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Economic Report
of the President

Transmitted to the Congress
February 1988
TOGETHER WITH

THE ANNUAL REPORT
OF THE

COUNCIL OF ECONOMIC ADVISERS

UNITED STATES GOVERNMENT PRINTING OFFICE
WASHINGTON : 1988

For sale by the Superintendent of Documents, U.S. Government Printing Office
Washington, D.C. 20402







C O N T E N T S
Page

ECONOMIC REPORT OF THE PRESIDENT

1

ANNUAL REPORT OF THE COUNCIL OF ECONOMIC
ADVISERS*.....

11

CHAPTER 1. T H E U.S. ECONOMY: PERFORMANCE AND PROSPECTS .

19

CHAPTER 2. RISING EMPLOYMENT, PRODUCTIVITY, AND INCOME....

57

CHAPTER 3. ADJUSTMENT AND GROWTH IN A CHANGING WORLD
ECONOMY

89

CHAPTER 4. EXPANDING TRADE AND AVOIDING PROTECTIONISM ...

127

CHAPTER 5. KNOWLEDGE, MARKETS, AND ECONOMIC PROGRESS....

163

CHAPTER 6. AIRLINE DEREGULATION: MAINTAINING THE MOMENTUM

199

APPENDIX A. REPORT TO THE PRESIDENT ON THE ACTIVITIES OF
THE COUNCIL OF ECONOMIC ADVISERS DURING 1987
APPENDIX B. STATISTICAL TABLES
EMPLOYMENT, AND PRODUCTION

RELATING - TO

*For a detailed table of contents of the Council's Report, see page 15.




(Ill)

231
INCOME,
241







ECONOMIC REPORT
OF THE PRESIDENT




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

My first Economic Report, issued in 1982 after a year in office, could
look only to the future for encouraging economic news. The task of
rebuilding the economy was just beginning, and hard choices were
being made. Inflation had begun to come down from double-digit
rates, but America was mired in recession, its second in as many
years. Today, however, we can point to real, solid economic
progress. The policies of this Administration have spurred and sustained a record economic expansion—the longest in U.S. peacetime.
Fifteen million new jobs have been created during this expansion,
with strong gains widespread across industries and demographic
groups. Real gross national product (GNP) has risen nearly 23 percent during these 5 years of growth.
And the accomplishments are not all in the past. Our policies will
continue to contribute to rising standards of living in the years
ahead. By enhancing private incentives and opportunities for work,
investment, and entrepreneurship, we have laid the groundwork for
growth far into the future. To ensure that the renewed energy of the
private sector remains a force for growth, we must continue our efforts to bring down the Federal deficit through restraint on spending,
to resist the siren song of protectionism, to support policies that
foster noninflationary economic growth, and to rein in government
when it threatens to make our markets less open, our industries less
responsive, or our economy less flexible.
THE ECONOMIC EXPANSION

Since November 1982, the U.S. economy has grown without interruption and without a resurgence of inflation. Only twice before in
our Nation's history—but never during peacetime—has recorded economic growth continued for so long. During the current expansion a
strong increase in employment, combined with low rates of inflation
and higher productivity growth, have meant rising standards of living
for the American people.
Employment has increased dramatically, and all demographic
groups have benefited. While overall employment has risen about 15
percent since November 1982, employment of blacks has increased
by more than 25 percent and employment of Hispanics by more than
40 percent. Correspondingly, unemployment rates—especially among




minorities—have fallen rapidly, although those rates are still unacceptably high. I believe that all who want jobs should be able to
obtain employment commensurate with their skills and abilities.
As the unemployment rate has declined by almost one-half, some
have claimed that the new jobs are low-quality, dead-end positions,
while others have argued that booming employment has put us on
the verge of another round of inflation. Neither view is accurate. The
facts show that the strongest job growth has been in the higher paid,
high-skill occupations. The bulk of the new jobs created have been
full-time positions in occupations that pay well. While it is true that
the number of jobs in manufacturing has risen more slowly than in
the service-producing sector of the economy, this is a reflection of
the innovation of American business and the skill of American workers, not a sign that the United States is "deindustrializing." The
share of manufacturing output in total output actually has risen over
the course of the expansion, and it is now above its postwar average.
However, rapid increases in manufacturing productivity have meant
slower growth in employment in this sector. This strong productivity
growth, in combination with the downward adjustment of the dollar's
exchange rate, has lifted the competitiveness of our products on
world markets. Around the globe, products "Made in the U.S.A.*' are
becoming more common and more sought after.
Moreover, I do not believe that our economy has yet reached its
full potential, or that our economic growth threatens price stability.
Growth can and should continue. With sound and stable economic
policies, saving and investment will be encouraged, and the Nation's
productive capacity will continue to expand. I remain committed to
the goal of price level stability, and I view the decline in inflation
during my Administration as a major accomplishment. I would not
take lightly the prospect of a resurgence of inflation. But economic
growth itself will not lead to a spiral of worsening inflation; only irresponsible economic policies would do that.
Our economic projections show inflation slowing during the
coming years, even as output grows at a robust average annual rate
of 3.2 percent. But continued economic progress requires that policymakers adhere to forward-looking principles, pursuing the long-term
best interests of the Nation through a sustained commitment to
growth and stability. The prospects for growth in the immediate
future have been diminished somewhat by last year's plunge in the
stock market, as well as by the increase in interest rates and tightening of monetary policy during 1987. Nevertheless, I anticipate that
the U.S. economy will continue to post gains in 1988, as the expansion moves through its 6th year.




The past 5 years have marked an outstanding period of economic
growth in the United States. It has been unusual in its longevity, unusual for the fact that inflation has remained subdued, and unusual
relative to the performance of other industrial economies. Between
1982 and 1986, American businesses, large and small, created two
and one-half times as many new jobs as Japan and the major industrial countries of Europe combined. In 1987 this trend appears to have
continued, as the U.S. economy again generated new jobs at a remarkable rate. The U.S. unemployment rate has fallen 5 percentage
points, and now stands well below those in most other major industrialized countries, where unemployment rates have yet to recover
fully from the last recession. Overall, we have not lost jobs because
of foreign trade. Instead, growth-oriented policies of lower and fairer
taxes, reduced interference by government, and free and open international trade have been a source of strength for the economy.
Indeed, the U.S. economy has flourished, and the outlook is full of
promise.
THE ROLE OF GOVERNMENT IN THE ECONOMY

It is hard to believe that at the beginning of the 1980s the prevailing attitude toward the economy could best be described as despair.
Inflation and interest rates had ratcheted higher with each successive
business cycle, and, as the economy suffered through its second recession in 2 years, the goal of sustainable growth appeared increasingly elusive. Amid double-digit inflation and unemployment rates,
there were calls for the Federal Government to do more and more,
thereby compounding the failed policies of the past. Instead, I took
government policy back to the basics, and the last 5 years of economic growth testify to the vitality of free markets and the productivity of
the American people. Government intrusions in the Nation's economic life have been reduced, and the private sector has responded
with an explosion of activity, creating new products and new jobs at a
very rapid rate.
The Federal Government has an important role to play in the Nation's economy, but it is a limited role. As a general proposition, economic decisions should be left to the private sector, which has been
our economy's strength throughout its history, or to State and local
governments when the issues cannot be handled satisfactorily by the
private sector. Only in issues truly national in scope is there a role
for the Federal Government.
We have made efforts to restrain Federal spending, to limit it to
only the government's vital functions, and those efforts have borne
fruit. Last fiscal year, for the first time in 14 years, Federal outlays,
after adjustment for inflation, declined. Government spending on




goods and services absorbs resources that might be used better by
the private sector, and any Federal outlay must be financed eventually by inflation or taxes. Because there is no free lunch, we must make
the hard choices, funding only those programs that are in the best
interest of the Nation, not those that happen to have the most influential lobbyists. For example, while a strong national defense is rightly the responsibility of the Federal Government, a continued proliferation of pork-barrel projects is not. America's sense of fair play is
violated when hard-earned tax dollars are needlessly turned over to
powerful special interests.
In the conduct of macroeconomic policies, we have turned away
from the stop-and-go policies of the past. My Administration has
adopted a long-term view that fiscal policy determines the division of
economic activity between the public and private sectors and is not
meant to respond to every rise and fall in the economic data. Similarly, monetary policy should provide adequate liquidity for sustained
noninflationary growth. Together, these policies create a stable environment in which individuals and businesses can plan for the future
and make the most of their economic opportunities.
For too long the Federal Government has interfered unnecessarily
in private economic decisions. There is a legitimate, although limited,
role for the Federal Government in certain industries—for example,
in ensuring the safety and soundness of the Nation's banking and
payments systems. But many government regulations impede the operation of markets, inhibit competition, or impose costs on firms and
raise the prices faced by consumers, without providing commensurate
benefits. Regulations that interfere with the efficient use of labor, investment, and raw materials ultimately reduce our productive potential, making this country worse off.
While my Administration has been successful in reducing many
regulations and intrusions into markets, much remains to be done.
We must lessen remaining disincentives to work, diminish the burden
of Federal regulations, and dismantle government programs that
needlessly subsidize inefficient producers. In particular, we must release financial institutions from outdated legal restraints, eliminate
the remaining controls on interstate trucking, deregulate natural gas,
and repeal mileage standards for new automobiles. We must resist
appeals for even more government intervention that would introduce
additional inefficiencies, such as requiring advance notification of layoffs and plant closings. With few exceptions, the private sector is best
able to allocate resources to their most highly valued uses, and it
should be allowed to do so without excessive paperwork and restrictions. That is why privatization, deregulation, and private sector initiatives have been important elements of my economic program. I be-




lieve in the inherent dynamism of the private sector, and I believe
that the most constructive thing government usually can do is simply
get out of the way.
THE INTERNATIONAL ENVIRONMENT

This Administration has been a force for economic change in the
United States and, by our example, in the world at large. Our proven
market-oriented policies are being adopted in more and more countries around the globe, as they recognize the high costs of big government and the harmful effects of stifling the entrepreneurial spirit.
In order to enhance growth and economic opportunity, many nations have followed our lead, undertaking reductions in sky-high tax
rates that diminish incentives to work, save, and produce. In addition, tax reform is becoming a worldwide movement. Just as in the
United States, tax reform abroad promises to end many distortions
and inefficiencies, allowing businesses and individuals to make decisions about production and investment in order to increase their economic well-being, rather than simply to reduce their tax bills.
From continent to continent, the benefits of privatization and deregulation are becoming appreciated. Even China, and perhaps now
even the Soviet Union, appear to be edging toward freer economic
systems. Instead of viewing private enterprise as the adversary, many
governments now see it as their best hope for progress and prosperity. Developing as well as industrialized nations are reducing market
rigidities and interferences, thereby expanding economic freedom
and opportunity for their citizens.
In those developing countries that encourage investment and private enterprise, the ensuing economic growth should contribute to
lessening their debt problems. The debt burden carried by developing countries is not just their problem; we all have a vital interest in
finding solutions that promote growth and protect open international
financial markets. And we will continue to work with all who display a
real determination to deal with this difficult issue.
The United States has been a constructive force in the world economy, not only by demonstrating the benefits of private enterprise,
but also by our commitment to free trade and international economic
cooperation. In addition, this Nation's strong demands for imports
helped support output growth abroad during much of this decade.
The world economy has become increasingly interdependent, as
trade has multiplied and financial markets have become essentially
global.
To continue to reap the benefits of an open international trading
system, we are committed to reducing further the barriers that interfere with the free flow of goods, services, and capital. To this end,




the United States has entered into, and will continue to seek out, bilateral and multilateral agreements to lower impediments to international commerce. The Free-Trade Agreement recently negotiated
with Canada is an historic accomplishment. Once the necessary implementing legislation is passed, it will establish the largest international free-trade area in the world. At the same time, in the Uruguay
Round of the multilateral negotiations under the General Agreement
on Tariffs and Trade, we have been working to lower trade barriers
worldwide. In that forum, we have placed special emphasis on eliminating spiraling subsidies to agricultural production and harmful barriers to agricultural imports, on establishing and enforcing adequate
protections for intellectual property, on liberalizing trade in services,
and on ensuring evenhanded treatment of foreign investment.
Through these avenues and others, we will continue to pursue the
goal of free and fair trade, which can only expand opportunity and
prosperity both at home and abroad.
THE CHALLENGES AHEAD

The American people elected me to this office with a vision of a
reinvigorated economy, and I have watched that vision become reality. The resurgence of America has confirmed my optimism. The accomplishments of the last 7 years should inspire us, but not blind us
to the important challenges that remain.
Foremost among our challenges is the continued high level of Federal spending and the budget deficit. Federal receipts last year were
$255 billion above their level in 1981; nevertheless, the deficit has
nearly doubled since then, bloated by a $326 billion increase in outlays. Although we have succeeded recently in slowing the growth of
spending, and the deficit declined by $71 billion in the last fiscal
year, the deficit is still too large.
Recent progress in controlling Federal outlays notwithstanding, as
a percent of GNP, outlays remain well above the postwar average.
The government continues to spend too much, absorbing resources
that could be put to better use by the private sector. There are several essential functions of the Federal Government, such as providing a
strong national defense and ensuring an appropriate safety net for
those in need, but in many areas the government's presence is oppressive and unnecessary.
Tax increases are not the key to eliminating the deficit. Some taxes
are unavoidable—the necessary functions of the Federal Government
must be paid for. But tax reform and the cuts that have been instituted in income tax rates represent successful efforts to find less distorting, less burdensome, and more equitable means of financing government. Undoing tax reform through tax increases would affect eco-




nomic activity adversely by raising uncertainty about government
policy and reducing incentives to work and produce. Rather, in
coming years we should look to ways to enhance incentives for investment in future productive capacity, including reducing the tax
rate on capital gains.
The Gramm-Rudman-Hollings law and our recent agreement with
the Congress on a 2-year budget-trimming package have charted the
course for additional deficit reduction. Those are steps in the right
direction. But the budget process itself remains a major obstacle to
eliminating the deficit. And I am not the only one to have noticed
that the budget process is a disaster; a recent survey of Members of
Congress identified it as a major source of frustration. The process is
not working and it must be reformed; discipline and responsibility
must be restored.
Current budget practice is to deliver a pair of mammoth bills that
must be passed and signed in a matter of hours—or the government
has to shut down. This is not responsible government, and I will not
sign another of these behemoths. This budget process does not serve
the best interests of the Nation, it does not allow sufficient review of
spending priorities, and it undermines the checks and balances established by the Constitution.
So that such massive appropriations bills do not have to be an allor-nothing proposition, I have asked for the line-item veto, a power
that 43 State Governors already have. With a line-item veto, future
Presidents could pare away waste and enforce budget discipline. In
addition, expanded rescission powers would allow the Executive to
cut unnecessary spending on programs that, in many cases, have outlived their usefulness. Finally, to ensure that balanced budgets
become a permanent feature of our fiscal landscape, the legislatures
of 32 States have asked for—and I endorse—a constitutional amendment to force the Federal Government to live within its means.
These steps must be taken, because the current budget process is impeding budget progress. By its very nature, the democratic process is
often messy and unfocused. But we know that democracy works and
that tough decisions can be made. We must rise to the challenge
again and prove that we can craft sound budgets through a sensible
process.
We also must resist efforts to push the Nation into protectionism.
Our foreign trade deficit is very large, but it has turned the corner in
real terms. Last year foreign trade contributed significantly to our
economic growth. Moreover, further improvements are on the way.
At this point especially, it would be a tragic mistake to attempt to
close the trade gap by closing our markets. Isolating U.S. markets




could only lead to a global downward spiral in trade and economic
activity.
My Administration is committed to working diligently with the
Congress to draft responsible trade legislation, but if that legislation
is not free of harmful protectionist measures, I will veto it. Our goal
is to see the trade deficit reduced in an environment of sustained
economic growth and low inflation. To this end, we are working with
the other major industrial countries to coordinate economic policies
that sustain noninflationary economic growth, encourage an orderly
reduction of international imbalances, and thereby foster stability of
exchange rates.
We must maintain the confidence of foreigners and our citizens
alike in the ability of the United States to generate profitable investment opportunities and to follow responsible economic policies. The
vitality of free and open markets, full of opportunity and promise, is
the best foundation for investment. We must see to it that our tax
structures and regulations do not discourage saving and investing.
We must encourage investment not only in plant and equipment, but
also in the American people themselves. Education, skills, research
and development—these are some of the most fruitful areas for investment; expanded knowledge enhances the productive potential of
our most valuable resource, our people.
CONCLUSION

America is blessed with great gifts—abundant land and natural resources, a diverse and hard-working people, an unshakable tradition
of democratic values. My confidence in America has been shown to
be well-founded over these past few years. The economy has been
revitalized, and the record peacetime economic expansion has
brought with it renewed opportunities and enhanced well-being. We
set ourselves a formidable task: to reduce and to rationalize the role
of government in the economy. That effort has been richly rewarded.
During our watch, the U.S. economy again has shown its strength.
But our job is not finished. The Federal budget must be controlled
in order to build a solid foundation for future economic growth. And
I will not be satisfied until all Americans share in this prosperity;
there are still too many enmeshed in poverty and without jobs. We
must rise to our remaining challenges, heartened by our triumphs
and inspired by the resilience of a resurgent America.

THE WHITE HOUSE
FEBRUARY 19, 1988




10




THE ANNUAL REPORT
OF THE
COUNCIL OF ECONOMIC ADVISERS

11




LETTER OF TRANSMITTAL
COUNCIL OF ECONOMIC ADVISERS,

Washington, D.C, February 16, 1988.
MR. PRESIDENT:

The Council of Economic Advisers herewith submits its 1988
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

X
Michael L. Mussa
Member

13




C O N T E N T S
Page

CHAPTER 1. THE U.S. ECONOMY: PERFORMANCE AND PROSPECTS .

Overview of the Report
The Macroeconomic Setting
Employment, Productivity, and Income
External Imbalances
Opening Markets and Avoiding Protectionism
Knowledge and Progress
Airline Deregulation
The U.S. Economy in 1987
Sources of Demand
Inflation and Relative Price Changes
Industrial Composition
Macroeconomic Policies
Fiscal Restraint
Monetary Policy
The Break in the Stock Market
The Crash
The Economic Implications
.
The Policy Response
The Economic Outlook
Forecast for 1988
Projections for 1989-93
Determinants of Growth 1988-93
;
Conclusion
CHAPTER 2. RISING EMPLOYMENT, PRODUCTIVITY, AND INCOME....

Employment and Output
The Breadth of Employment Gains
Changes in Job Quality
Shifts in Sectoral Output and Employment
Changing Patterns of Demand and Productivity
Income and Productivity
Increases in Living Standards
Labor Compensation and Per Capita Income
Determinants of Productivity Growth
Sectoral Differences in Productivity Growth
Problems of Productivity Measurement




15

19

19
19
20
21
21
22
23
23
24
26
28
30
30
32
39
40
41
43
45
46
49
51
55
57

58
59
60
61
64
66
67
69
72
72
75

Page

Competition and Adjustment in Manufacturing
Unemployment and Inflation
Frictional Unemployment
Inflation and Unemployment Tradeoff......
Prospects for Reducing Unemployment
Conclusion

76
79
80
81
84
87

CHAPTER 3. ADJUSTMENT AND GROWTH IN A CHANGING WORLD
ECONOMY

89

The Significance of External Imbalances
Measures of the External Balance
Growth of Employment
Strength of Manufacturing
Growth of Foreign Debt
The Level of National Saving
Demand Growth and the Saving-Investment Balance
The Macroeconomic Character of the External Deficit
Differential Demand Growth
The Role of the Federal Deficit
Exchange Rates and Relative Prices
The Extent of Exchange-Rate Movements
The Dollar and Relative Export Prices
The Dollar and Relative Import Prices
Profit Margins and Import Prices
The Adjustment Process
Conclusion

91
91
94
97
98
99
102
102
104
109
113
113
114
117
118
123
125

CHAPTER 4. EXPANDING TRADE AND AVOIDING PROTECTIONISM....

127

Expanding Trade Opportunities Abroad
Canada-United States Free-Trade Agreement
The United States-Mexico Framework Understanding .
General Agreement on Tariffs and Trade
The Protectionist Threat at Home
Protectionist Textile Legislation
Embracing Protectionism—The Omnibus Trade Bill...
Conclusion

128
128
137
138
147
149
150
162

CHAPTER 5. KNOWLEDGE, MARKETS, AND ECONOMIC PROGRESS....

Human Capital
Investments in Education, Training, and
Experience
Rationales for Government Support
Policy Issues
Science and Innovation
Expenditures and Returns
Role of Government
Intellectual Property Rights




16

163

165
Work
166
172
173
177
178
182
184

Page

Incentives in Government Research
Market Flexibility..
Market Barriers and Distortions
Labor Market Flexibility
Policies for Labor Adjustment
Conclusion
CHAPTER
6.
MOMENTUM

AIRLINE

DEREGULATION:

185
186
187
189
192
196
MAINTAINING

THE
199

The Regulatory Environment
Results of Deregulation
Lower Fares
Efficient Routing: The Hub and Spoke
Effects on Labor
Increases in Productivity, Profits, and Welfare
International Consequences
Managing the Increased Demand for Airspace,
Safety
Delays
Making the System More Responsive and Efficient
Concerns About Market Organization and Monopoly
The Viability of New Entrants and Smaller Airlines
Mergers and Consolidation at Hubs
Computerized Reservation Systems
Airport Capacity Limits
Conclusion

200
202
203
203
205
206
206
207
208
212
215
222
222
224
225
227
229

APPENDIXES

A. Report to the President on the Activities of the Council
of Economic Advisers During 1987
B. Statistical Tables Relating to Income, Employment,
and Production

231
241

List of Tables and Charts
Tables

1-1.
1-2.
1-3.
1-4.
2-1.

Growth of Real GNP and its Components, 1982-87
Economic Outlook for 1988
Administration Economic Assumptions, 1988-93
Accounting for Growth in Real GNP, 1948-93
Changes in Employment and Unemployment by Selected Demographic Groups, 1975-87
2-2. Growth in Real GNP per Capita and Productivity,
1948-87
2-3. Growth in Value Added per Hour Paid, 1948-86
2-4. Measures of Changes in Compensation and Wages,
1981-87




17

25
48
50
52
59
67
73
79

List of Tables and Charts—Continued
Tables

2-5. Regional Unemployment Rates, Selected Years,
1976-87
2-6. Unemployment by Reason and Duration, Selected
Years, 1967-87
3-1. Economic Growth, 1982-87
3-2. Saving and Investment as Percent of GNP, 1949-87
3-3. Selected Real Net Exports, 1980-87
3-4. Growth in Real Domestic Demand and Real GNP in
Major Industrial Countries, 1980-87
4-1. Canadian and U.S. Bilateral Tariffs by Sector
4-2. Agricultural Subsidies for Producers and Consumers,
Selected Countries, 1979-86
4-3. Principal U.S. Trade Law Provisions
5-1. Relation of Income and Education, Selected Years,
1969-86
'

85
86
96
100
103
105
132
143
152
169

Charts

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

The Dollar and Real Net Exports
Wages and Prices
Federal Receipts and Outlays as Percent of GNP
Interest Rates and Velocity of Money
Weekly Interest Rates, 1987
.
Real Output and Employment Shares in Manufacturing .
Real Hourly Earnings and Compensation
Wage Inflation and Unemployment
Net Exports and the Current Account Balance
Unemployment Rates in the Seven Summit Countries ....
Components of the Saving-Investment Balance
Relative Prices of Exports and Imports and the
Exchange Rate
U.S. and Foreign Exporters* Price-Cost Ratios and the
Exchange Rate
Shares of U.S. & Canadian Merchandise Trade in 1986..
U.S. Agricultural Exports
Contracting Spiral of World Trade
Trade Interventions
Years of Schooling of the Labor Force
Earnings by Age and Education
Research and Development Expenditures
Labor Force Shares by Industry
Airline Accident Rate




18

27
29
31
35
37
65
70
82
92
95
110
116
120
129
142
148
160
167
172
179
190
209

CHAPTER 1

The U.S. Economy: Performance and
Prospects
THE LONGEST PEACETIME EXPANSION in the history of the
U.S. economy entered its sixth year in 1987. Growth was vigorous,
with the economy's real output rising by nearly 4 percent last year.
Three million additional jobs were created in 1987, beyond the 12
million generated earlier in the expansion. The unemployment rate
dropped almost a percentage point to its lowest level in 8 years.
Significant improvement in the real trade deficit contributed importantly to growth of output and employment, for the first time since
1980. The inflation rate remained in the 4 percent range that has
characterized most of the expansion—well down from the double-digit
rates at the start of the decade. Dramatic progress was made in
reducing the Federal budget deficit. Judged by these accomplishments,
leaving aside the extraordinary events in financial markets, the U.S.
economy enjoyed a good year in 1987.
OVERVIEW OF THE REPORT
The past 5 years of sustained and vigorous growth in production,
income, and employment did not occur by accident. It was shaped by
government policies explicitly directed toward fostering the inherent
dynamism of the private sector. In reviewing the record of the current expansion and looking to the future, this Report highlights the
appropriate role for government in the economy—its macroeconomic
responsibilities, such as fiscal and monetary policy, as well as its
microeconomic responsibilities, which concern particular markets and
industries. This chapter begins with a summary of the Report,
THE MACROECONOMIC SETTING

Nineteen eighty-seven was a year of robust economic growth,
strong increases in employment, and—despite a temporary acceleration early in the year—continued moderate inflation. The composition of demand changed in a welcome direction, as the foreign trade
sector contributed to overall growth. But late in the year, the plunge
in the stock market and a sharp buildup in inventories raised ques-




19

tions about the outlook. With appropriate economic policies, however, growth should continue through 1988—albeit at a more moderate
rate than in 1987. A more balanced and sustainable pattern of
growth in 1988 then will set the stage for a resumption of more rapid
growth in the future, together with gradual reductions in both the
unemployment and inflation rates.
Chapter 1 first reviews the macroeconomic performance of the
United States in 1987 and the factors that shaped it. In particular,
the chapter discusses the role of fiscal and monetary policy in fostering noninflationary growth and economic adjustment. During 1987
macroeconomic policies turned toward restraint: growth of the monetary aggregates slowed sharply, interest rates climbed, and the Federal budget deficit was cut by one-third. Partly as a result, inflation remained low and progress was made in reducing the trade deficit.
Important adjustments occurred in the U.S. economy last year.
Real exports rose by nearly 17 percent, helping to turn business
fixed investment around and to produce large gains in output and
employment in the manufacturing sector. Consumer expenditure
growth slowed significantly from the rapid pace set during the first 4
years of the expansion, restraining the increase in imports. Last year
the U.S. economy enjoyed both trade deficit reduction and good
growth; with appropriate policies, this combination can be expected
to continue into the future.
EMPLOYMENT, PRODUCTIVITY, AND INCOME

The most important measures of economic progress concern
people: the number of people with jobs; the productivity of each
person; and real income per capita. Chapter 2 reviews the record of
the current economic expansion with respect to such measures of
well-being, and finds that, in both quantity and quality terms, the
past 5 years of growth have been good ones. Genuine economic
progress has been made, with benefits widespread across major demographic groups and across regions. Since 1982 the U.S. economy
has created 15 million new jobs—the strongest record of employment growth among the major industrial countries. Unemployment
rates have dropped substantially for all major demographic groups,
with especially large improvements for blacks, Hispanics, and youths.
The bulk of new jobs have been full-time and in higher paying occupations. Along with the rapid rise in employment, growth rates of
both productivity and real per capita income have picked up, after a
period of slow growth in the 1970s. Manufacturing has experienced
particularly strong productivity growth, while retaining its traditional
share in the value of total output. The Nation's industrial base remains strong.




Moreover, the expansion's accomplishments should continue to
build, provided the Administration's growth-oriented economic policies are followed in the future. The unemployment rate has not
reached a natural barrier beyond which further reductions necessarily
imply serious risk of accelerating inflation.
EXTERNAL IMBALANCES

Since late 1986 the Nation's large trade deficit has been narrowing
in real terms, contributing to output and employment growth in the
United States. Chapter 3 discusses the significance of external imbalances—the problems they do and do not pose for the United States
and the world economy. It then examines the forces behind the evolution of worldwide imbalances, as well as the processes that are
under way to reduce them.
In assessing the significance of the country's external deficit, the
chapter finds that, because of strong demand growth within the U.S.
economy, the widening trade gap did not impair overall employment
growth. Nor did it cripple the manufacturing sector. Moreover, U.S.
investment was aided by substantial net inflows of foreign capital
which offset a relatively low national saving rate. The buildup of net
foreign claims on the United States remains modest relative to U.S.
income and wealth, and future problems arising from a continued
rapid buildup can be forestalled by adequate progress in reducing
the external deficit.
To sustain such progress, it is essential that the fundamental macroeconomic causes of worldwide imbalances continue to be addressed. A substantial reduction in the foreign exchange value of the
dollar has helped to restore the international competitiveness of U.S.
industry, and it is a major factor in the turnaround and expected further improvement in the real trade deficit. To maintain noninflationary growth in the world economy while external imbalances are being
corrected, it is vital that Federal deficit reduction continue in the
United States, that internal growth in foreign countries remains
strong, and that markets function freely and flexibly to bring about
necessary structural adjustments here and abroad. It is equally vital
that national markets remain open to international trade and that the
world avoid a descent into protectionism.
OPENING MARKETS AND AVOIDING PROTECTIONISM

Chapter 4 amplifies the conclusion of the preceding chapter: protectionism is not the answer. Instead, economic progress here and
around the world is enhanced by the benefits of further liberalizing
international trade.




21

During 1987 significant progress was made toward a more open
trading system. Chapter 4 discusses the steps taken in three important areas: the Free-Trade Agreement (FTA) with Canada; the United
States-Mexico Framework Understanding; and the Uruguay Round of
negotiations under the General Agreement on Tariffs and Trade
(GATT). When approved, the FTA will culminate 140 years of efforts
to establish free trade as the guiding principle governing what has
become the world's largest commercial trading relationship between
any two nations, thereby providing substantial and enduring benefits
for businesses and consumers in both the United States and Canada.
In the Uruguay Round, the United States is vigorously pursuing the
proposals it has made to strengthen the free and fair trade principles
of GATT and to broaden their application in services, investment, intellectual property, and agriculture.
At the same time, however, threats to trade liberalization have
emerged within the United States. Pending legislation, while including some useful features, also contains numerous protectionist provisions. Enactment of these protectionist provisions would violate U.S.
obligations under GATT, increase costs to consumers, damage relations with our trading partners, and invite retaliation. The United
States has a choice: it can continue to lead the movement toward
freer world trade, building on the progress of the last year, or it can
turn inward, embracing protectionist measures that point only toward
economic stagnation.
KNOWLEDGE AND PROGRESS

Chapter 5 examines three of the major factors that underlie rising
living standards in the longer term and considers the role of government in supporting and sustaining economic progress. The chapter
first examines investment in human capital, reviewing trends in
schooling, training, and work experience, as well as their effects on
earnings and output. It then discusses expenditures on research and
development and their relationship to economic growth. Finally, the
chapter reviews the importance of economic incentives and flexible
markets in supporting economic progress by assuring that resources
are directed toward their most highly valued uses.
The government has a constructive, but limited, role to play in ensuring that these building blocks of economic progress are strong. In
education, government plays a large direct role, primarily at the State
and local level where it can be most responsive to community needs.
For investment in human capital and in research and development,
government support is most effective when it relies on private incentives that guide such investment toward its most productive uses. To
maintain economic incentives, government has an important respon-




22

sibility to protect the rights of individuals to benefit from their own
labor, investment, innovation, and entrepreneurship. Beyond this, the
best role for government is often a minimal one—ensuring that it
does not interfere with the efficient use of resources or introduce
market barriers and distortions that impede productive economic activity.
AIRLINE DEREGULATION

The success of deregulation is well illustrated by the airline industry. The final chapter of this Report focuses on the effects of the Airline Deregulation Act of 1978, which led to a surge in air travel as a
result of lower fares and greater choice. Recently, however, more
complaints about service and on-time performance, as well as safety
concerns, have prompted calls for reregulation.
Reregulation would be a mistake. The benefits of having removed
regulation of entry and pricing in the airline industry are clear. They
are also sizable, on the order of $11 billion per year. Despite airline
mergers and fears of monopoly pricing, competition remains
vigorous. More air travel—a reflection of the very success of deregulation—unquestionably has meant more crowded skies and
busier airports. However, the answer to this congestion is not less reliance on market forces, but more. Deregulation should be expanded
to allow a greater role for market forces in the management of the
Nation's airspace and airport services.
Concerns that air safety is being undermined by the increased
competition of a deregulated environment are not supported by the
facts. The rapid increase in airline business in the last 10 years has
led to no deterioration in the safety of air travel; instead, the record
is good and compares favorably with the period before 1978. More
people are flying to more places than ever before, and they are
traveling more safely.
THE U.S. ECONOMY IN 1987
U.S. economic growth strengthened in 1987, and the sources of
growth shifted markedly. Starting in the fourth quarter of 1986, real
gross national product (GNP) growth began to exceed domestic
demand growth, as—for the first time in 7 years—the foreign trade
sector contributed on a sustained basis to economic growth in the
United States. On the inflation front, the increase in consumer prices
moved up into the 5 percent range early in 1987, spurred largely by
the rebound in world petroleum prices. Non-oil import prices, which
had tended to restrain inflation during the first half of the 1980s,
also contributed upward pressure on consumer prices. But this accel-




23

eration, which largely reflected a one-time shift in relative prices,
proved short-lived, and inflation in the second half of the year fell
back to the 4 percent rate that has characterized most of the current
economic expansion.
SOURCES OF DEMAND

The economic expansion continued through 1987, and in October
it claimed the record as the longest period of uninterrupted growth
that the United States has experienced in peacetime. Ironically, the
record was set just as the stock market's optimism was shaken, and
the Dow Jones Industrial Average dropped more than 20 percent in a
single day. Clearly, some stresses and imbalances had emerged
during the expansion, but data on the real economy indicated that
favorable adjustments were occurring, and that they were occurring
within a context of continued growth. The trade deficit was narrowing in real terms, the Federal budget deficit had dropped by onethird, and business fixed investment was rebounding from its 1986
decline.
Real GNP grew 3.8 percent from the fourth quarter of 1986
through the fourth quarter of 1987, rising more than half again as
fast as in the preceding year. But this acceleration was by no means
uniform across components of demand. In fact, the largest component, personal consumption expenditures, slowed almost to a standstill, posting just a 0.6 percent rise after 4 consecutive years of 4-plus
percent increases (Table 1-1). Similarly, investment in housing declined for the first time since 1981. While the growth of government
purchases picked up slightly last year to 3.0 percent, the primary
source of the acceleration in GNP was the rebound in three components that had been a drag on growth in 1986: net exports, business
fixed investment, and inventories.
The strengthening of exports, the turnaround in business fixed investment, and the slower growth of consumer spending all were part
of a welcome pattern of economic adjustment necessary to redress
the major imbalances of the U.S. economy. The figures presented on
the composition of output growth in 1987 were influenced importantly by the weakening of consumer expenditures and business fixed
investment in the final quarter of last year, but the fundamental pattern was not altered. Combined with continued strong growth of production, the drop in consumer and nonresidential fixed investment
demand at the end of 1987 meant a large increase in inventories,
which consequently accounted for one-half of the total increase in
real GNP last year.
Growth of real consumption expenditures was dampened by slower
growth of real personal income in 1987. As a result of the faster rise




24

TABLE 1-1.—Growth of Real GNP and Its Components, 1982-87
1985 IV

1982 IV
to
1985 IV

Item

1986 IV
to
1987 IV1

to

1986 IV

Average annual percent change
Real GNP

4.9

2.2

3.8

6.3
4.7
9.7

Domestic demand
Personal consumption expenditures
Nonresidential fixed investment
Residential fixed investment
Government purchases of goods and services
Exports of goods and services
Imports of goods and services

2.7
4.1

3.2
.6
3.7
-2.9
3.0
16.9
8.2

[5.8

4.5
2.9

15.2

-4.7
12.5

2.4
5.9
8.9

Contribution to real GNP growth
in percentage points2
Total change in real GNP
Final domestic demand
Change in inventories
Net exports of goods and services
1

Preliminary.
Detail may not add to totals because of rounding.
Source: Department of Commerce, Bureau of Economic Analysis.
2

in consumer prices last year, the growth of real disposable personal
income slowed to 2.0 percent. Within consumer expenditures, only
spending on services recorded an increase. After rising 2.4 percent in
1986, real services expenditures increased 3.8 percent in 1987. By
contrast, spending on durables and nondurables fell. Consumer
spending on motor vehicles dropped 5.9 percent in 1987, reversing
half of the 12 percent rise in the year before. With so many households having recently bought automobiles, fewer remained interested
in and able to make a purchase in 1987. In general, purchases of
motor vehicles have been highly volatile in recent years, as manufacturers have instituted on-again ofF-again incentive plans. These huge
fluctuations in car sales—routine 40 percent annual rates of increase
or decrease in a quarter—have induced large swings in the pattern of
consumption expenditures, despite the fact that motor vehicles account for less than 10 percent of total consumer spending.
The housing sector was affected adversely last year as interest rates
climbed. Real residential investment dropped 2.9 percent, a reversal
from 1986 when it had soared 12.5 percent as interest rates on new
30-year mortgages had moved into the single digits for the first time
in the 1980s. Early in 1987 mortgage rates continued to ease to a 9year low of 9.0 percent, but then they turned higher and in mid-October peaked at nearly 11.6 percent. The plunge in the stock market
then changed the financial landscape, and mortgage rates ended the
year about 1 percentage point below their October highs. The impact
of higher rates during most of last year was softened somewhat by a
shift toward adjustable-rate financing, which accounted for more than




25

half of all mortgage originations by early autumn. In addition, by
most indications, inflation expectations picked up at times last year,
so that the increase in real (inflation-adjusted) rates was not so large
as that in nominal interest rates. In the multifamily sector, however,
high vacancy rates and tax code changes that reduced the attractiveness of multifamily homes as tax shelters acted as added deterrents
to new construction.
During 1987 business investment appeared influenced primarily by
the strength of the economy—especially improved export prospects.
Business fixed investment rose 3.7 percent, reversing most of the 4.7
percent decline of the preceding year.
Improved export demand was evident in sales, production, and
employment figures. Real exports grew almost 17 percent last year,
finally rebounding above their peak levels of 1980-81. The increased
international competitiveness of U.S. products, owing to the drop in
the dollar's exchange rate, rising manufacturing productivity, and
moderate wage increases, lifted export sales. As a result, the external
sector contributed significantly to GNP growth last year. Growth of
imports, while well below the rates recorded during the early years of
this expansion, remained relatively rapid. Imports increased more
than 8 percent in real terms last year, as U.S. domestic demand
picked up.
Although real domestic demand grew at a 3.2 percent rate last
year, substantial progress was made in reducing the real external deficit. The improved net export performance stemmed primarily from
relative price changes that made U.S. goods increasingly attractive
both at home and abroad (Chart 1-1). In coming quarters these relative price changes should continue to improve the external balance.
But even faster progress will be made if demand abroad strengthens,
and if growth of U.S. domestic demand slows—preferably as a result
of Federal spending restraint that narrows the budget deficit.
INFLATION AND RELATIVE PRICE CHANGES

The consumer price index (CPI) rose at more than a 5 percent
annual rate during each of the first 4 months of 1987, but this initial
acceleration did not herald a sustained resurgence of inflation. Last
year the economy had to contend with significant increases in the
prices of imports and energy—two categories that earlier in the economic expansion had tended to act as restraining influences on inflation. In addition, aided in part by the accommodative monetary
policy of 1985-86, the economy was moving through a fifth year of
growth, capacity utilization was rising, and the unemployment rate
was continuing to fall. In similar circumstances in the 1970s, inflation
had accelerated. But in 1987 most broad measures of inflation, al-




26

The Dollar and Real Net Exports
Index, March 1973 = 100
80
Dollar Exchange Rate
Lagged Six Quarters

Billions of 1982 dollars
100
Dollar
Exchange Rate^/
(Inverted)
(left scale)

100

120

-100
140

iIt111r11 111 11111111111111111r11

160 LU

1970

1973

1976

1979

1982

llJ-200
1985

-/Nominal multilateral trade-weighted value of the dollar against the currencies of the other G-10
countries plus Switzerland.
Sources: Department of Commerce and Board of Governors of the Federal Reserve System.

though up from 1986 when oil prices had dropped sharply, remained
close to their averages for the first 3 years of the current expansion.
For example, the GNP fixed-weighted price index rose 4.0 percent,
compared with an average of 3.7 percent during 1983-85.
In 1986 crude oil prices had fluctuated wildly, dropping from more
than $25 per barrel for West Texas Intermediate at the beginning of
the year to a low of less than half that in July, then climbing back up
to more than $18 per barrel around the end of the year. During 1987
the price of oil was less volatile, ending the year only a little below its
level at the beginning of the year. The deflationary impact of the earlier drop in oil prices was completed at the retail level during 1986,
as the energy component of the CPI declined almost 20 percent over
the year. The inflationary effect of the subsequent rebound in oil
prices, however, was strongest during the first 3 months of 1987,
when the energy component of the CPI rose at a 26 percent annual
rate. Thereafter, the energy component increased at about the same
rate as the aggregate CPI.




27

In early 1987 the higher relative price of oil gave a one-time boost
to the aggregate price level, with no apparent effect on the economy^ underlying inflation rate. Similarly, the rising import prices of
recent quarters are a relative price adjustment which should produce
only transitory upward pressure on inflation. But, in the case of imports, the relative price adjustment is likely to be a more drawn-out
process. Prices of non-oil imports have been rising more rapidly than
overall inflation since the end of 1985, and they likely will continue
to do so for several more quarters as the dollar's drop on foreign
exchange markets gradually affects prices. A fixed-weighted index of
non-oil import prices has increased at a 9 percent annual rate during
the last 2 years.
Although the passthrough effects of the lower dollar can be expected to take some time, rising import prices nevertheless represent
a one-time change in relative prices and are a necessary factor in reducing the Nation's trade deficit. Only if macroeconomic policies are
unduly expansionary, and wage increases fully reflect the increases in
import prices, will the increased relative price of imports turn into a
sustained higher rate of inflation.
The increase in measured inflation early in 1987, in combination
with the economy's stronger growth, may have contributed to slightly
higher wage demands later in the year (Chart 1-2). Data on wage
costs and average earnings indicate that wage increases bottomed out
during the first half of the year and began to edge up during the
second half. The acceleration was modest, however, and the 12month change in wages remained in the 2.5 to 3.5 percent range. By
most measures, the increase in wage costs last year was among the
lowest of the postwar period, and the rise in unit labor costs, at 1.3
percent, was also relatively low.
At times during 1987, inflation expectations appeared to flare up.
Early in the spring, both the price of gold and interest rates rose
sharply, apparently reflecting higher inflation expectations as broad
indexes of commodity prices surged. Throughout much of the year
the strong growth of industrial production also raised demand for
inputs and put upward pressure on the prices of intermediate and
crude goods, especially metals. In the 12 months through December,
the producer price index for crude materials rose 8.8 percent, but
this increase had little effect last year on the price index for finished
producer goods, which rose just 2.2 percent.
INDUSTRIAL COMPOSITION

Along with the shifts in sources of demand and in relative prices
last year, the sectoral composition of output also changed. After
more than 2 years of sluggish increases, industrial output rose a




28

Chart 1-2

Wages and Prices
Percent change from year earlier
12

/

10 -

-

/
8
*
6

\

>, Employment Cost Index
\ (Wages and Salaries)

-

t"
t

4 _
i

Fixed-Weighted Price Index for
Personal Consumption Expenditures
*

2 —

0

l t l

1977

111. i ' M i i t i
1978 1979 1980

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

1981

1982

1983

1984

1985

*
—
^_

—

I i i ] I I I I
1986 1987

Note.—Data for fourth quarter 1987 are preliminary.
Sources: Department of Commerce and Department of Labor.

healthy 5.2 percent in the 12 months through December 1987. Some
industries benefited from the surge in exports and the renewed competitiveness vis-a-vis imports, while others were aided by the strength
of equipment investment. The rebound in oil prices encouraged activity in energy-related industries. And the agricultural sector appears
to have improved, aided by government support as well as by stronger exports.
In 1987 the growth of goods production outpaced that of services
by the widest margin since 1984. Similarly, after 2 years of declining
employment, an additional 628,000 people were put to work last year
in goods-producing industries. However, the predominant increase in
employment remained in service-producing industries, where more
than 2 million new jobs were created.
Among industries there were some remarkable reversals. Iron and
steel production increased by nearly 30 percent in the 12 months
through November 1987, having fallen about that much during the
preceding 3 years. Similarly, the output of construction, mining, and
farm equipment rose 18 percent through November, back to levels
last reached in 1982. Oil and gas well drilling was another very




29

strong component of industrial production in 1987; it increased by
37 percent, thereby retracing about half the drilling decline that had
followed the collapse in oil prices at the end of 1985.
After a number of years of severe financial stress, agriculture may
well have turned the corner. Farmland prices and net worth on farms
rose in 1987, after declining in each of the preceding 7 years. Agricultural exports turned higher, crop prices rose, and huge stockpiles
declined. In 1986 net farm income was at a high level as a result of
record government transfers to farmers, high livestock prices, and
low production expenses. In 1987 net income rose further, supported in addition by the strength of exports.
As the economic expansion continued through 1987, certain industries and sectors that had not fully participated in the recovery, or
that had suffered setbacks more recently, were caught up in the
spreading cycle of growth. Earlier in the expansion the high exchange rate had stymied export growth; but by 1987, after the dollar
declined roughly 40 percent on the Federal Reserve Board's tradeweighted index from its peak in the first quarter of 1985, export-dependent industries (and those that compete with imports) regained
some ground.
MACROECONOMIC POLICIES
Both fiscal and monetary policy turned toward restraint last year.
The Federal deficit narrowed by one-third in fiscal 1987, and even
on a cyclically adjusted basis—that is, abstracting from the deficit-reducing effect of faster economic growth—the restraint was clear.
Moreover, measured either in real terms or as a share of GNP, Federal outlays fell below the level of the previous fiscal year. At the
same time, rising interest rates and sharply lower money growth rates
indicated a tightening of monetary policy during much of 1987.
FISCAL RESTRAINT

In fiscal 1987 the reduction in the Federal budget deficit was remarkable. The deficit was cut $71 billion, or 1.9 percent of GNP, in a
single year. This salutary development reduced the government's demands on credit markets, while restraint on Federal spending released more resources for use by the private sector and, by holding
down growth of domestic demand, contributed to the improvement
in the Nation's real trade gap. Despite the contractionary impulse
from fiscal policy last year—equivalent on a cyclically adjusted basis
to roughly 1 percent of GNP—economic growth did not slow. The
economy performed well in 1987, supported in part by the monetary




30

stimulus of the preceding years and in part by the strong export
growth that stemmed from a lower dollar.
A portion of the deficit decline was made up of one-time occurrences, such as loan asset sales, small changes in the timing of receipts and expenditures, and higher revenues due to the phase-in of
the Tax Reform Act, but much was real, substantive deficit reduction.
The Federal budget as measured by the national income and product
accounts, which exclude some of these special factors, showed a $55
billion narrowing in the deficit infiscal1987.
The growth of total Federal outlays (both on- and off-budget)
slowed to just 1.4 percent in fiscal 1987, which translated into the
first inflation-adjusted decline in 14 years. Similarly, as a share of
GNP, Federal outlays dropped to 22.8 percent, down from 23.6 percent in fiscal 1986 (Chart 1-3). Boosted by stronger economic
growth and roughly $30 billion in additional revenues brought in by
tax reform, total Federal receipts rose 11.1 percent infiscal1987.
Federal revenues thus rose to 19.4 percent of GNP, 1 percentage
point above the 1960-80 average.
Chart 1 -3
Federal Receipts and Outlays as Percent of GNP

Percent of GNP
261

24

22

20

18

16

n\

Receipts

-

•

1960

.

I

i

.

1963

I

.

1966

.

I

.

1969

•

I

i

i

1972

I

.

1975

i

I

t

1978

Fiscal Years
Note.—Includes on-budget and off-budget items.
Sources: Department of Commerce and Office of Management and Budget.




31

i

I

i

1981

i

I

i

1984

i

I I
1987

The fiscal 1987 deficit of $150 billion came close to the $144 billion target specified in the original Gramm-Rudman-Hollings (GRH)
legislation passed in 1985. After the method of imposing automatic
spending cuts in that law was found to be unconstitutional, amendments to GRH, with new enforcement mechanisms and new deficit
targets, were signed into law in September 1987. The amendments
extended the deadline for a balanced budget by 2 years to 1993, and
they eased the deficit reduction requirements for fiscal 1988 and
1989 by providing "safe harbors" in the form of caps on the amount
of cuts mandated. For fiscal 1988 the amendments exchanged a $108
billion target, as specified in the original act, for a new $144 billion
target with a maximum automatic cut of $23 billion.
In October, as fiscal 1988 opened, the Federal budget for the year
remained far from settled. A short-term continuing resolution kept
the government operating, while lawmakers worked on appropriations and reconciliation legislation that would allow them to avoid
the across-the-board spending cuts mandated by GRH. But the likelihood of agreement on a satisfactory budget package appeared to diminish as October progressed, making automatic cuts more likely.
Automatic cuts are preferable to some alternatives—such as no deficit reduction at all, or higher taxes that undo the benefits of tax
reform—but they have a serious drawback: they do not recognize priorities. In other words, programs that may legitimately merit more
funds are cut just as much as those programs that may have outlived
their usefulness. For fiscal 1988, automatic cuts were avoided eventually, but not until the stock market break had encouraged the parties
involved in the budget-making process to reach an agreement.
MONETARY POLICY

During 1987 the Federal Reserve continued the eclectic approach
that has characterized decisionmaking within the Nation's central
bank in recent years. The creation of new deposit instruments, wide
fluctuations in market interest rates, the deregulation of deposit
rates, and the accelerated process of general financial innovation had
raised questions about how movements in money and credit aggregates should be interpreted. As the 1980s progressed, the Federal
Reserve had watched the historical relationships between money and
income and interest rates apparently break down in response to these
influences, and it came to rely less on the monetary aggregates and
more on a wide range of economic and financial variables as indica-




32

tors of emerging trends. Finally, in 1987 the Federal Reserve refrained from specifying an annual growth range for Ml, the measure
of money which in the past had been related most closely and reliably to income growth. Thus, for the first time since 1975—when the
Federal Reserve began to set money targets publicly—neither a
target nor a monitoring range for Ml was announced. And while
target ranges for M2 and M3 (broader measures of money) were
specified, the Federal Reserve's midyear report to the Congress explicitly recognized that *'[in certain circumstances,] some shortfall
from the annual ranges might well be appropriate."
In view of heightened uncertainty about the behavior of the monetary aggregates, the sharp slowing in money growth in 1987 did not
alarm the Federal Reserve, as it continued to tighten policy through
September. Annual rates of growth in the second and third quarters
of 1987 averaged between just 2V2 and 4x/2 percent for Ml, M2, and
M3. When measured from the fourth quarter of 1986, the growth
rates were somewhat higher: through September, Ml grew at a 6.1
percent annual rate, M2 at a 4.2 percent rate, and M3 at 5.4 percent.
Nevertheless, even these rates represented substantial decelerations
from those in the preceding year, and left M2 well below, and M3
just below, their target growth ranges. MIA, which consists of currency and checking accounts that cannot pay interest, increased at
less than a 2 percent annual rate through September, after having
risen 10 percent in 1986.
Background

The lessened reliance on money as an indicator was an outgrowth
of the experience of the 1980s, but especially of 1985-86. The Federal Reserve had begun to ease policy in the second half of 1984, reversing its earlier restraint in order to support the flagging economic
expansion, and more than 2 years of falling interest rates and rapid
money growth followed. From their peaks in mid-1984, most interest
rates declined 5 to 6 percentage points by the end of 1986, and many
short-term rates were cut in half. The monetary aggregates, especially the narrower aggregates, soared in 1985 and accelerated further in
1986. Over the four quarters of 1986, even the slowest growing of
the commonly cited aggregates, M3, rose 8.9 percent, while the fastest growing measure, Ml, ballooned 15.3 percent. By comparison,
nominal GNP increased just 4.5 percent during the same period. In
other words, by any measure, velocity (the ratio of nominal GNP to
the money supply) dropped steeply in 1986.




33

The decline in the velocity of Ml, at 9.4 percent, was particularly
steep and provided additional evidence that the relationship between
that measure of money and income had shifted. The relationship between nominal GNP and Ml, as summarized by velocity, apparently
veered off track in the early 1980s (Chart 1-4). Rather than trending
higher at a rate of roughly 3 percent a year as it had during the preceding 20 years, velocity declined on balance after 1981. There
always had been some cyclical variations in velocity, with changes in
interest rates altering the "opportunity cost'* of holding idle balances. But the experience of the 1980s clearly was different. Ml velocity appeared to be responding far more emphatically than in the
past to changes in market interest rates, while M2 velocity—although
also affected—remained closer to its historical behavior.
The two most likely explanations for this increased interest rate responsiveness of money balances are deregulation and the sharpest
disinflation since the late 1940s. The drop in inflation early in the
1980s fed through to expectations: as the public expects lower inflation, they tend to become more willing to hold money. Thus, to the
extent that falling interest rates reflected declining inflation expectations, the disinflation/more-stable-purchasing-power argument provides an additional link between lower interest rates and increased
demand for money.
Financial deregulation had its effect by changing the composition
of the monetary aggregates. Interest-bearing transaction accounts
were permitted, and interest rate caps were eliminated on all types of
accounts except demand deposits, on which interest payments remained prohibited. In the case of Ml, the shift in composition was
profound: by 1986 interest-bearing deposits had grown to nearly
one-third of Ml from a negligible share just 8 years earlier. As a
result, the 1984-86 decline in market interest rates meant that, by
the end of that period, the opportunity cost of a major component of
Ml dropped below one-half percent. This opportunity cost, measured as the 3-month Treasury bill rate less the interest rate paid on
negotiable order of withdrawal (NOW) accounts, was the lowest for
any transaction account in 40 years. Such a narrow spread is clearly
atypical; it developed in part because deposit rates on NOW accounts
and other variable-rate accounts have adjusted relatively slowly to
changes in market interest rates. This rate-setting behavior has accentuated the effect of variations in market rates on the demand for
money.




34

Chart 1-4

Interest Rates and Velocity of Money

Percent per annum
16
Treasury Bill Rate is
Two-Quarter Moving Average
14

Ratio
7.5

12

5.5

A
3-Month Treasury
Bill Rate
(left scale)

V

4.5

'V
-

3.5

ulo
1959

1963

1967

1971

1975

1979

1983

Percent per annum

1987
Ratio

16

19
.
Treasury Bill Rate is
Two-Quarter Moving Average

3-Month Treasury
Bill Rate
(left scale)

-1.5

nJo

olinlinlin

1959

1963

1967

1971

1975

1979

1983

& Ratio of GNP to M1 or M2.
Sources: Department of the Treasury and Board of Governors of the Federal Reserve System.




35

1987

Federal Reserve Actions in 1987: Before October 19

In 1987 monetary policymakers continued to face uncertainties
concerning the strength of the economy, the extent of the inflationary threat, and the interpretation of movements in the monetary aggregates. Evaluating financial and economic indicators and predicting
the precise effects of policy moves remain inexact sciences. On the
domestic front, financial markets indicated that inflation expectations
may have surged at times, although inflation itself exceeded the 4
percent range only briefly, early in the year. And on the international
front, the value of the dollar came under pressure several times.
Throughout the year, however, U.S. economic activity remained
robust, and the unemployment rate dropped nearly a percentage
point.
As 1987 began, the deciphering of economic and financial market
trends was complicated by a year-end surge of transactions prompted
by a change in tax laws. Because many provisions of the Tax Reform
Act were to take effect at the turn of the year, individuals and businesses rushed to complete real estate transactions, mergers, sales of
equities, car purchases, etc., before the end of 1986. In the process
they generated huge demands for money and credit; for example, Ml
rose at a 30.5 percent annual rate in December 1986, and business
loans increased at a 36 percent rate.
In view of the difficulty in separating tax effects from underlying
economic trends during this period, the Federal Open Market Committee (FOMC), the Federal Reserve's principal monetary policymaking body, chose not to make any substantive changes in its instructions to the Open Market Desk, which implements policy on a day-today basis. Thus the thrust of the directive that had been in place
since the last discount rate cut in August 1986 remained in force. At
the same time, however, the FOMC indicated its bias toward future
tightening and noted that, at least with regard to Ml, money growth
would have to slow from the 1986 pace in order to sustain progress
toward price stability.
As the year-end bulge in the monetary aggregates dissipated and
the economy continued to grow at a moderate pace, the Federal Reserve made no explicit changes in monetary policy until late April.
Then, in April and again in May, the market for bank reserves was
tightened as policymakers responded to downward pressure on the
dollar in exchange markets and a perceived ratcheting upward of inflation expectations. News on the real economy was generally good:
growth was maintained, and the unemployment rate was dropping
substantially. But the rebound in energy prices, with some help from
higher import prices, had boosted the inflation rate above 5 percent,
and expectations of inflation were heating up. While oil prices had




36

roughly stabilized, broad indexes of commodity prices rose sharply in
April and early May, as did the price of gold. Long-term interest
rates also appeared to reflect an increase in inflation expectations:
the rate on 30-year Treasury bonds increased 1 Vz percentage points
in 2 months, to a peak of 9.0 percent (Chart 1-5). The dollar also
told a similar story about expectations during this period, losing
nearly 5 percent of its value on a trade-weighted basis in those 2
months.
Chart 1-5

Weekly Interest Rates, 1987
Percent per annum
12
tg. „
11 _ Mortgage Commitment Rate
;30-Year Mortgages)
30-Year Treasury Bonds
(Constant Maturity)

10

4\ 1111
Jan

11111111 n 11111111111111 11111 v\ 11111 111111111 i n
Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
1987

Sources: Department of the Treasury, Board of Governors of the Federal Reserve System, and
Federal Home Loan Mortgage Corporation.

The Federal Reserve actions, complemented by measures taken
abroad to ease policy, generally were successful in reassuring the domestic financial and foreign exchange markets. The dollar appreciated through mid-August, and interest rates remained below their
highs of the spring. Meanwhile, the economy showed signs of additional strength, inflation dropped back from the elevated levels of
early in the year, and wage increases remained subdued.
Under the influence of higher interest rates and tighter Federal Reserve policy, growth of the monetary aggregates continued to
weaken. Ml rose at just a 2.7 percent annual rate in the 6 months
through July, and MIA fell slightly, while M2 growth remained well




below, and M3 just below, their 5V2 to 8 ¥2 percent target ranges. To
some, this sharp slowdown in money growth raised concerns about
potential economic weakness.
In early September the Federal Reserve again tightened policy,
both by restricting reserve availability further—which it did "in light
of the potential for greater inflation, associated in part with weakness
in the dollar"—and by raising the discount rate one-half percentage
point to 6 percent. In the preceding 3 weeks the dollar had dropped
nearly 5 percent on a trade-weighted basis, and interest rates had
begun to move up very steeply in the last few days of August. Once
again, foreign exchange markets apparently were reassured by the
Federal Reserve's actions. The dollar stabilized, but this time interest
rates continued to climb.
The spur for the dollar's drop and the bond market's weakness appears to have been the release in mid-August of the June foreign
trade figures, which showed a $15.7 billion deficit—substantially
worse than the markets had expected. With the trade deficit thus narrowing more slowly than anticipated, the financial markets surmised
that further adjustments were required—either a lower dollar, reduced demand in the United States, or increased demand in our
major trading partners. Against a background of rising interest rates
abroad, and with little additional action expected to be taken to
reduce the U.S. budget deficit or to augment demand abroad, attention focused on the foreign exchange market and U.S. interest rates.
Specifically, a rise in U.S. interest rates appeared increasingly likely,
perhaps reflecting expectations that further dollar depreciation would
add to inflationary pressures. Higher rates also would have been expected to result from an effort to dampen business investment and
consumer spending—and thereby U.S. imports, which would reduce
the extent of the needed dollar decline.
The trade figures for the next 2 months also were worse than generally expected, and financial markets reacted adversely. On October
14, when the August data were released, the Dow Jones Industrial
Average posted a 1-day drop of 3.8 percent, and the rate on 30-year
Treasury bonds rose 20 basis points (0.20 percentage point). The
dollar also declined, but by less than 1 percent. On balance between
September 4 (when the discount rate was increased) and October 16,
the trade-weighted value of the dollar remained unchanged, the Dow
Jones Industrial Average dropped 12 percent, and interest rates rose
50-150 basis points.
The extent of Federal Reserve tightening through mid-October
was most dramatic as measured by the sharp deceleration of money
and reserve growth. In view of the relative looseness of money-GNP
relationships in recent years, however, other indicators provide addi-




tional evidence on the stance of Federal Reserve policy. Judging by
the level of the Federal funds rate in early October, the progressive
tightening of monetary policy had effectively reversed most of the
easing that had occurred during 1986. At their peaks, short-term interest rates had increased roughly 150-250 basis points since the beginning of the year, and long-term rates had risen a bit more than
that. Although these nominal increases were offset in part by higher
inflation expectations, real interest rates, which adjust for inflation
expectations, also appear to have risen during 1987—albeit by a
more modest amount than during some other periods of real rate increases in the 1980s. Two other variables that sometimes can be used
as indicators of monetary policy did not appear to point to a tightening last year. In particular, the dollar's exchange rate declined on
balance, and the yield spread between long- and short-term securities
widened somewhat, rather than narrowing or even turning negative
as it tends to do in periods of severe monetary policy restraint.
Nevertheless, the balance of the evidence points to a tightening of
monetary policy last year.
There is little question that a turn toward some restraint in 1987
was desirable; continued growth of money at the high rates experienced in 1985 and 1986 would have had inevitable inflationary consequences. With output growth apparently well-maintained and inflation expectations building at times, the Federal Reserve acted to
forestall a resurgence of deep-rooted inflation and to retain hardwon gains toward price stability. As always, because monetary policy
actions affect the economy with sizable lags, the tightening of policy
last year had implications for future growth and price performance.
THE BREAK IN THE STOCK MARKET
As the third quarter ended, preliminary evidence suggested—and
data later confirmed—that the U.S. economy was growing strongly.
The unemployment rate continued to edge down, reaching its lowest
level since late 1979, and the index of leading indicators pointed to
sustained economic growth. However, the outlook for further substantial improvement in the Federal deficit was clouded by an apparent deadlock between the Congress and the Administration over the
budget for fiscal 1988, which began October 1. In financial markets,
the Federal Reserve had tightened monetary policy in September. Interest rates, both short- and long-term, rose further in the first weeks
of October.




39

THE CRASH

In mid-October the stock market posted a string of large declines,
culminating in a 1-day plunge of unprecedented magnitude. The
stock market had soared more than 40 percent in value from the start
of the year through its August peak, but, by the close of business on
October 16, nearly half of that gain had been erased. And the following Monday, October 19, after stock markets elsewhere in the world
had posted sharp declines, the Dow Jones Industrial Average lost
22.6 percent in a single day. Trading volume was enormous, the markets were chaotic, many stocks opened very late, and the word
"panic" aptly described the atmosphere. It was a worldwide phenomenon with potentially worldwide consequences.
On that 1 day, the total value of the stock market dropped by
roughly half a trillion dollars. The next day, again amid an enormous
volume of transactions, market conditions worsened. Trading in
many stocks and index futures halted for a time, but the market managed to recover and closed higher. In subsequent days and weeks, investors remained nervous, but they drew reassurance from the Federal Reserve's prompt provision of liquidity and the large number of
corporations announcing stock buy-backs. During the remainder of
the year, the market settled into a trading range that left the Dow at
the end of 1987 quite close to its year-earlier level.
A wide range of explanations for the crash has been offered, and
many factors may have contributed. However, no political or economic event occurred between the market's close on Friday and on
Monday that appears capable of explaining such a huge revaluation
of the net worth of U.S. corporations. To an extent, the stock market
appeared to be reacting simply to itself; in increasingly heavy trading
on the preceding Wednesday, Thursday, and Friday, the Dow had
lost a total of 261 points, and on October 19, as more individuals
and institutions became aware of the deepening plunge in stocks that
day and tried to sell, the decline cumulated.
A survey regarding the factors that had propelled stock prices
downward was included in The Report of the Presidential Task Force on

Market Mechanisms, which reviewed the stock market break. A majority
of the market participants and other interested parties that responded to the survey viewed technical and psychological factors, especially
"sheer panic," as the cause of the intense selling pressure on October 19. By contrast, fundamental factors, such as rising interest rates,
overvaluation of the market, and the large trade and budget deficits,
were described as the primary cause of the preceding week's decline.
Some commonly watched measures of stock values lend support to
the proposition that stocks were overvalued before mid-October. Dividend yields on stocks were well below their postwar average, while




40

price/earnings ratios had soared to highs attained only briefly in
recent decades. Since the beginning of 1987, stock prices had skyrocketed amid reports of escalating corporate earnings and robust
economic growth. But while stock prices were soaring, bond prices
were dropping, creating an unusual divergence between the two markets. In a sense, on October 19 the stock market caught up with the
bond market.
Rising interest rates certainly were a factor in the stock market's
decline. As noted above, rates had risen sharply in the weeks preceding the crash, and one major bank announced another half percentage point hike in its prime rate on the Thursday before the plunge.
Moreover, the outlook for even higher interest rates had been bolstered by the lack of improvement in the monthly U.S. trade figures.
The slower-than-expected turnaround in the trade deficit implied to
some that further adjustments—either to exchange rates or to foreign
or domestic fiscal or monetary policies—would be necessary to stimulate U.S. exports and reduce U.S. import growth.
Several additional factors may have played a role in the market's
decline. In particular, publication of the large trade deficits appeared
to strengthen the position of those supporting protectionist trade
legislation, the passage of which would seriously impair the ability of
U.S. firms to do business abroad and would signal the abandonment
of a longstanding U.S. commitment to an open trading system. There
also were other indications that international economic policy cooperation might be endangered. In addition, the House Ways and
Means Committee had just approved a tax package containing several
items adversely affecting business, including a measure that would increase the cost of corporate takeovers.
THE ECONOMIC IMPLICATIONS

The damage to the financial system as a direct result of the stock
market break was remarkably minor. Several brokerage firms closed
their doors or merged with larger, better capitalized companies, a
number of Wall Street firms announced layoffs, and the demand for
portfolio insurance—which was supposed to provide a hedge against
declining stocks—dropped off amid evidence that such insurance had
failed to perform as expected.
Recent studies have provided much useful information concerning
the events surrounding October 19. These studies deserve, and will
receive, serious and careful attention. In response to the crash, however, it is important to avoid precipitous actions that might make financial markets less efficient and less flexible. The resilience of the
financial system in the face of the unprecedented dive in stock prices
can be read as eloquent testimony to the general adequacy of gov-




41

ernment regulations in this area. Regulatory authorities and market
participants worked together effectively to ensure that, despite the
large declines in stock prices, the financial system continued to function.
The implications of the market break for the economy, however,
are harder to gauge and may ultimately be more serious, requiring a
careful balance of macroeconomic policies to avoid the threat of an
economic downturn. The stock market is a good, but not infallible,
predictor of economic trends. While it is sufficiently reliable to be included in the Department of Commerce's index of leading indicators,
it represents only 1 of 11 components in that index. The stock
market tends to be overly pessimistic, erroneously predicting several
additional recessions in the postwar period. But in those circumstances when a stock drop has not been followed by an economic
downturn, it is often because economic policies have shifted direction, effectively preempting a recession. For example, in 1966, after
the stock market had declined more than 20 percent, the Federal Reserve did an about-face, reversing much of its earlier tightening. The
economy responded to the support, and a recession was avoided.
Stock prices are a leading indicator because they distill expectations about future corporate earnings, and because they affect decisions about spending and investment. Until October, when the break
in the stock market affected attitudes, surveys had shown steady increases in consumer confidence during 1987. Thereafter, consumer
sentiment dipped sharply, and although it has largely recovered, consumer spending behavior appears to have become more cautious.
The stock market is a barometer of confidence in the outlook, and
it is a major component of the Nation's wealth. At the end of September the market value of corporate equities totaled roughly $4.4
trillion, about $2.3 trillion of which was held directly by the household sector. This $2.3 trillion represented nearly one-sixth of that
sector's total net worth of $15 trillion, so a large change in the value
of stocks could be expected to have an impact on household spending. Some econometric models have estimated that a $1 decline in
the value of the stock market reduces consumer spending by about 4
cents over a horizon of roughly 1 year. Thus a $500 billion drop in
stocks would mean about a $20 billion (or 0.8 percent) reduction in
consumer expenditures by the fall of 1988.
The repercussions for consumption should be mitigated, however,
by the fact that the lost wealth this time had been so recently acquired. While many individuals and institutions were badly hurt financially by the plunge in prices, the decline reversed only about 1
year's gain in stock values. Even after October 19, the Dow Jones remained more than double its mid-1982 level. Nonetheless, in the at-




42

mosphere of uncertainty that followed the crash, there were convincing reasons to postpone decisions to spend and invest.
The stock market crash was not, as one observer put it, "a necessary, marvelous correction," but it may have had its silver lining. In
particular, as discussed below, it helped move macroeconomic policy
in the direction of a more balanced posture, by adding impetus to
efforts to reduce Federal spending and the deficit. In addition, by
drawing an explicit parallel to the Great Depression, the stock market
decline highlighted the serious dangers associated with protectionism, thereby undercutting support for protectionist trade legislation
and encouraging the reduction of trade barriers. Moreover, the crash
may have made enactment less likely for ill-considered Federal legislation that would inappropriately restrict the market for corporate
control.
If the plunge in stock prices also causes consumers to become
slightly more cautious in their spending patterns, a gentle rise in the
personal saving rate and consequent added improvement in the trade
balance will ensue. In this case, however, it is not true that if a little
consumer retrenchment is good, a lot is better. And it is the responsibility of policymakers to watch closely and to take additional actions
if it appears that a downward spiral is threatening. With appropriate
policies, 1987—the market break notwithstanding—need not herald
the end of the longest peacetime expansion in U.S. history.
THE POLICY RESPONSE

In the days and weeks following October 19, U.S. macroeconomic
policies were reassessed. The Federal Reserve reacted promptly, indicating by word and deed that ample liquidity would be provided to
help the financial system and the economy weather the stresses associated with the market break. The fiscal policy response required
more negotiation and more time, but 1 month after the plunge in
stock prices, the Administration and the Congress concluded an
agreement to continue efforts in the direction of restraint by cutting
the fiscal 1988 and 1989 budget deficits by $30 billion and $46 billion, respectively, from a specified baseline.
Fiscal Policy

Deficit reduction through Federal spending restraint was, and is, a
high priority of the Administration. The stock market drop added urgency to Administration and congressional efforts to forge a 1988
budget that consolidated and built upon the deficit reduction
progress made in fiscal 1987. At the "budget summit'* set up in the
wake of the stock market drop, participants agreed to a 2-year $76
billion deficit reduction package; the resulting legislation rendered
GRH automatic spending cuts unnecessary for fiscal 1988. The




43

spending cuts and revenue increases enacted preserve the progress
on the deficit made in fiscal 1987 and set the stage for further gains.
While deficit reduction is a very important objective, it is not paramount. For example, GRH wisely allows for suspending the targets
should the economy weaken markedly. In current circumstances, with
the deflationary impact of the stock market decline not yet clear,
progress on the fiscal deficit should continue to be made, but cautiously. The Federal Government's budget has the attractive property
of providing the economy with automatic stabilizers, moving in the
direction of deficit when the economy sinks and in the direction of
surplus when it soars. These stabilizers should not be overridden in
the pursuit of deficit reduction. Nor should the deficit reduction imperative run roughshod over considerations of economic efficiency by
raising taxes that undo the benefits of tax reform and reduce incentives to work, produce, and invest.
Without question, in the long run the potential for growth in this
country will be enhanced by moving toward a balanced Federal
budget. Over the medium term, a tighter fiscal policy would play a
major role in improving the balance between income and spending in
the United States. As the government significantly reduces its demands on resources, there is an increased likelihood that the external
imbalance can be righted without impairing the growth of private
sector investment expenditures. If, instead, investment expenditures
were to be stunted by a combination of loose fiscal policy and tight
money, America's potential for future growth might be jeopardized
by an increasingly outdated capital stock.
Monetary Policy

The stock market crash required—and received—an immediate
monetary policy response. By the end of the day on October 19, billions of dollars of financial wealth had been lost, and fears of a possible collapse of the financial system and, ultimately, of the economy
were palpable. The Federal Reserve responded promptly and unequivocally to these threats by issuing a brief statement the next day
that emphasized its willingness to support the system with adequate
liquidity. This statement was buttressed by open market operations
that satisfied increased demands for liquidity and eased money
market conditions. In the 2 weeks immediately following the crash,
borrowing from the Federal Reserve declined to a level not seen
since the initial tightening of policy in the spring, excess reserves
soared to nearly double their usual amount, and the Federal funds
rate dropped back to the 6% percent range that prevailed during the
summer.
The stock market plunge changed the circumstances faced by monetary policymakers in an important way. The market break caused an




44

abrupt loss of wealth and consumer confidence, removing some of
the impetus for higher growth and higher prices. The balance of risks
shifted as the possibility of recession increased, and the general level
of uncertainty about the outlook was heightened enormously. In
these circumstances, it was appropriate for the Federal Reserve to respond by making reserves freely available.
After its initial response, however, monetary policy began to take a
more cautious tack. Amid signs that the economy had strong momentum going into the fourth quarter, and with few clear indications of
economic retrenchment in reaction to the crash, the Federal Reserve
took no further moves to ease policy, keeping the discount rate at 6
percent. Most monetary and reserve aggregates weakened over the
balance of the year. Ml, MIA, and total reserves each ended the year
below their pre-crash levels, and M2 remained well below its target
growth range, rising at just a 4 percent rate for the year as a whole.
Immediately following the 508-point drop in the Dow, the Federal
Reserve's operations were exemplary. It was in the right place at the
right time, supporting the financial system with ample liquidity.
While it was appropriate for the conduct of policy to change subsequently (once constant reassurances to the markets were no longer
needed), the stance of monetary policy at the end of 1987 may have
underestimated the risks to adequate economic growth. At the end of
the year, interest rates were down from their October highs, but they
remained above the levels of January through August, while monetary aggregate growth remained weak. More recently, declining interest rates and increased money growth suggest that the Federal Reserve has been more supportive of economic growth.
THE ECONOMIC OUTLOOK
The Administration's economic forecast anticipates that the rate of
economic expansion will slow this year from the rapid pace set in
1987. Subsequently, growth is projected to resume at a rate that
more fully reflects the economy's long-term potential and that promises further reductions in unemployment. Improvement in the U.S.
real trade balance is expected to contribute to output and employment growth in coming years, as it did in 1987; this contribution will
play an especially important role in 1988. Increases in the workingage population, in labor force participation rates, and in the education, skill, and experience of the work force, together with an expanding capital stock and improving technology, are projected to
sustain growth of the economy's output at a rate sufficient to meet
rising domestic and international demand. The inflation rate is projected to move gradually downward from the 4 percem range charac-




45

teristic of the current expansion toward the long-term goal of price
stability. Underlying this outlook are economic policies that are assumed to support these developments.
FORECAST FOR 1988

Real GNP is forecast to rise 2.4 percent from the fourth quarter of
1987 to the fourth quarter of 1988, somewhat slower than the 3.8
percent increase in 1987. Nevertheless, output growth in 1988 is expected to generate employment growth sufficient to match increases
in the labor force and to keep the unemployment rate at about its
current level. As a result, the average unemployment rate during
1988 is likely to be the lowest in 13 years.
The expected slowing of real GNP growth in 1988, also widely anticipated by private forecasters, reflects economic developments
during 1987, especially those during the last quarter of the year. The
low rate of personal saving and the slow growth of real disposable
income through the third quarter of last year already suggested some
prospective slowing of growth in consumer spending—even before
the stock market crash lowered household wealth and consumer confidence. Interest rates declined significantly after the market break,
but they remained above their levels at the beginning of the year.
Slow growth of monetary aggregates throughout 1987 points to some
possible weakening of economic growth in 1988. The buildup of inventories at the end of 1987 also indicates a likely need to reduce
production growth relative to final sales growth in the new year.
Weighing on the other side, gains in disposable income at the end of
1987 and tax rate reductions taking effect in January 1988 are likely
to support consumer spending. Declines in mortgage interest rates
promise a future boost for residential construction. Perhaps most
important, prospects for continued strong growth of U.S. exports
look excellent. All told, however, real GNP growth in 1988 appears
likely to lag behind the rapid pace of 1987.
Probably the most immediate concern is the fast pace of inventory
accumulation during the fourth quarter of 1987. In particular, nonfarm
inventories appeared to rise at an unsustainable rate. To correct this
situation, production will have to decrease relative to final sales. Final
sales are expected to show renewed growth in 1988, after being
essentially flat in the final quarter of 1987. Consequently, an outright
decline in production can be avoided. The inventory adjustment can be
achieved through slower production growth relative to final sales
growth. This essentially reverses the situation in 1987. As discussed
earlier, inventory building accounted for one-half of overall economic
growth last year, more than offsetting deceleration in other domestic




components of GNP. In 1988 inventories are expected to accumulate
at a slower and more sustainable pace. This slowdown will have a
negative impact on real GNP growth, possibly with much of the effect
felt in the first half of the year. Modest gains for most other domestic
components of demand and strong gains for the U.S. trade sector are
expected to keep real GNP growing.
Real net exports will be one of the main sources of growth in the
economy in 1988, providing nearly half of overall output growth.
Rapid productivity gains in manufacturing, moderate wage increases,
and the effects of past exchange-rate adjustments will continue to
help U.S. businesses expand exports in foreign markets and compete
against imports at home. In addition, anticipated slow growth of final
demand within the U.S. economy and the possible effect of the inventory correction on imports are expected to restrain growth of imports and to contribute to net export gains.
In 1987 growth of real consumption slowed to a 0.6 percent rate
from the rapid pace set earlier in the expansion, and it actually fell at
a 3.8 percent annual rate in the fourth quarter. The personal saving
rate finished the year 1.3 percentage points above the year-earlier
rate, due entirely to the drop in consumer spending and a strong
gain in disposable income during the last quarter of the year. Given
the high rate of auto purchases in the third quarter of 1987, the low
personal saving rate for most of the year, and the likely effects of October's stock market decline, it was widely anticipated late last year
that there would be some downward adjustment in consumer spending. It appears that much of that adjustment occurred in the fourth
quarter. Accordingly, as indicated in Table 1-2, real consumption
spending is forecast to rise at a modest 1.9 percent rate during 1988,
slightly below the projected growth rate of real disposable income,
and substantially below the 4 V percent annual growth rate of real
2
consumer spending during the first 4 years of the current expansion.
Despite slower growth of aggregate output this year, fixed investment is expected to accelerate somewhat. As reported in Table
1-2, nonresidential fixed investment is forecast to increase 4.4 percent during the current year, up from 3.7 percent last year. The improving trade picture, which is lifting capacity utilization rates in
many manufacturing industries, will provide much of the motivation
for increased investment. The need for additional capacity to meet
demands both for exports and for import substitutes should continue
to stimulate investment in equipment and nonresidential structures.
Lower interest rates in 1988, partly as the result of slower economic
growth and lower expected inflation, should strengthen housing
demand. Residential investment, after falling in 1987, is forecast to
increase 3.4 percent in 1988.




47

TABLE 1-2.— Economic Outlook for

1988
1988
forecast

Item

Percent change,
fourth quarter to fourth quarter
Real gross national product..
Personal consumption expenditures
Nonresidential fixed investment
Residential investment
Federal purchases of goods and services
State and local purchases of goods and services..
GNP implicit price deflator..
Compensation per hour2
Output per hour2

Unemployment rate (percent) 3
Housing starts (millions of units, annual rate)..
1

Preliminary.
Nonfarm business, all persons.
Unemployed as percent of labor force including resident Armed Forces.
Note.—Based on seasonally adjusted data.
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.
2

3

The deficit reduction agreement concluded by the Congress and
the Administration, together with earlier efforts to control Federal
spending, will contribute to a decline in real Federal purchases in the
current year. Increases in State and local spending are expected to
offset much of this decline, leaving a small negative contribution to
GNP growth from the government sector as a whole.
As discussed in Chapter 2, the United States has been notable
among industrialized nations in its ability to create jobs both to meet
the needs of an expanding labor force and to reduce unemployment.
During the current expansion 15 million jobs have been created. Between the fourth quarter of 1986 and the fourth quarter of 1987,
when real GNP rose 3.8 percent, 3 million new jobs were created,
and the unemployment rate dropped from 6.8 percent to 5.8 percent.
Even though slower real growth in the current year is not expected
to bring further immediate reductions in the unemployment rate, it is
anticipated that some IV2 million new jobs will be created as employment growth keeps pace with an expanding labor force.
Higher oil prices and higher import prices increased the 1987 inflation rate (as measured by the CPI) above the very low rate recorded in 1986. Higher import prices also are expected to contribute to
consumer price inflation in 1988. However, after a year of slow
growth of monetary aggregates, and in view of the expected slowing
of real GNP growth, acceleration of inflation is not seen as a likely
danger in 1988. On a fourth-quarter to fourth-quarter basis, the CPI




48

is forecast to rise 4.3 percent in 1988, a small decline from the
rise in 1987. The GNP deflator, which is not affected directly by
import prices, is forecast to rise 3.9 percent in 1988. The increase
from 1987 primarily reflects a shifting of weights attached to different component prices used to calculate the deflator. It does not signify an acceleration of inflation.
The Administration's forecast for 1988 takes account of the favorable effects of tax reform, i.e., full implementation in January 1988 of
the reduced marginal tax rates mandated by the Tax Reform Act of
1986 and continued confidence in the preservation of tax reform's
incentives for growth and efficiency. Embodied in the forecast is the
expectation that the budget compromise agreed to by the Administration and the Congress will be followed, and that rates of demand
growth in other industrial countries will be sufficient to sustain world
output growth while the U.S. trade deficit is being reduced. Also critical for the forecast is the assumption that monetary authorities will
provide sufficient liquidity to support real growth without fueling an
acceleration of inflation.
PROJECTIONS FOR 1989-93

The Administration's medium-term projections show real GNP
growth strengthening after 1988, with growth averaging 3.3 percent
annually for the period 1989 through 1993. This projection is based
on the assessment that recent events in financial markets and slower
growth in 1988 will not materially alter the longer run growth potential of the U.S. economy. Table 1-3 presents yearly estimates for
major components of the medium-term projections. These estimates
are not intended to be year-to-year forecasts; rather, they are meant
to reflect underlying economic trends and Administration policies.
Implicit in the Administration's medium-term projections are important economic policy assumptions similar to those underlying the
forecast for 1988. First, tax increases that would dull incentives to
work, invest, and produce and that would impair the efficient allocation of resources are avoided, and the benefits of tax reform are preserved. Second, continued progress is made in reducing the Federal
deficit, primarily by restraining the growth of Federal spending while
allowing Federal revenues to rise with the growth of the economy.
Third, government regulation continues to be directed toward legitimate interests of public policy and does not again become an excessive and unnecessary burden to enterprise and growth. Fourth, monetary authorities supply adequate liquidity to sustain economic expansion while fostering progress toward the long-run goal of price
level stability. Fifth, protectionist pressures, which could provoke retaliation and hamper U.S. access to foreign markets, continue to be




49

TABLE 1-3.—Administration Economic Assumptions, 1988-93
[Calendar years]
Item

1988

1990

1989

1991

1992

1993

Percent change, year to year
Real GNP...

2.9

3.1

3.5

3.4

3.3

.0

.8

1.5

1.9

2.0

1.9

Output per hour1

1.4

1.8

2.0

2.0

2.0

2.0

Consumer price index2

4.3

4.1

3.6

3.2

2.7

2.2

116.1

118.1

120.0

121.9

123.8

125.5

5.8

5.6

5.4

5.3

5.2

5.2

Real compensation per hour1

3.2

Annua level
Employment (millions)3
Unemployment rate (percent) 4
1
2
3

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

resisted successfully. This last assumption is especially important in
view of the contribution that an improving U.S. trade balance is projected to make to overall U.S. economic growth in the medium term.
It is crucial that American businesses be permitted to compete in
markets that are as free as possible from the distorting effects of
trade barriers.
The Full Employment and Balanced Growth Act of 1978 requires
that the Economic Report of the President, together with the Annual Report
of the Council of Economic Advisers, include an investment policy report
and a review of progress in achieving goals specified in the act. Business fixed investment grew 3.7 percent in 1987, and it is expected to
continue expanding over the next 6 years in response to a growing
economy. Strong growth of manufacturing output and increases in
capacity utilization in manufacturing industries provided an important stimulus to investment growth in 1987. This development was
related to strong growth of U.S. exports, which is expected to persist
in 1988 and later years and thus support future investment growth.
More generally, it is the view of the Administration that the best
way to promote investment is to maintain a stable, growing, and
flexible economy that can profitably employ an ever-larger stock of
physical and human capital. The Administration has sought by means
of tax reform, deregulation, privatization, and other policies to provide such an environment. Chapter 5 of this Report discusses in greater detail the proper governmental role in promoting economic efficiency and investment, particularly investment in human capital and
in research and development.




50

The Administration's estimates of important measures that address
goals specified in the Full Employment and Balanced Growth Act are
summarized in Table 1-3. Projected increases in output and employment, higher real income and productivity growth, and lower inflation and unemployment will move the economy along the path to the
targets set by the act. As was discussed earlier, 15 million jobs have
been created during this expansion in an environment of decelerating inflation, and more can be accomplished in coming years. Chapter 2 documents in more detail the progress made so far in attaining
the goals specified in the act and outlines the prospects for future
gains.
DETERMINANTS OF GROWTH 1988-93

The long-run improvement in the Nation's standard of living implied by the Administration's economic projections hinges on the
continued expansion of the economy's capacity to produce. Important determinants of this capacity are the supply of labor, its level of
utilization, and its productive ability. The supply of labor is influenced by the size of the population and its demographic characteristics, by incentives to undertake employment in the market economy,
and by the cyclical state of the economy. The level of utilization of
the labor force, of course, responds primarily to fluctuations in the
level of economic activity. The productivity of labor depends on the
education, experience, and skills of the labor force, on the supplies
of physical capital and other cooperating factors of production, on
the technological efficiency of production processes, and on the economic efficiency of resource allocation. Except for the level of utilization of labor, the behavior of the determinants of the economy's productive capacity is governed mainly by long-term developments in
the economy, and is influenced by government policies that affect
these longer term developments. Favorable longer term trends and
policies directed at improving growth are projected to maintain the
momentum that the economy has developed during the 1980s, returning it to the trend rate of growth of the postwar era.
The sources of growth in the economy's productive potential that
underlie the Administration's medium-term projections are organized
into an accounting framework in Table 1-4. In order to focus on
trends in the economy and to avoid the complications of cyclical fluctuations, the first two columns of the table show growth rates from
business cycle peak to business cycle peak for historical periods. The
third column displays growth from the peak of the last business cycle
through 1987, and the final column presents growth rates over the
projection period, which extends through 1993.




51

TABLE 1 - 4 . —Accounting for Growth in Real GNP,

1948-93

[Average annual percent change]
1948 IV
to
1981 III

Item

1973 IV

to

1 9 8 1 III

1 9 8 1 III
to
1987 IV1

1987 IV1
to
1993 IV

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

0.9
.5

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

1.8
-.1

2.4
-.4

1.4
.1

5) EQUALS: Civilian employment
6) PLUS: Nonfarm business employment as share of civilian employment
7)
8)
9)
10)

EQUALS: Nonfarm business employment
PLUS: Average weekly hours (nonfarm business)
EQUALS: Hours of all persons (nonfarm business)
„
PLUS: Output per hour (productivity, nonfarm business)

1.5
.2
1.7
-.4

2.1
-.6

1.7
-.1

3.3

1.6
1.9

2.0
-.1

11) EQUALS: Nonfarm business output
12) LESS: Nonfarm business output as share of real GNP
13) EQUALS: Real GNP

2.0
1.4

3.4
.6

3.5
.3

2.2

2.8

3.2

1

Data for 1987 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.

Growth of the labor force is expected to be somewhat slower
during the projection period than earlier in the postwar era. As
Table 1-4 shows, labor force growth is determined by growth in the
adult population and by increases in labor force participation (the
fraction of the adult population in the labor force). The gradual decline in the growth rate of the adult population that has occurred
since the baby-boom generation reached adulthood in the 1960s and
1970s is expected to continue into the next decade. Also, strongly
rising rates of labor force participation that have existed since the
1970s are expected to continue in coming years. Increases in overall
participation likely will reflect continued entry of women into the
work force, higher participation by youth as they make up a smaller
proportion of the population, and a slowing of the decline in participation by people over 55. Significantly lower marginal tax rates on
labor income are expected to encourage labor force participation in
the years ahead. Furthermore, maintenance of a stable, growing
economy with expanding employment opportunities encourages increased labor force participation. Overall, the civilian labor force is
projected to rise 1.4 percent per year during the projection period.
Civilian employment is projected to grow slightly faster than the
labor force from 1988 to 1993, reflecting further modest declines in
the rate of unemployment. The 0.1 percent annual increase in the
employment rate documented in the last column of the table reflects
the estimated decline in the unemployment rate from current levels




52

to 5.2 percent by 1993. (Chapter 2 discusses the prospects for reductions in unemployment in coming years.)
The estimate of civilian employment growth is adjusted to cover
the nonfarm business sector in order to match published statistics for
productivity. A further adjustment to account for a slight projected
decline in the length of the workweek yields the growth rate of total
hours available for production indicated in Table 1-4. The sum of
the growth rate of total hours and the growth rate of output per hour
(productivity for nonfarm business) determines the growth rate of
nonfarm business output over the medium term. After adjustments
are made for the effect of relatively stronger growth in the nonfarm
business sector than in other sectors in the economy, the rate of
growth of real GNP is arrived at on the final line of Table 1-4.
The table shows that the average growth rate of the economy
through 1993 is projected to be almost the same as the average rate
of the postwar era, despite slower growth of the adult population.
Growth of nonfarm business output averages 3.5 percent annually for
the projection period, slightly higher than the 3.3 percent average for
the 1948-87 period. Slower population growth is projected to be
offset by continued strong increases in labor force participation and a
higher rate of productivity growth.
Critical to these projections is the assumption of a continued
pickup in productivity growth from the low rates experienced during
the 1970s and early 1980s. This assumption recognizes a number of
favorable trends in the economy that are lifting productivity growth,
as well as policy initiatives that should promote technological change
and growth in physical and human capital. Aging of the baby-boom
generation implies a trend toward a more experienced, more educated, and more skilled work force that should translate into improved
productivity growth in coming years. Furthermore, labor productivity
growth should rise as the result of increasing the ratio of the stock of
physical capital to labor. Slower growth of the labor force will facilitate this process of "capital deepening" in coming years. Continued
stability and gradual decline of the inflation rate also should contribute to stronger productivity growth by removing a major cause of
distortions in the allocation of capital. Oil and energy prices are expected to remain lower than in the late 1970s and early 1980s, implying that firms will have more resources to spend on investments that
enhance general productivity rather than having to focus so heavily
on investments that reduce energy costs.
Government policies also should contribute to increased productivity growth. Partly as a result of government initiatives, research and
development expenditures as a share of GNP are expected to remain
higher than in the 1970s, thus promoting innovation and technologi-




53

cal change. Government initiatives to improve education and to promote investment in knowledge and human capital also should lift
productivity growth. Tax reform has lessened the distortions to investment decisions by establishing more equal effective tax rates
across investment activities. This effect, coupled with policy initiatives
to lower market barriers and distortions, will allow capital and labor
to realize more fully their productive potential.
CONCLUSION
The current economic expansion entered its sixth year in 1987 and
became the longest peacetime expansion in U.S. economic history.
Real GNP recorded a strong 3.8 percent gain last year, 3 million new
jobs were created, and the unemployment rate dropped by nearly a
full percentage point. Early in the year, inflation rose temporarily
into the 5 percent range, due primarily to rising energy prices. For
the year as a whole, however, inflation remained in the 4 percent
range characteristic of the current expansion. An important transition
was made from an expansion led by growth of domestic demand and
with a deteriorating trade position, to one in which improving real
net exports made an important positive contribution to growth. The
manufacturing sector in particular benefited from the improving
trade situation, recording substantial gains in employment and
output. Dramatic progress was made in reducing the Federal deficit,
with a cut of one-third achieved in fiscal 1987.
However, some of the developments in 1987, particularly in the
last quarter, suggest a slower pace of economic advance in 1988. Interest rates rose persistently through the first three quarters of 1987,
due primarily to the vigor of the expansion, to increased worries
about higher inflation and a lower dollar, and to a tightening of monetary policy after 2 years of relative ease. After the stock market drop
on October 19, interest rates declined significantly, but still closed
the year above the levels at which they had started it. The decline in
stock prices cut the market value of equities back essentially to the
level at the end of 1986. This loss of wealth, together with the,effect
of the stock market break on consumer confidence, was widely anticipated to dampen the growth of consumer spending somewhat. In the
fourth quarter of 1987 output continued to grow strongly, but it ran
well ahead of final demand, leading to a buildup of inventories. Correction of this situation implies a period in which output grows more
slowly than final demand. During 1988 strong growth of exports,
some recovery of consumer spending, and anticipated growth of
fixed investment should enable this inventory correction to be
achieved in the context of continued economic expansion.




54

In sum, the longevity of the current expansion and the robust
growth exhibited in its most recent year testify convincingly to the
dynamism and resilience of the U.S. economy. Inevitably, no economic expansion proceeds at an absolutely even pace. The economy
had a good year in 1987—better than in 1986, and certainly much
better than in past years of recession or high inflation. This year
does not promise to be quite as good as 1987. However, the mistakes
of the past are not being repeated. Inflationary pressures are not
being built up that will once again distort the economy and impair its
growth, ultimately bringing on the wrenching readjustments of disinflation before a stable foundation for economic progress can be reestablished. Further progress toward the long-term goal of price level
stability is in prospect. The Federal deficit has been reduced substantially, and agreement has been reached on further reductions that do
not undermine the benefits of low and stable marginal tax rates. The
real trade deficit has begun to decline, and its further narrowing
promises to be an important source of strength for the U.S. economy. The present economic expansion, and the substantial benefits it
brings, can continue through 1988 and beyond.




55




CHAPTER 2

Rising Employment, Productivity, and
Income
"MAXIMUM EMPLOYMENT, PRODUCTION, and purchasing
power" are the fundamental goals of economic policy established by
the Employment Act of 1946. These goals are among the most important criteria by which the success of the Administration's economic policies must be assessed. The overall record of the last 7 years is
good. Since the longest peacetime expansion began in November
1982, 15 million new jobs have been created; production, as measured by real gross national product (GNP), has increased by almost
23 percent; living standards, as measured by real GNP per capita,
have grown at an average annual rate of 3.2 percent; and inflation is
down from double digits to a 4 percent annual rate.
Despite these accomplishments questions have been raised about
the breadth of U.S. economic growth, the strength of the industrial
base, and the rate at which incomes and productivity are rising. And
as the unemployment rate recently approached its lowest levels in 15
years, people have wondered if further reductions in unemployment
will accelerate inflation, as has happened in the past.
Many of these concerns are based on misconceptions about recent
trends in employment, productivity, and income growth. These
trends indicate that (1) most major demographic groups have shared
in the employment and income gains realized during the current expansion; (2) employment growth has been strong particularly in highpaying occupations; (3) the U.S. industrial base remains strong and
has not lost ground to other sectors of the economy; (4) incomes and
productivity have rebounded after a period of slow growth in the
1970s; and (5) as U.S. economic growth continues, further reductions
in the unemployment rate can be sustained without the damaging effects of accelerated wage and price inflation.
These features of the current expansion have not only ensured increased employment, production, and income; they also have improved the prospects for future growth. By virtue of its longevity and
steadiness, the recent economic expansion has simultaneously improved both living standards, through increased employment and incomes, and competitiveness, through improved productivity. These




57

gains in competitiveness can be expected to generate further gains in
employment and incomes in the future.
EMPLOYMENT AND OUTPUT
Strong employment growth is one of the outstanding features of
the current expansion. Since the expansion began in November
1982, total employment has increased by 15 million, and the unemployment rate has fallen by 4.9 percentage points to 5.7 percent. By
December 1987 the proportion of the working-age population employed reached a record 62.3 percent, and the unemployment rate
stood at its lowest level since July 1979, and within 0.2 percentage
point of its lowest level since 1974.
These employment gains exceeded the average rate of growth experienced in other postwar expansions, and they far surpassed the
growth rates of other major industrial countries. Employment has
risen at a 2.7 percent annual rate as compared to a 2.5 percent rate
in past expansions. The U.S. economy has added three times as many
workers as the six other economic summit countries combined, as
measured from either 1973 or 1982. This accomplishment is remarkable, considering that the combined working-age populations of
these countries are more than one and one-half times the workingage population of the United States. This difference in growth reflects not only the rapidly growing U.S. labor force, but also the
more than tripling of unemployment rates in France, Germany, and
the United Kingdom since the mid-1970s.
These strong gains in U.S. employment have been associated with
a brisk rate of growth in real output. The real value of goods and
services produced in the U.S. economy has increased at an annual
rate of 4.2 percent since the expansion began, a pace that is comparable to the average rate of growth in other U.S. postwar expansions,
but exceeds the rate of growth experienced by many other major industrial countries. Only two other postwar expansions, the first beginning in 1949 and including the Korean war, and the second beginning in 1961 and including the Vietnam war, have had faster real
output growth over a 5-year period.
The recent strength of GNP growth in the United States as compared to other industrial countries marks a break from past trends.
Between 1960 and 1980 real GNP growth in the United States lagged
behind output growth in the other six economic summit countries,
except the United Kingdom. In contrast, since 1982 only output
growth in Canada has exceeded growth in the United States.




58

THE BREADTH OF EMPLOYMENT GAINS

Increases in employment and reductions in unemployment during
the current expansion have affected all major demographic groups
and virtually all areas of the country. During the current expansion
unemployment rates for men and women have fallen by 5.4 and 4.3
percentage points, respectively, recording their largest declines of
any expansion in the postwar era. This progress reflects both the
depth of the 1981-82 recession, and the durability of the current expansion. Moreover, during this expansion, the unemployment rate
for women has fallen to nearly the same level as the unemployment
rate for men, in contrast to earlier periods when the rates for women
were significantly higher than those for men.
Gains in employment and reductions in unemployment rates have
been particularly large for minority groups. Employment of black
workers has risen by 2.4 million since November 1982, with black
female employment rising by 1.3 million and black male employment
rising by 1.1 million. As shown in Table 2-1, these employment gains
are significantly larger than those for other workers. As employment
has risen, unemployment rates for black males and black females
have fallen by 9.9 and 6.1 percentage points, respectively. Both the
gains in employment and reductions in unemployment rates are substantially larger than those recorded during the 1975-80 expansion.
TABLE 2-1.—Changes in Employment and Unemployment by Selected Demographic Groups,
1975-87
Unemployment rate

Employment
Demographic group1

1975
to
1980

1980
to
1982

1975
to
1980

1982
to
1987

1980
to
1982

1982
to
1987

Percentage point change

Average annual percent change
ALL CIVILIAN WORKERS

3.3

0.3

2.7

-2.3

4.5

5.0

Females
Males
Both sexes 16-19

4.8
2.3
2.6

.9
-1.2
7.3

3.3
2.3
1.0

2.7
-2.1
3.4

3.3
5.3
7.6

-4.3
-5.4
-8.0

Black

3.8

.8

4.7

-2.1

7.2

-8.0

4.9
2.9
2.3

.1
1.7
-9.3

5.1
4.4
8.2

-2.3
-1.8
-2.9

5.6
8.7
11.2

-6.1
-9.9
-16.1

9.3

1.2

6.8

-3.4

6.5

-7.1

Females
Males
Both sexes 16-19
Hispanic
1

Persons 16 years of age and over, except as noted.

Note.—Changes are measured from business cycle trough in March 1975 to business cycle peak in January 1980, from peak in
January 1980 to trough in November 1982, and from trough in November 1982 to December 1987.
Source: Department of Labor, Bureau of Labor Statistics.

Civilian employment of Hispanic workers has risen 2.3 million
since the expansion began. In percentage terms the employment of
Hispanics has risen much faster than the rest of the work force, although more slowly than the rapid pace set during the late 1970s.




59

The rapid pace of Hispanic employment growth during the 1970s
was partially due to rapid growth in the Hispanic labor force, which
between 1973 and 1980 grew by 8.6 percent per year. Since 1982 the
rate of Hispanic labor force growth has fallen by about one-third,
and this slowdown accounts for the difference in employment growth
during these two expansions. In recent years the pace of Hispanic
employment growth has exceeded the rate of growth in their labor
force, thus allowing their unemployment rate to fall by 7.1 percentage points.
Youth employment has risen relatively slowly during the current
expansion, reflecting slower growth of the population between 16
and 19 years of age than during the 1970s. Yet employment gains for
black youths have been among the strongest of all demographic
groups. During 1987 alone employment of black teenagers increased
by nearly the same amount as it did during the entire 1975-80 expansion. At the same time unemployment rates, especially for black
youths, have declined dramatically. For all youths the unemployment
rate declined by 8.0 percentage points between November 1982 and
December 1987 to reach its lowest level in 8 years. For black youths
the unemployment rate declined by 16.1 percentage points to reach
its lowest level in 13 years. Unemployment among black youths is,
however, still unacceptably high.
Gains in employment and reductions in unemployment rates also
have been widespread geographically. Between November 1982 and
November 1987, total employment increased in all but three States.
It increased by more than 5 percent in 43 States, and by more than
10 percent in 38 States. During this period unemployment rates decreased in all but 2 States, declining by at least 2 percentage points
in 39 States, and by at least 4 percentage points in 27 States. Most
States with small employment gains and small unemployment rate reductions were energy producers that were affected adversely by the
decline in energy prices, especially during 1986.
The large and widespread gains in employment and reductions in
unemployment rates during the past 5 years are primary benefits of a
long and vigorous economic expansion. These gains demonstrate the
principle that economic growth benefits all groups who participate in
the economic system. And conversely, as shown in Table 2-1, virtually all groups are injured during periods without economic growth, as
occurred between 1980 and 1982.
CHANGES IN JOB QUALITY

Employment gains during the current expansion have been largest
in higher paying occupations. Nearly two-thirds of the new employment growth has been in managerial, professional, technical, sales, or




60

precision production occupations. Within these broadly defined occupational categories, employment growth has been strong for a wide
variety of jobs. It has been less vigorous in lower paying, low-skilled
occupations and in part-time work.
For full-time workers, data recently available on employment and
earnings in nearly 500 occupations show that about 50 percent of the
increase in full-time employment between 1983 and 1986 occurred in
occupations with real median earnings of at least $20,000 per year.
The median earnings of these occupations were at least 10 percent
above the median earnings of all full-time workers. Managerial and
administrative jobs, which tend to pay the highest wages and salaries
and employ the most educated workers, accounted for 21 percent of
the gains in employment, even though these occupations accounted
for only 11 percent of all existing jobs in 1983.
In contrast, in low-paying occupations such as food preparation
and services, janitorial services, and retail sales, where new job
growth is commonly thought to be strong, the share of new employment growth was almost the same as the share of existing jobs. Employment growth was smallest, relative to its share of all jobs, for machine operators and other semiskilled blue-collar occupations.
Moreover, studies have indicated that the share of total full-time
employment accounted for by the lowest paying occupations declined
during the 1970s and has continued to fall during the current expansion, while the share accounted for by mid- and high-paying occupations has increased. Thus the growth in employment during the current expansion has not occurred solely in higher or lower paying occupations with fewer employed in the occupations in between.
The shift in employment toward higher paying occupations among
full-time workers does not mask a shift from full-time to part-time
employment. More than 90 percent of the increase in employment
during the current expansion has been in full-time work. This share
exceeds the share of full-time employment in the civilian workforce.
For those employees who work part time, the vast majority, nearly 80
percent, work part time voluntarily, according to surveys conducted
by the Bureau of Labor Statistics (BLS). The fraction of part-time
workers who report that they would prefer to work full time rose in
the late 1970s. After increasing substantially during the 1980 and
1981-82 recessions, it has fallen steadily during the current expansion.
SHIFTS IN SECTORAL OUTPUT AND EMPLOYMENT

During the current expansion real manufacturing output has increased more rapidly than real GNP, offsetting the effects of the recession and pushing the share of manufacturing output in real GNP




61

very close to its peak for the postwar period. The share of final
goods (as distinct from services and structures) has also risen and approached its highest level since 1960. In fact, except for business
cycle movements, the shares of real manufacturing output and real
final goods output have been remarkably stable for 25 years. In
contrast, there has been a long and relatively steady decline in the
fraction of all workers who are employed in manufacturing or in
goods-producing industries, and a consistent upward trend of the
fraction employed in service-producing industries. More rapid gains
in productivity in manufacturing and in goods-producing industries
than in the rest of the economy have allowed declining shares of
workers in these sectors to produce roughly constant shares of real
GNP.
Shifts in Final Product

The value of the economy's total final product, as measured by
real GNP, is divided officially into three broad categories: goods,
services, and structures. The value of these products includes the
contribution of intermediate goods and services from many different
industries. For example, the price of an automobile includes the
value of the transportation provided by the railroad industry, the
value of the electricity provided by the utility industry, and the value
of the salesperson's time provided by the retail industry. These particular services are not included as final services, since their value is
already embodied in the output of the goods sector.
Final goods and structures account for more than one-half of total
output. These products' share of real GNP has fallen slowly during
the postwar era, while the share of final services has risen gradually.
However, since 1960 final goods' share of GNP has remained roughly unchanged. In 1987 final goods represented 43 percent of GNP,
the same share as in 1965 and only 0.7 percentage point below its
level in 1960. During the last two decades the slight gains in final
services have coincided with a declining share of output in structures.
The relative stability of the shares of final goods, services, and structures in total GNP demonstrates that the United States is not becoming primarily a service economy.
While final goods' share of GNP has remained stable over the last
two decades, there have been dramatic changes in the types of final
goods produced and consumed. Since 1948 production of durable
goods has risen substantially relative to nondurable goods. Even
within these product categories, there have been changes in the
goods demanded by consumers. In durables, consumption of books
and kitchen appliances has fallen relative to motor vehicles and electronic equipment. Similarly, in nondurables, consumption of basic
food stuffs has fallen relative to processed foods. These changes in




62

the distribution of production across final products reflect the responses of the economy to changes in consumer demand.
Shifts in Value Added

GNP also can be partitioned based on the contributions that particular industries or sectors make to the value of the final product.
Value added (or GNP originating) in an industry is the difference between the value of its output and the value of inputs purchased from
other industries. For example, the measure of value added in the
motor vehicle industry removes the contribution of the railroad,
public utility, and retail industries from the total value of an automobile. The remaining portion, the value added, represents the industry's contribution to GNP.
Therefore the value added of the goods-producing sector (which
includes agriculture, mining, construction, and manufacturing) is not
equal to the final value of goods and structures. In 1986 real value
added by the goods-producing sectors accounted for 32 percent of
GNP, whereas the share accounted for by final goods and structures
was 53 percent. The share of value added for the goods-producing
industries has declined throughout the postwar period. The economy's goods-producing sector accounted for 42 percent of GNP in
1948, 40 percent in 1960, and 36 percent in 1973. The declining
share in this sector has occurred entirely as a result of declining
shares of value added in agriculture, mining, and construction.
The share of value added in manufacturing has remained remarkably stable throughout the postwar years, fluctuating in a narrow
range between 19 and 23 percent. The manufacturing sector's share
of value added has risen since the last business cycle peak in 1981. In
1986 manufacturing accounted for 22 percent of GNP, about 1 percentage point above its share in 1981, and only 0.7 percentage point
below its peak share in 1973.
Manufacturing's share of GNP has remained stable despite substantial changes in the types of final goods, services, and structures produced in the economy. These changes reflect the shifting demands
for final goods by consumers and for intermediate goods by producers. To accommodate the shifting demand for new products, capital
and labor have been reemployed in new tasks in the manufacturing
sector. This sector has maintained its share of total output because it
has adapted to the changing demand for final goods, and because it
continues to be an important supplier of intermediate products for
final services.
Shifts in Employment

Large shifts in employment of labor across industrial sectors have
occurred during the postwar period. The share of employment in




63

service-producing industries has risen steadily. In 1948 these industries (which include transportation, communications, public utilities,
wholesale and retail trade, finance, insurance, and real estate, and
other business and personal services) accounted for nearly 58 percent of all nonfarm payroll employees, and they contributed more
than 59 percent of total GNP. Over the years the share of employment in the service-producing sector increased faster than its share of
GNP. Recently the share of employed individuals working in this
sector has exceeded 75 percent, while the share of total value added
in this sector has topped 67 percent.
Movements in the share of employment in goods-producing industries are roughly the opposite of such movements in the share for
service-producing industries. The share of goods-producing employment and manufacturing employment has declined throughout the
postwar era. Currently there are 1.6 million fewer nonfarm jobs in
the goods-producing sector and more than 1.9 million fewer jobs in
manufacturing than in 1979. The share of total employment in manufacturing has declined from 35 percent in 1948 to 26 percent in 1973
to 19 percent in 1987. Moreover, this trend is not confined to the
United States. In all the major industrial countries, shares of employment in manufacturing have been declining since at least 1960, and
in all except Japan the absolute level of employment in manufacturing has been declining since 1979.
CHANGING PATTERNS OF DEMAND AND PRODUCTIVITY

While manufacturing's share of employment has declined, its share
of value added has remained roughly constant. These trends are illustrated by Chart 2-1, which compares the ratio of manufacturing
employment to total nonfarm employment with the ratio of value
added in manufacturing to real nonagricultural gross domestic product (GDP). In 1960 about 31 percent of all nonfarm workers were
employed in manufacturing and produced approximately 21 percent
of total output. By 1986 a slightly larger proportion of total output
was produced by 19 percent of nonfarm workers. This trend does
not suggest any long-term weakness in the manufacturing sector. Instead, it reflects stronger productivity growth in manufacturing than
in other sectors of the economy.
More generally, the rise in the share of employment in the serviceproducing sector and the corresponding decline in the manufacturing
sector reflect expected responses to changing patterns of demand for
goods and services as well as differential rates of productivity growth
among various sectors of the economy. For most of the past 40 years
the output of services has risen faster than real GNP, because households have wanted to spend a larger fraction of their rising incomes




64

Real Output and Employment Shares in Manufacturing
Percent
32
30

28
Employment ShareV
26

24

22
,

2

18

Real Output Shared

b

ru

i

1960

i

i

i

I

i

1965

i

i

i

i

I

I

1970

I

I

I

1975

I

I

I

I

I

I

1

I

1980

I

1

1985

-V Manufacturing as percent of nonfarm payroll employment.
-2/Manufacturing as percent of real gross domestic product less agriculture, forestry, and
fisheries.
Sources: Department of Commerce and Department of Labor.

on services. The output of services can rise faster than GNP when
productivity growth is more rapid in the service-producing sector
than in the rest of the economy, or when employment expands more
quickly in services than in goods. However, productivity growth in
much of the service-producing sector lagged somewhat behind productivity growth in the goods-producing sector until 1973, and it has
stagnated since then. The large gains in output of services have been
fueled not by productivity advances but by relatively large increases
in employment. Thus the increase in the share of employment in the
service sector is the result of growing demand and lagging measured
productivity.
Like manufacturing, the agricultural sector's share of total employment has exhibited a downward trend for some time. Productivity
growth in agriculture has been quite strong, while its share of national output has been falling. As discussed in Chapter 5, it is estimated
that in 1810 approximately 80 percent of the U.S. labor force was
employed in agriculture. In 1910 agriculture's share was approximately 30 percent; in 1987 it had fallen to 3 percent. During this




65

long period the share of agricultural output declined less rapidly
than the share of agricultural employment, reflecting rapid increases
in productivity.
Even though agricultural employment as a share of total employment and agricultural output as a share of total output have decreased, Americans today are significantly better fed and spend a
smaller fraction of their incomes on agricultural products than they
did during the 19th century. Because of rapid and sustained increases
in agricultural productivity, the small fraction of the U.S. labor force
working in agriculture is able to produce all the food required for
domestic consumption, plus a substantial surplus available for export.
Forestalling the downward trends in the shares of agricultural employment and output would have been counterproductive. Despite
the interference of many agricultural policies, resources have moved
into and out of agriculture in response to changes in consumer
demand, agricultural productivity, and nonfarm opportunities.
Similarly, it would be a serious policy error to attempt to maintain
the share of output or employment in manufacturing, or in any other
industry. The relative constancy of the share of U.S. manufacturing
output for the past 40 years is a consequence of particular circumstances. It is not an appropriate objective for economic policy. The
declining share of employment in manufacturing in the United States
and other industrial countries is not a sign of economic weakness.
Indeed, even though it has contributed to a decline in the share of
employment in manufacturing, the acceleration of productivity
growth in U.S. manufacturing during the 1980s is unambiguously a
source of economic strength.
INCOME AND PRODUCTIVITY
By the broadest available measure, American living standards have
resumed a steady rate of increase during the 1980s, after a period of
sluggish growth in the 1970s. To a large extent, these gains reflect
improved productivity growth. During the 1970s, gains in real GNP
per capita resulted primarily from an increasing proportion of working-age persons in the population and signified little gain for individual workers. During the 1980s, by contrast, improved productivity
growth has allowed more rapid growth in compensation per worker.
These gains in labor compensation are broad-based, benefiting all
major demographic groups. Furthermore, the upswing in productivity
growth will sustain gains in both per capita income and labor compensation in the coming years.
Another beneficial effect of improved productivity growth has been
its impact on the competitiveness of the manufacturing sector. Com-




66

bined with slower compensation growth, higher productivity growth
in manufacturing has reduced the real cost of producing manufactured goods. The benefits of these cost savings have been realized
broadly across the economy through lower consumer prices. Together with the recent depreciation of the dollar, lower real costs and
lower relative prices of manufactured products have enhanced the
competitiveness of U.S. manufacturers in world markets, thereby contributing to recent strong growth of exports.
These gains would have been impossible, however, had labor and
management failed to take advantage of opportunities for productivity improvement, or if they had failed to meet the challenges posed by
foreign competition. The many collective bargaining agreements that
have called for wage freezes or concessions, and that have addressed
labor's concerns about job security and management's concerns
about work rules, reflect the cooperation of labor and management.
As a result, the manufacturing sector has corrected many of the important problems that plagued it a decade ago, and it stands wellpositioned for the future.
INCREASES IN LIVING STANDARDS

The broadest measure of the economy's ability to support the
living standards of the American people is the real value of all goods
and services produced in the economy each year, divided by the total
population, i.e., real GNP per capita. As indicated in Table 2-2, real
GNP per capita has grown at an annual rate of 1.8 percent since the
last business cycle peak in 1981. This rate of growth has approached
the rapid rate recorded between 1948 and 1973, has exceeded the rate
experienced between the business cycle peaks in 1973 and 1981, and
has equaled the average rate achieved in the United States since 1900.
TABLE 2-2.—Growth in Real GNP per Capita and Productivity, 1948-87
[Average annual percent change]
Contribution to real GNP per capita
Real GNP
per
capita

Period

Real GNP
per
worker

Employmentpopulation
ratio

Workingage
population
as share
of total

Business
sector
productivity 1

2.2

2.6

0.1

-0.4

3.2

2.0

.8

.2

1.0

2.0

1973 IV to 1981 III

1.1

.2

.2

.8

.7

1981 III to 1987 IV 2

1.8

.8

.8

.2

1.5

1948 IV to 1966 IV
1966 IV to 1973 IV

1
2

.. .
. .

Output per hour, all persons.
Preliminary.

Sources: Department of Commerce (Bureau of Economic Analysis) and Department of Labor (Bureau of Labor Statistics).




67

Real GNP per capita rises when a larger fraction of the population
works or when those who work produce more. As indicated in Table
2-2, the importance of these two factors in generating higher living
standards has differed over time. Between 1948 and 1966 real GNP
per worker grew rapidly and more than offset the decline in the proportion of the population at work. The high birth rates of the 1950s
increased the share of children in the population, thus causing a decline in the share of working-age persons. Between the mid-1960s
and the early 1980s productivity growth declined significantly, but an
increase in the fraction of the population at work partially offset
these losses and helped to maintain a steady rate of growth in real
GNP per capita.
Productivity growth slowed during the mid-1960s, just as the babyboom generation began to enter the labor force. This influx of inexperienced workers slowed productivity growth but did not entirely
account for the slowdown. From 1966 to 1973 growth in real GNP
per worker averaged only one-third of its earlier postwar rate, and it
nearly ground to a halt between 1973 and 1981. Yet living standards
continued to rise during these periods, because the fraction of the
population employed increased dramatically. As the baby-boom generation matured, the proportion of children in the population fell,
and the potential pool of workers increased. During the middle and
late 1970s nearly all gains in living standards resulted from an increase in the share of the population at work.
In contrast, living standards have risen faster since 1981 because of
accelerated productivity growth. While the rate of growth of real
GNP per worker remains well below that achieved during the early
-postwar era, these gains represent a substantial improvement over
the 1970s. In addition to the encouraging gains in productivity
growth, increases in the fraction of the population working continue
to contribute to rising living standards. During the current decade, as
women have entered the labor force in increasing numbers, the employment to population ratio has grown rapidly. This effect has been
offset by slower growth in the share of the population 16 years of
age and older. The decline in the birth rate since 1960 ensured that
during the 1980s the share of adults in the population would grow
more slowly and that increases in this share would play a lesser role
in raising living standards than they did in earlier decades.
In the longer term, strong growth in living standards at rates comparable to those of the early postwar era will require continued
steady growth in productivity. Increases in the fraction of the population at work are likely to slow to about 0.8 percent per year; the
share of working-age persons in the population is forecast to grow at
0.1 percent, and the employment-population ratio is forecast to grow




68

at 0.7 percent over the next 5 years (Chapter 1). Thus in the years
ahead further gains in real GNP per worker will be the key to continuing rapid increases in living standards.
Gains in real GNP per worker are closely related to standard measures of productivity growth. These measures differ because labor
productivity usually refers to output per hour in the business sector
of the economy, rather than output per worker for the whole economy. If the second and last columns of Table 2-2 are compared, it is
apparent that labor productivity growth is generally somewhat
higher, but follows the same general pattern, as growth of real GNP
per worker. This difference reflects both a decline in the number of
hours worked per worker during the postwar period and slower
measured productivity growth in the nonbusiness sector, which constitutes one-seventh of the economy. Nonetheless, the implication
from these two productivity measures is that recent gains in living
standards are the consequence of recent increases in labor productivity growth, and that future gains in living standards depend critically
on continued labor productivity growth.
LABOR COMPENSATION AND PER CAPITA INCOME

The growth of labor productivity exerts a powerful influence on
the compensation earned by workers. Payments to workers, either in
the form of wages and salaries or nonwage benefits, cannot consistently outstrip labor productivity growth without diminishing incentives for investment. Over time, slower investment is likely to mean
slower growth in labor demand, labor productivity, and labor compensation. Conversely, strong labor productivity growth means that
firms can increase their workers' pay and benefits without impairing
profits.
The experience of the United States and other major industrial
countries is broadly consistent with this linkage between hourly compensation and labor productivity growth. After a period of sluggish
or declining growth during the 1970s, U.S. productivity and compensation growth rebounded after 1981. Recent rates of growth, however, remain below the levels attained between 1948 and 1973, when
compensation and nonfarm business sector productivity grew by 2.7
percent and 2.3 percent, respectively. After 1973 the rates of productivity growth slowed considerably, and real compensation actually declined slightly. Since 1981 productivity growth has averaged 1.4 percent per year, up from 0.6 percent during the previous decade, while
compensation growth has resumed its upward trend, averaging 0.7
percent per year. Similarly, in the other leading industrial countries
there has been a significant slowdown in labor productivity and compensation growth since the early 1970s.




69

After the early 1970s measures of real labor earnings in the United
States showed an even more pronounced slowdown in growth than
real labor compensation. As shown in Chart 2-2, real hourly earnings
(for production and nonsupervisory workers) grew rapidly during the
late 1960s, reaching a peak in 1973. They then fell by 10.1 percent
between 1973 and 1981, and in 1987 real hourly earnings remained
9.5 percent below their peak level. Other measures of earnings, such
as real weekly earnings of usual full-time workers, are similar and
were lower in 1986 than in 1973.
Chart 2-2

_

, ,,

,

_

. _

Real Hourly Earnings and Compensation
{Deflated by CPI-W and CPI-U-X1)
Index, 1967 = 100
128
124 —
Real Compensation
(CPI-U-X1)
y/

—

/

-

120
-

116
112

"
"

108 " "
104 ~~

y^\

\

/f
/ / ' /

\

fS
9^/
/V*~"

Real Earnings
{CPI-U-X1}

\

y

\\
%
\
\

Real Earnings
(CPI-W)

100 - A

*^%

\

1967

i

i

1969

i

i

1971

i

l

1973

i

i

1975

i

_

i

1977

i

i

1979

i

^y
i

1981

"*
i

i

1983

i

••—
i

1985

t

1987

Note.—Data relate to average hourly earnings of production workers or nonsupervisory employees
on nonfarm payrolls and to average hourly compensation in the nonfarm business sector
(all persons). CPI-U-X1 is the consumer price index for all urban consumers incorporating
a rental equivalence measure for homeownership costs. Data for 1987 are preliminary.
Sources: Department of Labor and Council of Economic Advisers.

The pattern exhibited by the real earnings data is broadly consistent with movements in labor productivity, but it significantly distorts
the impression of what has been happening to the level of real payments to labor. The consumer price index (CPI), used to correct for
inflation in constructing real earnings series, overstated increases in
homeowner costs before 1982. This distortion caused the rate of inflation to be overstated and measures of real earnings to be too low.
Furthermore, data on earnings do not include employer-provided
benefits (such as most pensions and health insurance) and employer




70

contributions to social security. The share of such employer-provided
benefits and contributions is estimated to have risen from 10 percent
of labor earnings in 1967 to 16 percent in 1987.
Real labor compensation growth slowed during the 1970s, but nevertheless maintained an upward trend and is substantially above its
levels of the early 1970s. The second line in Chart 2-2 shows the
effect of using an alternative price index to correct for inflation when
calculating real earnings. The BLS devised this index, the CPI-U-X1,
to correct for the biases in the CPI during the 1970s. As seen in the
chart, real earnings deflated by the CPI-U-X1 do not exhibit a substantial decline after 1973. If the measure of earnings is broadened
to include other nonwage and nonsalary income, real hourly labor
compensation of all workers is even higher. The third line in Chart
2-2 shows that real compensation grew between 1973 and 1981, and
that it is presently 9 percent higher than in 1973.
In general, the real incomes of American families also have risen
since 1973, with most of these gains recorded after 1981. Real family
income measures the total labor compensation and nonlabor money
income of households with two or more related persons. Real income
for the median family, measured in 1986 dollars, declined from
$29,730 in 1973 to $26,990 in 1981, and rose to only $29,460 in
1986. As with measures of real earnings for workers, measures of
real family incomes suffer from the bias in the CPI, which overestimates inflation during the 1970s. After correcting for this bias by
using the CPI-U-X1, real family income still shows a $790 decline between 1973 and 1981. However, the adjusted real median family
income in 1986 was the highest in U.S. history, and $1,430 higher
than in 1973.
Changes in the composition of families account for part of the
trend in real family income. Over time, an increasing number of
people have set up households separate from their parents or children. Thus the number of separate households (made up of either
families or unrelated individuals) has grown relative to the size of the
population, and average family size has decreased.
Data on income per capita confirm that the trend toward lower
family incomes during the 1970s was mainly due to smaller family
sizes, not lower compensation. When the standard CPI is used to
correct for inflation, real income per capita, measured in 1986 dollars, was unchanged at $10,220 between 1973 and 1981, and then
rose $1,450 to $11,670 in 1986. When the CPI-U-X1 is used to correct for inflation, income per capita rose $680 between 1973 and 1981,
and $1,360 between 1981 and 1986.
Gains in real per capita income have been widespread across major
demographic groups. When the CPI-U-X1 is used to adjust for infla-




71

tion, real per capita income for whites rose 7.7 percent between 1973
and 1981, and 13.1 percent between 1981 and 1986. For blacks, real
per capita income rose 6.4 percent between 1973 and 1981, and 15.5
percent between 1981 and 1986. For Hispanics, real per capita
income was up 14.0 percent between 1973 and 1981, and 7.6 percent
between 1981 and 1986. These gains in real per capita income for
major demographic groups, and the gains for the total population,
are broadly consistent with movements in real GNP per capita and
productivity.
DETERMINANTS OF PRODUCTIVITY GROWTH

Productivity growth, which contributes to gains in living standards
and compensation, results from the combined effects of many factors.
The productivity of labor is increased by human capital (such as education and work experience), by physical capital, by research and development, and by energy and other inputs that cooperate with labor
in production. Studies that have sought to identify the total contribution of these factors generally have been able to account for about
one-half of the productivity gains during the postwar period. In most
studies a significant fraction of productivity growth remains ascribed
to general "technological advance" that is not observed directly.
Nevertheless, there is some consensus concerning the factors that
contributed to the slowing of productivity growth during the middle
and late 1970s, and its subsequent reversal during the 1980s. These
factors include a growing proportion of persons in the labor force
with little work experience, a proliferation of new government regulations, a lower level of research and development (R&D) expenditures relative to GNP, and higher energy prices. The impact of these
factors was reversed during the 1980s, yielding higher productivity
growth, which seems likely to continue into the future.
In the coming years the increasing work experience of a maturing
labor force and higher levels of educational attainment should yield
significant gains in productivity. In addition, the policies and investments of the current decade should also contribute substantially to
productivity growth. In the years ahead, the effects of tax reform,
higher R&D spending, and the removal of burdensome regulation
will improve productivity by encouraging greater efficiency in production.
SECTORAL DIFFERENCES IN PRODUCTIVITY GROWTH

The increase in productivity growth since 1981 has not occurred
evenly across different sectors of the economy. Productivity in manufacturing rose at a rapid 4.2 percent annual rate between 1981 and
1987. These considerable productivity gains represent a substantial




72

improvement over the rates of growth achieved during the rest of the
postwar era. From 1973 to 1981 productivity growth in this sector
slowed to a 1.3 percent annual rate, after growing by 2.8 percent per
year between 1948 and 1973. By comparison, the productivity performance of the nonmanufacturing sector during the last 20 years
has been poor. In this sector unofficial measures of productivity
growth slowed starting in the mid-1960s, remained unchanged between 1973 and 1981, and began to creep upward once again at a
0.4 percent annual rate during the current decade. Not only are these
rates of growth substantially lower than those in the manufacturing
sector, but they are also considerably lower than the 2.6 percent
annual rate of growth realized in the nonmanufacturing sector between 1948 and 1966.
The BLS does not report official estimates of labor productivity
growth for the nonmanufacturing sector or for the major components of this sector. However, the Department of Commerce's measures of real value added, together with BLS's measures of hours
paid, can be used to estimate labor productivity growth for each industry between 1948 and 1986. These measures of the growth of real
value added per hour are shown in Table 2-3. The data suggest that
labor productivity has failed to grow in several nonmanufacturing industries since 1981, in contrast to the strong growth that has occurred in manufacturing.
TABLE 2-3.—Growth in Value Added per Hour Paid, 1948-86
[Average annual percent change, except as noted]
1986
output
share
(percent) 1

Sector

1948

1973
to
1981

to

1973

1981
to

1986

Goods-producing:

2.8

5.2
-6.8
-2.7
1.3

6.4
4.8
-1.1
4,5

2.4
3.4

1.1
1.7

6.0
2.1

4.3
3.2
3.5
21.7

2.3
5.2
5.9
2.7

-.2
4.3
.4
.5

.7
3.8
1.2
3.0

9.5
12.2

3.1
2.4

-.1
.5

4.0
2.5

11.0
15.4
1.5

1.4
2.2
-.1

_ 4
.3
1.2

-.3
— 1

100.0

2.9

2.6
4.0
5.7
27.3

4.6
4.0
.6

17.4
9.9

Transportation...
Communication..
Utilities
Trade
Wholesale..
Retail

Farm
Mining
Construction
Manufacturing..
Durable manufacturing
Nondurable manufacturing...
Service-producing:

Finance, insurance, and real estate..

Services
Government enterprises
BUSINESS..
1

1.7

Detail does not add to total because of rounding.

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




73

By these value-added measures of productivity growth, productivity
gains in agriculture and communications have been strong throughout the postwar period. In manufacturing, mining, and wholesale and
retail trade, productivity grew rapidly until the early 1970s, slowed
after 1973, and has accelerated since 1981 to match or exceed its
early postwar performance. In transportation and public utilities, the
pattern is similar to manufacturing, but productivity growth since
1981 has not returned to early postwar levels. In construction, in finance, insurance, and real estate (FIRE), and in services (including
business services and personal services such as health care), value
added per hour grew steadily until the mid-1960s and very little
thereafter. Since 1981 productivity in these areas actually has fallen.
In construction, for example, real value added per hour peaked in
1965 and now has fallen to its 1948 level. Given the strong recovery
of productivity growth in manufacturing, and the apparent gains in
mining and in wholesale and retail trade, it appears that the failure of
total business sector productivity to regain its early postwar growth
rate can be attributed largely to the continued sagging productivity in
construction, FIRE, and service industries.
Alternative measures of productivity developed by the BLS confirm
these differing patterns of productivity growth across industries. The
BLS's productivity measures use gross output, instead of value
added, to measure product. They are available on a selective basis
for 150 industries for which the BLS has been able to quantify final
output with reasonable reliability. For manufacturing industries, coverage is quite broad but not complete. The available data for manufacturing industries generally show a slowdown of productivity
growth between 1973 and 1981, and an acceleration after 1981. The
same holds true for most specific industries in mining and in wholesale and retail trade, though coverage is less extensive than for manufacturing.
In the transportation sector, airlines, railroads, and petroleum
pipelines show a dramatic resurgence of productivity growth after a
significant slowdown between 1973 and 1981. Only the series for bus
carriers indicates continued sluggish productivity growth after 1981.
Data on telephone productivity confirm the pattern of rapid growth
in value added per hour in the communications industry indicated in
Table 2-3. For FIRE, the only series available is for commercial
banks; it shows a significant acceleration of productivity growth after
1981. For other service industries, coverage is limited; the available
series for hotels and motels, laundry and cleaning, and beauty and
barber shops cover about 7 percent of total employment in this
sector. These data show declining or much slower growth in produc-




74

tivity since 1981. For construction, there is no available measure of
productivity growth based on final output.
PROBLEMS OF PRODUCTIVITY MEASUREMENT

Based on measures of both value added and gross output per
hour, productivity growth appears strong in agriculture, mining,
manufacturing, communications, and wholesale and retail trade. In
transportation and FIRE, the data show mixed results on the strength
of productivity growth. In construction and services, measured productivity has stagnated or even fallen. The recent decline in value
added per hour an construction, ^FIRE, and services occurred despite
the introduction of new communication and information processing
systems and many advances in health care technology. For these sectors, not only does the pattern of growth in value added per hour
diverge from that seen in manufacturing, it also appears inconsistent
with observed improvements in technology.
The forces behind the apparent deterioration of productivity in
construction, FIRE, and services are not well understood. Problems
in measuring value added and in apportioning output across sectors
may partly explain the apparent poor productivity performance in
these sectors. For example, measures of real value added are derived
by deflating the nominal value of outputs and inputs by appropriate
price deflators. Constructing price indexes that correctly account for
changes in the quality of outputs and inputs can be difficult, especially when there is no physical output, or when changes in quality are
hard to measure or even observe. The limited coverage of productivity measures based on gross output in construction, FIRE, and services indicates the problems faced in these sectors. The BLS currently
is expanding the coverage of these productivity measures. In the
meantime, however, they recommend that productivity measures
based on value added should not be used as reliable measures of
productivity in construction, FIRE, and services.
The quality of productivity measures in these sectors does not necessarily affect the reliability of measures for the business sector as a
whole. Business sector productivity is not a weighted average of productivity in each industry, but is the real value of final goods, services, and structures produced per hour worked. However, since value
added can be hard to measure both because of problems in measuring real output and real input, the potential for mismeasurement of
business sector productivity exists as long as industries with poor
measures of value added also produce final products. The final sales
of construction, FIRE, and services account for about one-third of
the final product in the business sector. Thus distortions of these
sectors' valued added increases the possibility of mismeasuring busi-




75

ness sector productivity. If the price index used to deflate the nominal value of final services understates the impact of quality changes,
real output and business sector productivity also will be understated.
The possibility that problems of measurement may be the cause of
apparently slower productivity growth in the business sector should
not be overstated. For one thing, some studies indicate that only
about 5 percent of final product is measured poorly. For another thing,
the same procedures measured significant gains in valued added per
hour in construction, FIRE, and services before the mid-1960s. Thus
there is nothing inherent in these measurement procedures that
would cause productivity growth in these sectors to appear to, worsen
in recent years. The disparity between measures of value added per
hour in construction, FIRE, and services before and after the mid1960s could be explained either by workers becoming less productive, or by increasingly severe problems of measurement. Currently,
however, there is insufficient evidence to support either hypothesis.
In sum, there is clear evidence of a substantial improvement in the
rate of productivity growth in manufacturing and several other sectors of the economy. These gains seem likely to continue. In contrast, there is no compelling explanation for the apparent decline in
productivity in construction, FIRE, and services. It may be due partly
to measurement problems. However, until improved output measures
are developed, it is unlikely that productivity growth in these sectors
will be better understood than it is now.
COMPETITION AND ADJUSTMENT IN MANUFACTURING

The increase in productivity growth in the business sector, and the
increase in living standards since 1981, are explained largely by the
dramatic strengthening of productivity growth in U.S. manufacturing.
However, the benefits of stronger productivity growth in manufacturing have not been realized primarily in the real wages of manufacturing workers or in the profits of manufacturing enterprises. Instead,
they have resulted in lower prices for manufactured products and
greater purchasing power for consumers. This result reflects the
normal operation of a competitive economy, supplemented by intense international competition in manufactured products.
In a competitive economy, relatively strong productivity growth in
one sector generally will not translate into relatively faster real wage
growth for that sector's workers or strong profit growth for that sector's enterprises. Price competition and the mobility of labor and
capital ensure that sectoral differences in wage growth and profit
growth will not persist. Instead, sectoral differences in productivity
growth tend to result in lower costs in sectors with faster growing
productivity, and these lower costs are passed on to consumers in the




76

form of lower product prices. Over the long run, wage growth in different sectors generally reflects average labor productivity growth in
the whole economy. And since higher rates of return attract additional capital investment, profit rates in different sectors also tend over
time to reflect the rate of return for the economy as a whole.
This process has been apparent in U.S. agriculture for many decades. Labor productivity in agriculture typically has increased two or
three times faster than productivity in the U.S. economy as a whole.
However, the earnings of agricultural workers and the profits of farm
owners have not risen relative to comparable earnings and profits in
the rest of the economy. Instead, consumers have been the primary
beneficiaries of strong productivity growth in agriculture through declining relative prices of agricultural products.
Similarly, in U.S. manufacturing since 1981 the real hourly compensation of manufacturing workers has risen by 0.3 percent per
year, while labor productivity growth has surged ahead at a 4.1 percent annual rate. Profits of manufacturing corporations generally leveled off during the 1980s but rose sharply in 1987. Relative to net
sales, real after-tax profits of manufacturing corporations were still
10 percent below their 1978-79 averages through the first three
quarters of 1987. The primary benefit from stronger productivity
growth in U.S. manufacturing has been lower unit labor costs relative
to the total private business sector. This reduction in costs has translated into substantial reductions in prices of manufactured products.
Between 1981 and 1986 the relative unit labor costs for manufactured products have fallen by 13 percent, and the relative prices of
manufacturing output have fallen by 10 percent.
Intense international competition enhanced productivity growth
and influenced the allocation of its benefits among consumers, workers, and firms. The relative price of foreign manufactured products
sold in U.S. markets fell sharply between 1980 and 1985. This decline in import prices was caused in large part by the strong appreciation of the U.S. dollar between 1980 and early 1985 (Chapter 3).
Intense competition from foreign producers put pressure on U.S.
manufacturers to keep their costs and prices down by limiting wage
and profit growth and by enhancing productivity growth. The consumers of manufactured products thus were the primary beneficiaries
of foreign competition and stronger productivity growth in U.S. manufacturing.
The adjustment of U.S manufacturing to increased international
competition was facilitated by the cooperation of labor and management. In manufacturing, where more than one-third of the wage and
salary workers were union members in 1979, these adjustments required a break from the customary patterns of collective bargaining




77

agreements, in which wage increases often reflected trends in productivity growth and inflation. During the 1970s union real wage
growth slowed just as productivity growth slowed, but the wages of
comparable nonunion workers tended to grow even more slowly. As
a consequence, the difference between the earnings of union and
nonunion workers widened during the decade, implying higher relative costs for unionized firms. The combination of higher relative
costs and increased foreign competition threatened the competitiveness of many U.S. industries. Manufacturing was particularly sensitive
to these problems because of the relatively high levels of unionization and import competition in this sector. Continued growth of this
sector required adjustments in wage demands and improvements in
labor productivity.
The adjustment of U.S. workers and manufacturing firms in many
cases has been especially difficult and costly. Some workers have
been displaced, the real earnings of others have declined, and profits
have fallen. Partially as a result of these changes, the level of unionization dropped to about 25 percent of wage and salary workers in
manufacturing. Since 1984 the compensation of private nonfarm
union workers has grown more slowly than for nonunion workers. As
illustrated in Table 2-4, pay increases have been smaller for unionized workers in manufacturing than elsewhere in the economy. Effective nominal average wage increases in major collective bargaining
settlements (agreements affecting more than 1,000 workers) in manufacturing have ranged between 1.5 percent and 5.2 percent from
1982 through 1987. Moreover, because inflation has averaged roughly 4 percent per year, many of these settlements have reduced workers' real wages.
This downward trend in real wages is due partly to the relatively
large fraction of collective bargaining agreements negotiated during
the 1980s that froze or cut wages. Before 1980 widespread negotiated wage freezes or outright cuts in pay were unusual, even during
periods of low inflation. However, since 1981, particularly in the
manufacturing sector, these agreements have become common. Even
in 1987, after 5 years of economic growth, 15 percent of manufacturing workers covered by new major collective bargaining agreements
accepted wage freezes or pay cuts over the life of their contracts.
Moreover, the recent decline in the real compensation of union
members has continued even when taking into account noncpntingent lump-sum payments, which have appeared in many recent
agreements.
By recognizing the challenges posed by foreign competitors, labor
and management cooperated to improve the international competitiveness of U.S. manufacturing. The U.S. economy benefited substan-




78

TABLE 2-4.—Measures of Changes in Compensation and Wages, 1981-87
[Private nonfarm industries]
Sector

1981

1982

1984

1983

1986

1985

1987^

Percent change2
Compensation:
All industries
Union workers
Nonunion workers

64
7.2
6.0

98
10.7
9.4

5.7
5.8
5.7

4.9
4.3
5.2

3.9
2.6
4.6

3.2
2.1
3.6

3.3
2.8
3.6

3.3
2.8
3.6

2.3
1.5
2.9

3.1
3.4
2.9

21
43
14

14
15
14

Percent
Average effective wage adjustment:3
All industries
Manufacturing
Nonmanufacturing

6.8
5.2
7.9

9.5
9.4
9.5

4.0
2.7
4.8

3.7
4.3
3.3

Percent of.workers affected
4

Settlements with no wage increase:
All industries
Manufacturing
Nonmanufacturirtg

.

....

6
10
3

36
48
23

27
44
18

16
7
22

15
18
13

1
2
3

Preliminary.
Percent change from December to December.
Average effective wage adjustment in collective bargaining settlements covering 1,000 workers or more. Includes increases,
decreases, and no changes in wages stemming from current settlements, agreements reached in a prior period, and cost-of-living
adjustment clauses.
4
Annual wage adjustments over the life of the contract for settlements covering 1,000 workers or more reached in year.
Source: Department of Labor, Bureau of Labor Statistics.

tially through increased productivity growth and improved living
standards. Now that the foreign exchange value of the U.S. dollar has
fallen back to the level of the early 1980s, U.S. manufacturing is exceptionally well positioned to expand sales in both domestic and foreign markets—a process that has been under way at a rapid pace for
more than a year and that is likely to provide the key to continued
growth for the U.S. economy in the years immediately ahead.
UNEMPLOYMENT AND INFLATION
After hovering close to 7.0 percent for nearly 2 years, the unemployment rate fell by nearly 1 percentage point during 1987 to its
lowest level since 1979. This sudden drop in the unemployment rate
has raised concerns that labor markets may be tightening to the point
where wage inflation may begin to accelerate. In 1978, when the unemployment rate was 6.0 percent and before the second oil shock,
there were already clear signs of increases in the rates of wage and
price inflation. In the present situation, however, there is little evidence of an acceleration of inflation, and there are signs that further
gradual reductions in the unemployment rate can be achieved without an increase in inflationary pressures.




79

FRICTIONAL UNEMPLOYMENT

Even at full employment, there is some "factional unemployment"
associated with job changes by current workers and entry of new
workers into the labor force. Matching workers to jobs is costly and
time consuming. Firms and workers seek employment relationships
that best match the skills of the worker with the production requirements of the firm. Workers do not necessarily accept their first job
offer, nor do employers fill vacancies with the first job applicant.
Even when job opportunities are relatively abundant, workers who
lose their jobs at one firm, workers who quit voluntarily to seek
better jobs, and workers who enter or reenter the labor force often
take some time to find suitable employment. Consequently, even
when the supply of and demand for labor are evenly balanced in the
aggregate, there will be some unemployment in the economy associated with job transitions.
Since demographic groups differ in their job turnover rates and in
the frequency with which they leave and reenter the labor force,
changes in the demographic composition of the labor force affect the
level of unemployment. During the 1970s the composition of the
labor force changed as increasing numbers of young persons, single
persons, and married women entered the workforce. Since these
groups have higher unemployment rates, the overall level of unemployment would have risen. This upward pressure on the unemployment rate was mitigated, however, by the growing fraction of workers
with either higher levels of education or with white-collar and service
sector jobs. These groups have lower unemployment rates relative to
other labor force participants. Studies differ as to the combined
effect of these changes in the labor force, but by the late 1970s they
may have increased the unemployment rate by as much as a percentage point.
The growing number of two-earner families and the effects of unemployment insurance do not appear to have contributed to increases in frictional unemployment. The available evidence suggests
that husbands with working wives do not remain unemployed for
longer periods of time than husbands whose wives do not work. In
fact the unemployment rates for married men with working wives are
slightly lower than those for married men whose wives remain at
home. Although studies show that unemployment compensation increases the duration of unemployment, the fraction of wages replaced by unemployment benefits has not risen significantly since the
late 1960s. Moreover, the share of unemployed workers who receive
unemployment benefits has fallen since the early 1970s, especially in
recent years.




80

The factors that have caused frictional unemployment to increase
since the early 1970s explain only a fraction of the total increase in
unemployment rates since that time. Overall, U.S. unemployment
rates have been substantially higher since 1973 than they were in the
early postwar period. Between 1948 and 1973 the civilian unemployment rate averaged 4.8 percent; it averaged more than 6.0 percent in
only 2 recession years, 1958 and 1961. Since 1973 the civilian unemployment rate has averaged 7.3 percent, and it has averaged less than
6.0 percent in only 2 years, 1974 and 1979. Furthermore, unemployment rates have risen for all demographic groups. Even adult married men, a group with traditionally low unemployment rates, have
experienced the same proportional increase in their unemployment
rates as teenagers, a group with traditionally high unemployment
rates. Increases in frictional unemployment associated with shifting
demographic patterns cannot explain these broad increases in unemployment rates since the early 1970s.
The deep recessions of 1974-75 and 1981-82 and the brief recession in 1980 partly explain higher average unemployment after 1973..
During these years unemployment rates rose to their highest levels
since the Great Depression; thus they have influenced the average
level of unemployment during the last 15 years. The depth of these
recessions, and limits on the feasible speed of securing reductions in
the unemployment rate, especially in the face of a rapidly expanding
labor force, also partly may explain the high average level of unemployment. However, there is no evidence that increases in frictional
unemployment can account for unemployment rates in 1979 or 1987
that are higher than in the later years of expansions during the 1950s
and 1960s. Moreover, demographic shifts that tended to increase unemployment during the 1970s more recently have been pushing
down the frictional unemployment rate, reversing perhaps one-half of
the earlier rise/Further downward movement in frictional unemployment from anticipated demographic shifts, especially the continuing
decline in the share of younger workers, suggests that further reductions in unemployment are feasible in the coming years.
INFLATION AND UNEMPLOYMENT TRADEOFF

With the unemployment rate below 6.0 percent during the second
half of 1987, some people have been concerned that further reductions in unemployment may not be possible without serious risk of
accelerating inflation. The belief that further reductions in the unemployment rate may not be feasible is based on the view that there is a
systematic tradeoff between lower unemployment and higher inflation, and that the unemployment rate has fallen to a level where inflation is likely to accelerate. This view states that when the unem-




81

ployment rate is low and labor markets are tight, firms will face increased pressures to raise wages in order to attract and maintain a
qualified and stable work force. Thus without a corresponding increase in productivity, unit labor costs also will rise, and these increased costs will be reflected in higher product prices.
The performance of the U.S. economy during the 1950s and
1960s, as illustrated in Chart 2-3, was consistent with the notion of a
stable tradeoff between inflation and unemployment. Unemployment
tended to be low in the years when inflation rates were high.
Chart 2-3

Wage Inflation and Unemployment

Percent change in average hourly earnings^

0
9

\

• 51

81

\

. «78
79

8

7?

•74

7

72

\

6 5

\
«53\
•52

x

76
• 71

73

»69
»68

82

\

4

• 56
•57

—
4

V
\ ^
65
•55

50

^•^1
64 60

84

^^-^f«.8

•63
•54

g?

—

I

I

83

*49

62

3.

1

75

•70

67

2

80
t

I

I
6

5
^~^~^--_
»61
~~^~—•86

I

I
8

^ ^ »

—
\

10

Civilian Unemployment Rate (Percent)
-I/For production workers or nonsupervisory employees on nonfarm payrolls.
Sources: Department of Labor and Council of Economic Advisers.

During the stagflation of the 1970s, however, this empirical relationship ceased to hold. Years of high inflation often were associated
with high unemployment rates. In the absence of a stable tradeoff between inflation and unemployment, some studies postulated that the
tradeoff shifted over time due to changes in inflationary expectations.
Support for this view came from the observation that during each of
the prior postwar expansions, wage inflation tended to rise as the unemployment rate fell. However, the observation of a shifting relationship between inflation and unemployment explains little, if most of




82

the actual behavior of inflation and unemployment is attributed to
unexplained shifts rather than to the purported relationship.
Recent data provide little evidence of a tradeoff between inflation
and unemployment. In the United States the inflation rate as measured by the CPI has been running close to 4 percent per year since
the end of 1981. The inflation rate fell temporarily to 1.1 percent in
1986, and then it rose temporarily to more than 5 percent in early
1987, mainly due to swings in energy prices. However, when energy
prices are excluded from the CPI, inflation has been approximately 4
percent for 6 years (Chapter 1). During this 6-year period, the inflation rate has been essentially constant, while the unemployment rate
has fallen almost 5 full percentage points—from 10.6 percent at its
peak in November 1982 to 5.7 percent in December 1987.
Wages and earnings also have shown little evidence of accelerating
as the unemployment rate has declined during the current expansion.
The average unemployment rate fell from 6.9 percent in 1986 to 6.1
percent in 1987—below the level at which inflation was beginning to
accelerate during the 1975-80 expansion. Unemployment rates fell in
every region of the country during 1987, with especially sharp reductions in the Northeast and in the energy-producing States. Yet this
substantial reduction in unemployment during 1987 was not accompanied by a sharp increase in nominal wage rates. For the year the
wages of production and nonsupervisory workers increased by 2.5
percent, compared with an average annual rate of increase of 3.3 percent during the previous 4 years of the expansion.
Recent experience in other countries also appears to contradict the
notion of a stable tradeoff between inflation and unemployment. In
many Western European countries unemployment rates generally
have been rising since the early 1970s, and they have risen throughout most of the current expansion. In contrast, rates of wage and
price inflation in these countries generally have fallen since 1982,
and they are now typically lower than they were in the middle and
late 1970s. Based on the experience of the 1950s and 1960s, these
reductions in inflation rates have been much smaller than would have
been expected given the increases in unemployment rates. Comparisons of inflation rates with unemployment rates for Western European countries for the 1950s through the 1980s show no consistent relationship.
Evidence concerning a possible relationship between inflation and
unemployment suggests that the U.S. economy can reduce unemployment rates further without suffering from accelerating inflation. Perhaps, as recent experience appears to show, there is no meaningful
tradeoff. Over wide ranges, inflation and unemployment can move
largely independently. Further reductions in unemployment that are




83

the result of natural economic adjustments, as opposed to monetary
or fiscal stimulation, can occur without increased risk of accelerating
inflation. Alternatively, if there is a shifting tradeoff between inflation
and unemployment, the evidence in Chart 2-3 would suggest that the
U.S. economy has returned to the relationship that existed in the
1950s and 1960s. If this is the situation, then it would also appear
that further reductions of unemployment can occur without a serious
risk of significant increases in inflation.
PROSPECTS FOR REDUCING UNEMPLOYMENT

In assessing the potential for further reductions in the unemployment rate, and the problems in securing such reductions, it is helpful
to examine the distribution of unemployment by geographic region
and by duration of unemployment. Regional data point to the promise of reducing the national unemployment rate toward the low levels
now prevailing in some regions, and securing this reduction in regions where unemployment remains high. Data on the duration of
unemployment point to the significance of long-term unemployment
associated with job displacements of more experienced workers, and
to the benefits of avoiding deep recessions and massive economic
disruptions that tend to generate long-term unemployment on a
broad scale.
While employment gains have been widespread across regions
during the current expansion, substantial regional differences in unemployment rates continued to exist in 1987. As shown in Table 2-5,
the unemployment rate in New England was 3.4 percent in 1987,
well below the national average of 6.2 percent, and down 4.4 percentage points from the unemployment rate in this region during the
recession year of 1982. In contrast, unemployment in 1987 in the
West South Central region (Louisiana, Oklahoma, Texas, and Arkansas) was 8.9 percent, well above the national average, and 1.4 percentage points above the unemployment rate in this region during
1982. This energy-producing region was sheltered somewhat from
the effects of the 1981-82 recession by continued high energy prices,
but it suffered significantly from the sharp decline of energy prices in
1986.
The relatively low rates of unemployment in the Middle Atlantic,
South Atlantic, and especially the New England regions indicate that
there is no inherent barrier that prevents the unemployment rate
from falling below 5 percent. Studies have shown that the difference
among regional unemployment rates is not explained by differences
in the characteristics of the region's labor force and the composition
of the region's industrial base. The data reported in Table 2-5 show
that the regions with relatively high unemployment rates during the




84

TABLE 2-5.—Regional Unemployment Rates, Selected Years, 1976-87
[Percent1]
Region

1979

1976

19872

1984

1982

New England

9.1

5.4

7.8

4.9

3.4

Middle Atlantic

9.6

7.0

9.4

7.6

5.0

South Atlantic

7.4

5.5

8.7

6.5

5.2

East North Central

7.3

6.1

12.5

9.4

7.2

West North Central

5.0

4.0

7.8

6.2

5.3

East South Central

6.2

6.1

12.0

9.8

8.2

6.0

4.7

7.5

7.0

8.9

Mountain ..

7.2

5.0

8.8

6.2

7.3

Pacific

9.1

6.4

10.2

8.1

6.1

U.S. unemployment rate

7.7

5.8

9.7

7.5

6.2

West South Central.

. ..

1

Unemployment as percent of civilian labor force.
2
January-November average.
Source: Department of Labor (Bureau of Labor Statistics) and Council of Economic Advisers.

1975-80 expansion were not the same as those which had relatively
high unemployment rates in 1987. Thus for the most part, regional
characteristics do not appear to cause unemployment rates to be permanently higher in some parts of the country than in others.
Recent data indicate somewhat higher rates of wage increase in regions where unemployment rates are relatively low. The rate of wage
inflation, however, remains moderate even in New England, where
the unemployment rate has been at or below 4 percent since mid1986. Since the national unemployment rate is well above New England's rate, the data on regional unemployment and wage inflation
certainly do not suggest that the economy is about to suffer from a
general acceleration of inflation.
Moreover, higher rates of wage increases in regions with relatively
low unemployment rates can play an important role in reducing overall unemployment. Since workers tend to move to areas with higher
relative wage rates and lower unemployment rates, they reduce unemployment when they leave one place, and they relieve tight labor
market conditions when they arrive at another. Furthermore, higher
wage rates in areas with low unemployment induce firms to shift jobs
to areas with lower wage rates and higher unemployment. Through
this process of shifting workers and jobs, unemployment rates in different regions tend to be equalized over time, and the aggregate unemployment rate gradually is reduced.
When unemployment rates approach frictional levels in some regions, efforts to drive down aggregate unemployment through stimulative policies may be especially inappropriate and counterproductive.




85

^6 time for workers to migrate to areas with rising wages and
ior firms to create new production capacity and new jobs in areas
with high unemployment rates. These adjustments can occur naturally and gradually; they should not be forced. Resorting to stimulative
macroeconomic policies could accelerate inflation without significantly affecting unemployment. Indeed, in a short time the need to
combat inflation could lead to policies that would increase unemployment.
Reducing the unemployment rate further to the levels of the early
1970s requires reversing the effects of either or both of two trends:
an increase in the proportion of workers who lose their jobs, and an
increase in the length of time workers remain unemployed. Both of
these trends have contributed to higher unemployment rates over the
last 20 years. As indicated by the data in Table 2-6, an increase in
the proportion of workers who lost their jobs accounts for almost all
of the increase in unemployment rates between 1973 and 1987, although increases in the proportion of workers who quit their jobs or
who entered the labor force were important contributors to rising
unemployment rates between 1967 and 1973. Moreover, as indicated
in Table 2-6, since 1973 there has been a significant increase in the
portion of the unemployed who report that they have been out of
work for 15 weeks or longer. Some studies have indicated that prolonged (and often repeated) spells of unemployment by experienced
workers who lose their jobs are an important reason for the increase
in the aggregate unemployment rate since the early 1970s,
TABLE 2-6.—Unemployment by Reason and Duration, Selected Years, 1967-87
[Percent]

Year

Reason for unemployment

All
unemployed

Job
losers

Job
leavers

Duration of unemployment

' Entrants

Percent of civilian labor force

Less than
5 weeks

5=14
weeks

15 weeks
and over

Percent distribution

1967

3.8

1.6

0.6

1.7

54.9

30.0

15.1

1973

4.9

1.9

.8

2.2

51.0

30.1

18.9

1979

5.8

2.5

.8

2.5

48.1

31.7

20.2

1987

6.2

3.0

.8

2.4

43.7

29.6

26.7

Source: Department of Labor, Bureau of Labor Statistics.

Comprehensive data that detail the reasons for job loss and prolonged unemployment are not available. However, it reasonably may
be inferred that deep and prolonged recessions and sudden massive
shifts in relative prices and in the structure of output are primary
causes of job loss, particularly for experienced workers. Certainly the
recessions of 1974-75 and 1981-82 generated job losses on a large




86

scale. The sudden decline of energy prices in 1986 clearly resulted in
widespread job losses in energy-producing states.
Recessions are costly to the economy in terms of lost output, but
more importantly to the workers who lose their jobs. These costs
continue even after the recovery from a recession has begun, since a
substantial amount of time is required to bring the level of unemployment down to its prerecession levels. Elimination of all fluctuations in the economy is, of course, neither feasible nor practical. Such
fluctuations are an essential counterpart of economic progress.
Changes in relative prices and in the structure of output are necessary if the economy is to adjust to changes in demand and technology. However, there is no need to repeat the destructive sequence of
expansions, marked by progressively rising inflation rates and punctuated by deep recessions, that afflicted the U.S. economy in the
1970s and early 1980s. Moreover, as discussed in last year's Report,
avoiding a resurgence of inflation and the subsequent need for disinflation probably would remove an important cause of large swings in
relative prices and real interest rates like those that buffeted the U.S.
economy during the last 20 years.
The U.S. economy today can continue economic expansion and
gradual reduction of the unemployment rate without resorting to
potentially inflationary policies. Reduction of the U.S. trade deficit
is under way, and it is projected to continue in 1988 and beyond.
Thus the tradable goods sector of the U.S. economy (predominantly
manufacturing) should expand more rapidly than the rest of the
economy, reversing the pattern of 1985 and 1986. These gains
should aid in the further gradual reduction of unemployment.
CONCLUSION
Since 1981 the United States has enjoyed large gains in employment and production, accelerated growth of productivity and real per
capita income, and substantial reductions of unemployment without a
resurgence of inflation. The gains during this extended period of
economic growth have been shared widely by all major demographic
groups. The achievements of the last 7 years did not result from specific government programs, but rather from a general approach to
policy that emphasizes reliance on the private sector. The desire for
economic gain, disciplined by the forces of competition in free and
open markets, provided the essential incentives for the productive efforts, the physical and human investments, the technological innovations, and the entrepreneurial advances that form the foundation of
prosperity and growth. Little progress generally results from governmental efforts to control, manage, or fine tune the processes that




87

generate growth. The proper role for government is to provide a
stable economic environment in which private enterprise can flourish,
to protect the rights of individuals so they can benefit from their
labors, investments, and entrepreneurship, and to avoid the dulling
or distortion of economic incentives through excessive taxation or
burdensome regulation.
While private business has clearly been the direct source of the
most important economic gains during the current expansion, government policy has played a critical role by shaping the economic environment for this success. The Administration's key priority was to
enhance the stability of general economic conditions by avoiding a
recurrence of the cycles of accelerating inflation, rising interest rates,
and deep recessions that seriously impaired the performance of the
economy during the 1970s and early 1980s. In pursuing these objectives, fiscal policy limited Federal spending, reduced marginal tax
rates, and provided greater certainty about future tax policies. Monetary policy provided money growth that was sufficient to sustain economic expansion, while avoiding the resurgence of rapid inflation.
And microeconomic policy promoted the efficient operation of markets and avoided intrusive regulation. The strong growth of the
economy at low rates of inflation indicates that these policies have
been very successful. Thus this Administration has made substantial
progress toward the goals of "maximum employment, production,
and purchasing power."
The Administration's economic program has become a blueprint
for promoting and maintaining noninflationary growth worldwide.
This approach to economic policy is especially important in today's
highly interdependent world. The events of the 1970s and 1980s
demonstrate that the U.S. economy is affected increasingly by events
in the world economy and economic policies of other nations. The
rapid growth of the U.S. economy has fostered growth in other countries as rising living standards have allowed Americans to buy more
products from abroad. Likewise, rising living standards abroad will
allow other nations to buy more products from the United States and
enhance U.S. economic growth.




88

CHAPTER 3

Adjustment and Growth in a Changing
World Economy
MAINTAINING NONINFLATIONARY GROWTH, while reducing
external imbalances, is the primary objective of economic policy in
the United States and other leading industrial nations. Market forces
and economic policies have combined to reduce external imbalances,
at least in volume terms, for more than a year. Further reductions are
in prospect and are important to maintaining the long-run health of
the world economy. Even more important, this progress should be
continued in a manner that does not undermine economic growth,
reignite inflation, or yield to the temptation of protectionism.
The problems associated with present external imbalances are real
and require attention, but unfortunately they often are exaggerated
or misunderstood. Despite a large increase in the U.S. external deficit since 1980 and problems in specific industries, overall employment growth in the United States has been very strong—the strongest of all the major industrial countries. The U.S. unemployment rate
has dropped 5 percentage points since late 1982, while unemployment rates in many other industrial countries have risen and now are
well above the U.S. rate. Improvement in the trade balance is expected to contribute to job growth when it is most needed—during 1988
when domestic spending is expected to grow only slowly. Nor has
U.S. manufacturing performed poorly. During the past 5 years its
share of total real output has been running at the postwar average,
and in 1987 it stood just below its postwar peak. But despite substantial gains in employment, persistence of a large U.S. trade deficit
fuels protectionist sentiment that threatens the open system of world
trade and could impair future employment gains.
In the 1980s the measured rate of national saving has been low,
and the United States has been a substantial net importer of foreign
capital. Yet net foreign claims against the United States remain very
small relative to U.S. income and wealth. Thus the general economic
problems arising from the U.S. external deficit are primarily problems of the future—problems that will arise only if adequate progress
is not maintained in reducing external imbalances. The immediate
concern, therefore, is to continue visible progress in reducing these




89

imbalances in order to reassure financial markets and enhance prospects for sustaining noninflationary growth in the world economy.
Current external imbalances have arisen primarily from macroeconomic causes and require primarily macroeconomic solutions. The
$219 billion deterioration in U.S. real net exports of goods and services between 1980 and late 1986 was widespread across product categories and trading partners. Although some U.S. exports have suffered from barriers in some foreign markets, the growth of the U.S.
trade deficit was not caused by an increase in unfair trade practices in
foreign countries.
Instead, the growth of the U.S. trade deficit in the 1980s primarily
reflects the influence of several interrelated macroeconomic developments. Rapid growth of spending (domestic demand) in the United
States relative to both growth of spending in other countries and to
growth of production (gross national product, or GNP) in the United
States spurred U.S. demand for foreign imports and restrained foreign demand for U.S. exports. The need for many heavily indebted
developing countries to reduce their international borrowing and improve their trade balances also cut into U.S. exports and tended to
expand imports into U.S. markets. Growth of U.S. spending relative
to production and income implied a deterioration in the national
saving-investment balance, which, in turn, owed much to the persistence of a large Federal deficit late into the current expansion. An increasing net inflow of foreign capital offset a declining national
saving rate and helped to finance reasonably robust U.S. investment.
This capital inflow, which was partly motivated by high prospective
after-tax returns on U.S. investment, was one among several important factors that contributed to the strong appreciation of the U.S.
dollar between 1980 and early 1985. Dollar appreciation, in turn, was
the critical proximate cause of much of the deterioration in the U.S.
trade balance, because it made U.S. exports more expensive in foreign
markets and foreign imports less expensive in U.S. markets.
Efforts to reduce external imbalances have focused on reversing
their underlying macroeconomic causes and on facilitating structural
adjustments essential to an altered pattern of world trade. In the
United States, a continued slowing of domestic demand growth and
further reductions in the Federal deficit promise continued improvements in the national saving-investment balance. In contrast, demand
growth in other leading industrial countries has increased, due to
government policies and market forces. In the United States relative
price changes have encouraged economic adjustments directed
toward higher output, increased employment, and greater investment
in tradable goods industries. Relative price changes also appear to
have assisted in reorienting economic activity toward stronger inter-




90

nally led growth in some countries with trade surpluses. A large correction in the foreign exchange value of the U.S. dollar has been especially important in improving international competitiveness of U.S.
industry and, in turn, the U.S. real trade balance.
This chapter first assesses the economic significance of present external imbalances. It then discusses two of the key macroeconomic
causes of present imbalances: the strong growth of domestic demand
in the United States relative to other industrial countries, and the decline of the U.S. national saving-investment balance in the presence
of persistently large Federal deficits. It next considers the role of exchange-rate movements and relative price changes in creating and
correcting external imbalances. The chapter concludes with a discussion of the adjustment process that will sustain progress in reducing
external imbalances in an environment of noninflationary growth.
THE SIGNIFICANCE OF EXTERNAL IMBALANCES
The external trade and payments position of the U.S. economy
moved from surplus to substantial deficit in the early 1980s. This deterioration reflects several closely related phenomena. However, it
does not signal a defect in the general performance of the U.S. economy, nor does it necessarily portend serious problems for the future.
The significance of the U.S. trade and payments imbalance—the
problems that it does and does not pose for the U.S. and the world
economy—are best understood with reference to alternative measures of these imbalances.
MEASURES OF THE EXTERNAL BALANCE

All measures of the U.S. external position show broadly similar
movement during the past two decades and exhibit sharp deterioration since 1980-82. For example, as measured in the national income
and product accounts (NIPA), the merchandise trade balance—the
difference between exports and imports of goods alone—moved from
a $29 billion deficit in 1980-82 to a $143 billion deficit in 1986. In
1987 the merchandise trade deficit grew further to $153 billion.
These movements in the merchandise trade balance indicate that,
since 1980-82, the value of U.S. imports has grown far more rapidly
than U.S. exports.
Expanding the measure of the trade balance to include services
(and factor income) yields the NIPA concept of "net exports." Chart
3-1 shows that nominal net exports were in surplus in 1980-82,
before deteriorating through the end of 1987. Movements in nominal
net exports have closely paralleled movements in the merchandise
trade balance. However, since the United States runs a surplus of




91

trade in services, the deficit in nominal net exports is somewhat
smaller than the deficit in merchandise trade.
Net Exports and the Current Account Balance
Billions of dollars {seasonally adjusted annual rates)
801

\ \ \

-40'

Nominal Net Exports

\ \ \
Real Net Exports^
-80,' -120
Current Account Balance
-160

-7Om

I I 1 I I 1| I | M

1975

1977

I M

I I I M

1979

I I 11I I M

1981

ll

1 I I 1 1 I I I I 1 I 1 1I I I I I I

1983

1985

1987

^Billions of 1982 dollars.
Note.—Net exports for fourth quarter 1987 are preliminary; current account balance not available.
Source: Department of Commerce.

Measuring the balance between exports and imports of goods and
services in constant 1982 dollars, rather than in current dollars, produces the NIPA measure of "real net exports," the measure most
closely related to real GNP. As illustrated in Chart 3-1, real net exports fell more than nominal net exports between 1980-82 and late
1986; since then real net exports have improved, while nominal net
exports have continued to deteriorate. The behavior of real net exports since late 1986 indicates that the external sector has made a
net positive contribution to growth in real GNP and employment.
The recent divergence in the movements of real and nominal net
exports primarily reflects movements in import prices. The price of
imports, as measured by the import price deflator, fell between
1980-82 and late 1986, with an especially sharp drop in 1986 due to
the fall in the price of imported oil. As a result, the increase in nominal spending on imports was less than the increase in the real quantity of imports. Since late 1986 import prices generally have been
rising faster than the price deflator for domestically produced goods




92

and services. Consequently, nominal spending on imports rose more
than the real quantity of imports and more than the nominal value of
exports. This phenomenon usually is referred to as the "J-curve"
effect of currency depreciation. The initial effect of depreciation is
often to raise nominal spending on imports because of higher prices
and to lead to a deterioration in the nominal trade balance. However,
over time the depreciation will tend to improve both real and nominal net exports.
A deficit in net exports necessarily implies that total spending by
domestic residents is greater than the value of domestic production
(GNP) and domestic income. When domestic demand exceeds domestic production, the excess is imported and the country runs a deficit on goods and services. Accordingly, the decline of U.S. real net
exports between 1980-82 and late 1986 corresponded to a growing
gap between real domestic demand and real GNP. Similarly, the decline in nominal net exports corresponded to the growing gap between nominal domestic demand and nominal GNP.
The decline in nominal net exports also was closely related to the
deterioration of the national saving-investment balance. This is a
direct consequence of national income accounting relationships.
Aside from some relatively minor items, the excess of national saving
over national investment is equal to the excess of GNP over domestic
demand and, therefore, equal to nominal net exports. As will be discussed later, growth of the government deficit (which counts as a
negative element in national saving) played an important role in the
deterioration of the national saving-investment balance.
The difference between national saving and national investment
equals the flow of net foreign investment. When U.S. residents save
more than is required to finance national investment, the remainder
is available to finance net accumulation of foreign assets—either
direct ownership of assets located abroad or ownership of stocks,
bonds, or other financial claims on foreigners. Conversely, when national investment in the United States exceeds national saving, the
excess is financed through net foreign accumulation either of direct
claims on U.S. assets or of financial claims on U.S. residents (include
ing the government). Since 1980-82 foreigners have increased their
net claims on U.S. assets and U.S. residents as the deficit in international trade has grown.
Finally, except for some relatively minor accounting differences,
the current account balance is conceptually similar to a measure of
the national saving-investment balance. Moreover, the net capital
inflow—which is conceptually similar to net foreign saving—equals
the current account deficit, except for a statistical discrepancy. Thus
the decline of the current account balance since 1980-82, illustrated




93

in Chart 3-1, describes the decline of national saving relative to national investment.
GROWTH OF EMPLOYMENT

A loss of jobs to foreign competitors and a general slowing of
growth of the U.S. economy often are suggested as important adverse effects of the deterioration of the U.S. trade position since the
early 1980s. In fact, however, the only significant declines in U.S.
employment since 1979 occurred during the recessions of 1980 and
1981-82, when the U.S. current account was in surplus. The deterioration of the U.S. external position began in earnest in late 1982,
which also marks the beginning of the longest peacetime expansion
in U.S. history. As discussed in Chapter 2, employment growth
during this expansion has been outstanding.
International comparisons of employment growth and reductions
in unemployment do not indicate that the United States has been
"losing jobs" to other industrial countries. Between 1982 and 1986
the United States sustained the strongest growth of employment in
percentage terms among the seven large industrial countries that participate in the annual economic summits, creating about two and
one-half times as many jobs as the other six countries combined. Especially striking is a comparison with Japan and West Germany, the
two countries with the largest current account surpluses among the
seven summit countries. The United States created 10 million new
jobs between 1982 and 1986—almost five times as many jobs as
Japan, and more than 100 times as many jobs as West Germany.
The large increase in employment does not simply reflect the size
of the U.S. economy or an increase in the labor force. Since 1982 the
United States has enjoyed the largest reduction in the unemployment
rate of all seven of the summit countries. As the top panel of Chart
3-2 shows, as of the third quarter of 1987, the United States had the
lowest unemployment rate among the summit countries, except for
Japan. This reverses the situation that existed in the 1950s, 1960s,
and early 1970s, when unemployment rates in Western Europe typically ran at about half the U.S. rate. Furthermore, as shown in the
lower panel of Chart 3-2, unemployment rates in a number of Western European countries have increased since 1982. Despite 5 years of
economic expansion, these unemployment rates now stand not only
well above the U.S. unemployment rate, but also near or above the
peak levels recorded for these countries between 1959 and 1981.
It has been suggested that employment in the United States would
have grown even more and the unemployment rate would have
dropped even further, if the U.S. external imbalance had not developed since 1982. Analysis of the strength of employment growth




94

Chart 3-2

„

.

.

«

~

.

*

Unemployment Rates in the Seven Summit Countries
Unemployment Rate (Percent) in Third Quarter 1987

Percentage Point Change from Fourth Quarter 1982 to Third Quarter 1987
4

2
0

BSD

1.4

-

0.6

mmmm

0.4

i!

|S^I!!lW^.HJ ^

-2

-1.9

-4

-^3.9

-6
France

Italy

West
Germany

Japan

United
Kingdom

Canada

-4.6
United
States

Note.—Unemployment rates used approximate the U.S. concept.
Source: Department of Labor.

over the course of the expansion, however, does not support this
notion.
During the initial phase of the expansion, from the end of 1982
through the middle of 1984, output and employment grew very rapidly (Table 3-1). Real GNP rose at a 7.0 percent annual rate, setting
a 35-year record for real GNP growth during a six-quarter period.
Real domestic demand grew even more rapidly than real GNP—the
fastest rate, over a six-quarter period, in nearly 35 years. In these six
quarters employment rose at a very strong 3.9 percent annual rate.
The exceptionally strong growth of real domestic demand relative
to the strong growth of real GNP is directly reflected in the $99 billion deterioration of real net exports between the end of 1982 and
the middle of 1984. With the same rate of real domestic demand
growth, if real net exports had not deteriorated, real GNP would
have grown at a 9.1 percent annual rate. However, an effort to meet
domestic demand growth entirely with U.S. production, even if that




95

TABLE 3-1.—Economic Growth, 1982-87
[Average annual percent change, except as noted]
1984 Jl
to
1986 III

1982 IV
to
1984 II

Item

1986 III
to
1987 IV»

RealGNP

7.0

2.7

3.4

Real domestic demand

9.1

3.6

2.6
2.5

Civilian employment
Change in real net exports

3.9

-74.3

30.9

-3.2

Change in civilian unemployment rate 3

2.1

-99.0

2

-.5

-1.1

1
2
3

Preliminary.
Change over the period in billions of 1982 dollars (seasonally adjusted annual rate).
Change over the period in percentage points.
Sources: Department of Commerce (Bureau of Economic Analysis) and Department of Labor (Bureau of Labor Statistics).

had been feasible, probably would have been misguided. By March
1984 the Federal Reserve already was becoming concerned that the
U.S. economy might be overheating and tightened monetary policy
to forestall the risk of accelerating inflation. If real GNP had grown
9.1 percent rather than 7.0 percent, possible overheating of the economy—and a resurgence of inflation—surely would have been even
more of a concern in 1984. A policy reaction to forestall such a development could have cut short the expansion. Thus it is not clear
that more rapid growth of real GNP during the initial phase of the
expansion would have been particularly good for the economy or
would have contributed to employment growth in the longer term.
During the second phase of the expansion, from the second quarter of 1984 through the third quarter of 1986, the growth rates of
real domestic demand, real GNP, and employment all declined from
the very rapid rates recorded initially. Some slowing probably was inevitable as the expansion matured. The sharp oil price decline in
early 1986 led to increased unemployment in the energy-producing
States, and probably contributed to slower overall employment
growth. The further decline in U.S. real net exports during this
period probably also contributed to slower employment growth, and
a smaller decline in real net exports probably would have been beneficial for the economy.
In the latest phase of the expansion, since the third quarter of
1986, improving real net exports have contributed positively to real
GNP and employment growth. The unemployment rate dropped rapidly during this period. While further reductions in the unemployment rate appear possible for the future (Chapter 2), the feasibility of
a significantly more rapid decline during the past five quarters is
open to question.
Thus strong growth of domestic demand early in the expansion
contributed to a growing trade deficit, without generally damaging




96

effects on overall employment growth. Now it is widely anticipated
that improvements in real net exports will help to sustain growth of
real GNP and employment during a period when growth of domestic
demand is expected to be weak. The timing of movements in the
trade balance may not have been exactly right to maintain the precisely optimal pace of employment growth. However, the deterioration of the trade balance did help to absorb some of the effect of
very strong domestic demand growth when that could have been a
serious problem for the economy. Improvement of the trade balance
now promises to assist output and employment growth at a time
when such assistance appears particularly useful.
STRENGTH OF MANUFACTURING

A related complaint about the trade and payments deficit is that it
has crippled U.S. manufacturing and led to a massive loss of manufacturing jobs. This issue was examined extensively in Chapter 2. In
the face of intense international competition, substantial and often
difficult adjustments have been made in many manufacturing industries. The output of some manufacturing industries declined. However, the cause of the general decline in manufacturing output in 198182 clearly was the recession, not the trade imbalance. Since 1982
manufacturing output has recovered very strongly. In fact, manufacturing's share of total real output currently stands near the record level
for the postwar era.
In the 1980s manufacturing's share of total employment has continued its long-term decline, and the absolute level of manufacturing
employment at the end of 1987 remained below its peak level of
1979. These developments, however, reflect the generally stronger
growth of productivity in manufacturing than in other sectors of the
economy. Perhaps if foreign competition had been less intense, productivity growth in U.S. manufacturing would have been slower and
more jobs would now exist in that sector. Americans as a whole,
however, would be less well off. And unless real wage growth had been
reduced to match slower productivity growth, manufacturing would
not be as well positioned to expand exports in the future.
In comparison with other leading industrial countries, manufacturing has been relatively strong in the United States. Between 1979
and 1986 manufacturing output grew slightly more rapidly in the
United States than in Canada and considerably more rapidly than in
Western Europe. Only Japan recorded significantly stronger growth
of manufacturing output, and only in Japan and Denmark did manufacturing employment increase. In Canada the decline in manufacturing employment was proportionally smaller than in the United States,
reflecting Canada's slower growth of productivity. In France, Italy,




97

and the United Kingdom, the proportional decline in manufacturing
employment was significantly larger than in the United States.
If there were no U.S. trade deficit, production of manufactured
goods and employment in manufacturing industries in the United
States probably would be higher than they are at present; but total
U.S production and total U.S. employment would not necessarily be
any higher. As discussed in Chapter 2, there appears to be some
room for further gradual reductions in the unemployment rate without automatically stimulating an acceleration of inflation. There is no
evidence that output and employment in manufacturing and other
tradable goods industries could have been increased sufficiently to
replace net imports of tradable goods in 1987, without largely offsetting reductions of output and employment in other industries. Similarly, over time, as the trade deficit is corrected gradually, output and
possibly employment in the manufacturing sector may expand more
rapidly than in the rest of the economy. These changes, however, will
reflect a shifting distribution of the economy's productive resources,
not a net increase in the supply of those resources.
GROWTH OF FOREIGN DEBT

The present size of net foreign claims on the United States and
their rate of increase often are cited as problems arising from continued large current account deficits. The recorded net international investment position of the United States, -$264 billion in 1986 (the
latest data available), represents the difference between U.S. assets
abroad ($1,068 billion) and foreign assets in the United States
($1,332 billion). The net international investment position often is
referred to as the net debt of the United States, even though the
value of U.S. assets abroad and foreign assets in the United States
include assets such as land, buildings, and stocks, as well as interestbearing assets such as bonds and bank accounts.
The net international investment position of the United States has
deteriorated over the last few years. In 1981 the U.S. net international investment position was $171 billion (valued in 1986 dollars). The
deterioration to -$264 billion in 1986 reflects the cumulative effect of
a string of large external deficits as well as some valuation changes.
Estimates of the flow of net foreign investment suggest that the U.S.
net international investment position may have grown roughly $150
billion, to approximately $400 billion in 1987.
The net international investment position of the United States may
be overstated by these estimates. According to Department of Commerce estimates, in 1986 the United States received income of $88
billion on assets owned abroad, and it paid $67 billion on foreignowned assets in the United States, This excess of receipts over pay-




98

ments reflects, in part, undervaluation of some U.S.-owned assets located abroad (especially direct investments made years ago that are
valued at historical cost), as well as a generally higher rate of return
on U.S.-owned assets abroad than on foreign-owned assets in the
United States. Therefore, in terms of income received and paid, the
United States may have been a net creditor in 1986. However, in the
third quarter of 1987, for the first time in recent history, payments
on foreign-owned assets exceeded income on assets owned abroad.
By this measure, the United States crossed the boundary between net
creditor and net debtor only in the middle of 1987.
Even at $400 billion, net foreign claims on the United States are
not large relative to the income generated by the U.S. economy that
can be used to service them. Net foreign claims of $400 billion represent less than 10 percent of U.S. GNP. Assuming a 5 percent real
rate of return, the income required to service these claims would
amount to less than one-half of one percent of U.S. GNP. And based
on the amount of income paid on foreign-owned assets in the United
States and U.S.-owned assets abroad, the income required for net
debt service in 1987 was about 0.1 percent of U.S. GNP. Consequently, concerns about the current stock of net foreign claims on
the United States may be overstated.
While the current level of net foreign claims should not be cause
for alarm, persistent growth of such claims at an annual rate equivalent to 3V2 percent of U.S. GNP (about $150 billion in 1987) would
be a source of worry. At this rate, net foreign claims on the United
States would reach 40 percent of U.S. GNP by the end of the century. Servicing these claims, assuming a 5 percent real rate of return,
would consume about 2 percent of U.S. GNP—still not a large percentage, but a very substantial absolute sum. Relative to the size of
the economy, U.S. net indebtedness would not be much larger than
Canada's has been in recent years. However, the absolute figure
would be very large—more than $2 trillion in 1987 dollars. This
could present difficulties for the world financial system, especially if for
some reason foreigners suddenly become less willing to hold claims on
the United States. Evidence of a steady reduction of the U.S. external
deficit over the next few years will prevent these difficulties from
emerging.
THE LEVEL OF NATIONAL SAVING

When a foreign net capital inflow is used to finance productive investment, even a relatively large and persistent inflow need not be a
source of concern. The increased productive capacity financed by the
capital inflow can generate the income to pay foreign creditors. Because of taxes and for other reasons, the entire return from invest-




99

merit is not always paid to creditors. Furthermore, a net capital
inflow means that the level of productive capital stock in the importing country probably is higher than it would be otherwise. Hence, a
country can gain from a net inflow of foreign capital, when this capital is used to increase productive investment. For much of its history—until about 1920—the United States was a fairly consistent net
importer of foreign capital. For example, foreign borrowing helped
to finance construction of U.S. railroads during the 19th century.
As indicated in Table 3-2, the recent net inflow of foreign capital
has enabled the United States to maintain a ratio of gross investment
to GNP that is close to the postwar average at a time when the ratio
of national saving to GNP has been relatively low by postwar standards. The recent strong performance of the U.S. economy suggests
that investment in the United States has paid an attractive return.
Given the level of national saving, financing some investment
through a net capital inflow—measured by net foreign saving—appears to have been worthwhile. The problem, to the extent that there
currently is a problem, does not arise from the net capital inflow; it
arises from the relatively low rate of national saving.
TABLE 3-2.—Saving and Investment as Percent of GNP,

1949-87

[Percent of GNP]
1949-81
average

Item

1982-86
average

1987 *

Current dollars:
Gross private domestic investment
Gross national saving
Net foreign saving 2
Net national saving

16.0
16.3
-.3
8.0

15.7
13.7
1.9
2.7

16.0
12.6
3.3
2.2

16.6
16.9
7.9

16.7
14.6
5.5

17.9
14.2
6.7

96.3

94.1

Constant (1982) dollars:
Gross private domestic investment...
Gross national saving3
Net private domestic investment2
Relative price of investment (1982=100) 4
1

Preliminary.
2 As percent of net national product.
3
Gross national saving deflated by the implicit price deflator for gross private domestic investment.
4
Ratio of gross private domestic investment and GNP implicit price deflators, multiplied by 100.
Sources: Department of Commerce (Bureau of Economic Analysis) and Council of Economic Advisers.

89.0
.

National saving is a matter of concern because, when properly
measured, national saving measures the increase in national wealth
and thus the potential for future improvements in living standards. If
the national saving rate is relatively low, future living standards may
not rise as quickly. The relevant measure of national saving, however,
must take into account the many forms of saving that contribute to
rising living standards. Such saving includes not only the usually
measured accumulation of claims to physical investments and the
income streams they generate, but also investments in human capital




100

and in research and development leading to new products and technologies (discussed in Chapter 5), as well as the accumulation of consumer assets that contribute directly to production within the household. Making such adjustments, a recent study of broadly defined
measures of national saving and capital formation found that the
United States has not been a particularly "low-saving" country in the
postwar period.
Moreover, even the narrow measures of national saving and national investment look more robust when recent declines in the relative price of capital goods are considered. Specifically, as indicated in
Table 3-2, the ratio of real gross investment to real GNP recently has
been somewhat higher than its average in the postwar period, thus
implying that the recent net capital inflow has helped to finance a
somewhat higher rate of real gross investment.
Nevertheless, the measured rate of gross national saving in recent
years has been lower than the postwar average. Even allowing for
problems in measuring depreciation, the standard measure of real
net investment relative to real net national product (NNP) has not
been particularly high in recent years. The standard measure of net
national saving relative to NNP has been running at less than half its
postwar average since 1981, and the net capital inflow has financed
roughly half of net national investment. Broadening the measures of
national saving and national investment to include human capital, research and development, and consumer durables diminishes the relative importance of the net capital inflow. However, it still appears
that the national saving rate has been relatively low in recent years.
Whether the appearance of a low national saving rate actually portends slower growth of living standards is far from clear. The rate of
national saving between 1973 and 1981—whether measured in nominal, real, gross, or net terms—was not particularly low by postwar
standards. Yet, as discussed in Chapter 2, the rate of increase in
living standards, measured by the rate of growth of real per capita
GNP, was quite slow by earlier postwar standards. Since 1981 the
rate of growth of real per capita GNP has increased, notwithstanding
the decline in the measured rate of national saving. Judged by the
outcome, therefore, the rate of national saving would appear to have
risen since the middle and late 1970s, although not back to the level
of the earlier postwar period.
In any event, a higher rate of national saving probably would mean
more rapid improvement of living standards, and both natural economic adjustments and economic policies indicate an increase in the
national saving rate. With national investment projected to remain
strong but not increase substantially as a share of GNP, the anticipated increase in the national saving rate would imply a significantly




101

smaller net inflow of foreign capital and hence a significantly slower
increase in net foreign claims on the United States. The anticipated
increase in national saving relative to national investment also implies a reduction in the growth rate of real domestic demand relative
to that of real GNP. This is consistent with the expectation that improvements in U.S. real net exports will make important contributions to output and employment growth in coming years. Because
improvements in real net exports must come to a large extent in net
trade in manufactured products, these anticipated developments also
suggest continuing strength of output and employment growth in the
manufacturing sector.
DEMAND GROWTH AND THE SAVING-INVESTMENT
BALANCE
The external deficit of the United States has been improving in
real terms since late 1986. Continued progress in reducing this deficit, in an environment of noninflationary growth, is an important
goal of economic policy. Assessing the likelihood of such progress,
and the policies that will help to sustain it, requires clear understanding of the macroeconomic forces that are fundamentally responsible
for the growth of the U.S. external deficit. Specifically, strong
demand growth in the United States after the worldwide recession of
1980-82 and relatively weak demand growth in other industrial countries during the early phases of recovery spurred the growth of U.S.
imports and retarded the growth of U.S. exports. Simultaneously, the
growth of the Federal deficit and its persistence late into the current
expansion contributed to the deterioration of the U.S. national
saving-investment balance and to a corresponding increase in the net
inflow of foreign capital.
THE MACROECONOMIC CHARACTER OF THE EXTERNAL DEFICIT

The U.S. external position deteriorated between 1980 and 1986,
with all measures of the trade and payments balance moving into
substantial deficit. In particular, U.S. real net exports (measured in
1982 dollars) moved from a surplus of $57.1 billion in 1980 to a deficit of $145.8 billion in 1986, with the deficit reaching a maximum of
$161.6 billion on an annualized basis in the third quarter of 1986. As
indicated in Table 3-3, all but one component of the trade balance—
other goods—shared in the deterioration. The surplus in services was
cut in half in real terms. Merchandise trade, which accounts for the
bulk of total trade, absorbed over 80 percent of the total decline in
real net exports. Most major end-use categories of the real merchandise trade balance (foods, feeds, and beverages; industrial supplies




102

and materials; capital goods; automobiles; and consumer goods) experienced a decline. Within merchandise, manufactured products
moved from a surplus in 1980 to a large deficit in 1986. Agricultural
exports, which are influenced by economic forces and policies somewhat different from other merchandise exports, also suffered from
shrinking markets between 1980 and 1986. Furthermore, the aggregate trade balance deteriorated against most major regions and trading partners: against the industrial countries as well as the developing countries; against Europe and East Asia as well as Africa and
Latin America.
TABLE 3-3.—Selected Real Net Exports, 1980-87
[Billions of 1982 dollars]

1982 IV

1980

Item

1986 II!

1987 IV*

Seasonally adjusted annual rates
Net exports of goods and services..

57.1

Merchandise
Foods, feeds, and beverages
Industrial supplies and materials (including petroleum).
Capital goods (except automobiles)
Automobiles
Consumer goods
Other

11.7

-161.6

-130.7

68.9
55.5
13.3

Services
Factor income....
Other

55.3
47.9
7.3

31.4
31.1
.3

22.9
18.6
4.3

-43.6
12.2
-49.3
31.6
-16,7
-25.0
3.6

-193.0
2.6
-94.7
.6
-48.7
-61.5
8.6

-153.6
6.0
-=83.9
10.9
-43.2
-57.3
13.3

-17.1

-137.2

-106.0

-11.8
16.9
-61.9
55.9
-11.6
-17.2
6.1

MEMORANDUM:
Nonagricultural exports minus nonpetroleum imports..

31.9

1

Preliminary.
Source: Department of Commerce, Bureau of Economic Analysis.

Exceptionally strong growth of imports into the United States led
the deterioration in real net exports. Between the beginning of the
expansion and the third quarter of 1986, real imports grew at an average annual rate of 14.6 percent, more than double the average
growth rate recorded between 1948 and 1980. Real exports also
grew, but their 3.3 percent annual growth rate was much less than
that of imports and about half the annual growth rate of real exports
between 1948 and 1980.
Between the third quarter of 1986 and the end of 1987, real net
exports improved by $31 billion, narrowing the real trade deficit
from 4.3 to 3.4 percent of real GNP. A $74 billion increase in real
exports outstripped a $43 billion increase in real imports. The 15.4
percent annual rate of real export growth was more than double the
average between 1948 and 1980. Strong gains in real merchandise
exports were widespread across major product categories. At 6.4 percent, the annualized growth rate of real imports was well below the
pace set between 1982 and late 1986 and about equal to the average




103

growth rate between 1948 and 1980. Increases in real merchandise
imports were generally modest (negative in the case of consumer
goods and petroleum products), except for capital goods excluding
autos. Strong import growth in capital goods presumably reflected
increased business purchases of durable equipment and substantial
inventory accumulation. Contrary to the improvement in merchandise trade, the surplus in factor income deteriorated by $13 billion—
the effect of a growing stock of foreign claims on the United States.
This led to a deterioration in the real trade balance in services; the
surplus on services other than factor income showed the same pattern as merchandise trade.
The influence of broad macroeconomic forces, rather than specific
developments in markets for particular products or trading relationships with particular countries, is readily apparent in the development of the U.S. real trade balance during the 1980s. Broad macroeconomic forces caused the strong growth of U.S. imports and the
weak growth of U.S. exports across so many products and trading
partners. Similarly, broad macroeconomic forces played a critical role
in the recent resurgence of real export growth and in the general
slowing of real import growth. These forces must continue to be
major factors in the gradual process of reducing the U.S. external imbalance.
DIFFERENTIAL DEMAND GROWTH

During the 1970s both real domestic demand and real GNP in the
United States generally grew more slowly than in Japan, Canada, and
Western Europe. Differences between demand growth and real GNP
growth, however, were relatively small in all countries, and trade imbalances remained small by recent standards. The situation changed
during the 1980s, as indicated by the data in Table 3-4. During the
general period of slow growth and world recession in 1980-82, U.S.
real GNP fell slightly more rapidly than real domestic demand; thus
as a share of real GNP, U.S. real net exports fell by 1.0 percentage
point. In Canada the pattern was essentially the reverse; real domestic demand fell a little more rapidly than real GNP, and real net exports increased modestly.
During the period of world recession, real GNP growth in Japan
slowed from a 5 percent average annual rate in the 1970s to 3.2 percent. Real net exports contributed about 1 percentage point to Japanese economic growth, since real GNP grew about 3 percent annually
and real domestic demand grew about 2 percent per year. In West
Germany, real domestic demand fell at a rapid 2.6 percent annual
rate, but improving real net exports cushioned the effect on output
growth, and real GNP fell at only a 1 percent annual rate. The pic-




104

TABLE 3-4.—Growth in Real Domestic Demand and Real GNP in Major Industrial Countries,
1980-87
[Average annual percent change]

Country/region

United States
Japan
Germany
France
United Kingdom..
Italy
Canada
Europe (Big Four) 4
G-7 less United States4

1980 I
to
1982 IV
Real
domestic
demand2
-0.5
2.1
-2.6
1.1
-.2
-.5
-1.0
.1

1984 II
to
1986 III

1982 IV
to
1984 tl

Real
GNP3
-0.8
3.2
-1.0
1.4
-.0

domestic
demand2

domestic
demand2

1986 III
to
1987 III1

Real
GNP3

domestic
demand2

Real
GNP3

2^3
2.8
7.1

3.6
4.1
2.9
3.4
3.4
3.4
4.1

2.7
3.7
3.3
2.1
3.3
3.0
3.6

4.8
*3.3
2.5
5.7
3.0
5.0

4.3
'1.6
2.0
5.2
2.4
4.1

2.0
3.2

3.2
3.6

2.9
3.2

3.2
3.8

2.4
3.1

9.1
3.0
2.9
-.5
4.1
3.2
6.7

7.0
4.4
2.5

2.2
2.8

1
2
3
4

Data for United States and Germany are preliminary estimates for 1987 IV.
Real domestic demand is real GNP minus real net exports.
Data for France, United Kingdom, Italy, and Canada are real GDP.
Data for Europe (Big Four) and G-7 less United States use GNP weights. Big Four consists of Germany, France, United
Kingdom, and Italy.
Sources: Department of Commerce (Bureau of Economic Analysis) and country sources.

ture was mixed in the other three large European economies (France,
Italy, and the United Kingdom).
During the initial phase of the expansion, from the end of 1982 to
the middle of 1984, real domestic demand in the United States shot
up at a 9.1 percent annual rate, exceeding by 2.1 percentage points
the rapid growth rate of U.S. real GNP. The strong growth of
demand and income reflected the recovery of the economy from a
particularly deep recession, aided by the shift to a quite expansionary
monetary policy early in the second half of 1982, and spurred on by
significant reductions in marginal tax rates on both labor and capital
income. In most of the other six leading industrial countries, recovery was less robust, as indicated in Table 3-4. For these six countries, combined real GNP growth averaged 3.2 percent, slightly exceeding the 2.8 percent annual growth rate of real domestic demand.
The very strong growth of real domestic demand in the United
States, together with relatively weak demand growth in other industrial countries, clearly contributed to the strong growth of U.S. imports and the weak growth of U.S. exports during this period.
In the second phase of the expansion, from the middle of 1984
through the third quarter of 1986, growth of real domestic demand
in the United States slowed to a 3.6 percent annual rate. As real net
exports deteriorated further, U.S. real GNP grew at a moderate 2.7
percent annual rate. Growth of real domestic demand picked up in
some of the other six leading industrial countries and equaled the
U.S. rate during this period. Because U.S. imports already were substantially larger than U.S. exports by 1984, equal rates of demand




105

growth in the United States and abroad implied further deterioration
of the U.S. trade balance.
Moreover, growth of real domestic demand during this period may
give an exaggerated impression of the strength of spending, particularly for countries whose currencies appreciated against the dollar. In
early 1986, the dollar prices of oil and many primary commodities
fell. These price declines made possible increased purchases of oil and
other primary commodities (measured in volume terms), even though
the amount spent (measured in dollars) fell. And when spending is
measured in foreign currencies that appreciated against the dollar,
the effect of falling dollar prices of primary commodities was amplified. This observation partly explains how real domestic demand
could grow more rapidly than real GNP in Japan between the second
quarter of 1984 and the third quarter of 1986, and yet Japan's current account surplus could increase from 3.1 to 4.6 percent of GNP.
Some of the benefits that Japan enjoyed from the large decline in the
yen prices of oil and other primary commodities ended up in increased saving rather than increased spending. Similarly, during this
period West Germany recorded a large increase in its current account surplus, from 0.5 to 3.6 percent of GNP, despite only a small
excess of real GNP growth over real domestic demand growth.
In the most recent phase of the expansion, starting in late 1986
and continuing through 1987, the growth rate of real domestic
demand in the United States slowed to 2.6 percent per year, due primarily to slower growth of consumption spending. In the other six
leading industrial countries the growth rate of real domestic demand
moved up slightly. The latest available data show that between their
peak in the fourth quarter of 1986 and the third quarter of 1987 the
current account surpluses of Japan and West Germany (as a share of
GNP) declined by 1.4 and 1.8 percentage points, respectively. The
reversal of the demand growth differential contributed to an improvement in U.S. real net exports, thus allowing the growth rate of
U.S. real GNP to rise to 3.4 percent despite the slower growth rate of
U.S. real domestic demand.
The growth rate of U.S. real domestic demand probably had to fall
below the 3.6 percent annual rate experienced during the second
phase of the expansion if the decline in U.S. real net exports was to
be reversed. As discussed in Chapter 1, if the U.S. unemployment
rate declines further and productivity grows further, the mediumterm growth rate for U.S. real GNP is probably about 3.2 percent per
year. Improvement of U.S. real net exports at an average annual rate
equivalent to, for example, 0.8 percent of real GNP implies an aver-




106

age annual growth rate of real domestic demand of about 2.4 percent, which is very close to the 2.6 percent growth rate actually realized since the turnaround in real net exports began in late 1986.
In 1988 it appears likely that real domestic demand will grow relatively slowly in the United States, for the reasons discussed in Chapter 1. In particular, consumption spending is expected to grow relatively slowly as households seek to increase their saving rates above
the low average level of 1987 (but probably not much above the rate
achieved in the fourth quarter). Furthermore, investment spending
for inventory accumulation is expected to decline. The strong growth
of both real exports and real net exports is expected to play a key role
in maintaining a moderate rate of economic growth.
Rapid growth of real domestic demand in other industrial countries, particularly those with large external surpluses, is critical to reducing their external surpluses, maintaining worldwide demand
growth, and improving the U.S. external balance. If U.S. real domestic demand growth declines without an offsetting increase in other
countries, total demand growth in the world economy would fall. If
this happens, the rate of growth of world output also would fall.
Output and employment growth in all the industrial countries, including the United States and the surplus countries, probably would
be curtailed. The economic problems of many developing countries,
especially those with large external debts, would become more
severe.
Recent developments indicate that domestic demand in other industrial countries is beginning to strengthen. In surplus countries
recent growth of real domestic demand has been running well ahead
of growth of real GNP, reversing the pattern of export-led growth
that had prevailed for many years. Between the third quarters of
1986 and 1987, domestic demand growth exceeded real GNP growth
by 1.1 percentage point in West Germany and by 0.5 percentage
point in Japan. Furthermore, recent domestic demand growth in
Japan has been exceptionally strong—5.2 and 7.6 percent in the
second and third quarters of 1987. In these two quarters domestic
demand growth in Japan exceeded GNP growth by an average of 2
percentage points. Strong growth of real domestic demand in Canada
and the United Kingdom also has contributed significantly to recent
demand growth in the world economy.
The Organization for Economic Cooperation and Development
(OECD) estimates that real GNP in Western Europe will grow only
about 1 y% percent per year during the next 2 years, while real domestic demand is expected to rise by 2V4 percent per year. Some
countries that enjoyed relatively vigorous demand and output growth
during the past 2 years may face worsening balance of payments po-




107

sitions. Consequently, it is especially important for countries with
substantial external surpluses to increase their demand growth in
order to maintain their own output and employment growth while
their external surpluses contract. More rapid demand growth in surplus countries also is essential for the health of the world economy,
because domestic demand growth is expected to be relatively weak in
the United States, and a shrinking U.S. trade deficit will subtract
from demand growth in other countries.
Market forces have provided, and are likely to continue to provide,
strong incentives for rapid growth of domestic demand in surplus
countries. In particular, the real appreciation of the yen and the
lower dollar price of imported oil have substantially reduced the real
cost of goods imported by Japan relative to goods and services produced in Japan. The passthrough of a substantial part of this decline
in real import costs has boosted the purchasing power of Japanese
consumers, thereby contributing to rising living standards and to
growth of domestic demand. Moreover, yen appreciation has induced
consumers to shift their purchases from domestic to imported goods.
The passthrough of the benefits of currency appreciation and lower
oil prices apparently has been important in stimulating stronger
growth of consumer spending in West Germany as well.
The government of Japan has carried out commitments made at
the Louvre Accord in February 1987 and the Venice Economic
Summit in June 1987 to boost domestic demand growth. On May 29,
1987, the Japanese government announced a 6 trillion yen ($41.3 billion) emergency stimulus package, including 5 trillion yen in public
works and 1 trillion yen in tax cuts. At the end of last year the government of Japan approved a 1988 budget including $58.7 billion for
public works—20 percent above the figure a year ago and equal to
the high level established by last year's supplementary budget.
West Germany also has taken actions to boost domestic demand
growth. For example, the West German government increased the
amount of tax cuts for 1988 and later years to about DM14 billion
($8.7 billion), and it will provide special loans at preferential rates for
private and public investment projects. In addition, the German
Bundesbank moved to reduce short-term interest rates in late 1987.
Continued domestic demand growth in other industrial countries
will contribute to the health of the world economy in another important way. A growth-oriented solution to the international debt crisis
requires that the heavily indebted developing countries expand their
exports. During the 1980s the United States increased its purchases
of goods exported by these countries while other industrial countries
reduced their purchases. Now, as the United States reduces its trade
deficit, other industrial countries must absorb more of the exports of




108

these heavily indebted developing countries if they are to solve their
debt problems. As a result, developing countries would be better
able to service their debts and would provide better markets for the
exports of the industrial countries.
THE ROLE OF THE FEDERAL DEFICIT

Because a deterioration in the U.S. external position corresponds
to a decline in the national saving-investment balance and to an associated increase in the net capital inflow, the deterioration of the U.S.
external position also must have an explanation in terms of factors
that affect the national saving-investment balance and the net capital
inflow. This explanation does not contradict the earlier discussion of
differential demand growth in the United States and other countries,
nor does it conflict with the later discussion of exchange-rate movements. All are part of the same puzzle. The importance of different
forces affecting the external balance may be more readily apparent
from one perspective than another, but all the pieces fit together in
the end.
The deterioration of the national saving-investment balance and
the corresponding increase in the net capital inflow since 1982 reflect
primarily the decline in the national saving rate (as officially measured). The low rate of national saving since 1982 is accounted for
primarily by the high rate of government dissaving which, in turn, is
attributable to large Federal deficits. Measured on a NIPA basis, the
government deficit (Federal, State, and local combined) has averaged
3.2 percent of GNP since 1982, compared with an average deficit of
0.3 percent of GNP between 1947 and 1982. The Federal deficit
alone has increased to an average of 4.6 percent of GNP since 1982,
compared with a pre-1982 average of only 0.6 percent of GNP. The
personal saving rate also has been relatively low since 1982, but the
rate of business saving has been relatively high. Since 1982 the private saving rate (personal plus business saving) has run about the same
as its postwar average.
The causal linkages between the government deficit and national
saving, national investment, and the capital inflow, however, are
more complex than these averages suggest. As shown in the upper
panel of Chart 3-3, movements in th^ general government deficit as
a share of GNP have tended to parallel movements in the private
saving-investment balance as a share of GNP. This parallelism has
offsetting implications for movements in the net capital inflow, as
measured by net foreign saving in the national income and product
accounts: an increase in the private saving-investment balance implies
a smaller net capital inflow, while an increase in the government deficit implies a larger net capital inflow. As shown in the lower panel of




109

Chart 3-3, movements in the net capital inflow generally have been
smaller than movements in either the private saving-investment balance or the government deficit.
Chart 3-3

Components of the Saving-Investment Balance

Percent of GNP
General Government
Deficit*/
Private Saving-Investment Balance b

1955

1960

1965

1970

1975

1980

1985

-VGross private saving minus gross private domestic investment,
i/Federal, State, and local deficit,
a/Defined as net foreign saving.
Note.—Data for 1987 are preliminary.
Source: Department of Commerce.

In the United States the dominant economic factor affecting movements in both the government deficit and the private saving-investment balance has been the business cycle. Usually during recessions,
private investment has declined more than private saving, so the private saving-investment balance has improved. Also during recessions
government revenues tend to fall and government expenditures tend
to expand, so the government deficit grows. In contrast, during expansions private investment usually grows relative to private saving,
so the private saving-investment balance deteriorates. Also, government revenue tends to rise relative to government expenditure, so
the government deficit declines. Because business cycle effects on the
private saving-investment balance typically have been a little stronger
than business cycle effects on the government deficit, the net capital




110

inflow has tended to decline during recessions and to increase during
expansions.
In this regard, the recessions of 1980 and 1981-82 were not very
different from earlier recessions. However, as is apparent in Chart 33, the pattern changed during the current expansion. As usual, the
private saving-investment balance declined during 1983-86, reflecting the strong growth of private investment. But the government deficit did not decline during 1983-86 as it usually does during a vigorous expansion—a result more than accounted for by the persistence
of quite large Federal deficits. Therefore, the net capital inflow grew
much more than normal between the end of 1982 and late 1986.
In fiscal 1987, due to a large decline in the Federal deficit, the
total government deficit dropped substantially from 3.6 to 2.5 percent of GNP. By itself, this reduction should have cut the net capital
inflow and the current account deficit by nearly one-third from its
level in fiscal 1986. However, the private saving-investment balance
deteriorated substantially between fiscal 1986 and fiscal 1987, from
0.3 percent to minus 0.8 percent of GNP. This fall in the privatesaving investment balance reflected both a strong gain in gross private domestic investment (due largely to higher inventory investment) and an outright decline in private saving (because of lower
personal saving). Thus, despite a substantial decline in the government deficit, the net capital inflow and the current account deficit
both increased modestly.
Future improvements in the private saving-investment balance and
future reductions in the Federal deficit should cause the national
saving-investment balance to improve and the net capital inflow to
decline. Because the rate of inventory investment in the nonfarm
sector at the end of 1987 is probably unsustainable for any significant length of time, downward adjustment in this component of private sector investment should contribute to an improved private
saving-investment balance in 1988. The personal saving rate in 1987
was very low by postwar standards, although it rose in the fourth
quarter. Assuming that the personal saving rate remains close to its
fourth quarter 1987 level in 1988 (which implies growth of consumption spending about even with growth of real disposable income), the
average saving rate in 1988 will be well above that of 1987—a further
factor tending to improve the private saving-investment balance.
The Federal budget deficit as a share of GNP is expected to decline only modestly in 1988 after the large drop registered in 1987.
However, the revised Gramm-Rudman-Hollings budget law mandates
a gradual reduction in the Federal deficit in later years and a balanced budget by 1993. The budget compromise agreed to by the Administration and the Congress last autumn provides for further steps




111

in this gradual process. Of course, the desirability of particular measures to reduce the Federal deficit must be assessed on the basis of
their likely effects on the economy.
The Federal deficit has grown because Federal outlays as a share
of GNP have risen substantially since the 1960s (despite a lower
share for defense spending), while Federal revenues as a share of
GNP have risen modestly. Specifically, Federal outlays averaged 19.0
percent of GNP in the 1960s; they were 22.8 percent in 1987. Federal revenues also rose, but by less than the increase in Federal outlays:
from 18.2 percent of GNP in the 1960s to 19.4 percent in 1987. Increases in taxes, without effective restraint on spending growth,
could fail to reduce the budget deficit. Moreover, increasing taxes
and undoing tax reform would impair incentives to work, invest, and
produce—the foundations of future growth. Thus reduction of the
Federal deficit, but only through appropriate means, is the proper
policy for improving the national saving-investment balance.
Finally, the behavior of the net capital inflow cannot be viewed as
entirely passive. The apparent attractiveness of U.S. investment to
foreigners and the inflow of capital it helped to stimulate probably
contributed to the appreciation of the dollar between 1980 and early
1985, which played a major role in the deterioration of the U.S. trade
balance. In the overall equilibrium of the economy, this deterioration
was the necessary counterpart of both the increase in real domestic
demand relative to real GNP and the growing gap between national
investment and national saving. If foreigners had not supplied capital
willingly, the pattern of real domestic demand, real GNP, national investment, national saving, and the government deficit all would have
been different.
Nevertheless, it is fair to say that the low rate of national saving,
which reflects primarily the persistence of a large Federal deficit late
into the current expansion, has played a key role in the development
of the U.S. external deficit. It is equally and simultaneously true that
the strong growth of real domestic demand in the United States and
the relatively weak growth of real domestic demand in other industrial countries between 1982 and late 1986 played critical roles in the
evolution of the U.S. external deficit. Therefore, reduction of this external deficit in an environment of continued economic growth in the
United States and other countries requires two important and simultaneous developments. First, the U.S. national saving-investment balance must improve through government spending restraints leading
to a reduced Federal deficit. Second, the growth of real domestic
demand in other industrial countries must remain sufficiently high to
sustain world output growth, while growth of real domestic demand




112

remains restrained in the United States, leading to a gradual contraction of worldwide external imbalances.
EXCHANGE RATES AND RELATIVE PRICES
Strong appreciation of the U.S. dollar between 1980 and early
1985 and its lingering effects in 1986 were important proximate
causes of the deterioration of the U.S. trade balance—the ultimate
causes lying with the economic forces that induced the dollar to appreciate. The full effects of dollar appreciation were not felt immediately; it took time for the relative prices of imports and exports to
respond fully to exchange-rate changes, and it took more time for
trade quantities to respond to changes in relative prices. As illustrated in Chart 1-1 of Chapter 1, there is about a six-quarter lag between movements in the foreign exchange value of the U.S. dollar
and movements in U.S. real net exports. The recent upturn in real
net exports beginning in late 1986 followed six quarters after the
beginning of dollar depreciation in early 1985.
The improvement in the trade balance through the end of 1987,
however, is somewhat smaller than normally would be expected from
dollar depreciation through the middle of 1986, after allowing for
lags. Analysis of this shortfall requires examination of the responses
of relative export and import prices to dollar depreciation. This analysis is important for assessing the likelihood of recovering lost
ground and of further improving real net exports commensurate with
the further depreciation of the dollar since the middle of 1986.
THE EXTENT OF EXCHANGE-RATE MOVEMENTS

The value of the U.S. dollar increased substantially against the currencies of most industrial countries between 1980 and the first quarter of 1985. The extent of appreciation was somewhat uneven across
currencies. The dollar rose 109 percent against the British pound
and 79 percent against the West German deutsche mark, but only 14
percent against the Japanese yen and 16 percent against the Canadian dollar. According to the Federal Reserve staffs trade-weighted
index of the foreign exchange value of the dollar against the currencies of 10 large industrial countries (used in subsequent discussions),
the dollar rose substantially over this period. Adjusted for movements of the price level in the United States and in other industrial
countries, the real foreign exchange value of the dollar rose a similar
amount.
The dollar's appreciation during the early 1980s probably was
spurred in part by the shift in monetary policy from perceived ease
and accommodation in the late 1970s to an actual and ultimately




113

credible anti-inflationary stance. Continued dollar appreciation after
1982 probably also reflected the strong recovery in the United States
in comparison with most other industrial countries, as well as the
general restoration of confidence in the U.S. economy. High real interest rates in the United States during the early 1980s, as well as
changes in U.S. tax laws that increased the attractiveness of investment in the United States, may have attracted foreign capital that
tended to push up the value of the dollar. The increase in U.S. interest rates and the tightening of monetary policy that began in early
1984 may have contributed to the upward surge in the value of the
dollar in 1984. No single factor, however, is the exclusive cause of
the dollar's appreciation; several different factors probably played important roles.
Since February 1985 the U.S. dollar generally has been depreciating. Substantial declines have been recorded against the currencies of
all the large industrial countries, except Canada. Based on the Federal Reserved index, by the end of 1987 the dollar had fallen—in real
and nominal terms—about 40 percent and was slightly below its
1980-81 level. The adjustment was less, however, against the currencies of some developing countries.
As with the dollar's appreciation in the early 1980s, the exact
causes of its depreciation since early 1985 are difficult to isolate. The
deceleration in U.S. real GNP growth after mid-1984 probably contributed to the dollar's fall. The intentions of the G-5 countries
(France, Japan, the United Kingdom, the United States, and West
Germany) to seek a lower dollar, as implied by the Plaza Agreement
of September 1985, and their subsequent actions to back up these intentions probably hastened the dollar's fall. The easing of U.S. monetary policy that began in late 1984 and extended through 1986 also
may have contributed to the dollar's decline.
THE DOLLAR AND RELATIVE EXPORT PRICES

The rising dollar in the early 1980s increased the relative price of
U.S. produced goods exported to foreign markets. The price of U.S.
exports in foreign currencies relative to overall foreign price levels
rose 52 percent between 1980 and the first quarter of 1985. It is not
surprising, therefore, that U.S. exporters became less competitive. In
1986 U.S. real exports of goods and services had fallen 3 percent
below their 1980 level, compared with about 40 percent growth that
would have been expected based on the trend rate of growth between 1948 and 1980.
Dollar appreciation, not slow productivity growth or spiraling wage
costs, was the primary cause of the decline in the international competitiveness of U.S. manufacturing in the first half of the 1980s. Be-




114

tween the cyclical peak in the third quarter of 1981 and the first
quarter of 1985, labor productivity in manufacturing increased at a
4.4 percent annual rate—more than one and a half times as fast as
the 1948-80 average—and only slightly below the 5.0 percent growth
rate of labor compensation in manufacturing. As a result, U.S. unit
labor costs rose at only a 0.6 percent rate from late 1981 to the first
quarter of 1985. This was less than the growth in a trade-weighted
average of unit labor costs in 11 of the largest foreign industrial
countries, measured on a national currency basis, during the first half
of the 1980s. However, once dollar appreciation is factored in, the
International Monetary Fund (IMF) estimates that unit labor costs for
U.S. manufacturing, relative to unit labor costs for manufacturing in
other industrial countries, rose substantially during this period.
The depreciation of the U.S. dollar since early 1985 now has enabled U.S. exporters to regain the international competitiveness they
lost earlier. Since the dollar began to decline, relative unit labor costs
have fallen significantly. Continued strong productivity growth and
wage restraint in U.S. manufacturing have contributed to improved
cost competitiveness. Between the first quarter of 1985 and the
fourth quarter of 1987, manufacturing productivity increased at a 3.7
percent annual rate, and hourly compensation of manufacturing
workers grew at a 2.7 percent annual rate. As a result, unit labor
costs for U.S. manufacturing have fallen at a 1.0 percent annual rate
since the first quarter of 1985. Adding to this the effect of dollar depreciation, the IMF estimates that unit labor costs for U.S. manufacturing, relative to those in other industrial countries, fell 39 percent
between the first quarter of 1985 and the second quarter of 1987
(the latest data available), and they are currently below their 1980
level.
Dollar depreciation also has contributed to a significant decline in
the relative price of U.S. nonagricultural exports in foreign markets,
as measured by a foreign currency price of U.S. nonagricultural exports divided by a foreign consumer price index (CPI). As Chart 3-4
illustrates, movements in the relative price of nonagricultural exports have been dominated by movements in the exchange rate. As
the dollar appreciated in the early 1980s, the relative price of U.S.
nonagricultural exports rose in foreign markets. As the dollar depreciated, this relative price declined, and it is now lower than it was in
1980.
As might be expected on the basis of improved price and cost
competitiveness, U.S. exports recently have enjoyed very strong
growth. Real nonagricultural exports have grown at a 19.5 percent
annual rate since the third quarter of 1986—nearly triple their rate of
growth between 1967 and 1980. Reflecting this export growth, U.S.




115

Chart 3-4

Relative Prices of Exports and Imports
and the Exchange Rate

Index, 1982 = 100
140
Exchange Rate A
Index y
l \

130
Relative Price of
Nonpetroleum Imports^

120

\

\
110

\

100 _

/
/

/

\

7A\
\

-

/ \\

90

J)
y

80 -

70
60

i n i•
1975

'y{ \
/ \

Relative Price of
\
Nonagricultural Exports^ \

11111 i t 1 1 1 1 1 1 1 1 1 1 i f i t i 1 i i i 1 i i t 1 i i i t i i i 1 i i i 1

1977

1979

1981

1983

1985

—

M'I

1987

-I/Multilateral trade-weighted value of the dollar against the currencies of the G-10 countries plus
Switzerland.
V Ratio of the implicit price deflator for nonpetroleum imports to the U.S. consumer price index.
-S'Ratio of the implicit price deflator for nonagricultural exports multiplied by the exchange rate
index to a GNP-weighted consumer price index for the G-10 countries (excluding the United States)
plus Switzerland.
Note.—Data for fourth quarter 1987 are preliminary.
Sources: Department of Commerce, Department of Labor, and Board of Governors of the Federal
Reserve System.

manufacturing output has increased at a 5.4 percent annual rate, and
manufacturing employment has increased by 380,000.
Econometric estimates suggest that nonagricultural exports rise
about three-fourths of a percent for every 1 percent decline in their
relative price, with about half the effect occurring within three quarters. Based on these estimates, the 43 percent decline in the relative
price of nonagricultural exports between the first quarter of 1985
and the third quarter of 1987 should increase U.S. nonagricultural
exports by about 30 percent within 2 years. By the end of 1987 real
nonagricultural exports had risen 36 percent above their level in the
first quarter of 1985. Since a part of this export gain probably was
due to normal export growth associated with rising foreign incomes,
it would appear that substantial further export growth should result
from relative export price adjustments made through the third quarter of 1987.




116

Moreover, relative export prices in the third quarter of 1987 may
not yet fully reflect the depreciation of the dollar since early 1987.
Following the Louvre Accord in February 1987, exchange rates
among the group of seven summit countries (the G-7 countries) remained fairly stable until the fourth quarter, allowing for much of the
adjustment of relative export prices to exchange rates to occur by the
end of the third quarter. However, the dollar continued to depreciate
against the currencies of important trading partners outside the G-7
during the spring and summer, and it declined a further 6 to 7 percent against other G-7 currencies (except the Canadian dollar) in the
fourth quarter. Therefore, there is reason to anticipate further reductions in relative prices of U.S. goods in foreign markets that will contribute to further increases in U.S. exports.
To correct the U.S. external deficit in a noninflationary manner,
U.S. manufacturing industries must be able to expand output to
serve domestic and foreign markets without incurring rapidly rising
costs. Recent data on capacity utilization suggest that existing capacity in most manufacturing industries appears ample to meet output
growth in the near term. The ability to expand capacity beyond existing levels is aided by the availability of unused capacity in the durable goods industries that produce business equipment, as well as by
the slack that exists in the construction industry. The incentive to
expand capacity is indicated by recent data that show manufacturers'
profits from current production running well above their average
rate in 1986. Additional incentive is provided by the knowledge that
the correction of the trade imbalance should assure continued strong
growth in the manufacturing sector. According to the most recent
Department of Commerce survey of investment intentions, U.S. manufacturers plan to increase spending for plant and equipment in real
terms by S.6 percent in 1988.
THE DOLLAR AND RELATIVE IMPORT PRICES

The price of nonpetroleum imports relative to the U.S. consumer
price index fell until the fourth quarter of 1985, at which time it was
28 percent below its 1980 level. Allowing 2 further years for this relative price decline to work its full effect on import quantities, econometric estimates suggest that a relative price decline of this magnitude would have induced about a 30 percent increase in real nonpetroleum imports. In the fourth quarter of 1985, nonpetroleum imports were about 90 percent above their 1980 level. The additional
increase reflects large increases in U.S. income and real domestic
demand, and the need for the heavily indebted developing countries
to run external surpluses in order to service their debts. There is,




117

therefore, little mystery about the rapid growth of real imports between 1980 and the end of 1985.
From the end of 1985 to the end of 1986, U.S. real nonpetroleum
imports increased 10 percent; from the end of 1986 to the end of
1987, they increased a further 6 percent. Some of these increases can
be explained by the growth of real domestic demand (2.7 percent in
1986 and 3.2 percent in 1987) and, especially for 1986, by the delayed effects of earlier reductions in relative import prices. However,
in view of the substantial depreciation of the dollar beginning in
early 1985, the continued rapid growth of real nonpetroleum imports
in 1986 and 1987 appears somewhat out of line with earlier empirical
relationships. This continued strong growth of real imports, not a
smaller than normal response of real exports, accounts for the failure
of U.S. real net exports to improve as rapidly as would normally be
expected, given the large adjustment in the foreign exchange value
of the dollar.
Although the recent strength in real nonpetroleum imports is unusual given the sharp depreciation of the dollar, this strength is not
unusual given the behavior of the relative price of such imports. As
illustrated in Chart 3-4, the relative price of nonpetroleum imports
increased very little during the period of dollar depreciation. At the
end of 1987 it stood just 0.5 percent above its level in the first quarter of 1985 (and only 2.9 percent above its lowest level in the fourth
quarter of 1985), despite a 40 percent depreciation of the dollar.
Econometric studies suggest that the relative price of nonpetroleum
imports normally would have risen about 25 percent in response to
dollar depreciation, rather than the amount actually recorded. It appears that the very limited response of relative import prices largely
accounts for the failure of real import growth to slow to the extent
that normally would be expected, given the size of the dollar's decline.
PROFIT MARGINS AND IMPORT PRICES

A substantial decline in the cost of materials purchased by foreign
exporters partially accounts for the slow rise in relative import prices
in the United States since 1985, Measured in U.S. dollars, the price
of oil in 1986 averaged about half its level in 1985. One commonly
cited index of the dollar price of raw commodities fell 13 percent between early 1985 and late 1986. Other factors being equal, reductions in the dollar cost of raw materials allow foreign exporters to
reduce the dollar prices of U.S. imports without reducing their profit
margins. However, if appreciation of foreign currencies and movements in foreign labor costs are considered, the decline in materials
costs only partly explains the limited increase of import prices in the




118

United States during the period of dollar depreciation. Apparently,
the profit margins of foreign exporters have absorbed much of the
effect of dollar depreciation.
The profit margins of exporting firms typically absorb some of the
effect of movements in exchange rates. This appears to be true to a
limited extent for U.S. firms exporting to foreign markets and to a
greater extent for foreign firms exporting to the United States. When
the dollar appreciates, U.S. exporters—whose costs often are determined in U.S. dollars—may not raise their prices in foreign markets
(quoted in foreign currencies) in the same proportion as the dollar
appreciates. Instead, to help preserve their market share abroad or
for other reasons, they sometimes will absorb part of the effect of
dollar appreciation by reducing their profit margins on export sales.
Conversely, when the dollar depreciates, U.S. exporters may not cut
their prices in foreign markets in the same proportion as the dollar's
decline, and their profit margins may expand. Similarly, foreign exporters to the United States may not cut their prices in U.S. markets
as much as the dollar appreciates or raise their prices here as much
as the dollar depreciates.
The evidence concerning adjustment of profit margins in response
to exchange-rate changes is largely inferential. Some evidence is
available in some specific cases, but there are no comprehensive data
on profit margins in different national markets for U.S. firms or for
foreign firms. It is possible, however, to construct proxy measures of
the ratio of prices to costs that indicate general movements in profit
margins. For U.S. exporters, the dollar price of U.S. nonagricultural
exports is taken as a measure of prices received in foreign markets. If
this price is divided by the U.S. producer price index (PPI) for finished goods, a proxy price-cost ratio for U.S. exporters can be constructed. For foreign exporters to the United States, the dollar price
of U.S. nonpetroleum imports is one measure of prices received. If
this price is divided by the foreign wholesale price index converted
into U.S. dollars using market exchange rates, a proxy price-cost
ratio for foreign exporters to the United States also can be constructed. An increase in this price-cost ratio generally suggests an increase
in the corresponding profit margin, but the relationship probably is
not exact. However, alternative measures of the price-cost ratio show
generally similar movements.
The behavior of the price-cost ratios for U.S. and foreign exporters
is illustrated in Chart 3-5. The levels of the two indexes are not particularly meaningful, but their movements in comparison with movements in the Federal Reserve's index of the foreign exchange value
of the U.S. dollar are important. Basically, the price-cost ratio for
U.S. exporters shows relatively little movement, although there is a




119

fairly consistent downward trend beginning in 1982. In contrast, the
price-cost ratio for foreign exporters moves in fairly close sympathy,
although somewhat less than in proportion, with movements in the
exchange rate.
U.S. and Foreign Exporters' Price-Cost Ratios
and the Exchange Rate
lnde>c, 1982 = 100
140
Exchange Rate A
Index^
/ \

130 -

120 -

/

110 —

\

SA\

U.S. Exporters' Price-Cost Ratio*/

100

""

"

-

4

90
Foreign Exporters' \
\
Price-Cost Ratio ^ ->+**

80
70

x
-^>
s/
i 1 i i i 1i i i 1i i i 1i i t 1i i i 1t t t
1 1 1i 1 1f I 1 11I 1 1I I 1 1I 1 1 11I 1 1

1975

1977

1979

1981

1983

1985

1987

-VMultilateral trade-weighted value of the dollar against the currencies of the, G-10 countries plus
Switzerland.
-2/Ratio of the implicit price deflator for nonagricultural exports to the U.S. producer price index for
finished goods.
.2/Ratio of the implicit price deflator for nonpetroleum imports to a trade-weighted wholesale price
index for eight industrial countries excluding the United States divided by the exchange rate index.
Note.—Data for fourth quarter 1987 are preliminary.
Sources: Department of Commerce, Department of Labor, Board of Governors of the Federal
Reserve System, and Data Resources, Inc.

The behavior of the price-cost ratios relative to the exchange rate
illustrated in Chart 3-5 is broadly consistent with the behavior of relative import and export prices illustrated in Chart 3-4. It appears
that U.S. exporters basically price their products in dollars and in
line with movements in domestic costs. The relative price of U.S. exports in foreign markets, therefore, moves in close sympathy with the
exchange rate (Chart 3-4), while the price-cost ratio for U.S. exporters shows little relation with the exchange rate (Chart 3-5). The reverse largely holds for foreign exporters. The relative price of foreign exports moves to some extent in response to exchange-rate
movements (indicated by the inverse relation between movements in
the relative price of nonpetroleum imports and movements in the ex-




120

change rate in Chart 3-4), while the foreign price-cost ratio appears
to absorb most of the effect of exchange-rate changes (Chart 3-5).
The decline in the price-cost ratio for U.S. exporters between 1982
and 1985 or 1986 is consistent with the fact that U.S. exporters were
under heavy competitive pressure in foreign markets and chose to
absorb some of this pressure in lower profit margins. The further decline of the price-cost ratio for U.S. exporters through 1987 is*peculiar in view of the very large correction in the value of the dollar.
Part of this anomaly may be due to deficiencies in the proxy measure
of the price-cost ratio. An alternative measure, based on unit labor
costs and raw materials prices rather than the PPI, does not show a
decline in 1987; it is roughly constant throughout the 1980s. The
strong growth of corporate profits for manufacturing firms in 1987
and the strong growth of exports suggest that profit margins were
not falling.
The recent behavior of the price-cost ratio for foreign exporters
suggests that their absorption of the effects of dollar depreciation at
least partly explains the less-than-expected relative price increase of
U.S. imports. The extent of such absorption also appears to have exceeded previous experience. Studies using alternative measures of
the price-cost ratio or the profit margin for foreign exporters generally have confirmed these impressions.
Less than complete passthrough of measured dollar depreciation to
import prices may result from changes in the pattern of international
trade. For example, the sources of U.S. imports may have been shifting in the direction of exporters with relatively lower production
costs measured in U.S. dollars, including exporters located in countries whose currencies have appreciated relatively little against the
U.S. dollar. In addition, some products imported into the United
States have been subject to quantitative restrictions imposed by the
United States or by the countries of origin. The prices of such imported products in U.S. markets are influenced strongly by these restrictions, rather than by exchange rates.
Less than complete passthrough is also consistent with economic
theory. Foreign producers whose costs tend to rise with increased
output and whose sales have been falling (in both domestic and foreign markets) probably have been experiencing declining production
costs, especially at the margin. Such producers naturally would cut
their prices in line with declines in their marginal production costs,
even if their profits (taking account of fixed costs) were falling. Furthermore, for a foreign producer whose dollar prices are higher than
production costs, holding the dollar price constant and cutting the
profit margin may retain more profits when the dollar depreciates
than raising the dollar price and suffering substantial sales losses.




121

Moreover, if a large share of a foreign producer's total sales are in
the U.S. market, primarily in competition with U.S. producers, there
may be little alternative to maintaining dollar prices even when production costs in terms of dollars rise due to appreciation of the producer's home currency. Some of the profit shrinkage may be passed
back to the foreign producer's workers and suppliers, who also recognize their indirect dependence on sales in the U.S. market. Because of the large size of the U.S. market, this situation is more likely
to arise for foreign firms selling in the United States than for U.S.
firms selling abroad. Finally, as a general marketing strategy, firms
may find it advantageous to maintain stable prices despite fluctuations in production costs arising from exchange-rate changes or
other factors. This may be especially important if brand loyalty is a
significant sales factor, if production costs are a relatively small share
of the final sales price, or if fluctuations in production costs are
viewed as temporary.
Whatever the reason for the relatively limited passthrough of
dollar depreciation to U.S. import prices through the end of 1987,
the most recent depreciation of the dollar and some of the residual
effects of earlier depreciation may have a more substantial effect on
import prices in the future. During the past year dollar depreciation
has become more general against a broader range of currencies, and
some quantitative restrictions on imports that were previously important are becoming redundant. Presumably there is also a limit beyond
which profit margins cannot reasonably be squeezed. Furthermore,
foreign producers may now recognize that much of the dollar's depreciation since 1985 is likely to prove permanent, so previously delayed
price adjustments may now be made.
In sum, U.S. exports appear to have a good potential for growth,
while economic forces are working to slow, if not partially reverse,
the growth of imports. Because of strong productivity growth, effective cost containment, and exchange-rate adjustment, U.S. exporters
already have regained the international competitive position they
held in 1980-81 when the United States had a substantial surplus of
real net exports. The additional depreciation of the dollar during the
fourth quarter of 1987, and the continuing passthrough of some of
the effects of earlier depreciation, should enhance export competitiveness further. Provided that costs remain effectively contained and
demand growth continues in foreign markets, real U.S. exports
should continue their recent vigorous growth. For real U.S. imports,
increasing passthrough to relative import prices of the effects of
recent and earlier dollar depreciation should limit growth. Anticipated slow growth of real domestic demand is an additional factor limiting likely growth of imports. Thus with import growth restrained and




122

exports growing strongly, improvements in real net exports should
contribute substantially to overall U.S. economic growth.
THE ADJUSTMENT PROCESS
Reduction of external imbalances requires substantial macroeconomic and structural adjustments that may be difficult to achieve
rapidly without endangering the fundamental objective of maintaining economic growth with low inflation. To be successful, therefore,
the process of reducing external imbalances must be gradual. It also
must be persistent. The apparent response of financial markets to
disappointing news about external imbalances suggests that an undesirably rapid pace of adjustment could be forced if external imbalances are not steadily reduced. Moreover, the incentives to undertake
the necessary structural adjustments probably are enhanced when the
need for, and reward from, such adjustments are apparent.
Consider the necessary macroeconomic adjustment in the United
States. In the fourth quarter of 1987 the U.S. deficit in real net exports was equivalent to about 3 percent of real GNP. As a matter of
arithmetic, elimination of this deficit requires that real GNP rise
about 3 percent relative to real domestic demand, or equivalently,
that real domestic demand fall by about 3 percent relative to real
GNP. Yet, since the Korean war, there has been only one period
longer than a year and a half when annual growth of real GNP has
consistently exceeded annual growth of real domestic demand by
close to a percentage point. This period lasted just over 2 years and
it included 1980, when a sudden drop in real domestic demand
drove the economy into a sharp recession. The danger is that without
the assurance of substantial, persistent improvement in the trade balance, slow growth of real domestic demand increases the risk of recession. Prudence, therefore, suggests that several years be allowed
to achieve the large necessary reductions in the U.S. real net export
deficit.
For other countries, excessively rapid reduction of the U.S. net
export deficit also poses significant macroeconomic problems. In the
world as a whole, demand growth must equal output growth. Therefore, if slower domestic demand growth in the United States is not
offset by more rapid domestic demand growth in other countries,
world output growth would suffer, and the effects would not be limited to the United States. Slow growth or outright decline of U.S. imports means slow growth or outright decline of other countries' exports. This process could be mutually reinforcing, increasing the risk
of worldwide recession. Moreover, there appear to be practical limits
to the growth of real domestic demand that can be expected in other




123

countries. Given the objective of sustaining world output growth,
therefore, there are practical limits to the desirable rate of reduction
of external imbalances.
Because the tradable goods and services sector of the U.S. economy is roughly 40 percent of the total economy, the structural adjustments required to reduce the U.S. trade deficit are relatively larger
than the macroeconomic adjustments. To reduce the real net export
deficit by 3 percent of GNP, production of tradable goods (including
tradable services) must expand by about 7.5 percent relative to consumption of tradable goods. Except in an economic downturn, U.S.
consumption of tradable goods is unlikely to decline over a sustained
period. Indeed, the need to expand productive capacity in the tradable goods sector is likely to keep domestic demand for tradable capital goods relatively strong. Therefore, reduction of the trade deficit
in an environment of economic growth likely will require significant
expansion of domestic production of tradable goods.
In 1987 production of tradable goods probably expanded at about
a 5 percent rate (the growth rate of industrial production), and the
rate of capacity utilization increased significantly. Sustaining output
growth at a 5 percent rate probably would be feasible if productive
capacity were expanded sufficiently rapidly. However, at this rate of
output growth, it would take several years to close the gap between
production and consumption of tradable goods. In a growing economy with the unemployment rate already down to 5.7 percent, pushing adjustment of the tradable goods sector too fast could generate
undesirable cost pressures that, among other problems, could erode
the international competitiveness of U.S. producers.
For other countries whose trade positions must adjust as the U.S.
position improves, their structural adjustment problem is essentially
the opposite. Production of tradable goods must decline relative to
consumption of tradable goods. This adjustment will be easier and
less painful to achieve, especially for workers and firms in the tradable goods sector, if it occurs gradually through a shift in the relative
growth rates of tradable goods production and consumption, rather
than suddenly through an absolute decline of tradable goods production. In the United States, it should be recalled, even though adjustments in tradable goods industries often were difficult during the
period of the growing U.S. trade deficit, output of most tradable
goods industries (particularly manufactures) continued to expand in
line with the overall economy.
Moreover, outright contraction or very slow growth of tradable
goods industries in foreign countries could impair overall economic
growth there. Resources need to shift away from tradable goods and
toward nontradable goods. However, unemployment of resources in




124

the tradable goods sector means temporary income losses that may
limit spending and thereby impair domestic demand growth essential
to maintaining overall growth in the world economy. These difficulties could be magnified if investment in the tradable goods sector
drops precipitously without offsetting increases of investment in
other sectors. Thus all trading nations share a common interest in
avoiding adjustment pressures that are ultimately too strong and selfdefeating.
CONCLUSION
Macroeconomic and structural adjustments in the United States
and other countries have begun to reduce external imbalances in an
environment of sustainable noninflationary growth. That process
will continue in 1988 and beyond. Growth of real domestic demand
has slowed in the United States, and it appears likely to remain relatively slow in the period ahead. Federal deficit reduction, together
with prospective improvement in the private saving-investment balance, should improve the national saving-investment balance. Growth
of real domestic demand abroad has accelerated due to government
policies and market forces. Relative price adjustments resulting from
the substantial correction in the foreign exchange value of the dollar
already have brought, and will continue to bring, reductions in
worldwide external imbalances. These relative price adjustments have
helped to stimulate stronger internally led growth in foreign economies and to motivate necessary structural adjustments both in the
United States and abroad.
Clearly, it is important to maintain policy momentum in the macroeconomic area, as well as to continue progress in reducing structural
rigidities and barriers to adjustment, especially in economies with
high unemployment rates. Reduction of marginal tax rates, of burdensome government regulations, and of inefficient government subsidies and, when appropriate, judicious easing of monetary policy and
increased spending on worthwhile public investments can contribute
to demand and output growth without raising risks of inflation.
Elimination of restrictive work practices, excessive nonwage labor
costs, expensive job security arrangements, rigid work rules and wage
restraints, and other labor market practices that impair mobility and
discourage job creation can contribute to both growth and adjustment. On the consumption side, reform of government policies that
prevent efficient use of scarce land and removal of artificial restraints
on mortgage and consumer credit can aid growth under appropriate
circumstances.




125

Finally, maintenance of an open system of world trade is essential
to the process of reducing external imbalances in an environment of
noninflationary growth for the world economy. Specifically, the
growth-oriented method for gradually reducing external imbalances
requires stronger demand growth in foreign countries while demand
growth remains restrained in the United States. This will allow improvements in the U.S. trade balance to come primarily from an expansion of exports, rather than a sharp cut in imports. For this
method to work, foreign markets must be open to U.S. exports. The
alternative method for reducing the U.S. trade deficit—protectionism
at home and retaliatory market-closing measures abroad—is a prescription for worldwide economic stagnation. Especially now, when
U.S. industries have regained international competitiveness and export
growth appears likely to sustain economic expansion, the United
States has a particular interest in avoiding protectionism and pursuing instead its program for freer and fairer trade.




126

CHAPTER 4

Expanding Trade and Avoiding
Protectionism
TWICE IN THIS CENTURY the United States has taken the lead
in setting a new course for the world's trading system. The first time
was in 1930 with the passage of the Smoot-Hawley Act, which led to
global protectionism and contributed to the Great Depression. The
second time was after World War II with the process of trade liberalization brought about through the General Agreement on Tariffs and
Trade (GATT). The result was more rapid recovery from the destruction of war, the unprecedented expansion of world commerce,
and increased prosperity in the industrialized and developing countries.
The Smoot-Hawley Act and GATT both taught that the United
States has a large influence on the world economy, for better or
worse. Likewise, the actions taken in the coming months regarding
American trade policy have the potential to influence the course of
international trade for years to come.
Recognition of the immense benefits of trade is a fundamental
principle of American economic policy. The framers of the U.S. Constitution saw the wisdom of prohibiting all tariffs and duties on the
trade between the States. Today those trading States, together with
the States that were added later, are among the most prosperous in
the world. The same principles of trade apply to commerce between
countries.
Although recent negotiations are improving U.S. access to a substantial portion of world markets, current domestic legislative proposals threaten to close U.S. markets and reverse many of the
market-opening gains made over the past 40 years. On the positive
side are the Canada-United States Free-Trade Agreement entered
into on January 2, 1988, the United States-Mexico Framework Understanding signed on November 6, 1987, and other initiatives proposed
by the United States in the ongoing Uruguay Round negotiations of
GATT. On the negative side are proposed changes to domestic trade
law contained in the Omnibus Trade and Competitiveness Act of
1987, the effects of which are potentially dangerous.




127

EXPANDING TRADE OPPORTUNITIES ABROAD
Both bilateral and multilateral initiatives are vital for expanding
trade opportunities. In the past year bilateral agreements were successfully completed, and substantial progress was made at the multilateral GATT negotiations. During the coming year the multilateral
GATT negotiations will become increasingly important.
CANADA-UNITED STATES FREE-TRADE AGREEMENT

In many respects a free-trade agreement between the United States
and Canada is a natural consequence of longstanding friendship,
common economic interests, and geographic proximity. Nevertheless,
there is a history of numerous unsuccessful attempts over more than
a century to reach a free-trade agreement. That an agreement was
reached in 1987 stands as a major achievement. The two nations had
to overcome special interests, internal pressures for the status quo,
fears about loss of identity, and protectionism in order to craft a final
document.
The outcome represents a victory for both countries. For the first
time, the agreement firmly anchors free trade as the fundamental
principle governing commerce between the two countries. It now remains for the U.S. Congress and the Canadian government to approve the understanding.
Canada and the United States are each other's largest trading partner. Measured in terms of national product, they will make up the
largest free-trade area in the world. Chart 4-1 shows the relative importance of Canadian trade to the United States. In terms of bilateral
trade, Canada represents 19 percent of all U.S. trade. As the chart
shows, trade with Mexico represents 5 percent of U.S. trade, and
trade with all other countries in the Western Hemisphere amounts to
7.5 percent.
History

The United States and Canada share common origins as former
British colonies. In spite of different political histories, the natural
economic proclivities of the two nations have led them to greater cooperation and economic interdependence as the years have passed.
The earliest attempt at a free-trade agreement dates back over 140
years. Canada initiated discussions with the United States for bilateral
free trade in the middle and late 1840s, in response to growing separation from the British market brought about by Britain's unilateral
movement toward free trade and the repeal of the Corn Laws. In
1854, under the impetus of the U.S. desire for fishing rights on the
east coast, a reciprocity treaty was signed covering free trade in natural products. The treaty was abrogated in 1866 by the United States,




128

Chart 4-1

Shares of U.S. and Canadian Merchandise Trade in 1986

Shares of U.S. Trade

Shares of Canadian Trade

Japan

Canada
18.9%

5.6%
Rest of World
20.6%
Other
Western
Hemisphere
2.0%

Other
Western
Hemisphere

Mexico
0.7%

7.5%
Rest of World
50.1%

United States
71.1%

Note.—Shares are based on the sum of bilateral exports and imports in dollars.
Source: Council of Economic Advisers, based on International Monetary Fund data.

due in some measure to British support for the South in the American Civil War and the ties between Britain and Canada.
In 1867 the Canadian provinces joined together in confederation.
Seven years later the United States and Canada negotiated a new reciprocity treaty which failed to be confirmed by the U.S. Senate. Since
that time sentiment in both countries has alternated on the notion of
bilateral free trade, and the free-trade issue has been revisited frequently, including a half dozen times in this century.
Over the years the tariffs of both countries have been used to provide differing amounts of protection. In 1850 the average U.S. tariff
level was 27 percent, and Canadian tariffs were 16 percent. U.S. tariffs rose to a high of 59 percent in 1932 following passage of the
Smoot-Hawley Act, while average Canadian tariffs reached 24 percent
in 1929. After World War II both countries* tariffs were reduced.
The post-Tokyo Round average U.S. tariff was 4 percent, and the average Canadian rate was 7 percent, although tariffs on selected products were substantially higher.
Recognizing the natural economic benefits to both countries, the
Canadian Royal Commission on the Economic Union and Develop-




129

ment Prospects for Canada concluded in August 1985 that it was in
Canada's interest "to engage the United States more directly in bilateral free-trade negotiations." In the United States the Trade Agreements Act of 1979 already had instructed the President to study "the
desirability of entering into trade agreements with countries in the
northern portion of the western hemisphere" for the mutual expansion of market opportunities. On September 26, 1985, the Canadian
Prime Minister requested that the United States and Canada consider
the potential for negotiating a comprehensive free-trade agreement.
The request was accepted, and the President notified the Congress
on December 10, 1985, of his intent to enter into bilateral negotiations, which began formally on June 17, 1986.
Benefits of a Free-Trade Area

Three-fourths of the trade between the United States and Canada
is already duty free. Moving to a free-trade area expands the range of
duty-free trade to cover all goods.
The reasons for creating a free-trade area are essentially the same
as the reasons for encouraging free trade generally. Moving to an
open trading regime brings gains associated with the freer flow of
goods and better allocation of resources to productive uses. Allowing
the Nation's households and firms to trade freely with foreigners
means that domestic sellers can add the net demand of foreigners to
domestic demand, thus expanding their market. Similarly, buyers can
add the net foreign supply to domestic supply, expanding the total
supply and lowering the prices of goods they purchase. Because, on
average, prices fall for the products for which the country is a net
purchaser and rise for the products for which the country is a net
seller (a terms-of-trade improvement), the cumulative effect of freer
trade is to increase welfare in both countries. Gains by one do not
imply losses to the other.
Another benefit from enlargement of the market is greater opportunity for economies of scale in production, marketing, and distribution. Many products can be produced and sold at lower cost per unit
if a larger volume is manufactured. A larger volume generally means
lower prices to the consumer and a greater variety of products which
can be profitably offered for sale in the marketplace. In addition, the
incentives to invest in research and development in order to enhance
technical knowledge and create new products are greater in a larger
market. Again, these benefits can accrue to both countries at the
same time.
Many of the effects of the Free-Trade Agreement, such as enhanced growth and the momentum given to ongoing negotiations to
open markets worldwide, are difficult to quantify. Benefits in the
form of lower prices to consumers (reduced cost of living) and in-




130

creased profits to firms, however, can be modeled and quantified.
Studies of the effects of the Free-Trade Agreement estimate that
these economic gains to the United States are on the order of $1.1
billion to $2.9 billion annually. Most studies show that gains to
Canada are of a similar absolute size. This stream of benefits is like
an annuity that will grow over time with economic growth in the two
countries. The present value of these gains ranges between $30 billion and $90 billion.
Because Canada is the smaller country, however, the effect of the
free-trade area on returns-to-scale gains is more important for
Canada. Studies show that these harder-to-quantify effects have the
potential to increase Canadian gains severalfold.
If there are such obvious benefits to freer trade, then why is there
opposition to it? One reason is the claim that removing trade barriers
eliminates jobs or sends them abroad. But this argument is misleading because overall employment in an economy is determined by internal conditions and macroeconomic policy, not by the existence of
trade barriers or the level of trade flows. The United States created
nearly 15 million payroll jobs over the course of the current economic expansion, a period of U.S. trade deficits and relatively open U.S.
markets. During the same period the European Community (EC) created virtually no net new jobs, even though they experienced trade
surpluses. The same level of employment can be obtained in the total
absence of foreign trade as when trade is completely free. But without foreign trade a nation will be worse off economically because, in
effect, it will throw away part of its productive capability—the ability
to convert surplus goods into other goods through foreign trade.
Free trade leads to industrial expansion in those industries in
which a country has a comparative advantage. To expand in one
sector, however, productive resources, including labor, must shift
from other sectors. Thus employment may decline in some sectors,
and there may be temporary unemployment during the transition. To
halt such economic adjustments in order to prevent the loss of jobs
in a particular sector, however, is to lose the benefits of international
trade. (For a discussion of the Administration's proposal to aid the
transition of workers to new employment, see the summary of the
Worker Readjustment Program in Chapter 5.)
Elements of the Agreement

Visible Barriers. If both countries approve the agreement, beginning
on January 1, 1989, all bilateral tariffs will be eliminated either immediately or in five or ten equal annual stages, depending on the
product. Table 4-1 displays the average tariff rates by sector for each
country as they apply to the other. In the clothing and footwear sectors, for example, Canadian tariffs on U.S. products are over 20 per-




131

cent. Other sectors in both countries are protected by tariffs ranging
from 12 percent down to nearly zero. Because each country retains
its own tariffs on third-country trade, the agreement provides for
rules of origin that require articles imported into one country to be
sufficiently processed in the importing country before they can be exported duty free to the other. Thus goods cannot be imported into
the country with the lower tariff and then exported duty free to the
other country.
TABLE 4-1 .—Canadian and U.S. Bilateral Tariffs by Sector
[Percent]

Canada
Share
subject to
tariffs

Sector

Agricultural products

United States
Average
tariff 1

Share
subject to
tariffs

Averai
tariff

9.0

4.1

Forest products

10.6

3.7

Textiles, apparel, and footwear..

20.9

10.4

Energy and chemicals

11.7

1.8

Minerals and metals

9.2

3.2

Machinery and equipment
Miscellaneous manufactures

9.2

6.1

10.4

ALL SECTORS

4.5

11.8

,

3.3

1

Canadian averages are weighted by imports from the United States and vice versa. Average tariffs are calculated using only
those products subject to tariffs.
Source: U.S. International Trade Commission estimates based on 1985 trade data.

The agreement also eliminates almost all quantitative restrictions
on trade between the United States and Canada. In energy, quantitative restrictions on imports or exports are prohibited, with exceptions
for national security considerations, prevention of the exhaustion of a
finite energy resource, and a special exception placing an upper
bound on the sales of Alaskan oil to Canada. If restrictions are imposed to prevent resource exhaustion, access must be granted to the
other party sufficient to maintain a prescribed proportion of their
purchases relative to total supply.
Canada is the largest supplier of energy to the United States, and
it is also the largest importer of U.S. coal. Two-way energy trade has
amounted to about $10 billion annually and is likely to increase as a
result of the Free-Trade Agreement.
Canadians sometimes have argued that it is harmful for Canada to
sell its energy resources to foreign countries. It is hard to support
such a position when the move to free trade in energy implies higher
prices for Canadian sellers, and when contracts to sell are freely entered into by both buyer and seller. From the Canadian point of
view, the Free-Trade Agreement represents an assured market in the




132

United States. From the U.S. perspective, a unified market reduces
uncertainties about future energy supply.
In agriculture, several significant quantitative restrictions will be
liberalized, in addition to the elimination of tariffs and export subsidies. The United States has a comparative advantage in most fruit
and vegetable trade. Seasonal quantitative restrictions remain in
place, but they are relaxed under the agreement. Import restrictions
on poultry products also will be lessened. Of general significance to
agriculture, trade in fertilizers and other agricultural inputs will be
liberalized.
Invisible Barriers. The past two decades have seen growth in the less
visible, but economically damaging, nontariff and rule-based trade
barriers. Invisible barriers to trade can take virtually an unlimited
number of forms. Examples include discriminatory access to distribution systems for foreign goods relative to domestic goods, the application of standards and codes that restrict foreign goods, rules about
government purchases (e.g., the "Buy American'* provisions of U.S.
law), failure to provide intellectual property protection for foreign
processes and goods, and various procedural restrictions on foreign
investment.
The Canada-United States Free-Trade Agreement makes progress
in reducing a number of these barriers. For example, both countries
now have agreed to provide national treatment to the investors of the
other, subject to grandfathering existing regulations. Direct U.S. and
Canadian investment in each other's economy currently totals over
$68 billion. The free movement of capital across geographic boundaries allows resources to move to the location of their greatest usefulness and profitability, making the opportunities of the combined
market available to the resources of both regions. After 3 years
Canada will screen direct acquisitions by U.S. investors only when
the Canadian company being sold has assets of $150 million or more
in constant Canadian dollars. Canadian screening of indirect acquisitions (where a firm's ownership changes when ownership of its
parent firm outside the country changes) by U.S. investors will be
phased out completely. Other provisions eliminate certain performance requirements imposed by one party on investors of the other.
Another section of the agreement ensures ease of border crossing by
individuals traveling for business purposes.
The Canada-United States Free-Trade Agreement breaks new
ground as the first bilateral agreement involving the United States
which governs the entire financial sector. The agreement frees the
capital, market share, and growth restrictions placed on U.S. banks in
Canada (currently at least 15 U.S. institutions are affected), and it
makes it possible for U.S. insurance firms to establish or acquire




133

closely held commercial banks and federally regulated insurance and
trust companies. Canadian financial institutions will continue to enjoy
the open access already received in the United States. In addition,
they are granted certain guarantees giving security of access to the
U.S. financial sector.
The General Agreement on Tariffs and Trade is supplemented by
an agreement on government procurement describing rules for foreign participation in domestic government procurement. After February 14, 1988, provisions of the code will apply to purchases by covered agencies of signatory governments of 130,000 special drawing
rights (in 1987 $167,000) or greater in value. The previous cutoff
was 150,000 special drawing rights. Under the Free-Trade Agreement that threshold is reduced for U.S.-Canadian procurement to
$25,000. Previously, approximately three-fifths of Canadian government procurement was not covered by the code due to the high
threshold. The procurement market affected by this agreement is estimated to be on the order of $500 million in Canada and almost $3
billion in the United States. Measures which strengthen current code
disciplines and negotiations to improve the openness of the government procurement process are provided for in the agreement.
Both countries have agreed to refrain from using domestic technical standards as a barrier to trade. For example, they have agreed not
to use in-country requirements for accreditation of testing facilities
and certification bodies, and to recognize each other's systems for
laboratory accreditation. Moreover, both countries will work to harmonize Federal standards when appropriate and to consult about potential problems before new standards are implemented.
Both Canada and the United States already have similar and effective laws for protecting intellectual property. However, the agreement resolves a number of problems in this area. In particular,
Canada will extend copyright protection to the retransmission of
copyrighted programming. Both countries have agreed to work in the
Uruguay Round negotiations to enhance intellectual property rights
protection worldwide.
The Canada-United States Free-Trade Agreement is the first major
agreement to apply binding rules to trade in the services sector.
Scores of service categories are covered, including telecommunications network-based enhanced services, computer services, professional services (accountants, architects, engineers, scientists, management consultants), tourism, insurance, construction engineering, and
retail and wholesale trade. The basic principles underlying the agreement for services are national treatment (equivalent treatment of foreign and domestic nationals), access to domestic distribution systems,




134

establishment of a commercial presence, transparency of rules and
procedures, and dispute settlement arrangements.
Currently there are relatively few barriers to U.S.-Canadian trade
in services, and bilateral trade is already open in most areas. The
Free-Trade Agreement insures that the environment will remain
open, governed by the principles enunciated in the agreement.
Other Provisions, The machinery and transport equipment sector,
which includes road vehicles, accounted for $55 billion of bilateral
trade in 1986, over 45 percent of bilateral trade between Canada and
the United States. Under the Automotive Products Agreement of
1965 between Canada and the United States, a large part of trade in
automotive products is already duty free. Under the Free-Trade
Agreement, tariffs on all original equipment, tires, and parts will be
eliminated; the Canadian embargo on used-car trade will be phased
out in 5 years; and duty waivers on imports of automobile products
linked to exports of automobiles to the other party will be stopped.
At least one-half of the assembly costs and production materials in
automobiles freely traded across the border must originate in the exporting country. To meet this requirement, averaging over a 12month period on the relevant vehicle class is permitted. Recognizing
the fast-changing nature of the automobile industry, the agreement
mandates the establishment of a select panel to assess the state of the
industry and make further recommendations for later consideration.
The concern over cultural identity, primarily by the Canadians, led
the negotiators to exempt cultural industries from the provisions of
the Free-Trade Agreement. Cultural industries include the publication of books, magazines, periodicals, or newspapers; the production
and sale of films and video and audio recordings; the sale of music;
and communication media for the general public (radio, television,
and cable television). However, if one party takes actions which normally would have been prohibited, the other party is permitted to
take measures of an equivalent commercial effect. Actions inconsistent with free trade, therefore, should be taken only rarely and for
strongly held reasons.
The Institutional Features. As with any agreement between two sovereign parties, arrangements must be made to resolve misunderstandings and disputes that arise after implementation. Devising a dispute
resolution mechanism suitable to both countries was a major difficulty in reaching a final agreement. The solution chosen to resolve disputes successfully and ingeniously blends the binational settlement
process with the separate laws of each nation.
The agreement establishes the Canadian-United States Trade
Commission to supervise implementation of the agreement and resolve disputes. The Commission, composed of members from both




135

countries and led by Cabinet-level representatives, will meet at least
once a year in regular sessions. Either country may request ad hoc
consultations; if consultations are unsuccessful in resolving a dispute,
either country may request a meeting of the Commission. If the
Commission is unsuccessful in resolving a dispute promptly, it may
establish a panel consisting of two members chosen by each country
and a fifth member chosen by both countries from a predetermined
roster. The recommendation of the panel would form the basis for
the Commission's final determination, normally resulting in the nonimplementation or removal of a measure. If a country fails to implement the findings of a panel, then the other country has the right to
suspend equivalent benefits.
The safeguards provisions, which address problems faced by industries harmed by increased fair trade, are separated into two parts.
One part regulates safeguards for third-country trade. The United
States and Canada are excluded from any actions taken by the other
under Article XIX (the safeguards article) of GATT, unless goods of
the other party contribute importantly to and are a substantial cause
of the injury. If the other party is included in the action, the remedy
cannot cut back imports from the other party to less than the level of
imports over the base period specified by the agreement, with allowance for growth.
The other part addresses agreement-related injuries where it can
be established that duty reductions resulting from the agreement
caused the injury. In this case, the remedy cannot exceed the lesser
of the most-favored-nation rate of duty in effect at that time, or preagreement rates of duty. Furthermore, the remedy can remain in
effect for only 3 years.
In cases involving antidumping and countervailing duty law, the
agreement sets up a separate binational dispute settlement mechanism. A panel is made up of two members chosen by each country
and a fifth member chosen by both countries from a predetermined
roster. The panel would replace judicial review by both the United
States and Canada. Each country would continue to apply its own domestic antidumping and countervailing duty laws, but, upon request,
the binational panel would review the administrative record of a disputed decision. After reviewing the antidumping or countervailing
duty order for its consistency with the relevant law (statutes and judicial precedent) of the country applying the order, the panel has binding authority to sustain or remand the decision back to the relevant
investigating authority.
No future changes to antidumping or countervailing duty law
would apply to the other party, unless it is specifically stated to apply
to the other country in the legislation, the changes are fully consist-




136

ent with the GATT antidumping code and subsidies code, the other
party is notified, and prior negotiations are entered into upon request. If a panel requires modification of the changes to the statutes
because they are inconsistent with GATT, or because they overturn a
prior decision of a binational dispute settlement panel, compulsory
negotiations are mandated for 90 days. If a solution is not found, the
other party may enact comparable legislation, take equivalent executive action, or terminate the agreement with 60 days' notice.
Viewed from the perspectives of economics, history, and international relations, the Canada-United States Free-Trade Agreement
represents a remarkable achievement. In its implications for the
future of U.S.-Canadian trade, the benefits which it secures for both
countries, and the example which it sets for trade liberalization
worldwide, it is truly an historic document.
THE UNITED STATES-MEXICO FRAMEWORK UNDERSTANDING

On November 6, 1987, the United States and Mexico signed an understanding concerning a framework of principles and procedures for
consultations regarding trade and investment relations between the
two countries. A bilateral consultative mechanism was set up to
review trade and investment issues, resolve disputes, and negotiate
the removal of trade barriers. The agreed upon principles and procedures supplement those in GATT.
Mexico is the third largest purchaser of U.S. goods, behind Canada
and Japan. In 1986 U.S. exports to Mexico were $12.4 billion, while
U.S. imports from Mexico were $17.6 billion, of which some $3.4 billion was crude petroleum. In trade terms the United States is more
than 10 times as large as Mexico's second most important trading
partner (Japan). The United States accounts for a full two-thirds of
Mexico's total trade with the world.
In spite of the importance of trade between the United States and
Mexico, the two countries have been without a formal mechanism to
govern their commercial relations. Although the United States and
Mexico generally grant one another most-favored-nation treatment
and other benefits similar to those found in GATT, there was no
formal channel to pursue the complaints that inevitably arise with
such a large volume of trade. Agreeing to overcome this deficiency,
the Presidents of the United States and Mexico decided in August
1986 to pursue the idea of a bilateral framework understanding.
Formal discussions began in February 1987.
Under the bilateral mechanism, either party may request consultations at any time, to be held within 30 days of the request. Annual
consultations will be held to review the status of the two countries'
trade and investment relationship. The United States and Mexico




137

also agreed to initiate discussions promptly in such areas as investment, intellectual property, electronics, textiles, agriculture, steel,
and services sector information exchange.
The United States-Mexico Framework Understanding reflects the
size and importance of the two countries' bilateral economic relationship. This step adds further stability to the relationship and signals
the mutual commitment to resolve trade and investment problems
expeditiously.
GENERAL AGREEMENT ON TARIFFS AND TRADE

In the past 35 years both world production and international trade
have grown rapidly. Real global output rose at an average annual
rate of 4.5 percent, while the real volume of international trade expanded by 6.5 percent per year. Through more efficient use of global
resources, increased international trade leads to higher global living
standards. GATT is partly responsible for the flowering of world
trade.
GATT is a multilateral agreement that defines the responsibilities
and operating rules of international trade that have been agreed
upon by 95 signatory governments (contracting parties). As its preamble states, GATT's goal is to raise living standards through "reciprocal and mutually advantageous arrangements directed to the substantial reduction of tariffs and other barriers to trade and to the
elimination of discriminatory treatment in international commerce.*'
Four basic principles underlie GATT: (1) Member countries should
work to lower trade barriers in general, and to eliminate the use of
quotas in particular; (2) any barrier to trade should be applied on a
nondiscriminatory basis to all member countries (the principle of
most-favored-nation treatment); (3) once a tariff concession is made,
it cannot later be rescinded without extending compensation to affected trade partners; and (4) trade conflicts should be settled by
consultation.
The Uruguay Round of multilateral trade negotiations, officially
launched at a Ministerial Meeting of GATT contracting parties in
Punta del Este, Uruguay, in September 1986 is the eighth GATTsponsored negotiating round since World War II and the first since
the 1973-79 Tokyo Round. While an attempt was made to address
nontariff barriers in earlier rounds, real progress was not made until
the Tokyo Round, which resulted in nine agreements or codes pertaining to issues such as customs valuation, import licensing, technical standards for products, subsidies and countervailing duties, government procurement, antidumping duties, and rules governing trade
in civilian aircraft.




138

This Administration played the principal role in developing a
broad consensus among GATT members to launch the Uruguay
Round. The centerpiece of the U.S. approach to the Uruguay Round
is a bold effort to bring GATT discipline to agricultural subsidies
and agricultural trade barriers. Also, due in large part to the efforts
of U.S. negotiators, barriers to trade in services, restrictions on foreign investment, and the protection of intellectual property rights
(beyond the limited area of counterfeiting) are on the negotiating
table for the first time. In pressing for the launching of GATT's most
ambitious multilateral trade negotiation ever, the United States is
seeking to revitalize and strengthen an institution which has served it
and the rest of the world well.
Functioning of the GA TT System

The Punta del Este Ministerial Declaration endorsed a threepronged approach to improve the functioning of the GATT system:
enhanced surveillance (on a country basis as well as on a subject
basis) of the contracting parties' trade policies; greater ministerial involvement; and closer links between GATT, the International Monetary Fund (IMF), and the World Bank. The Administration believes
that these are among the most important reforms to GATT contemplated in the Uruguay Round. Besides fostering transparency and
predictability, periodic individual country reviews under the surveillance mechanism would encourage trade policies that benefit the
functioning of the international trading system in conformity with
GATT intents and precedents. Increased ministerial involvement is
expected to raise countries' political accountability within the GATT
system and reinforce the free-trade principles on which it was founded. Improving GATT's policy management by linking its activities
more closely to those of the IMF and the World Bank would ensure
that their activities are complementary in improving the outlook for
continued trade liberalization among GATT member states.
Dispute Settlement

Another institutional issue aimed at improving the effectiveness of
the GATT system is reform of the dispute settlement mechanism of
the General Agreement. There is widespread recognition that the existing consensual dispute settlement procedures do not always foster
expeditious resolution of trade disputes. The United States has suggested possible improvements which might include an enhanced
GATT mediation role, process timetables, improved panel procedures, avenues for recourse should panel reports be blocked, and the
possibility of binding arbitration in certain instances.




139

Intellectual Property Rights

Reward for creativity and innovation are the principal driving
forces for technological change which, in turn, is a great source of
dynamism for world trade. But because of inadequate laws, or laws
inadequately enforced, patent, trademark, and copyright infringement
has grown worldwide. Legitimate firms have reduced incentives to
invest in research and development when some of the returns will be
pirated. Intellectual property thieves do not devote the large sums of
capital needed to develop a new product. Hence, they are able to undersell legitimate competitors. And since the pirates only copy
proven successes, they need never absorb the cost of failures. The
U.S. International Trade Commission has estimated that lost sales
due to infringement of intellectual property are up to $20 billion annually.
Under the auspices of GATT, the Administration seeks a comprehensive intellectual property agreement to establish and enforce intellectual property rights. The U.S. negotiating team has proposed a
consultation and dispute settlement mechanism combined with
strong rules governing domestic and border enforcement. Such an
agreement covering inter- and intracountry measures would increase
legitimate trade by raising standards of protection and the obligation
to enforce them.
Services

Despite their large and growing role in world trade, now accounting for approximately 20 percent of the total, services have never
been a significant area of negotiation in GATT before the Uruguay
Round. Difficult new issues arise in services trade that do not arise in
goods trade. For example, trade in services often requires local production of the service and, therefore, involves sensitive right-of-establishment and investment issues. The GATT concept of national
treatment is based on the notion that a good receives the same treatment as domestic products once it has crossed the border into the
importing country. The concept does not immediately carry over to
services trade, because it must be applied to service providers as well
as to the service itself. The issue of defining the proper "border,"
and when it is crossed, is different.
This Administration seeks a GATT services agreement which will
provide a framework for future negotiations. The United States has
proposed an umbrella agreement stating general trade liberalizing
principles and second-level agreements or protocols for individual
sectors. U.S. goals for services trade include greater transparency of
domestic laws; nondiscrimination and national treatment for foreignprovided services; discipline on state-sanctioned monopolies; antisub-




140

sidy provisions; and consultation and dispute settlement mechanisms
for trade in services. Since liberalization of trade in services is expected to continue for many years, the framework developed in the
Uruguay Round must incorporate the flexibility needed to allow for
growth and consideration of new issues.
Investment

Direct investment encourages trade in goods and services, boosts
development, and contributes to the efficient allocation of resources
throughout the world. With a free market in foreign investment, capital is allocated to those projects with the highest rates of return.
The United States is an example of the benefits of foreign direct
investment, both as a host country and as an investor. In the 19th
century the United States became a leading economic power with the
help of foreign capital. After World War II, the United States became
a leading provider of foreign direct investment in the world. More
recently, the United States again has been attracting increased capital
flows from abroad.
Unfortunately, many countries have attempted to stifle or distort
the free flow of foreign investment, an action that also affects trade
flows. Distortions include domestic content requirements, exchange
controls, licensing requirements, technology transfer requirements,
and requirements for a minimum level of exports by the foreign corporation operating in the host country. The U.S. goal in these negotiations is to identify and systematically address investment restrictions which have a trade-distorting effect and then to bring those
practices within the framework of GATT.
Agriculture in the Uruguay Round

The United States has proposed the elimination of all policies that
distort world agricultural production, prices, and trade. Since domestic farm programs and trade policy are fundamentally bound together, free trade in agriculture requires reform of domestic agricultural
policies as well as border measures such as tariffs and quotas.
World Agriculture in Disarray. The current round of multinational
trade negotiations has begun at a time of stress in world agriculture.
Recently, both world market prices and trade volumes have been low,
and farm programs worldwide have become more costly and distortionary.
Chart 4-2 shows the changes in the real value of U.S. agricultural
exports and the U.S. share of world exports. World and U.S. agricultural exports both expanded rapidly in the 1970s, reached a peak in
1980, and have fallen since then. The U.S. share of world agricultural
trade rose from 14 percent in 1972 to over 18 percent in 1981. Agricultural prices rose dramatically during the 1970s, increasing nominal




141

exports sixfold while the real value of exports doubled. Then in the
1980s U.S. agricultural export prices and quantities fell for most
commodities. In 1987 the quantities, values, and market shares for
U.S. agricultural exports rose and prospects are good for the rest of
the decade.
Chart 4-2

U.S. Agricultural Exports

Billions of 1982 dollars
50

20

~

Share of World
Agricultural Exports
(right scale)

20

— 10

10

1970

1980

1975

1985

Note.— U.S. value for 1987 estimated; world value not available.
Sources: Department of Agriculture, Food and Agricultural Organization, and Council of Economic
Advisers.

World farm production, prices, and trade have been governed by
numerous distortionary agricultural programs that frequently work at
cross purposes. Many countries use a variety of policy measures that
subsidize production or raise prices to consumers. These measures
include tariffs, import quotas, variable import levies, export subsidies, price supports, direct government payments based on output
levels, paid land diversions, production or input quotas, and subsidies for storage and inputs such as fertilizer, credit, insurance, fuel,
and transportation.
One summary indicator of farm program effects, the producer subsidy equivalent (PSE), measures the loss of farm income that would
result from the removal of a given set of policies (often reported as a
percent of farm revenues). An analogous measure, the consumer subsidy equivalent (CSE), measures the total policy contribution to costs




142

of farm output, often reported as a percent of expenditures. Table 42 shows average PSE and CSE measures for a variety of countries.
TABLE 4-2. —Agricultural Subsidies for Producers and Consumers, Selected Countries, 1979-86
[Percent of value1]
Country
Australia

Producers
1982

1979

2

Consumers
1986

7
4

13

1979

1986
<3)

11

38

33

41

-22

Japan..

68

67

79

-43

United States 5 .

11

15

Taiwan
South Korea

European Community (EC-10)

1982

30

-32

-17

23

25

-29

58

52

-65

34

27

63

40

-27

India

-10

60
-89

-47

34

15

Nigeria6

-43

-11

12

3

1

Producer figures are subsidy equivalents as percent of farm sales value (PSEs); consumer figures are percents of value at
first sate after the farm gate (CSEs). For dairy subsidies, sales value of primary dairy products is used. For Taiwan, Korea,
Nigeria, and India, consumer subsidies are percents of consumer values at wholesale or retail levels. Positive figures indicate net
subsidy; negative figures indicate that policies provide a net tax relative to no such policies. Commodity coverage varies, but for
each country major grains, oilseeds, sugar, and livestock products are included, except as noted for Nigeria.
2
Estimates do not include state policies, which would raise PSEs.
3
Not available.
4
Estimates do not include individual country policies, which would raise PSEs and lower CSEs. For 1979, data are for EC-9.
5
State policies are minor and are not included, but general Federal subsidies such as for farm credit are included.
6
Commodity coverage is limited to wheat, corn, rice, sugar, cotton, and cocoa.
Sources: Department of Agriculture (Economic Research Service), Organization for Economic Cooperation and Development, and
Council of Economic Advisers.

In many developing countries, where farmers are a large but not
particularly influential segment of the economy, producers are taxed
and consumers subsidized for many agricultural goods. Thus PSEs
are negative and CSEs are positive for most developing countries
over a wide range of commodities. (See, for example, the average
PSE and CSE for Nigeria and India.)
During the last decade policy distortions have been slowly reduced
in developing countries, especially in Asia and Latin America. At the
urging of the United States, the International Monetary Fund, and
the World Bank, farm prices in developing countries have been allowed to rise so that they more nearly reflect world market levels.
In most wealthy nations, where agriculture is a small part of the
economy and generally has been heavily subsidized, farm programs
have become increasingly distortionary, leading to higher farm prices
relative to world prices, more restrictive import barriers, and increased government subsidies. Crops such as sugar or wheat are
grown at high cost in nations using price supports and import barriers, and then surpluses are exported to the world market with the
aid of large subsidies. World prices of many commodities have been
depressed by these policies, imposing a severe economic burden on
export-dependent countries that would have a comparative advantage
in the absence of these distortions.




143

In the United States, farm programs have become particularly
costly and complex. Table 4-2 shows that overall PSEs in the United
States doubled in the 4 years from 1982 to 1986. The 1981 Agriculture and Food Act mandated high price supports at a time when
world market prices were falling. In 1983 farmers were paid to cut
back output; surpluses were reduced temporarily, but U.S. participation in world markets also declined. The Food Security Act of 1985
reduced price supports, increased the removal of land and other resources from production, expanded the use of Federal Government
programs to aid exports, and maintained target prices at up to twice
the market price or more. In 1985 the United States also began the
Export Enhancement Program, to counter the subsidies of other exporters (mainly the EC). As a result of these policies, Federal outlays
for commodity programs reached $26 billion in 1986, and net farm
incomes have been high, despite low market prices.
Agricultural production and consumption also is distorted throughout Europe. The Nordic countries, Switzerland, Austria, and the EC
all maintain high producer and consumer prices and restrict imports.
During the 1980s EC surpluses have been sold on world markets
with the help of export subsidies. Table 4-2 shows that the average
PSE for the EC is above 40 percent, and EC buyers pay over 30 percent more because of these farm programs. The Common Agricultural Policy cost taxpayers and consumers of the EC about $60 billion in
1986.
Japan has long been a net agricultural importer, but it distorts
world agricultural trade by holding its domestic prices high and limiting access to its markets. For wheat and rice, Japan now has a support price greater than five times the world market price. Japanese
producer and consumer prices for many agricultural goods are often
twice the world market price. Japanese consumers spend about 20
percent of their income for food, compared to less than 15 percent
spent by consumers in the United States.
Many countries continued to pursue policies that increased agricultural trade distortions during a period of slowly liberalizing world
trade partly because, at the urging of the United States over 30 years
ago, GATT prohibitions on import quotas and export subsidies were
not applied to agriculture. During the GATT negotiations held over
the past 30 years, few important agreements have been reached for
liberalizing trade in agricultural commodities.
The most serious distortions and barriers related to international
agricultural trade are caused by domestic programs in the industrialized countries that transfer income from consumers and taxpayers to
owners of agricultural resources. Because these programs have been
considered part of domestic policy, rather than international trade




144

policy, it has been particularly difficult to include them in international negotiations.
The U.S. GATT Proposal in Agriculture. In July 1987 the United States

put forward a GATT proposal on agriculture consisting of three
major parts: (1) an elimination, gradually over 10 years, of all subsidies that distort agricultural trade either directly or indirectly; (2) an
elimination, gradually over 10 years, of all barriers to agricultural imports; and (3) international harmonizing of health and sanitation regulations so that differences cannot be used as indirect trade barriers.
The U.S. proposal would not prohibit GATT contracting parties
from transferring income to agricultural groups. Nor would it restrict
bona fide foreign aid or domestic food assistance. Only those programs that have a direct or indirect effect on international trade, including output subsidies, would be restricted.
Reactions to the U.S. proposal have been encouraging. The October and December meetings in Geneva of the negotiating group on
agriculture included additional formal proposals. The proposals by
both Canada and the Cairns Group (an informal organization of selfproclaimed "nonsubsidizing" nations that includes major exporters
from developed and developing nations) were consistent with the
U.S. initiative. These proposals sent a clear signal that Canada and
other Cairns Group members would be working together with the
United States in this GATT round.
The EC and Japan have been expected to resist efforts to liberalize
agricultural trade. However, at the October GATT meeting the EC
endorsed multilateral reductions of subsidies and the separation of
income support from production. As was expected, the EC also suggested a number of short-term measures involving supply controls
and market sharing that would run counter to a move to freer trade.
Their proposal as a whole, however, leaves the negotiations on track.
Formal GATT proposals from the Nordic countries, Japan, and
some other importers were made available in December. The Japanese agreed that subsidies generally should be reduced, but they
have emphasized the maintenance of some of the current array of
import barriers. Japan and some other countries have argued that,
since they are already major importers of farm goods, their production subsidies and import barriers are not a significant problem.
However, they undoubtedly would import much more in the absence
of barriers. The Japanese recognize that they have much to gain from
the Uruguay Round because of Japan's position as a major exporter
of manufactured goods. Domestic political pressures in Japan in support of agriculture are strong, but international and domestic pressures to join in the move toward free trade are also considerable.




145

Consequences of Liberalization. Because liberalization offers very significant potential benefits, organizations such as the World Bank, the
Organization for Economic Cooperation and Development (OECD),
and the U.S. Department of Agriculture have studied the likely pattern of prices, production, and trade flows that would follow as a
consequence of world policy reform. A variety of studies have used
different methodologies, different underlying assumptions, different
base periods for comparison, and somewhat different policy scenarios. Given these differences, the conclusions are remarkably robust.
Removing agricultural barriers and ending subsidies is projected to
foster a major expansion in international trade. Compared to what
agricultural trade would likely be in the mid-1990s without reforms,
world wheat exports are projected to rise somewhat, and coarse grain
and rice exports are projected to expand substantially. In red meats
and dairy products, international trade is projected to more than
double. East Asia, Europe, and other restricted markets are expected
to experience major growth in imports. The United States is expected to profit from a major expansion in exports of several commodities such as tobacco, coarse grain, and meats. U.S. coarse grain sales
also would expand in the domestic market because of the expansion
of the U.S. livestock industry, which in turn would be free to sell
meat directly to currently restricted import markets.
Export prices under free trade are projected to be slightly higher
for coarse grains and poultry, in the range of 10 to 30 percent higher
for wheat, rice, and sugar, and up to 50 percent higher, or more, for
beef and dairy products. Prices paid to U.S. producers of program
crops are projected to be higher under free trade than current world
prices, but lower than current target prices (or support prices in the
case of sugar and dairy products).
Removing trade barriers also would reduce substantially the instability of world commodity prices, a factor now used as a rationale for
many farm programs. Because consumers and producers in many
countries now are insulated from world markets, weather and yield
shocks are not dampened and absorbed through supply and demand
responses in the full world market. Free trade is projected to reduce
world price variability by 20 to 80 percent for major farm commodities. Large reductions in price variability are projected for beef,
wheat, and dairy products, and smaller changes are expected for
coarse grains and sugar.
Potential world welfare gains from free trade are substantial. A variety of estimates for large but limited groups of countries and commodities range from $40 billion to $70 billion per year. Trade liberalization that included all industrialized and developing countries and
all major crop and livestock markets probably would increase world




146

well-being by significantly more. One careful study has found that,
compared to projections without reform, U.S. farmers would gain
from multilateral liberalization, and, compared to a potential unilateral
reduction in subsidies, their gains would be substantial. Farmers in
the developing countries clearly would gain, although their urban
consumers would lose. Consumers in Europe, East Asia, and other
restricted markets also would benefit. They would enjoy lower food
and fiber costs, because they would be allowed to import without restriction from the United States and other efficient producers. Their
income gains would be spent on increased imports of nonfarm goods
as well, thus improving trade balances.
Under the GATT proposal, the United States would end its distortionary and costly farm production subsidies and the output restrictions that accompany them. However, the United States and other
nations would be free to provide transition support and income
transfers as long as such aid did not subsidize production or otherwise interfere with trade. The removal of barriers would expand the
use of the more efficient agricultural resources in the United States
and could increase the demand for farm inputs and marketing services as well.
Potential now exists to achieve the first substantial reform since the
series of ever-increasing agricultural distortions began. Major international agreement requires patience and persistence, but success in
the Uruguay Round would improve well-being throughout the world.
THE PROTECTIONIST THREAT AT HOME
The United States has gone through numerous periods in its history when the sentiments for protectionism gained ascendancy. These
episodes typically were associated with times of economic downturn
or regionalist sentiment, the early counterpart of special interest politics today. The most recent period of this nature occurred more than
50 years ago with the passage of the Smoot-Hawley Act of 1930,
probably one of the most damaging pieces of legislation ever signed
in the United States. Passed after the stock market crash of 1929,
Smoot-Hawley attempted to benefit U.S. agriculture and manufacturing by raising tariff rates. But it had the opposite effect and caused
retaliatory tariffs to be put in place by foreign trade partners. More
than 60 nations responded within 2 years with tariffs of their own.
World trade fell dramatically. Chart 4-3 shows the spiraling decline
in world trade between the beginning of 1930 and the first part of
1933. Far from being beneficial, Smoot-Hawley helped turn the
1930s into a depression.




147

Chart 4-3

Contracting Spiral of World Trade
April

>
October
Millions of dollars
Note —Data are total imports of 75 countries.
Sources: Charles P. Kindleberger, The World in Depression, 1929-39 (Berkeley, California: University
of California Press, 1973); data from League of Nations, Monthly Bulletin of Statistics, February 1934.

The concerns and frustrations over trade felt today by the Congress, the President, and the American public stem from the large
trade deficits which the United States has been running since 1982.
As discussed in Chapter 3, the macroeconomic cause of the trade
deficit is related to the tremendous growth in Federal spending (22.8
percent of gross national product (GNP) in 1987 versus 20.6 percent
in 1979) relative to the also substantial growth in taxes (19.4 percent
of GNP in 1987 versus 18.9 in 1979) and the harmful effect of the
resulting Federal deficit on the savings-investment balance in the
United States. Yet the Congress has responded by seeking to eliminate various foreign trade practices. Many provisions of the trade bill
(H.R. 3) passed by the House of Representatives, and the version
passed by the Senate, both of which embody these frustrations, are
distinctly protectionist. Protectionism is also the motive of recent legislative proposals such as the Textile and Apparel Trade Act (H.R.
1154) passed by the House of Representatives. Ironically, since the
macroeconomic causes of the trade deficit are not addressed by these
actions, they are likely to have little or no influence on reducing the




148

trade deficit, although their protectionist influence could be harmful
and long lasting.
The lesson from Smoot-Hawley is that passage of protectionist
trade legislation by the United States will increase protectionist activity in the rest of the world, poison the international climate for trade
diplomacy in general, and slow the process of trade liberalization for
years to come. Since the United States is a major trading nation, it
could suffer major economic losses in the event of increased global
protectionism.
PROTECTIONIST TEXTILE LEGISLATION

Two of the most protected industries in the United States today
are textiles and apparel. The costs which this protection places on
the American family and consumer are enormous, running in the
range of $200 to $400 per year per household.
In a major protectionist effort, the House of Representatives
passed in 1987 the Textile and Apparel Trade Act which would raise
the wall of protection even higher, adding another $280 to $420 in
costs per household over the first 5 years. Similar textile legislation
was passed by the Congress in 1986 and vetoed by the President.
The current bill would set a 1 percent annual growth limit on U.S.
global imports of textiles and apparel, freeze shoe imports at 1986
levels, and, for the first time, restrict imports from Canada and the
European Community.
The textile and apparel industries do not need greater protection.
In 1986 textile industry profits rose 67 percent. Capacity utilization
for textile mills was 94.2 percent in the third quarter of 1987, compared with an average capacity utilization rate of 81.2 percent for all
U.S. industries. U.S. textile and apparel exports rose 15 percent in
1986 and are estimated to rise another 18 percent in 1987. Average
hourly earnings and employment in both sectors continued to rise
through the third quarter of 1987. And while the Congress would
seek to limit textile import growth to 1 percent a year, U.S. consumption of textiles rose 8.7 percent in 1986.
Regrettably, the Congress frequently considers the larger economic
interests of American consumers to be less important than the interests of particular industries. As with other protectionist measures,
consumers would have to pay for the special interest legislation,
losing more in increased costs than the gains to those who benefit
from the legislation. In the United States, the equivalent rate of tariff
protection on textiles and apparel already amounts to roughly 50
percent—ten times higher than average U.S. tariffs. H.R. 1154 would
cost consumers between $25 billion and $37 billion in the first 5




149

years, above and beyond the $20 billion to $40 billion annually they
already pay because of existing tariffs and quotas.
In addition to generating net economic losses for the country as a
whole, the textile bill would act like a regressive tax, hurting those
most who can afford it least. Because of the large share of income
they are forced to devote to clothing, low-income families—especially
those with children—would be burdened disproportionately by this
legislation.
EMBRACING PROTECTIONISM—THE OMNIBUS TRADE BILL

The most threatening proposal being considered by the Congress
is the Omnibus Trade and Competitiveness Act of 1987, the House
and Senate versions of which amount to about 1,000 pages. The bill,
which now must be considered in conference committee, includes
many features which have only a tangential relationship to trade
policy or which are inconsistent with U.S. policy in GATT. Among
these are sections dealing with education grants, plant closing restrictions (Chapter 5), subsidies to agricultural programs, changes to domestic tax laws, and investment screening regulations. With so many
provisions grouped together in one bill, the President is given little
opportunity to consider them on their separate merits. Furthermore,
the Administration is on record stating that many of the provisions
are unwise and damaging to U.S. interests.
Although the trade bill would include tariffs and trade barriers, as
Smoot-Hawley did, it represents a fundamentally different kind of
protectionism. In the area of trade policy, the legislation would
change the rules for administering U.S. trade law and for granting
protection to U.S. producers.
Helpful Features

Every President since 1934 has had authority to enter into international trade agreements involving the reduction of tariffs, and to
reduce U.S. tariffs by Presidential proclamation to carry out the
country's trade objectives. This authority originally was employed to
extricate the country from the economic disorder created by high tariffs after passage of the Smoot-Hawley Act. Tariff proclamation authority was renewed for every President thereafter until January 3,
1980. Reinstatement of this authority is a desirable feature of the
trade bill.
A second desirable feature is the so-called "fast track" trade agreement authority which was used in the Canadian free-trade agreement
negotiations and in the last round of GATT. Under a modification of
the operating rules of the House of Representatives and Senate, the
President is allowed to negotiate a trade agreement and present it
with necessary implementing legislation to the Congress for accept-




150

ance or rejection without amendment within a specified period of
time. This authority is important for U.S. credibility in international
negotiations, because foreign countries are assured that agreements
made at the bargaining table will not be undone later, apart from
overall acceptance or rejection. However, the Senate version of the
trade bill contains harmful "reverse fast track" provisions allowing
the Congress to remove fast track authority at any time.
A third desirable feature of the trade bill is the authority to implement the Harmonized System of tariff schedules. Common tariff
schedules greatly facilitate international interaction in trade issues. It
is regrettable, and a keen source of disappointment to the Administration, that the Congress chose not to grant this authority in earlier
legislation in time for the United States to join in implementing the
new system on January 1, 1988. The United States, which was one of
the original and principal supporters of the development of the Harmonized System, is now the only major trading country not to have
implemented it.
Harmful Features

Unfortunately, the protectionist features of the trade bill outweigh
the helpful features in number and in potential for harm. Legislation
whose result is protectionist (increasing the number of trade cases
filed and the amount of protection offered in response to them)
would hamper the attainment of U.S. trade objectives in the rest of
the world, damage global perceptions of the United States, and invite
retaliation on U.S. products.
Many other countries perceive international trade agreements such
as GATT as mechanisms to restrain U.S. antidumping and countervailing duties, whereas the United States views them as a way to control foreign subsidies and alleged unfair trade. In recent years the
United States has filed more antidumping and countervailing duty
cases than any other nation. The extensive use of U.S. antidumping
and countervailing duty law as applied to Canada, for example, was
the major difficulty in reaching agreement in the Canada-United
States Free-Trade Agreement. The Canadians insisted on establishing a binational panel to review issues related to these laws before an
agreement could be reached.
With passage of the omnibus trade bill, damaging protectionism
would become embedded in U.S. trade law. Among the dangers are
changes to the law designed to: (1) increase the number of cases
brought against foreign competitors; (2) rearrange legal definitions
and structures to increase the likelihood of finding injury or "unfairness" once a case is brought; and (3) increase the likelihood and
magnitude of protection once a case is concluded.




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The omnibus trade bill would remove Presidential judgment and
discretion from the protection-granting process. Converting important portions of U.S. trade law to mechanical rules for bringing trade
cases against foreign trade partners and eliminating case-by-case
evaluation by the President would be a serious change in current
practice.
Table 4-3 summarizes the four main sections of current U.S. trade
law. The origins of present provisions date back many years, and
their forms often represent decades of experience. Adjustments to
the statutes, the most recent in 1984, frequently have been made to
enhance industry access to protection under the various sections.
The changes recently suggested, however, represent a sharp break
from the past; they would throw out the wisdom that has been crafted into the statutes over time and replace it with untried and potentially dangerous alternatives.
TABLE 4-3.—Principal U.S. Trade Law Provisions
Statute

Focus

Response

Criteria for action

Duties, quotas, tariffrate quotas, orderly
marketing
arrangements,
adjustment
assistance

Responsibility
President
(ITC recommendation)

Section 201: Fair
Trade (Escape
Clause)

Increasing imports

Increasing imports
are substantial
cause of injury

Section 301: Unfair
Trade

Foreign practices
violating a trade
agreement or
injurious to U.S.
trade

Unjustifiable,
Al! appropriate and
unreasonable, or
feasible action
discriminatory
practices,
burdensome to U.S.
commerce

President
(Interagency
recommendation)

Section 701:
Subsidized Imports

Manufacturing,
production, or
export subsidies

Material injury or
threat of material
injury

Duties

ITC—Injury determination
Commerce—Subsidy
determination

Section 731: Dumped
Imports

Imports sold below
cost of production
or below foreign
market price

Material injury or
threat of material
injury

Duties

ITC—Injury determination
Commerce—pumping
determination

Note.—Origin of current provisions: Tariff Act of 1930 (Smoot-Hawley), as amended; Trade Act of 1974, as amended; Trade
Agreements Act of 1979, as amended; Trade and Tariff Act of 1984.
Source: Council of Economic Advisers.

Section 20L The escape clause provisions of current U.S. trade law
provide assistance to industries injured as a result of an increase in
fairly traded imports. The law is not designed to provide permanent
protection, but to aid workers and firms temporarily as they adjust to
increased imports. The petitioner submits its case to the U.S. International Trade Commission, which then undertakes an investigation,
including public hearings, to determine if the growth in imports is a
substantial cause of serious injury. If the U.S. International Trade
Commission finds affirmatively and recommends that import relief be
granted, the President must decide what method and amount of
relief he will provide, including possible adjustment assistance.




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Granting relief inevitably burdens other parts of the U.S. economy.
Therefore, in his decision, the President is required to consider
whether such relief is in the overall national economic interest. Relevant considerations include the impact of relief on industries and
firms facing higher prices for their inputs, the effect of the relief on
other U.S. international interests, the probability that the relief will
be effective in promoting adjustment, and the costs imposed on taxpayers, consumers, workers, communities, and other "innocent" parties. In other words, a favorable recommendation by the U.S. International Trade Commission does not and should not lead automatically to protection being granted.
Changes proposed in the trade bill would narrow the definition of
domestic industry used in Section 201 cases to cover only the domestic portion of production, only that subset of the industry which produces the like or competitive article causing the damage, and/or only
the geographic area where the imports are concentrated. Narrowing
the definition of domestic industry, of course, means that an injury
finding would be easier, since non-injured parts of the industry
would be removed from consideration.
Another change would alter the procedures for recommending
protection once injury is found. The proposal would change the law
to say that only those commission members who voted affirmatively
(found injury) in the review would be eligible to vote on recommendations about relief. Without the moderating voice of the minority
dissenters who failed to find that the foreign fairly traded goods injured the domestic industry, more protection is likely to be granted.
When a Section 201 case reaches the President, proposed changes
in the Senate version would effectively require the President to
accept the recommendation for protection, or else, in the House version, he would be removed from the process altogether. In the
House version the President's authority would be given to the United
States Trade Representative (USTR).
In the Senate bill the exceptions to granting protection would be
rigidly curtailed. The President would be required to impose protection unless he certifies that protection endangers national security,
disproportionately burdens agriculture, results in a net U.S. job loss,
causes serious injury to a downstream industry, or burdens the poor
disproportionately. The burden of proof would be changed, too. Protection would be imposed unless the President takes action to prevent it. With fewer reasons why protection could be rejected, and
with overall national economic interest not among them, the probability of protection would be increased substantially.
Antidumping and Countervailing Duty Law. In the United States, as in

GATT, dumping is considered unlawful when it injures domestic,




153

import-competing industries. Dumping is deemed to occur when a
product is sold in the United States at less than "fair value," that is, at
a price lower than it is sold in the selling country's home market, or
below its cost of production. Companies might engage in dumping
because they maintain high prices in their less competitive home
market, or because they lower export prices in hopes of capturing
foreign market share. Furthermore, because exchange rates vary over
time, firms may choose to hold dollar prices constant to retain export
market shares and let profit margins in their domestic currency
change.
Section 731 of the TarifF Act of 1930, as amended, directs the Department of Commerce to examine claims of dumping to determine
whether imports are being sold at less than fair value. If the Department rules in the affirmative, the U.S. International Trade Commission then determines whether a U.S. industry has suffered material
injury or the threat of material injury as a result of the specified imports.
Countervailing duty law is intended to offset any unfair advantages
foreign producers might enjoy as a result of government production
or export subsidies. In Section 701 of the Tariff Act of 1930, as
amended, the Department of Commerce determines whether the
specified imports have received foreign government subsidies. If the
Department finds in the affirmative, the U.S. International Trade
Commission determines whether a domestic import-competing industry has suffered material injury or the threat of material injury as a
result of the subsidized imports. If the International Trade Commission rules in the affirmative, countervailing duties are assessed on the
offending products.
There are legitimate reasons for opposing dumping and subsidies.
However, improper use of antidumping and countervailing duty law
also can be damaging to the country imposing it. Dumping and subsidies are, in and of themselves, beneficial to the importing country
(and are costly to the exporting country), because the buyers of the
product obtain their goods more cheaply (at the expense of the selling company or country). Subsidies and dumping are harmful to the
importing country as a whole if the lower prices drive competitors
out of existence (as in predatory pricing) or cause unnecessary adjustment costs to the domestic industry and labor (as in foreign business cycle dumping), and prices of products sold by foreign suppliers
subsequently are raised above what they would have been.
The threat of ultimately higher prices, burdensome and unnecessary adjustment costs, and reduced competition is the fundamental
reason for opposing dumping and subsidies. But the remedy for
dumping also raises domestic prices by imposing duties. If abused,




154

duties have the effect of reducing competition from foreigners in the
domestic market as well as harming domestic buyers of the product
through higher prices.
Thus care must be taken to ensure that misuse of antidumping and
countervailing duty law does not make the cure worse than the disease. The interests of competition and the benefits to consumers and
domestic producers, as well as the interests of the import-competing
industry, all must be considered.
Because current law already offers adequate protection from harmful dumping and subsidies, changes to expand the use of antidumping duties would be protectionist. For example, in some cases dumping margins are extremely difficult to establish clearly, since the foreign country may not be selling the exported good in its home
market, legitimate related costs of selling may be higher in the foreign market, and the costs of foreign production may be difficult to
ascertain. Under current law, when a product's fair value is calculated, it is assumed that exporters must sell at a price high enough to
provide an 8 percent profit margin, even though the before-tax average rate of profit on sales reported in 1986 for manufacturing,
wholesale, and retail trade in the United States was less than 5 percent.
Trade bill proposals for antidumping and countervailing duties
would move the law closer to a mechanism for granting protection
independent of a legitimate threat to the domestic economy. One
proposed change to U.S. antidumping and countervailing duty law
would require antidumping cases against products which are not
dumped themselves, but which incorporate inputs alleged to have
been purchased by the manufacturer at a price below fair value. The
amendment proposed in reaction to this newly defined "input dumping" is protectionist and GATT-illegal, and it makes the law less administrable because the foreign producer may not know if he is purchasing dumped inputs or what their fair value is supposed to be.
The effect of the proposal is to expand the range of activities against
which protection can be offered and encourage the initiation of
cases.
Proposals to increase the likelihood of protection once a case is
brought would alter the way dumping margins and subsidies are
computed. One which would harm American subsidiaries of foreign
firms would change the way indirect selling expenses are treated in
determining foreign market value for transactions between related
parties. The proposal would require that the administering authority
not deduct "indirect selling expenses from the foreign market value
in order to offset expenses deducted from an exporter's sale price."
For example, firm XYZ-Europe produces a product at a cost of $100.




155

Its selling expenses in Europe are $20 and its profit margin is $5.
The product, therefore, sells for $125 per unit. Firm XYZ-America,
the subsidiary, sells the same product in the United States for $125
per unit. According to the new proposal, the product would have a
dumping margin of 25 percent. The Department of Commerce would
be required to deduct U.S. selling expenses and profit on sales as not
part of the product cost. In America, the product cost would be
$100, while in Europe the product cost would be $125. Thus would
come a charge of dumping, whereas a proper calculation would find
none.
Historically, the definition of subsidies has been based on quantifiables such as government provision of capital, loans or loan guarantees on better than commercial terms, provision of goods or services
at preferential rates, forgiveness of debts, and contributions toward
manufacturing expenses. In subsidy cases the Department of Commerce has uniformly held that generally available benefits, applicable
to all companies and industries within an economy, are not countervailable subsidies. This position conforms with GATT interpretations.
The trade bill would define a subsidy to include actually conferred
benefits which bestow a "competitive advantage" on a class of beneficiaries, regardless of the number of firms or industries receiving the
advantage. Expanding the definition, of course, widens the class of
actions which could be found countervailable. Applying such a definition to the United States, for example, one might ask whether national weather forecasts would be considered subsidies to agriculture,
since the forecasts create greater competitive advantage for U.S. agricultural beneficiaries. The subjectivity of such a definition is dangerous in its possibilities for protectionist abuse and creates unfair uncertainty for trading partners about its application.
Section 30L Section 301 of the Trade Act of 1974, as amended,
provides the President with extremely wide discretionary authority to
act against the unfair trade practices of U.S. trade partners. This authority can be used to enforce the rights of the United States under a
trade agreement, to respond to a foreign practice that has the effect
of denying benefits to the United States under a trade agreement, or
to eliminate any foreign practice that is unjustifiable, unreasonable,
or discriminatory and which burdens or restricts U.S. commerce.
"Unjustifiable" is usually taken to mean any act, policy, or practice in
violation of, or inconsistent with, the international legal rights of the
United States. "Unreasonable" is taken to mean unfair and inequitable, while "discriminatory" typically means acts, policies, or practices
which deny national or most-favored-nation treatment to U.S. goods,
services, or investments.




156

Under Section 301 the President can take all appropriate and feasible actions within his power to enforce U.S. rights to obtain the
elimination of the objectionable act, policy, or practice. The response
can be on a nondiscriminatory basis or solely against the guilty trade
partner or party. It can be taken without regard to whether the goods
or sector employed were involved in the act, policy, or practice identified as the original cause of the action. Among the responses, the
President may suspend or withdraw benefits of trade agreement concessions or impose duties on goods or services as he deems appropriate. The President can act in response to petitions filed by private
parties or on his own initiative. Investigations are administered by
the Office of the U.S. Trade Representative in cooperation with
other U.S. Government agencies. USTR negotiates with the foreign
government, resolves the dispute if possible, and recommends actions to the President after interagency consultation.
The Section 301 statute has shown itself to be effective when used
in a judicious and discerning manner. This Administration has been
more vigorous in its active use of Section 301 than any other, increasing the yearly caseload by more than 50 percent and, for the
first time, initiating at the President's request a number of cases such
as the Japanese tobacco products case. But the mere act of instigating a Section 301 case does not magically ensure a solution to the
problem at hand. While many Section 301 cases have been successful, others resulted in long and inconclusive negotiations, or only
modest gains relative to the effort expended. In a sense, cases that
end in retaliation or counterretaliation, as some have, represent failures of policy and diplomacy.
Because the Senate trade bill mandates mechanical retaliation
against unjustifiable foreign trade practices without regard to whether retaliation is in the national economic interest, or without exercise
of Presidential discretion, long-run gains to the United States could
be sacrificed. More cases would be brought, but this would be less
desirable than if the cases were brought on the basis of discretion.
The trade bill also requires retaliation against countries deemed
deficient in their provision of intellectual property rights, and against
countries which do not give reciprocal treatment in the telecommunications area. Since the United States has the most open telecommunications market in the world, virtually every country could be
covered, even countries which in segments of the market are as free
as the United States was only some 10 or 15 years ago before the
breakup of the national telephone system.
Schemes for Deficit Reduction by Threats of Trade Sanctions. The trade

bill would require retaliation against countries which are found to
have "excessive and unwarranted" trade surpluses with the United




157

States. The term "excessive" is defined according to a formula, and
"unwarranted" means that USTR has found the country to have a
pattern of unfair trade practices that have an adverse effect on U.S.
commerce and contribute to the trade surplus of the country. The
provision would allow 6 months to reach an agreement to improve
the bilateral trade balance by 10 percent annually, or retaliation is
mandated. It does not specify what would be done to reinstate free
trade and reduce international tension after the United States has
branded one of its trading partners as an "unfair trader" and imposed a retaliatory set of tariffs.
Apart from a misplaced faith in negotiations as the method for reducing the U.S. trade imbalance, belief that bilateral trade balances
should be required to stay within some fixed range exhibits a certain
amount of confusion over the nature of international trade. Consider
the simplest possible example of three countries A, B, and C, each of
which produces a single good a, b, and c. Each country can make use
of only two of the goods: country A trades some of its a to B, using
the revenues to buy c from C; B trades some of its b to C, using the
revenues to buy a from A; and similarly for country C. Each country
has balanced trade, although no pair of countries has bilaterally balanced trade. Forcing bilateral balance not only would severely restrict
trade, but in this case it also would shut down trade altogether.
Situations similar to this example are not difficult to find. For example, in 1986 the United States had a trade surplus with respect to
Australia (primarily selling machinery and transport equipment), Australia had a trade surplus with Japan (selling primarily food and raw
materials), and Japan had a trade surplus with the United States (selling primarily motor vehicles and sound and image reproduction
equipment). Although the stylized example is simplistic, it shows how
simplistic it is to believe that trade sanctions should be used to keep
bilateral trade balances within a mathematical norm. Retaliations also
would damage U.S. international relations. Finally, limitations on bilateral trade balances may not be in U.S. interests in the 1990s when
America may need trade surpluses to pay back some of its borrowing
of the 1980s.
The Climate for Protection and Removal of Presidential Discretion. T h e

House bill would transfer the President's authority under Sections
201 and 301 (as well as under other sections not discussed here, such
as Sections 337 and 406) to USTR, and both the House and Senate
bills would transfer to USTR the President's authority to determine
whether foreign government practices are unfair under Section 301.
In combination with the mandating of Section 301 cases, these transfers of authority would represent a major change in the operation of
U.S. law.




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Since protection benefits the few at the expense of the many, the
President, who speaks for the Nation, usually has been less willing to
institute protection than those who speak for selected interests. By
design, the executive branch as a whole is also broader in its perspective than its component agencies. The Departments of Agriculture,
Commerce, and Labor, for example, have missions to speak for important components of the population, just as members of the Congress represent different regions. The President, however, can take
the entire country and economy into consideration, as well as foreign
policy objectives, through the interagency process which advises the
President from many sources.
The need for advocating and balancing different interests within
the American economic structure was recognized by the founding fathers. U.S. trade law similarly should seek to preserve necessary
checks and balances. Thus Presidential discretion should not be removed in Section 201 and 301 cases, as has been suggested, since no
single agency has as broad a perspective as the President.
The proposed procedural changes in U.S. trade law and removal of
the President from his traditional role in the process are a sad, but
perhaps expected, consequence of the growing demand for protection in the United States. Chart 4-4 compares the amount of protection granted in the United States under Section 201, dealing with fair
trade where the President has discretion, and interventions under
Sections 701 and 731, dealing with unfair trade where he does not,
in the periods 1975 to 1980 and 1981 to 1986. As shown, protection
granted under Section 201 changed little, but the number of petitions resulting in interventions under Section 701 increased 335 percent, and the number resulting in interventions under Section 731 increased 258 percent. It is difficult to believe that the frequency of
foreign subsidies during this Administration are more than three and
one-third times what they were previously, or that dumping has risen
to more than two and one-half times its previous level (especially
since the strong dollar during the latter period made selling to the
United States easier for foreigners rather than harder). More likely,
the higher intervention rate derives from changes made in U.S. trade
law in 1979, the large trade deficit, and the consequent increased
demand for protection inside this country.
The net effect of the definitional changes, the procedural changes,
the loss of checks and balances, and the removal of Presidential discretion would be to further increase the amount of protection afforded domestic import-competing producers. Since passage of the Trade
Act of 1974, the President has found that it was in the national economic interest to grant protection in response to 46 percent of the
Section 201 U.S. International Trade Commission recommendations.




159

Chart 4-4

Trade Interventions

Cases per Year
20
18 —

I I 1975 80
i—i i » / 3-ou

Unfair Trade
j N o p r e S j,j e n t j a | Discretion)

—

H 1981-86
16
14
12 -

-

••• .."y.V";V

10 -

.

'.••

'•',

—
—

'.•.;-::i.'

••

"

••_•

\

8 6

-.

: • ' • : • ' • ; :

.'••'.:'•

4 -

rair i raue
(P«jsidential Discretion)

•.-.••

••'.•'•

; • ' ' • .

—
! • • . - ' , '

••

• ' • • '

' • '

"'•"••'

'.'•.•

2
"...

0
Section 201

,-•_

•. •

Section 701

•

!;

'Mi "';•••
Section 731

Source: Council of Economic Advisers, based on data from Office of U.S. Trade Representative.

Thus, in the absence of Presidential participation, protection under
Section 201 could more than double if trade bill proposals became
law. The figure would be substantially higher if curtailing the President's role also created an incentive for industries to file more cases.
Mandating the initiation of cases under Section 301 would increase
their number while reducing the success ratio. Enlargements of the
definition of actionable practices and altered procedures for deciding
cases would make Sections 701 and 731 affirmative findings and the
subsequent market interventions easier.
The Pork Barrel. In addition to the procedural issues, there are many
<(
pork barrel" amendments in the two trade bills. The Senate version
of the trade bill contains a provision establishing a lamb import
quota fashioned after the protectionist U.S. meat import law. This
provision would place an upper bound on the amount of lamb that
could enter the United States each year. Such a restriction is contrary
to U.S. obligations under GATT. This trade barrier, like its sister
meat import quota, would raise the cost of meat in the United States.
Protection on meat is equivalent to voting a new tax on product
users, and handing part of it over to domestic sellers. Part of the




160

users' losses (in the form of higher prices paid) would go to domestic
producers, but another part (resulting from the cessation of consumer purchases because of higher prices) would end up in no one's
hands and thus be wasted.
The legislation also contains protectionist provisions for steel,
adding additional products to those currently being protected by voluntary restraint agreements with foreign sellers, a form of quota.
Users of wire fence panels, wire fabric, and reinforcing mesh would
have to pay higher prices because of these imposed barriers to trade.
Since another provision would include downstream steel products
(those products incorporating steel components) in the quota of the
country where the basic steel input was melted and poured, these
products also would cost more to Americans. The bill also calls for
the amount of U.S. coal purchased by Japan to be "taken into consideration" in any agreement with Japan regarding imports of steel.
That is, U.S. willingness to buy Japanese steel would be linked to
Japanese willingness to buy U.S. coal, thus distorting the market.
In addition to the above examples, the trade bills also contain provisions that would provide payments to special interest groups. One
such provision is the proposed exception to the requirement that the
tobacco program be operated at no net cost to the U.S. taxpayer for
government-assisted exports. Pressure to use the public treasury to
subsidize tobacco exports could increase Commodity Credit Corporation outlays by many millions of dollars.
Another handout is the sugar duty drawback provision. It is a usual
practice in international trade for a firm that imports a product for
domestic processing and then exports the good again to receive a
refund or "drawback" of the duty paid upon reexport. The drawback
normally is applied within a reasonably short period of time after
actual import and reexport. The trade bill would extend the drawback period for sugar retroactively to allow drawbacks for exports as
late as October 2, 1991, claimed against imports as early as October
30, 1977. This means that future exports (which need not have been
imported themselves, and which may have nothing to do with earlier
sugar which was not reexported because it was more profitable to sell
domestically) would receive duty drawbacks. In effect, the law arranges to give money from the public treasury to refiners of sugar in
the United States. Estimates place the transfer at more than $265
million, and possibly higher than $700 million. Because the U.S. Customs Service has not been able to verify potential claims, the loss to
the treasury could be even higher.




161

CONCLUSION
In the area of trade policy, the United States today faces a choice.
It can continue its commitment to foster an environment of trade liberalization, or it can turn to protectionism. The choice will be determined by how the Nation shapes domestic law and how it deals with
its trade partners in the international forum, rather than by public
statements of intentions.
U.S. negotiators have made substantial and historic progress this
past year in forging agreements with other countries which free
major international markets from trade restrictions. Pacts with
Canada and Mexico, and U.S. participation in the ongoing Uruguay
Round of GATT negotiations, offer real hope for the future of
American trade relations. The U.S. GATT proposal for major reform
of agricultural policies that distort international trade offers the prospect for progress in that important sector.
At the same time, spurred by its unwillingness to reduce Federal
Government spending and the desire, nevertheless, to appear responsive to the large American trade deficit, many in the Congress
appear ready to reconfigure U.S. trade law. Due regard for the macroeconomic and Federal deficit-related causes of the trade deficit
suggests, however, that the proposed legislation is unlikely to have
any substantive effect on the trade balance. A reasoned review of the
various proposed trade provisions suggests that they are protectionist
in nature, violate our international obligations under GATT, increase
costs to consumers and business purchasers of imported inputs, and
distort existing U.S. trade law. The recent textile and apparel legislation also would be damaging and costly.
Because protection favors some groups at the expense of the rest
of the country, there always will be pressures from within the United
States to provide greater protection. The same pressures exist
abroad. But now, as bilateral and multilateral negotiations show signs
of success, it is time to resist pressures for protection and international confrontation. The choice is between contraction or further
liberalization. Contraction points down the road of economic stagnation, while liberalization will result in continued growth, strengthening the groundwork for international trade well into the 21st century.




162

CHAPTER 5

Knowledge, Markets, and Economic
Progress
THE ECONOMY OF THE UNITED STATES has generated rising
standards of living for most of its history. During this century, real
output increased twelvefold, while population tripled, approximately
quadrupling the goods and services available to the average American. Output per hour of work doubled in the first half of the century
and has since doubled again. This enormous and sustained gain in
productivity has led to rapid increases in living standards. Real per
capita income rose at a 1.7 percent annual rate in the first half of the
century and at a 2.0 percent annual rate in the postwar period.
Long-term economic progress is assessed not only by output and
productivity, but also in terms of the means and choices that allow
people to enjoy full, healthy, and satisfying lives. Gains in real per
capita income improve well-being, as reflected in other indicators.
The infant mortality rate in the United States declined from roughly
150 per thousand in 1900 to 11 per thousand in 1987. Life expectancy increased from 47 years in 1900 to 75 years for persons born in
1987. Retirement from work, a rare phenomenon a century ago and
associated primarily with ill health, is now the norm, thanks to longer
lifespans and higher incomes.
Steadily rising income and its broader benefits are not inevitable.
In many societies throughout much of history, living standards rose
only slowly and at times even declined. Indeed, the postwar period
may be unique in terms of both the high overall rate of increase in
real per capita income in the world and the widespread nature of the
gains. In a world linked by trade, the benefits of economic progress
are shared widely. Increased productivity and growth in one country
enhance prospects for growth in other countries.
This chapter examines the factors that underlie increases in living
standards over the long term and considers the role of government
in supporting and sustaining the determinants of economic progress.
Business cycle fluctuations aside, the output available for current
consumption, or for investment to augment future consumption, is
determined by (1) the quantity and quality of labor, capital, and natural resources; (2) the technology used in production processes; and




163

(3) the mechanisms that allocate inputs in production processes and
distribute goods and services to final users. Government policies enhance the rise in living standards when they encourage increases in
supplies of factors of production, support the advance and application of knowledge that increases productive efficiency, and improve
allocative mechanisms.
In the United States, government policies have played an important positive role in supporting increased standards of living. Constitutional and common law traditions that protect individual rights and
private property have provided the foundation for freedom and economic progress. Resulting improvements in well-being continue to
attract those in search of better opportunities. Individual efforts to
earn maximum returns in a competitive environment promote effective allocation of resources. Individuals have powerful incentives to
increase supplies of productive resources, especially their own knowledge and skills (human capital), and to develop new products and
technologies that promise economic rewards. In addition, government has supported public education, which has played a critical role
in increasing the supply of human capital, and has financed basic research that contributes to economic advance but may generate little
private reward. Recent actions in the United States to reduce high
marginal tax rates and to remove burdensome regulations, both of
which impair economic efficiency and diminish incentives for growth,
have strengthened prospects for further improvements in living
standards. These policies also have set an example for growth-oriented policies in other countries.
Expansion of the physical capital stock is a major contributor to
economic progress and productivity. During the postwar years physical capital accounted for approximately one-third of output growth
and 40 percent of growth in output per hour of work. Most measures
of investment include only physical capital. It is estimated, however,
that human capital accounts for three-quarters of the Nation's total
stock of productive capital. Thus much investment is not identified as
such in standard accounts of national income. Recognizing the importance of knowledge and effective resource allocation to economic
progress, studies of the sources of growth have come to include contributions of human capital, technical innovations, and shifts in productive resources.
In the past in the United States, and still in some very poor countries, investments in human capital that led to better diets and improved health increased human capacity for physical labor. Today,
the forms of human capital most important for progress are those
that expand skill and knowledge. Investment in education, training,
and work experience increases productivity and earnings. Individuals,




164

families, and businesses gain directly, and society at large benefits indirectly. The widely shared benefits of investment in human capital,
and problems in borrowing to finance it, suggest that government
should encourage such investment. The strong incentives of individuals and families to invest in the most useful forms of human capital
also suggest the value of individual choice and market allocation
mechanisms. Investments in human capital, and the government's
role in promoting them, are the main issues discussed in the first
major section of this chapter.
Advances in scientific and technical knowledge and their application to the development of new products, services, and technologies
are widely recognized as important for economic progress. Without
definition and enforcement of property rights that allow discoverers
of valuable new knowledge to reap at least part of the benefits, incentives for these socially valuable activities would be inadequate.
Governmental support also is needed for advances in knowledge in
areas that are public by their nature, such as national security. As with
investment in human capital, economic incentives are critical in allocating resources to research and development. These are the main issues
discussed in the second major section of this chapter.
Finally, one of the key advantages of a competitive market system
is its ability to respond quickly and appropriately to the rapidly
changing conditions that accompany high rates of economic progress.
Interventions that slow necessary adjustments in a dynamic economy
are impediments to economic growth. Governmentally imposed barriers and distortions that diminish incentives for work, investment,
and innovation, or that divert resources from their most productive
uses, are further barriers to progress. In particular, growth often requires reallocations of labor. Policies intended to reduce adjustment
costs and protect existing jobs often can reduce employment and
stifle growth. The harmful effects of such policies and the benefits of
a more flexible, market-oriented approach to economic adjustment
are the main subject of the third major section of this chapter.
HUMAN CAPITAL
The United States devoted roughly $500 billion in 1987 to gross
investment in formal education. Another $100 billion was spent for
worker training, not including informal efforts to improve skills and
performance on the job. Investment in human capital is thus more
than one-third larger than the approximately $440 billion spent last
year for gross private nonresidential investment in physical capital.




165

Human capital investment has contributed substantially to the productive capacity of the labor force and the growth of the U.S. economy. Recent studies indicate that, in the postwar period, increases in
human capital have contributed 10 to 20 percent of real output
growth and a similar percentage of the gains in output per hour of
work.
Over the last 40 years, the education and skill of the U.S. labor
force has improved continuously but unevenly. An index of human
capital, primarily representing schooling and work experience, developed by the Bureau of Labor Statistics (BLS), grew at an average rate
of about 0.25 percent per year over the postwar period. During the
mid-1970s, as many new workers entered the labor force, the average
human capital per worker stopped increasing. In contrast, during the
1980s this index has grown by almost 0.5 percent per year.
INVESTMENTS IN EDUCATION, TRAINING, AND WORK EXPERIENCE

Aggregate rates of human capital investment are affected by population growth and the age distribution of the population. In the
United States, both the population and the labor force have grown
steadily. Better health and increased longevity have increased potential years of working life. Demographic changes, such as the aging of
the baby-boom generation, and labor market trends, such as increased employment of women outside the home and earlier retirement, also have affected patterns of schooling, training, and work experience.
Education

Direct annual expenditures for schooling, public and private, are
currently about $310 billion. About 60 percent, or $185 billion, is
spent on grade schools and high schools and the rest on post-secondary schooling, which includes vocational schools as well as colleges and universities. Expenditures for schooling have remained in
the range of 6 to 7 percent of gross national product (GNP) for two
decades, after having risen rapidly during the schooling of the babyboom generation. The number of students has declined from a peak
of almost 61 million in the mid-1970s to just under 58 million in the
mid-1980s.
A large component of total investment in schooling at the higher
levels, in addition to direct costs, is the forgone earnings of the students themselves. The time and effort devoted to study could otherwise be spent at work or leisure. The forgone earnings of students
aged 16 and over are estimated to be about $200 billion per year,
most of which is accounted for by post-secondary students. The
share of total social costs of education attributable to the postponed
earnings of students has increased in recent years, because a larger




166

proportion of schooling is for post-secondary students with higher
potential wages. In the early 1970s about 15 percent of the student
population was enrolled in post-secondary schools, compared with 23
percent today.
Increases in years of schooling of the labor force are indicated in
Chart 5-1. During the last 30 years the percent of the labor force not
completing high school has fallen by more than half, while the percent having attended college has more than doubled. These trends
have occurred primarily because retirees have had relatively little
schooling. High school completion rates have been fairly stable for a
decade at about 85 percent of persons 20 to 24 years old, and the
proportion of persons 25 to 29 years old with 4 years or more of college has remained about 22 percent.
Chart 5-1

Years of Schooling of the Labor Force
Percent of civilian labor force

60

50
4 Years High School
\

40

___-

An

^X^

30

Y College

Less than 4 years
High School

20

=~^r^_

_

"**•-

—
-----

10 -

0

-

I . . . . I
1960

.

1965

< .

.

I

t

i

i

1970

t

I

.

i

.

i

1975

I

> i

1980

t

< I

i

.

1985

Note.—Data are for March and relate to highest years of schooling attained.
Source: Department of Labor.

Data on hours of work by educational level and gender indicate
that the amount of schooling has increased for both male and female
workers, but more so for males. The BLS estimates that in 1948 twothirds of the hours worked by men, and more than half the hours
worked by women, were accounted for by those with fewer than 12
years of schooling. These proportions have declined to 17 percent
for men and 13 percent for women. In 1948 only about 12 percent of




167

total work hours were accounted for by those with more than 12
years of schooling, compared with more than 40 percent now. Currently, about 25 percent of work hours of men and 18 percent of
work hours of women are performed by those with 16 or more years
of schooling.
Years of schooling and expenditures are inputs to the process of
acquiring human capital; they do not measure learning. A variety of
measures have documented the decline in the academic achievement
of American students at every level during the 1960s and 1970s, with
evidence of partial reversal of this trend in the 1980s. Some of the
decline of Scholastic Aptitude Test (SAT) scores in the 1960s can be
attributed to the increasing proportion of high school students taking
the test. But in the 1970s the proportion taking the test declined
while scores continued to fall; now the proportion of students taking
the SAT is rising again, and scores are rising.
Concerns about student achievement are due not only to evidence
of academic declines, but also to indications that achievement has
been low relative to perceived requirements for success in today's
economy. Although basic literacy rates have increased steadily during
this century, a number of surveys document low reading comprehension and other academic deficiencies among U.S. students compared
with students in other countries. Young Americans score particularly
poorly in science and mathematics. Yet evidence indicates that mastery of these subjects is useful in many occupations, not only in science and engineering.
Not all of the benefits of education are reflected in increased productivity and earnings. Education may contribute to a person's wellbeing in other ways as well. For many people, learning is enjoyable.
Formal education contributes to continued learning. Education also
provides information and skills that encourage fuller appreciation
and enjoyment of science, art, and culture, as well as effective participation in public affairs. Schooling contributes to more efficient
household management, to better health and nutrition, and to the
higher educational achievement and earnings of one's children.
The clearest relationship between education and economic success
is indicated by earnings patterns. Workers with more schooling consistently earn more. In 1986, for example, the median income of persons with only an elementary school education was about $9,000 per
year, compared to high school graduates' median income of about
$20,000. Persons with 4 or more years of college had median incomes of about $33,000.
As Table 5-1 indicates, after declining in the 1970s, the relative incomes of those with more education increased in the 1980s. During
this decade, incomes of those with fewer than 4 years of high school




168

have declined compared to high school graduates, while the relative
incomes of college-trained workers have risen. Thus the returns to
investments in schooling have increased. Gains have been especially
pronounced for younger workers, who will continue to benefit from
more schooling for many years.
TABLE 5-1.—Relation of Income and Education, Selected Years, 1969-86
[Index, income of high school graduates = 1.00]
Females

Males
Years

1-3 years
high school

1-3 years
college

4 years
college1

1-3 years
high school

1-3 years
college

4 years
college1
1.44

1969-71

0.89

1.16

1.39

0.84

1.17

1974-76

.87

1.09

1.28

.82

1.14

1.33

1979-81

.83

1.08

1.26

.82

1.14

1.30

1984-86

.81

1.12

1.37

.78

1.16

1.39

1

Excludes those with more than 4 years of college.
Note.—Data are 3-year averages of indexes of median annual income for year-round, full-time workers, aged 25 and over.
Source: Department of Commerce, Bureau of the Census.

Changes in relative earnings are due to cyclical and demographic
factors and to longer term economic changes. People with more
schooling, for example, usually are more able to maintain employment and earnings during recessions. The relative earnings of college
graduates declined during the 1970s as the highly schooled babyboom generation entered the labor market, but they rose recently as
this group gained experience in the 1980s. Over the longer term, increased demand for technical and managerial skills may be expected
to raise the future relative earnings of workers with more education.
Earnings are higher for those with more years of schooling for reasons other than the productive value of education. Personal characteristics such as ability and effort, which contribute to success in both
school and the workplace, account for some of the earnings differential. Higher earnings also are associated with factors such as parental
income, gender, race, and geographic location. Research has confirmed, however, that schooling raises earnings even after accounting
for the effects of these other measurable factors.
Estimated real private rates of return for investments in schooling
in the United States have been 10 to 13 percent for secondary
schooling and 8 to 10 percent for higher education during the 1970s
and early 1980s. These estimates may be biased upward, because
they cannot fully adjust for workers' ability and effort. Recent increases in relative earnings for more educated workers, however, suggest that estimates based on data from the mid-1980s would show
even higher rates of return. Studies during the last 30 years consistently have shown that rates of return on investments in education




169

have been comparable to those available on alternative long-term investments.
A number of studies have shown that schooling increases earnings
for managers and the self-employed, as well as for employees, and
have suggested that the benefits of schooling are greater in more dynamic economic environments. More schooling for farmers, for example, increases the payoff from agricultural research, increases the
rate of adoption of innovative technology, and reduces the lag between price changes and appropriate market responses. Returns to
schooling are higher in industries with more technical progress and
productivity growth.
Workers with more schooling not only have higher earnings but
also safer, more comfortable working conditions and lower rates of
unemployment. The unemployment rate for workers with fewer than
4 years of high school is double that for workers with 4 years of high
school. Workers with a college education had unemployment rates of
less than 4 percent throughout the last 15 years, and they experienced smaller cyclical swings in unemployment than those with less
schooling. But increased schooling of the labor force has not resulted
in lower overall unemployment rates; unemployment rates of all
schooling groups have risen over the last 20 years (Chapter 2).
Training and Experience

The human capital that workers accumulate while employed includes formal training and learning-by-doing. Post-school training is
pervasive in the United States. About 40 percent of workers report
having taken training to improve their job skills. Workers with more
years of schooling also acquire more training on the job.
While much on-the-job training is of general value, some has value
only in a specific firm. The worker bears the cost of general training,
usually in the form of lower wages, because its value will be fully reflected in wage growth, whether the worker stays at the current firm
or goes to another. The cost of firm-specific human capital investment is borne jointly by the worker and the firm, and the benefits of
future productivity improvements are shared. Thus firm-specific investments encourage both the worker and the firm to maintain the
employment relationship. Conversely, when job tenure is expected to
be long, both the worker and the firm have more incentive to invest
jointly in training.
The investment in formal, employer-sponsored training has been
estimated to be about $60 billion per year and has been rising.
About half this total reflects the wages and forgone output of employees receiving training. The $60 billion does not include the value
of reduced wages that workers accept for jobs that offer training, nor




170

does it include the informal, everyday activities of workers and firms
to improve productivity.
In addition to schooling and training, the work experience of the
labor force is an important source of productive human capital. Unpublished estimates by the BLS indicate an increase in the approximate years of work experience for private business workers from 17.4
years in 1950 to 18.1 years in 1964. Since 1964 average experience
has fallen by more than 15 percent to 15.3 years in the mid-1980s.
For men, average work experience has fallen by about 10 percent since
peaking in the late 1950s, and it has held steady at about 17.6 years
in the 1980s. The average work experience of women rose by about
15 percent between 1950 and 1965, to 13.2 years. In the late 1960s
and the 1970s, many young women entered the labor force, and average experience fell back to about 11.6 years, where it has remained
since about 1980.
Four major demographic and labor market factors have contributed to these changes in work experience. First, more years in school
have meant that workers enter the labor force at a later age. Second,
with the labor market entry of the baby-boom generation during the
1970s, the age distribution of the labor force has shifted dramatically
toward younger workers. Third, men are leaving the labor force at
earlier ages than in the past. In 1948 about half the men 65 and over
and 90 percent of those 55 to 64 were in the labor force. In the 1980s
less than 20 percent of men 65 and over and about 70 percent of those
55 to 64 are labor force participants. Fourth, the share of women in
the labor force has risen from less than 30 percent in 1948 to 45 percent today, and women generally have had less work experience than
men.
Wages tend to rise with age through most of work life. Chart 5-2
shows that older workers have higher earnings and also that earnings
rise faster and peak later for those with more schooling. This increase in wages over work life has become more pronounced during
the 1980s. Younger workers are paid less, because they devote more
time and effort to on-the-job learning. Their wages also rise as training and experience increase productivity. Some of the wage gains associated with experience are due to workers' finding employment
that better matches their skills and interests. Younger workers change
jobs frequently while they learn about the labor market, occupations,
and particular jobs, and while employers learn about the capabilities
of particular workers. Job or occupation change is part of a search
process, and when a better job match is found, earnings and profits
improve.
Work experience and training of the U.S. labor force will rise for
the next two decades as a result of the large group of workers now




171

Chart 5-2

Earnings by Age and Education

Thousands of dollars
50
4 or More
Years College
40

30

4 Years High School

1-3 Years
High School

20

10 -

L

_L

_L
25-29

30-34

35-39

_L
40-44
Age group

_L

J_
45-49

50-54

55-59

Note. Data are mean annual earnings of male year-round full-time workers, average for 1984-85 in
1985 dollars.
Source: Department of Commerce.

gaining experience and the smaller group of young workers entering
the labor market. These demographic factors should contribute to reduced unemployment and improved productivity growth.
RATIONALES FOR GOVERNMENT SUPPORT

Human capital investment contributes to the well-being of individuals and to the long-term performance of the economy. But economic returns alone do not imply that the government should regulate or
subsidize investment. Government involvement in human capital formation is predicated on three premises. First, there are major social
benefits to increased levels of education that are not fully realized in
the returns to individuals. Second, government support of human
capital investment widens economic opportunity. Third, there are
particular difficulties in private financing of investment in schooling.
Social, political, and economic interaction is facilitated by a
common language, basic skills, and shared knowledge. A broad base
of educated individuals allows for a more efficient economy and a
more viable democratic system. The effectiveness of the military,




172

moreover, is enhanced by a higher level of general knowledge and
skills in the population, especially as national security relies increasingly on complex technology. These broad societal benefits of education provide one rationale for government funding and regulation of
primary and secondary schooling.
Giving every child the opportunity for an education is considered
necessary for a democratic society. Human capital contributes to individual earnings, and public support for schooling has been used to
widen economic opportunities. Government support for human capital investment is also one way to help reduce dependence on other
transfer programs. Most Federal funds devoted to education and
public training programs are directed toward people with low incomes.
Private financing of human capital investment is relatively difficult,
because most such investments are made by the young, and human
capital itself cannot serve as collateral. For other investment opportunities, one can usually borrow funds by demonstrating profitability
and pledging the investment itself as collateral, but for investments
in schooling it is difficult for a lender to enforce repayment. Thus
schooling generally is financed by the assets or income of parents or
other family members. Parents commonly borrow to finance investments in their children's human capital. Adult students use their own
resources, and if continued employment is assured, they may be able
to obtain assistance from their employers. For individuals with insufficient access to private resources, there may be grounds for public
support to help secure financing for education.
Public support for worker training generally is not provided,
because training is funded jointly by the worker receiving lower
wages and by the firm paying direct costs and allowing work time
to be used for learning. Workers and firms realize the rewards from
investments in job training through increased future wages and
productivity.
POLICY ISSUES

Public policy affects all human capital investment, directly through
government spending or indirectly through taxation and regulation.
Education is the third largest object of government spending, after
national defense and social security. State and local governments
provide most of the public spending for education. The Federal Government pays about 6 percent of the approximately $185 billion
annual direct cost of primary and secondary education, and about 12
percent of the approximately $125 billion in direct costs for higher
education. Federal spending for training programs is about $5 billion. The Federal Government also provides training for its own em-




173

ployees, spending close to $20 billion each year for military training
alone.
Government operation of schools is not a necessary consequence
of government support of education. At the primary and secondary
levels, State and local governments both fund and manage school
systems. In post-secondary education almost all Federal support is
provided to the student directly, allowing choice among public and
private institutions. State government support of higher education
also allows wider individual choice than at the lower levels.
Primary and Secondary Education

Poor achievement levels in primary and secondary schools have
neither obvious causes nor simple remedies. Schools and teachers
differ in their effectiveness, but there is no consensus on the underlying reasons. Low quality of teachers, low spending on teachers relative to school administration, curricula that fail to stress basic academic subjects, inadequate school discipline, poor early childhood
preparation, and home environments that fail to encourage learning
are among the suggested explanations.
Increased spending has not been effective in improving student
performance. Public school expenditures per student rose steadily
and most rapidly as student achievement was declining. In the early
1980s real spending per student was more than double that in 1960.
Student-teacher ratios have fallen and the education and experience
of teachers have increased, but none of these changes has been
linked statistically with better student performance.
State and local school districts have introduced a number of reforms to promote quality. Some school systems have required students to meet minimum standards, and some have rewarded teachers
for gains in student achievement. Many States have instituted statewide testing for high school graduation, and some withhold funds or
exercise other sanctions when local school districts have poor records
of academic progress. Several States are using alternative certification
to attract new teachers who are proficient in their subject but lack the
required coursework in teacher education. Such flexible certification
gives school systems wider latitude in hiring teachers and removes
barriers that prevent skilled people from entering teaching.
A dominant role for State and local governments is consistent with
principles of federalism. Traditionally, Federal spending for primary
and secondary schooling has been quite limited and directed toward
the disadvantaged. Close to $4 billion per year is provided to State
and local school districts to serve low-income students. Other major
Federal programs support vocational, bilingual, and special education.




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The Federal Government also supports research and the dissemination of information on student achievement in order to encourage
choice and accountability in the Nation's schools. The ability of families to choose the schools their children attend is a critical factor in
improving the quality of education. This Administration has proposed legislation and supported reforms that would encourage wider
opportunities for parental choice and greater accountability in education assistance programs. More scope for choice would provide incentives for schools to improve. In school systems that are accountable for the quality of education, special programs and good reputations attract students. Schools that perform poorly face declining enrollments and reduced budgets. Magnet schools provide an alternative that incorporates parental choice, allowing parents and students
to select among particular schools in a public school district.
One direct way for government to encourage schools to respond to
demand for better education would be to provide financial support
directly to families through vouchers. Families could use the vouchers at any school that meets basic standards. Voucher-type programs
currently are used in Federal food and housing assistance programs,
medicare, and in higher education. The GI Bill, which is an example
of a successful Federal educational voucher program, has helped
many veterans complete schooling, receive vocational training, and
increase their earnings capacities. Competition among schools for
students and support provides market incentives lacking in the current system of government-operated schools. Even partial voucher
systems allowing choice among public schools would offer substantially increased competition and accountability, thereby promoting
educational achievement.
Post-Secondary Education

Many U.S. institutions of higher education are operated by State
and local governments. These institutions provide subsidies to local
residents and others in the form of low tuition. Private operation and
funding, however, play a much larger role than in primary and secondary schooling. Private schools account for close to one-third of
total college and university expenditures, and proprietary schools are
a major source of formal occupational education. State systems allow
a large degree of student choice. Thus the higher education system
in the United States, in contrast to primary and secondary education,
has allowed students and their families some choice among institutions, thereby encouraging higher quality. One measure of the success of this approach is the large and growing number of students
from other nations that choose to study in this country.
Consistent with the policy emphasis on choice and accountability,
the major Federal programs in post-secondary education provide aid




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directly to students. In the last decade the number of student aid
grants has increased by more than 65 percent. The largest Federal
expenditure for support of post-secondary education is in the form of
grants to low-income students. Close to $4 billion in such grants was
provided in 1987. The Guaranteed Student Loan Program makes
funds available by providing government guarantees to banks and
other private lending sources. More than $9 billion annually is borrowed under this program. Students are responsible for repayment of
principal and interest (after the period of schooling), but the Federal
Government guarantees repayment if students fail to meet their obligations. These loans carry interest rates far below those that would
be required without Federal backing. Other aid in the form of loans,
work-study programs, and grants is provided to students through the
educational institutions themselves.
Student loan defaults cost about $1.5 billion in 1987. A large proportion of defaults are concentrated at relatively few schools. Student
loan default rates exceed 50 percent at more than 500 schools, which
make up about 7 percent of the post-secondary institutions that participate in loan programs. By more strongly encouraging the repayment of loans, the Federal Government can increase the amount
available for investment in education. Sanctions now are applied to
students, but incentives for schools to provide better monitoring and
better education also should help encourage loan repayment.
Worker Training

Workers and firms invest in job training and retraining to obtain
the future private returns that result from increased productivity.
Many government policies influence investments in job training and
experience. Direct government support of training programs is intended to raise the earnings capacity of the disadvantaged and to
ease the adjustment of displaced workers to new jobs. During the last
25 years the Federal Government has spent more than $115 billion
on training and related programs, including classroom training, training on the job, and job search assistance, but there is no consensus
that these training programs have significantly increased the earnings
of participants. Past evaluations have been inconclusive, partly because of methodological problems. Evidence suggests that training
for the disadvantaged has improved the earnings of adult women, but
it has had little, and perhaps even adverse, effect on the earnings of
youths and adult males. This Administration has encouraged recent
efforts to develop more effective training programs with designs that
facilitate better evaluation.




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Education in Science and Engineering

Private and social returns to education and training are affected
not only by the years of schooling but also by the student's field of
study. Undergraduate specialization in engineering, for example,
generally leads to high earnings. Because they can command high
starting salaries, engineers are less likely to postpone labor market
entry and forgo current earnings in order to pursue post-baccalaureate education. As a result, most Americans with the requisite abilities
and interest do not pursue masters or doctoral training. Post-baccalaureate study in the sciences and engineering, however, is vital for
research and innovation. A major factor in maintaining the high level
of research and development (R&D) activity in the United States is
the attraction of U.S. graduate programs for students and scientists
from abroad, about half of whom remain to pursue careers in this
country. Foreign students comprise a growing proportion of full-time
graduate students in science and engineering, having risen from 17
percent of the total in 1977 to 27 percent in 1986.
Most people who complete doctoral degrees in science and engineering pursue careers in research, for which much of the funding is
provided by the Federal Government. This close link has encouraged
Federal support for graduate studies and post-doctoral training in
the sciences. The Federal Government provides fellowships and parttime employment for graduate students in federally funded research
projects carried out under the supervision of faculty or other senior
researchers. Some of the Federal support for post-baccalaureate
training is similar to the joint funding of specific on-the-job training
by firms and workers in the private sector. Since the Federal Government is a large consumer of R&D, it captures some of the benefits
from training through a larger supply of scientists and engineers.
Furthermore, R&D carried out in the private sector may have benefits that extend broadly through society.
SCIENCE AND INNOVATION
Research and development leads to scientific discoveries and new
technologies that enhance economic progress. In the United States
private and public expenditures for formal R&D have reached more
than $120 billion per year. The contribution of this investment to the
productivity of the economy and the quality of life is large and pervasive.
Research and development usually is divided into three categories:
basic research, which investigates scientific questions with no readily
foreseeable applications; applied research, which is intended for application; and development, which aims to produce particular prod-




177

ucts or processes. Formal investments in knowledge are described
largely in these terms, but the distinctions are somewhat arbitrary.
Solving problems of development can shed light on basic scientific
problems, and some firms undertake basic research in hopes of eventual commercial applications. In addition, many informal R&D efforts
are not measured as R&D.
Technological progress, which is at least partly a result of formal
and informal R&D investments, has led to higher incomes, better
working conditions, and a greater variety and abundance of products.
Standard productivity measures, however, cannot capture many of
the most visible improvements made possible by advances in science
and technology. Much publicly supported R&D, for example, is devoted to public goods such as national defense and public health, the
benefits of which are not measured as increased productivity. Even
R&D that helps create better products and more efficient production
processes provides benefits that are not easily measured, such as improvements in computers and calculators.
EXPENDITURES AND RETURNS

U.S. expenditures for R&D have increased considerably in real
terms since World War II, as shown in Chart 5-3. Expenditures grew
at about 9 percent per year from 1941 to 1967, when they abruptly
leveled off. Since 1977, expenditures have been rising again with
rapid growth of defense R&D, growth of privately sponsored industrial research, and restoration of government support for basic research. For the last 10 years, total real R&D expenditures have been
growing at a rate of approximately 5 percent per year.
Private Investment

In 1987 approximately half of total national R&D expenditures
were funded by private sources, up from about one-third in 1965.
For the last 15 years private sources have provided more than twothirds of U.S. expenditures on industrially performed R&D. About
three-quarters of funding for nondefense R&D is provided by private
sources, and about 20 percent of funding for basic research is private. The emergence of the private sector as a major provider of
R&D funding is one of the most important developments in science
and technology in the last two decades.
Private R&D has a strong relationship to economic growth. According to one study, from 1948 to 1985 private R&D investment accounted for an estimated 7 percent of growth in output per hour of
work and about 13 percent of growth in productivity in the nonfarm
business sector. Estimates of rates of return to private R&D vary considerably, but are consistently high. Privately funded basic research




178

Research and Development Expenditures
Billions of 1 9 8 7 dollars

120 /
100 Total
80 -

60

Federal Government

40
^

X/

20

Private^

^^z^^—

0 ff
rT'"r~t>*T i
1941 1945

i 1 . i i i 1 i i i i 1i i i i 1 i i i i 1 i i

i |*T i | i i | i i i i I i i |

1950

1955

^—"**'

1960

1965

1970

1975

1980 1985

J/Private includes a small amount of State and local government funds.
Note.—GNP implicit price deflator used to deflate expenditures.
Sources: Department of Defense (1941-52) and National Science Foundation (1953-87).

has particularly strong effects on productivity growth, in part because
its results raise the overall level of technology in an industry.
The gains to society from private R&D that are not captured by the
firm performing it are significant. Knowledge produced by private
R&D spreads first to technologically related firms and then throughout the economy. Patent studies reveal that firms whose technological neighbors invest relatively large amounts in R&D produce more
patents per dollar of their own R&D and have higher rates of productivity growth than do firms in less research-intensive environments. Firms cannot simply adopt research, however; they generally
must do a certain amount of research themselves to be able to take
advantage of knowledge that other firms produce.
The extensive spillover benefits from private R&D are also apparent in the fact that firms often imitate the innovations of their rivals.
One study found that 60 percent of patented inventions had been
imitated within 4 years. The fast depreciation of patent values confirms that knowledge created by research and innovation spreads
quickly and can be appropriated by other firms.




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Federal Support

Federal spending for R&D was about $60 billion in 1987, almost
half of the national total. In addition, a special tax credit is intended
to encourage private investment in research. Defense R&D has increased from 51 percent of Federal R&D spending in 1977 to 69 percent today. From 1980 to 1987 Federal spending for basic research
(defense and nondefense) increased by about 25 percent in real
terms to $9.7 billion. During the same period nondefense basic research grew from 28 to 46 percent of Federal nondefense R&D.
From the late 1940s to the mid-1960s, federally sponsored R&D
advanced mainly defense and space technology. From 1967 to 1977
overall Federal funding for R&D slowed, but larger amounts were devoted to health and applied research, especially in the social and environmental sciences. Applied energy research and demonstration
projects, heavily funded in the 1970s, have been curtailed in recent
years as unproductive and inappropriate objects of Federal support.
Recent concerns about international competitiveness, health, and national defense have prompted a surge in Federal support of basic and
defense research.
Returns to federally sponsored research are sometimes dramatic
and easy to see. Federal investment in satellite technology, for example, revolutionized the communications industry. Federal expenditures on defense and medical research help prevent war and improve
health, but these results, by contrast, are more difficult to quantify.
The results of basic research diffuse gradually into industries and
lead to increased innovation. One study of commercial innovations in
chemistry has found that university research, which was largely federally funded, accounted for a large proportion of footnotes in the scientific articles that announced the innovations.
The most direct measurement of returns to Federal R&D tries to
discern its effect on productivity, taking R&D (along with labor and
capital) to be an input, and production of goods and services to be
the output. Such studies have not shown a strong relationship between industrial productivity and Federal R&D. One study has found
a rate of return of only 1.5 percent to Federal R&D, compared to returns to private R&D of between 9.2 and 33.4 percent. These meager
results have been questioned as a measure of the contribution to
overall well-being, however, because most Federal R&D is directed
toward public goods that do not generate significant private returns.
In some areas, such as agriculture and health, returns to Federal
R&D appear to be robust. If public expenditures stimulate private
R&D, moreover, a portion of the high returns to private R&D could
be attributable to complementary Federal research. Studies of wheth-




180

er Federal R&D increases private R&D have yielded conflicting results.
Case studies of Federal R&D also have attempted to measure returns to investment. Some have shown high returns to particular Federal R&D investments, but these results cannot be generalized. It is
difficult to assign R&D inputs, especially in basic research, to the appropriate outputs. Furthermore, researchers tend to study successful
R&D projects and may fail to account adequately for the costs of unsuccessful efforts.
International Comparisons

Because of intense competition in international markets, the level
of U.S. investment in R&D has been questioned. The United States
invests far more in R&D than any other country in the free world,
spending more than two and one-half times as much as Japan, the
next largest investor. The United States, Japan, West Germany,
France, and the United Kingdom all devote about 2.5 percent of
GNP to R&D. If defense R&D is excluded, Japan's and West Germany's outlays relative to GNP are higher than those of the United
States by nearly 1 percentage point. The United States leads Japan
and West Germany, however, in the ratio of nondefense R&D expenditures to manufacturing sales. The U.S.S.R. reportedly devotes
the largest share of GNP to R&D. The productivity effects of this
spending, much of which is probably military, appear mixed.
In part because of its large investments, the United States sells
much more in R&D outputs, such as patent licenses, plans, and blueprints, than it buys. The balance of U.S. receipts minus payments for
royalties and fees has grown 3.4 percent annually in real terms from
1961 until 1986, reaching almost $1.7 billion in 1986. Relatively
large amounts of technological knowledge enter the United States in
the form of improved products, and large amounts diffuse out in the
form of licensed technology. Another indication that scientific knowledge is an important U.S. export is the large role American universities play in training scientists and engineers from other countries.
The United States has led the worldwide advance in science and
technology for many years, but the size of the U.S. lead has diminished. The number of patent applications made abroad by U.S. citizens, for example, fell by about half between 1969 and 1982, while
Japanese external patent applications grew by almost 55 percent. The
U.S. real trade balance in high-technology products, often used as an
indicator of competitiveness, fell by $41 billion (1987 dollars) between its peak in 1980 and 1986. This decline, however, coincided
with a large increase in the value of the dollar and a decline in all
other trade sectors.




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The term "competitiveness" suggests to some that growth in one
country disadvantages others. In fact, the United States gains from
scientific and technological progress made by other countries. That
penicillin was discovered in England and relativity in Switzerland
does not diminish their contributions to U.S. health and scientific understanding. Advances in science and technology, which diffuse into
and out of the United States and every other country, would be deterred by the closing of national borders to the transfer of knowledge.
The decrease in the the U.S. lead in science and technology has
prompted some to call for increased government support for R&D. It
is not clear, however, that U.S. firms invest too little in R&D or that
their returns are not competitive. One recent study has suggested
that applied R&D yields a higher return to Japanese firms, which in
some industries may be better than U.S. firms in transforming externally produced technologies into marketable applications. Both the
levels and overall returns to R&D investment in the United States,
however, compare favorably to those in Japan. Another study of
American and Japanese manufacturing firms found that Japanese
firms spend about the same amounts on research relative to sales as
U.S. firms, and they appear to gain similar returns.
ROLE OF GOVERNMENT

Because returns to investments in knowledge are difficult to measure, government research policy has no straightforward guide. Private firms must estimate the appropriate levels of R&D under conditions of greater uncertainty than is common for other kinds of investment. Private firms, however, unlike governments, both bear the
costs and realize the gains from their investments in knowledge. The
costs of government research, by contrast, are borne by taxpayers,
while the benefits accrue to the public at large or to particular industries or firms. Private firms have incentives to invest the amount that
produces the greatest net return, but governments do not face similar incentives or constraints. Thus governments usually can encourage R&D most efficiently by defining and enforcing property rights
so that private researchers and their sponsors can undertake such activities profitably.
Providing incentives for R&D often involves extending the application of property rights in new ways. The definition of property rights
in the use of satellites and their orbits, for example, has advanced
telecommunications substantially. The definition of new property
rights creates incentives for continued technological advancement
that leads, in turn, to the more productive use of resources.




182

Defining property rights to research in a way that creates incentives for private firms to sponsor it is sometimes difficult or impossible. Purely basic research, for example, creates new knowledge that
spreads into the world at large, improving life in unpredictable ways.
Experience suggests that payoffs from basic research can be very
high, even if they cannot be fully anticipated. The basic research that
unraveled the molecular structure of DNA (deoxyribonucleic acid),
for example, led to the birth of a new industry—genetic engineering.
Individuals and firms that sponsor research can expect to capture
only a fraction of the total yield it produces. One study estimates that
the social returns of industrial innovations are about double the private returns. Firms tend to invest only where their gains are expected
to cover costs. Thus, for basic research that produces unpatentable
but potentially valuable new knowledge, an absence of public support
would leave social benefits unexploited. The appropriate amount of
basic research, the desirable level of public support, and the best allocation of resources among competing research opportunities are
difficult to determine. Policymakers must estimate the prudent level
of investment without exact quantitative evidence of rates of return,
weighing the costs of diverting resources from productive private
uses.
Firms sometimes may capture significant returns from research
even without well-defined rights to innovations, if the research is applied to a product or service for which they represent a large share of
the market. A very large computer firm, for example, may find it
profitable to invest in relatively basic research on superconductivity,
because it may hope to create highly profitable new products on the
basis of resulting innovations.
If no single firm has a large enough share of the industry to fund
research profitably, users of that research may form organizations to
sponsor it. Private cooperative research efforts in the computer industry and voluntary organizations of farmers that fund research on
plant disease are examples.
For potential innovations with many beneficiaries, however, the
costs of organizing and operating a voluntary organization may be
high, and access to the innovation by nonparticipants may be almost
impossible to preclude. Compulsory funding through specific taxes
or, if benefits are broad and indirect, through general funding is then
sometimes used. Government funding of relatively basic, agricultural
and health research often is justified in these terms.
Public goods that require large research inputs present a much
clearer case for government support. Projects such as the superconducting super collider, if they are to be carried out at all, must be
supported by government. National defense and protection from




183

contagious diseases depend on specialized research for which private
individuals do not have adequate incentives. About 80 percent of federally funded R&D is devoted to defense or basic research.
INTELLECTUAL PROPERTY RIGHTS

Investment in knowledge, like other investment, depends on rights
to future returns. Even in research that is publicly supported, the incentives created by property rights have powerful effects.
Patent, licensing, trademark, copyright, and trade secrets laws are
critical in determining the share of the returns from commercially
valuable ideas and inventions to which an inventor or investor is entitled. The dramatic advance of commercial biotechnology since 1980,
for example, was aided by the U.S. Supreme Court decision that
microorganisms produced by genetic engineering were patentable.
Building on the long-established principle that specially bred lines of
plants and animals belong to their breeders, genetically engineered
higher organisms, such as improved goats and cattle, now are protected by property rights. Legislation such as the Plant Variety Protection Act of 1970 and subsequent regulatory changes have made
property rights in agricultural innovations easier to establish. As a
result, research previously supported by government can be undertaken profitably by private firms, which now fund more than 60 percent of agricultural research.
This Administration has supported many actions that protect intellectual property, including stronger international enforcement of
property rights, facilitation of joint ventures, and improved procedures for regulatory review. For example, incentives for pharmaceutical innovations have been strengthened by reducing the time for regulatory approval and extending patent life to make up for most of
the time lost during government review.
International enforcement of intellectual property rights is increasingly important as national economies become more closely linked by
trade and investment. U.S. firms encounter myriad problems in protecting their intellectual property abroad. Some countries offer only
limited protection to process patents. Others do not recognize patents on pharmaceuticals and chemicals or copyrights on computer
software. Most newly industrialized countries lack rules sufficiently
flexible to offer protection to new technologies such as biotechnology and satellite communications.
This Administration strongly supports protection of intellectual
property rights through the General Agreement on Tariffs and
Trade, and it is working to end piracy that erodes incentives to innovate (Chapter 4). U.S. inventors have been defended against the importation of goods made abroad with unlicensed technology by vig-




184

orous enforcement of existing trade law. The Administration also
supports changes in the law to strengthen intellectual property provisions. The United States has proposed that the Organization for Economic Cooperation and Development (OECD) work to establish a
framework in which nations cooperatively support basic scientific research and training and enforce intellectual property rights.
Intellectual property rights, broadly conceived, include not only
the right to exclude others from the use of one's knowledge, but also
the right to share knowledge for productive purposes. Private firms
may want to conduct joint research in order to realize economies of
scope and scale. In the past, fear of inappropriate application of antitrust laws has inhibited cooperative research among competing firms.
By defining antitrust liability more clearly, the National Cooperative
Research Act of 1984 opened the way to research joint ventures
which may make research profitable in areas where property rights
are difficult to define or enforce. In the computer industry, for example, cooperative research already has yielded important innovations
and marketable products. Fear of antitrust liability sometimes has
prevented firms from broad licensing of intellectual property. This
Administration supports legislation that would promote the dissemination of new technology by preventing the award of multiple antitrust damages in cases where patent licensing has no anticompetitive
effect.
Federally sponsored research can benefit from the incentives created by property rights. The Patent Law Amendments of 1980 provided a uniform system for assigning title to inventions made at universities that conduct government-sponsored research. Between 1980
and 1986 cooperative ventures increased, and the number of patents
issued to American academic institutions grew by 70 percent. Before
these reforms, patenting such inventions was uncertain, and cooperative research ventures between private firms and universities were
difficult to establish because of the complex regulations that accompanied Federal funding. The Technology Transfer Act of 1986 also
should allow government scientists to respond better to market demands by simplifying the process by which Federal laboratories' discoveries may be patented and developed. For example, a Federal laboratory and a private biotechnology firm jointly are exploring vaccines against poultry disease.
INCENTIVES IN GOVERNMENT RESEARCH

The Federal Government does not have the appropriate information and incentives to determine the most useful outputs of R&D,
except when the government is the principal user. For example, in
areas of defense research such as aviation, computers, and semicon-




185

ductors, the Federal Government was for many years not only the
primary funder but also the primary user of the R&D product. Government thus had extensive knowledge of its needs and could guide
research toward successful applications.
Federal support for R&D in health and agriculture often is mentioned as an example of government research that has produced
large social benefits. Research in these fields illustrates the importance of close contact between the performers and users of R&D.
The close association of most schools of agriculture and medicine
with the decentralized farming and health care industries may allow
scientists to have more contact with the ultimate users of R&D outputs when deciding how to allocate R&D resources than would be
the case were research more centrally directed.
In contrast to research concerning public goods, the Federal Government's efforts to fund innovations in the private sector often have
been unsuccessful. Government-sponsored energy research and research into building materials and low-cost housing design produced
little that was ultimately marketable.
Support of synthetic fuels is perhaps the most notable example of
inappropriate government-directed investment in recent years. Citing
the dangers of dependence on imported oil, the previous Administration proposed spending $88 billion to speed the development of synthetic fuels. The Energy Security Act of 1980 established price supports, direct subsidies, tax credits, and loan guarantees to encourage
participation in the program.
After the synfuel program began, higher world energy prices induced greater supplies and conservation. In 1981, after deregulation,
oil prices declined. However, the synfuel policy was based on the assumption that oil prices would reach $40 to $70 per barrel. Weak
energy prices and political controversy helped convince the Congress
to reduce the Synthetic Fuels Corporation's funding substantially in
1984. With the fall of world oil prices, much of the Federal Government's support of windmills and other quixotic energy projects came
to an end. The history of these energy initiatives suggests that government should not try to impose new technologies on an industry
which is unwilling to commit its own resources to them, and that political influence can make policies that are obvious economic failures
difficult to abandon.
MARKET FLEXIBILITY
Economic growth requires many adjustments, including the expansion of productive activities and the abandonment of those that prove
unproductive. In a dynamic economy, markets for all productive fac-




186

tors—labor, capital, and natural resources—must accommodate shifting patterns of demand and changing technologies. As the economy
grows, capital is assembled and used in new configurations, and industrial as well as occupational shifts take place in the labor force.
The value of aggregate output is increased when factors of production shift to more highly valued uses in response to changes in
demand and in costs of production. Many changes result from investments in human and other forms of capital and from new technology.
The development of aircraft and computers, for example, has opened
new opportunities for consumption, production, and employment.
Increased income per capita, as well as relative price changes, lead
to shifts in demand patterns. Consumers with higher incomes
demand a wider variety of products and more services relative to
goods; they spend a smaller share of their income on the basic necessities of life. At the turn of the century, households spent more than
30 percent of disposable income on food, compared to about 15 percent today. Thus, choices available to consumers have increased as
has discretionary spending for travel, recreation, and other services.
Changes in output, consumption, and technology are essential features of economic progress. Rigidities and distortions in markets can
impede natural responses to economic change, reducing potential
gains from investment and slowing productivity and income growth.
Maintaining the flexibility of labor markets is particularly important
for a healthy economy.
MARKET BARRIERS AND DISTORTIONS

Throughout the world there is increasing recognition that economic growth requires the reduction of structural barriers and distortions
within domestic markets, as well as the reduction of protectionism in
international trade. Constraints on capital and labor markets stand in
the way of shifts in comparative advantage, barring allocation of resources to more productive uses. Taxation and regulation are major
sources of market distortion, inhibiting activities that otherwise
would expand or providing subsidies to activities that otherwise
would be curtailed.
Taxation

In general, taxes are distortionary, because they interfere with the
efficient allocation of productive resources and reduce incentives to
work, save, and invest. These burdens can be limited by keeping
marginal tax rates as low as possible and by imposing similar tax
rates on similar products, resources, or activities.
The Tax Reform Act of 1986 moved the U.S. tax system substantially in the direction of lower and more equal marginal tax rates. As
discussed in Chapter 2 of the 1987 Report, tax reform reduced the




187

marginal Federal tax rate on labor income from 25.8 percent to an
average 21.7 percent, and it has significantly lessened differences in
tax rates on the income from alternative forms of investment. The
higher after-tax yield of labor income encourages work and investments in human capital, which in turn increase the productivity of
labor. More equal taxation of investments also encourages a more
productive distribution of capital, because investors' decisions will be
made on the basis of expected economic returns rather than tax consequences.
It is estimated that over the long term tax reform will increase real
net national product by approximately 2 percent and raise aggregate
consumption by roughly 4 percent. The net improvement in economic welfare is equivalent to about $50 billion per year.
Tax distortions, however, cannot be avoided entirely. Any practical
system of taxation induces distortions, as discussed in Chapter 2 of
the 1985 Report. Costs of resource misallocation have been estimated
to range between 20 and 50 cents per additional tax dollar collected.
The costs of private compliance with personal income taxes are estimated to add another 5 to 7 cents per dollar collected. Because government outlays must be financed by tax revenues—now or in the
future—and because taxes have such sizable indirect costs, government spending should be undertaken only if the expected value of
the activity is substantially higher than its outlay costs. Government
services and transfer programs that fail to meet this test should be
cut back.
Regulation

Although often intended to correct externalities and other market
imperfections, government regulation frequently causes distortions
that reduce allocative efficiency and impede growth. The regulation
of financial services, for example, has reduced the efficiency of capital markets. While in force, Federal interest rate ceilings on bank deposits lowered the returns available to small savers and constrained
the amount of credit that depository institutions could provide to
businesses and homeowners. Similarly, interstate banking laws restrict the flow of funds to productive investments and interfere with
diversification of risks, thus reducing the gains that would be available to both savers and borrowers in nationwide capital markets.
During the past 50 years, regulation of agriculture has posed significant obstacles to economic efficiency and adjustment. Agricultural
regulation has restricted imports, subsidized production, raised
prices, and kept land idle. Federal outlays and consumer costs of
farm commodity programs are estimated to have been about $22 billion in 1987. Furthermore, the regulation of agriculture has slowed
the movement of labor and capital to other industries. It has wasted




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resources by distorting investment within agriculture and by diverting
investment from more profitable activities.
Rent controls, remaining controls on trucking, natural gas regulation, automobile fuel economy standards (discussed in Chapter 5 of
the 1986 Report), import barriers such as voluntary agreements to restrict imports of automobiles, and some rules designed to control environmental risks (discussed in Chapter 6 of the 1987 Report) are all
examples of regulations that reduce market flexibility. Price controls
distort resource allocation. Regulation often reduces incentives for
investment by insulating firms from competition, by creating hidden
subsidies and uncertainty about future changes in rules, and by requiring adherence to rigid standards that preclude innovation and
the introduction of lower cost methods of production. Safety and
health regulations that require the installation of particular equipment, for example, may stifle incentives for developing better ways of
improving workplace safety.
In recent years the United States has made substantial progress in
deregulating oil prices as well as major industries such as airlines
(Chapter 6), buses, and railroads. Deregulation of transportation industries has been associated with a resurgence of productivity growth
(Chapter 2); one study has estimated savings for the economy of
roughly $50 billion per year. Procedures also have been established
for review of Federal regulations on a systematic basis to ensure that
new regulations are worth their costs.
LABOR MARKET FLEXIBILITY

Flexibility in labor markets is particularly significant for allocative
efficiency and growth, because labor is the dominant input to production. In the United States, labor has contributed about 70 percent
to output for well over a hundred years. Compensation of employees
now accounts for almost 75 percent of national income, up from about
55 percent at the turn of the century.
In addition to improving the allocation of productive resources,
flexible labor markets expand employment opportunities and further
contribute to growth by encouraging investment. Adaptable labor
markets increase returns to investment, particularly in knowledge, by
rewarding the acquisition of skills that are in demand and the adoption of cost-saving innovations in production.
As discussed in Chapter 2, U.S. labor markets have been remarkably successful in generating new jobs for a growing labor force and
in accommodating structural change. Primarily as a result of strong
growth in productivity, the share of the U.S. labor force devoted to
agriculture fell from more than 80 percent in 1810 to about 3 percent today, as shown in Chart 5-4. The share of the labor force in




189

manufacturing rose earlier in this century, but has declined in recent
decades, also reflecting strong productivity growth. Shares in finance,
government, and other services have increased. Employment has
shifted toward jobs that are safer and less physically arduous, and
that demand more human capital. Work fatality rates in service industries, for example, are less than one-sixth of those in agriculture.
Employment in manual and farm occupations, which accounted for
about three-fourths of U.S. jobs in 1900, fell to less than 40 percent
in 1970, and the decline has continued.
Chart 5-4

Labor Force Shares by Industry

Percent
100
90
80
70
60
50
40
30
20
10
0
1810

1830

j j Agriculture

1850

1870

§ | Nonagriculture
^

1890

1910

£2 Manufacturing1

1930

1950

1970

[ H Transportation and Trade

Other Services

J/Also includes fisheries, mining, and construction.
Sources: Department of Commerce and Department of Labor.

Contrary to popular notions, increased unemployment in the postwar years in the United States has not been associated with unusually
rapid changes in industrial structure. Measures of the structure of
employment by industry in the United States do not indicate greater
turbulence or increasingly rapid shifts in employment, across either
major or more narrowly defined industrial sectors. The level of unemployment accounted for by workers' changing industry has been
steady since 1970.




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Flexible labor markets facilitate change, but they do not preclude
job attachment or long careers in a single firm. Long-term employment is common among American workers. About half stay with a
single employer for 8 or more years, and almost 30 percent do so for
at least 20 years.
Most changes in employment patterns take place as a result of employment growth and voluntary job change. Workers, particularly the
young, change jobs as they find opportunities that better suit their
skills and preferences. Evidence shows that the changing employment
patterns of workers under 25 years of age account for much of the
sectoral reallocation of jobs. In manufacturing, voluntary quit rates
have ranged from about 15 to 25 percent of the work force in recent
years, and layoffs typically have accounted for less than half of all job
separations.
However, job losses that occur in mid-career as a result of declining employment in particular industries or firms can pose serious
problems for workers and their families, leading to unemployment,
reduced earnings, and other hardships. The BLS estimates that, between 1981 and 1985, 5.1 million workers lost jobs they had held for
more than 3 years, due to slack work, job abolition, or a plant or
business closing. On average, a little more than one-half million of
these workers lost jobs each year because their plants closed or their
employers went out of business. Most of the affected workers experienced some unemployment, and some had lengthy unemployment
spells. Other research based on these data, however, has found that
the duration of joblessness over the year for displaced workers was
similar to that of average workers who had spells of unemployment.
Evidence suggests that earnings losses do not persist over the long
term. Losses for workers whose jobs were abolished vary considerably, reflecting losses in specific human capital and sometimes higher
wages associated with unionization. On average, wages upon reemployment have been about 90 percent of prior wages. Losses typically
have been higher in smaller and weaker labor markets. Workers with
more job tenure experienced larger losses, as did those with less
education. More educated workers had less unemployment. Workers
with more schooling have better access to labor market information,
a greater capacity to identify new opportunities, and more skills of
general value. In addition, forgone earnings during unemployment
are higher for workers with more human capital. Evidence shows that
schooling eases the transition for those leaving agricultural as well as
industrial jobs.
Employment growth and a general absence of impediments to mobility have facilitated the voluntary reallocation of labor to expanding
sectors. When jobs have been lost involuntarily, problems for individ-




191

uals typically have been temporary and usually mitigated by their
general knowledge and skills and by the availability of alternative employment.
POLICIES FOR LABOR ADJUSTMENT

The flexibility of the U.S. labor market, and the relative ease with
which workers can move between geographic areas and avail themselves of better job opportunities, have contributed substantially to
economic growth. Government can improve labor adjustment by reducing existing market interventions and avoiding the imposition of
new ones.
A number of labor market regulations, such as the minimum wage,
many occupational safety and health rules, and occupational licensing, impair flexibility and adjustment. Many studies have shown that
the minimum wage is a barrier to work and job-training opportunities
for inexperienced and unskilled workers. Erosion in the real value of
the minimum wage has contributed to substantial recent employment
growth and reduced unemployment among black teenagers, both of
which are documented in Chapter 2. Further lowering of the minimum wage would increase employment and accumulation of human
capital among young people, thereby raising future wages as well as
economic output.
Providing unemployment insurance and training may produce net
economic gains by broadening public support for the removal of
trade barriers and other market distortions. But programs intended
to ease the transitions of workers to new jobs can slow economic
change by creating work disincentives and other sources of inefficiency. Improving current policies that directly address adjustment—unemployment insurance, pension rules, and retraining—would increase
market flexibility and enhance prospects for growth. Establishing
protection for existing jobs, such as requiring advance notice of layoffs, would introduce new market rigidities.
Reducing the Inefficiencies of Unemployment Insurance

The Federal-State unemployment insurance program, established
more than 50 years ago, provides partial wage replacement for experienced workers who lose their jobs because of temporary layoffs or
job terminations. With few restrictions, States establish the amount
as well as the duration of compensation and the structure of payroll
taxes. Weekly benefits replace about 35 percent of prior wages on average; in most States compensation may be received up to 26 weeks.
Total benefits were about $14 billion in 1987. Benefit outlays are
greater in years of higher unemployment; for example, they were $23.8
billion in 1982, about 70 percent higher in nominal dollars than in 1987.




192

Compensation is intended to reduce earnings losses that result
from changing market conditions and thus to cushion labor adjustment. By replacing a portion of wages during unemployment, benefits support the search for a new job. At the same time, benefits tend
to prolong unemployment by reducing its costs for workers and allowing them to search longer, but they do not appear to increase
subsequent wages. Recent Federal reforms and State actions to tighten eligibility and job search requirements have reduced work disincentives substantially. Additional policy options to enhance reemployment incentives and the effectiveness of job search efforts are
being explored.
Further improvements can be realized in the program's financing.
Risk rating, or experience rating, is fundamental to private insurance,
because, when higher premiums are charged to insure against greater
risk, insured parties have an incentive to reduce risk. Since the unemployment insurance system is only partially experience rated, it provides incentives that increase unemployment. When a firm can lay off
workers temporarily and spread much of the cost to other firms that
also pay taxes into the program, it is more likely to generate layoffs.
Strengthening experience rating would reduce unemployment by
making individual firms bear more of the cost, thereby encouraging
them to explore alternatives to temporary layoffs, such as rescheduling work or modifying inventories.
Financial transfers that are generated by the tax structure of the
unemployment insurance system subsidize declining firms and those
in seasonal or cyclical industries at the expense of growing or stable
firms. Studies have found that agricultural and construction firms are
heavily subsidized by firms engaged in trade and in finance, insurance, and real estate. States have made a number of changes during
the 1980s to improve experience rating, partly in response to Federal
law. The Department of Labor, in an effort to increase information
and accountability, recently has required more complete State reporting of experience rating.
Improving Pension Rules

Pension termination insurance, which has been a Federal responsibility since 1974, has been funded by a flat premium per worker. As
a result, firms that fund their pension plans inadequately have been
subsidized at the expense of firms that maintain sound funding.
These indirect subsidies to poorly funded plans have reduced incentives for adequate funding and benefited failing firms at the expense
of healthier firms. This Administration strongly supported recently
enacted legislation that establishes partial risk rating of pension premiums and improved pension funding rules. This legislation will
reduce the automatic financial transfers generated by the system. An




193

additional step would allow pensions to be insured privately, provided basic standards are met. Private pension insurance would have
major advantages. Premiums would be based on risk, thus preserving
incentives for adequate pension funding as well as eliminating remaining automatic subsidies, and insurance would likely be provided
at an even lower cost for well-funded plans.
Government regulation of pensions can distort resource allocation
through the effect on job tenure and training as well as through
cross subsidies among firms. Rules such as those requiring early vesting may increase worker mobility, but at the same time such rules diminish employer incentives to provide training. Employer investments in job training are based on expectations of future returns
from increased worker productivity. To the extent that employment
contracts are precluded from offering pension inducements for
longer worker tenure with the firm, the amount of training is likely to
be reduced, along with future productivity. Among other features of
privately negotiated employment contracts, pension provisions reflect
the benefits and costs of job attachment to workers and firms. Government mandates with regard to pensions and other employment
benefits can prevent employers from offering the most desirable pay
packages to workers and can slow investment in human capital.
Retraining
Government-supported retraining may facilitate reemployment following job loss. Job training and retraining, however, are primarily a
private responsibility. Since private firms know best what skills they
require, they can tailor training to their needs. In its role as employer, the Federal Government provides substantial amounts of training
for military and other Federal occupations. As discussed earlier, however, the wider effectiveness of government-run training programs in
raising earnings over the long term has not been established.
The Administration's proposed Worker Readjustment Assistance
Program (WRAP) would replace Trade Adjustment Assistance (TAA)
and other existing retraining programs. In addition to training, TAA
provides compensation which, in combination with unemployment insurance, can be received for as many as 78 weeks. Evidence shows
that TAA has failed to facilitate adjustment and has prolonged unemployment. WRAP would offer training to all experienced workers
who have lost their jobs, in recognition that adjustment costs are unrelated to the cause of job loss, whether changing trade patterns or
other factors. At the options of States, vouchers for purchasing training in the market could be offered along with traditional retraining
services and job search assistance.




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Costs of Job Protection

Government actions to insulate industries and jobs from international competition, or to protect existing jobs by requiring employers
to provide advance notification of layoffs and plant closings, would
reduce market flexibility and diminish overall employment opportunities. Proponents argue that advance notice of layoffs would ease
worker adjustment. Mandated notice, however, as called for in proposed trade legislation, would constrain the responses of firms to
changing market conditions and reduce employment. Because required notice means that employers would incur greater liabilities in
the event of business contractions, hiring during expansions would
be curtailed. Higher costs and increased risks also would discourage
new business formation. In contrast, when job security provisions are
chosen in the marketplace, they can be weighed against other forms
of compensation according to workers' preferences and employers'
costs.
Employers frequently provide their workers with advance notice.
Recent government surveys have found that advance notice of the
specific date of an impending layoff was given in about one-half to
two-thirds of the cases surveyed, and general notice in one-third to
three-fourths of the cases. On average, general notice was given 46
days in advance. Notice was not the result of collective bargaining
alone; the likelihood of receiving notice was about equal in union
and nonunion establishments.
Although labor market performance is affected by numerous
forces, including macroeconomic and tax policies, an important
reason for high unemployment and lack of job growth in Europe has
been labor market rigidities. Many European governments severely
restrict an employer's ability to dismiss workers, and they require
substantial severance pay and notice prior to layoff. Unemployment
benefits are higher and last longer than in the United States, commonly replacing at least 70 percent of prior wages for a year or
more, and more of the unemployed qualify for benefits. Financing,
moreover, is not experience rated. Employment in Western Europe
has been flat since 1970; during the same period, employment in the
United States has increased by more than 40 percent. Unemployment
rates in Western Europe have approximately tripled since the early
1970s, and they are now higher than in the United States, thus reversing earlier patterns. The incidence of long spells of unemployment is substantially higher in Western Europe than in the United
States, as is unemployment among youth.
European governments have realized that the inflexibility of their
labor markets due to job security mandates, along with a variety of
other labor market interventions, have impaired growth in employ-




195

ment and spawned high unemployment rates, particularly among
youth. During the 1980s, European countries have begun to reverse
previous policies of increasing job protection, unemployment compensation, and other measures that impose constraints on labor markets and distort incentives. A number of countries have reduced the
costs of employment termination by relaxing job protections and increasing the ability of employers to effect dismissals. Governmentmandated severance pay in Western Europe has been reduced from
the levels of the late 1970s. In a majority of OECD countries, unemployment benefits, which had risen during the 1970s, have been reduced. Stricter eligibility conditions have been applied and work incentives strengthened. In a number of countries, minimum wages
have been held constant in nominal terms and reduced in real terms.
Several countries have reduced minimum wages for youth.
Policies such as those in Western Europe that had attempted to
reduce adjustment costs by preserving existing jobs at the expense of
new jobs have been recognized as shortsighted, benefiting some
workers by shifting high costs to others. In addition to the steps that
individual countries have taken to reverse such policies, the OECD
and the Venice Economic Summit formally recognized the need for
removing labor market barriers and increasing flexibility. At its May
1987 Ministerial meeting, the OECD concluded that improved functioning of labor markets is essential for sustained economic growth.
CONCLUSION
Investments in human capital and in science and technology have
made substantial contributions to productivity and economic
progress. In the future such investments 'may assume even greater
importance. Market incentives provide the primary mechanism for
the accumulation and allocation of investments in knowledge and
skill as well as in physical capital. Government support for education
and research can improve prospects for long-term economic growth,
but it should be linked closely to private incentives. Public support of
most education and training and of research should be limited to investments for which individuals and firms do not have adequate incentives and for which benefits exceed costs, including costs that
arise from tax distortions. Many government interventions, including
those that are designed to spur increases in knowledge, generate
costs and inefficiencies that in the end retard growth.
Economic progress requires change, and to realize the gains from
investments in human capital and in research and development it is
vital that markets remain flexible and responsive. To resist change
and to introduce protection that slows change will stifle investment




196

and diminish opportunities for future growth. Policies that reduce
market barriers and strengthen the incentives of individuals and businesses to invest and to innovate are the surest ways to improve economic performance. Government can encourage further advances in
knowledge and economic progress by maintaining flexible markets
and a stable framework in which property rights are protected and
initiatives are rewarded.




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CHAPTER 6

Airline Deregulation: Maintaining the
Momentum
DURING THE LAST DECADE there have been dramatic changes
in the way America's transportation sector is regulated. The railroad,
bus, trucking, and airline industries all have become more efficient as
a result. Since virtually all aspects of the economy depend on the
transportation system, gains in this sector help the overall economy,
thereby improving U.S. competitiveness. The principal force underlying these changes in productivity has been a deregulatory environment that allowed greater price flexibility for businesses while reducing government interference.
The deregulation of trucking, railroads, buses, and airlines began
in the 1970s when government officials recognized that regulation
was stilling competition. After the regulatory bodies began to reduce
their control over prices and entry, the Congress enacted landmark
legislation loosening or abolishing Federal controls over the transportation industries. For example, the Staggers Rail Act of 1980 allowed railroads to set prices freely in markets where they could not
exercise market dominance. Railroads no longer are subject to rate
regulation in these markets, and price intervention on the part of the
Federal Government has been reduced. The Motor Carrier Act of
1980 relaxed government regulation of trucking. Because barriers to
entry have been lowered, many new competitors have entered the
market. Trucking firms now have greater freedom in setting rates.
The Bus Regulatory Reform Act of 1982 relaxed both entry and fare
restrictions for the intercity bus industry. Although government regulation has not been eliminated entirely from these industries, the role
of the government has been reduced significantly.
While deregulation substantially improved productivity and efficiency in the transportation sector, the Airline Deregulation Act of
1978 has had the greatest immediate impact on the public. The benefits to travelers from airline deregulation have been estimated to
exceed $11 billion per year.
The deregulation of the airline industry has permitted greater
competition which, in turn, has led to a dramatic restructuring of the
airline industry. The industry has become more streamlined. Fares




199

generally are much lower than they would have been under regulation, and a wider menu of travel options is available to the consumer.
Although there had been concern about air service to small communities following deregulation, such service, as measured by the frequency of flights and flight length, has improved.
Despite the economic gains from deregulation, complaints about a
possible decline in the level of safety and an increase in flight delays
have increased. It is sometimes argued that regulation should be restored. These concerns must be examined in the context of the evolution of the airline industry since deregulation. While airline safety
is a serious public concern, the record indicates that safety has not
deteriorated under deregulation; in fact, it appears to have improved.
Moreover, while airport and airspace congestion has worsened, this is
a direct result of the success of deregulation. More people are flying
now than ever before, but the local and Federal authorities charged
with managing the airports and airspace have been unable to adjust
to the dramatic growth in demand. Congestion is a natural consequence of the fact that growth in demand for air travel has exceeded
the supply of airport and airspace services.
The solution to the problem of increased congestion lies not in
resurrecting an outmoded system of regulation with onerous restrictions on entry and fares. Rather, the solution lies in devising economic approaches that will enable the supply of airport and airspace
services to keep pace with the growing demands of the American
public for air transport.

THE REGULATORY ENVIRONMENT
For nearly four decades before the enactment of the Airline Deregulation Act in 1978, the Civil Aeronautics Board (CAB) exercised
extensive regulatory control over the domestic airline industry. The
CAB controlled the entry and exit of carriers on interstate routes and
approved the fares charged on those routes. The CAB appears to
have tried to stabilize the industry, attempting to shield existing carriers from entry and price competition, and to provide service to a
large number of communities. To the extent that airlines competed,
they focused on features other than price, such as departure frequency and food quality. This competition over service quality limited the
CAB's ability to use price and entry regulation to achieve its goals
concerning profits, service, and stability.
In order to provide service to more places, the CAB attempted to
favor short-haul service in two ways. First, for long-haul routes, fares
were set at high levels relative to costs, and fares for short-haul routes
were set at low levels relative to costs. As a result, passengers on




200

long-haul routes paid significantly higher prices than they would have
under competition.
Second, direct subsidies were given to airlines that served small
communities. The Federal Government frequently has used subsidies
to ensure that services were provided to less densely populated areas.
For example, subsidies have been provided for post offices and telephone service in small towns and remote areas. Thus it is not surprising that subsidies were given to the airline industry for similar
purposes.
These direct subsidies have created a number of problems. For example, because airlines were subsidized on the basis of the number
of departures, they had an incentive to schedule flights with multiple
stops, thereby resulting in lengthy flight times from small communities to major cities. Since the subsidies did not vary with the time of
day, airlines typically scheduled their service to small communities
during off-peak periods. Because the planes used on these subsidized
routes often were borrowed from other routes, they were not efficiently tailored to the size of the subsidized markets.
Even with the subsidy program, many carriers chose to limit service provided to small communities. From 1970 to 1975, the CAB permitted certificated carriers to reduce their service to small communities by nearly 25 percent. At the same time, unsubsidized commuter
carriers not under the CAB's regulatory jurisdiction were increasing
service to these communities.
Subsidies to airlines peaked in 1981 at $109 million. As traffic on
commuter airlines grew, fewer subsidies were needed to maintain
service; consequently, subsidies now have fallen to less than $30 million. A 1987 study by the Department of Transportation (DOT) projected that an end to these subsidies would result in a loss of service
to 70 of the 102 airports (excluding Alaska) currently in the program.
None of these 70 communities board more than 13 passengers per
day, and over half board fewer than five passengers per day. In addition, almost half of these airports are less than 75 miles from other
communities with air transportation, and only eight are more than
150 miles from alternative air transport. Although the Airline Deregulation Act would have ended these subsidies in 1988, legislation
has just been enacted extending the program for another 10 years.
In order to maintain service to small communities and stability in
the industry, the CAB regulated entry into the profitable long-haul
markets and exit from the less-profitable short-haul markets. The
type and extent of route regulation depended on the category of the
carrier. Route restrictions were imposed on all interstate carriers,
except for commuter airlines and charters. For example, carriers
often were precluded from operating beyond a stated point. In addi-




201

tion, carriers sometimes were required to make intermediate stops.
Restrictions on entry into the major interstate "trunk" markets were
particularly stringent. From 1938 through 1978, the CAB did not
permit a single new interstate trunk airline to enter the market.
The CAB did allow limited entry in some markets. After World
War II the Congress pressured the CAB to permit the creation of
"local service" airlines. These airlines replaced much of the federally
subsidized service that the trunks provided to smaller communities.
Initially, local service airlines were precluded from competing with
the trunk airlines. Then, in an effort to reduce the growing cost of
the subsidy, the government allowed local airlines to offer service in
selected markets served by the trunks. This policy helped foster limited competition between the trunks and the local service airlines.
The few areas where the CAB did not regulate rates, entry, and
route structure included small commuter airlines, airlines providing
charter services, and intrastate carriers. However, the CAB did limit
commuters by setting the maximum gross takeoff weight at 12,500
pounds, which permitted approximately 20 seats. This limitation subsequently was relaxed somewhat, but it still served to restrict commuter service to less densely populated markets.
Intrastate airline carriers had complete flexibility in choosing
routes and fares. The intrastate carriers in California and Texas
charged significantly lower fares than the interstate trunks charged
on routes of similar distances yet made profits. The fare per mile in
unregulated markets was often half as much as fares in comparable
regulated markets. Fare comparisons between interstate and intrastate markets made it easy to see that there could be substantial gains
from deregulation.
RESULTS OF DEREGULATION
Several factors have affected the performance of the airline industry over the last decade. Deregulation, while important, must not be
given undue credit or unjust blame for the recent performance of the
industry. Technical innovation, for example, has contributed to improvements in fuel efficiency and safety. The performance of the domestic economy also is linked to the overall health of the domestic
airline industry, because more people travel when the economy is
doing well. Since 1982 the United States has enjoyed its longest postwar peacetime economic expansion. Thus it is important to differentiate between the gains resulting from economic expansion and those
resulting from deregulation. Even controlling for such changes in the
economy, however, it is clear that deregulation has had a substantial
positive effect.




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LOWER FARES

The most important economic benefits that have resulted from
U.S. airline deregulation are decreases in fares and increases in the
frequency of service. The use of discount fares, which offer reductions from the standard coach fare, has increased dramatically. In
1976, 15 percent of travelers enjoyed discount fares; by 1987 this
number had grown to 90 percent. The substantial rise in the availability of discount fares has been accompanied by a 15 percent decrease in these fares, adjusting for inflation.
Since the old regulatory policies tended to keep long-haul fares
relatively high, the greatest reductions in discount fares have occurred for longer flights. For example, discount prices for flights
over 2,500 miles have dropped by 35 percent in real terms. The
availability of discount fares has increased significantly in short-haul
markets as well. For flights less than 500 miles, the prices of discount
tickets have dropped by about 10 percent in real terms.
In contrast to discount fares, average full undiscounted coach fares
have increased by more than 10 percent in real terms; however, only
about 10 percent of current ticket sales are for full coach fare.
Changes in real coach fares also vary with trip length. For trips less
than 2,000 miles, average coach fares have increased. For trips exceeding 2,000 miles, real average coach fares have declined.
The widespread reduction in fares is caused by several factors. The
elimination of regulated fares was important in long-haul markets. In
high-density markets, two other factors contributed to lower fares.
First, high passenger volumes in these markets permitted airlines to
reduce their cost per passenger mile by making more efficient use of
their equipment. Second, these markets also tended to have more
discretionary travelers, who could take advantage of discount fares.
Indeed, discount fares are used most widely in those markets with
the highest passenger volume.
EFFICIENT ROUTING: THE HUB AND SPOKE

The route structure that evolved under regulation has undergone
major changes as a result of increased competition. Free entry into
city-pair markets has permitted the airlines to develop much more efficient routing patterns than under regulation. The most significant
change has been the growth of a "hub-and-spoke" delivery system.
As the name suggests, airlines have developed a series of networks
analogous to a bicycle wheel. The hub represents the center of the
network; the spokes link different origin and destination points. For
example, a flight from Hartford to San Diego may be routed through
a hub at Chicago.




203

Leading hubs of all major airlines have shown large increases in
traffic since 1978. In several cases airline departures from the major
hubs have more than doubled. In addition, the expansion of the huband-spoke system following deregulation has permitted four major
innovations benefiting fliers.
First, service to airports with low traffic volume has been expanded. While demand may not be sufficient to justify direct flights from
small airports to certain other locations, the new distribution system
allows the traffic from small airports to be combined at the hubs with
traffic from other spokes. This traffic then is routed through the various spokes of the hub. Thus being connected to a hub allows convenient access to many destinations.
Second, flight frequency is greater at both hubs and spokes, allowing the traveler to find more convenient flight times. Pooling traffic
at the hubs permits greater departure frequency to and from the
smaller airports. The convergence of traffic from the various spokes
also permits more frequent hub service. With the expanded set of
options, most travelers now are able to schedule their departures
closer to their preferred times.
Deregulation appears to have led to an overall increase in the frequency of service; however, there is a wide variation across different
markets based on passenger travel demand. Using a random sample
of markets from 1976 and 1984, researchers have found that service
improved across all market groups. Significantly, markets with the
lowest passenger volumes experienced the greatest increase in both
service and estimated welfare gain per traveler.
Although some communities have lost scheduled service, only in
rare instances has deregulation been the primary cause. A study
which took into account the economic and demographic changes in
the United States has concluded that the introduction of deregulation
has helped to slow the rate at which small communities have lost
service. Moreover, deregulation has allowed commuters and regional
carriers to expand more rapidly, feeding passengers into the hubs
and thereby strengthening the hub-and-spoke system. Since 1978 the
regional and commuter airlines have more than doubled the number
of their passengers and added service to over 140 airports not previously served by these carriers.
While the growth of hubs has improved the frequency of service, it
also has increased average travel time somewhat. Hub-and-spoke
configurations are partly responsible for this increase, since they typically involve a tradeoff between departure frequency and travel time.
More flights to a particular destination may be available, but some of
these flights may involve brief stopovers in other cities. Comparing
airline regulation in 1977 with a simulated deregulation scenario, re-




204

searchers have found that the average time increase for flights under
2,500 miles has been less than 10 percent, while average flight times
have decreased about 4 percent on trips over 2,500 miles. A study
has shown that consumers place greater value on the increase in departure frequency than on the losses that result from the small average increase in travel time. In some cases, the hub-and-spoke system
has had a salutary effect on travel time. For example, hub-and-spoke
networks have resulted in a dramatic reduction in flights with two or
more intermediate stops, thus leading to a reduction in travel time
for many city-pairs.
A third benefit from hub-and-spoke networks is that larger aircraft
can be used, because traffic has been consolidated. Bigger planes
cost less to operate per seat mile than smaller planes. In addition to
the cost savings, larger aircraft usually are thought to afford greater
comfort, so fliers also benefit in this quality dimension.
A fourth benefit of the growth of hub-and-spoke systems is that
more fliers have the opportunity to book on a single airline for their
entire flight. Research has shown that fliers strongly prefer traveling
on a single carrier to reach a destination rather than changing airlines on one-stop flights. Benefits include better coordination of
flight times and better baggage services. The consolidation of airlines
at a hub can provide more opportunities for passengers to choose
single-line service. In 1977, 68 percent of all connecting passengers
changed airlines, whereas only 12 percent do today.
EFFECTS ON LABOR

While airline productivity has increased, the effects of deregulation
on the airline labor market have been mixed. Employment in the airline industry has increased as a result of increased air travel. From
1977 to 1986 total airline employment increased by more than onethird. Because of general changes in the economy and dramatic
changes in energy prices, it is difficult to isolate the effect of deregulation on wages. From 1977 to 1984 it appears that airline wages did
as well as other sectors of the economy, if not better.
The aggregate impact on wages masks an important change in the •
wage structure resulting from deregulation. The introduction of deregulation led to intense pressure to cut costs so that lower prices
could be offered. This downward pressure on costs induced airlines
to seek work rule changes as well as changes in wage rates. These
changes have in some cases led to a dual wage structure in which
newly hired workers earn less for performing the same jobs than previously hired workers.




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INCREASES IN PRODUCTIVITY, PROFITS, AND WELFARE

Besides leading to lower fares and increased service, airline deregulation has resulted in more productive uses of inputs, such as
labor and equipment. The hub-and-spoke system, for example, has
helped to deploy aircraft fleets more efficiently, so more passengers
can be served better using the same resources. For example, commercial planes flew with 55 percent of their seats filled in 1976 and
this load factor increased to 60 percent in 1986. Moreover, airlines
have installed more seats in their aircraft since deregulation to accommodate the growth in demand. U.S. airline productivity increased
by 7 percent from 1976 to 1983, while the productivity of non-U.S.
carriers decreased by nearly 40 percent over the same period. This
comparison lends strong support to the view that deregulation has
had a dramatic positive impact on U.S. airline productivity growth.
The effect of deregulation on industry profits is difficult to estimate. The difference between the average return on capital invested
in the airline industry in the period following deregulation and in the
decade preceding deregulation is relatively small. Both before and
after deregulation the industry experienced financial losses during
periods of sharp fuel price increases and economy-wide recessions.
Attempts to control for macroeconomic factors and changes in input
prices suggest that the financial performance of the airline industry is
better than it would have been under continued regulation. One
study has estimated that profits in 1977 would have increased by
more than $4 billion if the airlines had been fully deregulated at that
time.
To measure the overall welfare effects of deregulation, it is necessary to quantify effects on airlines and travelers. Travelers have been
affected principally through reduced fares, increased frequency of
service, and changes in travel time between destinations. Both business travelers and pleasure travelers have benefited. Moreover, travelers using all sizes of airports experienced a net average gain in welfare. The welfare increase for the average traveler amounts to roughly $20 per trip. Summing the estimated aggregate gains to travelers
and airline companies yields a total of approximately $15 billion in
annual benefits from deregulation.
INTERNATIONAL CONSEQUENCES

The U.S. experience with deregulation has been influential in leading other countries to deregulate air travel. Great Britain recently
privatized its major state-owned airline. Canada and Japan are considering similar moves. New Zealand has taken steps parallel to those
in the United States to deregulate its air transport industry, and Australia plans to phase in airline deregulation by the early 1990s. After




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nearly 3 years of debate the European Community (EC) has approved the first steps of a liberalization package that took effect at
the start of 1988. Greater entry by carriers within the EC will be permitted, and it is estimated that fares for flights within Europe will decline by an average of 10 to 15 percent.
The International Air Transport Association (IATA) plays a major
role in attempting to cartelize international air travel by providing a
forum for price coordination exempt from the antitrust laws. Limitations on international competition also result from government regulation of entry and prices in international markets. Through a series
of bilateral agreements, countries have divided international markets.
In many cases only one carrier from each country is permitted to
serve a particular route. These restrictions on entry and price competition have led to a market structure reminiscent of the domestic U.S.
market under the CAB. Fares tend to be higher, and firms compete,
if at all, on service rather than on price. Governments sometimes negotiate bilateral agreements that not only limit total capacity but also
divide the airline traffic and profits between themselves. The principal source of price competition in European markets comes from
charter services, which are outside of IATA's purview. Indeed, charter services currently account for more than half of all travel in
Europe.
In order to promote competition in international aviation, the
United States has entered into a number of bilateral negotiations
with other nations to increase the access of U.S. carriers to foreign
destinations in return for greater foreign access to U.S. destinations.
Where these agreements permit greater entry and price flexibility,
the increased competition on international routes has resulted in
lower fares.
The United States is pursuing further liberalization of international
airline travel through similar bilateral negotiations. Although such
negotiations are only a first step toward greater international competition, they could result in global economic gains. Allowing U.S. carriers free entry into foreign markets would provide significant benefits to consumers and domestic carriers. Offering foreign airlines free
access to U.S. destinations would provide much more convenient
international direct flight service to consumers worldwide.
MANAGING THE INCREASED DEMAND FOR AIRSPACE
Deregulation has given rise to the highest levels of commercial air
travel ever experienced in the world. If not managed properly, increased air traffic could lead to greater congestion, and in some situations could raise safety concerns. The deregulated environment has




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been quite effective in maintaining air safety. The growth of air traffic, however, has raised some important issues concerning the compatibility of airline deregulation with continued government management of airspace and airport services. If the benefits of deregulation
are to be enhanced, market forces should be introduced to reform
those elements of the air transport industry that are still regulated by
the government.
SAFETY

Airline accidents have declined steadily since the 1950s and this
trend has continued since the advent of deregulation in 1978. From
1978 to 1986 departures increased by 28 percent, miles flown by 48
percent, revenue passenger miles by 61 percent, and revenue passengers by 52 percent. In light of this large increase in air travel, the
accident rate statistics under deregulation appear even more favorable. The decline in fatality rates is particularly encouraging, since
load factors and the number of seats per plane have risen since the
end of regulation. Chart 6-1 shows that accident and fatal accident
rates for all scheduled passenger and cargo operations have declined
dramatically during the last 30 years, reaching an all-time low in the
period since deregulation.
Even if extremes rather than averages are compared, air safety
looks quite good following deregulation. A comparison of the worst
year for accidents following deregulation with the previous 30 years
shows that in only 3 years prior to 1978 were there fewer accidents.
A similar picture emerges if the best year achieved under regulation
is used as the benchmark for safety. In 4 of the 10 years following
deregulation, there have been fewer accidents than in regulation's
best year, notwithstanding the sharp increase in air travel.
Improvements in flight safety performance have not been confined
to the major carriers. Although only recent data are available for
nonscheduled service, commuters, and air taxis, their safety records
from 1971 to 1978 can be compared with those from 1979 to 1986.
For nonscheduled operations, accidents per 100,000 flight hours have
fallen 7 percent, and fatalities per 100,000 flight hours have declined
53 percent. Accident and fatality rates for commuters and air taxis
have shown similar improvement, falling 27 percent and 36 percent,
respectively. These statistics demonstrate that safety performance has
improved in all segments of the industry since deregulation.
Critics of deregulation have argued that airline safety would deteriorate under competition, because competitive pressures would
induce firms to cut back on safety expenditures. Under such circumstances the incentives to reduce costs could result in the airlines exposing passengers to greater risks. In addition, price regulation had




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Chart 6-1

Airline Accident Rate

Rate*
2.2

Rate*

i

1955

i i i I i i i i I i r i i I i i i i 1 i i

1960

1965

1970

1975

i

1980

1985

'Accidents per 100,000 departures.
Note.'—Data relate to scheduled passenger and cargo operations of U.S. certificated air carriers; data
for 1987 are preliminary.
Sources: Civil Aeronautics Board and National Transportation Safety Board.

forced airlines to focus their competition on nonprice factors such as
safety, and deregulation would end that incentive. Thus it was
argued, airlines would pay less attention to safety in a deregulated
environment, and the skies would become less safe.
After nearly a decade of experience with deregulated air travel,
these fears have proven to be unfounded. Studies have found no evidence of a decline in the safety performance of the airline industry
following deregulation. Furthermore, there appears to be little or no
correlation between safety and financial performance in the airline industry, either before or after deregulation. In addition, profitability
appears to have had no effect on maintenance expenditures, and
there is no systematic evidence that airlines have cut corners on
safety.
If deregulation were leading to reduced safety precautions, then
this change should affect the characteristics of accidents that do
occur. For example, if airlines were taking less time to train pilots or
were overworking them, then the share of accidents caused primarily
by pilot error should rise. Similarly, if there were less emphasis on




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maintenance, then the percentage of accidents primarily due to
equipment failure should rise. The statistics show, however, that the
proportion of accidents primarily due to pilot error as well as the
share primarily due to equipment failure have changed little since deregulation.
The relative ranking of the factors contributing to fatal airline accidents before and after deregulation also has been quite stable. Pilot
error is the most common factor followed by the weather and then
by air traffic control. Maintenance is the least common factor. In the
decade prior to deregulation, pilot error was a contributing factor in
32 fatal accidents, while maintenance was a contributing factor in 2
accidents. In contrast, pilot error was a contributing factor in 12 accidents and maintenance in only 1 accident in the period since deregulation.
Recently the public has expressed concern that the rapid growth in
air traffic stemming from deregulation has put unusual stress on the
air traffic control system. At the same time there have been reports
that air traffic controllers may feel overburdened. Since reaching a
low in late 1981 following the illegal strike by the air traffic controllers union, controller staffs have been growing to meet the increasing
demand. The evidence does not support the claim that changes in
controller staffing have led to a decline in safety. Indeed, the share of
accidents primarily due to air traffic control error has not changed
since deregulation.
Although the accident and fatality statistics point to improved
rather than deteriorating safety since 1978, some observers have
claimed that the "safety margin" is declining. However, measurement
of the safety margin is problematic. Near midair collision statistics
play a major role in this concept. Unfortunately, there is no consistent near midair collision data that would permit a comparison of performance before and after deregulation. In addition, a 1985 change
in the procedures for processing near midair collision reports makes
it difficult to discern reliable trends after deregulation.
A near midair collision is defined as an incident in which the possibility of a collision occurs as a result of aircraft coming within 500
feet of each other. A pilot or crew member also can report a near
midair collision if the individual believes that a hazard existed between two or more aircraft, even if the 500-foot criterion were not
met. Near midair collisions then are categorized as critical (the most
serious), potential, and no hazard (collision improbable). Approximately 70 percent of the total increase in near midair collision reports from 1985 to 1986 has been in the "no hazard" category. The
number of reported near midair collisions does not appear to be cor-




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related with any measure of accidents, fatalities, or number of actual
midair collisions.
Midair collisions constitute a very small fraction of all aircraft accidents involving a commercial carrier. Most accidents occur at takeoff
or landing and do not involve another aircraft. Since the passage of
the Airline Deregulation Act of 1978, only one midair collision involving a domestic commercial jetliner has occurred in the United
States. Since near midair collision reports do not appear to be correlated with air carrier accidents or accident rates, and actual midair
collisions involving commercial jets have been rare, the concern about
the safety margin appears to be exaggerated.
An often neglected but very significant consequence of deregulation is that lower fares and more frequent service have caused air
travel to be substituted for other modes of transportation. Since air
travel is safer than other forms of intercity travel, overall transportation safety is improved as people substitute a safer form of transport
for a less safe one. Between 1980 and 1984, for example, deaths per
billion passenger miles for passenger car travel averaged 35.7, whereas for airline travel they averaged 0.3. Thus, for every billion miles of
air travel that people substitute for car travel, there will be approximately 35 fewer deaths. A study has estimated that more than 800
lives are saved each year because people now travel by plane rather
than by car.
It is important to recognize that deregulation did not affect the
Federal Government's role in the regulation of safety. The Federal
Aviation Administration (FAA) has continued to monitor airlines'
safety-related activities. One study has concluded that airlines consider the FAA standards to be "bare-bones" minima for operation, and
they routinely do more than the FAA calls for. For example, the airlines have voluntarily set standards for aviation equipment through a
nonprofit corporation owned by the airlines.
While there is likely to be a valuable role for an external body to
oversee safety in the airline industry, government regulation represents but one of many approaches that could be adopted. In many
other industries, private organizations such as Underwriters Laboratories and insurance groups provide monitoring and safety standards.
The market provision of such services might work similarly in the airline industry.
As the safety statistics suggest, competition does not appear to
provide airlines an incentive to reduce safety. In fact, market forces
may reinforce airline safety considerations. When an airline experiences an accident, the price of its stock suffers a loss. If carriers attempted to reduce safety precautions to an unacceptable level, they
could be affected adversely by FAA enforcement actions, increased




211

insurance premiums, increased costs of borrowing, and a loss of reputation. Thus, firms will consider these consequences when they develop their safety management practices.
In summary, the evidence shows that safety has not deteriorated as
a result of airline deregulation. Even if safety were declining, a return
to price and entry regulation would not be the answer. Protecting
airline profits through regulation of price and entry is unlikely to
result in improved safety, since there is scant evidence that changes
in financial variables lead to changes in safety performance. With a
return to regulation, however, the safety gains from intermodal substitution of air travel for other, less safe forms of transport would be
forgone.
DELAYS

One feature not addressed by airline deregulation was the management of delays. Delays occur when the demand for system capacity
exceeds the available supply. Delays usually are caused by congestion. Just as highways often become congested during rush hours, so
do airports and airspace. Most delays occur at crowded airports
during peak periods, just as most highway delays occur during rush
hour traffic jams around major cities. In 1987, for example, 85 percent of total recorded delays were associated with only 22 airports.
The primary responsibility for managing the U.S. airspace continues to lie with the FAA. The policies adopted by the FAA have an
important effect on the amount and distribution of delays. To understand appropriate remedies for problems related to delays, it is
useful to have some understanding of how the air traffic control
system works.
In the United States more than 600 airport control towers clear
planes for takeoff and landing. To help regulate traffic between airports, there are 20 domestic en route air traffic control centers which
span the continental United States. These facilities help manage
more than 40 million flights per year. To simplify this task, the airspace is divided into a number of sectors. Each sector corresponds to
a parcel of airspace within which a controller is responsible for the
safe passage of aircraft. Of the 47,000 people employed by the FAA,
about 15,000 are air traffic controllers.
Weather conditions play a major role in contributing to delays. Because bad weather reduces an airport's capacity to handle flights, it
can generate delays. The FAA reports that in 1987 approximately 70
percent of flight delays were weather-related, and 23 percent were
volume-related. More specifically, the FAA estimates that 11 percent
of delays were due directly to traffic volume at airports, while 12 percent resulted from high traffic volume at en route centers. Prior to




212

deregulation in the 1970s, all volume-related delays constituted less
than 5 percent of total delays, and weather accounted for roughly 80
percent of total delays.
Unfortunately, incomplete measurement of delays, together with
changes in the definition of "delay," make it difficult to assess longterm trends. The FAA attempts to measure only major delays due to
air traffic control. Prior to 1982 only delays over 30 minutes were reported. Since then the FAA has recorded delays of 15 minutes or
more. The number of delays varies greatly from one year to the next,
due mainly to the vagaries of weather.
While delays are unpleasant, some amount of delay at peak periods
is usually appropriate. Actions taken to control delays should balance
the benefits of reducing delay during peak periods against the cost of
additional capacity. Even if it were possible to eliminate all delays,
such a policy would not necessarily be efficient, because the costs of
eliminating delays during peak periods would exceed the benefits.
For example, although it might be possible to build a superhighway
that could accommodate all rush hour traffic, most of the lanes of
this highway would remain empty for the vast majority of the day.
The costs incurred in building such a highway are likely to far exceed
the benefits of eliminating congestion and delays at rush hour.
Current Approaches for Managing Congestion

The FAA and DOT have taken a variety of actions to address concerns about air traffic congestion. After the strike by air traffic controllers in 1981, the FAA adopted a new policy to minimize the
number of aircraft that the system must track at any one time without
reducing the overall volume of daily flight activity. When congestion
is anticipated at the destination airport, the FAA requires that a
plane wait on the ground. This policy, while perhaps addressing
safety, actually may have introduced significant delays. If planes were
allowed to circle in the vicinity of destination airports, waiting for
weather or congestion to clear, unnecessary delays could be avoided.
To help ease the delay problem, the FAA has undertaken a major
restructuring of the airspace along the east coast. The FAA significantly expanded air traffic capabilities through an improvement in
routing procedures. This change required only a very small addition
of personnel and equipment. The airspace reorganization is analogous to reducing traffic jams by increasing the number of lanes on a
roadway and improving the timing of stoplights. The creation of additional departure routes and airways was accomplished primarily
through better charting, efficient realignment of existing paths, and
increased coordination among air traffic facilities. Similar plans for
restructuring airways along the west coast are under development.




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The Department of Transportation periodically has attempted to
enlist the help of the airlines in sorting out scheduling problems. In
1984 and again in 1987, the DOT brought the airlines together to
engage in scheduling discussions aimed at reducing delays. The DOT
believes that these meetings have helped to reduce excessive bunching of departures at peak periods.
Since pricing mechanisms are not used to allocate takeoffs and
landings at the most desirable times, the airlines have little incentive
to transfer some of their peak traffic to off-peak periods. Reliance
upon DOT meetings to deal with scheduling issues arises at least in
part because pricing of airport usage does not reflect congestion
costs.
Due to the increasing concern about delays and service, the DOT
recently required airlines to provide information on all delays, except
those related to maintenance. Beginning in September 1987, monthly
tabulations covering approximately 80 percent of all flights have
been made available on a flight-by-flight basis. Delay statistics for all
flights at the reporting airports also are being calculated.
If airport services were priced to reflect congestion costs accurately, then prices would convey much of the information that this disclosure rule attempts to provide. In the absence of price signals, the
DOT statistics may encourage some travelers to switch to flights that
are less likely to experience delays. The response of travelers would
provide an incentive for the airlines to improve scheduling and operations.
While the publication of delay statistics provides consumers and
planners with some information about the specific sources of delay,
the disclosure requirement may not lead to improved consumer service. For example, the willingness of an airline to hold a connecting
flight for the late arrival of another flight may be affected. Particularly at a hub, one plane arriving late could cause a number of other
planes to be held for connecting passengers. If the airline holds the
connecting flights, its on-time performance record will be harmed. If
it does not hold the flight and passengers miss their connections, the
airline's performance may appear better. Thus, actual delays experienced by travelers could increase as the reported statistics appear to
improve.
To meet capacity needs in the longer term, the FAA is attempting
to increase the pace at which the airport and airways system is being
modernized. The agency is in the process of designing and building a
new system of radars, communication devices, and computer hardware and software as part of the National Airspace System Plan.
These improvements will allow the system to handle more air traffic.
The FAA is also in the process of training more controllers. Unfortu-




214

nately, the implementation of many aspects of the National Airspace
System Plan are much behind schedule. Technical problems have
slowed the development and introduction of improved facilities to accommodate more volume.
In the United States, there is only one major new commercial passenger airport planned to be built before the turn of the century.
Direct airport capacity expansion faces a number of significant obstacles. There is strong opposition in many communities to the construction of new airports as well as to the expansion of existing local
airports. Local noise standards limit traffic growth at many airports.
A number of communities recently have passed ordinances explicitly
restricting airport traffic. The Federal authorities who manage the
overall capacity of the system often have goals conflicting with those
of the local communities.
The Federal Government and the airlines have taken a number of
steps to address the problems related to delays with varying degrees
of effectiveness. The recent trend in delays looks promising. Total
delays as recorded by the FAA declined by 15 percent from 1986 to
1987, even though traffic volume continued to climb. Despite this improvement, it is likely that the delay issue will resurface periodically,
unless fundamental structural changes are made in the way the airspace is managed and in the way decisions about investment in capacity are made.
MAKING THE SYSTEM MORE RESPONSIVE AND EFFICIENT

Because traffic volume has risen since deregulation, it has become
increasingly difficult for the supply of airspace services to keep up
with the demands imposed upon the system. Part of the problem is
the way the system currently is financed. Instead of paying for services actually rendered by the air traffic control system, operators and
travelers pay taxes only indirectly related to costs. The primary
source of funding for the system is an 8 percent tax on each airline
ticket sold. In 1987 the ticket tax yielded $2.7 billion in revenues, accounting for 88 percent of the revenues collected from users. The remaining revenues come from a tax on aviation fuel, a 5 percent tax
on cargo, and a $3 passenger tax on international departures. These
revenues flow into the Airport and Airway Trust Fund, out of which
part of the Federal spending related to air transportation is financed.
FAA expenditures for fiscal 1987 totaled $4.9 billion. The difference between FAA expenditures and revenues raised from user taxes
in 1987 was $1.9 billion. Not all of this difference represents a subsidy from the general public, since the public should pay for the use of
the airspace by government agencies such as the Department of Defense. Nonetheless, a sizable portion of this revenue shortfall does




215

represent a subsidy from U.S. taxpayers to the aviation system. The
FAA estimates that commercial airlines pay roughly 90 percent of the
costs they impose on the system. General aviation, which includes
small, privately owned aircraft and business jets, pays less than 10
percent of the costs they impose on the system. The total subsidy
from taxpayers to the beneficiaries of general aviation and air carrier
activity was approximately $1.1 billion for fiscal 1987.
There are two basic problems with this policy for funding air traffic
control and safety services. First, the primary beneficiaries of airline
travel are not bearing the full cost. Ending the subsidy to the air
transport sector not only would help allocate the supply of airspace
services rationally and result in better allocation among transportation modes, but it also would result in a small decrease in the Federal budget deficit. The second problem is that the payments made by
travelers and operators are not linked to the use of specific services.
The charges are related only tangentially to the costs they impose on
the system.
To develop a sensible response to short-term congestion problems
and long-term planning issues, it would be useful to obtain information on the value people place on airspace services, a task best accomplished by asking users to pay for services actually rendered.
More accurate information on how travelers value capacity would
make it possible to determine where adjustments in system capacity
are needed.
There are a variety of short- and long-term options that could enhance the efficiency of the air traffic control system. In the short
term, the most attractive options include the introduction of realistic
pricing of services that could ease particularly troublesome bottlenecks in the system. In the longer term, it is possible to design efficient approaches which avoid the types of delays that have been experienced in the recent past, and that also can meet the demands of
a rapidly changing airline industry.
Short-Term Options for Easing Congestion

Virtually none of the measures developed by Federal authorities to
address the short-term congestion problem incorporates economic
approaches. Because of the way the system currently is managed, airlines have very little incentive to consider the costs they impose on
others when flying at peak periods. Charges to aircraft operators do
not reflect the full costs of using the airspace and airport facilities at
these times. For example, if a plane lands at a congested airport
during a peak period, all other planes waiting to land are delayed.
Similarly, if a plane takes off during a peak period, planes waiting in
line behind it are delayed. Operators will not take these costs into




216

account unless a system is implemented in which they are charged
for them.
There are two basic approaches that would help alleviate the congestion problem during peak periods while at the same time promote
a more efficient use of available capacity. One would set a price for
takeoffs and landings that adequately reflects direct and indirect
costs. Direct costs include normal operating and maintenance costs,
while indirect costs include the costs of congestion. The other approach would limit the quantity of takeoff and landing slots during
peak periods and allow these slots to be bought and sold. Both the
fee system and the slot system would allow passengers who value
peak-period travel the most highly to have access to airports during
these periods. Those passengers who have greater flexibility could
elect to take flights during off-peak periods and, thus, take advantage
of the lower fares that would be offered then.
The best way to strike an appropriate balance between the costs
and benefits of congestion is to introduce tradable slots or variable
fees that reflect the costs that each individual imposes on other travelers at peak times. These economic approaches would ensure that
operators and customers take congestion costs into account in their
travel decisions. Reducing the level of congestion at airports would
increase the value\pf peak-period flights and would promote economic efficiency.
Variants of these approaches already are in use. Airports typically
assess landing fees based on aircraft weight because runway wear is
generally thought to be related to aircraft landing weight. Few of
these fees, however, vary with airport usage or time of day. Distinctions between peak and off-peak periods rarely are made. In addition,
the fees typically are quite low. For example, a small private plane
can land during a peak period at Washington's National Airport for
no more than $6.00.
Airports receiving funds from the Airport and Airway Trust Fund
are constrained to some extent in the fees they may charge to users.
Fees must be nondiscriminatory; this is interpreted to mean that they
must be related directly to costs. Such a condition does not preclude
the use of peak landing and takeoff fees, provided that costs are interpreted to include the congestion costs that each airplane imposes
on others. These congestion costs should be included in the calculation of peak prices to the extent feasible.
Under the current fee system, on-time performance cannot be purchased. Those travelers who incur high costs when delayed have no
way to signal their costs to the system. Passengers cannot simply pay
a premium to assure that their flights will arrive on schedule. Except
at a very limited number of airports, airlines wishing to offer better




217

on-time services cannot pay more to obtain a takeoff or landing preference. The current system rations airspace and airport services
through waiting time and delays, whereas a pricing mechanism would
permit a more efficient allocation of landings and takeoffs among
those who place different values on their time. Without accurate information on the costs of delays, the airlines and airports lack the criteria to decide how to improve flight schedules to suit passenger demands.
If landing fees adequately reflected congestion costs, some passengers and flights would be induced to switch to off-peak periods when
fees were lower. Some airports have begun to use such fees. For example, in 1968 peak and off-peak fees were introduced for general
aviation at three major New York airports. The peak-period fee was
raised to $25, while the off-peak landing fee remained at $5. This fee
schedule resulted in a 30 percent decrease in peak-period traffic and
a 19 percent overall decrease in general aviation activity. In addition,
there was a marked decrease in delays.
This example shows that the introduction of peak/off-peak pricing
differentials can be quite effective. Recently, Boston's Logan Airport
announced plans to implement general aviation fees intended to address congestion problems. In 1972 London's Heathrow Airport
adopted a peak-load pricing approach. Some U.S. airlines have objected to the charges at Heathrow on the grounds that they discriminate against transatlantic traffic. These arguments notwithstanding, it
is clear that proper application of peak-load pricing has the potential
to reduce congestion and enhance the efficiency of airline service significantly.
An alternative to peak-period fees is a restriction on the number of
landing and takeoff slots available during peak periods. At most airports there are no restrictions on landings and takeoffs other than
those imposed by air traffic controllers. Planes typically are handled
on a first-come, first-served basis. At O'Hare, La Guardia, Kennedy,
and National Airports, however, the FAA has limited the number of
takeoff and landing slots available. The FAA, in consultation with the
airlines, has allocated slots to the carriers by criteria related to historical usage. The FAA can change this allocation and require one airline to transfer slots to another.
Beginning in April 1986, the FAA authorized the purchase and sale
of slots at the four "slot-constrained" airports. Although all airlines
currently are free to participate in this slot market, the FAA retains
the right to withdraw this privilege and reallocate slots at its discretion. An initial 6-week experiment in 1982, in which over 190 slots
were bought and sold, provided evidence of the workability of a slot
market. During this experiment a private firm began to offer special-




218

ized brokerage services for the airlines. Since April 1986 there have
been more than 1,000 slot transactions at the four slot-constrained
airports. However, many of the slots have been transferred on only a
temporary basis. The uncertainty surrounding the FAA's ability to
direct the reallocation of slots or even to close the slot market may
make short-term leasing arrangements more desirable for the airlines
than outright purchases or sales.
Allowing purchases and sales of slots is a major improvement over
the previous system, which allocated slots by committee. The committee process did not allocate slots on the basis of their most highly
valued use. In contrast, the slot market allows firms that have a
better product to expand their operations by buying slots from other
firms. Since the exchange is voluntary, both the buyer and the seller
are better off. In addition, consumers generally will be better off,
since the airlines have more flexibility to respond to the demands of
travelers with different valuations of time. Thus the tradable slot
system is similar to the fee system in that it tends to reduce delays
while increasing efficiency.
Slots and fees can be tailored to meet particular problems that
arise in the air traffic control system. For example, two types of service could be offered in the event of bad weather or problems with
the air traffic control system. In the event of such a contingency,
some firms could receive priority service, which would entitle them to
have priority in taking off or landing. Operators would be assessed a
fee for this service, or, alternatively, special rights to priority service
could be auctioned or allocated to operators.
The details of a tradable slot or variable fee approach would vary,
depending on the needs and characteristics of the various airports.
But overall, such economic incentives could help address short-term
congestion problems. Moreover, these schemes could be extended to
other aspects of the airspace system. For example, a cost-based pricing system for air traffic control and other airspace services could be
explored. In Europe, charges are assessed for the usage of some airspace services. At present, users are not charged directly for using
the air traffic control network in the United States. By effectively
leaving these services unpriced, the system encourages overutilization
of this resource. As in the case of allocating services for landing and
takeoff, it is important to develop pricing schemes that reflect the
actual costs that users impose on the air traffic network. Such
schemes could provide valuable information on ways to improve
services provided by air traffic controllers.
Economic incentives are but one means of addressing some of the
short-term congestion problems. Airport capacity is determined by
more than the number of runways. Many other factors limit the over-




219

all capacity of the air traffic system. The FAA already has increased
capacity through improved routing and planning. It is also possible
to increase capacity by adding more support staff at terminals, by
changing the distribution of air traffic controllers, and by improving
air traffic control procedures. The effectiveness of these changes will
depend on where the bottlenecks in the system lie. However, all such
changes can be used in conjunction with economic incentives to help
address short-term congestion problems.
Long-Term Options for Air Traffic Management

Variable fees and tradable slot systems, two useful approaches for
controlling short-term congestion, also could aid in expanding air
travel capacity over the long term. For example, revenues from fees
or the auction of slots could be used to expand the capacity of the
system where it is most needed. In some cases such expansion might
include adding runways; in other situations new controllers or computers might be more appropriate. Even if the revenues from fees or
slots were not used to add directly to capacity, these approaches
could provide very useful information for long-term planning. The
price of a slot during the peak period at an airport provides a good
measure of what people would be willing to pay for a small increase
in capacity at that airport. When this value exceeds the cost of
adding capacity, then an increase in capacity is warranted.
To reap the full benefits of deregulation, it is necessary to have a
system that is responsive to changes in capacity needs. The current
system for planning capacity was developed under an environment in
which change was predictable. Routes and traffic patterns were stable
as a result of CAB regulation. This stability disappeared with deregulation. The FAA has found itself in the unenviable position of trying
to manage the capacity of a rapidly changing industry without having
the necessary information.
Capacity planners could make two changes that would help enhance the benefits of deregulation. First, the planning function needs
to be linked to data on the value of capacity additions. At present,
very little information is available on the value of adding capacity because users are not asked to pay directly for the services they are offered. Second, planning should be more responsive to the needs of
local airports. Decentralizing planning would help achieve this goal.
There are several alternatives for restructuring the current system
that could help address some of the basic concerns related to congestion. These include redefining the role of the FAA, restructuring the
FAA, and changing the organization of the air traffic control system.
The FAA currently must try to implement two largely independent
mandates: the regulation of aviation safety and the general promotion of aviation. Some observers have argued that the FAA is well-




220

suited to handle aviation safety regulation, but a government agency
may be less well-suited to meeting the capacity needs of an industry
that is evolving quickly.
One proposal would have the FAA retain its primary role in regulating safety, but relinquish its role as a central planner in the air
traffic control system. Some groups have recommended that the control of air traffic be placed under the supervision of a special Federal
corporation that would distribute airport grants, hire air traffic controllers, and contract out services. The corporation would have more
flexibility than a Federal agency in hiring and paying its employees
and in procurement. A board of directors representing the users of
the system would help make the corporation more responsive to the
needs of its users than the current system is.
Recognizing the potential for inefficiency in a federally sponsored
corporation, another proposal calls for placing the supply of air traffic services in the hands of the private sector. Instead of a Federal
corporation, a nonprofit corporation owned by the various users
would be created. Unlike the current air traffic control system, such a
corporation would be funded from user fees, including charges for
the use of the controller network. Financing the system on the basis
of user fees would provide improved information on where capacity
expansion is most needed. A private, user-funded corporation would
be free from the constraints of the budget process faced by a Federal
corporation, and would have a strong incentive to provide services
that meet the needs of travelers. A similar nonprofit, user-owned corporation has operated for over 50 years providing extensive airline
radio communications and navigation services. In addition, this corporation has played an important role in setting aviation engineering
and communications standards.
Another possibility is for local airports to own and operate their
own air traffic control towers. These control towers still would follow
the standards set by the FAA and the entity in charge of controlling
air traffic. The staffing and investment decisions for such control
towers, however, would be made by the management of the local airport. By returning this function to the local airports, the system
could become more responsive to the needs of users. The FAA currently allows 17 small Level I control towers to be operated privately.
Moreover, a private concern has expressed interest in buying and
managing the remainder of the federally owned Level I control
towers.
In contrast to the United States, Great Britain implemented a
system in 1972 which encouraged widespread use of the private
sector in managing various airspace functions. A private company
now competes with a governmental body in the training of air traffic




221

controllers. Airports in Great Britain contract with this company or
with the government to supply their air traffic control needs. The
largest British airports charge variable landing fees and use these
revenues to finance airport growth. In this way, local British airports
can respond directly to changes in demands for their facilities.
Two main themes underlie these proposals to reorganize the air
traffic control system. The first relates to the value of separating
safety regulation from the provision of air traffic services. While the
two activities are linked, the Federal Government may not be in the
best position to implement policies that ease congestion. The second
is that user fees directly related to services are necessary to understand more clearly the level of services needed now and in the future.
Only with a pricing system that allows operators and air travelers to
register the extent to which they value various services will it be possible to plan sensibly for the needs of the future. Moreover, this pricing system can be used to generate the revenues needed to improve
the system.
CONCERNS ABOUT MARKET ORGANIZATION AND
MONOPOLY
Deregulation has led to greater price competition, lower average
fares for travelers, and a more efficient industry structure. The evidence suggests that the industry is much more competitive now than
under regulation, and that attempts to reregulate would produce substantial net losses for both consumers and the airline industry. Nonetheless, concern has been voiced that the emerging industry structure
is oligopolistic in character, allowing firms to exert substantial control over various markets. Four specific issues have been raised. First,
the viability of new entrants and smaller carriers in the deregulated
marketplace has been a source of concern. Second, the growth of
particular airlines at hub airports, along with some recent mergers,
have raised questions about consolidation in the industry. Third,
since information about flights and fares has become more important
in airline competition, the influence of airline-owned computerized
reservation systems used by travel agents has come under scrutiny.
Fourth, by making entry more difficult, capacity limitations set on airport usage may pose a threat to competition.
THE VIABILITY OF NEW ENTRANTS AND SMALLER AIRLINES

Deregulation has radically transformed the organization of the airline industry. Freedom of entry has played an important role in this
change. Under regulation, the existing interstate airlines were pro-




222

tected against new entry. The number of carriers gradually dwindled
until 1978, when there were only 36 certificated airline operators left.
Since deregulation many new airlines have emerged. More than
200 firms have been certified since 1978. As in any dynamic industry,
some firms have failed, some have merged, and others have grown
on their own. As of July 1987 there were 78 certificated airline carriers, although nearly one-half operated outside of the continental
United States. More than three-fourths of carriers flying today received their certification following deregulation.
There was some initial concern that smaller carriers would have
difficulty entering the industry to compete against large incumbents.
Studies indicated that larger airlines had lower costs per seat mile
than smaller airlines; however, company size itself was found to
confer no advantages on a particular route. The differences instead
were found to be attributable to the different types of service offered
by large trunks and local carriers. Smaller airlines tended to make
shorter flights with smaller planes than the major carriers. Bigger
planes flying longer distances operated at lower costs per seat mile.
In other words, there appear to be economies of scale in aircraft size
and usage, but not necessarily in overall airline size.
The evolution of airline operations toward hub-and-spoke systems
following deregulation, however, may provide some advantages to
larger airlines. The ability of a single airline to offer a variety of
routes at convenient departure times may be valuable to prospective
passengers. Carriers may be able to use their aircraft more efficiently
by having multiple hubs rather than a single hub. The economics of
disseminating fare information and using this information for developing fare structures also may favor larger firms.
Since deregulation the success of local and regional airlines has
helped to relieve concerns about the viability of smaller airlines coexisting with the trunks. Local and regional carriers have enjoyed
greater profitability than the large trunk airlines. The common stock
of small carriers has performed better than stocks of the larger airlines. Furthermore, many smaller airlines have found market niches,
in which they have prospered, such as feeder services to larger carriers or connections between less densely populated areas.
New entrants generally have enjoyed cost advantages over the established airlines. The employment contracts and management organization developed under regulation were not compatible with a deregulated environment. New carriers have been able to achieve lower
labor costs and improved utilization of equipment. The established
airlines have responded to the competitive pressure by reducing operating costs, thereby mitigating the advantages of entrants.




223

MERGERS AND CONSOLIDATION AT HUBS

In order to coordinate and consolidate traffic in a hubbing network, a carrier must have a large number of flights at its hub airports. Naturally, as an airline routes more of its traffic through its
hubs, its share of flights at those airports will grow. Thus some increase in airline concentration at individual airports is a consequence
of building an efficient route structure.
Airline hub-and-spoke networks have expanded in two ways:
through internal growth by offering more flights and leasing more
gate space; and through mergers of existing airlines. Expanding the
reach of an airline's network by adding new hub locations and spoke
routes affords more opportunities for single-line travel.
Yet expansion of a carrier at an existing hub, through the merger
of two airlines' operations at a particular airport, has raised concerns
that firms may be able to exert market power. Potential anti-competitive problems from mergers can be addressed through normal antitrust review. The application of the antitrust laws to the airline industry is not an issue of deregulation per se, but a matter of general competitive policy.
Changes in airline organization and operation that cause traffic at a
hub airport to be concentrated in the hands of one or two airlines do
not, by themselves, reveal much about the competitive level in the
industry. Where barriers to entry are low and alternatives are available, the benefits of competition can be achieved regardless of airline
concentration or the actual number of competitors in a market.
Where those conditions do not hold, conclusions about the vigor of
competition must be drawn with more caution. Thus the potential
impediments to competition must be analyzed in order to evaluate
the consequences of consolidation in the airline industry.
At hubs where one or two carriers already use a large share of the
gate space, another airline may find it difficult to establish a major
presence there. The relevant statistic, however, may not be the concentration at the individual airport. Competition among hubs at different locations provides a significant disciplinary force. The hub airports in one carrier's system are the spoke airports of other carriers'
systems. If travelers living near a concentrated hub become dissatisfied with the fare and service of the dominant carrier(s), they often
have the option of taking another airline to its hub and flying to their
destinations from there.
For long journeys passengers can choose among a number of hubs
in order to reach their destination. A traveler from Boston to Phoenix, for example, can choose among nine connecting points, including Chicago, Kansas City, and St. Louis. Many hubs have been created since deregulation, and airlines are continuing to add new hubs




224

to their systems, such as Charlotte, Cincinnati, Dayton, Philadelphia,
and Raleigh-Durham. In addition, metropolitan areas with multiple
airports may experience competition among them, since an attempt
by an airline to raise its fares at one airport may be disciplined by
travelers switching to an airline at another airport.
Competitive conditions for shorter flights are different from those
for longer ones. Interhub competition is most effective for the longer
flights. On shorter routes flying through an out-of-the-way hub to
arrive at one's ultimate destination may not be a feasible alternative.
For example, flying from Minneapolis to Madison via Chicago may
not be a very good substitute for a nonstop flight from Minneapolis
to Madison. On thinly traveled shorter routes, service from small
commuter airlines may provide alternatives to the dominant carriers
feeding into the hub. For shorter distances surface transportation,
such as cars, buses, and trains, may provide a viable alternative
means of travel.
On routes where reasonable alternatives are quite limited, there
have been complaints of monopoly pricing. These cases often involve
markets with small traffic volume that can accommodate only single
plane scheduled service. In some cases, regular air service to small
communities is feasible only as a result of pooling passengers, which
is made possible by the existence of a hub into which traffic from
small communities can feed. A policy that would weaken the hubbing
structure also would reduce the network economies available from
careful route coordination. Such a policy could result in the denial of
air service to these communities altogether.
Recent research has found that fares tend to be higher on routes
on which there are fewer competitors. Yet it is not clear if increases
in concentration actually imply higher prices. Moreover, even if this
were true, if travelers paying these higher prices received higher
quality service, they could be better off. More research will be necessary to determine how specific changes in industry concentration
have affected consumer welfare.
While the concentration of major carriers at the national level and
at some hubs has increased recently, it is not clear that concentration
has risen in the economically relevant markets, namely, individual
city-pair markets. Easier entry into these markets appears to have
brought more airlines into competition on more routes. Preliminary
research suggests that the average number of carriers per route is
higher today than it was under regulation.
COMPUTERIZED RESERVATION SYSTEMS

The development of computerized reservation systems (CRS) by a
few airlines has been pointed to as a danger to free competition




225

among the airlines. Prior to CRS most travel agents would look up
flights and fares in the Official Airline Guide. Then they would call each
airline individually to check seat and fare availability. CRS provides
an up-to-date listing of flights, fares, and seat availability on a terminal screen. Reservations, seat assignments, and ticket purchases then
can be made by computer.
The initial plans to develop a computerized system of reservations
and flight information dates back to 1953. Technical difficulties in
implementation were formidable. The data processing requirements
stretched the limits of existing computer hardware and software. In
the late 1960s and early 1970s, attempts were made to develop a
common system for airlines and travel agents. After an industry-wide
effort to develop a CRS broke down in the early 1970s, two airlines
invested heavily to develop and market their own systems. The success of these systems spurred others to enter, and now three other
domestic airline-owned systems compete for travel agents.
While CRS was developed prior to deregulation, it is well-suited to
a market environment in which prices are changing constantly. The
key benefit provided by CRS is information. The development of the
hub-and-spoke structure has made finding convenient connections
extremely important. While fare structures have grown more complex, CRS allows prices, schedules, and routes to be accessed and
conveyed to the traveler in an inexpensive and timely manner.
CRS also has played an important role in managing the information that enables airlines to offer deep discount fares. The airlines
themselves had to develop sophisticated techniques for monitoring
the inventory of seats on their flights in order to plan their route
structure and thus to use their aircraft efficiently. CRS has helped
contribute to the rapid advances in the management and productivity
of the U.S. airline industry.
Because CRS provides airlines with the ability to react quickly,
change their fares, and disseminate information, it functions as an
important marketing and advertising tool. The order in which the offerings appear on the travel agent's computer screen, however, has
been a point of controversy. The owner-developer of each system initially listed its own flights first and permitted others to purchase
preferential placement on the screen.
There are two sides to the CRS market. CRS owners negotiate with
travel agents to use their services. They also negotiate with other airlines to list their flights on a particular CRS.
Since entry into the travel agency business is unrestricted, agents
compete with each other to offer the best service to their customers.
Thus travel agents will choose a system that best helps them to in-




226

crease earnings, so CRS services and screen presentations are developed to suit their demands and those of their customers.
Airlines purchasing CRS services argued it was unfair for CRS
owners to charge airlines different prices for their booking services.
In response to these concerns, the CAB required CRS owners to
charge the same price for all airline bookings. Whether in fact CRS
prices could be anticompetitive is a matter that currently is being litigated.
Airlines without their own CRS have complained that the preferential placement of the CRS owner's information puts the non-owners
at a competitive disadvantage. Just before its demise, the Civil Aeronautics Board issued an order requiring nondiscriminatory flight listings on a CRS. This order effectively limited the options available to
CRS owners in listing flights on the computer screen. There has
been vigorous debate over the desirability of the rule. Proponents
argue that the airlines that owned CRS systems have been able to
capture excessive profits as a result of having access to all the information in a CRS system. Opponents argue that the government's attempt to regulate screen display places an unnecessary restraint on
competition and that the potential to exercise monopoly power is
limited by the existence of several firms that currently offer CRS
services.
AIRPORT CAPACITY LIMITS

Capacity constraints can present obstacles to entry and competition. Setting well-defined limits on airport landings and takeoffs
could reduce delays. The price of such a measure, however, could be
a weakening of competition, since a major disciplinary force in the
airline market is the threat of entry by another carrier. The working
of competitive forces could be compromised significantly by capacity
restrictions that make it more difficult for carriers to expand service
at an airport.
The difficulties generated by capacity limitations may be eased
through the introduction of appropriate market incentives. When
there are such constraints, the allocation method for these limited
landing rights has important competitive consequences. Without
flexibility to reallocate the slots among rival airlines, those airlines
holding the slots are protected against the entry of other carriers. If
these slots were tradable, however, new airlines could bid for slots and
enter the market. In this way, some of the cartelizing effects of capacity
limits could be mitigated.
Regardless of whether the landing and takeoff rights are tradable
or not, the setting of capacity limits may create incentives that could
result in airline operators being reluctant to have the airport expand




227

in the future. Airlines holding slots could have an incentive to
oppose an increase in the capacity of the airport because such expansion would lower the value of the slots. Thus temporary capacity constraints could turn into long-term limits on capacity growth. A very
similar situation has arisen with the issuance of taxi medallions in
major cities. The number of authorized taxis in many cities today was
set many years ago. There has been much reluctance, even in the
face of consumer dissatisfaction, to augment the number of medallions. Taxi owners argue the local authority would be acting improperly if it took actions to diminish the value of the taxi owners' existing assets.
The structure of contracts between airports and airlines also may
provide some incentives to slow capacity expansion. Airlines play an
important role in determining capacity changes at airports. Airports
typically are operated by local authorities, and airport construction
usually is financed through the issue of revenue bonds. In order to
assure a stream of revenue to support the bond issue, the airport authority signs long-term leases with the airlines for the use of the airport facilities. In return for long-term commitments, as is common in
similar long-term agreements, the airlines receive some voice in
future capital investments at the airport. These lease contracts typically grant to the airlines leasing a majority of the facilities the power
to veto major airport alterations and capital improvements.
There have been some complaints that the current operation of
slot markets has not been fully effective in allocating landing rights
efficiently, and periodic lotteries and auctions have been suggested as
a remedy. At the four slot-constrained airports, the FAA can take
back a certain percentage of slots from the incumbent airlines and
hold a lottery in which new entrants and smaller carriers have a
greater chance of winning slots than the larger incumbent airlines.
While this procedure may facilitate entry by new carriers, it does so
in an inefficient manner. The slots are not allocated by a price mechanism; they are distributed arbitrarily. The careful coordination of incoming and outgoing flights is extremely important for effective
route planning. Taking slots from existing hub-and-spoke operations
and reallocating them without regard to route structure does not
promote airline efficiency.
An alternative allocation mechanism to those involving explicit capacity limits is variable landing and usage fees. Such fees would allow
the number of operators who can choose to land during a period to
vary, subject to safety considerations. Instead of setting a predetermined limit on takeoffs and landings, changes in technology, airport
staffing, and airway management then can be used to augment capacity at ppiiits of peak demand.




228

The effective limit will be determined by the demand for airspace
at the specified fee. A variable fee structure avoids the incentives for
airlines to be opposed to capacity growth. The airlines will prefer
lower fees at peak periods, so they will desire an increase in airport
capacity, as mentioned above. The use of variable fees also allows the
airport to observe demand at different prices for different time periods. Moving toward variable landing and usage fees may help to
avoid potential threats to competition posed by capacity limits and to
foster capacity expansion.
CONCLUSION
The passage of the Airline Deregulation Act of 1978 has led to
substantial gains, both for the airline industry and the general public.
Productivity within the industry has improved, air fares have declined
on average, and airlines are providing more frequent service. The
total social benefits resulting from airline deregulation during the
last decade are estimated to be on the order of $100 billion.
The U.S. experience with deregulation is beginning to have an
impact on the way other countries manage air travel. Several countries are following the lead of the United States in relaxing price and
entry regulation, thereby enhancing the efficiency of the world's
transportation system. Changes designed to reduce barriers to international competition would be the next step. An opening of all markets would bring benefits to travelers, airlines, and the global economy.
One of the principal benefits of deregulation has been to make air
travel available to many Americans who would not even have considered this transportation option 10 years ago. The rapid growth of air
travel has, however, strained the limits of the air traffic system in
some areas. The Airline Deregulation Act eased entry constraints and
promoted greater competition among airlines, but it did not foresee
the changes that would be needed to accommodate a revitalized airline industry.
To make the system more responsive to future changes, it might
be helpful to introduce variable landing and takeoff fees at airports.
Revenues from the fees then could be used to enhance the capacity
of the system. It is time to reexamine how planning decisions are
made, with an eye toward developing market-based approaches that
are better suited to meeting the needs of air travelers. The introduction of such changes is the key to increasing the benefits from airline
deregulation.




229




Appendix A
REPORT TO THE PRESIDENT ON THE ACTIVITIES
OF THE
COUNCIL OF ECONOMIC ADVISERS DURING 1987







LETTER OF TRANSMITTAL
COUNCIL OF ECONOMIC ADVISERS,

Washington, D.C., December 31, 1987.
MR. PRESIDENT:

The Council of Economic Advisers submits this report on its
activities during the calendar year 1987 in accordance with 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

233

Council Members and their Dates of Service
Name
Edwin G. Nourse
Leon H. Keyserling
John D. Clark
Roy Blough
Robert C. Turner
Arthur F. Burns
Neil H. Jacoby
Walter W. Stewart
Raymond J. Saulnier..
Joseph S. Davis
Paul W. McCracken..
Karl Brandt
Henry C. Wallich
Walter W. Heller
James Tobin
Hermit Gordon
Gardner Acktey
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. Malkiet
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




Position

Oath of office date
August 9, 1946
August 9 ( 1946
November 2, 1949
May 10, 1950
August 9, 1946
May 10, 1950
June 29, 1950
September 8, 1952...,
March 19, 1953
September 15,1953...
December 2, 1953
April 4,1955
December 3, 1956....
May 2, 1955
December 3, 1956
November 1, 1958....
May 7, 1959
January 29, 1961
January 29, 1961
January 29, 1961
August 3 t 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

Chairman
Vice Chairman
Acting Chairman..
Chairman
Member
Vice Chairman
Member
Member....
ChairmanMember..
Member
Member
ChairmanMember
Member
Member
Member
Chairman..,
Member
Member
Member
ChairmanMember
Member
Member
Chairman...
Member
Member
Member
Chairman...
Member
Member
Chairman...
Member
Member
Member....,
ChairmanMember
Member
Chairman..
Member
Member
Member
ChairmanMember
lYlBfflDCf ...i

ChairmanMember
ChairmanMember
Member....

234

Separation date
November 1, 1949.
January 20, 1953.
February 11, 1953.
August 20, 1952.
January 20, 1953.
December 1, 1956.
February 9, 1955.
April 29, 1955.
January 20, 1961.
October 31, 1958.
January 31, 1959.
January 20, 1961.
January 20, 1961.
November 15, 1964.
July 31, 1962.
December 27, 1962.
February 15, 1968.
August 31, 1964.
February 1, 1966.
January 20, 1969.
June 30, 1968.
January 20, 1969.
January 20, 1969.
December 31, 1971.
July 15, 1971.
August 31, 1974.
March 26, 1973.
August 15, 1973.
April 15, 1975.
February 25, 1975.
January 20, 1977.
November 15,1976.
January 20, 1977.
January 20, 1981.
February 4, 1979.
May 27, 1980.
January 20, 1981.
January 20, 1981.
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 1987
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 health and performance of the Nation's economy.
Beryl W. Sprinkel, Thomas Gale Moore, and Michael L. Mussa
continued to serve as Council Members in 1987, with Dr. Sprinkel as
Chairman.
MACROECONOMIC POLICIES
As is its tradition, the Council devoted much of its time during
1987 to assisting the President in formulating economic policy objectives and designing programs to achieve them. In this regard, the
Chairman kept the President informed of important macroeconomic
developments and advised the President and senior Administration
officials on major policy issues. Briefings were conducted on a variety
of domestic issues, especially the economic outlook, and on international issues, especially in preparation for the Venice Economic
Summit.
The Council chaired an interagency forecasting group, that also included the Department of the Treasury and the Office of Management and Budget. The forecasting group developed economic projections that were presented to the President and used in the Federal
budget. The Council also participated actively in discussions of macroeconomic policy issues within the Administration, in conjunction
with outside agencies, and with international organizations. The
Council testified before the Congress several times on the economic
outlook and on the conduct of monetary policy.
The Chairman of the Council continued to serve as the Chairman
of the Economic Policy Committee (EPC) of the Organization for
Economic Cooperation and Development (OECD). Through its participation in other OECD committees and meetings, the Council continued to analyze a number of economic policy issues, including macroeconomic performance in a multinational context, problems of
international policy coordination and payments imbalances, and bar-




235

riers to economic development and structural adjustment. During the
year, the Chairman led discussions on structural adjustment at the
EPC. The Chairman also represented the EPC at the Ministerial
Meeting where the EPC's recommendations on structural reform
were adopted.
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 Economic Policy Council, which
addressed a number of issues, including: stratospheric ozone, which
resulted in an international agreement on controlling and reducing
chlorofluorocarbon emissions; international trade policy, which culminated in the signing of a Free-Trade Agreement with Canada; and
agricultural policy, which led to the U.S. proposal under the General
Agreement on Tariffs and Trade to abolish all distortionary subsidies
for and barriers to agricultural products. The Council also continued
its membership on the Vice President's Task Force on Regulatory
Relief; its membership on the interagency working groups on acid
rain, energy security, health policy, research and development policy
including superconductivity, alternative fuels, antipoverty policies,
the Pension Benefit Guaranty Corporation and steel pensions, and
farm credit. The Council retained its chairmanship of the Working
Group on Privatization, and began chairing the Working Group on
Corporate Sentencing. The Council also devoted a great deal of attention to issues considered by the interagency Trade Policy Review
Group, including: intellectual property rights, textile and apparel
trade, competitiveness initiatives, Generalized System of Preferences,
and a number of Section 301 cases dealing with foreign trade practices and market-opening initiatives.
The Council testified before the Congress on mandated health
benefits, corporate control issues, and agricultural policy reform. The
Council also participated actively in various OECD fora, working on a
variety of issues, including the economic effects of agricultural policies and tax policies.
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 also is




236

provided to the public through speeches, testimony, 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 through personal discussions and written reports on economic developments. The Chairman also represents the
Council at Cabinet meetings, meetings of the Economic Policy Council and the Domestic Policy Council, daily White House senior staff
meetings, weekly issues lunches with the President, and many other
formal and informal meetings with the President, senior White House
staff, and other senior government officials. The Chairman guides
and oversees the work of the Council and exercises ultimate responsibility for directing the work of the Members and the professional
staff. This year, the Chairman was elevated to Cabinet rank.
COUNCIL MEMBERS
Members of the Council are involved in the full range of issues
within the Council's purview, and they are responsible for supervising the daily work of the professional staff. Members represent the
Council at a wide variety of interagency and international meetings
and assume major responsibility for selecting issues for Council attention.
The small size of the Council permits the Council Chairman and
Members to work as a team on most policy issues. There continued
to be, however, an informal division of subject matter. 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, 10 senior staff economists, 6 junior staff
economists, and 1 research assistant. The professional staff and their
respective areas of concentration at the end of 1987 were:




237

Special Assistant to the Chairman
Margot E. Machol
Senior Staff Economists
Deborah J. Danker
Earl L. Grinols
Robert W. Hahn
Craig S. Hakkio
Arlene S. Holen
Robert J. LaLonde
J. Steven Landefeld
Thomas A. Smith
Daniel A. Sumner
Peter M. Taylor

Macroeconomics, Money, and Finance. **
International Macroeconomics and Trade
Energy, Transportation, Environment, and
Regulation
International Macroeconomics
Labor, Health, and Regulation
Macroeconomics and Labor
Macroeconomics and Taxation
Law and Economics
Agriculture and Labor
Macroeconomics and Forecasting
Statistician

Catherine H. Furlong

Senior Statistician
Junior Staff Economists

Peter H. Barlerin
Lesley A. Cameron
Andrew J. Filardo
Julie Ann Hewitt
Randall S. Kroszner
Scott Schuh

International Macroeconomics and Trade
Macroeconomics and International Finance
Macroeconomics and Finance
Microeconomics, Agriculture, and
Environment
Industrial Organization, Regulation, and
Finance
International and Labor Macroeconomics
Research Assistant

William A. Teichner

Macroeconomics and Forecasting

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
Economic Indicators and the statistical appendix to the Economic Report,
as well as the verification of statistics in memoranda, testimony, and
speeches.
Thomas L. Super, from the Environmental Protection Agency, provided editorial assistance in the preparation of the 1988 Economic
Report.
Four former staff members returned to assist in the preparation of
the 1988 Report: Richard H. Clarida (senior staff economist), John J.
Dziak (research assistant), Lorraine A. Ambrosio (administrative




238

aide), and Dorothy Bagovich (statistical assistant). H. Hague Ollison
(Georgetown University), Jana C. Stull (Nebraska Wesleyan University), and Ellen H. Zimmerman (Johns Hopkins University) joined the
staff in early 1988 as student interns for the winter semester.
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 of Economic Advisers during 1987
were Lisa D. Branch, Gerardo Garcia, Mary E. Jones, Sandra F.
Medwid, Francine P. Obermiller, 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
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: Richard H. Clarida (Yale University), Stephen J. DeCanio (University of California, Santa Barbara),
Steven L. Husted (University of Pittsburgh), Randall P. Mariger (University of Washington), Aline O. Quester (Center for Naval Analyses), and Gordon C. Rausser (University of California, Berkeley).
Others went on to new positions. They are: J. David Germany
(Morgan Stanley & Co., Inc.), Carol A. Leisenring (Philadelphia National Bank), J. Gregory Sidak (Federal Communications Commission), and Susan E. Woodward (Department of Housing and Urban
Development).
Staff economists usually have just completed their dissertations and
spend 1 year at the Council as additional preparation for their professional careers. Staff economists who took new positions are:
Edward T. Gullason (University of Hartford) and Ellen L. HughesCromwick (Trinity College). 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 1987 are: Douglas A. Irwin (Columbia University) and Marjorie B. Rose (University of California, Los Angeles). Junior economists who went on to new positions are: Diana E. Furchtgott-Roth
(American Petroleum Institute) and Darrell L. Williams (Securities
and Exchange Commission). After graduating from the University of
Chicago, Lisa E. Bernstein spent a year at the Council as a research assistant and has now begun studies at Harvard Law School.




239

In addition, a number of other staff provided support to the Council
during the year. David K. Carlson (now at Goldman, Sachs & Co.)
continued to serve as an intern through the first half of 1987 while he
was completing his studies at the University of Maryland, and John J.
Dziak (University of Chicago, Graduate School of Business) served as
a research assistant during the summer of 1987. Hannah R. Hopkins
served as a student aide during the summer of 1987.
Support staff who resigned in 1987 were Bonnie D. Brown, Audrey
L. Carlson, and Sheila J. Moat.




240

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-16.
B-17.
B-18.
B-19.
B-20.
B-21.
B-22.
B-23.
B-24.
B-25.
B-26.
B-27.
B-28.
B-29.
B-30.

Gross national product, 1929-87
Gross national product in 1982 dollars, 1929-87
Implicit price deflators for gross national product, 1929-87
Fixed-weighted price indexes for gross national product, 1982
weights, 1959-87
Changes in gross national product, personal consumption expenditures, and related price measures, 1933-87
Gross national product by major type of product, 1929-87
Gross national product by major type of product in 1982 dollars,
1929-87
Gross national product by sector, 1929-87
Gross national product by sector in 1982 dollars, 1929-87
Gross national product by industry, 1947-86
Gross national product by industry in 1982 dollars, 1947-86
Gross domestic product of nonfinancial corporate business, 192987
Output, costs, and profits of nonfinancial corporate business,
1948-87
Personal consumption expenditures, 1940-87
Personal consumption expenditures in 1982 dollars, 1940-87
Gross and net private domestic investment, 1929-87
Gross and net private domestic investment in 1982 dollars, 192987
Inventories and final sales of business, 1946-87
Inventories and final sales of business in 1982 dollars, 1947-87
Foreign transactions in the national income and product accounts,
1929-87
Exports and imports of goods and services in 1982 dollars, 192987
Relation of gross national product, net national product, and national income, 1929-87
Relation of national income and personal income, 1929-87
National income by type of income, 1929-87
Sources of personal income, 1929-87
Disposition of personal income, 1929-87
Total and per capita disposable personal income and personal consumption expenditures in current and 1982 dollars, 1929-87
Gross saving and investment, 1929-87
Saving by individuals, 1946-87
Number and median income (in 1986 dollars) of families and persons, and poverty status, by race, selected years, 1963-86




243

248
250
252
254
255
256
257
258
259
260
261
262
263
264
265
266
267
268
269
270
271
272
273
274
276
278
279
280
281
282

POPULATION, EMPLOYMENT, WAGES, AND PRODUCTIVITY:
Page

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.
B-45.
B-46.
B-47.

Population by age groups, 1929-87
Population and the labor force, 1929-87
Civilian employment and unemployment by sex and age, 1947-87 ..
Civilian employment by demographic characteristic, 1954-87
Civilian unemployment by demographic characteristic, 1954-87
Labor force participation rate and employment/population ratio,
1948-87
Civilian labor force participation rate by demographic characteristic, 1954-87
Civilian employment/population ratio by demographic characteristic, 1954-87
Unemployment rate, 1948-87
Civilian unemployment rate by demographic characteristic, 194887
Unemployment by duration and reason, 1947-87
Unemployment insurance programs, selected data, 1955-87
Employees on nonagricultural payrolls, by major industry, 194687
Average weekly hours and hourly earnings in selected private nonagricultural industries, 1947-87
Average weekly earnings in selected private nonagricultural industries, 1947-87
Productivity and related data, business sector, 1947-87
Changes in productivity and related data, business sector, 1948-87.

283
284
286
287
288
289
290
291
292
293
294
295
296
298
299
300
301

PRODUCTION AND BUSINESS ACTIVITY:
B-48.
B-49.
B-50.
B-51.
B-52.
B-53.
B-54.
B-55.
B-56.
B-57.

Industrial production indexes, major industry divisions, 1939-87 ....
Industrial production indexes, market groupings, 1947-87
Industrial production indexes, selected manufactures, 1947-87
Capacity utilization rates, 1948-87
New construction activity, 1929-87
New housing units started and authorized, 1959-87
Business expenditures for new plant and equipment, 1947-88
Manufacturing and trade, sales and inventories, 1948-87
Manufacturers' shipments and inventories, 1947-87
Manufacturers' new and unfilled orders, 1947-87

302
303
304
305
306
308
309
310
311
312

Consumer price indexes, major expenditure classes, 1946-87
Consumer price indexes, selected expenditure classes, 1946-87
Consumer price indexes, commodities, services, and special
groups, 1946-87
Changes in special consumer price indexes, 1958-87
Changes in consumer price indexes, commodities and services,
1929-87
Producer price indexes by stage of processing, 1947-87
Producer price indexes by stage of processing, special groups,
1974-87
Producer price indexes for major commodity groups, 1947-87
Changes in producer price indexes for finished goods, 1955-87

313
314

PRICES:
B-58.
B-59.
B-60.
B-61.
B-62.
B-63.
B-64.
B-65.
B-66.




244

316
317
318
319
321
322
324

MONEY STOCK, CREDIT, AND FINANCE:
Page

B-67.
B-68.
B-69.
B-70.
B-71.
B-72.
B-73.
B-74.
B-75.

Money stock, liquid assets, and debt measures, 1959-87
Components of money stock measures and liquid assets, 1959-87...
Aggregate reserves of depository institutions and monetary base,
1959-87
Commercial bank loans and securities, 1972-87
Bond yields and interest rates, 1929-87
Total funds raised in credit markets by nonfinancial sectors, 197887
Mortgage debt outstanding by type of property and of financing,
1939-87
Mortgage debt outstanding by holder, 1939-87
Consumer credit outstanding, 1950-87

325
326
328
329
330
332
334
335
336

GOVERNMENT FINANCE:
B-76,
B-77.
B-78.
B-79.
B-80.
B-81.
B-82.
B-83.
B-84.
B-85.
B-86.

Federal receipts, outlays, surplus or deficit, and debt, selected
fiscal years, 1929-89
Federal receipts, outlays, and debt, fiscal years 1980-89
Relation of Federal Government receipts and expenditures in the
national income and product accounts to the budget, fiscal years
1987-89
Federal and State and local government receipts and expenditures,
national income and product accounts, 1929-87
Federal and State and local government receipts and expenditures,
national income and product accounts, by major type, 1929-87...
Federal Government receipts and expenditures, national income
and product accounts, 1966-89
State and local government receipts and expenditures, national
income and product accounts, 1946-87
State and local government revenues and expenditures, selected
fiscal years, 1927-86
Interest-bearing public debt securities by kind of obligation, 196787
Maturity distribution and average length of marketable interestbearing public debt securities held by private investors, 1967-87.
Estimated ownership of public debt securities, by private investors,
1976-87

337
338

340
341
342
343
344
345
346
347
348

CORPORATE PROFITS AND FINANCE:
B-87.
B-88.
B-89.
B-90.
B-91.
B-92.
B-93.
B-94.
B-95.

Corporate profits with inventory valuation and capital consumption
adjustments, 1929-87
Corporate profits by industry, 1929-87
Corporate profits of manufacturing industries, 1929-87
Sales, profits, and stockholders' equity, all manufacturing corporations, 1950-87
Relation of profits after taxes to stockholders' equity and to sales,
all manufacturing corporations, 1947-87
Sources and uses of funds, nonfarm nonfinancial corporate business, 1946-87
State and municipal and business securities offered, 1940-87
Common stock prices and yields, 1949-87,
Business formation and business failures, 1945-87




245

349
350
351
352
353
354
355
356
357

AGRICULTURE:
Page

B-96.
B-97.
B-98.
B-99.
B-100.
B-101.

Farm income, 1929-87
Farm output and productivity indexes, 1947-86
Farm input use, selected inputs, 1947-86
Indexes of prices received and prices paid by farmers, 1946-87
U.S. exports and imports of agricultural commodities, 1940-87
Balance sheet of the farm sector, 1939-87

358
359
360
361
362
363

INTERNATIONAL STATISTICS:
B-102. U.S. international transactions, 1946-87
B-103. U.S. merchandise exports and imports by principal end-use category, 1965-87
B-104. U.S. merchandise exports and imports by area, 1978-87
B-105. U.S. merchandise exports and imports by commodity groups,
1970-87
B-106. International investment position of the United States at year-end,
1979-86
B-107. International reserves, selected years, 1952-87
B-108. Foreign exchange rates, 1967-87
B-109. Industrial production and consumer prices, major industrial countries, 1962-87
B-110. Civilian unemployment rate, and hourly compensation, major industrial countries, 1960-87
B- 111. Growth rates in real gross national product, 1961-87




246

364
366
367
368
369
370
371
372
373
374

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 1987 and early 1988.




247

NATIONAL INCOME OR EXPENDITURE
TABLE B-l.—Gross national product, 1929-87

[Billions of 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

Nonresidential
Total

Durable
goods

Nondurable Services

Total
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
1987 '
1982: IV...
1983: IV...
1984: IV...
1985:1
II....
III...
IV...
1986:1
II....
III...
IV .
.
1987:1
II....
III...
IV.

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
3,772.2
4,010.3
4,235.0
4,486.2
3,212.5
3,545.8
3,851.8
3,921.1
3,973.6
4,042.0
4,104.4
4,174.4
4,211.6
4,265.9
4,288.1
4,377.7
4,445.1
4,524.0
4,598.0

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

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

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

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

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

63.2
69.0
75.1
82.1
88.0
94.3
101.6
108.5
115.7
125.0

85.7
97.6
111.2
124.7
123.8
135.4
161.5
184.5
205.6
219.0

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

219.3
239.9
252.7
289.1
335.5
368.7
402.4
413.9

2,117.0
2,315.8
2,493.4
2,549.9
2,602.0
2,665.4
2,700.1
2,737.9
2,765.8
2,837.1
2,858.6
2,893.8
2,943.7
3,011.3
3,015.1

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
2,430.5
2,629.4
2,799.8
2,966.0

4.0
.6
3.0
3.5
4.1
2.2
1.4
1.4
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

105.2
109.6
123.0
145.9
160.6
162.9
180.0
214.2
259.0
302.8

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

40.5
55.1
68.6
73.3
64.8
62.3
81.7
108.6
129.2
139.1

445.3
491.5
471.8
509.4
597.1
631.6
655.2
670.6

322.8
369.2
366.7
356.9
416.0
442.6
436.9
442.1

113.9
138.5
143.3
124.0
141.1
152.5
137.4
134.1

208.9
230.7
223.4
232.8
274.9
290.1
299.5
308.0

122.5
122.3
105.1
152.5
181.1
189.0
218.3
228.5

409.6
579.8
661.8
638.6
648.4
628.6
650.8
683.4
679.4
660.8
660.2

469.5
548.8
616.8
617.3
629.9
631.0
648.3
645.1
651.9
657.3
666.6

354.9
383.9
435.0
431.5
445.6
442.0
451.5
440.7
433.8
433.5
439.7

137.6
127.4
146.6
150.6
154.4
152.9
152.1
149.6
135.9
131.1
132.9

217.3
256.5
288.4
280.8
291.3
289.1
299.3
291.0
297.9
302.4
306.7

114.7
164.9
181.8
185.8
184.3
189.0
196.8
204.4
218.1
223.8
226.9

699.9
702.6
707.4
755.6

648.2
662.3
684.5
687.4

422.8
434.6
456.6
454.3

128.7
129.7
137.1
140.7

294.1
304.9
319.5
313.6

225.4
227.7
227.9
233.1

134.0
141.8
151.1
160.6
172.8
185.4
200.3
216.0
236.4
259.4

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

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

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

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

284.0
310.7
341.3
373.0
411.9
461.2
515.9
582.3
656.1
734.6

148.8
172.5
202.0
238.8
240.8
219.6
277.7
344.1
416.8
454.8

145.7
164.7
191.5
219.2
225.4
225.2
261.7
322.8
388.2
441.9

681.4
740.6
771.0
816.7
867.3
913.1
939.4
980.4

831.9
934.7
1,027.0
1,128.7
1,227.6
1,347.5
1,458.0
1,571.6

437.0
515.5
447.3
502.3
664.8
641.6
671.0
716.4

263.8
310.0
346.7
358.2
362.4
383.7
370.5
375.9
386.4
427.6
419.8

786.6
837.9
879.6
894.4
910.4
918.4
929.3
936.8
934.3
940.0
946.3

1,066.5
1,167.9
1,267.1
1,297.3
1,329.2
1,363.3
1,400.3
1,425.2
1,445.1
1,469.5
1,492.4

396.1
409.0
436.8
413.8

969.9
982.1
986.4
983.4

1,527.7
1,552.6
1,588.1
1,618.0

248

Producers' Residuedential
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

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

See next page for continuation of table.




Structures

14.9
3.1
9.1

TABLE B-l.—Gross national product, 1929-87—Continued
[Billions of dollars, except as noted; quarterly data at seasonally adjusted annual rates]
Net exports of goods and
services

Percent change
from preceding

Government purchases of goods and
services
Federal

Year or quarter
Net
Exports Imports
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
1987 P
1982- IV
1983: IV
1984-IV
1985-1

II
lit
IV
1986-1

II
III
IV
1987:1
||
Ill
IV P

5.9
2.1
3.4

18

7.1
2.4
4.6
54

1.5

6.1

4.7

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
311
33.1
35 7
40.5
42 9
46.6
49 5
54.8
60.4
68 9
72.4
814
1141
151.5
1613
177 7
1916
227 5
291.2
3510
382.8
361.9
352.5
383 5
369 9
376.2
426.7
335.9
364.7
385.7
376 3
370 6
364.2
368.7
373 5
3713
376 6
383.3
397.3
416.5
439.2
453.9

4.8
6.5
7.2
7.9
7.3
8.3
10.6
9.8
12.3
15 3
16.0
16.8
16.3
18.1
19 9
20.9
21.1
23.5
24.0
23 9
26.2
27 5
29.6
33 2
39.1
421
49.3
54.7
60 5
66.1
78 2
97 3
135.2
130.3
158 9
189.7
223.4
272.5
318 9
348.9
335.6
358.7
442.4
449 2
481.7
546.7
321.9
390.5
453.6
427 7
447 8
448.9
472.2
467.3
4721
4871
500.2
509.5
534.8
562.9
579.4

1.1
.4
1.2

-is
-1.7

l.B
11.9
7.0
6.5
2.2
45
3.2
1.3
26
3.0
53

. .

7.3
3.3
15
5.9
72
6.9
82
10.9
97
7.5
74
5.5
5.6
85
6.3
32
16 8
16.3
311
18 8
19
4.1
18.8
321
33.9
26.3

-61

-58 9
-79 2
-105.5
-119.9
14.1
-25.8
-67.9
-515
77 3
-84.7
-103 5
-93 8
100 8
110 5
-116.9
-112.2
-118.4
-123.7
-125.5

3.7

Total
Total

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
1084
118.2
123 8
130.0
1386
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
735 9
8186
869.7
923.8
671.8
676.1
764.5
784.1
800 5
832.8
857.0
846.9
867.2
878.5
886.3
896.2
917.1
929.0
952.8

Source: Department of Commerce, Bureau of Economic Analysis.




249

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
2081
242.2
272.7
283.5
310.5
353 9
366.2
380.6
293.2
276.1
326.0
336.3
339 4
361.9
378.0
356 7
368 4
3712
368.6
366.9
379.6
382.1
393.7

National
defense

Nondefense

State
and
local

1.3
23
13.8
49.4
79.8
87.5
73.7
16.4
10.0
11.3
13 9
14.3
338
46.2
49.0
416
39.0
40 7

3.9
39

7.4
6.1
8.3
8.1

3.2

8.0

2.6
1.6
2.0
1.1
2.8
3.6
6.0
7.2
4.7
48
6.5
8.9
68
6.0
57

446

5.9

7.8
7.5
7.6
8.2
9.9
12.8
15.3
180
19.8
218
23.1
24.8
27 7
30.3
333
36.9
40.8
43.3
46.1
502
53.5
581
63.5
699
78.2
87 0
97.6
107.2
119.4
132.5
144.2
1601
182.9
205.9
2206
236.2
263.4
289.9
322 2
345.9
369.0
391.5
425.3
464 7
503.5
543.2
378.7
400.0
438.5
447.8
461.1
470.9
479.0
490.2
498.8
507.3
517.7
529.3
537.6
546.9
559.1

46.3
46.4
45.3
47 9
52.1
515
50.4
510
62.0
73 4
79.1
78.9
76 8
74.1
77 A
77 5
82.6
89 6
93 4
100.9
108.9
121.9
142 7
167.5
193.8
214 4
234 3
259 3
277.8
295.2
205.4
221.5
244.1
250.2
253 7
265.1
268.2
266.6
278.2
287.6
279.0
287.5
294.5
299.0
300.0

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
396
42 9
50.3
52.9
56.1
65 4
74.8
78.9
69.1
76 2
94 6
88.4
85.3
87.7
54.6
81.9
86.1
85 7
96.8
109.8
90.1
90.2
83.6
89.6
79.4
85.1
83.0
93.7

Final
sales

102.2
57.6
90.9
983
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
3741
400.2
4236
449.6
458.3
490.0
512.3
5314
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
3,704.5
4,000.3
4,219.3
4,440.4
3,272.4
3,514.8
3,806.8
3,899.8
3,955.1
4,044.4
4,101.9
4,136.1
4,184.0
4,262.4
4,294.6
4,326.0
4,404.8
4,501.1
4,529.9

Gross
national
product

7.0
100
25.0
26.6
21.2
9.7
.9
—5
10*8
11.2
-.5
10.7
15.7
5.5
5.7
.2
9.0
55

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
58

5.3

6.1

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
10.8

1.9
6.9
4.6
3.7
7.0
5.7

6.3
5.6
5.9
4.2
12.4
4.7
7.4

5.5
7.1
6.3
7.0
3.6
5.3
2.1
8.6
6.3
7.3

6.7

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
8.5
8.0
5.5
5.2
11.0

7.8
7.0
10.1

5.8
9.3
5.fi

3.4
4.7
7.7

3.1
3.0

7.5
9.0
2.6

TABLE B-2.—Gross national product in 1982 dollars, 1929-87
[Billions of 1982 dollars, except as noted; quarterly data at seasonally adjusted annual rates]
Personal consumption

Gross private domestic investment
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

ill!::::::::::::
1982
1983
1984
1985
1986
1987 *
1982: IV
1983: IV
1984: IV
1985:1
II
Ill
IV
1986:1
II
Ill
IV
1987:1
II

Gross
national
product

Nonresidential
Total

Durable
goods

Nondurable Services
goods

Total
Total
Total

Structures

Producers'
durable
equipment

Residential

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

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

40.3
20.7
35.7
40.6
46.2
31.3
28.1
26.3
28.7
47.8
56.5
61.7
67.8

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

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

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

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

93.0
25.8
53.2
65.0
76.6
47.4
39.4
52.6
74.2
105.5
121.7
127.4
114.8

54.7
14.3
25.2
28.5
33.4
20.9
15.6
20.4
27.0
50.9
47.5
50.5
49.3

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

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

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
3,501.4
3,607.5
3,713.3
3,819.6
3,159.3
3,365.1
3,535.2
3,568.7
3,587.1
3,623.0
3,650.9
3,698.8
3,704.7
3,718.0
3,731.5
3,772.2
3,795.3
3,835.9
3,875.1

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

80.7
74.7
73.0
80.2
81.5
96.9
92.8
92.4
86.9
96.9

299.8
311.1
321.9
334.1
347.4
363.6
380.1
392.6
406.1
426.7

234.9
235.2
211.8
216.6
212.6
259.8
257.8
243.4
221.4
270.3

210.8
204.3
201.8
213.8
217.3
243.5
244.9
240.4
224.8
253.8

124.0
131.7
130.6
140.1
137.5
151.0
160.4
161.1
143.9
153.6

86.7
72.6
71.2
73.8
79.8
92.4
84.4
79.3
81.0
100.2

443.9
461.4
481.8
502.3
532.3
558.5
585.3
612.3
641.8
671.7

260.5
259.1
288.6
307.1
325.9
367.0
390.5
374.4
391.8
410.3

252.7
251.8
272.4
290.5
310.2
341.8
353.7
345.6
370.7
385.1

159.4
158.2
170.2
176.6
194.9
227.6
250.4
245.0
254.5
269.7

93.3
93.6
102.2
113.9
115.3
114.2
103.2
100.6
116.2
115.4

381.5
419.3
465.4
520.8
481.3
383.3
453.5
521.3
576.9
575.2

152.9
151.0
167.5
199.6
202.7
178.4
186.2
215.7
242.8
258.8

109.3
141.3
166.6
163.4
130.2
114.9
140.8
168.1
178.0
170.8

762.6
764.4
771.0
800.2
825.9
849.5
877.2
875.9
778.6
812.7
831.2
841.2
847.6
853.5
855.7
868.8
880.0
879.8
880.3
883.2
879.0
875.7
865.6

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
596.1
628.7
640.2
643.0
468.1
550.3
614.0
612.7
628.4
628.9
644.9
639.1
637.6
638.8
645.4
624.2
634.7
657.3
655.9

264.0
258.4
277.0
317.3
317.8
281.2
290.6
324.0
362.1
389.4

245.9
250.8
252.7
283.1
323.1
352.7
383.5
388.1
262.0
300.5
333.1
342.4
346.6
366.8
355.1
359.8
369.6
405.5
399.0
375.9
385.4
406.9
384.4

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
1,100.3
1,150.4
1,189.8
1,231.2
1,038.1
1,078.6
1,116.8
1,130.5
1,142.8
1,155.7
1,172.5
1,181.2
1,184.7
1,192.2
1,201.1
1,216.9
1,223.1
1,238.1
1,246.6

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

71.2
75.2
73.3
77.7
72.7
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

162.5
178.3
200.4
220.3
204.9
205.6
232.3
253.9
267.4
266.5

352.8
362.9
376.6
388.2
393.8
413.2
426.9
434.7
439.9
455.8
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

379.2
395.2
366.7
361.2
425.2
454.1
443.8
446.8
352.3
390.4
444.4
440.0
457.2
454.1
465.2
453.2
441.0
437.7
443.2
426.0
437.9
463.8
459.6

136.2
148.8
143.3
127.2
143.8
149.4
130.3
124.3
138.3
131.6
147.1
149.1
151.7
149.5
147.2
145.4
128.4
122.7
124.6
120.4
120.4
127.2
129.2

243.0
246.4
223.4
233.9
281.4
304.8
313.5
322.5
214.1
258.8
297.3
291.0
305.5
304.5
318.0
307.8
312.6
315.0
318.6
305.6
317.5
336.6
330.4

137.0
126.5
105.1
149.3
170.9
174.6
196.4
196.2
115.8
159.9
169.6
172.6
171.2
174.9
179.7
185.9
196.5
201.1
202.2
198.2
196.8
193.5
196.3

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
2,249.3
2,352.6
2,450.5
2,495.2
2,078.7
2,191.9
2,281.1
2,314.1
2,337.0
2,376.1
2,383.2
2,409.7
2,434.3
2,477.5
2,480.5
2,475.9
2,487.5
2,520.7
2,496.6

98.0
93.6
103.0
111.8
120.8
134.6
144.4
146.2
161.6
167.8

See next page for continuation of table.




250

509.3
545.5
447.3
504.0
658.4
636.1
654.0
685.4
408.8
577.2
655.7
632.1
645.7
623.2
643.3
674.4
665.6
645.0
631.0
671.8
673.7
681.9
714.2

Change in
business
inventories

TABLE B-2.—Gross national product in 1982 dollars, 1929-87—Continued
[Billions of 1982 dollars, except as noted; quarterly data at seasonally adjusted annual rates]

Federal
Year or quarter
Net
Exports Imports
exports

4.7

1929
1933
1939
1940
1941
1942
1943
1944
1945
1946
1947....
1948
1949
1950
1951
1952.
1953
1954
1955
1956
1957
1958
1959

I
V
1986-1

II

III
IV
1987:1

II
III
IV

P

Total

National
defense

-10.3
-18.2
-4.0
-2.7
-75
-1.9
5.9
-2.7
-13.7
-16 9
-29.7
-34.9
-30.0
-39.8
-49.4
-31.5
.8
18.9
-11.0
-35.5
26 8
3.6
57.0
49 4
26 3
— 19 9
-84.0
-108.2
-145 8
-134.3
11.7
-46.2
-94.8
-81.0
-107.7
-114.9
-129.3

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
160 5
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
3434
335 6
3681
455.8
473.6
523 2
560.1
324.3
401.6
471.4
450.7
472.4
475.4
495.8

94.2
98.5
144.1
150.2
235.6
483 7
708.9
790.8
704.5
2369
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
576 2
597.6
591.2
572.6
566.5
570.7
565.3
573 2
580.9
580.3
589.1
6041
609.1
620.5
629 7
6417
649 0
677.7
726.9
754 5
773.3
660.1
642.2
693.2
703.4
712.1
738.6
753.7

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
304 4
309.6
295.6
268.3
250.6
246.0
230.0
2264
226.3
224.2
231.8
233 7
236.2
246.9
259 6
272 7
2751
290.8
324.2
332 5
337.7
289.5
266.0
300.5
308.4
310.7
332.5
345.3

185.3
171.0
163 3
161.1
157.5
159.2
160 7
164.3
171.2
180.3
193 8
206 9
218.5
236.7
250.7
264.3
201.4
211.6
225.3
229.8
232.8
243.3
241.1

-123 0
-146 8
-161.6
-151.8
-135.2
-132.7
-138 4
-130.7

3715
370 2
379.6
388.3
397.8
414.5
437 1
453.8

494 4
517 0
541.2
540.1
533.0
547.2
575.6
584.5

737 6
7516
757.2
771.8
759.6
766.7
771.7
795.0

322.1
330 6
332.6
344.6
327.3
332.6
336.3
354.5

240.0
2501
259.8
252.7
257.4
263.5
268.3
267.8

7.0

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
1987"
1982: IV
1983: IV.
1984- IV
1985-1
If
Ill

Total

42.1
22.7
36.2
40.0
42.0
291
25.1
27.3
35.2
69 0
82 3
66.2
65.0
59.2
72.0
70.1
66.9
70.0
76.9
87 9
94.9
82.4
83.7
98.4
100.7
106 9
114.7
128.8
132.0
138.4
143 6
155.7
165.0
178.3
179.2
195.2
242.3
2691
259.7
274.4
281.6
312 6
356.8
388.9
392 7
3619
3481
371.8
365 3
377 4
425.8
336.0
355.5
376.6
369.7
364.7
360.5
366.5

-1.4
6.1
8.2
3.9
-77
-23.0
-23.8
-18.9
27 0
42.4
19.2
18.8
4.7
14.6
6.9
-2.7
2.5
.0
43

Source: Department of Commerce, Bureau of Economic Analysis.




Percent change
from pniceding
per

Government purchases of goods and
services

Net exports of goods and
services

251

Nondefense

State
and
local

Final
sales

60.7
59.1
63.1
65.2
66.8
72.7
73.0
71.9
75.7
79.3
78.9
68.2
72.3
87.5
81.8
73.4
88.2
54.4
75.2
78.6
77.8
89.3
104.2

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
324.7
335.3
346.8
354.6
356.0
357.2
370.4
373.0
373.6
370.1
369.0
373.9
387.0
402.7
422.1
435.6
370.6
376.2
392.7
395.0
401.4
406.1
408.4

698 7
509.2
712.7
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
1,179.5
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
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
2,407.9
2,465.2
2,586.8
2,704.1
2,696.0
2,707.8
2,804.6
2,929.5
3,078.4
3,177.4
3,194.0
3,225.0
3,190.5
3,285.5
3,439.1
3,600.1
3,699.5
3,777.2
3,218.6
3,338.1
3,493.5
3,549.2
3,569.9
3,628.7
3,652.5

82.0
80.4
72.8
91.9
69.9
69.1
67.9
86.7

415.5
421.0
424.6
427.1
432.3
434.1
435.4
440.5

3,663.4
3,676.7
3,711.9
3,745.8
3,724.5
3,756.3
3,811.4
3,816.7

Gross
national
product

Final
sales

-3.1
-2.1
6.3
7.9
6.4
7.8
16.2
17.7
212
18.8
19.4
18.1
8.6
8.2
-1.9
16
-19.0 - 2 1 6
.1
-2.8
2.7
3.9
2.0
.0
5.4
8.5
10.0
10.3
5.6
3.9
4.6
4.0
-.8
-1.3
4.1
5.6
2.3
2.1

1.7

2.3

-.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
-2.5

-.4
4.5
2.8
2.6
4.8
4.1
5.4
5.4
5.3

3.6
6.8
3.0

2.9

2.9
.6
7.3
1.7
3.8
2.1
4.1
3.1
5.4

.6
1.4
1.5
4.4
2.5

4.3
4.2

3.3
4.5
2.3
.4
2.4
4.9
4.5
.3

.4
3.6
4.5
5.1
3.2
.5

1.0

-1.1

3.0
4.7
4.7
2.8

2.1
7.1

3.8
4.0
6.5
2.4
6.8
2.6
1.2
1.5
3.9
3.7
-2.3

3.5
6.0
.6

TABLE B-3.—Implicit price deflators for gross national product, 1929-87
[Index numbers, 1982=100, except as noted; quarterly data seasonally adjusted]
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
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
1987 p ..
1982: IV
1983: IV
1984: IV
1985:1
II
Ill
IV
1986:1
lILl
IV
1987:1
II
Ill

IV..

Gross
national
product

Fixed investment
Presidential

Total

Durable
goods

Nondurable Services
goods

Total

Total

Structures

Producers'
durable
equipment

14.6
11.2
12.7

16.4
12.1
13.9

22.9
16.8
18.7

17.8
12.2
14.2

13.8
11.4
12.8

11.6
9.4
11.1

11.8
9.8
11.5

10.0
7.6
8.8

14.3
12.5
13.9

13.0
13.8
14.7
15.1
15.3
15.7
19.4
22.1
23.6
23.5

14.1
15.2
16.8
18.4
19.4
20.2
22.0
24.3
25.7
25.6

19.2
20.9
22.0
23.3
25.4
27.7
33.0
36.1
37.1
36.9

14.3
15.5
18.2
20.6
21.6
22.2
24.0
26.9
28.5
27.7

12.9
13.5
14.3
15.1
16.0
16.5
17.3
18.6
19.7
20.5

11.5
12.4
13.2
13.8
14.2
14.5
16.7
19.8
21.7
22.2

11.9
12.7
13.3
13.8
14.0
14.3
16.4
19.3
21.0
21.7

9.0
9.7
10.7
11.4
11.6
12.3
14.5
17.1
18.9
18.6

14.2
14.9
15.3
15.4
15.6
15.4
18.2
20.7
22.5
24.0

23.9
25.1
25.5
25.9
26.3
27.2
28.1
29.1
29.7
30.4

26.2
27.8
28.4
29.0
29.1
29.5
30.1
31.0
31.6
32.3

38.1
40.0
40.1
40.8
39.4
40.1
41.2
42.9
42.8
44.2

27.8
30.1
30.5
30.4
30.4
30.2
30.6
31.5
32.2
32.6

21.1
22.2
23.3
24.6
25.3
25.9
26.7
27.6
28.5
29.3

22.9
24.6
25.0
25.5
25.6
26.3
27.8
29.0
28,9
29.3

22.4
24.2
24.4
25.1
25.2
25.8
27.7
29.5
29.5
30.2

18.8
21.1
21.3
21.8
21.4
21.8
24.1
25.2
24.8
25.0

25.0
26.4
26.9
27.7
28.6
29.3
31.0
33.3
34.0
34.7

30.9
31.2
31.9
32.4
32.9
33.8
35.0
35.9
37.7
39.8

32.9
33.3
33.9
34.4
35.0
35.6
36.7
37.6
39.3
41.0

44.4
44.8
45.7
46.3
47.0
47.1
47.5
48.3
50.1
51.4

33.1
33.5
33.8
34.3
34.7
35.3
36.6
37.5
39.0
40.9

30.2
30.7
31.4
32.0
32.5
33.2
34.2
35.3
36.8
38.6

29.7
29.7
29.9
30.1
30.4
31.1
32.4
33.4
34.8
37.2

30.6
30.5
30.9
31.3
31.5
32.1
33.3
34.4
35.9
37.9

25.2
25.0
25.2
25.5
25.9
26.9
28.2
29.1
30.4
32.9

35.6
35.9
36.1
36.2
36.2
36.4
37.2
38.4
39.9
41.5

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
107.7
1U.2
114.1
117.5

42.9
44.9
46.7
49.6
54.8
59.2
62.6
66.7
71.6
78.2

52.7
54.7
55.5
56.6
60.4
65.9
69.5
72.7
76.9
82.1

40.7
43.1
45.1
47.4
51.3
55.6
59.8
64.8
69.8
75.6

39.0
41.2
43.2
45.6
50.3
56.9
60.7
65.6
71.9
78.9

39.9
42.4
44.4
46.0
50.5
57.9
61.9
66.1
71.5
77.8

89.2
957
100.0
102.1
103.8
104.5
104.9
106.6

83.9
92.6
100.0
106.2
111.6
117.1
122.5
127.6

86.3
94.2
100.0
99.8
100.2
100.5
102.3
104.3

85.1
93.4
100.0
98.8
97.9
97.5
98.5
98.9

35.2
38.1
40.6
43.7
49.5
54.7
57.6
61.6
67.9
76.2
83.6
93.1
100.0
97.5
98.2
102.1
105.5
107.9

43.2
45.5
46.8
47.3
51.1
59.7
64.4
68.3
73.3
78.6

86.6
94.6
100.0
104.1
108.1
111.8
114.3
118.9

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
105.0
107.5
107.1
111.9

86.0
93.7
100.0
99.5
97.7
95.2
95.5
95.5

101.7

101.8

100.7

101.0

102.7

100.3

100.7

99.5

101.5

105.4

105.7

103.1

103.1

108.3

99.7

98.3

96.8

99.1

109.0

109.3

104.1

105.8

113.5

100.5

97.9

99.6

97.0

109.9
110.8
111.6
112.4

110.2
111.3
112.2
113.3

104.6
104.5
104.6
104.3

106.3
107.4
107.6
108.6

114.8
116.3
118.0
119.4

100.7
100.2
100.3
100.5

98.0
97.5
97.3
97.1

101.0
101.8
102.3
103.3

96.5
95.3
94.9
94.1

112.9
113.7
114.7
114.9

113.6
113.6
114.5
115.2

104.5
104.6
105.4
105.2

107.8
106.2
106.8
107.5

120.7
122.0
123.3
124.3

100.9
102.2
102.9
103.3

97.2
98.4
99.0
99.2

102.9
105.9
106.8
106.7

94.5
95.3
96.0
96.3

116.1
117.1
117.9
118.7

116.9
118.3
119.5
120.8

105.4
106.1
107.4
107.7

109.8
111.7
112.6
113.6

125.5
126.9
128.3
129.8

103.9
104.4
104.1
104.8

99.3
99.2
98.4
98.9

106.9
107.8
107.8
108.9

96.3
96.0
94.9
94.9

See next page for continuation of table.




Gross private domestic investment'

252

TABLE B-3.—Implicit price deflators for gross national product, 1929-87—Continued
[Index numbers, 1982—100, except as noted; quarterly data seasonally adjusted]
Exports and
imports of goods
and services l
Year or quarter

.

Federal

Total
Exports

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
1987 P
1982:1V
1983:1V
1984- IV
1985-1
It
Ill
IV.
1986:1
II
til
I
V
1987:1
II.
Ill
IV *>

Government purchases of goods and services

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
309
31.0
311
31.4
32 5
33.7
34 5
35.2
36.6
38.7
40.4
417
47.1
56.3
621
64.8
68.0
72.8
81.6
90.2
97.5
100 0
1013
103.2
101.3
99 7
100.2
100.0
102.6
102.4
101.8
101.6
1010
100.6
100.6
100 3
99.2
98.7
99.9
100 5
100.5
100.0

Total

Imports

15.9
86
11.3
11.6
12 3
13.1
13.6
141
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
231
22.9
23 6
24.1
24 7
25.7
26 2
26.6
27.4
29 0
30.2
32 0
35 5
50.4
541
55.7
59.8
65.8
77.1
96.0
101.6
100 0
97 4
97.1
94 8
921
97.6
99.3
97.2
96.2
94.9
94 8
94 4
95.2
94.5
913
90.0
92.6
95 6
97 7
97.8
99.1

9.4
84
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
241
24.6
24.9
25 4
26.3
26 9
27.6
28 5
29.8
312
33.1
35.1
381
41.0
43 8
471
52.2
57 7
61.5
65.8
70.4
76.8
85.5
93.4
100 0
104 0
108.6
112 6
115 3
119.5
101.8
105.3
110.3
111.5
112 4
112 7
113.7
114 8
115 4
116.0
114.8
118 0
119 6
120.4
119.9

8.1
80
9.7
9.7
111
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
281
29.4
30 5
32.3
33.8
36 8
39.8
43 0
46 2
51.3
571
60.8
65.2
69.2
75.4
84.3
93.3
100 0
103 1
106.8
109 2
110 2
112.7
101.3
103.8
108.5
109.0
109 3
108 8
109.5
110 7
1114
111.6
107.0
1121
1141
113.6
111.1

National Nondefense defense

418
45 3
50.6
55 6
59.3
63.4
67.8
74.2
83.4
92.9
100 0
103 6
107.2
109 5
110 8
111.7
102.0
104.7
108.3
108.9
109 0
109 0
111.2

mi

1112
110.7
110.4
1117
1118
111.4
112.0

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
108.1
1081
116.2
99.5
100.3
108.9
109.5
110.1
108.4
105.4
109.8
112.2
115.0
97.5
113.6
123.1
122.2
108.2

State
and
local

9.7
86
9.2
9.3
97
10.2
10.6
112
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
111
86.2
93.4
100.0
104 7
109.9
115.4
119 3
124.7
102.2
106.3
111.7
113.4
114.9
116.0
117.3
118.0
118.5
119.5
121.2
122.4
123 8
125.6
126.9

Final
sales

14.6
113
12.8
13.0
13 7
14.7
15.2
153
15.7
19.3
22.1
23.4
23.5
23.9
24.9
25 4
25.9
26.3
27.1
28.0
29.0
29 7
30.4
30.9
31.2
31.9
32.4
32.9
33.7
34.9
35.9
37.7
39.8
42.0
44.4
46 5
49.5
54.1
59.2
63.0
67.2
72.1
78.5
85.8
93.9
100.0
103.9
107.7

m.i
114.1
117.6
101.7
105.3
109.0
109.9
110.8
111.5
112.3
112.9
113.8
114.8
114.7
116.1
117.3
118.1
118.7

Percent
change
from
preceding
period,
GNP
implicit
price
deflator2

1

-2 2
-.8
2.0
62
6.6
2.6
14
2.9
22.9
13.9
70
5
2.0
4.8
15
1.6
1.6
32
3.4
3.6
2.1
2.4
1.6
10
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
67
7.3
8.9
9.0
9.7
6.4
3.9
3.7
3.2
26
3.0
3.6
4.7
3.0
3.3
3.3
29
2.9
1.8
29
3.6
.7
42
35
2.8
2.7

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.




253

TABLE B-4.—Fixed-weighted price indexes for gross national product, 1982 weights,

1959-87

[Index numbers, 1982=100, except as noted; quarterly data seasonally adjusted]

Gross private domestic
investment1
Year or quarter

Personal
conGross
national sumption
product expenditures

Fixed investment

Total

Government purchases of
goods ana services

Exports and
imports of goods
and services1

Nonresi- Residen- Exports
dential
tial

Imports

Percent

Federal
Total

Total

National
defense

Non-

State
and
local

from
preceding
period,
GNP
fixedweighted
price
index2

1959

37.6

35.2

58.0

65.9

30.2

32.8

27.0

25.8

26.9

24.9

1960
1961
1962
1963
1964

38.1
38.4
38.7
39.1
39.6

35.7
36.1
36.4
36.8
37.2

58.1
58.0
58.0
58.0
58.2

66.1
66.0
66.1
66.2
66.4

30.3
30.2
29.9
29.5
29.6

33.5
34.0
34.1
34.4
34.8

27.3
27.0
26.7
27.1
27.7

26.4
27.0
27.8
28.5
29.3

27.3
27.8
28.4
29.3
30.1

25.7
26.4
27.3
27.9
28.5

1.4

1965
1966
1967
1968
1969

40.1
41.1
42.1
43.7
45.6

37.7
38.5
39.5
41.0
42.8

58.5
59.3
60.2
61.4
63.2

66.7
67.4
68.4
69.5
71.0

30.0
30.8
31.6
33.1
36.0

35.9
37.1
38.2
39.3
40.9

28.1
29.1
29.5
30.1
31.2

30.0
31.3
32.7
34.5
36.6

30.8
32.0
32.8
34.5
36.4

29.3
30.6
32.5
34.4
36.7

1.4
2.5
2.6
3.7
4.4

1970
1971
1972
1973
1974

47.2
48.8
50.3
53.1
57.2

44.7
46.6
48.3
51.0
55.8

61.5
60.6
59.8
61.8
64.4

68.4
66.6
65.0
66.6
68.5

37.4
39.5
41.6
45.1
50.1

33.4
35.6
37.8
42.4
54.5

39.6
42.3
45.2
48.8
53.5

39.5
42.4
46.0
50.1
54.8

44.3
47.4
51.4

50.5
56.9
63.3

39.6
42.2
44.6
47.8
52.6

3.6
3.5
2.9
5.5
7.8

1975
1976
1977
1978
1979

61.8
65.1
68.4
72.7
78.8

60.1
63.5
67.5
72.2
78.6

69.0
71.4
72.6
74.5
80.3

73.1
75.2
74.9
75.0
80.1

54.6
58.4
64.8
72.5
81.2

43.3
45.3
46.5
50.8
59.8
65.4
67.4
70.3
74.5
82.9

59.7
61.3
66.1
71.3
80.9

58.6
62.2
66.0
70.9
77.3

59.4
62.4
65.8
70.6
76.8

56.5
59.7
63.5
68.6
75.1

66.6
69.0
71.5
75.5
81.0

57.9
62.0
66.2
71.2
77.7

8.0
5.3
5.1
6.2
8.5

1980
1981
1982
1983
1984

86.1
94.1
100.0
104.1
108.3

86.8
94.6
100.0
104.2
108.4

86.9
94.5
100.0
100.4
101.5

86.1
93.9
100.0
99.9
100.2

89.4
96.6
100.0
102.2
106.0

90.5
97.7
100.0
101.6
104.3

96.3
101.5
100.0
97.7
97.5

86.3
94.1
100.0
104.5
109.2

86.4
94.9
100.0
104.1
108.0

84.7
93.8
100.0
103.7
107.6

90.6
97.4
100.0
105.1
108.9

86.2
93.5
100.0
104.8
110.1

9.3
9.3
6.2
4.1
4.0

1985
1986
1987 "

112.1
115.1
119.1

112.3
115.2
120.0

103.2
104.9
107.4

101.8
103.2
104.9

108.2
110.9
116.1

103.7
103.6
105.9

95.7
92.6
99.5

113.7
116.5
121.2

110.8
111.3
114.4

111.1
112.1
115.3

110.0
109.3
112.1

115.8
120.3
126.2

3.6
2.7
3.4

1982:1V...

101.7

101.8

100.2

100.5

99.1

100.0

101.7

101.8

101.4

102.2

105.8

100.5

99.6

103.3

103.2

106.0

105.4

104.7

107.0

106.4

109.6

109.7

102.3

100.9

107.2

104.0

110.7

109.0

109.0

109.1

111.9

4.0
4.0
3.2

110.7
111.7
112.5
113.5

110.7
111.9
112.8
114.0

102.6
102.9
103.4
104.0

101.2
101.6
102.0
102.5

107.6
107.6
108.0
109.4

103.9
104.0
103.6
103.5

99.3
97.6
96.8
95.4
95.6
95.1
96.6

102.0

105.7

112.3
113.2
113.9
115.2

110.5
110.4
110.4
111.7

110.7
110.6
110.7
112.3

110.1
110.1
109.7
110.1

113.7
115.2
116.4
117.8

4.1
3.7
2.9
3.4

114.1
114.7
115.5
116.1

114.4
114.5
115.5
116.4

104.1
104.8
105.1
105.7

102.4
103.1
103.3
103.9

109.9
110.7
11U
112.0

103.9
103.8
103.5
103.5

95.1
91.4
91.6
93.5

115.7
116.0
116.5
117.6

111.7
111.4
111.0
111.1

112.4
112.0
111.9
112.1

109.9
109.9
108.7
108.7

118.7
119.4
120.5
122.4

2.2
2.2
2.6
2.3

117.4
118.6
119.6
120.7

118.0
119.5
120.7
121.9

106.4
107.1
107.9
108.4

104.3
104.7
105.2
105.5

113.5
115.3
117.4
118.2

104.5
105.6
106.4
107.0

96.3
98.9
100.7
101.9

119.3
120.6
121.7
123.1

113.2
114.3
114.4
115.6

114.2
115.3
115.3
116.3

110.5
111.7
112.4
113.7

123.8
125.2
127.1
128.6

4.5
4.1
3.4
3.7

1983: IV...
1984: IV...
1985:1
II ....
III...
IV...
1986:1
II....
III ...
IV ..
1987:1
II ....
III...
IV P.

1.0
1.2

1
Separate price indexes 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.




254

TABLE B-5.—Changes in gross national product, personal consumption expenditures, and related price
measures, 1933-87

[Percent change from preceding period; quarterly data at seasonally adjusted annual rates]
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
1987"
1982- IV
1983- IV
1984: IV
1985:1
tl
III
IV
1986:1
1!
Ill
I
V
1987:1
II
Ill
IV P

Current
dollars

-4.2
7.0
10.0
25.0
26.6
21.2
9.7
9
108
11.2
-.5
10 7
15.7
5.5
57
.2
9.0
5.5
5.3
13
8.5
3.9
3.6
7.6
5.6
71
8.5
9.5
5.8
9.3
8.0
54
8.6
100
12.1
83
8.5
115
11.7
13.0
11.5
8.9
11.7
3.7
76
10.8
6.3
5.6
5.9
4.2
12.4
4.7
7.4
55
71
6.3
7.0
3.6
53
2.1
8.6
6.3
73
6.7

Constant
(1982)
dollars
-2.1
7.9
78
17.7
18.8
18.1
8.2
-1.9
-19.0
-28
3.9
.0
85
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
53
5.8
58
2.9
4.1
2.4
_3
2.8
50
5.2
_ 5
-1.3
49
4.7
5.3
2.5
-.2
1.9
-2.5
36
6.8
3.0
2.9
2.9
.6
7.3
1.7
3.8
21
41
3.1
5.4
.6
14
1.5
4.4
2.5
43
4.2

Implicit
price
deflator

Personal consumption expenditures

Chain
price
index

-2 2
8
20
6.2
6.6
26
1.4
29
22.9
13 9
7.0
5
20
4.8
1.5
16
1.6
3.2
3.4
3.6
21
2.4
1.6
10
2.2
1.6
15
2.7
36
2.6
50
5.6
55
5.7
47
6.5
91
9.8
64
6.7
7.3
8.9
9.0
9.7
6.4
39
3.7
3.2
2.6
3.0
3.6
4.7
3.0
33
33
29
2.9
1.8
29
36
.7
4.2
35
28
2.7

1.5
10
1.2
1.3
15
1.8
30
2.8
43
5.0
52
4.8
42
5.9
89
9.2
59
6.1
7.2
8.7
9.0
9.4
6.3
41
3.9
3.5
2.4
3.2
4.1
3.9
3.1
40
38
28
3.4
1.7
19
26
2.0
4.2
37
33
3.3

Source: Department of Commerce, Bureau of Economic Analysis.




255

Fixedweighted price
index
(1982
weights)

1.4
7
.8
1.0
12
1.4
25
2.6
37
4.4
36
3.5
29
5.5
78
8.0
53
5.1
6.2
8.5
9.3
9.3
6.2
41
4.0
3.6
2.7
3.4
4.0
4.0
3.2
41
37
29
3.4
2.2
22
26
2.3
4.5
4.1
34
3.7

Current
dollars

-5.7
4.6
60
13.8
9.7
12.2
8.8
10.5
20.4
12 5
8.0
1.9
77
8.3
5.3
6.2
3.1
7.5
4.9
5.4
33
7.4
4.6
31
6.1
5.5
72
7.7
83
5.5
97
8.2
70
8.1
95
10.5
95
10.5
115
11.3
11.6
11.6
10.6
10.5
7.1
90
8.8
8.2
6.5
5.9
10.3
9.7
7.2
9.4
84
101
5.3
5.7
4.1
10 7
3.1
5.0
7.1
9.5
.5

Constant
(1982)
dollars
-1.6
5.1
46
5.7
-.7
2.3
3.2
6.4
10.5
1.8
2.3
2.0
54
2.1
3.0
4.0
2.5
6.2
3.0
2.2
14
5.0
2.6
2.0
4.3
3.7
56
5.6
51
3.0
51
3.6
24
3.1
54
4.2
_9
2.3
5.4
4.4
4.1
2.2
-.2
1.2
1.3
46
4.8
4.6
4.2
1.8
5.3
5.5
4.3
5.9
4.0
69
1.2
4.5
4.1
7.3
-.7
1.9
5.4
-3.8

Implicit
price
deflator

Chain
price
index

Fixedweighted price
index
(1982
weights)

-4.2
13
7.7
10.4
9.6
5.4
3.9
8.9
10 6
5.6
-.1
22
6.1
2.2
2.1
.6
13
19
32
1.8
2.2
1.9
1.2
1.8
1.5
17
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
3.4
2.2
4.0
4.4
4.3
3.0
3.3
4.1
3.3
4.0
1.1
.0
3.2
2.5
6.0
4.9
4.1
4.4

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
3.9
3.6
2.5
4.1
4.8
4.1
3.1
3.5
4.4
3.2
4.2
1.5
3.6
3.0
5.5
5.2
4.0
4.1

1.5
.9
.9
1.1
12
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
2.6
4.2
4.8
4.1
3.2
3.4
4.5
3.3
4.2
1.7
.3
3.6
.3.0
5.7
5.2
4.0
4.2

TABLE B-6.—Gross national product by major type ofproduct, 1929-87
[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Goods
Year or
quarter

Gross
national
product

Final
sales

Inventory
change

Durable goods

Total
Total

Final
sates

Nondurable goods
Services

Inventory
change

Final

Inventory
change

Final
sales

Inventory
change

Structures

1929
1933
1939

103.9
56.0
91.3

102.2
57.6
90.9

1.7
-1.6
.4

56.1
27.0
49.0

54.4
28.6
48.6

1.7
-1.6
.4

16.1
5.4
12.4

1.4
-.5
.3

38.3
23.2
36.2

0.3
-1.1

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
-1.0
-1.0
6.4
-.5
4.7

56.0
72.5
93.7
120.4
132.3
128.9
125.3
139.8
154.4
147.7

53.8
68.0
91.9
121.0
133.3
129.9
118.9
140.3
149.7
150.8

2.2
4.5
1.8
-.6
-1.0
-1.0
6.4
-.5
4.7
-3.1

15.4
23.8
34.5
54.2
58.5
50.1
31.8
44.4
48.0
50.0

1.2
3.1
1.0
.0
=.6
-1.3
5.3
1.4
1.0
-1.8

38.4
44.2
57.4
66.8
74.8
79.8
87.1
95.9
101.7
100.9

1.0
1.4
.7
-.6
-.3
U
-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

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
-1.6
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
-2.5
3.4
2.1
-2.%
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

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

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
-5.6
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

441.1
3.2
484.9
4.9
533.2
3.3
4.6
586.6
4.3
650.6
1.3
725.2
5.7
803.5
11.6
895.9
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

1980
1981
1982
1983
1984
1985
1986
1987 "

2,732.0
3,052.6
3,166.0
3,405.7
3,772.2
4,010.3
4,235.0
4,486.2

2,740.3 - 8 . 3
3,028.6
24.0
3,190.5 -24.5
3,412.8 - 7 . 1
3,704.5
67.7
4,000.3
10.0
4,219.3
15.7
4,440.4
45.7

683.8
757.8
800.8
827.9
872.4
931.0
956.1
987.4

= 5.4
17.2
-7.7
-6.1
27.5
2.7
10.9
19.2

1,265.0
1,415.4
1,547.5
1,682.5
1,813.9
1,969.3
2,116.2
2,270.4

1982: IV

3,212.5

3,272.4 -59.9

1,309.8 1,369.7 -59.9

817.9

-17.2

1983: IV

3,545.8

3,514.8

31.0

1,473.7 1,442.7

31.0

1984: IV

3,851.8

3,806.8

45.0

1,599.9 1,554.9

45.0

1985:1

3,921.1
3,973.6
4,042.0
4,104,4

3,899.8
3,955.1
4,044.4
4,101.9

21.4
18.5
-2.4
2.5

1,620.5
1,629.4
1,649.7
1,651.9

1,599.1
1,611.0
1,652.1
1,649.4

21.4
18.5
-2.4
2.5

499.4 - 2 . 9
541.1
6.8
542.9 - 1 6 . 8
575.3 - 1 . 0
641.3
40.2
696.9
7.3
721.9
4.8
747.5
26.5
551.8
-42.7
611.9
16.7
667.6
33.0
681.4
16.3
6.4
692.9
714.4
699.0

1>

917.7
918.1
937.7
950.4

4,174.4
4,211.6
4,265.9
4,288.1

4,136.1
4,184.0
4,262.4
4,294.6

38.3
27.5
3.5
-=6.4

1,682.8
1,689.9
1,703.5
1,698.9

1,644.5
1,662.4
1,700.0
1,705.3

38.3
27.5
3.5
-6.4

25.9
691.1
707.0
10.1
747.9 - 1 2 . 1
741.8 =4.5

4,377.7
4,445.1
4,524.0
4,598.0

4,326.0
4,404.8
4,501.1
4,529.9

51.6
40.3
22.9
68.1

1,738.7
1,763.5
1,798.3
1,821.8

1,687.1
1,723.2
1,775.4
1,753.7

51.6
40.3
22.9
68.1

711.9
734.6
787.6
755.7

IV
1986:1
II
IV
1987:1..
IV »...,

1,174.9
1,322.9
1,319.1
1,396.1
1,581.4
1,637.9
1,693.8
1,780.6

1,183.2 - 8 . 3
1,298.9
24.0
1,343.7 - 2 4 . 5
1,403.2 =7.1
1,513.7
67.7
1,627.9
10.0
1,678.0
15.7
1,734.8
45.7

Source: Department of Commerce, Bureau of Economic Analysis.




256

35.2
22.1
-1.9
50.7

292.0
314.4
299.4
327.1
377.0
403.1
425.1
435.2

1,598.9

303.9

830.9

14.3 1,730.1

342.0

887.3

12.0 1,866.5

385.4

5.1
12.1
-2.3
-4.2

1,907.6
1,943.3
1,985.5
2,040.6

393.0
400.8
406.8
411.9

953.4
955.4
952.1
963.5

12.5
17.5
15.6
= 1.9

2,070.2
2,097.9
2,136.6
2,160.0

421.4
423.8
425.7
429.3

975.2
988.6
987.8
997.9

16.5
18.2
24.8
17.4

2,212.0
2,252.2
2,289.3
2,328.2

426.9
429.4
436.4
448.0

TABLE B-7.—Gross national product by major type of product in 1982 dollars, 1929-87
[Billions of 1982 dollars; quarterly data at seasonally adjusted annual rates]
Goods

Year or
quarter

Gross
national
product

Final
sales

Inventory
change

Total

709.6
498.5
716.6

Final
sales

Inventory
change

Final

sates

698.7
10.8
509.2 - 1 0 . 7
712.7
3.9

308.1
210.0
331.7

10.8
297.3
220.7 - 1 0 . 7
327.8
3.9

85.8
34.9
74.8

14.4
27.8
12.0

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

91.9
122.9
163.3
254.4
292.4
263.1
129.6
164.7
166.5
166.8

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

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

1950
1951..
1952..
1953..
1954..
1955..
1956..

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

-4.8
16.3
12.9

1957
1958
1959

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

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

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

1980
1981
1982
1983
1984
1985 .
1986
1987 *

.7

-5.2

8.4

27.9
-1.0
12.3
-9.7
24.2
30.8
10.0

2.8

3.0

-3.4
16.5

Nondurable goods
Services

Total

1929
1933
1939

Durable goods

.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

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

16.2
16.6
15.7
25.2
36.9
28.8
21.0
25.1

8.2
2,407.9
2,465.2
19.6
2,586.8
21.8
2,704.1
40.0
2,696.0
33.3
2,707.8 - 1 2 . 8
22.1
2,804.6
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
1,017.9
1,072.1
1,135.0
1,125.9
1,137.8
1,172.5
1,227.1
1,292.4
1,339.6

3,187.1
3,248.8
3,166.0
3,279.1
3,501.4
3,607.5
3,713.3
3,819.6

3,194.0 - 6 . 9
3,225.0
23.9
3,190.5 - 2 4 . 5
3,285.5 - 6 . 4
62.3
3,439.1
3,600.1
7.4
3,699.5
13.8
3,777.2
42.4

1,344.2
1,386.0
1,319.1
1,367.0
1,509.2
1,548.6
1,595.0
1,655.1

1982: IV

3,159.3

1983: IV

3,365.1

1984: IV
1985:1
I
I
HI
IV
1986:1
I
I
Ill
IV

180.0
208.8
229.8
245.4
230.6
245.2
248.3
251.3
229.1
236.8

7.5
-4.5

1.6
7.2
17.4

7.5
1.4

-3.8
-7.8
23.1

2.8
3.4

-6.1

11.4
19.1

3.6
4.7

-7.7

9.5
6.3
1.9

-7.1

8.2
4.0
-.1
8.4
7.1

Final
sales
211.5
185.7
253.1
264.0
281.2
328.8
353.5
377.4
384.4
363.5
353.4
353.0
360.8
357.1
383.4
401.5
428.4
417.7
422.3
435.8
445.0
448.6
463.4

Inventory
change

3.3
-6.2

2.3
7.2
10.3

4.5
-.7

-1.4

.6
4.8

-3.8

8.8

-3.6

12.8
11.7

6.4

-2.0

2.9
6.8
6.7
1.1
3.7
8.3
3.7
7.3
7.7
9.5
4.5
7.8

Structures

Auto
output

290.0
252.1
306.4

111.4
36.5
78.5

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

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

709.9
743.0
777.0
811.5
852.8
891.6
942.7
990.6
1,032.0
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

11.2
17.4
26.3
14.4
11.8
15.2

476.9
483.7
497.1
507.4
534.1
556.5
583.6
600.7
625.3
633.6

19.6
21.8
40.0
33.3
12.8
22.1
29.1
36.8
15.0

-.5
381.7
375.5
7.1
15.4
409.4
30.8
474.9
20.0
476.0
471.1 -11.4
15.9
490.9
14.2
534.0
27.5
572.5
13.3
604.6

640.1
642.4
662.7
660.1
649.9
666.7
681.7
693.1
719.9
735.1

8.8 1,092.4
12.5 1,126.1
6.4 1,169.4
9.2 1,218.7
13.3 1,256.4
- 1 . 4 1,286.4
6.3 1,324.4
14.9 1,368.7
9.3 1,426.9
1.7 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

1,351.1 - 6 . 9
1,362.2
23.9
1,343.7 - 2 4 . 5
1,373.4 - 6 . 4
1,446.9
62.3
1,541.2
7.4
1,581.3
13.8
1,612.7
42.4

584.0 - 3 . 2
578.5
6.9
542.9 - 1 6 . 8
566.3 - 1 . 2
38.2
623.5
681.6
6.4
712.6
4.3
748.1
24.1

767.1
783.7
800.8
807.0
823.3
859.7
868.6
864.6

-3.7
16.9
-7.7
-5.2
24.2

1,511.1
1,533.4
1,547.5
1,585.5
1,625.2
.9 1,679.5
9.5 1,730.8
18.2 1,781.4

331.8
329.4
299.4
326.6
367.1
379.4
387.4
383.2

67.1
73.3
66.5
85.9
98.5
105.6
106.4
98.7

3,218.6 - 5 9 . 3

1,297.9 1,357.1 - 5 9 . 3

543.8 -42.4

813.4

-16.9

1,555.5

305.9

63.3

3,338.1

27.0

1,423.8 1,396.8

27.0

598.0

16.1

798.8

10.9 1,600.7

340.6

96.4

3,535.2

3,493.5

41.7

1,520.2 1,478.5

41.7

647.8

31.1

830.7

10.6 1,644.7

370.3

104.2

3,568.7
3,587.1
3,623.0
3,650.9

3,549.2
3,569.9
3,628.7
3,652.5

19.5
17.3
-5.7
-1.6

1,537.0
1,540.7
1,557.7
1,558.9

1,517.6
1,523.4
1,563.5
1,560.5

19.5
17.3
-5.7
-1.6

660.3
677.1
699.2
689.6

15.0

4.5 1,657.7

5.5
-.4
5.6

857.2
846.3
864.2
870.9

373.9
379.0
382.2
382.4

104.8
104.2
107.4
106.1

3,698.8
3,704.7
3,718.0
3,731.5

3,663.4
35.3
3,676.7
28.1
3,711.9
6.1
3,745.8 -14.4

1,589.5
1,594.4
1,593.7
1,602.6

1,554.1
35.3
1,566.4
28.1
1,587.5
6.1
1,616.9 -14.4

23.6
682.1
9.0
696.9
735.9 - 1 1 . 1
735.5 - 4 . 3

872.0
869.5
851.6
881.4

11.7
19.1
17.2
-10.0

1,718.9
1,724.2
1,738.7
1,741.3

390.4
386.0
385.6
387.5

106.0
106.7
103.1
109.6

1,626.0
1,638.2
1,666.8
1,689.2

1,578.4
1,599.2
1,642.2
1,630.9

707.8
733.4
787.3
763.9

31.4
19.9
-1.0
46.2

870.6
865.9
854.9
866.9

16.2
19.1
25.5
12.1

1,764.0
1,777.4
1,787.1
1,797.0

382.1
379.7
382.0
388.8

102.3
97.0
93.5
102.1

1987:1
3,772.2 3,724.5
II
3,795.3 3,756.3
Ill
3,835.9 3,811.4
IV '... 3,875.1 3,816.7

47.6
39.0
24.6
58.3

7.3

8.2

47.6
39.0
24.6
58.3

Source: Department of Commerce, Bureau of Economic Analysis.




257

242.2
239.2
260.2
273.4
295.4
322.2
354.2
363.6
378.5
389.7

Inventory
change

10.6
14.4

9.3
9.9

11.8 1,667.5
- 5 . 3 1,683.1
- 7 . 2 1,709.6

TABLE B-8.—Gross national product by sector, 1929-87
[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Gross domestic product

Year or quarter

Gross
national
product

Business1
Total

Total1

Nonfarm1

Farm

Statistical
discrepancy

9.4

1.4

11.1
16.6
19.3
19.1
18.3
19.0
19.6
20.2
21.3
21.7

10.1
11.2
12.3
13.3
14.7
15.8
17.6
19.6
21.6
23.1

48.1
51.6
55.4
59.3
64.4
69.3
78.4
87.4
97.8
107.5

22.6
23.6
25.2
26.5
28.5
30.0
34.3
37.8
41.9
44.9

25.5
27.9
30.2
32.9
35.9
39.3
44.1
49.5
55.9
62.6

32.4
35.6
39.0
43.0
47.2
52.0
57.1
62.4
70.2
78.6

119.5
130.3
142.6
155.0
168.7
187.7
203.8
220.5
240.5
260.4

48.4
51.1
54.9
57.1
61.1
66.5
70.9
75.5
81.7
86.9

71.1
79.3
87.7
97.9
107.6
121.1
132.9
145.0
158.9
173.5

89.3
101.0
112.7
122.9
132.7
142.2
152.2
164.2

288.3
316.7
343.9
366.4
390.6
418.8
443.9
473.1

96.1
107.4
117,0
124.7
132.1
140.5
143.9
150.3

192.2
209.3
226.9
241.7
258.5
278.3
299.9
322.8

47.6

6.8

116.9

353.4

120.7

232.6

487

2.5

126.6

373.1

126.0

247.2

51.3

74.0

2.1

136.1

399.1

134.0

265.1

46.0

3,256.9
3,314.3
3,376.3
3,412.9

74.5
74.6
72.5
78.7

.7
-11.9
-9.1
2.3

138.3
140.7
143.6
146.1

410.0
415.7
421.1
428.4

139.1
139.9
140.3
142.7

270.9
275.8
280.8
285.7

40,7
40.2
37.6
40.5

3,551.6
3,587.9
3 630 7
3,650.8

3,480.6
3,509.9
3 557 9
3)586.6

73.9
77.1
78 8
75.7

2.9
.9
-6.1
-11.6

148.8
151.2
153.4
155.4

434.3
440.3
446.3
454.5

143.2
143.7
144.0
144.7

291.1
296.7
302.3
309.8

39.8
32.2
35.5
27.5

3,725.2
3,785.0
3,858 5
3,922.9

3,650.4
3,704.1
3,785 5
3,849.4

76.9
84.1
83.9
84.4

-2.2
-3.1
-10.9
-10.9

158.9
162.2
165.9
169.8

462.9
470.0
476.2
483.4

148.8
150.2
150.6
151.8

314.1
319.8
325.6
331.6

30.7
27.8
23.4
71.9

96.0
49 3
81.0

84.8
43.6
73.0

1940
1941
1942
1943
1944
1945
1946
1947
1948
1949

100.4
125.5
159.0
192.7
2114
213.4
212.4
235.2
261.6
260.4

100.1
125.0
158 5
192.3
210 9
213 0
211.6
2341
260.1
259.0

89.8
113.0
140 4
163.4
174 9
173.5
184.8
2113
236.4
232.9

82.0
103.4
128.0
149.8
156 9
153.5
165.2
189.3
214.4
213.3

13.0
15.3
15.3
16.0
18.8
20.2
23.3
18.8

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

288.3
333.4
3516
371.6
372.5
405.9
428.2
451.0
456.8
495.8

286 7
331.4
349 4
369 5
370.3
403 3
425.2
447 7
453.9
492.7

259 0
296.7
310 7
329.3
329.1
359.4
378.1
397 3
399.5
435.5

238.3
271.1
286.7
306.3
306.7
338.8
361.4
380.1
378.9
417.9

20.0
22.9
22.2
20.3
19.7
18.8
18.6
18.4
20.7
19.0

I960..
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

5118
530.0
5701
602.0
644 4
699.3
7663
810 4
885.9
957.1

449 9
463.9
4991
526.0
5621
610.7
666 7
699 7
762.0
820.1

432.5
445.0
478 6
506.2
544 3
590.0
6417
677.8
740.4
798.8

20.2
20.2
20.4
20.5
19 3
21.9
22.8
22.2
22.7
25.2

-2.8

1970
1971
1972
1973....
1974
1975...
1976
1977
1978
1979

1 015.5
1102 7
1,212.8
1359 3
1,472.8
1 598.4
1,782.8
1 990.5
2)249.7
2,508.2

1008 2
1093 4
1,201.6
13431
1,453.3
1580 9
1,761.7
1,965 1
2,219.1
2,464.4

856 3
927 4
1,020.0
1145 0
1,237.5
13412
1)500.7
1,682 1
1,908.4
2,125.3

831.2
897 5
988.8
1098 3
1,190.0
1288 4
U48.7
1,631 7
1,850.0
2,054.5

26.3

-1.1

32.8
51.0
49.2
50.3
48.5
50.4
60.3
71.8

-1.6
-4.3

1980
1981
1982..
1983
1984
1985
1986
1987 "

2,732.0
3 052.6
3,166.0
3,405.7
3,772.2
4 010.3
4235 0
4,486.2

2,684.4
3,000 5
3,114.8
3,355.9
3,724.8
3,970 5
4 2013
4,460.2

2,306.8
2,582 8
2,658.2
2,866.6
3,201.5
3,409 5
3 605 2
3,822.9

2,236.4
2,498.9
2,581.3
2,802.1
3,118.5
3,340.1
3 533 8
3,747.3

65.5
79.8
77.0
59.3
77.6
75.1 '
76 4
82.3

1982:

IV

3.212.5

3,163.8

2,693.6

2,607.7

79.0

1983:

IV

3,545.8

3,494.6

2,994.8

2,932.7

59.6

1984-

IV

3,851.8

3,805.9

3,270.6

3,198.7

1985:1
II
Ill

3,921.1
3,973.6
4,042.0
4,104.4

3,880.4
3,933.4
4,004.4
4,063.9

3,332.1
3,377.0
3,439.7
3,489.3

4,174.4
4,211.6
4 265 9
4,288.1

4,134.7
4,179.4
4 230 4
4,260.6

4,377.7
4,445.1
4 524.0
4,598.0

4,346.9
4,417 3
4 500 6
4)576.1

IV
1987-1
II

Ill
IV "
1

Includes compensation of employees in government enterprises.
2
Compensation of government employees.
Source: Department of Commerce, Bureau of Economic Analysis.




Federal

Rest
of the
world

10.7

103.2
55 7
90.9

lit

Total

State
and
local

0.8
.3
.4
.4
.5
.5
.4
.5

1.5
1.2
1.7
1.4

103.9
56 0
91.3

IV

Government2

3.5
3.5
4.2
4.3
4.4
4.5
4.7
4.9
5.4
6.2
7.3
8.5

9.7
4.6
6.3
6.4
8.9

1929
1933
1939

1986-1

Households
and
institutions

258

281

-.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

-.1

-1.5

12
.0

-.6
-1.4
1.2
2.1

-.4

-1.1
-3.9

1.8

1.7
2.5

3.6
.0
1.9
-1.0
4.9
4.1
-.1
5^4

-5.6
-4.9
-6.8

4.4
4.7
7.6
7.8
9.5

0.9
1.2
3.5
3.5
5.1

15.2
25.6
32.3
35.3
22.4
17.6
18.1
20.1

10.7
21.0
27.3
30.0
16.2
10.3

10.6
11.5
12.4

21.2
27.7
31.5
32.4
33.0
34.8
37.2
39.8
42.9
44.8

13.9
14.5
15.6
16.7
17.9
19.3
21.3
23.4
26.1
29.5

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

9.6

.7
1.2
1,5
1.5

2.2
2.2
3.0
3.4
3.1
3.5
3.8
4.5

4.9
54
5.8
56
6(1
6.8
68
7,3
9.3
11.?
16.2
19.5
17.5
21.1
75,4
30.5
43,8

51.2
49.9
47.4
39.8
33.7
25.9

TABLE B-9.—Gross national product by sector in 1982 dollars, 1929-87
[Billions of 1982 dollars; quarterly data at seasonally adjusted annual rates]

Gross domestic product
Year or quarter

Gross
national
product

Business1
Total

Total >

Nonfarm

1

Farm

Statistical
discrepancy

Households
and
institutions

Government2
Total

Federal

State
and
local

1929
1933
1939

709.6
498.5
716.6

704.6
496.1
713.5

611.6
404.9
586.8

547.8
338.7
518.3

54.1
56.6
56.4

9.7
9.6
12.1

34.4
27.1
33.3

58.6
64.0
93.4

13.2
16.2
38.9

45.3
47.9
54.6

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

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

635.5
738.7
832.9
891.6
934.3
914.3
866.3
886.1
925.4
916.7

571.2
675.8
774.4
841.6
862.5
839.3
809.0
828.6
875.1
858.5

54.6
58.1
62.4
59.2
57.2
53.7
54.0
49.9
55.2
55.0

9.7
4.8
-4.0
-9.2
14.6
21.3
3.3
7.6
-4.9
3.2

35.8
35.8
36.9
34.3
34.3
34.4
35.4
37.9
41.2
42.4

99.0
131.5
207.4
347.6
409.1
403.8
191.6
137.7
135.8
144.2

44.1
76.2
152.9
294.6
357.5
350.7
135.0
76.7
73.2
77.1

55.0
55.3
54.4
52.9
51.7
53.2
56.6
61.0
62.6
67.1

1950
1951
1952
1953
1954
1955
1956
1957
1958
1959

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

1,197.4
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

1,002.8
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

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

58.3
56.0
57.2
59.3
60.9
62.0
60.7
58.8
61.2
58.8

3.1

45.0
46.1
46.2
47.7
48.4
53.2
56.1
57.7
60.7
62.7

149.6
193.7
210.7
209.7
204.8
202.6
204.8
208.0
208.6
210.6

80.3
122.8
137.5
133.2
125.0
119.2
116.1
114.5
109.5
107.5

69.3
71.0
73.3
76.5
79.8
83.4
88.7
93.5
99.2
103.1

1960
1961
1962
1963
1964
1965
1966
1967
1968
1969

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

1,654.1
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

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
2,009.3

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

61.1
60.2
59.8
59.8
57.7
59.0
54.7
57.7
55.7
57.2

-l.B
-4.1
-3.4
5.9
-1.0
-2.8
-9.5

67.4
68.0
70.7
72.5
74.6
77.4
80.4
83.1
85.6
88.2

217.1
225.4
233.9
239.2
247.3
255.8
275.0
291.0
301.2
308.2

108.9
111.5
116.7
116.1
116.8
117.3
128.1
138.5
140.7
141.0

108.2
113.9
117.3
123.1
130.5
138.5
146.9
152.4
160.5
167.2

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

2,399.1
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

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

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

60.7
62.3
62.0
61.1
60.7
64.8
62.5
62.2
61.0
64.6

-2.7
4.2
-3.4
-8.6
-3.3
4.2
5.6
.1
-2.8
-1.4

87.0
88.8
91.2
93.4
93.9
96.4
97.0
98.0
101.0
103.7

307.7
307.4
307.1
309.3
315.7
319.6
321.9
326.0
332.8
336.5

133.2
125.5
118.3
113.6
113.5
112.8
112.7
112.7
113.9
113.0

174.5
181.9
188.8
195.7
202.1
206.8
209.2
213.3
219.0
223.5

1980
1981
1982
1983
1984
1985
1986
1987 "

3,187.1
3,248.8
3,166.0
3,279.1
3,501.4
3,607.5
3,713.3
3,819.6

3,131.7
3,193.6
3,114.8
3,231.2
3,457.5
3,571.5
3,683.5
3,797.3

2,683.2
2,739.8
2,658.2
2,770.1
2,990.1
3,095.1
3,197.9
3,303.1

2,613.1
2,659.6
2,581.3
2,703.7
2,916.6
3,021.3
3,117.5
3,223.6

64.2
75.7
77.0
61.3
68.5
78.9
84.7
85.3

5.9
4.4
5.0
-5.1
-4.3
-5.8

107.3
109.9
112.7
114.9
117.6
121.1
125.9
130.9

341.2
343.9
343.9
346.3
349.8
355.3
359.7
363.3

114.4
115.8
117.0
119.0
120.5
122.3
122.6
122.9

226.8
228.1
226.9
227.3
229.3
232.9
237.1
240.4

1982: IV

3,159.3

3,111.3

2,654.1

2,567.1

80.3

6.7

113.8

343.5

117.6

225.9

1983:1V

3,365.1

3,316.6

2,853.2

2,795.3

55.6

2.3

115.8

347.5

119.4

228.1

1984: IV

3,535.2

3,493.1

3,022.2

2,953.0

71.1

-1.9

119.0

351.9

121.2

230.7

1985:1
H
Ill
IV

3,568.7
3,587.1
3,623.0
3,650.9

3,531.6
3,550.7
3,589.0
3,614.6

3,058.9
3,075.7
3,111.1
3,134.6

2,983.6
3,008.5
3,038.7
3,054.2

74.7
78.0
80.6
82.4

.6
-10.8
-8.2
-2.0

119.2
120.5
121.8
123.1

353.5
354.5
356.1
357.0

122.0
122.2
122.6
122.5

231.4
232.3
233.5
234.5

1986:1
II
Ill
IV

3,698.8
3,704.7
3,718.0
3,731.5

3,663.4
3,676.3
3,686.9
3,707.3

3,181.1
3,191.5
3,200.2
3,218.5

3,100.4
3,106.7
3,120.2
3,142.5

83.2
84.0
85.3
86.3

-2.6
.8
-5.4
-10.2

124.2
125.8
126.6
127.2

358.1
359.0
360.2
361.6

122.6
122.4
122.5
123.0

235.6
236.6
237.7
238.6

1987:1
II
Ill
IV

3,772.2
3,795.3
3,835.9
3,875.1

3,745.6
3,771.4
3,815.9
3,856.4

3,254.7
3,278.4
3,320.3
3,358.9

3,171.4
3,196.2
3,243.7
3,283.2

85.2
84.9
86.0
85.1

-1.9
-2.7
-9.4
-9.3

128.9
130.0
131.9
133.0

362.0
363.0
363.7
364.5

122.7
122.8
122.9
123.0

239.3
240.2
240.8
241.5

P...,

1

Includes compensation of employees in government enterprises.
Compensation of government employees.
Source: Department of Commerce, Bureau of Economic Analysis.
2




259

9.7
6.5
9.4
9.5
6.2
-6.2

-3.8

-l!6
-8.7
-3.7

~io

Rest
of the
world

TABLE B-10.—Gross national product by industry, 1947-86
[Billions of dollars]
Gross domestic product

Wholesale
and
retail
trade

Finance,
insurance,
and
real
estate

Manufacturing
Year

Gross
national
product

Agriculture,
forestry,
and
fisheries

Mining

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
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

288.3
333.4
351.6
371.6
372.5

20.8
23.9
23.2
21.4
20.8

405.9
428.2
451.0
456.8
495.8

1985
1986
Note.—The

Construction

Total

Durable
goods

Nondurable

Transportation
and
utilities

Serv-

Government
and
government
enterprises

Statistical
discrepancy

Rest
of the
world

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

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

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
1.8
41.2 - 1 . 9
44.5 - 1 . 2
47.8
-.1
50.8 - 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 - 2 . 8
57.6 - 1 . 2
62.1
.0
67.0 = .6
72.5 - 1 . 4

3.5
3.8
4.5
4.9
5.4

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 98.9 74.6
124.1 106.9 82.5
132.9 115.6 90.6
146.8 125.1 99.1
159.2 136.3 110.5

78.2 - 1 . 2
2.1
88.1
-.4
98.4
110.5 - 1 . 1
121.0 - 3 . 9

5.8
5.6
6.0
6.8
6.8

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

168.7 145.8
183.7 161.4
202.6 174.8
225.6 190.5
246.0 206.7

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

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 76.5 357.3
46.0 86.2 409.3
50.2 97.9 465.3
56.5 115.6 518.8
72.7 131.4 561.8

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
29S.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

2.5
210.1
229.7
3.6
247.4
.0
270.3 - 1 . 9
292.4 - 1 . 0

17.5
21.1
25.4
30.5
43.8

2,732.0
3,052.6
3,166.0
3,405.7
3,772.2

77.2
92.0
89.6
74.3
92.9

107.3
143.7
132.1
118.4
119.4

581.0
643.1
634.6
683.2
771.9

351.8
385.8
362.5
385.6
451.1

229.2
257.3
272.1
297.6
320.8

240.8
269.6
288.4
320.0
354.4

438.8
483.1
506.5
542.9
614.0

400.6
449.3
475.1
536.4
572.8

374.0
422.6
463.6
515.5
580.2

322.1
354.7
383.9
410.5
442.5

4.9
4.1
= .1
5.2
5.4

47.6
52.1
51.2
49.9
47.4

4.010.3
4,235.0

90.6
93.0

118.2 184.4 799.3
95.3 197.9 824.3

469.9
478.5

329.3
345.8

376.2
391.4

663.6 622.8 643.7
702.5 695.0 700.2

477.4 - 5 . 6
506.6 - 4 . 9

39.8
33.7

industry classification

9.1
11.5
11.5

137.7
138.4
140.9
149.6
171.5

is on an establishment

basis and is based -on the 1972 Standard Industrial

Source: Department of Commerce, Bureau of Economic Analysis.




260

1.2
1.5
1.4

Classification.

TABLE B-U.—Gross national product by industry in 1982 dollars, 1947-86
[Billions of 1982 dollars]
Gross domestic product

Year

AgriGross
Connational culture,
forest- Mining strucproduct
ry, and
tion
fisheries

Manufacturing

Total

FiTranspor- Whole- nance,
tation sale insur- Servance,
and
and
Dura- Nonices
and
ble durable public retail
real
goods goods util- trade
estate
ities

Government
and
government
enterprises

Statistical
discrepancy

Rest
Resid- of the
world
ual >

88.0 100.0
93.5 98.7
93.1 90.7

157.8
161.9
166.1

103.0 124.7
107.7 128.9
112.2 129.0

156.2
7.6 -13.6
155.5 - 4 . 9 - 7 . 5
164.0
3.2 - 4 . 2

5.1
6.2
5.6

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

133.8
136.9
139.4
142.7
145.9

169.2
214.0
231.9
230.9
225.4

3.1
9.7
6.5
9.4
9.5

-.6
2.0
5.3
9.4
3.5

6.2
7.9
8.3
7.9

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

160.2
168.8
178.3
184.5
195.9

153.0
161.1
168.6
174.3
183.5

6.2
223.4
225.6 - 6 . 2
229.2 - 3 . 8
230.1 - . 5
232.8 - 4 . 6

-6.6
= 11.1
-14.7
-8.1
-11.0

9.4
10.7
11.5
9.5
10.0

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

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 - 8 . 7
249.2 - 3 . 7
258.4
264.5
274.0 - 4 . 1

-11.6
-6.9
-13.3
-19.7
-12.6

11.1
12.1
13.9
14.9
16.1

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

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
305.5
322.3
332.6
340.2

- 3 . 4 -14.0
5.9 - 1 4 . 5
-.2
-1.0
-2.8
2.8
-9.5 -2.7

17.0
15.9
16.3
17.7
17.0

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

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

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

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

4.2
355.0
5.6
357.7
.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

3,187.1
3,248.8
3,166.0
3,279.1
3,501.4

76.2
88.0
89.6
74.5
82.2

135.6
139.8
132.1
125.4
133.0

161.6
147.4
140.9
147.3
159.2

665.4
676.1
634.6
675.5
757.9

401.5
404.9
362.5
390.4
466.8

263.9
271.2
272.1
285.1
291.1

293.4
296.2
288.4
300.8
320.4

500.4
507.3
506.5
529.1
578.9

464.3
474.2
475.1
489.0
506.6

442.6
462.5
463.6
486.6
514.0

382.7
385.3
383.9
387.4
392.1

5.9
4.4
-.1
5.0
5.0

3.5
12.5
.0
10.6
8.1

55.5
55.2
51.2
47.9
43.9

3,607.5
3,713.3

93.6
100.4

612.1 523.6 541.3
644.7 551.3 564.9

399.0
405.4

-5.1
-4.3

-3.1
= 5.7

36.0
29.8

1947..
1948..
1949..

1,066.7
1,108.7
1,109.0

55.6
61.3
61.0

67.6
72.4
65.7

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

1955..
1956..
1957..
1958..
1959..

lf494.9
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

I960..
1961..
1962..
1963..
1964..

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

68.3
67.5
67.1
67.2
65.2

94.2
95.6
98.1
102.2
105.7

163.1
165.1
172.5
177.5
185.9

1965..
1966..
1967..
1968..
1969..

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

66.7
62.4
65.5
63.6
65.3

109.4
115.0
120.2
124.7
128.9

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

1975..
1976..
1977..
1978..
1979..

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

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

76.7 226.1 138.1
90.0 238.5 145.0
89.4 226.3 133.2

130.6 164.2 790.3 501.4
118.1 168.3 812.2 517.7

288.9 325.0
294.4 328.3

1
Equals GNP in constant dollars measured as the sum of incomes less GNP in constant dollars measured as the sum of gross product
by industry.
Note.—The industry classification is on an establishment basis and is based on the 1972 Standard Industrial Classification.
Source.- Department of Commerce, Bureau of Economic Analysis.




261

TABLE B-12.—Cross domestic product of nonfinancial corporate business, 1929-87
[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
1987 "...
1982: IV
1983: IV
1984: IV
1985:1...
II.
Ill
IV
1986:I...
II.
Ill
IV
1987:1...
II.
Ill
IV
1

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
1,540.8
1,738.4
1,782.2
1,914.2
2,146.7
2,282.8
2,376.1
2,495.4

1,779.4
2,012.5
2,201.8
2,230.9
2,266.2
2,312.4
2.321.8
2,353.3
2,358.6
2,387.7
2,404.7
2,434.8
2,465.4
2,521.1

Capital
consumption
allowances
with
capital Total
consumption
adjustment

5.3
4.2
4.8
5.0
5.4
6.0

6.1
6.2
6.3
7.4
9.0
10.5
11.2
12.1
13.9
14.9
15.9
16.8
17.9
20.1
22.1
23.2
24.3
25.3
26.0
27.0
28.2
29.6
31.6
34.5
37.8
41.7
45.7
50.2
55.1
60.5
65.6
76.8
92.5
103.0
115.1
130.8
150.7
172.5
200.2

223,0
229.8
240.1
252.8
264.4
275.9
229.7
232.2
245.0
248.1
251.2
254.3
257.4
259.4
262.9
265.6
269.6
271.8
274.3
277.2
280.1

45.1
20.4
39.1
45.6
60.5
77.3
93.0
96.4
89.5
92.4
112.2
128.4
123.9
141.5
162.4
169.1
180.7
176.7
200.7
213.5
221.9
214.8
242.8
252.4
259.1
284.2
303.0
328.0
361.1
395.7
414.8
458.0
496.6
510.2
550.0
611.3
687.4
736.0
789.0
892.5
1,010.9
U43.3
1,266.7
1,368.2
1,538.1
1,559.3
1,684.4
1,906.6
2,030.1
2,111.7
2,219.5
1,549.7
1,780.3
1,956.7
1,982.8
2,015.0
2,058.0
2.064.4
2,093.9
2,095.8
2,122.1
2,135.1
2,163.0
2,191.2
2,243.9

Net domestic product
Domestic income

Indirect
business
tax,
etc. *

Corporate profits with inventory valuation and capital
consumption adjustments

Total

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
165.9
166.9
182.9
204.2
218.2
226.4

238.1
169.7
189.6
210.6
212.8
219.4
219.7
221.0
226.7

220.0
230.5
228.5
231.4
237.0
242.0
242.0

1,229.7
1,372.3
1,392.4
1,501.5
1,702.5
1,811.8
1,885.3
lt981.4
1,379.9
1,590.7
1,746.1
1,770.0
1,795.7
1,838.4
1,843.4
1,867.2
1,875.8
1,891.6
1,906.6
1,931.6
1,954.2
2,001.9

Compensation of
employees

Profits

Total

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

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

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
59.3
246.5
69.1
274.0
73.7
292.3
70.5
323.2
74.8
358.8
69.6
378.7
55.4
402.0
65.2
447.1
75.7
505.9
82.4
556.8
69.4
580.4
91.6
656.3 113.3
741.0 134.9
847.4 146.0
962.0 139.1
1,051.1 123.1
1,160.5 144.2
1,203.9 111.9
1,266.1 165.6
1,399.8 222.4
1,492.6 227J
1,560.7 225.8
1,630.6 245.7
1,206.5 100.1
1,319.7 199.5
1,436.8 222.1
1,459.6 220.7
1,481.7 223.7
1,501.7 244.9
1,527.2 221.7
1,544.2 225.7
1,551.8 225.0
1,564.1 227.7
1,582.6 224.6
1,598.4 233.4
1,615.1 235.9
1,638.6 256.2
1,670.1

Profits Profits
before
tax
tax
liability

Total

1.2
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
196.0
175.9
174.6
214.9
116.3
183.2
181.9
173.3
168.3
183.4
178.7
158.4
168.7
179.0
192.1
196.9
207.9
226.0

\A
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
73.5
69.9
78.3
108.9
41.0
70.6
66.4
69.6
65.8
73.5
70.8
71.2
74.9
79.8
87.2
99.8
105.3
114.4

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
122.5
106.0
96.3
106.0
75.4
112.7
115.5
103.7
102.5
109.9
107.9
87.2
93.9
99.3
104.9
97.1
102.6
111.6

Indirect business tax and nontax liability plus business transfer payments less subsidies.

Source: Department of Commerce, Bureau of Economic Analysis.




Inven- Capital
tory
convalu- sumpation
tion
Undisadjust- adjustDivitributed
ment ment
dends
profits

Profits after tax

262

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
69.5
70.9
74.1
87.3
62.2
68 8
68.6
68.2
75.6
68.9
71.0
69.8
76.6
74.6
75.6
82.4
86.3
89.9
90.5

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
53.0

35.1
22.2
18.8
13.2
43.9
46.9
35.5
26.9
41.0
36.9
17.4
17.3
24.7
29.2
14.7
16.4
21.7

0.5 = 0.9
= 2.1
- . 7 -~L0
-1.0
-~Z5 - 1 . 0
-1.2
= .7
= .8 = .4
.3
= .3
-.6
- 5 . 3 -2.3
- 5 . 9 = 2.8
=2.2 = 3.0
1.9 = 2.9
- 5 . 0 =2.9
= 1.2 = 3.2
1.0 - 3 . 0
= 1.0 =2.4
-1.6
-~L7
-2.7
= 1.5 = 1.2
- . 3 -1.2
-.3
= .8
= .2
= .2
.3
.3
.0
3.1
.1
3.9
4.4
5.2
-~L2
5.5
=2.1
5.5
-1.6
5.3
-3.7
5.9
-5.9
5.0
-6.6
4.2
-4.6
-6.6
5.5
5.6
-20.0
1.7
=39.5
= 11.0 - 6 . 6
-14.9 -10.2
-16.6 -9.0
= 25.3 = 10.9
=43.2 - 1 3 . 5
-43.1 -15.5
- 2 4 . 2 = 13.1
-10.4 -7.5
= 10.9 17.1
= 5.8 32.1
-.7
52.6
6.5 44.6
-17.4
48.1 :
= 13.4 - 2 . 8
= 8.1 24.4
41.8
-1.6
48.9
-1.5
1.8 53.6
6.5 54.9
=9.8 52.8
17.8 49.6
11.3 45.0
6.0 42.7
= 8.9
41.4
- 1 1 . 3 47.8
=20.0 47.9
-17.6
47.8
=20.7 49.0

TABLE B-13.—Output, costs, and profits of nonfinancial corporate business, 1948-87
[Quarterly data at seasonally adjusted annual rates]
Current-dollar cost and profit per unit of output (dollars) l

Gross domestic
product of

Year or
quarter

nonfinancial
corporate
business
(billions of
dollars)

Current
dollars

1982
dollars

Total
cost
and
profit 2

Capital
consumption
allowances
with
capital
consumption
adjust*
ment

Compensation
of
employees

Indirect
business
tax,
etc. 3

Corporate profits with
inventory valuation and
capital consumption
adjustments

Total

Profits
tax
liability

Profits
after
tax 4

Output
per hour
of all
Net
interest

Compensation
per hour
employof all
ees
employ(1982
ees
dollars) (dollars)

1948
1949
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959

138.9
135.2

538.9
515.7

0.258
.262

0.019
.022

0.025
.027

0.163
.165

0.049
.046

0.022
.018

0.027
.028

0.002
.002

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
16.986
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
1987 P.

1,540.8
1,738.4
1,782.2
1,914.2
2,146.7
2,282.8
2,376.1
2,495.4

1,807.9
1,837.2
1,782.2
1,886.0
2,036.5
2,127.1
2,182.2
2,240.9

.852
.946
1.000
1.026
1.054
1.073
1.089
1.114

.095
.109
.125
.123
.118
.119
.121
.123

.077
.090
.094
.098
.100
.103
.104
.106

.581
.632
.676
.679
.687
.702
.715
.728

.068
.078
.063
.089
.109
.107
.103
.110

.037
.035
.026
.032
.036
.033
.036
.049

.031
.044
.037
.057
.073
.074
.068
.061

.031
.037
.043
.037
.039
.043
.045
.047

17.096
17.194
17.318
17.867
18.288
18.674
18.969

9.939
10.861
11.699
12.124
12.570
13.103
13.566

1982: IV

1,779.4 1,760.2

1.011

.131

.096

.685

.057

.023

.034

.042

17.382

11.914

1983: IV..

2,012.5 1,940.5

1.037

.120

.098

.680

.103

.036

.066

.037

18.029

12.261

1984: IV..

2,201.8 2,069.5

1.064

.118

.102

.694

.107

.032

.075

.042

18.359

12.746

1985:1....

2,230.9
2,266.2
2,312.4
2,321.8

2,091.1
2,115.1
2,148.7
2,153.5

1.067
1.071
1.076
1.078

.119
.119
.118
.120

.102
.104
.102
.103

.701
.699
.709

.106
.106
.114
.103

.033
.031
.034
.033

.072
.075
.080
.070

.043
.043
.043
.044

18.458
18.588
18.849
18.787

12.883
13.022
13.173
13.324

1986:1....

2,353.3
2,358.6
2,387.7
2,404.7

2,176.7
2,171.9
2,180.8
2,199.3

1.081
1.086
1.095
1.093

.119
.121
.122
.123

.104
.101
.106
.104

.709
.714
.717
.720

.104
.104
.104
.102

.033
.034
.037
.040

.071
.069
.068
.062

.045
.046
.046
.045

18.941
18.930
18.974
19.073

13.437
13.525
13.608
13.724

1987:!..

2,434.8 2,207.6
2,465.4 2,219.9
2,521.1 2,254.4

1.103
1.111
1.118

.123
.124
.123

.105
.107
.107

.724
.728
.727

.106
.106
.114

.045
.047
.051

.061
.059
.063

.045
.046
.048

18.933
18.964
19.119

13.708
13.798
13.897

IV..

1
Output is measured by gross domestic product of nonfinancial corporate business in 1982 dollars.
2
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).




263

TABLE B-14.—Personal consumption expenditures,

1940-87

[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Durable goods

Year or
quarter

1940..
1941..
1942..
19431944..
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...
1987 P.,

Personal
consumption
l
expendi- Total
tures

Nondurable goods

FurniMotor ture
vehiand
cles house- Total » Food
and
hold
parts equipment

and
shoes

Gasoline
and
oil

Cloth-

Services

Fuel
oil
and
coal

Household
operation
Totall

Housing2

TransElecportation
tricity
Total »• and
gas

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

37.0
42.9
50.8
58.6
64.3
71.9
82.7
90.9
96.6
94.9

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

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

26.2
28.3
31.0
34.3
37.2
39.7
45.4
50.6
55.5
58.4

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

2.1
2.4
2.7
3.4
3.7
4.0
5.0
5.3
5.8
5.9

30.8
29.9
29.3
32.7
32.1
38.9
38.2
397
37.2
42.8

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

98.2
109.2
114.7
117.8
119.7
124.7
130.8
137.1
141.7
148.5

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

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

63.2
69.0
75.1
82.1
88.0
94.3
101.6
108.5
115.7
125.0

21.7
24.3
27.0
29.9
32.3
34.4
36J
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
6.8
7.3
8.0
8.2
8.5
8.9
9.4
9.7
10.5

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

19.7
17.8
21.5
24.4
26.0
29.9
30.3
20.0
36.1
38.4

18.0
18.3
19.3
20.7
23.2
25.1
28.2
30.0
32.9
34.7

153.2
157.4
163.8
169.4
179.7
191.9
208.5
216.9
235.0
252.2

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

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

134.0
141.8
151.1
160.6
172.8
185.4
200.3
216.0
236.4
259.4

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

11.2
11.7
12.2
12.7
13.4
14.5
15.9
17.3
18.9
20.9

640.0
691.6
757.6
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

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

270.3
283.3
305.1
339.6
380.9
416.2
452.0
490.4
541.8
613.2

142.1
4.8
147.5 51.7
158.5 56.4
176.1 62.5
198.2 66.0
218.7 70.8
236.2 76.6
255.9 84.1
282.2 94.8
317.3 102.2

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

284.0
310.7
341.3
373.0
411.9
461.2
515.9
582.3
656.1
734.6

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

23.7
27.1
29.8
31.2
33.3
35.7
41.3
49.2
53.5
59.0

1,732.6
1,915.1
2,050.7
2,234.5
2,430.5
2,629.4
2,799.8
2,966.0

219.3
239.9
252.7
289.1
335.5
368.7
402,4
413.9

90.3
100.5
108.9
130.4
157.4
177.6
194.9
194.5

86.2
92.7
94.7
107.1
118.8
128.7
139.9
146.3

681.4
740.6
771.0
816.7
867.3
913.1
939.4
980.4

349.1
376.5
398.8
421.9
448.5
472.8
497.8
514.5

109.0
119.9
124.4
135.1
146.7
157.2
167.5
176.5

83.7
92.7
89.1
90.2
90.0
92.6
75.3
79.9

18.0
19.4
18.6
17.5
17.8
17.5
16.0
15.9

831.9
934.7
1027.0
1,128.7
1,227.6
1,347.5
1,458.0
1,571.6

261.5 113.9
295.6 127.5
321.1 143.4
344.1 156.0
371.3 166.9
402.4 174.7
436.9 178.6
469.2 182.2

56.4
63.5
72.8
80.0
84.8
88.9
87.6
87.3

64.5
68.3
69.7
74.8
82.0
88.6
95.1
105.4

2,117.0 263.8 115.7

71.0
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

192.1
208.1
219.1
232.6
239.8
257.9
270.6
285.3
294.6
316.3

837.2

1982: IV..
1983: IV..
1984: IV..

99.1

786.6

407.0

26.5

89.8

18.2 1,066.5

330.3

148.0

74.8

71.1

2,315.8 310,0 144.4 112.4

837.9

430.8 141.1

91.9

18.1 1,167.9

353.8

161.4

84.1

77.6

2,493.4 346.7 162.3 122.7

879.6

456.1 149.8

89.0

16.8 1,267.1

382.2

169.3

86.3

84.5

1985:1....
II...
III..
IV..

2,549.9
2,602.0
2,665.4
2,700.1

358.2
362.4
383.7
370.5

171.1
173.3
191.9
174.1

125.0
127.0
129.5
133.5

894.4
910.4
918.4
929.3

463.5
471.2
474.9
481.7

153.2
155.8
158.8
160.9

90.6
94.3
93.5
92.1

17.0
17.2
17.5
18.4

1,297.3
1,329.2
1,363.3
1,400.3

388.9
397.3
407.0
416.5

172.8
171.0
175.4
179.5

90.3
85.5
88.3
91.5

86.5
87.9
89.3
90.7

1986:1....

2,737.9
2,765.8
2,837.1
2,858.6

375.9
386.4
427.6
419.8

177.4
184.2
217.0
201.2

134.7
138.3
142.9
143.8

936.8
934.3
940.0
946.3

489.4
494.7
499.6
507.5

163.4
167.2
169.8
169.6

87.7
74.4
70.6
68.4

17.4
16.0
15.5
15.1

1,425.2
1,445.1
1,469.5
1,492.4

424.1 175.4
433.4 177.8
440.9 181.5
449.0 179.8

86.3
87.0
89.6
87.5

93.5
93.9
95.5
97.6

2,893.8
2,943.7
3,011.3
3,015.1

396.1
409.0
436.8
413.8

177.6
189.6
215.2
195.8

146.0
146.0
147.9
145.4

969.9
982.1
986.4
983.4

514.8
515.0
514.0
514.1

174.0
175.8
178.7
177.3

75.8
80.6
82.7
80.5

15.4
16.1
15.6
16.3

1,527.7
1,552.6
1,588.1
1,618.0

456.3 176.6
464.1 179.6
472.9 186.2
483.5 186.3

84.8
85.8
90.0
88.7

102.1
103.7
106.3
109.6

III..
IV..
1987:1
II....
1
2

Includes other items not shown separately.
Includes imputed rental value of owner-occupied housing.

Source: Department of Commerce, Bureau of Economic Analysis.




264

TABLE B-15.—Personal consumption expenditures in 1982 dollars, 1940-87
[Billions of 1982 dollars; quarterly data at seasonally adjusted annual rates]
Durable goods

Year or
quarter

Personal
consumption
expendi- Total 1
tures

Nondurable goods

Motor
vehicles
and
parts

Furniture
and
tousehold
equipment

Cloth-

shoes

Total]

Gasoline
and
oil

Food

Services

Fuel
oil
and
coal

Household
operation
Total»

Housing 2
Total ]

Electricity
and
gas

Transportation

1940
1941
1942
1943
1944
1945
1946
1947
1948
1949

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

18.6
20.6
8.4
7.7
7.1
7.4
15.2
21.8
25.5
32.7

17.6
20.4
17.4
14.0
12.4
13.7
22.9
25.7
27.1
26.4

259.4
275.6
279.1
284.7
297.9
323.5
344.2
337.4
338.7
342.3

150.6
158.3
161.8
166.3
178.5
193.0
202.2
193.9
191.5
193.6

36.3
38.9
40.3
43.0
41.7
43.4
44.7
42.5
42.7
43.0

17.2
19.2
14.5
9.2
9.5
12.5
22.7
24.1
25.7
27.9

23.8
24.6
25.3
25.7
25.5
27.2
29.2
30.8
31.0
27.3

202.7
209.3
217.2
227.2
232.9
240.5
262.9
272.6
281.4
285.3

53.6
56.0
58.1
59.8
61.9
62.6
67.2
72.8
76.5
80.9

32.4
32.0
33.4
31.2
31.5
32.4
35.1
37.6
39.0
40.1

7.1
7.3
7.9
8.2
8.6
9.2
10.3
11.7
12.8
13.7

17.7
19.7
21.9
26.9
29.2
31.0
35.9
35.3
35.1
33.2

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

733.2
748.7
771.4
802.5
822.7
873.8
899.8
919.7
932.9
979.4

80.7
74.7
73.0
80.2
81.5
96.9
92.8
92.4
86.9
96.9

41.3
36.3
34.1
39.9
40.6
51.5
45.3
45.8
40.8
47.4

30.1
28.9
28.9
29.9
30.1
33.7
34.9
33.7
33.2
35.5

352.8
362.9
376.6
388.2
393.8
413.2
426.9
434.7
439.9
455.8

196.6
202.5
209.8
217.7
222.0
231.3
238.8
243.5
243.5
252.1

44.3
43.7
45.8
46.2
46.2
48.6
49.7
49.3
49.9
52.3

29.0
31.5
34.1
36.0
37.1
40.3
42.8
44.4
46.5
48.9

29.4
29.3
28.5
27.6
28.1
29.9
29.9
29.7
30.8
29.4

299.8
311.1
321.9
334.1
347.4
363.6
380.1
392.6
406.1
426.7

86.1
91.9
97.5
102.5
107.1
112.1
117.1
122.6
127.7
133.6

43.8
46.2
47.0
48.9
50.5
55.5
59.3
61.2
63.3
65.7

15.6
17.6
19.0
20.4
22.4
24.2
26.4
28.0
29.5
31.2

32.4
33.2
33.4
34.2
33.3
34.2
35.6
36.2
35.4
36.8

1960...
1961...
1962...
1963...
1964...
1965...
1966...
1967...
1968...
1969...

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

98.0
93.6
103.0
111.8
120.8
134.6
144.4
146.2
161.6
167.8

49.2
44.6
51.0
56.4
59.0
67.5
68.5
67.4
77.3
80.4

34.9
35.3
37.4
39.9
44.7
48.5
53.8
55.8
59.2
60.9

463.3
470.1
484.2
494.3
517.5
543.2
569.3
579.2
602.4
617.2

255.5
259.7
263.7
266.5
277.2
290.4
299.4
304.0
317.0
324.3

52.7
53.7
56.0
56.9
61.5
64.0
68.3
68.8
71.7
73.0

50.7
51.0
53.2
54.7
57.4
60.2
63.9
66.0
70.6
75.2

28.5
26.7
26.7
28.0
29.5
31.0
31.8
31.8
30.1
28.6

443.9
461.4
481.8
502.3
532.3
558.5
585.3
612.3
641.8
671.7

139.8
145.7
153.0
159.4
166.1
174.4
181.7
189.3
197.9
207.6

68.7
70.9
74.4
77.0
80.5
83.9
87.8
91.9
95.1
99.3

32.9
34.6
37.1
38.8
40.8
42.7
44.9
47.4
49.7
52.4

37.9
38.2
39.6
41.2
43.4
45.5
48.3
51.4
54.7
58.1

1970...
1971...
1972...
1973...
1974...
1975...
1976...
1977...
1978...
1979...

1,492.0
1,538.8
1,621.9
1,689.6
1,674.0
1,711.9
1,803.9
1,883.9
1,961.0
2,004.4

162.5
178.3
200.4
220.3
204.9
205.6
232.3
253.9
267.4
266.5

73.5
86.4
98.3
106.7
90.3
91.1
109.6
121.2
125.9
119.4

61.1
63.5
70.2
77.9
78.2
75.9
80.6
87.3
92.3
97.1

632.5
640.3
665.5
683.2
666.1
676.5
708.8
731.4
753.7
766.6

334.5 72.0 79.9
335.9 75.3 83.6
344.2 80.3 87.0
340.8 86.0 91.7
336.6 84.9 87.2
346.4 88.1 89.8
363.6 92.2 93.4
377.1 97.4 96.4
379.6 107.1 100.9
387.5 112.1 97.1

26.7
25.9
28.6
30.9
24.3
24.2
27.0
26.1
26.9
26.2

697.0
720.2
756.0
786.1
803.1
829.8
862.8
898.5
939.8
971.2

216.1 102.2
224.5 103.6
235.5 108.6
246.5 112.6
258.6 112.8
265.7 117.5
273.2 122.3
279.6 128.2
292.8 134.0
304.1 138.3

54.4
55.8
58.5
59.8
60.2
63.3
65.5
68.1
70.7
71.1

59.8
62.1
66.0
67.8
68.4
69.4
72.6
77.8
80.2
82.9

1980...
1981...
1982..
1983..
1984..
1985..
1986..
1987*

2,000.4
2,024.2
2,050.7
2,146.0
2,249.3
2,352.6
2,450.5
2,495.2

245.9
250.8
252.7
283.1
323.1
352.7
383.5
388.1

103.8
106.3
108.9
126.8
148.0
163.6
175.7
169.9

95.4
96.5
95.7
106.1
118.4
130.2
144.7
152.4

762.6
764.4
771.0
800.2
825.9
849.5
877.2
875.9

394.9
392.5
398.8
414.0
422.8
436.5
444.9
440.1

114.8 88.4
122.2 87.8
124.4 89.1
132.6 93.2
142.2 94.5
147.9 96.5
158.0 100.3
159.0 100.6

21.6
19.2
18.6
18.6
18.5
18.9
21.5
21.1

991.9
1,009.0
1,027.0
1,062.7
1,100.3
1,150.4
1,189.8
1,231.2

312.5
318.9
321.1
325.4
333.0
341.0
350.0
358.8

142.6
142.0
143.4
146.2
148.8
151.0
151.3
153.7

73.1
72.0
72.8
74.2
75.4
77.4
76.8
77.7

77.4
73.3
69.7
71.4
75.9
81.0
84.4
88.2

1982: IV

2,078.7

262.0 115.0

69.1

1983: IV

2,191.9

300.5 138.1

1984: IV

2,281.1 333.1 151.6

1985:1
II
Ill
IV

2,314.1
2,337.0
2,376.1
2,383.2

342.4
346.6
366.8
355.1

1986:1
II
Ill
IV

2,409.7
2,434.3
2,477.5
2,480.5

1987:1
II
Ill
IV "...

2,475.9
2,487.5
2,520.7
2,496.6

1
2

778.6 404.6 126.2

89.7

17.6 1,038.1 322.1

143.1

71.6

111.1 812.7 418.2 137.4

94.4

19.4 1,078.6 328.2

149.4

76.9

72.6

122.7

831.2 426.2 143.5

94.7

18.0 1,116.8 335.8

148.9

75.7

78.0

158.1
159.9
176.6
159.9

125.4
128.0
131.4
135.9

841.2
847.6
853.5
855.7

431.1
436.8
438.8
439.4

145.4
146.7
149.5
150.1

97.0
96.3
96.3
96.4

18.6
18.4
19.3
19.4

1,130.5
1,142.8
1,155.7
1,172.5

337.7
339.7
342.0
344.3

151.2
148.1
150.6
154.3

78.8
74.2
76.6
80.2

79.3
80.7
81.4
82.7

359.8
369.6
405.5
399.0

162.3
167.0
194.3
179.1

137.5
142.5
148.3
150.7

868.8
880.0
879.8
880.3

445.9
447.3
442.2
444,0

154.3 97.4
159.0 99.6
160.4 101.5
158.4 102.5

19.8
21.2
22.5
22.3

1,181.2
1,184.7
1,192.2
1,201.1

346.7
349.0
351.1
353.1

149.3
150.1
152.9
152.8

75.0
75.7
78.4
78.2

83.3
83.7
85.2
85.5

375.9
385.4
406.9
384.4

158.1
166.4
186.6
168.6

151.5
152.5
154.1
151.7

883.2
879.0
875.7
865.6

447.5
441.6
437.1
434.1

160.4 99.8
157.3 102.1
161.7 100.9
156.6 99.5

21.0
21.4
20.4
21.6

1,216.9
1,223.1
1,238.1
1,246.6

355.3
357.7
360.0
362.2

150.0
151.4
156.5
156.8

75.8
76.1
79.8
79.1

86.9
87.5
88.6
89.6

98.4

Includes other items not shown separately.
Includes imputed rental value of owner-occupied housing.

Source: Department of Commerce, Bureau of Economic Analysis.




265

TABLE B-16.—Gross and net private domestic investment, 1929-87
[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Less:

Year or quarter

Gross
private
domestic
investment

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
1987 P.
1982: IV
1983: IV
1984: IV
1985:1
II
Ill
IV
1986-1
fl
Ill
IV
1987- 1..
II
III
IV P

16 7
16
9.5
13.4
18 3
10.3
62
7.7
113
315
35.0
471
36.5
55.1
60 5
53.5
54 9
541
69.7
72 7
71.1
63 6
80.2
78.2
77.1
87.6
931
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
664 8
6416
671.0
716.4
409 6
579.8
661.8
638.6
648 4
628 6
650.8
683.4
679.4
660 8
660.2
699.9
702.6
707 4
755.5

Equals: Net private domestic investment

consumption
allowances
with
capital
consumption
adjustment

Net fixed investment

9.9
76
9.0
9.4
103
11.3
116
12.0
12 4
14.2
17.6
204
22.0
23.6
27 2
29.2
309
32 5
34.4
381
41.1
42 8
44.6
46.4
47.8
49.4
514
53.9
57.4
62.1
67 4
73.9
81.4
88.8
97.5
107.9
1181
137.5
1618
179.2
201.5
229.9
265.8
303.8
347.8
383.2
396.6
415 5
437 6
456.7
479.4
393 2
400.8
423.5
428.2
433 3
4416
447.2
447.8
454.1
458 9
465.9
469.7
476.6
483 0
488.2

Nonresidentia1
Total

Total

5.0
=4 5

6.7
-61
.5
4.1
80
-1.0
-5 3
-4.2
-11
17.3
17.5
26 7
14.5
31.5
33 3
24.4
24 0
216
35.3
34 6
29.9
20 8
35.5
31.8
29.4
38.2
418
45.7
58.8
66.5
58 3
63.1
71.8
60.0
74.9
94.1
1207
103.4
57 8
98.4
142.5
186.9
189.1
133.1
167.7
64.1
105.7
249 4
204 0
214.3
237.0
16 4
179.0
238.3
210 4
2151
187 0
203.6
235.6
225.3
2019
194.3
230.2
226.0
224 4
267.3

1.9
35
= 2.7
-4 7
-3.2
= 1
10.9
17.9
22 0
17.6
24.6
231
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
480
55.2
62.0
56.9
67.2
83.6
1011
87.9
63 4
82.4
121.3
158.3
176.1
141.5
143.7
88.7
112.8
1817
194 0
198.6
191.3
76 3
148.0
193.3
189.0
196 6
189 4
201.1
197.3
197.8
1984
200.7
178.6
185.7
201.5
199.2

Source: Department of Commerce, Bureau of Economic Analysis.




266

Total

3.3
-3.5
— .7
.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
119
10.2
13.2
15.6
15.9
96
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
911
1015
81.0

Structures

1.8
-1.7
-1.1
= .8
_3
-1.7
-2 4
-1.9
-10
2.4
1.9
25
2.2
2.8
39
3.8
48
50
5.9
79
7.9
63
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
217
22.0
15 6
16.0
17.6
25.0
34.5
39.4
51.7
45.9
25.9
39 3
45 5
26.6

Producers'
durable
equipment
1.4
-1.8
.4
1.5
23
-=-.5
_ 7
28
4.5
8.7
93
6.5
7.5
77
6.4
71
5.2
7.3
77
8.1
32
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
219
24.8
41.0
57.2
64.5
49.5
46.9
19.6
19.9
518
55 9
54.4

Residential

1.7
-1.0
.8
1.2
1.5
=.6
= 1.6
= 1.9
= 18
4.0
7.3
10 2
8.9
14.4
11.5
11.2
117
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
90.6
92.5
117.6

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
67.7
10.0
15.7
45.7
= 59.9
31.0
45.0
21.4
18.5
-2.4
2.5
38.3
27.5
3.5
6.4
51.6
40.3
22.9
68.1

TABLE B-17.—Gross and net private domestic investment in 1982 dollars, 1929-87
[Billions of 1982 dollars; quarterly data at seasonally adjusted annual rates]
Less:

Equals: Net private domestic investment

Pam'tal

Year or quarter

Gross
private
domestic
investment

consumption
allowwith
capital
consumption
adjust- .
ment

Net fixed investment
Nonresidentta
Total
Total
Total

Structures

Producers'
durable
equipment

Residential

Change in
business
inventories

1929
1933
1939

139.2
22.7
86.0

86.8
86.5
84.4

52.4
-63.8
1.6

41.6
-53.0
-2.3

26.2.
40 2
-10.1

16.8
-24.3
-12.0

9.4
16.0
1.9

15.4
-12.8
7.8

1940
1941
1942
1943
1944
1945
1946
1947
1948
1949

111.8
138.8
76 7
50.4
56.4
76.5
178.1
177 9
208.2
168.8

84.9
86.3
86 9
85.7
84.8
85.4
88.0
91.8
96.8
101.7

26.9
52 5
-10 2
-35.3
-28.4
-8.9
90.1
86.1
111.4
67.1

12.5
24.7
-221
-36.0
-23.3
62^2
87.1
99.1
76.7

1.5
12 0
17 5
-24.4
10 5
10.5
39.5
52.6
54.3
37.9

-8.5
-3.5
-159
-20.7
-15.2
-8.3
15.4
11.7
14.3
12.7

10.0
15 6
16
-3.8
4.7
18.8
24.1
40.9
40.0
25.2

11.1
111
46
-11.5
-12.8
-11.0
22.7
34 5
44.8
38.9

10.8
107
3.9
14.4
27.8
12 0
.7
-5.2
-8.4
27.9
-1.0
12.3
-9.7

1950
1951
1952
1953
1954
1955
1956
1957
1958
1959

234 9
235.2
2118
216.6
212 6
259.8
257.8
243.4
221.4
270.3

106.5
111.8
117 0
122.1
127 4
132.6
138.3
143.5
147.7
151.9

128 4
123.3
94 8
94.4
85 2
127.2
119.5
99.9
73.7
118.4

104.2
92.5
84 8
91.7
90 0
110.9
106.5
96.9
77.1
101.9

43 3
46.9
417
47.0
404
49.9
54.9
51.7
31.5
38.5

15.7
18.8
18.8
22.9
24.4
27.7
32.5
30.7
24.8
25.0

27.6
28.1
22 9
24.1
160
22.2
22.4
20.9
6.6
13.6

60 9
45.6
43 2
44.7
49 6
60.9
51.6
45.2
45.6
63.4

24 2
30.8
10 0
2.8
-4 8
16.3
12.9
3.0
-3.4
16.5

1960
1961
1962
1963
1964
1965
1966
1967
1968
1969

260.5
2591
288.6
3071
325.9
367.0
390 5
374.4
3918
410.3

156.3
160 6
165.1
170.3
176.3
183.7
192 2
201.1
209 8
219.8

104.1
98 4
123.5
136 8
149.6
183.4
198 3
173.4
1819
190.5

96.4
912
107.3
1201
133.9
158.1
1614
144.6
160 9
165.3

41.4
37 3
46.4
49 2
63.3
90.4
106 3
93.6
961
103.1

27.9
28.1
30.3
29.1
34.0
46.2
50.4
45.9
46.7
49.7

13.6
93
16.0
20.1
29.2
44.2
558
47.7
49.3
53.4

55.0
53 8
61.0
709
70.6
67.7
551
50.9
64.8
62.2

7.7
7.3
16.2
16.6
15.7
25.2
36.9
28.8
21.0
25.1

1970
1971
1972
1973
1974
1975
1976
1977
1978
1979

3815
419.3
465.4
520 8
481.3
383.3
453 5
521.3
576.9
575.2

229 8
239.5
253.4
263 6
276.1
287.0
297 3
309.6
323.7
341.3

1518
179.8
212.1
2571
205.3
96.3
156 2
211.7
253.3
234.0

143 6
160.2
190.3
2171
172.0
109.1
1341
182.6
216.5
218.9

89 3
76.1
85.3
1165
106.9
60.8
618
85.2
111.6
124.3

1980
1981
1982
1983
1984
1985
1986
1987 *

509.3
545.5
447 3
504 0
658 4
6361
654.0
685.4

356.1
369.7
383.2
394 4
407 2
426 3
442.0
458.7

153.2
175.8
641
109 6
2512
209 8
212.0
226.7

160.1
152.0
88.7
116 0
188 9
202 5
198.2
184.3

101.3
105.5
65 5
50 4
103 3
1171
92.3

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
39.8
41.8
20.2

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
63.5
75 3
72.2

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 6
85 4
105.9

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
62.3
7.4
13.8
42.4

1982- IV ..

408.8
577.2
655.7
632 1
645 7
623 2
643.3
674.4
665.6
645.0
631.0

390.0
397.9
413.5
4181
422 6
4301
434.3
435.3
439.6
444.2
449.1

18.8
179.3
242.2
214 0
2231
1931
209.0
239.1
226.0
200.8
181.9

78.0
152.3
200.5
194 5
205.8
198 8
210.6
203.8
197.9
194.7
196.3

-59.3
27.0
41.7
19 5
17.3
-5.7
-1.6
35.3
28.1
6.1
-14.4

6718
673.7
681.9
714.2

453 2
456.6
460.4
464.6

218 6
217.1
221.5
249.6

1710
178.1
196.9
191.3

47.6
39.0
24.6
58.3

...

1983- IV
1984- IV
1985-1
II....
III..
I
V
1986-1
I
I
III
IV...
19871 .
||
II
I
IV *

Source: Department of Commerce, Bureau of Economic Analysis.




267

TABLE B-18.—Inventories and final sales of business, 1946-87
[Billions of dollars, except as noted; seasonally adjusted]
Inventory-final
sales ratio

Inventories»
Quarter

Fourth quarter:
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
1987 »
1982: IV
1983: IV
1984: IV
1985: I
II
Ill
IV
1986: I
It
III
IV
1987: I
II
Ill
IV

Nonfarm
Total 2

Farm

Total 2

Manufacturing

trade

Final
sales ^
Retail
trade

Other

Total

71.0
80.3
85.6
77.5
96.7
109.4
108.6
109.6
107.3
114.6
123.4
127.0
126.2
131.7

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

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

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

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
33J
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

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

739.3
789.0
771.5
787.2
858.2
863.4
863.4
945.2

84.5
81.6
79.2
79.4
80.9
71.1
66.7
79.8

654.8
707.4
692.2
707.8
777.3
792.3
796.7
865.4

310.7
330.2
316.1
315.9
343.4
335.6
324.3
343.2

154.8
164.7
162.2
163.8
177.5
180.4
181.5
198.3

122.7
134.0
134.7
148.2
166.7
180.1
189.5
209.8

66.7
78.5
79.2
79.9
89.6
96.3
101.4
114.0

201.1
217.8
229.5
247.0
268.8
290.6
304.8
321.2

3.68
3.62
3.36
3.19
3.19
2.97
2.83
2.94

771.5
787.2
858.2
862.1
862.5
857.2
863.4
856.9
861.9
863.3
863.4
884.6
906.9
921.4
945.2

79.2

692.2

316.1

162.2

134.7

79.2

229.5

3.36

79.4

707.8

315.9

163.8

148.2

79.9

247.0

3.19

80.9

777.3

343.4

177.5

166.7

89.6

268.8

3.19

80.1
77.3
73.2
71.1

782.0
785.1
784.0
792.3

342.6
340.3
337.2
335.6

178.5
179.7
178.9
180.4

169.4
171.4
173.4
180.1

91.6
93.7
94.5
96.3

275.9
279.9
286.8
290.6

3.12
3.08
2.99
2.97

68.5
70.6
71.2
66.7

788.4
791.3
792.1
796.7

327.6
325.0
323.9
324.3

178.7
179.6
181.6
181.5

185.8
187.6
187.1
189.5

96.4
99.1
99.5
101.4

292.8
296.7
302.3
304.8

2.93
2.91
2.86
2.83

69.4
76.3
79.3
79.8

815.2
830.5
842.1
865.4

327.7
329.3
336.6
343.2

185.2
189.8
192.2
198.3

197.8
204.3
203.2
209.8

104.5
107.2
110.2
114.0

306.1
312.1
319.6
321.2

Nonfarm*

2.89
2.91
2.88
2.94

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.




268

TABLE B-19.—Inventories and final sales of business in 1982 dollars, 1947-87
[Billions of 1982 dollars, except as noted; seasonally adjusted]
Inventories1

Invento ry-final
sales

Nonfarm
Quarter

Total2

Farm
Total

Fourth quarter:
1947
1948
1949

2

Manu- Wholesale
facturing trade

Final
sales3
Retail
trade

3 36
3.42
3.28

2 78
2.83
2.71

49.5
49.6
49.6
50.8
51.2
57.1
57.8
59.8
59-4
61.9

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

61.8
631
65.0
68.9
72 6
76.5
851
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

248.3
2461
251.7
267 9
288.5
2819
294 0
3019
3141
324.7

105.8
110 7
114.0
1184
128.4
124 0
1312
140.5
1516
156.1

96.6
107.2
114.0
1221
121.1
115.9
122 3
130.9
1391
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
3.0fi
3.09
3.10
3.08
3.08

691.4
710.3
687.2
687.2
744.8
756.9
772.5
805.6

326.8
330 3
315.2
309 3
330.0
322 2
317.0
322.7

161.6
165 0
161.5
157.9
171.0
173 6
177.6
184.9

130-4
135.5
132.9
142.4
157.8
168.2
174.8
188.1

72.7
79.5
77.6
77.5
86.0
92.9
103.2
109.9

225.3
224.6
226.1
235.5
248.4
261.3
269.4
275.1

3.41
3.53
3.40
3.24
3.32
3.18
3.14
3.23

3.07
3.16
3.04
2.92
3.00
2.90
2.87
2.95

81.2

687.2

315.2

161.5

132.9

77.6

226.1

3.40

3.04

74.9

687.2

309.3

157.9

142.4

77.5

235.5

3.24

2.92

824.2

79.4

744.8

330.0

171.0

157.8

86.0

248.4

3.32

3.00

829.1
833.5
832.1
831.7

80.4
81.6
79.3
74.8

748.8
751.9
752.7
756.9

329.4
327.5
325.2
322.2

171.4
173.2
173.0
173.6

159.5
161.2
163.3
168.2

88.4
90.0
91.3
92.9

253.3
254.9
259.7
261.3

3.27
3.27
3.20
3.18

2.96
2.95
2.9C
2.90

840 6
847 6
849.3
845.8

74 8
75 9
77.4
73.2

765 7
7718
771.9
772.5

3210
320 2
318.2
317.0

175 2
176 3
179.0
177.6

174.2
1751
173.1
174.8

95.4
100.1
101.6
103.2

262.1
263.6
266.2
269.4

3.21
3.22
3.19
3.14

2.92
2.93
2.90
2.8>

857 7
867 4
873.6
888.1

741
78 2
81.3
82.5

783 5
789 2
792.2
805.6

318 3
317 2
320.2
322.7

179.2
180 6
181.0
184.9

181.1
185 0
183.0
188.1

104.9
106.4
108.0
109.9

267.3
270.0
274.6
275.1

3.21
3.21
3.18
3.23

2.93
2.92
2.88
2.9-

208.0
218.1
209.5

1051
108.6
102.9

39 9
42.7
42.8

39.6
43.7
42.8

1950
1951
1952
1953
1954
1955
1956
1957
1958
1959

2781
308.9
3189
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

I960
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
608
63.5
65.8
64 0
66.3
661
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
1588
167.2
172.6
180 9
191.6
213 6
229.2
2390
248.5

1970
1971
1972
1973
1974
1975
1976
1977
1978
1979

571.1
590 7
612.4
652 5
685.7
673 0
6951
724.2
7610
776.0

69.8
73 4
75.9
814
81.3
82 6
791
77.2
77 8
82.4

501.2
517 3
536.6
571.0
604.5
590.3
6161
647.0
683 2
693.6

1980
1981
1982
1983
1984
1985
1986
1987 P

769.1
793 0
768.4
762 0
824.2
8317
845.8
888.1

77.8
82 6
81.2
74 9
79.4
74 8
73.2
82.5

1982: IV

768.4

1983- IV

762.0

1984- IV
1985- 1
|
|
Il
l

III
IV
1987- 1
III
IV P

Nonfarm 4

74.8
77.1
77.3

43 3
45.4
44.4

I
V

Total

23.5
23.1
21.1
23.4
25.6
25.8
23.5
23.6
22.7
24.8
26.3
26.3
28.1

2513
263.5
253.9

1986- 1

Other

1
End of quarter.
2
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.




269

TABLE B-20.—Foreign transactions in the national income and product accounts, 1929-87
[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Receipts from foreigners
Exports of goods and
Year or quarter
Total
Total

Merchan-

Serv-

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

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

0.3

•.2

.2

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

5.4
6.1
5.0
4.6
5.5
7.4
15.2
20.3
17.5
16.4

5.4
6.1
5.0
4.6
5.5
7.4
15.2
20.3
17.5
16.4

4.1
4.5
3.4
2.9
3.6
5.4
11.8
16.1
13.3
12.2

1.3
1.6
1.6
1.7
1.9
2.1
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
'.8
2.9
2.6
4.5
5.6

.2
.2
.1
.2
.4
.5

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

1960
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
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

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

69.8
73.1
82.1
114.1
- 2 . 0 149.5
161.3
0
177.7
0
191.6
0
227.5
0
1.1 292.4

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

1980
1981
1982
1983
1984
1985
1986
1987 *

352.1
383.9
361.9
352.5
383.5
369.9
376.2
426.7

351.0
382.8
361.9
352.5
383.5
369.9
376.2
426.7

225.1
238.3
214.0
206.1
224.1
220.8
224.9
257.6

352.1
383.9
361.9
352.5
383.5
369.9
376.2
426.7

318.9
348.9
335.6
358.7
442.4
449.2
481.7
546.7

247.5
266.5
249.5
271.3
334.3
341.0
367.5
410.6

71.4
82.4
86.1
87.3
108.2
108.2
114.2
136.0

1982: IV

335.9 335.9 196.3 139.6

335.9 321.9 239.9

1983: IV

364.7 364.7 215.6 149.1

364.7 390.5 298.3

1929
1933
1939

125.9
144.5
148.0
146.4
159.4
149.1
151.3
169.1

From

Interest
paid by
government to

Net
ffjrpjgn

investment

("net)
0.0
.0
.0

0.0
.0
.0

0.8
.2
1.0

.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
-.1
-2.1
-2.0
-1.3
4.9
9.3
2.4
.9

3.6
3.1
2.1
2.0
1.8
2.1
1.9
1.8
1.8
1.9

.0
.0
.1
.1
.1
.1
.2
.2

-1.8
.9
.6
-1.3

.3

!6
.7
.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

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

7.7
7.5
9.0
9.5
12.3
15.4
15.7
12.8

1.1
1.0
1.3
1.0
1.5
2.0
1.7
1.5

6.5
6.5
7.8
8.5
10.7
13.4
14.0
11.4

82.0

10.6

1.1

9.5

92.2

13.4

1.2

12.2

385.7 453.6 342.7 110.9

0.9

7
.7
.5

A
.5
A
.4

3

'.6
'.S

A
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
-10.1
2.6

1984: IV

385.7 385.7 228.0 157.7

17.0

1.6

15.5

1985:1
II
Ill
IV

376.3
370.6
364.2
368.7

376.3
370.6
364.2
368.7

225.0
221.6
218.0
218.6

151.3
149.0
146.2
150.2

376.3
370.6
364.2
368.7

427.7
447.8
448.9
472.2

321.5
339.8
341.0
361.8

106.3
108.0
107.9
110.4

13.3
14.1
16.7
17.4

2.1
1.7
2.2
1.9

11.1
12.5
14.5
15.5

12.6
13.0
16.9
10.6
18.3
-1.0
17.8 - 3 3 . 5
19.8 -90.9
21.3 -115.9
22.6 -143.9
24.0
-156.8
18.9
-15.4
18.3
-57.4
21.2
-106.1
21.2
-85.9
21.1 -112.5
21.5 -122.9
21.5 -142.3

1986:1
II
Il
l
IV

373.5
371.3
376.6
383.3

373.5
371.3
376.6
383.3

220.7
221.4
225.7
231.7

152.8
149.8
150.8
151.6

373.5
371.3
376.6
383.3

467.3
472.1
487.1
500.2

354.0
357.9
375.4
382.8

113.3
114.3
111.7
117.5

12.2
16.7
17.4
16.6

1.7
1.6
1.6
1.9

10.4
15.1
15.8
14.7

22.5
22.2
22.8
22.9

1987:1
II
Ill

397.3
416.5
439.2
453.9

397.3
416.5
439.2
453.9

235.6
247.4
267.2
280.1

161.7
169.0
171.9
173.8

397.3
416.5
439.2
453.9

509,5
534.8
562.9
579.4

386.1
401.8
421.7
432.9

123.4
133.0
141.1
146.5

12.4
11.6
11.0
16.2

1.7
1.2
1.2
1.7

10.7
10.5
9.8
14.4

23.1 -147.7
24.5 -154.5
24.3 -159.0
24.2 -165.9

1.2
1.1
0
0
0
0
0

Source-. Department of Commerce, Bureau of Economic Analysis.




270

-128.5
-139.8
= 150.7
-156.5

TABLE B-21.—Exports and imports of goods and services in 1982 dollars, 1929-87
[Billions of 1982 dollars; quarterly data at seasonally adjusted annual rates]
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
1987 ".
1982: IV....
1983: IV..,.
1984: IV....
1985:1
II
III....
IV....
1986:1
II
III....
IV....
1987:1
||
III....
IV *.

Total

Total

Durable
goods

Imports of goods and services

Services

Merchandise
Nondurable
goods

Total

Merchandise

Factor
income l

Other

Total
Total

Durable
goods

Services
durable
goods

Factor
Total

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

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

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

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

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

29.6
30.5
33.9
46.2
53.5
45.6
49.7
53.5
63.2
86.6

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
37.7
65.3
75.3

12.5
9.8
10.2
13.9
17.7
16.3
16.7
16.1
21.1
30.8

388.9
392.7
361.9
348.1
371.8
365.3
377.4
425.8
336.0
355.5
376.6
369.7
364.7
360.5
366.5
371.5
370.2
379.6
388.3

241.8
238.5
214.0
207.6
223.8
231.1
244.6
282.0
199.1
214.4
231.9
231.9
230.2
229.5
232.7
235.7
238.1
248.1
256.7
258.7
270.5
291.4
307.3

150.0
143.8
121.9
119.6
132.3
142.2
153.1
177.2

91.9
94.6
92.1
88.0
91.5
88.9
91.5
104.8
88.3
88.1
93.7

147.1
154.3
148.0
140.5
148.0
134.3
132.8
143.9
136.9
141.1
144.7

55.7
57.9
56.3
55.5
55.4
55.0
58.2
65J

332.0
343.4
335.6
368.1
455.8
473.6
523.2
560.1
324.3
401.6
471.4

253.6
258.7
249.5
282.2
351.1
370.2
420.2
443.5
242.7
311.6
364.2

116.1
126.1
125.3
150.4
201.6
219.2
248.1
263.2
117.1
172.5
211.4

35.9
41.1
40.5
37.1
48.7
43.3
44.8
55.9

137.8
134.5
131.0
133.8

450.7
472.4
475.4
495.8

347.6
368.4
372.4
392.3

135.8
132.1
131.5
131.7

79.8
75.2
72.6
70.7

56.9
54.1
53.8
55.3
56.0
56.9
58.9
61.0

494.4
517.0
541.2
540.1

139.2
144.0
145.7
146.5

74.7
77.9
78.7
81.3

64.5
66.1
67.1
65.2

533.0
547.2
575.6
584.5

390.5
413.4
441.1
435.7
425.2
432.8
454.9
460.9

209.6
216.5
221.4
229.3
235.5
246.6
254.6
255.7

137.5
132.6
124.2
131.9
149.5
150.9
172.1
180.3
125.6
139.1
152.8
138.0
151.9
151.0
162.9
154.9
166.8
186.6
179.9
171.7
174.5
188.8
186.3

78.4
84.7
86.1
85.8
104.7
103.4
103.0
116.7
81.6
90.1
107.2

91.2
87.2
87.1
90.0
88.6
86.8
93.9
96.9
96.9
103.6
109.7
109.1

91.4
96.3
91.6
85.0
92.6
79.2
74.5
78.2
83.0
88.2
89.5
80.9
80.4
77.2
78.5

397.8
414.5
437.1
453.8

110.8
126.3
138.2
140.7
142.9
142.4
142.7
147.1
151.3
154.2
159.8
161.7
166.9
181.7
198.2

53.8
52.9
55.2

1
Factor income exports less factor income imports equals rest-of-the-world product.
Source: Department of Commerce, Bureau of Economic Analysis.




271

253.5
258.3
266.2
274.7

103.1
104.0
103.0
103.5
104.0
103.6
100.1
104.5
107.8
114.4
120.6
123.6

35.1
39.7
47.4
43.8
43.9
43.2
42.2
44.4
46.8
41.5
46.5
48.1
54.0
58.7
62.7

TABLE B-22.—Relation of gross national product, net national product, and national income, 1929-87
[Billions cf dollars; quarterly data at seasonally adjusted annual rates]

Year or quarter

Gross
national
product

Less:

Less:
Capital
consumption
allowances
with
capital
consumption
adjustment

Equals:
Net
national
product

PIUS:

Indirect
business
tax and
nontax
liability

Business
transfer
payments

Statistical
discrepancy

Subsidies
less
current
surplus
of
government
enterprises

Equals:
National
income

1929 '.
1933
1939

103.9
56 0
91.3

9.9
7.6
9.0

94.0
48.4
82.3

7.1
7.1
9.4

0.6
.7
.5

1.5
1.2
1.7

-0.2
.0

84.7
39.4
71.2

1940
1941
1942
1943
1944
1945
1946
1947
1948
1949

100.4
125 5
159.0
192 7
211.4
2134
212.4
235 2
2616
260.4

9.4
10.3
11.3
11.6
12.0
12.4
14.2
17.6
20.4
22.0

91.1
115.3
147.7
181.1
199.4
201.0
198.2
217.6
241.2
238.4

10.1
11.3
11.8
12.8
14.2
15.5
17.1
18.4
20.1
21.3

.4
.5
.5
.5
.5
.5
.5
.6
.7
.8

1.4
.7

.4
.1

-1.7
2.7
4.0

.1
.6
.7
.9
-.2
-.1
.3

79.6
102.8
136.2
169.7
182.6
181.6
180.7
196.6
221.5
215.2

1950
1951
1952
1953
1954
1955
1956
1957
1958
1959

288.3
333 4
351.6
3716
372 5
405.9
4282
4510
456.8
495.8

23.6
27.2
29.2
30 9
32.5
34.4
381
41.1
42.8
44.6

264.6
306.2
322.5
340 7
340.0
371.5
3901
409.9
414.0
451.2

23.4
25.3
27.7
29.7
29.6
32.2
35.0
37.4
38.6
41.7

.8
.9
1.0
1.2
1.1
1.2
1.4
1.5
1.6
1.8

.8
2.7
1.8
2.6
2.7
1.8
-1.9
-1.2
-.1
1.5

.1
-.1
-.3
.0
.7
.7
1.1
.1

239.8
277.3
291.6
306.6
306.3
336.3
356.3
372.8
375.0
409.2

1960
1961
1962
1963
1964
1965
1966
1967
1968
1969

5153
533 8
574 6
606 9
649 8
705.1
772 0
816 4
892 7
963.9

46 4
47.8
494
51.4
53 9
57.4
621
67.4
73.9
81.4

468 9
486.1
525 2
555.5
595 9
647.7
709 9
749.0
818 7
882.5

45.3
48.0
515
54.6
58 7
62.5
65 2
70.1
78.7
86.3

2.0
2.0
2.1
2.4
2.7
2.8
3.0
3.1
3.4
3.9

2.8
-1.2
.0
-.6
-1.4
-1.2
2.1
-.4
-1.1
-3.9

.4
1.7
1.8
1.1
1.7
1.6
2.5
1.6
1.4
1.9

424.9
439.0
473.3
500.3
537.6
585.2
642.0
677.7
739.1
798.1

1970
1971
1972
1973
1974
1975
1976
1977
1978
1979

1015 5
1,102 7
1212 8
1,359 3
1,472.8
1,598 4
1782 8
1,990 5
2 249 7
2,508.2

88 8
97.5
107 9
118.1
137.5
161.8
1792
201.5
229 9
265.8

926 6
1,005.1
1104 8
1,241.2
1,335.4
1,436.6
1603 6
1,789.0
2,019 8
2,242.4

94 0
103.4
111 1
120.8
129.0
140.0
1517
165.7
1781
189.4

41
4.4
49
5.5
5.8
7.4
79
8.6
9.3
10.3

-1.1
1.8
-1.6
-4.3
-1.7
2.5
3.6
.0
-1.9
-1.0

2.9
2.6
3.7
3.5
1.2
2.4
1.0
3.0
3.9
3.5

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

1980
1981
1982
1983
1984
1985
1986
1987 "

2 732 0
3,052.6
3,1660
3405 7
3 772 2
4,010.3
4,235.0
4,486.2

303 8
347.8
3812
3966
415.5
437.6
456.7
479.4

2 4281
2,704.8
2,782.8
3,009 1
3,356 8
3,572.7
3,778.4
4,006.8

213 3
251.5
258.8
282 6
313 9
333.2
347.7
367.6

121
12.4
14.3
160
18 7
21.6
22.3
23.2

4.9
4.1
5.2
5.4
-5.6
-4.9
-6.8

5.7
6.7
8.7
14.1
9.9
6.3
8.7
13.1

2,203.5
2,443.5
2,518.4
2,719.5
3,028.6
3,229.9
3,422.0
3,635.9

3,212.5

393.2

2,819.3

264.5

15.2

6.8

15.4

2,548.2

3,545.8

400.8

3,145.0

294.1

16.5

2.5

19.6

2,851,5

1984- IV

3.851.8

423.5

3,428.3

322.7

20.0

-2.1

8.4

3,096.1

1985:1
||
Ill
I
V

3,9211
3 973 6
4,042.0
4,104.4

428 2
433 3
441.6
447.2

3,492.9
3 540 3
3!600.4
3,657.2

325.9
334 9
334.4
337.3

21.1
216
21.8
21.9

.7
-11.9
-9.1
-2.3

11.2
8.8
1.1
4.2

3,156.5
3,204.4
3,254.4
3,304.4

1986:1
|| ....
Ill
IV

4,174 4
4,2116
4 265 9
4,288.1

447.8
454.1
458 9
465.9

3,726.6
3,757 5
3,807 0
3,822.3

345.6
340 7
352 8
351.9

22.0
22.2
22 4
22.6

-2.9
.9
-6.1
-11.6

2.3
20.4
.7
11.6

3,364.2
3,414.1
3,438.7
3,471.0

1987-1
||
11
1
IV P

4,377 7
4 4451
4,524.0
4,598.0

469.7
4766
483.0
488.2

3,907.9
3,968 5
4,040.9
4,109.8

358.3
365 2
371.8
375.1

22.8
231
23.3
23.6

-2.2
-3.1

19.3
9.9
2.3
21.0

3,548.3
3,593.3
3,659.0

.. .

1982-.IV
1983- IV

.

Source: Department of Commerce, Bureau of Economic Analysis.




272

1.8
-1.3
.8

-10.9

TABLE B-23.—Relation of national income and personal income, 1929-87
[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
1987 P
1982- IV
1983- IV
1984: IV
1985-1
II
III
IV
1986-1
||
III
I
V
1987-1
||
Ill
IV »

National
income

84 7
39.4
71.2
796
102.8
136.2
169.7
182.6
1816
180.7
196.6
221.5
215.2
239.8
277 3
2916
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
8981
994.1
1122 7
1203 5
U89.1
14414
1617 8
1,838.2
2,047.3
2 203 5
2 443 5
2 5184
2 719 5
3,028.6
3 229.9
3 422.0
3,635.9
2,548.2
2,851.5
3,096.1
3 156 5
3,204.4
3,254.4
3,304.4
3 364 2
3,414.1
3,438.7
3,471.0
3 548.3
3,593.3
3,659.0

96
-1.5
5.5
88
14.3
19.7
24.0
24.2
197
17.2
22.9
30.3
28.0
34.9
399
37 5
T
37.7
36 6
471
45.7
45 3
40 3
51.4
49 5
503
58 3
63.6
70 7
813
86 6
84.1
90.7
87.4
74.7
871
100.7
113 3
1017
117.6
145 2
174 8
197.2
200.1
177 2
188 0
150 0
213 7
266.9
277.6
284 4
305.3
146.1
248.5
266.9
265 6
274.2
292.8
277.8
288 0
282.3
286.4
281.1
294 0
296.8
314.9

4.7
4.1
3.6
3.3
3.3
3.2
2.7
2.3
2.2
1.8
2.3
2.4
2.6
3.0
35
3.9 i
4.4
5.2
58
6.5
7.8
95
10.2
113
12.9
14 6
16.3
182
20.9
24 3
27.4
29.8
34.6
41.2
463
51.0
596
75 5
83.8
88.8
105 3
126.3
158.3
200.9
2481
2723
2810
304.8
315.3
326.1
336.7
266.9
290.2
313.1
316 5
313.2
313.7
317.9
326.6
328.7
327.5
321.7
323 6
331.1
340.6
351.5

03
.3
2.2
24
2.8
3.5
46
5.2
63
7.7
6.7
6.0
6.6
7.4
88
9.3
9.6
10 6
12 0
13 5
15 5
15 9
18.8
219
22 9
254
28.5
301
316
40 6
45.5
50.4
57.9
62.2
689
79.0
97 6
110 5
118.5
134 5
149 8
171.7
197.8
216 5
2512
269 6
2910
324.9
352.7
374 3
394.4
273.0
299.2
331.5
346 2
350.6
354.1
360.0
369 3
371.9
374.9
381.0
386 7
390.9
396.6
403.6

Source: Department of Commerce, Bureau of Economic Analysis.




Equals:

Plus:

Less:

Corporate
profits
with
GovernWage
inventory
ment
Contribu- accruals
Personal
valuation
transfer Personal dividend Business Personal
tions for
Net
transfer
less
and
payments interest income payments income
social
interest
income
disbursecapital
insurance ments
to
consumppersons
tion
adjustments.

273

0.0
.0
.0
.0
.0
.0
.2
-.2
,0
.0
.0
.0
.0
.0
.1
.0
-.1
.0
o
.0
.0

o
o
.0
o
.0
o
.0
o
.0
.0

.0
.0
.0
6
.0
— 1
5
\l
1
.3
-.2
.0
1

o
_ 4
.2
-.2
.0
.0
.0
.0
.6
.1
-1.0
.0
.0
.0
.0
.0
.0
.0
.0
.3
-.3

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
164
17.5
20.3
24 7
25.7
27 5
31.5
32 6
34.5
360
39.1
43 6
52.3
60.6
67.5
81.8
970
108.4
1241
147 4
185.7
202.8
217.5
234.8
262.8
312.6
355 7
3962
426 6
437.9
468.2
496.0
519.8
420.2
429.0
443.0
461.3
464.8
471.6
474.9
486.6
492.3
501.2
504.1
510.9
518.4
522.5
527.5

6.9
5.5
5.3
53
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
149
16.6
18.7
20 3
22.3
24 9
26.3
289
32.2
35 5
39.6
44 2
48.2
53.2
60.9
69.3
74 7
80.8
93.3
1119
122.5
134.1
155.4
182.5
221.5
271,9
335.4
369.7
3931
444.7
476.5
497.6
515.8
366.2
411.6
464.4
472.2
474.2
475.0
484.6
495.7
500.0
498.1
496.8
499.8
506.3
520.0
537.2

5.8
2.0
3.8
40
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
113
12.2
129
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
75.5
76.3
81.2
87.5
65.4
71.0
76.8
76.6
76.4
75.9
76.3
78.8
81.0
82.1
82.9
84.5
86.3
88.7
90.5

843
46.3
72.1
77 6
95.2
122.4
.5
150.7
.5
164.5
170.0
.5
177.6
190.2
.6
209.2
206.4
'.B
.8
228.1
256.5
.9
273.8
1.0
290.5
1.2
293.0
1.1
314.2
1.2
337.2
1.4
356.3
1.5
367.1
1.6
390.7
1.8
409.4
2.0
426.0
2.0
453.2
2.1
476.3
2.4
510.2
2.7
552.0
2.8
600.8
3.0
644.5
3.1
707.2
3.4
772.9
3.9
831.8
4.1
4.4
894.0
4.9
981.6
5.5 1,101.7
5.8 1,210.1
7.4 1,313.4
7.9 1,451.4
8.6 1,607.5
9.3 1,812.4
10.3 2,034.0
12.1 2,258.5
12.4 2,520.9
14.3 2,670.8
16.0 2,838.6
18.7 3,108.7
21.6 3,327.0
22.3 3,534.3
23.2 3,745.8
15.2 2,729.2
16.5 2,941.8
20.0 3,188.3
21.1 3,259.2
21.6 3,304.4
21.8 3,338.2
21.9 3,406.4
22.0 3,463.4
22.2 3,526.6
22.4 3,553.6
22.6 3,593.6
22.8 3,662.0
23.1 3,708.6
23.3 3,761.0
23.6 3,851.5
0.6

.5
4

TABLE B-24.~National

income by type of income, 1929-87

[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
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..
1987"
1982: IV
1983: IV
1984: IV
1985-1

H

III
IV
1986-1

f
|

III
IV
1987:1

|
|
II
I

IV P

National
income1

:

..
..

Farm

Wages
and
salaries

Supplements
to
wages
and
salaries2

Total

51.1
29.6
48.2

50.5
29.0
46.0

0.7
.6
2.2

52.2
64.8
85.3
109.6
121.3
123.3
119.6
130.1
142.1
142.0

49.9
62.1
82.1
105.8
116.7
117.5
112.0
123.1
135.5
134.7

155.4
181.6
196.3
210.4
209.4
225.9
244.7
257.8
259.8
281.2

Nonfarm

Total

Proprietors'
income3

Capital
consumption
adjustment

14.4
5.4
11.4

6.1
2.5
4.4

6.3
2.5
4.5

-0.2
.0
-.1

8.3
2.9
7.1

8.8
3.9
7.6

0.1
-.5

2.3
2.8
3.2
3.8
4.5
5.8
7.6
7.0
6.5
7.3

12.6
17.1
23.9
28.8
30.0
31.5
36.3
35.5
40.4
35.9

4.4
6.4
10.1
12.0
11.9
12.4
14.8
15.1
17.5
12.8

4.5
6.5
10.3
12.2
12.2
12.6
15.2
15.6
18.2
13.5

-.1

8.2
10.8
13.8
16.8
18.1
19.1
21.5
20.4
22.9
23.1

8.6
11.7
14.4
17.1
18.3
19.3
23.3
21.8
23.1
22.2

.0
-.6
-.4
-.2

147.2
171.6
185.6
199.0
197.2
212.1
229.0
239.9
241.3
259.8

8.2
10.0
10.7
11.5
111
13.8
15.7
17.8
18.5
21.4

38.8
44.0
44.4
43.4
43.5
45.4
46.9
48.8
51.5
51.7

13.6
16.0
15.0
13.0
12.4
11.3
11.1
11.0
13.1
10.8

14.3
16.8
15.9
13.9
13.2
12.1
12.0
11.9
14.0
11.7

-.7
-.8
-.9
-.9

25.2
28.0
29.4
30.4
31.1
34.0
35.8
37.8
38.5
40.9

25.7
27.7
28.5
29.8
30.4
33.5
35.4
37.2
37.7
40.1

= 1.1
-.3

296.7
305.6
327.4
345.5
371.0
399.8
443.0
475.5
524.7
578.4

272.8
280.5
299.3
314.8
337.7
363.7
400.3
428.9
471.9
518.3

23.8
25.1
28.1
30.7
33.2
36.1
42.7
46.6
52.8
60.1

52.1
54.3
56.6
57.7
60.5
65.1
69.6
71.1
75.4
79.3

11.6
12.0
12.1
11.9
10.7
13.0
14.0
12.7
12.8
14.6

12.4
12.8
12.9
12.6
11.4
13.7
14.8
13.6
13.7
15.8

39.7
41.7
43.8
45.1
49.1
51.8
55.5
58.4
63.1
65.1

.0
.0
.0
.0
-.1

-.9
-1.1

40.5
42.3
44.4
45.7
49.8
52.1
55.5
58.4
62.6
64.7

618.3
659.4
726.2
812.8
891.3
948.7
1,057.9
1,176.6
1,329.2
1,491.4

551.5
584.5
638.7
708.6
772.2
814.7
899.6
994.0
1,119.6
1,251.9

66.8
74.9
87.6
104.2
119.1
134.0
158.3
182.6
209.7
239.5

80.2
86.8
98.3
119.0
118.8
125.4
137.7
152.9
176.2
191.9

14.7
15.5
19.4
33.7
27,5
25.4
20.6
20.5
27.0
31.7

16.0
16.8
21.1
35.6
30.1
29.0
24.6
25.1
32.4
38.0

-1.3
-1.3
-1.7
-1.9
-2.6
-3.6
-4.0
=4.6
= 5.3
=6.3

65.4
71.4
79.0
85.3
91.3
100.0
117.1
132.4
149.2
160.1

66.0
72.3
79.6
95.3
102.2
119.6
135.1
152.8
164.0

-3.8
-1.2'
-1.3
-1.3
-2.3
-2.9

1,638.2
1,807.4
1.907.0
2,020.7
2,213.9
2,370.8
2,504.9
2,647.5

1,372.0
1,510.4
1,586.1
1,676.2
1,838.8
1,974.7
2,089.1
2,212.7

266.3
297.1
320.9
344.5
375.1
396.1
415.8
434.8

180.7
186.8
175.5
190.9
234.5
257.3
289.8
327.8

20.5
30.7
24.6
12.4
30.5
29.7
37.2
48.8

28.1
39.4
33.9
21.8
39.6
38.3
45.4
56.4

-7.6
-8.7
-9.3
-9.4
-9.2
-8.6
=8.1
-7.7

160.1
156.1
150.9
178.4
204.0
227.6
252.6
279.1

164.3
155.2
148.5
167.3
182.4
196.0
217.7
239.0

= 2.9
= 1.4

1,931.1
2,092.7
2,272.7
2,314.9
2,351.5
2,386.3
2,430.5

1,603.7
1,739.4
1,891.1
1,926.5
1,957.6
1,987.9
2,026.7

327.4
353.4
381.7

188.3
207.8
237.8

38.0
28.5
37.5

= 9.4

159.8

156.9

-.6

-9.3

188.6

172.7

-.7

-9.3

388.4
393.9
398.4
403.8

252.1
256.4
252.4
268.0

28.5
19.3
28.1
31.7
32.2
22.9
31.7

40.7
40.9
31.4
40.1

182.5
191.4
194.0
197.3
201.3

.3
-.5
= 1.3

2,464.8
2,487.6
2,515.1
2,552.0

2,055.3
2,074.6
2,097.9
2,128.5

409.5
413.0
417.2
423.5

270.8
298.1
292.5
297.8

28.0
48.1
36.3
36.6

242.8
250.1
256.2
261.2

209.2
217.4
220.2
223.9

-.2
-1.6
.7
.4

2,589.9
2,623.4
2,663.5
2,713.4

2,163.3
2,191.4
2,226.5
2,269.9

426.6
432.0
437.0
443.5

320.9
323.1
322.7
344.6

51.3
47.3
40.6
55.8

-9.0
= 8.7
-8.5
-8.4
-8.2
= 8.2
-8.0
-7.9
-7.7
=7.7
-7,7
-7.5

209.7
220.4
224.2
229.5
236.3

269.7
275.8
282.1
288.7

232.4
236.5
240.6
246.6

= 1.8
-1.5
-.9
-1.5

Total

841

39.4
71.2
79 6
102.8
136 2
169.7
182 6
1816
180 7
196.6
221.5
215.2
239 8
277.3
2916
306.6
306 3
3363
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
12891
1,441.4
1,617.8
1,838.2
2,047.3
2,203.5
2,443.5
2,518.4
2,719.5
3 028 6
3.229.9
3,422.0
3,635.9
2,548.2
2,851.5
3,096.1
3,156.5
3,204.4
3,254.4
3,304.4
3.364.2
3,414.1
3,438.7
3,471.0
3,548.3
3,593.3
3,659.0

Proprietors' income with inventory valuation and capital consumption
adjustments

1

36.2
56.3
44.3
44.5
59.0
55.0
48.3
63.3

-'.2
-'.3

-.4
-.5
-.7
-.7

-.9
=.9
-.9
-.9

-.7
-.7
-.7

Total

Proprietors'
income4

87.2

Inven- Capital
tory
convalua- sumption
tion
adjust- adjustment
ment

-7.7
-1.5
= .4
.5

-1
.0
-.2
-.3
-.1
.0

~'.2
-A
-.5
-!6

-l'.O

~'.8
-.4
-.2
-.2
-1.4

7.6

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-22.
2
Employer contributions for social insurance and to private pension, health, and welfare funds.
See next page for continuation of table.




274

TABLE B-24.—National income by type of income, 1929-87—Continued
[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Rental income of persons Corporate profits with inventory valuation and capital consumption adjustments
Profits with inventory valuation adjustment and without
capital consumption adjustment

adjustment
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
1987"
1982: IV
1983- IV
1984- IV
1985-1
II
III
IV
1986-1
II
III
I
V
1987:1
II
III
IV P.

Rental Capital
conincome sumption
of
adjustpersons ment

4.9
20
2.6
2.7
32
4.1
4.6
4.8
5.0
58
5.8
6.4
6.7
77
8.3
94
10 7
116
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
161 k
13.5
11.9
8.2
93
5.6
6.6
13.3
13.6
13 2
8.5
9.0
16.7
18.5
15.8
12.4
5.6
73
9.1
9.3
10.1
14 0
17.4
17.2
18.4
20 0
18 9
17.3
18.1

5.6
21
3.2
3.3
4.0
5.1
5.7
6.1
6.5
75
8.2
9.1
9.4
10.5
11.5
12.7
139
14.9
153
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
51.9
54.0
62.2
67.1
56.5
54.3
49.6
510
52.7
55.2
56.9
58 7
62.8
62.8
64.6
662
67 2
66.9
68.0

-0.7
1
-.5
6
-8
-.9
11
-13
-1.5
17
-2.4
-2.7
27
-28
-3.2
33
33
-3 2
33
-3 5
-3.5
-3.4
-3.4
34
-3.3
33
-3.2
-3.2
-3.3
-3.6
-3.9
-4.5
-5.8
64
-7.4
86
-10.1
12 7
-15.0
-17.0
20 6
24 9
-30.1
-34.8
-38.9
40 8
418
-43.3
-45.0
-45.5
48 5
-40.7
-41.9
44 0
43 7
-43.6
-46.0
-46.8
44 7
-45.4
-45.6
-46.2
46 3
48 3
-49.6
-50.0

Capital
Net
conInventory sumption interest
Profits after tax
adjustvalument
ation
Divi- UndisTotal dends tributed adjustment
profits

Profits
Total
Total

9.6
15
5.5
8.8
143
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
471
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
1017
117.6
145.2
174.8
197 2
200.1
177.2
188.0
150 0
213 7
266.9
277.6
284.4
305.3
146.1
248.5
266.9
265 6
274.2
292.8
277.8
288 0
282.3
286.4
281.1
294 0
2968
314.9

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
994
123.9
155.3
183.8
208 2
214.1
194.0
202.3
159 2
196 7
234.2
224.1
238.4
257.2
150.7
223.4
224.6
2161
219.8
236.8
223.7
236 7
235.6
242.4
239.0
245 7
248 8
267.3

Profits Profits
before
tax
tax liability
10.0
10
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
412
38 7
49 2
49 6
48.1
41.9
52.6
49 9
49.8
551
59.8
66.7
77.4
83.3
80.1
89.1
87.2
76 0
87.3
1015
127.2
1389
134.8
170.3
200.4
233 5
257.2
237.1
226.5
169 6
207 6
240.0
224.8
231.9
274.6
164.1
231.5
226.1
217 6
218.0
230.2
233.5
218 9
224.4
236.3
247.9
257 0
268 7
284.9

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
419
49.3
518
50.9
64.2
73.0
83 5
88.0
84.8
81.1
631
111
93.9
96.7
105.0
137.5
59.8
88.1
87.0
94 0
93.2
100.5
99.1
981
102.1
106.1
113.9
128 0
134 2
143.0

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
312
33.5
38.7
46.5
49.6
47.5
49.7
47.5
417
49.6
596
77.9
871
83.9
106.0
127.4
150.0
169.2
152.3
145.4
106.5
130 4
146.1
128.1
126.8
137.1
104.3
143.4
139.2
123.6
124.8
129.7
134.4
120.9
122.3
130.2
134.0
129.0
134.5
141.9

With inventory valuation adjustment and without capital consumption adjustment.
Without inventory valuation and capital consumption adjustments.
Source: Department of Commerce, Bureau of Economic Analysis.
4




275

5.8
20
3.8
4.0
44
4.3
4.4
4.6
4.6
56
6.3
7.0
7.2
88
8.5
88
91
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
447
50.1
54.7
63.6
669
715
79.0
81.3
86.8
93.8
68.5
73.9
80.8
812
81.3
81.2
81.7
84 3
86.6
87.7
88.6
90 3
92 4
95.2
97 3

2.8
16
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
67.0
46.8
40.0
43.3
35.8
69.5
58.4
42.4
43.5
48.5
52.7
36.6
35.7
42.5
45.4
38.7
42.1
46.7

0.5
21
-.2
25
-1.2
8
_ 3
-.6
-5 3
-5.9
22
1.9
5.0
-1.2
1.0
-10
-.3
-1.7
2.7
-1.5
_2
.3
0
.1
-.5
12
-2.1
16
-3.7
59
66
-4.6
66
-20.0
-39 5
-11.0
-14.9
-16.6
-25.3
-43.2
431
24 2
-10.4
-10.9
-5.8
6.5
-17.4
-13.4
81
-1.6
-1.5
1.8
6.5
-9.8
17.8
11.3
6.0
-8.9
-11.3
-20 0
-17.6
-20.7

-0.9
-1.0
-1.1
-.8
-.5
.2
-2A
-2.9
-3.2
-3.0
-3.0
-3.4
-3.2
-2.5
-1.8
-1.2
-1.3
-1.3
-.8
-.3
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
-10.9
-14.0
-16.8
-14.4
-9.2
17.0
32.7
53.5
46.0
48.1
-4.5
25.1
42.3
49.5
54.4
56.0
54.2
51.3
46.7
44.0
42.1
48.2
48.0
47.7
48.5

4.7
41
3.6
3.3
33
3.1
2.7
23
2.2
18
2.3
2.4
2.6
3.0
3.5
3.9
4.4
5.2
58
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
412
46.3
510
59.6
75.5
83.8
88.8
105.3
126.3
158.3
200.9
248.1
272.3
281.0
304.8
315.3
326.1
336.7
266.9
290.2
313.1
316.5
313.2
313.7
317.9
326.6
328.7
327.5
321.7
323.6
331.1
340.6
351.5

TABLE B-25.—Sources of personal income, 1929-87
[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Proprietor s income

Wage and salary disbursements *

Year or quarter

Personal
income

Commodityproducing
industries
Total
Total

Manufacturing

Distributive
industries

Service
industries

8.4
5.2
7.1
7.5
8.1
9.0
9.9

Government
and
government
enterprises

5.0
5.2
8.2
8.5

1929
1933
1939

84.3
46.3
72.1

50.5
29.0
46.0

21.5
17.4

13.6

13.3

1940
1941
1942
1943
1944
1945
1946
1947
1948
1949

77.6
95.2
122.4
150.7
164.5
170.0
177.6
190.2
209.2
206.4

49.9
62.1
82.1
105.6
116.9
117.5
112.0
123.1
135.5
134.8

19.7
27.5
39.1
49.0
50.4
45.9
46.0
54.2
61.1
57.8

15.6
21.7
30.9
40.9
42.9
38.2
36.5
42.5
47.1
44.6

14.2
16.3
18.0
20.1
22.7
24.8
31.0
35.2
37.5
37.7

10.9
11.9
14.3
16.1
17.9
18.5

10.2
16.0
26.6
33.0
34.9
20.7
17.5
19.0
20.8

1950
1951
1952
1953
1954
1955
1956
1957
1958
1959

228.1
256.5
273.8
290.5
293.0
314.2
337.2
356.3
367.1
390.7

147.2
171.5
185.6
199.0
197.2
212.1
229.0
239.9
241.3
259.8

64.8
76.4
82.1
89.8
85.8
93.3
100.8
104.4
100.3
109.9

50.3
59.4
64.2
71.3
67.6
73.9
79.5
82.5
78.7
86.9

39.9
44.4
47.0
49.9
50.3
53.6
58.0
60.7
61.1
65.1

19.9
21.6
23.2
25.0
26.2
28.7
31.5
33.8
35.9
38.8

22.6
29.2
33.3
34.4
34.9
36.6
38.8
41.0
44.1
46.0

1960
1961
1962
1963
1964
1965
1966
1967
1968
1969

409.4
426.0
453.2
476.3
510.2
552.0
600.8
644.5
707.2
772.9

272.8
280.5
299.3
314.8
337.7
363.7
400.3
428.9
471.9
518.3

113.4
114.0
122.2
127.4
136.0
146.6
161.6
169.0
184.1
200.4

89.8
89.9
96.8
100.7
107.3
115.7
128.2
134.3
146.0
157.7

68.6
69.6
73.3
76.8
82.0
87.9
95.1
101.6
110.8
121.7

49.2
52.4
56.3
80.0
64.9
69.9
78.3
86.4
96.6
105.5

1970
1971
1972
1973
1974
1975
1976
1977
1978
1979

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

551.5
583.9
638.7
708.7
772.6
814.6
899.5
993.9
1,119.3
1,252.1

203.7
209.1
228.2
255.9
276.5
277.1
309.7
346.1
392.3
441.4

158.4
160.5
175.6
196.6
211.8
211.6
238.0
266.7
300.1
334.8

131.2
140.4
153.3
170.3
186.8
198.1
219.5
242.7
274.6
307.8

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

1980
1981
1982
1983
1984
1985
1986
1987 *

1,372.0
1,510.3
1,586.1
1,676.6
1,838.6
1,974.9
2,089.1
2,212.7

470.7
512.2
511.7
523.1
577.6
609.2
623.3
641.2

1,603.6
1,739.4

501.8
545.4

355.6
386.7
384.0
397.4
439.1
460.9
470.5
484.0
377.4

335.5
366.8
384.2
404.2
442.8
473.0
497.1
522.8
389.3
420.8

1,890.5
1,926.4
1,958.6
1,987.9
2,026.7

591.6

415.5
449.5

600.0
606.3
610.8
619.7

2,055.3
2,074.6
2,097.9
2,128.5

620.8
621.2
622.8
628.4

2,163.3
2,191.4
2,226.1
2,270.2

632.9
635.0
641.8
655.1

1982: IV.

2,258.5
2,520.9
2,670.8
2,838.6
3,108.7
3,327.0
3,534.3
3,745.8
2,729.2

1983: IV.

2,941.8-

1984:1V..
1985:1
II..
III.
IV.

3,188.3
3,259.2
3,304.4
3,338.2
3,406.4
3,463.4
3,526.6
3,553.6
3,593.6
3,662.0
3,708.6
3,761.0
3,851.5

1986:1
II..
III.
IV.
1987; I
II..
III.
IV

16.1

9.8

7.8

454.5
458.1
462.0
469.0
469.0
468.7
470.0
474.5
477.2
479.0
485.1
494.8

15.6

8.8

455.1
461.7
469.2
476.7
484.5
491.4
493.7
498.6
504.7
511.5
518.9
526.3
534.4

Other
labor
income1

valuation and
cap mi
consuniption
adjust nents
Farm

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

6.1
2.5
4.4
4.4
6.4

Nonfarm

8.3
2.9
7.1
8.2

10.1
12.0
11.9
12.4
14.8
15.1
17.5
12.8

10.8
13.8
16.8
18.1
19.1
21.5
20.4
22.9
23.1

10.6

13.6
16.0
15.0
13.0
12.4
11.3
11.1
11.0
13.1
10.8

25.2
28.0
29.4
30.4
31.1
34.0
35.8
37.8
38.5
40.9

11.2
11.8
13.0
14.0
15.7
17.8
19.9
21.7
25.2
28.5

11.6
12.0
12.1
11.9
10.7
13.0
14.0
12.7
12.8
14.6

40.5
42.3
44.4
45.7
49.8
52.1
55.5
58.4
62.6
64.7

117.1
126.5
137.4
148.7
160.9
176.0
188.6
202.3
219.4
236.1

32.5
36.7
43.0
49.2
56.5
65.9
79.3
94.1
107.7
122.7

14.7
15.5
19.4
33.7
27.5
25.4
20.6
20.5
27.0
31.7

65.4
71.4
79.0
85.3
91.3
100.0
117.1
132.4
149.2
160.1

305.6
346.9
384.4
425.1
472.1
520.4
573.9
627.3
398.5

260.2
284.4
305.9
324.3
346.1
372.3
394.8
421.5
314.0

138.4
150.3
163.6
173.6
182.9
192.3
201.1
210.2

20.5
30.7
24.6
12.4
30.5
29.7
37.2
48.8
28.5

160.1
156.1
150.9
178.4
204.0
227.6
252.6
279.1

443.2
489.6

330.0
354.3

177.8
185.4

19.3
28.1

188.6
209.7

500.7
512.9
526.1
541.9

363.9
370.2
374.3
380.6
386.1
391.6
397.7
403.8
412.2
418.1
424.2
431.4

188.3
191.3
193.8
195.8
197.8
199.8
202.3
204.4

31.7
32.2
22.9
31,7
28.0
48.1
36.3
36.6
51.3
47.3
40.6
55.8

220.4
224.2
229.5
236.3
242.8
250.1
256.2
261.2
269.7
275.8
282.1
288.7

557.0
568.1
578.8
591.6
606.7
619.3
633.9
649.3

168.0

206.7
209.5
211.1
213.5

159.8

1
The total of wage and salary disbursements and other labor income differs from compensation of employees in Table 8-24 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.




276

TABLE B-25.—Sources ofpersonal income, 1929-87—Continued
[Billions of dollars; quarterly data at seasonally adjusted annual rates]

Year or quarter

Rental
income
of
persons Personal Personal
with
capital dividend interest
income income
conption
adjustment

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..

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

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

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

12.9
13.3
14.4
15.5
17.3
19.1
19.4
20.2
21.9
22.4

1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987 *
1982: IV
1983: IV
1984:1V
1985:1

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
8.5
9.0
16.7
18.5

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
75.5
76.3
81.2
87.5

15.8
12.4
5.6
7.3
9.1
9.3
10.1
14.0
17.4
17.2
18.4
20.0
18.9
17.3
18.1

65.4
71.0
76.8
76.6
76.4
75.9
76.3
78.8
81.0
82.1
82.9
84.5
86.3
88.7
90.5

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
444.7
476.5
497.6
515.8
366.2
411.6
464.4
472.2
474.2
475.0
484.6
495.7
500.0
498.1
496.8
499.8
506.3
520.0
537.2

III
IV
1986:1
II
Ml
IV
1987:1
II
Ill
IV "...

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

Old-age,
Governsurvivors, Government
ment
disability, unememployand
ployment Veterans
ees
health
insur- benefits retireinsurance
ment
ance
benefits
benefits benefits
0.6
.6
0.0

.0
.1
.2
.3
.7
1.0
1.9
2.2
3.0
3.6
4.9
5.7
7.3
8.5
10.2

85.9
101.5
113.3
129.6
153.2
193.1
210.7
226.1
244.0
273.1

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

324.7
368.1
410.6
442.6
456.6
489.7
518.3
543.0

154.2
182.0
204.5
221.7
235.7
253.4
269.2
282.9

435.4
445.5
463.0
482.3
486.4
493.4
496.8
508.6
514.5
523.6
526.6
533.7
541.5
545.8
551.1

216.6
227.0
241.7
249.0
251.0
256.5
257.1
264.5
266.4
272.4
273.5
278.0
282.3
284.4
286.8

2

0.4
.5
.4
.4
.1

0.1
.2

.5
.5

.3
.3

i!o
A
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
16.4
14.6
31.8
20.0
15.6
16.7
15.8
15.1
15.3
15.6
16.3
17.1
16.6
15.6
14.9
14.5
13.4

Aid to
families
with
depend- Other
ent
children
(AFDC)

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

A
A
.5
.7
.7
.7
.9

0.3
.4
.5

Less:
Personal
contribu- Nonfarm
tions for personal
income2
social
insurance

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

0.1
.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

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

'.S

1.0
1.1
1.2
1.4
1.5
1.7
1.9
2.2
2.5
2.8

.6
.6
.5

3.1
3.4
3.7
4.2
4.7
5.2
6.1
6.9
7.6
8.7

1.0
1.1
1.3
1.4
1.5
1.7
1.9
2.3
2.8
3.5
4.8
6.2
6.9
7.2
7.9
9.2
10.1
10.6
10.7
11.0

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

9.3
9.7
10.3
11.8
12.6
13.3
17.8
20.6
22.9
26.2

393.9
409.9
436.7
460.0
494.9
534.0
581.5
626.3
688.7
752.1

27.9
30.7
34.5
42.6
47.9
50.4
55.5
61.2
69.8
81.0

12.4
13.0
13.3
14.2
14.8
15.4
16.2
16.7

84.0
91.8
96.5
105.1
112.6
121.1
128.7
136.1
100.6
107.3
116.1
118.6
120.6
121.9
123.4
125.9
128.0
129.6
131.3
133.1
134.7
136.3
140.2

88.6
104.5
112.3
120.1
132.7
148.9
159.6
169.9
113.5
123.6
135.2
146.1
148.0
149.6
151.9
157.6
158.8
160.1
161.8
166.7
168.4
170.7
173.7

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
2f215.8
2,465.6
2,618.7
2,799.0
3,052.1
3,273.5
3,475.2
3,675.5

15.0
16.1
16.4
16.6
16.4
16.7
16.8
16.6

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
61.4
67.4
71.0
76.2

16.6
16.5
16.3
16.8
16.8
16.7
16.5
17.0
16.9
16.7
16.4
16.6
16.7
16.6
16.5

56.1
60.2
58.5
66.2
67.0
67.8
68.7
69.7
70.6
71.5
72.4
73.9
76.0
77.3
77.6

.6
.6
.6

13.6
14.5
14.8
15.0
15.3
15.6
15.7
16.0
16.2
16.4
16.4
16.5
16.7
16.8
16.7

2,672.8
2,895.6
3,134.7
3,202.6
3,248.0
3,291.7
3,3517
3,413.0
3,456.6
3,495.7
3,535.7
3,589.9
3,639.7
3,698.6
3,773.7

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.




277

TABLE B-26.—Disposition of personal income, 1929-87

[Billions of dollars, except as noted; quarterly data at seasonally adjusted annual rates]
Percent of disposable
personal income

Less: Personal outlays

Year or quarter

Personal
income

Less:
Personal
tax and
nontax
payments

Equals:
Disposable
personal
income

Personal
Interest transfer
paid by
payconconsumsumption ers to ments
to
expendibusifortures
ness
eigners
(net)

Personal

Total

Personal outlays
Equals:
Personal
saving
Total

Personal
consump- Personal
saving
tion
expenditures

0.3
.2
.2

2.6
-1.6
1.8

96.8
103.6
97.4

94.5
102.1
96.2

.7
1.0
1.4
1.7

.2
.2
.1
.2
.4
.5
.7
.7
.7
.5

3.0
10.0
27.0
32.7
36.5
28.7
13.6
5.2
11.1
7.4

96.0
89.1
76.8
75.4
74.9
80.8
91.4
96.9
94.1
96.1

94.7
87.9
76.1
74.8
74.4
80.2
90.6
95.9
93.0
94.9

192.1
208.1
219.1
232.6
239.8
257.9
270.6
285.3
294.6
316.3

2.3
2.5
2.9
3.6
3.8
4.4
5.1
5.5
5.6
6.1

.4
.4
.4
.5
.5
.4
.5
.5
.4
.4

12.6
16.6
17.4
18.4
16.4
16.0
21.3
22.7
24.3
21.8

93.9
92.7
92.7
92.8
93.7
94.2
92.8
92.8
92.5
93.7

92.6
91.4
91.4
91.2
92.0
92.5
90.9
90.9
90.7
91.8

338.1
348.9
370.2
391.2
419.9
452.5
489.9
516.9
567.1
614.5

330.7
341.1
361.9
381.7
409.3
440.7
477.3
503.6
552.5
597.9

7.0
7.3
7.8
8.8
9.9
11.1
12.0
12.5
13.8
15.6

.4
.5

7
.7
.9
.9
1.0

20.8
24.9
25.9
24.6
31.5
34.3
36.0
45.1
42.5
42.2

94.2
93.4
93.5
94.1
93.0
93.0
93.2
92.0
93.0
93.6

92.1
91.3
91.4
91.8
90.7
90.5
90.8
89.6
90.6
91.0

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

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

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

16.7
17.7
19.5
22.3
24.1
24.4
26.6
30.5
36.7
43.5

1.2
1.2
1.1
1.3
1.0
1.0
1.0
.9
.9
1.0

57.7
66.3
61.4
89.0
96.7
104.6
95.8
90.7
110.2
118.1

91.9
91.5
92.7
90.6
90.7
90.8
92.4
93.4
92.9
93.2

89.4
89.0
90.2
88.2
88.3
88.6
90.2
91.1
90.5
90.6

340.5
393.3
409.3
410.5
440.2
485.9
512.2
564.7

1,918.0
2,127.6
2,261.4
2,428.1
2,668.6
2,841.1
3,022.1
3,181.1

1,781.1
1,968.1
2,107.5
2,297.4
2,504.5
2,714.1
2,891.5
3,060.9

1,732.6
1,915.1
2,050.7
2,234.5
2,430.5
2,629.4
2,799.8
2,966.0

47.4
52.0
55.5
61.9
72.5
82.7
89.9
93.5

1.1
1.0
1.3
1.0
1.5
2.0
1.7
1.5

136.9
159.4
153.9
130.6
164.1
127.1
130.6
120.2

92.9
92.5
93.2
94.6
93.9
95.5
95.7
96.2

90.3
90.0
90.7
92.0
91.1
92.5
92.6
93.2

2,729.2

411.1

2,318.1

2,174.9

2,117.0

56.8

1.1

143.1

93,8

91.3

2,941.8

413.9

2,527.9

2,382.5

2,315.8

65.5

1.2

145.4

94.2

91.6

1984: IV

3,188.3

459.7

2,728.6

2,571.3

2,493.4

76.3

1.6

157.3

94.2

91.4

1985: I
||
III
IV

3,259.2
3,304.4
3,338.2
3,406.4

497.0
455.9
491.0
499.7

2,762.2
2,848.4
2,847.2
2,906.6

2,631.0
3,685.6
2,751.5
2,788.1

2,549.9
2,602.0
2,665.4
2,700.1

79.0
81.9
83.8
86.2

2.1
1.7
2.2
1.9

131.2
162.8
95.7
118.5

95.3
94.3
96.6
95.9

92.3
91.3
93,6
92.9

1986: I
II
Ill
IV

3,463.4
3,526.6
3,553.6
3,593.6

497.4
504.2
515.3
532.0

2,966.0
3,022.4
3,038.2
3,061.6

2,827.6
2,856.4
2,929.4
2,952.6

2,737.9
2,765.8
2,837.1
2,858.6

87.9
89.0
90.7
92.1

1.7
1.6
1.6
1.9

138.4
166.0
108.9
109.0

95.3
94.5
96.4
96.4

92.3
91.5
93.4
93.4

1987: I
II
Ill
IV »

3,662.0
3,708.6
3,761.0
3,851.5

536.1
578.0
565.7
578.9

3,125.9
3,130.6
3,195.3
3,272.6

2,987.5
3,037.4
3,106.5
3,112.2

2,893.8
2,943.7
3,011.3
3,015.1

92.1
92.6
93.9
95.3

1.7
1.2
1.2
1.7

138.4
93.2
88.8
160.4

95.6
97.0
97.2
95.1

92.6
94.0
94.2
92.1

1929
1933
1939

84.3
46.3
72.1

2.6
1.4
2.4

81.7
44.9
69.7

79.2
46.5
67.9

77.3
45.8
67.0

1940
1941
1942
1943
1944
1945
1946
1947
1948
1949

77.6
95.2
122.4
150.7
164.5
170.0
177.6
190.2
209.2
206.4

2.6
3.3
5.9
17.8
18.9
20,8
18.7
21.4
21.0
18.5

75.0
91.9
116.4
132.9
145.6
149.2
158.9
168.8
188.1
187.9

72.0
81.9
89.5
100.2
109.0
120.5
145.3
163.6
177.0
180.6

71.0
80.8
88.6
99.5
108.2
119.6
143.9
161.9
174.9
178.3

1950
1951
1952
1953
1954
1955
1956
1957
1958
1959

228.1
256.5
273.8
290.5
293.0
314.2
337.2
356.3
367.1
390.7

20.6
28.9
34.0
35.5
32.5
35.4
39.7
42.4
42.2
46.1

207.5
227.6
239.8
255.1
260.5
278.8
297.5
313.9
324.9
344.6

194.8
211.0
222.4
236.7
244.1
262.8
276.2
291.2
300.6
322.8

1960
1961
1962
1963
1964
1965
1966
1967
1968
1969

409.4
426.0
453.2
476.3
510.2
552.0
600.8
644.5
707.2
772.9

50.5
52.2
57.0
60.5
58.8
65.2
74.9
82.4
97.7
116.3

358.9
373.8
396.2
415.8
451.4
486.8
525.9
562.1
609.6
656.7

1970
1971
1972
1973
1974
1975
1976
1977
1978
1979

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

116.2
117.3
142.0
152.0
171.8
170.6
198.7
228.1
261.1
304.7

1980
1981
1982
1983
1984
1985
1986
1987 "

2,258.5
2,520.9
2,670.8
2,838.6
3,108.7
3,327.0
3,534.3
3,745.8

1982: IV
1983: IV

Source: Department of Commerce, Bureau of Economic Analysis.




278

.9
.7
.5

!s

^6

TABLE B-27.—Total and per capita disposable personal income and personal consumption expenditures in
current and 1982 dollars, 1929-87
[Quarterly data at seasonally adjusted annual rates, except as noted]
Disposable personal income
Year or quarter

Total (billions of
dollars)

Personal consumption expenditures

Per capita
(dollars)
Current
dollars

1982
dollars

Total (billions of
dollars)

Per capita
(dollars)

Population
(thousands) '

Current
dollars

1982
dollars

1929
1933
1939

81.7
44.9
69.7

498.6
370.8
499.5

671
357
532

4,091
2,950
3,812

77.3
45.8
67.0

471.4
378.7
480.5

634
365
511

3,868
3,013
3,667

121,878
125,690
131,028

1940
1941
1942
1943
1944
1945
1946
1947
1948
1949

75.0
91.9
116.4
132.9
145.6
149.2
158.9
168.8
188.1
187.9

530.7
604.1
693.0
721.4
749.3
739.5
723.3
694.8
733.1
733.2

568
689
863
972
1,052
1,066
1,124
1,171
1,283
1,260

4,017
4,528
5,138
5,276
5,414
5,285
5,115
4,820
5,000
4,915

71.0
80.8
88.6
99.5
108.2
119.6
143.9
161.9
174.9
178.3

502.6
531.1
527.6
539.9
557.1
592.7
655.0
666.6
681.8
695.4

538
606
657
727
782
855
1,018
1,123
1,193
1,195

3,804
3,981
3,912
3,949
4,026
4,236
4,632
4,625
4,650
4,661

132,122
133,402
134,860
136,739
138,397
139,928
141,389
144,126
146,631
149,188

1950
1951
1952
1953
1954
1955
1956
1957
1958
1959

207.5
227.6
239.8
255.1
260.5
278.8
297.5
313.9
324.9
344.6

791.8
819.0
844.3
880.0
894.0
944.5
989.4
1,012.1
1,028.8
1,067.2

1,368
1,475
1,528
1,599
1,604
1,687
1,769
1,833
1,865
1,946

5,220
5,308
5,379
5,515
5,505
5,714
5,881
5,909
5,908
6,027

192.1
208.1
219.1
232.6
239.8
257.9
270.6
285.3
294.6
316.3

733.2
748.7
771.4
802.5
822.7
873.8
899.8
919.7
932.9
979.4

1,267
1,349
1,396
1,458
1,477
1,560
1,608
1,666
1,692
1,786

4,834
4,853
4,915
5,029
5,066
5,287
5,349
5,370
5,357
5,531

151,684
154,287
156,954
159,565
162,391
165,275
168,221
171,274
174,141
177,073

1960
1961
1962
1963
.
1964
1965
1966
1967
1968
1969 . . .

358.9
373.8
396.2
415.8
451.4
486.8
525.9
562.1
609.6
656.7

1,091.1
1,123.2
1,170.2
i;207.3
1,291.0
1,365.7
1,431.3
1,493.2
1,551.3
1,599.8

1,986
2,034
2,123
2,197
2,352
2,505
2,675
2,828
3,037
3,239

6,036

330.7
341.1
361.9
381.7
409.3
440.7
477.3
503.6
552.5
597.9

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

1,829
1,857
1,940
2,017
2,133
2,268
2,428
2,534
2,752
2,949

5,561
5,579
5,729
5,855
6,099
6,362
6,607
6,730
7,003
7,185

180,760
183,742
186,590
189,300
191,927
194,347
196,599
198,752
200,745
202,736

1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987 P

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
2,668.6
2,841.1
3,022.1
3,181.1

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

3,489
3,740
4,000
4,481
4,855
5,291
5,744
6,262
6,968
7,682

8,134
8,322
8,562
9,042
8,867
8,944
9,175
9,381
9,735
9,829

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

3,121
3,330
3,609
3,950
4,285
4,689
5,178
5,707
6,304
6,960

7,275
7,409
7,726
7,972
7,826
7,926
8,272
8,551
.8,808
8,904

205,089
207,692
209,924
211,939
213,898
215,981
218,086
220,289
222,629
225,106

2,214.3
2,248.6
2,261.5
2,331.9
2,469.8
2,542.2
2,645.1
2,676.1

8,421
9,243
9,724
10,340
11,257
11,872
12,508
13,048

9,722
9,769
9,725
9,930
10,419
10,622
10,947
10,976

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
2,430.5
2,629.4
2,799.8
2,966.0

2,000.4
2,024.2
2,050.7
2,146.0
2,249.3
2,352.6
2,450.5
2,495.2

7,607
8,320
8,818
9,516
10,253
10,987
11,588
12,165

8,783
8,794
8,818
9,139
9,489
9,830
10,142
10,234

227,754
230,182
232,549
234,829
237,051
239,323
241,620
243,809

1982: IV

2,318.1

2,276.1

9,929

9,749

2,117.0

2,078.7

9,068

8,904

233,466

1983: IV

2,527.9

2,392.7

10,725

10,151

2,315.8

2,191.9

9,825

9,299

235,707

1984: IV....
1985:1
II
Ill ...
IV....

2,728.6

2,496.3

11,467

10,491

2,493.4

2,281.1

10,479

9,587

237,946

2,762.2
2,848.4
2,847.2
2,906.6

2,506.8
2,558.4
2,538.2
2,565.5

11,584
11,919
11,882
12,099

10,513
10,705
10,592
10,679

2,549.9
2,602.0
2,665.4
2,700.1

2,314.1
2,337.0
2,376.1
2,383.2

10,694

238,452
238,977
239,618
240,246

1986:1
It
Ill ...
IV....
1987:1
II
III ...
IV P.

2,966.0
3,022.4
3,038.2
3,061.6

2,610.5
2,660.2
2,653.2
2,656.7

12,318
12,525
12,560
12,626

10,842
11,024
10,968
10,956

2,737.9
2,765.8
2,837.1
2,858.6

10,008
10,088
10,242
10,229

240,782
241,313
241,896
242,489

3,125.9
3,130.6
3,195.3
3,272.6

2,674.6
2,645.5
2,674.7
2,709.7

12,865
12,858
13,090
13,374

11,008
10,865
10,958
11,074

2,893.8
2,943.7
3,011.3
3,015.1

2,409.7
2,434.3
2,477.5
2,480.5
2,475.9
2,487.5
2,520.7
2,496.6

11,124
11,239
11,371
11,461
11,729
11,789

9,705
9,779
9,916
9,920

11,910
12,090
12,337
12,322

10,190
10,217
10,327
10,203

242,971
243,480
244,094
244,690

6,378
6,727
7,027
7,280
7,513
7,728
7,891

Current
dollars

1982
dollars

Current
dollars

1982
dollars

1
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).




279

TABLE B-28.—Gross saving and investment, 1929-87
[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Gross saving

Gross investment

Government surplus or deficit Capital
StatisGross
grants
( - ) , national income and
tical
Net
private foreign discrepreceived
Gross
product accounts
by the Total domestic investbusiancy
3
investState
United
ness
ment
ment
and
States
savTotal
Federal
local
(net)^
ing»

Gross private saving
Year or
quarter

Total

Total

Personal
saving

16.7
17.4
1.5
1929
15.9
14.9
1.2
2.6
1.0
-0.2
0.8
12.3
1.7
1.2
1933
.6
1.9 - 1 . 6
-1.3
3.6
-1.4
1.6
10.6
1939
i!o
9.3
-2.2
~!o
1.7
8.9
11.1
-2.2
1.8
9.5
1.4
13.6
14.3
3.0
13.4
1940
-.7
1.5
11.3
.6
-1.3
15.0
.7
18.8
22.6
10.0
1941
18.3
1.3
12.6
1.3
-3.8
19.5
-5.1
10.9
42.3
27.0
-.7
1942
10.3
15.3
1.8
-31.4
10.2
-33.1
5.8
50.0
32.7
1943
6.2
17.3
2.4
-1.7
-44.2
4.1
-46.6
3.0
54.9
36.5
1944
7.7
18.4
2.7
-51.8
5.8
-2.0
-54.5
2.7
5.9
45.4
1945
28.7
16.8
2.6
-39.5
-42.1
10.0
11.3
-1.3
4.0
1946
35.7
30.3
16.7
1.9
13.6
5.4
3.5
36.4
31.5
4.9
1947
23.0
1.0
42.5
28.1
14.4
13.4
44.3
l".8
5.2
35.0
9.3
1948
31.3
.1
8.4
8.3
49.6
50.8
42.4
47.1
2.4
-1.3
U.I
-.7
1949
-3.4
32.5
-2.6
37.3
36.5
.9
.8
36.5
39.9
7.4
52.5
44.5
12.6
1950.
9.2
31.8
-1.2
.8
8.0
55.1
53.2
-1.8
58.7
52.6
16.6
1951
-.4
2.7
6.5
61.4
36.0
6.1
60.5
.9
52.3
56.1
17.4
1952
.0
-3.7
38.7
-3.8
54.2
53.5
.6
1.8
51.0
58.0
18.4
.1
1953
39.6
-7.0
-7.1
53.6
54.9
2,6
-1.3
51.6
58.8
16.4
1954
-1.1
-7.1
54.3
-6.0
54.1
42.3
.2
2.7
68.4
65.2
1955
16.0
70.2
4.4
69.7
49.2
3.1
-1.3
1.8
1956
77.3
72.1
75.4
21.3
6.1
72.7
2.8
50.8
5.2
-.9
-1.9
1957
77.1
76.1
2.3
75.9
4.8
53.5
.9
-1.4
71.1
-1.2
227
1958
64.5
-10.3
52.9
-12.6
-2.4
63.6
64.5
77.1
24.3
.9
-~L5
1959
79.0
60.3
-1.6
-1.1
-.4
80.2
80.5
82.1
21.8
-1.2
84.2
81.1
20.8
1960
.1
81.4
78.2
60.3
3.1
-2.8
3.0
3.2
82.6
86.8
24.9
1961
77.1
62.0
-.4
81.3
-1.2
-4.3
-3.9
4.2
91.4
95.2
1962 ...
25.9
87.6
69.3
.5
91.5
.0
-3.8
-4.2
3.8
1963
98.7
97.9
24.6
93.1
.5
-.6
98.1
73.3
4.9
1964
108.5
110.8
1.0
-1.4
31.5
107.1
99.6
79.3
-2.Z
-3.3
7.5
1965
.0
-1.2
123.5
123.0
116.2
88.7
122.3
34.3
6.2
1966
128.6
2.1
95.6
132.4
130.3
131.6
-1.8
36.0
-U
j.8
1967
125.7
-.4
98.6
129.2
-13.2
- U
-14.2
129.5
143.8
3.5
45.1
1968
137.0
.1
138.6
-6.0
-6.0
-1.1
1.6
139.7
145.7
42.5 103.3
1969
153.2
9,9
1.5
154.9
8.4
-3.9
1.7
158.8
148.9
42.2 106.7
154.7
164.5
57.7 106.7
1970
4.8
148.8
-1.1
1.8
-10.6
-12.4
0.9 153.6
171.9
190.6
1971
66.3 124.3
172.5
1.8
2.6
-19.5
-22.0
.7 173.7
1.3
1972
200.7
203.4
61.4 142.0
202.0
-1.6
13.5
-3.4
-16.8
.7 199.1
-2.9
1973
251.9
244.0
238.8
-4.3
13.5
89.0 155.0
7.9
-5.6
0 247.6
8.8
1974
240.8
7.2 l - 2 . 0 246.2
-1.7
247.9
254.3
-4.3
5.4
96.7 157.6
-11.6
1975
219.6
4.5
2.5
-64.9
0 241.2
21.6
238.7
303.6 104.6 198.9
-69.4
1976
277.7
15.2
3.6
-38.4
0 286.6
9.0
-53.5
283.0
321.4
95.8 225.6
1977
344.1
.0
-19.1
26.9
0 335.3
-8.7
-46.0
335.4
354.5
90.7 263.8
1978
416.8 - 1 0 . 1
-1.9
28.9
0 406.7
-29.3
408.6
409.0 110.2 298.9
1979
454.8
-1.0
27.6
1.1 457.4
2.6
iiis -16.1
458.4
445.8 118.1 327.7
445.0
478.4 136.9 341.5
1980
13.0
437.0
4.9
1.2 450.0
-34.5
-61.3
26.8
1981
522.0
550.5 159.4 391.1
10.6
515.5
-63.8
1.1 526.1
-29.7
34.1
4.1
1982
446.4
557.1 153.9 403.2 -110.8 -145.9
0 446.3
447.3
-1.0
35.1
1983
"
~ii
502.3 -33.5
0 468.8
463.6
592.2 130.6 461.6 -128.6 -176.0
47.5
1984
5.4
664.8 - 9 0 . 9
0 573.9
568.5
673.5 164.1 509.5 -105.0 -169.6
64.6
1985
-5.6
641.6 -115.9
0 525.7
531.3
664.2 127.1 537.2 -132.9 -196.0
63.1
-4.9
671.0 -143.9
0 527.1
1986 „...:.;
532.0
679.8 130.6 549.3 -147.8 -204.7
56.8
-6.8
716.4 -156.8
0 559.6
566.4
673.6 120.2 553.4 -107.2 -152.6
1987 P
45.4
6.8
409.6 -15.4
0 394.2
387.4
554.2 143.1 411.1 -166.8 -202.6
35.8
1982: IV
519.9
632.8 145.4 487.3 -112.9 -169.2
2.5
579.8 - 5 7 . 4
0 522.4
56.4
1983: IV
557.8
679.9 157.3 522.6 -122.1 -187.5
65.4
661.8 -106.1
-2.1
0 555.7
1984: IV
552.0
649.9 131.2
-97.8
65.1
.7
638.6 -85.9
0 552.7
547.7
695.8 162.8 518.7 -148.1 -162.9
1985:1
62.2
533.1
-210.3
648.4 -112.5 -11.9
0 535.9
514.7
648.4
95.7
-133.7
62.1
II
-9.1
628.6 -122.9
0 505.6
510.7
662.8 118.5 552.7 -152.1 -195.8
62.9
544.3
-215.0
650.8 -142.3
-2.3
0 508.5
III
557.8
691.8 138.4
-134.0
62.1
-2.9
683.4 -128.5
0 555.0
538.7
713.7 166.0 553.4 -175.0 -196.1
IV
55.1
.9
547.7
679.4 -139.8
-230.2
0 539.6
1986:1
516.2
660.4 108.9
59.6
551.5 -144.1 -203.7
660.8 -150.7
-6.1
0 510.1
II
515.3
653.4 109.0 544.4 -138.1
50.6
-188.7
660.2 -156.5 - 1 1 . 6
0 503.7
Ill
554.3
683.8 138.4
-129.5 -170.5
41.0
IV
-2.2
0 552.1
699.9 -147.7
551.3
639.9
93.2 545.3
-88.6 -139.2
50.6
1987:1
702.6 -154.5
-3.1
0 548.1
559.3
648.7
88.8 546.7
- 8 9 . 3 -135.8
46.5
II
707.4 -159.0
-10.9
559.8
0 548.4
160.4
Ill
0 589.6
755.5 -165,9
IV P
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.




280

TABLE B-29.—Saving by individuals, 1946-871
[Billions of dollars; quarterly data at seasonally adjusted annual rates]

Increase
Year or
quarter

Total

Total

Checkable Time
and
depos- savits ings
and
cur- derency posits

5.6
.1
9.7 - 2 . 9

2.6 2.4
4.6 4.7
1.6 78
1.0 8.1
2.2 9.1
1.2 8.6
18
94
-.4 11.9
38 139
1.0 11.0

-.3
-.6
2.5
2.4
.8
5.7
45
2.7

18.8
12.1

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

31.7
35.3

14.0
19.4
23.4
23.1
21.9
28.3

37.0
34 9
37.8

36.8

1960
1961
1962
1963...
1964
1965
1966
1967...
1968..;
1969

37.7
37.3
43 0
48 2
58.0
65.2
72.8
79 5
83.0
74.6

1.0
32.5
35.7 -.9
40.7 - 1 . 2
47.6
42
5.3
56.5
59.0
7.6
57.8
2.4
70.7
99
76.8 11.1
25
66.7

315

384

10.2 - 2 . 0

308

28.8

315

1970
1971
1972
1973
1974
1975
1976
1977
1978
1979

89.5
98.9
125.5
142.5
140.6
169.0
169.4
183.1
210.3
212.0

83.3
101.3
136.6
148.0
149.2
182.3
206.9
239.4
279.8
299.3

1980
1981
1982
1983
1984
1985
1986

231.2
266.3
318.8
311.7
421.0
366.2
392.6

314.5
328.0
391.9
468.5
544.1
549.5
532.8

1985:1
II ....
Ill ...
IV...
1986: I
II ....
III...
IV...

Govern- Corpoment
rate
securi- equities 2
ties *

-1.7

25.0
19.3
25.8
22.0

33.2
28.0
35.5

Money
market
fund
shares

.3
1.7
1.9

-2 5

8.8
2.4
1.5
1.3
6
4.9
3.9

12.0
18.3
26.1
26 2
26.1
27.8
19.0
35 3
31.1

-0.9

.7
1.8
1.4
1.1
.5
1.0
20
1.5
15
.5

-.7
.3
.0

.0
.7

2.3
-.2
-.5
13
.4
.7
2.3
52
7.9

-1.5

-16

.1

-1.7

10.7

.0

-3 6
-6.0
— 1.7

9.1

25.8
-5.9
-12.5

-.6

87

12.7
13.1
17.3
16 2
13.8
12 8
17.0

10.3

3.2
4.2
3.4
31
3.3
3.8
4.0
67
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
4.5
8.6
119

6.3
3.4
7.5
6.2
7.7

14.6
22.3
29.2
33.1
27.9
27.5
41.9
61.0
77.8
86.7

7.0

12.7

88
7.9
37
7.7

15.1
20.2
23.2

2.2
2.8
2.2

7.2 6.7
4.4 6.6
1.9 6.2
7.6
.8
1.7 8.7
2.9 12.2
1.0 112
2.1 8.9
95
29
4.3 12.8

4.8
1.6
5.3
4.2
1.5
7.1
39
2.9
5
8.0

5.0
3.7
2.6
1.9
5.5
6.3
32
18
60
7.2

3.2
4.9
7.0
9.2
8.8

4.4
2.5
6.3
8.9
9.8

5.0
6.6
7.3

12.4

9.9

213

10.7
10.0
13.3

19.9
25.7
34.8
41.2
29.9
28.4
42.9
53.3
58.8
54.0

11.7
12.2
13.8
16 6
17.5
17.0
13.8
12.4
17.0
18.6

13.1
19.5
26.6
31.9
14.9

26.9
26.2

10.6

6.5
5.7

11.5
10.9

5.5

-0.4

10.5
10.9
14.2
12:2
17.8
19.2
19.4

21.8
19.3
56.6
90.4
94.6
65.8

76.3
81.4
73.2
112.6
112.0
148.1
129.5

65.5
-28.0
43.7
125.6

159.5
203.3
230.6
182.9

34.2
14.4
71.6
71.0

99.8
92.2
91.6
97.7

110.5
6.2
110.5 10.2
127.0 - 2 . 5
108.4 - 1 0 . 1

141.8 101.0
135.3 89.6
163.7 106.0
163.1 81.8

84.6
152.7
121.8
233.4

4.9

21.4
68.1
-28.2
36.1

169.9
175.9
279.6
179.7

57.7
25.0
30.0
79.3

110.0
110.6
113.2
126.0

108.8
1.3
114.8 24.1
150.3 15.9
135.7 - 8 . 3

138.8
179.8
241.3
222.4

62.3
79.8
85.2
36.0

100.6
82.8
119.5
214.8

37.3
-93.5
-92.0

45.5
49.5
70.6

303.6
217.9
243.5

20.1 134.1 105.8 - 7 . 2 176.8
-.3 127.9 113.1 6.3 235.4
24.3 140.1 132.4 - 6 . 8 186.6

6.1
32.8
40.4

31.9
143.8
138.3

359.0
347.5
377.3
381.0

470.0 16.5 150.3
512.0 24.4 138.3
552.7 138.9 141.5
663.3 - 2 3 . 1 89.4

-5.9
32.6
-13.5
35.2

131.0
163.5
-59.8
194.2

-81.2
-36.5

421.6
363.8
344.1
440.8

503.2 63.4 125.6
456.6 86.1 90.0
510.7 85.7 130.2
660.7 162.0 77.4

42.0
51.0
62.8
14.5

1.7

21.4
35.1
25.5

1987:1
421.6
1 .... 243.5
1
Ill ... 390.9

403J - 5 6 . 0 - 9 . 8
408.2 69.7 66.4
490.6 105.0 102.5

-9.3

1.2

188

19.9
21.8

117

14.9
11.4

3.7
3.2
3.2

33.4 66.6 31.9 - 6 . 2 96.4
29.3 59.7 37.4 19.5 75.0
26.7 35.6 37.2 - 4 . 0 49.5
19.9 67.8 62.7 - 7 . 3 110.8
35.9 94.6 98.8 15.0 129.0
47.8 95.4 114.1
.9 151.0
48.0 114.9 127.4
8.3 195.6

-10.9
-39.5
-5.2

22.4

11.5
12.1
13.0
13.9
16.4
17.0
19.3

11.9

12.1
12.1

3.1

118.5
117.9
139.0
153.6
152.4
194.1
201.3

30.5
52.3
76.4
98.5
124.3
107.2
-10.3

72.3
97.2
14.3

2.4
2.2
23
2.2
2.3
2.3
26
2.8
34
3.8

3.6
4.7
4.6
4.4

2.0
1.3
6.9
2.0

6.9

24.5
90.7
32.8
-31.1
44.0
12.1
42.6

-74.7
-75.0
106.8

6.9
6.3
7.7
7.9
7.8
8.5
9.5
9.5
104

3.8 6.7
7.0 9.4
9.5 10.2
8.7 10.9

-15.7
-12.3
-13.6
-10.2
5.1
51.7
24.3

30.6

123.8
64.4
118.0
196.9
221.6
129.9
105.8

4.6
9.9

6.9
6.6
.1
9.5

3.1
2.7
2.5
1.7

Conon sumer Other8
8
non- credit debt
farm
homes

24.2
38.1
46.7
42.7

10.3
25.2
17.7
36.8
16.7
39.2
99.3

19.2
20.1
20.9

10.0

5.3
5.4
5.3
5.6

Mort-

11.1
17.3
17.4
28.0
32.9

31.5
52.8

2.4
1.3
-.0
-.2
6.0

-'$
1.0
10
.8
10
-.2

Other
finan- Owner- Concial occu- sumer
aspied durasets 6 homes bles

Noncorporate
business
assets 8

13.4
25.3
38.3
44.6
34.8
7.5 38.2
2.7 59.4
15.2 89.7
18.9 108.6
12.4 117.6

15.7
19.7
22.3
25.7

6.5
6.1

-.8
.0
-.4

Insurance
and
pension
reserves 5

24.2
28.0
48.5
39.9
43.7
71.9
56.6
78.6
95.0
101.8

-4.1
-8.0
-3.5

67.7
73.9
63.4
56.1
77.7
107.2
106.7
99.2
72.2

1.0

Other
securities 4

1.2
1.1
1.0
.7

-15
5.0

8.9 43.6
12.3
13.6
13.3

Less: Net increase in
ffoht

Securities

6.3
3.4
2.2
2.6

1946
1947
1948....
1949

Net investment in T

in financial assets

-.6

-3.9
-1.9
-7.1
-12.5
-23.7

4.1

-56.0
-32.4
21.7

-.2

-11.9

1
2

13.3
-2.8

7.3
14.5
10.3

14.8
19.8
24.0

9.9
9.1

2.9

22.6
29.9
43.5
43.2
36.6
29.3
41.3
57.9
69.7
80.1

Saving 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.
8
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.




281

TABLE B-30.—Number and median income (in 1986 dollars) of families and persons, and poverty status,
by race, selected jears, 1963-86
Persons
below
poverty level

Families >
fclOW poverty level

Median income of persons 15 years old
and over with income 2
Femdies

lYldiCi

Year

ALL RACES
1963
1964
1965
1966 3
1967
1968
1969

Number
(millions)

47.5
48.0
48.5
49.2
50.1
50.8
51.6

$22,379
23,221
24,177
25,448
26,052
27,205
28,213

52.2
53.3
54.4
55.1

27,862
27,845
29,134
29,734
28,687
27,949
28,811
28,966
29,647
29,588
27,974
26,991
26,619
27,155
27,903
28,269
29,458

1970
1971
1972
1973
1974 3
1975
1976
1977
1978
1979 4

56.2
56.7
57.2
57.8
59.6

1980
1981
1982
1983
1984
1985
1986

60.3
61.0
61.4
62.0
62.7
63.6
64.5

WHITE
1970
1971
1972
1973
1974 3
1975
1976
1977
1978
1979 4
1980
1981
1982
1983
1984
1985
1986

3

BLACK
1970
1971
1972
1973
1974 3
1975
1976
1977
1978
1979 4
1980
1981
1982
1983 3
1984
1985
1986

Median
income

557

rerridit:

Total
Number
(millions)

7.6
7.2
6.7
5.8
5.7
5.0
5.0
5.3
5.3
5.1
4.8
4.9
5.5
5.3
5.3
5.3
5.5
6.2
6.9
7.5
7.6
7.3
7.2
7.0

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
55.7

28,904
28,893
30,269
31,076
29,812
29,067
29,926
30,289
30,870
30,875
29,146
28,352
27,948
28,435
29,226
29,713
30,809

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
4.8

4.9
5.2
5.3
5.4
5.5
5.6
5.8
5.8
5.9
6.2
6.3
6.4
6.5
6.7
6.8
6.9
7.1

17,730
17,435
17,990
17,935
17,801
17,885
17,801
17,303
18,284
17,483
16,864
15,993
15,447
16,025
16,289
17,109
17,604

1.5
1.5
1.5
1.5
1.5
1.5
1.6
1.6
1.6
1.7
1.8
2.0
2.2
2.2
2.1
2.0
2.0

Rate

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
10.3
11.2
12.2
12.3
11.6
11.4
10.9

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
8.6
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
28.0

householder
Number
Rate

(millions)

2.0
1.8
1.9
1.7
1.8
1.8
1.8
2.0
2.1
2.2
2.2
2.3
2.4
2.5
2.6
2.7
2.6
3.0
3.3
3.4
3.6
3.5
3.5
3.6
1.1
1.2
1.1
1.2
1.3
1.4
1.4
1.4
1.4
1.4
1.6
1.8
1.8
1.9
1.9
2.0
2.0
.8
.9
1.0
1.0
1.0
1.0
1.1
1.2
1.2

1.2
1.3
1.4
1.5
1.5
1.5
1.5
1.5

Number
(millions)

Rate

All
persons

Yearround
full-time
workers

All
persons

Yearround
fulltime
work-

ers
$4,914 $12,735
5,122 13,116
5,285 13,263
5,535 13,601
5,915 13,786
6,363 14,397
6,377 15,185

$21,740
22,213
22,929
23,499
23,937
24,627
25,925

12.6
12.5
11.9
11.1
11.2
12.3
11.8
11.6
11.4
11.7

$16,154
16,426
17,456
17,927
18,236
18,847
19,228
18,834
18,689
19,526
19,877
18,792
18,036
18,155
18,316
18,378
17,793

25,933
26,074
27,619
28,295
27,041
26,349
26,694
27,267
26,995
26,403

6,317
6,519
6,812
6,899
6,853
6,896
6,888
7,131
6,837
6,574

15,361
15,435
15,864
16,008
15,951
15,725
16,010
15,948
16,203
15,908

29.3
31.8
34.4
35.3
33.7
33.1
32.4

13.0
14.0
15.0
15.2
14.4
14.0
13.6

16,673
16,243
15,846
16,135
16,468
16,625
17,114

25,512
24,946
24,599
24,769
25,339
25,480
25,894

6,547
6,580
6,687
7,049
7,250
7,356
7,610

15,423
15,018
15,520
15,945
16,280
16,565
16,843

25.0
26.5
24.3
24.5
24.8
25.9
25.2
24.0
23.5
22,3

17.5
17.8
16.2
15.1
15.7
17.8
16.7
16.4
16.3
17.2

9.9
9.9
9.0
8.4
8.6
9.7
9.1
8.9
8.7
9.0

19,797
19,593
20,480
20,856
19,686
18,946
19,140
19,185
19,249
18,588

26,676
26,808
28,615
29,114
27,568
26,959
27,489
27,824
27,496
27,166

6,399
6,628
6,856
6,965
6,930
6,967
6,946
7,239
6,919
6,636

15,632
15,613
16,176
16,279
16,087
15,762
16,133
16,049
16,356
16,047

25.7
27.4
27.9
28.3
27.1
27.4
28.2

19.7
21.6
23.5
24.0
23.0
22.9
22.2

10.2
11.1
12.0
12.1
11.5
11.4
11.0

17,735
17,235
16,753
16,975
17,383
17,440
18,060

26,240
25,532
25,254
25,430
26,207
26,187
26,617

6,583
6,654
6,778
7,172
7,335
7,499
7,760

15,572
15,269
15,729
16,158
16,441
16,799
17,101

54.3
53.5
53.3
52.7
52.2
50.1
52.2
51.0
50.6
49.4

7.5
7.4
7.7
7.4
7.2
7.5
7.6
7.7
7.6
8.1

49.4
52.9
56.2
53.7
51.7
50.5
50.1

8.6
9.2
9.7
9.9
9.5
8.9
9.0

33.5
32.5
33.3
31.4
30.3
31.3
31.1
31.3
30.6
31.0
32.5
34.2
35.6
35.7
33.8
31.3
31.1

11,693
11,571
12,334
12,615
12,198
11,327
11,524
11,385
11,531
11,506
10,657
10,249
10,039
9,927
9,973
10,975
10,822

18,171
18,331
19,324
19,623
19,355
20,063
19,689
19,183
21,059
19,579
18,463
18,064
17,936
18,131
17,885
18,317
18,766

5,825
5,807
6,406
6,287
6,257
6,330
6,545
6,251
6,230
6,039
6,094
5,911
5,978
6,129
6,507
6,398
6,566

12,808
13,786
13,838
13,805
14,165
15,059
15,083
15,000
15,160
14,704
14,524
13,789
14,058
14,343
14,817
14,871
14,964

40.4
36.4
38.4
33.1
33.3
32.3
32.7

36.4
36.1
33.2
28.5
27.8
25.4
24.1

19.5
19.0
17.3
14.7
14.2
12.8
12.1

32.5
33.9
32.7
32.2
32.1
32.5
33.0
31.7
31.4
30.4

25.4
25.6
24.5
23.0
23.4
25.9
25.0
24.7
24.5
26.1

32.7
34.6
36.3
36.0
34.5
34.0
34.6

1
The term "family" refers to a group of two or more persons related by blood, marriage, or adoption and residing together; all such
persons are considered members of the same family. Beginning 1979, based on householder concept and restricted to primary families.
2
Prior to 1979, data are for persons 14 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 ana 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. 158.
Source: Department of Commerce, Bureau of the Census.




282

POPULATION, EMPLOYMENT, WAGES, AND PRODUCTIVITY
TABLE B-31.—Population by age groups, 1929-87
[Thousands of persons]
Age (years)
July 1

Total

Under 5

5-15

16-19

20-24

25-44

45-64

65 and
over

1929

121,767

11,734

26,800

9,127

10,694

35,862

21,076

6,474

1933

125,579

10,612

26,897

9,302

11,152

37,319

22,933

7,363

1939

130,880

10,418

25,179

9,822

11,519

39,354

25,823

8,764

1940
1941
1942
1943
1944

132,122
133,402
134,860
136,739
138,397

10,579
10,850
11,301
12,016
12,524

24,811
24,516
24,231
24,093
23,949

9,895
9,840
9,730
9,607
9,561

11,690
11,807
11,955
12,064
12,062

39,868
40,383
40,861
41,420
42,016

26,249
26,718
27,196
27,671
28,138

9,031
9,288
9,584
9,867
10,147

1945
1946
1947
1948
1949

139,928
141,389
144,126
146,631
149,188

12,979
13,244
14,406
14,919
15,607

23,907
24,103
24,468
25,209
25,852

9,361
9,119
9,097
8,952
8,788

12,036
12,004
11,814
11,794
11,700

42,521
43,027
43,657
44,288
44,916

28,630
29,064
29,498
29,931
30,405

10,494
10,828
11,185
11,538
11,921

1950
1951
1952
1953
1954

152,271
154,878
157,553
160,184
163,026

16,410
17,333
17,312
17,638
18,057

26,721
27,279
28,894
30,227
31,480

8,542
8,446
8,414
8,460
8,637

11,680
11,552
11,350
11,062
10,832

45,672
46,103
46,495
46,786
47,001

30,849
31,362
31,884
32,394
32,942

12,397
12,803
13,203
13,617
14,076

1955
1956
1957
1958
1959

165,931
168,903
171,984
174,882
177,830

18,566
19,003
19,494
19,887
20,175

32,682
33,994
35,272
36,445
37,368

8,744
8,916
9,195
9,543
10,215

10,714
10,616
10,603
10,756
10,969

47,194
47,379
47,440
47,337
47,192

33,506
34,057
34,591
35,109
35,663

14,525
14,938
15,388
15,806
16,248

1960
1961
1962
1963
1964

180,671
183,691
186,538
189,242
191,889

20,341
20,522
20,469
20,342
20,165

38,494
39,765
41,205
41,626
42,297

10,683
11,025
11,180
12,007
12,736

11,134
11,483
11,959
12,714
13,269

47,140
47,084
47,013
46,994
46,958

36,203
36,722
37,255
37,782
38,338

16,675
17,089
17,457
17,778
18,127

1965
1966
1967
1968
1969

194,303
196,560
198,712
200,706
202,677

19,824
19,208
18,563
17,913
17,376

42,938
43,702
44,244
44,622
44,840

13,516
14,311
14,200
14,452
14,800

13,746
14,050
15,248
15,786
16,480

46,912
47,001
47,194
47,721
48,064

38,916
39,534
40,193
40,846
41,437

18,451
18,755
19,071
19,365
19,680

1970
1971
1972
1973
1974

205,052
207,661
209,896
211,909
213,854

17,166
17,244
17,101
16,851
16,487

44,816
44,591
44,203
43,582
42,989

15,289
15,688
16,039
16,446
16,769

17,202
18,159
18,153
18,521
18,975

48,473
48,936
50,482
51,749
53,051

41,999
42,482
42,898
43,235
43,522

20,107
20,561
21,020
21,525
22,061

1975
1976
1977
1978
1979

215,973
218,035
220,239
222,585
225,055

16,121
15,617
15,564
15,735
16,063

42,508
42,099
41,298
40,428
39,552

17,017
17,194
17,276
17,288
17,242

19,527
19,986
20,499
20,946
21,297

54,302
55,852
57,561
59,400
61,379

43,801
44,008
44,150
44,286
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
237,001

16,458
16,931
17,298
17,650
17,830

38,844
38,190
37,876
37,668
37,657

17,160
16,770
16,255
15,704
15,141

21,584
21,821
21,807
21,700
21,536

63,494
65,619
67,856
69,970
72,048

44,515
44,569
44,601
44,678
44,817

25,704
26,236
26,827
27,428
27,973

1985
1986
1987

239,283
241,596
243,773

18,017
18,128

37,691
37,701

14,819
14,802

21,214
20,613

74,076
76,126

44,931
45,053

28,536
29,173

Note.—Includes Armed Forces overseas beginning 1940. Includes Alaska and Hawaii beginning 1950.
Source: Department of Commerce, Bureau of the Census.




283

TABLE B-32.—Population and the labor force, 1929-87
[Monthly data seasonally adjusted, except as noted]

Period

Labor Employforce
Civilian
ment
noninsti- Resiinclud- including
dent
tutional Armed
resident
popula- Forces *
tion 1
Armed Armed
Forces Forces

Unemployment rate

Civilian labor force
Employment
Total

Total

Agricultural

Nonagricultural

Unemployment

Labor
Civil- force merit/
parian
work- work- tici- popers 2 ers pation ularate 3
All

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
94,090
103,070
106,018

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

Civilian

Percent
37,180
28,670
36,140
37,980
41,250
44,500
45,390
45,010
44,240
46,930
49,557

1,550
12,830
9,480
8,120
5,560
2,660
1,070
670
1,040
2,270
2,356

3.2
24.9
17.2
14.6
9.9
4.7
1.9
1.2

55.7
56.0
57.2
58.7
58.6

1.9
3.9
3.9

57.2
55.8
56.8

3.9
3.8
5.9

58.3
58.8
58.9

Thousands of persons 16 years of age and over
1947
1948
1949
1950
1951
1952
1953s
1954
1955
1956
1957
1958
1959
1960*
1961
19625
1963
1964
1965
1966
1967
1968
1969.......
1970
1971
19725
1973*
1974
1975
1976
1977s
1978
1979
1980..
1981
1982
1983
1984
1985
1986 *
1987
1983:Jan
Feb
Mar
June
July
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
182,753
173,354
173,505
173,656
173,794
173,953
174,125
174,306
174,440
174,602
174,779
174,951
175,121

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
11656
1,631
1,597
1,604
1,645
1,668
1,676
1,697
1,706
1,706
1,737
1,667
1,664
1,664
1,671
1,669
1,668
1,664
1,682
1,695
1,695
1,685
1,688

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
121,602
112,362
112,298
112,251
112,499
112,465
113,547
113,420
113,913
113,993
113,621
113,913
114,015

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
114,177
100,828
100,753
100,843
101,231
101,311
102,301
102,872
103,290
103,711
103,734
104,414
104,684

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
73,737
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
119,865
110,695
110,634
110,587
110,828
110,796
111,879
111,756
112,231
112,298
111,926
112,228
112,327

See next page for continuation of table.




284

57,038
58,343
57,651

7,890
7,629
7,658

49,148
50,714
49,993

2,311
2,276
3,637

58,918
59,961
60,250
61,179
60,109
62,170
63,799
64,071
63,036
64,630

7,160
6,726
6,500
6,260
6,205
6,450
6,283
5,947
5,586
5,565

51,758
53,235
53,749
54,919
53,904
55,722
57,514
58,123
57,450
59,065

3,288
2,055
1,883
1,834
3,532
2,852
2,750
2,859
4,602
3,740

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

59.2
59,2
59.0
58.9
58.8
59.3
60.0
59.6
59.5
59.3

65,778
65,746
66,702
67,762
69,305
71,088
72,895
74,372
75,920
77,902

5,458
5,200
4,944
4,687
4,523
4,361
3,979
3,844
3,817
3,606

60,318
60,546
61,759
63,076
64,782
66,726
68,915
70,527
72,103
74,296

3,852
4,714
3,911
4,070
3,786
3,366
2,875
2,975
2,817
2,832

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

59.4
59.3
58.8
58.7
58.7
58.9
59.2
59.6
59.6
60.1

78,678
79,367
82,153
85,064
86,794
85,846
88,752
92,017
96,048
98,824

3,463
3,394
3,484
3,470
3,515
3,408
3,331
3,283
3,387
3,347

75,215
75,972
78,669
81,594
83,279
82,438
85,421
88,734
92,661
95,477

4,093
5,016
4,882
4,365
5,156
7,929
7,406
6,991
6,202
6,137

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

60.4
60.2
60.4
60.8
61.3
61.2
61.6
62.3
63.2
63.7

99,303
100,397
99,526
100,834
105,005
107,150
109,597
112,440

3,364 95,938 7,637
3,368 97,030 8,273
96,125 10,678
3,401
3,383 97,450 10,717
3,321 101,685 8,539
3,179 103,971 8,312
3,163 106,434 8,237
3,208 109,232 7,425

7.0
7.5
9.5
9.5
7.4
7.1
6.9
6.1

7.1
7.6
9.7
9.6
7.5
7.2
7.0
6.2

63.8
63.9
64.0
64.0
64.4
64.8
65.3
65.6

99,161
99,089
99,179
99,560
99,642
100,633

3,439
3,382
3,360
3,341
3,328
3,462

95,722
95,707
95,819
96,219
96,314
97,171

11,534
11,545
11,408
11,268
11,154
11,246

10.3
10.3
10.2
10.0
9.9
9.9

10.4
10.4
10.3
10.2
10.1
10.1

63.9
63.8
63.7
63.8
63.7
64.3

101,208
101,608
102,016
102,039
102,729
102,996

3,481
3,502
3,347
3,303
3,291
3,332

97,727
98,106
98,669
98,736
99,438
99,664

10,548
10,623
10,282
9,887
9,499
9,331

9.3
9.3
9.0
8.7
8.3
8.2

9.4
9.5
9.2
8.8
8.5
8.3

64.1
64.3
64.3
64.0
64.1
64.1

TABLE B-32.—Population and the labor force, 1929-87—Continued
[Monthly data seasonally adjusted, except as noted]

Period

Labor EmployCivilian
force
ment
Resinomnstiinclud- including
dent
tutional Armed
ing
resident
popula- Forces1 resident Armed
tion 1
Armed
Forces
Forces

Civilian labor force

Unemployment rate

Employment
Total
Total

Agricultural

Nonagricultural

Unemployment

Labor
Civil- force
All
parian
work- work- ticiers 2
pation
ers rate3

Thousands of persons 16 years of age and over

Employment/
population
ratio4

Percent

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

113,899
114,314
114,397
114,822
115,310
115,521

104,883
105,511
105,659
106,058
106,849
107,300

112,213
112,630
112,711
113,129
113,620
113,831

103,197
103,827
103,973
104,365
105,159
105,610

3,296
3,354
3,234
3,309
3,319
3,377

99,901
100,473
100,739
101,056
101,840
102,233

9,016
8,803
8,738
8,764
8,461
8,221

7.9
7.7
7.6
7.6
7.3
7.1

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

115,645
115,404
115,556
115,720
115,884
116,268

107,127
106,879
107,198
107,339
107,684
107,910

113,947
113,692
113,836
114,015
114,185
114,570

105,429
105,167
105,478
105,634
105,985
106,212

3,340
3,295
3,388
3,195
3,400
3,387

102,089
101,872
102,090
102,439
102,585
102,825

8,518
8,525
8,358
8,381
8,200
8,358

7.4
7.4
7.2
7.2
7.1
7.2

1985: Jan....
Feb....
Mar...
Apr....
May...
JuneJuly...
Aug...
Sept..
Oct....
Nov...
Dec...

177,384
177,516
177,667
177,799
177,944
178,096

1,697
1,703
1,701
1,702
1,705
1,702

116,457
116,606
117,012
117,040
116,916
116,723

107,993
108,276
108,691
108,644
108,612
108,309

114,760
114,903
115,311
115,338
115,211
115,021

106,296
106,573
106,990
106,942
106,907
106,607

3,331
3,325
3,260
3,319
3,238
3,147

102,965
103,248
103,730
103,623
103,669
103,460

8,464
8,330
8,321
8,396
8,304
8,414

7.3
7.1
7.1
7.2
7.1
7.2

178,263
178,405
178,572
178,770
178,940
179,112

1,704
1,726
1,732
1,700
1,702
1,698

116,993
117,037
117,613
117,787
117,857
118,017

108,513
108,851
109,367
109,488
109,702
109,861

115,289
115,311
115,881
116,087
116,155
116,319

106,809
107,125
107,635
107,788
108,000
108,163

3,134
3,141
3,059
3,059
3,073
3,147

103,675
103,984
104,576
104,729
104,927
105,016

8,480
8,186
8,246
8,299
8,155
8,156

1.1
7.0
7.0
7.0
6.9
6.9

1986: Jan *.
Feb....
Mar...
Apr....
May...
June..

179,670
179,821
179,985
180,148
180,311
180,503

1,691
1,691
1,693
1,695
1,687
1,680

118,442
118,642
118,876
119,029
119,168
119,792

110,595
110,215
110,546
110,656
110,724
111,351

116,751
116,951
117,183
117,334
117,481
118,112

108,904
108,524
108,853
108,961
109,037
109,671

3,307
3,097
3,213
3,168
3,099
3,176

105,597
105,427
105,640
105,793
105,938
106,495

7,847
8,427
8,330
8,373
8,444
8,441

6.6
7.1
7.0
7.0
7.1
7.0

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

119,787
119,847
120,061
120,173
120,422
120,326

111,509
111,732
111,763
111,943
112,208
112,407

118,115
118,150
118,345
118,424
118,671
118,576

109,837
110,035
110,047
110,194
110,457
110,657

3,127
3,106
3,164
3,142
3,233
3,153

106,710
106,929
106,883
107,052
107,224
107,504

8,278
8,115
8,298
8,230
8,214
7,919

6.9
6.8
6.9
6.8
6.8
6.6

1987: Jan....
Feb...,
Mar..,
Apr....
May..,
June.

181,827
181,998
182,179
182,344
182,533
182,703

1,748
1,740
1,736
1,735
1,726
1,718

111,014
111,344
111,455
111,806
112,334
112,300

3,174
3,225
3,237
3,250
3,269
3,192

6.6
6.5
6.4
6.2
6.2
6.0

1,720
1,736
1,743
1,741
1,755
1,750

119,890
120,306
119,963
120,387
120,594
120,722

112,639
113,050
112,872
113,210
113,504
113,744

3,212
3,143
3,184
3,249
3,172
3,215

107,840
108,119
108,218
108,556
109,065
109,108
109,427
109,907
109,688
109,961
110,332
110,529

7,964
7,886
7,791
7,557
7,573
7,308

182,885
183,002
183,161
183,311
183,470
183,620

112,762
113,084
113,191
113,541
114,060
114,018
114,359
114,786
114,615
114,951
115,259
115,494

118,978
119,230
119,246
119,363
119,907
119,608

July..,
Aug..,
Sept.
Oct...,
Nov...
Dec...

120,726
120,970
120,982
121,098
121,633
121,326
121,610
122,042
121,706
122,128
122,349
122,472

7,251
7,256
7,091
7,177
7,090
6,978

6.0
5.9
5.8
5.9
5.8
5.7

1
2
3

Civilian

8.0
7.8
7.8
7.7
7.4
7.2
7.5
7.5
7.3
7.4
7.2
7.3
7.4
7.2
7.2
7.3
7.2
7.3
7.4
7.1
7.1
7.1
7.0
7.0
6.7
7.2
7.1
7.1
7.2
7.1
7,0
6.9
7.0
6.9
6.9
6.7
6.7
6.6
6.5
6.3
6.3
6.1
6.0
6.0
5.9
6.0
5.9
5.8

63.9
64.1
64.1
64.3
64,5
64.6

58.8
59.1
59.1
59.3
59.7
59.9

64.6
64.4
64.4
64.4
64.5
64.6

59.8
59.6
59.7
59.7
59.8
59.9

64.7
64.7
64.9
64.9
64.7
64.6

59.9
60.0
60.2
60.1
60.1
59.9

64.7
64.6
64.9
64.9
64.9
64.9

59.9
60.0
60.3
60.3
60.4
60.4

65.0
65.0
65.1
65.1
65.2
65.4

60.6
60.4
60.5
60.5
60.5
60.8

65.4
65.3
65.4
65.4
65.4
65.3

60.8
60.9
60.8
60.8
60.9
61.0

65.4
65.5
65.5
65.5
65.7
65.5

61.1
61.2
61.2
61.3
61.5
61.5

65.6
65.7
65.5
65.7
65.7
65.7

61.6
61.8
61.6
61.8
61.9
61.9

Not seasonally adjusted.
Unemployed as percent of labor force including resident Armed Forces.
Civilian labor force as percent of civilian noninstitutional population.
* Civilian employment as percent of civilian noninstitutional population.
5
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 nonagriculturaf 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 ana labor force and 350,000 to civilian employment. Unemployment
levels and rates were not significantly affected.
Note.—Labor force data in Tables B-32 through 8-41 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.




285

TABLE B-33.—Civilian employment and unemployment by sex and age, 1947-87
[Thousands of persons 16 years of age and over; monthly data seasonally adjusted]
Civilian employment
Males
Year or month
Total
Total

1947
1948
1949
1950
1951
1952
1953 l
1954
1955
1956
1957
1958
1959
1960*
1961
1962'
1963
1964
1965...
1966
1967
1968
1969
1970
1971
19721
1973 1
1974
1975
1976
1977
1978»
1979
1980
1981
1982
1983
1984
1985
1986 '
1987
1986: Jan 1
Feb
Mar

20
years
and
over

Total

16-19
years

20
years
and
over

Total
Total

Females

20
16-19 years
years and

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

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

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

16,045
16,617
16,723
17,340
18,181
18,568
18,749
18,490
19,551
20,419
20,714
20,613
21,164

1,691 14,354
1,682 14,936
1,588 15,137
1,517 15,824
1,611 16,570
1,612 16,958
1,584 17,164
1,490 17,000
1,547 18,002
1,654 18,767
1,663 19,052
1,570 19,043
1,640 19,524

2,311
2,276
3,637
3,288
2,055
1,883
1,834
3,532
2,852
2,750
2,859
4,602
3,740

1,692
1,559
2,572
2,239
1,221
1,185
1,202
2,344
1,854
1,711
1,841
3,098
2,420

270
256
353
318
191
205
184
310
274
269
300
416
398

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

65,778
65,746
66,702
67,762
69,305
71,088
72,895
74,372
75,920
77,902

'.

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

2,361
2,315
2,362
2,406
2,587
2,918
3,253
3,186
3,255
3,430

41,543
41,342
41,815
42,251
42,886
43,422
43,668
44,294
44,859
45,388

21,874
22,090
22,525
23,105
23,831
24,748
25,976
26,893
27,807
29,084

3,852
4,714
3,911
4,070
3,786
3,366
2,875
2,975
2,817
2,832

2,486
2,997
2,423
2,472
2,205
1,914
1,551
1,508
1,419
1,403

426
479
408
501
487
479
432
448
426
440

2,060
2,518
2,016
1,971
1,718
1,435
1,120
1,060
993
963

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
112,440
108,904
108,524
108,853
108,961
109,037
109,671
109,837
110,035
110,047
110,194
110,457
110,657

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
3322
3,328
3,323
3,381
3,225
3,264
3,297
3,336
3,350
3,330
3,347
3,354
3,360
3,367
3,360
3,247
3,342
3,373
3,308
3,299
3,304
3,352

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
58,726
57,606
57,294
57,361
57,374
57,273
57,550
57,551
57,620
57,625
57,607
57,893
58,120
58,220
58,324
58,380
58,516
58,673
58,632

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
50,334

111,014
111,344
111,455
111,806
112,334
112,300

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
62,107
60,831
60,558
60,658
60,710
60,623
60,880
60,898
60,974
60,985
60,974
61,253
61,367
61,562
61,697
61,688
61,815
61,977
61,984

112,639
113,050
112,872
113,210
113,504
113,744

62,150
62,341
62,368
62,468
62,581
62,656

3,367
3,516
3,401
3,431
3,417
3,471

58,783
58,825
58,967
59,037
59,164
59,185

50,489
50,709
50,504
50,742
50,923
51,088

fc:::::::::::
June
July
Aug
Sept
Oct
Nov
Dec
1987:Jan
Feb
Mar
Apr
May
June
Juty
Aug
Sept
Oct
Nov
Dec

16-19
years

Unemployment
Males

Females

48,073
47,966
48,195
48,251
48,414
48,791
48,939
49,061
49,062
49,220
49,204
49,290
49,452
49,647
49,767
49,991
50,357
50,316

16-19
years

144
153
223
195
145
140
123
191
176
209
197
262
256

1,768
1,793
1,833
1,849
1,929
2,118
2,468
2,496
2,526
2,687

20,105
20,296
20,693
21,257
21,903
22,630
23,510
24,397
25,281
26,397

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

2,735
2,730
2,980
3,231
3,345
3,263
3,389
3,514
3>34
3,783
3,625
3,411
3,170
3,043
3,122
3,105
3,149
3,260
3,093
3,138
3,211
3,154
3,141
3,168
3,124
3,157
3,122
3,207
3,127
3,169

599 1,638 1,855
26,952 4,093 2,238
693 2,097 2,227
27,246 5,016 2,789
711 1,948 2,222
28,276 4,882 2,659
653 1,624 2,089
29,484 4,365 2,275
757 1,957 2,441
30,424 5,156 2,714
966 3,476 3,486
30,726 7,929 4,442
939 3,098 3,369
32,226 7,406 4,036
874 2,794 3,324
33,775 6,991 3,667
813 2,328 3,061
35,836 6,202 3,142
811 2,308 3,018
37,434 6,137 3,120
913 3,353 3,370
38,492 7,637 4,267
962 3,615 3,696
39,590 8,273 4,577
40,086 10,678 6,179 1,090 5,089 4,499
41,004 10,717 6,260 1,003 5,257 4,457
812 3,932 3,794
42,793 8,539 4,744
806 3,715 3,791
44,154 8,312 4,521
779 3,751 3,707
45,556 8,237 4,530
732 3,369 3,324
47,074 7,425 4,101
723 3,521 3,603
44,980 7,847 4,244
788 3,766 3,873
44,828 8,427 4,554
770 3,778 3,782
44,984 8,330 4,548
817 3,724 3,832
45,097 8,373 4,541
821 3,836 3,787
45,273 8,444 4,657
819 3,791 3,831
45,623 8,441 4,610
45,815 8,278 4,602
782 3,820 3,676
45,904 8,115 4,454
793 3,661 3,661
45,940 8,298 4,632
801 3,831 3,666
46,013 8,230 4,570
753 3,817 3,660
46,077 8,214 4,570
763 3,807 3,644
46,121 7,919 4,449
721 3,728 3,470
758 3,691 3,515
46,290 7,964 4,449
768 3,606 3,512
46,485 7,886 4,374
774 3,553 3,464
46,582 7,791 4,327
760 3,454 3,343
46,761 7,557 4,214
803 3,456 3,314
47,028 7,573 4,259
658 3,422 3,228
47,088 7,308 4,080
637 3,323 3,291
47,206 7,251 3,960
763 3,258 3,235
47,308 7,256 4,021
709 3,118 3,264
47,251 7,091 3,827
725 3,174 3,278
47,480 7,177 3,899
710 3,135 3,245
47,634 7,090 3,845
722 3,063 3,193
47,750 6,978 3,785

506
568
598
583
665
802
780
789
769
743
755
800
886
825
687
661
675
616
683
693
673
730
671
698
651
656
675
653
673
644

3,162
3,162
3,185
3,230
3,329
3,228
3,283
3,401
3,253
3,262
3,289
3,338

1
See footnote 5, Table B-32.
Note.—See Note, Table B-32.
Source: Department of Labor, Bureau of Labor Statistics.




Total

286

286
349
313
383
385
395
405
391
412
413

638
654
632
610
614
594
611
574
593
663
625
582

TABLE B-34.—Civilian employment by demographic characteristic, 1954-87
[Thousands of persons 16 years of age and over; monthly data seasonally adjusted]
White
Year or
month

All
civilian
workers

Black and other

Total

Males

Females

Both
sexes
16-19

Total

Black

Males

Females

Both
sexes
16-19

Total

Mates

Females

1954
1955
1956
1957
1958
1959

60,109
62,170
63,799
64,071
63,036
64,630

53,957
55,833
57,269
57,465
56,613
58,006

37,846
38,719
39,368
39,349
38,591
39,494

16,111
17,114
17,901
18,116
18,022
18,512

3,078
3,225
3,389
3,374
3,216
3,475

6,152
6,341
6,534
6,604
6,423
6,623

3,773
3,904
4,013
4,006
3,833
3,971

2,379
2,437
2,521
2,598
2,590
2,652

396
418
430
407
365
362

1960
1961
1962
1963
1964
1965
1966
1967
1968
1969

65,778
65,746
66,702
67,762
69,305
71,088
72,895
74,372
75,920
77,902

58,850
58,913
60,622
61,922
63,446
65,021
66,361
67,750
69,518

39,755
39,588
40,016
40,428
41,115
41,844
42,331
42,833
43,411
44,048

19,095
19,325
19,682
20,194
20,807
21,602
22,690
23,528
24,339
25,470

3,700
3,693
3,774
3,851
4,076
4,562
5,176
5,114
5,195
5,508

6,928
6,833
7,003
7,140
7,383
7,643
7,877
8,011
8,169
8,384

4,149
4,068
4,160
4,229
4,359
4,496
4,588
4,646
4,702
4,770

2,779
2,765
2,843
2,911
3,024
3,147
3,289
3,365
3,467
3,614

430
414
420
404
440
474
545
568
584
609

1970
1971
1972
1973
1974
1975
1976
1977
1978
1979

78,678
79,367
82,153
85,064
86,794
85,846
88,752
92,017
96,048
98,824

70,217
70,878
73,370
75,708
77,184
76,411
78,853
81,700
84,936
87,259

44,178
44,595
45,944
47,085
47,674
46,697
47,775
49,150
50,544
51,452

26,039
26,283
27,426
28,623
29,511
29,714
31,078
32,550
34,392
35,807

5,571
5,670
6,173
6,623
6,796
6,487
6,724
7,068
7,367
7,356

8,464
8,488
8,783
9,356
9,610
9.435
9,899
10,317
11,112
11,565

4,813
4,796
4,952
5,265
5,352
5,161
5,363
5,579
5,936
6,156

3,650
3,692
3,832
4,092
4,258
4,275
4,536
4,739
5,177
5,409

574
538
573
647
652
615
611
619
703
727

7,802
8,128
8,203
7,894
8,227
8,540
9,102
9,359

4,368
4,527
4,527
4,275
4,404
4,565
4,796
4,923

3,433
3,601
3,677
3,618
3,823
3,975
4,307
4,436

1980
1981
1982
1983
1984
1985
1986
1987

99,303
100,397
99,526
100,834
105,005
107,150
109,597
112,440

87,715
88,709
87,903
88,893
92,120
93,736
95,660
97,789

51,127
51,315
50,287
50,621
52,462
53,046
53,785
54,647

36,587
37,394
37,615
38,272
39,659
40,690
41,876
43,142

7,021
6,588
5,984
5,799
5,836
5,768
5,792
5,898

11,58811,688
11,624
11,941
12,885
13,414
13,937
14,652

6,059
6,083
5,983
6,166
6,629
6,845
7,107
7,459

5,529
5,606
5,641
5,775
6,256
6,569
6,830
7,192

689
637
565
543
607
666
681
742

9,313
9,355
9,189
9,375
10,119
10,501
10,814
11,309

4,798
4,794
4,637
4,753
5,124
5,270
5,428
5,661

4,515
4,561
4,552
4,622
4,995
5,231
5,386
5,648

108,904
108,524
108,853
108,961
109,037
109,671

95,136
94,775
95,020
95,109
95,098
95,735

53,787
53,559
53,569
53,632
53,481
53,758

41,349
41,216
41,451
41,477
41,617
41,977

5,687
5,778
5,837
5,787
5,788
5,799

13,792
13,761
13,855
13,839
13,901
13,930

7,076
7,027
7,080
7,067
7,111
7,121

6,716
6,734
6,775
6,772
6,790
6,809

10,720
10,694
10,786
10,828
10,880
10,829

5,403
5,377
5,422
5,432
5,487
5.446

5,317
5,317
5,364
5,396
5,393
5,383

July
Aug
Sept....
Oct
Nov
Dec

109,837
110,035
110,047
110,194
110,457
110,657

95,854
96,114
96,046
96,162
96,343
96,544

53,738
53,888
53,880
53,869
54,094
54,188

42,116
42,226
42,166
42,293
42,249
42,356

5,762
5,811
5,811
5,883
5,819
5,750

13,961
13,853
13,974
14,092
14,111
14,174

7,140
7,042
7,102
7,141
7,158
7,228

6,821
6,811
6,872
6,951
6,953
6,946

652
688
687
696
688
700
681
619
670
715
678
689

10,809
10,669
10,798
10,883
10,904
10,968

5,430
5,340
5,389
5,430
5,450
5,530

5,379
5,329
5,409
5,453
5,454
5,438

1987:Jan
Feb
Mar
Apr
May...
Jun

111,014
111,344
111,455
111,806
112,334
112,300

96,749
97,001
97,074
97,338
97,829
97,698

54,273
54,403
54,323
54,403
54,591
54,553

42,476
42,598
42,751
42,935
43,238
43,145

5,840
5,880
5,813
5,846
5,935
5,842

14,295
14,320
14,392
14,467
14,475
14,582

7,321
7,304
7,353
7,408
7,357
7,410

6,974
7,016
7,039
7,059
7,118
7,172

680
695
683
679
679
731

10,995
11,086
11,072
11,114
11,129
11,238

5,553
5,565
5,579
5,600
5,570
5,614

5,442
5,521
5,493
5,514
5,559
5,624

July
Aug....
Sept...
Oct

112,639
113,050
112,872
113,210
113,504
113,744

97,917
98,181
98,069
98,317
98,492
98,779

54,651
54,779
54,801
54,895
54,976
55,111

43,266
43,402
43,268
43,422
43,516
43,668

5,904
6,017
5,857
5,915
5,917
6,021

14,725
14,804
14,778
14,946
15,017
15,008

7,485
7,518
7,559
7,601
7,613
7,582

7,240
7,286
7,219
7,345
7,404
7,426

736
822
795
797
805
794

11,381
11,513
11,421
11,556
11,589
11,605

5,689
5,750
5,738
5,753
5,763
5,754

5,692
5,763
5,683
5,803
5,826
5,851

. ..

1986: Jan

Feb
Mar
Apr

£::
::

Nov....
Dec...

Note.—See footnote 5 and Note, Table 8-32.
Source: Department of Labor, Bureau of Labor Statistics.




287

Both
sexes
16-19
month

TABLE B-35.—Civilian unemployment by demographic characteristic, 1954-87
[Thousands of persons 16 years of age and over; monthly data seasonally adjusted]
White
Year or
month

All
civilian
workers

Total

Males

Black

Black and other

Females

Both
sexes
16-19

Total

Males

Females

Both
sexes
16-19

Total

Males

Fe-

1954
1955
1956
1957
1958
1959

3,532
2,852
2,750
2,859
4,602
3,740

2,859
2,252
2,159
2,289
3,680
2,946

1,913
1,478
1,366
1,477
2,489
1,903

946
774
793
812
1,191
1,043

423
373
382
401
541
525

673
601
591
570
923
793

431
376
345
364
610
517

242
225
246
206
313
276

79
77
95
96
138
128

1960
1961
1962
1963
1964
1965
1966
1967
1968
1969

3,852
4,714
3,911
4,070
3,786
3,366
2,875
2,975
2,817
2,832

3,065
3,743
3,052
3,208
2,999
2,691
2,255
2,338
2,226
2,260

1,988
2,398
1,915
1,976
1,779
1,556
1,241
1,208
1,142
1,137

1,077
1,345
1,137
1,232
1,220
1,135
1,014
1,130
1,084
1,123

575
669
580
708
708
705
651
635
644
660

788
971
861
863
787
678
622
638
590
571

498
599
509
496
426
360
310
300
277
267

290
372
352
367
361
318
312
338
313
304

138
159
142
176
165
171
186
203
194
193

1970
1971
1972
1973
1974
1975
1976
1977
1978
1979

4,093
5,016
4,882
4,365
5,156
7,929
7,406
6,991
6,202
6,137

3,339
4,085
3,906
3,442
4,097
6,421
5,914
5,441
4,698
4,664

1,857
2,309
2,173
1,836
2,169
3,627
3,258
2,883
2,411
2,405

1,482
1,777
1,733
1,606
1,927
2,794
2,656
2,558
2,287
2,260

871
1,011
1,021
955
1,104
1,413
1,364
1,284
1,189
1,193

754
930
977
924
1,058
1,507
1,492
1,550
1,505
1,473

380
481
486
440
544
815
779
784
731
714

374
450
491
484
514
692
713
766
774
759

235
249
288
280
318
355
355
379
394
362

906
846
965
1,369
1,334
1,393
1,330
1,319

448
395
494
741
698
698
641
636

458
451
470
629
637
695
690
683

1980
1981
1982
1983
1984
1985
1986
1987

7,637
8,273
10,678
10,717
8,539
8,312
8,237
7,425

5,884
6,343
8,241
8,128
6,372
6,191
6,140
5,501

3,345
3,580
4,846
4,859
3,600
3,426
3,433
3,132

2,540
2,762
3,395
3,270
2,772
2,765
2,708
2,369

1,291
1,374
1,534
1,387
1,116
1,074
1,070
995

1,752
1,930
2,437
2,588
2,167
2,121
2,097
1,924

922
997
1,334
1,401
1,144
1,095
1,097
969

830
933
1,104
1,187
1,022
1,026
999
955

377
388
443
441
384
394
383
353

1,553
1,731
2,142
2,272
1,914
1,864
1,840
1,684

815
891
1,167
1,213
1,003
951
946
826

738
840
975
1,059
911
913
894
858

1986: Jan
Feb....
Mar....
Apr....
May...
June...

7,847
8,427
8,330
8,373
8,444
8,441

5,799
6,346
6,223
6,205
6,304
6,290

3,159
3,446
3,449
3,438
3,547
3,515

2,640
2,900
2,774
2,767
2,757
2,775

1,015
1,096
1,010
1,119
1,088
1,115

2,053
2,082
2,121
2,171
2,146
2,198

1,085
1,105
1,102
1,111
1,115
1,137

968
977
1,019
1,060
1,031
1,061

401
388
435
429
411
418

1,822
1,827
1,859
1,887
1,864
1,913

946
953
962
952
949
971

876
874
897
935
915
942

July....
Aug....
Sept...
Oct....
Nov....
Dec...

8,278
8,115
8,298
8,230
8,214
7,919

6,198
5,984
6,178
6,148
6,147
5,930

3,490
3,320
3,514
3,472
3,498
3,416

2,708
2,664
2,664
2,676
2,649
2,514

1,049
1,070
1,093
1,059
1,105
1,027

2,046
2,100
2,136
2,063
2,069
1,989

1,105
1,095
1,129
1,100
1,074
1,020

941
1,005
1,007
963
995
969

348
379
384
335
341
344

1,798
1,848
1,868
1,844
1,819
1,738

947
945
979
967
914
861

851
903
889
877
905
877

1987:Jan
Feb....
Mar....
Apr...,
May...
June...

7,964
7,886
7,791
7,557
7,573
7,308

5,920
5,824
5,762
5,634
5,587
5,452

3,391
3,332
3,321
3,238
3,219
3,149

2,529
2,492
2,441
2,396
2,368
2,303

1,038
1,044
1,049
1,018
1,061
944

2,046
2,061
2,042
1,935
1,997
1,892

1,052
1,031
1,007
993
1,048
963

994
1,030
1,035
942
949
929

368
383
356
354
361
322

1,812
1,808
1,781
1,664
1,760
1,654

895
885
856
827
911
819

917
923
925
837
849
835

July....
Aug...,
Sept..,
Oct...,
Nov....
Dec...,

7,251
7,256
7,091
7,177
7,090
6,978

5,331
5,335
5,288
5,352
5,239
5,128

2,992
3,016
2,945
3,048
2,935
2,858

2,339
2,319
2,343
2,304
2,304
2,270

905
984
979
1,000
969
949

1,886
1,893
1,816
1,809
1,852
1,845

960
973
893
860
911
913

926
920
923
949
941
932

314
350
322
372
374
359

1,658
1,637
1,607
1,596
1,604
1,610

823
821
757
747
773
776

835
816
850
849
831
-834

Note.—See footnote 5 and Note, Table B-32.
Source: Department of Labor, Bureau of Labor Statistics.




288

TABLE B-36.—Labor force participation rate and employment/population ratio, 1948-87
[Percent; monthly data seasonally adjusted]
Employment/population ratio3

Labor force participation rate
2

Civilian

Civilian
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
1987
1986:
Jan
Feb
Mr
a
Ar
p
May
June
July
Aug
Sept
Oct
Nov
Dec
1987:
Jan
Feb
Mar
Apr

fay
June
Aug
Sept
Oct
Nov
Dec

1

Total

FeTotal Males males

Both
Black
sexes
and
16-19 White other Black
years

59.7
60.1
60.0
59 7
59.6
60 0
60.7
60 3
60.1
59.9
60.0
60 0
59.5
59.3
59 4
59.5
59.8
602
60.3
60.8
610
60.7
60.9
61.3
61.7
61.6
62.0
62.6
63.5
64.0
64.1
64.2
64.3
64 4
64.7
65.1
65.6
65.9

58.8 86.6
58.9 86.4
864
59.2 86.3
59.0 86.3
*)R9 860
58.8 85.5
V H 85 4
60.0 85.5
S9fi 84 8
59.5 84.2
59.3 83.7
S9 4 83.3
591 82 9
58.8 82.0
58.7 81.4
S8 7 810
58.9 80.7
59.2 80.4
S9R 804
59.6 80.1
60.1 79.8
60 4 79 7
fin? 79.1
60.4 78.9
60.8 78.8
61.3 78.7
61.2 77.9
61.6 77.5
62.3 77.7
63.2 77.9
63.7 77.8
63.8 77.4
63.9 77.0
64.0 76.6
64 0 764
64.4 76.4
64.8 76.3
65.3 76.3
65.6 76.2

32.7
33.1
33.9
34.6
34.7
34.4
34.6
35 7
36.9
369
37.1
37.1
37.7
381
37.9
38.3
38 7
39.3
40.3
411
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
56.0

52.5
52.2
51.8
52.2
51.3
50.2
48.3
489
50.9
49 6
47.4
46.7
47.5
46 9
46.1
45.2
44 5
45.7
48.2
484
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
54.7

58.2
58 7
59.4
59.1
58.9
58.7
58.8
588
58.3
58.2
582
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
65.8

64.0
64.2
64.9
64.4
64.8
64.3
64.5
641
63.2
63.0
631
62.9
63.0
62 8
62.2
62.1
618
fiO9
60.2
60.5
60.3
59.6
59.8
60.4
62.2
62.2
61.7
61.3
61.6
621
62.6
63.3
63.7
64.3

65 3
65.4
65.4
65 5
65.5
65.8
65 7
65.7
65.7
65 7
65 8
65.6

6 t )0
65.0
65.1
fiSl
65.2
65.4
6S4
65.3
65.4
fiM
KM
65.3

763
76.2
76.3
76 2
76.2
76.4
76 3
76.2
76.3
761
76 4
76.3

54 8
54.9
55.0
551
55.2
55.5
55 5
55.6
55.5
55 6
55 5
55.4

534
54.5
54.9
55 5
55.1
55.4
54 6
54.9
54.9
54 9
54 4
53.4

65.8
65.8
65.8
65.8
66.0
65.8
65.9
66.1
65.8
66.0
66.1
66.1

65.4
65.5
65.5
65.5
65.7
65.5
BSfi
65.7
65.5
65.7
6S7
65.7

76.4
76.4
76.2
76.2
76.3
76.0
76.0
76.3
76.0
76.1
76.1
76.1

55.5
55.7
55.7
55.8
56.1
55.9
56.1
56.2
56.0
56.2
56.3
56.4

54.3
54.7
54.3
54.2
55.2
53.6
54.0
56.3
54.4
55.1
54.8
55.5

Total
Total

Males

Females

Both
sexes
16-19
years

White

Black
and
other

Black

59.9
60.2
59.8
58.8
59.0
59.8
61.5
61.4
61.0
60.8
61.0
615
62.2
62.9
63.3
63.8

56.6
58.2
58.2
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
580
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
61.9

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
554
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
61.5

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
71.5

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
52.5

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
45.5

55 2
565
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
62.3

580
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
55.0
54.3
51.4
52.0
52.5
54.7
55.2
53.6
52.6
50.9
51.0
53.6
54.7
55.4
56.8

53.7
54.5
53.5
50.1
50.8
51.4
53.6
53.8
52.3
51.3
49.4
49 S
52.3
53.4
54.1
55.6

65 2
65.3
65.3
65 3
65.3
65.7
65 6
65.6
65.6
65 6
65 7
65.6

63 7 63 2
63.5 63.0
64.0 . 63.6
64 0 63 8
64.0 63.9
64.2 63.8
63 6 63 0
63.2 62.5
63.7 63.2
63.8 63 4
63 7 63 2
63.5 63.1

610
60.7
60.8
60 9
60.8
61.1
61.1
61.2
61.2
61.2
613
61.3

60 6
60.4
60.5
60 5
60.5
60.8
60 8
60.9
60.8
60.8
60.9
61.0

713
70.9
70.9
70.9
70.8
71.0
70.9
71.0
70.9
70.8
71.1
71.1

51.0
50.8
51.0
51.0
51.2
51.5
51.6
51.7
51.6
51.8
51.7
51.7

43.7
44.3
44.9
44.8
44.8
44.9
44.7
44.9
44.7
45.3
44.6
44.1

61.5
61.2
61.3
61.3
61.3
61.6
61.6
61.8
61.7
61.7
61.8
61.8

55.4
55.2
55.5
55.3
55.4
55.4
55.4
54.9
55.3
55.6
55.6
55.7

54 0
53.8
54.2
54 4
54.6
54.2
54 0
53.3
53.8
54?
54?
54.4

65.7
65.7
65.7
65.7
65.9
65.7
65.7
65.9
65.7
65.9
fi5 9
66.0

64.0
64.1
64.2
63.9
64.0
63.9
64.3
64.5
64.0
64.5
64 8
64.7

63.4
63.8
63.5
63.0
63.5
63.4
64.0
64.5
63.8
64.3
64.4
64.4

61.4
61.5
61.5
61.7
61.9
61.8
61.9
62.1
62.0
62.1
62.2
62.3

61.1
61.2
61.2
61.3
61.5
61.5
61.6
61.8
61.6
61.8
61.9
61.9

71.2
71.3
71.2
71.3
71.4
71.3
71.5
71.6
71.6
71.7
71.7
71.7

51.8
52.0
52.1
52.3
52.6
52.5
52.6
52.8
52.6
52.8
52.9
53.1

44.7
44.9
44.6
44.8
45.4
45.0
45.5
47.2
45.5
45.7
45.7
46.6

61.9
62.0
62.0
62.1
62.4
62.3
62.3
62.5
62.4
62.5
62.6
62.7

56.0
56.0
56.2
56.4
56.3
56.6
57.0
57.2
57.0
57.6
57.7
57.6

54.5
54.8
54.7
54.8
54.8
55.2
55.9
56.4
55.9
56.5
56.6
56.6

1

Labor force including resident Armed Forces as percent of noninstitutional population including resident Armed Forces.
Civilian labor force as percent of civilian noninstitutional population in croup specified.
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-32.
Source: Department of Labor, Bureau of Labor Statistics.
2
3




289

TABLE B-37.—Civilian labor force participation rate by demographic characteristic, 1954-87
[Percent;1 monthly data seasonally adjusted]

Black and other or black

White
Year or month

All
civilian
work- Total
ers
Total

16-19
years

Males

Males

Females
20
years Total
and
over

16-19
years

20
years Total Total
and
over

16-19
years

Females
20
years Total
and
over

16-19
years

Black and other
1954
1955
1956
1957
1958
1959

58.8
59.3
60.0
59.6
59.5
59.3

58.2
58.7
59.4
59.1
58.9
58.7

85.6
85.4
85.6
84.8
84.3
83.8

57.6
58.6
60.4
59.2
56.5
55.9

87.8
87.5
87.6
86.9
86.6
86.3

33.3
34.5
35.7
35.7
35.8
36.0

40.6
40.7
43.1
42.2
40.1
39.6

32.7
34.0
35.1
35.2
35.5
35.6

64.0
64.2
64.9
64.4
64.8
64.3

85.2
85.1
85.1
84.2
84.1
83.4

61.2
60.8
61.5
58.8
57.3
55.5

87.1
87.8
87.8
87.0
87.1
86.7

46.1
46.1
47.3
47.1
48.0
47.7

31.0
32.7
36,3
33.2
31.9
28.2

1960
1961
1962
1963
1964
1965
1966
1967
1968
1969

59.4
59.3
58.8
58.7
58.7
58.9
59.2
59.6
59.6
60.1

58.8
58.8
58.3
58.2
58.2
58.4
58.7
59.2
59.3
59.9

83.4
83.0
82.1
81.5
81.1
80.8
80.6
80.6
80.4
80.2

55.9
54.5
53.8
53.1
52.7
54.1
55.9
56.3
55.9
56.8

86.0
85.7
84.9
84.4
84.2
83.9
83.6
83.5
83.2
83.0

36.5
36.9
36.7
37.2
37.5
38.1
39.2
40.1
40.7
41.8

40.3
40.6
39.8
38.7
37.8
39.2
42.6
42.5
43.0
44.6

36.2
36.6
36.5
37.0
37.5
38.0
38.8
39.8
40.4
41.5

64.5
64.1
63.2
63.0
63.1
62.9
63.0
62.8
62.2
62.1

83.0
82.2
80.8
80.2
80.1
79.6
79.0
78.5
77.7
76.9

57.6
55.8
53.5
51.5
49.9
51.3
51.4
51.1
49.7
49.6

86.2
85.5
84.2
83.9
84.1
83.7
83.3
82.9
82.2
81.4

48.2
48.3
48.0
48.1
48.6
48.6
49.4
49.5
49.3
49.8

32.9
32.8
33.1
32.6
31.7
29.5
33.5
35.2
34.8
34.6

1970
1971
1972

60.4
60.2
60.4

60.2
60.1
60.4

80.0
79.6
79.6

57.5
57.9
60.1

82.8
82.3
82.0

42.6
42.6
43.2

45.6
45.4
48.1

42.2
42.3
42.7

61.8
60.9
60.2

76.5
74.9
73.9

47.4
44.7
46.0

81.4
80.0
78.6

49.5
49.2
48.8

34.1
31.2
32.3

1972
1973
1974
1975
1976
1977
1978
1979

60.4
60.8
61.3
61.2
61.6
62.3
63.2
63.7

60.4
60.8
61.4
61.5
61.8
62.5
63.3
63.9

79.6
79.4
79.4
78.7
78.4
78.5
78.6
78.6

60.1
62.0
62.9
61.9
62.3
64.0
65.0
64.8

82.0
81.6
81.4
80.7
80.3
80.2
80.1
80.1

43.2
44.1
45.2
45.9
46.9
48.0
49.4
50.5

48.1
50.1
51.7
51.5
52.8
54.5
56.7
57.4

42.7
43.5
44.4
45.3
46.2
47.3
48.7
49.8

59.9
60.2
59.8
58.8
59.0
59.8
61.5
61.4

73.6
73.4
72.9
70.9
70.0
70.6
71.5
71.3

46.3
45.7
46.7
42.6
41.3
43.2
44.9
43.6

78.5
78.4
77.6
76.0
75.4
75.6
76.2
76.3

48.7
49.3
49.0
48.8
49.8
50.8
53.1
53.1

32.2
34.2
33.4
34.2
32.9
32.9
37.3
36.8

1980
1981
1982
1983...
1984 ...
1985
1986
1987

63.8
63.9
64.0
64.0
64.4
64.8
65.3
65.6

64.1
64.3
64.3
64.3
64.6
65.0
65.5
65.8

78.2
77.9
77.4
77.1
77.1
77.0
76.9
76.8

63.7
62.4
60.0
59.4
59.0
59.7
59.3
59.0

79.8 "51.2
79.5 51.9
79.2 52.4
78.9 52.7
78.7 53.3
78.5 54.1
78.5 55.0
78.4 55.7

56.2
55.4
55.0
54.5
55.4
55.2
56.3
56.5

50.6
51.5
52.2
52.5
53.1
54.0
54.9
55.6

61.0
60.8
61.0
61.5
62.2
62.9
63.3
63.8

70.3
70.0
70.1
70.6
70.8
70.8
71.2
71.1

43.2
41.6
39.8
39.9
41.7
44.6
43.7
43.6

75.1
74.5
74.7
75.2
74.8
74.4
74.8
74.7

53.1
53.5
53.7
54.2
55.2
56.5
56.9
58.0

34.9
34.0
33.5
33.0
35.0
37.9
39.1
39.6

1986:Jan
Feb

65.0
65.0
65.1
65.1
65.2
65.4

65.2
65.3
65.3
65.3
65.3
65.7

76.9
76.9
76.9
76.9
76.8
77.0

57.6
59.1
58.4
59.6
59.6
60.0

78.6
78.5
78.5
78.4
78.3
78.5

54.5
54.6
54.7
54.7
54.8
55.2

55.4
56.8
57.0
56.7
56.2
56.4

54.4
54.4
54.5
54.5
54.7
55.1

63.2
63.0
63.6
63.8
63.9
63.8

71.5
71.1
71.7
71.6
72.0
71.7

43.7
45.4
45.8
45.8
48.5
44.4

75.2
74.6
75.1
75.0
75.2
75.3

56.5
56.5
57.0
57.6
57.3
57.4

39.6
38.6
41.9
42.2
38.5
42.6

65.4
65.3
65.4
65.4
65.4
65.3

65.6
65.6
65.6
65.6
65.7
65.6

76.9
76.8
77.0
76.9
77.1
77.1

59.3
59.8
60.4
59.8
60.0
57.7

78.4
78.3
78.5
78.4
78.6
78.8

55.3
55.3
55.2
55.3
55.2
55.1

55.4
56.0
55.8
56.9
56.3
56.3

55.3
55.3
55.2
55.2
55.1
55.0

63.0
62.5
63.2
63.4
63.2
63.1

71.1
70.0
70.9
71.1
70.6
70.8

43.4
40.3
42.7
42.4
39.8
41.7

74.8
74.0
74.6
74.9
74.7
74.6

56.4
56.4
56.9
57.1
57.3
56.8

36.2
36.0
39.5
39.2
38.2
37.6

65.4
65.5
65.5
65.5
65.7
65.5

65.7
65.7
65.7
65.7
65.9
65.7

77.0
77.1
76.9
76.8
77.0
76.8

59.3
60.3
59.0
58.5
59.3
57.6

78.6
78.5
78.4
78.4
78.5
78.4

55.2
55.3
55.4
55.5
55.8
55.6

56.3
55.9
56.0
56.5
57,8
55.8

55.2
55.3
55.4
55.5
55.7
55.6

63.4
63.8
63.5
63.0
63.5
63.4

71.3
71.2
70.9
70.7
71.1
70.5

43.7
43.0
41.5
42.1
41.7
40.3

74.9
74.9
74.8
74.4
75.0
74.5

57.1
57.8
57.5
56.8
57.2
57.6

35.7
40.2
38.7
37.2
38.4
38.8

65.6
65.7
65.5
65.7
65.7
65.7

65.7
65.9
65.7
65.9
65.9
66.0

76.6
76.8
76.7
76.9
76.8
76.8

57.1 78.3
59.9 78.2
58.6 78.2
59.3 .78.4
58.7 78.3
60.1 78.2

55.7
55.9
55.7
55.8
55.9
56.0

56.7
57.1
55.7
56.5
56.7
57.0

55.7
55.8
55.7
55.7
55.8
55.9

64.0
64.5
63.8
64.3
64.4
64.4

71.2
71.8
70.9
70.9
71.1
71.0

42.2
48.4
43.3
44.5
45.8
45.6

75.1
74.9
74.5
74.3
74.5
74.3

58.1
58.5
58.0
59.0
58.9
59.1

37.4
41.5
42.3
43.1
40.8
41.8

Black

Mar

fezi
June
July
Aug
Sept
Oct
Nov

Dec

1987:Jan
Feb

Mar

Jay"."!'.'.."'

June
July
Aug
Sept
Oct

Nov
Dec

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-32.
Source: Department of Labor, Bureau of Labor Statistics.




290

TABLE B-38,—Civilian employment/population ratio by demographic characteristic, 1954-87
[Percent1; monthly data seasonally adjusted]
White

Year or month

A!)
civilian
workers

Black and other or black

Males

Females

Total

16-19
years

20
years
and
over

Total

Males

Total

16-19
years

20
years
and
over

Total
Total

16-19
years

Females
20
years
and
over

Total

16-19
years

20
years
and
over

Black and other

1954
1955
1956
1957
1958
1959

55.5
56.7
57.5
57.1
55.4
56.0

55.2
56.5
57.3
56.8
55.3
55.9

81.5
82.2
82.7
81.8
79.2
79.9

49.9
52.0
54.1
52.4
47.6
48.1

84.0
84.7
85.0
84.1
81.8
82.8

31.4
33.0
34.2
34.2
33.6
34.0

36.4
37.0
38.9
38.2
35.0
34.8

31.1
32.7
33.8
33.9
33.5
34.0

58.0
58.7
59.5
59.3
56.7
57.5

76.5
77.6
78.4
77.2
72.5
73.8

52.4
52.7
52.2
48.0
42.0
41.4

79.2
80.4
81.3
80.5
76.0
77.6

41.9
42.2
43.0
43.7
42.8
43.2

24.7
26.4
28.0
26.5
22.8
20.3

43.7
43.9
44.7
45.5
45.0
45.7

1960
1961
1962
1963
1964
1965
1966
1967
1969

56.1
55.4
55.5
55.4
55.7
56.2
56.9
57.3
57.5
58.0

55.9
55.3
55.4
55.3
55.5
56.0
56.8
57.2
57.4
58.0

79.4
78.2
78.4
77.7
77.8
77.9
78.3
78.4
78.3
78.2

48.1
45.9
46.4
44.7
45.0
47.1
50.1
50.2
50.3
51.1

82.4
81.4
81.5
81.1
81.3
81.5
81.7
81.7
81.6
81.4

34.6
34.5
34.7
35.0
35.5
36.2
37.5
38.3
38.9
40.1

35.1
34.6
34.8
32.9
32.2
33.7
37.5
37.7
37.8
39.5

34.5
34.5
34.7
35.2
35.8
36.5
37.5
38.3
39.1
40.1

57.9
56.2
56.3
56.2
57.0
57.8
58.4
58.2
58.0
58.1

74.1
71.7
72.0
71.8
72.9
73.7
74.0
73.8
73.3
72.8

43.8
41.0
41.7
37.4
37.8
39.4
40.5
38.8
38.7
39.0

77.9
75.5
75.7
76.2
77.7
78.7
79.2
79.4
78.9
78.4

43.6
42.6
42.7
42.7
43.4
44.1
45.1
45.0
45.2
45.9

24.8
23.2
23.1
21.3
21.8
20.2
23.1
24.8
24.7
25.1

45.8
44.8
44.9
45.2
46.1
47.3
48.2
47.9
48.2
48.9

1970...
1971...
1972...

57.4
56.6
57.0

57.5
56.8
57.4

76.8
75.7
76.0

49.6
49.2
51.5

80.1
79.0
79.0

40.3
39.9
40.7

39.5
38.6
41.3

40.4
40.1
40.6

56.8
54.9
54.1

70.9
68.1
67.3

35.5
31.8
32.4

76.8
74.2
73.2

44.9
43.9
43.3

22.4
20.2
19.9

48.2
47.3
46.7

1972
1973
1974
1975
1976
1977
1978
1979

57.0
57.8
57.8
56.1
56.8
57.9
59.3
59.9

57.4
58.2
58.3
56.7
57.5
58.6
60.0
60.6

76.0
76.5
75.9
73.0
73.4
74.1
75.0
75.1

51.5
54.3
54.4
50.6
51.5
54.4
56.3
55.7

79.0
79.2
78.6
75.7
76.0
76.5
77.2
77.3

40.7
41.8
42.4
42.0
43.2
44.5
46.3
47.5

41.3
43.6
44.3
42.5
44.2
45.9
48.5
49.4

40.6
41.6
42.2
41.9
43.1
44.4
46.1
47.3

53.7
54.5
53.5
50.1
50.8
51.4
53.6
53.8

66.8
67.5
65.8
60.6
60.6
61.4
63.3
63.4

31.6
32.8
31.4
26.3
25.8
26.4
28.5
28.7

73.0
73.7
71.9
66.5
66.8
67.5
69.1
69.1

43.0
43.8
43.5
41.6
42.8
43.3
45.8
46.0

19.2
22.0
20,9
20.2
19.2
18.5
22.1
22.4

46.5
47.2
46.9
44.9
46.4
47.0
49.3
49.3

1980
1981
1982
1983
1984
1985
1987

59.2
59.0
57.8
57.9
59.5
60.1
60.7
61.5

60.0
60.0
58.8
58.9
60.5
61.0
61.5
62.3

73.4
72.8
70.6
70.4
72.1
72.3
72.3
72.7

53.4
51.3
47.0
47.4
49.1
49.9
49.6
49.9

75.6
75,1
73.0
72.6
74.3
74.3
74.3
74.7

47.8
48.3
48.1
48.5
49.8
50.7
51.7
52.8

47.9
46.2
44.6
44.5
47.0
47.1
47.9
49.0

47.8
48.5
48.4
48.9
50.0
51.0
52.0
53.1

52.3
51.3
49.4
49.5
52.3
53.4
54.1
55.6

60,4
59.1
56.0
56.3
59.2
60.0
60.6
62.0

27.0
24.6
20.3
20.4
23.9
26.3
26.5
28.5

65.8
64.5
61.4
61.6
64.1
64.6
65.1
66.4

45.7
45.1
44.2
44.1
46.7
48.1
48.8
50.3

21.0
19.7
17.7
17.0
20.1
23.1
23.8
25.8

49.1
48.5
47.5
47.4
49.8
50.9
51.6
53.0

1986:Jan
Feb
Mar...,
Apr
May....
June..,

60.6
60.4
60.5
60.5
60.5
60.8

61.5
61.2
61.3
61.3
61.3
61.6

72.6
72.3
72.2
72.2
72.0
72.3

48.9
49.3
49.3
49.6
49.6
49.6

74.7
74.3
74.2
74.2
73.9
74.3

512
51.0
51.3
51.3
51.4
51.8

46.9
48.1
49.1
47.8
47.9
48.1

51.6
51.3
51.5
51.5
51.7
52.1

54.0
53.8
54.2
54.4
54.6
54.2

60.8
60.4
60.9
60.9
61.4
60.8

25.6
27.7
26.4
27.4
29.6
26.8

65.5
64.8
65.5
65.3
65.6
65.4

48.5
48.5
48.9
49.1
49.0
48.8

23.2
23.5
24.5
24.3
23.2
25.6

51.4
51.2
51.5
51.8
51.8
51.4

July
Aug....
Sept...

60.8
60.9
60.8
60.8
60.9
61.0

61.6
61.8
61.7
61.7
61.8
61.8

72.2
72.4
72.3
72.2
72.4
72.5

49.8
49.9
50.3
50.4
50.2
48.6

74.2
74.3
74.2
74.1
74.4
74.6

52.0
52.1
51.9
52.1
52.0
52.0

47.2
47.9
47.4
48.5
47.6
48.2

52.3
52.4
52.3
52.3
52.3
52.4

54.0
53.3
53.8
54.2
54.2
54.4

60.6
59.5
60.0
60.3
60.4
61.2

25.6
24.0
26.0
26.1
25.7
26.6.

65.2
64.2
64.5
64.9
65.1
65.8

48.7
48.2
48.9
49.2
49.1
48.9

23.0
20.3
23.7
26.2
24.2
23.7

51.5
51.3
51.6
51.7
51.8
51.6

1987:Jan
Feb
Mar...
Apr....
May...
June..

61.1
61.2
61.2
61.3
61.5
61.5

61.9
62.0
62.0
62.1
62.4
62.3

72.5
72.6
72.4
72.5
72.7
72.6

49.7
50.7
49.1
48.9
49.2
49.1

74.5
74.5
74.5
74.5
74.7
74.6

52.1
52.3
52.4
52.6
52.9
52.8

48.4
48.0
48.3
49.0
50.1
48.6

52.4
52.6
52.7
52.9
53.1
53.1

54.5
54.8
54.7
54.8
54.8
55.2

61.4
61.4
61.4
61.6
61.1
61.5

27.7
26.7
26.5
26.2
25.8
27.7

65.8
66.0
66.1
66.3
65.8
66.0

48.9
49.5
49.2
49.3
49.6
50.1

20.6
24.9
24.0
23.7
24.3
25.0

51.9
52.2
51.9
52.1
52.4
52.9

July....
Aug...
Sept..
Oct....
Nov....
Dec...

61.6
61.8
61.6
61.8
61.9
61.9

62.3
62.5
62.4
62.5
62.6
62.7

72.6
72.8
72.7
72.8
72.9
73.0

49.4
50.8
49.8
50.3
50.0
51,1

74.7
74.7
74.7
74.8
74.9
74.9

52.9
53.0
52.8
53.0
53.1
53.2

49.3
49.8
48.2
48.7
49.2
50.0

53.2
53.3
53.2
53.3
53.4
53.5

55.9
56.4
55.9
56.5
56.6
56.6

62.2
62.9
62.6
62.7
62.7
62.5

28.6
32.1
29.6
30.1
31.1
30.4

66.7
66.9
67.0
67.0
66.9
66.8

50.7
51.2
50.5
51.5
51.6
51.7

25.0
30.2
29.6
27.9
26.2
27.9

53.5
53.5
52.7
54.0
54.3
54.3

1968

Black

Oct

Nov
Dec

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-32.
Source: Department of Labor, Bureau of Labor Statistics.




291

TABLE B-39.—Unemployment rate, 1948-87
[Percent; monthly data seasonally adjusted]

Year or
month

Unemployment
UnemployMales
Females
ment
All
rate, civil20
20
all
ian
1616work- work- Total 19 years Total 19 years
and
and
ers » ers
years over
years

rate, civilian workers 2
Both
sexes
1619
years

3.8
5.9

9.8
14.3

8.3
12.3

9.2
13.4

Black
White and Black
other

Experienced
wage
and
salary
workers

Married
men,
spouse
present 3

5.9
8.9

4.3
6.8

3.5

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
4.8
4.4
4.6
7.3
5.7

4.6
1.5
1.4
17
4.0
2.6
2.3
2.8
5.1
3.6

57
6.8
5.6
5.6
5.0
4.3
3.5
3.6
3.4
3.3

37
4.6
3.6
3.4
2.8
2.4
1.9
1.8
1.6
1.5

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

12.7
8.1
8.9
7.9
13.5
11.6
11.1
12.4
17.1
15.3

11.4
8.3
8.0
7.2
11.4
10.2
11.2
10.6
14.3
13.5

12.2
8.2
8.5
7.6
12.6
11.0
11.1
11.6
15.9
14.6

3.5
5.6
4.9
3.1
2.8
2.7
5.0
3.9
3.6
3.8
6.1
4.8

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

15.3
17.1
14.7
17.2
15.8
14.1
11.7
12.3
11.6
11.4

13.9
16.3
14.6
17.2
16.6
15.7
14.1
13.5
14.0
13.3

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

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

15.0
16.6
15.9
13.9
15.6
20.1
19.2
17.3
15.8
15.9

15.6
17.2
16.7
15.3
16.6
19.7
18.7
18.3
17.1
16.4

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
9.0
9.9
13.8
13.1
13.1
11.9
11.3

10.4
9.4
10.5
14.8
14.0
14.0
12.8
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
27
5.1
4.2
3.6
2.8
2.8

1980
1981
1982
1983
1984
1985
1986
1987

7.0
7.5
9.5
9.5
7.4
7.1
6.9
6.1

7.1
7.6
9.7
9.6
7.5
7.2
7.0
6.2

18.3
20.1
24.4
23.3
19.6
19.5
19.0
17.8

17.2
19.0
21.9
21.3
18.0
17.6
17.6
15.9

17.8
19.6
23.2
22.4
18.9
18.6
18.3
16.9

6.3
6.7
8.6
8.4
6.5
6.2
6.0
5.3

13.1
14.2
17.3
17.8
14.4
13.7
13.1
11.6

14.3
15.6
18.9
19.5
15.9
15.1
14.5
13.0

6.9
7.3
9.3
9.2
7.1
6.8
6.6
5.8

4.2
4.3
6.5
6.5
4.6
4.3
4.4
3.9

1986: Jan....
Feb....
Mar...
Apr....
May...
June..

6.6
7.1
7.0
7.0
7.1
7.0

6.7
7.2
7.1
7.1
7.2
7.1

18.3
19.4
18.9
19.7
19.7
19.7

18.1
18.1
17.3
18.8
17.6
18.1

18.2
18.8
18.1
19.2
18.7
18.9

57
6.3
6.1
6.1
6.2
6.2

13.0
13.1
13.3
13.6
13.4
13.6

14.5
14.6
14.7
14.8
14.6
15.0

6.3
67
67
67
6.8
6.6

4.3
4.4
4.5
4.2
4.5
4.5

July...
Aug...
Sept..
Oct....
Nov...
Dec...

6.9
6.8
6.9
6.8
6.8
6.6

7.0
6.9
7.0
6.9
6.9
6.7

18.9
19.1
19.3
18.3
18.5
18.2

17.2
17.2
17.8
16.9
17.7
16.9

18.1
18.2
18.5
17.6
18.1
17.5

6.1
5.9
6.0
6.0
6.0
5.8

12.8
13.2
13.3
12.8
12.8
12.3

14.3
14.8
14.7
14.5
14.3
137

6.6
6.5
6.5
6.6
6.5
6.3

4.4
4.2
4.3
4.5
4.4
4.3

1987: Jan....
Feb....
Mar...

6.6
6.5
6.4
6.2
6.2
6.0

6.7
6.6
6.5
6.3
6.3
6.1

18.5
18.5
19.0
18.7
19.6
16.4

16.8
17.1
16.6
15.9
15.6
15.5

17.7
17.9
17.8
17.3
17.6
16.0

5.8
5.7
5.6
5.5
5.4
5.3

12.5
12.6
12.4
11.8
12.1
11.5

14.1
14.0
13.9
13.0
13.7
12.8

6.3
6.2
6.1
5.9
5.9
5.8

4.2
4.1
4.1
4.1
4.0
4.0

6.0
5.9
5.8
5.9
5.8
5.7

6.0
6.0
5.9
6.0
5.9
5.8

15.9
17.8
17.3
17.4
17.2
17.2

15.7
14.4
15.4
16.9
16.0
14.8

15.8
16.2
16.4
17.2
16.6
16.1

5.2
5.2
5.1
5.2
5.1
4.9

11.4
11.3
10.9
10.8
11.0
10.9

12.7
12.4
12.3
12.1
12.2
12.2

5.8
57
5.5
5.5
5.5
5.4

3.8
37
37
3.7
3.5
3.4

1948..
1949..

May"!!
JuneJuly...
Aug...
Sept..
Oct....
Nov...
Dec...
1

Unemployed as percent of labor force including resident Armed Forces.
Unemployed as 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-32.
Source: Department of Labor, Bureau of Labor Statistics.
2
3




292

TABLE B-40.—Civilian unemployment rate by demographic characteristic, 1948-87
[Percent;l monthly data seasonally adjusted]
Black and other or blaclt

White

Year or month

All
civilian
work- Total
Total
ers

Females

Males

16-19
years

20
years
and
over

Total 16-19
years

•ernaies

Males
20
years
and
over

Total
Total

16-19
years

20
years
and
over

Total

16-19
years

20
years
and
over

Black and other
1948
1949

3.8
59

3.5
56

3.4
56

3.8
57

5.9
89

5.8

96

6.1

1950
1951
1952
1953
1954
1955
1956
1957
1958
1959

5.3
3.3

4.9
3.1

4.7
2.6

9.0
53

9.4
4.9

5.0
39
3.6
38
6.1
4.8

4.8
3.7
3.4
3.6
6.1
4.6

13.4
113
10.5
115
15.7
14.0

4.4
3.3
3.0
3.2
5.5
4.1

84
6.1
5.7
4.1

5.5
4.4
4.1
4.3
6.8
5.5

53
4.2
3.3
3.1
5.5
43
4.2
43
6.2
5.3

10.4
9.1
9.7
9.5
12.7
12.0

5.1
3.9
3.7
3.8
5.6
4.7

9.9
8.7
8.3
7.9
12.6
10.7

10.3
8.8
7.9
8.3
13.7
11.5

14.4
134
15.0
18 4
26.8
25.2

9.9
84
7.4
76
12.7
10.5

9.2
8.5
8.9
7.3
10.8
9.4

20.6
19 2
22.8
20 2
28.4
27.7

8.4
77
7.8
64
9.5
8.3

1960
1961
1962
1963
1964
1965
1966
1967
1968
1969

5.5
6.7
5.5
5.7
5.2
4.5
3.8
3.8
36
3.5

5.0

60
4.9
5.0
4.6
4.1
34
3.4
32
3.1

4.8
5.7
4.6
4.7
4.1
3.6
2.8
2.7
26
2.5

14.0
15.7
13.7
15.9
14.7
12.9
10 5
10.7
101
10.0

4.2
5.1
4.0
3.9
3.4
2.9
2.2
2.1
20
1.9

5.3
6.5
5.5
5.8
5.5
5.0
43
4.6
43
4.2

12.7
14.8
12.8
15.1
14.9
14.0
12.1
11.5
12.1
11.5

4.6
5.7
4.7
4.8
4.6
4.0
3.3
3.8
3.4
3.4

10.2
12.4
10.9
10.8
9.6
8.1
7.3
7.4
6.7
6.4

10.7
12.8
10.9
10.5
8.9
7.4
61
6.0
5.6
5.3

24.0
26 8
22.0
27.3
24.3
23.3
21.3
23.9
22.1
21.4

9.6
117
10.0
9.2
7.7
6.0
4.9
4.3
3.9
3.7

9.4
11.9
11.0
11.2
10.7
9.2
8.7
9.1
8.3
7.8

24.8
29.2
30.2
34.7
31.6
31.7
31.3
29.6
28.7
27.6

8.3
10 6
9.6
9.4
9.0
7.5
66
7.1
63
5.8

1970
1971
1972

4.9
59
5.6

4.5
54
5.1

4.0
49
4.5

13.7
151
14.2

3.2
40
3.6

5.4
63
5.9

13.4
151
14.2

4.4
5.3
4.9

8.2
99
10.0

7.3
9.1

25.0
28 8
29.7

5.6
7.3

9.3
10.9
11.4

34.5
35.4
38.4

6.9
8.7
8.8

1972
1973
1974
1975
1976
1977
1978
1979

5.6
4.9
5.6
85
7.7
71
6.1
5.8

45
3.8
4.4
72
6.4
55
4.6
4.5

14 2
12.3
13.5
183
17.3
15 0
13.5
13.9

36
3.0
3.5
62
5.4
47
3.7
3.6

4.9
4.3
5.1
75
6.8
6.2
5.2
5.0

10.4
9.4
10.5
14 8
14.0
140
12.8
12.3

93
8.0
9.8
14.8
13.7
13.3
11.8
11.4

31.7
27.8
33.1
38.1
37.5
39.2
36.7
34.2

6.0
7.4
12.5
11.4
10.7
9.3
9.3

11.8
11.1
11.3
14.8
14.3
14.9
13.8
13.3

40.5
36.1
37.4
41.0
41.6
43.4
40.8
39.1

9(1
8.6
8.8
1??
11.7

7.1
76
9.7
9.6
75
7.2
7.0
6.2

6.1

65
8.8
8.8
64
6.1
6.0
5.4

16.2
17 9
21.7
20.2
168
16.5
16.3
15.5

5.3
56
7.8
7.9
57
5.4
5.3
4.8

59
5.3
6.1
86
7.9
73
6.2
5.9
6.5
69
8.3
7.9
65
6.4
6.1
5.2

14 2
13.0
14.5
17 4
16.4
15 9
14.4
14.0

1980
1981
1982
1983
1984
1985
1986
1987

51
4.3
5.0
78
7.0
62
5.2
5.1
6.3
67
8.6
8.4
65
6.2
6.0
5.3

14.8
16 6
19.0
18.3
15 2
14.8
14.9
13.4

5.6
59
7.3
6.9
58
5.7
5.4
4.6

14.3
156
18.9
19.5
15 9
15.1
14.5
13.0

14.5
15 7
20.1
20.3
16.4
15.3
14.8
12.7

37.5
40 7
48.9
48.8
42 7
41.0
39.3
34.4

12.4
13.5
17.8
18.1
14.3
13.2
12.9
11.1

14.0
15.6
17.6
18.6
15.4
14.9
14.2
13.2

39.8
42.2
47.1
48.2
42.6
39.2
39.2
34.9

11.9
114
15.4
16.5

1986- Jan
Feb

6.7
7.2
71
7.1
7.2
7.1

5.7
6.3
61
6.1
6.2
6.2

5.5
6.0
60
6.0
fi?
6.1

15.1
16.5
15 6
16.8
16.8
17.3

4.9
5.4
5.4
5.3
5.5
5.4

6.0
6.6
63
6.3
6.2
6.2

15.2
15.4
13.9
15.6
14.8
14.8

5.3
5.9
5.6
5.5
5.5
5.5

14.5
14.6
14.7
14.8
14.6
15.0

14.9
15.1
15.1
14.9
147
15.1

41.3
39.1
42.5
40.2
39.0
39.6

12.9
13.1
12.8
12.9
12.7
13.2

14.1
14.1
14.3
14.8
14.5
14,9

41.4
39.2
41.4
42.5
39.7
39.8

12.1

7.0

61
59
60
6.0
6.0
5.8

6.1
58
61
6.1
6.1
5.9

16 0

6.0
59
59
6.0
5.9
5.6

14.8
14 5
14 9
14.7
15.4
14.5

5.4

14.3
14.8
14 7
14.5
14.3
13.7

14.9
15.0
15.4
15.1
14.4
13.5

41.0
40.4
39.2
38.3
35.5
36.2

12.8
13.2
13.6
13.4
12.9
11.8

13.7
14.5
14.1
13.9
14,2
13.9

36.5
43.7

16 6
15.7
16.4
15.8

5.4
51
54
5.4
5.4
5.3

1?1
12 5
1??
12.6

36.5
37.1

12.3

58
57
56
5.5
5.4
5.3

59
58
5.8
5.6
5.6
5.5

161
16 0
16.8
16.3
17.0
14.8

52
51
5.0
4.9
4.8
4.9

56
55
5.4
5.3
5.2
5.1

14.0

5.0

14.1
14 0
13.9
13.0
13.7
12.8

13.9
13.7

36.5
37.9
36.1
37.8
38.3
31.4

12.1
11.9
11.6
11.0
12.3
11.4

14.4
14.3
14.4
13.2
13.2
12.9

42.3
38.0
38.0
36.3
36.6
35.4

12 6
12 7
11.6
11.6
11.3

52
52
5.1
52
5.1
4.9

5.2
52
5.1
5.3
5.1
4.9

13.5

4.7
46
4.4
4.6
4.4
4.3

5.1
51
5.1
5.0
5.0
4.9

32.4
33.7
31.5
32.5
32.2
33.5

11.2
10.7
10.1

12.8
12.4

9.8

12.8
12.5
12.5

33.1
27.1
30.0
35,?
35.8
33.4

3.0
2.9

2.8
2.7

2.5
2.5

5,4
4,5

79

4.8

8.9

6.9

Black

Mar

JfayZZZZ
June

July
Aug
Sept

Oct

69
70

Nov
Dec

6.9
6.9
6.7

1987-Jan

67

Feb

Mar....
Apr
May
June
July

66
6.5
6.3
6.3
6.1
6.0

Oct

60
5.9
6.0

Nov
Dec

5.9
5.8

SeDt

165

152

15.1
15.1
14.8
14.9

141

13.7
13.3
13.3
13.0
13.1
12.9
13.4
13.8
13.3
12.3

1

Unemployed as percent of civilian labor force in group specified.
Note.—See footnote 5 and Note, Table B-32.
Source: Department of Labor, Bureau of Labor Statistics.




293

5.2
5.2
5.2
5.1
4.9

4.8
4.7
4.6
4.5
4.4
4.5

4.4
4.5
4.3
4.4
4.4

12.7
12.4
12.3
12.1
12.2
12.2

113
12.9
14.1
12.7
12 5

117
115

11.8
11.9

7.0

10.2
10.1

130

11?
10.9

13.1
11.6
1??
12.7
12 9

114
113
11.7

in

10.8
10.9

TABLE B-41.—Unemployment by duration and reason, 1947-87
[Monthly data seasonally adjusted 1 ]
Duration of unemployment
Year or month

Unemployment

Less
than 5
weeks

5-14
weeks

15-26

27
weeks
and
over

Thousands of persons 16
years of age and over

Reason for unemployment

Average
(mean)
duration

Weeks

1947
1948
1949

2,311
2,276
3,637

1,210
1,300
1,756

704
669
1,194

234
193
428

164
116
256

1950
1951
1952
1953 ..
.
1954 I..
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967 2
1968
1969
1970
1971
1972
1973
1974
1975 ..
..
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1986:Jan
Feb....
Mar....

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

1,450
1,177
1,135
1,142
1,605
1,335
1,412
1,408
1,753
1,585

425
166
148
132
495
366
301
321
785
469

357
137
84
78
317
336
232
239
667
571

503
728
534
535
491
404
287
271
256
242

454
804
585
553
482
351
239
177
156
133

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

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
7,425
7,847
8,427
8,330
8,373
8,444
8,441

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
3,246

1,055
574
516
482
U16
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

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
943

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
1,040

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
14.5

1,005
1,139
1,082
949
1,045
1,008
1,062
1,091
1,118
989
1,063
1,042
1,023
1,004
944
984
974
973

1,099
1,192
1,169
1,171
1,161
1,264
1,203
1198
1,237
1,215
1,172
1,152
1,164
1,125
1,111
1,076
1,093
1,056
975
1,062
987
957
935
899

15.0
15.4
14.6
14.6
14.7
15.1
15.2
15.5
15.4
15.2
15.0
15.0

Apr

May....
June...
July....
Aug....
Sept...
Oct
Nov....
Dec...
1987:Jan
Feb....
Mar....
Apr
May....
June...
July....
Aug....
Sept...
Oct
Nov...,
Dec...,

8,278
8,115
8,298
8,230
8,214
7,919
7,964
7,886
7,791
7,557
7,573
7,308
7,251
7,256
7,091
7,177
7,090
6,978

1,719
1,806
1,663
1,751
1,697
1,628
1,573
1634
1,594
1,629

3,331
3,520
3,510
3,615
3,574
3,463
3,425
3,453
3,416
3,419
3,374
3,335
3,365
3,343
3,352
3,195
3,308
3,138
3,186
3,203
3,220
3,223
3,218
3,229

2,470
2,539
3,311
2,937
2,451
2,509
2,557
2,196
2,466
2,588
2.597
2,675
2,720
2,690
2,546
2,393
2,555
2,547
2,589
2,403
2,489
2,444
2,411
2,256
2,165
2,151
2,144
2,142
1,949
2,093
2,029
1,968

945
834
917
844
899
892

1
2

Median
duration

Job
losers

Job
leavers

trants

Thousands of persons 16
years of age and over

8.6
10.0

15.0
14.8
14.9
14.8
14.8
14.7
14.2
14.3
14.2
14.1
14.0
14.2

6.5
6.9
8.7
10.1
7.9
6.8
6.9
6.5

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
3.566

6.8
7.0
6.9
6.5
6.8
7.2
7.0
7.1
7.2
7.0
7.0
7.1
7.0
6.7
6.7
6.9
6.6
6.6

3,797
4,145
4.187
4.005
4,212
4,264
4,064
3.887
4,066
3,959
3.942
3,913
3,971
3.835
3,791
3,705
3.612
3,554

6.6
6.4
5.8
6.2
6.1
6.0

3,529
3,389
3.313
3,388
3,307
3,200

4.5
4.4
4.9
6.3
6.2
5.2
5.2
8.4
8.2
7.0
5.9
5.4

891
923
840
830
823
877
1,015
965

945
909
965
1,228
M72
1,456
1,340
l|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
1,974

992
976
986
1,105
999
1,018
1,011
976
1,027
1,015
1,058
1,024

2,085
2,264
2,168
2,211
2,177
2,113
2,222
2172
2,164
2,239
2,093
2,005

1,033
996
955
931
959

2,059
2,038
2,078
1,965
1,995
1,980

992
981
960
926
946

1,930
1,969
1.908
1,845
1,974
1.945

438
431
436
550
590
641
683
768
827
903
909
874
880

Because of independent seasonal adjustment of the various series, detail will not add to totals.
Data for 1967 by reason for unemployment are not strictly comparable with those for later years and the total by reason is not
equal to total unemployment.
Note.—See footnote 5 and Note, Table 8-32.
Source: Department of Labor, Bureau of Labor Statistics.




294

TABLE B-42.—Unemployment insurance programs, selected data, 1955-87
All programs

Year or month

Covered

Insured
unemployment
(weekly
aver-

State programs
Total
benefits
paid
(millions
of
dollars) 2 *

40,018
42,751
43,436
44,411
45,728
46,334
46,266
47,776
48,434
49,637
51,580
54739
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
99,186
' 101,099

Initial
claims

Exhaustions s

Insured
unemp!oy~
merit as
percent
covered

Benefits paid
Total
(millions
of
dollars) 4

Average
weekfy
check
(dollars) •

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
20,649.5
17,762.8
12,594.7
13,977.8
15,402.8

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
135.72

1,662.6
1,495.7
1,539.3
1,472.1
1,260.8
1,177 5

133.57
135.00
135.59
135.23
135.81
135.39

Weekly average; thousands

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
1986

Insured
unemployment

226
227
270
369
277
331
350
302
7
298
268
232
203
226
201
200
296
295
261
247
363
478
386
375
346
388
488
460
583
438
377
396
378

3.5
3.2
3.6
6.4
4.4

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
2,693
2,746

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
15,892.1

1,265
1,215
1,446
2,510
1,684
1,908
2,290
1,783
7
1,806
1,605
1,328
1,061
1,205
1,111
1,101
1,805
2,150
1,848
1,632
2,262
3,986
2,991
2,655
2,359
2,434
3,350
3,047
4,061
3,396
2,476
2,611

June..

3,370
3,295
3,144
2,799
2,556
2,474

1,715.1
1,543.5
1,585.0
1,516.8
1,297.5
1,224.4

2,602
2,594
2,625
2,610
2,666
2,673

381
381
391
384
383
377

2.8
**
2.8
2.8
2.8
2.8
2.9
2.9

July...
Aug...
Sept..
Oct....
Nov....
Dec...

2,632
2,483
2,335
2,296
2,478
2,841

1,368.1
1,211.6
1,192.6
1,196.1
1,074.9
1,507.5

2,675
2,688
2,694
2,622
2,571
2,529

375
390
372
364
356
355

2.8
2.9
2.9
2.8
2.7
2.7

1,315.7
1,166.8
1,152.5
1,157.6
1,130.6
1,466.7

134.13
135.05
136.90
138.01
137.51
137.86

1987: Jan....
Feb....
Mar...

3,276
3,155
2,933
2,526
2,216
2,108

1,599.2
1,554.1
1,662.6
1,413.1
1,116.0
1,135.2

2,523
2,470
2,439
2,367
2,321
2,297

363
361
342
334
333
331

2.7
2.6
2.6
2.5
2.4
2.4

1,532.7
1,499.8
1,606.8
1,372.1
1,084.3
1,105.3

139.11
140.79
140.98
140.22
140.53
139.66

2,210
2,030
1,800
1,759
1,931

1,143.8
1,031.3
978.3
991.6

2,273
2,223
2,102
2,035
2,037
2,090

329
307
289
293
303
317

2.4
2.3
2.2
2.1
2.1
2.2

1,114.9
1,005.0
952.7
967.4
866.3

138.13
139.07
140.19
141.52
138.97

1986: Jan...
Feb...
Mar..

fc
June..
July...
Aug...
Sept..
Oct....
Nov....
Dec...

886.5

1,274.4

26

5S

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

"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).
z
' 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.
8
Individuals receiving final payments in benefit year.
* 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.




295

TABLE B-43.—Employees on nonagricultural payrolls, by major industry, 1946^87
[Thousands of persons; monthly data seasonally adjusted]
Goods-producing industries
Manufacturing

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
1987 p

1986: Jan
Feb....
Mar...
May"!!
June..
«::

It:
Nov....
Dec...

1987: Jan....
Feb...
Mar...
IKPSV'.'.'.
June..
July...
Aug...
Sept..
Oct....
Nov...
Dec".

Total

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
97,519
99,610
102,110
98,776
98,914
99,013
99,252
99,389
99,323
99,601
99,772
100,039
100,209
100,415
100,567
100,919
101,150
101,329
101,598
101,708
101,818
102,126
102,275
102,434
102,983
103,285
103,596

See next page for continuation of table.




296

Total

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
24,859
24,681
24,884
24,821
24,768
24,711
24,770
24,708
24,628
24,628
24,639
24,620
24,611
24,630
24,630
24,708
24,743
24,749
24,759
24,752
24,761
24,850
24,886
24,917
25,064
25,169
25,258

ting

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
927
783
742
886
867
838
812
786
769
764
748

739
735
730
724
718
719

722

729
735

738
744
751
759
764
759
759

Construction

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
4,673
4,904
5,031
4,810
4,811
4,830
4,919
4,910
4,900
4,924
4,946
4,948
4,942
4,946
4,936
5,034
5,038
5,032
5,019
4,999
5,008
5,002
5,006
4,989
5.053
5,074
5,122

Total '

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
19,260
18,994
19,112
19,125
19,090
19,043
19,039
19,012
18,959
18,940
18.945
18,933
18,934
18.954
18,970
18,956
18.986
18.995
19.011
19.018
19,015
19,104
19,129
19,169
19,247
19,336
19,377

NondurDurable , able
goods " goods
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
3,480
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
11,490
11,244
11,236
11.377
11.345
11.307
11,305
11,277
11,218
11,199
11,206
11,181
11,169
11,174

1U75
11.157
11,179

11,176
11,175
11,175
11.176
11,195
11,248
11.268
11,319
11,367
11,401

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
7,770
7,750
7,875
7,748
7,745
7,736
7,734
7,735
7,741
7,741
7,739
7,752
7,765
7,780
7,795
7,799
7,807
7,819
7,836
7,843
7,839
7,909
7,881
7,901
7,928
7,969
7,976

TABLE B-43.—Employees on nonagricultural payrolls, by major industry, 1946-87—Continued
[Thousands of persons; monthly data seasonally adjusted]
Service-producing industries
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
1987 P
1986: Jan .....
Feb
Mar.....
May'""
June...
July
Aug
Sept....
Oct
Nov
Dec
1987:Jan
Feb
Mar ..
May....
June...
July
Aug
Sept....
Oct
Nov
Dec..

Total

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
72,660
74,930
77,226
73,955
74,146
74,302
74,482
74,681
74,695
74,973
75,133
75,419
75,598
75,785
75,937
76,211
76,407
76,580
76,839
76,956
77,057
77,276
77,389
77,517
77,919
78,116
78,338

Transportation
and
public
utilities
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
5,238
5,244
5,377
5,265
5,260
5,259
5,245
5,247
5,142
5,237
5,202
5,255
5,251
5,278
5,286
5,304
5,315
5,333
5,348
5,344
5,350
5,363
5,377
5,416
5,436
5,459
5,468

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
5,717
5,735
5,797
5,744
5,742
5,735
5,745
5,749
5,712
5,735
5,736
5,736
5,731
5,728
5,725
5,741
5,757
5,766
5,772
5,775
5,781
5,797
5,807
5,815
5,831
5,851
5,873

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
17,356
17,845
18,262
17,635
17,670
17,731
17,756
17,798
17,821
17,866
17,913
17,939
17,980
18,009
18,007
18,080
18,140
18,136
18,197
18,205
18,226
18,274
18,256
18,314
18,408
18,443
18,433

Finance,
insurance,
and real

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
5,955
6,297
6,589
6,127
6,159
6,186
6,227
6,257
6,287
6,323
6,351
6,374
6,395
6,418
6,451
6,480
6,501
6,526
6,558
6,576
6,586
6,608
6,624
6,629
6,650
6,657
6,667

Government
Services
Total

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
22,000
23,099
24,138
22,617
22,696
22,772
22,868
22,971
23,080
23,202
23,284
23,317
23,369
23,452
23,544
23,670
23,759
23,842
23,926
24,025
24,083
24,214
24,279
24,295
24,406
24,493
24,623

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
16,394
16,711
17,063
16,567
16,619
16,619
16,641
16,659
16,653
16,610
16,647
16,798
16,872
16,900
16,924
16,936
16,935
16,977
17,038
17,031
17,031
17,020
17,046
17,048
17,188
17,213
17,274

Federal

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
2348
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
2,943
2,916
2.916
2,915
2,911
2,899
2,878
2,872
2,882
2,902
2,897
2,900
2,904
2,912
2,916
2,922
2,933
2,935
2,935
2,936
2,940
2,962
2,965
2,977
2,979

State
and
local
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
13,519
13,811
14,120
13,653
13.704
13,705
13,731
13,762
13,777
13,736
13,752
13,896
13,978
14,001
14,020
14,025
14,020
14,055
14,105
14,096
14,096
14,084
14,106
14,086
14,223
14,236
14,295

Note.—Data in Tables B-43 through B-45 are based on reports from employing establishments and relate to full- and part-time wage
and salary workers in nonagricultural establishments who received pay for any part of the pay period which includes the 12th of the month.
Not comparable with labor force data (B-32 through B-41), 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.




297

TABLE B-44.—Average weekly hours and hourly earnings in selected private nonagricultural industries,
1947-87
[For production or nonsupervisory workers; monthly data seasonally adjusted, except as noted]
Average hourly earnings, current dollars

Average weekly hours
Year or
month

Adjusted hourly earnings, total
private nonagricultural2

Total
private
nonagricultural 1

Index.
1977=100

Total
private
nonagricul-

Manufacturing

Construction

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
1987 *

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
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
41.0

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
37.4
37.7

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
29.3

$1,131
1.225
1.275

1986: Jan....
Feb....
Mar....

35.0
34.8
34.9
34.8
34.8
34.7

40.8
40.6
40.7
40.7
40.7
40.6

38.2
36.4
36.9
37.5
37.5
37.2

34.7
34.7
34.7
34.7
34.8
34.6

40.6
40.8
40.8
40.7
40.8
40.8

34.7
34.9
34.8
34.7
34.9
34.8
34.8
34.9
34.6
34.9
34.9
34.7

fc
June...
July....
Aug....
Sept...
Oct....
Nov....
Dec...
1987: Jan....
Feb....
Mar....
May*;;;
July,...
Aug...,
Sept...
Oct...,
Nov....
Dec"..

Retail

ManufacConturing struction

Retail
trade

Percent change
from a year

1977 Current
Current
dollars dollars» dollars

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
8.98

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
9.54
9.73
9.91

1712
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
12.32
12.47
12.66

.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
6.03
6.11

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
169.3
173.5

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
95.0
94.0

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
2.5
2.5

29.4
29.3
29.3
29.2
29.2
29.1

8.68
8.71
8.73
8.72
8.74
8.75

9.65
9.69
9.71
9.70
9.73
9.72

12.31
12.36
12.28
12.38
12.42
12.46

6.00
6.00
6.00
6.01
6.01
6.02

167.5
168.2
168.5
168.5
168.9
169.2

93.6
94.4
95.1
95.4
95.3
95.2

2.9
2.9
2.9
2.6
2.7
2.5

37.3
37.5
37.6
37.5
37.3
37.3

29.2
29.2
29.1
29.1
29.2
28.9

8.74
8.77
8.78
8.82
8.86
8.84

9.74
9.75
9.75
9.77
9.78
9.79

12.44
12.48
12.48
12.57
12.70
12.65

6.02
6.03
6.05
6.06
6.07
6.09

169.1
169.5
169.8
170.2
171.2
171.1

95.1
95.2
95.0
95.1
95.5
95.3

2.4
2.4
2.0
2.4
2.6
2.0

40.9
41.1
40.9
40.6
41.0
41.0

38.1
38.0
37.9
37.4
38.1
37.6

29.0
29.3
29.3
29.5
29.4
29.2

8.88
8.91
8.91
8.95
8.94

9.79
9.81
9.83
9.86
9.88
9.88

12.51
12.48
12.62
12.61
12.65
12.72

6.05
6.04
6.05
6.08
6.09
6.10

171.2
171.8
172.2
172.6
172.9
172.9

94.7
94.6
94.4
94.2
94.0
93.8

2.2
2.1
2.2
2.5
2.4
2.2

41.0
41.0
40.6
41.3
41.2
41.0

37.8
37.8
' 35.5
38.3
38.0
38.2

29.3
29.6
29.6
29.3
29.2
28.8

8.96
9.02
9.02
9.08
9.12
9.10

9.87
9.93
10.02
10.00
10.01
10.02

12.67
12.71
12.67
12.68
12.84
12.65

6.11
6.13
6.19
6.16
6.17
6.19

173.2
174.1
174.6
174.9
175.8
175.4

93.7
93.7
93.8
93.7
93.8
93.6

2.4
2.7
2.9
2.8
2.7
2.6

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

$1,216

1

$1,540

$0,838

8.3

Also includes other private industry groups shown in Table 6-43.
Adjusted for overtime (in manufacturing only) and for interindustry 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-43.
Source: Department of Labor, Bureau of Labor Statistics.
2

3




298

TABLE B-45.—Average weekly earnings in selected private nonagricultural industries,

1947-87

[For production or nonsupervisory workers; monthly data seasonally adjusted, except as noted]
Average weekly earnings
Year or month

Total private
nonagricultural1
Current
dollars

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
1987"
1986-Jan
Feb

Mr
a

Apr
May
June
July
AUB

Sept
oct..::::::;:::::::
Nov
Dec
1987-Jan
Feb
Mar
Apr
May
June
July
Aug
Sept
Oct

:.::.:::::::::

Nv
o

Dec*

$45.58
49.00
50.24
5313
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
312.50
303.80
30311
304.68
303 46
30415
303.63
303.28
304 32
304 67
306.05
308.33
305.86
307 44
309.91
310.07
309.18
312 36
311.11
311.81
314 80
312 09
316 89
318 29
315.77

1977
dollars2
$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
17517
178.38
183.21
184 37
184.83
187.68
189.44
186.94
190.58
19841
198.35
190.12
184.16
186.85
189.00
189.31
183.41
172.74
170.13
168.09
17126
172.78
170.42
171.07
169.28
169.82
17010
171.84
171.83
17174
170.77
170.57
170.97
170 59
171.07
171.96
170.40
170 04
170.75
170.09
168.77
169.95
168.71
168.73
169.52
167.70
169 64
169 85
168.41

Manufacturing
(current
dollars)
$49.13
53.08
53.80
58 28
63.34
66.75
7047
70.49
75.30
78.78
81.19
82.32
88.26
89.72
92.34
96.56
99 23
102.97
107.53
11219
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
386 37
396.01
406.31
393.72
393 41
395.20
394.79
396 01
394.63
395.44
397 80
397 80
397.64
399.02
399.43
400 41
403.19
402.05
400.32
405 08
405.08
404.67
407.13
406.81
413.00
412.41
410.82

1

Percent change from
a year earlier, total
private
nonagricultural3

Construction
(current
dollars)

Retail
trade
(current
dollars)

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
12719
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 46
466.38
477.28
470.24
449 90
453.13
464.25
465.75
463.51
464.01
468.00
469.25
471.38
473.71
471.85
476.63
474.24
478.30
471.61
481.97
478.27
478.93
480.44
449.79
485.64
487.92
483.23

$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
9185
96.32
102.68
108.86
114.60
121.66
130.20
138.62
147.38
15803
163.85
17105
174.33
174 64
176.08
179.02
176.40
175 80
175.80
175.49
175.49
175.18
175.78
176.08
176.06
176.35
177.24
176.00
175 45
176.97
177.27
179.36
179.05
178.12
179.02
181.45
183.22
180.49
180.16
178.27

7.5
2.5
58
8.9
4.8
5.1
1.2
5.0
4.5
3.7
2.4
4.9
2.4
2.4
4.0
30
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
2.5
3.1
2.5
2.5
2.5
2.0
1.2
1.5
1.7
1.2
1.5
2.1
.5
1.2
2.4
1.8
1.8
2.6
2.6
3.0
3.3
2.4
3.7
3.2
3.2

1977
dollars
-0.1
3.6
47
.8
2.7
44
.5
5.4
3.1
.4
4.1
.7
1.4
3.0
17
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
1.0
.6
.6
1.3
.8
.3
.5
3
1.2
-.2
.1
-1.0
-1.9
-1.1
-1.0
g
-.9
-1.8
-.9
-1.3
-1.2

Also includes other private industry groups shown in Table B-43.
2
Earnings in current dollars divided by the consumer price index for urban wage earners and clerical workers on a 1977=100 base.
3
Based on data not seasonally adjusted.
Note.—See Note, Table B-43.
Source: Department of Labor, Bureau of Labor Statistics.




299

TABLE B-46.—Productivity and related data, business sector, 1947-87
[1977=100; quarterly data seasonally adjusted]
Output per hour
of all persons
Voar nr
Tear or

Hours of all
persons 2

Output1

Compensation per
hour 3

Real compensation
per hour 4

Nonfarm
business
sector

Business
sector

Nonfarm
business
sector

Business
sector

Nonfarm
business
sector

Business
sector

Nonfarm
business
sector

Business
sector

Nonfarm
business
sector

Unit labor costs

Business
sector

Nonfarm
business
sector

Business
sector

Nonfarm
business
sector

!

44.9
47.2
All

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
817
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
417
42.2

37.5
39.6
40.4
41.1
41.8

1955.
1956
1957
1958
1959

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
47i

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
507

49.7
49.8
50.2
50.2
50.5

48.5
48.8
49,7
50.2
507

48.5
48.8
49.7
50.2
50i

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
547
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
105.6

98.8
99.8
99.2
102.5
104.6

106.7
108.9
105.5
109.9
119.2

106.7
108.5
104.9
110.1
119.2

107.5
108.2
105.2
106.7
112.9

108.0
108.7
105.7
107.5
114.0

131.5
143.7
154.9
161.5
168.0

131.3
143,6
154.8
161.5
167.8

967
95.7
97.3
98.2
98.0

96.6
95.7
97.2
98.2
97.9

132.5
1427
154.5
156.7
159.1

132.9
144.0
156.0
157.6
160.4

127.6
139.8
148.1
153.0
158.2

127.8
140.3
149.2
154.3
159.0

1985
1986
1987"

107.5
109.5

105.8
107.5
108.4

123.9
128.0
132.3

123.6
127.5
131.9

115.2
116.9
119.7

116.8
118.6
121.6

175.9
182.8
188.2

175.2
182.0
187.1

99.1
101.0
100.3

98.7
100.6
99.8

163.6
166.9
170.2

165.6
169.3
172.6

162.4
165.8
170.0

164,1
167.8
171.8

1982: IV

101.0

99.7

105.0

104.2

103.9

104.5

158.3

158.2

98.0

97.9

156.8

158.7

150.2

151.4

1983: IV

103.7

103.3

113.6

114.1

109.4

110.4

163.6

163.4

98.0

97.9

157.7

158.2

155.2

156.2

quarter

1947
1948
1949

no.5

Business

1984: IV

105.9

104.8

120.8

120.7

114.0

115.2

170.3

170.2

98.1

98.0

160.8

162.4

159.8

161.0

1985:1
II
Ill
IV

106.5
107.2
111.3
111.1

105.2
105.7
109.1
109.0

122.2
123.3
133.1
134.7

122.0
123.1
132.7
134.4

114.7
115.0
119.6
121.2

115.9
116.4
121.7
123.2

172.4
174.6
189.1
190.5

172.2
174.1
187.9
189.5

98.5
98.6
100.3
100.2

98.4
98.3
99.6
99.6

161.9
162.8
169.8
171.4

163.6
164.7
172.2
173.8

160.8
162.0
170.7
171.3

162.2
163.6
172.5
173.1

1986:1

109.5
109.7
109.6
109.6

107.7
107.7
107.5
107.5

127.3
127.5
128.1
129.0

126.9
127.1
127.6
128.5

116.3
116.3
116.9
117.8

117.9
118.0
118.7
119.6

180.7
182.2
183.6
185.2

180.0
181.3
182.6
184.4

100.1
101.3
101.4
101.6

99.7
100.8
100.9
101.2

165.0
166.2
167,5
169.0

167.2
168.4
169.8
171.5

164.3
165.4
166.9
166.7

166.4
167.3
168.8
168.8

109.7
110.1
111,3
111.1

107.6
108.0
109.1
109.0

130.2
131.1
133.1
134.7

129.7
130.7
132.7
134.4

118.7
119.1
119.6
121.2

120.6
121.1
121.7
123.2

185.8
187.3
189.1
190.5

184.9
186.3
187.9
189.5

100.7
100.3
100.3
100.2

100.2
99.7
99.6
99.6

169.4
170.2
169.8
171.4

171.8
172.5
172.2
173.8

168.2
169.6
170.7
171.3

170.3
171.4
172.5
173.1

in'""!!
IV
1987:1
II
Ill
IV "...
1
2

Output 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.
< Hourly compensation divided by the consumer price index for alt urban consumers.
6
Current dollar gross domestic product divided by constant dollar gross domestic product.
Source: Department of Labor, Bureau of Labor Statistics.




300

TABLE B-47.—Changes in productivity and related data, business sector, 1948-87
[Percent change from preceding period; quarterly data at seasonally adjusted annual rates]
Output per hour
of all persons

Year or
quarter

Hours of all
persons2

Output*

Compensation per
hour 3

Real compensation
per hour 4

Unit labor costs

Implicit price
deflator6

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

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

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
-2.0

1.1
2.9
.1
.9
-3.4

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

3.3
.6
-.9
5.6
3.1
3.0
1.6

4.6
1.3

1950
1951
1952
1953
1954

0.8
4.0
5.1
.7
3.3
4.9
2.8

-.3
5.6
3.3
3.5
1.8

7.2
= .6
1.5
6.3
1.3
.7
1.2

7.2
1.3
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
11
-1.8
7.3

7.1
3.1
13
-2.0
7.7

3.7
1.5
-15
-4.7
3.8

4.0
2.5
-.6
-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

1960
1961
1962
1963
1964

17
3.5
3.6
40
4.3

11
3.1
3.3
36
3.9

18
19
5.2
46
6.0

1.7
2.0
5.5
4.7
6.3

.1
-16
1.6
.6
1.6

.6
-1.1
2.1
11
2.3

43
Z.S
4.7
38
5.2

4.4
3.3
4.1
3.5
4.6

2.7
2.8
3.5
2.5
3.8

28
2.2
2.9
23
3.3

2.6
.3
1.1
_2
.8

3.3
.1
.8
_ 1
.7

2.6
3.2
3.5
1.6
2.0
1.4
.5
1.9
9
1.0

3.2
3.3
3.6
1.2
2.5
1.4
.6
2.0
.9
1.2

1965
1966
1967
1968
1969

30
2.8
27
2.7

2.5
2.1
23
2.6

63
5.2
2.7
44
2.7

64
5.6
2.5
47
2.7

32
2.4
0
1.7
2.6

38
3.4
.3
2.0
3.2

3.8
6.9
54
7.9
7.0

3.4
5.9
55
7.6
6.6

2.1
3.9
25
3.5
1.6

17
2.9
2.6
32
1.1

9
4.1
26
5.0
6.9

8
3.7
32
4.8
7.1

2.3
3.3
2.5
4.6
5.1

2.0
3.1
2.9
4.6
5.0

.7
3.2
3.0
20
-2.1

.3
3.0
3.1
18
-2.2

-.9
2.7
6.3
60
-1.8

-1.1
2.7
6.4
62
-1.8

-1.6
-.5
3.1
39
.4

-1.3
-.3
3.3
43
.4

7.3
6.4
6.4
83
9.5

7.0
6.5
6.5
79
9.6

1.2
2.1
3.0
19
-1.3

.9
2.1
3.1
15
= 1.3

65
3.1
3.3
62
U.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

1.8
2.6
1.6
.8
-1.6

-2.1
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

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

1980
1981
1982
1983
1984

-.3
1.4

-.4
1.0
-.6
3.3
2.1

-1.1
21
-3.1
4.2
8.4

-1.2
17
-3.3
5.0
8.3

-.8
7
-2.8
1.5
5.7

-4.0
3.4
4.3
5.1
3.5
7
7
-2.7
1.6
6.0

10.5
92
7.8
4.2
4.1

10.5
9.4
7.8
4.3
3.9

-2.7
-1.0
1.6
1.0

-2.7
-9
1.5
1.1

10.9
7.7
8.3
1.4
1.5

11.0
8.3
8.4
1.0
1.8

9.0
9.6
5.9
3.3
3.3

9.7
9.7
6.3
3.5
3.0

!:§

4.0
3.3
3.4

3.6
3.2
3.4

2.1
1.4
2.4

2.5
1.6
2.6

4.7
3.9
2.9

4.4
3.9
2.8

1.1
2.0

.8
1.9
-.8

2.8
2.0
2.0

3.2
2.2
2.0

2.7
2.1
2.5

3.2
2.3
2.4

-1.2

—3 4

-3.5

1970
1971
1972
1973
1974

;

~2J
2.5

1987'""!";;

1.8
1.9
.9

1982: IV
1983: IV

3.0

.8
2.4

—5

4.5

5.0

3.2

3.7

1.5

2.6

2.4

3.0

3.0

1.4

10.4

9.8

7.2

8.3

5.4

4.3

1.5

.4

2.4

2.9

4.8

3.1

1984: IV

1.5

1.0

3.5

3.1

2.1

2.1

3.8

3.9

.4

.6

2.3

2.9

2.7

3.3

1985:1
II
Ill
IV

2.2
2.9
3.7
-1.0

1.5
1.7
2.6
-1.6

4.8
3.8
4.4
2.2

4.3
3.4
4.1
2.0

2.5
1.0
.7
3.2

2.8
1.7
1.5
3.6

5.1
5.1
5.7
5.1

4.8
4.5
4.9
4.9

1.7
.6
3.3
1.2

1.4

2.8
2.2
1.9
6.2

3.2
2.7
2.2
6.6

2.5
3.0
2.5
2.5

3.0
3.5
3.2
2.0

1986:1
II
Ill
IV

5.8
.6

6.6

6.4

6.4
.6
1.7
2.9

.5
21
3.1

-.2
.6
2.3
2.9

3.2
3.5
3.0
3.6

3.9
2.9
2.8
4.0

1.6
4.8
.5
.9

-2.5
2.8
3.3
3.7

-2.6
2.8
3.5
4.0

.9
2.6
3.7
-.5

1.6
2.3
3.7
.0

1987:1
II
Ill
IV *..

.5
1.4
4.7
-.7

3.8
3.2
6.3
5.1

3.0
1.6
1.5
5.6

3.4
1.7
2.0
5.3

1.4
3.3
3.8
3.1

1.1
3.0
3.6
3.4

-3.7
-1.6
-5

.9
1.8
-.9
3.9

.8
1.5
-.6
3.7

3.7
3.4
2.5
1.6

3.4
2.6
2.7
1.5

.0
.4
1.4
4.2
-.2

1*8
3.0
3.5
3.0
6.3
4.8

1
2

l!s
.9
2.3
4.2
U
-3.9
-1.8
-.3

Output 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, ana supplemental payments for the self-employed.
4
Hourly compensation divided by the consumer price index for all urban consumers.
5
i fc
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-46.
Source: Department of Labor, Bureau of Labor Statistics.




301

PRODUCTION AND BUSINESS ACTIVITY
TABLE B-48,—Industrial production indexes, major industry divisions, 1939-87
[1977=100; monthly data seasonally adjusted]

1977 proportion
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

. ..

1986
1987 P
1986: Jan
Feb
Mar
Apr
May
June
July
Aug
Sept
Dec
1987-Jan
Feb
Mar
Apr
May. .
June
July
Aug
sept

::::::::

.
:.;;;;:::.:;:::::::::;::::

oc? p
Nov
Dec'

:.:::

Total

Durable

Nondurable

100.00

,

1939

ocf.
Nov

Manufacturing

Total
industrial
production

Year or month

84.21

49.10

16.0
184
23.3
26 7
32 4
34.9
29 9
25.8
29 0
30.2
28.6
331
35.9
37.2
404
38.2
43 0
44.9
45.5
42 6
47.7
48.8
491
53 2
56.3
601
66.1
72 0
73.5
77 6
81.2
78 5
796
87.3
94 4
93 0
84 8
92 6
100.0
1065
110.7
108 6
1110
1031
109 2
1214
123.7
125.1
129.8
126 4
125.5
123.9
124 7
124 3
124.1
124 8
124 9
124 5
125 3
125 7
126.8
126.2
1271
127 4
127.4
128.2
129.1
130 6
1312
131.0
132 5
1331
133.3

15.8
18.6
23.8
27.7
34.5
37.3
31.2
25.9
289
30.0
28.3
33 0
35.6
37.1
40.4
37.8
42.6
44.4
44.9
41.7
47.0
48.0
481
52.4
55.5
59 3
65.7
717
73.1
77 2
80.6
77.0
78 2
86.4
940
92 6
83 4
919
100.0
1071
111.5
108 2
110 5
102 2
110.2
1234
X26.4
129.1
134.6
129 3
128.6
127.4
128 7
128 5
128.3
129.2
129.2
129 2
129 7
1301
131.3
130.7
131.6
132 4
132.4
133.2
134.0
135 6
135 9
135.7
137.4
138.0
138.3

13.6
181
24.2
30 7
41.8
46.1
34 9
24.4
29 0
30.3
27.5
33.5
37.7
40.0
45.2
39.9
456
47.1
47.4
41.5
47.7

Source: Board of Governors of the Federal Reserve System.




302

48.5
47 6
52.8
56.3
603
68.6
762
77.0
80 8
84.0
77.6
77 3
86.3
96 3
94 3
82 6
911
100.0
108 2
113.9
1091
1111
999
107.7
124 2
127.6
128.4
133.1
129 8
128.9
127.4
128 5
127 7
126.9
128.1
127 9
128 4
128 6
129 0
129.7
129.3
130 8
1315
130.9
131.4
132.0
133 5
133 8
133.7
136.7
137.0
136.8

Min

lltiti

ing

ties

35.11

9.83

5.96

17.9
18.8
22.7
23.7
25.4
26.4
26.3
27.1
28.2
29.2
28.7
31.9
33.0
33.6
35.0
35.2
39.1
41.1
41.8
42.1
46.3
47.4
48.8
51.8
54.6
58.2
62.1
66.0
68.1
72.5
76.3
76.3
79.4
86.5
90.8
90 2
84.5
931
100.0
105.5
108.2
107 0
109.7
1055
113.7
122.3
124.6
130.1
136.7
128 6
128.2
127.3
128.9
129 7
130.2
130.6
131.1
130.3
1312
1317
133.4
132.7
132.9
133 7
134.6
135.7
136.9
138 5
138 8
138.6
138.3
139.5
140.3

37.6
41.8
44.4
45 7
46.8
50.2
49.2
48.3
54.6
57.4
50.9
56.9
62.4
61.9
63.5
62.3
69 5
73.1
73.2
67.1
70.2
71.6
721
74.1
77.1
80.2
83.1
87.6
89.3
92.7
96.4

6.9
7.6
8.6
97
10.7
11.4
116
12.0
130
14.5
15.5
17 6
20.1
21.8
23.6
25.4
284
31.2
33.3
34.9
38.4
41.1
43 4
46.6
49.8
54.1
57.4
61.8
64.9
70 2
76.4

98.9
96.4
98.4
99.3
98 8
96.6
97 4
100.0
103.6
106.4
112 4
117.5
109 3
102.9
111.1
108.9
100.4
100.4
110 0
107.6
105.2
102.1
100 5
98.2
97.8
96.9
95 8
96 2
97 5
97.1
99.4
98.8
98 3
98.6
99.2
99.2
99 2
100 9
101.9
103.2
103.0
103.3

81.1
85.0
90.4
94.0
92 8
93.7
97 4
100.0
103.1
105.9
107 3
107.1
104 8
105.2
110.7
111.1
108.5
110.3
1115
109.9
107.9
108.1
1061
106.9
108.6
107.0
106 2
108 6
109 6
109.0
108.0
108 5
107 9
106.0
109.6
109.4
1112
112 9
111.2
112.1
112.9
112.4

TABLE B-49.—Industrial production indexes, market groupings, 1947-87
[1977=100; monthly data seasonally adjusted]
Final products

Year or month

Total
industrial
production

Materials

Consumer goods
Total

Equipment

Total l

Automotive
products

Home
goods

Total 2

Busi-

Defense
and
space

Intermediate
products

Total 3

Durable

100.00

44.77

25.52

2.98

3.91

19.25

14.34

3.67

12.94

42.28

20.50

1947
1948
1949

29.0
30.2
28.6

29.0
30.1
29.1

29.9
30.8
30.6

25.8
27.0
26.7

26.1
27.2
25.2

25.5
26.8
24.0

25.9
27.0
23.6

15.2
17.8
18.6

29.9
31.6
29.9

28.8
30.0
27.3

28.5
29.3
26.3

1950

33.1
35.9
37.2
40.4
38.2
43.0
44.9
45.5
42.6
47.7

32.9
35.5
38.1
40.7
38.5
41.6
44.1
45.4
43.3
47.5

35.0
34.6
35.4
37.5
37.3
41.6
43.1
44.2
43.8
48.0

33.6
29.8
26.8
33.9
31.5
41.9
34.5
36.1
28.7
36.0

34.7
29.9
29.9
33.9
31.3
36.9
38.8
38.0
35.8
41.1

26.0
36.1
43.3
47.0
41.1
42.0
46.1
48.0
42.9
47.2

25.2
30.8
34.9
36.3
31.9
34.6
40.1
41.7
35.2
39.5

21.9
53.8
75.7
90.6
79.8
73.1
71.4
74.6
74.9
78.9

34.8
36.5
36.3
38.8
38.7
43.9
45.9
45.9
44.9
49.6

32.7
36.2
36.7
40.8
37.7
44.6
45.7
45.7
41.1
47.4

33.1
37.6
38.4
44.9
38.7
47.4
47.6
47.5
40.0
47.7

48.8
49.1
53.2
56.3
60.1
66.1
72.0
73.5
77.6
81.2

49.1
49.5
53.7
56.7
59.9
65.8
72.1
75.0
78.6
81.1

49.8
50.9
54.3
57.3
60.5
65.3
68.6
70.3
74.5
77.3

41.2
37.6
45.6
49.9
52.3
64.4
64.2
56.4
67.2
67.5

41.4
42.7
46.4
50.0
54.6
61.9
68.2
69.1
74.0
78.9

48.4
47.8
53.2
56.3
59.6
67.3
78.4
83.4
85.8
88.1

40.6
39.4
42.8
44.9
50.3
57.6
66.7
68.0
71.0
75.6

81.1
82.4
95.4
102.9
99.6
110.3
129.6
147.8
148.1
141.0

49.9
50.9
54.0
57.0
60.7
64.6
68.6
71.4
75.5
79.6

48.1
48.1
52.4
55.8
60.3
67.2
73.2
72.5
77.3
81.9

48.3
47.1
52.4
55.9
60.9
69.8
76.9
74.2
78.6
82.7

1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987"

78.5
79.6
87.3
94.4
93.0
84.8
92.6
100.0
106.5
110.7

78.2
78.9
85.6
92.0
91.7
86.3
92.4
100.0
106.9
111.0

76.4
80.8
87.3
91.2
88.4
84.9
93.3
100.0
104.3
103.9

56.8
72.4
78.1
86.2
74.5
70.2
87.1
100.0
102.4
94.9

76.5
81.0
92.7
98.1
90.7
79.9
89.5
100.0
104.7
103.7

81.8
76.6
83.8
93.6
96.6
88.5
91.5
100.0
110.3
120.4

72.9
69.3
79.0
92.4
96.5
86.1
89.3
100.0
112.2
124.7

119.4
107.3
104.3
101.9
100.4
98.5
100.1
100.0
101.2
105.6

78.4
80.8
90.2
96.0
92.6
83.6
92.1
100.0
106.9
110.8

79.0
80.2
88.4
96.8
94.8
83.2
93.0
100.0
105.9
110.3

75.1
75.4
85.2
97.4
94.6
78.8
90.8
100.0
108.8
114.4

108.6
111.0
103.1
109.2
121.4
123.7
125.1
129.8

112.2
115.2
109.5
114.7
127.3
131.0
132.5
136.8

102.7
104.1
101.4
109.3
118.0
119.8
124.0
127.8

76.1
78.8
78.1
95.1
109.4
114.1
115.3
118.5

97.7
98.1
86.5
101.1
114.3
111.2
115.8
122.0

124.7
129.9
120.2
121.7
139.6
145.8
143.6
148.8

125.1
127.6
113.6
115.4
134.2
140.2
139.5
144.4

115.4
119.8
133.0
143.1
156.4
171.4
182.0
189.2

105.3
107.7
96.7
102.8
114.2
114.3
113.8
118.1

1986;Jan
Feb
Mar
Apr
May
June

126.4
125.5
123.9
124.7
124.3
124.1

123.6
122.9
121.4
123.8
123.8
123.7

114.5
116.2
110.8
115.9
114.6
114.7
116.6
115.8
118.4
115.7
114.9
115.3

133.3
134.8
135.1
134.5
135.5
136.2

124.5
125.0
123.6
124.8
125.0
126.6
125.5
126.4
126.7
125.5
127.3
127.2

147.7
146.1
143.7
143.3
142.1
140.8
142.7
142.8
143.4
143.7
143.4
144.0

137.9
138.4
137.8
139.5
139.5
139.4

128.9
129.4
127.7
129.3
129.5
129.7

117.5
118.0
114.2
124.3
121.3
115.8

120.5
119.8
118.4
118.1
121.2
119.3
122.5
123.6
121.9
124.6
126.9
128.7

143.5
146.0
146.2
146.4
146.3
148.1
149.7
150.2
151.2
153.1
152.8
152.4

142.1
141.3
139.2
139.6
138.6
137.2
139.4
139.1
139.6
139.4
138.8
139.5
138.6
141.7
141.9
142.1
141.7
144.2

178.9
178.0
178.6
179.8
180.2
180.7

124.8
124.9
124.5
125.3
125.7
126.8
126.2
127.1
127.4
127.4
128.2
129.1

115.8
114.2
111.6
113.4
113.5
114.0
115.4
116.5
116.7
117.6
119.3
122.6

106.1
109.7
94.2
103.7
121.5
121.7
120.0
124.8
122.4
121.3
119.4
120.1
119.4
118.7

July
Aug
Sept
Oct

134.0
132.9
131.0
132.2
131.7
131.0
132.3
132.7
132.1
132.9
132.9
134.1

106.9
107.3
101.7
111.2
124.7
129.3
136.2
143.4
134.2
134.2
134.0
134.9
135.1
136.3

Nondurable
goods

1977 proportion

1951

1952 .
1953
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965.. .
1966
1967
1968...
1969

Nov

Dec
1987: Jan
Feb
Mar
Apr
May
June
July
Aug
Sept
Oct

Nov.
p
Dec
1
2
3

.

130.6
131.2
131.0
132.5
133.1
133.3

116.6
122.6
121.6
115.0
118.8
114.9

145.6
145.6
146.3
148.7
148.7
148.2

182.4
183.7
184.6
185.6
185.5
186.2
187.3
188.9
188.6
189.2
189.3
188.6
188.7
189.1
189.8
190.2
190.0
191.1

137.1
136.8
136.4
138.3
138.1
139.2
138.8
139.9
140.9
140.3
141.8
143.3
145.0
145.3
144.9
146.0
146.9
147.5

115.9
115,0
113.2
113.7
113.2
113.0
113.2
113.1
112.9
113.3
114.3
115.2
114.9
114.9
115.2
115.9
116.3
U7.2
118.5
119.4
119.7
121.0
122.0
122.5

119.1
118.9
118.9
119.7
120.6
121.6
120.5
121.3
122.3
122.2
122.6
124.0
125.2
125.5
126.4
128.7
129.7
130.5

Includes clothing and consumer staples, not shown separately.
Two components—oil and gas well drilling 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.




303

TABLE B-50.—Industrial production indexes, selected manufactures, 1947-87
[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
1960
1961
1962
1963.,,.
1964..,
1965
1966
1967
1968
1969
1970
1971...
1972
1973...
1974
1975
1976
1977
1978.
1979
Z!
1980
1981
1982
1983
1984
1985
1986
1987 * " I "
1986:
Jan
Feb
Mar

niay'ZZ"!

June

{my
Aug
Sept
Oct
NOV
Dec
1987:
Jan
Feb
Mar
Apr
May
June
J"iy
Aug
Sept
Oct
N o v p.
Dec

:.iz

Iron
and
steel

FabriNonElectricated
eleccal
metal trical machinprod- machinery
ery
ucts

Transportation
equipment
Lumber Apparel Textile Printing Chemicals
and
and
mill
prod- prod- publish- and
Motor
products
vehicles proding
ucts
ucts
Total
ucts
and
parts

3.49

6.46

9.54

7.15

9.13

5.25

2.30

2.79

2.29

4.54

8.05

70.4
73.6
62.9

40.4
41.2
37.2

26.7
26.8
22.9

14.5
15.1
14.1

26.6
29.0
29.2

47.2
49.1
43.3

47.0
49.1
48.6

38.5
41.1
38.0

34.3
36.0
37.0

10.4
11.3
11.1

77.5
86.6
76.2
87.9
68,3
90.8
89.1
85.9
64.7
74.5

45.5
48.6
47.4
53.5
48.2
55.0
55.8
57.2
51.3
57.6

25.7
32.6
35.5
36.9
31.6
34.6
39.7
39.6
33.2
38.8

19.4
19.5
22.3
25.6
22.8
26.1
28.3
28.1
25.7
31.2

34.9
38.9
45.2
56.8
49.4
56.8
55.1
59.0
46.5
52.7

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

52.7
52.5
51.8
54.8
54.5
60.8
60.1
55.2
56.0
63.6

52.3
51.3
54.0
54.7
54.1
59.7
61.1
60.9
59.2
65.2

43.2
42.8
42.4
43.5
40.7
46.4
47.7
45.5
44.8
50.7

38.8
39.5
39.4
41.2
42.9
47.2
50.2
51.9
50.7
54.1

13.9
15.7
16.5
17.8
18.1
21,1
22.6
23.9
24.7
28.8

75.7
72.3
75.3
82.1
93.4
102.4
105.5
97.5
100.7
109.7

57.6
56.2
61.1
63.1
67.0
73.6
78.8
82.5
86.9
88.4

39.0
37.9
42.5
45.4
51.7
58.2
67.6
68.9
69.5
75.2

33.8
35.9
41.3
42.4
44.9
53.5
64.2
64.5
68.1
72.5

54.6
51.3
59.3
65.1
66.8
79.4
85.1
83.2
90.4
89.7

43.4
38.1
46.3
51.3
52.7
67.3
66.2
58.2
69.7
70.0

59,8
62.6
66.1
69.2
74.3
77.2
80.1
79.3
81.6
81.5

66.5
66.9
69.6
72.5
75.0
79.3
81.3
80.9
82.9
85.6

49,8
51.2
54.7
56.7
61.2
66.6
70.7
70.7
78.9
83.0

56.3
56.5
58.6
61.7
65.5
69.7
75.0
79.1
80.4
84.3

29.9
31.4
34.8
38.1
41.7
46.5
50.7
53.0
59.6
64.5

102.1
93.4
103.8
118.2
114.5
92.0
101.4
100.0
107.5
108.0

81.9
81.5
89.4
99.4
95.4
82.7
91.6
100.0
105.7
109.4

72.8
67.6
78.5
91.7
97.7
84.5
88.8
100.0
111.7
122.6

69.3
69.6
79.7
90.7
89.8
77.2
86.8
100.0
112.9
125.7

75.3
81.5
87.0
99.1
90.1
81.0
92.2
100.0
106.3
108.3

56.3
70.6
77.1
89.8
77.5
65.7
86.5
100.0
104.6
95.9

81.1
83.2
95.3
95.6
86.8
80.8
91.9
100.0
102.4
102.0

82.2
83.2
88.3
89.0
85.0
77.6
91.5
100.0
103.1
98.3

81.2
85.7
93.9
97.8
89.0
84.8
94.2
100.0
102.8
104.4

82.0
82.7
88.2
90.6
89.2
83.5
91.2
100.0
107.8
112.7

67.1
71.4
80.3
87.8
91.0
82.9
92.8
100.0
106.8
111.4

90.4
95.0
65.8
73.0
82.3
80.4
75.1
81.4

86.3
92.5
57.5
66.1
73.4
70.4
63.4

101.8
101.6
86.6
89.1
102.6
107.1
108.0
110.8

123.3
129.8
115.6
118.3
141.8
146.2
145.0
152.3

130.3
134.1
128.4
143.8
170.5
168.3
165.7
172.5

96.9
95.1
87.6
99.2
112.2
122.8
127.5
129.2

71.1
71.6
66.8
85.8
104.4
111.9
111.5
111.8

92.9
90.1
82.8
100.2
109.1
114.3
124.1

97.3
96.1
87.3
95.3
102.7
100.4
103.1

100.8
98.1
89.2
100.9
104.2
102.2
109.2

115.1
118.6
120.2
129.8
146.5
151.4
160.9
172.1

106.4
112.6
103.8
114.0
121.6
126.4
132.0

80.7
78.8
76.3
76.5
75.1
72.5

70.8
68.2
64.9
64.9
62.1
60.5

109.3
108.5
107.3
108.9
107.0
107.2

147.9
146.5
145.1
143.8
143.6
143.6

165.4
163.4
162.6
164.5
165.0
161.9

128.5
128.7
125.2
128.1
127.0
127.5

114.1
115.1
109.0
113.0
110.7
112.1

103.4
102.2
102.0
102.4
102.5
102.7

106.4
107.9
105.3
108.6
108.2
108.8

62.5
60.3
60.2
61.0
63.5
61.3

106.7
106.9
107.8
108.9
108.3
109.6

145.6
145.0
144.9
145.0
144.5
144.8

166.6
166.6
166.5
167.3
167.9
170.4

127.2
126.9
128.9
127.6
126.9
126.8

111.4
109.6
113.0
110.3
109.1
109.7

123.8
124.6
130.3
133.5

103.5
103.2
102.6
103.9
103.8
104.9

108.6
110.7
110.6
110.2
112.2
113.4

158.0
155.5
155.9
159.1
160.0
161.5
161.4
161.7
161.7
164.4
164.8
166.4

130.7
130.4
128.8
131.0
132.2
132.1

73.6
72.6
72.8
73.1
75.5
73.4

122.0
121.2
121.1
123.2
123.1
121.5
122.5
123.6

132.8
132.6
132.2
133.3
132.3
135.7

72.8
75.1
77.0
76.1
77.0
78.8

59.5
62.3
65.4
65.0
65.7
68.3

143.4
145.5
148.5
150.4
149.7
151.8

170.4
171.0
168.5
168.4
171.1
170.5

129.0
132.7
132.2
127.8
129.4
126.5

112.0
117.7
116.5
109.8
112.0
107.4

128.5
129.6
128.9
127.8
130.3
131.1

106.1
106.5
105.4
105.3
106.4
107.7

136.4
135.7
135.3
137.3
138.1
139.3

70.9
76.0
74.6
82.0
81.8

155.3
154.3
156.6
158.0
157.6
156.5

172.5
174.3
173.4
175.5
176.4
177.6

127.6
128.1
125.5
131.8
130.6
128.6

109.4
109.1
105.6
116.0
114.0
110.4

132.8
131.1
126.9
129.4

109.7
108.4
107.6
108.0

109.2
110.8
112.6
116.6
115.7
117.2
118.3
119.8
118.2
117.3
119.3

166.3
164.4
167.6
169.2
171.4
174.1

81.4
85.1
84.5
90.5
91.3
90.6

108.4
108.3
110.5
109.9
108.5
111.1
111.1
110.1
111.1
113.1
113.5
114.0

174.0
174.7
174.9
175.2
175.7
176.4

140.8
142.3
142.4
141.8
143.4

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
89.9
100.7
114.3
110.7
88.2
98.7
100.0
107.0
108.5

1

Source: Board of Governors of the Federal Reserve System.




304

134.0

TABLE B-51.—Capacity utilization rates, 1948-87
[Percent; monthly data seasonally adjusted]
Manufacturing
Year or month

Total
industry

1986:Jan
Feb
Mar

fe:
June
July
Aug
Sept
Oct
Nov
Dec
1987:Jan
Feb
Mar

wfayZ

June
July
Aug
Sept
Oct

Nov..
Dec "...

Durable
goods

Nondurable
goods

Primary
processing

Advanced
processing

82.5
74.2

87.3
76.2

85.4
89.3
80.1

88.5
90.2
84.9
89.4
80.6
92.0
89.4
84.7
75.4
83.0

84.2
84.4
83.1
74.9
81.1

80.1
77.3
81.4
83.5
85.6

79.8
77.9
81.5
83.8
87.8

Utilities

79.8
83.4
85.9
89.3
80.0

87.0
86.1
83.6
75.0
81.6

Mining

80.0
73.2

82.8
85.8

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
1987"

Total

80.5
77.2
81.6
83.4
84.6

89.5
91.1
86.7
87.0
86.7

87.0
86.7
86.1

86.7
87.7
88.0

91.0
91.4
85.3
86.9
87.7

91.1
87.6
87.0
86.1

82.9
84.6
87.0

79.2
77.4
82.8
87.0
82.6

76.1
73.3
79.7
86.2
81.6

83.9
83.5
87.4
88.1
84.2

80.9
79.5
86.4
91.3
85.4

78.3
76.1
81.1
85.1
81.5

87.3
90.2
91.4
91.1

72.3
77.4
81.4
84.2
84.6

74.8
79.4
82.9
84.1

76.3
81.4
84.5
86.1
85.3

72.2
79.3
83.1
86.0
86.6

72.6
76.8
80.5
83.1
83.5

89.2
89.7
89.9
90.3
90.7

84.3
85.3
85.1
85.0
85.6

79.3
78.2
70.3
73.9
80.5

77.9
76.7
66.9
70.3
78.7

81.3
80.6
75.4
79.4
83.3

77.9
78.1
67.5
73.9
80.9

80.0
78.3
71.7
74.0
80.3

93.2
92.9
83.4
77.9
84.0

85.4
84.2
81.4
80.0
83.0

80.1
79.7
81.0

78.5
77.2
78.4

82.4
83.5
84.9

80.9
81.8
84.6

79.7
78.8
79.4

82.4
76.4
77.6

82.3
79.1
79.5

81.0
80.3
79.2
79.5
79.2
78.9

80.7
80.2
79.2
79.9
79.6
79.3

78.7
78.0
77.0
77.5
76.9
76.4

83.8
83.3
82.5
83.3
83.6
83.7

82.9
82.0
80.9
81.7
81.4
81.1

79.8
79.3
78.4
79.1
78.8
78.4

83.4
81.6
79.9
77.6
76.4
74.7

81.8
80.5
79.0
79.1
77.6
78.1

79.2
79.1
78.8
79.1
79.2
79.7

79.7
79.6
79.4
79.5
79.6
80.2

76.9
76.7
76.9
76.9
77.0
77.3

83.8
83.8
83.1
83.5
83.5
84.4

81.3
81.5
81.5
81.8
82.5
83.1

78.9
78.6
78.4
78.5
78.3
78.7

74.5
73.9
73.1
73.4
74.5
74.2

79.4
78.1
77.5
79.2
79.8
79.3

79.2
79.7

79.7
79.6
79.9
80.3

79.6
80.0
80.3
80.2
80.4
80.8

76.9
77.6
77.9
77.5
77.6
77.8

83.7
83.6
83.9
84.2
84.6
85.2

82.7
82.4
83.1
83.5
83.2
84.0

78.2
79.0
79.1
78.7
79.2
79.2

76.1
75.8
75.5
75.9
76.5
76.6

78.5
78.8
78.2
76.8
79.2
79.0

81.1
81.4
81.1
81.9
82.0
82.1

81.5
81.5
81.3
82.1
82.3
82.2

78.6
78.6
78.4
80.0
80.1
79.8

85.9
85.8
85.5
85.0
85.5
85.8

85.4
85.3
85.1
86.1
87.0
87.4

79.8
79.9
79.5
80.2
80.2
80.0

76.8
78.2
79.1
80.2
80.2
80.6

80.2

87.1
87 4
87.4
80.9
790
84.0
87.9
83.6
74.1
78.8
82 4
84.8
85.2
80.9
79.9
721
74.6
81.0
80.4
79.4
80.7

Source: Board of Governors of the Federal Reserve System.




305

93.2
93.9
95.6
95.1
93.7
94.5
92.8

81.3
80.0
80.5
81.0
80.5

Industrial
materials

TABLE B-52.—New construction activity, 1929-87
[Value put in place, billions of dollars; monthly data at seasonally adjusted annual rates]
Public construction

Private construction
Tntal

Year or month

new
construction

Nonresidential buildings and other
construction'

Residential
buildings1
Total

New
Total a housing
units

Total

Federal State and
local6

Total

Commercial3

Industrial

Other4

1.1
.1
.3
.3
.4
.2

0.9
.2
.3
.4
.8
.3

2.6
.5
1.2
1.3
1.5
1.2
.9
1.1

2.5
1.6
3.8
3.6
5,8
10.7
6.3
3.1

0.2
.5
.8
12
3.8
9.3
5.6
2.5

2.3
1.1
3.1
2.4
2.0
1.3

1929
1933
1939
1940
1941
1942..
1943
1944

10.8
29
8.2
87
12.0
141
8.3
5.3

8.3
12
4.4
51
6.2
3.4
2.0
2.2

3.6
5
2.7
30
3.5
17
,9
.8

3.0
3
2.3
26
3.0
14
.6

4.7
8
1.7
21
2.7
17
1.1
1.4

1945
1946

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

New series
1947
1948
1949

20.0
261
26.7

16.7
21.4
20.5

9.9
131
12.4

7.8
105
10.0

6.9
82
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
12
1.5

2.5
3.5
4.8

1950
1951
1952
1953
1954

33 6
35.4
36.8
391
41.4

26.7
26.2
26.0
27.9
29.7

181
15.9
15.8
166
18.2

15 6
13.2
12.9
13 4
14.9

86
10.3
10.2
113
11.5

1.4
1.5
1.1
1.8
2.2

1.1
2.1
2.3
2.2
2.0

61
6.7
6.8
73
7.2

6.9
9.3
10.8
11.2
11.7

16
3.0
4.2
41
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

219
20.2
19.0
19 8
24.3

18 2
16.1
14.7
154
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

28
2.7
3.0
3.4
3.7

8.9
10.0
11.1
12.1
12.3

1960
1961
1962
1963

54 7
56.4
60 2
64.8

389
39.3
42 3
45.5

23 0
23.1
25 2
27.9

17 3
17.1
194
21.7

15 9
16.2
17 2
17.6

42
4.7
51
5.0

29
2.8
28
2.9

89
8.7
92
9.7

15.9
17.1
17.9
19.4

36
3.9
39
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
818
83.5
93 2
100.5

56.6
58.0
58.1
65.7
72.7

30.2
286
28.7
342
37.2

23.8
218
21.5
26.7
29,2

26.3
294
29.4
316
35.5

8.1
8.1
8.0
9.0
10.7

5.1
66
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
38
3.3
3.2
3.2

18.0
20.0
22.1
24.2
24.6

1970
1971
1972
1973
1974

1013
117.9
133 9
147 4
147.8

734
88.2
103.9
115 0
109.6

359
48.5
607

Ho

271
38.7
501
546
43!4

37 5
39 7
43 2
49 9
53.7

111
13.0
154
17 7
17.6

65
5.4
47
62
7.9

199
21.3
231
26 0
28.2

27.9
29.7
30.0
32.3
38.1

31
3.8
4.2
47
5.1

24.8
25.9
25.8
27.6
33.0

1975
1976
1977
1978
1979

144.3
163 0
188.0
225.9
252.4

102.6
122.1
148.6
178.4
200.7

51.6
68 3
92.0
109.8
116.4

36.3
50 8
72.2
85.6
89.3

51.0
53 8
56.6
68.6
84.3

13.9
13 7
15.7
19.7
27.1

8.0
72
7.7
11.0
15.0

29.1
33 0
33.2
37.9
42.3

41.7
40.9
39.4
47,5
51.7

6.1
6.8
7.1
8.1
8.6

35.6
34.1
32.4
39.3
43.1

1980
1981
1982
1983
1984

251.7
260 2
246 6
281.3
328.2

193.3
203.6
192.9
227.5
271.0

100.4
99 2
84 7
125.5
153.8

69.6
694
57 0
94!6
113.8

92.9
104 4
108 2
102.0
117.1

32.9
38.0
414
41.0
54.9

13.8
17.0
17 3
12.9
13.7

46.2
49.4
49.5
48.1
48.5

58.5
56.5
53.7
53.8
57.7

9.6
10 4
10 0
10.6
11.2

48.8
46.1
43.7
43.2
46.4

1985
1986
1987 K.

356.0
3888
399.5

291.7
3166
324.1

158.5
1871
198.1

114 7
1332
139.6

133 2
129 4
126.0

66.9
64.2
60.3

15.8
13.7
13.1

50.5
51.5
52.6

64.3
72.2
75.4

12 0
12 5
13.9

52.3
597
61.5

.0
.1

.6

New series

See next page for continuation of table.




306

TABLE B-52.—New construction activity, 1929-87—Continued
[Value put in place, billions of dollars; monthly data at seasonally adjusted annual rates]
Public construction

Private construction
Trttal

Year or month

new
construction

Residential
buildings >

Nonresidential buildings and other
constructionl
Total

Total
2

housing
units

Total

Total

Commercial a

Industrial

4

Federal State and
local5

Other

May
June

Ar
p

376.5
375 7
389.3
417.8
383.2
371.6

305 3
305 0
3191
345.2
309.1
299.9

167 0
1686
187.4
213.0
181.2
172.0

121.4
123 7
125.3
128.2
131.3
135.1

138.3
136.5
131.7
132.1
127.9
127.9

69.7
68.0
66.2
65.4
62.9
63.1

15.5
15.2
13.4
14.4
13.4
13.0

53.1
53.2
52.1
52.3
51.7
51.8

71.3
70.7
70.2
72.6
74.1
71.7

12.7
12.9
12.2
12.5
12.5
12.1

58.6
57.8
58.0
60.1
61.6
59.7

July
Aug
Sept
Oct
Nov
Dec

391.0
395.3
400.1
394.9
3906
380.2

318.4
322 6
324.9
322.9
320 4
306.8

191.9
194.0
198.8
192.6
194 5
181.7

136.5
136.5
137.6
139.0
138.5
137.6

126.5
128.6
126.1
130.3
126.0
125,1

62.6
64.4
62.8
63.8
61.7
62.3

12.9
13.2
13.0
14.6
13.4
13.2

51.1
51.0
50.3
51.9
50.8
49.7

72.6
72.7
75.2
71.9
70.2
73.3

12.1
12.2
14.3
11.3
12.3
13.0

60.5
60.5
60.9
60.6
57.9
60.3

1987-Jan
Feb
Mar
Apr
May
June

384.7
401.6
388.3
3962
396.7
397.2

310.2
326.5
312.2
320 5
321.4
324.3

187.8
203.1
190.8
199 5
195.9
200.9

137.3
137.0
139.5
139.7
139.4
138.2

122.4
123.3
121.4
121.0
125.5
123.4

58.3
60.7
59.9
58.4
60.4
58.9

12.1
12.1
11.4
11.5
13.4
13.0

52.0
50.5
50.1
51.1
51.7
51.4

74.5
75.2
76.1
75.7
75.3
72.9

13.4
11.6
12.8
12.4
14.6
14.0

61.2
63.6
63.4
63.3
60.7
58.9

July
Aug
Sept
Oct
Nov
Oec p

398.5
402 9
402.8
403.5
4113
409.7

323 8
329 8
324.9
326.7
333 6
330.1

198 0
2002
197.0
198.8
199 8
200.8

137.9
138 2
140.0
141.0
142 4
143.2

125.8
129 6
127.9
127.9
133 8
129.3

59.6
61.6
59.7
60.6
64.7
60.8

13,0
13.7
14.4
13.6
14.4
13.4

53.2
54.4
53.8
53.7
54.7
55.1

74.6
73.0
77.9
76.8
77.7
79.6

14.8
14.2
16.2
13.7
14.9
13.8

59.8
58.8
61.7
63.1
62.8
65.9

1986* Jan

Feb

Mar

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.
6
Includes Federal grants-in-aid for State and local projects.
Source: Department of Commerce, Bureau of the Census.




307

TABLE B-53.—New bousing units started and authorized, 1959-87
[Thousands of units]
New private housing units authorized2

New housing units started
Private and public'
Year or month

Type of structure

Total
(farm and
nonfarm)

Nonfarm

1959....

1,553.7

1,531.3

1,517.0

1,234.0

1960
1961
1962
1963
1964

1,296.1
1,365.0
1,492.5
1,634.9
1,561.0

1,274.0
1,336.8
1,468.7
1,614.8
1,534.0

1,252.2
1,313.0
1,462.9
1,603.2
1,528.8

994.7
974.3
991.4
1,012.4
970.5

1965....
1966....
1967....
1968....
1969....

1,509.7
1,195.8
1,321.9
1,545.4
1,499.5

1,487.5
1,172.8
1,298.8
1,521.4
1,482.3

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

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

1,171.4
1,547.6
2,001.7
2,036.1
1,760.0

1,160.4
1,537.5
1,987.1
2,020.3
1,745.1

1980...
1981..
1982..
1983..
1984...

1,312.6
1,100.3
1,072.1
1,712.5
1,755.8

1985
1986
1987 "...

1,745.0
1,807.1

1975..
1976..
1977..
1978..
1979..

1

Type of structure

Private (farm and nonfarm)*

Total
1 unit

2 to 4
units

Total
1 unit

5 units
or more

2 to 4
units

5 units
or more

1,208.3

938.3

77.1

192.9

998.0
1,064.2
1,186.6
1,334.7
1,285.8

746.1
722.8
716.2
750.2
720.1

64.6
67.6
87.1
118.9
100.8

187.4
273.8
383.3
465.6
464.9

422.5
325.1
376.1
527.3
571.2

1,239.8
971.9
1,141.0
1,353.4
1,323.7

709.9
563.2
650.6
694.7
625.9

84.8
61.0
73.0
84.3
85.2

445.1
347.7
417.5
574.4
612.7

84.8
120.3
141.3
118.3
68.1

535.9
780.9
906.2
795.0
381.6

1,351.5
1,924.6
2,218.9
1,819.5
1,074.4

646.8
906.1
1,033.1
882.1
643.8

88.1
132.9
148.6
117.0
64.3

616.7
885.7
1,037.2
820.5
366.2

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

1,741.8
1,805.4
1,617.1

1,072.4
1,179.4
1,143.7

93.4
84.0
65.3

576.1
542.0
408.2

1,733.3
1,769.4
1,539.0

956.6
1,077.6
1,036.3

120.1
108.4
87.3

656.6
583.5
415.3

283.0
257.4
338.7
471.5
590.8
108.4
450.0

Seasonally adjusted annual rates
1986:Jan
Feb
Mar

SE
Nov
Dec
1987:Jan
Feb
Mar
Apr
May....
June....
July
Aug
Sept....
Oct
Nov
Dec...

115.9
107.2
151.1
188.3
186.8
183.6

2,004
1,923
1,887
1,945
1,848
1,842

1,302
1,183
1,195
1,220
1,219
1,212

100
106
82
81
83
79

602
634
610
644
546
551

1,848
1,769
1,810
1,874
1,778
1,793

1,058
1,024
1,038
1,132
1,083
1,110

131
112
104
115
120
106

659
633
668
627
575
577

172.2
163.8
154.3
154.9
115.9
113.1

1,786
1,800
1,689
1,657
1,637
1,813

1,147
1,180
1,123
1,114

80
88
62
85
71
108

559
532
504
458
437
472

1,778
1,728
1,687
1,664
1,667
1862

1,098
1,059
1,071
1,036
1,028
1,184

108
108
99
104
94
105

572
561
517
524
545
573

105.1
102.8
141.3
159.6
158.3
163.2

1,816
1,838
1,730
1,643
1,606
1,586

1,253
1,303
1,211
1,208
1,130

79
76
85
67
67
85

484
459
434
368
409
413

1,652
1,676
1,719
1,598
1,493
1,517

1,085
1,204
1,150
1,058
1,009
1,039

96
109
94
94
91
85

471
363
475
446
393
393

152.5
143.9
152.3
139.1
116.6

1,598
1,585
1,685
1,537
1,639
1,374

1,143
1,111
1,211
1,105
1,110
1,023

59
59
50
66
51
48

396
415
424
366
478
303

1,487
1,502
1,502
1,463
1,469
1,361

993
1,023
992
977
983
974

87
83
80
79
82
81

407
396
430
407
404
306

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 pfaces 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.




308

TABLE B-54.—Business expenditures for new plant and equipment, 1947-88
[Billions of dollars; quarterly data at seasonally adjusted annual rates]

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
1986 4
1987 4
1988
1986:1
III"""!!!!
IV
1987:1

III!!!!!!!I
IV4
1988: I 4

All
industries

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
379.47
390.57
419.00
380.04
376.21
375.50
386.09
374.23
377.65
393.13
417.25
427.97
429.07

Total

Addenda

Nonmanufacturing

NonDurable durable Total l
goods goods

ComMin- Trans- Public mercial
ing porta- utiliand
tion ties other

Total
nonfarm
busi-2
ness

Nonmanufacturing
Manufacturing

Total

Surveyed
quarterly

Surveyed
annually3

8.73
9.25
7.32

3.39
3.54
2.67

5.34
5.71
4.64

11.38
13.53
12.96

0.69
.93
.88

2.69
3.17
2.80

1.64
2.67
3.28

6.38
677
6.01

22.27
25.97
24.03

873
9.25
7.32

13.54
1673
1672

11.38
13.53
12.96

2.16
3.19
376

7.73
11.07
12.12
12.43
12.00

3.22
5.12
5.75
5.71
5.49

4.51
5.95
6.37
6.72
6.51

13.83
15.74
16.04
17.53
16.85

.84
1.11
1.21
1.25
1.29

2.87
3.60
3.56
3.58
2.91

3.42
3.75
3.96
4.61
4.23

6.70
7.29
7.31
8.09
8.42

25.81
31.38
32.16
34.20
33.62

7.73
11.07
12.12
12.43
12.00

18.08
20.31
20.04
2177
21.62

13.83
1574
16.04
17.53
16.85

4.25
4.57
4.00
4.23
476

12.50
16.33
17.50
12.98
13.76

5.87
8.19
8.59
6.21
6.72

6.62
8.15
8.91
6.77
7.04

18.44
21.57
23.04
20.86
22.12

1.31
1.64
1.69
1.43
1.35

3.10
3.56
3.84
2.72
3.47

4.26
4.78
5.95
5.74
5.46

9.77
11.59
11.56
10.97
11.84

37.08
45.25
48.62
42.55
45.17

12.50
16.33
17.50
12.98
13.76

24.58
28.91
31.11
29.57
31.41

18.44
21.57
23.04
20.86
22.12

6.14
7.35
8.08
872
9.29

16.36
15.53
16.03
17.27
21.23

8.28
7.43
7.81
8.64
10.98

8.08
8.10
8.22
8.63
10.25

23.08
22.80
24.83
26.40
30.04

1.29
1.26
1.41
1.26
1.33

3.54
3.14
3.59
3.64
4.71

5.40
5.20
5.12
5.33
5.80

12.86
13.21
14.71
16.17
18.20

48.99
48.14
51.61
53.59
62.02

16.36
15.53
16.03
17.27
21.23

32.63
32.60
35.58
36.33
40.80

23.08 9.55
22.80 9.80
24.83 1075
26.40 9.93
30.04 10.76

25.41
31.37
32.25
32.34
38.27

13.49
17.23
17.83
17.93
19.97

11.92
14.15
14.42
14.40
16.31

34.12
39.03
40.50
44.08
49.47

1.36
1.42
1.38
1.44
1.77

5.66
6.68
6.57
6.91
7.23

6.49
7.82
9.33
10.52
11.70

20.60
23.11
23.22
25.22
28.77

7079
82.62
83.82
88.92
100.02

25.41
31.37
32.25
32.34
36.27

45.39
51.25
51.57
56.58
6374

34.12 11.27
39.03 12.22
40.50 11.07
44.08
49.47 14.27

36.99
33.60
35.42
42.35
52.48

19.80
16.78
18.22
22.63
26.77

17.19
16.82
17.20
19.72
25.71

54.92
59.31
67.98
77.67
87.19

2.02
2.67
2.88
3.30
4.58

7.17
6.42
7.14
8.00
9.16

13.03
14.70
16.26
17.99
19.96

3271
35.52
41.69
48.39
53.49

106.15
109.18
120.91
139.26
159.83

69.16
36.99
33.60 75.58
35.42 85.49
42.35 96.91
52.48 107.35

54.92 14.24
59.31 16.26
67.98 17.51
77.67 19.24
87.19 20.16

53.66
58.53
67.48
78.58
95.92

25.37
27.50
32.77
39.46
48.50

28.28
31.03
34.71
39.13
47.42

88.76 6.12
99.91 7.63
117.34 9.81
139.18 11.22
159.04 12.81

9.95
11.10
12.20
13.36
16.05

20.23
22.90
27.83
31.50
35.63

52.47
58.29
67.51
83.09
94.56

162.60
179.91
208.15
245.34
284.94

53.66 108.95 88.76 20.19
58.53 121.38 99.91 21.47
67.48 140.67 117.34 23.33
78.58 16676 139.18 27.58
95.92 189.02 159.04 29.98

112.33
126.54
120.68
116.20
138.82

55.36
59.81
55.35
53.08
66.24

56.96
66.73
65.33
63.12
72.58

170.47
188.68
189.89
188.58
215.61

16.60
15.84
14.79
13.97
16.52

37.74
41.21
45.43
44.96
47.48

100.14
110.24
109.63
114.45
13475

314.47
349.26
347.47
343.35
398.99

153.48
142.69
147.86
159.85

73.27
69.14
71.85
73.98

80.21
73.56
76.01
85.87

233.65 15.88 18.02
236.78 11.22 18.80
242.71 11.18 19.10
259.15 11.85 20.63

48.81
46.38
44.53
45.04

150.94
160.38
167.89
181.63

431.94 153.48
427.23 142.69
147.86
159.85

145.11
142.19
139.43
144.07

68.71
68.56
69.42
69.87

76.39
73.62
70.01
74.20

234.93 13.13 18.50 47.17 156.14
234.03 11.29 18.40 46.43 157.91
236.07 10.14 18.81 45.81 161.31
242.02 10.31 19.50 46.12 166.08

145.11
142.19
139.43
144.07

234.93
234.03
236.07
242.02

140.65
140.79
147.56
162.45

70.47
68.76
71.78
76.40

70.18
72.03
75.78
86.05

233.58 10.31 18.98
236.87 11.02 17.67
245.58 11.64 19.17
254.80 11.74 20.60

160.70
164.69
169.87
176.29

140.65
14079
147.56
162.45

233.58
236.87
245.58
254.80

164.68
165.94

78.41
77.70

86.27 263.29
88.23 263.14

11.86 22.92 45.36 183.15
12.04 20.53 46.56 184.01

164.68
165.94

263.29
263.14

15.99
21.39
20.05
15.19
16.86

43.60
43.48
44.90
46.16

112.33
126.54
120.68
116.20
138.82

202.15
22272
22679
227.15
260.16

170.47
188.68
189.89
188.58
215.61

31.68
34.04
36.89
38.56
44.55

278.46 233.65 44.81
284.54 236.78 47.75
242.71
259.15

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 tne 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 October and November 1987, corrected for biases.
Source: Department of Commerce, Bureau of Economic Analysis.




309

TABLE B-55.—Manufacturing and trade, sales and inventories, 1948-87
[Amounts in millions of dollars; monthly data seasonally adjusted]
Total manufacturing and
trade
Year or month
Sales 1
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
1986:Jan
Feb
Mar
Apr
May
June
July

Aug
Sept
Oct
Nov
Dec
1987; Jan
Feb
Mar

June....
July

Aug
Sept
Oct
Nov
Dec p...

Inventories 2

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
90,765
98,607
105,585
108,100
116,769
130,931
153,762
177,946
182,402
204,381
229,773
260,587
298,139
327,871
356,697
348,746
369,266
408,721
419,459
425,752
424,035
419,567
415,687
421,276
417,493
422,031
421,167
423,040
437,226
429,250
429,782
443,623
424,550
443,169
445,032
444,357
446,282
451,734
452,652
457,499
462,434
462,411
460,616
466,573

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
144,870
155,771
169,420
177,493
187,722
201,862
233,171
285,883
288,417
318,647
351,164
399,220
451,166
493,921
527,756
574,126
589,280
641,328
650,695
652,771
651,884
652,872
653,905
654,980
652,853
653,566
656,371
655,553
653,666
655,614
655,257
652,624
659,001
660,470
663,010
665,877
671,609
674,753
677,743
678,442
682,323
689,926
696,416
701,868

Ratio1
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
1.60
1.58
1.60
1.64
1.61
1.54
1.52
1.61
1.58
1.56
1.53
1.53
1.51
1.51
1.48
1.67
1.56
1.52
1.54
1.54
1.54
1.56
1.57
1.55
1.56
1.55
1.56
1.55
1.50
1.53
1.52
1.47
1.55
1.49
1.49
1.50
1.50
1.49
1.50
1.48
1.48
1.49
1.51
1.50

Manufacturing
Sales'

Inventories 2

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
163,350
171,242
187,869
189,928
189,442
190,391
188,618
185,483
189,276
187,361
188,957
186,331
187,249
190,384
189,744
190,159
197,474
189,956
195,608
197,430
195,958
196,929
200,591
199,395
200,404
205,732
206,396
207,226
211,695

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
311,421
312,152
334,163
326,780
318,238
325,756
324,551
323,774
323,315
322,216
321,261
320,888
319,613
318,356
318,276
318,755
318,238
320,654
320,535
320,090
320,785
321,848
321,621
323,333
325,394
326,670
328,554
331,812
333,221

Merchant wholesalers
Ratio

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
1.77
1.74
1.77
1.90
1.83
1.68
1.59
1.67
1.84
1.69
1.62
1.58
1.58
1.67
1.65
1.95
1.80
1.74
1.74
1.70
1.71
1.72
1.75
1.71
1.72
1.70
1.72
1.71
1.67
1.68
1.68
1.61
1.69
1.64
1.62
1.64
1.63
1.60
1.62
1.62
1.59
1.59
1.60
1.57

Sales

1

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
114,563
115,109
115,251
113,359
112,945
113,887
110,625
113,469
114,358
114,056
117,741
117,284
117,892
118,462
116,545
123,281
123,009
123,439
124,486
124,836
126,196
128,164
129,912
130,384
127,400
127,419

Inventories 2 Ration
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
128,196
129,803
140,865
144,244
147,375
144,952
144,967
145,518
145,900
145,650
146,585
147,711
147,939
148,253
147,268
147,548
147,352
149,347
149,408
149,565
150,050
152,673
153,093
152,648
151,222
153,245
156,632
157,287
158,183

Retail trade

Sales

1

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
1.27
1.25
1.24
1.29
1.30
1.28
1.17
1.15
1.31
1.29
1.28
1.27
1.25
1.20
1.20
1.35
1.27
1.21
1.25
1.28
1.26
1.28
1.29
1.28
1.32
1.29

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
24,758
27,453
29,390
31,264
34,513
38,209
42,658
45,167
49,010
54,699
60,207
67,013
74,731
79,776
86,555
89,107
97,599
107,448
114,968
121,201
118,393
117,590
117,259
118,113
119,507
119,605

1.29
1.30
1.26
1.26
1.25
1.24
1.28
1.21
1.22
1.22
1.23
1.23
1.21
1.18
1.18
1.20
1.23
1.24

120,478
121,735
129,101
122,222
121,731
127,687
118,049
124,280
124,593
124,960
124,867
126,307
127,061
128,931
126,790
125,631
125,990
127,459

Inventories2
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
35,249
38,885
42,455
43,641
49,856

54,809

62,989

70,852

71,510

79,087

89,149
102,306
110,804
116,162
126,854
134,509
147,325
166,300
179,671
187,158
181,176
183,354
184,613
185,765
184,987
185,720
187,772
188,001
187,057
190,070
188,954
187,034
189,000
190,527
193,355
195,042
197,088
200,039
201,762
201,826
202,408
204,740
207,317
210,464

1
Monthly average for year and total for month.
2
Seasonally adjusted, end of period. Inventories beginning January 1982 for manufacturing and December 1980 for wholesale and
retail trade are not comparable with earlier periods.
3
Inventory/sales ratio. Beginning 1967 annual data are averages of monthly figures except for manufacturing and trade combined,
which are based on December inventories and monthly average sales for the year. For earlier periods, data are weighted averages. 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

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.
Source: Department of Commerce, Bureau of the Census.




310

TABLE B-56.—Manufacturers' shipments and inventories, 1947-87

[Millions of dollars; monthly data seasonally adjusted]
Shipments
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
1986
1987 P.
1986:Jan
Feb
Mar....
Apr
MayJune...
July...,
Aug...,
Sept..,
Oct
Nov....
Dec...
1987:Jan
Feb
Mar...
Apr....
MayJune..
July...
Aug...
Sept..
Oct....
Nov...
Dec P.

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
163,350
171,242
187,869
189,928
189,442
200,716
190,391
188,618
185,483
189,276
187,361
188,957
186,331
187,249
190,384
189,744
190,159
197,474
189,956
195,608
197,430
195,958
196,929
200,591
199,395
200,404
205,732
206,396
207,226
211,695

1

Inventories2
Durable goods industries

Durable
goods
industries

Nondurable
goods
industries

Total

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
79,352
84,956
96,623
98,930
100,142
105,323
98,396
99,082
97711
100,941
98,619
99,602
99,712
98,185
100,655
101,031
100,009
106,394
99,318
103,601
104,750
102,747
102,477
104,476
103,032
104,135
108,433
108,251
108,378
113,282

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
83,998
86,286
91,246
90,997
89,300
95,393
91,995
89,536
87,772
88,335
88,742
89,355
86,619
89,064
89,729
88,713
90,150
91,080
90,638
92,007
92,680
93,211
94,452
96,115
96,363
96,269
97,299
98,145
98,848
98,413

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
311,421
312,152
334,163
326,780
318,238
333,221
325,756
324,551
323,774
323,315
322,216
321,261
320,888
319,613
318,356
318,276
318,755
318,238
320,654
320,535
320,090
320,785
321,848
321,621
323,333
325,394
326,670
328,554
331,812
333,221

Materials
and
supplies

Total

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
200,711
200,220
218,524
213,750
207,854
216,348
213,429
212,598
212,697
212,226
211,951
211,063
210,462
209,684
209,402
209,033
209,219
207,854
209,090
208,644
207,987
208,683
209,096
208,654
209,951
210,921
211,680
213,436
215,931
216,348

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
58,755
60,047
64,759
62,163
59,371
60,249
61,236
60,901
60,500
60,596
60,211
60,326
59,835
59,478
59,465
58,966
59,292
59,371
59,817
59,499
59,226
59,770
59,723
59,759
59,417
59,328
59,554
59,587
60,031
60,249

1

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
87,508
87,802
97,828
97,219
95,310
100,799
97,858
97,361
97,998
97,760
97,672
97,565
97,137
97,011
96,978
96,892
96,108
95,310
95,589
95,617
95,069
95,335
95,768
96,060
96,904
97,706
98,623
99,390
100,824
100,799

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
54,448
52,371
55,937
54,368
53,173
55,300
54,335
54,336
54,199
53,870
54,068
53,172
53,490
53,195
52,959
53,175
53,819
53,173
53,684
53,528
53,692
53,578
53,605
52,835
53,630
53,887
53,503
54,459
55,076
55,300

Total

12,836
13,881
13,261
15,539
18,315
17,405
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
110,710
111,932
115,639
113,030
110,384
116,873
112,327
111,953
111,077
111,089
110,265
110,198
110,426
109,929
108,954
109,243
109,536
110,384
111,564
111,891
112,103
112,102
112,752
112,967
113,382
114,473
114,990
115,118
115,881
116,873

Monthly average for year and total for month.,
Seasonally adjusted, end of period. Data beginning 1982 are not comparable with data for prior periods.
Note.—Data beginning 1958 are not strictly comparable with earlier data.
Source: Department of Commerce, Bureau of the Census.
2




311

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
43,798
44,550
44,826
42,865
42,986
45,635
42,894
42,801
42,444
42,376
42,159
42,178
42,593
42,502
42,092
42,181
42,123
42,986
43,021
43,023
43,191
43,624
44,045
44,184
44,394
44,602
45,288
45,109
45,420
45,635

Work
in
process

Finished
goods

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
18,357
18,649
18,807
18,775
17,338
18,793
18,016
18,061
17,618
17,411
17,303
17,395
17,270
17,021
17,084
17,272
17,269
17,338
17,612
17,914
18,018
17,832
18,029
18,134
18,034
18,385
18,432
18,554
18,736
18,793

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
48,555
48,733
52,006
51,390
50,060
52,445
51,417
51,091
51,015
51,302
50,803
50,625
50,563
50,406
49,778
49,790
50,144
50,060
50,931
50,954
50,894
50,646
50,678
50,649
50,954
51,486
51,270
51,455
51,725
52,445

TABLE B-57.—Manufacturers' new and unfilled orders, 1947-87

[Amounts in millions of dollars; monthly data seasonally adjusted]
Unfilled orders 2

New orders 1

Unfilled orders—shipments
ratio 3

Durable goods
industries
Year or month

Capital
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

15,256
17,693
15,614

1980
1981
1982
1983
1984
1985
1986
1987"

1986: Jan
Feb
Mar
May
June
July
Aug
Sept
Oct.

Nov

Dec
1987: Jan
Feb
Mar

Apr

May
June
July
Aug
Sept

Oct
Nov

Dec"

,

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
161,600
173,915
190,065
190,631
189,482
203,270
190,981
190,928
188,769
186,606
186,127
187,022
186,334
185,208
193,043
188,841
190,153
196,894
187,356
194,485
199,399
200,624
201,397
205,454
206,065
203,157
206,719
209,399
209,626
214,769

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
77,676
87,485
98,875
99,600
100,131
107,672
99,022
101,265
100,937
98,176
97,298
97,899
99,679
96,303
102,947
99,976
99,979
105,681
96,434
101,932
106,213
106,977
106,992
109,181
109,213
106,678
109,345
111,095
110,949
116,409

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
21,469
22,143
26,714
26,970
26,671
29,624
24,956
27,659
26,613
25,357
25,429
25,851
26,404
25,340
27,155
27,542
27,268
29,142
27,024
26,856
27,396
28,310
30,031
29,987
31,982
29,540
29,753
30,416
30,085
33,559

Nondurable

Total

industries

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
83,924
86,431
91,189
91,030
89,351
95,598
91,959
89,663
87,832
88,430
88,829
89,123
86,655
88,905
90,096
88,865
90,174
91,213
90,922
92,553
93,186
93,647
94,405
96,273
96,852
96,479
97,374
98,304
98,677
98,360

1
2
9

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
306,302
338,849
365,177
373,495
372,974
404,104
374,085
376,395
379,681
377,011
375,777
373,842
373,845
371,804
374,463.
373,560
373,554
372,974
370,374
369,251
371,220
375,886
380,354
385,217
391,887
394,640
395,627
398,630
401,030
404,104

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
297,344
328,103
355,114
363,030
361,855
390,393
363,656
365,839
369,065
366,300
364,979
363,276
363,243
361,361
363,653
362,598
362,568
361,855
358,971
357,302
358,765
362,995
367,510
372,215
378,396
380,939
381,851
384,695
387,266
390,393

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
8,958
10,746
10,063
10,465
11,119
13,711
10,429
10,556
10,616
10,711
10,798
10,566
10,602
10,443
10,810
10,962
10,986
11,119
11,403
11,949
12,455
12,891
12,844
13,002
13,491
13,701
13,776
13,935
13,764
13,711

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

Durable
goods
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

3.60
3.48
3.43
3.53
3.56
3.53

4.39
4.06
3.90
4.56
4.96
4.52
3.94
3.89
4.22
4.61
4.55
4.57
4.62
4.19
4.29
4.36
4.22
4.22
4.61
4.53
4.62
4.49
4.55
4.47
4.49
4.51
4.44
4.42
4.41
4.22
4.52
4.34
4.25
4.40
4.44
4.41

3.59
3.60
3.48
3.52
3.52
3.43

4.51
4.49
4.30
4.38
4.38
4.22

3.65
3.38
3.31
3.86
4.13
3.76
3.30
3.27
3.59
3.88
3.81
3.77
3.75
3.45
3.52
3.57
3.41
3.43
3.72
3.67
3.73
3.65
3.68
3.60
3.63
3.61
3.57
3.55
3.53
3.41

Monthly average for year and total for month.
Seasonally adjusted, 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.




312

PRICES
TABLE B-58.—Consumer price indexes, major expenditure classes, 1946-87
[1967=100]
Food and
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
1987
1986:Jan
Feb
Mar

All
items

58 5
66 9
72.1
714
721
77.8
79 5
801
805
80 2
814
84 3
86 6
87 3
88 7
89.6
90 6
917
92 9
94 5
97 2
100 0
104.2
109.8
116 3
1213
125 3
133.1
147 7
1612
170.5
1815
195.4
217 4
246 8
272.4
2891
298 4
311 1
322.2
328 4
340 4
328.4
327.5
326.0
325.3
iday".'.'"" 326.3
June
327.9
July
328.0
Aug
328.6
Sept
330.2
Oct , 330.5
Nov
330.8
Dec...;.... 331.1
1987: Jan
333.1
Feb
334.4
Mar
335.9
337.7
A/Pay"""" 338.7
June
340.1
July
340.8
Aug
342.7
Sept
344.4
Oct
345.3
Nov
345.8
Dec
345.7

Total1

Housing

2

Food

581
70.6
76.6
73 5
74.5
82.8
84 3
83.0
82 8
81.6
82.2
84 9
88.5
871
88 0
89.1
89 9
912
924
94.4
991
100 0 100 0
103.6 103.6
108.8 108.9
114 7 114.9
118 3 118 4
123.2 123.5
139.5 141.4
158.7 161.7
1721 175 4
177.4 180.8
1880 192 2
206.3 211.4
228 5 234 5
248 0 254 6
267.3 274.6
278 2 285 7
284 4 291.7
295 1 302 9
302.0 309.8
3118 319 7
324 5 333 0
307.9 315.6
307.7 315.3
307.8 315.4
308.5 316.1
309.4 317.0
309.5 317.1
312.2 320.1
314.6 322.7
315.1 323.2
315.6 323.7
316.4 324.6
317.0 325.2
320.5 328.9
321.6 330.1
321.6 330.0
322.5 331.0
324.0 332.5
325.4 334.1
325.1 333.6
325.4 333.8
326.4 334,9
326.9 335.3
3267 335.1
328.1 336.7

Total

60 6
65 2
69.8
70 9
72 8
77.2
78 7
80.8
817
82 3
83.6
86 2
87.7
88 6
90 2
90.9
917
92 7
93 8
94.9
97 2
100 0
104.0
110.4
118 2
123 4
128.1
133.7
148.8
164 5
174 6
1865
202 8
227 6
263 3
293.5
314 7
3231
336 5
349.9
360 2
3710
356.8
356.5
357.0
358.0
358.5
361.2
361.5
362.4
363.7
363.0
361.7
362.1
363.9
365.1
366.4
367.7
368.9
371.3
372.5
374.9
375.4
375.2
374.9
375.3

Other
hold Apparel TransEnterFuel and furnish- and portation Medical tainment goods
and
care
ings upkeep
Shelter other
services
utilities 3 and
operation 2

76 5
78 2
791
804
83 4
851
86 0
87 8
88.5
89 6
90 7
92 2
93 8
968
100 0
104 8
113.3
123 6
128 8
134 5
140.7
154 4
169 7
179 0
1911
210 4
239 7
2817
314 7
337 0
344 8
3617
382 0
402 9
4218
393.8
394.8
397.0
400.1
400.9
401.6
403.5
405.2
407.6
409.5
410.2
410.4
412.3
414.0
415.9
418.0
419.2
420.2
422.1
425.1
426.2
428.6
429.2
430.4

83.0
83 5

851
87.3
89 9
91.7
93 8

959
97.1
97 3
98 2
98 4
98.3
98 8
100 0
101.3
103.6
107 6
115 0
1201
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
380 7
394.6
390.0
385.5
381.8
382.5
393.8
389.4
389.5
388.3
379.1
371.1
371.0
373.7
374.8
374.9
374.2
377.5
387.6
388.1
391.1
389.8
381.3
378.2
376.9

1
2
3

913
90 9
89 9
89.9
919
92 3
93 1
93 8
93.7
93 8
94 6
95 0
95 3
97 0
100 0
103 8
107.7
1115
115 7
118 3
121.6
135 3
1510
1601
167 5
177 7
190 3
205 4
2213
233 2
238 5
242 5
247 2
250 4
254 9
248.8
249.0
249.8
249.6
249.9
250.2
250.5
250.5
251.5
251.6
251.2
252.4
253.1
253.5
254.3
255.2
254.9
254.9
255.1
255.4
255.8
255.6
255.6
255.3

67 5
78 2
83.3
801
79 0
86.1
85 3
84.6
84 5
84.1
85.8
87 3
87.5
88 2
89 6
90.4
90 9
919
92 7
93.7
961
100 0
105.4
111.5
116.1
119 8
122.3
126.8
136 2
142 3
147.6
154 2
159 6
166 6
178 4
186.9
1918
196 5
200 2
206.0
207 8
216 9
205.0
204.1
206.3
207.3
206.4
204.5
203.2
207.0
212.1
213.2
213.1
210.9
207.1
208.4
215.2
218.7
218.0
214.5
210.5
214.7
222.2
226.3
226.4
221.1

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
1506
165.5
177 2
185.5
212 0
249 7
280.0
2915
298 4
3117
319.9
307.5
316 8
323.9
319.2
309.6
303.3
305.7
308.6
304.7
301.3
302.2
302.6
304.3
304.8
308.5
310.0
310.6
313.3
314.6
316.7
318.5
320.2
320.4
321.9
324.1
323.3

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
934
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
2659
294.5
328.7
357.3
379 5
403.1
433.5
462.2
418.2
422.3
425.8
428.0
429.7
432.0
434.8
437.5
439.7
442.3
444.6
446.8
449.6
452.4
455.0
457.3
458.9
461.3
464.1
466.1
467.8
469.8
471.7
472.9

100.0
105.7
111.0
116.7
1229
126.5
130.0
139.8
152 2
159.8
167.7
176.6
188.5
205.3
221.4
235.8
246.0
2551
265.0
274.1
283.2
270.8
272.0
271.9
272.3
272.9
273.9
274.4
274.7
275.3
276.5
277.4
277.4
278.3
278.7
279.8
281.3
282.0
282.3
283.5
283.9
285.2
287.1
288.1
288.5

Energy3

901
90.3
918
94.2
94.4
94.7
95 0
94.6
96.3
97 8
100.0
100 0
101.5
105.2
• 110.4 104.2
107.0
116.8
1112
122 4
114.3
127.5
123.5
132.5
159.7
142.0
176.6
153 9
189.3
162.7
207.3
172 2
220.4
183.3
275.9
196.7
361.1
214.5
235.7 410.0
416.1
259.9
288.3 419.3
307 7 423.6
326.6 426.5
346.4 370.3
366.5 371.7
339.1 424.7
340.3 408.9
341.1 381.3
341.8 361.8
342.1 367.6
342.6 380.6
344.9 366.5
346.4 358.6
353.3 360.6
354.6 348.6
354.9 341.7
355.2 342.4
358.1 352.2
359.7 359.2
360.3 360.C
361.1 362.4
362.0 366.9
362.9 380.6
365.1 382.4
366.6 388.9
373.9 387.4
375.5 376.7
376.1 373.5
376.9 370.4

Includes alcoholic beverages, not shown separately.
Series beginning 1967 not comparable with series for earlier years.
See Tables 6-59 and B-60.
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.




313

TABLE B-59.—Consumer price indexes, selected expenditure classes, 1946-87
[1967=100, except as noted]

Food

Total

1946
1947

58.1
70.6
76.6
73.5
74.5
82.8
84.3
83.0
82.8
81.6

1948

1949
1950
1951
1952
1953!"
1954
1955

:

82.2
84.9
88.5
87.1
88.0

1956

1957
1958
1959
I960
96i:::
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.!'.
1987

::

\Z

1986:Jan
Feb
Mar

fez
June
July
Aug
Sept
Oct
Nov
Dec
1987: Jan
Feb
Mar..

fe::
j*

June
Aug
Sept
Oct
Nov
Dec
1

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
324.5
307.9
307.7
307.8
308.5
309.4
309.5
312.2
314.6
315.1
315.6
316.4
317.0
320.5
321.6
321.6
322.5
324.0
325.4
325.1
325.4
326.4
326.9
326.7
328.1

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
333.0
315.6
315.3
315.4
316.1
317.0
317.1

At
home

Away
from
home

Total

Rent,
residential

Total

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

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

282.2 319.9
292.6 333.4

296.8
305.3
318.5
302.5
301.5
301.2
301.5
302.1
301.6
305.5

320.1
322.7 308.9
323.2 309.0
323.7 309.5

324.6 309.9
325.2 310.2
328.9 315.2
330.1 316.6
330.0 315.8
331.0 316.9
332.5 318.8
334.1 320.4
333.6 319.1
333.8 319.0
334.9 319.8
335.3 319.9
335.1 319.0
336.7 321.0

346.6
360.1
374.4
353.1
354.2
355.5
357.0
358.8
360.2
360.8
361.8
363.3
364.0
365.|
367.1
368.6
369.6
370.9
371.5
372.3
373.8
374.9
375.9
377.4
378.4
379.6
380.4

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
421.8
393.8
394.8
397.0
400.1
400.9
401.6
403.5
405.2
407.6
409.5
410.2
410.4
412.3
414.0
415.9
418.0
419.2
420.2
422.1
425.1
426.2
42«.6
429.2
430.4

68.0
70.4
73.2
76.2
80.3
83.2
84.3
85.9
87.5
89.1

90.4

91.7
92.9
94.0

95.0
95.9
96.9
98.2

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

208.2
224.0
103.0 236.9
108.6 249.3
115.4
121.9
128.1
118.8
119.0
119.6
120.9
121.1
121.6
122.5
122.9
123.6
124.0
124.3
124.2
125.3
125.8
126.4
127.1
127.3
127.9
129.3
130.1
129.8
129.4
129.2
129.1

264.6

280.0

291.5
273.4
273.7
275.0
277.9
278.4
279.4
281.2
281.7
283.2
284.6
285.6
286.0
287.1
288.0
288.3
288.8

289.4

289.6
291.2
293.1
294.5
295.4
295.5
297.2

Includes alcoholic beverages, not shown separately.

«December 1982=100.
See next page for continuation of table.




Homeowners'
costs 2

Maintenance
and
repairs

Total
Total

314

102.5
107.3
113.1
119.4
124.8
116.7
117.0
117.9
118.7
118.9
119.0
119.4
119.9
120.7
121.3
121.5
121.6
122.9
122.5
123.0
123.6
124.0
124.2
124.4
125.4
126.0
127.1
127.4
128.0

71.2
72.4
74.1
77.2
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
387.3
379.1
379.6
367.5
367.6
367.1
366.6
369.2
3?8.4
376.2
379.0
377.1
380.0
382.1
381.9
383.4
382.4
381.9
385.0
392.4
391.3
390.5
390.9
393.2
392.7

Fuel oil
and
other
household
fuel
commodities

89.9

51.3
58.4
68.6
70.3
72.7
76.5
78.0
81.5
81.2
82.3
85.9
90.3

91.7
93.8
95.9
97.1
97.3

91.0
91.5

59.2
61.1
65.1

73.5
79.8
76.7
77.6
86.3
87.8
86.2

Household fuels

Renters' costs

Year or month
Total *

Fuel and other utilities

Shelter

Food and beverages

83.0
83.5
85.1
87.3

88.7
89.8
89.2

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
380.7
394.6
390.0
385.5
381.8
382.5
393.8
380.4
389.5
388.3
379.1
371.1
371.0
373.7
374.8
374.9
374.2
377.5
387.6
388.1
391.1
389.8
381.3
378.2
376.9

93.2

100.0
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
454.3
484.7
476.3
467.6
459.6
460.6
477.0
469.2
469.0
467.2
450.3
437.8
438.1
443.7
445.1
444.6
442.0
448.7
470.8
468.9
473.6
471.6
452.6
445.9
444.3

92.7
94.6
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
503.0
650.3
591.2
549.9
518.3
496.8
486.6
459.4
447.3
453.5
451.9
452.0
460.6
487.9
503.2
500.6
500.5
497.7
498.6
497.9
502.3
501.0
507.0
518.8
520.2

Gas
(piped)
and
electricity

Other
utilities
and
public
services

77.4
77.1
79.1
81.0
81.2
81.5
82.6
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
297.8
301.8
345.9
393.8
428.7
445.2
452.7
446.7

438.8

442.6
444.5
442.3
439.2
444.6
466.0
462.3
464.5
461.1
441.4
426.7
425.3
428.8
428.9
428.7
425.9
433.3
456.8
454.8
459.4
457.4
436.6
428.4
426.6

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
257.9
247.3
247.9
249.0
251.3
251.5
255.2
255.6
255.9
255.6
257.1
255.4
254.9
254.9
255.6
256.2
257;0
257.2
256.4
258.6
259.9
259.3
260.2
260.3
259.5

TABLE B-59.—Consumer price indexes, selected expenditure classes, 1946-87—Continued
[1967=100, except as noted]
Transportation

Medical care

Private transportatior
Year or month
Total

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
1987
1986:Jan
Fb
e

. .

. .
.

Mr
a

Apr
May
June
July
Aug
Sept
Oct

... .

Nv
o

Dec
1987-Jan

Fb
e
Mar
Apr
May
June
July
Aug
Sept
Oct

Nv
o
Dec

...
...

50 3
55.5
618
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
2915
298.4
3117
319 9
307.5
316.8
323 9
319 2
309.6
303 3
305 7
308.6
304.7
3013
302 2
302 6
304 3
304.8
308 5
310 0
310.6
313 3
314 6
316.7
318.5
320.2
320.4
3219
3241
323.3

Total 3

54.3
61.5
68.2
72.3
72.5
75.8
80.8
82.4
80.3
78 9
80.1
84.7
87.4
91.1
90.6
91.3
93.0
934
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
308.5
317 3
312 2
302.1
295.3
297 8
300.8
296.5
292.8
293 7
2941
295 8
295.9
299 8
3013
301.9
304.8
306 3
308.6
310.5
312.0
312.1
313.8
316 0
315.1

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
1110
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
232.5
219 9
220 4
220.3
221.2
223 0
224.2
224.7
224.7
224 5
2271
230 7
232.2
233 0
230 2
229.4
230.4
231.3
232.0
232.7
232.1
231.6
233.8
2366
236.6

Used
cars

Motor
fuel*

89.2"
75.9
718
691
77.4
80 2
89.5
83.6
86 9
94.8
96 0
1001
99 4
97 0
100.0
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
377.6
3741
370 7
367.2
364 8
363 6
362.5
360 3
358 0
359 5
360 6
3610
356 6
354 6
356 9
363.0
3716
378 6
383.0
385.5
385.7
387.3
388.0
389 0
388.4

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
918
91.4
94 9
97.0
100.0
1014
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
303.9
373 3
3515
308.5
279 5
289 3
299.4
280.2
265 9
2711
263 2
260 9
261.9
275 8
2881
290.0
297.2
299 7
306.0
311.2
319.5
318.4
315.2
315 2
310.6

3
4

Automobile
maintenance
and
repair
52.0
56.4
59 6
61.1
62.3
67.0
68.6
72.3
74.8
76 5
79.5
82.4
83.7
85.5
87.2
89.3
90.4
916
92.8
94 5
96.2
100.0
105.5
112.2
120 6
129.2
1351
142.2
156.8
176.6
189.7
203.7
220.6
242.6
268.3
293.6
315 8
330.0
3415
3514
363.1
377.7
357 9
358 9
359.3
360.6
3613
362.1
363.4
364.3
365 0
365 7
368 4
370.7
3713
373 0
373.0
376.1
376.1
376.3
376.8
378.6
380.7
382.0
383.5
384.7

Other

100.0
103.4
109.7
119 2
128.4
1291
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
318.9
297.7
299 2
301.5
301.6
301.3
303.0
304.5
304.5
302.3
307.6
3116
312.0
314.9
314.0
314.4
315.1
315.9
317.6
318.8
318.6
319.7
324.1
326.9
326.8

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
441.4
419 6
422 2
421.2
422.2
423 7
425.4
428.0
428.0
428 5
428 7
4317
437.5
438.9
439 8
441.4
440.8
439.6
438.1
438.3
442.8
445.1
442.0
444.8
445.3

Total

44.4
48.1
511
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
1206
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
462.2
418.2
422.3
425.8
428.0
429.7
432.0
434.8
437.5
439.7
442.3
444 6
446.8
449.6
452.4
455.0
457.3
458.9
461.3
464.1
466.1
467.8
469.8
471.7
472.9

Medical
care
commodities

76.2
81.8
861
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
291.9
264.5
267.4
269.4
271.3
272.3
273.3
275.4
276.0
276.7
277.5
278.2
280.8
282.4
283.9
286.3
287.5
289.6
291.5
293.4
294.6
295.8
297.4
299.1
300.7

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
499.6
451.9
456.2
460.1
462.3
464.2
466.8
469.8
473.0
475.7
478.8
481.5
483.4
486.5
489.6
492.1
494.7
496.0
498.4
501.5
503.6
505.4
507.4
509.3
510.3

Includes direct pricing of new trucks and motorcycles beginning September 1982.
Includes 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-58.
Source: Department of Labor, Bureau of Labor Statistics.




315

TABLE B-60.—Consumer price indexes, commodities, services, and special groups, 1946-87
[1967=100]
Services

Commodities
Commodities less food
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
1987
1986:Jan
Feb
Mar....

All
items

58 5
66 9
72.1
71.4
721
77 8
79.5
801
80.5
80 2
814
84.3
86 6
87.3
887
89 6
90.6
917
92.9
94 5
97!2
100 0
104.2
109.8
116 3
121.3
125.3
133.1
147 7
1612
170.5
1815
195 4
217.4
246.8
2724
2891
298 4
311.1
322.2
328 4
340.4
328.4
327.5
326.0
325.3
326.3
327.9
328.0
328.6
330.2
330.5
330.8
331.1
333.1
334.4
335.9
337.7
338.7
340.1
340.8
342.7
344.4
345.3
345.8
345.7

fc:

June...
July....
Aug....
Sept...
Oct
Nov....
Dec...
1987:Jan
Feb
Mar....

fiJay"''
June...
July.,..
Aug....
Sept...
Oct
Nov....
Dec...

MaHt

All
commodities

62 4
750
80 4
78.3
78 8
85 9
87.0
86 7
85 9
851
859
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
1584
165.2
174.7
187 1
2084
233.9
253.6
263 8
271*5
280.7
286.7
283 9
29310
290.1
287.4
283.7
281.2
282.1
282.8
281.9
281.9
283.5
283.6
284.0
284.2
286.3
287.7
289.5
291.4
292.3
292.8
292.8
294.2
296.1
297.3
297.9
297.2

Food

581
706
76 6
73.5
74 5
82 8
84.3
83 0
82 8
816
82 2
84.9
88 5
87.1
88.0
891
89.9
912
92 4
94 4
99.1
100 0
103 6
108.9
114 9
11814
123.5
141.4
1617
1754
180.8
192.2
2114
234*5
254.6
274 6
2857
291*7
302.9
3098
319 7
333.0
315.6
315.3
315.4
316.1
317.0
317.1
320.1
322.7
323.2
323.7
324.6
325.2
328.9
330.1
330.0
331.0
332.5
334.1
333.6
333.8
334.9
335.3
335.1
336.7

Al
l

68 1
76.8
82 7
81.5
814
87.5
88.3
88.5
87,5
86 9
87.8
90.5
915
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
1491
156 6
1651
1747
195*1
222.0
2412
2509
259*0
267^0
272 5
263 4
270.2
274.7
270.9
265.2
261.2
262.1
263.0
260.2
259.0
261.1
260.9
261.2
261.2
262.5
264.0
266.5
268.9
269.4
269.5
269.6
271.6
273.8
275.4
276.3
274.5

All
NonDurable durable services

741
80.3
86 2
87.4
884
95.1
96.4
95.7
93.3
915
91.5
94.4
95 9
97.3
96.7
96 6
97.6
97.9
98.8
98 4
98.5
100 0
1031
107.0
1118
116.5
118 9
121.9
1306
1455
154.3
163.2
173 9
19U
210.4
227.1
241.1
2530
266.5
270.7
270 2
2743
271.4
270.5
269.7
269.2
269.6
269.9
269.6
269.0
269.3
270.5
271.8
271.7
272.4
271.2
271.7
273.0
273.6
274.2
274.9
274.6
274.6
276.0
277.8
277.6

62 9
72.2
77 8
76.3
76 2
82.0
82.4
831
83 5
83 5
85.3
87 6
88 2
89.3
90 7
912
91.8
92.7
93 5
94 8
97.0
100 0
1041
108.8
1131
117!0
119 8
124.8
140.9
1517
158.3
166.5
174.3
1987
235.2
257 5
261*6
2663
270.8
277.2
262 2
270.9
280.4
274.5
265.6
259.2
260.5
261.8
257.3
255.6
258.9
257.8
257.4
257.5
259.2
262.6
266.4
269.6
270.0
269.8
269.5
273.1
276.8
278.4
278.9
276.0

491
511
54 3
56.9
58 7
61.8
64.5
67.3
69 5
709
72.7
75.6
78 5
80.8
83.5
85 2
86.8
88.5
90 2
92 2
95.8
100 0
1052
112.5
1216
\2ZA
133 3
139.1
152.1
1666
180.4
194.3
210.9
234*2
270.3
305 7
333I3
3449
363'0
3815
4005
417*1
391.7
393.3
394.9
396.8
397.9
401.0
402.3
403.7
405.5
406.1
406.1
406.6
408.6
409.9
411.2
412.8
414.2
416.7
418.3
420.7
422.4
423.1
423.4
424.0

Meatcal
care
services
401
43*5
464
48.1
49 2
51.7
55.0
57.0
58 7
60 4
62.8
65.5
68 7
72.0
74.9

m
80.2
82.6
84.6
87 3
92.0
1000
107 3
116.0
124 2
133'3
138.2
144.3
159.1
1791
197.1
216.7
235.4
258*3
287.4
318 2
35g'O
3870
410*3
435.1
468 6
499.6
451.9
456.2
460.1
462.3
464.2
466.8
469.8
473.0
475.7
478.8
481.5
483.4
486.5
489.6
492.1
494.7
496.0
498.4
501.5
503.6
505.4
507.4
509.3
510.3

Special indexes
Services
less
medical
care

77.6
80 4
82.5
85 2
86 7
88.1
89.6
912
93 2
96.4
1000
104 9
112.0
1213
127.7
132.6
138.3
151.0
1647

mi

190.6
2069
230'l
266.6
302.2
328.6
338 1
355.6
373.3
390 6
405.7
382.7
384.0
385.4
387.2
388.3
391.3
392.5
393.6
395.4
395.7
395.4
395.8
397.6
398.8
400.0
401.5
402.9
405.4
406.8
409.3
410.9
411.5
411.7
412.2

All
items
less
food

Ait
items
less
energy

itomc

All
items
less
food
and
energy

Energy 1

59 4
64.9
69 6
70.3
711
75 7
77 5
79 0
79 5
79 7
811
83.8
85 7
87.3
88 8
89 7
90.8
92.0
93 2
94 5
96.7
1000
104 4
110.1
116 7
122.1
125.8
130 7
143 7
1571
167 5
178.4
1912
21310
244.0
270.6
288.4
2983
311.3
323.3
328 6
340.1
329.5
328.5
326.6
325.7
326.7
328.6
328.0
328.1
330.0
330.2
330.4
330.6
332.2
333.6
335.4
337.3
338.3
339.6
340.5
342.7
344.6
345.6
346.2
345.7

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
340.4
321.8
322.3
.323.3
324.4
325.0
325.5
326.9
328.3
330.0
331.4
332.3
332.6
334.0
334.9
336.5
338.2
339.0
339.5
340.1
341.6
343.6
345.4
346.2
346.3

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
2761
287 0
301.2
314.4
327 1
340.5
321.6
322.3
323.6
324.8
325.3
325.9
326.9
327.9
329.9
331.6
332.5
332.8
333.6
334.5
336.4
338.3
338.9
339.1
339.9
341.7
343.9
346.1
347.0
346.8

90.1
90 3
91.8
94.2
94 4
94.7
95 0
94.6
96 3
97.8
100.0
1015
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
371.7
424.7
408.9
381.3
361.8
367.6
380.6
366.5
358.6
360.6
348.6
341.7
342.4
352.2
359.2
360.0
362.4
366.9
380.6
382.4
388.9
387.4
376.7
373.5
370.4

1
Household fuels—gas (piped), electricity, fuel oil, etc.—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-58.
Source: Department of Labor, Bureau of Labor Statistics.




316

TABLE B-61.—Changes in special consumer price indexes,

1958-87

[Percent change]
All items less
food

All items
Year or month

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
1987

Dec.
to
Dec 1

:..

Dec.
to
Dec.1

Year
to
year
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
58
6.5
7.7
11.3
13.5
10.4
6.1
3.2
4.3
3.6
19
3.7

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
88
12.2
7.0
48
6.8
9.0
13.3
12.4
8.9
3.9
3.8
4.0
3.8
1.1
4.4

1.6
2.3
10
11
12
1.6
1.0
1.6
3.3
35
4.9
5.7
6.5
31
3.0
56
12.2
7.1
62
6.3
85
14.0
12.9
9.9
4.0
4.1
4.0
4.0
5
4.6

All items less
energy

Year
to
year

Year
to
year

Dec.
to
Dec 1

2.3
1.9
1.7
10
1.2
1.3
1.3
1.4
2.3
3.4
4.4
5.5
6.0
4.6
3.0
39
9.9
9.3
66
6.5
72
11.4
14.6
10.9
6.6
3.4
4.4
3.9
16
3.5

All items less
food and
energy

1.9
1.4
1.4
8
1.2
1.8
1.3
1.9
3.5
3.1
4.9
6.4
5.6
3.3
3.5
83
11.5
6.7
46
6.8
92
11.1
11.7
8.6
4.2
4.4
4.5
4.0
38
4.1

Dec.
to
Dec 1
1.8
2.2
.8
15
11
1.8
1.2
1.5
3.3
3.9
5.1
6.1
6.6
31
3.0
47
11.3
6.7
61
6.4
85
11.3
12.1
9.6
4.5
4.9
4.7
4.4
38
4.2

2.9
.8
1.5
11
1.2
1.3
1.4
1.5
3.2
2.8
4.4
5.7
6.1
• 43
3.4
61
9.8
9.1
56
6.3
78
10.0
11.7
10.0
6.7
3.6
4.7
3.9
39
4.1

All items less food,
energy, and shelter
Dec.
to
Dec.1

Year
to
year
2.3
2.1
1.5
11
13
1.2
1.5
1.4
2.4
3.5
4.6
5.8
6.2
47
3.1
35
8.3
9.2
66
6.2
73
9.7
12.5
10.4
7.4
3.9
4.9
4.4
4.0'
4.1

Year
to
year

4.6
5.0
5.7
32
2.6
35
11.3
6.4
70
5.2
65
7.2
9.9
9.4
6.1
5.0
4.4
3.7
3.4
3.9

4.6
4.8
5.1
4.9
2.4
3.0
7.6
8.9
7.0
6.0
5.7
6.9
8.8
9.5
7.7
5.2
5.0
3.8
3.4
3.8

Change from preceding month
Seasonally
adjusted

Unadjusted
1986-Jan
Feb
Mr
a
Apr
May
June
July
Aug
Sept
Oct
Nov
Dec
1987-Jan
Feb
Mar
May
June

SS :::
:::
Sept

oct..:::::::::::....
Nov
Dec

0.3
.3
-,2
.3
.5
.0
.2
.5
1
.1
.1
.6
4
.4
.5
.3
.2
.6
!3
-.0

0.3
3
-.4
-.3
.2

Unadjusted

.2
7
4
.4
.4
.3
.4
.2
.5
.2

02
3
-.6
_3
3
.6
-.2
0
6
1
.1
.1
5
4
.5
.6
3
.4
.3
6
.6

*3
.1

2
-.1

.0
.2
3
2

Seasonally
adjusted

Seasonally
adjusted

Unadjusted

Unadjusted

0.4
2

0.4
2

2

3
2

:3
2

-.2
0
.3
1

.4
.4
5
4

.5

\z

:i
4
3

\l
5
3
.4
.4
.3

0.4
3
-A

.7
4
.5
.5
.3
.3
.5
.1
.4
3
.0

'.5
2
.2
.4
.6
.5
2
.0

3
4

.2
A
.2
.5
2

0.3
2
.4
.4
2
.2
.3
.3
.6
5
:i
2
3
.6
.6
.2
.1
.2
.5
.6
.6
.3
-.1

Seasonally
adjusted
0.5
2
.4
.3
.2
.3
.4
.3
.3
4
.3
.5
3
.5
.5
.3
.2
.3
.2
.5
.3
.1

Seasonally
adjusted

Unadjusted
0.2
.2

0.5

.2
.1
.2
.2
.3
.6
.5
.3
.1
.1
.2
.6
.6
.1
-.0
.1
.4
.9

:i

'A

A
-.1

-.3

.4
.2
.1
.2
.5
5
.6
.3
.2
.4
.3
.2

1
Changes from December to December are based on unadjusted indexes.
Note.—Data beginning 1978 are for all urban consumers; earlier data are for urban wage earners and clerical workers.
See also Note, Table B-58.
Source: Department of Labor, Bureau of Labor Statistics.




317

TABLE B-62.—Changes in consumer price indexes, commodities and services, 1929-87
[Percent change]
All items

Year

Dec.
to
Dec.1

Year
to
year

Commodities

Food

Year
to
year

Dec.
to
Dec 1

Year
to
year

Dec.
tn
10
Dec.1

1929
1933
1939
1940
1941"!...
1942..
1943
1944
1945
1946
1947 "
1948.1.
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
1987

0.2
.5
-.5
1.0
9.7
9.3
3.2
2.1
23

0
-1.0

-2.0

-2.5

-2.8

1.0
5.0

12

1.0
6.7

26
ISA

17
9.1

14.5

17 5

17.4
11.5
-1.4

1.8

— 15

-2

-.9
31
28
2.2
-.8
3.1
-.9
1.5
1.9
1.4
3.4
3.9
1.2
4.3
7.2
2.2
4.3
4.7

-1.4

.7
33
4.2

-1.6

1.0
1.3
.9
1.4
1.3
2.2
5.0
.9
3.6
5.1
5.5
3.0
4.3

11.0

10.4
12.7

12.0

20.1
12.2

14.5
14.4

7.0
4.8
6.8
9.0

9.1
5.8
6.5
7.7

6.3
3.3
6.1
8.9

8.9
4.3
5.8
7.1

6.5
.6
8.0

8.5
3.1
6.3

6.1
3.2
4.3
3.6
1.9
3.7

6.0
3.6
2.9
2.6
2.5

8.4
4.0
2.9
3.4
2.1

-2.0

-1.0

4.6

3.2

6.7
3.8
3.1
2.0
2.4

8.6
4.0
3.2
3.1
2.1

11.0
15.4
13.1

-5.3

-3.3

5.1

2.6

4.3
4.8
5.4
5.1
4.4
4.3

9.0
3.5
5.2
5.1
5.0
4.1

-1.1
_ 7

-l'.l
— 13
-l'.6

22

12.2

8.9
3.9
3.8
4.0
3.8
1.1
4.4

13.7
14.2
13.0

-1.4

.6
90
13
-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
4.7
3.4
3.0
7.4

11.4
12.2

11.7
13.8

_.l
75
.9
2

77
59
-7

13.0
ll.l

14.3
11.5

57
46
-.5
2

-2.6

11.3
13.5
10.4

8.1
7.3
7.9
9.3

14
111

-4.1

13.3
12.4

11.3

96
74

-1.0

_,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

9.2
5.0
5.4
5.8

-1.5

-1.8

_ 6
-1.4

10.6

-4.8

7.2

10
79
22
8
.5
-.4
15
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

6.2
5.1
4.9
7.7

-4.0

10 8
20.2

5.8
59
.9
.6
-.5
.4
29
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

13.2

9.1
5.3

-3.7

24 9
10.4

1.7

10
31
1.1
1.3
.4
.3
.7
.7
.8
.6
1.4
2.6
3.7
4.2
4.1
3.8
2.2
3.4

12 9

14.4

7.8

0.2
2
l!4
3.2
1.8
2.4
1.5
19
41
6;3
4.8
32
53
4!4
43
13
2,0
25
40
18
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

8.5

9.0
2.7

3.1
.2
30
315
112
-.8

18 2

year

0.2
7
2.5
2.0
2.6
1.7
1.0
35
5.2
6.1
3.6
36
52
4.6
42
1.9
23
31
45
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

-1.6

14 6
21.5

13.5
13.0

8.9
1.3
2.9

0.2
4

6
5.0
111
4.3
5.5
41
62

10.7

4.0
2.2
29

Year
to

services
Dec.
tn
IU
Dec 1

Dec

Year
*n
10
year

to
Dec 1

Year
to
year

-2.9

-1.4

6.1
1.7
23
85

Dec.
to
Dec.1

1.3

2.3
70

-5.1

Year
tn
lu
year

Medical care

Total

less food
Dec.
to
Dec.1

Energy *

Services

Commodities
Total

11.8
10.2
10.2

10.0
10.9
8.6

4.3
3.1
2.6
3.8
2.7
3.8
3.5

7.9
4.0
2.1
3.8
2.3
3.2
4.2

10.8

64
5.4
5.0
30

0
2.5
22
.8
1.5
-.3
.6
.7
1.2
.4
.7
1.9
3.1
3.7
4.5
4.8
2.3
2.5
5.0

1

12.8

7.7

0.3
0.3
0
0
1.5
.6
39
31
5.8
5.0
2.8
4.2
2.9
27
8.9
5.8
6.5
8.5
7.0
6.7
2.1
3.7
33
23
58
51
55
6.4
36
36
2.6
3.0
3.2
2.9
41
4.0
43
45
4.9
4.9
4.6
4.8
3.8
4.0
3.5
3.7
3.0
3.2
2.6
3.0
2.6
2.4
3.2
3.5
8.1
5.4
7.9
8.7
7.4
7.3
7.0
8.1
7.1
8.3
5.3
7.3
3.8 . 3.7
5.8
4.4
13.3

10.3

10.3
10.7

12.6
10.1

9.0
9.2

9.9
8.6
9.7

10.6
10.0
12.7
11.2

11.3
10.7
11.9

6.1
5.8
6.8
7.9
5.6

8.7
6.0
6.0
7.7
6.6

-0.7

4.3
1.5
-1.1

2.1
-.8
-.2
2.0
1.8
1.4
1.7
3.1
4.5
3.1
2.8

0.2
1.7
2.6
.2
.3
.3
-.4
1.8
1.6
2.2
1.5
2.7
2.7
3.9
2.8
8.0

16.8
21.6

29.3

11.6

10.6

6.9
7.2
8.0

7.2
9.5
6.3

37.4
18.1
11.9

25.2
30.9
13.5

1.3
-.5
.2
1.8

1.5
.8
1.0
.7

-19.7

-13.2

8.2

.4

Changes from December to December are based on unadjusted indexes.
2
Household fuels—gas (piped) electricity, fuel oil, etc.—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-58.
Source: Department of Labor, Bureau of Labor Statistics.




318

TABLE B-63.—Producer price indexes by stage of processing, 1947-87
[1967=100)
Finished goods
Consumer foods
Year or month

Total
finished
goods

Finished goods excluding consumer oods

Tntal

Consumer goods
Total

Crude

Processed

Total
Total

Durable

Capital
Non- equipment
durable

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

834
93.2
913
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
912
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
724
73.6
74.5
76.7
82.4
87.5
89.8
91.5

83 9
91.8
907
89.2
89.1
88.5
89.8
92.4
94.4
93.6

I960
1961
1962
1963
1964
1965
1966
1967
1968
1969

93.7
93.7
940
93.7
941
95.7
98.8
100.0
102.8
106.6

92.1
91.7
92.5
91.4
919
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
917
90.7
908
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
1661
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
1986 l
1987

247 0
269.8
280 7
285 2
291.1
293.7
289.7
295.7

239 5
253.6
259.3
2618
273.3
271.2
278.1
283.9

237 2
263.8
252 7
258 7
281.6
260.0
266.7
271.9

237 8
250.6
257 7
2600
270.3
270.0
276.7
282.4

247 8
273.3
285.8
2908
294.8
299.0
291.1
297.1

250 8
276.5
287.8
2914
294.1
297.3
283.5
289.7

2062
218.6
226.7
2331
236.8
241.5
246.8
252.7

283 9
319.6
333.6
3353
337.3
339.3
311.2
316.4

239.8
264.3
279.4
287.2
294.0
300.5
306.4
312.1

248.9
271.3
281.0
284.6
290.3
291.8
284.9
291.0

1986-Jan
Feb
Mar

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

287.6
2881
287 3
290 7
290 7
290.4

280.4
284.0
282 9
283 6
283 1
282.9

262.3
268 9
268 6
280 2
284 0
280.9

279.5
282 9
2817
2815
280 7
280.7

287.4
286.8
286.1
290 4
290 7
290.4

278.3
277.5
277.4
2810
2812
280.8

246.2
245.8
241.7
253 5
253 5
252.8

302.6
301.6
304 5
3019
302 2
302.1

306.4
306.2
303.9
309.9
310.4
310.1

282.3
283.0
282.5
285.2
285.1
284.8

2918
292 3
292 6
294.9
295.8
296.2

280.1
280 8
280 3
283.2
286.6
286.7

263 2
272 5
277 0
267.6
265.6
271.3

279 0
2791
278 2
282.0
285.9
285.5

293 2
293 6
294 3
296.3
296.3
296.7

284 4
285 3
286 3
288.6
288.6
289.5

253 2
250 7
250 6
252.5
252.1
252.1

307 7
310 5
312 2
314.7
314.9
316.3

311.2
310.7
310.5
311.8
311.8
311.4

286.2
287.1
287.5
290.1
291.3
291.9

297 4
297 3
2967
298 2
298.1
296.8

287.5
284.0
286 0
2841
284.9
282.2

276.7
246 6
266 5
263 7
309.9
281.8

285.9
284 5
285 2
283 3
280.6
279.8

298.1
299.3
297.7
300.5
300.1
299.2

291.4
292.9
291.1
293 5
293.0
291.8

252.3
251.4
249 4
257 6
256.0
254.3

319 3
322 3
320 5
319 4
319.7
318.8

311.7
312.0
311.0
314.7
314.3
314.2

293.4
293.2
292.7
293.5
293.6
291.8

Ar
p
May
June
July
Aug
Sept

Ot
c
Mv
o
Dec

1987-Jan

Fb
e
Mr
a
Ar
p
May
June
julv
Augi
Sept

Ot
c
Nov
Dec

,

See next page for continuation of table.




319

TABLE B-63.—Producer price indexes by stage ofprocessing, 1947-87—Continued
[1967 = 100]
Crude materials for further processing

Intermediate materials, supplies, and components

Year or month

Foods
Total

and
feeds*

For
manufacturing

For
construction

Processed
fuels
and
lubricants

Materials and
components
Other

Containers

Supplies

Total

Foodstuffs
and
feedstuffs

Other

Total

Fuel

Other

1947
1948
1949

72.4
78.3
75.2

70.0
76.1
74.2

72.1
77.8
74.5

66.0
73.1
73.2

85.5
96.9
88.2

66.8
69.8
70.1

77.5
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
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
95.5
96.8
99.2
100.0
102.3
105.8

100.0
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

100.0
102.2
106.8

92.8
92.6
92.1
93.2
92.8
93.5
96.3
100.0
M2.3
106.6

101.4
102.5
102.0
100.7
102.4
104.5
106.7
100.0
102.1
106.9

1970
1971
1972
1973
1974
1975
1976
1977
1978
1979

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<O
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

1980
1981
1982
1983
1984
1985
1986
1987 *

280.3
306.0
310.4
312.3
320.0
318.7
307,6
315.2

252.6
250.3
239.4
247.9
253.1
232.8
230.3
237.3

282.3
310.1
315.7
317.1
325.0
325.0
313.3
320.9

265.7
286.1
289.8
293.4
301.8
299.5
296.1
305.1

268.3
287.6
293.7
301.8
310.3
315.2
317.4
322.5

503.0
595.4
591.7
564.8
566.2
548.9
430.2
434.1

254.5
276.1
285.6
286.6
302.3
311.2
314.9
326.9

244.5
263.8
272.1
277.1
283.4
284.2
287.3
293.1

304.6
329.0
319.5
323.6
330.8
306.1
280.3
299.2

259.2
257.4
247.8
252.2
259.5
235.0
231.0
238.3

401.0
482.3
473.9
477.4
484.5
459.2
386.8
416.4

615.0
751.2
886.1
931.5
931.3
909.6
817.2
744.4

346.1
413.7
376.8
372.2
380.5
355.3
286.4
333.4

1986: Jan....
Feb....
Mar...

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
3116
314.0

286.6
286.4
286.8
287.2
2«.l
287.3

301.0
289.0
281.1
273.7
279.4
276.9

231.7
227.2
224.4
229.3
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

July....
Aug...
Sept..
Oct....
Nov....
Dec...

304.8
304.5
306.1
304.8
304.8
305.0

230.3
232.1
233.2
230.3
231.0
231.5

310.4
309.9
311.5
310.4
310.3
310.5

295.6
296.0
296.2
296.4
296.4
296.4

317.9
317.6
317.6
317.3
317.5
316.9

401.1
395.0
409.1
394.9
392.8
395.5

314.6
316.2
317.4
318.1
319.0
319.2

287.2
287.1
288.0
287.5
288.0
288.2

277.7
276.3
275.4
277.2
279.2
277.0

234.4
238.1
233.5
235.0
236.8
233.5

370.8
358.3
365.6
367.9
370.3
370.6

?92.3
783.9
757.2
761.8
769.8
760.2

272.6
259.8
273.7
275.4
276.6
278.9

1987: Jan....
Feb....
Mar...

307.0
308.9
309.3
311.0
313.1
315.2

229.5
230.0
227.6
231.9
240.4
241.1

312.8
314.7
315.3
316.9
318.5
320.7

297.8
298.7
299.5
301.4
303.2
304.5

317.1
317.9
318.7
319.3
319.9
320.9

406.7
418.5
416.0
421.3
429.3
440.8

320.7
323.6
324.9
325.4
325.5
326.2

289.0
289.5
289.6
290.5
292.0
292.8

284.2
287.2
288.6
295.3
302.9
303.7

227.6
229.9
229.6
240.1
251.7
247.0

394.2
398.5
402.0
405.3
409.4
416.8

7*4.6
743.4
763.9
759.5
745.5
744.5

306.5
313.3
313.6
318.1
325.3
333.8

316.9
318.2
318.9
320.0
321.3
322.0

241.2
238.3
241.4
240.5
242.0
243.8

322.6
324.2
324.6
325.9
327.2
327.8

305.8
306.6
308.0
310.7
311.8
313.4

322.4
323.6
325.4
326.8
328.2
330.3

450.0
457.6
450.1
442.0
443.0
433.7

326.0
326.5
329.6
331.0
332.2
331.4

293.2
293.4
294.5
295.9
297.7
299.6

306.8
308.4
305.4
304.3
302.2
301.3

243.8
240.6
238.8
237.7
235.8
237.5

427.7
435.0
430.3
428.9
426.3
422.2

743.2
745.4
748.1
734.1
718.3
732.8

346.4
354.2
348.4
349.4
349.3
342.0

lay...
JSPaj

A

MaV:

June..

July
Aug>
Nov
Dec

1
Data have been revised through August 1987 to reflect the availability of late reports and corrections by respondents. AH 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.




320

TABLE B-64.—Producer price indexes by stage of processing, special groups, 1974-87
[1967=100]
Intermediate materials, supplies,
and components

Finished goods

Crude materials for further
processing

Excluding foods and
energy
Year or month
Total

Foods

Energy

Total

Capital
equipment

Consumer
goods
exclud-

Total

Foods
and

Energy

Other

Total

Foodstuffs
and
feedstuffs

Energy

Other

and
energy
1974

147.5

166.9

215.2

133.3

141.0

129.1

162.9

200.2

188.7

156.7

196.1

189.4

223.0

198.3

1975
1976
1977
1978
1979

163.4
170.6
181.7
195.9
217.7

181.0
180.4
189.9
207.2
226.2

252.4
282.3
326.7
347.7
469.9

148.5
156.8
166.3
178.7
194.7

162.5
173.4
184.6
199.2
216.5

141.0
148.1
156.6
168.0
183.3

180.0
189.1
201.5
215.6
243.2

195.3
185.3
190.5
203.1
226.1

220.8
236.8
267.3
280.3
348.6

174.7
185.0
196.1
210.4
234.2

196.9
202.7
209.2
234.4
274.3

191.8
190.2
192.1
216.2
247.9

266.9
283.1
323.5
362.5
439.9

165.0
191.0
190.1
209.2
253.0

1980
1981
1982
1983
1984

247.0
269.8
280.7
285.2
291.1

239.5
253.6
259.3
261.8
273.3

701.3
835.4
822.9
783.6
750.3

216.4
235.1
248.6
256.1
262.3

239.8
264.3
279.4
287.2
294.0

204.2
220.1
232.6
239.9
245.9

280.3
306.0
310.4
312.3
320.0

252.6
250.3
239.4
247.9
253.1

484.9
573.6
570.8
543.9
545.0

261.8
283.4
290.1
294.8
303.6

304.6
329.0
319.5
323.6
330.8

259.2
257.4
247.8
252.2
259.5

586.1
783.4
801.5
791.1
785.2

269.4
266.0
238.1
250.7
266.1

1985
1986
1987 2

293.7
289.7
295.7

271.2
278.1
283.9

720.9
518.5
508.2

268.7
274.9
281.6

300.5
306.4
312.1

252.1
258.4
265.6

318.7
307.6
315.2

232.8
230.3
237.3

528.3
414.4
417.2

305.2
304.4
312.8

306.1
280.3
299.2

235.0
231.0
238.3

748.1 249.7
575.8 245.6
601.2 275.2

1986:Jan
Feb
Mar

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
227.2
224.4
220.3
229.9
227.1

732.8
662.9
614.5
577.0
570.6
563.9

245.8
246.5
247.9
249.1
249.3
250.1

Jufy
Aug

287.6
288.1
287.3
290.7
290.7
290.4

280.4
284.0
282.9
283.6
283.1
282.9

461.6
456.2
471.7
452.1
453.7
454.6

275.0
274.8
272.9
278.9
279.1
278.7

306.4
306.2
303.9
309.9
310.4
310.1

258.7
258.4
256.7
262.6
262.6
262.2

304.8 230.3
304.5 232.1
306.1 233.2
304.8 230.3
304.8 231.0
305.0 .231.5

386.6
380.7
393.8
380.3
378.3
380.7

304.1
304.2
304.6
304.8
304.9
304.8

277.7
276.3
275.4
277.2
279.2
277.0

234.4
238.1
233.5
235.0
236.8
233.5

528.8
520.4
533.9
534.4
537.0
533.2

250.0
235.9
239.1
242.3
244.4
247.1

280.1
280.8
280.3
283.2
286.6
286.7

477.4
489.6
495.5
507.4
506.9
514.3

279.8
279.3
279.5
280.7
280.7
280.7

311.2
310.7
310.5
311.8
311.8
311.4

263.4
262.9
263.3
264.4
264.5
264.6

307.0
308.9
309.3
311.0
313.1
315.2

229.5
230.0
227.6
231.9
240.4
241.1

391.3
402.6
400.3
405.3
412.2
423.2

306.2
307.2
308.1
309.3
310.5
311.7

284.2
287.2
288.6

y
June..

291.8
292.3
292.6
294.9
295.8
296.2

303.7

227.6
229.9
229.6
240.1
251.7
247.0

578.0
584.4
590.1
594.1
597.4
606.3

§3
252.8
254.4
257.4
263.2
270.2

July 2
Aug .
Sept..
Oct
Nov
Dec

297.4
297.3
296.7
298.2
298.1
296.8

287.5
284.0
286.0
284.1
284.9
282.2

522.0
533.9
521.8
514.5
513.5
501.0

281.5
281.8
281.1
284.7
284.4
284.5

311.7
312.0
311.0
314.7
314.3
314.2

265.8
265.9
265.5
269.1
268.7
269.0

316.9
318.2
318.9
320.0
321.3
322.0

241.2
238.3
241.4
240.5
242.0
243.8

432.1
439.4
432.5
424.8
425.6
416.8

312.9
313.9
315.3
317.8
319.3
321.0

306.8
308.4
305.4
304.3
302.2
301.3

243.8
240.6
238.8
237.7
235.8
237.5

623.8
632.3
615.4
604.9
598.3
589.4

275.5
282.6
291.2
300.1
301.8
302.4

Nov...
Dec...
1987: Jan...
Feb....
Mar..

1
2

Intermediate materials for food manufacturing and feeds.
Data have been revised through August 1987 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.




321

TABLE B-65.—Producer price indexes for major commodity groups, 1947-87
[1967=100]
Industrial commodities

Farm products and processed
foods and feeds

Textile
products
and
apparel

Hides,
skins
leather,
and
related
products

Fuels and
related
products,
and
power l

Chemicals
and allied
products1

70.8
76.9
75.3

103.6
108.1
98.9

83.3
84.2
79.9

76.9
90.5
86.2

93,7
95.9
87.6

83.4
92.7
91.6
87.4
88.9
85.0
84.9
87.4
91.8
89.4

78.0
86.1
84.1
84.8
85.0
86.9
90.8
93.3
93.6
95.3

102.7
114.6
103.4
100.8
98.6
98.7
98.7
98.8
97.0
98.4

86.3
99.1
80.1
81.3
77.6
77.3
81.9
82.0
82.9
94.2

87.1
90.3
90.1
92.6
91.3
91.2
94.0
99.1
95.3
95.3

88.9
101.7
96.5
97.7
98.9
98.5
99.1
101.2
102.0
101.6

97.2
96.3
98.0
96.0
94.6
98.7
105.9
100.0
102 5
109.1

89.5
91.0
91.9
92.5
92.3
95.5
101.2
100.0
102 2
107.3

95.3
94.8
94.8
94.7
95.2
96.4
98.5
100.0
102.5
106.0

99.5
97.7
98.6
98.5
99.2
99.8
100.1
100.0
103.7
106.0

90.8
91.7
92.7
90.0
90.3
94.3
103.4
100.0
103.2
108.9

96.1
97.2
96.7
96.3
93.7
95.5
97.8
100.0
98.9
100.9

101.8
100.7
99,1
97.9
98.3
99.0
99.4
100.0
99.8
99.9

111.0
1129
125.0
176 3
187.7
186 7
191.0
192 5
212 5
241.4

112.1
114 5
120.8
1481
170.9
182 6
178.0
1861
202.6
222.5

110.0
114.1
117.9
1259
153.8
1715
182.4
1951
209.4
236.5

107.1
109.0
113.6
123.8
139.1
137.9
148.2
154.0
159.8
168.7

110.3
114.1
131.3
143.1
145.1
148.5
167.8
179.3
200.0
252.4

106.2
115.2
118.6
134.3
208.3
245.1
265.6
302.2
322.5
408.1

102.2
104.1
104.2
110.0
146.8
181.3
187.2
192.8
198.8
222.3

1980
1981
1982
1983
1984
1985
1986
1987 2

111.7
113 9
122.4
1591
177 4
184 2
183.1
188 8
206 6
229.8
244 7
2515
248.9
253 9
262 4
250 5
2519
258.1

249 4
254 9
242.4
248 2
255 8
230 5
225 2
231.2

2412
248 7
251.5
255 9
265 0
260.4
2651
271.3

274.8
304 1
312.3
315.7
322 6
323.8
312.2
320.4

183.5
199.7
204.6
205.1
210.0
210.4
211.2
215.0

248.9
260.9
262.6
271.1
286.3
286.1
296.7
316.2

574.0
694.5
693.2
664.7
656.8
633.6
483.5
486.9

260.3
287.6
292.3
293.0
300.8
303.2
299.8
311.1

1986: Jan
Feb
Mr
a
Apr
May
June

251.5
248 3
247 3
246.2
250.8
249 8

227.4
2218
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
254.0
254.8
255 5
254.7

228 6
227 0
224.1
227.4
2301
227.4

266 8
269 6
269.0
268.4
267 9
268.2

308.5
307.9
308.7
309.6
309.8
309.8

21L4
211.2
211.1
211.2
211.3
211.4

297.4
297.0
296.4
297.8
299.3
301.6

444.3
438.4
452.6
438.8
438.5
439.6

298.4
297.0
297.5
298.2
298.6
298.1

251.6
252.8
252 0
2571
263 7
262.6

220.8
222.9
223 3
2319
242 0
239.3

266.8
267.6
266 2
269 5
274 3
274.0

313.5
314.9
315.7
317 3
318 3
319.9

212.0
212.1
212.5
2131
213 5
214.3

301.9
302.0
305.9
310 6
317 0
315.8

461.6
471.5
473.2
478.9
483 0
492.6

301.1
302.8
304.9
307.4
309.6
313.1

261.9
2589
260 0
258 7
258 9
258.6

237.2
231.9
2321
229 0
232 6
231.2

274.1
272.2
273 7
273 4
2719
272.1

322.1
323.8
323.3
324.9
325 4
325.3

215.4
215.9
216.9
217.8
218.1
218.4

317.8
318.5
321.4
326.5
326.1
330.6

503.2
511.8
501.1
492.9
491.4
481.8

312.9
313.1
314.1
317.1
318.8
318.8

Year or month
Farm
products

Processed
foods and
feeds

94 3
101.5
896

109.4
117.5
101.6

82.9
88.7
80.6

93 9
106.9
102.7
96.0
95.7
91.2
90.6
93 7
98.1
93 5

106.7
124.2
U7.2
106.2
104.7
98.2
96.9
99.5
103.9
97.5

I960
1961
1962
1963
1964
1965
1966
1967
1968
1969.

93.7
93.7
94.7
93.8
93 2
97.1
103 5
100.0
102 4
108.0

1970
1971
1972
1973
1974
1975
1976
1977
1978
1979

Total

1947
1948.
1949
1950
1951
1952
1953
1954
1955
1956.
1957
1958..
1959

...

;:::

:::;::

..

July

Aug
Sept
oct
Nv
o
Dec
1987:Jan
Feb
Mar

:.::::

..

Ar
p
May
June
July
Aug2
Sept

oct
Nov
Dec

:::::::::.

::::::

:.

Total

1
Prices for some items in this grouping are lagged and refer to 1 month earlier than the index month; the lag for refined petroleum
items was eliminated beginning with the June 1985 data.

See next page for continuation of table.




322

TABLE B-65.—Producer price indexes for major commodity groups,

1947-87—Continued

[1967-100]
Industrial commodities—Continued

Year or month

Pulp,
NonMetals Machinery Furniture
Rubber Lumber paper,
and
and
metallic
and
and
and
and
wood
metal equipment household mineral
plastic
allied
durables products
products products products products

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 2
1987

70.5
72.8
70.5
85.9
105.4
95.5
891
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
1362
150.2
159 2
167.6
174 8
194.3
217 4
232.6
2414
243.2
246.8
245.9
245.9
248.5

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
910
916
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
2056
236.3
276 0
300.4
288 9
292.8
284 7
307.1
307.4
303.6
305.3
320.9

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
1011
104.0
108 2
110.1
113 4
122.1
1517
170.4
179 4
186.4
195 6
219.0
249 2
273.8
288 7
298.1
318.5
327.2
335.3
351.8

1986-Jan
Feb
Mar
Apr
May
June

246 9
247 5
246.7
246 7
246 3
246.1

298 9
297 1
3012
308 6
3081
306.0

July
Aug
Sept
Oct
Nov
Dec

245.4
246.2
245 7
2451
244 4
244.2

1987-Jan
Feb
Mar
Anr
May:::::::::::::::::::::::::::::::::::::
June
. .
July 2
Aug
Sept
Oct
Nov
Dec

54.9
62.5
63.0
66.3
73.8
73.9
76 3
76.9
82.1
89.2
91.0

Transportation
equipment:
Motor
vehicles
and

Miscellaneous
products

ssr.

904
92.3
92.4
919
91.2
91.3
93 8
96.4
98 8
100.0
102 6
108.5
116 6
118.7
123 5
132.8
1719
185.6
195 9
209.0
2271
259.3
286 4
300.4
3016
307.2
316.1
314.9
311.2
323.0

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
1961
213.9
239 8
263.3
278.8
286.4
293.1
298.9
303.3
307.8

77.0
81.6
82.9
84.7
91.8
90.1
919
92.9
93.3
95 8
98.3
991
99.3
99.0
984
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
224.0
227.5

66.3
71.6
73.5
75.4
80.1
80.1
83 3
85.1
87.5
91.3
94.8
958
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
352.1
352.3

64.1
70.8
75.7
75.3
79.4
84.0
83.6
83.8
86.3
91.2
95.1
98.1
100.3
98.8
98.6
98.6
97.8
98.3
98.5
98.6
100.0
102.8
104.8
108.7
114.9
118.0
119.2
129.2
144.6
153.8
163.7
176.0
190.5
208.8
237.6
251.3
256.8
261.5
267.3
274.2
280.9

73.5
76.5
78.0
79.2
83 9
83.4
856
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
317.2

330 6
3311
3313
332 8
333 8
334.2

3110
3112
311.2
311.0
310 6
310.7

3011
3016
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

306.8
307.2
308 8
3071
307 5
306.8

335.2
336.4
337 8
339 4
340 4
340.9

310.4
311.1
311.7
311.9
312.0
311.7

303.9
304.1
304.2
304.5
304.9
305.2

224.1
224.2
224.2
224.6
224.9
224.9

352.9
351.8
351.4
351.3
351.1
350.0

273.3
272.0
264.2
284.3
283.9
282.7

309.4
309.7
310.0
310.4
310.7
310.2

245 0
245 2
244 8
245 6
246.1
246.9

307 9
3116
314 8
315 2
315.2
317.2

345 0
347 4
3481
349 2
349.2
350.0

312.8
313.2
313.8
315.0
317.4
319.0

306.1
306.5
306.7
306.7
307.1
306.9

225.5
225.7
226.1
226.8
227.2
227.4

350.0
350.8
351.2
351.9
351.8
352.4

283.0
278.7
279.2
282.2
280.8
280.0

312.6
312.7
313.2
314.8
315.1
315.3

248 3
249 2
250 0
252.1
254.0
255.1

320 0
323 8
3311
330.2
331.8
332.3

3512
352 9
354 9
356.9
357.6
358.9

322.0
324.7
327 7
333.3
336.0
340.6

307.7
308.2
3084
309.0
309.5
310.4

227.7
228.2
2281
228.8
229.1
229.7

352.5
352.0
352.5
354.2
354.2
354.2

279.8
278.3
274.0
287.9
285.1
281.3

318.3
319.2
319.8
320.1
321.0
324.0

2
Data have been revised through August 1987 to reflect the availability of late reports and corrections by respondents. All data are
ubject 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.




323

TABLE B-66.—Changes in producer price indexes for finished goods, 1955-87
[Percent change]
Finished
consumer
foods

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
1986
1987 2

Finished
energy
goods

Finished goods excluding consumer foods

Finished goods
excluding foods
and energy

Consumer
Capital
Total
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
12
4.2
32
.5
4
18
-.5
1
2
5
3.3
22
1.6
31
48
2.2
32
38
118
183
66
3.7
69
9.2
12 8
118
7.1
37
6
1.7
18
23
2.2

02
28
36
23
2
8
0
3
—3
4
1.7
32
12
28
37
35
31
31
91
15 3
10 8
4.4
65
78
111
13 5
9.2
40
16
21
9
14
2.1

29
36
53
4
37
52
-1.8
5
-13
4
9.1
14
48
82
=2 5
59
80
22 5
13 0
55
-2.5
69
117
74
75
1.4
21
23
35
5
29
-.2

17
25
17
2
3
4
_ 3
\
1
1
.9
17
2.1
20
29
3.9
20
20
74
20 5
67
6.0
67
85
17 5
14 2
8.5
42
3
8
20
66
3.9

25
-I
35
58
47
22
-4
9
-12

5

3.8
65
-16
36
62
32
16
56
203
14 0
84
53
91
92
59
5.9
22
10
44
3
25
2.1

24
34
43
21
21
66
212
72
6.2
69
83
14 8
13 3
8.8
41

o
11
22
40
3.0

26
27
35
37
20
41
16 0
121
6.3
70
73
119
16 2
10.3
46
17
14
14
26
2.1

08
24
25
1
13
4
- 1
2
0
1
.7
16
19
21
24
30
34
19
45
16 9
10 5
6.2
72
71
13 3
18 6
10.2
41
13
9
\ i
46
2.2

56
83
43
1.3
10
1
.2
3
5
9
1.5
39
3.1
30
4.6
4.9
24
20
53
22 6
82
6.4
73
79
88
114
9.2
39
19
18
27
21
1.3

30
7.4
62
2.6
19
2
.1
4
.2
10
1.2
2.5
3.3
35
3.3
4.8
41
2.5
33
14.2
15.2
6.7
65
7.9
87
10 8
10.2
57
28
24
22
20
1.9

164
11.5
121
85
58 0
27 8
14.1
- 1
92
41
3
38 0
10.2

17.3
11.8
15 7
6.4
351
49 2
19.1
= 15
48
-4 2
39
281
-2.0

6.1
5.6
6.3
8.3
94
10.7
7.8
4.9
18
2.1
27
27
2.1

11.4
5.6
61
7.5
90
111
8.6
57
30
24
24
23
2.4

Percent change from preceding month
Unadjusted

Seasonallu

7

Unadjusted

justed
1986: Jan
Feb
Mar
Apr
May
June
July
Aug
Sept
Oct
Nov
Dec
1987:Jan
Feb
Mar
June
July
Aug 2
Sept
Oct
Nov
Dec

-0.4
-1.4
-1.3
-.3
.6
.1
-.6
.2
-.3
1.2
0
-.1
.5
.2
.1
.8

-0.4
0.0
-1.5 -1.1
-.9
-.1
-.5
.1
.5
1.1
.2
.1
-.8
1.9
.4
1.3
-.4
.3
.2
.3
-.2
.0
-.1
.1
.4 - 1 . 0
.2
.1
-.2
.5
1.0
.5
.2
1.2
.1
.2
.0
.4
.2
.3
-.0
.2 - 1 . 2
-.2
.3
.7
.5
-.2
-.7
—0
0
.3
— .4 — .3 -.9

Season-

tl

SeaUnadjusted

.9
-.2
= .5
-1.8
-.1
.1
1.4
1.4
.1
-.3
-1.1
1.0
-.1
.3
-1.3

7

Unadjusted

justed

justed
-0,8
-1.4
.2
A
1.4
.1
1.3
1.4

sonal in

-0.6
-1.5
-1.7
-.4

-0.2
-1.5
-1.2
8

.1
-1.4
-.2
-.2
1.5
.1
-.1
1.0
.1
.2
.7
0
.1
.5
A
-.5
.9
-.1
-.3

.2
-1.5
.0
.4
.1
.2
.2
1.2
.1
.7
.2
-.2
.2
A
.6
.0
-.1
.1

-0.8
-2.2
-2.5
-.8
.6
.1
-2.1
-.3
-.0
1.3
.1
-.1
1.3
.3
.4
.8
0
.3
.7
.5
-.6
.8
-.2
— .4

Seasonad^
justed
-0.3
= 2.2
-1.9
-14
.2
.2
-2.2
0
.4
.0
.1
.3
1.7
.3
1.0
.2
-.4
.4
.6
.8
-.3
-.2
-.2
0

Unadjusted

Seasonollu

ad-

justed
0.1
.1
0
.4
.0
.1
.1
-.1
-.8
2.0
.2
-.1
.4
-.2
-.1
.4
0
-.1
.1
.1
-.3
1.2
-.1
-.0

SeaUnadjusted

sonal i»

7

Unadjusted

allu

tl

justed

justed

- 4 . 5 = 1.8
0.0
.1 -=10.2 - 1 0 . 3
.2 - 1 1 . 9 = 11.4
.3 =67 - 8 . 1
3.3
2.2
.2
.4
.5
.1 - 1 3 . 9 - 1 3 . 9
.1 - 1 . 2
-.8
.3
3.4
1.8
.4 - 4 . 2 - 3 . 7
.4
.4
= .2
.1
.2
.7
.2
7.7
5.0
-.2
2.6
2.5
.1
1.2
1.8
2.4
.9
.3
-.1 -1.1
-.1
1.5
1.5
.1
1.7
1.5
.3
2.3
2.6
.7 - 2 . 3 - 3 . 6
-.4
-1.4 -1.0
.1
-.2
= .8
.2 - 2 . 4 - 1 . 9

Season-

0.3
.1
0
.5
.0
.1
.3
=.1
-.7
2.2
.1
-.1
.4
-.2
.1
.4
0
0
.3
.1
-.2
1.3
= .1
.0

0.1
.1
5
.3
-.1
.2
.2
.1
.2
.6
.2
.2
.4
= .3
.6
.1
— 1
.0
2
.4
.6
= .2
0
.4

2
DataTiave been revised through August 1987 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.




324

MONEY STOCK, CREDIT, A N D FINANCE
TABLE B-67.—Money stock, liquid assets, and debt measures, 1959-87
[Averages of daily figures; billions of dollars, seasonally adjusted]

Ml

Year
and
month

M2

Sum of
currency,
demand
deposits,
travelers
checks, and
other
checkable
deposits
(OCDs)

M2 plus
large time
deposits,
term RPs,
;
term
Eurodollars,
and
institutiononly MMMF
balances

Debt 1

M3

Ml plus
overnight
RPs and
Eurodollars,
MMMF
balances
(general
purpose and
broker/
dealer),
MMDAs, and
savings and
small time

M3 plus
other liquid
assets

Debt of
domestic
nonfinancial
sectors
(monthly
average)

Percent change from year or 6
months earlier2

Ml

M2

M
3

Debt

December:
1959

141.0

297.8

299.8

388.6

659.5

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

694.7
737.0
789.4
845.1
908.3

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

5.3
6.1
7.1
7.1
7.5

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

977.0
1,044.4
1,120.9
1,216.1
1,305.9

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

7.6
6.9
7.3
8.5
7.4

1970
1971
1972
1973
1974

216.6
230.8
252.0
265.9
277.5

628.2
712.7
805.1
861.0
908.5

677.5
776.2
886.0
985.0
1,070.4

816.3
903.1
1,023.0
1,142.7
1,250.4

1,396.2
1,529.8
1,686.2
1,874.5
2,048.1

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
9.6
10.2
11.2
9.3

1975
1976
1977
1978
1979

291.1
310.4
335.3
363.0
391.1

1,023.2
1,163.7
1,286.8
1,389.2
1,500.3

1,172.2
1,311.9
1,472.9
1,647.1
1,806.7

1,367.1
1,516.7
1,705.5
1,911.2
2,119.6

2,231.5
2,471.7
2,785.9
3,158.6
3,541.6

4.9
6.6
8.0
8.3
7.7

12.6
13.7
10.6
8.0
8.0

9.5
11.9
12.3
11.8
9.7

9.0
10.8
12.7
13.4
12.1

1980
1981
1982
1983
1984

416.6
443.2
481.3
526.9
557.5

1,633.1
1,795.5
1,953.8
2,184.6
2,369.1

1,990.9
2,236.4
2,443.1
2,692.8
2,985.4

2,327.6
2,598.9
2,853.0
3,154.6
3,528.1

3,880.9
4,262.1
4,645.5
5,181.7
5,932.6

6.5
6.4
8.6
9.5
5.8

8.9
3.9
8.8
11.8
8.4

10.2
12.3
9.2
10.2
10.9

9.6
9.8
9.0
11.5
14.5

1985
1986
1987 »

627.0
730.5
753.2

2,569.5
2,801.2
2,894.8

3,205.0
3,493.1
3,661.8

3,837.1
4,140.7
4,330.3

6,749.4
7,606.1
8,299.0

12.5
16.5
3.1

8.5
9.0
3.3

7.4
9.0
4.8

13.8
12.7
9.1

1987: Jan
Feb....
Mar....
Apr
May....
June..

737.7
737.4
739.5
750.3
753.1
746.6

2,823.5
2,823.0
2,826.5
2,839.9
2,840.3
2,841.6

3,519.1
3,522.7
3,527.4
3,544.0
3,560.3
3,577.5

4,173.3
4,180.8
4,169.8
4,181.8
4,215.8
4,230.7

7,673.6
7,710.9
7,754.3
7,815.6
7,882.8
7,943.2

18.9
15.2
13.8
14.4
11.8
4.5

9.9
7.8
6.7
5.8
4.7
2.9

9.2
7.6
6.2
5.9
5.7
4.9

13.8
12.2
10.8
10.7
10.1
9.1

July...
Aug...
Sept..
Oct

747.6
751.0
751.2
760.8
756.7
753.2

2,847.9
2,862.7
2,875.6
2,892.2
2,890.9
2,894.8

3,584.2
3,604.8
3,621.1
3,644.4
3,657.7
3,661.8

4,226.1
4,252.1
4,280.7
4,316.3
4,330.7
4,330.3

7,985.9
8,037.5
8,098.0
8,166.2
8,243.4
8,299.0

2.7
3.7
3.2
2.8
1.0
1.8

1.7
2.8
3.5
3.7
3.6
3.8

3.7
4.7
5.4
5.7
5.5
4.8

8.3
8.7
9.1
9.2
9.4
9.2

Now
Dec ».

-

1

8.2

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; 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 years, especially shifts to MMDAs in 1983. A similar procedure is used to
seasonally adjust the remaining nontransactions balances in M l See Table B-68 for components.
Source: Board of Governors of the Federal Reserve System.




325

TABLE B-68.—Components of money stock measures and liquid assets, 1959-87
[Averages of daily figures; billions of dollars, seasonally adjusted, except as noted]

Year
and
month

Currency

Travelers
checks

Demand
deposits

Other
checkable
deposits
(OCDs)

Overnight
repurchase
agreements
(RPs)
net, plus
overnight
Eurodollars
NSA

Money market mutual
fund (MMMF)
balances

NSA

Institution only

market
deposit
accounts
(MMDAs)

NSA

General
purpose
and
broker/
dealer

NSA

Savings
deposits

December:
1959

29.0

0.4

111.6

0.0

0.0

0.0

0.0

0.0

146.4

I960
1961
1962
1963
1964

28.9
29 5
30.6
32 5
34.3

.4

112.5
116.5
118.2
1217
127.0

.0

.0

.0

.0

.0

4
.4
5
.5

.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

363

6
.6
.7
8
.8

132 5
134.6
143.9
155.1
158.8

.1
.1
.1

.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

166.3
176.9
193 7
202.4
207.4

.1
.2
.3

1.3
2.3
2.8
5.3

.0
,0
.0
.1

.0
.0
.0
.0

.0
.0
.0
.0

.4

5.6

1.7

261.0
292.2
321.4
326.7
338.4

2141
224.3
239 4
253.4
261.1

.9

2.7

19.8

5.8
10.6
14.7
20.3
21.2

265 2
234 6
237 9
242 3
248.3

30 5
80.2
104 7
131.4
145.5

28 3
35.9
38 8
53.8
56.3

272 2
308 3
291.7

1783
232.3
254.7

270 3
270.3
274 6
277 7
282 2
285.0

63

65
6.7
6.8
68
67

June

186 0
187.2
187.7
188 9
190 2
191.1

July
Aug
Sept
Oct p
Nov
Dec p

192.1
193.2
194 5
196.2
198 4
199.7

6.8
6.9
7.0

38.3
40.4

434

. .

46.1

1970
1971
1972
1973
1974

49 2
52.6
56 8
61.6
67.9

10
1.1
13
1.5

1975
1976
1977
1978
1979

73 8
80.6
88 6
97.6
106.4

23

1980
1981
1982
1983
1984

116 7
1241
134 3
148.3
158.5

42

1985
1986
1987

170 6
183 5
199.7

59

1718
172.7
173 8
174.4
175 8
176.7

59
6.0
61

p

1986- Jan
Feb...

Mr
a
Apr
My
a

June

::::::::::":::::::::::

177 6
179.0
179 7
181.2
182.4
183.5

July
Aug
Sept
Oct
Nov
Dec
1987- Jan
Feb

Mar
Apr
May

"

1.8

2.8
31
3.5
3.8

44
43
49
5.2

64
7.0

61
61
6.2

6.4
64
6.4
6.4
64

6.8

70
70
7.0

.1

.1

.0

33.4

9.5

.0

616
150.6
185.2
138.2
167.5

15.2
38.0
51.1
43.2
62.7

43.2
379.0
417.4

400.8
344.3
357.3
306.2
288.8

70 2
78.4
77.6

176.5
207.6
221.2

65.1
84.1
88.6

513.2
571.4
523.7

303.6
366.3
410.6

180 9
183.1
186.0
189.9
195.5
199.6

68.8
68.4
67.3
68.2
68.9
66.3

177.7
181.0
186.2
191.4
193.2
197.3

67.3
67.7
70.2
74.1
76.1
75.0

516.6
517.1
521.0
526.1
531.6
541.0

304.0
304.8
306.6
311.1
316.8
321.8

288.2
291.2
292 2
293.4
297.8
308.3

204.5
210.4
214.7
220.3
225.8
232.3

72.0
75.0
73.1
78.2
77.5
78.4

199.7
200.5
202.2
206.9
207.1
207.6

77.5
80.8
84.4
84.5
84.4
84.1

546.6
553.6
558.8
564.4
568.7
571.4

327.4
334.6
341.4
350.5
358.5
366.3

3051
300.8
299.3
303.9
303 9
297.4

240.1
242.9
245.7
250.7
252.2
251.2

84.7
80.1
76.9
76.9
76.0
74.5

209.0
210.7
211.6
211.0
208.9
209.6

84.0
84.7
84.9
83.1
81.8
81.3

574.3
570.8
570.6
565.5
557.1
553.5

376.7
387.2
396.3
406.1
411.7
415.2

296.2
296.4
294.1
300 5
295 8
291.7

252.6
254.6
255.6
257.1
255.5
254.7

75.1
79.2
82.8
85.4
79.0
77.6

209.6
212.2
215.4
217.9
219.9
221.2

83.4
83.4
80.7
81.6
88.5
88.6

548.1
543.7
539.2
532.6
526 3
523.7

416.7
419.9
419.3
416.8
412.0
410.6

2.7
4.2
8.5

See next page for continuation of table.




.0

.4
.6
.9
3.1

326

2.4
2.4
6.4

.0
.0
.0
.0

.0

388.7
453.1
492.0
481.7
423.5

TABLE B-68.—Components of money stock measures and liquid assets, 1959-87—Continued
[Averages of daily figures; billions of dollars, seasonally adjusted, except as noted]

Urge,
denomination
time
deposits1

Term
repurchase
agreements
<RPs)

Term
Eurodollars

NSA

Year
and
month

Small
denomination
time
deposits'

NSA

Savings
bonds

Shortterm
Treasury
securities

Bankers
acceptances

Commercial
paper

December:
1959

11.4

1.2

0.0

0.7

46.1

38.6

0.6

3.6

I960
1961
1962.
1963
1964

12.5
14.8
201
25.5
29.2

2.0
3.9
7.0
10.8
15.2

.0
.0
0
.0
.0

.8
1.4
1.6
1.9
2.4

45.7
46.5
46.9
48.1
49.0

36.7
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

1965
1966
1967
1968
1969

34.5
55.0
77.8
100 5
120.4

21.2
23.1
30.9
37 4
20.4

.0
.0
.0
0
2.6

1.7
2.1
2.1
2.9
2.7

49.6
50.2
51.2
518
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

1970
1971
1972
1973
1974

151.1
189 7
2316
265.8
287 9

45.2
57 7
73.3
111.1
144 8

1.6
27
3.5
6.8
79

2.2
27
3.6
5.4
8.0

52.0
54 3
57.6
60.4
63.3

48.9
361
40.7
49.3
52.8

3.5
38
3.5
5.0
12.6

34.5
32 7
35.2
43.0
51.4

1975
1976
1977
1978
1979

337 9
390.7
445 5
521.0
634.4

129 7
118.1
145 2
195.5
222.8

82
14.0
191
26.6
29.5

9.7
14.8
20 2
31.8
44.7

67.2
71.8
764
80.3
79.6

68.4
69.8
78.1
81.1
107.8

10.7
10.8
14.1
22.0
27.2

48.5
52.5
64.1
80.7
98.4

1980
1981
1982
1983
1984

728 7
823.3
8510
783 8
885.3

259 8
302.1
326 2
326 2
417.0

34 0
36.0
34 5
518
61.9

50 3
67.5
817
915
82.9

72 3
67.8
68 0
71.1
74.2

133.4
149.4
183 7
212.6
263.5

32.1
40.0
44.5
45.1
45.7

98.9
105.3
113.6
133.0
160.3

1985
1986
1987^

884.2
853 5
913.4

436.1
4471
488.5

65.7
84 0
106.7

76.6
83 8
92.7

79.4
917
100.4

304.6
288.1
271.3

42.4
37.5
44.6

206.6
230.2
252.2

1986: Jan
Feb
Mr
a
Ar
p
May
June

888.1
889 8
892.0
8931
888.0
883.0

445.0
447 6
448.5
4513
447.6
447.5

68.5
70 2
71.1
70 9
73.2
73.9

75.9
791
82.7
814
79.5
79.7

79.9
80 5
81.2
81.9
82.7
83.5

302.9
306.0
299.4
298.5
304.0
298.3

42.4
42.5
41.4
40.6
39.8
39.8

209.5
208.6
208.8
206.1
210.7
212.6

880 9
876 7
872.2
864.7
8571
853.5

448 3
449 4
448.4
445.5
445 8
447.1

73 4
74 9
78.1
78.8
83 8
84.0

78 3
78 0
81.4
78.0
80 2
83.8

84 3
85 3
86.4
87.7
89.8
91.7

292.6
286.2
285.7
284.2
288.8
288.1

39.0
37.3
36.9
37.7
38.0
37.5

214.5
219.7
223.9
228.4
228.4
230.2

851.6
848 5
846.1
843.9
843 2
850 1

449.7
448 2
450.1
454.6
459.7
4651

83.6
87 2
87.2
94.5
102.8
107.8

85.4
88.0
88.4
83.8
87.0
89.7

92.7
93.5
94.3
95.1
95.9
96.5

284.1
285.6
269.2
256.5
262.9
261.1

37.8
39.3
39.8
41.2
42.4
43.5

239.7
239.8
239.1
244.9
254.3
252.1

858.5
865.5
8715
882 5
909 9
913.4

465.1
466.8
468.9
475©
485 0
488.5

107.5
108.0
109.7
106 9
109 7
106.7

85.7
90.5
94.8
93.7
93.1
92.7

97.3
97.8
98.2
98.7
99.5
100.4

252.9
256.3
260.1
272.3
277.8
271.3

43.4
42.9
43.8
44.5
45.1
44.6

248.4
250.2
257.5
256.4
250.6
252.2

,

July
Aug "
sept:::::::::::::::::::..:::..:..:.::;:::::::
Oct
Nov
Dec
1987* Jan
Feb
Mr
a
Apr
/ay
June
July
Aug
Sept
Oct
Nov"
Dec"

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 8-67.
Source: Board of Governors of the Federal Reserve System.




327

TABLE B-69-—Aggregate reserves of depository institutions and monetary base, 1959-87
[Averages of daily figures; millions of dollars; seasonally adjusted, except as noted]
Adjusted for changes in reserve requirementsl

Borrowings of depository
institutions from the Federal
Reserve, NSA

Reserves of depository institutions
Year and month
Total

December:

Nonborrowed

rowed
plus
extended
credit

Monetary
Required

1959
1960
1961
1962
1963
1964

13,552
13,722
14,148
14,412
14,711
15,187

12,611
13,648
14,015
14,151
14,378
14,923

12,611
13,648
14,015
14,151
14,378
14,923

13,046
12,979
13,564
13,840
14,220
14,781

43,277
43,248
44,271
45,516
47,765
50,111

1965
1966
1967
1969

15,732
15,727
17,123
18,015
18,292

52,784
54,858
58,265
62,340
65,469

19,180
20,415
22,474
23,481
24,713

15,288
15,195
16,895
17,270
17,173
18,848
20,289
21,424
22,183
24,132

15,308
15,388.
16,748
17,589
18,005

1970
1971
1972
1973
1974

18,932
20,233
22,190
23,178
24,454

69,477
74,165
80,693
87,204
94,393

1975
1976
1977
1978
1979

24,846
25,386
26,411
27,686
28,971
30,808
32,077
34,320
36,107
39,909
46,056
56,166
57,436
46,116
46,715
47,379
48,039
49,016
49,726

15,288
15,195
16,895
17,270
17,173
18,848
20,289
21,424
22,183
23,985
24,716
25,333
25,842
26,818
27,498

24,728
25,333
25,842
26,818
27,499

24,580
25,112
26,221
27,453
28,529

100,523
108,082
117,185
127,754
138,709

29,118
31,440
33,686
35,333
36,723
44,738
55,340
56,658
45,345
45,832
46,619
47,146
48,140
48,923
49,950
50,628
51,294
52,384
53,737
55,340
56,304
56,317
56,325
56,961
57,317
56,930
56,929
57,229
56,885
57,553
57,362
56,658

29,121
31,589
33,872
35,335
39,327

30,294
31,757
33,820
35,546
39,057
44,999
54,798
56,407
45,005
45,618
46,483
47,238
48,178
48,795
49,780
50,761
51,576
52,479
53,511
54,798
55,816
55,662
55,936
57,127
57,273
56,516
56,841
56,844
57,032
57,368
57,064
56,407

150,021
157,918
169,964
185,235
199,596

1968

1980....
1981...,
1982....
1983....
1984...,
1985....
1986....
1987 ».

1986:Jan
Feb....
Mar....
l/ayl
June..,

y
June-

50,690
51,501
52,302
53,225
54,489
56,166
56,884
56,873
56,852
57,954
58,352
57,706

July
Aug
Sept.....
Oci
Nov "...
Dec...

57,602
57,876
57,825
58,496
57,987
57,436

Sz
Nov
Dec

1987: Jan
Feb..
Mar..

45,237
55,643
57,142
45,843
46,324
47,137
47,780
48,725
49,454
50,328
51,094
51,864
52,881
54,155
55,643
56,529
56,600
56,589
57,231
57,604
57,203
57,124
57,360
57,294
58,003
57f756
57,142

Total

Seasonal

Extended
credit

941
74
133
260
332
264
532
228
746
1,119
332
126
1,050
1,298
727

217,323
239,513
256,702
218,540
220,003
221,846
223,104
225,332
226,933
228,605
230,826
232,281
234,426
236,875
239,513
242,431
243,970
244,563
246,586
248,372
248,481

130
53
569
868
1,473
1,690
636
634
774
3,186
1,318
827
777
770
884
761
893
876
803
741
872
1,008
841
752
827
580
556
527
993
1,035
776

249,457
250,798
251,852
254,352
256,079
256,702

672
647
940
943
625
777

41
32
14
13
55
135
81
116
54
33
96
113
56
38
93
36
56
68
73
94
108
116
144
137
99
70
38
34
71
91
120
196
259
283
279
231
189
126
93

147
12

3
148
186
2,604
499
303
483
497
492
518
634
584
531
378
465
570
497
418
303
225
283
264
270
288
273
194
132
409
449
394
483

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.
Note,—NSA indicates data are not seasonally adjusted.
Source-. Board of Governors of the Federal Reserve System.




328

TABLE B-70.—Commercial bank loans and securities, 1972-87
[Monthly average, billions of dollars, seasonally adjusted ']
Loans and leases
Year and month

December:
1972
1973
1974

Total loans
and
securities

Total

Commercial
and
industrial
loans

U.S.
Government
securities.

Other
securities

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
1,014.3
1,136.1

517.3
555.1
632.6
747.5
849.8

189.3
190.9
211.0
246.2
291.4

116.7
136.3
136.6
137.6
144.3

111.2
113.5
122.7
129.3
141.9

1980
1981
1982
1983
1984

1,239.0
1,307.2
1,401.0
1,553.0
1,722.6

913.9
967.2
1,033.8
1,123.5
1,319.9

325.7
355.2
392.4
414.1
473.1

170.6
179.3
201.8
259.4
260.6

154.5
160.7
165.4
170.2
142.1

1985
1986
1987 "...

1,908.0
2,089.8
2,222.4

1,456.0
1,583.0
1,691.9

499.9
541.4
570.9

271.4
309.9
334.0

180.6
196.9
196.4

1986: Jan...
Feb...
Mar..

1,937.5
1,944.1
1,955.7
1,960.5
1,969.8
1,978.3

1,475.9
1,481.1
1,498.1
1,502.2
1,508.5
1,515.6

503.0
505.1
507.5
510.0
509.9
512.9

269.1
272.3
270.2
272.0
275.7
275.7

192.5
190.7
187.5
186.3
185.6
187.0

1,998.2
2,022.6
2,044.6
2,052.3
2,063.5
2,089.8

1,523.7
1,535.1
1,545.4
1,553.0
1,561.5
1,583.0

512.6
515.2
517.3
520.0
525.7
541.4

284.7
291.5
294.9
299.6
304.1
309.9

189.7
196.0
204.2
199.8
197.9
196.9

June..

2,118.3
2,119.7
2,126.2
2,147.3
2,160.6
2,167.1

1,611.8
1,610.7
1,616.4
1,634.3
1,642.9
1,651.7

554.1
553.8
551.7
553.9
555.9
558.0

316.3
315.2
314.3
315.8
320.1
316.9

190.2
193.9
195.5
197.2
197.6
198.5

July
Aug
Sept
Oct
Nov
Dec *

2,169.5
2,189.0
2,206.7
2,225.5
2,223.5
2,222.4

1,652.8
1,665.5
1.680.4
1.699.0
1,696.0
1,691.9

555.5
555.6
560.5
565.7
567.0
570.9

319.8
328.6
3317
332.2
331.0
334.0

196.9
194.9
194.6
194.3
196.4
196.4

fez
June
July...
Aug...
Sept..
Oct....
Nov...
Dec...
1987: Jan....
Feb....
Mar..

1
Data are prorated averages of Wednesday figures for domestically chartered banks and averages of weekly data for foreign-related
institutions beginning July 1981. Prior to July 1981, data for foreign-related institutions are averages of current and previous month-end
data. 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.




329

TABLE B-71.—Bond yields and interest rates, 1929-87
[Percent per annum]
U.S. Treasury securities
Year and
month

Bills
(new issues) *
3-month

6-month

Constant
maturities2
3year

10year

Corporate
bonds
(Moody's)
Aaa<>

Ba
a

Highgrade
NewCommunici- home
mercial
pal
mortgage paper, 6
bonds
yields
(Stand- (FHLBB)* months5
ards
Poor's)

nice mtnt

Prime rate
charged by
banks*

rate,
Federal
Federal
funds
Reserve
rate 7
Bank of
New York •
5.16
2.56 !"!!".'.!*.!".
1.00

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
!lO3
.326
.373
375
.375
375
.594
1040
U02

2.84
277
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
347
3.42

2 50
2'.10
2.36
2.06
186
1.67
164
2.01
2 40
2.21

56
.53
.66
.69
73
.75
81
1.03
144
1.49

150
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
1.552
1766
1.931
.953
1.753
2658
3.267
1839
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
219
2.72
2.37
2.53
2 93
3.60
3 56
3.95

1.45
2.16
2 33
252
1.58
2.18
3 31
3 81
2 46
3.97

2.07
2.56
3.00
317
3.05
3.16
3.77
4.20
3.83
4.48

1.59
1.75
1.75
1.99
1.60
1.89 """i'.78
2.77
2.73
3.12
3.11
157
215
3.36
3.30

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
1987

6.458
4.348
4.071
7.041
7.886
5.838
4.989
5.265
7.221
10.041
11.506
14.029
10.686
8.63
9.58
7.48
5.98
5.82

12.412
13.780
12.493
12.821
12.148
12.108
11.914
9.006
8.196
7.750
8.042
8.013

1.00
1.00
134
1.50

3.832

247
1.63
2 47
319
3 98
2 84
4.46

£85
2.40
2 82
318
365
3 32
4.33

2 62
2.86
2 96
3 20
2.90
3.06
3 36
3.89
3 79
4.38

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

519
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

535"
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

6.562
4.511
4.466
7.178
7.926
6.122
5.266
5.510
7.572
10.017
11.374
13.776
11.084
8.75
9.80
7.66
6.03
6.05

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

11.55
14.44
12.92
10.45
11.89
9.64
7.06
7.68

11.46
13.91
13.00
11.10
12.44
10.62
7.68
8.39

11.94
14.17
13.79
12.04
12.71
11.37
9.02
9.38

13.67
16.04
16.11
13.55
14.19
12.72
10.39
10.58

8.51
11.23
11.57
9.47
10.15
9.18
7.38
7.73

12.66
14.70
15.14
12.57
12.38
11.55
10.17
9.31

12.29
14.76
11.89
8.89
10.16
8.01
6.39
6.85

15.27
18.87
14.86
10.79
12.04
9.93
"8.33
8.22

11.77
13.42
11.02
8.50
8.80
7.69
6.33
5.66

13.36
16.38
12.26
9.09
10.23
8.10
6.81
6.66

High-low
1982:
Jan
Feb .
Mar...."
Apr
May
June
July
Aug
Sept
Oct
Nov
Dec

100
1.00

8
1.00
8
1.00
9
1.00
8
1.00
8

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

High-low

13.35 15.75-15.75 12.00-12.00
14.27 17.00-15.75 12.00-12.00
13.47 16.50-16.50 12.00-12.00
13.64 16.50-16,50 12.00-12.00
13.02 16.50-16.50 12.00-12.00
13.79 16.50-16.50 12.00-12.00
13.00 16.50-15.50 12.00-11.50
10.80 15.50-13.50 11.50-10.00
10.86 13.50-13.50 10.00-10.00
9.21 13.50-12.00 10.00- 9.50
8.72 12.00-11.50 9.50- 9.00
8.50 11.50-11.50 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

1
Rate on new issues within period; bank-discount basis.
2
Yields on the more actively traded issues adjusted to constant maturities by the Treasury Department.
a Series excludes public utility issues for January 17, 1984 through October 11, 1984 due to lack of appropriate issues.
4
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 Deginning January 1973 not strictly comparable with prior rates.
See next page for continuation of table.




330

TABLE B-71.—Bond yields and interest rates, 7929-S7-—Continued
[Percent per annum]
U.S . Treasury securities

Year and
month

Bills
(new issues) 1
3-month

1983:
Jan
Feb
Mar
Apr
lyfay

6-month

Constant
maturities2
3year

10year

Corporate
hnnrlc
bonds
(Moody's)

Aaa 3

Baa

HighMQIJU
grade
rtewCommunicihome
mercial
pal
paper, 6
bonds
months5
(Standard & (FHLBB)4

•SET

Prime rate
charged by
banks6

Discount
rate,
Federal
Reserve
Bank of
New York 6

Poor's)

Federal
funds
rate7

Dec

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

8.508.508.508.508.508.508.508.508.508.508.508.50-

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

1304:
Jan
Feb
Mar
Apr
May
June
July
Aug
Sept
Oct
Nov
Dec

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

8.508.508.509.009.009.009.009.009.009.009.008.50-

8.50
8.50
8.50
8.50
9.00
9.00
9.00
9.00
9.00
9.00
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

8.008.008.008.008.007.507.507.507.507.507.507.50-

8.00
8.00
8.00
8.00
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

7.507.507.507.006.506.506.506.005.505.505.505.50-

7.50
7.50
7.00
6.50
6.50
6.50
6.00
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

5.45
5.59
5.56
5.76
5.75
5.69
5.78
6.00
6.32
6.40
5.81
5.80

5.47
5.60
5.56
5.93
6.11
5.99
5.86
6.14
6.57
6.86
6.23
6.36

6.41
6.56
6.58
7.32
8.02
7.82
7.74
8.03
8.67
8.75
7.99
8.13

7.08
7.25
7.25
8.02
8.61
8.40
8.45
8.76
9.42
9.52
8.86
8.99

8.36
8.38
8.36
8.85
9.33
9.32
9.42
9.67
10.18
10.52
10.01
10.11

9.72
9.65
9.61
10.04
10.51
10.52
10.61
10.80
11.31
11.62
11.23
11.29

6.63
6.66
6.71
7.62
8.10
7.89
7.83
7.90
8.36
8.84
8.09
8.07

9.51
9.23
9.14
9.21
9.37
9.45
9.41
9.38
9.37
9.25
9.30
9.15

5.76
5.99
6.10
6.50
7.04
7.00
6.72
6.81
7.55
7.96
7.17
7.49

5.50-5.50
5.50-5.50
5.50-5.50
5.50-5.50
5.50-5.50
5.50-5.50
5.50-5.50
5.50-5.50
6.00-5.50
6.00-6.00
6.00-6.00
6.00-6.00

6.43
6.10
6.13
6.37
6.85
6.73
6.58
6.73
7.22
7.29
6.69
6.77

June .'."Z
July
Aug
Sept
Oct
Nov

Jan
Feb
Mar
May";;;"

June

July
Aug
Sept
Oct
Nov
Dec
1986:
Jan
Feb
Mar
Apr
May
June
July
Aug
Sept
Oct
Nov
Dec
1987:
Jan
Feb
Mar

xJune
July
Aug
Sept
Oct
Nov
Dec
6

9.509.509.509.008.508.508.508.007.507.507.507.50-

9.50
9.50
9.00
8.50
8.50
8.50
8.00
7.50
7.50
7.50
7.50
7.50

7.50-7.50
7.50-7.50
7.50-7.50
7.75-7.75
8.25-8.00
8.25-8.25
8.25-8.25
8.25-8.25
8.75-8.25
9.25-8.75
9.00-8.75
8.75-8.75

Bank-discount basis; prior to November 1979, data are for 4-6 months paper.
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
' 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
the 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.
6
7




331

TABLE B-72.—Total funds raised in credit markets by nonfinancial sectors, 1978-87
[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Item

1978

1979

1980

1981

1982

1983

1984

1985

1986

371.9

385.7

341.7

375.9

388.9

550.2

753.9

854.8

829.9

53.7

37.4

79.2

87.4

161.3

186.6

198.8

223.6

215.0

55.1
-1.4

38.8
-1.4

79.8
-.6

87.8
-.5

162.1
-.9

186.7
-.1

199.0
-.2

223.7
-.1

214.7
.4

318.2

348.4

262.5

288.5

227.6

363.6

555.1

631.1

614.9

200.7

212.5

189.1

155.5

148.3

253.4

313.6

447.8

450.9

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
183.6

50.4
46.1
217.1

136.4
73.8
237.7

30.8
121.3
298.8

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

117.5
14.2
49.3
2.6

129.7
25.1
63.2
-.9

151.9
29.2
62.5
-6.0

199.4
33.1
74.6
-8.4

Other debt instruments

U7.6

135.9

73.3

133.0

79.3

110.2

241.5

183.3

164.0

Consumer credit
Bank loans n.e.c
Open-market paper

46.7
40.3

27.9

42.7
48.5
9.0
35.7

2.9
36.5
4.0
30.0

21.8
48.1
14.7
48.5

19.3
50.4
-6.1
15.8

56.6
23.3
-.8
31.3

90.4
67.1
21.7
62.2

94.6
38.6
14.6
35.5

65.8
66.5
-9.3
41.0

318.2

348.4

262.5

288.5

227.6

363.6

555.1

631.1

614.9

16.5
167.2
134.5

17.6
173.7
157.1

17.2
118.4
126.8

6.8
120.7
161.1

21.5
90.0
116.1

34.0
188.2
141.4

27.4
234.6
293.0

91.8
293.4
245.9

44.3
279.3
291.2

15.6
33.8
85.2

23.5
37.9
95.7

15.2
31.8
79.8

16.6
38.5
106.0

6.8
40.2
69.0

4.1
77.0
60.3

-.1
97.0
196.0

-13.9
93.1
166.7

-15.1
116.1
190.2

24.0

15.0

24.2

23.5

16.0

17.3

8.3

1.2

9.0

4.0
18.3
1.0

3.7
3.1
1.7
6.5

1.2
11.8
2.4
8.8

5.5
3.0
3.9
11.1

6.6
-5.5
1.9
13.0

3.1
3.6
6.5
4.1

3.8
-6.6
6.2
5.0

3.8
-2.8
6.2
-6.0

2.6
-1.0
11.5
-4.0

365.8

399.4

404.8

567.5

762.2

856.0

838.9

Net credit market borrowing by nonfinancial sectors
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:
State and local governments.
Households
Nonfinancial business
Farm
Nonfarm noncorporate

Corporate

Foreign net borrowing in United States

Bonds

•
.

Bank loans n.e.c
Open-market paper
U.S. Government loans
Total domestic plus foreign

2.7

395.9

400.7.

.

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

371.9

385.7

341.7

375.9

388.9

550.2

753.9

854.8

829.9

220.0

252.6

231.3

295.8

311.5

389.9

517.1

496.7

379.4

148.4

147.5

183.2

217.9

205.5

232.8

320.4

223.5

291.8

26.2
108.3
6.4
5.5
2.0

27.9

16.7
128.3
28.5
6.8
2.8

28.1
84.0
102.2
5.2
-1.7

27.7
133.6
33.5
11.1
-.4

42.9
207.3
-39.0
18.5

36.5
235.1
49.0
5.0

53.8
146.3
8.9
16.6
-2.1

112.8
110.9
43.8
18.3
5.9

48.2

77.9

106.0

74.8
33.0

6.7
5.1

Credit market instruments

71.5

3.1

Foreign funds

1.8

36.9

U.S. Government and related loans, net
U.S. Government cash balances
Private insurance and pension reserves
Other sources

273.2

87.6

80.1

115.0

29.7

-25.1
25.3

-23.7

26.4

25.5

-31.4
23.7

40.0
16.3
23.7

57.9

17.7
62.3

12.4
102.6

3.2
6.8
76.0
29.0

-10.4
16.9
.4
74.7
25.1

4.8
-2.6
86.1
21.8

10.5
-1.1
83.4
-14.5

10.4
6.1
106.0
-37.4

5.2
-5.3
109.7
10.8

16.5
4.0
118.6
34.4

37.2
10.3
141.0
89.6

30.0
1.7
152,8
151.1

7.3

See next page for continuation of table.




196.7

-7.7

16.0
At banks
Credit market instruments

-5.1

157.0

105.1

332

63.3

5.4

TABLE B-72,—Total funds raised in credit markets by nonfinancial sectors, 1978-87—Continued
[Billions of dollars,- quarterly data at seasonally adjusted annual rates]
1986

Item

1987

Net credit market borrowing by nonfinancial sectors
Total net borrowing by domestic nonfinancial sectors....

565.0

Consumer credit
Bank loans n.e.c
Open-market paper
Other

68.0

226.0

208.9
-1.5

235.0

162.4
-.1

141.0
-1.9

68.5
-.5

567.1

722.0

793.8

350.6

619.1

537.7

407.6

587.1

485.3

444.1

459.3

442.9

14.2
140.8
252.6

137.1
113.7
336.2

17.3
100.8
367.2

46.9
146.9
250.3

18.6
108.0
332.7

37.9
135.2
269.9

246.4
36.8
59.0
-6.0

223.6 178.7
32.8
28.2
120.2
55J
- 9 . 4 -12.3

238.1
31.2
69.8
-6.4

188.2
28.2
56.5

135.0

308.5 -93.6

159.8

53.0

159.5

-2.9

376.5

567.1

722.0

793.8

350.6

94.8
32.8
40.4
75.6
34.8
10.8
40.8 -12.0
31.6
619.1 537.7

-21.5
195.5
202.5

30.1
270.4
266.6

138.3
352.6
231.2

30.4
298.8
464.6

45.7
161.2
143.7

25.0
286.7
307.5

39.2
264.3
234.3

-14.8 -19.0 -13.4 -13.3 -23.0 -12.0
89.6
99.9 171.1
78.9 122.7
103.9
87.8 196.8
113.3 196.1 144.6 306.9

,

-4.5
83.3
155.6

79.8
62.3
47.2
-22.9
-16.2 -10.1
42.7
29.8

By borrowing sector:
State and local governments
Households
Nonfinancial business
Farm
Nonfarm noncorporate
Corporate

85.2
6.1
36.0
14.8 226.8 -124.8
5.2 -16.3 - 1 . 8
29.8
61.9
26.9

34.7

Bank loans n.e.c
U.S. Government loans
Total domestic plus foreign

16.5 -23.5

-10.1

-3.4

23.7

-5.8
4.5
17.9
-8.4

2.4 - 4 . 6
-7.7
.6
15.8 - 8 . 1
6.0 -11.4

2.7
-2.3
-4.3
-6.2

-4.8
-4.1
-6.2
11.7

5.6
-1.3
21.4
-2.0

599.8

Bonds

8.2

18.2
-1.5
20.3
-2.3

Foreign net borrowing in United States

801.3

949.0 1,005.5

502,7

754.9

629.4

Direct and indirect supply of funds to credit markets

Total funds supplied to domestic nonfinancial sectors

512.9

758.2

605.7

88.5

280.7

398.2

319.9

323.3 -64.4

139.3

294.3

85.4
119.9
64.7
35.9
14.1

184.7 -73.1
35,4
93.5
16.5 - 6 . 9
15.7
17.1
11.6 -35.5

45.6
64.3
29.8
-1.1

96.9
100.2
23.3
52.4
21.5
103.9

565.0

350.7

563.6

261.0

81.7
130.1
41.7
4.5
4.8

Checkable deposits and currency
Time and savings deposits
Money market fund shares
Security repurchase ageements
Foreign deposits

932.5 1,029.0

300.8

262.8

Deposits and currency

793.1

302.4

Private domestic nonfinancial sectors

99.6
100.4
52.2
15.4
-6.6

39.6

30.8

240.3

152.9

141.4

122.5

128.8

81.7

110.3

109.1

97.2

44.4 -19.7
82.7 142.2

At banks
Credit market instruments
U.S. Government and related loans, net
U.S. Government cash balances
Private insurance and pension reserves
Other sources

39.8

127.2

Credit market instruments
Foreign funds

5.6
123.2

19.5
62.3

45.2
65.0

29.1
80.0

48.7
48.4

24.0
15.2
132.3
198.2

35.8
19.4
236.7
161.1

-34.8
-23.7
140.9
53.0

Source: Board of Governors of the Federal Reserve System.




139.1

143.1 184.7
25.7
37.0
65.8
53.6
- 6 . 7 -11.3

Tax-exempt obligations
Corporate bonds
Mortgages
Home mortgages
Multi-family residential
Commercial
Farm
Other debt instruments

605.7

162.3

323.5

Debt capital instruments

758.2

235.2

-45.4
129.7
239.2

Private domestic nonfinancial sectors

512.9

210.4

376.5

Agency issues and mortgages

932.5 1,029.0

226.0

188.8
-.3

Treasury issues

793.1

188.5

U.S. Government

333

94.8 -21.1
- 4 . 2 -34.7
101.2 277.3
92.6
191.9

19.2 -28.3
43.4
30.9
156:0 231.6
149.9 -123.8

TABLE B-73.—Mortgage debt outstanding by type of property and of financing, 1939-87
[Billions of dollars]
Nonfarm properties
End of year
or quarter

All
properties

Farm
properties

Nonfarm properties by type of mortgage
Conventional2

Government underwritten
Total

Multi- Com1- to 4- family mercial
family proper- properhouses
ties
ties

1- to 4-family houses
Total i

Total

VA
FHA
guarinsured anteed

Total

1939

35.5

6.6

28.9

16.3

5.6

7.0

1.8

1.8

1.8

27.1

1940
1941
1942
1943
1944
1945
1946
1947
1948
1949

36.5
37.6
36.7
35.3
34.7
35.5
41.8
48.9
56.2
62.7

6.5
6.4
6.0
5.4
4.9
4.8
4.9
5.1
5.3
5.6

30.0
31.2
30.8
29.9
29.7
30.8
36.9
43.9
50.9
57.1

17.4
18.4
18.2
17.8
17.9
18.6
23.0
28.2
33.3
37.6

5.7
5.9
5.8
5.8
5.6
5.7
6.1
6.6
7.5
8.6

6.9
7.0
6.7
6.3
6.2
6.4
7.7
9.1
10.2
10.8

2.3
3.0
3.7
4.1
4.2
4.3
6.3
9.8
13.6
17.1

2.3
3.0
3.7
4.1
4.2
4.3
6.1
9.3
12.5
15.0

2.3
3.0
3.7
4.1
4.2
4.1
3.7
3.8
5.3
6.9

0.2
2.4
5.5
7.2
8.1

27.7
28.2
27.1
25.8
25.5
26.5
30.6
34.1
37.3
40.0

1950
1951
1952
1953
1954
1955
1956
1957
1958
1959

72.8
82.3
91.4
101.3
113.7
129.9
144.5
156.5
171.8
190.8

6.1
6.7
7.2
7.7
8.2
9.0
9.8
10.4
11.1
12.1

66.7
75.6
84.2
93.6
105.4
120.9
134.6
146.1
160.7
178.7

45.2
51.7
58.5
66.1
75.7
88.2
99.0
107.6
117.7
130.9

10.1
11.5
12.3
12.9
13.5
14.3
14.9
15.3
16.8
18.7

11.5
12.5
13.4
14.5
16.3
18.3
20.7
23.2
26.1
29.2

22.1
26.6
29.3
32.1
36.2
42.9
47.8
51.6
55.2
59.3

18.8
22.9
25.4
28.1
32.1
38.9
43.9
47.2
50.1
53.8

8.5
9.7
10.8
12.0
12.8
14.3
15.5
16.5
19.7
23.8

10.3
13.2
14.6
16.1
19.3
24.6
28.4
30.7
30.4
30.0

44.7
49.1
54.9
61.5
69.3
78.0
86.8
94.6
105.5
119.4

1960
1961
1962
1963
1964
1965
1966
1967
1968
1969

207.5
228.0
251.4
278.5
305.9
333.3
356.5
381.2
410.9
441.4

12.8
13.9
15,2
16.8
18.9
21.2
23.1
25.1
27.4
29.2

194.7
214.1
236.2
261.7
287.0
312.1
333.4
356.1
383.5
412.2

141.9
154.6
169.3
186.4
203.4
220.5
232.9
247.3
264.8
283.2

20.3
23.0
25.8
29.0
33.6
37.2
40.3
43.9
47.3
52.2

32.4
36.5
41.1
46.2
50.0
54.5
60.1
64.8
71.4
76.9

62.3
65.6
69.4
73.4
77.2
81.2
84.1
88.2
93.4
100.2

56.4
59.1
62.2
65.9
69.2
73.1
76.1
79.9
84.4
90.2

26.7
29.5
32.3
35.0
38.3
42.0
44.8
47.4
50.6
54.5

29.7
29.6
29.9
30.9
30.9
31.1
31.3
32.5
33.8
35.7

132.3
148.5
166.9
188.2
209.8
231.0
249.3
267.9
290.1
312.0

1970
1971
1972
1973
1974
1975
1976
1977
1978
1979

473.5
524.0
597.1
672.3
732.3
791.7
878.5
1,009.8
1,161.9
1,327.3

30.3
32.2
35.1
39.5
44.7
49.7
55.3
63.5
71.6
85.6

443.2
491.8
562.0
632.8
687.5
742.0
823.2
946.4
1,090.2
1,241.7

297.4
325.9
366.5
407.9
440.7
482.1
546.3
642.7
753.5
870.5

60.1
70.1
82.8
93.1
100.0
100.6
105.7
114.0
124.9
134.9

85.6
95.9
112.7
131.7
146.9
159.3
171.2
189.7
211.8
236.3

109.2
120.7
131.1
135.0
140.2
147.0
154.1
161.7
176.4
199.0

97.3
105.2
113.0
116.2
121.3
127.7
133.5
141.6
153.4
172.9

59.9
65.7
68.2
66.2
65.1
66.1
66.5
68.0
71.4
81.0

37.3
39.5
44.7
50.0
56.2
61.6
67.0
73.6
82.0
92.0

333.9
371.1
430.9
497.7
547.3
595.0
669.0
784.6
913.9
1,042.7

1980
1981
1982
1983
1984
1985
1986

1,457.4
1,563.1
1,631.7
1,814.9
2,035.2
2,269.2
2,566.7

95.6
105.8
110.0
112.6
111.6
105.7
96.8

1,361.8
1,457.3
1,521.7
1,702.3
1,923.6
2,163.5
2,470.0

964.0
1,037.6
1,074,1
1,189.7
1,318.5
1,467.4
1,666.4.

142.3
142.1
145.9
161.0
185.6
214.0
247.0

255.5
277.5
301.7
351.6
419.4
482.0
556.6

225.1
238.9
248.9
279.8
294.8
328.3
370.7

195.2
207.6
217.9
248.8
265.9
288.8
328.9

93.6
101.3
108.0
127.4
136.7
153.0
185.5

101.6
106.2
109.9
121.4
129.1
135.8
143.4

1,136.7
1,218.4
1,272.8
1,422.5
1,628.8
1,835.2
2,099.2

1985:1
II
Ill
IV

2,081.6
2,140.5
2,201.3
2,269.2

111.9
110.9
108.3
105.7

1,969.6
2,029.7
2,093.0
2,163.5

1,346.1
1,382.8
1,424.9
1,467.4

191.0
197.7
203.8
214.0

432.5
449.2
464.3
482.0

299.7
305.4
323.8
328.3

270.6
276.0
282.6
288.9

139.8
144.3
148.3
153.0

130.8
131.6
134.3
135.8

1,669.9
1,724.3
1,769.1
1,835.2

1986:1
II
Ill
IV

2,318.3
2,386.5
2,472.3
2,566.7

103.8
101.1
99.5
96.8

2,214.5
2,285.3
2,372.8
2,470.0

1,495.3
1,544.4
1,607.9
1,666.4

221.9
229.5
237.8
247.0

497.4
511.4
527.2
556.6

339.9
349.7
360.4
370.7

299.1
308.3
319.5
328.9

160.6
168.9
176.8
185.5

138.5
139.4
142.7
143.4

1,874.7
1,935.6
2,012.3
2,099.2

1987:1
II
Ill

2,662.3
2,754.5
2,827.6

93.6
92.2
91.3

2,568.8
2,662.3
2,736.4

1,712.1
1,778.3
1,830.4

257.3
266.4
272.8

599.4
617.6
633.2

386.6
403.7
421.8

344.6
360.9
378.7

196.6
211.6
226.9

147.9
149.3
151.8

2,182.2
2,258.6
2,314.6

1

Includes FHA insured multifamity 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.
2




334

TABLE B-74.—Mortgage debt outstanding by holder, 1939-87
[Billions of dollars]
Major financial institutions
End of year

or quarter

Total
Total

Savings
institutions 1

Commercial
banks -

Other holders
Life
insurance
companies

Federal
and
related
agencies 3

Individuals and
others

1939

35.5

18.6

8.6

4.3

5.7

5.0

11.9

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

36.5
37.6
36.7
35.3
34.7
35.5
418
48.9
56.2
62.7

19.5
20 7
207
20.2
20.2
21.0
26 0
31.8
37.8
42.9

9.0
9.4
9.2
9.0
9.1
9.6
115
13.8
16.1
18.3

4.6
4.9
4.7
4.5
4.4
4.8
7.2
9.4
10.9
11.6

6.0
64
6.7
6.7
6.7
6.6
7.2
8.7
10.8
12.9

4.9
4.7
4.3
3.6
3.0
2.4
2.0
1.8
1.8
2.3

12.0
12.2
11.7
11.5
11.5
12.1
13.8
15.3
16.6
17.5

1950
1951
1952
1953
1954
1955
1956
1957
1958
1959

72.8
82.3
9L4
101.3
113.7
129.9
144.5
156 5
1718
190.8

51.7
59.5
669
75.1
85.7
99.3
111.2
119 7
1315
145.5

22.0
25.5
29.8
34.9
41.1
48.9
55.4
612
68.9
78.1

13.7
14.7
15.9
16.9
18.6
21.0
12.1
23 3
25.5
28.1

16.1
19.3
21.3
23.3
26.0
29.4
33.0
35 2
37.1
39.2

2.8
3.5
4.1
4.6
4.8
5.3
6.2
7.7
8.0
10.2

18.4
19.3
20.4
21.7
23.2
25.3
27.1
29.1
32.3
35.1

1960
1961
1962
1963
1964
1965
1966
1967
1968
1969

207 5
228.0
251.4
278 5
305 9
333.3
356.5
3812
410 9
441.4

157 6
172.6
192.5
2171
2410
264.6
280.8
298 8
319 9
339.1

87 0
97 9
111.1
1271
1419
154.9
161.7
172 3
184.3
196.3

28.8
30.4
34.5
39 4
44.0
49.7
54.4
59 0
65.7
70.7

41.8
44.2
46.9
50.5
55.2
60.0
64.6
67.5
70.0
72.0

11.5
12.2
12.6
11.8
12.2
13.5
17.5
20.9
25.1
31.1

38.4
43.1
46.3
49.5
52.7
55.2
58.2
61.4
65.9
71.2

1970
1971
1972
1973
1974
1975
1976
1977
1978
1979

473.5
524.0
5971
672.3
732 3
7917
878.5
1009 8
1,161.9
1,327.3

355.9
394.2
450 0
505.4
542 6
5812
647.5
745 2
848.2
938.2

208.2
236.3
273 8
304.9
324 2
355 8
404.6
469 4
528.0
574.6

73.3
82.5
99.3
119.1
1321
136.2
151.3
179 0
214.0
245.2

74.4
75.5
76.9
81.4
86.2
89.2
91.6
96.8
106.2
118.4

38.3
46.4
54.6
64.8
82.2
101.1
116.7
140.5
170.6
216.0

79.3
83.4
92.5
102.2
107,5
109.4
114.3
124.1
143.1
173.1

1980
1981
1982
1983
1984
1985
1986

1,457.4
1,563.1
16317
1814 9
2,035.2
2,269.2
2,566.7

996.8
1,040.5
10213
1108 2
1,245.9
1,361.5
1,473.7

603.1
618.5
5781
626 7
709.7
760.5
777.3

262.7.
284.2
301.3
330.5
379.5
429.2
502.5

131.1
137.7
142.0
1510
156.7
171.8
193.8

256.8
289.4
355.4
433.4
491.1
582.0
733.6

203.8
233.1
255,0
273.3
298.3
3257
359.5

1985- 1
II
Ill ,
I
V

2,081.6
2,140.5
2 2013
2,269.2

1,266.9
1,297.9
1 328.1
1,361.5

720.3
735.0
748.1
760.5

388.2
400.7
415.2
429.2

158.5
162.1
164.8
171.8

511.3
531.7
555.2
582.0

303.3
311.0
318.0
325.7

1986:1
II
Ill .
IV

2,318.3
2 386 5
2 472 3
2,566.7

1,379.0
1405.1
1432.8
1,473.7

762.9
768.4
772.1
777.3

441.1
456.2
474.7
502.5

175.0
180.5
186.0
193.8

605.7
637.0
682.2
733.6

333.6
344.4
357.2
359.5

1987: 1
)|
Ill

2,662.3
2,754.5
2,827.6

1,525.3
1,570.9
1,608.4

810.1
826.1
840.3

519.5
544.4
563.6

195.7
200.4
204.6

771.2
808.9
832.8

365.8
374.7
386.4

1
Includes savings banks and savings and loan associations. Beginning 1987, date reported by Federal Savings and Loan Insurance
Corporation-insured institutions include loans in process.
2
Includes loans held by nondeposit trust companies, but not by bank trust departments.
3
Includes Government National Mortgage Association (GNMA), Federal Housing Administration, Veterans Administration, Farmers Home
Administration (FmHA), and in earlier years Reconstruction Finance Corporation, Homeowners Loan Corporation, Federal Farm Mortgage
Corporation, and Pubfjc Housing Administration. Also includes U.S.-sponsored agencies such as Federal National Mortgage Association
(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.




335

TABLE B-75.—Consumer credit outstanding, 1950-87
[Amount outstanding (end of month); millions of dollars, seasonally adjusted]
Year and month

Total
consumer
credit

Installment credit'
Total

Automobile

RevolvingE

Mobile home a

Other

Noninstallment
credit4

December:
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959

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
278,919
324,999
366,431

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
57,444
63,023
69,948

1980
1981
1982
1983
1984
1985
1986
1987 *..
..

369,049
390,067
409,471
468,539
561,489
657,017
723,595
755,585

295,763
310,965
325,136
373,048
446,183
522,805
577,784
612,571

111,936
119,610
125,440
145,874
172,352
208,057
245,055
261,654

54,894
60,750
66,007
78,369
99,620
122,021
134,938
145,940

18,264
19,308
21,728
22,919
24,710
25,488
25,710
25,612

110,669
111,297
111,961
125,886
149,501
167,239
172,081
179,365

73,286
79,102
84,335
95,491
115,306
134,212
145,811
143,014

1986: Jan..
Feb..,
Mar.
Apr..,
May.,
June,

664,820
670,520
673,867
682,310
687,360
693,205

529,126
534,193
536,589
542,525
546,762
551,770

211,530
214,321
215,457
218,021
221,012
224,407

123,921
125,504
126,539
128,905
129,623
130,737

25,574
25,667
25,750
25,703
25,673
25,806

168,101
168,701
168,843
169,896
170,454
170,820

135,694
136,327
137,278
139,785
140,598
141,435

July...
Aug...
Sept.
Oct...
Nov..
Dec...

700,167
706,742
715,061
721,809
723,030
723,595

558,059
563,660
571,280
576,874
577,656
577,784

227,822
231,200
239,014
243,400
243,005
245,055

132,181
133,180
133,123
133,816
134,391
134,938

25,891
25,939
25,732
25,784
25,731
25,710

172,165
173,341
173,411
173,874
174,529
172,081

142,108
143,082
143,781
144,935
145,374
145,811

1987: Jan...
Feb...,
Mar..,
June....

724,581
726,025
726,890
730,733
730,208
735,101

578,578
579,591
579,913
583,595
583,276
587,821

245,472
246,064
246,290
247,663
247,578
250,130

134,916
135,663
135,166
136,706
136,869
137,401

25,852
25,789
25,614
25,626
25,542
25,685

172,338
172,076
172,844
173,600
173,287
174,605

146,003
146,434
146,977
147,138
146,932
147,280

July
Aug
Sept....
Oct
Nov
Dec ".
..

737,767
741,005
746,284
749,187
752,678
755,585

591,175
596,182
602,607
605,488
608,122
612,571

250,980
254,013
257,470
258,710
259.134
261,654

138,741
139,837
141,704
143,142
143,620
145,940

25,860
25,695
25,699
25,677
25,731
25,612

175,594
176,637
177,733
177,959
179,637
179,365

146,592
144,823
143,677
143,699
144,556
143,014

1
Installment credit covers most short- and intermediate-term credit extended to individuals through regular business channels,
usually to finance the purchase of consumer goods and services or to refinance debts incurred for such purposes, and scheduled to be
repaid (or with the option of repayment) in two or more installments. Credit secured by real estate is generally excluded.
z
Consists of credit cards at retailers, gasoline companies, and commercial banks, and check credit at commercial banks. Excludes 30day charge credit held by travel and entertainment companies. Prior to 1968, included in "other," except gasoline companies, included
in noninstallment credit prior to 1971. Beginning 197/, includes open-end 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. Oata are shown here as a general indication of trends.
Source: Board of Governors of the Federal Reserve System.




336

GOVERNMENT FINANCE
TABLE B-76.—Federal receipts, outlays, surplus or deficit, and debt, selectedfiscalyears 1929-89
[Billions of dollars; fiscal years]
Total
Fiscal year
or period

Off-budge t

On-budge

Gross Federal debt
(end of period)

Receipts

Outlays

Surplus
or
deficit
(-)

Addendum:
Gross
national
product

Receipts

Outlays

Surplus
or
deficit
(-)

07
-2.6
-2.8

5.8

9.2

-3.4

0.5

0.0

0.5

16.9
i 22 5
48.2

41.4

95
13.7
35.1
78.6
91.3

-29
-4.9
-20.5
-54.6
-47.6

60
8.0
13.7
22.9
42.5

95
13.6
35.1
78.5
91.2

35
-5.6
-21.3
-55.6
-48.7

6
.7
.9
1.1
1.3

0
.0
.1
.1

6
.7
.8
1.0
1.2

507
57.5
79.2
142.6
204.1

42 8
48.2
67.8
127.8
184.8

958
113.0
142.2
175.8
202.0

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

1.3
1.2
1.5
1.6
1.7

.1
.2
.3
.4
.4

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

-31
6.1
-15
-6.5
-1.2

37.3
48.5
62 6
65.5
65.1

42.0
44.2
660
73.8
67.9

-4.7
4.3
-34
-8.3
-2.8

21
3.1
36
4.1
4.6

5
1.3
17
2.3
2.9

16
1.8
19
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
766
82.4
92.1

-3.0
39
34
-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
25
2.6
-3.3
-12.1

5.1
64
6.8
8.0
8.3

4.0
50
6.0
7.5
9.0

1.1
15
.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
59

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
65

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
1117
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
191
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
261
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
.5
1.8

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

1,522.5
1,698.2

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
-39
-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
.3

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
3,687.6

1985
1986
1987 3
1988 3
1989

734.1
769.1
854.1
909.2
964.7

946.3
990.3
1,004.6
1,055.9
1,094.2

-212.3
-221.2
-150.4
-146.7
-129.5

547.9
568.9
640.7
669.3
706.2

769.5
806.8
810.8
852.8
880.9

-221.6
-237.9
-170.0
-183.5
-174.7

186.2
200.2
213.4
239.9
258.5

176.8
183.5
193.8
203.1
213.3

9.4
16.7
19.6
36.8
45.1

1,827.5
2,130.0
2,355.3
2,581.6
2,825.3

1,509.9
1,746.1
1,897.8
2,025.1
2,152.1

3,943.4
4,192.5
4,408.7
4,705.8
5,023.3

Receipts

Outlays

Surplus
or
deficit
{-)

1929
1933
1939

3.9
2.0
6.3

31
4.6
9.1

1940
1941
1942
1943
1944

65
8.7
14.6
24.0
43.7

1945
1946
1947
1948
1949

Total

Held by
the
public

1

1
2
3

2

1,794.7
1,933.0
2,171.8
2,447.8

Not strictly comparable with later data.
Annual rate.
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 1989" for additional information.
Sources: Department of the Treasury, Office of Management and Budget, and Department of Commerce (Bureau of Economic
Analysis).




337

TABLE B-77.—Federal receipts, outlays, and debt,fiscalyears 1980-89
[Millions of dollars; fiscal years]
Actual

Description
1980

1981

1982

1983

1984

517,112
590,920

599,272
678,209

617,766
745,706

600,562
808,327

666,457
851,781

-73,808

-78,936

-127,940

-207,764

-185,324

403,903
476,591

469,097
543,013

474,299
594,302

453,242
661,219

500,382
685,968

-72,689

-73,916

-120,003

-207,977

-185,586

113,209
114,329

130,176
135,196

143,467
151,404

147,320
147,108

166,075
165,813

-1,120

-5,020

-7,937

212

262

914,317

1,003,941

1,146,987

1,381,886

1,576,748

199,212
715,105
120,846
594,259

209,507
794,434

217,560
929,427

240,114
1,141,771

264,159
1,312,589

124,466
669,968

134,497
794,930

155,527
986,244

155,122
1,157,467

517,112

599,272

617,766

600,562

666,457
298,415
56,893
239,376

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 accounts..
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..,

;
64,600
157,803




12,834
956

15,186
975

14,492
1,108

15,684
1,347

678,209

745,706

808,327

851,781

157,513
13,104
6,469
15,166
13,568
11,323
8,206
23,379
10,568
33,709
26,866
39,149
99,723
139,584

185,309
12,300
7,200
13,527
12,998
15,944
6,256
20,625
8,347
27,029
27,445
46,567
107,717
155,964

209,903
11,848
7,935
9,353
12,672
22,901
6,681
21,334
7,560
26,606
28,641
52,588
122,598
170,724

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

670
138,914

844
155,120

19,993
150,731

7,056
171,167

22,991
4,762
11,436

23,958
4,703
10,922

24,846
5,099
11,241

25,614
5,660
11,821

68,734

84,995

89,774

111,058

71,022
-2,288

87,065
-2,071

91,619
-1,845

114,368
-3,310

-19,942

-28,041

=26,099

-33,976

-31.957

-18,738
-1,204

338

37,361
6,010
11,370

54,851
-2,339

See next page for continuation of table.

35,300
6,053
8,655

52,512

Allowances
Undistributed offsetting receipts
On-budget...
Off-budget..

36,311
7,991
8,854

21,185
4,582
13,030

On-budget...
Off-budget..

40,839
6,787
8,083

675
117,872

Veterans benefits and services
Administration of justice
General government
Central Federal credit activities
Net interest

73,301
166,075

133,995
12,714
5,832
10,156
13,858
8,839
9,390
21,329
11,252
31,843
23,169
32,090
86,540
118,547

On-budget...
Off-budget..

61,674
147,320

590,920

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

58,031
143,467

11,767
981

OUTLAYS: ON-BUDGET AND OFF-BUDGET..,

52,545
130,176

24,329
6,389
7,174

Excise taxes
Estate and toft taxes
Customs duties
Miscellaneous receipts:
Deposits of earnings by Federal Reserve SystemAll other

297,744
49,207
201,498

44,594
113,209

On-budget...
Off-budget..

285,917
61,137
182,720

•288,938
37,022
208,994

-26,611
-1,430

-24,453
-1,646

-32,198
-1,778

-29,913
-2,044

TABLE B-77.—Federal receipts, outlays, and debt,fiscalyears 1980-89—Continued
[Millions of dollars; fiscal years]
Actual

Description

Estimates
1987

1988

769,091
990,258

854,143
1,004,586

909,163
1,055,904

964,674
1,094,215

-212,260

-221,167

-150,444

-146,741

-129,542

547,886
769,509

568,862
806,760

640,741
810,754

669,264
852,778

709,193
880,873

-221,623

-237,898

-170,014

-183,514

-174,680

186,171
176,807

200,228
183,498

213,402
193,832

239,899
203,126

258,481
213,342

9,363

16,731

19,570

36,773

45,139

1985

1986

734,057
946,316

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:
1,827,470

2,130,031

2,355,280

2,581,556

2,825,288

Held by Government accounts
Held by the public

317,612
1,509,857

457,444
1,897,836

556,473
2,025,083

673,184
2,152,104

Federal Reserve System..
Other

169,806
1,340,051

383,919
1,746,112
190,855
1,555,257

Gross Federal debt..

212,040
1,685,795

734,057

83,673
200,228

89,916
213,402

91,614
239,899

96,084
258,481

32,919
6,958
13,327

32,457
7[493
15,085

35,342
7,567
16,399

35,213
7,795
17,224

18,374
l,510o

16,817
2,490

16,053
3,327

16,421

990,258

1,004,586

1,055,904

252,748

128,200
188,623

273,375
14,152
8,976
4,735
13,639
31,449
4,890
28,117
7,233
30,585
35,936
70,164
119,796
198,757

281,999
11,649
9,216
4,115
13,363
27,356
6,182
26,228
5,051
29,724
39,968
75,120
123,250
207,353

285,423
9,926
10,903
2,713
15,139
22,352
12,364
27,237
6,321
33,652
44,479
78,857
129,560
219,717

5,189
183,434

8,072
190,684

4,930
202,422

5,022
214,695

5,572
228,197

26,292
6,277
11,582

26,356
6,603
12,533

26,782
7,548
7,569

27,748
8,970
8,796

129,430

135,969

138,570

147,871

29,573
9,894
9,492
-6,282
151,804

133,548
-4,118

140,298
-4,329

143,860
-5,290

155,142
-7,271

161,940
-10,136

-32,698

-33,007

-36,455

-36,123

-48
-41,002

-30,189
-2,509

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

412,353
117,704
354,565

946,316

OUTLAYS: ON-BUDGET AND OFF-BUDGET..

964,674

393,395
105,567
331,513

17,059
1,480

Excise taxes
Estate and gift taxes
Customs duties
Miscellaneous receipts:
Deposits of earnings by Federal Reserve System..,
Allother

909,163

392,557
83,926
303,318

35,992
6,422
12,079

On-budget...
Off-budget..

854,143

348,959
63,143
283,901

78,992
186,171

Individual income taxes
Corporation income taxes
Social insurance taxes and contributions

769,091

334,531
61,331
265,163

RECEIPTS: ON-BUDGET AND OFF-BUDGET..

-30,150
-2,857

-33,155
-3,300

-31,825
-4,298

-36,283
-4,719

16,176
8,627
5,685
13,357
25,565
4,229

25,838

7,680
29,342
33,542

65,822

On-budget....
Off-budget...
Veterans benefits and services....
Administration of justice
,
General government
,
Central Federal credit activities...
Net interest
On-budget...
Off-budget..
Allowances
,
Undistributed offsetting receipts..,
On-budget...
Off-budget..

3,398
1,094,215
294,020
13,334
13,103
3,061
16,024
21,732

7,862
27,280
5,879

37,362
47,771
84,015
135,573
233,769

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 1989" for additional information.
Sources: Department of the Treasury and Office of Management and Budget.




339

TABLE B-78.—Relation of Federal Government receipts and expenditures in the national income and
product accounts to the budget, fiscal years 1987-89
[Billions of dollars; fiscal years]
Estimate
Receipts and expenditures

1987
1988

854.1

Federal sector, national income and product accounts, receipts..
EXPENDITURES
Total on-budget and off-budget outlays
Lending and financial transactions
Government contributions for employee retirement (grossing)..
Defense timing adjustment
Bonuses on Outer Continental Shelf land leases..
Geographic exclusions
Other..
Federal sector, national income and product accounts, expenditures.,

909.2

964.7

38.9
16.4
10.9
-1.6

41.5
18.4
6.1
-1.7

973.8

1,029.1

1,004.6

Government contributions for employee retirement (grossing).,
Other netting and grossing
Timing adjustments
Geographic exclusions

35.5
13.7
3.7
-1.5

905.6

RECEIPTS
Total on-budget and off-budget receipts..

1989

1,055.9

1,094.2

-6.4
35.5
13.7

-9.3
38.9
16.4

-7.2
41.5
18.4

7.4
1.6
-5.5

4.3
1,055.1

3.0
.7

-.5
1.2

-5.7
-1.9

-6.0

1,098.1

1,145.9

4.4

Note.—See Note, Table B-76.
See Special Analysis B, "Special Analyses, Budget of the United States Government, Fiscal Year 1989" for description of these
categories.
Sources: Department of Commerce (Bureau of Economic Analysis), Department of the Treasury, and Office of Management and
Budget.




340

TABLE B-79.—Federal and State and local government receipts and expenditures, national income and
product accounts, 1929-87

[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Total government

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
1987 P
1982: IV..
1983: IV..
1984: IV..
1985: I
Ill
IV
1986: I
II
Ill
IV
1987: I
II
Ill
IV "...

Federal Government

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
1,172.9
1,268.5
1,339.3
1,464.2
1,008.4
1,095.3
1,200.8
1,263.1
1,234.7
1,280.0
1,296.1
1,310.3
1,318.9
1,349.1
1,378.8
1,409.1
1,468.2
1,477.1

Expenditures

national
income
and
product
accounts

10.3
10.7
17.6

1.0
-1.4
-2.2
-.7
-3.8
-31.4
-44.2
-51.8
-39.5
5.4
14.4
8.4
-3.4

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

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

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
-1.3
-14.2
-6.0
9.9
-10.6
-19.5
-3.4
7.9
-4.3
-64.9
-38.4
-19.1
-.4
11.5
-34.5
-29.7
-110.8
-128.6
-105.0
-132.9
-147.8
-107.2

50.4
64.6
67.7
70.4
64.2
73.1
78.5
82.5
79.3
90.6

41.2
58.1
71.4
77.6
70.3
68.6
72.5
80.2
89.6
91.7

96.9
99.0
107.2
115.6
116.2
125.8
143.5
152.6
176.9
199.7

93.9
102.9
111.4
115.3
119.5
125.3
145.3
165.8
182.9
191.3

195.4
202.7
232.2
263.7
293.9
294.9
340.1
384.1
441.4
505.0

207.8
224.8
249.0
269.3
305.5
364.2
393.7
430.1
470.7
521.1

553.8
639.5
635.3
659.9
726.0
788.6
827.4
916.5
633.1
675.5
742.7
795.3
759.0
794.9
805.1
807.6
816.9
832.4
852.5
879.3
922.9
923.0

615.1
703.3
781.2
835.9
895.6
984.6
1,032.0
1,069.1
835.7
844.7
930.2
958.2
969.4
990.8
1,020.2
1,003.7
1,047.1
1,036.1
1,041.2
1,049.8
1,062.1
1,058.8
1,105.8

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
1,277.9
1,401.4
1,487.1
1,571.4
1,175.3
1,208.2
1,322.9
1,360.9
1,382.8
1,413.8
1,448.2
1,444.3
1,493.9
1,493.3
1,516.8
1,538.6
1,556.8
1,566.4
1,623.8

-166.8
-112.9
-122.1
-97.8
-148.1
-133.7
-152.1
-134.0
-175.0
-144.1
-138.1
-129.5
-88.6
-89.3

Receipts

Expenditures

State and local
government

Surplus or
deficit
(-),
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
-13
-L8
-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
-169.6
-196.0
-204.7
-152.6
-202.6
-169.2
-187.5
-162.9
-210.3
-195.8
-215.0
-196.1
-230.2
-203.7
-188.7
-170.5
-139.2
-135.8

Receipts

Expenditures

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

49.9
54.5
58.2
62.9
68.8
75.5
84.7
95.2
107.8
119.3

135.8
153.6
179.3
196.4
213.1
239.6
270.1
300.1
330.3
355.3

134.0
151.0
165.8
182.9
205.9
235.2
254.9
273.2
301.3
327.7

390.0
425.6
449.4
487.7
540.5
579.6
618.8
652.3

363.2
391.4
414.3
440.2
475.9
516.5
561.9
607.0
424.1
449.5
489.1
498.6
512.3
523.2
531.7
546.1
556.4
566.7
578.5
591.1
600.7
611.1
625.0

459.8
505.8
554.5
563.7
574.6
585.3
594.6
608.1
611.5
626.2
629.1
632.1
651.3
657.6

Surplus or
deficit
(-),
national
income
and
product
accounts

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

-0.2
-.1
.0
.6
1.3
1.8
2.4
2.7
2.6
1.9
1.0
.1
-.7

22.5
23.9
25.5
27.3
30.2
32.9
35.9
39.8
44.4
47.0

-1.2
-.4
-.0
-LI
-1.3
-.9
-1.4
-2.4
-.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
64.6
63.1
56.8
45.4
35.8
56.4
65.4
65.1
62.2
62.1
62.9
62.1
55.1
59.6
50.6
41.0
50.6
46.5

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.




341

TABLE B-80.—Federal and State and local government receipts and expenditures, national income and
product accounts, by major type, 1929-87
[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Receipts

Year Of 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
1987 "
1982: IV
1983: IV
1984: IV
1985:1
II
III
IV
1986:1
II
HI
IV
1987:1
II
III
IV

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
1,172.9
1,268.5

1,339.3
1,464.2
1,008.4
1,095.3
1,200.8
1,263.1
1,234.7
1,280.0
1,296.1
1,310.3
1,318.9
1,349.1
1,378.8
1,409.1
1,468.2
1,477.1

Expenditures

Personal Corpotax
rate
and
profits
nontax tax accruals
receipts

Indirect
busi- Contriness
tax
for
and
social
non- insurtax
ance
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
440.2
485.9
512.2
564.7
411.1
413.9
459.7
497.0
455.9
491.0
499.7
497.4
504.2
515.3
532.0
536.1
578.0
565.7
578.9

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
313.9
333:2
347.7
367.6
264.5
294.1
322.7
325.9
334.9
334.4
337.3
345.6
340.7
352.8
351.9
358.3
365.2
371.8
375.1

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
93.9
96.7
105.0
137.5
59.8
88.1
87.0
94.0
93.2
100.5
99.1
98.1
102.1
106.1
113.9
128.0
134.2
143.0

0.3

ii
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
324.9
352.7
374.3
394.4
273.0
299.2
331.5
346.2
350.6
354.1
360.0
369.3
371.9
374.9
381.0
386.7

390.9
396.6
403.6

Surplus
or
Subsidies
deficit
Less:
less
(-),
DivicurLess: dends
narent
Intertional
resurest received plus of income
ceived
and
by
govern- prodby
govern- govern- ment uct acment enter- counts
ment
prises

Net interest paid
Purchases
Transof
fer
payments

Total 1

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
1,277.9
1,401.4
1,487.1
1,571.4
1,175.3
1,208.2
1,322.9
1,360.9
1,382.8
1,413.8
1,448.2
1,444.3
1,493.9
1,493.3
1,516.8
1,538.6
1,556.8
1,566.4
1,623.8

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
735.9
818.6
869.7
923.8
671.8
676.1
764.5
784.1
800.5
832.8
857.0
846.9
867.2
878.5
886.3
896.2
917.1
929.0
952.8

1

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
448.7
481.6
510.0
531.2
429.7
441.1
458.5
472.4
477.3
486.2
490.4
497.0
507.4
517.1
518.7
521.6
528.9
532.2
541.9

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
87.2
99.7
104.2
109.7
61.4
74.2
96.1
97.9
100.1
99.0
102.0
103.7
104.5
102.6
105.9

Interest
paid

-0.2
.0
.4
.4
.1
.1

1.0
-1.4
=2.2
-.7
-3.8
-31.4
-44.2
'.S - 5 1 . 8
-39.5
'.S
5.4
14.4

Z\\
= .3
.1

342

8.0

6.1
-3.8
-7.0
-.3
-7.1
.0
3.1
5.2
7
.9
1.1 - 1 2 . 6
.1 - 1 . 6
.4
3.1
1.7
-4.3
1.8
-3.8
1.1
.7
1.7
-2.3
-'.3

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
173.5
194.5
205.8

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
94.7
101.7
104.9
71.8

214.6
133.2
154.7
80.5
185.3 89.2
188.9 91.0
193.2 93.1
195.6 96.7
200.2 98.2
204.2 100.5
205.6 101.1
206.2 103.6
207.4 101.5
107.3 209.7 102.3
107.1 211.0 103.9
109.7 215.6 105.9
114.6 221.9 107.3

Includes an item for the difference between wage accruals and disbursements, not shown separately.
Source: Department of Commerce, Bureau of Economic Analysis.




8.4
-3.4

1.6
2.5
0.1
.2
.2

.3

.9
.9
.9
1.3
1.7
2.0
1.9
2.3
2.9
2.8
3.5
5.0
5.6
6.3
3.1
2.9
4.0
4.5
5.0
5.2
5.4
5.5
5.5
5.6
5.7
5.9
6.2
6.5
6.8

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
9.9
6.3
8.7
13.1
15.4
19.6
8.4
11.2
8.8
1.1
4.2
2.3
20.4
.7
11.6
19.3
9.9
2.3
21.0

- U
-14.2
-6.0
9.9
-10.6
-19.5
-3.4
7.9
-4.3
-64.9
-38.4

-19.1
-.4
11.5
-34.5
-29.7
-110.8
-128.6
-105.0
-132.9
-147.8
-107.2
-166.8
-112.9
= 122.1
-97.8
-148.1
-133.7
-152.1
-134.0
-175.0
-144.1
-138.1
-129.5
-88.6
-89.3

TABLE B-81.—Federal Government receipts and expenditures, national income and product accounts,
1966-89
[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Receipts

Year or
quarter

Total

Expenditures

Contri'ersonal Corpo- Indirect butions
rate
tax and profits business for
tax and social Total 1
nontax
nontax
receipts tax
accruals accruals insurance

Fiscal: *
57.5
134.0
1966
64.4
148.1
196?
71.4
162.1
1968
192.5
90.2
1969
198.0
94.0
1970
196.2
87.9
1971
217.9 100.5
1972
245.3 107.5
1973
277.2 122.7
1974
290.5 127.5
1975
322.6 137.1
1976
374.7 165.9
1977
424.3 186.5
1978
491.2 222.9
1979
538.6 250.7
1980
623.8 289.6
1981
643.3 310.0
1982
645.7 292.5
1983
711.9 302.5
1984
776.4 340.5
1985
814.2 358.0
1986
905.6 401.9
1987 3
973.8 406.3
1988
1,029.1 421.2
1989 3
Calendar:
61.7
1966
143.5
67.5
152.6
1967
79.7
176.9
1968
95.1
199.7
1969
92.6
195.4
1970
90.3
202.7
1971
232.2 108.2
1972
263.7 114.7
1973
293.9 131.3
1974
294.9 125.9
1975
340.1 147.3
1976
384.1 169.8
1977
441.4 194.9
1978
505.0 231.0
1979
553.8 257.9
1980
639.5 298.9
1981
635.3 304.5
1982
659.9 294.5
1983
726.0 310.3
1984
788.6 346.6
1985
827.4 363.0
1986
916.5 403.8
1987 P
633.1 303.0
1982: IV
1983: IV.... 675.5 291.9
1984: IV... 742.7 326.0
795.3 361.2
1985:1
759.0 317.5
It
794.9 351.0
III....
805.1 356.7
IV....
807.6 352.8
1986:1
816.9 357.6