produced these jobs while
still providing rising real wages and incomes for both men and
women.
The success of the responsive and flexible U.S. labor markets has
not been confined to adapting to increasing numbers of women. Last
year the Council of Economic Advisers chronicled the labor market
success of immigrants. Since 1950, the United States has absorbed
about 13 million legal immigrants. During the same time, 4 million
workers left farming and found other jobs. The market provided nonfarm jobs for those who left agriculture, as well as jobs for immigrants who often knew neither the English language nor American
customs. It did this without major government programs to force accommodation.
The central conclusion that can be drawn from this chapter, as
from many other sections of this Report, is clear. The success of the
markets is reflected in their adaptability. In the labor market, as with
all markets, it is important to retain this ability to respond to change.
Regulations to mandate wages or benefits would, even if enacted
with the best of intentions, restrict this flexibility and inhibit the ability of markets to adapt. In contrast, free and flexible labor markets




225

provide employment opportunities for new workers, even in the face
of enormous and rapid structural change.
As this Report demonstrates, the success of the U.S. economy in
creating employment opportunities, increasing national income, and
raising real living standards begins with reliance upon private enterprise and a competitive-market system. The incentives for individual
effort and initiative generated by this system provide the essential
stimulus for economic progress. By facilitating the operation of this
system, government policy most effectively contributes to the goals
specified 40 years ago in the Employment Act of 1946: ". . .maximum
employment, production and purchasing power."




226

Appendix A
REPORT TO THE PRESIDENT ON THE ACTIVITIES
OF THE
COUNCIL OF ECONOMIC ADVISERS DURING 1986







LETTER OF TRANSMITTAL
COUNCIL OF ECONOMIC ADVISERS,
Washington, D.C., December 31, 1986.
MR. PRESIDENT:
The Council of Economic Advisers submits this report on its
activities during the calendar year 1986 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,




Beryl W. Sprinkel, Chairman
Thomas Gale Moore, Member
Michael L. Mussa, Member

229

Council Members and their Dates of Service
Name
Edwin G Nourse
Leon H Keyseriing
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
Martin Feldstein
William Poole
Beryl W. Sprinkel
Thomas Gale Moore
Michael L Mussa




Chairman
Vice Chairman
Acting Chairman
Chairman
Member
Vice Chairman
Member
Chairman
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
Member
Chairman
Member
Member
Member
Chairman
Member
Member
Chairman
Member
Chairman
Member
Member

Separation date

Oath of office date

Position

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
October 14, 1982
December 10, 1982
April 18 1985 .
.
July 1, 1985
August 18 1986

230

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.
August 25 1982
March 30 1985
July 31, 1982.
July 10, 1984.
January 20 1985.

Report to the President on the Activities of the
Council of Economic Advisers During 1986
The Council of Economic Advisers was established by the Employment Act of 1946 to provide economic analysis and advice to the
President and thus to assist in the development and implementation
of national economic policies. The Council also advises the President
on other matters affecting the performance of the Nation's economy.
Beryl W. Sprinkel and Thomas Gale Moore continued to serve as
Council Members in 1986, with Dr. Sprinkel as Chairman. Michael L.
Mussa, the William H. Abbott Professor of International Business of
the University of Chicago, became a Member of the Council on
August 18, 1986.
MACROECONOMIC POLICIES

As is its tradition, the Council devoted much of its time during
1986 to assisting the President in formulating economic policy objectives and designing programs to implement them. In this regard, the
Chairman kept the President informed on a continuing basis of important macroeconomic developments and other major policy issues.
This included briefings on various international issues in preparation
for the Tokyo Economic Summit.
The Council chaired an interagency forecasting group, also including the Department of the Treasury and the Office of Management
and Budget, which developed economic projections that were presented to the President and used in the Federal budget. The Council
also actively participated in discussions of macroeconomic policy
issues before the Cabinet-level Economic Policy Council, including
the economic effects of tax reform, the causes of and remedies for
trade and payments imbalances, and the need for international policy
coordination, including the need for budget reform in the United
States and for stronger, internally led economic growth abroad.
The Chairman of the Council continued to serve as the Chairman
of the Economic Policy Committee of the Organization for Economic
Cooperation and Development (OECD). The Council also actively
participated in other OECD fora, working on a variety of issues, including an analysis of macroeconomic performance in a multinational
context, problems of international policy coordination and payments




231

imbalances, and barriers to economic development, including structural rigidities.
The Council maintained particularly close attention to economic
developments in Japan. The Council participated in the ongoing
U.S.-Japan Sub-Cabinet Meetings and the newly formed Structural
Dialogue, and held its annual discussion with its Japanese counterpart, the Economic Planning Agency, in Tokyo.
MICROECONOMIC POLICIES
A wide variety of microeconomic issues received Council attention
during the year. The Council actively participated in the Cabinetlevel Domestic Policy Council and the Economic Policy Council, dealing with such issues as international trade policy and remedies for
unfair trade practices, problems in the agricultural sector including
farm credit, privatization, alternatives to Federal regulation, antitrust
reform, catastrophic health insurance, welfare reform, tort reform,
energy policy and security, financial markets and institutions, airport
landing rights and other transportation regulatory issues, communications regulatory issues, and tax policy.
The Council also participated actively in various OECD committees, working on a variety of issues including agricultural policy and
trade, tax policy, international financial market integration, and a variety of labor issues.
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 the Administration's domestic and
international economic policies. Annual distribution of the Report in
recent years has averaged about 50,000 copies. The Council also assumes primary responsibility for the monthly Economic Indicators,
which is issued by the Joint Economic Committee of the Congress
and has a distribution of approximately 10,000. Information is also
provided to the public through speeches and other public appearances by the Council Chairman, Members, and senior staff.
ORGANIZATION AND STAFF OF THE COUNCIL
OFFICE OF THE CHAIRMAN

The Chairman is responsible for communicating the Council's
views to the President. This role is performed through personal discussions with the President, Cabinet-level meetings with the President, and written reports to him on economic developments. The
Chairman also represents the Council at Cabinet meetings, meetings
of the Economic Policy Council and Domestic Policy Council, daily




232

White House senior staff meetings, weekly issues lunches with the
President, and at many other formal and informal meetings of senior
government officials. The Chairman guides and oversees the work of
the Council and exercises ultimate responsibility for the work of the
Members and the professional staff.
COUNCIL MEMBERS

Members of the Council are involved in the full range of issues
within the Council's purview, and are responsible for the regular 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 initiating issues for Council
attention.
The small size of the Council permits the Council Chairman and
Members to work as a team on most policy issues. There was, however, an informal division of subject matter in 1986. Dr. Mussa has
been primarily responsible for domestic and international macroeconomic analysis and economic projections. Dr. Moore has been primarily responsible for microeconomic and sectoral analysis and regulatory issues.
PROFESSIONAL STAFF

The professional staff of the Council consists of the Special Assistant, the Senior Statistician, 12 senior staff economists, 2 staff economists, 4 junior staff economists, and 1 research assistant. The professional staff and their respective areas of concentration at the end of
1986 were:
Special Assistant to the Chairman
Margot E. Machol
Senior Staff Economists
Richard H. Clarida
Stephen J. DeCanio
J. David Germany
Arlene S. Holen
Steven L. Husted
Carol A. Leisenring
Randall P. Mariger
Aline O. Quester
Gordon C. Rausser
J. Gregory Sidak
Peter M. Taylor
Susan E. Woodward




Macroeconomics and International Finance
Energy, Environment, and Regulation
International Finance and Macroeconomics
Labor, Health, and Regulation
International Trade and Finance
Macroeconomics and Monetary Policy
Public Finance and Taxation
Labor, Education, and Welfare
Agriculture, Trade, and Finance
Law and Economics
Macroeconomics and Forecasting
Financial Markets and Institutions

233

Statistician
Catherine H. Furlong

Senior Statistician
Staff Economists

Edward T. Gullason
General Microeconomics and Labor
Ellen L. Hughes-Cromwick ... Macroeconomics and Money
Junior Staff Economists
Diana E. Furchtgott-Roth
Douglas A. Irwin
Marjorie B. Rose
Darrell L. Williams

Public Finance and Privatization
International Trade, Finance, and Agriculture
International Finance and Macroeconomics
Industrial Organization and Finance
Research Assistant

Lisa E. Bernstein

General Economics and Regulation

Mrs. Furlong manages the Statistical Office assisted by Natalie V.
Rentfro, Linda A. Reilly, and Deborah D. Miller. They administer the
Council's statistical information system, overseeing the publication of
the Economic Indicators and the statistical appendix to the Economic
Report, as well as the verification of statistics in memoranda, testimony,
and speeches.
Joseph Foote provided editorial assistance in the preparation of the
1987 Economic Report.
Three former staff members returned in January to assist in the
preparation of the 1987 Report: S. Dean Furbush (junior staff economist), Rhonda L. Philopoulos (research assistant), and Hannah R.
Hopkins (student aide). David K. Carlson (research assistant) also
continued to provide support through the Report's preparation. Sarah
E. Jeffries (research assistant), Daniel J. Mullarkey (student intern),
and Dorothy Bagovich (statistical assistant) joined the staff in January
to work on the Report.
SUPPORTING STAFF
The Administrative Office, which provides general support for the
Council's activities, consists of Elizabeth A. Kaminski, Staff Assistant
to the Council, and Catherine Fibich, Administrative Assistant.
The secretaries for the Council during 1986 were Lisa D. Branch,
Bonnie D. Brown, Audrey L. Carlson, Mary E. Jones, Sandra F.
Medwid, Sheila J. Moat, Margaret L. Snyder, Suzanne M. Tudor, and
Alice H. Williams.
DEPARTURES
The Council's senior staff economists, in most cases, are on leave
of absence from faculty positions at academic institutions, or are




234

from other government agencies or research institutions. Their
tenure with the Council is usually limited to 1 or 2 years. Many of
the senior staff economists who resigned during the year returned to
their previous affiliations. They are: Dallas S. Batten (Federal Reserve Bank of St. Louis), Robert G. Chambers (University of Maryland), John H. Mutti (University of Wyoming), and Martin B. Zimmerman (University of Michigan). Others went on to new positions.
They are: Lincoln F. Anderson (Bear, Stearns, and Co.), Joseph R.
Antos (Department of Health and Human Services), Robert E.
Keleher (Board of Governors of the Federal Reserve System), and
Charles E. Stuart (Nationalekonomiska, Lund, Sweden).
Staff economists usually have recently completed their dissertations
and spend a year at the Council as preparation for their professional
careers. Junior staff economists generally are graduate students who
spend 1 year with the Council and then return to complete their dissertations. Those who returned to their graduate studies in 1986 are:
David S. Bizer (Stanford University), Catherine A. Bonser-Neal (University of Chicago), Phillip A. Braun (University of Chicago), S. Dean
Furbush (University of Maryland), and James V. Stout (University of
Maryland). Anne Caple, research assistant, resigned to continue graduate studies at Southern Methodist University.
In addition, a number of other staff provided support to the Council during the year. Kim Finethy (Bates University) served as an
intern during the spring of 1986 and David S. Clapp and John H.
Neumiller (Lawrence University) served as interns during the fall of
1986. David K. Carlson (University of Maryland) served as a research
assistant during the summer and fall of 1986 and Rhonda Philopoulos (Mt. Holyoke College) served as a research assistant during the
summer of 1986. Donald R. Brown served as an administrative aide
during the winter of 1986, Lorraine A. Ambrosio served as a student
aide during the spring of 1986, and Hannah R. Hopkins served as a
student aide during the summer of 1986.




235




Appendix B
STATISTICAL TABLES RELATING TO INCOME,
EMPLOYMENT, AND PRODUCTION







CONTENTS
NATIONAL INCOME OR EXPENDITURE:
Page

B-l.
B-2.
B-3.
B-4.
B-5.
B-6.
B-7.
B-8.
B-9.
B-10.
B-ll.
B-12.
B-l3.
B-14.
B-15.
B-l6.
B-17.
B-18.
B-l9.
B-20.
B-21.
B-22.
B-23.
B-24.
B-25.
B-26.
B-27.
B-28.
B-29.

Gross national product, 1929-86
Gross national product in 1982 dollars, 1929-86
Implicit price deflators for gross national product, 1929-86
Fixed-weighted price indexes for gross national product, 1982
weights, 1959-86
Changes in gross national product, personal consumption expenditures, and related price measures, 1933-86
Gross national product by major type of product, 1929-86
Gross national product by major type of product in 1982 dollars,
1929-86
Gross national product by sector, 1929-86
Gross national product by sector in 1982 dollars, 1929-86
Gross national product by industry, 1947-85
Gross national product by industry in 1982 dollars, 1947-85
Gross domestic product of nonfmancial corporate business, 192986
Output, costs, and profits of nonfinancial corporate business,
1948-86
Personal consumption expenditures, 1929-86
Gross and net private domestic investment, 1929-86
Gross and net private domestic investment in 1982 dollars, 192986
Inventories and final sales of business, 1946-86
Inventories and final sales of business in 1982 dollars, 1947-86
Foreign transactions in the national income and product accounts,
1929-86
Exports and imports of goods and services in 1982 dollars, 192986
Relation of gross national product, net national product, and national income, 1929-86
Relation of national income and personal income, 1929-86
National income by type of income, 1929-86
Sources of personal income, 1929-86
Disposition of personal income, 1929-86
Total and per capita disposable personal income and personal consumption expenditures in current and 1982 dollars, 1929-86
Gross saving and investment, 1929-86
Saving by individuals, 1946-86
Number and median income (in 1985 dollars) of families and persons, and poverty status, by race, selected years, 1960-85




239

244
246
248
250
251
252
253
254
255
256
257
258

259
260
262
263
264
265

266
267

268
269
270
272
274
275
276
277
278

POPULATION, EMPLOYMENT, WAGES, AND PRODUCTIVITY:
Page

B-30.
B-31.
B-32.
B-33.
B-34.
B-35.
B-36.
B-37.
B-38.
B-39.
B-40.
B-41.
B-42.
B-43.
B-44.

Population by age groups, 1929-86
Population and the labor force, 1929-86
Civilian employment and unemployment by sex and age, 1947-86..
Unemployment by duration and reason, 1947-86
Civilian labor force participation rate and employment/population
ratio, 1948-86
Unemployment rate, 1948-86
Civilian labor force participation rate by demographic characteristic, 1954-86
Civilian employment/population ratio, 1954-86
Civilian unemployment rate by demographic characteristic, 194886
Unemployment insurance programs, selected data, 1955-86
Employees on nonagricultural payrolls, by major industry, 194686
Average weekly hours and hourly earnings in selected private nonagricultural industries, 1947-86
Average weekly earnings in selected private nonagricultural industries, 1947-86
Productivity and related data, business sector, 1947-86
Changes in productivity and related data, business sector, 1948-86.

PRODUCTION AND BUSINESS ACTIVITY:
B-45. Industrial production indexes, major industry divisions, 1939-86....
B-46. Industrial production indexes, market groupings, 1947-86
B-47. Industrial production indexes, selected manufactures, 1947-86
B-48. Capacity utilization rates, 1948-86
B-49. New construction activity, 1929-86
B-50. New housing units started and authorized, 1959-86
B-51. Business expenditures for new plant and equipment, 1947-87
B-52. Manufacturing and trade, sales and inventories, 1948-86
B-53. Manufacturers' shipments and inventories, 1947-86
B-54. Manufacturers' new and unfilled orders, 1947-86
PRICES:
B-55.
B-56.
B-57.
B-58.
B-59.
B-60.
B-61.
B-62.
B-63.

Consumer price indexes, major expenditure classes, 1946-86
Consumer price indexes, selected expenditure classes, 1946-86
Consumer price indexes, commodities, services, and special
groups, 1940-86
Changes in special consumer price indexes, 1958-86
Changes in consumer price indexes, commodities and services,
1929-86
Producer price indexes by stage of processing, 1947-86
Producer price indexes by stage of processing, special groups,
1974-86
Producer price indexes for major commodity groups, 1947-86
Changes in producer price indexes for finished goods, 1955-86

MONEY STOCK, CREDIT, AND FINANCE:
B-64. Money stock, liquid assets, and debt measures, 1959-86
B-65. Components of money stock measures and liquid assets, 1959-86...




240

279
280
282
283
284
285
286
287
288
289
290

292
293
294
295
296
297
298
299
300
302
303
304
305
306
307
308
310
311
312
313
315
316
318
319
320

B-66.
B-67.
B-68.
B-69.
B-70.
B-71.
B-72.

Aggregate reserves of depository institutions and monetary base,
1959-86
Commercial bank loans and securities, 1972-86
Bond yields and interest rates, 1929-86
Total funds raised in credit markets by nonfinancial sectors, 197786
Mortgage debt outstanding by type of property and of financing,
1939-86
Mortgage debt outstanding by holder, 1939-86
Consumer credit outstanding, 1950-86

322
323
324
326

328
329
330

GOVERNMENT FINANCE:
B-73. Federal receipts, outlays, surplus or deficit, and debt, selected
fiscal years, 1929-88
331
B-74. Federal receipts, outlays, and debt, fiscal years 1979-88
332
B-75. Relation of Federal Government receipts and expenditures in the
national income and product accounts to the budget, fiscal years
1986-88
334
B-76. Federal and State and local government receipts and expenditures,
national income and product accounts, 1929-86
335
B-77. Federal and State and local government receipts and expenditures,
national income and product accounts, by major type, 1929-86... 336
B-78. Federal Government receipts and expenditures, national income
and product accounts, 1966-88
337
B-79. State and local government receipts and expenditures, national
income and product accounts, 1946-86
338
B-80. State and local government revenues and expenditures, selected
fiscal years, 1927-85
339
B-81. Interest-bearing public debt securities by kind of obligation, 196786
340
B-82. Maturity distribution and average length of marketable interestbearing public debt securities held by private investors, 1967-86. 341
B-83. Estimated ownership of public debt securities, by private investors,
1976-86
342
CORPORATE PROFITS AND FINANCE:
B-84. Corporate profits with inventory valuation and capital consumption
adjustments, 1929-86
343
B-85. Corporate profits by industry, 1929-86
344
B-86. Corporate profits of manufacturing industries, 1929-86
345
B-87. Sales, profits, and stockholders' equity, all manufacturing corporations, 1950-86
346
B-88. Relation of profits after taxes to stockholders' equity and to sales,
all manufacturing corporations, 1947-86
347
B-89. Sources and uses of funds, nonfarm nonfinancial corporate business, 1946-86
348
B-90. State and municipal and business securities offered, 1940-86
349
B-91. Common stock prices and yields, 1949-86
350
B-92. Business formation and business failures, 1945-86
351
AGRICULTURE:
B-93. Farm income, 1929-86
B-94. Farm output and productivity indexes, 1947-86
B-95. Farm input use, selected inputs, 1947-86




241

352
353
354

Page

B-96.
B-97.
B-98.

Indexes of prices received and prices paid by farmers, 1946-86
U.S. exports and imports of agricultural commodities, 1940-86
Balance sheet of the farm sector, 1939-86

355
356
357

INTERNATIONAL STATISTICS:
B-99. U.S. international transactions, 1946-86
B-100. U.S. merchandise exports and imports by principal end-use category, 1965-86
B-101. U.S. merchandise exports and imports by area, 1977-86
B-102. U.S. merchandise exports and imports by commodity groups,
1966-86
B-103. International investment position of the United States at year-end,
1978-85
B-104. International reserves, selected years, 1952-86
B-105. Exchange rates, 1967-86
B-106. Industrial production and consumer prices, major industrial countries, 1962-86
B-107. Civilian unemployment rate, and hourly compensation, major industrial countries, 1960-86
B-108. Growth rates in real gross national product, 1961-86




242

358
360
361
362
363
364
365
366
367
368

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).
Data in these tables reflect revisions made by the source agencies during 1986.




243

NATIONAL INCOME OR EXPENDITURE
TABLE B-l.—Gross national product, 1929-86
[Billions of dollars, except as noted; quarterly data at seasonally adjusted annual rates]
Gross private domestic investment

Personal consumption expenditures

Fixed investment
Year or quarter

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. ..
1982
1983 .
1984
1985 p
1986
1982: IV
1983: IV
1984- 1
II
Ill
IV
1985:1
II
III
IV
1986- 1 .
II
Ill
IV "

.. ..

.. .

.. .

. .

Gross
national
product

103.9
56.0
91.3
100.4
125.5
159.0
192.7
211.4
213.4
212.4
235.2
261.6
260.4
288.3
333.4
351.6
371.6
372.5
405.9
428.2
451.0
456.8
495.8
515.3
533.8
574.6
606.9
649.8
705.1
772.0
816.4
892.7
963.9
1,015.5
1,102.7
1,212.8
1,359.3
1,472.8
1,598.4
1,782.8
1,990.5
2,249.7
2,508.2
2,732.0
3,052.6
3,166.0
3,405.7
3,765.0
3,998.1
4,208.5
3,212.5
3,545.8
3,670.9
3,743.8
3,799.7
3,845.6
3,909.3
3,965.0
4,030.5
4,087.7
4,149.2
4,175.6
4,240.7
4,268.4

Nonresidential
Total

77.3
45.8
67.0
71.0
80.8
88.6
99.5
108.2
119.6
143.9
161.9
174.9
178.3
192.1
208.1
219.1
232.6
239.8
257.9
270.6
285.3
294.6
316.3
330.7
341.1
361.9
381.7
409.3
440.7
477.3
503.6
552.5
597.9
640.0
691.6
757.6
837.2
916.5
1,012.8
1,129.3
1,257.2
1,403.5
1,566.8
1,732.6
1,915.1
2,050.7
2,234.5
2,428.2
2,600.5
2,762.4
2,117.0
2,315.8
2,363.8
2,416.1
2,445.6
2,487.2
2,530.9
2,576.0
2,627.1
2,667.9
2,697.9
2,732.0
2,799.8
2,819.9

DuraNonble durable Services
goods goods

9.2
3.5
6.7
7.8
9.7
6.9
6.5
6.7
8.0
15.8
20.4
22.9
25.0
30.8
29.9
29.3
32.7
32.1
38.9
38.2
39.7
37.2
42.8
43.5
41.9
47.0
51.8
56.8
63.5
68.5
70.6
81.0
86.2
85.7
97.6
111.2
124.7
123.8
135.4
161.5
184.5
205.6
219.0
219.3
239.9
252.7
289.1
331.2
359.3
388.3
263.8
310.0
321.2
331.3
331.8
340.4
347.7
354.0
373.3
362.0
360.8
373.9
414.5
404.2

37.7
22.3
35.1
37.0
42.9
50.8
58.6
64.3
71.9
82.7
90.9
96.6
94.9
98.2
109.2
114.7
117.8
119.7
124.7
130.8
137.1
141.7
148.5
153.2
157.4
163.8
169.4
179.7
191.9
208.5
216.9
235.0
252.2
270.3
283.3
305.1
339.6
380.9
416.2
452.0
490.4
541.8
613.2
681.4
740.6
771.0
816.7
870.1
905.1
932.7
786.6
837.9
855.7
870.3
873.9
880.3
888.2
902.3
907.4
922.6
929:7
928.4
932.8
940.0

30.4
20.1
25.2
26.2
28.3
31.0
34.3
37.2
39.7
45.4
50.6
55.5
58.4
63.2
69.0
75.1
82.1
88.0
94.3
101.6
108.5
115.7
125.0
134.0
141.8
151.1
160.6
172.8
185.4
200.3
216.0
236.4
259.4
284.0
310.7
341.3
373.0
411.9
461.2
515.9
582.3
656.1
734.6
831.9
934.7
1,027.0
1,128.7
1,227.0
1,336.1
1,441.3
1,066.5
1,167.9
1,186.9
1,214.5
1,239.9
1,266.5
1,294.9
1,319.7
1,346.4
1,383.2
1,407.4
1,429.8
1,452.4
1,475.7

See next page for continuation of table.




244

Total

16.7
1.6
9.5
13.4
18.3
10.3
6.2
7.7
11.3
31.5
35.0
47.1
36.5
55.1
60.5
53.5
54.9
54.1
69.7
72.7
71.1
63.6
80.2
78.2
77.1
87.6
93.1
99.6
116.2
128.6
125.7
137.0
153.2
148.8
172.5
202.0
238.8
240.8
219.6
277.7
344.1
416.8
454.8
437.0
515.5
447.3
502.3
662.1
661.1
686.4
409.6
579.8
659.5
657.5
670.3
661.1
650.6
667.1
657.4
669.5
708.3
687.3
675.8
674.5

Total

14.9
3.1
9.1
11.2
13.8
8.5
6.9
8.7
12.3
25.1
35.5
42.4
39.5
48.3
50.2
50.5
54.5
55.7
64.0
68.0
69.7
65.1
74.4
75.1
74.7
81.5
87.3
94.2
106.2
114.4
115.4
129.1
143.4
145.7
164.7
191.5
219.2
225.4
225.2
261.7
322.8
388.2
441.9
445.3
491.5
471.8
509.4
598.0
650.0
675.1
469.5
548.8
564.0
597.6
605.8
624.4
625.2
648.0
654.3
672.6
664.4
672.8
680.3
682.7

Total

11.0
2.5
6.1
7.7
9.7
6.3
5.4
7.4
10.6
17.3
23.5
26.8
24.9
27.8
31.8
31.9
35.1
34.7
39.0
44.5
47.5
42.4
46.3
48.8
48.3
52.5
55.2
61.4
73.1
83.5
84.4
91.4
102.3
105.2
109.6
123.0
145.9
160.6
162.9
180.0
214.2
259.0
302.8
322.8
369.2
366.7
356.9
416.5
458.2
458.5
354.9
383.9
388.2
413.3
421.8
442.9
439.8
459.2
459.8
474.0
459.2
457.5
459.0
458.1

Structures

5.5
1.1
2.2
2.6
3.3
2.2
1.8
2.4
3.3
7.4
8.1
9.5
9.2
10.0
11.9
12.2
13.6
13.9
15.2
18.2
18.9
17.5
18.0
19.2
19.4
20.5
20.8
22.7
27.4
30.5
30.7
32.9
37.1
39.2
40.9
44.5
51.4
57.0
56.3
60.1
66.7
81.0
99.5
113.9
138.5
143.3
124.0
139.3
154.8
143.6
137.6
127.4
129.7
139.1
141.4
146.7
150.7
156.1
155.0
157.2
154.6
141.5
139.5
138.6

Producers' Residur- dential
able
equipment
5.5
1.4
3.9
5.2
6.4
4.1
3.7
5.0
7.3
9.9
15.3
17.3
15.7
17.8
19.9
19.7
21.5
20.8
23.9
26.3
28.6
24.9
28.3
29.7
28.9
32.1
34.4
38.7
45.8
53.0
53.7
58.5
65.2
66.1
68.7
78.5
94.5
103.6
106.6
119.9
147.4
178.0
203.3
208.9
230.7
223.4
232.8
277.3
303.4
314.9
217.3
256.5
258.4
274.1
280.4
296.2
289.1
303.1
304.7
316.8
304.6
316.0
319.5
319.5

4.0
.6
3.0
3.5
4.1
2.2
1.4
14
1.7
7.8
12.1
15.6
14.6
20.5
18.4
18.6
19.4
21.1
25.0
23.5
22.2
22.7
28.1
26.3
26.4
29.0
32.1
32.8
33.1
30.9
31.1
37.7
41.2
40.5
55.1
68.6
73.3
64.8
62.3
81.7
108.6
129.2
139.1
122.5
122.3
105.1
152.5
181.4
191.8
216.6
114.7
164.9
175.8
184.4
184.0
181.5
185.4
188.8
194.5
198.6
205.3
215.3
221.3
224.6

Change
in business
inventories

1.7
-1.6
.4
2.2
4.5
1.8
-.6
-1.0
-1.0
6.4
-.5
4.7
-3.1
6.8
10.2
3.1
.4
-1.6
5.7
4.6
1.4
-1.5
5.8
3.1
2.4
6.1
5.8
5.4
9.9
14.2
10.3
7.9
9.8
3.1
7.8
10.5
19.6
15.4
-5.6
16.0
21.3
28.6
13.0
83
24.0
-24.5
-7.1
64.1
11.1
11.4
-59.9
31.0
95.5
59.9
64.4
36.7
25.4
19.1
3.1
31
43.8
14.5
-4.5
-8.3

TABLE B-l.—Gross national product, 1929-86—Continued
[Billions of dollars, except as noted; quarterly data at seasonally adjusted annual rates]
Net exports of goods and
services
Year or quarter

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
1982
1983
1984
1985
1986 "
1982: IV
1983- IV
1984:1
II
Ill
IV
1985:1
||
III
IV
1986:1
||
III
IV P

Federal

Net
exports Exports Imports Total

1.1
.4
1.2
1.8
1.5
.2
-1.9
17

"?!8
11.9
7.0
6.5
2.2
4.5
3.2
1.3
2.6
3.0
5.3
7.3
3.3
1.5
5.9
7.2
6.9
8.2
10.9
9.7
7.5
7.4
5.5
5.6
8.5
6.3
3.2
16.8
16.3
31.1
18.8
1.9
4.1
18.8
32.1
33.9
26.3
-6.1
-58.7
-78.9
-105.7
14.1
-25.8
-45.6
632
-60.0
-66.1
-49.4
771
-83.7
1053
-93.7
-104.5
-108.9
-115.6

7.1
2.4
4.6
5.4
6.1
5.0
4.6
5.5
7.4
15.2
20.3
17.5
16.4
14.5
19.8
19.2
18.1
18.8
21.1
25.2
28.2
24.4
25.0
29.9
31.1
33.1
35.7
40.5
42.9
46.6
49.5
54.8
60.4
68.9
72.4
81.4
114.1
151.5
161.3
177.7
191.6
227.5
291.2
$51.0
382.8
361.9
352.5
382.7
369.8
373.0
335.9
364.7
373.4
382.1
389.2
386.2
378.4
370.0
362.3
368.2
374.8
363.0
370.8
383.4

5.9
8.9
2.1
8.3
3.4
13.6
3.7
14.2
4.7
25.0
59.9
4.8
88.9
6.5
97.1
7.2
7.9
83.0
29.1
7.3
8.3 26.4
10.6
32.6
9.8
39.0
12.3
38.8
15.3
60.4
16.0
75.8
16.8
82.8
16.3
76.0
18.1
75.3
19.9
79.7
20.9
87.3
21.1
95.4
97.9
23.5
24.0 100.6
23.9 108.4
26.2 118.2
27.5 123.8
29.6 130.0
33.2 138.6
39.1 158.6
42.1 179.7
49.3 197.7
54.7 207.3
60.5 218.2
66.1 232.4
78.2 250.0
97.3 266.5
135.2 299.1
130.3 335.0
158.9 356.9
189.7 387.3
223.4 425.2
272.5 467.8
318.9 530.3
348.9 588.1
335.6 641.7
358.7 675.0
441.4 733.4
448.6 815.4
478.7 865.3
321.9
671.8
390.5 676.1
419.0 693.2
445.3 733.3
449.1 743.8
452.2 763.4
427.9 777.3
447.1 799.0
446.0 829.7
473.6 855.6
468.5 836.7
467.5 860.8
479.7 874.0
499.0 889.7

Source: Department of Commerce, Bureau of Economic Analysis.




Percent change
from preceding
period

Government purchases of goods and
services

245

Total

1.5
2.2
5.2
6.1
17.0
52.0
81.4
89.4
74.8
19.2
13.6
17.3
21.1
19.1
38.6
52.7
57.9
48.4
44.9
46.4
50.5
54.5
54.6
54.4
58.2
64.6
65.7
66.4
68.7
80.4
92.7
100.1
100.0
98.8
99.8
105.8
106.4
116.2
129.2
136.3
151.1
161.8
178.0
208.1
242.2
272.7
283.5
311.3
354.1
367.2
293.2
276.1
283.4
315.2
317.2
329.1
333.7
340.9
360.9
380.9
355.7
367.6
369.3
376.3

Nation- Nonal
dedefense fense

1.3
2.3
13.8
49.4
79.8
87.5
73.7
16.4
10.0
11.3
13.9
14.3
33.8
46.2
49.0
41.6
39.0
40.7
44.6
46.3
46.4
45.3
47.9
52.1
51.5
50.4
51.0
62.0
73.4
79.1
78.9
76.8
74.1
77.4
77.5
82.6
89.6
93.4
100.9
108.9
121.9
142.7
167.5
193.8
214.4
235.0
259.4
278.4
205.4
221.5
227.1
233.7
234.5
244.9
248.9
255.1
265.5
268.0
266.4
278.4
286.8
281.9

3.9
3.9
3.2
2.6
1.6
2.0
1.1
2.8
3.6
6.0
7.2
4.7
4.8
6.5
8.9
6.8
6.0
5.7
5.9
8.3
8.2
9.2
10.2
12.6
14.2
16.0
17.7
18.3
19.3
21.0
21.1
22.0
25.8
28.4
28.9
33.6
39.6
42.9
50.3
52.9
56.1
65.4
74.8
78.9
69.1
76.2
94.7
88.9
87.7
54.6
56.3
81.6
82.7
84.2
84.8
85.8
95.5
112.9
89.3
89.2
82.6
94.4

State

and

Final
sales

local

7.4
6.1
8.3
8.1
8.0
7.8
7.5
7.6
8.2
9.9
12.8
15.3
18.0
19.8
21.8
23.1
24.8
27.7
30.3
33.3
36.9
40.8
43.3
46.1
50.2
53.5
58.1
63.5
69.9
78.2
87.0
97.6
107.2
119.4
132.5
144.2
160.1
182.9
205.9
220.6
236.2
263.4
289.9
322.2
345.9
369.0
391.5
422.2
461.3
498.1
378.7
400.0
409.8
418.1
426.6
434.3
443.5
458.1
468.8
474.7
480.9
493.3
504.7
513.3

102.2
57.6
90.9
98.3
121.0
157.2
193.4
212.3
214.4
206.0
235.7
256.9
263.4
281.4
323.2
348.6
371.1
374.1
400.2
423.6
449.6
458.3
490.0
512.3
531.4
568.5
601.1
644.4
695.2
757.8
806.1
884.8
954.1
1,012.3
1,094.9
1,202.3
1,339.7
1,457.4
1,604.1
1,766.8
1,969.2
2,221.0
2,495.2
2,740.3
3,028.6
3,190.5
3,412.8
3,700.9
3,987.0
4,197.1
3,272.4
3,514.8
3,575.4
3,683.9
3,735.3
3,808.9
3,883.9
3,945.9
4,027.4
4,090.8
4,105.4
4,161.2
4,245.2
4,276.7

Gross
national
product

-4.2
7.0
10.0
25.0
26.6
21.2
9.7
.9

ibis
11.2

10.7
15.7
5.5
5.7

g'.o

5.5
5.3
1.3
8.5
3.9
3.6
7.6
5.6
7.1
8.5
9.5
5.8
9.3
8.0
5.4
8.6
10.0
12.1
8.3
8.5
11.5
11.7
13.0
11.5
8.9
11.7
3.7
7.6
10.5
6.2
5.3
4.2
12.4
14.9
8.2
6.1
4.9
6.8
5.8
6.8
5.8
6.2
2.6
6.4
2.6

Final
sales

55
5.4
8.1
23.2
29.9
23.0
9.8
1.0
-3.9
14.4
9.0
2.5
6.8
14.8
7.9
6.5
.8
7.0
5.8
6.1
1.9
6.9
4.6
3.7
7.0
5.7
7.2
7.9
9.0
6.4
9.8
7.8
6.1
8.2
9.8
11.4
8.8
10.1
10.1
11.5
12.8
12.3
9.8
10.5
5.3
7.0
8.4
7.7
5.3
11.0
7.8
7.1
12.7
5.7
8.1
8.1
6.5
8.5
6.4
1.4
5.5
8.3
3.0

TABLE B-2.—Gross national product in 1982 dollars, 1929-86
[Billions of 1982 dollars, except as noted; quarterly data at seasonally adjusted annual rates]
Personal consumption
expenditures

Gross private domestic investment
Fixed investment

Year or
quarter

Gross
national
product

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
1982
1983
1984
1985 p
1986
1982: IV
1983: IV
1984- 1
II
Ill
IV

709.6
498.5
716.6
772.9
909.4
1,080.3
1,276.2
1,380.6
1,354.8
1,096.9
1,066.7
1,108.7
1,109.0
1,203.7
1,328.2
1,380.0
1,435.3
1,416.2
1,494.9
1,525.6
1,551.1
1,539.2
1,629.1
1,665.3
1,708.7
1,799.4
1,873.3
1,973.3
2,087.6
2,208.3
2,271.4
2,365.6
2,423.3
2,416.2
2,484.8
2,608.5
2,744.1
2,729.3
2,695.0
2,826.7
2,958.6
3,115.2
3,192.4
3,187.1
3,248.8
3,166.0
3,279.1
3,489.9
3,585.2
3,676.5
3,159.3
3,365.1
3,444.7
3,487.1
3,507.4
3,520.4

1985: I

3,547.0
3,567.6
3,603.8
3,622.3
3,655.9
3,661.4
3,686.4
3,702.4

||
III
IV

1986: I

II
Ill
IV P

Nonresidential
Total

Durable
goods

471.4
378.7
480.5

40.3
20.7
35.7

502.6
531.1
527.6
539.9
557.1
592.7
655.0
666.6
681.8
695.4

40.6
46.2
31.3
28.1
26.3
28.7
47.8
56.5
61.7
67.8
80.7
74.7
73.0
80.2
81.5
96.9
92.8
92.4
86.9
96.9
98.0
93.6
103.0
111.8
120.8
134.6
144.4
146.2
161.6
167.8
162.5
178.3
200.4
220.3
204.9
205.6
232.3
253.9
267.4
266.5
245.9
250.8
252.7
283.1
318.9
343.9
368.9
262.0
300.5
311.1
319.0
318.8
326.8
332.3
338.8
357.4
347.0
345.4
357.1
391.6
381.3

733.2
748.7
771.4
802.5
822.7
873.8
899.8
919.7
932.9
979.4
1,005.1
1,025.2
1,069.0
1,108.4
1,170.6
1,236.4
1,298.9
1,337.7
1,405.9
1,456.7
1,492.0
1,538.8
1,621.9
1,689.6
1,674.0
1,711.9
1,803.9
1,883.8
1,961.0
2,004.4
2,000.4
2,024.2
2,050.7
2,146.0
2,246.3
2,324.5
2,418.6
2,078.7
2,191.9
2,213.8
2,246.3
2,253.3
2,271.7
2,292.3
2,311.9
2,342.0
2,351.7
2,372.7
2,408.4
2,448.0
2,445.1

Nondurable
goods

211.4
181.8
248.0
259.4
275.6
279.1
284.7
297.9
323.5
344.2
337.4
338.7
342.3
352.8
362.9
376.6
388.2
393.8
413.2
426.9
434.7
439.9
455.8

Services

Total
Total

219.7
176.2
196.7
202.7
209.3
217.2
227.2
232.9
240.5
262.9
272.6
281.4
285.3
299.8
311.1
321.9
334.1
347.4
363.6
380.1
392.6
406.1
426.7

443.9
461.4
481.8
502.3
532.3
558.5
585.3
612.3
641.8
671.7
697.0
720.2
756.0
786.1
803.1
829.8
862.8
898.5
939.8
971.2
991.9
1,009.0
1,027.0
1,062.7
1,098.7
1,139.0
1,177.3
778.6 1,038.1
812.7 1,078.6
819.7 1,083.0
832.8 1,094.6
831.7 1,102.8
830.5 1,114.4
834.3 1,125.8
841.3 1,131.8
843.8 1,140.8
847.2 1,157.5
860.6 1,166.6
877.3 1,174.0
875.4 1,181.0
876.2 1,187.6

463.3
470.1
484.2
494.3
517.5
543.2
569.3
579.2
602.4
617.2
632.5
640.3
665.5
683.2
666.1
676.5
708.8
731.4
753.7
766.6
762.6
764.4
771.0
800.2
828.6
841.6
872.4

Total

139.2
22.7
86.0
111.8
138.8
76.7
50.4
56.4
76.5
178.1
177.9
208.2
168.8
234.9
235.2
211.8
216.6
212.6
259.8
257.8
243.4
221.4
270.3
260.5
259.1
288.6
307.1
325.9
367.0
390.5
374.4
391.8
410.3
381.5
419.3
465.4
520.8
481.3
383.3
453.5
521.3
576.9
575.2
509.3
545.5
447.3
504.0
652.0
647.7
659.7
408.8
577.2
649.3
649.7
658.9
649.9
638.2
655.6
643.8
653.2
684.0
664.7
651.3
638.8

See next page for continuation of table.




246

128.4
33.5
82.1
97.4
111.1
64.7
49.7
61.6
84.9
150.2
178.9
196.0
178.4
210.8
204.3
201.8
213.8
217.3
243.5
244.9
240.4
224.8
253.8
252.7
251.8
272.4
290.5
310.2
341.8
353.7
345.6
370.7
385.1
373.3
399.7
443.7
480.8
448.0
396.1
431.4
492.2
540.2
560.2
516.2
521.7
471.8
510.4
592.8
638.6
648.9
468.1
550.3
564.1
592.7
598.3
615.9
615.0
638.1
643.1
658.4
644.1
649.6
651.6
650.3

Structures

93.0
25.8
53.2

54.7
14.3
25.2

65.0
76.6
47.4
39.4
52.6
74.2
105.5
121.7
127.4
114.8
124.0
131.7
130.6
140.1
137.5
151.0
160.4
161.1
143.9
153.6
159.4
158.2
170.2
176.6
194.9
227.6
250.4
245.0
254.5
269.7
264.0
258.4
277.0
317.3
317.8
281.2
290.6
324.0
362.1
389.4
379.2
395.2
366.7
361.2
422.2
461.4
455.0
352.3
390.4
394.4
419.5
427.1
447.6
442.7
463.0
463.1
476.9
457.8
456.8
454.4
451.0

28.5
33.4
20.9
15.6
20.4
27.0
50.9
47.5
50.5
49.3
52.8
56.5
57.3
62.3
64.9
69.4
75.5
75.2
70.6
71.9
76.1
77.7
81.3
81.6
87.9
101.8
108.0
105.4
108.0
112.9
111.1
107.3
109.5
117.7
115.2
102.8
104.4
108.3
119.3
130.6
136.2
148.8
143.3
127.2
141.3
152.2
134.7
138.3
131.6
133.5
141.3
142.9
147.5
149.9
154.1
152.3
152.4
148.1
132.9
129.5
128.4

Producers'
durable
equipment
38.4
11.5
28.0
36.5
43.2
26.5
23.8
32.1
47.2
54.7
74.2
76.9
65.5
71.2
75.2
73.3
77.7
12.1
81.7
84.9
85.9
73.3
81.7
83.3
80.5
88.9
95.1
107.0
125.8
142.4
139.6
146.5
156.8
152.9
151.0
167.5
199.6
202.7
178.4
186.2
215.7
242.8
258.8
243.0
246.4
223.4
233.9
280.9
309.2
320.3
214.1
258.8
260.9
278.2
284.2
300.1
292.8
308.9
310.9
324.5
309.7
323.9
324.9
322.6

Residential

35.4
7.7
28.9
32.5
34.4
17.3
10.4
9.0
10.7
44.7
57.2
68.6
63.6
86.7
72.6
71.2
73.8
79.8
92.4
84.4
79.3
81.0
100.2
93.3
93.6
102.2
113.9
115.3
114.2
103.2
100.6
116.2
115.4
109.3
141.3
166.6
163.4
130.2
114.9
140.8
168.1
178.0
170.8
137.0
126.5
105.1
149.3
170.6
177.2
193.9
115.8
159.9
169.7
173.2
171.2
168.3
172.4
175.1
180.0
181.5
186.3
192.7
197.2
199.3

Change in
business
inventories

10.8
-10.7
3.9
14.4
27.8
12.0
.7
-5.2
-8.4
27.9
-1.0
12.3
-9.7
24.2
30.8
10.0
2.8
-4.8
16.3
12.9
3.0
-3.4
16.5
7.7
7.3
16.2
16.6
15.7
25.2
36.9
28.8
21.0
25.1
8.2
19.6
21.8
40.0
33.3
-12.8
22.1
29.1
36.8
15.0
-6.9
23.9
-24.5
-6.4
59.2
9.0
10.8
-59.3
27.0

85.1
57.0
60.6
33.9
23.2
17.4
.7
-5.2
39.9
15.1
-.3
-11.5

TABLE B-2.—Gross national product in 1982 dollars, 1929-86—Continued
[Billions of 1982 dollars, except as noted; quarterly data at seasonally adjusted annual rates]

Year or quarter

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
1982 .
1983
1984
1985
1986"
1982- IV .
1983: IV
1984:1

II.
Ill
IV

1985- 1
II
Ill
IV
1986- 1
II
III
IV P

Federal

Net
exports Exports mports Totai

37.4
24.2
30.1
31.7
38.2
36.9
48.0
51.1
54.1
42.0
39.9
47.1
46.2
54.6
57.4
63.3
69.7
67.5
76.9
83.6
87.9
92.8
101.9
102.4
103.3
114.4
116.6
122.8
134.7
152.1
1605
185.3
199.9
208.3
218.9
244.6
273.8
268.4
240.8
285.4
317.1
339.4
353.2
332.0
343.4
335.6
368.1
453.2
470.5
521.0
324.3
401.6
429.9
454.2
461.2
467.7

94.2
98.5
144.1
150.2
235.6
483.7
708.9
790.8
704.5
236.9
179.8
199.5
226.0
230.8
329.7
389.9
419.0
378.4
361.3
363.7
381.1
395.3
397.7
403.7
427.1
449.4
459.8
470.8
487.0
532.6
5762
597.6
591.2
572.6
566.5
570.7
565.3
573.2
580.9
580.3
589.1
604.1
609.1
620.5
629.7
641.7
649.0
675.2
721.2
748.0
660.1
642.2
650.2
678.2
681.0
691.5

18.3
27.0
53.8
63.6
153.0
407.1
638.1
722.5
634.0
159.3
91.9
106.1
119.5
116.7
214.4
272.7
295.9
245.0
217.9
215.4
224.1
224.9
221.5
220.6
232.9
249.3
247.8
244.2
244.4
273.8
3044
309.6
295.6
268.3
250.6
246.0
230.0
226.4
226.3
224.2
231.8
233.7
236.2
246.9
259.6
272.7
275.1
291.7
323.6
333.4
289.5
266.0
271.2
296.3
295.6
303.8

-78.8
-108.1
-113.8
-132.0
-125.9
1539
-163.3
-155.6

448.2
469.3
469.6
494.8
495.1
513.6
534.5
540.8

695.3
708.3
731.8
749.4
725.2
742.2
750.4
774.1

305.8
311.4
329.9
347.2
320.4
328.9
330.9
353.5

Source: Department of Commerce, Bureau of Economic Analysis.




Total

4.7
42.1
-1.4
22.7
6.1
36.2
8.2
40.0
3.9 42.0
77
29.1
-23.0
25.1
238
27.3
-18.9
35.2
27.0
69.0
42.4
82.3
19.2
66.2
18.8
65.0
4.7
59.2
14.6
72.0
6.9
70.1
-2.7
66.9
2.5
70.0
.0
76.9
4.3 87.9
7.0
94.9
103
82.4
83.7
-18.2
-4.0
98.4
-2.7 100.7
-7.5 106.9
-1.9 114.7
5.9 128.8
-2.7 132.0
-13.7 138.4
169 1436
297 155.7
-34.9 165.0
-30.0 178.3
-39.8 179.2
-49.4 195.2
-31.5 242.3
.8 269.1
18.9 259.7
-11.0 274.4
-35.5 281.6
-26.8 312.6
3.6 356.8
57.0 388.9
49.4 392.7
26.3 361.9
-19.9 348.1
-83.6 369.7
-108.2 362.3
-149.7 371.3
11.7 336.0
-46.2 355.5
-68.6 361.3
-87.2 367.0
-85.7 375.5
-92.7 375.0
369.4
361.2
355.8
362.9
369.2
359.8
371.2
385.3

Percent change
from preceding
period

Government purchases of goods and
services

Net exports of goods and
services

247

Nation- Nonal
dedefense fense

State
and
local

Final
sales

Gross
national
product

Final
sales

185.3
171.0
163.3
161.1
157.5
159.2
160.7
164.3
171.2
180.3
193.8
206.9
219.4
235.7
251.0
201.4
211.6
214.4
219.0
218.4
225.9

75.9
71.5
90.3
86.6
82.6
76.7
70.8
68.3
70.5
77.6
87.9
93.4
106.5
114.2
115.4
117.3
123.1
133.4
143.4
148.3
157.0
170.4
176.2
183.1
194.2
200.1
212.0
226.6
242.5
258.8
271.8
288.0
295.6
304.3
315.9
60.7 324.7
59.1 335.3
63.1 346.8
65.2 354.6
66.8 356.0
72.7 357.2
73.0 370.4
71.9 373.0
75.7 373.6
79.3 370.1
78.9 369.0
68.2 373.9
72.3 383.5
87.8 397.6
82.4 414.5
88.2 370.6
54.4 376.2
56.8 379.0
77.3 381.8
77.1 385.4
77.9 387.7

698.7
509.2
-2.1 -3.1
712.7
6.3
7.9
6.4
758.5
7.8
16.2
17.7
881.6
21.2
1,068.3
18.8
19.4
1,275.5
18.1
1,385.7
8.2
8.6
1,363.3
1.9 -1.6
1,069.0 -19.0 -21.6
1,067.7
2.8
~2J
1,096.4
3.9
1,118.7
2.0
.0
5.4
1,179.5
8.5
1,297.4
10.0
10.3
5.6
1,370.0
3.9
4.6
1,432.5
4.0
-.8
1,421.0
-1.3
4.1
5.6
1,478.6
1,512.7
2.1
2.3
1.7
2.3
1,548.1
-.4
1,542.6
.8
4.5
5.8
1,612.6
2.8
2.2
1,657.5
1,701.4
2.6
2.6
4.8
1,783.3
5.3
4.1
4.1
1,856.7
5.4
1,957.6
5.3
5.4
2,062.4
5.8
5.3
2,171.5
5.8
3.3
2,242.6
2.9
4.1
4.5
2,344.6
2.4
2.3
2,398.1
.4
2,407.9
-.3
2.4
2,465.2
2.8
4.9
2,586.8
5.0
4.5
2,704.1
5.2
2,696.0
-.5
.4
2,707.8 -1.3
3.6
2,804.6
4.9
4.7
4.5
2,929.5
5.1
3,078.4
5.3
3.2
3,177.4
2.5
.5
— .2
3,194.0
1.0
3,225.0
1.9
1.1
-2.5
3,190.5
3.0
3,285.5
3.6
4.4
3,430.7
6.4
4.2
3,576.2
2.7
2.5
3,665.7
2.5
7.1
3,218.6
.6
3.8
7.3
3,338.1
2.6
3,359.6
9.8
8.6
3,430.0
5.0
2.0
3,446.8
2.3
4.7
3,486.4
1.5

228.0
233.5
242.2
239.3
238.7
249.3
259.4
256.5

77.8
77.9
87.6
107.9
81.7
79.5
71.5
97.0

3,523.9
3,550.2
3,603.1
3,627.5
3,616.1
3,646.3
3,686.7
3,713.9

389.5
396.9
401.9
402.2
404.8
413.3
419.5
420.6

3.1
2.3
4.1
2.1
3.8
.6
2.8
1.7

4.4
3.0
6.1
2.7
-1.3
3.4
4.5
3.0

TABLE B-3.—Implicit price deflators for gross national product, 1929-86
[Index numbers, 1982=100, except as noted; quarterly data seasonally adjusted]
Gross private domestic investment J

Personal consumption
expenditures

Year or quarter

1929
1933
1939
1940
1941
1942
1943
1944
1945 .
1946
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
1982
1983
1984
1985
1986 "
1982- IV
1983- IV
1984- 1
II
Ill
IV
1985:1
II
III
IV
1986- 1
II
Ill
IV

. . .

Gross
national
product

14.6
11.2
12.7
13.0
13.8
14.7
15.1
15.3
15.7
19.4
22.1
23.6
23.5
23.9
25.1
25.5
25.9
26.3
27.2
28.1
29.1
29.7
30.4
30.9
31.2
31.9
32.4
32.9
33.8
35.0
35.9
37.7
39.8
42.0
44.4
46.5
49.5
54.0
59.3
63.1
67.3
72.2
78.6
85.7
94.0
100.0
103.9
1Q7.9
HIT
114.5
101.7
105.4
106.6
107.4
108.3
109.2
110.2
111.1
111.8
112.8
113.5
114.0
115.0
115.3

Nonresidential
Total

Durable
goods

16.4
12.1
13.9
14.1
15.2
16.8
18.4
19.4
20.2
22.0
24.3
25.7
25.6
26.2
27.8
28.4
29.0
29.1
29.5
30.1
31.0
31.6
32.3
32.9
33.3
33.9
34.4
35.0
35.6
36.7
37.6
39.3
41.0
42.9
44.9
46.7
49.6
54.8
59.2
62.6
66.7
71.6
78.2
86.6
94.6
100.0
104.1

22.9
16.8
18.7
19.2
20.9
22.0
23.3
25.4
27.7
33.0
36.1
37.1
36.9
38.1
40.0
40.1
40.8
39.4
40.1
41.2
42.9
42.8
44.2
44.4
44.8
45.7
46.3
47.0
47.1
47.5
48.3
50.1
51.4
52.7
54.7
55.5
56.6
60.4
65.9
69.5
72.7
76.9
82.1
89.2
95.7
100.0
102.1

111.9
114.2
101.8
105.7
106.8
107.6
108.5
109.5
110.4
111.4
112.2
113.4
113.7
113.4
114.4
115.3

104.5
105.3
100.7
103.1
103.3
103.9
104.1
104.1
104.6
104.5
104.5
104.3
104.5
104.7
105.9
106.0

_mL ___iQia

Nondurable Services
goods

17.8
12.2
14.2
14.3
15.5
18.2
20.6
21.6
22.2
24.0
26.9
28.5
27.7
27.8
30.1
30.5
30.4
30.4
30.2
30.6
31.5
32.2
32.6
33.1
33.5
33.8
34.3
34.7
35.3
36.6
37.5
39.0
40.9
42.7
44.2
45.8
49.7
57.2
61.5
63.8
67.1
71.9
80.0
89.4
96.9
100.0
102.1

13.8
11.4
12.8
12.9
13.5
14.3
15.1
16.0
16.5
17.3
18.6
19.7
20.5
21.1
22.2
23.3
24.6
25.3
25.9
26.7
27.6
28.5
29.3
30.2
30.7
31.4
32.0
32.5
33.2
34.2
35.3
36.8
38.6
40.7
43.1
45.1
47.4
51.3
55.6
59.8
64.8
69.8
75.6
83.9
92.6
100.0
106.2

106.9
101.0
103.1
104.4
104.5
105.1
106.0
106.5
107.2
107.5
108.9
108.0
105.8
106.6
107.3

122.4
102.7
108.3
109.6
110.9
112.4
113.6
115.0
116.6
118.0
119.5
120.6
121.8
123.0
124.3

-m -8K

See next page for continuation of table.




Fixed investment

248

Total

11.6
9.4
11.1
11.5
12.4
13.2
13.8
14.2
14.5
16.7
19.8
21.7
22.2
22.9
24.6
25.0
25.5
25.6
26.3
27.8
29.0
28.9
29.3
29.7
29.7
29.9
30.1
30.4
31.1
32.4
33.4
34.8
37.2
39.0
41.2
43.2
45.6
50.3
56.9
60.7
65.6
71.9
78.9
86.3
94.2
100.0
99.8
JOO 3
" 101.8
104.0
100.3
99.7
100.0
100.8
101.3
101.4
101.7
101.5
101.7
102.2
103.2
103.6
104.4
105.0

Total

11.8
9.8
11.5
11.9
12.7
13.3
13.8
14.0
14.3
16.4
19.3
21.0
21.7
22.4
24.2
24.4
25.1
25.2
25.8
27.7
29.5
29.5
30.2
30.6
30.5
30.9
31.3
31.5
32.1
33.3
34.4
35.9
37.9
39.9
42.4
44.4
46.0
50.5
57.9
61.9
66.1
71.5
77.8
85.1
93.4
100.0
98.8
J&7

—100.8
gfe
100.7
98.3
98.4
98.5
98.8
99.0
99.4
99.2
99.3
99.4
100.3
100.2
101.0
101.6

Structures

Producers'
durable
equipment

10.0
14.3
7.6
12.5
8.8
13.9
14.2
9.0
9.7
14.9
10.7
15.3
15.4
11.4
15.6
11.6
15.4
12.3
18.2
14.5
17.1
20.7
22.5
18.9
24.0
18.6
25.0
18.8
26.4
21.1
21.3
26.9
27.7
21.8
21.4
28.6
29.3
21.8
24.1
31.0
25.2
33.3
34.0
24.8
34.7
25.0
25.2
35.6
25.0
35.9
25.2
36.1
36.2
25.5
36.2
25.9
36.4
26.9
37.2
28.2
38.4
29.1
39.9
30.4
41.5
32.9
35.2
43.2
38.1
45.5
46.8
40.6
43.7
47.3
51.1
49.5
59.7
54.7
64.4
57.6
68.3
61.6
73.3
67.9
76.2
78.6
83.6
86.0
93.7
93.1
100.0
100.0
97.5
99.5
_98JL ~£8J.
101.7 - 98.1
98.3
106.6
101.5
99.5
96.8
99.1
97.1
99.1
98.5
98.5
99.0
98.6
98.7
99.5
100.6
98.8
101.3
98.1
101.8
98.0
103.2
97.6
104.4
98.4
97.6
106.5
98.3
107.8
99.0
108.0

Residential

11.2
8.1
10.5
10.9
11.9
12.8
13.8
14.9
15.8
17.5
21.1
22.8
23.0
23.7
25.4
26.1
26.3
26.4
27.0
27.9
28.0
28.0
28.0
28.2
28.2
28.3
28.2
28.5
29.0
29.9
30.9
32.5
35.6
37.0
39.0
41.2
44.8
49.8
54.2
58.0
64.6
72.6
81.4
89.4
96.6
100.0
102.2
IQ&3108.2 •
111.7
99.1
103.1
103.6
106.4
107.5
107.8
107.6
107.8
108.1
109.4
110.2
111.7
112.2
112.7

TABLE B-3.—Implicit price deflators for gross national product, 7929-86—Continued
[Index numbers, 1982=100, except as noted; quarterly data seasonally adjusted]
Export;, and
imports o f goods
and ser /ices1
Year or quarter
Exports

1929
1933
1939
1940
1941
1942
1943
1944
1945
1946.
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
1982
1983
1984
1985
1986 " .
1982: IV
1983- IV .
1984- 1
II
Ill
IV

!

.

1985:1
|
|

III
IV
1986- 1
II
Ill

IV

. ..
„

16.8
10.7
12.7
13.6
14.6
17.2
18.5
20.2
21.1
22.0
24.6
26.5
25.2
24.4
27.4
27.4
27.0
26.9
27.5
28.6
29.7
29.6
29.9
30.4
30.9
31.0
31.1
31.4
32.5
33.7
34.5
35.2
36.6
38.7
40.4
41.7
47.1
56.3
62.1
64.8
68.0
72.8
81.6
90.2
97.5
100.0
Wl.3
103.5
102.1
100.4
100.0
102.6
103.4
104.1
103.6
103.0
102.4
102.4
101.8
101.5
101.5
100.9
999
99.5

Imports

15.9
8.6
11.3
11.6
12.3
13.1
13.6
14.1
14.6
17.4
20.9
22.4
21.2
22.5
26.7
25.3
24.1
24.1
23.5
23.8
23.8
22.7
23.1
23.4
23.1
22.9
23.6
241
24.7
25.7
26.2
26.6
27.4
29.0
30.2
32.0
35.5
50.4
54.1
55.7
59.8
65.8
77.1
96.0
101.6
100.0
97.4
97.4
95,4
91.9
99.3
97.2
97.5
98.0
97.4
96.7
95.5
95.3
95.0
95.7
94.6
91.0
89.7
92.3

Government purchases of goods and services
Federal
Total

9.4
8.4
9.4
9.5
10.6
12.4
12.5
12.3
11.8
12.3
14.7
16.3
17.3
16.8
18.3
19.4
19.8
20.1
20.8
21.9
22.9
24.1
24.6
24.9
25.4
26.3
26.9
27.6
28.5
29.8
31.2
33.1
35.1
38.1
41.0
43.8
47.1
52.2
57.7
61.5
65.8
70.4
76.8
85.5
93.4
100.0
104.0
108.6
113.1
115.7
101.8
105.3
106.6
108.1
109.2
110.4
111.8
112.8
113.4
114.2
115.4
116.0
116.5
114.9

1

Total

8.1
8.0
9.7
9.7
11.1
12.8
12.8
12.4
11.8
12.0
14.8
16.3
17.6
16.3
18.0
19.3
19.6
19.7
20.6
21.5
22.5
24.2
24.6
24.7
25.0
25.9
26.5
27.2
28.1
29.4
30.5
32.3
33.8
36.8
39.8
43.0
46.2
51.3
57.1
60.8
65.2
69.2
75.4
84.3
93.3
100.0
103.1
106.7
109.4
110.1
101.3
103.8
104.5
106.4
107.3
108.3
109.1
109.5
109.4
109.7
111.0
111.8
111.6
106.5

National Nondefense defense

I"::.": :."." i."""::::

•'•""•

:::=::"""'»•""•
4l'.8
45.3
50.6
55.6
59.3
63.4
67.8
74.2
83.4
92.9
100.0
103.6
107.1
110,0
110.9
102.0
104.7
105.9
106.7
107.3
108.4
109.2
109.3
109.6
112.0
111.6
111.7
110.5
109.9

46"8
48.9
53.3
60.6
64.3
69.1
72.4
78.0
86.4
94.3
100.0
101.4
105.5
107.9
107.8
99.5
100.3
99.2
105.5
107.3
108.2
109.0
110.2
108.9
104.6
109.2
112.1
115.4
97.3

State
and
local

9.7
8.6
9.2
9.3
9.7
10.2
10.6
11.2
11.6
12.8
14.5
16.3
16.9
17.3
18.9
19.7
20.2
20.7
21.2
22.4
23.5
24.0
24.6
25.2
25.9
26.7
27.4
28.0
28.8
30.2
32.0
33.9
36.3
39.2
41.9
44.4
47.8
52.8
58.1
62.0
66.1
71.1
77.7
86.2
93.4
100.0
104.7
110.1
116.0
120.1
102.2
106.3
108.1
109.5
110.7
112.0
113.9
115.4
116.6
118.0
118.8
119.4
120.3
122.1

Final
sales

Percent
change
from
preceding
period,
GNP
implicit
price
deflator 2

14.6
11.3 ""-2.2
-.8
12.8
2.0
13.0
6.2
13.7
6.6
14.7
2.6
15.2
1.4
15.3
2.9
15.7
22.9
19.3
13.9
22.1
7.0
23.4
23.5
2.0
23.9
4.8
24.9
1.5
25.4
1.6
25.9
1.6
26.3
3.2
27.1
3.4
28.0
3.6
29.0
2.1
29.7
2.4
30.4
1.6
30.9
1.0
31.2
2.2
31.9
1.6
32.4
1.5
32.9
2.7
33.7
3.6
34.9
2.6
35.9
5.0
37.7
5.6
39.8
5.5
42.0
5.7
44.4
4.7
46.5
6.5
49.5
9.1
54.1
9.8
59.2
6.4
63.0
6.7
67.2
7.3
72.1
8.9
78.5
9.0
85.8
9.7
93.9
6.4
100.0
3.9
103.9
3.8
107.9
3.3
111.5
2.7
114.5
3.6
101.7
4.7
105.3
4.6
106.4
3.0
107.4
3.4
108.4
3.4
109.3
3.7
110.2
3.3
111.1
2.5
111.8
3.6
112.8
2.5
113.5
1.8
114.1
3.6
115.1
1.0
115.2

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.




249

TABLE B-4.—Fixed-weighted price indexes for gross national product, 1982 weights, 1959-86
[Index numbers, 1982 = 100, except as noted; quarterly data seasonally adjusted]

Year or quarter

1959
I960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984 .
1985
1986"
1982- IV
1983: IV
1984- 1
||
Ill
IV

Personal
Gross
connational sumption
product expenditures

. .
. .

.. .

1985:1

II

III
IV
1986- 1
II
Ill p
IV

37.6
38.1
38.4
38.7
39.1
39.6
40.1
41.1
42.1
43.7
45.6
47.2
48.8
50.3
53.1
57.2
61.8
65.1
68.4
72.7
78.8
86.1
94.1
100.0
104.1
108.3
112.3
115.4
101.7
105.7
106.9
107.8
108.8
109.8
110.9
111.9
112.6
113.7
114.4
114.9
115.6
116.4

35.2
35.7
36.1
36.4
36.8
37.2
37.7
38.5
39.5
41.0
42.8
44.7
46.6
48.3
51.0
55.8
60.1
63.5
67.5
72.2
78.6
86.8
94.6
100.0
104.2
108.4
112.4
115.2
101.8
105.8
107.1
107.9
108.9
109.9
110.8
112.0
112.8
114.1
114.6
114.5
115.4
116.4

Gross private domestic
investment1
Fixed investment
Total

58.0
58.1
58.0
58.0
58.0
58.2
58.5
59.3
60.2
61.4
63.2
61.5
60.6
59.8
61.8
64.4
69.0
71.4
72.6
74.5
80.3
86.9
94.5
100.0
100.4
101.8
103.3
105.2
100.2
100.5
100.6
101.6
102.2
102.7
102.7
103.0
103.4
104.0
104.2
104.9
105.5
105.9

Nonresi- Residen- Exports
dential
tial

65.9
66.1
66.0
66.1
66.2
66.4
66.7
67.4
68.4
69.5
71.0
68.4
66.6
65.0
66.6
68.5
73.1
75.2
74.9
75.0
80.1
86.1
93.9
100.0
99.9
100.5
101.9
103.3
100.5
99.6
99.7
100.2
100.7
101.2
101.3
101.6
102.0
102.4
102.5
103.1
103.6
104.0

30.2
30.3
30.2
29.9
29.5
29.6
30.0
30.8
31.6
33.1
36.0
37.4
39.5
41.6
45.1
50.1
54.6
58.4
64.8
72.5
81.2
89.4
96.6
100.0
102.2
106.3
108.2
111.5
99.1
103.3
103.7
106.4
107.4
107.7
107.6
107.8
108.1
109.4
110.1
111.4
112.0
112.5

Government purchases of
goods and services

Export s and
imports ()f goods
and ser

32.8
33.5
34.0
34.1
34.4
34.8
35.9
37.1
38.2
39.3
40.9
43.3
45.3
46.5
50.8
59.8
65.4
67.4
70.3
74.5
82.9
90.5
97.7
100.0
101.6
104.5
104.0
103.9
100.0
103.2
104.0
105.0
104.7
104.3
104.1
104.3
103.8
103.8
104.3
104.0
103.5
103.6

Imports

27.0
27.3
27.0
26.7
27.1
27.7
28.1
29.1
29.5
30.1
31.2
33.4
35.6
37.8
42.4
54.5
59.7
61.3
66.1
71.3
80.9
96.3
101.5
100.0
97.7
97.7
95.9
92.1
99.3
97.6
97.8
98.4
97.7
97.2
95.7
95.9
95.4
96.5
94.8
90.9
90.9
92.9

Federal
Total

25.8
26.4
27.0
27.8
28.5
29.3
30.0
31.3
32.7
34.5
36.6
39.6
42.3
45.2
48.8
53.5
58.6
62.2
66.0
70.9
77.3
86.3
94.1
100.0
104.5
109.2
114.1
117.1
102.0
106.0
107.7
108.8
109.6
110.8
112.6
113.5
114.4
115.8
116.4
116.7
117.1
118.2

Total

26.9
27.3
27.8
28.4
29.3
30.1
30.8
32.0
32.8
34.5
36.4
39.5
42.4
46.0
50.1
54.8
59.4
62.4
65.8
70.6
76.8
86.4
94.9
100.0
104.1
107.9
111.0
111.8
101.7
105.4
106.9
107.7
107.9
108.9
110.5
110.5
110.8
112.1
112.3
112.0
111.4
111.5

National Nondefense defense

44.3
47.4
51.4
56.5
59.7
63.5
68.6
75.1
84.7
93.8
100.0
103.7
107.5
111.4
112.8
101.8
104.7
106.3
107.2
107.4
108.9
110.8
110.7
111.2
112.9
113.2
112.7
112.5
112.6

50.5
56.9
63.3
66.6
69.0
71.5
75.5
81.0
90.6
97.4
100.0
105.1
108.8
110.0
109.5
101.4
107.0
108.4
109.1
109.0
108.8
109.9
110.0
109.7
110.3
110.1
110.1
108.8
108.9

State
and
local

249
25.7
26.4
27.3
27.9
28.5
29.3
30.6
32.5
34.4
36.7
39.6
42.2
44.6
47.8
52.6
57.9
62.0
66.2
71.2
77.7
86.2
93.5
100.0
104.8
110.3
116.0
121.0
102.2
106.4
108.2
109.7
110.9
112.2
114.1
115.7
117.0
118.5
119.4
120.2
121.3
123.1

Percent
change
from
preceding
period,
GNP fixedweighted
price
index 2

1.4
.7
.8
1.0
1.2
1.4
2.5
2.6
3.7
4.4
3.6
3.5
2.9
5.5
7.8
8.0
5.3
5.1
6.2
8.5
9.3
9.3
6.2
4.1
4.0
3.7
2.8
4.0
4.0
4.7
3.6
3.5
3.6
4.2
3.6
2.8
4.0
2.5
1.7
2.6
2.6

1
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.




250

TABLE B-5.—Changes in gross national product, personal consumption expenditures, and related price
measures, 1933-86
[Percent change from preceding period; quarterly data at seasonally adjusted annual rates]
Personal consumption expenditures

Gross national product
Year or quarter

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
1982
1983
1984
1985
1986 "
1982: IV
1983- IV
1984:1
II
Ill
IV . ...
1985:1
||
III
IV
1986- 1
II
Ill
IV »

Current
dollars

-4.2
7.0
10.0
25.0
26.6
21.2
9.7
.9
10.8
11.2
-.5
10.7
15.7
5.5
5.7
.2
9.0
5.5
5.3
1.3
8.5
3.9
3.6
7.6
5.6
7.1
8.5
9.5
5.8
9.3
8.0
5.4
8.6
10.0
12.1
8.3
8.5
11.5
11.7
13.0
11.5
8.9
11.7
3.7
7.6
10.5
6.2
5.3
4.2
12.4
14.9
8.2
6.1
4.9
6.8
5.8
6.8
5.8
6.2
2.6
6.4
2.6

Constant
(1982)
dollars
-2.1
7.9
7.8
17.7
18.8
18.1
8.2
19
-19.0
-2.8
3.9
.0
8.5
10.3
3.9
4.0
-1.3
5.6
2.1
1.7
-.8
5.8
2.2
2.6
5.3
4.1
5.3
5.8
5.8
2.9
4.1
2.4
3
2.8
5.0
5.2
5
-1.3
4.9
4.7
5.3
2.5
-.2
1.9
25
3.6
6.4
2.7
2.5
.6
7.3
9.8
5.0
2.3
1.5
3.1
2.3
4.1
2.1
3.8
.6
2.8
1.7

Implicit
price
deflator

Chain
price
index

-2.2
-.8
2.0
6.2
6.6
2.6
1.4
2.9
22.9
13.9
7.0
-.5
2.0
4.8
1.5
1.6
1.6
3.2
3.4
3.6
2.1
2.4
1.6
1.0
2.2
1.6
1.5
2.7
3.6
2.6
5.0
5.6
5.5
5.7
4.7
6.5
9.1
9.8
6.4
6.7
7.3
8.9
9.0
9.7
6.4
3.9
3.8
3.3
2.7
3.6
4.7
4.6
3.0
3.4
3.4
3.7
3.3
2.5
3.6
2.5
1.8
3.6
1.0

1.5
1.0
1.2
1.3
1.5
1.8
3.0
2.8
4.3
5.0
5.2
4.8
4.2
5.9
8.9
9.2
5.9
6.1
7.2
8.7
9.0
9.4
6.3
4.1
4.0
3.6
2.5
4.1
3.9
4.8
3.6
3.6
3.5
3.9
3.5
2.5
3.9
1.9
1.5
2.5
2.3

Source: Department of Commerce, Bureau of Economic Analysis.




251

Fixedweighted price
index
(1982
weights)

1.4
.7
.8
1.0
1.2
1.4
2.5
2.6
3.7
4.4
3.6
3.5
2.9
5.5
7.8
8.0
5.3
5.1
6.2
8.5
9.3
9.3
6.2
4.1
4.0
3.7
2.8
4.0
4.0
4.7
3.6
3.5
3.6
4.2
3.6
2.8
4.0
2.5
1.7
2.6
2.6

Current
dollars

-5.7
4.6
6.0
13.8
9.7
12.2
8.8
10.5
20.4
12.5
8.0
1.9
7.7
8.3
5.3
6.2
3.1
7.5
4.9
5.4
3.3
7.4
4.6
3.1
6.1
5.5
7.2
7.7
8.3
5.5
9.7
8.2
7.0
8.1
9.5
10.5
9.5
10.5
11.5
11.3
11.6
11.6
10.6
10.5
7.1
9.0
8.7
7.1
6.2
10.3
9.7
8.6
9.1
5.0
7.0
7.2
7.3
8.2
6.4
4.6
5.2
10.3
2.9

Constant
(1982)
dollars
-1.6
5.1
4.6
5.7
-.7
2.3
3.2
6.4
10.5
1.8
2.3
2.0
5.4
2.1
3.0
4.0
2.5
6.2
3.0
2.2
1.4
5.0
2.6
2.0
4.3
3.7
5.6
5.6
5.1
3.0
5.1
3.6
2.4
3.1
5.4
4.2
-.9
2.3
5.4
4.4
4.1
2.2
-.2
1.2
1.3
4.6
4.7
3.5
4.0
5.3
5.5
4.1
6.0
1.3
3.3
3.7
3.5
5.3
1.7
3.6
6.2
6.7
-.5

Implicit
price
deflator

-4.2
-.5
1.3
7.7
10.4
9.6
5.4
3.9
8.9
10.6
5.6
-.1
2.2
6.1
2.2
2.1
.6
1.3
1.9
3.2
1.8
2.2
1.9
1.2
1.8
1.5
1.7
1.7
3.1
2.5
4.5
4.3
4.6
4.7
4.0
6.2
10.5
8.0
5.7
6.5
7.3
9.2
10.7
9.2
5.7
4.1
3.8
3.5
2.1
4.4
4.3
4.2
3.0
3.4
3.7
3.3
3.7
2.9
4.3
1.1
-1.1
3.6
3.2

Chain
price
index

1.7
1.1
1.1
1.4
1.2
1.5
2.7
2.5
4.0
4.4
4.7
4.3
3.6
6.0
10.3
8.0
5.7
6.4
7.2
9.2
10.9
9.2
5.7
4.2
4.0
3.6
2.4
4.8
4.1
4.5
3.0
3.7
3.7
3.5
4.0
2.8
4.7
1.4

~3.B
3.6

Fixedweighted price
index
(1982
weights)

1.5
.9
.9
1.1
1.2
1.2
2.2
2.5
3.8
4.3
4.6
4.2
3.5
5.7
9.4
7.7
5.6
6.3
7.0
8.8
10.5
9.0
5.6
4.2
4.0
3.7
2.5
4.8
4.1
4.7
3.0
3.8
3.8
3.6
4.2
3.0
4.7
1.5
-.4
3.4
3.5

TABLE B-6.—Gross national product by major type of product, 1929-86
[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Goods
Year or
quarter

Gross
national
product

Final
sales

Inventory
change

Total
Total

Durable goods

Final Inven- Final
tory
sales change sales

Inventory
change

Nondurable goods
Final
sales

Inventory
change

Services Structures

Auto
output

1929
1933
1939

103.9
56.0
91.3

102.2
57.6
90.9

1.7
16
.4

56.1
27.0
49.0

54.4
28.6
48.6

1.7
16
.4

16.1
5.4
12.4

1.4
-.5
.3

38.3
23.2
36.2

0.3
11
.1

35.9
25.9
34.5

11.9
3.1
7.8

1940. .
1941
1942
1943
1944
1945
1946
1947
1948
1949.

100.4
125.5
159.0
192.7
211.4
213.4
212.4
235.2
261.6
260.4

98.3
121.0
157.2
193.4
212.3
214.4
206.0
235.7
256.9
263.4

2.2
4.5
1.8
-.6
10
-1.0
6.4
~4>
-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
10
-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

35.8
40.9
50.9
63.2
72.4
77.3
70.5
72.7
78.0
83.0

8.6
12.1
14.4
9.2
6.6
7.2
16.6
22.8
29.2
29.6

7.2
8.8
11.9

1950
1951
1952
1953
1954
1955
1956
1957... .
1958
1959

288.3
333.4
351.6
371.6
372.5
405.9
428.2
451.0
456.8
495.8

281.4
323.2
348.6
371.1
374.1
400.2
423.6
449.6
458.3
490.0

6.8
10.2
3.1
.4
16
5.7
4.6
1.4
-1.5
5.8

162.4
189.9
195.5
204.6
198.0
216.3
225.4
234.7
230.5
250.8

155.6
179.6
192.4
204.2
199.6
210.6
220.7
233.3
232.0
245.1

6.8
10.2
3.1
.4
-1.6
5.7
4.6
1.4
-1.5
5.8

56.2
66.4
72.6
78.0
74.1
81.7
86.2
91.7
84.8
91.1

3.6
6.1
1.2
1.5
25
3.4
2.1
.5
-2.8
3.1

99.4
113.2
119.8
126.2
125.5
128.9
134.5
141.6
147.2
154.0

3.2
4.2
1.9
-1.1
.9
2.3
2.5
.9
1.3
2.6

89.0
104.4
115.2
123.4
128.5
138.5
148.9
161.6
170.9
183.5

36.9
39.1
40.9
43.6
46.0
51.1
53.9
54.8
55.5
61.5

15.4
13.3
12.0
16.1
14.7
21.2
16.9
19.4
14.5
19.4

1960
1961
1962
1963
1964
1965
1966
1967
1968
1969

515.3
533.8
574.6
606.9
649.8
705.1
772.0
816.4
892.7
963.9

512.3
531.4
568.5
601.1
644.4
695.2
757.8
806.1
884.8
954.1

3.1
2.4
6.1
5.8
5.4
9.9
14.2
10.3
7.9
9.8

257.2
260.4
281.5
293.2
313.5
342.9
380.1
395.1
427.4
456.6

254.1
258.0
275.4
287.4
308.1
333.0
365.9
384.9
419.5
446.8

3.1
2.4
6.1
5.8
5.4
9.9
14.2
10.3
7.9
9.8

93.8
93.1
103.4
110.0
119.6
132.4
147.9
154.5
169.1
180.1

1.6
-.1
3.4
2.7
4.0
6.7
10.2
5.5
4.7
6.4

160.3
164.8
172.0
177.4
188.5
200.6
218.1
230.4
250.4
266.7

1.4
2.5
2.7
3.1
1.4
3.2
4.0
4.8
3.2
3.4

197.4
210.9
226.4
242.2
261.1
280.5
307.2
334.9
368.0
402.3

60.7
62.5
66.7
71.5
75.2
81.7
84.6
86.4
97.2
105.1

21.3
17.8
22.4
25.1
25.9
31.1
30.2
27.8
35.0
34.7

1970
1971
1972
1973
1974
1975
1976
1977
1978
1979

1,015.5
1,102.7
1,212.8
1,359.3
1,472.8
1,598.4
1,782.8
1,990.5
2,249.7
2,508.2

1,012.3
1,094.9
1,202.3
1,339.7
1,457.4
1,604.1
1,766.8
1,969.2
2,221.0
2,495.2

3.1
7.8
10.5
19.6
15.4
56
16.0
21.3
28.6
13.0

467.8 464.7
493.0 485.2
537.4 526.9
616.4
596.8
663.1
647.7
714.7
720.3
798.9 782.9
882.0 860.7
991.4
962.8
1,099.1 1,086.1

3.1
7.8
10.5
19.6
15.4
-5.6
16.0
21.3
28.6
13.0

182.1
189.4
209.7
241.9
257.2
288.2
323.6
369.4
416.9
473.1

-.1
2.8
7.2
15.0
11.2
-7.0
10.3
9.7
20.1
10.3

282.6
295.8
317.2
354.9
390.4
432.2
459.3
491.3
545.9
613.0

3.2 441.1
4.9 484.9
3.3 533.2
4.6 586.6
4.3 650.6
1.3 725.2
5.7 803.5
895.9
11.6
8.6 1,003.0
2.7 1,121.9

106.5
124.8
142.1
156.3
159.1
158.5
180.4
212.6
255.3
287.1

28.5
38.9
41.4
46.0
38.8
40.3
55.2
64.3
68.3
66.9

1980.
1981
1982
1983
1984
1985 p
1986 .

2,732.0
3,052.6
3,166.0
3,405.7
3,765.0
3,998.1
4,208.5

2,740.3
83
3,028.6 24.0
3,190.5 -24.5
7i
3,412.8
3,700.9 64.1
3,987.0 11.1
4,197.1
11.4

499.4 -2.9
541.1
6.8
542.9 -16.8
574.3 -1.0
635.9 39.2
6.6
693.6
715.5
4.2

683.8
757.8
800.8
828.8
876.7
925.5
946.1

1,265.0
1,415.4
1,547.5
1,682.5
1,813.2
1,959.8
2,105.5

292.0
314.4
299.4
327.1
375.1
408.1
430.0

60.1
69.4
66.5
88.6
103.5
114.1
114.8

1982: IV

3,212.5 3,272.4 -59.9

1,309.8 1,369.7 -59.9

551.8

-42.7

-17.2 1,598.9

303.9

64.5

1983: IV

3,545.8 3,514.8

31.0

1,473.7 1,442.7

31.0

610.4

16.7

832.3

14.3

1,730.1

342.0

102.1

1984-.I
II
Ill
IV

3,670.9
3,743.8
3,799.7
3,845.6

3,575.4
3,683.9
3,735.3
3,808.9

95.5
59.9
64.4
36.7

1,553.5
1,573.5
1,585.8
1,594.1

1,458.1
1,513.7
1,521.4
1,557.4

95.5
59.9
64.4
36.7

612.4
632.2
633.0
666.0

45.6
36.8
44.8
29.5

845.7
881.5
888.4
891.4

49.9
23.1
19.6
7.2

1,760.3
1,792.9
1,832.3
1,867.1

357.1
377.3
381.6
384.4

108.3
97.1
99.7
108.9

1985:1
II
Ill
IV

3,909.3
3,965.0
4,030.5
4,087.7

3,883.9
3,945.9
4,027.4
4,090.8

25.4
19.1
3.1
-3.1

1,611.6
1,622.4
1,642.7
1,644.1

1,586.2
1,603.3
1,639.7
1,647.2

25.4
19.1
3.1
-3.1

671.1
690.8
713.0
699.6

17.3
2.3
-2.7
9.5

915.2
912.6
926.7
947.7

8.1
16.7
5.8
-12.7

1,906.3
1,935.4
1,971.9
2,025.5

391.4
407.2
415.9
418.1

114.8
111.4
116.9
113.3

1986:1

4,149.2
4,175.6
4,240.7
4,268.4

4,105.4
4,161.2
4,245.2
4,276.7

43.8
14.5
-4.5
-8.3

1,669.0
1,661.5
1,680.2
1,681.1

1,625.2
1,647.1
1,684.7
1,689.4

43.8
14.5
-4.5
-8.3

682.0 28.6
-.1
703.2
745.7 -15.6
731.1
3.9

943.1
943.9
939.0
958.3

15.3
14.6
11.1
-12.2

2,057.7
2,087.4
2,125.2
2,151.7

422.6
426.7
435.3
435,7

113.2
112.7
112.0
121.2

II
Ill
IV P.

1,174.9
1,322.9
1,319.1
1,396.1
1,576.7
1,630.2
1,673.0

1,183.2 -8.3
1,298.9 24.0
1,343.7 -24.5
1,403.2 -7.1
1,512.6 64.1
1,619.1
11.1
11.4
1,661.6

Source: Department of Commerce, Bureau of Economic Analysis.




252

817.9

-5.4
17.2
-7.7
-6.1
25.0
4.5
7.2

TABLE B-7.—Gross national product by major type of product in 1982 dollars, 1929-86
[Billions of 1982 dollars; quarterly data at seasonally adjusted annual rates]
Goods
Year or
quarter

Gross
national
product

Final
sales

1929
1933
1939

709.6
498.5
716.6

1940
1941
1942
1943
1944
1945
1946
1947
1948
1949

772.9
909.4
1,080.3
1,276.2
1,380.6
1,354.8
1,096.9
1,066.7
1,108.7
1,109.0

758.5
881.6
1,068.3
1,275.5
1,385.7
1,363.3
1,069.0
1,067.7
1,096.4
1,118.7

1,203.7
1,328.2
1,380.0
1,435.3
. 1,416.2
1,494.9
1,525.6
1,551.1
1,539.2
1,629.1

1960
1961
1962
1963
1964
1965
1966
1967
1968
1969

Inventory
change

Durable goods

Total
Total

Final Inven- Final
tory
sales change sales

Inventory
change

Nondurable goods
Final
sales

Inventory
change

Services Structures

Auto
output

698.7
10.8
509.2 -10.7
712.7
3.9

308.1
210.0
331.7

297.3 10.8
220.7 -10.7
3.9
327.8

85.8
34.9
74.8

7.5
-4.5
1.6

211.5
185.7
253.1

3.3
-6.2
2.3

290.0
252.1
306.4

111.4
36.5
78.5

14.4
27.8
12.0
-5.2
-8.4
27.9
-1.0
12.3
-9.7

370.3
431.9
504.1
608.6
664.6
639.1
521.0
517.1
531.7
517.9

355.9
404.2
492.1
607.9
669.8
647.5
493.1
518.1
519.4
527.6

14.4
27.8
12.0
.7
-5.2
-8.4
27.9
-1.0
12.3
-9.7

91.9
122.9
163.3
254.4
292.4
263.1
129.6
164.7
166.5
166.8

7.2
17.4
7.5
1.4
-3.8
-7.8
23.1
2.8
3.4
-6.1

264.0
281.2
328.8
353.5
377.4
384.4
363.5
353.4
353.0
360.8

7.2
10.3
4.5
-.7
14
-.6
4.8
-3.8
8.8
-3.6

318.1
367.1
460.4
598.9
665.0
662.3
472.0
431.0
438.1
450.1

84.5
110.3
115.8
68.7
50.9
53.5
104.0
118.6
138.9
141.0

24.1
27.6
35.5

1,179.5
1,297.4
1,370.0
1,432.5
1,421.0
1,478.6
1,512.7
1,548.1
1,542.6
1,612.6

24.2
30.8
10.0
2.8
-4.8
16.3
12.9
3.0
-3.4
16.5

561.4
623.0
641.3
676.6
643.5
683.9
697.1
699.3
674.2
716.6

537.2
592.2
631.3
673.8
648.2
667.6
684.1
696.3
677.6
700.1

24.2
30.8
10.0
2.8
-4.8
16.3
12.9
3.0
-3.4
16.5

180.0
208.8
229.8
245.4
230.6
245.2
248.3
251.3
229.1
236.8

11.4
19.1
3.6
4.7
-7.7
9.5
6.3
1.9
-7.1
8.2

357.1
383.4
401.5
428.4
417.7
422.3
435.8
445.0
448.6
463.4

12.8
11.7
6.4
-2.0
2.9
6.8
6.7
1.1
3.7
8.3

470.4
537.7
567.3
577.6
579.5
601.0
619.7
645.4
654.7
681.5

171.9
167.5
171.4
181.2
193.2
210.0
208.9
206.5
210.3
231.0

44.9
38.3
34.9
44.8
43.3
58.2
45.8
48.3
37.4
45.7

1,665.3
1,708.7
1,799.4
1,873.3
1,973.3
2,087.6
2,208.3
2,271.4
2,365.6
2,423.3

1,657.5
1,701.4
1,783.3
1,856.7
1,957.6
2,062.4
2,171.5
2,242.6
2,344.6
2,398.1

7.7
7.3
16.2
16.6
15.7
25.2
36.9
28.8
21.0
25.1

726.8 719.1
730.2 723.0
773.5 757.3
797.5 780.8
845.2 829.5
904.0 878.8
974.7 937.8
993.1 964.3
1,024.8 1,003.7
1,048.5 1,023.3

7.7
7.3
16.2
16.6
15.7
25.2
36.9
28.8
21.0
25.1

242.2
239.2
260.2
273.4
295.4
322.2
354.2
363.6
378.5
389.7

476.9
483.7
497.1
507.4
534.1
556.5
583.6
600.7
625.3
633.6

3.7 709.9
7.3 743.0
7.7 777.0
9.5 811.5
4.5 852.8
7.8 891.6
942.7
10.6
14.4 990.6
9.3 1,032.0
9.9 1,066.9

228.5
235.4
248.9
264.4
275.3
292.0
291.0
287.6
308.8
307.9

49.6
41.1
49.8
54.6
55.3
66.9
64.8
58.3
70.5
67.6

1970
1971
1972
1973
1974
1975
1976
1977
1978
1979

2,416.2
2,484.8
2,608.5
2,744.1
2,729.3
2,695.0
2,826.7
2,958.6
3,115.2
3,192.4

2,407.9
8.2
2,465.2
19.6
2,586.8 21.8
2,704.1 40.0
2,696.0 33.3
2,707.8 -12.8
2,804.6 22.1
2,929.5 29.1
3,078.4 36.8
3,177.4
15.0

1,030.0
1,037.6
1,093.8
1,175.0
1,159.2
1,125.0
1,194.7
1,256.2
1,329.1
1,354.6

1,021.7
8.2
1,017.9
19.6
1,072.1 21.8
1,135.0 40.0
1,125.9 33.3
1,137.8 -12.8
1,172.5 22.1
1,227.1 29.1
1,292.4 36.8
1,339.6
15.0

381.7
375.5
409.4
474.9
476.0
471.1
490.9
534.0
572.5
604.6

4.0
-.1
8.4
7.1
11.2
17.4
26.3
14.4
11.8
15.2
_5
7'.1
15.4
30.8
20.0
-11.4
15.9
14.2
27.5
13.3

640.1
642.4
662.7
660.1
649.9
666.7
681.7
693.1
719.9
735.1

8.8
12.5
6.4
9.2
13.3
-1.4
6.3
14.9
9.3
1.7

1,092.4
1,126.1
1,169.4
1,218.7
1,256.4
1,286.4
1,324.4
1,368.7
1,426.9
1,478.6

293.8
321.2
345.4
350.4
313.7
283.6
307.6
333.7
359.1
359.2

53.1
69.8
73.9
82.0
65.4
61.8
80.1
88.7
87.3
80.2

1980 ....
1981
1982
1983
1984 ..
1985
1986 ".

3,187.1
3,248.8
3,166.0
3,279.1
3,489.9
3,585.2
3,676.5

3,194.0 -6.9
3,225.0 23.9
3,190.5 -24.5
3,285.5 -6.4
3,430.7
59.2
3,576.2
9.0
3,665.7
10.8

1,344.2
1,386.0
1,319.1
1,367.0
1,503.1
1,533.2
1,569.0

1,351.1 -6.9
1,362.2 23.9
1,343.7 -24.5
1,373.4
64
1,443.9 59.2
1,524.2
9.0
1,558.2
10.8

584.0 -3.2
578.5
6.9
542.9 -16.8
565.4
12
615.9
37.5
670.0
5.9
699.6
3.7

767.1
783.7
800.8
808.0
828.0
854.2
858.6

37
16.9
-7.7
52
21.7
3.2
7.1

1,511.1
1,533.4
1,547.5
1,585.5
1,623.0
1,667.6
1,718.1

331.8
329.4
299.4
326.6
363.9
384.4
389.4

67.1
73.3
66.5
85.9
97.3
104.6
102.5

1982: IV

3,159.3 3,218.6 -59.3

543.8 -42.4

813.4

1,555.5

305.9

63.3

1983: IV

3,365.1 3,338.1

27.0

1,423.8 1,396.8

27.0

596.6

16.1

800.2

10.9 1,600.7

340.6

96.4

1984:1
II
Ill
IV

3,444.7
3,487.1
3,507.4
3,520.4

3,359.6
3,430.0
3,446.8
3,486.4

85.1
57.0
60.6
33.9

1,486.3
1,506.1
1,510.3
1,509.5

1,401.2
1,449.1
1,449.7
1,475.6

85.1
57.0
60.6
33.9

596.2
614.1
611.8
641.5

43.6
35.5
42.8
28.0

805.0
835.0
837.9
834.1

41.5
21.6
17.8
5.9

1,604.9
1,614.9
1,629.7
1,642.5

353.5
366.1
367.4
368.4

102.3
92.2
93.5
101.4

1985:1

3,547.0
3,567.6
3,603.8
3,622.3

3,523.9
3,550.2
3,603.1
3,627.5

23.2
17.4
.7
-5.2

1,521.1
1,526.0
1,544.2
1,541.7

1,497.9
1,508.6
1,543.6
1,546.9

23.2
17.4

643.8
666.6
689.3
680.2

16.2
1.7
-2.9
8.4

854.1
841.9
854.2
866.7

7.0
15.7
3.5
-13.6

1,653.0
1,656.5
1,668.7
1,692.1

373.0
385.1
390.9
388.5

105.7
102.3
107.6
102.7

1986:1
II
Ill
IV ".

3,655.9
3,661.4
3,686.4
3,702.4

3,616.1 39.9
3,646.3 15.1
_3
3,685.7
3,713.9 -1L5

1,563.6
1,562.8
1,568.0
1,581.6

1,523.7 39.9
15.1
1,547.6
1,568.3
1,593.2 -1L5

662.6 26.0
-.7
688.3
728.6 -14.4
718.7
3.9

861.1
859.4
839.7
874.4

13.9
15.9
14.1
-15.4

1,703.0
1,712.0
1,727.2
1,730.5

389.4
386.6
391.3
390.3

103.2
101.6
98.3
106.8

..

1950
1951
1952
1953
1954
1955
1956
1957
1958
1959

.

II
Ill
IV

1,297.9 1,357.1 -59.3

-5.'2

Source: Department of Commerce, Bureau of Economic Analysis.




253

-16.9

TABLE B-8.—Gross national product by sector, 1929-86
[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Gross domestic product
Year or quarter

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
1982
1983
1984.
1985 p
1986
1982: IV
1983: IV
1984: 1
||
III
IV
1985: 1
||
III
IV
1986: 1

II
Ill
IV "

Gross
national
product

103.9
56.0
91.3
100.4
125.5
159.0
192.7
211.4
213.4
212.4
235.2
261.6
260.4
288.3
333.4
351.6
371.6
372.5
405.9
428.2
451.0
456.8
495.8
515.3
533.8
574.6
606.9
649.8
705.1
772.0
816.4
892.7
963.9
1,015.5
1,102.7
1,212.8
1,359.3
1,472.8
1,598.4
1,782.8
1,990.5
2,249.7
2,508.2
2,732.0
3,052.6
3,166.0
3,405.7
3,765.0
3,998.1
4,208.5
3,212.5
3,545.8
3,670.9
3,743.8
3,799.7
3,845.6
3,909.3
3,965.0
4,030.5
4,087.7
4,149.2
4,175.6
4,240.7
4,268.4

Business '
Total

103.2
55.7
90.9
100.1
125.0
158.5
192.3
210.9
213.0
211.6
234.1
260.1
259.0
286.7
331.4
349.4
369.5
370.3
403.3
425.2
447.7
453.9
492.7
511.8
530.0
570.1
602.0
644.4
699.3
766.3
810.4
885.9
957.1
1,008.2
1,093.4
1,201.6
1,343.1
1,453.3
1,580.9
1,761.7
1,965.1
2,219.1
2,464.4
2,684.4
3,000.5
3,114.8
3,355.9
3,717.5
3,957.0
4,171.2
3,163.8
3,494.6
3,622.1
3,697.7
3,751.3
3,798.8
3,866.8
3,923.8
3,991.4
4,045.8
4,106.0
4,140.7
4,203.2
4,234.9

Total !

96.0
49.3
81.0
89.8
113.0
140.4
163.4
174.9
173.5
184.8
211.3
236.4
232.9
259.0
296.7
310.7
329.3
329.1
359.4
378.1
397.3
399.5
435.5
449.9
463.9
499.1
526.0
562.1
610.7
666.7
699.7
762.0
820.1
856.3
927.4
1,020.0
1,145.0
1,237.5
1,341.2
1,500.7
1,682.1
1,908.4
2,125.3
2,306.8
2,582.8
2,658.2
2,866.6
3,194.3
3,394.0
3,572.3
2,693.6
2,994.8
3,110.6
3,178.6
3,224.7
3,263.2
3,317.2
3,365.7
3,424.7
3,468.4
3,519.9
3,546.3
3,600.7
3,622.2

Nonfarm l

84.8
43.6
73.0
82.0
103.4
128.0
149.8
156.9
153.5
165.2
189.3
214.4
213.3
238.3
271.1
286.7
306.3
306.7
338.8
361.4
380.1
378.9
417.9
432.5
445.0
478.6
506.2
544.3
590.0
641.7
677.8
740.4
798.8
831.2
897.5
988.8
1,098.3
1,190.0
1,288.4
1,448.7
1,631.7
1,850.0
2,054.5
2,236.4
2,498.9
2,581.3
2,802.1
3,117.2
3,324.0
3,498.7
2,607.7
2,932.7
3,022.7
3,102.4
3,148.2
3,195.3
3,247.4
3,301.3
3,357.8
3,389.4
3,451.7
3,470.1
3,524.0
3,549.3

1
2

Includes compensation of employees in government enterprises.
Compensation of government employees.
Source: Department of Commerce, Bureau of Economic Analysis.




254

Farm

9.7
4.6
6.3
6.4
8.9
13.0
15.3
15.3
16.0
18.8
20.2
23.3
18.8
20.0
22.9
22.2
20.3
19.7
18.8
18.6
18.4
20.7
19.0
20.2
20.2
20.4
20.5
19.3
21.9
22.8
22.2
22.7
25.2
26.3
28.1
32.8
51.0
49.2
50.3
48.5
50.4
60.3
71.8
65.5
79.8
77.0
59.3
79.0
75.5
68.1
79.0
59.6
82.9
79.4
77.0
76.6
76.1
76.1
72.4
77.5
71.8
71.6
66.4
62.6

Statistical
discrepancy
1.5
1.2
1.7
1.4
.7
-.7
17
2.7
4.0
.7
1.8
-1.3
.8
.8
2.7
1.8
2.6
2.7
1.8
-1.9
-1.2
-.1
-1.5
-2.8
12
.0
6
-1.4
-1.2
2.1
4
-1.1
39
-1.1
1.8
-1.6
43
-1.7
2.5
3.6
.0
-1.9
-1.0
4.9
4.1
-.1
5.2
-1.9
-5.5
5.4
6.8
2.5
5.0
32
-.6
86
-6.4
-11.7
-5.5
1.6
-3.6
4.6
10.3
10.3

Households
and
institutions
2.9
1.7
2.3
2.4
2.5
2.9
3.2
3.7
4.1
4.5
5.1
5.6
5.9
6.5
6.9
7.2
7.8
8.1
9.1
9.9
10.6
11.5
12.4
13.9
14.5
15.6
16.7
17.9
19.3
21.3
23.4
26.1
29.5
32.4
35.6
39.0
43.0
47.2
52.0
57.1
62.4
70.2
78.6
89.3
101.0
112.7
122.9
132.3
142.1
153.1
116.9
126.6
128.9
131.3
133.3
135.9
138.2
140.5
143.4
146.2
149.5
152.0
154.4
156.6

Government 2
Total

4.4
4.7
7.6
7.8
9.5
15.2
25.6
32.3
35.3
22.4
17.6
18.1
20.1
21.2
27.7
31.5
32.4
33.0
34.8
37.2
39.8
42.9
44.8
48.1
51.6
55.4
59.3
64.4
69.3
78.4
87.4
97.8
107.5
119.5
130.3
142.6
155.0
168.7
187.7
203.8
220.5
240.5
260.4
288.3
316.7
343.9
366.4
390.9
420.9
445.9
353.4
373.1
382.6
387.9
393.4
399.7
411.5
417.6
423.3
431.2
436.7
442.5
448.1
456.2

Federal

0.9
1.2
3.5
3.5
5.1
10.7
21.0
27.3
30.0
L6.2
10.3
9.6
10.7
11.1
16.6
19.3
19.1
18.3
19.0
19.6
20.2
21.3
21.7
22.6
23.6
25.2
26.5
28.5
30.0
34.3
37.8
41.9
44.9
48.4
51.1
54.9
57.1
61.1
66.5
70.9
75.5
81.7
86.9
96.1
107.4
117.0
124.7
132.0
140.7
145.1
120.7
126.0
130.5
131.4
132.4
133.7
139.1
140.0
140.5
143.4
144.0
144.7
145.2
146.4

State
and
local
3.5
3.5
4.2
4.3
4.4
4.5
4.7
4.9
5.4
6.2
7.3
8.5
9.4
10.1
11.2
12.3
13.3
14.7
15.8
17.6
19.6
21.6
23.1
25.5
27.9
30.2
32.9
35.9
39.3
44.1
49.5
55.9
62.6
71.1
79.3
87.7
97.9
107.6
121.1
132.9
145.0
158.9
173.5
192.2
209.3
226.9
241.7
258.9
280.1
300.8
232.6
247.2
252.1
256.4
261.0
266.0
272.4
277.6
282.8
287.8
292.6
297.8
302.9
309.8

Rest
of the
world

0.8
.3
.4
.4
.5
.5
.4
.5
.4
.7
1.2
1.5
1.4
1.5
2.0
2.2
2.1
2.2
2.6
3.0
3.4
2.9
3.1
3.5
3.8
4.5
4.9
5.4
5.8
5.6
6.0
6.8
6.8
7.3
9.3
11.2
16.2
19.5
17.5
21.1
25.4
30.5
43.8
47.6
52.1
51.2
49.9
47.5
41.2
37.3
48.7
51.3
48.9
46.0
48.4
46.8
42.5
41.2
39.1
41.9
43.2
34.9
37.4
33.5

TABLE B-9.—Gross national product by sector in 1982 dollars, 1929-86
[Billions of 1982 dollars; quarterly data at seasonally adjusted annual rates]
Gross domestic product
Year or quarter

Gross
national
product

Business »
Total

Total 1

Nonfarm l

Farm

Statistical
discrepancy

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
1982
1983
1984
1985
1986"
1982: IV

709.6
498.5
716.6
772.9
909.4
1,080.3
1,276.2
1,380.6
1,354.8
1,096.9
1,066.7
1,108.7
1,109.0
1,203.7
1,328.2
1,380.0
1,435.3
1,416.2
1,494.9
1,525.6
1,551.1
1,539.2
1,629.1
1,665.3
1,708.7
1,799.4
1,873.3
1,973.3
2,087.6
2,208.3
2,271.4
2,365.6
2,423.3
2,416.2
2,484.8
2,608.5
2,744.1
2,729.3
2,695.0
2,826.7
2,958.6
3,115.2
3,192.4
3,187.1
3,248.8
3,166.0
3,279.1
3,489.9
3,585.2
3,676.5
3,159.3

704.6
496.1
713.5
770.3
906.0
1,077.1
1,273.4
1,377.7
1,352.6
1,093.3
1,061.6
1,102.5
1,103.4
1,197.4
1,320.3
1,371.7
1,427.4
1,407.8
1,485.5
1,515.0
1,539.7
1,529.7
1,619.1
1,654.1
1,696.6
1,785.6
1,858.5
1,957.1
2,070.6
2,192.5
2,255.0
2,347.9
2,406.2
2,399.1
2,464.1
2,584.9
2,711.8
2,693.5
2,665.7
2,793.7
2,921.2
3,073.0
3,136.6
3,131.7
3,193.6
3,114.8
3,231.2
3,446.0
3,548.3
3,643.8
3,111.3

611.6
404.9
586.8
635.5
738.7
832.9
891.6
934.3
914.3
866.3
886.1
925.4
916.7
1,002.8
1,080.5
1,114.7
1,170.0
1,154.6
1,229.7
1,254.1
1,274.0
1,260.4
1,345.8
1,369.7
1,403.2
1,480.9
1,546.7
1,635.2
1,737.4
1,837.1
1,880.9
1,961.1
2,009.8
2,004.4
2,068.0
2,186.6
2,309.1
2,283.9
2,249.6
2,374.8
2,497.2
2,639.2
2,696.4
2,683.2
2,739.8
2,658.2
2,770.1
2,978.3
3,071.5
3,158.9
2,654.1

547.8
338.7
518.3
571.2
675.8
774.4
841.6
862.5
839.3
809.0
828.6
875.1
858.5
941.4
1,014.9
1,050.9
1,101.3
1,084.2
1,161.5
1,199.6
1,219.0
1,199.7
1,291.6
1,317.2
1,346.7
1,421.1
1,488.7
1,581.6
1,681.8
1,776.5
1,824.2
1,908.3
1,962.1
1,946.4
2,001.4
2,128.0
2,256.6
2,226.5
2,180.6
2,306.6
2,434.9
2,581.0
2,633.2
2,613.1
2,659.6
2,581.3
2,703.7
2,910.4
2,998.9
3,080.7
2,567.1

54.1
56.6
56.4
54.6
58.1
62.4
59.2
57.2
53.7
54.0
49.9
55.2
55.0
58.3
56.0
57.2
59.3
60.9
62.0
60.7
58.8
61.2
58.8
61.1
60.2
59.8
59.8
57.7
59.0
54.7
57.7
55.7
57.2
60.7
62.3
62.0
61.1
60.7
64.8
62.5
62.2
61.0
64.6
64.2
75.7
77.0
61.3
69.6
77.6
73.4
80.3

9.7
9.6
12.1
9.7
4.8
-4.0
-9.2
14.6
21.3
3.3
7.6
-4.9
3.2
3.1
9.7
6.5
9.4
9.5
6.2
62
-3.8

1983: IV
1984:1
II
Ill
IV
1985- 1
||
III .
IV

3,365.1
3,444.7
3,487.1
3,507.4
3,520.4
3,547.0
3,567.6
3,603.8
3,622.3

3,316.6
3,399.1
3,444.4
3,462.9
3,477.6
3,508.5
3,530.5
3,568.8
3,585.2

2,853.2
2,934.4
2,977.9
2,994.5
3,006.3
3,034.8
3,054.8
3,090.8
3,105.4

2,795.3
2,860.9
2,912.7
2,925.6
2,942.2
2.965.6
2,988.0
3,016.9
3,025.0

1986: 1
II
Ill
IV P

3,655.9
3,661.4
3,686.4
3,702.4

3,617.9
3,630.6
3,653.8
3,673.1

3,135.8
3,146.9
3,168.0
3,184.8

3,061.6
3,067.5
3,087.3
3,106.3

1
2

Includes compensation of employees in government enterprises.
Compensation of government employees.
Source.- Department of Commerce, Bureau of Economic Analysis.




255

Households
and
institutions

Government 2
Total

Federal

State
and
local

Rest
of the
world

50
4.8
6.7

34.4
27.1
33.3
35.8
35.8
36.9
34.3
34.3
34.4
35.4
37.9
41.2
42.4
45.0
46.1
46.2
47.7
48.4
53.2
56.1
57.7
60.7
62.7
67.4
68.0
70.7
72.5
74.6
77.4
80.4
83.1
85.6
88.2
87.0
88.8
91.2
93.4
93.9
96.4
97.0
98.0
101.0
103.7
107.3
109.9
112.7
114.9
117.7
121.2
125.5
113.8

58.6
64.0
93.4
99.0
131.5
207.4
347.6
409.1
403.8
191.6
137.7
135.8
144.2
149.6
193.7
210.7
209.7
204.8
202.6
204.8
208.0
208.6
210.6
217.1
225.4
233.9
239.2
247.3
255.8
275.0
291.0
301.2
308.2
307.7
307.4
307.1
309.3
315.7
319.6
321.9
326.0
332.8
336.5
341.2
343.9
343.9
346.3
350.0
355.5
359.4
343.5

13.2
16.2
38.9
44.1
76.2
152.9
294.6
357.5
350.7
135.0
76.7
73.2
77.1
80.3
122.8
137.5
133.2
125.0
119.2
116.1
114.5
109.5
107.5
108.9
111.5
116.7
116.1
116.8
117.3
128.1
138.5
140.7
141.0
133.2
125.5
118.3
113.6
113.5
112.8
112.7
112.7
113.9
113.0
114.4
115.8
117.0
119.0
120.7
122.6
123.2
117.6

45.3
47.9
54.6
55.0
55.3
54.4
52.9
51.7
53.2
56.6
61.0
62.6
67.1
69.3
71.0
73.3
76.5
79.8
83.4
88.7
93.5
99.2
103.1
108.2
113.9
117.3
123.1
130.5
138.5
146.9
152.4
160.5
167.2
174.5
181.9
188.8
195.7
202,1
206.8
209.2
213.3
219.0
223.5
226.8
228.1
226.9
227.3
229.3
232.9
236.2
225.9

4.9
2.4
3.1
2.6
3.4
3.1
2.7
2.9
2.3
3.6
5.1
6.2
5.6
6.2
7.9
8.3
7.9
8.4
9.4
10.7
11.5
9.5
10.0
11.1
12.1
13.9
14.9
16.1
17.0
15.9
16.3
17.7
17.0
17.1
20.7
23.7
32.2
35.9
29.3
33.0
37.4
42.1
55.7
55.5
55.2
51.2
47.9
43.9
37.0
32.7
48.0

55.6
68.7
68.2
69.4
72.1
75.0
77.5
78.9
79.0

2.3
4.7
-3.0
5
-8.0
-5.8
-10.7
-4.9
1.4

115.8
116.2
117.3
118.0
119.3
119.7
120.6
121.8
122.9

347.5
348.4
349.2
350.4
352.0
354.0
355.1
356.2
356.9

119.4
120.0
120.5
120.8
121.3
122.5
122.6
122.8
122.6

228.1
228.4
228.7
229.6
230.6
231.6
232.5
233.4
234.3

48.5
45.6
42.7
44.5
42.8
38.5
37.1
35.1
37.1

77.4
75.3
71.5
69.4

-3.2
4.0
9.1
9.1

124.1
125.1
126.0
127.0

357.9
358.7
359.8
361.3

122.9
123.0
123.2
123.8

235.0
235.7
236.6
237.5

38.1
30.8
32.7
29.3

-"le
87
-3.7
-L8
-4.1
-3.4
5.9
-1.0
-2.8
95
-2.7
4.2
-3.4
-8.6
-3.3
4.2
5.6
.1
-2.8
-1.4
5.9
4.4

l!o
17

TABLE B-10.—Gross national product by industry, 1947-85
[Billions of dollars]
Gross domestic product
Year

Gross
FiGovernManufacturing
KcSl
nation- AgriTrans- Whnlo nance,
ment Statist!- Poet
wnoieportation sale insurand
of the
al
culture,
pal
Concai
prod- forestry, Mining struction
Dura- Nonand
and ance, Services govern- discrep- world
Total
uct
ble durable public retail and
ment
and
ancy
entergoods goods utilities trade real
fisheries
estate
prises

66.2
74.7
72.2

33.5
38.2
37.1

32.7
36.6
35.0

21.0
23.7
23.9

44.2
48.4
48.0

23.8
26.9
29.2

20.2
21.9
22.6

20.2
20.8
23.2

1.8
-1.3
.8

1.2
1.5
1.4

9.3
10.2
10.2
10.7
11.0

13.2 84.0
15.6 99.0
16.9 103.3
17.5 112.5
17.7 106.7

45.9
55.5
59.0
66.1
61.0

38.1
43.4
44.3
46.4
45.7

26.6
30.2
32.2
34.2
33.8

51.5
56.8
59.0
60.4
61.6

32.2
35.5
39.1
43.3
47.0

24.2
26.4
28.1
30.2
31.6

24.2
31.2
35.7
36.8
37.4

.8
2.7
1.8
2.6
2.7

1.5
2.0
2.2
2.1
2.2

20.0
19.8
19.6
22.1
20.4

12.5
13.6
13.7
12.6
12.5

19.1
21.3
22.2
21.8
23.7

121.3
127.2
131.8
124.3
141.8

70.8
73.9
78.0
70.0
81.6

50.4
53.3
53.9
54.3
60.3

36.8
39.6
41.7
41.9
45.1

67.0
71.3
75.0
76.4
83.3

50.7
54.3
58.5
63.1
68.2

35.1
38.7
41.7
44.0
48.3

39.0
41.2
44.5
47.8
50.8

1.8
-1.9
-1.2
-.1
-1.5

2.6
3.0
3.4
2.9
3.1

515.3
533.8
574.6
606.9
649.8

21.7
21.8
22.3
22.3
21.4

12.8
12.9
13.1
13.4
13.8

24.3
25.3
27.1
28.9
31.6

144.4
145.0
158.6
168.1
180.2

82.5
81.6
91.9
98.0
105.7

61.9
63.3
66.8
70.1
74.5

47.3
48.9
51.9
54.8
58.3

85.7
88.0
94.1
98.2
107.1

72.8
76.9
81.7
86.5
92.0

51.4
54.9
59.2
63.3
69.0

54.2
57.6
62.1
67.0
72.5

-2.8
-1.2
.0
-.6
-1.4

3.5
3.8
4.5
4.9
5.4

1965
1966
1967
1968
1969

705.1
772.0
816.4
892.7
963.9

24.2
25.3
24.9
25.7
28.6

14.0
14.6
15.2
16.2
17.1

34.7
37.9
39.7
43.5
48.7

198.4
217.4
222.9
243.6
257.1

118.4
130.8
133.7
146.1
154.2

80.0
86.6
89.2
97.5
102.9

62.6
67.4
70.7
76.4
82.6

115.0
124.1
132.9
146.8
159.2

98.9
106.9
115.6
125.1
136.3

74.6
82.5
90.6
99.1
110.5

78.2
88.1
98.4
110.5
121.0

-1.2
2.1
-.4
-1.1
-3.9

5.8
5.6
6.0
6.8
6.8

1970
1971
1972
1973
1974

1,015.5
1,102.7
1,212.8
1,359.3
1,472.8

29.9
32.2
37.4
56.2
55.0

18.7
18.8
20.2
23.4
36.9

51.4
56.5
63.0
70.4
74.5

252.3
265.7
292.5
326.4
338.5

145.9
153.8
172.6
195.4
201.7

106.3
111.9
119.9
131.0
136.7

88.4
97.1
108.0
118.7
129.1

168.7
183.7
202.6
225.6
246.0

145.8
161.4
174.8
190.5
206.7

120.2
130.2
144.6
163.2
179.4

134.0
145.9
160.1
173.1
189.0

-1.1
1.8
-1.6
-4.3
-1.7

7.3
9.3
11.2
16.2
19.5

1975
1976
1977
1978
1979

1,598.4
1,782.8
1,990.5
2,249.7
2,508.2

56.3
55.7
58.9
70.1
83.1

41.3
46.0
50.2
56.5
72.7

76.5
86.2
97.9
115.6
131.4

357.3
409.3
465.3
518.8
561.8

206.3
239.7
277.7
317.4
345.2

151.0
169.7
187.7
201.4
216.5

141.7
160.4
178.9
201.0
216.1

273.7
299.7
332.8
373.5
415.8

221.7
246.1
280.3
326.3
363.3

199.8
224.9
253.4
289.1
328.7

210.1
229.7
247.4
270.3
292.4

2.5
3.6
.0
-1.9
-1.0

17.5
21.1
25.4
30.5
43.8

1980
1981
1982
1983
1984
1985

2,732.0
3,052.6
3,166.0
3,405.7
3,765.0
3,998.1

77.2
92.0
89.6
74.3
94.0
91.5

107.3
143.7
132.1
118.4
125.1
122.8

137.7
138.4
140.9
149.6
171.1
182.2

581.0
643.1
634.6
683.2
766.9
795.8

351.8
385.8
362.5
385.6
446.6
463.1

229.2
257.3
272.1
297.6
320.3
332.8

240.8
269.6
288.4
320.0
350.9
374.4

438.8
483.1
506.5
542.9
610.4
652.5

400.6
449.3
475.1
536.4
577,0
626.6

374.0
422.6
463.6
515.5
581.6
639.4

322.1
354.7
383.9
410.5
442.3
477.4

4.9
4.1
-.1
5.2
-1.9
-5.5

47.6
52.1
51.2
49.9
47.5
41.2

1947
1948
1949

235.2
261.6
260.4

20.8
24.0
19.5

6.8
9.4
8.1

1950
1951
1952
1953
1954

288.3
333.4
351.6
371.6
372.5

20.8
23.9
23.2
21.4
20.8

1955
1956
1957
1958
1959

405.9
428.2
451.0
456.8
495.8

1960
1961
1962
1963
1964

9.1
11.5
11.5

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.




256

TABLE B-ll.—Gross national product by industry in 1982 dollars, 1947-85
[Billions of 1982 dollars]
Gross domestic product
Year

AgriGross
national culture,
forestproduct ry, and
fisheries

Manufacturing

Transpor- Wholetation sale
ConMin- strucNon- and
and
ing tion Total Dura- durable public retail
ble
goods goods util- trade
ities

76.7 226.1 138.1
90.0 238.5 145.0
89.4 226.3 133.2

FiGovern- StaRest
nance,
ment
tisof the
insur- Servand
ance, ices govern- tical Resid- world
dis- ual 1
and
ment
enter- crepreal
estate
prises ancy

1947
1948
1949

1,066.7
1,108.7
1,109.0

55.6
61.3
61.0

67.6
72.4
65.7

88.0 100.0 157.8 103.0 124.7
93.5 98.7 161.9 107.7 128.9
93.1 90.7 166.1 112.2 129.0

1950
1951
1952 .
1953
1954

1,203.7
1,328.2
1,380.0
1,435.3
1,416.2

64.3
62.6
64.2
66.3
68.2

72.8
80.8
81.5
84.3
83.3

100.0
110.9
115.9
119.9
124.8

257.7
288.4
298.2
319.9
296.6

156.7
181.4
190.6
208.4
185.8

101.0
107.0
107.6
111.5
110.8

95.3
104.9
104.5
106.7
104.1

182.1
183.7
189.5
195.6
197.1

119.7
126.4
134.7
142.2
149.5

1955
1956
1957
1958
1959

1,494.9
1,525.6
1,551.1
1,539.2
1,629.1

69.1
67.8
65.9
68.3
65.8

92.0
96.5
96.2
89.1
94.1

133.3
142.7
142.4
147.5
160.4

327.7
330.6
332.5
303.5
338.0

208.5
207.3
208.7
180.1
203.0

119.2
123.3
123.8
123.4
135.0

112.3
117.7
119.9
116.1
123.5

215.0
221.5
225.1
225.0
240.7

1960
1961
1962
1963
1964

1,665.3
1,708.7
1,799.4
1,873.3
1,973.3

68.3 94.2
67.5 95.6
67.1 98.1
67.2 102.2
65.2 105.7

163.1
165.1
172.5
177.5
185.9

338.7
339.4
368.3
397.4
425.4

202.4
199.9
220.5
238.9
259.3

136.3
139.5
147.8
158.5
166.2

127.8
130.0
136.3
143.8
150.4

1965
1966
1967
1968
1969

2,087.6
2,208.3
2,271.4
2,365.6
2,423.3

66.7
62.4
65.4
63.6
65.3

109.4
115.0
120.2
124.7
128.9

193.7
194.4
190.7
190.2
183.6

462.5
497.9
496.6
522.0
536.7

286.9
312.3
311.9
326.2
334.1

175.6
185.6
184.7
195.8
202.6

1970
1971
1972
1973
1974

2,416.2
2,484.8
2,608.5
2,744.1
2,729.3

68.8
70.6
70.9
70.3
69.7

134.5
132.4
134.4
133.4
130.3

168.0
162.7
166.7
170.4
162.3

506.8
515.5
561.2
621.3
591.6

304.8
305.5
336.5
377.0
363.5

1975
1976
1977
1978
1979

2,695.0
2,826.7
2,958.6
3,115.2
3,192.4

73.1
71.5
71.6
71.8
76.1

125.6
124.4
126.2
128.8
130.0

149.4
158.1
165.1
176.7
173.5

547.5
600.6
645.0
683.4
697.1

1980
1981
1982
1983
1984

3,137.1
3,248.8
3,166.0
3,279.1
3,489.9

76.2
88.0
89.6
74.5
84.0

135.6
139.8
132.1
125.4
133.0

161.6
147.4
140.9
147.3
159.9

665.4
676.1
634.6
675.5
748.2

1985 ..

3,585.2

92.2 130.6

156.2
7.6 -13.6
155.5 -4.9 -7.5
3.2 -4.2
164.0

5.1
6.2
5.6

133.8
136.9
139.4
142.7
145.9

169.2
214.0
231.9
230.9
225.4

-.6
2.0
5.3
9.4
3.5

6.2
7.9
8.3
7.9
8.4

160.2
168.8
178.3
184.5
195.9

153.0
161.1
168.6
174.3
183.5

223.4
6.2
66
225.6 -6.2 -11.1
229.2 -3.8 -14.7
-8.1
230.1
232.8 -~4l6 110

9.4
10.7
11.5
9.5
10.0

245.4
247.8
263.9
273.9
290.7

206.5
215.0
226.5
235.9
245.8

190.2
197.7
207.7
217.4
230.7

240.3
87 116
249.2 -3.7 -6.9
258.4
133
264.5 -L8 -19.7
274.0 -4.1 -12.6

11.1
12.1
13.9
14.9
16.1

161.5
174.2
178.1
189.5
200.3

309.8
326.5
335.4
354.8
361.7

259.8
271.1
282.4
296.0
314.0

240.4
253.9
265.2
274.7
287.8

284.3 -3.4 140
5.9 -14.5
305.5
322.3 -1.0
28 liS
332.6
340.2 -9.5 -2.7

17.0
15.9
16.3
17.7
17.0

202.0
210.0
224.8
244.3
228.1

203.9
209.8
223.8
243.0
248.8

367.6
385.7
414.8
437.0
426.2

320.7
335.9
350.9
367.7
381.6

295.7
302.4
320.0
340.2
347.5

339.6
340.0
340.5
343.4
350.6

-2.7 -3.9
4.2
4.8
-3.4
5.1
-8.6 -6.2
-3.3 -11.8

17.1
20.7
23.7
32.2
35.9

325.2
357.4
386.2
415.9
423.5

222.2
243.2
258.9
267.5
273.5

246.4
257.1
268.5
284.8
293.4

433.1
454.4
479.2
502.3
511.7

387.6
403.1
417.7
442.5
459.2

352.4
367.7
388.4
411.9
429.8

355.0
4.2
357.7
5.6
.1
362.9
371.5 -2.8
376.2 -1.4

-8.7
-6.6
-3.4
2.1
-9.0

29.3
33.0
37.4
42.1
55.7

401.5
404.9
362.5
390.4
451.7

263.9
271.2
272.1
285.1
296.4

293.4
296.2
288.4
300.8
317.0

500.4
507.3
506.5
529.1
578.2

464.3
474.2
475.1
489.0
506.1

442.6
462.5
463.6
486.6
519.6

382.7
5.9
385.3
4.4
383.9 -.1
387.4
5.0
392.3 -1.7

3.5
12.5
.0
10.6
9.6

55.5
55.2
51.2
47.9
43.9

295.4 323.3 604.3 523.9 538.5

399.4 -5.0

1.1

37.0

163.1 776.9 481.5

1

3.1
9.7
6.5
9.4
9.5

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.




257

TABLE B-12.—Gross domestic product of nonfinancial corporate business, 1929-86
[Billions of dollars,- quarterly data at seasonally adjusted annual rates]

Year or
quarter

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
1982
1983
1984 .
1985 p
1986
1982: IV
1983: IV
1984- 1
II
Ill
IV
1985: 1
II
Ill
IV
1986: I

II
Ill
IV

Gross
domestic
product
of
nonfinancial
corporate
business

50.4
24.6
44.0
50.6
65.9
83.3
99.1
102.6
95.8
99.8
121.2
138.9
135.2
153.6
176.3
184.0
196.6
193.5
218.5
233.6
244.1
238.0
267.1
277.6
285.2
311.1
331.1
357.7
392.7
430.2
452.6
499.7
542.2
560.4
605.1
671.8
753.0
812.8
881.5
995.5
1,126.1
1,274.1
1,417.4
15408
1,738.4
1,782.2
1,914.2
2,143.7
2,275.1
2,361.5
1,779.4
2,012.5
2,081.7
2,135.9
2,160.3
2,196.8
2,226.0
2,259.1
2,301.3
2,314.1
2,343.6
2,341.5
2,370.0

Capital
consumption
allowances
with
capital Total
consumption
adjustment
5.3 45.1
4.2 20.4
4.8 39.1
5.0 45.6
5.4 60.5
6.0 77.3
6.1 93.0
6.2 96.4
6.3 89.5
7.4 92.4
9.0 112.2
10.5 128.4
11.2 123.9
12.1 141.5
13.9 162.4
14.9 169.1
15.9 180.7
16.8 176.7
17.9 200.7
20.1 213.5
22.1 221.9
23.2 214.8
24.3 242.8
25.3 252.4
26.0 259.1
27.0 284.2
28.2 303.0
29.6 328.0
31.6 361.1
34.5 395.7
37.8 414.8
41.7 458.0
45.7 496.6
50.2 510.2
55.1 550.0
60.5 611.3
65.6 687.4
76.8 736.0
92.5 789.0
103.0 892.5
115.1 1,010.9
130.8 1,143.3
150.7 1,266.7
1725 13682
200.2 1,538.1
223.0 1,559.3
229.8 1,684.4
239.5 1,904.1
252.2 2,023.0
262.9 2,098.5
229.7 1,549.7
232.2 1,780.3
234.9 1,846.7
238.1 1,897.8
241.0 1,919.3
244.1 1,952.7
247.3 1,978.7
250.7 2,008.4
253.9 2,047.4
256.8 2,057.3
258.7 2,084.9
261.9 2,079.6
264.2 2,105.8
267.0

Net domestic product

Domestic income
Corporate profits with inventory valuation and capital
consumption adjustments

Indirect
Combusipensaness Total tion of
tax,
employ- Total
etc.1
ees

3.4 41.8
3.8 16.5
5.1 34.1
5.5 40.2
6.4 54.1
6.8 70.5
7.3 85.7
8.1 88.3
8.9 80.6
10.1 82.3
11.9 100.3
13.2 115.2
13.9 110.1
15.3 126.2
16.5 146.0
18.0 151.1
19.2 161.5
18.6 158.1
20.6 180.0
22.4 191.1
23.7 198.2
24.1 190.7
26.2 216.7
28.5 223.9
29.8 229.4
32.2 252.0
34.2 268.7
36.8 291.2
39.4 321.7
40.7 355.0
43.3 371.5
49.9 408.1
54.9 441.6
59.0 451.2
64.7 485.3
69.4 541.9
76.5 610.8
81.5 654.5
88.3 700.7
95.4 797.1
104.4 906.5
114.1 1,029.2
122.1 1,144.7
138.5 1,229.7
165.9 1,372.3
166.9 1,392.4
182.9 1,501.5
203.7 1,700.4
216.8 1,806.1
226.7 1,871.9
169.7 1,379.9
189.6 1,590.7
196.6 1,650.1
203.3 1.694.5
206.3 1,713.0
208.7 1,744.0
210.9 1,767.8
217.1 1,791.3
218.2 1,829.2
221.1 1,836.2
227.6 1,857.4
220.1 1,859.5
230.0 1,875.8
229.1

32.3
16.7
28.2
31.2
39.8
51.0
62.2
65.1
61.9
67.2
79.1
87.7
85.2
94.7
110.2
118.2
128.6
126.4
138.4
151.3
159.0
155.8
171.5
181.2
185.3
200.1
211.1
226.7
246.5
274.0
292.3
323.2
358.8
378.7
402.0
447.1
505.9
556.8
580.4
656.3
741.0
847.4
962.0
1,051.1
1,160.5
1,203.9
1,266.1
1,401.1
1,491.5
1,555.7
1,206.5
1,319.7
1,361.2
1,389.3
1,414.4
1,439.6
1,461.8
1,482.2
1,498.4
1,523.5
1,542.8
1,545.7
1,557.0
1,577.1

8.0
-1.9
4.4
7.6
13.0
18.2
22.4
22.2
17.7
14.4
20.4
26.6
23.9
30.6
34.7
31.7
31.5
30.1
40.0
38.1
37.0
32.2
42.1
39.2
40.1
47.3
52.8
59.3
69.1
73.7
70.5
74.8
69.6
55.4
65.2
75.7
82.4
69.4
91.6
113.3
134.9
146.0
139.1
123.1
144.2
111.9
165.6
216.7
224.2
229.2
100.1
199.5
214.3
225.0
212.5
214.9
214.6
218.2
240.8
223.3
225.5
225.9
232.7

Profits
Profits Profits
before tax
tax liability Total
8.4
.6
6.1
8.8
16.4
20.1
23.6
22.2
17.8
22.0
29.1
31.8
24.9
38.5
39.1
33.8
34.9
32.1
42.0
41.8
39.8
33.7
43.1
39.7
39.5
44.2
48.9
55.4
65.2
70.3
66.5
73.1
69.6
57.0
65.6
76.8
96.9
107.2
109.2
138.3
160.5
182.1
195.8
181.8
181.5
129.7
159.3
189.3
170.3
171.7
116.3
183.2
202.2
201.1
179.6
174.2
164.9
161.1
177.5
177.5
156.3
165.7
176.8

1.2
U
2.7
7.5
11.2
13.8
12.6
10.2
8.6
10.8
11.8
9.3
16.9
21.2
17.8
18.5
15.6
20.2
20.1
19.1
16.2
20.7
19.2
19.5
20.6
22.8
24.0
27.2
29.5
27.8
33.6
33.3
27.2
29.9
33.8
40.2
42.2
41.5
53.0
59.9
67.1
69.6
67.0
63.9
46.3
59.4
74.4
66.5
75.7
41.0
70.6
81.5
80.8
69.1
66.2
63.6
61.5
70.5
70.3
68.7
71.7
77.9

7.3
.1
4.7
6.1
9.0
8.9
9.8
9.6
7.6
13.4
18.3
20.0
15.6
21.6
17.9
16.0
16.4
16.4
21.8
21.8
20.7
17.5
22.4
20.5
20.1
23.5
26.2
31.4
38.0
40.8
38.6
39.5
36.2
29.8
35.6
43.0
56.7
65.0
67.7
85.4
100.6
115.0
126.2
114.8
117.6
83.4
99.9
114.9
103.8
96.1
75.4
112.7
120.6
120.3
110.5
108.0
101.3
99.6
107.0
107.2
87.6
94.0
98.9

1
Indirect business tax and nontax liability plus business transfer payments less subsidies.
Source: Department of Commerce, Bureau of Economic Analysis.




258

Inventory
valuation
Divi- Undis- adjustdends tributed ment
profits

Profits after tax

5.1
2.0
3.3
3.5
3.9
3.7
3.9
4.1
4.1
4.8
5.5
6.0
6.0
7.5
7.1
7.1
7.3
7.4
8.5
9.0
9.3
9.3
10.0
10.6
10.6
11.4
12.6
13.7
15.6
16.8
17.5
19.1
19.1
18.5
18.5
20.1
21.1
21.7
24.8
27.8
32.0
37.2
39.3
45.5
53.4
59.7
66.5
72.9
74.3
80.4
62.2
68.8
70.1
74.3
74.3
72.9
69.1
80.6
72.8
74.6
74.8
85.6
79.8
814

2.2
-1.9
1.4
2.6
5.0
5.2
5.8
5.6
3.5
8.6
12.8
14.0
9.6
14.1
10.8
8.8
9.1
9.0
13.4
12.7
11.4
8.2
12.4
9.9
9.5
12.2
13.5
17.7
22.4
24.0
21.2
20.4
17.1
11.3
17.1
22.9
35.6
43.3
42.9
57.6
68.6
77.8
86.9
69.3
64.2
23.7
33.4
42.0
29.5
15.6
13.2
43.9
50.6
45.9
36.2
35.1
32.1
19.1
34.1
32.6
12.8
8.3
19.1

0.5
-2.1
-.7
-.2
-2.5
-1.2
-.8
-.3
-.6
-5.3
-5.9
22
1.9
-5.0
-1.2
1.0
-1.0

-7.7
-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
200
-39.5
-11.0
149
-16.6
-25.3
-43.2
-43.1
-24.2
104
-10.9
-5.5
-.6
6.3
-13.4
-8.1
-13.6
-4.9
-1.8
-1.6
-.5
1.6
6.1
-9.4
16.5
10.6
6.1
-8.0

Capital Net
con- intersump- est
tion
adjustment

-0.9
-~LO
-1.0
-1.0
-.7
-.4
.3
-2.3
-2.8
30
-2.9
-2.9
-3.2
-3.0
24
-1.6
-~L1
-1.2
-1.2
-.8
_2
'.3
3.1
3.9
4.4
5.2
5.5
5.5
5.3
5.9
5.0
4.2
5.5
5.6
1.7
-6.6
102
-9.0
-10.9
-13.5
155
-13.1
-7.5
17.1
32.9
54.5
51.1
-2.8
24.4
25.7
28.9
34.7
42.3
50.2
55.5
57.2
55.2
52.7
49.7
49.7
52.3

1.4
1.7
1.5
1.4
1.3
1.3
1.1
1.0
1.0
.7
.8
.9
1.0
.9
1.1
1.2
1.3
1.6
1.6
1.8
2.2
2.7
3.1
3.5
4.0
4.5
4.8
5.3
6.1
7.4
8.8
10.1
13.2
17.1
18.1
19.2
22.5
28.3
28.7
27.5
30.6
35.9
43.5
55.5
67.5
76.6
69.8
82.6
90.4
87.0
73.4
71.5
74.6
80.2
86.1
89.5
91.4
90.9
89.9
89.3
89.1
87.8
86.1
85.0

TABLE B-13.—Output, costs, and profits of nonfinancial corporate business, 1948-86
[Quarterly data at seasonally adjusted annual rates]

Year or
quarter

Gross d<)mestic
produ rt nf
nonfin ancial
corpc rate
busirless
(billio ns of
doll; rs)

Current-dollar cost and profit per unit of output (dollars) 1

Total
cost
and
profit 2

Capital
consumption
allowances
with
capital
consumption
adjustment

Indirect
business
tax,
etc.3

Compensation
of
employees

0.019 0.025
.022
.027

0.163
.165

Corporate profits with
inventory valuation and
capital consumption
adjustments

Net
interest

Profits
tax
liability

Profits
after
tax 4

0.049
.046

0.022
.018

0.027
.028

Output Compenper hour sation
of all per hour
employof all
ees
employ(1982
ees
dollars) (dollars)

0.002
.002

Current
dollars

1982
dollars

1948
1949

138.9
135.2

538.9
515.7

0.258
.262

1950
1951 ... .
1952
1953 ..
1954
1955
1956
1957
1958
1959

153.6
176.3
184.0
196.6
193.5
218.5
233.6
244.1
238.0
267.1

570.4
622.4
637.3
668.4
650.8
719.3
747.0
758.1
725.2
798.5

.269
.283
.289
.294
.297
.304
.313
.322
.328
.335

.021
.022
.023
.024
.026
.025
.027
.029
.032
.030

.027
.026
.028
.029
.029
.029
.030
.031
.033
.033

.166
.177
.185
.192
.194
.192
.203
.210
.215
.215

.054
.056
.050
.047
.046
.056
.051
.049
.044
.053

.030
.034
.028
.028
.024
.028
.027
.025
.022
.026

.024
.022
.022
.020
.022
.028
.024
.024
.022
.027

.002
.002
.002
.002
.002
.002
.002
.003
.004
.004

12.053
12.506

2.589
2.685

1960
1961
1962
1963
1964
1965
1966
1967 ..
1968
1969

277.6
285.2
311.1
331.1
357.7
392.7
430.2
452.6
499.7
542.2

820.8
839.1
904.8
964.4
1,029.0
1,111.7
1,189.5
1,217.0
1,286.5
1,339.6

.338
.340
.344
.343
.348
.353
.362
.372
.388
.405

.031
.031
.030
.029
.029
.028
.029
.031
.032
.034

.035
.035
.036
.035
.036
.035
.034
.036
.039
.041

.221
.221
.221
.219
.220
.222
.230
.240
.251
.268

.048
.048
.052
.055
.058
.062
.062
.058
.058
.052

.023
.023
.023
.024
.023
.024
.025
.023
.026
.025

.024
.025
.029
.031
.034
.038
.037
.035
.032
.027

.004
.005
.005
.005
.005
.005
.006
.007
.008
.010

12.672
13.058
13.550
14.135
14.655
14.979
15.205
15.344
15.715
15.700

2.797
2.884
2.997
3.093
3.229
3.321
3.502
3.685
3.948
4.206

1970
1971
1972
1973
1974
1975.. .
1976
1977
1978
1979

560.4
605.1
671.8
753.0
812.8
881.5
995.5
1,126.1
1,274.1
1,417.4

1,325.2
1,360.6
1,461.1
1,569.7
1,533.4
1,488.1
1,583.5
1,686.6
1,789.8
1,840.4

.423
.445
.460
.480
.530
.592
.629
.668
.712
.770

.038
.040
.041
.042
.050
.062
.065
.068
.073
.082

.045
.048
.048
.049
.053
.059
.060
.062
.064
.066

.286
.295
.306
.322
.363
.390
.414
.439
.473
.523

.042
.048
.052
.053
.045
.062
.072
.080
.082
.076

.021
.022
.023
.026
.028
.028
.033
.036
.037
.038

.021
.026
.029
.027
.018
.034
.038
.044
.044
.038

.013
.013
.013
.014
.018
.019
.017
.018
.020
.024

15.713
16.158
16.490
16.832
16.331
16.691
16.S86
17.257
17.358
17.221

4.490
4.774
5.045
5.425
5.930
6.510
7.040
7.581
8.219
9.002

1980.. ..
1981
1982 .. . .
1983
1984 .. .
1985
1986 *

1,540.8
1,738.4
1,782.2
1,914.2
2,143.7
2,275.1
2,361.5

1,807.9
1,837.2
1,782.2
1,886.0
2,030.8
2,105.5
2,144.9

.852
.946
1.000
1.026
1.056
1.081
1.101

.095
.109
.125
.123
.118
.120
.123

.077
.090
.094
.098
.100
.103
.106

.581
.632
.676
.679
.690
.708
.725

.068
.078
.063
.089
.107
.106
.107

.037
.035
.026
.032
.037
.032
.035

.031
.044
.037
.057
.070
.075
.072

.031
.037
.043
.037
.041
.043
.041

17.096
17.194
17.318
17.867
18.224
18.436

9.939
10.861
11.699
12.124
12.574
13.060

1982- IV

1,779.4 1,760.2

1.011

.131

.096

.685

.057

.023

.034

.042

17.383

11.915

1983: IV

2,012.2 1,940.5

1.037

.120

.098

.680

.103

.036

.066

.037

18.027

12.259

1984- 1
II
Ill
IV

2,081.7
2,135.9
2,160.3
2,196.8

1,993.8
2,031.6
2,038.4
2,059.4

1.044
1.051
1.060
1.067

.118
.117
.118
.119

.099
.100
.101
.101

.683
.684
.694
.699

.107
.111
.104
.104

.041
.040
.034
.032

.067
.071
.070
.072

.037
.039
.042
.043

18.172
18.275
18.201
18.250

12.406
12.498
12.630
12.758

1985- 1
II
Ill
IV

2,226.0
2,259.1
2,301.3
2,314.1

2,075.7
2,094.4
2,124.6
2,127.3

1.072
1.079
1.083
1.088

.119
.120
.119
.121

.102
.104
.103
.104

.704
.708
.705
.716

.103
.104
.113
.105

.031
.029
.033
.033

.073
.075
.080
.072

.044
.043
.042
.042

18.285
18.384
18.604
18.472

12.878
13.011
13.121
13.229

1986: 1 .. .
II
Ill"

2,343.6 2,141.0
2,341.5 2,135.3
2,370.0 2,142.2

1.095
1.097
1.106

.121
.123
.123

.106
.103
.107

.721
.724
.727

.105
.106
.109

.032
.034
.036

.073
.072
.072

.042
.041
.040

18.449
18.438
18.450

13.294
13.347
13.407

1
Output
2

Total

is measured by gross domestic product of nonfinancial corporate business in 1982 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).




259

TABLE B-14.—Personal consumption expenditures, 1929-86
[Billions of dollars; quarterly data at seasonally adjusted annual rates]

Year or quarter

1929
1933
1939

Personal
consumption
expenditures

Durable goods
Durable
goods

Nondurable
goods

Services

Furniture
Motor
and
vehicles household
and parts
equipment

,
Other

Nondurable goods

Food

Clothing
and
shoes

77.3
45.8
67.0

9.2
3.5
6.7

37.7
22.3
35.1

30.4
20.1
25.2

3.3
1.1
2.3

4.7
1.9
3.4

1.2
.5
1.0

19.5
11.5
19.1

9.4
4.6
7.1

7LO
80.8
88.6
99.5
108.2
119.6
143.9
161.9
174.9
178.3

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
28.3
31.0
34.3
37.2
39.7
45.4
50.6
55.5
58.4

2.8
3.5
'.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

192.1
208.1
219.1
232.6
239.8
257.9
270.6
285.3
294.6
316.3

30.8
29.9
29.3
32.7
32.1
38.9
38.2
39.7
37.2
42.8

98.2
109.2
114.7
117.8
119.7
124.7
130.8
137.1
141.7
148.5

63.2
69.0
75.1
82.1
88.0
94.3
101.6
108.5
115.7
125.0

13.7
12.2
11.3
13.9
13.0
17.8
15.8
17.3
14.8
18.9

13.7
14.1
14.0
14.7
14.8
16.4
17.3
17.2
16.9
18.1

3.3
3.6
3.9
4.1
4.3
4.6
5.0
5.2
5.4
5.8

53.9
60.7
64.1
65.4
66.8
68.6
71.4
75.1
77.9
80.7

19.6
21.3
22.0
22.2
22.3
23.3
24.4
24.5
24.9
26.4

1960
1961
1962
1963
1964
1965
1966
1967
1968 .
1969

330.7
341.1
361.9
381.7
409.3
440.7
477.3
503.6
552.5
597.9

43.5
41.9
47.0
51.8
56.8
63.5
68.5
70.6
81.0
86.2

153.2
157.4
163.8
169.4
179.7
191.9
208.5
216.9
235.0
252.2

134.0
141.8
151.1
160.6
172.8
185.4
200.3
216.0
236.4
259.4

19.7
17.8
21.5
24.4
26.0
29.9
30.3
30.0
36.1
38.4

18.0
18.3
19.3
20.7
23.2
25.1
28.2
30.0
32.9
34.7

5.8
5.8
6.3
6.8
7.6
8.4
10.0
10.6
12.0
13.2

82.7
84.8
87.1
89.5
94.6
101.0
109.0
112.3
121.6
130.5

27.0
27.6
29.0
29.8
32.4
34.1
37.4
39.2
43.2
46.5

1970
1971 .
1972
1973
1974
1975
1976
1977
1978
1979

640.0
691.6
757.6
837.2
916.5
1,012.8
1,129.3
1,257.2
1,403.5
1,566.8

85.7
97.6
111.2
124.7
123.8
135.4
161.5
184.5
205.6
219.0

270.3
283.3
305.1
339.6
380.9
416.2
452.0
490.4
541.8
613.2

284.0
310.7
341.3
373.0
411.9
461.2
515.9
582.3
656.1
734.6

35.9
44.9
51.5
56.7
50.3
55.8
72.7
85.4
95.1
96.9

35.7
37.8
42.4
47.9
51.5
54.5
60.2
67.1
73.9
82.1

14.1
14.9
17.2
20.1
22.0
25.0
28.5
32.0
36.6
40.0

142.1
147.5
158.5
176.1
198.2
218.7
236.2
255.9
282.2
317.3

47.8
51.7
56.4
62.5
66.0
70.8
76.6
84.1
94.8
102.2

1980
1981
1982
1983
1984
1985
1986 *

1,732.6
1,915.1
2,050.7
2,234.5
2,428.2
2,600.5
2,762.4

219.3
239.9
252.7
289.1
331.2
359.3
388.3

681.4
740.6
771.0
816.7
870.1
905.1
932.7

831.9
934.7
1,027.0
1,128.7
1,227.0
1,336.1
1,441.3

90.3
100.5
108.9
130.4
154.5
169.2
182.3

86.2
92.7
95.7
107.1
118.9
126.8
137.0

42.8
46.6
48.1
51.6
57.8
63.3
69.0

349.1
376.5
398.8
421.9
449.9
469.3
492.8

109.0
119.9
124.4
135.1
147.2
155.2
164.8

1982- IV

2,117.0

263.8

786.6

1,066.5

115.7

99.1

49.0

407.0

126.5

1983- IV

2,315.8

310.0

837.9

1,167.9

144.4

112.4

53.2

430.8

141.1

1984:1
II
Ill
IV

2,363.8
2,416.1
2,445.6
2,487.2

321.2
331.3
331.8
340.4

855.7
870.3
873.9
880.3

1,186.9
1,214.5
1,239.9
1,266.5

150.4
155.8
154.4
157.6

115.6
118.3
119.2
122.3

55.2
57.2
58.3
60.4

440.4
447.9
454.3
456.9

144.4
148.2
146.6
149.7

1985:1
||
III
IV

2,530.9
2,576.0
2,627.1
2,667.9

347.7
354.0
373.3
362.0

888.2
902.3
907.4
922.6

1,294.9
1,319.7
1,346.4
1,383.2

162.3
165.3
182.8
166.4

123.5
125.9
126.8
130.9

61.9
62.8
63.7
64.7

461.2
468.3
470.4
477.4

151.7
155.0
155.4
158.7

1986: I

2,697.9
2,732.0
2,799.8
2,819.9

360.8
373.9
414.5
404.2

929.7
928.4
932.8
940.0

1,407.4
1,429.8
1,452.4
1,475.7

163.5
172.0
204.7
189.0

132.1
135.8
140.0
140.2

65.3
66.0
69.8
75.0

484.6
490.3
494.0
502.2

161.3
165.0
166.6
166.2

1940
1941
1942
1943
1944
1945 ..
1946
1947
1948
1949

..

II
Ill
IV

See next page for continuation of table.




260

TABLE B-14.—Personal consumption expenditures, 1929-86—Continued
[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Services

Nondurable goods— cont'd
Year or
quarter

Gasoline
and oil

Fuel oil
and coal

Household operation
Other

Housing 1

Total

Electricity
and gas

Other

Transportation

Medical
care

Other

1929
1933
1939

1.8
1.5
2.2

1.6
1.2
1.4

5.4
3.5
5.3

11.7
8.1
9.4

4.0
2.8
3.8

1.2
1.1
1.4

2.9
1.7
2.4

2.6
1.5
2.0

2.2
1.5
2.1

9.9
6.3
8.0

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
11.3
12.8
14.1
14.7

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

2.2
2.4
2.7
2.9
3.3
3.6
4.6
5.6
6.3
6.5

8.2
8.9
9.6
11.0
12.0
12.9
15.0
16.3
17.4
17.8

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
3.5
3.4
3.5
3.8
3.9
4.1
4.2
4.0

15.8
17.6
18.4
19.4
W.3
20.4
21.7
23.2
24.2
26.1

21.7
24.3
27.0
29.9
32.3
34.4
36.7
39.3
42.0
45.0

9.5
10.4
11.2
12.1
12.7
14.2
15.4
16.3
17.4
18.7

3.3
3.7
4.1
4.5
5.0
5.5
6.1
6.5
7.1
7.6

6.2
6.7
7.1
7.6
7.7
8.6
9.3
9.8
10.4
11.1

6.2
6.8
7.3
8.0
8.2
8.5
8.9
9.4
9.7
10.5

6.9
7.4
8.3
9.3
10.2
10.8
11.7
12.8
14.0
15.3

18.8
20.1
21.4
22.9
24.6
26.5
28.9
30.7
32.5
35.4

1960
1961
1962
1963
1964
1965
1966
1967
1968
1969 .

12.0
12.0
12.6
13.0
13.6
14.8
16.0
17.1
18.6
20.5

3.8
3.8
3.8
4.0
4.1
4.4
4.7
4.8
4.7
4.6

27.7
29.2
31.4
33.1
35.0
37.6
41.4
43.5
47.0
50.2

48.2
51.2
54.7
58.0
61.4
65.4
69.5
74.1
79.7
86.8

20.3
21.2
22.4
23.6
25.0
26.5
28.2
30.1
32.3
35.0

8.3
8.8
9.4
9.9
10.4
10.9
11.5
12.2
13.0
14.0

11.9
12.3
12.9
13.7
14.6
15.6
16.7
17.9
19.3
21.0

11.2
11.7
12.2
12.7
13.4
14.5
15.9
17.3
18.9
20.9

16.4
17.5
19.4
21.0
24.1
25.9
28.3
31.1
35.7
40.9

38.0
40.3
42.4
45.3
48.9
53.1
58.5
63.5
69.9
75.8

1970
1971
1972 .. .
1973
1974
1975
1976
1977 ..
1978
1979

21.9
23.2
24.4
28.1
36.1
39.7
43.0
46.9
51.3
66.1

4.4
4.6
5.1
6.3
7.8
8.4
10.1
11.1
12.0
15.8

54.1
56.4
60.8
66.6
72.7
78.5
86.0
92.4
101.4
111.8

94.0
102.7
112.1
123.1
135.1
148.4
163.5
182.4
205.2
231.1

37.7
40.9
45.2
49.6
55.4
63.5
72.3
|81.7
90.9
100.3

15.2
16.6
18.4
20.0
23.5
28.5
32.5
37.6
42.1
46.8

22.5
24.3
26.8
29.6
31.9
35.0
39.8
44.1
48.8
53.4

23.7
27.1
29.8
31.2
33.3
35.7
41.3
49.2
53.5
59.0

46.1
51.8
57.8
64.4
72.4
84.2
95.9
111.5
125.1
141.4

82.5
88.2
96.5
104.7
115.7
129.3
142.9
157.5
181.4
202.7

1980 ...
1981
1982
1983
1984
1985
1986 ".

83.7
92.7
89.1
90.2
90.7
91.9
78.7

18.0
19.4
18.6
17.5
17.9
15.7
14.0

121.5
132.2
140.1
152.1
164.3
172.9
182.5

261.5
295.6
321.1
344.1
372.2
403.9
438.5

113.9
127.5
143.4
156.0
166.6
175.0
178.4

56.4
63.5
72.8
80.0
84.8
89.9
87.3

57.5
64.0
70.6
76.0
81.8
85.1
91.1

64.5
68.3
69.7
74.8
82.0
88.7
95.9

164.2
193.5
217.8
238.3
263.2
290.1
315.9

227.9
249.7
275.1
315.5
342.9
378.4
412.6

1982: IV

89.8

18.2

145.2

330.3

148.0

74.8

73.2

71.1

226.9

290.2

1983: IV

91.9

18.1

155.9

353.8

161.4

84.1

77.3

77.6

246.9

328.1

1984:1
II
Ill
IV

92.0
91.7
89.4
89.9

18.9
18.3
17.7
16.6

160.0
164.2
165.9
167.3

360.2
368.2
376.6
383.8

162.5
166.6
168.2
169.3

81.5
84.7
86.2
86.9

81.0
81.9
82.0
82.4

79.5
81.6
82.2
84.9

252.1
259.4
267.0
274.1

332.5
338.6
346.0
354.5

1985:1
||

89.6
92.8
92.4
93.0

15.9
15.3
15.5
16.2

169.9
170.9
173.6
177.3

390.6
399.1
408.6
417.4

175.0
171.4
175.1
178.3

93.1
86.5
88.7
91.3

82.0
84.9
86.4
87.0

86.8
88.1
88.9
90.9

278.6
287.7
291.5
302.5

364.0
373.4
382.1
394.1

87.6
78.1
74.2
74.9

14.9
13.7
13.7
13.5

181.3
181.2
184.3
183.2

424.8
434.7
442.8
452.0

174.3
177.6
181.7
180.0

86.3
86.9
89.2
86.8

88.0
90.6
92.5
93.2

93.5
95.0
96.8
98.2

307.9
312.3
318.1
325.4

406.9
410.3
413.0
420.2

III
IV
1986:1
II
Ill
IV

1
Includes imputed rental value of owner-occupied housing.
Source: Department of Commerce, Bureau of Economic Analysis.




261

TABLE B-15.—Gross and net private domestic investment, 1929-86
[Billions of dollars; quarterly data at seasonally adjusted annual rates]

Year or quarter

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
1982
1983 .
1984
1985
1986".
1982- IV
1983: IV. ..
1984:1
||
III
IV
1985- 1 .
II
Ill
IV
1986- 1
II
Ill
IV '

Gross
private
domestic
investment

16.7
1.6
9.5
13.4
18.3
10.3
6.2
7.7
11.3
31.5
35.0
47.1
36.5
55.1
60.5
53.5
54.9
54.1
69.7
72.7
71.1
63.6
80.2
78.2
77.1
87.6
93.1
99.6
116.2
128.6
125.7
137.0
153.2
148.8
172.5
202.0
238.8
240.8
219.6
277.7
344.1
416.8
454.8
437.0
515.5
447.3
502.3
662.1
661.1
686.4
409.6
579.8
659.5
657.5
670.3
661.1
650.6
667.1
657.4
669.5
708.3
687.3
675.8
674.5

Less:
Capital
consumption
allowances
with
capital
consumption
adjustment
9.9
7.6
9.0
9.4
10.3
11.3
11.6
12.0
12.4
14.2
17.6
20.4
22.0
23.6
27.2
29.2
30.9
32.5
34.4
38.1
41.1
42.8
44.6
46.4
47.8
49.4
51.4
53.9
57.4
62.1
67.4
73.9
81.4
88.8
97.5
107.9
118.1
137.5
161.8
179.2
201.5
229.9
265.8
303.8
347.8
383.2
396.6
415.1
437.2
455.1
393.2
400.8
405.5
413.0
418.5
423.3
427.8
433.1
441.3
446.7
447.1
453.3
457.6
462.5

Equals: Net private domestic investment
Net fixed investment
Nonresidential
Total

Total

6.7
-6.1
.5
4.1
8.0
-1.0
-5.3
-4.2
-1.1
17.3
17.5
26.7
14.5
31.5
33.3
24.4
24.0
21.6
35.3
34.6
29.9
20.8
35.5
31.8
29.4
38.2
41.8
45.7
58.8
66.5
58.3
63.1
71.8
60.0
74.9
94.1
120.7
103.4
57.8
98.4
142.5
186.9
189.1
133.1
167.7
64.1
105.7
247.0
223.9
231.3
16.4
179.0
254.0
244.5
251.8
237.8
222.8
234.0
216.1
222.8
261.2
234.0
218.2
212.0

5.0
45
.1
1.9
3.5
-2.7
-4.7
-3.2
-.1
10.9
17.9
22.0
17.6
24.6
23.1
21.3
23.6
23.3
29.6
29.9
28.5
22.3
29.8
28.7
27.0
32.1
35.9
40.3
48.9
52.3
48.0
55.2
62.0
56.9
67.2
83.6
101.1
87.9
63.4
82.4
121.3
158.3
176.1
141.5
143.7
88.7
112.8
182.9
212.8
219.9
76.3
148.0
158.5
184.6
187.4
201.1
197.4
214.9
213.0
225.9
217.4
219.5
222.7
220.3

Source: Department of Commerce, Bureau of Economic Analysis.




262

Total

3.3
35
.7
2.0
-2.1
3.1
-1.3
1.7
6.9
10.7
11.8
8.7
10.3
11.6
10.1
11.9
10.2
13.2
15.6
15.9
9.6
12.1
13.4
11.9
14.9
16.0
20.3
29.3
35.8
32.3
34.2
39.8
36.8
34.5
40.5
56.2
55.8
37.5
40.9
58.6
82.2
98.9
88.9
98.6
65.5
45.8
92.0
117.2

Structures

1.8
-1.7
-1.1
8
-.3
17
-2.4
-1.9
-1.0
2.4
1.9
2.5
2.2
2.8
3.9
3.8
4.8
5.0
5.9
7.9
7.9
6.3
6.4
7.3
7.3
8.0
7.9
9.4
13.2
15.2
14.4
15.1
17.4
17.4
16.8
17.4
21.7
22.0
15.6
16.0
17.6
25.0
34.5
39.4
51.7
45.9
25.9
38.1
48.4

Producers'
durable
equipment
1.4
-1.8
.4
1.5
2.3
5
-.7
.5
2.8
4.5
8.7
9.3
6.5
7.5
7.7
6.4
7.1
5.2
7.3
7.7
8.1
3.2
5.7
6.1
4.6
6.9
8.1
10.9
16.1
20.7
18.0
19.0
22.4
19.4
17.7
23.1
34.4
33.7
21.9
24.8
41.0
57.2
64.5
49.5
46.9
19.6
19.9
53.9
68.8

Residential

1.7
-1.0
.8
1.2
1.5
-.6
-1.6
-1.9
-1.8
4.0
7.3
10.2
8.9
14.4
11.5
11.2
11.7
13.0
16.4
14.4
12.6
12.7
17.7
15.4
15.1
17.2
19.9
20.0
19.6
16.5
15.7
21.0
22.2
20.1
32.7
43.1
45.0
32.2
25.9
41.6
62.6
76.1
77.2
52.6
45.0
23.2
67.0
90.8
95.6

Change in
business
inventories

1.7
-1.6
.4
2.2
4.5
1.8
-.6
-1.0
-1.0
6.4
-.5
4.7
-3.1
6.8
10.2
3.1
.4
-1.6
5.7
4.6
1.4
-1.5
5.8
3.1
2.4
6.1
5.8
5.4
9.9
14.2
10.3
7.9
9.8
3.1
7.8
10.5
19.6
15.4
-5.6
16.0
21.3
28.6
13.0
-8.3
24.0
-24.5
-7.1
64.1
11.1
11.4
-59.9
31.0
95.5
59.9
64.4
36.7
25.4
19.1
3.1
-3.1
43.8
14.5
-4.5
-8.3

TABLE B-16.—Gross and net private domestic investment in 1982 dollars, 1929-86
[Billions of 1982 dollars,- quarterly data at seasonally adjusted annual rates]
Less:

Year or quarter

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
1982
1983
1984
1985
1986 p
1982: IV
1983- IV
1984:1

II
Ill
IV
1985:1
II
III
IV ..
1986- 1
II
III
IV P

Gross
private
domestic
investment

139.2
22.7
86.0
111.8
138.8
76.7
50.4
56.4
76.5
178.1
177.9
208.2
168.8
234.9
235.2
211.8
216.6
212.6
259.8
257.8
243.4
221.4
270.3
260.5
259.1
288.6
307.1
325.9
367.0
390.5
374.4
391.8
410.3
381.5
419.3
465.4
520.8
481.3
383.3
453.5
521.3
576.9
575.2
509.3
545.5
447.3
504.0
652.0
647.7
659.7
408.8
577.2
649.3
649.7
658.9
649.9
638.2
655.6
643.8
653.2
684.0
664.7
651.3
638.8

Equals: Net private domestic investment

consumption
allowances
with
capital
consumption
adjustment

Net fixed investment

86.8
86.5
84.4
84.9
86.3
86.9
85.7
84.8
85.4
88.0
91.8
96.8
101.7
106.5
111.8
117.0
122.1
127.4
132.6
138.3
143.5
147.7
151.9
156.3
160.6
165.1
170.3
176.3
183.7
192.2
201.1
209.8
219.8
229.8
239.5
253.4
263.6
276.1
287.0
297.3
309.6
323.7
341.3
356.1
369.7
383.2
394.4
407.1
425.6
441.0
390.0
397.9
401.3
405.0
409.0
413.2
417.5
421.9
429.4
433.7
434.8
439.1
443.2
447.0

Nonresidential
Total

Total

52.4
638
1.6
26.9
52.5
-10.2
353
-28.4
89
90.1
86.1
111.4
67.1
128.4
123.3
94.8
94.4
85.2
127.2
119.5
99.9
73.7
118.4
104.1
98.4
123.5
136.8
149.6
183.4
198.3
173.4
181.9
190.5
151.8
179.8
212.1
257.1
205.3
96.3
156.2
211.7
253.3
234.0
153.2
175.8
64.1
109.6
244.8
222.0
218.7
18.8
179.3
248.0
244.7
249.9
236.7
220.7
233.7
214.4
219.5
249.2
225.6
208.1
191.8

41.6
-53.0
-2.3
12.5
24.7
-22.1
-36.0
-23.3
B2.2
87.1
99.1
76.7
104.2
92.5
84.8
91.7
90.0
110.9
106.5
96.9
77.1
101.9
96.4
91.2
107.3
120.1
133.9
158.1
161.4
144.6
160.9
165.3
143.6
160.2
190.3
217.1
172.0
109.1
134.1
182.6
216.5
218.9
160.1
152.0
88.7
116.0
185.6
213.0
207.9
78.0
152.3
162.9
187.7
189.3
202.8
197.5
216.3
213.7
224.7
209.3
210.5
208.4
203.3

Source: Department of Commerce, Bureau of Economic Analysis.




263

Total

26.2
402
-10.1
1.5
12.0
-17.5
-24.4
-10.5
10.5
39.5
52.6
54.3
37.9
43.3
46.9
41.7
47.0
40.4
49.9
54.9
51.7
31.5
38.5
41.4
37.3
46.4
49.2
63.3
90.4
106.3
93.6
96.1
103.1
89.3
76.1
85.3
116.5
106.9
60.8
61.8
85.2
111.6
124.3
101.3
105.5
65.5
50.4
100.3
124.9

Structures

16.8
243
-12.0
-8.5
-3.5
-15.9
207
-15.2
83
15.4
11.7
14.3
12.7
15.7
18.8
18.8
22.9
24.4
27.7
32.5
30.7
24.8
25.0
27.9
28.1
30.3
29.1
34.0
46.2
50.4
45.9
46.7
49.7
46.1
40.4
39.8
46.8
42.5
27.9
27.3
28.7
37.2
44.8
47.2
56.0
45.9
26.2
37.4
44.4

Producers'
durable
equipment
9.4
-16.0
1.9
10.0
15.6
-1.6
38
4.7
18.8
24.1
40.9
40.0
25.2
27.6
28.1
22.9
24.1
16.0
22.2
22.4
20.9
6.6
13.6
13.6
9.3
16.0
20.1
29.2
44.2
55.8
47.7
49.3
53.4
43.3
35.7
45.5
69.8
64.4
32.9
34.6
56.5
74.3
79.5
54.1
49.4
19.6
24.1
62.9
80.5

Residential

15.4
128
7.8
11.1
12.7
-4.6
115
-12.8
110
22.7
34.5
44.8
38.9
60.9
45.6
43.2
44.7
49.6
60.9
51.6
45.2
45.6
63.4
55.0
53.8
61.0
70.9
70.6
67.7
55.1
50.9
64.8
62.2
54.2
84.1
105.0
100.6
65.1
48.3
72.2
97.4
104.9
94.6
58.7
46.5
23.2
65.6
85.4
88.1

Change in
business
inventories

10.8
-10.7
3.9
14.4
27.8
12.0
.7
-5.2
84
27.9
10
12.3
-9.7
24.2
30.8
10.0
2.8
48
16.3
12.9
3.0
-3.4
16.5
7.7
7.3
16.2
16.6
15.7
25.2
36.9
28.8
21.0
25.1
8.2
19.6
21.8
40.0
33.3
-12.8
22.1
29.1
36.8
15.0
-6.9
23.9
-24.5
-6.4
59.2
9.0
10.8
-59.3
27.0
85.1
57.0
60.6
33.9
23.2
17.4
.7
-5.2
39.9
15.1
-.3
115

TABLE B-17.—Inventories and final sales of business, 1946-86
[Billions of dollars, except as noted; seasonally adjusted]
Inventory-final
sales ratio

Inventories *
Nonfarm

Quarter

Total2

Fourth quarter:
1946
1947
1948
1949

Farm

Total

2

Manu- Wholesale
facturing trade

Retail
trade

Final
sales3
Other

Total

Nonfarm 4

71.0
80.3
85.6
77.5

19.6
21.0
19.3
16.7

51.4
59.3
66.3
60.8

24.6
29.0
32.2
28.6

10.4
11.1
12.5
12.5

12.8
14.5
16.6
15.4

3.2
4.1
4.5
3.9

15.8
18.4
19.8
19.7

4.48
4.36
4.33
3.94

3.24
3.22
3.35
3.09

1950
1951
1952
1953
1954
1955
1956
1957
1958
1959 .

96.7
109.4
108.6
109.6
107.3
114.6
123.4
127.0
126.2
131.7

22.5
24.9
23.3
22.0
21.2
19.9
19.9
21.2
22.6
22.1

74.2
84.5
85.3
87.6
86.1
94.7
103.5
105.8
103.7
109.6

34.9
43.1
44.0
46.0
43.9
48.3
54.0
54.3
52.7
55.2

14.7
15.6
15.6
15.8
16.1
17.6
18.9
19.2
19.3
21.0

19.2
19.7
19.4
20.0
20.2
22.8
23.7
25.0
25.1
26.2

4.9
5.5
5.6
5.2
5.3
5.4
6.2
6.6
6.6
7.2

21.8
24.9
26.4
27.5
28.0
30.2
31.9
33.3
34.3
36.2

4.44
4.40
4.11
3.98
3.84
3.80
3.87
3.82
3.68
3.64

3.41
3.40
3.23
3.18
3.08
3.14
3.24
3.18
3.02
3.03

1960
1961
1962
1963
1964
1965
1966
1967
1968
1969

135.5
137.2
143.8
149.6
155.3
169.1
185.2
197.4
211.8
232.4

23.3
23.8
25.2
25.7
24.5
28.0
27.4
27.9
29.1
31.8

112.2
113.4
118.6
123.8
130.9
141.0
157.8
169.5
182.6
200.6

56.2
57.2
60.3
62.2
65.9
70.7
80.9
87.5
94.0
103.4

21.3
21.8
22.4
23.9
25.2
26.9
30.3
32.7
34.6
37.9

27.5
27.0
28.3
29.6
31.0
33.7
36.2
36.9
40.7
44.5

7.2
7.4
7.5
8.0
8.8
9.8
10.4
12.4
13.3
14.9

37.5
39.5
41.8
44.5
47.1
52.1
55.3
58.8
64.8
68.8

3.61
3.47
3.44
3.36
3.30
3.24
3.35
3.36
3.27
3.38

2.99
2.87
2.84
2.78
2.78
2.70
2.85
2.88
2.82
2.91

1970
1971
1972
1973
1974
1975
1976
1977 .
1978
1979

240.3
257.8
285.6
352.6
423.3
428.8
463.3
505.7
588.2
674.8

31.1
35.4
44.3
65.5
62.4
64.3
60.2
59.3
73.7
80.7

209.2
222.4
241.3
287.1
360.9
364.5
403.1
446.4
514.5
594.1

105.8
107.3
113.6
136.1
177.0
177.8
194.9
210.6
238.4
281.1

41.7
45.2
50.0
59.4
75.6
76.2
86.1
96.2
113.8
133.7

45.8
52.3
57.7
66.4
74.6
74.7
82.7
93.3
107.8
117.0

16.0
17.6
19.9
25.2
33.7
35.8
39.4
46.3
54.5
62.3

72.4
78.9
87.7
96.8
104.6
117.1
128.5
143.9
165.1
183.2

3.32
3.27
3.26
3.64
4.05
3.66
3.60
3.51
3.56
3.68

2.89
2.82
2.75
2.97
3.45
3.11
3.14
3.10
3.12
3.24

739.3
789.0
771.5
787.2
854.5
862.6
856.3

84.5
81.6
79.2
79.4
81.2
74.0
71.0

654.8
707.4
692.2
707.8
773.3
788.5
785.3

310.7
330.2
316.1
315.9
342.5
338.9
328.1

154.8
164.7
162.2
163.8
178.0
181.9
184.0

122.7
134.0
134.7
148.2
166.6
176.7
183.1

66.7
78.5
79.2
79.9
86.1
91.0
90.1

201.1
217.8
229.5
247.0
268.9
289.3
302.5

3.68
3.62
3.36
3.19
3.18
2.98
2.83

3.26
3.25
3.02
2.87
2.88
2.73
2.60

1982: IV

771.5

79.2

692.2

316.1

162.2

134.7

79.2

229.5

3.36

3.02

1983- IV

787.2

79.4

707.8

315.9

163.8

148.2

79.9

247.0

3.19

2.87

1984: I . . . .

II
III
IV

818.4
832.8
846.9
854.5

86.1
85.8
83.4
81.2

732.3
747.0
763.6
773.3

325.2
333.6
341.2
342.5

168.4
171.5
176.0
178.0

155.8
157.8
160.9
166.6

82.8
84.1
85.5
86.1

251.3
259.9
263.4
268.9

3.26
3.20
3.22
3.18

2.91
2.87
2.90
2.88

1985- 1 .
II
Ill
IV

859.0
859.2
856.4
862.6

81.1
79.0
76.8
74.0

777.8
780.2
779.7
788.5

342.5
341.5
340.0
338.9

179.2
180.4
179.8
181.9

168.9
169.3
170.5
176.7

87.2
89.0
89.4
91.0

274.3
278.9
285.1
289.3

3.13
3.08
3.00
2.98

2.84
2.80
2.73
2.73

1986: 1
||
III
IV P

855.8
857.0
856.6
856.3

71.5
73.8
74.8
71.0

784.3
783.2
781.8
785.3

330.5
328.5
327.2
328.1

179.9
180.9
182.5
184.0

183.4
183.0
181.2
183.1

90.5
90.9
90.8
90.1

289.7
294.3
300.4
302.5

2.95
2.91
2.85
2.83

2.71
2.66
2.60
2.60

1980
1981
1982
1983
1984
1985
1986

.

.

p

1
2

End of quarter.
Beginning 1959, inventories of construction establishments are included in "other" nonfarm inventories. Prior to 1959, they are
included in total and total nonfarm inventories, but not in the detailed categories shown.
3
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.
4
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.




264

TABLE B-18.—Inventories and final sales of business in 1982 dollars, 1947-86
[Billions of 1982 dollars, except as noted; seasonally adjusted]
Inventory-final
sales ratio

Inventories *
Quarter

Fourth quarter:
1947
1948
1949

Nonfarm
Total 2

Farm

Total 2

Manu- Wholesale
facturing trade

Retail
trade

Final
sales3
Total

Other

Nonfarm 4

251.3
263.5
253.9

43.3
45.4
44.4

208.0
218.1
209.5

105.1
108.6
102.9

39.9
42.7
42.8

39.6
43.7
42.8

23.5
23.1
21.1

74.8
77.1
77.3

3.36
3.42
3.28

2.78
2.83
2.71

278.1
308.9
318.9
321.6
316.9
333.2
346.1
349.1
345.7
362.2

47.7
51.5
54.6
54.3
55.9
56.0
53.7
54.9
57.3
58.1

230.4
257.4
264.3
267.4
260.9
277.1
292.4
294.2
288.4
304.2

109.8
133.2
139.0
142.7
135.0
142.5
153.2
152.1
146.8
153.5

47.6
49.0
50.0
50.4
51.1
54.8
56.6
56.0
56.0
60.7

49.5
49.6
49.6
50.8
51.2
57.1
57.8
59.8
59.4
61.9

23.4
25.6
25.8
23.5
23.6
22.7
24.8
26.3
26.3
28.1

82.6
90.4
93.9
98.0
97.7
102.5
104.7
105.9
107.7
111.4

3.37
3.42
3.40
3.28
3.24
3.25
3.31
3.30
3.21
3.25

2.79
2.85
2.81
2.73
2.67
2.70
2.79
2.78
2.68
2.73

1960
1961
1962
1963
1964
1965
1966
1967
1968
1969

370.0
377.2
393.4
410.1
425.8
451.0
487.9
516.6
537.7
562.8

59.4
60.8
63.5
65.8
64.0
66.3
66.1
67.7
68.2
69.0

310.5
316.5
329.9
344.2
361.8
384.7
421.7
449.0
469.4
493.8

154.7
158.8
167.2
172.6
180.9
191.6
213.6
229.2
239.0
248.5

61.8
63.1
65.0
68.9
72.6
76.5
85.1
90.7
93.5
98.9

65.2
64.2
67.5
70.3
73.4
79.2
84.3
84.2
90.5
96.4

28.8
30.3
30.1
32.4
34.9
37.4
38.7
45.0
46.5
50.0

114.1
118.7
123.4
130.4
136.3
147.7
150.2
156.4
163.7
165.4

3.24
3.18
3.19
3.14
3.12
3.05
3.25
3.30
3.28
3.40

2.72
2.67
2.67
2.64
2.65
2.60
2.81
2.87
2.87
2.98

1970
1971
1972
1973.
1974
1975
1976
1977
1978
1979

571.1
590.7
612.4
652.5
685.7
673.0
695.1
724.2
761.0
776.0

69.8
73.4
75.9
81.4
81.3
82.6
79.1
77.2
77.8
82.4

501.2
517.3
536.6
571.0
604.5
590.3
616.1
647.0
683.2
693.6

248.3
246.1
251.7
267.9
288.5
281.9
294.0
301.9
314.1
324.7

105.8
110.7
114.0
118.4
128.4
124.0
131.2
140.5
151.6
156.1

96.6
107.2
114.0
122.1
121.1
115.9
122.3
130.9
139.1
136.7

50.5
53.2
56.9
62.6
66.4
68.6
68.5
73.7
78.4
76.1

166.8
172.6
185.4
188.9
184.3
191.5
199.3
209.0
221.5
225.6

3.42
3.42
3.30
3.45
3.72
3.51
3.49
3.47
3.44
3.44

3.00
3.00
2.89
3.02
3.28
3.08
3.09
3.10
3.08
3.08

1980
1981
1982 . .
1983
1984
1985 p
1986 .

769.1
793.0
768.4
762.0
821.2
830.2
841.0

77.8
82.6
81.2
74.9
79.8
77.8
77.7

691.4
710.3
687.2
687.2
741.4
752.4
763.3

326.8
330.3
315.2
309.3
329.9
325.2
322.3

161.6
165.0
161.5
157.9
171.3
174.7
180.1

130.4
135.5
132.9
142.4
157.6
165.0
168.9

72.7
79.5
77.6
77.5
82.6
87.5
91.9

225.3
224.6
226.1
235.5
247.7
259.2
266.4

3.41
3.53
3.40
3.24
3.32
3.20
3.16

3.07
3.16
3.04
2.92
2.99
2.90
2.87

1982- IV ..

768.4

81.2

687.2

315.2

161.5

132.9

77.6

226.1

3.40

3.04

1983: IV

762.0

74.9

687.2

309.3

157.9

142.4

77.5

235.5

3.24

2.92

1984- 1
II
Ill
IV ..

783.3
797.6
812.7
821.2

79.0
79.4
79.8
79.8

704.3
718.1
733.0
741.4

315.5
323.0
329.5
329.9

161.0
164.4
168.9
171.3

148.2
150.1
152.7
157.6

79.8
80.7
81.9
82.6

237.4
243.4
244.5
247.7

3.30
3.28
3.32
3.32

2.97
2.95
3.00
2.99

1985: 1
II
Ill
IV

827.0
831.4
831.5
830.2

81.4
83.3
83.2
77.8

745.6
748.0
748.4
752.4

330.2
329.3
327.8
325.2

172.2
174.0
173.9
174.7

159.1
159.3
160.5
165.0

84.1
85.4
86.2
87.5

251.0
253.1
257.5
259.2

3.30
3.28
3.23
3.20

2.97
2.96
2.91
2.90

1986: 1
II ...
Ill
IV P

840.2
844.0
843.9
841.0

78.6
79.6
81.7
77.7

761.6
764.4
762.2
763.3

323.9
324.1
322.5
322.3

176.4
177.7
180.1
180.1

172.1
171.0
167.8
168.9

89.3
91.5
91.8
91.9

258.0
261.0
264.0
266.4

3.26
3.23
3.20
3.16

2.95
2.93
2.89
2.87

1950
1951
1952
1953
1954
1955
1956.
1957
1958.
1959

.

.

1
End
2

of quarter.
Beginning 1959, inventories of construction establishments are included in "other" nonfarm inventories. Prior to 1959, they are
included in total and total nonfarm inventories, but not in the detailed categories shown.
3
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.
4
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.




265

TABLE B-19.—Foreign transactions in the national income and product accounts, 1929-86
[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Receipts from foreigners

Year or quarter

Exports of goods and
services
Total
Total

Merchandise

Services

Payments to foreigners
Capital
grants
received
by the
United
States
(net)

Imports of goods and
services

Transfer payments (net)

Merchandise

From
persons
(net)

Total
Total

Services

Total

Interest
paid by
From
governgovern- ment to
ment
(net) foreigners

Net
foreign
investment

1929
1933
1939

7.1
2.4
4.6

7.1
2.4
4.6

5.3
1.7
3.3

1.7
.7
1.3

7.1
2.4
4.6

5.9
2.1
3.4

4.5
1.5
2.4

1.5
.6
1.0

0.4
.2
.2

0.3
.2
.2

0.0
.0
.0

0.0
.0
.0

0.8
.2
1.0

1940
1941
1942
1943
1944
1945
1946
1947
1948
1949

5.4
6.1
5.0
4.6
5.5
74
15.2
20.3
17.5
16.4

5.4
6.1
5.0
4.6
5.5
74
15.2
20.3
17.5
16.4

4.1
4.5
3.4
2.9
3.6
54
11.8
16.1
13.3
12.2

1.3
1.6
1.6
1.7
1.9
21
3.4
4.2
4.3
4.1

5.4
6.1
5.0
4.6
5.5
7.4
15.2
20.3
17.5
16.4

3.7
4.7
4.8
6.5
7.2
7.9
7.3
8.3
10.6
9.8

2.7
3.4
2.7
3.4
3.8
3.9
5.1
6.0
7.6
6.9

1.0
1.3
2.1
3.1
3.4
4.0
2.3
2.4
3.0
2.9

.2
.2
.2
.2
.3
.8
2.9
2.6
4.5
5.6

.2
.2
.1
.2
.4
.5
.7
.7
.7
.5

.0
.0
.1
1
-.1
.4
2.3
2.0
3.9
5.1

.0
.0
.0
.0
.0
.0
.0
.0
.0
.0

1.5
1.3

1950
1951
1952
1953
1954
1955
1956
1957
1958. ..
1959

14.5
19.8
19.2
18.1
18.8
21.1
25.2
28.2
24.4
25.0

14.5
19.8
19.2
18.1
18.8
21.1
25.2
28.2
24.4
25.0

10.2
14.2
13.4
12.4
12.9
14.4
17.6
19.6
16.4
16.5

4.3
5.5
5.8
5.7
5.9
6.7
7.6
8.7
8.0
8.5

14.5
19.8
19.2
18.1
18.8
21.1
25.2
28.2
24.4
25.0

12.3
15.3
16.0
16.8
16.3
18.1
19.9
20.9
21.1
23.5

9.1
11.2
10.8
11.0
10.4
11.5
12.8
13.3
13.0
15.3

3.2
4.1
5.2
5.8
5.9
6.6
7.1
7.6
8.1
8.2

4.0
3.5
2.5
2.5
2.3
2.5
2.4
2.3
2.3
2.3

.4
.4
.4
.5

3.6
3.1
2.1
2.0
1.8
2.1
1.9
1.8
1.8
1.9

.0
.0

I960
1961
1962
1963
1964
1965
1966
1967
1968
1969

29.9
31.1
33.1
35.7
40.5
42.9
46.6
49.5
54.8
60.4

29.9
31.1
33.1
35.7
40.5
42.9
46.6
49.5
54.8
60.4

20.5
20.9
21.7
23.3
26.7
27.8
30.7
32.2
35.3
38.3

9.4
10.1
11.4
12.3
13.8
15.1
15.8
17.3
19.5
22.1

29.9
31.1
33.1
35.7
40.5
42.9
46.6
49.5
54.8
60.4

24.0
23.9
26.2
27.5
29.6
33.2
39.1
42.1
49.3
54.7

15.2
15.1
16.9
17.7
19.4
22.2
26.3
27.8
33.9
36.8

8.8
8.8
9.3
9.7
10.2
11.0
12.7
14.4
15.4
17.9

2.4
2.7
2.8
2.9
3.0
3.0
3.1
3.3
3.2
3.2

.4
.5
.5
.6

.3
.3

'.7
.7
.9
.9
1.0

1.9
2.2
2.3
2.3
2.3
2.3
2.4
2.4
2.3
2.2

A
.5
.5
.5
.6
.7
.8

3.2
4.2
3.8
4.9
7.5
6.2
3.8
3.5
1.6
1.7

1970
1971
1972
1973
1974
1975
1976
1977
1978
1979

69.8
73.1
82.1
114.1
149.5
161.3
177.7
191.6
227.5
292.4

68.9
72.4
81.4
114.1
151.5
161.3
177.7
191.6
227.5
291.2

44.5 24.4
45.6 26.8
51.7 29.6
73.9 40.2
101.0 50.5
109.6 51.7
117.5 60.2
123.1 68.6
144.7 82.8
183.3 107.9

0.9
.7
.7
0
-2.0
0
0
0
0
1.1

69.8
73.1
82.1
114.1
149.5
161.3
177.7
191.6
227.5
292.4

60.5
66.1
78.2
97.3
135.2
130.3
158.9
189.7
223.4
272.5

40.9
46.6
56.9
71.8
104.5
99.0
124.3
151.9
176.5
211.9

19.6
19.5
21.3
25.5
30.7
31.3
34.6
37.9
46.9
60.5

3.5
3.9
4.1
4.1
4.6
4.9
5.4
5.1
5.6
6.2

1.2
1.2
1.1
1.3
1.0
1.0
1.0
.9
.9
1.0

2.3
2.7
2.9
2.9
3.6
4.0
4.4
4.2
4.7
5.2

1.0
1.8
2.7
3.8
4.3
4.5
4.5
5.5
8.7
11.1

4.8
1.3
-2.9
8.8
5.4
21.6
9.0
87
-10.1
2.6

1980
1981
1982
1983
1984
1985
1986 p.

352.1
383.9
361.9
352.5
382.7
369.8
373.0

351.0
382.8
361.9
352.5
382.7
369.8
373.0

225.1
238.3
214.0
206.1
224.1
219.6
220.4

1.2
1.1
0
0
0
0
0

352.1
383.9
361.9
352.5
382.7
369.8
373.0

318.9
348.9
335.6
358.7
441.4
448.6
478.7

247.5 71.4
266.5 82.4
249.5 86.1
271.3 87.3
334.4 107.0
341.7 106.9
369.8 108.9

7.7
7.5
9.0
9.5
12.2
15.0
15.0

1.1
1.0
1.3
1.0
1.5
1.6
1.4

6.5
6.5
7.8
8.5
10.7
13.4
13.7

,

125.9
144.5
148.0
146.4
158.6
150.2
152.6

!4
.5
.5
.4
.4

!i
.1
.1
\2
.1
.3

21
-2.0
-1.3
4.9
9.3
2.4
.9

-1.8
.9
.6
-1.3
.2
.4
2.8
4.8
.9
-1.2

12.6
13.0
16.9
10.6
18.3
-1.0
17.8 -33.5
19.8 -90.7
21.3 -115.2
23.0 -143.7

1982- IV

335.9 335.9 196.3 139.6

0

335.9 321.9 239.9

82.0

10.6

1.1

9.5

18.9

-15.4

1983- IV

364.7 364.7 215.6 149.1

0

364.7 390.5 298.3

92.2

13.4

1.2

12.2

18.3

574

1984: 1
II
III
IV

373.4
382.1
389.2
386.2

373.4
382.1
389.2
386.2

219.3
223.2
226.0
228.0

154.1
158.9
163.2
158.1

0
0
0
0

373.4
382.1
389.2
386.2

419.0
445.3
449.1
452.2

320.2 98.8
336.1 109.2
338.5 110.6
342.9 109.4

9.5
9.8
12.5
17.0

1.4
1.5
1.4
1.5

8.1
8.3
11.1
15.5

18.6 -73.7
19.0 -92.1
20.2
927
21.2 -104.3

1985:1
||
III
IV. . . .

378.4
370.0
362.3
368.2

378.4
370.0
362.3
368.2

226.0
221.1
215.0
216.2

152.4
148.9
147.4
152.0

0
0
0
0

378.4
370.0
362.3
368.2

427.9
447.1
446.0
473.6

323.1
340.7
339.2
363.8

104.8
106.4
106.8
109.8

13.2
13.9
16.0
17.0

2.1
1.4
1.5
1.6

11.1
12.4
14.5
15.4

21.2
-83.8
21.1
11? 0
21.5 -121.2
21.5 -143.8

1986-1
||
III .
IV

374.8
363.0
370.8
383.4

374.8
363.0
370.8
383.4

219.7
212.5
219.2
230.3

155.2
150.6
151.6
153.1

0
0
0
0

374.8
363.0
370.8
383.4

468.5
467.5
479.7
499.0

358.9
358.9
372.7
388.6

109.6
108.7
106.9
110.3

12.2
16.3
16.6
15.2

1.7
1.2
1.2
1.5

10.5
15.0
15.5
13.6

22.8
22.2
22.8
24.0

Source: Department of Commerce, Bureau of Economic Analysis.




266

-128.6
-143.0
-148.3
-154.8

TABLE B-20.—Exports and imports of goods and services in 1982 dollars, 1929-86
[Billions of 1982 dollars,- quarterly data at seasonally adjusted annual rates]
Exports of goods and services
Year or
quarter

Total
Total

Durable
goods

Imports of goods and services

Services

Merchandise

Nondurable
goods

Total

Factor
income x

Merchandise
Total
Other

Total

Durable
goods

Services

Nondurable
goods

Total

Factor
income *

Other

1929
1933
1939

42.1
22.7
36.2

29.7
15.9
26.5

12.3
4.5
13.3

17.5
11.4
13.1

12.3
6.8
9.8

7.6
3.7
5.2

4.8
3.1
4.5

37.4
24.2
30.1

29.3
19.2
24.0

7.4
4.0
6.9

22.0
15.2
17.0

8.0
4.9
6.1

2.6
1.3
2.2

5.4
3.6
4.0

1940
1941
1942
1943
1944
1945
1946
1947
1948
1949

40.0
42.0
29.1
25.1
27.3
35.2
69.0
82.3
66.2
65.0

30.5
31.7
19.5
15.2
16.4
24.0
54.1
65.5
49.1
48.4

18.9
20.2
13.4
10.5
11.0
12.6
23.1
34.4
24.5
24.1

11.6
11.6
6.1
4.8
5.4
11.3
31.0
31.1
24.6
24.2

9.4
10.3
9.6
9.8
10.9
11.2
14.9
16.9
17.1
16.7

4.6
5.2
4.8
4.6
4.9
4.8
5.6
7.2
8.5
8.2

4.8
5.1
4.9
5.2
6.0
6.5
9.4
9.7
8.6
8.5

31.7
38.2
36.9
48.0
51.1
54.1
42.0
39.9
47.1
46.2

25.6
29.4
21.0
25.0
26.5
26.0
30.0
29.3
33.9
33.3

8.8
11.0
6.7
6.5
6.7
6.9
7.8
7.8
9.4
8.9

16.8
18.4
14.3
18.5
19.7
19.1
22.2
21.5
24.5
24.4

6.2
8.8
15.8
23.0
24.6
28.2
12.0
10.6
13.1
13.0

2.0
1.9
1.7
1.9
2.1
2.5
1.9
2.1
2.3
2.6

4.1
6.9
14.2
21.2
22.5
25.7
10.1
8.5
10.8
10.4

1950
1951
1952
1953
1954
1955
1956
1957
1958
1959

59.2
72.0
70.1
66.9
70.0
76.9
87.9
94.9
82.4
83.7

42.2
51.1
49.0
46.4
48.8
53.2
61.8
66.6
56.6
56.1

21.0
23.8
25.3
25.8
26.9
30.3
34.4
37.2
31.0
30.5

21.3
27.3
23.7
20.6
21.9
22.9
27.4
29.4
25.6
25.6

17.0
20.9
21.2
20.5
21.2
23.7
26.1
28.3
25.8
27.6

9.1
10.9
11.3
11.0
11.6
13.0
14.1
14.8
13.2
14.0

7.9
10.0
9.9
9.5
9.6
10.7
12.0
13.5
12.6
13.5

54.6
57.4
63.3
69.7
67.5
76.9
83.6
87.9
92.8
101.9

40.9
40.4
41.9
44.6
42.1
48.3
53.6
56.1
58.1
68.0

11.5
11.5
13.0
13.7
11.9
14.7
16.8
17.1
16.9
22.8

29.5
28.9
28.9
30.9
30.3
33.5
36.8
39.0
41.3
45.3

13.6
17.1
21.4
25.1
25.4
28.6
30.0
31.8
34.6
33.8

2.8
3.1
2.9
3.1
3.3
3.6
3.4
3.4
3.7
4.0

10.8
14.0
18.4
21.9
22.1
25.0
26.6
28.4
30.9
29.8

1960
1961
1962
1963
1964
1965
1966
1967
1968
1969

98.4
100.7
106.9
114.7
128.8
132.0
138.4
143.6
155.7
165.0

68.8
69.1
72.2
77.6
87.7
88.2
94.0
96.5
104.9
110.0

37.9
38.0
39.8
42.1
48.2
50.0
53.6
58.8
64.8
69.5

30.9
31.1
32.4
35.5
39.5
38.2
40.4
37.7
40.1
40.5

29.6
31.6
34.7
37.1
41.1
43.8
44.4
47.1
50.8
55.0

15.7
16.9
18.5
20.0
21.8
23.2
22.8
23.8
26.3
29.0

13.9
14.7
16.2
17.2
19.3
20.6
21.6
23.3
24.5
26.0

102.4
103.3
114.4
116.6
122.8
134.7
152.1
160.5
185.3
199.9

67.5
69.0
78.9
81.2
86.3
97.0
109.1
113.0
135.7
144.6

21.7
21.1
24.8
26.2
29.0
35.6
44.0
48.0
61.7
65.6

45.8
47.9
54.0
55.0
57.4
61.4
65.2
65.0
74.0
79.0

34.9
34.3
35.5
35.4
36.5
37.7
43.0
47.5
49.6
55.2

4.6
4.8
4.6
5.1
5.6
6.2
7.0
7.5
8.6
12.0

30.3
29.6
30.9
30.3
30.9
31.6
36.0
40.0
41.0
43.2

1970
1971
1972
1973
1974
1975
1976
1977
1978
1979

178.3
179.2
195.2
242.3
269.1
259.7
274.4
281.6
312.6
356.8

120.6
119.3
131.3
160.6
175.8
171.5
177.5
178.1
196.2
218.2

74.3
72.9
80.0
99.3
113.9
112.1
112.9
111.2
121.9
136.6

46.3
46.4
51.3
61.3
62.0
59.5
64.7
66.9
74.3
81.6

57.6
59.9
64.0
81.7
93.3
88.2
96.8
103.6
116.4
138.6

28.0
29.4
30.1
35.4
39.8
42.6
47.1
50.1
53.2
52.0

208.3
218.9
244.6
273.8
268.4
240.8
285.4
317.1
339.4
353.2

150.9
166.2
190.7
218.2
211.8
187.9
229.3
259.4
274.1
277.9

66.8
74.4
84.4
88.9
89.2
72.4
88.5
99.3
113.7
115.7

84.1
91.8
106.4
129.4
122.5
115.5
140.8
160.1
160.4
162.2

57.4
52.7
53.9
55.6
56.6
52.9
56.1
57.7
65.3
75.3

12.5
9.8
10.2
13.9
17.7
16.3
16.7
16.1
21.1
30.8

45.0
42.9
43.7
41.7
38.9
36.6
39.3
41.6
44.2
44.5

1980
1981
1982
1983
1984
1985..........
1986 P.

388.9
392.7
361.9
348.1
369.7
362.3
371.3

241.8
238.5
214.0
207.6
222.7
227.4
237.5

150.0
143.8
121.9
117.5
127.3
133.5
146,9

91.9
94.6
92.1
90.1
95.4
93.9
90.7

147.1
154.3
148.0
140.5
147.0
135.0
133.8

29.6
30.5
33.9
46.2
53.5
45.6
49.7
53.5
63.2
86.6
91.4
96.3
91.6
85.0
92.6
80.9
76.9

55.7
57.9
56.3
55.5
54.4
54.0
56.9

332.0
343.4
335.6
368.1
453.2
470.5
521.0

253.6
258.7
249.5
282.2
350.0
368.7
420.4

116.1
126.1
125.3
149.2
199.3
216.6
246.8

137.5
132.6
124.2
133.0
150.7
152.1
173.6

78.4
84.7
86.1
85.8
103.3
101.8
100.7

35.9
41.1
40.5
37.1
48.7
44.0
44.2

42.4
43.6
45.7
48.7
54.6
57.8
56.5

1982: IV

336.0

199.1

110.8

88.3

136.9

83.0

53.8

324.3

242.7

117.1

125.6

81.6

35.1

46.5

1983: IV

355.5

214.4

123.7

90.7

141.1

88.2

52.9

401.6

311.6

171.3

140.3

90.1

39.7

50.3

1984:1

II
Ill
IV

361.3
367.0
375.5
375.0

216.9
219.1
224.9
230.1

124.0
125.0
128.3
132.1

92.9
94.1
96.6
98.1

144.4
147.9
150.6
144.9

90.0
94.0
96.2
90.1

54.4
53.9
54.4
54.8

429.9
454.2
461.2
467.7

334.0
348.7
354.8
362.5

186.7
197.3
204.5
208.6

147.3
151.4
150.3
153.9

95.8
105.5
106.4
105.3

44.3
51.3
51.6
47.3

51.5
54.2
54.8
58.0

1985:1
II
Ill
IV

369.4
361.2
355.8
362.9

230.8
227.0
223.9
227.8

132.6
134.3
133.6
133.4

98.2
92.7
90.3
94.4

138.6
134.2
132.0
135.1

82.6
81.2
79.1
80.9

56.0
53.0
52.9
54.3

448.2
469.3
469.6
494.8

347.5
367.7
368.4
391.3

209.2
213.8
216.9
226.7

138.3
153.9
151.4
164.6

100.7
101.7
101.3
103.6

44.1
44.1
44.0
43.7

56.6
57.5
57.2
59.8

1986:1
II
Ill
IV P..

369.2
359.8
371.2
385.3

232.0
227.2
238.8
252.2

142.1
142.7
148.0
154.7

89.9
84.5
90.8
97.5

137.2
132.6
132.4
133.1

82.4
76.3
74.8
74.0

54.8
56.3
57.6
59.0

495.1
513.6
534.5
540.8

392.6
412.8
436.0
440.0

237.4
244.8
249.5
255.4

155.2
168.0
186.4
184.6

102.5
100.8
98.5
100.8

44.3
45.5
42.2
44.7

58.2
55.3
56.4
56.1

1
Factor income exports less factor income imports equals rest-oMhe-world product.
Source: Department of Commerce, Bureau of Economic Analysis.




267

TABLE B-21.—Relation of gross national product, net national product, and national income, 1929-86
[Billions of dollars; quarterly data at seasonally adjusted annual rates]

Year or quarter

Gross
national
product

Plus:

Less:

Less:
consumption
allowances
with
capital
consumption
adjustment

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
1933
1939

1039
560
91.3

99
76
9.0

940
484
82.3

71
71
9.4

06
7
.5

15
12
1.7

02
0
.4

847
394
71.2

1940
1941. .
1942
1943
1944
1945
1946
1947
1948
1949

100.4
1255
159.0
1927
2114
2134
2124
2352
2616
2604

9.4
103
11.3
116
120
124
142
176
204
220

91.1
115.3
147.7
181 1
1994
2010
1982
2176
2412
2384

10.1
113
11.8
128
14.2
155
171
184
201
213

.4
5
.5
5
5
5
5
6
7
8

1.4
7
-.7
17
2.7
40
7
18
-13
8

.4
1
j
.6
7
9
2
_1
3

79.6
1028
136.2
1697
182.6
1816
180.7
1966
221.5
2152

1950
1951
1952
1953.
1954
1955 . .
1956
1957
1958
1959

288*3
3334
3516
3716
372.5
4059
428.2
4510
4568
4958

236
272
292
309
32.5
344
38.1
41 1
42.8
446

2646
306.2
3225
3407
340.0
3715
390.1
4099
414.0
4512

234
25.3
277
297
29.6
322
35.0
374
38.6
417

8
9
10
12
1.1
12
1.4
15
16
18

8
27
18
26
2.7
18
-1.9
12
_.l
15

1
_1
3
_5
— 3
0
.7
7
1.1
1

2398
277.3
2916
3066
306.3
3363
356.3
3728
375.0
4092

1960
1961
1962
1963
1964
1965
1966.
1967
1968
1969

5153
5338
5746
6069
6498
7051
7720
8164
8927
9639

464
478
494
514
539
574
62 1
674
739
814

4689
486.1
5252
5555
5959
6477
7099
7490
8187
8825

453
48.0
515
546
587
625
652
701
787
863

20
20
21
24
27
28
30
31
34
39

28
-1.2

-.6
14
-12
21
_4
11
-3.9

4
1.7
18
1.1
17
1.6
25
16
14
1.9

4249
439.0
4733
500.3
5376
585.2
6420
677.7
7391
798.1

10155
1 1027
12128
13593
14728
15984
17828
19905
22497
25082

888
975
1079
1181
1375
1618
1792
2015
2299
2658

9266
10051
1 1048
12412
13354
14366
16036
17890
20198
22424

940
1034
111 1
1208
1290
1400
151.7
1657
178 1
1894

41
44
49
55
58
74
79
86
93
103

-1 1
18
16
-4.3
-17
25
3.6
0
19
10

29
26
37
3.5
12
24
1.0
3.0
39
35

832.6
8981
9941
1,122.7
1 203.5
12891
1,441.4
1,617.8
1,838.2
20473

27320
30526
31660
34057
37650
39981
42085

3038
3478
3832
3966
4151
4372
4551

24281
27048
27828
3009 1
33499
35609
37534

2133
251 5
2588
2826
3120
3314
3487

121
124
143
160
183
209
232

49
41
_1
-19
55
54

57
67
8.7
141
10.5
82
113

2,203.5
24435
2,518.4
27195
3,032.0
32223
3,387.4

1982: IV

32125

3932

28193

2645

152

68

15.4

2,548.2

1983: IV

35458

4008

31450

2941

165

25

196

2,851,5

1984-1 .
II
Ill
IV

36709
37438
37997
38456

4055
4130
4185
4233

32654
3,330 7
33812
34223

3029
310.3
3153
319.6

172
17.9
187
194

50
-3.2
6
-8.6

230
4.5
45
10.0

2 963.2
3,010.3
30523
3,102.0

1985: 1
||
III
IV

39093
39650
4,030.5
40877

4278
4331
441.3
4467

34815
35319
3,589.3
36410

323.3
3319
332.7
3377

20.0
206
21.2
217

-6.4
110
-5.5
16

12.5
102
2.6
74

3,157.0
3 201.4
3,243.4
3 287.3

1986- 1
II
III.. . .

4 1492
4,175.6
42407
42684

447 1
453.3
4576
4625

37021
3,722.3
37831
38060

3467
340.8
3542
3531

223
22.9
235
241

-36
4.6
103

41
22.4
1.0
178

3 340.7
3,376.4
3,396.1

1970
1971 .
1972
1973
1974.
1975
1976
1977
1978
1979

. .

1980
1981
1982
1983
1984
1985
1986 "

Source: Department of Commerce, Bureau of Economic Analysis.




268

o

TABLE B-22.—Relation of national income and personal income, 1929-86
[Billions of dollars; quarterly data at seasonally adjusted annual rates]

Year or quarter

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
1982
1983
1984
1985
1986"
1982: IV.
1983: IV.
1984 1
II.
Ill
IV.
1985 1
II.
III.
IV.
1986 1
II
III
IV P

National
income

84.7
394
71.2
79.6
102.8
136.2
169.7
182.6
181.6
180.7
196.6
221.5
215.2
239.8
277.3
291.6
306.6
306.3
336.3
356.3
372.8
375.0
409.2
424.9
439.0
473.3
500.3
537.6
585.2
642.0
677.7
739.1
798.1
832.6
898.1
994.1
1,122.7
1,203.5
1,289.1
1,441.4
1,617.8
1,838.2
2,047.3
2,203.5
2,443.5
2,518.4
2,719.5
3,032.0
3,222.3
3,387.4
2,548.2
2,851.5
2,963.2
3,010.3
3,052.3
3,102.0
3,157.0
3,201.4
3,243.4
3,287.3
3,340.7
3,376.4
3,396.1

9.6
15
5.5
8.8
14.3
19.7
24.0
24.2
19.7
17.2
22.9
30.3
28.0
34.9
39.9
37.5
37.7
36.6
47.1
45.7
45.3
40.3
51.4
49.5
50.3
58.3
63.6
70.7
81.3
86.6
84.1
90.7
87.4
74.7
87.1
100.7
113.3
101.7
117.6
145.2
174.8
197.2
200.1
177.2
188.0
150.0
213.7
264.7
280.7
299.7
146.1
248.5
262.5
271.7
259.8
265.0
266.4
274.3
296.3
285.6
296.4
293.1
302.0

4.7
41
3.6
3.3
3.3
3.1
2.7
2.3
2.2
1.8
2.3
2.4
2.6
3.0
3.5
3.9
4.4
5.2
5.8
6.5
7.8
9.5
10.2
11.3
12.9
14.6
16.3
18.2
20.9
24.3
27.4
29.8
34.6
41.2
46.3
51.0
59.6
75.5
83.8
88.8
105.3
126.3
158.3
200.9
248.1
272.3
281.0
307.4
311.4
294.9
266.9
290.2
292.5
305.2
316.1
315.7
316.8
311.4
309.7
307.6
304.9
297.7
292.9
2841

GovernWage
ment
Contribu- accruals
transfer Personal Personal Business
tions for
transfer
less
payments interest dividend payments
social
income income
to
insurance disbursements
persons

0.3
.3
2.2
2.4
2.8
3.5
4.6
5.2
6.3
7.7
6.7
6.0
6.6
7.4
8.8
9.3
9.6
10.6
12.0
13.5
15.5
15.9
18.8
21.9
22.9
25.4
28.5
30.1
31.6
40.6
45.5
50.4
57.9
62.2
68.9
79.0
97.6
110.5
118.5
134.5
149.8
171.7
197.8
216.5
251.2
269.6
291.0
326.7
355.7
376.1
273.0
299.2
318.8
323.9
329.0
334.9
350.0
353.9
356.8
362.1
371.5
373.5
376.6
3826

Source: Department of Commerce, Bureau of Economic Analysis.




Equals:

Plu S:

Le SS:
Corporate
profits
with
inventory
valuation
Net
and
interest
capital
consumption
adjustments

269

0.0
.0
.0
.0
.0
.0
.2
-.2
.0
.0
.0
.0
.0
.0
.1
.0
_i
'.0
.0
.0
.0
.0
.0
.0
.0
.0
.0
.0
.0
.0
.0
.0
.0
.0
.6
.0

_ 1

-'.5
.1
.1
.1

.3
-.2
.0
.1
.0
-.4
.2
-.2
.0
.0
.0
.2
.2
.0
.6
.1
-1.0
.0
.0
.0
.0
.0
.0

0.9
1.5
2.5
2.7
2.6
2.7
2.5
3.1
5.6
10.8
11.2
10.6
11.7
14.4
11.6
12.2
13.1
15.3
16.4
17.5
20.3
24.7
25.7
27.5
31.5
32.6
34.5
36.0
39.1
43.6
52.3
60.6
67.5
81.8
97.0
108.4
124.1
147.4
185.7
202.8
217.5
234.8
262.8
312.6
355.7
396.2
426.6
437.3
466.2
490.5
420.2
429.0
433.4
436.7
437.7
441.6
459.4
463.5
469.9
471.8
482.4
487.2
495.0
4976

6.9
5.5
5.3
5.3
5.3
5.2
5.1
5.2
5.8
6.6
7.5
8.0
8.7
9.6
10.4
11.2
12.4
13.7
14.9
16.6
18.7
20.3
22.3
24.9
26.3
28.9
32.2
35.5
39.6
44.2
48.2
53.2
60.9
69.3
74.7
80.8
93.3
111.9
122.5
134.1
155.4
182.5
221.5
271.9
335.4
369.7
393.1
446.9
476.2
475.4
366.2
411.6
421.4
438.9
460.6
466.8
473.8
475.3
475.2
480.6
480.8
480.1
473.8
466.7

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
21.9
22.4
22.2
22.6
24.1
26.6
28.9
28.7
33.8
38.2
43.0
48.1
52.9
61.3
63.9
68.7
74.7
76.4
81.2
65.4
71.0
72.9
74.7
75.2
75.9
76.3
76.4
76.3
76.7
79.1
81.1
82.0
827

0.6
.7
.5
.4
.5
.5
.5
.5
.5
.5
.6
.7
.8
.8
.9
1.0
1.2
1.1
1.2
1.4
1.5
1.6
1.8
2.0
2.0
2.1
2.4
2.7
2.8
3.0
3.1
3.4
3.9
4.1
4.4
4.9
5.5
5.8
7.4
7.9
8.6
9.3
10.3
12.1
12.4
14.3
16.0
18.3
20.9
23.2
15.2
16.5
17.2
17.9
18.7
19.4
20.0
20.6
21.2
21.7
22.3
22.9
23.5
24.1

Personal
income

!

;
!

|

84.3
46.3
72.1
77.6
95.2
122.4
150.7
164.5
170.0
177.6
190.2
209.2
206.4
228.1
256.5
273.8
290.5
293.0
314.2
337.2
356.3
367.1
390.7
409.4
426.0
453.2
476.3
510.2
552.0
600.8
644.5
707.2
772.9
831.8
894.0
981.6
1,101.7
1,210.1
1,313.4
1,451.4
1,607.5
1,812.4
2,034.0
2.258.5
2,520.9
2,670.8
2,838.6
3,110.2
3,314.5
3,487.0
2,729.2
2,941.8
3,034.2
3,077.4
3,139.7
3,189.6
3,253.1
3,298.7
3,323.2
3,382.9
3,432.6
3,483.3
3,498.8
3,533.4

TABLE B-23.—National income by type of income, 1929-86
[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Compensation
of employees
Year or quarter

1929 .
1933
1939
1940
1941
1942
1943
1944
1945
1946
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
1982
1983.
1984
1985 .
1986 P
1982- IV
1983- IV
1984: I

II
Ill
IV

1985:1

II
Ill
IV
1986- 1
II
Ill

IV

National
income l

84.7
39.4
71.2
79.6
102.8
136.2
169.7
182.6
181.6
180.7
196.6
221.5
215.2
239.8
277.3
291.6
306.6
306.3
336.3
356.3
372.8
375.0
409.2
424.9
439.0
473.3
500.3
537.6
585.2
642.0
677.7
739.1
798.1
832.6
898.1
994.1
1,122.7
1,203.5
1,289.1
1,441.4
1,617.8
1,838.2
2,047.3
2,203.5
2,443.5
2,518.4
2,719.5
3,032.0
3,222.3
3,387.4
2,548.2
2,851.5
2.963.2
3,010.3
3,052.3
3,102.0
3,157.0
3,201.4
3,243.4
3,287.3
3,340.7
3,376.4
3,396.1

Total

51.1
29.6
48.2
52.2
64.8
85.3
109.6
121.3
123.3
119.6
130.1
142.1
142.0
155.4
181.6
196.3
210.4
209.4
225.9
244.7
257.8
259.8
281.2
296.7
305.6
327.4
345.5
371.0
399.8
443.0
475.5
524.7
578.4
618.3
659.4
726.2
812.8
891.3
948.7
1,057.9
1,176.6
1,329.2
1,491.4
1,638.2
1,807.4
1,907.0
2,020.7
2,214.7
2,368.2
2,498.3
1,931.1
2,092.7
2,153.7
2,195.4
2,234.7
2,275.0
2,316.3
2,352.1
2,380.9
2,423.6
2,461.5
2,480.2
2,507.4
2,544.2

Proprietors' income with inventory valuation and capital consumption
adjustments

Supplements
Wages
to
and , wages
salaries
and
salaries 2

50.5
29.0
46.0
49.9
62.1
82.1
105.8
116.7
117.5
112.0
123.1
135.5
134.7
147.2
171.6
185.6
199.0
197.2
212.1
229.0
239.9
241.3
259.8
272.8
280.5
299.3
314.8
337.7
363.7
400.3
428.9
471.9
518.3
551.5
584.5
638.7
708.6
772.2
814.7
899.6
994.0
1,119.6
1,251.9
1,372.0
1,510.4
1,586.1
1,676.2
1,837.0
1,965.8
2,073.8
1,603.7
1,739.4
1,784.1
1,820.5
1,854.8
1,888.6
1,922.4
1,952.2
1,976.0
2,012.8
2,044.1
2,058.8
2,081.1
2,111.1

0.7
.6
2.2
2.3
2.8
3.2
3.8
4.5
5.8
7.6
7.0
6.5
7.3
8.2
10.0
10.7
11.5
12.1
13.8
15.7
17.8
18.5
21.4
23.8
25.1
28.1
30.7
33.2
36.1
42.7
46.6
52.8
60.1
66.8
74.9
87.6
104.2
119.1
134.0
158.3
182.6
209.7
239.5
266.3
297.1
320.9
344.5
377.7
402.4
424.5
327.4
353.4
369.6
374.9
379.8
386.3
393.9
399.8
404.9
410.9
417.4
421.3
426.3
433.1

Nonfarm

Farm
Total

14.4
5.4
11.4
12.6
17.1
23.9
28.8
30.0
31.5
36.3
35.5
40.4
35.9
38.8
44.0
44.4
43.4
43.5
45.4
46.9
48.8
51.5
51.7
52.1
54.3
56.6
57.7
60.5
65.1
69.6
71.1
75.4
79.3
80.2
86.8
98.3
119.0
118.8
125.4
137.7
152.9
176.2
191.9
180.7
186.8
175.5
190.9
236.9
254.4
278.9
188.3
207.8
242.5
229.6
234.6
240.7
250.7
255.5
249.3
262.1
265.3
289.1
277.5
283.7

1

Total

6.1
2.5
4.4
4.4
6.4
10.1
12.0
11.9
12.4
14.8
15.1
17.5
12.8
13.6
16.0
15.0
13.0
12.4
11.3
11.1
11.0
13.1
10.8
11.6
12.0
12.1
11.9
10.7
13.0
14.0
12.7
12.8
14.6
14.7
15.5
19.4
33.7
27.5
25.4
20.6
20.5
27.0
31.7
20.5
30.7
24.6
12.4
31.5
29.2
26.4
28.5
19.3
44.5
26.4
24.7
30.4
32.9
33.0
21.6
29.4
24.4
39.5
19.6
22.2

Proprietors'
income3

6.3
2.5
4.5
4.5
6.5
10.3
12.2
12.2
12.6
15.2
15.6
18.2
13.5
14.3
16.8
15.9
13.9
13.2
12.1
12.0
11.9
14.0
11.7
12.4
12.8
12.9
12.6
11.4
13.7
14.8
13.6
13.7
15.8
16.0
16.8
21.1
35.6
30.1
29.0
24.6
25.1
32.4
38.0
28.1
39.4
33.9
21.8
40.8
38.0
34.6
38.0
28.5
53.7
35.8
34.1
39.5
41.8
41.9
30.3
37.9
32.7
47.9
27.7
30.1

Capital
consumption
adjustment

02
.0
-.1
_~2
-'.2
-.2
-.3
-.3
4
-.5
7
-.7
-.7
8
-.9
-.9
8
-.8
9
-.9
-.9
— .9
-.8
-.8
-.8
-.7
7
-.7
8
-.8
_9
-U
-1.3
-1.3
-1.7
-1.9
-2.6
-3.6
40
-4^6
-5.3
63
-7.6
-8.7
-9.3
-9.4
-9.3
-8.8
-8.2
-9.4
-9.3
92
-9.4
94
-9.1
-8.9
-8.8
-8.7
85
84
-8.3
82
-8.0

Total

8.3
2.9
7.1
8.2
10.8
13.8
16.8
18.1
19.1
21.5
20.4
22.9
23.1
25.2
28.0
29.4
30.4
31.1
34.0
35.8
37.8
38.5
40.9
40.5
42.3
44.4
45.7
49.8
52.1
55.5
58.4
62.6
64.7
65.4
71.4
79.0
85.3
91.3
100.0
117.1
132.4
149.2
160.1
160.1
156.1
150.9
178.4
205.3
225.2
252.5
159.8
188.6
198.0
203.2
209.9
210.3
217.8
222.5
227.7
232.7
240.9
249.6
258.0
261.6

Proprietors'
income4

8.8
3.9
7.6
8.6
11.7
14.4
17.1
18.3
19.3
23.3
21.8
23.1
22.2
25.7
27.7
28.5
29.8
30.4
33.5
35.4
37.2
37.7
40.1
39.7
41.7
43.8
45.1
49.1
51.8
55.5
58.4
63.1
65.1
66.0
72.3
79.6
87.2
95.3
102.2
119.6
135.1
152.8
164.0
164.3
155.2
148.5
167.3
183.9
193.5
217.5
156.9
172.7
180.4
183.5
187.4
184.4
189.0
191.2
194.4
199.1
206.6
215.5
222.8
224.9

Inventory
valuation
adjustment

Capital
consumption
adjustment

_0.1
5

-0.6
-.5
-.4
-.3

-2
.0
-.6
-.4
_ 2

-!i
-.1

-1.7
-1.5
4
.5
-1.1
3
.2
-.2
.0
-.2
_5
-.3
-.1
.0
.0
.0
.0
.0
-.1
-.2
-.2
-.4
-.5
_5
-'.B

-2.0
-3.8
12
-1.3
-1.3
-2.3
-2.9
-2.9
-1.4
-.5
-.8
-.4
_2
-19
6
_7
-.9
-.6
-.2
.1
_3
-.3
-'.3
-A
-1.0
-1.1
-1.0

-'.3
-.2
-.1
-.1
-.1
.1
.2
.5
.6
.6
.7
.7
.8
.7
.9
.9
.9
.9
.8
.6
.6
.7
.7
.4
.3
-.'l
.1
.0
-.3
.1
.1
10
-1.3
-1.4
-1.4
-1.0
-1.2
2.3
2.9
12.0
21.8
31.9
35.9
3.5
16.5
18.5
20.3
22.8
25.8
29.0
31.5
33.2
34.0
34.7
35.1
36.2
37.7

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-21.
2
Employer contributions for social insurance and to private pension, health, and welfare funds.
See next page for continuation of table.




270

TABLE B-23.—National income by type of income, 1929-86—Continued
[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Rental income of persons
with capital cons
adjustmer t
Year or quarter
Total

1929
1933
1939
1940
1941
1942
1943
1944
1945
1946
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
1982
1983
1984
1985
1986 *
1982- IV
1983: IV
1984:1

H
III
IV
1985- 1
II
Ill
IV
1986:1

II
Ill
IV '

4.9
2.0
2.6
2.7
3.2
4.1
4.6
4.8
5.0
5.8
5.8
6.4
6.7
7.7
8.3
9.4
10.7
11.6
12.0
12.4
13.1
13.9
14.6
15.3
15.8
16.5
17.1
17.3
18.1
18.6
19.6
18.4
18.4
18.2
18.6
17.9
18.0
16.1
13.5
11.9
8.2
9.3
5.6
6.6
13.3
13.6
13.2
8.3
7.6
15.6
15.8
12.4
12.1
8.4
7.1
5.6
6.8
8.1
7.3
8.3
12.8
16.3
16.2
17.0

Rental Capital
conincome sumption
of
adjustpersons ment

5.6
2.1
3.2
3.3
4.0
5.1
5.7
6.1
6.5
7.5
8.2
9.1
9.4
10.5
11.5
12.7
13.9
14.9
15.3
15.9
16.5
17.3
18.0
18.7
19.1
19.8
20.3
20.5
21.3
22.2
23.5
22.9
24.2
24.6
25.9
26.5
28.1
28.9
28.6
28.9
28.8
34.2
35.7
41.4
52.2
54.4
55.0
51.7
52.4
60.6
56.5
54.3
54.0
51.9
51.1
49.6
50.4
51.5
53.0
54.7
57.2
61.3
61.5
62.5

-0.7
-.1
6
-.8
9
-1.1
13
-1.5
17
-2.4
27
-2.7
-2.8
-3.2
-3.3
33
3.2
33
-3.5
35
-3.4
34
34
-3.3
33
-3.2
-3.2
-3.3
-3.6
-3.9
-4.5
-5.8
-6.4
74
-8.6
-10.1
-12.7
-15.0
-17.0
206
-24.9
-30.1
348
-38.9
-40.8
-41.8
434
-44.8
-45.1
407
-41.9
41.9
435
-44.0
440
436
-43.4
457
-46.4
-44.4
-45.1
-45.3
-45.5

Corporate profits with inventory valuation and capital consumption adjustments
Profits with inventory valuation adjustment and without
capital consumption adjustment
Profits
Total
Total

9.6
-1.5
5.5
8.8
14.3
19.7
24.0
24.2
19.7
17.2
22.9
30.3
28.0
34.9
39.9
37.5
37.7
36.6
47.1
45.7
45.3
40.3
51.4
49.5
50.3
58.3
63.6
70.7
81.3
86.6
84.1
90.7
87.4
74.7
87.1
100.7
113.3
101.7
117.6
145.2
174.8
197.2
200.1
177.2
188.0
150.0
213.7
264.7
280.7
299.7
146.1
248.5
262.5
271.7
259.8
265.0
266.4
274.3
296.3
285.6
296.4
293.1
302.0

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
49.8
50.1
55.2
59.8
66.2
76.2
81.2
78.6
85.4
81.4
69.5
82.7
94.9
107.1
99.4
123.9
155.3
183.8
208.2
214.1
194.0
202.3
159.2
196.7
230.2
222.6
242.9
150.7
223.4
235.7
241.5
223.3
220.3
213.3
215.4
235.3
226.4
239.0
238.3
246.5

Profits Prnfitc
before
tax
tax liability

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
49.9
49.8
55.1
59.8
66.7
77.4
83.3
80.1
89.1
87.2
76.0
87.3
101.5
T7.2
138.9
134.8
170.3
200.4
233.5
257.2
237.1
226.5
169.6
207.6
235.7
223.2
236.6
164.1
231.5
249.3
246.5
225.1
221.9
213.8
213.8
229.2
235.8
222.5
227.7
240.4

3

1.4
.5
1.4
2.8
7.6
11.4
14.1
12.9
10.7
9.1
11.3
12.4
10.2
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
32.7
39.4
39.7
34.4
37.7
41.9
49.3
51.8
50.9
64.2
73.0
83.5
88.0
84.8
81.1
63.1
77.2
95.4
91.8
102.8
59.8
88.1
102.9
101.6
89.3
87.8
87.8
87.1
95.8
96.4
95.7
99.0
104.4

Profits after tax
Total
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
27.2
27.1
31.2
33.5
38.7
46.5
49.6
47.5
49.7
47.5
41.7
49.6
59.6
77.9
87.1
83.9
106.0
127.4
150.0
169.2
152.3
145.4
106.5
130.4
140.3
131.4
133.8
104.3
143.4
146.4
144.8
135.8
134.1
126.0
126.7
133.4
139.4
126.9
128.8
135.9

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.




271

Divi- Undisdends tributed
profits
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
29.7
29.6
34.6
39.5
44.7
50.1
54.7
63.6
66.9
71.5
78.3
81.6
87.8
68.5
73.9
76.0
78.1
79.0
80.1
80.9
81.4
81.6
82.5
85.2
87.5
88.8
89.7

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
13.7
16.8
18.0
21.4
27.4
30.2
27.3
27.7
25.0
19.2
26.6
35.2
50.8
57.3
54.3
71.4
87.9
105.2
119.1
97.6
81.8
39.6
58.9
62.0
49.8
46.0
35.8
69.5
70.4
66.7
56.8
54.0
45.1
45.3
51.8
57.0
41.7
41.2
47.2

Inventory
valuation
adjustment
0.5
-2.1
2
-2.5
12
-.8
3
-.6
53
-5.9
-2.2
1.9
-5.0
-1.2
1.0
-1.0
l'y
-2.7
15
-.3
3
-.2
.3
.0
.1
5
-1.2
-2.1
-1.6
-3.7
-5.9
-6.6
46
-6.6
200
-39'.5
-11.0
-14.9
166
-25.3
-43.2
43 1
-24.2
-10.4
-10.9
55
-.6
6.3
-13.4
-8.1
-13.6
49
-1.8
-1.6
5
1.6
6.1
-9.4
16.5
10.6
6.1
-8.0

Capital
Net
consumption interest
adjustment

-0.9
-.3
-1.0
-1.1
-1.1
-.8
_5
'.2
A
-2.4
-2.9
-3.2
-3.0
-3.0
-3.4
-3.2
-2.5
-1.8
-.4
-1.2
-1.3
-1.3
-.8
-.3
.2
3.1
3.8
4.5
5.2
5.4
5.5
5.3
6.1
5.2
4.3
5.8
6.2
2.3
-6.2
-10.1
-9.0
109
-14.0
-16.8
144
-9.2
17.0
34.5
58.1
56.8
45
25.1
26.7
30.2
36.5
44.7
53.2
58.9
61.0
59.2
57.3
54.8
55.5
59.5

4.7
4.1
3.6
3.3
3.3
3.1
2.7
2.3
2.2
1.8
2.3
2.4
2.6
3.0
3.5
3.9
4.4
5.2
5.8
6.5
7.8
9.5
10.2
11.3
12.9
14.6
16.3
18.2
20.9
24.3
27.4
29.8
34.6
41.2
46.3
51.0
59.6
75.5
83.8
88.8
105.3
126.3
158.3
200.9
248.1
272.3
281.0
307.4
311.4
294.9
266.9
290.2
292.5
305.2
316.1
315.7
316.8
311.4
309.7
307.6
304.9
297.7
292.9
284.1

TABLE B-24.—Sources of personal income, 1929-86
[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Wage and salary disbursements l

Personal
income

Year or quarter

Commodityproducing
industries
Total

Total
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
1982 .
1983
1984
1985
1986 "
1982: IV
1983- IV
1984- 1
II
Ill .
IV
1985- 1
II
Ill
IV
1986: 1
||
III p
IV ....

!

84.3
46.3
72.1
77.6
95.2
122.4
150.7
164.5
170.0
177.6
190.2
209.2
206.4
228.1
256.5
273.8
290.5
293.0
314.2
337.2
356.3
367.1
390.7
409.4
426.0
453.2
476.3
510.2
552.0
600.8
644.5
707.2
772.9
831.8
894.0
981.6
1,101.7
1,210.1
1,313.4
1,451.4
1,607.5
1,812.4
2,034.0
2,258.5
2,520.9
2,670.8
2,838.6
3,110.2
3,314.5
3,487.0
2,729.2
2,941.8
3,034.2
3,077.4
3,139.7
3,189.6
3,253.1
3,298.7
3,323.2
3,382.9
3,432.6
3,483.3
3,498.8
3,533.4

50.5
29.0
46.0
49.9
62.1
82.1
105.6
116.9
117.5
112.0
123.1
135.5
134.8
147.2
171.5
185.6
199.0
197.2
212.1
229.0
239.9
241.3
259.8
272.8
280.5
299.3
314.8
337.7
363.7
400.3
428.9
471.9
518.3
551.5
583.9
638.7
708.7
772.6
814.6
899.5
993.9
1,119.3
1,252.1
1,372.0
1,510.3
1,586.1
1,676.6
1,836.8
1,966.1
2,073.8
1,603.6
1,739.4
1,783.9
1,820.3
1,854.9
1,888.1
1,922.3
1,953.3
1,976.0
2,012.8
2,044.1
2,058.8
2,081.1
2,111.1

21.5
9.8
17.4
19.7
27.5
39.1
49.0
50.4
45.9
46.0
54.2
61.1
57.8
64.8
76.4
82.1
89.8
85.8
93.3
100.8
104.4
100.3
109.9
113.4
114.0
122.2
127.4
136.0
146.6
161.6
169.0
184.1
200.4
203.7
209.1
228.2
255.9
276.5
277.1
309.7
346.1
392.3
441.4
470.7
512.2
511.7
523.1
577.8
607.7
623.3
501.8
545.4
563.5
572.9
582.9
591.9
600.1
605.0
608.3
617.7
622.0
620.8
621.8
628.7

GovernOther
Distrib- Service ment
and
labor
utive
income1
indus- indus- governtries
ment
Manutries
enterfacturing
prises

16.1
7.8
13.6
15.6
21.7
30.9
40.9
42.9
38.2
36.5
42.5
47.1
44.6
50.3
59.4
64.2
71.3
67.6
73.9
79.5
82.5
78.7
86.9
89.8
89.9
96.8
100.7
107.3
115.7
128.2
134.3
146.0
157.7
158.4
160.5
175.6
196.6
211.8
211.6
238.0
266.7
300.1
334.8
355.6
386.7
384.0
397.4
439.1
460.1
471.3
377.4
415.5
427.8
435.8
443.0
449.9
455.1
457.3
460.7
467.5
470.5
468.8
470.0
475.8

15.6
8.8
13.3
14.2
16.3
18.0
20.1
22.7
24.8
31.0
35.2
37.5
37.7
39.9
44.4
47.0
49.9
50.3
53.6
58.0
60.7
61.1
65.1
68.6
69.6
73.3
76.8
82.0
87.9
95.1
101.6
110.8
121.7
131.2
140.4
153.3
170.3
186.8
198.1
219.5
242.7
274.6
307.8
335.5
366.8
384.2
404.2
442.2
469.8
488.0
389.3
420.8
429.2
439.1
446.7
454.0
460.2
467.7
472.4
478.9
485.2
484.3
488.3
494.2

8.4
52
7.1
7.5
8.1
9.0
9.9
10.9
11.9
14.3
16.1
17.9
18.5
19.9
21.6
23.2
25.0
26.2
28.7
31.5
33.8
35.9
38.8
41.7
44.4
47.6
50.7
54.9
59.4
65.3
72.0
80.4
90.6
99.4
107.9
119.7
133.9
148.6
163.4
181.6
202.8
232.9
266.8
305.6
346.9
384.4
425.1
470.6
516.4
566.8
398.5
443.2
453.1
465.0
476.1
488.1
498.8
511.0
521.1
534.6
549.6
561.3
572.6
583.8

5.0
5.2
8.2
8.5
10.2
16.0
26.6
33.0
34.9
20.7
17.5
19.0
20.8
22.6
29.2
33.3
34.4
34.9
36.6
38.8
41.0
44.1
46.0
49.2
52.4
56.3
60.0
64.9
69.9
78.3
86.4
96.6
105.5
117.1
126.5
137.4
148.7
160.9
176.0
188.6
202.3
219.4
236.1
260.2
284.4
305.9
324.3
346.2
372.2
395.7
314.0
330.0
338.2
343.4
349.2
354.0
363.2
369.6
374.2
381.6
387.2
392.5
398.4
404.4

0.5
.4
.6
.6
.7
.9
1.1
1.5
1.8
2.0
2.4
2.7
2.9
3.7
4.6
5.2
5.9
6.1
7.0
8.0
9.0
9.4
10.6
11.2
11.8
13.0
14.0
15.7
17.8
19.9
21.7
25.2
28.5
32.5
36.7
43.0
49.2
56.5
65.9
79.3
94.1
107.7
122.7
138.4
150.3
163.6
173.6
184.5
196.9
208.8
168.0
177.8
181.0
183.5
185.5
188.2
191.7
195.3
198.8
201.7
204.5
207.3
210.4
213.0

Proprietors' income
with inventory
valuation and
capital
consumption
adjustments
Farm
6.1
2.5
4.4
4.4
6.4
10.1
12.0
11.9
12.4
14.8
15.1
17.5
12.8
13.6
16.0
15.0
13.0
12.4
11.3
11.1
11.0
13.1
10.8
11.6
12.0
12.1
11.9
10.7
13.0
14.0
12.7
12.8
14.6
14.7
15.5
19.4
33.7
27.5
25.4
20.6
20.5
27.0
31.7
20.5
30.7
24.6
12.4
31.5
29.2
26.4
28.5
19.3
44.5
26.4
24.7
30.4
32.9
33.0
21.6
29.4
24.4
39.5
19.6
22.2

Nonfarm
8.3
2.9
7.1
8.2
10.8
13.8
16.8
18.1
19.1
21.5
20.4
22.9
23.1
25.2
28.0
29.4
30.4
31.1
34.0
35.8
37.8
38.5
40.9
40.5
42.3
44.4
45.7
49.8
52.1
55.5
58.4
62.6
64.7
65.4
71.4
79.0
85.3
91.3
100.0
117.1
132.4
149.2
160.1
160.1
156.1
150.9
178.4
205.3
225.2
252.5
159.8
188.6
198.0
203.2
209.9
210.3
217.8
222.5
227.7
232.7
240.9
249.6
258.0
261.6

1
The total of wage and salary disbursements and other labor income differs from compensation of employees in Table B-23 in that it
excludes employer contributions for social insurance and the excess of wage accruals over wage disbursements.
See next page for continuation of table.




272

TABLE B-24.—Sources of personal income, 1929-86—Continued
[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Rental
income
of
persons Personal Personal
with
Year or quarter capital dividend interest
income income
consumption
adjustment

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
1982
1983
1984
1985
1986 * .
1982: IV
1983: IV
1984- 1
II
Ill
IV
1985: 1
||
Ill
IV ...
1986:1
|
|

III
IV

4.9
2.0
2.6
2.7
3.2
4.1
4.6
4.8
5.0
5.8
5.8
6.4
6.7
7.7
8.3
9.4
10.7
11.6
12.0
12.4
13.1
13.9
14.6
15.3
15.8
16.5
17.1
17.3
18.1
18.6
19.6
18.4
18.4
18.2
18.6
17.9
18.0
16.1
13.5
11.9
8.2
9.3
5.6
6.6
13.3
13.6
13.2
8.3
7.6
15.6
15.8
12.4
12.1
8.4
7.1
5.6
6.8
8.1
7.3
8.3
12.8
16.3
16.2
17.0

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
21.9
22.4
22.2
22.6
24.1
26.6
28.9
28.7
33.8
38.2
43.0
48.1
52.9
61.3
63.9
68.7
74.7
76.4
81.2
65.4
71.0
72.9
74.7
75.2
75.9
76.3
76.4
76.3
76.7
79.1
81.1
82.0
82.7

6.9
5.5
5.3
5.3
5.3
5.2
5.1
5.2
5.8
6.6
7.5
8.0
8.7
9.6
10.4
11.2
12.4
13.7
14.9
16.6
18.7
20.3
22.3
24.9
26.3
28.9
32.2
35.5
39.6
44.2
48.2
53.2
60.9
69.3
74.7
80.8
93.3
111.9
122.5
134.1
155.4
182.5
221.5
271.9
335.4
369.7
393.1
446.9
476.2
475.4
366.2
411.6
421.4
438.9
460.6
466.8
473.8
475.3
475.2
480.6
480.8
480.1
473.8
466.7

Transfer payments

Total

1.5
2.1
3.0
3.1
3.1
3.1
3.0
3.6
6.2
11.3
11.7
11.3
12.5
15.2
12.6
13.3
14.3
16.3
17.7
18.9
21.8
26.3
27.4
29.5
33.5
34.7
36.9
38.7
41.9
46.6
55.5
64.0
71.4
85.9
101.5
113.3
129.6
153.2
193.1
210.7
226.1
244.0
273.1
324.7
368.1
410.6
442.6
455.6
487.1
513.7
435.4
445.5
450.6
454.6
456.4
461.8
479.4
484.1
491.1
493.6
504.7
510.1
518.5
521.7

Old-age,
Governsurvivors, Government
ment
disability, unememployand
ees
ployment Veterans
health
insur- benefits retireinsurance
ment
ance
benefits
benefits benefits

0.0
.0
.1
.1
.2
.2
.3
.4
.5
.6
.7
1.0
1.9
2.2
3.0
3.6
4.9
5.7
7.3
8.5
10.2
11.1
12.6
14.3
15.2
16.0
18.1
20.8
25.5
30.2
32.9
38.5
44.5
49.6
60.4
70.1
81.4
92.9
104.9
116.2
131.8
154.2
182.0
204.5
221.7
235.7
253.4
266.7
216.6
227.0
231.2
233.7
235.8
241.9
249.3
251.1
256.5
256.3
263.2
264.1
269.6
270.2

0.4
.5
.4
.4
.1
.1
.4
1.1
.8
.9
1.9
1.5
.9
1.1
1.0
2.2
1.5
1.5
1.9
4.1
2.8
3.0
4.3
3.1
3.0
2.7
2.3
1.9
2.2
2.1
2.2
4.0
5.8
5.7
4.4
6.8
17.6
15.8
12.7
9.7
9.8
16.1
15.9
25.2
26.3
15.8
15.7
16.3
31.8
20.0
17.3
15.6
15.1
15.5
16.7
15.8
15.1
15.3
15.5
16.3
16.9
16.5

06
.6
.5
.5
.5
.5
.5
1.0
3.0
7.0
7.0
5.9
5.3
7.7
4.6
4.3
4.1
4.2
4.4
4.4
4.5
4.7
4.6
4.6
5.0
4.7
4.8
4.7
4.9
4.9
5.6
5.9
6.7
7.7
8.8
9.7
10.4
11.8
14.5
14.4
13.8
13.9
14.4
15.0
16.1
16.4
16.6
16.4
16.7
16.8
16.6
16.5
16.4
16.4
16.5
16.3
16.8
16.8
16.7
16.4
17.0
17.0
16.7
16.4

Aid to
families
with
depend- Other
ent
children
(AFDC)

01

'.3
.3
.3
.3
.4
.4
.5
.7
.7
.7
.9
1.0
1.1
1.2
1.4
1.5
1.7
1.9
2.2
2.5
2.8
3.1
3.4
3.7
4.2
4.7
5.2
6.1
6.9
7.6
8.7
10.2
11.8
13.8
16.0
19.0
22.7
26.1
29.0
32.7
36.9
43.0
49.4
54.6
58.7
60.8
66.6
70.6
56.1
60.2
61.1
61.8
62.5
57.7
65.3
66.2
67.0
68.0
69.1
70.1
71.0
72.1

0.3"
.4
.5
.6
.6
.5
.5
.6
.6
.6
.7
.8
.9
1.0
1.1
1.3
1.4
1.5
1.7
1.9
2.3
2.8
3.5
4.8
6.2
6.9
7.2
7.9
9.2
10.1
10.6
10.7
11.0
12.4
13.0
13.3
14.2
14.9
15.4
16.2
13.6
14.5
15.0
15.0
14.6
14.9
15.1
15.3
15.6
15.7
16.0
16.2
16.3
16.4

0.8
1.4
1.7
1.7
1.8
1.8
1.8
2.0
2.0
2.1
2.5
2.9
3.3
3.5
3.6
3.9
4.2
4.2
4.5
4.8
5.2
5.7
6.2
6.7
7.1
7.6
8.3
9.1
9.8
11.2
13.0
15.3
17.3
20.7
24.5
27.6
31.2
37.5
47.6
51.5
55.1
60.9
69.1
84.0
91.8
96.5
105.1
112.0
119.2
127.1
100.6
107.3
109.6
112.0
111.9
114.6
116.1
118.9
120.3
121.3
124.0
126.5
127.9
130.1

Less:
Personal
contribu- Nonfarm
personal
tions for income 2
social
insurance

0.1
.2
.6
.7
.8
1.2
1.8
2.2
2.3
2.0
2.1
2.2
2.2
2.9
3.4
3.8
4.0
4.6
5.2
5.8
6.7
6.9
7.9
9.3
9.7
10.3
11.8
12.6
13.3
17.8
20.6
22.9
26.2
27.9
30.7
34.5
42.6
47.9
50.4
55.5
61.2
69.8
81.0
88.6
104.5
112.3
120.1
133.5
150.2
160.3
113.5
123.6
130.3
132.5
134.7
136.7
147.8
149.4
150.7
152.9
158.6
159.5
160.8
162.5

159.9
172.0
188.3
190.6
211.2
237.1
255.4
274.2
277.5
299.6
322.8
341.9
350.4
376.2
393.9
409.9
436.7
460.0
494.9
534.0
581.5
626.3
688.7
752.1
810.4
871.8
955.0
1,059.7
1,172.6
1,276.9
1,417.9
1,572.6
1,769.3
1,983.2
2,215.8
2,465.6
2,618.7
2,799.0
3,052.2
3,261.0
3,437.8
2,672.8
2,895.6
2,962.7
3,024.2
3,088.6
3,133.2
3,194.9
3,241.0
3,277.8
3,330.4
3,385.4
3,421.1
3,456.4
3,488.3

2
Personal income exclusive of farm proprietors' income, farm wages, farm other labor income, and farm 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.




273

TABLE B-25.—Disposition of personal income, 1929-86
[Billions of dollars, except as noted; quarterly data at seasonally adjusted annual rates]
Less: Personal outlays

Year or quarter

Personal
income

Less:
Equals:
Personal Dispostax and
able
nontax personal
payments income

Total

Personal
consumption
expenditures

Interest
paid by
consumers to
business

1.5

0.3

.'7
.8
.9
.7
.5
.5
.5

.2
.2
.2
.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.
1982
1983
1984
1985 p
1986

84.3
46.3
72.1
77.6
95.2
122.4
150.7
164.5
170.0
177.6
190.2
209.2
206.4
228.1
256.5
273.8
290.5
293.0
314.2
337.2
356.3
367.1
390.7
409.4
426.0
453.2
476.3
510.2
552.0
600.8
644.5
707.2
772.9
831.8
894.0
981.6
1,101.7
1,210.1
1,313.4
1,451.4
1,607.5
1,812.4
2,034.0
2,258.5
2,520.9
2,670.8
2,838.6
3,110.2
3,314.5
3,487.0

2.6
1.4
2.4
2.6
3.3
5.9
17.8
18.9
20.8
18.7
21.4
21.0
18.5
20.6
28.9
34.0
35.5
32.5
35.4
39.7
42.4
42.2
46.1
50.5
52.2
57.0
60.5
58.8
65.2
74.9
82.4
97.7
116.3
116.2
117.3
142.0
152.0
171.8
170.6
198.7
228.1
261.1
304.7
340.5
393.3
409.3
410.5
439.6
486.5
513.4

81.7
44.9
69.7
75.0
91.9
116.4
132.9
145.6
149.2
158.9
168.8
188.1
187.9
207.5
227.6
239.8
255.1
260.5
278.8
297.5
313.9
324.9
344.6
358.9
373.8
396.2
415.8
451.4
486.8
525.9
562.1
609.6
656.7
715.6
776.8
839.6
949.8
1,038.4
1,142.8
1,252.6
1,379.3
1,551.2
1,729.3
1,918.0
2,127.6
2,261.4
2,428.1
2,670.6
2,828.0
2,973.7

79.2
46.5
67.9
72.0
81.9
89.5
100.2
109.0
120.5
145.3
163.6
177.0
180.6
194.8
211.0
222.4
236.7
244.1
262.8
276.2
291.2
300.6
322.8
338.1
348.9
370.2
391.2
419.9
452.5
489.9
516.9
567.1
614.5
657.9
710.5
778.2
860.8
941.7
1,038.2
1,156.9
1,288.6
1,441.1
1,611.3
1,781.1
1,968.1
2,107.5
2,297.4
2,501.9
2,684.7
2,857.4

77.3
45.8
67.0
71.0
80.8
88.6
99.5
108.2
119.6
143.9
161.9
174.9
178.3
192.1
208.1
219.1
232.6
239.8
257.9
270.6
285.3
294.6
316.3
330.7
341.1
361.9
381.7
409.3
440.7
477.3
503.6
552.5
597.9
640.0
691.6
757.6
837.2
916.5
1,012.8
1,129.3
1,257.2
1,403.5
1,566.8
1,732.6
1,915.1
2,050.7
2,234.5
2,428.2
2,600.5
2,762.4

LO
1.4
1.7
2.3
2.5
2.9
3.6
3.8
4.4
5.1
5.5
5.6
6.1
7.0
7.3
7.8
8.8
9.9
11.1
12.0
12.5
13.8
15.6
16.7
17.7
19.5
22.3
24.1
24.4
26.6
30.5
36.7
43.5
47.4
52.0
55.5
61.9
72.3
82.6
93.6

1982- IV
1983- IV
1984: 1
||
III
IV
1985- 1
II
Ill
IV
1986- 1
II
III
IV P

2,729.2
2,941.8
3,034.2
3,077.4
3,139.7
3,189.6
3,253.1
3,298.7
3,323.2
3,382.9
3,432.6
3,483.3
3,498.8
3,533.4

411.1
413.9
421.5
431.2
445.9
460.0
497.7
456.4
491.2
500.7
497.5
504.8
519.0
532.2

2,318.1
2,527.9
2,612.7
2,646.3
2,693.8
2,729.6
2,755.4
2,842.3
2,832.0
2,882.2
2,935.1
2,978.5
2,979.9
3,001.2

2,174.9
2,382.5
2,433.5
2,488.7
2,520.9
2,564.6
2,611.3
2,658.7
2,712.4
2,756.4
2,789.4
2,825.5
2,895.8
2,918.9

2,117.0
2,315.8
2,363.8
2,416.1
2,445.6
2,487.2
2,530.9
2,576.0
2,627.1
2,667.9
2,697.9
2,732.0
2,799.8
2,819.9

56.8
65.5
68.2
71.1
73.9
75.8
78.4
81.2
83.8
87.0
89.8
92.3
94.9
97.5

Source: Department of Commerce, Bureau of Economic Analysis.




Personal
transfer Equals:
pay- Personal
ments
saving
to
foreigners
(net)

274

Percent of disposable
personal income
Personal outlays

Total

Personal
consump- Personal
saving
tion
expenditures

.7
.7
.7
.9
.9
1.0
1.2
1.2
1.1
1.3
1.0
1.0
1.0
.9
.9
1.0
1.1
1.0
1.3
1.0
1.5
1.6
1.4

2.6
-1.6
1.8
3.0
10.0
27.0
32.7
36.5
28.7
13.6
5.2
11.1
7.4
12.6
16.6
17.4
18.4
16.4
16.0
21.3
22.7
24.3
21.8
20.8
24.9
25.9
24.6
31.5
34.3
36.0
45.1
42.5
42.2
57.7
66.3
61.4
89.0
96.7
104.6
95.8
90.7
110.2
118.1
136.9
159.4
153.9
130.6
168.7
143.3
116.3

96.8
103.6
97.4
96.0
89.1
76.8
75.4
74.9
80.8
91.4
96.9
94.1
96.1
93.9
92.7
92.7
92.8
93.7
94.2
92.8
92.8
92.5
93.7
94.2
93.4
93.5
94.1
93.0
93.0
93.2
92.0
93.0
93.6
91.9
91.5
92.7
90.6
90.7
90.8
92.4
93.4
92.9
93.2
92.9
92.5
93.2
94.6
93.7
94.9
96.1

94.5
102.1
96.2
94.7
87.9
76.1
74.8
74.4
80.2
90.6
95.9
93.0
94.9
92.6
91.4
91.4
91.2
92.0
92.5
90.9
90.9
90.7
91.8
92.1
91.3
91.4
91.8
90.7
90.5
90.8
89.6
90.6
91.0
89.4
89.0
90.2
88.2
88.3
88.6
90.2
91.1
90.5
90.6
90.3
90.0
90.7
92.0
90.9
92.0
92.9

3.2
-3.6
2.6
4.0
10.9
23.2
24.6
25.1
19.2
8.6
3.1
5.9
3.9
6.1
7.3
7.3
7.2
6.3
5.8
7.2
7.2
7.5
6.3
5.8
6.6
6.5
5.9
7.0
7.0
6.8
8.0
7.0
6.4
8.1
8.5
7.3
9.4
9.3
9.2
7.6
6.6
7.1
6.8
7.1
7.5
6.8
5.4
6.3
5.1
3.9

1.1
1.2
1.4
1.5
1.4
1.5
2.1
1.4
1.5
1.6
1.7
1.2
1.2
1.5

143.1
145.4
179.2
157.6
172.9
165.0
144.1
183.6
119.6
125.8
145.6
153.1
84.1
82.3

93.8
94.2
93.1
94.0
93.6
94.0
94.8
93.5
95.8
95.6
95.0
94.9
97.2
97.3

91.3
91.6
90.5
91.3
90.8
91.1
91.9
90.6
92.8
92.6
91.9
91.7
94.0
94.0

6.2
5.8
6.9
6.0
6.4
6.0
5.2
6.5
4.2
4.4
5.0
5.1
2.8
2.7

A
.5
.7
.7
.7
.5
.4
.4
.4
.5
A
.5
.5
.4
.4
.4
.5

!e

TABLE B-26.—Total and per capita disposable personal income and personal consumption expenditures in
current and 1982 dollars, 1929-86
[Quarterly data at seasonally adjusted annual rates, except as noted]
Personal consumption expenditures

Disposable personal income
Year or quarter

Total (billions of
dollars)
Current
dollars

1929
1933
1939
1940
1941
1942
1943
1944
1945
1946
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
1982
1983
1984 .
1985
1986"
1982- IV
1983- IV

. .. .

1984: I

II
III
IV.
1985:1
|
|
III
IV
1986- I....
II
Ill

IV

1982
dollars

81.7
44.9
69.7
75.0
91.9
116.4
132.9
145.6
149.2
158.9
168.8
188.1
187.9
207.5
227.6
239.8
255.1
260.5
278.8
297.5
313.9
324.9
344.6
358.9
373.8
396.2
415.8
451.4
486.8
525.9
562.1
609.6
656.7
715.6
776.8
839.6
949.8
1,038.4
1,142.8
1,252.6
1,379.3
1,551.2
1,729.3
1,918.0
2,127.6
2,261.4
2,428.1
2,670.6
2,828.0
2,973.7
2,318.1
2,527.9
2,612.7
2,646.3
2,693.8
2,729.6
2,755.4
2,842.3
2,832.0
2,882.2
2,935.1
2,978.5
2,979.9
3,001.2

498.6
370.8
499.5
530.7
604.1
693.0
721.4
749.3
739.5
723.3
694.8
733.1
733.2
791.8
819.0
844.3
880.0
894.0
944.5
989.4
1,012.1
1,028.8
1,067.2
1,091.1
1,123.2
1,170.2
1,207.3
1,291.0
1,365.7
1,431.3
1,493.2
1,551.3
1,599.8
1,668.1
1,728.4
1,797.4
1,916.3
1,896.6
1,931.7
2,001.0
2,066.6
2,167.4
2,212.6
2,214.3
2,248.6
2,261.5
2,331.9
2,470.6
2,528.0
2,603.7
2,276.1
2,392.7
2,446.9
2,460.3
2,481.9
2,493.1
2,495.7
2,550.8
2,524.7
2,540.7
2,581.2
2,625.8
2,605.5
2,602.3

Per capita
(dollars)
Current
dollars

671
357
532
568
689
863
972
1,052
1,066
1,124
1,171
1,283
1,260
1,368
1,475
1,528
1,599
1,604
1,687
1,769
1,833
1,865
1,946
1,986
2,034
2,123
2,197
2,352
2,505
2,675
2,828
3,037
3,239
3,489
3,740
4,000
4,481
4,855
5,291
5,744
6,262
6,968
7,682
8,421
9,243
9,724
10,340
11,265
11,817
12.312
9,929
10,725
11,060
11,178
11,350
11,471
11,555
11,893
11,819
11,999
12,193
12,348
12,324
12,382

1

Total (billions of
dollars)

1982
dollars

Current
dollars

1982
dollars

4,091
2,950
3,812
4,017
4,528
5,138
5,276
5,414
5,285
5,115
4,820
5,000
4,915
5,220
5,308
5,379
5,515
5,505
5,714
5,881
5,909
5,908
6,027
6,036
6,113
6,271
6,378
6,727
7,027
7,280
7,513
7,728
7,891
8,134
8,322
8,562
9,042
8,867
8,944
9,175
9,381
9,735
9,829
9,722
9,769
9,725
9,930
10,421
10-,563
10,780
9,749
10,151
10,358
10,392
10,457
10,477
10,466
10,674
10,537
10,577
10,723
10,886
10,776
10,737

77.3
45.8
67.0
71.0
80.8
88.6
99.5
108.2
119.6
143.9
161.9
174.9
178.3
192.1
208.1
219.1
232.6
239.8
257.9
270.6
285.3
294.6
316.3
330.7
341.1
361.9
381.7
409.3
440.7
477.3
503.6
552.5
597.9
640.0
691.6
757.6
837.2
916.5
1,012.8
1,129.3
1,257.2
1,403.5
1,566.8
1,732.6
1,915.1
2,050.7
2,234.5
2,428.2
2,600.5
2,762.4
2,117.0
2,315.8
2,363.8
2,416.1
2,445.6
2,487.2
2,530.9
2,576.0
2,627.1
2,667.9
2,697.9
2,732.0
2,799.8
2,819.9

471.4
378.7
480.5
502.6
531.1
527.6
539.9
557.1
592.7
655.0
666.6
681.8
695.4
733.2
748.7
771.4
802.5
822.7
873.8
899.8
919.7
932.9
979.4
1,005.1
1,025.2
1,069.0
1,108.4
1,170.6
1,236.4
1,298.9
1,337.7
1,405.9
1,456.7
1,492.0
1,538.8
1,621.9
1,689.6
1,674.0
1,711.9
1,803.9
1,883.8
1,961.0
2,004.4
2,000.4
2,024.2
2,050.7
2,146.0
2,246.3
2,324.5
2,418.6
2,078.7
2,191.9
2,213.8
2,246.3
2,253.3
2,271.7
2,292.3
2,311.9
2,342.0
2,351.7
2,372.7
2,408.4
2,448.0
2,445.1

Per capita
(dollars)
Current
dollars

634
365
511
538
606
657
727
782
855
1,018
1,123
1,193
1,195
1,267
1,349
1,396
1,458
1,477
1,560
1,608
1,666
1,692
1,786
1,829
1,857
1,940
2,017
2,133
2,268
2,428
2,534
2,752
2,949
3,121
3,330
3,609
3,950
4,285
4,689
5,178
5,707
6,304
6,960
7,607
8,320
8,818
9,516
10,243
10,866
11,437
9,068
9,825
10,007
10,206
10,304
10,453
10,613
10,779
10,964
11,107
11,208
11,326
11,579
11,634

1982
dollars
3,868
3,013
3,667
3,804
3,981
3,912
3,949
4,026
4,236
4,632
4,625
4,650
4,661
4,834
4,853
4,915
5,029
5,066
5,287
5,349
5,370
5,357
5,531
5,561
5,579
5,729
5,855
6,099
6,362
6,607
6,730
7,003
7,185
7,275
7,409
7,726
7,972
7,826
7,926
8,272
8,551
8,808
8,904
8,783
8,794
8,818
9,139
9,475
9,713
10,014
8,904
9,299
9,372
9,489
9,494
9,547
9,613
9,674
9,775
9,790
9,857
9,985
10,125
10,088

Population
(thousands) *

121,878
125,690
131,028
132,122
133,402
134,860
136,739
138,397
139,928
141,389
144,126
146,631
149,188
151,684
154,287
156,954
159,565
162,391
165,275
168,221
171,274
174,141
177,073
180,760
183,742
186,590
189,300
191,927
194,347
196,599
198,752
200,745
202,736
205,089
207,692
209,924
211,939
213,898
215,981
218,086
220,289
222,629
225,106
227,754
230,182
232,549
234,829
237,067
239,317
241,522
233,466
235,707
236,222
236,742
237,347
237,953
238,469
238,985
239,605
240,206
240,709
241,215
241,789
242,376

Population of the United States including Armed Forces overseas; includes Alaska and Hawaii beginning 1960. Annual data are for
July 1 through 1958 and are averages of quarterly data beginning 1959. Quarterly data are averages for the period.
Source: Department of Commerce (Bureau of Economic Analysis and Bureau of the Census).




275

TABLE B-27.—Gross saving and investment, 1929-86
[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Gross saving
Gross private saving
Year or
quarter

Total

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 ..
1982
1983
1984
1985
1986 »
1982- IV
1983: IV
1984- 1
||
III
IV. .
1985:1
II.
Ill
IV
1986- 1
II..
Ill
IV P

15.9
.6
8.9
13.6
18.8
10.9
5.8
3.0
5.9
35.7
42.5
50.8
36.5
52.5
58.7
52.3
51.0
51.6
68.4
77.3
77.1
64.5
80.5
84.2
82.6
91.4
98.7
108.5
123.5
130.3
129.5
139.7
158.8
154.7
171.9
200.7
251.9
247.9
238.7
283.0
335.4
408.6
458.4
445.0
522.0
446.4
463.6
573.3
551.5
537.4
387.4
519.9
580.7
568.7
578.2
565.5
573.2
566.8
541.7
524.1
583.2
539.7
517.2

Total

14.9
1.9

11.1
14.3
22.6
42.3
50.0
54.9
45.4
30.3
28.1
42.4
39.9
44.5
52.6
56.1
58.0
58.8
65.2
72.1
76.1
77.1
82.1
81.1
86.8
95.2
97.9
110.8
123.0
131.6
143.8
145.7
148.9
164.5
190.6
203.4
244.0
254.3
303.6
321.4
354.5
409.0
445.8
478.4
550.5
557.1
592.2
674.8
687.8
680.5
554.2
632.8
668.3
662.6
682.9
685.4
669.8
722.4
679.6
679.2
708.3
713.0
650.5

Personal
saving
2.6
-1.6
1.8
3.0
10.0
27.0
32.7
36.5
28.7
13.6
5.2
11.1
7.4
12.6
16.6
17.4
18.4
16.4
16.0
21.3
22.7
24.3
21.8
20.8
24.9
25.9
24.6
31.5
34.3
36.0
45.1
42.5
42.2
57.7
66.3
61.4
89.0
96.7
104.6
95.8
90.7
110.2
118.1
136.9
159.4
153.9
130.6
168.7
143.3
116.3
143.1
145.4
179.2
157.6
172.9
165.0
144.1
183.6
119.6
125.8
145.6
153.1
84.1
823

Gross
hnci

ness

saving 1

12.3
3.6

Gross investment

Government surplus or deficit Capital
grants
(-), national income and
product accounts
received
by the
State
United
States
Federal
Total
and
(net) 2
local

1.0
-1.4

9.3
-2.2
-.7
11.3
12.6
-3.8
15.3
-31.4
17.3
-44.2
18.4
-51.8
16.8
-39.5
16.7
5.4
23.0
14.4
31.3
8.4
32.5
34
31.8
8.0
36.0
6.1
38.7
-3.8
39.6
-7.0
-7.1
42.3
49.2
3.1
50.8
5.2
53.5
.9
52.9
-12.6
60.3
-1.6
60.3
3.1
62.0
-4.3
69.3
-3.8
73.3
.7
79.3
23
88.7
95.6
13
98.6
-14.2
103.3
-6.0
106.7
9.9
106.7
-10.6
124.3 -19.5
142.0
34
155.0
7.9
157.6
-4.3
198.9
-64.9
225.6
384
263.8
-m
298.9
-.4
327.7
11.5
341.5
-34.5
391.1
-29.7
403.2 -110.8
461.6 -128.6
506.1
1015
544.5 -13613
564.2 -143.1
411.1 -166.8
487.3
1129
489.1
-87.5
505.0
-93.9
510.0 -104.8
520.3
1199
525.6
-96.6
538.8
1556
560.1 -138.0
553.4 -155.1
562.7 -125.1
560.0 -173.3
566.4 -133.3

1.2
-1.3
22
-1.3
-5.1
-33.1
466
-54.5
421
3.5
13.4
8.3
-2.6
9.2
6.5
3.7
-7.1
-6.0
4.4
6.1
2.3
-10.3
-1.1
3.0
-3.9
-4.2

-0.2
-.1
.0
.6
1.3
1.8
2.4
2.7
2.6
1.9
1.0
.1
7
-1.2
-.4
.0
.1
-1.1
-1.3
-.9
-1.4
-2.4
-.4
.1
-.4
.5

-13
.5
-1.8
-13.2
60
8.4
-12.4
-22.0
168
-5.6
-11.6
-69.4
-53.5
-46.0
-29.3
-16.1
613
-63.8
-145.9
-176.0
-170.0
-198.0
-204.0
-202.6
-169.2
1540
-163.9
1719
-190.1
-162.6
-214.8
197.5
-217.6
1950
-232.2
-197.4

i!o

.0
.5
-1.1
1.5
1.8
2.6
13.5
13.5
7.2
4.5
15.2
26.9
28.9
27.6
26.8
34.1
35.1
47.5
68.5
61.7
60.8
35.8
56.4
66.5
70.0
67.2
70.2
65.6
59.2
59.5
62.5
69.9
58.9
64.0

4

0.9
.7
.7
0
-2.0
0
0
0
0
1.1
1.2
1.1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0

Gross
Net
private
Total domestic foreign
invest-3
invest- ment
ment

17.4
1.7
10.6
15.0
19.5
10.2
4.1
5.8
10.0
36.4
44.3
49.6
37.3
53.2
61.4
54.2
53.6
54.3
70.2
75.4
75.9
64.5
79.0
81.4
81.3
91.5
98.1
107.1
122.3
132.4
129.2
138.6
154.9
153.6
173.7
199.1
247.6
246.2
241.2
286.6
335.3
406.7
457.4
450.0
526.1
446.3
468.8
571.4
545.9
542.8
394.2
522.4
585.8
565.5
577.6
556.8
566.8
555.0
536.2
525.7
579.6
544.3
527.5
519.7

16.7
1.6
9.5
13.4
18.3
10.3
6.2
7.7
11.3
31.5
35.0
47.1
36.5
55.1
60.5
53.5
54.9
54.1
69.7
72.7
71.1
63.6
80.2
78.2
77.1
87.6
93.1
99.6
116.2
128.6
125.7
137.0
153.2
148.8
172.5
202.0
238.8
240.8
219.6
277.7
344.1
416.8
454.8
437.0
515.5
447.3
502.3
662.1
661.1
686.4
409.6
579.8
659.5
657.5
670.3
661.1
650.6
667.1
657.4
669.5
708.3
687.3
675.8
674.5

0.8
.2
1.0
1.5
1.3
21
-2.0
13
4.9
9.3
2.4
.9
-1.8
.9
.6
-1.3
.2
.4
2.8
4.8
.9
-1.2
3.2
4.2
3.8
4.9
7.5
6.2
3.8
3.5
1.6
1.7
4.8
1.3
-2.9
8.8
5.4
21.6
9.0
-8.7
101
2.6
13.0
10.6
-1.0
-33.5
-90.7
1152
-143.7
-15.4
-57.4
-73.7
-92.1
-92.7
-104.3
-83.8
-112.0
-121.2
-143.8
-128.6
-143.0
-148.3
1548

Statistical
discrepancy

1.5
1.2
1.7
1.4
.7
-.7
-1.7
2.7
4.0
.7
1.8
-1.3
.8
.8
2.7
1.8
2.6
2.7
1.8
-1.9
-1.2

-~L5
-2.8
1.2
.0
-1.4
-1.2
2.1
-.4
-1.1
-3.9
-1.1
1.8
16
43
-1.7
2.5
3.6
.0
-1.9
-1.0
4.9
4.1
~5.2
-1.9
-5.5
5.4
6.8
2.5
5.0
-3.2

-lie
-6.4
-11.7
-5.5
1.6
-3.6
4.6
10.3

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
received by the United States, 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.




276

TABLE B-28.—Saving by individuals, 1946-861
[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Net investment in 7 Less: Net increase in
debt

Increase in financial assets
Year or
quarter

Total

Checkable
deposTotal its
and
currency

Securities

Time
and Money
sav- market Govern- Corpoings fund
ment
rate
de- shares securi- equiposits
ties 2 ties3

1946
1947
1948
1949

25.2
20.6
25.4
21.8

19.0 5.6
.1
13.4
9.4 -2.9
10.0 -2.0

1950
1951
1952
1953
1954
1955
1956
1957
1958
1959

31.9
35.3
31.7
33.1
28.6
35.7
37.8
36.6
349
39.1

14.2
19.4
23.6
23.0
22.4
28.4
30.2
28.4
315
38.1

1960
1961
1962
1963
1964
1965
1966
1967
1968
1969

36.9
36.7
42.1
47.3
57.3
65.0
72.4
78.5
81.4
73.1

31.7
1.0
35.1 -.9
39.7 -1.2
46.7
4.2
55.8
5.3
58.9
7.6
57.5
2.4
69.8
9.9
75.2 11.1
65.2 -2.5

1970
1971
1972
1973
1974
1975
1976
1977
1978
1979

88.6
97.3
122.9
140.5
139.4
158.5
171.4
183.1
212.2
220.5

82.4
99.8
134.0
146.1
148.0
171.7
208.9
239.4
281.7
307.7

43.6
67.7
73.9
63.4
56.1
76.8
107.6
105.4
99.2
74.0

2.4
1.3
-.0
.2
6.9
34.4

1980
1981
1982
1983
1984
1985

249.0
301.5
330.9
312.0
422.3
381.2

333.7 12.8 126.2
363.7 30.0 66.2
402.3 19.3 126.7
468.3 39.5 198.6
551.7 19.1 224.6
560.5 45.1 140.0

29.2
107.5
24.7
-44.1
47.2
-2.2

1984: 1
II....
III..
IV..

419.4
427.5
429.1
413.3

503.2 29.9
591.0 26.4
541.0 -14.7
571.7 34.7

226.5
226.5
214.6
230.9

44.9
15.4
20.5
107.9

1985: I

358.5
434.9
368.8
362.6

456.6
596.7
533.0
655.9

-.4
69.7
95.9
15.3

185.5
127.0
145.2
102.4

-12.1
20.4
-21.2
4.0

1986: I

374.1
428.1
314.4

434.3 49.4 143.2
542.4 125.6 78.9
428.4 62.4 125.9

II...
III..
IV..
II...
III..

Other
financial
assets •

Consumer
durables

Noncorporate
business
assets8

3.8 6.7
7.0 9.4
9.5 10.2
8.7 10.9

2.0
1.3
6.9
2.0

Owneroccupied
homes

15
1.6
1.3
1.8

12.0
183
26.1
26.2
26.1
27.8
19.0
35.3
31.1
9.1

1.1
1.1
1.0
.7

09
-.8
.0
-.4

5.3
5.4
5.3
5.6

3.1
2.7
2.5
1.7

-.6
2.5
2.5
1.0
5.8
3.9
2.3
-2.5
10.1

.7
1.8
1.6
1.0
.8
1.0
2.0
1.5
1.5
.5

-.7
.3
.0

6.9
6.3
7.7
7.9
7.8
8.5
9.5
9.5
10.4
11.9

2.4
2.2
2.3
2.2
2.3
2.3
2.6
2.8
3.4
3.8

12.1
12.1
11.7
12.7
13.1
17.3
16.2
13.8
12.8
17.0

14.9
11.4
8.7
10.3
7.0
12.7
8.8
7.9
3.7
7.7

2.2
1.4
1.3
.6
4.8
3.7
11.3
-1.2
5.2
25.9

6.3
3.4
2.2
2.6

2.6 2.4
4.6 4.7
1.6 7.8 »"'"
1.0 8.1
2.2 9.1
1.2 8.6
1.8 9.4
-.4 11.9
38 139
1.0 11.0

8.9
12.3
13.6
13.3
6.5
5.9
16.0
19.6
22.4
25.9

Insurance
and
Other pension
securireties4 serves5

-.6

2.3
_2

-2^1
-2.6
-.2
-2.1
-.7
-4.7
-7.5
-2.8

~L3
.4
• 1.3
2.4
5.2
7.9
10.0

11.5
12.1
12.7
13.9
16.1
16.9
19.2
18.6
19.8
21.5

3.2
4.2
3.4
3.1
3.3
3.8
4.0
6.7
7.8
4.1

15.7
13.5
14.0
15.5
15.7
15.3
14.5
12.6
17.0
17.2

7.3 3.2
4.5 4.9
8.6 7.0
11.9 9.2
15.1 8.7
20.2 12.4
23.2 9.8
21.3 10.7
26.9 9.9
26.2 13.3

6.9 23.9
6.6 27.4
.1 47.8
9.5 39.1
13.0
42.7
-4.7 70.5
8.6 55.2
78.0
13.6
9.6 88.5
2.9 106.1

6.3
3.4
7.5
6.2
7.7
11.1
17.4
17.3
28.0
32.7

14.6
22.3
29.2
33.1
27.9
27.5
41.9
61.0
77.8
86.7

19.9
25.7
34.8
41.2
29.9
28.4
42.9
53.3
58.8
54.0

33.5
29.4
29.1
19.2
26.9
46.9

66.6
59.7
35.6
67.8
94.6
98.1

-'.8
1.0
1.0
.8
1.0
-.2

-5.4
-1.7
-12.2
-5.5
.9 -9.9
18.9 -4.3
19.9
-.3
18.3 -7.4
6.5 -2.4
12.6
-7.2
33.4
-6.3
54.7 -22.9

33.6
-6.3 -13.9
56.2 -29.0 -12.6
80.4
2.1 -7.3
14.8 -8.3
98.3
139.9 -36.4
-3.9
60.9
120.1
-.8
115.8
169.8
178.4
95.5

-16.7
-52.9
-27.1
-48.8

-26.1 109.1 19.8
-16.9 193.4 29.3
25.9 112.9 30.5
1.5 121.9 28.0

81.0
50.5 -14.7
195.1 -23.1 -13.5
21.8
82.3
7.9
94.0
213.0
26.5

27.0 -91.9
70.6
30.9
49.8 -4.6

118.5
116.0
127.3
150.2
134.3
150.5

135.5
166.4
165.9
134.1

24.4 97.9
133.9
50.7
4.8 157.8
80.5 -121.2 194.9

1
Saving
2

3.6
4.7
4.6
4.4

7.2 6.7
4.4 6.6
1.9 6.2
.8 7.6
1.7 8.7
2.9 12.2
1.0 11.2
2.1 8.9
2.9 9.5
4.3 12.8

13.0
19.5
26.6
31.9
14.9
7.6
2.7
15.1
18.9
12.4

3.1 -0.4
3.7
2.2
3.2
2.8
3.2
2.2
4.8
1.6
5.3
4.2
1.5
7.1
3.9
2.9
.5
8.0

5.0
3.7
2.6
1.9
5.5
6.3
3.2
3.8
6.0
7.2

11.7 4.4
12.2 2.5
13.8 6.3
16.6 8.9
17.5 9.8
17.0 10.6
13.8 6.5
12.4 5.7
17.0 11.5
18.6 10.9

5.0
6.6
7.3
10.5
10.9
14.2
12.2
17.8
19.2
19.4

13.4
25.3
38.3
44.6
34.8
38.2
59.4
89.7
108.6
117.6

5.5
14.8
19.8
24.0
9.9
9.1
24.2
38.1
46.7
42.7

22.6
29.9
43.5
43.2
36.6
29.3
41.3
57.9
69.7
80.1

31.9 -6.1 96.4 4.5 76.3
37.4 19.7 75.0 22.6 81.4
37.2 -3.8 49.5 17.7 73.2
62.7 -7.2 110.4 56.8 112.5
92.7 19.8 129.3 95.0 112.2
102.9 13.6 149.4 96.6 147.9

90.2 87.6
95.1 95.4
97.4 92.1
95.6 95.6

31.3 94.6
54.6 96.8
35.2 99.6
66.5 101.3

Mortgage
debt Con- Other
89
on sumer
non- credit debt
farm
homes

98.1
100.1
114.8
98.7

36.4
16.5
16.4
10.1

118.8
145.6
121.7
131.1

83.2 96.0
114.3 110.5
91.2 104.9
91.4 137.2

19.1
24.6
14.0
-3.3

124.7 105.5 79.7
139.8 89.2 154.2
162.4 112.6 117.6
170.6 79.2 240.2

48.3 104.2 92.9 25.2 114.7 63.6 104.2
23.2 110.5 101.5 30.8 182.1 87.0 88.1
40.7 112.6 137.4 29.8 200.5 81.1 112.1

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
Consists of security credit, mortgages, accident and health insurance reserves, and nonlife insurance claims for households and of
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.




277

TABLE B-29.—Number and median income (in 1985 dollars) of families and persons, and poverty status,
by race, selected years, 1960-85
Pers()ns
belc w
poverty

Families »
Below poverty level

Year

Number
(mil-

Median
income

lions)

Female
householder

Total

Number
(mil-

Rate

Rate

2.0
2.0
2.0
2.0
1.8
1.9
1.7
1.8
1.8
1.8

42.4
42.1
42.9
40.4
36.4
38.4
33.1
33.3
32.3
32.7

5.3
5.3
5.1
4.8
4.9
5.5
5.3
5.3
5.3
5.5

18.1
18.1
17.2
15.9
15.0
13.9
11.8
11.4
10.0
9.7
10.1
10.0
9.3
8.8
8.8
9.7
9.4
9.3
9.1
9.2

2.0
2.1
2.2
2.2
2.3
2.4
2.5
2.6
2.7
2.6

27,446
26,481
26,116
26,642
27,376
27,735

6.2
6.9
7.5
7.6
7.3
7.2

10.3
11.2
12.2
12.3
11.6
11.4

3.0
3.3
3.4
3.6
3.5
3.5

32.5
33.9
32.7
32.2
32.1
32.5
33.0
31.7
31.4
30.4
32.7
34.6
36.3
36.0
34.5
34.0

46.5
47.6
48.5
48.9
49.4
49.9
50.1
50.5
50.9
52.2
52.7
53.3
53.4
53.9
54.4
55.0

28,358
28,347
29,697
30,489
29,249
28,518
29,361
29,717
30,287
30,292

8.0
7.9
7.1
6.6
6.8
7.7
7.1
7.0
6.9
6.9
8.0
8.8
9.6
9.7
9.1
9.1

1.1
1.2
1.1
1.2
1.3
1.4
1.4
1.4
1.4
1.4

28,596
27,816
27,420
27,898
28,674
29,152

3.7
3.8
3.4
3.2
3.4
3.8
3.6
3.5
3.5
3.6
4.2
4.7
5.1
5.2
4.9
5.0

19794

4.9
5.2
5.3
5.4
5.5
5.6
5.8
5.8
5.9
6.2

17,395
17,106
17,650
17,596
17,465
17,547
17,465
16,976
17,939
17,153

1.5
1.5
1.5
1.5
1.5
1.5
1.6
1.6
1.6
1.7

1980
1981
1982
1983 3
1984
1985

6.3
6.4
6.5
6.7
6.8
6.9

16,546
15,691
15,155
15,722
15,982
16,786

1.8
2.0
2.2
2.2
2.1
2.0

29.5
28.8
29.0
28.1
26.9
27.1
27.9
28.2
27.5
27.8
28.9
30.8
33.0
32.3
30.9
28.7

WHITE
1970
1971
1972
1973....

19743

1975
1976
1977
1978
1979*

1980
1981
1982
1983 3.
1984
1985

45.5
46.4
47.1
47.5
48.0
48.5
49.2
50.1
50.8
51.6
52.2
53.3
54.4
55.1
55.7
56.2
56.7
57.2
57.8
59.6

$20,415
20,623
21,181
21,957
22,783
23,720
24,967
25,560
26,691
27,680

8.2
8.4
8.1
7.6
7.2
6.7
5.8
5.7
5.0
5.0

27,336
27,319
28,584
29,172
28,145
27,421
28,267
28,419
29,087
29,029

60.3
61.0
61.4
62.0
62.7
63.6

Number
(mil-

YearAll
round
persons full-time
workers

Rate

lions)

Females

Males

All
persons

lions)

lions)

ALL RACES
I960
1961
1962
1963
1964
1965 3
1966 ..
1967
1968
1969
1970
1971
1972
1973 3
1974
1975
1976
1977
1978 4
1979
1980
1981
1982 3
1983
1984
1985

Number
(mil-

Median income of persons 14 zyears old
and over with income

$14,822 $19,740 $4,582
15,064 20,363 4,600
15,548 20,721 4,773
15,849 21,329 4,821
16,117 21,793 5,025
17,126 22,496 5,185
17,588 23,055 5,431
17,892 23,485 5,803
18,491 24,162 6,243
18,865 25,436 6,256
18,479 25,444 6,197
18,336 25,582 6,396
19,157 27,098 6,683
19,502 27,761 6,768
18,438 26,531 6,723
17,695 25,852 6,766
17,813 26,190 6,758
17,970 26,752 6,996
18,031 26,485 6,708
17,457 25,905 6,450
16,358 25,031 6,423
15,936 24,475 6,456
15,547 24,134 6,561
15,830 24,301 6,916
16,157 24,861 7,113
16,311 24,999 7,217

$11,971
12,015
12,296
12,494
12,868
13,012
13,345
13,526
14,125
14,898
15,071
15,143
15,565
15,706
15,650
15,428
15,708
15,647
15,897
15,608
15,132
14,734
15,227
15,644
15,972
16,252

26,172
26,302
28,075
28,565
27,048
26,450
26,970
27,299
26,976
26,653
25,745
25,050
24,777
24,950
25,712
25,693

6,278
6,502
6,727
6,834
6,800
6,836
6,814
7,103
6,789
6,511
6,458
6,528
6,650
7,037
7,197
7,357

15,337
15,318
15,871
15,972
15,783
15,464
15,828
15,746
16,047
15,744
15,278
14,980
15,432
15,853
16,131
16,482

17,828
17,985
18,959
19,252
19,378
19,684
19,317
18,821
20,661
19,209
18,114
17,723
17,598
17,789
17,548
17,971

5,715
5,698
6,285
6,168
6,139
6,210
6,421
6,133
6,113
5,925
5,979
5,799
5,866
6,013
6,384
6,277

12,567
13,525
13,577
13,544
14,566
14,775
14,799
14,716
14,873
14,426
14,250
13,529
13,793
14,072
14,537
14,590

39.9
39.6
38.6
36.4
36.1
33.2
28.5
27.8
25.4
24.1
25.4
25.6
24.5
23.0
23.4
25.9
25.0
24.7
24.5
26.1

22.2
21.9
21.0
19.5
19.0
17.3
14.7
14.2
12.8
12.1

29.3
31.8
34.4
35.3
33.7
33.1

13.0
14.0
15.0
15.2
14.4
14.0

1.6
1.8
1.8
1.9
1.9
2.0

25.0
26.5
24.3
24.5
24.8
25.9
25.2
24.0
23.5
22.3
25.7
27.4
27.9
28.3
27.1
27.4

17.5
17.8
16.2
15.1
15.7
17.8
16.7
16.4
16.3
17.2
19.7
21.6
23.5
24.0
23.0
22.9

9.9
9.9
9.0
8.4
8.6
9.7
9.1
8.9
8.7
9.0
10.2
11.1
12.0
12.1
11.5
11.4

19,423
19,223
20,093
20,463
19,315
18,589
18,778
18,823
18,885
18,237
17,400
16,910
16,437
16,654
17,055
17,111

.8
.9
1.0
1.0
1.0
1.0
1.1
1.2
1.2
1.2

54.3
53.5
53.3
52.7
52.2
50.1
52.2
51.0
50.6
49.4

33.5
32.5
33.3
31.4
30.3
31.3
31.1
31.3
30.6
31.0

1.3
1.4
1.5
1.5
1.5
1.5

49.4
52.9
56.2
53.7
51.7
50.5

7.5
7.4
7.7
7.4
7.2
7.5
7.6
7.7
7.6
8.1
8.6
9.2
9.7
9.9
9.5
8.9

11,472
11,353
12,101
12,377
11,967
11,113
11,306
11,170
11,313
11,289
10,456
10,055
9,850
9,739
9,785
10,768

12.6
12.5
11.9
11.1
11.2
12.3
11.8
11.6
11.4
11.7

Yearround
fulltime
workers

BLACK
1970....

1971
1972
1973 3
1974
1975
1976....

1977
1978. ..

32.5
34.2
35.6
35.7
33.8
31.3

J
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. Beginning 1979, based on householder concept and restricted to primary families.
2
Beginning 1979, data are for persons 15 years and over.
3
Based on revised methodology; comparable with succeeding years.
4
Based on 1980 census population controls; comparable with succeeding years.
Note.—The poverty level is based on the poverty index adopted by a Federal interagency committee in 1969. That index reflected
different consumption requirements for families based on size and composition, sex and age of family householder, and farm-nonfarm
residence. Minor revisions implemented in 1981 eliminated variations in the poverty thresholds based on two of these variables, farmnonfarm residence and sex of householder. 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, No. 152.
Source-. Department of Commerce, Bureau of the Census.




278

POPULATION, EMPLOYMENT, WAGES, AND PRODUCTIVITY
TABLE B-30.—Population by age groups, 1929-86
[Thousands of persons]
Age (years)
Total

July 1

Under 5

5-15

16-19

20-24

25-44

45-64

65 and
over

1929

121 767

11734

26800

9127

10694

35862

21076

6474

1933

125 579

10612

26897

9302

11 152

37319

22933

7,363

1939

130 880

10418

25179

9822

11519

39354

25823

8,764

1940
1941
1942
1943
1944

132 122
133,402
134 860
136,739
138 397

10579
10,850
11301
12,016
12524

24811
24,516
24231
24,093
23949

9895
9,840
9730
9,607
9561

11690
11,807
11955
12,064
12062

39868
40,383
40861
41,420
42016

26249
26,718
27196
27,671
28138

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

12979
13,244
14406
14,919
15607

23907
24,103
24468
25,209
25852

9361
9,119
9097
8,952
8788

12036
12,004
11814
11,794
11700

42521
43,027
43657
44,288
44916

28630
29,064
29498
29,931
30405

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

16410
17,333
17312
17,638
18,057

26721
27,279
28894
30,227
31480

8542
8,446
8414
8,460
8637

11680
11,552
11350
11,062
10832

45672
46,103
46495
46,786
47001

30849
31,362
31884
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

18566
19,003
19494
19,887
20175

32682
33,994
35272
36,445
37368

8744
8,916
9195
9,543
10215

10714
10,616
10603
10,756
10969

47,194
47,379
47440
47,337
47192

33,506
34,057
34591
35,109
35663

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

20341
20,522
20469
20,342
20165

38494
39765
41205
41,626
4? 297

10683
11025
11 180
12007
12736

11 134
11483
11959
12714
13269

47140
47,084
47013
46,994
46958

36203
36,722
37255
37,782
38338

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

19824
19208
18563
17913
17376

42938
43702
44244
44622
44840

13516
14311
14*200
14452
14'800

13746
14050
15248
15786
16480

46912
47001
47194
47721
48064

38916
39534
40193
40846
41,437

18,451
18755
19,071
19,365
19,680

1970
1971
1972
1973
1974

205,052
207 661
209 896
211,909
213 854

17,166
17244
17 101
16'851
16487

44816
44591
44203
43582
42989

41,999
42482
42,898
43235
43522

20,107
20,561
21,020
21,525
22,061

16,121
15617
15564
15735
16,063

42,508
42099
41298
40428
39,552

17202
18 159
18 153
18'521
18975
19,527
19986
20499
20946
21,297

48,473
48936
50482
51 749
53051

215,973
218 035
220 239
222 585
225,055

15289
15688
16039
16446
16769
17,017
17194
17276
17288
17,242

54,302
55852
57 561
59400
61,379

43,801
44,008
44150
44286
44,390

22,696
23,278
23,892
24,502
25,134

1980
1981
1982
1983
1984....

227 757
230 138
232,520
234,799
237 019

16458
16931
17,298
17650
17859

38844
38 190
37876
37668
37'657

17 160
16770
16255
15704
15 141

21 584
21 821
21807
21 700
21 535

63494
65619
67,856
69970
72046

44515
44569
44,601
44678
44815

25,704
26,236
26,827
27,428
27,967

1985.. .
1986

239 283
241,489

18037

37694

14818

21 207

74066

44931

28,530

1975
1976.
1977
1978
1979

|
!

Note.—Includes Armed Forces overseas beginning 1940. Includes Alaska and Hawaii beginning 1950.
Source-. Department of Commerce, Bureau of the Census.




279

TABLE B-31.—Population and the labor force, 1929-86
[Monthly data seasonally adjusted, except as noted]

Period

Labor EmployCivilian
force
ment
non insti- Resi- includ- including
dent
tutional Armed
ing
popula- Forces * resident resident
tion1
Armed Armed
Forces Forces

Civilian labor force
Employment
Total
Total

Agricultural

Unemployment rate

UnemNonployagricultural ment

All Civilian
work- work- Total3 Civilers2 ers
ian4
Percent

Thousands of persons 14 years of age and over

1929
1933
1939
1940
1941
1942
1943
1944
1945
1946
1947

49,180
51,590
55,230
55,640
55,910
56,410
55,540
54,630
53,860
57,520
60,168

99,840
99,900
98,640
94,640
93,220
94090
103,070
106,018

Labor force
participation
rate

47,630 10,450
38,760 10,090
45,750 9,610
47,520 9,540
50,350 9,100
53,750 9,250
54,470 9,080
53,960 8,950
52,820 8,580
55,250 8,320
57,812 8,256

1,550
12,830
9,480
8,120
5,560
2,660
1,070
670
1,040
2,270
2,356

32
24.9
17.2
14.6
9.9
47
1.9
1.2
1.9
3.9
3.9

55.7
56.0
57.2
58.7
58.6
57.2
55.8
56.8

49,148 2,311
50,714 2,276
49,993 3,637
51,758 3,288
53,235 2,055
53,749 1,883
54,919 1,834
53,904 3,532
55,722 2,852
57,514 2,750
58,123 2,859
57,450 4,602
59,065 3,740
60,318 3,852
60,546 4,714
61,759 3,911
63,076 4,070
64,782 3,786
66,726 3,366
68,915 2,875
70,527 2,975
72,103 2,817
74,296 2,832
75,215 4,093
75,972 5,016
78,669 4,882
81,594 4,365
83,279 5,156
82,438 7,929
85,421 7,406
88,734 6,991
92,661 6,202
95,477 6,137
95,938 7,637
97,030 8,273
96,125 10,678
97,450 10,717
101,685 8,539
103,971 8,312
106,434 8,237
96,299 9,397
96,387 9,705
96,300 9,895
96,225 10,244
96,682 10,335
96,212 10,538
96,091 10,849
96,225 10,881
96,119 11,217
95,726 11,529
95,602 11,938
95,618 12,051

3.9
3.8
5.9
5.3
3.3
3.0
2.9
5.5
4.4
4.1
4.3
6.8
5.5
5.5
6.7
5.5
5.7
5.2
4.5
3.8
3.8
3.6
3.5
4.9
5.9
5.6
4.9
5.6
8.5
7.7
7.1
6.1
5.8
7.1
7.6
9.7
9.6
7.5
7.2
7.0
8.6
8.9
9.0
9.3
9.4
9.6
9.8
9.8
10.1
10.4
10.8
10.8

58.3
58.8
58.9
59.7 59.2
60.1 59.2
60.0 59.0
59.7 58.9
59.6 58.8
60.0 59.3
60.7 60.0
60.3 59.6
60.1 59.5
59.9 59.3
60.0 59.4
60.0 59.3
59.5 58.8
59.3 58.7
59.4 58.7
59.5 58.9
59.8 59.2
60.2 59.6
60.3 59.6
60.8 60.1
61.0 60.4
60.7 60.2
60.9 60.4
61.3 60.8
61.7 61.3
61.6 61.2
62.0 61.6
62.6 62.3
63.5 63.2
64.0 63.7
64.1 63.8
64.2 63.9
64.3 64.0
64.4 64.0
64.7 64.4
65.1 64.8
65.6 65.3
64.0 63.7
64.2 83.8
64.2 63.8
64.3 63.9
64.5 64.2
64.3 63.9
64.4 64.0
64.4 64.1
64.5 64.1
64.4 64.1
64.5 64.2
64.5 64.1

37,180
28,670
36,140
37,980
41,250
44,500
45,390
45,010
44,240
46,930
49,557

Thousands of persons 16 years of age and over

1947
1948
1949
1950
1951
1952 5
1953
1954
1955
1956
1957
1958
1959
I9605
1961 s
1962
1963
1964
1965
1966
1967..
1968
1969
1970.. .
1971 5
1972
19735
1974
1975
1976
1977 s
1978
1979
1980
1981
1982
1983
1984
1985 s
1986
1982: Jan
Feb
Mar
Apr
May
June

J/y

Aug
Sept
Oct
Nov
Dec

101,827
103,068
103,994
104,995
104,621
105,231
107,056
108,321
109,683
110,954
112,265
113,727
115,329
117,245
118,771
120,153
122,416
124,485
126,513
128,058
129,874
132,028
134,335
137,085
140,216
144,126
147,096
150,120
153,153
156,150
159,033
161,910
164,863
167,745
170,130
172,271
174,215
176,383
178,206
180,587
171,335
171,489
171,667
171,844
172,026
172,190
172,364
172,511
172,690
172,881
173,058
173,199

1,169
2,143
2,386
2,231
2,142
2,064
1,965
1,948
1,847
1,788
1,861
1,900
2,061
2,006
2,018
1,946
2,122
2,218
2,253
2,238
2,118
1,973
1,813
1,774
1,721
1,678
1,668
1,656
1,631
1,597
1,604
1,645
1,668
1,676
1,697
1,706
1,706
1,656
1,664
1,671
1,668
1,665
1,664
1,674
1,689
1,670
1,668
1,660
1,665

63,377
64,160
64,524
65,246
65,785
67,087
68,517
68,877
69,486
70,157
71,489
72,359
72,675
73,839
75,109
76,401
77,892
79,565
80,990
82,972
84,889
86,355
88,847
91,203
93,670
95,453
97,826
100,665
103,882
106,559
108,544
110,315
111,872
113,226
115,241
117,167
119,540
110,745
111,131
111,238
111,488
112,116
111,745
112,016
112,203
112,391
112,412
112,710
112,748

60,087
62,104
62,636
63,410
62,251
64,234
65,764
66,019
64,883
66,418
67,639
67,646
68,763
69,768
71,323
73,034
75,017
76,590
78,173
80,140
80,796
81,340
83,966
86,838
88,515
87,524
90,420
93,673
97,679
100,421
100,907
102,042
101,194
102,510
106,702
108,856
111,303
101,348
101,426
101,343
101,244
101,781
101,207
101,167
101,322
101,174
100,883
100,772
100,697

59,350
60,621
61,286
62,208
62,017
62,138
63,015
63,643
65,023
66,552
66,929
67,639
68,369
69,628
70,459
70,614
71,833
73,091
74,455
75,770
77,347
78,737
80,734
82,771
84,382
87,034
89,429
91,949
93,775
96,158
99,009
102,251
104,962
106,940
108,670
110,204
111,550
113,544
115,461
117,834
109,089
109,467
109,567
109,820
110,451
110,081
110,342
110,514
110,721
110,744
111,050
111,083

57,038
58,343
57,651
58,918
59,961
60,250
61,179
60,109
62,170
63,799
64,071
63,036
64,630
65,778
65,746
66,702
67,762
69,305
71,088
72,895
74,372
75,920
77,902
78,678
79,367
82,153
85,064
86,794
85,846
88,752
92,017
96,048
98,824
99,303
100,397
99,526
100,834
105,005
107,150
109,597
99,692
99,762
99,672
99,576
100,116
99,543
99,493
99,633
99,504
99,215
99,112
99,032

See next page for continuation of table.




280

7,890
7,629
7,658
7,160
6,726
6,500
6,260
6,205
6,450
6,283
5,947
5,586
5,565
5,458
5,200
4,944
4,687
4,523
4,361
3,979
3,844
3,817
3,606
3,463
3,394
3,484
3,470
3,515
3,408
3,331
3,283
3,387
3,347
3,364
3,368
3,401
3,383
3,321
3,179
3,163
3,393
3,375
3,372
3,351
3,434
3,331
3,402
3,408
3,385
3,489
3,510
3,414

5.2
3.2
2.9
2.8
5.4
4.3
4.0
4.2
6.6
5.3
5.4
6.5
5.4
5.5
5.0
4.4
3.7
3.7
3.5
3.4
4.8
5.8
5.5
4.8
5.5
8.3
7.6
6.9
6.0
5.8
7.0
7.5
9.5
9.5
7.4
7.1
6.9
8.5
8.7
8.9
9.2
9.2
9.4
9.7
9.7
10.0
10.3
10.6
10.7

TABLE B-31.—Population and the labor force, 1929-86—Continued
[Monthly data seasonally adjusted, except as noted]

Period

Labor Employforce
Civilian
ment
noninsti- Resi- includ- including
dent
tutional Armed
ing
popula- Forcesl resident resident
tion1
Armed Armed
Forces Forces

Civilian labor force
Employment
UnemNon- ployAgriagriTotal
cultural cultural ment

Total

UnemployLabor force
ment rate participation
rate
All Civilian
work- work- Total3 Civilers2 ers
ian4

Thousands of persons 16 years of age and over

1983: Jan
Feb
Mar

Percent

173,354
173,505
173,656
173,794
May'.".'""!!! 173,953
June
174,125

1,667
1,664
1,664
1,671
1,669
1,668

112,361
112,318
112,256
112,512
112,492
113,489

100,835
100,776
100,853
101,244
101,340
102,241

110,694 99,168
110,654 99,112
110,592 99,189
110,841 99,573
110,823 99,671
111,821 100,573

3,436
3,385
3,369
3,343
3,342
3,461

95,732
95,727
95,820
96,230
96,329
97,112

11,526
11,542
11,403
11,268
11,152
11,248

10.3
10.3
10.2
10.0
9.9
9.9

10.4
10.4
10.3
10.2
10.1
10.1

64.2
64.1
64.0
64.1
64.1
64.6

63.9
63.8
63.7
63.8
63.7
64.2

July
Aug
Sept
Oct
Nov
Dec

174,306
174,440
174,602
174,779
174,951
175,121

1,664
1,682
1,695
1,695
1,685
1,688

113,410
113,878
113,995
113,621
113,905
114,037

102,880
103,279
103,719
103,744
104,405
104,668

111,746
112,196
112,300
111,926
112,220
112,349

101,216
101,597
102,024
102,049
102,720
102,980

3,481
3,493
3,345
3,306
3,278
3,330

97,735 10,530
98,104 10,599
98,679 10,276
98,743 9,877
99,442 9,500
99,650 9,369

9.3
9.3
9.0
8.7
8.3
8.2

9.4
9.4
9.2
8.8
8.5
8.3

64.4
64.7
64.7
64.4
64.5
64.5

64.1
64.3
64.3
64.0
64.1
64.2

1984- Jan
Feb
Mar .
Apr
May
June

175,533
175,679
175,824
175,969
176,123
176,284

1,686
1,684
1,686
1,693
1,690
1,690

113,923
114,355
114,400
114,816
115,365
115,447

104,885
105,540
105,650
106,067
106,909
107,235

112,237
112,671
112,714
113,123
113,675
113,757

103,199
103,856
103,964
104,374
105,219
105,545

3,286
3,362
3,252
3,316
3,347
3,373

99,913
100,494
100,712
101,058
101,872
102,172

9,038
8,815
8,750
8,749
8,456
8,212

7.9
7.7
7.6
7.6
7.3
7.1

8.1
7.8
7.8
7.7
7.4
7.2

64.3
64.5
64.4
64.6
64.9
64.9

63.9
64.1
64.1
64.3
64.5
64.5

July
Aug
Sept
Oct
Nov
Dec

176,440
176,583
176,763
176,956
177,135
177,306

1,698
1,712
1,720
1,705
1,699
1,698

115,630
115,369
115,544
115,723
115,873
116,283

107,144
106,876
107,188
107,351
107,666
107,898

113,932
113,657
113,824
114,018
114,174
114,585

105,446
105,164
105,468
105,646
105,967
106,200

3,337
3,276
3,379
3,203
3,380
3,386

102,109
101,888
102,089
102,443
102,587
102,814

8,486
8,493
8,356
8,372
8,207
8,385

7.3
7.4
7.2
7.2
7.1
7.2

7.4
7.5
7.3
7.3
7.2
7.3

64.9 64.6
64.7 64.4
64.7 64.4
64.8 64.4
64.8 64.5
65.0 64.6

1985: Jan
Feb
Mar
Apr

June

177,384
177,516
177,667
177,799
177,944
178,096

1,697
1,703
1,701
1,702
1,705
1,702

116,494
116,673
117,017
117,015
116,991
116,628

107,988
108,308
108,666
108,651
108,700
108,243

114,797
114,970
115,316
115,313
115,286
114,926

106,291 3,312 102,979 8,506
106,605 3,336 103,269 8,365
106,965 3,289 103,676 8,351
106,949 3,337 103,612 8,364
106,995 3,276 103,719 8,291
106,541 3,138 103,403 8,385

7.3
7.2
7.1
7.1
7.1
7.2

7.4
7.3
7.2
7.3
7.2
7.3

65.1
65.1
65.2
65.2
65.1
64.9

64.7
64.8
64.9
64.9
64.8
64.5

July
Aug
Sept
Oct. .
Nov
Dec

178,263
178,405
178,572
178,770
178,940
179,112

1,704
1,726
1,732
1,700
1,702
1,698

116,984
117,003
117,576
117,780
117,851
118,031

108,546
108,862
109,334
109,492
109,680
109,847

115,280
115,277
115,844
116,080
116,149
116,333

106,842
107,136
107,602
107,792
107,978
108,149

3,131
3,106
3,044
3,072
3,055
3,151

103,711
104,030
104,558
104,720
104,923
104,998

8,438
8,141
8,242
8,288
8,171
8,184

7.2
7.0
7.0
7.0
6.9
6.9

7.3
7.1
7.1
7.1
7.0
7.0

65.0
65.0
65.2
65.3
65.2
65.3

64.7
64.6
64.9
64.9
64.9
64.9

179,670
179,821
179,985
180,148
180,311
180,503

1,691
1,691
1,693
1,695
1,687
1,680

ft:::::
June

118,485
118,733
118,880
118,987
119,274
119,685

110,583
110,248
110,500
110,664
110,852
111,293

116,794
117,042
117,187
117,292
117,587
118,005

108,892
108,557
108,807
108,969
109,165
109,613

3,280
3,105
3,252
3,199
3,151
3,164

105,612
105,452
105,555
105,770
106,014
106,449

7,902
8,485
8.380
8,323
8,422
8,392

6.7
7.1
7.0
7.0
7.1
7.0

6.8
7.2
7.2
7.1
7.2
7.1

65.3 65.0
65.4 65.1
65.4 65.1
65.4 65.1
65.5 65.2
65.7 65.4

July
Aug
Sept
Oct
Nov
Dec

180,682
180,828
180,997
181,186
181,363
181,547

1,672
1,697
1,716
1,749
1,751
1,750

119,789
119,821
119,988
120,163
120,426
120,336

111,559
111,764
111,703
111,941
112,183
112,387

118,117
118,124
118,272
118,414
118,675
118,586

109,887 3,124 106,763 8,230
110,067 3,057 107,010 8,057
109,987 3,142 106,845 8,285
110,192 3,162 107,030 8,222
110,432 3,215 107,217 8,243
110,637 3,161 107,476 7,949

6.9
6.7
6.9
6.8
6.8
6.6

7.0
6.8
7.0
6.9
6.9
6.7

65.7
65.6
65.7
65.7
65.8
65.7

way-

1986: Jan 5
Feb
Mar

1
Not seasonally adjusted.
2
Unemployed as percent of labor force including resident Armed Forces.
3
Labor force including resident Armed Forces as percent of noninstitutional
4
Civilian labor force as percent of civilian noninstitutional population.
5

65.4
65.3
65.3
65.4
65.4
65.3

population including resident Armed Forces.

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 350,000 to labor force, total employment, and agricultural employment. Beginning 1960,
inclusion of Alaska and Hawaii added about 500,000 to population, 300,000 to labor force, and 240,000 to nonagricuIturaI employment.
Beginning 1962, introduction of 1960 census data reduced population by about 50,000 and labor force and employment by 200,000.
Beginning 1972, introduction of 1970 census data added about 800,000 to civilian noninstitutional population and 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. Beginning 1986, the introduction of revised
population controls added about 400,000 to the civilian population and labor force and 350,000 to civilian employment. Unemployment
levels and rates were not significantly affected.
Note.—Labor force data in Tables B-31 through B-38 are based on household interviews and relate to the calendar week including
the 12th of the month. For definitions of terms, area samples used, historical comparability of the data, comparability with other series,
etc., see "Employment and Earnings."
Source: Department of Labor, Bureau of Labor Statistics.




281

TABLE B-32.—Civilian employment and unemployment by sex and age, 1947-86
[Thousands of persons 16 years of age and over; monthly data seasonally adjusted]
Unemployment

Civilian employment

Females

Males
Year or month

Total
Total

1947
1948
1949
1950
1951
1952
1953 »
1954 ..
1955
1956
1957
1958
1959
I9601
1961
1962 »
1963 ... .
1964
1965
1966
1967 .. .
1968
1969
1970
1971
1972 *
1973 »
1974
1975 . ..
1976
1977
1978 »
1979
1980
1981
1982
1983
1984
1985 l
1986
1985: Jan .
Feb
Mar
Apr
May
June

July
Aue

sept ::.::..
Oct

Nov
Dec
1986: Jan l ...
Feb
Mar..
Apr
May ..
June

July
Aug
Sept
Oct
Nov
Dec

57,038
58,343
57,651
58,918
59,961
60,250
61,179
60,109
62,170
63,799
64,071
63,036
64,630
65,778
65,746
66,702
67,762
69,305
71,088
72,895
74,372
75,920
77,902
78,678
79,367
82,153
85,064
86,794
85,846
88,752
92,017
96,048
98,824
99,303
100,397
99,526
100,834
105,005
107,150
109,597
106,291
106,605
106,965
106,949
106,995
106,541
106,842
107,136
107,602
107,792
107,978
108,149
108,892
108,557
108,807
108,969
109,165
109,613
109,887
110,067
109,987
110,192
110,432
110,637

40,995
41,725
40,925
41,578
41,780
41,682
42,430
41,619
42,621
43,379
43,357
42,423
43,466
43,904
43,656
44,177
44,657
45,474
46,340
46,919
47,479
48,114
48,818
48,990
49,390
50,896
52,349
53,024
51,857
53,138
54,728
56,479
57,607
57,186
57,397
56,271
56,787
59,091
59,891
60,892
59,570
59.590
59J89
59,817
59,951
59,629
59,761
59,949
60,116
60,153
60,207
60,213
60,853
60,603
60,681
60,712
60,668
60,793
60,884
60,942
60,968
60,975
61,241
61,393

16-19
years

2,218
2,344
2,124
2,186
2,156
2,107
2,136
1,985
2,095
2,164
2,115
2,012
2,198
2,361
2,315
2,362
2,406
2,587
2,918
3,253
3,186
3,255
3,430
3,409
3,478
3,765
4,039
4,103
3,839
3,947
4,174
4,336
4,300
4,085
3,815
3,379
3,300
3,322
3,328
3,323
3,417
3,371
3,420
3,431
3,385
3,265
3,310
3,295
3,287
3,237
3,265
3,285
3,254
3,307
3,293
3,320
3,330
3,271
3,340
3,357
3,361
3,380
3,358
3,292

20
years
and
over

38,776
39,382
38,803
39,394
39,626
39,578
40,296
39,634
40,526
41,216
41,239
40,411
41,267
41,543
41,342
41,815
42,251
42,886
43,422
43,668
44,294
44,859
45,388
45,581
45,912
47,130
48,310
48,922
48,018
49,190
50,555
52,143
53,308
53,101
53,582
52,891
53,487
55,769
56,562
57,569
56,153
56,219
56,369
56,386
56,566
56,364
56,451
56,654
56,829
56,916
56,942
56,928
57,599
57,296
57,388
57,392
57,338
57,522
57,544
57,585
57,607
57,595
57,883
58,101

Total

16-19
years

1,517
1,611
1,612
1,584
1,490
1,547
1,654
1,663
1,570
1,640
1,768
1,793
1,833
1,849
1,929
2,118
2,468
2,496
2,526
2,687
2,735
2,730
2,980
3,231
3,345
3,263
3,389
3,514
3,734
3,783
3,625
3,411
3,170
3,043
3,122
3,105
3,149
3,136
3,213
3,154
3,123
3,109
2,929
3,095
3,067
3,128
3,088
3,160
3,093
3,087
3,134
3,192
3,163
3,162
3,163
3,134
3,169
3,114
3,197
3,124
3,186

1
See footnote 5, Table B-31.
Note.—See Note, Table B-31.
Source: Department of Labor, Bureau of Labor Statistics.




20
years
and
over

Total

20
20
Total 16-19 years Total 16-19 years
years and
years and
over
over

16,045 1,691 14,354 2,311 1,692
16,617 1,682 14,936 2,276 1,559
16,723 1,588 15,137 3,637 2,572
17,340
18,181
18,568
18,749
18,490
19,551
20,419
20,714
20,613
21,164
21,874
22,090
22,525
23,105
23,831
24,748
25,976
26,893
27,807
29,084
29,688
29,976
31,257
32,715
33,769
33,989
35,615
37,289
39,569
41,217
42,117
43,000
43,256
44,047
45,915
47,259
48,706
46,721
47,015
47,176
47,132
47,044
46,912
47,081
47,187
47,486
47,639
47,771
47,936
48,039
47,954
48,126
48,257
48,497
48,820
49,003
49,125
49,019
49,217
49,191
49,244

282

Females

Males

15,824
16,570
16,958
17,164
17,000
18,002
18,767
19,052
19,043
19,524
20,105
20,296
20,693
21,257
21,903
22,630
23,510
24,397
25,281
26,397
26,952
27,246
28,276
29,484
30,424
30,726
32,226
33,775
35,836
37,434
38,492
39,590
40,086
41,004
42,793
44,154
45,556
43,585
43,802
44,022
44,009
43,935
43,983
43,986
44,120
44,358
44,551
44,611
44,843
44,952
44,820
44,934
45,094
45,335
45,657
45,869
45,956
45,905
46,020
46,067
46,058

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
10,678
10,717
8,539
8,312
8,237
8,506
8,365
8,351
8,364
8,291
8,385
8,438
8,141
8,242
8,288
8,171
8,184
7,902
8,485
8,380
8,323
8,422
8,392
8,230
8,057
8,285
8,222
8,243
7,949

2,239
1,221
1,185
1,202
2,344
1,854
1,711
1,841
3,098
2,420
2,486
2,997
2,423
2,472
2,205
1,914
1,551
1,508
1,419
1,403
2,238
2,789
2,659
2,275
2,714
4,442
4,036
3,667
3,142
3,120
4,267
4,577
6,179
6,260
4,744
4,521
4,530
4,626
4,578
4,512
4,563
4,427
4,614
4,598
4,429
4,432
4,570
4,455
4,411
4,274
4,595
4,572
4,517
4,653
4,619
4,566
4,428
4,600
4,565
4,574
4,439

270
256
353
318
191
205
184
310
274
269
300
416
398
426
479
408
501
487
479
432
448
426
440
599
693
711
653
757
966
939
874
813
811
913
962
1,090
1,003
812
806
779
820
816
784
772
798
767
865
798
772
897
791
794
730
799
783
829
833
811
755
794
795
751
754
714

1,422
1,305
2,219
1,922
1,029
980
1,019
2,035
1,580
1,442
1,541
2,681
2,022
2,060
2,518
2,016
1,971
1,718
1,435
1,120
1,060
993
963
1,638
2,097
1,948
1,624
1,957
3,476
3,098
2,794
2,328
2,308
3,353
3,615
5,089
5,257
3,932
3,715
3,751
3,806
3,762
3,728
3,791
3,629
3,847
3,733
3,631
3,660
3,673
3,664
3,617
3,544
3,796
3,789
3,688
3,820
3,808
3,811
3,634
3,805
3,814
3,820
3,725

619
717
1,065
1,049
834
698
632
1,188
998
1,039
1,018
1,504
1,320
1,366
1,717
1,488
1,598
1,581
1,452
1,324
1,468
1,397
1,429
1,855
2,227
2,222
2,089
2,441
3,486
3,369
3,324
3,061
3,018
3,370
3,696
4,499
4,457
3,794
3,791
3,707
3,880
3,787
3,839
3,801
3,864
3,771
3,840
3,712
3,810
3,718
3,716
3,773
3,628
3,890
3,808
3,806
3,769
3,773
3,664
3,629
3,685
3,657
3,669
3,510

144
153
223
195
145
140
123
191
176
209
197
262
256
286
349
313
383
385
395
405
391
412
413
506
568
598
583
665
802
780
789
769
743
755
800
886
825
687
661
675
697
663
691
630
685
635
707
575
628
680
653
700
683
701
677
719
671
691
654
635
670
663
693
645

475
564
841
854
689
559
510
997
823
832
821
1,242
1,063
1,080
1,368
1,175
1,216
1,195
1,056
921
1,078
985
1,015
1,349
1,658
1,625
1,507
1,777
2,684
2,588
2,535
2,292
2,276
2,615
2,895
3,613
3,632
3,107
3,129
3,032
3,183
3,124
3,148
3,171
3,179
3,136
3,133
3,137
3,182
3,038
3,063
3,073
2,945
3,189
3,131
3,087
3,098
3,082
3,010
2,994
3,015
2,994
2,976
2,865

TABLE B-33.—Unemployment by duration and reason, 1947-86
[Monthly data seasonally adjusted 1 ]
Reason for unemployment

Duration of unemployment
Year or month

Unemployment

Less
than 5
weeks

5-14
weeks

15-26
weeks

27
weeks
and
over

AverMedian
age
(mean) duradura- tion in
tion in weeks
weeks

Thousands of persons 16
years of age and over

1947
1948
1949

sept::::::::::::::::::::::::::::
Oct

Nov
Dec
1986- Jan
Feb
Mar
Apr
May .
June
July
Aug
Sept
Oct. . .
Nov
Dec

1,210
1,300
1,756

704
669
1,194

234
193
428

164
116
256

Reentrants

New
entrants

8.6
10.0

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
10,678
10,717
8,539
8,312
8,237
8,506
8,365
8,351
8,364
8,291
8,385
8,438
8,141
8,242
8,288
8,171
8,184
7,902
8,485
8,380
8,323
8,422
8,392
8,230
8,057
8,285
8,222
8,243
7,949

1,450
1,177
1,135
1,142
1,605
1,335
1,412
1,408
1,753
1,585
1,719
1,806
1,663
1,751
1,697
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
3,883
3,570
3,350
3,498
3,448
3,689
3,481
3,514
3,480
3,534
3,492
3,530
3,428
3,499
3,431
3,484
3,417
3,373
3,534
3,536
3,565
3,610
3,415
3,399
3,436
3,415
3,418
3,382
3,355

1,055
574
516
482
1,116
815
805
891
1,396
1,114
1,176
1,376
1,134
1,231
1,117
983
779
893
810
827
1,290
1,585
1,472
1,314
1,597
2,484
2,196
2,132
1,923
1,946
2,470
2,539
3,311
2,937
2,451
2,509
2,557
2,593
2,484
2,474
2,489
2,549
2,492
2,535
2,524
2,493
2,529
2,445
2,507
2,505
2,615
2,625
2,650
2,671
2,650
2,521
2,407
2,524
2,563
2,613
2,389

425
166
148
132
495
366
301
321
785
469
503
728
534
535
491
404
287
271
256
242
428
668
601
483
574
1,303
1,018
913
766
706
1,052
1,122
1,708
1,652
1,104
1,025
1,045
958
1,060
1,042
1,013
1,061
1,036
1,061
1,022
1,025
1,076
912
1,005
1,003
1,142
1,078
982
1,065
1,038
1,058
1,068
1,110
950
1,045
1,023

357
137
84
78
317
336
232
239
667
571
454
804
585
553
482
351
239
177
156
133
235
519
566
343
381
1,203
1,348
1,028
648
535
820
1,162
1,776
2,559
1,634
1,280
1,187
1,342
1,348
1,345
1,356
1,235
1,273
1,255
1,226
1,253
1,200
1,295
1,204
1,114
1,190
1,165
1,148
1,167
1,261
1,192
1,204
1,263
1,218
1,172
1,148

12.1
9.7
8.4
8.0
11.8
13.0
11.3
10.5
13.9
14.4
12.8
15.6
14.7
14.0
13.3
11.8
10.4
8.7
8.4
7.8
8.6
11.3
12.0
10.0
9.8
14.2
15.8
14.3
11.9
10.8
11.9
13.7
15.6
20.0
18.2
15.6
15.0
15.9
15.9
16.2
16,4
15.3
15.5
15.5
15.3
15.3
15.3
15.6
15.2
15.0
15.2
14.6
14.7
14.8
15.2
15.1
15.6
15.5
15.2
14.8
15.0

4.5
4.4
4.9
6.3
6.2
5.2
5.2
8.4
8.2
7.0
5.9
5.4
6.5
6.9
8.7
10.1
7.9
6.8
6.9
6.8
7.1
7.0
6.9
6.8
6.7
7.0
7.1
6.8
7.0
6.9
6.8
6.8
6.9
6.8
6.6
6.8
7.2
7.1
7.1
7.1
7.0
7.0
7.1

1
Because of independent seasonal adjustment of the various series, detail will not add to totals.
Note.—See footnote 5 and Note, Table B-31.
Source: Department of Labor, Bureau of Labor Statistics.




Job
leavers

Thousands of persons 16
years of age and over

2,311
2,276
3,637

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.. . .
1982
1983
1984
1985
1986
1985- Jan
Feb
Mar*.
Apr
May
June
July
Auc

Job
losers

283

1,229
1,070
1,017
1,811
2,323
2,108
1,694
2,242
4,386
3,679
3,166
2,585
2,635
3,947
4,267
6,268
6,258
4,421
4,139
4,033
4,307
4,223
4,144
4,225
3,910
4,112
4,327
4,130
4,126
4,035
4,098
3,996
3,802
4,147
4,210
4,035
4,214
4,272
4,063
3,824
4,044
3,984
3,947
3,890

438
431
436
550
590
641
683
768
827
903
909
874
880
891
923
840
830
823
877
1,015
864
857
853
826
871
982
887
889
857
940
807
902
977
985
989
1,071
979
1,009
1,025
990
1,041
1,027
1,056
1,036

945
909
965
1,228
1,472
1,456
1,340
1,463
1,892
1,928
1,963
1,857
1,806
1,927
2,102
2,384
2,412
2,184
2,256
2,160
2,253
2,218
2,303
2,280
2,367
2,270
2,176
2,167
2,356
2,212
2,221
2,251
2,083
2,263
2,196
2,188
2,200
2,107
2,205
2,199
2,145
2,190
2,119
2,019

396
407
413
504
630
677
649
681
823
895
953
885
817
872
981
1,185
1,216
1,110
1,039
1,029
1,048
1,038
1,079
1,041
1,130
1,010
1,122
955
915
1,062
1,038
1,042
1,029
1,073
1,006
1,048
1,046
1,050
989
1,014
1,038
972
1,076
1,015

TABLE B-34.—Chilian labor force participation rate and employment/population ratio, 1948-86
[Percent; monthly data seasonally adjusted]
Employment/population ratio2

Civilian labor force participation rate1
Year or month

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
1982
1983
1984
1985
1986

Total

Males

Fe-

males

Both
sexes
16-19
years

Civilian
White

Males

Fe-

males

Both
sexes
16-19
years

White

Black
and
other

Black

64.0
64.2
64.9
64.4
64.8
64.3
64.5
64.1
63.2
63.0
63.1
62.9
63.0
62.8
62.2
62.1
61.8
60.9
60.2 "59"9
60.5 60.2
60.3 59.8
59.6 58.8
59.8 59.0
60.4 59.8
62.2 61.5
62.2 61.4
61.7 61.0
61.3 60.8
61.6 61.0
62.1 61.5
62.6 62.2
63.3 62.9
63.7 63.3

56.6
58.2
57.3
58.0
56.4
57.5
58.2
57.8
56.1
56.7
56.8
56.1
56.3
56.1
56.4
56.9
57.6
58.0
58.2
58.7
58.0
57.2
57.5
58.3
58.3
56.5
57.3
58.3
59.7
60.3
59.6
59.4
58.2
58.3
59.9
60.5
61.1

47.7
45.2
45.5
47.9
46.9
46.4
42.3
43.5
45.3
43.9
39.9
39.9
40.5
39.1
39.4
37.4
37.3
38.9
42.1
42.2
42.2
43.4
42.3
41.3
43.5
45.9
46.0
43.3
44.2
46.1
48.3
48.5
46.6
44.6
41.5
41.5
43.7
44.4
44.6

55.2
56.5
57.3
56.8
55.3
55.9
55.9
55.3
55.4
55.3
55.5
56.0
56.8
57.2
57.4
58.0
57.5
56.8
57.4
58.2
58.3
56.7
57.5
58.6
60.0
60.6
60.0
60.0
58.8
58.9
60.5
61.0
61.5

58.0
58.7 •••••"• •
59.5
59.3
56.7
57.5 •••••••• •
57.9
56.2
56.3
56.2
57.0
57.8
58.4
58.2
58.0
58.1
56.8
54.9
54.1 "'53J
55.0 54.5
54.3 53.5
51.4 50.1
52.0 50.8
52.5 51.4
54.7 53.6
55.2 53.8
53.6 52.3
52.6 51.3
50.9 49.4
51.0 49.5
53.6 52.3
54.7 53.4
55.4 54.1

64.9
65.0
65.1
65.0
65.0
64.8

63.6
63.1
63.5
63.6
63.4
63.0

63.2
63.1
62.7
62.9
62.8
62.5

60.3
60.4
60.6
60.5
60.5
60.2

59.9
60.1
60.2
60.2
60.1
59.8

70.8
70.8
71.0
71.0
71.1
70.6

50.1
50.3
50.5
50.4
50.3
5Q. 1

44.9
45.1
45.1
45.1
44.8
42.8

60.7
61.0
61.1
61.0
61.0
60.6

54.8
54.0
54.7
54.9
54.6
54.9

53.5
52.9
53.2
53.4
53.1
53.6

55.2
53.5
54.1
54.6
54.4
54.4

64.9
64.8
65.1
65.2
65.2
65.2

63.3
63.0
63.2
63.1
63.3
63.7

62.8
62.7
62.8
62.8
62.9
63.4

60.3
60.4
60.6
60.7
60.7
60.8

59.9
60.1
60.3
60.3
60.3
60.4

70.7
70.9
71.0
71.0
71.0
70.9

50.2
50.3
50.6
50.7
50.8
50.9

44.3
44.0
44.4
43.7
44.4
44.1

60.8
60.8
61.1
61.2
61.3
61.3

54.7
54.9
54.7
54.6
54.4
55.1

53.3
53.9
53.4
53.5
53.2
53.9

54.8
54.9
55.0
55.1
55.2
55.5

53.6
54.9
54.9
55.4
55.2
54.8

65.2
65.3
65.3
65.3
65.4
65.6

63.8
63.6
64.0
63.9
64.0
64.0

63.3
63.3
63.5
63.7
63.8
63.6

61.0
60.7
60.8
60.9
60.9
61.1

60.6
60.4
60.5
60.5
60.5
60.7

71.3
71.0
71.0
70.9
70.8
70.9

50.9
50.8
50.9
51.0
51.2
51.5

43.9
44.5
44.8
44.8
44.8
44.5

61.4
61.2
61.3
61.3
61.4
61.6

55.5
55.1
55.5
55.3
55.4
55.4

54.1
53.9
54.2
54.3
54.3
54.2

55.5
55.6
55.5
55.6
55.5
55.4

54.5
54.8
54.8
55.0
54.5
53.8

65.6
65.6
65.6
65.6
65.7
65.7

63.6
63.3
63.6
63.8
63.8
63.5

63.0
62.7
63.1
63.3
63.2
63.1

61.2
61.2
61.1
61.2
61.3
61.3

60.8
60.9
60.8
60.8
60.9
60.9

70.9
70.9
70.9
70.8
71.1
71.2

51.7
51.8
51.6
51.8
51.7
51.7

44.8
45.0
44.7
45.3
44.5
44.5

61.6
61.8
61.6
61.7
61.7
61.8

55.5
55.0
55.3
55.7
55.7
55.7

54.1
53.5
53.8
54.2
54.2
54.4

52.5
52.2
51.8
52.2
51.3
50.2
48.3
48.9
50.9
49.6
47.4
46.7
47.5
46.9
46.1
45.2
44.5
45.7
48.2
48.4
48.3
49.4
49.9
49.7
51.9
53.7
54.8
54.0
54.5
56.0
57.8
57.9
56.7
55.4
54.1
53.5
53.9
54.5
54.7

58.2
58.7
59.4
59.1
58.9
58.7
58.8
58.8
58.3
58.2
58.2
58.4
58.7
59.2
59.3
59.9
60.2
60.1
60.4
60.8
61.4
61.5
61.8
62.5
63.3
63.9
64.1
64.3
64.3
64.3
64.6
65.0
65.5

64.7
64.8
64.9
64.9
May!...!."..... 64.8
June
64.5

76.4
76.3
76.4
76.4
76.3
76.1

54.2
54.4
54.6
54.5
54.4
54.1

55.2
55.2
55.2
54.7
55.0
52.4

July
Aug
Sept
Oct
Nov
Dec

64.7
64.6
64.9
64.9
64.9
64.9

76.2
76.1
76.3
76.4
76.2
76.1

54.3
54.2
54.6
54.6
54.7
54.9

1986: Jan
Feb
Mar
Apr
May
June

65.0
65.1
65.1
65.1
65.2
65.4

76.3
76.3
76.3
76.2
76.3
76.3

July

65.4
65.3
65.3
65.4
65.4
65.3

76.2
76.1
76.2
76.1
76.4
76.3

Aug
Sept
Oct
Nov
Dec

Total

31.3
31.2
32.0
33.1
33.4
33.3
32.5
34.0
35.1
35.1
34.5
35.0
35.5
35.4
35.6
35.8
36.3
37.1
38.3
39.0
39.6
40.7
40.8
40.4
41.0
42.0
42.6
42.0
43.2
44.5
46.4
47.5
47.7
48.0
47.7
48.0
49.5
50.4
51.4

32.7
33.1
33.9
34.6
34.7
34.4
34.6
35.7
36.9
36.9
37.1
37.1
37.7
38.1
37.9
38.3
38.7
39.3
40.3
41.1
41.6
42.7
43.3
43.4
43.9
44.7
45.7
46.3
47.3
48.4
50.0
50.9
51.5
52.1
52.6
52.9
53.6
54.5
55.3

,

Total

83.5
81.3
82.0
84.0
83.9
83.6
81.0
81.8
82.3
81.3
78.5
79.3
78.9
77.6
77.7
77.1
77.3
77.5
77.9
78.0
77.8
77.6
76.2
74.9
75.0
75.5
74.9
71.7
72.0
72.8
73.8
73.8
72.0
71.3
69.0
68.8
70.7
70.9
71.0

86.6
86.4
86.4
86.3
86.3
86.0
85.5
85.4
85.5
84.8
84.2
83.7
83.3
82.9
82.0
81.4
81.0
80.7
80.4
80.4
80.1
79.8
79.7
79.1
78.9
78.8
78.7
77.9
77.5
77.7
77.9
77.8
77.4
77.0
76.6
76.4
76.4
76.3
76.3

1985: Jan
Feb
Mar

Black

56.6
55.4
56.1
57.3
57.3
57.1
55.5
56.7
57.5
57.1
55.4
56.0
56.1
55.4
55.5
55.4
55.7
56.2
56.9
57.3
57.5
58.0
57.4
56.6
57.0
57.8
57.8
56.1
56.8
57.9
59.3
59.9
59.2
59.0
57.8
57.9
59.5
60.1
60.7

58.8
58.9
59.2
59.2
59.0
58.9
58.8
59.3
60.0
59.6
59.5
59.3
59.4
59.3
58.8
58.7
58.7
58.9
59.2
59.6
59.6
60.1
60.4
60.2
60.4
60.8
61.3
61.2
61.6
62.3
63.2
63.7
63.8
63.9
64.0
64.0
64.4
64.8
65.3

.

Black
and
other

1
Civilian labor force as percent of civilian noninstitutional population in group specified. See Table B-31 for total labor force
participation rate.
2
Employment as percent of noninstitutional population in group specified.
Note.—Data relate to persons 16 years of age and over. See footnote 5 and Note, Table B-31.
Source: Department of Labor, Bureau of Labor Statistics.




284

TABLE B-35.—Unemployment rate, 1948-86
[Percent; monthly data seasonally adjusted]

Year or
month

Unemployment
UnemployFemales
Males
All
ment
rate, civil20
ian
all
16- 20
16work- work- Total 19 years Total 19 years
and
and
years over
ers * ers
years over

1948
1949

rate, civilian workers 2
Both
sexes
1619
years

Black
White and Black
other

Experienced
wage
and
salary
workers

3.8
5.9

3.6
5.9

9.8
14.3

3.2
5.4

4.1
6.0

8.3
12.3

3.6
5.3

9.2
13.4

3.5
5.6

5.9
8.9

43
6.8

Mar- Women
who
ried
men, mainspouse
tain
famipresent 3
lies
3.5

1950
1951
1952
1953
1954
1955
1956
1957
1958
1959

5.2
3.2
2.9
2.8
5.4
4.3
4.0
4.2
6.6
5.3

5.3
3.3
3.0
2.9
5.5
4.4
4.1
4.3
6.8
5.5

5.1
2.8
2.8
2.8
5.3
4.2
3.8
4.1
6.8
5.2

12.7
8.1
8.9
7.9
13.5
11.6
11.1
12.4
17.1
15.3

4.7
2.5
2.4
2.5
4.9
3.8
3.4
3.6
6.2
4.7

5.7
4.4
3.6
3.3
6.0
4.9
4.8
4.7
6.8
5.9

11.4
8.3
8.0
7.2
11.4
10.2
11.2
10.6
14.3
13.5

5.1
4.0
3.2
2.9
5.5
4.4
4.2
4.1
6.1
5.2

12.2
8.2
8.5
7.6
12.6
11.0
11.1
11.6
15.9
14.6

4.9
3.1
2.8
2.7
5.0
3.9
3.6
3.8
6.1
4.8

9.0
5.3
5.4
4.5
9.9
8.7
8.3
7.9
12.6
10.7

6.0
3.7
3.4
3.2
6.2
48
4.4
4.6
7.3
5.7

1960
1961
1962
1963
1964
1965
1966
1967
1968
1969

5.4
6.5
5.4
5.5
5.0
4.4
3.7
3.7
3.5
3.4

5.5
6.7
5.5
5.7
5.2
4.5
3.8
3.8
3.6
3.5

5.4
6.4
5.2
5.2
4.6
4.0
3.2
3.1
2.9
2.8

15.3
17.1
14.7
17.2
15.8
14.1
11.7
12.3
11.6
11.4

4.7
5.7
4.6
4.5
3.9
3.2
2.5
2.3
2.2
2.1

5.9
7.2
6.2
6.5
6.2
5.5
4.8
5.2
4.8
4.7

13.9
16.3
14.6
17.2
16.6
15.7
14.1
13.5
14.0
13.3

5.1
6.3
5.4
5.4
5.2
4.5
3.8
4.2
3.8
3.7

14.7
16.8
14.7
17.2
16.2
14.8
12.8
12.9
12.7
12.2

5.0
6.0
4.9
5.0
4.6
4.1
3.4
3.4
3.2
3.1

10.2
12.4
10.9
10.8
9.6
8.1
7.3
7.4
6.7
6.4

5.7
6.8
5.6
5.6
5.0
4.3
3.5
3.6
3.4
3.3

4.6
1.5
1.4
1.7
4.0
26
2.3
2.8
5.1
3.6 ••••""""
3.7
4.6
3.6
3.4
2.8
2.4
1.9
4.9
1.8
4.4
1.6
4.4
1.5

1970
1971
1972
1973
1974
1975
1976
1977
1978
1979

4.8
5.8
5.5
4.8
5.5
8.3
7.6
6.9
6.0
5.8

4.9
5.9
5.6
4.9
5.6
8.5
7.7
7.1
6.1
5.8

4.4
5.3
5.0
4.2
4.9
7.9
7.1
6.3
5.3
5.1

15.0
16.6
15.9
13.9
15.6
20.1
19.2
17.3
15.8
15.9

3.5
4.4
4.0
3.3
3.8
6.8
5.9
5.2
4.3
4.2

5.9
6.9
6.6
6.0
6.7
9.3
8.6
8.2
7.2
6.8

15.6
17.2
16.7
15.3
16.6
19.7
18.7
18.3
17.1
16.4

4.8
5.7
5.4
4.9
5.5
8.0
7.4
7.0
6.0
5.7

15.3
16.9
16.2
14.5
16.0
19.9
19.0
17.8
16.4
16.1

4.5
5.4
5.1
4.3
5.0
7.8
7.0
6.2
5.2
5.1

8.2
9.9
10.0 ""io.4"
9.4
9.0
9.9 10.5
13.8 14.8
13.1 14.0
13.1 14.0
11.9 12.8
11.3 12.3

4.8
5.7
5.3
4.5
5.3
8.2
7.3
6.6
5.6
5.5

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

1980
1981
1982
1983
1984
1985
1986

7.0
7.5
9.5
9.5
7.4
7.1
6.9

7.1
7.6
9.7
9.6
7.5
7.2
7.0

6.9
7.4
9.9
9.9
7.4
7.0
6.9

18.3
20.1
24.4
23.3
19.6
19.5
19.0

5.9
6.3
8.8
8.9
6.6
6.2
6.1

7.4
7.9
9.4
9.2
7.6
7.4
7.1

17.2
19.0
21.9
21.3
18.0
17.6
17.6

6.4
6.8
8.3
8.1
6.8
6.6
6.2

17.8
19.6
23.2
22.4
18.9
18.6
18.3

6.3
6.7
8.6
8.4
6.5
6.2
6.0

13.1
14.2
17.3
17.8
14.4
13.7
13.1

14.3
15.6
18.9
19.5
15.9
15.1
14.5

6.9
7.3
9.3
9.2
7.1
6.8
6.6

4.2
4.3
6.5
6.5
4.6
4.3
4.4

9.2
10.4
11.7
12.2
10.3
10.4
9.8

1985: Jan
Feb
Mar
MPay";"!
June....

7.3
7.2
7.1
7.1
7.1
7.2

7.4
7.3
7.2
7.3
7.2
7.3

7.2
7.1
7.0
7.1
6.9
7.2

19.4
19.5
18.6
18.4
19.1
19.0

6.3
6.3
6.2
6.3
6.0
6.4

7.7
7.5
7.5
7.5
7.6
7.4

18.2
17.1
18.0
16.8
18.1
17.8

6.8
6.7
6.7
6.7
6.7
6.7

18.8
18.3
18.3
17.6
18.6
18.5

6.4
6.2
6.2
6.2
6.1
6.4

13.9
14.4
13.9
13.7
13.9
13.0

15.2
16.1
15.2
15.2
15.4
14.2

7.0
6.8
6.7
6.8
6.7
6.8

4.5
4.4
4.2
4.3
4.0
4.6

10.2
10.8
10.2
10.8
10.7
9.8

July
Aug
Sept ...
Oct
Nov....
Dec....

7.2
7.0
7.0
7.0
6.9
6.9

7.3
7.1
7.1
7.1
7.0
7.0

7.1
6.9
6.9
7.1
6.9
6.8

20.7
19.5
19.0
21.7
19.5
19.5

6.2
6.0
6.1
6.1
6.0
6.0

7.5
7.3
7.4
7.2
7.2
7.3

18.6
15.8
16.7
18.0
17.1
18.5

6.6
6.6
6.7
6.4
6.4
6.4

19.7
17.8
17.9
20.0
18.4
19.0

6.3
6.2
6.1
6.1
5.9
6.0

13.6
12.8
13.6
13.5
14.1
13.5

15.1
14.1
15.0
14.8
15.5
15.0

6.8
6.8
6.8
6.7
6.6
6.6

4.3
4.2
4.4
4.2
4.3
4.3

10.5
10.7
11.1
10.6
10.0
9.6

1986: Jan
Feb
Mar....
Apr
May....
June-

6.7
7.1
7.0
7.0
7.1
7.0

6.8
7.2
7.2
7.1
7.2
7.1

6.6
7.0
7.0
6.9
7.1
7.1

18.3
19.5
19.2
20.0
20.0
19.9

5.8
6.2
6.2
6.0
6.2
6.2

7.0
7.5
7.3
7.3
7.2
7.2

18.1
18.3
17.5
18.5
17.5
17.9

6.1
6.6
6.5
6.4
6.4
6.3

18.2
18.9
18.4
19.3
18.8
18.9

5.8
6.3
6.2
6.1
6.2
6.1

13.1
13.3
13.4
13.5
13.5
13.5

14.6
14.9
14.8
14.8
14.8
14.9

6.3
6.8
6.7
6.7
6.8
6.6

4.3
4.5
4.5
4.2
4.4
4.5

9.9
9.9
10.1
9.5
10.1
10.0

July ....
Aug....
Sept...
Oct
Nov....
Dec....

6.9
6.7
6.9
6.8
6.8
6.6

7.0
6.8
7.0
6.9
6.9
6.7

7.0
6.8
7.0
7.0
6.9
6.7

18.4
19.1
19.1
18.2
18.3
17.8

6.2
5.9
6.2
6.2
6.2
6.0

7.0
6.9
7.0
6.9
6.9
6.7

17.3
16.7
17.7
17.2
18.2
16.8

6.2
6.1
6.2
6.1
6.1
5.9

17.9
18.0
18.5
17.7
18.2
17.3

6.0
5.8
6.0
6.0
6.0
5.8

12.7
13.1
13.1
12.7
12.7
12.3

14.2
14.6
14.6
14.3
14.2
13.7

6.6
6.5
6.5
6.6
6.5
6.3

4.4
4.2
4.3
4.6
4.5
4.3

9.5
10.1
9.8
8.9
9.7
9.8

1
Unemployed as
2
Unemployed as
3

percent of labor force including resident Armed Forces.
percent of civilian labor force in group specified.
Data for 1949 and 1951-54 are for April; 1950, for March.
Note.—Data relate to persons 16 years of age and over. See footnote 5 and Note, Table B-31.
Source: Department of Labor, Bureau of Labor Statistics.




285

TABLE B-36.—Civilian labor force participation rate by demographic characteristic, 1954-86
[Percent;1 monthly data seasonally adjusted]
White
Year or month

All
civilian
work- Total
ers
Total

Black

Males

16-19
years

Males

Females

20
years Total
and
over

16-19
years

20
years Total Total
and
over

1954
1955
1956
1957
1958
1959

588
59.3
600
596
595
59.3

582
58.7
594
591
589
58.7

856
854
856
848
843
83.8

576
58.6
604
592
565
55.9

878
87.5
876
869
866
86.3

333
34.5
357
357
358
36.0

59.4
593
588
587
58.7
589
592
596
596
60.1

58.8
588
583
582
58.2
584
587
592
593
59.9

83.4
830
821
815
811
808
806
806
804
80?

55.9
545
53.8
531
52.7
541
559
563
559
56.8

86.0
857
849
844
842
839
836
835
832
83.0

36.5
369
367
372
375
381
392
401
407
41.8

40.3
406
398
387
378
392
426
425
430
44.6

1970
1971
1972
1973
1974
1975
1976
1977
1978
1979

60.4
602
60.4
608
61.3
61.2
616
62.3
632
63.7

60.2
601
60.4
608
614
61.5
618
62.5
633
63.9

80.0
796
79.6
794
79.4
787
784
78.5
786
78.6

57.5
579
60.1
620
629
61.9
623
64.0
650
64.8

82.8
823
82.0
816
814
80.7
803
80.2
801
801

42.6
426
432
441
452
459
469
480
494
505

45.6 42.2
454 423
481 427 59.9
501 435 602
517 444 598
51.5 45.3 588
528 462 590
54.5 473 59.8
567 487 615
574 498 61.4

1980
1981
1982
1983
1984
1985
1986

63.8
639
64.0
640
64.4
648
65.3

641
643
64.3
643
64.6
650
65.5

782
779
774
771
771
770
769

637
624
600
594
590
597
593

798
795
792
789
787
785
785

512
519
524
527
533
54 1
550

562
554
550
545
554
552
563

506
515
522
525
531
540
549

1985- Jan
Feb
Mar

647
64.8
64.9
64.9
64.8
64.5

649
65.0
65.1
65.0
65.0
64.8

770
77.0
77.0
77.0
77.1
76.9

605
60.1
60.5
60.6
60.8
59.3

785 539
785 541
78.5 54.3
78.5 54.0
78.5 54.0
78.5 53.7

559
566
56.3
54.5
55.1
52.6

64.7
64.6
64.9
64.9
64.9
64.9

64.9
64.8
65.1
65.2
65.2
65.2

76.9
76.8
76.9
77.1
77.0
76.8

60.4
58.7
58.6
600
58.6
58,9

78.3
78.4
78.6
787
78.6
78.4

53.9
53.9
54.3
544
54.4
54.6

650 652
65.1 65.3
65.1 65.3
65.1 65.3
65.2 65.4
65.4 65.6

770
770
76.9
76.8
76.8
76.9

578
59.5
58.7
59.5
59.5
59.5

786
78.6
78.5
78.3
78.4
78.5

65.4
65.3
65.3
65.4
65.4
65.3

76.8
76.8
76.9
769
77.1
77.1

58.9
59.9
60.3
59.8
59.6
58.2

78.4
78.2
78.4
783
78.7
78.8

20
16-19 years
years and
over

406 327
40.7 34.0
431 35.1
422 352
401 355
396 35.6

I960
1961
1962 . .
1963
1964
1965
1966 .
. .
1967
1968
1969

Females

20
16-19 years Total
and
years
over

.

fc=:
June
July
Aug

Sept
Oct
Nov
Dec

1986: Jan
Feb
Mar
Apr
fay
June
July
Aug
Sept
Oct
Nov
Dec

65.6
65.6
65.6
65.6
65.7
65.7

362
366
365
370
375
380
388
398
404
41.5

73.6
734
729
70.9
700
70.6
715
713

46.3
457
467
42.6
413
43.2
449
43.6

78.5
784
77.6
76.0
754
75.6
762
76.3

48.7
493
490
48.8
498
50.8
531
53.1

32.2
342
33.4
34.2
329
32.9
373
36.8

51.2
516
51.4
51 1
525
53 fi
555
554

432
416
39.8
399
417
446
437

751
745
747
752
748
744
748

531
535
537
542
55.2
565
569

34.9
340
33.5
330
35.0
379
39.1

556
560
56.2
568
57.6
586
58.9

537
539
54.1
54.0
53.9
53.8

703
700
701
706
708
708
712
632 709
631 711
62.7 70.4
62.9 70.5
62.8 70.5
62.5 70.1

450
43.0
43.5
44.5
43.1
41.7

745 569
750 56.6
74.1 56.6
74.1 56.7
74.2 56.6
74.0 56.3

379
39.9
38.5
37.8
40.7
34.6

59 1
58.4
58.6
58.9
58.4
58.8

55.2
53.6
55.7
555
56.2
55.9

53.8
53.9
54.2
543
54.2
54.5

62.8
62.7
62.8
62.8
62.9
63.4

70.7
71.1
71.2
710
70.6
71.0

46.5
46.4
44.9
46.2
43.6
45.7

74.1
74.4
74.7
744
74.2
74.4

56.4
55.9
56.1
56.1
56.8
57.2

39.0
35.2
35.9
38.4
38.9
38.6

58.4
58.3
58.3
581
58.7
59.2

545
546
54.7
54.7
54.9
55.2

553
566
56.8
56.7
56.6
56.2

544 633 715
544 63.3 71.3
54.5 63.5 71.6
54.5 63.7 71.5
54.8 63.8 71.9
55.1 63.6 71.6

445
45.7
45.5
45.6
48.1
43.8

752
747
75.1
75.0
75.1
75.3

566
56.8
57.0
57.3
57.2
57.2

396
39.9
42.0
41.5
38.4
42.1

585
586
58.6
59.1
59.2
58.8

55.3
55.4
55.2
55.3
55.2
55.1

55.5
56.2
55.5
56.9
56.3
56.5

55.3
55.4
55.2
552
55.1
55.0

71.2
70.5
70.7
70.8
70.5
70.7

42.7
41.8
42.2
42.2
40.4
41.6

75.0
74.2
74.4
74.6
74.5
74.5

56.4
56.4
56.9
57.2
57.3
56.9

34.8
35.9
39.7
40.0
38.2
38.1

58.8
58.6
58.8
591
59.3
58.9

610
608
610
615
622
629
633

63.0
62.7
63.1
63.3
63.2
63.1

1
Civilian labor force as percent of civilian noninstitutional population in group specified.
Note.—Data relate to persons 16 years of age and over. See footnote 5 and Note, Table B-31.
Source: Department of Labor, Bureau of Labor Statistics.




286

TABLE B-37.—Civilian employment/population ratio, 1954-86
[Percent*; monthly data seasonally adjusted]
White
Year or month

All
civilian
work- Total
ers

Black

Males
Total

16-19
years

Females
20
years
and
over

Total

16-19
years

Males
20
years
and
over

Total

Total

16-19
years

Females
20
years
and
over

Total

16-19
years

20
years
and
over

1954.
1955
1956
1957
1958
1959

555
567
57.5
571
55.4
560

552
565
573
568
55.3
559

815
822
827
818
79.2
799

499
520
541
524
47.6
481

840
847
850
841
81.8
828

314
330
342
342
33.6
340

364
370
389
382
35.0
348

31 1
327
338
339
33.5
340

1960
1961
1962
1963
1964
1965
1966
1967
1968
1969

561
554
55.5
55.4
55.7
56.2
569
57.3
575
580

559
553
55.4
55.3
55.5
560
568
57.2
574
580

794
782
784
77.7
77.8
779
783
78.4
783
782

481
459
464
44.7
45.0
471
501
50.2
503
51 1

824
814
815
81.1
81.3
815
817
81.7
816
814

346
345
347
35.0
35.5
362
375
38.3
389
40 1

351
346
348
32.9
32.2
337
375
37.7
378
395

345
345
347
35.2
35.8
365
375
38.3
391
40 1

1970
1971
1972
1973
1974
1975
1976
1977
1978
1979

574
56.6
570
578
57.8
561
568
57.9
593
59.9

575
56.8
574
582
58.3
567
575
58.6
600
60.6

768
75.7
760
765
759
730
734
74.1
750
75.1

496
49.2
515
543
544
506
51 5
54.4
563
55.7

801
79.0
790
792
786
757
760
76.5
772
77.3

403
39.9
407
418
424
420
432
44.5
463
47.5

395
386
413
436
443
425
442
45.9
485
49.4

404
40.1
406
416
422
419
43 i
44.4
46 1
47.3

537
545
535
501
508
51.4
536
53.8

668
675
658
606
606
61.4
633
63.4

316
328
314
263
258
26.4
285
28.7

730
737
719
665
668
67.5
69 1
69.1

430
438
435
416
428
43.3
458
46.0

192
220
20.9
202
192
18.5
221
22.4

465
472
46.9
449
464
47.0
493
49.3

1980
1981 .
1982
1983
1984.
1985
1986

59.2
590
57.8
57.9
595
601
60.7

600
600
58.8
58.9
605
610
61.5

734
728
706
70.4
721
723
72.3

534
513
470
47.4
49 1
499
49.6

756
75 1
730
72.6
743
743
74.3

478
483
481
48.5
498
507
51.7

479
462
446
44.5
470
47 1
47.9

478
485
484
48.9
500
51 0
52.0

523
513
494
49.5
523
534
54.1

604
59 1
560
56.3
592
600
60.6

270
246
203
20.4
239
263
26.5

658
645
614
61.6
64 1
646
65.1

457
451
44.2
44.1
467
481
48.8

21.0
197
17.7
17.0
201
23 1
23.8

49.1
485
47.5
47.4
498
509
51.6

1985: Jan
Feb
Mar
Apr
May
June

59.9
60.1
60.2
60.2
60.1
59.8

60.7
61.0
61.1
61.0
61.0
60.6

72.2
72.2
72.4
72.4
72.6
72.0

50.6
49.9
50.8
51.1
50.8
49.8

74.1
74.2
74.3
74.2
74.5
74.0

50.3
50.7
50.8
50.6
50.5
50.3

47.3
48.9
47.8
46.8
46.7
44.5

50.5
50.8
51.0
50.9
50.8
50.7

53.5
52.9
53.2
53.4
53.1
53.6

59.9
59.6
59.5
59.6
59.6
59.9

25.3
25.1
26.1
27.1
26.4
24.2

64.7
64.4
64.1
64.1
64.2
64.8

48.4
47.5
48.1
48.3
47.9
48.5

23.3
22.2
22.7
23.3
23.8
22.7

51.2
50.4
50.9
51.1
50.6
51.4

July
Aug
Sept
Oct
Nov
Dec

59.9
60.1
60.3
603
60.3
60.4

60.8
60.8
61.1
61 2
61.3
61.3

72.1
72.1
72.4
725
72.4
72.3

49.9
48.8
49.4
488
49.3
49.2

74.0
74.2
74.4
746
74.5
744

50.4
50.5
50.8
51 0
51 1
51 1

46.9
46.3
47.7
47 1
480
472

50.7
50.9
51.1
513
513
514

53.3
53.9
53.4
535
53.2
539

60.0
61.3
60.4
600
59.5
601

26.9
29.6
26.6
274
23.7
27.0

64.5
65.6
65.0
644
64.3
64.6

47.9
47.8
47.7
482
48.1
48.8

23.8
22.4
22.7
228
24.4
22.1

50.6
50.7
50.5
51 1
50.8
51.8

1986: Jan
Feb
Mar
Apr
May
June

60.6
60.4
60.5
60.5
60.5
60.7

61.4
61.2
61.3
61.3
61.4
61.6

72.6
72.3
72.2
72.2
72.1
72.2

49.1
49.7
49.4
49.3
49.4
49.3

74.7
74.3
74.2
74.2
74.1
74.2

51.2
51.0
51.2
51.3
51.5
51.9

47.0
47.9
48.8
48.0
48.2
48.0

51.5
51.2
51.4
51.5
51.8
52.2

54.1
53.9
54.2
54.3
54.3
54.2

60.8
60.4
60.9
60.9
61.1
60.7

26.2
27.7
26.1
26.8
28.6
26.4

65.5
64.8
65.5
65.4
65.4
65.3

48.5
48.6
48.7
48.9
48.9
48.8

23.0
23.7
24.3
23.8
22.8
25.5

51.4
51.3
51.4
51.7
51.7
51.4

July
Aug
Sept
Oct
Nov
Dec

60.8
60.9
60.8
60.8
60.9
60.9

61.6
61.8
61.6
61.7
61.7
61.8

72.1
72.3
72.3
72.2
72.4
72.6

49.7
50.0
50.2
50.5
49.9
49.2

74.1
74.3
74.2
74.1
74.4
74.6

52.0
52.2
51.9
52.0
51.9
52.0

47.4
48.2
47.1
48.2
47.5
48.3

52.4
52.5
52.3
52.3
52.3
52.3

54.1
53.5
53.8
54.2
54.2
54.4

60.6
59.9
60.0
60.3
60.4
61.2

25.4
25.5
25.9
26.2
26.3
26.6

65.3
64.5
64.5
64.8
65.0
65.7

48.8
48.3
48.9
49.3
49.2
49.0

22.6
20.8
24.5
26.5
24.1
24.0

51.6
51.3
51.5
51.8
51.9
51.7

1

Civilian employment as percent of civilian noninstitutional population in group specified.

Note.—Data relate to persons 16 years of age and over. See footnote 5 and Note, Table B-31.
Source: Department of Labor, Bureau of Labor Statistics.




287

TABLE B-38.—Civilian unemployment rate by demographic characteristic, 1948-86
[Percent;J monthly data seasonally adjusted]
Black

White
Year or month

All
civilian
work- Total
ers
Total

Females

Males
16-19
years

20
years Total
and
over

16-19
years

1948
1949

38
59

35
56

34
56

53
33
30
29
55
44
41
43
68

49
31
28
27
50
39
36
38
61

44
3.3
30
3.2
55

5.5

14.0

4.1

53
4.2
33
3.1
55
4.3
42
4.3
62

4.8

47
26
25
25
48
37
34
36
61

5.3

12.0

1960
1961
1962
1963
1964
1965
1966
1967
1968
1969

55

50

48

42

53

5.5
57

4.9
5.0

4.6
47

140
15.7
13.7
159

4.0
3.9

5.5
5.8

127
14.8
12.8
15.1

3.8
36

3.4
32

1970
1971
1972
1973.. ..
1974
1975
1976
1977.. . .
1978
1979 .

4.9
59

4.5
54

20
years Total Total
and
over

16-19
years

Females
20
years Total
and
over

16-19
years

20
years
and
over

38
57

1950
1951
1952
1953
1954
1955 . .
1956
1957 .
. .
1958
1959

Males

6.7

52
4.5
38
35

1980
1981
1982
1983
1984
1985..
1986

5.6
49
56
85
77
71
61
58
71
76
97
9.6
75
72
7.0

1985: Jan
Feb
Mar

74
7.3
72

ft
June

7.3
72

73

6.0

46
4.1
34
31

5.1
43
50
78
70
62
52
51

4.6

57

41
36
28
2.7
26

25

4.0
49

4.5
38
44
72
64
55
46
45

134
113
105
115
157

147
129
105

5.1

34
2.9
22

10.7
101

2.1
20

13.7
151

3.2
40

100

142
123
135
183
173
150
135
139

19

3.6
30
35
62
54
47
3.7
36

R")

55
5.0
43

104
9.1
97
9.5
127

149
14.0

121

51
3.9
37
3.8
56
4.7
46

5.7

4.7
4.8

46
4.0
33

4.6
43

11.5
121

115

34

5.4
63

13.4
151
14.2

4.4
53

42

59
53
61
86
79
73
62
59

3.8
34

130
145
174
164
159
144
140

4.9
43
51
75
68
62
52
50

94
105
148
140
140
128
123

9.3
80
98
148
137
133
118
114

31.7
27.8

10.4

331
381
375
392
367
342

11.8
11.1

13.8

40.8

124
135
178
181
143
132
129

140
156
176

398
422
471

119
134
154

154
149
142

426
392
39.2

135
131
124

385

133

113
148
143
149
133

63
67
86
8.4
65
62
6.0

61
65
88
88
64
61
60

162
179
217
202
168
165
163

53
56
78
79
57
54
53

65
69
83
79
65
64
61

148
166
190
183
152
148
149

56
59
73
69
58
57
54

143 145
156 157
189 201
195 203
159 164
151 153
145 148

375
407
489

64
6.2
62

63
61
60

164
169
160

56
5.4
53

67
63
65

154
136
151

60
57
58

152
161
152

155
162
155

438
400

131
142
135

150
160
150

161

57

65

154

58

142

145

421

124

139

6.2
61

64

6.1
59

64

15.6
165

5.4
51

6.4
65

14.2
151

5.8
58

15.2
154

15.4
154

48.8

427
410
393
41.6

39.2
388

90
8.6
88
122
117
123

7.0
60
74
125
114
107
93
93

13.5
135

18.6

14.9
155

40.5
36.1

374
41.0

416
434
391

48.2

44.5
41 1
38.3
416

344

11.2

109

16.5

13.7

131
13.2
134

125

63
62
6.1
61
5.9
60

62
61
59
61
59
58

174
170
157
187
159
164

55
53
52
52
52
51

64
63
64
62
60
63

150
136
144
151
146
156

57
57
57
55
53
55

151 152
141 137
150 151
148 155
155 157
150 153

422
361
408
408
457
409

129
118
130
134
134
132

150
145
149
141
152
146

389
363
36.6

Nov
Dec

73
71
7.1
71
7.0
70

406
373
427

132
130
134
121
136
126

1986: Jan
Feb
Mar

68
72
72

58
63
62

56
61

150
166
159

50
54
54

61

66
63

151
154
141

54
59
57

146
149
148

395
426

41 1

129
133
128

143
145
145

419
407
422

122
125
123

71

61

61

171

54

61

146

54

149

397

133

146

394

127

July

Auc

Sept
Oct...

ft
June
July

Aug

sepf:
oct :.. .:.::..:
Nov
Dec

7.1
72

70
68
70
69
69
67

6.1
62

61
5.9
61

60
58
60
60
60
58

60
58
61
61
61
59

17.1
170

156
166
166
157
163
155

5.2
54

54
51
54
54
54
53

6.2
62

60
59
60
60
59
57

15.4
147

147
142
151
152
157
146

1

Unemployed as percent of civilian labor force in group specified.
Note.—See footnote 5 and Note, Table B-31.
Source: Department of Labor, Bureau of Labor Statistics.




288

5.5
55

53
52
53
52
52
50

14.8
148

150
152
150
14.9
150

152

142 149
146 149
146 151
143 149
142 143
137 135

41.2
405

405
388
386
378
350
361

12.8
129

129
132
134
131
129
11 8

14.7
145

135
143
142
138
141
139

42.7
405

350
419
383
338
370
369

12.5
127

12 1

125
124
124
125
123

TABLE B-39.—Unemployment insurance programs, selected data, 1955-86
State programs

All programs

Year or month

Covered
employment 1

Insured
Total
unemploy- benefits
ment
paid
(weekly
(millions
of
average) « > dollars) 2 4

Thousands

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
1982 ...
1983
1984 ..
1985

.

..

1985- Jan
Feb
Mar
Apr
May
June
July
Aug

sept":
Oct .
Nov
Dec

1986- Jan
Feb
Mar
Apr . ..
May
June
July
Aug
Sept
Oct
Nov
Dec

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
93,300
91,628
91,898
96,474
8
99,186

Insured
Insured
unemployment

Initial
claims

Exhaustions 5

Weekly average; thousands
1,265
226
221
1,215
1,446
270
2,510
369
1,684
277
1,908
331
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
296
1,805
295
2,150
261
1,848
247
1,632
2,262
363
478
3,986
2,991
386
375
2,655
346
2,359
388
2,434
488
3,350
3,047
460
583
4,061
438
3,396
377
2,476
396
2,611

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
3,410
4,594
3,775
2,561
2,692

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
16,175.4
15,287.1
23,774.8
20,206.2
13,109.6
14,495.1

3,361
3,339
3,113
2,767
2,457
2,340
2,523
2,361
2,212
2,227
2,468
2,884

1,631.3
1,495.5
1,503.8
1,395.9
1,257.8
1,039.2
1,213.9
1,128.7
1,019.6
1,120.9
1,049.8
1,383.3

2,590
2,646
2,620
2,575
2,562
2,581
2,609
2,585
2,560
2,535
2,560
2,564

3,370
3,295
3,144
2,779
2,556
2,474
2,632
2,483
2,335
2,296
2,478

1,715.1
1,543.5
1,585.0
1,516.7
1,297.5
1,224.4
1,361.3
1,204.8
1,184.4
1,195.0
1,075.4

2,591
2,610
2,654
2,612
2,666
2,681
2,698
2,705
2,691
2,596
2,549
2,488

ment as
percent
of
covered
employment

Benefits paid
Total
(millions
of
dollars) 4

Average
weekly
check
(dollars) 6

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
57
80
80
50
50

3.5
3.2
3.6
6.4
4.4
4.8
5.6
4.4
4.3
3.8
3.0
2.3
2.5
2.2
2.1
3.4
4.1
3.5
2.7
3.5
6.0
4.6
3.9
3.3
2.9
3.9
3.5
4.6
3.9
2.8
2.9

1,350.3
1,380.7
1,733.9
3,512.7
2,279.0
2,726.7
3,422.7
2,675.4
2,774.7
2,522.1
2,166.0
1,771.3
2,092.3
2,031.6
2,127.9
3,848.5
4,957.0
4,471.0
4,007.6
5,974.9
11,754.7
8,974.5
8,357.2
7,717.2
8,612.9
13,761.1
13,262.1
20,649.6
17,762.8
12,594.7
13,977.8

25.04
27.02
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
98.95
106.70
119.37
123.59
123.47
128.23

385
411
394
390
389
398
391
386
384
380
382
391

52
52
54
57
51
49
51
47
43
45
43
48

2.9
3.0
2.9
2.9
2.8
2.9
2.9
2.8
2.8
2.8
2.8
2.8

1,580.0
1,450.6
1,459.2
1,349.8
1,221.4
1,011.8
1,183.8
1,096.7
988.8
1,085.2
1,014.6
1,341.3

127.47
128.20
128.21
128.18
127.00
126.35
125.82
126.88
128.37
129.41
130.90
132.13

370
392
393
380
382
381
380
387
370
354
354
363

52
52
55
58
53
51
54
54
48
49
46

2.8
2.8
2.9
2.8
2.9
2.9
2.9
2.9
2.9
2.7
2.7
2.6

1,662.6
1,495.7
1,539.3
1,472.1
1,260.8
1,177.5
1,308.9
1,160.0
1,144.5
1,147.3
1,030.5

133.57
135.00
135.59
135.23
135.81
135.61
134.16
135.03
136.78
136.73
137.49

**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), SUA (special unemployment assistance), and Federal Supplemental
Compensation 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.




289

TABLE B-40.—Employees on nonagricultural payrolls, by major industry, 1946-86
(Thousands of persons; monthly data seasonally adjusted]

Year or month

Total

Total

Goods-producing industries
Manufacturing
ConNondurMining struction
Total Durable
able
goods

goods

1946
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
1982
1983
1984
1985,
1986 "
1985: Jan
Feb .
Mar
Apr
May
June
July
Aug
Sept
Nov
Dec
1986: Jan
Feb
Mar
Apr .. .




. .

.

(::::::::::::::
£:::::::::::::
itfay..:

June
July
Aug
Sept ...
Oct
NoV
Dec*.

..:: .::;; r: r
r::r:
,

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
90,406
91,156
89,566
90,200
94,496
97,614
100,168
96,366
96,507
96,870
97,104
97,338
97,442
97,672
97,890
98,128
98,428
98,666
98,910
99,296
99,429
99,484
99,783
99,918
99,843
100,105
100,283
100,560
100,826
101,065
101,334

See next page for continuation of table.

290

17,248
18,509
18,774
17,565
18,506
19,959
20,198
21,074
19,751
20,513
21,104
20,964
19,513
20,411
20,434
19,857
20,451
20,640
21,005
21,926
23,158
23,308
23,737
24,361
23,578
22,935
23,668
24,893
24,794
22,600
23,352
24,346
25,585
26,461
25,658
25,497
23,813
23,334
24,727
24,930
24,940
25,008
24,931
24,971
24,996
24,949
24,897
24,875
24,880
24,843
24,903
24,931
24,977
25,101
25,038
24,945
25,038
24,965
24,854
24,869
24,888
24,858
24,865
24,895
24,932

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
1,027
1,139
1,128
952
966
930
792
948
946
945
949
944
936
928
922
917
913
907
901
897
880
852
821
790
772
768
753
743
746
743
738

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
4,346
4,188
3,905
3,948
4,383
4,687
4,961
4,576
4,554
4,624
4,691
4,682
4,671
4,679
4,702
4,728
4,754
4,765
4,787
4,901
4,864
4,838
4,972
4,974
4,947
4,980
5,012
5,010
5,001
4,993
5,004

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
20,285
20,170
18,781
18,434
19,378
19,314
19,187
19,484
19,431
19,402
19,356
19,323
19,290
19,268
19,256
19,198
19,236
19,259
19,289
19,303
19,294
19,255
19,245
19,201
19,135
19,121
19,123
19,105
19,118
19,159
19,190

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
12,187
12,109
11,039
10,732
11,505
11,516
11,346
11,642
11,611
11,595
11,559
11,542
11,517
11,483
11,473
11,421
11,447
11,453
11,461
11,466
11,455
11,418
11,415
11,378
11,307
11,294
11,302
11,271
11,266
11,283
11,298

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
8,098
8,061
7,741
7,702
7,873
7,798
7,841
7,842
7,820
7,807
7,797
7,781
7,773
7,785
7,783
7,777
7,789
7,806
7,828
7,837
7,839
7,837
7,830
7,823
7,828
7,827
7,821
7,834
7,852
7,876
7,892

TABLE B-40.—Employees on nonagricultural payrolls, by major industry, 1946-86—Continued
[Thousands of persons; monthly data seasonally adjusted]
Service-producing industries
Transportation

Year or month
Total

and

public
utilities
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
1982
1983
1984
1985
1986 p
1985: Jan
Feb
Mar
Apr
May
June
July
Aug
Sept
Oct
Nov
Dec
1986: Jan
Feb
Mar
Apr
May
June
July
Aug
Sept
Oct
Nov"
Dec P

24,404
25,348
26,092
26,189
26,691
27,860
28,595
29,128
29,239
30,128
31,266
31,889
31,811
32,857
33,755
34,142
35,098
36,013
37,278
38,839
40,743
42,495
44,160
46,023
47,302
48,278
50,007
51,897
53,471
54,345
56,030
58,125
61,113
63,363
64,748
65,659
65,753
66,866
69,769
72,684
75,228
71,358
71,576
71,899
72,108
72,389
72,545
72,797
73,010
73,285
73,525
73,735
73,933
74,195
74,391
74,539
74,745
74,953
74,989
75,236
75,395
75,702
75,961
76,170
76,402

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
5,146
5,165
5,082
4,954
5,159
5,242
5,285
5,219
5,229
5,220
5,230
5,241
5,238
5,241
5.219
5,257
5,260
5,272
5,277
5,286
5,277
5,280
5,266
5,265
5,167
5,288
5,255
5,316
5,316
5,348
5,358

Wholesale
trade

2,291
2,471
2,605
2,602
2,635
2,727
2,812
2,854
2,867
2,926
3,018
3,028
2,980
3,082
3,143
3,133
3,198
3,248
3,337
3,466
3,597
3,689
3,779
3,907
3,993
4,001
4,113
4,277
4,433
4,415
4,546
4,708
4,969
5,204
5,275
5,358
5,278
5,268
5,555
5,740
5,853
5,669
5,673
5,691
5,705
5,721
5,736
5,740
5,762
5,777
5,796
5,796
5,809
5,830
5,843
5,841
5,864
5,872
5,829
5,849
5,863
5,859
5,864
5,864
5,855

Retail
trade

6,084
6,485
6,667
6,662

6,751
7,015
7,192
7,393
7,368
7,610
7,840
7,858
7,770
8,045
8,248
8,204
8,368
8,530
8,823
9,250
9,648
9,917
10,320
10,798
11,047
11,351
11,836
12,329
12,554
12,645
13,209
13,808
14,573
14,989
15,035
15,189
15,179
15,613
16,545
17,360
17,976
16,988
17,066
17,184
17,240
17,329
17,379
17,404
17,464
17,489
17,543
17,589
17,622
17,734
17,795
17,828
17,851
17,911
17,944
17,992
18,030
18,065
18,143
18,186
18,187

Finance,
insurance,
and real
estate

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
5,160
5,298
5,341
5,468
5,689
5,953
6,304
5,821
5,838
5,864
5,888
5,913
5,939
5,964
5,988
6,014
6,038
6,070
6,095
6,123
6,157
6,184
6,228
6,261
6,295
6,334
6,364
6,388
6,409
6,431
6,466

Government
Services

State
Total

Federal

and

local
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
17,890
18,619
19,036
19,694
20,797
21,974
23,073
21,451
21,541
21,660
21,741
21,838
21,893
21,998
22,115
22,212
22,313
22,415
22,501
22,585
22,638
22,707
22,825
22,924
23,072
23,176
23,255
23,300
23,359
23,444
23,586

5,595
5,474
5,650
5,856
6,026
6,389
6,609
6,645

6,751
6,914
7,278
7,616
7,839
8,083
8,353
8,594
8,890
9,225
9,596
10,074
10,784
11,391
11,839
12,195
12,554
12,881
13,334
13,732
14,170
14,686
14,871
15,127
15,672
15,947
16,241
16,031
15,837
15,869
16,024
16,415
16,738
16,210
16,229
16,280
16,304
16,347
16,360
16,450
16,462
16,536
16,575
16,593
16,629
16,637
16,681
16,699
16,711
16,720
16,682
16,597
16,628
16,774
16,870
16,897
16,950

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
2,866
2,772
2,739
2,774
2,807
2,875
2,899
2,837
2,838
2,852
2,859
2,869
2,872
2,879
2,886
2,899
2,895
2,904
2,913
2,918
2,918
2,923
2,914
2,899
2,875
2,866
2,875
2,901
2,896
2,899
2,901

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
13,375
13,259
13,098
13,096
13,216
13,540
13,839
13,373
13,391
13,428
13,445
13,478
13,488
13,571
13,576
13,637
13,680
13,689
13,716
13,719
13,763
13,776
13,797
13,821
13,807
13,731
13,753
13,873
13,974
13,998
14,049

Note.—Data in Tables B-40 through B-42 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-31 through B-38), 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.




291

TABLE B-41.—Average weekly hours and hourly earnings in selected private nonagricultural industries,
1947-86
[For production or nonsupervisory workers,- monthly data seasonally adjusted, except as noted]
Average gross hourly earnings,
current dollars

Average weekly hours
Year or
month

Total
private

non-

agricultural 1

Manufacturing

Con-

struction

Retail
trade

Total
private

non-

agricultural 1

ConManufacturing
struction

Adjusted hourly earnings, total
private nonagricultural 2

Daioil

trade

Index,
1977=100

Percent change
from a year
earlier*

Current
1977
1977
dollars dollars3 Current dollars
dollars

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
1982
1983
1984
1985
1986 p

40.3
40.0
39.4
39.8
39.9
39.9
39.6
39.1
39.6
39.3
38.8
38.5
39.0
38.6
38.6
38.7
38.8
38.7
38.8
38.6
38.0
37.8
37.7
37.1
36.9
37.0
36.9
36.5
36.1
36.1
36.0
35.8
35.7
35.3
35.2
34.8
35.0
35.2
34.9
34.8

40.4
40.0
39.1
40.5
40.6
40.7
40.5
39.6
40.7
40.4
39.8
39.2
40.3
39.7
39.8
40.4
40.5
40.7
41.2
41.4
40.6
40.7
40.6
39.8
39.9
40.5
40.7
40.0
39.5
40.1
40.3
40.4
40.2
39.7
39.8
38.9
40.1
40.7
40.5
40.7

38.2
38.1
37.7
37.4
38.1
38.9
37.9
37.2
37.1
37.5
37.0
36.8
37.0
36.7
36.9
37.0
37.3
37.2
37.4
37.6
37.7
37.3
37.9
37.3
37.2
36.5
36.8
36.6
36.4
36.8
36.5
36.8
37.0
37.0
36.9
36.7
37.1
37.8
37.7
37.5

40.3
40.2
40.4
40.4
40.4
39.8
39.1
39.2
39.0
38.6
38.1
38.1
38.2
38.0
37.6
37.4
37.3
37.0
36.6
35.9
35.3
34.7
34.2
33.8
33.7
33.4
33.1
32.7
32.4
32.1
31.6
31.0
30.6
30.2
30.1
29.9
29.8
29.8
29.4
29.2

$1.131
1.225
1.275
1.335
1.45
1.52
1.61
1.65
1.71
1.80
1.89
1.95
2.02
2.09
2.14
2.22
2.28
2.36
2.46
2.56
2.68
2.85
3.04
3.23
3.45
3.70
3.94
4.24
4.53
4.86
5.25
5.69
6.16
6.66
7.25
7.68
8.02
8.32
8.57
8.76

$1.216
1.327
1.376
1.439
1.56
1.64
1.74
1.78
1.85
1.95
2.04
2.10
2.19
2.26
2.32
2.39
2.45
2.53
2.61
2.71
2.82
3.01
3.19
3.35
3.57
3.82
4.09
4.42
4.83
5.22
5.68
6.17
6.70
7.27
7.99
8.49
8.83
9.19
9.53
9.73

$1.540
1.712
1.792
1.863
2.02
2.13
2.28
2.38
2.45
2.57
2.71
2.82
2.93
3.07
3.20
3.31
3.41
3.55
3.70
3.89
4.11
4.41
4.79
5.24
5.69
6.06
6.41
6.81
7.31
7.71
8.10
8.66
9.27
9.94
10.82
11.63
11.94
12.13
12.31
12.42

$0.838
.901
.951
.983
1.06
1.09
1.16
1.20
1.25
1.30
1.37
1.42
1.47
1.52
1.56
1.63
1.68
1.75
1.82
1.91
2.01
2.16
2.30
2.44
2.60
2.75
2.91
3.14
3.36
3.57
3.85
4.20
4.53
4.88
5.25
5.48
5.74
5.85
5.94
6.02

21.6
23.4
24.5
25.4
27.3
28.7
30.3
31.3
32.4
34.0
35.7
37.2
38.5
39.8
41.0
42.4
43.6
44.8
46.4
48.4
50.8
53.9
57.5
61.3
65.7
69.8
74.1
80.0
86.7
92.9
100.0
108.2
116.8
127.3
138.9
148.5
155.4
160.3
165.2
169.2

58.5
58.9
62.3
64.0
63.6
65.5
68.7
70.5
73.3
75.9
76.9
78.0
80.0
81.4
83.0
85.0
86.3
87.5
89.0
90.3
92.2
94.0
95.0
95.7
98.3
101.2
101.1
98.3
97.6
99.0
100.0
100.5
97.4
93.5
92.6
93.4
94.9
94.6
94.1
94.9

8.3
4.7
3.7
7.5
5.1
5.6
3.3
3.5
4.9
5.0
4.2
3.5
3.4
3.0
3.4
2.8
2.8
3.6
4.3
5.0
6.1
6.7
6.6
7.2
6.2
6.2
8.0
8.4
7.2
7.6
8.2
7.9
9.0
9.1
6.9
4.6
3.2
3.1
2.4

1985: Jan
Feb
Mar
Apr
May....
June.,.
July
Aug
Sept....
Oct
Nov
Dec

35.0
34.9
35.0
34.9
35.0
34.9
34.8
34.9
34.9
34.9
34.8
34.9

40.5
40.1
40.5
40.3
40.4
40.5
40.4
40.6
40.7
40.7
40.7
40.9

37.6
37.9
38.1
37.9
37.7
37.3
37.6
37.6
37.8
37.9
37.4
37.2

29.6
29.6
29.6
29.4
29.6
29.5
29.4
29.4
29.4
29.3
29.3
29.2

8.44
8.48
8.50
8.52
8.53
8.57
8.55
8.59
8.62
8.63
8.65
8.70

9.40
9.43
9.45
9.49
9.50
9.53
9.54
9.57
9.58
9.61
9.63
9.68

12.23
12.32
12.27
12.29
12.29
12.29
12.29
12.32
12.35
12.33
12.34
12.40

5.88
5.89
5.90
5.90
5.92
5.92
5.93
5.94
5.98
5.96
5.97
6.02

162.7
163.6
163.8
164.2
164.4
165.2
165.0
165.5
166.4
166.2
166.8
167.7

94.3
94.5
94.2
94.0
94.1
94.2
93.9
94.1
94.4
94.0
93.9
94.0

2.7
3.3
3.1
2.9
3.1
3.2
2.8
3.1
3.1
3.0
3.0
3.1

-.5
-.2
-.8
-1.3
-.9
-.8
-1.0
.1
.4
.1
-.4
-.5

1986: Jan
Feb
Mar....

35.0
34.9
34.9
34.8
34.8
34.7
34.7
34.8
34.7
34.7
34.8
34.6

40.8
40.7
40.7
40.7
40.7
40.6
40.6
40.8
40.8
40.7
40.8
40.9

38.4
36.5
36.8
37.7
37.5
37.1
37.4
37.6
37.7
37.5
37.3
37.4

29.3
29.3
29.3
29.2
29.2
29.1
29.2
29.2
29.2
29.1
29.2
28.8

8.68
8.71
8.73
8.72
8.73
8.74
8.73
8.77
8.76
8.80
8.85
8.84

9.65
9.68
9.70
9.68
9.72
9.71
9.73
9.76
9.74
9.77
9.77
9.80

12.25
12.29
12.23
12.34
12.38
12.43
12.40
12.43
12.43
12.53
12.65
12.63

5.99
5.99
6.01
5.99
5.99
6.00
6.00
6.03
6.05
6.05
6.06
6.04

167.3
168.2
168.5
168.4
168.7
169.2
168.9
169.3
169.6
170.0
170.9
170.8

93.5
94.4
95.1
95.4
95.4
95.2
95.1
95.1
95.0
95.1
95.4
95.1

2.8
2.8
2.9
2.6
2.6
2.4
2.4
2.3
1.9
2.3
2.4
1.8

-.9
-.2
.9
1.4
1.4
1.0
1.2
1.1
.6
1.1
1.5
1.1

May"!'.!
June....
July
Aug....
Sept.,
Oct..,
Nov..
Dec P..

1
Also includes other private industry groups shown in Table B-40.
2
Adjusted for overtime (in manufacturing only) and for interindustry
3

0.7
5.8
2.7
-.6
3.0
4.9
2.6
4.0
3.5
1.3
1.4
2.6
1.8
2.0
2.4
1.5
1.4
1.7
1.5
2.1
2.0
1.1
.7
2.7
3.0
-.1
28
-.7
1.4
1.0

-3'.1
-4.0
-1.0
.9
1.6
-.5
.9

employment shifts.
Current-dollar earnings index divided by the consumer price index for urban wage earners and clerical workers on a 1977=100
base.
4
Monthly percent changes are computed from indexes to two decimal places and are based on data not seasonally adjusted.
Note.-See Note, Table B-40.
Source: Department of Labor, Bureau of Labor Statistics.




292

TABLE B-42.—Average weekly earnings in selected private nonagricultural industries, 1947-86
[For production or nonsupervisory workers; monthly data seasonally adjustea, except as noted]
Average gross weekly earnings
Total private
nonagricultural1

Year or month

Current
dollars

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
1982
1983
1984
1985
1986"
1985- Jan
Feb
Mar
Apr
May
June
July
Aug
Sept
Oct
Nov
Dec
1986- Jan
Feb
Mar
Apr
May
June
July
Aug
Sept
Oct p
Nov p
Dec

. .. .

$45.58
49.00
50.24
53.13
57.86
60.65
63.76
64.52
67.72
70.74
73.33
75.08
78.78
80.67
82.60
85.91
88.46
91.33
95.45
98.82
101.84
107.73
114.61
119.83
127.31
136.90
145.39
154.76
163.53
175.45
189.00
203.70
219.91
235.10
255.20
267.26
280.70
292.86
299.09
304.85
295.40
295.95
297.50
297.35
298.55
299.09
297.54
299.79
300.84
301.19
301.02
303.63
303.80
303.98
304.68
303.46
303.80
303.28
302.93
305.20
303.97
305.36
307.98
305.86

1977
dollars 2
$123.52
123.43
127.84
133.83
134.87
138.47
144.58
145.32
153.21
157.90
158.04
157.40
163.78
164.97
167.21
172.16
175.17
178.38
183.21
184.37
184.83
187.68
189.44
186.94
190.58
198.41
198.35
190.12
184.16
186.85
189.00
189.31
183.41
172.74
170.13
168.09
171.26
172.78
170.42
171.07
171.15
170.97
171.08
170.30
170.80
170.62
169.44
170.43
170.74
170.45
169.49
170.20
169.72
170.58
171.94
171.93
171.83
170.67
170.57
171.46
170.49
170.78
171.86
170.30

Manufacturing
(current
dollars)
$49.13
53.08
53.80
58.28
63.34
66.75
70.47
70.49
75.30
78.78
81.19
82.32
88.26
89.72
92.34
96.56
99.23
102.97
107.53
112.19
114.49
122.51
129.51
133.33
142.44
154.71
166.46
176.80
190.79
209.32
228.90
249.27
269.34
288.62
318.00
330.26
354.08
374.03
385.97
396.01
380.70
378.14
382.73
382.45
383.80
385.97
385.42
388.54
389.91
391.13
391.94
395.91
393.72
393.98
394.79
393.98
395.60
394.23
395.04
398.21
397.39
397.64
398.62
400.82

1
Also includes other
2
Earnings in current
3

Construction
(current
dollars)
$58.83
65.23
67.56
69.68
76.96
82.86
86.41
88.54
90.90
96.38
100.27
103.78
108.41
112.67
118.08
122.47
127.19
132.06
138.38
146.26
154.95
164.49
181.54
195.45
211.67
221.19
235.89
249.25
266.08
283.73
295.65
318.69
342.99
367.78
399.26
426.82
442.97
458.51
464.09
465.75
459.85
466.93
467.49
465.79
463.33
458.42
462.10
463.23
466.83
467.31
461.52
461.28
470.40
448.59
450.06
465.22
464.25
461.15
463.76
467.37
468.61
469.88
471.85
472.36

private industry groups shown in Table B-40.
dollars divided by the consumer price index on a 1977=100 base.
Based on data not seasonally adjusted.
Note.-See Note, Table B-40.
Source: Department of Labor, Bureau of Labor Statistics.




293

Retail
trade
(current
dollars)
$33.77
36.22
38.42
39.71
42.82
43.38
45.36
47.04
48.75
50.18
52.20
54.10
56.15
57.76
58.66
60.96
62.66
64.75
66.61
68.57
70.95
74.95
78.66
82.47
87.62
91.85
96.32
102.68
108.86
114.60
121.66
130.20
138.62
147.38
158.03
163.85
171.05
174.33
174.64
175.78
174.05
174.34
174.64
173.46
175.23
174.64
174.34
174.64
175.81
174.63
174.92
175.78
175.51
175.51
176.09
174.91
174.91
174.60
175.20
176.08
176.66
176.06
176.95
173.95

Percent change from
a year earlier, total
private
nonagriculturar 3
Current
dollars

7.5
2.5
5.8
8.9
4.8
5.1
1.2
5.0
4.5
3.7
2.4
4.9
2.4
2.4
4.0
3.0
3.2
4.5
3.5
3.1
5.8
6.4
4.6
6.2
7.5
6.2
6.4
5.7
7.3
7.7
7.8
8.0
6.9
8.5
4.7
5.0
4.3
2.1
1.9
2.0
2.1
2.7
1.4
2.4
2.6
1.5
2.3
2.1
2.7
2.3
2.5
3.1
2.5
2.4
2.1
1.9
1.1
1.7
1.8
1.0
1.4
2.0
.7

1977
dollars
-0.1
3.6
4.7
.8
2.7
4.4
.5
5.4
3.1
.1
-.4
4.1
.7
1.4
3.0
1.7
1.8
2.7
.6
.2
1.5
.9
-1.3
1.9
4.1
-.0
-4.1
-3.1
1.5
1.2
.2
-3.1
-5.8
-1.5
-1.2
1.9
.9
-1.4
.4
-1.2
13
-1.2
-2.6
-1.5
-1.5
-2.2
-.6
-.6
-.2
-1.1
-1.1
-.6
-.5
.4
.9
.7
_2
.5
.6
-.3
.2
1.1
.1

TABLE B-43.—Productivity and related data, business sector, 1947-86
[1977=100; quarterly data seasonally adjusted]
Output per hour
of all persons

Year or
quarter

Output

1

Hours of 2all
persons

Compensation per Real compensation
hour3
per hour4

Unit labor costs

implicit price
deflator5

Business
sector

Nonfarm
business
sector

Business
sector

Nonfarm
business
sector

Business
sector

Nonfarm
business
sector

Business
sector

Nonfarm
business
sector

Business
sector

Nonfarm
business
sector

Business
sector

Nonfarm
business
sector

Business
sector

Nonfarm
business
sector

1947
1948
1949

44.9
47.2
47.7

51.4
53.3
54.2

36.2
38.3
37.4

35.2
37.2
36.4

80.6
81.2
78.5

68.6
69.8
67.0

16.6
18.1
18.4

18.0
19.6
20.2

45.2
45.5
46.7

48.9
49.3
51.3

37.0
38.3
38.5

35.1
36.7
37.2

35.5
38.0
37.8

34.0
36.4
36.9

1950 .
1951
1952
1953
1954

51.7
53.8
55.4
57.5
58.4

57.7
59.4
60.7
62.1
63.0

41.0
43.9
45.3
47.4
46.5

39.9
43.0
44.4
46.4
45.5

79.3
81.6
81.7
82.5
79.7

69.1
72.3
73.0
74.8
72.2

19.7
21.6
23.0
24.6
25.3

21.4
23.3
24.6
26.0
26.8

49.6
50.5
52.5
55.6
57.2

53.9
54.3
56.1
58.8
60.5

38.1
40.3
41.5
42.7
43.4

37.1
39.2
40.5
41.9
42.6

38.4
40.8
41.4
41.7
42.2

37.5
39.6
40.4
41.1
41.8

60.1
60.9
62.5
64.4
66.5

64.8
65.2
66.5
68.0
70.2

49.7
51.1
51.7
50.7
54.4

48.7
50.2
50.9
49.8
53.7

82.7
83.9
82.7
78.8
81.8

75.1
77.0
76.6
73.3
76.4

26.0
27.7
29.5
30.9
32.2

27.8
29.5
31.2
32.5
33.8

58.8
61.8
63.6
64.8
67.1

62.9
65.8
67.2
68.1
70.3

43.2
45.5
47.2
48.0
48.5

42.9
45.3
47.0
47.7
48.2

43.2
44.6
46.2
46.9
47.8

43.1
44.5
46.1
46.6
47.8

1960
1961
1962... .
1963
1964

67.6
70.0
72.5
75.4
78.7

71.0
73.2
75.6
78.3
81.4

55.4
56.5
59.4
62.1
65.9

54.6
55.7
58.7
61.5
65.4

81.9
80.7
81.9
82.4
83.7

76.9
76.0
77.6
78.5
80.3

33.6
34.9
36.6
37.9
39.9

35.3
36.5
38.0
39.3
41.1

68.9
70.8
73.2
75.1
78.0

72.3
73.8
76.0
77.7
80.3

49.7
49.9
50.4
50.3
50.7

49.7
49.8
50.2
50.2
50.5

48.5
48.8
49.7
50.2
50.7

48.5
48.8
49.7
50.2
50.8

1965
1966
1967 . .
1968
1969

81.0
83.2
85.5
87.8
87.8

83.4
85.2
87.1
89.4
89.0

70.0
73.6
75.6
78.9
81.1

69.5
73.4
75.3
78.8
80.9

86.4
88.5
88.5
89.9
92.3

83.3
86.2
86.4
88.1
90.9

41.5
44.3
46.7
50.4
53.9

42.5
45.0
47.5
51.1
54.4

79.6
82.7
84.8
87.8
89.1

81.6
84.0
86.2
89.0
90.0

51.2
53.3
54.7
57.4
61.4

50.9
52.8
54.5
57.1
61.2

51.9
53.6
54.9
57.5
60.4

51.9
53.5
55.0
57.5
60.4

1970
1971
1972
1973 . ..
1974

88.4
91.3
94.1
95.9
93.9

89.3
91.9
94.7
96.4
94.3

80.3
82.5
87.7
92.9
91.3

80.0
82.2
87.5
92.9
91.2

90.8
90.4
93.2
96.9
97.3

89.7
89.4
92.3
96.3
96.7

57.8
61.6
65.5
70.9
77.6

58.2
62.0
66.0
71.2
78.0

90.2
92.1
94.9
96.7
95.4

90.8
92.8
95.7
97.1
95.9

65.4
67.4
69.6
73.9
82.7

65.2
67.4
69.7
73.9
82.7

63.2
66.4
69.0
73.4
80.5

63.4
66.6
69.0
72.3
79.7

1975
1976 .
1977
1978
1979

95.7
98.3
100.0
100.8
99.6

96.0
98.5
100.0
100.8
99.3

89.4
94.5
100.0
105.8
107.9

89.1
94.4
100.0
106.0
107.9

93.4
96.1
100.0
104.9
108.3

92.8
95.9
100.0
105.1
108.7

85.2
92.8
100.0
108.5
119.1

85.6
92.8
100.0
108.6
118.9

95.9
98.7
100.0
100.8
99.4

96.4
98.8
100.0
100.9
99.2

89.0
94.3
100.0
107.6
119.5

89.2
94.3
100.0
107.7
119.7

88.7
94.0
100.0
107.3
117.0

88.3
93.8
100.0
107.0
116.5

1980
1981
1982
1983
1984 .

99.3
100.7
100.3
103.0
105.3

98.8
99.8
99.2
102.4
104.3

106.7
108.9
105.5
109.9
118.8

106.7
108.5
104.9
110.1
118.8

107.5
108.2
105.2
106.7
112.8

108.0
108.7
105.7
107.5
114.0

131.5
143.7
154.9
161.5
168.1

131.3
143.6
154.8
161.5
167.9

96.7
95.7
97.3
98.2
98.1

96.6
95.7
97.2
98.2
98.0

132.5
142.7
154.5
156.8
159.7

132.9
144.0
156.0
157.7
161.0

127.6
139.8
148.1
153.0
158.5

127.8
140.3
149.2
154.3
159.3

1985

106.4

104.8

122.7

122.5

115.3

116.9

175.3

174.6

98.8

98.4

164.8

166.7

163.0

164.6

1982: IV

101.0

99.7

105.0

104.2

103.9

104.5

158.3

158.2

97.9

97.8

156.8

158.7

150.2

151.4

1983: IV

103.8

103.3

113.6

114.1

109.4

110.5

163.6

163.4

98.0

97.9

157.7

158.2

155.2

156.2

1984:1
II
Ill
IV

104.9
105.6
105.5
105.5

103.9
104.6
104.4
104.3

116.9
119.0
119.5
120.2

116.9
119.1
119.5
120.2

111.4
112.7
113.3
114.0

112.5
113.8
114.5
115.2

165.9
167.1
169.0
170.6

165.6
166.9
168.7
170.4

98.1
97.9
98.1
98.2

97.9
97.8
98.0
98.1

158.2
158.3
160.2
161.7

159.4
159.5
161.5
163.3

156.7
157.7
159.0
160.3

157.2
158.4
160.0
161.4

1985:1
II
Ill
IV

105.7
106.4
107.3
106.4

104.4
104.9
105.4
104.5

121.3
122.3
123.5
123.8

121.1
122.1
123.3
123.6

114.8
115.0
115.2
116.4

116.0
116.4
116.9
118.2

172.3
174.5
176.4
178.0

172.1
174.0
175.4
177.0

98.4
98.7
99.1
99.0

98.2
98.4
98.5
98.4

163.1
164.0
164.4
167.3

164.8
165.9
166.3
169.3

161.4
162.6
163.4
164.6

162.7
164.1
165.2
166.2

1986:1

107.3
107.4
107.4

105.6
105.7
105.8

125.3
125.4
126.2

125.1
125.3
126.2

116.8
116.7
117.4

118.5
118.5
119.3

179.1
180.4
181.7

178.3
179.3
180.4

99.2
100.3
100.4

98.8
99.8
99.7

167.0
168.0
169.1

168.8
169.6
170.5

165.3
165.8
167.2

167.1
167.5
168.9

1955
1956 .
1957
1958
1959

II
Ill

.

1
Output
2

refers to gross domestic product originating in the sector in 1982 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
Hourly compensation divided by the consumer price index for all urban consumers.
5
Current dollar gross domestic product divided by constant dollar gross domestic product.
Source: Department of Labor, Bureau of Labor Statistics.




294

TABLE B-44.—Changes in productivity and related data, business sector, 1948-86
[Percent change from preceding period; quarterly data at seasonally adjusted annual rates]

Ynar nr

quarter

Output 1

Output per hour
of all persons
Business
sector

Hours of 2all
persons

Real compensation
per hour 4

Unit labor costs

Nonfarm
business
sector

Business
sector

Nonfarm
business
sector

Business
sector

Compensation per
hour 3

Nonfarm
business
sector

Business
sector

Nonfarm
business
sector

Business
sector

Nonfarm
business
sector

Business
sector

Implicit price
deflator5

Nonfarm
business
sector

Business
sector

Nonfarm
business
sector

1948
1949

5.0
1.1

3.8
1.7

5.9
-2.3

5.6
-2.3

0.8
-3.4

1.7
-3.9

8.5
1.7

8.5
3.0

0.7
2.7

0.8
4.0

3.3
.6

4.6
1.3

7.2
-.6

7.2
1.3

1950
1951
1952 .
1953
1954

8.3
4.0
3.1
3.6
1.6

6.4
3.0
2.2
2.2
1.5

9.5
7.1
3.2
4.6
-1.8

9.7
7.7
3.2
4.6
20

1.1
2.9
.1
.9
34

3.0
4.6
1.0
2.4
-3.4

7.3
9.8
6.3
6.7
3.2

6.1
8.7
5.6
5.7
3.3

6.3
1.7
4.0
5.9
2.8

5.1
3^3
4.9
2.8

-.9
5.6
3.1
3.0
1.6

~5.B
3.3
3.5
1.8

1.5
6.3
1.3
.7
1.2

1.8
5.6
2.0
1.8
1.5

1955
1956
1957
1958
1959

3.0
1.3
2.6
3.0
3.3

2.9
.6
1.9
2.4
3.2

6.9
2.8
1.1
-1.8
7.3

7.1
3.1
1.3
-2.0
7.7

3.7
1.5
15
-4.7
3.8

4.0
2.5
5
-4.3
4.3

2.5
6.7
6.5
4.6
4.4

3.6
6.2
5.7
4.1
4.1

2.9
5.1
3.0
1.8
3.5

4.0
4.6
2.2
1.3
3.3

-.5
5.3
3.8
1.6
1.0

.7
5.5
3.8
1.6
.9

2.6
3.2
3.5
1.6
2.0

3.2
3.3
3.6
1.2
2.5

1960
1961
1962
1963
1964

1.7
3.5
3.6
4.0
4.3

1.1
3.1
3.3
3.6
3.9

1.8
1.9
5.2
4.6
6.0

1.7
2.0
5.5
4.7
6.3

.1
-1.6
1.6
.6
1.6

.6
-1.1
2.1
1.1
2.3

4.3
3.9
4.7
3.8
5.2

4.4
3.3
4.1
3.5
4.6

2.7
2.8
3.5
2.5
3.8

2.8
2.2
2.9
2.3
3.3

2.6
.3
1.1
_2

3.3

'.B

'.S
-.1
.7

1.4
.5
1.9
.9
1.0

1.4
.6
2.0
.9
1.2

1965
1966
1967
1968
1969

3.0
2.8
2.7
2.7
.1

2.5
2.1
2.3
2.6
-.5

6.3
5.2
2.7
4.4
2.7

6.4
5.6
2.5
4.7
2.7

3.2
2.4
-.0
1.7
2.6

3.8
3.4

2'.0
3.2

3.8
6.9
5.4
7.9
7.0

3.4
5.9
5.5
7.6
6.6

2.1
3.9
2.5
3.5
1.6

1.7
2.9
2.6
3.2
1.1

.9
4.1
2.6
5.0
6.9

.8
3.7
3.2
4.8
7.1

2.3
3.3
2.5
4.6
5.1

2.0
3.1
2.9
4.6
5.0

1970
1971
1972
1973
1974

.7
3.2
3.0
2.0
-2.1

.3
3.0
3.1
1.8
-2.2

-.9
2.7
6.3
6.0
-1.8

-1.1
2.7
6.4
6.2
-1.8

-1.6
~3!l
3.9
.4

-1.3
-.3
3.3
4.3
.4

7.3
6.4
6.4
8.3
9.5

7.0
6.5
6.5
7.9
9.6

1.2
2.1
3.0
1.9
-1.3

.9
2.1
3.1
1.5
-1.3

6.5
3.1
3.3
6.2
11.9

6.7
3.4
3.4
6.0
12.0

4.7
4.9
4.0
6.4
9.6

4.9
5.0
3.6
4.8
10.2

1975
1976
1977 .
1978
1979

2.0
2.8
1.7
.8
-1.2
_3
L4
-.4
2.7
2.3

1.8
2.6
1.6
.8
-1.6

21
5.8
5.8
5.8
2.0

-2.3
6.0
5.9
6.0
1.9

-4.0
2.9
4.0
4.9
3.2

-4.0
3.4
4.3
5.1
3.5

9.7
8.9
7.8
8.5
9.7

9.7
8.4
7.7
8.6
9.5

.5
2.9
1.3
.8
-1.4

.5
2.5
1.2
.9
-1.6

7.6
5.9
6.0
7.6
11.1

7.8
5.7
6.1
7.7
11.2

10.3
5.9
6.4
7.3
9.0

10.8
6.3
6.6
7.0
8.9

-.4
1.0
-.6
3.3
1.8

-1.1
2.1
-3.1
4.2
8.1

-1.2
1.7
-3.3
4.9
8.0

-.8
.7
-2.8
1.5
5.7

-.7
.7
-2.7
1.6
6.0

10.5
9.2
7.8
4.2
4.1

10.5
9.4
7.8
4.3
4.0

-2.7
-1.0
1.6
1.0
-.1

-2.7
-.9
1.5
1.1
-.3

10.9
7.7
8.3
1.5
1.8

11.0
8.3
8.4
1.1
2.1

9.0
9.6
5.9
3.3
3.5

9.7
9.7
6.3
3.5
3.2

2.6

4.3

4.0

.7

.4

3.2

3.5

2.9

3.3

4.5

5.1

2.9

3.4

1.5

2.6

2.4

3.0

1980
1981
1982
1983
1984
1985

1.0

.5

3.3

1982: IV

3.0

2.4

-.5

1983: IV

2.8

1.3

10.4

9.8

7.3

8.4

5.3

4.4

1.1

.1

2.4

3.0

4.8

3.1

1984:1
II
Ill
IV

4.4
2.6
-.3
-.1

2.4
2.9
-.7
-.4

12.2
7.5
1.7
2.5

10.2
7.7
1.6
2.2

7.4
4.8
2.1
2.6

7.6
4.7
2.3
2.6

5.7
2.8
4.6
3.8

5.4
3.2
4.3
4.2

.5
-.8
.8
.1

.3
-.4
.4
.5

1.2
.2
5.0
3.9

3.0
.3
5.1
4.6

4.0
2.6
3.4
3.2

2.7
3.1
4.0
3.7

1985:1
II
Ill
IV

.9
2.7
3.4
-3.2

.3
1.8
2.2
-3.5

3.6
3.3
4.1
1.0

3.2
3.0
4.0
1.0

2.6
.6
.7
4.3

2.9
1.2
1.8
4.6

4.2
5.1
4.4
3.8

3.9
4.6
3.2
3.7

1.0
1.0
1.8
-.5

.7
.5
.7
-.6

3.3
2.4
1.0
7.2

3.6
2.7
1.0
7.4

2.7
3.0
1.9
3.0

3.2
3.4
2.6
2.4

1986:1
II
Ill

3.3
.5
.2

4.3
.5
.2

4.7
.3
2.5

5.1
.6
3.0

1.4
-.2
2.3

.8
.1
2.8

2.5
2.8
2.9

3.1
2.3
2.3

1.0
4.5

1.6
4.0
_2

-.7
2.3
2.7

-1.2
1.8
2.2

1.8
1.2
3.4

2.3
1.0
3.3

3.0

-1.2

2.2

-3.4

-3.5

1
Output
2

refers to gross domestic product originating in the sector in 1982 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
Hourly compensation divided by the consumer price index for all urban consumers.
5
Current dollar gross domestic product divided by constant dollar gross domestic product.
Note.—Data relate to all persons engaged in the sector. Percent changes are based on original data and therefore may differ slightly
from percent changes based on indexes in Table B-43.
Source: Department of Labor, Bureau of Labor Statistics.




295

PRODUCTION AND BUSINESS ACTIVITY
TABLE B-45.—Industrial production indexes, major industry divisions, 1939-86
[1977=100; monthly data seasonally adjusted]
Year or month
1977 proportion
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
1982
1983
1984
1985
1986 "
1985: Jan
Feb
Mar .. . .
Apr
May
June
July
Aug . . .
Sept
Oct
Nov
Dec
1986- Jan
Feb
Mar
Apr
May
June
July
Aug
Sept

od':;.:::.::::.::.::.:::::::::::::":":::::::
Nov"
Dec "

Total
industrial
production

Manufacturing

lltili

ing

ties

49.10

35.11

179
188
227

9.83
376
418
444
45.7
468
50.2
492
48.3
54.6
574
50.9
56.9
624
61.9
635
62.3
695
73.1
73.2
671
702
716
72.1
741
771
80.2
831
87.6
893
92.7
964
989
964
98.4
99.3
988
96.6
97.4
1000
1036
106.4
1124
117.5
1093
1029
111 1
1088
996
1100
1100
1102
1097
1095

5.96

136
181
242

Dura-

100.00
160
184
233

84.21

158
186
238

324

345

26.7

ble

durable

27.7

299

30.7

37.3

34.9

46.1

26.4

29.0

27.1
28.2

312

25.8
29.0
30.2
28.6
33.1

25.9
28.9

300

418
349
244

303

28.3
33.0

27.5
33.5

37.1

40.0

356

359
37.2

404

404

38.2

37.8

44.9
45.5
42.6

44.4
44.9
41.7

430

426

477
488

470
480
481
524
555

49.1

532

56.3
60.1

59.3

657

661
72.0

71.7

77.6

77.2

731

735
812
785
796
873
944
930
848
926

806
770
782
864
940
926

83.4

919

1000
1065
1107
1086
1110
1031
1092
1214
1238
1251
1227
1232
1234
1233
1236
1236
1234
1244
1243
1236
1248
1256
1262
1253
1236
1247
1242
1242
1249
1251
1249
1253
1260
126.6

1000
107 1
1115
1082
1105
1022
1102
1234
1263
1292
1250
1252
1258
1261
1263
1261
1263
1272
1270
1263
1278
1282
1294
1287
1272
1287
1282
1283
1292
1295
1295
1299
1305
1314

Source: Board of Governors of the Federal Reserve System.




Uin

Non-

Total

296

377

23.7

254

263
292

28.7
31.9

330

33.6

452

350

456

391

39.9

47.1
47.4
41.5

477
485
476
528
563
60.3

35.2

41.1
41.8

421
463
474
48.8

518
546

58.2

686

621

770

681

76.2

80.8

840
776
773
863
963
943

82.6
91 1
1000
1082
1139
109 1
111.1

999

1077
124.2
1273
1280
1266
1264
1273
1275
1274
1270
1269
1281
1274
1267
1282
1287
1295
1287
1268
1281
1270
1262
1274
1275
1281
1282
1287
129.6

66.0
72.5

763
763
794
86.5

908
902
84.5

931

1000
1055
1082
1070
109.7
1055
1137
1223
1251
1309
1226
1235

123*7
1241
1247
1248
1254
1260
1264
1258
1272
1275
1293
1287
1277
129.6
1299
131.2
1317
132.2
1314
1323
1331
1338

1106
1075
1081
1082
1069
1069
1074
1081
105.1
1030
101.0

998
98.9

971
964
962
959
966
970

69
76
86
9.7
107
11.4

116
12.0
13.0

145
15.5
17.6

201
21.8

236
25.4

284

31.2
33.3
34.9

384
411

43.4

466

49.8
54.1
57.4
61.8
64.9
70.2
76.4
81.1

850

90.4
94.0
92.8
93.7
97.4
100.0
1031
105.9
1073
107.1
104.8
105.2
110.7
111.9
109.7
113.3
1161
1127
109.7
1097
1095
110.0
1100
113.3
1118
111.9
1148
1125
109.7
1093
109.4
1085
108.6
1097
1083
1083
1095
1109
110.6

TABLE B-46.—Industrial production indexes, market groupings, 1947-86
[1977=100; monthly data seasonally adjusted]
Materials

Final products
Year or month

Total
industrial
production

Consumer goods
Total

AutoTotal » motive
products

Equipment

InterDura- Non3
De- mediate
ble
fense products Total goods durable
goods
and
space

2
Home
goods Total

Business

19.25

14.34

3.67

12.94

42.28

20.50

10.09

83.8
93.6
96.6
88.5
91.5
100.0
110.3
120.4
124.7
129.9
120.2
121.7
139.6
145.4
142.9
143.6
144.3
144.2
145.4
146.0
144.6
145.6
147.1
146.9
144.9
147.0
146.4
147.5
145.4
142.3
142.3
141.2
140.0
141.0
142.5
142.8
143.1
143.5
143.9

25.9
27.0
23.6
25.2
30.8
34.9
36.3
31.9
34.6
40.1
41.7
35.2
39.5
40.6
39.4
42.8
44.9
50.3
57.6
66.7
68.0
71.0
75.6
72.9
69.3
79.0
92.4
96.5
86.1
89.3
100.0
112.2
124.7
125.1
127.6
113.6
115.4
134.2
139.6
138.8
138.3
139.2
138.9
140.7
140.8
138.5
139.5
141.0
140.4
138.3
140.8
140.0
141.5
140.5
137.7
138.6
137.9
136.6
137.9
139.3
139.3
139.2
139.2
139.3

15.2
17.8
18.6
21.9
53.8
75.7
90.6
79.8
73.1
71.4
74.6
74.9
78.9
81.1
82.4
95.4
102.9
99.6
110.3
129.6
147.8
148.1
141.0
119.4
107.3
104.3
101.9
100.4
98.5
100.1
100.0
101.2
105.6
115.4
119.8
133.0
143.1
156.4
170.6
180.2
163.2
164.2
166.0
167.1
168.3
169.9
170.8
173.3
174.5
174.8
177.2
178.5
178.7
176.3
176.2
178.0
178.0
178.4
179.5
181.0
182.0
183.6
184.5
186.2

29.9
31.6
29.9
34.8
36.5
36.3
38.8
38.7
43.9
45.9
45.9
44.9
49.6
49.9
50.9
54.0
57.0
60.7
64.6
68.6
71.4
75.5
79.6
78.4
80.8
90.2
96.0
92.6
83.6
92.1
100.0
106.9
110.8
106.9
107.3
101.7
111.2
124.7
130.0
136.3
126.3
127.2
128.1
128.7
130.1
130.9
130.6
131.7
131.3
131.2
131.8
132.0
134.2
133.4
133.3
134.5
135.1
137.0
137.3
137.8
137.0
138.4
138.5
139.2

28.8
30.0
27.3
32.7
36.2
36.7
40.8
37.7
44.6
45.7
45.7
41.1
47.4
48.1
48.1
52.4
55.8
60.3
67.2
73.2
72.5
77.3
81.9
79.0
80.2
88.4
96.8
94.8
83.2
93.0
100.0
105.9
110.3
105.3
107.7
96.7
102.8
114.2
114.2
113.9
114.8
114.9
115.0
114.1
113.8
114.1
113.6
113.9
113.8
113.4
113.9
115.4
115.5
114.8
113.3
113.8
113.0
113.1
113.6
113.2
113.5
113.4
114.5
114.7

28.5
29.3
26.3
33.1
37.6
38.4
44.9
38.7
47.4
47.6
47.5
40.0
47.7
48.3
47.1
52.4
55.9
60.9
69.8
76.9
74.2
78.6
82.7
75.1
75.4
85.2
97.4
94.6
78.8
90.8
100.0
108.8
114.4
106.1
109.7
94.2
103.7
121.5
121.4
119.7
123.6
122.4
122.9
122.2
120.8
121.2
120.1
121.2
119.9
120.1
121.2
121.9
122.2
121.3
119.3
120.2
118.4
117.8
118.8
118.8
118.9
119.0
120.6
120.5

29.1
33.3
34.8
34.7
34.5
39.4
40.1
41.7
45.2
47.9
52.1
57.2
61.8
62.9
69.1
74.8
75.2
78.4
86.4
92.7
93.2
82.9
93.9
100.0
105.6
109.3
103.4
107.1
96.6
106.2
111.4
112.2
118.2
110.4
110.9
110.8
110.5
111.1
111.5
113.3
112.7
114.2
113.6
113.3
114.9
116.2
116.1
114.8
116.5
116.5
117.7
118.9
119.7
120.6
120.4
120.3
121.3

1977 proportion

100.00

44.77

25.52

2.98

3.91

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
1982
1983
1984
1985
1986p
1985: Jan
Feb
Mar
Apr
May
June
July. .
Aug
Sept
Oct
Nov
Dec
1986: Jan
Feb
Mar
Apr
May
June
July
Aug
Sept
Oct
Nov.
Dec"

29.0
30.2
28.6
33.1
35.9
37.2
40.4
38.2
43.0
44.9
45.5
42.6
47.7
48.8
49.1
53.2
56.3
60.1
66.1
72.0
73.5
77.6
81.2
78.5
79.6
87.3
94.4
93.0
84.8
92.6
100.0
106.5
110.7
108.6
111.0
103.1
109.2
121.4
123.8
125.1
122.7
123.2
123.4
123.3
123.6
123.6
123.4
124.4
124.3
123.6
124.8
125.6
126.2
125.3
123.6
124.7
124.2
124.2
124.9
125.1
124.9
125.3
126.0
126.6

29.0
30.1
29.1
32.9
35.5
38.1
40.7
38.5
41.6
44.1
45.4
43.3
47.5
49.1
49.5
53.7
56.7
59.9
65.8
72.1
75.0
78.6
81.1
78.2
78.9
85.6
92.0
91.7
86.3
92.4
100.0
106.9
111.0
112.2
115.2
109.5
114.7
127.3
131.1
132.4
129.0
129.9
130.0
130.3
131.0
130.5
130.6
132.2
132.2
131.0
133.1
133.2
133.9
132.8
130.6
132.1
131.6
131.1
132.0
132.6
132.2
132.7
133.4
134.2

29.9
30.8
30.6
35.0
34.6
35.4
37.5
37.3
41.6
43.1
44.2
43.8
48.0
49.8
50.9
54.3
57.3
60.5
65.3
68.6
70.3
74.5
77.3
76.4
80.8
87.3
91.2
88.4
84.9
93.3
100.0
104.3
103.9
102.7
104.1
101.4
109.3
118.0
120.2
124.5
118.0
119.1
119.3
118.9
119.7
119.9
119.4
120.9
121.1
120.5
122.7
123.3
123.8
123.3
121.8
124.5
124.3
124.4
125.2
125.1
124.2
124.9
125.8
126.9

25.8
27.0
26.7
33.6
29.8
26.8
33.9
31.5
41.9
34.5
36.1
28.7
36.0
41.2
37.6
45.6
49.9
52.3
64.4
64.2
56.4
67.2
67.5
56.8
72.4
78.1
86.2
74.5
70.2
87.1
100.0
102.4
94.9
76.1
78.8
78.1
95.1
109.4
114.0
114.9
113.9
114.1
113.2
111.9
112.7
112.6
113.0
118.6
116.2
113.2
115.6
113.9
116.2
117.6
110.4
116.4
113.2
113.7
116.4
114.5
117.0
112.7
113.2
117.0

26.1
27.2
25.2
34.7
29.9
29.9
33.9
31.3
36.9
38.8
38.0
35.8
41.1
41.4
42.7
46.4
50.0
54.6
61.9
68.2
69.1
74.0
78.9
76.5
81.0
92.7
98.1
90.7
79.9
89.5
100.0
104.7
103.7
97.7
98.1
86.5
101.1
114.3
112.2
116.8
109.1
111.3
113.8
111.4
111.4
112.7
110.3
111.4
110.7
111.6
115.3
116.4
115.8
115.8
113.9
115.5
114.3
114.8
116.3
116.7
117.7
119.7
120.5
121.2

1
Includes clothing and consumer staples, not
2
Two components—oil and gas well drilling
3

shown separately.
and manufactured homes—are included in total equipment, but not in detail shown.
Includes energy materials, not shown separately.
Source: Board of Governors of the Federal Reserve System.




297

TABLE B-47.—Industrial production indexes, selected manufactures, 1947-86
[1977=100; monthly data seasonally adjusted]
Nondurable manufactures

Durable manufactures
Year or month

Primary
metals
Total

1977 proportion
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
1982
1983
1984
1985
1986 '
1985: Jan . .
Feb
Mar
Apr
May
June
July
Aug
Sept
Oct .
Nov
Dec
1986: Jan ..
Feb
Mar

May
June
July
Aug
Sept
Oct
Nov
Dec*

5.33
57.8
60.1
50.5
63.6
69.2
63.2
71.6
57.9
75.3
74.8
71.6
56.8
66.4
66.1
64.9
69.6
75.1
84.7
93.2
98.9
91.4
94.7
101.9
94.8
899
100.7
114.3
110.7
88.2
98.7
100.0
107.0
108.5
90.4
95.0
65.8
73.0
82.3
80.5
76.0
80.9
80.2
82.3
79.8
77.1
78.9
78.5
82.3
80.8
81.9
82.9
81.7
82.4
80.3
76.3
78.1
74.8
71.4
73.6
73.4
74.1
74.2
76.8
75.9

Iron
and
steel

3.49
70.4
73.6
62.9
77.5
86.6
76.2
87.9
68.3
90.8
89.1
85.9
64.7
74.5
75.7
72.3
75.3
82.1
93.4
102.4
105.5
97.5
100.7
109.7
102.1
934
103.8
118.2
114.5
92.0
101.4
100.0
107.5
108.0
86.3
92.5
57.5
66.1
73.4
70.4
70.3
69.1
73.9
69.8
66.1
68.7
67.7
72.3
70.3
72.4
73.9
71.6
72.2
69.5
64.3
65.6
60.2
58.3
61.7
60.8
61.1
62.2
64.6

Fabricated
metal
products

6.46
40.4
41.2
37.2
45.5
48.6
47.4
53.5
48.2
55.0
55.8
57.2
51.3
57.6
57.6
56.2
61.1
63.1
67.0
73.6
78.8
82.5
86.9
88.4
81.9
815
89.4
99.4
95.4
82.7
91.6
100.0
105.7
109.4
101.8
101.6
86.6
89.1
102.6
107.3
107.4
106.5
106.5
107.4
108.9
107.7
106.6
106.4
107.4
106.7
107.9
107.6
108.2
109.2
108.5
107.6
108.2
106.5
106.6
105.7
105.9
107.3
108.0
107.5
108.1

NonElectrieleccal
trical machinmachinery
ery
9.54
26.7
26.8
22.9
25.7
32.6
35.5
36.9
31.6
34.6
39.7
39.6
33.2
38.8
39.0
37.9
42.5
45.4
51.7
58.2
67.6
68.9
69.5
75.2
72.8
676
78.5
91.7
97.7
84.5
88.8
100.0
111.7
122.6
123.3
129.8
115.6
118.3
141.8
145.3
142.3
144.4
145.4
145.9
148.5
148.2
144.2
145.4
145.4
144.2
141.7
144.8
146.2
144.9
143.9
141.7
140.8
141.3
140.4
142.6
142.6
140.9
142.9
142.6
142.9

7.15
14.5
15.1
14.1
19.4
19.5
22.3
25.6
22.8
26.1
28.3
28.1
25.7
31.2
33.8
35.9
41.3
42.4
44.9
53.5
64.2
64.5
68.1
72.5
69.3
696
79.7
90.7
89.8
77.2
86.8
100.0
112.9
125.7
130.3
134.1
128.4
143.8
170.5
168.4
166.5
172.8
172.3
173.2
168.3
169.2
169.6
165.5
165.8
164.5
164.2
166.9
168.7
166.1
164.8
165.2
166.8
166.0
163.2
166.8
167.2
166.9
167.8
167.9
169.7

Transportation
equipment
Total

9.13
26.6
29.0
29.2
34.9
38.9
45.2
56.8
49.4
56.8
55.1
59.0
46.5
52.7
54.6
51.3
59.3
65.1
66.8
79.4
85.1
83.2
90.4
89.7
75.3
815
87.0
99.1
90.1
81.0
92.2
100.0
106.3
108.3
96.9
95.1
87.6
99.2
112.2
121.4
125.9
118.9
117.9
118.7
119.2
119.7
120.4
121.5
125.0
124.5
123.3
124.8
124.0
128.2
127.5
122.6
126.2
124.1
125.1
125.6
125.1
127.7
125.2
125.7
127.8

Source: Board of Governors of the Federal Reserve System.




298

Motor
vehicles
and
parts

5.25
28.8
31.2
32.0
41.2
37.8
32.4
40.8
35.1
47.1
38.2
40.1
29.6
38.5
43.4
38.1
46.3
51.3
52.7
67.3
66.2
58.2
69.7
70.0
56.3
706
77.1
89.8
77.5
65.7
86.5
100.0
104.6
95.9
71.1
71.6
66.8
85.8
104.4
111.5
110.9
112.3
110.0
109.8
110.2
110.2
110.2
111.9
115.6
113.7
111.4
112.6
111.4
116.5
116.4
108.1
112.6
108.7
110.6
111.2
108.2
112.2
107.1
107.8
11.5

Lumber Apparel Printing
and
and
prod- publishproducts
ucts
ing

2.30
47.2
49.1
43.3
52.7
52.5
51.8
54.8
54.5
60.8
60.1
55.2
56.0
63.6
59.8
62.6
66.1
69.2
74.3
77.2
80.1
79.3
81.6
81.5
81.1
832
95.3
95.6
86.8
80.8
91.9
100.0
102.4
102.0
92.9
90.1
82.8
100.2
109.1
113.4

2.79
47.0
49.1
48.6
52.3
51.3
54.0
54.7
54.1
59.7
61.1
60.9
59.2
65.2
66.5
66.9
69.6
72.5
75.0
79.3
81.3
80.9
82.9
85.6
82.2
832
88.3
89.0
85.0
77.6
91.5
100.0
103.1
98.3
97.3
96.1
87.3
95.3
102.7
100.9

109.2
109.0
110.6
111.8
113.3
114.4
113.8
115.3
116.0
116.2
115.0
116.1
120.5
120.3
120.7
121.3
121.6
120.9
120.8
122.5
125.0
124.8

100.7
101.5
100.1
99.2
99.4
98.3
99.9
100.0
101.8
102.1
103.8
104.5
105.5
102.8
102.8
103.1
102.6
101.7
102.5
102.5
102.7
104.1
105.7

4.54
34.3
36.0
37.0
38.8
39.5
39.4
41.2
42.9
47.2
50.2
51.9
50.7
54.1
56.3
56.5
58.6
61.7
65.5
69.7
75.0
79.1
80.4
84.3
82.0
827
88.2
90.6
89.2
83.5
91.2
100.0
107.8
112.7
115.1
118.6
120.2
129.8
146.5
153.9
163.5
149.2
149.7
151.3
152.9
156.0
154.7
154.3
155.8
153.4
154.5
156.8
157.6
160.9
156.7
157.8
161.6
161.9
164.0
165.4
164.6
163.0
168.0
167.8
1686

Chemicals
and
products

Foods

8.05
10.4
11.3
11.1
13.9
15.7
16.5
17.8
18.1
21.1
22.6
23.9
24.7
28.8
29.9
31.4
34.8
38.1
41.7
46.5
50.7
53.0
59.6
64.5
67.1
714
80.3
87.8
91.0
82.9
92.8
100.0
106.8
111.4
106.4
112.6
103.8
114.0
121.6
127.1

7.96
41.9
41.5
41.9
43.4
44.3
45.2
46.1
47.0
49.8
52.6
53.4
54.7
57.4
59.0
60.7
62.6
64.9
67.8
69.4
72.0
75.2
77.2
79.8
81.0
83.6
88.0
89.8
91.0
90.4
95.6
100.0
104.3
106.7
111.4
113.7
114.9
120.4
126.9
130.2

125.2
125.8
126.4
126.7
126.9
126.8
127.2
127.9
129.1
127.3
128.2
128.1
131.7
132.0
130.2
132.8
131.5
134.2
134.1
134.4
133.9
134.2
134.2

126.9
128.6
128.4
129.8
130.4
130.7
130.5
131.5
132.2
129.4
131.5
132.1
132.0
132.9
132.2
133.1
133.7
134.6
134.3
135.1
134.3
133.5
134.5

TABLE B-48.—Capacity utilization rates, 1948-86
[Percent; monthly data seasonally adjusted]
Manufacturing
Year or month

Total
industry

Total

Durable
goods

Nondurable
goods

Primary
processing

Advanced
processing

1948
1949

825
742

87.3
762

82.8
858
85.4
893
80 1

88.5
902
84.9
89.4
806
920
894
84.7
754
83.0

842
844
831
749
81.1

801
773
814
83.5
856

798
77.9
815
83.8
878

Industrial
materials

79.8
834
85.9
893
800

870
86 1
83.6
750
81.6

Utilities

800
732

1950
1951
1952
1953
1954

Mining

805
772
816
83.4
846

1955
1956
1957
1958
1959

. . ..

1960
1961
1962
1963
1964
871
874
874

89.5
91 1
86.7
870
86.7

87.0
867
86.1

86.7
877
88.0

91.0
914
85.3
869
87.7

88.8
91 1
87.6
870
86.1

829
846
87.0

932
939
95.6

851
868
88.1

80.9
790
84.0
879
83.6

79.2
774
82.8
870
82.6

76.1
733
79.7
862
81.6

83.9
835
87.4
88.1
84.2

80.9
795
86.4
91.3
85.4

78.3
761
81.1
851
81.5

89.0
873
90.2
914
91.1

95.1
937
94.5
928
86.8

81.8
804
86.0
91 1
86.1

1975
1976
1977
1978
1979

74.1
78.8
824
848
85.2

72.3
77.4
814
842
84.6

69.6
74.8
794
829
84.1

76.3
81.4
845
86.1
85.3

72.2
79.3
831
86.0
86.6

72.6
76.8
805
831
83.5

89.2
89.7
899
90.3
90.7

84.3
85.3
851
85.0
85.6

73.4
80.3
841
86.3
87.1

1980
1981
1982
1983
1984
1985
1986

809
79.9
72.1
747
81.0
804
794

793
78.3
70.3
740
80.5
801
798

779
76.7
66.9
703
78.6
782
743

813
80.7
75.5
795
83.4
830
854

779
78.1
67.6
742
81.6
821
835

800
78.3
71.7
739
80.0
792
78.1

932
92.9
83.4
779
84.0
821
75.4

854
84.2
81.4
805
83.6
831
79.9

811
81.1
71.7
753
82.0
802
78.5

N&y!'.!'.'.'.'.'.'.
June

80.6
80.8
80.8
80.5
80.5
80.4

80.2
80.2
80.4
80.4
80.3
80.0

78.8
78.4
78.8
78.7
78.5
78.0

82.4
82.8
82.7
82.8
83.0
82.9

81.5
81.3
81.7
81.9
81.4
81.6

79.5
79.6
79.6
79.7
79.8
79.2

83.0
83.1
83.3
82.8
82.7
83.5

85.0
87.0
84.3
81.9
81.7
81.4

81.4
81.3
81.2
80.5
80.1
80.2

July
Aug
Sept
Oct
Nov
Dec

80.1
80.6
80.3
79.7
80.3
80.6

79.9
80.3
80.0
79.4
80.1
80.2

77.8
78.4
77.8
77.2
77.9
78.1

83.1
83.3
83.3
82.7
83.5
83.5

82.0
82.5
82.5
82.8
82.8
83.0

79.0
79.3
78.9
77.9
78.9
79.0

81.2
81.6
81.7
80.7
80.7
81.1

81.6
81.5
83.8
82.6
82.5
84.5

79.7
79.8
79.5
79.1
79.4
80.3

1986: Jan
Feb
Mar
MPary"l""":
June

80.9
80.2
79.0
79.5
79.1
79.0

80.8
80.2
79.1
79.9
79.4
79.3

78.4
111
76.5
77.1
76.3
75.7

84.5
83.9
83.0
84.1
84.1
84.7

84.4
83.6
82.4
83.2
82.9
82.7

79.2
78.6
77.4
78.5
78.0
111

81.6
79.4
77.9
76.4
75.5
74.9

82.7
80.4
80.1
80.0
79.3
79.2

80.1
79.6
78.5
78.7
78.1
78.0

July
Aug
Sept
Oct.
Nov"
Dec p.

79.2
79.2
79.0
79.1
79.4
79.6

79.7
79.7
79.6
79.7
79.9
80.3

76.3
76.2
76.4
76.4
76.5
76.9

84.8
85.0
84.3
84.7
85.0
85.2

82.9
83.2
83.7
83.7
84.2
84.6

78.4
78.0
77.6
77.9
77.9
78.3

73.5
73.1
72.9
72.8
73.4
73.7

79.9
78.8
78.7
79.4
80.3
80.0

78.3
77.9
78.1
77.9
78.5
78.6

1965
1966
1967
1968
1969

. .

1970
1971
1972
1973
1974

. ..

p

1985: Jan
Feb
Mar

Source: Board of Governors of the Federal Reserve System.




299

TABLE B-49.—New construction activity, 1929-86
[Value put in place, billions of dollars; monthly data at seasonally adjusted annual rates]
Public construction

Private construction
Year or month

Total
new
construction

Residential
buildings '
Total

Nonresidential buildings and other
construction1

New
Total 2 housing
units

Total

Total

Federal State and
local5

Com- 3

Industrial

Other 4

2.5
1.6
3.8
3.6
5.8
10.7
6.3
3.1

0.2

'.B
1.2
3.8
9.3
5.6
2.5

2.3
1.1
3.1
2.4
2.0
1.3
.7
.6

mercial

1929
1933
1939
1940
1941
1942
1943
1944

10.8
2.9
8.2
8.7
12.0
14.1
8.3
5.3

8.3
1.2
4.4
5.1
6.2
3.4
2.0
2.2

3.6
.5
2.7
3.0
3.5
1.7
.9
.8

3.0
.3
2.3
2.6
3.0
1.4
.7
.6

4.7
.8
1.7
2.1
2.7
1.7
1.1
1.4

1.1
.1
.3
.3
.4
.2
.0
.1

0.9
.2
.3
.4
.8
.3

'.I

2.6
.5
1.2
1.3
1.5
1.2
.9
1.1

1945
1946
New sprips
1947
1948
1949 . .

5.8
14.3

3.4
12.1

1.3
6.2

.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

20.0
26.1
26.7

16.7
21.4
20.5

9.9
13.1
12.4

7.8
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

8.9
10.0
11.1
12.1
12.3

I960
1961
1962
1963.

54.7
56.4
60.2
64.8

38.9
39.3
42.3
45.5

23.0
23.1
25.2
27.9

17.3
17.1
19.4
21.7

15.9
16.2
17.2
17.6

4.2
4.7
5.1
5.0

2.9
2.8
2.8
2.9

8.9
8.7
9.2
9.7

15.9
17.1
17.9
19.4

3.6
3.9
3.9
4.0

12.2
13.3
14.0
15.4

1964

72.6

52.4

30.5

24.1

21.8

6.8

3.6

11.5

20.2

3.7

16.5

1965.
1966
1967
1968
1969

78.5
81.8
83.5
93.2
100.5

56.6
58.0
58.1
65.7
72.7

30.2
28.6
28.7
34.2
37.2

23.8
21.8
21.5
26.7
29.2

26.3
29.4
29.4
31.6
35.5

8.1
8.1
8.0
9.0
10.7

5.1
6.6
6.0
6.0
6.8

13.1
14.7
15.4
16.6
17.9

21.9
23.8
25.4
27.4
27.8

3.9
3.8
3.3
3.2
3.2

18.0
20.0
22.1
24.2
24.6

1970
1971
1972
1973
1974

101.3
117.9
133.9
147.4
148.4

73.4
88.2
103.9
115.0
110.3

35.9
48.5
60.7
65.1
56.6

27.1
38.7
50.1
54.6
44.1

37.5
39.7
43.2
49.9
53.7

11.1
13.0
15.4
17.7
17.6

6.5
5.4
4.7
6.2
7.9

19.9
21.3
23.1
26.0
28.2

27.9
29.7
30.0
32.3
38.1

3.1
3.8
4.2
4.7
5.1

24.8
25.9
25.8
27.6
33.0

1975
1976
1977
1978
1979 .. .

143.6
161.3
187.0
224.7
250.3

102.9
122.4
149.1
179.0
201.5

51.9
68.6
92.5
110.4
117.2

36.6
51.1
72.7
86.2
90.1

51.0
53.8
56.6
68.6
84.3

13.9
13.7
15.7
19.7
27.1

8.0
7.2
7.7
11.0
15.0

29.1
33.0
33.2
37.9
42.3

40.7
38.9
37.9
45.6
48.8

6.1
6.8
7.1
8.1
8.6

34.6
32.1
30.9
37.5
40.2

1980
1981
1982
1983
1984 . .

249.0
257.8
244.4
279.2
327.2

194.0
204.4
193.6
228.5
272.0

101.1
100.0
85.4
126.6
155.1

70.4
70.2
57.7
95.7
115.1

92.9
104.4
108.2
102.0
116.8

32.9
38.0
41.4
41.0
54.9

13.8
17.0
17.3
12.9
13.7

46.2
49.4
49.5
48.1
48.2

55.0
53.3
50.8
50.7
55.2

9.6
10.4
10.0
10.6
11.2

45.4
42.9
40.8
40.2
44.0

1985

355.6

292.8

158.8

116.0

134.0

66.9

15.8

51.3

62.8

12.4

50.4

New series

See next page for continuation of table.




300

TABLE B-49.—New construction activity, 1929-86—Continued
[Value put in place, billions of dollars; monthly data at seasonally adjusted annual rates]
Public construction

Private construction
Year or month

Total
new
construction

Residential
buildings 1
Total

Nonresidential buildings and other
construction l

New
Total 2 housing
units

Total

Total

Commercial3

Industrial

Federal

State and
local5

Other*

343.6
344.8
352.7
350.1
352.0
352.9

285.3
287.7
291.9
289.3
287.6
288.4

159.4
158.0
161.0
154.7
151.6
154.3

114.3
114.7
116.0
115.6
115.2
115.4

125.8
129.7
130.9
134.6
136.0
134.1

63.2
64.8
66.1
66.9
67.3
65.7

15.7
15.4
15.4
16.0
16.2
15.0

47.0
49.5
49.4
51.7
52.5
53.4

58.3
57.2
60.8
60.8
64.4
64.5

11.8
11.0
12.3
11.3
12.9
13.1

46.6
46.2
48.5
49.5
51.5
51.4

355.1
353.3
361.3
374.0
357.6
365.6

290.3
289.8
296.0
312.0
294.4
300.6

156.8
154.9
161.0
174.8
158.2
161.8

115.3
115.5
116.1
117.2
117.5
118.7

133.5
134.9
135.0
137.1
136.2
138.8

64.9
66.8
68.5
68.2
68.9
71.7

15.8
15.3
15.8
15.9
16.1
16.5

52.8
52.8
50.7
53.0
51.2
50.6

64.8
63.5
65.3
62.1
63.2
64.9

13.5
12.4
14.1
11.0
12.4
12.6

51.3
51.1
51.3
51.0
50.8
52.3

June

373.4
373.9
368.0
373.9
374.5
375.4

305.4
305.7
298.9
303.3
302.6
304.6

163.4
164.7
165.6
170.5
172.5
174.5

122.8
124.7
126.5
129.4
132.4
135.2

142.0
141.0
133.2
132.8
130.1
130.1

72.6
71.1
68.1
67.3
65.1
65.3

15.8
16.4
13.4
14.6
13.7
13.0

53.5
53.5
51.8
51.0
51.3
51.8

68.0
68.3
69.2
70.6
71.9
70.8

12.9
12.8
11.9
12.7
12.6
12.4

55.1
55.5
57.2
57.9
59.3
58.4

July .
Aug
Sept
Oct
Nov"

380.7
382.6
382.6
379.7
377.0

309.0
310.2
308.6
307.7
306.2

178.8
178.8
178.5
178.6
178.0

136.6
137.8
138.5
139.5
139.5

130.2
131.4
130.1
129.1
128.2

66.4
68.5
66.1
64.8
64.4

12.9
12.5
13.2
12.9
12.7

50.9
50.3
50.9
51.4
51.2

71.7
72.4
74.0
71.9
70.7

11.9
12.0
14.3
11.7
11.6

59.8
60.4
59.7
60.3
59.1

1985- Jan
Feb
Mar
Apr
May ...
June
July
Aug
Sept
Oct
Nov
Dec

1986- Jan
Feb
Mar .
Apr

May::::::::::::::::

1
Beginning 1960, farm residential buildings included in residential buildings; prior to 1960, included in nonresidential buildings and
other construction.
2
Includes residential improvements, not shown separately. Prior to 1964, also includes nonhousekeeping units (hotels, motels, etc.)
3
Office buildings, warehouses, stores, restaurants, garages, etc., and, beginning 1964, hotels and motels; prior to 1964 hotels and
motels are included in total residential.
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.




301

TABLE B-50.—New housing units started and authorized, 1959-86
[Thousands of units]
New private housing units authorized 2

New housing units started
Private and public
Year or month

l

Private (farm and nonfarm)

Total
(farm and Nonfarm
nonfarm)

l

Type of structure

Type of structure
Total

1 unit

2 to 4
units

Total

5 units
or more

1 unit

2to4
units

5 units
or more

1959

1,553.7

1,53 1.3

1,517.0

1,234.0

283.0

1,208.3

938.3

77.1

192.9

1960
1961
1962
1963
1964

1,296.1
1,365.0
1,492.5
1,634.9
1,561.0

1,27 4.0
1,33 6.8
1,46 8.7
1,614.8
1,53 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

25 '.4
33*1.7
47] .5
59C).8
108.4
450.0

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

1965
1966
1967
1968
1969

1,509.7
1,195.8
1,321.9
1,545.4
1,499.5

1,48 7.5
1,17 2.8
1,29 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

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

1970
1971
1972
1973
1974

1,469.0
2,084.5
2,378.5
2,057.5
1,352.5

)
)

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

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
366.2
64.3

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

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

1,292.2
1,084.2
1,062.2
1,703.0
1,749.5

852.2
705.4
662.6
1,067.6
1,084.2

109.5
91.1
80.0
113.5
121.4

330.5
287.7
319.6
522.0
544.0

1,190.6
985.5
1,000.5
1,605.2
1,681.8

710.4
564.3
546.4
901.5
922.4

114.5
101.8
88.3
133.6
142.6

365.7
319.4
365.8
570.1
616.8

3
3

1,741.8
1,806.6

1,072.4
1,179.4

93.4
956.6
576.1
1,733.3
83.7
1,073.6
543.6
1,759.3
Seasonally adjusted annual rates

120.1
110.2

656.6
575.5

3
3

1,804
1,632
1,849
1,851
1,684
1,693

1,039
1,111
1,147
1,129
1,041
1,036

105
96
103
106
105
95

660
425
599
616
538
562

1,640
1,696
1,754
1,694
1,727
1,717

903
976
995
940
926
958

131
108
139
118
127
124

606
612
620
636
674
635

1,673
1,737
1,653
1,784
1,654
1,882

1,068
1,071
1,006
1,118
1,006
1,098

86
97
85
80
76
83

519
569
562
586
572
701

1,709
1,782
1,846
1,703
1,668
1,839

961
990
956
984
932
963

115
123
128
109
107
114

633
669
762
610
629
762

2,034
2,001
1,960
2,019
1,853
1,852

1,335
1,202
1,221
1,242
1,241
1,230

107
115
84
79
83
80

592
684
655
698
529
542

1,861
1,808
1,834
1,885
1,788
1,792

1,060
1,033
1,043
1,139
1,092
1,121

127
122
107
117
118
108

674
653
684
629
578
563

1,782
1,795
1,664
1,628
1,585
1,802

1,137
1,186
1,102
1,085
1,087
1,209

81
89
59
82
67
100

564
520
503
461
431
493

1,759
1,673
1,603
1,565
1,613
1,893

1,093
1,039
1,047
1,006
991
1,144

103
108
97
103
92
115

563
526
459
456
530
634

1975
1976
1977
1978
1979

1

1,171.4
1,547.6
2,001.7
2,036.1
1,760.0

1980
1981
1982
1983
1984

1,312.6
1,100.3
1,072.1
1,712.5
1,755.8

1985
1986".

)

!

1,745.0
1,808.3

1985: Jan
Feb
Mar
Apr

June

105.4
95.8
145.2
176.0
170.5
163.4

July
Aug ..
Sept
Oct
Nov. .
Dec

161.0
161.1
148.6
173.2
124.1
120.5

1986- Jan.. .
Feb
Mar
Apr
May
June

115.9
107.2
151.1
188.3
186.8
183.6

May::::::::::::;:::'::

July
Aug
Sept
Oct
Nov p
Dec

172.2
163.8
154.3
154.9
115.9
114.1

:
;
3
3
3
3
3
3
3
3

(3

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 17,000 permit-issuing places beginning 1984; in 16,000 places for 1978-83; in
14,000 places for 1972-77; in 13,000 places for 1967-71; in 12,000 places for 1963-66; and in 10,000 places prior to 1963.
3
Not available separately beginning January 1970.
Source: Department of Commerce, Bureau of the Census.




302

TABLE B-51.—Business expenditures for new plant and equipment, 1947-87
[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Addenda

Industries surveyed quarterly
Manufacturing
Year or quarter

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
1982
1983
1984
1985 4
1986 4
1987
1985- 1
II
Ill
IV
1986:1
II
III 4
IV
1987- 1 44
II

All
industries

Total

20.11
22.78
20.28
21.56
26.81
28.16
29.96
28.86
30.94
37.90
40.54
33.84
35.88
39.44
38.34
40.86
43.67
51.26
59.52
70.40
72.75
76.42
85.74
91.91
92.91
103.40
120.03
139.67
142.42
158.44
184.82
217.76
254.96
282.80
315.22
310.58
304.78
354.44
387.13
380.69
384.24
373.56
387.86
389.23
397.88
377.94
375.92
374.55
394.34
386.82
393.39

8.73
9.25
7.32
7.73
11.07
12.12
12.43
12.00
12.50
16.33
17.50
12.98
13.76
16.36
15.53
16.03
17.27
21.23
25.41
31.37
32.25
32.34
36.27
36.99
33.60
35.42
42.35
52.48
53.66
58.53
67.48
78.58
95.92
112.33
126.54
120.68
116.20
138.82
153.48
144.77
141.95
146.94
154.25
154.47
158.26
144.03
141.68
139.21
154.17
141.22
145.23

Nonmanufacturing

Dura- Nonble durable Total »
goods goods

3.39
3.54
2.67
3.22
5.12
5.75
5.71
5.49
5.87
8.19
8.59
6.21
6.72
8.28
7.43
7.81
8.64
10.98
13.49
17.23
17.83
17.93
19.97
19.80
16.78
18.22
22.63
26.77
25.37
27.50
32.77
39.46
48.50
55.36
59.81
55.35
53.08
66.24
73.27
69.96
69.50
70.29
74.34
72.99
75.47
68.01
68.33
69.31
74.17
67.86
72.37

5.34
5.71
4.64
4.51
5.95
6.37
6.72
6.51
6.62
8.15
8.91
6.77
7.04
8.08
8.10
8.22
8.63
10.25
11.92
14.15
14.42
14.40
16.31
17.19
16.82
17.20
19.72
25.71
28.28
31.03
34.71
39.13
47.42
56.96
66.73
65.33
63.12
72.58
80.21
74.81
72.44
76.64
79.91
81.48
82.79
76.02
73.35
69.89
80.00
73.36
72.85

11.38
13.53
12.96
13.83
15.74
16.04
17.53
16.85
18.44
21.57
23.04
20.86
22.12
23.08
22.80
24.83
26.40
30.04
34.12
39.03
40.50
44.08
49.47
54.92
59.31
67.98
77.67
87.19
88.76
99.91
117.34
139.18
159.04
170.47
188.68
189.89
188.58
215.61
233.65
235.91
242.30
226.62
233.61
234.76
239.61
233.90
234.24
235.34
240.17
245.60
248.16

ComMin- Trans- Public mercial
and
ing porta- utilities other
tion
0.69
.93
.88
.84
1.11
1.21
1.25
1.29
1.31
1.64
1.69
1.43
1.35
1.29
1.26
1.41
1.26
1.33
1.36
1.42
1.38
1.44
1.77
2.02
2.67
2.88
3.30
4.58
6.12
7.63
9.81
11.22
12.81
15.99
21.39
20.05
15.19
16.86
15.88
11.24
10.11
15.81
16.56
15.89
15.25
12.99
11.23
10.15
10.62
10.36
10.58

2.69
3.17
2.80
2.87
3.60
3.56
3.58
2.91
3.10
3.56
3.84
2.72
3.47
3.54
3.14
3.59
3.64
4.71
5.66
6.68
6.57
6.91
7.23
7.17
6.42
7.14
8.00
9.16
9.95
11.10
12.20
13.36
16.05
16.60
15.84
14.79
13.97
16.52
18.02
18.64
18.86
16.70
17.45
18.81
19.15
18.22
18.28
19.03
19.02
19.85
18.46

1.64
2.67
3.28
3.42
3.75
3.96
4.61
4.23
4.26
4.78
5.95
5.74
5.46
5.40
5.20
5.12
5.33
5.80
6.49
7.82
9.33
10.52
11.70
13.03
14.70
16.26
17.99
19.96
20.23
22.90
27.83
31.50
35.63
37.74
41.21
45.43
44.96
47.48
48.81
46.53
44.42
48.44
48.61
48.44
49.79
47.03
46.55
45.90
46.63
46.32
46.90

6.38
6.77
6.01
6.70
7.29
7.31
8.09
8.42
9.77
11.59
11.56
10.97
11.84
12.86
13.21
14.71
16.17
18.20
20.60
23.11
23.22
25.22
28.77
32.71
35.52
41.69
48.39
53.49
52.47
58.29
67.51
83.09
94.56
100.14
110.24
109.63
114.45
134.75
150.94
159.50
168.91
145.68
150.99
151.62
155.42
155.67
158.18
160.25
163.91
169.08
172.22

Total
nonfarm
busi-2
ness

Monu

22.27
25.97
24.03
25.81
31.38
32.16
34.20
33.62
37.08
45.25
48.62
42.55
45.17
48.99
48.14
51.61
53.59
62.02
70.79
82.62
83.82
88.92
100.02
106.15
109.18
120.91
139.26
159.83
162.60
179.91
208.15
245.34
284.94
314.47
349.26
347.47
343.35
398.99
431.94

8.73
9.25
7.32
7.73
11.07
12.12
12.43
12.00
12.50
16.33
17.50
12.98
13.76
16.36
15.53
16.03
17.27
21.23
25.41
31.37
32.25
32.34
36.27
36.99
33.60
35.42
42.35
52.48
53.66
58.53
67.48
78.58
95.92
112.33
126.54
120.68
116.20
138.82
153.48
144.77
141.95
14694
154.25
154.47
158.26
144.03
141.68
139.21
154.17
141.22
145.23

facturing

Nonmanufacturing
Total

13.54
16.73
16.72
18.08
20.31
20.04
21.77
21.62
24.58
28.91
31.11
29.57
31.41
32.63
32.60
35.58
36.33
40.80
45.39
51.25
51.57
56.58
63.74
69.16
75.58
85.49
96.91
107.35
108.95
121.38
140.67
166.76
189.02
202.15
222.72
226.79
227.15
260.16
278.46

Surveyed
quarterly

Surveyed
annually 3

11.38
13.53
12.96
13.83
15.74
16.04
17.53
16.85
18.44
21.57
23.04
20.86
22.12
23.08
22.80
24.83
26.40
30.04
34.12
39.03
40.50
44.08
49.47
54.92
59.31
67.98
77.67
87.19
88.76
99.91
117.34
139.18
159.04
170.47
188.68
189.89
188.58
215.61
233.65
23591
242.30
226.62
233.61
234.76
239.61
233.90
234.24
235.34
240.17
245.60
248.16

2.16
3.19
3.76
4.25
4.57
4.00
4.23
4.76
6.14
7.35
8.08
8.72
9.29
9.55
9.80
10.75
9.93
10.76
11.27
12.22
11.07
12.50
14.27
14.24
16.26
17.51
19.24
20.16
20.19
21.47
23.33
27.58
29.98
31.68
34.04
36.89
38.56
44.55
44.81

::::::

1
Excludes forestry, fisheries, and agricultural services; medical services; professional services; social services and membership
organizations; and real estate, which, effective with the April-May 1984 survey, are no longer surveyed quarterly. See last column
("nonmanufacturing surveyed annually") for data for these industries.
2
"All industries plus the part of nonmanufacturing that is surveyed annually.
3
Consists of forestry, fisheries, and agricultural services; medical services; professional services; social services and membership
organizations; and real estate.
4
Planned capital expenditures as reported by business in late October and November 1986, corrected for biases.
Source: Department of Commerce, Bureau of Economic Analysis.




303

TABLE B-52.—Manufacturing and trade, sales and inventories, 1948-86
[Amounts in millions of dollars; monthly data seasonally adjusted]

Year or month

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
1982
1983
1984
1985
1985- Jan. . .
Feb .
Mar
Apr
May
June
July. . .
Aug
Sept
Oct
Nov
Dec
1986: Jan
Feb
Mar
Apr
May. . .
June
July
Aug
Sept
Oct
Nov
Dec

Total manufacturing and
trade
]
3
InvenSales
tories2 Ratio
35,260
33,788
38,596
43,356
44,840
47,987
46,443
51,694
54,063
55,879
54,201
59,729
60,827
61,159
65,662
68,995
73,682
80,283
87,187
90,419
98,184
105,088
107,536
116,110
130,144
153,566
177,861
182,404
204,463
230,000
260,805
298,334
328,058
356,919
344,656
368,724
410,737
424,091
415,973
418,218
420,346
423,215
424,379
418,219
421,565
428,205
427,201
426,123
431,012
432,679
431,713
426,854
420,230
428,455
421,613
425,475
427,473
429,310
442,206
435,848
437,141

52,507
49,497
59,822
70,242
72,377
76,122
73,175
79,516
87,304
89,052
87,093
92,129
94,713
95,594
101,063
105,480
111,503
120,907
136,790
144,920
155,831
169,482
177,719
187,929
202,132
233,419
286,098
288,651
318,833
351,459
399,608
451,460
494,105
528,105
509,555
520,328
575,098
583,148
576,490
578,541
578,370
578,533
577,813
580,107
580,372
579,486
579,519
581,986
582,707
583,148
584,968
585,176
588,178
588,599
586,727
588,908
591,895
590,141
588,069
591,556
590,606

1.42
1.53
1.36
1.55
1.58
1.58
1.60
1.47
1.55
1.59
1.60
1.50
1.56
1.54
1.50
1.49
1.47
1.45
1.47
1.56
1.53
1.55
1.62
1.58
1.49
1.41
1.45
1.57
1.48
1.46
1.44
1.43
1.45
1.44
1.51
1.38
1.34
1.37
1.39
1.38
1.38
1.37
1.36
1.39
1.38
1.35
1.36
1.37
1.35
1.35
1.35
1.37
1.40
1.37
1.39
1.38
1.38
1.37
1.33
1.36
1.35

Merchant wholesalers

Manufacturing
Sales

1
3
Inventories2 Ratio Sales

17,316
16,126
18,634
21,714
22,529
24,843
23,355
26,480
27,740
28,736
27,247
30,286
30,879
30,923
33,357
35,058
37,331
40,995
44,870
46,487
50,228
53,501
52,805
55,906
63,027
72,931
84,790
86,589
98,797
113,202
126,905
143,936
154,391
168,129
159,027
170,441
189,578
195,102
191,724
192,261
194,303
193,509
194,638
193,871
193,793
196,593
194,229
197,229
200,131
199,084
198,716
196,274
191.051
196432
193,068
193,642
193,294
193,305
196,281
196,202
198,232

28,543
26,321
31,078
39,306
41,136
43,948
41,612
45,069
50,642
51,871
50,241
52,945
53,780
54,885
58,186
60,046
63,409
68,185
77,952
84,666
90,618
98,203
101,653
102,656
108,237
124,626
157,792
159,935
175,195
189,214
210,509
241,100
264,281
282,645
264,909
260,682
285,709
281,884
285,785
286,146
286,171
286,049
284,900
285,678
285,036
284,688
284,030
282,444
281,993
281,884
280,357
279,236
279,571
279,358
278,352
278,410
278,613
277,473
276,574
276,007
276,588

1

1
Monthly average for
2
Seasonally adjusted,
3

1.57
1.75
1.48
1.66
1.78
1.76
1.81
1.62
1.73
1.80
1.84
1.70
1.75
1.74
1.70
1.69
1.64
1.60
1.62
1.76
1.74
1.77
1.90
1.83
1.67
1.58
1.65
1.84
1.69
1.61
1.57
1.57
1.66
1.64
1.73
1.52
1.45
1.46
1.49
1.49
1.47
1.48
1.46
1.47
1.47
1.45
1.46
1.43
1.41
1.42
1.41
1.42
1.46
1.42
1.44
1.44
1.44
1.44
1.41
1.41
1.40

6,808
6,514
7,695
8,597
8,782
9,052
8,993
9,893
10,513
10,475
10,257
11,491
11,656
11,988
12,674
13,382
14,529
15,611
16,987
19,520
20,926
22,694
24,031
26,350
29,695
38,173
47,989
46,803
50,885
56,364
66,669
79,472
93,704
102,013
96,290
100,424
113,404
114,494
113,738
114,022
114,044
115,450
115,749
110,880
113,152
115,263
114,473
113,947
115,527
116,852
115,648
113,380
112,495
114,608
109,870
112,873
114,375
114,482
117,594
117,991
117,972

Retail trade

3
3
InvenInventories2 Ratio Sales ! tories2 Ratio

7,957
7,706
9,284
9,886
10,210
10,686
10,637
11,678
13,260
12,730
12,739
13,879
14,120
14,488
14,936
16,048
17,000
18,317
20,765
24,955
26,268
28,762
32,199
35,210
38,816
45,556
57,239
56,972
64,365
72,801
86,405
99,262
113,478
118,259
118,149
120,265
131,544
135,940
131,752
132,917
133,135
132,984
133,485
134,696
134,762
134,732
134,496
135,038
134,927
135,940
136,624
136,561
137,056
137,083
137,506
138,793
139,753
139,742
139,878
139,211
138,837

1.13
1.19
1.07
1.16
1.12
1.17
1.18
1.13
1.19
1.23
1.24
1.15
1.22
1.20
1.16
1.15
1.14
1.15
1.15
1.24
1.23
1.21
1.26
1.27
1.24
1.11
1.07
1.21
1.19
1.21
1.20
1.18
1.14
1.13
1.24
1.17
1.12
1.17
1.16
1.17
1.17
1.15
1.15
1.21
1.19
1.17
1.17
1.19
1.17
1.16
1.18
1.20
1.22
1.20
1.25
1.23
1.22
1.22
1.19
1.18
1.18

11,135
11,149
12,268
13,046
13,529
14,091
14,095
15,321
15,811
16,667
16,696
17,951
18,294
18,249
19,630
20,556
21,823
23,677
25,330
24,413
27,030
28,893
30,700
33,853
37,422
42,462
45,082
49,012
54,781
60,434
67,231
74,926
79,963
86,777
89,339
97,858
107,755
114,495
110,511
111,935
111,999
114,256
113,992
113,468
114,620
116,349
118,499
114,947
115,354
116,743
117,349
117,200
116,684
117,715
118,675
118,960
119,804
121,523
128,331
121,655
120,937
126,255

16,007
15,470
19,460
21,050
21,031
21,488
20,926
22,769
23,402
24,451
24,113
25,305
26,813
26,221
27,941
29,386
31,094
34,405
38,073
35,299
38,945
42,517
43,867
50,063
55,079
63,237
71,067
71,744
79,273
89,444
102,694
111,098
116,346
127,201
126,497
139,381
157,845
165,324
158,953
159,478
159,064
159,500
159,428
159,733
160,574
160,066
160,993
164,504
165,787
165,324
167,987
169,379
171,551
172,158
170,869
171,705
173,529
172,926
171,617
176,338
175,181

1.39
1.41
1.38
1.64
1.52
1.53
1.51
1.43
1.47
1.44
1.43
1.40
1.45
1.43
1.38
1.39
1.40
1.39
1.44
1.43
1.38
1.41
1.41
1.41
1.40
1.40
1.48
1.44
1.38
1.39
1.43
1.44
1.42
1.41
1.41
1.34
1.39
1.40
1.44
1.42
1.42
1.40
1.40
1.41
1.40
1.38
1.36
1.43
1.44
1.42
1.43
1.45
1.47
1.46
1.44
1.44
1.45
1.42
1.34
1.45
1.45

year and total 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 the Census.




304

TABLE B-53.—Manufacturers' shipments and inventories, 1947-86
[Millions of dollars; monthly data seasonally adjusted]
Inventories2

Shipmentsl
Year or
month

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
1982
1983
1984
1985
1985:

...

.

..

. ..

Jan
Feb
Mar

May"!'.;;
June....
July
Aug
Sept....
Oct
Nov
Dec
1986: Jan
Feb
Mar
May"!!
JuneJuly....
Aug....
Sept...
Oct
Nov....

Total

15,513
17,316
16,126
18,634
21,714
22,529
24,843
23,355
26,480
27,740
28,736
27,247
30,286
30,879
30,923
33,357
35,058
37,331
40,995
44,870
46,487
50,228
53,501
52,805
55,906
63,027
72,931
84,790
86,589
98,797
113,202
126,905
143,936
154,391
168,129
159,027
170,441
189,578
195,102
191,724
192,261
194,303
193,509
194,638
193,871
193,793
196,593
194,229
197,229
200,131
199,084
198,716
196,274
191,051
196,132
193,068
193,642
193,294
193,305
196,281
196,202
198,232

Durable
goods
industries

Nondurable
goods
industries

6,694
7,579
7,191
8,845
10,493
11,313
13,349
11,828
14,071
14,715
15,237
13,563
15,609
15,883
15,616
17,262
18,280
19,637
22,221
24,649
25,267
27,659
29,437
28,188
29,954
34,027
39,681
44,230
43,659
50,700
59,267
67,848
76,060
77,550
83,872
76,693
84,951
98,502
103,649
101,966
101,724
102,116
102,068
102,718
102,657
102,478
105,311
103,656
106,479
107,007
105,777
105,631
105,545
102,693
106,592
103,672
104,553
104,980
104,154
106,027
107,443
107,185

8,819
9,738
8,935
9,789
11,221
11,216
11,494
11,527
12,409
13,025
13,499
13,684
14,677
14,996
15,307
16,095
16,778
17,694
18,774
20,220
21,220
22,570
24,064
24,617
25,952
29,000
33,250
40,560
42,931
48,097
53,935
59,057
67,876
76,841
84,257
82,334
85,491
91,076
91,452
89,758
90,537
92,187
91,441
91,920
91,214
91,315
91,282
90,573
90,750
93,124
93,307
93,085
90,729
88,358
89,540
89,396
89,089
88,314
89,151
90,254
88,759
91,047

Durable goods industries
Total
Total

25,897
28,543
26,321
31,078
39,306
41,136
43,948
41,612
45,069
50,642
51,871
50,241
52,945
53,780
54,885
58,186
60,046
63,409
68,185
77,952
84,666
90,618
98,203
101,653
102,656
108,237
124,626
157,792
159,935
175,195
189,214
210,509
241,100
264,281
282,645
264,909
260,682
285,709
281,884
285,785
286,146
286,171
286,049
284,900
285,678
285,036
284,688
284,030
282,444
281,993
281,884
280,357
279,236
279,571
279,358
278,352
278,410
278,613
277,473
276,574
276,007
276,588

13,061
14,662
13,060
15,539
20,991
23,731
25,878
23,710
26,405
30,447
31,728
30,258
32,077
32,371
32,544
34,632
35,866
38,506
42,257
49,920
55,005
58,875
64,739
66,780
66,289
70,250
81,398
101,739
102,874
112,581
121,601
137,891
160,533
174,620
186,347
175,103
171,629
191,109
189,164
192,153
192,030
192,355
192,475
191,546
192,239
192,163
192,037
191,930
190,508
190,284
189,164
188,518
187,644
188,333
188,031
187,637
187,148
186,858
186,045
186,102
185,358
185,742

Materials
and
supplies

8,966
7,894
9,194
10,417
10,608
10,032
10,776
10,353
10,279
10,810
11,068
11,970
13,325
15,489
16,455
17,376
18,693
19,182
19,759
20,860
26,028
35,151
33,920
37,548
40,251
45,252
52,687
55,121
57,927
52,454
51,604
56,469
53,527
56,033
55,768
55,445
55,638
54,693
54,714
54,257
54,217
53,844
53,644
52,999
53,527
52,317
51,921
51,688
51,864
51,387
51,559
51,338
50,878
51,052
50,561
50,530

1
2

Monthly 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.




305

Work
in
process

10,720
9,721
10,756
12,317
12,837
12,387
13,063
12,772
13,203
14,159
14,871
16,191
18,075
21,939
25,005
27,336
30,408
29,848
28,650
30,788
35,545
42,603
43,369
46,345
50,620
58,634
69,254
76,997
81,105
77,813
77,463
88,105
89,912
88,672
88,967
89,684
89,537
89,654
90,306
91,383
91,473
92,181
91,072
91,020
89,912
90,477
90,125
91,236
90,825
90,714
90,918
90,518
90,673
90,898
90,507
90,030

Nondurable goods industries

Finished
goods

6,206
6,040
6,348
7,565
8,125
7,839
8,239
9,245
9,063
9,662
9,925
10,344
10,854
12,491
13,547
14,163
15,639
17,751
17,880
18,601
19,823
23,985
25,586
28,690
30,730
34,005
38,592
42,502
47,315
44,836
42,562
46,535
45,725
47,448
47,295
47,226
47,300
47,199
47,219
46,523
46,347
45,905
45,792
46,265
45,725
45,724
45,598
45,409
45,342
45,536
44,671
45,002
44,494
44,152
44,290
45,182

Total

12,836
13,881
13,261
15,539
18,315
17405
18,070
17,902
18,664
20,195
20,143
19,983
20,868
21,409
22,341
23,554
24,180
24,903
25,928
28,032
29,659
31,743
33,463
34,871
36,368
37,988
43,230
56,053
57,060
62,612
67,613
72,618
80,567
89,661
96,298
89,806
89,053
94,600
92,720
93,632
94,116
93,816
93,574
93,354
93,439
92,873
92,651
92,100
91,936
91,709
92,720
91,839
91,592
91,238
91,327
90,715
91,262
91,755
91,428
90,472
90,649
90,846

Materials
and
supplies

8,317
8,167
8,556
8,971
8,775
8,662
9,080
9,082
9,493
9,813
9,978
10,131
10,448
11,155
11,715
12,289
12,724
13,150
13,683
14,676
18,132
23,699
23,542
25,833
27,398
29,317
32,451
36,206
37,758
35,165
36,170
36,635
35,503
36,731
36,914
36,400
36,399
36,107
36,448
35,917
35,974
35,433
35,539
35,051
35,503
35,500
35,462
35,110
35,078
34,889
35,289
35,685
35,684
35,367
35,580
35,457

Work
in
process

2,472
2,440
2,571
2,721
2,864
2,828
2,944
2,946
3,110
3,296
3,406
3,511
3,806
4,204
4,421
4,848
5,122
5,274
5,665
5,982
6,707
8,175
8,837
9,933
11,003
11,907
13,741
15,732
16,074
14,308
14,480
14,811
14,568
14,656
14,642
14,524
14,351
14,318
14,336
14,216
14,161
14,310
14,607
14,680
14,568
14,150
14,198
13,921
13,790
13,697
13,938
13,788
13,504
13,737
13,905
13,954

Finished
goods

7,409
7,415
7,666
8,622
8,624
8,491
8,845
9,380
9,738
10,444
10,796
11,261
11,674
12,673
13,523
14,606
15,617
16,448
17,019
17,330
18,391
24,179
24,681
26,846
29,212
31,394
34,375
37,723
42,466
40,333
38,403
43,154
42,649
42,245
42,560
42,892
42,824
42,929
42,655
42,740
42,516
42,357
41,790
41,978
42,649
42,189
41,932
42,207
42,459
42,129
42,035
42,282
42,240
41,368
41,164
41,435

TABLE B-54.—Manufacturers' new and unfilled orders, 1947-86
[Amounts in millions of dollars; monthly data seasonally adjusted]

Unfilled orders2

New orders *

Unfilled orders— shipments
ratio3

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
1982.
1983
1984
1985. ..
1985: Jan
Feb
Mar
Apr
May
June
July
Aug
Sept
Oct
Nov
Dec
1986- Jan
Feb
Mar
Apr
May
June
July
Aug

sept::....::....:.:

Oct
Nov

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
76,056
87,244
85,220
99,532
115,032
131,546
147,403
156,161
167,752
157,255
173,259
191,634
195,803
195,210
193,057
191,532
191,081
195,019
198,261
195,793
198,782
197,332
195,381
196,865
201,213
201,133
198,559
192,996
193,151
192,122
191,795
194,560
192,836
199,399
192,502
200,421

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
42,726
46,835
42,099
51,403
61,082
72,339
79,451
79,360
83,553
74,996
87,631
100,611
104,305
105,447
102,467
99,544
99,839
102,971
106,780
104,370
107,661
106,641
104,495
103,796
107,531
108,194
107,545
104,682
103,747
102,624
102,730
106,220
103,845
108,723
103,569
109,273

NonCapital durable
goods
goods
indus- industries
tries,
nondefense

6,903
7,660
6,738
7,444
8,622
10,971
12,673
11,011
12,791
15,291
19,458
23,231
23,259
24,050
20,681
22,764
27,017
27,215
23,633
29,493
27,206
25,461
25,594
27,984
26,685
27,554
29,240
27,092
25,788
30,566
24,288
28,637
26,540
26,179
26,145
26,421
27,387
26,325
28,222
26,912
28,647

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
40,409
43,122
48,129
53,950
59,207
67,953
76,801
84,199
82,260
85,627
91,024
91,499
89,763
90,590
91,988
91,242
92,048
91,481
91,423
91,121
90,691
90,886
93,069
93,682
92,939
91,014
88,314
89,404
89,498
89,065
88,340
88,991
90,676
88,933
91,148

Total

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
158,884
188,467
172,037
180,562
203,475
259,770
302,145
323,393
319,094
296,918
330,924
355,640
363,809
359,125
359,926
357,151
354,731
355,112
359,502
361,502
363,691
366,794
364,946
361,680
363,809
366,226
368,511
370,456
367,475
366,529
364,682
365,948
365,479
368,597
364,897
367,086

1
Monthly average for
2
Seasonally adjusted,
3

NonDurable
durable
goods
goods
industries industries

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
151,504
182,925
164,139
172,273
195,008
249,483
290,921
312,648
309,066
287,796
320,123
345,443
353,036
348,924
349,671
347,096
344,874
345,127
349,250
351,142
353,492
356,477
354,493
351,282
353,036
355,599
357,599
359,588
356,743
355,695
353,872
355,112
354,803
357,499
353,625
355,713

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
8,467
10,287
11,224
10,745
10,028
9,122
10,801
10,197
10,773
10,201
10,255
10,055
9,857
9,985
10,252
10,360
10,199
10,317
10,453
10,398
10,773
10,627
10,912
10,868
10,732
10,834
10,810
10,836
10,676
11,098
11,272
11,373

Total

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
3.86
4.13
3.76
3.30
3.27
3.59
3.88
3.81
3.77
3.76
3.38
3.36
3.33
3.47
3.47
3.40
3.40
3.38
3.39
3.41
3.41
3.47
3.37
3.32
3.33
3.43
3.43
3.50
3.39
3.46
3.36
3.38
3.41
3.36
3.31
3.30

NonDurable durable
goods
goods
industries industries

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
4.56
4.96
4.52
3.94
3.89
4.22
4.61
4.55
4.57
4.65
4.10
4.06
4.04
4.23
4.21
4.14
4.12
4.12
4.11
4.14
4.11
4.22
4.06
4.00
4.04
4.20
4.17
4.27
4.14
4.23
4.13
4.14
4.19
4.15
4.05
4.04

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
.76
.67
.59
.53
.55
.49
.50
.49
.50
.48
.48
.47
.49
.49
.49
.48
.50
.49
.50
.48
.50
.50
.49
.50
.47
.48
.47
.48
.49
.49

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.




306

PRICES
TABLE B-55.—Consumer price indexes, major expenditure classes, 1946-86
[1967=100]
Food and
bever ages
Year or
month

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
1982
1983
1984 .
1985
1986
1985: Jan
Feb
Mar

fez
June
July
Aug
Sept
Oct
Nov
Dec
1986: Jan
Feb
Mar

fez
June
July
Aug
Sept
Oct
Nov
Dec

All
items

58.5
66.9
72.1
71.4
72.1
77.8
79.5
80.1
80.5
80.2
81.4
84.3
86.6
87.3
88.7
89.6
90.6
91.7
92.9
94.5
97.2
100.0
104.2
109.8
116.3
121.3
125.3
133.1
147.7
161.2
170.5
181.5
195.4
217.4
246.8
272.4
289.1
298.4
311.1
322.2
328.4
316.1
317.4
318.8
320.1
321.3
322.3
322.8
323.5
324.5
325.5
326.6
327.4
328.4
327.5
326.0
325.3
326.3
327.9
328.0
328.6
330.2
330.5
330.8
331.1

Total »

Food

Housing

Total 2

58.1
60.6
65.2
70.6
76.6
69.8
73.5
70.9
74.5
72.8
77.2
82.8
•••"•"••••
78.7
84.3
80.8
83.0
81.7
82.8
82.3
81.6
82.2
83.6
86.2
84.9
87.7
88.5
87.1
88.6
88.0
90.2
90.9
89.1
91.7
89.9
92.7
91.2
92.4
93.8
94.4
94.9
97.2
99.1
'"iboio" 100.0 100.0
103.6 103.6 104.0
108.8 108.9 110.4
114.7 114.9 118.2
118.3 118.4 123.4
123.2
123.5 128.1
139.5 141.4 133.7
158.7 161.7 148.8
175.4
172.1
164.5
177.4
180.8 174.6
188.0 192.2
186.5
206.3 211.4 202.8
228.5 234.5 227.6
248.0 254.6 263.3
267.3 274.6 293.5
278.2 285.7 314.7
284.4 291.7 323.1
295.1 302.9 336.5
302.0 309.8 349.9
311.8 319.7 360.2
299.3 307.3 342.0
301.4 309.5 343.6
301.6 309.7 344.7
301.6 309.6 345.9
301.0 308.9 348.5
301.4 309.3 350.4
301.6 309.5 351.6
301.8 309.7 352.9
302.1 309.9 353.8
302.5 309.8 354.4
303.6 311.0 355.0
305.6 313.2 355.8
307.9 315.6 356.8
307.7 315.3 356.5
307.8 315.4 357.0
308.5 316.1 358.0
309.4 317.0 358.5
309.5 317.1 361.2
312.2
320.1 361.5
314.6 322.7 362.4
315.1 323.2 363.7
315.6 323.7 363.0
316.4 324.6 361.7
317.0 325.0 362.1

HouseOther
hold Apparel TransEnterFuel and furnish- and portation Medical ainment goods
care
and
Shelter other 3 ings upkeep
services
and
utilities
operation 2

76.5
78.2
79.1
80.4
83.4
85.1
86.0
87.8
88.5
89.6
90.7
92.2
93.8
96.8
100.0
104.8
113.3
123.6
128.8
134.5
140.7
154.4
169.7
179.0
191.1
210.4
239.7
281.7
314.7
337.0
344.8
361.7
382.0
402.9
371.2
373.3
374.3
375.9
379.5
381.0
383.2
385.9
386.9
389.1
391.3
392.3
393.8
394.8
397.0
400.1
400.9
401.6
403.5
405.2
407.6
409.5
410.2
410.4

83.0
83.5
85.1
87.3
89.9
91.7
93.8
95.9
97.1
97.3
98.2
98.4
98.3
98.8
100.0
101.3
103.6
107.6
115.0
120.1
126.9
150.2
167.8
182.7
202.2
216.0
239.3
278.6
319.2
350.8
370.3
387.3
393.6
384.7
387.2
386.5
388.2
388.7
393.0
399.4
399.9
398.9
400.5
395.6
392.1
393.3
394.6
390.0
385.5
381.8
382.5
393.8
389.4
389.5
388.3
379.1
371.1
371.0

1
Includes alcoholic beverages, not shown separately.
2
Series beginning 1967 not comparable with series for
3

67.5
78.2
83.3
80.1
79.0
86.1
85.3
91.3
84.6
90.9
84.5
84.1
89.9
85.8
89.9
87.3
91.9
87.5
92.3
93.1
88.2
93.8
89.6
93.7
90.4
93.8
90.9
91.9
94.6
92.7
95.0
93.7
95.3
97.0
96.1
100.0 100.0
103.8 105.4
107.7
111.5
111.5 116.1
115.7 119.8
118.3 122.3
121.6 126.8
135.3 136.2
151.0 142.3
160.1 147.6
167.5 154.2
177.7
159.6
190.3 166.6
205.4 178.4
221.3
186.9
233.2 191.8
238.5 196.5
242.5 200.2
247.2 206.0
250.4 207.8
244.2 199.8
246.2 201.8
246.9 205.3
247.9 205.9
247.6 205.3
247.1 204.6
246.5 202.8
247.0 205.3
247.1 209.6
248.4 211.1
248.9 211.2
248.8 209.0
248.8 205.0
249.0 204.1
249.8 206.3
249.6 207.3
249.9 206.4
250.2 204.5
250.5 203.2
250.5 207.0
251.5 212.1
251.6 213.2
251.2 213.1
252.4 210.9

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
291.5
298.4
311.7
319.9
307.5
314.7
314.3
316.7
320.0
321.4
321.8
321.8
320.7
319.7
320.9
323.2
324.0
323.9
319.2
309.6
303.3
305.7
308.6
304.7
301.3
302.2
302.6
304.3
304.8

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
328.7
357.3
379.5
403.1
433.5
391.1
393.8
396.5
398.0
399.5
401.7
404.0
406.6
408.3
410.5
413.0
414.7
418.2
422.3
425.8
428.0
429.7
432.0
434.8
437.5
439.7
442.3
444.6
446.8

100.0
105.7
111.0
116.7
122.9
126.5
130.0
139.8
152.2
159.8
167.7
176.6
188.5
205.3
221.4
235.8
246.0
255.1
265.0
274.1
261.0
261.3
262.2
263.3
263.6
264.8
265.7
265.7
266.8
268.4
269.0
268.3
270.8
272.0
271.9
272.3
272.9
273.9
274.4
274.7
275.3
276.5
277.4
277.4

100.0
105.2
110.4
116.8
122.4
127.5
132.5
142.0
153.9
162.7
172.2
183.3
196.7
214.5
235.7
259.9
288.3
307.7
326.6
346.4
319.1
320.5
321.1
321.8
322.3
323.0
325.0
326.0
333.3
334.9
335.3
336.5
339.1
340.3
341.1
341.8
342.1
342.6
344.9
346.4
353.3
354.6
354.9
355.2

Energy 3

90.1
90.3
91.8
94.2
94.4
94.7
95.0
94.6
96.3
97.8
100.0
101.5
104.2
107.0
111.2
114.3
123.5
159.7
176.6
189.3
207.3
220.4
275.9
361.1
410.0
416.1
419.3
423.6
426.5
370.3
414.5
411.4
416.6
424.4
431.7
436.8
437.1
433.8
432.6
427.1
425.1
426.5
424.7
408.9
381.3
361.8
367.6
380.6
366.5
358.6
360.6
348.6
341.7
342.4

earlier years.
See Tables B-56 and B-57.
Note.—Data beginning 1978 are for all urban consumers; earlier data are for urban wage earners and clerical workers.
Data beginning 1983 incorporate a rental equivalence measure for homeowners' costs and therefore are not strictly comparable with
earlier figures.
Source: Department of Labor, Bureau of Labor Statistics.




307

TABLE B-56.—Consumer price indexes, selected expenditure classes, 1946-86

[1967 = 100]
Shelter

Food and beverages
Food

Year or month

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
1982
1983
1984
1985
1986
1985: Jan
Feb .
Mar
May'""'"""'
June
July
Aug
Sept
Oct
Nov
Dec
1986- Jan
Feb
Mar
Apr
May
June
July
Aug
Sept
Oct
Nov
Dec

Fuel and other utilities

Renters' costs

Household fuels
Other
utilities
Home- MainteFuel oil, Gas
nance
(piped)
Total »
and
At Away Total Total Rent, owners' and Total Total coal,
Total home from
and
pubfic
resi- costs repairs
and
dential
home
bottled elec- services
tricity
gas

100.0
103.6
108.8
114.7
118.3
123.2
139.5
158.7
172.1
177.4
188.0
206.3
228.5
248.0
267.3
278.2
284.4
295.1
302.0
311.8
299.3
301.4
301.6
301.6
301.0
301.4
301.6
301.8
302.1
302.5
303.6
305.6
307.9
307.7
307.8
308.5
309.4
309.5
312.2
314.6
315.1
315.6
316.4
317.0

58.1
70.6
76.6
73.5
74.5
82.8
84.3
83.0
82.8
81.6
82.2
84.9
88.5
87.1
88.0
89.1
89.9
91.2
92.4
94.4
99.1
100.0
103.6
108.9
114.9
118.4
123.5
141.4
161.7
175.4
180.8
192.2
211.4
234.5
254.6
274.6
285.7
291.7
302.9
309.8
319.7
307.3
309.5
309.7
309.6
308.9
309.3
309.5
309.7
309.9
309.8
311.0
313.2
315.6
315.3
315.4
316.1
317.0
317.1
320.1
322.7
323.2
323.7
324.6
325.2

73.5
79.8
76.7
77.6
86.3
87.8
86.2
85.8
84.1
84.4
87.2
91.0
88.8
89.6
90.4
91.0
92.2
93.2
95.5
100.3
100.0
103.2
108.2
113.7
116.4
121.6
141.4
162.4
175.8
179.5
190.2
210.2
232.9
251.5
269.9
279.2
282.2
292.6
296.8
305.3
296.1
298.6
298.4
297.7
296.2
296.0
296.2
295.9
295.6
295.3
296.6
299.3
302.5
301.5
301.2
301.5
302.1
301.6
305.5
308.9
309.0
309.5
309.9
310.2

68.9
70.1
70.8
72.2
74.9
77.2
79.3
81.4
83.2
85.4
87.3
88.9
90.9
95.1
100.0
105.2
111.6
119.9
126.1
131.1
141.4
159.4
174.3
186.1
200.3
218.4
242.9
267.0
291.0
306.5
319.9
333.4
346.6
360.1
339.9
341.4
342.6
343.9
345.1
346.9
347.3
348.4
349.9
350.3
351.3
352.1
353.1
354.2
355.5
357.0
358.8
360.2
360.8
361.8
363.3
364.0
365.8
367.1

76.5
78.2
79.1
80.4
83.4
85.1
86.0
87.8
88.5
89.6
90.7
92.2
93.8
96.8
100.0
104.8
113.3
123.6
128.8
134.5
140.7
154.4
169.7
179.0
191.1
210.4
239.7
281.7
314.7
337.0
344.8
361.7
382.0
402.9
371.2
373.3
374.3
375.9
379.5
381.0
383.2
385.9
386.9
389.1
391.3
392.3
393.8
394.8
397.0
400.1
400.9
401.6
403.5
405.2
407.6
409.5
410.2
410.4

"i03"b"
108.6
115.4
121.9
111.8
112.4
112.9
113.5
114.5
115.1
115.8
116.6
117.0
117.9
118.4
118.3
118.8
119.0
119.6
120.9
121.1
121.6
122.5
122.9
123.6
124.0
124.3
124.2

59.2
61 1
65.1
68.0
70.4
73.2
762
80.3
83.2
84.3
85.9
87.5
89.1
90.4
91.7
92.9
94.0
95.0
959
96.9
982
100.0
102.4
105.7
110.1
115.2
119.2
124.3
130.6
137.3
144.7
153.5
164.0
176.0
191.6
2082
224.0
236.9
249.3
264.6
280.0
257.1
258.4
259.2
260.4
262.6
263.6
265.0
266.6
267.7
269.9
271.7
272.4
273.4
273.7
275.0
277.9
278.4
279.4
281.2
281.7
283.2
284.6
285.6
286.0

See next page for continuation of table.




308

'"ibis"
107.3
113.1
119.4
110.0
110.7
110.8
111.3
112.4
112.8
113.5
114.3
114.6
115.1
115.8
116.3
116.7
117.0
117.9
118.7
118.9
119.0
119.4
119.9
120.7
121.3
121.5
121.6

71.2
72.4
74.1
772
80.5
81.8
83.2
84.6
85.9
86.5
87.7
89.5
91.3
95.2
100.0
106.1
115.0
124.0
133.7
140.7
151.0
171.6
187.6
199.6
214.7
233.0
256.4
285.7
314.4
334.1
346.3
359.2
368.9
373.8
366.0
366.8
370.0
368.0
366.2
367.6
367.8
370.6
368.7
368.5
372.7
373.7
379.1
379.6
367.5
367.6
367.1
366.6
369.2
376.4
376.2
379.0
377.1
380.0

83.0
83.5
85.1
87.3
89.9
91.7
93.8
95.9
97.1
97.3
98.2
98.4
98.3
98.8
100.0
101.3
103.6
107.6
115.0
120.1
126.9
150.2
167.8
182.7
202.2
216.0
239.3
278.6
319.2
350.8
370.3
387.3
393.6
384.7
387.2
386.5
388.2
388.7
393.0
399.4
399.9
398.9
400.5
395.6
392.1
393.3
394.6
390.0
385.5
381.8
382.5
393.8
389.4
389.5
388.3
379.1
371.1
371.0

"ib'o'.b"
101.4
103.4
107.9
115.3
120.1
128.4
160.7
183.8
202.3
228.6
247.4
286.4
349.4
407.0
446.2
469.2
485.5
488.1
463.1
481.2
480.8
482.2
483.0
490.0
497.7
497.3
494.4
496.8
488.4
481.5
483.6
484.7
476.3
467.6
459.6
460.6
477.0
469.2
469.0
467.2
450.3
437.8
438.1

51.3
58.4
68.6
70.3
72.7
76.5
780
81.5
81.2
82.3
859
90.3
887
89.8
892
91.0
91.5
93.2
92.7
946
97.0
100.0
103.1
105.6
110.1
117.5
118.5
136.0
214.6
235.3
250.8
283.4
298.3
403.1
556.0
675.9
667.9
628.0
641.8
619.5
501.5
621.6
623.4
620.8
623.5
620.8
612.0
601.9
594.6
601.7
615.3
641.6
657.3
650.3
591.2
549.9
518.3
496.8
486.6
459.4
447.3
453.5
451.9
452.0
460.6

77.4
77.1
79.1
81.0
81.2
81.5
826
84.2
85.3
87.5
88.4
89.3
92.4
94.7
98.6
99.4
99.4
99.4
99.4
99.4
99.6
100.0
100.9
102.8
107.3
114.7
120.5
126.4
145.8
169.6
189.0
213.4
232.6
257.8
301.8
345.9
393.8
428.7
445.2
452.7
446.7
444.1
443.3
445.5
445.9
454.7
465.6
467.1
465.1
466.5
453.9
440.5
439.9
442.6
444.5
442.3
439.2
444.6
466.0
462.3
464.5
461.1
441.4
426.7
425.3

100.0
101.2
104.0
107.4
114.7
120.6
124.1
130.3
137.1
145.4
152.0
158.3
159.5
165.2
181.0
200.2
213.7
230.2
240.7
253.1
235.3
234.3
236.3
236.4
236.8
241.1
242.8
244.2
244.6
244.7
245.9
245.8
247.3
247.9
249.0
251.3
251.5
255.2
255.6
255.9
255.6
257.1
255.4
254.9

TABLE B-56.—Consumer price indexes, selected expenditure classes, 1946-86—Continued
[1967=100]
Transportation

Medical care

Private transportation
Year or month

1946
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
1982
1983
1984
1985
1986
1985: Jan
Feb
Mar
Apr
May
June
July
Aug
Sept
Oct
Nov
Dec
1986- Jan .. .
Feb
Mar
Apr
May
June
July
Aug ...
Sept
Cct
.
Nov
Dec
.

Total

.
.

.

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
291.5
298.4
311.7
319.9
307.5
314.7
314.3
316.7
320.0
321.4
321.8
321.8
320.7
319.7
320.9
323.2
324.0
323.9
319.2
309.6
303.3
305.7
308.6
304.7
301.3
302.2
302.6
304.3
304.8

Total 2

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
287.5
293.9
306.6
314.2
299.5
309.1
308.7
311.0
314.6
316.0
316.3
316.1
314.9
313.6
314.7
317.0
317.8
317.3
312.2
302.1
295.3
297.8
300.8
296.5
292.8
293.7
294.1
295.8
295.9

New
cars

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
197.6
202.6
208.5
215.2
224.4
213.1
213.9
214.1
214.1
214.5
214.7
214.7
214.6
214.5
216.2
218.4
219.4
219.9
220.4
220.3
221.2
223.0
224.2
224.7
224.7
224.5
227.1
230.7
232.2

Used
cars

Motor
fuel 3

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

u£l
104.3

110.2
110.5
117.6
122.6
146.4
167.9
182.8
186.5
201.0
208.1
256.9
296.4
329.7
375.7
379.7
363.2
382.8
384.6
386.1
386.4
384.2
380.3
376.7
374.0
374.3
375.3
376.4
375.6
374.1
370.7
367.2
364.8
363.6
362.5
360.3
358.0
359.5
360.6
361.0
356.6

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
389.4
376.4
370.7
373.8
292.1
357.6
352.4
360.6
374.2
381.6
384.7
385.5
381.9
377.7
374.6
376.7
377.5
373.3
351.5
308.5
279.5
289.3
299.4
280.2
265.9
271.1
263.2
260.9
261.9

1
Includes
2
Includes
3
Includes
4

Automobile
maintenance
and
repair

52.0
564
59.6
61 1
62.3
67.0
686
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
315.8
330.0
341.5
351.4
363.1
346.9
348.2
348.5
348.2
349.6
350.4
351.1
351.9
353.5
355.7
355.8
357.5
357.9
358.9
359.3
360.6
361.3
362.1
363.4
364.3
365.0
365.7
368.4
370.7

Other

""ibo.b"
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
257.8
260.8
273.3
287.6
303.9
283.9
284.4
284.5
285.8
285.6
286.6
287.6
287.7
285.8
289.6
293.9
295.2
297.7
299.2
301.5
301.6
301.3
303.0
304.5
304.5
302.3
307.6
311.6
312.0

Public
transportation

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
346.0
362.6
385.2
402.8
426.4
394.5
394.4
397.3
398.0
398.4
399.3
402.4
403.7
408.0
411.5
412.8
412.9
419.6
422.2
421.2
422.2
423.7
425.4
428.0
428.0
428.5
428.7
431.7
437.5

Total

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
328.7
357.3
379.5
403.1
433.5
391.1
393.8
396.5
398.0
399.5
401.7
404.0
406.6
408.3
410.5
413.0
414.7
418.2
422.3
425.8
428.0
429.7
432.0
434.8
437.5
439.7
442.3
444.6
446.8

Medical
care
commodities

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
205.7
223.3
239.7
256.7
273.6
248.2
249.8
251.9
253.9
255.2
257.0
257.8
259.3
260.2
261.3
262.7
262.9
264.5
267.4
269.4
271.3
272.3
273.3
275.4
276.0
276.7
277.5
278.2
280.8

Medical
care
services

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
356.0
387.0
410.3
435.1
468.6
422.4
425.3
428.1
429.4
430.9
433.0
435.8
438.6
440.5
443.0
445.8
448.0
451.9
456.2
460.1
462.3
464.2
466.8
469.8
473.0
475.7
478.8
481.5
483.4

alcoholic beverages, not shown separately.
direct pricing of new trucks and motorcycles, beginning September 1982.
direct pricing of diesel fuel 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.
See also Note, Table B-55.
Source: Department of Labor, Bureau of Labor Statistics.




309

TABLE B-57.—Consumer price indexes, commodities, services, and special groups, 1940-86
[1967=100]
Commodities
Year or
month

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
1982
1983
1984
1985
1986
1985: Jan
Feb
Mar....
Apr
May....
JuneJuly....
Aug....
Sept..
Oct....
Nov...
Dec...
1986: Jan....
Feb....
Mar...
Apr....
MayJune. .
July...
Aug...
Sept..
Oct....
Nov...
Dec...

All
items

42.0
44.1
48.8
51.8
52.7
53.9
58.5
66.9
72.1
71.4
72.1
77.8
79.5
80.1
80.5
80.2
81.4
84.3
86.6
87.3
88.7
89.6
90.6
91.7
92.9
94.5
97.2
100.0
104.2
109.8
116.3
121.3
125.3
133.1
147.7
161.2
170.5
181.5
195.4
217.4
246.8
272.4
289.1
298.4
311.1
322.2
328.4
316.1
317.4
318.8
320.1
321.3
322.3
322.8
323.5
324.5
325.5
326.6
327.4
328.4
327.5
326.0
325.3
326.3
327.9
328.0
328.6
•'30.2
330.5
330.8
331.1

All
commodities

40.6
43.3
49.6
54.0
54.7
56.3
62.4
75.0
80.4
78.3
78.8
85.9
87.0
86.7
85.9
85.1
85.9
88.6
90.6
90.7
91.5
92.0
92.8
93.6
94.6
95.7
98.2
100.0
103.7
108.4
113.5
117.4
120.9
129.9
145.5
158.4
165.2
174.7
187.1
208.4
233.9
253.6
263.8
271.5
280.7
286.7
283.9
282.7
284.0
285.3
286.8
287.0
286.9
286.5
286.5
287.1
287.9
289.2
289.9
290.1
287.4
283.7
281.2
282.1
282.8
281.9
281.9
283.5
283.6
284.0
284.2

Food

35.2
38.4
45.1
50.3
49.6
50.7
58.1
70.6
76.6
73.5
74.5
82.8
84.3
83.0
82.8
81.6
82.2
84.9
88.5
87.1
88.0
89.1
89.9
91.2
92.4
94.4
99.1
100.0
103.6
108.9
114.9
118.4
123.5
141.4
161.7
175.4
180.8
192.2
211.4
234.5
254.6
274.6
285.7
291.7
302.9
309.8
319.7
307.3
309.5
309.7
309.6
308.9
309.3
309.5
309.7
309.9
309.8
311.0
313.2
315.6
315.3
315.4
316.1
317.0
317.1
320.1
322.7
323.2
323.7
324.6
325.2

All

48.0
50.4
56.0
58.4
61.6
64.1
68.1
76.8
82.7
81.5
81.4
87.5
88.3
88.5
87.5
86.9
87.8
90.5
91.5
92.7
93.1
93.4
94.1
94.8
95.6
96.2
97.5
100.0
103.7
108.1
112.5
116.8
119.4
123.5
136.6
149.1
156.6
165.1
174.7
195.1
222.0
241.2
250.9
259.0
267.0
272.5
263.4
267.8
268.6
270.6
272.8
273.4
273.1
272.4
272.3
273.1
274.4
275.7
275.7
274.7
270.9
265.2
261.2
262.1
263.0
260.2
259.0
261.1
260.9
261.2
261.2

Special indexes

Services

Commodities less food

All
NonDurable durable services

48.1
51.4
58.4
60.3
65.9
70.9
74.1
80.3
86.2
87.4
88.4
95.1
96.4
95.7
93.3
91.5
91.5
94.4
95.9
97.3
96.7
96.6
97.6
97.9
98.8
98.4
98.5
100.0
103.1
107.0
111.8
116.5
118.9
121.9
130.6
145.5
154.3
163.2
173.9
191.1
210.4
227.1
241.1
253.0
266.5
270.7
270.2
270.2
271.4
271.9
272.6
271.6
270.4
269.3
268.6
268.7
270.2
271.5
271.4
271.4
270.5
269.7
269.2
269.6
269.9
269.6
269.0
269.3
270.5
271.8
271.7

44.7
46.7
51.6
53.8
56.6
58.6
62.9
72.2
77.8
76.3
76.2
82.0
82.4
83.1
83.5
83.5
85.3
87.6
88.2
89.3
90.7
91.2
91.8
92.7
93.5
94.8
97.0
100.0
104.1
108.8
113.1
117.0
119.8
124.8
140.9
151.7
158.3
166.5
174.3
198.7
235.2
257.5
261.6
266.3
270.8
277.2
262.2
269.7
270.2
273.2
276.5
278.0
278.4
277.9
278.1
279.6
280.7
282.0
282.0
280.4
274.5
265.6
259.2
260.5
261.8
257.3
255.6
258.9
257.8
257.4
257.5

43.6
44.2
45.6
46.4
47.5
48.2
49.1
51.1
54.3
56.9
58.7
61.8
64.5
67.3
69.5
70.9
72.7
75.6
78.5
80.8
83.5
85.2
86.8
88.5
90.2
92.2
95.8
100.0
105.2
112.5
121.6
128.4
133.3
139.1
152.1
166.6
180.4
194.3
210.9
234.2
270.3
305.7
333.3
344.9
363.0
381.5
400.5
372.1
373.5
375.0
376.2
378.9
381.3
383.3
384.9
386.5
387.7
388.7
389.5
3917
393.3
394.9
396.8
397.9
401.0
402.3
403.7
405.5
406.1
406.1
406.6

Medical
care
services

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
356.0
387.0
410.3
435.1
468.6
422.4
425.3
428.1
429.4
430.9
433.0
435.8
438.6
440.5
443.0
445.8
448.0
451.9
456.2
460.1
462.3
464.2
466.8
469.8
473.0
475.7
478.8
481.5
483.4

Services
less
medical
care

77.6
80.4
82.5
85.2
86.7
88.1
89.6
91.2
93.2
96.4
100.0
104.9
112.0
121.3
127.7
132.6
138.3
151.0
164.7
177.7
190.6
206.9
230.1
266.6
302.2
328.6
338.1
355.6
373.3
390.6
364.3
365.5
366.9
368.1
370.9
373.3
375.2
376.7
378.3
379.3
380.1
380.8
382.7
384.0
385.4
387.2
388.3
391.3
392.5
393.6
395.4
395.7
395.4
395.8

All
items
less
food

47.3
487
52.1
536
55.7
56.9
594
64.9
696
70.3
71.1
75.7
775
79.0
795
79.7
81.1
83.8
85.7
87.3
88.8
89.7
90.8
92.0
93.2
94.5
96.7
100.0
104.4
110.1
116.7
122.1
125.8
130.7
143.7
157.1
167.5
178.4
191.2
213.0
244.0
270.6
288.4
298.3
311.3
323.3
328.6
316.3
317.4
319.1
320.8
322.4
323.6
324.2
325.0
326.2
327.4
328.5
328.9
329.5
328.5
326.6
325.7
326.7
328.6
328.0
328.1
330.0
330.2
330.4
330.6

All
items
less
energy

83.9
86.3
87.0
88.3
89.3
90.4
91.6
92.9
94.3
97.3
100.0
104.4
110.3
117.0
122.0
126.1
133.8
146.9
160.2
169.2
179.8
193.8
213.1
238.0
261.7
279.3
289.3
302.9
314.8
327.0
309.2
310.9
312.0
312.7
313.3
313.9
314.5
315.6
316.8
318.4
319.8
320.5
321.8
322.3
323.3
324.4
325.0
325.5
326.9
328.3
330.0
331.4
332.3
332.6

All
items
less
food
and
energy

Energy 1

83.3
85.2
87.0
88.3
89.3
90.5
91.6
93.0
94.3
96.6
100.0
104.6
110.7
117.6
123.1
126.9
131.3
142.2
155.3
165.5
175.8
188.7
207.0
232.8
257.1
276.1
287.0
301.2
314.4
327.1
307.9
309.5
310.8
311.8
312.8
313.4
314.1
315.3
316.9
318.9
320.4
320.7
321.6
322.3
323.6
324.8
325.3
325.9
326.9
327.9
329.9
331.6
332.5
332.8

90.1
90.3
91.8
94.2
94.4
94.7
95.0
94.6
96.3
97.8
100.0
101.5
104.2
107.0
111.2
114.3
123.5
159.7
176.6
189.3
207.3
220.4
275.9
361.1
410.0
416.1
419.3
423.6
426.5
370.3
414.5
411.4
416.6
424.4
431.7
436.8
437.1
433.8
432.6
427.1
425.1
426.5
424.7
408.9
381.3
361.8
367.6
380.6
366.5
358.6
360.6
348.6
341.7
342.4

1
Fuel oil, coal, and bottled gas; gas (piped) and electricity; and motor fuel. Motor oil, coolant, etc. also included through 1982.
Note.—Data beginning 1978 are for all urban consumers; earlier data are for urban wage earners and clerical workers.
See also Note, Table B-55.
Source: Department of Labor, Bureau of Labor Statistics.




310

TABLE B-58.—Changes in special consumer price indexes, 1958-86
[Percent change]
All items less
food

All items
Voar nr mnnth

Dec.
to
Dec.1

Dec.
to
Dec.1

Year
to
year

All items less
energy

Year
to
year

Dec.
to
Dec.1

All iterris less
food and
ene rgy

Year
to
year

Dec.
to
Dec.1

All items less food,
energy, and shelter
Year
to
year

Dec.
to
Dec.1

Year
to
year

1958
1959

1.8
1.5

2.7
.8

1.6
2.3

2.3
1.9

1.9
1.4

2.9
.8

1.8
2.2

2.3
2.1

I960
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
5.0

4.6
4.8

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
3.2
2.6
3.5
11.3

5.1
4.9
2.4
3.0
7.6

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

6.4
7.0
5.2
6.5
7.2

8.9
7.0
6.0
5.7
6.9

1980
1981
1982
1983
1984

12.4
8.9
3.9
3.8
4.0

13.5
10.4
6.1
3.2
4.3

12.9
9.9
4.0
4.1
4.0

14.6
10.9
6.6
3.4
4.4

11.7
8.6
4.2
4.4
4.5

11.7
10.0
6.7
3.6
4.7

12.1
9.6
4.5
4.9
4.7

12.5
10.4
7.4
3.9
4.9

9.9
9.4
6.1
5.0
4.4

8.8
9.5
7.7
5.2
5.0

1985
1986

3.8
1.1

3.6
1.9

4.0
.5

3.9
1.6

4.0
3.8

3.9
3.9

4.4
3.8

4.4
4.0

3.7
3.4

3.8
3.4

1970
1971
1972
1973
1974

..

Change from preceding month
Seasonally
adjusted

Unadjusted

1985- Jan

fc:

June
July
Aug
Sept
Oct
Nov
Dec
1986- Jan
Feb
Mar

::~

W&y"'.l"'.!'.!!'.""'.
June
July.
Aug
Sept

ocf. ::.::""
Nov
Dec

Unadjusted

Sea-

sonally
adjusted

Unadjusted

0.3
.5
.4

0.3
.5
.3

'.4

'.2
.2

.2
.2
.4
.4
.3
.1

.2
.2
.2
.4
.5
.3

.2
3
-.6

'.5

.3
-.4
-.4
-.3
.2
.5

.4
3
-.5
_ 4
'.1
.6

.0
.2
.5
.1
.1
.1

.0
.2
.3
.2
.3
.2

-.2
.0
.6
.1
.1
.1

A
.3
.2
.2
'.3
.3

.3
-.5
-.2

0.2
.3
.5
.3

0.0
.3
.5
.5

'.2

.2
'.2
.4
.6
.4

'.3
.6

~'.o
.3
.1
.2
.3

Seasonally
adjusted

Unadjusted

0.2
.3
.5
.4
.3
.3

0.2
.4
.4

Feb
Mar

Seasonally
adjusted

0.2

Seasonally
adjusted

Unadjusted

0.2

0.4
.5
.4
.3
-.0
.2

'.4
.3

0.3
.6
.4
.3

'.2
.3

'.2

'.3

.1

.2
.3
.4
.5
.4
.2

.2
.3
.2
.4
.5
.4

.2
.4
.5
.6
.5
.1

.3

.1
.2
.6
.7
.4
.0

.2
.2
.2

.4
.2

.4
.0

.5

'.3
.2

'.2

.4
.2
.4
.4
.1
.3

.2

'.4
.2
.2

.3
.2
.4
.4
.2
.2

'.2
.2
.1
.3

.4
.4
.5
.4
.3
.1

.5
.4
.3
.4
.4
.2

.3
.3
.6
.5
.3
.1

.4
.3
.3
.4
.3
.3

.2

'.3

'.2
.5
.5

'.5

o'

'.2

ie
'.3
.1

'.5

.3
.3
'.3

1
Changes from December to December are based on unadjusted indexes.
Note.—Data beginning 1978 are for all urban consumers; earlier data arefor urban wage earners and clerical workers.
See also Note, Table B-55.
Source: Department of Labor, Bureau of Labor Statistics.




311

TABLE B-59.—Changes in consumer price indexes, commodities and services, 1929-86
[Percent change]
Commodities

All items
Total
Year

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
1982
1983
1984
1985
1986

Dec.
to
Dec.1

0.2
5
_5
1.0
9.7
9.3
3.2
2.1
2.3
18.2
9.0
2.7
-1.8
5.8
5.9
.9
.6
-.5
.4
2.9
3.0
1.8
1.5
1.5
.7
1.2
1.6
1.2
1.9
3.4
3.0
4.7
6.1
5.5
3.4
3.4
8.8
12.2
7.0
4.8
6.8
9.0
13.3
12.4
8.9
3.9
3.8
4.0
3.8
1.1

Year
to
year

0
-5.1
14
1.0
5.0
10.7
6.1
1.7
2.3
8.5
14.4
7.8
-1.0
1.0
7.9
2.2
.8
.5
-.4
1.5
3.6
2.7
.8
1.6
1.0
1.1
1.2
1.3
1.7
2.9
2.9
4.2
5.4
5.9
4.3
3.3
6.2
11.0
9.1
5.8
6.5
7.7
11.3
13.5
10.4
6.1
3.2
4.3
3.6
1.9

Dec.
to
Dec.1

10
1.2
13.5
13.0
4.0
2.2
2.9
24.9
10.4
1.7
-4.1
7.7
5.9
-.7
-.6
-1.4
-.4
2.6
2.6
1.3
.6
1.1
0
1.0
1.4
.8
1.6
2.5
2.5
3.8
5.5
4.0
2.9
3.4
10.4
12.7
6.3
3.3
6.1
8.9
13.0
11.1
6.0
3.6
2.9
2.6
2.5
-2.0

Commc)dities
less Fnnrl

Food
Year
to
year

20
1.0
6.7
14.5
8.9
1.3
2.9
10.8
20.2
7.2
-2.6
.6
9.0
1.3

-'.9
— 9
!9
3.1
2.3
.1
.9
.5
.9
.9
1.1
1.2
2.6
1.8
3.7
4.5
47
3.4
3.0
7.4
12.0
8.9
4.3
5.8
7.1
11.4
12.2
8.4
4.0
2.9
3.4
2.1
-1.0

Dec.
to
Dec.1

Year
to
year

2.3
7.0
-2.5
2.6
16.4
17.5
3.1
.2
3.0
31.5
11.2
-.8
-3.7
9.6
7.4
-1.1
-1.3
-1.6
-.9
3.1
2.8
2.2
-.8
3.1
_g
L5
1.9
1.4
3.4
3.9
1.2
4.3
7.2
22
4.3
4.7
20.1
12.2
6.5
.6
8.0
11.8
10.2
10.2
4.3
3.1
2.6
3.8
2.7
3.8

1.3
-2.9
28
1.7
9.1
17.4
11.5
-1.4
2.2
14.6
21.5
8.5
-4.0
1.4
11.1
1.8
15
-.2
-1.4
.7
3.3
4.2
-1.6
1.0
1.3
.9
1.4
1.3
2.2
5.0
.9
3.6
5.1
55
3.0
4.3
14.5
14.4
8.5
3.1
6.3
10.0
10.9
8.6
7.9
4.0
2.1
3.8
2.3
3.2

Energy 2

Services

Dec.
to
Dec.1

0.2
.4
10.8
6.4
5.4
5.0
3.0
12.9
9.1
5.3
-4.8
5.7
4.6
-.5
.2
-1.4
0
2.5
2.2
.8
1.5
-.3
.6
.7
1.2
.4
.7
1.9
3.1
3.7
4.5
48
2.3
2.5
5.0
13.2
6.2
5.1
4.9
7.7
14.3
11.5
6.7
3.8
3.1
2.0
2.4
-5.3

1
Changes
2

Year
to
year

16
.6
5.0
11.1
4.3
5.5
4.1
6.2
12.8
7.7
-1.5
1
7.5
.9
.2
-1.1
-.7
1.0
3.1
1.1
1.3
.4
.3
.7
.7
.8
.6
1.4
2.6
3.7
4.2
41
3.8
2.2
3.4
10.6
9.2
5.0
5.4
5.8
11.7
13.8
8.6
4.0
3.2
3.1
2.1
-3.3

Medical care
services

Total
Dec.
to
Dec.1

0.2
.7
2.5
2.0
2.6
1.7
1.0
3.5
5.2
6.1
3.6
3.6
5.2
4.6
4.2
1.9
2.3
3.1
4.5
2.7
3.7
2.7
1.9
1.7
2.3
1.8
2.6
4.9
4.0
6.1
7.4
8.2
4.1
3.6
6.2
11.3
8.1
7.3
7.9
9.3
13.7
14.2
13.0
4.3
4.8
5.4
5.1
4.4

Year
to
year

0.2
.2
1.4
3.2
1.8
2.4
1.5
1.9
4.1
6.3
4.8
3.2
5.3
4.4
4.3
3.3
2.0
2.5
4.0
3.8
2.9
3.3
2.0
1.9
2.0
1.9
2.2
3.9
4.4
5.2
6.9
8.1
5.6
3.8
4.4
9.3
9.5
8.3
7.7
8.5
11.0
15.4
13.1
9.0
3.5
5.2
5.1
5.0

Dec.
to
Dec.1

0.3
0
1.5
3.9
5.8
2.8
2.9
8.9
6.5
7.0
2.1
3.3
5.8
5.5
3.6
2.6
3.2
4.1
4.5
4.9
4.6
3.8
3.5
3.0
2.6
2.6
3.5
8.1
7.9
7.4
7.0
8.3
5.3
3.8
5.8
13.3
10.3
10.7
9.0
9.2
10.6
10.0
12.7
11.2
6.1
5.8
6.8
7.9

Year
to
year

0.3
0
.6
3.1
5.0
4.2
2.7
5.8
8.5
6.7
3.7
2.3
5.1
6.4
3.6
3.0
2.9
4.0
4.3
4.9
4.8
4.0
3.7
3.2
3.0
2.4
3.2
5.4
8.7
7.3
8.1
7.1
7.3
3.7
4.4
10.3
12.6
10.1
9.9
8.6
9.7
11.3
10.7
11.9
8.7
6.0
6.0
7.7

Dec.
to
Dec.1

Year
to
year

-0.7
0.2
1.7
4.3
2.6
1.5
.2
-1.1
.3
2.1
-.8
-'.A
-.2
1.8
2.0
1.6
1.8
2.2
1.4
1.5
1.7
2.7
3.1
2.7
4.5
3.9
3.1
2.8
2.8
8.0
16.8
29.3
21.6
10.6
11.6
7.2
6.9
9.5
7.2
6.3
8.0
37.4
25.2
30.9
18.1
13.5
11.9
1.5
1.3
.8
-.5
1.0
.2
.7
1.8
-19.7 -13.2

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. also included through 1982.
Note.—Data beginning 1978 are for all urban consumers; earlier data are for urban wage earners and clerical workers.
See also Note, Table B-55.
Source: Department of Labor, Bureau of Labor Statistics.




312

TABLE B-60.—Producer price indexes by stage of processing, 1947-86
[1967=100]
Finished goods
Consumer foods
Year or month

Total
finished
goods

Total

Crude

Finished goods excluding consumer foods
Processed

Consumer goods
Total

Total

Non-

Durable

durable

Capital
equipment

Total
finished
consumer
goods

1947
1948
1949

74.0
79.9
77.6

82.8
90.4
83.1

99.4
107.1
101.3

80.2
87.6
80.1

79.0
84.0
82.2

74.6
79.7
81.8

80.7
85.8
82.3

55.4
60.4
63.4

80.5
86.5
82.5

1950
1951
1952
1953
1954
1955
1956
1957
1958 .
1959

79.0
86.5
86.0
85.1
85.3
85.5
87.9
91.1
93.2
93.0

84.7
95.2
94.3
89.4
88.7
86.5
86.3
89.3
94.5
90.1

92.2
105.9
112.8
105.2
94.7
98.8
98.7
97.4
103.5
94.3

83.4
93.2
91.3
86.7
87.6
84.4
84.3
87.9
93.1
89.5

83.5
89.5
88.3
89.1
89.4
90.1
92.3
94.6
94.7
95.9

82.7
88.2
88.9
89.6
90.3
91.2
94.3
97.1
98.4
99.6

83.6
90.0
87.8
88.6
88.9
89.4
91.1
93.2
92.6
94.0

64.9
71.2
72.4
73.6
74.5
76.7
82.4
87.5
89.8
91.5

83.9
91.8
90.7
89.2
89.1
88.5
89.8
92.4
94.4
93.6

I960
1961
1962
1963
1964
19651966
1967
1968
1969

93.7
93.7
94.0
93.7
94.1
95.7
98.8
100.0
102.8
106.6

92.1
91.7
92.5
91.4
91.9
95.4
101.6
100.0
103.6
110.0

100.6
96.1
97.0
95.5
98.2
98.6
104.8
100.0
107.5
116.0

90.7
90.9
91.7
90.7
90.8
94.9
101.0
100.0
103.0
108.9

100.0
102.6
105.4

96.3
96.2
96.0
96.0
95.9
96.6
98.1
100.0
102.1
104.6

99.2
98.8
98.3
97.8
98.2
97.9
98.5
100.0
102.2
104.0

94.7
94.7
94.8
95.1
94.8
95.9
97.8
100.0
102.2
105.0

91.7
91.8
92.2
92.4
93.3
94.4
96.8
100.0
103.5
106.9

94.5
94.3
94.6
94.1
94.3
96.1
99.4
100.0
102.7
106.6

1970
1971
1972
1973
1974
1975
1976
1977
1978
1979

110.3
113.7
117.2
127.9
147.5
163.4
170.6
181.7
195.9
217.7

113.5
115.3
121.7
146.4
166.9
181.0
180.4
189.9
207.2
226.2

116.3
115.8
121.2
160.7
180.8
181.2
193.9
201.0
216.8
233.1

113.1
115.1
121.7
143.9
164.6
181.3
177.8
187.3
204.6
223.8

109.1
113.1
115.4
120.1
139.3
156.2
166.1
177.7
190.7
213.3

107.7
111.4
113.5
118.6
138.6
153.1
162.6
174.3
186.7
211.5

106.9
110.8
113.3
115.4
125.9
138.2
144.5
152.8
166.9
183.2

108.3
111.7
113.6
120.5
146.8
163.0
174.8
189.3
200.0
231.3

112.0
116.6
119.5
123.5
141.0
162.5
173.4
184.6
199.2
216.5

109.9
112.9
116.6
129.2
149.3
163.6
169.7
180.7
194.9
217.9

1980
1981
1982
1983
1984
1985 1
1986

247.0
269.8
280.7
285.2
291.1
293.7
289.6

239.5
253.6
259.3
261.8
273.3
271.2
278.0

237.2
263.8
252.7
258.7
281.6
260.0
265.6

237.8
250.6
257.7
260.0
270.3
270.0
276.7

247.8
273.3
285.8
290.8
294.8
299.0
291.1

250.8
276.5
287.8
291.4
294.1
297.3
283.4

206.2
218.6
226.7
233.1
236.8
241.5
246.9

283.9
319.6
333.6
335.3
337.3
339.3
311.1

239.8
264.3
279.4
287.2
294.0
300.5
306.5

248.9
271.3
281.0
284.6
290.3
291.8
284.9

1985: Jan
Feb
Mar
Apr
May
June

292.1
292.6
292.1
293.1
294.1
294.0

273.7
275.6
273.7
272.2
269.5
268.7

255.4
279.4
275.5
279.9
254.2
237.0

273.1
273.1
271.3
269.3
268.7
269.3

296.0
295.9
296.0
297.8
300.1
300.2

294.3
293.5
293.6
295.9
299.0
299.0

240.2
240.9
240.4
240.7
241.4
241.9

334.9
332.7
333.4
337.4
342.4
342.1

297.4
299.2
299.3
299.9
300.3
300.5

290.6
290.7
290.1
291.2
292.4
292.2

294.8
293.5
290.0
294.7
296.4
297.2

271.2
268.7
265.7
268.2
271.8
275.0

261.5
251.2
243.5
242.3
259.2
280.4

269.9
268.1
265.5
268.3
270.7
272.3

300.5
299.5
295.9
301.3
302.4
302.4

299.2
297.8
294.7
299.4
300.7
300.7

241.9
241.8
234.5
244.9
245.0
244.3

342.4
340.0
340.3
340.3
342.6
343.2

300.8
301.0
296.3
303.5
303.8
303.7

293.1
291.4
288.2
292.3
294.4
295.4

June

296.0
291.9
288.0
287.2
288.9
289.3

275.0
272.0
271.6
271.9
274.8
275.1

268.9
245.9
250.0
265.3
270.6
255.2

273.2
271.8
271.1
270.1
272.9
274.4

300.7
296.3
291.2
289.9
291.2
291.6

298.3
291.8
284.6
282.2
284.0
284.4

243.5
243.9
243.7
245.7
245.5
245.9

339.6
328.0
315.4
309.8
313.0
313.5

303.9
304.3
304.3
305.6
305.7
306.1

293.8
288.4
283.4
281.9
284.1
284.5

July l
Aug
Sept
Oct
Nov
Dec

287.6
288.1
287.5
290.5
290.7
289.9

280.4
284.0
282.2
282.9
283.0
282.9

262.3
268.9
259.6
273.5
284.5
282.3

279.5
282.9
281.6
281.3
280.5
280.6

287.4
286.8
286.6
290.5
290.7
289.7

278.3
277.5
278.1
281.0
281.1
279.9

246.2
245.8
242.7
253.6
253.5
252.9

302.6
301.6
304.8
301.9
302.1
300.5

306.4
306.2
304.2
310.1
310.5
310.1

282.3
283.0
282.7
284.9
285.0
284.2

July
Aug

. .

sept ::::::::::::::::.:
Oct
Nov
Dec

1986: Jan
Feb
Mar
Apr

May:..::.:"::::::::::.::::..

See next page for continuation of table.




313

TABLE B-60.—Producer price indexes by stage of processing, 1947-86—Continued
[1967=100]
Intermediate materials, supplies, and components

Year or month
Total

Foods
and
feeds 2

724

For
manufacturing

For
construction

Processed
fuels
and
lubricants

Materials and
components
Other

Crude materials for further processing

Containers

Supplies

Total

Foodstuffs
and
feedstuffs

Other

Total

Fuel

Other

1947
1948
1949

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
81.0
76.3

101.2
110.9
96.0

111.7
120.8
100.3

66.6
78.7
78.3

90.6
100.7
91.6

1950
1951
1952
1953
1954
1955
1956
1957
1958
1959

78.6
88.1
85.5
86.0
86.5
88.1
92.0
94.1
94.3
95.6

77.7
87.0
84.3
85.3
85.7
88.3
92.6
95.0
94.8
96.4

78.1
88.5
84.8
86.2
86.3
88.4
92.6
94.8
95.2
96.5

77.0
84.3
83.7
85.1
85.5
88.9
93.5
94.0
94.0
96.6

89.9
93.9
92.8
93.4
93.3
93.3
96.2
101.9
96.0
95.6

72.0
84.5
79.9
80.0
81.5
82.6
88.6
92.5
94.7
94.2

78.9
88.8
88.8
84.3
86.3
84.8
87.1
88.0
90.0
91.2

104.6
120.1
110.3
101.9
101.0
97.1
97.6
99.8
102.0
99.4

107.6
124.5
117.2
104.9
104.9
95.1
93.1
97.2
103.0
96.2

77.9
79.4
79.9
82.7
79.0
78.8
84.4
89.2
90.3
91.9

104.7
120.7
104.6
100.1
98.2
103.8
107.6
106.2
102.2
105.8

1960
1961
1962
1963
1964
1965
1966
1967
1968
1969

95.6
95.0
94.9
95.2
955
96.8
99.2
100.0
102.3
105.8

99.4
102.7

96.8
95.5
95.3
95.0
95.6
96.9
98.9
100.0
102.5
106.1

96.5
95.3
94.7
94.9
95.9
97.4
99.3
100.0
102.2
105.8

95.9
94.6
94.2
94.5
95.4
96.2
98.8
100.0
105.0
110.8

98.2
99.4
99.0
98.1
96.0
97.4
99.2
100.0
97.6
98.5

95.5
94.7
95.9
94.7
94.0
95.8
98.4
100.0
102.4
106.3

90.7
91.8
93.8
95.2
94.3
95.2
99.4
100.0
101.0
102.8

97.0
96.5
97.5
95.4
94.5
99.3
105.7
100.0
101.6
108.4

95.1
93.8
95.7
92.9
90.8
97.1
105.9
100.0
101.3
109.3

102.2
106.8

92.8
92.6
92.1
93.2
92.8
93.5
96.3
100.0
102.3
106.6

101.4
102.5
102.0
100.7
102.4
104.5
106.7
100.0
102.1
106.9

109.9
114.1
118.7
131.6
162.9
180.0
189.1
201.5
215.6
243.2

109.1
111.7
118.5
168.4
200.2
195.3
185.3
190.5
203.1
226.1

109.9
114.3
118.9
128.1
159.5
178.6
189.4
202.3
216.5
244.4

110.0
112.8
117.0
127.7
162.2
178.7
185.4
195.4
208.7
234.4

112.6
119.7
126.2
136.7
161.6
176.4
188.4
203.4
224.7
247.4

105.0
115.2
118.9
131.5
199.1
233.0
250.1
282.5
295.3
364.8

111.4
116.6
121.9
129.2
152.2
171.4
180.2
188.3
202.8
226.8

108.0
111.0
115.6
140.6
154.5
168.1
179.0
188.7
198.5
218.2

112.3
115.1
127.6
174.0
196.1
196.9
202.7
209.2
234.4
274.3

112.0
114.2
127.5
180.0
189.4
191.8
190.2
192.1
216.2
247.9

112.7
117.0
128.0
162.5
208.9
206.9
228.5
245.0
272.3
330.0

122.6
139.0
148.7
164.5
219.4
271.5
305.3
372.1
426.8
507.6

109.8
110.7
121.9
161.5
205.4
188.3
206.7
212.2
233.1
284.5

280.3
306.0
310.4
312.3
320.0
318.7
307.6

252.6
250.3
239.4
247.9
253.1
232.8
230.2

282.3
310.1
315.7
317.1
325.0
325.0
313.3

265.7
286.1
289.8
293.4
301.8
299.5
296.1

268.3
287.6
293.7
301.8
310.3
315.2
317.5

503.0
595.4
591.7
564.8
566.2
548.9
430.3

254.5
276.1
285.6
286.6
302.3
311.2
315.1

244.5
263.8
272.1
277.1
283.4
284.2
287.3

304.6
329.0
319.5
323.6
330.8
306.1
280.0

259.2
257.4
247.8
252.2
259.5
235.0
230.6

401.0
482.3
473.9
477.4
484.5
459.2
386.8

615.0
751.2
886.1
931.5
931.3
909.6
817.3

346.1
413.7
376.8
372.2
380.5
355.3
286.4

1985: Jan
Feb
Mar
Apr
May
June

319.5
318.7
318.6
319.3
319.9
319.3

240.7
239.2
236.7
235.4
232.6
232.2

325.4
324.5
324.7
325.5
326.4
325.7

300.6
300.5
300.0
300.6
300.5
300.3

313.4
313.3
313.5
314.0
315.9
317.3

556.3
546.3
547.9
552.3
558.0
549.1

311.1
311.8
313.1
312.4
311.7
312.0

283.9
283.8
283.8
283.7
283.4
283.3

318.9
318.1
312.3
311.0
309.1
305.6

250.7
250.0
242.9
239.9
236.3
233.7

466.0
465.1
462.0
464.2
466.0
460.5

916.6
930.5
910.8
915.0
938.8
924.8

361.9
358.2
358.4
360.2
357.7
354.0

July
Aug
Sept
Oct
Nov
Dec

318.6
317.9
317.7
317.6
318.1
318.9

231.7
227.1
225.4
228.6
231.4
232.7

325.0
324.5
324.4
324.1
324.5
325.3

299.8
299.1
298.4
298.0
297.7
297.9

316.9
316.5
315.6
315.5
315.0
315.7

544.0
539.8
542.4
542.6
550.5
557.2

311.4
310.3
309.9
310.4
309.8
310.6

283.6
284.1
284.5
285.1
285.6
285.7

303.9
295.3
291.8
297.8
304.7
304.3

231.6
221.0
215.4
224.6
236.6
236.8

459.6
454.7
455.4
455.3
451.6
450.0

921.6
904.0
903.0
898.6
880.0
871.6

353.5
351.2
352.2
352.8
352.0
351.6

1986: Jan
Feb
Mar
Apr
May
June

317.4
313.5
309.5
307.1
306.7
306.8

232.6
228.9
227.8
227.0
229.3
229.0

323.6
319.7
315.5
313.0
312.4
312.5

297.1
296.5
296.4
295.5
295.4
295.1

316.2
316.5
317.0
318.3
318.3
317.8

540.8
500.8
453.4
428.5
424.2
426.7

311.2
310.9
312.3
312.8
313.6
314.0

286.6
286.4
286.8
287.2
287.1
287.3

301.0
289.0
281.1
273.7
279.4
276.9

231.7
227.2
224.4
220.3
229.9
227.1

450.6
422.7
403.9
389.4
386.9
384.8

871.9
855.6
891.8
865.4
859.5
837.4

352.4
321.8
290.5
278.8
277.1
279.5

304.8
304.5
306.1
304.9
304.9
305.0

230.3
232.1
233.3
229.8
230.9
231.7

310.4
309.9
311.5
310.4
310.4
310.5

295.6
296.0
296.2
296.5
296.5
296.2

317.9
317.6
317.9
317.3
317.6
317.0

401.1
395.0
409.1
395.1
393.2
396.2

314.6
316.2
317.8
318.4
319.6
319.7

287.2
287.1
287.9
287.5
287.9
288.3

277.7
276.3
275.5
276.7
278.4
274.8

234.4
238.1
231.9
233.7
235.9
232.8

370.8
358.3
369.6
369.8
369.7
365.1

792.3
783.9
781.3
773.2
766.0
729.4

272.6
259.8
273.5
275.3
276.7
278.6

1970
1971
1972 ..
1973
1974
1975
1976.
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986

.

1

.

July
Aug J
Sept
Oct
Nov
Dec

"ibb'.b"

ibb.b

1
Data have been revised through August 1986 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.




314

TABLE B-61.—Producer price indexes by stage of processing, special groups, 1974-86
[1967=100]
Finished goods

Intermediate materials, supplies,
and components

Excluding food
energy
Year or month

1974
1975. .
1976
1977
1978
1979

Total

Foods

Energy

Total

Consumer
Cap- goods
ital excludequiping
ment foods
and
energy

Crude materials for further
processing

Total

Foods
and
feeds1

Energy

Other

Total

Foodstuffs
and
feedstuffs

Energy

Other

147.5
163.4
170.6
181.7
195.9
217.7

166.9
181.0
180.4
189.9
207.2
226.2

215.2
252.4
282.3
326.7
347.7
469.9

133.3
148.5
156.8
166.3
178.7
194.7

141.0
162.5
173.4
184.6
199.2
216.5

129.1
141.0
148.1
156.6
168.0
183.3

162.9
180.0
189.1
201.5
215.6
243.2

200.2
195.3
185.3
190.5
203.1
226.1

188.7
220.8
236.8
267.3
280.3
348.6

156.7
174.7
185.0
196.1
210.4
234.2

196.1
196.9
202.7
209.2
234.4
274.3

189.4 223.0 198.3
191.8 266.9 165.0
190.2 283.1 191.0
192.1 323.5 190.1
216.2 362.5 209.2
247.9 439.9 253.0

1980
1981
1982
1983
1984
1985 2
1986

247.0
269.8
280.7
285.2
291.1
293.7
289.6

239.5
253.6
259.3
261.8
273.3
271.2
278.0

701.3
835.4
822.9
783.6
750.3
720.9
518.5

216.4
235.1
248.6
256.1
262.3
268.7
274.9

239.8
264.3
279.4
287.2
294.0
300.5
306.5

204.2
220.1
232.6
239.9
245.9
252.1
258.4

280.3
306.0
310.4
312.3
320.0
318.7
307.6

252.6
250.3
239.4
247.9
253.1
232.8
230.2

484.9
573.6
570.8
543.9
545.0
528.3
414.5

261.8
283.4
290.1
294.8
303.6
305.2
304.4

304.6
329.0
319.5
323.6
330.8
306.1
280.0

259.2
257.4
247.8
252.2
259.5
235.0
230.6

586.1
783.4
801.5
791.1
785.2
748.1
575.8

269.4
266.0
238.1
250.7
266.1
249.7
245.6

1985: Jan
Feb
Mar
Apr
May
June

292.1
292.6
292.1
293.1
294.1
294.0

273.7
275.6
273.7
272.2
269.5
268.7

711.7
692.0
693.2
714.9
746.1
741.4

266.0
267.2
267.2
267.7
268.2
268.6

297.4
299.2
299.3
299.9
300.3
300.5

249.6
250.5
250.5
251.1
251.5
252.0

319.5
318.7
318.6
319.3
319.9
319.3

240.7
239.2
236.7
235.4
232.6
232.2

535.7
526.0
527.5
531.5
536.7
528.6

305.1
305.3
305.2
305.6
305.9
306.0

318.9
318.1
312.3
311.0
309.1
305.6

250.7
250.0
242.9
239.9
236.3
233.7

757.5
754.1
746.4
749.1
760.7
754.5

254.4
255.3
255.4
257.3
252.3
247.4

294.8
293.5
290.0
294.7
296.4
297.2

271.2
268.7
265.7
268.2
271.8
275.0

733.8
719.9
718.2
716.5
729.5
733.8

269.4
269.4
265.7
271.6
271.8
271.4

300.8
301.0
296.3
303.5
303.8
303.7

252.9
252.9
249.6
254.9
255.0
254.6

318.6
317.9
317.7
317.6
318.1
318.9

231.7
227.1
225.4
228.6
231.4
232.7

523.8
519.8
522.3
522.2
529.3
536.2

305.6
305.5
305.0
304.6
304.2
304.5

303.9
295.3
291.8
297.8
304.7
304.3

231.6
221.0
215.4
224.6
236.6
236.8

752.6
742.9
743.2
743.1
737.1
735.6

247.2
245.8
246.7
246.5
244.6
242.9

fc=
June

296.0
291.9
288.0
287.2
288.9
289.3

275.0
272.0
271.6
271.9
274.8
275.1

700.9
629.3
554.1
517.2
534.1
536.4

272.1
272.5
272.5
273.9
274.0
274.3

303.9
304.3
304.3
305.6
305.7
306.1

255.5
256.0
256.0
257.3
257.5
257.7

317.4
313.5
309.5
307.1
306.7
306.8

232.6
228.9
227.8
227.0
229.3
229.0

520.0
482.0
437.0
413.3
409.1
411.1

304.3
304.2
304.5
304.3
304.0
303.8

301.0
289.0
281.1
273.7
279.4
276.9

231.7 732.8 245.8
227.2 662.9 246.5
224.4 614.5 247.9
220.3 577.0 249.1
229.9 570.6 249.3
227.1 563.9 250.1

July 2
Aug
Sept
Oct
Nov
Dec

287.6
288.1
287.5
290.5
290.7
289.9

280.4
284.0
282.2
282.9
283.0
282.9

461.6
456.2
477.2
454.9
452.9
446.8

275.0 306.4
274.8 306.2
273.1 304.2
278.8 310.1
279.1 310.5
278.5 310.1

258.7
258.4
256.9
262.4
262.7
262.0

304.8
304.5
306.1
304.9
304.9
305.0

230.3 386.6
232.1 380.7
233.3 393.8
229.8 380.5
230.9 378.7
231.7 381.3

304.1
304.2
304.7
304.9
305.1
304.8

277.7
276.3
275.5
276.7
278.4
274.8

234.4
238.1
231.9
233.7
235.9
232.8

.

July
Aug
Sept
Oct..
Nov
Dec

1986: Jan
Feb
Mar

528.8
520.4
544.1
539.2
535.3
519.5

250.0
235.9
239.2
242.3
244.5
246.9

1
Intermediate materials for food manufacturing and feeds.
2
Data have been revised through August 1986 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.




315

TABLE B-62.—Producer price indexes for major commodity groups, 1947-86

[1967 = 100]
Industrial commodities

Farm products and processed
foods and feeds
Year or month
Total

Farm
products

Processed
foods and
feeds

Total

Textile
products
and
apparel

Hides,
skins,
leather,
and
related
products

Fuels and
related
products,
and
power l

Chemicals
and allied
products l

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
1982
1983
1984
1985 2
1986

94.3
101.5
89.6
93.9
106.9
102.7
96.0
95.7
91.2
90.6
93.7
98.1
93.5
93.7
93.7
94.7
93.8
93.2
97.1
103.5
100.0
102.4
108.0
111.7
113.9
122.4
159.1
177.4
184.2
183.1
188.8
206.6
229.8
244.7
251.5
248.9
253.9
262.4
250.5
252.0

109.4
117.5
101.6
106.7
124.2
117.2
106.2
104.7
98.2
96.9
99.5
103.9
97.5
97.2
96.3
98.0
96.0
94.6
98.7
105.9
100.0
102.5
109.1
111.0
112.9
125.0
176.3
187.7
186.7
191.0
192.5
212.5
241.4
249.4
254.9
242.4
248.2
255.8
230.5
224.7

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
251.5
255.9
265.0
260.4
265.1

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
312.3
315.7
322.6
323.8
312.1

103.6
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
139.1
137.9
148.2
154.0
159.8
168.7
183.5
199.7
204.6
205.1
210.0
210.4
211.1

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
260.9
262.6
271.1
286.3
286.1
296.7

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
694.5
693.2
664.7
656.8
633.6
483.5

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
287.6
292.3
293.0
300.8
303.2
299.7

1985: Jan
Feb
Mar
Apr
May
June

257.6
258.0
254.6
253.1
250.2
249.1

243.2
245.3
238.8
236.8
230.4
229.4

264.4
263.9
262.3
260.9
260.0
258.8

322.9
322.2
322.5
323.8
325.3
324.8

210.3
210.6
210.5
210.7
210.5
210.2

283.7
283.7
282.4
284.7
284.2
285.5

636.8
625.3
625.3
633.9
647.3
640.6

301.6
302.2
302.6
303.3
303.2
303.7

July
Aue
Sept
Oct
Nov
Dec

249.6
244.0
240.9
245.1
251.0
252.6

229.3
218.0
212.8
219.9
230.4
232.2

259.7
257.3
255.3
257.8
261.2
262.8

324.4
323.7
322.3
324.2
324.7
325.1

210.2
210.4
210.3
210.1
210.6
210.6

284.6
286.3
287.2
288.6
290.0
292.4

635.4
627.6
628.6
628.0
634.7
639.6

304.6
304.6
304.7
303.0
302.6
301.9

1986: Jan
Feb
Mar
Apr

251.5
248.3
247.3
246.2
250.8
249.8

227.4
221.8
220.2
218.6
227.0
222.6

263.3
261.4
260.7
259.9
262.3
263.2

323.8
318.9
314.0
311.6
311.6
311.8

210.7
210.9
211.4
211.1
211.2
211.1

293.7
294.1
293.6
295.0
296.5
297.9

620.3
567.0
512.1
482.4
483.8
484.7

305.1
303.7
303.8
300.2
298.5
298.4

254.2
255.5
254.6
255.4
255.2
254.6

228.6
227.0
221.7
225.4
229.3
226.8

266.8
269.6
269.0
268.2
267.9
268.4

308.5
307.9
308.8
309.3
309.8
309.3

211.4
211.2
210.9
210.9
211.3
211.0

297.4
297.0
297.1
297.5
299.1
301.5

444.3
438.4
455.3
440.1
438.2
435.9

298.4
297.0
297.1
298.0
298.5
297.5

May

June
July.2
Aug
Sept
Oct
Nov
Dec

::rr

1
Prices for some items in this grouping are lag jed and refer to 1 month earlier than the index month; the lag for refined petroleum
items was eliminated beginning with the June 1981 data.
See next page for continuation of table.




316

TABLE B-62.—Producer price indexes for major commodity groups, 1947-86—Continued
[1967=100]
Industrial commodities— Continued

Pulp,
NonMetals Machinery Furniture
Rubber Lumber
paper,
and
metallic
and
and
and
and
and
metal equipment household mineral
plastic
wood
allied
durables products
products products products products

Year or month

. . .

Aug
Sept

: : : : : : ".: :

Oct
Nov
Dec

1986: Jan
Feb
Mar
Apr

Say :::::::.::::::.: :r:::
June
July 2
Aujt

sept
Oct
Nov
Dec

Miscellaneous
products

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
232.6
241.4
243.2
246.8
245.9
246.1

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
1982
1983
1984
1985 2
1986 .
1985: J a n
Feb
Mar
Apr
May
June
July

Transportation
equipment:
Motor
vehicles
and
equipment 3

.

.

::::.::.. .". .

73.4
84.0
77.7
89.3
97.2
94.4
94.3
92.6
97.1
98.5
93.5
92.4
98.8
95.3
91.0
91.6
93.5
95.4
95.9
100.2
100.0
113.3
125.3
113.6
127.3
144.3
177.2
183.6
176.9
205.6
236.3
276.0
300.4
288.9
292.8
284.7
307.1
307.4
303.6
305.3

72.5
75.7
72.4
74.3
88.0
85.7
85.5
85.5
87.8
93.6
95.4
96.4
97.3
98.1
95.2
96.3
95.6
95.4
96.2
98.8
100.0
101.1
104.0
108.2
110.1
113.4
122.1
151.7
170.4
179.4
186.4
195.6
219.0
249.2
273.8
288.7
298.1
318.5
327.2
335.3

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
301.6
307.2
316.1
314.9
311.3

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
263.3
278.8
286.4
293.1
298.9
303.3

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
198.5
206.9
214.0
218.7
221.6
223.9

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
320.2
325.2
337.3
347.8
352.0

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
1192
129.2
144.6
153.8
163.7
176.0
190.5
208.8
237.6
251.3
256.8
261.5
267.3
274.4

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
265.7
276.4
289.6
295.9
302.3
308.6

246.7
246.4
246.5
246.6
246.4
246.2
245.8
244.8
245.1
245.2
245.5
246.0

304.4
303.4
303.1
301.5
306.8
313.1
310.1
305.5
300.5
299.4
296.9
298.1

327.1
327.6
327.7
327.6
327.3
327.1
326.8
326.9
326.6
327.2
327.3
327.4

315.0
315.6
315.4
316.8
316.4
314.9
314.5
314.7
314.4
314.2
313.3
313.4

297.0
297.6
297.8
298.1
298.4
298.9
299.2
299.6
299.8
299.9
300.1
300.4

220.3
220.8
221.1
221.7
221.7
221.6
222.0
222.0
221.9
221.8
222.2
222.4

341.7
342.6
343.9
345.5
348.1
349.3
349.7
350.3
349.9
350.5
350.5
351.1

265.2
266.7
266.2
266.2
267.3
267.5
267.7
267.7
254.8
273.3
273.2
271.9

299.2
300.7
300.6
301.6
301.4
301.3
303.5
303.4
303.7
304.2
304.4
304.0

246.9
247.5
246.7
246.7
246.3
246.1

298.9
297.1
301.2
308.6
308.1
306.0

330.6
331.1
331.3
332.8
333.8
334.2

311.0
311.2
311.2
311.0
310.6
310.7

301.1
301.6
302.0
302.7
302.9
303.1

222.7
223.0
223.2
223.6
224.1
224.2

352.5
352.3
352.4
352.8
353.6
353.0

270.3
270.8
270.2
272.9
272.6
273.0

307.3
306.9
307.2
307.3
307.2
306.8

245.4
246.2
246.3
245.2
244.4
244.9

306.8
307.2
308.3
307.0
307.6
306.7

335.2
336.4
337.9
339.5
340.5
340.6

310.4
311.1
311.8
312.1
312.2
311.8

303.9
304.1
304.3
304.4
304.9
305.0

224.1
224.2
223.9
224.4
224.6
225.0

352.9
351.8
351.1
351.2
350.9
349.8

273.3
272.0
265.7
284.4
284.2
282.9

309.4
309.7
310.0
310.4
310.5
309.9

2
Data have been revised through August 1986 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.




317

TABLE B-63.—Changes in producer price indexes for finished goods, 1955-86
[Percent change]
Total
finished
goods
Year or month

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
1982
1983
1984
1985 2
1986

Finished
consumer
foods

Finished
energy
goods

Finished goods excluding consumer foods

Finished goods
excluding foods
and energy

Total
Consumer
Capital
goods
equipment
Dec. to Year Dec. to Year
Dec. to Year Dec. to Year
1
1
Dec. to year Dec. to year Dec. to Year Dec. to Year Dec. to Year
Dec.1 to year Dec.1 to year
1
1
1
Dec. to year Dec. to year Dec. to year

1.2
4.2
3.2
.5
_4
1.8
-.5
.1
-.2
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
7.1
3.7
.6
1.7
1.8
-2.5

0.2
2.8
3.6
2.3
0

.8

-is

.4
1.7
3.2
1.2
2.8
3.7
3.5
3.1
3.1
9.1
15.3
10.8
4.4
6.5
7.8
11.1
13.5
9.2
4.0
1.6
2.1
.9
-1.4

29
3.6
5.3
.4
-3.7
5.2
-1.8

-li3
.4
9.1
1.4
-.4
4.8
8.2
-2.5
5.9
8.0
22.5
13.0
5.5
25
6.9
11.7
7.4
7.5
1.4
2.1
2.3
3.5
.5
2.9

1.7
2.5
1.7
.2
.8
.4
-.3

-2.5
-.2
5i8
-4.7
2.2
-.4
.9
-1.2
3.8
6.5
-1.6
3.6
6.2
3.2
1.6
5.6
20.3
14.0
8.4
5.3
9.1
9.2
5.9
5.9
2.2
1.0
4.4
-.8
2.5

£4
3.4
4.3
2.1
2.1
6.6
21.2
7.2
6.2
6.9
8.3
14.8
13.3
8.8
4.1
.0
2.2
-4.2

2.6
2.7
3.5
3.7
2.0
4.1
16.0
12.1
6.3
7.0
7.3
11.9
16.2
10.3
4.6
1.7
1.4
1.4
-2.6

il
9
1.7
2.1
2.0
2.9
3.9
2.0
2.0
7.4
20.5
6.7
6.0
6.7
8.5
17.5
14.2
8.5
4.2
-.8
.8
2.0
-6.9

0.8
2.4
2.5
1
1.3
.4
-.1
2
0
-.1
7
1.6
1.9
2.1
2.4
3.0
3.4
1.9
4.5
16.9
10.5
6.2
7.2
7.1
13.3
18.6
10.2
4.1
1.3
.9
1.1
-4.7

5.6
8.3
4.3
1.3
1.0
.1
.2
.3
.5

3.0
7.4
6.2
26
1.9
.2
.1
.4
.2
1.0
12
2.5
3.3
3.5
3.3
4.8
4.1
2.5
3.3
14.2
16.4
15.2
11.5
6.7
12.1
6.5
7.9
8.5
8.7
58.0
27.8
10.8
14.1
10.2
1
5.7
2.8 -9.2
2.4 -4.1
2.2
-.3
2.0 -39.1

15
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
3.9
1.9
1.8
2.7
2.1

17.3
11.8
15.7
6.4
35.1
49.2
19.1
-1.5
-4.8
-4.2
-3.9
-28.1

6.1
5.6
6.3
8.3
9.4
10.7
7.8
4.9
1.8
2.1
2.7
2.6

11.4
5.6
6.1
7.5
9.0
11.1
8.6
5.7
3.0
2.4
2.4
2.3

Percent change from preceding month
Unadjusted

Season-

S

Unadjusted

justed

1985: Jan
Feb
Mar

fc
June
July
Aug
Sept
Oct
Nov
Dec
1986: Jan
Feb
Mar
Mayiiiiii
June
July
Aug 2
Sept
Oct
Nov
Dec

0.0 -0.1
.2
0
-.2
.0
.3
.5
.3
-'.2
-.0
.2
.3
-.4
-.3
-1.2
-.5
1.6
.9
.6
.3
ie
_4
-.7
-li4 -1.6
-1.3 -1.0
-.3 _ 5
.6
is
.1
-.6
-.6
.2
.3
-.2
.5
1.0
.3
.1
-.3
o'

Season-

S

Unadjusted

justed

0.0

-0.4
-.0
-.4
-.6
-.8

0.1
-.0
.0
.6
.8
-To
.0
-.3
.1
.9
.9
-.7
-.3
-.9
-1.1
-1.0 -1.2
1.7
1.8
.9
.4
1.3
1.1
1.2
0
1.0
-.6
0
-.6
-1.7 -1.5
-1.1
-.1
.1 -1.7
.1
.1 -.4
.4
1.1
1.3
.1
.1
-.0
1.9
1.8 -1.4
1.3
-.2
1.6
-.6
-.3 -.1
1.4
.2
.9
-.1
.1
.0
-.3
-.0
-.4
-i7

Season-

%

Unadjusted

justed

0.0 -0.2
-.3
-.0
.2
.0
.8
.9
1.0
.6
0
-.3
.1
.0
-.2
-.5
-.4 -1.0
.7
1.6
.4
.5
.5
0
-.8 -.8
-1.6 -2.2
-1.3 -2.5
-.8
-.8
.2
.6
.1
.2
-1.5 -2.1
—1
i7
.1
lio
.0
.3
-.4
.2

1
Changes
2

Season-

Unadjusted

-i4
0
-.3
-.4
.6
'.6
-1.0
-2.3
-2.0
-1.2
.3
.1
-2.2
—1

-io

.3
.2

Unadjusted

justed

justed

-0.2
-.2
.2
1.2

Season-

0.6
.6
.0
.2
.1
.1
.1

-1.6
2.4
.1
-.0
.1
.1
0
.4
.0
.1
.1
-.1
-.7
1.9
.1
-.1

0.4
.6
.2
.1
.1
.1
.1
.2

lio

.2
.1
-.2
.1

is

.0
.2
.1
.1
.4
.5

o'

Season-

%

Unadjusted

%

justed

justed

-3.3 -2.6
-2.8 -2.5
.2
-.9
6.1
3.1
4.4
3.0
-.6 -3.3
-1.0 -1.1
-1.9 -1.5
-.4
-.2
.1
-.2
2.3
1.8
2.3
.6
-4.5 -4.4
-10.2 -9.9
-11.9 -12.0
-6.7 -7.8
1.8
3.3
.1
.4
-13.9 -13.9
-.8
-1.2
4.4
4.6
-4.7 -4.3
-.4
-.0
-1.3
.2

Season-

0.6
.5
0
.2
.2
.1
.3
0
-1.4
2.2
.1
-.1
.3
.1
0
.5
.0
.1
.3
-.1
-.6
2.1
.1

0.5
.4
.4
0
.1
.3
.3
.1
_4

is

.2
.2
-.1
0
.5
.3
.0
.1
.2
.0
.3
.7
.3
.1

from December to December are based on unadjusted indexes.
Data have been revised through August 1986 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.




318

MONEY STOCK, CREDIT, AND FINANCE
TABLE B-64.—Money stock, liquid assets, and debt measures, 1959-86
[Averages of daily figures; billions of dollars, seasonally adjusted]
Ml

M2

M3

L

Debt1

Sum of
currency,
demand
deposits,
travelers
checks, and
other
checkable
deposits
(OCDs)

Ml plus
overnight
RPs and
Eurodollars,
MMMF
balances
(general
purpose and
broker/
dealer),
MMDAs, and
savings and
small time
deposits

M2 plus
large time
deposits,
term RPs,
term
Eurodollars,
and
institutiononly MMMF
balances

M3 plus •
other liquid
assets

Debt oh
domestic
nonfinancial
sectors
(monthly
average)

December:
1959

141.0

297.8

299.8

388.6

673.0

1960
1961
1962
1963
1964

141.8
146.5
149.2
154.7
161.9

312.3
335.5
362.7
393.2
424.8

315.3
341.0
371.4
406.0
442.5

403.6
430.8
466.1
503.8
540.4

708.2
750.4
802.8
858.5
921.6

0.6
3.3
1.8
3.7
4.7

4.9
7.4
8.1
8.4
8.0

5.2
8.2
8.9
9.3
9.0

5.2
6.0
7.0
6.9
7.4

1965
1966
1967
1968
1969

169.5
173.7
185.1
199.4
205.8

459.4
480.0
524.3
566.3
589.5

482.2
505.1
557.1
606.2
615.0

584.4
614.8
666.5
728.9
763.5

990.8
1.058.2
1,134.8
1,230.1
1,320.0

4.7
2.5
6.6
7.7
3.2

8.1
4.5
9.2
8.0
4.1

9.0
4.7
10.3
8.8
1.5

7.5
6.8
7.2
8.4
7.3

1970
1971
1972
1973
1974

216.6
230.8
252.0
265.9
277.5

628.2
712.7
805.1
861.0
908.4

677.5
776.2
886.0
985.0
1,070.4

816.3
903.1
1,023.0
1,141.7
1,249.2

1,410.6
1,544.2
1,700.5
1,889.5
2,062.7

5.2
6.6
9.2
5.5
4.4

6.6
13.5
13.0
6.9
5.5

10.2
14.6
14.1
11.2
8.7

6.9
9.5
10.1
11.1
9.2

1975
1976
1977
1978
1979

291.1
310.4
335.3
363.0
388.7

1,023.1
1,163.6
1,286.6
1,388.9
1,497.5

1,172.2
1,311.8
1,472.6
1,646.4
1,803.2

1,366.6
1,515.9
1,704.1
1,909.0
2,114.8

2,245.6
2,485.8
2,800.2
3,173.1
3,556.1

4.9
6.6
8.0
8.3
7.1

12.6
13.7
10.6
8.0
7.8

9.5
11.9
12.3
11.8
9.5

8.9
10.7
12.6
13.3
12.1

1980
1981...
1982
1983
1984

414.2
441.1
479.9
527.1
558.5

1,630.3
1,792.8
1,952.6
2,186.0
2,373.8

1,987.4
2,233.6
2,443.5
2,697.3
2,986.6

2,323.3
2,593.7
2,850.1
3,162.7
3,532.4

3,898.9
4,279.2
4,661.7
5,210.1
5,949.8

6.6
6.5
8.8
9.8
6.0

8.9
10.0
8.9
12.0
8.6

10.2
12.4
9.4
10.4
10.7

9.6
9.8
8.9
11.8
14.2

1985
1986 "

626.6
730.4

2,566.5
2,804.7

3,201.2
3,488.1

3,839.5

6,778.6

12.2
16.6

8.1
9.3

7.2
9.0

13.9

1986: Jan

627.2
631.0
638.4
646.1
658.7
666.8

2,569.9
2,577.7
2,592.4
2,622.2
2,649.7
2,670.8

3,224.5
3,241.5
3,262.6
3,293.7
3,315.4
3,339.0

3,862.2
3,881.3
3,895.1
3,918.6
3,951.0
3,973.5

6,878.5
6,923.3
6,968.5
7,029.1
7,101.3
7,172.2

10.7
8.9
9.0
10.7
12.8
13.2

6.0
5.0
5.0
6.7
7.9
8.3

7.3
7.2
7.2
8.2
8.6
8.8

16.0
15.2
14.7
14.6
14.0
12.0

676.0
687.6
693.2
701.2
713.5
730.4

2,699.2
2,724.3
2,740.8
2,765.2
2,781.4
2,804.7

3,375.1
3,400.7
3,425.5
3,444.2
3,461.2
3,488.1

4,003.5
4,031.1
4,059.3
4,082.0
4,111.8

7,238.1
7,314.8
7,387.2
7,444.4
7,519.3

16.2
18.7
17.9
17.8
17.3
20.0

10.3
11.7
11.8
11.2
10.2
10.3

9.6
10.1
10.2
9.3
9.0
9.1

10.7
11.6
12.4
12.2
12.1

Year
and
month

Feb
Mar
Apr
May
June

July

Aug
Sept

Oct
Nov"
Dec ".

Percent change from year or 6
months earlier2

Ml

M2

M3

Debt

8.0

1
Consists of outstanding credit market debt of the U.S. Government, State and local government and private nonfinancial sectors;
data from flow of funds accounts.
2
Annual changes are from December to December, and monthly changes are from 6 months earlier at an annual rate.

Note.—The nontransactions portion of M2 is seasonally adjusted as a whole to reduce distortions caused by substantial portfolio
shifts arising from regulatory and financial changes in recent vears, especially shifts to MMDAs in 1983. A similar procedure is used to
seasonally adjust the remaining nontransactions balances in Ml See Table 6-65 for components.
Source: Board of Governors of the Federal Reserve System.




319

TABLE B-65.—Components of money stock measures and liquid assets, 1959-86
[Averages of daily figures; billions of dollars, seasonally adjusted, except as noted]

Year
and
month

Currency

Travelers
checks

Demand
deposits

Overnight
repurchase
agreeOther
ments
checkable
(RPs)
deposits net, plus
(OCDs) overnight
Eurodollars
NSA

Money market mutual
fund (MMMF)
balances
General
purpose
and
broker/
dealer

Institution only

Money
market
deposit
accounts
(MMDAs)

NSA

NSA

NSA

Savings
deposits

December:
1959

29.0

0.4

111.6

0.0

0.0

0.0

0.0

0.0

146.4

1960 .
1961
1962 .
1963
1964

28.9
29.5
30.6
32.5
34.3

.4
.4
.4
.5
.5

112.5
116.5
118.2
121.7
127.0

.0
.0
.0

.0
.0
.0
.0
.0

.0
.0
.0
.0
.0

.0
.0
.0
.0
.0

.0
.0
.0
.0
.0

159.1
175.5
194.8
214.4
235.2

1965
1966
1967
1968
1969

36.3
38.3
40.4
43.4
46.1

.6
.6
.8
.8

132.5
134.6
143.9
155.1
158.8

.0
.0
.0
.0
2.2

.0
.0
.0
.0
.0

.0
.0
.0
.0
.0

.0
.0
.0
.0
.0

256.9
253.1
263.7
268.9
263.7

1970
1971
1972
1973
1974

49.2
52.6
56.8
61.6
67.9

1.0
1.1
1.3
1.5
1.8

166.3
176.9
193.7
202.4
207.4

.1
.2
.2

'A

1.3
2.3
2.8
5.3
5.6

.0
.0
.0
.1
1.7

.0
.0
.0
.0
.2

.0
.0
.0
.0
.0

261.0
292.2
321.4
326.7
338.5

1975
1976
1977.
1978
1979

73.8
80.6
88.6
97.6
106.4

2.3
2.8
3.1
3.5
3.8

214.1
224.3
239.4
253.5
261.1

.9
2.7
4.2
8.5
17.4

5.8
10.6
14.7
20.3
21.2

2.7
2.4
2.4
6.4
33.4

.4
.6
.9
3.1
9.5

.0
.0
.0
.0
.0

388.8
453.1
492.2
482.0
423.9

1980
1981
1982
1983
1984

116.7
124.1
134.3
148.3
158.5

4.2
4.4
4.3
4.9
5.2

265.3
234.6
237.9
242.7
248.4

28.0
78.0
103.4
131.3
146.3

28.3
35.9
38.8
53.8
56.3

61.6
150.6
185.2
138.2
167.5

15.2
38.0
51.1
43.2
62.7

.0
.0
43.2
379.2
417.0

401.4
344.8
357.9
306.6
289.7

1985
1986".

170.6
183.5

5.9
6.4

271.5
307.8

178.6
232.7

70.3
75.7

176.5
207.2

64.6
84.1

512.0
570.7

303.6
371.5

1985: Jan
Feb
Mar
Apr
May
June

159.6
160.7
161.3
161.9
163.2
164.4

5.3
5.3
5.4
5.5
5.5
5.7

249.0
251.2
251.4
251.8
255.4
259.0

149.0
152.2
154.1
156.5
158.4
161.8

60.4
64.6
63.3
57.8
61.3
60.8

171.9
175.1
177.6
176.2
172.2
175.4

65.0
62.2
59.5
59.6
63.5
67.1

435.7
450.5
460.2
462.5
466.4
478.1

289.4
289.9
289.7
289.0
290.8
293.6

July
Aug
Sept
Oct
Nov
Dec

165.3
166.9
167.7
168.7
169.8
170.6

5.8
5.9
5.9
5.9
5.9
5.9

260.4
263.1
266.4
266.0
267.8
271.5

164.8
169.0
171.5
173.7
176.7
178.6

60.8
63.8
64.5
65.2
66.4
70.3

175.8
176.8
176.7
177.0
176.8
176.5

65.0
63.6
62.3
63.3
64.5
64.6

487.2
495.2
499.8
504.1
509.5
512.0

296.7
299.7
300.3
302.3
303.7
303.6

1986: Jan
Feb
Mar . .
Apr
May
June

171.9
172.9
173.9
174.4
175.8
176.7

5.9
5.9
6.1
6.1
6.1
6.2

268.9
269.2
273.2
275.7
281.6
284.9

180.5
183.1
185.3
189.9
195.1
199.0

68.9
68.5
67.6
68.6
69.2
66.5

177.7
181.0
186.2
191.4
193.2
197.3

67.3
67.7
70.2
74.1
76.1
75.0

515.7
516.3
520.5
525.2
530.8
540.4

304.0
304.9
306.9
311.4
318.5
325.0

July
Aug

177.5
179.0
179.7
181.2
182.2
183.5

6.4
6.5
6.5
6.4
6.4
6.4

288.3
291.8
292.2
293.2
298.4
307.8

203.8
210.4
214.8
220.4
226.4
232.7

71.9
74.6
72.7
77.2
75.8
75.7

199.7
200.5
202.2
206.9
207.0
207.2

77.5
80.8
84.4
84.5
84.4
84.1

546.1
553.1
558.3
563.8
568.1
570.7

331.2
337.6
344.4
353.8
363.3
371.5

sept...:.::.:::"::"::
Oct
Nov.
Dec*

See next page for continuation of table.




320

TABLE B-65.—Components of money stock measures and liquid assets, 1959-86—Continued
[Averages of daily figures; billions of dollars, seasonally adjusted, except as noted]

December:
1959

Small
denomination
time
deposits *

Large
denomination
time
deposits *

Term
repurchase
agreements
(RPs)

Term
Eurodollars

NSA

Year
and
month

NSA

Savings
bonds

Shortterm
Treasury
securities

Bankers
acceptances

Commercial
paper

11.4

1.2

0.0

0.7

46.1

38.6

0.6

3.6

12.5

I960
1961
1962
1963
1964

2.0
39
7.0

.0

o

10.8
15.2

.0
.0
.0

.8
14
1.6
1.9
2.4

45.7
46.5
46.9
48.1
49.0

36.7
37.0
39.8
40.7
38.5

.9
1.1
1.1
1.2
1.3

5.1
5.2
6.8
7.7
9.1

.0
.0
.0
.0
2.6

1.7
2.1
2.1
2.9
2.7

49.6
50.2
51.2
51.8
51.7

40.7
43.2
38.7
46.1
59.5

1.6
1.8
1.8
2.3
3.3

10.2
14.4
17.8
22.5
34.0

3.5
3.8
3.5
5.0

148
20.1
25.5
29.2

345

1965
1966
1967
1968
1969

100.5
1204

21.2
23.1
30.9
37.4
20.4

1970
1971
1972
1973
1974

151.1
189.7
231.6
2658
287.9

45.2
57.7
73.3
111.1
144.8

1.6
2.7
3.5
6.8
7.9

2.2
2.7
3.6
5.4
8.0

52.0
54.3
57.6
60.4
63.3

48.9
36.1
40.7
49.4
52.9

12.6

34.5
32.7
35.2
41.9
50.1

1975
1976
1977
1978
1979

337.9
390.8
445.7
521.5
635.3

129.7
118.1
145.0
195.1
222.1

8.2

9.7

14.0
19.1
26.6
29.5

14.8
20.2
31.8
44.7

67.2
71.8
76.4
80.3
79.6

68.5
69.8
78.2
81.1
107.8

10.7
10.8
14.1
22.0
27.2

48.0
51.7
62.9
79.2
97.0

1980
1981
1982
1983
1984

7302
825.1
8528
785.2
8875

259.0
301.8
3278
329.9
4139

34.0
36.0

50.3
67.5
81.7
91.5

622

831

72.3
67.8
68.0
71.2
74.3

133.4
149.6
184.4
214.1
266.1

32.1
39.9
44.3
44.5
43.6

98.1
102.8
109.9
135.6
161.8

8803
8524

4365
4443

660

767
830

79.5

308.4

41.1

209.5

81 1

887.4
8852
885.0
8876
889.5
8903

415.6
4169
421.0
4259
425.0
4227

58.9

81.1

58.6

84.7

57.7

80.8

74.5
74.9
75.3
75.7
76.1
76.5

266.9
270.5
275.0
276.3
277.6
282.8

43.3
45.0
47.0
47.5
46.3
44.5

159.5
164.5
169.0
167.7
168.6
165.7

8880
880.9
8783
8757
8760
880.3

4182
421.0
4257
429.8
4329
436.5

558

776

57.3

78.8

59.7

78.2

76.7
77.2
78.0
78.5
79.0
79.5

280.1
278.3
281.6
282.1
300.7
308.4

43.7
43.6
43.2
43.9
43.1
41.1

171.6
182.9
187.2
192.5
196.4
209.5

8859
891.0
8947
8959
8912
8856

79.9
80.5
81.1
81.8
82.6

305.6
307.8
300.3
299.1
306.2
300.2

41.6
42.4
41.7
41.0
40.1
40.3

210.6
209.2
209.5
203.0
206.7
210.6

8837
8772
871.3
8618
854.9
8524

84.3

292.5
288.6
289.4
287.5
298.6

39.4
37.3
36.7
38.1
37.7

212.3
219.3
221.1
224.4
224.4

1985
1986

55.0

778

...

p

1985: Jan

Feb
Mar

Apr
May
June

July
Aug
Sept
Oct

Nov

Dec

1986- Jan
Feb
Mar
Apr

May

June
July

Aug
Sept

Oct

Nov p
Dec p

345
51.8

585
597
571

587

813
809
782

789

633

784

66.0

76.7

4479
451.3
4505
4521
4464
445 1

688

760

70.6
71.6

79.2
82.7

4459
448 1
447.2
4430
442.9
4443

750
755

786
784

78.0
17 &
81.8
81 1

81.6

715
742
753

815
798
801

787

79.9

834

853
86.4
87.8
89.9

830

1
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-64.

Source: Board of Governors of the Federal Reserve System.




321

TABLE B-66.—Aggregate reserves of depository institutions and monetary base, 1959-86
[Averages of daily figures; millions of dollars; seasonally adjusted, except as noted]

Year and month

December:
1959
I960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985 p
1986
1985- Jan
Feb
Mar
Apr
May
June
July
Aug
Sept
Oct
Nov
Dec
1986: Jan
Feb
Mar
Apr
June
July
Auc
Sept
Oct
Nov p
Dec

Adjusted for changes in reserve requirements *
Reserves of depository institutions
NonborMonerowed
NonborTotal
Required tary base
plus
rowed
extended
credit
13,654

allay::::::::::::":::

. ..

13,823
14,252
14,516
14,816
15,295
15,840
15,835
17,237
18,136
18,421
19,309
20,547
22,614
23,624
24,858
24,996
25,544
26,574
27,854
29,146
30,990
32,187
34,413
36,155
39,509
45,612
55,647
40,132
40,946
40,984
41,148
41,855
42,669
43,083
43,654
43,882
44,244
44,847
45,612
45,881
46,370
46,865
47,275
48,577
49,445
50,489
51,318
51,809
52,401
53,823
55,647

12,713
13,749
14,119
14,256
14,483
15,031
15,397
15,303
17,010
17,390
17,302
18,977
20,421
21,565
22,326
24,130
24,866
25,491
26,005
26,986
27,673
29,300
31,551
33,779
35,381
36,323
44,294
54,821
38,738
39,657
39,391
39,825
40,521
41,464
41,976
42,581
42,593
43,056
43,106
44,294
45,111
45,486
46,104
46,383
47,701
48,642
49,748
50,446
50,801
51,559
53,071
54,821

12,713
13,749
14,119
14,256
14,483
15,031
15,397
15,303
17,010
17,390
17,302
18,977
20,421
21,565
22,326
24,277
24,878
25,491
26,005
26,986
27,673
29,303
31,699
33,965
35,383
38,927
44,793
55,124
39,788
40,461
40,450
40,693
41,055
42,129
42,483
43,151
43,249
43,685
43,637
44,793
45,608
45,978
46,622
47,017
48,285
49,172
50,126
50,911
51,371
52,056
53,489
55,124

1

Borrowings of depository
institutions from the Federal
Reserve, NSA
Total

13,148

43,383

13,080
13,668
13,944
14,325
14,889
15,417
15,496
16,862
17,710
18,135
19,060
20,365
22,331
23,321
24,599
24,730
25,270
26,385
27,622
28,704
30,476
31,868
33,913
35,594
38,657
44,554
54,270
39,386
40,044
40,219
40,410
41,051
41,764
42,227
42,826
43,216
43,491
43,919
44,554
44,771
45,272
45,968
46,474
47,739
48,514
49,579
50,579
51,083
51,655
52,845
54,270

Extended
credit

941

43,364
44,392
45,639
47,890
50,240
52,916
54,992
58,406
62,485
65,625
69,634
74,327
80,867
87,384
94,578
100,717
108,288
117,401
127,981
138,950
150,280
158,116
170,152
185,384
199,173
216,721
238,801
200,776
202,496
203,337
203,972
205,853
207,932
209,105
211,208
212,289
213,566
215,253
216,721
218,404
219,788
221,262
222,359
224,904
226,631
228,300
230,587
231,634
233,439
235,921
238,801

Seasonal

74
133
260
332
264

444
532
228
746
1,119
332
126
1,050
1,298
727
130
53
569
868
1,473

1,690
636
634
774
3,186
1,318
827
1,395
1,289
1,593
1,323
1,334
1,205
1,107
1,073
1,289
1,187
1,741
1,318
770
884
761
893
876
803
741
872
1,008
841
752
827

41
32
14
13
55
135
81
116
54
33
96
113
56
38
62
71
88
135
165
151
167
221
203
172
107
56
36
56
68
73
94
108

116
144
137
99
70
38

147
12

3
148
186

2,604
499
303
1,050
803
1,059
868
534
665
507
570
656
629
530
499
497
492
518
634
584
531
378
465
570
497
418
303

Aggregate reserves incorporate adjustments for discontinuities associated with the implementation of the Monetary Control Act and
other regulatory changes to reserve requirements. For details on aggregate reserves series see Federal Reserve Bulletin.
Source: Board of Governors of the Federal Reserve System.




322

TABLE B-67.—Commercial bank loans and securities, 1972-86
[Monthly average, billions of dollars, seasonally adjusted M
Loans and leases
Year and month

December:

Total loans
and
securities

Total

Commercial
and
industrial
loans

U.S.
Government
securities

Other
securities

1972
1973
1974

572.5
647.9
713.9

390.1
460.3
520.0

137.1
165.0
196.6

89.0
88.2
86.3

93.4
99.4
107.5

1975
1976
1977
1978
1979

745.3
804.9
891.9
1,014.4
1,136.2

517.3
555.1
632.6
747.5
849.9

189.3
190.9
211.0
246.2
291.3

116.7
136.3
136.6
137.6
144.4

111.2
113.5
122.7
129.3
142.0

1980
1981
1982
1983
1984

1,240.5
1,308.2
1,401.1
1,553.5
1,722.6

915.4
968.4
1,033.9
1,123.7
1,319.7

327.4
355.9
392.5
414.0
472.9

170.6
179.2
201.9
259.7
260.9

154.5
160.6
165.3
170.1
142.1

1985
1986 P.

1,900.4
2,079.7

1,449.7
1,576.9

499.5
536.7

273.1
309.4

177.6
193.4

1985: Jan
Feb

1,736.1
1,751.1

1,329.2
1,340.5
1,355.1
1,365.7
1,377.6
1,388.2

474.5
478.4
483.2
483.9
486.1
487.6

262.8
267.9
268.1
265.4
270.2
273.1

144.2
142.7
140.6
142.5
144.7
147.2

Mar
Apr
May
June

1,763.8
1,773.6
1,792.5
1,808.5

July
Aug
Sept

1,822.2
1,833.9
1,847.2

1,855.5
1,876.0
1,900.4

1,398.2
1,408.0
1,418.0
1,424.0
1,436.8
1,449.7

488.5
489.7
492.1
492.7
495.7
499.5

275.4
275.1
275.5
274.2
276.0
273.1

148.5
150.7
153.6
157.3
163.3
177.6

1986: Jan
Feb
Mar
Apr
May
June

1,930.0
1,935.5
1,944.6
1,947.9
1,957.5
1,963.7

1,469.3
1,473.7
1,491.8
1,495.8
1,501.5
1,505.3

502.1
502.4
506.1
507.8
506.7
508.7

268.2
273.6
269.5
270.0
274.1
274.8

192.5
188.1
183.3
182.1
181.9
183.6

July

1,985.0

Aug
Sept
Oct
Nov
Dec *

2,007.7
2,029.6
2,034.0
2,049.0
2,079.7

1,513.4
1,524.5
1,534.7
1,537.7
1,549.5
1,576.9

508.7
510.4
512.1
514.1
520.3
536.7

285.4
290.9
294.3
299.6
304.8
309.4

186.1
192.3
200.7
196.7
194.8
193.4

Oct
Nov
Dec

1
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.

Note.—Data are not strictly comparable because of breaks in the series.
Source: Board of Governors of the Federal Reserve System.




323

TABLE B-68.—Bond yields and interest rates, 1929-86
[Percent per annum]
U.S. Treasury securities
Year and
month

Bills
(new issues) l
3-month

6-month

Constant
maturities 2
3year

10-

year

Highgrade
Newmunici- 'home
Commercial
pal
bonds mortgage paper, 6
yields
(Stand- (FHLBB)< months 5
ards
Poor's)

Corporate
bonds
(Moody's)
Aaa»

Baa

Prime rate
charged 6by
banks

Discount
rate,
Federal
Federal
funds
Reserve
rate 7
Bank of
New York 6

1929
1933
1939

0.515
.023

4.73
4.49
3.01

5.90
7.76
4.96

4.27
4.71
2.76

5.85
1.73
.59

5.50-6.00
1.50-4.00
1.50

1940
1941
1942
1943
1944
1945
1946
1947
1948
1949

.014
.103
.326
.373
.375
.375
.375
594
1.040
1 102

2.84
2.77
2.83
2.73
2.72
2.62
2.53
2.61
2.82
2.66

4.75
4.33
4.28
3.91
3.61
3.29
3.05
3.24
3.47
3.42

2.50
2.10
2.36
2.06
1.86
1.67
1.64
2.01
2.40
2.21

.56
.53
.66
.69
.73
.75
.81
1.03
1.44
1.49

1.50
1.50
1.50
1.50
1.50
1.50
1.50
1.50-1.75
1.75-2.00
2.00

1950
1951 .
1952
1953
1954
1955
1956
1957
1958
1959

1.218
1552
1.766
1.931
.953
1753
2.658
3267
1.839
3.405

3.24
3.41
3.52
3.74
3.51
3.53
3.88
4.71
4.73
5.05

1.98
2.00
2.19
2.72
2.37
2.53
2.93
3.60
3.56
3.95

1.45
2.16
2.33
2.52
1.58
2.18
3.31
3.81
2.46
3.97

2.07
2.56
3.00
3.17
3.05
3.16
3.77
4.20
3.83
4.48

1.00
1.00
1.34
1.50 •""••••"•
1.59
1.75
1.75
1.99
1.60
l'.78
1.89
2.77
2.73
3.11
3.12
1.57
2.15
3.30
3.36

1960
1961
1962
1963
1964
1965
1966
1967
1968
1969

2.928
2.378
2.778
3.157
3.549
3.954
4.881
4.321
5.339
6.677

4.82
4.50
4.50
4.50
4.50
4.54
5.63
5.61
6.30
7.96

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
4.07
5.11
4.22
5.66
8.20

1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986

ZZZ" ••— "

5.16
2.56
1.00
1.00
1.00

8
1.00
8
1.00
8
1.00
8
1.00
8

Jan
Feb
Mar
May"!!
June
July
Aug
Sept ....
Oct
Nov
Dec

2.85
2.40
2.82
3.18
3.65
3.32
4.33

3.247
2.605
2.908
3.253
3.686
4.055
5.082
4.630
5.470
6.853

3.98
3.54
3.47
3.67
4.03
4.22
5.23
5.03
5.68
7.02

4.12
3.88
3.95
4.00
4.19
4.28
4.92
5.07
5.65
6.67

4.41
4.35
4.33
4.26
4.40
4.49
5.13
5.51
6.18
7.03

5.19
5.08
5.02
4.86
4.83
4.87
5.67
6.23
6.94
7.81

3.73
3.46
3.18
3.23
3.22
3.27
3.82
3.98
4.51
5.81

5.89
5.82
5.81
6.25
6.46
6.97
7.80

3.85
2.97
3.26
3.55
3.97
4.38
5.55
5.10
5.90
7.83

6.458
4.348
4.071
7.041
7.886
5.838
4.989
5.265
7.221
10.041

6.562
4.511
4.466
7.178
7.926
6.122
5.266
5.510
7.572
10.017

7.29
5.65
5.72
6.95
7.82
7.49
6.77
6.69
8.29
9.71

7.35
6.16
6.21
6.84
7.56
7.99
7.61
7.42
8.41
9.44

8.04
7.39
7.21
7.44
8.57
8.83
8.43
8.02
8.73
9.63

9.11
8.56
8.16
8.24
9.50
10.61
9.75
8.97
9.49
10.69

6.51
5.70
5.27
5.18
6.09
6.89
6.49
5.56
5.90
6.39

8.45
7.74
7.60
7.96
8.92
9.00
9.00
9.02
9.56
10.78

7.71
5.11
4.73
8.15
9.84
6.32
5.34
5.61
7.99
10.91

7.91
5.72
5.25
8.03
10.81
7.86
6.84
6.83
9.06
12.67

5.95
4.88
4.50
6.44
7.83
6.25
5.50
5.46
7.46
10.28

7.18
4.66
4.43
8.73
10.50
5.82
5.04
5.54
7.93
11.19

11.506
14.029
10.686
8.63
9.58
7.48
5.98

11.374
13.776
11.084
8.75
9.80
7.66
6.03

11.55
14.44
12.92
10.45
11.89
9.64
7.06

11.46
13.91
13.00
11.10
12.44
10.62
7.68

11.94
14.17
13.79
12.04
12.71
11.37
9.02

13.67
16.04
16.11
13.55
14.19
12.72
10.39

8.51
11.23
11.57
9.47
10.15
9.18
7.38

12.66
14.70
15.14
12.57
12.38
11.55
10.17

12.29
14.76
11.89
8.89
10.16
8.01
6.39

15.27
18.87
14.86
10.79
12.04
9.93
8.33

11.77
13.42
11.02
8.50
8.80
7.69
6.33

13.36
16.38
12.26
9.09
10.23
8.10
6.81

High-low
1981:

3.832'

2.47
1.63
2.47
3.19
3.98
2.84
4.46

2.62
2.86
2.96
3.20
2.90
3.06
3.36
3.89
3.79
4.38

High-low

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
15.057
14.013
11.530
11.471

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

12.81
13.35
13.33
13.88
14.32
13.75
14.38
14.89
15.49
15.40
14.22
14.23

15.03
15.37
15.34
15.56
15.95
15.80
16.17
16.34
16.92
17.11
16.39
16.55

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

15.10
14.87
13.59
14.17
16.66
15.22
16.09
16.62
15.93
14.72
11.96
12.14

21.50-20.00
20.00-19.00
19.00-17.50
18.00-17.00
20.50-18.00
20.50-20.00
20.50-20.00
20.50-20.50
20.50-19.50
19.50-18.00
18.00-16.00
15.75-15.75

13.00-13.00
13.00-13.00
13.00-13.00
13.00-13.00
14.00-13.00
14.00-14.00
14.00-14.00
14.00-14.00
14.00-14.00
14.00-14.00
14.00-13.00
13.00-12.00

1
Rate on new issues within period; bank-discount basis.
2
Yields on the more actively traded issues adjusted to constant maturities
3
Series excludes public utility issues for January 17, 1984 through
4

19.08
15.93
14.70
15.72
18.52
19.10
19.04
17.82
15.87
15.08
13.31
12.37

by the Treasury Department.
October 11, 1984 due to lack of appropriate issues.
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.
See next page for continuation of table.




324

TABLE B-68.—Bond yields and interest rates, 1929-86—Continued
[Percent per annum]
U.S. Treasury securities

Year
and
month

Bills
(new issues)1
3-month

6-month

Constant
maturities 2

3year

10year

Highgrade
Newmunici- home
Compal mortgage mercial
bonds
paper, 6
yields
(Stand- (FHLBB) 4 months5
ard &
Poor's)

Corporate
hrmHc
uonas
(Moody's)
Aaa 3

Baa

Prime rate
charged 6by
banks

Discount
rate,
Federal
Federal
funds
7
Reserve
Bank of 6 rate
New York

High-low

Jan
Feb
Mar....
Apr
May....
June ...
July ....
Aug ....
Sept...
Oct
Nov
Dec
1983:

Jan
Feb
Mar ....
Apr
May....
June ...
July ....
Aug ....
Oct
Nov
Dec

1984:

Jan
Feb
Mar....
Apr
May....
June...
July....
Aug....
Sept...
Oct
Nov
Dec

1985:

Jan
Feb
Mar ....
Apr
May....
June...
July ....
Aug ....
Sept ...
Oct
Nov
Dec

1986:

Jan
Feb
Mar ....
Apr
May....
June..
July...
Aug ...
Sept ..
Oct....
Nov....
Dec....

High-low

12.412
13.780
12.493
12.821
12.148
12.108
11.914
9.006
8.196
7.750
8.042
8.013

12.930
13.709
12.621
12.861
12.220
12.310
12.236
10.105
9.539
8.299
8.319
8.225

14.64
14.73
14.13
14.18
13.77
14.48
14.00
12.62
12.03
10.62
9.98
9.88

14.59
14.43
13.86
13.87
13.62
14.30
13.95
13.06
12.34
10.91
10.55
10.54

15.18
15.27
14.58
14.46
14.26
14.81
14.61
13.71
12.94
12.12
11.68
11.83

17.10
17.18
16.82
16.78
16.64
16.92
16.80
16.32
15.63
14.73
14.30
14.14

13.16
12.81
12.72
12.45
11.99
12.42
12.11
11.12
10.61
9.59
9.97
9.91

15.25
15.12
15.67
15.84
15.89
15.40
15.70
15.68
14.98
14.41
13.81
13.69

13.35
14.27
13.47
13.64
13.02
13.79
13.00
10.80
10.86
9.21
8.72
8.50

15.75-15.75
17.00-15.75
16.50-16.50
16.50-16.50
16.50-16.50
16.50-16.50
16.50-15.50
15.50-13.50
13.50-13.50
13.50-12.00
12.00-11.50
11.50-11.50

12.00-12.00
12.00-12.00
12.00-12.00
12.00-12.00
12.00-12.00
12.00-12.00
12.00-11.50
11.50-10.00
10.00-10.00
10.00- 9.50
9.50- 9.00
9.00- 8.50

13.22
14.78
14.68
14.94
14.45
14.15
12.59
10.12
10.31
9.71
9.20
8.95

7.810
8.130
8.304
8.252
8.19
8.82
9.12
9.39
9.05
8.71
8.71
8.96

7.898
8.233
8.325
8.343
8.20
8.89
9.29
9.53
9.19
8.90
8.89
9.14

9.64
9.91
9.84
9.76
9.66
10.32
10.90
11.30
11.07
10.87
10.96
11.13

10.46
10.72
10.51
10.40
10.38
10.85
11.38
11.85
11.65
11.54
11.69
11.83

11.79
12.01
11.73
11.51
11.46
11.74
12.15
12.51
12.37
12.25
12.41
12.57

13.94
13.95
13.61
13.29
13.09
13.37
13.39
13.64
13.55
13.46
13.61
13.75

9.45
9.48
9.16
8.96
9.03
9.51
9.46
9.72
9.57
9.64
9.79
9.90

13.49
13.16
13.41
12.42
12.67
12.36
12.50
12.38
12.54
12.25
12.34
12.42

8.15
8.39
8.48
8.48
8.31
9.03
9.36
9.68
9.28
8.98
9.09
9.50

11.50-11.00
11.00-10.50
10.50-10.50
10.50-10.50
10.50-10.50
10.50-10.50
10.50-10.50
11.00-10.50
11.00-11.00
11.00-11.00
11.00-11.00
11.00-11.00

8.50- 8.50
8.50- 8.50
8.50- 8.50
8.50- 8.50
8.50- 8.50
8.50- 8.50
8.50- 8.50
8.50- 8.50
8.50- 8.50
8.50- 8.50
8.50- 8.50
8.50- 8.50

8.68
8.51
8.77
8.80
8.63
8.98
9.37
9.56
9.45
9.48
9.34
9.47

8.93
9.03
9.44
9.69
9.90
9.94
10.13
10.49
10.41
9.97
8.79
8.16

9.06
9.13
9.58
9.83
10.31
10.55
10.58
10.65
10.51
10.05
8.99
8.36

10.93
11.05
11.59
11.98
12.75
13.18
13.08
12.50
12.34
11.85
10.90
10.56

11.67
11.84
12.32
12.63
13.41
13.56
13.36
12.72
12.52
12.16
11.57
11.50

12.20
12.08
12.57
12.81
13.28
13.55
13.44
12.87
12.66
12.63
12.29
12.13

13.65
13.59
13.99
14.31
14.74
15.05
15.15
14.63
14.35
13.94
13.48
13.40

9.61
9.63
9.92
9.98
10.55
10.71
10.50
10.03
10.17
10.34
10.27
10.04

12.29
12.23
12.02
12.04
12.18
12.10
12.50
12.43
12.53
12.77
12.75
12.55

9.18
9.31
9.86
10.22
10.87
11.23
11.34
11.16
10.94
10.16
9.06
8.55

11.00-11.00
11.00-11.00
11.50-11.00
12.00-11.50
12.50-12.00
13.00-12.50
13.00-13.00
13.00-13.00
13.00-12.75
12.75-12.00
12.00-11.25
11.25-10.75

8.50- 8.50
8.50- 8.50
8.50- 8.50
9.00- 8.50
9.00- 9.00
9.00- 9.00
9.00- 9.00
9.00- 9.00
9.00- 9.00
9.00- 9.00
9.00- 8.50
8.50- 8.00

9.56
9.59
9.91
10.29
10.32
11.06
11.23
11.64
11.30
9.99
9.43
8.38

7.76
8.22
8.57
8.00
7.56
7.01
7.05
7.18
7.08
7.17
7.20
7.07

8.03
8.34
8.92
8.31
7.75
7.16
7.16
7.35
7.27
7.32
7.26
7.09

10.43
10.55
11.05
10.49
9.75
9.05
9.18
9.31
9.37
9.25
8.88
8.40

11.38
11.51
11.86
11.43
10.85
10.16
10.31
10.33
10.37
10.24
9.78
9.26

12.08
12.13
12.56
12.23
11.72
10.94
10.97
11.05
11.07
11.02
10.55
10.16

13.26
13.23
13.69
13.51
13.15
12.40
12.43
12.50
12.48
12.36
11.99
11.58

9.55
9.66
9.79
9.48
9.08
8.78
8.90
9.18
9.37
9.24
8.64
8.51

12.27
12.21
11.92
12.05
12.01
11.75
11.34
11.24
11.17
11.09
11.01
10.94

8.15
8.69
9.23
8.47
7.88
7.38
7.57
7.74
7.86
7.79
7.69
7.62

10.75-10.50
10.50-10.50
10.50-10.50
10.50-10.50
10.50-10.00
10.00- 9.50
9.50- 9.50
9.50- 9.50
9.50- 9.50
9.50- 9.50
9.50- 9.50
9.50- 9.50

8.00- 8.00
8.00- 8.00
8.00- 8.00
8.00- 8.00
8.00- 7.50
7.50- 7.50
7.50- 7.50
7.50- 7.50
7.50- 7.50
7.50- 7.50
7.50- 7.50
7.50- 7.50

8.35
8.50
8.58
8.27
7.97
7.53
7.88
7.90
7.92
7.99
8.05
8.27

7.04
7.03
6.59
6.06
6.12
6.21
5.84
5.57
5.19
5.18
5.35
5.49

7.13
7.08
6.60
6.07
6.16
6.28
5.85
5.58
5.31
5.26
5.42
5.53

8.41
8.10
7.30
6.86
7.27
7.41
6.86
6.49
6.62
6.56
6.46
6.43

9.19
8.70
7.78
7.30
7.71
7.80
7.30
7.17
7.45
7.43
7.25
7.11

10.05
9.67
9.00
8.79
9.09
9.13
8.88
8.72
8.89
8.86
8.68
8.49

11.44
11.11
10.49
10.19
10.29
10.34
10.16
10.18
10.21
10.24
10.07
9.97

8.06
7.44
7.07
7.32
7.67
7.98
7.62
7.31
7.14
7.12
6.86
6.93

10.89
10.68
10.50
10.27
10.22
10.15
10.30
10.26
10.17
10.02
9.91
9.69

7.62
7.54
7.08
6.47
6.53
6.63
6.24
5.83
5.61
5.61
5.69
5.88

9.50- 9.50
9.50- 9.50
9.50- 9.00
9.00- 8.50
8.50- 8.50
8.50- 8.50
8.50- 8.00
8.00- 7.50
7.50- 7.50
7.50- 7.50
7.50- 7.50
7.50- 7.50

7.50- 7.50
7.50- 7.50
7.50- 7.00
7.00- 6.50
6.50- 6.50
6.50- 6.50
6.50- 6.00
6.00- 5.50
5.50- 5.50
5.50- 5.50
5.50- 5.50
5.50- 5.50

8.14
7.86
7.48
6.99
6.85
6.92
6.56
6.17
5.89
5.85
6.04
6.91

5
Bank-discount basis; prior to November 1979, data are for 4-6 months paper.
6
For monthly data, high and low for the period. Prime rate for 1929-33 and 1947-48 are ranges of the rate in effect during the
period.
7
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
the8 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.
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.




325

TABLE B-69.—Total funds raised in credit markets by nonfina ncial sectors, 1977-86
[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Item

1977

1978

1979

1980

1981

1982

1983

1984 | 1985

Net credit market borrowing by nonfinancial sectors
Total net borrowing by domestic nonfinancial sectors... 316.9

385.7

344.9

375.8

387.4

548.8

756.3

869.3

56.8

53.7

37.4

79.2

87.4

161.3

186.6

198.8

223.6

57.6

-.9

55.1
-1.4

38.8
-1.4

79.8
-.6

87.8
-.5

162.1
-.9

186.7
-.1

199.0

223.7
-.1

Private domestic nonfinancial sectors

260.2

318.2

348.4

265.7

288.5

226.2

362.2

557.5

645.7

Debt capital instruments .

171.3

200.7

212.5

189.1

155.5

148.3

252.8

314.0

461.7

20.3
22.9
128.1

28.4
21.1
151.2

30.3
17.3
164.9

30.3
27.7
131.2

23.4
22.8
109.3

44.2
18.7
85.4

53.7
16.0
183.0

50.4
46.1
217.5

152.4
73.9
235.4

93.3
8.4
18.2
8.2

110.2
10.9
21.9
8.2

116.6
10.0
24.4
14.0

94.2
7.6
19.2
10.2

72.2
4.8
22.2
10.0

50.5
5.4
25.2
4.2

117.1
14.1
49.0
2.8

129.9
25.1
63.3
-.8

150.3
29.2
62.4
-6.4

Other debt instruments

88.9

117.6

135.9

76.6

133.0

77.9

109.5

.243.5

184.0

Consumer credit
Bank loans n e e
Open-market paper
Other

38.1
26.5
1.6
22.6

46.7
40.5
2.7
27.6

42.7
50.5
9.0
33.7

4.5
37.8
4.0
30.3

22.6
57.0
14.7
38.7

17.7
52.9
-6.1
13.4

56.8
25.8
-.8
27.7

95.0
80.1
21.7
46.6

96.6
41.3
14.6
31.4

260.2

318.2

348.4

265.7

288.5

226.2

362.2

557.5

645.7

10.5
137.5
112.2

16.5
167.2
134.5

17.6
173.7
157.1

17.2
120.0
128.5

6.8
121.4
160.3

21.5
88.4
116.2

34.0
188.0
140.2

27.4
239.5
290.6

107.8
295.0
242.9

13.4
29.5
69.3

15.6
33.8
85.2

23.5
37.9
95.7

15.2
31.8
81.5

16.6
38.5
105.2

6.8
40.2
69.2

4.3
76.6
59.3

97'.1
193.4

-13.6
92.8
163.7

U S Government
Treasury issues
Agency issues and mortgages

Tax-exempt obligations
Corporate bonds
Mortgages
Home mortgages
Multi-family residential
Commercial
Farm

By borrowing sector: Total
State and local governments
Households
Nonfinancial business
Farm
Nonfarm noncorporate
Corporate
Foreign net borrowing in United States

371.9

13.5

24.2

15.1

23.8

23.5

16.0

17.4

6.1

1.7

Bonds
Bank loans n.e.c
Open-market paper
U S. Government loans

5.1
3.1
.6
3.0

4.2
18.3
1.0
3.9

3.9
3.1
1.7
2.9

.8
11.8
2.4
4.7

5.4
3.0
3.9
4.2

6.7
-5.5
1.9
4.5

3.1
3.6
6.5
4.3

1.3
-6.6
6.2
4.3

4.0
-2.8
6.2
1.6

Total domestic plus foreign

330.4

396.1

400.8

368.7

399.3

403.4

566.2

762.4

871.0

Direct and indirect supply of funds to credit markets

Total funds supplied to domestic nonfinancial sectors ..
Private domestic nonfinancial sectors
Deposits and currency
Checkable deposits and currency
Time and savings deposits
Money market fund shares
Security repurchase agreements
Foreign deposits
Credit market instruments
Foreign funds
At banks
Credit market instruments
U.S. Government and related loans, net
U.S. Government cash balances
Private insurance and pension reserves
Other sources

316.9

371.9

385.7

344.9

375.8

387.4

548.8

756.3

191.5

221.8

248.6

237.0

299.0

320.7

382.7

517.4

515.3

146.6

149.0

150.8

183.9

222.4

204.5

229.7

321.1

215.1

25.3
116.9
.2
2.9
1.3

26.3
108.3
6.9
5.5
2.0

28.1
76.5
34.4
6.7
5.1

16.8
128.2
29.2
6.8
2.8

28.0
83.4
107.5
5.2
-1.7

28.3
140.8
24.7
11.1
4

43.1
209.0
441
18.5
3.1

36.4
235.6
47.2
7.0
51

54.4
151.5
22
13.4
-2.1

44.9

72.8

97.8

53.1

76.6

116.3

153.0

196.4

300.2

36.9

33.4

18.9

-4.0

-.7

-7.3

41.3

60.9

80.1

1.1
35.8

7.3
26.1

26.4
75

-25.1
21.1

-23.7
-31.4
24.1
23.0

16.3
24.9

5.4
55.5

17.7
62.4

4.2
4.3
58.3
21.7

3.0
6.8
75.7
31.2

16.7
.4
79.5
21.6

5.2
-2.6
88.9
20.4

10.4
6.1
92.5
-35.0

5.2
-5.3
110.6
14.4

18.1
4.0
112.5
43.3

37.7
10.3
107.0
119.0

See next page for continuation of table.




326

10.6
-1.1
89.6
-21.4

869.3

TABLE B-69.—Total funds raised in credit markets by nonfinancial sectors, 1977-86—Continued
[BilKons of dollars; quarterly data at seasonally adjusted annual rates]
1986

1985
Item

1

II

III

1

IV

III

II

Net credit market borrowing by nonfinancial sectors
658.6

806.6

728.8 1,283.3

551.7

859.1

824.4

140.2

263.4

149.3

341.7

120.6

301.9

184.5

140.3
-.2

263.5
-.1

149.3
1

341.7
0

120.9
-.3

301.9
0

184.7
-.2

518.4

543.2

579.6

941.6

431.1

557.2

639.9

333.2

377.6

404.7

731.4

332.2

436.7

542.0

59.7
67.3
206.2

75.2
78.1
224.2

96.0
70.2
238.5

378.6
80.0
272.9

83
120.6
219.9

48.1
137.6
251.0

156.7
99.6
285.6

125.5
22.1
59.3
-.7

140.7
27.2
61.2
-4.9

162.7
26.3
59.4
-9.9

172.3
41.1
69.5
-10.1

119.9
33.2
71.7
-5.0

186.3
24.9
49.5
-9.7

205.1
31.4
54.6
-5.5

Other debt instruments

185.2

165.6

174.9

210.2

98.9

120.4

97.9

Consumer credit
Bank loans n.e.c
Open-market paper
Other

105.5
28.6
11.3
39.8

89.2
21.3
13.2
41.9

112.6
43.3
-.5
19.5

79.2
72.2
34.3
24.5

63.6
22.9
-16.6
29.0

87.0
21.2
-14.9
27.1

81.1
.8
16.4
-.4

518.4

543.2

579.6

941.6

431.1

557.2

639.9

52.9
237.6
227.9

60.8
269.6
212.8

71.7
302.9
204.9

245.8
369.8
326.0

16.9
173.6
240.7

64.5
283.4
209.2

161.2
305.1
173.6

-7.6
79.4
156.0

-4.2
91.7
125.3

-15.3
92.2
128.0

-27.2
107.6
245.6

-12.5
105.6
147.5

-17.6
84.8
142.1

-4.5
84.6
93.4

12.0

2.9

34.5

14.1

2.6
7.5
6.3
.5

2.5
-6.7
10.0
.3

16.1
-4.8
23.9
.8

-1.9
7.6
17.3
-.8

2.5
240
14.7
3.8

740.8 1,286.2

586.2

873.2

819.2

Total net borrowing by domestic nonfinancial sectors
U.S. Government
Treasury issues
Agency issues and mortgages
Private domestic nonfinancial sectors
Debt capital instruments
Tax-exempt obligations
Corporate bonds
Mortgages
Home mortgages
Multi-family residential
Commercial
Farm . .

By borrowing sector- Total
State and local governments
Households
. . .
Nonfinancial business
Farm
Nonfarm noncorporate
Corporate
Foreign net borrowing in United States

. .

58

Bonds
.Bank loans n e e
Open-market paper
U.S. Government loans...

-2.4

2.5
-8.3
3.7
2.1

652.7

Total domestic plus foreign

8.5
-3.8
4.8
3.7

804.1

-5.2

Direct and indirect supply of funds to credit markets
658.6

At banks
Credit market instruments
U.S Government and related loans net
U.S. Government cash balances
Private insurance and pension reserves
Other sources
Source: Board of Governors of the Federal Reserve System.




327

424.5

269.8

228.1

286.3

142.3

226.1

253.8

245.9

78.2
135.2
20.4
5.3
-11.1

113.8
159.1
-21.2
19.5
15.1

35.8
114.6
4.0
5.6
-17.7

44.0
154.6
27.0
-2.9
3.4

147.5
87.3
30.9
210
9.0

35.0
135.4
49.8
14.8
10.9

245.6

207.3

573.1

190

170.7

24.0

65.4

89.4

106.8

146.6

90.3

126.6

24.7
34.3

-2.3
67.7

23.3
66.1

25.2
81.5

36.6
109.9

-36.2
126.5

.1
126.5

64.1
51
97.6
64.6

. .

824.4

207.2

59.0

Credit market instruments
Foreign funds

859.1

715.3

174.7

Checkable deposits and currency
Time and savings deposits
Money market Fund shares
Security repurchase ageements
Foreign deposits

551.7

493.6

-10.2
197.3
-12.1
23.4
5.3

Deposits and currency

728.8 1,283.3

473.7

203.7

Private domestic nonfinancial sectors

806.6

378.4

Total funds supplied to domestic nonfinancial sectors

59.8
33.9
97.2
76.5

16.8
-68.4
126.7
70.7

10.1
80.6
106.5
264.0

304
-54.2
99.6
182.9

26.1
43.2
118.7
156.2

39.1
-13.4
197.5
204.7

TABLE B-70.—Mortgage debt outstanding by type of property and of financing, 1939-86
[Billions of dollars]
Nonfarm properties
All
properties

End of year
or quarter

Farm
properties

Nonfarm properties by type of mortgage
Conventional 2

Government underwritten
Total

Multi- Com1- to 4- family mercial
family proper- properhouses
ties
ties

1- to 4-family houses
Total l

Total

VA
FHA
guarinsured anteed

Total

l-to4family
houses

1939

35.5

6.6

28.9

16.3

5.6

7.0

1.8

1.8

1.8

27.1

14.5

1940
1941
1942
1943
1944

36.5
37.6
36.7
35.3
34.7

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
5.9
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
3.0
3.7
4.1
4.2

2.3
3.0
3.7
4.1
4.2

27.7
28.2
27.1
25.8
25.5

15.1
15.4
14.5
13.7
13.7

1945
1946
1947
1948
1949

35.5
41.8
48.9
56.2
62.7

4.8
4.9
5.1
5.3
5.6

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

4.3
6.3
9.8
13.6
17.1

4.3
6.1
9.3
12.5
15.0

4.1
3.7
3.8
5.3
6.9

0.2
2.4
5.5
7.2
8.1

26.5
30.6
34.1
37.3
40.0

14.3
16.9
18.9
20.8
22.6

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

11.5
12.5
13.4
14.5
16.3

22.1
26.6
29.3
32.1
36.2

18.8
22.9
25.4
28.1
32.1

8.5
9.7
10.8
12.0
12.8

10.3
13.2
14.6
16.1
19.3

44.7
49.1
54.9
61.5
69.3

26.3
28.9
33.2
38.0
43.6

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

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
55.2
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

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

141.9
154.6
169.3
186.4
203.4

20.3
23.0
25.8
29.0
33.6

32.4
36.5
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
95.5
107.1
120.5
134.1

333.3
356.5
381.2
410.9
441.4

21.2
23.1
25.1
27.4
29.2

312.1
333.4
356.1
383.5
412.2

220.5
232.9
247.3
264.8
283.2

37.2
40.3
43.9
47.3
52.2

54.5
60.1
64.8,1
71.4
76.9

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
193.0

473.5
524.0
597.1
672.3
732.3

30.3
32.2
35.1
39.5
44.7

443.2
491.8
562.0
632.8
687.5

297.4
325.9
366.5
407.9
440.7

60.1
70.1
82.8
93.1
100.0

85.6
95.9
112.7
131.7
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

333.9
371.1
430.9
497.7
547.3

200.2
220.7
253.5
291.7
319.4

1975
1976
1977
1978
1979

791.7
878.5
1,009.8
1,161.9
1,327.3

49.7
55.3
63.5
71.6
85.6

742.0
823.2
946.4
1,090.2
1,241.7

482.1
546.3
642.7
753.5
870.5

100.6
105.7
114.0
124.9
134.9

159.3
171.2
189.7
211.8
236.3

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
67.0
73.6
82.0
92.0

595.0
669.0
784.6
913.9
1,042.7

354.3
412.8
501.0
600.2
697.6

1980
1981
1982
1983
1984

1,457.5
1,564.0
1,631.3
1,813.9
2,034.6

95.8
105.8
110.0
112.8
112.0

1,361.8
963.9
1,458.2 1,038.5
1,521.2 1,074.7
1,701.0 1,189.8
1,922.6 1,318.9

142.3
142.1
145.8
160.8
185.4

255.5
277.5
300.8
350.4
418.3

225.1
238.9
248.9
279.8
294.8

195.2
207.6
217.9
248.8
265.9

93.6
101.3
108.0
127.4
136.7

101.6
106.2
109.9
121.4
129.1

1,136.7
1,219.3
1,272.4
1,421.2
1,627.8

768.8
830.9
856.8
941.0
1,053.0

1985

2,266.3

105.6

2,160.7

1,466.1

213.8

480.7

328.3

288.8

153.0

135.8

1,832.3

1,177.3

1984: 1
||
III
IV

1,863.8
1,926.8
1,983.7
2,034.6

112.3
112.6
112.6
112.0

1,751.5
1,814.3
1,871.0
1,922.6

1,217.0
1,254.2
1,288.1
1,318.9

166.4
174.2
179.6
185.4

368.0
385.9
403.3
418.3

286.8
290.5
292.9
294.8

255.9
260.5
263.6
265.9

131.1
133.6
135.6
136.7

124.8
126.9
128.0
129.1

1,464.7
1,523.8
1,578.2
1,627.8

961.1
993.7
1,024.5
1,053.0

1985:1
II
Ill
IV..

2,080.9
2,139.6
2,200.6
2,266.3

111.9
110.9
108.3
105.6

1,969.0 1,346.6
2,028.8 1,383.2
2,092.3 1,425.4
2,160.7 1,466.1

190.9
197.5
203.6
213.8

431.5
448.1
463.3
480.7

299.7
305.4
323.8
328.3

270.6
276.0
282.6
288.8

139.8
144.3
148.3
153.0

130.8
131.6
134.3
135.8

1,669.3 1,076.0
1,723.4 1,107.2
1,768.4 1,142.7
1,832.3 1,177.3

2,315.0
2,381.2
2,456.5

103.9
101.6
100.1

2,211.1
2,279.6
2,356.3

221.5
228.3
236.1

495.9
509.9
524.9

339.9
349.7

299.1
308.3

160.6
168.9

138.5
139.4
142.7

1,871.3
1,929.9

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

.. .

.

1986: 1
II
Ill

.

.

1,493.8
1,541.5
1,595.3

1
2

1,194.7
1,233.2

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.




328

TABLE B-71.—Mortgage debt outstanding by holder, 1939-86
[Billions of dollars]
Major financial institutions
End of year
or quarter

Total

Total

Savings
and loan
associations

Savings
banks

Commercial
banks '

Life
insurance
companies

Other holders
Federal
Individand
uals and
related
others
agen2
cies

1939

35.5

4.8

4.3

5.7

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

5.0
4.9
4.7
4.3
3.6
3.0

11.9

36.5
37.6
36.7
35.3
34.7

18.6
19.5
20.7
20.7
20.2
20.2

3.8

1940
1941
1942
1943
1944
1945
1946
1947
1948
1949

35.5
41.8
48.9
56.2
62.7

21.0
26.0
31.8
37.8
42.9

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

12.1
13.8
15.3
16.6
17.5

1950
1951
1952
1953
1954

72.8
82.3
91.4
101.3
113.7

51.7
59.5
66.9
75.1
85.7

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

18.4
19.3
20.4
21.7
23.2

1955
1956
1957
1958
1959

129.9
144.5
156.5
171.8
190.8

99.3
111.2
119.7
131.5
145.5

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

25.3
27.1
29.1
32.3
35.1

1960
1961
1962
1963
1964

207.5
228.0
251.4
278.5
305.9

157.6
172.6
192.5
217.1
241.0

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

11.5
12.2
12.6
11.8
12.2

38.4
43.1
46.3
49.5
52.7

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

13.5
17.5
20.9
25.1
31.1

55.2
58.2
61.4
65.9
71.2

1970
1971
1972
1973
1974

473.5
524.0
597.1
672.3
732.3

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

38.3
46.4
54.6
64.8
82.2

79.3
83.4
92.5
102.2
107.5

1975
1976
1977
1978
1979

791.7
878.5
1,009.8
1,161.9
1,327.3

581.2
647.5
745.2
848.2
938.2

278.6
323.0
381.2
432.8
475.7

77.2
81.6
88.2
95.2
98.9

136.2
151.3
179.0
214.0
245.2

89.2
91.6
96.8
106.2
118.4

101.1
116.7
140.5
170.6
216.0

109.4
114.3
124.1
143.1
173.1

1980
1981
1982
1983
1984

1,457.5
1,564.0
1,631.3
1,813.9
2,034.6

996.8
1,040.5
1,021.3
1,108.2
1,245.9

503.2
518.5
483.6
494.8
555.3

99.9
100.0
94.5
131.9
154.4

262.7
284.2
301.3
330.5
379.5

131.1
137.7
142.0
151.0
156.7

256.8
289.4
355.4
433.4
491.1

203.9
234.1
254.5
272.2
297.6

1985

2,266.3

1,361.7

583.2

177.3

429.4

171.8

582.0

322.6

1984: 1
II
Ill

1,863.8
1,926.8
1,983.7
2,034.6

1,137.8
1,181.6
1,219.4
1,245.9

503.5
528.2
550.1
555.3

139.1
143.4
146.1
154.4

343.9
356.5
367.9
379.5

151.3
153.5
155.4
156.7

448.4
458.9
472.3
491.1

277.6
286.3
291.9
297.6

1985- 1
II
Ill

2,080.9
2,139.6
2,200.6
2,266.3

1,266.9
1,297.9
1,328.5
1,361.7

559.3
569.3
573.7
583.2

161.0
165.7
174.4
177.3

388.2
400.7
415.6
429.4

158.5
162.1
164.8
171.8

511.3
531.7
555.2
582.0

302.6
310.1
316.9
322.6

2,315.0
2,381.2
2,456.5

1,379.0
1,404.6
1,429.9

574.7
565.2
558.4

188.2
203.2
214.2

441.3
456.1
472.0

174.8
180.0
185.2

605.7
637.0
680.6

330.3
339.6
346.1

IV

IV
1986- 1
II

Ill

12.0
12.2
11.7
11.5
11.5

1
Includes loans held by nondeposit trust companies, but not by bank trust departments.
2
Includes former Federal National Mortgage Association (FNMA) and new Government National Mortgage Association (GNMA), as well
as Federal Housing Administration, Veterans Administration, Public Housing Administration, Farmers Home Administration (FmHA), and in
earlier years Reconstruction Finance Corporation, Homeowners Loan Corporation, and Federal Farm Mortgage Corporation. Also includes
U.S.-sponsored agencies such as new FNMA, Federal Land Banks, Federal Home Loan Mortgage Corporation (FHLMC), and mortgage
pass-through securities issued or guaranteed by GNMA, FHLMC, FNMA or FmHA. 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.




329

TABLE B-72.—Consumer credit outstanding, 1950-86
[Amount outstanding (end of month); millions of dollars, seasonally adjusted]

Year and month

Total
consumer
credit

December:
1950
1951
1952
1953
1954... .
1955
1956
1957
1958
1959

Total

Automobile

Installment credit l
Mobile home3
Revolving2

Other

Noninstallment
credit *

25,018
26,576
31,830
35,928
37,293
44,319
48,224
51,136
51,595
59,432

15,166
15,859
20,121
23,870
24,470
29,809
32,660
34,914
34,736
40,421

6,035
5,981
7,651
9,702
9,755
13,485
14,499
15,493
14,267
16,641

9,131
9,878
12,470
14,168
14,715
16,324
18,161
19,421
20,469
23,780

9,852
10,717
11,709
12,058
12,823
14,510
15,564
16,222
16,859
19,011

1960
1961
1962
1963
1964
1965
1966
1967
1968
1969

63,928
66,569
72,830
81,578
91,279
101,726
108,227
113,628
124,915
135,431

44,335
45,438
50,375
57,056
64,674
72,814
78,162
81,783
90,112
99,381

18,108
17,656
20,001
22,891
25,865
29,378
31,024
31,136
34,352
36,946

2,022
3,563

26,227
27,782
30,374
34,165
38,809
43,436
47,138
50,647
53,738
58,872

19,593
21,131
22,455
24,522
26,605
28,912
30,065
31,845
34,803
36,050

1970
1971
1972
1973
1974
1975
1976
1977
1978
1979

141,010
155,537
175,286
200,894
210,634
217,428
241,989
279,428
325,433
366,854

103,905
116,434
131,258
152,910
162,203
167,043
187,782
221,475
261,976
296,483

36,348
40,522
47,835
53,740
54,241
56,989
66,821
80,948
98,739
112,475

4,900
8,252
9,391
11,318
13,232
14,507
16,595
36,689
45,202
53,357

2,433
7,171
9,468
13,505
14,582
15,388
15,738
16,362
16,921
18,207

60,224
60,489
64,564
74,347
80,148
80,159
88,628
87,476
101,114
112,444

37,105
39,103
44,028
47,984
48,431
50,385
54,207
57,953
63,457
70,371

1980
1981
1982
1983
1984
1985

371,219
393,701
411,709
471,784
568,127
668,216

297,667
314,321
327,173
376,239
453,580
535,098

112,255
120,020
125,369
145,908
173,122
206,482

54,894
60,750
66,007
78,369
98,514
118,296

19,119
20,382
20,998
22,194
24,184
25,461

111,399
113,169
114,799
129,768
157,760
184,859

73,552
79,380
84,536
95,545
114,547
133,118

1985: Jan
Feb
Mar
Apr
May
June

576,121
584,896
595,246
604,592
613,127
619,473

210,661
213,342
214,361
215,814
218,965
222,606

100,263
102,373
105,297
107,417
108,372
109,260
110,904
112,373
113,850
115,218
117,050
118,296
119,682
120,724
122,131
123,442
124,545
124,720

24,139
24,360
24,468
24,570
24,670
24,768
25,015
25,173
25,341
25,320
25,315
25,461
25,371
25,573
25,584
25,513
25,560
25,479

159,596
161,706
163,710
166,019
168,287
169,766
172,919
175,621
178,573
180,446
182,490
184,859

1986- Jan
Feb
Mar
Apr
May
June

628,255
636,234
647,776
654,249
660,462
668,216
678,067
682,855
686,810
694,403
702,353
708,541

175,845
178,251
181,514
184,526
187,533
189,459
191,201
192,923
198,656
201,994
203,766
206,482

116,278
118,206
120,257
122,060
124,265
126,220

July
Aug
Sept
Oct
Nov
Dec

459,843
466,690
474,989
482,532
488,862
493,253
500,039
506,090
516,420
522,978
528,621
535,098
542,753
547,852
550,939
555,810
562,267
567,653

187,039
188,212
188,863
191,041
193,197
194,847

128,216
130,144
131,356
131,271
131,841
133,118
135,314
135,003
135,871
138,593
140,086
140,888

July
Aug
Sept
Oct
Nov

715,112
719,507
727,128
735,348
739,208

573,216
576,609
584,334
591,542
595,560

226,234
228,814
236,280
240,548
241,392

125,577
125,915
126,012
126,514
128,102

25,398
25,215
24,958
24,994
25,029

196,007
196,665
197,084
199,485
201,036

141,896
142,898
142,794
143,806
143,648

1
Installment credit covers most short- and intermediate-term credit extended to individuals through regular business channels,
usualrv 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. Credit secured by real estate is generally excluded.
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.
3
Not reported separately prior to July 1970.
4
Noninstallment credit is credit scheduled to be repaid in a lump sum, including single-payment loans, charge accounts, and service
credit. Because of inconsistencies in the data and infrequent benchmarking, series is no longer published by the Federal Reserve Board
on a regular basis. Data are shown here as a general indication of trends.
Source-. Board of Governors of the Federal Reserve System.




330

GOVERNMENT FINANCE
TABLE B-73.—Federal receipts, outlays, surplus or deficit, and debt, selected fiscal years 1929-88
[Billions of dollars; fiscal years]
Total
Fiscal year
or period

Receipts

Outlays

Off-budget

On-budget
Surplus
or
deficit
(-)

Receipts

Outlays

Surplus
or
deficit
(-)

Receipts

Outlays

Surplus
or
deficit
(-)

Gross Federal debt
(end of period)
Total

Held by
the
public

Addendum:
Gross
national
product

1

1929
1933
1939

3.9
2.0
6.3

3.1
4.6
9.1

0.7
-2.6

28

5.8

9.2

-3.4

0.5

0.0

0.5

169
*22.5
48.2

41.4

1940
1941
1942
1943
1944

6.5
8.7
14.6
24.0
43.7

9.5
13.7
35.1
78.6
91.3

-2.9
-4.9
-20.5
-54.6
-47.6

6.0
8.0
13.7
22.9
42.5

9.5
13.6
35.1
78.5
91.2

-3.5
-5.6
-21.3
-55.6
-48.7

.6
.7
.9
1.1
1.3

.0
.0
.1
.1
.1

.6
.7
.8
1.0
1.2

50.7
57.5
79.2
142.6
204.1

42.8
48.2
67.8
127.8
184.8

95.8
113.0
142.2
175.8
202.0

1945
1946
1947
1948
1949

45.2
39.3
38.5
41.6
39.4

92.7
55.2
34.5
29.8
38.8

-47.6
-15.9
4.0
11.8
.6

43.8
38.1
37.1
39.9
37.7

92.6
55.0
34.2
29.4
38.4

-48.7
-17.0
2.9
10.5
-.7

1.3
1.2
1.5
1.6
1.7

.1
.2
.3

A

1.2
1.0
1.2
1.2
1.3

260.1
271.0
257.1
252.0
252.6

235.2
241.9
224.3
216.3
214.3

212.4
212.9
223.6
247.8
263.9

1950
1951
1952
1953
1954

39.4
51.6
66.2
69.6
69.7

42.6
45.5
67.7
76.1
70.9

-3.1
6.1
-1.5
65
-1.2

37.3
48.5
62.6
65.5
65.1

42.0
44.2
66.0
73.8
67.9

-4.7
4.3
-3.4
-8.3
-2.8

2.1
3.1
3.6
4.1
4.6

l'.3
1.7
2.3
2.9

1.6
1.8
1.9
1.8
1.7

256.9
255.3
259.1
266.0
270.8

219.0
214.3
214.8
218.4
224.5

266.8
315.0
342.4
365.6
369.5

1955
1956
1957
1958
1959

65.5
74.6
80.0
79.6
79.2

68.4
70.6
76.6
82.4
92.1

-3.0
3.9
3.4
-2.8
-12.8

60.4
68.2
73.2
71.6
71.0

64.5
65.7
70.6
74.9
83.1

-4.1
2.5
2.6
-3.3
-12.1

5.1
6.4
6.8
8.0
8.3

4.0
5.0
6.0
7.5
9.0

1.1
1.5
.8
.5
-.7

274.4
272.8
272.4
279.7
287.8

226.6
222.2
219.4
226.4
235.0

386.4
418.1
440.5
450.2
481.5

1960
1961
1962
1963
1964

92.5
94.4
99.7
106.6
112.6

92.2
97.7
106.8
111.3
118.5

.3
-3.3
-7.1
-4.8
-5.9

81.9
82.3
87.4
92.4
96.2

81.3
86.0
93.3
96.4
102.8

.5
-3.8
-5.9
-4.0
-6.5

10.6
12.1
12.3
14.2
16.4

10.9
11.7
13.5
15.0
15.7

-.2
.4
-1.3
-.8
.6

290.9
292.9
303.3
310.8
316.8

237.2
238.6
248.4
254.5
257.6

506.7
518.2
557.7
587.8
629.2

1965
1966
1967
1968
1969

116.8
130.8
148.8
153.0
186.9

118.2
134.5
157.5
178.1
183.6

-1.4
-3.7
-8.6
-25.2
3.2

100.1
111.7
124.4
128.1
157.9

101.7
114.8
137.0
155.8
158.4

-1.6
31
-12.6
-27.7
-.5

16.7
19.1
24.4
24.9
29.0

16.5
19.7
20.4
22.3
25.2

.2
-.6
4.0
2.6
3.7

323.2
329.5
341.3
369.8
367.1

261.6
264.7
267.5
290.6
279.5

672.6
739.0
794.6
849.4
929.5

1970
1971
1972
1973
1974

192.8
187.1
207.3
230.8
263.2

195.6
210.2
230.7
245.7
269.4

-2.8
-23.0
-23.4
-14.9
-6.1

159.3
151.3
167.4
184.7
209.3

168.0
177.3
193.8
200.1
217.3

-8.7
-26.1
-26.4
-15.4
-8.0

33.5
35.8
39.9
46.1
53.9

27.6
32.8
36.9
45.6
52.1

5.9
3.0
3.1
L8

382.6
409.5
437.3
468.4
486.2

284.9
304.3
323.8
343.0
346.1

990.2
1,055.9
1,153.1
1,281.4
1,416.5

1975
1976
Transition
quarter ..
1977
1978
1979

279.1
298.1

332.3
371.8

-53.2
-73.7

216.6
231.7

271.9
302.2

-55.3
-70.5

62.5
66.4

60.4
69.6

2.0
-3.2

544.1
631.9

396.9
480.3

81.2
355.6
399.6
463.3

96.0
409.2
458.7
503.5

-14.7
-53.6
-59.2
-40.2

63.2
278.7
314.2
365.3

76.6
328.5
369.1
403.5

-13.3
-49.7
-54.9
-38.2

18.0
76.8
85.4
98.0

19.4
80.7
89.7
100.0

-1.4
-3.9
-4.3
-2.0

646.4
709.1
780.4
833.8

498.3
551.8
610.9
644.6

1980
1981
1982
1983
1984

517.1
599.3
617.8
600.6
666.5

590.9
678.2
745.7
808.3
851.8

-73.8
-78.9
-127.9
-207.8
-185.3

403.9
469.1
474.3
453.2
500.4

476.6
543.0
594.3
661.2
686.0

-72.7
-73.9
-120.0
-208.0
-185.6

113.2
130.2
143.5
147.3
166.1

114.3
135.2
151.4
147.1
165.8

-1.1
-5.0
-7.9
.2

914.3
1,003.9
1,147.0
1,381.9
1,576.7

715.1
794.4
929.4
1,141.8
1,312.6

2,670.6
2,986.4
3,139.1
3,321.9
3,686.8

734.1
769.1
842.4
916.6

946.3
989.8
1,015.6
1,024.3

-212.3
-220.7
-173.2
-107.8

547.9
568.9
628.4
674.5

769.5
806.3
821.1
821.9

-221.6
-237.5
-192.7
-147.4

186.2
200.2
214.0
242.1

176.8
183.5
194.5
202.4

9.4
16.7
19.5
39.7

1,827.2
2,132.9
2,372.4
2,585.5

1,509.9
1,746.1
1,908.4
2,015.1

3,937.2
4,163.3
4,418.9
4,731.2

1985
1986
1987
1988

3
3

1
Not strictly comparable
2
Annual rate.
3

1,522.5
1,698.2
2

1,794.7
1,933.0
2,171.8
2,447.8

with later data.

Estimates.
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. The 3-month period from 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 1988" for additional information.
Sources: Department of the Treasury, Office of Management and Budget, and Department of Commerce (Bureau of Economic
Analysis).




331

TABLE B-74.—Federal receipts, outlays, and debt, fiscal years 1979-88
[Millions of dollars; fiscal years]
Actual

Description

1&79

1980

1981

1982

1983

463 302
503,464

517,112
590,920

599,272
678,209

617 766
745,706

600562
808,327

-40,162

-73,808

-78,936

- 127,940

-207,764

365,309
403 486

403,903
476 591

469,097
543,013

474,299
594 302

453,242
661 219

-38,178

72,689

-73,916

-120,003

-207,977

97994
99,978

113209
114,329

130 176
135,196

143 467
151 404

147 320
147 108

-1,984

-1,120

-5,020

-7937

212

833,751

914,317

1,003,941

1,146,987

1 381 886

189,162
644 589

199,212
715 105

209,507
794 434

217 560
929 427

240 116
1 141 770

115594
528,995

120 846
594,259

124 466
669,968

134 497
794,930

155 527
986,243

463 302

517,112

599,272

617 766

600,562

217 841
65,677
138 939

244 069
64,600
157 803

285,917
61,137
182,720

297 744
49,207
201 498

288,938
37,022
208 994

40945
97994

44594
113,209

52545
130,176

58031
143,467

61674
147,320

18,745
5411
7,439

24,329
6389
7^174

40,839
6787
8,083

36,311
7991
8,854

35,300
6053
8,655

8,327
925

11,767
981

12,834
956

15,186
975

14,492
1,108

503,464

590,920

678,209

745,706

808,327

116 342
7459
5235
9180
12135
11236
4,686
17532
10480
30,223
20494
26495
66359
104073

133 995
12,714
5832
10156
13,858
8839
9,390
21,329
11252
31,843
23,169
32090
86540
118 547

157 513
13,104
6,469
15166
13,568
11,323
8,206
23,379
10,568
33,709
26,866
39,149
99723
139,584

185 309
12,300
7200
13527
12,998
15944
6,256
20,625
8347
27,029
27,445
46567
107 717
155 964

209 903
11,848
7^35
9353
12,672
22,901
6,681
21,334
7,560
26,606
28,641
52,588
122 598
170,724

757
103,316

675
117,872

670
138,914

844
155,120

19,993
150,731

19931
4,169
3928
8,369
42615

21,185
4,582
4,448
8,582
52,512

22,991
4,762
4,582
6,854
68,734

23,958
4,703
4,532
6,390
84995

24,846
5,099
4,789
6,452
89,774

44839
2224

54851
2339

71,022
2288

87065
2071

91,619
1845

17476

19942

28041

-26 099

-33 976

16362
-1,114

18738
-1,204

-26,611
-1,430

-24453
-1,646

-32 198
-1,778

RECEIPTS AND OUTLAYS:
Total receipts
Total outlays
Total surplus or deficit ( — )
On-budget receipts
On-budget outlays
On-budget surplus or deficit (-)
Off-budget receipts
Off-budget outlays
Off-budget surplus or deficit ( — )
OUTSTANDING DEBT, END OF PERIOD:
Gross Federal debt
Held by Government agencies .
Held by the public
Federal Reserve System
Other

.

.

RECEIPTS: ON-BUDGET AND OFF-BUDGET .
Individual income taxes . ..
Corporation income taxes
Social insurance taxes and contributions
On-budget
Off-budget
Excise taxes
Estate and gift taxes
Customs duties
Miscellaneous receipts:
Deposits of earnings by Federal Reserve System
OUTLAYS: ON-BUDGET AND OFF-BUDGET
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
Medicare
Income security
Social security
On-budget
Off-budget
Veterans benefits and services
Administration of justice
General government
General purpose fiscal assistance
Net interest
....

.

On-budget
Off-budget
Allowances
Undistributed offsetting receipts
On-budget
Off-budget
See next page for continuation of table.




332

TABLE B-74.—Federal receipts, outlays, and debt, fiscal years 1979-88—Continued
[Millions of dollars; fiscal years]
Estimates

Actual

1988

1984

1985

1986

1987

666,457
851,781

734,057
946,316

769,091
989,815

842,390
1,015,572

916,571
1,024,328

-185,324

-212,260

-220,725

-173,182

-107,756

500,382
685,968

547,886
769,509

568,862
806,318

628,372
821,074

674,473
821,900

-185,586

-221,623

-237,455

-192,702

-147,427

166,075
165,813

186,171
176,807

200,228
183,498

214,018
194,498

242,098
202,427

262

9,363

16,731

19,520

39,671

1,576,748

1,827,234

2,132,913

2,372,429

2,585,466

264,159
1,312,589

317,377
1,509,857

386,772
1,746,141

464,040
1,908,389

570,356
2,015,110

155,122
1,157,467

169,806
1,340,051

190,855
1,555,286

666,457

734,057

769,091

842,390

916,571

298,415
56,893
239,376

334,531
61,331
265,163

348,959
63,143
283,901

364,002
104,761
301,460

392,821
117,207
333,184

73,301
166,075

78,992
186,171

83,673
200,228

87,442
214,018

91,086
242,098

37,361
6,010
11,370

35,992
6,422
12,079

32,919
6,958
13,327

32,602
5,998
14,445

15,684
1,347

17,059
1,480

18,374
1,510

15,822
3,300

15,450
3,413

851,781

946,316

989,815

1,015,572

1,024,328

227,413
15,876
8,317
7,086
12,593
13,613
6,917
23,669
7,673
27,579
30,417
57,540
112,668
178,223

252,748
16,176
8,627
5,685
13,357
25,565
4,229
25,838
7,680
29,342
33,542
65,822
128,200
188,623

273,375
14,152
8,976
4,735
13,639
31,449
4,448
28,117
7,233
30,585
35,936
70,164
119,796
198,757

282,246
14,607
9,523
3,787
13,857
31,084
9,300
27,017
6,167
29,808
39,665
71,614
124,905
207,865

297,550
15,209
11,439
3,344
14,241
26,333
2,533
25,523
5,463
28,429
38,865
73,032
124,784
219,388

7,056
171,167

5,189
183,434

8,072
190,684

5,008
202,857

4,882
214,506

25,614
5,660
5,053
6,770
111,058

26,291
6,277
5,228
6,353
129,430

26,356
6,603
6,102
6,431
135,969

26,679
8,293
6,840
1,944
137,461

27,160
9,170
7,528
1,475
139,032

114,368
-3,310

133,548
-4,118

140,298
-4,329

142,544
-5,084

145,626
-6,594

31957

-32,698

33007

37091

-770
45,399

-29,913
-2,044

-30,189
-2,509

30150
-2,857

33816
-3,275

39,915
-5,484

RECEIPTS AND OUTLAYS:
Total receipts
Total outlays

. .

Total surplus or deficit ( — )
On-budget receipts
On-budget outlays
On-budget surplus or deficit (

)

Off-budget receipts
Off-budget outlays
Off-budget surplus or deficit (

)

OUTSTANDING DEBT, END OF PERIOD:
Gross Federal debt
Held by Government agencies
Held by the public
Federal Reserve System . .
Other
RECEIPTS: ON-BUDGET AND OFF-BUDGET
Individual income taxes
Corporation income taxes
Social insurance taxes and contributions
On-budget
Off-budget
Excise taxes
Estate and gift taxes
Customs duties
Miscellaneous receipts:
Deposits of earnings by Federal Reserve System
OUTLAYS: ON-BUDGET AND OFF-BUDGET
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..
Medicare
Income security
Social security
On-budget
Off-budget
Veterans benefits and services
Administration of justice
General government
General purpose fiscal assistance
Net interest
On-budget
Off-budget
Allowances
Undistributed offsetting receipts
On-budget
Off-budget

•

33,406
5,817
15,274

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. The 3-month period from 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 1988" for additional information.

Sources: Department of the Treasury and Office of Management and Budget.




333

TABLE B-75.—Relation of Federal Government receipts and expenditures in the national income and
product accounts to the budget, fiscal years 1986-88
[Billions of dollars; fiscal years]

Estimate
Receipts and expenditures

1986
1987

1988

769.1

842.4

916.6

33.8
12.3
.8
-1.4

35.8
13.5
-15.6
-1.5

41.5
17.7
-6.1
-1.7

814.7

874.6

968.1

RECEIPTS
Total on-budget and off-budget receipts
Government contributions for employee retirement (grossing)
Other netting and grossing
.
Timing adjustments
Geographic exclusions.. ..
.
..
Federal sector national income and product accounts receipts
EXPENDITURES
Total on-budget and off-budget outlays

989.8

Lending and financial transactions
Government contributions for employee retirement (grossing)
Other netting and grossing
Defense timing adjustment
.
Bonuses on Outer Continental Shelf land leases
Geographic exclusions. ..
Other
Federal sector, national income and product accounts, expenditures

1,015.6

1,024.3

-12.5
33.8
12.3
3.2
2.0
-5.4
2.0

-6.3
35.8
13.5
6.5
1.3
-5.6
-.4

4.5
41.5
17.7
3.9
.8
-5.5
1.5

1,025.4

1,060.5

1,088.6

Note.—See Note, Table B-73.
See Special Analysis B, "Special Analyses, Budget of the United States Government, Fiscal Year 1988"
categories.

for description of these

Sources: Department of Commerce (Bureau of Economic Analysis), Department of the Treasury, and Office of Management and
Budget.




334

TABLE B-76.—Federal and State and local government receipts and expenditures, national income and
product accounts, 1929-86
[Billions of dollars; quarterly data at seasonally adjusted annual rates]

Year
or
quarter

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
1982
1983
1984
1985
1986"
1982: IV
1983- IV
1984- 1
II
Ill
IV
1985: 1

||
III
IV
1986- 1
II
Ill
IV

Surplus or
deficit

Surplus or
deficit
Receipts

11.3
9.4
15.4
17.8
25.0
32.7
49.2
51.2
53.4
52.6
57.8
59.6
56.6
69.4
85.6
90.5
95.0
90.4
101.6
110.2
116.7
115.7
130.3
140.4
145.9
157.9
169.8
175.6
190.2
214.4
230.8
266.2
300.1
306.8
327.3
374.0
419.6
463.1
480.0
549.1
616.6
694.4
779.8
855.1
977.2
1,000.8
1,061.3
1,173.7
1,265.4
1,341.0
1,008.4
1,095.3
1,146.1
1,167.0
1,179.5
1,202.2
1,258.8
1,229.3
1,276.6
1,296.9
1,311.4
1,318.1
1,354.2

Expenditures

national
income
and
product
accounts

10.3
1.0
10.7
-1.4
17.6
-2.2
-.7
18.5
-3.8
28.8
64.1
314
93.4
-44.2
103.1
518
-39.5
92.9
47.2
5.4
14.4
43.4
8.4
51.1
60.0
34
61.4
8.0
79.5
6.1
94.3
38
102.0
-7.0
97.5
-7.1
98.5
3.1
105.0
5.2
115.8
.9
128.3
-12.6
131.9
16
137.3
3.1
150.1
-4.3
161.6
-3.8
169.1
.7
177.8
-2.3
189.6
.5
215.6
-1.3
245.0
-14.2
272.2
-6.0
290.2
9.9
317.4
-10.6
346.8
195
377.3
-3.4
411.7
7.9
467.4
-4.3
544.9
-64.9
587.5
384
635.7
-19.1
694.8
-.4
768.3
11.5
889.6
-34.5
1,006.9
-29.7
1,111.6
1108
1,189.9
-128.6
1,275.2
-101.5
1,401.7
1363
1,484.1
-143.1
1,175.3
-166.8
1,208.2
112 9
1,233.6
-87.5
1,260.9
-93.9
1,284.3
1048
1,322.1
-119.9
1,355.4
-96.6
1,385.0
1556
1,414.5 /- 138.0
1,452.0 ^-155.1
1,436.5
-125.1
1,491.4
-173.3
1,487.5
-133.3
1,520.8

State and local
government

Federal Government

Total government

Receipts

3.8
2.7
6.8
8.7
15.5
23.0
39.3
41.1
42.7
40.7
44.1
43.9
39.4
50.4
64.6
67.7
70.4
64.2
73.1
78.5
82.5
79.3
90.6
96.9
99.0
107.2
115.6
116.2
125.8
143.5
152.6
176.9
199.7
195.4
202.7
232.2
263.7
293.9
294.9
340.1
384.1
441.4
505.0
553.8
639.5
635.3
659.9
726.5
786.8
826.2
633.1
675.5
711.2
721.7
729.2
743.9
793.3
755.8
792.6
805.8
806.6
813.5
833.1

Expenditures

2.7
4.0
9.0
10.0
20.5
56.1
85.9
95.6
84.7
37.2
30.8
35.5
42.0
41.2
58.1
71.4
77.6
70.3
68.6
72.5
80.2
89.6
91.7
93.9
102.9
111.4
115.3
119.5
125.3
145.3
165.8
182.9
191.3
207.8
224.8
249.0
269.3
305.5
364.2
393.7
430.1
470.7
521.1
615.1
703.3
781.2
835.9
896.5
984.9
1,030.2
835.7
844.7
865.2
885.6
901.1
934.0
955.4
970.6
990.1
1,023.4
1,001.5
1,045.7
1,030.5
1,043.0

national
income
and
product
accounts
1.2
-1.3
-2.2
-1.3
-5.1
-33.1
-46.6
-54.5
-42.1
3.5
13.4
8.3
-2.6
9.2
6.5
-3.7
-7.1
-6.0
4.4
6.1
2.3
-10.3
-1.1
3.0
-3.9
-4.2
.3
33
.5
-1.8
132
-6.0
8.4
-12.4
220
-16.8
-5.6
-11.6
-69.4
535
-46.0
-29.3
-16.1
-61.3
-63.8
-145.9
-176.0
-170.0
-198.0
-204.0
-202.6
-169.2
-154.0
-163.9
-171.9
-190.1
-162.2
-214.8
-197.5
-217.6
-195.0
-232.2
-197.4

Surplus or
deficit

Receipts

Expenditures

national

income
and

product
accounts
7.6
7.2
9.6
10.0
10.4
10.6
10.9
11.1
11.6
13.0
15.4
17.7
19.5
21.3
23.4
25.4
27.4
29.0
31.7
35.0
38.5
42.0
46.6
50.0
54.1
58.6
63.4
69.8
75.5
85.2
94.1
107.9
120.8
135.8
153.6
179.3
196.4
213.1
239.6
270.1
300.1
330.3
355.3
390.0
425.6
449.4
487.7
540.8
577.5
618.8
459.8
505.8
526.5
538.8
542.9
555.3
561.3
571.9
584.2
592.7
608.3
611.5
629.1

7.8
7.2
9.6
9.3
9.1
8.8
8.4
8.5
9.0
11.1
14.4
17.6
20.2
22.5
23.9
25.5
27.3
30.2
32.9
35.9
39.8
44.4
47.0
49.9
54.5
58.2
62.9
68.8
75.5
84.7
95.2
107.8
119.3
134.0
151.0
165.8
182.9
205.9
235.2
254.9
273.2
301.3
327.7
363.2
391.4
414.3
440.2
472.4
515.8
557.9
424.1
449.5
460.0
468.7
475.8
485.0
495.6
512.6
524.7
530.2
538.5
552.6
565.1
575.5

-0.2
_i

!o

.6
1.3
1.8
2.4
2.7
2.6
1.9
1.0
.1
.7
-1.2
-.4
.0
-LI
-1.3
-.9
-1.4
-2.4
.4
.1
-.4
.5
1.0
-.0
.5
1.1
.1
1.5
1.8
2.6
13.5
13.5
7.2
4.5
15.2
26.9
28.9
27.6
26.8
34.1
35.1
47.5
68.5
61.7
60.8
35.8
56.4
66.5
70.0
67.2
70.2
65.6
59.2
59.5
62.5
69.9
58.9
64.0

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.




335

TABLE B-77.—Federal and State and local government receipts and expenditures, national income and
product accounts, by major type, 1929-86
[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Receipts

Expenditures
Net interest paid

In-

Year or quarter

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
1982
1983
1984
1985 p
1986 .. . .
1982: IV
1983: IV
1984- 1
II
Ill
IV
1985:1

II
III
IV
1986- 1 ... .
II
Ill p
IV .

Total

11.3
9.4
15.4
17.8
25.0
32.7
49.2
51.2
53.4
52.6
57.8
59.6
56.6
69.4
85.6
90.5
95.0
90.4
101.6
110.2
116.7
115.7
130.3
140.4
145.9
157.9
169.8
175.6
190.2
214.4
230.8
266.2
300.1
306.8
327.3
374.0
419.6
463.1
480.0
549.1
616.6
694.4
779.8
855.1
977.2
1,000.8
1,061.3
1,173.7
1,265.4
1,341.0'
1,008.4
1,095.3
1,146.1
1,167.0
1,179.5
1,202.2
1,258.8
1,229.3
1,276.6
1,296.9
1,311.4
1,318.1
1,354.2,

direct
PerPurContrisonal Corpo- busi- butions
chases Transtax
rate ness
of
tax
for Total ! goods fer
and profits and
paynontax tax ac- non- social
and ments
re- cruals tax insurservance
ceipts
ices
accruals

2.6
1.4
2.4
2.6
3.3
5.9
17.8
18.9
20.8
18.7
21.4
21.0
18.5
20.6
28.9
34.0
35.5
32.5
35.4
39.7
42.4
42.2
46.1
50.5
52.2
57.0
60.5
58.8
65.2
74.9
82.4
97.7
116.3
116.2
117.3
142.0
152.0
171.8
170.6
198.7
228.1
261.1
304.7
340.5
393.3
409.3
410.5
439.6
486.5
513.4
411.1
413.9
421.5
431.2
445.9
460.0
497.7
456.4
491.2
500.7
497.5
504.8
519.0
532.2

1.4
.5
1.4
2.8
7.6
11.4
14.1
12.9
10.7
9.1
11.3
12.4
10.2
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
32.7
39.4
39.7
34.4
37.7
41.9
49.3
51.8
50.9
64.2
73.0
83.5
88.0
84.8
81.1
63.1
77.2
95.4
91.8
102.8
59.8
88.1
102.9
101.6
89.3
87.8
87.8
87.1
95.8
96.4
95.7
99.0
104.4

7.1
7.1
9.4
10.1
11.3
11.8
12.8
14.2
15.5
17.1
18.4
20.1
21.3
23.4
25.3
27.7
29.7
29.6
32.2
35.0
37.4
38.6
41.7
45.3
48.0
51.5
54.6
58.7
62.5
65.2
70.1
78.7
86.3
94.0
103.4
111.1
120.8
129.0
140.0
151.7
165.7
178.1
189.4
213.3
251.5
258.8
282.6
312.0
331.4
348.7
264.5
294.1
302.9
310.3
315.3
319.6
323.3
331.9
332.7
337.7
346.7
340.8
354.2
353.1

0.3
.3
2.2
2.4
2.8
3.5
4.6
5.2
6.3
7.7
6.7
6.0
6.6
7.4
8.8
9.3
9.6
10.6
12.0
13.5
15.5
15.9
18.8
21.9
22.9
25.4
28.5
30.1
31.6
40.6
45.5
50.4
57.9
62.2
68.9
79.0
97.6
110.5
118.5
134.5
149.8
171.7
197.8
216.5
251.2
269.6
291.0
326.7
355.7
376.1
273.0
299.2
318.8
323.9
329.0
334.9
350.0
353.9
356.8
362.1
371.5
373.5
376.6
382.6

10.3
10.7
17.6
18.5
28.8
64.1
93.4
103.1
92.9
47.2
43.4
51.1
60.0
61.4
79.5
94.3
102.0
97.5
98.5
105.0
115.8
128.3
131.9
137.3
150.1
161.6
169.1
177.8
189.6
215.6
245.0
272.2
290.2
317.4
346.8
377.3
411.7
467.4
544.9
587.5
635.7
694.8
768.3
889.6
1,006.9
1,111.6
1,189.9
1,275.2
1,401.7
1,484.1
1,175.3
1,208.2
1,233.6
1,260.9
1,284.3
1,322.1
1,355.4
1,385.0
1,414.5
1,452.0
1,436.5
1,491.4
1,487.5
1,520.8^

8.9
8.3
13.6
14.2
25.0
59.9
88.9
97.1
83.0
29.1
26.4
32.6
39.0
38.8
60.4
75.8
82.8
76.0
75.3
79.7
87.3
95.4
97.9
100.6
108.4
118.2
123.8
130.0
138.6
158.6
179.7
197.7
207.3
218.2
232.4
250.0
266.5
299.1
335.0
356.9
387.3
425.2
467.8
530.3
588.1
641.7
675.0
733.4
815.4
865.3
671.8
676.1
693.2
733.3
743.8
763.4
777.3
799.0
829.7
855.6
836.7
860.8
874.0
889.7

1.0
1.5
2.6
2.7
2.6
2.7
2.4
3.0
6.0
13.1
13.1
14.5
16.9
18.0
14.8
14.3
15.1
17.1
18.5
19.4
22.2
26.5
27.6
29.4
33.7
34.8
36.8
38.3
41.3
46.0
54.7
62.9
69.7
84.1
99.8
111.3
127.0
150.9
189.6
207.2
221.6
239.5
268.0
319.2
362.2
404.0
435.1
448.1
479.5
504.2
429.7
441.1
441.4
445.0
448.8
457.0
470.5
475.9
484.4
487.3
492.9
502.3
510.5
511.3

Total

0.7
1.0
1.1
1.2
1.2
1.4
1.9
2.4
3.2
4.1
4.2
4.2
4.3
4.4
4.5
4.5
4.6
4.7
4.7
5.2
5.6
5.4
6.3
6.9
6.4
6.9
7.4
7.9
8.1
8.5
8.9
10.3
11.5
12.4
12.5
12.9
15.2
16.5
18.8
23.2
25.1
28.2
30.8
36.3
52.2
60.1
68.1
87.1
103.6
109.8
61.4
74.2
79.3
81.6
90.9
96.4
99.9
103.8
103.2
107.5
109.0
112.4
108.8
109.2

Less-.
InterInter- est reest ceived
by
paid
government

10.1
9.9
10.8
11.6
12.5
13.2
14.5
15.7
18.1
19.8
22.3
23.1
24.8
29.6
33.6
37.7
43.6
47.9
56.5
68.2
83.2
109.1
128.3
145.1
173.3
194.7
206.4
133.2
154.7
162.4
167.8
178.1
184.9
189.0
193.8
195.7
200.4
204.0
207.8
206.9
206.9

Less:
Dividends
received
by
government

3.3
3.5
3.9
4.2
4.6
5.1
6.0
6.8
7.7
8.3
9.9
10.6
11.9
14.3
17.1
18.9
20.4
22.8
28.3
37.5
46.9
56.9
68.1
77.1
86.3
91.1
96.6
71.8
80.5
83.2
86.1
87.2
88.4
89.1
90.0
92.5
92.9
95.0
95.5
98.1
97.8

1
Includes an item for the difference between wage accruals and disbursements, not shown separately.
Source: Department of Commerce, Bureau of Economic Analysis.




336

0.1
.2
.2
.3
.3
.5
.9
.9
.9
1.3
1.7
2.0
1.9
2.3
2.9
2.8
3.6
5.2
6.6
3.1
2.9
3.1
3.4
3.8
4.2
4.6
5.0
5.4
5.7
6.1
6.4
6.8
7.0

Subsidies
less
current
surplus of
government
enterprises

-0.2
.0
.4
.4
.1
.1
.1
.6
.7
.9
_2
—1
-.3
.1
1
-.3
-.5
-.3
.0
.7
.7
1.1
.1
.4
1.7
1.8
1.1
1.7
1.6
2.5
1.6
1.4
1.9
2.9
2.6
3.7
3.5
1.2
2.4
1.0
3.0
3.9
3.5
5.7
6.7
8.7
14.1
10.5
8.2
11.3
15.4
19.6
23.0
4.5
4.5
10.0
12.5
10.2
2.6
7.4
4.1
22.4
1.0
17.8

Surplus
or
deficit
(-),
national
income
and
product accounts

Addendum:
Grantsin-aid
to
State
and
local
governments

1.0
-1.4
-2.2
_i
38
-31.4
-44.2
-51.8
395
5.4
14.4
8.4
-3.4
8.0
6.1
-3.8
-7.0
-7.1
3.1
5.2
.9
-12.6
1.6
3.1
-4.3
-3.8
.7
-2.3
.5
13
-14.2
-6.0
9.9
-10.6
-19.5
34
7.9
-4.3
-64.9
-38.4
-19.1
-.4
11.5
-34.5
297
-110.8
-128.6
-101.5
1363
-143.1
-166.8
-112.9
875
-93.9
1048
-119.9
-96.6
-155.6
-138.0
1551
-125.1
-173.3
-133.3

0.1
.5
1.0
.9
.8
.9
.9
.9
.9
1.1
1.7
2.0
2.2
2.3
2.5
2.6
2.8
2.9
3.1
3.3
4.2
5.6
6.8
6.5
7.2
8.0
9.1
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
80.5
88.7
87.9
83.9
86.2
93.6
99.0
104.0
84.5
86.0
91.5
93.4
92.6
96.9
95.7
98.3
100.2
101.6
103.5
106.9
108.0
97.7

TABLE b-/o.—reaerai Government receipts and expenditures, national income and product accounts,
1966-88
[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Receipts

Year or
quarter

Total

Expenditures

Indirect ContriPersonal Corpo- business butions
rate
1
tax and profits tax and for
nontax tax nontax social Total
receipts accruals accruals insurance

Purcha ses of
goods and
serv

Total

Transfer
payments

To To forNational persons eigndefense
ers

Grantsin-aid

to Net
State nterand est
local paid

govern-

ments

Subsidies
less
current
surplus
of
government
enterprises

Surplus
or
deficit
( ),
national
income
and
product
accounts

-0.3
-8.6
-12.3
5.2

2

Fiscal:
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975.. .
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986 3
1987 3
1988

134.0
148.1
162.1
192.5
198.0
196.2
217.9
245.3
277.2
290.5
322.6
374.7
424.3
491.2
538.6
623.8
643.3
645.7
712.6
774.6
814.7
874.6
968.1

57.5
64.4
71.4
90.2
94.0
87.9
100.5
107.5
122.7
127.5
137.1
165.9
186.5
222.9
250.7
289.6
310.0
292.5
302.4
340.2
355.8
368.7
396.5

30.8
30.3
33.1
36.8
32.9
31.9
34.2
40.9
43.4
42.1
52.1
59.0
67.8
75.7
70.2
69.4
52.1
55.7
76.3
71.7
83.0
108.9
130.2

15.4
15.7
17.0
18.6
19.1
20.0
19.8
20.6
21.3
22.1
24.2
24.5
27.1
29.0
35.3
53.4
50.0
50.2
54.9
56.5
52.2
53.8
56.6

30.2 134.3
37.7 156.7
40.6 174.4
46.9 187.3
52.0 198.7
56.5 216.8
63.4 237.1
76.3 260.4
89.8 283.9
98.8 335.7
109.1 378.9
125.4 419.6
142.9 459.9
163.6 506.4
182.3 589.0
211.4 682.4
231.1 755.9
247.3 832.4
279.0 873.9
306.2 962.1
323.7 1,025.4
343.2 1,060.5
384.8 1,088.6

73.9
87.6
97.0
100.3
99.8
98.3
104.4
105.3
109.3
123.9
132.2
146.8
158.6
173.1
199.9
231.8
264.4
287.4
297.8
341.1
367.1
384.8
394.8

55.7
68.8
77.0
78.5
78.2
75.7
76.2
77.1
78.8
86.3
91.5
99.2
106.3
117.7
137.2
160.7
187.3
210.4
229.1
253.6
274.8
291.0
301.0

31.8
37.2
42.9
48.9
55.3
68.1
76.5
87.6
102.3
131.9
154.3
167.1
179.3
198.5
235.4
274.6
305.6
339.8
342.3
360.8
380.4
395.3
412.9

2.4 12.7 8.7
2.3 14.8 9.6
2.2 17.8 10.4
2.3 19.2 12.0
2.2 22.6 13.5
2.5 26.8 14.1
3.0 32.6 14.0
2.8 40.4 15.7
3.2 41.6 19.6
3.7 48.4 21.7
3.7 57.5 25.1
4.1 66.3 28.5
4.4 74.7 33.5
5.1 79.1 40.7
5.8 86.7 50.8
6.7 90.1 66.7
7.2 83.4 82.2
7.7 85.7 90.6
9.9 90.7 109.7
13.4 97.7 128.3
13.8 107.4 136.8
14.2 104.6 138.5
14.3 100.0 140.5

4.8
5.2
4.1
4.7
5.5
7.0
6.5
9.1
7.7
5.9
6.2
6.9
9.7
9.9
10.4
12.5
13.0
20.9
23.5
20.9
19.9
25.1
26.1

-2~il5
-19.2
-15.2
-6.8
-45.3
-56.3
-44.8
-35.6
-15.2
-50.4
-58.5
-112.6
-186.7
-161.3
-187.5
-210.7
-185.9
-120.5

Calendar:
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975..
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986 "

143.5
152.6
176.9
199.7
195.4
202.7
232.2
263.7
293.9
294.9
340.1
384.1
441.4
505.0
553.8
639.5
635.3
659.9
726.5
786.8
826.2

61.7
67.5
79.7
95.1
92.6
90.3
108.2
114.7
131.3
125.9
147.3
169.8
194.9
231.0
257.9
298.9
304.5
294.5
309.3
345.6
361.8

31.4
30.0
36.1
36.1
30.6
33.5
36.6
43.3
45.1
43.6
54.6
61.6
71.4
74.4
70.3
65.7
49.0
61.3
75.9
73.6
83.2

15.5
16.2
17.9
18.9
19.2
20.3
19.9
21.1
21.6
23.8
23.3
25.0
28.0
29.3
38.8
56.2
48.1
51.6
55.7
56.1
52.3

34.9 145.3
38.9 165.8
43.2 182.9
49.6 191.3
52.9 207.8
58.7 224.8
67.5 249.0
84.6 269.3
95.9 305.5
101.6 364.2
115.0 393.7
127.7 430.1
147.0 470.7
170.3 521.1
186.8 615.1
218.8 703.3
233.7 781.2
252.5 835.9
285.5 896.5
311.5 984.9
328.9 1,030.2

80.4
92.7
100.1
100.0
98.8
99.8
105.8
106.4
116.2
129.2
136.3
151.1
161.8
178.0
208.1
242.2
272.7
283.5
311.3
354.1
367.2

62.0
73.4
791
78.9
76.8
74.1
77.4
77.5
82.6
89.6
93.4
100.9
108.9
121.9
142.7
167.5
193.8
214.4
235.0
259.4
278.4

33.5
40.2
46.2
50.8
61.6
73.0
80.9
93.7
115.0
146.8
159.3
170.1
182.4
205.6
247.0
282.1
316.3
340.1
344.3
367.0
383.8

2.4 14.4
2.4 15.9
2.3 18.6
2.2 20.3
2.3 24.4
2.7 29.0
2.9 37.5
2.9 40.6
3.6 43.9
4.0 54.6
4.4 61.1
4.2 67.5
4.7 77.3
5.2 80.5
6.5 88.7
6.5 87.9
7.8 83.9
8.5 86.2
10.7 93.6
13.4 99.0
13.7 104.0

9.2
9.8
11.3
12.7
14.1
13.8
14.4
18.0
20.7
23.0
26.8
29.1
35.2
42.5
53.3
72.4
84.6
94.3
115.6
130.5
135.8

5.5
4.7
4.5
5.2
6.5
6.3
7.9
7.8
5.6
6.9
5.8
8.2
9.5
9.2
11.5
12.3
16.0
22.9
21.3
20.7
25.6

-1.8
-13.2
-6.0
8.4
-12.4
-22.0
-16.8
-5.6
-11.6
-69.4
-53.5
-46.0
-29.3
-16.1
-61.3
-63.8
-145.9
-176.0
-170.0
-198.0
-204.0

633.1
675.5
711.2
721.7
729.2
743.9
793.3
755.8
792.6
805.8
806.6
813.5
833.1

303.0
291.9
295.9
301.7
314.3
325.5
360.7
316.6
349.6
355.6
350.3
355.5
365.8
375.6

46.4
70.2
81.9
80.9
71.0
69.9
70.5
69.9
76.8
77.2
77.8
80.1
84.3

47.6
53.6
54.6
55.8
56.3
55.9
55.1
59.3
53.9
56.0
52.7
50.7
53.4
52.5

236.1
259.8
278.8
283.3
287.6
292.6
306.9
310.0
312.2
317.0
325.8
327.2
329.6
333.1

835.7
844.7
865.2
885.6
901.1
934.0
955.4
970.6
990.1
1,023.4
1,001.5
1,045.7
1,030.5
1,043.0

293.2
276.1
283.4
315.2
317.2
329.1
333.7
340.9
360.9
380.9
355.7
367.6
369.3
376.3

205.4
221.5
227.1
233.7
234.5
244.9
248.9
255.1
265.5
268.0
266.4
278.4
286.8
281.9

337.9
340.3
342.1
343.4
345.0
346.7
363.1
364.7
369.6
370.4
378.8
381.6
387.5
387.4

9.5
12.2
8.1
8.3
11.1
15.5
11.1
12.4
14.5
15.4
10.5
15.0
15.5
13.6

87.2
101.0
107.3
110.4
119.7
124.9
127.6
130.9
129.8
133.9
135.0
138.1
134.7
135.4

23.4
29.1
32.9
15.0
15.6
21.5
24.4
22.3
15.1
21.1
18.0
36.5
15.4
32.5

-202.6
-169.2
-154.0
-163.9
-171.9
-190.1
-162.2
-214.8
-197.5
-217.6
-195.0
-232.2
-197.4

1982: IV
1983: IV
1984:1

II
Ill
IV
1985:1
II
Ill
IV
1986:1

Ill"""
IV'..
1
2

84.5
86.0
91.5
93.4
92.6
96.9
95.7
98.3
100.2
101.6
103.5
106.9
108.0
97.7

Includes an item for the difference between wage accruals and disbursements, not shown separately.
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.




337

TABLE B-79.—State and local government receipts and expenditures, national income and product accounts,
1946-86
[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Expenditures

Receipts

Year
or
quarter

1946
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
1982
1983
1984
1985
1986 »
1982- IV
1983: IV
1984: 1
II
Ill
IV
1985: 1
||
III
IV
1986: 1
II
Ill
IV

Total

13.0
15.4
17.7
19.5
21.3
23.4
25.4
27.4
29.0
31.7
35.0
38.5
42.0
46.6
50.0
54.1
58.6
63.4
69.8
75.5
85.2
94.1
107.9
120.8
135.8
153.6
179.3
196.4
213.1
239.6
270.1
300.1
330.3
355.3
390.0
425.6
449.4
487.7
540.8
577.5
618.8
459.8
505.8
526.5
538.8
542.9
555.3
561.3
571.9
584.2
592.7
608.3
611.5
629.1

Indirect
Personal Corpo- business Contribu- Federal
rate
tax and profits tax and tions for grants-m- Total »
nontax
social
aid
tax
nontax
receipts accruals accruals insurance

1.5
1.7
2.1
2.4
2.5
2.8
3.0
3.2
3.5
3.9
4.5
5.0
5.4
6.2
6.8
7.5
8.4
9.0
10.2
11.3
13.2
15.0
18.0
21.1
23.6
27.0
33.8
37.3
40.5
44.7
51.5
58.3
66.2
73.7
82.6
94.5
104.9
116.1
130.3
140.9
151.6
108.1
122.0
125.5
129.5
131.7
134.4
137.0
139.8
141.6
145.1
147.2
149.3
153.1
156.7

0.5
.6
.7
.6
.8
.9
.8
.8
.8
1.0
1.0
1.0
1.0
1.2
1.2
1.3
1.5
1.7
1.8
2.0
2.2
2.6
3.3
3.6
3.7
4.3
5.3
6.0
6.7
7.3
9.6
11.4
12.1
13.6
14.5
15.4
14.0
15.9
19.5
18.2
19.6
13.4
17.9
21.0
20.8
18.3
18.0
17.3
17.2
19.0
19.2
17.9
18.8
20.1

9.3
10.7
12.2
13.3
14.6
15.9
17.4
18,8
19.9
21.6
23.8
25.7
27.2
29.3
32.0
34.4
37.0
39.4
42.6
46.1
49.7
53.9
60.8
67.4
74.8
83.1
91.2
99.6
107.4
116.2
128.4
140.7
150.0
160.1
174.5
195.3
210.8
231.0
256.3
275.4
296.4
216.9
240.5
248.3
254.4
259.0
263.7
268.2
272.7
278.8
281.8
294.1
290.1
300.8
300.6

0.6

is

.9
1.1
1.4
1.6
1.7
2.0
2.1
2.3
2.6
2.8
3.1
3.4
3.7
3.9
4.2
4.7
5.0
5.7
6.7
7.2
8.3
9.2
10.2
11.5
13.0
14.6
16.8
19.5
22,1
24.7
27.4
29.7
32.5
35.8
38.5
41.1
44.2
47.1
36.9
39.4
40.0
40.7
41.4
42.3
43.1
43.9
44.5
45.1
45.7
46.3
47.0
49.5

1.1
1.7
2.0
2.2
2.3
2.5
2.6
2.8
2.9
3.1
3.3
4.2
5.6
6.8
6.5
7.2
8.0
9.1
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
80.5
88.7
87.9
83.9
86.2
93.6
99.0
104.0
84.5
86.0
91.5
93.4
92.6
96.9
95.7
98.3
100.2
101.6
103.5
106.9
108.0
97.7

11.1
14.4
17.6
20.2
22.5
23.9
25.5
27.3
30.2
32.9
35.9
39.8
44.4
47.0
49.9
54.5
58.2
62.9
68.8
75.5
84.7
95.2
107.8
119.3
134.0
151.0
165.8
182.9
205.9
235.2
254.9
273.2
301.3
327.7
363.2
391.4
414.3
440.2
472.4
515.8
557.9
424.1
449.5
460.0
468.7
475.8
485.0
495.6
512.6
524.7
530.2
538.5
552.6
565.1
575.5

Subsi- Surplus
or
dies
deficit
Trans- Net
Purless
(— ).
chases fer interest current national
paid surplus
payof
income
less
goods ments diviof
and
to
and
per- dends govern- product
services sons received ment accounts
enterprises

9.9
12.8
15.3
18.0
19.8
21.8
23.1
24.8
27.7
30.3
33.3
36.9
40.8
43.3
46.1
50.2
53.5
58.1
63.5
69.9
78.2
87.0
97.6
107.2
119.4
132.5
144.2
160.1
182.9
205.9
220.6
236.2
263.4
289.9
322.2
345.9
369.0
391.5
422.2
461.3
498.1
378.7
400.0
409.8
418.1
426.6
434.3
443.5
458.1
468.8
474.7
480.9
493.3
504.7
513.3

1.7
2.3
3.0
3.0
3.6
3.1
3.5
3.6
3.8
4.0
4.2
4.6
5.1
5.6
5.9
6.5
7.0
7.5
8.2
8.8
10.1
12.1
14.5
16.7
20.1
24.0
27.5
30.4
32.3
38.9
43.6
47.4
52.4
57.2
65.7
73.6
79.9
86.5
93.1
99.2
106.7
82.3
88.7
91.3
93.3
92.7
94.9
96.3
98.7
100.4
101.4
103.6
105.6
107.5
110.2

1
Includes an item for the difference between wage accruals and disbursements, not shown separately.
Source: Department of Commerce, Bureau of Economic Analysis.




338

0.2
.1
.1
.1
.1
.0
.0
.0
.1
.1
.1
.1
.1
.1
.1
.1
.2
.1
-.1
3

~'.9
-1.1
-1.3
-2.0
-1.6
-1.8
-3.3
-5.0
-5.1
45
-5.3
-8.7
138
-18.9
-22.4
274
-29.0
-32.1
-32.1
-32.6
289
-29.7
-31.2
-32.2
-32.6
-32.6
-32.3
-32.1
-32.0
321
-32.2
-32.2
-32.7
-33.3

-0.7
-.8
-.8
9
-.9
-1.0
-1.1
-1.2
-1.3
15
-1.6
-1.7
17
-2.0
-2.2
-2.3
-2.5
-2.8
-2.8
30
-3.0
-3.1
-3.2
33
-3.6
-3.7
-4.2
-4.3
-4.4
-4.5
-4.8
-5.1
-5.6
-5.7
-5.8
-5.6
-7.3
-8.8
-10.7
126
-14.3
-8.0
-9.4
-9.9
-10.5
-11.0
-11.5
-11.9
-12.1
-12.5
-13.7
-13.9
-14.1
-14.4
-14.7

1.9
1.0
.1
-.7
12
-.4
.0
.1
-1.1
13
-.9
-1.4
24
-.4
.1
-.4
.5
.5
1.0
.0
.5
-1.1
.1
1.5
1.8
2.6
13.5
13.5
7.2
4.5
15.2
26.9
28.9
27.6
26.8
34.1
35.1
47.5
68.5
61.7
60.8
35.8
56.4
66.5
70.0
67.2
70.2
65.6
59.2
59.5
62.5
69.9
58.9
64.0

TABLE B-80.—State and local government revenues and expenditures, selected fiscal years, 1927-85
[Millions of dollars]
General expenditures by function2

General revenues by source2
Fiscal year *
Total

Sales
and
Property gross
taxes
receipts
taxes

Individual
income
taxes

Corpo- Revenue
from
ration
All 3
Federal
net
income Govern- other
taxes
ment

Total

Education

Highways

Public
welfare

All
other4

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
3,215
3,547

1940
1942
1944
1946
1948

9,609
10,418
10,908
12,356
17,250

4,430
4,537
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
2,123
2,269
2,661
3,685

9,229
9,190
8,863
11,028
17,684

2,638
2,586
2,793
3,356
5,379

1,573
1,490
1,200
1,672
3,036

1,156
1,225
1,133
1,409
2,099

3,862
3,889
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
10,619
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 9,252
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

1962-63
1963-64
1964-65

62,269 19,833 14,446
68,443 21,241 15,762
74,000 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
74,678

23,729
26,286
28,563

11,150
11,664
12,221

5,420
5,766
6,315

23,678
25,586
27,579

1965-66
1966-67
1967-68
1968-69
1969-70

83,036
91,197
101,264
114,550
130,756

24,670
26,047
27,747
30,673
34,054

19,085
20,530
22,911
26,519
30,322

4,760
5,825
7,308
8,908
10,812

2,038
2,227
2,518
3,180
3,738

13,214
15,370
17,181
19,153
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
1972-73
1973-74
1974-75

144,927
167,541
190,214
207,670
228,171

37,852
42,877
45,283
47,705
51,491

33,233
37,518
42,047
46,098
49,815

11,900
15,227
17,994
19,491
21,454

3,424
4,416
5,425
6,015
6,642

26,146
31,342
39,256
41,820
47,034

32,374
36,162
40,210
46,541
51,735

150,674
168,550
181,357
198,959
230,721

59,413
65,814
69,714
75,833
87,858

18,095
19,021
18,615
19,946
22,528

18,226
21,117
23,582
25,085
28,155

54,940
62,597
69,446
78,096
92,180

1975-76
1976-77
1977-78
1978-79
1979-80
1980-81
1981-82
1982-83
1983-84
1984-85

256,176
285,157
315,960
343,278
382,322
423,404
457,654
486,878
542,847
597,719

57,001
62,527
66,422
64,944
68,499
74,969
82,067
89,253
96,457
103,757

54,547
60,641
67,596
74,247
79,927
85,971
93,613
100,247
114,097
126,281

24,575
29,246
33,176
36,932
42,080
46,426
50,738
55,129
64,623
70,097

7,273
9,174
10,738
12,128
13,321
14,143
15,028
14,258
17,047
19,158

55,589
62,444
69,592
75,164
83,029
90,294
87,282
89,983
97,052
106,193

57,191
61,124
68,436
79,864
95,466
111,599
128,926
138,009
153,570
172,233

256,731
274,215
296,983
327,517
369,086
407,449
436,896
466,421
505,006
554,161

97,216
102,780
110,758
119,448
133,211
145,784
154,282
163,876
176,108
192,686

23,907
23,058
24,609
28,440
33,311
34,603
34,520
36,655
39,516
45,022

32,604
35,906
39,140
41,898
47,288
54,121
57,996
60,484
66,414
71,532

103,004
112,472
122,476
137,731
155,277
172,941
190,098
205,406
222,969
244,921

1
2

Fiscal years not the same for all governments. See Note.
Excludes revenues or expenditures of publicly owned utilities and liquor stores, and of insurance-trust activities. Intergovernmental
receipts and payments between State and local governments are also excluded.
3
Includes other taxes and charges and miscellaneous revenues.
4
Includes expenditures for libraries, hospitals, health, employment security administration, veterans' services, air transportation,
water transport and terminals, parking facilities, and transit subsidies, police protection, fire protection, correction, protective inspection
and regulation, sewerage, natural resources, parks and recreation, housing and community development, sanitation other than sewerage,
financial administration, judicial and legal, general public buildings, other governmental administration, interest on general debt, and
general expenditures, n.e.c.
Note.—Data for fiscal years listed from 1962-63 to 1983-84 are the aggregations of data for government fiscal years which ended
in the 12-month period from July 1 to June 30 of those years. Data for 1963 and earlier years include data for government fiscal years
ending during that particular calendar year.
Data are not available for intervening years.
Source-. Department of Commerce, Bureau of the Census.




339

TABLE B-81.^—Interest-bearing public debt securities by kind of obligation, 1967-86
[Millions of dollars]

End of year
or month

Fiscal year:
1967
1968
1969
1970
1971
1972
1973
1974 .. ..
1975
1976
1977
1978
1979
1980
1981
1982 .
1983
1984
1985
1986
1985- Jan
Feb
Mar
Apr
May
June
July
Aug
Sept....
Oct
Nov ..
Dec
1986: Jan
Feb
Mar

Total »
interestbearing
public
debt
securities

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
906,402
996,495
1,140,883
1,375,751
1,559,570
1,821,010
2,122,684

Self::::::::

Total 1

4

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
824,422
1,024,000
1,176,556
11,360,179
1,564,329

1,677,785 1,259,416
1,696,188 1,274,909
1,695,223 1,271,670
1,730,666 1,300,895
1,751,838 1,314,308
1,759,826 1,310,712
1,798,912 1,343,550
1,806,905 1,347,763
1,821,010 1,360,179
1,829,885 U,375,619
1,888,844 1
'1,411,469
1,943,402 1,437,653
1,960,129 1 1,449,859
1,976,744 1 1,464,094
1,984,224 1 1,472,836
2,005,889 1 1,481,953
2,019,773 '1,487,226
2,056,726 1,498,229
2,071,976 1,519,700
2,081,961 1 1,531,835
2,122,684 1 1,564,329
2,136,596 1 1,567,492
2,167,058 1 1,591,874
2,212,034 1 1,618,961

fci:
June
July
AUB
Oct
Nov
Dec

Marketable
Treasury
bills

58,535
64,440
68,356
76,154
86,677
94,648
100,061
105,019
128,569
161,198
156,091
160,936
161,378
199,832
223,388
277,900
340,733
356,798
384,220
410,730
374,471
376,760
379,477
379,851
381,220
381,872
384,462
387,345
384,220
389,716
397,561
399,893
399,563
397,505
393,172
393,714
394,880
396,650
400,727
403,628
410,730
412,166
423,759
426,679

Treasury
notes

49,108
71,073
78,946
93,489
104,807
113,419
117,840
128,419
150,257
191,758
241,692
267,865
274,242
310,903
363,643
442,890
557,525
661,687
776,449
896,884
712,778
719,762
713,836
738,455
745,124
740,910
766,677
760,882
776,449
777,687
788,611
812,488
820,299
829,375
842,473
851,084
845,884
869,302
877,717
872,796
896,884
898,631
903,269
927,459

Treasury
bonds

Total

97,418
91,079
78,805
62,956
53,989
49,135
45,071
33,137
36,779
39,626
45,724
56,355
71,073
83,772
96,178
103,631
125,742
158,070
199,510
241,716
172,168
178,387
178,357
182,589
187,963
187,930
192,411
199,537
199,510
199,470
211,103
211,078
215,803
223,045
223,022
222,986
232,294
232,278
232,256
241,742
241,716
241,695
249,845
249,824

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
316,461
351,751
383,015
460,831
558,355
418,369
421,279
423,554
429,771
437,531
449,114
455,362
459,142
460,831
454,265
477,375
505,749
510,270
512,650
511,388
523,936
532,547
558,497
561,276
550,126
558,355
569,103
575,184
593,073

Nonmarketable
Foreign
governU.S.
ment
and
bonds
public
series2
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
67,274
70,024
72,832
77,011
85,551
73,336
73,724
74,089
74,534
74,992
75,426
75,927
76,490
77,011
77,536
78,115
78,073
78,567
79,185
79,807
80,534
81,509
82,278
83,052
84,322
85,551
87,005
89,926
90,594

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
14,641
11,450
8,806
6,638
4,128
9,378
8,598
9,087
8,840
7,663
8,333
8,147
7r153
6,638
7,156
7,036
7,527
7,543
7,087
6,726
5,737
5,253
5,260
4,676
4,470
4,128
4,468
4,282
4,661

Government
account
series

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
210,462
234,684
259,534
313,928
365,872
290,527
293,292
292,219
297,355
302,536
310,995
313,956
314,849
313,928
302,625
319,425
332,174
336,203
338,988
335,956
343,156
348,672
372,305
372,264
358,380
365,872
374,109
374,298
386,867

Other 3

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
24,085
35,593
41,843
63,255
102,804
45,127
45,664
48,159
49,043
52,339
54,359
57,332
60,648
63,255
66,948
72,799
87,975
87,957
87,391
88,899
94,509
97,112
98,653
101,284
102,953
102,804
103,521
106,678
110,951

1
Beginning October 1985, includes Federal Financing Bank securities, not shown separately: $8,747 million in October 1985, $14,194
million in November 1985 through January 1986, $14,169 million in February through May 1986, $13,670 million in August 1986, and
$15,000 in September through December 1986.
2
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.




340

TABLE B-82.—Maturity distribution and average length of marketable interest-bearing public debt securities
held by private investors, 1967-86

End of year or month

Amount
outstanding,
privately
held

Maturity class

Within
lyear

Ito5
years

5 to 10
years

Average length

10 to 20
years

20 years
and over

Millions of dollars

Years

Months

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

6,153
6,110
6,097

12,968
12,670
12,337

5
4
4

1
5
2

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

8,286
14,503
16,033
16,385
14,197

7,876
6,357
6,358
8,741
9,930

8,272
7,645
6,922
4,564
3,481

3
3
3
3
2

8
6
3
1
11

1975
1976
1977
1978
1979

210,382
279,782
326,674
356,501
380,530

115,677
151,723
161,329
163,819
181,883

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

4,611
6,652
10,531
14,805
20,304

2
2
2
3
3

8
7
11
3
7

1980
1981
1982
1983.
1984

463,717
549,863
682,043
862,631
1,017,488

220,084
256,187
314,436
379,579
437,941

156,244
182,237
221,783
294,955
332,808

38,809
48,743
75,749
99,174
130,417

25,901
32,569
33,017
40,826
49,664

22,679
30,127
37,058
48,097
66,658

3
4
3
4
4

9
0
11
1
6

1,185,675
1,354,275

472,661
506,903

402,766
467,348

159,383
189,995

62,853
70,664

88,012
119,365

4
5

11
3

1985: Jan ...
Feb
Mar....
Apr
May
June .

1,099,857
1,110,272
1,106,798
1,121,977
1,145,271
1,138,109

461,758
462,955
463,882
457,352
467,260
465,310

372,608
378,690
366,843
385,122
392,430
379,046

137,280
136,490
143,745
143,704
145,696
153,878

56,353
54,699
54,722
54,320
58,372
58,362

71,858
77,438
77,606
81,478
81,513
81,513

4
4
4
4
4
4

6
8
8
8
10
10

July
Aug....
Sept
Oct
Nov....
Dec

1,171,662
1,173,579
1,185,675
1,193,376
1,224,074
1,237,340

470,538
473,060
472,661
480,307
492,916
490,217

401,502
398,089
402,766
407,877
413,960
423,625

155,237
151,550
159,383
154,326
156,262
163,049

62,872
62,867
62,853
62,853
66,154
66,003

81,513
88,013
88,012
88,013
94,782
94,446

4
5
4
4
5
5

9
0
11
10
0
0

1986: Jan
Feb
Mar
Apr
May...
June .

1,251,882
1,268,648
1,277,307
1,281,210
1,286,970
1,309,827

492,408
496,927
496,137
498,504
493,622
496,114

429,808
434,036
435,704
437,756
438,261
450,670

164,242
165,187
172,974
173,434
173,587
181,384

66,045
70,810
70,804
70,389
70,793
70,952

99,379
101,688
101,688
101,127
110,707
110,707

5
5
5
5
5
5

0
2
1
1
4
3

1,322,700
1,328,833
1,354,275
1,358,195
1,377,141
1,388,733

501,204
499,103
506,903
504,767
513,311
511,117

456,984
456,689
467,348
477,871
473,818
481,772

182,860
182,388
189,995
184,917
190,631
197,594

70,946
70,941
70..664
70,928
70,847
70,657

110,706
119,712
119,365
119,712
128,534
127,593

5
5
5
5
5
5

2
5
3
3
5
4

.

1985
1986

July
Aug
Sept...
Oct....
Nov...
Dec ..

.

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.




341

TABLE B-83.—Estimated ownership of public debt securities by private investors, 1976-86
[Par values;1 billions of dollars]
Held by private investors
Nonbank investors

End of month

1976:

June
Dec

. .

Total

Commercial
banks2

Individuals3
Total

Total

Insurance
Other
Savings securri- compabonds" ties
nies

5
market Corporafunds tions

State
and
local
governments6

Foreign
ana
international7

Other
investors8

376.4
409.5

91.4
103.5

285.0
306.0

96.1
101.6

69.6
72.0

26.5
29.6

14.4
16.2

0.8
1.1

23.3
23.5

34.2
40.9

69.8
78.1

46.4
44.6

June
Dec

421.0
461.3

102.7
98.9

318.3
362.4

104.9
107.8

74.4
76.7

30.5
31.1

18.1
19.9

.8
.9

22.1
18.2

50.3
58.1

87.9
109.6

34.2
47.9

1978:
June
Dec

477.8
508.6

97.8
95.0

380.0
413.6

109.0
114.0

79.1
80.7

29.9
33.3

19.7
20.0

1.3
1.5

17.3
17.3

70.0
76.1

119.5
133.1

43.2
51.6

1979:
June
Dec

516.6
540.5

86.1
88.1

430.5
452.4

115.5
118.0

80.6
79.9

34.9
38.1

20.9
21.4

3.8
5.6

18.6
17.0

78.7
81.7

114.9
119.0

78.1
89.7

1980:
June
Dec

558.2
616.4

97.4
112.1

460.8
504.3

116.5
117.1

73.4
72.5

43.1
44.6

22.3
24.0

5.3
3.5

14.0
19.3

83.3
87.9

118.2
129.7

101.2
122.8

651.2
694.5

119.7
111.4

531.5
583.1

107.4
110.8

69.2
68.1

38.2
42.7

26.4
29.0

9.0
21.5

19.9
17.9

94.2
96.8

136.6
136.6

138.0
170.5

733.3
740.9
791.2
848.4

116.1
116.1
117.8
131.4

617.2
624.8
673.4
717.0

112.5
114.1
115.6
116.5

67.5
67.4
67.6
68.3

45.0
46.7
48.0
48.2

32.1
32.5
34.8
39.1

25.7
22.4
38.6
42.6

16.9
17.6
21.6
24.5

99.0
103.3
109.0
116.6

136.1
137.2
140.6
149.5

194.9
197.7
213.2
228.2

906.6
948.6
982.7
1,022.6

153.2
171.6
176.3
188.8

753.4
777.0
806.4
833.8

116.7
121.3
128.9
133.4

68.8
69.7
70.6
71.5

47.9
51.6
58.4
61.9

43.7
47.4
51.2
56.7

44.8
28.3
22.1
22.8

27.2
32.8
35.9
39.7

123.7
135.2
143.0
150.5

156.2
160.1
160.1
166.3

241.1
251.9
265.0
264.4

1,073.0
1,102.2
1,154.1
1,212.5

189.8
182.3
183.0
183.4

883.2
919.9
971.1
1,029.1

136.2
142.2
142.4
143.8

72.2
72.9
73.7
74.5

64.0
69.3
68.7
69.3

60.7
63.4
68.4
76.4

19.4
14.9
13.6
25.9

42.6
45.3
47.7
50.1

157.7
165.4
172.4
179.4

166.3
171.6
175.5
192.9

300.3
317.1
351.1
360.6

1,254.1
1,292.0
1,338.2
1,417.2

195.0
196.3
196.9
192.2

1,059.1
1,095.7
1,141.3
1,225.0

145.1
148.7
151.4
154.8

75.4
76.7
78.2
79.8

69.7
72.0
73.2
75.0

80.4
85.0
88.6
93.2

26.7
24.8
22.7
25.1

50.8
54.9
59.0
59.0

189.7
198.9
212.8

186.4
200.7
209.8
214.6

380.0
382.7
397.0

1,473.1
1,502.7
1.553.3

195.1 1,278.0
197.2 1,305.5
212.5 1,340.8

157.6
157.2
156.1

81.4
83.8
87.1

76.2
73.9
69.0

95.8

29.9
22.8
24.9

59.6
59.8
67.0

1977:

1981:

June
Dec

1982:

Mar
June
Sept
Dec

1983:
Mar

June
Sept
Dec
1984:
Mar
June
Sept
DK
1985:

Mar
June
Sept
Dec

1986:

Mar
June
Sept
1
U.S.
2

225.4
2398
256.3

savings bonds, series A-F and J, are included at current redemption value.
Includes domestically chartered banks, U.S. branches and agencies of foreign banks, New York investment companies majority owned by foreign banks,
and3 Edge Act corporations owned by domestically chartered and foreign banks.
Includes partnerships and personal trust accounts.
4
Includes U.S. savings notes. Sales began May 1,1967, and were discontinued June 30,1970.
5
Exclusive of banks and insurance companies.
6
Includes State and local pension funds.
7
Consists of the investment of foreign balances and international accounts in the United States.
8
Includes savings and loan associations, credit unions, nonprofit institutions, mutual savings banks, corporate pension trust funds, dealers and brokers,
certain Government deposit accounts, and Government-sponsored agencies.
Source: Department of the Treasury.




342

CORPORATE PROFITS AND FINANCE
TABLE B-84.—Corporate profits with inventory valuation and capital consumption adjustments, 1929-86
[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Corporate profits after tax with inventory
valuation and capital consumption adjustments

Corporate
profits with
inventory
valuation
and capital
consumption
adjustments

Corporate
profits tax
liability

1929
1933 ..
1939 .

9.6
-1.5
5.5

1.4
.5
1.4

1940
1941
1942
1943
1944
1945
1946 .
1947
1948
1949

8.8
14.3
19.7
24.0
24.2
19.7
17.2
22.9
30.3
28.0

1950
1951
1952 .
1953
1954
1955
1956
1957 .
1958
1959

Dividends

Undistributed
profits with
inventory
valuation
and capital
consumption
adjustments

8.2
-2.1
4.0

5.8
2.0
3.8

2.4
-4.1
.3

2.8
7.6
11.4
14.1
12.9
10.7
9.1
11.3
12.4
10.2

5.9
6.7
8.3
9.9
11.2
9.0
8.0
11.7
17.8
17.8

4.0
4.4
4.3
4.4
4.6
4.6
5.6
6.3
7.0
7.2

1.9
2.3
4.0
5.5
6.6
4.4
2.5
5.4
10.8
10.6

34.9
39.9
37.5
37.7
36.6
47.1
45.7
45.3
40.3
51.4

17.9
22.6
19.4
20.3
17.6
22.0
22.0
21.4
19.0
23.6

17.0
17.3
18.1
17.4
19.0
25.1
23.8
23.8
21.4
27.8

8.8
8.5
8.5
8.8
9.1
10.3
11.1
11.5
11.3
12.2

8.2
8.8
9.6
8.6
9.8
14.8
12.7
12.3
10.1
15.6

I960
1961
1962
1963
1964
1965
1966
1967 ..
1968
1969

49.5
50.3
58.3
63.6
70.7
81.3
86.6
84.1
90.7
87.4

22.7
22.8
24.0
26.2
28.0
30.9
33.7
32.7
39.4
39.7

26.8
27.6
34.3
37.4
42.7
50.4
52.9
51.4
51.4
47.7

12.9
13.3
14.4
15.5
17.3
19.1
19.4
20.2
22.0
22.5

13.9
14.2
19.9
21.9
25.3
31.3
33.5
31.2
29.4
25.2

1970
1971
1972
1973
1974
1975..
1976
1977..
1978
1979 .

74.7
87.1
100.7
113.3
101.7
117.6
145.2
174.8
197.2
200.1

34.4
37.7
41.9
49.3
51.8
50.9
64.2
73.0
83.5
88.0

40.3
49.3
58.8
64.1
49.9
66.7
81.0
101.8
113.7
112.1

22.5
22.9
24.4
27.0
29.7
29.6
34.6
39.5
44.7
50.1

17.9
26.4
34.4
37.0
20.2
37.1
46.4
62.3
69.0
62.0

177.2
188.0
150.0
213.7
264.7
280.7
299.7

84.8
81.1
63.1
77.2
95.4
91.8
102.8

92.4
106.8
86.9
136.5
169.3
188.9
196.9

54.7
63.6
66.9
71.5
78.3
81.6
87.8

37.7
43.2
20.0
65.0
91.0
107.3
109.1

1982: IV

146.1

59.8

86.3

68.5

17.9

1983: IV

248.5

88.1

160.4

73.9

86.5

1984- 1 .
II
Ill
IV

262.5
271.7
259.8
265.0

102.9
101.6
89.3
87.8

159.6
170.1
170.5
177.1

76.0
78.1
79.0
80.1

83.5
92.0
91.5
97.0

1985: 1

266.4
274.3
296.3
285.6

87.8
87.1
95.8
96.4

178.7
187.2
200.5
189.2

80.9
81.4
81.6
82.5

97.8
105.8
118.8
106.8

296.4
293.1
302.0

95.7
99.0
104.4

200.7
194.2
197.6

85.2
87.5
88.8

115.5
106.6
108.8

Year or quarter

.

..

1980
1981
1982
1983
1984
1985
1986 »

||
III
IV

1986: 1
II...
Ill

.

Source: Department of Commerce, Bureau of Economic Analysis.




343

Total

TABLE B-85.—Corporate profits by industry, 1929-86
[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Corporate profits with inventory valuation adjustment and without capital consumption
adjustment
Domestic industries
Financial *

Nonfinancial

Year or quarter
Total

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
1982
1983
1984. .
1985
1986 *
1982- IV
1983- IV
1984- 1
II. .
HI
IV
1985- 1
||
III
IV
1986- 1
|
|
III

. .

10.5
12
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
49.8
50.1
55.2
59.8
66.2
76.2
81.2
78.6
85.4
81.4
69.5
82.7
94.9
107.1
99.4
123.9
155.3
183.8
208.2
214.1
194.0
202.3
159.2
196.7
230.2
222.6
242.9
150.7
223.4
235.7
241.5
223.3
220.3
213.3
215.4
235.3
226.4
239.0
238.3
246.5

Total

10.2
-1.2
6.1
9.6
15.0
20.1
24.1
23.5
18.9
18.9
24.9
32.2
29.9
36.7
41.5
38.7
38.4
36.4
45.1
44.1
43.5
39.1
49.6
46.7
46.8
51.5
55.8
61.8
71.5
76.7
73.9
79.9
74.8
62.6
75.1
85.5
92.6
82.4
109.5
139.3
165.5
186.0
180.4
159.6
173.8
131.2
166.6
199.2
190.8
207.4
121.6
190.7
205.2
211.5
191.3
188.8
182.6
183.8
205.3
191.3
200.6
205.4
211.8

FedTotal

1.3
.3
.8
1.0
1.1
1.2
1.3
1.6
1.7
2.1
1.7
2.6
3.1
3.1
3.6
4.0
4.5
4.6
4.8
5.0
5.2
5.7
6.8
7.2
7.0
7.3
6.8
6.9
7.5
8.5
9.0
10.4
11.2
12.2
14.1
15.4
15.8
14.7
11.2
15.9
21.6
29.1
27.8
21.0
16.5
11.8
18.1
15.4
21.0
29.3
18.7
15.5
16.6
15.4
13.4
16.1
18.2
21.1
21.7
23.2
27.8
29.1
28.9

eral

Re-

serve
banks

Other

0.0
1.3
.0
.3
.0
.8
.9
.0
1.0
.0
1.2
.0
.0
1.3
.1
1.6
1.6
.1
.1
2.0
.1
1.6
.2
2.3
.2
2.9
.2
3.0
.3
3.3
.4
3.7
.4
4.1
.3
4.3
4.5
.3
4.5
.5
4.6
.6
.6
5.1
.7
6.0
6.2
1.0
.8
6.3
6.4
.9
1.0
5.8
1.1
5.8
1.4
6.2
1.7
6.8
7.0
2.0
2.5
7.9
8.1
3.1
8.6
3.6
3.3 10.7
3.4 12.0
4.5 11.2
5.7
8.9
5.7
5.5
9.9
6.0
6.2 15.4
7.7 21.4
9.6 18.2
11.9
9.0
1.9
14.5
15.4
36
3.3
14.8
16.7 -1.3
16.8
4.3
15.9 13.4
14.8
3.9
.1
15.4
.5
16.1
16.4 -1.0
17.0
36
17.4 -1.2
17.1
1.1
17.1
4.0
5.2
16.5
16.3
6.9
17.0 10.8
16.2 13.0
15.5 13.4

Total

8.9
-1.5
5.3
8.6
14.0
18.9
22.8
21.9
17.3
16.8
23.2
29.6
26.8
33.5
37.9
34.7
33.9
31.8
40.3
39.1
38.3
33.5
42.9
39.5
39.8
44.2
49.0
54.9
64.0
68.2
64.9
69.5
63.7
50.4
61.0
70.2
76.8
67.8
98.3
123.4
143.9
156.8
152.6
138.6
157.3
119.4
148.5
183.8
169.7
178.1
102.9
175.2
188.6
196.1
177.8
172.6
164.4
162.7
183.6
168.1
172.8
176.3
182.9

Manu-

fac-

Transporta- Wholetion
sale

and

turing 2

public
utilities

5.2
-.4
3.3
5.5
9.5
11.8
13.8
13.2
9.7
9.0
13.6
17.6
16.2
20.9
24.6
21.7
22.0
19.9
26.0
24.7
24.0
19.4
26.4
23.6
23.3
26.0
29.3
32.3
39.3
41.9
38.6
41.4
36.7
26.7
34.3
40.8
46.2
39.8
53.6
70.9
80.6
88.7
87.5
77.1
88.5
58.0
70.1
87.4
73.0
73.4
46.8
88.6
95.0
94.6
81.3
78.9
70.4
68.2
79.0
74.5
66.7
76.8
75.6

1.8
.0
1.0
1.3
2.0
3.4
4.4
3.9
2.7
1.8
2.2
3.0
3.0
4.0
4.6
4.9
5.0
4.7
5.6
5.9
5.8
5.9
7.0
7.4
7.8
8.4
9.3
10.0
11.0
11.8
10.7
10.8
10.3
8.2
8.5
9.0
8.5
6.7
10.3
14.8
17.9
20.9
15.2
17.6
19.5
19.3
28.5
32.6
33.0
38.8
16.3
31.3
34.6
34.7
31.1
29.9
31.7
30.9
36.6
32.7
36.8
38.6
40.3

and

retail
trade

1.0
-.5
.7
1.2
1.4
2.2
3.0
3.2
3.3
3.8
4.6
5.5
4.5
5.0
5.0
4.8
3.8
3.8
5.0
4.5
4.4
4.6
5.9
4.9
5.0
5.8
5.9
7.5
8.1
8.2
9.1
10.4
10.5
9.6
11.7
13.4
13.9
12.9
22.2
23.0
27.5
27.3
28.7
21.6
32.5
34.6
38.9
49.7
49.7
50.7
33.6
43.1
46.2
51.1
51.0
50.7
48.8
51.1
54.2
45.0
52.1
46.3
53.3

Other

0.9
_7
'.3
.6
1.1
1.5
1.6
1.6
1.5
2.1
2.9
3.6
3.1
3.6
3.7
3.3
3.1
3.4
3.6
4.1
4.0
3.6
3.6
3.6
3.7
3.9
4.4
5.1
5.6
6.3
6.5
6.9
6.1
5.9
6.5
6.9
8.2
8.3
12.2
14.7
17.8
20.0
21.1
22.4
16.8
7.5
10.9
14.1
14.0
15.1
6.2
12.2
12.8
15.8
14.5
13.1
13.6
12.6
13.9
15.9
17.1
14.6
13.7

Rest
of the
world

0.2
.0
.3
.3
.4
.4
.4
.4
.3
.7
1.0
1.3
1.1
1.3
1.7
1.9
1.8
2.0
2.4
2.8
3.1
2.5
2.7
3.1
3.3
3.7
4.0
4.4
4.6
4.4
4.7
5.5
6.5
6.9
7.6
9.3
14.5
17.0
14.4
16.0
18.3
22.2
33.7
34.4
28.5
28.0
30.2
31.0
31.8
35.5
29.1
32.7
30.6
30.0
32.0
31.5
30.6
31.6
30.0
35.1
38.4
32.9
34.7

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-86 for industry detail.
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.




344

TABLE B-86.—Corporate profits of manufacturing industries, 1929-86
[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Corporate profits with inventory valuation adjustment and without capital consumption adjustment
Nondurable goods

Durable goods
Year or quarter

Total
manufacturing

1929
1933
1939
1940
1941
1942
1943
1944
1945
1946
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
1982
1983 .
1984
1985
1986"
1982: IV
1983- IV
1984:1
II ..
Ill
IV
1985-1
II
Ill
IV
1986- 1
II
Ill

5.2
4
33
5.5
95
118
13.8
132
9.7
90
13.6
17.6
16.2
20.9
24.6
21.7
22.0
19.9
26.0
24.7
24.0
19.4
26.4
23.6
23.3
26.0
29.3
32.3
39.3
41.9
38.6
41.4
36.7
26.7
34.3
40.8
46.2
39.8
53.6
70.9
80.6
88.7
87.5
77.1
88.5
58.0
70.1
87.4
73.0
73.4
46.8
88.6
95.0
94.6
81.3
78.9
70.4
68.2
79.0
74.5
66.7
76.8
75.6

Total

2.6
4
17
3.1
64
72
8.1
74
4.5
24
5.8
7.5
8.1
12.0
13.2
11.7
11.9
10.5
14.3
12.8
13.3
9.3
13.7
11.6
11.4
14.0
16.3
17.9
23.0
23.8
21.0
22.2
19.0
10.2
16.4
22.5
24.7
14.6
19.8
31.3
38.6
44.6
37.3
21.3
21.0
2.1
17.2
34.8
28.0
31.6
-6.6
29.4
36.8
34.9
33.2
34.5
27.8
28.8
28.9
26.6
28.1
34.6
31.8

Primary
metal
industries

Fabri- Machin- Electric Motor
and
ery,
cated
elec- vehicles Other
and
metal except tronic
prod- electri- equip- equipcal
ment
ucts
ment

Food Chemi- Petrocals
leum
and
and
and
kindred allied
coal
prod- prod- products
ucts
ucts

Total

Other

2.6

o

1.6
1.5
2.3
3.1
1.9
2.5
1.7
2.9
3.0
3.0
1.9
2.3
2.0
1.6
1.6
2.0
2.5
3.1
3.6
2.7
1.9
1.4
0.8

lie

2.3
4.9
2.7
2.0
1.3
3.5
3.6
2.5
3.1
49
-4.9
-2.6
-3.6
20
-5.1
44
-2.6
-1.8
-3.3
27
-4.1
-3.9
-2.6
-3.6
-2.6
-1.1
-2.3

0.8
1.1
1.3
1.0
1.0
.9
1.1
1.1
1.1
.9
1.1
.8
1.0
1.1
1.3
1.4
2.0
2.4
2.4
2.3
2.0
1.1
1.5
2.1
2.6
1.6
3.1
3.9
4.4
4.9
5.2
4.3
4.4
2.4
3.0
4.6
4.1
5.0
.9
4.4
4.2
4.5
4.3
5.2
4.4
4.6
4.5
3.0
4.7
5.0
5.1

1.2
1.3
1.6
2.3
2.3
1.9
1.7
1.7
2.1
2.0
1.4
2.1
1.8
1.9
2.3
2.5
3.3
3.9
4.5
4.1
4.1
3.7
3.0
2.9
4.3
4.7
3.1
4.8
6.7
8.9
9.6
9.1
7.7
8.6
4.1
3.1
4.7
3.6
3.4
1.3
4.7
5.3
5.6
4.0
4.1
1.5
3.5
4.6
4.7
2.2
4.9
2.8

0.7
.8
1.2
1.3
1.5
1.4
1.2
1.1
1.2
1.5
1.3
1.7
1.3
1.3
1.5
1.6
1.7
2.7
3.0
2.9
2.8
2.3
1.2
1.9
2.8
3.0
.3
2.4
3.7
5.8
6.7
5.2
4.7
4.1
1.7
3.7
5.2
4.9
5.4
.1
6.2
5.7
5.1
5.2
4.8
4.3
5.2
6.0
4.3
4.7
7.2
4.9

1.4
2.1
3.1
2.4
2.4
2.6
2.1
4.1
2.2
2.6
0.9
3.0
3.0
2.5
4.0
4.9
4.7
6.2
5.1
3.9
5.5
4.8
1.2
5.1
5.9
5.8
0.7
2.0
7.2
9.4
8.9
4.7
-2.5

-'$
5.1
9.9
6.8
4.9
-2.7
8.7
11.5
7.9
10.2
10.1
9.0
7.6
4.2
6.6
6.4
4.9
4.1

1.8
1.7
2.6
2.8
2.6
2.6
2.9
3.5
3.2
3.1
2.9
3.5
2.7
3.1
3.5
4.0
4.4
5.1
5.2
4.9
5.7
4.9
2.9
4.3
5.8
6.2
4.0
4.8
7.9
8.8
10.9
9.5
4.5
0.7
-.4
7.2
13.1
12.1
14.9
-1.2
9.9
12.8
13.6
12.8
13.1
12.8
11.9
12.3
11.6
12.7
13.7
17.1

1.7
2.4
31
4.6
57
5.9
5.2
6.6
78
10.0
8.1
8.9
11.4
9.9
10.1
9.4
11.8
11.9
10.7
10.0
12.7
12.0
11.9
12.0
13.1
14.4
16.3
18.1
17.6
19.1
17.7
16.5
17.9
18.3
21.6
25.2
33.8
39.6
42.0
44.0
50.2
55.8
67.5
55.9
53.0
52.6
45.0
41.9
53.5
59.2
58.2
59.7
48.1
44.4
42.6
39.4
50.1
47.9
38.6
42.2
43.9

1.9
1.6
1.6
1.4
1.7
1.8
1.6
2.2
1.8
1.8
2.1
2.4
2.2
2.3
2.3
2.7
2.7
2.8
3.2
3.2
3.2
3.0
3.2
3.5
2.9
2.5
2.5
8.8
7.1
6.9
6.2
5.8
6.1
8.7
7.0
7.2
8.0
7.8
10.3
7.1
8.0
8.8
8.6
7.4
7.3
7.2
7.6
9.1
7.6
9.3
10.0
11.2

1.7
1.8
2.3
2.8
2.3
2.2
2.2
3.0
2.8
2.8
2.5
3.5
3.1
3.2
3.2
3.6
4.0
4.6
4.9
4.3
5.2
4.6
3.9
4.5
5.2
6.0
5.1
6.4
8.2
7.8
8.2
7.2
5.4
8.2
5.2
6.7
7.5
4.7
7.3
3.2
7.8
8.8
8.3
7.0
6.0
5.4
5.3
5.3
2.8
6.3
6.4
8.3

2.8
1.9
2.3
2.7
2.3
2.8
2.7
3.0
3.3
2.6
2.1
2.5
2.5
2.2
2.2
2.1
2.4
2.9
3.2
3.9
3.7
3.3
3.5
3.6
3.0
5.2
10.7
9.5
13.1
12.9
14.7
22.5
31.4
36.5
29.1
21.4
17.3
13.4
7.6
25.9
25.3
20.0
22.5
14.0
12.8
10.5
7.4
17.0
18.7
7.3
9.7
7.0

3.7
2.8
2.7
4.4
3.6
3.3
2.9
3.6
4.1
3.6
3.3
4.3
4.2
4.1
4.3
4.6
5.3
6.0
6.8
6.3
7.0
6.9
5.9
6.4
7.2
7.9
7.0
9.1
11.2
14.4
14.9
14.7
12.9
14.1
14.5
17.7
19.7
19.1
16.7
17.3
18.1
20.6
20.3
19.7
18.3
19.6
19.1
18.7
18.9
15.7
16.1
17.4

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.




345

TABLE B-87.—Sales, profits, and stockholders' equity, all manufacturing corporations, 1950-86
[Billions of dollars]
All manufacturing corporations
Year or
quarter

1950
1951
1952 . . .
1953
1954
1955
1956
1957 . .
1958
1959
I960
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
1981
1982
1983
1984
1985

Profits
Sales

(net)

Before After
income income
taxes J taxes

Stockholders'
equity 2

181.9
245.0
250.2
265.9
248.5
278.4
307.3
320.0
305.3
338.0
345.7
356.4
389.4
412.7
443.1
492.2
554.2
575.4
631.9
694.6
708.8
751.1
849.5
1,017.2
275.1

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
10.7
11.3
11.2
15.1
16.2
15.4
12.7
16.3
15.2
15.3
17.7
19.5
23.2
27.5
30.9
29.0
32.1
33.2
28.6
31.0
36.5
48.1
13.0

83.3
98.3
103.7
108.2
113.1
120.1
131.6
141.1
147.4
157.1
165.4
172.6
181.4
189.7
199.8
211.7
230.3
247.6
265.9
289.9
306.8
320.8
343.4
374.1
386.4

236.6
1,065.2
1,203.2
1,328.1
1,496.4
1,741.8
1,912.8
2,144.7
2,039.4
2,114.3
2,335.0
2,331.4

20.6
92.1
79.9
104.9
115.1
132.5
154.2
145.8
158.6
108.2
133.1
165.6
137.0

13.2
58.7
49.1
64.5
70.4
81.1
98.7
92.6
101.3
70.9
85.8
107.6
87.6

1984- 1
II
Ill
IV

566.1
597.9
577.1
594.0

42.5
48.5
38.5
36.1

1985: I

II
Ill
IV

565.3
594.1
578.0
593.9

1986: 1
II
Ill

558.4
581.1
561.2

1,060.6

Nondurable goods industries

Durable goods industries
Profits
Sales
(net)

Before After
income income
taxes 1 taxes

Stockholders'
equity 2

Profits
Sales
(net)

Before After
income income
taxes1 taxes

Stockholders'
equity 2

86.8
116.8
122.0
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

12.9
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
188.7
194.7

95.1
128.1
128.0
128.0
125.7
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
413.7
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
15.7
16.5
18.0
23.3
6.7

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
151.7
160.5
172.0
185.4
191.7

368.0

122.7

395.0

529.0

423.4 521.1
462.7 589.6
496.7 657.3
540.5 760.7
600.5 865.7
668.1 889.1
743.4 979.5
770.2 913.1
812.8 973.5
864.2 1,107.6
866.2 1,142.6

10.1
41.1
35.3
50.7
57.9
69.6
72.4
57.4
67.2
34.7
48.7
75.5
61.5

6.2
24.7
21.4
30.8
34.8
41.8
45.2
35.6
41.6
21.7
30.0
48.9
38.6

185.8
196.0
208.1
224.3
239.9
262.6
292.5
317.7
350.4
355.5
372.4
395.6
420.9

113.9
531.6
544.1
613.7
670.8
735.7
876.1
1,023.7
1,165.2
1,126.4
1,140.8
1,227.5
1,188.8

10.5
51.0
44.6
54.3
57.2
62.9
81.8
88.4
91.3
73.6
84.4
90.0
75.6

7.0
34.1
27.7
33.7
35.5
39.3
53.5
56.9
59.6
49.3
55.8
58.8
49.1

182.1
199.0
215.3
238.4
256.8
277.9
308.0
350.4
393.0
414.7
440.4
468.5
445.3

26.7
31.0
25.7
24.3

850.9
857.0
865.1
883.6

264.6
284.8
270.7
287.5

18.9
22.9
16.6
17.2

11.7
14.6
11.2
11.4

386.5
392.1
297.2
406.7

301.5
313.1
306.4
306.5

23.6
25.6
21.9
19.0

15.0
16.4
14.5
13.0

464.5
464.5
467.9
476.9

35.5
37.3
33.5
30.7

22.5
23.6
21.4
20.1

861.4
864.0
868.8
870.7

276.3
293.6
281.1
291.6

15.5
18.6
13.3
14.0

9.5
11.4
8.5
9.1

414.1
420.4
423.7
425.6

289.1
300.5
296.9
302.3

20.0
18.7
20.2
16.7

13.0
12.2
12.9
11.0

447.3
443.6
445.1
445.1

31.4
39.4
31.3

19.7
27.1
18.9

874.3
888.4
891.0

278.7
297.7
283.9

13.2
17.9
12.0

8.0
12.0
6.9

436.3
441.2
445.6

279.7
283.4
277.3

18.2
21.5
19.3

11.7
15.1
11.9

438.0
447.2
445.4

1
In the old series, "income taxes" refers to Federal income taxes only, as State and local income taxes had already been deducted.
In 2 new series, no income taxes have been deducted.
the
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,' Department of Commerce, Bureau of the Census.
Source-. Department of Commerce, Bureau of the Census.




346

TABLE B-88.—Relation of profits after taxes to stockholders' equity and to sales, all
corporations, 1947-86
Ratio of profits after income taxes (annual
rate) to stockholders' equity— percent *
Year or quarter

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
1981
1982. .
1983
1984 ..
1985
1984- 1 .
II
III
IV
1985:1
II
Ill
IV
1986- 1
II
Ill

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
13.0
13.4
11.7
12.1
11.5
9.3
9.7
10.6
12.8
13.4

14.4
15.7
12.1

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
9.6
9.9
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

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
5.7
5.6
4.8
4.9
4.6
3.5
3.8
4.2
4.7
4.5

6.7
6.8
5.4

14.3
14.9
11.6
13.9
14.2
15.0
16.4
13.9
13.6
9.2
10.6
12.5
10.1
12.5
14.5
11.9
11.0
10.5
10.9
9.9
9.3
9.0
12.2
8.5

13.3
12.6
10.3
13.7
14.5
16.0
15.4
11.2
11.9
6.1
8.1
12.4
9.2
12.1
14.9
11.3
11.2
9.2
10.9
8.0
8.6
7.3
10.9
6.2

15.3
17.1

5.6
5.5
4.6
5.4
5.3
5.4
5.7
4.8
4.7
3.5
4.1
4.6
3.8
4.7
5.2
4.4
4.1
4.0
4.0
3.7
3.4
3.5
4.7
3.4

5.0
4.7
4.1
5.2
5.3
5.5
5.2
4.0
4.2
2.4
3.1
4.4
3.4
4.4
5.1
4.1
4.0
3.4
3.9
3.0
3.1
2.9
4.0
2.4

6.1
6.4
5.1
5.5
5.3
5.3
6.1
5.6
5.1
4.4
4.9
4.8
4.1
5.0
5.2
4.7
4.2
4.5
4.0
4.3
3.6
4.2
5.3
4.3

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
13.8
14.2
11.7
12.2
11.4
8.3
9.0
10.8
13.1
12.9

12.9
14.2
13.8
14.2
17.4
16.3
15.2
11.9
12.7
12.5
11.0
12.9
14.1
12.4
10.9
11.7
11.0
11.6
9.9
10.7
13.5
10.7

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, TaWe B-87.
Source: Department of Commerce, Bureau of the Census.




347

TABLE B-89.—Sources and uses of funds, nonfarm nonfinancial corporate business, 1946-86
[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Sources

Uses

Internal
Year
or
quarter

Total
Total

External

Inventory
Domes- aluation Capital
tic
and
con- Foreign
undis- capital sumption earn- Total
ributed conallow- ings 1
profits umption ances
adjustments

Credit market funds

Discrepancy
Capital ncrease (sources
in
Securi- Loans
Total expendiinancial ess uses)
3
ties
tures
and Other *
assets
Total
and shortmort- term
paper
gages

-7.6
-8.7
-5.2
-1.0

0.7
1.0
1.3
1.1

10.6
14.1

10.4
11.2

-7.9
-4.4
-2.0
-3.3
-1.9
-2.0
-3.7
-2.7
-1.5
-1.0

12.0
13.8
14.8
15.9
16.8
17.8
20.0
22.0
23.1
24.1

1.3
1/7
1.9
1.8
2.0
2.4
2.8
3.1
2.5
2.7

24.0
16.2

10.5

8.0
6.3
5.7

9.5
5.8
6.5

23.4
15.2
11.5
11.6
20.3

10.4
12.7
11.9
10.4
12.4

25.1
25.9
26.8
28.0
29.4
31.5
34.3
37.6
41.4
45.4

3.1
3.3
3.7
4.1
4.4
4.7
4.5
4.6
5.5
6.5

13.0
19.1
17.1
21.5
21.8
33.8
35.1
30.6
48.9
52.6

11.8
12.2
12.5
12.0
13.7
19.0
23.9
27.3
28.0
33.8

49.9
54.8
60.1
65.2
76.3
91.9
102.3
114.3
129.8
149.6

6.9
7.6
9.3
14.5
17.0
14.4
16.0
18.3
22.2
33.7

39.5
51.7
67.0
101.6
104.8
33.6
77.1
96.3
146.3
155.1

34.2
37.1
43.8
57.6
70.3
27.1
55.0
72.0
85.0
87.8

25.9
52.1

171.3
198.8
221.4
228.2
237.9
250.6

34.4
28.5
28.1
30.2
31.0
31.9

147.5
143.0
85.3
145.6
177.1
130.6

94.3
53.1
93.7
22.8
80.6
44.0
87.6
57.3
116.4 -10.0
82.1
15.3

39.5
37.3
26.2
22.9

10.8
22.5
31.3
39.0

233.3
236.5
239.4
242.5

30.5
29.9
32.1
31.5

213.2
158.9
114.8
221.6

15.2
14.5
21.4
20.6

47.9
55.2
61.4
44.0

245.7
249.1
252.3
255.2

30.6
31.5
30.0
35.3

92.8
71.6
139.8
218.1

67.5
58.7
54.2

257.1
260.3
262.6

38.5
32.9
34.8

51.8
100.3
30.0

1946...
1947...
1948...
1949...

19.1
27.4
29.4
20.5

8.5

8.1

13.3
19.7
20.0

12.1
13.2

1950...
1951...
1952...
1953...
1954...
1955...
1956...
1957...
1958...
1959...

42.5
37.0
30.5
28.6
30.1
53.4
45.2
43.5
42.3
56.8

18.5
20.8
22.5
22.3
24.4
29.9
30.1
32.0
30.7
36.4

13.1

1960...
1961...
1962...
1963...
1964...
1965...
1966...
1967...
1968...
1969...

48.8
56.0
60.3
68.5
74.1
92.9
98.4
94.8
114.7
117.9

35.9
36.9
43.2
47.0
52.3
59.1
63.3
64.2
65.8
65.2

8.0
7.2
9.6
11.0
14.6
19.1
21.2
18.1
17.1
13.4

1970...
1971...
1972...
1973...
1974...
1975...
1976...
1977 ...
1978..
1979..

102.2
126.4
153.4
195.5
194.1
158.4
219.1
261.4
328.5
352.6

62.8
74.7
86.4
93.9
89.3
124.8
142.0
165.1
182.3
197.6

7.6

-1.6

12.7
18.1
28.8
34.1
36.4
49.1
58.4
66.9
71.5

-1.2
-14.7
-38.1
-17.9
-25.4
-26.0
-36.6
-57.2

1980..
1981..
1982..
1983..
1984..
1985..

347.6
382.5
327.6
431.3
503.4
483.1

200.1
239.5
242.3
285.7
326.3
352.5

53.7
50.2
11.6
22.2
31.5
17.9

527.3
485.1
443.7
557.5

314.1
326.2
329.0
335.8

IV...

432.2
421.9
505.0
573.2

339.4
350.3
365.2
355.1

1986:.
1
II....
III...

413.5
456.0
389.6

361.7
355.6
359.6

8.7
9.6
7.8
8.0
7.6
11.8
10.9

9.6
6.5
10.6

-.4
.6
3.1
3.9
3.9
3.9
3.3
3.9
1.7
.0
-.5

-59.2
-38.0
-18.7

5.1

7.4
9.0

6.9
8.4
6.5
3.1

3.6
5.4
6.7
4.9

8.1

4.2
6.4
8.1
6.2
6.8
6.6
7.4

3.3
3.0
-.2

3.7
5.8
3.3

-1.4

1.6
1.0
3.8
2.1

17.5
26.5
25.6
18.4

18.8
18.1
20.7
14.9

40.4
37.9
30.0
28.5
28.1
49.1
41.1
40.0
38.6
52.1

24.0
30.6
25.4
26.2
23.3
32.5
37.2
35.7
27.8
38.0

41.8
50.7
56.1
60.3
64.9
83.4
91.9
87.5
106.0