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Transmitted to the Congress
February 1992






Economic Report
of the President

Transmitted to the Congress
February 1992
TOGETHER WITH

THE ANNUAL REPORT
OF THE

COUNCIL OF ECONOMIC ADVISERS

UNITED STATES GOVERNMENT PRINTING OFFICE
WASHINGTON : 1992

For sale by the U.S. Government Printing Office
Superintendent of Documents, Mail Stop: SSOP, Washington, DC 20402-9328




ISBN 0-16-036052-8




C O N T E N T S
Page

ECONOMIC REPORT OF THE PRESIDENT

1

ANNUAL REPORT OF THE COUNCIL OF ECONOMIC
ADVISERS*

7

FOREWORD

11

CHAPTER 1. THE AMERICAN ECONOMY: RESPONDING TO CHALLENGES

21

CHAPTER 2. RECENT DEVELOPMENTS AND THE ECONOMIC OUTLOOK

35

CHAPTER 3. THE AMERICAN LABOR MARKET

81

CHAPTER 4. GOVERNMENT AND THE LEVEL AND DISTRIBUTION
OF INCOME

115

CHAPTER 5. COMPETITIVE FORCES AND REGULATION

155

CHAPTER 6. OPEN INTERNATIONAL MARKETS AND PROSPERITY ...

193

CHAPTER 7. ECONOMIC STATISTICS: MEASURING ECONOMIC PERFORMANCE

239

APPENDIX A. REPORT TO THE PRESIDENT ON THE ACTIVITIES OF
THE COUNCIL OF ECONOMIC ADVISERS DURING 1991

279

APPENDIX B. STATISTICAL TABLES RELATING TO INCOME, EMPLOYMENT, AND PRODUCTION

291

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




(iii)







ECONOMIC REPORT
OF THE PRESIDENT




ECONOMIC REPORT OF THE PRESIDENT
To the Congress of the United States:
1991 was a challenging year for the American economy. Output
was stagnant and unemployment rose. The recession, which began
in the third quarter of 1990, following the longest peacetime expansion in the Nation's history, continued into 1991. The high oil
prices and the uncertainty occasioned by events in the Persian
Gulf were quickly resolved with the successful completion of Operation Desert Storm early in the year. Most analysts expected a sustained recovery to follow. Indeed, signs of a moderate expansion
began to appear in the spring. Industrial production and consumer
spending rose for several months. By the late summer, however,
the economy flattened out and was sluggish through the rest of the
year.
Our recent economic problems are a reminder that even a wellfunctioning economy faces the risk of temporary setbacks from external shocks or other disturbances. Market economies, such as the
United States, are continually restructuring in response to technological changes and external events. Occasionally, structural imbalances develop that can interrupt economic growth. The American
economy experienced an unusual confluence of such imbalances in
recent years, for example in the financial and real estate sectors,
and in household, corporate, and governmental debt. At the same
time, a major reallocation of resources from defense to other sectors has been under way. Not least, the lagged effects of a relatively tight monetary policy coupled with problems in the availability
of credit, especially for small and medium-sized businesses, dampened economic growth.
The U.S. economy, however, remains the largest and strongest in
the world. The American people enjoy the highest standard of
living on earth. American productivity is second to none. With less
than 5 percent of the world's population, America produces a quarter of the world's output.
As we move into 1992, the fundamental conditions to generate
economic growth are falling into place. Interest rates are at their
lowest levels in decades and should help boost investment and consumer spending. Inflation is down and expected to remain relatively low. Generally lean inventories imply that increases in demand
will be met mainly from new production, which will generate gains
in employment and income. America's international competitive
position has improved, as evidenced by record levels of exports.




Nevertheless, the United States faces serious economic challenges: to speed, strengthen, and sustain economic recovery; and, simultaneously, to provide a firmer basis for long-term growth in
productivity, income, and employment opportunities. In both my
State of the Union address and my fiscal 1993 Budget, I presented
a comprehensive program to encourage short-term recovery and
long-term growth. I have already taken steps to accelerate job-creating Federal spending, to adjust income tax withholding that will
add about $25 billion to the economy over the next year, and to
renew the attack on excessive regulation and red tape that hamper
business formation and expansion and job creation. I will also continue to support a monetary policy that keeps inflation and interest rates low while providing adequate growth of money and credit
to support a healthy economic expansion.
Most of my program will require congressional action. In addition to the executive actions I have already announced, my immediate agenda includes:
• Investment incentives to promote economic growth: a reduction in capital gains tax rates; a 15-percent investment tax allowance; and an improved alternative minimum tax.
• Incentives to help revive real estate: a $5,000 tax credit for
first-time homebuyers; penalty-free withdrawals from individual retirement accounts for first-time homebuyers; low-income
housing credits; tax preferences for mortgage revenue bonds; a
modified passive loss tax rule; and a tax deduction for losses on
the sale of a personal residence.
My intermediate and longer term agenda includes:
• Investment in the future: record levels of spending for Head
Start and for anti-crime and drug abuse programs; a comprehensive Job Training 2000 initiative, which will enhance the
skills and flexibility of our work force; record levels of spending for research and development and infrastructure; record
spending on math and science education; and Enterprise Zones.
• Pro-family initiatives: an increase in the personal tax exemption for families with children; new flexible individual retirement accounts for health, education, and first home purchases;
and tax deductibility of interest paid on student loans.
• Comprehensive health reform: vital cost containment measures and tax credits for the purchase of health insurance.
Also before the Congress is an urgent unfinished agenda that I
proposed earlier, including financial sector reform to make our
banking system safer, sounder, and more internationally competitive; the America 2000 education reforms necessary to meet the national education goals, produce a new generation of American
schools, and provide the choice and competition that will promote
better performance and strengthen accountability; the National



Energy Strategy to meet our Nation's energy needs through a combination of enhanced production, diversification of sources, and
conservation, thereby enhancing our energy security; and legal reforms to reduce the litigiousness that unnecessarily adds to costs
and stifles innovation and productivity.
Successful completion of the Uruguay Round of the General
Agreement on Tariffs and Trade and a North American free-trade
agreement remain major priorities. I also urge congressional action
on the Enterprise for the Americas Initiative. These market-opening initiatives will spur growth and create jobs.
My program can be accommodated within the limits established
in the budget agreement of 1990. I am also asking the Congress for
budget process reforms: a line-item veto and caps on so-called
mandatory programs to control the growth of government spending.
Maintaining fiscal discipline is essential to reallocating resources
toward investment in the future.
These proposals are described in detail in the fiscal 1993 Budget,
and in legislative proposals I am forwarding to the Congress. The
Annual Report of the Council of Economic Advisers, which accompanies this Report, discusses the strengths of the U.S. economy and
the challenges it faces in the short run and the long run. It also
explains how my comprehensive economic growth proposals are designed to move us toward a more prosperous America.

THE WHITE HOUSE
FEBRUARY 6, 1992




(/




THE ANNUAL REPORT
OF THE
COUNCIL OF ECONOMIC ADVISERS







LETTER OF TRANSMITTAL
COUNCIL OF ECONOMIC ADVISERS,

Washington, D.C., January 31, 1992
MR. PRESIDENT:

The Council of Economic Advisers herewith submits its 1992
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,




Michael J. Boskin
Chairman

David F. Bradford*
Member

Paul Wonnacott
Member




FOREWORD
In this Annual Report of the Council of Economic Advisers—the
third by the Council during this Administration—we repeat a
theme that has been emphasized in Annual Reports since the statutory establishment of the Council 46 years ago: the primary goal of
economic policy is to achieve the highest possible rate of sustainable economic growth. Economic growth is the fundamental determinant of the long-run success of any nation, the basic source of
rising living standards, and the key to meeting the needs and desires of the American people. Although America's economic growth
was interrupted at the beginning of the 1990s, that does not signal
a decline in the basic long-term vitality of the U.S. economy. Still,
the Nation faces serious short- and long-run economic challenges—
among them, accelerating, strengthening, and ensuring recovery;
raising long-run productivity growth to increase the growth of real
wages; and improving programs to lift the disadvantaged into the
mainstream of American life. The United States cannot take economic growth for granted. In the following pages, we describe these
challenges as well as the policy prescriptions that must be adhered
to if the Nation is to meet them successfully.
By tradition, in conjunction with a discussion of recent economic
trends and the economic outlook, much of the Council's Annual
Report is composed of topical chapters, the subject matter of which
changes from year to year. The Council selects the topics of these
chapters from the vast array of significant economic issues and
does not necessarily attempt to provide a comprehensive analysis
of every issue. Successive Annual Reports written during a single
Administration should be viewed as an interrelated whole. In this
regard, the 1990 Annual Report—the first in this Administration—
focused on explaining the policy principles necessary for achieving
the maximum rate of sustainable economic growth, as well as on
such issues as the environment, investment in technology and
human capital, education, and improving economic opportunities of
low-income households. The 1991 Annual Report highlighted such
issues as financial market reform, the economy's flexibility to respond to change, and nations in transition from central planning to
market economies all around the world. This year's Annual Report
focuses on the labor market, the distribution of income, regulation,
international trade and investment, and economic statistics.




11




CONTENTS
FOREWORD
CHAPTER 1. THE AMERICAN ECONOMY: RESPONDING TO CHALLENGES

Adjusting to Imbalances
Adjusting to Cyclical Factors
Adjusting to Structural Factors
Foundations for Renewed Growth
Policies Focused on Growth
Productivity—The Key to Sustainable Growth
The Administration's Agenda to Meet the Challenges
:
Conclusion
CHAPTER 2. RECENT DEVELOPMENTS AND THE ECONOMIC OUTLOOK

An Overview of the Economy in 1991
Signs of a Recovery
The Economy Flattens Out
Summary
Reasons for the Sluggish Economy
Structural Adjustments
Monetary Policy and Interest Rate Developments
Summary
Recent Economic Performance in Historical Context
Cyclical Comparisons
Performance of GDP Components in 1991
Industrial Production and Capacity Utilization
Sectoral and Regional Diversity During the Recession
Summary
The Inflation Record
Summary
Fiscal Policy
Summary
Developments Outside the United States
Business Cycle Developments Abroad
Inflation, Monetary Policy, and Interest Rates
Abroad
External Accounts




13

Page
11
21

23
24
25
27
29
29
30
34
35

37
37
39
40
41
42
47
53
54
54
56
60
61
66
67
69
69
71
72
72
73
74

Page

Summary
The Economic Outlook
The President's Policies or Business as Usual
Accounting for Growth in the Longer Term
Summary
Conclusion
CHAPTER 3. THE AMERICAN LABOR MARKET

Employment Growth
Changes in Labor Demand
Changes in Labor Supply
Summary
Productivity Trends
The Historical Record of Productivity Growth
Causes of the Slowdown in Productivity Growth
Summary
Real Wage Growth
Aggregate Real Wage Growth
Worker Characteristics and Wage Levels
Summary
Wage Dispersion and Market Forces
Wage Premium for Education
Wages of Women
Wages of Black Workers
Summary
Unemployment
Unemployment Insurance
Extended Benefit Programs
Summary
Enhancing Worker Skills
Summary
Conclusion
CHAPTER 4. GOVERNMENT AND THE LEVEL AND DISTRIBUTION
OF INCOME

The Level and Distribution of Income
Level of Income
Distribution of Annual Income
The Distribution of Long-Term Income and Wealth...
Summary
Trends in Taxes and Transfers
Transfers
Taxation
Summary
Effects of Taxes and Transfers on the Distribution of
Income
Combined Effects of Taxes and Transfers
Redistribution in the Federal Tax System



14

75
74
76
77
79
79
81

82
82
84
89
90
91
92
94
95
95
97
99
100
100
101
102
103
103
106
107
109
109
112
112
115

117
117
129
124
126
126
126
129
134
134
135
138

Page

Social Security
Summkry
Poverty and the Social Safety Net
The Social Safety Net
Incentive Effects of Means-Tested Transfers....
Issues Requiring Special Attention
Summary
Conclusion
CHAPTER 5. COMPETITIVE FORCES AND REGULATION

Competition and the Role of Government
The Legal System
Why and How Governments Regulate
The Regulatory Process
Summary
The Benefits of Economic Deregulation
Natural Gas
Electric Power
Cable Television
Summary
Reforming Regulation of the Environment, Health, and
Safety
Improving the Environment
Health and Safety Regulation
Summary
Conclusion

141
143
143
147
147
149
153
153
155

157
159
161
170
173
173
175
178
180
182
182
183
188
191
191

CHAPTER 6. OPEN INTERNATIONAL MARKETS AND PROSPERITY..

193

Mutual Gains from Trade
Distributional Effects of Trade Liberalization
The Need for Strong Trading Rules
Summary
International Investment
The Close Ties Between Trade and Foreign Direct
Investment
The Benefits of Foreign Investment
Foreign Investment in the United States in Perspective
Policy Toward Foreign Investment
Summary
Multilateral and Regional Approaches to Liberalization ..
The Most-Favored-Nation Principle and GATT
Exceptions: Free-Trade Associations and Customs
Unions
Summary
The Uruguay Round
Agriculture
Textiles

195
199
199
201
201




15

202
204
205
207
208
208
208
209
210
210
212
213

Page

Services, Investment, and Intellectual Property
Market Opening
Trade Remedies
Dispute Settlement Procedures
Summary
'.
The North American Free-Trade Agreement
Market Access
,
Trade in Services and Investment
Intellectual Property Rights
Trade Rules
Labor and the Environment
Summary
EC 92 and European Economic and Monetary Union
Summary
Achieving Market-Oriented Policies and Growth in
Economies in Transition
Political Change and Reforms
Causes of the Market Revolution
Principles of Reform in Economies in Transition
Progress and Policy Challenges
The Role for Industrial Countries
The Role for Assistance
Summary
Conclusion
CHAPTER 7.
ECONOMIC STATISTICS: MEASURING ECONOMIC
PERFORMANCE..

Using the Most Appropriate Data
How Much Data?
Problems with Inaccurate Data
Why the Government Is in the Data Business
Summary
GNPandGDP
Measuring the Standard of Living
Summary
Employment and Unemployment
The Household Survey
The Establishment Survey
State Unemployment Insurance System
When to Use the Different Labor Market Data
Other Sources of Labor Market Data
Summary
Prices and Inflation
Changes in Quality
Rebasing Real GDP
Summary
Money



16

214
216
216
219
220
221
221
222
222
222
223
223
224
226
227
227
228
229
230
232
234
235
236
239

240
242
243
245
245
246
247
248
249
249
250
251
251
253
253
253
253
256
257
257

Page

Definitions of Money
Changes in the Velocity of Money
Summary
Business Accounting
Market Value and Book Value
Accrual Versus Cash Accounting
Summary
Fixed Investment
Gross Versus Net Investment
Measuring Depreciation
Summary
Saving
Cash-Flow Measures of Saving
Human Capital
Summary
Federal Government Finance
Concepts and Measures of the Budget Deficit
Accounting for Government Assets and Liabilities
Accounting for Intergenerational Redistribution of
Wealth
Alternatives to Direct Expenditures and Taxes
Summary
International Statistics
Where Do International Data Come From?
Difficulties in International Comparisons
International Competitiveness
Discrepancies in International Accounts
Summary
Conclusion

258
258
260
260
260
261
262
262
262
263
265
265
266
267
267
267
268
270
271
271
273
273
274
274
276
277
277
278

APPENDIXES

A. Report to the President on the Activities of the
Council of Economic Advisers During 1991
B. Statistical Tables Relating to Income, Employment,
and Production

279
291

LIST OF TABLES, CHARTS, AND BOXES
Tables

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

Cyclical Comparisons
Accounting for the Decline in Payroll Employment
Administration Forecasts
Accounting for Growth in Real GDP, 1960-97
Female-Male Income Ratios
Expenditures on Selected Means-Tested Government
Assistance Programs, Fiscal 1990
4-2 Effects of Taxes and Transfer Payments on Household
Income by Income Quintile, 1990




17

54
62
76
78
102
132
136

LIST OF TABLES, CHARTS, AND BOXES—CONTINUED

Tables
4-3 CBO Estimates of All Federal Taxes
4-4 CBO Estimates of Shares of All Federal Tax Payments
7-1 Reconciliation Between Deficits in Fiscal 1990

141
141
268

Charts

2-1
2-2
2-3
2-4
2-5
2-6
2-7
2-8
2-9
2-10
2-11
2-12
3-1
3-2
3-3
3-4
3-5
3-6
3-7
3-8
3-9
4-1
4-2
4-3
4-4
4-5
4-6
4-7
4-8
4-9
4-10

Civilian Unemployment Rate
Real GDP Growth, 1980-1991
Quarterly Real GDP Growth, 1989-1991
Commercial and Industrial Loans
M2 Money Stock and Federal Reserve Target Ranges...
Federal Funds Rate
Consumer Confidence
Mortgage Rates
Unemployment Rates by State, Year Ending November 1982
Unemployment Rates by State, Year Ending November 1991
Unemployment Rates by Occupation
Inflation and Core Inflation
Employment-to-Population Ratio and Hours Worked
per Worker
Unemployment Rates by Gender
Percentage of Civilian Labor Force with 4 or More
Years of College
Historical Growth in Labor Productivity
Real Hourly Compensation, 1959-1990
Earnings Growth Early in Male Workers' Careers
Earnings of Cohorts of Young Men, 1975-1990
Ratio of Median Incomes of College- and High-SchoolEducationed Workers
Unemployment Rate by Educational Attainment, 1990
Real Median Income
Distribution of Families by Income Class
Real Household Income Relative to 1967 Income for
Selected Quintiles
Gini Ratios for Family Income
Federal Social Insurance and Means-Tested Transfers
Relative to GDP
Effects of Taxes and Transfers on Income, 1990
Average Federal Individual Income Tax Rates
Shares of Federal Individual Income Tax Payments by
Income Class
Alternative Measures of the Poverty Rate of Persons...
Demographics and the Poverty Rate of Persons




18

38
39
41
45
49
50
58
59
65
65
66
68
85
87
89
91
96
98
99
101
105
118
121
122
123
131
137
139
140
144
146

Charts

4-11 Real Federal and State Means-Tested Transfer Spending per Poor Person
5-1 Administrative Costs of Federal Regulation
5-2 Consumption of Natural Gas
5-3 Cost per Premature Death Averted of Federal Health
and Safety Regulations
6-1 GDP and Export Growth Trends, 1720-1990
6-2 Foreign Direct Investment Outflows and Exports of
G-7 Countries
6-3 Foreign Direct Investment, 1990
6-4 Net International Investment Position
7-1 Velocities of Ml and M2
7-2 Investment Shares of Output
7-3 National Saving
7-4 Measures of U.S. Competitiveness

148
172
176
190
194
203
205
207
259
263
266
274

Boxes

2-1 Credit Crunches
2-2 Interpreting the Money Statistics in the Second Half
of 1991
2-3 Emphasizing GDP and the NIPA Benchmark Revision
3-1 Total and Insured Unemployment Rate
3-2 Job Training 2000
4-1 Means-Tested Cash Transfers
4-2 Means-Tested Noncash Transfers
4-3 Social Insurance Programs
4-4 Subsidies to the Well-Off.
4-5 Behavioral Responses to Taxes and Transfers
4-6 The Poverty Rate
5-1 The President's Regulatory Reform Initiative
5-2 Civil Justice Reform Proposals
5-3 Ronald Coase, the Role of Transaction Costs, and the
Definition of Property Rights
5-4 Agricultural Marketing Orders
5-5 Writing the Rules: The Clean Air Act
5-6 Are Emission Allowances Licenses to Pollute?
6-1 Economies of Scale and Trade Policy
6-2 A Lack of Discipline: The Case of Agriculture
6-3 Measuring International Investment
6-4 The Role of Regional Free-Trade Initiatives
6-5 The Cost of Weak Multilateral Rules
6-6 Strengthening GATT Antidumping Rules
6-7 Economic Performance in the Two Germanys
6-8 Enterprise Funds
6-9 International Institutions



19

46
52
55
108
Ill
127
128
129
130
135
145
158
162
166
169
171
184
198
200
206
211
218
219
228
233
235

Boxes

7-1 The Economic Statistics Initiative: Improving the
Quality of Economic Statistics
7-2 Measuring the Quality of Statistics
7-3 System of National Accounts
7-4 Error and Revision Properties of Labor Market Surveys
7-5 Price Indexes
7-6 Measuring Economies in Transition




20

241
243
248
252
254
275

CHAPTER 1

The American Economy: Responding to
Challenges
THE UNITED STATES IS THE most prosperous and productive
Nation on earth. With less than 5 percent of the world's population, America produces a quarter of the world's total output. The
longest peacetime economic expansion in the Nation's history, 1982
to 1990, produced 30 percent more output, 21 million jobs, and 5
million new corporations.
However, no economic system is immune to disruption. Even
well-functioning market economies face the risk of temporary setbacks from external shocks, policy mistakes, or other disturbances.
This was starkly demonstrated in the first 2 years of the 1990s. The
American economy, which already was experiencing slow growth,
fell into recession in the second half of 1990. Between the third
quarter of 1990 and the first quarter of 1991, output fell 1.6 percent
and 1.7 million jobs were lost. The unemployment rate, which had
averaged 5V* percent for the 18 months prior to the recession, rose
to 7.1 percent in December 1991. Sluggish growth and recession reflect the serious difficulties that the U.S. economy has faced in correcting structural imbalances while adjusting to previous monetary
tightening, the credit crunch, and the August 1990 oil shock.
Over the past few years, structural imbalances had developed in
the financial and real estate sectors, in household and corporate
debt positions, and in governments' fiscal positions. A major reallocation of resources from defense to other sectors is under way, reversing the trend of the 1980s. The economy also has had to deal
with changing national demographics, and a productivity growth
slowdown that began two decades ago.
The monetary policy initiated in the late 1980s to ease incipient
inflationary pressure slowed growth by the early 1990s. The anticipated increase in demand for world capital resulting from the historic changes in the former Soviet bloc increased interest rates substantially in early 1990. Problems in financial markets have limited the availability of credit.
Oil prices surged following Iraq's invasion of Kuwait and consumer and business confidence plummeted as the immediate outlook for growth weakened and uncertainty increased about the
worldwide consequences of the crisis. The U.S. economy was not re-




21

silient enough to continue to grow in the face of the combination of
the oil shock, structural adjustments, monetary restraint, and problems of credit availability. The Nation entered 1991 in the midst of
the ninth recession since the end of World War II.
The other industrial countries also were buffeted by many of the
same problems that hit the United States—the oil shock, sinking
consumer and business confidence, and high interest rates. Several
of these countries also were experiencing structural problems related to government budget positions and serious difficulties in their
financial and real estate markets. Recessions began in Canada and
the United Kingdom earlier in 1990, and with jobless rates at or
exceeding 10 percent in late 1991, the recessions have been deeper
than in the United States. Growth in other industrial countries, including France and Italy, slowed in 1991, and the unemployment
rate for the European Community as a whole was about 9 percent
in 1991. Growth in Japan and Germany slowed considerably in the
second half of 1991.
The current economic difficulties in the United States and other
industrial countries should not obscure the fundamental strengths
of market economies. The United States is the world's best example of the interrelated strengths of democratic pluralism and
market-oriented economies. Americans have the highest standard
of living in the world. U.S. gross domestic product (GDP) per capita
of $22,056 in 1990, the latest year for which comparable data are
available, places the United States more than 35 percent above
Germany and more than 25 percent above Japan, when calculated
using purchasing power equivalents (Chapter 7). The United States
has the highest level of productivity of any country in the world,
with output per worker about 20 percent above the average of the
other major industrial countries. As of 1990, the last year for which
comparable data are available, the United States produced a larger
share of the industrial output of the Organization for Economic Cooperation and Development—24 of the largest industrial economies—than it did in 1970. U.S. firms are competitive internationally, and America is unsurpassed in basic research.
Nor should we ignore the remarkable sweep of countries around
the world seeking to emulate our economic and political system.
The collapse of central planning and, communism—the most important economic and political event of the postwar era—was, in large
part, a consequence of these command systems' inability to provide
their populations with adequate standards of living and personal
freedoms. Change in the former Soviet bloc is only the most conspicuous; countries in Latin America, Asia, and Africa are discarding their centrally controlled economies and privatizing stateowned enterprises. All are embracing market principles conscious
that the transition to the market economy can be difficult. On the



22

political side as well, institutional transformations leading to democratic freedoms are in ascendancy. Market reliance and democracy
are mutually reinforcing principles and practices; they lead to the
highest standards of living and the greatest personal freedoms.

ADJUSTING TO IMBALANCES
Modern market economies such as the United States are constantly restructuring in response to changes in the goods and services that consumers desire, innovations in productive technologies,
and external events that affect the ability of the economy to
produce goods and services. In the last decade, for example, computer technology has transformed the workplace and greatly increased the demand for skilled workers.
In responding to structural change, however, even a fundamentally sound market economy can occasionally develop imbalances.
Or external shocks or policy mistakes can knock it off track. A
flexible and productive economy generally can adapt to such events
with a minimal amount of disruption to the economy as a whole,
although the costs of adjustment usually are concentrated in specific groups of the population or regions of the country. But if an unusual confluence of imbalances, mistakes, and shocks occurs, then
the self-adjusting mechanisms may be inadequate to sustain overall
economic growth. And if productivity growth is slow, the economy
has less of a cushion to absorb the adjustment that markets undertake naturally without sliding into recession. The American economy is struggling today with such a confluence of events.
For the year and a half prior to the recession that began in the
third quarter of 1990, the U.S. economy was growing at only a 1XApercent annual rate as it adjusted to policies and worked to correct
its imbalances. When the recession began, the Administration and
most private analysts believed that it would not be as severe as the
last recession, or even the average of postwar recessions. Partly as
a consequence of expecting a less severe recession, the subsequent
recovery also was expected to be more moderate than those following other postwar recessions. Moreover, many, including the Administration, believed that the continuing resolution of structural
imbalances would inhibit the recovery.
The recession appeared to end in the spring of 1991, and signs of
a moderate recovery began to emerge. The index of leading indicators, industrial production, real income, and retail sales all bottomed out in the first quarter and showed upward trends into the
second quarter. Other key data also pointed to a recovery. Housing
starts, new orders for durable goods manufactured in the United
States, and manufacturers' shipments reached their recession



23

troughs in the first quarter and then climbed through midsummer.
Real GDP grew modestly in the second and third quarters of 1991.
Rather than continuing its modest rebound, the economy flattened from the late summer to the end of 1991. Payroll employment, industrial production, and retail sales all turned down. Real
GDP was essentially flat in the fourth quarter. On the positive
side, exports continued to rise and housing starts continued their
slow upward progress. The Administration, along with most private
analysts, expect the economy to be sluggish early in 1992 but then
to pick up in the second half of the year. Some indicators of future
economic activity reinforce this view.
ADJUSTING TO CYCLICAL FACTORS
The economy had been slowing even before the oil shock in
August 1990. In 1988 and the first half of 1989, the Federal Reserve
and central banks around the world had adopted tighter monetary
policies in an effort to temper growing inflationary pressure by
slowing the rate of growth of their economies. In the presence of
structural imbalances and combined with the oil shock, these policies proved too contractionary in most countries, including the
United States.
Interest rates around the world, which had been relatively flat in
1989, rose sharply in early 1990. This rise in interest rates in part
reflected an increased demand for capital originating from the anticipated unification of Germany, a reemergent Latin America, and
prospective developments in Eastern and Central Europe and the
former Soviet Union. At the same time, the supply of capital to the
rest of the world from the two largest capital exporting countries,
Germany and Japan, declined abruptly. The higher long-term interest rates that resulted dampened U.S. growth.
In the United States, governments at all levels have encountered
budget problems. The sluggish economy and structural problems
created deficits at the State and local level. As the economy weakened, tax revenues declined and pressure on spending mounted. To
reduce their deficits, many State and local governments have
raised taxes, and more are likely to do so in 1992. The tax increases
dampen private spending, further impeding economic recovery.
At the Federal level, the 1990 budget agreement established a
program to restrain spending and reduce the structural deficit—
that is, the deficit excluding the cyclical component of expenditures
and revenues. (Chapter 7 discusses budget concepts.) As an economy dips into recession, income tax receipts fall and outlays for the
cyclical components rise, even without any legislated changes in
programs. Such automatic stabilizers are an important element of
systematic fiscal policy because they cushion the fall in the economy, preventing further contraction. On balance, for example, the



24

automatic stabilizers were larger than other fiscal factors in 1991;
the overall stance of Federal fiscal policy was slightly stimulative.
Usually late in a recession or early in a recovery, tax cuts or increases in discretionary fiscal spending increase the structural
budget deficit, providing notably more stimulus than the automatic
stabilizers alone. In contrast, between fiscal 1990 and 1991, the
structural budget deficit, excluding outlays for deposit insurance,
changed little. The structural deficit is expected to increase considerably in 1992, however, adding a discretionary stimulus to the
automatic stabilizers (Chapter 2).
The initial fiscal position inherited from the past and expectations concerning future fiscal policy can restrict the use and effectiveness of discretionary fiscal stimulus. Obviously, in the current
fiscal situation, an attempted stimulus that abandoned, or was perceived to abandon, serious discipline on the growth of future spending or on the reduction in the multiyear structural deficit probably
would produce a substantial rise in interest rates. That would
offset a large portion of the direct stimulus in the short run and
would leave the economy thereafter with a higher cost of capital,
which would be detrimental to investment necessary for long-run
growth.
Finally, it is important to note that the deficit has been boosted
by a temporary bulge in deposit insurance outlays, which exceeded
1 percent of GDP in fiscal 1991 and are expected to be larger in
fiscal 1992. It is widely accepted that the actual timing of outlays
and borrowing to protect insured depositors has little impact on
credit markets, interest rates, and the economy. So the component
of the deficit due to deposit insurance (about $66 billion, or roughly
one-quarter of the deficit in fiscal 1991) does not represent fiscal
stimulus.
ADJUSTING TO STRUCTURAL FACTORS
The unusual confluence of the cyclical factors, structural imbalances, and long-run trends in the U.S. economy has hindered adjustment and slowed the pace of recovery.

The Financial Sector
The financial sector has been buffeted by disturbances of both an
external and policy nature, as well as by problems of its own
making. The high inflation and interest rates of the 1970s wiped
out a large fraction of the value of the assets held by savings and
loans (S&Ls), primarily long-run, fixed-rate mortgages. The debt
crisis in the developing countries shocked commercial bank portfolios in the 1980s. The expansion of deposit insurance that did not
account for the riskiness of an institution's investments enabled
weak banks and S&Ls to stay open and to overinvest in risky
assets without losing depositor confidence. Many financial institu


25

tions already were in poor financial condition when the downturn
in real estate markets hit in the late 1980s. Real estate normally is
a cyclical part of the economy; but changing tax laws boosted the
upturn in real estate activity in the early and mid-1980s, and a reversal in the laws accentuated the downturn that began in some
regions of the country in the late 1980s. The downturn has been
most pronounced in commercial real estate and has been particularly deep in certain regions of the country.
While prudent supervision of financial institutions is extremely
important, it is widely thought that examiners have been discouraging banks and S&Ls from engaging in some sound lending opportunities. In addition, banks have changed the composition of their
lending portfolios and have increased their equity in response to
the financial markets' demands for more capital as well as to meet
domestic capital requirements and to accommodate the new international agreement on bank capital standards. Once monetary
policy shifted actively toward the objective of bolstering economic
growth, its effectiveness was dampened by these problems. Indeed,
growth of commercial and industrial bank loans slowed during
1990 and fell dramatically in 1991.
Taken together, these unexpectedly tight credit conditions created a credit crunch. Some businesses, particularly small and
medium-sized firms that traditionally depend on banks for financing and that normally would help stimulate an upturn in economic
activity, have been hit hard by the credit crunch. Such businesses
generally account for a large percentage of job growth.
Demographics
Some of the slower growth in recent years is a direct consequence of demographic shifts. As the baby-boom generation matured in the late 1970s and early 1980s, the rate of household formation increased. That contributed to higher demand for big-ticket
items such as houses, cars, and appliances, and with it higher
levels of mortgage and installment debt. The boost to demand for
these items coming from demographic factors has diminished as
the baby boomers have grown older and the rate of household formation has slowed. This has reinforced problems in the auto and
real estate markets.
As the baby-boom generation was forming new households in the
1970s and early 1980s, it also was entering the work force in record
numbers. Female participation in the labor force was rising particularly quickly. However, growth of the working-age population
has slowed in the late 1980s and early 1990s. Hence, the contribution to economic growth from an expanding labor force has declined.



26

Private Debt
Private debt increased substantially during the expansion. From
1982 to 1988, household borrowing almost doubled, growing nearly
twice as fast as personal income, and corporate borrowing surged.
By the end of the expansion, consumers and businesses faced relatively high levels of debt. Although the value of assets grew as
well—a point often ignored when the growth of debt is discussed—
the high ratios of household debt to income and corporate debt to
profits probably were not sustainable. A period of slower consumption and investment naturally results as households and corporations restructure their balance sheets.
The largest asset for most households is the equity in their
homes. After rising rapidly in the 1970s and 1980s, residential real
estate values flattened and even fell in many areas. When consumers' expectations for a continued increase in wealth were dampened, growth of consumer spending tapered off.

Defense Spending
Increases in defense spending were an important contributor to
growth in the 1980s. By the end of the decade, fiscal constraints
and shifting spending priorities led to cuts in defense spending;
real defense purchases of goods and services surged between 1979
and 1987, but fell somewhat from 1987 to 1990. A much larger defense downsizing has already begun to affect employment in defense industries as firms adjust to expected changes.
The United States has accommodated reductions in defense
spending before. But the transition is never easy and, in fact, is
costly in the short run, as people retrain and industrial resources
are retooled for other purposes. Moreover, local economies where
defense industries are a primary source of employment can experience significant disruption. Despite these difficulties the long-run
potential dividends to the United States that come from turning
military capacity to civilian endeavors is large. Obviously, the benefits to the world of the end of the Cold War transcend these economic factors.

FOUNDATIONS FOR RENEWED GROWTH
Fundamentals that promote growth are beginning to fall into
place. Declining real and nominal interest rates should help boost
interest-sensitive spending. Inflation, too, is expected to remain
near its current, relatively low levels. Imbalances in international
accounts have been substantially reduced, and exports should continue to grow as the Nation's international competitive position
strengthens. Some structural imbalances are being righted: Households and corporations are reducing their credit burdens, and



27

banks are improving their capital positions. It will take time to correct all the imbalances, but a start has been made.
With the exception of a few industries, there does not appear to
be a widespread inventory imbalance that would foreshadow furtheif cuts in production. Increases in domestic and foreign demand
will therefore be met mainly from new production and not from
drawing down existing stocks. New production will generate
income, increase consumption, and lead to further gains in production, employment, and income.
The international competitive position of the United States has
improved. After adjusting for exchange rates, the pattern of unit
labor costs in manufacturing has been favorable relative to that of
the Nation's major trading partners. As foreign economic growth
rebounds, U.S. exports should increase.
A particularly positive factor is the reduced inflation rate. Although special factors in agriculture, energy, and excise taxes may
cause an occasional temporary blip in, for example, the consumer
price index, underlying inflation is widely believed to be down. The
economy currently is operating well below full capacity. Thus,
during a moderate recovery, resource constraints that could rekindle inflationary pressures are unlikely to emerge. Furthermore, a
credible and systematic monetary policy that is designed to reduce
inflation gradually has ample room to accommodate a healthy expansion.
Nominal interest rates generally are at their lowest levels in two
decades. Real rates may not be as low as they have been around
the trough in some other cycles. But the lagged effects of lower interest rates already in the pipeline should help the economy in
1992. The lowest mortgage rates in almost 20 years should spur
housing starts and sales. Low rates also allow households to refinance mortgages, improving their balance sheets and providing a
foundation for consumption growth. For many businesses, lower interest rates reduce the cost of borrowing to finance new investment. They also increase corporate cash-flow. Some corporations
are using the strong stock market to issue equity and repay debt,
thus improving their financial position and freeing funds for investment. There is some offset to the expansionary effect of these
factors because lower interest rates reduce interest income and the
consumption based on it.
Because their capital positions have improved greatly, banks
should be in a better position to lend than they have been for some
time. Furthermore, the Administration, under the leadership of the
Treasury Department and in conjunction with banking and thrift
regulators, has been working to ensure that lenders make prudent
loans and that examiners perform their reviews in a balanced, sensible manner. Still, bank lending remains tight; many banks are in


28

vesting in Treasury securities rather than making loans. A combination of slack demand, due to the soft economy and the need to
rebuild balance sheets still further, and skittishness, in response to
regulatory overreaction, is preventing the banking system from
playing its normal role in financing economic expansion.

POLICIES FOCUSED ON GROWTH
Economic growth is not just an abstract concept; it is the key to
ensuring America's future. Growth will raise our standard of
living; it will create a legacy of prosperity for our children; it will
enable us to afford nontraditional goods and services, such as a
better environment. It will provide new employment opportunities
for those seeking upward economic and social mobility, and it will
allow the United States to maintain its leadership role in the
world.
The Nation must choose between sound policies that promote
long-term growth and those that stifle the flexibility of the economy, stunt incentives to work, save, invest, and innovate, and place
our economic future at risk. If the proper choices are made today,
the Nation's long-run growth potential will improve and a crucial
step will be taken toward improving the current performance of
the economy. Policies that promote short-term growth can and
should be made consistent with medium- and long-term goals. This
is one of the fundamental principles of the President's growth
agenda.

PRODUCTIVITY—THE KEY TO SUSTAINABLE GROWTH
The major long-run challenge confronting the American economy
is to increase the Nation's rate of productivity growth—that is,
growth in output per worker. The United States still has the highest level of productivity, but other countries have had higher productivity growth in recent decades. After a quarter of a century of
rapid advance following World War II, U.S. productivity growth
collapsed between 1973 and 1981. It has only partially rebounded
since then, although productivity growth in the manufacturing
sector has improved much more than in the rest of the economy.
Higher saving rates have helped Europe and Japan maintain
higher productivity growth rates.
Productivity depends on capital formation, workers' skills, and
new technology. The Nation cannot be complacent about the fundamentals of economic growth and productivity. Quite simply, without adequate productivity growth, America's standard of living will
neither keep pace with the expectations of our citizens, nor remain
the highest in the world.

http://fraser.stlouisfed.org/
305-592 0—92
Federal Reserve Bank of St. Louis 2

29

The Nation must increase its rate of saving to ensure that funds
are available to finance job-creating investment and research and
development leading to new technologies. Raising America's saving
and investment rates to enhance future productivity growth is a
key goal of the Administration's policies.
The United States cannot remain the world's leading economy
without the world's leading labor force. Competing in a rapidly
changing international economy requires a skilled and flexible
work force able to adapt to changes unforeseen today. Effective job
training programs to retrain workers are a key to increasing productivity and remaining internationally competitive.
The most important step the Nation can take to confront these
long-term challenges is to restructure our elementary and secondary education system. By some measures, the United States spends
more per pupil than any country in the world except Switzerland,
but test scores reflect less than world-class performance. Another
urgent priority for the Nation is to eliminate the scourge of crime
and drugs. Not only is it costly to address the consequences of these
problems, but the Nation is losing the potential contribution these
people can make to economic growth.
A key source of the U.S. economy's dynamism and resiliency is
the flexibility it derives from reliance on markets. Of course, some
markets are not perfect, and achieving certain desirable social
goals such as a cleaner environment may require rules and regulation. Long-run productivity is enhanced if regulation does not unnecessarily hamper the efficient allocation of resources and reduce
the economy's flexibility. Incentive regulation, which encourages
firms to operate more efficiently while at the same time achieving
the social objective, is an important innovation in this regard. In
particular, regulation must not inhibit competition by discouraging
technological innovation that would enable new firms to compete
with those that are currently regulated.
Just as improper regulation harms the economy, protection from
foreign competition retards innovation, raises production costs, and
decreases choices for consumers. Long-term productivity growth,
therefore, depends on opening, rather than closing or segmenting,
markets.
THE ADMINISTRATION'S AGENDA TO MEET THE
CHALLENGES
The President has presented a comprehensive and coordinated
growth agenda for the Nation. The agenda includes fiscal and other
measures that will stimulate the economy in the short run, address
the structural imbalances, and promote the Nation's long-term
growth.



30

The Administration's policies for raising long-run productivity
growth and thus the standard of living are based on five principles:
a pro-growth fiscal policy that enhances incentives for entrepreneurship, saving, and investment, and that continues to reduce the
multiyear structural budget deficit; a trade policy that promotes
growth through opening markets worldwide; a regulatory policy
that avoids unnecessary burdens on business and consumers; a
human capital investment policy that focuses on education, training, and preventive health care; and strong support of a monetary
policy that keeps inflation and interest rates low, while providing
adequate growth of money and credit to support solid real growth.
The agenda focuses directly on increasing economic growth. The
short-term agenda includes executive actions and proposed legislation that will stimulate economic growth immediately. Executive
actions with immediate impact include a reduction in excessive
personal income tax withholding and acceleration of previously appropriated Federal spending. Reinvigorated action to reduce the
burden of unnecessary regulation and prudent measures to reduce
the credit crunch will improve the environment for growth now.
Proposed legislation focuses on spurring job-creating investment.
The proposed 15-percent investment tax allowance and simplified
and liberalized treatment of depreciation under the alternative tax,
as well as the reduction in the capital gains tax rate, will stimulate
business investment. The reduction in the capital gains tax rate
will quickly raise asset values, improving confidence and encouraging
spending. A $5,000 tax credit and penalty-free withdrawal from individual retirement accounts for first-time homebuyers, along with
other incentives, will increase housing construction and sales.
Bolstering the short-term agenda are proposals for the long term
that invest in the Nation's future by increasing the productivity of
people and business. Record Federal investment in research and
development and infrastructure, and the extension of the research
and development tax credit will help increase business productivity. Record Federal investment in Head Start, children, and education, as well as proposals that strengthen the war on drugs and improve the implementation of job training through Job Training
2000 will help increase labor productivity. The long-term growth
agenda also includes continued efforts to expand international
markets through multilateral, regional, and bilateral negotiations.
Fiscal discipline has been a centerpiece of all of this Administration's budgets. Fiscal policy is designed to foster long-term growth
by encouraging saving and investment as outlined in the Omnibus
Budget Reconciliation Act of 1990. Controlling the growth of government spending and deficits so that resources are freed up for investment is but part of a more comprehensive fiscal program that,
within proposed spending categories, shifts spending from current



31

consumption to investment, such as expenditures for research and
development and investments in public infrastructure that pass
cost-benefit tests.
Some of the President's reform proposals are awaiting congressional action. Education reform through America 2000 will revolutionize education, strengthen accountability, and improve performance. Financial sector reform will strengthen the financial system,
improve its ability to contribute to business growth, and sustain its
international competitiveness. Civil justice reform will curb wasteful litigation and enhance productive activity. And the National
Energy Strategy will increase energy security and conservation.
The President has repeatedly proposed reducing the tax rate on
capital gains. This will encourage entrepreneurial activity, create
new products, new methods of production, and new businesses.
These, in turn, will generate new jobs. A capital gains differential
will reduce the tax bias against equity financing and the overall
cost of capital, thereby increasing investment and growth. Moreover, the Administration has supported a zero capital gains tax for
areas designated as Enterprise Zones to spur investment and encourage entrepreneurial activity in inner cities and rural areas.
Innovation increases productivity growth and the standard of
living. The Administration has advocated making the research and
experimentation tax credit a permanent part of the tax code and
has proposed large increases in both basic and applied research
and development spending in the Federal budget.
There are also proposals to assist families. These policies include
an increase in the tax exemption for each child, a new flexible individual retirement account, and deductibility of interest paid on student loans. Comprehensive health reform will increase the affordability and security of health insurance at a cost that is economically sustainable. The incentives for first-time homebuyers, mentioned earlier will encourage homeownership—one of the most important ingredients to family financial and social well-being. The
homeownership and opportunities for people everywhere (HOPE)
program helps low-income residents of public and assisted housing
to manage and eventually own their own homes.
Fundamental banking reform is critical to ensuring efficient operation of credit markets. The recent bill passed by the Congress is
at best only a start. Important provisions in the Administration's
proposal that would remove many unnecessary and antiquated restrictions on the banking industry are missing from the legislation.
These reforms are needed to rebuild the soundness of the banking
industry and enable it to be internationally competitive.
The Administration believes a well-functioning legal and regulatory system should increase, not impede, economic activity.
Through its Agenda for Civil Justice Reform in America, the Ad


32

ministration has proposed a comprehensive set of reforms to the
civil justice system that will improve the efficiency of the legal
system and reduce unnecessary and costly litigation. This would
free up resources and enhance productivity. (These reforms are explained in detail in Chapter 5.)
The Administration believes that investments in the Nation's
human capital increase its productivity and living standards at
home and increase its competitiveness abroad. The National Education Goals, America 2000 Excellence in Education Act, and Job
Training 2000 all are directed at improving the quality of our most
important resource—our people. The America 2000 Excellence in
Education Act focuses on setting world-class educational standards,
measuring performance against those standards, and increasing
the educational choices available to American families so as to generate the competition that will improve performance and accountability of schools. The Administration's Job Training 2000 system is
designed to train millions of workers in the skills needed in the
evolving labor market. (This initiative is described more fully in
Chapter 3.)
Moreover, the President has initiated a variety of measures to
expand opportunities and improve the well-being of individuals and
families. Although not often thought of as economic policy, expanded tax relief for child care, Head Start, Healthy Start, protecting
the civil rights of all Americans, the strategy to eliminate substance abuse, and measures against violent crime all serve to improve U.S. productivity in the long term. Starting our children on
the right path, providing our children the finest education, and
continuing to provide programs that ensure public safety are sound
economic policies.
The President's economic and domestic agenda also includes investing in America's future by improving the Nation's infrastructure, enhancing energy efficiency and security, and improving the
quality of the environment and life. The Administration continues
to promote an energy policy that relies on the flexibility of market
forces to ensute that the Nation's resources are used most efficiently. Implementation of the Administration's National Energy Strategy would enhance competition in the generation of electric power
and in the delivery of natural gas and would reduce vulnerability
to oil disruptions abroad. (Chapter 5 addresses these items.)
This Administration is committed to free and fair trade. Because
trade enhances long-term growth, the Administration is following a
multipronged effort to open markets, expand trade, and spur
growth. (The rationale underlying this policy is described fully in
Chapter 6.) The Administration is committed to achieving a successful conclusion of the Uruguay Round of multilateral trade negotiations, under the auspices of the General Agreement on Tariffs



33

and Trade. These ambitious talks, which were initiated in 1986 involve 108 countries and cover topics ranging from the elimination
or reduction of tariffs, to the strengthening of international rules
for trade in textiles and agriculture, to the extension of rules to
cover trade in services and intellectual property. A successful Uruguay Round would expand market opportunities globally for our
exporters, increase jobs, and provide lasting gains for both the
United States and the world. The Administration also has important
proposals to expand trade in this hemisphere—notably the Enterprise for the Americas Initiative and the historic North American
free-trade area—and is continuing to achieve market access
through bilateral negotiations.
Taken together, the President's proposals constitute a comprehensive agenda to stimulate short-term economic growth and support long-term productivity growth. These policies will expand opportunities for workers and families, increase living standards, and
support the global competitiveness of the U.S. economy.

CONCLUSION
The United States confronts serious economic challenges in the
1990s. The flexibility and resilience of the U.S. economy and the
resourcefulness of our people provide America the ability to meet
these challenges. But as the Council noted when the United States
was in the midst of the longest peacetime expansion in American
history and the unemployment rate had hit a 15-year low, the
Nation cannot take economic growth for granted. The U.S. economy remains the largest and most productive in the world. Sound
policies are essential to guarantee that American living standards
will continue to rise substantially from one generation to the next
and that the United States will remain the world's leading economy.
The President's agenda, based on sound economic policy principles, seeks to achieve the maximum possible rate of sustainable
economic growth. If enacted, the President's policies will not only
make near-term recovery faster, stronger, and more certain, but
also will solidify the foundation for long-term growth and help
ensure that the United States remains the world's leading economy
in the 1990s and beyond.




34

CHAPTER 2

Recent Developments and the
Economic Outlook
THE U.S. ECONOMY ENTERED 1991 in the midst of the ninth
recession since the end of World War II. The recession began in the
second half of 1990, following the longest peacetime expansion in
the Nation's history. A recovery appeared to begin in the spring of
1991 and continue into the summer, as production, employment,
and spending all rose. Total output grew in the second and third
quarters of 1991, recovering about one-half of the decline that occurred during the recession. In midsummer, however, the economy
began to flatten out, and then production, employment, and spending faltered late in the year.
Even during the initial months of recovery, many key economic
indicators did not improve much. Only about one-fifth of the jobs
lost from July 1990 to April 1991 were regained by October 1991,
and employment declined toward the end of the year. The unemployment rate hovered around the 6.9-percent level reached in
June, before rising to 7.1 percent in December. By June personal
income, adjusted for inflation and taxes, recovered about four-fifths
of its 1.5-percent decline but then flattened out for most of the
second half of the year. Although many indicators were sluggish or
fell back at the end of the year, others continued to improve. For
example, growth in exports contributed to a further reduction of
the Nation's trade deficit and residential investment showed a
strong gain.
The economy is expected to be sluggish in early 1992, but growth
is expected to pick up in the middle part of the year. With adoption
of the Administration's pro-growth policies, real, or inflation-adjusted, growth, as measured by the change in gross domestic product (GDP) in 1987 dollars, is forecast to be 2.2 percent in 1992, and
to average 3 percent in the mid-1990s. The unemployment rate is
expected to plateau, or perhaps rise slightly, in early 1992 but
should begin to decline by midyear. As the economy picks up, inflation and interest rates are expected to rise slightly over the next
year from their recent lows, and then stabilize, before gradually
falling.
Although the economy is expected to improve in 1992, the magnitude of the improvement is still uncertain. In addition to uncer-




35

tainties about the economy's short-term cyclical performance, there
also are various structural imbalances in the economy that are
being worked through. Beyond the short term, the economy faces
the serious challenge of improving productivity; slow productivity
growth has plagued the economy for two decades.
One of the major cyclical concerns is whether growth of money
and credit—which has been quite sluggish—will be sufficient to
promote near-term recovery. Also, consumer confidence, which has
fallen significantly, likely will be restored only when prospects for
employment and income improve and household balance sheets reflect stable or rising asset values. Higher levels of consumer confidence are essential for growth in consumer spending. Because consumer spending accounts for two-thirds of total spending, its
growth is a key ingredient for a durable economic recovery. While
exports are expected to continue to promote growth in the domestic
economy, the export sector faces risks from the possibility that
growth abroad will be slower than expected.
Underlying these cyclical issues are structural imbalances and
adjustments that also pose potential difficulties. Although the economy is flexible and continuously restructuring, the number of
major structural adjustments currently occurring is abnormally
large. Changes in world capital markets in recent years have affected the cost of capital in the United States. In early 1990, for
example, long-term interests rates were pushed up significantly by
expectations of increased demand for capital—associated with
German unification, a reemergent Latin America, and the opening
up of Eastern Europe—and an abrupt decline in the supply of capital to the rest of the world from Germany and Japan. The availability of credit also has been restricted as financial institutions
have moved to shore up their capital positions and as they have
faced more stringent regulation. Sufficient credit is necessary to finance expansion. High levels of public and private debt, high vacancy rates in commercial and residential buildings, and failing financial institutions also could limit prospects for spending. Budget
problems of State and local governments have resulted in higher
taxes and spending constraints, adding a fiscal drag on the recovery. Impediments to free and fair trade must be removed or avoided to bolster international trade and growth of U.S. exports.
Nonetheless, fundamentals are in place to promote growth in the
economy. Nominal interest rates are generally at their lowest
levels in two decades, and recent declines should help boost interest-sensitive spending. Lower interest rates also are allowing many
homeowners to refinance their mortgages, thereby reducing monthly payments and increasing income available for purchases of goods
and services. Inflation is relatively low, and is expected to remain
low in the near term. Low and stable inflation reduces the uncer


36

tainty confronting businesses and consumers about prices and the
purchasing power of money and income, and thus provides a better
environment for investment, production, and growth. Imbalances
in international accounts have been substantially reduced, and the
Nation's trade position should improve further over time as exports
continue to grow and the Nation's international competitive position strengthens.
As has been stated in previous Economic Reports of this Administration, the Nation faces serious challenges and cannot take economic growth for granted. The Administration's policies are designed to support sustained increases in the Nation's standard of
living by raising long-run productivity growth. Such policies include a pro-growth fiscal policy that enhances incentives for entrepreneurship, saving, and investment and reduces the multiyear
structural budget deficit over time; a trade policy that promotes
growth through opening markets worldwide; and a regulatory
policy that avoids unnecessary burdens on business and consumers.
The Administration also supports a monetary policy that promotes
solid real growth while gradually reducing inflation pressures. The
adoption of the Administration's pro-growth policies would not only
boost the expected rate of growth in the near term and beyond but
also would reduce uncertainty and the risk that the economy's performance will be worse than expected.

AN OVERVIEW OF THE ECONOMY IN 1991
The major economic indicators reflected the effects of the recession in the second half of 1990 and the first half of 1991. Payroll
employment, industrial production, real sales, and real personal
income fell during this period. The unemployment rate rose to 6.9
percent in June 1991, up from 5.2 percent in June 1990—the approximate level for most of the previous 2 years (Chart 2-1). The
unemployment rate then fell slightly and flattened out for several
months before rising at the end of the year Real GDP—the value
of all goods and services produced in the United States—rose 0.2
percent during 1991 (on a fourth-quarter-to-fourth-quarter basis),
following a 0.1-percent decline in 1990 (Chart 2-2).
SIGNS OF A RECOVERY
In the spring of 1991 signs of a recovery began to emerge. The
index of leading indicators reached its low in January and then
rose sharply through July. Production, sales, and income all bottomed out between February and April and then rose into the
summer. By July industrial production had recovered about 3 percentage points of the 5-percent decline that occurred from September 1990 to March 1991. Nonfarm payroll employment did not re


37

Chart 2-1

Civilian Unemployment Rate

The unemployment rate fell to its lowest level in a decade and a half in 1989 but then rose during
the 1990-91 recession to hover around 7 percent.
Percent

10.8 percent
Nov., Dec. 1982

10

7.1 percent
December 1991

5.0 percent
March 1989
j

1980

|

1981

i

1982

|

1983

i

1984

i

1985

i

1986

1987

1988

1989

1990

1991

Source: Department of Labor.

spond very much, however, and after increasing significantly in
May, trended up only slightly through October. Total output and
spending also rose; following the 1.6-percent decline registered over
the fourth quarter of 1990 and the first quarter of 1991, real GDP
increased in the second and third quarters, recovering about 0.8
percent, or about half, of the earlier loss.
Other key data also pointed to recovery. Total retail sales and
sales of cars and light trucks hit lows in January 1991 and rose
into the early summer. Housing starts, which bottomed out in January, rose 25 percent by August. New orders and shipments for
manufacturers' durable goods reached lows in March and rose
through July; the 11.7-percent increase in new orders in July was
the largest monthly increase on record. Initial claims for unemployment insurance reached a peak in March and then fell for 4
consecutive months through July.
Various conditions had emerged in early 1991 that helped set the
stage for the pickup in the economy. Oil prices, which had shot up
after Iraq invaded Kuwait in August 1990, fell back to their preinvasion levels within hours of the successful launch of the air-war
phase of Operation Desert Storm in January. Prospects for growth
in the international economy—and continued growth in U.S. ex-




38

Chart 2-2 Real GDP Growth, 1980-1991
Real gross domestic product grew strongly during the first 6 years of the expansion but slowed in 1989
and fell in 1990. Growth resumed in 1991, but at a very slight pace.
Percent change (Q4/Q4)
8

4 -

o

_

-2
1980

1981

1982

1983

1984

1985

1990

1991

Source: Department of Commerce.

ports—improved as the threat to oil supplies was eliminated. With
the successful end of the ground war, consumer and business confidence rebounded in March. Declining interest rates in late 1990
and early 1991—both short and long term—supported an upturn in
residential construction and other interest-sensitive sectors. Furthermore, household net worth recovered somewhat in the first
half of 1991; the value of owner-occupied housing and land stopped
declining, the runup in the stock market boosted the value of financial assets, and the increase in household liabilities was quite
modest.
THE ECONOMY FLATTENS OUT
By late summer the recovery lost momentum. A self-reinforcing
process of growth—in which increases in spending, production, and
employment tend to bolster one another—typically occurs in recoveries. In 1991, however, the spending and production gains and the
positive feedback between them were not sufficient to sustain a
solid recovery. The leading index flattened out in the late summer
and early fall and even declined slightly at the end of the year.
After rising through the summer from its trough in April, payroll
employment fell significantly in November before rising slightly in




39

December. Industrial production rose slightly from July through
September arid then fell slightly in each of the final 3 months of
the year. Real income was sluggish from August through October
and fell in November, before rising in December.
Other indicators pointed to a lackluster economy at the end of
the year. Retail sales were relatively flat from late summer into
the fall but declined at the end of the year. Motor vehicle sales
slipped in July and August and then remained weak in the fall and
early winter. Initial claims for unemployment insurance were
higher at the end of the year than at midyear. Manufacturers'
shipments of durable and nondurable goods showed gains throughout most of the second half of the year, but fell significantly in December.
On the positive side, merchandise exports continued to rise, and
housing starts continued on an upward trend through the end of
the year. Stock prices rose strongly at year-end, with various
market indexes hitting record highs. And, according to a government survey, businesses plan to increase spending for plant and
equipment by 5.4 percent in 1992, following a 0.5-percent decrease
in 1991. Thus, by the end of 1991, the economy was sluggish at
best, but some forward-looking indicators were pointing to improvement in mid-1992.
The fundamental causes underlying the faltering recovery likely
will be a source of continuing debate. Most forecasts—including the
Administration forecast of a year ago—had foreseen a relatively
modest rebound from a relatively shallow downturn. Until the last
few months, this scenario seemed to be on track. It now appears
that the structural imbalances in the economy were larger—and
were taking longer to work off—than expected; it soon became evident that the oil shock and the war were not the economy's only
problems. Credit remained tight and money growth was slow. Relatively high levels of household debt incurred earlier constrained
consumer spending. The weaker outlook for the economy created
greater uncertainty about employment and income prospects as
businesses became more cautious in hiring and spending plans; several major corporations announced plans for further downsizing in
efforts to reduce costs and become more competitive. These factors
contributed to lower consumer confidence and restrained consumer
spending. The State and local fiscal drag continued.
SUMMARY
• The economy entered 1991 in a recession that began in the
second half of 1990. In the spring, various indicators pointed to
the beginning of a recovery.
• Late in the summer, however, the recovery lost momentum
and the economy was sluggish in the second half of the year.



40

REASONS FOR THE SLUGGISH ECONOMY
The recession of 1990-91 followed the longest peacetime expansion in the Nation's history. During the expansion of 1982-90, real
output increased by more than 30 percent, more than 21 million
jobs were created, and 5 million businesses were incorporated. The
unemployment rate fell from a peak of almost 11 percent in late
1982 to 5 percent in March 1989—a level not experienced since
1973. Employment as a percentage of working-age population
reached a peacetime high of more than 63 percent in early 1990.
Consumer price inflation remained relatively low and stable
throughout the expansion, averaging about 4 percent a year. For a
year and a half before the recession, however, real GDP grew at an
annual rate of only about 1 lA percent (Chart 2-3). (All real figures
are measured in constant 1987 dollars.)
Chart 2-3

Quarterly Real GDP Growth, 1989-1991

Real GDP had been growing slowly for a year and a half before the recession. Slow growth resumed
in the final 3 quarters of 1991.
Percent change, annual rate
4

1.8

0.2

1989

1990

1991

Source: Department of Commerce.

Economic expansions do not end on their own; they end as a
result of external shocks to the economy, economic imbalances that
must be worked off, or inappropriate economic policies. Hopes that
the expansion would continue were dashed in August 1990, when
the economy was hit with an external shock—the rise in oil prices
resulting from the Iraqi invasion of Kuwait. Oil prices rose sharply,
from less than $19 a barrel in July to more than $30 in late




41

August, and peaked at about $40 in early October. It is natural to
point to the oil shock—coupled with the resulting declines in consumer and business confidence—as the event that pushed the economy into recession. However, a number of structural imbalances
and the lagged effect of tight monetary policy in 1988 and 1989 also
slowed the economy. While the oil shock significantly aggravated
weakness in the economy, it is a matter of debate whether these
other factors on their own eventually would have pushed the economy into recession, or, alternatively, whether the economy would
have experienced a prolonged period of sluggish growth.
STRUCTURAL ADJUSTMENTS
By the end of the 1980s, economic growth was constrained by
various imbalances that had accumulated over the past two decades. Although some of these imbalances were concentrated in specific sectors and regions of the country, their effects generally were
felt nationwide. The economy also has had to deal with a reallocation from defense to other sectors and changing national demographic trends.
Demographic Trends
The baby-boom generation matured in the 1970s and early 1980s,
boosting the rate of household formation. As household formation
rises, so does the demand for houses and big-ticket durable items
such as cars and appliances. The assumption of higher levels of
mortgage and installment debt in the process of acquiring better
housing and durable goods is a natural result of these demographic
trends.
The more recent shift to lower growth in residential housing and
in the demand for cars and other durable goods also in part reflects
demographic trends. The average annual rate of household formation was 1.8 percent during the 1960s, 2.5 percent during the 1970s,
and 1.7 percent from 1983 to 1989. The rate then fell to about 0.8
percent from 1989 to 1991. According to middle-path projections by
the Department of Commerce, the rate of household formation is
expected to be about 1.3 percent from 1990 to 2000, higher than in
recent years but lower than the average rate of the past several
decades. While household formation varies cyclically, the declines
from the 1970s to 1980s and prospective declines in the rate of
household formation reflect an underlying trend to an older population.
Buildup in Private Debt
Private debt relative to income rose significantly during the expansion. From 1982 to 1988 household borrowing increased at a 12percent annual rate, while personal income measured in current




42

dollars increased at the much lower rate of 7 percent. Similarly,
corporate borrowing surged, rising at an annual rate of 11 percent.
Borrowing to finance real estate purchases grew substantially.
From 1982 to 1989 home mortgage borrowing increased at a 12-percent annual rate and commercial mortgage borrowing at a 10-percent rate. During this period, national income increased about 67
percent, but nonfarm mortgage debt more than doubled. The borrowing financed a surge in construction, which began to outstrip
demand. By the late 1980s, both commercial and residential real
estate showed signs of overbuilding; the problem was particularly
acute in commercial real estate. Vacancy rates in rental housing
rose from just above 5 percent in 1982 to about 8 percent at the
end of 1987. Commercial office vacancy rates in downtown areas increased from less than 8 percent in 1982 to more than 16 percent
in 1988, according to the Coldwell Banker Office Vacancy Index.
Favorable provisions in the 1981 tax laws had boosted building and
contributed to the upswing in the early to mid-1980s, but the
changes in 1986 reversed many of those provisions, hitting commercial real estate and building hard.
By the end of the expansion, many consumers had accumulated
relatively high levels of debt. At the same time, the value of their
largest asset—their homes—was flat or declining. Householders' expectations of continued increases in the equity in their homes were
not being realized. After rising at an average annual rate of 7.5
percent—about twice the rate of inflation—from the end of 1984
through 1989, the value of owner-occupied housing and land fell 1.6
percent in 1990. In addition, the value of other household assets,
such as durable goods, stocks, bonds, pensions, and other financial
assets, grew only slowly in 1990. Total household net worth—the
difference between the household sector's assets and liabilities as
measured by the Federal Reserve's flow of funds accounts—fell 1
percent in 1990.
Financial Sector Imbalances
The real estate situation brought about a further erosion of confidence by exacerbating problems in the already troubled financial
sector. Also, a shifting financial regulatory environment—from
being too lax during the good times of the expansion to being too
tight more recently—further aggravated financial sector difficulties
and constrained lending activity and economic growth.
Those troubles had begun in the 1970s, when an increase in inflation and interest rates had produced large and widespread losses
on mortgage portfolios—the predominant assets on the balance
sheets of savings and loans (S&Ls). These assets consisted primarily
of fixed-rate, 20- to 30-year mortgages, but deposit liabilities were
primarily short term. When interest rates rose, S&Ls had to increase deposit interest rates to retain deposits—the source of their



43

funds. Hence, the cost of funds to S&Ls increased, even though revenues from outstanding mortgages remained fixed. Moreover, because the market value of a fixed-rate asset falls as interest rates
rise, the increase in interest rates in the 1970s slashed the market
value of the outstanding mortgages held by S&Ls. By 1980 the
thrift industry as a whole was already heavily insolvent.
In the 1980s, an extension of deposit insurance that did not account for the riskiness of the institution's investments and a loosening of lending restrictions—both of which came about mainly in
response to the problems in the industry—allowed weak S&Ls to
stay open and to pursue risky investment strategies without losing
the confidence of their depositors. Government insurance meant
that shaky S&Ls could continue to attract deposits because depositors knew they were protected. Many of the risky investments were
real estate projects that eventually failed as a result of overbuilding and declining real estate prices. The risk ultimately was borne
by the insurer—in the end, the Federal Government and the taxpayers. In fact, in 1984, a task force headed by then Vice President
Bush proposed risk-based deposit insurance, which would have
sharply curtailed the excessive risk-taking by requiring depository
institutions to pay higher deposit insurance premiums if they pursued risky investment strategies.
Besides S&Ls, other financial institutions also experienced balance sheet difficulties as the value of commercial real estate assets
declined, and many large banks continued to carry problem loans
to Third World countries on their balance sheets. As a result of
these factors, bankers grew more cautious about extending loans.
Their caution also reflected hesitancy over the profitability of lending projects as a result of the slowing economy.
Tighter lending standards cannot be attributed entirely to caution resulting from a weak economy. Banks' balance sheets had deteriorated with the increase in loan losses taken during the 1980s,
and banks moved to rebuild equity and shift their portfolios away
from business loans and toward assets with lower default risk.
Much of this shift in bank portfolios was a response to financial
market demands for increased equity.
But bank regulatory policies played a significant role as well. Although tighter supervision clearly was warranted, it appears that
examiners overcompensated and discouraged financial institutions
from engaging in some viable lending opportunities. Moreover, the
phase-in of capital standards established in the 1988 Basle Accords—an agreement among banking regulators in the major industrialized countries that set capital adequacy standards—also
caused some banks to reduce business loans and move into assets
deemed safer by the accords, such as Treasury notes and securities
issued by U.S. Government agencies. All of these factors likely



44

have contributed to overly restrictive credit supplies, or a "credit
crunch" (Box 2-1).
Indeed, growth of commercial and industrial loans by banks
slowed during 1990 and fell in 1991 (Chart 2-4); the 4.8-percent decline in commercial and industrial loans during 1991 was the first
annual decline since the 3.8-percent fall in 1975. For many small
and medium-sized businesses, bank loans represent their only
source of external finance, and the fall in commercial and industrial lending likely has stifled activity for a large number of potentially prosperous businesses. Furthermore, borrowing on the high
yield, below-investment-grade bond market—the junk bond
market—contracted precipitously in 1990. This market had provided an alternative source of funds for many businesses that otherwise could not tap the commercial paper market.
Chart 2-4 Commercial and Industrial Loans
Commercial and industrial loans by commercial banks fell in 1991, the largest decline in a decade
and a half.
Billions of dollars
700

600

-

500

-

400

-

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

Source: Board of Governors of the Federal Reserve System.

Financial sector problems have had a significant effect on the
current economic situation because of the integral role the financial sector plays in ensuring a growing, healthy, and flexible economy. When functioning properly, financial institutions help allocate
capital efficiently and thus promote economic growth. Structural
problems—like the recent constraints on credit—that impair the




45

Box 2~L—Credit Crunches
A credit crunch occurs when the supply of credit is restricted
below the range usually identified with prevailing market interest rates and the profitability of investment projects. Credit
crunches often involve a reduction in the funds that depositoiy
institutions, such as commercial banks and savings and loans,
channel from savers to investor. Credit crunches affect economic activity because most small and medium-sked businesses depend on banks when financing investment projects or current operations. Thus, unusual circumstances that force depositories to reduce business loans can restrict the activity of these
firms regardless of market interest rates. Households, however,
have been relatively unaffected by the recent credit crunch because innovations such as home equity lines of credit and the
secondary market in repackaged home mortgages have supported lending to households.
Credit crunches used to occur from time to time because regulations fixed an upper limit on the interest rates that could
be paid on deposits. When market rates rose above those
limits, depositors withdrew funds from tonka and thrifts and
put them in assets paying higher rates of return. Depository
institutions had difficulty attracting deposits and had to cut
back on loans. Eliminating the interest rate caps on deposit accounts removed this source of credit cm&chm*
As discussed in this chapter, restructuring of depositories'
balance sheete—in part market driven and in ptei te meet new
international capital standards—as well as the overreaction of
examiners to the earlier excesses of banks and s&viiip and
loans have contributed to a credit crunch over the past 2 years*
This experience reminds us that a tension exists between the
short- and long-run consequences of policies overseeing financial markets. When the economy is sluggish, it is important
that depository institutions do not deny credit to worthy borrowers: Undue restrictions on credit would depress spending
even more and hamper the recovery. In the long run, however,
a well-capitalised banking system is less vulnerable to risky excesses in lending.
ability of financial institutions to function efficiently also reduce
growth.
Defense
At the end of the 1980s and into the 1990s, public-sector budgets
came under increasing pressure and tax increases put a drag on
the economy. Also, Federal spending priorities shifted. The defense




46

buildup in the mid-1980s gave way to a period of moderate cutbacks in the late 1980s and then to planned significant cuts from
the early to mid-1990s. This shifted the defense sector from being a
stimulus to the economy to being a contractionary force.
While increases in defense spending contributed to growth in the
economy for much of the 1980s, by the end of the decade, international developments, fiscal constraints, and shifting spending priorities led to cuts in defense spending, and the effects of these cuts
were felt throughout the economy. Real defense purchases of goods
and services in the national income and product accounts (NIPAs)
rose nearly 60 percent from 1979 to 1987 but fell 4 percent from
1987 to 1990. As a share of Federal spending, national defense rose
from 23 percent in fiscal 1979 to 28 percent in fiscal 1987 but then
fell back to about 21 percent in fiscal 1991. The defense downsizing
is projected to continue and has already begun to affect both direct
Defense Department employment (military and civilian) and employment in defense industries as firms adjust to expected changes.
The economy has adjusted to defense downsizing in the past and is
flexible enough to do so now. Such adjustment is neither instantaneous nor without costs, however; significant disruptions can occur
in local economies where defense industries are a primary source
of employment.
MONETARY POLICY AND INTEREST RATE
DEVELOPMENTS
The Federal Reserve has stated a policy goal of achieving, over
time, "price stability/' Price stability need not literally mean a
zero change in the price level, but a change that is low enough so
that inflation no longer is an important factor in the economic decisions of consumers and businesses. Over the past few years, the
Federal Reserve generally has maintained a relatively tight monetary policy in an attempt to achieve this goal. These efforts have
prevented inflation from being higher than it otherwise would have
been, but they also have been one of the important factors contributing to slower growth over the past 3 years.
The Nation's long-term growth prospects were enhanced by the
reduction of inflation from the double-digit rates experienced in the
1970s. High inflation causes households and businesses to divert
effort from productive activities toward preventing the value of
their assets from eroding with inflation. High and variable inflation often is associated with increased uncertainty about the future
course of the economy; such uncertainty can add a risk premium to
interest rates and reduce investment. Variable inflation makes it
difficult to judge the change in the prices of items relative to one
another; in market economies, relative prices signal suppliers to
devote more resources to products that consumers value more.




47

Thus, low and stable inflation is an important ingredient in achieving maximum sustainable long-term growth. But just as high and
variable inflation can be costly, lowering inflation sometimes has
costly consequences in the short run for economic growth and employment, which also must be considered when implementing monetary policy.
Monetary Policy, Nominal GDP, and Inflation
The growth in nominal GDP is composed of growth in real GDP
and changes in prices—or inflation. Over the long run, there has
been a fairly stable relationship between the growth in money as
measured by the M2 aggregate—the primary definition of money
monitored by the Fed (Chapter 7)—and the rate of growth of nominal GDP. Over the past several years, the Federal Reserve has
aimed to lower the growth of money gradually in order to lower
inflation without a recession. When money growth slows for an extended period of time, it is likely that nominal GDP growth will
fall. However, there are lags—which cannot be predicted with certainty—between the time money growth slows and the effect on
nominal GDP. And determining how much of the slower nominal
GDP growth will be reflected in lower inflation and how much in
lower real GDP growth is difficult.
Each February, the Fed sets a target range for growth of the
money supply over the coming year. (The target ranges for the
growth in money define the cones, pictured in Chart 2-5, within
which the Fed attempts to keep the quantity of money. The new
targets are set from where the money supply ends the year, not the
midpoint of the previous target range.) The midpoint of the target
range for M2 was lowered from 7 percent in 1987 to 4.5 percent in
1991. In addition, actual M2 growth has tended to be in the lower
part of the target range. It has taken some time, however, for inflation to begin to moderate, and much of the monetary restraint apparently has shown up in terms of lower output in the last 3 years.
Indeed, the growth in real GDP was lower than the Federal Reserve, the Administration, and most private analysts had expected.
While the long-run relationships between money and nominal
GDP are relatively stable, the short-run relationships are not. Furthermore, particularly in the short and medium terms, the Fed is
able only to influence, not control, the quantity of money. The Federal Reserve is, however, able to directly affect the Federal funds
rate, the interest rate on overnight borrowing among banks. Consequently, in its short-run implementation of monetary policy the
Fed focuses mainly on managing the Federal funds rate. The Fed
generally increases the Federal funds rate when inflation pressures
appear to be rising and lowers the rate when inflation appears to
be waning and the economy is sluggish. Changes in the Federal
funds rate, however, do not necessarily signal a fundamental shift



48

Chart 2-5 M2 Money Stock and Federal Reserve Target Ranges
In recent years, the Federal Reserve has gradually lowered the target range for M2 growth. M2
generally has been below the middle of the target cones.
Billions of dollars

3,600

6.5%

/

7%

3,400

2.5%
7%

s

y

y
^ ^

3,200

-

3,000

3%

-

2,800

8%

1

1
1988

1
1989

1990

1991

Note: Weekly data. Percentage growth lines mark out growth ranges set by the Federal Reserve for that year.
Source: Board of Governors of the Federal Reserve System.

in policy toward loosening or tightening because of the natural
tendency for market interest rates to decline when the demand for
credit falls during a period of sluggishness or to rise when demand
for credit increases in a strong economy.

The Attempt to Engineer a Soft Landing in 1988 and 1989
Solid economic growth in 1987 and 1988 pushed capacity utilization up, and unemployment rates fell to their lowest levels in a
decade and a half. These developments spurred concerns that the
economy might be outstripping its productive capacity, increasing
the possibility of rising inflation. Monetary policy moved toward
engineering a "soft landing"—slower growth with low inflation but
no recession. Beginning in early 1988, the Federal Reserve gradually increased the Federal funds rate (Chart 2-6) and in 1988 and in
1989 it lowered the midpoint of the target range for the growth of
M2 a full percentage point from the previous year.
This tight monetary policy removed some of the incipient inflationary pressure from the economy. However, tighter monetary
policy also put substantial downward pressure on output and employment growth.




49

Chart 2-6 Federal Funds Rate
The federal funds rate rose in 1988 and early 1989 and then fell as the economy weakened.
Percent per annum
11

10

1988

1990

1989

1991

Source: Board of Governors of the Federal Reserve System.

Monetary Policy and Credit Conditions in Late 1989 and 1990
As growth slowed in 1989 and inflation pressures waned, market
interest rates began to fall. The Federal Reserve began to reduce
the Federal funds rate in the middle of 1989; over the remainder of
the year the rate fell from roughly 9% percent to about 8V4 percent.
Despite declining short-term rates, by early 1990 long-term interest rates were rising. Yields on long-term Treasury bonds rose from
below 8 percent at the end of 1989 to more than 9 percent in September 1990, and high-grade corporate bond yields rose to more
than 9.5 percent. The rise partly reflected the increase in long-term
interest rates throughout the world, discussed earlier. Because interest rates in the United States are influenced by developments in
world markets, these events put upward pressure on U.S. long-term
rates. Furthermore, tighter credit conditions—the credit crunch described in the previous section—held lending by banks and S&Ls to
levels below those normally associated with the prevailing market
interest rates and the profitability of investment projects. Higher
world interest rates and the credit crunch resulted in tighter credit
conditions than otherwise would have been associated with the
level of the Federal funds rate.




50

Monetary Policy and Interest Rates From Late 1990
Market interest rates fell in late 1990 and much of 1991, reflecting lower demand for borrowed funds in the weakened economy,
and, after early 1991, declining inflation rates. Furthermore, the
prospect of reducing the long-term Federal structural budget deficit
led many people to expect that improved coordination between
monetary and fiscal policy could result in lower interest rates.
The Federal Reserve proceeded cautiously with a small reduction
in the Federal funds rate following passage of the Omnibus Budget
Reconciliation Act in late October 1990. In late 1990 and early
1991, as weakness in the economy became more evident and shortterm market rates continued to move downward, the Federal funds
rate was lowered by 2 percentage points to 5% percent by late
April 1991 (Chart 2-6). In the late spring and early summer, when
the economy appeared to be entering a recovery, there was little
movement in the Federal funds rate.
M2 growth was somewhat erratic during much of this period
(Chart 2-5). Through most of the first half of 1991, M2 stayed near
the middle of its target cone. M2 then fell for several weeks, reaching the lower bound of the cone in early September. Broader measures of credit also were weak, particularly bank loans to businesses. The implications of these developments were not clear; as mentioned above, in the short run the relationship between M2 and
nominal GDP can be quite unpredictable, and money supply data
can be quite difficult to interpret (Box 2-2). Nonetheless, the weak
money growth raised concerns that the growth in credit would be
insufficient to support a healthy expansion.
In the late summer and the fall, employment, sales, and other
indicators flattened or fell. As the recovery wavered and money
growth remained weak, a series of cuts brought the Federal funds
rate to 4.5 percent by early December. In mid-December, the Fed
responded to growing concerns about the faltering recovery by lowering the Federal funds rate one-half percentage point to around 4
percent and cutting the discount rate—the rate the Federal Reserve charges on its loans to banks—a full percentage point to 3.5
percent, the lowest nominal discount rate since 1964. This aggressive move by the Fed contributed to a downward movement in
market interest rates around the end of the year.
In retrospect, it appears that monetary policy should have been
geared to lowering interest rates faster and earlier. It is likely
that sluggish demand for credit in a weaker-than-expected economy
and continued fallout from the problems in the banking industry
prevented the quantity of credit from expanding as the Fed
thought it would when it lowered interest rates. Indeed, M2 growth
did not react as the Fed expected when it lowered the Federal
funds rate in the second half of 1991.



51

Box 2-2.—Interpreting the Money Statistics in the Second
Half of 1991
Interpreting the money statistics during the second half of
1991 was not a straightforward matter* Although M2 growth
was weak, Ml—a narrower measure of money composed solely
of components used in transactions—grew at nearly a 9-percent annual rate in the second half of 1991, compared to an average annual rate of 7.6 percent from the end of 1982 to the
end of 1989, when the economy was expanding rapidly.
The weakness in M2 and credit growth likely reflected a variety of demand and supply factors. On the demand side, weak
credit growth in part was caused by sluggish loan demand;
businesses saw fewer profitable borrowing opportunities than
during a period of rapid expansion. Households also appear to
have moved out of M2 assets such as money market accounts
to seek higher returns in longer maturity bond and equity
mutual funds. Declining yields on M2 assets relative to consumer debt also may have caused consumers to move away
from financing purchases with debt or to use M2 assets to pay
down existing debt. Such shuffling of assets by households
likely had little effect on the overall availability of credit in
the economy.
On the supply side, banks apparently were not actively seeking deposits; they likely felt that they could satisfy loan
demand with their current deposit base. Furthermore, loan
supply may have been restricted by a continuation of some of
the factors underlying the credit crunch.
At the end of 1991 and into early 1992, interest rates generally
were at their lowest levels in 2 decades or more. Three-month
Treasury bill rates fell from 7.2 percent in October 1990 to about
3.8 percent in early 1992, the lowest level of nominal Treasury bill
rates since 1972. Near troughs of recessions, however, short-term
real interest rates—that is, interest rates adjusted for expected inflation—often are quite low, sometimes negative. Currently, real
short-term rates are higher than they have been during many comparable periods in the past.
By mid-January 1992, nominal long-term interest rates also were
relatively low. Yields on 10-year Treasury notes were about 6.8 percent, the lowest level of nominal interest rates since 1977. Rates on
30-year fixed mortgages fell from a little more than 10 percent in
late 1990 to about 8V4 percent in mid-January 1992. The decline in
mortgage rates has substantially enhanced the affordability of
housing. In addition, interest rates on adjustable rate mortgages



52

have come down, many homeowners have refinanced mortgages at
lower rates, and interest rates on consumer installment credit also
have fallen. These factors have freed up income for other purposes,
allowing households to reduce their debt burdens and to enhance
their purchasing power. Of course, these effects are offset somewhat by the lower income earned by holders of interest-bearing
assets.
Yields on publicly traded short-term commercial paper and
longer term corporate bonds also fell between late 1990 and early
1992. Although some rates lagged a bit late, the overall decline in
yields on corporate debt was roughly in line with the fall in interest rates on Treasury issues of comparable maturity. As with
households, the decline in borrowing costs has improved the cashflow positions of businesses, enhancing profitability and freeing
funds for productive purposes.
In contrast, the prime rate—the rate banks charge their best
business borrowers—generally did not fall as quickly or as much as
other short-term interest rates. This rising spread reflected an attempt by banks to increase profitability and rebuild their balance
sheets as well as some reluctance to lend to small and medium-size
businesses because of the unfavorable effects such loans might
have on their capital positions. In December, however, following
the 1-percentage-point cut in the Federal Reserve's discount rate,
the prime rate fell 1 percentage point to 6.5 percent, its lowest
level since 1977.
SUMMARY
• A number of structural imbalances that had evolved over a
number of years—including high public and private debt, overbuilding in commercial real estate, and financial sector difficulties—constrained growth in the economy in the late 1980s
and early 1990s. Constraints on State and local budgets along
with defense downsizing also put a drag on the economy. The
large Federal fiscal stimulus usually present during a recession
did not occur.
• In the late 1980s, the Federal Reserve tightened monetary
policy in an effort to restrain incipient inflation pressures.
However, the tighter monetary policy also was one of the factors contributing to the sluggish performance of output and
employment over the past 3 years.




53

RECENT ECONOMIC PERFORMANCE IN
HISTORICAL CONTEXT
CYCLICAL COMPARISONS
Table 2-1 compares the 1990-91 recession with previous recessions since World War II. GDP data consistent with the December
1991 revisions are not yet available for the years before 1959 (Box
2-3). Comparisons between a given recession and the average of the
experiences over a number of cycles are informative, but one
should keep in mind that there is no such thing as a typical or average recession. Because of differences in the events causing recessions, the state of the economy when those events occur, and the
responses of markets, individuals, and the government to the downturn in activity, the range of cyclical experiences is quite broad.
TABLE 2-1.—Cyclical Comparisons
Duration1

Real GDP

Unemployment rate

Payroll
employment

Change

Recession

Percent
Change

Months

High

Percentage
points

Percent
change

Percent

1948-49

11

(2)

-5.2

4.2

7.9

1953-54

10

(2)

-3.5

3.6

6.1

1957-58

8

(2)

-4.3

3.8

7.5

1960-61

10

-0.6

-2.2

2.3

7.1

1969-70

11

1.0

1.5

2.6

6.1

1973-75

16

4.1

2.9

4.4

9.0

-2.6

-1.4

1.9

7.8

-2.8

-3.1

3.6

10.8

1980

6

1981-82

16

Recession Average

11

1990-91

(3)

1.6

4

-1.5

7.8

3.3

-3.0

-2.2
4

4

1.9

4

7.1

1

Duration based on National Bureau of Economic Research dating of business cycle peaks and troughs.
Data for GDP in 1987 dollars is not vet available Drior to 1959.
The trough of the recession has not yet been determined, although a majority of the Blue Chip forecasters surveyed in January
1992 placed it in the second quarter of 1991.
2
3

4

The values for the recession that began in 1990 may differ depending on the course of the economy and data revisions.

Note.—Changes determined from series-specific peaks and troughs in neighborhood of recession.
Source: Department of Commerce, Department of Labor, and National Bureau of Economic Research.

Gross Domestic Product
In terms of the direct effect on output—assuming that output
does not fall significantly in 1992 (the Administration forecasts an
increase)—the 1990-91 recession was somewhat milder than the average for recessions since 1959. As the Administration predicted
last year, real GDP fell for two consecutive quarters—the fourth
quarter of 1990 and the first quarter of 1991—and then rose in the
second and third quarters. However, real GDP was essentially flat
in the fourth quarter. The decline in real GDP from the third quarter of 1990 through the first quarter of 1991 was 1.6 percent, compared with the 2.2-percent average for recessions since 1959.



54

Box

accounts (NIPAs)
the value nf

. Benchmark eS
ng cycle; the last
««rt month of each

£»» ©EA) publishes T
«» «he Preceding q u a r t e r fe

d*« become a S b ^

mates are published. M a n ^
stooctwg the mPAs, but ar
l u n a t e . Some of t h W < ^
sions each July. Otheri
iarly; some
T
nesses and

^

howe^r,^ T h e ^ ^




55

in

or

&al phase of the NIPA
I™ December 1985, In
n Economic Analf" NIPA estimate
I months, as more
' *&d "final0 estiare useful for conwen for the final
~ annual revi&
* available even less regu* censuses of busi-

.f**

ch

^«^ at t h e ^

Employment and Unemployment
Based on data available through the end of 1991, the effect of the
1990-91 recession on labor markets also was less severe than average. The 1.5-percent decline in nonfarm payroll employment from
June 1990 to April 1991 was about half the average for all postwar
recessions, and the 1.9-percentage point increase in the unemployment rate from June 1990 to December 1991 was about 40 percent
less than the postwar average. Similarly, through the fourth quarter, the number of discouraged workers—those who are no longer
actively seeking work because they think they cannot find a job—
increased about 270,000, less than half the 680,000 increase that resulted from the more severe recession of 1981-82. Although the unemployment rate is expected to improve in the middle of 1992, both
it and the number of discouraged workers could rise in early 1992,
depending on the course of the economy. Other labor market indicators suggest greater severity of the recession. During recessions,
for example, businesses often lay off workers temporarily, planning
to rehire them when demand picks back up. Over the past several
years, however, there has been a trend toward laying off workers
permanently. During the second half of 1991, more than 40 percent
of the unemployed did not expect to be recalled to their old jobs.
Duration
The National Bureau of Economic Research, the private organization that officially dates the beginning and end of recessions, has
not yet decided on the trough of the most recent recession. There is
uncertainty about whether the trough of the recession occurred in
the spring of 1991 or whether the recession continued, with a trough
at a later date. Thus, at this time, the length of the recession cannot
be compared with those of other recessions since World War II,
which varied between the 6-month recession in 1980 and the 16month downturns in 1973-75 and 1981-82.
PERFORMANCE OF GDP COMPONENTS IN 1991
The decline in real economic activity during the recession from
the third quarter of 1990 through the first quarter of 1991 was
spread across the various sectors of the economy, but much of the
decline occurred in investment, with a less severe fall in consumption. In fact, the decline in investment exceeded the total decline in
GDP but was offset by an improved net export position and by government spending, which rose slightly. In the second and third
quarters of 1991, the performance of GDP components was largely
consistent with what would be expected in the early stages of recovery. However, in the fourth quarter the economy flattened out,
with declines in consumption and government spending being




56

offset by a small increase in investment and a significant improvement in net exports.
Consumption and Saving
Consumer spending in real terms fell by about IVi percent
during the recession, compared with a slight increase, on average,
in previous recessions. During 1991, real consumer spending rose
0.3 percent. Real disposable personal income, a key determinant of
consumer spending, rose 0.4 percent during 1991. In terms of current dollars, consumer spending and other outlays rose less than
disposable income so that personal saving rose to 5.3 percent in
1991 from 5.1 percent in 1990.
Real purchases of durable goods fell 2.8 percent during 1991, falling in the first and second quarters, before picking up in the third
quarter and then falling again in the fourth quarter. Expenditures
for nondurable goods fell 1.1 percent during 1991, declining slightly
in the first quarter, rising slightly in the second quarter before
being unchanged in the third quarter. In the fourth quarter, however, expenditures on nondurable goods fell significantly. Spending
on services rose in each quarter of 1991, increasing 1.9 percent
from the end of 1990 through the end of 1991.
The fundamentals underlying consumer spending were volatile
but generally weak for much of the year. Real disposable personal
income was essentially flat. Consumer confidence was on a roller
coaster, falling in the second half after a strong post-Operation
Desert Storm rebound (Chart 2-7). In fact, consumer confidence by
year-end was very low, which suggests that consumer spending in
early 1992 will be sluggish.
Residential Investment
Real residential investment fell by about 10 V2 percent during the
recession, just over half of the average decline in previous recessions since 1959. Residential investment fell 1.3 percent during
1991. However, residential investment climbed steadily in the last
three quarters of the year, after falling significantly in the first
quarter. Economic fundamentals—the most important being low
mortgage rates (Chart 2-8)—supported the pickup in residential investment. By the end of 1991 mortgage rates were at their lowest
levels in nearly two decades.
Business Fixed Investment
The decline in nonresidential fixed investment during the recession was on a par with the average for previous recessions—just
above 6 percent. The 9-percent decline in investment in structures,
however, was three times as large as the recession average of about
3 percent. That disproportionately large decline reflects the imbalances described earlier, particularly the high vacancy rates for
commercial office space. Investment in durable equipment fell




57

Chart 2-7 Consumer Confidence
Consumer confidence plummeted during the Persian Gulf crisis, rebounded in early 1991, but then fell back
at the end of the year.
Index, 1985=100
140

120

-

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

Source: The Conference Board.

about 5 percent during the recession, about two-thirds the decline
in the average recession.
During 1991, nonresidential fixed investment fell 6.9 percent,
with investment in structures falling 15 percent and expenditures
for durable equipment falling by more than 3 percent.
Inventories
As the economy entered the recession, many analysts cited the
lean inventory position of businesses as one reason the recession
would be relatively mild. However, early in the recession, businesses began cutting inventories almost as soon as demand began to
fall. Inventories fell at an annual rate of $31 billion (1987 dollars)
in the fourth quarter of 1990, and businesses continued to liquidate
inventories through the second quarter of 1991. The shift in inventory investment of about $47 billion (1987 dollars)—from an accumulation of about $14 billion in the third quarter of 1990 to a liquidation of about $32 billion in the first quarter of 1991—represented
nearly 1 percent of real GDP. Hence, a significant part of the fall
in real output during the recession can be attributed directly to the
inventory cutback, which occurred earlier than has typically been
the case in previous recessions. By the end of 1991, inventory liqui-




58

Chart 2-8 Mortgage Rates
At the end of 1991, mortgage rates were at their lowest level in nearly a decade and a half and were
much lower than their peak in 1981.
Percent per annum
20

18.45
\
October 1981 ^V
18

16

12

10

8.50
December 1991
i

1972

1974

i

1976

i

i

i

1978

i

i

1980

i

i

1982

i

i

1984

i

1986

i

I

1988

1990

Note: Contract interest rates on commitments for fixed-rate first mortgages.
Source: Federal Home Loan Mortgage Corporation.

dation had ceased, and some accumulation of inventories began in
the fourth quarter.
Government Spending
Real government purchases of goods and services fell 1.7 percent
during 1991. On average, Federal defense purchases fell by about
$13 billion, or 4.6 percent. Federal nondefense purchases rose only
slightly during 1991. On average, Federal purchases increased by
about 1 percent in previous recessions and by about \XA percent
during the first year of expansions.
State and local government purchases were somewhat more constrained than the average for other recessions, falling about 0.6
percent during 1991. The fall in 1991 followed a 3.8-percent rise
during 1990. The decline in 1991 reflected the tight State and local
government budget situation. In earlier recessions, State and local
government purchases were countercyclical, increasing 2 percent on
average during recessions. During the first year of recoveries since
1959, State and local government spending increased 2.7 percent on
average.




59

Exports and Imports
The improvement in the Nation's international trade position
helped keep the recession from being more severe. Real exports
continued to grow in 1991 and by the end of the year reached 11.6
percent of real GDP. In fact, over the past 4 years, real exports
have gone up by nearly 1 percentage point of GDP each year. Over
the same period, real imports as a percent of GDP remained relatively stable, usually between 11 and 12 percent.
The rising share of exports coupled with the stable share of imports has resulted in significant reductions in the Nation's trade
deficit. Real net exports as measured in the national income and
product accounts rose from —$155 billion (1987 dollars) in 1986 to
— $27 billion in 1991. During the recession, real net exports were
one bright spot, increasing by $47 billion, or nearly 1 percent of
GDP—from the third quarter of 1990 through the first quarter of
1991. The importance of the improving trade position becomes
more obvious when compared with the recession of 1981-82, when
real net exports fell by nearly $40 billion, or approximately 1 percent of GDP. During 1991 real net exports improved from —$31 billion at the end of 1990 to -$8 billion at the end of 1991. The recent
improvement in the trade balance and its contribution to economic
growth help to reinforce the importance of maintaining open international markets in which free and fair trade can flourish.
The above discussion focuses on real imports and exports in the
national income and product accounts and their contribution to
real GDP growth. Other measures of U.S. international transactions in current-dollar terms also showed marked improvement in
1991. Through November, with exports reaching a record high, the
merchandise trade deficit in 1991 was running at an annual rate of
$65 billion, down from $102 billion in 1990. The current account
balance—which includes trade of goods and services, flows of
income payments, and unilateral transfers—showed a surplus of
about $4 billion at an annual rate through the third quarter, a significant change from the $92 billion deficit of 1990. A major part of
the improvement, however, resulted from the cash contributions of
coalition partners in Operation Desert Storm.
INDUSTRIAL PRODUCTION AND CAPACITY
UTILIZATION
Industrial production—the output of the Nation's factories,
mines, and utilities—peaked in September 1990. From its trough
after the 1981-82 recession in December 1982, industrial production
increased by nearly 40 percent during the expansion—representing
an average growth of about 4.4 percent a year. From September
1990 through March 1991, industrial production fell 5 percent,
giving up the equivalent of slightly more than a year's worth of



60

growth during the expansion. The average decline in industrial
production during previous recessions in the postwar era was about
9 percent, nearly twice as large as the decline from September 1990
to March 1991.
Capacity utilization—the percentage of available equipment and
structures used in production—also fell as industrial production declined. Capacity utilization peaked at 83.8 percent in June and July
1990. By March 1991 it had fallen to 78.4 percent.
The initial pickup in economic activity that occurred in the
spring boosted industrial production and capacity utilization. Industrial production rose about 3 percent from March to July, and
capacity utilization rose to 80 percent in July. Industrial production then flattened out in the second half of the year and even declined at the end of the year. Capacity utilization fell from 80 percent in July to 79 percent in December.
SECTORAL AND REGIONAL DIVERSITY DURING THE
RECESSION
Developments in demand and technology vary significantly
among industries; as a result, not all sectors of the economy
expand or contract at the same rate. The efficient allocation of economic resources requires industries experiencing increases in
demand or rapid technological advances to grow faster than industries not experiencing those advantages. Differences in relative demands and technological change mean that during a recession
some industries still experience growth while others contract; conversely, an industry with outdated technology or falling demand
may still decline during an expansion. Because of differences in
natural resources, composition of the labor force, and historical development, a wide variety of industrial concentrations exists across
the country. Regions experience fluctuations in growth commensurate with activity in their industrial concentration.
Industrial and regional diversity enhances the cyclical resiliency
of the economy as a whole. The flow of labor and capital among
regions and sectors permits more rapid adjustment to shocks, a
more efficient allocation of scarce resources, and a larger national
product. Indeed, subsidizing declining industries inhibits the efficient flow of resources from those industries to the expanding sectors of the economy. In contrast, policies aimed at aiding the flow
of workers and capital among sectors can improve efficiency and
enhance growth.
Sectoral Diversity in Employment
Table 2-2 presents the proportion of the decline in total nonfarm
payroll employment attributable to each of the major industrial
groupings during postwar recessions. These declines are compared



61

to behavior of employment between its peak in June 1990 and its
1991 low in April.
TABLE 2-2.—Accounting for the Decline in Payroll Employment
[Decline in sector divided by total decline, percent]
Recession

Manufacturing

Construction

Service Producing

Mining

1948-49

72.4

0.9

8.8

17.9

1953-54

102.5

-.6

-6.8

4.9
3.9

1957-58

.

76.4

11.5

8.2

1960-61

..

81.6

11.4

2.2

4.7

1969-70

.

131.3

5.6

-36.7

_2

1973-75 . .

81.4

19.1

.3

.8

1980

81.2

15.8

3.7

.8

1981-82

82.2

12.5

-.4

5.7

Recession Average..

88.6

9.5

2.6

4.4

M6.9

^9.1

...

June 1990 to April 1991
1

The values for the recession that began in 1990 may differ depending on subsequent changes in payroll employment and
data revisions.
Note.—Changes determined from the peaks and troughs in total payroll employment in the neighborhood of the recession.
Mining includes oil and gas extraction. A minus sign indicates an increase in employment in the sector.
Source: Department of Labor and National Bureau of Economic Research.

The manufacturing sector accounted for about 47 percent of the
decline in total employment between June 1990 and April 1991,
roughly half the average of previous postwar recessions. (Manufacturing employment, however, had fallen somewhat during 1989 and
early 1990.) Before 1990-91, manufacturing had never accounted
for less than 72 percent of the jobs lost during a recession. The
smaller negative effect of manufacturing on the economy as a
whole is not simply a result of its lower share of total employment;
in percentage terms, the decline in manufacturing employment
also was about half its cyclical average.
In the late 1970s and early 1980s, the cost-competitiveness of U.S.
manufacturing declined relative to that of the Nation's major trading partners, in large part because of the rising exchange value of
the dollar. The decline in competitiveness forced manufacturing to
scale back operations. The restructuring caused painful dislocations—particularly in Midwestern States with a high dependence
on traditional heavy manufacturing industries such as steel and
autos—that lasted longer than the recessions in the national economy. But by the end of the 1980s, the competitive footing of U.S.
manufacturing was much improved, a result both of cost-cutting
steps and the decline in the exchange value of the dollar between
1985 and 1987. Indeed, over the past year and a half, the manufacturing sector has received a welcome boost from export demand. As
a result of these factors, manufacturing did not display the same



62

degree of cyclical sensitivity in 1990 and 1991 that it had during
earlier recessions.
In contrast, construction accounted for 29 percent of the jobs lost
between June 1990 and April 1991, about three times its cyclical
average. The surge in building activity during the 1980s resulted in
an excess supply of office space, commercial property, and apartments. Many of these buildings are vacant. And over the past 3
years, there has been a notable rise in vacancies in the Northeast—where the number of vacant residential rental units rose
from 4.9 percent of the rental stock in the fourth quarter of 1988 to
6.3 percent in the fourth quarter of 1991. Because it could take
some time for renewed demand to work off existing vacancies, construction is not likely to be robust even after the recovery gains
momentum.
The service sector accounted for almost one-quarter of the overall decline in employment between June 1990 and April 1991, by
far its largest share during any postwar recession. This sector
covers a large number of diverse industries, such as wholesale
trade, retailing, real estate, banking, insurance, health care, business services, and government. Many of these industries are undergoing longer term structural changes that have caused their cyclical behavior to differ noticeably from earlier experiences. Furthermore, there has been a trend toward manufacturers contracting
out activities to workers that are counted in the services category,
thereby increasing the cyclical sensitivity of the service-producing
sector.
Wholesale and retail trade accounted for nearly one-third of the
decline in total payroll employment between June and April; this
share was about three times its cyclical average. Retail trade in
particular has undergone significant structural changes over the
past several years. The 1980s witnessed a large expansion in retailing. According to estimates by the Department of Energy, in 1983
there were 44 square feet of floorspace at mercantile and service
establishments for every person in the Nation; by 1986, this figure
had risen to 53 square feet per person. Such increases apparently
reflected building beyond the demand for retail services. More recently, many traditional department store chains have scaled back
operations as they face intense competition, much of it coming
from expanding discount outlets.
Employment in the finance, insurance, and real estate industries
typically has grown during recessions. In 1990-91, however, the
number of jobs in these industries fell, accounting for about \xk
percent of the total decline in payroll employment. The problems
with the financial industries noted earlier—as well as changes in
the way that financial services are provided to households and
businesses—have resulted in a restructuring that likely will leave



63

the Nation with fewer banks and savings and loans. Job opportunities in real estate were adversely affected by the slump in the construction industry.
One industry that did not contract during this recession was
health care services. This industry continued to expand during the
recession despite the weakness in the aggregate economy. All told,
the services subgrouping, which includes health and business services as well as a miscellany of other service industries, added more
than 300,000 jobs between June 1990 and April 1991.
Regional Disparity
Before this latest cycle, some people argued that the East and
West coasts were "recession proof." This claim seems to have been
based on the experience of the early 1980s. Chart 2-9 plots the average unemployment rate in each State during the 12 months
ending at the cyclical trough in November 1982. The figure highlights that unemployment rates generally were much lower on the
East Coast than in the Midwestern industrial States and some portions of the South, which were hard hit by the problems in manufacturing. Despite the claims, unemployment on the West Coast
was higher than in the country as a whole. Chart 2-10, which plots
average unemployment rates from December 1990 to November
1991, indicates that many of the coastal States—namely, Maine,
New Hampshire, Massachusetts, Rhode Island, Florida, and California—fared worse than the Nation as a whole during the latest recession. The unemployment rate through much of the industrial
parts of the Midwest has been closer to the national average. Both
charts highlight, however, that there has been significant diversity
in the economic performance of different regions of the country.
(Data for State-level unemployment rates in December 1991 were
not available at the time this Report was published; for the Nation
as a whole, the unemployment rate rose 0.2 percentage point in December.)
One exception in the Midwest has been Michigan, where the
weakness in the automobile industry has caused high unemployment. Indeed, in 1991 the "big three" domestic automakers sold
roughly 8V2 million cars and trucks in the United States, only
about 14 percent above sales in 1982 during that severe recession.
In addition to cyclical developments, motor vehicle sales have been
adversely affected by the decline in the rate of household formation, which is one of the key determinants of longer run trends in
demand for big-ticket durable items such as automobiles.
Was This a White-Collar Recession?
Because of the job losses in banking, insurance, real estate, and
other industries with a high proportion of white-collar workers,
some have argued that the 1990-91 recession was a "white-collar



64

Chart 2-9

Unemployment Rates by State, Year Ending November 1982
Twelve months ending November 1982
(United States = 9.5%)

•

10.00% or over

•

8.50 - 9.99%

O 7.00 - 8.49%
Q 5.50 - 6.99%
•

Under 5.50%

Note: Average of the rates for the twelve months ending November 1982.
Source: Department of Labor.

Chart 2-10

Unemployment Rates by State, Year Ending November 1991
Twelve months ending November 1991
(United States = 6.7%)

•

10.00% or over

•

8.50 - 9.99%

E3 7.00 - 8.49%
C3 5.50 - 6.99%
•

Under 5.50%

Note: Average of the rates for the twelve months ending November 1991.
Source: Department of Labor.

recession." Chart 2-11 illustrates that the unemployment rate for
white-collar workers is lower than in other occupations, and also is



65

below its recent peak in 1983. Because of the trend toward more
employment in the typically white-collar jobs, however, these workers now account for a larger proportion of total unemployment
than they have in previous recessions. Nonetheless, they still account for a smaller proportion of total unemployment than the
blue-collar or sales, services, and support categories.
Chart 2-11 Unemployment Rates by Occupation
White-collar unemployment rates are below those of other broad occupational categories.
Percent
16

14

12
.

.

.

\ Blue Collar

Sales, Services, and Support

White Collar

68 69 70 71 72 73 74 75 76 77 78 79 80 81 82* 83 84 85 86 87 88 89 90 91
WHITE COLLAR: Managerial, Professional, Technical, and Administrative.
SALES, SERVICES, AND SUPPORT: Sales, Clerical and Kindred, and Services.
BLUE COLLAR: Precision Production, Operators, Fabricators, Laborers, Farming, Forestry, and Fishing.
* The occupational classifications used to construct these series are not strictly comparable before and after 1982.
Source: Department of Labor.

Blue-collar unemployment rates on average run higher, and recently have risen more, than the rates for white-collar and service
workers. However, the less severe cycle in manufacturing has
meant that the blue-collar unemployment rate is substantially
below the peaks experienced in the mid-1970s and early 1980s.
SUMMARY
• While a majority of the private Blue Chip forecasters surveyed
in January 1992 placed the end of the recession in the second
quarter of 1991, as noted above the trough of the recession has
not yet been officially determined. Thus, the statements in this
section are consistent with the majority Blue Chip view, but it
should be borne in mind that the future course of the economy
may affect the values for the recession that began in the third
quarter of 1990.



66

• The decline in output from the third quarter of 1990 through
the first quarter of 1991 and the number of jobs lost between
June 1990 and April 1991 was somewhat less severe than the
average for post-World War II recessions. Much of the decline
in output occurred in investment, particularly in inventories.
There was a smaller decline in consumption, and an improvement in net exports helped to keep the recession from being
more severe.
• Sectoral comparisons show that, relative to previous recessions,
manufacturing accounted for a smaller proportion of jobs lost;
the construction and service-producing sectors accounted for a
much larger proportion.
• The rise in white-collar unemployment represented a larger
proportion of total unemployment compared to previous recessions. However, blue-collar unemployment still accounted for a
larger share of total unemployment than white-collar unemployment did.

THE INFLATION RECORD
Falling energy prices and the weak economy held inflation in
1991 at relatively low levels in comparison to the past two decades.
Price inflation, measured by the annual rate of change in the consumer price index (CPI), averaged 9.3 percent from the end of 1973
through 1981, peaked at over 13 percent in 1979 (December-to-December), but fell to 3.9 percent from the end of 1982 through 1991
(Chart 2-12). Core or underlying inflation—as measured by the CPI
excluding food and energy—peaked in 1980 at more than 12 percent and averaged 9 percent from the end of 1973 through 1981 but
declined to 4.5 percent from the end of 1982 through 1991. During
1991 consumer price inflation was only 3.1 percent, down from 6.1
percent in 1990 and the second lowest rate since 1967. Core inflation was 4.4 percent, down from 5.2 percent in 1990.
Commodity prices declined significantly over the past year and a
half, signaling continued low inflation. Crude oil prices were down
nearly 50 percent from their peak in the fall of 1990, and nonenergy commodity prices also fell. Producer prices for sensitive
crude and intermediate materials (which do not include energy
commodities) declined about 4 percent during 1991, and the Commodity Research Bureau's index of spot market prices for raw industrial materials was down more than 10 percent. Many view gold
as a hedge against inflation; its price fell by about 12 percent from
the beginning of 1990 to the end of 1991.
The labor cost situation in 1991 also was quite favorable for reducing inflation pressures. Unit labor costs, which influence inflation by affecting the cost of producing goods and services, are de


67

Chart 2-12 Inflation and Core Inflation
Overall consumer price inflation fell significantly in 1991. Core inflation, a measure that excludes food
and energy prices, also fell.
Percent
16

14

12

10

All Items Excluding
Food and Energy

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

Note: Percent change in CPI from 12 months earlier.
Source: Department of Labor.

termined by dividing hourly compensation by output per hour. Effects of increases in wages and salaries and other labor compensation are thus offset by any increases in the productivity of workers.
Although real compensation tends to follow productivity gains
(Chapter 3), nominal compensation typically increases at a higher
rate than productivity, raising unit labor costs and contributing to
inflation. Unit labor costs continued to rise in 1991, but at a much
slower rate than in recent years. Through the first three quarters
of 1991, unit labor costs increased at an annual rate of only 2.3 percent, as labor compensation rose at a 3.4-percent rate and productivity increased at about a 1-percent rate. This compares favorably
to the 6-percent rise in unit labor costs in 1990, and the 4% percent
average annual increase during the 1980s.
Price changes during 1991 were affected primarily by the declines in energy prices from their peak in the fall of 1990; the slowdown in labor markets, money growth, and the economy in general
also helped keep inflation pressures low. Still, some longer run
trends continued in 1991 as prices for consumer services rose faster
than those for consumer goods. During 1991 services prices rose 4.6
percent, compared with a 1.2-percent rise for consumer goods. In




68

particular, the cost of medical care services continued to soar,
rising 7.9 percent.
SUMMARY
• Inflation in 1991 was relatively low, partly as a result of lower
oil prices, but also as a result of several years of slow money
growth, slack labor markets, and excess capacity in many industries.
• Inflation is expected to remain relatively low in the coming
years.

FISCAL POLICY
Fiscal policy comprises the spending, tax, borrowing, and credit
activities of the Federal Government. The Administration supports
a responsible growth-oriented fiscal policy. The Omnibus Budget
Reconciliation Act of 1990 established spending constraints that
will help reduce the medium-term structural budget deficit—that
is, the deficit excluding the cyclical component of expenditures and
revenues. (Chapter 7 discusses budget concepts.)
In fiscal 1991 total Federal outlays were $1,323 trillion and Federal receipts were $1,054 trillion, yielding a Federal budget deficit
of $269 billion. As a percent of GDP, receipts were 18.7 percent,
outlays were 23.5 percent, and the deficit was 4.8 percent. In comparison, in fiscal 1990 the deficit was $220 billion, or 4 percent of
GDP.
The rise in the deficit reflects a number of factors. As an economy dips into recession, income tax receipts fall and outlays for
some programs rise, even without any legislated changes in the
programs. Such automatic stabilizers are an important element of
systematic fiscal policy since they cushion the fall in the economy,
preventing further contraction. On balance, for example, the automatic stabilizers offset other factors in fiscal 1991, leaving the overall stance of Federal fiscal policy slightly stimulative. Usually late
in a recession or early in a recovery, tax cuts or an increase in discretionary fiscal spending increases the structural budget deficit,
providing notably more stimulus than the automatic stabilizers
alone. In contrast, between fiscal 1990 and fiscal 1991, the structural budget deficit, excluding outlays for deposit insurance, changed
little.
It is important to note that the deficit has been boosted by a temporary bulge in deposit insurance outlays, which exceeded 1 percent of GDP in fiscal 1991. It is widely accepted that the actual
timing of outlays and borrowing to protect insured depositors has
little impact on credit markets, interest rates, and the economy. So
the component of the deficit due to deposit insurance—about $66



69

billion, or roughly one-quarter of the deficit in fiscal 1991—does not
represent fiscal stimulus.
For fiscal 1992, outlays are projected to be $1,475 trillion, receipts $1,076 trillion, and the deficit $399 billion, or 6.8 percent of
GDP. Excluding deposit insurance outlays, projected to be about
$80 billion, the projected deficit would be 5.5 percent of GDP. The
projected increase in the deficit from fiscal 1991 reflects both the
effect of automatic stabilizers and discretionary stimulus from an
increase in the short-term structural deficit.

Growth Agenda
The President has presented a comprehensive and coordinated
growth agenda for the Nation. The agenda includes fiscal and other
measures that will stimulate the economy in the short run, address
the structural imbalances, and promote the Nation's long-term
growth.
The agenda focuses directly on increasing economic growth. The
short-term agenda includes executive actions and proposed legislation that will stimulate economic growth immediately. Executive
actions with immediate impact include the reduction in excessive
personal income tax withholding and acceleration of previously appropriated Federal spending. Reinvigorated action to reduce the
burden of unnecessary regulation and prudent measures to reduce
the credit crunch will improve the environment for growth now.
Proposed legislation for a 15-percent tax allowance and simplified and liberalized treatment of depreciation under the alternative
minimum tax will spur job-creating investment. Penalty-free withdrawal from individual retirement accounts and a $5,000 tax credit
for first-time homebuyers along with other incentives will boost
real estate. The President has repeatedly proposed reducing the tax
rate on capital gains; the first effect of such a reduction would be to
raise asset values, bolstering confidence and spending.
There also are proposals to assist families. These include an increase in the tax exemption for each child, a new flexible individual
retirement account, and student loan interest deductions. The incentives for first-time homebuyers mentioned above will encourage
homeownership—one of the most important ingredients to family
financial and social well-being. Comprehensive health reform will
increase the affordability and security of health insurance.
Bolstering the short-term agenda are proposals for the long term
that invest in the Nation's future by increasing the productivity of
people and business. Record Federal investment in research and
development and infrastructure, and the extension of the research
and experimentation tax credit will help generate new technologies
that enhance productivity and employment growth. The Administration also has advocated making the research and experimentation




70

tax credit a permanent part of the tax code. Record Federal investment in Head Start will prepare all eligible disadvantaged 4-yearolds for effective learning when they start school. Record Federal
investment in programs for children and education will improve the
opportunities for today's youth when they enter the labor market in
the future. Record Federal investment in programs designed to deal
directly with the crime and drug problems will, in combination with
other programs, move many of those from this subculture into
socially productive activity. The comprehensive job-training program will help millions of Americans to acquire the skills necessary
to succeed in the changing labor market.
A number of Administration proposals aimed at improving economic performance await congressional action. Education reform
through America 2000 will revolutionize education, strengthen accountability, and improve performance. Financial sector reform
will strengthen the financial system, improve its ability to contribute to business growth, and sustain international competitiveness.
Civil justice reform will curb wasteful litigation and enhance productive activity. The National Energy Strategy will increase energy
security and conservation. The long-term growth agenda also includes continued efforts to expand international markets through
multilateral, regional, and bilateral negotiations.
The proposed cut in the capital gains tax rate is an important
element of the long-term growth agenda. The capital gains tax rate
cut would encourage entrepreneurial activity, create new products,
new methods of production, and new businesses. These, in turn,
would generate new jobs. A capital gains differential would reduce
the tax bias against equity financing and the overall cost of capital,
thereby increasing investment and growth. The Administration
also has supported a zero capital gains tax rate for areas designated as Enterprise Zones to spur investment and encourage entrepreneurial activity in inner cities and rural areas.
Fiscal discipline has been a centerpiece of all of this Administration's budgets. The Administration's proposals are designed to
foster long-term growth by encouraging saving, investment, and entrepreneurship. Controlling the growth of government spending
and deficits frees resources for private investment. This is but one
part of a more comprehensive fiscal program that, within proposed
spending categories, also shifts spending from current consumption
to investment (such as expenditures for research and development
and investments in public infrastructure that pass cost-benefit
tests).
SUMMARY
• Federal fiscal policy typically provides a significant stimulus to
the economy during recessions and early recovery periods.



71

From 1990 to 1991, automatic stabilizers offset other factors,
leaving fiscal policy slightly stimulative. Federal fiscal stimulus is projected to be stronger in fiscal 1992, but still within the
constraints of the Omnibus Budget Reconciliation Act.
• The prompt enactment of the Administration's pro-growth
policy proposals will boost the economy in the short run and
will enhance productivity, investment, and economic growth in
the long run.

DEVELOPMENTS OUTSIDE THE UNITED STATES
The increase in U.S. exports, noted above, was one of the important factors that kept the recession from being more severe. Exports have been aided by the exchange value of the dollar, which
has fluctuated within a fairly narrow range since the significant
depreciation between 1985 and 1987. During 1990 and 1991, however, several of our major trading partners were in recession—among
them Canada and the United Kingdom—or, more recently, periods
of slower growth—such as Germany and Japan. These developments have reduced growth in demand for U.S. exports.
BUSINESS CYCLE DEVELOPMENTS ABROAD
In Canada, the United States' largest trading partner, GDP
began to fall in the second quarter of 1990, two quarters before the
decline in output in the United States. The recession in Canada
was more severe than in the United States, with GDP falling 2.8
percent from the first quarter of 1990 through the first quarter of
1991. Growth rebounded to a 5.7-percent annual rate in the second
quarter of 1991, but activity has fallen back to a more sluggish
pace in recent months. The United Kingdom also fell into recession
before the United States and experienced a more severe downturn.
Real GDP in the United Kingdom fell 1.2 percent in 1990 and remained on a downward course during the first half of 1991. Activity picked up around midyear, but the economy still was sluggish.
French GDP fell a bit late in 1990, and recovery was subdued
during 1991.
The cyclical experiences of Japan and Germany were quite different. While most of the industrial world experienced slow growth
in 1989 and early 1990, Japan and Germany registered rather
robust growth, which continued into early 1991. More recently,
however, activity has begun to slow in Germany. The costs of unification, the pent-up demand for consumer goods by citizens who live
in the former East Germany, and the one-for-one conversion of the
East German mark all contributed to inflationary pressures. In
response, the Bundesbank tightened monetary policy and growth
slowed; this tightening has had repercussions for the other econo


72

mies in Western Europe. Japan's gross national product grew solidly
in 1990 and the first quarter of 1991 but has slowed since. The
reduced pace of activity in Japan largely reflects the lagged effects of
a tightening of monetary policy in 1989 and 1990.
About one-quarter of U.S. merchandise exports go to Latin America and the newly industrialized countries of Asia. The economic
reform programs in Mexico and in a number of other Latin American countries have started to result in solid growth for them as
well as expanded exports for the United States. The newly industrialized countries of Asia continue to register strong growth, and the
share of U.S. exports going to these countries increased from less
than 8 percent in 1985 to more than 10 percent in 1990.
INFLATION, MONETARY POLICY, AND INTEREST
RATES ABROAD
Like the United States, other major industrial countries have
sought to reduce inflation in recent years by following tight monetary policies. These policies have had substantial effects on output
and employment. During 1991, the combination of slack demand
for funds, lower expectations regarding inflation, and an easing of
monetary policy led to declines in interest rates in a number of
countries, including Japan, Canada, and the United Kingdom.
The experience of Germany has been different. The strains of
unification have led to budget deficits, higher consumer price inflation, and increased wage pressures. After substantial upward movement in 1989-90, interest rates in Germany remained on a high
plateau through most of 1991, with long-term government bonds
yielding above 8 percent and short-term securities more than 9 percent. Continued wage and price pressures induced the Bundesbank
to raise key official short-term rates again in December 1991, and
the Lombard rate—the interest rate the Bundesbank charges
banks for short-term borrowing—hit a historical peak. The operation of the exchange-rate mechanism—an agreement among European countries aimed at keeping exchange rates among European
currencies relatively stable—combined with the high degree of capital mobility within the European Monetary System required central banks in some other European countries to limit monetary
easing (particularly in the United Kingdom, and also in France). In
other countries, central banks raised their rates in line with Germany (most notably the Netherlands and Belgium). This linkage of
monetary policies has been a major reason why many countries in
Europe are in recession or growing slowly.
The dollar appreciated about 15 percent (on a trade-weighted
basis) in the first half of 1991 but returned back to beginning-ofyear levels over the last half of the year. During 1991 as a whole,
the dollar appreciated moderately against most European curren


73

cies, while it depreciated about 7% percent against the Japanese
yen. The dollar was appreciating against European currencies at
the beginning of 1992.
Developments in the major foreign stock markets mirrored those
in the United States early in 1991; stock indexes surged from midJanuary to April with the resolution of the Middle East crisis.
After April, most foreign stock markets experienced little movement, on balance. The major exception was Japan, where the
Nikkei index fell about 15 percent between March and December
after falling even more sharply in 1990.
EXTERNAL ACCOUNTS
While economic activity in both Japan and Germany was slowing, their external accounts were behaving quite differently. Following declines in 1989 and 1990, Japan's external surplus rose in
1991; these movements largely reflected developments in the exchange value of the yen and changes in the prices of exports relative to imports.
In contrast, Germany's external balance moved sharply into deficit. Most of the movements in the German accounts can be traced
to unification, which resulted in a shift in resources from exports
to internal reconstruction and a spillover of higher domestic demands onto imports. Indeed, the shift in the external balance from
surplus to deficit in Germany was on the same order of magnitude
as the large and rapid shift that occurred in the United States in
the early to mid-1980s. Such a change in the external balance of
one of the world's traditional surplus nations provided stimulus for
Germany's trading partners and was a factor elevating world longterm interest rates higher than they otherwise would have been.
SUMMARY
• Many of the Nation's trading partners recently experienced
slower growth or recessions.
• Tighter monetary policies in many major industrialized countries have helped to reduce inflation pressures, but also have
contributed to lower real growth.
THE ECONOMIC OUTLOOK
The Administration projects that the economy is likely to remain
sluggish in the early part of 1992 but that a renewed pickup is
likely to begin by the middle of the year. With the adoption of the
President's policy proposals, the economy is then expected to
return to solid real GDP growth of about 3 percent a year through
the mid-1990s, and the unemployment rate is expected to decline
from around 7 percent to less than 5 V2 percent.



74

The sluggish performance of the economy and the declines in
consumer and business confidence at the end of 1991 all point to a
continued slow economy in the early part of 1992. Various recent
developments, however, indicate a resumption of stronger growth
in the middle of the year. The cuts in interest rates in the second
half of 1991 are expected to support gains in consumer and business spending by the middle of 1992. Relatively low interest rates
also should help households and businesses reduce debt-servicing
costs and improve their financial positions. The improvement in
personal finances would help boost consumer confidence and encourage growth in consumer spending. Declines in long-term interest rates should continue to have positive effects on investment
spending; low mortgage rates, in particular, should help to boost
residential investment. Business inventories remain relatively lean.
As a result, production likely will respond quickly to meet increases in demand, and a sustained increase in demand would encourage businesses to rebuild inventories. The relatively low exchange value of the dollar and growth in the world economy should
help to promote continued export growth.
Economic forecasting is an imprecise science, however. Unexpected events and policy changes can cause actual events to be substantially different from the forecast. Forecasts are based largely on
predictions about human behavior, usually taking previous patterns of behavior as a guide. But human behavior is complex, difficult to predict, and subject to change. People do not always respond
the same way, or with the same speed, in what appear to be similar circumstances. Hence, uncertainty remains about the outlook
for the economy.
If the problems the economy has been facing are resolved relatively quickly and confidence is restored, growth could rise faster
than is expected. The relatively low rate of inflation combined with
the large degree of slack in the economy is particularly noteworthy, for it could allow the Federal Reserve to keep interest rates
low—or cut them further, if necessary—to help boost growth with
little immediate concern about reintroducing inflation pressures. A
quick shift to a significant rebuilding of inventories alone could
add as much as a percentage point to the rate of growth over the next
year. Alternatively, if the problems are resolved slowly, the economy could perform worse than expected. Tight credit and slow
money growth, along with the continuing structural adjustments
described earlier could continue to hinder the economy. Under
those conditions confidence could remain low, and the rate of
growth likely would be lower than expected.




75

THE PRESIDENT'S POLICIES OR BUSINESS AS USUAL
With the adoption of the President's pro-growth proposals as outlined in the State of the Union address and presented in detail in
the budget, the prospects for renewed solid growth improve markedly. The policy forecast in Table 2-3 shows the expected course of
the economy given the adoption of the pro-growth policies. The
President's proposals will inspire confidence and provide a stimulus
to the economy in the short run, boosting output, income, and employment. The productivity-enhancing nature of the proposals will
also improve the economic outlook in future years. If the President's policy proposals are not adopted relatively promptly, however, and a "business-as-usual" situation persists in determining Federal spending and tax policies, the economy is expected to perform
worse than projected, as indicated by the business-as-usual forecast.
TABLE 2-3.—Administration Forecasts
1991

Item

1994

1993

1992

1995

1997

1996

Percent change, fourth quarter to fourth quarter
POLICY FORECAST
Real GDP

0.2

2.2

3.0

3.0

3.0

2.9

2.8

GDP deflator, 1 9 8 7 - 1 0 0

3.2

3.2

3.4

3.3

3.3

3.2

3.2

Consumer price index

2.9

3.1

3.3

3.2

3.2

3.2

3.1

Calendar year average, percent
6.7

Interest
bills

rate,

91-day

10-year

6.5

6.1

5.8

5.4

5.3

4.1

4.9

5.3

5.3

5.2

5.1

Treasury

Interest rate,
notes

6.9

5.4

Unemployment rate

Treasury
7.9

7.0

6.9

6.7

6.6

6.6

6.6

116.8

Civilian employment

117.4

119.6

121.7

123.7

125.8

127.8

Percent change, fourth quarter to fourth quarter
BUSINESS AS USUAL FORECAST
Real GDP

2.4

2.5

2.4

6.3

5.8

5.6

5.5

5.5

5.4

5.3

7.1

7.0

7.0

6.9

0.2

1.6

6.7

7.1

6.9

6.7

5.4

4.2

5.1

7.9

7.2

7.3

2.5

2.6

Calendar year average, percent
Unemployment rate
Interest
bills

rate,

91-day

Treasury

Interest rate,
notes

10-year

Treasury

Sources: Council of Economic Advisers, Department of Commerce, Department of Labor, Department of the Treasury, and Office
of Management and Budget.

With the President's pro-growth policies, the Administration expects real GDP to increase 2.2 percent from the fourth quarter of
1991 to the fourth quarter of 1992. This represents a significant improvement from the 0.2-percent growth during 1991 and the 0.1-percent decline during 1990. Inflation in 1992 should be only slightly
higher than in 1991. The relatively low inflation pressures in 1991
partly were a result of the fall in oil prices from their peak in




76

late 1990. But several years of slow money growth and a slow economy, which eased tightness in labor markets and created excess capacity in many industries, also kept inflation pressures down. In
1993 real growth is expected to be even stronger than in 1992—at
about a 3-percent rate—as the economy continues to rebound from
the recession and the sluggish growth over the 1989-91 period.
The President's policies will also improve the outlook in labor
markets, and the unemployment rate is expected to fall from about
6.9 percent in 1992 to 6.1 percent in 1994. Interest rates are expected to fall in 1992 from 1991, reflecting the sluggish economy and
the low level of interest rates at the end of 1991. As the expansion
becomes more robust, however, short-term interest rates are expected to rise somewhat through 1995 before declining slightly in
1996 and 1997. Long-term interest rates are expected to fall gradually through 1995 and then flatten out, reflecting continued, relatively low inflation and lower uncertainty about fiscal policy and
the economic outlook.
Under the business-as-usual projection, real growth in 1992
would likely be around 1.6 percent, well below the rate that would
be achieved with the adoption of the President's policy proposals. The period of slow growth that has existed since early 1989
would likely continue in 1992. By 1993 business-as-usual growth
picks up some, but remains more than a half percentage point
below policy growth. The differences in real growth in the policy
and business-as-usual forecasts persist beyond the short-term outlook because of the productivity-enhancing nature of the President's proposals. In the policy forecast, real growth in the 3-percent
range continues through the mid-1990s. With business-as-usual,
growth averages only in the 2.5-percent range.
ACCOUNTING FOR GROWTH IN THE LONGER TERM
In the longer term the main determinants of average growth are
the factors that influence the overall supply of goods and services
generated in the economy. One way to focus on supply factors is to
decompose real GDP growth into four components: (1) labor force
growth, that is, the growth in the number of people available for
work each year; (2) the change in the share of the labor force that
is employed, or the employment rate; (3) the growth in the number
of hours an employed person works each year, represented as the
growth in average weekly hours; and (4) labor productivity growth,
or the growth in the amount of goods and services that can be produced with an hour of labor.
Table 2-4 shows the contribution of these various factors in average real GDP growth for various periods. The first three columns
provide historical comparisons for periods from business-cycle peak
to business-cycle peak. The final column shows the contributions



77

for the period incorporating the historical performance since the
recent business cycle peak (in the third quarter of 1990) along with
the policy forecast period. Economic growth is projected to average
2.2 percent a year from the business cycle peak in 1990 through the
end of the forecast in 1997.
TABLE 2-4.—Accounting for Growth in Real GDP, 1960-97
[Average annual percent change]
1960 II
to
1981 III

Item

1973 IV
to
1981 III

1981 I
to
1990 I

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

1990 III
to
1997 IV
0.9
.2

2.1
-.1

2.4
-.4

1.1
.0

2.0
.1

2.0
.1

1.2
-.0

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

2.1
-.6

2.1
-.7

11) EQUALS: Nonfarm business output
12) LESS: Nonfarm business output as a share of real GDP2
13) EQUALS: Real GDP

3.3
.1

3.2

3) EQUALS: Civilian labor force
4) PLUS: Civilian employment rate
5) EQUALS: Civilian employment
6) PLUS: Nonfarm business employment as a share of civilian employment1
7)
8)
9)
10)

2.1
.0

1.2
.0

2.1

1.2
1.4

1.9
_ 2

2.9
.2

2.6
.4

2.1

2.7

2.2

1
2

Line six translates the civilian employment growth rate into the nonfarm business employment growth rate.
Line 12 translates nonfarm business output back into output for all sectors, or GDP, which includes the output of farms and
general government.
Note.—Data may not add due to rounding.
Time periods are from business cycle peak to business cycle peak to avoid cyclical effects.
Sources: Council of Economic Advisers, Department of Commerce, Department of Labor, Department of the Treasury, and Office
of Management and Budget.

This projection assumes an average rise of 1.1 percent a year in
the labor force over the 1990-97 period, a lower growth rate than
during the 1980s. Slower labor force growth results from smaller
increases in projected labor force participation rates and from
slower growth in the working-age population. Although the labor
force is assumed to grow 1.3 percent a year in the forecast, the low
growth of the labor force that occurred in late 1990 and in 1991
pulls down the average for the entire period.
Decreases in the unemployment rate from the third quarter of
1990 through the end of the forecast are expected to contribute
only slightly, on average, each year to real GDP growth. The largest contribution from a falling unemployment rate occurs in the
1992-94 period. As the economy nears full employment, increases
in employment make smaller contributions.
A key assumption underlying the average 2.2-percent growth
rate is that labor productivity growth will average 1.4 percent a
year. After 1992, assuming the Administration's pro-growth initiatives are adopted, underlying economic growth is expected to approach 3 percent and labor productivity growth is projected to be
about 1.6 percent. That is very close to the average rate of produc


78

tivity growth since 1959. It is below the 2.4-percent rate from 1959
to 1969, but above the average rate for the 1980s. This rise in labor
productivity will be facilitated by the higher level of capital accumulation that results from lower real interest rates, lower Federal
borrowing as a percent of GDP, and the productivity-enhancing
components of the President's proposals.
SUMMARY
• The economy is expected to remain sluggish in early 1992, but
a renewed pickup should occur by midyear. The prompt enactment of the President's proposals would boost the economy in
the short run and promote higher growth in the long run.
• However, if the President's proposals are not adopted promptly
and a "business-as-usual" environment prevails, growth in the
economy will be lower in both the short and long run.
• In the long run, the President's proposals will promote higher
private capital accumulation and faster productivity growth.
The economy's underlying medium-term growth potential is
expected to be about 3 percent a year. Inflation and nominal
interest rates are projected to rise slightly in the short run, but
then fall gradually thereafter.

CONCLUSION
Following a year and a half of slow growth, the Nation's economy entered a recession in the second half of 1990. In the late
spring of 1991, the economy began to recover. However, the recovery lost momentum in mid-summer, and by the end of the year the
economy was sluggish at best.
It is natural to point to the oil shock and the resulting decline in
confidence as the reason the economy fell into recession. However,
growth in the economy already had been slowed by a number of
structural imbalances and the lagged effects of tight monetary
policy in earlier years. The flat economy at the end of 1991 was evidence that the structural imbalances in the economy were larger
and taking longer to work off than had been expected.
Growth is expected to remain sluggish in the early part of 1992.
By midyear, however, the economy is expected to improve. The
prompt enactment of the President's pro-growth proposals announced in the State of the Union address will spur economic recovery and promote long-term investment and growth, as well as
improve the Nation's competitive position in global markets.
Over the longer term, the Omnibus Budget Reconciliation Act establishes discipline to lower the multiyear structural Federal deficit and therefore, Federal borrowing requirements. Combined with
a monetary policy aimed at maintaining solid economic growth



79

while gradually reducing the underlying inflation rate, both nominal and real interest rates are likely to remain relatively low.
Credible monetary policy and growth-oriented fiscal policy will
facilitate higher levels of capital accumulation, raise labor productivity and thereby real wages, and enhance the economy's growth
potential.




80

CHAPTER 3

The American Labor Market
A SLUGGISH ECONOMY GENERALLY draws attention to
short-run labor market conditions that affect the economic wellbeing of American workers and their families. Concern is naturally
focused on the decline in job prospects and the increase in unemployment brought about by recession. Yet, longer run trends that
underlie these shorter run events have profound importance as
well. Although a temporary spell of unemployment disrupts a
worker's earnings for weeks or months, the creation of job opportunities and the growth in real wages over a person's career determine the standard of living over his or her lifetime. Chapter 2 discussed the current cyclical situation. This chapter reviews the
longer run developments.
Despite the temporary setbacks of several recessions, employment increased by 38 million, from 71 million in 1971 to 109 million in 1991. This 53-percent growth far surpassed that of most
other major industrialized countries. Employment in Japan increased only half as fast; employment in France, Germany, and the
United Kingdom grew at less than one-fifth the U.S. rate.
The U.S. economy not only provided employment for an extra 38
million workers, it also delivered improved opportunities in the
labor market. The average wage level, adjusted for inflation, rose
by 18 percent from 1971 to 1990 (the most recent year for which
statistics are available).
To put this performance of the U.S. economy in expanding labor
market opportunities in perspective, consider an extreme example
of a rapid increase in the supply of workers. Imagine that suddenly
tomorrow, with each 100 workers, 53 companions showed up at the
factory, office, or farm. It is obvious that the economy would be
hard pressed to employ those workers and that such an abrupt enlargement in the supply of workers would exert a strong downward
pressure on wages.
In the course of the actual process of adjustment to the changing
market, a gradual but significant shift toward high-skilled jobs has
taken place. The evolutionary shift toward service sector employment and the restructuring within all industries in response to
technological change has favored workers with more years of
schooling. This trend is most evident in the real wage increase of



81

better educated and more experienced workers, despite the sizable
increase in the supply of workers with these attributes.
Women have benefited from changes in the workplace. Since the
late 1940s women have been entering the labor market in increasing numbers and now account for 46 percent of civilian employment. Women's job prospects have improved as they have attained
more years of schooling and more work experience. As a result,
their unemployment rates fell to the same levels as men's, they
moved into traditionally male-dominated occupations, and their
wages grew faster than men's wages.
Accompanying these long-term positive trends in the labor
market were some troubling developments. Perhaps reflecting the
magnitude of the task of absorbing such a large number of new
workers, average real wages have grown, on average, less than 1
percent a year since 1973. Real wages of successive age cohorts of
low-skilled workers—particularly young men with a high school
education or less—have actually declined.
The slower rate of growth in average real wages is tied to the
slower growth of labor productivity. Many factors have contributed
to the productivity slowdown, in particular the reduced growth rate
of capital per worker. Unless productivity increases at a faster
rate, real wage growth will remain modest, and the rate of advance
in living standards will fall below the robust pace that Americans
enjoyed in the quarter century after World War II.

EMPLOYMENT GROWTH
Over the long-term, despite the temporary setbacks of several recessions, the U.S. economy has demonstrated great capacity to provide jobs to an increasing percentage of the population. Significant
shifts in demand and supply accompanied this growth in jobs.
Technology and product changes increased demand for more educated workers, while the strong demographic forces of the babyboom generation and changing preferences of workers regarding
work and schooling drove much of the change in supply.
CHANGES IN LABOR DEMAND
The steady increase in the demand for more educated and more
skilled workers has been a dominant force in the U.S. labor market
during the last two decades. The increase in the supply of collegeeducated men and women kept pace with demand throughout most
of the 1970s. During the 1980s, though, demand outstripped the
rising supply, as evidenced by the increasingly higher wage premium for college-educated workers.
Two structural changes account for most of the demand for more
educated workers. First, changing preferences and demography, as



82

well as increased international trade, led to relative changes in the
demand for different products and services. Second, and more importantly in recent years, changes in technology within industries favored people who could master complex technologies and learn new
methods quickly.

Changes in Product Demand
Changes in product demand have been reflected in the expansion
of industries that employ a higher-than-average proportion of college-educated workers and a contraction in industries that tend to
hire a proportionally higher number of high-school-educated workers.
Contraction in the share of the Nation's output of mining, an industry in which the percentage of workers without college education is high, has diminished the demand for workers with less
formal schooling. Manufacturing is another industrial sector that
has traditionally employed less educated workers. Manufacturing
employment has been declining as a share of total employment at
least since World War II. In contrast with mining, however, the
share of manufacturing in total U.S. output has been virtually constant. Thus, the decline in manufacturing employment does not
portend the deindustrialization of the U.S. economy. It reflects
rather the productivity gains that have been achieved in this industrial sector.
The most significant expansions in demand for college-educated
workers have occurred in finance, various government sectors, and
professional services. The health care sector, which employs a high
proportion of college-educated workers, provides a striking example. The aging of the population, advances in medical technology,
and a general increase in demand commensurate with rising incomes have increased the health care sector's share of output from
7 percent to 12 percent between 1970 and 1989. Its share in employment doubled from 4 percent to 8 percent.
Occupations in health care and similar sectors place a high value
on cognitive and interpersonal skills. These skills are acquired primarily through formal education, and recent studies show that
they are highly correlated with years of schooling. Therefore, as
employment shifts to the service-producing sectors, demand for
workers with more formal education increases.
Occupations with high concentrations of college-educated workers have typically grown faster than occupations with less educated
workers. Managerial and professional specialty occupations, which
are found primarily in the professional services sectors, have the
highest average level of education of the major occupation groups.
Sixty-one percent of the people holding these jobs had 4 or more
years of college—more than twice the average for all occupations.
Between 1983 and 1991, the number of these jobs grew nearly twice



83

as fast as total employment. In contrast, jobs in the occupational
classification of operators, fabricators, and laborers, which are typically filled by workers with low educational attainment and located
primarily in manufacturing, grew about half as fast as total employment.
Technological Change
Technological changes that have brought about internal restructuring within industries and firms have also increased the demand
for workers with greater educational attainment, particularly in
the 1980s. The most extensive restructuring in favor of more educated workers occurred in retail trade, government, and professional and financial services. Manufacturing, which 20 years ago had
the least educated work force among industrial sectors, has hired
increasing proportions of college-educated workers. In 1988, for
example, 45 percent of all workers in high-skill manufacturing
industries had a college education, up from 28 percent in 1968. Lowskill manufacturing firms have nearly doubled the percentage of
such workers in their work forces, from 9 percent to 17 percent.
Computer technology has extensively changed the nature of the
workplace and the operations of firms. In 1984, 8 percent of businesses reported using personal computers. By 1989 that figure had
climbed to 36 percent. Proficiency in operating computers has
become a requisite for an increasing number of jobs, from secretaries to production-line workers. This proficiency is linked to increased years of schooling; college-educated workers are twice as
likely to use computers as are workers with only high school degrees.
Another development has been the shift away from material
handling to information handling. Within manufacturing, the
input of knowledge, rather than the input of material, accounts for
an increasing share of the value added in the production process.
The cost of the material content, such as the steel and plastic used
in the manufacture of an automobile, for example, has steadily declined relative to the price of the automobile. Instead, the price increasingly incorporates the cost of knowledge embedded in features
of the automobile and the production process: the car's advanced
design, including the use of computer-aided engineering, the substitution of computer-controlled devices for mechanically controlled
devices used in the operation of the vehicle, and the use of robotics
in the assembly of the automobile. Consequently, the demand for
people with the ability to work with and process knowledge and information, rather than with physical inputs, has increased.

CHANGES IN LABOR SUPPLY
Changes in labor supply have been propelled by demographic
changes, as the post-World War II baby-boom generation has



84

moved through the labor force, and by changes in people's choices
regarding work and school. During the 1970s a large portion of the
baby-boom generation began entering the labor force. By the 1980s,
most of this generation had reached working age, and many had
moved toward the midpoints of their careers. Consequently, the
growth of the working-age population slowed considerably, and the
labor force gradually aged and gained more work experience. At
the same time, the percentage of the working-age population employed increased sharply.
Chart 3-1 shows this rising ratio of employment to working-age
population during the 1980s. Also displayed is a decline in the average number of hours worked. Between 1965 and 1982, average
annual hours worked fell by about 10 percent, from 1,977 hours to
1,772 hours. This trend occurred even though the length of the average work week of full-time employees remained constant at
roughly 43 hours.
Chart 3-1 Employment-to-Population Ratio and Hours Worked per Worker
Since the early 1980s, the percentage of the working-age population employed has grown. Hours
worked per worker fell from 1965 to 1982 but have remained roughly constant since.
Hours

Ratio
0.68

2,050

Annual Hours Worked
Per Worker
2,000

Employment-toPopulation Ratio

(left scale)

0.66

(right scale)

1,950
0.64
1,900
0.62

1,850

0.60

1,800

1,750

I

I

I

I

I

I

I

0.58

1959 1961 1963 1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989
Note: Population refers to people 16 years and older.
Sources: Council of Economic Advisers and Department of Labor.

Most of the decline in average hours worked is explained by an
increase in part-time workers. The fraction of the labor force that
worked part time rose from 18 percent in 1965 to 25 percent in
1982, and then declined to 21 percent by 1990. The majority of
workers holding part-time, rather than full-time, jobs do so by
choice. Many people choose this work option to maintain flexible



85

work schedules. Nonetheless, in recent years about 40 percent of
part-time workers surveyed say they would prefer full-time jobs.
Women in the Work Force
The increasing participation of women in the work force accounts for the upward trend in the employment-to-working-age
population ratio. Since the late 1940s, when about 31 percent of
working-age women were employed, women have accounted for 60
percent of the increase in employment. In 1991, 54 percent of all
working-age women and 70 percent of all working-age men were
employed. The fraction of men in the labor market has been steady
in recent years.
Women's increased presence in the work force is related to
changes in social norms and behavior, which gained momentum
during the 1960s and continued throughout the 1980s. Women
found increasingly greater acceptance in jobs that were more
career oriented and higher paying than the jobs they typically
filled during the 1950s and 1960s. Even in the relatively short
period between 1983 and 1989, for example, the proportion of working women holding traditionally male-dominated managerial and
professional specialty jobs increased from 22 percent to 26 percent.
Roughly the same percentage of working women now hold these
jobs as do working men.
The increase in the number of working women is also associated
with changes in American families. Women are marrying at an
older age, divorce rates are up, and a greater percentage of married women are working outside the home. The proportion of families maintained by women increased from 11 percent in 1970 to
about 17 percent in 1990.
As women's attachment to the labor force has increased and they
have acquired more years of schooling, their labor market performance has increasingly resembled that of men's. One noticeable
change in recent years has been the convergence of men's and
women's unemployment rates. Throughout most of the post-World
War II period, women had higher unemployment rates than men,
as shown in Chart 3-2. In 1980, however, women's unemployment
rates began to match those of men, and they have remained virtually the same since that time. As discussed in a subsequent section,
women's wages have increased relative to men's during the last
decade, even as the relative supply of working women has increased.
Married women have been steadily increasing their participation
in the labor market since at least 1970, when data first became
available. The proportion of married women in the paid work force
rose from 39 percent in 1970 to 50 percent in 1980 and 58 percent
in 1990. The increase in both the number and percentage of married women working was larger in the 1970s than in the 1980s. The



86

Chart 3-2 Unemployment Rates By Gender
After exceeding the unemployment rate of men for most of the post-World War II era, the
unemployment rate of women has converged with that of men.
Percent
12

10
Women

I

1948

1952

I I I I I I I I I i I I I I I I I I I I I I I I I I I I I I I

1956

1960

1964

1968

1972

1976

1980

1984

1988

Source: Department of Labor.

common thread through this period is the sizable increase in real
wages earned by wives in most income brackets. As the real wages
available to them increased, the cost (in the form of wages forgone)
of working on an unpaid basis in the home increased.
Diversity in Worker Characteristics
Like the U.S. population as a whole, the U.S. labor market is a
melting pot of different races, nationalities, and ethnic groups. Categorizing the rich diversity of the work force into simple groups is
very difficult, and possibly misleading, but it is useful to focus in
particular on the progress of black, white, and Hispanic men and
women. Each group has increased its participation in the labor
market during the last several decades, but some groups have fared
better than others, as market conditions and educational and employment opportunities have changed.
In 1990 blacks accounted for 11 percent of the civilian labor
force, Hispanics accounted for 8 percent, and whites accounted for
86 percent. (These percentages add to more than 100, because the
Census Bureau also identifies people of Hispanic origin by race.)
Since 1980 the labor force shares of both blacks and Hispanics have
increased, from 10 percent to 11 percent for blacks and from 6
percent to 8 percent for Hispanics.



87

In 1990, 64 percent of the white population was employed, compared with 56 percent of the black population and 62 percent of the
Hispanic population. These rates were higher in 1990 than in 1980
for all these groups. Unemployment rates also varied, with whites
experiencing the lowest rate at 6.3 percent, as of December 1991.
The rate for Hispanics stood at 9.7 percent, and the rate for blacks
was 12.7 percent. Although the rates have changed over the course
of business cycles, the ordering has typically remained the same.
The flow of immigrants into the United States continues to add
to the size and diversity of the labor force. More than 6 million
people were admitted into the country in the 1980s, more than in
any other decade since the early 1900s. Nearly a million immigrants from Mexico were admitted, and more than 2V2 million
from Asian countries, principally, Vietnam, China, India, Korea,
and the Philippines. More than a third of the immigrants were the
spouses or children of U.S. citizens or alien residents. Immigrants
typically have had less schooling than the average U.S. citizen and
thus have added disproportionately to the supply of less educated
workers. Recent immigration laws have favored admitting a greater number of highly skilled people into the country.
Although the entry of immigrants raises the supply of labor, particularly that of lower skilled workers, studies provide no conclusive evidence of whether and by how much immigration has affected employment or earnings of other U.S. workers. One recent careful study concluded that immigration had a negligible effect on the
employment status of less-skilled native workers and reduced their
wage rates by only a fraction of 1 percent. Moreover, numerous
studies suggest that the long-run benefits of immigration greatly
exceed any short-run costs. The unskilled jobs taken by immigrants
in years past have often complemented the skilled jobs typically
filled by the native-born population, increasing employment and
income for the population as a whole.
Educational Attainment
The labor force has become more educated over the last 20 years.
Chart 3-3 shows that the proportion of workers in the labor force
with 4 or more years of college has more than doubled since 1970.
That means that the number of workers with college education has
grown by more than 18 million since 1970. The growth in educational attainment for women has exceeded that of men. The proportion of women who have completed 4 or more years of college
grew from 4 percent in 1970 to 11 percent in 1991, while the proportion of college-educated men increased from 10 percent to 15
percent. The rate of increase for men slowed during the latter half
of the 1980s, while the rate for women grew at about the same pace
throughout the entire period. Although a greater proportion of



male workers have college educations than female workers, the difference fell by more than half from 1980 to 1990.
Chart 3-3 Percentage of Civilian Labor Force With 4 or More Years of College
The educational attainment of both men and women in the labor force has increased over the
last two decades.
Percentage
30

25
Total with 4 or More
Years of College
20
Men with 4 or More
Years of College
15

10
Women with 4 or More
Years of College

i

I

i

I

i

I

I

I

I

I

I

I

i

1970
1972
1974
1976
1978
1980
1982
Note: Data unavailable for 1988, percentages extrapolated.
Sources: Council of Economic Advisers and Department of Labor.

I

I
1984

i

I
1986

i

I
1988

I
1990

The proportion of black workers who had completed 4 or more
years of college rose from 11 percent in 1980 to 16 percent in 1989.
The proportion of white workers with college educations increased
from 23 percent to 27 percent. Educational attainment of Hispanic
workers has also risen. The proportion of Hispanic workers who
had completed high school increased from 33 percent in 1970 to 51
percent in 1989. The proportion having completed 4 or more years
of college climbed from 5 percent to 10 percent during the same
period. These proportions are lower than for blacks or whites: In
1989, 65 percent of black workers and 78 percent of white workers
had completed 4 years of high school.

SUMMARY
• Employment grew during the last two decades at rates that far
surpassed those of other major industrialized countries.
• The proportion of whites, blacks, and Hispanics working in the
paid labor force increased during the last decade.
• Employment increasingly favored workers with high levels of
skills. The work force, in general, became more educated, as




89

the percentage of black, white, and Hispanic workers who had
completed college increased.
• Women have entered the work force at a faster rate than men
as a result of changing social norms and improving job prospects. Through greater educational attainment and work experience, women made considerable gains, both in absolute terms
and relative to men.

PRODUCTIVITY TRENDS
The key to each worker's well-being and the Nation's prosperity
is productivity growth. An increase in the Nation's standard of
living, commonly measured as output per person, depends upon
three factors: a greater percentage of the population employed, an
increase in average hours worked, and greater labor productivity—
output per hour worked. The historical trend in the United States
has been toward a rising rate of participation in the labor market
and lower hours per worker. Labor productivity has also grown historically, although its low rate of advance in the last two decades is
a matter of great concern.
Long-term advances in labor productivity and employment have
provided the United States with the highest standard of living in
the world. Based on the commonly used measure of gross domestic
product (GDP), the U.S. economy produced, on average, $45,918
worth of goods and services per worker in 1990, or $22,056 per
capita. GDP per person in the United States was 25 percent above
Japan and 35 percent above Germany. Another way to measure the
relative prosperity of U.S. workers is to compare their purchasing
power—the amount of goods and services that workers can purchase per hour worked. American workers have greater purchasing
power than workers in most other major industrialized countries,
although the leadership gap has narrowed.
The variation in hours worked per worker and in the fraction of
the labor force in paid employment is limited. Therefore, long-run
advances in living standards depend upon continuing improvements
in productivity. Even a modest annual growth rate in productivity,
compounded over a long time, can make a very large difference.
Growth of 2 percent maintained over 50 years would generate an
increase in annual output per worker from the current level of
$45,918 to $123,592 in today's dollars. A seemingly small increase
in growth rates, similarly maintained over years, can have large
consequences. A growth rate of 2.5 percent, instead of 2 percent,
would raise output per worker to almost $160,000 after 50 years.




90

THE HISTORICAL RECORD OF PRODUCTIVITY
GROWTH
Chart 3-4 pieces together a century-long path of average U.S.
labor productivity in the private business sector. The vertical axis
of this graph uses a "ratio scale," which means that equal vertical
distances correspond to equal percentage changes in labor productivity. The slope of the line, therefore, corresponds to the percentage
growth rate of productivity; a constant upward slope implies a constant annual percentage rate of growth of productivity.
Chart 3-4

Historical Growth in Labor Productivity

Labor productivity has increased steadily over the past century. Productivity growth has slowed
in recent years.
Index, 1929=100 (ratio scale)
500

1889

1899

1909

1919

1929

1939

1949

1959

1969

1979

1989

Note: Labor productivity is private business sector GDP per hour. Percentages are average annual rates
of change for periods indicated.
Sources: Council of Economic Advisers, Department of Labor, and National Bureau of Economic Research.

The long-term upward trend in labor productivity is clearly visible. Other, more subtle patterns are also seen: the downtick associated with the depression of the 1930s, the upward spurt in measured productivity during World War II, and the downturn of the
postwar recession. Laying a ruler on the graph, though, one is
tempted to see three historical epochs: from 1889 to 1937, when
productivity growth averaged 1.9 percent a year; from 1937 to 1973,
when productivity grew 3.0 percent a year; and the period since
1973, when productivity growth averaged 0.9 percent a year.
A qualitatively similar picture to this one characterizes the
record for most other industrialized countries as well—long-term
growth, with middle-level growth before the 1930s Depression, rela


91

tively high growth coming out of the Depression and World War II,
and relatively low growth starting in the early 1970s. This suggests
that factors common to all countries, rather than factors specific to
any one country, underlie these trends.
Looking at labor productivity over the last century, some economists contend that the slowdown in recent years should not necessarily be viewed as an historical aberration. Rather, the high
growth rates from the late 1930s to the early 1970s may well be the
exception, not only for the United States, but for all countries. Proponents of this view attribute the historically high average growth
rate between 1937 and 1973 to a backlog of ideas and technology
that went unused and investment projects that were postponed
during the depression and World War II. In addition, new wartime
technologies were developed that were eventually adopted for
peacetime use. When the war ended, many products incorporating
these new technologies were developed and produced. Pent-up consumer demand and the rebuilding of the economies of Europe and
Japan also created a tremendous demand for investment in new
factories and equipment. According to this view, as the surge in
new investment slowed and the backlog of new ideas was depleted,
growth rates in these countries slowed.
CAUSES OF THE SLOWDOWN IN PRODUCTIVITY
GROWTH
Although many factors have contributed to the recent slowdown
in productivity growth, most researchers look to three broad classes of explanations: a reduced rate of capital accumulation, a
change in the rate of technological advance, and a reduced rate of
improvement in the skill levels of the labor force. Government policies can have important effects on these determinants and hence
on productivity growth.
Capital Accumulation
The notion of capital represents an attempt to capture the productive facilities with which an economy is equipped. These facilities are of a great variety—examples range from the storage tanks
and pumps at the local gas station to a highly sophisticated complex for manufacturing microprocessing chips for personal computers. In a private enterprise economy, most capital is put in place by
people who bear the risk of success or failure of the investments.
Growth in capital per worker is, over long periods of time, closely
associated with productivity growth. From 1959 to 1973, for example, capital per worker grew by 2.4 percent a year in the private
business sector, while productivity in that sector grew by 2.8 percent. From 1973 to 1989, capital per worker grew at 0.8 percent annually and annual productivity growth was 0.9 percent.



92

According to generally accepted economic analysis, a higher level
of capital per worker should support a higher level of output per
worker. A rough rule of thumb is that a 1-percentage-point higher
level of capital per worker should lead to between a quarter and a
third of a percentage point higher level of productivity.
Such a static view of capital may well understate the effect of
the process of increasing the amount of capital per worker. The new
investment required for such "capital deepening" is often the
method for introducing new technology that contributes to the productivity of existing facilities. New investment may also foster
learning by doing; in putting new equipment in place, companies
discover new ways of doing things that make their further investments more productive.
These hypotheses are consistent with studies that find a high
correlation between investment rates and rates of productivity
growth in different countries. Among major industrialized countries, the United States had the lowest investment rate and the
lowest rate of productivity growth in recent decades. According to a
recent OECD survey, U.S. gross investment as a fraction of gross
national product averaged 19 percent in 1971-80, and 18 percent in
1981-89; the corresponding figure for Japan was 29 percent. Between 1950 and 1979, the United States had the lowest rate of
growth of capital per worker among the "group of seven" industrial countries (the others being Canada, France, Germany, Italy,
Japan, and the United Kingdom). In 1979 the U.S. capital stock
was estimated to be 73 percent older than Japan's.
A major suspect in the slowdown of U.S. productivity growth is
thus to be found not in the labor markets but in the capital markets. To raise the rate of productivity growth, the national rate of
investment should be increased. The Administration has stressed
the need to encourage investment through numerous avenues of
policy, including measures to reduce the tax bias against saving
and investment. Capital formation is also a principal reason the
Administration insists on maintaining budgetary discipline. Expanded government borrowing diverts saving from private investment that leads to higher productivity growth.
Innovation
The pace of innovation, or technological change, is also an important determinant of productivity growth. No number of barns or
buggies could support today's standard of living. New methods of
production, new products, new modes of organization, and new possibilities for communication have been essential to increased
growth and have been forthcoming in remarkable degree. The rate
of technological advance is difficult to measure quantitatively,
other than by reference to productivity change that cannot be ex


93

plained by measurable changes in inputs such as physical capital
and labor.
Innovation requires the commitment of resources to development
of new products and processes and to institutional change (for example, the intricately coordinated overnight delivery systems that
have become part of everyday business life in the United States).
Government can help make the most of opportunities to innovate
in a wide variety of ways, from supporting basic scientific research
to ensuring that tax laws do not discourage innovation.
Government has a particular role in encouraging innovation in
areas where private investors find it difficult to capture the full
benefits of new knowledge. The patent protection afforded an invention permits an inventor to require payments from users and
hence to capture some of the benefits. But the innovation may
convey an idea to another inventor, who is thereby able to create
further benefits, an effect not captured by the original patent. For
this reason, the Administration has favored tax policies that encourage innovation broadly. It has also proposed increased government support for basic and applied civilian research that has widespread benefits exceeding costs and from which the returns are not
fully appropriable by the private firms that might undertake the
research.
Labor Force Quality
Improvement in the "quality" of the labor force, that is, in the
productive abilities of individual workers, is the third major contributor to advances in productivity. The term "human capital"
refers to the stock of knowledge and skills possessed by workers
and is sometimes used to express the analogy with the stock of facilities discussed above. Economists generally agree that the stock
of human capital is an immensely important source of an economy's productive power.
All else being equal, higher levels of schooling in the population
would be expected to lead to higher levels of output per worker.
Productive skills are not perfectly correlated with years of classroom education, however. The quality and relevance of instruction
are significant factors. Moreover, one of the concerns in recent
years is how well the educational system prepares students for the
demands of the workplace. The Administration has made improvements in the Nation's educational system a high priority, as described in the last section of this chapter.

SUMMARY
• Advances in labor productivity and employment have provided
the United States with the highest standard of living in the
world.



94

• In the United States, as in many other industrialized countries, labor productivity growth during the last 20 years has
slowed.
• A slowdown in the rate of capital accumulation is one of several factors contributing to the slower productivity advance.

REAL WAGE GROWTH
Workers' earnings are closely linked to their productivity: In a
competitive market economy, a worker will tend to be paid an
amount equal to the contribution he or she makes to the value of
the employer's output. For the economy as a whole, therefore, real
wage growth is related to the growth of productivity. For individual workers, real wages differ according to worker characteristics
and are affected by shifts in overall supply of and demand for these
characteristics.
AGGREGATE REAL WAGE GROWTH
Various statistical measures of payments to workers are available, all of which track productivity trends closely. A comprehensive measure would include wages and fringe benefits and cover all
workers in the economy. One of the measures that comes closest to
meeting these criteria is compiled by the Bureau of Labor Statistics
and includes payroll employees and the self-employed. Aggregate
real hourly compensation is derived by dividing total compensation
by hours worked by all employed people and adjusting for inflation
using an improved version of the consumer price index, CPI-U-X1
(Chapter 7).
Chart 3-5 shows that although the year-to-year changes are
sometimes small or negative, long-term wage growth has been significant. The average real hourly compensation of workers in the
U.S. economy has increased 69 percent since 1959 and 11 percent
since 1973. The slowdown in real wage growth since 1973 primarily
reflects the sharp reduction in productivity growth, which collapsed between 1973 and 1981, and rebounded only modestly between 1981 and 1990.
The relationship between labor productivity and aggregate real
hourly compensation in the private business sector is seen by comparing their growth rates over time. From 1959 to 1973, labor productivity grew at an average annual rate of 2.8 percent, while real
hourly compensation grew 2.9 percent. After 1973 labor productivity grew at an annual average rate of 0.9 percent, while real hourly
compensation grew at 0.7 percent. Similar patterns occurred in
U.S. manufacturing.
Most other major industrialized countries displayed similar relationships. In Japan's manufacturing sector, for example, productiv


95

Chart 3-5 Real Hourly Compensation, 1959-1990
Total compensation per hour has increased since 1959. Its rate of growth has slowed since 1973.

14.00 -

12.00 -

10.00 -

8.00
1959 1961 1963 1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989
Note: Compensation deflated by CPI-U-X1.
Source: Council of Economic Advisers and Department of Labor.

ity grew at an average annual rate of 10.6 percent and real hourly
compensation grew by 8.2 percent a year from 1959 to 1973. After
1973 annual productivity growth averaged 4.4 percent and real
hourly compensation growth averaged 2.1 percent.
Changes in the attributes—particularly educational attainment
and experience—of the work force have a significant effect on the
change in aggregate wage measures. To demonstrate the effect of
an increase in both schooling and experience (approximated by age)
on real earnings growth, consider what would have happened to
the average level of real earnings if the composition of the work
force had remained the same in 1990 as it was in 1975. If yearround, full-time workers had maintained the same gender, age, and
schooling structure in 1990 as in 1975, and the gender-, age- and
educational-specific earnings levels were those prevailing in 1990,
average real earnings would have been 8 percent lower than they
actually were. Thus, changes in the composition of the work force
can have a sizable effect on the growth of average real wages over
time.




96

WORKER CHARACTERISTICS AND WAGE LEVELS
While aggregate real wage measures reveal the progress of the nation's work force as a whole, they do not identify the progress of any
one group of workers, and they do not show how successive age cohorts of workers have fared. An age cohort refers to all workers
born in the same period.

Earnings Growth Over a Worker's Career
The typical relationship between real earnings and age is that
earnings rise steeply during the first part of a worker's career,
level off in the middle years, and decline in the last years before
retirement. Earnings generally increase faster in the earlier stages
of a person's career—in part because training is usually concentrated in the first few years of a person's career, and, consequently,
skills and knowledge accumulate at a faster rate for younger workers.
The average pattern of earnings growth over a person's career
can be approximated by following workers of the same cohort over
time. Consider, for example, the group of men who in 1980 were
between the ages of 25 and 34, who had completed 4 years of college, and who worked full time year round. To see how their earnings changed in 10 years, one looks at the group of workers in 1990
with the same characteristics, except that they are 35 to 44 years
old.
As shown in Chart 3-6, average annual real earnings of these
men increased 42 percent, from $33,370 in 1980 to $47,401 in 1990.
These numbers refer only to earnings and thus omit other forms of
compensation. Including only year-round, full-time workers implicitly adjusts for much of the variation in the number of hours
worked between these groups or within groups over time.
These real wage increases not only reflect the long expansion of
the 1980s, but also the generally rapid increase in wages that workers typically obtain during the early years of their careers. The
same relatively large increase is observed for college-educated men
who were 25 to 34 years old in 1975. Average real earnings for this
cohort of men were 36 percent higher in 1985 than in 1975.
As expected from the typical age-earnings profile, real earnings
growth was slower for older men than for younger men. Average
real earnings grew 11 percent between 1980 and 1990 for the group
of men with 4 years of college aged 35 to 44 in 1980. Men in these
age groups typically have at least 10 years more experience than
workers who have embarked on their careers around the age of
25. Thus, even though general economic conditions were the same for
all workers, real earnings growth for the various age cohorts differed because they were moving through different stages of their
lifetime careers.



97

Chart 3-6

Earnings Growth Early in Male Workers' Careers

Average real earnings for male workers grew between 1980 and 1990. Earnings growth was
larger for those with higher educational attainment.
1990 dollars

/u,uuu
|
H

60,000

1980, 25-34 Year Old Workers
1990, 35-44 Year Old Workers

58,542

50,000 -

47,401

I
40,000

1
37,333

33,370

30,000 -

20,000

28,9

Us - \

10,000

n
High School
Dropout

4 Years of
High School

4 Years of
College

1
J

5+ Years of
College

Note: Data based on year-round, full-time workers. Dollar values deflated by CPI-U-X1.
Sources: Council of Economic Advisers and Department of Commerce.

Studies indicate that the proportionate rise in earnings in the
first 20-25 years of workers7 careers is similar for all education
groups. The actual earnings growth of a particular group of workers results from the combined effect of more work experience, more
training, developments in the labor market, and capital formation.
The demand shift favoring more highly educated workers is evident in relatively higher wage growth from 1980 to 1990 for workers with more years of schooling (Chart 3-6). The chart also shows
that the cohort of young men with low levels of education achieved
low real earnings growth between 1980 and 1990. For less educated
workers, developments in the labor market counterbalanced the
wage-increasing effect of experience, resulting in a more modest
rise in earnings.
Young and middle-aged women with each level of educational attainment achieved even more marked relative increases, although
women's average annual earnings were lower than men's. As was
the case for men, increased earnings were most marked for the
highly educated women.




98

Earnings Growth from One Cohort to the Next
Chart 3-7 shows how the experience of successive cohorts has
varied. Growth in average earnings by successive age cohorts of
young men has varied by educational attainment. The chart shows
a general, but uneven, rise from 1975 to 1990 in average earnings
of successive cohorts of men with at least 4 years of college. The
chart also shows a deterioration of average earnings of successive
cohorts of less educated young men. For older men the pattern is
less pronounced.
Chart 3-7

Earnings of Cohorts of Young Men, 1975-1990

Average real earnings for 25-34 year old men grew only for workers with higher educational attainment.

20,000

-

10,000

High School
Dropout

4 Years of
High School

4 Years of
College

5+ Years of
College

Note: Data based on year-round, full-time workers. Dollar values deflated by CPI-U-X1.
Sources: Council of Economic Advisers and Department of Commerce.

A similar pattern holds for successive cohorts of women, in all
age categories. Average earnings levels rise little or decline for the
less educated. Average earnings levels rise for the more educated.
The common element for all cohort-education groups is the general increase in productivity. The relatively better wage growth experienced by the more highly educated groups is consistent with
the previously discussed shift in demand for high-skill jobs.
SUMMARY
• Aggregate real wages have grown by 69 percent since 1959 and
by about 11 percent since 1973. Slower labor productivity




99

growth during the last two decades slowed the growth in average real wages.
• Tracking workers within specific age cohorts over time reveals
that most cohorts of young and middle-aged workers, men and
women at all education levels, experienced increases in average real wages during the 1980s.
• The increase in average wages achieved in the early years of
their careers was higher for workers with greater years of
schooling.
• The average real wage of successive age cohorts of better educated men and women generally increased between 1975 and
1990, while wages of less educated workers declined.

WAGE DISPERSION AND MARKET FORCES
The shifting pattern of earnings growth for workers with different attributes has been one of the notable labor market developments in recent decades. Studies have shown that, for workers as
a whole, the result has been some tendency toward equality in
wage levels in the lower half of the earnings distribution, and a
widening of the spread of earnings in the upper half of the distribution. When the earnings of men are considered separately, a tendency to greater dispersion is observed for the entire distribution. A
growing spread between the earnings of those with college degrees
and those with high-school or lesser levels of education is particularly noticeable. Even within groups of workers with similar years
of schooling and experience, however, the wage dispersion increased,
suggesting an increasing role of differences in work skills not
attributable to the broad measures of years of experience or schooling.
WAGE PREMIUMS FOR EDUCATION
Educational attainment is one of the primary characteristics that
distinguishes high-income from low-income workers. The wage gap
between workers with a college education and those with only a
high school education began to widen at about the same time that
the general increase in wage dispersion began during the late
1970s. As shown in Chart 3-8, the income (which consists predominately of labor earnings) of men with 4 years of college rose after
1979 relative to the income of men with only 4 years of high school.
Before then, the income premium for college-educated workers actually had declined slightly. The income premium for women,
based on the same differences in schooling, has followed the same
trend since 1979 and is noticeably higher than for men.
The earnings premium for college-educated workers over the last
two decades is consistent with a steadily increasing demand in the



100

Chart 3-8

Ratio of Median Incomes of College- to High-School-Educated Workers

The premium for an advanced education has increased for both men and women since 1979.

1.60 -

1.40 -

1.20 -

1.00
1967

1969

1971

1973

1975

1977

1979

1981

1983

1985

1987

1989

Note: Ratio of median income of people who have completed 4 or more years of college to median income of
people who have completed 4 years of high school.
Source: Department of Commerce.

market for their skills. The proportion of the labor force with college educations increased from 14 percent to 22 percent between
1970 and 1980. As shown in Chart 3-8, the college premium was
nearly constant this period. By 1990 the proportion of the labor
force with college education had risen to 27 percent. The college
premium rose significantly in the 1980s.
The current wage premium paid to college-educated workers
should serve as an incentive for high school students to go to college.
A recent study indicated that young people base decisions about
college enrollment in part on their expectations of higher future
earnings. This study also suggested that the increased wage gap
between college and high school graduates has induced a significant
number of students to enter or continue with college.
WAGES OF WOMEN
After remaining constant for most of the 1960s and 1970s, the
difference between women's and men's earnings narrowed during
the 1980s. Between 1980 and 1990, the median earnings for yearround, full-time female workers rose from 60 percent to 72 percent
of the corresponding figure for men. The increase is particularly
notable in light of the increased supply of female workers. In


101

creased education was an important factor in the narrowing of the
wage differential. The female-to-male earnings ratio for college-educated workers is higher than that of high-school-educated workers.
In 1990 the ratio was 84 percent for college-educated workers between the ages of 25-34, compared with a ratio of 73 percent for highschool-educated workers.
Increase in labor force experience was also a key factor in narrowing the wage gap. Over their careers, many women enter and
leave employment as they assume family or other responsibilities.
As a result, women have tended to acquire fewer years of experience than men over a fixed period of time. In recent years, however, women have spent longer sustained periods employed and have
accumulated more training and job experience. This increased experience has paid off as women have entered traditionally male-dominated, higher-paying occupations in increasing numbers. Consequently, the income growth over women's careers during the 1980s
appears to be much closer to that of men in the same cohort than
was true for earlier cohorts of workers.
This trend can be seen by examining the change over time in the
ratio of male worker income to female worker income for different
cohorts of workers. Table 3-1 shows that the income ratio fell over
10 years for workers who were between the ages of 25 and 34 in
1970. The ratio for workers in this age cohort was 65 percent in
1970 and 56 percent in 1980—when the group was 10 years older.
That means that women did not maintain their earnings position
relative to men as they grew older.
TABLE 3-1.—Ratio of Women's Income to Men's Income (Percent)
Year

Age Groups

1970

25-34

65

35-44 ...

1990

1980
69
56

69

Note.— Data are median annual income of year-round, full-time workers.
Source: Department of Commerce.

The age cohort that was between the ages of 25 and 34 in 1980
started out with an income ratio (69 percent) that was slightly higher
than the rate for the previous cohort in 1970 (65 percent). But unlike
the earlier cohort, the ratio stayed the same (69 percent) in 1990.
Thus, women's age-earnings paths were comparable to men's during
the 1980s.

WAGES OF BLACK WORKERS
In 1990 the median annual earnings of black men 25 years or older
working year round, full time were 72 percent of the median annual




102

earnings of comparable white workers. For women 25 years or older
working year round, full time, the ratio was 91 percent. A recent
study has shown that these ratios have remained relatively constant
through the 1980s. From 1963 to 1980, the earnings of black male and
black female workers rose relative to comparable white workers.
The black-white wage differential is affected by several factors.
One factor is the relative reduction in employment in industries
that have traditionally employed a proportionately higher number
of black workers receiving relatively high wages. Another factor
has been the diminished employment opportunities in some central
cities and regions of the country with a high concentration of the
black population. Furthermore, the shift in demand to high-skill jobs
disproportionately affected blacks, whose educational attainment,
while improving, still lags behind that of whites.
Many studies document that discrimination in the labor market
also contributes to wage and employment differentials. The Administration strongly opposes discrimination.
SUMMARY
• Median income of college-educated workers, both men and
women, rose relative to high-school-educated workers in the
1980s.
• As women gained greater work experience and more schooling
and made inroads into traditionally higher paying, male-dominated occupations, the difference in wages between men and
women narrowed during the last decade.
• The difference in wages between white and black workers
stayed roughly the same during the 1980s. While educational
attainment improved for both black and white workers, there
was still an educational gap, which contributed to the earnings
differential.

UNEMPLOYMENT
Workers voluntarily leaving their jobs to find other jobs or
people entering or reentering the labor force sometimes experience
spells of unemployment. Involuntary unemployment occurs when a
worker is laid off or dismissed. During the last business cycle, the
proportion of the unemployed who lost their jobs involuntarily fluctuated between 45 and 60 percent, depending upon economic conditions. During the latter half of 1991, for example, when the economy was sluggish, about half of the unemployed had involuntarily
lost their jobs.
For statistical purposes, everyone over 16 years of age who is
either employed, actively searching for employment, or awaiting
recall from a lay-off is considered part of the labor force. Estimates



103

of the number of people in each of these categories are obtained by
surveying a random sample of the population each month. Those
interviewed are asked whether they worked in the week prior to
the survey, and if not, whether they were on layoff or were searching for work. The unemployment rate is defined as the number of
people in the labor force who are not working divided by the
number of people in the labor force.
Analysts sometimes extend the category of the unemployed to include "discouraged workers." Discouraged workers are those people
who say they want a job but have stopped looking because they do
not think they can find one. Because such people are not actively
searching for employment, they are not technically defined as
being in the labor force and therefore are not included in the
standard unemployment measure. In the fourth quarter of 1991, just
over 1 million people were counted as discouraged workers, about
one-eighth the number of people who were officially recorded as
unemployed.
Manufacturing employment is very sensitive to swings in aggregate demand. Mass production techniques, standardized products,
and the durable nature of most goods produced in the manufacturing sector permit companies to stockpile items to ensure a ready
supply for customers. At times, manufacturing companies respond
to rising inventories by cutting back production. The usual practice
is for companies to reduce their employment for short periods of
time until inventories are drawn down to the desired level.
Service jobs, on the other hand, are more oriented toward performing tasks on demand. By their nature, services cannot be
stored. They usually are performed at the time the customer requests assistance. Although people may postpone some services
when the economy softens, service sector employment does not exhibit the wide swings that characterize the manufacturing sector.
Service workers are less likely than manufacturing workers to
become unemployed during an economic downturn.
To speak of "economic downturn" may give a misleading impression of the nature of much unemployment. Although many workers
can reasonably expect to be recalled when general business conditions improve, many others are permanently laid off and their jobs
abolished. Such dislocations can occur in good times as well as bad,
and they may affect entire regions. A commonly cited example is
the historical movement of the shoe and textile industries from
New England to the South. These industrial shifts can affect
skilled as well as unskilled workers. Nor are the changes necessarily wholly unexpected. Present projections of Federal Government
defense expenditure imply substantial job dislocation over the
coming years for many highly trained engineers and others em-




104

ployed in the defense industries, as well as for those entering the
civilian labor force from the armed services.
Dislocated workers face special problems, particularly if they
have been employed in a job that has involved developing knowledge and skills specific to a particular employer. Their reemployment may require moving to another geographical location and acquiring new training. As discussed in a later section, government
programs can play a role in facilitating such transitions.
Workers with more classroom education often possess knowledge
that is more general and can be applied to a variety of jobs, and
thus they may find it easier to switch employers. The significantly
lower unemployment rate for people with college education is consistent with this point (Chart 3-9). The unemployment rate for college graduates is typically one-quarter the rate for people with less
than a high school degree.
Chart 3-9 Unemployment Rate By Educational Attainment, 1990
Unemployment rates are lower among people with higher levels of education.

Percent

12

10

8

6

4

2

;•

12.4

12.1

^

-O
- •

H

2.3

n
MEN

I

High School
Dropout

|

4 Years of
High School

2.5

WOMEN

4 or more Years
of College

Source: Department of Labor.

The 1990-91 slump hit white-collar, highly educated workers
harder than past downturns had. Particularly affected were workers in the financial and retail sectors. In contrast, during the 198082 recessionary period, employment in these sectors, as well as in
the service industries, continued to climb, despite a substantial fall
in the economy-wide number of jobs. Unemployment rose among
white-collar workers in 1990-91, but lower skilled production work


105

ers suffered not only higher unemployment rates, but also larger increases in unemployment. Educational attainment and job security
still go together.
UNEMPLOYMENT INSURANCE
Since 1935 States have administered an unemployment insurance (UI) program that provides financial assistance for workers
who have lost their jobs through no fault of their own. Virtually all
workers who receive wages or salaries are included in the program.
The UI system is financed by Federal and State taxes placed on
employers based on the size of their payroll. Each State also establishes its own tax base that funds regular unemployment insurance
benefits, as well as 50 percent of extended benefits (described in the
next section). The magnitude of the State tax varies across States
and across firms. The Federal tax funds the administration of the
UI program, the other half of the permanent extended benefits programs, and a loan account.
Most States base the amount of weekly benefit on a formula that
compensates the unemployed worker for some percentage of his or
her full-time weekly wage. Benefit levels vary among States but average roughly 35 percent of the unemployed worker's earnings. Eligibility criteria also differ across States. In general, a worker must
have lost the job through no fault of his or her own, have sufficient
job tenure, and be free from disqualification for any of a variety of
reasons spelled out by State law. A worker can continue to receive
benefits for a specified time period as long as he or she is looking
for a job, is available and able to work, and has not refused to
accept a "suitable" job. Unwillingness to accept available suitable
work can lead to disqualification from benefits for a specified
period of time, determined by each State's codes.
The financing structure of the unemployment insurance program
levies higher tax rates on companies with histories of sizable layoffs. This tax system, known as experience rating, places much of
the cost of the system on those firms (and indirectly on their employees through lower wages, their customers through higher
prices, and their suppliers through reduced demand). Every State
institutes a maximum and minimum rate that can be levied on a
firm. The ceiling may prevent a firm with a history of extensive
layoffs from being taxed the full cost of the benefits to its laid-off
employees. In that case, the firm is subsidized by other firms whose
relatively low layoff experience warrants a tax rate below the minimum allowed by law. Studies have shown that this arrangement
provides firms in volatile industries with an incentive to hire more
workers than they otherwise would, while expecting each worker to
spend more time on temporary layoff because their UI benefits are
subsidized by firms in more stable sectors.



106

EXTENDED BENEFIT PROGRAMS
The UI program provides benefits to eligible workers for up to 26
weeks in most States, which is usually sufficient time for the majority of unemployed workers to find new jobs. Median duration of
unemployment has typically been between 5 and 8 weeks since
1968, when records began to be kept. Even during the depths of the
1980-82 recessionary period, the median duration never rose above
13 weeks. In December 1991 it stood at 8 weeks. Some people, of
course, have much more difficulty finding reemployment than
others. During economic slowdowns or recessions, more jobs are
eliminated than created, making jobs harder to find. Immediately
following the 1981-82 recession, 25 percent of the unemployed had
been without work for more than 27 weeks. In December 1991, 17
percent of the unemployed had been without work for more than
27 weeks.
Workers who do not find jobs within the regular 26-week benefit
period are currently covered by two extended benefits programs. A
permanent program, established in 1970, provides up to 13 additional weeks of benefits to those workers in States that have particularly high unemployment rates. Workers are eligible for extended benefits under the permanent program if their State's insured unemployment rate is higher than a statutorily specified
level. The insured unemployment rate is different from the commonly publicized total unemployment rate and is almost always
lower (Box 3-1). Few States qualified for extended benefits under
the permanent program in 1991, even though labor market conditions worsened in most of them. An emergency unemployment
compensation program was enacted in the fall of 1991, which provided additional benefits to many of those who had exhausted regular UI benefits during the recession but had not found work.
Extended benefits are designed to assist people financially during
particularly arduous times. Economists have observed, however,
that extending benefits also tends to delay reemployment. Estimates from recent studies, which examined the job search experience during the 1980-82 recessionary period, suggest that an additional week of extended benefits will increase the expected duration of the unemployment spell up to half a week. Evidence also
shows that extending benefits reduces the likelihood that workers
will make a switch to industries other than the one in which they
were previously employed.
Further evidence of the effects of extended benefits comes from
those countries with relatively high unemployment experience. The
United States has the shortest period of benefits and one of the
lowest long-term unemployment rates, defined as the percentage of
people who remain jobless for more than 12 months. Belgium has
both the longest period of extended benefits and the highest long


107

Box 3-1.—Total and Insured Unemployment Rates

Recent discussion regarding extended unemployment benefits has drawn attention to the difference between two measures of a State's unemployment conditions: the total unemployment rate and the insured unemployment rate. The total rate,
the standard measure of unemployment, is defined as the total
number of unemployed divided by the total labor force. The insured rate is defined as the number of people who are receiving unemployment insurance (UI) divided by the number of
workers covered by the program.
Until the fall of 1991, the sole criterion for a State qualifying
for extended benefits was the level of the State's insured rate.
The emergency unemployment compensation program enacted
in November 1991 uses either the insured rate, adjusted for
those who have exhausted regular UI benefits, or the total rate
to determine which States are eligible for various periods of extended benefits.
More than 90 percent of those employed are covered by UI.
Excluded from covered employment are primarily the self-employed and some agricultural and household workers. Insured
unemployment tends to be around 40 percent of total unemployment. Most of the disparity between the two rates stems
from those who are not eligible for UI benefits but are considered unemployed: new entrants into the labor force, reentrants, those who quit voluntarily, and those who have exhausted regular UI benefits. A secondary source of difference
is those who are unemployed and eligible to draw UI benefits
but do not apply to do so. As a result, the insured rate and the
total rate may give two different pictures of the economic conditions in a State. In August 1991, for example, Michigan's insured rate was 3.2 percent, while its total unemployment rate
stood at 8.7 percent. West Virginia's total rate of 10.5 percent
was the highest in the nation, but its insured rate was only 3.8
percent.

term unemployment rate among the major industrial countriesits rate is nearly eight times that of the United States. The correlation between long-term unemployment rates and long benefit
periods holds when comparing many other countries.
Extending unemployment insurance benefits can be a critical addition to the Nation's social safety net. Ways should be sought, however, to mitigate any associated disincentives to either accept employment or take advantage of reemployment services. These serv-




108

ices include job training, job search assistance, and relocation assistance.
Some economists have proposed that training be linked directly
to the UI program. Another option to get people back to work, currently being tested and developed in two states, offers UI recipients
the opportunity to receive their benefit entitlement in a lump-sum
payment as seed capital after they have started their own businesses. The program also provides training and assigns a business development counselor to each participant. This program puts people
back to work and creates businesses at a time the economy needs
such a stimulus. Although these projects have not been under way
long enough to measure their success, experience with similar programs in Europe shows that they can provide the opportunity for
some unemployed to become self-employed.
SUMMARY
• The unemployment insurance program provides financial assistance for workers who have lost their jobs through no fault
of their own.
• The Emergency Unemployment Compensation program was
enacted in November 1991 to extend benefits to those workers
who have exhausted their regular UI benefits.
ENHANCING WORKER SKILLS
The wage gap between high-skilled and low-skilled workers has
been growing. Low-skilled workers are more likely to work only
part time and are more frequently unemployed. Workers at every
level must possess skills that match the challenges of new technologies and more complex work environments. Even skilled workers
must be prepared to move into other jobs as changing market conditions favor some industries at the expense of others.
How best to train people to meet the changing needs of the workplace is not easily resolved. Some firms provide extensive training,
but most formal teaching of basic cognitive skills is left to institutions outside the workplace. Formal education can provide people
with a stock of skills applicable to many different jobs. The increasing divergence in wages among people with various levels of educational attainment and the greater job security that comes with
more schooling conveys a clear signal to America's youth that employers value education.
Greater involvement of the private sector, both employers and
employees, in the educational system would help students transfer
their skills and knowledge from school to the workplace. Businesses have the most immediate knowledge concerning the skills that
people need to be productive workers. Cooperation between busi


109

nesses and schools would help close the gap between the education
schools provide and the skills businesses need in their employees.
Demand often outstrips supply for high-skilled workers. Even
during the present sluggish state of the economy, manufacturers
have reported shortages in skilled positions, such as technicians
and technical professionals. One response to persistent shortages
and high wages of skilled workers is to structure the workplace to
accommodate the low-skill worker, for example, by developing routine procedures or using computers to simplify calculations workers
might have to make. Such arrangements provide useful employment
to presently low-skilled workers. To raise those workers' long-term
prospects more significantly, their skills must be enhanced through
education and training.
Defining jobs narrowly and making each job relatively easy to
learn served the U.S. economy well when mass production was so
prevalent and successful. In that system, a small group of technical
and sales specialists did the thinking and planning, while the workers followed orders and carried out routine tasks quickly and efficiently. Today's workplace is increasingly one in which workers
at all levels share responsibilities for day-to-day decisions. Work becomes technically more complex, and more cognitive skills and
interpersonal skills are required.
Retraining displaced workers poses particularly difficult problems. Many of these workers have considerable work experience;
returning to the classroom and taking several years to complete a
course of training is difficult at that stage in their careers. The
present institutional structure of the educational system, in which
most substantive training is performed away from the job, precludes such workers from pursuing this route. The current Economic Dislocation and Worker Adjustment Assistance program, enacted in 1988, is more successful than previous job-training programs for displaced workers precisely because it is more flexible
and geared to early intervention.
Another major Federal program designed to improve the economic well-being of workers is the job opportunities and basic skills
training program (JOBS). Under the JOBS program, families receiving assistance from the aid to families with dependent children
program can also obtain education, training, and employment
needed to help them avoid long-term welfare dependency.
The Administration has recently announced a major program,
Job Training 2000, to reform the Nation's job-training and vocational education system so that workers are better prepared for the
future demands of the global marketplace. These initiatives target
three groups: new labor force entrants who need basic education
and job training, people who currently rely on public assistance,
and displaced workers who seek jobs and placement assistance. The



110

reform proposal simplifies and better coordinates more than 60 existing Federal programs and services, encourages greater and more
effective private sector involvement in training and placement programs, and creates a flexible training system that provides the
skills needed in local labor markets (Box 3-2).
Box 3-2.—Job
uses market-based
The Job
system* Hie
approaches to
initiative eoixstste
reforming vocational training, fact
welfare to work,
to work. The nucleus
and improving the
more than 600 busiof the vocational tr
lished by the Congress
ness-led private industry J
business and publicly
in the late 1970s to
supported job-training
would run skills cenUnder the new progr
ters, which would function ag the primary points of entry into
federally funded job^rainitjg aiid vocational education programs. These centers would provide skills assessment and testing, referral services, labor market information, job-training
placement assistance, m\4 "0^0^$
programs. Hie councils
would also administer training vouchers and incentive grants
to help ensure that vocational sdKKrfs and training centers are
offering the most relevant skills to students.
Job Training 2000 calls for private sector welfare-to-work
demonstration projects that allow States to use private and
nonprofit firms to provide baaic training and job placement for
welfare recipients. These firms would function in a manner
similar to a temporary employment agency but would not receive full payment for their services until after the worker has
been permanently placed and hM a Job for some period of
time.
The reform proposal also establishes a youth apprenticeship
program in which students in the 11th and 12th grades may
choose a structured combination of academic instruction, class*
room training, paid on-the-job training and work experience,
and mentoring. Successful apprentices would receive a high
school diploma or associate degree, a certificate attesting to
their skill competencies and qualifications, and employment.
The effort to ensure that America's future workers have the
skills they need must begin even before formal schooling. The Administration has recently proposed increased funding for the Head
Start program, which helps prepare preschool children from low


Ill

income families for elementary school. The main responsibility for
schooling resides with the States and localities, where the funds
and decisions about education originate and where the solutions
are best found. The Administration's America 2000, discussed in
last year's Report, lays out a long-range educational reform strategy
for the Nation. Its goals have already been adopted by more than
half the States and put in place in more than 1,000 communities
across the country.
The Administration encourages communities to adopt programs
that will allow parents and students the greatest latitude in choosing the school and curriculum that best meets their needs and preferences. Opening the educational system to choice will stimulate
institutions to seek innovative ways to educate the workers of tomorrow.
SUMMARY
• The changing nature of the workplace has put greater demands on the U.S. educational system. Skills that were once
sufficient to command high wages are no longer adequate, as
occupational restructuring within U.S. industries favors highskill workers.
• The Administration's Job Training 2000 initiative to reform job
training and vocational education is designed to encourage
greater and more effective involvement of business in training
a highly skilled work force.
• The Administration's education reform initiative, America
2000, strives to provide every American with the basic skills
necessary to be a productive worker.

CONCLUSION
Over the past two decades, despite the temporary setback of several recessions, the U.S. labor market has been flexible, dynamic,
and resilient enough to provide nearly 40 million additional jobs, a
percentage increase far surpassing that of most other major industrialized countries. Over the same period, average real wages rose
18 percent.
Although the earning power of workers in this country has improved over the last two decades, it has done so at a slower pace
than during the first 25 years after World War II. The primary
reason for the slower wage growth has been the slower growth of
productivity. While many factors contributed to the slower growth
of productivity, and hence real wages, a major factor has been the
slower growth in capital per worker. This reflects developments in
both capital and labor markets.



112

Ample evidence supports the view that investment in technology
development and in the skills and knowledge of workers also raises
productivity growth. In recent years, the worker characteristic
most conducive to higher earnings has been higher levels of education. The Administration is committed to the goal of increased economic well-being for all Americans. The fundamental key is raising
the earning power of American workers. This in turn will require
greater capital formation, enhanced technology, and more and
better job training and education. While much of this is the responsibility of the private sector and of State and local governments,
the Federal Government has an important role to play as well.
The Administration's entire domestic policy agenda should be
understood as addressing the objective of economic progress. Initiatives designed to modernize the financial system, ensure energy security, improve the civil justice system, and reduce the scourge of
crime and drugs, each in its own way, will contribute to the future
earning power of American workers. More directly, the Administration has taken the lead in developing a school reform strategy that
will improve the quality of education and an improved job training program that will give millions of American workers the
skills necessary for success in the labor market. A variety of fiscal
and other initiatives designed to increase private investment and
saving, spur entrepreneurship and innovation, and expand federal
investment in technology development and infrastructure will
ensure that American workers are equipped with the best possible
capital to enhance their productivity.




113




CHAPTER 4

Government and the Level and
Distribution of Income
INCOME FOR THE TYPICAL family has risen substantially
over the past several decades. Rapid productivity growth and other
factors fueled strong income growth from the late 1940s through
the late 1960s. Since then, slower productivity growth and shifting
demographic patterns have reduced the rate of income growth.
Nevertheless, the typical family in 1990 received about $4,100 more
in income after adjusting for inflation than the typical family did
in 1970. Average incomes for families in each fifth, or quintile, of
the income distribution have increased. Income growth, however,
has been uneven for different segments of the population, and the
distribution of income has gradually grown more dispersed since
the mid-1960s.
Trends in the level and distribution of income are closely related
and are affected by a variety of factors. The primary source of
income for most families is labor earnings. Thus, the primary
causes of the continued long-run increase in family income are the
long-term increase in productivity, and hence in wages, the historic
growth in employment, and related labor market factors. Changes
in the distribution of wages and in employment patterns have also
had important effects on the distribution of income.
The level of overall economic activity affects the incomes of families in each part of the income distribution. Sustained long-term
economic growth has been the most effective and durable way to
raise the income of families.
Demographic patterns also have substantial effects on the level
and distribution of income. The average number of people per
family has fallen significantly over the past three decades, and
single-parent families are much more prevalent now than they
were in the 1960s.
The level and structure of government taxes and transfers have
important effects on the level, structure, and growth rate of overall
economic activity. Many tax and transfer programs contain features that discourage people from working, saving, or investing.
Some programs, like the earned income tax credit, can encourage
work effort.



115

Many Federal, State, and local government programs and policies redistribute a substantial amount of income, wealth, and opportunities for economic advancement across the population. In
1990 according to estimates by the Census Bureau, the net effects
of Federal and State taxes and transfers raised the income of
households in the bottom fifth of the income distribution by an average of more than $8,800, from about $2,100 to about $10,900.
Households in the top fifth paid $22,000 more in taxes, on average,
than they received in transfers, reducing their average income
from about $94,000 to under $72,000.
Most of this redistribution occurs through transfer programs. A
network of means-tested programs transfers cash and specific
goods, such as food, housing, health care, and job training to the
Nation's neediest citizens. Other government programs redistribute
in ways that are not means-tested. Social insurance programs protect individuals against a variety of contingencies. Recent decades
have seen significant growth in spending on means-tested and
social insurance programs and a shift in the composition of meanstested assistance toward the provision of specific goods and services
rather than cash.
Despite long-term increases in income and transfer payments,
poverty remains a serious problem in the United States. Society
can and should provide a minimum level of support for those who
are unable to provide for themselves. The most effective antidote to
general conditions of poverty in the long run is sustained economic
growth. Some poor people are unable to benefit from such growth,
however, and require targeted programs. The Administration is
firmly committed to the goal of alleviating poverty.
The Federal tax system also redistributes income toward lower
income households. Major income tax reforms since the late 1970s
reduced marginal tax rates, eliminated many tax shelters, broadened the tax base, and removed many low-income households from
the income tax rolls. In addition, Social Security tax rate increases,
enacted in the 1970s, were accelerated in 1983 to address short- and
long-run financing problems in the Social Security trust fund.
Amid these sweeping changes, redistribution of income within the
Federal tax system has remained about the same as it was in the
1970s before the reforms took place.
Government tax and spending programs also transfer large
amounts of wealth across generations. These transfers are sometimes clearly visible, as in the case of the Social Security program,
where current workers make payments and current retirees receive benefits. As explained below, however, other policies embody
intergenerational transfers that are much less obvious. In both
cases, transfers across generations may be larger than transfers
across income classes in a particular year.



116

THE LEVEL AND DISTRIBUTION OF INCOME
The most commonly used measure of income, and the one used
in this section, is "money income" as defined by the Bureau of the
Census. This measure includes all periodic earned and unearned
monetary income except capital gains. Money income includes government cash transfers but does not count noncash government
transfers, such as medicaid and food stamps, or fringe benefits,
such as employer-provided health insurance, and it does not deduct
taxes paid.
While wages are earned by individuals, income is typically
shared among members of a family or household. Thus, analyses of
income typically focus on these groups rather than on individuals.
The Census Bureau defines a family as a group of two or more
people related by birth, marriage, or adoption who live together. A
household is defined as all related family members and all unrelated people living in a given housing unit. A family, a person living
alone, or a group of unrelated people living together in a single
housing unit each counts as a single household.
To measure the evolution of income over time, adjustments need
to be made for the changing cost of living. Estimates of the cost of
living are measured in the consumer price index (CPI) published by
the Bureau of Labor Statistics. As discussed in Chapter 7, the CPI
was modified in 1983 to incorporate an improved measure of the
cost of shelter for homeowners. The modified price index used
below, the CPI-U-X1, incorporates the improved measure of costs
on a consistent basis back to 1967. Most analysts believe this index
is the more appropriate measure of changes in the cost of living.
LEVEL OF INCOME
Median income adjusted for inflation is used to track the history
of typical families and households. The median represents the midpoint of the income distribution; there are as many families (or
households) with income above the median as there are with
income below.
Chart 4-1 traces the evolution of real median family and household income since 1967. Although the year-to-year changes are sometimes small, median family income grew by a substantial amount,
from $28,563 in 1967 to $35,353 in 1990. This represents an increase
of about $6,800, or 23.8 percent. Median household income was
$29,943 in 1990, an increase of about $4,200, or 16.4 percent, since
1967. Medians of both family and household income reached alltime highs in 1989.
Effects of the Level of Economic Activity
Fluctuations and trends in aggregate economic activity produce
similar fluctuations and trends in median family and household



117

Chart 4 1 Real Median Income
Real median income of families and households has grown substantially since 1967.

32,000

-

30,000

-

28,000

-

26,000

-

24,000
1967

1969

1971

1973

1975

1977

1979

1981

1983

1985

1987

1989

Note: CPI-U-X1 used as deflator.
Sources: Department of Commerce and Department of Labor.

income. Long economic expansions in the 1960s and the 1980s led
to strong advances in income. Inflation and three recessions between 1973 and 1982 resulted in fluctuating levels of income.
Chart 4-1 shows that real median family income rose sharply in
1967-69, was stagnant in the 1969-70 recession, and then rose
during the expansion in 1971-73. After falling in 1974-75 in the recession following the first oil crisis, income rose again until 1979.
However, the high inflation of the late 1970s and the subsequent
back-to-back recessions in 1980 and in 1981-82 brought real wages
and income down sharply. Real median family income in 1982 was
lower than it was in 1973. From 1982 to 1990, median family
income increased by about $3,300, or 10.4 percent. Since 1973, an
earlier business cycle peak, median family income has increased by
about $2,000, or 5.9 percent.
Similar cyclical patterns occurred for median household income
and for black, Hispanic, and white families and households. These
patterns indicate that the most effective and durable way to raise
the income of typical families and households has been through sustained, long-term economic growth.




118

The Role of Demographics
Substantial income growth between 1967 and 1990 is particularly
noteworthy in light of several long-term demographic trends.
During this period, average family size fell by 14 percent, and average household size fell by 19 percent. Income growth rates for families and households thus understate the growth rate of income per
person. Between 1967 and 1990, average, or mean, real money
income rose by 62 percent per person, as opposed to 35 percent per

family.
Large shifts in the composition of households have also influenced income growth. Between 1969 and 1989, the proportion of
household heads living alone or with unrelated individuals rose
from 18.5 percent to 29.1 percent, and the proportion of families
with children that have a female householder rose from 11.3 percent to 21.7 percent. In 1990, more than two-thirds of household
heads living alone or with unrelated individuals and one-third of
female heads of families were under 35 years old. At this age,
many workers are still acquiring skills and training and may also
have had short job tenure or little overall labor market experience.
Female heads of families also often face child care responsibilities
that make full-time participation in the labor force difficult. The
means-tested transfer system creates incentives for some women to
reduce or eliminate work outside the home. For these and other
reasons, female-headed families and people living alone or with unrelated individuals have median incomes well below the overall
median. One study found that in the absence of these demographic
trends, real median household income between 1969 and 1989
would have grown another $3,200, more than doubling its actual
rate of growth.
Two-Earner Families
A related issue is the extent to which sustained income growth is
due to the increased proportion of married women that work outside the home. In 1970, 39 percent of married women worked outside the home. That figure rose to 50 percent in 1980 and 58 percent in 1990. The number of working married women rose more in
absolute and percentage terms in the 1970s than in the 1980s.
Determining the effect of this trend on median income is difficult. Determining the contribution of new second earners to overall
income growth is much more straightforward. Average income for
married couple families rose by $4,232 (in 1990 dollars) between
1970 and 1980, and $6,035 between 1980 and 1990. The role of the
increased number of second earners can be calculated using data
on the number and average income of married couple families and
second earners. The increased number of married women in the
labor force accounts for only about 18 percent of the real increase in



119

income of married couple families between 1980 and 1990. The corresponding figure for the 1970s is 19 percent. For all families,
about 14 percent of the increase in income in the 1980s and 16 percent in the 1970s is due to the increase of two-earner families.
The small role of the rising number of two-earner families in
income growth can be attributed to two factors. First, average
earnings of second earners are lower than average earnings for all
earners, in part because a high proportion of second earners work
part-time. Second, the recent increase in two-earner families is
small relative to the total number of families. From 1980 to 1990,
the number of married women in the labor force rose by 5.5 million; the total number of families in 1990 was 66.3 million.

DISTRIBUTION OF ANNUAL INCOME
The long-term and cyclical factors that affect income levels also
affect the distribution of income. Incomes in any year can differ
across households for many reasons. Because the primary source of
income for most people is labor earnings, the determinants of the
wage distribution discussed in Chapter 3, including workers' education and changes in labor supply and demand, also help determine
the distribution of annual income. Because families and households
in the United States experience a significant amount of mobility
across income classes, the distribution of long-term income differs
from the distribution of annual income.
The distribution of income and its evolution over time can be
measured in several ways. Perhaps the simplest approach is to
choose particular income thresholds and examine what percentage
of families exceed these thresholds. Although there is no official
definition of the middle class, the range of $15,000 to $50,000 (in
1990 dollars) in money income is used in Chart 4-2 to demarcate
middle-income families. The chart shows the often-noted declining
proportion of families in the middle-income range. The proportion
of families with middle incomes fell from 64.8 percent in 1967 to
52.7 percent in 1990.
Many middle-income families have moved into higher income categories; the proportion of families with real income above $50,000
showed a sustained increase, from 14-9 percent in 1967 to an alltime high of 31.6 percent in 1989, before it declined slightly in 1990.
The proportion of families with real money income below $15,000
fell from 20.3 percent in 1967 to 16.9 percent in 1990.
Using alternative definitions of middle income (for example,
$25,000 to $75,000, or $25,000 to $50,000) preserves the basic results
that the proportion of high-income families has increased and the
proportion of low-income families has fallen. Similar patterns hold
for households as well. These trends indicate that substantial num


120

Chart 4-2

Distribution of Families by Income Class

The proportion of high-income families has more than doubled since 1967, while the proportion of
low- and middle-income families has fallen.
Percent of all families
70

60

Middle Income ($15,000-$50,000)

50

40

30

High Income (over $50,000)

20

i

10

1967

1969

,

i

•

1971

i

1973

.

i

1975

•

i

,

1977

i. ,

1979

i

1981

,

i

1983

.

i

1985

,

i

1987

•

i

1989

Note: All income is in 1990 dollars; CPI-U-X1 used as deflator.
Sources: Department of Commerce and Department of Labor.

bers of families and households have moved into higher income categories over time.
Income Growth by Quintile
Chart 4-3 displays mean, or average, money income for the highest, middle, and lowest fifth, or quintile, for households from 1967
to 1990, as a percentage of 1967 income. (The major points below
also hold for families.) Average money income in each quintile has
increased since 1967. Thus, long-term trends have raised money
income in each part of the income distribution.
Changes in average money income in every quintile reflect changes
in the level of macroeconomic activity, just as the measures of
median income did. The real money incomes of households along
all parts of the income distribution have improved the most during
periods of economic growth. In particular, the economic expansion
between 1982 and 1989 produced strong growth in each quintile.
Money income grew faster in the highest quintile than in the
other quintiles. From 1967 to 1990, real money income grew by 35
percent in the highest quintile, 25 percent in the lowest quintile,
and 17 percent in the middle quintile. The relative magnitudes of
growth rates for the highest and lowest quintiles shifted between
1979 and 1982. This shift coincided with a shift in real wage pat


121

Chart 4-3 Real Household Income Relative to 1967 Income for Selected Quinttles
Real income of low-, middle-, and high-income households generaWy rose from 1967 to 1979, fell from
1979 to 1982, and rose after 1982.
Percent of 1967 income
150

1967

1969

1971

1973

1975

1977

1979

1981

1983

1985

1987

1989

Note: CPI-U-X1 used as deflator.
Sources: Department of Commerce and Department of Labor.

terns: wages for high-wage workers were roughly the same level in
1979 and in 1982, while wages for low-wage workers fell.
Chart 4-3 understates the improvement in income for the lowest
group because, among other reasons, money income omits noncash
transfers. Real Federal and State spending on means-tested medical assistance, the vast majority of which is medicaid, grew by $67
billion (in 1990 dollars) from 1967 to 1990, while spending on other
means-tested noncash transfers grew by $46 billion. Real payments
for medicare, which is not means-tested, grew by $96 billion. In
1990, households in the lowest income quintile received about 10
percent of medicare payments, 17 percent of medicaid payments,
and 59 percent of other means-tested noncash transfers. Maintaining these allocations over time and using the Census Bureau's best
estimates of the value of these transfers to recipients provides estimates of noncash transfers per household. For households in the
lowest quintile, money income plus the estimated value of noncash
transfers, adjusted for inflation, increased by 48 percent between
1967 and 1990, nearly double the 25-percent growth rate for money
income alone.




122

Gini Ratios
The Gini ratio is a measure of the dispersion of income that
ranges between 0 and L A lower value indicates less dispersion in
the income distribution; a Gini of 0 would occur if every family had
the exact same amount of income. A higher value indicates more
dispersion; a Gini of 1 would occur if all income accrued to only
one family.
Chart 4-4 shows that from 1947 to 1968, despite some fluctuations, the dispersion of money income for families fell gradually.
Since then, dispersion has risen slowly but steadily, by about 14
percent. Almost one-third of the increase occurred between 1979
and 1982, when wage and income patterns diverged sharply at the
high and low ends of the spectrum. Slightly more than a third of
the increase occurred between 1968 and 1979, with the increase
from 1982 to 1990 accounting for the remaining third.
Chart 4-4 Gini Ratios for Family Income
The dispersion of money income followed a downward trend from 1947 to 1968 and increased gradually
after that.

0.40

-

0.35

-

0.30
1947

1951

1955

1959

1963

1967

1971

1975

1979

1983

1987

Source: Department of Commerce.

The Gini for households followed similar trends. One study found
that shifting household composition accounted for almost half of
the increase in dispersion between 1969 and 1989.
The Gini ratio is a measure of relative income rather than of the
absolute level of income. Thus, changes in the Gini do not provide
any information about the level of income for various groups in the
population. In the 1980s, increasing dispersion of income did not



123

mean that the rich became richer while the poor became poorer.
Incomes grew in all quintiles, but income in the top quintile grew
fastest.
Trends in the share of income received by families in each quintile mirror those of the Gini coefficient. The share received by the
lowest quintile rose from 5.0 percent in 1947 to 5.7 percent in 1968,
and then fell to 4.6 percent in 1990. The share for the highest quintile fell from 43.0 percent in 1947 to 40.5 percent in 1968, before
rising to 44.3 percent by 1990. Similar trends apply to income
shares received by households. Like the Gini, however, measures of
income shares do not show how the level of income has evolved for
each group, and thus give an incomplete picture of income patterns.
Similar trends in income distribution appear in other countries
as well. One study found that in the early 1980s, the distribution of
earnings for prime-age males who headed households and worked
full time became more unequal in all five countries studied:
Canada, Sweden, Australia, West Germany, and the United States.
The widening distribution in many countries indicates that the
causes of the shift are more likely to be due to factors common to
all of the countries rather than to any factor specific to only one of
the countries.
THE DISTRIBUTION OF LONG-TERM INCOME AND
WEALTH
Families and households display a substantial amount of mobility across income classes in the United States. For this reason, analyses of income distribution that focus only on annual income tend
to overstate the degree of income inequality.
One reason annual income data are misleading is that earnings
of individual workers tend to rise as they acquire training and experience and then to fall when they retire. A 20-year-old worker
just starting out and a 45-year-old worker who is in his or her peak
earning years could have equal incomes over their careers, but
very different wages in the same calendar year.
Data on annual income can also prove misleading because of
transitory income, that is, income gains or losses that are thought
to be temporary. A person who owns a small business, for example,
may face greater year-to-year fluctuations in income than someone
who works at a steady wage.
There is substantial mobility across income classes from year to
year. One study found that in the mid-1980s, about one-third of all
families were in a different income quintile than they had been in
the previous year. In each of the lowest three quintiles, about 18
percent of the families moved to a higher quintile the following
year. In each of the highest three quintiles, more than 20 percent



124

of the families moved to lower quintiles the following year. Another study found that more than half of families in the highest
quintile in 1971 had fallen into lower quintiles by 1978. Similarly,
almost half of those in the lowest quintile had risen to a higher
quintile.
Over longer periods, the extent of mobility increases. One study,
using data from the 1970s and 1980s, found that more than 75 percent of households are in a different decile when ranked by lifetime
income than when ranked by current income. A decile includes onetenth of the households. About 44 percent had current income two
or more deciles away from their lifetime income. More than half of
households in each of the lowest three deciles for annual income
had lifetime income in a higher decile. More than half of households in the top three deciles for annual income had lifetime
income in a lower decile.
A recent study, using tax return data from the 1960s, 1970s, and
1980s, estimates that the Gini coefficients for income over 4-year or
7-year periods are between 5.0 percent and 7.7 percent less than
the average of the Gini coefficients for the individual years. Another study, using data from 1969 to 1981, found that the Gini for
lifetime income in the United States was 19 percent lower than the
Gini for annual income, indicating less dispersion in lifetime
income.
These findings underscore the importance of income mobility for
a large number of families. Nevertheless, even after removing temporary income changes and the effects of the life-cycle on income,
part of the population still faces very low long-term income prospects.
Because the distribution of long-term income is less dispersed
than are annual incomes, trends in the distribution of annual
income may not accurately reflect trends in the distribution of
long-term income. For example, an increase in income mobility or
in the importance of transitory income can increase inequality of
annual income but have no effect on the distribution of long-term
income. Nevertheless, one study found that, like annual incomes,
incomes averaged over 4- and 7-year periods became more dispersed between 1967-73 and 1979-85.
A related issue is the distribution of wealth. A family's wealth
holdings consist of financial assets, such as saving accounts; property, such as a house or family business; pensions and future Social
Security benefits; and human capital, the value of future labor
earnings. For most households, housing, public and private pensions, and human capital constitute the vast bulk of wealth. One
study found that between 1983 and 1989 the median value of households' real financial net worth and property rose 11 percent and
that holdings of these assets became more concentrated.

 5
305-592 O—92

125

SUMMARY
• Median levels of family and household money income have
shown sustained long-term growth since the mid-1960s. Median
income is influenced by cyclical and long-term economic activity and demographic patterns.
• Since the mid-1960s and in particular since the early 1980s,
income growth has occurred in all quintiles and the distribution of annual money income has become more dispersed in
the United States. Earnings distributions have also become
more dispersed in several other countries in recent years.
• Because money income omits in-kind transfers, data on money
income understate both the level of and improvement in
income for the lowest income groups.
• Families and households display significant mobility across
income classes. The distribution of long-term income is more
equal than the distribution of annual income.

TRENDS IN TAXES AND TRANSFERS
Tax and transfer policies in the United States have undergone
major changes in level and composition in the last 30 years. These
changes are among the principal ways that government influences
the distribution of resources and the level and structure of economic activity.
TRANSFERS
The two main categories of transfers are means-tested programs
and social insurance. Means-tested programs provide benefits or
services to people and families whose financial resources have
fallen below a certain level. Distributed by Federal, State, or local
governments, means-tested transfers can be cash grants, such as
aid to families with dependent children, or goods and services, such
as food and health care. Transfers of goods and services ensure
that assistance is used for the purposes intended. Means-tested
service programs also provide education and job training. (Brief descriptions are in Boxes 4-1 and 4-2; fiscal 1990 spending totals are
in Table 4-1.)
Social insurance programs compensate people for income loss due
to retirement, disability, and unemployment, and provide health
insurance for the elderly. The three major Federal social insurance
programs are Social Security, medicare, and unemployment insurance (Box 4-3). These programs are financed primarily by payroll
taxes. Because they are predominantly not means-tested, social insurance programs can sometimes make large direct payments to
the well-off (Box 4-4).



126

Box 4-1.—Means-Tested Cash Transfers
The principal means-tested cash transfer programs:
• Aid to families with dependent children (AFDC) provides
income to low-income, single-parent families with dependent children and to low-income couples with children in which the primary breadwinner is unemployed
or incapacitated. Benefit levels are set by the States. Recipients are eligible for Federal job training programs
and for health care assistance through medicaid. In 1990
AFDC assisted a monthly average of 11,4 million people.
• Supplemental security income (SSI) began providing payments in 1974 to needy aged, disabled, and blind people
meeting nationwide eligibility requirements. SSI provided benefits to nearly 5 million recipients each month in
1990.
• The earned income tax credit (EITC), a refundable tax
credit for low-income working families with children,
was established in 1975. The maximum credit has more
than doubled since 1975. The credit was claimed on 11.9
million tax returns for 1989.
Federal spending on means-tested and social insurance programs
has grown dramatically since 1967. Chart 4-5 shows that these expenditures more than doubled relative to gross domestic product
(GDP), from 4.3 percent in fiscal 1967 to 9.2 percent in fiscal 1990.
That represents an annualized growth rate of 6.3 percent in real
expenditures.
Real spending on social insurance programs grew at an annual
rate of 5.8 percent from fiscal 1967 to 1990. In 1990, Federal outlays
for social insurance were $388 billion, 31 percent of total Federal
outlays. Social Security and medicare accounted for more than 90
percent of the total. Federal expenditures on unemployment insurance were approximately $17 billion.
Real means-tested spending grew at an annual rate of 8.3 percent from fiscal 1967 to 1990, and accounted for approximately $121
billion, or 9.6 percent, of total Federal outlays in 1990. Most of the
long-term increase occurred through noncash programs (Chart 4-5).
From 1967 to 1990, real Federal outlays on medicaid grew by $37
billion (in 1990 dollars), while food stamp outlays rose by almost
$15 billion. Real expenditures on the special supplemental food program for women, infants, and children and on Head Start rose
about 90 percent and 33 percent, respectively, from 1980 to 1990.
Real means-tested cash expenditures grew at 4.7 percent per year
from 1967 to 1990.



127

Box 4-2.—Means-Tested Noncash Transfers
The principal means-tested noncash transfer programs:
• Medicaid, enacted in 1965, covers a broad range of
health services including hospital care, physicians' services, and long-term care- In 1990, 25J million people who
were disadvantage^ or faced high medical expenses received benefits,
• The food stomp program* formally established in 1964,
distributes coupons for food, based on household size and
income. In 1990, 21 million people received benefits in
an average month, The special supplemental food program for women, infants and children (WIC) provides
food vouchers to pregnant women, infants, and children
through age 4 considered to be at nutritional risk The
child nutrition program subsidizes meals for needy children in school.
• Head Start provides education and medical, nutritional
and social services to economically disadvantaged 8- and
4year-olds, In 1990, 541,000 children participated.
• Morning assistance* enacted in the 1930s, provides rental
subsidies and aid for construction or rehabilitation of
housing for low-income families.
• The Job Tmining Partnership Act, passed in 1982, flmds
education, training, and related services for economically disadvantaged adults and youths. Job Corps and the
Summer Youth Employment Program provide education, training, and jobs to youths. Job Opportunities and
j&me Skills (JOBS) programs provide educational, training, and placement services for AFDC adult recipients.
« fidl Grants provided assistance to 3.4 million needy undergraduate students enrolled at least half-time in 1990,
• Emrgy ttssistance is provided to low-income households
through cash, vouchers, and vendor and tax credits*
Many means-tested programs are funded jointly by the Federal
and State governments and administered at the State level. Real
expenditures by State and local governments on these programs
rose from $22 billion (in 1990 dollars) in 1970 to $36 billion in 1977,
fluctuated between 1977 and 1982, and have increased by about 50
percent since then. The largest State programs are medicaid,
AFDC, and general assistance, which consists of programs that provide funds to low-income households who are ineligible for AFDC
and SSI.




128

Box 4-3.—Social Insurance Programs
The three major social insurance programs:
• Social Security* introduced in 1985, provides monthly
payments to workers who retire or face long-term disability and their dependents and to survivors of deceased
workers. Benefits are based on a worker's earnings history, age, marital status, and other factors. Social Security
covers more than 9© percent of the worik force.
• Medicare, enacted in 1965, covers inpatient care at hospitals and limited acute care at nursing homes. An optional part pays for physicians, supplies, and other services outside hospitals. In 1987 medicare covered 45 per*
cent of the health costs of the elderly.
• Unemployment insurance, established in 1935, replaces
income loss due to temporary unemployment for workers with recent work histories who tost their jobs
through no fault of their own. Virtually all wage and
salary workers are covered. (Details are in Chapter 3.)
Other social insurance programs include Workers' Compensation, Veterans' Disability Compensation, Railroad Retirement, and Black Lung.

Federal expenditures for many programs take the form of grants
to State governments. Over time, Federal regulations have given
the States increased flexibility to make the best use of funds and
authority to experiment with programs. The Administration has
encouraged innovation at the State level in the design of assistance
programs.
Total real Federal grants to States grew steadily between 1967
and 1978, rising from $57 billion (in 1990 dollars) to $150 billion. In
1981 eligibility requirements were tightened for means-tested programs. Federal grants fell to $113 billion in 1983. Since then, some
of the eligibility requirements have been relaxed, and Federal
grants increased to $131 billion in 1990. Federal grants were about
20 percent of State and local governments' own revenues in the
late 1960s. The ratio rose to 31 percent in 1978 before falling to
about 19 percent in 1987-90.
TAXATION
Federal tax revenues were 18.9 percent of GDP in 1990. Between
1960 and 1990, Federal tax revenues ranged between 17.5 percent
and 20.2 percent of GDP.




129

Box 4-4.—Subsidies to the Weil-Off
Although a large portion of government spending is targeted
toward lower income persons, some transfers directly benefit
high-income groups as well as others. Data from the Census
Bureau show that in 1990 about $30 billion in transfers were
received by households with pretax, pretransfer income in the
top fifth for all households.
For example, supplementary medical insurance (SMI), part B
of medicare, pays for physicians, supplies, and other items and
is highly subsidized. For a 65-year-old in 1991, premium payments covered only about 17 percent of the costs. The remaining portion was financed from general revenues. More than 90
percent of the elderly are enrolled in medicare, and more than
95 percent of medicare enrollees choose to participate in SMI.
Thus* a large proportion of high-income elderly households receive very highly subsidized medical insurance through SMI.
The average lifetime subsidy for men who were 65 years old
in 1991 is estimated to be more than $25,000. For women of the
same age, the estimated lifetime subsidy is $39,000. The difference in subsidies reflects differences in life expectancies, and
other factors.
While subsidies for low-income people are generally supported by many people, most people are unaware that high-income
households receive subsidies of this magnitude*

The composition of Federal tax revenues has changed since 1960.
Social insurance taxes (mostly Social Security) rose from 16 percent
to 37 percent of revenues between 1960 and 1990. The rise was due
initially to the increase in contributors into the Social Security
system and higher benefit levels. Since the late 1970s, Social Security tax rates have been increased in order to ensure the future solvency of the system. Revenues from corporate income taxes fell
from 23 percent of revenues in 1960 to about 9 percent in 1990, primarily because of declining corporate profits relative to national
income. The individual income tax constituted 45 percent of revenues in 1990, and between 41 and 48 percent of revenues annually
since 1960.

Income Tax Reforms
Several major tax reforms since the late 1970s have substantially
changed the nature of the tax system, beyond the shift in the composition of revenues described above. Many of these reforms developed as a response to events in the 1960s and 1970s.




130

Chart 4-5

Federal Social Insurance and Means-Tested Transfers Relative to GDP

Federal social insurance and means-tested transfers have more than doubled relative to GDP since
1967. Means-tested spending has shifted toward noncash benefits.
Percent of GDP
12

10

Total

Noncash Means-Tested
_ —

"^

Cash Means-Tested

-.*m.**.wm.m.Tr.~'
r

,

i

1967 . 1969

i

i

1971

,

i

1973

,

i

1975

i

i

1977

i

i

1979

,

i

1981

,

i

1983

,

i

1985

i

i

1987

,

i

1989

Fiscal years
Sources: Department of Commerce and Office of Management and Budget.

Bracket creep, a process in which sustained inflation pushes
many people's income into higher income tax brackets, raises people's marginal and average income tax rates even in the absence of
any explicit tax policy changes. Between 1964 and 1980, when
annual inflation averaged more than 6 percent, bracket creep and
other factors had significant effects on tax rates. The proportion of
adjusted gross income that was taxed at a rate of 35 percent or
higher quadrupled, from 7.7 percent in 1964 to 31.2 percent in
1980. The proportion of tax filers who faced a marginal Federal
income tax rate of 35 percent or higher increased tenfold.
High marginal tax rates can have strong, negative effects on the
level and growth of GDP by reducing the return to working,
saving, investing, and innovating. High marginal tax rates also increase incentives for tax avoidance and evasion and thus do not
always translate into higher average tax rates or higher tax revenues. Tax avoidance occurs when taxpayers make investment and
consumption decisions that are influenced by the desire to reduce
tax liabilities. Tax evasion is the failure to comply with the tax
laws.
Reform of the U.S. income tax system to address these concerns
began with the Revenue Act of 1978, which reduced income tax
rates and raised the exclusion for capital gains income. The Eco


131

TABLE 4-1.—Expenditures on Selected Means-Tested Government Assistance
Programs, Fiscal 1990
[Outlays in millions of dollars]
Federal
expenditures

Program

State/
local
expenditures

Total
expenditures

Medicaid

41,103

31,033

72,136

AFDC

10,147

9,691

19,838

Food stamps

14,992

1,185

16,177

Housing assistance

15,901

2

15,901

SSI

11,493

3,626

15,119

0

7,784

7,784

Child nutrition

4,996

2

4,996

Pell grants

4,484

0

4,484

Earned income tax credit1

4,354

0

4,354

Job Training Partnership Act

3,784

0

3,784

WIC

2,196

2

2,196

Head Start

1,552

388

1,940

Energy assistance

1,314

122

1,436

463

184

647

116,779

54,013

170,792

General assistance

JOBS

,

"
.
Total

1

Expenditures include refunded portion of the credit only.
Not available.
Note.—State/local expenditures include administrative expenses.
Sources: Office of Management and Budget and Congressional Research Service.
2

nomic Recovery Tax Act of 1981 created sweeping across-the-board
reductions in marginal tax rates. The top marginal tax rate was reduced from 70 percent to 50 percent. The act also indexed tax
brackets and personal exemptions in the individual income tax for
inflation starting in 1985, and provided incentives to save by allowing near-universal eligibility for tax-preferred individual retirement accounts (IRAs). A variety of changes in depreciation and
leasing rules provided new incentives for investment. Tax reforms
in 1982 and 1984 scaled back some of these provisions.
The Tax Reform Act of 1986 reduced the top statutory individual
tax rate from 50 percent to 28 percent, with an effective rate of 33
percent for some high-income taxpayers. The corporate income tax
rate was reduced to 34 percent from 46 percent. The income tax
base was broadened substantially by changing several features of
the tax code that affect saving and investment. Depreciation deductions were reduced. The investment tax credit was repealed, as was
the tax exclusion for capital gains income. Passive loss restrictions
were imposed. Eligibility for tax-deductible IRAs was restricted. Interest deductions for consumer borrowing were phased out. The
earned income tax credit (EITC) was expanded, and along with increased personal exemptions and standard deductions, exempted



132

more than 4 million low-income taxpayers from having to pay Federal income taxes.
The Omnibus Budget Reconciliation Act of 1990 installed a variety of tax policy changes, in addition to the spending and deficit limitations discussed in last year's Economic Report of the President.
The EITC was expanded, with supplemental credits added for families with young children and for health care expenses. Statutory
marginal tax rates for the highest levels of income were equalized
at 31 percent. A phase-out of personal exemptions, limitations on
itemized deductions, and new excise taxes levied on furs, jewelry,
and expensive cars effectively raised taxes for the affluent.
On the whole, the changes in the tax code since 1981 have reduced the role of the income tax in economic decisionmaking. Statutory rates on the highest levels of income fell from 70 percent in
1980 to 31 percent in 1990. Differentials in the tax treatment of investment in most kinds of assets were reduced, and the tax base
was broadened.
Despite these generally desirable reforms, the income tax continues to discourage saving and investment. This concern is especially
timely in light of the low rates of saving and investment in the
United States relative to other countries and the critical role of
such activity in spurring long-term economic growth. Limited loss
offset provisions and the taxation of nominal rather than real incomes create a wedge between statutory tax rates and effective tax
rates. Capital gains tax payments can exceed 100 percent of capital
gains adjusted for inflation. To increase incentives to save and
invest, the Administration's fiscal 1993 budget calls for the restoration of the capital gains tax exclusion, a new flexible IRA, penaltyfree IRA withdrawals for first-time homebuyers, a tax credit for
first-time homebuyers, an investment tax allowance for machinery
and capital equipment, improvements in the corporate alternative
minimum tax, and other items.
Social Security Reforms
A second development in the 1970s and early 1980s concerned
the financial status of the Social Security system. The system narrowly averted cash-flow crises in 1977 and 1983, and faced long-run
financing problems in meeting the retirement needs of the babyboom generation.
To put the Social Security system on sounder footing, a schedule
of tax rate increases was passed in 1977. In 1983 further reforms
incorporating some of the recommendations of the bipartisan National Commission on Social Security Reform were enacted. These
recommendations accelerated the dates of previously legislated tax
increases, raised tax rates for the self-employed, imposed income
taxes on half of all Social Security benefits for people with income
above certain amounts, required a small and gradual increase in



133

the retirement age in the 21st century, delayed annual cost-ofliving adjustments by 6 months, and extended mandatory coverage
to new Federal workers. These changes reduced substantially the
long-run deficit in the Social Security trust fund and eliminated
the trust fund's short-run cash-flow problems.
SUMMARY
• Federal and State spending on means-tested and social insurance programs has grown significantly since the mid-1960s.
Means-tested spending has shifted dramatically toward noncash programs.
• A series of major income tax reforms since 1978 has broadened
the tax base, closed loopholes, and reduced marginal tax rates
substantially. The income tax, however, continues to discourage saving, investment, and entrepreneurship.
• Social Security reforms have averted financial crises and initiated the buildup of funds necessary to finance the retirement
of the baby-boom generation.

EFFECTS OF TAXES AND TRANSFERS ON THE
DISTRIBUTION OF INCOME
Government tax and transfer policies can have large effects on
the distribution of income. The effects of taxes and transfers can
occur directly, through receipt of transfers from, or payments of
taxes to, the government, or indirectly, when the government program changes a person's behavior. The people who are actually affected by a tax or transfer are not necessarily the same people who
send the money directly to, or receive the transfer from, the government. Making the distinction between the two is sometimes difficult (Box 4-5).
There are many ways to measure and describe the redistribution
that occurs within an economic system. One common measure uses
the relationship between average ("effective") tax rates—the ratio
of taxes to income—and income level. If the average tax rate increases with income, then the tax system is said to be progressive.
If the average tax rate falls as income rises, the system is termed
regressive. In a proportional tax system, average tax rates are constant across income classes.
This measure can easily be expanded to consider both taxes and
transfers by examining the ratio of taxes minus transfers to
income as income rises. Thus, a progressive system, for example,
would show higher average rates of taxes net of transfers as
income rises.



134

Box 4-5.—Behavioral Responses to Taxes and Transfers
Economic theory draws a key distinction between those who
are legally obligated to make tax payments to the government
and those who ultimately bear the burden of the tax. Firms, for
example, may pass along tax increases to consumers or workers. Although the firms send the money to the government,
consumers may bear the burden of the tax by paying higher
prices, or workers may bear the burden by receiving lower
wages or other compensation;
Just as the costs of a tax can sometimes be shifted, the benefits of a transfer are sometimes shifted as well. Shifting can
occur over periods of time as well as among people* Expected
future Federal farm payments raise the price that buyers are
willing to pay for farmland now. People who buy land this year
and receive the expected Federal benefits in the future rrJA
have paid for the benefits by paying a higher purchase price
for the land. Current landowners who sell their land now will
be the beneficiaries of expected future policy.
The extent of shifting depends on how people respond to the
tax or spending program and on the timeframe considered.
Analyzing the behavioral response can be quite complicated. If
a tax is anticipated, the behavioral response can come before
the actual implementation of the tax. A temporary tax or
spending change may induce a very different response and
thus a different pattern of tax shifting than a permanent
change. The response to any policy, temporary or permanent,
may be different in the short run, when people have little time
to adjust, than in the long run* when full adjustments can take
place.
Behavioral responses are crucial ingredients in understanding the effects of government policy. For example, Social Security benefits constitute a large portion of income for many elderly people. Social Security thus appears to raise incomes of
elderly people by a substantial amount However, Social Security provides disincentives for the elderly to work. Determining
the net effects of Social Security on the recipient's income requires knowing how the program affects the work patterns of
the elderly.
COMBINED EFFECTS OF TAXES AND TRANSFERS
The most comprehensive, and thus potentially the most informative, measures of redistribution examine the combined effects of
taxes and transfers. Data prepared by the Bureau of the Census



135

and presented in Table 4-2 show in the second column the distri
bution of annual income for households ordered into quintiles b>
their income before taxes and transfers (including private income,
capital gains, and the cash value of employers' contribution for
health insurance). The third and fourth columns show the effects of
Federal and State income and payroll taxes and cash and noncash
transfers, keeping the assignment of households to quintiles the
same as in the second column. Table 4-2 uses the Census Bureau's
best estimates of the value of noncash transfers. Like virtually all
of the available estimates, the data in Table 4-2 do not include adjustments for people's behavioral responses to taxes and transfers.
The combined effects of Federal and State taxation reduce the
Gini by 5.5 percent, thus making the distribution of income more
equal. Most redistribution, however, occurs through transfer programs. When income from cash and noncash transfers is added, the
Gini falls by an additional 17 percent.
Table 4-2 shows that the tax and transfer system in 1990 raised
the share of income for households in the lowest quintile from 1.1
percent to 6.5 percent, and reduced the share going to the highest
quintile to 43.0 percent from 50.7 percent.
TABLE 4-2.—Effects

of Taxes and Transfer Payments on Household Income by Income
Quintile, 1990
ncome before
taxes and
transfers

Income quintile

0.490

Gini...

Income after
taxes before
transfers
0.463

Income after
taxes and
transfers
0.384

Lowest

1.1

1.4

6.5

Second

7.9

9.0

11.2

Third

15.5

16.4

16.1

Fourth

24.7

25.2

23.2

Highest

50.7

48.0

43.0

10,904

Average Income (dollars)
Lowest

2,096

2,045

Second

14,664

13,126

18,676

Third

28,836

24,102

27,017

Fourth

45,836

36,991

38,780

Highest

93,966

70,338

71,944

Source: Department of Commerce.

Chart 4-6 shows that in 1990, households in the top 20 percent of
the pretax, pretransfer income distribution paid an average of about
$22,000 in taxes net of transfers to Federal and State governments.
Households in the lowest income quintile received an average of
about $8,800. Average income in the lowest quintile rose from
about $2,100 before accounting for taxes and transfers to about



136

$10,900 afterwards. Average income in the highest quintile fell
from about $94,000 to about $72,000. Thus, the combined effects of
Federal and State taxes and transfers are highly progressive.
Chart 4-6 Effects of Taxes and Transfers on Income, 1990
The combined effects of government taxes and transfers are to redistribute a substantial amount of
income from higher income households to lower income households.
Average net dollars received
20,000

10,000

8,808
4,012

mmmm
-1,819

tiiitt
-7,056

-10,000

-20,000
-22,022

I

-30,000
Lowest

Second

Source: Department of Commerce.

I
Third
Income Quintiles

Fourth

Highest

Redistributive Effects of Other Policies
While taxes and transfers represent a broad range of government
activities, other government policies redistribute resources as well.
For example, the tax deduction for private contributions to charitable organizations raises these contributions. The private contribution does not appear as a government transfer but is nonetheless
influenced by the favorable tax treatment.
Direct government purchases of goods and services and government programs that improve the environment, maintain the infrastructure, and provide education, national defense, or other items
can also have important distributional effects. These effects, however, are difficult to measure.
Long-Term Redistribution
The impact of government policies on the distribution of longterm income can differ significantly from the effects on the distribution of annual income. Low-skilled workers in their high-earning
years may pay a relatively high amount of taxes compared with
other taxpayers, even though income over their entire careers may
be relatively low. In contrast, medical students pay relatively low



137

amounts of taxes even though their long-term income is relatively
high. A tax increase on the older, low-skilled workers combined
with a tax cut for the medical students would reduce inequality of
annual incomes but raise inequality of long-term incomes.
One study, using data from 1969 to 1981, found that Federal
taxes and cash transfers reduced the Gini for lifetime incomes by
19 percent and reduced the Gini ratio for annual incomes by 13
percent. Therefore, the combined effects of taxes and transfers may
reduce inequality in long-term incomes by more than they reduce
inequality in annual incomes.
Some government policies have the effect, intended or unintended, of redistributing wealth across generations. A well-known example is Social Security, which makes direct payments to the elderly,
financed by payments from current workers. Intergenerational
transfers can occur in less obvious forms as well. For example,
most wealth in the United States is held by people who are older
than 40, and most people over the age of 65 are retired. Therefore,
a policy that raised tax rates on capital income and reduced rates
on labor income would constitute an implicit transfer of wealth
from older to younger generations. These transfers can be large.
Government policies can also transfer resources between currently living generations and generations yet to be born. Financing government through debt rather than through current taxes, for example, can push the burden of paying for current obligations onto
future generations. Intergenerational issues concerning the deficit
are discussed in Chapter 7.
REDISTRIBUTION IN THE FEDERAL TAX SYSTEM
By any of a variety of measures, the income tax and Social Security reforms beginning in the late 1970s have not significantly
changed the redistributional effect of the tax system.
The Individual Income Tax
Chart 4-7 shows estimates from the Department of the Treasury
of average Federal individual income tax rates for hypothetical
four-member families with the median, half the median, and
double the median income level, as reported by the Bureau of the
Census. Median income for 1991 was estimated on the assumption
that the real level of median income would not change from its
1990 level. Families are assumed to have only wage and salary
income earned by one person. Comparisons made for the same type
of family over time help to isolate the effect of changes in the tax
system from changes in the sources and distribution of income and
in demographics.
The chart shows that the Federal individual income tax is progressive in each of the years because the average tax rate rises with
income. In 1991, for example, the average estimated income tax



138

Chart 4-7 Average Federal Individual Income Tax Rates
The Federal individual income tax system is progressive because average tax rates rise with income.
The degree of progressivity has not changed substantially since 1980.
Percent
20

1980
^

1985
Half of median income

^

1988
Median income

Q

1991
Twice median income

Note: Data are for four-person families with one wage earner.
Source: Department of the Treasury.

rate rises from 5.1 for families with half the median income to 15.1
for families with twice the median income. The average Federal
income tax rate has fallen since 1980 for all three groups. The percentage change in average tax rates between 1980 and 1991 was
virtually the same at all three relative income levels.
Chart 4-8 shows that the share of individual income taxes paid
by the highest income groups has increased since 1980, while the
share paid by the lowest income groups has declined. The share of
taxes paid by households in the highest income quintiles has increased because their overall share of income has increased and because they pay higher average tax rates than all other households.
All Federal Taxes
Although it is the single largest revenue source for the Federal
Government, the individual income tax accounts for less than half
of all Federal revenues. Estimates by the Congressional Budget
Office (CBO) of tax rates for all Federal taxes are reproduced in
Table 4-3. CBO's definition of the demographic unit, measure of
income, and basis for ordering units into quintiles differ substantially from those employed in the data developed by the Census
Bureau and the Treasury Department and presented above. De-




139

Chart 4-8 Shares of Federal Individual Income Tax Payments by Income Class
The share of Federal individual income taxes paid by high-income groups has increased since 1980,
while the share paid by low-income groups has fallen.
Percent
80
72.3
67.2

68.5

1980

1985

60

40

20

Bottom 40 percent

Top 20 percent

1989
Top 5 percent

Source: Department of the Treasury.

spite these differences and the issues they raise, the implications of
CBO's analysis are similar to those presented above.
The CBO data indicate that the overall Federal tax system is progressive in each year. The system appeared to have become less progressive between 1977 and 1985. Part of this change, however, is
due to the 1977 and 1983 Social Security tax increases. As discussed
below, examining Social Security taxes and ignoring Social Security benefits makes that particular program appear regressive.
Taken as a whole, however, the Social Security system is progressive.
The tax system became more progressive between 1985 and 1988,
when the Tax Reform Act of 1986 led to sizable tax increases in the
higher income quintiles and a sizable tax reduction in the lowest
quintile. The tax system is forecast to become even more progressive between 1988 and 1992, according to CBO's estimates. Tax reductions for the lowest four income quintiles and another tax increase for the highest quintile are expected to occur as a result of
policies introduced in the 1990 budget accord.
CBO estimates in Table 4-4 indicate that the share of all Federal
taxes paid by the highest income groups has increased since 1977,
while the share paid by middle and lower income families has
fallen.



140

TABLE 4-3.—CBO Estimates of All Federal Taxes
[As a percent of income]
1977

Income quintile
Lowest

.

1980

1992

1988

1985

93

8.1

10.3

9.3

8.6

15.4

.

Second

15.6

15.8

15.9

15.6

Th'rd

19.5

19.8

19.1

19.8

19.7

Fourth

21.8

22.9

21.7

22.4

22.2

Highest

27.2

27.5

24.1

26.0

26.8

Note.—The individual income tax burden is allocated to families who directly pay the tax. Both the employer and employee
portions of social insurance taxes are allocated to labor income. Excise tax burdens are allocated to the consumers who pay
them. The corporate tax burden is divided equally between capital and labor income.
Source: U.S. House of Representatives, Committee on Ways and Means, 1991 Green Book.

TABLE 4-4.—CBO Estimates of Shares of All Federal Tax Payments
[Percent]
1977

Income quintile

1980

1985

1988

1992

Lowest

2.0

1.6

1.8

1.5

1.3

Second

7.2

6.9

6.8

6.2

6.0

Third

13.4

13.2

13.0

12.5

12.1

Fourth

21.6

22.1

22.0

20.8

20.0

Highest

55.7

56.1

56.1

58.9

60.5

27.7

27.4

27.5

30.9

33.3

Addendum
Top 5 percent..,

Source: U.S. House of Representatives, Committee on Ways and Means, 1991 Green Book.

Thus, data developed separately by the Treasury Department
and the Congressional Budget Office indicate that the Federal individual income tax and the overall Federal tax system redistribute
income from high-income households to low-income households and
thus are progressive. The degree of progressivity of, and the amount
of redistribution within, the tax system has not changed significantly since the mid-1970s.
SOCIAL SECURITY
In 1990, $296 billion in Social Security taxes were paid to the
Social Security trust fund by or on behalf of 134 million workers.
At the same time, Social Security benefits totaling $248 billion
were paid to more than 39 million people. Most people pay Social
Security taxes during their working lives and receive benefits
during retirement.
On average, Social Security redistributes resources from higher
income households to lower income households. Redistribution
within the Social Security program has long been a controversial
topic, however, because the program transfers resources across
people and over time and involves both taxes and benefits.



141

Social Security transfers resources across generations, from current workers to current retirees. Over the long term, the cumulative effects of long-term productivity growth imply that current
workers will, on average, have higher wages and incomes over
their lifetime than current retirees did. Thus, on average, the
Social Security system to date has transferred resources from
people in generations with higher overall resources to people in
generations with lower resources.
Social Security also redistributes resources among people within
a generation. For example, the payroll tax used to finance Social
Security benefits is proportional up to an income threshold, above
which the marginal rate falls to zero. Thus, examining only the tax
structure would suggest (incorrectly) that the Social Security program is regressive.
If one adds in benefit payments, but focuses only on a 1-year
period, Social Security appears highly progressive. Households in
the lowest income quintile received 20 percent of Social Security
benefits (net of taxes paid on those benefits) and paid less than 2
percent of Social Security taxes in 1990. Households in the top
quintile paid 47 percent of the taxes and received 11 percent of the
benefits.
However, because Social Security transfers resources over people's lifetimes, the program is best understood through analyses of
longer periods. Among households of the same generation, Social
Security has redistributed resources from higher income households
to lower income households through a combination of three factors.
First, the formula that determines benefits replaces a higher percentage of wages of lower income workers than of higher income
workers. This aspect of Social Security is progressive in that the
ratio of benefits received to taxes paid falls as income rises. A
recent study showed that a married worker who retires at age 65
after working since age 21 at the Federal minimum wage will recover all Social Security taxes paid, including the employer and
employee shares, in 4.1 years. A married worker earning the maximum taxable amount each year will recover contributions in 7.2
years.
This effect is offset to some extent because heads of lower income
households face higher mortality rates than heads of high-income
households and thus, on average, collect Social Security benefits for
a shorter period of time. After accounting for these factors, one
study found that the rate of return earned on Social Security retirement contributions was roughly equal across wealth classes.
The study, however, omitted the third effect, namely the influence of survivors, dependents, and disability payments. Lower
income households are likely to receive more of these payments
precisely because of their higher mortality and disability rates.



142

When all three factors are considered, the Social Security program
redistributes resources within a generation from households with
higher lifetime income to those with lower lifetime income.
SUMMARY
• Federal and State tax and transfer programs shift a substantial amount of resources to lower income households from
higher income households. Most redistribution occurs through
the transfer system.
• The overall Federal tax system and the individual income tax
are progressive. By several alternative measures, the extent of
redistribution within the Federal tax system has not changed
substantially since at least the mid-1970s.
• The Social Security system transfers resources both across generations and within generations. In each case, the program redistributes income, on average, from higher income households
to lower income households.
• The impact of government policies on the distribution of
wealth across generations can be larger than the impact on the
distribution of annual incomes.

POVERTY AND THE SOCIAL SAFETY NET
Despite long-term increases in income and government transfer
spending, poverty remains a serious problem in the United States.
Integration of more low-income households into the economic mainstream will not only help those families gain economic independence, but will also increase the productive resources of the Nation
and help maintain economic growth.
The Poverty Rate
The poverty rate measures the percentage of people with incomes below a level associated with a minimally adequate standard
of living (Box 4-6). The official poverty rate for persons fell from
22.4 percent in 1959 to a low of 11.1 percent in 1973, fluctuated
throughout the remainder of the 1970s, and rose sharply from 11.4
percent in 1978 to 15.2 percent in 1983. The rate fell to 12.8 percent
in 1989, and then rose to 13.5 percent in 1990 (Chart 4-9).
The official poverty rate, however, is somewhat misleading in
several respects. The Census Bureau publishes several alternative
poverty rates that adjust for some of these factors. For example,
the official poverty measure omits noncash transfers. Including estimates of the value of noncash transfers reduces the poverty rate
in 1990 to 11.0 percent (Chart 4-9).
The poverty threshold is adjusted annually for inflation using
the CPI-U price index. For reasons discussed in Chapter 7, the CPIU-Xl provides a more accurate and consistent measure of trends in



143

Chart 4-9 Alternative Measures of the Poverty Rate of Persons
Adjusting for government noncash benefits and measuring the cost of living on a consistent basis reduces
the level of the poverty rate, but does not alter the trends.
Poverty rate of persons
24

1959 1961 1963 1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989
* Includes noncash benefits.
Sources: Department of Commerce and Department of Labor.

the cost of living since the mid-1960s. Using the CPI-U-X1 to adjust
the poverty thresholds since 1967 yields a 1990 poverty rate of 12.1
percent, excluding noncash transfers, and a rate of 9.5 percent
when noncash transfers are included (Chart 4-9). By any measure,
however, poverty is clearly a problem that requires serious attention.
Duration of Poverty
While most people in poverty remain impoverished for only a
short time, most poverty in any extended period is accounted for by
people who remain poor for a long time. Long spells of poverty
have been associated with low educational attainment, low attachment to the work force, and early child bearing out of wedlock.
Concern exists that the structure of means-tested transfer programs
contributes as well. Studies have also shown that children of government-dependent parents are more likely to become dependent on
government themselves.
Demographics and Poverty
Poverty rates and trends vary across age groups. For people 65
years and older, the poverty rate fell from 28 percent in 1966 to
about 16 percent in 1980 and to about 12 percent in 1990. In con


144

Box 4-6.—The Poverty Rate
The poverty rate measures the percentage of people or families with money income below the poverty threshold. The
threshold was developed in 1964 by the Social Security Administration. The threshold was based on a 1955 survey that
showed average families spent about one-third of their income
(net of income and payroll taxes) on food. To estimate a minimally adequate total family income level* the Agriculture Department's economy food budget plan was multiplied by the
same factor of three. For smaller families and people living
alone, the cost of the economy food plan was multiplied by
slightly higher factors to compensate for the relatively larger
fixed expenses.
Standards of living have grown considerably since the mid1950s and average families do not have to spend as much of
their income now on food or other basics as they previously
did. However, a higher multiplier reflecting the amount an average family now spends on food would introduce a relative
measure of poverty not in the original poverty definition. The
official poverty estimates maintain the same absolute standard
of living by adjusting the threshold for inflation each year.
Income calculations for determining the poverty rate omit
in-kind transfers and fringe benefits. The poverty measure also
omits consideration of forms of wealth, such as homes, automobiles and savings accounts, and does not take into account regional variations in the cost of living.
trast, as discussed below, the poverty rate for children has increased over the last 25 years.
Shifts in household composition also affect poverty rates, primarily through their effects on earnings and income. The most
common reason why people fall into or escape poverty concerns
changes in their own or their family's earnings. Thus, for example,
the long-term increase in the proportion of families with children
headed by females has led to an increase in the overall poverty
rate. Female heads of families tend to be younger than heads of
other families and those in the labor force may have had shorter
job tenure or less overall labor market experience. Female heads of
households also often face child care responsibilities that severely
limit their ability to take on jobs outside the home. Means-tested
transfer programs provide incentives for female heads of households to reduce or eliminate work outside the home. About onefourth of all female householders with children do not work outside
the home; of these, nine in ten are poor. Due to these and other




145

factors, median income for all female householders was 60 percent
of median income for all households in 1990 and the poverty rate
for female-headed families with children was 44.5 percent. Between
1973 and 1990, the increase in the number of poor female-headed
families was 69 percent of the increase in the number of all poor
families, and the proportion of poor families headed by a female
grew from 45.4 percent to 53.1 percent.
Chart 4-10 shows that, if the mix of population classified by
householder status (married, female householder, or unrelated individual) were held constant at the 1973 proportions, the poverty rate
in 1989 would have been 11.1 percent, the same as in 1973. As a
purely statistical matter, shifting demographic patterns, through
their effects on household earnings and income, can account for the
entire increase in poverty between 1973 and 1989, while other effects on the poverty rate netted to zero.
Chart 4-10 Demographics and the Poverty Rate of Persons
If the mix of population classified by householder status were held constant at 1973 proportions, the
official poverty rate in 1989 would have been the same as the rate in 1973.
Poverty rate of persons
16

1973

1975

1977

1979

1981

1983

1985

1987

1989

Source: Department of Commerce.

This point should not be misunderstood. Families are not destined to have lower income simply because they have a particular
demographic characteristic. However, family income is largely determined by the earnings capacity of its members—the number of
workers, and their skills, job tenure, experience and availability to
work outside the home. Some of the recent demographic changes,
the growth in the number of female-headed households in particu


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lar, has made it harder for a larger number of families to develop
earnings capacity.
THE SOCIAL SAFETY NET
Although there is no official definition, the social safety net
refers generally to government programs and policies whose purpose is to ensure a minimum standard of living for individuals and
families unable to provide for themselves. Means-tested programs
(Boxes 4-1 and 4-2) are thus the centerpiece of the social safety
net. Social insurance programs (Box 4-3) make payments to persons and families who experience income losses and thus provide
protection against several important causes of poverty. Other programs, such as child support enforcement measures, are also important elements of the safety net.
Safety net spending has a significant effect on the official poverty rate. In 1990 cash and noncash transfers cut the poverty rate by
more than half, from 19.3 percent to 9.5 percent, using the CPI-UXI.
One measure of the safety net is Federal and State means-tested
expenditures per poor person. Although not every dollar of meanstested spending goes to people in poverty, this measure provides a
useful approximation of the extent of, and trends in, government
spending on the poor.
Chart 4-11 shows that despite a sharp drop between 1978 and
1982, real Federal and State means-tested spending per poor person
(using the official definition of poverty) increased by more than 300
percent from 1967 to 1990. Means-tested expenditures were $5,160
per poor person in 1990. Much of the long-term increase occurred
through medicaid spending. Spending per poor person on other
means-tested programs has increased 230 percent since 1967 and
totaled $3,015 in 1990.
INCENTIVE EFFECTS OF MEANS-TESTED TRANSFERS
One of the major concerns about means-tested transfer programs
is their effects on the labor supply, saving, and family structure of
recipients. These effects are examples of the behavioral responses
to tax and transfer programs discussed in Box 4-5.
Labor Supply
Recipients of means-tested transfers typically have very low
levels of earnings, and the structure of these transfer programs is
suspected to be at least partially at fault. Most means-tested programs provide guaranteed benefits to a target population with zero
earnings. As earnings are increased, benefits are reduced and eventually eliminated. This reduction in benefits acts like a tax on
earnings.



147

Chart 4-11 Real Federal and State Means-Tested Transfer Spending Per Poor Person
Real government means-tested spending per poor person grew rapidly between 1967 and 1978, fell
between 1978 and 1982, and grew substantially again after that.
1990 dollars
6,000

5)000

r

Total Means-Tested

4,000

3,000
/

**
/

* Excluding Medicaid

.-•*"

2,000

1,000

i

1967

1969

1971

1973

1975

1977

1979

1981

,

-

i

1983

i

i

1985

i

i

1987

,

i

1989

Fiscal years
:

Note: CPI U-X1 used as deflator.
Sources: Department of Commerce, Department of Labor, Office of Management and Budget, and Congressional
Research Service.

For example, when AFDC recipients accept jobs, their AFDC and
food stamp benefits may fall. If they earn sufficiently high
amounts, they can eventually lose eligibility for medicaid and child
care benefits as well. Studies have shown that effective tax rates
on people leaving AFDC to work can be very high and can even
exceed 100 percent. High effective tax rates such as these obviously
reduce the incentive for people to work outside the home. The
actual effect of these provisions on labor supply is the subject of
much research.
The policy issues posed here have been well recognized for decades. Given the current structure of the system, reducing the high
benefit reduction rate requires either allowing families to remain
on AFDC at higher income levels than are currently allowed, with
attendant higher government spending, or providing a lower
amount of assistance to families with no earnings.
To reduce the disincentives created by AFDC, the Administration
has proposed, as a demonstration project, setting up "escrow"
saving accounts for long-term AFDC recipients, working their way
off the rolls. The project would set aside the amount by which a
long-term AFDC family's benefits are reduced when the family
head takes a job, and would pay that amount in a lump-sum to the
family if they succeed in working their way off the rolls.



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Saving
Means-tested transfer programs have asset limits as well as
income tests. To remain eligible for AFDC, a family may not have
more than $1,000 in wealth, excluding a home, one automobile,
and, at the State's option, items of personal property deemed essential for daily living.
Although asset limits ensure that families use their own resources before depending on the government for assistance, asset
restrictions mean that people already receiving benefits cannot
save much if they want to retain their eligibility for public benefits. People who are currently ineligible for benefits as a result of
asset restrictions have an incentive to diminish their assets so they
can qualify for benefits. But without the economic cushion that
assets provide, people will be less likely to take steps to leave
transfer programs and begin attaining economic self-sufficiency.
For this reason, the 1993 budget calls for giving States the option
to raise the AFDC asset limit to $10,000 for families already receiving AFDC benefits.
Family Structure
Because AFDC targets primarily single-parent families with children, many analysts think that the program has contributed to the
increase in the number of female-headed families over the past 20
years. While the evidence concerning its effects on out-of-wedlock
childbirth and divorce patterns is mixed, AFDC clearly penalizes
marriage.
The average transfer income (including medicaid) in 1990 for a
single parent with two children and no earnings was $9,196.
Income net of work expenses and taxes from a minimum wage job
was approximately $6,370. If an AFDC recipient married a minimum
wage worker in 1990, combined family income would be only
$10,887 because welfare benefits are reduced due to the spouse's
labor earnings. The combined income before marriage was $15,566.
As a result of marrying, the couple would lose $4,679 in income. Despite this apparent disincentive, marriage is a primary reason for
leaving AFDC.
The existing system of means-tested transfers thus provides lowincome families with incentives not to work, not to save, and not to
keep families intact.
ISSUES REQUIRING SPECIAL ATTENTION
Over the past century, economic growth has done more to reduce
general conditions of poverty and economic need than any specifically designed antipoverty policy. While a healthy economy is important in fighting poverty, by itself it is insufficient because not
all low-income households benefit from economic expansion. Some



149

analysts have concluded that the ability of macroeconomic growth
to reduce poverty may have diminished in recent years for either
of two reasons. First, earning opportunities were less attractive for
low-skilled workers in the 1980s. Second, due to child care responsibilities and other factors, income of poor female heads of families
tend to be less responsive than income of other poor households to
macroeconomic expansion. The proportion of such households
among the poor has increased in the past 20 years. Thus, general
policies to enhance growth need to be supplemented with programs
that assist particular groups.
Administration policy for low-income households aims to give
people choice and opportunity. Only with the ability to make crucial decisions regarding themselves and their families will people
be able to participate fully in the mainstream economy. Policies
that promote opportunity, choice, and responsibility foster the
values that are central to attaining economic self-sufficiency.
Children
Children now have a higher poverty rate than any other age
group. In 1990, about 20 percent of all children and 45 percent of
black children in the United States lived in poor families. One explanation for the high child poverty rate is the increase in the proportion of families headed by single females. The proportion of children living in female-headed families doubled, from 11 percent in
1970 to 22 percent in 1990. In 1990, children living in femaleheaded families were more than five times as likely to live in poverty as children living in married-couple families. More than half
of all poor children in 1990 were living in female-headed families.
Children need special consideration for several reasons. The economic position of a child depends on the economic position of his or
her family. A child is therefore limited in the ability to make decisions or take actions to improve his or her economic situation.
Poverty and economic insecurity have negative effects on children. Children born into poor families suffer from higher infant
mortality rates and lower average birth weights and are at greater
risk of developing learning and health problems.
Today's youth represent the future. Social investment in children
is economically vital not only for their own sake but also in preparing America for the 21st century. Over time, the benefits of assistance to poor children can be expected to accrue to all members of
society.
The Administration continues to place a high priority on programs serving children. Government-wide funding for programs relating to children is projected to rise from $60 billion in fiscal 1989
to over $100 billion in fiscal 1993, representing a 66-percent increase in funding over the 4-year period.



150

The social safety net, in many cases, is unable to assist children
directly. Rather, aid often must come through the child's parents.
One direct way to assist children is through education. America
2000, the President's strategy for moving the Nation toward the national educational goals, seeks to focus attention on the needs of
children by helping all children start school ready to learn.
Head Start is designed to do just that, by providing a wide range
of services to low-income 3- and 4-year olds. Head Start provides
cognitive and language development, medical, dental, and mental
health services, and nutritional and social services. Analysis of
Head Start has shown it to be effective in providing learning skills
for disadvantaged children. The Administration's fiscal 1993 budget
proposes a $600 million increase in Head Start funding, the largest
ever. If the increase is approved by the Congress, Head Start funding will have more than doubled in this Administration.
The Administration also supports educational choice and flexibility. Choice is critical because it enables parents to make decisions
about what is best for their children's education. The fiscal 1993
budget includes proposals to increase educational choice for lowand middle-income families, for educationally disadvantaged children, and for students pursuing higher education.
The Working Poor
The vast majority of families with workers are not poor. In 1990,
the poverty rate for families with any employment was 7.5 percent,
while the rate for families with full-time, year-round workers was
3.1 percent. Nevertheless, work is not always an immediate way
out of poverty. In 1990 about 60 percent of all poor families had at
least one employed worker and 20 percent had a full-time, yearround worker. Typically, these are larger families.
The tax and transfer system provides assistance to working families with low wages through food stamps, medicaid, child care assistance, and the earned income tax credit (EITC). The EITC reduces the income tax liability of low-income working taxpayers
with children. The credit is refundable, so that families with no
other tax liabilities receive a payment in the value of the credit.
The basic credit rate was expanded from 14 percent in 1990 to 23
percent for families with one child and 25 percent for families with
two or more children by 1994. The maximum credit will rise from
$953 in 1990 to about $1,300 in 1992 and more than $1,900 in 1995.
The EITC supplemental young child credit, enacted as part of the
1990 budget agreement, provides an additional 5-percent tax credit
to eligible families with children less than a year old. A health insurance credit, also part of the 1990 budget agreement, allows a 6percent tax credit to families to help defray the cost of health insurance policies that cover children. In 1992 the maximum health
credit will be about $450.



151

Homelessness and Affordable Housing
One of the most visible problems of the last decade has been homelessness. The exact number of homeless people in the United
States is uncertain, but one extensive study placed the number between 500,000 and 600,000 over a given week in 1987, with twice
that number homeless at some point during the year.
Changes in urban housing markets are often cited as an important cause of homelessness. Rising rents and land prices and the
rejuvenation of downtown areas have displaced low-income populations. The availability of boarding houses and rooms, typically used
by poor single adults, has diminished in many cities. In some areas,
rent control, restrictive building codes, and zoning regulations have
also decreased the stock of low-income housing. Other factors in homelessness include deinstitutionalization of the mentally disabled,
drug abuse, and spouse abuse.
The McKinney Act, passed in 1987, was the first bill to authorize
major direct Federal expenditures on emergency food, shelter, and
counseling for the homeless. In fiscal 1992, $1,008 million was authorized for homeless assistance. The fiscal 1993 budget calls for a
5.5-percent increase in funding.
Legislation signed into law in November 1990, homeownership
and opportunity for people everywhere (HOPE), established a new,
comprehensive strategy to address homelessness called shelter plus
care. Shelter plus care is the first program to combine rental assistance with the necessary supportive services to assist the homeless
in becoming self-sufficient.
Housing affordability is also a critical concern. A large portion of
the poor pay more than half of their income for housing. The Administration continues to emphasize housing vouchers and other
tenant subsidies to address low-income housing needs. The 1993
budget also contains proposals to make housing more affordable for
many middle-income families.
The HOPE program also provides opportunities for low-income
residents of public and assisted housing to manage and eventually
own their own homes. The fiscal 1993 budget proposes that Federal
funding for HOPE homeownership grants be raised by 185 percent
to $1 billion.
Health Insurance
Health costs are increasing far more rapidly than the general
price level and many Americans are without adequate access to
health insurance. In 1988, roughly 13 percent of the population
was medically uninsured. About 30 percent of the uninsured was
in poverty.
As part of a comprehensive health-care reform proposal, the Administration proposes to establish tax credits and deductions for



152

low- and moderate-income people who are not covered by other federally subsidized health programs. The maximum credit for the
purchase of health insurance would be $3,750 for families of three
or more.
SUMMARY
• Since the mid-1960s, Federal and State means-tested expenditures per poor person have grown significantly.
• Administration antipoverty initiatives focus on providing
people with the opportunity, incentives, choices, and responsibilities that help develop economic self-sufficiency.
• Demographic changes have influenced the poverty rate in
recent years. Disincentives in means-tested transfer programs
to work in the labor force, save, and marry exacerbate these
effects.
• Although sustained economic growth remains the best way to
improve economic welfare, special attention must be paid to
children, the working poor, homelessness, affordable housing,
and health insurance.

CONCLUSION
Over the long term, incomes for families and households in each
part of the income distribution have increased substantially. Over
the past 25 years, the distribution of money income has become
more dispersed in the United States. Similar trends are evident in
other countries as well. Trends in the level and distribution of
income are determined by a complex interplay of aggregate economic activity, demographic changes, labor market changes, and
government policy.
Government taxes and transfers redistribute a substantial
amount of resources from higher income households to lower
income households and across generations. Most of this redistribution occurs through transfer payments. Government spending on
transfer programs has increased significantly, starting in the 1960s
and continuing to the present. Redistribution within the Federal tax
system has not changed substantially since at least the mid-1970s.
The status of low-income households remains an important concern. A combination of continued economic growth and targeted
programs is the best strategy for alleviating poverty.




153




CHAPTER 5

Competitive Forces and Regulation
GOVERNMENT AT ALL LEVELS affects economic activity
through such mechanisms as taxes, law enforcement, and the construction of roads and highways. Regulation, however, generally
refers to legal rules that alter the way private companies and
others conduct their operations or that mandate government provision of goods and services. "Economic" regulation takes many different forms. It includes regulating prices and limiting the extent
of competition in an industry, by establishing, for example, a single
local telephone company with rates set by a government body. The
government also attempts to protect the environment, health, and
safety through "social" regulation. Much of this regulation has
been enacted in response to concern about exposure to risk.
Economic and social regulation, the main focus of this chapter,
are part of a broader class of regulatory activities that affect businesses and consumers. Governments require schools to provide special services for certain groups of students, require places of business to be accessible to the handicapped, and require firms to provide certain benefits to their employees. The government sometimes provides services directly, such as mail services through the
U.S. Postal Service, and prohibits others from competing to perform many of these services, including first-class mail.
While the intentions of many regulations are laudable, they can
have unintended adverse impacts on the general public. For example, oil price controls and allocation schemes, begun in 1971 and
abandoned in 1981, exacerbated the effects of the two energy crises
of the 1970s by creating gasoline lines and spot shortages of gasoline. In contrast, during the Persian Gulf crisis, the short-lived
price spike reflected the potential scarcity of oil created by Iraq's
invasion of Kuwait. The higher prices encouraged consumers to
reduce their gasoline use, avoiding the need for government allocations. Once it became apparent that future supply disruptions were
unlikely to occur, prices receded.
Why are regulations that have an adverse impact on the general
public instituted in the first place? One reason is that proponents
of increased government regulation fail to consider the costs associated with new regulations relative to the benefits they are intended to achieve. This failure is particularly common when regula


155

tions are developed to reduce exposure to risk. Similarly, regulation to prevent monopoly pricing by public utilities, although intended to benefit consumers, can be costly if it discourages innovation by the utility. Also, new regulation results from efforts by interest groups to influence legislators and regulatory agencies. As a
result, regulations are adopted that sometimes benefit a particular
interest group to the detriment of overall societal goals. Appropriate regulation is based on a balancing of costs and benefits to society in general, taking into account hidden costs such as reductions in
the incentives for firms to innovate.
Once in place, regulations often are difficult to eliminate or to
alter. A regulation is a legal rule that can be changed only by legislation or the further actions of a government agency. Moreover,
special interests that would lose from the removal of a regulation
that diminishes the well-being of consumers often resist proposed
rule changes. Continued restrictions on price cutting on international air routes, for example, benefit the owners of some air carriers because they are protected from competition, but consumers in
general suffer because they are forced to pay higher fares. Foreign
governments that regulate or control air carriers that would be
forced to become more efficient in a more competitive market
resist the change to a deregulated environment. Deregulation, however, is appropriate when there is reason to believe that, without
government intervention, a market would be competitive. Even
when some regulation is required, reduced or modified regulation
is warranted when the market outcome will be more competitive
with less restrictive regulation.
The Administration remains committed to the continued process
of deregulating or reducing regulation in markets that are or can be
competitive and to advocating regulation only when there is a
strong presumption that the benefits to society exceed the costs.
Energy, for example, is an important input into production and is
also consumed directly. Increased reliance on the competitive
market has improved the ability of the economy to respond to
shocks in energy supply. The Administration's National Energy
Strategy has proposed regulatory changes that would allow energy
markets to function even more effectively. Further reductions in regulation would increase the availability of natural gas. They would
also increase competition in the generation of electric power by encouraging the entry of lower cost, more innovative producers.
Reforming the regulation of financial institution^ while ensuring
the integrity of the financial sector is another major goal of this
Administration. In early 1991 the Administration proposed legislation to address the fundamental problems of the banking industry—the need to recapitalize the bank insurance fund; the need to
make banks safer, stronger, and better able to compete; the need to



156

attract private capital into the industry; and the need to protect
the taxpayer from a costly deposit insurance bailout. The legislation produced by the Congress provided critical funding for the
bank insurance fund but little more. Further legislation is needed
to make banks stronger and to improve the competitiveness of the
industry. The regulation of financial markets was analyzed in
detail in the 1991 Report.
Where regulation remains necessary, the movement toward "incentive regulation/' which encourages firms to operate more efficiently, has been a positive regulatory innovation. As a transition
to complete deregulation, the Federal Communications Commission
(FCC) is now regulating the rates AT&T (American Telephone and
Telegraph) charges for long-distance telephone services in a way
that encourages the company to produce more efficiently. The Environmental Protection Agency (EPA) has pioneered the use of a
regulatory mechanism that allows the market to determine the
most efficient way to achieve air quality levels. While the burden
of clean air legislation will be high, this Administration initiative
will save several billion dollars over the next two decades.
Poorly designed regulations can impose burdens on firms and
their workers that in the long run will hurt economic growth. As
part of the Administration's agenda to enhance economic growth,
the President has announced a regulatory reform initiative designed to reduce the economic burden of regulation (Box 5-1).
When it is determined that the government should intervene directly, regulatory approaches that use or replicate market forces,
rather than impose direct bureaucratic control on output and
prices, will allow markets to retain their flexibility and encourage
the most productive use of the economy's resources.

COMPETITION AND THE ROLE OF GOVERNMENT
The competitive market system has three important advantages.
First, the discipline of competition encourages efficient production.
In a competitive market, a firm that does not produce efficiently
will have to charge a higher price to make a profit and will lose
customers to its more efficient competitors. Ultimately the firm
will be driven out of business.
Second, a competitive market ensures that the economy's productive resources are put to their best use. Automobile manufacturers,
for example, decide what kind of cars to build based on the relative
prices of different parts needed for the car and on what they think
consumers will pay for different kinds of cars. As economists since
Adam Smith have emphasized, in competitive markets, consumers
and producers will be led to an outcome in which the value con
http://fraser.stlouisfed.org/
305-592 0—92
6
Federal Reserve Bank of St. Louis

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Box 5-1.—The President's Regulatory Reform Initiative
There is increasing concern that the high cost of regulation
has become a barrier to economic growth* On January 28,
1992, the President announced a regulatory reform initiative
as part of the Administration's agenda to enhance economic
growth. The central theme of the regulatory reform initiative
is to have Federal regulator? agencies review existing regulations and to accelerate action on initiatives that eliminate unnecessary regulations or otherwise promote economic growth,
as allowed by law. The goals of the review are to:
• revise (or repeal where appropriate) those regulations
that clearly impose costs that exceed their benefits;
• ensure that regulatory goals are being achieved at the
lowest possible cost;
• ensure that existing rules rely on market forces rather
than command-and-control requirements to the extent
feasible; and
• ensure that regulations provide clarity and certainty to
the regulated community and do not promote needless
litigation.
To achieve these goals the agencies have been asked to refrain from issuing any new rules for 90 days (except for those
regulations that have statutory deadlines* that would promote
economic growth, or that are needed for health and safety
emergencies) in order to focus their efforts on evaluating exist*
ing regulations*
As a first step, the President announced actions to begin the
regulatory reform initiative. The goals of these specific actions
are to increase the amount of credit and capital available to
businesses and consumers, and to reduce the costs of regulation to small businesses. As the review of existing regulations
proceeds further actions will be taken as well.
sumers place on the last unit of output of a good (or service) produced just equals the value that society forgoes in producing it.
Third, competition accommodates changes in consumer demand.
If consumers demand more washing machines, store owners will
quickly begin to run out of inventories. The price will increase to
reflect the increased demand for the existing stock of washing machines. In turn, manufacturers will respond by producing more of
them.
One of the roles of government is to establish an institutional
framework that is conducive to competition and, when markets are




158

not performing well, to introduce regulation that accomplishes the
goal of approximating competitive outcomes.
THE LEGAL SYSTEM
The law determines the ground rules under which market transactions take place. All legal rules, including regulations, impose
costs and bestow benefits on different participants in a transaction
and therefore alter their incentives. If an inventor knew that another person could copy an innovation and sell it to others, there
would be very little incentive to invent in the first place. The legal
system protects the inventor by creating specified rights to exclude
others from the use of the invention for a fixed period of time, and
therefore conveys the right to require compensation for its use. Besides defining and protecting a person's property rights, the legal
system provides a method for enforcing contracts and for compensating people when they are victims of accident or injury.
Among its many benefits, the legal system provides a forum for
resolving disputes and establishes the ground rules upon which
market transactions take place. But resolving conflicts within the
legal system also entails costs. A legal system can constrain economic activity if dispute resolution is slow, if the outcome is uncertain, or if the costs of litigation are high. Reform of the legal
system, like regulatory reform, involves setting rules that achieve
their aims in the most cost-effective way possible. The goal is to
create rules and a system of adjudication that provides a fair and
efficient system for settling disputes.
Property Rights, Contracts, and the Tort System
Ownership of a piece of land gives the owner the right either to
exclude others from it or to give them access to the benefits or use
of a resource on that property. The deed to a piece of land defines a
property right, and the law protects that right by giving the owner
access to the courts if someone tries to use the property without
the owner's permission. Property rights are not defined in the abstract, however. Private property rights are determined by overall
societal goals. In the case of land, local zoning laws limit property
rights by restricting the types of buildings that can be constructed
in a particular neighborhood.
Some regulations have been challenged as violating the Fifth
Amendment prohibition against taking private property without
just compensation (referred to as "takings"). In several recent
cases, landowners discovered that newly enacted regulations intended to protect wetlands or endangered species prevented them
from building on their property. They argued that although the
public interest may be served by restricting land use, the landowners should be compensated for their loss. They also argue that the
traditional justification for an uncompensated appropriation of pri-




159

vate property—the elimination of a "nuisance"—does not apply in
these cases. If a court determines that a "taking" has occurred, it
will consider the economic impact of the regulation on the value of
the property and the extent to which the regulation has unreasonably interfered with investment expectations in determining compensation.
The Lucas case, now pending before the Supreme Court, presents
these issues in the context of a claim that local restrictions on
beachfront development, on a lot otherwise suitable for construction, deprived a property owner of all meaningful use of his land.
The United States filed a brief in this case, emphasizing the
narrow scope of the government's power to regulate nuisances
without paying compensation. The Court's decision in the case will
affect the value of land subject to regulation, the incentives of
landowners to develop such land, and the incentives of political
bodies to take such regulatory actions.
Property rights may also be granted in a form less tangible than
a deed to a piece of land. A patent that allows an inventor to receive the profits from his work or a license from the FCC that gives
the owner sole rights to use a part of the radio spectrum are also
property rights. The licensee of a particular portion of the spectrum would have little incentive to invest in the frequency if any
other person could broadcast on the same frequency. By defining
what the license is and providing a forum to enforce that right, the
legal system allows the license owner to capture the returns from
the investment.
The rules of contract law provide for enforcement of agreements
and establish remedies when contracts are breached. Even if a
person could specify all outcomes when writing a contract, legal enforcement would still be necessary to ensure that people will honor
the agreement. If a tire manufacturer, for example, has contracted
to deliver tires to an auto manufacturer and then does not deliver
them, the auto manufacturer can go to the courts to have the contract enforced. Without enforcement, people would have to depend
exclusively on the good will of others to ensure that the agreement
is carried out. The auto manufacturer can more easily plan production of new cars when the contract for tire delivery is clearly enforceable.
The legal system also includes a system of tort law, whose major
goal is to provide victims of accidents and injury the opportunity to
seek compensation for their losses. By awarding damages to victims, the tort law creates an incentive for individuals to behave responsibly. Because of the potential for being sued, people put more
effort into preventing accidents and reducing the potential loss
from accidents.



160

Proposed Reforms for the Legal System
Certain aspects of the process of enforcing civil law have been
criticized for being costly, arbitrary, and unpredictable and for
using unscientific standards. Because of the way the rules for resolving legal disputes are currently written, parties to a legal case do
not consider all of the costs of resolving a lawsuit. For example,
both sides to a legal dispute have almost unlimited ability to take
sworn depositions of witnesses, request documents, and submit
written questions to each other within the pretrial process called
"discovery." Discovery is provided without payment from the requesting party, so there is virtually no incentive to limit the size of
the request. As a result, more information than necessary is often
gathered,, adding substantially to the cost of litigation but providing little offsetting benefit.
Under the leadership of the Vice President, the President's
Council on Competitiveness has proposed a comprehensive set of
reforms to the civil justice system in its "Agenda for Civil Justice
Reform in America." Many of the reforms are designed to accelerate the resolution of disputes and to discourage waste in litigation.
The proposed civil justice reforms would establish rules to set
quantitative limits on the amount of discovery provided without
cost to the requesting party, encourage alternative methods of dispute resolution, place caps on punitive damages, and promote appropriate use of expert testimony (Box 5-2). In Executive Order
12778 the President directed all Federal agencies to implement several of these reforms, including changes in discovery procedures
and in the use of expert witnesses, in civil proceedings in Federal
courts to which the Federal Government is a party, to the extent
feasible.

WHY AND HOW GOVERNMENTS REGULATE
Regulation, it is commonly argued, is intended to correct market
imperfections, or "market failures." Imperfections in competition
among firms are one type of market failure. For example, in an industry that is a "natural monopoly," where a single supplier can
most efficiently meet consumer needs, regulation of prices and the
number of competitors may be desirable. In a broader set of markets, no economic regulation is generally necessary. In those cases
the antitrust laws exist as a check against the possibility of anticompetitive behavior.
A second justification given for regulation is the presence of "externalities," or third-party effects. An externality occurs when
people do not account for all the effects of their actions on others.
A manufacturer who dumps pollutants into a river, for example,
does not consider the effects of those pollutants on fishermen who




161

Box 5-2.—Civil Justice Reform Proposals
In August 1991 the President's Council on Competitiveness
recommended SO specific changes to the civil litigation system.
The m^jor reforms include:
Loser Pays, The Council has proposed adoption of a modified
version of the English rule in which the "loser pays.1* Under
this proposal the person who loses a case would pay the winner's attorney fees. The amount of the payment would be
capped at a level equal to the amount the loser spends on attorney fees. Knowing that the law establishes a penalty for
losing would discourage a frivolous suit. The use of this modified English rule would be limited to cases involving State law
brought under the Federal courts' diversity jurisdiction.
Punitive Damages. A victim may receive punitive damages
over and above actual damages, but those awards are often distributed in a random and capricious manner* The Council proposes that the amount of the punitive damages not exceed an
amount equal to the plaintiffs actual damages.
Expert Evidence. Often, "expert" testimony is unsupported
by accepted professional practice or scientific knowledge* A
principal recommendation would require experts to base their
testimony on theories "widely accepted" by others in the field.
Voluntary Dispute Resolution, Most disputes are resolved
through litigation, either at trial or in out-of-court settlements.
The Council on Competitiveness recommends greater access to
alternative mechanisms such as private mediation or arbitration to resolve matters without resort to the legal system.
also use the river. The presence of this type of harmful externality
has been the rationale underlying most environmental regulation.
An externality can benefit rather than harm third parties. Information is one important example. Private organizations acquire information about product characteristics, such as the nutritional
value of foods, which they then sell to consumers. However, it may
be difficult for those organizations to capture all the benefits of
supplying the information. Once the information is disclosed, consumers can benefit from the use of the information without compensating the provider for its use. In that event, the incentives to
invest in supplying the information are diminished.
In principle, when the benefits to consumers of having the information outweigh the costs of requiring that it be provided, the government may want to supplement the role of the private market in
supplying information. The government can provide information
directly or require firms to provide it. People can then make more



162

informed choices about which products to buy. Examples of government-required information include food and drug labeling and
energy-efficiency labels for household appliances.
Both the absence of competition and the presence of externalities
represent imperfections in the market system. If government regulators were acting primarily to correct these imperfections, one
would expect that the chief characteristic of regulation would be to
simulate the features of the market by encouraging regulated businesses to produce efficiently. In practice, however, the United
States and other nations have too often relied on command-and-control mechanisms, which set a particular level of profits or require
use of a specific technology, rather than on mechanisms that encourage firms to reduce their costs or to improve services.
For example, EPA's 1979 rules for new electric power plants required costly limestone "scrubbers" to reduce sulfur emissions at
virtually all new coal-fired plants. A better alternative would have
been to set emissions targets and then allow firms to meet the targets by the most cost-effective means, such as by switching to lower
sulfur coal. Other examples of command-and-control regulation include restricting price competition among ocean carriers, limiting
the number of firms that can provide cable television service, and
using administrative hearings to determine who gets the rights to
new frequencies on the radio spectrum.
One reason that command-and-control regulations remain in
place is that the decision to introduce regulatory reform or to deregulate an industry affects the distribution of wealth among consumers and regulated companies. The outcome of the regulatory
process may be determined by the strength of interest groups rather
than by an assessment of whether the proposed regulatory action
maximizes net benefits to society. A regulated company that is producing inefficiently, for example, knows that competition will force
the company either to go out of business or to invest in a more efficient production process. Such a company is highly likely to resist
regulatory reform.

The Inefficiency of Monopoly
Sometimes an industry may not be competitive—either because a
producer has a monopoly over production or because the industry
consists only of a few large firms that can make decisions collusively. In these situations, producers tend to reduce the amount of production below what a competitive market would produce, causing
prices and profits to rise at the expense of consumers. The desirable characteristics of markets are attenuated when competition is
absent. In particular, the outcome is inefficient because some consumers would be willing to pay more for additional quantities of
the good than the additional cost of its production. If competition
were greater, producers' profits would decline, but by less than the




163

value of increased output, and all consumers would enjoy lower
prices.
One way that the government discourages anticompetitive behavior is through antitrust enforcement. The antitrust laws are part of
the institutional framework within which most businesses in the
United States operate. The Federal Government enforces the antitrust laws through the Antitrust Division of the Department of
Justice and the Federal Trade Commission. The primary focus of
these agencies is to challenge mergers that significantly reduce
competition and to prosecute businesses that collude to raise prices.
The Regulation of Prices and Competition
Economic regulation generally involves control over the prices a
business can charge and limitations on the number of businesses
that can provide a good or service. One goal of price regulation is
to place a check on companies that have a monopoly in the market
that they serve. Yet, price regulation has been imposed on competitive industries as well. Price regulation of initial natural gas sales
was instituted in 1954, even though approximately 2,300 independent producers of natural gas were operating as of 1947. Because
regulated prices were set too low in an industry that was already
competitive, shortages of gas developed in the 1970s.
Another motivation for economic regulation is to protect existing
companies from new competition. Regulation of interstate trucking
by the Interstate Commerce Commission (ICC) in 1935 was partially stimulated by railroads' concern that unregulated trucking companies would be able to undercut rail prices in areas where regulated railroad rates were high relative to trucking costs. The ICC
restricted the ability of trucking companies to offer discounts, and
regulators were hostile to companies that wanted to extend service
into new geographic regions and to the development of completely
new firms. In fact, existing firms were allowed to protest proposed
service by a new carrier. The Motor Carrier Act of 1980 changed
all of that by limiting the ICC's regulatory authority. By 1990 the
total number of licensed interstate carriers exceeded 40,000, compared with 17,000 in 1980. During fiscal 1987 truckers filed 1.2 million new rate schedules, compared with 394,000 in 1979. Because
trucking services represent 75 percent of all expenditures on transporting goods, reduced regulation contributes to economic growth
by cutting a major cost of production.
Price regulation and limitations on competition are generally
justified in industries that are natural monopolies. These are industries where a single firm can produce all of a product at lower
cost than several different firms can. Within a particular geographic area, electric utilities, local telephone companies, local distributors of natural gas, and similar industries have been considered
natural monopolies.



164

If several electric utilities attempted to compete with each other
to distribute electricity to customers in the same geographic area,
each company, realizing that cost reductions in distribution come
from having more local customers, would begin to lower prices to
capture those customers. Eventually if it were less costly for one
firm to provide all the service, only one local distribution company
would survive this battle. Exactly this type of competition occurred
in the late 19th century when several companies provided electric
service in Chicago, with one company eventually emerging to serve
the entire city. The expenditure on the overlapping electric lines
was wasteful, since competing firms could not survive.
The usual policy response is to carve out a monopoly for an electric utility over a fixed geographic area and then to regulate its
prices. This regulatory approach eliminates wasteful duplication
while constraining the pricing of the monopolist, but it can also
have drawbacks. As discussed below, the way prices are regulated
can diminish the incentive for the regulated company to minimize
its costs. Government protection of a monopoly may also prevent new
competitors from implementing technologies that do not have the
cost characteristics of a natural monopoly.

The Environment, Health, and Safety
Since World War II, the government has assumed an ever-increasing role in regulating the environment, health, and safety.
Spurred by increasing public concern over risks, government agencies, for example, now regulate discharges of air pollutants, set
safety standards for cars, and oversee the food that Americans eat.
A major goal of regulating the environment, health, and safety is
to correct the problem of externalities. Externalities may take the
form of something people want less of—like air pollution—or something they want more of—like information on safety. If one man's
clothes are soiled by his rural neighbor's furnace, he may be able
to reach an accommodation with his neighbor—for example, by offering to share the cost of switching to a cleaner fuel. In this way,
the neighbor is led to take into account the external cost of his decision about which fuel to burn. But if the man's clothes are soiled
by air pollution from a thousand furnaces and cars, then it is not
practical to reach similar arrangements with, or even identify, all
those who caused the harm. In this case, one person can pollute another's air without confronting the cost, and the result is too much
air pollution. A regulatory approach can provide a corrective in
such cases. Ronald Coase, the winner of the 1991 Nobel Memorial
Prize in Economics, has emphasized the role of the cost of reaching
agreements in determining the appropriate policy response to problems created by externalities (Box 5-3).
Besides protecting the environment, the government protects
consumers by providing product information on health and safety



165

Box 5-3.—Ronald Coase, the Role of Transaction Costs, and
the Definition of Property Eights
Professor Ronald Coase of the University of Chicago, the
Nobel Laureate in Economies for 1991, is particularly known
for his penetrating analysis of the role of transaction costs—
the cost of effecting an exchange—in determining the characteristics of social institutions, Coase pointed out that, for exampie, whether an auto manufacturing company makes or purchases the seat belts it installs in the cars it produces depends
upon the cost of making a product for which it may not be particularly well set up (the seat belts) compared with the cost of
reaching a satisfactory supply arrangement with an external
seat belt firm. In competitive markets, Coase noted, organisational forms that economise on transaction costs will tend to
prosper and survive. Changes in the relative costs of such
transactions, owing in part to the development of computers,
are leading to major changes in the organizational structure of
firms in market economies.
In a celebrated paper, Coase explored the role of transaction
costs in determining how property rights ought to be defined.
Should, for example, the property rights of an owner of a piece
of land include the freedom to emit smoke that soils a neighbor's laundry, or, alteratively, should the neighbor's property
rights include the option to ask a court to enforce a claim for
damages against the emitter of smoke? Coase's answer is that
how property rights in such cases should be defined depends on
transaction costs. If, for example, it is easy to measure smoke
emissions but hard to tell whether people are taking due precautions to do their laundry on smoke-free days, the better
result may obtain if the property right includes the option to
emit smoke! Launderers would then have an incentive to negotiate a satisfactory schedule with smoke-emitters (for example,
smokeless Tuesdays),
A similar line of reasoning offers insights into the traditional legal doctrine that denies comjmnsation for a "regulatory
taking1' to eliminate a "nuisance" and into the choices faced in
several recent court cases that deal with new questions of regulatory taking. The Coase analysis emphasizes that in addition
to the issues of equity, the courts should consider whether the
net effect of a more or less stringent protection against taking
in the definition of property rights wilt lead to the best use of
land in the long run.




166

or requiring businesses to do so. To encourage disclosure, the President signed the Nutrition Labeling and Education Act of 1990, requiring the Food and Drug Administration (FDA) to establish rules
that would make it easier for consumers to understand the nutritional content of foods. Among the proposals the FDA made in
November 1991 is a requirement that food companies use standardized measures of a "serving" for more than 100 different foods,
which would allow consumers to compare products easily. The FDA
is also expected to rule on which specific health claims will be permitted on labels.
Although increased nutritional information benefits consumers, it
is important to consider its cost when writing regulatory rules that
implement legislation. Businesses will incur costs to develop the
new information and to alter the food labels. Some of these costs
will be borne by consumers in the form of higher food prices. Also,
any restrictions on health claims should be balanced against the
possibility that potentially useful information will not be disseminated. Furthermore, the presence of an externality does not mean
that information on nutrition will be provided only when it is required by the government. Some information will still be supplied
by other means, such as through consumer magazines.
For certain risks, the government goes beyond requiring that information be provided. In the case of automobiles, workplace
safety, or a doctor's services, it may be costly for each person to
invest in assessing the relative quality or safety of the goods provided. The government can play the role of gathering the information and then regulating the risks directly. Thus, all automobiles
sold in the United States must satisfy safety regulations established by the National Highway Traffic and Safety Administration
(NHTSA). Some products, such as certain pesticides, are banned entirely. The government, however, is not the only entity that can
assist the consumer in evaluating product performance. Product
manufacturers may be able to assure quality by providing product
warranties. Industry-established standards and companies' investments in their own brand names also demonstrate that the private
market plays an important role in ensuring safety and quality without help from the government.
Many actions have some external or third-party effects that
could justify government intervention. But government action itself
has third-party effects, and government intervention to correct the
market failure of an externality carries with it the risk of unintended outcomes because of "government failure."
Government failure in regulation may occur for at least three
reasons. First, it can be difficult to determine who is affected by an
externality and to what extent. This is particularly true where the
scientific consensus about an externality is still evolving. For ex


167

ample, the scientific consensus on air pollutants and toxic substances has changed often enough to impede sound regulatory decisions, as the scientific debates surrounding asbestos, dioxin, and
global climate change all illustrate.
Government failure in regulation may also occur when regulatory solutions impose large unintended costs on innocent third parties. Thus, long delays in the approval of new drugs harms those
forced to use the older, often less effective, substances. The Administration has proposed using outside review organizations to complement the FDA's function of evaluating the safety and effectiveness of new drugs. The goal of contracting out some of the approval
function is to reduce the time needed to approve new drugs, especially those that have the prospect of extraordinary benefits in reducing morbidity or mortality.
Third, as explained in the next section, government failure may
occur when regulation becomes the mechanism that allows one
group of people to take advantage of another.
Interest Groups and Regulation
Regulation creates winners and losers. Firms know this and
spend considerable time and money trying to capture the benefits
of regulation. New regulations rarely affect all firms equally. New
firms may face higher costs than existing firms; large firms may be
able to finance costly changes demanded by new regulations; some
firms may be able to gain exemptions from the existing rules.
In each case the effect of a new regulation is to transfer income
from one group to another. The government, for example, does this
by creating or protecting a firm's position as a monopolist or by restricting a market to a small number of firms. Protected firms
enjoy higher profits than competitive firms; these higher profits
become the prize sought by others. Thus, as explained above, truckers used the ICC to block entry of new competitors.
But gaining a protected position from the government can involve large expenditures. Firms hire lobbyists and lawyers and
even alter their business plans in order to acquire a protected position. Because all interest groups must make similar expenditures to
seek government favor, the regulatory process tends to favor those
groups or businesses that can capture the greatest benefits from a
protected position. Once achieved, a protected position must be defended against competitors trying to dislodge the incumbent firm.
Before deregulation in 1978, for example, the Civil Aeronautics
Board (CAB) granted effective monopolies to airlines on many
routes. The CAB held hearings in which the airlines attempted to
persuade the board members to award them exclusive franchises
and to keep out competitors. Although the deregulated domestic
airline industry continues to use lobbyists to gain a favorable hear


168

ing for its views, the industry no longer has protected domestic monopolies to spend time and money defending.
The U.S. Department of Agriculture's agricultural marketing
orders are another illustration of protection from competition.
These orders restrict supply in markets for lemons, oranges, and
other crops (Box 5-4). For decades farmers have made investments
in the belief that the orders would protect their profitable position.
Although in the long run, expansion by farmers dissipates these
profits, some farmers resist proposals that would eliminate these
orders because doing so would reduce the value of their investment.
Box 5-4.—Agricultural Marketing Orders
The current Federal marketing order for California-Arizona
navel oranges has been in effect since 1953. Under the present
order, the maximum quantity each handler (first buyer) may
ship to the domestic fresh market is set weekly* Harvested oranges not sold in the domestic market are sold abroad or to the
domestic processing industry. By limiting the quantity of oranges that may be sold in the high-valued fresh market, domestic fresh orange prices are raised and total revenue to
growers may be increased.
Although farmers may gain in any one year from the higher
farm income, such gains are dissipated as growers plant additional trees to earn some of the increased revenues brought
about by regulation. The marketing order also penalizes growers
who produce oranges at lower cost by limiting the volume of
fresh oranges they may sell. Consumers of fresh oranges lose as
well because of higher prices.
What are the costs and benefits of such regulation? A recent
study by the Department of Agriculture suggests that eliminating the marketing order would cost producers about $13 million annually, while saving consumers about $30 million. On a
per capita basis, however, each consumer would gain about
$.12, while each grower would lose about $3,150.
Not only firms, but other interest groups as well, benefit from
protected positions. The Advisory Commission on Regulatory Barriers to Affordable Housing found that many local land use controls (including zoning laws and building codes) are designed to restrict the availability of housing for families with incomes somewhat lower than current residents. By limiting the supply of affordable housing, local regulations drive up the cost of housing,
particularly for moderate and lower income families.




169

The problem of entrenched protected interests can be avoided by
arrangements that discourage expenditures solely to defend the
special position. Auctioning public property, for example, not only
gives the auction winners control of the property but also an incentive to make the best use of it. Currently, the FCC uses a lengthy
process of hearings or a purely random lottery system to assign
new licenses to the radio spectrum. The Administration has proposed legislation to permit competitive bidding for newly available
portions of the radio spectrum to ensure that licenses will be assigned to those parties who value them most. Competitive bidding
would also simplify the application process and bring in revenue to
the government.
THE REGULATORY PROCESS
Regulation has become pervasive at the local, State, and Federal
levels. Local regulation typically involves such matters as setting
zoning restrictions and building codes, regulating sewer and water
prices, and granting cable television franchises. In some cases local
municipalities own the local electric utility, buying the needed
power from generators of electricity. States regulate utilities
through regulatory commissions, which set retail rates for local
telephone calls, electric power, and natural gas. States also issue
regulations in a broad range of areas including insurance, energy,
transportation, health, safety, and the environment.
Federal regulation is concerned primarily with goods and services that are sold in interstate commerce. The Congress has responded to economic and social problems by creating regulatory
agencies or by expanding the role of an existing Cabinet department. In health and safety, for example, 9 separate Federal agencies write regulations under the authority of 26 major statutes. In
a process called a "rulemaking," agencies propose rules to conform
with the requirements of the legislation (Box 5-5 describes the
rulemaking mechanism). They are then published in the Federal
Register and finalized only after a period for public comment.
As shown in Chart 5-1, researchers estimate that the administrative costs of enforcing and writing Federal regulations have increased almost threefold since 1970. The administrative costs shown
in Chart 5-1, however, do not include additional costs imposed on
firms from regulation—costs that are ultimately borne by consumers. These additional costs result when regulation raises production
costs and product prices, makes products unprofitable to provide, or
retards product innovation. Recent estimates put these costs in the
hundreds of billions of dollars.
To make regulations more cost effective and to create some consistency in the way regulations are formulated in each agency, a
system of regulatory oversight has been established within the Ex


170

Box 5-&r-Writing the Rules: The Clean Air Act
The Coi*gres& legislates regulation broadly but leaves to the
regulatiary agencies the task of filling in the details. Each
agency i$ chared with implementing certain laws. As an illustration, the dean Air Act Amendments of 1990 contain 9
major titles running to 300 pages and require the Environmental Protection Agency (EPA) to issue at least 55 separate regulations in the first 2 years alone*
Consultation and Publk Comment On November 15, 1990,
the President signed the Clean Air Act Amendments. In late
1990 the EPA began work on the first set of rules to be drafted,
meeting formally and informally with affected industries, environmental groups, and other outside organizations. In early
1991 the EPA published in the Federal Register the first of a
series of notices of proposed rulemaking, soliciting public comment* At several stages of the rule-writing process, the EPA
must solicit public comments to be considered as the regulations are finalized.
Reg-neg. Beceiitly, some rules have been formulated through
negotiated regulation or "reg^negs," which are designed to
bring all parties affected by the regulation together to reach a
consensus on its design. The regulation is then drafted by the
responsible agency in a way that balances the welfare of the
affected parties, including that of the general public. When
successful, reg-negs are able to reduce the time and resources
(including litigation) that might be expanded under the conventional rulemaking process.
Agency Review. The Office of Management and Budget (OMB)
and other agencies have the opportunity, and in some cases the
statutory obligation, to review proposed rules, generally for 30
to 60 days.
Mnal Rule. After a last round of public comments, and clearance from OMB, th& EPA Adiministrator signs the final rule,
which is promulgated in the Federal Register.
ecutive Office of the President. In 1981 President Reagan issued
Executive Order 12291, which authorizes the Office of Information
and Regulatory Affairs (OIRA) within the Office of Management
and Budget (OMB) to work with the various regulatory agencies to
develop more effective and less costly regulations. The Executive
order directs all agencies proposing new regulations, reviewing old
ones, or developing legislation to estimate costs and benefits and to
demonstrate that the potential benefits outweigh the potential
costs to society. OIRA reviewed more than 2,100 rules in 1990 to




171

Chart 5-1

Administrative Costs of Federal Regulation

The administrative costs of Federal regulation have increased greatly since 1970.
Millions of 1982 dollars
10,000

8,000

-

6,000

-

4,000

-

2,000
1970

1975

1980

1985

1990

1991

1992

Economic Regulation

Social Regulation

Note: 1991 and 1992 figures are projected.
Source: Center for the Study of American Business, Washington University.

ensure that the principles of Executive Order 12291 were applied.
In addition, some major issues are reviewed by the President's
Council on Competitiveness.

Federal vs. State Regulation
One barrier to increasing the overall effectiveness of regulation
is the dual system of Federal and local regulation. Local governments often can respond more effectively to problems that arise in
their communities. Federal involvement in local zoning laws, for
example, would require knowledge of local conditions that would be
very costly to accumulate. Overlapping jurisdictions can sometimes
create problems. For example, State regulations that impose food
labeling laws distinct from FDA rules force businesses to develop
differently labeled products for these States. The inevitable increase in production costs is likely to lead to higher food prices for
all consumers. In cases where local regulation interferes with economies of production, a uniform system of Federal regulations could
reduce the burdens on firms and their workers and lower prices for
consumers.




172

SUMMARY
• A system of competitive markets creates the discipline that encourages firms to produce efficiently and directs resources to
their best use.
• A well-functioning legal system increases the efficiency of economic activity by appropriately defining and protecting property rights, ensuring that the terms of contracts are fulfilled, and
facilitating compensation for the victims of injury. The Council
on Competitiveness has proposed reforms that would improve
the efficiency of the legal system and reduce unnecessary litigation.
• Government intervention to correct the market failure of an
externality carries with it the risk of creating other unintended market failures.
• Once a regulatory goal is established, policies that incorporate
market incentives are superior to command-and-control solutions.

THE BENEFITS OF ECONOMIC DEREGULATION
The primary purposes of deregulation are to allow competition to
determine the amount of goods and services that are produced and
the prices consumers are charged for those goods and services.
Competition would also encourage innovation and the development
of new products. For example, before deregulation, the CAB determined the number of airlines that could serve each air route and
the air fares they could offer. Since deregulation in 1978, fares
have decreased on long-distance routes and increased on short-distance routes, but average air fares overall have declined 20 percent
in real terms. Half of all passenger trips are now in markets served
by three or more carriers, double the percentage before deregulation. Also, once freed from regulation, airlines developed "hub-andspoke" systems, an innovation that has given passengers a much
greater range of flight choices.
New technologies mean that some industries may no longer be
natural monopolies, but regulation can mask that fact by keeping
the new technologies out of the marketplace. Instead of perpetuating the monopoly, deregulation would allow new firms to enter.
The market would then determine how the service should be provided and at what price.
This is especially true in telecommunications where technology
is changing rapidly. For many years most supporters of regulation
considered long-distance telephone service to be a natural monopoly. Now firms have set up fiber optic and microwave networks that
compete directly with AT&T in long-distance service. The Administration proposed in November 1991 to permit competition with the




173

International
Telecommunications
Satellite
Organization
(INTELSAT), the consortium that provides international long-distance telephone service by satellite. Under the new policy, international satellite companies would immediately be permitted to provide additional services, with the goal of opening the market to full
competition by 1997.
Even when unfettered market competition is not feasible, there
are better and worse ways to regulate. Under recently developed approaches, prices can be set in a manner that gives regulated firms
greater incentives to reduce costs and to innovate. Currently, monopolies, such as local electricity distributors, are often regulated
using traditional "cost-of-service regulation/' The regulator tries to
determine the cost of providing the service, and sets prices to cover
those estimated costs, including a return on the capital that is invested in the regulated company. This method is used to ensure
that the company will not lose money and that it will not be able
to charge prices above its costs.
The problem with cost-of-service regulation is that it does not
give the regulated firm the incentive to reduce its costs or provide
better service. An attempt to reduce costs will eventually be followed by a reduction in allowed revenues, leaving the firm no
better off. If new services lead to increases in profit, prices will
eventually be reduced to bring revenues in line with costs. The incentive for firms to develop the new services are thereby diminished.
New regulatory approaches, commonly labeled "incentive regulation," are being tried as alternatives to cost-of-service regulation.
In the transition from regulation to unregulated competition in
long-distance telephone service, the FCC has tied some of AT&T's
rates to an index that is adjusted for inflation minus a correction
for expected productivity improvements. If AT&T reduces its costs
or improves its products, it is allowed to keep some of the profits.
The FCC and many States have also instituted this incentive regulation for local telephone companies. And in its National Energy
Strategy, the Administration has proposed instituting incentive
regulation for natural gas pipelines. In this way regulators limit
monopoly profits while giving the regulated company incentives to
produce efficiently and to innovate.
The following sections analyze proposals for further reductions in
regulation that are now being considered to improve performance
in the natural gas, electric power, and cable television industries.
Regulatory reform will bring more competition to natural gas delivery and the generation of electric power. The benefits of deregulating cable television will be fully realized only when entry barriers to new competitors, possibly using alternative technologies,
are removed. The goal of deregulation is to promote general prosper-




174

ity by creating a more efficient allocation of resources. That goal
can be achieved by eliminating price regulation and barriers to
entry where markets can be competitive.
NATURAL GAS
Regulation in the natural gas industry provides a good example
of the problems that can arise when regulators set prices incorrectly. Before 1978 the price paid for the natural gas extracted from
the ground, often called the '"wellhead" price, was regulated by the
Federal Energy Regulatory Commission (FERC). Unfortunately, the
regulated prices were set too low, reducing the incentive to extract
more natural gas. Because demand at the regulated price was
greater than the amount being produced, Federal regulators were
forced to ration the use of natural gas. To alleviate this problem,
the Natural Gas Policy Act of 1978 began the process of decontrolling prices. The Natural Gas Wellhead Decontrol Act of 1989 set a
timetable for completing wellhead deregulation. By January 1,
1993, all Federal regulatory control over wellhead prices will be
eliminated.
The Current Status of Natural Gas Regulation
The process of transporting natural gas to a residence or a commercial user remains regulated by FERC and the States, however.
Once natural gas is extracted from the ground, it is transported by
pipeline, often over long distances and across State lines, and then
sold to local distribution companies, electric utilities, and industrial
users. FERC regulates the prices charged for interstate transportation of natural gas and the prices that pipelines charge for the gas
they sell to local distributors and others. Pipeline companies must
provide FERC with information on the costs they incur. These include the prices paid to producers for gas and the cost of building
pipeline facilities to transport natural gas. FERC then sets rates to
cover those costs.
The local distribution segment of the industry, which distributes
the gas to residential, commercial, and industrial users, remains
largely a regulated monopoly. Generally, the least costly method of
distribution is for a single company to deliver the gas to all homes
within a market, although a small number of areas have competing
distributors for nonresidential customers. Because distribution has
natural monopoly characteristics, local distributors generally have
franchised service areas in which they are the monopoly provider
of service for most or all customers. States regulate the rates distributors may charge.
Despite the fact that most wellhead prices have been deregulated, the electric generation and industrial sectors have actually reduced their use of natural gas over the last two decades. Although
natural gas is a relatively clean fuel with abundant domestic sup


plies, total domestic consumption has declined more than 10 percent
since 1973 (Chart 5-2). One primary barrier to increased use is the
process of granting permits for construction of new natural gas pipe-

lines. FERC approval must be obtained before any new interstate
pipeline can be constructed. Often, an administrative hearing is
held in which outside parties, including competitors, can object to
the application. Several years may elapse before a construction
permit is granted, sometimes prompting consumers to turn to alternative, more expensive fuels. Legislation based on the Administration's National Energy Strategy would streamline the process of reviewing applications for pipeline construction.
Chart 5-2

Consumption of Natural Gas

Domestic consumption of natural gas has declined from 1973 levels.
Billion cubic feet
23,000

22,000

-

21,000

-

20,000

-

19,000

-

1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990

Source: Department of Energy.

Consumption may also have declined because local distribution
companies, electric utilities, and industrial users were limited in
their ability to negotiate directly with natural gas producers.
Before 1985, when FERC initiated open access to natural gas pipelines, almost all natural gas was actually purchased by pipeline
companies and then resold to distributors, utilities, and industrial
users. In 1982, for example, only 3 percent of the natural gas transported by the pipelines was owned by others. Consequently, for
most users the only source for natural gas was the monopoly pipeline that served their plant. With a monopoly over gas transporta-




176

tion, a pipeline company may not offer the lowest priced natural
gas, prompting the user to consider other fuels.
Open Access to Natural Gas Pipelines
The FERC initiatives have significantly changed the position of
pipeline companies by creating incentives for them to transport gas
that is owned by other companies. Pipelines that market their own
gas, as well as provide transportation services for gas owned by
others are called "open access" pipelines. These pipelines are required to provide gas transportation services to owners of natural
gas not affiliated with the pipeline that are comparable to those it
provides for its own gas sales. Because of this policy, gas owned by
firms other than pipelines now accounts for about 80 percent of the
interstate sales of natural gas transported by pipelines.
The effect of the open access policy is that electric utilities, industrial users, and local distribution companies can now contract to
purchase gas directly from gas producers and marketers as well as
from pipeline companies.
Although open access has dramatically expanded, the extent to
which competition can be fully realized in the market for gas delivered by pipelines has been questioned. When a pipeline sells its
own gas, it is actually selling a bundled commodity consisting of
the gas and various transportation, storage, and other services.
Other gas sellers pay for the transportation services separately, but
the price they pay and the quality of service they receive may not
be comparable to the rate and service implicitly provided for the
pipeline's own gas sales. If there is no other competing pipeline
through which the natural gas can be delivered to a particular customer, the nonpipeline seller will be at a disadvantage relative to
the pipeline's own gas sales. Discrimination of this type could
reduce the benefits of competition.
One of the goals of the Administration's National Energy Strategy is to eliminate that potential for discrimination. In July 1991
FERC proposed that pipelines be required to separate their business of selling gas from their business of transporting gas for
others. After this restructuring, gas would be sold unbundled from
the various transportation services, as on an "a la carte" menu,
making the comparability of transportation rates and services
much easier to monitor.
FERC has proposed to relax regulation of pipeline gas sales once
this unbundling occurs. This relaxation would mean that the competitive natural gas sales market will determine which transactions take place and at what price. Because local distributors and
other gas consumers may still be captive to a single pipeline, the
rate the pipeline charges for transporting the natural gas would
remain regulated.



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Mandatory unbundling may not always be necessary, however. If
a customer has access to competing pipelines, then the likelihood of
discrimination is reduced. In that case a competitive gas sales
market could flourish without unbundling. Mandatory unbundling
can also impose costs on producers. With unbundling, pipelines
may lose the ability to coordinate and manage gas shipments. Mandating unbundling would deny pipelines the benefit of these
"economies of scope." These economies of scope cannot be recaptured by simply allowing buyers to purchase the services together.
The potential loss of productive efficiency needs to be considered
before unbundling is mandated on a blanket basis.
ELECTRIC POWER
Similar to the natural gas industry, the electric power industry
consists of three different segments: the generation of power, the
transmission of power from generators to local utilities, and the
distribution of electricity to homes and businesses by the local utility company. Unlike the natural gas industry, however, the same
firm frequently performs all three functions: it produces and transmits its own power and then distributes that power to retail customers. A small but growing number of firms specialize in one particular segment, such as generating electric power that is sold
wholesale to utilities.
Currently, all three segments of the industry are subject to State
and Federal regulation to some extent. Competition in the distribution of electricity has generally been considered infeasible because
of the natural monopoly characteristics of these services. Instead,
local utilities are granted monopolies over the markets they service, and States or local municipalities regulate the rates they can
charge customers. FERC regulates the prices charged for use of
interstate transmission facilities, which also have natural monopoly characteristics, and the price of interstate sales of wholesale
power. But competition has emerged among firms that generate
wholesale power. Regulators now face the problem of determining
when to step aside and allow the market to determine the price at
which that power is sold.
Promoting Competition in Electricity Generation
The ability to buy and sell electric power allows utilities to make
more efficient use of existing capacity. By buying power from other
companies, for example, a local utility can satisfy an extraordinary
demand for electricity, such as that which occurs on an unusually
hot day, without having to build the additional capacity itself.
When utilities purchase power, however, the Federal Power Act of
1935 requires FERC to ensure that prices charged for any interstate sales are "just and reasonable." The seller must provide cost
information to FERC, and significant delays in determining the



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rates can occur. With the emergence of a more competitive generation market, however, the need to regulate all sales on a cost-ofservice basis has been questioned.
One major step in developing competition in the sale of electric
power was the Public Utilities Regulatory Policies Act of 1978
(PURPA). PURPA exempts "qualifying facilities," such as cogenerators of steam and electricity, from FERC rate control and relieves
them of other financial requirements. PURPA has been successful
in encouraging the development of nontraditional sources of power.
In the 1980s qualifying facilities that sell power to utilities added
13,000 to 15,000 megawatts of capacity to the national market,
while utilities that produce their own power ordered only about
9,500 megawatts of new capacity. Other independent power producers that do not qualify under PURPA have also begun to emerge.
The availability of alternative power sources has encouraged 13
States to use competitive procurement, rather than cost-of-service
regulation, when a utility needs generating capacity. FERC has also
adopted, for some power sales, the use of rates arrived at through
competitive bidding.
A major barrier to the further development of a wholesale electricity market is the Public Utility Holding Company Act of 1935
(PUHCA). The original intent of the 1935 law was to curb financial
abuses by electric utility holding companies. Its effect today, however, is to restrict the development of independent generating
sources. For example, certain holding companies are barred from
owning more than 10 percent of a power producer whose sole purpose is to sell power in the wholesale market. Legislation supported
by the Administration as part of the National Energy Strategy
would amend PUHCA to eliminate obstacles to entry by new independent power producers and barriers to the development of new
sources of wholesale power affiliated with utilities.

Transmission Access
The control of access to transmission services by firms that sell
wholesale power raises the possibility that power sales will not
take place at competitive prices. A utility may be captive to a
single provider of transmission who also sells power. The owner of
the transmission capacity could deny other power producers access
to the lines, allowing it to charge prices above competitive levels
for its own power. The presence of a monopoly provider of transmission forces FERC to keep a close watch over the prices charged
for wholesale power.
A seller of power who also controls transmission cannot always
set rates above the competitive level, however. A purchaser may
have several alternative sources of supply. It could generate power
itself, it could purchase power produced by others in its own service area, or it could purchase power produced outside of its service



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area by firms that have access to the necessary transmission. When
the purchaser of power has a number of alternative sources, a competitive market can develop. Prices that arise from competitive markets can take the place of prices based on cost-ofservice regulation.
When there are no alternative sources of power, denial of access
to transmission would leave the utility captive of a single supplier.
In that case a requirement that the transmission owner give a
buyer access to alternative sellers, while being compensated for the
opportunity costs of transmitting that power, would increase competition in wholesale markets and ensure that power can be purchased at competitive rates. At present, FERC has limited legal authority to require owners of transmission to provide access. Legislation may be needed to expand FERC's authority to order a transmission owner to provide access to a power supplier when such
access would enhance competition in the wholesale power market.
CABLE TELEVISION
Cable television is now available to more than 90 percent of all
homes with television, and more than 60 percent of these households subscribe to cable service. Cable television normally includes
television stations that are broadcast over the air, as well as services such as CNN and ESPN, that are delivered by satellite to the
cable operator. Consumers in most communities can obtain these
services only by subscribing to the local cable television service.
The operator typically charges subscribers a monthly fee for delivering these services. The problem now facing policymakers is how
to encourage competition that will restrain local cable systems
from setting fees too high.
The Effects of Cable Deregulation
By virtue of their control over permits to string cable along and
across public rights-of-way, local communities established the right
to regulate cable television. Many communities decided that having
more than one cable system was inefficient. Multiple systems
would have meant duplicating all of the cable connected to each
household and business. Most cable television companies were thus
granted a monopoly franchise over the market they serve. A local
authority regulated the rates of "basic service/' a package that
usually includes both broadcast channels and satellite-delivered
programs.
By the early 1980s the availability of alternatives to cable
brought into question the necessity of continued regulation. Possible alternatives included purchasing satellite dishes, using videocassette recorders (VCRs), or simply opting to limit viewing to
channels available via broadcast antennas. The Cable Communications Policy Act of 1984 (Cable Act) barred regulation in communities where there was "effective competition/' which the FCC de


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fined as communities that receive at least three over-the-air broadcast channels. The effect of this rule was to leave only 3 percent of
all cable franchises regulated by the end of 1989, down from 63 percent before deregulation.
Cable television rates increased substantially between the end of
1986, when the Cable Act took effect, and the end of 1990. Over that
period, the average rate for the lowest priced basic service increased
32 percent in constant dollars. Cable operators explain the increase
by arguing that they now include more channels and a greater
variety of programs in the basic service. But others blame deregulation, noting that the alternatives of watching broadcast television or
renting video tapes do not provide enough competition to restrict the
prices charged by cable operators.
Introducing Competition for Cable
Responding to that criticism, the FCC changed its effective competition standard in 1991. Now local communities may regulate
rates in those areas that receive fewer than six over-the-air broadcast channels. Although there have been calls to increase the scope
of rate regulation even further, the Administration has supported a
policy whose ultimate goal is to introduce new competition for cable
operators, encouraging both price competition and alternative
sources of television programming. Although cable television has
been traditionally perceived as a natural monopoly that requires
limitations on competition and regulated prices, new transmission
technologies such as satellite-delivered services are emerging. Reliance on rate regulation and restriction on entry prevents those
technologies from being fully implemented. Rather than perpetuating the existing monopolies, competition among video providers
will determine how the services should be provided and at what
price.
The emergence of competition will depend on whether a second
company finds it profitable to install the necessary wires and other
equipment or to use a different technology to compete with the incumbent cable operator. One possible competitor that has already
invested in some of the fixed equipment is the local telephone company, although it would have to install fiber optic cable to provide
a service comparable to that provided by existing cable companies.
Currently, however, FCC regulations and the Cable Act prevent
direct competition from the local telephone company.
Under one reform proposal, local telephone companies would be
permitted to transmit television or other video signals provided by
both the telephone company and other companies. Critics of this
plan worry that because telephone rates in some States are still determined by cost-of-service regulation, the telephone companies
might seek to transfer the costs of their video operations to the regulated telephone sector, thereby inflating the costs of telephone




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service and putting competing video program providers at a disadvantage. This practice is commonly called "cross-subsidization."
There are also concerns that telephone companies might use their
control over the telephone lines to discriminate against competing
programmers simply by designing the network to favor their own
product.
The problems of discrimination and cross-subsidization are legitimate concerns. The FCC has developed rules that could be used to
minimize the risk of cross-subsidization and discrimination in video
services. If problems arise, these rules can be strengthened further.
Even with the proper rules in place, full participation by telephone
companies in providing video content cannot occur until the Cable
Act is changed. As an interim step, competition for existing cable
operators could be enhanced by permitting local telephone companies to carry television and other video services that are controlled
by independent companies. The FCC began to ask for comment on
such a policy in November 1991. The alternative policy would be to
continue banning the most likely competitor for incumbent cable
operators. Such a policy is untenable in the face of unregulated
rates and monopoly franchises.
SUMMARY
• Implementation of the National Energy Strategy would enhance competition in the generation of electric power and the
delivery of natural gas.
• In the long run, removal of the barriers to competition for existing cable operators, rather than price regulation, will benefit consumers by lowering rates and providing alternative services.
• By limiting competition, economic regulation may be inhibiting
the introduction of innovations that would benefit consumers.
• The economies of producing in both a regulated and unregulated market should not automatically be sacrificed to eliminate
problems of discrimination and cross-subsidization.

REFORMING REGULATION OF THE
ENVIRONMENT, HEALTH, AND SAFETY
Environmental, health, and safety regulation is directed in part
toward remedying externalities or third-party effects. During the
past two decades, the Federal Government has significantly widened the scope of regulatory activity in these areas, generally using a
command-and-control approach. As a result, costs to the economy
have increased substantially, because legislation in these areas has
rarely required regulators to balance the costs and benefits of their
actions. Recent initiatives have attempted to improve on tradition-




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al regulation by allowing more flexibility and by balancing benefits
and costs. These initiatives offer significant cost savings compared
with traditional command-and-control regulation.

IMPROVING THE ENVIRONMENT
By requiring firms to account for the costs they impose on others
through pollution, the Clean Air Act, the Clean Water Act, and the
Resource Conservation and Recovery Act have dampened the incentives for the excessive use of environmental resources.
At the same time, their costs have been significant. Just one new
initiative, the Clean Air Act Amendments of 1990, when fully implemented in 2005, will cost an estimated $25 billion to $30 billion
per year or more. The EPA estimates that expenditures to reduce
pollution were at least $115 billion in 1990, more than in any other
major industrialized country, and one of the highest as a percentage of gross national product (GNP). Between 1972 and 1990, pollution control costs tripled (in constant dollars), rising from 0.9 percent to 2.1 percent of GNP; the EPA expects this total to rise to 2.6
percent by 2000. By some estimates, indirect costs of compliance
add significantly to this total; to comply with a regulation, for example, firms may turn to higher cost inputs as substitutes or
produce lower quality finished goods.

Acid Rain
Significant uncertainties surround many environmental issues.
This was seen in the scientific controversy that resulted in the National Acid Precipitation Assessment Program (NAPAP), a 10-year,
$550 million effort authorized by the Congress because of concern
that acid rain might be harming the environment. When the
NAPAP study began in 1980, the consensus view held that acid
rain caused acidic lakes; the study demonstrated, however, that soil
and other conditions had a far greater influence than acid rain on
the acidity of lakes. Other studies have also suggested that simple
mitigation strategies would be far more cost effective than the
technology-based command-and-control regulation usually favored
by the Congress.
In the recent past, scientific consensus has shifted abruptly on
several other important issues as well, including the risks associated with dioxin, asbestos, and radon. These examples should serve
as reminders not to rush into expensive new regulatory regimes on
the basis of incomplete evidence. But once a policy decision has
been made to correct an externality associated with the environment, then market-based incentive programs usually can accomplish their objectives at a lower cost than traditional commandand-control approaches.
The Clean Air Act Amendments of 1990 institute the first largescale emissions trading regime for a pollutant. This program sets a



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maximum national level of sulfur dioxide that can be emitted annually from coal-fired power plants. Firms must possess an emission allowance for each unit of SO2 they emit or face heavy fines
(Box 5-6). To comply, firms are allowed to buy and sell allowances;
the maximum level of emissions will be attained efficiently because
firms self-select, purchasing or selling allowances to minimize
costs. The same level of emissions could be achieved under command-and-control regulation, but the cost of compliance, which
falls ultimately on the consumer through increased electricity
prices, would be greater, in some cases much greater.
Box 5-6,~~Are Emission Allowances Licenses to Pollute?
Some have opposed the implementation of emission allowance trading systems on the ground that the allowances give
their holder a license to pollute. By that standard, however,
any environmental regulation that does not hold pollution to
zero also constitutes a license to pollute. The costs of pollution
abatement become prohibitive compared with benefits as emissions are reduced toward zero, making some tradeoffs inevitable. Consequently, regulatory regimes should be chosen that
protect the environment to some desired level while minimizing losses in economic growth.
An allowance trading system is merely a method of allocation; it does not confer new licenses to pollute. Under com*
mand-and-control regulation, firms pay nothing for residual
emissions after they install the required equipment. An allowance trading system, on the other hand, requires firms to pay
for each unit of pollution they emit.
Economic incentives decrease firms' compliance costs by offering
them the flexibility to make the best use of information regarding
their production process. In contrast, efficient command-and-control
regulation requires the regulating agency to collect detailed, firmspecific information on pollution control costs, alternative production processes, and the value of capital stock in place—an impossible task. With economic incentives, regulators merely lay down
ground rules and allow firms to make their own production choices;
the government—and the Nation—benefits from the firm's internal
information without having to discover it.
Fuel Economy Standards
The transportation sector accounts for two-thirds of U.S. petroleum consumption, with more than half going to gasoline for cars,
trucks, and buses. Gasoline consumption imposes at least two kinds
of externalities on society: vulnerability to oil shocks and pollution.
Reducing oil consumption, and in turn the demand for imported




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oil, was the original justification for corporate average fuel economy (CAFE) standards in 1975. Proponents also claim that the
standards improve air quality, particularly in cities, by reducing
ground-level ozone.
Current CAFE standards require each auto manufacturer to
meet a target of 27.5 miles per gallon for both its domestic and imported fleet. Recent proposals would increase CAFE standards by
varying amounts. Proponents argue that higher standards would
reduce both oil imports and consumption.
Government can correct the externalities associated with gasoline consumption by several means. The Clean Air Act Amendments of 1990 address those pollution externalities in provisions
covering new car tailpipe emissions, reformulated gasoline, and enhanced inspection and maintenance programs. Fuel and vehicle
taxes also correct these externalities. The most direct solution
would be for regulators to determine the damage caused by gasoline consumption and then set a fee on its use equal to that
damage. (State and Federal gasoline taxes, which now average 32
cents per gallon, already correct 32 cents worth of externalities in
this way.)
Higher CAFE standards would be a poor substitute for the use of
fees, because they fail to address the externalities directly. First,
higher CAFE standards might reduce pollution, because drivers
would burn less gasoline per mile. However, because higher mileage cars generally cost less to drive per mile, motorists would drive
more, offsetting a portion of the gain from the higher standards.
(More driving makes road congestion worse, meaning that CAFE
standards are themselves responsible for a negative externality.)
Second, although higher CAFE standards would indeed reduce oil
imports, they may not reduce U.S. vulnerability to oil shocks,
which depends not only on the level of imports, but also on the
flexibility provided by alternative energy sources and on economic
responses to the shock.
Much of the CAFE debate has centered on engineering feasibility, on what mileage targets the automakers could achieve. But consumers, who are the ultimate decisionmakers, do not base vehicle
purchase decisions on engineering feasibility or on fuel efficiency
alone. Size, options, and performance are also important. Indeed,
engineering feasibility does not itself establish value to society; it
does so only in conjunction with economic feasibility. Manufacturers can produce cars with high fuel economy ratings, but if consumers will not buy them, then such cars should not be produced.
Proponents of higher CAFE standards generally overlook the indirect effects of their proposals, which would tend to offset many of
the purported benefits. First, to comply with higher CAFE standards, firms would probably produce fewer large cars and more




185

small cars. This would raise the price of large cars and likely cause
consumers to respond by holding onto their older, less fuel-efficient
vehicles. Second, because small cars, all else being equal, are less
safe than large cars, higher CAFE standards could significantly increase deaths and injuries on the Nation's highways.
Higher CAFE standards pose other problems as well. The requirement that manufacturers divide production into a "domestic"
and an "import" fleet ignores the realities of a globalized auto industry and forces them to make less-than-efficient input choices to
meet the standard in each category. Moreover, current proposals
would penalize firms whose technology gives them a comparative
advantage in the production of larger cars. They could be forced to
abandon these competitive technologies in order to comply. Finally,
as with other forms of regulation, CAFE standards could be coopted by political forces and used by some firms to gain an advantage over others. The shortcomings of the CAFE program serve as a
reminder of the dangers of an ill-designed regulatory program. A
successful regulatory program must first define the externality it intends to address, then design incentives to address these externalities without introducing any new ones.
Global Climate Change
Global climate change is another example of an environmental
externality. The presence of "greenhouse gases" such as carbon dioxide, methane, and water vapor in the atmosphere helps to maintain surface temperatures at historic levels. If these gases were
wholly absent, the temperature of the earth would be about 33° C
lower. These gases retain and reflect some of the heat given off by
the earth back to its surface, providing a sort of blanket over the
planet. Some production processes such as the burning of fossil
fuels result in the emission of greenhouse gases. These additions to
the earth's natural supply of such gases have raised concerns over
possible effects on global climate. Those who emit greenhouse gases
do not account in their production decision for the climatic effects
they may cause. A negative externality is present if these emissions cause harmful ecological or economic effects.
As with many global environmental issues, much of the research
regarding the effects of greenhouse gas emissions is in its preliminary stage. Indeed, the Intergovernmental Panel on Climate
Change (IPCC), under the aegis of the United Nations, estimated
that it may take a decade or more to ascertain whether human-induced climate change has indeed occurred. In part, this uncertainty
is caused by growing evidence that certain factors counteract a potential increase in global temperature. The 1992 IPCC Supplemental Science Assessment states that the cooling effect of sulfur emissions may have offset a significant part of greenhouse warming in
the northern hemisphere.



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Most scientists agree that additions to the earth's natural supply
of greenhouse gases through fossil fuel burning, deforestation, and
other human activities have a warming effect on the climate. By
most estimates, the concentration of CO2 in the atmosphere will
have doubled worldwide from preindustrial levels by the middle of
the next century. Concentrations of most other greenhouse gases
are also projected to increase.
At issue is the timing and magnitude of the potential warming
caused by such increases. As stated above, coincident offsetting factors could mitigate the effects of greenhouse gas emissions. Additionally, other recent work cited by the IPCC indicates that most
warming is likely to occur at night rather than during the day, and
in winter rather than summer. These and other recent studies generally discount the severe effects (such as dramatic sea level increases, major changes in precipitation patterns, and significant
threats to certain species) predicted in some preliminary work a
few years ago.
From an economic perspective, the following questions must be
addressed: First, do greenhouse gas emissions from human activities constitute a significant externality? Second, if so, is it negative
(such as an increase in sea level), positive (such as a longer growing
season in Canada and the former Soviet Union), or both (a mix of
effects that benefits some regions and harms others)? The scientific
consensus is by no means clear on this point. If a negative externality is determined to exist, the next step is to identify the major
sources, from natural as well as human activities, of all greenhouse
gases and to determine their relative contributions to potential
warming. At the same time, materials that absorb greenhouse
gases ("sinks"), such as forests, should also be identified. One must
then determine if it is better to reduce emissions now, perhaps
using economic incentives, or to wait and respond later to the observed effects.
In choosing among alternative courses of action, the scientific uncertainty surrounding climate change should be considered along
with estimated costs and benefits of action. Although immediate
large-scale actions in anticipation of global warming have been suggested, a prudent course would include taking those actions that
would be desirable on their own merits, while deferring costly steps
that should properly await resolution of key scientific uncertainties. Rational policy requires balancing the costs of delay with the
benefits of information that will be available later.
The potential effects of climate change are generally long term,
and the initial costs of proposed remedies may be high. One proposal aims to stabilize global greenhouse gas emissions at 80 percent
of 1985 totals by 2010. Studies put the eventual cost of achieving
this goal at 1 to 5 percent of world gross domestic product per year,



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with most of the cost attributed to the reduction in output needed
to achieve the emission reduction. In today's world economy, this
would be $200 billion to $1 trillion per year ($1 trillion is considerably more than the GNP of China and India combined). Hasty attempts to remedy the externality imposed by greenhouse gas emissions could have small benefits relative to these very large costs. A
better understanding of the science of global climate change is
needed before agreeing to policies with potentially large costs.
The Administration has taken the view that a successful climate
change strategy must be comprehensive, incorporating all relevant
greenhouse gases, their sources and sinks. It must be flexible, built
on many diverse actions, and readily adjustable as knowledge improves; and it must be integrated, designed to involve all nations.
Integral to the U.S. climate change strategy is the world's largest
program of research. For fiscal 1993 the President's budget contains $1.4 billion for global change research, including $17 million
for research in the economics of global change.
HEALTH AND SAFETY REGULATION
Decisions to wear a seat belt, to take a job as a telephone lineman, or to fly a small plane all involve balancing exposure to risk
against other objectives. In the United States, government addresses risk indirectly, by providing the legal framework for the market
and the tort system, and directly, by an extensive and growing program of safety regulation. A 1967 NHTSA rule sets safety standards for automobile steering columns, for example, a 1979 EPA
rule regulates chemicals used to treat drinking water, a 1985 Federal Aviation Administration rule sets fire protection standards for
aircraft cabins, and a 1990 EPA decision lists certain wood-preserving chemicals as hazardous wastes.
Proponents of a larger government role in health and safety
assert that in these areas, people are not able to make proper decisions about risk bearing. Some also argue for intervention on
equity grounds. If a certain risk is exceptionally high or prohibitively expensive for an individual to bear, society will sometimes
assume the burden through regulatory intervention or public funding, as it does for neonatal intensive care, and burn and trauma
centers.
The Congress has expanded budgets, staffs, and the regulatory
scope of the agencies regulating these areas, almost tripling administrative costs of health, safety, and environment regulation between 1970 and the present. The Federal Register chronicles official
actions of the regulatory agencies, including those that regulate
health and safety. Its size gives an idea of the regulatory burden on
the economy. The Register occupied 26 inches of shelf space for



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1956, 36 inches for 1966, and more than 10 feet at its apogee in
1978; in more recent years it has been somewhat thinner.
Public perceptions have fueled this regulatory growth. The public
believes, according to surveys, that life is becoming more risky. In
fact, life is becoming safer, as demonstrated by the steady increase
in life expectancy, from 70.8 years in 1970 to 74.9 years in 1988; by
the steady decrease in age-adjusted death rates from most diseases;
and by the steady decrease in death rates on highways and in the
workplace.
Public concern over risk has sometimes given rise to legislation
requiring that all risk be eliminated. The Delaney Clause of the
Food, Drug, and Cosmetics Act prohibits the use in food of any
' 'substance shown to cause cancer in animals or humans." Courts
have interpreted this clause to mean that such substances are automatically prohibited at any dose no matter how small. Further, a
ban may be based on animal studies showing carcinogenicity in
any amount, even if the animals were fed unrealistically large
doses. In the Clean Air Act, the Congress set a slightly more flexible standard when it instructed the EPA to fix primary air quality
standards that "protected the most sensitive group in the population with an adequate margin of safety." Similarly, the Congress
charged the Occupational Safety and Health Administration with
ensuring that "insofar as possible, no employee will suffer diminished health, functional capacity, or life expectancy as a result of
his work."
Just as individuals must balance risks and benefits in making
their individual decisions, so must government regulators. Commercial air travel, for example, is relatively safe; at some cost,
though, it could be made still safer. Yet each extra safety-related
increase in ticket prices makes some travelers decide to drive instead, which is up to 20 times more dangerous per mile traveled.
As Chart 5-3 indicates, regulations issued during the 1980s were,
on average, far more costly per unit of safety achieved than earlier
ones had been. (The vertical axis is logarithmic; each grid line represents 100 times more cost per unit of safety than the one below
it.) In part, this cost increase is due to congressional mandates
placed on agencies. Before 1985 only two regulations exceeded a
cost of $100 million per death averted. Eight such regulations have
been enacted since that time. EPA's rule regulating wood-preserving chemicals, while not large in total costs, is estimated to avert
only one case of cancer every 2.9 million years, and cost at least $5
trillion dollars per death averted; that is 10 million times more
costly per unit of safety than a number of earlier rules. In this example and elsewhere, regulation often targets expensive risks and
passes over those where greater reductions are possible at the same
cost.



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Chart 5-3 Cost per Premature Death Averted of Federal Health and Safety Regulations
Federal regulation of risk has become less cost-effective.
Millions of 1990 dollars
100,000,000

1,000,000

10,000

100

t
0.01

I

1967

I

1969

I

•
I

1971

I

I

1973

I

1975

i

I

I

1977

1979

I

1981

I

I

1983

I

I

1985

1987

I

I

1989

I

1991

Note: Dots represent Federal regulations.
Source: Office of Management and Budget.

Recent initiatives often impose high total costs as well as high
per-unit costs. For example, several laws including Superfund,
which are designed to reduce damage from hazardous wastes, were
formulated when little was known about the environmental benefits or economic costs of the requirements. Recent evidence indicates that these laws will cost $500 billion to $1 trillion (in 1991
dollars) over the life of the programs. While no definitive estimate
yet exists, benefits to public health and the environment from
these programs are not likely to approach the magnitude of the
costs.
Market failure may justify government intervention only if the
government can improve on the market. Cost-benefit analysis can be
a useful tool for setting appropriate goals when regulating risk, even
though precise estimates of costs and benefits may not exist. Several
regulatory agencies, including EPA, have recently attempted to establish risk regulation priorities as part of the Federal Government's larger initiative to develop a risk-based regulatory agenda.
In regulating risk, as in regulating other areas, government policies
should strive to maximize net benefits, enacting only those regulations in which benefits to society outweigh costs. To do otherwise di-




190

verts resources from more important risks and impedes economic
growth.
SUMMARY
• Market-based solutions are the most efficient means of allocating a given level of pollution.
• Increased CAFE standards are potentially costly, would encourage consumers to maintain their older, less fuel-efficient
automobiles, and could decrease highway safety.
• In addressing the possibility of global climate change, the economic effects of proposed policies must be carefully evaluated
before deciding which policies to implement.
• In regulating health and safety risks, government policies
should maximize net benefits, promulgating only those regulations whose benefits to society outweigh their costs.

CONCLUSION
The government plays a crucial role in facilitating competition
through the establishment of a legal system that governs contracts,
defines and protects property rights, and compensates people who
have been injured. The Administration's proposed reforms to the
legal system would lift the burden of litigation on economic productivity, while maintaining a fair system for settling disputes. Regulation can also play a direct role in improving the performance of
the market system. Any proposal to regulate the market, however,
should be tempered by an understanding that regulation can be at
least as imperfect as the market it is trying to improve. The goal of
the Administration's regulatory reform initiative is to have all regulatory agencies, to the maximum extent allowed by law, reexamine existing regulations, eliminate or revise those that clearly
impose costs that exceed their benefits, and ensure that other regulations are implemented in a cost-effective manner.
The government must constantly reevaluate the need to intervene in markets. The necessity of continuing to regulate industries
should be reconsidered whenever innovations or technical changes
allow a natural monopoly to be replaced by competition. The National Energy Strategy would accelerate deregulation in the markets for pipeline sales of natural gas and in the generation and
sales of electric power, benefiting consumers with lower energy
prices. Environmental protection is also an important goal of this
Administration, but measures should reflect the costs of shifting resources away from other uses to meet this challenge. Tradable allowances are an efficient tool for meeting strict pollution standards
at minimum cost. Current regulations to reduce risk sometimes fail
to strike the proper balance between costs imposed and benefits re


191

alized. To improve on this performance, the effectiveness of resources spent to reduce one type of risk must be weighed against
the effectiveness of using those same resources to reduce other
risks.




192

CHAPTER 6

Open International Markets and
Prosperity
INTERNATIONAL TRADE AND INVESTMENT make important contributions to U.S. and world prosperity. In the broad sweep
of history, rising prosperity and rising international trade have
gone hand in hand. Indeed, international trade has grown much
more rapidly than domestic production in all major periods of the
past 300 years, with one notable exception—the period that includes the Great Depression of the 1930s and the two World Wars
(Chart 6-1). Domestic economic growth contributes to the rapid
growth of international trade; as people have more income to
spend, they spend part of it on foreign goods and services. At the
same time, increases in trade and investment are powerful engines
contributing to efficiency and growth.
Several major developments are under way that could open
international markets further and boost worldwide prosperity.
These developments come as many countries of the world face the
prospect of temporarily slower economic growth. Although such periods often lead to renewed calls for protection, now is not the time
for the United States or its trading partners to turn inward: There
is simply too much at stake. Retreating from a focus on open international markets now would undermine opportunities to promote a
growing and efficient world economy.
Foremost among these opportunities is the Uruguay Round of
multilateral negotiations under the General Agreement on Tariffs
and Trade (GATT). These negotiations, which were initiated at
Punta del Este, Uruguay, in 1986, involve more than 100 countries
and address a wide array of issues from the reduction of tariffs to
the safeguarding of intellectual property rights. The gain to the
United States and to the world from a successful Uruguay Round
would be large, but the costs of a failed round are potentially enormous: The prospect of a successful round has kept many trade frictions from becoming full-blown trade disputes. The alternative to a
successful Uruguay Round is therefore the possibility of an increase in trade disputes and a proliferation of retaliatory tariffs,
voluntary restraint arrangements, and other restrictions on trade,
which could lead to a period of contracted world trade and slower
world economic growth.



193

Chart 6-1

GDP and Export Growth Trends, 1720-1990

Historically, GDP growth and export growth have reinforced each other. Trade has
generally grown more rapidly than output.
Average annual growth (percent)
12

1720-1820

1820-1870

1870-1913

1913-1950

1950-1973

1973-1990

Note: The figure for first period GDP uses 1700-1820 data. Data are for France, Germany, Italy, Japan,
the United Kingdom, and the United States. Not all countries are represented in the first two periods.
Sources: Department of Labor, International Monetary Fund, the World Bank, and Maddison, Phases of
Capitatist Development.

Regional initiatives to further liberalize trade and investment
are also under way. The United States has entered into negotiations with Mexico and Canada to form a North American freetrade area, which will build on the U.S.-Canada Free-Trade Agreement of 1988 and provide for freer trade and investment throughout the North American continent. These negotiations offer a historic opportunity to create a market with 360 million consumers
and a total annual output of more than $6 trillion. Further market
openings could come from the hemisphere-wide system of freer
trade and investment envisioned in the Administration's Enterprise for the Americas Initiative.
The economies in transition also present new opportunities for
trade and investment. The collapse of communism and central
planning in Central and Eastern Europe and the former Soviet
Union is only the most obvious and recent event in a ground swell
of changes to political and economic systems around the world. The
reorientation of economic systems toward greater dependence on
market forces has become more apparent in other parts of the
world as well. Providing open international markets is perhaps the
most important single thing that the West can do to help the
economies in transition, particularly the countries of the old Soviet
bloc, in their efforts to build democratic and market-oriented soci


194

eties. While aid—particularly technical assistance—can play a constructive role during the transition, trade, not aid, is the most important force for integrating these economies into the world
market.

MUTUAL GAINS FROM TRADE
The case for an open trading system is even stronger today than
in 1817, when the English economist David Ricardo first argued for
the benefits of free trade on the basis of comparative advantage.
Ricardo argued that countries could gain from specialization and
trade by taking advantage of their differences. He showed that
whenever the same products sold at different prices in different locations, the possibility of mutually beneficial trade between countries arose. For example, as long as wine was relatively more expensive in England and cloth in Portugal, each country could gain
by exporting some of the product that was inexpensive at home in
exchange for imports of the product that it found relatively expensive to produce. Through the process of free international trade,
the world's resources would be directed to their most efficient uses
and the standard of living of each country would be enhanced.
With this insight, the basic case for free trade had been established.
Today, as in Ricardo's time, people engage in trade to improve
their standards of living. This is true whether the trade is among
individuals, among States, or among nations.
States or countries often specialize to take advantage of their distinctive climate or natural resources. Thus, it is the fertile land
and plentiful rain that leads Iowa farmers to produce corn; it is the
warm climate that induces farmers in Florida to grow oranges. If
Iowans sell corn to Floridians in exchange for oranges, both sides
gain. Similarly, if the United States sells wheat to Brazil in exchange for coffee, both countries gain. Special skills or technology
can likewise lead to specialization; advanced technology enables
U.S. companies to manufacture many sophisticated goods more
cheaply than foreign countries and to pay high wages while doing
so.
Economies of large-scale production provide an additional reason
for specialization, even among regions that are broadly similar. It
would be enormously inefficient for each American State to attempt to become self-sufficient in every variety of manufactured
good and specialized service. For many products, research and development (R&D) costs are significant; their production may also
require complex and costly machinery. By extending their production runs, firms can spread their overhead costs and lower the cqst
of producing each unit.



195

Thus, in the United States, airplane production is concentrated
in the Northwest, automobiles in the Midwest, and motion pictures
on the West Coast. Each industry produces for a larger market
than any single State could sustain, and exports to other States.
Similarly, by exporting to other countries, American aircraft companies can lengthen their production runs, lower their costs, and
increase their profit margins; this, in turn, can increase the return
to innovation and lead to greater investment in R&D, higher
growth, and greater choice for domestic consumers.
For many other countries with much smaller domestic markets
than that of the United States—which, after all, is the largest
economy in the world—economies of scale provide an even greater
incentive to engage in international trade. The Swiss pharmaceutical industry, for example, is dependent upon export markets for its
prosperity.
In addition to the gains from trade associated with economies of
scale and specialization, reducing barriers to imports of goods and
services may produce important investment-enhancing and procompetitive effects, especially in countries with high tariffs and relatively closed markets. The doubling of foreign direct investment in
Mexico in the past 5 years, for instance, came largely in response
to Mexico's unilateral trade and investment liberalization beginning in the mid-1980s. Moreover, although the lower cost of imports that comes with an open trading system can eliminate some
import-competing jobs, an open trading system promotes exports
and creates export-related jobs. Export growth accounted for 25
percent of the growth in private industry jobs in the United States
between 1986 and 1990.
Just as open international markets permit countries to enjoy the
mutual gains from trade, protectionism interferes with the ability
to realize these gains. Trade barriers not only raise the price of imported goods to consumers but also the price of domestically produced goods that compete with those imports. Such barriers may
help import-competing producers, but they do so by hurting other
domestic industries. By encouraging domestic production of importcompeting goods, protection acts to discourage a nation's resources
from reorienting toward exporting sectors. And where scale Economies are important, import barriers can fragment the market in
ways that diminish the ability of firms to achieve the benefits of
large-scale production.
In practice, the costs of protection can be substantial. Between
1981 and 1985, for example, U.S. imports of Japanese automobiles
were restricted by a voluntary restraint agreement (VRA), under
which Japan agreed to reduce its exports of automobiles to the
United States. According to one study, the higher prices brought
about by this VRA cost U.S. consumers $5.8 billion in 1984, while



196

U.S. automakers gained only $2.6 billion. VRAs on imports of steel
into the United States, which will expire on March 31, 1992, have
also been costly to the U.S. economy. One study estimates that the
elimination of VRAs and tariffs on U.S. steel imports would have
saved U.S. consumers more than $800 million in 1988; maintaining
this protection provided less than $300 million in benefits to U.S.
steel producers.
In agriculture, import quotas for commodities such as peanuts
and sugar keep domestic prices high at the expense of U.S. consumers. The sugar import quota, for example, maintains domestic
prices that are often two to three times the world price. Losses to
U.S. consumers were estimated at $1.9 billion in 1987. The current
peanut quota is set at 1.7 million pounds, less than one-tenth of 1
percent of total U.S. peanut production. A recent study estimates
that the effects of the peanut quota is equivalent to as much as a
90-percent tariff on peanut imports. Another study estimates that
the losses to U.S. consumers because of the peanut import quota
totaled over $400 million in 1987. These losses are disproportionately shared by lower income groups who spend a larger share of their
income on peanut butter. Higher peanut butter costs affect government domestic feeding and child nutrition programs such as the
Temporary Emergency Food Assistance Program.
Losses to U.S. consumers from the sugar and peanut quotas are
partially offset by the gains to U.S. producers, through higher
prices. Sugar and peanut producers are estimated to have gained
$1 billion and $370 million, respectively, from import quotas in
1987. Over time, however, these benefits become capitalized into
higher land prices. Thus, farmers who lease land and new entrants
into farming pay for much of the "benefit" of import quotas
through high rental rates and higher land prices.
While the costs of protection can be substantial, new justifications for protection continue to emerge. The recent focus on industries with scale economies, for example, has raised new questions
about the possibility of gains from government intervention designed to "create" comparative advantage in such industries. Academic research on this question, however, has generally reinforced
the basic case for free trade and the arguments against government intervention (Box 6-1).
If trade barriers are reduced and market forces allowed to act,
countries will export the goods for which they are the relatively efficient, low-cost producers and will import other goods in exchange.
As the world economy changes, so too will efficient patterns of international specialization and trade, but gains from specialization and
trade remain. Such international specialization promotes low-cost,
efficient production and contributes to the economic well-being of
all trading nations.



197

Box 6-L—TEconomies of Scale and Trade Policy
As discussions of trade policy have broadened to include industries where scale economies are prevalent and a small
number of firms dominate the market, one school of thought
has argued that government should intervene to ^create" a
comparative advantage in such industries, in the expectation
that they will provide attractive rates of return*
Far from providing a strong case for government intervention, studies of so-called strategic trade policy generally illustrate more than anything else the pitfalls associated with such
a policy. The form of intervention cannot be prescribed without
detailed knowledge of industry information, such as the nature
of competition among firms, the nature of the research and development process, details of the production technology, and
entry conditions in the industry, Thorn information requirements make successful government intervention on a case-bycase basis virtually impossible* Moreover, targeting one favored, "winning" industry to help it achieve large-scale production would typically mean shifting resources away from other
industries* Thus, successful intervention in one case k not
enough: Anything less than a comprehensive program that correctly identifies and implement® the prescribed intervention for
a wide range of industries is likely to do more harm than good.
That makes successful intervention even less likely.
In practice, evidence suggests the futility of a government attempting to "pick winners/' The case of Japanese steel has
been widely cited as the classic example of successful Japanese
industrial policy in the 1960s and early 1970s, yet the veiy low
returns on Japanese investment in steel suggest that this government policy was anything but successful.
Economies of scale are often suggested as a reason for government intervention, including trade barriers to keep out imports that will spoil the home market But there is a fundamental paradox here* When economies of scale are present* the
gains to the world as a whole from open international trade
are particularly great: Open world markets permit firms to
extend their production runs and lower their costs,Rather
than suggesting that governments should attempt to create
comparative advantage in selected industries, eamomtes of
scale underline the importance of multilateral commitments to
refrain from such attempts and the t f ^
that accompany them*




198

DISTRIBUTIONAL EFFECTS OF TRADE
LIBERALIZATION
Even though each country as a whole enjoys lasting gains from
the general reduction of trade barriers, some individuals and firms
may nevertheless lose, particularly in the short run.
As the tariff on a good comes down, the domestic price of the
good generally falls, to the benefit of the consumer. The owners of
the firms in this industry generally lose in the short run as the
value of their investment declines, and workers may face wage reductions and temporary job dislocations. Protecting the industry in
an attempt to avoid this dislocation, however, typically imposes a
large ongoing cost on domestic consumers. The annual consumer
cost per job saved by U.S. protection against imports of specialty
steel in 1988, for example, was estimated to be more than $340,000.
Those who lose in the short run from tariff reductions are relatively easily identified, but the permanent impact of trade liberalization on the distribution of income is difficult to predict. As affected workers and firms find new opportunities in other sectors,
their relocation can affect the structure of wages and returns to investment throughout the economy in ways that are complex and
indirect.
Finally, a tariff reduction creates lasting gains, but the gainers
are often diffuse or hidden. They are the large group of consumers—who often are unaware of the price decrease that lower tariffs
cause—and the workers and owners in export industries, who gain
as trade barriers fall and export markets increase.
Because the reduction of trade barriers leads to increased efficiency and improved standards of living for the population as a whole,
the possibility that some individuals may lose from trade liberalization is therefore not a reason for a country to resist movement
toward more open markets. Rather, it is a reason to allow a gradual
phase-in of trade liberalization, to give those who will be adversely
affected a better chance to adjust. In fact, gradual phase-ins are a
standard feature of international trade agreements. Adjustment
programs, which in the United States include programs such as
Economic Dislocation and Worker Adjustment Assistance, are also
available to reduce the burdens and speed the relocation of workers
and firms in trade-impacted industries. Finally, the ability to reimpose temporary protection, which is also a standard feature of
international trade agreements, provides an important avenue to
prevent or remedy serious injury due to increased imports.
THE NEED FOR STRONG TRADING RULES
While each country has much to gain from trade, the temptation
to deviate from open trade policies can be very strong. The readily
identifiable distributional effects of trade liberalization in the short




199

run can create strong lobbying interests who resist the removal of
trade barriers even when their removal benefits the nation as a
whole. And in times of increasing unemployment, the temptation
to use protection to stimulate domestic employment at the expense
of foreigners may be especially strong.
The presence of such temptations, which all countries are likely to
face, does not justify going ahead with that protection, however.
Rather, these temptations signal the need for strong international
rules to avoid the reciprocal trade wars that would result if all
countries shortsightedly pursued such policies (Box 6-2).

Box 6-2.—A Lack of Discipline: The Case of Agriculture
Agriculture has effectively been beyond the discipline of the
General Agreement on Tariffs and Trade. This has allowed a
web of national policies to evolve that has distorted production
patterns and trade. For example, the agricultural export subsidy war being waged by the United States and the European
Community (EC) cost EC taxpayers over $11 billion in direct
export subsidies in 1988. In the United States, export subsidies
totaled more than $1 billion in 1988.
The export subsidies are a direct consequence of agricultural
support programs within the EC and the United States. The
EC supports high internal prices by subsidizing the export of
surplus production. In response to deteriorating market share,
some of which was caused by its own high support prices, the
United States began subsidizing exports in 1985. Since then,
U.S. support prices have been lowered substantially, and new
U.S. export subsidies are focused on combating EC subsidies.
The clear winners of the EC-U.S. trade wars have been consumers in the importing countries. At times, U.S. subsidies
have been as high as 30 to 40 percent of the world price to
counter EC export subsidies, which have been as high as twice
the world price. The losers are consumers and taxpayers
within the EC and the United States, and producers in nonsubsidizing exporting countries who cannot easily compete with
subsidized exports.
In practice, protectionist actions have evoked similar reactions
from trading partners. The most notorious episode of "beggar-thyneighbor" trade policy is the well-known tariff war that erupted
with the onset of the Great Depression. Driven by the misguided
view that the short-term imposition of tariffs could alleviate the
growing unemployment experienced in the U.S. manufacturing and
agriculture sectors by "switching" expenditure from foreign to domestic products, the Smoot-Hawley Act of 1930 raised the average




200

tariff rate on dutiable imports in the United States to 60 percent.
Rather than benefiting the U.S. manufacturing and agriculture
sectors, the Smoot-Hawley tariffs had the opposite effect by provoking foreign trade partners to adopt retaliatory tariffs. More than 60
nations responded with tariffs of their own within 2 years. A
breakdown in world trade followed, contributing to the global depression.
SUMMARY
• The case for an open trading system is even stronger today
than when David Ricardo first argued for the benefits of free
trade on the basis of comparative advantage. Comparative advantage provides a reason for countries to gain from specialization and trade by exploiting their differences, while economies
of large-scale production provide an additional reason to specialize, even among regions that are broadly similar.
• By exporting to the world, American companies can lengthen
their production runs, lower their costs, and increase their
profit margins. This, in turn, can increase the return to innovation and lead to greater investment in research and development, higher growth, and a greater variety of goods and services for consumers.
• Even though each country as a whole enjoys lasting gains from
the general reduction of trade barriers, some individuals and
firms may nevertheless lose, particularly in the short run.
Rather than serve as a reason to maintain trade barriers, however, this is a reason to provide for a gradual phase-in of trade
liberalization and to have effective adjustment programs.
• While each country has much to gain from trade, the temptation to deviate from open trade policies can sometimes be
strong. Such temptations signal the need for strong international trading rules.

INTERNATIONAL INVESTMENT
Along with the flow of trade, greater international investment
over the past four decades has increased the global integration of
markets. International investment takes two forms. Some is direct
investment, where the investing foreign party exercises control
over the management of a business; this is judged to occur when
foreign ownership reaches at least 10 percent of the voting equity
of the business. The remainder is portfolio investment, passive foreign ownership of financial instruments, including corporate stocks
or bonds, government securities, or bank deposits.
Worldwide, foreign direct investment flows, which are manifested in the operations of multinational corporations, have grown




201

since 1983 at an unprecedented rate of 29 percent a year, roughly
four times that of the growth of output (with output and investment both being measured at current prices). For the United
States, in recent years foreign direct investment has become more
significant relative to foreign portfolio investment. Foreign direct
investment's share of total foreign investment flows into the
United States increased from 13 percent in the 1970s to 23 percent
in the 1980s; by 1990, direct investment accounted for 43 percent of
total foreign investment flows into the United States. Today, the
United States is the world's largest recipient of foreign direct investment. In the other direction, 58 percent of U.S. investment
flows abroad during 1990 was direct investment.
THE CLOSE TIES BETWEEN TRADE AND FOREIGN
DIRECT INVESTMENT
Although foreign direct investment flows are not a new development—the advent of the multinational enterprise dates back several centuries—they are far less extensive than international trade.
As Chart 6-2 shows, however, foreign direct investment has grown
faster than trade in recent years. By integrating national markets,
the recent dramatic increase in foreign direct investment could
foster greater trade flows, setting the stage for a new era of global
economic growth. Direct investment stimulates companies to be
more competitive internationally, which can generate exports.
Also, plants established abroad often rely on inputs exported from
the home country.
In general, trade and investment do not substitute for one another; direct investment is not likely to displace exports. In many
cases, if a firm does not establish an affiliate abroad to produce for
a local market, it is likely to be too distant for an export strategy
to give it an effective, sustainable presence in that market in the
long run. Moreover, in these circumstances, it is likely that companies from other countries would ultimately attempt to establish
production facilities in the market. Thus, in general it is a mistake
to presume that if direct investment abroad did not take place, production would be maintained at home and exports to the foreign
market would continue.
Still, there are similarities between trade and investment. As
with trade, both "home" and "host" countries gain from foreign
direct investment. Indeed, the mutual gains from trade tend to be
reinforced by flows of foreign direct investment. The benefits of foreign direct investment also stem from comparative advantage, and
many of the factors that determine the flow of trade are similar to
those that influence investment. Through their international production networks, multinational corporations move inputs and out


202

Chart 6-2 Foreign Direct Investment Outflows and Exports of G-7 Countries
Since 1985 foreign direct investment outflows have grown much more rapidly than
exports, measured in nominal dollars.
Index, 1980=100
400

Foreign Direct Investment
Outflows
300

200

Exports of Goods
and Services
100

j
i
i
i
i
i
i
1980
1981
1982
1983
1984
1985
1986
1987
1988
Note: The G-7 countries are Canada, France, Germany, Italy, Japan, the United Kingdom,
and the United States.
Source: Organization for Economic Cooperation and Development.

1989

1990

puts among geographically dispersed plants, providing for crosscountry specialization, economies of scale, and greater competition.
On a global basis, multinational corporations play a significant
role in trade. For example, 28 percent of all U.S. exports go to, and
20 percent of U.S. imports come from, U.S. firms abroad. Generally, in the countries where they operate, foreign-owned multinationals engage in trade more extensively than do their local counterparts.
The rapid growth of worldwide foreign direct investment has
been accompanied by a change in its composition. During the 1950s
foreign direct investment was concentrated in raw materials and
natural resource-based manufacturing; today, it is increasingly in
technology-intensive manufacturing and in services, such as banking, insurance, and telecommunications. The shift toward services
has been particularly pronounced. Services accounted for 16 percent of cumulative U.S. direct investment abroad in 1982 and for
31 percent in 1990.
« The growing importance of the high-technology and service sectors enhances global economic integration. Downsized, high valueadded, sophisticated products made from multifaceted, interchange-




203

able components can be shipped easily for processing. Today, more
trade takes place in computer chips and less in heavy machinery.
Openness in trade and openness in investment work hand in hand
to enhance prosperity and competitiveness. Both increase the efficiency of resource allocation and raise living standards. There is an
important synergy between open trade and open investment flows:
Cross-border corporate linkages increase pressure to keep open
markets for goods and services as well as for capital. Continued
progress toward an open international investment regime can contribute to strong worldwide growth in the 1990s.

THE BENEFITS OF FOREIGN INVESTMENT
International flows of capital through foreign direct and portfolio
investment affect growth and the standard of living in several
ways. They have kept U.S. interest rates lower than they would
have been, thereby helping to sustain private investment and
growth despite the Nation's low saving rate. Moreover, they have
reduced the interest cost of financing the U.S. Federal budget deficit.
Of course, capital inflows mean that the United States will have
to make interest and dividend payments to foreigners in future
years. Raising domestic saving is essential to achieving the high
levels of investment on which long-run economic growth depends.
A goal of Administration policy is to increase national saving to
support a higher level of domestic investment that is sustainable
over the long run—a level that can be achieved regardless of future
flows of international capital.
International capital flows in the form of direct investment are
also important avenues for transferring technology. Early in this
century, such investment emerged as a major conduit for technological know-how, especially between the United States and
Europe. More recently, capital flows to developing countries—ranging from Hong Kong to Mexico to Thailand—have increased the
diffusion of technology.
Foreign direct investment involves the investment not only of financial and physical resources, but also of entrepreneurial and
managerial skills. Indeed, the presence of foreign companies results
in "spillover" improvements in the efficiency of local firms through
the diffusion of state-of-the-art, productivity-enhancing activities.
These transfers are no longer viewed as flowing predominantly in
one direction—with a net transfer of American expertise to other
nations; there is much that the United States has learned, and will
continue to learn, from other nations.




204

FOREIGN INVESTMENT IN THE UNITED STATES IN
PERSPECTIVE
The increase in total foreign investment in the United States reflects both the worldwide trend toward greater economic integration and the American economy's underlying dynamism and attractiveness.
Although flows of foreign direct investment into the United
States decreased in 1990 and 1991—due, in part, to the U.S. recession and competing investment opportunities abroad—cumulative
foreign direct investment in the United States, as measured by
market value, reached $530 billion at the end of 1990, having increased at an average annual rate of 18 percent since 1985.
Still, on a comparative basis, foreign direct investment in the
United States remains modest (Chart 6-3). Indeed, foreign multinationals account for only about 5 percent of U.S. jobs and U.S. gross
domestic product.
Chart 6-3

Foreign Direct Investment, 1990

\n most industrialized countries, U.S. holdings of direct investment represent a substantially
larger share ol host country GDP than the respective foreign country's holdings in the United States.
Percent of host-country GDP
14

United Kingdom Japan

Netherlands

Canada

Germany

Foreign Holdings in the
United States

France

Switzerland

Australia

Italy

U.S. Holdings in the
Foreign Country

Note: Japan data based on GNP. German output is for former West Germany.
Source: Department of Commerce and Organization for Economic Cooperation and Development.

As discussed in detail in last year's Economic Report, foreign
multinationals in the United States generally appear to operate in
a manner similar to U.S.-owned companies. On average, however,
foreign multinationals do spend more than U.S. firms on wages
and on plant and equipment per worker. Available evidence also
indicates that R&D spending per dollar of gross product by foreign



205

manufacturing multinationals in the United States appears to be
significantly higher than that by all U.S. manufacturing firms.
Until recently, statistics on stocks of foreign direct investment
were quite misleading, primarily because they were based on historical purchase prices, not current market values. Much of U.S.
direct investment abroad was made decades ago, while the bulk of
foreign direct investment in the United States was made more recently. Because prices have risen over time, historical valuation
understates the current value of U.S. holdings abroad relative to
that of foreign direct investment in the United States. New valuation measures have rectified this problem (Box 6-3 and Chart 64).
Box 6-3.—Measuring International Investment
IJntil last year, data on U-S. direct investment abroad were
valued at historical cost, that is, at the original price paid for
the investment. These data greatly understated the value of
U.S. investments abroad. As a result, the negative U.S. net
international investment position was overstated.
In 1991 data were revised to count UJ6L direct investments
abroad and foreign direct investments in the United States at
current cost, or what they would cost to replace. Since much of
UJSL direct investment overseas occurred between the 1950s
and 1970s, while most foreign direct investment in the United
States has taken place in the last two decades, the adjustment
from historical cost to current cost increased the value of U.Sinvestments abroad more than the value of foreign investments in the United States, With the revised method, these
international data are now consistent with other fixed investment data, such as the Bureau of Economic Analysis's fixed re*
producible tangible wealth and the Federal Reserve Board's estimates of U.S. domestic wealth.
Chart 6-4 shows the net international investment position
using historical cost and current cost. It also shows a third estimate for the net position that uses stock market prices to
value direct investments. The net position—subtracting foreign
direct and portfolio investment in the United States from U.S.
direct and portfolio investment abroad—remains negative re*
gardless of how assets are measured. Nevertheless, total
income received by the United States on foreign investment is
still somewhat larger than total income earned by foreigners
on their U*S- holdings.




206

Chart 6-4 Net International Investment Position
On a current cost or market value basis, the negative U.S. net international investment position
is significantly smaller than on a historical cost basis.
Billions of dollars
600

Current Cost
400

-

y%

\
-200

-

***•

\

Historical Cost

Market Value

\
\

***•
•

-

-600

\

i

i

i

i

i

i

i

I

I

I

I

I

I

l

i

i

I

I

1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990

Source: Department of Commerce.

POLICY TOWARD FOREIGN INVESTMENT
Official U.S. policy toward foreign investment, as reaffirmed in a
statement by the President in December 1991, recognizes that unhindered international flows of capital are beneficial to home and host
countries alike. The basic principle underlying this open investment policy is that all countries should provide "national treatment" for foreign investment, so that foreign investors are able to
make the same kinds of investments, under the same conditions, as
local investors. Exceptions to this principle should be few and generally related to national security. The United States has limited
foreign investment restrictions in certain sectors as a result of such
considerations. These sectors include aviation, nuclear energy, telecommunications, broadcast communications, shipping, and defense.
The interagency Committee on Foreign Investment in the United
States is authorized to investigate foreign investments to determine
their effects on national security and, under certain circumstances,
recommend that the President suspend or prevent acquisitions by
foreigners.
Despite the growing worldwide recognition that flows of foreign
direct investment produce benefits for all countries, national foreign investment policies differ significantly, particularly with respect to rights of establishment, local content restrictions, export



207

performance requirements, regulations on profit remittance, and
protection of intellectual property. The increased globalization of
both markets and corporate production networks is forging an international consensus on the need for multilateral rules governing national policies toward foreign direct investment. This issue will be
considered in more detail below, in the discussion of the Uruguay
Round negotiations.
SUMMARY
• The internationalization of companies through increased foreign direct investment complements the global integration of
markets through the expansion of trade.
• All countries—both sources and recipients—benefit from investment flows, in terms of greater economic growth, increased
competitiveness, and enhanced technology development.
• The increase in foreign investment in the United States reflects not only the worldwide trend toward greater economic
integration, but also the attractiveness of the American economy. The volume of foreign direct investment in the United
States is modest by international standards.
• The United States' open investment policy is based on the
principle of national treatment: Foreign investors should not
be treated differently from domestic investors. This policy promotes growth and prosperity.

MULTILATERAL AND REGIONAL APPROACHES TO
LIBERALIZATION
The world is currently witnessing a number of major initiatives
to reduce barriers to international trade and investment. The
United States and 107 other countries are working toward the completion of the Uruguay Round, the eighth round of multilateral negotiations under GATT. At the same time, there are a number of
important regional initiatives to reduce barriers to trade and investment below the level that would currently be possible on a
multilateral worldwide basis. An important issue is how multilateral and regional approaches to liberalization fit together.
THE MOST-FAVORED-NATION PRINCIPLE AND GATT
Nondiscrimination, or the most-favored-nation (MFN) principle,
is the cornerstone of the GATT system. Under MFN, a GATT
member undertakes to apply its trade policies in a uniform and
like manner to all of its GATT trading partners; it applies the
same tariff to imports of a specific product, regardless of which
GATT member exported it.



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There are two major reasons for abiding by the MFN principle.
First, it promotes worldwide efficiency. Under an MFN regime, a
country will import from the lowest cost foreign source. In contrast, if tariffs are applied in a discriminatory manner, low tariffs
in themselves may be enough to induce importers to choose a lessefficient, higher cost source of supply. Second, MFN greatly facilitates international negotiations to reduce trade barriers. Indeed,
the MFN principle was partially based on U.S. experience with the
Reciprocal Trade Agreements Act of 1934. Under this act, the
United States negotiated 20 bilateral trade agreements between
1934 and 1939. The negotiated tariff reductions in each of the
agreements were relatively small, but all the agreements provided
for MFN treatment. Such treatment was deemed necessary to
move the bilateral negotiations along, since it ensured that each individual negotiating country would receive the benefits of any further tariff reductions that might later be negotiated between the
United States and other countries.
EXCEPTIONS: FREE-TRADE ASSOCIATIONS AND
CUSTOMS UNIONS
GATT, however, recognizes several exceptions to the MFN rule.
First, GATT allows industrialized countries to extend preferential
tariff treatment to less developed countries under the Generalized
System of Preferences. Second, GATT permits the creation of freetrade areas (a set of countries that eliminate internal tariffs but
maintain their independent external trade barriers) and customs
unions (which also eliminate internal tariffs but adopt a set of
common external tariffs) but only under certain conditions. The
two principal conditions are (1) that the formation of a free-trade
area or customs union must not result in barriers that are more
restrictive to outside exporters than preexisting barriers, and (2)
that trade barriers must be eliminated on substantially all trade
within the region. If these two conditions are met, the predominant
effect of the preferential trading area is likely to be the creation of
new, efficiency-enhancing trade among the members. Such trade
creation is likely to exceed trade diversion—the redirection of trade
from a low-cost supplier outside the region to a higher cost, lessefficient source of supply within the region, simply because the
inside supplier escapes the tariff that is applied to the more efficient outside producer. Such trade diversion reduces worldwide efficiency and is particularly harmful to outside countries who lose
their markets within the customs union or free-trade area. It is to
avoid the harmful trade-diverting effects of preferential trading arrangements that GATT places conditions on free-trade associations
and customs unions.




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The view embraced in the GATT articles and shared by the Administration is that bilateral and multilateral initiatives can both
contribute to international economic efficiency. Free-trade associations that are predominately trade-creating stimulate efficient
trade within the region. By demonstrating the prosperity that
comes with the elimination of trade barriers, they can also stimulate further steps toward multilateral liberalization.
Although regional free-trade areas can enhance the prosperity
that comes from more open international markets, continued multilateral cooperation on trade and investment issues becomes even
more crucial in their presence. The absence of such cooperation
could lead to increased rivalry and friction among the free-trade
areas, to greater barriers to trade and investment among regions,
and to reduced prosperity worldwide (Box 6-4). U.S. trade policy is
guided by a primary emphasis on multilateral initiatives but sees a
beneficial role for bilateral and regional initiatives that are consistent with GATT.
SUMMARY
• There are two major reasons for abiding by the principle of
MFN: It promotes worldwide efficiency, and it facilitates international negotiations to reduce trade barriers.
• GATT, however, recognizes an exception to the MFN rule by
permitting the creation of free-trade areas and customs unions
under certain conditions aimed at ensuring continued access
for imports from countries that do not participate in regional
trade agreements.
• The view embraced in the GATT and shared by the Administration is that bilateral initiatives can complement multilateral initiatives, by stimulating efficient trade within the region
and by stimulating further steps toward multilateral liberalization as well.

THE URUGUAY ROUND
Since its inception in 1947, GATT has proved remarkably successful in orchestrating the reduction of world tariff rates. Through
successive negotiating rounds, world tariffs have fallen from an average of 40 percent in 1947 to 4 percent today. However, the expected completion of the Uruguay Round, by far the most ambitious of the eight rounds of GATT negotiations to date, comes at a
time when GATT faces great challenges.
A number of developments that have become increasingly clear
since the mid-1970s have defined the scope of the round. First, the
inadequacy of established GATT rules covering agriculture and textiles has become apparent. Second, several new areas not previous


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Box 6-4.—The Role of Regional Free-Trade Initiatives
Although the benefits of the most-favored-nation (MFN) principle are generally acknowledged, economists disagree about
the advisability of allowing exceptions from MFN in the case
of customs unions and regional free-trade agreements. One
point of disagreement concerns how the existence of such regional free-trade areas might alter the cost of a trade war.
The answer to this question depends in part on which kind
of trade—trade based on traditional comparative advantage or
trade based on the exploitation of scale economies—is dominant Regional integration may lead to greater similarity
among the resulting free-trade regions—in terms of natural resource availability and overall level of development—than existed among the individual countries. If this occurs, and if
trade stems primarily from differences between trading partners as in Ricardo's world of comparative advantage, then free
trade among countries within each free-trade area could diminish the need for trade between regions, and the cost of any subsequent trade wars between regions could be small. Where
scale economies are important, however, the formation of regional free-trade areas and the creation of large unified markets can increase the potential gains from trading between regions and increase the damage that would result if these regions were to engage in trade wars.
Because specialization and trade based on economies of scale
are clearly important in today's economy, even free-trade regions that are broadly similar have much to gain from trading
with each other, and therefore have much to lose from the outbreak of a trade war* Avoiding trade frictions through
strengthened multilateral trade relations is therefore essential
to assure that the formation of regional free-trade areas contributes to greater world welfare.
ly covered in detail by GATT rules have grown in importance and
are increasingly in need of international rules—trade in services,
international investment flows, and intellectual property rights as
they relate to trade in goods and services. Third, the previous success in tariff reduction has increased both the relative importance
of nontariff barriers, and the need for better GATT dispute settlement mechanisms. Fourth, the rise in antidumping and countervailing duty actions and the increasing use of trade actions that
fall outside GATT restrictions have led many countries to question
the efficacy of GATT rules governing the use of so-called trade
remedy laws.



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In the Uruguay Round, negotiators are attempting to respond to
these new challenges, and are also pursuing the more traditional
goal of market opening, by seeking agreements in a broad range of
areas. Significant progress has been made in clarifying the issues
and moving toward possible agreement in a number of the areas.
That progress has been slow, however, and considerable disagreement remains. To move the process along, GATT Director General
Arthur Dunkel in late 1991 produced a draft agreement that built
upon the negotiations over the past 5 years; this draft agreement
has become the working text for continuing the negotiations and
finalizing the agreement. Although the draft text covers many of
the topics, several important areas not covered by the text were
left to be negotiated in the coming months, most notably, specific
market access commitments in goods and services. Important areas
of the working text are discussed below.
AGRICULTURE
Agricultural reforms in the Uruguay Round would mark a historic departure from the costly protectionist measures that have flourished in that sector, largely outside GATT disciplines. These reforms would have significant consequences for farmers, taxpayers,
and consumers in the United States and the rest of the world.
Agreements on agricultural reforms fall into four categories:
market access, internal supports, export subsidies, and sanitary
and phytosanitary measures. First, countries would agree to reduce
agricultural tariffs by an average 36 percent from 1986 levels over
the 6 years beginning in 1993. Nontariff barriers such as quotas
and licenses would be converted to tariff equivalents. Also under
the agreement, countries would guarantee a minimum access equal
to 3 percent of consumption over the period 1986-88.
Second, countries would agree to reduce internal supports (such
as deficiency payments or price supports) by 20 percent over 6
years starting in 1993. Internal supports would be measured using
1986-88 world reference prices and 1986 policies as a base. Government assistance would be permitted under categories of internal
support agreed upon as non-trade-distorting. These permitted, or
"green box," policies would include, for example, conservation
measures, crop insurance and disaster assistance, extension programs, and income payments that are not based on current production levels. Third, under the export subsidies reforms, countries
would agree to reduce the volume of subsidized exports by 24 percent and budgetary expenditures by 36 percent from 1986-90 levels
over the 6 years beginning in 1993.
Last, the rights of countries to protect human, animal, and plant
life and health through sanitary and phytosanitary measures
would be recognized. Countries would be prevented, however, from



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erecting protectionist trade barriers under the guise of health and
safety measures.
These reforms would allow the United States to export more
grains to replace subsidized exports of the European Community
and allow U.S. consumers to enjoy lower prices for some dairy
products and peanuts. Japan and other highly protectionist agricultural markets would begin to open their doors to commodities such
as rice. With lower internal supports, disposal of surplus stocks on
world markets would be less likely. This, coupled with the gradual
reduction of export subsidies, would begin to halt the costly and
distortive trade subsidy wars between the United States and the
EC.
TEXTILES
Since 1961 world trade in textiles has, like agriculture, effectively taken place outside the discipline of GATT through a series of
negotiated side-agreements. These agreements established a special
regime of quotas to limit exports of textile and apparel products
from developing to developed countries. The accords were ultimately put together to form the Multi-Fiber Arrangement (MFA). At
the same time, many developing countries placed exceptionally
high tariffs on textile and apparel imports or banned them altogether.
A major objective of the Uruguay Round has been to open world
textile and apparel markets and reintegrate these products into the
normal GATT regime. Under the working text, this would be done
via two channels during a 10-year transition period, which would
begin in 1993. First, an increasing percentage of textile and apparel
products would no longer be subject to quotas; by the end of the
transition period, 51 percent of the volume of those products currently covered by the MFA would have been freed of quotas.
Second, during the transition period, the products still subject to
quotas would have their quota levels expanded at an accelerated
rate. Finally, at the end of 10 years, MFA coverage on the remaining 49 percent of textile and apparel products currently covered by
the MFA would be terminated, and all textile and apparel trade
would once again be subject to normal GATT rules. In addition, all
countries would promote improved access to markets for textiles
and clothing through such measures as tariff reductions, reduction
or elimination of nontariff barriers, and facilitation of customs, administrative, and licensing formalities. Consumers worldwide
would gain billions of dollars annually.




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SERVICES, INVESTMENT, AND INTELLECTUAL
PROPERTY
Several changes in the global trading environment have combined to place on the table a number of important issues that have
never before been the subject of explicit and systematic GATT negotiations. In recent years the importance of services in world
trade has become increasingly recognized. Trade in services is now
about one-quarter as large as trade in goods. At the same time, the
globalization of modern companies and the accompanying intrafirm
trade mean that barriers to foreign direct investment act increasingly as barriers to trade. The trend toward globalization has also
brought to the forefront the degree to which inadequate protection
of intellectual property can serve as a barrier to trade. For example, the inadequacy of a country's patent or copyright protection
can permit "pirated" versions to replace exports of legitimate products and can deter foreign direct investment. Together, these
changes underlie the efforts of negotiators to formulate international rules governing trade in services, trade-related investment
measures and trade-related intellectual property rights.
Services
The General Agreement on Trade in Services (GATS) contained
in the working text rests on three pillars. The first is the Articles
of the Agreement, which provide legally enforceable rules governing trade and investment in services covered by country commitments. The second pillar consists of several annexes that elaborate
the principles as they apply to various sectors such as telecommunications and financial services. The third pillar of the GATS
agreement will set out the initial commitments made by each country concerning market access and national treatment.
The creation of GATS would provide the framework for further
beneficial liberalization of services in the future, much as the creation of GATT did for goods 45 years ago. Moreover, the initial
commitments to liberalization, which will be negotiated in the
coming months, should translate into immediate benefits for the
United States.
Investment
Companies that invest in foreign countries tend to import many
of the inputs they use in production and to export a significant portion of their output. Restrictions on investment therefore directly
affect the flow of trade. The Uruguay Round has included negotiations on new rules that would discipline the use of investment policies that inhibit or distort trade.
There is no generally accepted definition of what constitutes
such a trade-related investment measure (TRIM). Examples include
government requirements that foreign firms use specific amounts



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of locally produced goods in their products (local content requirements), that foreign multinationals export a certain share of their
output (export performance requirements), and that foreign investors use only a limited amount of the foreign exchange they earn
to purchase inputs (foreign exchange restrictions). Current GATT
rules indirectly cover a few of these measures, but the rules are
neither comprehensive nor clear.
The U.S. position, shared by most industrialized countries, is that
GATT should explicitly prohibit all TRIMs that inherently restrict
or distort trade and develop a timeline to phase out prohibited
TRIMs already in existence. Deep differences of opinion between
developed and developing countries have hindered these negotiations, however. Many developing nations, which are largely host
countries for foreign direct investment, insist that control of such
investment through TRIMs is crucial to achieving their development objectives. The proposed Uruguay Round text embodies systematic, explicit prohibitions of some TRIMS. Importantly, however, it does not cover export performance requirements, which are
not currently treated even indirectly in the GATT articles.
In the long run, given the increasing links between investment
and trade, it is desirable to have strong rules covering all aspects of
foreign investment—not merely trade-related foreign investment—
analogous to those that cover trade. Even if the Uruguay Round
adopts rules regarding trade-related investment measures, nothing
comparable to GATTs rules on goods trade would exist for investment. Establishing common, multilateral rules for investment
throughout the world continues to be a high priority for the United
States because differences in foreign investment policies across countries reduce the benefits that stem from the global production networks of multinational corporations.
Intellectual Property
The current system for protecting international property rights
consists of a number of conventions and agreements. Its inadequacy stems from a number of factors. First, not all countries adhere
to the existing conventions and agreements. Second, the coverage
of the rules themselves is incomplete, permitting, in some cases, exceptions from patent coverage for foods, drugs, and chemicals.
Third, these conventions and agreements rely on the principle of
national treatment: Each country must afford to others the same
intellectual property protection it provides its own citizens. The
weak standards of protection within many countries, however,
make national treatment an inadequate standard for protection.
Fourth, existing conventions and agreements contain no enforcement and dispute settlement mechanisms.
The working text addresses many of these deficiencies by providing a comprehensive set of rules governing trade-related intellectual



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property rights. The draft agreement sets new and higher standards
for the protection of a full range of intellectual property rights, including patents, copyrights, trademarks, and trade secrets. It also
provides for strengthened enforcement of those standards both
within countries and at the border. It would subject these standards and enforcement obligations to effective multilateral dispute
settlement. The draft agreement would provide substantial benefits
to the computer software, pharmaceutical, sound recording, semiconductor, and equipment manufacturing industries.
MARKET OPENING
The working text does not include specific market access commitments, which are to be negotiated in the coming months. If the
round is successful, however, participants in the round are likely to
reduce their average tariffs by about one-third. This includes a U.S.
initiative to create 10 free-trade sectors, where tariffs would be
eliminated altogether: Sectors covered by this initiative include
electronics, steel, construction equipment, and Pharmaceuticals,
among others. Under the Zero-for-Zero Initiative, the United States
has offered to cut its tariffs to zero in particular sectors provided
that other countries agree to cut their tariffs to zero in the same
sectors. To place the importance of the round's market access negotiations in perspective, the 10 free-trade sectors would reduce tariffs to
zero on a greater value of U.S. exports than that covered by the
U.S.-Canada Free-Trade Agreement and by more than three times
the value of U.S. exports to Mexico covered by the North American
free-trade negotiations.

TRADE REMEDIES
The case for open trade does not deny a potentially legitimate
role for the use of various trade remedies that allow limited, temporary deviations from open trade. When used appropriately, such
trade remedies can actually enhance the benefits of trade and
strengthen the international trading system by encouraging countries to reduce their trade barriers and other trade-distorting measures. When used for protectionist purposes, however, these remedies can undo open trade policies and threaten the international
trading system. A major focus of the Uruguay Round has been to
make changes in the GATT rules governing the use of safeguards,
antidumping actions, and countervailing duty actions to ensure
that these trade remedies serve their intended purposes.
Safeguards
By allowing countries to impose temporary import restrictions
when increased imports cause or threaten to cause serious injury
to an industry, safeguards act as an escape clause in trade agreements. An important part of any agreement to which countries



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accede voluntarily, safeguards provide some degree of flexibility in
what might otherwise be a rigid commitment to liberalization.
With appropriate design, the existence of such a safety valve can
encourage countries to enter into liberalizing agreements that they
might not otherwise. Once countries have entered into such agreements, safeguards can provide them with an agreed-upon avenue to
respond to protectionist pressures that might otherwise lead to a
breakdown of international cooperation and the outbreak of a
trade war. Finally, safeguards can allow for some flexibility while
staying within the existing rules, so that extraordinary actions can
be taken without sacrificing all the restraining effects that the
international rules place on protectionist pressures at home.
The challenge is to design safeguards that are neither inadequate
nor too readily available. Safeguard provisions that err on the side
of stringency risk the possibility that fissures will develop in the
workings of the trade agreement that lead either to trade wars or
to "solutions" that in effect operate outside the rules of the agreement. Provisions that err on the side of permissiveness risk the
possibility that liberalization embodied in the trade agreement will
be undone by frequent safeguard actions. The changes to GATT
safeguard provisions that are contained in the working text represent a balance between these conflicting considerations. One crucial
change would eliminate the loophole that allowed so-called greyarea measures—such as voluntary export restraints, orderly marketing arrangements, and other similar measures—to be applied
outside GATT rules (Box 6-5). In addition, the existing requirement
that compensation be provided to trading partners when a safeguard action is taken would be waived, provided that the safeguard
action lasts 3 years or less. This change would increase the incentive to use safeguard actions only as short-term, temporary measures.
Antidumping and Countervailing Duty Laws
Whereas safeguard actions are designed to remedy a kind of "nofault" injury claim, antidumping and countervailing duty laws are
intended to address unfair trading practices of foreign exporters
and their governments, respectively. Under antidumping laws,
duties may be imposed on a firm's imports when that firm is found
to be "dumping," that is, exporting its product at a price that is
below either the selling price in its home market or the cost of production. Countervailing duty law allows the imposition of duties on
imports to offset government subsidies.
From the viewpoint of economic efficiency, the circumstances
that warrant the imposition of antidumping or countervailing
duties are quite narrow. Dumped or subsidized imports have their
clearest detrimental effect on economic efficiency if they allow foreign firms to drive out domestic suppliers and monopolize the



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Box 6-5.—The Cost of Weak Multilateral Butes
A major objective of the Uruguay Round has been to reinforce General Agreement on Tariffs and Trade (GATT) principles and to strengthen GATT rules that delimit the use of extraordinary measures of protection. The stronger rules would
help prevent such aberrations as the Multi-Fiber Arrangement
(MFA), which operates under GATT but has deviated from
some of GATTs most important principles* The MFA is the
latest in a string of "temporary" textile arrangements that
began in the early 1960s*
Under the MFAf participants negotiate bilateral quotas that
exporters promise to respect. The bilateral nature of the negotiations undermines GATTs fundamental most-favored-nation
principle* This has allowed some high-cost countries to continue exporting textiles and apparel while the trade of competitive countries is limited. The negotiation of quotas contravenes
GATT Article XI, which states that quantitative restrictions
should be avoided. The quantitative restrictions have prompted
some countries to export more expensive products, thereby further distorting trade flows. The cost to U-S. consumers of protection in the textile and apparel sector has been high, while
the gains to U.S. producers have been much smaller. One estimate put the cost to UJS. consumers at about $11 billion in
1987, while U-S, producers gained slightly more than $4 billion.
The MFA itself would be phased out under the proposed
Uruguay Round text. Stronger GATT rules governing the use
of safeguards would help to prevent the development of any
successor agreements.
market, or if they are sporadic and interfere with the ability of the
domestic industry to undertake investment in capital equipment
and R&D, and thereby lead to higher prices or lower quality for
consumers.
However, antidumping and countervailing duty laws are primarily motivated not by economic efficiency concerns, but by concern
for fairness to the import-competing industry. This concern is embodied in the criterion under which dumping is actionable under
GATT: A finding that dumped products have injured the domestic
industry is both necessary and sufficient to permit the imposition
of antidumping duties, regardless of the effect on consumers. An
analogous criterion applies for subsidized imports under GATT
countervailing duty rules.
A concern for fairness to the import-competing industry is appropriate; however, the abuse of antidumping or countervailing duty




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laws for protectionist purposes by any country is unfair to consumers and to exporting firms. The challenge to negotiators in the
Uruguay Round has been to strengthen the GATT antidumping
and countervailing duty rules, particularly in the area of effective
anticircumvention provisions, while at the same time ensuring that
such trade remedies are not misused for protectionist purposes
(Box 6-6).
Box 6-6.—Strengthening GATT Antidumping Rules
Important changes in the GATT rales governing antidumping procedures are under consideration in the Uruguay Bound*
These changes could strengthen the ability of the law to prevent injury to import-competing industries from dumped imports at the same time that they could reduce the likelihood
that antidumping actions would be used for protectionist purposes*
Several changes under negotiation that have been proposed
by the United States are aimed at including provisions against
the circumvention of legitimate antidumping orders, Negotiators are attempting to ensure that exporting firms that face
antidumping duties may not easily circumvent those duties by,
for example, setting up "screwdriver" operations in the importing country* Such operations could allow an exporting firm to
circumvent an antidumping duty by exporting the parts and
components for final assembly rather than exporting the final
product on which an existing antidumping duty has been imposed.
Among numerous changes to methodology offered by other
countries and included in the proposed text is the addition of
new rules governing the use of exchange rates in the calculation of dumping margins. This change would reduce the chance
that normal business practices—specifically, the use of forward
exchange contracts tied directly to export transactions—might
lead to a mistaken finding of dumping.
DISPUTE SETTLEMENT PROCEDURES
An essential element of any effective trade agreement is the
threat of retaliation, or other penalty, if a country does not live up
to its end of the agreement. The enforcement mechanism is typically contained in the dispute settlement procedures of the agreement.
Without a workable enforcement mechanism, international trade
agreements, like any other agreement, would become meaningless.
Section 301 of the Trade Act of 1974 also provides the authority
and procedures for the President unilaterally to enforce U.S. rights



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under international trade agreements and to respond to certain
unfair foreign practices where no trade agreement exists. The inclusion of section 301 in the 1974 Trade Act and subsequent amendments reflects a growing concern that GATT's existing dispute settlement mechanisms are not sufficient and that its inadequate coverage has left policies in important areas of trade and investment
undisciplined. This raises a quandary for U.S. trade policy, as it
does for all countries that take up unilateral enforcement. On the
one hand, negotiating trade agreements without the ability to enforce them is meaningless. On the other hand, unilateral enforcement can weaken the international trading system. The difficulty
lies in ensuring that unilateral action is used in a constructive
manner. Outside of GATT, there is a risk that conflicts can degenerate into either escalating protection, or "resolutions" that diverge
from market principles.
The challenge negotiators face has been to make the GATT dispute settlement mechanism prompt, reliable, effective, and fair.
The working text would provide for tight procedural time limits on
the formation and operation of dispute settlement panels, automatic
adoption of panel reports, and broad provisions for retaliation
should the panel recommendations not be implemented (or compensation not be paid). With these changes, the new dispute settlement
mechanism contained in the working text should become the central means of enforcing trade agreements under GATT. At the
same time, by extending comprehensive GATT coverage to include
areas such as services and intellectual property, the working text
should obviate the need for unilateral actions in those areas.
SUMMARY
• GATT has proved remarkably successful in orchestrating the
reduction in world tariff rates over the past 45 years. The expected completion of the Uruguay Round, however, comes at a
time when GATT faces great challenges.
• A number of developments have defined the scope of the
round, including the increasing inadequacy of GATT rules covering agriculture and textiles; the growing need to extend
international rules to trade in services, international investment flows, and intellectual property rights as they relate to
trade in goods and services; the need for better GATT dispute
settlement mechanisms; and the desire for better GATT disciplines on the use of so-called trade remedy laws.
• When completed, the Uruguay Round has the potential to have
a profound effect on the integration of global trade and investment for many years to come, and to provide substantial and
lasting benefits to the United States and the world.



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THE NORTH AMERICAN FREE-TRADE
AGREEMENT
The Administration is in the midst of negotiating an agreement
with Mexico and Canada that will build on the U.S.-Canada FreeTrade Agreement of 1988 and provide for freer trade and investment throughout North America. By the end of 1991, the negotiations had made considerable progress in laying out points of convergence and in identifying the main problems that must be solved
to reach agreement.
The talks are divided into several negotiating groups. The Administration has important objectives in the areas of market
access, services, investment, intellectual property rights, and trade
rules. Both within the negotiations on the North American freetrade agreement (NAFTA) and through parallel discussions, the
Administration is also addressing concerns regarding the areas of
labor and the environment.
MARKET ACCESS
Market access negotiations cover trade in goods among the
United States, Canada, and Mexico. The fundamental goal of the
United States is the removal of all tariffs and the removal or reduction of nontariff trade barriers (the latter include, for example,
quotas and import licenses). When necessary, this liberalization
should take place over a transition period to ease the adjustment
pressures in sensitive sectors. Because Mexico's tariffs are, on average, significantly higher than those of the United States, U.S. exporters have a great deal to gain from these talks.
Areas such as automobiles, agriculture, textiles and apparel, and
energy and petrochemicals are complicated enough to merit their
own negotiating groups. A number of restrictions specific to the
automobile sector have distorted automotive assembly and component manufacture investments in North America. These distortions
include a web of local content provisions, export performance requirements, and restrictions on foreign ownership. Integrating the
North American automobile market offers great opportunities for
U.S. products that have been subject to such restrictions. The sensitive textiles and apparel sector has its own intricate system of protection. Finally, Mexico's constitution limits that country's ability
to liberalize the energy sector; for example, it prohibits foreign
ownership of domestic oil resources. The United States will respect
Mexico's constitutional provision on energy, but there are other
areas in which progress could be made to enhance cooperation in
this sector.
Duty-free trade in North American goods among the three countries raises the question of what constitutes a North American



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good. Because all three participants in the negotiations import raw
materials and intermediate goods that are often included in final
products, a rule must be formulated to distinguish between products that qualify for duty-free treatment and those that do not.
U.S. negotiators are building on the rule from the U.S.-Canada
Free-Trade Agreement, which uses changes in tariff classification
as the principal criterion for qualifying for duty-free treatment.
TRADE IN SERVICES AND INVESTMENT
In services, the United States seeks additional market openings
in Mexico in such areas as banking, securities, insurance, telecommunications, and land transportation. In these areas in particular,
market entry is restricted and in some sectors U.S. firms are
denied access to the Mexican market. The negotiations can be used
to build upon the existing free-trade agreement with Canada to
create greater services opportunities in all three countries.
The United States wants to guarantee all NAFTA investors nondiscriminatory treatment when they invest in another NAFTA
country. The United States also wants access to arbitrations for the
settlement of disputes, guarantees against expropriation, and the
right for U.S. firms to repatriate profits from investments in
Mexico.
INTELLECTUAL PROPERTY RIGHTS
The United States seeks the achievement of adequate and effective legal protection for the rights of owners of such intellectual
property as patents, trademarks, copyrights, and trade secrets. U.S.
negotiators are pressing for acceptance among NAFTA parties of
the principle of according national and MFN treatment to holders
of intellectual property rights. The establishment of measures to
ensure timely and effective enforcement of laws governing intellectual property rights is another area of attention.
TRADE RULES
Issues concerning the rules of the trading system are dealt with
in the groups on safeguards; antidumping, subsidies, and countervailing duties; standards; and dispute resolution.
As in the Uruguay Round, safeguard provisions are an important
element of the NAFTA negotiations. In NAFTA, the United States
is seeking a transitional, bilateral safeguard with Mexico similar to
its bilateral safeguards with Canada in the U.S.-Canada Free-Trade
Agreement. The United States also wants to retain the ability to
limit NAFTA imports temporarily as part of a global safeguard
action if they contribute to serious injury of a U.S. industry.
The United States is trying to ensure that remedies to unfair
trade operate transparently and without unduly burdening busi


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ness in North America. In the area of product standards, U.S. negotiators are insisting on maintaining the right to impose standards more stringent than international standards, where there is a
scientific justification for doing so. The agreement, however, will
contain provisions to prevent the use of product standards and
technological regulations as trade barriers. Finally, the NAFTA
parties hope to establish an efficient dispute settlement mechanism
to resolve conflicts arising from the NAFTA accord.
LABOR AND THE ENVIRONMENT
When NAFTA was proposed, concerns were raised about its potential effect on the environment and about the treatment of labor
in Mexico. These are not among the primary subjects under discussion in the negotiations themselves, since the purpose of the agreement is to liberalize trade and investment. The Administration,
however, has addressed and continues to address these concerns in
parallel discussions. Government experts in environmental matters
and in labor affairs from the United States and Mexico are consulting and cooperating on a broad range of issues. Where it is possible
and appropriate, the United States and Mexico are consulting and
sharing information with regard to the enforcement of labor and
environmental regulations. A successful conclusion of the NAFTA
talks should enhance the level of cooperation in these important
areas. At the same time, the Administration is committed to working with the Congress to ensure that an effective, adequately
funded worker adjustment program is in place when NAFTA takes
effect.
SUMMARY
• The Administration is in the midst of negotiating an agreement with Mexico and Canada that will provide for freer trade
and investment throughout North America.
• Major goals of the United States in NAFTA negotiations include the removal of all tariffs and the removal or reduction of
nontariff barriers to trade in goods among NAFTA countries;
nondiscriminatory treatment among NAFTA countries for a
broad range of service providers; nondiscriminatory treatment
for all NAFTA investors when they invest in another NAFTA
country; and the achievement of adequate and effective legal
protection among NAFTA countries for the rights of owners of
such intellectual property as patents, trademarks, copyrights,
and trade secrets.




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EC 92 AND EUROPEAN ECONOMIC AND
MONETARY UNION
In 1985 the 12 member states of the European Community proposed abolishing nearly all internal impediments to the free movement of goods, capital, services, and people by the end of 1992. At
the Maastricht Summit in December 1991, the EC agreed to establish an economic and monetary union (EMU) with a single currency by the end of the decade. The EC also defined a new social charter and forged a closer political union, with common foreign and
defense policies the primary goals. Most of the rules for EC 92 are
now in place, and the outline of a European economic and monetary union is taking shape. The resulting integration of the European marketplace, the culmination of the 1957 Treaty of Rome, is
intended to overcome historical, cultural, and political barriers
that have separated these countries for centuries.
Since the late 1960s the EC has operated as a customs union
with a common external tariff but no internal tariffs. Yet various
nontariff barriers have remained, including differences among the
member states in safety, health, and environmental standards;
rules governing the operations of financial institutions; internal
export and import licensing restrictions; border shipping taxes and
customs procedures; intra-EC immigration policies; and public procurement practices. The 1992 reforms are intended to eliminate or
substantially reduce barriers by liberalizing financial sector regulations, harmonizing technical standards and aspects of tax systems,
and enforcing intra-European competitive bidding in public procurement.
Substantial gains could come from the 1992 reforms. Benefits
will come from lower production costs, economies of scale, and reduced transportation costs. Efficiency is likely to increase from
more competitive bidding in government procurement and from
tax harmonization. Integration of financial services and markets is
expected to lower the cost of capital to firms. EC consumers stand
to enjoy greater product variety.
For both U.S. exporters and investors, EC 92 offers potential benefits, partly because it creates an integrated market, and partly because the process of integration could promote growth. As a trading

partner, the United States (as well as other non-European countries) could gain through increased EC demand for imported products. The realization of these benefits, however, depends on the EC
market's openness to external trade and how much more competitive European companies become.
As investors, U.S. firms could gain even more than their European counterparts from EC 92 because American multinationals frequently operate in more than one European country already and



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therefore are particularly likely to gain from uniform standards
and a reduction in nontariff barriers. Based on decades of foreign
direct investment, American firms (in contrast to Japanese firms,
other foreign companies, and even some European firms) are accustomed to serving a pan-European market. However, these gains
depend on American firms located in Europe enjoying national
treatment, that is, the same rights of market access as European
firms. Moreover, the advantage some U.S. firms have will not last
forever; Japanese automobile and electronics multinationals, for
example, will be building up European production facilities, and
native European firms will also establish operations in more efficient configurations.
Overall, while the market integration initiatives embodied in EC
92 should foster greater long-term economic growth, they by no
means guarantee such an outcome. And, of course, it will not prevent short-term cyclical fluctuations. Europe's prosperity will
depend on, among other things, guarding against establishing additional layers of bureaucracy associated with implementation of EC
92.
European monetary union with a single currency and a single central bank would complement the internal market. Monetary union
would advance market integration by eliminating the nuisance and
cost of switching from one currency to another as borders are
crossed, and it would reduce business uncertainties associated with
exchange rate variability and divergent monetary and fiscal policies in EC member countries. Monetary union, however, would also
eliminate independent monetary policies, and thus limit the policy
instruments available to respond to country-specific economic fluctuations. At Maastricht, EC members determined the timetable
and conditions needed to move from the current system of limited
exchange-rate flexibility to "irrevocably fixed" exchange rates and
then to a single currency. Europe should have a single currency by
the end of the decade.
Although monetary union is some years away, members of the
Community have used the exchange rate mechanism of the European Monetary System to bring about some of the necessary discipline that is a prerequisite to monetary union. The exchange rate
mechanism requires exchange rates among the member countries
to be kept within a narrow band, which has encouraged a convergence of inflation rates and interest rates. Fiscal stance still differs
markedly among the member countries, however, and will have to
converge to support an EC currency.
A single currency would prevent exchange-rate adjustments
among European countries from absorbing external economic shocks
or differences in domestic economic policies; adjustment would have
to take place instead through changes in domestic wages and prices.



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Therefore, for monetary union to be sustainable, wages and prices
in each country need to be flexible. If domestic performance in the
member countries "converges" sufficiently, there will be less differentiation among regional wages and prices and therefore less pressure for change. In preparation for monetary union, the EC Council is monitoring the macroeconomic policies of member countries
to encourage a convergence of both monetary and fiscal policies.
Policies to encourage labor market flexibility in individual member
states, as well as policies which may stem from Maastricht's social
charter, should further reduce interregion tensions.
The dollar remains the most widely used currency for international transactions and reserves, although in recent years financial
innovation and increased international capital mobility have reduced its relative importance. The single currency resulting from
the EMU will likely be used along with the dollar in international
transactions and world capital markets. It will be an important reserve and transactions asset in non-European countries that trade
with Europe. Within Europe, the need to hold dollar reserves will
decline as countries consolidate reserve holdings.
Where there is agreement on policy objectives, an EMU may facilitate greater cooperation among the Federal Reserve, the proposed European central bank, and other major central banks in
setting their respective monetary policies. This, along with better
coordination of fiscal policies, will likely enhance overall world
growth. Moreover, because a successful move to the EMU requires
flexible labor and product markets, countries have been undertaking structural reforms directed toward greater flexibility. These
policies by themselves promote growth.
SUMMARY
• EC 1992 and an Economic and Monetary Union represent successive steps toward integrating the national markets of
Europe. Liberalization of trade in goods is scheduled to be completed this year. Economic and monetary union, including £
single currency and central bank, is scheduled to be completed
before the end of the decade.
• As long as EC integration proceeds in an open manner, U.S.
producers in Europe and U.S. exporters are likely to benefit
from EC 92 and the EMU. Growth of the European market
should be enhanced by efficiencies gained through reduction of
barriers and harmonization of standards, by convergence of
fiscal and monetary policies associated with the EMU, and by
structural changes to labor and goods markets that increase
their flexibility.




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ACHIEVING MARKET-ORIENTED POLICIES AND
GROWTH IN ECONOMIES IN TRANSITION
Around the globe, previously repressive political systems are
turning toward democratic pluralism, and heavily controlled economic systems are being restructured to allow market forces to
flourish. Democratic pluralism and market-oriented economies do
not guarantee wealth, but they do establish an environment that
promotes growth and prosperity.
Economies in transition—both developing economies with market
structures in place and economies emerging from the command
system—need comprehensive reforms and balanced policies, both
macroeconomic and structural, to create the foundations for longrun prosperity.
The industrial economies can aid the transition with robust, noninflationary growth in their own economies and by opening their
markets to encourage international trade. In turn, growth and development of economies in transition will benefit the industrial
countries.
POLITICAL CHANGE AND REFORMS
The sovereignty of the Baltic nations and free elections in some
of the former Soviet republics made 1991 a watershed year for political change and economic reform. These countries are only the
most obvious and recent participants in a surge of change around
the world.
In other countries as well, new political beginnings portend new
economic eras. Zambia held its first multiparty elections in about
two decades. Cambodia achieved peace and scheduled elections
after nearly a generation of war. The new Colombian Constitution
embraces all peoples in Colombia. The nations in the Middle East
are talking instead of fighting. To no small degree, these political
changes are responses to the clear economic advantages of an open
and peaceful society.
These worldwide changes promise to settle intellectual debates
that have persisted for decades. The "convergence hypothesis" that
emerged in the 1950s held that the capitalist and communist systems would eventually evolve toward each other, with the final
result a hybrid of the two systems. It is now unmistakably clear
that this hypothesis has been rejected. The developed market
economies have reversed their leanings toward socialism, and the
leaders in the former Soviet Union, Eastern and Central Europe
and the other countries with command-style economies in transition are turning away from these approaches. These leaders instead push market-oriented economics with individual choice and
private property rights as the foundations of progress and prosperi


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ty. The failure of economic socialism and central planning have
brought about a fundamental rethinking by their proponents. In
many respects the model of central planning is no longer even a
hypothetical ideal.

CAUSES OF THE MARKET REVOLUTION
Although pressure for market-oriented change had been increasing in many countries for a decade or more, it erupted first in the
developments in Eastern and Central Europe during 1989 and 1990
and subsequently in the former Soviet Union in 1991. The fall of
the Berlin Wall and the events that followed raised hopes and expectations around the world. Indeed, the unification of East and
West Germany is a case study of how poor economic performance
has been a major impetus for shifting centrally planned economies
toward market economies (Box 6-7).
Box 6-7.—Economic Performance in the Two Germanys
East and West Germany were unified on October 3, 1990,
less than a year after the fall of the Berlin Wail in November
1989. At the time of unification, the contrast between the two
systems in Germany could scarcely have been more stark.
Starting from a similar economic base at the end of World War
II and sharing a common culture, East and West Germany
went two different ways. West Germany achieved one of the
highest standards of living in the world, while East Germany
became an industrial wasteland with rundown, outmoded factories and a poisoned environment.
Several contrasting examples make the point. Only 7 percent
of East German households had telephones in 1988; in West
Germany virtually every one (98 percent) did. Moreover, only a
few hundred East German phone lines stretched outside the
country. In East Germany, the percentage of households with
cars and color televisions was about half that in West Germany* A recent study estimated that productivity in East Germany was, at best, half that in West Germany. Another recent assessment found that, as of 1989, output per capita in East Germany was $9,670, while in West Germany, it was $15,250,
almost 60 percent higher.
A fundamental motivation for change—not just in East Germany, but in the other countries dominated by central planning as
well—was the failure of their economies to perform adequately.
The economic policies followed in these countries failed because they
were unable to provide adequate incentives for producers to supply
efficiently the goods and services that consumers wanted to buy.



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The impact of these economic regimes on living standards has
been devastating. The repercussions are epitomized in the case of
the former Soviet Union. By the time of the attempted coup in
August 1991, the Soviet Union had most, if not all, of the generic
difficulties inherent in central planning. Other inefficiencies associated with a command-and-control economy were also pervasive. For
example, although estimates are imprecise, perhaps as much as a
fifth of the Soviet Union's output had been allocated to the defense
sector in recent years. Also, because many goods and services had
been unavailable for years, Soviet citizens had stored up massive
amounts of rubles.
The information technology revolution made the success of
market-oriented economies and the weakness of the centrally
planned countries more apparent. Ideas flowing easily across national borders spurred momentum for fundamental change. Most
East Germans, for example, could receive West German television
broadcasts before the Berlin Wall fell. The pressure for change that
was created ultimately overwhelmed governments.
PRINCIPLES OF REFORM IN ECONOMIES IN
TRANSITION
Regardless of the stage of transition, sound economic foundations
and flexible markets create an environment in which individuals
succeed and the economy prospers. Institution building, human resource development, and political will are always important for
policy success but are especially critical in some economies in transition. Economic policy builds on these foundations to unlock the
key engines of growth: productivity increases and private investment.
Three economic fundamentals underpin the market-oriented
system: a stable macroeconomic environment, market-determined
prices, and private sector entrepreneur ship. Key complementary reforms to the legal framework, the financial sector, labor markets,
and fiscal systems are necessary to unleash growth. Economies in
transition around the world face challenges in each of these economic policy areas.
A stable macroeconomic environment assures people of the value
of money. Because goods and services are exchanged for money in a
market system, the value of money needs to be reasonably stable
for the system to work well. A stable macroeconomic environment
also allows savers and investors to look to the long term, by assuring them that a successful investment made today will reap a positive benefit in the future. Many of the most profitable investments
take a long time to mature.
Market-determined prices encourage resources to move to sectors
with the highest return. Freeing prices allows consumers, produc


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ers, and investors to read the signals of supply and demand, choose
products and services that yield the most benefits for the money,
maximize returns, and increase well-being. Price liberalization is
complete only when the domestic economy is open to international
market forces. That requires currency convertibility and liberalizing trade. Markets where prices are flexible adjust more easily to
changes in the domestic and international environments.
Entrepreneurship is particularly important. Because restructuring and privatization are slow processes, and because incentives
and behavior in large organizations are hard to alter, new private
firms and small and medium-sized privatized enterprises are likely
to be the major sources of growth and dynamism in economies in
transition.
Complementary policies bring together these fundamentals. A
solid legal foundation ensures that private property rights are established and respected, which is a prerequisite for entrepreneurship and innovation. A functioning financial sector channels savings to investment opportunities and is the conduit for monetary
policy signals to affect the economy. A flexible labor market enables workers to build skills, find the best jobs, and reap the benefits of greater productivity. A fiscal system that raises revenues in
a relatively nondistortionary way and undertakes the appropriate
level of social expenditures is an integral part of the transition
process. A procompetition policy fosters the small and medium-size
enterprise sector. A liberal trade regime encourages competition
and creates new opportunities for industry and entrepreneurs.
The success of a market economy depends on people who take opportunities that the market creates. In some transitional economies, removing government regulation will help redirect entrepreneurship toward productive activity and away from wasted efforts
of jumping through bureaucratic hoops. In other economies with
little experience with competition, market-responsive behavior may
take time to develop.
PROGRESS AND POLICY CHALLENGES
Economies in transition in Latin America, Africa, Asia, Central
and Eastern Europe, and the former Soviet Union have some of the
underpinnings of a market economy, have undertaken many of
these reforms, and have achieved successes in many areas, although to varying degrees. Policymakers face different challenges
in the various countries to sustain the momentum of development
and promote growth.
In recent years several Latin American countries have improved
fiscal and monetary policy control and have made a commitment to
trade liberalization and private ownership. Popular support and
understanding of economic reforms appears stronger. They have



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emerged from nearly a decade of poor performance into a new environment of lower inflation, higher investment, voluntary capital
flows, and improved growth.
As the transition to an industrial market economy proceeds, policymakers in each country are focusing on particular challenges
that will move the process ahead. In Mexico, for example, privatization of banks, telecommunications, and airlines is widening the
private sector's role in the economy. Along with trade liberalization, this privatization will lead to increased competition and greater efficiency in domestic markets. Argentina's Decree 2284, a
sweeping deregulation of domestic and international trade and liberalization of labor markets, is strengthening the market mechanism and, combined with renewed vigor in macroeconomic discipline, should create a more flexible environment for further
growth. In Chile, policy attention is focused on raising the quality
of life by improving education, health, infrastructure, and the environment.
Encouraging the private sector and increasing market opportunities through trade and investment are key elements of U.S. policies
for Latin America. Policies include the NAFTA, Enterprise for the
Americas Initiative, and the Andean Trade Preference Initiative,
the latter two discussed in more detail in last year's Economic
Report.
Several African countries have undertaken important reforms to
improve the investment climate. Zambia rewrote its investment
codes to protect investors against expropriation and to allow profit
repatriation. Tanzania, only recently a Marxist regime, opened the
private Investment Promotion Center. Policy reforms in many African countries need to be geared to the challenges of achieving sustained growth within the context of low and stable inflation, expanding opportunities for the private sector, and diversifying exports according to comparative advantage.
Many East Asian countries have applied the principles of market
economics with great success. Real per capita output growth in the
four Asian newly industrializing economies (Hong Kong, Singapore,
South Korea, and Taiwan) averaged 7.5 percent annually between
1983 and 1990. Policy challenges remain for these Asian success
stories, in particular to reduce government guidance in the financial sector and with respect to investment choice and direction of
trade.
Transforming the economies of Eastern and Central Europe into
market economies is a difficult, complex, and lengthy process.
Progress has been made in economic reform. In less than two
years, many of the countries have liberalized prices, and some have
approached macroeconomic stability. Most have written new laws
and defined property rights. Financial systems are being created,



231

and privatization is moving forward. While essential regulatory
and institutional underpinnings are in place and the spirit of the
marketplace is beginning to take hold, expectations for a quick
transformation are unrealistic. It will take time for institutions to
serve the objective of growth efficiently. All the countries face massive dislocation and restructuring of industry. Finally, a critical
mass of citizens must seize their new economic empowerment.
Private sector development is a key element of reform in Central
and Eastern Europe. The Administration has encouraged the development of small and medium-size enterprises through the Enterprise
Funds (Box 6-8). The Trade Enhancement Initiative has lowered
barriers to Central and Eastern European exports of agricultural,
steel, and textile products to the United States and has focused on
reducing these countries' impediments to exports, both of which
should create new opportunities for the emerging private sector.
A range of domestic policy challenges face reformers in Central
and Eastern Europe. Hungary's impressive pace of foreign and domestic investment can be sustained only if it quickly revamps its
antiquated banking and telecommunications systems. Labor retraining and creation of a housing market would help Poland restructure and privatize its industries, which would also reduce
pressure on fiscal balance.
In the former Soviet republics, as in Eastern and Central Europe,
a credible and comprehensive economic reform program is a prerequisite for real change. Economic reformers in the former Soviet
republics face some unique problems, making their challenges even
greater.
Clarifying economic relations among the republics would assist
the reform efforts. Continuing trade ties would significantly reduce
adjustment costs and aid the overall reform process since a high
degree of specialization and interrepublic trade existed in the
former Soviet Union. In Eastern and Central European countries,
the collapse in intraregional trade has made adjustment much
more difficult. Decisions on whether to have one currency, a currency union, or multiple currencies will affect other reforms, such
as the responsibilities of the central bank and other financial institutions. Clarifying responsibility for Soviet debt, dividing up Soviet
assets, and property right laws are a prerequisite for new investment. Moreover, the allocation of economic decisionmaking responsibilities between republic and local authorities must be determined.
THE ROLE FOR INDUSTRIAL COUNTRIES
Economic development and the transition to pluralistic, marketoriented economies is taking place in the broader context of an
interdependent global economy. The industrial countries can con


232

Box 6-8.—Enterprise Funds
Creating a private sector from scratch is a daunting task.
One innovative approach to help accelerate this process has
been the creation of Enterprise Funds, private investment
firms that channel U.S. Government grants to the fledgling
private sectors in economies in transition.
Four Enterprise Funds, one each for Poland, Czechoslovakia,
Hungary, and Bulgaria, have been created. All but the Bulgarian-American Fund are currently in operation. Using more
than $400 million authorized by the Congress under the Support for East European Democracy Act of 1989 (the SEED Act),
these private, nonprofit corporations help promote small businesses, agricultural projects, and joint ventures between the
United States and host country firms. The funds typically
make loans, grants, and equity investments, undertake feasibility studies, and offer technical assistance, training, insurance,
and loan guarantees.
Enterprise Funds are particularly attractive because they
allow private sector participants to select investments that will
maximize returns. By raising additional capital from private
sources and by reinvesting profits, the financial impact of the
initial grant will be multiplied many times over.
About 750 serious business proposals were submitted to the
Hungarian-American Enterprise Fund between July 1989,
when the President announced its creation, and December
1991. Initial interest among potential entrepreneurs has been
substantial. The fund has made investments and loans totaling
about $27 million in a variety of projects including a music recording company, a computer and office automation equipment
distributor, and a firm engaged in capital equipment leasing.

tribute to the success of the transition process through sustained,
noninflationary economic growth and open international markets—
actions that will also enhance the performance of their own economies. A renewed commitment to open markets and policies that encourage competitive and undistorted markets and greater productivity are keys to growth—for both industrial countries and economies
in transition. In particular, the benefits of an open trading regime
accrue gradually and build over time. A long-term commitment to
free trade based on market principles guides investment at home
and abroad to the sectors of greatest productivity.
Although the Uruguay Round offers the most comprehensive,
nondiscriminatory approach to opening markets, the Administration has pursued bilateral market opening measures that comple


233

ment the multilateral negotiations. These include the Trade Enhancement Initiative for Central and Eastern Europe, and the Enterprise for the Americas Initiative and the Andean Trade Preference Initiative in the Western Hemisphere. These multilateral and
bilateral arrangements have two-way benefits. By encouraging
growth abroad, they increase exports and growth in the United
States.
THE ROLE FOR ASSISTANCE
Aid of several types—humanitarian, financial, and technical—
can complement active policy reforms. An infusion of humanitarian and financial aid early in the adjustment process can be particularly important to prevent catastrophic declines in consumption and maintain support for reforms. As the reform process proceeds, properly designed, coordinated, and balanced financial and
technical assistance programs from the international institutions
and bilateral donors can support and complement private sector development.
Financial aid should be viewed as a transitional mechanism.
Over the longer term, sustained growth depends on greater integration into the international trading system and increased access to
private capital, both of which depend on comprehensive reforms.
Financial aid is not a panacea and can, at times, reduce the momentum of reform. Financial aid that supports an unsustainable
exchange rate or an unsustainable level of consumption only delays
adjustments that will, in the end, be more difficult. If policies are
sound, economies can prosper without extraordinary official support;
if policies are faulty, economies can fail even with abundant external finance.
Technical assistance is an especially important form of aid that
focuses on improving the environment for investment and growth.
The Administration's technical assistance program has emphasized
the development of the private sector through support for privatization, restructuring, and the development of labor markets and of
legal, financial, and business infrastructure, to name only a few
areas. The U.S. Agency for International Development provides
staff and technical assistance to help design economic policies. The
Trade and Development Program in the Department of Commerce
finances feasibility and project planning studies to aid industrial
development. Developing a partnership between the U.S. Government and the U.S. private sector to further economic development
is an objective of U.S. assistance efforts.
The International Monetary Fund, the World Bank, and other
multilateral institutions can play a key role, both by themselves
and in conjunction with donor nations (Box 6-9). In helping to
design adjustment programs for transitional economies, these insti


234

tutions can draw on their experiences in other countries. Their
presence helps commit governments to market-oriented reforms
that will elicit private investment. They can also coordinate and
participate with industrial economies in the overall effort through
financial and technical assistance and training.
Bat 6-9.—International Institutions
Chief among the several multilateral institutions that provide pivotal support to economies in transition are the World
Bank and the International Monetary Fund (IMF). The twin financial institutions were created in 1944 to aid in reconstruction after World War II and to stabilize the world financial
system. The World Bank is an investment bank. Its historical
mission has been to finance specific projects, such as roads,
dams, power stations, agriculture, and education, that aid in
the development of the world's poorer countries. The IMF is
more like a credit union where members pay fees into a pool of
resources that supplements members' own foreign exchange reserves when they face problems of external adjustment.
In recent years, it has become clear that coordinated assistance reinforces reform. Development projects are more effective when countries pursue sound macroeconomic policies. Consequently, the two institutions have increasingly focused on
medium* and long-term structural reform. Continued lending
has been conditioned on policy variables such as money
growth, tariff structure, and government deficit levels.
The Organization for Economic Cooperation and Development, the Paris Club, the European Bank for Reconstruction
and Development, the Bank for International Settlements, the
European Investment Bank, and the International Labor Organization are also cooperating to ensure coordinated and effective assistance. The G-24 (a group of industrial market economies) has been coordinating bilateral financial and technical
assistance from its members to Eastern and Central Europe to
complement that from multilateral institutions.

SUMMARY
• The dissolution of the Soviet Union is the most recent and
spectacular example of the collapse of communism, the failure
of central economic planning, and the move toward market
principles. A fundamental motivator of change was inadequate
economic performance.
• Economies in transition, both developing market economies
and economies emerging from the command system, face the




235

economic policy challenges of establishing and maintaining a
stable macroeconomic environment, encouraging competition
and market-determined prices, and, perhaps most important,
fostering creativity, innovation, and entrepreneurship. These
policies will unleash the key drivers of growth and prosperity:
productivity increases and private investment.
• The most important contribution the industrial countries can
make to economies in transition is to assure robust, noninflationary world growth with open international markets. That
will enable economies in transition to grow, and to develop industrial structures based on comparative advantage.
• Financial aid can play an important role at key points, but it
is not a panacea. Overall programs of assistance must be properly designed and implemented to ensure that they support
rather than undermine reforms. In many economies in transition, technical assistance will be the most beneficial form of
aid.

CONCLUSION
International trade and investment are increasing U.S. and
world prosperity. Domestic economic growth, together with the decline in transportation costs and improvements in communications,
contributes to the rapid growth of international trade. At the same
time, increases in trade and investment are powerful engines contributing to efficiency and growth.
An unprecedented number of major multilateral and regional
initiatives designed to reduce barriers to international trade and
investment are under way that could have dramatic effects on
global trade and investment for many years to come. Foremost
among these is the Uruguay Round of multilateral negotiations
under GATT. When completed, the Uruguay Round has the potential to have a profound effect on the integration of global trade and
investment, and to provide substantial and lasting benefits to the
United States and the world. The United States has also entered
into negotiations with Mexico and Canada to form a North American free-trade area. NAFTA will eliminate trade and investment
barriers with the first- and third-largest U.S. trading partners. Additional market openings could come from the hemisphere-wide
system of freer trade and investment envisioned in the Enterprise
for the Americas Initiative.
At the same time, the nations of the European Community are
integrating their economies more closely. The 12 member states
are in the process of abolishing, by the end of 1992, remaining internal impediments to the free movement of goods, capital, services, and people.



236

Along with the collapse of communism and central planning in
Central and Eastern Europe and the former Soviet Union, the reorientation of economic systems toward greater reliance on market
forces has become more apparent in other parts of the world as
well. Providing open international markets is perhaps the single
most important thing that the West can do to help the economies
in transition, particularly the countries of the old Soviet bloc, build
democratic and market-oriented societies. The Administration is
committed to achieving and maintaining open international markets for both trade and investment.




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CHAPTER 7

Economic Statistics: Measuring
Economic Performance
EVERY DAY, NEWSPAPER, radio, and television reports offer
the American public a wealth of information about the U.S. economy. They may tell us how many new jobs ha^e been created, how
many cars have been sold, or how much the prices for goods and
services have changed. We may learn that interest rates have gone
up or down, that exports have increased, or that personal saving
has remained flat.
Economic data provide snapshots of the economy that answer a
great variety of questions. How much is the Nation producing?
How does the U.S. standard of living compare with Germany's or
Japan's? How much of the Nation's income does the government
collect in taxes? Without good data, these questions cannot be answered. Many questions require that snapshots be compared over
time. How much has the standard of living increased over the past
30 years? How much more productive are today's factories than
those that existed 10 years ago? And because the economy is continually changing, data that provided a focused picture 10 years
ago may no longer adequately measure today's economy. To maintain an accurate picture, statistical measures—and the ways they
are interpreted—need to account for the changing structure of the
economy.
Individuals, corporate managers, and public policymakers all
rely on economic data to make informed decisions that affect economic well-being and to judge whether they are achieving their
goals. A consumer might use information about changing interest
rates in deciding when to buy a new home. An automobile manufacturer is likely to use a wide range of data to determine how
many cars to produce in the coming months. Sales data give useful
information about the current demand for cars, while data on the
number of people employed, changes in household income, and the
level of consumer confidence are useful in assessing future sales.
Laws and contracts often depend on economic data for their operation. Some labor contracts, for example, include cost-of-living allowances that adjust wages in response to inflation. A measure of
inflation is therefore needed to make such adjustments. Similar
cost-of-living adjustments are made to Social Security benefits.



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Because data are critical for charting the course of the economy,
a large number of statistical tables have been included in every
Economic Report of the President since 1947. This chapter is intended to help readers understand many of these commonly used economic statistics.
Care is needed in interpreting statistics. It is important that
people who use data understand the concepts that lie behind the
measurements, the activity actually measured by the published
numbers, and the statistical accuracy of the data. Practical limitations often prevent economic statistics from corresponding exactly
to the concepts the user is interested in. Some economic statistics—
particularly early estimates based on incomplete data—inevitably
contain a great deal of error. Changes in definitions or reporting
conventions can be a source of confusion and in some cases may
affect the consistency of the data over time.
Furthermore, substantial changes in the economy—for example,
new technologies, demographic shifts, and changes in the nature
and volume of international transactions—require statistical agencies to revise periodically the types of data they collect, the ways
they collect the data, and the concepts they use to measure the
economy. In November 1989 the President signed the Economic
Statistics Initiative to upgrade the Federal statistical system. Its
aim is to help the major producers of economic data develop new
techniques to measure economic concepts, improve the accuracy of
statistics, and provide a more complete framework for understanding the economy (Box 7-1).
USING THE MOST APPROPRIATE DATA
There are many sources of economic data. Any one set of statistics, however, is limited in the questions it can answer; the features
that make numbers appropriate for certain uses may make them
inappropriate for others. Unfortunately, sometimes data that can
give a definitive—or even a very good—answer to an important
question simply do not exist. Decisionmakers must be careful, first,
to choose the most appropriate data to analyze issues and, second,
to recognize the shortcomings of the measures they use.
Consider, for example, the number of people employed in the
United States. According to the survey of households, published by
the Bureau of Labor Statistics (BLS), 117,555,000 civilians were employed in October 1991. According to the BLS survey of businesses
and government, known as the establishment survey, 109,796,000
people were on the Nation's payrolls in October 1991. Why are
these numbers different, and is one better than the other?
The numbers are different because the two surveys measure employment differently and have different coverage. The household
survey measures the number of people who are working, while the



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Box 7-1*—The Economic Statistics Initiative: Improving the
Quality of Economic Statistics

The U.S. statistical system is among the finest in the world,
staffed by dedicated and highly competent professionals* The
rapid pace of change in today's economy, however, strains the
statistical agencies. Keeping abreast of these changes requires
both the development of new measurement techniques and the
timely improvement of the existing statistical system* In 1989
a working group, which included representatives of many of
the major producers and users of economic statistics in the
Federal Government, developed a package of high-priority
projects designed to improve the quality of statistics. The President approved this package on November 25,1989.
The programs are aimed at addressing many of the measurement problems discussed in this chapter. They include 1) improving and modernizing our national and international economic accounts, and making U.S. data more internationally
comparable; 2) improving coverage and measures of service
sector output; 8) extending existing methods and developing
new techniques to incorporate quality adjustment in price indexes; 4) improving the establishment and household labor
market surveys; 5) tracking changes across industries; 6) establishing a university center for graduate-level training in statistics for current and prospective staff of the Federal statistical
agencies; and 7) sharing data among statistical agencies.
Work began on these programs in fiscal 1991. The President's fiscal 1992 budget proposed spending $30 million on
these programs; $18 million was appropriated. The initiative
envisions spending more than $150 million during fiscal 199397. The funds are included in the budgets of the Census
Bureau, the Bureau of Economic Analysis, the Bureau of Labor
Statistics, the National Agricultural Statistics Service, and the
National Science Foundation.
establishment survey measures the number of jobs on the payrolls
of business and government. The establishment survey does not
cover jobs in agriculture, the self-employed, proprietors, unpaid
family workers, or household domestic workers; but the household
survey counts these people as employed.
Consequently, one might think that the household number is a
better measure of total employment. But it samples only about
60,000 households each month, while the establishment survey
samples almost 370,000 establishments. Because the establishment
survey counts a much larger number of workers than the house-




241

hold survey, it is less likely to suffer a random miss in its estimate
of the true value for the entire country. On the other hand, a
number of issues concerning the construction of the establishment
survey make these data susceptible to certain nonrandom errors
(those issues are discussed later).
Thus, neither employment measure is clearly "better." The user
must judge which is better-suited to answering the question at
hand. Many economists believe that on a month-to-month basis, the
establishment survey probably gives a more accurate reading of job
developments for the nonfarm economy as a whole because of its
large sample. But if one is concerned with employment among
teenagers or women, for example, then the household survey data
are appropriate because the establishment survey does not collect
comprehensive information on the demographic characteristics of
the work force.
HOW MUCH DATA?
One of the most important principles of economics is that people
are better off expanding an activity as long as the additional, or
"marginal," benefit exceeds the marginal cost. This principle also
applies to the collection of data—additional resources should be
committed as long as the marginal benefit from additional data is
greater than the marginal cost of collection. Costs and benefits
often cannot be measured precisely, but expected costs and benefits
should nonetheless be compared when deciding the amount of resources to devote to collecting data.
Clearly, it is too costly to measure all the household, business,
and government activities in the economy every day, week, or
month. Consequently, most economic data are based on only a portion, or sample, of individuals or establishments. The larger the
sample, the smaller the probable error in estimating the true
number. One basic question, therefore, is whether it is worth increasing the size of the sample to reduce the size of errors (Box 72).
A tradeoff also exists between the accuracy of data and the timeliness of their publication. For example, the first estimate of gross
domestic product (GDP) for a given quarter is released during the
month following the end of the quarter. To produce this "advance"
estimate, the Bureau of Economic Analysis (BEA) of the Commerce
Department estimates some important data that are not yet available. Other data are available only in a preliminary form and are
subject to substantial revision. If the BEA were to wait several
weeks until better data became available, it could publish more accurate GDP estimates. On the other hand, many private and public
decisionmakers eagerly await the GDP data; they want a comprehensive summary of the Nation's economy as quickly as possible.



242

As more and better data become available, the advance estimate
of GDP is revised in a "preliminary" and then a "final" estimate.
These revisions are useful for judging the quality of the advance
and preliminary estimates. Between 1977 and 1988, the final estimate of real GDP growth (at an annual rate) was within —1.0 to
+ 1.6 percentage points of the advance estimate 90 percent of the
time. Between the preliminary and final estimates, 90 percent of
the revisions fell in the range of —0.6 to +0.7 percentage point.
Box 7-2.—Measuring the Quality of Statistics
A sample covers only a fraction of the firms or individuals in
the economy. Because not everyone is counted, sample-based
estimates do not give the actual numbers for the entire economy. The differences are called sampling errors. The larger the
sample, the smaller is the error* For example, the second estimate of monthly retail sales, published by the Census Bureau,
is based on a much larger; sample of businesses than the advance estimate, and has a sampling error only one-third the
size.
Other statistical errors, called nonsampling errors, occur because respondents misunderstand questions or provide incorrect information, because there are errors in data processing,
or because systematic problems arise in sampling procedures.
Such errors, however, often cannot be quantified.
Statistical errors can be reduced in several ways. Sample
sizes can be increased. Procedures can be improved to avoid
nonsampling errors. Surveys can be revised to account for
structural changes in the economy. Some surveys suffer from
poor response rates and imprecise answers; better survey
methods can reduce the burdens on participants, making it
easier for the public to play its part in providing high-quality
data. Further automation for some surveys could improve the
speed and quality of data collection and processing.

PROBLEMS WITH INACCURATE DATA
Data that are inaccurate can be misleading. From time to time,
inaccurate preliminary estimates of key data, conceptual measurement difficulties, or other data problems have made it more difficult to implement sensible economic policy. Two examples follow.
Example: Business Inventories in 1973 and 1974
Early in the 1973-75 recession, businesses appeared to be controlling inventories fairly well. According to data available in April
1974, increases in inventories in constant dollars were not that
large; inventory investment was estimated at 1.5 percent of total




243

gross national product (GNP) in the fourth quarter of 1973 and 0.6
percent of GNP in the first quarter of 1974. These figures suggested
that firms probably would not have to cut production to work off
excessive inventories and thus led policymakers to believe it was
not necessary to stimulate the economy. Revised data, however,
showed that serious inventory excesses actually had developed.
Data available by July 1974 indicated that inventory investment
actually had been 2.4 percent of GNP in the fourth quarter of 1973,
and 1.3 percent in the first quarter of 1974. The subsequent liquidation of inventories placed a severe drag on GNP growth in 1975.
Example: Mismeasurement of Consumer Price Changes Before
1983
A principal measure of inflation is the change in the consumer
price index (CPI), which includes the prices of a wide variety of
household goods and services—food, clothing, medical care, and so
on. One of the largest household expenditures is for shelter. For
those who rent their homes, statisticians have a relatively straightforward task—to find out how much rent actually is paid for an
apartment or house. But how should owner-occupied housing be
treated statistically?
Before 1983 the CPI did not capture the monthly cost of shelter
associated with living in an owner-occupied house. Instead, the CPI
measured the costs—in terms of purchase prices and mortgage
rates—experienced by those people who purchased and financed a
home. Furthermore, some analysts believe the weights on house
prices and mortgage rates were overstated in the index. When
housing prices and interest rates soared in the late 1970s and early
1980s, the CPI rose out of proportion to the actual costs of housing,
because unrealized capital gains of homeowners were inappropriately treated as increasing the monthly cost of shelter. Because
many wage, benefit, and transfer payments are tied by contract or
mandate to the CPI, this overstatement of inflation caused unwarranted increases in wages and government transfers.
In 1983 the BLS acted to correct this problem in the CPI-U (CPI
for all urban consumers); in 1985 the correction was made in the
CPI-W (CPI for urban wage earners and clerical workers). Instead
of looking at current purchase prices and interest rates, the BLS
began to estimate the cost of the shelter provided by owner-occupied houses by looking at rents paid on houses and apartments
that are comparable to the stock of owner-occupied housing. To
have a series that is consistent before and after 1983, the BLS has
constructed another index, the CPI-U-X1, that extends estimates of
housing costs consistent with the new methodology back from 1983
to 1967.
Although those revisions were a major improvement, problems
may still exist because many communities have very few rental



244

properties with attributes typical of the owner-occupied housing
stock. Owner-occupied housing makes up almost 20 percent in the
total CPI; therefore, a large component of the index could suffer
from a sampling problem. The BLS has addressed this problem by
screening areas with high concentrations of owner-occupied housing for suitable rental units and plans to study the cost-effectiveness of increasing the rental sample. Because of these and other
sampling issues, the BLS suggests that users look beyond month-tomonth variations in the data and consider changes over longer
time periods when trying to discern trends in owner-occupied housing costs.
WHY THE GOVERNMENT IS IN THE DATA BUSINESS
The entire Nation benefits from having access to unbiased, highquality economic data. It is unlikely, however, that the potential
profits would be high enough to induce the private sector to
produce the quantity, quality, and types of data that would balance
society's marginal benefits and costs. It may be difficult, for example, for private data collectors to avoid unauthorized reproduction
that would cost them sales. Furthermore, it often is less costly for
the government to obtain data as a by-product of other activities
than it is for private firms to collect statistics from scratch. Information on personal income and corporate profits, for example, are
gathered in conjunction with tax collection. Survey participants
also naturally prefer that their answers remain anonymous, and
because of strong legal protection, government statistical agencies
are able to ensure confidentiality more easily than private collectors can. Finally, the government may legally require people to respond, as in the case of the census.
Although it is appropriate for the government to gather economic data, there also is a role for the private sector in the Nation's
statistical system. Some private businesses have found it profitable
to collect some types of economic information. For example, private
firms compile a large amount of balance sheet information for publicly traded corporations and sell it to investors and researchers.
Other private businesses gather, organize, and interpret data for
clients, adding value to data originally published by the government or other sources.
SUMMARY
• Individuals, business managers, and public policymakers all
rely on economic data to make informed decisions that affect
the economic well-being of the Nation.
• Users of economic data should be aware of the activity measured by published data, the statistical accuracy of the data,



245

and the effect that changes in the structure of the economy
can have on their interpretation of economic statistics.
• Any set of economic statistics is limited in the questions that it
can answer. The features that make numbers appropriate for
certain uses may make them inappropriate for others. Even
when used properly, however, imprecise data can mislead decisionmakers.

GNP AND GDP
GNP, or gross national product, is one of the most common measures of the overall performance of the economy. It is defined as the
market value of all goods and services produced during a particular
time period by U.S. residents, that is, U.S. individuals, business,
and government. GNP includes income earned by U.S.-owned corporations overseas and U.S. residents working abroad; it excludes
income earned in the United States by residents of the rest of the
world.
A closely related measure, gross domestic product (GDP), is the
value of output produced by people, government, and firms in the
United States, whether they are U.S. or foreign citizens, or American- or foreign-owned firms. Profits earned by foreign-owned businesses in the United States are included in U.S. GDP, but not in
U.S. GNP. In contrast, profits earned by U.S. firms abroad are included in U.S. GNP (because the firms are owned by Americans),
but they are not included in U.S. GDP (because they are not
earned in the United States). GDP is measured quarterly and annually. Data on GDP and its components are found in Tables B-l
through B-26 of Appendix B to this Report.
The distinction between GDP and GNP is not very great for the
United States. Relatively few U.S. residents work abroad, and U.S.
earnings on foreign investments are about the same as foreign
earnings on investments in the United States. For other countries,
such as Pakistan and Portugal that have many workers in foreign
countries or Brazil and Canada that have more foreign investment
in their country than they have abroad, the difference between
GNP and GDP can be large. GDP corresponds more closely than
GNP does to other indicators used to analyze short-term movements in the U.S. economy, such as employment and industrial
production. This past December, the national income and product
accounts (NIPAs) shifted emphasis from GNP to GDP.
GNP and GDP measure output at market prices. Because prices
change over time, a distinction must be made between a change in
the quantity of goods and services produced and a change in the
prices paid for those products. Real GNP or GDP adjusts for inflation and measures the quantity of goods and services produced;



246

they are therefore better measures of output than nominal GNP or
GDP.
MEASURING THE STANDARD OF LIVING
Growth in real GNP or GDP does not ensure an increase in the
standard of living. If real GDP grew less rapidly than the population, for example, real GDP per person would fall. But even real
GDP per person is not a perfect measure of economic well-being because some transactions are not recorded in GDP.
GDP measures principally the production of those goods and
services that are sold through a marketplace. It also includes a few
imputed items, such as the value of living in owner-occupied housing. Many nonmarket activities are, however, omitted from GDP
even though they affect economic well-being. If a person mows his
or her own lawn, for example, there is no entry in the GDP accounts, but if he or she hires a lawn service, the costs of the service
are included in GDP. Similarly, GDP does not include volunteer
work. Were the volunteers to work for a wage, GDP would rise, although economic well-being might not.
Changes in the condition of the environment affect well-being,
but they are hard to quantify in the GDP accounting framework.
An increase in pollution makes life less pleasant, but it is not subtracted from GDP. Indeed, if increased pollution leads to more expenditures for health care, it actually increases GDP. On the other
hand, GDP does include the *value of production of goods and services to improve the environment, such as catalytic converters or
toxic waste consultants. The United States is examining how satellite accounts to the United Nations' system of national accounts
would better measure the influence of natural resources and environmental factors on economic well-being (Box 7-3).
Leisure time affects economic well-being but is not counted in
GDP. In the last two decades, real GDP per person rose almost 40
percent, while leisure—that is, time spent outside the workplace—
increased by 7 percent (if it is measured by a decrease in the average hours worked per week). Did economic well-being rise by more
than the 40-percent increase in output because working people also
had more leisure time? Or did economic well-being rise by less than
40 percent because some of the increase in output came from an
increase in the number of two-earner families for whom "family
leisure" time declined. Vacation spending is another leisure-related
issue. Money spent on airfares, hotels, and recreation increases
GDP, while relaxing at home does not. Yet both types of vacations
increase economic well-being.




247

Box 7-3.—System of National Accounts
Gross domestic product (GDP) is the primary measure of aggregate activity presented in the U.S. national income and
product accounts, GDP measures the value of production in a
given time period. But other indicators such as national wealth
are valuable to gauge economic well-being. Saving links these
two major concepts of economic well-being because saving out
of GDP augments national wealth- But real wealth also is affected when the prices of the Nation's existing assets and liabilities change at different rates or when there is net lending
or borrowing from other countries.
The United Nations* system of national accounts (SNAs) is
an integrated presentation of an economy's stocks of assets and
liabilities and its flows of income, production, consumption,
and saving. The system of national accounts integrates the factors that affect national wealth with the GDP data, providing a
more complete framework for analysing the economy than do
the national income and product accounts.
As part of the President's Statistical Initiative, the U.S. national accounts will adopt the SNAs' framework in the mid1990s. The Federal Reserve Board already prepares much of
the additional asset and liability information needed to fill in
theframework*Because many countries already use the SNAs,
developing these accounts for the United States will facilitate
international comparisons of GDP, its components, and supporting financial data.
SUMMARY
• The United States recently shifted emphasis from GNP to
GDP. In contrast to GNP, GDP includes income of foreign corporations and foreign residents working in the United States,
but excludes the income of U.S. residents and corporations
overseas. GDP corresponds more closely to other indicators of
domestic short-term economic performance.
• Adjusting GDP and GNP for inflation and for population
growth makes them better measures of the standard of living,
but some factors that affect economic well-being, such as nonmarket activities and pollution, are not recorded in either
measure.




248

EMPLOYMENT AND UNEMPLOYMENT
How many people lost their jobs during 1991? How many people
found employment? What are the demographic characteristics of
the unemployed? To answer such questions, one can turn to several
sources of labor market data.
The most common data describing labor markets come from
three sources: a survey of the Nation's households, a survey of the
Nation's businesses and governments (the establishment survey),
and the unemployment insurance systems of the States. No one of
these sources records all labor market indicators, and the three
sources sometimes give different readings of apparently similar
labor market indicators. For example, nonfarm wage and salary
employment fell 0.3 percent between April and November 1991 in
the household survey, while jobs rose 0.1 percent in the establishment survey. To prevent confusion about these figures, it is important to understand how these labor market data are generated.
THE HOUSEHOLD SURVEY
The most familiar labor market statistic is the unemployment
rate, which is based on information the Census Bureau collects for
the BLS through the Current Population Survey. Many series from
this survey are found in Appendix Tables B-31 through B-39.
About 60,000 households are on the interview list; in any given
month, on average, 4-5 percent of these are not interviewed for a
variety of reasons. The population estimates underlying the survey
are benchmarked every 10 years to the decennial census—that is,
they are adjusted to make them consistent with the census.
Surveyors ask respondents about the major activity of each
member of their household 16 years and older. Those who are
working, including the self-employed and unpaid workers in a
family enterprise, are counted as employed. Those who are reported to be not working but who have actively sought work in the last
4 weeks or who were waiting to be recalled from layoff or report to
a new job within 30 days are counted as unemployed. Those who
are not looking for a job or who are unavailable for work are not
considered part of the labor force. The unemployment rate is the
number of unemployed people divided by the civilian labor force,
which is the sum of the employed and unemployed. As discussed in
Chapter 3, the unemployment rate does not count people who are
not looking for work because they feel no work is available. Current Population Survey data on these "discouraged workers" are
published once a quarter.
The household survey also includes a comprehensive set of questions concerning the household members' age, sex, race, occupation,
industry of employment, number of hours worked, duration of any



249

unemployment, and whether the unemployed workers quit or involuntarily left their last jobs. People working fewer than 35 hours
a week are classified as part-time workers. Data are published at
both the national and State levels. Except for 11 large States, however, the State-level samples are small and monthly estimates
cannot be obtained directly from the household survey. The monthly labor force and unemployment data published for these smaller
States are based on estimating equations that use information from
more than just the household survey. On an annual basis, however,
the household survey does provide enough data for State-level estimates.
THE ESTABLISHMENT SURVEY
Every month, the BLS surveys almost 370,000 establishments
that, combined, employ more than 40 million workers. For purposes of the survey, an establishment is a business or government
operation that, in general, is at a single location and engages in
one type of activity. The agricultural sector is not included. Private
firms and State and local governments report information concerning workers who receive pay for any part of the payroll period that
includes the 12th day of the month. Federal Government employment, which is counted on the last day of the month, covers only
civilians. Some of the results from the survey are presented in
Tables B-41 and B-42 in the Appendix.
The survey collects information by industry on the number of
workers, the number of production and nonsupervisory workers,
average weekly hours paid, overtime hours, and average hourly
earnings. The survey does not distinguish between full-time and
part-time workers in its count of jobs. The only demographic information published is gender. State and metropolitan area breakdowns also are published.
When a sample of establishments is surveyed, the question arises
as to how employment in the sample is related to the total number
of jobs. To shed light on this relationship and make appropriate adjustments in the survey results, the BLS each year conducts a more
comprehensive study, or benchmark, of civilian nonfarm jobs, relying primarily on information that firms and government agencies
are required by law to report to the State unemployment insurance
systems. The benchmark indicates that the coverage of the monthly establishment survey is quite large; the establishments in the
monthly sample employ 39 percent of the workers enumerated in
the 1991 annual benchmark. Indeed, the BLS reports that the
"sample of establishment employment and payrolls is the largest
monthly statistical sampling operation in social statistics/' Some
issues have been raised regarding the survey, however. Its sample
may overrepresent large establishments relative to their share of



250

employment. And, particularly in the short term, the survey probably has difficulty accounting for the emergence of new establishments and for firms that go out of business.
The establishment and household surveys measure different concepts. The establishment survey counts the number of jobs, not the
number of employed people. Thus, a person holding more than one
job is counted more than once in the establishment survey but only
once in the household survey. The establishment survey counts
hours paid, which includes, for example, paid vacations. In contrast, the household survey asks respondents the number of hours
worked.
STATE UNEMPLOYMENT INSURANCE SYSTEM
Every week data are published showing the number of people
who filed new claims for unemployment insurance—the "initial
claims*' figure—and the number of people covered by unemployment insurance who were unemployed for any part of the week—
the "insured unemployment" number. These data, found in Table
B-40, are compiled by the Employment and Training Administration of the Department of Labor, using information collected from
the State unemployment insurance systems.
The insured unemployment count does not include workers
whose unemployment insurance coverage has lapsed, initial claimants who do not qualify for benefits, workers who qualify but do
not apply, or individuals not covered by unemployment insurance.
This final category includes new entrants or reentrants into the
work force who have not yet found jobs. These persons would be
counted in the household survey if they met that survey's tests for
unemployment.
Once a quarter, employers are required to report the number of
persons on their payrolls each month and the total wages that they
paid. Because virtually all businesses are required to belong to the
State systems, these reports provide very accurate readings of employment. Indeed, the data are used to benchmark the establishment survey's estimates once a year. The State data are not very
timely, however; the reports are not available until about 6 months
after the end of the quarter.
WHEN TO USE THE DIFFERENT LABOR MARKET DATA
Each of the labor market data sources has its strengths and
weaknesses (Box 7-4). The lag between the collection and publication of the initial claims numbers is less than 2 weeks; these data
provide the most up-to-date, but quite incomplete, reading on unemployment conditions. Although the State unemployment system
provides information about those persons seeking unemployment
benefits, it does not provide timely information on jobs gained or



251

the industrial structure of employment, or offer any data on the
number of hours people worked. The establishment survey does
provide timely information on these questions. And despite some
problems with the establishment survey, many economists believe
that because of its large sample coverage, it generally provides a
relatively accurate reading of month-to-month changes in the
number of nonfarm jobs. It also provides useful industry detail.
Over long periods of time, the establishment survey and the nonagricultural component of the household survey generally yield
similar trends. The establishment survey, however, does not contain any information about people who are without jobs. The
household survey provides details of the demographic composition
of the population with and without jobs, information on the duration of unemployment, and reasons why people may be working
part time or have dropped out of the labor force.
Box 7-4.—Error and Revision Properties of Labor Market

Surveys
Comprehensive work has been done to determine the statistical accuracy of the household and establishment surveys. The
estimate of the civilian unemployment rate in the household
survey has a standard error of 0,11 percentage point. This
means that because of sampling error, there is a one-in-three
chance that the true unemployment rate will be more than
0.11 percentage point higher or lower than the published
number. Thus, for most analyses, one should not consider
movements in the unemployment rate that are less than 0.2
percentage point as significant changes in the labor market
One useful measure of the statistical accuracy of the establishment survey is how well the monthly survey forecasts the
annual benchmark. For the past 10 years, the difference between the final monthly estimate of total nonfarm employment from the establishment survey and the benchmark has
averaged 0.2 percent.
The first estimate of payroll employment for each month is
revised in subsequent months as late reports are received and
processed. Between the first and final estimates, there is approximately a one-in-three chance that the first reading of
total nonfarm employment will be revised up or down by
78,000 jobs. One program in the President's Statistical Initiative will upgrade automated data collection techniques to improve the quality of the establishment survey's first estimate
of employment.



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OTHER SOURCES OF LABOR MARKET DATA
In addition to these three sources, several other important labor
market surveys are published less frequently. These include the
quarterly employment cost index, the survey of income and program participation, the national longitudinal survey, and the
public use micro data sample from the decennial census. The employment cost index provides comprehensive information on wages
and benefits at the industry level. The last three surveys record a
variety of demographic, employment, income, and wealth information on an individual-by-individual basis.
SUMMARY
• Three sources of labor market data—the household survey, the
establishment survey, and the State unemployment insurance
system—give complementary, but sometimes differing readings
of the labor market.
• The weekly data on initial claims for unemployment insurance
are the most timely, if quite incomplete, report on unemployment. The establishment survey provides useful information on
month-to-month changes in nonfarm employment. The household survey reports detailed information on the demographic
and economic characteristics of the employed, the unemployed,
and those people out of the labor force.

PRICES AND INFLATION
Inflation is an increase in the average level of prices. As discussed in Chapter 2, high and variable inflation inhibits the efficient allocation of resources in the economy, and if unanticipated,
redistributes income and wealth capriciously. To achieve strong
and sustainable economic growth over the long run, the Nation
must maintain low and stable inflation rates. Good measures of
prices and inflation are necessary to help gauge progress toward
achieving this goal. Appendix Tables B-56 through B-64 provide a
variety of price indexes that commonly are used to measure inflation (Box 7-5).
CHANGES IN QUALITY
Some price changes reflect changes in quality. For example, suppose the purchase price of a car increases solely because antilock
brakes are added as standard equipment. Because the higher price
reflects an increase in quality, it should not be included in a calculation of inflation. If such a price change were included in a price
index, then inflation would be overstated. To avoid this problem,
price indexes are adjusted for quality where possible.



253

Box 7-5.—Price Indexes
Inflation is measured using indexes that record price
changes for a market basket of items representing the purchases or sales of some portion of the economy. Some price indexes, called fixed-weight or Laspeyeres indexes, weight items
by their shares in the market basket during a base period. Examples are the producer price index, the consumer price index,
and the fixed-weight price index for gross domestic purchases.
(The BEA has shifted emphasis from the GDP fixed-weight
index—which measures prices of everything produced in the
Nation—to the gross domestic purchases index, which measures the price of everything purchased in the Nation, including
imports.) In other price indexes, the weights change with every
observation to reflect the current period's market basket. The
most common example of such an index is the GDP deflator.
On a month-tcwnonth or quarter-to-quarter basis, economists
generally prefer measuring inflation using fixed-weight indexes* Because the weights do not change, movements in these
price indexes reflect changes only in prices. In contrast, movements in deflators reflect changes both in prices and in the
composition of the market basket. Indeed, even over long periods of time, point-to-point comparisons of deflators can be affected by unusual shifts in the composition of spending.
Over time, consumers and producers tend to shift purchases
away from higher priced items, and advances in technology
tend to reduce relative prices in many fast-growing sectors. Because of such substitutions and other changes in the economy,
the composition of a fixed-weight index may become quite different from the market basket currently purchased by consumers and businesses. Consequently, fixed-weight indexes are updated periodically to keep pace with changes in the economy.
In addition, price indexes constructed from various alternative
weighting formulas are being used more frequently in economic analyses.

Some items are adjusted by "direct quality adjustments." Autos
are an example. The average transaction price of autos sampled in
the CPI for the 1992 model year was $917.30 higher than for the
1991 model year. BLS analysts determined that $259.79 of this
change represented higher quality from better warranties, the inclusion of passive restraints, and other improvements. Thus, the
BLS used a price increase of only $657.51 ($917.30 - $259.79) to
calculate the change in the auto component of the CPI.




254

Other items are adjusted for quality by "price-linking" methods.
For example, when a new item replaces an old one in the marketplace, the BLS also must make this substitution in the CPFs
market basket. If the characteristics of the original and substitute
items differ substantially, then the difference between their prices
is assumed to reflect a change in quality and is not counted as a
price change. The link is made when the price of the new item, adjusted for the amount attributable to the quality change, replaces
the price of the old item in the index. Sometimes a new item is so
different from the old one that the prices are not immediately comparable. Here, the quality adjustment is estimated as the difference
between the price of the new item and a value imputed from the
prices of a collection of items in the broader class, or stratum, of
the CPI that includes the new item.
In a few cases, quality adjustment is made by statistically estimating the value of certain attributes that have changed over time.
Such statistical estimates have been termed "hedonic quality adjustments." Two of the main areas that use hedonic quality adjustment are housing and computer equipment. Technological advances have significantly increased the processing speed and storage capacity of computers. Suppose a computer purchased today
performs twice as many operations as a computer purchased 5
years ago for the same price. Because two 5-year old computers
would be needed to perform the same tasks as one of today's machines, it is clear that the true price of computers has fallen substantially.
With the aid of private industry, the BEA has constructed statistical estimates of how the market valuation of various attributes of
information-processing equipment has changed with technology
over time. Such hedonic quality-adjusted prices for informationprocessing units fell at an annual rate of 23 percent between 1977
and 1984. In contrast, a price index constructed from a method
similar to price linking fell at only a 12-percent annual rate over
the same period.
For many items, particularly for services, adjusting prices for
changes in quality is very difficult. Medical care services in the
CPI, for example, are estimated in part from the prices paid for a
set of common medical procedures. The prices have risen significantly over time. But some of the increases reflect advances in
medical science that have resulted in better diagnoses, higher cure
rates, and lower postprocedure complications. Ideally, the value of
these improvements would be measured and prices adjusted accordingly. While such measurement is impossible in some areas, there
clearly is room for improvement in others. As part of the President's efforts to upgrade the quality of economic statistics, the BLS



255

is undertaking research to improve quality adjustment in the service sector.
Because all changes in quality cannot be accounted for accurately, and because no explicit quality adjustments are made for some
items, inflation may not be measured accurately in the United
States or in other countries. Whether the measure is too high or
too low is not known. Many economists believe that the scales tip
toward inflation being overstated in the United States, perhaps by
as much as a percentage point. Furthermore, because price indexes
are used in the construction of some components of real GDP, longrun real GDP growth may be understated. The allocation of real
GDP between sectors with and without adequate quality adjustment may be misstated as well. For example, real medical services
likely have grown faster than shown in the national accounts because some real gains in services have been mistaken for inflation.
REBASING REAL GDP
Real GDP measures the value, at base-period prices, of all the
goods and services produced in the Nation. Because all prices do
not change at the same rate, the price of one item relative to another varies over time. Periodically, the BEA updates the base
period so that real GDP reflects more recent relative values of
goods and services. The base year was moved, from 1982 to 1987, in
the benchmark revisions published in December 1991.
Rebasing can change the size, composition, and rate of growth of
real GDP. The recent rebasing significantly reduced computers'
share of real GDP because their relative prices had been falling so
rapidly. Between 1982 and 1987, the deflator for information-processing equipment (which is much broader than simply computers)
fell 4.4 percent while the deflator for total GDP rose 19.4 percent.
Moving the base from 1982 to 1987 therefore substantially lowered
the relative importance of computers in GDP. Because computers
are a rapidly growing sector of the economy, reducing their weight
in this way reduced the growth rate of real GDP. As the computer
example illustrates, rebasing often can lower measured real GDP
growth because it reduces the influence of fast-growing sectors with
declining relative prices. When measured in 1982 dollars, real GDP
growth from 1982 to 1987 averaged 4.1 percent per year; when
measured in 1987 dollars, growth over this period averaged 3.8 percent per year.
Measuring real GDP at base-period prices has the virtue of being
simple and easy to interpret. For some purposes, however, alternative formulas that do not restrict valuations to a single period may
be better. The BEA plans to introduce such alternative measures
for GDP and its components. Although somewhat more complex
than the traditional formula, these measures of output and related



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prices indexes are more flexible and will be useful for certain economic analyses.
SUMMARY
• Inflation is the increase in the average level of prices. Inflation
is measured using price indexes, which calculate the change in
prices for a market basket of items.
• Price indexes are adjusted so that price changes reflecting
changes in quality are not counted in inflation. For many
items, it is difficult to adjust completely for quality changes,
particularly services. Consequently, inflation may not be measured accurately.
• Real GDP values items at prices in a base year. Because of
changes in relative prices, it is necessary to change the base
year periodically to reflect more current relative prices. Rebasing often lowers the growth rate of real GDP.

MONEY
Money greatly facilitates the efficiency of transactions by allowing producers to sell their goods and services for money instead of
searching for someone willing to barter. Sometimes—during the
early 1920s in Germany, for example, or recently in Russia—the
government issues too much money, and as money loses its value,
people resort to inefficient barter. But even in less extreme cases,
monetary disturbances can create economic problems. The collapse
of the U.S. banking system and the decline in the quantity of
money in the early 1930s propelled the economy more deeply into
depression. Changes in the rate of growth of money also have
played a role in the more moderate fluctuations of recent decades—sometimes stabilizing and sometimes accentuating the business cycle.
By exercising influence over the quantity of money, the Federal
Reserve can affect interest rates, prices, the availability of credit,
and short-term movements in overall economic activity. To underline the Federal Reserve's responsibilities, the Congress has mandated that the Fed announce target ranges for money growth and
report twice a year on the conduct of monetary policy with respect
to those targets.
Timely and accurate measures of the quantity of money are important in developing and monitoring monetary policies. Because
money supply data are available with only about a 10-day lag, the
Federal Reserve is able to observe almost continuously how well
money growth targets are being met. There are many ways to
define money, however, and it has not always been clear which definition better serves as an intermediate target of monetary policy.



257

DEFINITIONS OF MONEY
Traditionally, economists considered assets to be money if they
served as a medium of exchange, a unit of account, and a store of
value. Given the large number of financial assets in today's world,
however, the once well-defined boundaries between money and
other financial assets have become increasingly fuzzy. Because it is
difficult to pinpoint exactly which assets should be considered
money, several definitions of money have been devised, each composed of a specific set of assets.
One narrow definition of the money stock is Ml, which consists
of items that are most commonly used to buy goods and services—
specifically currency, travelers' checks, and checkable deposits. A
broader definition of money, M2, includes all of the items in Ml
plus savings and small time deposits, as well as some more sophisticated financial instruments such as money market deposit accounts, money market mutual funds, overnight repurchase agreements, and overnight Eurodollar accounts. Many of the components of M2 that are not in Ml can be used for transactions, but
their primary use is as a store of savings. An even broader measure of money is M3, which includes the components of M2 plus
larger, investment-type accounts that generally are held by businesses.
The Federal Reserve Board collects and publishes money statistics on a weekly basis. A number of these series are found in Appendix Tables B-65 and B-66. A primary source of these data is the
balance sheet items that large banks and thrifts are required by
law to report to the Federal Reserve each week in conjunction with
required reserve regulations. These reports cover nearly 9,000 institutions that hold more than 90 percent of the deposit components
of the monetary aggregates. Several additional surveys collect data
from small banks and information on nondeposit components of the
monetary aggregates.
CHANGES IN THE VELOCITY OF MONEY
The velocity of money—the ratio of nominal GDP to the money
stock—is a commonly used statistic for summarizing the relationship between money and nominal output. The more stable and predictable the velocity of money, the greater the ability of the Federal Reserve to anticipate the effects of monetary policy on nominal
GDP.
Until the mid-1970s, the velocity of Ml appeared to be on a fairly
stable and predictable upward trend, as seen in Chart 7-1. This
steady relationship stemmed largely from the use of Ml to facilitate transactions and from a fairly regular association between
nominal GDP and the number of transactions occurring in the
economy. Because Ml velocity was fairly stable, many economists



258

focused on Ml when discussing the effects of money on the economy, although some prominent economists advocated concentrating
on broader measures of money.
Chart 7-1 Velocities of M1 and M2
As defined currently, the velocity of M2 is more stable than the velocity of M1 and the velocities of
previous definitions of M1 and M2.
Index, 1958Q1 =1.0
3.5

Pre-1978 definition, M1
3.0

2.5

Present M1
2.0

1.5

1.0
Present M2

0.5

I
I I I
I
I
I
I
I
I
i
l
i
1960
1965
1970
1975
1980
1985
Note: Pre-1978 definitions are reconstructions from other Federal Reserve data.
Pre-1978 M2 is a proxy which excludes all large time deposits.
Sources: Department of Commerce and Board of Governors of the Federal Reserve System.

1990

Until the late 1970s, the definition of Ml included only currency
and checking accounts, neither of which paid interest. During the
1970s and early 1980s, increases in market interest rates caused
households and businesses to move their funds toward interestbearing assets. New types of interest-bearing deposit accounts
began to be offered as savings and loans (S&Ls), banks, and other
institutions competed to attract funds. Many of these instruments
carried check-writing privileges; in effect, they were interest-bearing checking accounts.
As seen in Chart 7-1 the emergence of new financial instruments
that could play the traditional roles of money coincided with a
large increase in the volatility of the velocities of Ml and of M2.
The Federal Reserve responded by redefining the money aggregates
in the late 1970s and early 1980s. Certain interest-bearing checkable deposits and travelers checks were added to Ml because they
clearly were used for transactions purposes. Even with these
changes, however, Ml velocity remained quite volatile, as consumers and businesses continually reshuffled their funds between
assets included in Ml and those not included.




259

In addition to the assets added to Ml, the Fed added certain savings-type deposits, overnight repurchase agreements, overnight
Eurodollar accounts, and money market mutual fund accounts to
M2 in the late 1970s and early 1980s. The relationship between redefined M2 and nominal GDP has been much more stable than the
velocity of Ml. Because of that stability and the relative trendlessness of M2 velocity, many economists have switched their primary
focus from Ml to M2. Indeed, the Federal Reserve no longer announces Ml growth targets in its biannual reports to the Congress.
SUMMARY
• Accurate measures of money are important for managing monetary policy. But money is difficult to define because of the
large number of financial assets that can play the roles of
money.
• The more stable and predictable the velocity of money, the
better the ability of the Federal Reserve to anticipate the effects of monetary policy on nominal GDP. The velocity of Ml
became much more volatile following the financial innovations
in the 1970s and 1980s; the relationship between redefined M2
and nominal GDP has been much more stable.

BUSINESS ACCOUNTING
Aggregate economic data, such as GDP and employment, are
measures of how the overall economy is performing. However, the
aggregate economy is composed of the productive activities of thousands of firms and millions of individuals. Measures of individual
firm performances are sometimes used in the construction of aggregate measures of the economy, and they are also of particular interest to investors, suppliers, customers, and employees.
The Financial Accounting Standards Board, an independent rulemaking body in the private sector, sets accounting standards for
firms. The Securities and Exchange Commission also rules on the
acceptability of various accounting procedures. Even so, accounting
practices do not always constitute good economic measurements.

MARKET VALUE AND BOOK VALUE
One of the most important pieces of information about a firm is
its net worth. Net worth, sometimes referred to as shareholders'
equity, is the excess of the assets of the firm over its liabilities. An
enterprise is solvent when its net worth is positive. In addition to
physical assets, a firm has intangible assets, such as the value created by the firm in coordinating, developing, and deploying its
physical assets. Intangible assets are often not included in the
firm's balance sheet.




260

Tangible assets are typically registered on a firm's accounts at
"book" value, which is their historical cost less depreciation. Assets
can also be valued at market, the current prices that would be received if the assets were sold. The book value of an asset need not
correspond closely with its market value.
A liability, likewise, can be valued at market. For example, the
market value of a firm's pension liabilities could be measured by
the price required to compensate someone for assuming the present
and future financial obligations of the firm's pension plan. In practice, however, the balance sheets of firms do not measure the
market value of all assets and liabilities. Often, market values
cannot be determined because of the absence of active markets in
particular assets and liabilities.
An example of the importance of the difference between book
and market value is presented in Box 6-3 on measuring international investment. Data in the box show that the difference between book and market value of U.S. direct investment abroad
amounts to hundreds of billions of dollars.
The difference between market value and book value is important for the government. It has an interest in the market value of
assets and liabilities of private businesses, especially when it insures those liabilities, as it does for banks and savings and loan
institutions. Deposit insurance represents taxpayers' commitment
to reimburse depositors in the event the institution is closed because the market value of a bank's or S&L's assets (loans, for example) are less than the value of its insured liabilities (deposits).
Regulators of financial institutions are increasingly using tools
such as stress tests to capture principles of market valuation in assessing net worth. Stress tests apply adverse scenarios to an economic model of an institution's balance sheet to determine the sensitivity of asset and liability values to changes in interest rates and
other relevant economic variables. Regulators now routinely apply
stress tests in the banking industry. Recent legislation would require some of the government-sponsored enterprises, such as the
Federal National Mortgage Association and the Federal Home
Loan Mortgage Corporation, to use stress tests to evaluate the
soundness of their balance sheets.

ACCRUAL VERSUS CASH ACCOUNTING
Standard accounting practice registers assets and liabilities as
they accrue rather than as cash is received or disbursed. A pension
liability, for example, accrues as workers earn additional claims on
their pension plan.
Until recently, firms were permitted to register nonpension benefits for retired workers, such as medical benefits, on a cash basis.
As employers' commitments to provide these benefits increased, so



261

did concern that financial reporting did not adequately track the
assumed liabilities. The Financial Accounting Standards Board
statement, FAS No. 106 of 1990, requires firms to recognize postretirement benefit costs as the liabilities accrue rather than waiting
until the benefits are actually paid out. To minimize disruptions to
their balance sheets, firms can elect either to recognize these obligations immediately or to phase in recognition over 20 years.
SUMMARY
• Net worth measures the excess of a firm's assets over its liabilities. Book value measures assets at historical costs less depreciation and often excludes intangible assets. Market value is
the current price that would be received or paid for an asset or
liability.
• Under a recent ruling, firms are required to register their nonpension employee benefits as they accrue, rather than when
the benefits are actually paid.

FIXED INVESTMENT
One of the important policy questions facing the Nation is
whether Americans are investing enough to boost productivity and
increase the standard of living. Business fixed investment represents the purchases of new structures and equipment. Data on investment are found in Appendix Tables B-l, B-2, B-14, and B-15.
There are large fluctuations in business fixed investment, as Chart
7-2 shows; but the trend in investment over the past 30 years is
not clear. As measured by the NIP As, the ratio of real gross business fixed investment to real GDP appears to have a small upward
trend, whereas the ratio of real net business fixed investment to
real net domestic product has trended down since the mid-1960s.
The difference between the two ratios in Chart 7-2 is depreciation: Gross investment refers to total outlays for capital items,
while net investment is gross investment less depreciation. Thus,
net investment represents the net addition to the Nation's capital
stock. (The NIPA measure of depreciation is called the consumption of fixed capital.)

GROSS VERSUS NET INVESTMENT
Both the gross and net figures provide useful measures of investment trends. Real gross investment measures the flow of new capital into the capital stock. Real net investment essentially measures the change in the quantity of the capital stock. Many economists believe that the price indexes and depreciation allowances
used to convert nominal investment to real investment do not completely adjust for changes in the quality of some capital. The prob


262

Chart 7-2

Investment Shares of Output

Increased NIPA depreciation accounts for the rising gap between the shares of output accounted for
by real gross investment and real net investment.
Percent
14

12

10
Real Gross Business Fixed Investment as a Share of Real GDP

Real Net Business Fixed Investment as a Share of Real Net Domestic Product
I

1960

i

i

i

i

i

1965

i

i

i

I

i

1970

i

i

i

i

i

I

I

1975

i

i

i

1980

i

i

1985

1990

Note: Investment and domestic product are measured in 1987 prices.
Source: Department of Commerce.

lem is most notable for high-technology items that are adjusted for
quality by price-linking methods. Because technology is continually
improving, the real value of newly produced additions to the capital stock may be undervalued compared with the depreciated older
capital stock. Thus, net investment may understate the value of
the technological advances more than gross investment does.
MEASURING DEPRECIATION
The Department of Commerce defines NIPA depreciation as "the
decline in value due to wear and tear, obsolescence, accidental
damage, and aging." The construction of the NIPAs assume all capital items follow straight-line depreciation. Private capital items
are classified into various categories of equipment or structures;
items in each category are depreciated according to the estimated
retirement experiences of items in that category. Special estimates
of depreciation are made when unusual circumstances such as hurricanes or earthquakes damage large quantities of capital. Nominal
NIPA depreciation measures the cost of replacing the capital item
in the current time period. Constant-dollar NIPA depreciation
measures the cost of replacing the item at base-period prices. A
number of questions have been raised concerning the concepts and




263

statistical methods used to construct NIPA depreciation, however,
and the BEA currently is reviewing its procedures to improve the
estimates of depreciation.
The widening gap between the gross and net investment ratios in
Chart 7-2 represents increases in NIPA depreciation: real depreciation rose from 66 percent of real gross business fixed investment in
1979 to 79 percent in 1990. In turn, the larger share of NIPA depreciation reflects a rise in the share of real gross business fixed investment accounted for by equipment; it increased from 64 percent
in 1979 to 68 percent in 1990. Equipment has a much shorter service life than structures do, so it depreciates at a much faster rate.
The tax code provides another method for depreciation accounting. The tax law divides capital items into various categories of
equipment and structures and specifies what percentage of the historical cost of the item may count as a tax deduction in each year
following its purchase. There are two principal differences between
NIPA and tax depreciation. First, NIPA depreciation is measured
at replacement cost, while tax depreciation is measured at historical costs of acquisition. Second, the service lives and depreciation
patterns for the NIPA differ from those for tax depreciation. This
difference was larger when the tax laws allowed more-pronounced
accelerated depreciation of certain capital items. Because of these
differences, tax records are not used to estimate NIPA depreciation.
Depreciation and Changes in the Market Value of Capital
Under NIPA depreciation, service lives attempt to capture
"normal" obsolescence, but not obsolescence due to irregular
changes in prices or technology. In contrast, the market value of
capital changes in response to irregular obsolescence. For example,
even if an older, fuel-inefficient airplane were perfectly maintained, a sharp rise in the price of oil could drive down its market
value.
There is some disagreement on whether such changes in the
value of capital should be considered as depreciation. Some economists would say no; they prefer that depreciation measure only the
decline in the physical productivity of capital. Other economists
would say yes; they prefer that depreciation measure the change in
the contribution of the capital stock to national wealth. Because
the market price of a capital item reflects the present value of the
flow of services from the item, the best way to measure this latter
concept of depreciation would be as a decline in the market price of
existing equipment and structures. (An increase in the value of the
existing capital stock would be an appreciation.)
Difficulties occur, however, in making a market-based measure of
depreciation operational. There is a relatively active market for
some used capital, such as trucks and aircraft, but for many types



264

of capital, there are no active second-hand markets to provide price
information. In addition, the value of some capital currently owned
by a particular firm might be quite different if it were acquired by
another company; the "market" value of such capital is difficult to
determine.
SUMMARY
• There is a small upward trend in real gross investment relative to real GNP, while there is a small downward trend in
real net investment relative to net national product.
• The difference between the two series is the depreciation in
the capital stock as measured by the NIPAs. Both gross and
net investment are important for measuring the effect of
changes in the capital stock on productivity.

SAVING
Saving is the primary source of funds for investment and therefore is necessary to increase productivity, enhance growth, and improve the Nation's standard of living. Saving is also the vehicle by
which households transfer consumption through time by building
up funds for retirement, college expenses, hard economic times—
"saving for a rainy day"—or other purposes.
Because saving is so important, there has been much concern
that U.S. saving rates have fallen over time and in relation to rates
in other countries. Saving, however, is difficult to measure. Alternative yardsticks can provide very different estimates of both
short-term fluctuations and longer term trends in saving.
Saving can be defined two ways. First, cash-flow saving measures
the excess of income or revenue over expenditures. Specifically, in
the NIPAs, personal saving is disposable (after-tax) income less expenditures for consumption and net interest. For businesses saving
is retained earnings; that is, net after-tax profit less dividends paid.
For government, saving is revenue less expenditures, as explained
later. Such saving data are presented in Appendix Tables B-24, B26, and B-27. Second, saving may be defined as the change in real
wealth as reported in the Federal Reserve Board's national balance
sheets. These data are presented in Appendix Tables B-109 and B110. In principle, the two definitions should provide the same
answer: The excess of income over outlays should equal the increase in wealth. In practice, however, the two methods produce
substantially different measures of saving because they implicitly
define income, outlays, and wealth differently.
Chart 7-3 compares the cash-flow based national saving rate
from the NIPAs with a measure of the change in wealth, specifically, the change in real household net worth (including ownership of



265

corporate stock) and in real government financial wealth taken
from the Federal Reserve Board's national balance sheets. Because
the saving rate from the national balance sheets is calculated using
market prices for some assets, it fluctuates far more than the
measure based on income and outlays. For example, the national
balance sheets assume that a fall in the price of corporate common
stocks represents "dissaving." And while a downward trend in the
NIPA measure of saving is evident over the past decade, any trend
in the national balance sheets saving is masked by its wide swings
as asset prices fluctuate.
Chart 7-3

National Saving

Cash flow and change in wealth measures of saving provide very different estimates of saving patterns.
Percent of GDP
30

_^
~

20

Cash Flow (Income less Consumption)

10

-10
Change in Wealth

-20

-30

i

1960

i

i

i

i

i

1965

i

i

i

i

i

i

i

i

1970
National
Balance Sheets

i

i

1975

i

i

i

i

i

1980

1985

1990

National Income
and Product Accounts

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

CASH-FLOW MEASURES OF SAVING
The NIPAs measure personal expenditures on consumer items.
Because these include purchases of consumer durables, they are
not necessarily the same as personal current-period consumption.
Only part of expenditures on durables represents current-period
consumption: The car, refrigerator, or other durable good purchased in January still has value at the end of December. Logically, this value (less depreciation of durables acquired in previous
years) might be considered as part of this year's saving, but instead
the entire purchase is counted as consumption in the NIP As. On
the income side, the NIP As do not include capital gains or losses.




266

Excluding net capital gains leads to an understatement of income
and therefore to an understatement of saving; the opposite would
be the case in a year with net capital losses.
An alternative measure of personal saving, available from the
flow of funds accounts produced by the Federal Reserve, does count
consumer durable expenditures (net of depreciation) as saving. It
also treats certain government insurance credits and realized capital gains as personal income. These additions make this personal
saving measure higher than the NIPA measure.
Because cash-flow saving is measured as the difference between
income and consumption, substantial measurement error may
occur. An error in measuring consumption or income translates
dollar for dollar into an error in saving. Because saving is much
smaller than either consumption or income, the proportional effect
of the error on saving is much larger than on consumption or
income.
HUMAN CAPITAL
A significant omission from all the standard measures of saving
is human capital, the productive skills people acquire through education, job training, and on-the-job experience. Like investment in
physical plant and equipment, investment in human capital boosts
productivity and increases the standard of living. Like other forms
of capital, human capital depreciates over time; skills, like machinery, may become obsolete, and skilled people retire. Some studies
have shown that investment in human capital is of approximately
the same order of magnitude as investment in physical assets.
SUMMARY
• Saving is the source of funds for investment and a vehicle to
transfer consumption through time. Different measures of
saving can vary by large amounts, and each measure has
errors.
• There are two basic ways to measure saving. The cash-flow approach measures saving as income less consumption. The
change-in-wealth measure of saving is based on changes in
market values and is highly volatile.

FEDERAL GOVERNMENT FINANCE
Economic measures of Federal Government activity encompass
all of its spending, taxing, borrowing, and financing policies. Government expenditure and taxation data frequently are used to
argue that government is too big or too small, that it is overly intrusive or insufficiently involved in various sectors of the economy,
or that it neglects a particular constituency or concentrates too



267

many resources on it. A variety of statistics measuring government
activity are found in Appendix Tables B-74 through B-84.
In fiscal 1991 total Federal outlays were about $1.32 trillion, Federal revenues were about $1.05 trillion, and the resulting deficit
was $269 billion. These broad aggregates, however, do not fully
measure the extent of the Federal Government's involvement in
the economy. Through a variety of special tax rules, credit subsidies, mandates, and quotas, the government affects the economy in
ways similar to many tax and spending programs.
CONCEPTS AND MEASURES OF THE BUDGET DEFICIT
Several measures of the Federal budget deficit are shown in
Table 7-1.
TABLE 7-1.—Reconciliation Between Deficits in Fiscal 1990
Item

Billions of dollars

On-budget-to-consolidated reconciliation
On-budget deficit
Plus: Off-budget deficit
Equals: Consolidated deficit.,

277.1
-56.6
220.5

Consolidated-to-primary reconciliation
Consolidated deficit
Minus: Net interest
Minus: Deposit insurance
Equals: Primary deficit (net of deposit insurance)
Consolidated-to-real reconciliation
Consolidated deficit
Minus: Decline in value of outstanding debt..
Equals: Real deficit
Consolidated-to-cyclically adjusted reconciliation
Consolidated deficit
Minus: Deposit insurance
Minus: Other NIPA adjustments1
Equals: NIPA deficit
Minus: Cyclical adjustment
Equals: Cyclically adjusted NIPA deficit..

220.5
184.2
56.7
-20.4
220.5
97.8
122.7
220.5
56.7
6.3
157.5
-18.2
175.7

1
These adjustments include changing the timing of outlays and receipts to NIPA conventions, NIPA geographic exclusion, and
other miscellaneous factors.
Sources: Department of Commerce and Office of Management and Budget.

The on-budget deficit is the difference during a fiscal year between the revenues and outlays that by law are classified as "on
the budget." Currently, the only government operations treated as
"off budget" are Social Security and the Postal Service.
The consolidated deficit is the sum of the on-budget deficit and
the deficit of the off-budget activities, that is, Social Security and
the Postal Service. If the off-budget activities run a surplus, as is
currently the case, the consolidated deficit is lower than the onbudget deficit by the amount of the surplus. Because any surplus
from off-budget programs must be invested in Treasury bonds, the
consolidated deficit measures the borrowing that must be met from
nongovernment sources.
The primary deficit, net of deposit insurance, measures the deficit net of spending on inherited liabilities, such as interest pay


268

ments on the government debt and payments to cover losses in previous years of insured depository institutions. Large current deficits do not imply that the Nation is creating large new burdens for
future generations. Table 7-1 shows that in fiscal 1990 the entire
current consolidated deficit was attributable to deposit insurance
expenditures and net interest payments, which are most properly
viewed as borrowing to finance the continuing costs of previously
incurred liabilities.
Inflation reduces the value of outstanding government debt; it
acts as a tax on holders of debt. The consolidated deficit adjusted
for the reduction in value of government debt due to inflation provides a measure of the real deficit. Table 7-1 shows that this adjustment can be large. In fiscal 1990 the inflation adjustment was
almost half as large as Federal borrowing from nongovernment
sources.
The NIPA deficit measures the difference between government
expenditures and revenues in a manner consistent with national
income accounting. For certain receipts and expenditures, NIPA
conventions involve somewhat different classification and timing
than the on-budget and consolidated budgets. For example, asset
sales and other financial transactions are excluded from the NIPA
deficit. For this reason, outlays for deposit insurance are not included in the current year's NIPA deficit.
Business cycle fluctuations cause changes in the deficit. When
the economy contracts, the government's deficit increases even if
there is no change in tax rates or spending programs. As incomes
fall, tax revenues fall and government expenditures for unemployment and welfare benefits increase. Likewise, when the economy
expands, income tax receipts rise and unemployment and welfare
benefits typically fall. These changes in tax collections and expenditures automatically dampen the impact of economic fluctuations.
That is, they act as automatic stabilizers.
It is informative to separate changes in the deficit that occur
automatically, as a result of cyclical swings in the economy, from
those that result from explicit policy changes, such as changes in
tax rates. This is the purpose of the structural or cyclically adjusted deficit. This measure shows what the NIPA deficit would be,
with existing tax rates and existing programs, if the economy had
no cyclical fluctuations and maintained a constant unemployment
rate of 6 percent. Table 7-1 shows that the unadjusted NIPA deficit
was lower than the cyclically adjusted deficit in fiscal 1990. This
occurred because the unemployment rate was below 6 percent
during fiscal 1990. Because it eliminates the automatic cyclical
changes in tax collections and expenditures, changes in the cyclically adjusted deficit are a better measure of discretionary fiscal
policy than are changes in the unadjusted NIPA deficit.



269

ACCOUNTING FOR GOVERNMENT ASSETS AND
LIABILITIES
Like private businesses, governments have assets and liabilities.
These can be tangible or intangible, and physical or financial. A
government purchase of assets at market value without an accompanying increase in taxes increases measures of the deficit discussed in Table 7-1, even though it increases government assets
and government liabilities by the same amount. To measure
changes in government assets and liabilities in the Federal budget,
a separate capital account would have to be established. The Federal Government would, of course, continue to maintain a current account, which measures revenues arising from and expenses for current operations. With separate current and capital accounts, depreciation on government capital would appear as an expenditure in
the current account.
Because the Federal budget treats all borrowing the same, it imposes a bias in favor of current-account spending relative to spending for long-term infrastructure and productivity-enhancing programs. Furthermore, financing that lowers front-end costs of an acquisition (such as leasing) might be preferred to an economically
superior decision that has higher front-end costs (such as buying).
The budget agreement of 1990 sought to eliminate some of these
biases toward leasing.
Moving to a system of capital accounting would require resolving
some conceptual issues surrounding the definition of capital. First,
valuing intangible capital, such as investment in human capital or
research and development, is problematic. Second, government capital accounting, like private sector capital accounting, would require estimating the depreciation of capital, but how is an aircraft
carrier to be depreciated? Despite these difficulties, however, many
countries and State governments have incorporated aspects of capital accounting.
Separating the Federal budget into a current and capital account
could dramatically alter the way the public views fiscal policy, as
well as the way the public views particular components of government spending. The spending devoted to building the interstate
highway system during the Eisenhower Administration, or the
spending on infrastructure in the Intermodal Surface Transportation Efficiency Act signed by the President in 1991, would be considered investment and thus an addition to government assets. The
value of these assets would decline over time due to depreciation
unless offsetting maintenance or improvement expenditures were
made in the current account.
The United States will adopt the United Nation's system of national accounts (SNAs) in the mid-1990s. The SNA framework will



270

provide more information on government assets and liabilities.
(Box 7-3).
ACCOUNTING FOR INTERGENERATIONAL
REDISTRIBUTION OF WEALTH
The government's assets and liabilities are owned and owed collectively by all of the Nation's citizens. By reducing government
assets or increasing government liabilities, the current generation
can increase its consumption at the expense of future generations.
Many factors affecting intergenerational burdens are not captured
in cash-flow measures of the deficit. For example, a pay-as-you-go
Social Security system would have no impact on the deficit in any
year, but it would redistribute wealth from generations with few
people in the labor force to generations with a large number of
Social Security recipients. Government expenditure on scientific research that is paid for by current taxes does not affect the deficit
but redistributes wealth to future generations who will reap the
benefits of the research.
As discussed in the fiscal 1993 budget, generational accounting is
a new method for comparing the fiscal treatment of different generations. It is still being developed, and a number of the assumptions used are controversial. Generational accounts measure, from
a particular base year, the present value of the future taxes that
the average person of each age is estimated to pay to the government minus the present value of the future transfers that the average person of that age is expected to receive. The difference is the
net payment to government.
ALTERNATIVES TO DIRECT EXPENDITURES AND
TAXES
Government programs frequently are structured in ways that
produce a similar allocation of costs and benefits to society, but
have different effects on measured government spending and taxes.
Direct spending, for example, can be replaced with a tax expenditure, provision of credit guarantees, or a mandate for private
action. Direct taxation can be replaced with a quota or restriction.
These alternatives are not scored in the budget even though the
government influences the economy through their use.
Tax Rules as an Alternative to Expenditures
Many alternatives to direct Federal spending can be found in the
tax code. An example is the deduction for State and local income
and property taxes. This deduction has the same economic effect as
a grant to the individuals paying those taxes. If the deduction were
converted to an actual grant, both reported taxes and reported Federal spending would be higher.



271

Such special tax rules are sometimes known as tax expenditures.
The Congressional Budget Act of 1974 defines tax expenditures as
"revenue losses attributable to provisions of the ... tax laws which
allow a special exclusion, exemption, or deduction from gross
income or which provide a special credit, a preferential rate of tax,
or a deferral of liability." This concept, however, is controversial
because of disagreement over how to define a neutral, or "baseline," tax system—that is, one that is free of special exclusions, exemptions, or deductions.
Direct and Guaranteed Loans
The government often makes loans to finance agriculture, housing, education, medical facilities, purchases of arms by foreign governments, rural development, railroads, and other activities. These
loans can be financed with either taxes or Federal borrowing.
Sometimes, the Federal Government guarantees loans issued by
others. Government loans and guarantees affect the availability of
credit, most notably to homebuyers, students, and small business
owners.
Before the Omnibus Budget Reconciliation Act of 1990, the
budget treated the two kinds of loans very differently. Direct loans
were treated as an expenditure at the time the loan was issued and
as a negative expenditure when the loan was repaid. A loan guarantee was treated as an expenditure only when a default occurred.
Because a direct loan is only costly to the government when a
default occurs, the expected cost of a direct loan is the same as that
of a guarantee of a loan made to the same borrower at the same
terms. As a result of the 1990 budget act, the budget accounts for
direct loans and guaranteed loans in the same manner.
The President's fiscal 1993 budget proposes that these credit
reform principles be extended to deposit insurance and pension
guarantees. Budget outlays for banks and thrifts would be calculated in terms of a measure of accrued costs instead of cash disbursements starting in fiscal 1992. Accrued costs can be measured from
financial information provided quarterly to regulators by each institution. An aggregate measure of accrued costs would constitute
an estimate of what it would cost the insurance fund to recognize
all current insolvencies.
Mandates
As a substitute for direct spending, governments can require individuals or businesses to perform certain actions. The Federal
Government even imposes mandates on State and local governments. Requiring owners of public buildings to install access facilities for handicapped persons, for example, is equivalent to the government installing those facilities with revenues from a tax on



272

building owners. If the latter program were counted in the budget,
it would increase both spending and revenue figures.
Quotas
The Federal Government may also limit certain economic activities through direct prohibition or quotas. This alternative is an important issue in international trade, where both quotas and taxes
(that is, tariffs) commonly are used to restrict imports. A tariff
causes the quantity of imports to fall by increasing their price. A
quota sets specific limits on the quantity of imports. Either a tariff
or a quota on a particular good restricts markets and shifts income
away from consumers of the good toward domestic producers of the
good. Under a tariff, the government collects revenues. Under a
quota, the revenue goes instead to the fortunate businesses who are
granted the right to import the limited quantity.
SUMMARY
• Different measures of the budget deficit are used to gauge the
stimulus to the economy from current policies and the government's borrowing requirements. A new measure is being developed to assess the intergenerational burden of government programs.
• Large current deficits do not in themselves mean that the
Nation is currently generating new large burdens on future
generations. Today, virtually all of the consolidated deficit is
accounted for by deposit insurance and net interest outlays,
which represent borrowing to finance previously incurred liabilities.
• Cash-flow measures of the deficit do not reflect changes in government assets and liabilities. Issuing debt to finance government investment projects represents an increase in both assets
and liabilities, although under current budgetary practices it is
scored as an increase in the deficit.
• The size and effects of government are reflected through a variety of policies such as mandates, quotas, and tax expenditures, as well as through the more obvious channels of spending and taxation.

INTERNATIONAL STATISTICS
As the United States becomes more integrated into the world
economy through trade and financial flows, international forces
exert a greater influence on the Nation's economic performance
and affect the transmission of domestic economic policies to the national economy. International statistics help us better understand
these influences. Data that are comparable across countries can
lead to a better understanding of the interactions among nations'



273

economies and therefore can improve policy coordination and facilitate international negotiations. It is, moreover, natural to want to
compare U.S. economic performance with other countries. Data on
transactions between the United States and the rest of the world,
exchange rates, and a number of measures of economic activity in
other major industrial nations can be found in Appendix Tables B99 through B-108.
WHERE DO INTERNATIONAL DATA COME FROM?
International statistics as they relate to the domestic economy
come from many of the U.S. statistical agencies discussed earlier in
this chapter. For internationally comparable data, the international institutions are the most important source. The Organization for
Economic Cooperation and Development prepares extensive internationally comparable data for the industrial market economies,
including measures of economic activity, labor market structures,
consumption and saving, and financial flows. The International
Monetary Fund compiles data from member countries on a variety
of macroeconomic measures, including monetary and fiscal data,
price indexes, exchange rates, and balance of payments data. The
World Bank publishes development indicators, such as life expectancy and literacy, and measures of the structure of production, exports and outstanding debt, among other data. The United Nations
and the Secretariat of the General Agreement on Tariffs and Trade
prepare disaggregated trade data and compile information on trade
barriers. A host of other organizations keep internationally comparable data on specific topics.
DIFFICULTIES IN INTERNATIONAL COMPARISONS
Each country's data system focuses on and is influenced by the
characteristics of its domestic economy. Because these characteristics vary from country to country, the statistical methodology,
sector detail, and degree of economic aggregation also differ among
countries. Thus, constructing comparable data requires detailed
knowledge of the individual national data sources. Of course, comparable data are only as good as the underlying national data.
Quality and availability of data remain a problem in some countries (Box 7-6). In the developing countries, the funding for statistical systems is particularly tight as governments balance the value
of statistics for policymaking against social needs.
International comparisons often require converting data from
valuation in national currencies to a common unit of account.
Standards of living, for example, are commonly compared by converting per capita GDP into dollars. But how should foreign currencies be converted into dollars? To compare income or living
standards, the exchange-rate conversion should take into account



274

the goods and services that a currency actually can buy within a
country. When calculated using these "purchasing power parity"
exchange rates, U.S. GDP per person in 1990 ranked first in the
world, about 8 percent above the next highest country, Canada; 25
percent above Japan; and 35 percent above Germany.
Box 7-6.—Measuring Economies in Transition
Unique data problems occurred in centrally planned economies where the planning agency that set targets for output
was also the agency that collected statistics- When reporting
data, factory managers had an obvious incentive to tell their
overseer in the planning agency that they had fulfilled their
assigned tasks. The resulting statistics were often poor indicators of what was actually happening in the economy•
Those countries moving toward a market economy and private ownerri»p have generally eliminated centralked pricing
and production quotas, but the statistical framework for measuring market-based transactions is not yet in place. Some privately owned factories in Central and Eastern Europe* for example, are not reporting data to any statistical authority. As
the private sector has grown, "a larger fraction of output has
gone unrecorded. This accounts, in part, for the dramatic decline in measured GDP* Without adequate date, changes in
production and income in these economies, and ultimately the
success of their economic reform programs, are very difficult to
assess. These issues are manifest in Eastern and Central
Europe, and in the new nations of the former Soviet Union.
A common mistake in comparing living standards across countries is the use of market exchange rates to convert GDP from national currencies into dollar terms. Market exchange rates affect
what people can buy from foreign countries, and therefore are an
appropriate measure of the purchasing power of income only if
people spend all of their income on foreign goods or services. Americans, for example, spent only about 14 percent of their income on
imports between 1988 and 1990. To see how misleading market exchange rates can be, consider an example. In 1985 German per
capita income calculated using market exchange rates was 63 percent below the United States. Real income per capita grew about 5
percent more in Germany than in the United States over the next
5 years. Yet, when compared at the market exchange rate, income
per person in Germany had vaulted 9 percent ahead of the United
States by 1990. This anomaly is explained by the sharp real depreciation of the dollar against the German mark; as noted above,
using the prices of products actually purchased in each country, in



275

1990 real GDP per capita was 34 percent higher in the United
States than in Germany.
INTERNATIONAL COMPETITIVENESS
Global integration has heightened interest in U.S. international
competitiveness, another difficult concept to define and measure.
Chart 7-4 shows movements in three measures of international
competitiveness. Relative unit labor costs measure changes in the
relative cost competitiveness of goods produced with U.S. labor.
Relative average unit value of manufactured exports indicates
changes in the relative price competitiveness of U.S. exports. The
real exchange rate is the nominal exchange rate adjusted for
changes in the relative consumer price indexes at home and abroad
and therefore broadly indicates changes in the real purchasing
power of money in terms of foreign goods and services.
Chart 7-4 Measures of U.S. Competitiveness
All measures of U.S. competitiveness have improved, but the competitiveness of U.S. labor has improved
the most.
Index, 1985 = 100
120

Declining relative
costs and increasing
competitiveness

110

1980

1981 1982 1983 1984 1985 1986 1987 1988 1989 1990
Real Effective
Relative Unit Labor
Relative Unit Value of
Exchange Rate Costs in Manufacturing Manufactured Exports

Source: International Monetary Fund.

All three series show the same trend because the nominal exchange rate is a common factor in all three measures. Nonetheless,
these indexes do differ significantly. From 1985 to 1990, U.S. international competitiveness based on relative unit labor costs improved 60 percent more than the measure based on relative unit
value of exports of manufactured goods. The difference occurs because unit labor costs measure only one input into the production



276

process for exports, because the unit value of manufactured exports
can move differently from labor costs due to changes in exporters'
price-cost margins, and because real exchange rates are affected by
differences across countries in the composition of consumer market
baskets that include nontraded goods and services.
DISCREPANCIES IN INTERNATIONAL ACCOUNTS
Because international data systems vary and statistical systems
sometimes are limited, international flows of goods, services, and
capital may be mismeasured, and worldwide aggregates may deviate from accounting identities. In theory, for example, the sum of
all of the world's current account balances should equal zero—one
country's exports of goods and services and investment income are
another country's imports of goods and services and investment
payments. Likewise, the global capital account should sum to
zero—one country's capital outflows are another country's investment from abroad. After carefully accounting for flows of goods,
services, and investment income, the global current account has
been calculated at close to zero. Several statistical agencies have
tried to account for all international flows of capital, but without
complete success; the calculated global capital account in 1989 was
about $80 billion. That implies that all the countries of the world
combined were a net importer of capital—an obvious impossibility.
The U.S. international accounts show a discrepancy between current account and capital account transactions of $18 billion in 1989
and $64 billion—more than 1 percent of GDP—in 1990. The discrepancy, which is both large and volatile, arises from imperfect recording of many items in both the capital and current accounts. An
important source of the discrepancy is the underreporting of investment income that is based on estimates of U.S. portfolio investment abroad. The last benchmark of these data occurred during
World War II; it has been proposed that a new benchmark be
made. In addition, financial innovation and the globalization of financial markets have made capital flows more difficult to track accurately. Direct transactions between U.S. and foreign residents
bypass the recording system altogether. Moreover, increased foreign holdings of U.S. currency abroad is omitted entirely from the
accounts and was an important source of the U.S. statistical discrepancy in 1990.
SUMMARY
• Internationally comparable data lead to a better understanding of the interactions among nations' economies. Yet, accurate
comparisons are often difficult because each country's data
system focuses on and is influenced by characteristics of the
domestic economy.




277

• Exchange rates are often required to compare data recorded in
different currencies. The choice of exchange rate has an important effect on the comparison and must be made with care.
• The difficulty of generating internationally comparable data is
illustrated by the discrepancy between recorded current and
capital accounts, both for the United States and for the world.

CONCLUSION
Economic data are essential tools for describing the state of the
economy, investigating how the economic well-being of the Nation
has changed over time, and comparing the economic performance
of the United States with that of other countries. Economic data
are valuable inputs to the decisionmaking processes of individuals,
businesses, and public policymakers.
Users of economic data should be aware of a number of factors
that can complicate their analyses. The available economic data
may not correspond well to the concept the analyst wants to measure. Changes in the structure of the economy can alter the relationships among various economic statistics and may render certain measures obsolete. It takes time to become familiar with new
definitions, refined methodologies, and improved reporting conventions. Some economic statistics—particularly early estimates based
on incomplete data—contain measurement error and must be used
with caution.
The economy is made up of complex interactions among individuals, businesses, and government, and these relationships change
rapidly. By continually developing new measurement techniques
and improving the accuracy and collection of statistics, the Nation's statistical system can reflect these changes and provide a
more complete framework for understanding the economy.




278

Appendix A
REPORT TO THE PRESIDENT ON THE ACTIVITIES
OF THE
COUNCIL OF ECONOMIC ADVISERS DURING 1991







LETTER OF TRANSMITTAL
COUNCIL OF ECONOMIC ADVISERS

Washington, D.C., December 31, 1991
MR. PRESIDENT:

The Council of Economic Advisers submits this report on its
activities during the calendar year 1991 in accordance with the
requirements of the Congress, as set forth in section 10(d) of the
Employment Act of 1946 as amended by the Full Employment and
Balanced Growth Act of 1978.
Sincerely,




Michael J. Boskin, Chairman
David F. Bradford, Member
Paul Wonnacott, Member

281

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
Kermit Gordon
Gardner Ackley
John P. Lewis
Otto Eckstein
Arthur M. Okun
James S. Duesenberry....
Merton J. Peck
Warren L. Smith
Paul W. McCracken
Hendrik S. Houthakker....
Herbert Stein
Ezra Solomon
Marina v.N. Whitman
Gary L Seevers
William J. Fellner
Alan Greenspan
Paul W. MacAvoy
Burton G. Malkiel
Charles L Schultze
William D. Nordhaus
Lyle E. Gramley
George C. Eads
Stephen M. Goldfeld
Murray L. Weidenbaum....
William A. Niskanen
Jerry L Jordan
Martin Feldstein
William Poole
Beryl W. Sprinkel
Thomas Gale Moore
Michael L Mussa
Michael J. Boskin
John B. Taylor
Richard L. Schmalensee...
David F. Bradford
Paul Wonnacott




Oath of office date

Position
Chairman
Vice Chairman
Acting Chairman..
Chairman
Member
Vice Chairman
Member
Member
Chairman
Member
Member
Member
Chairman......
Member
Member
MemberMember
Chairman...
Member
Member
Member
Chairman..
Member
Member
Member
Chairman..,
Member
Member
Member
ChairmanMember
Member
Chairman..
Member....
Member
Member
Member
Chairman..
Member....
Member....
Chairman..
Member..
Member..
Member....
Member....
Chairman..
Member....
Member....
Chairman..
Member....
Chairman..
Member....
Member....
Chairman..
Member....
Member....
Member....
Member....

August 9, 1946
August 9, 1946
November 2, 1949
May 10, 1950
August 9, 1946
May 10, 1950
June 29, 1950
September 8, 1952
March 19, 1953
September 15, 1953...
December 2, 1953
April 4, 1955
December 3, 1956
May 2, 1955
December 3, 1956
November 1, 1958
May 7, 1959
January 29, 1961
January 29, 1961
January 29, 1961
August 3, 1962
November 16, 1964....
May 17, 1963
September 2, 1964
November 16, 1964....
February 15, 1968
February 2, 1966
February 15, 1968
July 1, 1968
February 4, 1969
February 4, 1969
February 4, 1969
January 1, 1972
September 9, 1971
March 13, 1972
July 23, 1973
October 3 1 , 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
February 2, 1989
June 9, 1989
October 3, 1989
November 13, 1991..
November 13, 1991..

282

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 3 1 , 1958.
January 3 1 , 1959.
January 20, 1961.
January 20, 1961.
November 15, 1964.
July 3 1 , 1962.
December 27, 1962.
February 15, 1968.
August 3 1 , 1964.
February 1, 1966.
January 20, 1969.
June 30, 1968.
January 20, 1969.
January 20, 1969.
December 3 1 , 1971.
July 15, 1971.
August 3 1 , 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 3 1 , 1982.
July 10, 1984.
January 20, 1985.
January 20, 1989.
May 1, 1989.
September 19, 1988.
August 2, 1991
June 2 1 , 1991

Report to the President on the Activities of the
Council of Economic Advisers During 1991
THE MISSION OF THE PRESIDENT'S Council of Economic Advisers, which was established by the Employment Act of 1946, is to
provide the President with the best possible economic advice, to develop and recommend economic policies to the President, and to appraise programs and activities of the Federal Government as they
pertain to the health of the Nation's economy. In addition to the
Council's role in directly advising the President, the Council is represented, usually by the Chairman, at Cabinet meetings, meetings
of the Economic Policy Council, the Domestic Policy Council, and
the Council on Competitiveness, and at National Security Council
meetings on issues of economic importance.
Michael J. Boskin continued to serve as Chairman in 1991. Dr.
Boskin is on a leave of absence from Stanford University, where he
is the Burnet C. and Mildred Finley Wohlford Professor of Economics. The President nominated David F. Bradford and Paul Wonnacott as the two other Members of the Council on September 6,
1991. After Senate confirmation, Dr. Bradford and Dr. Wonnacott
were sworn in on November 13, 1991. Dr. Bradford is on a leave of
absence from Princeton University, where he is a Professor of Economics and Public Affairs. Dr. Wonnacott came to the Council
from the University of Maryland, where he was a Professor of Economics. Richard L. Schmalensee resigned as a Member on June 21,
1991, to return to the Massachusetts Institute of Technology, where
he is the Gordon Y Billard Professor of Economics and Management and Director of the Center for Energy and Environmental
Policy Research. John B. Taylor resigned as a Member on August
2, 1991, and returned to Stanford University, where he is a Professor of Economics.
As in previous years, the Council in 1991 continued to stress the
importance of maximizing sustainable economic growth to raise
American living standards, setting ambitious but realistic longterm economic goals, and removing barriers to market forces. In its
interactions with various outside groups—the Congress, the business community, international organizations, the press—as well as
within the Administration, the Council continued to emphasize the
Administration's fiscal, monetary, regulatory, and trade policy
principles. This year's Economic Report follows the previous two
Economic Reports of this Administration in outlining these princi


283

pies and indicating how they contribute to strong economic growth
and improved standards of living.
The recession that began in the second half of 1990, following the
longest peacetime expansion in the Nation's history, continued as
the U.S. economy entered 1991. The recession appeared to end in
the spring, with the beginning of a very modest recovery boosting
production, employment, and spending into the summer. Total
output grew in the second and third quarters and recovered about
one-half of the decline that occurred during the recession. In midsummer, however, the economy flattened out, and production, employment, and spending faltered late in the year.
The first years of the 1990s served as a reminder that the economy faces the risk of setbacks from external shocks and other disturbances. Economic expansions do not end on their own; they end
as a result of the working-off of economic imbalances, inappropriate economic policies, or external shocks to the economy. The 199091 recession was associated with all three: Attempts by households,
corporations, and the Federal Government to work off imbalances
and reduce debt created structural adjustment problems for the
economy. The lagged effects of a restrictive monetary policy initiated in 1988 to contain inflationary pressures, along with a credit
crunch, engendered a slowdown in growth beginning in 1989. The
Iraqi invasion of Kuwait in August 1990 produced a sharp rise in
world oil prices, followed by a plummeting in business and consumer confidence.
In the Council's view, the Nation faces serious challenges and
cannot take economic growth for granted. Abiding by sound economic policy principles is therefore all the more important. The
Administration's policies are designed to support sustained increases in the standard of living by raising the Nation's long-run
productivity growth. Such policies include a pro-growth fiscal
policy that enhances incentives for entrepreneurship, saving, and
investment and continues to reduce the multiyear structural
budget deficit; a trade policy that promotes growth through opening markets worldwide; and a regulatory policy that avoids unnecessary burdens on business and consumers. The Administration
also supports a monetary policy that promotes real growth while
maintaining low and stable inflation. Implementing these policies
would greatly improve the prospects for growth in the U.S. economy in 1992 and beyond.
MACROECONOMIC POLICIES
Throughout the year, the Council emphasized the importance of
credible, systematic fiscal and monetary policies as a key to mitigating the recession and ultimately sustaining maximum economic
growth. The Council briefed the President and participated in regu


284

lar discussions on macroeconomic policy issues with the Department of the Treasury, the Office of Management and Budget
(OMB), and other members of the President's economic team. The
Council also regularly exchanged information and met with the
Federal Reserve Board on monetary policy issues and the economic
outlook.
The Council, Treasury, and OMB—the "Troika"—continued to
produce the Administration's economic forecasts and projections.
Two official forecasts are published each year: one at the start of
the year, which is used as part of the President's budget, and one
as part of the mid-session budget review in July. The Council
chairs the Troika's forecasting group. In preparing its forecasts, the
Troika continued the practice, initiated in the first year of the Administration, of indicating that the forecasts and resulting budget
calculations have a considerable degree of uncertainty.
The Council continued to work to improve the general understanding of economics and the quality of economic information
through a comprehensive series of memoranda and briefing papers
on economic events for the President and the White House Senior
Staff, regular briefings for the White House press on major economic news, and meetings with outside economists, forecasters, financial analysts, and business executives. The Chairman and the
other Council Members appeared before numerous other organizations to explain the Administration's economic principles, policies,
and outlook.
Dr. Boskin continued to chair the Working Group on the Quality
of Economic Statistics. Based on the report of the working group,
the President approved a list of 25 recommendations for improving
economic statistics. During 1991 the Council worked closely with
the major Federal statistical agencies to implement these recommendations.
The Council was one of the leading participants in the formulation of the Administration's economic policies through various Cabinet and sub-Cabinet working groups. In testimony to the Congress
and in talks to business and other groups, the Chairman and Council Members stressed the importance of lowering the structural
Federal budget deficit, shifting the composition of Federal spending
toward investment in productive infrastructure and research and
development, and maintaining and improving the structure of incentives in the tax system to work, save, invest, and innovate.
INTERNATIONAL ECONOMIC POLICIES
International economic issues again occupied a substantial part
of the Council's time during 1991. The Chairman and Council
Members stressed the benefits of free trade and open markets for
goods, services, and investment, and they emphasized the risk to

http://fraser.stlouisfed.org/
305-592 0—92
Federal Reserve Bank of St. Louis

285
10

world economic growth posed by rising protectionism. The Council
participated in formulating Administration policy on the Uruguay
Round of the General Agreement on Tariffs and Trade, the proposed North American free-trade agreement, the Enterprise for the
Americas Initiative, and many other issues pertaining to international trade policy. The Council also participated in formulating
Administration positions on legislation in the international area.
The Council's involvement in economic reform in Eastern Europe
and the former Soviet Union increased during 1991. Dr. Boskin was
one of the three coordinators of U.S. assistance to Eastern Europe.
He also chaired a working group on economic reform in the former
Soviet Union and held numerous discussions in Washington with
officials from the former Soviet bloc.
Dr. Boskin traveled to Paris as part of the U.S. delegation to the
Organization for Economic Cooperation and Development (OECD)
Ministerial Meeting. He also served as Chairman of the OECD Economic Policy Committee. Dr. Wonnacott led the U.S. delegation to
the Economic and Development Review Committee at the OECD to
assess U.S. economic policy. He was also a member of the U.S. delegation to the OECD Working Party 3 on macroeconomic policy coordination. Dr. Bradford headed the U.S. delegation to the OECD
Working Party 1 meetings on microeconomic and structural issues.
The Council provided the President and the White House Senior
Staff with regular briefings and analytical materials on international developments and participated in preparations for the Economic Summit in London.
The Council also participated in discussions on a wide range of
issues—including developing-country debt, economic reform in
Eastern Europe, and macroeconomic policy coordination—with
other members of the Administration, the Federal Reserve, the
World Bank, the International Monetary Fund, and representatives of other countries. The Council Members and the Council
Senior Staff conducted numerous briefings on the U.S. economy for
visiting officials and scholars.
MICROECONOMIC POLICIES
The Administration considered and proposed action this year on
a wide range of microeconomic issues. In its work in this area, the
Council repeatedly stressed that government regulation must pass
careful cost-benefit tests and that where regulation is appropriate,
it should be formulated to allow workers and firms maximum flexibility, as well as to provide incentives to meet social goals in the
least costly manner. The Council worked with other agencies to
ensure that the rules implementing the newly enacted amendments to the Clean Air Act balance costs and benefits in protecting
the environment and minimize the costs of regulation to the maxi


286

mum extent possible. The Council was also instrumental in ensuring that other legislative initiatives were designed to achieve reforms in a more cost-effective manner. The Council emphasized the
principles of promoting flexibility, enhancing incentives, and placing maximum reliance on the private sector in a wide range of
policy areas.
As a member of the Environmental Policy Review Group, Dr.
Bradford dealt with a wide range of environmental issues, including analysis of the emissions allowance trading system under the
Clean Air Act, global change, and reauthorization of the Resource
Recovery and Conservation Act and the Comprehensive Environmental Response, Compensation, and Liability Act. He also participated in a variety of working groups on health care policy, income
distribution, financial institution reform and regulation, public
debt auctions, tax policy, telecommunications, energy markets, job
training reform, automobile insurance, science and technology
policy, drug policy, and empowerment.
PUBLIC INFORMATION
The Chairman and Council Members regularly testify before the
Congress, make public speeches, and hold news briefings. In addition, the Council produces two publications a year for the public.
The Economic Report of the President is the principal medium
through which the Council informs the public of its work and its
views. It is an important vehicle for presenting the Administration's domestic and international economic policies. Annual distribution of the Economic Report in recent years has averaged about
45,000 copies. The Council 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.
THE COUNCIL AND THE STAFF
The Chairman is responsible for communicating the Council's
views on economic developments to the President through personal
discussions and written reports. The Chairman also represents the
Council at daily White House Senior Staff meetings, at budget
review group meetings with the President, and at many other
formal and informal meetings with the President and White House
Senior Staff, as well as with other senior government officials. The
Chairman guides the work of the Council and is ultimately responsible for directing the work of the professional staff.
Members of the Council are responsible for the full range of
issues within the Council's purview and for the direct supervision
of the work of the professional staff. Members represent the Council at a wide variety of interagency and international meetings and




287

assume major responsibility for selecting issues for Council attention.
The small size of the Council permits the Chairman and the
Members to work as a team on most policy issues. There is, however, an informal division of subject matter. Dr. Bradford is primarily
responsible for microeconomic and sectoral analysis, including
analyses of regulatory issues. Dr. Wonnacott is primarily responsible for international issues and macroeconomic analysis, including
economic projections.
PROFESSIONAL STAFF
The Council's advice to the President depends on the analytical
and empirical studies of its professional staff. The Council has benefited from an extraordinarily capable staff during 1991. The professional staff currently consists of the Special Assistant to the
Chairman and Senior Staff Economist, a Staff Assistant to the
Chairman, a Senior Statistician, 10 Senior Staff Economists, 7
Junior Staff Economists, and a Research Assistant. The professional staff and their respective areas of concentration at the end of
1991 were:
Special Assistant to the Chairman and Senior Staff Economist
Harry G. Broadman

International Trade and Investment,
Science and Technology, and Regulation

Staff Assistant to the Chairman
Shelley A. Slomowitz

Senior Staff Economists
David S. Bizer
Randall W. Eberts
William G. Gale
Joseph W. Glauber
Andrew S. Joskow
John H. Kitchen
Spencer D. Krane

Raymond L. Squitieri

Financial Markets, Banking, and Insurance
Labor Markets and Education
Public Finance
Agriculture and International Trade
Regulation and Energy
Macroeconomics and Forecasting
Macroeconomics, Monetary Policy, and
Quality of Statistics
International Macroeconomics and the
former Soviet Bloc
Energy and Environment

Robert W. Staiger

International Trade

Catherine L. Mann




Senior Statistician
Catherine H. Furlong
288.

Junior Staff Economists
Jeffrey S. Gray
John A. Higgins
Thomas N. Hubbard
Philip I. Levy
Nancy L. Maritato
Derek H. Utter
Michael G. Williams

Labor Markets, Education, and Public
Finance
Macroeconomics
Regulation and Natural Resources
International Trade
Public Finance and Labor Markets
International Macroeconomics and Finance
Public Finance and Financial Markets

Research Assistant
Kimberly J. O'Neill

Forecasting, Macn>economics, and Public
Finance

David G. Fernandez (Princeton University) served as a Junior
Staff Economist during the summer of 1991. K. C. Fung (University
of California, Santa Cruz) joined the Council as a Senior Staff Economist in January 1992.
Mrs. Furlong is assisted in the operation of the Statistical Office
by Susan P. Clements, Linda A. Reilly, and Margaret L. Snyder.
The Statistical Office maintains and updates the Council's statistical information system and is responsible for overseeing the publication of the Economic Indicators and the statistical appendix to
the Economic Report of the President, as well as for the verification
of statistics in memoranda, testimony, and speeches.
Martha V. Gottron provided editorial assistance in the preparation of the 1992 Economic Report.

SUPPORTING STAFF
The Administrative Office, which provides general support for
the Council's activities, consists of Elizabeth A. Kaminski, Administrative Officer, and Catherine Fibich, Administrative Assistant.
The Secretaries for the Council during 1991 were Alice H. Williams and Sandra F. Daigle (Secretaries to the Chairman), Lisa D.
Branch (Secretary to Dr. Wonnacott), and Francine P. Obermiller
(Secretary to Dr. Bradford). The Secretaries for the Council's staff
were Mary E. Jones, Rosalind V. Rasin, Mary A. Thomas, and
Janet J. Twyman.
Brian Amorosi, H. Brill Bundy, David J. Kogut, Ian B. Goldberg,
and Lissa J. Rideout served as Student Assistants during 1991.
Dorothy Bagovich served as a Statistical Assistant during the preparation of the 1992 Economic Report.
DEPARTURES

The Council's Senior Staff Economists, in most cases, are on
leave of absence from faculty positions at academic institutions or
from other government agencies or research institutions. Their



289

tenure with the Council is usually limited to 1 or 2 years. Most of
the Senior Staff Economists who resigned during the year returned
to their previous affiliations. They are Nicole S. Ballenger (U.S. Department of Agriculture), Michael W. Horrigan (Bureau of Labor
Statistics), Charles J. Jacklin (Stanford University), Adam B. Jaffe
(Harvard University), Robert B. Kahn (Board of Governors of the
Federal Reserve System), Ralph M. Monaco (U.S. Department of
Agriculture), and John K. Scholz (University of Wisconsin). Others
went on to new positions: They are Richard E. Baldwin (Graduate
Institute of International Studies in Geneva), Howard K. Gruenspecht (U.S. Department of Energy), Peter F. Kostiuk (KPMG Peat
Marwick), and James A. Wilcox (Board of Governors of the Federal
Reserve System).
Junior Staff Economists generally are graduate students who
spend 1 year with the Council and then return to complete their
doctoral programs. Those who returned to their graduate studies in
1991 are Eric D. Craft (University of Chicago), Alison F. Del Rossi
(University of Pennsylvania), Brian J. Hall (Harvard University),
and Arik M. Levinson (Columbia University). Mark A. Condon
(Urban Institute) and Naomi S. Smith went on to new positions.
Natalie V. Rentfro, Statistical Assistant, retired in 1991 after
having served the Council for 20 years; she returned in 1992 to
assist in the preparation of this Economic Report. Stefanie J.
Reiser, Staff Assistant to the Chairman, resigned to join the Washington staff of the Governor of California.




290

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-13.
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.

Gross domestic product, 1959-91
Gross domestic product in 1987 dollars, 1959-91
Implicit price deflators for gross domestic product, 1959-91
Changes in gross domestic product and personal consumption expenditures, and related implicit price deflators and fixedweighted price indexes, 1960-91
Selected per capita product and income series in current and
1987 dollars, 1959-91
Gross domestic product by major type of product, 1959-91
Gross domestic product by major type of product in 1987 dollars,
1959-91
Gross domestic product by sector, 1959-91
,
Gross domestic product by sector in 1987 dollars, 1959-91
Gross domestic product of nonflnancial corporate business, 195991
Output, costs, and profits of nonfinancial corporate business,
1959-91
Personal consumption expenditures, 1959-91
Personal consumption expenditures in 1987 dollars, 1959-91
Gross and net private domestic investment, 1959-91
Gross and net private domestic investment in 1987 dollars, 195991
Inventories and final sales of domestic business, 1959-91
Inventories and final sales of domestic business in 1987 dollars,
1959-91
-.
Foreign transactions in the national income and product accounts, 1959-91
Exports and imports of goods and services and receipts and payments of factor income in 1987 dollars, 1959-91
Relation of gross domestic product, gross national product, net
national product, and national income, 1959-91
Relation of national income and personal income, 1959-91
National income by type of income, 1959-91
Sources of personal income, 1959-91
Disposition of personal income, 1959-91
Total and per capita disposable personal income and personal
consumption expenditures in current and 1987 dollars, 1959-91
Gross saving and investment, 1959-91
Personal saving, flow of funds accounts, 1946-91
Median income (in 1990 dollars) and poverty status of families
and persons, by race, selected years, 1971-90




293

298
300
302

304
305
306
307
308
309
310
311
312
313
314
315
316
317
318
319
320
321
322
324
326
327
328
329
330

POPULATION, EMPLOYMENT, WAGES, AND PRODUCTIVITY:
B-29. Population by age groups, 1929-90
B-30. Population and the labor force, 1929-91
B-31. Civilian employment and unemployment by sex and age, 1947-91
B-32. Civilian employment by demographic characteristic, 1954-91
B-33. Unemployment by demographic characteristic, 1954-91
B-34. Labor force participation rate and employment/population ratio,
1948-91
B-35. Civilian labor force participation rate by demographic characteristic, 1954-91
B-36. Civilian employment/population ratio by demographic characteristic, 1954-91
B-37. Unemployment rate, 1948-91
B-38. Civilian unemployment rate by demographic characteristic,
1948-91.
B-39. Unemployment by duration and reason, 1947-91
B-40. Unemployment insurance programs, selected data, 1960-91
B-41. Employees on nonagricultural payrolls, by major industry, 194691
B-42. Average weekly hours and hourly and weekly earnings in private nonagricultural industries, 1955-91
B-43. Employment cost index, private industry, 1979-91.....
B-44. Productivity and related data, business sector, 1959-91
B-45. Changes in productivity and related data, business sector, 196091
PRODUCTION AND BUSINESS ACTIVITY:
B-46. Industrial production indexes, major industry divisions, 1947-91..
B-47. Industrial production indexes, market groupings, 1947-91
B-48. Industrial production indexes, selected manufacturers, 1947-91....
B-49. Capacity utilization rates, 1948-91
B-50. New construction activity, 1929-91
B-51. New housing units started and authorized, 1959-91
B-52. Business expenditures for new plant and equipment, 1947-92
B-53. Manufacturing and trade sales and inventories, 1950-91
B-54. Manufacturers' shipments and inventories, 1950-91
B-55. Manufacturers' new and unfilled orders, 1950-91
PRICES:
B-56.
B-57.
B-58.
B-59.
B-60.
B-61.
B-62.
B-63.
B-64.

Consumer price indexes, major expenditure classes, 1950-91
Consumer price indexes, selected expenditure classes, 1950-91
Consumer price indexes, commodities, services, and special
groups, 1950-91
Changes in special consumer price indexes, 1958-91
Changes in consumer price indexes, commodities and services,
1929-91
Producer price indexes by stage of processing, 1947-91
Producer price indexes by stage of processing, special groups,
1974-91
Producer price indexes for major commodity groups, 1950-91
Changes in producer price indexes for finished goods, 1955-91




294

Page

331
332
334
335
336
337
338
339
340
341
342
343
344
346
347
348
349
350
351
352
353
354
356
357
358
359
360
361
362
364
365
366
367
369
370
372

MONEY STOCK, CREDIT, AND FINANCE:
B-65. Money stock, liquid assets, and debt measures, 1959-91
B-66. Components of money stock measures and liquid assets, 1959-91..
B-67. Aggregate reserves of depository institutions and monetary base,
1959-91
B-68. Commercial bank loans and securities, 1972-91
B-69. Bond yields and interest rates, 1929-91
B-70. Total funds raised in credit markets by nonfinancial sectors,
1982-90
B-71. Mortgage debt outstanding by type of property and of financing,
1940-91
B-72. Mortgage debt outstanding by holder, 1940-91
B-73. Consumer credit outstanding, 1950-91
GOVERNMENT FINANCE:
B-74. Federal receipts, outlays, surplus or deficit, and debt, selected
fiscal years, 1929-93
,
B-75. Federal receipts, outlays, and debt, fiscal years 1981-93
B-76. Relation of Federal Government receipts and expenditures in the
national income and product accounts to the budget, fiscal
years 1989-91
B-77. Federal and State and local government receipts and expenditures, national income and product accounts, 1959-91
B-78. Federal and State and local government receipts and expenditures, national income and product accounts, by major type,
1959-91
B-79. Federal Government receipts and expenditures, national income
and product accounts, 1975-91
B-80. State and local government receipts and expenditures, national
income and product accounts, 1959-91
B-81. State and local government revenues and expenditures, selected
fiscal years, 1927-90
B-82. Interest-bearing public debt securities by kind of obligation,
1967-91
B-83. Maturity distribution and average length of marketable interestbearing public debt securities held by private investors, 196791
B-84. Estimated ownership of public debt securities by private investors, 1976-91
CORPORATE PROFITS AND FINANCE:
B-85. Corporate profits with inventory valuation and capital consumption adjustments, 1959-91
B-86. Corporate profits by industry, 1959-91
B-87. Corporate profits of manufacturing industries, 1959-91
B-88. Sales, profits, and stockholders' equity, all manufacturing corporations, 1950-91
B-89. Relation of profits after taxes to stockholders' equity and to
sales, all manufacturing corporations, 1947-91
B-90. Sources and uses of funds, nonfarm nonfinancial corporate business, 1947-91
B-91. Common stock prices and yields, 1952-91
B-92. Business formation and business failures, 1950-91




295

Page

373
374
376
377
378
380
382
383
384

385
386

388
389

390
391
392
393
394

395
396

397
398
399
400
401
402
403
404

AGRICULTURE:
B-93. Farm income, 1940-91
B-94. Farm output and productivity indexes, 1947-91
B-95. Farm input use, selected inputs, 1947-90
B-96. Indexes of prices received and prices paid by farmers, 1950-91
B-97. U.S. exports and imports of agricultural commodities, 1940-91
B-98. Balance sheet of the farm sector, 1939-91
INTERNATIONAL STATISTICS:
B-99. International investment position of the United States at yearend, 1982-90
B-100. U.S. international transactions, 1946-91
B-101. U.S. merchandise exports and imports by principal end-use category, 1965-91
B-102. U.S. merchandise exports and imports by area, 1982-91
B-103. U.S. merchandise exports, imports, and trade balance, 1972-91
B-104. International reserves, selected years, 1952-91
B-105. Industrial production and consumer prices, major industrial
countries, 1967-91
B-106. Civilian unemployment rate, and hourly compensation, major industrial countries, 1965-91
B-107. Foreign exchange rates, 1967-91
:
B-108. Growth rates in real gross national product/gross domestic
product, 1971-91
NATIONAL WEALTH:
B-109. National wealth, 1945-90
B-110. National wealth in 1982 dollars, 1945-90




296

Page

405
406
407
408
409
410

411
412
414
415
416
417
418
419
420
421
422
423

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:
^Preliminary.
Not available (also, not applicable).
Data in these tables reflect revisions made by the source agencies from
January 1901 through January 1902. In particular, tables containing
data from the national income and product accounts reflect the recent
comprehensive (benchmark) revision*




297

NATIONAL INCOME OR EXPENDITURE
TABLE B-l.—Gross domestic product, 1959-91
[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

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
1988
1989
1990
1991 "
1982: IV...
1983: IV...
1984: IV...
1985: IV...
1986: IV...
1987: IV...
1988:1
II....
III...
IV...
1989:1

1990:1

II ....
III...
IV...
II....
III...
IV...
1991:1
II....
III ...
IV.

Gross
domestic
product

494.2
513.4
531.8
571.6
603.1
648.0
702.7
769.8
814.3
889.3
959.5
1,010.7
1,097.2
1,207.0
1,349.6
1,458.6
1,585.9
1,768.4
1,974.1
2,232.7
2,488.6
2,708.0
3,030.6
3,149.6
3,405.0
3,777.2
4,038.7
4,268.6
4,539.9
4,900.4
5,244.0
5,513.8
5,671.8
3,195.1
3,547.3
3,869.1
4,140.5
4,336.6
4,683.0
4,752.4
4,857.2
4,947.3
5,044.6
5,139.9
5,218.5
5,277.3
5,340.4
5,422.4
5,504.7
5,570.5
5,557.5
5,589.0
5,652.6
5,709.2
5,736.6

Total

318.1
332.4
343.5
364.4
384.2
412.5
444.6
481.6
509.3
559.1
603.7
646.5
700.3
767.8
848.1
927.7
1,024.9
1,143.1
1,271.5
1,421.2
1,583.7
1,748.1
1,926.2
2,059.2
2,257.5
2,460.3
2,667.4
2,850.6
3,052.2
3,296.1
3,517.9
3,742.6
3,886.8
2,128.7
2,346.8
2,526.4
2,739.8
2,923.1
3,124.6
3,199.1
3,260.5
3,326.6
3,398.2
3,436.5
3,490.6
3,551.7
3,592.8
3,667.3
3,706.0

3,785.2
3,812.0
3,827.7
3,868.5
3,916.4
3,934.4

NonDurable durable Services
goods goods

42.8
43.5
41.9
47.0
51.8
56.8
63.5
68.5
70.6
81.0
86.2
85.3
97.2
110.7
124.1
123.0
134.3
160.0
182.6
202.3
214.2
212.5
228.5
236.5
275.0
317.9
352.9
389.6
403.7
437.1
459.8
465.9
445.2
246.9
297.7
328.2
354.4
406.8
408.8
428.8
433.1
433.5
452.9
449.4
457.2
474.5
458.0
479.9
464.6
467.1
451.9
440.7
440.0
452.9
447.2

148.5
153.1
157.4
163.8
169.4
179.7
191.9
208.5
216.9
235.0
252.2
270.4
283.3
305.2
339.6
380.8
416.0
451.8
490.4
541.5
613.3
682.9
744.2
772.3
817.8
873.0
919.4
952.2
1,011.1
1,073.8
1,146.9
1,217.7
1,251.0
787.3
839.8
887.8
939.5
963.7
1,029.4
1,041.5
1,062.0
1,085.8
1,105.8
1,120.0
1,142.5
1,155.3
1,169.8
1,194.9
1,200.9
1,228.4
1,246.4
1,246.3
1,252.9
1,257.4
1,247.6

126.8
135.9
144.1
153.6
163.1
175.9
189.2
2C4.6
221.7
243.1
265.3
290.8
319.8
351.9
384.5
423.9
474.5
531.2
598.4
677.4
756.2
852.7
953.5
1,050.4
1,164.7
1,269.4
1,395.1
1,508.8
1,637.4
1,785.2
1,911.2
2,059.0
2,190.5
1,094.6
1,209.3
1,310.4
1,446.0
1,552.6
1,686.4
1,728.8
1,765.4
1,807.3
1,839.5
1,867.1
1,891.0
1,921.9
1,965.0
1,992.5
2,040.4
2,089.6
2,113.6
2,140.7
2,175.6
2,206.1
2,239.6

See next page for continuation of table.




298

Nonresidential
Total

78.8
78.7
77.9
87.9
93.4
101.7
118.0
130.4
128.0
139.9
155.2
150.3
175.5
205.6
243.1
245.8
226.0
286.4
358.3
434.0
480.2
467.6
558.0
503.4
546.7
718.9
714.5
717.6
749.3
793.6
837.6
802.6
725.3
464.2
614.8
722.8
737.0
697.1
800.2
770.6
788.4
800.7
814.8
844.7
844.3
826.8
834.4
812.0
825.9
821.8
750.9
709.3
708.8
740.9
742.3

Total

74.6
75.5
75.0
81.8
87.7
96.7
108.3
116.7
117.6
130.8
145.5
148.1
167.5
195.7
225.4
231.5
231.7
269.6
333.5
406.1
467.5
477.1
532.5
519.3
552.2
647.8
689.9
709.0
723.0
777.4
801.6
802.7
745.6
510.5
594.6
671.8
704.4
715.9
740.9
753.8
774.6
783.6
797.5
801.6
802.0
803.5
799.4
815.3
800.2
807.7
787.4
748.4
745.8
744.5
743.4

Total

46.5
49.2
48.6
52.8
55.6
62.4
74.1
84.4
85.2
92.1
102.9
106.7
111.7
126.1
150.0
165.6
169.0
187.2
223.2
274.5
326.4
353.8
410.0
413.7
400.2
468.9
504.0
492.4
497.8
545.4
570.7
587.0
550.4
397.7
426.9
491.5
511.3
491.7
514.3
526.8
544.1
550.3
560.2
565.1
570.2
574.2
573.4
586.3
580.0
596.3
585.2
560.0
554.6
546.8
540.3

Structures

18.1
19.6
19.7
20.8
21.2
23.7
28.3
31.3
31.5
33.6
37.7
40.3
42.7
47.2
55.0
61.2
61.4
65.9
74.6
93.9
118.4
137.5
169.1
178.8
153.1
175.6
193.4
174.0
171.3
182.0
193.1
198.7
174.5
168.9
154.6
184.1
195.4
168.4
180.0
176.6
181.4
183.1
186.8
191.1
190.0
194.9
196.5
202.4
199.5
201.7
191.2
184.0
180.0
169.0
164.8

Producers'
durable
equipment
28.3
29.7
28.9
32.1
34.4
38.7
45.8
53.0
53.7
58.5
65.2
66.4
69.1
78.9
95.1
104.3
107.6
121.2
148.7
180.6
208.1
216.4
240.9
234.9
247.1
293.3
310.6
318.4
326.5
363.4
377.6
388.3
376.0
228.8
272.3
307.3
315.9
323.3
334.3
350.2
362.6
367.3
373.4
374.0
380.2
379.3
376.8
384.0
380.5
394.7
394.0
375.9
374.7
377.8
375.6

Residential

28.1
26.3
26.4
29.0
32.1
34.3
34.2
32.3
32.4
38.7
42.6
41.4
55.8
69.7
75.3
66.0
62.7
82.5
110.3
131.6
141.0
123.3
122.5
105.7
152.0
178.9
185.9
216.6
225.2
232.0
230.9
215.7
195.1
112.8
167.7
180.4
193.1
224.2
226.5
227.0
230.5
233.3
237.3
236.5
231.8
229.2
226.0
229.0
220.3
211.4
202.2
188.4
191.2
197.7
203.1

Change
in
business
inventories

4.2
3.2
2.9
6.1
5.7
5.0
9.7
13.8
10.5
9.1
9.7
2.3
8.0
9.9
17.7
14.3
-5.7
16.7
24.7
27.9
12.8
-9.5
25.4
-15.9
-5.5
71.1
24.6
8.6
26.3
16.2
36.0
.0
-20.2
-46.3
20.2
51.0
32.6
-18.8
59.3
16.8
13.8
17.1
17.3
43.2
42.3
23.3
35.1
-3.3
25.6
14.1
-36.5
-39.2
-37.1
-3.6
-1.1

TABLE B-l.—Gross domestic product, 1959-91—Continued

[Billions of dollars, except as noted; quarterly data at seasonally adjusted annual rates]
Net exports of goods and
services *
Year or
quarter

Government purchases
Federal

Net
Total
exports Exports Imports

-1.7
1959
24
1960
1961
3.4
2.4
1962
1963
3.3
5.5
1964
3.9
1965
1.9
1966
1.4
1967
1968
-1.3
-1.2
1969
1.2
1970
1971
-3.0
-8.0
1972
1973
.6
-3.1
1974
1975
13.6
1976
-2.3
-23.7
1977....
-26.1
1978
1979
-23.8
1980
-14.7
-14.7
1981
1982
-20.6
-51.4
1983
1984
-102.7
1985
-115.6
-132.5
1986
-143.1
1987
1988
-108.0
-82.9
1989
1990
-74.4
-27.1
1991"
1982: IV
-29.5
-71.8
1983: IV
-107.1
1984: IV
-135.5
1985: IV
-133.2
1986: IV
1987: IV - 1 4 3 . 2
1988:1
-122.0
-105.6
II
-98.5
Ill
IV - 1 0 6 . 0
1989:1
-88.9
-83.0
II
-82.1
Ill
-77.5
IV
-78.0
1990:1
-60.4
||
-82.5
III
-76.6
IV
1991:1
-36.8
-17.2
II
-37.3
Ill
IV "... - 1 7 . 3

20.6
25 3
26.0
27.4
29.4
33.6
35.4
38.9
41.4
45.3
49.3
57.0
59.3
66 2
91.8
124.3
136 3
148.9
158 8
186.1
228.9
279.2
303.0
282.6
276.7
302.4
302.1
319.2
364 0
444.2
504.9
5504
593.3
265.6
286.2
308.7
304.7
333.9
392.4
418.5
438.8
452.4
467.0
486.1
506.2
506.2
521.3
534.6
545.9
548.7
572.6
565.9
589.8
597.0
620.4

22.3
22 8
22.7
25.0
26.1
28.1
31.5
37.1
39.9
46.6
50.5
55.8
62.3
74 2
91.2
127.5
122 7
151.1
182 4
212.3
252.7
293.9
317.7
303.2
3281
405.1
417.6
451.7
5071
552.2
587.8
624 8
620.4
295.1
358.0
415.7
440.2
467.1
535.6
540.5
544.3
550.9
573.1
575.0
589.2
588.3
598.8
612.6
606.3
631.2
649.2
602.7
6O7.0
634.3
637.7

99.0
99 8
107.0
116.8
122.3
128.3
136.3
155.9
175.6
191.5
201.8
212.7
224.3
241.5
257.7
288.3
321.4
341.3
368.0
403.6
448.5
507.1
561.1
607.6
652.3
700.8
772.3
833.0
8815
918.7
971.4
1042 9
1,086.9
631.6
657.6
727.0
799.2
849.7
901.4
904.7
913.8
918.5
937.6
947.5
966.6
980.9
990.7
1,021.2
1,033.2
1,046.0
1,071.2
1,088.8
1,092.5
1,089.1
1,077.0

Total

57.1
55 3
58 6
65.4
66.4
67.5
69.5
81.3
92.8
99.2
100.5
100.1
100.0
106 9
108.5
117.6
129 4
135.8
147 9
162.2
179.3
209.1
240 8
266.6
292 0
310.9
344.3
367.8
384 9
387.0
401.4
424 9
445.1
281.4
289.7
324.7
356.9
373.1
392.5
386.6
386.0
383.5
392.0
392.6
401.9
407.6
403.7
417.2
423.3
424.7
434.5
451.5
452.1
444.9
431.9

Nation- Nonal
dedefense fense
46.4
45 3
47 9
52.1
51.5
50.4
51.0
62.0
73.4
79.1
78.9
76.8
74.1
77 4
77.5
82.6
89 6
93.4
100 9
108.9
121.9
142.7
167 5
193.8
214 4
233.1
258.6
276.7
2921
295.6
300.0
313 4
323.4
205.5
222.8
242.9
268.6
278.6
295.8
296.7
294.8
294.0
296.8
293.9
298.5
305.8
301.6
309.3
312.7
311.1
320.6
332.3
328.4
322.3
310.7

10.8
10 0
10.6
13.3
14.9
17.0
18.5
19.3
19.4
20.0
21.6
23.3
25.9
294
31.1
35.0
39 8
42.4
47 0
53.3
57.5
66.4
73 3
72.7
77 5
77.8
85.7
91.1
92 9
91.4
101.5
1115
1217
75.9
66.9
81.9
88.3
94.5
96.7
89.9
91.2
89.5
95.2
98.7
103.3
101.8
102.1
107.9
110.7
113.6
113.9
119.2
123.7
122.6
121.3

1

State
and
local

41.8

445
48 4
51.4
55.8
60.9
66.8
74.6
82.7
92.3
101.3
112.6
124.3
134 7
149.2
170.7
192 0
205.5
2201
241.4
269.2
298.0
320 3
341.1
360 3
389.9
428.1
465.3
496 6
531.7
570.0
6180
641.8
350.3
367.9
402.2
442.4
476.6
509.0
518.1
527.8
535.1
545.7
554.9
564.7
573.3
587.0
604.0
609.9
621.4
636.7
637.3
640.4
644.2
645.1

Final
sales of
domestic
product

490.0
5101
528 9
565.5
597.5
643.0
693.0
756.0
803.8
880.2
949.8
1,008.4
1,089.2
1,197 1
1,331.9
1,444.4
15915
1,751.7
1,949 4
2,204.8
2,475.9
2,717.5
3,005 2
3,165.5
3410 6
3,706.1
4,014.1
4,260.0
4 513 7
4,884.2
5,208.1
5 513 8
5,692.0
3,241.4
3,527.1
3,818.1
4,107.9
4,355.4
4,623.7
4,735.6
4,843.4
4,930.2
5,027.3
5,096.7
5,176.2
5,254.0
5,305.3
5,425.7
5,479.1
5,556.5
5,594.0
5,628.2
5,689.6
5,712.8
5,737.6

Gross
domestic purchases 2

495.8
510 9
528.4
569.2
599.8
642.5
698.8
767.9
812.9
890.6
960.7
1,009.5
1,100.2
1215 0
1,349.0
1,461.8
1572 3
1,770.7
1997 8
2 258 8
2,512.5
2,722.8
3 045 3
3,170.2
3 456 5
3,879.9
4,154.3
4,401.2
4 683 0
5,008.4
5,326.9
5 588 1
5',699.0
3,224.6
3,619.1
3,976.2
4,276.0
4,469.8
4,826.2
4,874.4
4,962.7
5,045.8
5,150.7
5,228.8
5,301.5
5,359.4
5,417.9
5,500.5
5,565.1
5,653.0
5,634.0
5,625.8
5,669.8
5,746.5
5,753.8

New definition: Excludes receipts and payments of factor income from or to rest of the world.
Gross domestic product (GDP) less exports of goods and services plus imports of goods and services.
GDP plus net receipts of factor income from rest of the world.
Source: Department of Commerce, Bureau of Economic Analysis.
2
3




299

Addendum:
Gross
national
product 3
497.0
516 6
535 4
575.8
607.7
653.0
708.1
774.9
819 8
895.5
965.6
10171
1,104.9
1215 7
1,362.3
1,474.3
15991
1,785.5
1994 6
2 254 5
2,520.8
2,742.1
3 063 8
3,179.8
3 434 4
3,801.5
4,053.6
4,277.7
45445
4,908.2
5,248.2
5,524.5
3,222.6
3,578.4
3,890.2
4,156.2
4,340.5
4,690.5
4,764.3
4,862.7
4,951.6
5,054.3
5,144.3
5,217.7
5,279.8
5,350.9
5,432.7
5,505.5
5,576.8
5,583.2
5,611.7
5,660.6
5,720.1

Percent change
from preceding
period
Gross
Gross
domes- domestic
tic
purproduct chases 2

39
36
7.5
5.5
7.4
8.4
9.5
5.8
9.2
7.9
5.3
8.6

30
3.4
7.7
5.4
7.1
8.8
9.9
5.9
9.6
7.9
5.1
9.0

10 0
11.8

10.4
11.0

8.1
87

8.4
76

11.5

12.6
12 8
13.1
11.2

116

13.1
11.5

8.8
11.9

3.9
81

8.4
Hi
4.1
90

10.9

12.2

6.9
5.7
64
7.9
7.0
51
2.9
4.0

7.1
5.9
64
6.9
6.4
49
2.0
3.8

11.7

12.2

5.4
6.4
4.4
9.9
6.1
9.1
7.6
8.1
7.8
6.3
4.6
4.9
6.3
6.2
4.9
-.9
2.3
4.6
4.1
1.9

5.6
7.9
3.7
9.6
4.1
7.4
6.9
8.6
6.2
5.7
4.4
4.4
6.2
4.8
6.5

-1.3

-.6
3.2
5.5
.5

TABLE B-2.—Gross domestic product in 1987 dollars, 1959-91
[Billions of 1987 dollars, except as noted; quarterly data at seasonally adjusted annual rates]
Personal consumption
expenditures

Gross private domestic investment
Fixed investment

Year or
quarter

Gross
domestic
product

Change

Nonresidential
Total

Durable
goods

Nondurable
goods

Services

Total
Total
Total

Structures

in

Producers'
durable
equipment

dential

business
inventories

1959

1,931.3

1,178.9

114.4

518.5

546.0

296.4

282.8

165.2

74.4

90.8

117.6

13.6

1960
1961
1962
1963
1964

1,973.2
2,025.6
2,129.8
2,218.0
2,343.3

1,210.8
1,238.4
1,293.3
1,341.9
1,417.2

115.4
109.4
120.2
130.3
140.7

526.9
537.7
553.0
563.6
588.2

568.5
591.3
620.0
648.0
688.3

290.8
289.4
321.2
343.3
371.8

282.7
282.2
305.6
327.3
356.2

173.3
172.1
185.0
192.3
214.0

80.8
82.3
86.1
86.9
95.9

92.5
89.8
98.9
105.4
118.1

109.4
110.1
120.6
135.0
142.1

8.1
7.2
15.6
16.0
15.7

1965
1966
1967
1968
1969

2,473.5
2,622.3
2,690.3
2,801.0
2,877.1

1,497.0
1,573.8
1,622.4
1,707.5
1,771.2

156.2
166.0
167.2
184.5
190.8

616.7
647.6
659.0
686.0
703.2

724.1
760.2
796.2
837.0
877.2

413.0
438.0
418.6
440.1
461.3

387.9
401.3
391.0
416.5
436.5

250.6
276.7
270.8
280.1
296.4

111.5
119.1
116.0
117.4
123.5

139.1
157.6
154.8
162.7
172.9

137.3
124.5
120.2
136.4
140.1

25.1
36.7
27.6
23.6
24.8

1970
1971
1972
1973
1974

2,875.8
2,965.1
3,107.1
3,268.6
3,248.1

1,813.5
1,873.7
1,978.4
2,066.7
2,053.8

183.7
201.4
225.2
246.6
227.2

717.2
725.6
755.8
777.9
759.8

912.5
946.7
997.4
1,042.2
1,066.8

429.7
481.5
532.2
591.7
543.0

423.8
460.7
509.6
554.0
512.0

292.0
292.6
311.6
357.4
356.5

123.3
121.2
124.8
134.9
132.3

168.7
171.4
186.8
222.4
224.2

131.8
168.1
198.0
196.6
155.6

5.9
20.8
22.5
37.7
30.9

1975
1976
1977
1978
1979

3,221.7
3,380.8
3,533.2
3,703.5
3,796.8

2,097.5
2,207.3
2,296.6
2,391.8
2,448.4

226.8
256.4
280.0
292.9
289.0

767.1
801.3
819.8
844.8
862.8

1,103.6
1,149.5
1,196.8
1,254.1
1,296.5

437.6
520.6
600.4
664.6
669.7

451.5
495.1
566.2
627.4
656.1

316.8
328.7
364.3
412.9
448.8

118.0
120.5
126.1
144.1
163.3

198.8
208.2
238.2
268.8
285.5

134.7
166.4
201.9
214.5
207.4

-13.9
25.5
34.3
37.2
13.6

1980
1981
1982
1983
1984

3,776.3
3,843.1
3,760.3
3,906.6
4,148.5

2,447.1
2,476.9
2,503.7
2,619.4
2,746.1

262.7
264.6
262.5
297.7
338.5

860.5
867.9
872.2
900.3
934.6

1,323.9
1,344.4
1,368.9
1,421.4
1,473.0

594.4
631.1
540.5
599.5
757.5

602.7
606.5
558.0
595.1
689.6

437.8
455.0
433.9
420.8
490.2

170.2
182.9
181.3
160.3
182.8

267.6
272.0
252.6
260.5
307.4

164.8
151.6
124.1
174.2
199.3

-8.3
24.6
-17.5
4.4
67.9

1985
1986
1987
1988
1989

4,279.8
4,404.5
4,540.0
4,718.6
4,836.9

2,865.8
2,969.1
3,052.2
3,162.4
3,223.1

370.1
402.0
403.7
428.7
440.8

958.7
991.0
1,011.1
1,035.1
1,049.3

1,537.0
1,576.1
1,637.4
1,698.5
1,732.9

745.9
735.1
749.3
773.4
789.2

723.8
726.5
723.0
753.4
756.6

521.8
500.3
497.8
530.8
542.4

197.4
176.6
171.3
174.0
177.4

324.4
323.7
326.5
356.8
365.0

202.0
226.2
225.2
222.7
214.2

22.1
8.5
26.3
19.9
32.6

1990
1991 ".

4,884.9
4,848.4

3,262.6
3,256.7

438.9
412.5

1,050.8
1,042.3

1,773.0
1,801.9

744.5
672.6

744.2
687.7

548.8
512.7

177.9
153.9

370.8
358.8

195.5
175.1

.2
-15.1

1982:
1983:
1984:
1985:
1986:
1987:

IV...
IV...
IV...
IV...
IV...
IV...

3,759.6
4,012.1
4,194.2
4,333.5
4,427.1
4,625.5

2,539.3
2,678.2
2,784.8
2,895.3
3,012.5
3,074.7

272.3
319.1
347.7
369.6
415.7
404.7

880.7
915.2
942.9

503.5
669.5
756.4
763.1
705.9
793.8

548.4
640.2
708.4
732.9
725.9
733.9

417.2
449.6
509.6
525.5
495.5
510.6

173.2
162.6
189.5
198.3
170.4
177.9

244.0
287.0
320.1
327.2
325.0
332.7

131.2
190.6
198.8
207.4
230.5
223.3

-44.9
29.3
47.9
30.2

1,000.9
1,014.6

1,386.2
1,443.9
1,494.2
1,557.1
1,595.8
1,655.5

1988: I
II....
III...
IV...

4,655.3
4,704.8
4,734.5
4,779.7

3,128.2
3,147.8
3,170.6
3,202.9

425.1
426.9
423.8
439.2

1,023.5
1,031.0
1,039.3
1,046.8

1,679.6
1,690.0
1,707.5
1,716.9

756.9
769.4
782.2
785.0

737.7
753.3
758.6
764.1

517.7
531.4
535.2
538.8

171.6
174.4
174.1
175.7

346.1
356.9
361.0
363.1

220.0
222.0
223.5
225.3

19.2
16.1
23.5
20.9

1989: I
II...
III..
IV..

4,832.4
4,845.6
4,859.7

3,200.9
3,208.6
3,241.1
3,241.6

433.6
439.9
454.3
435.6

1,047.1
1,043.3
1,051.4
1,055.3

1,720.3
1,725.4
1,735.4
1,750.7

803.2
797.4
776.8
779.2

761.9
758.5
756.6
749.2

540.0
543.6
544.7
541.3

177.8
175.0
178.4
178.6

362.2
368.6
366.3
362.7

221.9
215.0
211.9
207.9

41.2
38.9
20.2
30.0

1990: I
II...
III..
IV..

4,900.3
4,903.3
4,855.1

3,258.8
3,258.6
3,281.2
3,251.8

452.7
438.7
440.3
424.0

1,054.4
1,050.3
1,053.7
1,044.7

1,751.8
1,769.6
1,787.3
1,783.1

754.9
766.0
760.3
696.6

758.9
743.8
746.4
727.8

550.7
544.3
555.5
544.5

182.3
178.9
180.0
170.4

368.4
365.4
375.5
374.0

208.2
199.5
190.9
183.3

-4.0
22.1
13.9
-31.2

4,824.0
4,840.7
4,862.7
4,866.3

3,241.1
3,252.4
3,271.2
3,262.2

410.8
408.9
418.3
412.1

1,043.9
1,046.2
1,046.1
1,033.0

1,786.3
1,797.2
1,806.8
1,817.1

657.0
656.3
686.5
690.6

689.8
686.8
686.5
687.9

519.1
514.8
510.0
506.9

163.3
158.9
148.4
144.8

355.8
355.8
361.6
362.1

170.7
172.0
176.5
181.0

-32.8
-30.4
.1
2.7

1991: I
IV..




968.7

300

-20.1
59.9

TABLE B-2.—Gross domestic product in 1987 dollars, 1959-91—Continued
[Billions of 1987 dollars, except as noted; quarterly data at seasonally adjusted annual rates]
Net exports of goods and
services»

Government purchases
Federal

Year or
quarter

Net
exports Exports Imports

Total
Total

National
defense

Nondefense

State
and
local

Final
sales of
domestic
product

Gross
domestic purchases 2

Addendum:
Gross
national
product3

Percent change
from preceding
period
Gross
Gross
domes- domestic
tic
purprod- chases 2
uct

1959

-21.8

73.8

95.6

477.8

268.2

209.6

1,917.8

1,953.1 1,942.1

1960
1961
1962
1963
1964

-7.6
-5.5
-10.5
-5.8
2.5

89.9
95.0
101.8
115.4

96.1
95.3
105.5
107.7
112.9

479.2
503.3
525.9
538.7
551.7

261.3
271.9
289.0
288.1
284.5

217.9
231.4
236.9
250.6
267.3

1,965.0
2,018.4
2,114.2
2,202.0
2,327.6

1,980.8
2,031.1
2,140.3
2,223.8
2,340.7

1,985.1
2,039.0
2,145.0
2,234.2
2,360.8

2.2
2.7
5.1
4.1
5.6

1965
1966
1967
1968
1969

-6.4
-18.0
-23.7
-37.5
-41.5

118.1
125.7
130.0
140.2
147.8

124.5
143.7
153.7
177.7
189.2

569.9
628.5
673.0
691.0
686.1

285.1
325.4
356.1
357.2
344.2

284.8
303.1
317.0
333.7
341.9

2,448.3
2,585.6
2,662.7
2,777.4
2,852.3

2,479.9
2,640.3
2,714.0
2,838.5
2,918.6

2,491.9
2,639.4
2,707.8
2,819.8
2,895.0

5.6
6.0
2.6
4.1
2.7

1970
1971
1972
1973
1974

-35.2
-45.9
-56.5
-34.1
-4.1

161.3
161.9
173.7
210.3
234.4

196.4
207.8
230.2
244.4
238.4

667.8
655.8
653.0
644.2
655.4

316.9
294.2
284.4
265.3
262.6

209.6
191.3
185.8

74.8
74.1
76.8

350.9
361.6
368.6
378.9
392.9

2,869.9
2,944.3
3,084.5
3,230.9
3,217.2

2,911.0
3,011.0
3,163.6
3,302.7
3,252.2

2,893.5
2,985.2
3,128.8
3,298.6
3,282.4

-.0
3.1
4.8
5.2
-.6

1975
1976
1977
1978
1979

23.1
-6.4
-27.8
-29.9
-10.6

232.9
243.4
246.9
270.2
293.5

209.8
249.7
274.7
300.1
304.1

663.5
659.2
664.1
677.0
689.3

262.7
258.2
263.0
268.6
271.7

184.9
179.9
181.6
182.1
185.1

77.8
78.3
81.4
86.5
86.6

400.8
401.1
401.0
408.4
417.6

3,235.6
3,355.3
3,499.0
3,666.3
3,783.2

3,198.6
3,387.1
3,561.1
3,733.3
3,807.4

3,247.6
3,412.2
3,568.9
3,739.0
3,845.3

4.9
4.5
4.8
2.5

1980
1981
1982
1983
1984

30.7
22.0
-7.4
-56.1
-122.0

320.5
326.1
296.7
285.9
305.7

289.9
304.1
304.1
342.1
427.7

704.2
713.2
723.6
743.8
766.9

284.8
295.8
306.0
320.8
331.0

194.2
206.4
221.4
234.2
245.8

90.6
89.4
84.7
86.6
85.1

419.4
417.4
417.6
423.0
436.0

3,784.6
3,818.6
3,777.8
3,902.2
4,080.6

3,745.7
3,821.2
3,767.7
3,962.8
4,270.5

3,823.4
3,884.4
3,796.1
3,939.6
4,174.5

-2.2
3.9
6.2

1985
1986
1987
1988
1989

-145.3
-155.1
-143.0
-104.0
-75.7

309.2
329.6
364.0
421.6
469.2

454.6
484.7
507.1
525.7
544.9

813.4
855.4
881.5
886.8
900.4

355.2
373.0
384.9
377.3
375.0

265.6
280.6
292.1
287.0
280.7

89.5
92.4
92.9
90.2
94.4

458.2
482.4
496.6
509.6
525.3

4,257.6
4,395.9
4,513.7
4,698.6
4,804.3

4,425.1
4,559.6
4,683.0
4,822.6
4,912.6

4,295.0
4,413.5
4,544.6
4,726.3
4,840.7

3.2
2.9
3.1
3.9
2.5

1990
1991 ".

-51.3
-17.6

505.7
539.6

557.0
557.2

929.1
936.7

380.9
384.8

281.3
281.4

99.6
103.4

548.2
551.9

4,884.7
4,863.6

4,936.2 4,894.6
4,866.0

1.0

1982:
1983:
1984:
1985:
1986:
1987:

IV
IV
IV
IV
IV
IV

-19.0
-83.7
-131.4
-155.4
-156.0
-136.0

280.4
291.5
312.8
312.0
342.9
386.1

299.4
375.1
444.2
467.4
498.9
522.1

735.9
748.1
784.3
830.5
864.8
893.0

316.0
322.2
341.7
363.7
377.5
391.6

229.4
242.9
254.3
272.1
282.2
295.0

86.6
79.3
87.4
91.6
95.3
96.6

419.9
425.9
442.6
466.7
487.3
501.4

3,804.5
3,982.8
4,146.2
4,303.3
4,447.2
4,565.6

3,778.6
4,095.8
4,325.5
4,488.9
4,583.1
4,761.5

3,791.7
4,046.6
4,216.4
4,349.5
4,430.8
4,633.0

.6
7.0
2.7
2.3
1.3
5.9

1988:I
II
Ill
IV

-113.4
-98.1
-101.9
-102.7

407.1
417.2
424.1
438.2

520.5
515.2
526.1
540.9

883.7
885.6
883.7
894.5

379.7
377.2
373.7
378.4

290.8
287.1
284.6
285.7

88.9
90.1
89.1
92.7

503.9
508.3
510.0
516.1

4,636.2
4,688.7
4,710.9
4,758.7

4,768.7
4,802.8
4,836.4
4,882.4

4,667.1
4,710.3
4,738.7
4,789.0

2.6
4.3
2.5
3.9

1989: I
II
Ill
IV

-81.2
-71.9
-79.8
-70.0

451.2
469.5
470.5
485.8

532.4
541.3
550.3
555.7

886.9
898.3
907.4
908.9

369.1
376.2
380.9
373.9

276.1
279.9
286.7
279.9

93.0
96.3
94.2
94.0

517.8
522.1
526.4
534.9

4,768.5
4,793.5
4,825.4
4,829.7

4,891.0
4,904.3
4,925.4
4,929.7

4,813.9
4,831.6
4,847.9
4,869.3

2.5
1.9
1.1
1.2

1990: I
II
Ill
IV

-56.0
-52.5
-65.7
-31.2

496.2
502.1
501.6
522.5

552.2
554.5
567.4
553.7

923.0
928.1
927.5
937.9

379.3
383.3
378.4
382.6

281.5
283.8
278.0
282.0

97.7
99.5
100.4
100.6

543.7
544.8
549.1
555.3

4,884.8
4,878.1
4,889.4
4,886.3

4,936.8
4,952.7
4,969.1
4,886.3

4,890.2
4,901.2
4,909.2
4,877.7

1.7
1.6
.2
-3.9

1991: I
II
Ill
IV "..

-18.6
-12.3
-31.1
-8.3

512.5
535.7
545.2
565.1

531.1
548.0
576.3
573.4

944.5
944.3
936.1
921.9

391.7
392.7
384.5
370.2

289.4
287.0
280.4
268.9

102.3
105.7
104.1
101.3

552.7
551.7
551.6
551.7

4,856.8
4,871.2
4,862.6
4,863.7

4,842.6 4,843.7
4,853.1 4,847.8
4,893.8 4,872.0
4,874.6

-2.5
1.4
1.8
.3

1

New definition: Excludes receipts and payments of factor income from or to rest of the world.
Gross domestic product (GDP) less exports of goods and services plus imports of goods and services.
GOP plus net receipts of factor income from rest of the world.
Source: Department of Commerce, Bureau of Economic Analysis.
2
3




301

1.8

TABLE B-3.—Implicit price deflators for gross domestic product,

1959-91

[Index numbers, 1987 = 100, except as noted; quarterly data seasonally adjusted]
Personal consumption

Fixed investment
Nonresidential

Year or quarter

Gross
domestic
product

Total

Durable
goods

Nondurable
goods

Services

Total
Total

Structures

Producers'
durable
equipment

Residential

1959

25.6

27.0

37.4

28.6

23.2

26.4

28.1

24.4

31.2

23.9

1960
1961
1962
1963
1964

26.0
26.3
26.8
27.2
27.7

27.5
27.7
28.2
28.6
29.1

37.7
38.3
39.1
39.7
40.4

29.1
29.3
29.6
30.1
30.5

23.9
24.4
24.8
25.2
25.6

26.7
26.6
26.8
26.8
27.1

28.4
28.2
28.6
28.9
29.2

24.2
24.0
24.1
24.4
24.7

32.1
32.2
32.4
32.6
32.8

24.0
24.0
24.0
23.8
24.1

1965
1966
1967
1968
1969

28.4
29.4
30.3
31.7
33.3

29.7
30.6
31.4
32.7
34.1

40.6
41.3
42.3
43.9
45.2

31.1
32.2
32.9
34.3
35.9

26.1
26.9
27.8
29.0
30.2

27.9
29.1
30.1
31.4
33.3

29.6
30.5
31.5
32.9
34.7

25.4
26.3
27.2
28.6
30.5

32.9
33.6
34.7
36.0
37.7

24.9
25.9
26.9
28.4
30.4

1970
1971
1972
1973
1974

35.1
37.0
38.8
41.3
44.9

35.6
37.4
38.8
41.0
45.2

46.4
48.3
49.2
50.3
54.1

37.7
39.0
40.4
43.7
50.1

31.9
33.8
35.3
36.9
39.7

34.9
36.4
38.4
40.7
45.2

36.5
38.2
40.5
42.0
46.4

32.7
35.2
37.8
40.7
46.3

39.4
40.3
42.2
42.7
46.5

31.4
33.2
35.2
38.3
42.4

1975
1976
1977
1978
1979

49.2
52.3
55.9
60.3
65.5

48.9
51.8
55.4
59.4
64.7

59.2
62.4
65.2
69.1
74.1

54.2
56.4
59.8
64.1
71.1

43.0
46.2
50.0
54.0
58.3

51.3
54.5
58.9
64.7
71.2

53.3
56.9
61.3
66.5
72.7

52.0
54.7
59.2
65.2
72.5

54.1
58.2
62.4
67.2
72.9

46.6
49.6
54.6
61.3
68.0

1980
1981
1982
1983
1984

71.7
78.9
83.8
87.2
91.0

71.4
77.8
82.2
86.2
89.6

80.9
86.4
90.1
92.4
93.9

79.4
85.7
88.6
90.8
93.4

64.4
70.9
76.7
81.9
86.2

79.2
87.8
93.1
92.8
93.9

80.8
90.1
95.3
95.1
95.6

80.8
92.5
98.6
95.5
96.1

80.9
88.5
93.0
94.8
95.4

74.8
80.9
85.2
87.3
89.7

1985
1986
1987
1988
1989

94.4
96.9
100.0
103.9
108.4

93.1
96.0
100.0
104.2
109.1

95.4
96.9
100.0
102.0
104.3

95.9
96.1
100.0
103.7
109.3

90.8
95.7
100.0
105.1
110.3

95.3
97.6
100.0
103.2
106.0

96.6
98.4
100.0
102.8
105.2

98.0
98.5
100.0
104.6
108.8

95.7
98.4
100.0
101.9
103.5

92.0
95.8
100.0
104.2
107.8

1990
1991 "

112.9
117.0

114.7
119.3

106.1
107.9

115.9
120.0

116.1
121.6

107.9
108.4

107.0
107.4

111.7
113.4

104.7
104.8

110.4
111.5

1982:
1983:
1984:
1985:
1986:
1987:

IV
IV
IV
IV
IV
IV

85.0
88.4
92.2
95.5
98.0
101.2

83.8
87.6
90.7
94.6
97.0
101.6

90.6
93.3
94.4
95.9
97.8
101.0

89.4
91.8
94.1
97.0
96.3
101.5

79.0
83.7
87.7
92.9
97.3
101.9

93.1
92.9
94.8
96.1
98.6
101.0

95.3
95.0
96.4
97.3
99.2
100.7

97.5
95.1
97.2
98.5
98.8
101.2

93.8
94.9
96.0
96.5
99.5
100.5

86.0
88.0
90.7
93.1
97.3
101.5

1988:1
II
Ill
IV

102.1
103.2
104.5
105.5

102.3
103.6
104.9
106.1

100.9
101.5
102.3
103.1

101.8
103.0
104.5
105.6

102.9
104.5
105.8
107.1

102.2
102.8
103.3
104.4

101.8
102.4
102.8
104.0

102.9
104.0
105.1
106.3

101.2
101.6
101.7
102.8

103.2
103.8
104.4
105.3

1989:1
II
Ill
IV

106.9
108.0
108.9
109.9

107.4
108.8
109.6
110.8

103.6
103.9
104.4
105.2

107.0
109.5
109.9
110.8

108.5
109.6
110.7
112.2

105.2
105.7
106.2
106.7

104.6
104.9
105.4
105.9

107.5
108.6
109.3
110.1

103.3
103.2
103.6
103.9

106.6
107.8
108.2
108.7

1990:1
II
Ill
IV

111.1
112.3
113.6
114.5

112.5
113.7
115.4
117.2

106.0
105.9
106.1
106.6

113.3
114.3
116.6
119.3

113.7
115.3
116.9
118.5

107.4
107.6
108.2
108.2

106.5
106.5
107.4
107.5

111.0
111.5
112.0
112.2

104.2
104.1
105.1
105.3

110.0
110.4
110.7
110.3

1991:1
II
Ill
IV P....

115.9
116.8
117.4
117.9

118.1
118.9
119.7
120.6

107.3
107.6
108.3
108.5

119.4
119.8
120.2
120.8

119.8
121.1
122.1
123.3

108.5
108.6
108.5
108.1

107.9
107.7
107.2
106.6

112.7
113.2
113.9
113.8

105.7
105.3
104.5
103.7

110.4
111.2
112.0
112.2




302

TABLE B-3.—Implicit price deflators for gross domestic product, 1959-91—Continued
[Index numbers, 1987=100, except as noted; quarterly data seasonally adjusted]

Government purchases

Exports and
imports of goods
and services l
Year or quarter
Exports

28.0

1959

Imports

23.4

Federal

Total

Total

National Nondefense defense

State
and
local

Final
sales of
domestic
product

Gross
domestic
purchases 2

20.7

21.3

19.9

25.5

25.4

20.4
20.9
21.7
22.3
22.8

26.0
26.2
26.7
27.1
27.6

25.8
26.0
26.6
27.0
27.5

23.5
24.6
26.1
27.7
29.6

28.3
29.2
30.2
31.7
33.3

Percent
change
from
preceding
period,
GDP
implicit
price
deflator 3

28.2
29.1
30.0
31.4
32.9

1960
1961
1962
1963
1964

28.6
29.0
28.9
28.9
29.1

23.8
23.8
23.7
24.3
24.9

20.8
21.3
22.2
22.7
23.3

21.2
21.5
22.6
23.1
23.7

1965
1966
1967
1968
1969

30.0
31.0
31.8
32.3
33.3

25.3
25.8
26.0
26.2
26.7

23.9
24.8
26.1
27.7
29.4

24.4
25.0
26.127.8
29.2

1970
1971
1972
1973
1974

35.3
36.6
38.1
43.6
53.0

28.4
30.0
32.2
37.3
53.5

31.8
34.2
37.0
40.0
44.0

31.6
34.0
37.6
40.9
44.8

36.9
40.5
44.5

39.3
41.9
45.5

32.1
34.4
36.5
39.4
43.5

35.1
37.0
38.8
41.2
44.9

34.7
36.5
38.4
40.8
44.9

1975
1976
1977
1978
1979

58.5
61.2
64.3
68.9
78.0

58.5
60.5
66.4
70.7
83.1

48.4
51.8
55.4
59.6
65.1

49.3
52.6
56.2
60.4
66.0

48.5
51.9
55.6
59.8
65.8

51.2
54.1
57.7
61.7
66.4

47.9
51.2
54.9
59.1
64.5

49.2
52.2
55.7
60.1
65.4

49.2
52.3
56.1
60.5
66.0

1980
1981
1982
1983
1984

87.1
92.9
95.2
96.8
98.9

101.4
104.5
99.7
95.9
94.7

72.0
78.7
84.0
87.7
91.4

73.4
81.4
87.1
91.0
93.9

73.5
81.1
87.6
91.6
94.8

73.3
82.1
85.9
89.5
91.3

71.1
76.7
81.7
85.2
89.4

71.8
78.7
83.8
87.4
90.8

72.7
79.7
84.1
87.2
90.9

1985
1986
1987
1988
1989

97.7
96.9
100.0
105.3
107.6

91.9
93.2
100.0
105.1
107.9

95.0
97.4
100.0
103.6
107.9

96.9
98.6
100.0
102.6
107.0

97.3
98.6
100.0
103.0
106.9

95.7
98.6
100.0
101.4
107.5

93.4
96.4
100.0
104.3
108.5

94.3
96.9
100.0
103.9
108.4

93.9
96.5
100.0
103.9
108.4

1990
1991"

108.9
109.9

112.2
111.3

112.2
116.0

111.6
115.7

111.4
114.9

112.0
117.8

112.7
116.3

112.9
117.0

113.2
117.1

1982: IV
1983: IV
1984: IV
1985:1V
1986: IV
1987: IV

94.7
98.2
98.7
97.7
97.4
101.6

98.5
95.4
93.6
94.2
93.6
102.6

85.8
87.9
92.7
96.2
98.3
100.9

89.0
89.9
95.0
98.1
98.8
100.2

89.6
91.7
95.5
98.7
98.7
100.3

87.7
84.3
93.7
96.4
99.2
100.1

83.4
86.4
90.9
94.8
97.8
101.5

85.2
88.6
92.1
95.5
97.9
101.3

85.3
88.4
91.9
95.3
97.5
101.4

1988:1
II
Ill
IV

102.8
105.2
106.7
106.6

103.9
105.7
104.7
106.0

102.4
103.2
103.9
104.8

101.8
102.3
102.6
103.6

102.0
102.7
103.3
103.9

101.2
101.2
100.4
102.6

102.8
103.8
104.9
105.7

102.1
103.3
104.7
105.6

102.2
103.3
104.3
105.5

1989:1
||
III
IV

107.7
107.8
107.6
107.3

108.0
108.8
106.9
107.7

106.8
107.6
108.1
109.0

106.4
106.8
107.0
108.0

106.5
106.6
106.7
107.8

106.1
107.4
108.1
108.6

107.2
108.2
108.9
109.7

106.9
108.0
108.9
109.8

106.9
108.1
108.8
109.9

1990:1
||
Ill .
IV

107.7
108.7
109.4
109.6

110.9
109.3
111.2
117.2

110.6
111.3
112.8
114.2

110.0
110.4
112.2
113.6

109.9
110.2
111.9
113.7

110.4
111.2
113.1
113.2

111.1
111.9
113.2
114.7

111.1
112.3
113.6
114.5

111.4
112.4
113.8
115.3

1991:1
||

110.4
110.1
109.5
109.8

113.5
110.8
110.1
111.2

115.3
115.7
116.4
116.8

115.3
115.1
115.7
116.7

114.8
114.4
114.9
115.5

116.5
117.1
117.9
119.6

115.3
116.1
116.8
116.9

115.9
116.8
117.5
118.0

116.2
116.8
117.4
118.0

Ill
IV".
1
New definition:
2
Gross domestic
3

Excludes receipts and payments of factor income from or to rest of the world.
product (GOP) less exports of goods and services plus imports of goods and services.
Quarterly changes are at annual rates.
Note.—Separate deflators are not calculated for gross private domestic investment, change in business inventories, and net exports
of goods and services.
Source: Department of Commerce, Bureau of Economic Analysis.




303

TABLE B-4.—Changes in gross domestic product and personal consumption expenditures, and related
implicit price deflators and fixed-weighted price indexes, 1960-91
[Percent change from preceding period; quarterly data at seasonally adjusted annual rates]
Personal consumption expenditures

Gross domestic produc
Year or quarter

Current
dollars

Constant
(1987)
dollars

Implicit
price
deflator

Fixedweighted price
index
(1987
weights)

Current
dollars

Constant
(1987)
dollars

Implicit
price
deflator

I960
1961
1962...
1963
1964

3.9
3.6
7.5
5.5
74

2.2
2.7
5.1
4.1
5.6

1.6
1.2
1.9
1.5
1.8

4.5
3.3
6.1
5.4
7.4

2.7
2.3
4.4
3.8
5.6

1.9
.7
1.8
1.4
17

1965
1966
1967
1968
1969

84
9.5
5.8
9.2
7.9

5.6
6.0
2.6
4.1
2.7

2.5
3.5
3.1
4.6
5.0

7.8
8.3
5.8
9.8
8.0

5.6
5.1
3.1
5.2
3.7

21
3.0
2.6
4.1
4.3

1970
1971
1972
1973
1974

5.3
86
10.0
11.8
8.1

0
3.1
4.8
5.2
-.6

5.4
54
4.9
6.4
8.7

7.1
83
9.6
10.5
9.4

2.4
33
5.6
4.5
-.6

4.4
51
3.7
5.7
10.2

1975...
1976
1977
1978 "
.
1979

8.7
11.5
11.6
131
11.5

-.8
4.9
4.5
48
2.5

9.6
6.3
6.9
79
8.6

10.5
11.5
11.2
11.8
11.4

2.1
5.2
4.0
4.1
2.4

8.2
5.9
6.9
7.2
8.9

1980
1981
1982
1983
1984

88
11.9
39
8.1
10.9

_ 5
1.8
22
3.9
6.2

95
10.0
62
4.1
4.4

10.4
10.2
6.9
9.6
9.0

_.l
1.2
1.1
4.6
4.8

10.4
9.0
5.7
4.9
3.9

. 69
5.7
6.4
79
7.0

32
2.9
3.1
39
2.5

37
2.6
3.2
39
4.3

84
6.9
7.1
8.0
6.7

44
3.6
2.8
3.6
1.9

39
3.1
4.2
4.2
4.7

5.1
2.9

1.0
-.7

4.2
3.6

6.4
3.9

1.2
-.2

5.1
4.0

40
11.7
54
64
4.4
9.9
61
9.1
7.6
8.1
78
6.3
46
4.9
6.3
6.2
49
-.9
2.3
4.6
41
1.9

6
7.0
27
23
1.3
5.9
26
4.3
2.5
3.9
25
1.9
11
1.2
1.7
1.6
2
-3.9
25
1.4
18
.3

34
4.2
26
39
3.3
3.6
36
4.4
5.1
3.9
54
4.2
34
3.7
4.4
4.4
47
3.2
5.0
3.1
21
1.7

112
10.5
8.1
54
5.8
4.4
99
7.9
8.4
8.9
4.6
6.4
7.2
4.7
8.6
4.3
88
2.9
1.7
4.3
50
1.9

60
6.1
4.5
3
2.5
-.1
71
2.5
2.9
4.1
-.2
1.0
4.1
.1
2.1
-.0
2.8
35
-1.3
1.4
23
-1.1

4.9
4.2
3.1
48
2.9
4.5
2.8
5.2
5.1
4.7
5.0
5.3
3.0
4.5
6.3
4.3
6.1
6.4
3.1
2.7
2.7
3.0

1985
1986
1987
1988
1989

:

1990...
1991 p
1982: IV
1983- IV
1984: IV
1985- IV
1986- IV
1987: IV
1988: I . ..
||
III
IV
1989:1
II
III
I
V
1990:1
||
III
I
V
1991:1.
||
III .
IV P

Note.—Data are not yet available for fixed-weighted price indexes (1987 weights).
Source: Department of Commerce, Bureau of Economic Analysis.




304

Fixedweighted price
index
(1987
weights)

TABLE B-5.—Selected per capita product and income series in current and 1987 dollars, 1959-91

[Quarterly data at seasonally adjusted annual rates, except as noted]
Constant (1987) dollars

Current dollars
Year or
quarter

DisposGross
domes- Person- able
persontic
al
al
prod- income
income
uct

Personal consumption
expenditures
Total

Gross Disposdomes- able
tic
Dura- Non- Serv- prod- personble durable
uct income
goods goods

987
1,060
1,091
1,171
1,244

974
1,041
1,116
1,211
1,308

12,727
13,338
13,536
13,953
14,191

7,256 6,658 646 2,928 3,083
7,264
638 2,915 3,145
7,382 6,740 595 2,926 3,218
7,583 6,931 -644 2,964 3,323
7,718 7,089 688 2,977 3,423
8,140 7,384 733 3,065 3,586
8,508 7,703 803 3,173 3,726
8,822 8,005 844 3,294 3,867
9,114 8,163 841 3,316 4,006
9,399 8,506 919 3,417 4,169
9,606 8,737 941 3,469 4,327

416
468
528
585
575

1,318
1,364
1,454
1,602
1,780

1,418
1,540
1,676
1,814
1,982

14,022
14,276
14,801
15,422
15,185

9,875
10,111
10,414
11,013
10,832

1,796
1,839
1,869
1,953
2,030
2,149

242
240
228
252
273
296

838

1,994
2,048
2,137
2,210
2,369

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

3,616
3,915
4,097
4,430
4,733

2,845
3,061
3,253
3,536
3,816

2,527
2,699
2,861
3,077
3,274

2,287
2,450
2,562
2,785
2,978

327
348
355
404
425

1970...
1971...
1972...
1973...
1974...

4,928 4,052
5,283 4,302
5,750 4,671
6,368 5,184
6,819 5,637

3,521
3,779
4,042
4,521
4,893

3,152
3,372
3,658
4,002
4,337

1988:1..

II...
III..
IV..
1990:1....
II...
III..
IV..
1991:1..
Ill
IV ».

Dura- Non- Servble durable
goods goods ices

10,916
11,024
11,414
11,717
12,209

2,209
2,264
2,321
2,430
2,516
2,661

1975...
1976...
1977...
1978...
1979...
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991 ".
..
1982: IV
1983: IV
1984: IV
1985: IV
1986: IV
1987: IV

10,907

Total

716
752
784
823
861
917

2,791
2,840
2,894
3,063
3,186
3,376

1,958

1960...
1961...
1962...
1963...
1964...

1959...

Personal consumption
expenditures

847
857
878
895
936

7,343
8,109
8,961
10,029
11,055
11,892
13,177
13,564
14,531
15,978

6,053
6,632
7,269
8,121
9,032

5,329
5,796
6,316
7,042
7,787

4,745
5,241
5,772
6,384
7,035

622
734
829
909
952

1,926
2,072
2,226
2,432
2,725

2,197
2,436
2,717
3,043
3,359

14,917
15,502
16,039
16,635
16,867

10,906
11,192
11,406
11,851
12,039

8,842 896
9,022 970
9,425 1,073
9,752 1,164
9,602 1,062
9,711 1,050
10,121 1,176
10,425 1,271
10,744 1,316
10,876 1,284

9,948
11,021
11,589
12,216
13,345

8,576
9,455
9,989
10,642
11,673

7,677
8,375
8,868
9,634
10,408

2,999
3,236
3,326
3,490
3,693

3,745
4,146
4,523
4,971
5,370

16,584
16,710
16,194
16,672
17,549

12,005
12,156
12,146
12,349
13,029

10,746
10,770
10,782
11,179
11,617

16,933
17,735
18,694
19,994
21,196

14,170
14,917
15,655
16,630
17,705

12,339 11,184
13,010 11,843
13,545 12,568
14,477 13,448
15,313 14,219

933
994
1,018
1,173
1,345
1,480
1,619
1,662
1,783
1,858

3,855
3,956
4,163
4,381
4,636

5,849
6,269
6,742
7,284
7,725

17,944
18,299
18,694
19,252
19,550

12,015
12,336
12,568
12,903
13,027

22,056
22,448
13,709
15,085
16,310
17,296
17,953
19,213
19,458
19,846
20,161
20,506
20,852
21,125
21,304
21,500
21,781
22,055
22,251
22,135
22,206
22,406
22,567
22,611

18,720
19,131
11,786
12,613
13,668
14,440
15,102
16,076
16,245
16,499
16,720
17,053
17,460
17,616
17,726
18,014

16,236
16,693

14,971
15,383

1,864
1,762

4,871
4,951

10,189
11,033
11,925
12,565
13,121
13,907
14,154
14,332
14,570
14,850
15,131
15,197
15,337
15,586
15,963
16,154
16,344
16,479
16,492
16,678
16,752
16,849

9,134
9,980
10,649
11,445
12,101
12,819

1,059
1,266
1,383
1,480
1,684
1,677

3,378
3,572
3,742
3,924
3,990
4,223

8,236 19,540
8,670 19,189
4,696 16,132
5,143 17,062
5,524 17,680
6,040 18,102
6,428 18,328
6,919 18,977

13,258
13,552
13,545
13,890
14,030
14,154
13,987
12,154
12,591
13,145
13,278
13,522
13,685

13,099
13,322
13,556
13,814
13,942
14,130
14,338
14,464

1,756
1,770
1,767
1,841

4,264
4,339
4,425
4,495

7,078
7,213
7,365
7,477

1,823
1,851
1,916
1,844

4,544
4,625
4,664
4,710

7,575
7,655
7,759
7,911

14,731
14,848
15,120
15,183
15,208
15,334
15,481
15,508

1,928
1,862
1,866
1,800

4,800
4,812
4,907
4,964

8,004
8,175
8,347
8,418

19,061
19,223
19,294
19,429
19,513
19,562
19,561
19,565
19,606
19,633
19,586
19,337

1,751
1,744
1,790
1,763

4,952
4,966
4,970
4,918

8,505
8,624
8,720
8,828

19,166
19,188
19,221
19,181

18,400
18,649
18,851
18,977
18,944
19,110
19,184
19,286

13,840
13,836
13,886
13,996
14,093
13,969
13,996
14,063
14,185
14,204
14,168
14,058
13,965
14,022
13,992
13,970

3,497
3,494
3,601
3,670
3,552

4,449
4,558
4,751
4,917
4,988

3,552
3,674
3,722
3,795
3,833

5,110
5,271
5,433
5,633
5,760

1,154
1,150
1,131
1,270
1,432

3,779
3,774
3,756
3,842
3,953

5,814
5,845
5,895
6,066
6,231

1,552
1,670
1,662
1,749
1,782
13,051 1,756
12,889 1,633
10,895 1,169
11,390 1,357
11,739 1,466
12,095 1,544
12,472 1,721
12,615 1,660
12,808 1,740
12,862 1,744
12,921 1,727
13,020 1,785
12,986 1,759
12,989 1,781
13,084 1,834
13,051 1,754
13,090 1,818
13,056 1,758
13,107 1,759
12,952 1,689

4,019
4,118
4,163
4,223
4,241

6,444
6,548
6,742
6,930
7,004

12,877
12,892
12,930
12,858

1,632
1,621
1,653
1,624

4,203 7,092
4,125 7,131
3,779
3,892
3,975
4,046
4,144
4,162

5,948
6,141
6,298
6,505
6,607
6,792

4,190
4,213
4,235
4,255

6,877
6,905
6,958
6,979

4,248
4,223
4,245
4,249

6,979
6,984
7,006
7,048

4,235
4,208
4,209
4,161

7,037
7,090
7,139
7,102

4,148
4,147
4,135
4,071

7,097
7,124
7,142
7,162

1
Population of the United States including Armed Forces overseas; includes Alaska and Hawaii beginning 1960. Annual data are
averages of quarterly data. Quarterly data are averages for the period.
Source: Department of Commerce (Bureau of Economic Analysis and Bureau of the Census).




305

TABLE 3-6.—Gross domestic product by major type of product, 1959-91
[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Goods l
Year or
quarter

Final
Gross sales of Invendomestic domes- tory
product
tic
change
product

Total
Total

Final
sales

Durable goods
Inventory
change

Final
sales

Inventory
change

Nondurable goods
Final
sales

Inventory
change

Services 1

Structures

Auto
output

1959

494.2

490.0

4.2

249.3

245.1

4.2

91.1

3.1

153.9

1.1

180.7

61.7

19.4

1960 .
1961
1962
1963
1964

513.4
531.8
571.6
603.1
648.0

510.1
528.9
565.5
597.5
643.0

32
2.9
6.1
5.7
5.0

257.3
260.9
281.5
293.0
313.1

254 0
258.0
275.4
287.4
308.1

3.2
2.9
6.1
5.7
5.0

93 8
93.1
103.4
110.0
119.6

1.6
-.1
3.4
2.7
4.0

160.2
164.8
172.0
177.4
188.5

16
3.0
2.7
3.0
1.0

194.2
207.7
222.3
237.5
256.2

61.1
62.8
67.0
71.9
77.6

213
17.8
22.4
25.1
25.9

1965
1966
1967
1968
1969

702.7
769.8
814.3
889.3
959.5

693 0
756.0
803 8
880 2
949.8

9.7
13.8
10 5
9.1
9.7

342 7
379.7
395 4
428 7
456.5

333 0
365.9
384 9
419 5
446.8

9.7
13.8
10 5
9.1
9.7

132 4
147.9
154 5
1691
180.1

67
10.2
55
47
6.4

200 6
218.1
230 4
250 4
266.7

30
3.6
50
44
3.3

275 4
302.3
330 4
362 8
395.4

83 8
86.9
88 5
98*9
107.1

311
30 2
27 8
35 0
34.7

1970...
1971
1972
1973
1974

1,010.7
1,097.2
1,207.0
1 349.6
1,458.6

1,008.4
1,089.2
1,197.1
13319
1,444.4

2.3
8.0
9.9
17 7
14.3

467.0
493.3
537.4
616 6
662.8

464.7
485.2
527.5
598 9
648.5

2.3
8.0
9.9
17 7
14.3

182.1
189.4
209.7
242 0
257.1

-.1
2.8
7.2
15 0
11.2

282.6
295.8
317.8
356 9
391.4

2.3
5.2
2.7
28
3!l

433.8
476.6
523.6
5710
63L3

108.6
127.2
145.9
1619
164^5

28.5
38.9
41.4
45 9
38.8

1975...
1976
1977
1978
1979

1,585.9 1 591.5
1,768.4 1,751.7
1,974.1 1,949.4
2,232.7 2,204.8
2,488.6 2,475.9

-5.7
16.7
24.7
27.9
12.8

7151 720 8
798.8 782.0
880.4 855.7
989.1 961.2
1,100.2 1,087.5

-5.7
16.7
24.7
27.9
12.8

288 8
323 6
368.3
416.9
474.5

70
10 3
9.7
20.3
9.6

432 0
458 4
487.4
544.3
613.0

13
64
15.0
7.6
3.1

706 9
782 2
870.4
975.5
1,079.6

163 8
187 5
223.3
268.1
308.8

40 3
55.1
64.2
67.9
66.2

1980
1981
1982
1983
1984

2,708.0
3,030.6
3,149.6
3,405.0
3,777.2

1,176.2
1,324.6
1315 0
1,407.3
1,591.9

1,185.7
1,299.2
1330 9
1,412.8
1,520.8

-9.5
25.4
159
-5.5
71.1

502.1 - 2 . 6
544.2
6.2
5416 - 1 6 0
579.4
5.5
647.0
44.9

683.6
755.0
789 3
833.4
873.8

-6.8
19.2
1
-11.0
26.2

1,215.4
1,357.4
1494 2
1,636.3
1,770.7

316.4
348.6
340 4
361.5
414.7

59.2
68.3
65.3
88.3
104.2

1985
1986
1987
1988
1989

4,038.7 4,014.1
4 268 6 4 260 0
4,539.9 4'5137
4,900.4 4,884.2
5,244.0 5,208.1

1,652 6
1,705.3
17945
1,942.0
2,098.1

1628 0
1^696.7
17682
1,925.7
2,062.1

24.6
86
263
16.2
36.0

8.6
16
216
24.3
26.9

923 2
966 5
1,014 7
1,090.1
1,169.2

16.0
7i
4.7
-8.1
9.1

1,939.0
2 097 3
2,267.2
2,460.9
2,634.7

447.1
466 0
478.2
497.5
511.3

115.8
120.4
118.9
129.1
133.9

1990
1991 p

o 2 167 6 2 167 6
5 513 8 5 513 8
5,671.8 5i692!o _20!2 2[l92!8 2,213^0 -202

69 2 834 0
4.3 3,012.7

512 2
466.4

130.3
117.9

1982: IV
1983: IV
1984: IV
1985: IV
1986: IV
1987: IV
1988:1
II
Ill
IV
1989:1
II
Ill
IV
1990:1
II
Ill
IV
1991:1
II
Ill
IV "

3,195.1
3,547.3
3,869.1
4,140.5
4,336.6
4,683.0
4,752.4
4,857.2
4,947.3
5,044.6
5,139.9
5,218.5
5,277.3
5,340.4
5,422.4
5,504.7
5,570.5
5,557.5
5,589.0
5,652.6
5,709.2
5,736.6

1,553.3
1,686.1
1,824.7
2,008.9
2,154.1
2,327.6
2,391.0
2,436.7
2,487.5
2,528.5
2,568.8
2,608.1
2,651.8
2,709.9
2,753.0
2,812.6
2,864.8
2,905.5
2,951.7
2,999.0
3,035.1
3,065.0

339.5
378.2
426.9
457.9
468.1
490.1
485.7
495.9
499.2
509.1
512.1
507.5
511.5
514.0
529.2
515.6
510.1
494.0
467.9
467.4
463.5
466.6

63.2
101.9
110.4
115.1
122.5
120.9
116.4
133.4
130.6
136.1
135.3
133.9
136.2
130.1
121.8
133.2
147.6
118.5
109.8
115.5
125.2
121.0

2,717.5 - 9 . 5
3,005.2
25.4
3,165.5 - 1 5 . 9
3,410.6 - 5 . 5
3,706.1
71.1

3,241.4
3,527.1
3,818.1
4,107.9
4,355.4
4,623.7
4,735.6
4,843.4
4,930.2
5,027.3
5,096.7
5,176.2
5,254.0
5,305.3
5,425.7
5,479.1
5,556.5
5,594.0
5,628.2
5,689.6
5,712.8
5,737.6

24.6
86
263
16.2
36.0

-46.3
20.2
51.0
32.6
-18.8
59.3
16.8
13.8
17.1
17.3
43.2
42.3
23.3
35.1
-3.3
25.6
14.1
-36.5
-39.2
-37.1
-3.6
-1.1

1,302.2
1,483.0
1,617.5
1,673.7
1,714.5
1,865.4
1,875.7
1,924.5
1,960.7
2,007.0
2,058.9
2,102.9
2,114.1
2,116.4
2,140.2
2,176.5
2,195.6
2,158.0
2,169.4
2,186.1
2,210.5
2,205.0

1,348.5
1,462.8
1,566.5
1,641.1
1,733.3
1,806.1
1,859.0
1,910.8
1,943.6
1,989.7
2,015.7
2,060.6
2,090.8
2,081.4
2,143.5
2,150.9
2,181.6
2,194.5
2,208.6
2,223.2
2,214.1
2,206.1

o

-46.3
20.2
51.0
32.6
-18.8
59.3
16.8
13.8
17.1
17.3
43.2
42.3
23.3
35.1
-3.3
25.6
14.1
-36.5
-39.2
-37.1
-3.6
-1.1

704 8
730.2
7535
835.6
892.9

934 6 —70 1233 0
929!o -24^5 1,284.0
550.6
620.5
676.3
705.7
751.5
769.3
809.0
833.7
838.8
861.0
866.9
894.0
916.5
894.2
941.0
931.1
939.3
927.2
916.4
939.5
929.4
930.8

-41.1
25.5
38.5
10.9
-11.9
37.1
11.0
14.3
36.6
35.3
39.2
17.7
12.6
37.9
-14.4
1.4
14.5
-29.4
-43.5
-33.5
-9.2
-12.0

798.0
842.3
890.2
935.4
981.8
1,036.9
1,049.9
1,077.0
1,104.8
1,128.7
1,148.9
1,166.6
1,174.3
1,187.1
1,202.5
1,219.8
1,242.3
1,267.3
1,292.1
1,283.7
1,284.7
1,275.3

-5.2
-5.3
12.5
21.7
-7.0
22.2
5.7
-.5
-19.5
-18.0
4.0
24.6
10.7
-2.9
11.0
24.3
-.4
-7.1
4.3
-3.6
5.6
10.9

1
Exports and imports of certain goods, primarily military equipment purchased and sold by the Federal Government, are included in
services.
Source: Department of Commerce, Bureau of Economic Analysis.




306

TABLE B-7.—Gross domestic product by major type of product in 1987 dollars,

1959-91

[Billions of 1987 dollars; quarterly data at seasonally adjusted annual rates]
Goods *
Final
Gross
sales of Invendomestic domestory
product
tic
change
product

Year or
quarter

Durable goods

Total
Total

Final

Inventory
change

Final

Inventory
change

Nondurable goods
Final
sales

Inventory
change

Services'

Strucoutput

1959

1,931.3

1,917.8

13.6

825.2

811.6

13.6

273.8

8.6

537.8

5.0

846.2

259.9

1960
1961
1962
1963
1964

1,973.2
2,025.6
2,129.8
2,218.0
2,343.3

1,965.0
2,018.4
2,114.2
2,202.0
2,327.6

8.1
7.2
15.6
16.0
15.7

835.3
840.9
889.6
914.9
967.6

827.1
833.7
874.0
898.9
952.0

8.1
7.2
15.6
16.0
15.7

277.8
273.5
296.5
310.4
334.3

4.6
-.3
8.6
7.5
11.3

549.3
560.2
577.5
588.5
617.6

3.5
7.5
7.0
8.6
4.4

879.7
918.6
958.5
1,002.3
1,055.3

258.2
266.1
281.7
300.8
320.4

1965
1966
1967
1968
1969

2,473.5
2,622.3
2,690.3
2,801.0
2,877.1

2,448.3
2,585.6
2,662.7
2,777.4
2,852.3

25.1
36.7
27.6
23.6
24.8

1,033.0
1,113.3
1,129.4
1,168.9
1,193.9

1,007.9
1,076.6
1,101.7
1,145.3
1,169.1

25.1
36.7
27.6
23.6
24.8

364.1
399.4
413.7
430.4
438.4

18.3
27.1
14.5
12.8
15.7

643.8
677.2
688.0
714.9
730.7

6.9
9.6
13.1
10.9
9.1

1,105.0
1,174.5
1,231.7
1,282.0
1,328.7

335.4
334.5
329.3
350.1
354.5

1970
1971
1972
1973
1974

2,875.8
2,965.1
3,107.1
3,268.6
3,248.1

2,869.9
2,944.3
3,084.5
3,230.9
3,217.2

5.9
20.8
22.5
37.7
30.9

1,173.0
1,187.8
1,251.0
1,349.8
1,328.2

1,167.1
1,167.0
1,228.4
1,312.1
1,297.3

5.9
20.8
22.5
37.7
30.9

428.0
424.9
458.4
528.0
524.6

_ g
8i9
16.2
31.2
19.6

739.1
742.1
770.0
784.1
772.7

6.9
11.9
6.4
6.5
11.3

1,364.0
1,405.2
1,454.1
1,508.3
1,553.9

338.9
372.1
401.9
410.4
366.1

1975
1976
1977
1978
1979

3,221.7
3,380.8
3,533.2
3,703.5
3,796.8

3,235.6 -13.9
3,355.3
25.5
3,499.0
34.3
3,666.3
37.2
3,783.2
13.6

1,291.8
1,372.7
1,436.9
1,507.3
1,537.1

1,305.7 -13.9
1,347.2
25.5
1,402.6
34.3
1,470.1
37.2
1,523.5
13.6

521.6 -11.5
540.6
17.0
583.6
15.6
623.7
28.7
654.1
11.7

784.1
806.6
819.0
846.4
869.3

-2.5
8.5
18.7
8.5
1.9

1,602.2
1,649.1
1,701.2
1,770.6
1,821.7

327.7
359.0
395.2
425.6
438.0

1980
1981
1982
1983
1984

3,776.3
3,843.1
3,760.3
3,906.6
4,148.5

3,784.6 - 8 . 3
3,818.6
24.6
3,777.8 -17.5
3,902.2
4.4
4,080.6
67.9

1,509.5
1,547.4
1,468.7
1,531.7
1,667.7

1,517.7 - 8 . 3
1,522.9
24.6
1,486.2 -17.5
1,527.3
4.4
1,599.8
67.9

626.4 - 4 . 3
619.4
6.3
578.9 -16.0
601.5
6.3
655.1
45.7

891.4
903.4
907.3
925.8
944.7

-4.0
18.3
-1.5
-1.8
22.3

1,864.3
1,895.7
1,922.8
1,976.8
2,033.1

402.5
400.0
368.8
398.1
447.7

1985
1986
1987
1989

4,279.8
4,404.5
4,540.0
4,718.6
4,836.9

4,257.6
4,395.9
4,513.7
4,698.6
4,804.3

22.1
8.5
26.3
19.9
32.6

1,695.0
1,740.1
1,794.5
1,892.5
1,962.0

1,672.9
1,731.6
1,768.2
1,872.6
1,929.4

703.4
731.5
753.5
833.1
868.2

969.5
1,000.1
1,014.7
1,039.5
1,061.3

12.9
6.7
4.7
-3.4
7.4

2,115.3
2,185.0
2,267.3
2,349.7
2,402.7

469.4
479.3
478.2
476.4
472.1

1990
1991"

4,884.9
4,848.4

4,884.7
4,863.6

15!l

1,958.0 1,957.8
1,929.2 1,944.3 -15.1

892.9 - 6 . 7
875.9 - 2 2 . 2

1,065.0
1,068.4

6.9
7.0

2,464.8
2,504.5

462.0
414.8

1982:
1983:
1984:
1985:
1986:
1987:

3,759.6
4,012.1
4,194.2
4,333.5
4,427.1
4,625.5

3,804.5 -44.9
3,982.8
29.3
4,146.2
47.9
4,303.3
30.2
4,447.2 -20.1
4,565.6
59.9

1,447.7
1,597.8
1,680.9
1,708.1
1,741.8
1,850.8

1,492.6 -44.9
1,568.5
29.3
1,633.0
47.9
1,677.9
30.2
1,761.8 -20.1
1,790.9
59.9

580.9 -41.9
26.7
639.4
677.6
39.7
703.1
11.9
750.4 -11.9
769.4
36.9

911.6
929.1
955.3
974.9
1,011.4
1,021.5

-3.0
2.6
8.3
18.3
-8.2
23.0

1,942.1
1,998.3
2,058.1
2,148.8
2,208.2
2,290.9

369.8
416.0
455.1
476.5
477.2
483.8

1988:1
II
Ill
IV

4,655.3
4,704.8
4,734.5
4,779.7

4,636.2
4,688.7
4,710.9
4,758.7

19.2
16.1
23.5
20.9

1,858.2
1,887.4
1,898.6
1,926.0

1,839.0
1,871.3
1,875.0
1,905.0

19.2
16.1
23.5
20.9

811.3
835.3
832.7
852.9

10.6
14.1
35.0
33.5

1,027.7
1,036.0
1,042.4
1,052.2

8.6
2.0
-11.5
-12.5

2,326.2
2,340.2
2,359.9
2,372.4

470.9
477.2
476.0
481.3

1989:1
II
Ill
IV

4,809.8
4,832.4
4,845.6
4,859.7

4,768.5
4,793.5
4,825.4
4,829.7

41.2
38.9
20.2
30.0

1,953.8
1,971.6
1,966.6
1,956.1

1,912.5
1,932.8
1,946.4
1,926.1

41.2
38.9
20.2
30.0

851.6
873.4
886.8
860.9

37.5
16.5
11.2
35.6

1,060.9
1,059.4
1,059.6
1,065.2

3.7
22.4
9.1
-5.6

2,377.9
2,391.5
2,408.4
2,433.2

478.1
469.3
470.6
470.5

1990:1
II
Ill
IV

4,880.8
4,900.3
4,903.3
4,855.1

4,884.8 - 4 . 0
4,878.1
22.1
4,889.4
13.9
4,886.3 -31.2

1,961.1
1,973.8
1,968.5
1,928.6

1,965.1 - 4 . 0
1,951.6
22.1
1,954.6
13.9
1,959.8 -31.2

902.3 -13.6
891.8
1.2
892.3
13.1
884.8 -27.3

1,062.8
1,059.8
1,062.3
1,075.0

9.7
20.9
.8
-3.9

2,440.1
2,461.2
2,476.3
2,481.8

479.6
465.3
458.5
444.6

1991:1
II
Ill
IV *

4,824.0
4,840.7
4,862.7
4,866.3

4,856.8 -32.8
4,871.2 -30.4
4,862.6
4,863.7
2.1

1,917.0
1,922.0
1,940.5
1,937.2

1,949.8 - 3 2 . 8
1,952.4 - 3 0 . 4
1,940.4
.1
1,934.5
2.7

866.4 - 3 9 . 4
883.3 -30.5
873.9 - 8 . 4
879.9 - 1 0 . 4

1,083.4
1,069.1
1,066.5
1,054.6

6.6

2,487.6
2,502.7
2,511.8
2,516.0

419.4
416.1
410.4
413.2

....

IV..
IV...
IV...
IV...
IV...
IV...

22.1
8.5
26.3
19.9
32.6

9.3
1.9
21.6
23.3
25.2

8A
13.0

1
Exports and imports of certain goods, primarily military equipment purchased and sold by the Federal Government, are included in
services.
Source: Department of Commerce, Bureau of Economic Analysis.




307

TABLE B-8.—Gross domestic product by sector, 1959-91
[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Busines

Year or quarter

Gross
domestic
product

Nonf arm 1

Total l

Farm

Statistical
discrepancy

Households
and
institutions

General government2

Total

Federal

State
and
local

1959

494.2

436.9

419.8

18.9

-1.8

12.4

44.9

21.7

23.1

1960
1961
1962
1963
1964

513.4
531.8
571.6
603.1
648.0

451.4
465.7
500.5
527.1
565.8

434.7
447.9
481.4
508.7
547.2

19.8
20.1
20.2
20.4
19.3

-3.1
-2.2
-1.0
-2.0
-.7

13.9
14.5
15.6
16.7
17.9

48.1
51.6
55.5
59.3
64.4

22.6
23.7
25.2
26.5
28.5

25.5
27.9
30.2
32.9
35.9

1965
1966
1967
1968
1969

702.7
769.8
814.3
889.3
959.5

614.1
670.1
703.5
765.4
822.5

592.9
644.4
680.5
742.8
799.9

21.9
22.9
22.2
22.7
25.2

-.7
2.8
.8
-.1
-2.6

19.3
21.3
23.4
26.1
29.5

69.3
78.4
87.4
97.8
107.5

30.0
34.3
37.9
41.9
44.9

39.3
44.1
49.5
55.9
62.6

1970
1971
1972
1973
1974

1,010.7
1,097.2
1,207.0
1,349.6
1,458.6

858.7
931.2
1,025.3
1,151.5
1,242.7

832.5
900.0
991.7
1,102.2
1,193.9

26.2
28.1
32.6
49.8
47.4

.0
3.1
1.1
-.5
1.4

32.4
35.6
39.0
43.0
47.2

119.5
130.4
142.6
155.1
168.8

48.5
51.1
54.9
57.2
61.1

71.1
79.3
87.7
97.9
107.6

1975
1976
1977
1978
1979

1,585.9
1,768.4
1,974.1
2,232.7
2,488.6

1,346.1
1,507.4
1,691.1
1,921.1
2,147.9

1,291.4
1,450.6
1,633.0
1,858.7
2,069.7

48.8
46.4
47.2
54.7
64.5

6.0
10.4
10.9
7.6
13.8

52.0
57.1
62.4
71.0
78.9

187.7
203.9
220.6
240.7
261.9

66.6
71.0
75.6
81.8
87.1

121.1
132.9
145.0
158.9
174.8

1980
1981
1982
1983
1984

2,708.0
3,030.6
3,149.6
3,405.0
3,777.2

2,328.9
2,611.7
2,692.1
2,914.8
3,251.1

2,259.2
2,530.9
2,634.4
2,855.5
3,191.6

56.1
69.9
65.1
49.2
68.5

13.6
10.9
-7.4
10.2
-9.0

89.3
100.5
111.6
121.3
132.0

289.8
318.4
345.8
368.9
394.1

96.3
107.7
117.3
125.0
132.2

193.5
210.7
228.5
243.9
261.9

1985
1986
1987
1988
1989

4,038.7
4,268.6
4,539.9
4,900.4
5,244.0

3,473.5
3,665.7
3,890.8
4,201.0
4,490.7

3,420.3
3,601.5
3,849.5
4,161.8
4,411.3

67.1
62.9
66.0
67.6
82.1

-13.9
1.2
-24.8
-28.4
-2.7

141.7
153.3
170.5
187.6
205.0

423.6
449.6
478.7
511.7
548.3

140.3
143.7
151.4
159.8
169.2

283.2
305.9
327.3
351.9
379.1

1990
1991 ".

5,513.8
5,671.8

4,699.4
4,802.9

4,605.6
4,702.7

85.7
80.5

8.1
19.6

225.1
246.4

589.2
622.6

179.4
188.8

409.8
433.7

1982: IV
1983: IV
1984: IV
1985: IV
1986: IV
1987: IV

3,195.1
3,547.3
3,869.1
4,140.5
4,336.6
4,683.0

2,724.0
3,046.6
3,330.3
3.561.2
3,718.3
4,016.6

2,674.1
2,986.9
3,283.2
3,501.5
3,656.0
3,970.9

60.0
45.8
67.5
65.7
64.3
70.6

-10.1
13.8
-20.5
-5.9
-2.0
-24.9

115.5
125.1
135.6
145.6
157.8
177.6

355.6
375.6
403.2
433.6
460.5
488.8

121.1
126.2
134.1
142.4
144.9
153.2

234.5
249.4
269.2
291.2
315.6
335.6

1988:1
II
Ill
IV

4,752.4
4,857.2
4,947.3
5,044.6

4,070.6
4,164.0
4,242.2
4.327.3

4,034.0
4,124.9
4,196.4
4.291.9

70.9
67.2
71.6
60.8

-34.4
-28.1
-25.8
-25.4

180.8
185.3
190.1
194.3

501.1
507.8
515.0
523.0

158.5
159.4
160.2
161.3

342.6
348.5
354.9
361.7

1989:1
II
Ill
IV

5,139.9
5,218.5
5,277.3
5,340.4

4,404.6
4,471.7
4,518.3
4,568.0

4,348.2
4,393.5
4.436.2
4,467.6

82.5
83.5
79.6
82.6

-26.0
-5.2
2.5
17.9

198.6
202.8
207.1
211.7

536.7
544.0
551.9
560.6

168.1
168.7
169.4
170.4

368.6
375.3
382.5
390.2

1990:1
II
Ill
IV

5,422.4
5,504.7
5,570.5
5,557.5

4,630.6
4,696.2
4,748.7
4,722.3

4,538.3
4,608.9
4,634.8
4,640.4

87.8
89.6
85.7
79.8

4.4
-2.4
28.2
2.1

216.1
222.2
228.9
233.3

575.7
586.4
592.9
601.9

177.5
180.1
179.1
181.0

398.2
406.2
413.8
420.9

1991:1
II
Ill
IV "...

5,589.0
5,652.6
5,709.2
5,736.6

4,734.7
4,786.8
4,835.0
4,855.0

4,640.1
4,687.2
4,730.1
4,753.5

76.6
83.1
82.9
79.5

18.0
16.5
22.0
22.0

237.5
243.7
249.9
254.4

616.8
622.0
624.3
627.2

189.4
188.7
188.4
188.8

427.4
433.2
435.9
438.3

1

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




308

TABLE B-9.—Gross domestic product by sector in 1987 dollars, 1959-91
[Billions of 1987 dollars; quarterly data at seasonally adjusted annual rates]
Business1
Year or quarter

Gross
domestic
product

Total 1

Nonf arm 1

Farm

Statistical
discrepancy

Households
and
institutions

General government 2
Total

Federal

State
and
local

1959

1,931.3

1,584.7

1,546.0

45.2

-6.5

80.1

266.5

130.5

136.0

1960
1961
1962
1963
1964

1,973.2
2,025.6
2,129.8
2,218.0
2,343.3

1,611.9
1,652.6
1,742.5
1,821.2
1,933.1

1,576.7
1,613.5
1,699.8
1,781.0
1,889.4

46.4
46.9
46.3
47.1
46.0

-11.2
-7.8
-3.6
-6.9
-2.4

86.5
87.5
91.1
93.6
96.5

274.8
285.6
296.2
303.2
313.7

132.1
135.3
141.6
140.9
141.7

142.7
150.3
154.7
162.3
172.0

1965
1966
1967
1968
1969

2,473.5
2,622.3
2,690.3
2,801.0
2,877.1

2,048.2
2,168.7
2,213.2
2,307.1
2,370.3

2,004.6
2,115.2
2,164.0
2,262.1
2,330.8

46.1
44.5
46.5
45.1
46.8

-2.5
9.1
2.6
-.1
-7.3

100.4
104.7
108.3
111.8
115.5

324.8
348.9
368.9
382.1
391.3

142.3
155.4
168.1
170.7
171.2

182.5
193.5
200.8
211.4
220.1

1970
1971
1972
1973
1974

2,875.8
2,965.1
3,107.1
3,268.6
3,248.1

2,370.3
2,456.6
2,594.8
2,749.7
2,719.6

2,320.8
2,397.7
2,541.3
2,702.0
2,666.0

49.5
50.5
50.7
48.6
50.7

.0
8.3
2.8
-1.0
3.0

114.1
116.7
120.0
123.2
124.3

391.4
391.8
392.2
395.7
404.1

161.6
152.4
143.7
138.0
137.9

229.8
239.5
248.6
257.7
266.2

3,221.7
3,380.8
3,533.2
3,703.5
3,796.8

2,684.6
2,840.1
2,987.9
3,144.2
3,226.0

2,619.6
2,768.1
2,914.6
3,083.8
3,155.0

53.1
52.5
53.8
48.2
50.4

11.9
19.5
19.4
12.2
20.6

128.0
128.6
129.8
135.1
138.3

409.1
412.0
415.6
424.2
432.5

137.1
137.0
137.0
138.4
137.5

272.0
275.0
278.6
285.8
295.0

1980
1981
1982
1983
1984

3,776.3
3,843.1
3,760.3
3,906.6
4,148.5

3,193.4
3,253.6
3,167.3
3,308.2
3,541.7

3,123.4
3,179.2
3,115.8
3,243.1
3,496.4

51.0
60.8
60.2
53.7
55.1

19.0
13.6
-8.7
11.5
-9.8

142.6
145.6
148.9
151.0
154.9

440.3
443.9
444.2
447.4
451.9

139.2
140.9
142.4
144.8
146.4

301.1
303.0
301.8
302.6
305.4

1985
1986
1987
1988
1989

4,279.8
4,404.5
4,540.0
4,718.6
4,836.9

3,658.1
3,768.3
3,890.8
4,050.6
4,150.4

3,608.6
3,702.8
3,849.6
4,014.8
4,085.9

64.2
64.3
66.0
63.2
67.2

-14.7
1.3
-24.8
-27.4
-2.7

159.9
166.3
170.5
180.6
189.7

461.8
469.9
478.7
487.4
496.8

148.6
149.0
151.4
153.5
154.1

313.2
320.8
327.3
333.9
342.7

1990
1991 ".
1982: IV
1983: IV
1984: IV
1985: IV
1986: IV
1987: IV

4,884.9
4,848.4

4,180.4
4,134.1

4,101.9
4,044.0

71.4
73.2

7.2
16.9

195.7
202.2

508.8
512.1

155.7
155.2

353.1
356.9

3,759.6
4,012.1
4,194.2
4,333.5
4,427.1
4,625.5

3,166.3
3,411.5
3,583.0
3,706.1
3,786.7
3,969.9

3,116.9
3,349.0
3,548.9
3,646.8
3,724.4
3,925.5

61.1
47.0
56.1
65.5
64.4
69.0

-11.7
15.5
-22.0
-6.2
-2.1
-24.6

149.6
151.7
156.8
162.3
166.9
173.2

443.8
448.9
454.4
465.1
473.5
482.3

143.2
145.2
147.1
148.7
149.8
152.8

300.6
303.7
307.3
316.5
323.7
329.5

1988:1
II
Ill
IV

4,655.3
4,704.8
4,734.5
4,779.7

3,994.7
4,039.7
4,063.6
4,104.2

3,956.8
4,001.2
4,026.8
4,074.5

71.7
65.8
61.6
53.8

-33.8
-27.2
-24.7
-24.1

176.2
179.0
182.4
184.7

484.4
486.1
488.4
490.7

153.3
153.2
153.6
154.0

331.2
332.8
334.8
336.7

1989:1
II
Ill
IV

4,809.8
4,832.4
4,845.6
4,859.7

4,129.9
4,148.0
4,157.0
4,166.6

4,088.4
4,084.0
4,087.9
4,083.2

65.9
68.9
66.7
67.1

-24.4
-4.8
2.3
16.3

187.2
189.3
190.6
191.8

492.7
495.1
498.1
501.3

153.8
153.8
154.2
154.5

338.9
341.2
343.8
346.7

1990:1
II
Ill
IV

4,880.8
4,900.3
4,903.3
4,855.1

4,183.3
4,196.7
4,196.4
4,145.1

4,109.4
4,126.9
4,099.9
4,071.2

69.9
72.0
71.7
72.0

4.0
-2.1
24.9
1.9

192.8
194.8
197.2
197.9

504.7
508.7
509.6
512.1

155.0
156.4
155.3
156.2

349.7
352.3
354.4
356.0

1991:1
II
Ill
IV

4,824.0
4,840.7
4,862.7
4,866.3

4,111.4
4,126.4
4,148.6
4,150.1

4,024.6
4,040.1
4,055.6
4,055.9

71.1
72.1
74.1
75.5

15.7
14.3
18.9
18.8

198.8
201.1
203.1
205.7

513.9
513.2
511.0
510.5

157.0
155.5
154.4
153.8

356.9
357.7
356.6
356.6

1975
1976
1977
1978
1979

_.

1

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




309

TABLE B-10.—Gross domestic product of nonfinancial

corporate business,

1959-91

[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Net domestic product

Year or
quarter

Gross
domestic
product
of
noninancial
corporate
business

Domestic income
Consumption
of
fixed
capital

Total

Indirect
business
taxes i

Corporate profits with inventory valuation and capital
consumption adjustments

Total

Compensation of
employ-

Profits

Inventory
valuation
Divi- Undis- adjustdends tributed ment
profits

Profits after tax
Total

Profits Profits
before
tax
tax liability Total

Capital Net
conintersump- est
tion
adjustment

1959
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969

267.5
278.1
285.5
311.7
331.7
358.1

24.2

243.2

26.0

217.2

171.5

42.6

43.6

20.7

22.9

10.0

12.9

-0.3

-0.7

3.1

25.2
26.0
26.9
28.1
29.5

252.8
259.6
284.8
303.7
328.6

28.3
29.5
32.0
34.0
36.6

224.6
230.1
252.8
269.7
292.0

181.2
185.3
200.1
211.1
226.7

40.0
40.8
48.2
53.8
60.0

40.3
40.1
45.0
49.8
56.0

19.2
19.5
20.6
22.8
24.0

21.1
20.7
24.3
27.0
32.1

10.6
10.6
11.4
12.6
13.7

10.6
10.1
13.0
14.4
18.4

—.2

-.2

.0
.1
-.5

Z.2
3.9
4.5

3.5
4.0
4.5
4.8
5.3

393.5
431.0
453.5
500.5
543.2

31.5
34.3
37.5
41.4
45.3

362.0
396.7
415.9
459.1
497.9

39.2
40.4
43.2
49.8
54.7

322.8
356.2
372.8
409.3
443.3

246.5
274.0
292.3
323.2
358.8

70.3
74.9
71.8
76.0
71.3

66.2
71.4
67.5
74.0
70.8

27.2
29.5
27.8
33.6
33.3

39.0
41.9
39.7
40.4
37.5

15.6
16.8
17.5
19.1
19.1

23.4
25.1
22.2
21.3
18.4

-1.2
-2.1
-1.6
-3.7
-5.9

5.3
5.6
5.8
5.6
6.3

6.1
7.4
8.8
10.1
13.2

1970
1971
1972
1973
1974

561.3
606.2
673.2
754.5
814.8

49.7
54.6
61.0
66.2
77.5

511.6
551.6
612.3
688.3
737.2

58.8
64.4
69.1
76.3
81.5

452.8
487.3
543.2
612.0
655.7

378.7
402.0
447.1
505.9
556.8

57.1
67.2
77.0
83.6
70.6

58.1
67.1
78.6
98.6
109.2

27.2
29.9
33.8
40.2
42.2

31.0
37.1
44.8
58.4
67.0

18.5
18.5
20.1
21.1
21.7

12.5 - 6 . 6
18.7 - 4 . 6
24.7 - 6 . 6
37.3 - 2 0 . 0
45.2 - 3 9 . 5

5.5
4.7
5.0
5.0

17.1
18.1
19.2
22.5
28.3

881.1
994.4
1,124.3
1,279.2
1,423.6

93.3
700.6
787.8 87.2
103.8
795.7
890.6 94.9
116.2 1,008.1 103.9
904.2
132.3 1,146.9 113.6 1,033.3
153.0 1,270.6 121.9 1,148.7

580.3
656.7
741.6
850.9
965.5

91.5
111.5
132.0
146.1
138.1

109.9
137.3
158.6
183.5
195.5

41.5
53.0
59.9
67.1
69.6

68.4
84.4
98.7
116.4
125.9

24.8
27.8
32.0
37.2
39.3

43.6
56.6
66.8
79.1
86.7

-11.0
-14.9
-16.6
-25.0
-41.6

-7.4
-10.9
-10.0
-12.3
-15.9

28.7
27.5
30.6
36.3
45.1

1,546.8
1,749.1
1,803.5
1,937.1
2,167.3

174.8
207.0
229.4
242.1
248.1

1,372.1
1,542.1
1,574.1
1,695.0
1,919.1

137.8
165.8
166.9
182.6
202.5

1,234.3
1,376.3
1,407.2
1,512.3
1,716.6

1,055.4
1,167.4
1,213.2
1,275.7
1,414.4

120.7
136.9
111.5
159.9
214.3

181.6
181.0
132.9
155.9
189.0

67.0
63.9
46.3
59.4
73.7

114.6
117.1
86.7
96.4
115.4

45.5
53.4
56.4
66.5
69.5

69.1 - 4 3 . 0 - 1 7 . 8
63.7 - 2 5 . 7 - 1 8 . 4
30.2 - 9 . 9 - 1 1 . 5
12.5
29.9 - 8 . 5
29.4
45.9 - 4 . 1

58.2
71.9
82.5
76.7
87.9

2,295.5
2,391.3
2,544.6
2,762.1
2,910.8

258.0
271.4
281.4
297.5
316.2

2,037.5
2,119.9
2,263.2
2,464.6
2,594.7

216.4
230.0
237.1
254.3
268.8

1,821.0
1,889.9
2,026.1
2,210.3
2,325.9

1,509.0
1,587.8
1,676.1
1,814.4
1,922.9

221.4
203.8
244.2
274.4
261.0

165.5
149.1
212.0
256.6
251.5

69.9
75.6
93.5
101.7
99.2

95.6
73.5
118.5
154.9
152.3

74.5
76.3
77.9
82.0
104.4

3,008.9 327.3 2,681.6 285.5 2,396.1 2,023.3
3,052.3 343.3 2,709.0 307.7 2,401.3 2,052.6

224.3
203.3

232.5
202.4

96.1
83.0

136.4
119.4

112.2
116.5

5.9 148.5
24.2 - 1 4 . 2
2.9
3.8 - 2 . 9 145.4

1,807.1
2,038.1
2,230.0
2,341.3
2,428.4
2,625.9

238.8
261.5
258.9
263.4
275.8
286.1

1,568.3
1,776.6
1,971.1
2,077.9
2,152.7
2,339.8

169.9
190.4
208.7
220.3
232.7
242.2

1,398.4
1,586.2
1,762.5
1,857.6
1,920.0
2,097.6

1,217.4
1,332.2
1,455.2
1,546.1
1,618.0
1,731.6

101.5
175.2
211.4
221.4
198.6
256.8

116.5
168.1
169.0
168.4
168.5
224.8

40.6
64.4
62.6
71.1
86.5
99.6

75.9
103.7
106.4
97.2
82.0
125.1

59.0
67.4
68.7
74.7
75.2
84.0

16.9 - 8 . 6 - 6 . 4 79.6
14.7 78.9
36.3 - 7 . 6
3.5 38.9 95.8
37.7
56.9 90.0
22.5 - 3 . 8
40.8 103.5
6.8 - 1 0 . 7
49.8 109.2
41.2 - 1 7 . 8

2,685.3
2,740.9
2,782.2
2,840.1

291.3
295.4
298.7
304.5

2,393.9
2,445.5
2,483.5
2,535.6

247.8
251.8
256.7
260.9

2,146.1
2,193.7
2,226.8
2,274.7

1,758.1
1,798.7
1,832.9
1,867.8

273.3
275.7
270.0
278.5

243.3
254.3
257.5
271.4

95.9
101.1
102.0
107.9

147.4
153.2
155.5
163.5

70.9
79.9
92.8
84.3

76.5
73.3
62.7
79.2

2,870.3
2,901.1
2,928.7
2,943.3

308.6
311.7
320.1
324.4

2,561.7
2,589.5
2,608.6
2,618.8

262.6
267.3
272.4
272.8

2,299.1
2,322.2
2,336.2
2,346.1

1,896.7
1,910.2
1,928.9
1,955.7

267.6
269.9
261.9
244.5

270.5
254.8
241.2
239.5

108.0
100.7
94.8
93.4

162.5
154.1
146.5
146.0

2,974.7
3,025.6
3,021.2
3,014.2

322.5
324.9
328.9
333.1

2,652.2
2,700.7
2,692.4
2,681.1

279.8
281.1
288.0
293.2

2,372.4
2,419.7
2,404.3
2,387.9

1,982.0
2,021.4
2,046.0
2,043.8

244.7
249.7
209.4
193.3

237.1
236.9
239.1
216.9

98.2
98.1
99.1
89.0

3,011.8 339.6 2,672.2 301.3 2,370.9 2,028.0
3,043.9 342.5 2,701.4 303.0 2,398.5 2,046.1
3,070.1 343.8 2,726.3 312.2 2,414.1 2,063.5
314.4
347.1
2,072.8

194.4
206.4
205.5

194.4
202.4
211.7

79.9
83.6
87.2

1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991 *
1982: IV..
1983: IV..
1984: IV..
1985: IV..
1986: IV..
1987: IV..
1988:1
IV..
1989:1
IV
1990:1
II
Ill
IV
1991:1
II
Ill
IV ".
..

310

55.6 90.7
44.9 98.3
46.7 105.8
45.0 121.6
27.0 142.0

-18.8
-26.1
-32.6
-31.7

48.8
47.5
45.1
38.8

114.7
119.3
123.9
128.4

108.4
103.0
104.7
101.4

54.1 - 3 7 . 6
51.1 - 1 5 . 7
41.8 - 3 . 3
44.6 - 1 3 . 5

34.7
30.8
24.0
18.6

134.8
142.1
145.4
145.9

138.9
138.8
140.0
127.9

111.6
107.7
109.5
119.9

14.2
27.2 - 6 . 6
9.0
3.8
31.1
2.9
30.5 - 3 2 . 6
8.0 - 2 1 . 2 - 2 . 4

145.7
148.5
149.0
150.9

114.5
118.9
124.5

114.1
115.3
117.3
119.3

6.7 - 6 . 6
9.9 - 5 . 9
-4.8 -1.4
2.3
3.3

148.4
145.9
145.1
142.3

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




.2
21.1
9.7
-2.8
40.6 - 1 4 . 5
72.9 - 2 7 . 3
47.9 - 1 7 . 5

.4
3.6
7.2

TABLE B-ll.—Output, costs, and profits of nonfinancial corporate business, 1959-91
[Quarterly data at seasonally adjusted annual rates]

Year or quarter

Gross domestic
product of
nonfinancial
corporate
business
(billions of
dollars)
Current
dollars

1987
dollars

Current-dollar cost and profit per unit of output (dollars) 1
Total
cost
and
profit 2

Corporate profits with
inventory valuation and
capital consumption
adjustments

ConComsump- Indipention
rect
sation
of
busiof
ness
fixed
cap- taxes 3 employees
ital

Total

Profits
tax
liability

Profits
after
tax 4

Net
interest

Output Compenper hour sation
of all per hour
of all
employees
employ(1987
ees
dollars) (dollars)

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
1988
1989
1990
1991 *
1982: IV
1983: IV
1984: IV
1985: IV
1986: IV
1987: IV

928.7
955.5
978.2
1,047.5
1,104.6
1,179.1
1,262.1
431.0 1,335.9
453.5 1,367.6
500.5 1,444.5
543.2 1,492.4
561.3 1,473.2
606.2 1,525.5
673.2 1,629.3
754.5 1,706.9
814.8 1,669.9
881.1 1,625.3
994.4 1,748.2
1,124.3 1,866.1
1,279.2 1,966.8
1,423.6 1,995.5
1,981.4
1,546.8
1,749.1 2,035.8
1,803.5 2,002.1
1,937.1 2,113.3
2,167.3 2,285.0
2,366.3
2,295.5 2,444.3
2,391.3
2,544.6
2,544.6
2,762.1 2,682.2
2,910.8 2,715.3
2,717.4
3,008.9 2,690.5
3,052.3 2,000.5
1,807.1 2,205.2
2,038.1 2,330.3
2,230.0 2,399.5
2,341.3 2,469.0
2,428.4 2,602.4
2,625.9

0.288
.291
.292
.298
.300
.304
.312
.323
.332
.347
.364
.381
.397
.413
.442
.488
.542
.569
.603
.650
.713
.781
.859
.901
.917
.949
.970
.978
1.000
1.030
1.072
1.107
1.134
.903
.924
.957
976
.984
1.009

0.026
.026
.027
.026
.025
.025
.025
.026
.027
.029
.030
.034
.036
.037
.039
.046
.057
.059
.062
.067
.077
.088
.102
.115
.115
.109
.109
.111
.111
.111
.116
.120
.128
.119
.119
.111
.110
.112
.110

0.028
.030
.030
.031
.031
.031
.031
.030
.032
.034
.037
.040
.042
.042
.045
.049
.054
.054
.056
.058
.061
.070
.081
.083
.086
.089
.091
.094
.093
.095
.099
.105
.114
.085
.086
.090
.092
.094
.093

0.185
.190
.189
.191
.191
.192
.195
.205
.214
.224
.240
.257
.264
.274
.296
.333
.357
.376
.397
.433
.484
.533
.573
.606
.604
.619
.638
.650
.659
.676
.708
.745
.763
.609
.604
.624
.644
.655
.665

0.046
.042
.042
.046
.049
.051
.056
.056
.052
.053
.048
.039
.044
.047
.049
.042
.056
.064
.071
.074
.069
.061
.067
.056
.076
.094
.094
.083
.096
.102
.096
.083
.076
.051
.079
.091
.092
.080
.099

0.022
.020
.020
.020
.021
.020
.022
.022
.020
.023
.022
.018
.020
.021
.024
.025
.026
.030
032
!034
.035
.034
.031
.023
.028
.032
.030
.031
.037
.038
.037
.035
.031
.020
.029
.027
.030
.035
.038

0.024
.022
.022
.026
.028
.031
.034
.034
.032
.029
.025
.020
.024
.027
.025
.017
.031
.033
.039
.040
.034
.027
.036
.033
.048
.062
.064
.052
.059
.064
.060
.047
.045
.030
.050
.064
.063
.045
.060

0.003
.004
.004
.004
.004
.005
.005
.006
.006
.007
.009
.012
.012
.012
.013
.017
.018
.016
.016
.018
.023
.029
.035
.041
.036
.038
.038
.040
.042
.045
.052
.055
.054
.040
.036
.041
.038
.042
.042

15.442
15.657
16.167
16.661
17.190
17.841
18.061
18.145
18.356
18.856
18.742
18.759
19.467
19.762
19.741
19.226
19.729
20.324
20.745
20.693
20.214
20.276
20.560
20.827
21.597
21.905
22.144
22.737
23.047
23.472
23.059
23.062

2.851
2.968
3.063
3.183
3.284
3.430
3.527
3.721
3.923
4.219
4.506
4.825
5.133
5.425
5.855
6.416
7.053
7.644
8.244
8.952
9.780
10.800
11.790
12.620
13.037
13.559
14.121
14.770
15.181
15.782
16.330
17.171

21.103
21.905
22.050
22.340
22.891
23.268

12.842
13.233
13.770
14.395
15.001
15.483

1988:1
II
III
IV
1989:1
II
Ill
IV

2,685.3
2,740.9
2,782.2
2,840.1

2,648.6
2,677.5
2,685.6
2,717.1

1.014
1.024
1.036
1.045

.110
.110
.111
.112

.094
.094
.096
.096

.664
.672
.682
.687

.103
.103
.101
.102

.036
.038
.038
.040

.067
.065
.063
.063

.043
.045
.046
.047

23.518
23.512
23.411
23.423

15.517
15.700
15.882
16.005

2,870.3
2,901.1
2,928.7
2,943.3

2,714.9
2,712.7
2,718.5
2,715.3

1.057
1.069
1.077
1.084

.114
.115
.118
.119

.097
.099
.100
.100

.699
.704
.710
.720

.099
.096
.090

.040
.037
.035
.034

.059
.062
.061
.056

.050
.052
.053
.054

23.159
.23.039
23.007
22.967

16.180
16.223
16.325
16.542

1990:1
||
III
IV
1991:1
II .
Ill

2,974.7
3,025.6
3,021.2
3,014.2

2,720.0
2,741.6
2,710.4
2,697.6

1.094
1.104
1.115
1.117

.119
.119
.121
.123

.103
.103
.106
.109

.729
.737
.755
.758

.090
.091
.077
072

.036
.036
.037
033

.054
.055
.041
.039

.054
.054
.055
.056

22.973
23.181
22.952
23.110

16.740
17.092
17.325
17.509

3,011.8
3,043.9
3.070.1

2,668.1
2,682.1
2,699.0

1.129
1.135
1.138

.127
.128
.127

.113
.113
.116

.760
.763
.765

.073
.077
.076

.030
.031
.032

.043
.046
.044

.056
.054
.054

23.188
23.355
23.456

17.625
17.818
17.933

267.5
278.1
285.5
311.7
331.7
358.1
393.5

1
2

Output is measured by gross domestic product of nonfinancial corporate business in 1987 dollars.
This is equal to the deflator for gross domestic product of nonfinancial corporate business with the decimal point shifted two
places to the left.
3
Indirect business tax and nontax liability plus business transfer payments less subsidies.
4
With inventory valuation and capital consumption adjustments.
Sources: Department of Commerce (Bureau of Economic Analysis) and Department of Labor (Bureau of Labor Statistics).




311

TABLE B-12.—Personal consumption expenditures,

1959-91

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

Year or
quarter

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
1988
1989
1990
1991 "
1982: IV....
1983: IV....
1984: IV....
1985: IV....
1986: IV....
1987: IV....
1988:1
II
III....
IV....
1989:1
II
III....
IV....
1990:1
II
III....
IV....
1991:1
IV "...

Nondurable goods

FurniPersonal
Motor ture
convehiand
sumption
expendi- Total 1 cles louse- Total'
and
hold
tures
parts equip-

318.1
332.4
343.5
364.4
384.2
412.5
444.6
481.6
509.3
559.1
603.7
646.5
700.3
767.8
848.1
927.7
1,024.9
1,143.1
1,271.5
1,421.2
1,583.7
1,748.1
1,926.2
2,059.2
2,257.5
2,460.3
2,667.4
2,850.6
3,052.2
3,296.1
3,517.9
3,742.6
3,886.8
2,128.7
2,346.8
2,526.4
2,739.8
2,923.1
3,124.6
3,199.1
3,260.5
3,326.6
3,398.2
3,436.5
3,490.6
3,551.7
3,592.8
3,667.3
3,706.0
3,785.2
3,812.0
3,827.7
3,868.5
3,916.4
3,934.4

42.8
43.5
41.9
47.0
51.8
56.8
63.5
68.5
70.6
81.0
86.2
85.3
97.2
110.7
124.1
123.0
134.3
160.0
182.6
202.3
214.2
212.5
228.5
236.5
275.0
317.9
352.9
389.6
403.7
437.1
459.8
465.9
445.2
246.9
297.7
328.2
354.4
406.8
408.8
428.8
433.1
433.5
452.9
449.4
457.2
474.5
458.0
479.9
464.6
467.1
451.9
440.7
440.0
452.9
447.2

18.9
19.7
17.8
21.5
24.4
26.0
29.9
30.3
30.0
36.1
38.4
35.5
44.5
51.1
56.1
49.5
54.8
71.3
83.5
92.2
91.5
84.0
91.6
97.7
120.6
144.6
167.4
184.9
183.5
197.8
205.6
203.7
183.8
105.1
134.8
149.3
162.9
188.2
186.3
198.2
196.4
193.3
203.4
201.4
204.3
218.1
198.7
213.9
203.6
204.7
192.5
180.7
179.3
188.4
186.6

18.1
18.0
18.3
19.3
20.7
23.2
25.1
28.2
30.0
32.9
34.7
35.7
37.8
42.4
47.9
51.5
54.5
60.2
67.1
74.0
82.3
86.0
91.3
92.5
104.4
115.3
123.4
135.5
144.0
156.7
168.1
173.2
171.9
95.6
109.7
118.7
128.1
140.6
145.9
150.8
155.7
158.0
162.5
165.3
167.5
169.2
170.5
176.1
173.4
173.1
170.4
171.1
172.8
173.9
169.8

148.5
153.1
157.4
163.8
169.4
179.7
191.9
208.5
216.9
235.0
252.2
270.4
283.3
305.2
339.6
380.8
416.0
451.8
490.4
541.5
613.3
682.9
744.2
772.3
817.8
873.0
919.4
952.2
1,011.1
1,073.8
1,146.9
1,217.7
1,251.0
787.3
839.8
887.8
939.5
963.7
1,029.4
1,041.5
1,062.0
1,085.8
1,105.8
1,120.0
1,142.5
1,155.3
1,169.8
1,194.9
1,200.9
1,228.4
1,246.4
1,246.3
1,252.9
1,257.4
1,247.6

ClothFood

and
shoes

26.4
11.3
27.0
12.0
12.0
27.6
12.6
29.0
13.0
29.8
13.6
32.4
14.8
34.1
16.0
37.4
17.1
39.2
18.6
43.2
20.5
46.5
21.9
47.8
23.2
51.7
24.4
56.4
28.1
62.5
36.1
66.0
39.7
70.8
43.0
76.6
46.9
84.1
50.1
94.3
66.2
101.2
86.7
107.3
117.2 97.9
94.1
120.5
93.3
130.8
94.5
142.5
96.9
152.2
79.7
163.2
84.7
174.5
86.9
186.4
95.5
200.5
106.8
208.7
102.9
210.9
93.0
122.7
949
136.7
94.9
145.7
97.6
156.2
73.0
165.8
87.8
177.6
85.2
180.1
86.3
183.2
87.6
188.1
88.5
194.4 89.0
195.1
97.9
199.7
97.1
202.7
97.9
204.7 100.4
208.5
97.3
208.3 106.4
211.0 123.2
206.8 105.0
208.2 102.0
212.8 101.7
214.6 102.9
207.9

80.7
82.6
84.8
87.1
89.5
94.6
101.0
109.0
112.3
121.6
130.5
142.1
147.5
158.5
176.1
198.1
218.5
236.0
255.9
280.6
313.0
341.8
367.3
386.0
406.2
430.2
451.1
476.8
500.7
533.6
563.3
595.8
618.7
394.9
413.9
436.8
460.7
486.7
507.4
515.8
528.0
541.1
549.5
556.6
560.3
565.3
571.0
585.2
592.3
601.1
604.8
616.3
620.5
620.4
617.7

1

Includes other items not shown separately.
Includes imputed rental value of owner-occupied housing.
Source: Department of Commerce, Bureau of Economic Analysis.
2




Gasoline
and
oil

312

Services

Fuel
oil
and
coal

4.0
3.8
3.8
3.8
4.0
4.1
4.4
4.7
4.8
4.7
4.6
4.4
4.6
5.1
6.3
7.8
8.4
10.1
11.1
11.5
14.4
15.4
15.8
14.5
13.8
14.2
14.1
12.0
12.0
12.1
12.0
12.5
11.6
14.0
14.1
13.8
14.3
11.3
12.2
12.3
12.1
12.1
11.7
11.1
11.8
11.7
13.4
11.9
11.7
13.3
13.1
12.2
11.4
11.7
11.1

Household
operation
Totall

Housing2
Total

126.8
135.9
' 144.1
153.6
163.1
175.9
189.2
204.6
221.7
243.1
265.3
290.8
319.8
351.9
384.5
423.9
474.5
531.2
598.4
677.4
756.2
852.7
953.5
1,050.4
1,164.7
1,269.4
1,395.1
1,508.8
1,637.4
1,785.2
1.911.2
2,059.0
2,190.5
1,094.6
1,209.3
1,310.4
1,446.0
1,552.6
1,686.4
1,728.8
1,765.4
1,807.3
1,839.5
1,867.1
1,891.0
1,921.9
1,965.0
1,992.5
2,040.4
2,089.6
2,113.6
2,140.7
2,175.6
2,206.1
2,239.6

45.0
48.2
51.2
54.7
58.0
61.4
65.4
69.5
74.1
79.7
86.8
94.0
102.7
112.1
122.7
134.1
147.0
161.5
179.5
201.7
226.6
255.2
287.1
311.1
334.6
362.3
392.5
421.8
452.5
484.2
514.3
547.1
574.6
320.2
344.6
373.8
404.6
432.7
466.6
473.5
479.5
487.8
496.0
502.2
508.8
518.2
527.9
534.1
541.5
553.6
559.3
565.7
571.7
577.0
583.8

1

Trans- Medical
Elec- portacare
tricity tion
and

18.7
7.6
20.3
8.3
21.2
8.8
22.4
9.4
23.6
9.9
25.0
10.4
26.5
10.9
28.2
11.5
30.2
12.2
32.3
13.0
35.1
14.0
37.8
15.2
41.0
16.6
45.3
18.4
49.8
20.0
55.5
23.5
63.7
28.5
72.4
32.5
81.9
37.6
91.2 42.1
100.0 46.8
113.0
56.3
126.0
63.4
141.4
72.6
153.6 80.7
165.5 84.6
176.2
88.7
181.1
87.1
187.8
88.4
199.5 93.4
208.4 97.6
212.7
97.2
224.8 102.5
145.8
74.9
159.3 84.8
168.8 85.9
180.7
90.1
182.5
86.8
189.7
88.6
194.9 92.2
196.8 91.7
202.4 94.5
203.8 95.3
206.0 96.4
204.8 94.7
207.2 96.1
215.5 103.1
205.2
91.7
213.4 98.3
215.8
99.1
216.5 99.6
218.6 99.8
225.4 103.7
226.5 102.4
228.8 104.0

10.5
11.2
11.7
12.2
12.7
13.4
14.5
15.9
17.3
18.9
20.9
23.7
27.1
29.8
31.2
33.3
35.7
41.3
49.2
53.6
59.4
65.1
69.4
71.6
78.9
89.1
99.0
105.8
116.6
128.5
138.0
147.6
155.9
73.6
82.9
92.5
101.5
109.0
121.3
122.7
127.5
130.9
132.7
135.7
136.1
138.6
141.5
144.1
146.2
148.5
151.7
152.2
153.9
157.4
160.2

16.3
17.4
18.6
20.7
22.4
25.7
27.7
30.5
33.7
39.0
44.4
50.1
56.5
63.5
71.2
80.1
93.0
106.2
122.4
139.7
157.8
181.3
213.6
240.5
265.7
290.6
319.3
346.4
384.7
427.7
472.2
523.1
576.8
250.9
274.8
299.9
333.0
358.4
398.5
409.9
421.4
435.1
444.4
457.4
466.4
475.7
489.3
501.8
515.8
531.3
543.4
555.9
570.0
583.5
597.7

TABLE B-13-—Personal consumption expenditures in 1987 dollars,

1939-91

[Billions of 1987 dollars; quarterly data at seasonally adjusted annual rates]
Durable goods

Year or
quarter

Personal
consumption
expendi- Total 1
tures

Nondurable goods

FurniMotor
ture
vehiand
cles house- Total *
and
hold
parts equipment

Cloth-

Food

and
shoes

Gasoline
and
oil

Services

Fuel
oil
and
coal

Household
operation
Total!

Housing 2
Total'

Electricity
and
gas

Transportation

1959
1960
1961
1962
1963
1964

1,178.9

114.4

59.7

38.2

518.5 301.9

58.2

38.1

22.6

546.0

159.8

75.0

34.5

45.4

1,210.8
1,238.4
1,293.3
1,341.9
1,417.2

115.4
109.4
120.2
130.3
140.7

61.3
54.9
62.2
68.4
71.2

37.7
38.1
40.4
43.1
48.3

526.9
537.7
553.0
563.6
588.2

305.8
312.1
316.3
319.2
331.0

58.7
59.8
62.4
63.6
68.5

39.4
39.8
41.5
42.8
45.1

21.7
20.6
20.6
21.6
22.5

568.5 168.1
591.3 176.0
620.0 185.8
648.0 194.4
688.3 203.5

78.5
81.2
85.2
88.4
92.6

36.3
38.3
40.9
42.8
45.1

46.7
47.0
48.7
50.5
53.0

1965
1966
1967
1968
1969

1,497.0
1,573.8
1,622.4
1,707.5
1,771.2

156.2
166.0
167.2
184.5
190.8

81.2
81.8
80.3
91.8
95.1

52.1
57.6
59.5
62.9
64.3

616.7
647.6
659.0
686.0
703.2

346.5
359.1
364.5
380.7
389.7

71.5
76.3
76.9
80.2
81.9

47.3
50.2
51.8
55.5
59.2

23.5
24.2
24.2
23.0
21.8

724.1
760.2
796.2
837.0
877.2

214.6
224.4
234.5
246.0
259.1

96.8
101.4
106.2
110.1
115.3

47.2
49.7
52.4
55.0
58.0

55.4
58.6
62.0
65.4
68.9

1970
1971
1972
1973
1974

1,813.5
1,873.7
1,978.4
2,066.7
2,053.8

183.7
201.4
225.2
246.6
227.2

85.6
100.8
114.3
123.4
102.2

64.4
66.8
73.6
81.5
81.9

717.2
725.6
755.8
777.9
759.8

397.5
399.2
411.9
412.6
404.7

81.0
84.6
90.4
96.9
95.4

62.9
65.9
68.6
72.1
68.6

20.2
912.5 269.3
19.5 946.7 280.9
21.5
997.4 295.9
23.3 1,042.2 310.8
18.4 1,066.8 326.9

118.9
120.8
126.8
132.0
132.5

60.4
61.8
64.9
66.5
66.9

71.0
73.6
77.8
79.6
79.9

1975
1976
1977
1978
1979

2,097.5
2,207.3
2,296.6
2,391.8
2,448.4

226.8
256.4
280.0
292.9
289.0

102.9
124.6
137.3
141.5
130.5

79.1
84.2
91.4
96.6
101.3

767.1
801.3
819.8
844.8
862.8

413.2
431.9
441.5
442.8
448.0

98.5
103.2
108.7
119.0
124.1

70.6
73.4
75.7
77.4
76.4

18.1
20.3
19.6
19.5
18.1

1,103.6
1,149.5
1,196.8
1,254.1
1,296.5

336.5
346.7
355.4
372.9
387.9

138.1
143.9
151.0
158.0
162.9

70.4
72.9
76.0
78.8
79.3

81.4
84.4
90.2
92.9
96.1

1980
1981
1982
1983
1984

2,447.1
2,476.9
2,503.7
2,619.4
2,746.1

262.7
264.6
262.5
297.7
338.5

111.4
113.5
115.6
138.1
160.3

98.5
97.7
94.2
104.3
115.3

860.5
867.9
872.2
900.3
934.6

448.8
446.6
451.4
463.4
472.3

126.0
132.8
133.7
142.4
153.1

72.0
73.2
73.9
75.7
77.9

14.0
11.8
10.9
11.1
11.2

1,323.9
1,344.4
1,368.9
1,421.4
1,473.0

399.4
407.3
409.6
415.5
426.8

167.1
165.6
166.7
169.4
173.7

81.6
80.3
81.2
83.7
84.3

91.3
88.9
87.4
91.6
100.0

1985
1986
1987
1988
1989

2,865.8
2,969.1
3,052.2
3,162.4
3,223.1

370.1
402.0
403.7
428.7
440.8

180.2
193.3
183.5
194.8
196.2

123.8 958.7 483.0
136.3 991.0 494.1
144.0 1,011.1 500.7
155.4 1,035.1 513.4
166.1 1,049.3 513.3

158.8
170.3
174.5
178.9
187.9

79.2
82.9
84.7
86.1
86.7

11.5
12.1
12.0
12.0
11.5

1,537.0
1,576.1
1,637.4
1,698.5
1,732.9

435.9
442.1
452.5
461.8
469.0

179.1
180.8
187.8
196.9
201.5

86.6
85.6
88.4
92.7
94.2

109.2
112.6
116.6
122.5
126.0

1990
1991 ".
1982: IV
1983: IV
1984: IV
1985: IV
1986: IV
1987: IV

3,262.6
3,256.7

438.9
412.5

191.4
167.6

170.6 1,050.8 515.8
170.5 1,042.3 516.6

187.4
182.9

85.0
83.1

10.0 1,773.0 474.5
9.6 1,801.9 478.8

202.1
206.2

92.2
94.2

129.0
128.3

2,539.3
2,678.2
2,784.8
2,895.3
3,012.5
3,074.7

272.3
319.1
347.7
369.6
415.7
404.7

123.7
151.6
164.3
173.9
193.6
183.6

96.4
880.7 458.3
109.3 915.2 467.1
118.7
942.9 475.1
128.6 968.7 488.2
141.4 1,000.9 496.9
145.9 1,014.6 502.4

135.7
147.7
154.7
161.7
171.9
174.5

73.4
76.9
79.0
79.5
84.6
85.4

10.5
11.4
11.1
11.4
12.4
11.9

1,386.2
1,443.9
1,494.2
1,557.1
1,595.8
1,655.5

411.0
419.7
431.3
438.1
444.8
457.0

166.2
173.3
174.8
182.6
182.8
189.3

80.2
86.8
84.5
88.5
86.8
88.6

88.2
94.2
103.5
111.2
113.4
117.9

1988:1
II
Ill
IV

3,128.2 425.1
3,147.8 426.9
3,170.6 423.8
3,202.9 439.2

197.1
195.0
189.6
197.7

150.5
154.3
156.3
160.3

1,023.5
1,031.0
1,039.3
1,046.8

506.8
513.1
515.8
518.0

176.5
176.0
180.2
182.8

85.1
86.1
85.8
87.5

12.1
11.9
12.1
12.0

1,679.6
1,690.0
1,707.5
1,716.9

458.4
460.3
462.8
465.6

194.8
194.7
199.5
198.6

92.4
91.4
93.9
93.0

120.3
122.1
123.5
124.2

1989:1
II
Ill
IV

3,200.9
3,208.6
3,241.1
3,241.6

433.6 193.6
439.9 195.0
454.3 208.4
435.6 187.8

163.5
166.4
166.9
167.7

1,047.1
1,043.3
1,051.4
1,055.3

517.6
512.5
511.3
511.7

183.4
186.8
191.2
190.1

86.6
83.2
86.6
90.2

10.8
11.5
11.3
12.3

1,720.3
1,725.4
1,735.4
1,750.7

466.1
467.2
470.2
472.8

200.2
198.3
200.7
206.7

94.0
91.4
92.8
98.4

124.6
125.0
126.3
128.0

1990:1
II
Ill
IV

3,258.8
3,258.6
3,281.2
3,251.8

452.7
438.7
440.3
424.0

200.7
192.0
192.9
179.8

173.1
170.9
170.5
168.0

1,054.4
1,050.3
1,053.7
1,044.7

513.9
516.3
517.1
515.9

190.1
187.2
188.2
184.1

87.2
84.5
84.4
84.0

9.5
10.5
11.0
8.9

1,751.8
1,769.6
1,787.3
1,783.1

472.8
473.0
475.4
476.9

195.6
202.8
206.3
203.7

87.0
93.2
94.9
93.5

128.7
128.9
129.6
128.7

1991:1
II
Ill

3,241.1 410.8
3,252.4 408.9
3,271.2 418.3
3,262.2 412.1

166.7
164.2
170.9
168.5

168.9
171.1
172.5
169.3

1,043.9
1,046.2
1,046.1
1,033.0

518.7
517.0
517.4
513.5

181.7
186.1
184.7
178.9

81.8
83.0
83.6
83.9

9.3
9.8
10.1
9.2

1,786.3
1,797.2
1,806.8
1,817.1

477.3
478.3
479.4
480.4

201.7
207.1
208.0
207.9

91.7
95.6
95.2
94.4

127.0
127.9
128.9
129.4

1

Includes other items not shown separately.

2

Includes imputed rental value of owner-occupied housing.

Source: Department of Commerce, Bureau of Economic Analysis.




313

TABLE B-14.—Gross and net private domestic investment, 1959-91
[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Equals: Net private domestic investment
Net fixed investment
Year or quarter

Gross
private
domestic
investment

Less:
Consumption of
fixed
capital

Nonresidentia
Total
Total
Total

Structures

Producers'
durable
equipment

Residential

Change in
business
inventories

1959

78.8

44.6

34.2

30.1

12.3

6.6

5.7

17.8

4.2

1960
1961.
1962
1963
1964

78.7
77 9
87.9
93.4
101.7

46.3
47 7
49.3
51.3
53.9

32.4
30 3
38.6
42.0
47.8

29.2
27 3
32.5
36.4
42.8

13.8
12 2
15.3
16.4
21.3

7.7
76
8.3
8.3
10.3

6.1
46
7.0
8.1
11.0

15.4
151
17.2
20.0
21.5

3.2
29
6.1
5.7
5.0

1965
1966
1967
1968
1969

118.0
130.4
128 0
139.9
155.2

57.3
62.1
67.4
73.9
81.5

60.7
68.3
60.6
66.0
73.7

51.0
54.5
501
56.9
64.0

30.3
36.7
33 2
35.0
40.5

14.1
16.0
151
15.8
17.9

16.2
20.7
181
19.2
22.6

20.7
17.8
16 9
21.9
23.5

9.7
13.8
10 5
9.1
9.7

1970
1971
1972
1973
1974

150.3
175.5
205.6
243.1
245.8

88.8
97.6
109.9
120.4
140.2

61.5
78.0
95.7
122.7
105.5

59.2
69.9
85.8
105.0
91.3

38.4
36.8
42.5
59.0
58.9

18.4
18.4
18.7
23.8
24.5

20.0
18.4
23.8
35.2
34.5

20.8
33.1
43.2
46.0
32.3

2.3
8.0
9.9
17.7
14.3

1975
1976
1977
1978
1979

226.0
286 4
358.3
434 0
480.2

165.2
182 8
205.2
234 8
272.4

60.9
103 6
153.1
199 3
207.8

66.5
86 8
128.3
1713
195.1

41.5
45 6
64.9
941
117.3

18.8
19 9
23.4
35 5
49.9

22.7
25 6
41.5
58 6
67.4

25.1
41.2
63.4
77.3
77.8

5.7
16.7
24.7
27.9
12.8

1980
1981..
1982
1983
1984

467.6
558.0
503.4
546.7
718.9

311.9
362.4
399.1
418.4
433.2

155.7
195.6
104.3
128.2
285.6

165.2
170.2
120.3
133.8
214.6

113.8
127.1
99.1
69.1
126.6

59.1
75.5
72.4
46.2
65.1

54.7
51.6
26.7
22.9
61.5

51.4
43.1
21.2
64.6
87.9

-9.5
25.4
-15.9
-5.5
71.1

1985
1986
1987
1988
1989

714 5
717.6
749.3
793.6
837.6

454 5
478.6
502.2
534.0
574.5

260 0
239.1
247.1
259.6
263.1

235 4
230.4
220.9
243.4
227.1

146 1
114.4
103.0
125.8
122.1

75 2
51.8
46.7
47.9
48.5

70 9
62.6
56.3
77.9
73.6

89 3
116.0
117.9
117.6
105.0

24.6
8.6
26.3
16.2
36.0

1990 p
1991 .
1982- IV
1983: IV
1984- IV
1985- IV
1986: IV
1987- IV
1988-1

802.6
725.3
464.2
614 8
722 8
737.0
697 1
800.2
770.6
788.4
800.7
814.8
844.7
844.3
826.8
834.4
812.0
825.9
821.8
750.9
709.3
708 8
740.9
742.3

594.8
623.5
412.5
439 7
448 0
465.6
488.2
512.1
522.4
529.9
536.5
547.2
556.0
563.6
586.7
591.7
585.3
590.1
598.3
605.4
615.4
620 0
623.7
635.1

207.9
101.8
51.7
1751
274 8
271.4
208.9
288.1
248.2
258.4
264.2
267.6
288.7
280.7
240.1
242.8
226.8
235.8
223.5
145.5
93.9
88 8
117.2
107.2

207.9
122.0
98.0
154 9
223 8
238.8
227.8
228.8
231.4
244.6
247.1
250.3
245.5
238.4
216.8
207.7
230.1
210.1
209.4
182.1
133.1
125 8
120.8
108.3

120.4

50.3

70.1

87.5

.0
-20.2
46.3
20.2
51.0
32.6
-18.8
59.3
16.8
13.8
17.1
17.3
43.2
42.3
23.3
35.1
-3.3
25.6
14.1
-36.5
-39.2
-37.1
-3.6
-1.1

II

III

I
V
1989:I

II
III .

I
V
1990-1
II

Ill
IV
1991-1
II...

Ill
IV

P

Source: Department of Commerce, Bureau of Economic Analysis.




314

TABLE B-15.—Gross and net private domestic investment in 1987 dollars, 1959-91
[Billions of 1987 dollars; quarterly data at seasonally adjusted annual rates]
Equals: Net private domestic investment

Year or quarter

Gross
private
domestic
investment

Less:
Consumption of
fixed
capital

Net fixed investment
Nonresidential
Total
Total
Total

Structures

Producers'
durable
equipment

dential

Change in
business
inventories

1959
1960
1961
1962
1963
1964

296.4

168.8

127.5

114.0

39.2

25.4

13.8

74.8

13.6

290.8
289.4
321.2
343.3
371.8

173.7
178.6
183.6
189.6
196.4

117.1
110.8
137.6
153.7
175.4

109.0
103.6
122.0
137.7
159.7

44.1
39.9
49.5
52.8
69.7

30.5
30.6
32.9
32.1
39.5

13.7
9.4
16.6
20.7
30.2

64.8
63.7
72.5
84.9
90.0

8.1
7.2
15.6
16.0
15.7

1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991".
1982: IV...
1983: IV...
1984-.IV...
1985: IV...
1986: IV...
1987: IV...

413.0
438.0
418.6
440.1
461.3

205.0
214.9
225.2
235.3
246.7

208.1
223.0
193.4
204.7
214.6

182.9
186.3
165.8
181.1
189.8

99.9
118.1
103.9
105.1
112.2

53.0
58.3
53.0
52.2
56.0

46.9
59.8
50.9
52.9
56.2

83.0
68.2
61.9
76.0
77.6

25.1
36.7
27.6
23.6
24.8

429.7
481.5
532.2
591.7
543.0

258.0
269.1
285.0
296.4
310.3

171.7
212.3
247.2
295.3
232.6

165.8
191.6
224.6
257.6
201.7

98.7
90.8
98.9
134.6
122.3

53.5
49.0
49.2
57.9
53.4

45.2
41.7
49.7
76.7
68.9

67.1
100.8
125.7
123.0
79.4

5.9
20.8
22.5
37.7
30.9

437.6
520.6
600.4
664.6
669.7

322.8
334.6
348.4
364.5
384.5

114.8
186.1
252.1
300.0
285.2

128.7
160.6
217.8
262.8
271.6

72.0
74.5
99.0
134.4
154.1

36.7
36.8
39.8
55.2
70.1

35.3
37.7
59.2
79.2
84.0

56.8
86.1
118.8
128.4
117.5

-13.9
25.5
34.3
37.2
13.6

594.4
631.1
540.5
599.5
757.5

400.7
417.8
429.5
447.4
455.5

193.7
213.2
111.0
152.1
302.0

201.9
188.7
128.5
147.7
234.0

129.5
131.6
101.0
71.6
134.3

73.3
82.0
75.3
50.3
69.3

56.1
49.6
25.7
21.4
65.0

72.5
57.1
27.5
76.0
99.8

-8.3
24.6
-17.5
4.4
67.9

745.9
735.1
749.3
773.4
789.2

471.5
486.7
502.2
518.5
542.1

274.4
248.4
247.1
254.9
247.1

252.3
239.9
220.9
235.0
214.5

154.0
118.3
103.0
122.6
117.4

79.4
54.9
46.7
46.7
45.8

74.6
63.3
56.3
75.9
71.7

98.3
121.6
117.9
112.4
97.0

22.1
8.5
26.3
19.9
32.6

744.5
672.6

550.5
568.4

194.0
104.2

193.8
119.3

114.5

46.0

68.6

79.2

.2
-15.1

503.5
669.5
756.4
763.1
705.9
793.8

439.2
468.5
467.4
480.1
492.5
508.1

64.3
201.0
289.0
283.0
213.3
285.7

109.2
171.7
241.1
252.8
233.4
225.8

-44.9
29.3
47.9
30.2
-20.1
59.9

1988:1
II....
III...
IV...

756.9
769.4
782.2
785.0

512.2
516.4
520.6
524.7

244.7
253.1
261.6
260.3

225.5
237.0
238.1
239.3

19.2
16.1
23.5
20.9

1989:1
II....
III...
IV...

803.2
797.4
776.8
779.2

528.9
532.9
552.3
554.3

274.3
264.6
224.5
224.9

233.1
225.7
204.3
194.9

41.2
38.9
20.2
30.0

1990:1
II....
III...
IV...

754.9
766.0
760.3
696.6

544.4
548.3
552.4
556.7

210.6
217.7
207.9
139.9

214.5
195.5
193.9
171.1

-4.0
22.1
13.9
-31.2

1991:1
II....
III...
IV P

657.0
656.3
686.5
690.6

561.9
565.3
569.0
577.5

95.1
91.0
117.5
113.1

127.9
121.4
117.5
110.4

-32.8
-30.4
.1
2.7

Source: Department of Commerce, Bureau of Economic Analysis.




315

TABLE B-16.—Inventories and final sales of domestic business, 1959-91
[Billions of dollars, except as noted; seasonally adjusted]

Inventories1
Quarter

Fourth quarter:
1959

Nonfarm
Total 2

Farm

Total 2

Manu- Wholesale
facturing trade

Retail
trade

Other

Final
sales of
domestic
business3

Ratio of inventories
to final sales of
domestic business
Total

Nonfarm

141.2

31.6

109.6

55.2

21.0

26.2

7.2

36.2

3.90

3.03

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

145.2
147.0
153.4
158.7
164.2

33.0
33.7
34.8
34.9
33.3

112.2
113.4
118.6
123.8
130.9

56.2
57.2
60.3
62.2
65.9

21.3
21.8
22.4
23.9
25.2

27.5
27.0
28.3
29.6
31.0

7.2
7.4
7.5
8.0

37.4
39.3
41.5
44.2
47.1

3.88
3.74
3.69
3.59
3.49

3.00
2.88
2.86
2.80
2.78

1965
1966
1967
1968
1969

178.4
194.0
206.0
221.4
242.5

37.4
36.3
36.5
38.7
41.9

141.0
157.8
169.5
182.6
200.6

70.7
80.9
87.5
94.0
103.4

26.9
30.3
32.7
34.6
37.9

33.7
36.2
36.9
40.7
44.5

9.8
10.4
12.4
13.3
14.9

52.1
55.1
58.7
64.5
68.5

3.43
3.52
3.51
3.43
3.54

2.71
2.86
2.89
2.83
2.93

1970..
1971..
1972..
1973..
1974..

249.4
267.4
296.6
365.1
435.2

40.1
45.0
55.3
78.0
74.3

209.2
222.4
241.3
287.1
360.9

105.8
107.3
113.6
136.1
177.0

41.7
45.2
50.0
59.4
75.6

45.8
52.3
57.7
66.4
74.6

16.0
17.6
19.9
25.2
33.7

72.3
78.6
87.5
96.0
104.0

3.45
3.40
3.39
3.80
4.18

2.90
2.83
2.76
2.99
3.47

1975
1976
1977
1978
1979

440.1
475.3
521.6
605.3
702.6

75.5
72.2
75.2
92.1
97.9

364.5
403.1
446.4
513.2
604.7

177.8
194.9
210.6
238.0
280.6

76.2
86.1
96.2
111.7
141.2

74.7
82.7
93.3
107.5
118.9

35.8
39.4
46.3
55.9
64.1

116.2
127.6
142.7
164.5
182.3

3.79
3.72
3.65
3.68
3.85

3.14
3.16
3.13
3.12
3.32

1980....
1981....
1982....
1983....
1984....

784.1
836.2
817.0
827.5
898.9

104.9
101.4
103.6
103.2
100.9

679.3
734.7
713.5
724.4
797.9

309.8
331.9
318.5
319.2
349.0

174.2
184.8
174.7
168.9
187.2

125.0
137.0
139.5
153.7
173.5

70.3
81.1
80.7
82.5
88.3

201.2
217.2
228.6
249.6
271.5

3.90
3.85
3.57
3.32
3.31

3.38
3.38
3.12
2.90
2.94

1985....
1986....
1987....
1988....
1989....

904.3
887.9
950.6
1,025.1
1,084.6

96.6
90.5
90.9
95.4
95.6

807.7
797.3
859.7
929.6
989.0

339.9
328.1
349.3
383.2
409.7

184.9
183.4
196.3
215.3
224.8

188.6
193.4
216.1
229.9
250.2

94.3
92.4
98.0
101.2
104.4

292.7
311.1
329.2
358.4
376.9

3.09
2.85
2.89
2.86
2.88

2.76
2.56
2.61
2.59
2.62

1990....
1991".

1,103.4
1,070.5

93.1
91.9

1,010.3
978.5

416.6
396.8

234.3
231.8

248.8
244.3

110.7
105.7

394.4
404.2

2.80
2.65

2.56
2.42

1988:1
II....
III...
IV...
1989:1
II....
III...
IV...
1990:1
H....

963.8
986.8
1.006.6
1,025.1
1,048.3
1,061.9
1,068.7
1,084.6
1,084.6
1,092.9
1,114.8
1,103.4

90.2
94.2
95.9
95.4
97.4
98.2
95.0
95.6
95.8
98.4
96.8
93.1
95.6
98.0
96.2
91.9

873.6
892.6
910.8
929.6
950.9
963.7
973.8
989.0
988.9

356.4
365.2
372.7
383.2
393.1
400.6
407.4
409.7
409.9
410.6
423.1
416.6
410.3
404.8
403.7
396.8

202.8
208.6
213.2
215.3
216.9
220.7
222.1
224.8

216.3
220.4
225.4
229.9
238.5
239.3
240.1
250.2
244.5
246.9
249.8
248.8
241.5
242.1
243.9
244.3

98.2
98.4
99.5
101.2
102.3
103.0
104.1
104.4
107.9
108.6
111.3
110.7

336.8
345.4
351.7
358.4
363.1
369.2
374.4
376.9
385.3
389.1
394.0
394.4

2.86
2.86
2.86
2.86
2.89
2.88
2.85
2.88
2.81
2.81
2.83
2.80

106.9
107.0
106.1
105.7

395.9
401.3
402.3
404.2

2.75
2.69
2.68
2.65

2.59
2.58
2.59
2.59
2.62
2.61
2.60
2.62
2.57
2.56
2.58
2.56
2.51
2.45
2.44
2.42

IV...
1991:1
IV "...

1,087.8
1,081.0
1,079.0
1,070.5

994.5

1,018.0
1,010.3
992.1
983.1
982.8
978.5

1

226.6
228.5
233.7
234.3
233.3
229.1
229.1
231.8

Inventories at end of quarter. Quarter-to-quarter change calculated from this table is not the current-dollar change in business
inventories (CBI) component of GDP. The former is the difference between two inventory stocks, each valued at their respective end-ofquarter prices. The latter is the change in the physical volume of inventories valued at average prices of the quarter. In addition,
changes calculated from this table are at quarterly rates, whereas CBI is stated at annual rates.
2
Inventories of construction establishments are included in "other" nonfarm inventories.
3
Quarterly totals at monthly rates. Final sales of domestic business equals final sales of domestic product less gross product of
households and institutions and general government and 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 1987 Standard Industrial
Classification (SIC) beginning 1987 and on the 1972 SIC for earlier years shown.
Source: Department of Commerce, Bureau of Economic Analysis.




316

TABLE B-17.—Inventories and final sales of domestic business in 1987 dollars, 1959-91
[Billions of 1987 dollars, except as noted; seasonally adjusted]
Inventories *
Quarter

Fourth quarter:
1959

Nonfarm
Total 2

Farm

Total 2

Manu- Wholesale
facturing trade

Retail
trade

Other

Final
sales of
domestic
business3

Ratio of inventories
to final sales of
domestic business
Total

Nonfarm

388.6

79.6

308.9

152.4

61.2

67.6

27.8

130.6

2.98

2.37

1960
1961
1962
1963
1964

396.7
403.9
419.5
435.6
451.2

80.5
82.1
83.9
85.4
83.4

316.2
321.8
335.7
350.2
367.8

153.9
157.9
166.1
171.6
179.6

62.4
63.7
65.9
69.6
73.4

71.4
70.2
73.8
76.9
80.3

28.5
30.0
29.9
32.0
34.5

133.6
138.8
144.0
152.3
159.8

2.97
2.91
2.91
2.86
2.82

2.37
2.32
2.33
2.30
2.30

1965
1966
1967
1968
1969

476.4
513.1
540.7
564.3
589.2

84.6
83.5
84.5
86.9
86.9

391.7
429.6
456.3
477.5
502.3

190.2
212.1
227.6
237.4
246.7

77.6
86.5
92.0
94.7
100.3

86.8
92.5
92.1
99.3
105.9

37.2
38.4
44.6
46.1
49.4

173.5
176.3
182.8
191.3
194.5

2.75
2.91
2.96
2.95
3.03

2.26
2.44
2.50
2.50
2.58

1970
1971
1972
1973
1974

595.1
615.8
638.4
676.1
707.0

86.3
89.2
90.6
92.9
92.5

508.8
526.7
547.7
583.3
614.5

246.1
243.9
249.6
264.9
283.7

106.9
112.3
116.3
121.1
130.8

105.8
117.8
125.3
134.5
133.6

50.0
52.6
56.5
62.7
66.4

196.4
204.2
218.4
223.2
218.5

3.03
3.02
2.92
3.03
3.24

2.59
2.58
2.51
2.61
2.81

1975
1976
1977
1978
1979

693.1
718.6
752.9
790.1
803.7

92.9
90.8
93.6
93.0
95.7

600.2
627.8
659.2
697.1
708.0

277.2
289.6
297.1
309.2
320.1

127.3
135.3
144.4
155.8
157.3

127.6
134.8
144.5
153.7
153.5

68.0
68.1
73.3
78.3
77.1

226.5
235.6
246.8
261.3
265.7

3.06
3.05
3.05
3.02
3.02

2.65
2.66
2.67
2.67
2.66

1980
1981.,
1982
1983
1984

795.4
820.0
802.5
806.9
874.8

92.3
98.3
101.4
93.1
94.8

703.1
721.7
701.0
713.8
780.0

319.9
324.0
311.3
311.9
339.4

161.9
164.8
159.9
159.3
174.7

146.7
152.9
151.7
162.8
181.4

74.6
80.0
78.1
79.8
84.5

265.4
262.7
264.9
279.0
292.7

3.00
3.12
3.03
2.89
2.99

2.65
2.75
2.65
2.56
2.66

1985
1986
1987
1988
1989

896.9
905.5
931.8
951.7
984.3

97.2
95.1
88.7
81.7
81.0

799.8
810.4
843.1
870.0
903.3

335.7
333.6
340.2
355.3
373.8

178.7
185.7
192.7
199.1
202.5

194.1
196.7
213.6
219.7
231.0

91.3
94.4
96.6
95.9
96.0

305.0
316.9
325.2
339.5
343.9

2.94
2.86
2.87
2.80
2.86

2.62
2.56
2.59
2.56
2.63

1990
1991 *
1988:1
II
Ill
IV

984.5
969.4

82.7
82.8

901.9
886.6

372.5
367.5

205.6
204.3

224.2
217.7

99.5
97.0

346.1
345.2

2.84
2.81

2.61
2.57

936.6
940.6
946.5
951.7

87.6
85.6
84.1
81.7

849.0
855.0
862.4
870.0

343.4
346.3
349.3
355.3

196.9
198.2
199.7
199.1

212.2
214.1
217.1
219.7

96.5
96.3
96.3
95.9

330.3
334.8
336.3
339.5

2.84
2.81
2.81
2.80

2.57
2.55
2.56
2.56

1989:1
II
Ill
IV

962.0
971.7
976.8
984.3

83.1
84.5
83.0
81.0

879.0
887.3
893.8
903.3

359.5
365.9
372.3
373.8

198.6
201.7
201.7
202.5

225.2
224.3
223.9
231.0

95.7
95.5
95.9
96.0

340.4
342.5
344.5
343.9

2.83
2.84
2.84
2.86

2.58
2.59
2.59
2.63

1990:1
II
Ill
IV

983.3
988.8
992.3
984.5

81.4
83.0
84.1
82.7

901.9
905.8
908.3
901.9

374.5
374.6
375.9
372.5

203.5
204.7
205.4
205.6

224.3
226.0
226.4
224.2

99.6
100.5
100.5
99.5

348.2
347.8
348.1
346.1

2.82
2.84
2.85
2.84

2.59
2.60
2.61
2.61

1991:1
II
Ill
IV "

976.3
968.7
968.7
969.4

82.2
82.3
83.1
82.8

894.1
886.4
885.7
886.6

372.6
369.1
368.0
367.5

206.1
202.6
202.3
204.3

217.2
216.4
217.9
217.7

98.2
98.3
97.4
97.0

343.7
345.8
344.9
345.2

2.84
2.80
2.81
2.81

2.60
2.56
2.57
2.57

1
Inventories at end of quarter. Quarter-to-quarter changes calculated from this table are at quarterly rates, whereas the constantdollar change in business inventories component of GDP is stated at annual rates.
2
Inventories of construction establishments are included in "other" nonfarm inventories.
3
Quarterly totals at monthly rates. Final sales of domestic business equals final sales of domestic product less gross product of
households and institutions and general government and 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 1987 Standard Industrial
Classification (SIC) beginning 1987 and on the 1972 SIC for earlier years shown.
Source: Department of Commerce, Bureau of Economic Analysis.


http://fraser.stlouisfed.org/
305-592 St. 2 Federal Reserve Bank of 0 - 9 Louis

317

TABLE B-18.—Foreign transactions in the national income and product accounts, 1959-91
[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Payments to rest of the world

Receipts from rest of the world
Exports of goods and
Year or
quarter

Total

Merchandise2

Payments
of
Serv- factor
2
in- 4
ices
come

Total

Total

Merchandise 2

Receipts
of factor
Serv- income 3
ices 2

Total *

Transfer payments (net)

Imports of goods and

1.5

Total

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
1988
1989
1990
1991 p
1982: IV....
1983: IV....
1984: IV....
1985: IV....
1986: IV....
1987: IV....
1988:1
II
III....
IV....

25.0
30.2
31.4
33 5
36.1
41.0
43.5
47.2
50 2
55.6
61.2
70.8
74.2
83.4
115.6
152.6
164.4
181.6
196.5
233.3
299.7
360.9
398 2
379.9
372 5
410.5
399.3
415.2
469.0
572.9
650.3
698.2

20.6
25.3
26.0
27 4
29.4
33.6
35 4
38.9
414
45.3
49.3
57.0
59.3
66.2
91.8
124.3
136.3
148.9
158.8
186.1
228.9
279.2
303 0
282.6
276 7
302.4
302.1
319.2
364.0
444.2
504.9
550.4
593.3

16.5
20 5
20.9
217
23.3
26.7
27 8
30.7
32 2
35.3
38.3
44.5
45.6
51.8
73.9
101.0
109.6
117.8
123.7
145.4
184.2
226.0
239 3
215.2
207 5
225^8
222.4
226.2
257.7
325.8
371.4
398.2
428.1

4.2
4.8
5.1
5.7
6.1
6.9
7.6
8.2
92
10.0
11.0
12.4
13.8
14.4
17.8
23.3
26.7
31.1
35.1
40.7
44.7
53.2
63 7
67.4
69 2
76.6
79.7
93.0
106.2
118.4
133.5
152.2
165.2

4.3
50
5.4
61
6.6
7.4
81
8.3
89
10.3
11.9
13.0
14.1
16.4
23.8
30.3
28.2
32.8
37.7
47.1
69.7
80.6
941
97.3
95 8
108.1
97.3
96.0
105.1
128.7
145.4
147.7

25.0
30 2
31.4
33 5
36.1
41.0
43.5
47.2
50 2
55.6
61.2
70.8
74.2
83.4
115.6
152.6
164.4
181.6
196.5
233.3
299.7
360.9
398 2
379.9
372 5
410.5
399.3
415.2
469.0
572.9
650.3
698.2

22.3
22.8
22.7
25 0
26.1
28.1
31.5
37.1
39 9
46.6
50.5
55.8
62.3
74.2
91.2
127.5
122.7
151.1
182.4
212.3
252.7
293.9
317 7
303.2
3281
405.1
417.6
451.7
507.1
552.2
587.8
624.8
620.4

15.3
15.2
15.1
16.9
17.7
19.4
22.2
26.3
27 8
33.9
36.8
40.9
46.6
56.9
71.8
104.5
99.0
124.6
152.6
177.4
212.8
248.6
267 7
250.6
272 7
336.3
343.3
370.0
414.8
452.1
484.6
507.4
499.4

7.0
7.6
7.6
81
8.4
8.7
9.3
10.7
12 2
12.6
13.7
14.9
15.8
17.3
19.3
22.9
23.7
26.5
29.8
34.8
39.9
45.3
49 9
52.6
55 4
68.8
74.3
81.7
92.3
100.1
103.3
117.4
121.1

1.8
1.8
18
2.1
2.4
2.7
3.1
34
4.1
5.8
6.6
6.4
7.7
11.1
14.6
14.9
15.7
17.2
25.3
37.5
46.5
60 9
67.1
66 5
83.8
82.4
86.9
100.5
120.8
141.2
137.0

2.3
2.4
2.7
2.8
2.8
2.9
3.0
3.1
33
3.1
3.1
3.5
4.0
4.2
4.5
5.3
5.2
5.8
5.8
6.0
7.1
8.5
95
11.6
12 5
15.2
16.9
17.9
16.0
17.3
17.3
19.2
-26.7

357.5
388.3
415.2
402.9
426.7
506.8
541.8
562.1
580.7
606.9

265.6
286.2
308.7
304.7
333.9
392.4
418.5
438.8
452.4
467.0

198.2
218.2
231.4
222.6
235.8
283.3
304.7
321.5
331.6
345.4

67.4
67.9
77.3
82.1
98.1
109.2
113.8
117.3
120.7
121.6

91.9
102.1
106.6
98.1
92.8
114.4
123.3
123.3
128.3
139.9

357.5
388.3
415.2
402.9
426.7
506.8
541.8
562.1
580.7
606.9

295.1
358.0
415.7
440.2
467.1
535.6
540.5
544.3
550.9
573.1

241.6 53.4
300.0 58.0
344.1 71.6
363.0 77.2
382.4 84.7
437.6 98.0
441.6 99.0
445.7 98.6
451.1 99.8
470.1 103.0

64.4
71.0
85.5
82.4
88.9
106.9
111.4
117.7
124.1
130.2

13.3
17.4
20.0
18.9
19.2
20.7
16.2
14.4
15.3
23.2

1989:1
II
III....
IV....

627.2
653.5
649.6
671.1

486.1
506.2
506.2
521.3

358.6
376.5
370.3
380.4

127.5
129.7
135.9
140.9

141.1
147.3
143.4
149.8

627.2
653.5
649.6
671.1

575.0
589.2
588.3
598.8

473.6
487.9
485.1
491.8

101.5
101.3
103.2
107.0

136.7
148.2
140.9
139.2

1990:1
II
III....
IV ...

679.6
688.1
694.1
730.9

534.6
545.9
548.7
572.6

390.3
397.5
395.0
410.0

144.2
148.4
153.7
162.6

145.0
142.2
145.4
158.3

679.6
688.1
694.1
730.9

612.6
606.3
631.2
649.2

500.2
492.8
511.8
525.0

112.4
113.5
119.4
124.1

134.8
141.5
139.1
132.6

1991:1
713.8 565.9 412.3 153.5
II .... 721.4 589.8 426.7 163.1
Ill ... 728.9 597.0 427.3 169.7
IV P..
620.4 445.9 174.5

147.9
131.6
132.0

713.8 602.7 485.4 117.3 125.2 - 7 0 . 6
721.4 607.0 488.3 118.7 123.5 - 3 0 . 8
728.9 634.3 511.1 123.2 121.0 - 5 . 5
637.7 512.7 125.0

1
2

From
From
From
persons govern- business
ment
(net)
(net)

Net
foreign
investment
-1.2
3.2
4.3
3.9
5.0
7.6
6.3
3.9
36
1.8
1.8
5.0
1.4
-2.8
8.9
5.3
21.6
9.0
-9.0
-10.3
2.4
11.9
10.1
-1.9
-34.6
-93.6
-117.6
-141.4
-154.5
-117.5
-96.0
-82.8

0.4
1.8
.4
1.9
2.1
.5
5
2.1
2.1
.6
.7
2.1
.7
2.1
.7
2.2
9
2.1
1.9
.9
1.0
1.8
1.2
2.0
1.2
2.4
1.2
2.5
1.3
2.5
1.1
3.2
1.0
3.5
1.0
3.7
.9
3.4
.9
3.8
1.0
4.1
5.0
1.2
50
13
6.4
1.6
7.3
14
9.4
1.9
11.4
2.2
2.1
12.3
2.4
10.4
2.1
10.4
2.1
10.8
12.6
2.1
2.2 - 3 3 . 8

0.1
.1
.1
1
.1
.2
.2
.2
.2

1.5
1.6
2.1
2.0
2.4
2.4
2.3
1.9
2.1
2.2

8.2
11.0
13.9
13.5
12.8
14.6
9.1
7.8
9.4
15.1

3.7
4.8
4.0
3.4
4.0
3.8
4.8
4.7
3.8
5.9

16.3
14.6
16.7
21.7

1.9
2.2
2.0
2.2

9.8
7.8
10.7
14.8

4.6 -100.8
4.6 - 9 8 . 4
4.0 - 9 6 . 3
4.6 - 8 8 . 6

17.2
20.8
19.1
19.6

2.1
1.7
2.5
2.1

10.9
14.5
12.3
12.7

4.2
4.6
4.3
4.9

-85.0
-80.4
-95.3
-70.4

2.3 - 7 7 . 8
2.2 - 3 7 . 9
2.1 - 1 2 . 5
2.1 - 7 . 1

4.9
4.9
4.9
4.9

56.5
21.7
-20.9

.3
.4
.4
.5
.7
1.0
.7
1.1
1.4
1.4
2.0
2.4
32
3.6
3.8
3.9
3.2
3.5
3.2
4.8
4.4
4.5
4.9

-15.3
-58.2
-105.9
-138.7
-148.6
-156.4
-126.3
-114.4
-109.6
-119.5

Includes capital grants received by the United States (net), not shown separately. See Table B-26 for data.
Exports and imports of certain goods, primarily military equipment purchased and sold by the Federal Government, are included in
services.
3
Consists largely of receipts by U.S. residents of interest and dividends and reinvested earnings of foreign affiliates of U.S.
corporations.
4
Consists largely of payments to foreign residents of interest and dividends and reinvested earnings of U.S. affiliates of foreign
corporations.
Source: Department of Commerce, Bureau of Economic Analysis.




318

TABLE B-19.—Exports and imports of goods and services and receipts and payments of factor income in
1987 dollars, 1959-91
[Billions of 1987 dollars; quarterly data at seasonally adjusted annual rates]
Exports of goods and services
Merchandise
Year or quarter
Total

Total

Durable
goods

Imports of goods and services

1

Nondurable
goods

Services 1

ceipts
of
factor
in- 2
come

Merchandise 1
Total

Total

Durable
goods

Nondura ble
goods

Services 1

Payments
of
factor
in- 3
come

73.8

58.0

31.5

26.5

15.8

17.0

95.6

60.2

26.0

34.2

35.4

6.2

1960
1961
1962
1963
1964...

88.4
89.9
95.0
101.8
115.4

71.2
71.5
74.8
80.3
91.4

39.2
39.4
41.2
43.6
50.2

32.0
32.1
33.5
36.7
41.2

17.2
18.4
20.3
21.5
24.0

19.1
20.6
22.6
24.4
26.7

96.1
95.3
105.5
107.7
112.9

59.1
59.2
68.0
70.9
75.6

24.7
23.7
28.0
29.6
32.8

34.4
35.5
40.0
41.2
42.8

37.0
36.1
37.5
36.8
37.3

7.2
7.2
7.3
8.2
9.1

1965
1966
1967
1968
1969

118.1
125.7
130.0
140.2
147.8

92.1
98.4
100.1
108.8
114.4

52.2
56.1
63.8
70.0
75.2

39.9
42.3
36.3
38.7
39.2

25.9
27.3
29.9
31.5
33.3

28.3
28.1
29.2
32.3
35.8

124.5
143.7
153.7
177.7
189.2

86.5
100.2
105.2
128.1
137.0

40.5
50.6
53.1
68.7
74.1

46.0
49.6
52.1
59.4
62.8

37.9
43.5
48.6
49.6
52.3

9.9
11.0
11.8
13.6
17.8

1970
1971
1972
1973
1974

161.3
161.9
173.7
210.3
234.4

125.2
124.1
136.5
166.9
183.4

80.4
79.3
87.1
108.0
123.5

44.7
44.9
49.5
58.9
59.9

36.1
37.8
37.2
43.4
51.0

36.8
38.1
42.2
57.6
67.5

196.4
207.8
230.2
244.4
238.4

142.1
156.1
177.5
194.7
189.3

75.4
84.4
95.7
100.9
101.3

66.7
71.7
81.7
93.9
87.9

54.4
51.7
52.8
49.7
49.2

19.2
18.0
20.5
27.6
33.2

1975
1976
1977
1978
1979

232.9
243.4
246.9
270.2
293.5

178.5
183.9
183.9
203.0
225.7

121.3
121.8
119.5
132.1
148.1

57.2
62.1
64.4
70.9
77.6

54.4
59.5
63.0
67.2
67.8

57.4
63.0
67.9
78.7
107.1

209.8
249.7
274.7
300.1
304.1

163.3
200.4
223.2
245.2
248.7

82.1
100.9
112.9
130.0
132.1

81.2
99.5
110.3
115.3
116.7

46.5
49.3
51.5
54.8
55.3

31.6
31.5
32.2
43.2
58.6

1980
1981
1982
1983
1984

320.5
326.1
296.7
285.9
305.7

248.2
244.0
217.7
208.3
221.3

161.0
154.2
130.5
124.6
133.8

87.3
89.7
87.2
83.8
87.5

72.3
82.2
79.0
77.6
84.4

113.7
120.7
117.9
111.0
119.4

289.9
304.1
304.1
342.1
427.7

235.6
246.1
243.1
276.5
346.1

133.6
143.4
143.0
167.6
219.9

102.0
102.7
100.1
108.9
126.2

54.2
58.0
61.1
65.6
81.6

66.6
79.4
82.1
78.0
93.5

1985
1986
1987
1988
1989

309.2
329.6
364.0
421.6
469.2

224.8
234.3
257.7
307.4
343.8

139.3
144.8
163.0
202.8
230.6

85.6
89.6
94.7
104.6
113.2

84.4
95.3
106.3
114.2
125.4

103.4
99.2
105.0
123.8
133.7

454.6
484.7
507.1
525.7
544.9

366.5
398.0
414.8
431.3
450.4

237.2
254.6
264.2
274.7
287.0

129.3
143.4
150.6
156.7
163.4

88.1
86.7
92.3
94.3
94.5

88.2
90.2
100.4
116.1
129.9

1990
1991 *

505.7
539.6

369.4
398.3

249.3
269.9

120.1
128.5

136.2
141.3

130.2

557.0
557.2

458.5
458.7

290.0
291.9

168.4
166.7

98.5
98.5

120.4

1982:
1983:
1984:
1985:
1986:
1987:

IV
IV
IV
IV
IV
IV

280.4
291.5
312.8
312.0
342.9
386.1

202.8
215.5
229.0
226.4
243.5
278.0

119.0
131.0
138.5
139.6
150.0
180.1

83.7
84.5
90.5
86.8
93.5
97.8

77.6
75.9
83.8
85.5
99.4
108.1

109.7
116.5
116.1
102.9
94.8
112.9

299.4
375.1
444.2
467.4
498.9
522.1

236.3
306.6
357.9
380.0
409.1
427.4

134.6
191.1
229.3
243.5
259.8
273.8

101.7
115.5
128.6
136.5
149.3
153.7

63.1
68.6
86.3
87.4
89.8
94.6

77.6
82.0
93.9
86.8
91.2
105.4

1988:1
II
Ill
I
V

407.1
417.2
424.1
438.2

296.0
303.6
308.1
322.0

192.7
201.2
202.7
214.7

103.3
102.4
105.4
107.2

111.2
113.6
116.0
116.2

120.8
119.3
122.6
132.3

520.5
515.2
526.1
540.9

426.5
422.8
431.3
444.8

271.1
269.3
274.4
284.0

155.4
153.4
156.9
160.8

94.0
92.5
94.8
96.1

109.0
113.8
118.4
123.0

1989:1
II
Ill
IV

451.2
469.5
470.5
485.8

330.3
347.0
343.1
354.8

220.8
232.8
230.9
237.7

109.5
114.1
112.2
117.1

120.9
122.5
127.4
131.0

131.7
136.1
131.2
135.8

532.4
541.3
550.3
555.7

439.9
447.5
455.4
458.9

282.4
286.0
288.8
290.8

157.4
161.5
166.6
168.2

92.5
93.8
94.9
96.8

127.6
136.9
129.0
126.1

1990:1
II
Ill
I
V

496.2
502.1
501.6
522.5

364.9
368.0
365.1
379.4

243.9
249.9
248.6
254.5

121.0
118.1
116.5
124.9

131.3
134.1
136.5
143.1

130.0
125.9
127.2
137.4

552.2
554.5
567.4
553.7

455.9
457.2
467.9
453.0

283.7
287.1
296.4
293.0

172.3
170.1
171.5
160.0

96.3
97.4
99.5
100.7

120.6
125.0
121.4
114.7

1991:1
II
Ill
IV "....

512.5
535.7
545.2
565.1

379.9
395.8
400.3
417.3

251.2
271.0
272.8
284.5

128.7
124.8
127.6
132.8

132.6
139.9
144.8
147.8

126.8
111.8
111.4

531.1
548.0
576.3
573.4

435.9
451.2
475.7
472.0

278.9
283.2
304.8
300.9

156.9
168.0
170.9
171.1

95.3
96.8
100.6
101.5

107.0
104.7
102.2

1959

1
Exports and imports of certain goods, primarily military equipment purchased and sold by the Federal Government, are included in
services.
2
Consists largely of receipts by U.S. residents of interest and dividends and reinvested earnings of foreign affiliates of U.S.
corporations.
3
Consists largely of payments to foreign residents of interest and dividends and reinvested earnings of U.S. affiliates of foreign
corporations.
Source: Department of Commerce, Bureau of Economic Analysis.




319

TABLE B-20.—Relation of gross domestic product, gross national product, net national product, and
national income, 1959-91
[Billions of dollars; quarterly data at seasonally adjusted annual rates]

Year or quarter

Less:
Less:
Plus:
Equals:
Gross Receipts Payments Equals:
Net Indirect
Gross
domes- of factor of factor nation- Consumption nation- business Business
tic
income income to
al
al
transfer
prod- from rest rest of
prod- of fixed prod- tax and payments
the 2
capital
nontax
uct
of the
uct
uct
liability
world »
world

of
government
enterprises

Equals:
National
income

3,222.6
3,578.4
3,890.2
4,156.2
4,340.5
4,690.5

44.6
46.3
47.7
49.3
51.3
53.9
57.3
62.1
67.4
73.9
81.5
88.8
97.6
109.9
120.4
140.2
165.2
182.8
205.2
234.8
272.4
311.9
362.4
399.1
418.4
433.2
454.5
478.6
502.2
534.0
574.5
594.8
623.5
412.5
439.7
448.0
465.6
488.2
512.1

452.5
470.2
487.7
526.5
556.4
599.2
650.7
712.8
752.4
821.5
884.2
928.3
1,007.3
1,105.7
1,241.9
1,334.1
1,433.9
1,602.7
1,789.4
2,019.8
2,248.4
2,430.2
2,701.4
2,780.8
3,016.0
3,368.3
3,599.1
3,799.2
4,042.4
4,374.2
4,673.7
4,929.8
5,060.3
2,810.1
3,138.7
3,442.2
3,690.7
3,852.3
4,178.5

41.9
45.5
48.1
51.7
54.7
58.8
62.7
65.4
70.4
79.0
86.6
94.3
103.6
111.4
121.0
129.3
140.0
151.6
165.5
177.8
188.7
212.0
249.3
256.4
280.1
309.5
329.9
345.5
365.0
385.3
411.0
439.2
470.7
262.3
291.7
317.7
335.1
351.6
372.3

1.4
1.4
1.5
1.6
1.8
2.0
2.2
2.3
2.5
2.8
3.1
3.2
3.4
3.9
4.5
5.0
5.2
6.5
7.3
8.2
9.9
11.2
13.4
15.4
16.6
19.0
21.0
24.2
24.0
25.6
26.8
27.7
31.2
16.0
18.1
20.2
22.2
24.9
24.2

111.4
117.7
124.1
130.2

4,764.3
4,862.7
4,951.6
5,054.3

522.4
529.9
536.5
547.2

4,241.9
4,332.8
4,415.1
4,507.2

376.8
382.0
388.3
394.2

25.2
25.3
24.6
27.2

-34.4
-28.1
-25.8
-25.4

L4
1.2
1.2
1.5
2.6
2.4
3.4
2.6
.4
2.6
1.4
3.3
3.6
2.9
4.8
4.7
6.2
11.7
9.5
6.4
9.7
14.1
10.9
6.1
4.8
.6
9.6
19.2
9.7
2.6
8.2
22.0
14.6
12.8
-.3
16.5

141.1
147.3
143.4
149.8

136.7
148.2
140.9
139.2

5,144.3
5,217.7
5,279.8
5,350.9

556.0
563.6
586.7
591.7

4,588.2
4,654.1
4,693.2
4,759.2

399.9
408.1
416.7
419.2

27.2
26.9
26.3
27.0

-26.0
-5.2
2.5
17.9

15.4
6.5
-3.0
5.3

4,202.6
4,230.9
4,244.7
4,300.5

5,422.4
5,504.7
5,570.5
5,557.5

145.0
142.2
145.4
158.3

134.8
141.5
139.1
132.6

5,432.7
5,505.5
5,576.8
5,583.2

585.3
590.1
598.3
605.4

4,847.4
4,915.4
4,978.5
4,977.8

430.8
432.3
442.3
451.2

26.8
27.7
27.6
28.5

4.4
-2.4
28.2
2.1

10.2
3.3
-5.2
10.8

4,395.5
4,461.0
4,475.2
4,506.8

5,589.0
5,652.6
5,709.2
5,736.6

147.9
131.6
132.0

125.2 5,611.7
123.5 5,660.6
121.0 5,720.1

615.4
620.0
623.7
635.1

4,996.3
5,040.6
5,096.4
5,107.7

461.6
464.5
475.6
481.0

29.6
30.7
31.8
32.8

18.0
16.5
22.0

2.7
1.9
-7.1
4.8

4,489.8
4,530.8
4,559.8

1981 .
.
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991"
1982: IV...
1983: IV...
1984: IV...
1985: IV...
1986: IV...
1987: IV...

494.2
513.4
531.8
571.6
603.1
648.0
702.7
769.8
814.3
889.3
959.5
1,010.7
1,097.2
1,207.0
1,349.6
1,458.6
1,585.9
1,768.4
1,974.1
2,232.7
2,488.6
2,708.0
3,030.6
3,149.6
3,405.0
3,777.2
4,038.7
4,268.6
4,539.9
4,900.4
5,244.0
5,513.8
5,671.8
3,195.1
3,547.3
3,869.1
4,140.5
4,336.6
4,683.0

4.3
5.0
5.4
6.1
6.6
7.4
8.1
8.3
8.9
10.3
11.9
13.0
14.1
16.4
23.8
30.3
28.2
32.8
37.7
47.1
69.7
80.6
94.1
97.3
95.8
108.1
97.3
96.0
105.1
128.7
145.4
147.7

1.5
1.8
1.8
1.8
2.1
2.4
2.7
3.1
3.4
4.1
5.8
6.6
6.4
7.7
11.1
14.6
14.9
15.7
17.2
25.3
37.5
46.5
60.9
67.1
66.5
83.8
82.4
86.9
100.5
120.8
141.2
137.0

497.0
516.6
535.4
575.8
607.7
653.p
708.1
774.9
819.8
895.5
965.6
1,017.1
1,104.9
1,215.7
1,362.3
1,474.3
1,599.1
1,785.5
1,994.6
2,254.5
2,520.8
2,742.1
3,063.8
3,179.8
3,434.4
3,801.5
4,053.6
4,277.7
4,544.5
4,908.2
5,248.2
5,524.5

91.9
102.1
106.6
98.1
92.8
114.4

64.4
71.0
85.5
82.4
88.9
106.9

1988:1
II....
III...
IV...

4,752.4
4,857.2
4,947.3
5,044.6

123.3
123.3
128.3
139.9

1989:1..
IV...

5,139.9
5,218.5
5,277.3
5,340.4

1990:1
II
III...
IV...
1991:1

1959
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979

Statistical
discrepancy

Plus:
Subsidies
less
current
surplus

-1.8
-3.1
-2.2
-1.0
-2.0

-0.9
-.8
".3
~!l

-.7
2.8
.8

-l!6
.0
3.1
1.1
~L4
6.0
10.4
10.9
7.6
13.8
13.6
10.9
-7.4
10.2
-9.0
-13.9
1.2
-24.8
-28.4
-2.7
8.1
-10.1
13.8
-20.5
-5.9
-2.0
-24.9

410.1
425.7
440.5
474.5
501.5
539.1
586.9
643.7
679.9
741.0
798.6
833.5
899.5
992.9
1,119.5
1,198.8
1,285.3
1,435.5
1,609.1
1,829.8
2,038.9
2,198.2
2,432.5
2,522.5
2,720.8
3,058.3
3,268.4
3,437.9
3,692.3
4,002.6
4,244.7
4,459.6
2,551.5
2,834.3
3,134.4
3,341.9
3,486.0
3,828.8
3,888.8
3,966.3
4,027.6
4,127.6

1
Consists largely of receipts by U.S. residents of interest and dividends and reinvested earnings of foreign affiliates of U.S.
corporations.
2
Consists largely of payments to foreign residents of interest and dividends and reinvested earnings of U.S. affiliates of foreign
corporations.

Source: Department of Commerce, Bureau of Economic Analysis.




320

TABLE B-21.—Relation of national income and personal income, 1959-91
[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Less:

Year or quarter

National
income

Corporate
profits
with
inventory
valuation
and
capital
consumption
adjustments

Equals:

Plus:

Net
interest

Contributions for
social
insurance

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
171.8
197.8
216.6
251.3
269.6
290.2
325.0
353.8
379.8
400.7
442.3
473.4
501.7
527.3
272.8
298.3
332.2
362.3
388.7
409.6
431.3
438.7
445.6
453.5

Wage
accruals
less
disbursements

Government
transfer
payments
to
persons

Business
transfer
payments
to
persons

Personal
income

12.7
13.4
14.0
15.0
16.1
18.0
20.2
20.9
22.1
24.5
25.1
23.5
23.5
25.5
27.7
29.6
29.2
34.7
39.4
44.2
50.4
57.1
66.9
67.1
77.8
78.8
87.9
104.7
100.4
108.4
119.8
124.8
128.5
69.4
80.6
79.3
92.7
105.6
100.1
103.1
106.4
110.5
113.8

25.7
27.5
31.5
32.6
34.5
36.0
39.1
43.6
52.3
60.6
67.5
81.8
97.0
108.4
124.1
147.4
185.7
202.8
217.5
234.8
262.8
312.6
355.7
396.3
426.1
437.8
468.1
497.1
521.3
555.9
602.0
661.7
732.8
419.9
428.0
442.3
474.8
505.8
528.1
548.9
553.2
557.9
563.5

1.3
1.3
1.4
1.5
1.7
1.8
2.0
2.1
2.3
2.5
2.8
2.8
3.0
3.4
3.8
4.0
4.5
5.5
5.9
6.8
7.9
8.8
10.2
11.8
12.8
15.1
17.8
20.7
20.8
20.8
22.4
23.2
26.3
12.3
13.2
16.2
18.8
20.9
20.4
20.5
20.7
20.8
21.3

391.2
409.2
426.5
453.4
476.4
510.7
552.9
601.7
646.5
709.9
773.7
831.0
893.5
980.5
1,098.7
1,205.7
1,307.3
1,446.3
1,601.3
1,807.9
2,033.1
2,265.4
2,534.7
2,690.9
2,862.5
3,154.6
3,379.8
3,590.4
3,802.0
4,075.9
4,380.2
4,679.8
4,833.9
2,746.8
2,965.8
3,242.5
3,456.7
3,647.8
3,918.5
3,967.7
4,037.9
4,102.9
4,195.2

Personal
interest
income

Personal
dividend
income

22.7
25.0
26.9
29.3
32.4
36.1
40.3
44.9
49.5
54.6
60.8
69.2
75.7
81.8
94.1
112.4
123.0
134.6
155.7
184.5
223.2
274,0
336.1
376.8
397.5
461.9
498.1
531.7
548.1
583.2
669.0
721.3
719.4
373.6
418.7
485.4
507.5
532.6
562.3
564.8
570.8
588.1
608.9

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
1988
1989
1990
1991
1982:
1983: IV....
1984: IV....
1985: IV....
IV....
1986: IV....
1987: IV....
1988:
I
II
III....
IV....

410.1
425.7
440.5
474.5
501.5
539.1
586.9
643.7
679.9
741.0
798.6
833.5
899.5
992.9
1,119.5
1,198.8
1,285.3
1,435.5
1,609.1
1,829.8
2,038.9
2,198.2
2,432.5
2,522.5
2,720.8
3,058.3
3,268.4
3,437.9
3,692.3
4,002.6
4,244.7
4,459.6

52.3
50.7
51.6
59.6
65.1
72.1
82.9
88.6
86.0
92.6
89.6
77.5
90.3
103.2
116.4
104.5
121.9
147.1
175.7
199.7
202.5
177.7
182.0
151.5
212.7
264.2
280.8
271.6
319.8
365.0
351.7
319.0

2,551.5
2,834.2
3,134.4
3,341.9
3,486.0
3,828.8
3,888.8
3,966.3
4,027.6
4,127.6

150.3
229.1
261.3
284.9
264.6
343.3
352.1
364.2
365.3
378.3

10.2
11.2
13.1
14.6
16.1
18.2
21.1
24.3
28.1
30.4
33.6
40.0
45.4
49.3
56.5
71.8
80.0
85.1
100.7
120.5
149.9
191.2
233.4
262.4
270.0
307.9
326.2
350.2
360.4
387.7
452.6
490.1
481.3
256.8
281.8
321.1
331.9
349.7
368.6
374.9
376.5
391.1
408.1

1989:1
II...
III..
IV.

4,202.6
4,230.9
4,244.7
4,300.5

366.2
361.0
345.0
334.7

429.9
448.4
462.4
469.6

466.8
471.3
475.4
480.2

639.4
665.6
679.1
691.9

117.0
119.1
120.8
122.2

585.0
594.6
606.8
621.8

22.6
22.3
22.3
22.4

4,303.8
4,351.7
4,390.9
4,474.4

1990:1
II...
III..
IV..

4,395.5
4,461.0
4,475.2
4,506.8

340.2
339.8
299.8
296.1

477.5
484.5
491.8
506.4

493.0
498.6
505.8
509.3

703.0
716.2
729.1
736.9

123.7
123.5
124.8
127.0

646.6
653.7
664.4
682.2

22.6
23.1
23.2
23.6

4,580.6
4,654.7
4,719.3
4,764.7

1991:1
II
Ill
IV ".....

4,489.8
4,530.8
4,559.8

302.1
303.5
306.1

492.6
481.6
480.1
470.8

522.9
525.7
529.5
531.3

730.1
721.8
716.7
709.1

128.7
127.4
128.7
129.4

712.5
725.7
736.8
756.2

24.7
25.8
26.9
27.8

4,768.0
4,821.1
4,853.3
4,893.1

Source: Department of Commerce, Bureau of Economic Analysis.




321

0.0
.0
.0
.0
.0
.0
.0
.0
.0
.0
.0
.0
.6
.0
-.1
.1
.1
.1
.3
-.2

-.4
.2
-.2

.1
-.1

-.2

— .4

TABLE B-22.—National income by type of income, 1959-91
[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Compensation
of employees

Year or quarter

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
1988
1989
1990
1991 *
1982: IV...
1983: IV...
1984: IV...
1985: IV...
1986: IV...
1987: IV...
1988:1
II....
III..
IV...
1989:1
IV...
1990:1...

1991: I..

National
incomex

410.1
425.7
440.5
474.5
5C1.5
539.1
586.9
643.7
679.9
741.0
798.6
833.5
899.5
992.9
1,119.5
1,198.8
1,285.3
1,435.5
1,609.1
1,829.8
2,038.9
2,198.2
2,432.5
2,522.5
2,720.8
3,058.3
3,268.4
3,437.9
3,692.3
4,002.6
4,244.7
4,459.6
2,551.5
2,834.3
3,134.4
3,341.9
3,486.0
3,828.8
3,888.8
3,966.3
4,027.6
4,127.6
4,202.6
4,230.9
4,244.7
4,300.5
4,395.5
4,461.0
4,475.2
4,506.8
4,489.8
4,530.8
4,559.8

IV "...

Total

Wages
and
salaries

281.2
296.7
305.6
327.4
345.5
371.0
399.8
443.0
475.5
524.7
578.4
618.3
659.4
726.2
812.8
891.3
948.7
1,058.3
1,177.3
1,333.0
1,496.4
1,644.4
1,815.5
1,916.0
2,029.4
2,226.9
2,382.8
2,523.8
2,698.7
2,921.3
3,101.3
3,290.3
3,387.7
1,940.4
2,101.2
2,288.1
2,442.5
2,582.5
2,785.1
2,834.6
2,895.4
2,950.2
3,004.9
3,051.8
3,081.0
3,114.9
3,157.4
3,216.1
3,279.9
3,325.3
3,340.0
3,342.9
3,377.4
3,405.3
3,425.1

259.8
272.8
280.5
299.3
314.8
337.7
363.7
400.3
428.9
471.9
518.3
551.5
584.5
638.7
708.6
772.2
814.7
899.6
994.0
1,120.9
1,255.3
1,376.6
1,515.6
1,593.3
1,684.2
1,850.0
1,986.3
2,105.4
2,261.2
2,443.0
2,585.8
2,738.9
2,807.7
1,611.8
1,747.3
1,903.9
2,039.1
2,153.9
2,336.7
2,371.5
2,422.9
2,467.0
2,510.6
2,547.8
2.569.4
2,595.8
2,630.2
2.675.9
2,731.6
2,769.9
2,778.3
2,771.1
2,800.2
2,822.4
2,837.2

Proprietors' income with inventory valuation and
capital consumption adjustments
Supplements
to
wages
and
salaries 2
21.4
23.8
25.1
28.1
30.7
33.2
36.1
42.7
46.6
52.8
60.1
66.8
74.9
87.6
104.2
119.1
134.0
158.7
183.3
212.1
241.1
267.8
299.8
322.7
345.2
376.9
396.5
418.4
437.4
478.3
515.5
551.4
580.0
328.6
353.9
384.2
403.3
428.6
448.4
463.1
472.5
483.2
494.3
503.9
511.6
519.1
527.2
540.1
548.3
555.4
561.6
571.8
577.2
582.9
587.9

Farm
Total

51.7
51.9
54.3
56.4
57.7
60.5
65.0
69.4
70.9
75.1
78.9
79.9
86.2
97.4
116.5
115.3
121.2
132.9
146.4
167.7
181.8
171.8
180.8
170.7
186.7
236.0
259.9
283.7
310.2
324.3
347.0
373.2
379.6
179.9
200.1
239.6
268.7
284.4
325.0
320.9
326.1
316.8
333.4
357.0
347.0
332.7
351.3
375.8
374.2
368.8
373.9
364.2
380.0
382.5
391.9

1

Total

10.7
11.2
11.9
11.9
11.8
10.6
12.9
14.0
12.7
12.7
14.4
14.6
15.2
19.1
32.2
25.5
23.7
18.3
17.1
21.5
24.7
11.5
21.2
13.5
2.4
21.3
21.5
22.3
31.3
30.9
41.4
42.5
35.2
10.2
6.3
21.9
17.8
23.6
42.4
35.4
34.1
23.1
30.9
51.5
43.8
29.6
41.0
50.9
45.3
32.4
41.2
32.8
39.6
32.0
36.3

Proprietors'
income 3
11.6
12.1
12.7
12.7
12.5
11.3
13.7
14.8
13.5
13.6
15.6
15.9
16.6
20.9
34.3
28.2
27.5
22.5
21.8
27.0
31.2
19.4
30.2
23.1
12.1
30.8
30.5
31.0
39.6
38.8
49.6
50.3
42.8
20.0
15.8
31.2
26.7
32.1
50.6
43.6
42.1
30.9
38.8
59.5
51.8
38.0
49.0
58.9
53.2
40.2
49.0
40.5
47.1
39.6
43.9

Nonfarm
Capital
consumption
adjustment
-0.9
-.8
-.8
-.8
-7
-.7
-.9
-1.1
-1.3
-1.4
-1.8
-2.0
-2.8
-3.8
-4.2
-4.8
-5.5
-6.4
-7.9
-9.0
-9.7
-9.7
-9.4
-9.0
-8.7
-8.3
-8.0
-8.1
-7.9
-7.6
-9.8
-9.5
-9.3
-8.9
-8.6
-8.2
-8.2
-8.0
-7.8
-7.9
-8.0
-8.0
-8.4
-8.0
-8.0
-7.8
-7.8
-7.8
-7.7
-7.6
-7.6
-7.6

Total

41.1
40.6
42.4
44.5
45.9
49.8
52.1
55.3
58.2
62.4
64.5
65.3
70.9
78.3
84.3
89.8
97.5
114.6
129.4
146.2
157.0
160.3
159.6
157.3
184.3
214.7
238.4
261.5
279.0
293.4
305.5
330.7
344.5
169.6
193.8
217.7
250.9
260.9
282.6
285.5
292.0
293.8
302.5
305.5
303.2
303.2
310.2
324.9
328.8
336.5
332.7
331.4
340.4
350.5
355.6

Proprietors'
income

40.2
39.8
41.8
43.9
45.2
49.2
51.9
55.4
58.3
63.0
65.0
66.0
72.0
79.3
86.5
94.2
100.2
117.6
132.5
150.2
161.8
165.8
160.9
157.8
176.1
197.1
212.4
230.6
252.4
266.8
278.6
308.9
325.4
168.0
182.5
196.6
223.2
230.0
254.2
257.7
265.5
269.0
274.9
279.8
275.3
275.1
284.4
300.6
306.1
315.7
313.0
312.5
321.6
331.5
336.0

Inven- Capital
contory
valua- sumption
tion
adjust- adjustment
ment
0.0
.0
.0
.0
.0
-.1
-.2
-.2
-.2
-.4
-.5
-.5
-.6
-.7
-2.0
-3.8
-1.2
-1.3
-1.3
-2.1
-2.9
-3.0
-1.4
-.6
-.6
-.2
-.1
-.8
-1.5
-1.2
-.8
-.3
.6
-1.6
.1
-1.4
17
.8
-1.3
-4.0
-1.4
-3.3
-1.0
.2
-1.0
-.9
-.9
-.5
-.3
-.3
-.1

0.9
.8
.6
.6
7
.4
.2
.1
-.2
.0
-.1
-2
-.2
-.6
-1.4
-1.7
-1.8
-2.0
-1.9
-2.5
.2
.0
8.7
18.1
26.1
30.9
27.4
28.1
28.1
227
19.4
1.1
12.9
21.0
29.1
30.1
26.7
26.9
27.8
28.7
29.0
29.1
28.9
27.9
26.6
25.3
23.6
21.6
20.2
19.1
19.2
19.4
19.7

National income is the total net income earned in production. It differs from gross domestic 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-20.
See next page for continuation of table.




322

TABLE B-22.—National income by type of income, 1959-91—Continued
[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Rental income of persons
with capital consumption
adjustment

Year or quarter
Total

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
1988
1989
1990
1991 P
1982: IV
1983: IV
1984: IV
1985: IV
1986: IV
1987: IV
1988:1
II
III
IV
1989:1
II.
III
IV
1990:1
II
III
IV
1991:1
II.
III
IV
2
3

14.7
15.3
15.8
16.5
17.1
17.3
18.0
18.5
19.4
18.2
18.0
17.8
18.2
16.8
17.3
15.8
13.5
12.1
9.0
8.9
8.4
13.2
20.8
21.9
22.1
23.3
18.7
8.7
3.2
4.3
-7.9
-12.9
-13.2
24.1
22.2
24.3
14.0
4.7
6.8
6.2
4.1
4.2
2.8
-2.2
-6.5
-10.3
-12.5
-14.2
-17.3
-10.4
-9.5
-11.9
-11.7
-14.2
-15.2

Capital
Rental
conincome
sumption
of
adjustpersons
ment

18.0
18.7
19.2
19.8
20.3
20.5
21.3
22.1
23.4
22.8
23.9
24.2
25.6
26.1
28.2
29.3
29.5
29.9
30.0
34.4
39.1
49.0
61.1
64.4
64.8
66.5
63.4
53.4
50.0
53.4
46.9
40.6
42.0
66.5
64.5
67.6
60.0
50.2
54.2
54.9
53.0
53.2
52.6
48.5
45.3
49.0
44.8
39.0
35.8
43.5
44.0
41.9
42.6
40.9
42.8

Corporate profits with inventory valuation and capital consumption adjustments
Profits with inventory valuation adjustment and without
capital consumption adjustment
Profits
Total

-3.4

52.3

-3.4
-3.3
-3.3
-3.2
-3.2

50.7
51.6
59.6
65.1
72.1

-3.3
-3.6
-3.9
-4.6
-5.9

82.9
88.6
86.0
92.6
89.6

-6.4
-7.4
-9.3
-10.9
-13.5

77.5
90.3
103.2
116.4
104.5

-15.9
-17.8
-21.0
-25.5
-30.8

121.9
147.1
175.7
199.7
202.5

-35.8
-40.2
-42.4
-42.8
-43.2

177.7
182.0
151.5
212.7
264.2

-44.6
-44.7
-46.8
-49.1
-54.8

280.8
271.6
319.8
365.0
351.7

-53.4
-55.3
-42.3
-42.4
-43.4
-46.0
-45.5
-47.4
-48.6
-48.9
-49.0
-49.7
-50.7
-51.8
-59.4
-57.3
-53.2
-53.2
-53.9
-53.5
-53.8
-54.2
-55.1
-58.0

Profits after tax
Total

Profits
before
tax

Profits
tax
liability

Total

319.0

53.1
51.0
51.3
56.4
61.2
67.5
77.6
83.0
80.3
86.9
83.2
71.8
85.5
97.9
110.9
103.4
129.4
158.8
186.7
212.8
219.8
197.8
203.2
166.4
202.2
236.4
225.3
227.6
273.4
320.3
327.0
318.2

53.4
51.1
51.0
56.4
61.2
68.0
78.8
85.1
81.8
90.6
89.0
78.4
90.1
104.5
130.9
142.8
140.4
173.7
203.3
237.9
261.4
240.9
228.9
176.3
210.7
240.5
225.0
217.8
287.9
347.5
344.5
332.3

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
94.0
96.5
106.5
127.1
137.0
138.0
135.3

29.7
28.4
28.2
32.4
34.9
40.0
47.9
51.4
49.2
51.2
49.4
44.0
52.4
62.6
81.6
91.0
89.5
109.5
130.3
154.4
173.4
156.1
147.8
113.2
133.5
146.4
128.5
111.3
160.8
210.5
206.6
197.0

150.3
229.1
261.3
284.9
264.6
343.3
352.1
364.2
365.3
378.3
366.2
361.0
345.0
334.7
340.2
339.8
299.8
296.1
302.1
303.5
306.1

160.0
216.2
223.6
228.0
225.0
293.4
303.3
316.8
320.4
340.5
332.9
332.2
323.6
319.2
330.0
335.4
302.4
304.9
315.7
316.1
313.4

168.6
223.8
220.1
231.8
235.7
311.2
322.1
342.9
353.0
372.2
370.5
347.9
326.9
332.8
336.6
331.6
335.1
326.1
309.1
306.2
318.2

58.7
82.2
83.8
97.6
116.6
135.2
126.6
135.7
139.6
146.2
149.2
141.7
131.2
129.8
137.6
137.9
138.8
127.1
119.4
123.5
128.6

109.9
141.6
136.3
134.2
119.2
176.0
195.5
207.2
213.4
226.0
221.3
206.2
195.7
203.0
199.1
193.7
196.3
199.0
189.7
182.7
189.6

UndisDivitributed
dends
profits
12.7
13.4
14.0
15.0
16.1
18.0
20.2
20.9
22.1
24.6
25.2
23.7
23.7
25.8
28.1
30.4
30.1
35.6
40.7
45.9
52.4
59.0
69.2
70.0
81.2
82.7
92.4
109.8
106.2
115.3
127.9
133.7
137.8
72.5
84.2
83.4
97.4
111.0
106.3
109.6
113.3
117.5
121.0
124.6
127.1
129.1
130.7
132.3
132.5
133.8
136.2
137.8
136.7
138.1
138.5

17.0
15.0
14.3
17.4
18.8
22.0
27.8
30.5
27.1
26.6
24.1
20.3
28.6
36.9
53.5
60.6
59.4
73.9
89.5
108.5
121.0
97.1
78.6
43.2
52.3
63.8
36.1
1.6
54.6
95.2
78.7
63.3
37.5
57.4
52.9
36.9
8.2
69.7
86.0
93.9
95.8
105.0
96.6
79.2
66.7
72.3
66.7
61.2
62.5
62.8
51.9
46.1
51.5

Inventory
valuation
adjustment

-0.3
_ 2
-.3
-.0
-.1
-.5
-1.2
-2.1
-1.6
-3.7
-5.9

-0.8

-6.6
-4.6
-6.6
-20.0
-39.5

5.6
4.8
5.3
5.5
1.2

-11.0
-14.9
-16.6
-25.0
-41.6

-7.6
-11.7
-11.0
-13.1
-17.3

-43.0
-25.7
-9.9
-8.5
-4.1

-20.2
-21.2
-14.9
10.4
27.8

.2
9.7
-14.5
-27.3
-17.5

55.5
44.1
46.4
44.7
24.7

-14.2
3.8
-8.6
-7.6
3.5
-3.8
-10.7
-17.8
-18.8
-26.1
-32.6
-31.7
-37.6
-15.7
-3.3
-13.5
-6.6
3.8
-32.6
-21.2
6.7
9.9
-4.8
3.3

Consists mainly of employer contributions for social insurance and to private pension, health, and welfare funds.
With inventory valuation adjustment.

Source: Department of Commerce, Bureau of Economic Analysis.




323

Capital
Net
coninterest
sumption
adjustment

-.3
.3
3.2
3.9
4.6
5.3
5.6
5.7
5.6
6.4

-9.1
-9.6
12.9
37.7
56.9
39.6
49.9
48.8
47.4
44.8
37.9
33.2
28.7
21.4
15.4
10.2
4.4
-2.7
-8.8
-13.6
-12.6
-7.3
-2.9

TABLE B-23.—Sources of personal income, 1959-91
[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Wage and salary disbursementsl

Year or quarter

Personal
income

Commodityproducing
industries
Total
Total

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
1988
1989
1990
1991 P
1982: IV..
1983: IV..
1984: IV..
1985: IV..
1986: IV..
1987: IV..
1988:1
II...
III..
IV..
1989:1....
II...
III..
IV..
1990:1....
II...
III..
IV..
1991:1....
Ill
IV P. ...

391.2
409.2
426.5
453.4
476.4
510.7
552.9
601.7
646.5
709.9
773.7
831.0
893.5
980.5
1,098.7
1,205.7
1,307.3
1,446.3
1,601.3
1,807.9
2,033.1
2,265.4
2,534.7
2,690.9
2,862.5
3,154.6
3,379.8
3,590.4
3,802.0
4,075.9
4,380.2
4,679.8
4,833.9
2,746.8
2,965.8
3,242.5
3,456.7
3,647.8
3,918.5
3,967.7
4,037.9
4,102.9
4,195.2
4,303.8
4,351.7
4,390.9
4,474.4
4,580.6
4,654.7
4,719.3
4,764.7
4,768.0
4,821.1
4,853.3
4,893.1

259.8
272.8
280.5
299.3
314.8
337.7
363.7
400.3
428.9
471.9
518.3
551.5
583.9
638.7
708.7
772.6
814.6
899.5
993.9
1,120.7
1,255.4
1,376.6
1,515.6
1,593.3
1,684.7
1,849.8
1,986.5
2,105.4
2,261.2
2,443.0
2,585.8
2,738.9
2,807.8
1.611.7
1.747.3
1.903.3
2,039.1
2,153.9
2,337.0
2,371.5
2,422.9
2,467.0
2,510.6
2,547.8
2,569.4
2,595.8
2,630.2
2,675.9
2,731.6
2,769.8
2,778.2
2,770.9
2,800.6
2,822.4
2,837.2

109.9
113.4
114.0
122.2
127.4
136.0
146.6
161.6
169.0
184.1
200.4
203.7
209.1
228.2
255.9
276.5
277.1
309.7
346.1
392.6
442.1
471.9
513.7
513.5
525.1
580.8
612.2
628.5
651.8
699.1
723.8
745.4
738.7
503.9
547.6
594.5
622.6
635.3
668.4
682.1
694.8
703.9
715.3
720.8
719.7
724.2
730.7
737.4
747.7
751.2
745.2
733.4
735.2
742.3
744.0

Manufacturing

86.9
89.8
89.9
96.8
100.7
107.3
115.7
128.2
134.3
146.0
157.7
158.4
160.5
175.6
196.6
211.8
211.6
238.0
266.7
300.1
334.9
355.7
386.9
384.3
397.7
439.8
461.3
473.8
490.1
524.5
542.1
555.8
556.5
378.0
415.7
450.5
469.1
478.5
501.6
512.6
520.6
527.3
537.5
542.1
539.6
541.8
544.7
548.0
557.5
560.4
557.3
549.3
552.3
559.9
564.4

1

Distributive
industries

Service
industries

Government

Other
labor
income 1

Proprietors' income
with inventory
valuation and
capital
consumption
adjustments
Farm

65.1
68.6
69.6
73.3
76.8
82.0
87.9
95.1
101.6
110.8
121.7
131.2
140.4
153.3
170.3
186.8
198.1
219.5
242.7
274.9
308.4
336.4
368.1
385.8
406.2
445.4
475.9
501.7
536.9
575.3
607.5
634.6
641.2
391.2
422.4
458.4
487.6
512.5
551.9
559.6
571.0
580.8
589.9
599.9
605.1
608.8
616.0
624.6
634.5
640.4
639.0
635.1
642.0
644.0
643.8

38.8
41.7
44.4
47.6
50.7
54.9
59.4
65.3
72.0
80.4
90.6
99.4
107.9
119.7
133.9
148.6
163.4
181.6
202.8
233.7
267.7
306.9
348.1
386.5
427.4
475.8
524.5
579.5
650.7
719.6
775.9
845.0
887.6
400.9
445.8
494.4
546.8
602.1
685.0
690.2
711.4
730.1
746.8
758.7
770.0
781.1
793.9
812.4
838.0
860.6
868.8
866.5
883.0
894.4
906.6

46.0
49.2
52.4
56.3
60.0
64.9
69.9
78.3
86.4
96.6
105.5
117.1
126.5
137.4
148.7
160.9
176.0
188.6
202.3
219.4
237.3
261.4
285.7
307.5
325.9
347.8
373.9
395.7
421.8
449.0
478.6
514.0
540.2
315.6
331.5
356.1
382.2
404.0
431.7
439.7
445.7
452.1
458.5
468.4
474.7
481.8
489.7
501.5
511.4
517.7
525.2
535.8
540.5
541.8
542.8

10.6
11.2
11.8
13.0
14.0
15.7
17.8
19.9
21.7
25.2
28.5
32.5
36.7
43.0
49.2
56.5
65.9
79.7
94.7
110.1
124.3
139.8
153.0
165.4
174.6
184.7
191.8
200.7
210.4
230.5
253.7
274.0
290.6
169.2
179.0
187.7
193.9
205.3
216.5
221.4
226.6
233.6
240.3
245.8
251.0
256.4
261.7
267.8
272.1
276.3
279.9
284.2
288.5
292.8
297.0

10.7
11.2
11.9
11.9
11.8
10.6
12.9
14.0
12.7
12.7
14.4
14.6
15.2
19.1
32.2
25.5
23.7
18.3
17.1
21.5
24.7
11.5
21.2
13.5
2.4
21.3
21.5
22.3
31.3
30.9
41.4
42.5
35.2
10.2
6.3
21.9
17.8
23.6
42.4
35.4
34.1
23.1
30.9
51.5
43.8
29.6
41.0
50.9
45.3
32.4
41.2
32.8
39.6
32.0
36.3

Nonfarm

41.1
40.6
42.4
44.5
45.9
49.8
52.1
55.3
58.2
62.4
64.5
65.3
70.9
78.3
84.3
89.8
97.5
114.6
129.4
146.2
157.0
160.3
159.6
157.3
184.3
214.7
238.4
261.5
279.0
293.4
305.5
330.7
344.5
169.6
193.8
217.7
250.9
260.9
282.6
285.5
292.0
293.8
302.5
305.5
303.2
303.2
310.2
324.9
328.8
336.5
332.7
331.4
340.4
350.5
355.6

The total of wage and salary disbursements and other labor income differs from compensation of employees in Table B-22 in that it
excludes employer contributions for social insurance and the excess of wage accruals over wage disbursements.




324

TABLE B-23.—Sources of personal income, 1959-91— Continued

[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Rental
income
of
Year or quarter

with Personal Personal
capital dividend interest
income income
consumption
adjustment

Transfer payments to persons

Total

Old-age,
Govern- Aid to
survivors, Government
ment families
unem- Veterans employ- with
and
ployment benefits
ees depend- Other
health
insurretireent
insurance
ment children
ance
benefits
benefits (AFDC)
benefits

Less:
Personal
contribu- Nonfarm
tions for personal
income2
social
insurance

14.7
12.7
22.7 27.0
2.8
4.6
1959
10.2
2.8
0.9
5.7
7.9
376.2
15.3
13.4
25.0 28.8
3.0
4.6
393.7
1960
3.1
9.3
11.1
1.0
6.1
15.8
14.0
26.9 32.8
4.3
5.0
410.4
9.7
1961
3.4
1.1
6.5
12.6
16.5
15.0
29.3 34.1
3.1
4.7
437.0
1962
3.7
7.0
10.3
14.3
1.3
17.1
16.1
32.4 36.2
3.0
4.8
460.0
1963
11.8
15.2
4.2
7.6
1.4
17.3
18.0
36.1 37.9
2.7
4.7
1964
12.6
495.3
4.7
8.2
16.0
1.5
18.0
20.2
40.3 41.1
2.3
4.9
534.9
1965
18.1
5.2
9.0
13.3
1.7
18.5
20.9
44.9 45.7
1.9
4.9
582.4
1966
6.1
17.8
20.8
1.9 10.3
19.4
22.1
49.5 54.6
2.2
5.6
1967
20.6
628.3
25.5
6.9
2.3 12.2
18.2
24.5
54.6 63.2
2.1
5.9
1968
22.9
691.4
30.2
7.6
2.8 14.5
18.0
25.1
60.8 70.3
2.2
6.7
1969
26.2
753.1
32.9
8.7
3.5 16.2
17.8
23.5
69.2 84.6
4.0
7.7
1970
27.9
809.8
38.5
10.2
4.8 19.4
18.2
23.5
75.7 100.1
5.8
8.8
1971
30.7
871.5
6.2 23.0
44.5
11.8
16.8
25.5
81.8 111.8
5.7
9.7
954.2
1972
34.5
6.9 26.1
49.6
13.8
17.3
27.7
94.1 127.9
4.4
10.4
42.6 1,058.1
1973
60.4
7.2 29.5
16.0
15.8
29.6 112.4 151.3
6.8
11.8
1974
47.9 1,170.2
70.1
7.9 35.7
19.0
13.5
29.2 123.0 190.2
17.6
14.5
50.4 1,272.5
1975
81.4
22.7
9.2 44.7
12.1
34.7 134.6 208.3
15.8
14.4
1976
55.5 1,415.1
92.9
26.1
10.1 49.1
9.0
39.4 155.7 223.3
12.7
13.8
1977
61.2 1,569.9
10.6 52.4
104.9
29.0
8.9
44.2 184.5 241.6
9.7
13.9
69.8 1,770.3
1978
10.7 58.4
116.2
32.7
8.4
50.4 223.2 270.7
9.8
14.4
81.0 1,989.3
1979
11.0 66.8
131.8
36.9
57.1 274.0 321.5
16.1
15.0
88.6 2,231.6
1980
13.2
12.4 80.8
154.2
43.0
66.9 336.1 365.9
15.9
16.1
104.5 2,488.5
1981
20.8
13.0 89.7
49.4
182.0
67.1 376.8 408.1
25.2
16.4
1982
112.3 2,649.8
21.9
13.3 94.1
204.5
54.6
77.8 397.5 438.9
26.3
16.6
119.7 2,832.6
1983
22.1
14.2 102.1
221.7
58.0
78.8 461.9 452.9
15.8
16.4
132.8 3,106.1
1984
23.3
14.8 109.2
235.7
60.9
87.9 498.1 485.9
15.7
16.7
18.7 104.7 531.7 517.8
149.1 3,333.2
1985
15.4 118.1
253.4
66.6
16.3
16.7
162.1 3,545.6
1986
8.7 100.4 548.1 542.2
16.4 128.5
70.7
269.2
14.5
16.6
1987
173.6 3,749.4
16.7 135.5
3.2 108.4 583.2 576.7
76.0
282.9
13.4
16.9
194.5 4,023.9
1988
4.3 119.8 669.0 624.4
17.3 146.5
82.2
300.4
14.4
17.3
211.7 4,316.6
1989
-7.9 124.8 721.3 684.9
18.0 162.4
87.2
325.1
17.9
17.8
1990
224.3 4,614.5
-12.9 128.5 719.4 759.1
19.8 184.2
93.1
352.0
26.7
18.3
69.4 373.6 432.2
31.8
16.6
1991'
238.0 4,775.0
-13.2
21.8 212t9
99.7
379.7
80.6 418.7 441.3
19.9
16.5
113.3 2,708.5
24.1
1982: IV....
13.6 97.6
56.1
216.4
79.3 485.4 458.5
15.6
16.4
123.4 2,932.0
22 2
14.5 104.2
59.5
1983: IV....
226.7
92.7 507.5 493.6
15.3
16.5
135.6 3,193.8
24.3
14.8 112.5
58.0
241.3
1984: IV....
152.8 3,414.9
14.0 105.6 532.6 526.6
15.7 121.3
68.0
256.7
16.7
16.4
1985: IV....
165.4 3,602.3
4.7 100.1 562.3 548.5
16.7 131.1
72.4
273.3
13.4
16.5
1986: IV....
177.7 3,854.9
6.8 103.1 564.8 569.4
16.7 138.3
77.7
285.8
1987: IV....
14.0
16.9
6.2 106.4 570.8 573.8
189.6 3,911.2
81.0
17.0 142.7
297.8
1988:1
13.4
16.9
4.1 110.5 588.1 578.7
17.1 145.1
192.9 3,982.8
82.5
298.9
II
13.3
16.9
4.2 113.8 608.9 584.8
196.0 4,058.7
82.3
17.3 147.6
301.2
III....
13.0
16.8
2.8 117.0 639.4 607.7
83.0
199.5 4,142.9
303.8
17.5 150.6
13.5
17.5
IV....
-2.2 119.1 665.6 616.9
208.6 4,230.7
316.7
85.8
17.6 156.7
13.8
17.3
1989:1
-6.5 120.8 679.1 629.1
321.7
86.7
210.8 4,286.0
17.8 159.5
14.6
17.3
II
-10.3 122.2 691.9 644.2
328.2
212.7 4,339.0
87.5
18.1 163.4
15.6
17.2
-12.5 123.7 703.0 669.2
214.8 4,410.9
334.0
88.8
18.4 170.2
16.1
17.9
II!....
220.7 4,507.2
-14.2 123.5 716.2 676.8
347.7
19.2 175.9
92.5
17.1
17.8
IV....
-17.3 124.8 729.1 687.7
222.3 4,586.5
348.9
19.5 181.1
92.4
18.0
17.7
-10.4 127.0 736.9 705.8
226.7 4,664.1
19.9 185.8
1990:1
353.0
93.1
20.5
17.9
227.5 4,700.4
-9.5 128.7 730.1 737.2
20.5 193.9
358.4
94.6
II
23.6
18.0
235.4 4,711.9
-11.9 127.4 721.8 751.5
20.9 201.2
373.1
27.0
187 100.3
III....
237.0 4,757.9
-11.7 128.7 716.7 763.7
21.7 208.0
98.9
377.2
26.5
18.4
239.3 4,797.4
-14.2 129.4 709.1 784.1
22.1 215.7
99.3
381.7
IV....
29.6
18.2
240.4 4,832.6
-15.2
100.2
22.5 226.7
386.8
1991:1
2 II
Personal income exclusive of the farm component of wages and salaries, other labor income, proprietors' income, and net interest.
III....
IV.
Note.—The industry classification of wage and salary disbursements and proprietors' income is on an establishment basis and is
based on the 1987 Standard Industrial Classification (SIC) beginning 1987 and on the 1972 SIC for earlier years shown.
Source: Department of Commerce, Bureau of Economic Analysis.




325

TABLE B-24.—Disposition of personal income, 1959-91

[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

Total

Personal
Personal
transfer
conpayInterest
sumption paid by ments
expendi- persons to rest
tures
of the
world
(net)

Personal outlays
Equals:
Personal
saving
Total

Personal
consumption
expenditures

1959
1960
1961
1962
1963
1964

391.2
409.2
426.5
453.4
476.4
510.7

44.5
48.7
50.3
54.8
58.0
56.0

346.7
360.5
376.2
398.7
418.4
454.7

324.7
339.9
351.3
372.8
393.7
423.1

318.1
332.4
343.5
364.4
384.2
412.5

6.1
7.0
7.3
7.8
8.9
10.0

0.4
.4
.5
.5
.6
.7

22.0
20.6
24.9
25.9
24.6
31.6

93.6
94.3
93.4
93.5
94.1
93.1

91.8
92.2
91.3
91.4
91.8
90.7

1965
1966
1967
1968
1969

552.9
601.7
646.5
709.9
773.7

61.9
71.0
77.9
92.1
109.9

491.0
530.7
568.6
617.8
663.8

456.4
494.3
522.8
573.9
620.4

444.6
481.6
509.3
559.1
603.7

11.1
12.0
12.5
13.8
15.7

.7
.7
.9
.9
1.0

34.6
36.4
45.9
43.9
43.4

93.0
93.1
91.9
92.9
93.5

90.5
90.7
89.6
90.5
90.9

1970
1971
1972
1973
1974

831.0
893.5
980.5
1,098.7
1,205.7

109.0
108.7
132.0
140.6
159.1

722.0
784.9
848.5
958.1
1,046.5

664.4
719.3
788.6
871.9
953.0

646.5
700.3
767.8
848.1
927.7

16.8
17.8
19.6
22.4
24.2

1.2
1.2
1.2
1.3
1.1

57.6
65.5
59.9
86.2
93.5

92.0
91.7
92.9
91.0
91.1

89.5
89.2
90.5
88.5
88.6

1975
1976
1977
1978
1979

1,307.3
1,446.3
1,601.3
1,807.9
2,033.1

156.4
182.3
210.0
240.1
280.2

1,150.9
1,264.0
1,391.3
1,567.8
1,753.0

1,050.4
1,170.7
1,303.1
1,459.6
1,629.3

1,024.9
1,143.1
1,271.5
1,421.2
1,583.7

24.5
26.7
30.7
37.5
44.5

1.0
1.0
.9
.9
1.0

100.4
93.2
88.1
108.1
123.7

91.3
92.6
93.7
93.1
92.9

89.1
90.4
91.4
90.7
90.3

1980
1981
1982
1983
1984

2,265.4
2,534.7
2,690.9
2,862.5
3,154.6

312.4
360.2
371.4
368.8
395.1

1,952.9
2,174.5
2,319.6
2,493.7
2,759.5

1,798.6
1,982.1
2,119.6
2,324.7
2,537.2

1,748.1
1,926.2
2,059.2
2,257.5
2,460.3

49.4
54.6
58.8
65.7
75.0

1.2
1.3
1.6
1.4
1.9

154.3
192.4
200.0
169.1
222.3

92.1
91.2
91.4
93.2
91.9

89.5
88.6
88.8
90.5
89.2

1985
1986
1987
1988
1989

3,379.8
3,590.4
3,802.0
4,075.9
4,380.2

436.8
459.0
512.5
527.7
591.7

2,943.0
3,131.5
3,289.5
3,548.2
3,788.6

2,753.2
2,943.6
3,146.9
3,392.0
3,621.6

2,667.4
2,850.6
3,052.2
3,296.1
3,517.9

83.6
90.9
92.3
93.7
101.6

2.2
2.1
2.4
2.1
2.1

189.8
187.8
142.6
156.2
166.9

93.6
94.0
95.7
95.6
95.6

90.6
91.0
92.8
92.9
92.9

1990
1991"

4,679.8
4,833.9

621.0
616.0

4,058.8
4,217.8

3,852.2
3,995.8

3,742.6
3,886.8

107.5
106.8

2.1
2.2

206.6
222.1

94.9
94.7

92.2
92.2

IV
IV
IV
IV
IV
IV

2,746.8
2,965.8
3,242.5
3,456.7
3,647.8
3,918.5

372.1
371.6
413.4
448.8
478.5
528.6

2,374.7
2,594.3
2,829.1
3,007.9
3,169.3
3,389.9

2,190.4
2,417.6
2,606.1
2,828.2
3,017.8
3,219.4

2,128.7
2,346.8
2,526.4
2,739.8
2,923.1
3,124.6

60.2
69.2
77.6
86.4
92.3
92.4

1.5
1.6
2.1
2.0
2.4
2.4

184.2
176.7
223.0
179.7
151.5
170.5

92.2
93.2
92.1
94.0
95.2
95.0

89.6
90.5
89.3
91.1
92.2
92.2

1988:1
||
III
IV
1989:1
II
Ill
IV

3,967.7
4,037.9
4,102.9
4,195.2
4,303.8
4,351.7
4,390.9
4,474.4

510.8
530.4
527.7
542.0
574.3
597.6
591.8
602.9

3,456.8
3,507.6
3,575.2
3,653.2
3,729.5
3,754.2
3,799.1
3,871.4

3,294.2
3,355.2
3,422.3
3,496.2
3,535.9
3,593.4
3,656.8
3,700.4

3,199.1
3,260.5
3,326.6
3,398.2
3,436.5
3,490.6
3,551.7
3,592.8

92.8
92.7
93.6
95.8
97.4
100.6
103.1
105.4

2.3
1.9
2.1
2.2
1.9
2.2
2.0
2.2

162.6
152.3
152.9
157.0
193.7
160.8
142.2
171.0

95.3
95.7
95.7
95.7
94.8
95.7
96.3
95.6

92.5
93.0
93.0
93.0
92.1
93.0
93.5
92.8

1990:1
II.
Ill
IV
1991:1
||
III
IV ".

4,580.6
4,654.7
4,719.3
4,764.7
4,768.0
4,821.1
4,853.3
4,893.1

606.6
622.7
627.5
627.2
617.1
613.6
615.1
618.3

3,974.0
4,032.0
4,091.8
4,137.5
4,151.0
4,207.5
4,238.2
4,274.7

3,776.6
3,815.3
3,895.3
3,921.7
3,937.5
3,977.9
4,024.9
4,042.8

3,667.3
3,706.0
3,785.2
3,812.0
3,827.7
3,868.5
3,916.4
3,934.4

107.2
107.6
107.7
107.6
107.5
107.1
106.3
106.2

2.1
1.7
2.5
2.1
2.3
2.2
2.1
2.1

197.5
216.7
196.5
215.8
213.4
229.6
213.3
232.0

95.0
94.6
95.2
94.8
94.9
94.5
95.0
94.6

92.3
91.9
92.5
92.1
92.2
91.9
92.4
92.0

1982:
1983:
1984:
1985:
1986:
1987:

1
Percents based on data in millions of dollars.
Source: Department of Commerce, Bureau of Economic Analysis.




326

TABLE B-25.—Total and per capita disposable personal income and personal consumption expenditures in
current and 1987 dollars, 1959-91
[Quarterly data at seasonally adjusted annual rates, except as noted]
Personal consumption expenditures

Disposable personal income
Year or quarter

Total (billions of
dollars)

Per capita
(dollars)

Total (billions of
dollars)

Current
dollars
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
1988
1989
1990
1991'
1982: IV
1983: IV
1984: IV
1985: IV
1986: IV
1987: IV
1988: I
II
Ill
IV
1989:1
II
Ill
IV
1990:1
II
Ill
IV
1991: I
II
Ill
IV ".
..

1987
dollars

Current
dollars

1987
dollars

Current
dollars

1987
dollars

346.7
360.5
376.2
398.7
418.4
454.7
491.0
530.7
568.6
617.8
663.8
722.0
784.9
848.5
958.1
1,046.5
1,150.9
1,264.0
1,391.3
1,567.8
1,753.0
1,952.9
2,174.5
2,319.6
2,493.7
2,759.5
2,943.0
3,131.5
3,289.5
3,548.2
3,788.6
4,058.8
4,217.8
2,374.7
2,594.3
2,829.1
3,007.9
3,169.3
3,389.9
3,456.8
3,507.6
3,575.2
3,653.2
3,729.5
3,754.2
3,799.1
3,871.4
3,974.0
4,032.0
4,091.8
4,137.5
4,151.0
4,207.5
4,238.2
4,274.7

1,284.9
1,313.0
1,356.4
1,414.8
1,461.1
1,562.2
1,653.5
1,734.3
1,811.4
1,886.8
1,947.4
2,025.3
2,099.9
2,186.2
2,334.1
2,317.0
2,355.4
2,440.9
2,512.6
2,638.4
2,710.1
2,733.6
2,795.8
2,820.4
2,893.6
3,080.1
3,162.1
3,261.9
3,289.6
3,404.3
3,471.2
3,538.3
3,534.1
2,832.6
2,960.6
3,118.5
3,178.7
3,266.2
3,335.8
3,380.1
3,386.3
3,407.5
3,443.1
3,473.9
3,450.9
3,466.9
3,493.0
3,531.4
3,545.3
3,547.0
3,529.5
3,514.8
3,537.4
3,539.9
3,544.3

1,958
1,994
2,048
2,137
2,210
2,369
2,527
2,699
2,861
3,077
3,274
3,521
3,779
4,042
4,521
4,893
5,329
5,796
6,316
7,042
7,787
8,576
9,455
9,989
10,642
11,673
12,339
13,010
13,545
14,477
15,313
16,236
16,693
10,189
11,033
11,925
12,565
13,121
13,907
14,154
14,332
14,570
14,850
15,131
15,197
15,337
15,586
15,963
16,154
16,344
16,479
16,492
16,678
16,752
16,849

7,256
7,264
7,382
7,583
7,718
8,140
8,508
8,822
9,114
9,399
9,606
9,875
10,111
10,414
11,013
10,832
10,906
11,192
11,406
11,851
12,039
12,005
12,156
12,146
12,349
13,029
13,258
13,552
13,545
13,890
14,030
14,154
13,987
12,154
12,591
13,145
13,278
13,522
13,685
13,840
13,836
13,886
13,996
14,093
13,969
13,996
14,063
14,185
14,204
14,168
14,058
13,965
14,022
13,992
13,970

318.1
332.4
343.5
364.4
384.2
412.5
444.6
481.6
509.3
559.1
603.7
646.5
700.3
767.8
848.1
927.7
1,024.9
1,143.1
1,271.5
1,421.2
1,583.7
1,748.1
1,926.2
2,059.2
2,257.5
2,460.3
2,667.4
2,850.6
3,052.2
3,296.1
3,517.9
3,742.6
3,886.8
2,128.7
2,346.8
2,526.4
2,739.8
2,923.1
3,124.6
3,199.1
3,260.5
3,326.6
3,398.2
3,436.5
3,490.6
3,551.7
3,592.8
3,667.3
3,706.0
3,785.2
3,812.0
3,827.7
3,868.5
3,916.4
3,934.4

1,178.9
1,210.8
1,238.4
1,293.3
1,341.9
1,417.2
1,497.0
1,573.8
1,622.4
1,707.5
1,771.2
1,813.5
1,873.7
1,978.4
2,066.7
2,053.8
2,097.5
2,207.3
2,296.6
2,391 8
2,448.4
2,447.1
2,476.9
2,503.7
2,619.4
2,746.1
2,865.8
2,969.1
3,052.2
3,162.4
3,223.1
3,262.6
3,256.7
2,539.3
2,678.2
2,784.8
2,895.3
3,012.5
3,074.7
3,128.2
3,147.8
3,170.6
3,202.9
3,200.9
3,208.6
3,241.1
3,241.6
3,258.8
3,258.6
3,281.2
3,251.8
3,241.1
3,252.4
3,271.2
3,262.2

Per capita
(dollars)
Current
dollars
1,796
1,839
1,869
1,953
2,030
2,149
2,287
2,450
2,562
2,785
2,978
3,152
3,372
3,658
4,002
4,337
4,745
5,241
5,772
6,384
7,035
7,677
8,375
8,868
9,634
10,408
11,184
11,843
12,568
13,448
14,219
14,971
15,383
9,134
9,980
10,649
11,445
12,101
12,819
13,099
13,322
13,556
13,814
13,942
14,130
14,338
14,464
14,731
14,848
15,120
15,183
15,208
15,334
15,481
15,508

1987
dollars
6,658
6,698
6,740
6,931
7,089
7,384
7,703
8,005
8,163
8,506
8,737
8,842
9,022
9,425
9,752
9,602
9,711
10,121
10,425
10,744
10,876
10,746
10,770
10,782
11,179
11,617
12,015
12,336
12,568
12,903
13,027
13,051
12,889
10,895
11,390
11,739
12,095
12,472
12,615
12,808
12,862
12,921
13,020
12,986
12,989
13,084
13,051
13,090
13,056
13,107
12,952
12,877
12,892
12,930
12,858

Population
(thousands) l

177,073
180,760
183,742
186,590
189,300
191,927
194,347
196,599
198,752
200,745
202,736
205,089
207,692
209,924
211,939
213,898
215,981
218,086
220,289
222,629
225,106
227.715
229,989
232,201
234,326
236,393
238,510
240,691
242,860
245,093
247,405
249,992
252,666
233,060
235,146
237,231
239,387
241,550
243,745
244,235
244,744
245,387
246,004
246,491
247,032
247,711
248,387
248,950
249,594
250,349
251,074
251,689
252,281
252,990
253,705

1
Population of the United States including Armed Forces overseas; includes Alaska and Hawaii beginning 1960. Annual data are
averages of quarterly data. Quarterly data are averages for the period.
Source: Department of Commerce (Bureau of Economic Analysis and Bureau of the Census).




327

TABLE B-26.—Gross saving and investment, 1959-91
[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Gross saving
Gross private saving
Year or
quarter

Total
Total

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
1988
1989
1990
1991 "
1982: IV
1983: IV
1984: IV
1985: IV
1986: IV
1987: IV
1988:1
III..
IV..
1989:1....
II...
III..
IV..
1990:1....
II...
III..
III
IV..
IV "..
1991:1....

79.4
85.1
84.4
92.8
100.4
110.0
125.0
131.6
130.8
141.8
159.6
155.3
173.8
201.8
252.4
249.6
241.6
285.0
338.4
416.1
468.8
465.9
557.2
508.9
501.9
634.3
610.9
575.0
619.6
704.5
744.2
711.8

82.5
81.5
87.4
95.8
98.8
111.6
123.8
132.5
144.5
146.4
149.6
165.9
192.3
205.0
245.6
256.1
306.5
323.3
355.2
413.2
458.3
500.1
586.4
617.5
641.7
743.1
736.1
721.8
731.3
802.8
827.3
851.3

459.0
542.8
637.4
604.3
550.5
668.6
678.6
702.0
717.0
720.6
770.0
751.1
727.9
727.9
722.6
747.9
698.3
678.3
747.7
713.9
698.0

615.9
679.1
765.1
735.2
676.7
784.4
801.0
797.5
797.5
815.3
842.0
816.6
813.7
836.9
853.1
876.2
821.9
853.9
873.8
893.0
876.4

Personal
saving

Gross
business
saving*

22.0
20.6
24.9
25.9
24.6
31.6
34.6
36.4
45.9
43.9
43.4
57.6
65.5
59.9
86.2
93.5
100.4
93.2
88.1
108.1
123.7
154.3
192.4
200.0
169.1
222.3
189.8
187.8
142.6
156.2
166.9
206.6
222.1
184.2
176.7
223.0
179.7
151.5
170.5
162.6
152.3
152.9
157.0
193.7
160.8
142.2
171.0
197.5
216.7
196.5
215.8
213.4
229.6
213.3
232.0

60.5
60.9
62.5
69.9
74.1
80.0
89.2
96.1
98.7
102.5
106.2
108.2
126.8
145.1
159.3
162.6
206.0
230.0
267.1
305.0
334.5
345.7
394.1
417.5
472.7
520.7
546.4
533.9
588.7
646.6
660.3
644.7
431.6
502.4
542.1
555.5
525.3
613.9
638.4
645.1
644.6
658.3
648.3
655.8
671.4
665.8
655.6
659.5
625.5
638.1
660.4
663.4
663.1

Gross investment

Government surplus or deficit Capital
grants
— ) , national income and
received
product accounts
by the
United
State
States
and
Total
Federal
(net)«
local
-3.1
3.6
-3.0
-2.9
1.6
-1.6
1.2
-1.0
-13.7
-4.6
10.0
-11.5
-19.2
-3.9
6.9
-4.5
-64.8
-38.3
-16.8
2.9
9.4
-35.3
-30.3
-108.6
-139.8
-108.8
-125.3
-146.8
-111.7
-98.3
-83.0
-139.5
-171.2
-156.9
-136.3
-127.8
-130.9
-126.2
-115.8
-122.4
-95.5
-80.5
-94.7
-72.1
-65.4
-85.7
-108.9
-130.5
-128.4
-123.6
-175.6
-126.1
-179.1
-178.4

-2.6
3.5
-2.6
-3.4
1.1
-2.6
1.3
-1.4
-12.7
-4.7
8.5
-13.3
-21.7
-17.3
-6.6
-11.6
-69.4
-52.9
-42.4
-28.1
-15.7
-60.1
-58.8
-135.5
-180.1
-166.9
-181.4
-201.0
-151.8
-136.6
-124.2
-165.3
-200.7
-183.4
-184.6
-186.8
-187.2
-177.5
-152.7
-157.5
-134.6
-119.5
-134.9
-114.5
-110.5
-128.4
-143.3
-160.8
-156.9
-149.7
-193.6
-146.4
-206.7
-210.2

-0.5
.0
-.4
.5
.4
1.0
.0
.5
-1.1
1.5
1.8
2.5
13.4
13.4
7.1
4.6
14.6
25.6
31.1
25.1
24.8
28.5
26.9
40.3
58.1
56.1
54.3
40.1
38.4
41.1
25.7
29.6
26.5
48.3
59.0
56.3
51.2
37.0
35.1
39.1
39.0
40.2
42.4
45.1
42.6
34.4
30.3
28.5
26.1
18.0
20.4
27.6
31.8

0.9
.7
.7
0
*-2.0
0
0
0
0
1.1
1.2
1.1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0

Total

77.6
82.0
82.2
91.8
98.4
109.3
124.3
134.4
131.6
141.7
157.0
155.3
176.9
202.8
252.0
251.1
247.6
295.4
349.3
423.7
482.6
479.5
568.1
501.5
512.1
625.2
597.0
576.3
594.8
676.1
741.5
719.9
736.9
448.9
556.6
616.9
598.3
548.5
643.7
644.2
673.9
691.1
695.2
743.9
745.9
730.5
745.8
727.0
745.5
726.5
680.4
765.8
730.4
720.0
731.3

Gross
private
domestic
investment
78.8
78.7
77.9
87.9
93.4
101.7
118.0
130.4
128.0
139.9
155.2
150.3
175.5
205.6
243.1
245.8
226.0
286.4
358.3
434.0
480.2
467.6
558.0
503.4
546.7
718.9
714.5
717.6
749.3
793.6
837.6
802.6
725.3
464.2
614.8
722.8
737.0
697.1
800.2
770.6
788.4
800.7
814.8
844.7
844.3
826.8
834.4
812.0
825.9
821.8
750.9
709.3
708.8
740.9
742.3

Net
foreign
investment 3

-1.2
3.2
4.3
3.9
5.0
7.6
6.3
3.9
3.6
1.8
1.8
5.0
1.4
-2.8
8.9
5.3
21.6
9.0
-9.0
-10.3
2.4
11.9
10.1
-1.9
-34.6
-93.6
-117.6
-141.4
-154.5
-117.5
-96.0
-82.8
11.5
-15.3
-58.2
-105.9
-138.7
-148.6
-156.4
-126.3
-114.4
-109.6
-119.5
-100.8
-98.4
-96.3
-88.6
-85.0
-80.4
-95.3
-70.4
56.5
21.7
-20.9
-11.0

Statistical
discrepancy

-1.8
-3.1
-2.2
-1.0
-2.0
-.7
2.8
.8
-7.6
.0
3.1
1.1
-.5
1.4
6.0
10.4
10.9
7.6
13.8
13.6
10.9
-7.4
10.2
-9.0
-13.9
1.2
-24.8
-28.4
-2.7
8.1
-10.1
13.8
-20.5
-5.9
-2.0
-24.9
-34.4
-28.1
-25.8
-25.4
-26.0
-5.2
2.5
17.9
4.4
-2.4
28.2
2.1
18.0
16.5
22.0

1
Undistributed corporate profits with inventory valuation and capital consumption adjustments, corporate and noncorporate
consumption of fixed capital, and private wage accruals less disbursements.
2
Consists mainly of allocations of special drawing rights (SDRs).
3
Net exports of goods and services plus net receipts of factor income from rest of the world less net transfers plus net capital
grants received by the United States. See also Table B-18.
• Consists of a U.S. payment to India under the Agricultural Trade Development and Assistance Act. This payment is included in
capital grants received by the United States, net.
Source: Department of Commerce, Bureau of Economic Analysis.




328

TABLE B-27.—Personal saving, flow of funds accounts, 1946-91 1
[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Increase in financial assets

Net investment in
langtuie ass BIS '

Securities

Year or
quarter

Personal
saving

InsurCheckTime
ance
able
Money
and
depos- and
market Govern- CorpoOther
Total its and savings fund
ment
rate securi- pension
recurren- depos- shares securi- equiits
ties* serves 5
cy
ties 2
ties'

5.6
.0

1.2 - 0 . 7
7
11
.2
1.0
2
.7
.7 - . 6
.6
1.8
.2
1.5
.3
11
11
7
11
1.0
1.1
2.0
.9
1.5
-2.3
1.3
1.8
.4
.6
8.6
.1
1.6
2.5
7
12
10
-.3
1.2 - 1 . 3
1.4
-.9 -1.5
.5
-.2
38
.9
3.8 - 1 . 5
3.5
.0
13.6
-2.6 -3.1
6.2
7.4
61
12

6.3
35
£3
2.6
2.4
4.8
7.8
82
92
86
9.4

5.1
54
5.3
5.6
6.1
6.3
7.7
7.9
78
8.5
9.5
9.5

NonOther
corfinan- Owner- Con- porate
cial occu- sumer busipied dura- ness
assets 6 homes bles
assets 8

3.7
27
2.2
1.6
2.9
2.0
2.4
2.4
20
1.7
3.4
1.9
4.3
1.9
3.7
44
2.5
2.1
3.2
3.2
4.2
6.8
57
3.9
4.1
6.5
9.4
8.1
9.5

4.2
79

6.7
94

1.7
64
5.6
5.6
4.5
3.1
1.2
.0
8
2.1
.1
1.0
1.2
.8
1.4
19
2.9
2.9
2.5
6.7
5.4
5.6
37
2.2
.6
4.9
5.1
6.5

Less: Net increase in
ueui
Mort-

SR

Consumer Other
8
on credit debt *
nonfarm
homes

4.0
49
4.8
4.4
7.1
6.6
6.4
76
90

3.1
37
3.2
3.2
4.6
3.3
3.3
4.1
13
7.0
3.6
2.6
.3
7.7
4.0
22
5.9
8.5
9.5

2.2
28
2.8
2.4
5.5
3.8
3.4
2.4
50
5.8
4.7
3.3
6.7
6.0
6.1
67
6.6
9.4

1946
1947
1948
1949

22.8
25 0
24.8
25.9

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

32.0
33.7
37.8
34 5
27 6
36.5
38.3
38.4
36.1
36.7

1960
1961
1962
1963
1964
1965
1966
1967
1968
1969

38.0
37 7
44.5
47.9
60.0
67.4
80.6
83.0
79 7
78.1

35 4
40.1
45.5
55 9
57.9
62.1
71.7
68.6
69.6

— 10
-1.2

-1.1

8.9

1970
1971
1972
1973
1974
1975
1976
1977
1978
1979

88.3
101.5
118.3
153.4
118.7
154.6
166.7
192.5
199.1
208.1

80.1
106.7
134.2
145.8
147.8
174.6
207.5
253.4
284.5
325.8

7.4

43.5
67.7
74.0
63.5
56.2
77.6
107.1
106.6
99.6
74.4

1980
1981
1982
1983
1984
1985
1986
1987
1988
1989

210.9
237.9
265.6
307.9
371.0
352.1
429.0
337.1
390.8
448.8

327.1
321.6
386.3
495.0
552.5
572.4
576.5
461.4
537.2
575.3

1990

389.5

474.7

21.1

11.9

59.3

127.3

-.6 - 2 5 . 3

86.7 - 2 9 . 2 206.4

14.3

60.0

1989:1
II
III....
IV....

370.7
590.7
439.5
394.2

477.5
707.8
560.4
555.4

30.0
-3.0

86.8
124.8
100.1
92.6

71.9
89.9
111.8
51.2

243.6
154.9
219.9
127.0

-181.9 -55.6
-33.2 -15.9
-97.7
36.9
-50.7 -58.2

220.9 61.7
305.2 85.1
174.7
9.1
218.0 114.2

173.1 110.6 - 2 5 . 6
172.6 113.8 - 2 9 . 9
167.7 117.0 - 5 3 . 1
162.6 97.4 - 5 2 . 9

213.1
208.8
224.5
227.9

46.9
39.9
45.8
39.7

105.0
124.7
82.0
100.8

1990:1
II
III....
IV....

424.1
554.7
268.6
310.7

579.2
639.6
319.3
360.6

35.4
73.8
38.9
1.2
15.5 - 2 0 . 8
-5.3 -6.4

106.5
-23.3
109.5
44.4

202.4 - 2 7 . 4 - 1 3 . 2
234.1
16.4
46.4
116.7
25.9 - 1 2 4 . 0
-44.1 -17.2 -10.6

160.2 41.6
265.7 60.3
143.0 53.6
292.3 107.5

147.0 106.7 - 2 5 . 1
146.8 88.4 - 2 3 . 8
135.6 85.6 - 2 5 . 8
122.4 65.9 - 4 1 . 9

256.3 33.6
221.2 14.2
186.0 13.4
162.1 - 4 . 2

93.8
60.9
46.7
38.4

1991:1
II
III....

474.7
275.9
389.3

571.3
399.7
449.4

71.3
35.1
17.8 - 4 6 . 0
86.2 - 1 5 4 . 5

167.5
-61.4
-3.3

-24.4
156.3
30.7

35.3 - 4 8 . 7 144.5 - 2 1 . 2
31.6 - 4 5 . 1 161.3 - 7 . 0
42.0 - 4 1 . 8 141.2 - 2 6 . 3

69.4
56.2
42.7

19.6
12.6

8^9 —2^0
2.7
4.6
1.6
9
21
210
1.2
28.6
31.7
1.9
29.1
-.4
33.2
3.7
.9
35.3
32.6
.9

15.0
19.5
28.5
24.6

4.2
6.1
6.7
2.4
10.3

95
13.4
13.4
13.1

6.3
6.0

15.6
19.7
22.0
35.8

7.8
7.3

23.5

5.6

61.5

5
1.0
.5
.9
-.6
7.4
3.7
2
64
4.5
3.9

11.9
13.9
11.0
12.2
18 3
26.1
26.2
26.3
27.9
19.1
35.4
30 9

9.2 124.9
36.2
24.6
33.6
20.8
34.1
99.2

-1.5

72.0
122.6
203.3
218.6
129.9
98.3
118.1
152.6
101.1

27.5

-2.1

10.7

-5.6
-11.1

-.5

7.0
6.5

2.4

1.3
.0
-.2
6.0
30.6
24.5
90.7
32.8
-31.1
44.0

8.7

39.6
28.1
23.5
81.2

121

13.0
13.9
16.4
17.0
19.3
18.8
19.9
21.8

14.9
13.4
12.5
13.7
14 2
18.2
17.1
15.1
14.6
19.6

14.9
11.4

18.4

171

26.3
27.3
22.4
50.6
81.8
95.8
111.4
102.9
112.6
109.7

-10.5 -9.0
-36.9 -9.7
-15.5 -20.1
-2.3
18.3
-56.0
3.5
-45.7
41.5
6.6 59.1
-27.8
8.0
-120.1
9.4
-90.9 -23.2

118.5
117.9
153.5
142.4
172.9
223.3
231.3
118.7
210.1
229.7

37.5
10.5
23.4
30.6
36.6
67.6
85.1
47.9
77.9
67.5

89.6
83.0
57.8
96.1
129.0
132.1
156.8
164.9
171.0
169.0

215.3

65.8 137.9

2.5

13.8 - 7 . 7
29.9 - 1 2 . 8
65.5 - 2 5 . 4

16.8

43.7 - 7 1 . 0
97.1 - 5 0 . 3
120.4 - 1 0 2 . 8

316.0
245.8
411.9

8.8
7.9
3.7
7.7
7.2
45
8.6

19.6
25.4
34.3
40.6
29.1
27.4
41.5
51.5
56.8
50.4

9.8
4.0

-.6

8.4

14.0
-4.9

70

12.7

11.9
15.1
20.2
23.2
21.3
26 9
26.2

10.3
17.2
25.8
35.0
39.1

9.0

-1.2

8.7

10.3

19.5
22.0
23.8
23.1
22.0
19.4
26 3
29.8
27.3
37.8
50.1
57.4
47.0
36.9
50.7
73.9
95.3
109.6

17.2
17.8
18.8

32.0
40.8
65.1
100.1
112.1
113.0
-42.7
160.5
176.5
186.3

11.5

10.2
10.9

24.2
28.0
48.5
39.9
43.7
71.9
56.6
78.6
95.0
101.8

-4.4
-9.0
-4.4
-2.0
-6.5

-.7

10.4
11.9

10.9
10.4

33.2 109.4
40.4 100.2
60.7 97.3

12.3
11.0

8.8
9.6

12.9

11.4
12 3
14.1
16.4
17.2
17.1
13.5
12.9
17.2
18.3

10.1

5.9
5.1

10.8

9.9
4.6

-1.5

13.6
26.2
38.8
44.1
34.7
38.9
60.7
91.4
109.3
117.2

22.9
36.7
45.1
40.5

-22.5
-2.9
-18.5
-40.3
-11.6
-11.9
-23.3
-29.9
-37.0
-40.4

96.5
73.9
52.8
117.1
136.4
156.3
216.8
234.0
230.7
218.6

16.9
16.4
48.9
81.7
82.5
58.0
33.5
50.4
43.1

-4.4
-3.3
-3.7

5.9
5.2

14.0
19.0
22.7

9.4
8.0

2.6

10.6
13.3
12.6
17.0
17.8
21.6

21.2
33.0
47.6
30.1
56.7
34.1
45.6
64.0
88.3
118.4
110.4
100.3
113.2
127.5
162.7
197.6
117.5
94.8
111.9
103.1

1
Saving by households, personal trust funds, nonprofit institutions, farms, and other noncorporate business.
2
Consists of U.S. savings bonds, other U.S. Treasury securities, U.S. Government agency securities and sponsored agency securities,
mortgage pool securities, and State and local obligations.
3
Includes mutual fund shares.
4
Corporate and foreign bonds and open-market paper.
5
Private life insurance reserves, private insured and noninsured pension reserves, and government insurance and pension reserves.
6
Consists of security credit, mortgages, accident and health insurance reserves, and nonlife insurance claims for households, and of
consumer credit, equity in sponsored agencies, and nonlife insurance claims for noncorporate business.
7
Purchases of physical assets less depreciation.
8
Includes data for corporate farms.
9
Other debt consists of security credit, U.S. Government and policy loans, and noncorporate business debt.
Source: Board of Governors of the Federal Reserve System.




329

TABLE B-28.—Median income (in 1990 dollars) and poverty status of families and persons, by race, selected
years, 1971-90
Families 1

Persons
below
poverty level

1
Jelow poverty level
Year

ALL RACES
1971
1973
1975 3
1977
1978
1979 *
1980
1981
1982 3
1983
1984
1985
1986 3
1987
1988
1989
1990
WHITE
1971
1973
1975 3
1977
1978
1979 *
1980
1981
1982
1983 3
1984
1985
1986 3
1987
1988
1989
1990
BLACK
1971
1973 3
1975
1977
1978
1979 *
1980
1981
1982
1983 3
1984
1985
1986 3
1987
1988
1989
1990

Number
(millions)

Median
income
(in
/in
1990
dollars)

T/>+
lOltii

Female
nousenoioer
Number
Per(milcent
lions)
LAI , . A U A | f l A P

Number
(millions)

Percent

Median income (in 1990 dollars) of
person.> i a yeaii uiu 2dim uver wiui
income
Males

Number
(millions)

Percent

Females

All
persons

Yearround
full-time
workers

All
persons

Yearround
full-time
workers

53.3
55.1
56.2
57.2
57.8
59.6
60.3
61.0
61.4
62.0
62.7
63.6
64.5
65.2
65.8
66.1
66.3

$33,191
35,474
33,329
34,528
35,361
35,262
33,346
32,190
31,738
32,378
33,251
33,689
35,129
35,632
35,565
36,062
35,353

5.3
4.8
5.5
5.3
5.3
5.5
6.2
6.9
7.5
7.6
7.3
7.2
7.0
7.0
6.9
6.8
7.1

10.0
8.8
9.7
9.3
9.1
9.2
10.3
11.2
12.2
12.3
11.6
11.4
10.9
10.7
10.4
10.3
10.7

2.1
2.2
2.4
2.6
2.7
2.6
3.0
3.3
3.4
3.6
3.5
3.5
3.6
3.7
3.6
3.5
3.8

33.9
32.2
32.5
31.7
31.4
30.4
32.7
34.6
36.3
36.0
34.5
34.0
34.6
34.2
33.4
32.2
33.4

25.6
23.0
25.9
24.7
24.5
26.1
29.3
31.8
34.4
35.3
33.7
33.1
32.4
32.2
31.7
31.5
33.6

12.5
11.1
12.3
11.6
11.4
11.7
13.0
14.0
15.0
15.2
14.4
14.0
13.6
13.4
13.0
12.8
13.5

$22,277
23,714
21,507
21,833
21,920
21,205
19,875
19,372
18,894
19,239
19,624
19,813
20,409
20,463
20,890
20,968
20,293

$31,081
33,758
31,932
32,502
32,198
31,467
30,412
29,752
29,330
29,533
30,196
30,366
30,879
30,697
30,208
30,151
29,172

47.6
48.9
49.9
50.5
50.9
52.2
52.7
53.3
53.4
53.9
54.4
55.0
55.7
56.1
56.5
56.6
56.8

34,440
37,076
34,662
36,104
36,821
36,796
34,743
33,814
33,322
33,905
34,827
35,410
36,740
37,260
37,470
37,919
36,915

3.8
3.2
3.8
3.5
3.5
3.6
4.2
4.7
5.1
5.2
4.9
5.0
4.8
4.6
4.5
4.4
4.6

7.9
6.6
7.7
7.0
6.9
6.9
8.0
8.8
9.6
9.7
9.1
9.1
8.6
8.1
7.9
7.8
8.1

1.2
1.2
1.4
1.4
1.3
1.4
1.6
1.8
1.8
1.9
1.9
2.0
2.0
2.0
1.9
1.9
2.0

26.5
24.5
25.9
24.0
23.5
22.3
25.7
27.4
27.9
28.3
27.1
27.4
28.2
26.9
26.5
25.4
26.8

17.8
15.1
17.8
16.4
16.3
17.2
19.7
21.6
23.5
24.0
23.0
22.9
22.2
21.2
20.7
20.8
22.3

9.9
8.4
9.7
8.9
8.7
9.0
10.2
11.1
12.0
12.1
11.5
11.4
11.0
10.4
10.1
10.0
10.7

23,355
24,883
22,593
22,868
22,959
22,152
21,140
20,555
19,975
20,240
20,715
20,784
21,537
21,751
22,051
21,990
21,170

31,955
34,736
32,697
33,167
32,795
32,376
31,279
30,451
30,111
30,322
31,230
31,209
31,741
31,413
31,224
31,459
30,186

7,900
8,310
8,308
8,629
8,253
7,909
7,847
7,935
8,082
8,552
8,741
8,936
9,254
9,788
10,057
10,342
10,317

18,611
19,422
18,796
19,131
19,509
19,124
18,563
18,210
18,754
19,266
19,592
20,020
20,393
20,582
20,796
20,947
20,840

5.2
5.4
5.6
5.8
5.9
6.2
6.3
6.4
6.5
6.7
6.8
6.9
7.1
7.2
7.4
7.5
7.5

20,783
21,398
21,327
20,625
21,808
20,836
20,103
19,074
18,417
19,108
19,411
20,390
20,993
21,177
21,355
21,301
21,423

1.5
1.5
1.5
1.6
1.6
1.7
1.8
2.0
2.2
2.2
2.1
2.0
2.0
2.1
2.1
2.1
2.2

28.8
28.1
27.1
28.2
27.5
27.8
28.9
30.8
33.0
32.3
30.9
28.7
28.0
29.4
28.2
27.8
29.3

.9
1.0
1.0
1.2
1.2
1.2
1.3
1.4
1.5
1.5
1.5
1.5
1.5
1.6
1.6
1.5
1.6

53.5
52.7
50.1
51.0
50.6
49.4
49.4
52.9
56.2
53.7
51.7
50.5
50.1
51.1
49.0
46.5
48.1

7.4 32.5
7.4 31.4
7.5 31.3
7.7 31.3
7.6 30.6
8.1 31.0
8.6 32.5
9.2 34.2
9.7 35.6
9.9 35.7
9.5 33.8
8.9 31.3
9.0 31.1
9.5 32.4
9.4 31.3
9.3 30.7
9.8 31.9

13,928
15,051
13,507
13,570
13,754
13,713
12,704
12,223
11,970
11,836
11,885
13,080
12,905
12,903
13,306
13,290
12,868

21,851
23,411
23,924
22,866
25,118
23,333
22,008
21,545
21,386
21,619
21,313
21,829
22,379
22,461
22,887
21,825
21,540

6,922
7,501
7,548
7,452
7,431
7,198
7,265
7,050
7,128
7,308
7,754
7,625
7,830
7,995
8,119
8,301
8,328

16,433
16,470
17,958
17,880
18,082
17,524
17,313
16,446
16,762
17,103
17,656
17,722
17,845
18,383
18,635
18,876
18,518

$7,771 $18,398
8,231
19,099
8,223
18,752
8,500
19,010
8,155
19,326
7,835
18,959
7,804
18,385
7,848
17,911
7,973
18,505
8,405
19,012
8,640
19,400
8,766
19,741
9,075
20,086
9,544
20,208
9,815
20,489
10,144
20,704
10,070
20,586

x
The term "family" refers to a croup 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 and age of family householder, and farm-nonfarm
residence. Minor revisions implemented in 1981 eliminated variations in the poverty thresholds based on two of these variables, farmnonfarm residence and sex of householder. The poverty thresholds are updated every year to reflect changes in the consumer price
index. For further details, see "Current Population Reports," Series P-60, No. 174.
Source: Department of Commerce, Bureau of the Census.




330

POPULATION, EMPLOYMENT, WAGES, AND PRODUCTIVITY
T A B L E B-29.—Population by age groups, 1929-90
[Thousands of persons]
Age (years)
July 1

Total
Under 5

5-15

16-19

20-24

25-44

45-64

65 and
over
6,474

1929

121,767

11,734

26,800

9,127

10,694

35,862

21,076

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

1
1
1
1
1

227,757
230,138
232,520
234,799
237,001

16,458
16,931
17,298
17,651
17,830

38,843
38,190
37,876
37,669
37,656

17,160
16,771
16,255
15,704
15,141

21,584
21,821
21,807
21,700
21,536

63,494
65,620
67,856
69,971
72,048

44,515
44,570
44,602
44,679
44,818

25,704
26,235
26,825
27,426
27,971

1985
1986
1987
1988
1989

1
1
1
1
1

239,279
241,625
243,942
246,328
248,781

18,004
18,154
18,267
18,437
18,759

37,692
37,706
37,687
38,008
38,441

14,819
14,802
14,958
14,894
14,570

21,214
20,608
19,982
19,372
18,885

74,077
76,124
77,897
79,225
80,635

44,934
45,058
45,310
46,007
46,503

28,540
29,174
29,841
30,384
30,988

1990

1

251,523

19,155

39,083

14,097

18,673

81,942

46,980

31,592

1

Based on 1980 census of population. Total populations for July 1 based on 1990 census for 1980-1991 are: 227,722; 229,958;
232,192; 234,321; 236,370; 238,492; 240,680; 242,836; 245,057; 247,343; 249,975; and 252,626, respectively. Data for age groups
consistent with these figures are not yet available.
Note.—Includes Armed Forces overseas beginning 1940. Includes Alaska and Hawaii beginning 1950.
Source: Department of Commerce, Bureau of the Census.




331

TABLE B-30.—Population and the labor force, 1929-91

[Monthly data seasonally adjusted, except as noted]

Year or month

Labor EmployCivilian
ment
force
noninsti- Resiinclud- includdent
tutional Armed
ing
popula- Forcesx resident
tion 1
Armed Armed
Forces Forces

Unemployment rate

Civilian labor force
Employment
Total

Total

Agricultural

Nonlulfural

UnemPloyment

All

ian
work- work- ticiers 2 ers 8 pation
4
rate

Thousands of persons 14 years of age and over
1929
1933
1939
1940
1941
1942
1943
1944
1945
1946
1947

Civil-

Civilian
labor
force

Percent

49,180
51,590
55,230

47,630 10,450
38,760 10,090
45,750 9,610

37,180 1,550
28,670 12,830
36,140 9,480

3.2
24.9

99,840
99,900
98,640
94,640
93,220

55,640
55,910
56,410
55,540
54,630

47,520
50,350
53,750
54,470
53,960

9,540
9,100
9,250
9,080
8,950

37,980
41,250
44,500
45,390
45,010

8,120
5,560
2,660
1,070
670

14.6
9.9
4.7
1.9
1.2

55.7
56.0
57.2
58.7
58.6

94,090
103,070
106,018

53,860
57,520
60,168

52,820
55,250
57,812

8,580
8,320
8,256

44,240
46,930
49,557

1,040
2,270
2,356

1.9
3.9
3.9

57.2
55.8
56.8

49,148
50,714
49,993

2,311
2,276
3,637

3.9
3.8
5.9

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

58.3
58.8
58.9
59.2
59.2
59.0
58.9
58.8
59.3
60.0
59.6
59.5
59.3

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

5.5
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

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

5.4
6.5
5.4
5.5
5.0
4.4
3.7
3.7
3.5
3.4
4.8
5.8
5.5
4.8
5.5
8.3
7.6
6.9
6.0
5.8

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

95,938 7,637
97,030 8,273
96,125 10,678
97,450 10,717
101,685 8,539
103,971 8,312
106,434 8,237
109,232 7,425
111,800 6,701
114,142 6,528

7.0
7.5
9.5
9.5
7.4
7.1
6.9
6.1
5.4
5.2

7.1
7.6
9.7
9.6
7.5
7.2
7.0
6.2
5.5
5.3

63.8
63.9
64.0
64.0
64.4
64.8
65.3
65.6
65.9
66.5

6,874
8,426

5.4
6.6

5.5
6.7

66.4
66.0

17.2

Thousands of persons 16 years of age and over
1947
1948
1949
1950
1951
1952
1953 6
1954
1955
1956
1957
1958
1959
I960 6
1961
1962 6
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972 6
1973°
1974
1975
1976
1977
1978•
1979

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

59,350
60,621
61,286
62,208
62,017
62,138
63,015
63,643
65,023
66,552
66,929
67,639
68,369
69,628
70,459
70,614
71,833
73,091
74,455
75,770
77,347
78,737
80,734
82,771
84,382
87,034
89,429
91,949
93,775
96,158
99,009
102,251
104,962

57,038
58,343
57,651
58,918
59,961
60,250
61,179
60,109
62,170
63,799
64,071
63,036
64,630
65,778
65,746
66,702
67,762
69,305
71,088
72,895
74,372
75,920
77,902
78,678
79,367
82,153
85,064
86,794
85,846
88,752
92,017
96,048
98,824

7,890
7,629
7,658
7,160
6,726
6,500
6,260
6,205
6,450
6,283
5,947
5,586
5,565
5,458
5,200
4,944
4,687
4,523
4,361
3,979
3,844
3,817
3,606
3,463
3,394
3,484
3,470
3,515
3,408
3,331
3,283
3,387
3,347

100,907
102,042
101,194
102,510
106,702
108,856
111,303
114,177
116,677
119,030
119,550
118,440

106,940
108,670
110,204
111,550
113,544
115,461
117,834
119,865
121,669
123,869
124,787
125,303

99,303
100,397
99,526
100,834
105,005
107,150
109,597
112,440
114,968
117,342
117,914
116,877

3,364
3,368
3,401
3,383
3,321
3,179
3,163
3,208
3,169
3,199

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

1,169
2,143
2,386
2,231
2,142
2,064
1,965
1,948
1,847
1,788

117,245
118,771
120,153
122,416
124,485
126,513
128,058
129,874
132,028
134,335

1,861
1,900
2,061
2,006
2,018
1,946
2,122
2,218
2,253
2,238

137,085
140,216
144,126
147,096
150,120
153,153
156,150
159,033
161,910
164,863

2,118
1,973
1,813
1,774
1,721
1,678
1,668
1,656
1,631
1,597

1980
1981
1982
1983
1984
1985
1986 6
1987
1988
1989

167,745
170,130
172,271
174,215
176,383
178,206
180,587
182,753
184,613
186,393

1,604
1,645
1,668
1,676
1,697
1,706
1,706
1,737
1,709
1,688

1990
1991

188,049
189,765

1,637
1,564

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
123,378
125,557
126,424
126,867

1
2
3
4
5

Not seasonally adjusted.
Unemployed as percent of labor force including resident Armed Forces.
Unemployed as percent of civilian labor force.
Civilian labor force as percent of civilian noninstitutional population.
Civilian employment as percent of civilian noninstitutional population.
See next page for continuation of table.




332

3,186 114,728
3,233 113,644

TABLE B-30.—Population and the labor force, 1929-91—Continued
[Monthly data seasonally adjusted, except as noted]

Year or month

Labor EmployCivilian
force
ment
noninsti- Resiinclud- including
dent
tutional Armed
resident
popula- Forces1 resident Armed
tion 1
Armed Forces
Forces

Unemployment rate

Civilian labor force
Employment
Total

Total

Agricultural

Noncultural

Unemployment

All Civilian
work- workers 2 ers 3 pation
rate*

Thousands of persons 16 years of age and over
1988:Jan
Feb
Mar...
Apr....
May...
June..
July...
Aug...
Sept..
Oct
Nov...
Dec...
1989:Jan
Feb
Mar...
June...
July....
Aug....
Sept...
Oct
Nov....
Dec...
1990:Jan
Feb
Mar....
Apr
May....
June...
July...,
Aug...,
Sept..
Oct
Nov....
Dec....
1991:Jan
Feb
Mar...
Apr
May...
June..
July...
Aug...
Sept..
Oct
Nov...
Dec...

183,822
183,969
184,111
184,232
184,374
184,562
184,729
184,830
184,962
185,114
185,244
185,402
185,644
185,777
185,897
186,024
186,181
186,329
186,483
186,598
186,726
186,871
187,017
187,165
187,293
187,412
187,529
187,669
187,828
187,977
188,136
188,261
188,401
188,525
188,697
188,866
188,977
189,115
189,243
189,380
189,522
189,668
189,839
189,973
190,122
190,289
190,452
190,605

1,749
1,736
1,736
1,732
1,714
1,685
1,673
1,692
1,704
1,687
1,705
1,696
1,696
1,684
1,684
1,684
1,673
1,666
1,666
1,688
1,702
1,709
1,704
1,700
1,697
1,678
1,669
1,657
1,639
1,630
1,627
1,640
1,601
1,570
1,615
1,617
1,615
1,602
1,460
1,456
1,458
1,505
1,604
1,616
1,624
1,614
1,605
1,604

122,749
122,894
122,656
122,989
122,801
123,197
123,356
123,812
123,672
123,871
124,236
124,304
125,100
124,830
124,916
125,239
125,180
125,710
125,674
125,838
125,651
125,893
126,244
126,204
126,283
126,325
126,441
126,432
126,602
126,371
126,350
126,469
126,504
126,423
126,358
126,761
126,355
126,669
126,710
127,100
126,717
127,029
126,808
126,620
127,214
127,122
126,979
127,223

115,798
115,980
115,789
116,391
116,014
116,637
116,735
116,967
117,060
117,305
117,703
117,797
118,429
118,485
118,727
118,777
118,809
119,105
119,140
119,323
119,041
119,252
119,534
119,563
119,704
119,758
119,975
119,747
120,013
119,897
119,575
119,425
119,364
119,201
118,888
119,093
118,592
118,539
118,294
118,844
118,188
118,414
118,333
118,100
118,713
118,481
118,377
118,332

121,000
121,158
120,920
121,257
121,087
121,512
121,683
122,120
121,968
122,184
122,531
122,608
123,404
123,146
123,232
123,555
123,507
124,044
124,008
124,150
123,949
124,184
124,540
124,504
124,586
124,647
124,772
124,775
124,963
124,741
124,723
124,829
124,903
124,853
124,743
125,144
124,740
125,067
125,250
125,644
125,259
125,524
125,204
125,004
125,590
125,508
125,374
125,619

114,049
114,244
114,053
114,659
114,300
114,952
115,062
115,275
115,356
115,618
115,998
116,101
116,733
116,801
117,043
117,093
117,136
117,439
117,474
117,635
117,339
117,543
117,830
117,863
118,007
118,080
118,306
118,090
118,374
118,267
117,948
117,785
117,763
117,631
117,273
117,476
116,977
116,937
116,834
117,388
116,730
116,909
116,729
116,484
117,089
116,867
116,772
116,728

3,251
3,207
3,173
3,227
3,120
3,111
3,059
3,116
3,163
3,225
3,239
3,198
3,299
3,239
3,200
3,162
3,122
3,075
3,221
3,272
3,219
3,206
3,139
3,209
3,169
3,128
3,222
3,166
3,279
3,263
3,100
3,136
3,175
3,182
3,159
3,284
3,194
3,237
3,124
3,187
3,256
3,286
3,244
3,254
3,283
3,204
3,272
3,183

Civilian
labor
force

Percent
110,798
111,037
110,880
111,432
111,180
111,841
112,003
112,159
112,193
112,393
112,759
112,903
113,434
113,562
113,843
113,931
114,014
114,364
114,253
114,363
114,120
114,337
114,691
114,654
114,838
114,952
115,084
114,924
115,095
115,004
114,848
114,649
114,588
114,449
114,114
114,192
113,783
113,700
113,710
114,201
113,474
113,623
113,485
113,230
113,806
113,663
113,500
113,545

6,951
6,914
6,867
6,598
6,787
6,560
6,621
6,845
6,612
6,566
6,533
6,507
6,671
6,345
6,189
6,462
6,371
6,605
6,534
6,515
6,610
6,641
6,710
6,641
6,579
6,567
6,466
6,685
6,589
6,474
6,775
7,044
7,140
7,222
7,470
7,668
7,763
8,130
8,416
8,256
8,529
8,615
8,475
8,520
8,501
8,641
8,602
8,891

5.7
5.6
5.6
5.4
5.5
5.3

5.4
5.5
5.3
5.3
5.3
5.2
5.3
5.1
5.0
5.2
5.1
5.3

5.2
5.2
5.3
5.3
5.3
5.3
5.2
5.2
5.1
5.3
5.2
5.1
5.4
5.6
5.6
5.7
5.9
6.0
6.1
6.4
6.6
6.5
6.7
6.8
6.7
6.7
6.7
6.8
6.8
7.0

5.7
5.7
5.7
5.4
5.6
5.4
5.4
5.6
5.4
5.4
5.3
5.3
5.4
5.2
5.0
5.2
5.2
5.3
5.3
5.2
5.3
5.3
5.4
5.3
5.3
5.3
5.2
5.4
5.3
5.2
5.4
5.6
5.7
5.8
6.0
6.1
6.2
6.5
6.7
6.6
6.8
6.9
6.8
6.8
6.8
6.9
6.9
7.1

65.8
65.9
65.7
65.8
65.7
65.8
65.9
66.1
65.9
66.0
66.1
66.1
66.5
66.3
66.3
66.4
66.3
66.6
66.5
66.5
66.4
66.5
66.6
66.5
66.5
66.5
66.5
66.5
66.5
66.4
66.3
66.3
66.3
66.2
66.1
66.3
66.0
66.1
66.2
66.3
66.1
66.2
66.0
65.8
66.1
66.0
65.8
65.9

6
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 nonagricultural employment.
Beginning 1962, introduction of 1960 census data reduced population by about 50,000 and labor force and employment by 200,000.
Beginning 1972, introduction of 1970 census data added about 800,000 to civilian noninstitutional population and 333,000 to labor
force and employment. A subsequent adjustment based on 1970 census in March 1973 added 60,000 to labor force and to employment.
Beginning 1978, changes in sampling and estimation procedures introduced into the household survey added about 250,000 to labor
force and to employment. Unemployment levels and rates were not significantly affected. Beginning 1986, the introduction of revised
population controls added about 400,000 to the civilian population and labor force and 350,000 to civilian employment. Unemployment
levels and rates were not significantly affected.
Note.—Labor force data in Tables B-30 through B-39 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.




333

TABLE B-31.—Civilian employment and unemployment by sex and age, 1947-91

[Thousands of persons 16 years of age and over; monthly data seasonally adjusted]
Civilian employment

Unemployment

Males
Year or month
Total
Total

1947
1948
1949
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1990: Jan...
Feb...
Mar..
Apr...
May..
June.
July..
Aug..
Sept.
Oct...
Nov..
Dec.
1991: Jan..
Feb...
Mar..
Apr...
May..
June.
July..
Aug..
Sept.
Oct...
Nov..
Dec.

57,038
58,343
57,651
58,918
59,961
60,250
61,179
60,109
62,170
63,799
64,071
63,036
64,630
65,778
65,746
66,702
67,762
69,305
71,088
72,895
74,372
75,920
77,902
78,678
79,367
82,153
85,064
86,794
85,846
88,752
92,017
96,048
98,824

40,995
41,725
40,925
41,578
41,780
41,682
42,430
41,619
42,621
43,379
43,357
42,423
43,466
43,904
43,656
44,177
44,657
45,474
46,340
46,919
47,479
48,114
48,818
48,990
49,390
50,896
52,349
53,024
51,857
53,138
54,728
56,479
57,607

99,303
100,397
99,526
100,834
105,005
107,150
109,597
112,440
114,968
117,342
117,914
116,877
118,007
118,080
118,306
118,090
118,374
118,267
117,948
117,785
117,763
117,631
117,273
117,476
116,977
116,937
116,834
117,388
116,730
116,909
116,729
116,484
117,089
116,867
116,772
116,728

57,186
57,397
56,271
56,787
59,091
59,891
60,892
62,107
63,273
64,315
64,435
63,593
64,525
64,600
64,653
64,573
64,648
64,573
64,337
64,265
64,333
64,305
64,192
64,222
63,819
63,611
63,563
63,836
63,528
63,514
63,427
63,378
63,767
63,597
63,572
63,426

16-19

2,218
2,344
2,124
2,186
2,156
2,107
2,136
1,985
2,095
2,164
2,115
2,012
2,198
2,361
2,315
2,362
2,406
2,587
2,918
3,253
3,186
3,255
3,430
3,409
3,478
3,765
4,039
4,103
3,839
3,947
4,174
4,336
4,300
4,085
3,815
3,379
3,300
3,322
3,328
3,323
3,381
3,492
3,477
3,237
2,879
3,421
3,395
3,393
3,376
3,320
3,240
3,153
3,068
3,160
3,134
3,094
3,126
3,051
3,038
2,966
2,889
2,890
2,823
2,756
2,773
2,924
2,851
2,808
2,754

Females
20
years
and
over

Total

38,776
39,382
38,803
39,394
39,626
39,578
40,296
39,634
40,526
41,216
41,239
40,411
41,267
41,543
41,342
41,815
42,251
42,886
43,422
43,668
44,294
44,859
45,388
45,581
45,912
47,130
48,310
48,922
48,018
49,190
50,555
52,143
53,308
53,101
53,582
52,891
53,487
55,769
56,562
57,569
58,726
59,781
60,837
61,198
60,714
61,104
61,205
61,260
61,197
61,328
61,333
61,184
61,197
61,173
61,171
61,098
61,096
60,768
60,573
60,597
60,947
60,638
60,691
60,671
60,605
60,843
60,746
60,764
60,672

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
21,874
22,090
22,525
23,105
23,831
24,748
25,976
26,893
27,807
29,084
29,688
29,976
31,257
32,715
33,769
33,989
35,615
37,289
39,569
41,217
42,117
43,000
43,256
44,047
45,915
47,259
48,706
50,334
51,696
53,027
53,479
53,284
53,482
53,480
53,653
53,517
53,726
53,694
53,611
53,520
53,430
53,326
53,081
53,254
53,158
53,326
53,271
53.552
53,202
53,395
53,302
53,106
53,322
53,270
53,200
53,302

16-19
years

1,691
1,682
1,588
1,517
1,611
1,612
1,584
1,490
1,547
1,654
1,663
1,570
1,640
1,768
1,793
1,833
1,849
1,929
2,118
2,468
2,496
2,526
2,687
2,735
2,730
2,980
3,231
3,345
3,263
3,389
3,514
3,734
3,783
3,625
3,411
3,170
3,043
3,122
3,105
3,149
3,260
3,313
3,282
3,024
2,749
3,192
3,136
3,233
3,100
3,068
3,063
3,021
2,895
2,985
2,906
2,846
2,858
2,830
2,888
2,863
2,863
2,778
2,756
2,621
2,564
2,683
2,706
2,726
2,689

Note.—See footnote 6 and Note, Table B-30.
Source: Department of Labor, Bureau of Labor Statistics.




334

Males
20
years
and
over

Total

Females

20
Total 16-19 years Total 16-19
years and
years

14,354 2,311 1,692 270 1,422 619
14,936 2,276 1,559 256 1,305 717
15,137 3,637 2,572 353 2,219 1,065
15,824 3,288 2,239 318 1,922 1,049
16,570 2,055 1,221 191 1,029 834
16,958 1,883 1,185 205 980
698
17,164 1,834 1,202 184 1,019 632
17,000 3,532 2,344 310 2,035 1,188
18,002 2,852 1,854 274 1,580 998
18,767 2,750 1,711 269 1,442 1,039
19,052 2,859 1,841 300 1,541 1,018
19,043 4,602 3,098 416 2,681 1,504
19,524 3,740 2,420 398 2,022 1,320
20,105 3,852 2,486 426 2,060 1,366
20,296 4,714 2,997 479 2,518 1,717
20,693 3,911 2,423 408 2,016 1,488
21,257 4,070 2,472 501 1,971 1,598
21,903 3,786 2,205 487 1,718 1,581
22,630 3,366 1,914 479 1,435 1,452
23,510 2,875 1,551 432 1,120 1,324
24,397 2,975 1,508 448 1,060 1,468
25,281 2,817 1,419 426
993 1,397
26,397 2,832 1,403 440 963 1,429
26,952 4,093 2,238 599 1,638 1,855
27,246 5,016 2,789 693 2,097 2,227
28,276 4,882 2,659 711 1,948 2,222
29,484 4,365 2,275 653 1,624 2,089
30,424 5,156 2,714 757 1,957 2,441
30,726 7,929 4,442 966 3,476 3,486
32,226 7,406 4,036 939 3,098 3,369
33,775 6,991 3,667 874 2,794 3,324
35,836 6,202 3,142 813 2,328 3,061
37,434 6,137 3,120 811 2,308 3,018
38,492 7,637 4,267 913 3,353 3,370
39,590 8,273 4,577 962 3,615 3,696
40,086 10,678 6,179 1,090 5,089 4,499
41,004 10,717 6,260 1,003 5,257 4,457
42,793 8,539 4,744 812 3,932 3,794
44,154 8,312 4,521 806 3,715 3,791
45,556 8,237 4,530 779 3,751 3,707
47,074 7,425 4,101 732 3,369 3,324
48,383 6,701 3,655 667 2,987 3,046
49,745 6,528 3,525 658 2,867 3,003
50,455 6,874 3,799 629 3,170 3,075
50,535 8,426 4,817 709 4,109 3,609
50,290 6,579 3,630 632 2,998 2,949
50,344 6,567 3,553 620 2,933 3,014
50,420 6,466 3,497 588 2,909 2,969
50,417 6,685 3,657 631 3,026 3,028
50,658 6,589 3,627 613 3,014 2,962
50,631 6,474 3,594 581 3,013 2,880
50,590 6,775 3,752 610 3,142 3,023
50,625 7,044 3,904 656 3,248 3,140
50,445 7,140 3,956 641 3,315 3,184
50,420 7,222 4,041 650 3,391 3,181
50,235 7,470 4,206 654 3,552 3,264
50,396 7,668 4,346 674 3,672 3,322
50,328 7,763 4,337 689 3,648 3,426
50,438 8,130 4,684 674 4,010 3,446
50,408 8,416 4,858 752 4,106 3,558
50,689 8,256 4,730 695 4,035 3,526
50,424 8,529 4,895 752 4,143 3,634
50,639 8,615 4,966 751 4,215 3,649
50,681 8,475 4,952 727 4,225 3,523
50,542 8,520 4,891 680 4,211 3,629
50,639 8,501 4,955 712 4,243 3,546
50,564 8,641 4,894 679 4,215 3,747
50,474 8,602 4,845 695 4,150 3,757
50,613 8,891 4,990 700 4,290 3,901

144
153
223
195
145
140
123
191
176
209
197
262
256
286
349
313
383
385
395
405
391
412
413
506
568
598
583
665
802
780
789
769
743
755
800
886
825
687
661
675
616
558
536
519
581
502
531
528
503
532
498
503
526
510
532
539
530
616
566
570
585
566
560
605
570
535
615
576
605

TABLE B-32.—Civilian employment by demographic characteristic,

1954-91

[Thousands of persons 16 years of age and over; monthly data seasonally adjusted]
Black and other

White
Year or
month

All
civilian
workers

Total

Males

Females

Both
sexes
16-19

Black

Total

Males

Females

Both
sexes
16-19

Total

Males

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
59,698
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

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
1988
1989

99,303 87,715
100,397 88,709
99,526 87,903
100,834 88,893
105,005 92,120
107,150 93,736
109,597 95,660
112,440 97,789
114,968 99,812
117,342 101,584

51,127
51,315
50,287
50,621
52,462
53,046
53,785
54,647
55,550
56,352

36,587
37,394
37,615
38,272
39,659
40,690
41,876
43,142
44,262
45,232

7,021
6,588
5,984
5,799
5,836
5,768
5,792
5,898
6,030
5,946

11,588
11,688
11,624
11,941
12,885
13,414
13,937
14,652
15,156
15,757

6,059
6,083
5,983
6,166
6,629
6,845
7,107
7,459
7,722
7,963

5,529
5,606
5,641
5,775
6,256
6,569
6,830
7,192
7,434
7,795

689
637
565
543
607
666
681
742
774
813

9,313
9,355
9,189
9,375
10,119
10,501
10,814
11,309
11,658
11,953

4,798
4,794
4,637
4,753
5,124
5,270
5,428
5,661
5,824
5,928

4,515
4,561
4,552
4,622
4,995
5,231
5,386
5,648
5,834
6,025

1990
1991

117,914 102,087
116,877 101,039

56,432
55,557

45,654
45,482

5,518
4,989

15,827
15,838

8,003
8,036

7,825
7,802

743
639

11,966
11,863

5,915
5,880

6,051
5,983

1990: Jan
Feb
Mar
Apr
May
June

118,007
118,080
118,306
118,090
118,374
118,267

102,191
102,163
102,333
102,108
102,368
102,352

56,608
56,590
56,644
56,494
56,537
56,506

45,583
45,573
45,689
45,614
45,831
45,846

5,768
5,720
5,785
5,678
5,625
5,565

15,824
15,931
15,976
15,988
16,001
15,877

7,916
8,016
8,032
8,070
8,094
8,022

7,908
7,915
7,944
7,918
7,907
7,855

855
806
813
807
755
737

11,980
12,034
12,075
12,095
12,152
12,056

5,861
5,922
5,928
5,948
5,970
5,970

6,119
6,112
6,147
6,147
6,182
6,086

July
Aug
Sept
Oct
Nov
Dec

117,948
117,785
117,763
117,631
117,273
117,476

102,215
102,099
102,082
101,877
101,517
101,704

56,395
56,344
56,368
56,310
56,200
56,151

45,820
45,755
45,714
45,567
45,317
45,553

5,449
5,299
5,404
5,335
5,269
5,317

15,667
15,720
15,634
15,782
15,773
15,764

7,958
7,945
7,900
7,998
8,026
8,052

7,709
7,775
7,734
7,784
7,747
7,712

691
685
707
704
689
668

11,880
11,853
11,845
11,921
11,897
11,821

5,894
5,870
5,872
5,910
5,916
5,911

5,986
5,983
5,973
6,011
5,981
5,910

1991: Jan
Feb
Mar
Apr
May
June

116,977
116,937
116,834
117,388
116,730
116,909

101,204
101,184
101,027
101,504
101,033
101,050

55,800
55,595
55,533
55,793
55,616
55,470

45,404
45,589
45,494
45,711
45,417
45,580

5,230
5,265
5,131
5,102
4,997
4,921

15,783
15,767
15,828
15,888
15,681
15,832

8,026
8,021
8,063
8,038
7,892
8,015

7,757
7,746
7,765
7,850
7,789
7,817

678
662
677
661
661
659

11,868
11,845
11,909
11,939
11,748
11,851

5,869
5,886
5,912
5,892
5,742
5,857

5,999
5,959
5,997
6,047
6,006
5,994

July
Aug
Sept
Oct
Nov
Dec

116,729
116,484
117,089
116,867
116,772
116,728

100,792
100,716
101,053
101,067
100,977
100,828

55,407
55,403
55,612
55,530
55,530
55,364

45,385
45,313
45,441
45,537
45,447
45,464

4,712
4,785
4,973
4,959
4,928
4,856

15,902
15,823
16,004
15,836
15,813
15,909

8,053
8,015
8,092
8,080
8,073
8,066

7,849
7,808
7,912
7,756
7,740
7,843

649
588
606
604
629
604

11,903
11,814
12,043
11,834
11,779
11,841

5,880
5,837
5,953
5,916
5,906
5,906

6,023
5,977
6,090
5,918
5,873
5,935

Note.—See footnote 6 and Note, Table B-30.
Source: Department of Labor, Bureau of Labor Statistics.




335

TABLE B-33.—Unemployment by demographic characteristic, 1954-91

[Thousands of persons 16 years of age and over; monthly data seasonally adjusted]
Black and other

White

All

Year or
month

AM

civilian
workers

Total

Males

Fo
re-

males

Both
sexes
16-19

946
774
793
812

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

1,191
1,043

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
1232
1,220
1,135
1,014
1,130
1084
1,123

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

1980
1981
1982
1983
1984.
1985
1986
1987
1988
1989

7,637
8,273
10,678
10,717
8,539
8,312
8,237
7,425
6,701
6,528

5,884
6,343
8,241
8,128
6,372
6,191
6,140
5,501
4,944
4,770

3,345
3,580
4,846
4,859
3,600
3,426
3,433
3,132
2,766
2,636

2,540
2,762
3,395
3,270
2,772
2,765
2,708
2,369
2,177
2,135

1990
1991

6,874
8,426

5,091
6,447

2,866
3,775

2,225
2,672

1990: Jan...
Feb..
Mar..
May"
June.

6,579
6,567
6,466
6,685
6,589
6,474

4,871
4,905
4,825
5,005
4,891
4,794

2,720
2,709
2,671
2,797
2,751
2,684

2,151
2,196
2,154
2,208
2,140
2,110

July..
Aug..
Sept.
Oct..
Nov..
Dec.

6,775
7,044
7,140
7,222
7,470
7,668

4,964
5,191
5,254
5,344
5,489
5,694

2,791
2,936
2,943
3,030
3,144
3,315

2,173
2,255
2,311
2,314
2,345
2,379

1991: Jan...
Feb..
Mar..
Apr..
May.
June.

7,763
8,130
8,416
8,256
8,529
8,615

5,909
6,215
6,497
6,222
6,486
6,608

3,391
3,665
3,852
3,645
3,786
3,860

2,518
2,550
2,645
2,577
2,700
2,748

July..
Aug..
Sept.
Oct..
Nov..
Dec.

8,475
8,520
8,501
8,641
8,602
8,891

6,590
6,504
6,540
6,565
6,622
6,818

3,932
3,818
3,940
3,845
3,833
3,890

2,658
2,686
2,600
2,720
2,789
2,928

Total

423
373
382
401
541
525
575
669
580
708
708
705
651
635
644
660
871
1,011
1,021
955
1,104
1,413
1,364
1,284
1,189
1,193
1,291
1,374
1,534
1,387
1,116
1,074
1,070
995
910
863
856
977
852
873
854
854
851
772
829
880
890
885
864
879
988
914
984
950
1,022
1,013
1,035
926
923
969
987
1,016

673
601
591
570
923
793
788
971
861
863
787
678
622
638
590
571

431
376
345
364
610
517
498
599
509
496
426
360
310
300
277
267

754
930
977
924
1,058
1,507
1,492
1,550
1,505
1,473
1,752
1,930
2,437
2,588
2,167
2,121
2,097
1,924
1,757
1,757
1,783
1,979
1,764
1,655
1,672
1,637
1,668
1,671
1,806
1,832
1,905
1,866
1,964
1,964
1,915
1,895
1,961
1,987
2,007
2,002
1,890
1,985
1,995
2,065
1,962
2,068

380
481
486
440
544
815
779
784
731
714
922
997
1,334
1,401
1,144
1,095
1,097
969
888
889
933
1,043
963
846
866
840
849
886
958
944
1,028
988
1,047
1,014
1,007
1,020
1,049
1,062
1,076
1,079
1,022
1,049
1,045
1,023

Note.—See footnote 6 and Note, Table B-30.
Source: Department of Labor, Bureau of Labor Statistics.




Males

336

Fo

remales
242
225
246
206
313
276
290
372
352
367
361
318
312
338
313
304

374
450
491
484
514
692
713
766
774
759
830
933
1,104
1,187
1,022
1,026
999
955
869
868
850
936
801
809
806
797
819
785
848
888
877
878
917
950
908
875
912
925
931
923
868
936
950
1,042
9 4 968
9
1,080
988

Black

Both
sexes
16-19

Total

Males

Fo

remales

Both
sexes
16-19

79
77
95
96
138
128
138
159
142
176
165
171
186
203
194
193
235
249
288
280
318
355
355
379
394
362
377
388
443
441
384
394
383
353
316
331
292
313
283
272
272
269
289
291
288
302
272
302
332
325
319
323
343
319
293
283
303
319
335
331
288
291

906
448
458
846
395
451
965
494
470
1,369
741
629
1,334
698
637
1,393
698
695
1,330
641
690
1,319
636
683
1,553
815
738
1,731
891
840
2,142 1,167
975
2,272 1,213 1,059
1,914 1,003
911
1,864
951
913
1,840
946
894
1,684
826
858
1,547
771
776
1,544
773
772
734
1,527
793
1,679
874
805
832
704
1,536
1,449
725
724
1,448
740
708
1,422
723
699
1,428
718
710
1,412
728
684
807
716
1,523
1,568
813
755
1,634
876
758
1,588
849
739
1,661
879
782
1,665
851
814
1,634
855
779
1,599
858
741
1,676
883
793
1,705
908
797
1,721
912
809
1,725
926
799
863
748
1,611
1,674
871
803
1,688
884
804
1,736
841
895
1,647
814
833
1,718
871
847

279
262
297
330
330
354
360
333
343
357
396
392
353
357
347
312
288
30C
258
270
250
247
242
235
256
257
251
274
2C
4
2C
6
297
287
283
273
303
283
257
250
252
265
292
284
247
251

TABLE B-34.—Labor force participation rate and employment/population ratio, 1948-91
[Percent; monthly data seasonally adjusted]
Employment/population ratio

Labor force participation rate
Civilian2
Year or month

Total1

En-

Total Males males
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....
1988
1989
1990
1991...
1990: Jan
Feb
Mar

59 7
60.1
600
59.7
596
60.0
60 7
60.3
601
59.9
60 0
60.0
59.5
59.3
59.4
59.5
59.8
60 2
60.3
60 8
610
60.7
60.9
61.3
61.7
61.6
62.0
62.6
63 5
64.0
641
64.2
64.3
644
64.7
651
65 6
65 9
66 2
66 8
66.6
66 3
66.8
66.8
66.8
66.8
May";;;;;; 66.8
June
66.6
July
66.6
Aug
66.6
Sept
66.6
Oct
66.5
Nov
66.4
Dec
66.5
1991: Jan
66.3
Feb
66.4
Mr
a
66.4
66.6
&:::::::. 66.4
June
66.4
July
66.2
Aug
66.1
Sept
66.3
Oct
66.2
Nov
66.1
Dec
66.2

Civilian 4

Qnth

58 8
58 9
59?
59?
59 f)
S8 9
*>R8
593
60 0
19 6
59 5
59 3
59 4
59.3
58 8
58 7
58 7
58 9
59?
59 6
59 6
601
60 4
60?
60.4
60 8
61.3
fil ?
61.6
6? 3
63?
63 7
63 8
63.9
64.0
640
64.4
648
65 3
65 6
65 9
66 5
66 4
66 0
66.5
66.5
66.5
66.5
66.5
66.4
66.3
66.3
66.3
66.2
66.1
66.3
66.0
66.1
66.2
66.3
66.1
66.2
66.0
65.8
66.1
66.0
65.8
65.9

866
86.4
864
86.3
863
860
85 5
85.4
85 5
848
84 2
83 7
83 3
82.9
82.0
814
81.0
80 7
80.4
804
801
79 8
79 7
791
78.9
78 8
78.7
77 9
77.5
77 7
77 9
77 8
77 4
77.0
76 6
764
764
76 3
76 3
76 2
76 2
76 4
761
75 5
76.4
76.3
76.3
76.3
76.2
76.1
75.9
75.9
76.0
76.0
76.0
76.1
75.6
75.7
75.8
75.9
75.7
75.7
75.5
75.3
75.7
75.4
75.2
75.2

32 7
33.1
33 9
34.6
347
34.4
346
35.7
36 9
369
371
371
37 7
38.1
37.9
38.3
38.7
39.3
40.3
411
416
42 7
43 3
434
43.9
447
45.7
46 3
47.3
48 4
500
50 9
515
52.1
52 6
52 9
53 6
545
55 3
56 0
56 6
57 4
57 5
57 3
57.6
57.6
57.7
57.6
57.7
57.5
57.5
57.5
57.4
57.3
57.1
57.3
57.2
57.4
57.4
57.6
57.3
57.5
57.3
57.1
57.2
57.3
57.2
57.4

Black
and
16-19 White other Black
years
52 5
52.2
518
52.2
513
50.2
48 3
48.9
509
49.6
47 4
46 7
47 5
46.9
46.1
45.2
44.5
45.7
48.2
484
483
494
499
49 7
51.9
53 7
54.8
540
54.5
56 0
57 8
57 9
56 7
55.4
541
53 5
53 9
545
547
547
55 3
55 9
53 7
517
55.2
54.8
55.6
54.9
54.5
53.5
52.9
52.1
53.3
52.9
52.3
52.8
53.0
53.0
53.0
52.3
52.0
51.5
50.4
49.5
51.5
51.7
51.4
51.1

58 2
58.7
594
59.1
58 9
58.7
58 8
58.8
58.3
58?
58.2
58 4
58.7
59 2
59 3
59 9
60 2
601
60.4
60 8
61.4
615
61.8
62 5
63 3
63 9
641
64.3
643
64 3
64 6
65 0
65 5
65 8
66 2
66 7
66 8
66 6
66.9
66.9
66.9
66.9
66.9
66.8
66.8
66.8
66.8
66.7
66.5
66.7
66.5
66.7
66.7
66.8
66.6
66.7
66.5
66.3
66.5
66.5
66.4
66.4

640
642
649
644
64 8
643
645
64.1
63.2
63 0
631
6? 9
63 0
62 8
62 2
62 1
618
609
60.2
60 5
60.3
59 6
59.8
604
62 2
622
617
61.3
616
621
62 6
63 3
63 7
643
640
647
63 7
63 1
64 3
64.2
64.3
641
64.1
63.6
63.?
63 3
63.2
63.5
63.7
63.5
63.3
63.0
63.4
63.6
6?.8
63.2
6?.9
62.9
63.4
62.9
62.4
62.9

59.9
60 2
59.8
58 8
59.0
59 8
615
614
610
60.8
610
615
62 2
62 9
63 3
63 8
63 8
642
63 3
62 6
63.9
63.6
63.8
63.7
63.9
63.3
62.9
62.9
63.1
63.2
63.3
62.9
62.9
62.5
63.1
63.3
62.4
62.9
62.5
62.3
63.3
62.5
61.7
62.3

1
2
3

Rnth

Total8
Total

566
58.2
58 2
580
564
57.5
58 2
57.8
561
567
56 8
56.1
56.3
56.1
56.4
56.9
57 6
58 0
58 2
58 7
58 0
57 2
57.5
58 3
58.3
56 5
57.3
58 3
59 7
60 3
59 6
59.4
58 2
58 3
59 9
60 5
611
619
62 6
63 3
63 0
619
63.3
63.3
63.4
63.2
63.3
63.2
63.0
62.9
62.8
62.7
62.5
62.5
62.2
62.2
62.0
62.3
61.9
61.9
61.8
61.6
61.9
61.7
61.6
61.6

566
55.4
561
57.3
57 3
57.1
55 5
56.7
57 5
57.1
554
560
561
55.4
55.5
55.4
55.7
56.2
56.9
57 3
57 5
58 0
57 4
56 6
57.0
57 8
57.8
561
56.8
57 9
59 3
59 9
59 2
59.0
57 8
57 9
59 5
601
60 7
615
62 3
63 0
62 7
616
63.0
63.0
63.1
6?.9
63.0
62.9
62.7
6?.6
62.5
62.4
6?.l
62.2
61.9
61.8
61.7
62.0
61.6
61.6
61.5
61.3
61.6
61.4
61.3
61.2

Mates

83 5
81.3
82 0
84.0
839
83 6
810
81.8
82 3
813
78 5
79 3
789
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
717
72.0
72 8
73 8
73 8
72 0
71.3
69 0
68 8
70 7
70 9
710
715
72 0
72 5
719
70 2
72.3
72.3
7?.3
72.2
72.2
72.1
71.7
71.6
71.6
71.5
71.3
71.3
70.8
70.5
70.4
70.7
70.3
70.2
70.0
69.9
70.3
70.0
69.9
69.7

Co.

males
313
31.2
32 0
33.1
33 4
33.3
32 5
34.0
351
351
345
35 0
35 5
35.4
35.6
35.8
36 3
37.1
38 3
39 0
39 6
40 7
40 8
404
41.0
42 0
42.6
42 0
43.2
445
46 4
47 5
47 7
48.0
47 7
48 0
49 5
50 4
514
52 5
53 4
54 3
543
53 7
54.5
54.5
54.7
54.5
54.7
54.6
54.5
54.3
54.2
54.1
53.8
53.9
53.8
53.9
53.8
54.1
53.7
53.8
53.7
53.5
53.7
53.6
53.5
53.5

16-19
years
47 7
45.2
45 5
47.9
469
46.4
42 3
43.5
453
43.9
39 9
399
40 5
39.1
39.4
37.4
37.3
38.9
421
42 2
42 2
43 4
42 3
413
43.5
459
46.0
43 3
44.2
461
48 3
48 5
46 6
44.6
415
415
43 7
444
44 6
45 5
46 8
47 5
45 4
42 1
47.1
46.6
47.6
46.8
46.2
45.7
44.9
43.5
44.9
44.2
43.5
43.9
43.3
43.8
43.2
42.7
42.2
41.7
40.4
40.1
42.2
41.9
41.8
41.2

White

552
56.5
57 3
56.8
553
55.9
559
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
610
615
62 3
63 1
63 8
63 6
62 6
63.9
63.8
63.9
63.7
63.9
63.8
63.7
63.6
63.5
63.4
63.1
63.2
62.9
62.8
62.7
62.9
62.6
62.6
62.4
62.3
62.5
62.4
62.4
62.2

Black
and
other

58 0
58.7
59 5
59.3
567
57 5
57 9
56.2
56.3
56.2
57.0
57.8
58 4
582
58 0
581
56 8
54.9
54.1
55 0
54.3
514
52.0
52 5
547
55 2
53 6
52.6
509
510
53 6
547
55 4
56 8
57 4
582
57 3
561
57.8
58.1
58.2
58.1
58.1
57.5
56.6
56.7
56.3
56.8
56.6
56.5
56.4
56.3
56.4
56.5
55.7
56.1
56.2
55.9
56.4
55.7
55.5
55.7

Black

53.7
54.5
53.5
501
50.8
514
53 6
53 8
52 3
51.3
49.4
49 5
52.3
53 4
541
55 6
56 3
56 9
56 2
549
56.6
56.8
56.9
57.C
57.2
56.6
55.7
55.6
55.5
55.7
55.5
55.1
55.3
55.1
55.3
55.4
54.5
54.9
55.0
54.6
55.5
54.5
54.2
54.4

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 group specified.
Empjoyment including resident Armed Forces as percent of noninstitutional population including resident Armed Forces.
4
Civilian employment as percent of civilian noninstitutional population in group specified.
Note.—Data relate to persons 16 years of age and over.
See footnote 6 and Note, Table B-30.
Source: Department of Labor, Bureau of Labor Statistics.




337

TABLE B-35.—Civilian labor force participation rate by demographic characteristic, 1954-91
[Percent;1 monthly data seasonally adjusted]
White
Year or month

All
civilian
work- Total
ers
Total

Black and other or black

Males
16-19
years

Females
20
years Total
and
over

16-19

Females
20
years Total Total
and
over

16-19
years

20
years Total
and
over

16-19
years

Black and other
1954..
1955..
1956..
1957..
1958..
1959..
I960..
1961..
1962..
1963..
1964..
1965..
1966..
1967..
1968..
1969..
1970..
1971..
1972..

58.8
59.3
60.0
59.6
59.5
59.3
59.4
59.3
58.8
58.7
58.7
58.9
59.2
59.6
59.6
60.1
60.4
60.2
60.4

58.2
58.7
59.4
59.1
58.9
58.7
58.8
58.8
58.3
58.2
58.2
58.4
58.7
59.2
59.3
59.9
60.2
60.1
60.4

85.6
85.4
85.6
84.8
84.3
83.8
83.4
83.0
82.1
81.5
81.1
80.8
80.6
80.6
80.4
80.2
80.0
79.6
79.6

57.6
58.6
60.4
59.2
56.5
55.9
55.9
54.5
53.8
53.1
52.7
54.1
55.9
56.3
55.9
56.8
57.5
57.9
60.1

87.8
87.5
87.6
86.9
86.6
86.3
86.0
85.7
84.9
84.4
84.2
83.9
83.6
83.5
83.2
83.0
82.8
82.3
82.0

33.3
34.5
35.7
35.7
35.8
36.0
36.5
36.9
36.7
37.2
37.5
38.1
39.2
40.1
40.7
41.8
42.6
42.6
43.2

40.6
40.7
43.1
42.2
40.1
39.6
40.3
40.6
39.8
38.7
37.8
39.2
42.6
42.5
43.0
44.6
45.6
45.4
48.1

32.7
34.0
35.1
35.2
35.5
35.6
36.2
36.6
36.5
37.0
37.5
38.0
38.8
39.8
40.4
41.5
42.2
42.3
42.7

64.0
64.2
64.9
64.4
64.8
64.3
64.5
64.1
63.2
63.0
63.1
62.9
63.0
62.8
62.2
62.1
61.8
60.9
60.2

85.2
85.1
85.1
84.2
84.1
83.4
83.0
82.2
80.8
80.2
80.1
79.6
79.0
78.5
77.7
76.9
76.5
74.9
73.9

61.2
60.8
61.5
58.8
57.3
55.5
57.6
55.8
53.5
51.5
49.9
51.3
51.4
51.1
49.7
49.6
47.4
44.7
46.0

1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991

60.4
60.8
61.3
61.2
61.6
62.3
63.2
63.7
63.8
63.9
64.0
64.0
64.4
64.8
65.3
65.6
65.9
66.5
66.4
66.0
66.5
66.5
66.5
66.5
66.5
66.4
66.3
66.3
66.3
66.2
66.1
66.3
66.0
66.1
66.2
66.3
66.1
66.2
66.0
65.8
66.1
66.0
65.8
65.9

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
66.2
66.7
66.8
66.6
66.9
66.9
66.9
66.9
66.9
66.8
66.8
66.8
66.8
66.7
66.5
66.7
66.5
66.7
66.7
66.8
66.6
66.7
66.5
66.3
66.5
66.5
66.4
66.4

79.6
79.4
79.4
78.7
78.4
78.5
78.6
78.6
78.2
77.9
77.4
77.1
77.1
77.0
76.9
76.8
76.9
77.1
76.9
76.4
77.2
77.2
77.1
77.1
77.0
76.8
76.7
76.8
76.8
76.8
76.8
76.9
76.5
76.5
76.6
76.6
76.5
76.4
76.4
76.2
76.5
76.2
76.2
76.0

60.1
62.0
62.9
61.9
62.3
64.0
65.0
64.8
63.7
62.4
60.0
59.4
59.0
59.7
59.3
59.0
60.0
61.0
59.4
57.2
60.6
60.3
60.3
61.1
59.9
58.9
58.6
57.9
59.0
59.0
58.4
59.2
59.1
58.9
58.7
56.6
57.9
56.8
56.0
55.3
57.6
56.9
56.9
56.2

82.0
81.6
81.4
80.7
80.3
80.2
80.1
80.1
79.8
79.5
79.2
78.9
78.7
78.5
78.5
78.4
78.3
78.5
78.3
77.8
78.6
78.5
78.5
78.3
78.3
78.2
78.2
78.3
78.2
78.2
78.2
78.2
77.8
77.8
78.0
78.2
78.0
77.9
77.9
77.7
77.9
77.7
77.6
77.4

43.2
44.1
45.2
45.9
46.9
48.0
49.4
50.5
51.2
51.9
52.4
52.7
53.3
54.1
55.0
55.7
56.4
57.2
57.5
57.4
57.4
57.4
57.5
57.5
57.6
57.6
57.6
57.6
57.6
57.4
57.1
57.4
57.3
57.6
57.5
57.7
57.4
57.7
57.3
57.2
57.2
57.5
57.4
57.6

48.1
50.1
51.7
51.5
52.8
54.5
56.7
57.4
56.2
55.4
55.0
54.5
55.4
55.2
56.3
56.5
57.2
57.1
55.4
54.3
56.5
56.7
57.9
55.8
56.2
55.2
54.8
54.0
55.4
54.5
53.7
54.4
55.3
55.4
54.7
56.1
54.4
54.3
51.8
52.0
53.3
54.8
54.7
54.8

42.7
43.5
44.4
45.3
46.2
47.3
48.7
49.8
50.6
51.5
52.2
52.5
53.1
54.0
54.9
55.6
56.3
57.2
57.6
57.7
57.5
57.5
57.5
57.6
57.7
57.7
57.8
57.8
57.7
57.6
57.3
57.6
57.5
57.7
57.7
57.8
57.7
57.9
57.7
57.6
57.5
57.6
57.6
57.8

59.9
60.2
59.8
58.8
59.0
59.8
61.5
61.4
61.0
60.8
61.0
61.5
62.2
62.9
63.3
63.8
63.8
64.2
63.3
62.6
63.9
63.6
63.8
63.7
63.9
63.3
62.9
62.9
63.1
63.2
63.3
62.9
62.9
62.5
63.1
63.3
62.4
62.9
62.5
62.3
63.3
62.5
61.7
62.3

73.6
73.4
72.9
70.9
70.0
70.6
71.5
71.3
70.3
70.0
70.1
70.6
70.8
70.8
71.2
71.1
71.0
71.0
70.1
69.5
70.4
69.9
70.0
70.0
70.0
70.0
70.0
69.7
70.3
70.4
70.6
70.2
69.7
69.8
70.3
70.3
68.6
69.9
69.3
68.9
70.1
69.2
68.7
69.2

46.3
45.7
46.7
42.6
41.3
43.2
44.9
43.6
43.2
41.6
39.8
39.9
41.7
44.6
43.7
43.6
43.8
44.6
40.6
37.4
45.3
41.8
43.1
42.1
41.1
38.5
38.8
38.6
39.1
39.6
40.7
38.5
37.7
36.9
39.7
38.6
36.4
38.7
35.4
36.5
40.9
36.8
35.1
36.3

87.1
87.8
87.8
87.0
87.1
86.7
86.2
85.5
84.2
83.9
84.1
83.7
83.3
82.9
82.2
81.4
81.4
80.0
78.6

46.1
46.1
47.3
47.1
48.0
47.7
48.2
48.3
48.0
48.1
48.6
48.6
49.4
49.5
49.3
49.8
49.5
49.2
48.8

31.0
32.7
36.3
33.2
31.9
28.2
32.9
32.8
33.1
32.6
31.7
29.5
33.5
35.2
34.8
34.6
34.1
31.2
32.3

48.7
49.3
49.0
48.8
49.8
50.8
53.1
53.1
53.1
53.5
53.7
54.2
55.2
56.5
56.9
58.0
58.0
58.7
57.8
57.0
58.5
58.6
58.7
58.5
58.9
57.7
57.1
57.3
57.2
57.3
57.3
56.9
57.3
56.6
57.3
57.7
57.4
57.1
56.9
56.9
57.8
57.0
56,1
56.6

32.2
34.2
33.4
34.2
32.9
32.9
37.3
36.8
34.9
34.0
33.5
33.0
35.0
37.9
39.1
39.6
37.9
40.4
36.7
33.5
39.2
36.4
38.0
38.0
37.1
37.5
34.3
35.8
35.1
36.8
37.0
35.5
37.8
36.1
37.1
35.1
34.2
31.2
33.8
28.8
31.7
33.2
32.4
30.7

Black

1990:Jan
Feb
Mar....
May!!!:
June..,
July...
Aug...
Sept..
Oct
Nov...
Dec...
1991: Jan
Feb
Mar...

fc

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 6 and Note, Table B-30.
Source: Department of Labor, Bureau of Labor Statistics.




338

78.5
78.4
77.6
76.0
75.4
75.6
76.2
76.3
75.1
74.5
74.7
75.2
74.8
74.4
74.8
74.7
74.6
74.4
73.8
73.4
73.6
73.5
73.4
73.5
73.7
74.0
73.8
73.6
74.2
74.2
74.4
74.1
73.6
73.8
74.0
74.1
72.6
73.7
73.4
72.8
73.6
73.0
72.7
73.0

TABLE B-36.—Civilian employment/population

ratio by demographic characteristic, 1954-91

[Percent;1 monthly data seasonally adjusted]
White
Year or month

All
civilian
work- Total
ers
Total

Black and other or black

Males
16-19
years

Females
20
years Total
and
over

16-19
years

Females

Males
20
years Total Total
and
over

16-19
years

20
years Total
and
over

16-19
years

Black and other
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972

55.5
56.7
57.5
57.1
55.4
56.0
56.1
55.4
55.5
55.4
55.7
56.2
56.9
57.3
57.5
58.0
57.4
56.6
57.0

55.2
56.5
57.3
56.8
55.3
55.9
55.9
55.3
55.4
55.3
55.5
56.0
56.8
57.2
57.4
58.0
57.5
56.8
57.4

81.5
82.2
82.7
81.8
79.2
79.9
79.4
78.2
78.4
77.7
77.8
77.9
78.3
78.4
78.3
78.2
76.8
75.7
76.0

49.9
52.0
54.1
52.4
47.6
48.1
48.1
45.9
46.4
44.7
45.0
47.1
50.1
50.2
50.3
51.1
49.6
49.2
51.5

84.0
84.7
85.0
84.1
81.8
82.8
82.4
81.4
81.5
81.1
81.3
81.5
81.7
81.7
81.6
81.4
80.1
79.0
79.0

31.4
33.0
34.2
34.2
33.6
34.0
34.6
34.5
34.7
35.0
35.5
36.2
37.5
38.3
38.9
40.1
40.3
39.9
40.7

36.4
37.0
38.9
38.2
35.0
34.8
35.1
34.6
34.8
32.9
32.2
33.7
37.5
37.7
37.8
39.5
39.5
38.6
41.3

31.1
32.7
33.8
33.9
33.5
34.0
34.5
34.5
34.7
35.2
35.8
36.5
37.5
38.3
39.1
40.1
40.4
40.1
40.6

58.0
58.7
59.5
59.3
56.7
57.5
57.9
56.2
56.3
56.2
57.0
57.8
58.4
58.2
58.0
58.1
56.8
54.9
54.1

76.5
77.6
78.4
77.2
72.5
73.8
74.1
71.7
72.0
71.8
72.9
73.7
74.0
73.8
73.3
72.8
70.9
68.1
67.3

52.4
52.7
52.2
48.0
42.0
41.4
43.8
41.0
41.7
37.4
37.8
39.4
40.5
38.8
38.7
39.0
35.5
31.8
32.4

1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987

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
62.3
63.0
62.7
61.6
63.0
63.0
63.1
62.9
63.0
62.9
62.7
62.6
62.5
62.4
62.1
62.2
61.9
61.8
61.7
62.0
61.6
61.6
61.5
61.3
61.6
61.4
61.3
61.2

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
63.1
63.8
63.6
62.6
63.9
63.8
63.9
63.7
63.9
63.8
63.7
63.6
63.5
63.4
63.1
63.2
62.9
62.8
62.7
62.9
62.6
62.6
62.4
62.3
62.5
62.4
62.4
62.2

76.0
76.5
75.9
73.0
73.4
74.1
75.0
75.1
73.4
72.8
70.6
70.4
72.1
72.3
72.3
72.7
73.2
73.7
73.2
71.5
73.7
73.6
73.7
73.4
73.4
73.3
73.1
73.0
73.0
72.9
72.7
72.6
72.1
71.8
71.7
71.9
71.7
71.4
71.3
71.2
71.5
71.3
71.2
71.0

51.5
54.3
54.4
50.6
51.5
54.4
56.3
55.7
53.4
51.3
47.0
47.4
49.1
49.9
49.6
49.9
51.7
52.6
51.0
47.2
52.4
52.3
52.5
52.7
51.8
51.4
50.2
49.0
49.9
50.0
49.5
50.1
49.5
49.5
48.1
47.1
47.1
46.0
45.1
45.9
47.9
47.3
47.0
46.1

79.0
79.2
78.6
75.7
76.0
76.5
77.2
77.3
75.6
75.1
73.0
72.6
74.3
74.3
74.3
74.7
75.1
75.4
75.0
73.3
75.4
75.3
75.4
75.1
75.1
75.0
74.9
74.9
74.8
74.7
74.5
74.3
73.8
73.5
73.4
73.8
73.5
73.3
73.2
73.1
73.2
73.1
73.0
72.8

40.7
41.8
42.4
42.0
43.2
44.5
46.3
47.5
47.8
48.3
48.1
48.5
49.8
50.7
51.7
52.8
53.8
54.6
54.8
54.3
54.8
54.8
54.9
54.8
55.0
55.0
55.0
54.9
54.8
54.6
54.3
54.5
54.3
54.5
54.4
54.6
54.2
54.4
54.1
54.0
54.1
54.2
54.1
54.1

41.3
43.6
44.3
42.5
44.2
45.9
48.5
49.4
47.9
46.2
44.6
44.5
47.0
47.1
47.9
49.0
50.2
50.5
48.5
46.1
49.6
49.3
50.6
49.0
49.1
48.7
48.2
46.9
48.3
47.3
46.8
47.4
46.7
47.9
47.1
47.9
46.1
46.1
43.3
44.0
45.7
46.1
46.0
45.7

40.6
41.6
42.2
41.9
43.1
44.4
46.1
47.3
47.8
48.5
48.4
48.9
50.0
51.0
52.0
53.1
54.0
54.9
55.2
54.8
55.2
55.2
55.2
55.2
55.5
55.5
55.5
55.4
55.2
55.1
54.8
55.0
54.8
55.0
54.9
55.1
54.8
55.0
54.9
54.7
54.7
54.8
54.6
54.6

53.7
54.5
53.5
50.1
50.8
51.4
53.6
53.8
52.3
51.3
49.4
49.5
52.3
53.4
54.1
55.6
56.3
56.9
56.2
54.9
56.6
56.8
56.9
57.0
57.2
56.6
55.7
55.6
55.5
55.7
55.5
55.1
55.3
55.1
55.3
55.4
54.5
54.9
55.0
54.6
55.5
54.5
54.2
54.4

66.8
67.5
65.8
60.6
60.6
61.4
63.3
63.4
60.4
59.1
56.0
56.3
59.2
60.0
60.6
62.0
62.7
62.8
61.8
60.5
61.7
62.2
62.2
62.4
62.5
62.4
61.5
61.2
61.2
61.5
61.5
61.3
60.8
61.0
61.2
60.9
59.2
60.3
60.5
59.9
61.1
60.6
60.4
60.3

31.6
32.8
31.4
26.3
25.8
26.4
28.5
28.7
27.0
24.6
20.3
20.4
23.9
26.3
26.5
28.5
29.4
30.4
27.6
23.8
31.9
29.5
30.3
30.1
28.2
25.2
25.8
24.6
26.9
27.0
27.0
24.2
24.4
23.7
24.8
24.0
23.1
24.6
23.9
23.1
24.3
23.5
22.4
23.4

79.2
80.4
81.3
80.5
76.0
77.6
77.9
75.5
75.7
76.2
77.7
78.7
79.2
79.4
78.9
78.4
76.8
74.2
73.2

41.9
42.2
43.0
43.7
42.8
43.2
43.6
42.6
42.7
42.7
43.4
44.1
45.1
45.0
45.2
45.9
44.9
43.9
43.3

24.7
26.4
28.0
26.5
22.8
20.3
24.8
23.2
23.1
21.3
21.8
20.2
23.1
24.8
24.7
25.1
22.4
20.2
19.9

43.0
43.8
43.5
41.6
42.8
43.3
45.8
46.0
45.7
45.1
44.2
44.1
46.7
48.1
48.8
50.3
51.2
52.0
51.6
50.3
52.5
52.4
52.6
52.5
52.8
51.9
51.0
50.9
50.8
51.0
50.7
50.0
50.7
50.3
50.6
51.0
50.6
50.4
50.6
50.2
51.0
49.5
49.1
49.6

19.2
22.0
20.9
20.2
19.2
18.5
22.1
22.4
21.0
19.7
17.7
17.0
20.1
23.1
23.8
25.8
25.8
27.1
25.7
21.4
29.6
26.2
28.2
28.1
26.2
26.8
23.8
24.2
24.8
25.0
23.1
22.8
24.4
23.5
23.2
22.7
23.4
21.6
21.3
16.9
20.3
19.2
21.4
19.5

Black

1988

1989
1990
1991

1990: Jan...
Feb...
Mar..

fe
June.
July..
Aug..
Sept.
Oct...
Nov..
Dec.
1991: Jan..
Feb..
Mar.

fe

June
July.
Aug.
Sept.
Oct..,
Nov.
1 Dec.
Civilian employment as percent of civilian noninstitutional population in group specified.
Note.—Data relate to persons 16 years of age and over.
See footnote 6 and Note, Table B-30.
Source: Department of Labor, Bureau of Labor Statistics.




339

73.0
73.7
71.9
66.5
66.8
67.5
69.1
69.1
65.8
64.5
61.4
61.6
64.1
64.6
65.1
66.4
67.1
67.0
66.1
64.9
65.5
66.5
66.2
66.5
66.8
67.1
66.0
65.8
65.4
65.8
65.8
65.9
65.3
65.5
65.5
65.3
63.7
64.7
64.8
64.3
65.4
65.0
64.9
64.6

TABLE B-37.—Unemployment rate, 1948-91
[Percent; monthly data seasonally adjusted]

Year or
month

1948
1949
1950
1951
1952
1953
1954
1955
1956
1957 .
1958...
1959
1960
1961
1962
1963
1964
1965
1966
1967
1968...
1969
1970
1971
1972
1973
1974
1975...
1976
1977
1978..
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1990:Jan
Feb
Mar
May!!!!!
June....
July
Aug
Sept....
Oct
Nov
Dec
1991: Jan
Feb
Mar
May!!!!!
June....
July
Aug
Sept....
Oct
Nov
Dec

Unemployment
UnemployFemales
Males
ment
All
rate, civil20
20
all
ian
1616work- work- Total 19 years Total 19 years
1
and
and
ers
ers
years over
years over

52
3.2
29
2.8
5.4
4.3
40
4.2
6.6
5.3
5.4
6.5
5.4
55
5.0
44
3.7
3.7
3.5
3.4
4.8
5.8
5.5
4.8
5.5
8.3
7.6
6.9
6.0
5.8
7.0
7.5
9.5
9.5
7.4
71
69
6.1
54
5.2
5.4
6.6
5.2
5.2
5.1
5.3
5.2
5.1
5.4
5.6
5.6
5.7
5.9
6.0
6.1
6.4
6.6
6.5
6.7
6.8
6.7
6.7
6.7
6.8
6.8
7.0

38
5.9
53
3.3
30
2.9
5.5
4.4
41
4.3
6.8
5.5
5.5
6.7
5.5
57
5.2
45
38
3.8
3.6
3.5
4.9
5.9
5.6
49
5.6
85
7.7
7.1
6.1
5.8
71
7.6
9.7
9.6
75
7.2
70
6.2
5.5
5.3
5.5
6.7
5.3
5.3
5.2
5.4
5.3
5.2
5.4
5.6
5.7
5.8
6.0
6.1
6.2
6.5
6.7
6.6
6.8
6.9
6.8
6.8
6.8
6.9
6.9
7.1

36
5.9
5.1
2.8
28
2.8
5.3
4.2
3.8
4.1
6.8
5.2
5.4
6.4
5.2
5.2
4.6
4.0
3.2
3.1
2.9
2.8
4.4
5.3
5.0
4.2
4.9
7.9
7.1
6.3
5.3
5.1
6.9
7.4
9.9
9.9
7.4
7.0
69
6.2
5.5
5.2
5.6
7.0
5.3
5.2
5.1
5.4
5.3
5.3
5.5
5.7
5.8
5.9
6.1
6.3
6.4
6.9
7.1
6.9
7.2
7.3
7.2
7.2
7.2
7.1
7.1
7.3

98
14.3
12.7
8.1
89
7.9
13.5
11.6
11.1
12.4
17.1
15.3
15.3
17.1
14.7
17.2
15.8
141
11.7
12.3
11.6
11.4
15.0
16.6
15.9
13.9
15.6
201
19.2
17.3
15.8
15.9
18 3
20.1
24.4
23.3
19.6
19.5
19 0
17.8
16.0
15.9
16.3
19.8
15.6
15.4
14.8
15.7
15.6
15.2
16.2
17.6
16.9
17.2
17.4
17.7
18.4
18.2
20.2
19.4
20.6
21.0
20.9
19.7
19.6
19.2
19.8
20.3

32
5.4
47
2.5
2.4
2.5
4.9
3.8
3.4
3.6
6.2
4.7
4.7
5.7
4.6
4.5
3.9
32
2.5
2.3
22
2.1
3.5
4.4
4.0
33
3.8
68
5.9
52
4.3
4.2
59
6.3
8.8
8.9
66
6.2
61
54
4.8
4.5
49
6.3
4.7
4.6
4.5
4.7
4.7
4.7
4.9
5.0
5.1
5.3
5.5
5.7
5.7
6.2
6.3
6.2
6.4
6.5
6.5
6.5
6.5
6.5
6.4
6.6

41
6.0
5.7
4.4
3.6
3.3
6.0
4.9
4.8
4.7
6.8
5.9
5.9
7.2
6.2
6.5
6.2
55
4.8
5.2
4.8
4.7
5.9
6.9
6.6
60
6.7
93
8.6
82
72
6.8
74
7.9
9.4
9.2
7.6
7.4
7i
6*2
5.6
5.4
5.4
6.3
5.2
5.3
5.2
5.4
5.2
5.1
5.3
5.5
5.6
5.6
5.8
5.9
6.1
6.1
6.3
6.2
6.4
6.4
6.2
6.4
6.2
6.6
6.6
6.8

83
12.3
114
8.3
80
7.2
11.4
10.2
112
10.6
14.3
13.5
13.9
16.3
14.6
17.2
16.6
15 7
141
13.5
14 0
13.3
15.6
17.2
16.7
15 3
16.6
19 7
18.7
18 3
17.1
16.4
17 2
19.0
21.9
21.3
18.0
17.6
17 6
15!9
14.4
14.0
14.7
17.4
13.6
14.5
14.0
14.0
14.8
14.0
14.3
15.4
14.6
15.5
15.9
15.6
17.9
16.4
16.6
17.0
16.9
16.9
18.8
18.2
16.6
18.5
17.4
18.4

36
5.3
51
4.0
32
2.9
5.5
4.4
42
41
6.1
5.2
5.1
6.3
5.4
54
52
45
3.8
4.2
3.8
3.7
4.8
5.7
5.4
49
5.5
80
7.4
70
6.0
5.7
64
6.8
8.3
8.1
6.8
6.6
62
5!4
4.9
4.7
4.8
5.7
4.6
4.7
4.6
4.8
4.6
4.5
4.7
4.9
5.0
5.0
5.1
5.2
5.3
5.4
5.6
5.5
5.7
5.7
5.4
5.7
5.6
5.8
5.9
6.1

1 resident Armed Forces.
r._,
r
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 6 and Note, Table B-30.
Source: Department of Labor, Bureau of Labor Statistics.
2
3




340

rate, civilian workers2
Both
sexes
1619
years
92
13.4
12 2
8.2
85
7.6
12.6
11.0
111
116
15.9
14.6
14.7
16.8
14.7
17 2
16 2
14 8
12 8
12.9
12.7
12.2
15.3
16.9
16.2
14 5
16.0
19 9
19.0
17 8
16!4
16.1
17 8
19.6
23.2
22.4
18.9
18.6
18 3
16!9
15.3
15.0
15.5
18.6
14.6
15.0
14.4
14.9
15.2
14.6
15.3
16.5
15.8
16.4
16.7
16.8
18.2
17.3
18.5
18.2
18.9
19.0
19.9
19.0
18.2
18.9
18.7
19.3

Black
White and Black
other

35
5.6
4.9
3.1
28
2.7
5.0
3.9
36
3.8
6.1
4.8
5.0
6.0
49
50
4.6
41
3.4
3.4
3.2
3.1
4.5
5.4
5.1
43
5.0
78
7.0
62
5.2
5.1
63
6.7
8.6
8.4
6.5
6.2
60
5!3
4.7
4.5
4.7
6.0
4.5
4.6
4.5
4.7
4.6
4.5
4.6
4.8
4.9
5.0
5.1
5.3
5.5
5.8
6.0
5.8
6.0
6.1
6.1
6.1
6.1
6.1
6.2
6.3

59
8.9
9.0
5.3
54
4.5
9.9
87
83
79
12.6
10.7
10 2
12.4
10 9
10 8
96
81
7.3
7.4
6.7
6.4
8.2
9.9
10.0 "ib'.4"
90
94
9.9 10.5
13 8 14 8
13.1 14.0
131 14 0
11.9 12 8
11.3 12.3
131 14 3
14.2 15.6
17.3 18.9
17.8 19.5
14.4 15 9
13.7 15.1
13 1 14 5
ll!6 13 0
10.4 11.7
10.0 11.4
10.1 11.3
11.1 12.4
10.0 11.4
9.4 10.7
9.5 10.7
9.3 10.5
9.4 10.5
9.5 10.5
10.3 11.4
10.4 11.7
10.9 12.1
10.6 11.8
11.1 12.3
11.1 12.3
10.8 12.1
10.7 11.9
11.0 12.3
11.1 12.5
11.3 12.8
11.2 12.7
10.6 11.9
11.1 12.4
11.1 12.3
11.5 12.8
11.0 12.3
11.5 12.7

Experienced
wage
and
salary
workers
43
6.8
60
3.7
34
32
6.2
4.8
44
4*6
7.3
5.7
5.7
6.8
5.6
56
5.0
43
35
3.6
3.4
3.3
4.8
5.7
5.3
45
5.3
82
7.3
66
5.6
5.5
6.9
7.3
9.3
9.2
71
6.8
66
5.8
5.2
5.0
5.3
6.5
5.1
5.0
5.0
5.1
5.0
5.0
5.2
5.3
5.5
5.5
5.8
5.9
6.0
6.3
6.6
6.3
6.5
6.6
6.4
6.5
6.5
6.6
6.7
6.8

Mar- Women
who
ried
mainmen,
tain
spouse
famipreslies
ent 3
3.5
46
1.5
14
17
4.0 !!!!!!!!!!!!!
2.6
23
2*8
5.1
3.6
3.7
4.6
3.6
34
2.8
24
19
4.9
1.8
4.4
1.6
4.4
1.5
5.4
2.6
7.3
3.2
7.2
2.8
7.1
23
7.0
2.7
10.0
51
10.1
4.2
9.4
36
8.5
2.8
8.3
2.8
9.2
4.2
10.4
4.3
11.7
6.5
12.2
6.5
10.3
4.6
10.4
4.3
98
44
9.2
3.9
8.1
33
8.1
3.0
8.2
3.4
9.1
4.4
7.6
3.4
7.6
3.1
8.4
3.1
7.5
3.2
7.6
3.2
8.0
3.1
3.4
8.4
8.3
3.5
8.8
3.5
8.5
3.6
8.8
3.8
8.8
3.8
9.0
4.0
4.2
9.1
4.4
9.1
4.3
9.6
4.4
9.2
4.6
9.1
8.5
4.4
4.4
9.4
4.5
9.0
4.2
9.4
4.5
9.1
4.7
9.1

TABLE B-38.—Civilian unemployment rate by demographic characteristic, 1948-91
[Percent;l monthly data seasonally adjusted]

Year or month

White
Black and other or black
All
Males
Females
Males
Females
civilian
20
20 Total
20
work- Total
ers
Total 16-19 years Total 16-19 years
Total 16-19 years Total 16-19
and
years and
years and
years
over
over
over
Black and other

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

13.4
11.3
10.5
11.5
15.7
14.0
14.0
15.7
13.7
15.9
14.7
12.9
10.5
10.7
10.1
10.0
13.7
15.1
14.2

10.4
9.1
9.7
9.5
12.7
12.0
12.7
14.8
12.8
15.1
14.9
14.0
12.1
11.5
12.1
11.5
13.4
15.1
14.2

9.9
8.7
8.3
7.9
12.6
10.7
10.2
12.4
10.9
10.8
9.6
8.1
7.3
7.4
6.7
6.4
8.2
9.9
10.0

10.3
8.8
7.9
8.3
13.7
11.5
10.7
12.8
10.9
10.5
8.9
7.4
6.3
6.0
5.6
5.3
7.3
9.1
8.9

14.4
13.4
15.0
18.4
26.8
25.2
24.0
26.8
22.0
27.3
24.3
23.3
21.3
23.9
22.1
21.4
25.0
28.8
29.7

9.9
8.4
7.4
7.6
12.7
10.5
9.6
11.7
10.0
9.2
7.7
6.0
4.9
4.3
3.9
3.7
5.6
7.3
6.9

6.1
7.9
8.4
6.1
5.7
4.1
9.2
8.5
8.9
7.3
10.8
9.4
9.4
11.9
11.0
11.2
10.7
9.2
8.7
9.1
8.3
7.8
9.3
10.9
11.4

20.6
19.2
22.8
20.2
28.4
27.7
24.8
29.2
30.2
34.7
31.6
31.7
31.3
29.6
28.7
27.6
34.5
35.4
38.4

11.8
11.1
11.3
14.8
14.3
14.9
13.8
13.3
14.0
15.6
17.6
18.6
15.4
14.9
14.2
13.2
11.7
11.4
10.8
11.9
10.3
10.6
10.3
10.2
10.3
10.1
10.7
11.2
11.3
10.9
41.6
12.1
11.5
11.1
11.7
11.6
11.9
11.8
11.0
11.8
11.7
13.1
12.4
12.5

40.5
36.1
37.4
41.0
41.6
43.4
40.8
39.1
39.8
42.2
47.1
48.2
42.6
39.2
39.2
34.9
32.0
33.0
30.0
36.1
24.7
28.1
25.8
26.1
29.5
28.5
30.6
32.5
29.3
32.0
37.4
35.7
35.4
35.0
37.5
35.4
31.7
30.9
37.0
41.4
35.9
42.1
33.8
36.3

Black
1972
1973
1974
1975....
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991

1990: Jan...
Feb....
Mar...
Apr...,
Jay...
June..
July..
Aug..
Sept.
Oct....
Nov...
Dec,
1991: Jan...

Feb...
Mar..

t:
June.

Nov..
Dec.

14.2
12.3
13.5
18.3
17.3
15.0
13.5
13.9
16.2
17.9
21.7
20.2
16.8
16.5
16.3
15.5
13.9
13.7
14.2
17.5
13.5
13.4
13.0
13.8
13.6
12.6
14.3
15.3
15.4
15.2
15.3
15.3
16.1
15.9
18.2
16.8
18.7
19.0
19.4
16.9
16.9
16.9
17.4
18.0

14.2
13.0
14.5
17.4
16.4
15.9
14.4
14.0
14.8
16.6
19.0
18.3
15.2
14.8
14.9
13.4
12.3
11.5
12.6
15.2
12.2
13.1
12.8
12.2
12.7
11.7
12.0
13.1
12.8
13.1
12.7
12.9
15.6
13.6
13.8
14.5
15.2
15.1
16.5
15.5
14.3
15.8
15.9
16.6

1
Unemployed as percent of civilian labor force in group specified.
Note.—See Note, Table B-37.
Source: Department of Labor, Bureau of Labor Statistics.




341

10.4
9.4
10.5
14.8
14.0
14.0
12.8
12.3
14.3
15.6
18.9
19.5
15.9
15.1
14.5
13.0
11.7
11.4
11.3
12.4
11.4
10.7
10.7
10.5
10.5
10.5
11.4
11.7
12.1
11.8
12.3
12.3
12.1
11.9
12.3
12.5
12.8
12.7
11.9
12.4
12.3
12.8
12.3
12.7

9.3
8.0
9.8

14.8
13.7
13.3
11.8
11.4
14.5
15.7
20.1
20.3
16.4
15.3
14.8
12.7
11.7
11.5
11.8
12.9
12.4
10.9
11.1
10.8
10.7
10.9
12.0
12.2
13.0
12.6
12.9
12.6
12.7
12.7
13.0
13.4
13.7
13.7
12.8
13.0
12.9
12.4
12.1
12.9

31.7
27.8
33.1
38.1
37.5
39.2
36.7
34.2
37.5
40.7
48.9
48.8
42.7
41.0
39.3
34.4
32.7
31.9
32.1
36.5
29.5
29.5
29.5
28.3
31.4
34.6
33.4
36.3
31.2
31.9
33.7
37.0
35.3
35.8
37.5
37.7
36.5
36.5
32.5
36.7
40.7
36.1
36.4
35.7

7.0
6.0
7.4

12.5
11.4
10.7

9.3
9.3
12.4
13.5
17.8
18.1
14.3
13.2
12.9
11.1
10.1
10.0
10.4
11.5
11.1

9.5
9.7
9.6
9.3
9.3
10.7
10.6
11.8
11.3
11.5
11.0
11.3
11.3
11.4
11.8
12.3
12.2
11.7
11.6
11.1
11.0
10.7
11.5

TABLE B-39.—Unemployment by duration and reason, 1947-91

[Thousands of persons, except as noted; monthly data seasonally adjusted1]
Duration of unemployment
Year or month

1947
1948
1949
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966 2
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988T.
1989
1990
1991
1990: Jan...
Feb...
Mar...

iJay""
June.
July...
Aug...
Sept..
Oct...
Nov...
Dec...
1991: Jan...
Feb...
Mar...

fc:

June.
July...
Aug..,
Sept..
Oct...
Nov...
Dec...

Unemployment

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
3,852
4,714
3,911
4,070
3,786
3,366
2,875
2,975
2,817
2,832
4,093
5,016
4,882
4,365
5,156
7,929
7,406
6,991
6,202
6,137
7,637
8,273
10,678
10,717
8,539
8,312
8,237
7,425
6,701
6,528
6,874
8,426
6,579
6,567
6,466
6,685
6,589
6,474
6,775
7,044
7,140
7,222
7,470
7,668
7,763
8,130
8,416
8,256
8,529
8,615
8,475
8,520
8,501
8,641
8,602
8,891

Less
than 5
weeks
1,210
1300
1,756
1,450
1,177
1,135
1,142
1,605
1,335
1,412
1,408
1,753
1,585
1,719
1,806
1,663
1,751
1,697
1,628
1573
1,634
1,594
1,629
2,139
2,245
2,242
2,224
2,604
2,940
2,844
2,919
2,865
2,950
3,295
3,449
3,883
3,570
3,350
3,498
3,448
3,246
3,084
3,174
3,169
3,380
3,120
3,114
3,147
3,181
3,038
3,090
3,142
3,305
3,114
3,177
3,316
3,316
3,392
3,417
3,458
3,285
3,596
3,413
3,370
3,386
3,344
3,300
3,289
3,307

5-14
weeks
704
669
1,194
1,055
574
516
482
1,116
815
805
891
1,396
1,114
1,176
1,376
1,134
1,231
1,117
983
779
893
810
827
1,290
1585
1,472
1,314
1,597
2,484
2,196
2,132
1,923
1,946
2,470
2,539
3,311
2,937
2,451
2,509
2,557
2,196
2,007
1,978
2,201
2,724
2,032
2,049
2,015
2,123
2,192
2,054
2,167
2,128
2,444
2,401
2,379
2,562
2,527
2,694
2,803
2,708
2,711
2,816
2,737
2,686
2,798
2,774
2,721
2,764

15-26
weeks

27
weeks
and
over

234
193
428
425
166
148
132
495
366
301
321
785
469
503
728
534
535
491
404
287
271
256
242
428
668
601
483
574
1,303
1,018
913
766
706
1,052
1,122
1,708
1,652
1,104
1,025
1,045
943
801
730
809
1,225
773
745
712
716
768
758
800
833
872
898
965
966
1,007
1,066
1,199
1,185
1,188
1,372
1,234
1,258
1,260
1,415
1,300
1,372

164
116
256
357
137
84
78
317
336
232
239
667
571
454
804
585
553
482
351
239
177
156
133
235
519
566
343
381
1,203
1,348
1,028
648
535
820
1,162
1,776
2,559
1,634
1,280
1,187
1,040
809
646
695
1,098
650
636
638
671
626
639
692
731
759
711
805
808
862
919
945
995
1,025
1,116
1,121
1,159
1,162
1,155
1,323
1,471

Reason for unemployment

Average
(mean)
duration
(weeks)
8.6
10.0
12.1
9.7
8.4
8.0
11.8
13.0
11.3
10.5
13.9
14.4
12.8
15.6
14.7
14.0
13.3
11.8
10.4
8.7
8.4
7.8
8.6
11.3
12.0
10.0
9.8
14.2
15.8
14.3
11.9
10.8
11.9
13.7
15.6
20.0
18.2
15.6
15.0
14.5
13.5
11.9
12.1
13.8
12.0
11.8
11.9
11.8
11.8
11.8
12.0
12.3
12.4
12.1
12.5
12.5
12.5
12.9
13.0
13.4
13.1
14.0
13.9
14.1
14.2
14.6
14.9
15.3

Median
duration
(weeks)

4.5
4.4
4.9
6.3
6.2
5.2
5.2
8.4
8.2
7.0
5.9
5.4
6.5
6.9
8.7
10.1
7.9
6.8
6.9
6.5
5.9
4.8
5.4
6.9
5.1
5.3
5.0
5.0
5.3
5.2
5.3
5.3
6.0
5.9
5.8
5.9
5.9
6.3
6.5
6.9
6.6
6.9
6.8
7.2
7.4
7.4
7.7
7.8

Job
losers

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
3,092
2,983
3,322
4,608
3,127
3,078
3.017
3,101
3,122
3,139
3,168
3,407
3,543
3,636
3,852
3,880
4,080
4,474
4,587
4,456
4,571
4,748
4,659
4,690
4,805
4,782
4,696
4,990

Job
leavers

438
431
436
550
590
641
683
768
827
903
909
874
880
891
923
840
830
823
877
1,015
965
983
1,024
1,014
979
1,027
1,015
1,000
1,169
1,000
986
1,016
994
966
979
989
1,044
914
993
1,055
993
1,029
1,072
987
892
946
986
987
913

Reentrants

945
909
965
1,228
1,472
1,456
1,340
1,463
1,892
1,928
1,963
1,857
1,806
1,927
2,102
2,384
2,412
2,184
2,256
2,160
1,974
1,809
1,843
1,883
2,087
1,765
1,826
1,844
1,795
1,801
1,825
1,945
1,865
1,976
1,919
1,937
2,112
2.036
2.010
2,076
2.059
2,159
2,120
2,065
2,107
2,036
2,100
2,108
2,164

1
Because of independent seasonal adjustment of the various series, detail will not add to totals.
2
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.—Data relate to persons 16 years of age and over.
See footnote 6 and Note, Table B-30.
Source: Department of Labor, Bureau of Labor Statistics.




342

TABLE B-40.—Unemployment insurance programs, selected data, 1960-91
All programs

Year or month

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
1988
1989
1990
1991"...

Covered
employment 1

State programs

Total
Insured
unemploy- benefits
ment
paid
(weekly
(millions
averof
a g e ) * ' dollars) 2 4

Insured
unemployment

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
15,056.3
16,292.5
14,501.0
13,694.4
14,957.0
19,640.2

1,908
2,290
1,783
7
l,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
2,650
2,332
2,081
2,158
2,522
3,344
**

3,120
2,989
2,822
2,593
2,320
2,209
2,435
2,287
2,188
2,285
2,510
3,040
4,015
4,090
4,060
3,864
3,262
3,177
3,270
2,999
2,795
2,795
2,846
3,596

1,883.5
1,676.1
1,759.6
1,540.3
1,502.3
1,297.1
1,427.9
1,462.4
1,207.2
1,439.8
1,524.9
1,782.8
2,585.9
2,430.7
2,575.3
2,586.3
2,329.1
1,939.2
2,196.7
1,959.7
1,727.0
1,884.5
1,729.5
2,298.7

2,400
2,386
2,396
2,384
2,377
2,419
2,489
2,520
2,573
2,704
2,851
2,977
3,136
3,303
3,467
3,490
3,475
3,406
3,336
3,283
3,267
3,273
3,313
3,317

fc

June..
July...
Aug...
Sept..
Oct....
Nov....
Dec...
1991: Jan....
Feb....
Mar..

May
June....
July
Aug
Sept....
Oct
Nov
Dec ".
..

Exhaustions 5

Weekly average; thousands

Thousands
46,334
2,071
46,266
2,994
47,776
1,946
48,434
M.973
49,637
1>53
51,580
1,450
54,739
1,129
56,342
1,270
57,977
1,187
59,999
1,177
59,526
2,070
59,375
2,608
66,458
2,192
69,897
1,793
72,451
2,558
71,037
4,937
73,459
3,846
76,419
3,308
88,804
2,645
92,062
2,592
92,659
3,837
93,300
3,410
91,628
4,594
91,898
3,775
96,474
2,561
99,186
2,693
101,099
2,746
103,933
2,401
107,157
2,135
109,926
2,205
1
111,494
2,575
3,408

1990: Jan....
Feb....
Mar...

Initial
claims

Insured
Benefits paid
unemployment as
Average
percent
Total
weekfy
(millions
of
check
of 4
covered
employ- dollars) (dollars)•
ment

331
350
302
'298
268
232
203
226
201
200
296
295
261
247
363
478
386
375
346
388
488
460
583
438
377
396
378
328
310
330
388
449
**
376
365
354
350
348
355
368
374
387
419
454
470
460
498
511
460
433
421
418
415
415
418
448
462

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
2.8
2.4
2.0
2.1
2.4

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
14,130.8
15,329.3
13,606.8
12,564.7
13,760.3
18,249.5

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
139.90
144.97
151.73
161.56
170.08

2.3
2.3
2.3
2.3
2.3
2.3
2.4
2.4
2.5
2.6
2.7
2.8
3.0
3.1
3.3
3.3
3.3
3.2
3.1
3.1
3.1
3.1
3.1
3.1

1,843.6
1,636.7
1,716.1
1,502.5
1,466.7
1,265.4
1,397.2
1,430.0
1,178.0
1,401.9
1,482.4
1,736.8
2,529.5
2,382.2
2,525.6
2,485.7
2,242.0
1,867.4
2,134.6
1,911.0
1,681.4
1,831.1
1,681.0
2,232.9

158.53
160.44
159.60
162.02
162.02
161.91
159.91
160.46
162.11
163.83
163.56
165.25
166.83
169.51
170.45
170.01
170.47
170.49
169.16
169.02
170.70
171.27
170.79
173.29

"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).
"Includes State, UCFE, RR, UCX, UCV (unemployment compensation for veterans, October 1952-January 1960), and SRA
(Servicemen's Readjustment Act, September 1944-September 1951) programs. Also includes Federal and State extended benefit
programs. Does not include FSB (Federal supplemental benefits), SUA (special unemployment assistance), and Federal Supplemental
Compensation programs.
3
Covered workers who have completed at least 1 week of unemployment.
4
Annual data are net amounts and monthly data are gross amounts.
5
Individuals receiving final payments in benefit year.
6
For total unemployment only.
7
Programs include Puerto Rican sugarcane workers for initial claims and insured unemployment beginning July 1963.
8
Latest data available for all programs combined. Workers covered by State programs account for about 97 percent of wage and
salary earners.
Source: Department of Labor, Employment and Training Administration.




343

TABLE B-41.—Employees on nonagricultural payrolls, by major industry, 1946-91
[Thousands of persons; monthly data seasonally adjusted]
Goods-producing industries
Year or month

Manufacturing

Total
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
1988
1989
1990
1991 p
1990: Jan...
Feb..
Mar..
May
June....
July
Aug
Sept....
Oct
Nov
Dec
1991:Jan
Feb
Mar

as-

June....
July
Aug
Sept....
Oct
Nov..
Dec "...

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
99,525
102,200
105,536
108,329
109,971
108,975
109,416
109,792
109,933
109,934
110,304
110,435
110,269
110,160
110,113
109,982
109,761
109,621
109,418
109,160
108,902
108,736
108,887
108,885
108,859
108,971
109,066
109,073
108,808
108,839

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
24,558
24,708
25,173
25,322
24,958
23,820
25,190
25,339
25,255
25,165
25,141
25,093
25,027
24,937
24,842
24,705
24,481
24,375
24,181
24,039
23,877
23,794
23,847
23,792
23,798
23,826
23,797
23,727
23,595
23,572

Mining

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
777
717
713
693
711
697
704
706
706
709
713
718
717
713
711
710
712
715
713
715
714
710
706
704
701
693
684
679
674
670

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
4,816
4,967
5,110
5,187
5,136
4,696
5,271
5,322
5,262
5,202
5,203
5,182
5,145
5,111
5,088
5,022
4,962
4,911
4,797
4,792
4,720
4,688
4,715
4,710
4,695
4,691
4,699
4,671
4,583
4,596

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
18,965
19,024
19,350
19,442
19,111
18,427
19,215
19,311
19,287
19,254
19,225
19,193
19,165
19,113
19,043
18,973
18,807
18,749
18,671
18,532
18,443
18,396
18,426
18,378
18,402
18,442
18,414
18,377
18,338
18,306

Durable
goods

Nondurable goods

7,785
8,358
8,298
7,462
8,066
9,059
9,320
10,080
9,101
9,511
9,802
9,825
8,801
9,342
9.429
9;041
9,450
9,586
9,785
10,374
11,250
11,408
11,594
11,862
11,176
10,604
11,022
11,863
11,897
10,662
11,051
11,570
12,245
12,730
12,159
12,082
11,014
10,707
11,479
11,464
11,203
11,167
11,381
11,420
11,115
10,557
11,185
11,289
11,270
11,230
11,212
11,189
11,160
11,111
11,049
11,000
10,867
10,828
10,770
10,652
10,584
10,560
10,575
10,534
10,546
10,553
10,531
10,493
10,459
10,425

Note.—Data in Tables B-41 and B-42 are based on reports from employing establishments and relate to full- and part-time wage and
salary workers in nonagricultural establishments who received pav for any part of the pay period which includes the 12th of the month.
Not comparable with labor force data (Tables B-30 through B-39), which include proprietors, self-employed persons, domestic servants,
See next page for continuation of table.




344

TABLE B-41.—Employees on nonagricultural payrolls, by major industry, 1946-91—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
1988
1989
1990
1991 *

1990: Jan..
Feb..
Mar..
June..
y
Aug
Sept
Oct
Nov
Dec
1991: Jan
Feb
Mar

tz

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
74,967
77,492
80,363
83,007
85,014
85,154
84,226
84,453
84,678
84,769
85,163
85,342
85,242
85,223
85,271
85,277
85,280
85,246
85,237
85,121
85,025
84,942
85,040
85,093
85,061
85,145
85,269
85,346
85,213
85,267

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
5,255
5,372
5,527
5,644
5,826
5,823
5,776
5,790
5,794
5,798
5,820
5,831
5,832
5,839
5,854
5,855
5,852
5,867
5,866
5,834
5,824
5,814
5,819
5,809
5,809
5,820
5,829
5,828
5,819
5,796

Wholesale
trade
2,298
2,478
2,612
2,610
2,643
2,735
2,821
2,862
2,875
2,934
3,027
3,037
2,989
3,092
3,153
3,142
3,207
3,258
3,347
3,477
3,608
3,700
3,791
3,919
4,006
4,014
4,127
4,291
4,447
4,430
4,562
4J23
4,985
5,221
5,292
5,376
5,296
5,286
5,574
5,736
5,774
5,865
6,055
6,221
6,205
6,072
6,227
6,215
6,210
6,206
6,212
6,220
6,215
6,211
6,204
6,190
6,180
6,166
6,138
6,119
6,105
6,086
6,085
6,068
6,064
6,050
6,049
6,047
6,032
6,017

Retail
trade

6,077
6,477
6,659
6,654
6,743
7,007
7,184
7,385
7,360
7,601
7,831
7,848
7,761
8,035
8,238
8,195
8,359
8,520
8,812
9,239
9,637
9,906
10,308
10,785
11,034
11,338
11,822
12,315
12,539
12,630
13,193
13,792
14,556
14,972
15,018
15,172
15,161
15,595
16,526
17,336
17,909
18,462
19.077
19,549
19,683
19,340
19,691
19,718
19,702
19,689
19,701
19,714
19,710
19,714
19,698
19,663
19,628
19,579
19,542
19,464
19,378
19,324
19,339
19,345
19,347
19,343
19,338
19,288
19,196
19,180

Finance,
insurance,
and real
estate
1,675
1,728
1,800
1,828
1,888
1,956
2,035
2,111
2,200
2,298
2,389
2,438
2,481
2,549
2,628
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
6,283
6,547
6,649
6,695
6,739
6,707
6,717
6,732
6,730
6,732
6,739
6,746
6,745
6,750
6,750
6,746
6,740
6,733
6,736
6,732
6,735
6,718
6,712
6,703
6,688
6,687
6,692
6,697
6,692
6,696

Government
Services

4,697
5,025
5,181
5,239
5,356
5,547
5,699
5,835
5,969
6,240
6,497
6,708
6,765
7,087
7,378
7,619
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
15,302
16,252
17,112
17,890
18,619
19,036
19,694
20,797
21,999
23,053
24,235
25,669
27,120
28,240
28,778
27,778
27,916
28,036
28,045
28,151
28,254
28,310
28,388
28,437
28,479
28,525
28,548
28,590
28,583
28,576
28,576
28,645
28,712
28,733
28,831
28,937
29,019
29,009
29,047

Total
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
16,693
17,010
17,386
17,779
18,322
18,434
18,037
18,082
18,206
18,299
18,540
18,577
18,430
18,321
18,328
18,344
18,355
18,353
18,365
18,389
18,407
18,424
18,440
18,456
18,420
18,414
18,424
18,467
18,465
18,531

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
2,348
2,378
2,564
2,719
2,737
2,758
2,731
2,696
2,684
2,663
2,724
2,748
2,733
2,727
2,753
2,773
2,866
2,772
2,739
2,774
2,807
2,875
2,899
2,943
2,971
2,988
3,085
2,965
3,002
3,007
3,092
3,153
3,347
3,337
3,162
3,038
2,994
2,980
2,964
2,948
2,952
2,951
2,951
2,953
2,952
2,971
2,963
2,967
2,979
2,983
2,979
2,980

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
13,794
14,067
14,415
14,791
15,237
15,469
15,035
15,075
15,114
15,146
15,193
15,240
15,268
15,283
15,334
15,364
15,391
15,405
15,413
15,438
15,456
15,471
15,488
15,485
15,457
15,447
15,445
15,484
15,486
15,551

June...
July
Aug
Sept
Oct
Nov "...
Dec "..
Note (cont'd).—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.




345

TABLE B-42.—Average weekly hours and hourly and weekly earnings in private nonagricultural industries,
1955-91
[For production or nonsupervisory workers; monthly data seasonally adjusted, except as noted]
Average
weekly hours
Manufacturing
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
1988
1989
1990
1991 *>.
1990: Jan....
Feb....
Mar...

fc

June..
July...
Aug...
Sept..
Oct....
Nov...
Dec...
1991: Jan....
Feb....
Mar...

fc
JuneJuly...
Aug...
Sept..
Oct....
Nov.
Dec.

Total
private 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
34.7
34.6
34.5
34.3
34.5
34.5
34.5
34.5
34.5
34.6
34.5
34.5
34.6
34.2
34.4
34.6
34.1
34.3
34.2
34.0
34.3
34.6
34.1
34.3
34.5
34.3
34.4
34.5

Average
weekly earnings

Average
hourly earnings
Total private l

OverTotal time

Current
dollars

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
41.1
41.0
40.8
40.7
40.7
40.8
40.9
40.7
40.9
40.9
40.9
40.9
40.9
40.7
40.6
40.7
40.4
40.3
40.3
40.2
40.4
40.8
40.7
41.0
41.0
40.9
41.0
41.1

$1.71 $6.15
1.80
6.38
1.89
6.47
1.95
6.50
2.02
6.69
2.09
6.79
2.14
6.88
2.22
7.07
2.28
7.17
2.36
7.33
2.46
7.52
2.56
7.62
2.68
7.72
2.85
7.89
3.04
7.98
3.23
8.03
3.45
8.21
3.70
8.53
3.94
8.55
4.24
8.28
4.53
8.12
4.86
8.24
5.25
8.36
5.69
8.40
6.16
8.17
6.66
7.78
7.25
7.69
7.68
7.68
8.02
7.79
8.32
7.80
8.57
7.77
8.76
7.81
8.98
7.73
9.28 7.69
9.66
7.64
10.02
7.53
10.34
7.46
9.82
7.55
9.88 7.56
9.92
7.56
9.95
7.57
9.98 7.58
10.02
7.57
10.05
7.57
10.07
7.51
10.10
7.48
10.10
7.43
10.13
7.43
10.17
7.44
10.18
7.42
10.20
7.43
10.24
7.46
10.28
7.47
10.32
7.47
10.37
7.49
10.36
7.47
10.40
7.49
10.41
7.47
10.40
7.46
10.43
7.44
10.50
7.48

1982
dollars 2

Total private l
Manufacturing

Current
dollars

1982
dollars 2

$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
322.02
334.24
345.69
354.66
338.79
340.86
342.24
343.28
344.31
346.69
346.73
347.42
349.46
345.42
348.47
351.88
347.14
349.86
350.21
349.52
353.98
358.80
353.28
356.72
359.15
356.72
358.79
362.25

$243.60
250.85
251.13
250.27
260.86
261.92
265.59
273.60
278.18
283.63
291.90
294.11
293.49
298.42
300.81
298.08
303.12
315.44
315.38
302.27
293.06
297.37
300.96
300.89
291.66
274.65
270.63
267.26
272.52
274.73
271.16
271.94
269.16
266.79
264.22
259.72
255.89
260.41
260.80
260.85
261.25
261.44
261.85
261.09
259.27
258.67
254.17
255.66
257.41
253.02
254.81
255.07
253.83
256.32
259.25
254.89
257.00
257.82
255.90
256.10
258.01

$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
10.19
10.48
10.83
11.18
10.56
10.67
10.73
10.75
10.80
10.84
10.87
10.89
10.91
10.96
10.96
10.99
11.02
11.03
11.05
11.12
11.15
11.19
11.22
11.25
11.25
11.26
11.30
11.32

1

Manufacturing
(current
dollars)

Construction
(current
dollars)

$75.30
78.78
81.19
82.32
88.26
89.72
92.34
96.56
99.23
102.97
107.53
112.19
114.49
122.51
129.51
133.33
142.44
154.71
166.46
176.80
190.79
209.32
228.90
249.27
269.34
288.62
318.00
330.26
354.08
374.03
386.37
396.01
406.31
418.81
429.68
441.86
455.03
429.79
435.34
438.86
437.53
441.72
443.36
444.58
445.40
446.22
446.07
444.98
447.29
445.21
444.51
445.32
447.02
450.46
456.55
456.65
461.25
461.25
460.53
463.30
465.25

$90.90 $48.75
96.38
50.18
100.27
52.20
103.78
54.10
108.41
56.15
112.67
57.76
118.08
58.66
122.47
60.96
127.19
62.66
132.06
64.81
138.38
66.65
146.26
68.50
154.95
70.86
164.49
74.93
181.54
78.67
195.45
82.31
211.67
87.51
221.19
92.03
235.89
96.45
249.25 102.55
266.08 108.63
283.73 114.56
295.65 121.54
318.69 130.14
342.99 138.83
367.78 147.24
399.26 157.99
426.82 163.83
442.97 171.13
458.51 174.47
464.46 174.81
466.75 175.80
480.44 178.80
495.73 183.62
513.17 188.72
526.40 194.69
533.78 200.20
527.87 192.10
526.30 192.38
527.23 193.92
511.63 194.21
526.01 194.11
530.53 195.65
522.02 195.94
528.31 195.16
532.22 196.81
515.59 193.69
530.46 196.02
536.77 196.31
523.13 194.14
533.65 196.48
526.67 197.34
532,50 197.95
533.40 200.33
532.64 202.59
532.38 199.65
533.25 201.34
537.73 203.04
536.97 200.50
524.90 204.19
537.35 202.92

Retail
trade
(current
dollars)

Percent change
from a year
earlier, total
private 3
Current
dollars
5.0
4.5
3.7
2.4
4.9
2.4
2.4
4.0
3.0
3.2
4.5
3.5
3.1
5.8
6.4
4.6
6.2
7.5
6.2
6.4
5.7
7.3
7.7
7.8
8.0
6.9
8.5
4.7
5.0
4.3
2.1
1.9
2.5
3.0
3.8
3.4
2.6
2.6
3.8
3.6
2.4
4.0
4.4
3.4
3.6
4.5
2.2
3.3
4.0
2.4
2.4
2.3
2.5
2.9
3.1
1.9
3.0
2.8
3.3
3.0
3.1

Also includes other private industry groups shown in Table B-41.
Current dollars divided by the consumer price index for urban wage earners and clerical workers on a 1982=100 base.
Monthly percent changes are based on data not seasonally adjusted.
Note.—See Note, Table B-41.
Source: Department of Labor, Bureau of Labor Statistics.
2

3




346

TABLE B-43.—Employment cost index, private industry, 1979-91
Service-producing

Goods-producing

Total privatf

Year and month Total Wages Bene- Total
and
compen- sala- fits 1 compensation
sation
ries

salaries

Bne
fits 1

Manufacturing

Total Wages
and
compen- sala- Benefits 1
sation
ries

Total
compensation

1

"
S
sala-

Nontnanufacturing

ries

Bene- Total
fits 1 compensation

salaries

63 0
68.9
74 9
79.1
82 5
86.1
89.2
921
95.2
981
101.9
106 2
110.3
103.3
104.5
105.4
106.2
107.4
108.4
109.3
110.3

542
59.9
67 5
72.4
77 5
82.7
85.0
87 5
89.8
96 6
102.3
109 5
116.1
105.5
106.9
108.4
109.5
111.2
113.3
115.3
116.1

58 5
64.2
70 4
75.1
79 6
83.4
87.0
89.7
92.9
97 5
102.3
106.9
111.5
103.8
105.1
106.2
106.9
108.5
109.7
110.9
111.5

60 8
66.2
721
76.8
810
84.2
88.0
90 6
93.7
97 8
102.2
1061
109.8
103.2
104.5
105.4
106.1
107.3
108.4
109.3
109.8

52 5
59.1
661
70.6
76 2
81.1
84.4
87 5
91.0
96 8
102.8
109 3
116,2
105.4
106.9
108.2
109.3
111.9
113.5
115.1
116.2

103.9 103.3 105.1
103.8 103.4 105.0
105.0 104.5 106.4
105.2 104.5 106.7
106.1 105.5 107.9
106.4 105.4 108.4
107.2 106.5 109.5
107.5 106.2 110.1
108.5 107.6 111.1
108.5 107.4 110.8
109.7 108.6 112.8
109.9 108.4 113.1
110.8 109.5 114.7
111.2 109.3 115.2
111.9 110.4 116.4
112.4 110.3 116.7
12 months earlier, not seasonally adjusted

103.8
105.0
106.1
107.1
108.5
109.6
110.8
111.8

103.2
104.5
105.3
106.2
107.4
108.4
109.2
109.9

105.1
106.7
108.2
109.8
111.5
113.3
115.1
116.8

9.8
9.4 10.5
8.8 12.5
9.7
9.8
8.7 12.7
8.9 11.5
9.8
6.1
5.6
7.3
6.8
6.9
6.6
5.1
4.3
7.0
5.7
8.0
6.5
5.2
4.4
6.7
4.4
6.9
5.1
33
36
28
48
40
45
3.3
2.9
3.3
3.0
3.B
3il
3.9
3.0
3.4
2.6
3.7
3.4
6.5
4.5
3.0
7.6
5.1
4.7
6.8
4.5
3.9
5.9
5.1
4.5
6.2
5.1
4.2
7.0
4.6
4.0
6.1
4.7
3.9
6.0
4.3
3.7
5.2
6.8
7.2
4.3
4.2
5.1
5.3
6.9
5.2
4.6
6.6
4.5
5.2
6.7
4.8
4.2
6.4
4.5
5.1
7.0
4.6
4.0
6.2
4.2
4.4
5.4
4.5
4.1
5.8
4.0
4.5
6.0
4.4
3.9
6.0
3.7
4.5
6.4
4.5
3.8
6.2
3.7
4.7
6.0
4.3
3.7
6.1
3.9
3 months earlier, seasonally adjusted

9.7
9.7
6.7
6.0
4.8
43
3.1
3.6
5.0
4.9
4.5
4.3
5.1
5.1
4.8
4.5
4.5
4.4
4.4
4.3

8.9
8.9
6.5
5.5
4.0
45
3.0
3.4
4.4
4.5
3.8
3.5
4.1
4.5
3.9
3.8
4.0
3.7
3.7
3.5

12.6
11.8
6.8
7.9
6.4
41
3.7
4.0
6.4
6.2
6.3
6.3
7.3
6.9
6.7
6.3
6.2
6.2
6.4
6.3

2.2
1.5
1.6
1.6
.6
2.1
1.9
1.3

1.3
1.2
1.0
.9
1.3
1.0
1.1
.9

0.9
1.3
.8
.9
1.1
.9
.7
.6

1.7
1.5
1.4
1.5
1.5
1.6
1.6
1.5

Benefits 1

Index, June 1989=100; not seasonally adjusted
December:
1979 .
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1990: Mar
June
Sept
Dec
1991: Mar
June
Sept
Dec

591
64.8
712
75.8
801
84.0
87.3
901
93.1
97 6
102.3
107 0
111.7
103.9
105.2
106.2
107.0
108.5
109.8
111.0
111.7

615
67.1
73 0
77.6
814
84.8
88.3
911
94.1
98 0
102.0
1061
110.0
103.2
104.5
105.4
106.1
107.3
108.4
109.3
110.0

53 2
59.4
66 6
7L4
76 7
81.7
84.6
87 5
90.5
96 7
102.6
109 4
116.2
105.5
106.9
108.3
109.4
111.6
113.5
115.2
116.2

60 7
667
73 3
ll'.B
816
85.4
88.2
910
93.8
97 9
102.1
107 0
111.9
103.9
105.2
106.2
107.0
108.5
109.8
111.0
111.9

1990: Mar
June
Sept
Dec
1991: Mar
June
Sept
Dec

103.8
105.0
106.2
107.2
108.5
109.7
110.8
111.9

103.3
104.4
105.4
106.2
107.3
108.4
109.2
110.1

105.2
106.7
108.3
109.9
111.4
113.2
115.1
116.7

103.8 103.1 105.4
105.1 104.2 107.0
106.2 105.1 108.7
107.2 105.8 110.3
108.4 107.0 111.6
109.7 108.0 113.7
110.8 108.7 115.8
112.0 109.7 117.2
Percent change from

December:
1980
1981.
1982.
1983.
1984.
1985
1986.
1987.
1988.
1989.
1990
1991.
1990: Mar
June
Sept
Dec
1991: Mar
June
Sept
Dec

9.6
9.9
6.5
5.7
4.9
39
3.2
3.3
4.8
4.8
4.6
4.4
5.2
5.2
4.9
4.6
4.4
4.4
4.5
4.4

9.1
8.8
6.3
4.9
4.2
41
3.2
3.3
4.1
4.1
4.0
3.7
4.2
4.5
4.2
4.0
4.0
3.7
3.7
3.7

11.7
12.1
7.2
7.4
6.5
35
3.4
3.4
6.9
6.1
6.6
6.2
7.2
6.9
6.8
6.6
5.8
6.2
6.4
6.2

1990: Mar
June
Sept
Dec
1991: Mar
June
Sept
Dec

1.4
1.2
1.1
.9
1.2
1.1
1.0
1.0

1.1
1.1
1.0
.8
1.0
1.0
.7
.8

2.1
1.4
1.5
1.5
1.4
1.6
1.7
1.4

63 7 54 6
69.7 60.5
75 7 68 2
80.0 73.2
83 2 78 3
86.4 83.2
89.4 85.7
92 3 88 3
95.2 90.9
98 2 97 3
102.0 102.6
105 8 109 9
109.7 116.7
103.1 105.7
104.2 107.2
105.1 108.7
105.8 109.9
107.0 111.9
108.0 113.9
108.7 115.8
109.7 116.7
Index, June

57 7 60 0 519
601
66.0
63.3 65.3 58.4
69 5 711 651
72 5
74.1 75.9 69.6
76.9
78 9 80 2 75 2
80 8
85.0
82.9 83.7 80.4
86.6 87.7 83.6
87.8
90 7
89 3 90 3 86 8
93.4
92.6 93.4 90.2
97 6
97 3 97 8 961
102.0
102.3 102.2 102.6
107 2
107 0 106 3 109 0
112.2
111.6 110.2 115.7
104.0
103.8 103.3 105.3
105.3
105.2 104.6 106.6
106.4
106.2 105.7 107.9
107.2
107.0 106.3 109.0
108.6
108.5 107.5 111.4
110.0
109.8 108.7 113.0
111.2
111.0 109.7 114.6
112.2
111.6 110.2 115.7
1989=100; seasonally adjusted

9.9
9.4 10.8
9.9
8.6 12.7
6.1
5.7
7.3
4.9
4.0
7.0
4.7
3.8
6.3
33
35
30
3.2 3i2
3^0
2.9
3.1
3.1
7.0
4.4
3.2
5.4
4.3
3.9
7.1
4.8
3.7
6.2
4.6
3.7
7.1
4.0
5.1
5.2
4.2
7.2
5.0
4.1
7.1
4.8
3.7
7.1
4.4
3.8
5.9
4.4
3.6
6.3
4.5
3.4
6.5
4.6
3.7
6.2
Percent change from
1.5
1.3
1.0
.9
1.1
1.2
1.0
1.1

1.1
1.1
.9
.7
1.1
.9
.6
.9

2.3
1.5
1.6
1.5
1.2
1.9
1.8
1.2

1.3
1.2
1.0
1.0
1.2
1.1
1.0
1.0

1.0
1.1
1.0
.9
1.0
.9
.8
.8

1.9
1.3
1.4
1.5
1.5
1.5
1.7
1.5

1.6
1.3
1.1
1.0
.9
1.3
1.2
1.1

1.4
1.2
.9
.8
1.1
.9
.8
.9

1
Employer costs for employee benefits.
Note.—The employment cost index is a measure of the change in the cost of labor, free from the influence of employment shifts
among occupations and industries.
Data exclude farm and household workers.
Through December 1981, percent changes are based on unrounded data; thereafter changes are based on indexes as published.
Source: Department of Labor, Bureau of Labor Statistics.




347

TABLE B-44.—Productivity and related data, business sector, 1959-91
[1982=100; quarterly data seasonally adjusted]
1

Output per hour
of all persons
Year or
quarter

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
1988
1989
1990
1982: IV
1983: IV
1984: IV
1985: IV
1986: IV
1987: IV
1988: IV
1989:1
II
Ill
IV
1990:1
II
Ill
IV
1991:1
II
Ill

Output

Hours of all
persons2

Compensation
pert our 3

Real compensation
per hour4

Unit labor costs
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

64.6
65.6
68.1
70.4
73.3
76.5
78.6
81.0
83.0
85.4
85.9
87.0
90.2
92.6
95.0
93.3
95.5
98.3
99.8
100.4
99.3
98.6
99.9
100.0
102.2
104.6
106.1
108.3
109 4
110 4
109.5
109.7
101.1
103.0
105.2
106.9
108.0
110.3
110.4
110.0
109.7
109.2
109.1
109.6
110.3
109.6
109.4
109.4
109.9
110.2

69.2
70.0
72.2
74.4
77.1
80.0
81.9
83.6
85.4
87.8
87.8
88.6
91.6
94.1
96.4
94.5
96.7
99.2
100.6
101.3
99.9
99.0
99.9
100.0
102.4
104.5
105.4
107.5
108 3
109.2
108.2
108.1
101.0
103.2
105.1
105.8
107.1
109.1
109.6
108.8
108.2
107.9
107.8
108.1
108.6
107.9
107.9
107.9
108.4
108.6

51.5
52.3
53.4
56.1
58.8
62.3
66.0
69.5
71.0
74.1
76.3
75.9
78.3
83.0
88.2
86.7
85.0
90.0
94.9
100.1
102.1
100.5
102.4
100 0
104.1
112.6
116.7
119.9
124 8
130.1
132.4
132.9
100.0
107.5
114.4
118.0
120.6
127.4
131.7
132.6
132.5
132.4
132.2
133.2
133.9
132.9
131.8
130.2
130.7
131.3

51.1
51.9
53.0
55.8
58.4
62.0
65.8
69.5
70.9
74.2
76.3
75.8
78.3
83.0
88.4
86.8
85.0
90.1
95.0
100.5
102.5
100.8
102.4
100 0
104.4
113.0
116.8
120.1
125 0
130*6
132.8
133.2
100.0
108.1
114.8
118.2
120.8
127.6
132.5
133.0
132.8
132.8
132.6
133.5
134.1
133.1
132.0
130.4
130.9
131.4

79.6
79.7
78.5
79.7
80.1
81.4
83.9
85.8
85.6
86.8
88.9
87.2
86.9
89.6
92.8
92.9
89.1
91.5
95.1
99.7
102.8
101.9
102.5
100 0
101.8
107.6
109.9
110.7
114 1
117*9
120.9
121.2
98.9
104.3
108.7
110.4
111.6
115.5
119.3
120.5
120.7
121.3
121.2
121.6
121.4
121.2
120.5
119.1
119.0
119.2

73.8
74.2
73.4
74.9
75.8
77.5
80.4
83.1
83.1
84.5
87.0
85.6
85.4
88.3
91.7
91.8
88.0
90.8
94.5
99.3
102.7
101.8
102.5
100.0
102.0
108.1
110.8
111.8
1154
119.5
122.7
123.1
98.9
104.7
109.2
111.7
112.8
117.0
121.0
122.2
122.7
123.1
123.0
123.5
123.4
123.3
122.4
120.9
120.8
121.0

20.2
21.1
21.9
22.9
23.8
25.0
26.0
27.8
29.4
31.8
34.1
36.7
39.0
41.5
45.1
49.5
54.5
59.4
64.2
69.9
76.7
85.0
93.0
100.0
103.7
108.1
113.0
118.6
122 7
1280
132.5
139.6
102.1
105.2
109.7
115.4
120.6
125.3
130.1
131.3
131.9
132.6
134.1
136.2
139.0
140.9
142.3
143.2
144.8
145.8

21.3
22.2
22.9
23.9
24.7
25.8
26.7
28.3
29.9
32.3
34.5
37.0
39.4
41.9
45.4
49.9
54.8
59.5
64.3
70.0
76.7
84.9
93.0
100.0
103.9
108.1
112.6
118.1
122 1
127*2
131.5
138.3
102.1
105.1
109.7
114.8
120.1
124.6
129.3
130.4
130.7
131.5
133.0
134.9
137.6
139.5
141.0
142.0
143.6
144.5

67.0
68.7
70.7
73.2
75.0
77.9
79.6
82.9
84.9
88.2
89.7
91.2
93.0
95.8
98.0
97.0
97.7
100.8
102.3
103.4
102.0
99.5
98.7
100.0
100.5
100.4
101.3
104.4
104 3
104.4
103.1
103.1
100.6
100.4
100.6
102.2
105.3
104.8
104.3
103.9
102.9
102.7
102.8
102.6
103.6
103.3
102.6
102.4
103.0
103.0

70.5
72.3
74.0
76.2
77.9
80.4
81.8
84.2
86.5
89.5
90.7
92.0
93.8
96.7
98.6
97.6
98.3
101.0
102.4
103.6
101.9
99.4
98.8
100.0
100.7
100.4
101.0
104.0
103 7
103 8
102.3
102.1
100.6
100.3
100.5
101.6
104.9
104.2
103.6
103.2
102.0
101.8
101.9
101.6
102.6
102.3
101.7
101.5
102.1
102.1

1
2

31.3
32.1
32.2
32.5
32.4
32.7
33.1
34.4
35.4
37.2
39.7
42.2
43.3
44.8
47.5
53.1
57.1
60.5
64.3
69.6
77.2
86.2
93.1
100.0
101.5
103.3
106.5
109.5
112 2
116.0
121.0
127.2
101.0
102.1
104.3
108.0
111.6
113.7
117.8
119.3
120.2
121.5
122.8
124.3
126.1
128.5
130.1
131.0
131.8
132.4

Implicit price
deflator5

Nonfarm
business
sector

Business
sector

Nonfarm
business
sector

30.7
31.7
31.7
32.0
32.0
32.3
32.6
33.8
35.1
36.8
39.3
41.7
42.9
44.5
47.1
52.8
56.7
60.0
63.9
69.1
76.8
85.7
93.1
100.0
101.5
103.4
106.8
109.9
112 8
116.4
121.5
127.9
101.1
101.8
104.4
108.4
112.1
114.3
118.0
119.8
120.8
121.9
123.4
124.9
126.7
129.2
130.7
131.6
132.5
133.1

32.1
32.6
32.8
33.4
33.7
34.0
34.9
36.0
37.1
38.7
40.5
42.3
44.3
46.2
49.0
53.7
59.0
62.4
66.5
71.8
78.3
85.9
94.5
100.0
103.4
107.7
111.2
113.6
116.6
120.8
126.0
130.8
101.1
104.8
109.0
112.4
114.6
117.9
122.8
124.2
125.6
126.4
127.6
128.8
130.2
131.6
132.5
134.0
135.0
135.6

31.7
32.2
32.4
33.1
33.4
33.8
34.6
35.7
36.9
38.5
40.3
42.1
44.1
45.8
47.9
52.8
58.3
61.9
66.1
71.2
77.5
85.6
94.2
100.0
104.0
107.6
111.6
114.2
117.2
121.4
126.4
131.3
101.4
105.2
109.0
112.9
115.2
118.5
123.4
124.5
126.0
126.9
128.0
129.2
130.6
132.2
133.3
134.9
135.7
136.4

Output refers to cross domestic product originating in the sector in 1987 dollars.
Hours at work of all persons engaged in the sector, including hours of proprietors and unpaid family workers. Estimates based
primarily on establishment data.
3
Wages and salaries of employees plus employers' contributions for social insurance and private benefit plans. Also includes an
estimate of wages, salaries, and supplemental payments for the self-employed.
4
Hourly compensation divided by the consumer price index for all urban consumers.
6
Current dollar gross domestic product divided by constant dollar gross domestic product.
Note.—Data reflect the recent comprehensive (benchmark) revision of the national income and product accounts by the Department
of Commerce, Bureau of Economic Analysis (BEA). BEA data for output and compensation for the first three quarters of 1991
incorporate benchmarking to unemployment insurance (Ul) records. However, the detailed Ul information needed by the Bureau of Labor
Statistics to measure employment and hours for 1990 and 1991 is not yet available. Therefore, movements in measures based on hours
of labor input should be interpreted with caution for 1990 and 1991.
Source: Department of Labor, Bureau of Labor Statistics.




348

TABLE B-45.—Changes in productivity and related data, business sector, 1960-91
[Percent change from preceding period; quarterly data at seasonally adjusted annual rates]
Output per hour
of ail persons
Year or
quarter

Output 1

Compensation per
hour 8

Hours of ail
persons2

Real compensation
per hour 4

Unit labor costs

Implicit price
deflator5

Business
sector

Nonfarm
business
sector

Business
sector

Nonfarm
business
sector

Business
sector

Nonfarm
business
sector

Business
sector

Nonfarm
business
sector

4.3
3.9
4.7
3.8
5.2

4.4
3.3
4.1
3.5
4.6

2.6
2.8
3.6
2.4
3.9

2.6
2.2
3.0
2.2
3.3

2.7
.2
1.2
-.3

1.6
.6
2.0
.7
1.1

1.5
.6
2.1
.9

.9

3.3
0
1.0
-.1
.8

Business
sector

Nonfarm
business
sector

Business
sector

Nonfarm
business
sector

Business
sector

1960
1961
1962
1963
1964

1.6
3.7
3.5
4.1
4.3

1.0
3.2
3.1
3.6
3.8

1.7
2.1
5.1
4.7
6.0

1.6
2.1
5.3
4.7
6.2

0.1
-1.6
1.6
L6

0.6
-1.1
2.1
1.1
2.3

1965
1966
1967
1968
1969

2.7
3.0
2.5
3.0

2.3
2.1
2.1
2.9
-.0

6.0
5.3
2.2
4.4
2.9

6.1
5.5
2.1
4.6
2.9

3.2
2.3
-.3
1.4
2.4

3.8
3.4
-.0
1.7
2.9

3.8
7.0
5.7
8.2
7.3

3.3
6.0
5.8
7.9
6.8

2.2
4.1
2.5
3.8
1.7

1.7
3.0
2.6
3.6
1.3

1.1
3.9
3.1
5.1
6.7

1.0
3.8
3.6
4.9
6.9

2.5
3.2
2.9
4.5
4.7

2.2
3.1
3.3
4.6
4.6

1970
1971
1972
1973
1974

1.3
3.6
2.7
2.6
-1.8

.9
3.5
2.7
2.5
-2.0

-.5
3.2
6.0
6.2
-1.8

3.2
6.1
6.5
-1.9

-1.9
-.4
3.2
3.6
.1

-1.6
-.3
3.3
.1

7.6
6.4
6.3
8.7
9.9

7.2
6.4
6.4
8.3
9.9

1.7
1.9
3.0
2.3
-1.0

1.4
2.0
3.1
1.9
-1.0

6.1
2.7
3.5
5.9
11.9

6.2
2.9
3.7
5.7
12.1

4.4
4.6
4.3
6.1
9.5

4.6
4.6
4.0
4.5
10.2

1975
1976
1977
1978
1979

2.3
3.0
1.6
.6

2.3
2.7
1.4

-1.9
5.8
5.5
5.5
2.0

-2.0
6.0
5.5
5.8
2.0

-4.1
2.8
3.8
4.9
3.1

-4.2
3.2
4.1
5.0
3.4

10.0
9.1
8.0
8.8
9.8

9.9
8.6
8.0
8.9
9.5

3.2
1.4
1.2
-1.4

.7
2.7
1.4
1.2
-1.6

7.4
6.0
6.4
8.2
11.0

7.5
5.8
6.5
8.1
11.1

10.0
5.8
6.5
8.0
9.1

10.4
6.3
6.8
7.6
8.9

-1.1

-U

sector

3.9

1.4

-.7
1.3
.1
2.2
2.3

-.9
.9
.1
2.4
2.1

-1.6
1.9
-2.3
4.1
8.2

-1.7
1.6

-.9
.6

-2.4
4.4
8.2

-2.5
1.8
5.7

.7
-2.4
2.0
6.0

10.7
9.4
7.6
3.7
4.2

10.7
9.6
7.5
3.9
4.0

-2.4
-.8
1.3
.5
-.1

-2.4
-.7
1.2
.7
-.3

11.5
8.0
7.4
1.5
1.9

11.7
8.6
7.4
1.5
1.9

9.7
10.1
5.8
3.4
4.1

10.4
10.1
6.1
4.0
3.5

1.4
2.0
1.0
.9
-.7

1.9
.8
.9
-.9

3.6
2.8
4.1
4.3
1.8

3.4
2.8
4.1
4.4
1.7

2.1
.7
3.1
3.3
2.6

2.5
.9
3.3
3.5
2.7

4.5
4.9
3.5
4.3
3.5

4.2
4.9
3.4
4.1
3.4

.9
3.0
-.1
.1
-1.2

.6
3.0
_ 2

0
-1.4

3.0
2.8
2.5
3.3
4.3

3.3
2.9
2.6
3.2
4.3

3.3
2.2
2.6
3.6
4.3

3.7
2.4
2.6
3.6
4.1

-.1

.4

5.4

5.2

-.0

-.2

5.2

5.3

3.8

3.9

-1.5
-1.0
-2.0
-.2

-2.8
-2.0
-1.3
-.3

2.6

4.2

-.1
-.6

1.4
-.6
.1

4.3
1.4
1.4
_ 4

3.5
2.0
2.1
4.4

3.4
1.1
2.5
4.5

-1.3
-3.9
-1.0
.4

-1.5
-4.7
-.7
.5

5.1
3.1
4.2
4.6

6.4
3.2
3.8
4.8

4.7
4.4
2.7
3.7

3.9
4.7
3.0
3.5

1.0
2.1
-2.5
-.3

3.0
2.0
-3.0
-3.0

2.7
1.8
-3.0
-3.1

1.2

IV

1.7
2.4
-2.2
-.9

1.8
-.3
-.5
-2.8

6.6
8.4
5.7
4.1

6.0
8.1
5.6
4.4

-1.3
4.1
-1.2
-2.4

4.8
5.8
8.1
5.0

5.0
5.9
8.4
4.7

4.0
4.3
4.4
2.8

3.8
4.5
4.8
3.4

1991:1
II
Ill

-.1
1.9
1.1

L9
.9

-4.9
1.7
1.8

-4.9
1.6
1.6

-4.9
— 3
7

2.6
4.6
2.8

2.7
4.6
2.7

2.5
-.2

2.7
2.6
1.7

2.7
2.6
1.9

4.5
2.9
1.8

4.8
2.5
2.1

1980

1981
1982
1983
1984
1985
1986
1987

1988
1989
1990
1989:1
II
Ill
IV
1990:1
II.
Ill

-.8
-2.2
-4.7
_ 3

.7

2.4
-.2

.......
s domestic product originating in the sector in 1987 dollars.
2
Hours at work 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.
* Hourly compensation divided by the consumer price index for all urban consumers.
5
Current dollar gross domestic product divided By constant dollar gross domestic product.
Note.—Percent changes are based on original data and therefore may differ slightly from percent changes based on indexes in Table
See also Note, Table B-44.
Source: Department of Labor, Bureau of Labor Statistics.




349

PRODUCTION AND BUSINESS ACTIVITY
TABLE B-46.—Industrial production indexes, major industry divisions, 1947-91
[1987=100; monthly data seasonally adjusted]

Year or month

Total
industrial
production
100.0
22.7
23.6
22.3
258
28.8
291
31.6
29.9
33.7
35.1
35.6
33.3
37.3
38.1
38.4
41.6
44.0
47.0
51.7
56.3
57.5
60.7
63.5
61.4
62 2
68.3
73.8
111
66.3
72 4
78.2
82 6
85 7
84.1
85 7
819
84.9
92 8
94 4
95.3
100 0
105 4
108.1
109.2
1071
107.5
108 5
108 9
108 8
109.4
1101
110.4
110 5
110.6
109 9
108.3
107.2
106 6
105 7
105.0
105 5
106.4
107.3
108.1
108 0
108.4
108 2
108.0
107.8

I960 Bfwwfan
1948
1949
1966
1961
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
1988
1989
1990
1991"
1990- Jan
Feb
Mr
a
Apr
My
a
June
July
Aue
Sept
Oct
Nov
Dec
1991:Jan
Feb
Mar
Apr
May
June
July
Aug
Sept
Oct
Nov"
Dec "

,

Source: Board of Governors of the Federal Reserve System.




350

Manufacturing
Utilities
Total
85.0
21.2
22.0
20.8
24 2
26.1
27 2
29.6
27.7
31.3
32.5
32.9
30.6
34.5
35.2
35.3
38.4
40.7
43.5
48.2
52.6
53.6
56.6
59.1
56.4
57 3
63.3
68.9
67.9
61.1
67 4
73.3
77 8
80.9
78.8
80.3
76 6
80.9
893
916
94.3
100 0
105 8
108.9
109.9
107 5
108.1
109.6
109 8
109.5
110.3
110 8
111.1
1111
111.2
110 7
108.9
107.5
107 0
1061
105.2
105 9
106.6
107.5
108.3
108.4
108.9
108 9
108.6
108.7

Durable
48.3
19.9
218
18.9
23.8
25.9
27 5
31.1
27.4
31.3
32.4
32.6
28.5
32.8
33.3
32.7
36.3
38.7
41.4
47.1
52.3
52.9
55.5
57.7
53.3
531
59.3
66.2
64.8
56.7
62.6
68.7
73 9
78.3
75.7
77.4
72 7
76.8
88.4
918
93.9
100.0
107 6
110.9
111.6
107.1
108.6
110.7
1119
111.1
112.6
113 4
113.4
113 5
113.8
112 5
109.9
107.5
107.2
1061
105.0
106 0
106.7
107.3
108.1
107.8
108.4
1081
107.7
107.5

able
M7
22.6
23.4
23J
25 6
26.4
2€9
28.0
28.2
31.3
32.9
33 5
33.7
37.1
38.0
39.1
41.5
43.8
46.6
49.8
52.9
54.6
58.1
61.1
61.1
63 6
69.3
72.7
72.3
67.7
74.6
80.1
83.5
84.6
83.1
84.5
82 5
87.0
90.8
915
94.9
100.0
103 6
106.4
107.8
108.0
107.5
108.3
107 2
107.5
107.4
107.6
108.1
1081
108.0
108.4
107.7
107.4
106.8
106 0
105.4
105 9
106.5
107.6
108.6
109.0
109.6
110.0
109.8
110.3

7.4
55.5
58.3
51.7
57 7
63.4
62 8
64.5
§3.2
70.5
74.2
74 3
68.1
71.3
72.7
73.1
75.2
78.2
81.4
84.4
88.9
90.6
94.1
97.8
100.4
97 8
99.9
100.8
100.3
98.0
98.9
101.5
104.6
106.6
110.0
114.3
109.3
104.8
111.9
109.0
101.0
100.0
101.8
100.5
102.6
101.0
101.7
101.0
1011
102.9
102.2
102.2
104.0
102.4
103.9
102.6
103.3
103.4
101.7
102 9
101.5
100.9
100.2
102.1
102.7
101.3
101.4
100.6
99.2
98.9

7.5
11.7
13.8
13.9
15 8
1-8.1
19 6
21.3
22.9
25.6
28.1
3©0
31.4
34.5
36.9
39.0
41.9
44.8
48.7
51.7
55.6
58.4
63.1
68.7
72.9
76 4
81.3
84.5
83.5
84.3
87.6
89.9
92.7
95.3
95.9
94.3
91.8
93.6
97.0
99.5
96.3
100.0
104.4
107.1
108.0
108.7
106.8
104.0
106.2
106.7
107.1
109.7
109.7
111.4
110.3
109.2
106.9
108.8
107.6
104.6
106.4
105.9
111.4
111.5
110.9
110.7
109.7
108.6
110.0
106.7

TABLE B-47.—Industrial production indexes, market groupings,

1947-91

[1987=100; monthly data seasonally adjusted]
Materials

Final products

Year or month

Total
industrial
production

Consumer goods

Total
Total

1990 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
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991 ".
1990: Jan
Feb
Mar
June....
July
Aug
Sept....
Oct
Nov
Dec
1991: Jan
Feb
Mar
May"!!!'.
June....
July
Aug
Sept....
Oct
Nov ".
..
Dec ".
..
1

Automotive
products

Equipment

Other
Nonduradurable Total
ble
goods
goods

Busi-

Defense
and
space

Intermediate
products

Total

Durable

Nondurable

8.7

100.0
22.7
23.6
22.3

46.8
20.8
21.5
20.9

25.6
25.4
26.2
26.1

2.3
21.7
22.6
22.5

3.1
22.8
23.8
22.0

20.1
27.0
27.7
27.9

21.2
15.0
15.8
14.1

15.7
14.7
15.3
13.4

4.8
7.5
8.8
9.2

14.5
22.4
23.6
22.4

38.7
25.1
26.2
23.9

19.8
21.5
22.1
19.8

25.8
28.0
29.1
31.6
29.9
33.7
35.1
35.6
33.3
37.3

23.5
25.4
27.3
29.1
27.6
29.8
31.6
32.5
31.0
34.0

29.7
29.4
30.1
31.9
31.7
35.4
36.7
37.6
37.2
40.9

28.3
25.0
22.5
28.4
26.5
35.2
28.9
30.3
24.1
30.2

30.4
26.2
26.2
29.6
27.3
32.2
33.9
33.2
31.3
36.0

30.3
31.3
32.6
33.5
33.9
36.5
38.8
40.1
41.3
44.1

15.3
21.2
25.5
27.6
24.2
24.7
27.1
28.2
25.2
27.7

14.3
17.5
19.8
20.6
18.1
19.6
22.7
23.6
19.9
22.4

10.8
26.5
37.2
44.6
39.3
35.9
35.1
36.7
36.8
38.8

26.1
27.4
27.2
29.1
29.0
32.9
34.4
34.4
33.6
37.1

28.6
31.6
32.1
35.6
32.9
38.9
39.9
39.9
35.9
41.4

24.9
28.3
28.9
33.8
29.2
35.7
35.8
35.8
30.1
35.9

25.2
28.9
30.2
30.1
29.9
34.2

38.1
38.4
41.6
44.0
47.0
51.7
56.3
57.5
60.7
63.5

35.1
35.4
38.4
40.6
42.9
47.1
51.6
53.7
56.3
58.1

42.4
43.3
46.2
48.8
51.5
55.5
58.4
59.8
63.4
65.8

34.6
31.6
38.3
4L9
43.9
54.1
53.9
47.4
56.4
56.7

36.2
37.3
40.5
43.7
47.7
54.1
59.6
60.4
64.7
69.0

45.5
47.0
49.2
51.4
54.0
56.3
59.0
62.0
64.5
66.7

28.5
28.1
31.3
33.1
35.0
39.6
46.1
49.0
50.4
51.8

23.0
22.3
24.3
25.5
28.5
32.6
37.8
38.6
40.3
42.9

39.9
40.6
46.9
50.6
49.0
54.3
63.7
72.7
72.9
69.4

37.4
38.1
40.4
42.7
45.5
48.4
51.4
53.5
56.6
59.6

42.0
42.0
45.8
48.7
52.6
58.7
63.9
63.3
67.5
71.5

36.3
35.5
39.4
42.1
45.9
52.6
57.9
55.9
59.2
62.3

34.8
36.2
39.2
41.6
45.2
49.6
53.6
54.5
59.9
64.9

61.4
62.2
68.3
73.8
72.7
66.3
72.4
78.2
82.6
85.7

56.0
56.5
61.3
65.9
65.7
61.8
66.2
71.6
76.1
79.0

65.0
68.8
74.3
77.6
75.2
72.3
79.4
85.1
88.4
87.3

47.7
60.8
65.6
72.4
62.6
59.0
73.2
84.0
86.3
78.5

66.9
70.8
810
85.7
79.3
69.8
78.2
87.4
91.2
89.8

678
69.7
74.2
76.5
76.5
74.9
80.4
84.4
87.8
87.7

48.1
45.0
49.3
55.0
56.8
52.0
53.8
58.8
64.2
71.0

41.3
39.3
44.8
52.4
54.7
48.8
50.6
56.7
63.1
71.5

58.7
52.8
51.3
50.1
49.4
48.5
49.2
49.2
49.5
51.5

58.7
60.5
67.6
71.91

69.0
70.01
77 O
77.2
84.51

56.5
56.8

65.2
68.0
74.9
80.4
80.8
71.9
81.4
86.7
89.7
92.9

84.1
85.7
81.9
84.9
92,8
94.4
95.3
100.0
105.4
108.1

80.0
82.1
80.8
83.0
91.0
94.2
95.7
100.0
105.6
109.1

85.3
85.8
84.5
88.8
92.8
93.7
96.8
100.0
104.0
106.7

59.5
59.2
57.5
71.9
86.6
92.7
95.2
100.0
105.9
106.9

85.1
86.3
78.1
86.2
94.6
90.6
93.9
100.0
104.1
108.7

89.1
89.6
89.7
91.9
93.4
94.4
97.6
100.0
103.7
106.4

74.6
78.2
77.0
76.8
89.2
94.8
94.5
100.0
107.6
112.3

73.5
76.1
72.9
71.9
85.4
91.1
93.2
100.0
111.8
119.1

57.4
58.5
65.7
71.8
78.9
89.4
96.0
100.0
98.0
97.4

109.2
107.1

110.9
109.5

107.3
107.5

102.3
98.0

107.6
108.9

115.5
112.2

123.1
121.5

107.5
108.5
108.9
108.8
109.4
110.1

108.5
109.7
110.7
110.4
111.2
111.7

106.0
107.0
107.5
107.2
107.4
107.8

85.2
99.3
109.3
102.4
107.0
112.2

109.4
105.8
110.6
111.6
112.0
111.2
111.1
112.0

107.8
107.2
106.6
107.1
106.9
106.6

111.8
113.3
114.9
114.7
116.2
116.8

110.4
110.5
110.6
109.9
108.3
107.2

111.7
111.9
112.6
112.3
110.2
109.2

107.5
107.8
108.7
108.6
106.5
105.7

108.7
104.6
111.8
107.1
93.5
86.7

109.5
109.6
109.3
106.8
104.1
103.4

107.3
107.9
108.2
109.1
108.5
108.4

106.6
105.7
105.0
105.5
106.4
107.3

109.1
108.3
108.1
108.7
109.3
110.1

105.6
104.7
104.7
105.5
106.6
108.0

90.6
88.1
88.9
94.2
97.4
100.4

103.2
100.7
101.4
103.4
104.1
107.3

108.1
108.0
108.4
108.2
108.0
107.8

110.2
109.8
110.4
110.6
110.4
110.0

108.3
108.4
109.4
109.7
109.8
109.4

102.3
98.6
106.5
106.7
104.1
102.5

108.1
108.3
108.7
108.2
108.2
107.4

CA O
64.2

73.3
71.2
59.3
68.4
75.3
81.4
85.3

69.41

82.8

62.6
69.0
74.9
79.1
81.2

72.6
81.2
87.3
91.8
95.4
91.3
92.8
85.1
88.3
96.6
96.6
95.9
100.0
105.6
107.4

97.3
90.9

77.0
77.0
75.1
80.3
86.2
88.3
92.0
100.0
104.4
106.8
107.7
103.3

107.8
105.6

93.7
100.0
109.0
111.6
111.8
107.1

118.0
120.1
122.2
121.6
123.5
124.4

97,5
97.6
97.5
97.3
97.6
97.6

108.0
108.4
108.2
108.0
108.3
108.3

106.2
107.1
107.1
107.3
107.7
108.8

109.4
110.8
110.9
110.9
112.5
113.8

106.0
106.1
105.4
105.8
105.2
106.1
105.2
106.1

117.2
117.2
117.8
117.0
115.1
113.6

125.0
1254
126.4
125.4
122.9
121.2

97.8
97.7
97.3
97.3
96.2
95.8

108.4
107.9
107.4
107.0
106.2
106.0

109.6
109.7
109.4
108.3
106.8
105.3

114.0
114.9
114.1
112.5
110.4
107.5

107.8
106.8
106.9
106.5
105.6
104.9

107.8
107.3
107.1
107.2
108.1
109.0

113.6
112.9
112.5
112.8
112.7
112.8

121.6
120.6
120.3
121.3
121.7
121.9

94.4
94.5
93.9
92.5
91.5
91.0

103.8
102.6
101.3
101.2
102.7
104.0

104.8
103.9
102.6
103.4
104.5
105.4

106.8
105.5
103.3
104.9
106.2
106.7

104.9
103.6
102.8
103.1
103.7
104.9

109.0
109.6
109.8
110.3
110.7
110.5

112.8
111.6
111.8
111.7
111.3
110.9

122.5
121.3
122.2
122.2
121.8
121.8

90.0
89.8
89.1
88.9
88.4
87.1

104.0
104.4
104.3
103.5
103.8
103.9

107.0
107.2
107.5
107.3
106.6
106.6

108.2
109.1
109.3
108.7
108.4
108.6

108.1
107.8
108.3
109.4
108.1
109.0

79.3

82.1
73.4
79.2
92.1
92.9

88.7
90.5
82.1
89.2
93.0
91.7
94.4
100.0
103.0
105.3

Two components—oil and gas well drilling and manufactured homes—are included in total equipment, but not in detail shown.

Source: Board of Governors of the Federal Reserve System.




351

TABLE B-48.—Industrial production indexes, selected manufactures, 1947-91
[1987=100; monthly data seasonally adjusted]

Durable manufactures
Primary
metals
Year or month
Total

1990 proportion.

1947:.r.
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
1988
1989
1990
1991 "
1990:Jan
Feb

Mar

=
June
July......
Aug
Sept
Oct
Nov
Dec
1991:Jan
Feb
Mar
May

June
July
Aug
Sept

Oct
Nov...
Dec "...

Iron
and
steel

3.3
70.2
73.0
61.4
77.3
84.1
76.8
87.0
70.4
91.5
90.9
87.1
69.0
80.7
80.4
78.9
84.6
91.2
102.9
113.2
120.2
111.1
115.1
123.8
115.2
109.2
122.4
138.9
134.5
107.2
119.9
121.5
130.7
133.0
110.8
117.5
83.2
91.0
102.4
101.8
93.8
100.0
110.3
109.2
108.4
99.6
105.0
107.9
105.4
106.4
106.2
109.5
110.3
114.6
111.6
108.6
109.1
104.2
99.7
99.5
94.7
94.5
96.9
96.4
101.2
102.6
102.3
102.6
103.5
103.4

102.1
106.8
91.2
112.4
125.7
110.6
127.5
99.1
131.8
129.3
124.6
93.9
108.1
109.9
104.9
109.3
119.1
135.5
148.7
153.1
141.5
146.1
1592
148.2
135.5
150.6
171.5
166.1
133.5
147.1
145.1
155.3
156.5
126.0
135.1
86.2
96.1
105.9
104.5
90.8
100.0
113.8
109.3
109.9
98.3
104.6
110.6
106.1
106.7
105.5
110.3
110.6
118.3
113.9
110.3
112.6
107.3
99.0
98.0
92.0
91.6
94.0
92.9
99.5
100.6
100.8
102.4
105.6
105.6

Nondurable manufactures
Transportation
equipment

FabriNonElectricated
eleccal
metal trical machinprod- machinery
ucts
ery

Total

5.2
37.5
38.2
34.4
42.2
45.1
44.0
49.6
44.7
51.0
51.8
53.1
47.6
53.4
53.4
52.1
56.7
58.5
62.1
68.3
73.1
76.5
80.6
81.9
75.9
75.6
82.9
92.1
88.4
76.7
84.9
92.7
96.2
99.5
92.5
91.1
83.2
85.5
93.3
94.5
93.8
100.0
106.2
107.2
105.9
100.4
105.1
105.6
105.5
105.0
107.1
106.7
107.7
107.9
106.8
106.4
104.3
101.9
101.7
99.1
97.8
98.0
99.1
99.8
100.9
101.4
101.9
101.7
101.5
101.9

9.5
19.6
21.4
21.5
25.7
28.7
33.3
41.8
36.4
41.9
40.6
43.5
34.3
38.9
40.3
37.8
43.7
48.0
49.2
58.5
62.7
61.3
66.6
66.1
55.5
60.1
64.1
73.0
66.4
59.7
68.0
73.7
79.5
81.0
72.3
68.7
64.8
72.7
83.1
91.8
96.9
100.0
105.0
107.2
105.5
98.6
94.7
103.5
107.9
105.1
109.0
111.0
109.3
107.9
111.1
109.2
100.1
96.6
97.6
95.5
95.0
97.2
98.2
99.7
101.3
99.0
102.2
102.4
99.7
98.0

9.9
12.0
12.1
10.3
11.6
14.7
16.0
16.7
14.2
15.6
17.9
17.9
15.0
17.5
17.6
17.1
19.2
20.5
23.3
26.2
30.5
31.1
31.3
33.9
32.8
30.5
35.4
41.4
44.1
38.1
40.0
45.1
50.2
56.9
60.6
65.9
63.9
64.3
80.8
86.8
90.4
100.0
113.8
121.8
126.5
123.6
123.7
124.2
125.2
125.7
126.9
127.5
128.3
128.8
128.5
128.1
126.3
124.7
125.5
124.5
123.1
123.5
123.6
123.4
123.9
123.3
123.1
123.3
122.6
122.7

8.5
8.8
8.3
11.3
11.4
13.0
14.9
13.3
15.3
16.5
16.4
15.0
18.2
19.8
21.0
24.1
24.8
26.2
31.3
37.5
37.7
39.8
42.3
40.5
40.7
46.5
53.0
52.4
45.1
50.7
58.4
64.0
71.3
73.3
75.4
75.9
80.3
94.1
93.1
94.3
100.0
' 106.5
109.5
111.4
110.1
110.1
111.0
112.3
111.3
112.4
112.8
112.2
112.5
112.5
110.8
110.4
108.7
107.6
108.2
108.6
109.7
110.6
111.5
111.0
111.5
111.0
109.9
110.9
110.7

Source: Board of Governors of the Federal Reserve System.




352

Motor
vehicles
and
parts
27.3
29.6
30.4
39.0
35.8
30.7
38.7
33.3
44.6
36.2
38.0
28.0
36.4
41.1
36.0
43.9
48.6
49.9
63.7
62.6
- 55.1
66.0
66.3
53.3
66.9
73.0
85.0
73.4
62.2
81.9
94.7
99.2
91.0
67.0
64.4
58.8
74.5
90.6
99.0
98.5
100.0
105.5
104.9
96.8
90.4
76.8
94.1
103.5
95.8
104.0
108.0
102.7
101.0
107.5
103.8
85.8
78.5
83.0
79.4
79.8
86.2
89.8
92.5
96.7
91.6
99.5
100.4
95.8
94.8

Lumber Apparel Textile Printing Chemicals
and
and
mill
prod- prod- publish- and Foods
products
products
ucts
ing
ucts
1.9
38.8
40.4
35.7
43.4
43.2
42.7
45.1
44.8
50.1
49.5
45.4
46.1
52.3
49.3
51.6
54.4
56.9
61.1
63.5
65.9
65.3
67.2
67.1
66.7
68.5
78.4
78.7
71.4
66.5
75.6
82.3
83.6
82.4
76.9
74.7
67.3
79.9
86.0
88.0
95.1
100.0
104.6
103.0
101.6
94.0
106.0
104.3
105.0
103.3
101.7
102.0
103.6
100.5
100.3
98.2
95.5
93.5
94.2
91.5
91.2
92.7
92.5
96.7
94.8
95.3
952
92.4
94.9
95.5

2.1
43.1
45.0
44.5
47.9
47.0
49.5
50.1
49.5
54.7
56.0
55.8
54.3
59.7
60.9
61.3
63.8
66.4
68.7
72.6
74.5
74.1
76.0
78.4
75.3
76.2
80.9
81.5
77.9
71.1
83.9
91.6
93.9
89.0
89.2
91.0
90.1
93.8
95.7
92.6
96.3
100.0
102.2
104.3
98.8
96.3
102.4
102.1
99.8
98.7
99.2
99.3
99.2
98.8
98.4
97.2
95.5
94.9
92.9
93.1
92.5
93.2
95.2
96.2
97.8
98.3
98.1
98.7
992
99.5

35.2
37.7
34.8
39.6
39.2
38.9
39.9
37.3
42.5
43.7
41.6
41.1
46.4
45.6
46.9
50.1
51.9
56.0
61.0
64.7
64.8
72.3
76.0
74.4
78.5
86.0
89.6
81.5
77.7
86.3
91.6
92.0
95.0
92.1
89.4
83.0
93.2
93.7
89.7
93.9
100.0
99.8
101.9
100.8
100.6
100.6
103.0
99.8
100.9
102.7
103.6
102.9
100.4
100.7
101.2
97.4
96.1
94.0
94.3
95.4
97.2
99.2
101.7
104.2
104.7
103.2
105.4
104.0
104.1

6.5
22.1
23.2
23.8
24.9
25.4
25.3
26.5
27.6
30.3
32.3
33.4
32.6
34.8
36.2
36.4
37.7
39.7
42.1
44.8
48.3
50.9
51.7
54.2
52.7
53.2
56.7
58.3
57.4
53.7
58.7
64.3
68.1
69.9
70.3
72.1
75.2
79.0
84.5
87.6
90.7
100.0
103.6
108.5
111.9
112.4
110.7
112.1
111.4
112.0
112.8
112.0
111.4
110.9
111.6
112.9
112.4
112.8
112.1
110.9
101.4
110.7
110.6
111.2
111.9
112.3
113.3
114.3
114.8
115.4

8.7
8.7
9.4
9.3
11.6
13.1
13.7
14.8
15.0
17.6
18.9
19.9
20.6
24.0
24.9
26.1
29.0
31.7
34.8
38.7
42.2
44.2
49.6
53.7
55.9
59.5
66.9
73.1
75.8
69.1
77.3
83.3
88.0
91.3
87.8
89.2
81.8
87.5
91.4
91.4
94.6
100.0
105.4
108.5
110.3
111.2
109.9
110.5
109.5
110.3
109.2
110.3
110.4
111.1
110.9
110.7
110.0
109.9
110.1
109.1
108.2
109.0
109.2
109.6
111.5
112.3
112.6
113.9
114.1
114.8

8.6
33.1
32.8
33.1
34.3
35.0
35.7
36.4
37.2
39.3
41.5
42.2
43.2
45.4
46.6
47.9
49.5
51.2
53.6
54.8
56.9
59.4
61.0
63.0
64.0
66.0
69.5
70.9
71.9
71.4
75.5
79.0
81.8
82.6
84.6
86.5
87.7
90.1
92.1
94.9
97.4
100.0
102.8
105.5
107.6
108.6
106.8
107.4
107.1
107.0
106.8
106.1
107.1
107.7
107.6
108.8
109.6
109.1
108.3
107.6
107.4
107.6
107.8
108.6
108.3
108.7
109.5
109.8
11O.0
110.0

TABLE B-49.—Capacity utilization rates, 1948-91
[Percent 1 ; monthly data seasonally adjusted]
Manufacturing
Year or month

1948
1949
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976.
1977
1978
1979
1980
1981
1982
1983
1984
1985....
1986
1987
1988
1989
1990
1991 P
1990:Jan
Feb
Mar
Apr
May:::::::::::::::::::::::::":
June
July
Aug
Sept
Oct
Nov
Dec
1991:Jan
Feb
Mar
Apr
May
June
July
Aug
Sept. ..
Oct p
Nov .
Dec

Total
industry

864
86.8
86.9
80.8
79 2
84 3
884
84.2
74.6
79 3
83.3
85 5
86.2
82.1
809
75.0
75 8
81.1
80 3
79.2
81.4
84.0
84.2
83.0
79.4
82.7
83.3
83 4
83.2
83.4
83.8
83.8
83.7
83 6
83 0
81.6
80.6
80 0
79.1
78 4
78.6
791
79.6
80 0
79.8
79 9
79.6
79 3
79.0

Total

Durable
goods

82 5
74 2
82.8
85 8
85.4
89 3
801
87 0
861
83 6
75.0
81.6
801
77.3
814
83.5
85.6
89 5
911
87 2
87.2
86.8
79.7
78 2
83 7
881
83.8
73.2
78 5
82.8
851
85.4
80.2
78 8
72.8
74 9
80.4
79 5
79.0
81.4
83.9
83.9
82.3
78.2
82.0
83.0
83 0
82.5
82.9
83.1
83.1
82.9
82 8
82 2
80.7
79.4
78 9
78.0
77 2
77.5
77 8
78.3
78 7
78.6
78 8
78.6
78 2
78.1

871
86.8
86.3
76.7
74 3
80 9
87 5
82.7
70.2
75 4
80.3
83 5
84.9
78.6
76 6
69.0
70 5
78.3
77 8
76.1
78.6
82.5
82.8
81.1
75.8
79.9
81.3
82 0
81.2
82.2
82.5
82.3
82.3
82 2
81 2
79.1
77.2
76 8
75.8
74 9
75.4
75 7
76.0
76 4
76.0
76 2
75.8
75 4
75.1

1
Output as percent of capacity.
Source: Board of Governors of the Federal Reserve System.




353

Nondurable
goods

86.3
86.6
86.6
82.9
82 8
86 6
87 5
84.0
76.4
818
85.2
86 2
85.1
81.4
810
78.0
811
83.1
819
83.0
85.4
86.0
85.5
83.9
81.6
84.9
85.3
843
84.3
84.0
83.9
84.1
83.8
83 6
83 6
82.9
82.4
818
81.0
80 3
80.5
80 7
81.4
82 0
82.1
82 3
82.4
821
82.2

Primary
processing
87 3
76.2
88.5
90.2
84.9
89.4
806
92 0
89.4
847
75.4
83.0
79 8
77.9
815
83.8
87.8
91.0
914
85.4
86.3
86.9
80.4
79 3
86.4
915
86.0
72.9
801
84.0
86 3
86.4
78.0
78 0
69.0
74 8
80.4
79 8
80.8
84.9
87.8
87.0
84.9
80.1
85.7
86.1
85 3
85.0
85.0
85.6
86.1
86.1
851
84 3
83.2
81.5
80 6
79.5
77 9
78.2
79 0
79.9
81 1
81.2
813
81.2
80 7
80.9

Advanced
processing
80.0
73.2
79.8
83.4
85.9
89.3
80 0
84.2
84.4
83.1
74.9
81.1
80.5
77.2
816
83,4
84.6
88.8
911
88.0
87.4
86.5
79.1
77.4
82.5
86 5
82.8
73.5
77 8
81.9
84 3
84.8
81.3
79.1
74.6
74.9
80.3
79 4
78.2
79.9
82.3
82.7
81.2
77.4
80.5
81.7
82 0
81.5
82.1
82.0
81.8
81.6
818
813
79.6
78.5
78 2
77.4
76 8
77.3
77.3
77.6
77 8
77.5
77 7
77.6
77 2
77.0

Mining

81.2
83.5
86.6
88.9
87.4
90.4
92.5
92.5
89.9
90.0
90.9
91.3
91.9
94.0
94.6
86.5
79.9
84.4
82.9
78.2
80.0
84.6
85.9
89.4
88.4
87.8
87.4
87.6
89.3
88.9
89.0
90.7
89.4
90.9
89 9
90.6
90.8
89.5
90.4
89.0
88.3
87.6
89.2
89.6
88.5
88.5
87.8
86.5
86.2

Utilities

93.4
94.1
95.8
95.4
93.9
94.6
92.9
86.8
84.0
84.8
84.6
84.8
85.9
85.5
82.8
79.5
80.3
82.5
83.5
80.2
82.5
84.2
85.4
85.2
84.5
84.8
82.5
84.1
84.4
84.6
86.6
86.4
87.6
86.7
85.6
83.8
85.1
84.1
81.6
83.0
82.6
86.7
86.7
86.2
85.9
85.1
84.1
85.2
82.5

TABLE B-50.—New construction activity, 1929-91
[Value put in place, billions of dollars; monthly data at seasonally adjusted annual rates]
Public construction

Private construction
Year or month

Total
new
construction

Nonresidential buildings and other
constructionl

Residential
buildings1
Total
Total*

New
housing
units

Total

Commercial 3

Indus- Other*
trial

Total

Federal State and
local*

1929
1933
1939

10.8
29
8.2

8.3
12
4.4

3.6
.5
2.7

3.0
3
2.3

4.7
8
1.7

1.1
.1

0.9
.2

2.6
5
1.2

2.5
1.6
3.8

0.2
.5
.8

2.3
1.1
3.1

1940
1941 .
1942
1943
1944

8.7
12 0
14.1
83
5.3

5.1
62
3.4
20
2.2

3.0
35
1.7
.9
.8

2.6
30
1.4
7
.6

2.1
27
1.7
11
1.4

.3
.4
.2
.0
.1

.4
.8

1.3
15
1.2
9
1.1

3.6
5.8
10.7
6.3
3.1

1.2
3.8
9.3
5.6
2.5

2.4
2.0
1.3
.7
.6

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
26.1
26.7

16 7
21.4
20.5

9.9
13.1
12.4

78
10.5
10.0

69
8.2
8.0

1.0
1.4
1.2

1.7
1.4
1.0

4.2
5.5
5.9

3.3
4.7
6.3

.8
1.2
1.5

2.5
3.5
4.8

1950
1951
1952
1953
1954

33 6
35.4
36.8
39.1
41.4

26 7
26.2
26.0
27.9
29.7

181
15.9
15.8
16.6
18.2

15 6
13.2
12.9
13.4
14.9

86
10.3
10.2
11.3
11.5

14
1.5
1.1
1.8
2.2

11
2.1
2.3
2.2
2.0

61
6.7
6.8
7.3
7.2

6.9
9.3
10.8
11.2
11.7

1.6
3.0
4.2
4.1
3.4

5.2
6.3
6.6
7.1
8.3

1955
1956
1957
1958
1959

46.5
47 6
49.1
50.0
55.4

34.8
34 9
35.1
34.6
39.3

21.9
20 2
19.0
19.8
24.3

18.2
161
14.7
15.4
19.2

12.9
14 7
16.1
14.8
15.1

3.2
36
3.6
3.6
3.9

2.4
31
3.6
2.4
2.1

7.3
80
9.0
8.8
9.0

11.7
12.7
14.1
15.5
16.1

2.8
2.7
3.0
3.4
3.7

8.9
10.0
11.1
12.1
12.3

1960
1961
1962
1963

54.7
56.4
60.2
64.8

38.9
39.3
42.3
45.5

23.0
23.1
25.2
27.9

17.3
17.1
19.4
21.7

15.9
16.2
17.2
17.6

4.2
4.7
5.1
5.0

2.9
2.8
2.8
2.9

8.9
8.7
9.2
9.7

15.9
17.1
17.9
19.4

3.6
3.9
3.9
4.0

12.2
13.3
14.0
15.4

1964

72.1

51.9

30.5

24.1

21.4

6.8

3.6

11.0

20.2

3.7

16.5

1965
1966
1967
1968
1969

78 0
81.2
83.0
92 4
99.8

561
57.4
57.6
65 0
72.0

30 2
28.6
28.7
34 2
37.2

23 8
21.8
21.5
26 7
29.2

25 8
28.8
28.8
30 8
34.8

81
8.1
8.0
90
10.8

51
6.6
6.0
60
6.8

12 6
14.1
14.9
15 8
17.2

21.9
23.8
25.4
27 4
27.8

3.9
3.8
3.3
3.2
3.2

18.0
20.0
22.1
24.2
24.6

1970
1971 .
1972
1973
1974

100 7
117.3
133.3
146 8
147.5

72 8
87.6
103.3
114 5
109.3

35 9
48.5
60.7
651
56.0

27 1
38.7
50.1
54 6
43.4

37 0
39.1
42.6
49 4
53.4

112
13.1
15.7
181
18.1

66
5.5
4.8
64
8.1

19 2
20.5
22.1
24 9
27.2

27.9
29.7
30.0
32.3
38.1

3.1
3.8
4.2
4.7
5.1

24.8
25.9
25.8
27.6
33.0

1975
1976
1977
1978
1979

145.6
165 4
193.1
230 2
259.8

102.3
1215
150.0
180 0
203.2

51.6
68 3
92.0
109 8
116.4

36.3
50 8
72.2
85 6
89.3

50.7
53 2
58.0
70 2
86.8

14.3
141
16.4
20 6
28.3

8.3
74
8.0
115
15.6

28.2
316
33.7
38 2
42.8

43.3
44.0
43.1
50.1
56.6

6.1
6.8
7.1
8.1
8.6

37.2
37.2
36.0
42.0
48.1

1980
1981
1982
1983
1984

259.7
272 0
260.6
294.9
348.8

196.1
207 3
197.5
231.5
278.6

100.4
99 2
84.7
125.5
153.8

69.6
69 4
57.0
94.6
113.8

95.7
108 0
112.9
106.0
124.8

34.6
40.2
44.1
43.9
59.1

14.6
18.0
18.5
13.8
14.8

46.6
49.8
50.2
48.2
50.8

63.6
64.7
63.1
63.5
70.2

9.6
10.4
10.0
10.6
11.2

54.0
54.3
53.1
52.9
59.0

1985..
1986
1987
1988
1989

377.4
407.7
419 3
432.2
443.7

299.5
323.1
328 6
337.4
345.4

158.5
187.1
194 7
198.1
196.6

114.7
133.2
139 9
138.9
139.2

141.1
136.0
134 0
139.3
148.9

72.6
69.5
68 9
71.5
73.9

17.1
14.9
15 0
16.5
20.4

51.3
51.6
50 0
51.4
54.6

77.8
84.6
90.6
94.8
98.3

12.0
12.4
14.1
12.3
12.4

65.8
72.2
76.6
82.5
85.9

1990

446.4

337.8

182.9

128.0

154.9

72.5

23.8

58.5

108.7

12.4

96.3

.2

New series

..

See next page for continuation of table.




354

TABLE B-50.—New construction activity, 1929-91—Continued
[Value put in place, billions of dollars; monthly data at seasonally adjusted annual rates]
Private construction
Year or month

Total
new
construction

Residential
buildings'
Total
Total

1990: Jan....
Feb....
Mar...

fc
June..
July...
Aug...
Sept..
Oct....
Nov...
Dec...
1991: Jan....
Feb....
Mar...
Apr....
MayJune.
July...
Aug..,
Sept..
Oct....
Nov.

2

Public construction

Nonresidential buildings and other
construction 1

New
housing
units

Total

Commercial 3

Indus- Other4
trial

Total

Federal

State and
local 5

457.3
466.1
464.4
454.7
451.1
450.4

349.8
356.3
356.8
350.3
344.4
342.0

195.2
197.8
198.6
193.9
188.8
185.2

137.7
141.6
142.0
137.4
133.1
129.7

154.6
158.5
158.2
156.4
155.6
156.9

74.5
76.6
75.7
74.6
73.8
74.2

23.1
25.3
24.7
24.2
24.4
24.1

57.0
56.6
57.8
57.7
57.5
58.5

107.5
109.8
107.6
104.3
106.7
108.4

12.3
12.0
13.1
13.0
12.0
13.0

95.2
97.8
94.5
91.3
94.7
95.4

453.1
449.7
437.2
434.6
431.4
421.3

345.2
336.9
330.3
324.1
317.2
311.3

183.1
180.6
175.4
172.1
168.0
165.0

127.8
125.8
121.6
119.0
115.1
113.0

162.2
156.3
154.9
151.9
149.2
146.3

75.4
73.5
72.3
69.1
66.8
65.6

27.3
22.9
22.5
22.8
22.5
23.0

59.5
59.9
60.0
59.9
59.9
57.7

107.9
112.8
106.8
110.5
114.2
110.0

13.4
13.4
12.1
10.7
12.4
11.7

94.5
99.4
94.7
99.8
101.8
98.3

406.5
410.1
401.9
407.1
399.0
398.2

303.9
300.5
293.3
299.0
291.0
290.9

161.8
155.6
152.4
151.8
154.6
158.3

107.9
103.5
100.8
100.6
103.2
106.7

142.1
144.9
140.8
147.2
136.5
132.6

62.7
62.9
60.1
62.7
57.5
53.0

22.4
23.2
23.1
24.3
20.7
20.9

57.0
58.7
57.6
60.2
58.3
58.8

102.6
109.6
108.6
108.0
108.0
107.3

12.7
11.2
11.2
14.3
12.6
13.8

89.9
98.3
97.4
93.7
95.4
93.5

398.4
403.2
407.0
409.4
406.3

290.3
293.4
296.6
296.7
293.6

158.0
162.8
166.6
167.5
167.3

109.9
114.4
118.0
118.6
119.0

132.3
130.6
130.0
129.2
126.2

52.5
51.6
50.9
48.9
45.7

20.9
20.4
20.3
21.4
21.6

58.9
58.6
58.8
58.8
58.9

108.1
109.7
110.4
112.8
112.8

13.1
13.2
13.4
14.2
15.3

95.0
96.5
96.9
98.6
97.5

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 nonhousckeeping 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,
telecommunications, and all other private.
5
Includes Federal grants-in-aid for State and local projects.
Source: Department of Commerce, Bureau of the Census.




355

TABLE B-51.—New housing units started and authorized, 1959^91
[Thousands of units]
New private housing units authorized 2

New housing units started
Private and public1
Year or month

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
1988
1989
1990
1991"...

Private (farm and nonfarm) *

Total
(farm and Nonfarm
nonfarm)

Type of structure

1,553.7
1,296.1
1,365.0
1,492.5
1,634.9
1,561.0
1,509.7
1,195.8
1,321.9
1,545.4
1,499.5
1,469.0
2,084.5
2,378.5
2,057.5
1,352.5
1,171.4
1,547.6
2,001.7
2,036.1
1,760.0
1,312.6
1,100.3
1,072.1
1,712.5
1,755.8
1,745.0
1,807.1
1,622.7

1,531.3
1,274.0
1,336.8
1,468.7
1,614.8
1,534.0
1,487.5
1,172.8
1,298.8
1,521.4
1,482.3

Total

1 unit

1,517.0
1,252.2
1,313.0
1,462.9
1,603.2
1,528.8
1,472.8
1,164.9
1,291.6
1,507.6
1,466.8
1,433.6
2,052.2
2,356.6
2,045.3
1,337.7
1,160.4
1,537.5
1,987.1
2,020.3
1,745.1
1,292.2
1,084.2
1,062.2
1,703.0
1,749.5
1,741.8
1,805.4
1,620.5
1,488.1
1,376.1
1,192.7
1,014.7

1,234.0
994.7
974.3
991.4
1,012.4
970.5
963.7
778.6
843.9
899.4
810.6
812.9
1,151.0
1,309.2
1,132.0
888.1
892.2
1,162.4
1,450.9
1,433.3
1,194.1
852.2
705.4
662.6
1,067.6
1,084.2
1,072.4
1,179.4
1,146.4
1,081.3
1,003.3
894.8
841.6

1,543
1,459
1,298
1,217
1,208
1,187
1,155
1,131
1,106
1,026
1,130
971
847
992
907
977
983
1,034
1,049
1,056
1,017
1,090
1,075
1,103

1,078
1,127
988
901
897
890
876
835
858
839
769
751
648
788
742
801
831
869
879
883
861
889
910
948

2 to 4
units

Type of structure
Total
1 unit

5 units
or more

283.0
257.4
338.7
471.5
590.8
108.4
450.0
86.6
422.5
61.1
325.1
71.6
376.1
80.9
527.3
85.0
571.2
84.8
535.9
120.3
780.9
141.3
906.2
118.3
795.0
68.1
381.6
64.0
204.3
85.9
289.2
121.7
414.4
125.0
462.0
122.0
429.0
109.5
330.5
91.1
287.7
80.0
319.6
113.5
522.0
121.4
544.0
93.4
576.1
84.0
542.0
65.3
408.7
58.8
348.0
55.2
317.6
37.5
260.4
36.3
136.8

1,208.3
998.0
1,064.2
1,186.6
1,334.7
1,285.8
1,239.8
971.9
1,141.0
1,353.4
1,323.7
1,351.5
1,924.6
2,218.9
1,819.5
1,074.4
939.2
1,296.2
1,690.0
1,800.5
1,551.8
1,190.6
985.5
1,000.5
1,605.2
1,681.8
1,733.3
1,769.4
1,534.8
1,455.6
1,338.4
1,110.8
960.8

938.3
746.1
722.8
716.2
750.2
720.1
709.9
563.2
650.6
694.7
625.9
646.8
906.1
1,033.1
882.1
643.8
675.5
893.6
1,126.1
1,182.6
981.5
710.4
564.3
546.4
901.5
922.4
956.6
1,077.6
1,024.4
993.8
931.7
793.9
758.5

2to4
units

5 units

77.1
192.9
64.6
187.4
67.6
273.8
87.1
383.3
118.9
465.6
100.8
464.9
84.8
445.1
61.0
347.7
73.0
417.5
84.3
574.4
85.2
612.7
88.1
616.7
132.9
885.7
148.6 1,037.2
117.0
820.5
64.3
366.2
63.9
199.8
93.1
309.5
121.3
442.7
130.6
487.3
125.4
444.8
114.5
365.7
101.8
319.4
88.3
365.8
133.6
570.1
142.6
616.8
120.1
656.6
108.4
583.5
89.3
421.1
75.7
386.1
67.0
339.8
54.3
262.6
45.7
156.6

Seasonally adjusted annual rates
1990:Jan
Feb....
Mar....

Mlay
a
v
June
July
Aug
Sept
Oct
Nov
Dec
1991: Jan
Feb
Mar
June
July
Aug
Sept......
Oct
Nov....
Dec"....

53
41
35
51
38
41
31
30
35
22
54
17
29
37
28
32
36
24
46
42
28
51
33
56

412
291
275
265
273
256
248
266
213
165
307
203
170
167
137
144
116
141
124
131
128
150
132
99

1,758
1,343
1,205
1,123
1,088
1,123
1,086
1,055
989
925
916
854
802
876
892
913
966
999
1,005
953
982
1,028
993
1,055

998
978
884
816
808
801
781
756
730
703
668
645
611
695
689
742
760
780
794
769
782
796
787
851

84
62
55
57
51
49
58
61
48
44
42
44
40
44
45
45
41
54
42
46
48
50
58
43

676
303
266
250
229
273
247
238
211
178
206
165
151
137
158
126
165
165
169
138
152
182
148
161

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.
4
Series discontinued December 1988.
Source: Department of Commerce, Bureau of the Census.




356

TABLE B-52.—Business expenditures for new plant and equipment, 1947-92
[Billions of dollars; quarterly data at seasonally adjusted annual rates]
Industries surveyed quarterly
Manufacturing
Year or quarter

All
industries

Total

Addenda

Nonmanufacturing

NonDurable
durable Total *
goods goods

Min-

ComTrans- Public mercial
porta- utiliand
tion
ties
other

Total
nonfarm
busi-2
ness

Manufacturing

Nonmanufacturing
Total

Surveyed
quarterly

1947
1948
1949

20.11
22.78
20.28

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

2.69
3.17
2.80

1.64
2.67
3.28

6.38
6,77
6.01

22.27
25.97
24.03

1950
1951
1952
1953
1954

21.56
26.81
28.16
29.96
28.86

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

1955
1956
1957
1958
1959

30.94
37.90
40.54
33.84
35.88

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

39.44
38.34
40.86
43.67
51.26

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

1965
1966
1967
1968
1969

59.52
70.40
72.75
76.42
85.74

25.41
31.37
32.25
32.34
36.27

13.49
17.23
17.83
17.93
19.97

11.92
14.15
14.42
14.40
16.31

34.12
39.03
40.50
44.08
49.47

1970
1971
1972
1973
1974

91.91
92.91
103.40
120.03
139.67

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

1975
1976
1977
1978
1979

142.42
158.44
184.82
216.81
255.26

53.66
58.53
67.48
78.13
95.13

1980
1981
1982
1983
1984

286.40
324.73
326.19
321.16
373.83

1985
1987
1988
1989

410.12
399.36
410.52
455.49
507.40

1990
1991 *.
1992 *.

532.61 192.61
529.97 184.31
558.60 184.06

82.58 110.04 339.99 9.88 21.47 67.21 241.43
77.04 107.27 345.66 10.06 22.18 65.98 247.44
79.38 104.68 374.54 9.50 26.24 71.44 267.35

1990: I
II
Ill
IV

532.50
534.55
534.11
530.13

192.16
195.02
194.05
189.72

86.03
84.15
82.48
79.03

106.14
110.87
111.57
110.69

340.33 9.62
339.53 9.77
340.06 9.97
340.41 10.12

65.41
64.64
67.68
70.24

243.46
243.18
241.32
238.87

192.16
195.02
194.05
189.72

340.33
339.53
340.06
340.41

1991: I

535,50
524.57
527.86
531.96

191.13
187.35
177.05
181.72

81.24
79.69
74.51
72.74

109.90
107.66
102.54
108.98

344.37
23.25 67.04
337.22 10.09 23.05 64.58
350.81 10.09 22.83 66.47
350.24 10.15 19.61 65.82

244.19
239.50
251.42
254.66

191.13
187.35
177.05
181.72

344.37
337.22
350.81
350.24

80.58 107.52 375.20 10.58 24.82 71.52 268.28
84.87 112.61 383.03 10.01 27.68 74.47 270.88

188.11
197.49

375.20
383.03

1960
1961
1962
1963
1964

,

Ill
IV*...
1992:1

13.54
16.73
16.72

11.38
13.53
12.96

25.81
31.38
32.16
34.20
33.62

7.73 18.08
11.07 20.31
12.12 20.04
12.431 21.77
12.001 21.62

13.83
15.74
16.04
17.53
16.85

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

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
22.80
24.83
26.40
30.04

1.36
1.42
1.38
1.44
1.77

5.66 6.49
6.68 7.82
6.57 9.33
6.91 10.52
7.23 11.70

20.60
23.11
23.22
25.22
28.77

70.79
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
63.74

34.12
39.03
40.50
44.08
49.47

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

32.71
35.52
41.69
48.39
53.49

106.15
109.18
120.91
139.26
159.83

36.99 69.16
33.60 75.58
35.42 85.49
42.35 96.91
52.48 107.35

54.92
59.31
67.98
77.67
87.19

25.37
27.50
32.77
39.02
47.72

28.28 88.76 6.12 9.95
31.03 99.91 7.63 11.10
34.71 117.34 9.81 12.20
39.10 138.69 10.55 12.07
47.41 160.13 11.05 13.91

20.23
22.90
27.83
32.10
37.53

52.47
58.29
67.51
83.96
97.64

162.60
179.91
208.15
244.40
285.24

53.66
58.53
67.48
78.13
95.13

112.60
128.68
123.97
117.35
139.61

54.82
58.93
54.58
51.61
64.57

57.77
69.75
69.39
65.74
75.04

41.32
47.17
53.58
52.95
57.53

106.21
120.41
122.79
129.41
151.39

318.08
358.77
363.08
359.73
418.38

112.60
128.68
123.97
117.35
139.61

205.48
230.09
239.11
242.38
278.77

173.80
196.06
202.22
203.82
234.22

152.88
137.95
141.06
163.45
183.80

70.87 82.01
65.68 72.28
68.03 73.03
77.04 86.41
82.56 101.24

257.24 12.00 14.57 59.58 171.09
261.40 8.15 15.05 56.61 181.59
269.46 8.28 15.07 56.26 189.84
292.04 9.29 16.63 60.37 205.76
323.60 9.21 18.84 66.28 229.28

454.93
447.11
461.51
508.22
563.93

152.88
137.95
141.06
163.45
183.80

302.05
309.16
320.45
344.77
380.13

257.24
261.40
269.46
292.04
323.60

563.31 188.11
580.52 197.49

173.80
196.06
202.22
203.82
234.22

12.71
15.81
14.11
10.64
11.86

13.56
12.67
11.75
10.81
13.44

21.84
21.94
21.08
21.18

8.73
9.25
7.32

108.95 88.76
121.38 99.91
140.67 117.34
166.27 138.69
190.11 160.13

591.96 192.61 399.34 339.99
345.66
184.31
374.54
184.06

1
Excludes forestry, fisheries, and agricultural services; professional services; social services and membership organizations; and real
estate, which, effective with the April-May 1984 survey, are no longer surveyed quarterly. See last column ("nonmanufacturing surveyed
annually") for data for these industries.
2
"All industries" plus the part of nonmanufacturing that is surveyed annually.
3
Consists of forestry, fisheries, and agricultural services; professional services; social services and membership organizations; and
real estate.
4
Planned capital expenditures as reported by business in October and November 1991, corrected for biases.
Source: Department of Commerce, Bureau of the Census.




357

TABLE B-53.—Manufacturing and trade sales and inventories, 1950-91

[Amounts in millions of dollars; monthly data seasonally adjusted]
Total manufacturing and
trade
Year or month
Sales1
1950
1951
1952
1953
1954
19SS
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
1988
1989
1990
1990: Jan..
Feb..
Mar...

38,596
43,356
44,846
47,987
46,443
51,694
54,063
55,879
5431
59,729
66,827
61,159
65,662
68,995
73,682
80,283
87,187
90,765
98,607
135,585
108,106
116,769
130,931
153,762
177,946
182,402
264,381
229,773
260,592
298,144
327,874
356,700
348,755
370,441
411,391
423,806
431,668
459,088
496,330
525,839
542,917
531,420
537,551
540,938
535,418
540,387
544,643
541,799
554,180
549,804
554,628
546,533
534,760
527,074
527,915
523,117
530,872
535,926
536,977
541,023
539,578
540,898
542,982
542,761

fc:

June
July
Aug
Sept
Oct
Nov
Dec
1991: Jan
Feb
Mar

June
Aug
Sept
Oct
Nov "

Inventories 2
70,242
72,377
76,122
73,17§
79,516
87,3t4
88,652
87,815
§2,087
94,719
95,516
101,949
105,463
111,564
128,929
136,824
144,853
155,713
169,362
177,439
187,633
201,74«
233,044
285,716
288,190
318,088
350,328
400,397
452,216
509,256
546,363
574,518
650,789
665,066
664,031
711,515
767,706
810,257
826,941
810,742
810,024
810,830
812,976
816,667
813,118
818,689
822,683
825,964
829,140
830,857
826,941
831,445
828,201
819,615
816,893
811,713
807,105
806,802
806,648
809,793
813,024
814,340

Ratio3
1.36
1.55
1.58
1.98
1.60
1.47
1.S5
1.S9
1.61
1.54
1.56
1.56
1.54
1.53
1.51
1.51
1.57
1.60
1.58
1.60
1.64
1.61
1.54
1.52
1.61
1.58
1.56
1.52
1.54
1.52
1.55
1.53
1.67
1.55
1.53
155
1.55
1.50
1.49
1.51
1.51
1.53
1.51
1.50
1.52
1.51
1.49
1.51
1.48
1.50
1.49
1.52
1.55
1.58
1,57
1.57
1.54
1.51
1.50
1.49
1.49
1.50
1.50
1.50

Manufacturing
Sales 1
18,634
21,714
22,529
24,843
23,355
26,469
27,746
28,736
27,248
36,2t6
33,878
36,922
33,358
35,058
37,331
46,995
44,870
46,4§6
56,229
53,501
52,865
55,966
63,027
72,931
84,790
86,589
98,797
113,201
126,905
143,936
154,391
168,129
163,351
172,547
196,682
194,538
194,657
206,326
223,541
236,689
243,122
232,180
238,812
241,975
238,663
243,214
244,602
242,754
251,502
247,916
251,953
245,827
236,575
234,548
233,215
228,715
234,886
238,289
239,118
240,193
241,894
242,240
245,134
245,586

Merchant wholesalers

3
1
Inventories* Ratio Sales

31,878
39,366
41,136
43,948
41,612
45,089
56,642
51,871
56,263
52,913
53,766
54,871
58,172
66,029
63,416
68,267
77,986
84,646
90,566
98,145
101,599
162,567
108,121
124,499
157,625
159,768
174,636
188,378
211,686
242,150
265,210
283,395
311,829
312,350
339,484
334,863
322,731
338,212
367,596
383,825
386,811
386,547
386,273
384,947
385,652
386,235
384,373
387,104
387,986
390,992
391,460
392,370
388,811
388,381
388,459
385,982
385,145
381,877
379,968
378,002
377,388
378,837
378,064
378,034

1
2

1.46
1.66
1.78
1.76
1.81
1.62
1.73
1.86
1.64
1.75
1.74
1.77
1.74
1.71
1.76
1.66
1.74
1.82
1.86
1.83
1.92
1.83
1.72
1.71
1.86
1.84
1.77
1.66
1.67
1.68
1.72
1.69
1.95
1.78
1.73
1.73
1.68
1.59
1.58
1.61
1.60
1.66
1.62
1.59
1.62
1.59
1.57
1.59
1.54
1.58
1.55
1.60
1.64
1.66
1.67
1.69
1.64
1.60
1.59
1.57
1.56
1.56
1.54
1.54

7,695
8,587
8,782
9,052
8,993
9,993
16,513
16,475
1S.257
11,461
11,656
11,968
12,674
13,382
14,529
15,611
16,987
19,520
26,926
22,694
24,031
26,356
29,695
38,173
47,989
46,803
50,885
56,364
66,669
79,472
93,704
102,013
96,296
106,324
113,393
114,626
116,151
124,254
135,176
144,005
149,193
148,326
148,351
149,113
147,568
148,430
149,885
148,547
151,694
149,918
150,588
148,037
148,036
144,723
143,608
142,935
145,019
144,927
145,217
147,635
145,524
146,000
145,365
145,444

Retail trade

3
tories 2 Ratio

Sales 1

Inven3
tories2 Ratio

9,284
9,666
16,216
16,686
16,637
11,676
13,266
12,736
12,736
13,871
14,126
14,466
14,93*
16,048
17,606
18,317
26,765
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
122,979
130,275
128,196
130,906
143,557
148,484
154,713
165,271
180,313
188,273
195,567
188,470
188,653
189,580
190,968
192,557
191,042
192.042
192,641
193,077
194,080
194,984
195,567
198,993
198,563
196,733
195,052
193,632
192,039
192,806
192,503
191,211
193,005
194,148

12,268
13,64$
13,529
14,991
14,66§
15,321
15,811
16,6*7
K666
,
17,951
18,294
16,241
19,636
26,556
21,823
23,677
25,330
24,758
27,453
29,396
31,264
34,513
38,269
42,658
45,167
49,010
54,699
60,207
67,018
74,737
79,779
86,558
89,114
97,570
107,316
114,642
120,860
128,509
137,613
145,146
150,602
150,914
150,388
149,850
149,187
148,743
150,156
150,498
150,984
151,970
152,087
152,669
150,149
147,803
151,092
151,467
150,967
152,710
152,642
153,195
152,160
152,658
152,483
151,731

21,050
21,331
21,468
26,936
22,761
23,462
24,451
24,113
2S,36§
26,813
26,221
27,941
29,366
31,094
34,405
38,073
35,249
38,885
42,455
43,641
49,856
54,869
62,989
70,852
71,510
79,087
89,149
102,306
110,804
121,067
132,693
134,493
147,712
167,748
181,773
186,587
208,112
219,791
238,159
242,563
235,725
235,098
236,303
236,356
237,875
237,703
239,543
242,056
241,895
243,600
243,503
242,563
244,071
241,179
236,900
236,696
236,204
235,098
235,994
236,757
239,745
241,955
242,158

1.07
1.16
1.12
1.17
1.14
1.13
1.19
1.23
1.24
1.21
1.21
1.21
1.16
1.20
1.17
1.17
1.22
1.28
1.26
1.27
1.34
1.34
1.31
1.19
1.19
1.22
1.26
1.29
1.30
1.25
1.31
1.28
1.35
1.27
1.22
1.28
1.31
1.28
1.30
1.28
1.29
1.27
1.27
1.27
1.29
1.30
1.27
1.29
1.27
1.29
1.29
1.32
1.32
1.37
1.38
1.38
1.35
1.34
1.32
1.31
1.32
1.31
1.33
1.33

Monthly average for year and total for month.
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. Annual data are: beginning 1982, averages of monthly ratios; for 1958-81, ratio of December inventories to
monthly average sales for the year,- and for earlier years, weighted averages. Monthly data are ratio of inventories at end of month to
sales for month.
Note.—Earlier data are not strictly comparable with data.beginning 1958 for manufacturing and beginning 1967 for wholesale and
retail trade.
Source: Department of Commerce, Bureau of the Census.




358

TABLE B-54.—Manufacturers' shipments and inventories, 1950-91
[Millions of dollars; monthly data seasonally adjusted]
Inventories2

Shipments *

Year or
month

1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972 ,..
..
1973
1974
1975
1976...
1977...,
1978
1979
1980
1981
1982...
1983..
1984
1985
1986
1987
1988
1989
1990
1990: Jan...
Feb...
Mar..

Total

18,634
21r714
22,529
24,843
23,355
26,480
27,740
28,736
27,248
30,286
30,878
30,922
33,358
35,058
37,331
40,995
44,870
46,486
50,229
53,501
52,805
55,906
63,027
72,931
84,790
86,589
98,797
113,201
126,905
143,936
154,391
168,129
163,351
172,547
190,682
194,538
194,657
206,326
223,541
236,689
243,122
232,180
238,812
241,975
238,663
243,214
244,602
242.754
251,502
247,916
251,953
245,827
236,575
234,548
233,215
228,715
234,886
238,289
239,118
240,193
241,894
242,240
245,134
245,586

fe
June.
July..
Aug..
Sept.
Oct...
Nov..
Dec.
1991: Jan...
Feb..
Mar.

ivlay'
June
July.
Aug.
Sept
Oct..
Nov

Durable
goods
industries

Nondurable

8,845
10,493
11,313
13,349
11,828
14,071
14,715
15,237
13,553
15,597
15,870
15,601
17,247
18,255
19,611
22,193
24,617
25,233
27,624
29,403
28,156
29,924
33,987
39,635
44,173
43,598
50,623
59,168
67,731
75,927
77,419
83,727
79,212
85,481
97,940
101,279
103,238
108,128
117,993
124,532
125,388
118,699
125,092
126,769
123,885
127,891
129,167
126,531
130,441
125,783
127,692
122,693
118,578
117.648
117,432
114,487
119,721
121,024
122,240
122,994
124,459
124,965
126,404
126,545

9,789
11,221
11,216
11,494
11,527
12,409
13,025
13,499
13,695
14,689
15,008
15,321
16,111
16,803
17,720
18,802
20,253
21,253
22,605
24,098
24,649
25,982
29,040
33,2%
40,617
42,991
48,174
54,033
59,174
68,009
76,972
84,402
84,139
87,066
92,742
93,259
91,419
98,198
105,549
112,156
117,735
113,481
113,720
115,206
114,778
115,323
115,435
116,223
121,061
122,133
124,261
123,134
117,997
116,900
115,783
114,228
115,165
117,265
116,878
117,199
117,435
117,275
118,730
119,041

Nondurable goods industries

Durable goods industries
Total
Total

tries

31,078
39,306
41,136
43,948
41,612
45,069
50,642
51,871
50,203
52,913
53,786
54,871
58,172
60,029
63,410
68,207
77,986
84,646
90,560
98,145
101,599
102,567
108,121
124,499
157,625
159,708
174,636
188,378
211,686
242,150
265,210
283,395
311,829
312,350
339.484
334,803
322,731
338,212
367,596
383,825
388,811
386,547
386,273
384,947
385,652
386,235
384,373
387,104
387,986
390,992
391,460
392,370
388,811
388,381
388,459
385,982
385,145
381,877
379,968
378,002
377,388
378,837
378,064
378,034

15,539
20,991
23,731
25,878
23,710
26,405
30,447
31,728
30,194
32,012
32,337
32,496
34,565
35,776
38,421
42,189
49,852
54,8%
58,732
64,598
66,651
66,136
70,067
81,192
101,493
102,590
111,988
120,877
138,174
160,725
174,779
186,420
200,409
199,814
221,284
218,182
212,010
220,790
241,389
253,261
252,836
255,068
254,499
252,994
254,328
254,564
252,877
254,521
254,721
255,278
255,113
256,387
252,836
252,170
252,256
250,405
249,546
246,964
245,642
244,467
243,616
244,310
242,816
242,451

Materials
and
supplies

8,966
7,894
9,194
10,417
10,608
9,970
10,709
10,306
10,246
10,794
11,053
11,946
13,298
15,464
16,423
17,344
18,636
19,149
19,679
20.807
25,944
35,070
33,903
37,457
40,186
45,202
52,675
55,179
57,999
59,131
60,322
66,027
64,020
61,445
63,685
69,488
71,295
71,191
71,423
70,916
70,282
70,390
70,599
70,107
70,637
70,044
70,268
70,741
71,041
71,191
71,208
70,980
70,101
69,274
68,425
67,387
66,936
66,951
67,027
66,823
66,565

Work

in
process

10,720
9,721
10,756
12,317
12,837
12,408
13,086
12,809
13,211
14,124
14,835
16,158
18,055
21,908
24,932
27,213
30,282
29,745
28,550
30,713
35,490
42,530
43,227
46,074
50,226
58,841
69,317
76,937
80,987
86,693
86,884
98,234
98,065
96,923
102,324
112,360
120,890
119,169
122,536
121,590
120,881
121,720
121,617
120,546
121,509
121,956
122,352
121,692
122,487
119,169
119,015
119,010
118,646
118,041
117,308
117,748
117,350
116,308
116,762
115,492
115,472

Finished
goods

Total

15,539
18,315
17,405
6,206 18,070
6,040 17,902
6,348 18,664
7,565 20,195
8,125 I 20,143
7,816 I 20,009
8,217 I 20,901
9.222 j 21,449
S,039 I 22,375
9,647 ! 23,607
9,888 24,253
10.317 24,989
10,836 26,018
12,480 28,134
13,541 29,750
14,175 31,828
15,680 33,547
17,757 34,948
17,907 36,431
18,547 38,054
19,758 43,307
23,893 j 56,132
25,460 i 57,118
28,457 62,648
30,465 67,501
34,13! 73,512
38,733 81,425
42,663 ! 90,431
47,434 ! 96,975
54,585 1111,420
52,608 1112,536
57,023 118,200
56,097 116,621
53,642 110,721
54.781 U7.422
59;541 1126,207
61,076 130,564
62,476 135,975
61,109 131,479
61,993 131,774
61,831 131,953
62,218 131,324
62,348 131,671
62,224 131,496
62,375 132,583
62,721 133,265
62,658 135,714
62,680 138,347
62,859 135,983
62,476 135,975
61,947 136,211
62,266 136,203
61,658 135,577
62,231 135,599
61,231 134,913
60,507 134,326
60,181 133,535
60,357 133,772
60,521 134,527
60,501 135,248
60,414 135,583

1

Monthly average for year and total for month.

2

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.




359

Materials
and
supplies

8,317
8,167
8,556
8,971
8,775
8,676
9,094
9,097
9,505
9,838
10,009
10,167
10,487
11,197
11,760
12,328
12,753
13,163
13,686
14,677
18,147
23,744
23,565
25,847
27,387
29,606
32,803
36,593
38.159
44,035
44,810
45,689
44,094
42,334
45,350
49,158
48,456
49,710
48,316
48.359
48,731
48.461
48,405
48,275
48 *54
49,003
49,407
49,845
49,98i
49,710
50,034
49,706
49,661
49,523
49,342
49,305
49,409
49,237
49,284
49,556
49,286

Work
in
process

2,472
2,440
2,571
2,721
2,864
2,827
2,942
2,947
3,108
3,304
3,420
3,531
3,825
4,226
4,431
4,852
5,120
5,271
5,678
5,998
6,729
8,189
8,834
9,929
10,961
12,083
13,906
15,882
16,195
18,609
18,698
19,344
19,470
18,153
19,321
20,489
22,424
22,906
22,479
22,387
22,360
22,308
22,476
22,171
22,286
22,683
23,149
23,155
22,950
22,906
22,426
22,369
21,998
22,296
22,224
22,395
22,228
22,339
22,786
22,820
22,496

Finished
goods

7,409
7,415
7,666
8,622
8,624
8,506
8,865
9,405
9,762
10,467
10,824
11,291
11,706
12,711
13,559
14,648
15,674
16,509
17,067
17,379
18,431
24,199
24,719
26,872
29.153
31,823
34,716
37,956
42,621
48,776
49,028
53,167
53,057
50,234
52,751
56,560
59,684
63,359
60,684
61,028
60,862
60,555
60,790
61,050
61.643
61,579
63,158
63,347
63,052
63,359
63,751
64,128
63,918
63,780
63,347
62,626
61,898
62,196
62,457
62,872
63,801

TABLE B-55.—Manufacturers' new and unfilled orders, 1950-91

[Amounts in millions of dollars; monthly data seasonally adjusted]
Unfilled orders2

New orders1
Durable goods
industries
Year or month

Capital
Total
Total

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
1988
1989
1990
1990: Jan....
Feb
Mar....

fc:

June...
July....
Aug....
Sept...
Oct.....
Nov....
Dec...
1991: Jan....
Feb
Mar
Apr..'!!!
May....
June..
July...
Aug...
Sept..
Oct
Nov*

20,110
23,907
23,204
23,586
22,335
27,465
28,368
27,559
27,193
30,711
30,232
31,112
33,440
35,511
38,240
42,137
46,420
47,067
50,657
53,990
52,022
55,921
64,182
76,003
87,327
85,139
99,513
115,109
131,629
147,604
156,359
168,025
162,140
175,451
192,879
195,706
195,204
209,389
227,025
240,758
243,643
234,819
236,016
246,422
240,333
245,318
242,396
245,039
250,592
248,987
254,976
239,237
238,196
234,462
233,132
226,431
231,229
236,540
233,725
248,090
243,160
237,624
242,230
242,991

10,165
12,841
12,061
12,147
10,768
14,996
15,365
14,111
13,387
15,979
15,288
15,753
17,363
18,671
20,507
23,286
26,163
25,803
28,051
29,876
27,340
29,905
35,038
42,627
46,862
41,957
51,307
61,035
72,278
79,483
79,392
83,654
78,064
88,140
100,164
102,356
103,647
110,809
121,444
128,651
125,958
121,419
122,468
131,030
125,603
129,936
127,057
129,387
129,020
126,893
130,875
116,193
120,221
117,789
117,547
112,116
116,139
118,434
117,128
130,827
125,482
120,092
123,325
123,859

tries,
nondefense

6,314
7,046
6,072
6,682
7,745
9,926
11,594
9,886
11,490
13,681
17,588
21,154
21,135
21,806
19,213
19,624
23,669
24,545
23,983
26,096
30,727
34,816
34,032
34,784
31,949
36,385
32,556
31,890
32,501
35,274
31,607
34,419
37,223
30,884
38,560
33,957
33,756
31,940
28,748
28,038
29,282
36,689
30,993
30,078
31,098
34,884

Nondurable
goods
industri
ries

9,945
11,066
11,143
11,439
11,566
12,469
13,003
13,448
13,805
14,732
14,944
15,359
16,078
16,840
17,732
18,851
20,258
21,265
22,606
24,114
24,682
26,016
29,144
33,376
40,465
43,181
48,206
54,073
59,351
68,121
76,967
84,371
84,077
87,311
92,715
93,351
91,557
98,579
105,581
112,107
117,685
113,400
113,548
115,392
114,730
115,382
115,339
115,652
121,572
122,094
124,101
123,044
117,975
116,673
115,585
114,315
115,090
118,106
116,597
117,263
117,678
117,532
118,905
119,132

1
2
3

Total

41,456
67,266
75,857
61,178
48,266
60,004
67,375
53,183
46,609
51,717
44,213
46,624
47,798
53,417
64,518
78,249
96,846
103.711
108,377
114,341
105,008
105.247
119,349
156,561
187,043
169,546
178,128
202,022
259,168
303,595
327,421
326,553
311,893
347,310
373,607
387,241
393.629
430.589
472,223
520,837
527,195
523,476
520,680
525,127
526.797
528,901
526,695
528,980
528,070
529,141
532,164
525,574
527,195
527,109
527,026
524,742
521,085
519,336
513,943
521,840
523,106
518,490
515,586
512,990

Durable
goods
industries

35,435
63,394
72,680
58,637
45,250
56,241
63,880
50,352
43,807
48,369
41,650
43,582
45,170
50,346
61,315
74,459
93,002
99,735
104,393
110,161
100,412
100,225
113,034
149,204
181,519
161,664
169,857
193,321
248,282
291,324
315,209
314,718
300,810
333,159
359,734
372,175
376,839
408,894
450,258
499,494
506,375
502,214
499,590
503,851
505,569
507,614
505,504
508,360
506,939
508,049
511,232
504,732
506,375
506,516
506,631
504,260
500,678
498,088
492,976
500,809
501,832
496,959
493,880
491,193

Unfilled orders—shipments
ratio3
Nondurable
Total
Ties

6,021
3,872
3,177
2,541
3,016
3,763
3,495
2,831
2,802
3,348
2,563
3,042
2,628
3,071
3,203
3,790
3,844
3,976
3,984
4,180
4,596
5,022
6,315
7,357
5,524
7,882
8,271
8,701
10,886
12,271
12,212
11,835
11,083
14,151
13,873
15,066
16,790
21,695
21,965
21,343
20,820
21,262
21,090
21,276
21,228
21,287
21,191
20,620
21,131
21,092
20,932
20,842
20,820
20,593
20,395
20,482
20.407
21,248
20,967
21,031
21,274
21,531
21,706
21,797

3.42
3.63
3.87
3.35
3.02
2.94
2.71
2.58
2.64
2.74
2.99
3.25
3.74
3.66
3.83
3.74
3.64
3.36
3.27
3.83
4.12
3.72
3.26
3.25
3.57
3.89
3.85
3.87
3.84
3.53
3.60
3.67
3.59
3.64
3.62
3.95
4.04
4.03
3.90
3.89
3.96
3.90
3.85
3.91
3.83
3.93
3.92
3.94
4.04
4.08
4.08
4.14
4.03
3.99
3.91

3.%
3.92
3.88
3.82
3.79

NonDurable durable
goods
goods
industries industries

4.12
4.27
4.55
4.00
3.62
3.47
3.29
3.08
3.18
3.31
3.59
3.86
4.48
4.37
4.64
4.50
4.40
4.06
3.88
4.55
4.97
4.50
3.90
3.87
4.20
4.62
4.58
4.68
4.74
4.29
4.37
4.47
4.40
4.44
4.42
4.80
4.97
4.96
4.78
4.77
4.88
4.78
4.71
4.80
4.68
4.83
4.80
4.86
4.97
5.03
5.04
5.13
4.94
4.89
4.77
4.86
4.80
4.74
4.67
4.62

0.96
1.12
1.04
.85
.85
.92
.71
.78
.68
.72
.71
.79
.75
.73

.76
.76
.86
.91
.62
.82
.74
.71
.81
.82
.75
.69
.62
.69
.64
.68
.70
.83
.77
.77
.73
.74
.73
.72
.72
.72
.72
.70
.71
.71
.71
.71
.73
.72
.71
.72
.73
.75
.74
.73
.74
.75
.75
.75

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.




360

PRICES
TABLE B-56.—Consumer price indexes, major expenditure classes, 1950-91
[1982-84=100]
Housing

Food and

ii

Year or
month

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
1988
1989
1990
1991
1990: Jan
Feb
Mar
Apr
May....
June...
July
Aug
Sept....
Oct
Nov
Dec
1991: Jan
Feb
Mar

tz

June...
July
Aug
Sept....
Oct
Nov
Dec

All
items

241
260
26 5
26.7
269
26 8
27 2
281
289
291
29.6
299
302
30 6
310
315
32 4
33.4
348
36.7
38.8
40 5
41.8
44.4
49.3
53 8
56.9
60.6
65.2
72 6
82.4
90.9
96.5
99 6
103.9
107 6
109.6
113.6
118.3
124 0
130.7
136.2
127.4
128.0
128.7
128.9
129.2
129.9
130.4
131.6
132.7
133.5
133.8
133.8
134.6
134.8
135.0
135.2
135.6
136.0
136.2
136.6
137.2
137.4
137.8
137.9

1

Total

35.0
36 2
381
40.1
414
43.1
48.8
55.5
602
62.1
65.8
72.2
79 9
86.7
93.5
97.3
995
103.2
105 6
109.1
113.5
118.2
124 9
1321
136.8
130.0
130.9
131.2
131.0
131.1
131.7
132.4
132.7
133.0
133.4
133.7
133.9
135.9
136.0
136.3
137.2
137.3
137.7
137.1
136.6
136.7
136.5
136.9
137.3

Food

2

254
28 2
28 7
28.3
28 2
27 8
28 0
289
302
297
30.0
304
30 6
311
31.5
32 2
33.8
34.1
353
37.1
39.2
404
42.1
48.2
55.1
59 8
61.6
65.5
72.0
79 9
86.8
93.6
97.4
994
103.2
105 6
109.0
113.5
118.2
1251
132.4
136.3
130.4
131.3
131.5
131.3
131.3
132.0
132.7
132.9
133.2
133.6
134.0
134.2
135.8
135.5
135.8
136.7
136.8
137.2
136.5
136.0
136.0
135.8
136.2
136.7

Total

30.8
32 0
34.0
36.4
380
39.4
41.2
45.8
507
53.8
57.4
62.4
701
81.1
90.4
96.9
99 5
103.6
107 7
110.9
114 2
118.5
123 0
128 5
133.6
125.9
126.1
126.8
126.8
127.1
128.3
129.2
130.2
130.5
130.6
130.4
130.5
131.8
132.4
132.6
132.5
132.8
133.4
134.2
134.5
134.7
134.7
134.7
135.0

Shelter 2

220
22 5
22 7
231
24 0
245
24 7
25.2
254
25 8
261
26.5
27 0
27 8
28.8
301
32 6
35.5
37 0
387
40.5
444
488
51.5
54.9
605
689
81.0
90.5
96.9
991
104.0
109 8
115.8
1213
127.1
132 8
140 0
146.3
136.3
136.6
137.8
138.0
138.3
139.5
141.1
142.4
142.3
142.4
142.4
142.7
144.0
144.6
145.2
145.2
145.2
145.8
146.8
147.3
147.4
147.7
147.9
148.2

Other
hold Apparel TransEnterFuel and furnish- and portation 2 Medical tainment goods
and
care 2
other 2 ings upkeep
services
and
utilities
operation

22.5
22 6
230
23 6
24.3
24 8
254
26.0
263
263
26 6
26.6
266
26.7
27.1
27 4
28.0
29.1
311
32.5
34.3
40.7
45 4
49.4
54.7
585
64 8
75.4
86.4
94.9
1002
104.8
106 5
104.1
103 0
104.4
107 8
1116
115.3
110.8
110.2
109.9
109.4
109.9
112.2
111.3
112.7
114.0
113.4
112.9
112.7
114.8
114.7
114.1
113.1
114.2
115.8
116.4
116.2
116.8
115.7
115.3
116.0

1
2
3

42.0
43 6
45.2
46.8
48 6
49.7
51.1
56.8
634
67.3
70.4
74 7
799
86.3
93.0
98.0
100 2
101.9
103 8
105.2
1071
109.4
1112
113 3
116.0
112.1
112.8
112.8
112.8
113.2
113.1
113.6
113.3
113.8
114.2
113.8
113.7
114.1
115.6
115.7
115.9
116.3
115.9
116.3
116.2
116.4
116.4
116.5
116.3

40 3
43 9
43 5
43.1
431
42 9
43 7
445
446
45 0
45.7
461
46.3
469
47.3
47 8
49 0
51.0
53 7
568
59.2
611
62.3
64.6
69.4
72 5
75.2
78.6
814
849
90.9
95.3
97.8
100 2
102.1
105 0
105.9
110 6
115.4
118 6
128.7
116.7
120.4
125.4
126.7
125.5
123.3
120.8
122.2
126.8
128.4
127.5
125.3
123.8
126.2
128.8
130.1
129.4
126.9
125.2
127.6
131.3
132.7
132.9
129.6

22 7
241
25 7
26.5
261
25 8
26 2
27 7
28 6
298
29.8
301
30 8
30 9
31.4
319
32 3
33 3
34 3
35.7
37.5
39 5
39.9
41.2
45.8
50 1
55.1
59.0
617
70 5
83.1
93.2
97.0
99 3
103.7
106 4
102.3
105 4
108.7
114 1
120 5
123.8
117.2
117.1
116.8
117.3
1177
118.2
118.4
120.6
123.0
125.8
126 9
127.2
125.5
123.7
122.3
122.2
123.3
1237
123.4
123.8
123.8
124.0
125.0
125.3

151
15 9
16 7
17.3
17 8
18 2
18 9
19.7
20 6
215
22.3
22 9
23 5
241
24.6
25 2
26 3
28.2
29 9
31.9
34.0
361
37.3
38.8
42.4
47 5
52.0
57.0
61.8
67 5
74.9
82.9
92.5
100 6
106.8
113 5
122.0
130.1
138.6
149 3
162 8
177.0
155.9
157.5
158.7
159.8
160.8
161.9
163.5
165.0
165.8
167.1
168.4
169.2
171.0
172.5
173.7
174.4
175.2
176.2
177.5
178.9
179.7
180.7
181.8
182.6

40.7
43 0
45.2
47.5
50 0
51.5
52.9
56.9
62 0
65.1
68.3
71.9
76 7
83.6
90.1
96.0
1001
103.8
107 9
111.6
115.3
120.3
126 5
132.4
138.4
129.9
130.4
130.9
131.4
131.7
131.9
132.7
133.0
134.1
134.3
134.4
134.6
135.5
136.2
136.7
137.7
137.8
138.1
138.6
139.2
140.2
140.5
140.4
139.9

35.1
36 9
38.7
40.9
42.9
44.7
46.4
49.8
53 9
57.0
60.4
64.3
68 9
75.2
82.6
91.1
1011
107.9
114 5
121.4
128.5
137.0
147 7
159.0
171.6
154.0
154.7
155.2
155.8
156.6
157.8
159.2
160.4
162.6
163.2
163.6
164.5
166.5
167.4
167.9
168.8
169.1
170.0
170.8
172.2
175.8
176.2
176.9
177.6

Energy 3

21.5
215
21.9
22.4
22.5
22.6
22 6
22.5
22 9
23.3
23.8
24.2
24.8
25.5
26.5
27.2
29.4
38.1
42.1
45.1
49.4
52.5
65.7
86.0
97.7
99.2
99.S
100.9
1016
88.2
88.6
89.3
94.3
102.1
102.5
97.6
96.4
95.5
95.7
96.7
99.5
98.9
103.6
108.8
111.4
110.9
110.1
107.1
102.8
99.7
99.5
102.1
103.5
102.7
102.9
103.6
101.8
101.8
101.9

Includes alcoholic beverages, not shown separately.
See table B- 57 for components.
See tables 6-58 for definition and B-57 for components.
Note.—Data beginning 1978 are for ail 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.




361

TABLE B-57.—Consumer price indexes, selected expenditure classes, 1950-91
[1982-84=100, except as noted]

Food and beverages

Year or month

1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1990: Jan...
Feb...
Mar...
June...
July....
Aug....
Sept...
Oct
Nov....
Dec...
1991: Jan....
Feb....
Mar....

Jay""

June...
July....
Aug....
Sept...
Oct
Nov....
Dec...

Total

35.0
36.2
38.1
40.1
41.4
43.1
48.8
55.5
60.2
62.1
65.8
72.2
79.9
86.7
93.5
97.3
99.5
103.2
105.6
109.1
113.5
118.2
124.9
132.1
136.8
130.0
130.9
131.2
131.0
131.1
131.7
132.4
132.7
133.0
133.4
133.7
133.9
135.9
136.0
136.3
137.2
137.3
137.7
137.1
136.6
136.7
136.5
136.9
137.3

Fuels

Fuel oil
Other
and
(Piped) utilities
Home- Mainteother
nance Total
and
and
Away Total
Rent, owners' and
2
houseelec2
public
from
Total
Total resi- costs repairs
tricity
hold
home
dential
(energy services
fuel
servcommodities ices)

Total

25.4
28.2
28.7
28.3
28.2
27.8
28.0
28.9
30.2
29.7
30.0
30.4
30.6
31.1
31.5
32.2
33.8
34.1
35.3
37.1
39.2
40.4
42.1
48.2
55.1
59.8
61.6
65.5
72.0
79.9
86.8
93.6
97.4
99.4
103.2
105.6
109.0
113.5
118.2
125.1
132.4
136.3
130.4
131.3
131.5
131.3
131.3
132.0
132.7
132.9
133.2
133.6
134.0
134.2
135.8
135.5
135.8
136.7
136.8
137.2
136.5
136.0
136.0
135.8
136.2
136.7

Fuel and other utilities

Shelter
Renters' costs

Food

27.3
30.3
30.8
30.3
30.1
29.5
29.6
30.6
32.0
31.2
31.5
31.8
32.0
32.4
32.7
33.5
35.2
35.1
36.3
38.0
39.9
40.9
42.7
49.7
57.1
61.8
63.1
66.8
73.8
81.8
88.4
94.8
98.1
99.1
102.8
104.3
107,3
111.9
116.6
124.2
132.3
135.8
131.0
132.1
131.9
131.1
130.9
131.7
132.5
132.7
132.9
133.4
133.8
133.8
136.4
135.7
136.0
137.0
136.9
137.4
136.0
134.9
134.9
134.4
135.0
135.5

21.5
21.9
22.1
22.6
23.4
24.1
24.8
25.4
26.0
26.7
27.3
27.8
28.4
29.7
31.3
32.9
34.9
37.5
39.4
41.0
44.2
49.8
54.5
58.2
62.6
68.3
75.9
83.4
90.9
95.8
100.0
104.2
108.3
112.5
117.0
121.8
127.4
133.4
137.9
130.3
131.0
131.8
132.5
133.0
133.4
133.9
134.3
134.6
135.0
135.4
135.7
135.8
136.2
136.5
137.1
137.5
137.9
138.4
138.7
138.9
139.1
139.3
139.6

22.0
22.5
22.7
23.1
24.0
24.5
24.7
25.2
25.4
25.8
26.1
26.5
27.0
27.8
28.8
30.1
32.6
35.5
37.0
38.7
40.5
44.4
48.8
51.5
54.9
60.5
68.9
81.0
90.5
96.9
99.1
104.0
109.8
115.8
121.3
127.1
132.8
140.0
146.3
136.3
136.6
137.8
138.0
138.3
139.5
141.1
142.4
142.3
142.4
142.4
142.7
144.0
144.6
145.2
145.2
145.2
145.8
146.8
147.3
147.4
147.7
147.9
148.2

103.0
108.6
115.4
121.9
128.1
133.6
138.9
146.7
155.6
142.0
143.5
144.8
144.7
144.4
145.3
148.7
150.7
148.9
148.9
149.0
149.5
153.2
154.4
156.1
155.1
154.2
155.1
157.4
158.1
156.2
156.1
155.4
155.8

29.7
30.9
32.2
33.9
35.1
35.6
36.3
37.0
37.6
38.2
38.7
39.2
39.7
40.1
40.5
40.9
41.5
42.2
43.3
44.7
46.5
48.7
50.4
52.5
55.2
58.0
61.1
64.8
69.3
74.3
80.9
87.9
94.6
100.1
105.3
111.8
118.3
123.1
127.8
132.8
138.4
143.3
135.8
136.0
136.5
137.0
137.3
137.9
138.7
139.4
140.0
140.5
140.7
141.1
141.2
141.5
142.0
142.5
142.8
143.0
143.7
143.7
144.6
144.6
145.0
145.2

1

Includes alcoholic beverages, not shown separately.
December 1982 = 100.
See next page for continuation of table.
2




362

102.5
107.3
113.1
119.4
124.8
131.1
137.3
144.6
150.2
141.1
141.0
142.2
142.5
143.1
144.4
145.4
146.5
147.0
147.2
147.3
147.5
147.9
148.2
148.4
148.8
149.2
149.7
150.2
150.7
151.6
152.1
152.6
153.0

20.5
20.9
21.4
22.3
23.2
23.6
24.0
24.4
24.8
25.0
25.3
25.8
26.3
27.5
28.9
30.6
33.2
35.8
38.6
40.6
43.6
49.5
54.1
57.6
62.0
67.2
74.0
82.4
90.7
96.4
99.9
103.7
106.5
107.9
111.8
114.7
118.0
122.2
126.3
120.4
120.8
121.2
121.2
122.2
121.8
122.1
121.2
124.6
123.4
123.9
123.8
124.1
125.1
124.2
126.1
126.9
126.2
126.9
127.2
126.8
126.6
127.6
128.1

22.5
22.6
23.0
23.6
24.3
24.8
25.4
26.0
26.3
26.3
26.6
26.6
26.6
26.7
27.1
27.4
28.0
29.1
31.1
32.5
34.3
40.7
45.4
49.4
54.7
58.5
64.8
75.4
86.4
94.9
100.2
104.8
106.5
104.1
103.0
104.4
107.8
111.6
115.3
110.8
110.2
109.9
109.4
109.9
112.2
111.3
112.7
114.0
113.4
112.9
112.7
114.8
114.7
114.1
113.1
114.2
115.8
116.4
116.2
116.8
115.7
115.3
116.0

21.4
21.7
22.1
23.1
24.7
25.7
27.5
34.4
39.4
43.3
49.0
53.0
61.3
74.8
87.2
95.6
100.5
104.0
104.5
99.2
97.3
98.0
100.9
104.5
106.7
104.5
103.1
102.3
101.2
101.9
105.4
104.5
105.6
107.6
106.4
105.4
105.6
107.7
107.1
105.7
104.0
105.4
107.6
108.2
107.7
108.5
106.5
105.5
106.5

11.3
11.8
12.1
12.6
12.6
12.7
13.3
14.0
13.7
13.9
13.8
14.1
14.2
14.4
14.4
14.6
15.0
15.5
16.0
16.3
17.0
18.2
18.3
21.1
33.2
36.4
38.8
43.9
46.2
62.4
86.1
104.6
103.4
97.2
99.4
95.9
77.6
77.9
78.1
81.7
99.3
94.6
113.1
95.4
91.5
89.6
88.0
84.9
82.7
91.8
104.4
118.5
117.0
114.1
111.2
105.7
99.3
94.4
90.9
89.3
87.8
87.8
88.9
90.9
94.8
94.7

19.2
19.3
19.5
19.9
20.2
20.7
20.9
21.1
21.9
22.4
23.3
23.5
23.5
23.5
23.5
23.5
23.6
23.7
23.9
24.3
25.4
27.1
28.5
29.9
34.5
40.1
44.7
50.5
55.0
61.0
71.4
81.9
93.2
101.5
105.4
107.1
105.7
103.8
104.6
107.5
109.3
112.6
107.5
108.3
107.9
106.8
107.8
112.4
111.7
111.6
112.4
109.0
108.0
108.6
111.5
111.5
110.8
109.4
111.5
114.4
115.4
114.7
115.5
112.9
111.2
112.4

46.6
47.1
48.4
50.0
53.4
56.2
57.8
60.7
63.9
67.7
70.8
73.7
74.3
77.0
84.3
93.3
99.5
107.2
112.1
117.9
120.1
122.9
127.1
131.7
137.9
129.3
130.0
130.7
130.9
131.2
131.8
130.8
132.8
132.9
133.4
133.7
132.7
135.0
135.7
136.3
136.5
137.3
137.9
138.5
138.9
139.2
139.6
140.1
140.2

TABLE B-57.—Consumer price indexes, selected expenditure classes,

1950-91—Continued

[1982-84=100, except as noted]

Transportation

Medical care

Private transportation
Year or month

1950.
1951
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969...
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985,
1986
1987
1988
1989
19S0
1991
1990: Jan
Feb....
Mar...
June..
July...
Aug...
Sept..
Oct....
Nov...
Dec...
1991: Jan....
Feb....
Mar...
MJay...
a
y
June..
July...
Aug...
Sept..
Oct....
Nov...
Dec...

Total

22.7
24.1
25.7
26.5
26.1
25.8
26.2
27.7
28.6
29.8
29.8
30.1
30.8
30.9
31.4
31.9
32.3
33.3
34.3
35.7
37.5
39.5
39.9
41.2
45.8
50.1
55.1
59.0
61.7
70.5
83.1
93.2
97.0
99.3
103.7
106.4
102.3
105.4
108.7
114.1
120.5
123.8
117.2
117.1
116.8
117.3
117.7
118.2
118.4
120.6
123.0
125.8
126.9
127.2
125.5
123.7
122.3
122.2
123.3
123.7
123.4
123.8
123.8
124.0
125.0
125.3

Total

3

24.5
25.6
27.3
27.8
27.1
26.7
27.1
28.6
29.5
30.8
30.6
30.8
31.4
31.6
32.0
32.5
32.9
33.8
34.8
36.0
37.5
39.4
39.7
41.0
46.2
50.6
55.6
59.7
62.5
71.7

97.1
99.3
103.6
106.2
101.2
104.2
107.6
112.9
118.8
121.9
115.9
115.8
115.1
115.5
115.9
116.4
116.6
119.0
121.4
124.2
125.1
125.1
123.2
121.2
119.9
120.2
121.5
121.9
121.7
122.0
122.1
122.4
123.4
123.4

New
cars

Motor
fuel 4

Used
cars

41.1
43.1
46.8
47.2
46.5
44.8
46.1
48.5
50.0
52.2
51.5
51.5
51.3
51.0
50.9
49.7
48.8
49.3
50.7
51.5
53.0
55.2
54.7
54.8
57.S
62.9
66.9
70.4
75.8
81.8
88.4
93.7
97.4
99.9
102.8
106.1
110.6
114.6
116.9
119.2

31.2
33.0
33.1
35.2
36.7
43.8
50.3
54.7
55.8
60.2
62.3
76.9
88.8
98.7
112.5
113.7
108.8
113.1
118.0
120.4

121.0
125.3
122.3
121.9
121.3
120.7
120.7
120.3
119.8
119.5
119.0
120.5
122.1
123.5
124.6
125.3
125.4
125.3
125.4
125.3
124.9
124.4
124.1
125.0
126.6
127.6

117.6
118.1
118.9
117.4
116.6
116.2
116.9
117.6
118.2
118.3
118.3
118.1
117.2
117.1
116.1
115.1
114.4
115.0
117.0
118.8
120.4
120.0
119.8
120.2
120.6
120.1

26.7
22.7
21.5
20.7
23.2
24.0
26.8
25.0
26.0
28.4
28.7
30.0
29.8
29.0
29.9

19.0
19.5
20.0
21.2
21.8
22.1
22.8
23.8
23.4
23.7
24.4
24.1
24.3
24.2
24.1
25.1
25.6
26.4
26.8
27.6
27.9
28.1
28.4
31.2
42.2
45.1
47.0
49.7
51.8
70.1
97.4
108.5
102.8
99.4
97.9
98.7
77.1
80.2
80.9
88.5
101.2
99.4
91.4
90.6
89.3
91.2
92.5
94.6
94.3
103.2
112.0
118.9
119.0
117.1
108.3
99.7
94.6
96.1
100.2
100.5
98.2
99.3
99.8
98.3
99.4
98.4

Automobile
maintenance
and
repair
18.9
20.4
20.8
22.0
22.7
23.2
24.2
25.0
25.4
26.0
26.5
27.1
27.5
27.8
28.2
28.7
29.2
30.4
32.1
34.1
36.6
39.3
41.1
43.2
47.6
53.7
57.6
61.9
67.0
73.7
81.5
89.2
96.0
100.3
103.8
106.8
110.3
114.8
119.7
124.9
130.1
136.0
127.3
127.6
128.8
129.4
129.4
129.6
130.2
130.4
131.5
132.1
132.5
132.5
133.1
133.5
134.1
134.4
134.7
135.6
136.4
136.9
137.8
138.4
138.5
138.4

Other

37.9
39.2
41.6
45.2
48.6
48.9
48.4
50.2
53.5
61.8
67.2
69.9
75.2
84.3
91.4
97.7
98.8
103.5
109.0
115.1
120.8
127.9
135.8
142.5
149.1
140.3
140.8
140.7
140.8
140.8
141.0
142.1
142.4
143.0
144.8
146.2
146.7
147.3
147.8
147.7
147.5
147.7
148.3
149.0
149.7
149.7
150.9
151.8
152.0

Public
transportation

13.4
14.8
15.8
16.8
18.0
18.5
19.2
19.9
20.9
21.5
22.2
23.2
24.0
24.3
24.7
25.2
26.1
27.4
28.7
30.9
35.2
37.8
39.3
39.7
40.6
43.5
47.8
50.0
51.5
54.9
69.0
85.6
94.9
99.5
105.7
110.5
117.0
121.1
123.3
129.5
142.6
148.9
134.2
136.7
139.1
140.3
140.9
141.5
141.6
141.9
144.0
146.6
150.3
154.4
155.4
156.2
153.3
147.1
146.0
146.6
146.7
147.6
146.6
144.9
147.0
149.8

Total

15.1
15.9
16.7
17.3
17 8
18.2
18.9
19.7
20.6
21.5
22.3
22.9
23.5
24.1
24.6
25.2
26.3
28.2
29.9
31.9
34.0
36.1
37.3
38.8
42.4
47.5
52.0
57.0
61.8
67.5
74.9
82.9
92.5
100.6
106.8
113.5
122.0
130.1
138.6
149.3
162.8
177.0
155.9
157.5
158.7
159.3
160.8
161.9
163.5
165.0
165.8
167.1
168.4
169.2
171.0
172.5
173.7
174.4
175.2
176.2
177.5
178.9
179.7
180.7
181.8
182.6

Medical
care
commodities

Medical
care
services

39.7
40.8
41.2
41.5
42.0
42.5
43.4
44.6
46.1
46.8
46.9
46.3
45.6
45.2
45.1
45.0
45.1
44.9
45.0
45.4
46.5
47.3
47.4
47.5
49.2
53.3
56.5
60.2
64.4
69.0
75.4
83.7
92.3
100.2
107.5
115.2
122.8
131.0
139.9
150.8
163.4
176.8
156.9
158.6
159.9
161.3
162.2
163.3
164.1
164.8
166.0
166.8
167.8
169.1
170.4
171.6
173.2
174.3
175.4
176.5
177.7
178.9
180.0
180.3
181.1
181.7

3
Includes other new vehicles, not shown separately. Includes direct pricing of new trucks and motorcycles beginning September
1982.
4
Includes direct pricing of diesel fuel and gasohot beginning September 1981.
Not available.
Note.--Data beginning 1978 are for ail urban consumers; earlier data are for urban wage earners and clerical workers.
See also Note, fable £ 56.
Source: Department of labor, Bureau of Labor Statistics.




363

TABLE B-58.—Consumer price indexes, commodities, services, and special groups, 1950-91
[1982-84=100]
Commodities

Year or
month

All
items

241

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

26.0
26.5
26 7

269

26 8
27 2
28.1

289

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
1988
1989
1990
1991
1990:Jan
Feb
Mar....

fc

June...
July...
Aug...
Sept..
Oct....
Nov...
Dec...
1991: Jan....
Feb....
Mar...

fe
June..
July...
Aug...
Sept..
Oct....
Nov...
Dec...

29.1
29.6
29.9
30.2
30.6
31.0

315

32.4
33.4
34 8
36.7
38.8
40.5
41.8
44.4
49.3
53.8
56 9
60.6
65 2
72.6
82.4
90.9
96.5
99.6
103 9
107.6
109 6
113.6
118.3
124.0
130 7
136.2
127.4
128.0
128.7
128.9
129.2
129.9
130.4
131.6
132.7
133.5
133.8
133.8
134.6
134.8
135.0
135.2
135.6
136.0
136.2
136.6
137.2
137.4
137.8
137.9

Medi-

All

All

commodities

Food

29 0
31.6
32.0

319
316
313
316

32.6
33 3
33.3
33.6
33.8
34.1
34.4
34.8
35 2
36.1
36.8

381

39.9
41.7
43.2
44.5
47.8
53.5
58.2
60 7
64.2

688
76.6
86.0
93.2
97.0
99.8
103 2
1054
104 4
107.7
1115
116.7
122 8
126.6
119.9
120.6
121.1
121.4
121.4
121.6
121.6
122.8
124.6
126.1
126.3
126.0
126.0
125.7
125.7
126.4
126.8
126.7
126.2
126.4
127.1
127.2
127.8
127.5

25 4
28.2
28.7

283
282

27.8
28 0
28.9
30 2
29.7
30.0
30 4
30.6

311

31.5
32 2
33.8
34.1
35 3
37.1
39.2
40.4
42.1
48.2
55.1
59.8

616
65.5
72 0
79.9
86.8
93.6
97 4
99.4
103 2
1056
109 0
113.5
118 2
125.1
132 4
136.3
130.4
131.3
131.5
131.3
131.3
132.0
132.7
132.9
133.2
133.8
134.0
134.2
135.8
135.5
135.8
136.7
136.8
137.2
136.5
136.0
136.0
135.8
136.2
136.7

All
All

Durable

31.4
33.8
34.1
34 2
33 8
33.6

349

339

361

34.9

353

35.8
36.0
36.1
36.3
36.6
36.9
37 2
37.7
38.6
40.0
41.7
43.4
45.1
46.1
47.7
52.8
57.6
60.5
63.8
67 5
75.3
85.7
93.1

969

100.0
1031
105.2
1017
104.3
107.7
112.0
117 4
121.3
114.1
114.6
115.4
115.9
115.9
115.8
115.5
117.2
119.8
121.8
121.8
121.4
120.6
120.3
120.1
120.7
121.3
120.9
120.5
121.1
122.1
122.4
123.0
122.4

Special indexes

Services

Commodities less food

37.5
38 0
37 7
36 8
36.1
37.2
37.8
38.4
38.1
38.1
38.5
38.6
39.0
38.8
38.9
39.4
40.7
42.2
44.1
46.0
46.9
48.1
51.5
57.4

609

64.4

686
75.4
83.0
89.6
95.1
99.8
1051
10&8
106 6
108.2
1104
112.2
1134
116.0
113.8
113.7
113.4
113.1
113.2
112.9
113.0
112.9
112.8
113.6
114.1
114.5
115.0
115.5
115.5
115.5
115.9
116.0
116.3
115.9
115.9
116.3
117.0
117.2

Nonservices
durable

28 6
30.8
31.0

312
314

31.4
32 0
32.9

331

33.5
34.1
34.3
34.5
34.8
35.1
35 6
36.4
37.6
39.1
40.9
42.5
44.0
45.0
46.9
52.9
57.0
59 5
62 5
65 5
74.6
88.4
96.7
98.3
100.0
1017
1041
98 5
101.8
105 8
111.7
119 9
124.5
114.2
115.0
116.5
117.4
117.5
117.6
117.0
119.9
124.1
126.8
126.6
125.7
124.0
123.2
122.9
123.9
124.6
123.9
123.0
124.3
125.9
126.1
126.7
125.5

16.9
17.8
18.6
19 4
20.0
20.4
20.9
21.8
22 6
23.3
24.1
24.5
25.0
25.5
26.0
26.6
27.6
28.8
30.3
32.4
35.0
37.0
38.4
40.1
43.8
48.0
52 0
56.0
60 8
67.5
77.9
88.1
96.0
99.4
104 6
109.9
115 4
120.2
125 7
131.9
139 2
146.3
135.4
136.0
136.9
137.1
137.6
138.8
139.9
140.9
141.4
141.7
142.0
142.3
143.8
144.5
144.8
144.7
145.0
145.8
146.8
147.3
147.9
148.1
148.3
148.8

..i
cai
care
services

12 8
13.4
14 3
14 8
15.3
15.7
16 3
17.0
17.9
18.7
19.5
20.2
20.9
21.5
22.0
22 7
23.9
26.0
27.9
30.2
32.3
34.7
35.9
37.5
41.4
46.6

513

56.4

612

67.2
74.8
82.8
92.6
100.7
106 7
113 2
1219
130.0
138 3
148.9
162 7
177.1
155.7
157.2
158.5
159.4
160.5
161.5
163.4
165.0
165.8
167.2
168.6
169.3
171.1
172.8
173.8
174.5
175.1
176.1
177.5
178.9
179.7
180.8
181.9
182.8

Services
less
medical
care
services

All
All

All

items
less
food

items
less
energy

items
Incc
less
food
and
energy

Energy1

23 8
25.3
25 9

264

22.8
23 6
24.2
25.0
25.4
25.9
26.3
26.8
27 4
28.3
29.3
30.8
32.9
35.6
37.5
38.9
40.6
44.3
48.3
52.2
55.9
60 7
67.5
78.2
88.7

964

99.2
104 4
109.6
114 6
119.1
124.3
130.1
136 8
143.3
133.4
133.9
134.7
134.9
135.3
136.5
137.5
138.5
139.0
139.1
139.4
139.7
141.1
141.7
142.0
141.8
142.1
142.9
143.8
144.3
144.8
145.0
145.1
145.5

26 6
26.6
27.1
28.0
28 6
29.2
29.7
30.0
30.3
30.7
31.1
31.6
32.3
33.4
34.9
36.8
39.0
40.8
42.0
43.7
48.0
52.5

560
59.6
63 9
71.2
81.5
90.4
96,3
99.7
104 0
108.0
109 8
113.6
118.3
123.7
130 3
136.1
126.7
127.3
128.1
128.4
128.7
129.4
130.0
131.3
132.6
133.5
133.7
133.7
134.3
134.6
134.8
134.9
135.4
135.7
136.1
136.7
137.4
137.7
138.0
138.1

28.9
29.7
29.9
30.4
30.7
31.1
31.5
32.0
32.5
33.5
34.4
35.9
38.0
40.3
42.0
43.4
46.1
50.6
55.1

582

61.9
66.7
73.4
81.9
90.1

961

99.6
104.3
108.4
112.6
117.2
122.3
128.1
134 7
140.9
131.5
132.3
133.3
133.5
133.7
134.2
134.8
135.6
136.3
136.9
137.2
137.4
138.6
139.3
139.8
140.2
140.3
140.5
140.9
141.3
141.9
142.3
142.7
142.8

28.9
29 6
30.2
30.6
31.0
31.4
31.8
32.3
32 7
33.5
34.7
36.3
38.4
40.8
42.7
44.0
45.6
49.4
53.9
57.4
61.0
65 5
71.9
80.8
89.2
95 8
99.6
104.6
109.1
113 5
118.2
123.4
129.0
135 5
142.1
132.0
132.8
133.9
134.2
134.4
134.8
135.5
136.4
137.2
137.8
138.2
138.3
139.4
140.3
140.9
141.1
141.3
141.5
142.0
142.7
143.4
143.9
144.4
144.4

21.5

215

21.9
22.4
22.5
22.6
22.6
22.5
22.9
23.3
23.8
24.2
24.8
25.5
26.5
27.2
29.4
38.1
42.1
45.1
49.4
52.5
65.7
86.0
97.7
99.2
99.9
1009
101.6
88.2
88.6
89.3
94.3
102.1
102.5
97.6
96.4
95.5
95.7
96.7
99.5
98.9
103.6
108.8
111.4
110.9
110.1
107.1
102.8
99.7
99.5
102.1
103.5
102.7
102.9
103.6
101.8
101.8
101.9

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-56.
Source: Department of Labor, Bureau of Labor Statistics.




364

TABLE B-59.—Changes in special consumer price indexes, 1958-91
[Percent change]
All items less
food

All items
Year or month

Dec.
to
Dec.1

Year
to
year

All items less
energy

Year
to
year

Dec.
to
Dec.1

All items less food
and energy

Year
to
year

Dec.
to
Dec.1

Dec.
to
Dec.1

All items less food,
shelter, and energy

Year
to
year

Year
to
year

Dec.
to
Dec*

1.8
1.7

2.8
.7

1.8
2.1

2.1
2.1

2.1
1.3

2.8
.7

1.7
2.0

2.4
2.0

.

1.4
.7
1.3
1.6
1.0

1.7
1.0
1.0
1.3
1.3

1.0
1.3
1.0
1.6
1.0

1.7
1.0
1.0
1.3
1.3

1.3
.7
1.3
1.9
1.3

1.7
1.0
1.3
1.3
1.6

1.0
1.3
1.3
1.6
1.2

1.3
1.3
1.3
1.3
1.6

..

1.9
3.5
3.0
4.7
6.2

1.6
2.9
3.1
4.2
5.5

1.6
3.5
3.3
5.0
5.6

1.6
2.2
3.4
4.5
5.4

1.9
3.4
3.2
4.9
6.5

1.6
3.1
2.7
4.4
5.8

1.5
3.3
3.8
5.1
6.2

1.2
2.4
3.6
4.6
5.8

4.6
5.1

4.7
4.7

1970
1971
1972
1973
1974

5.6
3.3
3.4
8.7
12.3

5.7
4.4
3.2
6.2
11.0

6.6
3.0
2.9
5.6
12.2

6.0
4.6
2.9
4.0
9.8

5.4
3.4
3.5
8.2
11.7

6.1
4.2
3.3
6.2
9.8

6.6
3.1
3.0
4.7
11.1

6.3
4.7
3.0
3.6
8.3

5.8
3.1
2.7
3.5
11.3

5.2
4.9
2.4
2.9
7.7

1975
1976
1977
1978
1979

6.9
4.9
6.7
9.0
13.3

9.1
5.8
6.5
7.6
11.3

7.3
6.1
6.4
8.3
14.0

9.4
6.7
6.4
7.2
11.4

6.6
4.8
6.7
9.1
11.1

8.9
5.6
6.4
7.8
10.0

6.7
6.1
6.5
8.5
11.3

9.1
6.5
6.3
7.4
9.8

6.4
6.9
5.3
6.4
7.3

8.9
7.1
6.0
5.6
6.9

1980
1981
1982
1983
1984

12.5
8.9
3.8
3.8
3.9

13.5
10.3
6.2
3.2
4.3

13.0
9.8
4.1
4.1
3.9

14.5
10.9
6.5
3.5
4.3

11.7
8.5
4.2
4.5
4.4

11.6
10.0
6.7
3.6
4.7

12.2
9.5
4.5
4.8
4.7

12.4
10.4
7.4
4.0
5.0

9.8
9.4
6.1
5.0
4.3

8.8
9.6
7.7
5.2
5.0

1985
1986
1987
1988
1989

3.8
1.1
4.4
4.4
4.6

3.6
1.9
3.6
4.1
4.8

4.1
.5
4.6
4.2
4.5

3.8
1.7
3.5
4.1
4.6

4.0
3.8
4.1
4.7
4.6

3.9
3.9
4.1
4.4
4.7

4.3
3.8
4.2
4.7
4.4

4.3
4.0
4.1
4.4
4.5

3.7
3.3
3.8
4.7
4.1

3.8
3.4
3.8
4.2
4.4

1990
1991

6.1
3.1

5.4
4.2

6.3
3.3

5.3
4.5

5.2
3.9

5.2
4.6

5.2
4.4

5.0
4.9

5.2
4.6

4.9
5.2

1958
1959
1960
1961
1962.
1963
1964
1965
1966
1967
1968
1969

.

Change from preceding period
Seasonally
adjusted

Unadjusted

1990:Jan
Feb

Seasonally
adjusted

Unadjusted

Seasonally
adjusted

Unadjusted

Seasonally
adjusted

Unadjusted

Seasonally
adjusted

Unadjusted

1.0
.5
.5
.2
.2
.5

0.9
.5
.4
.2
.2
.6

0.7
.5
.6
.2
.2
.5

0.8
.6
.4
.3
.2
.5

0.7
.6
.8
.2
.1
.4

0.6
.7
.5
.2
.2
.5

0.4
.6
.8
.2
.1

0.5
.6
.5
.4
.2
.5

0.3
.8
.8
.3
.2
0

0.5
.8
.5
.3
.3
.3

.4
.9
.8
.6
.2

.4
.8
.8
.6
.3
.3

.5
1.0
1.0
.7
.1
0

.5
.8
.8
.7
.3
.3

.4
.6
.5
.4
.2
.1

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

.5
.7
.6
.4
.3
.1

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

.2
l'.O
.7
.3
.1

.5
.4
.4
.4
.4
.4

%June

.6
.1
.1
.1
.3
.3

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

.4
.2
.1
.1
.4
.2

.4
.3
.1
.1
.4
.1

.9
.5
A
.3
.1
.1

.8
.5
.2
.3
.1
.4

.8
.6
.4
.1
.1
.1

.8
.7
.1
.2
.2
.4

.6
.9
.5
.1
.2
-.1

.8
.9
.1
.1
.4
.3

July
Aug
Sept
Oct
Nov
Dec

.1
A
.1
.3
.1

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

.3
.4
.5
.2
.2
.1

.4
.3
.4
.1
.4
.3

.3
.3
.4
.3
.3
.1

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

.4
.5
.5
.3
.3

.4
.4
.4
.1
.3
.3

.2
.6
.8
.4
.4
-.1

.6
.3
.1
.4
.2

Mar

SEf
June
July
Aug
Sept
Oct
Nov
Dec
1991: Jan
Feb
Mar

0

1

0

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-56.
Source: Department of Labor, Bureau of Labor Statistics.




365

TABLE B-60.—Changes in consumer price indexes, commodities and services, 1929-91
[Percent change]
Commodities

All items
Total
Year

Dec.
to

Dec.1

1929...

Year
to
year

Dec.
to
Dec 1

Year
to
year

0.6

to

Dec. 1

Year
to

Dec.
to

Dec.1

2.5

Total

Year
to
year

Dec.
to
Dec. 1

Medical care
services
Year
to
year

Dec.
to

Dec. 1

Year
to
year

Dec.
to

Dec. 1

Year
to
year

1.2

6.9

-5.1

1933...

Dec.

Energy2

Services
Commodities
less food

Food

-2.8

-1.4

-0.7

-2.0

-2.5

-2.5

0.5

-1.6

1.2

1.2

1940...
1941...
1942...
1943...
1944...

.7
9.9
9.0
3.0
2.3

.7
5.0
10.9
6.1
1.7

1.4
13.3
12.9
4.2
2.0

.7
6.7
14.5
9.3
1.0

2.5
15.7
17.9
3.0
0

1.7
9.2
17.6
11.0
-1.2

.5
10.7
63
5.5
4.7

.5
5.4
10.8
4.6
5.3

2.4
2.3
2.3
2.2

3.1
2.3
2.2

0
1.2
3.5
5.6
3.2

0
0
3.5
4.5
4.3

1945...
1946...
1947...
1948...
1949...

2.2
18.1
8.8
3.0
-2.1

2.3
8.3
14.4
8.1
-1.2

2.9
24.8
10.3
1.7
-4.1

3.0
10.6
20.5
7.2
-2.7

3.5
31.3
11.3
-.8
-3.9

2.4
14.5
21.7
8.3
-4.2

3.3
12.7
9.2
5.2
-4.6

4.2
6.0
12.9
7.4
-1.3

.7
3.6
5.6
5.9
3.7

1.5
14
4.3
6.1
5.1

3.1
9.0
6.4
6.9
1.6

3.1
5.1
8.7
7.1
3.3

1950...
1951...
1952...
1953...
1954...

5.9
6.0
.8
.7
_ 7

1.3
7.9
1.9
.8
.7

7.8
5.9
-.9
-.3
-1.6

.7
9.0
1.3

9.8
7.1
-1.0
— 11
-L8

1.6
11.0
1.8
-1.4

5.5
4.9
-.6
.3

-.3
7.6
.9

-1.5

-L2

3.6
5.2
4.4
4.2
2.0

3.0
5.3
4.5
4.3
3.1

4.0
5.3
5.8
3.4
2.6

2.4
4.7
6.7
3.5
3.4

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

.4
3.0
2.9
1.8
1.7

-.4
1.5
3.3
2.8
.7

-.3
2.6
2.8
1.2
.6

-.7
2.9
2.8
2.4
-1.0

-1.4
.7
3.2
4.5
-1.7

0
2.7
2.0
.8
1.4

-.6
.9
2.9
1.1
1.4

2.0
3.4
4.2
2.7
3.9

2.0
2.5
4.3
3.7
3.1

3.2
3.8
4.8
4.6
4.9

2.6
3.8
4.3
5.3
4.5

-0.9
4.7

0
1.9

1960...
1961...
1962...
1963...
1964..

1.4
.7
1.3
1.6
1.0

1.7
1.0
1.0
1.3
1.3

1.2
0
.9
1.5
.9

.9
.6
.9
.9
1.2 |

3.1
-.7
1.3
2.0
1.3

1.0
1.3

-.3
.8
.6
1.4

.6
.3
.6

2.5
2.1
1.6
2.4
1.6

3.4
1.7
2.0
2.0
2.0

3.7
3.5
2.9
2.8
2.3

4.3
3.6
3.5
2.9
2.3

1.3
-1.3
2.2
-.9
0

2.3
.4
.4
0
-.4

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

1.9
3.5
3.0
4.7
6.2

1.6
2.9
3.1
4.2
5.5

1.4
2.5
2.5
4.0
5.4

1.1
2.6
1.9
3.5
4.7

3.5
4.0
1.2
4.4
/.0

2.2
5.0
.9
3.5
5.1

.8
1.9
3.1
3.6
4.7

.8
1.3
2.4
3.6
4.3

2.7
4.8
4.3
5.8
7.7

2.3
3.8
4.3
5.2
6.9

3.6
8.3
8.0
7.1
7.3

3.2
5.3
8.8
7.3
8.2

1.8
1.7
1.7
1.7
2.9

1.8
1.7
2.1
1.7
2.5

1970..
1971..
1972..
1973..
1974..

5.6
3.3
3.4
8.7
12.3

5.7
4.4
3.2
6.2
11.0

3.9
2.3
3.4
10.4
12.8

4.5
3.6
3.0
7.4
11.9

2.3
4.3
4.6
20.3
12.0

5.7
3.1
4.2
14.5
14.3

4.7
2.2
2.6
4.9
13.2

4.1
3.9
2.2
3.5
10.7

8.1
4.1
3.4
6.2
11.4

8.0
5.7
3.8
4.4
9.2

8.1
5.4
3.7
6.0
13.2

7.0
7.4
3.5
4.5
10.4

3.1
2.6
17.0
21.6

2.8
3.9
2.6
8.1
29.6

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

6.9
4.9
6.7
9.0
13.3

9.1
5.8
6.5
7.6
11.3

6.2
3.3
6.1
8.8
13.0

8.8
4.3
5.3
7.2
11.3

6.6
.5
8.1
11.8
10.2

8.5
3.0
6.3
9.9
11.0

6.1
5.1
4.8
7.7
14.3

9.1
5.0
5.5
5.8
11.6

8.2
7.2
8.G
9.3
13.6

9.6
8.3
7.7
8.6
11.0

10.3
10.8
9.0
9.3
10.5

12.6
10.1
9.9
8.5
9.8

11.4
7.1
7.2
7.9
37.5

10.5
7.1
9.5
6.3
25.1

1980..
1981..
1982..
1983..
1984..

12.5
8.9
3.8
3.8
3.9

13.5
10.3
6.2
3.2
4.3

11.0
6.0
3.6
2.9
2.7

12.3
8.4
4.1
2.9
3.4

10.2
4.3
3.1
2.7
3.8

8.6
7.8
4.1
2.1
3.3

11.5
6.7
3.8
3.1
2.1

13.8
8.6
4.1
3.2
3.1

14.2
13.0
4.3
4.8
5.4

15.4
13.1
9.0
3.5
5.2

10.1
12.6
11.2
6.2
5.8

11.3
10.7
11.8
8.7
6.0

18.0
11.9
1.3
_ 5
.2

30.9
13.6
1.5
.7
1.0

1985..
1986..
1987..
1988..
1989..

3.8
1.1
4.4
4.4
4.6

3.6
1.9
3.6
4.1
4.8

2.5
-2.0
4.6
3.8
4.1

2.1
-.9
3.2
3.5
4.7

2.6
3.3
3.5
5.2
5.5

2.3
3.2
4.1
4.1
5.8

2.4
-5.3
5.1
3.2
3.3

2.0
-3.3
2.6
3.3
4.0

5.1
4.5
4.3
4.8
5.1

5.1
5.0
4.2
4.6
4.9

6.8
7.9
5.6
6.9
8.6

6.1
7.7
6.6
6.4
7.7

1990..
1991..

6.1
3.1

5.4
4.2

6.6
1.2

5.2
3.1

5.3
1.9

5.8
2.9

7.4
.8

4.8
3.3

5.7
4.6

5.5
5.1

9.9
8.0

9.3
8.9

1939...

1
8

-.9
_g
L0
3.2
2.1
0

L6
1.3

.7
1.8
-19.7 -13.2
8.2
".8
5.6
5.1
18.1
-7.4

8.3
.4

Changes from December to December are based on unadjusted indexes.
Household fuels-gas (piped) electricity, fuel oil, e t c - a n d 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-56.
Source: Department of Labor, Bureau of Labor Statistics.




366

TABLE B-61.—Producer price indexes by stage of processing, 1947-91
[1982=100]
Finished goods
Finished goods excluding consumer foods

Consumer foods
Year or month

Total
finished
goods

264

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
1988
1989
1990
1991» ..
.
1990:Jan

28 5
27.7
282
30 8
30 6

303
30 4

305
313
32 5
33 2

331
33 4
33 4
33 5

334
33 5

341
35.2
35 6
36 6
38.0
39.3
40 5

418

Fb
e
Mar
Ar
p
May.:::::::::::::::::::
June
July
Aug..

Sept:.::::. ::::
::.:
::.
Ot
c
Nov...
Dec
1991: Jan
Fb
e
Mar
Apr
My
a
June.
July
Aug l
Sept

oc?..:
Nov

:

Dc
e

45 6
52.6
58 2
60 8
64.7
69.8
77.6
88 0
96.1
100 0
1016
103 7
104.7
103 2
105.4
108.0
113.6
119.2
121.7
117.6
117 4
117 2
117 2
117.7
117.8
118.2
119 3
120.4
122 3
122 9
122.0
122.3
121.4
120 9
121.1
121.8
121.9
1216
121.7
1213
122 3
122 3
121.9

Consumer goods
Total

Crude

Processed

319
349

393
424
40.1
36 5

334

391
391

31.1
32 4
36 2
35.4
33 6
34 0
32.7
32.7
34.1
36.1
34.7
35 2
35 3
35.6
35.2
35.2
36.8
39.2
38 8
40 0
42.3
43.9
44 7
47 2
55 8
63.9
70 3
69 0
111
79.4
86.8
92 3
97.2
100 0
100 9
104 9
104.8
107 4
109.6
112.7
118.6
124.4
124.4
122.0
122 5
123 3
123 5
125.3
125.3
125.7
125 8
125.2
1251
124 8
124.6
124.7
124.9
1251
1251
124.9
124.8
124 7
124.1
123 5
124 2
123.5
123.4

Total

311
340

32.1
32 7
36 7
36 4
34 5
34 2

Total

33 3
34 4
36 5
34 8
35 5

354
35 7
35 3
35 4
36.8
39.2
38 5
40 0
42.4
43.8
445
46 9
56 5
64.4
69 8
69 6
73.3
79.9
87.3
92 4
97.8
100 0
1010
105 4
104.6
107 3
109.5
112.6
118.7
124.4
124.2
123.9
124 6
124 4
123 2
124.5
124.2
124.9
124 9
124.2
124 6
125 0
124.2
124 8
124.6
125 2
125 3
125.8
125.3
124 5
123.3
122 7
123 0
1231
122.2

419
446
416
37 5
38 5
41.0
37 3
39 8
38.0
38.4
37 8
38 9
39.0
41.5
39 6
42 5
45.9
46.0
45 8
48 0
63 6
71.6
71 7
76 7
79.5
85.8
92.3
93 9
104.4
100 0
102 4
1114
102.9
105 6
107.1
109.8
119.6
123.0
119.7
148.8
152 7
138 6
118 7
112.9
108.6
113.4
1121
109.1
117 4
126 3
117.9
124 3
118.8
125 0
128 2
137.8
130.3
1218
112.1
1101
105 7
116.0
106.1

35 0
35.9
36.9
38.2
39 6
40 4
42.0
48.8
54 7

581
62.2
66.7
74.6
86 7
95.6
100 0
1018
103.2
104.6
1019
104.0
106.5
111.8
117.4
120.9
115.5
115 1
114 8
115 2
115.5
115.7
116.0
117 4
119.1
1215
1221
121.3
121.4
120.4
119 5
119.7
120.5
120.8
120.7
121.1
120 8
122 0
122.0
121.7

27.4
29.2
28.6
29.0
31.1
30.7
31.0
31.1
31.3
32.1
32.9
32.9
33.3
33.5
33.4
33.4
33.4
33.3
33.6
34.1
34 7
35.5
36.3
37.4
38 7
39.4
41.2
48.2
53 2
56 5
60.6
64.9
73.5
871
96.1
100 0
1012
102.2
103.3
98 5
100.7
103.1
108.9
115.3
118.7
113.2
112 4
1118
112 2
112.7
112.9
113.2
1151
117.7
120 6
1214
120.0
119.8
118.2
117 0
117.2
118.2
118.6
118.4
119.0
118 8
119.7
119.7
119.3

Durable
32.9
35.2
36.1
36.5
38.9
39.2
39.5
39.8
40.2
41.6
42.8
43.4
43.9
43.8
43.6
43.4
43.1
43.3
43.2
43.4
44.1
45.1
45.9
47.2
48.9
50.0
50.9
55.5
61.0
63.7
67.4
73.6
80.8
91.0
96.4
100 0
102.8
104.5
106.5
108 9
111.5
113.8
117.6
120.4
123.9
119.1
119 4
119.2
119 3
119.4
120.3
120.4
119 9
119.9
122 7
122.8
122.9
123.5
123.9
124.0
123.7
123.2
123.1
123.1
122.9
121.8
126.0
126.0
125.6

Nondurable
24.2
25.7
24.7
25.1
27.0
26.3
26.6
26.7
26.8
27.3
27.9
27.8
28.2
28.4
28.4
28.4
28.5
28.4
28.8
29.3
30.0
30.6
31.5
32.5
33.5
34.1
36.1
44.0
48.9
52.4
56.8
60.0
69.3
85.1
95.8
100.0
100.5
101.1
101.7
93 3
94.9
97.3
103.8
111.5
115.0
109.2
107 9
107.1
107 7
108.3
108.3
108.6
111.5
115.1
118.0
119.0
117.2
116.7
114.4
112.8
113.2
114.6
115.2
115.0
115.8
115.9
115.7
115.7
115.2

Capital
equipment

19.8
21.6
22.7
23.2
25.5
25.9
26.3
26.7
27.4
29.5
31.3
32.1
32.7
32.8
32.9
33.0
33.1
33.4
33.8
34.6
35.8
37.D
38.3
40.1
41.7
42.8
44.2
50.5
58.2
62.1
66.1
71.3
77.5
85.8
94.6
100.0
102.8
105.2
107.5
109.7
111.7
114.3
118.8
122.9
126.7
121.2
121.6
121.9
122.2
122.2
122.5
122.8
123.1
122.9
124.5
124.7
124.9
125.9
126.1
126.2
126.2
126.5
126.5
126.6
126.5
126.1
127.9
127.9
128.0

Tntal
finished
consumer
goods

28.6
30.8
29.4
29.9
32.7
32.3
31.7
31.7
31.5
32.0
32.9
33.6
33.3
33.6
33.6
33.7
33.5
33.6
34.2
35.4
35.6
36.5
37.9
39.1
40.2
41.5
46.0
53.1
58.2
60.4
64.3
69.4
77.5
88.6
96.6
100.0
101.3
103.3
103.8
101.4
103.6
106.2
112.1
118.2
120.4
116.7
116.4
115.9
115.8
116.5
116.6
117.0
118.3
119.8
121.9
122.6
121.4
121.4
120.3
119.6
119.8
120.6
120.7
120.4
120.4
120.1
120.8
120.9
120.3

1
Data have been revised through August 1991 to reflect the availability of late reports and corrections by respondents. All data are
subject to revision 4 months after original publication.
See next page for continuation of table.




367

TABLE B-61.—Producer price indexes by stage of processing,

1947-91—Continued

[1982=100]
Intermediate materials, supplies, and components

Year or month
Total

1947
1948
1949
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
,
1980
1981
1982
1983
1984
1985
1986
'.
1987
1988.
1989
1990
1991 »..
1990: Jan
Feb
Mar
May"
June
July
Aug .
Sept
Oct
Nov
Dec
1991:Jan
Feb
Mar

341

Supplies

Total

For
manufacturing

For
construction

and
lubricants

tainers

24.9
26.8
25.7
26.9
30.5
29.3
29.7
29.8

22.5
24.9
24.9
26.2
28.7
28.5
29.0
29.1

14.4
16.4
14.9
15.2
15.9
15.7
15.8
15.8

23.4
24.4
24.5
25.2
29.6
28.0
28.0
28.5

28.5
29.8
28.0
29.0
32.6
32.6
31.0
31.7

31.7
34.7
30.1
32.7
37.6
34.5
31.9
31.6

29 3
30.1
30.1
30.5
30.7
30 3
30.2

32 0
32.7
32 8
33.3
33.3

16.3
17.2
16.2
16.2
16.6
16.8
16.7
16.6
16.2
16 5
16 8

31.0
32.4

32.0
32.3
33.1
33.5
33.3
33 7
34.5
35 0
34.7
35 0

30.6
31.2
31.9
31.1
30.4
30.2
30.5
29.9
29.6

280

301
30.3
30 7

312

32 0
32 2
33.0

Other

fualc

22.2
24.1
23.5
24.6
27.6
26.7
27.0
27.2

23.3
25.2
24.2
25.3
28.4
27.5
27.7
27.9
28 4
29.6
30.3
30.4
30.8
30.8
30.6
30.6
30.7
30.8

35.4
36 8
38.2
42 4
52.5
58 0
60.9
64 9
69 5
78.4
90.3
98 6
100 0
100.6
1031
102 7
99.1
101.5
1071
112 0
114 5
114 4
113.4
112.5
112 4
112.8
1131
113.1
113.1
114 4
116.3
117 9
117.9
116.7
116.4
115.5
114.2
113.9
114.0
June
114.3
July
114.0
Aug»
114.2
Sept
114.5
Oct
114.1
Nov
114.1
Dec....... ... 113.7

fcz

Foods
and
feeds'

Crude materials for further processing

Proc-

Materials and

418
41.5
42 9
45 6
46 7
49 5
70 3

313
317
32.5
33 6

348
36 2
37 7

406

836
816

50 5
56 6
60 0

77 4
79 6

848
94.5
105.5
104 6
100 0
103.6
105 7
97 3
96.2
99 2
109 5
113 8
113 3
111 1
113.2
111.0
1114
112.5
1159
115.5
116.0
114 9
113.9
113 0
111.2
1115
110.4
110.7
111.6
111.5
110.8
110.8
110.0
111.5
111.4
111.8
111.4
111.4

641

68 6
77.4
89.4
98 2
1000
100 5
103 0
103 0
99.3
1017
106 9
1119
114 5
114 6
113 4
112.5
112 5
112.8
112 9
113.0
113 0
114 4
116.4
1181
118.2
117 0
116.8
115.7
114.4
114.1
114.2
114.5
114.2
114.4
114.7
114.2
114.3
113.8

305

329

32.7
32 7
33.1
33 6

343
345
353

36 5

380
389
404
441
560
617
640
67 4
72 0

809
917

98 7
100 0
1012
1041
103 3
102 2
105 3
113 2
1181
118 7
118 1
117 6
117.5
117 9
118.2
118 4
118.3
118.5
118 7
119.3
120 0
1201
119 8
119.9
119.6
118.9
118.5
118.1
117.8
117.4
117.3
117.4
117.5
117.4
117.3

158

303
318

32.0

320

32.9
32.7
32.2
32.1
32 2
32.5
32 8
33 6

340

169

35.7
37 7
38 3

16.5
16 6

43 0

201

55 0

22 2
33 6

111

408

19 5

465

601
641

394

42 3

Ml

69 3

765

49 9

84 2

616

913

85 0
100 6
100 0
95 4
95 7
92 8
72 7
73 3

97 9
100 0
102 8
105 6
107 3
1081
109 8
1161
1213
1229
124 5
1218
121.9
122 5
123.0
123 2
122.8
123 0
123 0
123.3
123 4
123 4
123 5
124.0
123.9
124.0
124.3
124.5
125.2
125.3
124.7
124.7
124.5
124.4
124.5

712

76 4

859
852
842
79.4
77 8
78.0
78 4
79.4
78.7
85 7
94.1
1006
100.0
94 0
91.7
87.5
82.8
81.8
83.4
85.0
84.6
86.0
86.9
84.8
84.9
83.2

2
Intermediate materials for food manufacturing and feeds.
Source: Department of Labor, Bureau of Labor Statistics.




368

Foodstuffs
and
feed-

Other

Total

Fuel

Other

etirffc

289

332

33.0
33.4
33 2
33.6
33 2
32.9

335
345
35 0
35.9
37 2
39 0

312

365
368
37.1
37 8
39 7

408

408

42 7
45 2
53 3

42 5

600
631
659
710
794
891
967

1000
1004
105 9
109 0
110 3
114 5
1201
125 4
127 7
128 2
127 3
127.4
127 4
127.8
127 7
127.6
127 5
127 5
127.5
127 8
128 3
128 2
129.0
128.S
128.7
128.3
128.1
127.7
127.9
127.4
127.9
127.9
128.3
128.1

517
568
618
65 8
69 3
72 9
80 2
89 9

969

100 0
1018
1041
104 4
105 6
107 7
113 7
1181
119 4
1214
118 8
118.5
118 7
118.9
119 4
119.2
119.5
119 4
119.7
1201
120.2
120 4
120.9
121.1
121.3
121.4
121.3
121.4
121.1
121.5
121.6
121.7
121.8
121.8

304

311
331
313
31.8

339

416
38.8
38.4
37 9
38.6
37 5
36.6
39 2
42 7
40 3
40.9

441

35 2
45 2
36 0 ' 46 1

399
545
614
616

63 4
65 5
73 4
85.9
95.3
103 0
100 0
101.3
103 5
95 8
87.7
93 7
96 0
103 1
108 9
1012
106.5
106.8
105 6
103.0
104 7
101.2
101.4
110 2
115.3
124 8
116.7
110 5
112.8
104.1
101.2
100.8
102.1
99.8
99.5
99.1
98.0
99.6
99.7
97.7

7.5
8.9
8.8
8.8
9.0
9.0
9.3
8.9
89
9.5

45.1
48.8
40.5
43.4
50.2
47.3
42.3
42.3
38 4
37.6
39.2

515

72 6
76 4
11A
76 8
77 5
87 3
100.0
104 6
103 9
100 0
1018
104 7
94 8
93 2
96 2
106 1
1112
1131
105 5
113 5
113.9
115 3
115.1
117 0
115.6
115.4
113 2
110.8
110 5
108.5
107 9
107.2
107.3
109.9
109.0
108.7
107.4
105.1
102.7
102.9
102.5
101.6
101,9

211
21.6
22 5
23 8
24 7
27.0
34 3

441

43 7
48.2

517
57 5
69.6
84.6
1018
100 0
100.7
102 2
96 9
81.6
87 9
85 5
93 4
101 5
94 6
97.5
97.6
94 9
91.0
92 5
88.0
88.3
103 4
112.9
127 8
116.4
107.1
110.8
97.9
92.3
92.2
94.2
91.5
92.3
93.0
91.3
93.8
94.3
91.3

10.1
10.2
10.4
10.5
10.5
10.4
10.5
10.5
10 6
10 9
11.3
11.5
12 0
13.8
15 7
16.8
18 6
24 8
30 6
34.5
42 0
48.2
57.3
69.4

848

100 0
105.1
1051
102 7
92.2

841
821

85 3
84 8
82 8
86.8
87.3
86 0
84.7
84 8
83.0
86.8
80.4
81.7
81.2
85.2
89.8
88.5
85.6
84.8
81.7
84.0
82.5
81.4
81.8
78.0
77.7
82.0
85.4

24.0
26.7
24.3
27.8
32.0
27.8
26.6
26.1
27 5
28.6
28.2

271

28.1
26.9
27 2
27.1
26 7
27.2
27 7
28 3
26.5
27.1
28 4

291
294
32 3
42 9

545
500

54.9
56 3

619

75.5
91.8
109 8
100 0
98.8
1010
94 3
76.0
88.5
85 9
95 8
107 3
97 5
101.0
100.8
97 6
92.7
94 6
89.0
87.8
112 0
124.8
146.3
128.3
113.2
120.4
101.C
92.2
94.2
95.9
92.4
94.8
95.6
95.4

99i

97.6
90.1

TABLE B-62.—Producer price indexes by stage of processing, special groups, 1974-91
[1982=100]
Finished
goods

Intermediate materials, supplies,
and components

Crude materials for further
processing

Excluding foods and
energy
Year or month
Total

Foods

Energy

Total

Consumer
Capital excludequiping
ment
and
energy

Total

Foods
and
feeds*

Energy

Other

Total

Foodstuffs
and
feedstuffs

Energy

Other

1974

52.6

64.4

26.2

53.6

50.5

55.5

52.5

83.6

33.1

54.0

61.4

76.4

27.8

83.3

1975
1976
1977
1978
1979

58.2
60.8
64.7
69.8
77.6

69.8
69.6
73.3
79.9
87.3

30.7
34.3
39.7
42.3
57.1

59.7
63.1
66.9
71.9
78.3

58.2
62.1
66.1
71.3
77.5

60.6
63.7
67.3
72.2
78.8

58.0
60.9
64.9
69.5
78.4

81.6
77.4
79.6
84.8
94.5

38.7
41.5
46.8
49.1
61.1

60.2
63.8
67.6
72.5
80.7

61.6
63.4
65.5
73.4
85.9

77.4
76.8
77.5
87.3
100.0

33.3
35.3
40.4
45.2
54.9

69.3
80.2
79.8
87.8
106.2

1980
1981
1982
1983
1984

96.1
100.0
101.6
103.7

92.4
97.8
100.0
101.0
105.4

85.2
101.5
100.0
95.2
91.2

87.1
94.6
100.0
103.0
105.5

85.8
94.6
100.0
102.8
105.2

87.8
94.6
100.0
103.1
105.7

90.3
98.6
100.0
100.6
103.1

105.5
104.6
100.0
103.6
105.7

84.9
100.5
100.0
95.3
95.5

90.3
97.7
100.0
101.6
104.7

95.3
103.0
100.0
101.3
103.5

104.6
103.9
100.0
101.8
104.7

73.1
97.7
100.0
98.7
98.0

113.1
111.7
100.0
105.3
111.7

1985
1986
1987
1988
1989

104.7
103.2
105.4
108.0
113.6

104.6
107.3
109.5
112.6
118.7

87.6
63.0
61.8
59.8
65.7

108.1
110.6
113.3
117.0
122.1

107.5
109.7
111.7
114.3
118.8

108.4
111.1
114.2
118.5
124.0

102.7
99.1
101.5
107.1
112.0

97.3
96.2
99.2
109.5
113.8

92.6
72.6
73.0
70.9
76.1

105.2
104.9
107.8
115.2
120.2

95.8
87.7
93.7
96.0
103.1

94.8
93.2
96.2
106.1
111.2

93.3
71.8
75.0
67.7
75.9

104.9
103.1
115.7
133.0
137.9

1990
1991 2

119.2
121.7

124.4
124.2

75.0
78.1

126.6
131.0

122.9
126.7

128.8
133.7

114.5
114.4

113.3
111.1

85.5
85.0

120.9
121.4

108.9
101.2

113.1
105.5

85.9
80.4

136.3
128.1

1990:Jan
Feb
Mar

117.6
117.4
117.2
117.2
117.7
117.8

123.9
124.6
124.4
123.2
124.5
124.2

72.7
69.2
67.0
68.0
68.5
67.6

124.8
125.2
125.4
125.6
125.9
126.4

121.2
121.6
121.9
122.2
122.2
122.5

127.0
127.4
127.5
127.7
128.1
128.8

113.4
112.5
112.4
112.8
113.1
113.1

113.2
111.0
111.4
112.5
115.9
115.5

83.7
79.0
77.4
77.7
78.0
79.0

120.0
120.0
120.3
120.6
120.7
120.5

106.5
106.8
105.6
103.0
104.7
101.2

113.5
113.9
115.3
115.1
117.0
115.6

82.3
82.6
78.6
73.1
74.5
69.4

132.1
131.3
134.2
137.8
138.8
137.8

118.2
119.3
120.4
122.3
122.9
122.0

124.9
124.9
124.2
124.6
125.0
124.2

68.1
74.2
82.0
88.1
89.5
84.7

126.7
126.7
126.7
128.2
128.5
128.8

122.8
123.1
122.9
124.5
124.7
124.9

129.0
128.9
129.0
130.3
130.8
131.2

113.1
114.4
116.3
117.9
117.9
116.7

116.0
114.9
113.9
113.0
111.2
111.5

101.4 115.4
110.2 113.2
115.3 110.8
124.8 110.5
116.7 ,108.5
110.5 107.9

69.7
87.2
98.5
117.0
104.1
93.5

138.2
140.4
140.1
137.8
134.6
132.8

122.3
121.4
120.9
121.1
121.8
121.9

124.8
124.6
125.2
125.3
125.8
125.3

82.6
78.4
75.5
75.7
78.0
78.4

129.9
130.2
130.3
130.5
130.5
130.8

125.9
126.1
126.2
126.2
126.5
126.5

132.3
132.7
132.8
133.1
132.9
133.3

116.4
115.5
114.2
113.9
114.0
114.3

110.4
110.7
111.6
111.5
110.8
110.8

91.5
87.4
82.7
81.7
83.2
84.8

122.4
122.2
121.8
121.6
121.4
121.4

112.8
104.1
101.2
100.8
102.1
99.8

107.2
107.3
109.9
109.0
108.7
107.4

97.6
83.1
77.0
76.7
79.2
77.1

133.5
133.4
132.2
132.7
131.4
126.8

121.6
121.7
121.3
122.3
122.3
121.9

124.5
123.3
122.7
123.0
123.1
122.2

77.5
78.8
79.1
78.3
78.2
76.6

131.0
131.0
130.5
132.4
132.5
132.8

126.6
126.5
126.1
127.9
127.9
128.0

133.7
133.7
133.2
135.2
135.3
135.7

114.0
114.2
114.5
114.1
114.1
113.7

110.0
111.5
111.4
111.8
111.4
111.4

84.4
85.7
86.6
84.6
84.6
82.8

121.1
120.9
121.0
121.1
121.1
121.0

99.5
99.1
98.0
99.6
99.7
97.7

105.1
102.7
102.9
102.5
101.6
101.9

78.3
79.0
77.1
80.1
81.1
77.9

125.9
126.0
125.8
125.0
122.8
122.2

B
July
Aug
Sept..
Oct
Nov
Dec
1991: Jan....
Feb....
Mar...
June..
July 2
Aug
Sept.
Oct
Nov
Dec
1
2

120.6
78.4
120.8
85.3
93.6 121.4
122.0
100.1
122.2
99.7
93.7 122.08

Intermediate materials for food manufacturing and feeds.
Data have been revised through August 1991 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.




369

TABLE B-63.—Producer price indexes for major commodity groups, 1950-91
[1982=100]
Farm products and processed
foods and feeds
Year or month
Total

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
1988
1989
1990
1991 2
1990- Jan
Feb
Mar

. .

. . .

Apr
itfay::..::::::::::::::::::::::::::::::
June... .

July
Aug
Sept
Oct
Nov.
Dec
1991- Jan
Feb...,

,

Mar

Apr

May.
June....

.....

..

July
Aug 2 . ..
Sept
Oct

Nov

Dec

37.7
43 0
41.3
38 6
38.5
36.6
36.4
37.7
39.4
37.6
37,7
37.7
38.1
37.7
37.5
39.0
41.6
40 2
41.1
43.4
44.9
45.8
49.2
63.9
713
74.0
73.6
75.9
83 0
92.3
98 3
101.1
100 0
102.0
105.5
100 7
1012
103.7
110 0
115.4
118.6
116.4
118 3
118.4
118 9
118 5
120.1
119.6
1200
119.1
117 9
117.9
117 3
116.8
117 C
117.1
118 3
118.1
118.3
117.6
116.3
115 2
115.0
115 0
114 8
114.5

Farm
products

44.0
51.2
48.4
43.8
43.2
40.5
40.0
41.1
42.9
40.2
40.1
39.7
40.4
39.6
39.0
40.7
43.7
413
42.3
45.0
45.8
46.6
51.6
72.1
77 4
77.0
78.8
79.4
87 7
99.6
102 9
105.2
100 0
102.4
105.5
95 1
92 9
95.5
104 9
110.9
112.2
105.6
114 9
115.7
1153
113 3
113.7
113.6
113 8
111.4
109 2
109.5
108 5
107.2
106 9
106.9
109 7
109.6
110.4
109.1
105.6
102 9
102.8
1012
1014
100.7

Processed
foods and
feeds

33.2
36 9
36.4
34 8
35.4
33.8
33.8
34.8
36.5
35.6
35.6
36.2
36.5
36.8
36.7
38.0
40.2
39.8
40.6
42.7
44.6
45.5
48.0
58.9
68 0
72.6
70.8
74.0
80 6
88.5
959
98.9
^000
101.8
105.4
103 5
1054
107.9
112 7
117.8
121.9
121.9
120 2
120.0
120 9
1212
123.5
122.8
123 2
123.0
122 4
122.2
121 7
121.7
122 i
122.3
122 6
122.5
122.3
121.9
121.6
1214
121.1
122 0
1215
121.4

1
2

industrial commodities

Total

25.0
27 6
26.9
27 2
27.2
27.8
29.1
29.9
30.0
30.5
30.5
30.4
30.4
30.3
30.5
30,9
31.5
32 0
32.8
33.9
35.2
36.5
37.8
40.3
49 2
54.9
58.4
62.5
67 0
75.7
880
97.4
1000
101.1
103.3
103 7
100 0
102.6
106 3
111.6
115.8
116.5
114 1
113.6
113 2
113 2
113.5
113.2
113 4
115.9
1184
1214
120 7
119.0
119 3
117.2
115 7
115.6
116.1
116.1
116.0
116 3
116.2
116 6
115 7
116.1

Textile
products
and
apparel

50.2
56 0
50.5
49 3
48.2
48.2
48.2
48.3
47.4
48.1
48.6
47.8
48.2
48.?
48.5
48 8
48.9
48.9
50.7
51.8
52.4
53.3
55.5
60.5
68 0
67.4
72.4
75.3
781
82.5
89 7
97.6
100 0
100.3
102.7
10? 9
103 2
105.1
109 2
112.3
115 0
116.3
114 6
114.6
114 7
U4 9
114.8
115.0
1151
115.1
1151
115.1
115 3
115.2
115 7
115.8
1159
116.0
116.0
116.2
116.3
116.5
1165
116 6
116 8
116.9

Hides,
skins,
leather,
and
related
products
32.9
37 7
30.5
310
29.5
29.4
31.2
31.2
31.6
35.9
34.6
34.9
35.3
34.3
34.4
35 9
39.4
38.1
39.3
41.5
42.0
43.4
50.0
54.5
55.2
56.5
63.9
68.3
761
96.1
94 7
99.3
100 0
103.2
109.0
108 9
113 0
120.4
1314
136.3
141.7
138.S
138 9
141.7
1416
14? S
143.7
143.0
142.8
142.2
141.4
140.9
140.5
140.6
140 2
140.0
140 4
141.1
140.4
140.0
138.3
138.1
137.1
136.5
137 0
137.6

Fuels and
related
products,
and
powerl
12.6
13 0
13.0
13 4
13.2
13.2
13.6
14.3
13.7
13.7
13.9
14.0
14.0
13.9
13.5
13.8
14.1
14.4
14.3
14.6
15.3
16.6
17,1
19.4
30.1
35.4
38.3
43.6
46.5
58.9
82.8
100.2
100.0
95.9
94.8
91.4
S9 8
70.2
66 7
72.9
82.3
81.2
79 8
77.0
74 6
73 4
74.1
72.8
72.7
82.4
91.3
101.0
97.4
90.5
9O.i
83.0
78.5
78.1
80.2
80.3
80.1
81.3
81.2
81.0
81.3
79.1

Chemicals
and allied
products *

30.4
348
33.0
33 4
33.8
33.7
33.9
34.6
34.9
34.8
34.8
34.5
33.9
33.5
33.6
33 9
34.0
34.2
34.1
34.2
35.0
35.6
35.6
37.6
50.2
62.0
64.0
65.9
68.0
76.0
89.0
98.4
100.0
100.3
102.9
103.7
102.6
106.4
116.3
123.0
123.6
125.6
121 2
121.7
121.8
121.9
122.3
122.2
122.4
122.5
124.5
126.5
128.2
127.9
128.3
128.1
126.0
126.0
125.3
125.0
124.4
124.5
124.3
124.9
125.0
124.9

Prices for some items in this grouping are lagged and refer to 1 month earlier than the index month.
Data have been revised through August 1991 to reflect the availability of late reports and corrections by respondents. All data are
subject to revision 4 months after original publication.




370

TABLE B-63.—Producer price indexes for major commodity groups,

1950-91—Continued

[1982=100]
Industrial commodities—Continued

Year or month

1953
1951
1952
1953
1954
1955
1966
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
19«3
1984
1985
1986
1987
1988
1989
1990
1991 ^
1990: Jan..
Feb..
Mar.
Apr..
May.
June
July..
Aug..
Sept
Oct..
Nov..
Dec.
1991: Jan..
Feb..
Mar..
Apr..
May.
June
July..
Aug s
Sept
Oct..
Nov..
Dec.

Transportation
equipment

Rubber
and
plastic
products

Lumber
and
wood
products

Pulp,
paper,
and
allied
products

Metals
and
metal
products

Machinery
and
equipment

35.6
43.7
39.6
36.9
37.5
42.4
43.0
42.8
42.8
42.6
42.7
41.1
39.9
40.1
39.6
39.7
40.5
41.4
42.8
43.6
44.9
45.2
45.3
46.6
56.4
62.2
66.0
69.4
72.4
80.5
90.1
96.4
100.0
100.8
102.3
101.9
101.9
103.0
109.3
112.6
113.6
115.2
113.2
112.9
113.3
113.3
113.5
113.2
113.1
113.2
113.4
114.2
115.0
115.4
116.0
116.0
115.8
115.5
115.2
115.0
114.8
114.7
114.9
114.7
114.6
114.7

31.4
34.1
33.2
33.1
32.5
34.1
34.6
32.8
32.5
34.7
33.5
32.0
32.2
32.8
33.5
33.7
35.2
35.1
39.8
44.0
39.9
44.7
50.7
62.2
64.5
62.1
72.2
83.0
96.9
105.5

25.7
30.5
29.7
29.6
29.6
30.4
32.4
33.0
33.4
33.7
34.0
33.0
33.4
33.1
33.0
33.3
34.2
34.6
35.0
36.0
37.5
38.1
39.3
42.3
52.5
59.0
62.1
64.6
67.7
75.9
86.3
94.8
100.0
103.3
110.3
113.3
116.1
121.8
130.4
137.8
141.2
143.0
140.3
140.5
140.7
140.9
141.1
141.0
141.1
141.1
141.3
142.0
142.3
142.3
143.6
143.8
143.7
143.2
143.0
142.7
142.3
142.2
142.6
142.9
143.0
142.7

22.0
24.5
24.5
25.3
25.5
27.2
29.g
30.2
3O.0
30.6
30.6
30.5
30.2
30.3
31.1
32.0
32.8
33.2
34.0
36.0
38.7
39.4
40.9
44.0
57.0
61.5
65.0
69.3
75.3
86.0
95.0
99.6
100.0
101.8
104.8
104.4
103.2
107.1
118.7
124.1
122.9
120.3
121.7
120.9
122.0
122.9
123.1
122.6
122.9
124.2
124.6
124.5
123.3
122.4
122.4
121.9
121.5
121.3
120.5
119.7
119.6
119.5
119.6
119.5
119.1
U8.7

22.6
25.3
25.3
25.S
2S.3
27.2
29.3
31.4
32.1
32.8
33.0
33.0
33.0
33.1
33.3
33.7
34.7
35.9
37.0
38.2
40.0
41.4
42.3
43.7
50.0
57.9
61.3
65.2
70.3
76.7
86.0
94.4
100.0
102.7
105.1
107.2
108.8
110.4
113.2
117.4
120.7
123.0
119.6
119.7
120.0
120.2
120.4
120.5
120.8
120.9
121.2
121.4
121.7
122.0
122.6
122.9
123.0
123.1
123.1
123.1
123.0
123.0
123.0
123.0
123.1
123.1

101.5
102.8
100.0
107.9
108.0
106.6
107.2
112.8
118.9
126.7
129.7
132.0
129.0
129.7
130.5
132.4
132.0
130.7
131.3
130.2
129.3
127.5
126.9
126.8
127.6
127.2
127.8
129.2
132.3
136.2
136.9
133.3
133.0
133.3
133.3
134.3

Source: Department of Labor, Bureau of Labor Statistics.




371

Furniture
and
household
durables

Nonmetallic
mineral
products

44.4
43.5
44.4
44.9
45.1
46.3
47.5
47.9
46.0
47.8
47.5
47.2
46.9
47.1
46.8
47.4
48.3
49.7
50.7
51.9
53.1
53.8
55.7
61.8
67.5
70.3
73.2
77.5
82.8
90.7
95.9
100.0
103.4
105.7
107.1
108.2
109.9
113.1
116.9
119.2
121.2
118.4
118.7
118.7
119.0
119.0
119.2
119.1
119.2
119.3
119.5
119.8
120.0
120.6
120.9
121.0
121.2
121.2
121.2
121.2
121.2
121.3
121.4
121.4
121.4

23.5
25.0
25.0
26.0
U.%
27.3
2«.5
29.6
29.9
30.3
30.4
30.5
30.5
39.3
30.4
30.4
30.7
31.2
32.4
33.6
35.3
38.2
39.4
40.7
47.8
54.4
58.2
62.6
69.6
77.6
8€4
96.7
100.0
101.6
105.4
108.6
110.0
110.0
111.2
112.6
114.7
117.2
113.8
113.9
114.2
114.3
114.5
114.6
114.6
114.7
115.0
115.3
115.8
115.8
116.9
117.2
117.4
117.3
117.3
117.3
117.2
117.1
117.3
117.3
117.4
117.2

Total

40.4
41.9
44.2
45.5
46.1
50.3
56.7
60.5
64.6
69.5
75.3
82.9
94.3
100.0
102.8
105.2
107.9
110.5
112.5
114.3
117.7
121.5
126.4
119.7
120.2
120.3
120.5
120.4
121.0
121.2
121.1
121.0
124.0
124.2
124.2
125.2
125.7
125.7
125.5
125.6
125.6
125.7
126.0
124.8
128.9
128.9
128.9

vehicles
and

36.8
31.6
33.4
33.3
33.4
34.3
36.3
37.9
39.0
39.9
39.3
39.2
39.2
38.9
39.1
39.2
39.2
39.8
40.9
41.7
43.3
45.7
47.0
47.4
51.4
57.6
61.2
65.2
70.0
75.8
83.1
94.6
100.0
102.2
104.1
106.4
109.1
111.7
113.1
116.2
118.2
122.1
117.2
117.3
117.0
116.9
116.6
117.6
117.8
117.2
116.7
121.6
121.5
121.5
121.9
122.4
122.2
121.5
120.7
120.6
120.5
120.6
118.6
125.6
125.5
125.0

Miscellaneous
products

TABLE B-64.—Changes in producer price indexes for finished goods, 1955-91
[Percent change]
Total
finished
goods
Year or month

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
1988
1989...
1990
1991 2 ...

Finished
consumer
foods

Finished
energy
goods

Finished goods excluding consumer foods

Consumer
Total
Capital
goods
equipment
Dec. to Year Dec. to Year
Dec.1 to year Dec.1 to year Dec. to Year Dec. to Year Dec. to Year
Dec. 1 to year Dec.1 to year Dec.1 to year
1.0
4.2
3.4
3
-.3
1.8
6
.3
_ 3
.6
3.3
2.0
17
3.1
49
21
3.3
39
11.7
18 3
6.6
38
6.7
93
12.8
118
71
36
6
17
18
-2.3
22
4.0
49
57
-.1

0.3
2.6
3.8
22
-.3
.9
0
.3
_ 3
.3
1.8
32
11
2.8
38
34
3.1
32
9.1
15 4
10 6
45
6.4
79
11.2
13 4
92
41
16
21
10
-14
21
25
52
49
2.1

-3.0
3.7
5.1
6
-3.7
5.3
-19
.6
-14
.6
9.1
1.3
3
4.6
81
-2 3
5.8
79
22.7
12 8
5.6
25
6.9
117
7.4
75
15
20
23
35
6
2.8
2
57
52
26
1.6

-2.3
-.3
3.3
61
-4.7
2.0
_3
.8
-11
.3
4.0
6.5
-18
3.9
60
33
1.6
54
20.5
14 0
84
3
53
90
9.3
58
58
22
10
44
2.6
21
2*8
54
48

2.5
33
43
?0
23
66
211
72
62
68
83
14.8
134
87
42

o1
1

22
-40
32
32
48
69
.3

2.6
28
35
3.7
20
4.0
16 2
121
62
71
72
11.8
162
103
46
18
14
14
-2 6
21
24
50
50
3.0

1.6
2.5
1.5
3
.9
.3
-3
0
0
.3
.9
1.8
20
2.0
28
38
2.1
21
75
20 3
68
60
6.7
17.6
141
86
42
9
g
21
-6.6
41
31
53
87
.6

0.6
2.6
2.5
0
1.2
.6
_3
0
0
-.3
.9
1.5
18
2.3
23
30
3.5
18
4.6
17 0
10 4
62
73
71
13.3
18 5
103
41
12
10
11
-46
22
24
56
59
2.9

5.6
8.1
4.6
12
.9
.3
0
.3
6
.9
1.5
38
31
30
48
48
2.4
21
5.1
22 7
81
65
72
80
8.8
114
92
39
20
18
27
2.1
13
36
38
34
2.5

2.6
7.7
6.1
26
1.9
.3
3
.3
3
.9
1.2
24
35
34
35
47
4.0
26
33
14 3
15 2
67
64
79
8.7
10 7
10 3
57
28
23
22
2.0
18
23
39
3.5
3.1

Finished goods
excluding foods
and energy

Dec. to Year Dec. to Year
Dec 1 to year Dec.1 to year

17 2
16 3
117
116
15.7
12.0
65
85
35.0
58.1
49 2
27 9
19.1
141
1
15
48
92
42
42
2
39
-38.1 -28.1
- 19
11 2
-3.2
-3.6
99
95
14.2
30.7
4.1
-9.6

17 7
60
57
62
84
9.4
10 8
77
49
19
20
27
2.7
21
4.3
42
3.5
3.1

114
11.4
57
6.0
75
8.9
112
8.6
57
30
24
25
2.3
24
3.3
4.4
3.7
3.5

Percent change from preceding month

Unadjusted

Seasonallw

3

Unadjusted

justed
1990:Jan
Feb
Mar
Apr
May
June
July
Aug
Sept
Oct
Nov
Dec
1991: Jan
Feb
Mar
Apr
May.
June
July
Aug *
Sept
Oct
Nov
Dec

1.9
-.2
-.2
0
.4
.1
.3
.9
.9
1.6
.5
_ 7
.2
-.7
-.4
.2
.6
.1
-.2
.1
-.3
.8
0
— 3

1.7
-.1
-.1
-.1
.3
0
.3
1.1
1.3
1.2
.4
-.4
.1
-.7
-.2
.1
.5
-.4
-.2
.2
.1
.7
.2
-.2

Season-

ad?

Unadjusted

justed
2.3
.6
-.2
-1.0
1.1
.L.

.6
0
-.6
.3
.3
-.6
.5
_ 2
.5
.1
.4
_ 4
-.6
-1.0
-.5
.2
.1
-.7

1.6
1.0
-.5
-.6
.4
-.2
.5
.6
-.5
.6
.1
-.3
-.2
.2
.2
.3
0
—.5
-.7
-.5
-.4
.4
-.1
-.4

Seasonally

s

Unadjusted

1.8
_ 3
-.1
.2
.3
.1
.3
1.4
1.8
1.5
.5
-.5
.2
-1.0
-.4
.1
.6
-.4
0
.5
.2
.7
.2
-.2

s

Unadjusted

2.5
-.7
-.5
.4
.4
.2
.3
1.7
2.3
2.5
.7
-1.2
-.2
-1.3
-1.0
.2
.9
.3
-.2
.5
-.2
.8
0
-.3

1

2.5
-.8
-.3
.2
.5
-.2
.3
1.9
2.7
2.1
.6
-.9
-.1
-1.4
-.8
.2
.7
_ 7
-.1
.7
.3
.9
.3
-.3

Seasonollu

Unadjusted

justed

justed

justed
1.8
-.3
-.3
.3
.3
.2
.3
1.2
1.4
2.0
.5
-.7
.1
-.8
-.7
.2
.7
.2
-.1
.3
-.2
1.0
0
-.2

Seasonally

0.3
.3
.2
.2
0
.2
.2
.2
-.2
1.3
.2
.2
.8
.2
.1
0
.2
0
.1
-.1
_ 3
1.4
0
.1

0.3
.3
.4
.2
.1
.4
.2
.3
.3
.2
.2
.3
.7
.2
.2
-.1
.3
.2
.1
.1
.1
.4
.2
.2

12.2
-4.8
-3.2
1.5
.7
-1.3
.7
9.0
10.5
7.4
1.6
-5.4
-2.5
-5.1
-3.7
.3
3.0
.5
-1.1
1.7
.4
-1.0
-.1
-2.0

Seasonadjusted
12.3
-4.8
-2.7
.1
-.6
-.7
.1
9.1
11.3
9.1
.2
- 4.0
-2.2
-5.3
-3.3
-.1
1.7
-1.5
-1.3
1.8
.8
1.7
0
-1.4

Unadjusted

Season-

s
allv

justed
0.3
.3
.2
.2
.2
.4
.2
0
0
1.2
.2
.2
.9
.2
.1
.2
0
.2
.2
0
-.4
1.5
.1
.2

0.2
.3
A
.2
.5
.2
.3
.2
.3
.2
.5
.2
.8
.2
.3
.1
A
-.1
.2
.2
0
.5
.3
.2

Changes from December to December are based on unadjusted indexes.
2
Data have been revised through August 1991 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.




372

MONEY STOCK, CREDIT, A N D FINANCE
TABLE B-65.—Money stock, liquid assets, and debt measures, 1959-91
[Averages of daily figures; billions of dollars, seasonally adjusted]

Ml

Sum of

S'

and
month

December:
1959
1960 .
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971 .
1972 .
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983 .
1984
1985
1986
1987
1988
1989
1990 . .
1991 J»
1990: Jan
Feb
Mar
Am-

travelers
checks, and
other
checkable
deposits
(OCDs)

'.

May

June
July
Aug
Sept
Oct
Nov
Dec
1991: Jan.
Feb

Mr
a
May
june
July

Sept...".I..l.....r.I
Oct
Nov
Dec*.

140.0
140.7
145.2
147.9
153.4
160.4
167.9
172.1
183.3
197.5
204.0
214.5
228.4
249.3
262.9
274.4
287.6
306.4
3313
358.4
382.8
408.8
436.4
474.4
521.2
552.2
6199
724.3
749.7
786.4
793.6
825.4
896.7
795.4
801.1
804.7
807.7
807.5
8115
810.7
8165
821.8
8212
823.3
825.4
826.7
836.4
843.0
842.1
851.6
858.4
859.5
866.1
870.0
879.1
890.3
896.7

M2

M3

Ml plus
overnight
RPsand
Eurodollars,
MMMF
balances
(general
purpose and
broker/
dealer),
MMDAs, and
savings and
smalltime
deposits

M2 plus
large time
deposits,
term RPs,
term
Eurodollars,
and
institutiononly MMMF
balances

297.8
312.4
335.5
362.7
393.3
424.8
459.4
480.0
524.4
566.4
589.6
628.1
712.7
805.2
861.0
908.6
1,023.3
1,163.7
1,286.7
1,389.0
1,497.1
1,629.8
1,793.3
1,952.9
2,186.3
2,374.7
2 569.7
2,811.6
2,910.1
3,069.9
3,223.1
3,327.8
3,425.4
3,233.6
3,255.0
3,269.6
3,279.9
3,282.8
3,290.6
3,295.4
3,309.6
3,321.6
3,324.5
3,323.7
3,327.8
3,331.4
3,354.7
3,375.4
3,383.7
3,395.5
3,400.9
3,392.0
3,393.7
3,395.5
3,404.0
3,418.4
3,425.4

299.8
315.3
341.1
371.5
406.1
442.5
482.3
505.1
557.1
606.3
615.1
677.4
776.2
886.0
985.0
1,070.4
1,172.3
1,311.8
1,472.7
1,646.7
1,803.3
1,987.5
2,234.1
2,441.7
2,693.3
2,986.2
3,201.6
3,492.6
3,677.4
3,919.1
4,055.2
4,111.2
4,172.0
4,061.4
4,073.1
4,077.2
4,082.7
4,082.7
4,085.8
4,089.0
4,103.1
4,108.8
4,109.0
4,108.4
4,111.2
4,124.0
4,159.7
4,168.2
4,170.4
4,171.9
4,165.3
4,150.2
4,149.4
4,144.7
4,151.3
4,163.3
4,172.0

L

Debt1

M3 plus
other liquid

Debt of
domestic
nonfinancial
sectors
(monthly
average)

assets

388.7
403.7
430.8
466.1
503.8
540.4
584.5
614.8
666.6
729.0
763.6
816.3
903.0
1,023.0
1,142.6
1,250.3
1,367.0
1,516.6
1,705.3
1,910.8
2,116.3
2,324.2
2,596.7
2,851.4
3,154.6
3,527.5
3,828.9
4,133.2
4,337.0
4,676.0
4,889.9