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ECONOMIC
TRANSMITTED
TO THE CONGRESS
FEBRUARY 1374
Economic Report
of the President
Transmitted to the Congress
February 1974
TOGETHER WITH
THE ANNUAL REPORT
OF THE
COUNCIL OF ECONOMIC ADVISERS
UNITED STATES GOVERNMENT PRINTING OFFICE
WASHINGTON
:
1974
For sale by the Superintendent off Documents^ U.S. Government Printing Office
Washington, IXC. 2G402.P Price $3.05
Stock Number 4000-Q.Q305
CONTENTS
Page
ECONOMIC REPORT OF THE PRESIDENT
1
ANNUAL REPORT OF THE COUNCIL OF ECONOMIC
ADVISERS*
11
CHAPTER 1. ECONOMIC PROBLEMS AND POLICIES
21
CHAPTER 2. DEVELOPMENTS AND POLICY IN 1973
47
CHAPTER 3. INFLATION CONTROL UNDER THE ECONOMIC STABILIZATION ACT
88
CHAPTER 4. ENERGY AND AGRICULTURE
110
CHAPTER 5. DISTRIBUTION OF INCOME
137
CHAPTER 6. T H E INTERNATIONAL ECONOMY IN 1973
181
APPENDIX A.
ACTIVITIES OF THE ADVISORY COMMITTEE ON THE
ECONOMIC ROLE OF WOMEN
227
APPENDIX B. REPORT TO THE PRESIDENT ON THE ACTIVITIES OF THE
COUNCIL OF ECONOMIC ADVISERS DURING 1973
231
APPENDIX C. STATISTICAL TABLES RELATING TO INCOME, EMPLOYMENT, AND PRODUCTION
243
* For a detailed table of contents of the Council's Report, see page 15.
ECONOMIC REPORT
OF THE PRESIDENT
ECONOMIC REPORT OF THE PRESIDENT
To the Congress of the United States:
The United States enters 1974 in a position of leadership in the world
economy. The dollar is strong, we have constructive economic relations
throughout the world, and we have the greatest freedom of action resulting from our great capacity to produce. We must take the responsibilities
and the opportunities this position of leadership gives us.
Nineteen hundred and seventy-three was a year of problems and
progress in the American economy. In some respects the problems were
greater than we expected and the progress was less than we had hoped.
But the areas of our solid achievements were more important than the
areas of our disappointments. We and the world around us have difficult
tasks ahead—primarily to deal with an old problem, inflation, and to
deal with one that has just become acute, energy. But the United States
confronts these difficulties with a strong and adaptable economy, which
means an economy of capable and enterprising people.
In the middle of 1971, when the New Economic Policy was launched,
the country had three economic objectives: to promote the expansion
of output and reduce unemployment, to correct the persistent deficit
in the U.S. balance of payments, and to check the inflation which had
been going on for 5J/2 years. To achieve these objectives a comprehensive program of action was initiated. Taxes were reduced. Price and
wage controls were instituted. The exchange rate of the dollar was set
free to adjust to market conditions, and steps were initiated to improve
the international monetary system.
There has been great progress toward two of these three objectives.
Production and employment have risen rapidly. Total civilian employment was 6.8 million higher in December 1973 than in June 1971. The
unemployment rate had fallen from 6 percent to a little under 5 percent. In 1973 a larger percentage of the civilian population over the age
of 16 was employed than ever before.
With vigorously rising employment, and rising productivity as well,
there was a big increase in output of goods and services, the essential
ingredients of higher living standards. In the 2^/2 years of the New
Economic Policy, total output increased by 14 percent, which is about 35
percent above our average for a period of this length. The real income
of American consumers per capita, after taxes, rose by Ql/2 percent, also
well above our long-term rate. Both real output and real income, of
course, reached record highs.
The second goal of the New Economic Policy, to strengthen the international financial position of the United States and of the world, was
also largely achieved. The significance of this goal is commonly neglected
in America. But a country whose currency is weak, whose currency others
don't want to hold, is greatly limited in what its government and citizens
can do—in buying goods abroad, in traveling freely, in investing freely,
in maintaining forces abroad if necessary. And if a country goes on spending more abroad than it earns abroad, its freedom of action is going to be
curtailed. There has been a dramatic change in our balance of trade,
from a deficit of $917 million in the first half of 1971 to a surplus of $714
million in the second half of 1973. We have not only improved our own
position but we have also taken the lead in strengthening the international system. The more flexible system we have promoted withstood
numerous shocks during 1973, and at the same time the world economy
and international trade and investment continued to expand.
It is the third of the three objectives of the New Economic Policy—
the control of inflation—that has been our great difficulty. Until the end
of 1972 the New Economic Policy, drawing on the results of earlier fiscal
and monetary restraints, worked well in getting the rate of inflation
down, even though worrisome rises in food prices appeared. But in 1973
inflation speeded up sharply. During the year, consumer prices increased
by almost 9 percent.
Of course, the progress on the first two objectives was connected with
the disappointment on the third. The rapid rise toward full employment,
the expansion of our net exports, and the reduction in the value of the
dollar to make the United States more competitive, all contributed to
the resurgence of inflation. But there were other factors at work, less directly under our control. Food production lagged in major producing
countries, including the United States. An extraordinary combination of
booms in other countries boosted prices of industrial materials. Countries
jointly controlling a large part of the world's exportable oil supplies decided to raise their prices substantially. During 1973 food prices accounted for 51 percent of the total rise of consumer prices, and energy
prices accounted for another 11 percent.
The American people generally prospered despite the inflation in 1973.
Their incomes, on the average, rose more than prices. But there were
many families for which that was not true. We cannot accept continuation
of the inflation rate of 1973, and still less can we risk its acceleration. We
must dedicate ourselves to carrying on the fight against inflation in 1974
and thereafter.
There are at least four lessons we can learn from our past experience
in combating inflation:
1. The importance of patience. To correct a powerful trend of the
economy which has been going on for some time requires time. Sharply
squeezing down the economy in an effort to halt inflation would produce
a severe drop in employment and economic activity and create demands
for a major reversal of policy. Pumping up the economy to get quickly
to full employment would risk setting off even swifter inflation. We need
a greater steadiness of policy.
2. The importance of the rest of the world. The events of 1973
brought our external economic relations sharply to our attention. Most
simply put, it will be exceedingly hard for us to have a stable economy
in an unstable world. We must contribute a stabilizing influence to the
world economy of which we are a large part. We must promote concerted
efforts to maintain the health of the world economy.
3. The importance of production. Despite other vicissitudes, what
determines the economic well-being of the American people more than
anything else is the rate of production. The rapid increase of production
has provided the rising real incomes of the American people. More specifically, increasing food production is the best way to deal with the food
price problem, and increasing our energy supplies is the best way to deal
with the energy shortage. We think of ourselves as a Nation with high
and strongly rising output. We are. But we can do better and it is important that we do better.
4. The importance of free markets. In the past several years, under
the pressure of emergency conditions, we have made great, but temporary, departures from reliance on free prices and free markets. In special
circumstances and for short periods these departures have been helpful.
But taken together, these experiences have confirmed the view that the
free market is, in general, our most efficient system of economic organization, and that sustained and comprehensive suppression of it will not solve
the inflation problem.
At the beginning of 1974 the three problems which have dominated
economic policy for many years—inflation, unemployment, and the balance of payments—have been joined by a fourth—the energy problem.
Or rather, the other three problems have been pervaded by the energy
problem. The present oil situation means that we are paying much higher
prices for imported oil than formerly and that the volume of imports at the
present time is less than we would freely buy even at those prices. But the
prices and volumes are both highly uncertain and add uncertainties to
the economic picture for the year.
The current and prospective oil situation will at the same time raise
prices, limit production in some industries, and reduce demand in others.
It will be the objective of the Administration's policy to do three things
in this circumstance:
1. To keep the moderate slowdown of the economic boom from
becoming excessive because of the energy shortage;
2. To keep the rise of fuel prices from spilling over unnecessarily into
more inflation in other parts of the economy; and
3. To set the stage for stronger economic expansion with greater price
stability after the initial price and output disruptions caused by the
energy shortage have been absorbed.
Achieving these goals in this unpredictable economic environment will
require alertness and adaptability. We cannot set a policy at the beginning of the year and let it run without further consideration. But we can
describe the main elements of our present strategy.
1. We will maintain a budget of moderate economic restraint. Even
though the combination of urgent requirements and inescapable
commitments generates pressures for huge expenditure increases,
the budget I will propose will keep the expenditures within the
revenues that the tax system would yield at full employment.
2. We will be prepared to support economic activity and employment
by additional budgetary measures, if necessary.
3. We urge the Congress to enact the legislation I proposed last year
for improving the unemployment compensation system, with further strengthening amendments I will submit. This would provide
better protection for workers who may lose their jobs, whether
because of the energy shortage or for other reasons, and also help
to protect the economy better against the secondary effects of their
unemployment.
4. Working together with other consuming countries, including the
developing countries, and with the oil-exporting countries, we will
try to arrive at an understanding on mutually beneficial conditions
of exchange.
5. We will try to manage the energy shortage in such a way as to keep
the loss of jobs and production to a minimum, although some loss
is inevitable in the short run. The allocation system is designed to
assure an adequate flow of oil to those industries where lack of it
would limit employment the most. We shall also have to provide
or permit incentives—including higher prices—for maximum imports, for maximum domestic exploration and production, and for
efficient use of our scarce supplies. To prevent higher prices from
causing excess profits, I have proposed an Emergency Windfall
Profits Tax, which I urge the Congress to enact promptly.
6. We will work with other oil-importing countries to prevent the
higher prices of oil and its limited supply from generating a downward spiral of recession. The higher prices will cause dislocations
and impose burdens on all consuming countries; they do not have
to cause a spreading recession if we manage our affairs cooperatively and wisely.
7. We will continue our policy of maximum agricultural production
to help hold down food prices.
8. We will continue our policy of progressive removal of price and
wage controls in order to restore the flexibility needed for efficiency
and expansion in a time of economic strain.
The effort to maintain the stability of our economy in the face of the
present unusual conditions will absorb a great deal of attention this year.
But we must not neglect the fundamental factors which determine the
prosperity of the American people in the longer run. One of these has
come to general public attention with a rush—the need for adequate
supplies of energy at reasonable cost. We are seeing the possible consequences of being deprived of these, and we must not allow it.
The energy problem has had two main parts for some time:
First, with rapidly rising world demand for energy, most of which
comes from depletable resources, we could run into sharply increasing
costs of energy unless vast investments are made in research, development,
experimentation, and production.
Second, we are exposed to the danger of being thrown back upon
inadequate or very expensive sources of energy earlier than necessary
by joint action of a few countries that control a large part of the existing
low-cost reserves of oil.
To deal with this problem I began proposing, almost 3 years ago, a
number of governmental measures to permit or assist development of
energy within the control of the United States. In 1973 the second part
of the problem, which had formerly been a threat, became a reality at
least temporarily, and this has demonstrated unmistakably the urgency
of the steps I have recommended.
I propose that the United States should commit itself to "Project
Independence" to develop the capacity for self-sufficiency in energy supplies at reasonable cost. One key element of Project Independence is a
5-year, $10 billion program of federally financed research and development in the field of energy. My budget for fiscal year 1975 will include
almost $2 billion for this purpose. By far the largest part of the research,
development, and production required by Project Independence will be
private, and steps to stimulate the private contribution are essential.
Among the numerous measures to this end which I called attention to
in my latest energy message on January 23, were several tax proposals.
Last April I proposed that the investment credit be extended to cover
exploratory drilling for new oil and gas fields, while the tax shelters for
wealthy taxpayers associated with such drilling would be eliminated. In
my recent message I asked Congress to eliminate the depletion allowance
given to U.S. companies for foreign oil production but to retain it for
domestic production, in order to shift the incentive to exploration and
production at home. I have also asked the Treasury Department to prepare proposals for revising the treatment of taxes paid by oil companies
to foreign governments, both to improve tax equity and to increase the
incentive for domestic production.
Energy is only the most dramatic example of the need for policies to
promote a rising American standard of living by increasing production
and assuring the stability of supplies. There are many others.
I. We have discovered that we no longer have a surplus of food,
in the sense of producing more than we need either to consume at home or
to sell abroad in order to pay for the things we buy abroad. We no
longer have great reserves of food in storage and acreage withheld
from use. We have freed the American farmer to produce as much as
he can and we should keep him free. American agriculture is, and should
be, heavily involved in exports. This means that the American food
price level and the American consumer are directly influenced by the
forces of world demand and supply. International cooperation is needed
to promote food production and the maintenance of stocks adequate to
shield consumers from the more extreme variations of output. At the
call of the Secretary of State, preparations are now being made for a conference on this subject to be held under United Nations auspices.
II. Our ability to buy abroad what is produced more efficiently abroad,
and to sell abroad what we produce more efficiently, contributes to the
productivity of the American economy. At my recommendation the
countries of the world are now preparing to negotiate new steps in
foreign trade policy which will further invigorate this beneficial process.
I urge the Congress to enact promptly the trade legislation I have proposed to permit the United States to participate in these negotiations.
8
III. One of our most essential industries—freight transportation—is
unfortunately shot through with inefficiencies. Many of these inefficiencies
are the result of obsolete, shortsighted, and excessive regulation. Hundreds
of millions and probably billions of dollars a year could be saved by unleashing carriers and shippers to carry the freight on the most efficient
mode of transportation, in the most efficient way. I have sent to the
Congress new proposals to this end.
IV. In 1973, as in 1972, relatively few days of work were lost as a
result of industrial disputes. Continuation of this record would be a
valuable contribution to the level and stability of production. I have
appointed a Commission on Industrial Peace, composed of leaders of
management and labor with an impartial chairman, to make recommendations for bringing that about.
V. In addition to the major research and development effort to provide
secure supplies of energy, without abusing our natural environment in
doing so, this Administration is continuing its support of research and
development projects that will help maintain a healthy rate of innovation
and productivity growth in the rest of our economy. These activities will
be supported at record levels in the coming year, and we are also trying to
get a higher return for every dollar we spend.
VI. An indispensable source of economic growth is saving and investment in productive facilities. It should be the policy of government to
interfere with this process as little as possible. The government should not
absorb private savings into financing its deficits in times when private
investment would otherwise utilize all the private saving. Our basic
budget policy of balancing the budget or running a surplus under conditions of high employment carries out this principle. Moreover, taxation
should not depress productive investment by unduly burdening its return. We should not indulge in demagogic and shortsighted attacks
upon profits.
VII. We must push forward, as we have been doing, to remove barriers
against the entry of women and minorities into any occupation and
against their maximum training and advancement. The men and women
of the country are its greatest economic resource. To fail to use any of
this resource to its full potential is a serious loss to us all.
Compared with our parents and grandparents we are enormously rich.
We have protections against the ebbs and flows of economic life that they
never expected and barely imagined. But I cannot assure the American
people of an easy time. Like our parents and grandparents, we have our
own tests. If we meet them with fortitude and realism the period ahead
can be one not only of material advance but also of spiritual satisfaction.
February I, 1974.
10
THE ANNUAL REPORT
OF THE
COUNCIL OF ECONOMIC ADVISERS
11
LETTER OF TRANSMITTAL
COUNCIL OF ECONOMIC ADVISERS,
Washington, D.C., January 28,1974.
T H E PRESIDENT:
SIR: The Council of Economic Advisers herewith submits its Annual
Report, January 1974, in accordance with Section 4(c) (2) of the Employment Act of 1946.
Respectfully,
HERBERT STEIN,
Chairman.
0
WILLIAM J. FELLNER.
GARY L. SEEVERS.
13
527-867 O - 74 - 2
CONTENTS
Page
CHAPTER 1. ECONOMIC PROBLEMS AND POLICIES
Where We Stand at the Outset of 1974
General Economic Implications of the Energy Problem. .
Goals for 1974
Policies for Achieving the 1974 Goals
Goals Beyond 1974
Development of Low-Cost Energy for the Future
Saving and Private Investment
The Financial System
Transportation Reform
Efficient International Exchange
Supplement—Prospects for 1974
CHAPTER 2. DEVELOPMENTS AND POLICY IN 1973
Demand and Output in 1973
Nonresidential Fixed Investment
Inventories
Housing
Consumer Spending
Net Exports
The Labor Market
The Labor Force
Employment and Hours
Unemployment
Productivity and Potential Output
The Behavior of Prices
Compensation and Unit Labor Costs
Fiscal Policy in 1973
Federal Expenditures
Federal Receipts
Balances of the Federal Budget
Inflation and the Federal Budget at Full Employment. .
The State and Local and the Combined Budget Balances.
Monetary Policy and Financial Markets
15
21
22
23
27
29
35
36
37
38
40
42
43
47
49
51
52
53
53
55
57
57
58
58
62
65
68
75
75
77
78
79
80
82
CHAPTER 3. INFLATION CONTROL UNDER THE ECONOMIC STABILIZATION ACT
The Economic Stabilization Program in 1973
Phase III
Phase III Is Tightened
The Freeze
Phase IV
The Effectiveness of Controls
Fairness of Controls
Effect of Controls on Components of Output
Summary
CHAPTER 4. ENERGY and AGRICULTURE
Energy
The Energy Crisis
Recovery from the Crisis
Long-Term Prospects
Energy and Environmental Policy
Agriculture
Agriculture: Fully Employed
Agricultural Policy for the Future
CHAPTER 5. DISTRIBUTION of INCOME
Outline and Summary.
The Change in Inequality of Family and Individual Income.
Secular Changes
Cyclical Changes
Omitted Sources of Real Income and the Inequality of
Weil-Being
,
Determinants of Differences in Earnings Among Individuals. .
Schooling
Post-School Training
Employment
Earnings Differentials Between Groups
Discrimination
Race Differentials
Sex Differentials
Occupational Differences
The Low-Income Population
The Definition of Poverty
The Decrease in Poverty
The Characteristics of the Poor
16
88
88
89
94
96
97
99
105
107
108
110
Ill
117
118
122
125
128
128
133
137
137
139
139
142
142
145
145
146
149
150
150
150
154
158
161
161
162
163
Page
Government Transfer Programs
Federal Transfers in 1973
Aid to Families With Dependent Children
Social Security and Supplemental Security Income
Federal Food Subsidy Programs
Medicare and Medicaid
Income Distribution Effects of Money Transfer Programs.
Supplement—The Variance of the Natural Logarithm of Income
CHAPTER 6. T H E INTERNATIONAL ECONOMY IN 1973
What Happened in 1973?
How Governments Behaved in the Monetary Arena
Planning the Future International Monetary System
How Governments Behaved in the Trade Arena
Planning the Future International Trading System
Supplement—Measurement of Effective Changes in Exchange
Rates
167
167
168
173
174
175
176
179
181
182
196
202
209
212
220
APPENDIXES:
A. Activities of the Advisory Committee on the Economic Role
of Women
B. Report to the President on the Activities of the Council of
Economic Advisers During 1973
C. Statistical Tables Relating to Income, Employment, and
Production
List of Tables and Charts
Tables
1. Federal Budget Surplus or Deficit Under Alternative Assumptions, National Income Accounts Basis, Calendar Years
1969-74
2. Changes in Gross National Product in Current and Constant
Dollars, 1968 to 1973
3. Changes in Manufacturing Plant and Equipment Outlays and
Value of Starts, 1971 to 1973
4. Changes in Manufacturing Real Plant and Equipment Outlays,
1948 to 1973
5. Disposition of Disposable Personal Income, 1960-73
6. Unemployment Rates for Selected Groups, Selected Years,
1956-73
17
227
231
243
31
50
51
52
54
59
Page
7. Unemployment Rates by Sex and Age, Selected Years, 1956-73.
8. Composition of the Civilian Labor Force, Selected Years,
1956-73
9. Aspects of Labor Utilization, Selected Years, 1948-73
10. Aspects of Capacity Utilization, Selected Years, 1948-73
11. Changes in Gross National Product Price Deflators, Selected
Periods, 1948 to 1973
12. Changes in Selected Price Measures, 1971 IV to 1973 IV
13. Components of Percent Change in Compensation Per ManHour in the Private Nonfarm Sector, 1965-73
14. Changes in Prices, Costs, and Profits Per Unit of Output for
Nonfmancial Corporations, 1970 to 1973
15. Distribution of Gross Product Originating in Nonfinancial
Corporations, 1947-73
16. Federal Government Receipts and Expenditures, National Income Accounts Basis, Calendar Years 1972-73
17. Actual and Full-Employment Federal and State and Local
Government Receipts and Expenditures, National Income
Accounts Basis, Calendar Years 1969-73
18. Changes in Aggregate Monetary Measures and Gross National
Product, 1968 to 1973
19. Offerings of New Security Issues, 1972-73
20. Net Savings Flows at Thrift Institutions, 1968-73
21. Measures of Price and Wage Change During the Economic
Stabilization Program
22. Regulations of the Controls Program, Phases II, III, and IV. .
23. Changes in Consumer Prices in OECD Countries, Selected
Periods, 1958-73
24. Supply-Increasing Actions of the Federal Government During
1973
25. First Year Wage Rate Changes in Collective Bargaining Agreements Covering 1,000 Workers or More, 1970-73
26. Behavior of Items in Consumer Price Index During Phases II
and III, Classified by Type of Control Applicable
27. Gross Consumption of Energy in Natural Units, Selected Years,
1950-72
28. Consumption of Energy, By User Sector and Source, 1972. .
29. Use of Energy Inputs for Electric Power, 1972
30. Wholesale Prices, All Industrial Commodities and Selected
Fuels, Selected Periods, 1950-73
31. U.S. Grain Stocks Compared to Grain Utilization, Selected
Periods, 1950-73
18
60
60
61
64
67
68
70
71
73
76
80
82
86
87
89
91
93
95
102
104
112
112
113
114
129
Page
32. Change in Inputs Used in Farming, 1950 to 1973
33. Production and Productivity in Agriculture, Selected Years,
1950 to 1973
34. Share of Aggregate Income Before Taxes Received by Each
Fifth of Families, Ranked by Income, Selected Years,
1947-72
35. Income Inequality Under Alternative Definitions of Income,
1968
36. Selected Characteristics of the Lowest, Middle, and Highest
Fifths of Families Ranked by Money Income, 1952 and 1972.
37. Average Usual Weekly Earnings of Male Workers 35-44
Years of Age Who Worked Full Time, by Years of Schooling
and Race, 1973
38. Average Usual Weekly Earnings of Males Who Worked Full
Time, by Age and Years of Schooling, 1973
39. Income of Negro Males as Percent of Income of White Males,
by Type of Income and Age, 1949, 1959, and 1969
40. Earnings of Negroes as a Percent of Earnings of Whites, for
Persons 25-64 Years of Age, 1969
41. Median Income of Negro Husband-Wife Families as Percent of
White Husband-Wife Families, by Region and Age of
Husband, 1959, 1969, and 1972
42. Relation of Wage and Salary Earnings and of Total Money
Earnings of Women to Those of Men, 1949, 1959, and 1969.
43. Persons Below the Low-Income Level and Percent Below the
Low-Income Level by Family Status, Selected Years, 195972
44. Work Experience of Family Heads Below the Low-Income
Level by Sex, 1959 and 1972
45. Federal Government Transfer Programs, Fiscal Year 1973. . . .
46. AFDC Benefits and Families, Selected Years, 1950-72
47. Trends in the Employment Status of Mothers in the AFDC
Program, Selected Years, 1961-73
48. Proportion of Families Having Transfer Income From Particular
Sources, 1970
49. The Effect of Money Transfers on Family Income Inequality,
1970
50. Changes in the Foreign Exchange Value of the Dollar, U.S.
Liabilities to Official Foreigners, and U.S. Liabilities to
Private Foreigners, 1973
51. Relative Labor Costs in Manufacturing, 1968-73
52. U.S. Balances on International Transactions, 1972-73
19
130
131
140
143
145
146
149
152
153
157
158
162
163
168
169
172
177
178
183
192
194
Page
53. Maximum Percent Change in Exchange Rates Between Various
Foreign Currencies and the Dollar During 1973
54. Major Changes in Capital Controls, 1973
55. Composition of International Reserve Assets, 1970-73
56. A Comparison of Several Measures of the Effective Depreciation
of the Dollar From May 1970, 1971-73
57. Changes in Exchange Rates From May 1970, 1970-73
Charts
1. Changes in GNP, Real GNP, GNP Price Deflator, and the
Unemployment Rate
2. Changes in Real GNP
3. Changes in Selected Price Measures
4. Productivity, Compensation, and Unit Labor Costs in the Private Nonfarm Economy
5. Interest Rates
6. Changes in Related Wholesale and Consumer Prices
7. Consumer Prices of Gasoline and Motor Oil
8. Real Income Profiles of Cohorts of Men Born in Selected Years.
9. Real Incomes for Men in Different Age Groups
10. Change in the Value of the U.S. Dollar Relative to Selected
Foreign Currencies
20
197
198
201
222
225
48
56
66
69
84
106
113
147
148
185
CHAPTER 1
Economic Problems and Policies
F
OR EIGHT YEARS economic policy and the news about the economy have been dominated by inflation. The story has been a frustrating one. Over the period from the end of 1965 to the end of 1973 consumer
prices rose by 45 percent, or at an average rate of 4.8 percent a year.
There were fluctuations. Twice during the period the rate of inflation declined significantly. But in the last of the 8 years the rate of inflation was
higher than in any of the others. During the 8 years the inflation came in
various forms—sometimes led by wages, sometimes by prices, by foods, by
oil; sometimes it was domestic and sometimes imported. Many programs
have been launched to stop it—without durable success. Inflation seemed
a Hydra-headed monster, growing two new heads each time one was cut off.
The problem was not confined to the United States; indeed inflation was
worse in most other countries.
Several important points seem clear to us from the experience of the past
8 years. One is that while continued rapid inflation is not inevitable, the
course of unwinding it will be long and difficult. There is by now a great
deal of inflation built into our system. For one thing, both workers and employers are now used to high increases in money wages which reflect the
expectation of rapid inflation, and only gradually can these be moderated.
Inflation is similarly built into the level of interest rates. The public is
highly sensitive to inflation and reacts in an inflationary way to any news
which confirms its expectation of inflation. Against this background, to
hope that we can "wring the inflation out of the system" by the end of
some short period is to assure disappointment. Whoever undertakes now to
fight inflation must be prepared to stay the long course. We think it is
necessary to do this, and also to recognize why we must do it. Experience
extending over almost a decade teaches us that if we do not fight inflation
effectively it will accelerate.
The American people have prospered over the past 8 years. Our real
incomes have risen. Our real consumption expenditures have risen, and
our real assets have risen, in total and per capita. These are facts of great
importance. But they do not relieve us of the need to bring inflation under
control, and to accept the cost of doing so for the sake of avoiding the
greater costs of an accelerating inflation.
21
We have specific problems, too, aside from the general inflation problem.
There are many things the American people want to do, collectively or
individually. They want to maintain an adequate defense, to clean up the
environment, to provide more generously for the disadvantaged, to improve
standards of health, and also to continue to raise the quality of their lives
in all the ways that involve more private consumption. At the same time, we
see unusual obstacles to more rapid increases of production—the increased
costs of energy being the most obvious one at present. Beneath the tide of
inflation the basic economic problem of increasing production goes on and
requires attention, even in a country as rich as ours.
The problems of specific price increases must be distinguished from the
general inflation problem. Increases in some individual product or service
prices beyond the average are essential, if we are to maintain supplies and
allocate shortages. The attempt to suppress the increase of particular prices,
while it may be necessary in emergencies, is in general not an effective way
to combat inflation and is harmful to production.
WHERE WE STAND AT THE OUTSET OF 1974
We enter 1974 in a condition of high inflation and in the early stage
of a slowdown, one result of which will be to reduce the rate of inflation,
although not immediately. All the features of this situation—the high rate
of inflation, the slowdown of output, and the slowdown of demand—are intensified by the higher prices and reduced imports of oil. Moreover, the oil
situation makes the period ahead even more than usually difficult to predict.
Decisions of the oil-exporting countries, resulting from a mixture of economics and politics, cannot be foreseen. American businesses and consumers
are faced with unprecedented increases in relative prices and curtailments
in supply, and no one can tell just how they will react in their consumption
and investment. Other oil-importing countries will be seriously affected by
price and supply developments in oil, and their responses will have repercussions here.
The rapid price and wage increases that were being experienced at the
end of 1973 will undoubtedly be carried on and passed through in the early
part of 1974. In the fourth quarter of last year, wholesale industrial prices
other than for energy products rose at an annual rate in excess of 11 percent.
Much of this rise will appear in retail prices in early 1974. Similarly, large
increases that have already occurred in crude oil prices have not yet been
fully reflected in retail prices. Wholesale food prices were also rising as the
year ended, and the outlook was that tight supplies would boost retail prices
in the first months of 1974. The rate of wage increases had been drifting up
during 1973, and since the cost of living was also continuing to rise rapidly,
this trend of wages was unlikely to be reversed soon.
Thus, a high rate of price and wage increases, although possibly not as
high a rate as in 1973, seems inevitable in the first part of 1974. But
22
beyond the early months, the course of inflation is as yet undetermined.
Prices of oil and related products will not go on rising at the rate of late
1973 and early 1974, but will presumably reach some new high level from
which they will be no more likely to rise than to fall. There is also a prospect
of larger world food supplies. In general, as we go through the year the
course of prices will be less and less a reverberation of what happened in
1973 and increasingly the outcome of events and policies in 1974.
The year 1974 also began with demand rising less rapidly than during
most of 1973 and production possibly not rising at all. In the fourth
quarter of 1973, total expenditures for the purchase of output rose at an
annual rate of about 9^2 percent, compared to about 12 percent in the
year ending in the third quarter. Real output rose at the rate of about 1
percent after an increase of about 5/2 percent in the preceding year.
There seems little doubt that this sluggishness will continue in the early
part of 1974 and that total output may decline. Automobile production is
being cut back sharply, partly because of the effect of high prices and
shortages of gasoline on the demand for large cars. The recent weakness
of housing starts and permits indicates declining residential construction
during the first part of the year. The high prices for oil being paid to foreign suppliers will hold down expenditures for U.S. output. There will be
some cases, although one cannot be sure how many, in which production
is held back by shortages of energy or energy-related materials.
Just as a high inflation rate seems predetermined for the early part of
the year, so does a fairly low rate of increase of production, which might in
fact for a while be negative. But the situation at the beginning of the year
does not appear to presage a very long or severe slowdown. There are
a number of factors tending to support the expansion of the economy, including substantial planned increases of business fixed investment. How soon
a revival will come, and how strong it will be, also depend on events and
policies of 1974.
GENERAL ECONOMIC IMPLICATIONS OF THE ENERGY PROBLEM
The nature of the problems with which policy has to contend in 1974
depends substantially on the energy situation—on the volume of oil imports, on their prices, and on the policies adopted in the United States.
Total imports of oil expected in 1974, before measures were taken by some
exporting countries beginning in October 1973 to curtail shipments and
raise prices, were about 40 percent of expected petroleum consumption in
1974. This was about 20 percent of expected energy consumption in 1974,
since petroleum would have supplied about 50 percent of total energy
use. The countries participating in the embargo of the United States had
been expected to supply, directly and indirectly, about 16 percent of our
petroleum use and 8 percent of our energy use. This would have been the
extent of the initial supply reduction if the embargo had been fully
effective.
23
This curtailment of supply does, of course, lead to adaptations. Prices
of oil imported into the United States are free from price control, as are
prices of oil produced by certain small (stripper) wells and of "new"
oil produced by other wells in excess of their base period production.
These prices can be passed on in prices of refined products. Thus, a shortage
of oil in the United States raises the prices of oil in these categories and
increases the supply, both of imported oil and of domestic oil, offsetting
some of the initial effects of the curtailment. Also the higher prices reduce
the quantity consumers and businesses want to buy. Therefore, the whole
initial curtailment does not appear as a gap between desired quantities and
available quantities.
In time, and despite the existence of the price controls, prices might rise
enough to clear the market, and there would be no "shortage" in the sense
of inability to buy petroleum products at the prevailing prices. The uncontrolled prices, whether of imports, of "new" oil, or of oil from stripper wells,
would rise to a level which, when averaged in with the controlled prices,
would equate the quantities demanded and supplied. Although prices of
petroleum products in the United States rose very rapidly after October 1973,
and this apparently served to cut down the desired consumption, they had
not risen enough by the end of January to eliminate shortages. The impact
of the remaining shortages is being distributed through the economy by allocations and other controls, by voluntary conservation measures, and to some
extent by a first-come-first-served process.
The Secretary of State has recently expressed the hope that the embargo
on the export of oil to the United States from some Arab countries would
soon be lifted. The effect of such action on the U.S. economy would depend
upon the price and production policies of the oil-exporting countries. The
higher their production levels, and the lower the world price, the smaller
will be the current economic problems for the United States and for other
importing countries. In any case it seems necessary to reckon with a significantly higher price for imported oil in 1974 than in 1973, although how
much higher is uncertain. This conclusion would imply smaller U.S. imports
than would otherwise have occurred, but a larger dollar cost of imports. It
is probably also reasonable to assume that the curtailment would increasingly
be reflected in higher domestic prices rather than in shortages at the existing
prices.
This combination of limited oil imports and higher prices will have four
kinds of economic effects in the United States and in other oil-importing
countries.
1. Limitation on capacity to produce. Beyond some point, inadequacy in
the supply of energy can make it impossible to produce certain products, or
high energy prices can make it impossible to produce certain products at
costs at which they can be sold. However, it does not appear that this point
will be exceeded or that our capacity to produce will be significantly curtailed by the energy situation. Part of the U.S. energy supply is utilized
24
directly for consumption, particularly for home heating and for personal
transportation. Some is used in industry for lighting or heating that may
be convenient but is not necessary for production. In general, it appeared
when the embargo began that the initial curtailment of imports could be
absorbed out of these "nonproductive" uses without impairing our capacity
to produce. This would not have been entirely true, because there would
have been shortages of particular products and in particular places. But it
did not appear that the output and employment loss resulting from inability
to produce would be substantial, although there would be other negative
effects. This view has been fortified since it appears that the net curtailment of imports may be less than initially .eared. Maintenance of capacity
to produce in the presence of import curtailment will depend on limiting
consumption use of petroleum products, especially the use of heating oil for
homes and gasoline for personal transportation. This will cause inconvenience, although curtailment on the scale foreseen would not cause hardship. Concentration of the available supply in the uses most essential for
production and employment will be brought about in part by higher prices.
This can be, and is, supplemented by voluntary conservation measures and
by mandatory allocations.
2. Restraint on the demand for output. The reduced availability and
higher price of gasoline will curtail the demand for large automobiles, for the
services of motels, and for other tourist services. The shortage of heating oil
and gasoline will cut the demand for new houses. How serious these effects
are will depend in part on the amount of the cut in oil supplies or on the rise
in the price. One should note that the effect of a price rise can be as great
as the effect of a shortage in diverting expenditures from oil-related products. All of these effects will also depend on how consumers react, not only
in restricting purchases of petroleum-related products but also in switching
purchases to other things. The problem is compounded by uncertainties,
both about imports and about public policy, which may cause a more negative reaction than the most probable facts would justify.
3. The real income loss due to costlier energy. The foregoing are the transitional problems created by the present energy situation. The initial loss of
capacity to produce caused by the curtailment of energy supplies will in time
be offset by shifts of production in directions that use less energy. The initial
loss of demand for output associated with energy will in time be compensated
for by a shift of consumers' demands to other products, and possibly by an
increase in demand for American products by the oil-exporting countries. In
addition to these transitional problems there will be a continuing effect on
the real standard of living of the American people as a result of being cut
off from low-cost sources of oil. That means we shall have to pay more of
our own products or assets to foreigners in exchange for their oil, that we
shall have to devote more of our own resources to producing energy domestically, and that we shall have to accept methods of production or forms of
25
consumption we would not have chosen if more oil had been available at
a lower price.
How much these costs will amount to is exceedingly difficult to estimate.
A clue to their magnitude is given by the fact that the increased cost of U.S.
oil imports due to the oil price rises of October and December 1973 would
be less than 1 percent of the gross national product (GNP) in 1974, with a
volume of imports that would have occurred at the pre-October prices. This
is probably an outside estimate of the costs in 1974 (aside from the transitional costs already noted) because there would be adaptations of various
kinds. The amount is large and justifies a strenuous effort to reduce it, by
getting the foreign price down and by developing cheaper sources at home.
Whether the cost will continue to rise, relative to GNP, will depend on the
costs of producing additional amounts of energy from new sources.
4. Balance of payments and other international consequences. All of the
other oil-importing countries of the world will suffer the effects of the cut
in supplies and the increase in prices of oil. In fact, most of these countries
will be more seriously affected than the United States, because their imports of oil are larger relative to their total supply of energy and to their
total GNP. The position in the Western European countries is expected to
be qualitatively similar to that in the United States. The short-run depressing effect on their domestic demand as a result of the high import
prices will be greater than the cut in their ability to produce caused by the
oil shortage. For Japan the situation may be different, and the effect on her
ability to produce may be more severe. In any case there will be a marked
slowdown, and possibly an absolute decline, in demand and output in most
of the countries of the world with which we do business, except for the oilexporting countries.
This outcome will influence the United States in a number of ways. It
should help to retard the increases in prices of industrial raw materials, just
as the worldwide boom contributed to their rise. The increase in the value
of the dollar in the last quarter of 1973 should also help to slow down the
rise of dollar prices of internationally traded commodities. The net effects
on trade are not clear. Oil prices will be lower here than elsewhere, at least
for a time, because of the price control on a large part of our oil supply; and
this situation will tend to stimulate exports of products with a large oil component, such as petrochemicals. On the other hand, the reduction of income
and activity abroad and the depreciation of foreign currencies will tend to
cut our exports. This factor will probably be the dominant one, although
its net effect is likely to be small except for one reservation to be noted.
At present prices of oil, the oil import bills of the industrialized countries
will be so large that many if not all of them will have current account
deficits—that is, their foreign expenditures for goods and services will exceed
their foreign earnings. This will be true even after allowing for the added
purchases that the oil-exporting countries may make from the industrialized
countries. The oil-exporting countries will have large current account sur-
26
pluses, which in one form or another will be invested in financial or real
assets in the industrialized countries.
This combination of transactions does not require any decline in the level
of economic activity in the industrialized world—aside from the transitional
difficulties already noted—or slowdown in the rate of growth. In fact, there
may be a stimulus to the rate of growth, as the higher oil prices extract
funds from consumption and return them to investment via the investment
of the oil-exporting countries. However, there could be severe repercussions if the financial aspects of these transactions are not well managed.
Several possibilities can be envisaged which could lead to cumulative
recession. One possibility is that some of the industrialized countries might
lose large amounts of monetary reserves, or incur large liquid liabilities to the
oil-exporting countries which would impel the industrialized countries to
try to build up their reserves. Or industrialized countries having current account deficits might feel it important to correct those deficits, even though
their overall balances of payments are not in deficit. Some countries will have
overall deficits and might try to correct that situation. In any event, the
single-country response is likely to be to try to export more and import less,
either by squeezing down the economy at home or by checking imports and
spurring exports. That is, the single-country response could well either create
recession at home or export recession. If many countries are following this
policy at once, the compound result could be a large and unnecessary decline
in the world economy.
GOALS FOR 1974
The goals for 1974 must be realistically connected with the conditions
existing at the beginning of the year. As we have already explained, we believe that the conditions existing at the beginning of the year make it extremely likely that inflation will continue at a high rate through the early
part of 1974. A slow rate of economic expansion is also likely during this
period, and possibly a decline, with rising unemployment. After some period,
probably after the first half of the year, the course of the economy will be
influenced more by policies still to be adopted. The idea of a "goal" is more
relevant to this later period than to the months immediately at hand. For
this later period, three possible paths for the economy can be distinguished.
1. Total spending can accelerate strongly, bringing production quicklyback to a full-employment level. This path would create new price
pressures which would replace the diminishing pressures expected in
energy and food and contribute to an acceleration of wage increases.
2. The contraction can continue, with unemployment rising throughout
the year. Anti-inflationary pressure would be strengthened along this
path.
3. The economy can begin a moderate expansion, one which will bring a
halt to the rise in unemployment and yet resist an upsurge of inflation
27
outside the food and fuel sectors and get the benefit of a much lower
rate of further price increase in these two sectors. There would be an
expectation that a significant reduction of price increases in food and
fuel would be followed in time by a reduction elsewhere if the economic
environment is not overheated. This would be accompanied by a gradual decline of the unemployment rate.
The third possible path is most consistent with attaining as well as maintaining the goals of the Employment Act. The first is a prescription for
undiminished and probably accelerating inflation. The second exacts too
high a price in unemployment.
Of course, no one knows with certainty or precision the relations among
output, unemployment, and prices along any of these paths. They only
reflect general emphases which can be utilized as guides to policy. Moreover, even if the desired path could be precisely described, no one could
precisely describe the policy that would achieve it. All of these usual uncertainties are heightened this year by the difficulty of foreseeing the effects
of the radical change in the energy situation. This unusual degree of uncertainty makes it more important than ever that we be prepared with
means for adapting policy if events seem to be moving outside a reasonable
range of the roughly defined target path.
What is implied by the path that at present seems to us the best of the
feasible ones for the economy, given the inescapable effects of the energy
shortage, is an increase of about 8 percent in the nominal value of GNP
from calendar 1973 to 1974, to about $1,390 billion. Of this rise, about 1
percent would be an increase in real output and about 7 percent an increase of prices (as measured by the GNP deflator). Changes from calendar 1973 to 1974 are, of course, significantly influenced by what has already
happened in 1973; and hence changes so expressed do not describe an expected path for 1974, though they are implied in any expected path. As
for the expected path during 1974, this would leave real output approximately flat, and perhaps declining for an interval, in the first half of the year
but would bring a rise by somewhat more than the normal trend rate in
the second half. Inflation would be rapid in the early part of the year, mainly
as a consequence of energy and food prices, and then subside to rates significantly below those experienced in 1973. Unemployment for the year
would average a little above 5J/2 percent.
We would emphasize two aspects of this path. First, it is at the same
time our view of a feasible target and a prediction of what will be achieved
if the planned policy is carried through. Second, that the path is feasible
and that it will be achieved by the planned policy are both uncertain to a
significant degree. This means that the target or the policy may have to be
changed as new information emerges, although changes involve costs and
should not be made unless the case for them is clear.
A description of the implications of this path for the main sectors of
the economy appears at the end of this chapter.
28
POLICIES FOR ACHIEVING THE 1974 GOALS
The general contour of the economy described for 1974 is consistent with
the private forces now apparently at work. In the early months of the year,
consumers will make the move to spending a larger part of their income on
an imported product—namely oil—because of the higher price. This will
tend to reduce their spending for the purchase of other goods and services
and will offset the rise of other categories of demand, such as business investment and government spending. But the adjustment to spending more money
on imported oil will be completed early in the year; this drag on the expansion of the economy will then be removed and the expansive forces will
become more effective. (Expenditures for foreign oil will not decline, but
they will not be rising significantly.) As the year progresses, housing construction will rise in response to greater availability of credit and greater certainty
about the distribution of fuel oil and gasoline; and production of new automobiles will increase as the manufacturers improve their ability to turn out
small cars. Meanwhile, the period of maximum increase of energy prices
and food prices should have passed.
The main functions of policy will be to keep the dip in the early part of
the year from going too far and to assist the revival later in the year, but to
avoid stimulating too rapid a surge.
1. Fiscal policy. The budget proposed by the President will tend to restrain the decline of the economy during 1974 but would inject no fiscal
stimulus to push the economy above its average rate of expansion.
If the economy were operating at about the same rate of utilization of the labor force in 1974 as in 1973, the size of the budget surplus
would change very little between the 2 years. Thus one can say approximately that if the economy were moving along its normal growth path the
budget would not be tending to divert the economy from that path in either
direction.
However, if the economy operates, as expected, at a lower rate of activity
relative to its potential in calendar 1974 than in calendar 1973, the budget
will swing significantly toward deficit. This change will result chiefly from
the lower level of receipts accruing to the Federal Government at lower
levels of economic activity, and partly from higher unemployment compensation payments. As a consequence, private incomes after taxes rise relative
to output, thus sustaining demand and moderating the slowdown of the
economy.
In calendar year 1972, unlike 1973, Federal receipts were swollen by
exceptionally large net overwithholding of personal income tax estimated to
amount to about $9 billion. An estimate of the economic effect of the budget
in 1972 and 1973 depends heavily on the impact attributed to this overwithholding. If the amount overwithheld was less like a personal tax than like
personal saving accruing in the form of a government obligation, fiscal policy
moved in a restrictive direction from 1972 to 1973. Thus, if the amount
overwithheld is subtracted from recorded receipts, there was a swing of
29
527-867 O - 74 - 3
about $14 billion from deficit to surplus between the 2 years on the assumption of a constant rate of economic activity at full employment. Over $3
billion of that swing would have been due to the higher rate of inflation in
1973, but the remaining $10 billion would represent an independent fiscal
policy force restraining even the normal rate of growth. Such restraint was
appropriate, given the inflationary condition of the time. Since we had in
1973 both a reduction of unemployment and an increase in the rate of inflation, the actual swing from deficit to surplus was larger—about $17
billion, or about $26 billion if overwithholding is excluded from actual
1972 receipts.
If the overwithheld amount is treated like any other tax receipt, little shift
in the full-employment budget position appears between 1972 and 1973.
However, exclusion of the overwithholding from receipts seems to us to
come closer to representing the economic effect of the budget, and the fullemployment estimates in Table 1 are calculated in that way. On this basis
it appears that whereas the direction of fiscal policy was significantly restrictive from 1972 to 1973 it is fairly neutral from 1973 to 1974, offering support
if the economy declines but otherwise not exerting any upward or downward push.
The foregoing observations relate to the balance of Federal receipts and
expenditures in the national income and product accounts. These accounts
are more useful for analysis of overall economic impact than the unified
budget accounts stressed in the Budget Message, primarily because they
exclude certain expenditufes which do not enter directly into the stream
of U.S. income or expenditure. The references to the behavior of the surplus
or deficit at a constant rate of economic activity are to calculations of the
surplus as it would be at the actual or forecast rate of inflation if the economy were operating at 4 percent unemployment and at an annual growth
rate of 4 percent (rather than the 4.3 percent used in Council Reports of
the past 4 years). The level of these surpluses depends on the unemployment
rate chosen, but the year-to-year changes in the surplus are not sensitive to
the unemployment rate chosen if the chosen rate is approximately stable
from year to year. Reference to a higher unemployment rate would reduce
the levels of the surpluses but not have much effect on the year-to-year
changes.
It is also useful to try to take the effect of changing inflation rates out of
the change in the surplus because such a procedure gives a clearer picture
of the budget changes that are autonomous, that is, not responses to economic
fluctuations. An increase in the inflation rate will affect both receipts and
expenditures, but it will affect receipts much more promptly and hence increase the surplus. This increase in the surplus tends to restrain the expansion and thus the increase of the inflation rate. But it is also a symptom of
not having prevented a rise of the inflation rate and so is evidence of antiinflationary policy only in a rather negative sense. Unfortunately, the effect
of the change in the inflation rate can be measured only very approximately.
Table 1 shows the annual surpluses and changes according to four different methods of measurement.
30
TABLE 1.—Federal budget surplus or deficit under alternative assumptions, national income accounts
basis, calendar years 1969—74
[Billions of dollars]
Full-employment budget surplus or deficit (—)
under alternative assumptions i
Actual budget
surplus or
deficit ( - )
Calendar year
4 percent
Variable
unemployment, unemployment
4 percent
unemployment standardized
rates
inflation rate 2
Level:
1969
1970
1971
1972
1973
1974 4
.
8.1
-11.9
-22.1
-15.9
.6
-4.6
8.8
4.0
-2 1
-7.7
5.8
6.0
-20.0
-10.2
6.2
16.5
-5.2
-4 8
-6.1
-5.6
13.5
.2
4.9
.3
-5 0
-10.4
3.1
2.1
Change from previous year:
1970
1971
1972
1973
19744
-4 8
-5.3
-5.6
10.2
.3
-4.6
-5.3
-5.4
13.5
-1.0
1
$9 billion in overwithholding excluded from 1972 receipts.
2
Change in surplus or deficit between 2 succeeding years assumes that inflation rate is constant at rate of
first year.
3
Assumes that unemployment rates of the civilian labor force are constant at their 1956 levels in each of
four sex-age categories: Males and females 16-24 years and males and females 25 years and over. Instead of
staying at 4 percent, the overall unemployment rate used to represent a constant rate of utilization of the
labor force in this estimate rises to about 4.6 percent by 1973 because the labor force was increasingly composed of groups (females, youths) characteristically having higher unemployment rates than older males.
4
Excludes transfer of $2.1 billion worth of rupees to the Indian Government expected in the first half of 1974.
Sources: Department of Commerce (Bureau of Economic Analysis), Office of Management and Budget, and
Council of Economic Advisers.
In view of the uncertainties facing us, it is extremely important to be
prepared with fiscal measures to support or restrain the economy if it is
clearly running outside the general track described here for 1974. The Administration is now in the process of preparing for support action. A decision
to take such measures would have to be made with great caution, however,
in view of the additional supply bottlenecks that might be caused by the
energy shortage.
Greater protection for those unemployed because of the prospective conditions, and greater assurance against an even more serious slowdown, would
have been provided if Congress had enacted the proposal submitted by the
Administration last year to improve the unemployment compensation system. The President has again strongly urged the Congress to act promptly
on these proposals; he will also submit additional unemployment insurance
amendments to extend the duration of benefits and expand coverage in labor
market areas that have large increases in unemployment.
2. Monetary policy. Because of the lag which we believe exists between
changes in money and changes in economic activity, the influence of monetary policy on the economy during 1974 will largely result from the monetary
expansion during the second half of 1973 and the first half of 1974. The
monetary expansion in the second half of 1973 can be described by an
increase in the narrowly defined money stock (Ma) of somewhat under 5
percent and an increase in the broadly defined money stock (M 2 ) of about
31
8 percent, at annual rates. Continued growth in M 2 at approximately this
rate would be consistent with our expectations concerning the increase in
money GNP during 1974. At present we expect money GNP to increase by
about 8 percent during the year. For more than a decade the proportionate
increase of money GNP tended to be the same as that of M2, though in some
years the deviations from this proportionality were substantial, and halfyearly deviations were often quite large. Hence, the foregoing conclusion
seems reasonable, barring the emergence of further evidence as yet
unforeseen.
The prospect for trends in interest rates is particularly difficult to appraise
at present. Inflationary expectations tend to raise money rates, while
the temporary slowdown of business activity is apt to have the contrary
influence for a while, even though business fixed investment is likely to rise
at a rate well above that of GNP. Among the interest-reducing influences,
the prospective capital inflows resulting directly or indirectly from current
account surpluses of the oil-exporting countries also need to be taken into
account. All this relates to interest rates in general. Terms on which mortgage credit is available will be influenced by the success that depository
institutions have in attracting new savings funds in competition with market
alternatives, and by the subsidization policies of the Administration with
respect to this category of borrowers.
As will be explained in Chapter 2, by steepening inflationary expectations
an overgenerous increase in the money supply would steepen rather than
moderate trends in money rates of interest.
3. Housing policy. The economic path described for 1974 implies a bottoming out of housing starts in the first quarter of 1974 at a level only slightly
below the fourth quarter of 1973 followed by a rise beginning in the spring.
The Administration took a number of steps in September 1973 to cushion
the decline then under way. In January a two-pronged action was taken to
revive the mortgage market. The Department of Housing and Urban Development was authorized to purchase mortgages on up to 200,000 housing
units at 7% percent, substantially below the prevailing market interest rate.
In addition, the maximum interest rates on FHA-VA mortgages were lowered to 8I4 percent from 8/ 2 percent, thereby setting the pattern for reduced
mortgage rates.
4. Managing the energy shortage in the United States. If the economy
is to follow the general path we have outlined it will be essential that output
not be seriously hampered by the shortage of energy. This stipulation means,
first, that the total supply of fuels made available for industrial production,
including transportation related to it, must be adequate to sustain the aggregate level of economic activity projected for the year. Second, the supply
must be distributed among users in a way that avoids bottlenecks.
How easily these two conditions can be met will depend upon the volume
of oil imports. We believe that the volume of imports will be sufficient to
permit their fulfillment, but it would be imprudent to assume that they can
be met without care in the distribution of energy among various uses.
32
The rise in prices of petroleum products which has been occurring helps
to bring about the desired distribution. As the prices rise, the less valuable
uses—which tend to be those which generate the least output and employment—are foregone. At a higher price, a factory which uses oil for space
heating will cut down the temperature before it cuts down the use of oil in
the production process. A higher price will cause a consumer to cut down
the use of his car for pleasure driving, rather than for getting to work. It
is commonly said that the use of energy will be reduced relatively little
by a price increase. That may or may not be correct. But even if the cut
in energy use is "relatively little" compared to a price increase, the price
increases that have occurred or are in prospect are sufficiently large to have
a substantial effect on the total use of energy and its distribution.
The oil price increases that have taken place under the controls program
have been justified as a necessary means of increasing supply and maintaining orderly markets. Imported oil, "new" oil, and oil from small wells are
exempt from control. Other oil is controlled and sells at prices considerably
below those of uncontrolled oil, but the control price has been raised on
two occasions to keep the price spread from becoming too large. Although
necessitated by supply considerations, these price increases have played a
useful role in the allocation of supply. To make sure that the price increases
do not yield excessive profits that are not justified by their contribution to
increasing supply, the Administration has proposed an Emergency Windfall
Profits Tax. This tax would take a large proportion, up to 85 percent, of
the additional revenue earned by producers of crude oil as a result of higher
prices.
Other methods are being used to distribute supplies of oil in ways that will
meet production requirements. The Federal Energy Office (FEO) has encouraged refineries to limit the production of gasoline in order to increase
the production of other products more essential to industrial output. This
enforces a cut in automobile driving, although it does not solve the question
of who gets the available gasoline. The FEO has taken steps to prepare for
coupon rationing of gasoline, although it is believed that a combination of
increased supplies, higher prices, and conservation measures, largely voluntary, will make such rationing unnecessary.
The Emergency Petroleum Allocation Act of 1973 requires the establishment of a system of mandatory allocation of oil products, and the FEO
has now set up such a system. It specifies limits to the amounts of petroleum
products that refineries or distributors can deliver to described classes of
customers (but stops short of individual consumers). The limits are generally described in percentages of current requirements or base-period use.
The limits differ by class of user, in accord with FEO's estimate of the essentiality of the use to the productive process and to society. Such a system
necessarily involves elaborate paperwork and a large degree of arbitrariness.
Confidence that the economy will not be seriously hampered rests upon
the expectation that increased supply and higher prices will narrowly limit
the shortages to be distributed by the allocation system.
33
A third method, which seems to have been highly effective, has been
voluntary conservation. This has been especially useful in stretching out the
supplies of gasoline and home heating oil, but it has also helped to bring
about a reduction in the nonproductive use of energy in industry.
The measures taken in recent months to deal with the energy shortage
are too numerous to recount here. What further steps may be needed cannot
now be foreseen. It must be emphasized, however, that satisfactory progress
through 1974 will depend upon a flexible use of prices, allocations, and
voluntary measures to channel energy efficiently into industry.
5. Wage and price controls. When Phase IV controls were instituted in
August, the President announced that it would be our policy to work our
way and feel our way out of controls. There would be no pre-set terminal
date and we should avoid a disorderly transition, but the determination
would be to end the system of comprehensive controls. This policy has been
followed in the last 5 months. A number of industries have been decontrolled since Phase IV began and the pace of decontrol has been
accelerating.
Experience under Phase IV has shown the wisdom of pressing on with
the removal of controls. The controls have not recently been very effective
in restraining inflation, and the general uncertainty cast over the economic
process by the actual or potential operations of a detailed control system
endangers the healthy economic expansion we seek. The last point is very
important. Too many business decisions for too long a period ahead are
being influenced by puzzlement over the kinds of controls businesses will be
subjected to. We badly need business investment and economic growth in the
years ahead, and continuation of general controls tends to interfere with
that aim.
Just how fast the process of decontrol should properly go, and what
residue of controls will endure, if any, cannot now be precisely told. But
achievement of the desired reduction of inflation during the year does not,
in our opinion, depend upon any significant influence from the controls.
6. International cooperation. The ability of the United States to get
through the economic uncertainties of 1974 successfully would be enhanced
by reasonable stability in the rest of the world, especially in the industrialized countries that are the chief suppliers and customers of the United
States. There are two main things the United States can do to further that
stability.
First, the United States can take the lead in an international effort to
bring about a reliable international flow of oil at reasonable prices. Powerful
moves by the United States and other industrialized countries to develop
energy sources as potential alternatives to the oil now controlled by a few
nations will be helpful in normalizing the flow of oil. The President has
called the first of a series of international meetings on this subject to take
place February 11.
34
Second, the United States can participate in a common effort to assure
that the effects of high oil prices on the balance of payments do not lead the
industrialized countries into a round of competitive deflation, depreciation,
or trade restriction. This effort should include consideration of possible ways
to supplement the now existing means of providing temporary support
to countries finding themselves in a critical financial condition as a result of
greatly enlarged oil import costs.
GOALS BEYOND 1974
Concern with the stabilization problems of 1974 should not divert attention from those other problems whose consequences will come chiefly after
1974 but which need to be dealt with now and continuously. Most of these
problems arise from the need to increase our ability to produce—in total as
well as in particular directions. This emphasis on ability to produce is essentially an emphasis on efficiency, on managing our resources so that we get
as much out of them as we can. It is neutral about what should be produced
and even about how much should be produced, only stressing the ability to
produce more of what is wanted, if it is wanted.
We think emphasis on ability to produce is important at this time, because
in the years ahead the desire of the American people for more output is
likely to be especially strong, and unusual obstacles may hinder fulfillment
of this demand. The need to devote more resources to obtaining energy will
be a drag on output. The country is almost certainly ending the period of
large transfers of the labor force out of agriculture into other pursuits. By
1980, we will probably come to the end of a period in which the labor force
grew much more rapidly than the population and thus helped to raise output
per capita. Environmental considerations may tend to slow down the growth
of output, at least as output is usually measured.
For these reasons, emphasis on the capacity to produce—on efficiency and
productivity—is especially important now. Of course, even in the field
vaguely labeled "economic" the Nation always deals with a multiplicity of
goals. For example, the distribution of the national income among persons
will always be a subject of concern. We hope that the information presented
in Chapter 5 will be illuminating in this connection. The Nation has other
goals about the uses of the national output. One sees evidence, for example,
of a great interest in devoting more of the national output to improvement
of health, and in achieving that aim more efficiently. The President will be
submitting suggestions to this end. It seems most useful for us to concentrate here on the problem of production.
Many aspects of Government policy affecting capacity to produce are discussed in more detail in later chapters of this report. We present here only
a brief survey of the field.
35
DEVELOPMENT OF LOW-COST ENERGY FOR THE FUTURE
Throughout the 1960's the United States employed quantitative restrictions on petroleum imports to limit dependence on foreign sources of supply.
However, the availability of imported petroleum at a price below the domestic price led to a weakening of the import restrictions and in 1973 to
abandonment of the quota system altogether. As a result, imports have provided a rapidly expanding share of the domestic market.
The energy crisis that occurred in late 1973 as a result of the embargo by
some of the oil-exporting countries alerted the Nation to the risk of depending on imports for a commodity that is vital to our economic well-being, and
the supply of which is largely controlled by a few countries. Reductions in oil
shipments to the United States and a sharp rise in the price of imported oil
have caused substantial economic disruption. Had these events occurred
later, when the United States was projected to be even more dependent on
imported petroleum, the loss of jobs and the effect on incomes might have
been far greater.
Oil imports may become more readily available, and the price may decline.
However, the possibility of a subsequent sharp price rise or supply curtailment makes it risky for the United States to remain heavily dependent on
imports to supply domestic needs.
The Nation has the capability to become self-sufficient in energy production. This capability will, however, require substantial capital investment
and large expenditure on research and development. The private sector
will be willing to make the needed investment only if there is a reasonable
assurance that returns will be adequate to justify the commitment of resources to long-term investments.
In response to this situation, the President has announced Project Independence, a program to develop the capability for self-sufficiency in energy
production by 1980. The choice of policies to implement Project Independence should be made largely on economic grounds. Because energy can be
expected to cost more in the 1980's than it did in 1972, important changes in
production methods, in the composition of output, and in consumption will
occur. These changes will develop most rapidly, and with the least cost to
society, if relative prices are allowed to allocate resources and to influence
production decisions. There are many uncertainties regarding which of the
new energy technologies will prove to be economic. By relying on the market
mechanism to guide production decisions, we can avoid becoming locked
into production methods and energy sources that prove to be uneconomic.
A major component of Project Independence is a program of Governmentfunded research and development to accelerate the development of technologies that will ensure an adequate supply of low-cost energy for the future.
Although the private sector will continue to undertake most of the energy
research and development, there is a need for a more active Government
role. In part this is because the returns from expenditure on research and
development will be heavily influenced by Federal policies regarding en-
36
vironmental control, leasing of mineral rights, and import restrictions. In
addition, the development of new energy technologies to some extent involves
expanding our knowledge of fundamental processes. In such cases, although
the research and development provides a large gain to the economy as a
whole, there may be little opportunity for any one firm to derive a large
enough part of this gain to warrant undertaking the research. Moreover,
private research and development is usually oriented toward projects with a
relatively quick payoff, whereas much of the needed expenditure must be
devoted to the development of energy sources that may not be competitive for
some time.
SAVING AND PRIVATE INVESTMENT
To keep output per worker rising rapidly, when the labor force is also
rising rapidly, requires a high rate of investment in productive facilities.
Our total investment requirements in the years ahead will be greatly increased by the need to invest in energy development and environmental
improvements.
These energy and environmental investments do not raise productivity as
conventionally measured, though the former may prevent a decline in productivity if energy shortages would otherwise continue, and the latter may
also prevent an ultimate decline in productivity. Both types of investment
thus represent part of the increased resource costs imposed on energy-using
or environment-using industries, in one case by adverse supply developments
and in the other by social choice. Environmental benefits enhance economic
well-being, and increased reliance on domestic sources of energy adds to
security of production. Still, one can probably say, the American people
expect rapidly rising output of the ordinary, marketable kind; and this
expectation will require rapidly rising total investment to accommodate
rising energy and environmental investment along with increasing investments of other kinds.
Part of total investment is provided through the Federal budget, in the
form of direct expenditures for capital purposes, loans to private businesses
and individuals, or grants and loans to States and localities. The budget for
fiscal 1975 includes $19 billion for such outlays, excluding defense and excluding expenditures for education, training, health, and research and development. The largest single item is expenditures for transportation, primarily highways, followed by expenditures for public works.
These direct investments in the Federal budget make a useful contribution to economic growth, if they are wisely selected and well managed. Such
direct investments have numerous advocates in the Federal budget-making
process. But attention needs to be called to another way in which the Federal budget could contribute to investment and growth, although it has few
advocates: running a budget surplus, or at least avoiding a budget deficit
except under appropriate conditions.
If the Federal Government runs a deficit and borrows under conditions
of strong private investment demand, its borrowing absorbs funds which
37
would otherwise have been invested in private projects. Unless all of that
deficit is used to finance direct Government investment, which is unlikely,
the deficit depresses total investment. On the other hand, if the Government
runs a surplus in these circumstances, it will repay some of its debt and make
more funds available for private investment, unless the surplus is generated
by taxes all of which come out of private saving, an unlikely condition.
When there is a great deal of slack in the economy, a budget deficit will help
to support the level of economic activity needed to supply both the incentive
to invest and the savings for investment. However, when productive resources are fully utilized, the smaller the Federal deficit is, or the larger the
Federal surplus, the higher private investment is likely to be. This fact partly
explains the principle adopted by the Administration that expenditures
should not exceed, and at times may properly be less than, the receipts that
would be collected at full employment.
Government policy affects incentives for private investment, in total and
in particular sectors, in a number of ways, including policies relating to
taxes, international trade, and international financial policy, as well as
credit guarantees, subsidies, and so on. All of these involve well-known conflicts of objectives and difficulties of measuring costs and benefits. We may
now be running into a problem which is new, at least in magnitude, and potentially very serious: the uncertainty created for private investment, and
all private long-term commitments, by Government economic controls that
are unprecedented in scope and unpredictable in operation. Taken together,
the price and wage controls, the controls connected with the energy shortage, and the environmental regulations add up to a massive entry of Government into the affairs of almost every business in the country. The management of these controls involves a great many close or arbitrary decisions, to
be made in many instances by a very few people. They could go either way,
and the private businessman who must invest in the light of these controls
cannot tell which way they will go.
These uncertainties could become a major obstacle to new private investment, even though we do not now see good evidence of its having already
happened. Concern on this score is not a conclusive argument against any
particular control, although it is a strong argument for avoiding controls.
And it does argue for as much stability as can be achieved in the management
of the controls that are inescapable.
THE FINANCIAL SYSTEM
In his 1970 Economic Report the President said:
Because our expanding and dynamic economy must have strong and
innovative financial institutions if our national savings are to be utilized effectively, I shall appoint a commission to study our financial
structure and make recommendations to me for needed changes.
After studying the findings of this commission (the Hunt Commission),
the President, on August 3, 1973, sent to Congress a series of recommendations. In them a more efficient financial system is envisioned, in which finan-
38
cial institutions can operate with greater freedom and less imposed specialization. By fostering more competition among financial institutions, the proposed measures would improve the efficiency of our financial system in
channeling funds from savers to borrowers. Savings would earn the highest
rate of return the competitive market structure could allow, and the savings
would be put to the most productive use. Under such a system, interest rates
would play a greater role in determining the volume and the distribution
of funds. Social projects deserving priorities, such as low- and moderateincome housing, would be taken care of with subsidies instead of regulations.
Among the recommendations, interest rate ceilings on deposits would be
phased out over a period of 5 5/2 years. Federally chartered thrift institutions
would be authorized to offer third party payment plans, including negotiable orders of withdrawal (NOW's) and credit cards to individuals and
corporations; but they would also be given expanded lending powers in
making consumer and real estate loans and in acquiring high-grade private
debt securities. National banks would likewise be able to offer NOW accounts and make real estate loans with fewer restrictions. Interest ceilings
on Government-backed mortgages would be removed, and a mortgage interest tax credit of up to 3 ^ percent to financial institutions and up to 1 l/i
percent to individuals supplying mortgage funds would be made available.
The President's recommendations, if enacted by Congress, would
strengthen the financial markets in general and mortgage markets in particular. The expanded lending and borrowing powers would increase the
flow of funds into financial institutions. Further, the mortgage tax credit
would reduce the dependence of the mortgage market on thrift institutions
by encouraging other types of financial institutions, as well as individuals, to
invest in mortgages. The resulting mortgage market would be less vulnerable to a credit squeeze than it has been, and the burden of monetary
restraint would be more evenly distributed throughout the economy.
On another financial matter, the time may be at hand when a move in
the direction of greater uniformity of reserve requirements among depository
institutions is warranted. Varying reserve arrangements among State and
federally supervised banks have resulted in removing an increasing proportion of the money supply from the direct influence of Federal Reserve requirements and have made short-term shifts of deposits among member and
nonmember institutions a source of uncertainty in the implementation of
monetary policy. Care must be taken that any change in the reserve structure
of the Nation's banks should not work to the disadvantage of smaller institutions or change the balance among supervisory authorities; but within these
constraints it now appears desirable that deposits which form the money
supply should be subject to direct influence by the Federal Reserve, regardless of the source of supervision of the institutions that hold them. The Federal Reserve has recently submitted its own proposals in this field.
39
TRANSPORTATION REFORM
Last year the Congress passed and on January 2, 1974, the President
signed the Regional Rail Reorganization Act, which is a pragmatic attempt
to deal with the pervasive insolvency of railroads in the heavily industrialized
Midwest and Northeast. Several of the eight principal bankrupt railroads
had threatened liquidation, and such a bill was needed because the risk of
even a very short period of suspended service was too great to be tolerated.
If the services of the Northeast's railroads are so vital to the rest of the
economy, one must ask why so many of them were in such a weakened
financial condition. Factors more general and basic than those that normally
cause bankruptcy are responsible.
Poor management and unrealistically rigid labor contracts are popular
explanations of the railroads' inability to adapt to changing technology and
a changing economy. These proximate causes largely reflect, however, a more
fundamental cause—inefficient and intransigent governmental regulation.
Governmental regulation of the railroads can be traced to two sources.
The public wanted the Government to protect them from the industry in a
time of near monopoly and the members of the industry wanted the Government to protect them from each other. This "protection" has been expensive
for both the railroads and the public. The elaboration of regulations intended
to provide this protection has created a complex set of specifications for the
behavior of firms that has tended to ossify with time. As a result railroad
companies have increasingly given up control of fundamental management
decisions to the Interstate Commerce Commission (ICC) in return for the
policing of industry competition by the agency. Moreover, railroad management's attention began to focus more on the rules that delimited its discretion than upon the underlying economic realities in the markets in which
they operated. As these realities changed, railroad management found itself
increasingly inept at adjusting—the result being an increasing incidence of
bankruptcy.
The Transportation Improvement
Act
The Transportation Improvement Act of 1974, proposed by the Administration, is an important first step toward solving some of the more general
problems of the railroad industry. It is also an imperative step toward a longterm solution of the problem of the bankrupt railroad; because the viability
of the rail system that will emerge from the wreck of the Penn Central will
depend in an important way upon successful regulatory reform. Among the
more important reforms facilitated by the bill would be liberalization and
rationalization of procedures for the "abandonment" of unprofitable lines.
In 1971 the railroads were required by the ICC to maintain service on 21,000
miles, about 10 percent of the total, of lightly traveled track for which
revenues were less than operating costs.
To cover these losses, railroads must charge higher rates on profitable
routes. This subsidization distorts resource use and interferes with the effi-
40
ciency of the entire transportation system, and hence the entire economy,
as well as increasing the financial problems of the rail industry. Requiring
railroads to continue to operate short and uneconomic branch lines diverts
traffic that could be carried more efficiently by truck; and conversely the
higher rates on longer hauls result in a diversion to trucks of freight that
could be moved more efficiently by rail. Since trucks use considerably more
fuel (and emit more pollutants) than trains per ton-mile of freight carried,
the magnitude of this inefficiency grows directly with the increasing relative
scarcity of energy supplies.
The proposed act will also facilitate the substitution of truck transportation for rail services on abandoned lines, by more or less automatically
authorizing truck service between any point on the abandoned line and
connecting rail service points.
Need for Further Reform
Although enactment of this bill will add to the efficiency of the rail
industry, several basic problems remain on the agenda for transportation
reform in the coming year. The longer-term viability of the Nation's railroads will require substantial investments in improved technology, and in improvement and diversification of types of freight service, as well as investments to rehabilitate deteriorating physical facilities.
It is vital, however, that a comprehensive evaluation of the regulatory
and institutional structure of both the railroads and the entire surface transportation industry be completed before such investments are made. Many
aspects of modern railroad operation are not determined by either technological or profitability considerations. They are adaptations to obsolete
regulatory policies and labor practices. Investment in conventional railroad
technology as it exists today may inhibit productivity and actually reinforce
the resistance to the institutional reforms that will be required for the development of a more rational and efficient surface transportation system in the
future.
Changes in corporate structure may also be desirable. Costs of transferring
freight from one railroad to another significantly reduce the savings that
rails enjoy relative to trucks on long-haul shipments. This would imply that
end-to-end mergers of railroads might be important mechanisms for reducing the real cost of rail transportation. Yet formidable administrative barriers must be surmounted by companies attempting end-to-end mergers
under current regulatory practices.
The Administration's concern with the efficiency of the surface transportation system is not limited to stopping the spreading insolvency that
infects the railroad industry. It will be difficult to exploit fully the opportunities for increasing productivity in the railroad industry unless major changes
take place concurrently in the trucking industry.
The regulation of trucks in interstate common carriage that began in the
midst of the Great Depression has also evolved into a web of regulatory
41
constraints. Restrictions on entry into market areas, limitations on the type
of goods carried, and mandated "gateways"—creating required routes which
may be so circular as to be bizarre—have resulted in an industry burdened
with regulatory inefficiency. Partially loaded trucks, often required to return
empty even when alternative cargoes are available, are common. Such inefficiency is a result of regulatory policy. There are no technological
reasons why the motor freight industry could not operate as an essentially
competitive sector of the economy.
A comprehensive analysis of the trucking industry is now under way and
will provide a basis for the design of a comprehensive set of regulatory reform proposals to be completed by the fall of 1974.
EFFICIENT INTERNATIONAL EXCHANGE
Economic growth is significantly enhanced by an openness to foreign
economies which permits a relatively free international exchange of goods
and capital based on economic incentive. International trade makes goods
available that might otherwise be lacking, or only available at much higher
costs. It can also make available to domestic producers ideas about new products, new product designs, or new methods of production. For producers it
can be an added incentive to adopt more efficient methods of production.
We have been reminded in recent months that in some circumstances
there can be a danger, both political and economic, in excessive dependence
on foreign supplies. The United States must guard itself against this danger,
by unilateral or multilateral action. However, if this objective is realistically
defined it will be found not to limit greatly the scope for beneficial expansion
of international trade.
Despite a fairly extensive removal of trade barriers in the past 25 years,
substantial barriers to international trade and investment remain in effect.
The inefficient location of productive facilities because of these barriers
constitutes a loss of economic welfare to the country as a whole. Efforts to
negotiate a reduction of the remaining trade barriers are therefore important
toward improving the efficiency of the U.S. economy. The trade legislation
now before Congress would give the President authority to negotiate a substantial reduction of such barriers.
Negotiations in the trade area also have to deal with the economic interdependence that results from trade. Abrupt economic shifts emanating from
abroad can from time to time create a temporary economic dislocation at
home which needs to be moderated or offset by government measures. Since
such measures will have further repercussions abroad, governments need to
agree on some basic rules and procedures that they can follow when their
interests conflict. Multilateral negotiations are designed to improve some of
the current rules and procedures, as well as to reduce existing trade barriers.
An international monetary system is a prerequisite for the efficient exchange of goods and capital. Without such a system, international exchange
is confined to barter. To function efficiently, the international monetary sys-
42
tem has to provide sufficient quantities of commonly accepted means of payment and a procedure for adjusting the relationship between one currency
and another. It also has to provide a set of rules on such questions as the
conversion of one currency into another, restrictions on the conversion of
currencies, transfers of liquid funds from one country to another, as well as
a set of procedures for resolving differences in national approaches to such
problems. The current negotiations to reform the international monetary system are designed to improve the existing rules and procedures.
SUPPLEMENT
Prospects for 1974
Earlier in this chapter we noted that 1974 would be a year of little output
growth and considerable inflation but that in both respects the second half
of the year should be better than the first. The energy crisis has clouded
near-term prospects much more than usual. There is great uncertainty, not
only about the overall GNP change and its distribution between price and
real volume but also about the components of demand. It seems fairly likely
that this year's 8 percent increase in nominal GNP should reflect slower
rates of increase, compared to last year, in consumption, gross private domestic investment, and net exports, and a faster rate in combined government
purchases. The specific changes are much less certain, but the Council
presents the following projections of individual demand components underlying this year's overall total.
Business Fixed Investment
The Council expects nonresidential fixed investment to show a rise of
about 12 percent from 1973 to 1974. It is likely to be the major source of
strength in demand this year. Despite the small rise in production in the
final quarter of 1973, the condition of shortages that prevailed in many industries earlier in 1973 continued through the end of the year. Capacity utilization was still very high, especially in the basic materials industries.
Delivery times were still long. Aside from the automobile industry, inventories were rather low relative to output and sales. All of these were indicative of tight supply conditions that constituted a strong stimulus for business
to invest in new plant and equipment in the coming year.
This is not to say that the character of investment demand will be the
same as in 1972 or 1973. The slowdown of the rise in aggregate demand
during 1973 and the leveling in profits are likely to bring a smaller rise in
new investment initiatives than in the preceding 2 years. Even so, the large
volume of new investment under way assures a sizable increase in real expenditures in 1974. Unfilled order backlogs in capital goods industries at the
end of December were some 35 percent greater than they had been a year
earlier.
43
In early 1974 the Commerce Department released a survey which showed
that businessmen were planning a rise of 12 percent in capital expenditures
in the coming year. The rise was particularly large for manufacturing—17
percent—and planned increases within manufacturing were above average
(21 percent) for materials-producing industries. The Commerce Department survey is broadly consistent with a McGraw-Hill survey, which was run
about 2 months earlier, projecting an overall rise of 14 percent from 1973
to 1974.
Neither of these surveys sheds any light on the effect of the energy crisis
on investment plans; and because of variations in sample coverage and for
other reasons, the difference in results between the two surveys is not considered significant. The Council believes that on balance the energy crisis
may result in some reduction in business purchases of cars and trucks, but
aside from this the negative and positive effects of the energy crisis on investment will be roughly offsetting. Some industries directly affected by the crisis
have already cut back investment (airlines, for example), while some firms
in other industries may be holding back on commitments until they understand the implications that the current crisis holds for future fuel supplies-.
On the other hand, the crisis is stimulating capital outlays to support the
search for new energy sources in this country, and conversions to other types
of fuel will entail new capital expenditures.
Inventory
Investment
Inventory investment is likely to be a little higher this year than in 1973—
perhaps by $2 billion. In the final quarter of 1973 there was a very large
increase in inventory accumulation, a good part of which represented a rise
of retail stocks of new cars. Even so, total nonfarm stocks relative to total
output measured in real terms at the end of 1973 were low, gauged by postWorld War II experience. The first half of this year should see a working off
of unwanted automobile stocks at the same time that other industries continue to accumulate inventories in an effort to restore more normal relationships between stocks and output.
Residential
Construction
Housing starts in the final quarter of 1973 appeared to be reflecting the
effects of the stringency in mortgage markets last summer, and possibly temporary effects arising out of the energy crisis. Very late in the year there were
reports that builders were uncertain about the impact of reduced fuel supplies on new construction, while potential buyers of homes in outlying areas
were hesitant because of uncertainty about the availability of gasoline
for extended commuting. But this, and the extent to which homeowners
were making new expenditures for better insulation of their homes, cannot
be considered hard information. While there is no assurance about improved
energy supplies, the coming months should at least dispel the present uncertainty and permit those builders and those consumers who can buy and
rent new homes to make decisions.
44
A more fundamental factor concerns financial conditions. Net inflows
into savings and loan associations have risen since late summer, and thrift
institutions now have more funds available for mortgage lending. On
the basis of past experience this improvement in the availability of mortgage
funds should be reflected in a turnaround in starts this spring. Recent actions
taken by the Federal Government should also help spur the recovery. The
reduction in FHA and VA mortgage rates in January should help make
these programs more attractive to home purchasers, and increased purchases
of mortgages by GNMA should increase the supply of mortgage funds for
these programs.
The underlying demand for housing—as measured by the need to provide shelter for new households and for the replacement of houses removed
from the housing stock—remains strong. However, the inventory of unsold
homes at the start of the year is likely to act temporarily as a brake on new
starts and dampen the increase after this spring. For all of 1974 the Council
foresees starts of approximately \'2/z million private units, which would represent a decline of almost 20 percent from the 1973 total. Outlays are expected to decline by 15 percent.
Government Purchases
Federal purchases of goods and services, after rising very little from 1972
to 1973, are expected to increase about 10 percent in the coming year, with
increases in both defense and nondefense outlays. State and local purchases,
further supported by the revenue sharing program, are expected to rise by
12 percent, which is close to the increase of the preceding year.
Net Exports
Prior to the energy crisis it was expected that net exports would show a
further improvement from 1973 to 1974. The effect of the devaluation of
the dollar and the continued strength of foreign demand were expected
to stimulate exports. The slower growth of output in the United States was
expected to slow the growth in imports. Thus, a further moderate improvement over the high rate of net exports that prevailed in the second half of
1973 appeared to be a reasonable prospect.
The oil crisis has drastically modified this outlook. For the time being at
least, foreign countries are expecting much slower real growth than they
anticipated previously. While exports will be greater than in 1973, they will
not rise as much as they would have without the crisis. The main factor
affecting imports is the huge increase in prices of imported oil. Cutbacks in
the physical volume of crude oil and refined products will be much more
than offset by the rise in price. The full effect of the price rise should be
felt by the second quarter. In nominal terms the net exports are expected to
fall close to zero for 1974 as a whole.
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527-867 O - 74 - 4
Consumer Spending
Consumer expenditures are likely to increase about as much as GNP in
1974. Spending should be rather sluggish in the first half but should show
a marked improvement in the second.
Consumers had already shown a pronounced reaction to the energy
crisis in late 1973, when they reduced their purchases of domestically
produced cars from an annual rate of 10 million units in the third quarter
to about 8 million units in the fourth. The decrease was much more than
had been anticipated by forecasters prior to the energy crisis, and the fact
that large car purchases were weak, while long delivery times were required
for small car purchases, pointed up the special influence of the crisis on
auto demand. It is not clear whether the cutback by consumers had run
its course by early January, when dealer sales of domestic cars were running
at a seasonally adjusted annual rate of about 7 5/3 million units. As small car
supplies improve through the year consumers should come into the market in
increasing numbers, although the pickup in car purchases is not likely to be
appreciable until this summer. Another reason for the improvement in consumer spending from the first to the second half of 1974 is that the major
downward adjustment of demand resulting from reduced gasoline supplies
and higher prices is likely to be completed in the first half of this year.
Prior to the energy crisis some slowdown in the growth of consumer
spending had been expected in the first half of 1974 because of the earlier
shift in fiscal and monetary policy and the independent effect of the housing
decline. Offsetting these influences is the stimulation from sharp increases in
Federal transfer payments. These include the 7 percent social security increase scheduled for this April and the further 4 percent increase in July;
the rise in payments due to the federalization of adult welfare programs; increased payments for food stamps and increased retirement benefits for
Federal workers and veterans. All told, Federal transfer payments to persons
as measured in the national accounts are scheduled to rise by $14 billion
(annual rate) from the second half of 1973 to the first half of 1974. As an
offset, the increase in the taxable wage base this January from $10,800 to
$13,200 will reduce personal income by $2 billion, as calculated in the national income accounts. In fact, this rise will be felt by those consumers
whose wages exceed $10,800 only in the second half of the calendar year,
as employers make deductions from employees' earnings for a longer period
than under the old taxable base. Although the net fiscal stimulus will have
run its course by midyear, the pickup elsewhere in the economy in the
second half should serve to increase consumer incomes and spending.
46
CHAPTER 2
Developments and Policy in 1973
FEW FACTS STAND OUT about the American economy in 1973,
and the story of the year is mainly the story of the relation among
them:
A
1. From calendar 1972 to calendar 1973 real output rose about 6
percent; but from the end of 1972 to the end of 1973 it rose only 4
percent.
2. From calendar 1972 to calendar 1973 prices of this output rose
about 5 percent; but from the end of 1972 to the end of 1973 prices
rose 7 percent.
3. On both bases of comparison expenditures for the purchase of
output rose by about 11 percent.
The explanation of the large increase in expenditures for the purchase of
output in 1973 involves the following factors, although the relative weight
to be given to each and which ones were active and which permissive are
unclear and in dispute:
—Total output approached a ceiling early in the year, so that the price
rise accelerated and demand for output was stimulated in anticipation
of future shortages and price increases.
—During 1972 the money supply grew 7.7 percent as narrowly defined
and 10.9 percent as broadly defined. In 1973 the corresponding figures
were 6.1 percent and 8.8 percent.
—The shift to more restrictive fiscal policy turned out to be insufficient to
prevent an excessive rise in demand in view of the other forces at work.
—Foreign demand for American output increased substantially.
These factors interacted and multiplied in various ways. The rise of
prices boosted inflationary expectations which, either directly or through
an effect on interest rates, made people willing to spend more relative to
their money holdings. Rising expenditures generated more incomes and,
in turn, more spending. Limited production of food, great foreign demand
for it, and, later in the year, the embargo on oil had particularly sharp effects on the prices of food and energy. Different models of economic behavior would arrange these factors differently, but probably all models
would invoke these factors in one way or another.
47
Chart 1
Changes in GNP, Real GNP, GNP Price
Deflator, and the Unemployment Rate
PERCENT CHANGE FROM PRECEDING QUARTERJ/
UNEMPLOYMENT RATE 1/
4 —
1972
1973
_ ! / SEASONALLY ADJUSTED ANNUAL RATES.
2/
SEASONALLY ADJUSTED.
SOURCES: DEPARTMENT OF COMMERCE AND DEPARTMENT OF LABOR.
48
The whole process depended, at least for its magnitude, on the fact
that in 1973, at an earlier stage than had been anticipated, supply limitations made it impossible to obtain further rapid increases of production.
If we could have increased output more readily in response to the strong
demand, prices would have risen less, and the additional spur to demand
resulting from the rising prices could have been avoided. The rise of output during 1973, especially after the first quarter, was limited by a slow
growth of productivity while the labor force was growing quite fast. The
slow growth of productivity, in turn, resulted from shortages of certain basic
materials used for further production, retardation in the flow of labor
out of agriculture, an increase in the proportion of less experienced workers
in the labor force, and supply difficulties in agriculture. At the end of the
year energy shortages may have been hurting productivity, although given
the limited information now available this is not entirely clear and does not
in any case bulk large in the statistics for 1973 as a whole.
The foregoing remarks and much of the remainder of this chapter are
meant to explain what was unexpected and disappointing about the economy in 1973, notably the inflation. This question holds the most interest,
and perhaps the most lessons, for the future. Worth emphasizing, however,
is that in terms of the objectives of the Employment Act, "maximum employment, production, and purchasing power," 1973 was a successful year.
Total employment was at a record high, as was the proportion of the
working-age population employed. Production was also higher than ever
before and close to its potential. The purchasing power of the American
people, measured by consumers' real income after taxes, per capita, also
reached a record level and was well above the 1972 average.
DEMAND AND OUTPUT IN 1973
The year 1973 started out on a very expansive note. Closing figures for
1972 showed that from the third to the fourth quarter real GNP had
increased at an annual rate of 8.1 percent and nominal GNP at a rate of 11.7
percent. These were followed by still larger increases in the first quarter
(Chart 1). The real increases were unsustainable in terms of the economy's
potential to produce, and the nominal increases were undesirable from the
point of view of stabilization policy.
The slowdown that policy had aimed for finally came in the spring. In the
second and third quarters of 1973 the deceleration of the rise was moderate
for aggregate demand but substantial for total output. Against a background
of strong and rising demand by business and foreigners, the slower rise in
total expenditures took the form of some softening in automobile demand
from extremely high levels reached early in the year and a weakening in
housing. All of this had its impact on production, but the production rise
was also held down by shortages of many basic materials and limitations on
capacity in a number of industries.
49
During the fourth quarter the downturn in housing became more pronounced, and the adverse effects from the energy crisis began to be evident.
A marked slump in automobile sales led to a build-up of inventories in
dealers' hands and to cutbacks in production. It was clear from the pattern
of sales that the fear of a gasoline shortage was the dominant influence on
fourth quarter sales, since throughout the period demand for small cars
increased, while demand for large cars declined.
TABLE 2.—Changes in gross national product in current and constant dollars, 1968 to 1973
IPercentJ
1968
to
1969
Component
1969
to
1970
1970
to
1971
1971
to
1972
1972
to
19731
CURRENT DOLLARS
Percent change:
7.6
5.0
8.0
9.4
11.5
Personal consumption expenditures.
Durable goods
Nondurable goods
Services
8.1
8.0
6.5
9.7
6.6
.6
7.3
8.2
8.0
13.5
5.7
8.5
8.9
13.3
7.6
8.5
10.8
11.7
12.1
9.2
Gross private domestic investment.
Business fixed investment
Residential structures
10.3
10.9
8.5
-1.9
2.1
-4.5
12.4
3.8
37.0
16.4
13.2
26.4
13.0
15.1
7.4
Government purchases
Federal purchases
State and local purchases..
5.2
.0
10.3
4.6
-2.6
10.9
6.7
2.0
10.4
8.8
6.5
10.5
8.7
2.4
13.2
7.6
7.7
5.4
5.3
7.9
8.2
9.5
10.0
11.5
10.6
.7
-.6
-3.3
1.7
1.5
-2.8
.0
-5.4
1.4
9.2
Total GNP.
Addendum:
Final sales
Domestic final sales..
Change in billions of dollars:
Inventory accumulation
Net exports of goods and services..
CONSTANT (1958) DOLLARS
Percent change:
2.7
-0.4
3.2
6.1
5.9
Personal consumption expenditures.
Durable goods
Nondurable goods
Services
3.6
5.3
2.1
4.5
1.8
-2.1
2.6
2.7
3.9
10.0
2.5
2.8
6.1
12.8
4.4
4.9
5.3
10.2
3.8
4.5
Gross private domestic investment.
Business fixed investment
Residential structures
5.0
6.0
2.2
-6.4
-3.6
-6.3
6.7
-1.4
30.6
11.4
10.0
19.3
7.2
10.5
-1.7
-1.2
-5.9
4.0
-4.5
-12.5
3.6
-.6
-5.3
3.3
3.3
-.2
6.1
1.3
-5.8
6.4
2.7
2.8
-.1
-.3
3.0
3.3
6.2
6.5
5.9
4.8
.3
-.8
-2.8
2.1
1.4
-1.9
-.7
-2.4
.6
8.0
Total GNP_
Government purchases
Federal purchases
State and local purchases..
Addendum:
Final sales
Domestic final sales.
Change in billions of dollars:
Inventory accumulation
Net exports of goods and services..
i Preliminary.
Source: Department of Commerce, Bureau of Economic Analysis.
50
The 11.5 percent increase in nominal GNP fron calendar 1972 to calendar 1973 was the largest annual rise in 22 years. It featured a dramatic
shift from deficit to surplus in net exports, as well as unusually strong
demand by consumers, especially for durable goods; by business for new
plant and equipment; and by State and local governments. There is also
reason to believe that inventory demand was strong last year but that supply
conditions did not permit this demand to be satisfied. Federal purchases and
housing rose less than average and decreased in real terms (Table 2).
Somewhat over half of the rise in demand from 1972 to 1973 was matched
by increased physical volume, the 5.9 percent increase coming quite close
to the 1972 rise and exceeding the long-term average of about 4 percent
(Table 2). The inflation component of the rise in money GNP accelerated significantly from the 3.2 percent rate of 1972 and the 2.7 percent
average of the past 25 years.
NONRESIDENTIAL FIXED INVESTMENT
Last year's rise in nonresidential investment extended the upturn that
began in 1971 after a year of declining real outlays. The investment expansion gathered strength in late 1971, when rising production increased
capacity requirements and accelerated the rise in internal funds. The liberalized depreciation regulations and investment tax credit of late 1971 helped
to bolster the rise in cash flow. The exceptionally large increases in output during late 1972 and early 1973, coinciding with similar production increases abroad, put severe pressure on domestic capacity in several industries,
especially those producing basic materials. In view of these pressures it is
not surprising that manufacturing firms, with a 21 percent rise, dominated
last year's increase in plant and equipment outlays.
TABLE 3.—Changes in manufacturing plant and equipment outlays and value of starts, 1971
to 1973
Percent change
Industry
Total outlays 2
Materials-producing industries3
26
Primary metals.._
Paper
Chemical
Petroleum refining...
Rubber
Textile..
Stone, clay, and glass
-1
10
-22
29
20
41
27
37
25
8
45
8
25
Allother
Total starts
.._.
1 Preliminary. Expenditures include anticipated outlays for fourth quarter 1973. For starts, fourth quarter 1973 was
assumed by the Council of Economic Advisers to be equal to average of second and third quarters of 1973.
2 As published by the Department of Commerce, Bureau of Economic Analysis. The two groups "materials-producing"
and "all other" will not add up to the Commerce total because nonmanufacturing petroleum outlays ordinarily included
in petroleum in this particular survey have been excluded by the Council of Economic Advisers from each group.
3
Includes lumber not shown separately.
* Less than 0.05 percent.
Source: Department of Commerce, Bureau of Economic Analysis (except as noted).
51
A number of points may be noted about recent changes in manufacturing
plant and equipment outlays. First, 1973's large increase reflects in part
the sharp rise in new starts in 1972 (Table 3). Second, the acceleration
of the rise in outlays, as compared to the year before, was most pronounced
in materials-producing industries. Third, the rise in manufacturing outlays in real terms since 1968 has been far below the previous postwar
average. For materials-producing industries real outlays rose 1.9 percent
per annum from 1968 through 1973, compared to a rise of 2.8 percent per
annum from 1948 through 1968 (Table 4).
TABLE
4.—Changes in manufacturing real plant and equipment outlays, 1948 to 1973
Percent change (annual rate)
Period
Materials
producing
industries *
1948 to 1968
2.8
1948
1953
1957
1965
2 2
to
to
to
to
1953
1957
1965
1968
....
1968 to 1973 2
All others
manufacturing
industries
4.1
2.0
4.7
2.4
4.3
5.4
2.1
4.1
1.9
2.4
1
Consists of primary metals, paper, chemicals, petroleum refining, rubber, textiles, stone, clay, and glass, and lumber.
2 Preliminary.
Note.—Based on expenditures in plant and equipment survey, deflated by the implicit price deflator for nonresidential
fixed investment.
Sources: Department of Commerce (Bureau of Economic Analysis) and Council of Economic Advisers.
INVENTORIES
Inventory investment was quite low in the first 3 quarters of 1973, contrary to the expectations of the Council and of most forecasters. Additions to
inventories were only slightly higher in 1973 than in 1972, and gauged by
the postwar ratio of stocks to output, inventories appeared low during
the year. Two main explanations have been put forth to account for this
behavior. The first is that businessmen were cautious in their inventory
policy last year, partly because of their experience during the 1970 recession
and partly because they expected that the rapid upsurge in demand and
output in late 1972 and early 1973 could not be sustained. A second possibility, to which the Council attaches greater weight, is that the rise in
demand was so strong and the limits to raising production so numerous
that businessmen were unable to build up stocks to any significant extent
until the end of the year.
The slowdown of the rise in final sales in the last quarter of the year
(a decrease in real terms) was accompanied by a sharp rise in inventory
accumulation. Much of this reflected the backing up of automobile inventories in the hands of dealers, since producers did not make an immediate
adjustment to the pronounced decline in sales. Apart from automobiles the
increase in inventory accumulation in real terms was not especially large.
52
HOUSING
In early 1973 there were indications that the 3-year expansion in
housing starts was coming to an end. Sales of single-family homes had grown
little after the summer of 1972; and vacancy rates of rental housing, while
not high, had been edging up. During the first half of 1973 the inflow of
savings into thrift institutions showed a pronounced decline compared to
1972, and lenders consequently reduced the volume of their mortgage commitments. The situation became acute in July and August, when institutions
experienced a net outflow of funds, although that was reversed late in the
year. A further discussion of mortgage markets appears below.
From the first to the third quarter, starts fell from a seasonally adjusted
annual rate of 2.4 million units to 2.0 million. In the final quarter, however, the summer stringency in mortgage markets was reflected in a precipitous decline in starts, which dropped to an annual rate of 1.57 million
units. Starts for 1973 as a whole, not counting mobile homes, were some
13 percent below the 1972 total.
Despite the record volume of completions, the rise in housing vacancies
from 1972 to 1973 remained moderate: 0.2 percentage point for rental
units and 0.1 percentage point for homeowner units. Although both of these
are up from the troughs reached in 1970 and 1971, they are low by the
standards of the 1960's, mainly because household formation and losses from
the housing inventory (due to demolitions and other factors) have remained
very high.
CONSUMER SPENDING
Consumer demand rose sharply from 1972 to 1973 under the influence of
higher incomes. Rising wage and salary payments in the private sector and
striking gains in incomes of farm proprietors played major roles in the 10*4
percent rise in personal income, the largest since 1951. Transfer payments
were also up substantially for the year as a whole, mainly because of the 20
percent increase in social security benefits that became effective in the final
quarter of 1972, although that influence was diminished by the rise in
social security taxes starting in January 1973. Under ordinary circumstances
disposable income (after tax) should have risen less than personal income,
but taxes rose less than usual because of the refund early in 1973 of some $9
billion in personal income taxes overwithheld in 1972; this figure also reflects
smaller than usual final settlements on 1972 tax liabilities. The refund contributed about 1 percentage point to the 10% percent increase in disposable
income.
The 11 percent rise in consumer spending was accompanied by little
change in the saving rate for the year as a whole. In 1970 and 1971, when the
economy was sluggish and the recovery weak, the rate had been very high,
the 8.1 percent annual average for each year being the highest since just
after the end of World War II. The vigorous recovery seems to have been a
decisive factor in the decline in the saving rate to 6.2 percent in 1972. However, decisions by consumers to spend a still larger fraction of their disposable
53
income do not appear to have played a major part in last year's upsurge in
consumer expenditures (Table 5).
TABLE 5.—Disposition of disposable personal income, 1960—73
[Percent of disposable personal income]
Current dollars
Disposition of income
1960-72
average
1972
19731
Personal consumption expenditures:
Food 2
Durable goods
Automobiles..
All other expenditures
17 4
13.7
4.8
59.9
15.7
14.7
4.9
60.7
15.7
14.9
4.9
60.6
Total expenditures
91.0
91.2
91.2
2.5
93.5
6.5
100.0
2.6
93.8
6.2
100.0
2.7
93.9
6.1
100.0
Plus: Transfers and interest
Equals: Total outlays
Plus: Saving
Equals: Disposable income
...
Constant (1958) dollars
Personal consumption expenditures:
Food2
Durable goods
Automobiles..
All other expenditures . . .
Total expenditures
17.7
15.4
5.4
58.0
15.5
18.0
6.1
57.7
14.3
18.8
6.2
58.0
91.1
91.2
91.2
* Preliminary.
2 Excludes alcoholic bever?ges.
Source: Department of Commerce, Bureau of Economic Analysis.
The influence on consumer spending of the overwithholding of Federal
income taxes in 1972, and their subsequent refunding in 1973, remains uncertain. When taxes were overwithheld in 1972, it was feared that the overwithholding might have an adverse effect on consumption. Perhaps it did,
but if so, this effect was swamped by decisions of consumers to reduce their
saving rate. The Council's position last year was that the overwithholding
was viewed as temporary by consumers and that in accordance with the permanent income hypothesis it affected saving rather than spending.
At the start of 1973 the Administration expected that consumers would
begin to reduce their withholdings to some extent in order to eliminate the
overwithholding that had started a year earlier. This expectation did not materialize. In effect, consumers seem to have changed their pattern of paying
income tax liabilities for a given year. That is, they overpay in the year of
liability and prefer to receive refunds the following year, giving the Government substantial interest-free loans.
Last year's refunds were not accompanied by a rise in the saving rate, but
the exact manner in which the refunds affected expenditures is not clear.
Refunds by the Internal Revenue Service did not become very large until the
second quarter of 1973. However, the upsurge in consumer spending came
in the first quarter, and spending increases then subsided. If the refunds were
important in the spending rise of early 1973, the anticipation by consumers of
54
refunds must have contributed to the bulge, which was pronounced in durable goods.
Despite last year's large price rise, real personal consumption expenditures
for 1973 were up some 5*4 percent over 1972. This may be compared to the
6 percent real rise in 1972 and an average rise of 4 percent in the postWorld War II years. Real spending in all major categories increased except
for food expenditures, which declined by about 2/2 percent.
In aggregate, real consumption gains after the first quarter were comparatively small, and the large increases in expenditures after early 1973 were
absorbed mainly in higher prices. Several factors seem to have been at work
here. Even before the fourth quarter there was some softening in auto demand from the exceptionally high levels of sales (12.5 millon unit annual
rate) reached in the first quarter, although reports were common in the spring
and early summer that shortages of parts were holding back production and
sales of automobiles. A leveling out in real purchases of durable goods other
than autos after an exceptional rise early in the year may have been related
to the decrease in housing. Real food consumption also declined after the
first quarter because of the reduction in domestic output, the increase in exports, higher prices, and the shift to lower-cost foods. Whether the extraordinary increases in food prices also had an adverse effect on other types
of spending taken as a whole is not clear. The saving rate did not change
much. The question is complicated by the fact that the higher food prices
were paid largely to American farmers, whose additional purchases of nonfood items could partly offset any reduction in such expenditures by the rest
of the population. In aggregate, real consumer outlays for all personal consumption except durables and food rose at an annual rate of 5 percent from
the first to the fourth quarter of 1973.
NET EXPORTS
A major element in the big expansion of demand during 1973 was the
change in our net export position. In the fourth quarter of 1972 the United
States was a net importer of goods and services at the annual rate of $3.5
billion. In the fourth quarter of 1973, net exports were at the annual rate of
$8.0 billion. This swing of $11.5 billion was equal to 8.5 percent of the
increase in spending during 1973. It exceeded the acceleration in total spending from 1972 to 1973; that is, if net exports are excluded, the rise in total
spending is changed to 10.7 percent in 1972 and 10.3 percent in 1973.
Not all of the increase of net exports may have been a net addition to total
spending, since the financing of the net exports may have reduced some
domestic spending. On the other hand, the direct effect of the increase in
net exports would have a multiplied effect on total spending, because
the initial effect would increase incomes in the United States and raise
consumption.
The increase in net exports resulted from three developments. First, there
was a boom in the rest of the industrial world, far exceeding expectations
(Chart 2). Second, low food supplies in the rest of the world boosted the
55
Chart 2
Changes in Real GNP
PERCENT
UNITED STATES
m
i
w
I
OEC:D EUf\c>PE
1
1
1 1 1
1
.—,
I
1
1
1961
73
SOURCES: DEPARTMENT OF COMMERCE AND ORGANIZATION FOR ECONOMIC
COOPERATION AND DEVELOPMENT.
56
volume and the prices of farm exports from the United States. Third, the
depreciation of the U.S. dollar helped to increase exports from the United
States and to restrain the growth of imports.
THE LABOR MARKET
With aggregate output up substantially for the second year in a row the
demand for labor remained strong. Civilian employment increased by 2.7
million persons in the course of the year, while the civilian labor force grew
by 2.6 million. The 3.3 percent rise in employment was the largest December- to-December percentage increase since 1955. Unemployment declined
through the first 3 quarters of the year and then edged up.
THE LABOR FORGE
The civilian labor force expanded sharply during 1973 and for the entire
year was 2.1 million above the average level in 1972. This 2.5 percent increase followed a 1972 gain of similar proportions and substantially exceeded
the average rise of 1.8 percent a year in the preceding decade.
The civilian labor force can be augmented in three ways: (1) Through
reductions in the Armed Forces; (2) through population increases in the
working-age groups; and (3) through increases in the proportion of the population seeking work. By 1973 reductions in the Armed Forces had ceased
to be a major factor in enlarging the civilian labor force. For the year as a
whole the Armed Forces averaged about 100,000 less than in 1972, a marked
contrast to the reductions of 400,000 which occurred in both 1971 and 1972.
The 1.7 percent increase in the working-age population was in line with the
long-term trend. The main factor accounting for the larger than average increase in the civilian labor force in 1973 was the sharp rise in the participation rate. In the fourth quarter of the year a record 61.2 percent of
the civilian working-age population participated in the labor force, a large
increase from the 60.4 percent participation rate a year earlier. In 1972 and
1973 the movement toward increased labor force participation was reinforced by the large expansion in demand.
The rise in participation was most pronounced for women from ages
20 to 24. In 1973, 61 percent of women in this age group were either
at work or looking for a job, compared to 58 percent in 1971 and only
46 percent as recently as 1960. The long-term upward movement in the
participation rate for young women has several causes. There has been a
trend toward smaller families and toward starting them later. In addition,
mothers with preschool children have increased their work outside the
home. The continued strong expansion of the service industries, which
typically employ a large percentage of women, the relative increase in
university training of young women, and the broadening of all women's
employment opportunities have contributed to this trend.
Men in the 20 to 24 age group also sharply increased their participation
in the civilian labor force for the second year in a row, following 10 years
57
of essentially declining participation rates. One reason for these declines
was the absorption into the Armed Forces of many young men who would
otherwise have been part of the civilian labor force. In addition, selective
service legislation, which provided exemption from the draft for those continuing their education, induced many others to stay in school. Recently
the growth in college enrollments has slackened, and a number of young men
who might otherwise have continued their schooling are instead entering
the labor force either directly after high school or after a year or two of
specialized training.
Teenagers have also displayed an increased tendency to join the labor
force. A large proportion of teenagers in the labor force are in school, holding
or seeking part-time jobs. During the past few years a wider availability of
part-time jobs has contributed to the upward trend in the labor force participation of younger workers. The tight labor market of 1973 accelerated this
rise as it did in 1955, 1966, and 1972.
EMPLOYMENT AND HOURS
Last year's increase in the demand for labor took the form of a large
increase in employment and little change in the average length of the workweek. The failure of weekly hours to rise is not an unusual cyclical development for an advanced stage of a business expansion. In the early phases
of a business cycle upswing, employers prefer to lengthen hours rather
than hire new employees, because the latter course of action is often more
costly and employers are uncertain about the duration of the expansion.
Part-time workers are consequently put on full-time schedules, and fulltime workers are switched increasingly to overtime. There are limits to this
kind of switching, however, because overtime involves premium pay; at
some point it becomes more profitable to add additional workers, or an additional shift, when that option is available.
Another factor that served to hold down average weekly hours in 1973
was the behavior of labor turnover. Average weekly hours are total manhours worked during the week divided by the number of persons on the
payroll. Labor turnover was quite high during the year, because increased
job availability led many workers to switch their jobs. As some employees
quit and others are hired to take their place, an increased proportion of those
listed on the payroll during the survey week have put in less than a full
workweek.
UNEMPLOYMENT
The overall unemployment rate averaged 4.9 percent in 1973, well below
the 5.6 percent average of 1972. Unemployment declined for almost all
demographic, occupational, or industry groups (Table 6).
Last year we described "maximum employment," which is the goal specified in the Employment Act, as "a condition in which persons who want
work and seek it realistically on reasonable terms can find employment." We
believe that condition was approximately met in 1973, even though the aver-
58
TABLE 6.—Unemployment rates for selected groups, selected years, 1956—73
[Percent]
Group
1956
All civilian workers
..
.
1965
1972
1973
4.1
4.5
5.6
4.9
3.6
8.3
4.1
8.1
5.0
10.0
4.3
8.9
3.4
4.2
11.1
3.2
4.5
14.8
4.0
5.4
16.2
3.2
4.8
14.5
White-collar workers
Professional and technical workers
Managers and administrators, except f a r m Sales workers
Clerical workers
1.7
1.0
.8
2.7
2.4
2.3
1.5
1.1
3.4
3.3
3.4
2.4
1.8
4.3
4.7
2.9
2.2
1.4
3.7
4.2
Blue-collar workers...
Craft and kindred workers
Operatives
Nonfarm laborers
5.1
3.2
5.4
8.2
5.3
3.6
5.5
8.6
6.5
4.3
6.9
10.3
5.3
3.7
5.7
8.4
4.6
5.3
6.3
5.7
2.6
2.6
2.5
RACE
White
Negro and other races
AGE-SEX
Men 20 years and over
Women 20 years and over
Both sexes 16-19 years
OCCUPATION
.
Service workers
Farm workers..
_.
. ..
1.9
INDUSTRY
Nonagricultural private wage and salary workers.
Construction
Manufacturing
Durable goods
Nondurable goods
Transportation and public utilities
Wholesale and retail trade..
Finance and service industries
Government workers
Agricultural wage and salary workers
_
4.7
4.6
5.7
4.8
10.0
4.7
4.4
5.2
3.0
4.5
4.0
10.1
4.0
3.5
4.7
2.9
5.0
4.1
10.3
5.6
5.4
5.7
3.5
6.4
4.8
8.8
4.3
3.9
4.9
3.0
5.6
4.3
1.7
1.9
2.9
2.7
7.4
7.6
7.6
6.9
Note.—Rates by occupation for 1956 refer to persons 14 years of age and older. Data for later years are for 16 years of
age and older.
Source: Department of Labor, Bureau of Labor Statistics.
age unemployment rate was 4.9 percent rather than the 4.0 percent which
conventionally defines full employment. There is no single statistic which
can signal the achievement of the condition which we seek. But the combination of evidence for 1973 is strongly suggestive. During the year the rise
in total employment was extraordinarily large, and the proportion of the
population over the age of 16 employed was at a postwar high.
A condition of "maximum employment" in overall terms will imply different rates of unemployment for different groups of the population. For
example, under conditions of abundant employment opportunities, suppose that young men leave their jobs twice a year on the average and
spend on the average 3 weeks each time searching for the job they prefer.
In that case young men will have on the average an unemployment rate
of 11^2 percent, that is, 6 weeks of unemployment divided by 52 weeks in
the labor force. Suppose that 20 percent of the employed adult men quit
their jobs each year and spend on the average 5 weeks seeking a new one.
59
The unemployment rate for adult males would then be about 2 percent. If
the labor force consisted of an equal number of young men and adult men,
the average unemployment rate would be 6% percent. But if it consisted of
five times as many adults as youths, the average rate would be 32/3 percent.
This illustrates how changes in the composition of the labor force can
greatly change the overall unemployment rate that is associated with a constant condition of maximum employment for each group of the labor force.
TABLE 7.—Unemployment rates by sex and age, selected years, 1956-73
[Percent)
1965
1956
Sex and age
1972
1973
All civilian workers:
4.1
4.1
4.5
4.3
5.6
4.9
4.9
4.1
11.1
6.9
3.0
3.5
14.1
6.4
2.7
3.3
15.9
9.2
3.1
3.2
13.9
7.3
2.5
2.5
11.2
6.3
4.1
3.3
15.7
7.3
4.3
2.8
16.7
9.3
4.9
3.5
15.2
8.4
4.4
2.8
Actual
Standardized for age and sex 1
Males:
16-19 years
20-24 years
25-54 years
55 years and over.
Females:
16-19 years
20-24 years
25-54 years
55 years and over.
1
The standardized rate was computed by assuming that the age-sex composition of the labor force remained unchanged
from 1956 to 1973.
Sources: Department of Labor (Bureau of Labor Statistics), and Council of Economic Advisers.
One way of seeing how labor force composition affects the aggregate unemployment rate is to weight the actual unemployment rates for each agesex group by the composition of the labor force at a specific time. If each
age-sex group shown in Table 7 is weighted according to its importance
in the labor force in 1956, when unemployment averaged 4.1 percent, one
finds that the overall unemployment rate in 1973 would also have averaged
4.1 percent rather than the 4.9 percent actually experienced. This wide disTABLE 8.—Composition of the civilian labor force, selected years, 1956—73
[Percent]
Total civilian labor force
Both sexes 16-19 years..
Adult women
20-24 years
25-54 years
55 years and over..
Adult men
20-24 years
25-54 years
55 years and over..
Note.—Detail may not add to totals because of rounding.
Source: Department of Labor, Bureau of Labor Statistics.
1965
1956
Sex and age
60
1972
1973
100.0
100.0
100.0
6.5
7.9
9.3
9.5
29.4
3.7
20.6
5.2
64.1
5.2
45.6
13.3
31.8
4.5
21.2
6.1
60.2
6.6
41.7
11.9
34.3
6.1
22.1
6.1
34.6
6.3
22.4
5.9
56.4
7.7
38.1
10.6
55.8
8.0
37.8
10.0
100.0
crepancy reflects the large increase in the proportion of the labor force made
up of women and young workers of both sexes, two groups whose unemployment rates are substantially higher than the national average. The
higher than average unemployment rates for women and for teenagers are
closely related to their labor force participation patterns. In addition to
their jobs, people in these groups have responsibilities in household management or schooling, which tend to weaken their attachment to the labor
force. Since a new entry or a reentry into the labor force is generally followed
by a period of searching, and hence unemployment, these groups have
higher unemployment rates almost by definition. Even among persons in
their early twenties, there are many who have not yet developed an attachment to a specific occupation and who thus change their jobs frequently.
Teenagers, persons in the 20 to 24 age group, and women 25 or older
accounted for only 41 percent of the civilian labor force in 1956. By 1973
they accounted for 52 percent (Table 8). The gap between the actual unemployment rate and the fixed-weight unemployment rate follows this
changing proportion closely. The difference between the two rates was 0.2
percentage point in 1965, 0.5 point in 1969, and 0.8 point in 1973.
A number of other aspects of the employment situation suggest that if
we were not at "maximum employment" in 1973 we were at least very
close to it (Table 9). The average duration of unemployment declined, and
the proportion of the unemployed who were without jobs for 5 weeks or
less was high, indicating a large turnover among the unemployed and relatively short durations of search for work. Only 38.7 percent of the unemployed had lost their last job, which was nearly the same as the proportion in 1968, when the overall unemployment rate was 3.6 percent. Aside
TABLE 9.—Aspects of labor utilization, selected years, 1948-73
Unemployment rate
(percent)
Period
Total
Adult
males
Job losers
as percent of
total
unemployment
Average monthly labor turnover
rate in manufacturing
(per 100 employees)
Quits
Layoffs
New hires
0)
Ratio of
help-wanted
ads to nonagricultural
employment
Average
weekly
overtime
hours in
manufacturing
0)
0)
0)
1948
3.8
3.2
0)
3.4
.6
1953
2.9
2.5
1
C)
2.8
] .6
3.6
.86
1955
4.4
3.8
0)
1.9
.5
3.0
.77
1959
5.5
4.7
0)
1.5
1.0
2.6
.73
2.7
1965
1966
1967
1968
1969
4.5
3.8
3.8
3.6
3.5
3.2
2.5
2.3
2.2
2.1
1
C)
0)
41.3
38.0
35.9
1.9
2.6
2.3
2.5
2.7
1.4
1.2
.4
1.2
.2
3.1
3.8
3.3
3.5
3.7
.91
1.07
1.00
1.06
1.13
3.6
3.9
3.4
3.6
3.6
1970
1971
1972
19732
4.9
5.9
5.6
4.9
3.5
4.4
4.0
3.2
44.3
46.3
43.2
38.7
2.1
1.8
2.2
2.7
1.8
1.6
L.I
.9
2.8
2.5
3.3
3.9
.86
.76
.91
3 1.07
3.0
2.9
3.5
3.8
1
Not available.
Preliminary.
311-month average.
2
Sources: Department of Labor (Bureau of Labor Statistics) and The Conference Board.
61
527-867 O - 74 - 5
1.03
from job losers, the remainder of the unemployed had either left their
last job voluntarily, newly entered the labor force, or reentered it after
a period of absence. The proportion of employees in manufacturing who
quit was high, an indication of much voluntary turnover and confidence
about finding other jobs. The proportion of employees laid off was similarly low. Available measures showed job vacancies were plentiful.
PRODUCTIVITY AND POTENTIAL OUTPUT
Although the rise of employment during 1973 was exceptionally high,
the rise of output was just about average. Consequently the rise of output
per worker was significantly less than average. Hours of work per worker
did not decline, as they had been doing on the average for a long time. Total
hours of work rose even faster, relative to their long-term trend, than
employment; and output per man-hour—commonly called productivity—
lagged significantly below its trend rate of increase. The failure of productivity to rise more rapidly, and therefore of output to rise more rapidly,
was partly a reflection of last year's excess demand. It also contributed to
excess demand and to the inflation of 1973.
We have no good measures of productivity in the government sector.
This sector is arbitrarily considered to have no productivity growth when
total real output and its rate of increase are calculated, though changes in
the importance of government relative to private sector output can affect
the trend of total productivity. It is possible to say more, however, about
productivity in the private sector of the economy.
In the past 25 years (1947-72), output per man-hour in the private
economy rose at an annual rate of 3.2 percent, whereas in the private nonfarm economy it rose at an annual rate of 2.7 percent. The private total rose
faster than the nonfarm, partly because productivity rose faster in the farm
sector than in the nonfarm sector, and partly because of the continuing shift
of workers from agriculture to the nonagricultural sector. This shift raises
average productivity because productivity in agriculture is lower, ev^n
though it is rising more rapidly.
Recently, however, productivity has been rising less in the total private
economy than in the private nonfarm economy. Productivity in agriculture declined between 1972 and 1973 instead of rising more than in the
nonfarm sector. Moreover man-hours in agriculture as measured in the
productivity series fell less than usual last year, and although the rise in
nonagricultural man-hours was large the shift in the farm-nonfarm proportion was not as big as usual. These two factors together depressed the
rise of total private productivity below the rise in private nonfarm productivity. Productivity in the nonfarm sector rose very strongly through 1972
and the first quarter of 1973. Thereafter it essentially leveled out for the
remainder of the year, leaving the increase between 1972 and 1973 at 3.1
62
percent and much less during the year 1973. Productivity growth has a
cyclical pattern, tending to be greatest in the period of most rapid expansion,
then to slow down as output nears its peak and during the early period of
contraction, but to revive before the recession ends.
Some decline in the rate of productivity growth in 1973 was anticipated
as the economy passed beyond its period of most rapid expansion. The
degree of the slowdown was unexpectedly great, however, considering that
output at the beginning of the year was still more than 2 percent below
its conventionally estimated potential. A number of relevant factors were
at work:
1. Many industries had trouble achieving large output gains because it was hard to obtain raw and intermediate materials, such as
chemicals, steel, paper, and copper. Capacity utilization in basic materials-producing industries was pushed to a postwar high as a consequence of surging demand after several years in which additions to
capacity had been low. Capacity utilization in fabricating industries
was not so high. Estimates of capacity utilization in manufacturing
vary, but in any case output was limited by the lack of materials
(Table 10). The shortage of some materials was aggravated by large
exports which resulted from the foreign boom, the depreciation of the
dollar, and the maintenance in the United States of price ceilings
below world price levels.
The shortages of basic materials apparently did not prevent a large
rise of manufacturing output and of productivity in manufacturing.
We say "apparently" because the manufacturing figures are derived
in a different way from that used for the nonfarm output figures, and
the two may not be consistent. Nevertheless, the basic materials shortages may have prevented a still further rise of output and employment
in manufacturing; and it may have diverted a higher proportion of
the enlarged number of workers into nonmanufacturing industries,
where productivity was lower and where the influx of workers depressed
productivity further. As noted earlier, inventory accumulation was low
most of last year, and a larger rise in manufacturing output might have
permitted more normal ratios of stocks to sales.
2. The 1973 work force consisted to an unusual degree of new entrants to the labor force and reentrants—chiefly women and young
people, all of whom on the average tend to work in less productive
occupations than adult males with work experience.
3. An unusually high rate of turnover of workers occurred during
1973. A large number of people quit each month, and a large number
of people were newly hired. This meant that a high proportion of the
people in each job category were new to that work, if not to the labor
force, and required training and experience before they became normally productive. Furthermore, this would give employers an incentive
63
to maintain a somewhat larger work force than they would otherwise
require, as assurance against the departure of experienced workers.
4. Another factor that may have acted to restrain the rise in output
per man-hour was the behavior of average weekly hours. As noted
before, weekly hours in the;private nonfarm sector remained virtually
level throughout the year. Increases in man-hours resulting from increased hours rather than from increased employment will usually lead
to a rise in output per man-hour, since a smaller proportion of total manhours is lost to start-up and shut-down routines. In 1972, 35 percent
of the increase in man-hours resulted from a longer workweek. In 1973,
however, only 5 percent of the increase in man-hours in manufacturing
was attributable to longer working hours.
TABLE 10.—Aspects of capacity utilization, selected years, 1948-73
Capacity utilization
(percent)
Period
FRB manufacturing
Total
Primary Advanced
processing processing
FRB
major
materials
Wharton
manufacturing
Percent
of
manufacturers
needing
more
capacity
1948
92.7
98.1
89.8
87.9
92.4
0)
1953
95.5
94.3
96.1
87.3
92.3
0)
1955
90.0
93.7
87.7
89.8
90.9
(l)
1959
81.4
82.7
80.7
81.5
82.2
0)
1965
1966
1967
1968
1969
89.0
91.9
87.9
87.7
86.5
91.1
92.1
85.7
86.8
88.5
87.8
91.8
89.1
88.1
85.4
90.7
91.2
86.8
89.5
90.7
90.2
95.9
92.9
94.7
96.0
1970
1971
1972
19732
78.3
75.0
78.6
83.0
81.5
79.3
84.6
89.8
76.5
72.7
75.4
79.4
86.6
85.8
90.2
94.9
88.3
85.6
90.0
3 95.8
Ratio of
unfilled
orders
to shipments in
durable
goods
manufacturing
0)
0)
Percent of companies
reporting
Slower
delivery of
materials
32
60 days or
longer for
commitments for
materials
(0
31
53
4.27
66
63
3.44
60
66
47
50
45
43
45
3.12
3.51
3.38
3.27
3.13
67
73
44
53
65
64
71
65
64
63
42
31
35
49
2.90
2.59
2.59
4 3.00
51
48
63
88
55
54
57
78
1
Not available.
2 Preliminary.
3
Average of first 3 quarters.
* Based on seasonally adjusted data through November.
Sources: Board of Governors of the Federal Reserve System (FRB), Department of Commerce, and Wharton School of
Finance.
Our experience in 1973 raises the question whether we were at "potential" even though output was, on the average for the year, 2^4 percent below
the commonly measured figure of "potential" output. Being at potential does
not mean that output cannot be raised further. In 1973, although employment was still rising rapidly, output increased slowly and the rate of productivity increase sagged and actually fell in the second and fourth quarters.
A more rapid rise in output would probably have required an even more
rapid increase of labor input, if it had been available, and would have depressed labor productivity further.
The conventional measurements of potential assume that the labor force
and productivity rise, and that weekly hours of work decline, along an esti-
64
mated smooth trend from a period in which the unemployment rate was
about 4 percent. A recent calculation by the Bureau of Labor Statistics,
(Monthly Labor Review, December 1973) using these elements, leads us to
the estimate that potential was growing by 4 percent per annum after 1969
if we assume that output was at potential in the second quarter of 1969. On
this basis, actual output was about 2 percent below potential in 1973. What
the experience of 1973 suggests, however, is that potential does not grow
year by year at a constant rate. It is a simplification to assume that the labor
force, hours of work, the stock of capital, the availability of supplies from
abroad, and other determinants of potential move smoothly and continuously.
Reliance on a reasonable simplification of this kind is inevitable for inferring
the level of potential for those future years about which we have as yet no
detailed evidence. But for the years that are past, and probably also for a
period immediately ahead, we know more and should be able to do better
than read the level of potential off the smooth trend. Looking at it in this
way, it seems reasonable to say that the conditions peculiar to 1973 held
"actual potential" below the trend, without at the same time saying that in
the future the actual potential will always be below the trend derived from
past data.
THE BEHAVIOR OF PRICES
During 1973 prices rose more rapidly than at any time since the Korean
war. From December 1972 to December 1973 the consumer price index
(CPI) rose 9 percent and the wholesale price index 18 percent. The comprehensive GNP deflator rose 7 percent from the fourth quarter of 1972 to the
fourth quarter of 1973. Its 8 percent annual rate of increase in the fourth
quarter of last year was far above the rise projected by the Administration
a year ago.
There is no simple explanation for this price behavior which was the
most extraordinary in almost a generation and which confounded the
Council and most other economists alike. The simultaneous upsurge in
demand in the United States and in foreign countries, the shortfall in agricultural production of 1972 and early 1973, the decline in the international exchange value of the dollar, the unexpected capacity problems in
materials industries, the increases in petroleum prices late in the year as a
result of the Arab oil embargo, the shifting character of domestic price controls—all of these tell part of the story of last year's inflation. Chapter 3 deals
with the Economic Stabilization Program and Chapter 4 with the problems
of energy and agriculture. The present section touches briefly on some of
the broad measures of prices and wages, chiefly in the context of the national
income accounts.
Price behavior in the private sector of the economy, as measured by the
deflator for private GNP, shows the same broad pattern as the overall GNP
65
Chart 3
Changes in Selected Price Measures
PERCENT CHANGE FROM PRECEDING YEAR
_ PRIVATE NONFARM
GNP PRICE DEFLATOR
6 - PRIVATE GNP PRICE DEFLATOR
VTA
4 -
1
1
^§
1 1 1
1 1 I 1 1
1 1 I 1 1
2 -
CPI-ALL ITEMS
6 -4 -2 -
I
P
-I 1I I I
CPI-ALL ITEMS LESS FOOD
I1
i
11m
14 _ WPI-ALI. COMMODITIES
12 -
10 -
11-
WPI-INDUSTRIAL COMMODITIES
Q
o
6 4
2
0
I
1969
1
I1
1i
I 1
1970
1971
1972
—
-
1973
1969
SOURCES: DEPARTMENT OF COMMERCE AND DEPARTMENT OF LABOR.
66
1970
1971
1972
1973
deflator. The rate during 1973 was substantially above the high rates during
1969 and 1970, but the differences between 1973 and 1969-70 are greatly
narrowed when attention is focused on the private nonfarm deflator alone
(Table 11). Similarly, because farm and food prices have greater weights
in the wholesale and consumer price indexes, the latter show larger increases
from 1972 to 1973 than the private nonfarm deflator (Chart 3).
TABLE 11.—Changes in gross national product price deflators, selected periods, 1948 to 1973
[Percent change; seasonally adjusted annual rates]
Private
GNP
Total
GNP
Period
Private
nonfarm
GNP
Nonfinancial
corporations
1948 to 1973 average1
2.7
2.4
2.5
2.1
1968
1969
1970
1971
1972
5.3
5.3
3.6
3.3
7.1
5.0
4.8
3.1
3.2
7.1
4.8
5.3
2.9
2.5
5.5
2.8
5.1
1.6
1
2
IV to
IV to
IV to
IV to
IV to
1969 IV
1970 IV
1971 IV
1972 IV
1973 IV1
. .
.
2.9
24.4
Preliminary.
Estimate by Council of Economic Advisers.
Source: Department of Commerce, Bureau of Economic Analysis (except as noted).
Table 12 brings together changes during 1972 and 1973 for the major
indexes and some of their components. The acceleration in the advance of
prices is evident throughout the indexes, but the sharp advances in prices of
farm products, food, and energy products dominate the extraordinary price
behavior of last year.
The role of import prices is also noteworthy. The price deflator for imports rose 26 percent during 1973. If these rising import prices were merely
passed through dollar for dollar to final purchasers in the United States,
they would have accounted for about one-fourth of the rise in prices paid
by U.S. purchasers in 1973.
The farm deflator rose 54 percent from the fourth quarter of 1972 to the
corresponding quarter of 1973, reflecting exceptional increases in the first 3
quarters of the year. The great increase in U.S. farm and food prices began
in 1972 as a reaction to the reduced world output caused by adverse weather
in several parts of the world. The single most important shortfall occurred
in the Soviet Union and led that country to enter world markets for extremely large quantities of food and feed grains. Poor weather in other countries also contributed to the tightening of world food markets, and the United
States, as the major source of additional supplies, was faced with a huge
increase in demand.
The sharp increase in demand continued in 1973. Rising incomes in this
country contributed to an increase in the demand for food, especially during
the first part of the year. International events again added to the demand
pressures on U.S. food supplies. Two devaluations of the dollar in a 15month period, followed by further depreciation in the dollar exchange rate
after February, added to the export demand for U.S. food commodities, as
67
TABLE 12.—Changes in selected price measures, 1971IV to 1973IV
[Percent; seasonally adjusted annual rates]
Price measure
1971 IV
to
1972 IV
1972 IV
to
1973 IV
19731
1
II
IV
III
Implicit GNP price deflator:
Total G N P 2 . . . .
Private nonfarm GNP
Farm GNP
3.3
3 7.1
6.1
7.3
7.0
3 7.9
2.5
?2.9
3 5.5
54.2
4.3
50.6
6.0
75.8
4.5
107.4
3 7.0
3.0
Consumer price index:
All items
Food
Nonfood items
Energy *
Other nonfood
3.5
8.4
6.1
8.4
9.1
9.9
5.2
2.9
2.9
3.0
19.4
5.2
12.8
4.5
18.6
3.2
8.2
2.5
20.2
5.1
11.6
4.1
24.6
4.4
5.7
4.7
14.5
27.0
5.6
17.3
17.4
22.7
18.8
10.7
11.4
3.5
5.6
3.3
31.0
12.0
46.0
8.2
49.1
6.5
12.8
5.9
41.2
15.2
41.3
12.6
49.9
6.5
22.2
-6.8
20.5
133.2
11.3
8.2
6.8
Wholesale price index:
All commodities
Farm products and processed foods
and feeds.
Industrial commodities
Energy s
Other industrials
4.9
1 Changes from preceding quarter.
2 Includes general government not shown separately.
3 Preliminary.
* Includes gasoline and motor oil, fuel oil and coal, and gas and electricity.
a Includes fuels and related products and power.
Sources: Department of Commerce (Bureau of Economic Analysis) .and Department of Labor (Bureau of Labor Statistics)
did the widespread and strong economic expansion abroad. Exports of agricultural commodities rose sharply from $9.4 billion during 1972 to $17.5
billion in 1973, a development which was instrumental in the sharp increase
in U.S. farm commodity prices.
Last year saw a continuation of the major changes in agricultural policy
that were initiated during 1972 to further the expansion of supplies and
thus restrain price increases. Farm and food product prices, nevertheless,
reached new highs during the year. Wholesale farm product prices in
December, although 12.4 percent below the August peak, were 36 percent
above their level a year earlier, while retail food prices were 20 percent
higher. Although the expansion in acreage lifted gross farm-food production,
the production of livestock products declined slightly, and with exports
higher, there was a 2.5 percent reduction in food supplies reaching consumers. Disruptions in the pattern of supplies occasioned by the controls
created serious shortages during the third quarter of the year.
COMPENSATION AND UNIT LABOR COSTS
The slowdown in productivity growth during 1973 was accompanied by
a quickening of the rate of increase in compensation per man-hour. As a
result, unit labor costs rose sharply and contributed to substantial price increases in the private nonfarm economy (Chart 4). Nevertheless, preliminary data suggest that these price increases fell short of the increase of unit
68
Chart 4
Productivity, Compensation, and Unit Labor
Costs in the Private Nonfarm Economy
INDEX, 1970 IV=100
130
RATIO SCALE
125
120
115
COMPENSATION
PER MAN-HOUR
110
105
UNIT LABOR COSTS
100
j
1970
1971
1972
L
1973
NOTE.-DATA RELATE TO ALL PERSONS.
SOURCE: DEPARTMENT OF LABOR.
labor costs in the same sector. This is true even though real compensation
per man-hour—money compensation deflated by the consumer price index—
is likely to have suffered a small decline instead of having risen as it usually
does.
Wage rate adjustments under major collective bargaining agreements
were substantially lower in 1973 than in 1972. For the first year of the
contract, increases averaged 5.8 percent, down from 7.3 percent in 1972;
the slowdown for wages and benefits combined was a little smaller. (See
Chapter 3 for further treatment of wage rates.)
Wage changes under such bargaining agreements are limited in scope
because only one-fourth of all workers are unionized and only one-half
of these are covered by large contracts. A useful indicator of wage rate
behavior is the Labor Department's index of adjusted average hourly
earnings, which is applicable to all private nonfarm industries. The index
holds constant overtime hours in manufacturing and industry mix, but it
does not cover fringe benefits or compensation of employees other than
69
production workers, and it is sensitive to the occupational composition of the
work force within industries, which tends to be related to age and sex.
From 1972 to 1973 the adjusted earnings index rose 6.2 percent, essentially the same increase as from 1971 to 1972. Although lastv year's increase
was less than that of 1971, the index has shown a good measure of stability
during the past 6 years (Table 13). Monthly data suggest some step-up in
the rate of increase in the second half of 1973, although within the year the
figures tend to be rather erratic. However, compensation per man-hour
in the private nonfarm sector increased by 7.6 percent in 1973, the largest
increase in more than 20 years. This acceleration was attributable mainly
to a large rise in what is labeled benefits in Table 13, the major part
of which in 1973 came from the increase in employers' social security taxes
in the first quarter.
TABLE
13.—Components of percent change in compensation per man-hour in the private
sector,
1965-73
nonfarm
[Percent]
Production workers
Period
Hourly
earnings1
Overtime in
manufacturing
Industry
shifts
Employees
other than
production
workers
Benefits, all
employees
Compensation
per man-hour,
all
employees
Change from preceding year:
1965
1966...
1967....
1968
1969
3.7
4.0
4.6
6.6
6.6
0.1
.3
-.3
.2
-.1
0.0
.2
-.4
-.5
.2
-0.4
!9
.9
-.3
0.2
.6
.0
.3
.3
3.6
5.8
5.6
7.5
6.7
1970
1971
1972
19732
6.7
7.0
6.3
6.2
-.2
-.1
.3
.1
-.6
-.4
-.2
.3
.9
-.3
.0
.1
.4
.8
.4
.9
7.2
7.0
6.8
7.6
1
Adjusted for overtime in manufacturing and interindustry shifts.
2 Preliminary.
Source: Department of Labor, Bureau of Labor Statistics.
From 1972 to 1973 labor costs per unit of output (unit labor costs) rose
by 4.4 percent, or much more than the 2.6 percent rise in 1972. The acceleration in the increase of unit labor costs resulted partly from rising hourly
labor costs and partly from a reduced rate of increase in productivity.
Nonfinancial Corporations
Table 14 brings together for nonfinancial corporations the components
of annual price change over the past few years. Although it constitutes a
convenient set of accounts for examining prices, it does not permit one to
draw inferences regarding causation. However, the previous remarks about
factors underlying changes in productivity and hourly compensation would
also be applicable here. The reader should keep in mind that the price
deflators are not the equivalent of prices charged by corporations. The deflators apply only to the value added in production by nonfinancial corporations and not to the cost of goods and services purchased by corporations.
70
T A B L E 14.—Changes in prices, costs, and profits per unit of output for nonfinancial corporations,
7970 to 1973
[Percent change]
1971
to
1972
1970
to
1971
Item
1972
to
1973
Percent change per unit of output:
Prices
Employee compensation...
Compensation per man-hour.
Output per man-hour
3.1
2. 3
3.6
1.6
2. 7
3.9
7.2
5.5
6.8
I0
7.6
3.7
3.5
-.3
.0
4.0
5.0
-1.6
1.5
-2. 4
0
.0
.0
.0
Profits 2
12.6
6.0
9.9
Percent change in output..
3.5
7.4
7.8
Other costs.
Capital consumption allowances.
Indirect business taxes l
Net interest
1 Also includes business transfer payments less subsidies.
2 Before taxes and including inventory valuation adjustment.
Note.—Detail may not add to totals because of rounding.
Sources: Department of Commerce (Bureau of Economic Analysis)and Department of Labor (Bureau of Labor
Statistics).
The deflator for corporate output rose 3.6 percent from 1972 to 1973 after
a 2.3 percent rise in the preceding year. Rising unit labor costs and profits
plus inventory valuation adjustment account for all of last year's price rise.
Nonlabor costs per unit, which make up about 22/2 percent of price, showed
little overall change; this was essentially the pattern of change from 1971
to 1972. The faster rise in unit labor costs last year in comparison with the
year before reflected an acceleration of the rise in compensation per manhour and a somewhat smaller increase in output per man-hour. Profits per
unit rose quite sharply for the third straight year, but they still remained
below the average level from 1964 through 1968.
The 10 percent rise in profits per unit of output and the 8 percent rise in
output yielded a 19 percent rise in aggregate profits of nonfinancial corporations, the largest since 1959. Profits of domestic financial corporations
rose somewhat faster, and profits originating abroad rose still more. The latter consist of earnings of foreign branches and affiliates remitted to U.S.
parent corporations. Part of the increase in profits originating abroad was
attributable directly to the depreciation of the dollar.
The profits mentioned thus far refer to profits inclusive of the inventory
valuation adjustment (IVA). If this adjustment is excluded, the increase in
reported or book profits was considerably greater: 31 percent, rather than
19 percent, for nonfinancial corporations. In 1972 the IVA resulted in a
downward adjustment of $7 billion in book profits; last year the corresponding downward adjustment was $17 billion.
The IVA has been an integral part of the national income and product
accounts since they were first established. The adjustment is made because
71
the profits that companies report are strongly affected by the accounting
methods they use. Most companies rely on the first-in-first-out method. Under this system, when prices of purchased goods are rising, the prices at which
purchases are charged to costs will ordinarily be less than the prices of goods
in ending inventories. The effect is to reduce the cost of goods sold and to
raise profits. The amount by which profits are inflated under such accounting procedures is analogous to capital gains resulting from inflation, which
are not included in the calculation of national income. In the national
accounts this correction is applied to the valuation of inventory change on
the product side and affects proprietors' income and profits on the income
side.
Although the share of profits plus IVA as a percentage of gross product
originating in nonfinancial corporations rose for the third year in a row, the
1973 share was still lower than in any year from 1947 through 1969 (Table
15). Last year's increase in the profit share was matched by a decrease in
all costs except employee compensation: indirect business taxes, capital consumption allowances, and net interest. The last two have shown a strong
secular increase; and, as indicated below, they are partly responsible for the
decrease in the profit share.
Over the postwar years depreciation laws and regulations have undergone many changes—in the direction of liberalization—that have influenced
the level of profits. Holding constant these methods of calculating depreciation would still leave the 1973 profits share low in comparison to the years
from 1947 to 1969. For example, according to a special analysis of the Commerce Department, if one used historical costs for the valuation of assets,
service lives of assets equal to 85 percent of the Treasury Department's
Bulletin F, and the double declining balance method of depreciation, the
1973 ratio of corporate profits to output would be raised by 0.3 percentage
point, whereas for the 1947-69 period it would be essentially unchanged.
A further allowance for interest, a return on capital whose importance has
risen over the postwar years, would narrow the difference between 1973 and
the 1947-69 average even more but would still leave the 1973 profit ratio
lower by 2.7 percentage points. (Estimates for 1973 are those of the Council.)
Most companies use historical costs for calculating depreciation, and for
the most part the Commerce Department accepts in the national accounts
the depreciation reported for tax purposes. The current value of output
should reflect current prices, and costs of production should reflect current
costs. If depreciation is standardized with replacement rather than historical
costs, last year's profit share would be reduced by 2.0 percentage points. In
terms of depreciation calculated with replacement costs the spread in profits
between 1973 and the 1947-69 average is considerably greater than the
spread that reflects the use of historical costs.
The share accounted for by employee compensation, which as a rule has
moved countercyclical^, was unchanged from 1972 and was exceeded only
72
in 1970. Employee compensation consists of wages and salaries as well as of
supplements, most of which are made up of employers' contributions for
social insurance and for private pension and welfare funds. If all supplements to wages and salaries are excluded from employee compensation,
the wage and salary share appears to have declined each year since 1970
and to be well below the postwar average of 59 percent. The 9 percent
share accounted for by supplements was far above the average of 5.7 percent.
TABLE 15.—Distribution of gross product originating in nonfinancial corporations, 1947—73
[Percent]
Compensation of
employees
Period
All other costs
Total
Total
Wages and
salaries
Total
Capital
consumption
allowances
Profits 2
Indirect
business
taxes i
Net
interest
1947.
1948
1949....
100.0
100.0
100.0
65.9
63.9
63.8
62.8
61.0
60.7
14.8
14.5
16.1
4.8
5.0
5.9
9.3
8.8
9.5
1950
1951..
1952..
1953...........
1954
100.0
100.0
100.0
100.0
100.0
62.4
63.1
64.8
65.9
65.9
58.7
59.2
60.9
61.9
61.5
15.5
15.1
16.1
16.6
17.6
5.7
5.8
6.2
6.6
7.7
9.2
8.7
9.2
9.3
9.1
1955
1956......
1957
1958
1959
100.0
100.0
100.0
100.0
100.0
63.9
65.3
65.6
65.9
64.7
59.5
60.7
60.6
60.8
59.3
17.5
17.7
18.6
19.9
19.1
7.9
8.0
8.4
9.1
8.7
8.9
9.0
9.3
9.7
9.3
.7
.7
.9
1.1
1.0
18.6
16.9
15.8
14.2
16.2
1960
1961
1962
1963
1964
100.0
100.0
100.0
100.0
100.0
65.5
65.1
64.3
63.9
63.3
59.8
59.3
58.2
57.7
57.1
19.7
20.4
20.8
20.9
20.8
8.9
9.2
9.7
9.7
9.5
9.7
9.9
9.8
9.8
9.8
1.1
1.3
1.4
1.4
1.5
14.8
14.5
14.9
15.2
16.0
10(3.0
100.0
100.0
100.0
100.0
62.6
63.2
64.0
64.2
65.7
56.3
56.5
57.2
57.2
58.4
20.4
20.0
20.9
21.2
21.8
9.4
9.3
9.7
9.7
9.9
9.5
8.9
9.1
9.3
9.3
1.6
1.8
2.1
2.2
2.5
17.0
16.8
15.1
14.7
12.5
100.0
100.0
100.0
100.0
66.9
65.9
66.2
66.3
59.1
57.8
57.7
57.3
23.3
23.4
22.8
22.0
10.4
10.5
10.4
10.0
9.8
9.9
9.5
9.2
3.1
3.0
2.9
2.8
9.8
10.7
11.1
11.7
...
1965
1966
1967.
1968
1969
1970
1971
1972
19733.
.
0.7
.7
.8
.6
.6
.7
.7 •
.8
19.4
21.6
20.1
22.1
21.7
19.1
17.4
16.6
1
Also includes business transfer payments less subsidies.
2 Before taxes and including inventory valuation adjustment.
3 Preliminary.
Note.—Detail may not add to totals because of rounding.
Source: Department of Commerce. Bureau of Economic Analysis.
Changes in Real Income
In an evaluation of the year it is important to know whether the net
effect of economic developments resulted in an increase or decrease in
the economic well-being of the people. There are many different aspects to
economic well-being, some of which are difficult or impossible to measure.
Even with measurable dimensions of welfare, such as income, subjective reasons lead people to apply different weights to increases in income obtained by
different recipients. There is no one statistic that is universally accepted as a
measure of economic well-being.
73
Two measures of changes in income that receive particular attention
are real per capita disposable personal income (DPI) and real net spendable weekly earnings for a worker with 3 dependents. From the fourth
quarter of 1972 to the fourth quarter of 1973 real per capita DPI increased
by 2.4 percent, whereas the real net spendable weekly earnings series declined by 3.1 percent.
Real per capita DPI, as published by the Commerce Department, refers
to personal income less Federal and State income taxes; this is deflated by
the deflator for personal consumption expenditures and the result is divided by the population. Personal income, which is net of deductions for personal contributions for social insurance, includes income in cash and kind;
transfer payments as well as wage and other income earned in current production; and imputed income. Disposable personal income was somewhat low
in 1972 because of the overwithholding of taxes, which were subsequently
refunded in 1973.
The real net spendable weekly earnings series of the Labor Department
reflects earnings of production workers in the private nonfarm economy. The
average hourly earnings of all private nonfarm production and nonsupervisory workers listed on payrolls are multiplied by the average weekly hours
of these workers to obtain average weekly earnings. The payroll and Federal
income tax liability is computed on the assumption that these earnings are
realized through the year and that the worker is married, has three dependents, and no other income. The weekly tax liability (which excludes State
income taxes and which was unaffected by the overwithholding of Federal
incomes taxes) is subtracted from the weekly earnings data to obtain net
weekly earnings, which are then deflated by the consumer price index to
obtain real net weekly spendable earnings. The Labor Department makes
similar calculations for single persons.
As noted above, from the fourth quarter of 1972 to the fourth quarter of
1973 the change in per capita real DPI exceeded that of real net spendable
weekly earnings by 5.5 percentage points. About 30 percent of this difference
is explained by differential movements of after-tax income of the two series.
The disposable personal income series rose 10.8 percent, compared to a rise
of 9.2 percent in the net earnings of all production workers. Slightly more
than half of the aggregate difference occurred because the number of production and nonsupervisory workers on private nonfarm payrolls grew faster
than the total population: 4.0 percent for the former and only 0.7 percent
for the latter. The remaining difference is due to the different price deflators:
the deflator for personal consumption expenditures rose 7.4 percent during
the period, while the CPI rose 8.4 percent.
The consumer price index, which is used to deflate the spendable earnings series, reflects weights as of 1960-61, whereas the DPI series uses current
expenditure weights. One consequence is that food, whose relative importance in consumer budgets has tended to decrease over time, has a heavier
74
weight in the CPI than in the deflator. Also, the personal consumption expenditures deflator excludes and the CPI includes mortgage interest, which
rose very rapidly last year. On the other hand, an alternative PCE deflator
using fixed 1967 rather than current weights rose almost / 2 percent more
than the regular PCE deflator during 1973.
The spendable weekly earnings series as a measure of well-being may have
a downward bias in periods of strongly rising employment. When economic
opportunities are abundant, many married women, students, and retirees
enter the labor force. On the average these groups have less training, are
likely to earn less than the average hourly wage, and are more likely to work
less than a full workweek. Both factors will tend to depress the average
weekly earnings of those employed, although each worker has gained in
economic well-being. There is also a tendency for multiple jobholdings to
increase in periods of strong demand, which would have a similar effect. In
addition, the spendable earnings series treats each worker as a family head,
when in fact the number of employed persons per family may rise, especially
in a period when total employment is rising rapidly, as in 1973.
FISCAL POLICY IN 1973
After supporting the expansion of general business activity in 1972, fiscal
policy moved toward restraint in 1973. This was accomplished by the successful control of expenditures. Deferrals, cutbacks, or terminations of nonessential programs helped keep Federal outlays at more than $3 billion
below the $250 billion target for fiscal 1973 presented in the January 1973
budget. Receipts, on the other hand, rose more than was anticipated, partly because of unexpectedly high rates of inflation. With outlays moderately
lower and receipts considerably higher than proiected, the unified budget
deficit for fiscal 1973 turned out to be $14 billion, rather than the $25
billion projected a year ago.
In January 1973 the Administration presented a budget of $256 billion
in receipts and $269 billion in outlays for fiscal 1974. Since then, the estimate of receipts has been raised to $270 billion, and projected outlays
have been raised to $274/ 2 billion, the result being an estimated deficit of
$4/2 billion in the unified budget. On the full-employment basis, however, a surplus of $4 billion is estimated for fiscal 1974, compared to an
approximate balance projected a year ago. In fiscal 1973 the budget showed
a full-employment deficit of about $2 billion.
FEDERAL EXPENDITURES
On the national income accounts (NIA) basis, actual Federal expenditures rose from $245 billion in calendar 1972 to $265 billion in calendar
1973 (Table 16). The increase of 8 percent was smaller than the IO/2 percent rise from 1971 to 1972. Last year was the first time since 1969 that Federal expenditures grew less rapidly than GNP.
75
About $8 billion of the growth in expenditures from calendar 1972 to
calendar 1973 was due to the 20 percent increase in benefits from old age,
survivors, and disability insurance that went into effect in October 1972,
and to the liberalization of retirement and entitlement provisions at the
start of 1973. Federal purchases of goods and services rose much less last
year than from 1971 to 1972. All of last year's rise in purchases is accounted
for by pay increases for civilian and military employees. A 5.1 percent increase in the wages and salaries of Federal employees took effect in January 1973 and was followed by a 4.8 percent rise in October, but the simultaneous reduction in Federal employment (including the Armed Forces)
caused Federal payrolls to rise by only 5 percent. The other half of total
Federal purchases of goods and services, purchases from the private sector,
changed little after a 7 percent rise the year before.
Grants-in-aid to State and local governments rose by $3j/i billion in 1973,
when general revenue sharing had its first full year of operation. The
general revenue sharing program, enacted in 1972, provides from $6.0
to $6.5 billion of grants-in-aid each year through calendar 1976. About
$10 billion has been distributed to more than 38,000 State and local
governments from December 1972 through December 1973. About half of
this amount had been authorized for 1972. The initial planned-use reports
filed by most of the recipient units of government indicate that approximately half of them would spend shared revenues in such a way as to
relieve tax pressures.
TABLE 16.—Federal Government receipts and expenditures, national income accounts basis,
calendar years 1972-73
[Billions of dollars]
1973
Receipt or expenditure category
Federal Government receipts.
Personal tax and nontax payments
Corporate profits tax accruals
Indirect business tax and nontax accruals.
Contributions for social insurance
Federal Government expenditures
264.7
Purchases of goods and services
Defense
Other
Transfer payments
Grants-in-aid to State and local governments
Net interest paid
Subsidies less current surplus of government enterprises-
.6
Surplus or deficit (—)_
1 January 1973 projected percent changes applied to revised 1972 actual data.
Preliminary.
Note.—Detail may not add to totals because of rounding.
Sources: Department of Commerce (Bureau of Economic Analysis) and Office of Management and Budget.
2
106.9
74.2
32v 7
95.4
41.2
15.9
5.4
76
It is interesting to note that after rising by 24 percent from 1971 to 1972
the increase in personal tax and nontax receipts of State and local governments was halved from 1972 to 1973, even though increases in personal income were slightly larger in the latter period. General revenue sharing
may well have contributed to this change.
The new program has also allowed a number of long delayed but high
priority projects for capital improvement and construction by State and
local governments. A 3-year decline in real public construction outlays
stopped last year. More recently, general revenue sharing funds have been
relied upon more and more to meet the current operating costs of human
resource and economic development programs, primarily in public education,
public safety and health, as well as in environmental protection, conservation, and public transportation. In sum, the financial stability, vitality, and
independence of State and local governments has been increased noticeably
by the general revenue sharing program.
FEDERAL RECEIPTS
Federal receipts (NIA) grew from $229 billion in calendar 1972 to $265
billion in calendar 1973 (Table 16). The 16 percent increase was twice
the rate of growth of expenditures. Little more than one-fourth of this
increase can be attributed to a change in tax rates or in tax structure. For
the most part, receipts grew automatically because of the increase in the
various tax bases provided by the real growth of GNP and by inflation.
Compared to the January 1973 NIA estimates, personal tax and nontax
receipts turned out to be higher in 1973, partly because the accelerated
inflation affected personal incomes and partly because individuals permitted their Federal income taxes to be overwithheld at the same rate
as they had in 1972. The projection of NIA receipts at the start of last year
assumed that individuals would reduce their withheld taxes in order to bring
about a closer balance between 1973 withholdings and 1973 tax liabilities.
The estimated reduction of $3.5 billion did not materialize. Corporate profits
tax accruals were more than $7 billion higher than had been anticipated at
the start of the year. The rise in these taxes was due largely to the sharp
increase in book profits produced by unexpectedly high rates of price
inflation.
The only major discretionary change affecting 1973 receipts occurred in
social security (OASDHI) taxes. Social security includes old age, survivors,
disability, hospital, and supplementary medical insurance and accounts for
most of the Federal receipts included in contributions for social insurance.
At the start of 1973 the combined rate for employers and employees was
raised from 10.4 percent to 11.7 percent of earnings. Simultaneously the
maximum amount of annual earnings subject to the tax was increased from
$9,000 to $10,800. These two measures together raised OASDHI tax receipts
by $10 billion and thus accounted for over one-quarter of the $37 billion
rise in total Federal receipts from 1972 to 1973. Including the automatic
77
527-867 O - 74 - 6
effect of covered wage and employment growth, total OASDHI receipts
rose by about $14 billion.
By comparison, in 1969 the combined payroll tax rate was 9.6 percent
and the maximum amount of earnings subject to the tax was $7,800.
From 1969 to 1973 social security taxes and contributions rose by 67 percent, compared to a rise of 39 percent in employee compensation and
an increase of about 21 percent in the consumer price index. In 1969
contributions for social security represented 20 percent of Federal receipts,
and OASDHI benefits accounted for 17 percent of Federal expenditures.
In 1973 these ratios had risen to 24 and 23 percent respectively.
Rapid growth in the importance of payroll taxes in relation to total
taxes lowers the elasticity of Federal receipts with respect to income. The
average annual earnings of all covered employees were about $8,000 in 1973.
Those workers whose annual earnings exceeded the 1973 maximum of
$10,800 did not pay more tax when their earnings grew. The periodic increases that have been made in the tax ceiling on covered earnings mitigate
the regressive effects of the payroll tax and provide for increased benefits.
The latest rise to $13,200 occurred January 1, 1974.
BALANCES OF THE FEDERAL BUDGET
As the economy moved towards full utilization of resources from 1971
to 1973, the actual Federal budget balance (NIA) rose from a deficit of $22
billion to a slight surplus. At the same time, the full-employment budget
balance increased about one-third as much as the actual balance, or by
$8 billion. The smaller rise in the full-employment balance reflects the fact
that the actual real rate of growth from 1971 to 1973 exceeded the growth
rate of potential GNP, which is used to calculate full-employment revenues.
The calculations in this report are based on potential growth rates of 4 percent annually in constant dollars.
The traditional calculation of the full-employment budget involves adjusting actual Federal expenditures for those changes in unemployment
benefits (normally reductions) which would be expected if the economy
were operating at 4 percent unemployment. Apart from this adjustment,
full-employment expenditures are assumed to be equal to actual expenditures. To estimate Federal receipts at full employment, one must project the
shares in full-employment income of taxable personal income, corporate
profits, and wages and salaries. Retrospectively, personal tax and nontax
receipts at full employment are then calculated, as are corporate profits taxes
and contributions for social insurance, by applying the respective average tax
rates observed each quarter to the corresponding tax bases in potential GNP
measured in current dollars. Total potential GNP is used as the tax base for
indirect taxes. Prospective calculations also take into account changes in tax
laws scheduled for future years, as well as a gradual rise in the average tax
rate on personal incomes, a rise produced by the growth of incomes subject
to progressive rates of taxation.
78
Comparisons between 1972 and 1973 show that the full-employment balance increased by $14 billion. On a quarterly basis, however, the increase
was uneven; the large rise in social security benefits ahead of taxes in the
fourth quarter of 1972 and the phase-in of revenue sharing contributed to
the full-employment deficit for that year. Furthermore, if the $9 billion of
overwithholding of individual income taxes that started in 1972 and has
persisted since is included in full-employment receipts, as it is in actual
receipts, the change amounts to only $5 billion instead of $14 billion. In 1972
overwithheld taxes were about $9 billion, but in 1973 refunds of overwithheld 1972 taxes were offset by overwithholding of 1973 taxes.
The limitations of the traditional measures of potential output were discussed earlier in this chapter. Despite these limitations, the full-employment
surplus calculation based on the traditional concept of the potential GNP
that is consistent with 4 percent unemployment is useful in the long run for
evaluating changes in fiscal policy. At a constant price level, changes in the
balance at full employment—whatever consistent definition of full employment one may choose—reflect changes in full-employment expenditures, discretionary changes in tax receipts, that is, those produced by
changes in tax laws, and changes in tax receipts along the full-employment
path of output under given tax laws. When prices rise over time, changes in
the full-employment budget surplus can also be produced automatically. As
explained in the next section, this is particularly likely to occur in the short
run when unexpected increases in the rate of inflation raise receipts more
than expenditures.
INFLATION AND THE FEDERAL BUDGET AT FULL EMPLOYMENT
The increase in the Federal full-employment budget surplus from calendar 1972 to 1973 is reduced further if one takes account of the high rates
of inflation that materialized in 1973. At the start of that year, the price
level measured by the implicit GNP price deflator was expected to continue
to rise by about 3 percent during the year, as it had during 1972. In fact, it
rose by about 7 percent from the fourth quarter of 1972. Thus, for the year
as a whole the level of the deflator was 2 percent above the level that had
been assumed in budget planning.
In the short run, Federal receipts respond much more promptly than
Federal expenditures to an unexpected increase in the rate of inflation. The
bases for most taxes are raised automatically, but less than half of total
expenditures will respond within a few months to an increase in the rate
of inflation. Thus for each additional 1 percent rise in the price level, fullemployment receipts increase by about 1.1 percent, but expenditures grow
by perhaps only 0.5 percent in the short run. With the magnitudes of calendar 1973, a price level that is 2 percent higher on the average for the
year raises full-employment receipts by around $3 billion more than expenditures, leaving the full-employment surplus shown in Table 17 higher by
that amount for the year than it would have been if the rate of inflation had
not grown.
79
Since these apparent stabilization effects of the budget were called forth
by an unexpectedly high rate of inflation, higher than in the past, they cannot be attributed to the fiscal policies intended at the start of the year. Rather,
they may be regarded as part of the automatic stabilizing component of
fiscal policy. Before one can infer changes in discretionary fiscal policies by
comparing the full-employment balances of 1972 and 1973, the fullemployment budget surplus for 1973 should first be adjusted for the rise
in the rate of inflation from 1972 to 1973, even though the adjustment
cited above is only a first approximation.
T A B L E 17.—Actual and full-employment
Federal and State and local government receipts and
expenditures, national income accounts basis, calendar years
1969-73
[Billions of dollars; seasonally adjusted annual rates]
Federal Government
Calendar year
Receipts
Actual:
1969
1970
1971
1972
19731
Expenditures
State and local government
Surplus
or
deficit ( - )
Receipts
Expenditures
Surplus
or
deficit ( - )
Combined
surplus
or
deficit
(-)
197.3
192.0
198.9
228.7
265.4
189.2
203.9
221.0
244.6
264.7
8.1
-11.9
-22.2
-15.9
.6
119.7
135.0
152.3
177.2
194.8
119.0
133.2
148.3
164.0
183.8
0.7
1.8
4.0
13.1
11.0
8.8
-10.1
-18.1
-2.8
11.6
1972:1
II
III
IV
222.9
225.4
229.6
236.9
236.6
244.4
237.0
260.3
-13.8
-19.0
-7.4
-23.4
166.2
175.9
175.3
191.2
157.8
160.8
165.9
171.6
8.4
15.2
9.5
19.6
-5.4
-3.9
2.0
-3.8
1973:1
II
Ill
253.6
262.4
269.5
258.6
262.4
265.6
-5.0
.0
4.0
190.2
192.8
196.0
176.4
181.2
185.7
13.9
11.5
10.4
8.9
11.6
14.3
Full-employment:2
1969
1970
1971
1972.
19731
198.4
206.7
216.5
234.9
269.5
189.6
202.7
218.6
242.6
263.7
8.8
4.0
-2.1
-7.7
5.8
119.9
140.4
159.5
182.5
198.0
119.0
133.2
148.3
164.0
183.8
.9
7.2
11.2
18.5
14.2
9.7
11.2
9.1
10.8
20.0
1972:1.
II
Ill
IV
230.2
232.6
236.6
240.1
234.3
242.3
235.0
258.7
-4.1
-9.7
1.6
-18.6
173.0
181.6
180.5
195.0
157.8
160.8
165.9
171.6
15.2
20.8
14.6
23.4
11.1
11.1
16.2
4.8
1973:1
II
III.
258.4
265.9
272.4
257.3
261.2
264.6
1.1
4.7
7.7
192.4
195.2
198.8
176.4
181.2
185.7
16.0
14.0
13.1
17.1
18.7
20.8
1 Preliminary.
2 Over-withholding of personal income taxes is not included in full-employment receipts.
Note.—Detail may not add to totals because of rounding.
Sources: Department of Commerce (Bureau of Economic Analysis), Office of Management and Budget, and Council
of Economic Advisers.
THE STATE AND LOCAL AND THE COMBINED BUDGET BALANCES
As shown in the preceding table, the actual balance of State and local
government receipts and expenditures grew rapidly, from $4 billion in
calendar 1971 to $11 billion in 1973. Last year's surplus amounted to almost
6 percent of total receipts.
Relationships among Federal transfers to State and local governments
and the budget surpluses and tax efforts of these units have grown closer
80
since general revenue sharing was introduced in October 1972. For instance,
of the $3 billion received for the third entitlement period under general
revenue sharing in April and July 1973, it is estimated that almost half is
being spent to reduce taxes or prevent an increase in taxes. With State and
local spending rising at a somewhat accelerated rate of 12 percent from 1972
to 1973, the surplus of State and local governments declined progressively
during 1973.
This decline is somewhat more pronounced if one estimates the fullemployment budget surplus for State and local governments. Here essentially the same procedure is used as in estimating the Federal budget. Only
a few differences arise. Full-employment receipts from contributions for
social insurance are assumed to be equal to the actual social insurance contributions received by State and local governments, since these programs
cover only State and local employees and therefore do not fluctuate cyclically. Full-employment expenditures are assumed to be equal to actual expenditures, since unemployment benefits enter the national accounts only as
Federal expenditures.
The difference between these full-employment receipts and expenditures
yields the crude estimate of the full-employment budget balance of State and
local governments used in this report for the analysis of fiscal policy. More
refined estimates might take into account that some State and local expenditures vary automatically with cyclical conditions. There is also some evidence that tax rates tend to be raised when the gap between actual GNP
and potential GNP widens. The average tax rates at full employment may
therefore deviate systematically from the actual tax rates, contrary to the
assumption made in estimating full-employment receipts. Nevertheless the
State and local budget calculated in this way does give a better estimate of
the stance of overall fiscal policy than the actual budget.
The full-employment budget balance of State and local governments can
be added to the comparable balance of the Federal Government to obtain
a rough indicator of the combined fiscal policy changes generated by all layers of government. The result shows that although State and local governments reduced their full-employment budget surplus in 1973 the combined
budget surplus still rose by $9 billion—from $10.8 billion in 1972 to $20.0
billion in 1973, on a national income accounts basis. If increases in the fullemployment budget surplus produced by an unexpected rise in rates of inflation are not regarded as "discretionary" but as part of the automatic
stabilizers, particularly at the Federal level, the increase in the full-employment surpus for all levels of government combined would be reduced to
about $6 billion. However, if overwithholding is included in Federal receipts
for 1972, the full-employment surplus shows a decline from 1972 to 1973.
As indicated in Chapter 1, the Council believes that overwithholding should
be omitted from the calculation of full-employment receipts. Viewed in this
manner, therefore, the full-employment surpus on a combined governmental
basis indicates a shift toward restraint from 1972 to 1973, but the shift is
less than in the Federal budget alone.
81
MONETARY POLICY AND FINANCIAL MARKETS
For more than a decade, money GNP has tended to grow in a higher proportion than the narrowly defined money supply (Mi) but in the same
proportion as both the broadly defined money supply (M 2 ) and privately
held liquid assets as defined in Table 18. However, even with reasonable allowances for lags—with a 2-quarter lag of the growth of GNP behind the
growth of M 2 and of privately held liquid assets—deviations from these
relationships of proportionality have been large in some years. A reduction
in the rate of growth of these aggregates tends to have a moderating effect
on the growth of money GNP, even if for some purposes the short-run deviations from long-run relations are uncomfortably large.
TABLE 18.—Changes in aggregate monetary measures and gross national product, 1968 to 1973
[Percent change; seasonally adjusted annual rates]
Mi
(currency,
plus demand
deposits)
Half year
1968: First half
Second half
M2
(Mi plus
time
deposits 0
Private liquid
asset
holdings 2
Adjusted
credit
proxy3
GNP
6.5
8.4
7.5
10.4
8.2
10.0
5.4
12.6
10.4
7.8
6.2
2.2
6.3
.6
6.9
3.0
3.2
-1.5
7.6
5.6
1970: First half
Second half
5.5
6.0
4.8
10.7
5.3
8.0
4.4
10.7
4.6
4.4
1971: First half
Second half
8.9
4.3
14.9
7.8
11.9
9.1
10.5
8.5
11.4
7.3
6.9
8.6
10.8
10.9
12.3
12.5
11.7
11.1
11.0
10.2
13.1
9.2
14.4
8.2
12.5
10.0
1969: First half
Second half_
1972: First half
Second half
1973: First half
Second half *_
_
_
_._
7.4
4.8
9.1
8.5
1 Time deposits at commercial banks other than large certificates of deposit.
2 Holdings of private nonfinancial investors: Currency, demand deposits, time deposits (including CD's) and savings
accounts in commercial banks and thrift institutions, U.S. Government securities (savings bonds and short-term), and
commercial paper.
3 Consists of member bank deposits, bank-related commercial paper, Eurodollar borrowings of U.S. banks, and certain
nondeposit items.
* Preliminary.
es are based on data for last quarter in each half year.
Note.—Half year changes
year would
the ttwo halves
of 1973 7.8 and 3.7 percent, respecUsing data for the lastt month of each half y
ld yield
i l d ffor th
hl
d 7.9
79 percentt for
f M2.
tively, for Mi, and 9.3 and
Sources: Board of Governors of the Federal Reserve System and Department of Commerce (Bureau of Economic
Analysis).
Appraising the effect of a change in the money supply on money
rates of interest, particularly appraising its effects in the longer run, is a
matter of some complexity because money rates depend not only on the
"real" yield of the available physical resources, measured as if the general
price level remained constant, but also on the inflation premium which
lenders insist on receiving and borrowers are willing to pay. The immediate
effect produced by a high rate of increase in the money stock is to increase the
supply of credit; but such a policy also tends to increase the expected rate of
82
inflation and thus to raise the demand for credit. However, both the demand
and the supply also depend significantly on real factors which would
make for positive yields from investment even if these were estimated on the
basis of an unchanging general price level.
Because the demand for credit continued to rise rapidly in 1973, upward
pressures on interest rates were strong and rates at year-end were well
above their levels at the start of the year (Chart 5). From December 1972
to December 1973 the Treasury bill rate rose from 5.1 to 7.4 percent, the
prime commercial paper rate from 5.5 to 9.1 percent, and the rate on longterm bonds of the Federal Government from about 5.9 to 6.4 percent; the
FHA mortgage yield from loans on new homes climbed from about 7.6 to
8.9 percent. Until late August the stock market declined, then it rose until
October without fully recovering the earlier loss. After October, stock prices
fell again, leaving a substantial net decline for the year as a whole.
It is hard to tell to what extent the reduction in the market value of stock
equities was caused by rising interest rates and to what extent by the rising
uncertainty about profits, an attitude at least partly occasioned by the
energy crisis late in the year.
Monetary Policy
Monetary policy in 1973 applied somewhat more restraint than the year
before, since it was aiming for a gradual return to a sustainable rate of
growth in demand and output. According to preliminary estimates, from
the fourth quarter of 1972 to that of 1973, Mi grew by 6.1 percent, M 2 by
8.8 percent, and the stock of privately held liquid assets by 11.2 percent.
For the preceding year these figures had been 7.7, 10.9, and 12.4 percent
respectively. By the last quarter of 1973 the current growth of money GNP
was reduced to about 9 percent at an annual rate from an 11.7 percent rate
in the fourth quarter of 1972, a 15.2 percent rate in the first quarter of 1973,
and rates of 9.9 and 10.6 percent in the second and third quarters of the
year.
As market interest rates rose, deposits at commercial banks became less
attractive than alternative open market assets, a financial market condition reminiscent of 1969. Contrary to the 1969 practice, however, when
ceilings on large certificates of deposit (CD's) were set below open market
interest rates—a move causing outflows of funds from commercial banks—
measures were taken to ensure that commercial banks could compete for
funds in the open market. The ceilings on large CD's ($100,000 and over)
maturing in less than 90 days had been removed in 1970, and the restrictions on large CD's maturing in 90 days or more were lifted in May 1973.
In addition, the Federal Reserve Board in conjunction with other Federal
regulatory agencies increased the maximum interest payable on time and
savings deposits in July. Ceilings on CD's with maturities of at least 4 years
and minimum denominations of $1,000, but not more than $100,000, were
eliminated at the same time. In November, however, Congress passed legis-
83
lation requiring ceilings on all CD's of less than $100,000. The volume of
large CD's increased from $44.4 billion in January to $67.0 billion in August,
a sharp contrast to the sizable decline in 1969.
chart 5
Interest Rates
PERCENT PER ANNUM
12
SHORT-TERM
FEDERAL FUNDS
10
I
u r
\
3-MONTH TREASURY BILLS
(New Issues)
- A\H
^
/ \
V
_rrj'/
•• 1 r1
••"C/
0 I i i 111 1 i i 111 I i 1111 h i n i 111 i i 111 i i i 111 i i 11 1111 11 I 111 11 111 i 11 I 11 1111 I 11 I i
1968
1969
1970
1971
1972
1973
12
LONG-TERM
10
NEW HOME MORTGAGES
(FHLBB)
CORPORATE Aaa BONDS
. . . . - - • . . . - • • % . . . . • .
U.S. GOVERNMENT BONDS
HIGH-GRADE
MUNICIPAL BONDS
0
I I I I I I I I II I I I I I I I I I I I I I I I I I II I I I I I 1 I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I
1968
1969
1970
1971
1972
1973
SOURCES: DEPARTMENT OF THE TREASURY, BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM,
FEDERAL HOME LOAN BANK BOARD, MOODY'S INVESTORS SERVICE, AND STANDARD & POOR'S CORPORATION.
84
However, steps were taken to keep credit expansion within bounds. The
supply of reserves through open market operations was kept at a level where
commercial banks had to borrow heavily from the Federal Reserve discount window to acquire additional reserves. The Federal funds rate, a good
barometer of money market conditions, rose to about 11 percent in September from about 5 / 2 percent at the beginning of the year.
Marginal reserve requirements on large CD's and on bank-related commercial paper were also raised from 5 to 8 percent in May to increase the
effective cost of raising funds. As loans financed through large CD's continued to accelerate, these marginal reserve requirements were raised again
in September, this time to 11 percent. The new regulation meant an additional $465 million in required reserves for the banking system. Commercial
banks raised the prime lending rate to a record 10 percent in response to the
higher effective cost of large CD's and strong credit demand. The volume
of large CD's outstanding declined from $67 billion in August to about $63
billion in December. The rapid rise of business loans at commercial banks
came to an end. As a result, there occurred in September and October a
significant rise in business borrowing by means of the placement of commercial paper by dealers in the market.
Recognizing these developments, the Federal Reserve Board lowered the
marginal reserve requirement on large CD's and bank-related commercial
paper from 11 to 8 percent in December. The move lowered the effective
cost to banks of obtaining additional funds through the sale of large CD's
and bank-related commercial paper and prevented short-term interest rates
from rising even higher.
Long-Term Financing
Long-term financing by corporations was lighter in 1973 than in 1972
but showed a substantial increase in the final quarter (Table 19). The
reduction was partly a reflection of the large rise in internally generated
funds. In the first 3 quarters of 1973 corporate profits after taxes plus capital consumption allowances were on average 16 percent greater than the
annual average for 1972. Along with rising long-term rates, this contributed
to the decline in bond market activity, while declining stock prices made
financing through equity issues less attractive.
With the rise in profits slowing down after midyear, and with requirements for new capacity continuing to increase, scheduled new bond offerings
rose substantially in the fourth quarter. These upward pressures on interest
rates were counterbalanced when investors attempted to reshuffle their
portfolios in favor of longer-term securities in response to declining shortterm rates.
Mortgage Markets
During the first 3 quarters of 1973 the sharp increase in short-term open
market rates and the gap between those rates and yields on most types of
85
TABLE 19.—Offerings
of new security issues, 1972—73
[Billions of dollars]
Corporate securities
Period
Bonds and
notes
Total
1972
1973
1972:1
II
III
IV
.. .
1973:1. .
II
III
IV
State and
local
government
securities
Stocks
40.8
33.1
27.8
21.8
13.1
11.3
22.9
22.8
9.8
11.2
9.2
10.6
6.9
7.4
6.1
2.9
3.8
3.1
7.4
3.3
5.9
6.1
5.4
8.2
8.6
6.4
9.9
4.4
6.2
4.6
6.6
3.9
2.4
1.7
3.3
5.6
5.6
5.6
5.1
6.4
i Preliminary.
Note.—Detail may not add to totals because of rounding.
Sources: Securities and Exchange Commission and The Bond Buyer.
savings deposits decreased the net inflow of funds into thrift institutions. The
tightness in mortgage markets was less severe than in 1966 and 1969.
In 1972, conditions in credit markets were relatively easy, and net savings flows into thrift institutions were large (Table 20). The rate of this net
inflow moderated during the first half of 1973, but it still remained substantial, partly because of unusually large tax refunds. Mortgage repayment flows were also ample. Mortgage loan commitments outstanding at
all savings and loan associations reached a record $15.1 billion in May. As
short-term open market rates increased sharply, net savings inflows into thrift
institutions excluding interest credited were reduced, and for the duration of
the third quarter they turned into net outflows. Savings and loan associations
decreased new commitments, borrowed heavily from the Federal Home
Loan Banks (FHLB), and sold liquid assets in order to meet existing commitments. Inclusion of interest credited into the net savings flow would still
yield a negative figure for the third quarter, though with seasonal adjustment the sharp diminution from earlier quarters would then leave the net
third-quarter flow positive.
The progressive reduction of net savings flows to the thrift institutions
tightened conditions in mortgage markets and induced Federal regulatory
agencies to take steps to revive this market. In July, maximum interest
rates payable on time and savings deposits by thrift institutions were adjusted upward. Also the Federal Home Loan Bank Board lowered liquidity
requirements at member institutions, freeing additional funds for mortgage
lending. Ceilings on FHA-VA mortgages were raised from 7 to 8JJ/2 percent in two steps in order to attract more funds to Government-backed
mortgages.
86
Assistance to Mortgage Markets
Mortgage markets received substantial support from federally sponsored housing agencies in 1973. These agencies channeled funds from the
open market to mortgage markets and thus eased the availability of
mortgage credit. In addition, the President announced measures to help the
mortgage and housing sector in both the short and long run.
Federal Home Loan Bank advances outstanding to member savings and
loan associations reached $15 billion in December, compared to $8 billion
at the end of 1972. The $7 billion net increase may be compared with a rise
of $4 billion during 1969.
TABLE 20.—Net savingsflowsat thrift institutions, 1968-73
[Billions of dollars, not seasonally adjusted]
Period
Net savings
flows i
1968
1969
3.9
-1.8
1970
1971
1972
19732
6.2
26.3
29.9
10.2
1972- 1
II
III
IV
10.7
7.1
6.3
5.9
1973- 1
II
III.
IV2
7.8
3.6
-3.7
2.5
1 New deposits less withdrawals. Excludes interest credited.
2 Estimate by Council of Economic Advisers.
Note.—Thrift institutions consist of mutual savings banks and federally insured savings and loan associations.
Sources: National Association of Mutual Savings Banks, and Federal Home Loan Bank Board (except as noted).
The Federal National Mortgage Association, the largest financial intermediary serving mortgage markets, bought $6.1 billion worth of mortgages during 1973, an increase of $2.4 billion over 1972.
The President announced a series of legislative and administrative proposals in September 1973 in order to ease the tight mortgage market conditions existing at the time. First, the Federal Home Loan Banks were authorized to make forward commitments up to $2.5 billion at a predetermined rate of interest to member savings and loan associations. Second, the
Government National Mortgage Association was authorized to reactivate
the Tandem Plan and offer to buy up to $3 billion of mortgages from various
types of financial institutions. Third, Congress was requested to raise the
maximum amount of a mortgage loan insurable by the Federal Housing Administration, a step which would make Government-backed loans available
to a larger number of home buyers who cannot obtain conventional mortgage
loans. The President also sent to the Gongresss several recommendations designed to make it easier for home buyers to obtain mortgages in the future.
87
CHAPTER 3
Inflation Control Under the
Economic Stabilization Act
Public Law 93-28, the Economic Stabilization Act Amendments of
197.1, as amended, requires that the Economic Report of the President
include a section "describing the actions taken under this title during the
preceding year and giving his assessment of the progress attained in
achieving the purposes of this title." This chapter is intended to fulfill
that requirement. There is, however, no intent to represent the description of the control regulations contained herein as legally binding
interpretations.
P
RICE AND WAGE CONTROLS, administered by the Cost of Living
Council (CLC) under authority of the Economic Stabilization Act,
remained in effect throughout 1973 but underwent several substantial
modifications. After the move to Phase III early in the year, the changes
were in the direction of greater stringency. They reflected the strain placed
on the program when economic forces caused a sharp acceleration of inflation beginning early in the year and when this in turn generated public and
political demand for changes in the nature of controls. However, the extent
to which these changes could contain the inflation in 1973 was limited by
the serious risks of disrupting markets and adversely affecting supply.
THE ECONOMIC STABILIZATION PROGRAM IN 1973
As 1973 began, economic conditions seemed propitious for a substantial
modification in the Phase II system of controls. The rate of inflation had
been moderate in 1972. The consumer price index (CPI) rose 3.4 percent
during the year (Table 21). Wage increases had moderated from their
very high rates of early 1971, a sign that expectations of future price increases had diminished. Industrial price increases had slowed to a 2.9 percent
annual rate in the last half of 1972 3Tij$$ fiscal and monetary policy supplemented by the controls program had approximately achieved their interim
goals by the end of 1972.
as
TABLE 21.—Measures of price and wage change during the Economic Stabilization Program
[Percent change; seasonally adjusted annual rates]
Freeze and
Phase II
Aug. 1971
to
Jan. 1973
Price or wage measure
Phase III
Jan. 1973
to
June 1973
Second
freeze and
Phase IV
June 1973
to
Dec. 1973
Calendar year during
which controls were in
effect throughout
Dec.1971
to
Dec. 1972
Dec. 1972
to
Dec. 1973
PRICES
Consumer price index:
3.3
8.3
9.6
3.4
8.8
'Food
All items less food
Commodities less food
Services
5.6
2.7
2.0
3.5
20.3
5.0
5.2
4.3
18.6
6.9
5.2
8.4
4.7
3.0
2.5
3.6
20.1
5.6
5.0
6.2
Personal consumption expenditures deflator *
2.4
6.7
8.1
2.7
7.4
5.7
24.4
14.3
6.5
18.2
13.3
2.9
49.8
14.4
8.8
17.2
14.4
3.6
26.7
14.8
1.8
3.7
11.7
16.2
21.4
14.1
2.2
4.5
15.6
14.1
6.1
6.3
7.6
6.3
6.7
6.3
6.5
8.4
8.2
7.6
7.9
6.8
6.9
8.0
8.1
6.2
5.8
7.5
6.5
6.7
All items
Wholesale price index:
All commodities.
Farm products and processed foods
and feeds
Industrial commodities 2
Finished goods,
consumer and
producer 3 ..
Crude and intermediate materials3.
WAGES«
Average
hourly earnings, private nonfarm economy s
Average hourly compensation:
!
Total private economy
Nonfarm l
Average hourly earnings, private
economy16
nonfarm
1 Percent changes based on quarterly data: 1971 III to 1972 IV (col. 1), 1972 IV to 1973 II (col. 2), 1973 II to 1973 IV
(col.
3), 1971 IV to 1972 IV (col. 4). and 1972 IV to 1973 IV (col. 5).
2
Includes a small number of items not shown separately.
3
Excludes foods but includes a small number of items not in the industrial commodity index.
* Average hourly earnings are for production workers or nonsupervisory employees and average hourly compensation
for5 all employees.
Adjusted for overtime (in manufacturing only) and interindustry shifts.
Source: Department of Labor (Bureau of Labor Statistics) and Council of Economic Advisers.
With excess capacity declining at the end of 1972, there was a clear possibility that continuation of the Phase II controls program would interfere
increasingly with production, productivity, and investment decisions, and
raise administrative costs, especially if the economy continued to expand
as expected.
PHASE III (January 11 to June 13, 1973)
Against this backdrop it was decided to modify the price and wage controls program to make it more consistent with the further reduction in excess
capacity foreseen at the time and also move toward the Administration's
goal of eventually ending the controls. The new regimen of controls, known
as Phase III, involved some basic changes in the regulations (Table 22).
89
(A more detailed presentation of the regulations of Phase III, the subsequent freeze, and Phase IV can be found in the Quarterly Reports of the
Cost of Living Council.) To reduce the mounting delays and costs entailed
in submitting requests for price increases, having them reviewed, and seeking detailed interpretations of increasingly complex rules, the basic principles of regulation developed during Phase II were to be self-administered
in Phase III. The prenotification requirement was dropped in most sectors
of the economy. Report-filing requirements were maintained only for the
largest economic units. The Price Commission and Pay Board were absorbed into the staff of the Cost of Living Council; and this staff, together
with the Internal Revenue Service (IRS) enforcement staff, was reduced.
The Cost of Living Council retained authority, and subsequently used it, to
impose specific, mandatory regulations where restraint seemed lacking, but
in most sectors of the economy the system was not mandatory without
further action by the CLC.
An important reason for the change to a self-administered program was the
need for flexibility in administering the standards for wage and price behavior. Phase II had, in fact, provided important instances of flexibility, but
the changed economic conditions suggested that even more was needed. In
one of its first public pronouncements, on February 26, the newly formed
Labor-Management Advisory Committee to the CLC made the point that
no single standard or wage settlement can be expected to apply throughout the economy at any one time. This aspect of Phase III was important in
the decision of leaders of labor, many of whom had earlier withdrawn
from participation in the program, to join the Phase III effort.
The profit margin regulations were also modified in Phase III. The basis
for calculating the profit margin limitation was changed to increase the
number of fiscal years from which a firm could choose the 2 years they
used in calculating their base. To permit firms to benefit from productivity
increases if they practiced price restraint, the profit margin limit was
waived if a firm's average price increase was no more than 1.5 percent
in a year. A third change was to permit price increases "necessary for efficient allocation of resources or to maintain adequate levels of supply."
Price changes were thus allowed in instances where economic growth led
to exceptional demand pressures in particular markets and the alternative
was shortages.
The Construction Industry Stabilization Committee and the Committee
on Interest and Dividends were continued, and new committees were established in the field of health care. Special criteria were established for public
utilities, making the program voluntary and ending the requirement that
regulatory agencies obtain from the CLC certification that their actions
accorded with Phase III controls.
Special steps were also taken to counter problems emerging in the food
sector. Increases in farm product prices had led to a 7.1 percent annual
90
T A B L E 22.—Regulations of the controls program, Phases II,Ill, and IV
Phase II
Nov. 14,1971 to
Jan. 11,1973
Program
Phase I I I
Jan. 11,1973 to
June 13,1973
Phase IV
Aug. 12,1973 to date
General Standards:
Price increase limitations.. Percentage pass-through of
allowable cost increases
since last price increase,
or Jan. 1, 1971, adjusted
for productivity and volume offsets. Term limit
pricing option available.
Self-administered standards
of Phase II.
In most manufacturing and
service industries dollar
for dollar pass-through of
allowable cost increase
since last fiscal quarter
ending prior to Jan. 11,
1973.
Profit margin limitations... Not to exceed margins of
the best 2 of 3 fiscal years
before Aug. 15,1971. Not
applicable if prices were
not increased above base
level, or if firms "purified" themselves.
Not to exceed margins of
the best 2 fiscal years
completed after Aug. 15,
1968. No limitation if
average price increase
does not exceed 1.5 percent.
Same years as Phase I I I ,
except that a firm that has
not charged a price for any
item above its base price,
or adjusted freeze price,
whichever is higher, is not
subject to the limitation.
Wage increase limitations.. General standard of 5.5
percent. Exceptions made
to correct gross inequities, and for workers
whose pay had increased
less than 7 percent a year
for the last 3 years.
Workers earning less
than $2.75 per hour were
exempt. Increases in
qualified fringe benefits
permitted raising standard to 6.2 percent.
Prenotification:
General Phase II standard, self-administered.
Some special limitations.
More flexibility with respect to specific cases.
Workers earning less than
$3.50 per hour were exempted after May 1.
Self-administered standards
of Phase I I I . Executive
compensation limited.
Prices
Prenotification required for
all firms with annual
sales above $100 million,
30 days before implementation, approval required.
After May 2, 1973, pre- Same as Phase II except
that prenotified price innotification required for
creases may be impleall firms with sales above
mented in 30 days unless
$250 million whose price
CLC requires otherwise.
increase has exceeded a
weighted average of 1.5
percent.
Wages
For all increases of wages
for units of 5,000 or
more; for all increases
above the standard regardless of the number of
workers involved.
None.
None.
Quarterly for firms with
sales over $50 million.
Quarterly for firms with
sales over $250 million.
Quarterly for firms with
sales over $50 million.
Wages..
Pay adjustments below
standard for units greater
than 1,000 persons.
Pay adjustments for units
greater than 5,000 persons.
As Phase III.
Special areas
Health, insurance, rent,
construction, public utilities.
Health, food, public utilities, construction, petroleum.
Health, food, petroleum, construction, insurance, executive and variable compensation.
Raw agricultural commodities, import prices, export prices, firms with 60
or fewer employees.
Same as Phase 11 plus rents. Same as Phase III plus manufactured feeds, cement,
public utilities, lumber,
copper scrap, long-term
coal contracts, automobiles, fertilizers, nonferrous metals except
aluminum and copper,
mobile homes, and semiconductors.
Reporting:
Prices...
_
Exemptions to price standards.
_
1
In some of these sectors wages were also exempted.
Source: Cost of Living Council (CLC).
91
rate of advance in grocery store food prices in the second half of 1972, and
substantial increases were in prospect for early 1973. This development was
a major threat to the moderate price behavior that had been achieved, as
was obvious by comparison with nonfood prices in the CPI, which had
slowed to a 3.0 percent annual rate of increase in the last 6 months of
1972. Specific mandatory controls were therefore retained on wages and
prices in food processing and distribution in Phase III, a number of additional actions to expand supply were taken, and special committees were
established to help coordinate activities that would moderate the increases
in food prices. Prices of raw agricultural products continued to be exempt
from controls.
By the spring it was clear that three specific assumptions underlying
forecasts for 1973 had gone awry. In the first quarter of 1973, retail food
prices, propelled by sharply higher farm prices, were already 8.1 percent
above the first quarter of 1972, substantially higher than the average 3 percent increase for the first half of 1973 over the first half of 1972 that had
been forecast by the Department of Agriculture in October 1972. The
official year-over-year forecast had been revised by February to 6 percent;
by May an earlier expectation that food prices would level off after midyear began to appear less certain.
The second assumption concerned economic expansion in early 1973 both
in the United States and abroad, which turned out to be much more robust
than had been anticipated. In December 1972, after consultation with
member countries, the Organization for Economic Cooperation and Development (OECD) forecast that combined real GNP for its seven largest
member countries, including the United States, would grow at an annual
rate of 6/ 2 percent from the second half of 1972 to the first half of 1973.
By July 1973, before second quarter data were complete, the OECD had
revised the estimate upward to 8*4 percent, considerably above the growth
rate of potential output. The unexpected boom was widespread; the actual
rate of growth exceeded earlier forecasts in all but one of the countries. At
no time since the early 1950's had such strong expansion occurred simultaneously in the larger member countries of the OECD, and much more
pressure was placed on capacity than had been anticipated. (For a view of
the effect that rapid expansion had on inflation in OECD countries see
Table 23.)
The rate of expansion in the United States from the second half of 1972
to the first half of 1973 was fairly close to that predicted by the Administration, but the rise in output in the first quarter of the year was steeper than
expected. Production in some industries was pushed to its limit sooner than
had been anticipated, and unexpected shortages also occurred in others.
The third change in the economic outlook concerned the large decline
in the foreign exchange value of the dollar. The realignment of exchange
rates on February 12 resulted in a decline in the value of the dollar of about
5 percent with respect to our major trading partners. From March 19, when
92
TABLE 23.—Changes in consumer prices in OECD countries, selected periods, 1958—73
[Percent change, annual rates]
1958-59
Average
to 1970-71
Price item and country
Dec. 1971
to
Dec. 1972
Dec. 1972
to
Sept. 19731
All items:
United States
Other OECD countries:
Canada
Japan
France
Germany
Italy
United Kingdom
All other OECD countries..
2.6
3.4
8.7
2.5
5.5
4.2
2.6
3.6
3.9
4.0
5.1
5.3
6.9
6.5
7.4
7.6
7.1
9.7
18.1
7.6
6.8
12.0
9.5
11.0
2.4
4.7
23.9
2.4
6.0
4.0
2.0
3.1
3.7
4.0
7.2
4.9
8.7
8.1
8.8
7.5
7.8
17.0
20.1
10.7
5.4
12.6
13.4
11.4
2.7
3.0
4.5
2.6
5.0
4.3
3.1
4.0
4.0
4.0
4.1
5.6
5.8
5.6
6.4
7.7
6.7
6.2
16.4
5.5
7.4
11.2
7.2
10.4
Food:
United States
Other OECD countries:
Canada
Japan
__
France
Germany
Italy
United Kingdom
All other OECD countries..
Nonfood items:
United States
Other OECD countries:
Canada____
Japan
France
_
Germany
Itajy
United Kingdom
All other OECD countries..
i Seasonally adjusted. Latest date for which comparable data are available.
Sources: Organization for Economic Cooperation and Development (OECD) and Department of Labor, Bureau of Labor
Statistics.
other major countries ceased to support fixed exchange rates, to July it
depreciated about 6 percent more. In a setting of rapidly rising demand and
output here and abroad, the extent to which these exchange rate changes,
and those that had previously occurred in the 14 months after the Smithsonian Agreement in December 1971, affected prices in the United States
was substantial.
Prices of imported commodities and products, which were exempt from
controls at first sale into U.S. commerce, rose as a direct result of the dollar
depreciation. U.S. exports were drawn out of the country at a faster rate
than before because they were less expensive in foreign currencies. The increased export demand raised domestic prices of commodities, like raw
agricultural products, that were exempt from controls. In a growing number
of cases products that remained under price controls were also drawn out of
the country, because prices of internationally traded goods had risen markedly, and controls prevented U.S. prices from rising to world market levels.
In the first few months of Phase III the observed increases in the consumer price index and wholesale price index (WPI) showed that inflation
was accelerating for some important raw commodities—important not only
93
527-867 O - 74 - 7
to the economy but also in the sense that consumers' attention focused on
them. Retail meat prices rose 5.4 percent a month in February and March as
a result of a 39 percent increase in livestock prices from November 1972 to
March 1973. Shortages of crude oil pushed up retail fuel oil prices 7.4
percent during the winter, and a rise of 16 percent in prices of lumber and
wood products was reflected in the prices of new houses and indirectly influenced the prices of existing houses.
As a result of the acceleration of inflation, pressures mounted to tighten
controls. While Phase II controls were in effect, public opinion polls indicated that the popularity of a return to a price freeze diminished, reaching
a point in the last quarter of 1972 at which only about a fourth of the population supported such an action. According to the polls, however, by February,
43 percent of the population wanted a return to a price freeze, and these
pressures for stricter controls were reflected within the Congress. One effect
of this sentiment among the public and the Congress may have been to encourage price increases in anticipation of a freeze.
The Administration was sensitive to the growing pressures from consumers and Congress and was also concerned that the acceleration of inflation would undo the gains achieved by slowing the private nonfarm wage
rate increases, as measured by average hourly earnings adjusted for interindustry shifts and overtime in manufacturing, from a peak annual rate of
8.5 percent for the third quarter of 1970 to 5.0 percent for the first quarter
of 1973. The situation posed a dilemma for policy makers, however, because
the major source of inflation was in commodity markets, in which controls
have only limited usefulness. The problems of hides and lumber that were
encountered during Phase II had made this apparent. The most effective
way to slow price increases for raw commodities is to increase their supply.
Numerous actions, detailed in Table 24, were taken by means of agricultural programs, foreign trade policy instruments, and stockpile policies to
expand supplies of lumber, agricultural products, metals, and petroleum
products. While some of these policies increased supply quickly, others required more time to take effect and had little immediate impact on the
rate of inflation.
PHASE III IS TIGHTENED
The Administration recognized that controls were unlikely to be effective
in holding down prices of those consumer goods that are derived almost
directly from crude commodities. Nonetheless, in the face of mounting
pressure, selected changes in the administration of controls were instituted
in order to assure labor and consumers that everything possible was being
done to contain price increases. Thus, on March 6, cost justification was
required of major producers of crude oil and petroleum products who
sought price increases yielding more than a 1 percent yearly addition to their
revenues; for increases greater than 1.5 percent prenotification was required.
This deterred price increases which would otherwise have been useful
94
TABLE 24.—Supply-increasing actions of the Federal Government during 1973
Commodity
Food.
Action
Date of action
January 31
Direct subsidies ended for farm product exports.
Mandatory wheat acreage set-asides suspended for 1973 crop.
Grain to be sold from Government CCC reserves.
Loans terminated on farm-stored grain.
Review of Federal marketing orders initiated to encourage additional supply of
fruits and vegetables.
Livestock grazing permitted on set-aside acreages.
Cabinet-level CLC Committee on Food established.
CLC public Food Advisory Committee established.
Feed grain acreage set-asides reduced for 1973 crop.
March 8.
March 26
Dairy price supports increased to mandatory minimums.
Feed grain set-aside acreage further reduced.
April5
April 19
April 25.
Interagency Task Force established to coordinate grain transportation policies.
Rice acreage allotments increased for 1973 crop.
Cheese import quotas increased.
January 11
May 10
Import quotas increased on dry milk.
June 27
Temporary export restrictions imposed on oilseed crops.
July 5 . .
Temporary export restrictions extended to 41 categories of agricultural commodities including edible oils, animal fats, and livestock protein feed.
Exports of food under P.L. 480 reduced to minimum levels.
Import quotas further increased on dry milk.
Wheat and feed grain set-asides suspended for 1974 crops.
July 6
July 1 8 . .
July 19
August 10
Agriculture and Consumer Protection Act signed, establishing target price system
to support farm incomes.
Import quotas increased further for nonfat dry milk.
August 28
Metals..
October 3
Agricultural production and food processing given high priority in propane allocation program.
Fertilizer price decontrolled by CLC; export monitoring system established.
October 2 5 . . . .
November l . _
November 2 7 .
Butter import quotas increased.
Sugar import quotas increased.
December 2 0 . .
December 21_.
Loans on 1973 crop wheat called for January 15,1974 delivery.
Meat import quotas suspended for 1974.
April 16
President requests authority to sell excess stockpile items; sales of tin, aluminum,
lead, zinc, magnesium, rubber, cobalt, manganese ore made throughout the year.
Reporting requirements imposed for ferrous scrap exports.
May 22
Lumber..
July 2
Licensing requirements set up for ferrous scrap exports.
Japan agreed voluntarily to limit imports of U.S. ferrous scrap in second half of 1973.
April 12
Japan agreed voluntarily to reduce imports of U.S. softwood logs in second half of
1973.
May 15
More efficient use of railroad cars as result of ICC changes in rail rates for lumber
shipments.
Increased sales of timber by Forest Service from national forests.
May 29
Petroleum
April 18
Mandatory Oil Import Program quotas and tariffs suspended by Presidential order.
Unlimited imports of crude oil and petroleum products permitted, subject to
license fees on imports above former quota levels.
August 19
Phase IV regulations removed ceiling price from "new" crude oil.
November 27..
Ceiling price removed from crude oil from stripper wells.
Source: Council of Economic Advisers.
in encouraging additional supplies from domestic sources and signaling the
rising costs of petroleum products to consumers.
Meat prices were also singled out for additional control. Meats account for
about one-fourth of the consumer food budget. Consumer complaints about
high meat prices had become widespread; there was concern that they would
add to inflationary expectations and accelerate wage demands. On March
29, ceilings on prices of red meats at all levels of processing and distribution
95
were imposed, limiting prices to the highest price level that had prevailed
in the preceding 30 days for at least 10 percent of the sales of each meat item.
Farm prices of livestock were not controlled directly, but it was expected
that beyond some limit livestock price increases would squeeze margins of
processors and retailers and thereby constrain what they could pay for
livestock. It was recognized that the ceilings, while not binding at the time,
would probably become so for a couple of months in the summer and thus
create distortions, but after that meat prices were expected to drop below
the ceilings. The ceilings were not expected to interfere in any basic way
with incentives to expand production, because it was thought that livestock
prices were, and would remain, sufficiently high in relation to production
costs.
In the late winter and spring, prices of industrial commodities, which had
been increasing by about one-third of 1 percent per month in 1972, began
rising by somewhat more than 1 percent per month. These large increases
reflected the impact of spiraling basic commodity prices here and abroad,
stemming from the rapid expansion that occurred simultaneously in major
countries and the decline in the foreign exchange value of the dollar. This
development signaled the building up of cost pressures, particularly for purchasers of industrial materials, which in turn accelerated a rise in finished
goods prices. To slow down the pass-through of these cost pressures, prenotification requirements were reinstated on May 2 for large firms that proposed
weighted average price increases 1.5 percent above price levels either authorized or in effect on January 10, 1973.
THE FREEZE (June 13 to August 12, 1973)
The disappointingly high rate of inflation in the first 5 months of 1973
continued to arouse public dissatisfaction, and few signs appeared that the
inflation would slow significantly in the second half of the year. Congress
and the Administration were urged to take stronger actions to contain inflation. In the circumstances it seemed necessary to establish a more stringent
controls system than Phase III, but one flexible enough to respond to economic developments. This would be better than being forced into one so
comprehensive, rigid, and permanent that it would have adverse effects on
the economy.
On June 13, the President announced a freeze on prices, to be followed
by a new set of Phase IV controls. The freeze was to last no more than 60
days, ending just as soon as new controls could be put in place. Most prices,
but not wages, were prevented from rising above their June 1-8 levels.
Dividends and interest rates remained subject to voluntary controls. Rents
and raw agricultural products at the first sale were also excluded from the
action.
More instances of price increases turned up during the 1973 freeze than
in the one begun in August 1971, partly because of the extreme upward
96
pressures on farm and some major nonfarm commodity prices. Bad weather
had reduced worldwide supplies of farm commodities in 1972. Rapidly rising incomes both in the United States and abroad and increased foreign
purchasing power, resulting from the dollar devaluation, lifted demand and
produced the largest increase in farm commodity prices since World War I.
Little could be done through the use of direct controls to stop the price
surge without interfering with production and inducing additional exports.
The meat price ceilings imposed on March 29 began to interfere with livestock production under these circumstances. Increases in livestock feeding
costs arising from the sharp increases in feed costs between midspring and
midsummer could not be passed on to packers, who were subject to ceilings,
and consequently some livestock producers limited their expansion or cut
back production.
Further negative effects on food production resulted from the extension
of ceilings in the June 13 freeze action to all food prices except those of
farm products at the point of first sale. Feed grain and oilseed prices
remained high, stimulated by strong foreign demand. Like meat processors
and distributors, processors of other food products requiring these grains
and oilseeds, either as feeds or as inputs for further processing, were caught
between rising costs and frozen prices. Poultry and egg producers began to
cut back production, although not to the extent believed by consumers.
Grain millers were especially hard hit by the rapid rise in prices of wheat.
Ganners of processed fruits and vegetables also faced cost problems. Their
selling prices were based on growers' prices a year earlier, but short supplies
had subsequently pushed these prices upward. The well-publicized grocery
store shortages during the freeze exemplified the developments in the food
industry which hastened the move to Phase IV.
PHASE IV (August 12, 1973 to date)
Plans for a fourth phase of the controls program were prepared and
either implemented or published for comment a month after the beginning
of the freeze. On July 18, Stage A of the Phase IV food regulations was
implemented because especially quick action was required in this sector.
The new regulations permitted the dollar for dollar pass-through of all
farm price increases and decreases except those for cattle, as the beef price
ceilings remained in effect until September 10. On July 19 plans for Phase
IV were announced and the health industry was returned to Phase III control. The final regulations were announced August 6-10 and put into effect
on August 12 for the wholesale, retail, manufacturing, and service sectors.
The regulations adopted in Phase IV were designed to serve a number of
ends. The main object, of course, was to slow the rate of inflation. It would
be achieved, in part, by postponing some price increases in the expectation
that monetary and fiscal policy would slow the rate of growth of demand
and perhaps make them unnecessary. It had to be acknowledged, however,
that holding prices down could have undesirable effects, among them the
97
spurring of domestic inflation by encouraging exports and discouraging the
investment needed to ensure adequate supply in the long run. Plans for
decontrol were also needed to serve the ultimate goal of return to a free
market economy.
The considerations gave rise to a Phase IV system that was stricter than
that of Phase II, though it contained some regulations developed earlier
to deal with specific circumstances in particular industries. Phase IV was
stricter than Phase II in three ways.
1. Price increases in manufacturing and service industries were limited
to the dollar and cents amount of allowable cost increases, with no
add-on permitted to maintain percentage markups.
2. Only cost increases since the last fiscal quarter of 1972 could be used
to justify price increases. This rule wiped out some cost justification that
had been built up earlier in the controls period.
3. In Phase IV new base prices were established to which actual prices
could rise without cost justification; in some industry sectors these
new base prices were below those of Phase II.
Special regulations were drawn up for the insurance and petroleum industries. Phase B of the food regulations took effect September 10. New
regulations for the health industry were issued on January 16, 1974. The
major aspects of Phase IV are summarized in Table 22 and discussed in
more detail in the Quarterly Reports of the Cost of Living Council.
Phase IV also incorporated a new strategy for achieving a return to free
markets: decontrol of selected industries in appropriate cases. Lumber,
copper scrap, public utilities, and coal sold to utilities under long-term
contracts were decontrolled at the outset. In the administration of Phase IV,
each request for price and wage increases is reviewed individually. In suitable cases decontrol has been made contingent on agreements by the firms
to expand output or capacity or to limit exports. In these and other instances,
exemptions have been subject to a requirement that the firms furnish Government agencies with data on their prices, exports, and investment in new
facilities.
Likely candidates for decontrol have been industries producing basic commodities for which there was excess demand, since low domestic prices promoted an unwanted rise in exports, as well as reducing supplies and providing
less incentive to expand production. Thus, fertilizers and most nonferrous
metals have been decontrolled during Phase IV.
In some sectors where there had not been a build-up of cost pressures,
decontrol would not lead to a spurt in prices. No advantages would be gained
by applying controls in these cases. Thus rents, which are difficult to regulate
for administrative reasons, were exempt from Phase IV controls, as they had
been in Phase III, and lumber was decontrolled for similar reasons. Partly
for the same reason, both wages and prices were decontrolled in the auto
industry, after a new wage contract for auto workers had been signed and
98
after three of the four automobile companies agreed not to raise prices of
1974 model year cars beyond those already approved by the CLC, unless
economic conditions changed drastically.
Prices were decontrolled in other industries: cement, for example, where
expanded capacity was needed and a long lead time is required for construction, and where there was some assurance of moderate price performance.
Areas that were decontrolled are still subject to periodic review to make
certain that wage and price behavior remains acceptable and that firms are
complying with agreements made at the time of decontrol.
THE EFFECTIVENESS OF CONTROLS
The most obvious question to ask about the controls program is whether
it has helped to hold down the rate of inflation. As last year's Report noted,
the answer to such a question is by no means obvious. A year ago, looking
back at 1972, one could say that the rate of inflation had been lower
during the controls program than earlier. Yet this was only a superficial
answer. The real question was whether the inflation had been less than it
would have been without the controls. Some argued that the rate of inflation
had been declining before the controls were instituted. A continuation of
the decline, they said, did not indicate the effectiveness of the controls but
rather their ineffectiveness. This view was also superficial, because no one
could be sure that the inflation rate would have continued to decline without
the controls.
Last year's Report concluded that the controls had probably restrained
inflation up to the end of 1972. The fact of the controls, plus their initial
success, had reduced inflationary expectations, held down total spending,
restrained the tendency to boost wages and prices, and permitted output
to rise more rapidly than it would otherwise have done. This interpretation
seemed at least to accord with the facts of 1971 and 1972.
The facts of 1973 are, of course, quite different. Price increases for raw
commodities were extremely rapid. Farm prices rose at their fastest rate
since 1917 and resulted in retail food price increases that accounted for 51
percent of the rise in the CPI during 1973. Another 11 percent of the rise
in the index was accounted for by higher prices of energy purchased directly
by consumers. The large rise in industrial materials prices also contributed
to the rise in retail prices. As a result the rate of inflation did not diminish
but increased; it outstripped the rate of the earlier period of controls as well
as the rate of earlier periods without controls. But again one should ask
what would have happened without controls in 1973? Would prices have
risen even more than they actually did?
The answer will never be known with certainty. Still it is more difficult in
1973 than in 1972 to believe that controls have had a significant effect in
reducing the rate of inflation. The reason is not simply that the inflation rate
99
was more than twice as high in 1973. It is partly that the scenarios on
which it is usually argued that a controls system might restrain inflation
do not seem plausible for 1973. Two different theories of controls might
be envisioned.
1. Equilibrium system. The controls might either so restrain demand or
increase output as to bring demand and supply into balance at a lower price
level than would otherwise have prevailed. On the demand side, this might
occur as a result of dampening inflationary expectations. On the supply side,
because they know that controls preclude paying higher wages and charging
higher prices, businesses may try to employ more workers and produce
more than they would if wages and prices were uncontrolled and they
could achieve larger profits by producing less. Workers may accept the
controlled wage and be willing to work at it, even though they would
not have been willing to work at it if they had been free to bargain for
more.
2. Disequilibrium system. This course would imply that programs of control create shortages because at controlled prices, below market-clearing
equilibrium prices, buyers want more than producers are willing to supply.
The controls system was not designed to create or deal with a shortage
situation. From the beginning of 1973, and indeed throughout most of 1972,
about half the prices and wages in the economy were uncontrolled, including farm prices, import and export prices, prices and wages in small business, and wages below $2.75 per hour (below $3.50 per hour after May 1,
1973). If controls held down prices and created shortages in controlled
sectors, so that people could not spend money there, abundant opportunities
existed for spending money in the uncontrolled sectors, where prices could
rise. Moreover, and this is most important, many of the controlled sectors
either processed or distributed products from the uncontrolled sectors. The
controlled prices were margins over the uncontrolled prices. If the margins
were held down enough to create a "shortage," which producers tried to fill,
their action would pull up the prices of the uncontrolled materials and raise
the final price until there was no shortage. This appears to have happened
in the food sector during the first half of 1973 and may have contributed
to the price increases for imported crude nonfood commodities.
In any case, the machinery of the system was not prepared to withstand
acute shortages. That is, there was no enforcement apparatus capable of
resisting the price pressures that widespread shortages would have created.
Instead, the policy tried to correct shortages, either by expanding supply,
or in acute cases by allowing prices to rise.
There were, of course, some shortages; but at the consumer level they
were not very evident except temporarily with meat, and at the end of the
year with gasoline and fuel oil. They did not cast serious doubt on the proposition that consumer prices were high enough to clear the market; in other
words, people who wanted to buy things at those prices could find them.
If the proposition is true, then whether controls restrained the rate of inflation boils dowrn to whether it can be demonstrated that they either re-
100
strained the rate of spending or increased the rate of production. There can
be no doubt that the controls program restrained price increases in many
cases. But the question, of course, is whether holding down these prices
served to hold down prices on the average or only diverted the inflationary
pressure from these particular prices to others. This question returns us to
the effect controls may have had on total spending.
It is possible that when specific prices were held down—as they clearly
were—consumers did not transfer their spending elsewhere but reduced
their total spending. This might not show up as higher savings, because the
lower expenditures would also mean lower incomes to someone. It might
show up in a lower ratio of spending and income to the money supply, or
even in a lower money supply, if at a lower price level the Federal Reserve
felt less need to permit monetary expansion. However, as Chapter 2 pointed
out, spending increased by an exceptionally large amount in 1973. In fact
the increase was exceptional, even when the current and preceding behavior
of fiscal and monetary policy is taken into account. Last year was not one
in which the rise of spending was inexplicably slow and the controls could
have provided a plausible explanation for the slowness. On the contrary, if
the controls were holding down spending, its high rate of increase would
be very hard to explain. The route by which controls are sometimes thought
to hold down spending is through inflationary expectations. If controls make
people confident that inflation will be moderate, they are less inclined to
spend their money. To some extent this happened in 1972. But before long
in 1973 people's confidence that the controls would assure price stability
fell to a low point. Polls give much evidence of this sentiment, as well as
of the spreading expectation of more inflation.
The supply side of the equation is more uncertain. Controls that held
prices down may also have induced businesses to produce and sell more,
since they did not have the alternative of profiting by raising prices. However, the increase of output during 1973 was about the same as the average
annual increase in the past. Employment rose much more than the average;
and output per worker, productivity, rose much less than the average. It is
improbable that the controls system did anything to raise productivity. Its
effect is more likely to have been in the other direction. The controls also
held down U.S. prices relative to export prices, which were uncontrolled,
and they encouraged export of some basic materials which, if used for
further production in the United States, would have increased output. To
an unknown extent this increment to exports was offset by additional imports, particularly of industrial materials, prices of which were not controlled.
So this leaves the question of whether output was increased because the
controls program contributed to the rise of employment by holding down
wage rates; that is, with the given increase in spending there would be, as a
result of controls, more real demand for labor, more employment, more output, and lower prices. But this chain depends on the first link, namely, that
the controls held down wages. The controls program undoubtedly restrained
101
wage increases in many cases, construction wages being an exceptionally
important and well-documented instance. But whether they did, in fact, hold
down the overall wage level is hard to tell.
At the beginning of 1973, the Administration and a few others believed
that the year would be one of only moderate wage increases compared to
those of the recent past. This view was based on the fact that wages had
gained substantially over the cost of living in 1972 and that wages in different industries seemed in good balance. When consumer prices began to rise
rapidly early in 1973, the question arose whether this moderate expectation
would be upset, or whether the controls program would prevent such a
development.
The wage picture is not clear because the measures of wage rates do not
always agree, and no single ideal measure exists. Wage increases in new union
contracts were lower in 1973 than in 1972 (Table 25). When fringe benefits are included, the 1973 contract increases were also lower than those of
1972, but not by so wide a margin; fringe benefits rose faster than wages.
However, the index of hourly earnings, adjusted for overtime in manufacturing and for interindustry shifts, rose a little more during 1973 than
during 1972 (Table 21). This index reflects not only new wage decisions
but also the effects of old decisions and their implementation. It also reflects the so-called wage drift as individual workers are reclassified, but it
does not reflect the relatively more rapid rise of fringe benefits.
TABLE 25.—First year wage rate changes in collective bargaining agreements covering 7,000
workers or more, 1970—73
Percent of workers affected
Type of wage rate action i
All industries
1970
All wage actions.
No wage jncrease..
Increase in v ages..
100
1971
100
1972
100
Manufacturing
1973 2
100
1970
100
1971
100
1972
100
2
100
1973 2
100
100
Under 1 percent
1 and under 2 percent...
2 and under 3 percent...
3 and under 4 percent...
4 and under 5 percent...
5 and under 6 percent...
6 and under 7 percent...
7 and under 8 percent...
8 and under 9 percent...
9 and under 10 percent..
10 percent and over
8,
1
3
5
47
24
4
16
10
2
9
6
53
Not specified
00
2,318
4,675
3,978
2,424
5,004
2,184
1,913
913
Mean adjustment (percent)
11.9
11.6
7.3
5.8
8.1
10.9
6.6
5.9
Median adjustment (percent)....
10.0
12.5
6.6
5.5
7.5
10.1
6.2
5.5
Number of workers (thousands).
* Percent of estimated average hourly earnings excluding overtime.
2 Preli -inary.
3 Less than 0.5 percent.
Note.—Detail may not add to total because of rounding.
Source: Department of Labor, Bureau of Labor Statistics.
102
The most comprehensive measure we have of what it costs an employer
to purchase an hour of labor is the estimate of labor compensation per
hour. This measure covers not only wages but also fringes, including the
employers' share of social security contributions. Compensation per manhour of employees and the self-employed in the private nonfarm sector of
the economy rose at a more rapid rate during 1973 than during 1972, 8.0
percent in 1973 compared to 7.1 percent in 1972, partly because of the
big increase in social security contributions. This rise in compensation
occurred while the rate of productivity increase was declining, so that unit
labor costs accelerated considerably, from an increase of 2.4 percent during
1972 to an increase of 7.1 percent during 1973. Prices, of course, also rose
more rapidly in 1973 than in 1972. Nevertheless, whereas unit labor costs in
the private nonfarm economy rose about as much as nonfarm prices during
1972, they rose more than nonfarm prices during 1973. This suggests—
but only suggests—that labor compensation was not being held down to an
unusual degree, if one considers the factors which affect employers' desire to
hire labor, that is, the productivity of labor and the price of the product.
Analysis of the probable behavior of wages in relation to a longer list of variables, including the condition of the labor markets, also makes it seem
probable that wages rose as much as might have been expected without controls. If so, one might also conclude that the controls over wages did not raise
employment and output and so restrain inflation in the demand conditions
of 1973.
Despite the uncertainty about whether controls had affected inflation in
1973, no uncertainty exists about another and possibly more relevant proposition. The controls did not prevent a rate of inflation which was large compared to our past history, to the previous year, to our expectations for 1973,
and to the goals of the program. This fact need not be interpreted as a
criticism of the way the program was designed and managed or as implying
a lack of cooperation by labor or business. It simply means that the situation
the program ran into was more than it could successfully contend with.
Effectiveness During Phase III
The shift from Phase II to Phase III coincided closely with the acceleration of inflation from its moderate 1972 pace. Phase III was perceived bymany, largely because of the fact that it was self-administered, as a signal
that controls had come to an end. This is reflected in survey findings that
the sharp rise in consumer spending early in 1973 was partly due to expectations that price increases would accelerate. One would naturally like
very much to know whether or not this shift released an inflation which had
been kept in check by Phase II, and which could have remained in check if
Phase II had been continued. Table 26 throws light on this question. It classifies the items in the consumer price index into three categories: (1) Items
exempt from control in Phases II and I I I ; (2) items subject to similar
regulations in both phases; and (3) items for which the administration of
Phase II rules was substantially relaxed in the transition to Phase III.
The increase of the inflation rate between Phases II and III was a little
103
TABLE 26.—Behavior of items in consumer price index during Phases II and HI, classified by
type of control applicable
Relative importance,
December (percent
of all items)
Percent change,
annual rates1
Percent contribution
to change
Phase W Phase III
Nov. 1971 Jan. 1973
to
to
Jan. 1973 June 1973
Phase II
Phase III
Nov. 1971 Jan.1973
to
to
Jan. 1973 June 1973
Item and control status
1971
1972
100.0
100.0
3.6
8.3
100
100
A. Items exempt from Phases II and III 2
11.3
11.5
4.4
5.5
13
7
B. Items subject to similar regulations in Phases
II and I I I :
Food
Public utilities a
Medical care services
Mortgage interest rates
22.2
4.8
5.6
3.7
22.5
4.8
5.6
3.7
6.5
4.2
3.9
20.3
2.8
3.8
1.8
38
5
6
-1
51
1
2
1
C. Items for which Phase II controls abolished
or made self-administered: *
Residential rents
Nonfood commodities
Services
5.1
32.2
15.2
5.1
31.8
15.1
3.8
2.1
3.3
4.4
6.1
6.2
3
22
13
47.6
52.4
48.1
51.9
4.8
2.6
11.7
6.0
63
37
48.8
48.4
2.6
5.1
30
All items
Total A + B
Total C
Addendum: C excluding gasoline, motor and
fuel oil, and coal
1 Seasonally adjusted where possible. Major exceptions are property taxes, services, and residential rents.
2
Major items are houses, used cars, and State and local taxes and user charges.
3
Though the Phase II requirement for certification was dropped in Phase I I I , the basic regulations continued in force.
* Excludes components included in A and B above and does not take into account the small business exemption.
Note.—Detail may not add to total because of rounding.
Sources: Department of Labor (Bureau of Labor Statistics) and Council of Economic Advisers.
greater for the first two categories, for which the rules did not change, than
for the third category, for which the rules were relaxed. Consequently the
first two categories contributed a little more to the inflation of Phase III
than they did to the inflation of Phase II. Thus, little evidence can be found
that consumer prices rose exceptionally fast in the areas in which the administration of controls was relaxed in Phase III.
This is also largely the case even with respect to the rapid increases in
the WPI. Agricultural prices were not controlled under Phase II, so the shift
to Phase III presumably had no effect on them. Much of the increase in
prices of raw industrial commodities occurred in industries which had profit
margins below their permitted ceilings and, in some important instances,
those whose product prices at the beginning of 1973 were below Phase II
ceilings. There was considerable room for profit margin expansion in industries like steel, primary nonferrous metals, and petroleum. Only a tightening
of Phase II rules could have eliminated this gap; but, given worldwide
demand and the devaluation of the dollar, such tightening might only have
led to a further expansion of exports.
*
*
*
*
*
*
*
During 1973, in all phases of the controls, there was a marked shift of
relative prices. Prices of raw agricultural products and of industrial materials rose very much more than prices of finished goods and services.
Undoubtedly this shift would have happened in 1973 without a controls
104
program. The worldwide lag in agricultural production, for which demand is
quite price inelastic, would have caused a relative rise of agricultural prices.
Industrial raw materials prices generally rise relative to the prices of finished
goods in a boom, and in 1973 the boom affecting the world as a whole was
exceptionally strong. Raw agricultural products were exempt from control, and some industrial raw materials were also exempt because they
were imported. The controls, particularly the profit margin limitation, held
down specific prices and may have compressed the prices representing the
value added in processing and distribution, thereby diverting demand to
the uncontrolled commodities. (Chart 6 shows changes in the relationship
between materials prices and those of finished goods at the wholesale and
retail level.) Extension of controls to these uncontrolled items would have
meant more exports, less farm output, lower imports of industrial raw
materials, less total output, and if not higher prices, at least more shortages.
One of the most constructive aspects of the Economic Stabilization Program, and one of the most valuable effects of the effort to control prices
directly, was that it led the Federal Government to redouble its efforts to find
ways of increasing supplies in many areas (Table 24). As prices skyrocketed in many sectors—chiefly food, but also lumber and other basic
materials—and it became apparent that price controls would be ineffective,
if not harmful, attention turned to dealing with the real problem, which
was inadequacy of supply. In many cases it was discovered that the Federal
Government was itself partly responsible for the limitation of supply.
The leading example is agriculture. The President, concerned with short
supplies and rising prices, has brought about a dramatic change in agricultural policy during the past 2 years. The results have been striking: the
elimination of many restrictions on agricultural production in the United
States; a greater willingness to receive agricultural imports; removal of the
subsidies to agricultural exports; and reductions of Government-owned
stockpiles of farm products. These changes, more than anything that was
done or could be done with direct price controls, are the Government's effective contribution to more stable food prices. Less spectacular, but still
important, steps were taken to increase lumber production from the national
forests and to sell excess Government stockpiles of industrial raw materials.
In any appraisal of the part the controls program played in checking
inflation up to the end of 1973 or subsequently, one of the most obvious
benefits must be the mobilized effort to increase supply and remove Government-imposed impediments to supply.
FAIRNESS OF CONTROLS
A major challenge in the development and administration of controls is
the assurance of equity. Whenever the Government has as strong a hand
in the distribution of real incomes as it does in a price-wage controls program, many will complain of unfairness. It is rare for anyone to think that
he has received his just deserts, and this is especially true where Government
105
Chart 6
Changes in Related
Wholesale and Consumer Prices
PERCENT CHANGE DURING PERIOD
V/X WPI CRUDE AND INTERMEDIATE MATERIALS EXCLUDING FOODS
30
| § WPI CONSUMER FINISHED GOODS EXCLUDING FOODS
•
CPI NONFOOD COMMODITIES
20
10
1961 TO 1970
1971
1972
1973
1972
1973
AVERAGE
WPI FARM PRODUCTS
40
WPI CONSUMER FINISHED FOODS
CPI FOOD
30
20
10
1961 TO 1970
1971
AVERAGE
* R I S E EXAGGERATED BY INCREASE IN REFINED PETROLEUM PRODUCTS PRICES, WHICH ARE BASED ON SPOT
MARKET QUOTATIONS NOT REPRESENTATIVE OF TOTAL MARKET IN 1973.
SOURCES: DEPARTMENT OF LABOR AND COUNCIL OF ECONOMIC ADVISERS.
106
is concerned. Some may very well have been adversely affected by controls,
just as others may suffer from the implementation of various other policies.
There is no strong objective evidence, however, that the controls operated
in a biased manner in 1973.
As should be clear from the preceding discussion, the effect of the controls
on relative incomes or relative prices is hard to define. We know what happened during the year but not how much of it was due to the controls.
Several developments in the distribution of income are relevant to the issue
of fairness in the economy's performance during 1973. Since controls first
went into effect, the share of national income produced in the private sector
and going to workers employed there has declined slightly, edging down
from 70.6 percent in the second quarter of 1971 to 70.3 percent in the third
quarter of 1973. Almost all of this decrease occurred during 1973 and was
offset by a rise in the profit share of national income and the income of
farm proprietors.
The implication of the relatively unchanged labor share during 1973 is
that if workers bought a bundle of goods and services consisting only of those
they produced—excluding imports, of course—and weighted in the same
proportion as this output, they would have continued to command the same
share of national output as they had done previously. And since output grew
during the year, even on a per man-hour basis, an unchanged labor share
means that workers, before tax changes in 1973, received more goods per
hour of work.
The most dramatic event in the distribution of income in 1973 was the
extraordinary rise of farm income. In the year ending in the third quarter
of 1973 the income of farm proprietors increased by 37 percent, whereas
the total national income rose by 12 percent. Net income per farm rose 39
percent, 24 percent in constant dollars. The large rise placed farm proprietors in a favorable position despite controls imposed on meat prices on March
29. Cash receipts from livestock products rose to record highs, but rises in
production costs offset a major part of the increase. Nevertheless the higher
receipts from farm marketings led to record incomes and an improved
relative position for farm families.
EFFECT OF CONTROLS ON COMPONENTS OF OUTPUT
Throughout 1973 considerable attention was drawn to shortages of goods,
particularly in the manufacturing sector of the economy. Purchasing agents'
reports that they could not obtain materials became widespread. High
demand throughout the economy was the reason most frequently cited for
such shortages. In some cases shortages also arose from a diversion of domestically produced supply to export markets, particularly for such materials as
chemicals, metals, and lumber. Many shortages—of fertilizers and petrochemicals, for example—were traceable to the limited supply of crude oil
107
and natural gas. A complex set of factors can be blamed for this situation;
the controls program intensified the problem but was not the only cause.
Except for meat and petroleum products, shortages of industrial materials
did not carry over noticeably to consumer markets. One reason is that firms
were able to substitute to some extent more plentiful materials for scarce
ones in the production process, especially in finished durable goods and in
the use of packaging materials. Inventories also helped to offset shortages of
materials; inventories of some products would probably have been higher
if materials supplies had been greater.
Flexibility in the administration of the controls program, enabling administrators to exempt some markets, decontrol others, and allow exceptions
to the general rules regarding price increases, helped prevent shortages
from becoming more pervasive and acute. Attention was also given to cases
in which controls, without limiting current output, might discourage the investment needed to supply future output. The need to stimulate investment
was, for example, an important consideration in decontrolling the cement
industry and allowing a price increase by the paper industry.
Despite constant reminders by the Administration that it regarded controls as temporary, there was always the danger that the program might
result in significant deferral or cancellation of investment plans. Probably the
controls introduced an element of uncertainty that affected long-run planning. But the CLC did move to decontrol in important instances where it
was shown that controls threatened to limit investment. And many investment plans with long lead times were undoubtedly undertaken on the likelihood that controls would be abolished by the time the new capacity came
on stream.
In the agricultural sector the ceilings on meat prices contributed to
subsequent reductions in livestock production. That the controls program to
some extent limited the quantity of output and the investment required to
produce future output is not surprising. Even the anticipation of a controls
program can have this effect if producers raise prices, establish new marketing channels, or divert investment from the United States to other countries.
SUMMARY
We repeat what was said at the outset: the effect of the controls program
on the rate of inflation in 1973 cannot be known with certainty either today
or ever.
Controls could have worked in many ways, and economists' knowledge of
the quantitative relationships determining prices is not so precise as to rule
out the possibility that inflation might have been even greater in 1973 without controls. We think it would not have been much greater, however, since
with the controls the rate of spending was high relative to the money supply,
and output was low relative to the labor supply.
Still no one can disprove the thesis that the controls had a significant effect,
although 1973 makes it a hard thesis to believe. Doubts of this kind should
108
come as no surprise. There is much prior evidence that price and wage controls of the kind tolerated during peacetime in free societies cannot significantly restrain inflation under the supply and demand conditions experienced in 1973.
The effectiveness of controls obviously cannot be judged by 1973 alone.
The operation of the controls during 1971 and 1972, bringing about a good
balance in the structure of wages, may have helped to avoid a repetition in
1973 of the kind of wage spiral the country was experiencing before August
1971. On the other hand, if controls did hold down prices during 1973, the
possibility remains that these prices will catch up in 1974 or later.
109
527-867 O - 74 - 8
CHAPTER 4
Energy and Agriculture
F
OR THE BASIC RESOURCE INDUSTRIES, 1973 was an unusually
eventful year. Prices in all major categories of these industries—agriculture, energy, timber, and minerals and metals—rose sharply, even in relation to the rising average level of prices. In some cases additional supplies
could not be obtained even at the higher prices. These conditions reflected
a worldwide state of affairs.
The growing scarcity of resources in 1973 was a significant departure from
the long-term trend. Since World War II prices of basic resources have increased much less than prices generally. Wholesale prices of crude materials,
for instance, increased only 13.6 percent from 1947 to 1971, compared to a
53.4 percent increase in wholesale prices of finished goods. During the same
period the consumer price index rose 81.3 percent, and the GNP deflator for
the private economy 78.2 percent. Prices of basic resources thus declined by
a considerable amount relative to prices in the entire economy throughout
most of the postwar period.
This downward trend of relative prices began to be reversed in 1972,
and in 1973 it changed significantly. Some have interpreted this reversal
as an early indication that along with the rest of the world we are entering
a new era of increased scarcity of basic resources, during which prices for
these materials will rise faster than prices for other products. Others have
attributed the reversal to the coincidence of essentially temporary factors.
Neither generalization can be conclusively supported at this time.
With the exception of energy, basic resource demands and prices tend to
exhibit strong fluctuations. The demand for timber rises when housing
construction accelerates, and housing construction is highly cyclical. The demand for minerals and metals is tied closely to the cycle of economic
activity, and the agricultural sector is influenced heavily by weather conditions and its own production cycles. Thus the unusual price pressures on
basic resources in 1973 are to a significant extent explained by an exceptional combination of economic fluctuations that impinged upon all basic
resource industries in the context of high total demand and output.
The reduction in oil exports by several Arab nations focused attention
upon a severe shortage of energy resources. But in recent years the market
demand for energy has been growing faster than our capacity to produce
110
it at the existing price. While the oil cutbacks created obvious new shortterm problems for the economy, they also precipitated what was emerging
as a serious long-run problem.
It would be naive to assume that so fundamental a question as whether
or not we are entering a new era of scarcity for basic resources can be
answered adequately on the basis of the limited information now available.
The question is nevertheless important for the following reasons.
1. Basic resource industries utilize many minerals and metals that ultimately will be exhausted. Because the opportunities to correct faulty
public policy and private decisions affecting exhaustible resources
are also limited, a high value to society accrues from accurate information on future demands and supplies.
2. Public policy has played a particularly important role in the evolution of basic resource industries. Specific policies in varying degrees
inhibited the capacity for adaptability that is inherent in the operation of the market system. During periods of sudden and substantial
change in world patterns of production and demand, these industries
may therefore experience particularly difficult problems of adjustment.
3. Most basic resource industries involve commodities that are traded
very extensively in international markets. The volatility of these
markets, the commonly strong cyclical nature of the domestic industry, and the rapidly expanding consumption in foreign countries
can combine in such a way as to create significant political and
economic tensions between nations. As international markets expand
and nations become more economically interdependent, such tensions
could become more serious.
4. The production processes in many basic resource industries interact
with the environment in an important and complex way that has
in the past resulted in abuse of the environment. Public policy to
protect the environment in turn interacts with—and in an ultimate
sense may well determine—the appropriate public policy toward
basic resource industries.
The following sections of this chapter seek to separate the enduring from
the transitory factors that shape the Nation's energy and agricultural industries. This is a risky business. In the past the initial stages of new trends
have often been dismissed by wise men as unusual, even unique, events; and
many an authoritative forecast of an imminent new trend has proved to be
based upon random episodes.
ENERGY
Energy prices have been generally lower in the United States than in
other developed countries. Abundant supplies of coal, petroleum, and natu-
111
ral gas have contributed to the low market prices of these fuels. This situation
coupled with relatively plentiful capital, and advanced technology, permitted
rapid growth in conversion of fossil fuels to electric power. In addition, a
generous depletion allowance and low excise tax rates have helped keep
down consumer prices of energy.
Low prices and a high rate of economic growth have encouraged
domestic consumption of energy to expand. From 1950 to 1972 U.S. gross
consumption of energy increased at an annual rate of 3.5 percent (Table
27). In 1972 the United States consumed about one-third of the world's
production of energy. Tables 28 and 29 show the distribution of U.S.
energy use by sector and by source. Americans have often been accused
of wasting energy, but the low prices prevailing until 1973 provided little
reason to economize in its use. Because the price of labor was rising relative
to the prices of capital and energy, it paid, both in industry and in the home,
to substitute capital and energy for labor.
TABLE
27 —Gross consumption of energy in natural units, selected years, 1950—72
Total
(quadrillions
of Btu's)
Year
Natural gas
(trillions of
cubic feet)
Petroleum *
(millions of
barrels per
day)
Coal 2
(millions of
tons)
Hydropower
(billions of
kilowatthours)
Nuclear power
(billions of
kilowatthours)
1950
1960
1970
34.0
44.6
67.4
5.94
12.27
21.37
6.52
9.89
14.70
494
398
525
103
154
253
0.0
.5
21.8
19723
72.3
22.43
16.41
526
282
54.0
1
Includes petroleum products refined and processed from crude oil, including still gas, liquefied refining gas, and
natural
gas liquids.
2
Includes anthracite, bituminous, and lignite coals.
3
Preliminary.
Note.—Data relate to annual totals unless indicated otherwise.
Source: Department of the Interior, Bureau of Mines.
TABLE 28.—Consumption of energy, by user sector and source, 1972
[Quadrillions of Btu's]
Consumption of energy1
Source
Total
Industrial
Transportation
Household
and
commercial
Total consumption..
59.6
23.2
18.1
18.3
Petroleums
Natural gas
CoaM
Electric power..
29.8
19.0
4.8
6.0
5.8
10.6
4.4
2.5
17.3
.8
6.7
7.6
.4
3.5
1
2
Preliminary.
Includes petroleum products refined and processed from crude oil, including still gas, liquefied refining gas, and
natural gas liquids.
3
Includes anthracite, bituminous, and lignite coals.
4
Less than 0.05 quadrillions.
Note.—While in 1972,18.6 quadrillion Btu's were used for generating electricity, the electricity so generated represented
only 6.0 quadrillion Btu's. This accounts for the difference between 72.3 quadrillion Btu's of gross energy consumption
in Table 27 and 59.6 quadrillion Btu's of consumption by user sector.
Detail may not add to totals because of rounding.
Source: Department of the Interior, Bureau of Mines.
112
TABLE 29.—Use of energy inputs for electric power, 1972
[Quadrillions of Btu's]
Total uses i
Energy input
18.6
Total uses
3.1
4.1
7.8
3.0
.6
Petroleum
Natural gas
Coal
Hydropower
Nuclear power
i Preliminary.
Source: Department of the Interior, Bureau of Mines.
Wholesale energy prices in the United States were quite stable, relative to
other wholesale prices, during the 1960's. But toward the close of the decade
the price of coal began to move upward, and in 1973 petroleum prices increased sharply (Table 30). Consumer prices of energy actually were declining from 1960 to 1972, relative to other consumer prices. For instance, the
relative price of gasoline and motor oil fell 17.2 percent between 1960 and
1972 but began to increase steeply near the end of 1973 (Chart 7).
Chart 7
Consumer Prices of Gasoline
and Motor Oil
1967=100
ANNUALLY
130
MONTHLY
—
/
r
i
120
-
110
-
GASOLINE AND MOTOR OIL PRICES
RELATIVE TO
V
-
ALL CONSUMER PRICES (CPI)
^^^-"^"
100
/
90
--—s
"' \
N.
GASOLINE A N D MOTOR
A/
^ ^ *
OIL PRICES (CPI)
80
I
1957
I
I
59
I
I
I
61
I
63
I
I
65
SOURCE: DEPARTMENT OF LABOR.
113
1
I
67
I
I
69
1
71
1
11111111111
1973
TABLE 30*—Wholesale prices, all industrial commodities and selectedfuels, selected periods, 1950-73
[1967=100]
Periods
1950
1960
1970
.
1972
1973
_
December:
1972
1973
All
industrial
commodities
Coal
Crude
petroleum
Gas fuels
Electric
power
0)
0)
78.0
95.3
110.0
83.3
95.6
150.3
83.2
98.6
106.1
117.9
127.0
193.8
218.1
113.8
126.0
114.1
126.7
121.5
129.3
119.4
137.1
205.5
240.7
114.7
146.2
119.2
137.6
122.9
135.9
87.2
103.6
101.2
105.9
* Not available.
Source: Department of Labor, Bureau of Labor Statistics.
During 1973 the United States also experienced threats of shortages of
petroleum and natural gas, and in some areas of the country electric power
brownouts and blackouts. Shortages of petroleum intensified late in the year,
following an October decision by several Arab nations to cut back crude
oil production and to curtail shipments to the United States. By the end of
1973 our once abundant and secure energy supplies seemed to be seriously
threatened; and what appeared earlier in the year as a problem turned
into a crisis. To conserve scarce petroleum, a variety of restrictions previously unknown to peacetime America had to be adopted. They focused
attention on the dependence of the economy on energy, the importance that
oil imports have assumed, and the vulnerability of the economy to arbitrary
acts by foreign states.
The energy crisis has its roots in events dating back a decade or more.
To understand the present situation, it is necessary to examine the factors
that have influenced energy supply and use in the United States.
Natural Gas
Since 1954 the Federal Power Commission (FPC) has regulated the
wellhead price of all natural gas sold to interstate pipeline companies. The
FPC maintained prices at approximately the same level throughout the
1960's. In response to increased exploration costs and constant prices, producers cut back on exploration, so that the ratio of reserves to annual production declined rapidly from over 20 in 1960 to 10.5 in 1972. At the same
time, the use of natural gas was expanding rapidly. With a growing gap between production and desired consumption, producers called for deregulation to permit higher prices and to stimulate exploration.
Beginning in 1969, the regulated price was permitted to rise. The natural
gas shortage continued to intensify, however, as demand received an additional stimulus from environmental limitations imposed on the use of highsulfur coal and high-sulfur oil. The FPC estimated that in 1973 the shortage
reached 7 to 10 percent of demand at the prevailing price. To restrict con-
114
sumption to available supplies, the industry has been forced to curtail deliveries under both firm and interruptible contracts. In addition, many gas
distributors have been unable to add new customers. Recently, arrangements
were made to import liquefied natural gas (LNG) at a price several times
the domestic price for natural gas. Because the gas price has been maintained
below the market-clearing level, a heavier burden has been placed on other
fuels, mainly oil.
Petroleum
In 1959 the Mandatory Oil Import Program was adopted to limit dependence upon foreign sources of supply. This program was partly a response to
the curtailment of Middle East oil exports during the Suez Crisis of 1956.
Under the program, quotas were imposed on imports of oil, especially crude
oil. These quotas increased the profitability of domestic production and led
to additional drilling. The major oil-producing States had earlier established
a maximum efficient rate of recovery (MER) for oil fields, and had limited
production to some percentage of MER. This prorationing, together with
import quotas, served to support the domestic price above the price of imports. In addition, prorationing resulted in excess capacity in crude oil production, in the form of production below MER.
After 1960 the only major new discoveries of petroleum in the United
States were on the North Slope of Alaska and on the Outer Continental
Shelf. In the "lower 48" States, the ratio of proved reserves of crude oil to
annual production declined throughout the 1960's. Excess crude oil production capacity also declined as allowable rates of recovery were raised by the
State regulatory agencies. This permitted output to increase rapidly during
the 1960's. But after 1969 the increases in production failed to keep pace
with the growing domestic demand. As an alternative to raising the supported price which would have stimulated domestic production and restrained demand, exceptions were made to the existing quotas, to permit a
greater level of petroleum imports. Finally, in April 1973, the system of import quotas was abandoned altogether in favor of a flexible import fee. This
fee is currently set at a low level to encourage importation.
Beginning in the late 1960's, the expansion of domestic refinery capacity
failed to keep up with the growing demand for oil products. Frequent exceptions to oil import quotas and the continuing review of the Mandatory
Oil Import Program gave rise to uncertainties about whether future policy
would encourage importation of crude oil or of refined products. In the
face of this uncertainty few new domestic refineries were built. In some cases
domestic refinery construction may also have been discouraged by the difficulty of finding a site that would not arouse community objections for environmental and other reasons. In addition, the income tax credit to companies for income taxes paid to foreign governments may have increased the
incentive to build refineries outside the United States.
The use of petroleum products in the United States increased by 66 percent from 1960 to 1972. Much of this increase occurred in the transporta-
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tion sector, which in 1972 accounted for 53 percent of the Nation's total
petroleum use. A low excise tax has made the retail price of gasoline lower
in the United States than in most other developed countries. The low gasoline price and a rapid growth in incomes have contributed to large increases
in the number of motor vehicles on the road and in the total mileage driven,
and thus to the rapidly growing demand for gasoline. Gasoline consumption
has also been increased by the trend toward heavier automobiles with air
conditioners and automatic transmissions, and by the use of emissions control devices. This expansion in demand for petroleum products was underestimated, as was the need for additional refinery capacity to meet that demand, with the result that the United States became heavily dependent on
imports of refined products.
Imports of crude oil and refined products rose from 22 percent of domestic consumption in 1969 to 36 percent in 1973, prior to the embargo. For the
first 9 months of 1973 the U.S. share of total world oil imports amounted to
19 percent. This increased U.S. dependence on imports coincided with, and
probably contributed to, a general tightening of the world petroleum market.
In the mid-1960's the governments of the oil-exporting countries gradually
began to assume a greater measure of control over crude oil production and
pricing decisions. The Organization of Petroleum Exporting Countries
(OPEC), which was formed in 1960, began to function effectively as a
cartel in the 1970's. Excess capacity in crude oil production had begun to
disappear in the United States, Canada, and Venezuela, thereby strengthening the market power of the Middle Eastern nations. This market power
was further increased by the rapid growth in demand for petroleum. For
example, from 1960 to 1972, oil consumption grew at an annual rate of 11.0
percent in Western Europe and 17.4 percent in Japan. When it became apparent that the United States would also have to expand its oil imports,
the exporting countries, working through OPEC, were in a strong position
to raise prices and thus to realize monopoly profits.
Coal
Although coal is our most plentiful energy resource, its use in the United
States has not expanded since 1966. Enactment of the Coal Mine Health
and Safety Act in 1969, together with a host of labor problems, caused a
large rise in the cost of underground mining, and a decline in output. The
reduction in output, together with increased transportation rates, led to the
rise in the price of coal referred to earlier. The higher price, coupled with
the development of improved equipment, spurred an expansion in surface
mining. But the price rise encouraged many industries and utilities to switch
to other fuels. Environmental regulations imposed at both the Federal and
State levels prevented the use of high-sulfur coal in some areas and accelerated the substitution of other fuels. Because of the unavailability of natural
gas, most of the burden has fallen on oil.
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Electric Power
Until recently it was widely expected that nuclear power would be a
major factor in meeting the increased demand for electricity in the early
1970's, but construction of nuclear reactors has fallen far behind schedule.
Technical problems in their design and construction have been partly to
blame, but there have also been unexpected delays associated with the siting of new power plants. To some extent both the construction delays and
the siting delays are attributable to time-consuming litigation resulting
from increased public concern about nuclear hazards and thermal pollution
of water by these reactors.
Meanwhile the demand for electricity has continued to grow rapidly. So
far the increased demand has been met largely by the use of fossil-fuel
power plants, but in some regions the new construction of these plants has
been insufficient to meet demand at existing prices. To some extent this
situation may have come about because the delays in the construction and
use of nuclear reactors were largely unforeseen. There is also evidence that
some electric utilities underestimated the rate at which demand would rise;
the rapid growth in the number of electrical appliances was not fully
anticipated. At present, however, an even more serious problem for the electric utilities than the shortage of power plants is the shortage of natural
gas and residual fuel oil, together with environmental restrictions on the use
of coal.
THE ENERGY CRISIS
The energy crisis originated in a large number of circumstances none of
which was sufficient in itself to disrupt the economy seriously. Their convergence in 1972—73, however, touched off a dramatic change in the domestic energy supply-demand balance.
During most of the 1960's the United States retained the capability to
become rapidly self-sufficient in energy production, but this capability
quickly disappeared in the last part of the decade. The natural gas price was
kept below the market-clearing price, thereby creating a shortage and leading to an increased demand for oil. The demand for oil was further increased
by environmental restrictions on the use of high-sulfur coal as well as by
delays in the construction of nuclear reactors. Domestic refinery capacity was
unable to meet the rapid expansion in demand for petroleum products.
Although the domestic price of crude oil was supported above the price of
imports, the price was not sufficiently high to discourage a rapid growth in
demand or to encourage an adequate expansion in domestic production.
Preventing a rapidly growing dependence on oil imports would have
required maintaining a higher domestic price. Because the enormous oil reserves in the Persian Gulf area were expected to be available to us at a very
low price, a decision wras made to permit exceptions to the limitations on
imports of petroleum products rather than allowing further increases in the
domestic crude oil price. Partly because of this increased reliance by the
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United States on oil imports, OPEC could more confidently reduce crude
oil output and raise the price.
Near the close of 1973 the Federal Energy Office projected that the reduction of oil imports into the United States during the first quarter of
1974 would result in a deficit of 2.7 million barrels per day, or 14 percent of
total U.S. petroleum consumption. The deficit was projected to increase to
17 percent by the fourth quarter if the import curtailment continued. This
projection does not adjust for the effects of higher prices on domestic demand and production. In addition, the projection assumes that there will be
no leakage in the embargo and no increases in oil imports from countries
not participating in the embargo. For these reasons, the projected deficit
overstates the amount by which petroleum use must be reduced through
nonprice conservation measures.
RECOVERY FROM THE CRISIS
The disruption generated by the unexpected reduction of oil imports has
both a supply and a demand aspect. On the supply side the country has
abundant energy resources for the long run, although at costs that are
substantially above past levels. But in the short run there are constraints on
the rate at which exploitation of these resources can be accelerated. Some
increased oil and natural gas production can be obtained from existing fields,
but large increases require development of new fields. There is a long gestation period for new investment in most energy-producing industries. New oil
and gas fields do not begin to produce for at least a year and are not fully
developed for several years. Pipelines, refineries, and nuclear reactors all
take time to build. As a result the economy has less flexibility to expand
energy production in the short run than over a longer period.
There is a comparable short-run inflexibility on the demand side. Most
energy is used as a production input in conjunction with some item of capital
equipment: for example, in a furnace to produce heat and in an automobile
to produce passenger miles. To a large extent equipment design determines the energy requirements per unit of output. In some cases there
is scope for reducing energy use per unit of output, but usually only to a
limited extent. By increasing load factors in airline flights, for instance, the
same number of passenger miles can be obtained with less jet fuel, although
the inconvenience may be greater. In other cases, as in the use of clothes
dryers or air conditioners, the energy-output ratio cannot be changed.
The Nation's capital stock was built during a period when energy prices
were low and were expected to remain so. In view of the prices that are likely
during the next few years, much of the capital stock is inappropriately
designed. To obtain a major reduction in energy use without a decrease in
output, we must replace the stock of capital with machines and equipment
that use energy more efficiently.
A distinction should be made, however, between industrial output and
household output. The latter refers to the services provided by the use
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of consumer durables. There is considerable scope for conserving energy by
reducing household output: for example, lowering thermostat settings and
driving fewer miles. Unlike reductions in industrial output, these measures
generate little unemployment, and for this reason they play an important
role in the Administration's energy conservation program. During 1974,
cutting back on energy used in the household will be the best available means
of conserving energy without paying a high price in increased unemployment
or reduced incomes.
Pricing Policy
Because of these inflexibilities with respect to energy production and use,
market equilibration of demand and domestic supply in the short run would
require very large price increases, at least for a year or two. Even though
price increases would gradually stimulate additional production at higher
cost, profits would also increase—especially before the additional production
is forthcoming—and this raises problems of equity.
If price increases are not allowed, however, there will be insufficient incentives for consumers to reduce demand and for producers to expand reserves
and output. Substantial excess demand would then result, requiring an extensive system of controls, allocations, and rationing. Because of serious
data limitations, it is impossible to design these measures so as to ensure
that resources are efficiently used. Heavy reliance on such measures is likely
to lead to an inefficient use not simply of energy resources but of all resources, and thus might delay our recovery from the crisis. One has reason
therefore to question the efficacy of such controls for more than a very brief
period.
In addition, holding prices down is likely to create expectations that prices
will rise in the future, thus further discouraging increases in production and
sales. Because fossil fuels are exhaustible resources, sales made today are at
the expense of earnings in the future. If the rate of appreciation of the value
of a resource is expected to exceed the rate of return on alternative investments, there is little incentive to sell. A greater return could be earned by
holding back production and building up inventories than by immediate sale.
It has been argued that the domestic output of natural gas has been held
down during the past few years, partly because of expectations that large
price increases would be permitted.
These considerations argue for letting energy prices rise so that markets
will clear, and for initiating a tax to limit windfall profits. In this way, the
price system is permitted to play an important role in guiding production
decisions and encouraging consumers to conserve energy.
With respect to the price of domestically produced crude oil, a distinction has been made between "old oil" and "new oil," the latter referring to
all oil produced on a property in excess of output in the same month of
1972. To stimulate increases in production, the ceiling price has been removed from new oil production. The ceiling price on old oil was raised to
$5.25 per barrel late in 1973 to reduce the widening gap between prices
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of old oil and prices of imported and new crude. As required by the TransAlaska Pipeline Authorization Act, there is no price ceiling on oil produced
from stripper wells, that is, those producing less than 10 barrels per day.
To limit windfall profits, the President recommended that Congress enact
an Emergency Windfall Profits Tax. The proposed measure taxes increases
in crude oil prices at rates graduated up to 85 percent on all sales of domestic
crude oil at prices higher than base prices determined by reference to the
December 1, 1973 ceiling set by the Cost of Living Council; the same price
would apply in the case of uncontrolled oil. The tax, which would be phased
out over 5 years, is designed to eliminate significant windfall profits resulting
from short-term increases in crude oil prices, but to give producers enough
incentive to invest in the expansion of crude oil output in the future.
Sound natural gas policy calls for more competitive pricing. The Administration has asked Congress to pass legislation deregulating prices on new
interstate natural gas contracts. The Administration's proposal would permit
the price to rise, in stages, toward the long-run, market-clearing level.
Prompt steps in this direction are desirable as a means of avoiding the
natural gas shortages that have recently occurred. Deregulating the interstate price will increase reserves and production and will permit users who
depend on interstate pipelines for supplies to compete with intrastate users.
Many electric utilities and industries now buy intrastate gas at a price above
the regulated interstate rate. When the interstate price rises, more gas will
flow in interstate commerce, where in many cases it will substitute for oil.
Natural gas would thus be available where the need is most critical. Deregulation will also result in a greater output of natural gas liquids, a prime feedstock used by the petrochemical industry.
Prospects for Increasing Domestic Production
Production of petroleum, and of associated natural gas, can be increased
within a year by expanding output from existing oil fields. Part of this
increase will result from the use of secondary and tertiary recovery methods.
An additional increase can come from maintaining the production of
stripper wells that would otherwise be abandoned. Some stripper wells
can be reworked to yield a greater rate of flow.
In 1973 most wells in the United States were producing at 100 percent
of the MER. In most States the law does not permit production in excess
of the MER, which is in principle the maximum rate at which oil can
be extracted without seriously reducing the total amount of the resource
that can ultimately be recovered from the field. But the MER is an imprecise figure. In many instances total output would be reduced by only
a small amount if production went beyond the MER for 2 or 3 years.
Moreover the MER should reflect economic as well as technological
factors. The economically efficient rate of production is a function of market prices, both present and future. An increase in the value of oil today,
relative to the expected future value, should lead to a more rapid rate of
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recovery today. In some cases, therefore, it would be in the national interest
to adjust the MER's upward.
Progressively larger increases in the production of petroleum and associated natural gas can be expected after 1974. Increases in the price paid for
the so-called new oil will stimulate exploration, mainly offshore, and an expansion in production. It is likely that offshore production of crude oil will
begin to rise by 1976. The Prudhoe Bay fields in Alaska are expected to begin
producing by 1977 or 1978 and to yield up to 2 million barrels of oil per day
by 1980, to be delivered via the new trans-Alaska pipeline, which received
final congressional authorization in December 1973. It is expected that
another pipeline will be completed by 1980 to ship associated natural gas
from the Prudhoe Bay fields to the "lower 48" States. In addition, major
new refinery construction and expansion plans have been announced.
In 1973, natural gas exploration increased sharply in response to increases
in the wellhead price and a stepped-up rate of offshore leasing. The annual
total of gas well completions in that year surpassed by 15 to 25 percent the
all-time high reached in 1961. This high level of drilling is expected to be
maintained in 1974 and will lead to a build-up of reserves. Production is
likely to begin to rise in 1974 and to increase more rapidly in the following
years, particularly if higher prices are permitted.
Energy Conservation
Higher producer prices for oil and natural gas will not only stimulate
additional production but also dampen energy use and lead to a shift to
coal in the industrial, commercial, and electric power sectors. An acceleration of the rate of construction of nuclear reactors and coal-fired power
plants might lead to some substitution of electric power for oil and gas
in the residential and commercial sectors.
Because the real prices of all fuels and electric power will be higher than
in the past, there will be a substitution of other productive inputs for energy
inputs, both in industry and in the household. Americans can be expected
to drive cars that are smaller and have more efficient engines; to improve
the insulation in their homes; and to pay greater attention to the energy
requirements of appliances when making a purchase. In some parts of
the country it will become economic to install solar space-conditioning
systems that substitute energy from the sun for more conventional kinds.
There will also be shifts in the composition of output away from energyintensive goods and services toward those that use less energy.
These effects will restore the balance between domestic demand and
production. The system of controls and allocations that was instituted at the
close of 1973 to deal with the crisis will become increasingly less important,
and it will be possible and desirable for energy resources to be allocated principally by the market system.
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LONG-TERM PROSPECTS
The price of imported oil is now probably far above the long-run cost of
supplying the entire U.S. market from domestic production. Because of
OPEG's monopoly power, it is possible that the world price will remain
above the long-run domestic cost for some time. The probability of this occurrence would be significantly increased if the United States were to continue to depend heavily on imports. Even if the world price were to decline,
moreover, there would be a risk of a subsequent sudden sharp price rise or a
cutoff of supply.
These prospects argue for an accelerated development of domestic energy
resources. The United States has sufficient energy resources to last for centuries, even if demand continues to grow as rapidly as in the past. The Nation
has untapped oil and natural gas resources on the Outer Continental Shelf.
Synthetic hydrocarbon liquids and gas can be obtained from our vast shale
and coal resources. Nuclear power may still play the role once expected of
it, and the development of the breeder reactor will greatly expand the power
that can be ultimately obtained from domestic uranium resources. New technologies that are being developed may eventually permit an economic use
of geothermal, solar, and fusion power.
However, large capital investments are required to expand domestic
energy production. The private sector will be willing to undertake this investment only if there is a reasonable assurance that the price will remain
sufficiently high to provide an adequate rate of return. As long as domestic
producers face the possibility of a significant decline in their price, the
domestic investment required to expand production will be held back.
The risk to the domestic energy industry comes from the very low cost
of producing oil in many OPEC countries. Although OPEC is now able
to charge a price that is many times the cost of production, there is always
the chance that OPEC countries will lower their prices substantially. Such
a price reduction might result from a deliberate decision by producing countries to undercut U.S. energy producers, or from a breakdown of the cartel.
A decision regarding energy self-sufficiency in petroleum production is
complicated by the important effect that U.S. policy may have on the price
of oil imports. A U.S. policy oriented toward one price level is likely to help
bring about a different price level and thus make the policy appear costly.
A growing dependence on imports, however, involves a potentially higher
cost than would result from expanded domestic production and also poses
a threat to our national security.
Project Independence
In response to these considerations, in November 1973 the President
inaugurated Project Independence, designed to ensure an expansion in domestic energy production so that the Nation would no longer be subject to
economic disruption, or the threat of such disruption, from a sudden curtail-
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ment of vital energy supplies. This program include large proposed expenditures for research and development, which are d' ,cribed below.
The choice of policies to bring about the capability for self-sufficiency in
energy production should depend primarily on economic criteria. Because
domestic energy investment is now inhibited by the risk that the oil-exporting
countries will disrupt the market for political or economic reasons, the policy
should be oriented toward reducing that risk. It is important, however, to
ensure that the incentives for efficient domestic production will continue,
and that any reductions in costs are passed on to consumers. In addition,
policy should be designed to permit prices of different sources of energy to
reflect differences in quality (or desirability), so that resources will be used
efficiently. This means that, while the Nation needs to be protected from
dependence on unreliable supplies, domestic producers should not be isolated
from the normal business risks arising from domestic competition. Policy
should not protect against the risk of a decline in the price because of technical advances by other domestic producers; to reduce this risk would encourage inefficient production. There should be adequate incentives for
development of new products, for innovation in production methods, and in
general for measures that reduce the social cost of producing energy.
One way to achieve the capability for energy self-sufficiency is to provide
selective incentives for the introduction of designated new sources of energy,
such as shale oil or synthetic gas from coal. For example, the Government
could agree to purchase a specified amount of shale oil, over a number of
years, at a guaranteed price. If the market price is above the support level,
there is no need for the Government to act; but if the price falls below the
support level, the Government would make deficiency payments to producers. Such action would encourage the development and construction of
the necessary shale oil production facilities, while market forces would determine prices to producers of other types of energy and to energy users. This
proposal results in lower profits to producers of conventional energy resources, for which no price guarantee is made.
A drawback of the proposal is that different energy sources would have
different prices, thereby leading to an inefficient resource use. Moreover, the
Government would be required to determine which new sources of energy
to support. There is also a likelihood that production from nonsupported
energy sources would be discouraged and that the Government could be
forced to support an ever-increasing part of the market. For these reasons
many believe it would be preferable to rely on general market incentives
rather than selective subsidization.
It is also important to recognize that the exercise of monopoly power by
the oil-exporting countries has increased the real cost of energy to the United
States. Although Project Independence will reduce energy prices below the
prices currently charged for imports of petroleum and liquefied natural gas,
the cost of energy is unlikely to return to the pre-1973 levels. It is therefore
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important that the higher costs be reflected in the prices paid by consumers,
to ensure that they economize on energy use.
Another way to achieve the capability for self-sufficiency is to give domestic energy producers assurance that import prices would not fall below certain levels. Variable tariffs could be used to ensure that prices of imported
oil and natural gas do not fall below such levels. This would ensure competition among domestic producers and would encourage development of
the lowest-cost domestic sources of energy. The price of all energy sources
would reflect their value to consumers and would therefore encourage
efficient use.
An important factor in selecting an appropriate policy is the responsiveness of domestic supply to changes in price. Restricting energy imports may
appear to be an attractive option if it is believed that the long-run domestic
price will be, say, $5 per barrel of crude oil. But if the cost is expected to
be triple that amount, import restrictions appear decidedly less attractive.
Role of Imports
At least until 1980 the United States will continue to depend on oil imports
to supplement domestic production. As domestic energy output expands, it
will be possible gradually to reduce this dependence. If imports can be obtained at a sufficiently low price, however, without posing a threat to our
national security, they can continue to play a role in our long-term energy
policy.
The risks associated with petroleum imports could be substantially reduced
by means of a storage program. Petroleum could be stored both in salt domes
and in the form of oil fields with shut-in production capacity. In the event
of an unexpected curtailment of oil imports, the salt dome storage would
be immediately available to offset the loss of foreign supplies; and the shut-in
capacity would be available within a few months to supply petroleum until
it is possible to produce from new wells. On the basis of the level of imports
and an assessment of the risk of an actual or threatened reduction in foreign
supplies, the Government could determine the appropriate amounts of storage and shut-in capacity.
Energy Research and Development
The principal object of a Federal energy research and development
program is to develop new technologies that permit the production
and use of energy at a lower cost to society, either by reducing the cost
(including the environmental cost) of providing a given amount of energy
or by reducing the quantity of energy needed to produce a given output of
goods and services.
Until recently, most energy research and development has been conducted
by the private sector. There is now a need for the Government to play a
more active role, partly because of the long-term nature of many energy
research and development projects and partly because of the fundamental
nature of much of the research that is needed. There are other reasons. The
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payoff from such projects depends critically on future Government policies
with respect to environmental control, leasing of mineral rights, and import
restrictions. It may therefore be unusually risky for private investors to
undertake this research. Many kinds of research and development concerning energy involve benefits to society as a whole that cannot be fully captured by the investor, so that it is unprofitable for any one firm to conduct
the research. Finally, the interdependence among projects provides a compelling case for the Government to provide an overview and to coordinate
research and development in the energy field, though not necessarily to
conduct the research itself.
There is an additional potential benefit that might result from an energy
research and development program. By making a coordinated effort to
develop those technologies required to ensure self-sufficiency, the United
States will improve its bargaining power vis-a-vis the oil-exporting countries.
In this way a federally coordinated energy research and development program may play an important role in forcing the world price of oil down to
the competitive level.
A major component of Project Independence is a stepped-up program of
energy research and development. The Administration has recommended
an expenditure of $10 billion over a 5-year period beginning with fiscal
1975. This program is principally addressed to the accomplishment of six
tasks:
1. Improving the efficiency of energy use and of the conversion of fossil
fuels to electric power.
2. Increasing the domestic production of petroleum and natural gas.
3. Expanding the use of coal.
4. Increasing the use of nuclear power.
5. Developing renewable energy sources.
6. Reducing the environmental effects associated with all stages of energy
production and use.
The Administration's research and development program represents an
important step in moving the economy toward an established capability of
being self-sufficient in energy production. However, the program deals only
with the technological aspect of energy production and use.
Energy production is limited not only by the state of current technology,
but also by economic incentives. The prospect of higher energy prices will
accelerate the development and application of technological advances by
the private sector. If the private sector is given a larger role in Project Independence, expenditures on research and development will be more closely
geared to those techniques likely to become commercially applicable, thus
further assuring the success of the program.
ENERGY AND ENVIRONMENTAL POLICY
The Nation's urgent need for adequate and dependable supplies of energy
has raised concerns about how efforts to fill the need will affect the goal of
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improving the environment. The fundamental premise of economic policy
is that the Nation's total resources must be allocated as efficiently as possible.
This concept includes careful allocation of our scarce environmental resources, but it does not follow that environmental policy should be insulated
from other problems and policies.
In enacting laws to protect environmental quality, Congress was responding to the strong public demand that environmental resources—clean air,
water, and land—should be enjoyed as amenities rather than used as
receptacles to absorb residual wastes of production and consumption. The
new legislation set environmental standards that would be costly to achieve,
but it did so with the presumption that the goals were worth the costs. However, the standards also assumed certain basic cost relationships among the
additional resources devoted to meeting the standards; the energy crisis has
disrupted these relationships by sharply raising the cost of fuels.
As the price of energy increases, environmental policy provisions that call
for significant consumption of energy become more expensive, and energyconserving provisions become cheaper. If policy adjustments are not made,
unnecessary amounts of society's scarce energy resources will be used to
attain any given level of environmental quality. Adjustments to avoid
such waste do not represent a change in the relative importance that either
the Government or the public places upon environmental quality. Instead,
they are similar to the reduction in consumption that occurs if the price of
any commodity increases significantly while other nonprice influences on the
consumption of that commodity remain unchanged. The appropriate shortterm adjustments indicated in environmental policy because of energy price
increases have two requirements: First, they must accurately reflect the increased scarcity of energy expected in the near future; second, they must
not interfere unnecessarily with appropriate adjustments to the somewhat
less intense scarcity of energy likely to prevail in the more distant future.
Thus, provisions of environmental policy that save energy become cheaper,
and as a result comprehensive efficiency criteria indicate a greater use of
them. For example, to achieve the air quality standards specified in the Glean
Air Act, the Environmental Protection Agency (EPA) has stated that a very
substantial reduction in the number of vehicle miles traveled (VMT) by
automobiles and lightweight trucks will be necessary in several large urban
areas. This reduced fuel consumption would be desirable both in countering
the energy crisis and in improving the environment. Since higher energy
prices reduce the costs of such VMT reductions, efficiency criteria suggest
faster implementation of this particular environmental policy. In accordance
with this view, the Administration has acted to provide on a priority basis
for substantial funding of mass transit in areas in which air quality will
require large VMT reductions.
The theory of implementation in the Clean Air Act calls for the States
to formulate plans to achieve the act's air quality standards. The act requires only that the more important primary or human health standards be
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met in 1975, but stipulates a "reasonable period of time" for attainment of
the secondary standards which are intended to protect esthetics and vegetation. However, some States required in their plans that the secondary and
primary standards be reached at the same time, and this became legally
binding under the Clean Air Act. Such advanced timing of the environmental goals would require much more low-sulfur coal than is now available
domestically. It would also seriously constrain the ability of other States to
reach the more urgent primary or health standards. Although estimates
vary, the so-called clean fuels deficit is roughly equivalent to one-quarter to
one-half of all coal burned in 1970. In States with advanced secondary
standards and in States where the primary standards will not be met, the
only legal course open to coal-burning utilities would be to switch to lowsulfur oil or natural gas. In a period of high prices and short supplies for
these fuels, such substitution is inefficient.
The Administration has therefore proposed in the Emergency Energy
Act to give the EPA the authority to postpone attainment of the secondary
air quality standards in States where such action would reduce the clean
fuels deficit. One longer-term danger of this action, however, is that it
removes some of the incentive that users of high-sulfur coal would have
to develop improved emission control technology. A relatively easy way
to restore this incentive, and give it a more efficient form, would be congressional enactment of the Administration's sulfur emissions tax proposal.
This example of the adjustments in enviromental policy that are
indicated by higher energy prices is only a postponement of an implementation schedule, not a lowering of standards or other change in the policy
itself. As a short-run response to the energy crisis, postponement has two
advantages over a structural policy change. It entails less risk of obstructing
the realization of long-term goals of environmental policy; and it avoids adding to the uncertainty about these goals which might inhibit the investment
required by both energy and environmental needs.
Efficient Environmental Policy: The Post-Crisis Challenge
Although postponing the implementation of environmental standards is
preferable to revising such standards, one should not conclude that current
standards are optimal and need no revision. Indeed, the standards—
particularly those in the Clean Air Act—should be regarded as interim
and provisional targets that reflect the urgency of the Nation's commitment to environmental protection at the time they were adopted. These
standards may become more stringent or less stringent. In any event, they do
not yet embody the careful distillation of scientific knowledge that will be
required for the most efficient use of our scarce environmental resources in
the longer run.
For example, air quality standards permit only specified concentrations
of a limited number of particular pollutants in the ambient air. But, although
concentrations of some pollutants might damage health or create other costs
for some individuals, regulations to limit processes that release particular
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pollutants into the atmosphere will also impose costs upon others. Standards
ought to be based on a careful balancing of these risks, costs, and benefits, as
they would be perceived and evaluated by fully informed individuals.
Not enough is known, however, about the ways in which activities that result in the release of pollutants are linked with ambient air quality to permit
such a balancing, nor is enough known about the effects of various concentrations of pollutants upon human health. Another consideration is the efficiency of the means employed to reach optimal environmental standards once
they are identified. Thus far, legal and administrative regulations and directives have been the principal instruments. Administrative capacity and legal
enforceability require that these regulations be uniform and relatively simple.
At the same time, the activity and organizations they seek to regulate are
complex and varied. If individuals and enterprises had more discretion and
flexibility, specified standards could be attained at a lower cost and with
fewer scarce resources. Taxes, emission charges, and user charges are mechanisms that introduce this flexibility and efficiency into environmental
protection.
AGRICULTURE
The problems and policies of American agriculture since the 1930's have
been predominantly related to excess productive capacity and the adjustment
of resources to that condition. A related condition was an underlying instability in agricultural prices and incomes brought about by variability in food
production and foreign demand, and intensified by a slow response by
consumers and producers to changes in prices. Government restrictions on
farm output, which were adopted to deal with the problem of excess capacity, as a by-product also tended to reduce price instability.
In 1972 circumstances began to change in agriculture. One reason was a
sharp rise in the demand from abroad for U.S. farm products. By 1973 the
higher level of exports had eliminated almost all excess capacity, and longstanding restrictive agricultural policies were modified to encourage all-out
production. In an important sense the disappearance of chronic excess capacity should be recorded as a success. With its disappearance, however, the
second problem, instability, has now taken on more significance.
Wide swings in farm and food prices contribute to instability throughout
the economy. This became especially clear in 1973 when rising food prices
accelerated the overall inflation rate. Although instability will at times lead
to reduced farm prices, there are existing standby measures that cushion the
decline in farm incomes. Comparable measures do not exist at present to
moderate an acceleration in consumer food prices.
New conditions now face agriculture. They have raised a new set of issues
that are discussed in this section.
AGRICULTURE: FULLY EMPLOYED
The stabilization of agricultural markets, especially for grains, was an outgrowth of two related public policies designed to support farm income. There
128
was an underutilization of productive capacity in the farming sector, measured in terms of available cropland, underemployed labor, and underutilized
capital equipment. In recent years this underutilization was a result of Government programs that provided payments to farmers and concurrently diverted or "set aside" land from production, usually on an annual basis. Since
the early 1960's about one-sixth of the Nation's cropland was recorded as
being withheld from production under Government land retirement programs. In addition to withdrawing land from production, farm programs
caused sizable stocks of several commodities to be accumulated by the Government. Because of the stockpile program, substantial short-term fluctuations in either production or demand were largely offset by the accumulation
or release of stocks of farm commodities under the various price support
programs. These policies reduced instability in farm markets over the years
at considerable cost in both Government budget outlays and intervention by
the Government in the agricultural sector. As experience was gained, legislative and administrative actions were taken to "fine tune" production and restrict what was viewed as excessive accumulation of commodities under
Government control. By the early 197O's the programs had become very
effective in controlling total crop acreage to mesh prospective production
with expected demand. Actual production varied, of course, with yields per
acre, which were influenced by weather conditions. Nevertheless, a clear
downward trend in stocks was evident and reflected the direction of Government policy (Table 31).
TABLE 31.—U.S. grain stocks compared to grain utilization, selected periods, 1950—73
End of marketing year stocks as a percent of total
utilization
Marketing year
Wheat
Annual average:
1950-54
1955-59
1960-64
1965-69
1970-73 »
52.1
102.7
96.5
44.4
45.8
1970
1971
1972..
19731
64.2
48.6
58.0
21.7
Feed
grains
Rice
8.5
48.1
14.0
11.5
14.6
24.9
43.0
49.4
28.4
21.2
18.3
23.0
12.4
27.1
18.9
25.1
15.0
5.7
Soybeans
2.9
9.6
8.6
15.1
9.2
18.7
7.8
6.0
4.6
» Preliminary.
Source: Department of Agriculture.
Disappearance of "Excess Capacity"
For years it was fashionable to talk of "excess capacity" in agriculture.
The measure most widely referred to was the acres of cropland that were
idled each year by Government programs. That measure seemed to be an
adequate approximation, because if more output and hence more land
were demanded the complementary inputs—labor, machinery, fertilizer,
and seeds—would also be available to expand production. Several decades
129
of research and rapid mechanization had resulted in an abundance of these
other inputs, particularly of labor, because of a continuous flow of worksaving technology into agriculture. If more production were needed—more
crops, more livestock, or both—the resources were already on the farms of
the Nation or could be readily purchased. Only during World War II, when
vast amounts of manpower had been drawn off the farm, was a shortage of
labor apparent. After that period, agriculture experienced a long succession
of years with excess land, excess labor, and abundant supplies of purchased
inputs.
This situation led to a widespread view that excess capacity was endemic in
U.S. agriculture and that it would be large enough to cover almost any potential shortfall in worJd food production. Given time to expand production,
the Nation's farmers could produce more of everything—more grain and soybeans, as well as more meat, milk, and other farm commodities—without
substantial increases in costs or prices.
The amount of labor employed in agriculture adjusted downward
throughout the 1950's and 1960's (Table 32). Without its being generally
realized, the availability of labor to produce more livestock as well as crops
slowly approached a balance with normal requirements for food production.
So long as productivity of manpower in agriculture was growing rapidly
from the addition of new capital equipment or other technological innovations, the remaining workers could meet the requirements for larger output
without interfering with the continued exodus of workers from the agricultural sector.
TABLE 32.—Change in inputs used in farming, 1950 to 1973
Percent change (annual rate)
Period i
Cropland
Farm labor
Machinery
Fertilizer
1950 to 1955
1955 to 1960
1960 to 1965
1965 to 1970
1970 to 19731.
-0.8
-1.2
-1.3
.0
2.8
-3.7
-4.5
-4.2
-3.6
-.5
2.9
- 2
14
.3
5.9
4 7
8.2
69
2.6
1969 to 1970
1970 to 1971
1971 to 1972
1972 to 19731
1.0
4.1
-3.6
9.5
-5.3
-1.1
-3.4
4.7
-1.0
2.0
-1.0
2.9
2.7
7.1
-.8
3.3
1
Preliminary.
Source: Department of Agriculture.
Labor productivity and farm output were moving uniformly upward until
at least the mid-1960's. Then, recent evidence suggests, some of the trends
flattened out. This was especially true in livestock production, which is more
labor intensive than field crop production. The annual rate of increase in
livestock output declined from 1.7 percent for each year in the 1960-65
period to 1.6 percent in 1965-70, and to only 0.9 percent annually after 1970
(Table 33). The reduced availability of labor placed new restraints on expansion of livestock production. Trade-offs between more crops or more
130
TABLE 33.—Production and productivity in agriculture, selected years, 1950 to 1973
Percent change (annual rate)
Period
Crop
output
1950 to
1955 to
1960 to
1965 to
1970 to
1955
1960
1965
1970
19731
Livestock
output
0.9
2.3
1.0
2.0
4.2
2.1
1.3
1.7
1.6
.9
Crop
output
per acre
1.3
3.7
2.0
1.8
2.4
Livestock
output per
feed unit
1.3
-1.7
-.3
.1
-1.5
i Preliminary.
Note.—Annual rates of change are based on 3-year centered averages for years shown except for 1973 which is for a
single year.
Source: Department of Agriculture.
livestock became more significant, although their existence went largely
unnoticed until the burst of additional export demands for farm products
after mid-1972. When market prices and Government policy encouraged
stepped-up farm production, the response was less than expected. Additional
acres were planted, and crop production rose. Meanwhile livestock production declined in aggregate, and the indexes of labor used in agriculture,
which have been declining steadily for years, either increased or declined
only marginally in 1973. These results suggest that some significant changes
had occurred in the structure and excess capacity of American agriculture.
The persistent decline in the hours of laoor employed on farms at least
temporarily bottomed out in the past year. If the long downward labor
adjustment is largely over, agriculture will have to provide higher returns
to labor in the future in order to compete with the nonfarm sector for
workers.
The growth in productivity of all inputs used in farm production has
shown some slowing, although there is no indication of a plateau. Nor has
the rate of increase in yields of crops shown a decline. But the productivity
of feedstuffs used in livestock production has shown some decline, partly
because until recently it was economical to substitute feedstuffs for forages
in dairy and beef enterprises. Dairy products and meat are an important part
of consumer food budgets and continuous improvement in the efficiency of
feed conversion would help to hold down their real cost. For this reason
there may be a need to review the organization and use of public funds in
livestock research.
Expanding Farm Exports
Growing exports have been the immediate cause of the new pressures
on agriculture's productive capacity and have contributed to the shift toward
crop production, particularly since mid-1972. For years the United States
has nurtured foreign markets for food and fiber with Government supported export promotion efforts. A few months before the burst of world
demand for U.S. agricultural products, projections had suggested that a
record $10 billion of exports could be achieved by 1980, up from $8.0 bil-
131
lion in fiscal 1972. Actually the accelerated foreign purchases since mid1972 caused agricultural exports to reach $12.9 billion in fiscal 1973 and
$17.5 billion in calendar 1973. About 60 percent of the increase in fiscal
1973 was caused by increased volume; the remainder came from higher
prices.
Causes of export growth. An important question is whether the increased
demand for exports is traceable to abnormally poor weather conditions in
other countries or a longer-term rise in world demand. Both of these have
contributed to export demand in the 1972-73 period. Poor crop harvests
during 1972 in many countries were certainly a major factor: world grain
production fell 2.7 percent below the previous year.
However, there are two reasons to believe that U.S. exports have moved
to a higher plateau. First, the demand for red meat and poultry in Western Europe and Japan has been expanding as incomes improved. The
sharp economic expansion of 1972-73 combined with the depreciation of
the dollar to augment this basic trend in 1973. In fiscal 1973, Japan and
Western Europe accounted for about one-half of the growth in export
volume.
The second factor has been growing markets in the Soviet Union, the
People's Republic of China, and Eastern European countries. The key here
is primarily how much these countries import in total, not how much they
buy from the United States. The initial U.S. sales of grains to the U.S.S.R.
in mid-1972 were caused partly by very poor Soviet crops, but they also
stemmed from an earlier Soviet policy decision to improve consumers' diets.
Implementation of the decision will mean higher Soviet grain imports, on
average, in the future. Their grain purchases in 1972-73 together with
Chinese purchases accounted for about a third of the increased export volume of U.S. grain in fiscal 1973. Even if such purchases are smaller in the
future, they can be significant in maintaining exports at high levels.
Domestic market complications. Isolated from domestic food markets,
the record on farm exports is impressive. However, the greatly expanded
exports have had significant implications for domestic food markets. When
more feedstuffs are shipped abroad, the result is increased competition
and higher prices for the remaining supplies. This became clear in 1973
as the production of livestock products failed to respond to sharply higher
livestock prices. The very large exports of feed grains and oilseeds raised the
costs of livestock production, thus reducing incentives to producers.
The problem was highlighted in 1973 when the contracted supplies of
soybeans for export were thought to have exceeded the amount that would
be available after domestic demands were met. This finding led to a temporary embargo and a later licensing of exports of soybeans (and related
products) for the months of July through September. After harvesting of
large crops began in the fall months, all restrictions on exports were removed,
although a newly instituted reporting system on forward export sales was
continued under new farm legislation passed in 1973.
132
The controls on soybean exports seemed justified by special circumstances
which made domestic processors and livestock producers unable to pay world
prices for the available supplies of soybean products. The ceiling prices on
red meats in March, the later freeze on all food prices in June, and the rising
costs of feedstuff's combined to place producers in a severe profit squeeze. As
a result, they cut back their production plans and began to slaughter breeding animals, a response that could have seriously reduced food supplies for
many months and even years if it had continued. However, the export controls raised serious conflicts among a variety of national objectives. Removal
of meat price ceilings and the earlier termination of all special efforts to
expand exports gave domestic and foreign buyers equal access to U.S. supplies of feedstuff's and food commodities, thereby reducing the necessity of
export controls.
*
*
*
*
*
*
*
The recent shifts in resource use and output mix in agriculture have occurred in response to increased worldwide demands for agricultural products and tighter domestic supplies of farm resources. These changes have
brought an end, at least temporarily, to the chronic excess capacity in agriculture. Exports have expanded swiftly, so much that large carryover stocks
of grain commodities have been depleted. With supplies of feedstuffs for
livestock extremely tight, livestock production has stopped expanding. Crop
and livestock production are now competing more directly for the Nation's
farm resources. Over the last year, extensive adjustments have occurred in
agriculture in response to changing price relationships and sharply rising
prices. Tightened markets for food have brought a new awareness of many
interrelationships that could be safely ignored during periods of surpluses
and have made policy decisions relating to food and agriculture more
complex.
AGRICULTURAL POLICY FOR THE FUTURE
Significant progress has been made in the past decade toward less Government intervention in and control of farm production. The agricultural
acts passed in 1965 and 1970 moved the Government out of mandatory control programs for major farm commodities and provided a more flexible and
effective means of controlling farm output. Another significant step toward
making farm legislation more market oriented was taken when Congress
passed the Agriculture and Consumer Protection Act of 1973, whose principal innovation is a system of target prices for wheat, feed grains, and
cotton. When market prices are above the targets, no Government "deficiency payments" are made to farmers and the Government has little involvement in agriculture. In years when market prices fall below the target
prices, Government payments to farmers make up the difference between
target and market prices on base production. The Government also places
a floor under market prices by being ready to purchase crops from farmers
at relatively low prices. Farmers are thereby assured in two ways of at least
133
a minimum income. Unless prices fall so low that the Government begins to
accumulate inventories of commodities, however, its role is limited to making
deficiency payments when they are required.
With this change in basic farm programs, market prices assume more
importance in guiding resources into production. Market prices will also have
greater importance in allocating U.S. agricultural products among competing buyers. The intensity of market competition is likely to be much greater
in the coming year than was true under the surplus conditions of the past.
The Need for Improved Information
The 1973 act is particularly well suited to current conditions in agriculture. It permits the market to signal to farmers what priorities domestic
and foreign purchasers are placing on various commodities and products.
The act allows, and indeed mandates, the Government to provide market
information to the private sector, so that decisions will be based upon the
fullest possible knowledge about trends in market conditions. In fact, the
production period for both crop and animal production is so long that
current prices may be a misleading guide to the most profitable future
operations. Under these conditions, advance information is especially
necessary for efficient farm production.
Export demand is one important area in which a deficiency of information became apparent in 1973. The Administration has taken a number of
steps to improve the flow of current economic intelligence regarding worldwide agricultural developments through consultations with other countries.
Among other actions, it initiated a World Food Conference to be held in
1974 under the auspices of the United Nations. A bilateral agreement has
been signed with the U.S.S.R. that will make possible more accurate forecasts
of worldwide production and demand. The agreements between the United
States and the Soviet Union will facilitate more prompt exchange of information on crop and livestock production. In June the Department of Commerce initiated a reporting system for forward export sales of major agricultural products. The new farm legislation later made this a permanent
system under the administration of the Department of Agriculture.
Steps also have been initiated to improve domestic farm and food forecasting and planning. The Department of Agriculture has requested, and
the 1975 budget will contain, increased funds to strengthen its information
and analysis services to the rest of the Government and the private sector.
The need and scope for such activities were less as long as agricultural reserves existed in the form of stockpiles or idle acres. Under today's conditions, it is essential to give high priority to this aspect of the Government's
work.
Government Food Stockpiles
One very important issue has emerged in 1973 and remains unresolved:
What policy should the Government pursue on grain stockpiles? In the
past two purposes have been served by such stocks: as "operating stocks"
134
which the private sector needs if it is to function normally, ai. ' thus would
elect to hold; and as "contingency reserves" over and above normal operating requirements to cover variations in production or demand.
As discussed above. Government policies were directed toward and succeeded in gradually reducing grain stocks in recent years. In earlier years,
a substantial fraction of stocks had been held by the Government; but virtually all of these were released in 1973, and total stocks reached the lowest
level since 1953. Stocks of wheat, in particular, are only adequate to provide
for normal operating inventories this year; contingency reserves are nonexistent both in the United States and in the world.
The unusually low grain reserves mean that the world is at present
more vulnerable to poor harvests than it has been for some time. But stockpiling obviously cannot begin until world production levels have been built
up. Otherwise, such a step would cause already high prices to escalate further, or necessitate a system of nonmarket allocations. Once a more normal
supply-demand food balance is restored, which should begin to occur in
1974-75, stocks can be accumulated again. In the past the world has sought
protection against crop failure by relying upon stocks held principally by the
United States and Canada. Although this arrangement has worked, the
current supply-demand conditions provide an opportunity to improve on
the system. The Administration is exploring several approaches which,
through cooperative action, could improve supply stability:
1. As a minimum, improved worldwide information flows are necessary
to signal a tightening of supply-demand conditions as promptly as
possible. Producers and consumers will then have the best opportunity
to react to higher market prices.
2. Beyond that, multiyear forward sales contracts negotiated either privately or by governments could be used to provide more supply stability. Events of 1973 have encouraged importing countries and exporting firms to seek commitments looking farther into the future.
These contracts can contribute to greater stability because they provide valuable information on prospective export demand to supplying
countries and because production can thus be planned to meet contract
sales.
3. A broader approach has been put forth by the Food and Agriculture
Organization of the United Nations. It would seek to establish stockpiling guidelines that participating countries would follow in developing their national policies. The system would be voluntary; but to
the extent that the guidelines were appropriately set and complied with
this approach could increase supply stability.
4. A more rigorous approach would be to establish an essentially autonomous international agency having the resources to operate a buffer
stock. Such schemes take various forms. They all present common problems, however, with regard to control, financing, and interference with
desirable market activity.
135
The Administration supports the examination of multilateral approaches
to the stockpile issue. It also recognizes that this country has an interest, as
the world's major exporter, in maintaining necessary levels of stocks, since
otherwise we could not be a reliable supplier of food for the world. It is
also in this country's interest to have adequate stocks to provide a measure
of domestic price stability. According to preliminary estimates a contingency reserve would not have to be large or costly in order to offset most
instances of poor harvests or abnormal demand. Large costs in the past have
grown out of excessively large stock build-ups under price support programs. The prospects are reasonably strong that market conditions will not
again lead to excessive stock-building in the near future. Any accumulation
of contingency reserves would therefore require that the Government purchase commodities in the market or have ready access to farm-held stocks
under the Government loan program.
Agriculture has always been a cyclical industry; and the fluctuations,
though relatively minor, have been around a trend of general abundance in
the United States. One cannot say with certainty whether the unusually tight
markets of 1973 signal a turning point toward a period in which fluctuations
will be around a trend of relative scarcity, or whether 1973 represents only
an abnormally large cyclical swing. This increased uncertainty implies that
agriculture must be prepared to adjust to market developments as promptly
and efficiently as possible. The current Government policy, with minimum
restrictions on market mechanisms, is designed to make that possible.
136
CHAPTER 5
Distribution of Income
I
MPLICITLY OR EXPLICITLY, MOST DISCUSSIONS of the performance of the American economy and the economic role of the Government are concerned with the growth of national income and the way it is
distributed.
Three fundamental principles of equity concerning the distribution of
income are widely accepted: those who produce the same amount should
be rewarded equally (horizontal equity) ; those who produce more should be
rewarded more (vertical equity); and no individual or household should be
forced to fall below some minimum standard of consumption regardless of
productive potential. Although there is fairly general agreement on these
principles, the desirability of any given amount of inequality in the income
distribution remains a matter of personal judgment and of social and political debate.
One of the principal social debates has been about the extent to which
those having high incomes should share with those having less. Among its
chief objectives, the Government seeks the proper balance between redistributing income to the disadvantaged so that they may have the basic
amenities of life and allowing a reward system which gives individuals incentives to work to their fullest capacity.
OUTLINE AND SUMMARY
This chapter looks at the distribution of income among families and individuals and examines some of the government policies which have influenced it. The chapter considers the distribution of income among individuals and families and among various classifications of the population:
age, sex, and race.
While the inequality of family income is quite stable over the long term, it
varies over the business cycle. Inequality increases during a recession and
decreases in an expansion. This is a consequence of the variation in weeks
worked that occurs because of changes in the unemployment rate.
Because the concept of income used to measure inequality is essentially
limited to money income before taxes, these measures need not reflect the
true inequality of economic well-being. Some sources of income which are
omitted would increase measured inequality and others would decrease it,
137
and estimates of some of these effects are given. While those omitted sources
which would decrease family income inequality have been growing in importance over time, there exists no such presumption concerning the omitted
sources that would increase it.
Many factors, such as schooling and on-the-job training, determine the
inequality of earnings among workers. Differentials in the earnings of whites
and blacks, and of males and females, are analyzed with respect to the contribution to the differential made by training and other factors that influence
productivity. Past discrimination has contributed to current differences in
productivity because of the once widespread barriers to equivalent schooling and on-the-job training. Because of the difficulties of measuring productivity, no conclusion could be reached about the magnitude of current labor
market discrimination against blacks or women. For the same reason it is
difficult to determine whether labor market discrimination has declined with
time, although there is a strong presumption that it has. For men, the blackwhite earnings differential has narrowed, and much of the change may be
due to a narrowing of educational differences. The narrowing of the differential has been much more dramatic for black women, however, and
outside the South black women now receive a higher wage rate than white
women. This development is largely due to black women's greater lifetime
attachment to the labor force, and hence their greater level of experience and
training.
The differential in hourly earnings between men and women has widened
over time, and this change reflects the relative decline in education and
experience of women in the labor force. With the rapid increase in the
labor force participation of women, the female labor force has become
increasingly composed of recent entrants with fewer years of schooling and of
experience. Younger women are, however, showing less tendency to withdraw from the labor force for a prolonged period; as the age of these cohorts
increases and they come to comprise a larger proportion of women in the
labor force, the experience and earnings differential between men and
women should decrease.
Widespread concern is felt about those whose incomes fall below a level
needed to maintain an adequate living standard. There has been a marked
decline in poverty, as conventionally defined, from 39 million persons in
1959 to 24 million persons in 1972, in large part because of economic
growth, which increased wage rates and employment opportunities for men
and women, and permitted larger social security and pension benefits. Increasingly the poor are living in families in which there is no adult worker,
and increasingly the family is headed by a female.
The Federal Government has several programs—some operated on its
own, others in conjunction with the States—which are intended to decrease poverty. Aid to Families with Dependent Children (AFDC) is the
most important Federal-State program designed explicitly for poor families
in which there is no employed male head. The 3.1 million AFDC families
138
in 1972 represent nearly a threefold increase in the number of AFDG
families since 1965. This increase can be partly explained by the spread of
knowledge about the program and the lessening of the social stigma attached
to it. In addition, the faster rate of increase of benefits to AFDG families,
compared to average wages, contributed to the change by making the incentives greater for an existing female family head to apply for benefits, as well
as giving women an incentive to head a family.
Social Security is the largest single Federal transfer program, with 28
million recipients of old age, survivor, or disability benefits in fiscal 1973.
Many of the recipients of old age and survivors' benefits were in families
classified as in poverty. For many others, however, social security kept their
income above the poverty level.
The Federal Government also transfers economic resources to aged and
low-income families by subsidizing the price of food, medical care, and housing. The Food Stamp Program, initiated in 1961, subsidized the purchase
of food for 12.6 million recipients from low-income families in fiscal 1973.
The average monthly subsidy (of $15.30 per individual recipient in July
1973) represents a substantial contribution to the economic well-being of
many low-income families, although the food stamp subsidy is not counted in
the measure of income used to define poverty.
A rapidly growing source of Federal transfers to the aged and the poor
is medicare and medicaid, which lower the cost of medical care to the
recipients. In fiscal 1973, 10.6 million people received medicare benefits, and
23.5 million received medicaid benefits.
The combined effects of the tax and transfer mechanisms of Federal,
State, and local governments appear to redistribute income toward lowincome families. Various studies have concluded that when accrued capital
gains are included in income the tax system is roughly proportional in the
income ranges in which most Americans are located, but regressive for very
low incomes and progressive for very high ones. However, some government
transfers have a strong effect of redistributing income to low-income
families. These include public assistance programs, social security, food
stamps, medicaid, and medicare.
THE CHANGE IN INEQUALITY OF FAMILY
AND INDIVIDUAL INCOME
Between 1947 and 1972 median family income, adjusted for the rise in
prices, doubled. This rapid increase in the overall level of income tells us
much about the change in living standards, but it tells only part of the
story. The extent to which the gains from economic growth have been diffused throughout the population is also important.
SECULAR CHANGES
There are various ways of illustrating the distribution of income among
persons and of measuring the amount of inequality in the distribution.
139
Since families typically pool their incomes, the distribution of family income
is a particularly useful indicator of the distribution of economic well-being.
One common measure of inequality shows the percentage share of aggregate
money income before taxes received by each fifth of families ranked by
income. Quite remarkably, relative income shares measured in this way have
hardly varied in the 25 years between 1947 and 1972 (Table 34). Thus in a
relative sense the rich were not getting richer and the poor were not getting
poorer. In this period the average income of each quintile increased at much
the same rate. If anything, there seems to have been a slight tendency
towards greater equality, since the share of measured income received by the
top 5 percent declined somewhat from 1947 to 1972. The decline in the
income share of. the top 5 percent may be a consequence of the secular
decrease in the share of national income received by the owners of nonlabor
factors of production.
TABLE
34.—Share of aggregate income before taxes received byl each fifth of families, ranked by
income, selected years, 1947-72
[Percent]
1947
Income rank
Total families
Lowest fifth
Second fifth
Third fifth
Fourth fifth
Highest fifth
Top 5 percent
1950
1960
1966
1972
100.0
100.0
100.0
100.0
100.0
5.1
11.8
16.7
23.2
43.3
4.5
11.9
17.4
23.6
42.7
4.8
12.2
17.8
24.0
41.3
5.6
12.4
17.8
23.8
40.5
5.4
11.9
17.5
23.9
41.4
17.5
17.3
15.9
15.6
15.9
iThe income (before taxes) boundaries of each fifth in 1972 were: lowest fifth—under $5,612; second fifth—$5,612$9,299; third fifth—$9,300-$12,854; fourth fifth—$12,855-$17,759; highest fifth—$17,760 and over; top 5 percent—
$27,837 and over. Income includes wages and salaries, proprietors' income, interest, rent, dividends, and money transfer payments.
Note.—Detail may not add to totals because of rounding.
Source: Department of Commerce, Bureau of the Census.
The general impression that no significant trend has developed in the
relative inequality of income among families is confirmed by other measures of inequality. For example, the variance of the natural logarithm of
income, a measure which takes into account dispersion throughout all ranges
of income, shows no trend in the dispersion of family income throughout
the post-World War II period. (See the supplement to this chapter for an
explanation of this measure.)
A family's income depends on the amount of work the different family
members perform, on the earnings they receive, on the monetary return from
property owned by the family, and on transfers received from the government. Underlying the distribution of family income then is the distribution of
individuals' incomes. For males 35 to 44 years old or those 25 to 64 there is
no trend during the post-World War II period in income inequality. However, in all years inequality is greater for the 25-64 age group than for the
35-44 age group, and this reflects the change in earnings with age. Thus,
measures of inequality for broad age groups merge the inequality resulting
140
from differences between lifetime incomes with the inequality that results
because individuals do not earn the same income in successive phases of their
lives.
An increase does occur over time, however, in the inequality of income for
males 14 years of age and over, and in the inequality of income for all members (male and female) of the labor force. The increasing inequality for all
male workers and all workers results mainly from the greater proportion
of workers with part-time and part-year work schedules, rather than from
an increase in the inequality of wage rates. The growth of part-time and
part-year work may to some extent be attributed to a shift in industrial
composition towards the service industries, where flexible hours are more
common, and partly to the increasing desire among workers for flexible
schedules with shorter hours. Such schedules are particularly attractive to
students, semi-retired older workers, and married women. Associated with
the increasing importance of these groups in the labor force has been a secular increase in the variability of annual hours worked and consequently in
the variability of annual income for the labor force as a whole.
Since most families (75 percent in 1972) are husband-wife families with
a working husband, the stability in the dispersion of adult male incomes has
been one factor leading to stability in the distribution of family income. The
increase in the proportion of wives with earned income evidently did not
lead to increases in the relative inequality of family income, partly because
husbands' and wives' annual earnings have not been positively correlated.
In the future, if a strong positive correlation between husbands' and wives'
annual earnings should develop, this correlation could be a factor in increasing the relative income inequality among families.
Stability of Income Inequality Among Adult Males
It is striking that there has been no change in the relative inequality of
income among adult males. The greater opportunities for schooling among
persons at all income levels and the larger subsidies for training less advantaged persons might have been expected to reduce earnings inequality
in the past 20 years, but the relation between equal access to training or
schooling and earnings inequality is not so straightforward.
The post-World War II period has brought a narrowing of differences in
years of schooling among adult males, and this alone generally decreases the
inequality of lifetime income. In the same period, however, the level of
schooling has greatly increased. A recent study suggests that at higher levels
of schooling the relative dispersion of wage rates tends to be greater than at
lower levels, and that the effects on income inequality of the higher level and
of the smaller variance in years of schooling have somewhat offset each other.
Greater equality of opportunity could also lead to increases in income inequality if investments in schooling or training became more closely related
to ability. Generally, more able people receive a higher money return on an
equal investment in education. In a world where financial access to schooling
and training depend on family income (and assuming that family income and
141
527-867 O - 74 - 10
ability were not perfectly correlated), extending equal financial access to
such investments for all people, regardless of income, could result in those
with more ability investing more. In that case inequality could increase.
Obviously many factors other than education influence earnings. However, the distribution of adult males by age, marital status, health, and
union membership, and the profitability of investments in school and postschool training, have been essentially stable over the past 25 years, and this
stability has undoubtedly contributed to the stability of the income
distribution.
CYCLICAL CHANGES
The inequality of income among families and among individuals fluctuates with the business cycle. Inequality increases in a recession and decreases
in an expansion. During a recession, wage rates tend to be sticky, and there
is no substantial change in the inequality of wage rates. However, layoffs
increase and there is an increase in the relative inequality of weeks of employment. The increase in the relative inequality in weeks worked during
a recession shows up both within and across demographic groups (age, sex,
race, and schooling).
During a recession, unemployment within a group of the same skill,
age, and other characteristics is not experienced uniformly; rather, in
any one year it is likely to affect some workers to a disproportionate degree.
Thus, an increasing rate and duration of unemployment have a greater
effect on the weeks of employment of some workers than on others and
result in a greater inequality of employment within the group.
A recession also intensifies the inequality of weeks of employment among
groups with different characteristics. Workers with higher levels of skill—
that is, more schooling and longer labor market experience—usually work
more weeks per year at all stages of the business cycle. During recessions,
however, the disemployment is relatively greater for workers with less skill.
For this reason, in a recession one finds a larger inequality of weeks
worked between skill groups than during a business cycle peak.
OMITTED SOURCES OF REAL INCOME AND THE INEQUALITY OF
WELL-BEING
Because the concept of income used in the measures of inequality just
presented omits some sources of real income, it gives an imperfect description
of the resources that families actually command. The omitted items can be
very important. They include the imputed value of rental income received
by homeowners living in their own homes, as well as capital gains. Employee fringe benefits paid by the employer are omitted, and so is the
monetary value to the recipient of Government transfers in kind, such as
food stamps, medical benefits, and housing allowances. Many goods and
services are produced at home and are excluded from these income measures because of the difficulty of placing a value on production outside the
market. Families with a working husband and wife may thus have more
142
measured income than some families in which the wife confines her work to
caring for the home and children, although the extra expenses or loss of
leisure time of the working couple could mean that they are really less well
off. Finally, the data used here refer to income received in one year before
payroll and income taxes.
The reason for not including these sources of income in census surveys
of consumer income is that they are all extremely difficult to measure for
individuals or families. Several studies have attempted to measure the magnitude and distribution of the different items, but so far the net effect on
income inequality of all the items cannot be stated with complete confidence.
Nor can we say how past changes in the importance of the different omitted sources may have affected the true trend in income inequality.
TABLE 35.—Income inequality under alternative definitions of income, 1968
Definition of income
Income
inequality 1
0.75
1. Money income
2. Line 1 plus rental value of owner-occupied homes
.74
3. Line 2 plus nonmoney wages and nonmoney farm income
.69
4. Line 3 plus medicare payments
.62
5. Line 4 plus imputed interest from banks and insurance companies
.61
6. Line 5 plus other imputations2 equals money income plus imputed income..
.61
7. Line 6 less direct taxes equals disposable family personal income
.52
1
Income inequality is measured by the variance in the natural log of income. (See supplement to this chapter.)
The income classes used are: Under $2,000; $2F000-$3,999; $4,000-$5,999; $5,000-$7,999; $8,000-$9,999; $10,000$14,999; $15,000-$24,999; $25,000-$49,999; and $50,000 and over.
2
Other imputations include services furnished without payment by banks and insurance companies, military clothing,
and miscellaneous other items.
Sources: Department of Commerce (Bureau of the Census) and Council of Economic Advisers.
Table 35 presents estimates of the effect that some of these omitted
sources of income would have had on measured income inequality. For
convenience the basic measure of income dispersion used in the calculation
is the variance in the natural logarithm of income (see supplement to this
chapter). The measure is zero when there is perfect equality of income, and
it increases for greater income inequality. However, while a reduction from
0.7 to 0.6 conveys an acceptable suggestion about a decline in inequality,
and a decline from 0.7 to 0.5 an acceptable suggestion about a greater decline, the statement that the second of these two declines is twice the first
would not be meaningful.
The rental value of owner-occupied dwellings can be imputed by assuming that it is proportional to the value of the house. When the imputed
rental value of owner-occupied dwellings is added to money income, the
inequality of family income does not change significantly. Although the
imputed rental value of housing rises with money income, it does not rise
as a percentage of income.
143
Farm wages and farm income received in kind (such as food and lodging)
and medicare payments are generally concentrated among the poor, and
they reduce income inequality. The inclusion of imputed interest from
banks and insurance companies does not significantly change inequality.
When personal income taxes and payroll taxes are deducted from money
income plus imputed income, the dispersion of income declines.
Because of the extreme difficulties involved, no effort was made to compute the distribution of capital gains or losses among families. Nor was an
effort made to remove the effect of transitory influences on income in any
one year. Capital gains and losses, however, tend to be concentrated among
upper-income families, and for years of net capital gains their inclusion in
the income concept would clearly increase family income inequality. Several
studies suggest that if accrued capital gains are included in income a very
high proportion of families earn incomes falling in ranges in which the tax
system is essentially proportional.
The huge growth in Federal food, medical, and other in-kind subsidies
to the poor during the past 10 years would certainly reduce inequality if
they were included in the income measures. In addition, families differ in
their use of government-subsidized goods and services, such as manpower
training programs, public schools, national parks, and roads, but the incidence of benefits by income level is not known.
Family Composition and Work in the Labor Market
Families vary considerably in the hours they work in the labor market
to produce measured money income. The difficulty of imputing a value to
work done at home has already been noted. The fact that a wife does not
work in the market can be taken to mean that she considers her productivity
at home to be of more value than what she could earn in the market. Knowing that she does not work in the labor market is not sufficient, however, to
determine the money value of the wife's work at home.
Table 36 indicates roughly how families at three levels of income differ
in their composition and work in the labor market, and how this has changed.
In both 1952 and 1972, families in the lowest fifth were much more likely
to be headed by a woman or by a person either less than 25 years of age or
older than 65 years. Partly because of these differences in age and sex, the
heads of lower-income families are less likely to participate in the labor
market, and so are the other family members.
Such families consequently depend more on income from sources other
than earnings, such as social security, other retirement incomes, and public
assistance. By contrast, upper-income families generally have many earners
per family and are more likely to include a wife who works. Presumably
these families have less time for work at home, and they must buy with their
earnings some of the services that would otherwise be produced at home.
144
TABLE 36.—Selected characteristics of the lowest, middle, and highest fifths of families ranked by
money income, 1952 and 1972
[Percent]
Lowest fifth
Middle fifth
Highest fifth
Family characteristic
1952
Total families
1972
1952
1972
1952
1972
100.0
100.0
100.0
100.0
100.0
100.0
Female head
22.0
32.0
7.1
7.1
4.8
3.2
Head under 25 years of age
Head 65 years of age and over
7.1
30.1
13.2
32.8
6.0
7.8
7.5
7.9
1.3
7.9
1.6
5.9
No earners
2 earners or more
25.3
22.4
36.4
20.6
1.2
36.7
2.4
57.0
.6
66.3
.8
74.0
Husband-wife families
100.0
100.0
100.0
100.0
100.0
100.0
Wife in paid labor force
18.9
19.9
21.2
41.3
38.1
51.6
Mean number of children.
1.14
1.09
1.43
1.35
1.10
1.25
Source: Department of Commerce, Bureau of the Census.
These differences in the characteristics of families by income class have
become more intense. They raise problems of interpretation which are important for public policy designed to influence the distribution of income.
Some of these issues are discussed below in the section on poverty.
DETERMINANTS OF DIFFERENCES IN EARNINGS
AMONG INDIVIDUALS
Wage rates and annual labor market earnings of individuals vary considerably. Much of this variation can be related statistically to individual
differences in measurable characteristics—schooling, post-school training,
region of residence, and other demographic characteristics, as well as restrictions on entry into occupations. How far such unmeasurable characteristics
as innate ability, diligence, personal attractiveness, and contacts explain
the remaining differences is not known. Nor can it be ascertained how important luck is in determining the distribution of income.
Other aspects of earnings are not included in earnings data. Psychic
earnings from having a pleasant job or living in a pleasant locality are not
measurable. Earnings received by individuals in kind, such as free lodging
and fringe benefits purchased by the employer, are measurable in principle,
but difficult to measure in practice.
SCHOOLING
Schooling is an important determinant of the distribution of earnings.
Table 37 shows average usual weekly earnings for males 35 to 44 years of
age who worked full time. Those with more schooling have substantially
higher earnings; and this relation has been persistent in many different sets
of data.
145
TABLE 37.—Average usual weekly earnings of male workers 35—44 years of age who worked full
time, by years of schooling and race, 1973
Years of schooling
173
202
$96
149
165
211
231
165
178
265
321
333
209
241
284
$150
0-4
5-7
8
9-11
12
Negro and
other races
White
..
.
13-15
16
Over 16
Note.—Data are from a survey made in May 1973.
A full-time worker is defined as one who usually works 35 hours or more per week.
Source: Department of Labor, Bureau of Labor Statistics.
One suggested reason why schooling and earnings are positively related is
that schooling increases a worker's productivity. A mobile labor force and
competitive markets translate the increased productivity into higher income
for the worker. To test the hypothesis that schooling increases productivity
and thereby increases income, one must have some measure of productivity
other than income itself. Several studies have investigated the association
between schooling and the productivity of self-employed farmers, as well
as the association between schooling and efficiency in household activities
and in interregional migration, and in scores on standardized ability tests.
They indicate that, controlling for other variables, those people with more
schooling are more productive.
Some say that those capable of higher productivity receive more schooling
and that business firms use the amount of schooling as a means of sorting
out those capable of better performance. It is therefore important to distinguish between schooling as a means of changing productivity and schooling
as a means of identifying the more productive members of the population.
The sorting hypothesis implies that firms regard the number of years of
schooling as an index of individual qualities that the educational system can
identify more efficiently than they can. The educational system, according
to this theory, is effective in attracting persons possessing these qualities and
discouraging the schooling of those without these qualities. Empirical tests
of the sorting hypothesis have not been conclusive.
POST-SCHOOL TRAINING
Another important aspect of training is experience acquired on the job
after schooling is completed. On-the-job training can vary from formal
training programs within the firm to the informal process of learning by
doing. Thus, particularly at younger ages, a worker may be involved in a
process of investment with returns accruing later on. For this reason earnings would rise as age increases.
Charts 8 and 9 give the results of two different procedures to find the
relation between age and income for males. Chart 8 presents the age-income
profiles of a group of men over time (cohort profile). For a cohort, income
146
Chart 8
Real Income Profiles of Cohorts of Men
Born in Selected Years
REAL ANNUAL INCOME (1967 DOLLARS) 1/
BORN 1913-22
8,000
BORN 1923-32
6,000
BORN 1933-42
BORN 1903-12
4,000
2,000
J_
14-19
20-24
I
25-34
J_
I
35-44
45-54
55-64
YEARS OF AGE
J / M E D I A N TOTAL MONEY INCOME FOR EACH AGE DEFLATED BY THE CONSUMER PRICE INDEX.
SOURCES: DEPARTMENT OF COMMERCE AND DEPARTMENT OF LABOR.
increases with age, but for adults it does so at a decreasing rate. Income increases with age because the workers are acquiring experience and because of
the rising productivity of workers as technology improves and physical capital
grows. The cohort profiles are higher for younger workers because they have
not only more years of schooling but also the benefits that accompany a
growth of technology and physical capital.
Chart 9 presents the age-income profiles obtained from plotting the income of males of different ages in the same time period (cross-sectional profile). The tipping down for the oldest age groups (45 to 54 and 55 to 64
years of age) of the cross-sectional profile for annual income reflects the
lower income of retired persons and, compared to younger males, the lower
level of schooling and obsolescence of knowledge of those older males still
in the labor force.
There are too few comparable data to determine whether the cohort profiles are becoming steeper over time for adult males, although there are some
147
Chart 9
Real Incomes for Men in Different
Age Groups
REAL INCOME (1967 DOLLARS).!/
8,000
1967
f
6,000
1957
,.
/
L-
/
4,000
/
/
'
1947
-
2,000
\
0
14-19
1
\
20-24
25-34
1
35-44
1
45-54
55-64
YEARS OF AGE
J/MEDIAN TOTAL MONEY INCOME FOR EACH AGE DEFLATED BY THE CONSUMER PRICE INDEX.
SOURCES: DEPARTMENT OF COMMERCE AND DEPARTMENT OF LABOR.
hints to that effect. Increased high school and college attendance has increased the slope of the age annual income profile for younger males. If better
data in the future indicate a steepening over time in the slope of the ageincome profile, a constant income inequality within a broad age interval
would imply a narrowing of income inequality for each age in the interval.
The relation between age and usual weekly earnings in 1973 for males
with 12 and 16 years of schooling is shown in Table 38. For the same level
of schooling, usual weekly earnings generally increase with age. The ageearnings profiles are steeper for those with more schooling and thus suggest
a positive association of schooling and on-the-job training. Because women
are more likely to participate discontinuously in the labor force, entering
and leaving several times during their lives, their post-school training does
not necessarily rise steadily with age.
148
TABLE 38.—Average usual weekly earnings of males who worked full time, by age and years of
schooling, 1973
Years of schooling
Age
20-24
25-34
35-44
45-54
55-64
12
years
years..
years
years
years
16
$158
201
226
227
227
$170
238
317
347
323
Note.—Data are from a survey made in May 1973.
Source: Department of Labor, Bureau of Labor Statistics.
EMPLOYMENT
The annual labor market earnings of a worker are a function of the
worker's weekly earnings and the number of weeks of employment during
the year. Weeks of employment can vary because of unemployment; but
they also vary because of voluntary withdrawals from the labor force.
The number of weeks worked is greater for male workers 25 to 54 years
of age than for younger, older, or married female workers. Younger persons
work less because of school attendance and a greater incidence of unemployment. Students (who now make up 59 percent of the teenage labor force)
ordinarily work during vacations or have part-time jobs for a few months
during the year. Most new entrants and reentrants to the labor force are
young people or married women, and most also experience some unemployment before taking their first job. One reason for the higher unemployment
rate for young workers is that they voluntarily leave jobs to acquaint themselves with the labor market and to gain experience in various jobs. In addition, the instability of their employment is increased by the fact that their
productivity is very close to the legal minimum wage, and they have a
smaller amount of specific job training.
Employers make investments specific to the firm for some workers. Specific
investments include the component of training a worker receives that is useful only in that firm, and also hiring and placement costs. The more important specific training is, the more costly it is for both the firm and the
worker if the worker is separated from the firm. Workers with more specific
training are therefore less likely to be subjected to layoffs or to quit, and they
will work more weeks during the year. Workers with advanced schooling
ordinarily work more weeks during the year, partly because their higher
wage makes absence from work more costly, and partly because they have
more specific training.
Married men work more weeks per year than men who have not married,
but married women work fewer weeks than those who have never married.
Most married women work less if they have young children. Older workers
work less because of deteriorating health and partial retirement.
The weekly wage and the number of weeks worked are related. Those
who work more weeks per year tend to have a higher weekly wage, partly,
149
because they have acquired more experience. On the other hand, it has been
suggested that the weekly wage for each week worked is higher in some
seasonal occupations in which there are fewer weeks of employment during
the year.
EARNINGS DIFFERENTIALS BETWEEN GROUPS
In the last quarter century there has been substantial public concern
with the causes and consequences of the observed earnings differential
between groups differentiated by race and sex. This discussion has focused
on investments in training and current and past discrimination, as factors
that may explain the differential.
DISCRIMINATION
Discrimination is said to exist when two or more groups that are differentiated on the basis of some characteristic irrelevant to an objective
measure of productivity are not granted equal treatment in a particular
activity. The differentiating characteristic may be race, sex, ethnic origin,
marital status, age, or physical appearance. Obviously some forms of discrimination give rise to more social concern than others. Discrimination may also take several forms: the way individuals and business firms
behave in the market place for jobs, housing, credit, and other goods and
services; and discriminatory taxation or public expenditure policies by
government. It may be so closely interwoven with the culture of a society
that the stereotyping of roles is accepted by all with little or no question.
The income and employment of an individual can be influenced by past
and present discrimination. Past discrimination affects the years and quality
of an individual's schooling and the path to his present occupation and
training. Current discrimination affects incomes when two workers are
given a different wage for the same productivity and restrictions are placed
on a worker's occupational mobility.
It is important to distinguish between the differences caused by discrimination and those from other causes. Observed differences between the
wages or occupational distribution in two groups of individuals may be due
to discrimination or to factors entirely unrelated to discrimination. Because
many important variables are not measurable, one cannot fully quantify the
effects of past or present discrimination on earnings and occupational choice.
What can be quantified, however, is the extent of observed differences
between groups that remain after making allowance for what is measurable.
RAGE DIFFERENTIALS
Data on the income or occupations of white and black males and females
indicate a substantial racial difference that has persisted for the last century.*
* Almost 90 percent of nonwhites are bracks, but many of the available data do not
distinguish between blacks and other nonwhites.
150
The relative income difference widened in recessions or depressions and narrowed during periods of economic expansion, particularly during World
War II. Evidence is accumulating, however, that there has been a long-run
narrowing of the racial income difference. According to one recent study,
for example, the median wage and salary income of black males increased
at an annual rate of 3.2 percent from 1947 to 1971, compared to an annual
increase of 2.6 percent for white males. For black and white females the
rates were 4.9 percent and 1.7 percent respectively. In spite of this narrowing, substantial racial income differences continue, particularly for males.
Why the Differential Narrowed
There are several reasons for the narrowing of the black-white earnings
differential. Important changes have occurred in the relative schooling of
blacks and whites. The substantial discrimination against blacks that was evident in the public school expenditures of many States appears to have ended.
For this and other reasons there has been a dramatic increase in the level of
schooling for blacks. The median number of years of schooling among black
males 18 years old and over in the labor force increased between 1952 and
1971 by 4.2 years, to 11.4 years. For white males the increase was 1.7 years,
to a level of 12.5 years. During the same period, black females in the labor
force increased their level of schooling by 4 years, to 12.1 years, compared
to an increase for white females of only 0.4 year, to 12.5 years.
The substantial migration of blacks out of the South and into States in
the northern and western regions may also have influenced the relative
increase in the earnings of blacks. In 1940, 77 percent of the black population
lived in the South; by 1970, the proportion was 53 percent. Earnings are
lower in the South than in other regions for all workers, but the difference is
particularly great for black workers, and in the past the difference between
earnings in the South and elsewhere was even more pronounced. Thus
blacks could increase their earnings by moving out of the South. Although
whites have an even greater propensity than blacks to migrate between
States or regions, this greater regional earnings differential for blacks, coupled with their greater concentration in the South, provided an important
way for blacks to improve their earnings. Blacks are likely to have increased
their earnings relative to whites through migration, despite their somewhat
lower geographic mobility.
The changing occupational structure and labor force status of the population was another factor influencing the rate of growth of earnings. The
labor force participation rate of married white females increased at a
faster rate than that of married black females. The entry into the labor force
of white females with little experience and the growth of part-time employment slowed the rate of growth of earnings among white females. The proportion of black females employed as household workers declined from 43
percent in 1949 to 18 percent in 1969.
Two important factors served as catalysts enabling these changes to take
place. First, the American economy is highly competitive, and business firms
151
whose owners or white workers have less discriminatory attitudes toward
blacks will be likely to employ more blacks. These firms prosper if blacks
receive lower wages. When such firms expand, the demand for black workers increases and the discriminatory differential declines.
Competition may not be a fully effective weapon against discrimination,
however, if prejudice is very widespread. The second factor, working with
the first, was a change in attitudes toward discrimination against blacks. This
development improved the relative income and occupational status of
blacks by directly reducing labor market discrimination. It also facilitated
the passage of the 1964 Civil Rights Act and other Federal and State legislation as well as court decisions prohibiting discrimination in wages and
employment. Such changes in the legal system made discrimination more
costly and therefore lessened it. The reduction in discrimination in housing
and in public accommodations brought about increased contact between
blacks and whites and presumably expanded the information sources and
job opportunities for blacks.
Dead-End Jobs
There is a widespread belief that, compared to white males, black males
are relegated to poorly paid, dead-end jobs—that is, jobs in which earnings
are initially low and do not rise with experience. This view originated as a
result of examining the relation between age and income for white and black
males at a moment in time (cross-section). For example, reading down
the columns of Table 39 indicates a substantial decline for older age groups
in the income of black males relative to white males. The appropriate
procedure for a study of life-cycle income, however, is to follow a group
(cohort) as it ages, as is shown along the diagonals of Table 39. For each
TABLE
39.—Income of Negro males as percent of income of white males, by type of income and age,
1949, 1959, and 1969
[Percent]
1949
Type of income by age group
1959
1969
Annual income:
25-34 years.
35-44 years.
45-54 years.
55-64 years.
57
48
46
45
57
52
49
48
65
56
53
51
61
52
48
47
61
57
52
51
67
58
55
53
Weekly income:
25-34 years.
35-44 years..
45-54 years.
55-64 years.
Note.—Data for 1949 and 1959 relate to Negro and races other than white end therefore are not strictly comparable
with data for 1969 which relate to the Negro race only.
Sources: Department of Commerce (Bureau of the Census) and Council of Economic Advisers.
cohort, the ratio of black to white annual and weekly incomes either did not
decline at all with age from 1949 to 1969, or declined at an appreciably
slower rate than in the cross-section. Thus, experience appears to have a
152
similar relative effect on the incomes of white and black males. Although
some black and some white males may be in dead-end jobs, this is not the
situation of the average black or white worker.
Current Differentials
Although the earnings differential between black and white females has
become quite small, the differential that still exists between the earnings of
black and white males is substantial. It does narrow, however, when the comparison is restricted to the States outside the South, and when differences in
years of schooling are taken into account (Table 40). A further narrowing of the differential occurs if the comparison is restricted to married men.
There are large differences in marital status between blacks and whites.
In March 1972, 78 percent of white males 20 years old and over were
married and living with their wives, compared to 61 percent for black
males. Among both white and black males, marital status is closely related
to earnings, married men having higher earnings than those not currently
married. How the division of labor within the family affects the earnings of
married men and women is discussed at greater length in the next section.
TABLE 40.—Earnings of Negroes as a percent of earnings of whites} for persons 25—64
years of age, 1969
[Percent]
All persons
Type of earnings by sex and region
All
levels
of schooling
High
school
graduate
Married, spouse present
College
graduate or
more
All
levels
of schooling
High
school
graduate
College
graduate or
more
EARNINGS OF MEN
Annual earnings:
All regions
South
North and West*
_
60
68
71
61
61
53
69
60
74
64
78
55
70
61
76
67
73
79
68
76
60
77
64
81
71
87
60
79
65
85
72
(2)
79
Hourly earnings:
All regions
South
North and West i
81
(2)
93
EARNINGS OF WOMEN
Annual earnings:
All regions
.
.
South
North and West *
80
93
104
88
102
108
69
94
80
102
105
111
75
105
88
112
112
108
89
99
119
91
107
95
82
101
76
118
128
109
76
111
79
128
88
107
Hourly earnings:
All regions
South. ..
.
North and West i
1 Includes Northeast and North-central.
2 Fewer than 50 persons in the sample.
Note.—Education, region, marital status and age relate to 1970.
Sources: Department of Commerce (Bureau of the Census) and Council of Economic Advisers.
153
Several factors can be mentioned to explain why black males still receive
lower earnings than white males after adjustment for schooling, age, region,
and marital status. Prior investments made in the child at home are important in determining the extent to which a student benefits from schooling.
Black youths are more likely to come from poorer homes where the parents
have less schooling, to have poorer diets, and to be less healthy. They are
likely to start school with fewer advantages and skills than the typical white
youth. Moreover, at least in the past, there was discrimination against black
youths in public school expenditures. Later on, as adults, blacks have poorer
health, and may have poorer information about better jobs. Some of the current wage differences may thus be a consequence of past discrimination.
Many factors, such as health and information about labor markets, are difficult to measure, however, and their actual effects on earnings differences
between blacks and whites have not been quantified. One cannot then
reliably measure the extent of the occupational and wage rate discrimination
that now exists, or the effect that current discrimination has on earnings.
SEX DIFFERENTIALS
In 1972 the median annual earnings of women 14 years old and over
who did full-time, year-round work were about 58 percent of that of fulltime, year-round male workers. This low ratio cannot be taken as a measure
of current market discrimination, however, since the average full-time workweek is shorter for women than for men, and their life time work experience
has been vastly different.
Specialization and Working Women
Although the pattern is changing rapidly, the traditional economic organization of the family has been marked by a specialization of function:
women tend to specialize in the work associated with child care and keeping
up the home; men tend to specialize in labor market employment. In the
past, when it was typical for families to have more children than they now
do, this specialization of function was undoubtedly an efficient arrangement.
Whether it now reflects societal discrimination or efficiency is a matter for
speculation.
In many families a lesser degree of specialization and a greater sharing
of home and labor market activities have come to be the preferred form
of family organization, and women's participation in the labor force has
increased greatly. In 1950, 28 percent of married women 35 to 44 years of
age were in the labor force; in 1972 the proportion was 49 percent. However, most married men still work nearly continuously during their prime
working years; and the labor force participation rate of married men from
25 to 55 years of age is over 95 percent.
The work histories of individual women cannot be ascertained from
current labor force rates; special surveys are needed to provide informa-
154
tion about lifetime work experience. The National Longitudinal Survey
(NLS), a large data source sponsored by the Department of Labor, has
recently become available and provides much more detailed information
on the work histories of women than has ever been previously compiled.
The survey indicates that in 1967, among married women 30 to 44 years
old with children, only 3 percent had worked at least 6 months every year
since leaving school. On the average, married women worked at least 6
months in 40 percent of their years after leaving school, but the work
was not likely to be continuous.
One study which used the NLS showed that earnings of women do rise
with experience and that continuity of experience, as opposed to intermittent participation, commands a premium. Withdrawal from the labor force
for a time resulted in a decline in earnings when work resumed, since previously accumulated skills, or human capital, actually depreciate during
extended periods away from work. For the married women in the sample,
the hourly wage rate was about 66 percent of that of married men in the
same age group (30-44 years) in the same year (1966), after controlling for
differences in years of schooling. At least half of the 34 percent differential
resulted from differences in their measured experience. The remaining differential is unexplained.
It is not known to what extent current discrimination, as opposed to
other unmeasured factors, contributed to this differential. For example,
the study could not provide direct measures of the nature of the investments made in the productivity of women and men, other than years of
formal schooling. Women do not appear to obtain as much training on the
job as men for the same length of time in the labor force. Thus, although
women's earnings rise with experience, the study found that they do not rise
as steeply as men's. This difference could result partly from a faulty measurement of a year's experience for women; as noted above, in these data a year's
work could be as little as 6 months of part-time employment. However, the
measured effect of experience could also be interpreted as the result of discrimination. That is, employers may deny a woman on-the-job training or a
promotion because of her sex, sometimes from sheer prejudice, sometimes
because they think a woman is more likely to quit for personal reasons. One
can also surmise that women themselves may not choose to invest in training
at a cost of either lower current earnings or additional hours of work, when
the payoff might be lost because of the uncertainty of their future work
patterns.
For example, women in school have a lower enrollment rate in programs
oriented toward the labor market—engineering, accounting, electronics—
and a higher enrollment rate in courses that may be more applicable to work
or leisure in the home—child development, languages, literature. This pattern may reflect greater uncertainty among women about their future attachment to the labor force. A choice of field of study may also be influenced
155
by social pressures, however, which make women feel less feminine and men
feel less masculine if they enroll in courses traditionally selected by the other
sex.
The study also relates lifetime work history to earnings for women who
never married. A year's experience has a much greater effect on single
women's earnings than on those of married women. Single women work
much more continuously than married women, though less so than married men. Some single women may choose not to make investments related
to work because they expect to marry. But many look forward to careers
and may therefore delay marriage or never marry at all. This career orientation is consistent with the relatively greater number of years of schooling
completed by single women compared to those who marry. It is also consistent with their observed higher earnings. Estimates of hourly wage and
salary earnings from 1970 census data show that women 45 to 54 years of
age who had never married earned 20 percent more than married women,
and 28 percent less than married men, but only 2 percent less than men who
had never married.
There is then also a differential between the earnings of married and single
men, and it may be taken as another illustration of how specialization within
families may affect career patterns and earnings. Single men have somewhat
lower labor force participation rates; they also work fewer hours per year
than married men. In part this may result from a higher incidence of disability, which influences both marriage and work. Although they have greater
work participation than married women, single women also have higher
disability rates than married women.
Because of differences in life-cycle participation in the labor force by
women and men, the experience of women does not bear the same relationship to age as it does for men. Many women who have entered or reentered
the market at older ages are really beginners. Men's earnings are at their
peak when the men reach an older age, but women's earnings will represent
a mixture in which a small minority have high earnings because of their
considerable experience, but the majority have earnings closer to those at the
start of a career. As age increases, it is therefore not surprising that the earnings differential between women and men widens. For example, a comparison
of usual weekly earnings of workers who worked 35 hours a week or more
in 1973 shows that the ratio of women's earnings to men's earnings declined
from 0.70 at ages 20-24 to 0.59 at ages 45-54 for high school graduates. Of
course the earnings ratios at older ages reflect the work histories of different
cohorts of women. If the younger women maintain a greater attachment to
the labor force during their lifetime (and there is some evidence that this
is the case), then the ratio of women's earnings to men's may not decline as
much with age in the future.
Differences in lifetime work experience also seem to explain why the ratio
of black women's earnings to those of white women exceeds the ratio of
earnings of black men to those of white men (Table 40). Indeed, in the
156
regions outside the South, within educational levels, black women earn more
than white women. The differential between whites and blacks in quality of
schooling, family background, and discrimination can be assumed to be similar for women and men. Black women have a much greater life-cycle attachment to the labor force, however, than white women do, although this
differential is largely confined to married women. For example, in 1972
among women 35 to 44 years of age, with 4 years of high school or more,
71 percent of the black women were in the labor force, compared to 53
percent of the white women.
The greater tendency of black married women to work, compared to
white married women, may be due in part to the relatively lower earnings
of their husbands. Partly because of the relatively high earnings and work
participation of black wives, the ratio of annual income of black husbandwife families to that of white husband-wife families is higher than the ratio
of black men's to white men's income. For families headed by males 35 to 44
years old the ratio in 1969 was 75 percent, compared to 56 percent for males
alone (Tables 39 and 41).
TABLE 41.—Median income of Negro h'isband-wife families as percent of white husband-wife
families, by region and age of husband, 1959, 1969, and 1972
[Percentl
1972
Age of husband
1959
1969
Total
72
All families.
Under 35 years
35-44 years
45-54 years
55-64 years
65 years and over..
South
North
and
Westi
86
93
78
79
i Includes Northeast and North-central.
Source: Department of Commerce, Bureau of the Census.
Trends in the Earnings Differential
Much has been made of the rather puzzling observation that the ratio
of earnings of all women to those of all men has declined during the past
20 years. This observation refers to annual earnings, or the earnings of
full-time, year-round workers who are not necessarily representative of the
total. But average hours and weeks worked during the year fell for women
relative to men from 1949 to 1969. If annual wages and salaries are divided
by total hours worked during the year, the result is a much modified decline
in the hourly wage of women relative to the hourly wage of men (Table
42).
An additional factor which would produce a relative decline in women's
earnings is the relative decline in their general educational level and their
labor market experience during the period. In 1950, women in the labor
force had on the average more schooling than men did; but this advantage
157
527-867 O - 74 - 11
TABLE 42.—Relation of wage and salary earnings and of total money earnings of women to those
of men, 1949, 1959, and 1969
Earnings of women as percent of earnings
of men
Type of earnings
1949
Mean wage and salary earnings:
1959
1969
1
47
63
63
Annual
Hourly
Hourly adjusted for education 2 .
Mean total money earnings: i
Annual
Hourly
Hourly adjusted for education 2 .
46
62
62
12 Earnings for any year are for those in the experienced labor force the following year.
Approximate adjustment based on differences in the educational distributions of men and women in the labor force
in 31950, 1960, and 1970.
Not available.
Source: Council of Economic Advisers.
was eliminated by 1970. Since education has an effect on earnings—both
men's and women's earnings increase with education—it is important
to take these changes into account. An approximate adjustment for educational level increases the differential in 1949 and 1959, because women in
the labor force then had more education than men. After the educational
adjustment, the differential shows little change from 1949 to 1969.
What has not been accounted for is the experience differential between
men and women. As has been explained above, this difference seems
to be the most important factor causing a divergence in hourly earnings. But
since the labor force participation of women, particularly married women,
was increasing rapidly during the period, it is very likely that the constant
flow of entrants into the labor force resulted in a decline in the average
experience of women in the labor force during the 20 years.
The foregoing suggests that if we could compare women and men with
a given amount of experience and education the ratio of women's hourly
earnings to men's might well show an increase over the 20 years—a narrowing in the gap. This would, of course, be compatible with the fact that
women have dramatically increased their participation in the labor force
during the past 20 years. The rapidly increasing opportunities offered them
would be one reason why they have done so.
OCCUPATIONAL DIFFERENCES
The occupational distribution of blacks differs from that of whites. In
1970, for example, 27 percent of employed white males and 9 percent of
employed black males were managers or professionals, whereas 7 percent of
white males and 19 percent of black males were hired farm or nonfarm
laborers; and 18 percent of employed black females were domestic household
workers, compared to only 2 percent of white females. There is also consid-
158
erable occupational segregation by sex, and some believe that the sex segregation is even greater than the racial segregation. For example, 83 percent
of managers and 87 percent of farm laborers were men; but only 3 percent
of nurses and 16 percent of elementary school teachers were men.
Occupational segregation by race derives partly from differences in
schooling and partly from the geographical distribution of blacks, who disproportionately live in the South. Moreover, there has been substantial
discrimination against blacks who entered, or tried to enter, certain occupations. This discrimination, stemming from the attitudes of white employers, employees, and consumers of services, resulted in a smaller proportion of blacks entering these occupations. In some professions—for example,
medicine, law, and the ministry—blacks were generally restricted to practicing in segregated black markets. In addition, blacks were not always granted
equal opportunity to move up the occupational scale—for example, from
laborer or operative to foreman or manager.
Some of the differences in occupational composition by sex can be
attributed to differences in physical attributes. Undoubtedly, however, jobs
requiring physical strength are on the decline, and it is questionable
whether this factor was ever very important. One may also argue that
prejudice on the part of employers, fellow employees, and consumers
operates to exclude women from some activities in the labor market and
to favor them in others.
Another hypothesis stresses the difference in role identification that leads
to differences between the work careers and training of women and men.
That is, women who anticipate combining some work with marriage seek
occupations and work situations which are most complementary to home
responsibilities, such as those in which hours are shorter or correspond to
the children's school hours, or those offering work close to home. Another
criterion is the penalty for interruptions in work. For example, women
might avoid situations with rigid seniority rules, or they might choose careers
in which skills are least likely to depreciate during a period spent at home.
Some of the occupations stereotyped as women's, such as elementary school
teaching and nursing, are indeed those where the same skills can be utilized
in the home. According to this view occupational differences arise from
choice, although the choice may be induced by a pervasive societal bias
which dictates that home responsibilities are the women's major work. It
is quite difficult to separate empirically the effects of discrimination in the
labor market from the effects of personal considerations in women's occupational choices.
One may question whether the wage rates received by blacks and women
have been affected by the occupational segregation. Earnings differ from
occupation to occupation. If blacks or women were clustered in occupations
that were low paying for all groups, including white males, then the lower
average hourly earnings of blacks and women could be attributed to dif-
159
ferences in their mix of occupations, rather than to earnings differences
within individual occupations. To estimate the effect of occupational mix
on the earnings of black males, indexes were calculated to measure what
black males would earn if they had the white male occupational distribution but the earnings of black males within each occupation. Similar
indexes were computed to measure what white women would earn if they
had the same occupational distribution as white men, but the earnings of
white women within occupations.
Preliminary results, using 1970 census data on 443 detailed occupations,
indicate that black males would have hourly earnings about 18 percent
higher if they had the white male mix of occupations. Since white males
earned 50 percent more than black males, occupational differences would
appear to "explain" 35 percent of the differential. However, those with
high levels of education have a very different occupational distribution
compared to those with lower levels of education. Hence it may be that
in adjusting for occupation one is really adjusting for education. Indexes
calculated for seperate education groups indicate a much smaller explanatory
power of occupation. For example, among males who completed 12 to 15
years of schooling, the earnings of black workers would be increased by only
8 percent if they were given the white occupational distribution, and this
would account for 22 percent of the race differential in earnings.
Comparing white women and white men 25 to 64 years old, the preliminary results for 1970 indicate that women would increase their earnings
by about 11 percent if they had the occupational mix of men, and this
would account for about 21 percent of the gross earnings differential
between women and men. Since women have completed roughly the same
average years of schooling as men, education would not be expected to
interact so strongly with occupation. Within education groups, occupational mix seems to explain less for women below the college level than
for women as a whole, but relatively more at the college level.
Since occupation alone does not explain very much of the overall earnings differential between men and women, it would seem that earnings differentials within occupations, as they are now defined, must be more important than earnings differentials between occupations. In other words, if
custom or overt barriers to entry have relegated women to different occupations from those of men, this factor has not been the major one in
lowering their earnings.
It has already been noted that earnings differences between women and
men are in large part a consequence of differences in lifetime labor market
experience. Since earnings differences between occupations may also be
influenced by sex differences in the extent of post-school training between
occupations, it may be necessary to make a distinction between the explanatory power of occupational mix per se and the explanatory power of
occupational differences in experience. This requires data not currently
available.
160
In conclusion, it appears that the different occupational distributions
of white men, compared to black men and white women, explain at most
about one-fourth of the existing earnings differentials between them. Because occupational differences can also be explained by other factors that
differ between the races and the sexes, such as labor market experience
(post-school training), and region, the true effect of occupation may be much
smaller.
THE LOW-INCOME POPULATION
The Government has assumed an ever larger role in helping to see that
those in need reach an adequate standard of living; and a considerable
share of the Federal budget is now devoted directly and indirectly to that
end.
THE DEFINITION OF POVERTY
There is not, and probably never will be, a consensus on any one definition
of poverty. Many programs require, however, that we distinguish those who
fall below a minimum income standard; and, accordingly, the concept of the
low-income or poverty threshold has been developed. The Government
concept is defined essentially as an amount about three times the
estimated cost of a nutritionally adequate diet. The standard is adjusted
for differences in family size, sex of family head, number of children, and
farm-nonfarm residence; and different schedules are set for each group.
The standard for each group is adjusted each year for changes in the overall
consumer price index. Thus, the average threshold for a nonfarm family of
four increased from $2,973 in 1959 to $4,275 in 1972.
Because the poverty threshold is, in real dollars, an absolute standard, it
cannot be used to measure changes in the relative inequality of income. Indeed, as the average real income level of the population increases, the poverty standard lags farther behind the average. Thus the poverty threshold
for a family of four declined from about 55 percent of median family income in 1959 to 38 percent in 1972.
Only cash income is used in determining low-income status, although a
crude implicit adjustment is made for food grown at home by farm families.
It has not been feasible to take account of the tremendous growth in the
number and size of transfers in kind, such as public housing, food stamps,
child care, and medical care. For example, in 1972, Federal and State government expenditures per poor person on the food subsidy and medicaid programs alone, valued at cost, were equal to about 50 percent of the money
income of the average person in the low-income category.
It would be extremely difficult to determine the exact incidence or value
of all the benefits. The programs for the low-income population are administered by different agencies and jurisdictions, they also have different
aims and are distributed to somewhat different target populations. Moreover, the income in kind cannot be considered a perfect substitute, dollar for
dollar, for cash income. For example, a public expenditure of $100 a month
161
for public housing may be valued by the poor family at considerably less
than $100. Nevertheless, it seems safe to conclude that some low-income
families with in-kind benefits are receiving real incomes in excess of the
low-income threshold and that the proportion exceeding the threshold has
increased with the growth of the programs. On the other hand, some persons classified as above the low-income threshold, who receive no in-kind
benefits and who have unusual expenses—for example, because of poor
health—may have their real income position overstated.
THE DECREASE IN POVERTY
There has been a rapid decline in the number and proportion of persons
in families with a cash income below the poverty line (Table 43). In 1972,
12 percent of all persons were classified as low income, compared to 22
percent in 1959. In all years the incidence of poverty is greater among
blacks than among whites and much greater among female-headed families
than among male-headed families. Since 1959 the decline in poverty has
been particularly marked for both black and white male-headed families.
TABLE 43.—Persons below the low-income level and percent below the low-income level by
family status, selected years, 1959-72
Family status
Total persons below the low-income level (thousands)
1959
1966
1969
1971
1972
39,490
28, 510
24,147
25, 559
24,460
12.5
11.9
Group below low-income level as percent of all persons in
group:
Total persons
, .
22.4
65 years and over
C)
Unrelated individuals
14.7
28.5
12.1
0)
21.6
18.6
46.1
38.3
34.0
31.6
29.0
14 7
51.0
8 0
31.2
6 0
19.8
6.2
19.1
5.6
18.5
40.2
75.6
29.7
64.6
29.1
57.8
30.4
55.6
27.4
57.7
Persons in families with male head:
White
Negro and other races
. . .
Persons in families with female head:
White
Negro and other races
.
._ . .
i Not available.
Note.—Persons below the low-income level are those falling below the poverty index adopted by the Federal Interagency
Committee in 1969. See text for explanation of index.
Years are not exactly comparable because of changes in definition and methodology.
Source: Department of Commerce, Bureau of the Census.
The principal factor behind the decline in poverty is economic growth.
The basic forces underlying economic growth have raised the productivity
of even the least skilled worker and have enabled millions of workers to rise
above the low-income threshold through higher wage rates for those in the
labor force. In addition, economic growth has increased the labor force
participation of wives by increasing their labor market wage relative to the
cost of consumer durables and other substitutes for time in the home. Thus
the decline in poverty has been most pronounced for the working poor. In
162
1959, 14.6 percent of family heads who worked at all, and 9.4 percent of
those who worked full time, year round were classified as low income;
by 1972, the percentages had dropped to 6.0 and 2.9 percent respectively.
Those heads of families who do not work but are no longer in poverty have
benefited from increases in social security and pension income, which were
made possible by economic growth.
More and more the low-income population is composed of families headed
by a person who does not work because of disability, age, responsibilities in
the home, or perhaps simply inability to cope with work (Table 44). Unemployment, perhaps surprisingly, does not play a major role in withdrawal
from the labor force. Of those low-income family heads who did not work
in 1972, 4.8 percent cited inability to find work as the reason for not working.
Thus, the vast majority of the poor who do not work seem to be in a situation where work is not a feasible alternative. For some the inability to
work is a permanent condition, but for others it may be temporary.
TABLE 44.—Work experience offamily heads below the low-income level by sex} 1959 and 1972
Female head
Male head
Total
Work experience of head
1959
1972
1959
1972
1959
Total families (thousands)
8,320
5,075
6,404
2,917
1,916
2,158
Total families (percent)
100.0
100.0
100.0
100.0
100.0
100.0
67.5
53.5
74.9
64.9
42.9
38.1
31.5
31.0
14.4
19.8
30.1
11.1
37.6
32.1
17.3
29.4
31.3
14.9
10.9
27.1
4.9
6.9
28.5
5.8
30.5
45.9
22.5
34.0
57.1
61.9
1.2
10.9
18.3
2.2
19.0
24.6
1.0
1.9
21.5
8.2
1.5
47.5
8.1
2.6
44.7
14.6
1.9
.6
2.5
1.0
Worked i
50-52 weeks, full time
1-49 weeks, part time or full time...
Worked part of year because unemployed
Did not work.
Unable to find work
Keeping house.
Ill, disabled, retired, and other
Head in Armed Forces
1
2
1972
Includes those who worked part-time hours for 50-52 weeks, not shown separately.
Not reported.
Note.—Persons below the low-income level are those falling below the poverty index adopted by the Federal Interagency
Committee in 1969. See text for explanation of index.
Data for 1959 and 1972 are not exactly comparable because of changes in definition and methodology.
Detail may not add to totals because of rounding.
Source: Department of Commerce, Bureau of the Census.
THE CHARACTERISTICS OF THE POOR
As the population in poverty has come to include a smaller proportion of
families with a working adult, the demographic characteristics of the poor
have changed. Male-headed families have decreased as a proportion of all
poor families—dropping from 77 percent in 1959 to 57 percent in 1972—
because male family heads are more likely to work than female family heads.
The proportion of low-income families headed by a female has increased
sharply from 1959 to 1972, from 23 to 43 percent for all females and from
163
8 to 20 percent for black females. In part this trend results from an increase
in the proportion of all families headed by a woman, from 10 percent in
1959 to 12 percent in 1972. However, while the incidence of poverty among
female-headed families declined in this period, it did not decline nearly as
fast as for families headed by a male.
The Male-Headed Family
Among male-headed families, the presence of children has a direct influence on poverty status, since for a given income the more children there are,
the higher the poverty-income threshold. Children also indirectly affect the
family's income, because it is more difficult for a wife to work outside the
home when young children are present. In 1972, 31 percent of low-income
families with a male head had three or more children, compared to 17 percent for families above the poverty line. The presence of a working wife
can bring an otherwise poor family above the poverty line. Only 22 percent
of the wives in low-income families headed by a male worked in 1972, compared to 48 percent of wives in families above the poverty line.
The number of children and the work experience of wives are also important variables affecting the ability of the poor to move up from poverty.
One longitudinal survey which followed the poverty status of a cohort for
5 years, starting in 1967, found that about 20 percent of nonaged families
headed by a male experienced steady income increases and ended the period
out of poverty. This group had significantly fewer children than those who
remained poor during those 5 years, and a larger proportion of wives who
increased their labor market work over the period. However, a period of 5
years is too short to determine whether this group is permanently upwardly
mobile or simply experiences long-term fluctuations in its income position.
Low earnings, per se, are still an important reason for poverty among
male-headed families. Educational levels are very low for this group. In 1972
only 29 percent were high school graduates or better, compared to 63 percent among other male family heads. As might be expected, the poor were
also much more concentrated in low-income jobs, particularly farming: 20
percent of employed men heading low-income families were farmers
or farm laborers, compared to 4 percent among those not poor. In the
future, as the level of education rises and as productivity change continues
to increase earnings, one would expect that the incidence of poverty (under
a fixed standard) may come close to disappearing for this group.
The Aged Poor
The population 65 or more years old increased as a percentage of the
poor from 1959 to 1970. Since then, however, the incidence of poverty has
dropped sharply for this group, from 24.6 percent in 1970 to 18.6 percent
in 1972, and the aged represent a declining proportion of the poor. This
rapid change is primarily due to across-the-board increases in social security
164
benefits of about 50 percent from 1970-72. Since 1972 there has been further expansion in social security benefits. The increase in a widow's benefits
to 100 percent of her deceased husband's benefits should reduce the extent
of poverty among widows.
Undoubtedly, however, cash income understates real consumption by
the aged poor compared to that of the other poor. Many of the aged have
income in the form of imputed rents from owner-occupied homes. Elderly
people often consume out of past savings, and many widows receive life
insurance benefits which are not included in income data. In addition,
compared to others classified as poor, the aged poor derive a larger proportion of their measured income from sources which are not taxed, such as
social security and some pension income. The aged also have fewer expenses
related to employment. The aged benefit disproportionately from medicare
and medicaid, which are not counted in money income statistics, although
in this case obviously their need is often greater because of poorer health.
Even excluding the benefits of medicare and medicaid, however, it would
appear that on average a two-person aged family may have a higher level
of consumption than a two-person family which has the same measured
cash income but whose members are under age 65.
The Female-Headed Family
Perhaps the most important issue concerning poverty status in this country is the increasing identification of poverty with the female-headed family.
Future progress in eliminating poverty will depend in large part on the
extent to which poverty can be reduced for this group. If the proportion of families headed by women continues to increase, the problem may
become still more difficult. Among families with a female head, 33 percent
were classified as in poverty in 1972, compared to 6 percent for male-headed
families. Among black female-headed families the proportion was 53 percent. The factors behind this very high incidence of poverty among families
headed by women are complex.
As discussed earlier, the average married woman has not had the same
labor market experience or vocationally oriented training as her husband.
Since the incidence of marital breakup is greater among less educated
couples, the woman who becomes a family head is more likely to have
assumed during her marriage the traditional role of caring for children and
the home, and she is less likely to have had work experience. Women
who have children without having married tend to be young, with little
work experience or formal education. Earnings for women in these circumstances tend to be much lower than for men of the same age and to be lower
even than the earnings of other women, particularly those with considerable
education. Moreover, the expenses of going to work are higher for a person
with sole responsibility for child care. It is thus clear that if work is to be a
sensible option in the single-parent family, earnings (after taxes) must be
165
sufficiently high to cover the additional costs of child care and other home
expenses.
Not surprisingly, poverty status among women is strongly related to
presence of children and to work participation. As noted above, among
women in general the presence of children, particularly young children, has
a strong inhibiting effect on work participation. About 70 percent of female
family heads under 65 years of age have children under age 18. As one would
also expect, mothers who head families are more likely to work than mothers
living with their husbands. In 1972, 30 percent of the former and 17 percent
of the latter worked full time, the year round. However, mothers heading
families are much less likely than men to work full time, the year round.
Among males heading families, the proportion was 68 percent.
Of the small proportion of female family heads with children who did
have full-time, year-round jobs in .1972, 9.5 percent were in poverty, a
markedly lower incidence than the 42 percent for all female family heads
with children. One cannot, however, infer from this statistic that poverty
would fall to that level for all women with children if they did full-time,
full-year work. It is likely that those women who work extensively are relatively more productive in the labor market because of higher educational
attainment, greater work experience in the past, or greater ability.
The poverty status of female-headed families is often the result of a
marital breakup, and this situation is temporary for many. One longitudinal
study which followed the poverty status of a cohort over a 5-year period,
starting in 1967, discovered that of those persons in nonaged female-headed
families who were poor at the start of the period, 27 percent experienced
consistent increases in income and had moved out of poverty by the end
of the period. (The comparable percentage for male-headed families was 20
percent.) Remarriage of the female family head was the primary factor
associated with this upward mobility.
About 32 percent of the persons in female-headed families who started
as poor in 1967 remained poor throughout the 5 years. The demographic
characteristics associated with this more permanently poor group were low
education, a large number of children, and residence in low-wage, rural
areas with low public assistance payments. For this group, the high costs
of child care and poor prospects of high earnings suggest that training and
increased work in the labor market by the female family head could not be
relied on as a route out of poverty.
The remaining 41 percent of persons in female-headed families who
started in poverty moved in and out of poverty during the 5-year period.
A large part of this change in poverty status was associated with a change in
household arrangements.
166
Because of the lower work participation of low-income female heads of
families, the major source of income for this group is public assistance. In
1972, public assistance accounted on the average for 51 percent of the
income of low-income, female-headed families. Many in-kind benefits are
given automatically to families receiving public assistance, specifically those
in the Aid to Families with Dependent Children program, which is largely
a program for female-headed families. Moreover, because public assistance
income is not taxed, the real consumption of female-headed families is
probably understated, compared to that of husband-wife families whose
income depends more heavily on earnings.
The increase in female-headed families may, per se, be an important variable in determining the size of the poverty population in future years. There
is some evidence, discussed below, that our system of welfare payments, which
has been an important way of increasing income for mothers heading families, may itself have promoted some of the increase in female-headed families through the structure of incentives. This is clearly an important issue in
the future design of transfer payments to the poor.
GOVERNMENT TRANSFER PROGRAMS
All expenditures by government, directly or indirectly, have implications for the distribution of income. Analyses can be made of the direct income distribution effect of public transfers. It is far more difficult to identify
the income distribution effects of other government expenditures.
Some of the transfer programs were initially viewed as public insurance
mechanisms. Social security was intended as a public pension plan. Unemployment compensation and workmen's compensation are government mandated insurance. Veterans' compensation and benefits were adopted as a
form of deferred payment for military service. Public assistance was and
is explicitly intended as a mechanism for raising the income of those families
that would otherwise fall below a socially desired level of consumption.
FEDERAL TRANSFERS IN 1973
The Government gives transfers to individuals and families in the form
of cash or subsidization of the price of particular goods and services. Of the
two, transfers in cash are easier to administer, and they also have the advantage that the recipients presumably know better than the Government
does how to allocate the transfer income so as to maximize their own wellbeing. Some transfers are given in kind, however, on the presumption that
the goods are of such importance that the recipients should consume at least
a minimum quantity. Food, medical care, and housing are examples.
Table 45 presents a summary of the Federal Government transfer expenditures in fiscal 1973. The poverty status of recipients is based on money
income, including cash transfers but excluding the value of transfers in kind.
167
TABLE 45.—Federal Government transfer programs,fiscalyear 1973
Program
Total
expenditure
(millions of
dollars)
Number of
recipients
(thousands)
Monthly
benefits per1
recipient
Percent of
recipients
in poverty 2
Social Security:
Old age and survivors insurance..
Disability insurance
42,170
5,162
25, 205
3,272
3,617
56
766
1,051
10, 980
78
1,164
1,917
1,401
4,404
7,203
5,409
9,039
4,402
2,136
1,408
106
282
170
10,600
23, 537
12, 639
3,319
373
1,647
513
$139
132
16
24
Public assistance:
Aid to families with dependent children.
Blind
Disabled
Aged
76
62
73
60
Other cash programs:
Veterans' compensation and benefits..
Unemployment insurance benefits
O)
()
In kind:
Medicare
Medicaid
Food stamps..
_
Public housing
Rent supplements
Homeownership assistance (section 235)..
Rental housing assistance (section 236)..
17
70
92
8
8
1 The number of recipients is for individuals, not families.
2 Poverty is defined relative to the money income and the size of the recipient's family. Money income includes money
transfer payments but excludes income received in kind. All percents are estimated.
3 Programs with Federal-State sharing of expenses.
* Not available.
Source: Office of Management and Budget.
AID TO FAMILIES WITH DEPENDENT CHILDREN
Aid to Families with Dependent Children (AFDC) is now the primary
cash assistance program run by the States with Federal assistance.
Eligibility
The original purpose of the program was to assist children in families
where there was need for income because of the death, severe disability, or
prolonged absence of the father. The financial aid was intended to enable
mothers to stay at home and care for their children, rather than be compelled to work. If the mother did work, her welfare payments were generally
reduced by one dollar for each dollar earned, a provision that eliminated the
pecuniary incentive for her to go to work. Families with an able-bodied
father present who earned little income were not eligible for any federally
aided assistance.
The reasons why AFDC recipients lack the father's support have changed
dramatically over time. In the 1930's, when the program began, about 75
percent of those receiving benefits from the program were children of fathers
who had died or who were severely disabled. By 1971, only 14 percent of the
fathers were in this category. The composition of AFDC families has thus
shifted toward families with living fathers who are absent, either because of
divorce or separation or because they are not married to the mother.
Attitudes have changed, and the AFDC rules have shifted toward encouraging mothers to work. Starting in 1956, appropriations were authorized
168
to help mothers to become self-supporting through services such as child
care for dependent children and rehabilitation assistance for the mother.
The 1967 amendments to the Social Security Act provided a work incentive for families by reducing the implicit tax on earnings and granting
assistance in preparing for work through appropriations for services such
as training, counseling, and child care (the Work Incentive Program or
WIN).
The AFDG program has also been liberalized to allow limited assistance
to needy families with an able-bodied father present. Since 1961 States
have had the option of providing aid to families with an unemployed father,
and 22 States in fact do so.
Growth of the Program
During the 1950's the proportion of all families in the AFDC program
was roughly stable (Table 46). Since then, however, the proportion of
families receiving aid has grown dramatically, benefits per recipient have
increased, and total expenditures in the program have increased even more
sharply.
TABLE 46.—AFDC benefitsand families, selected years ,1950-72
AFDC families
AFDC benefits i
Year
1950
1955
1960
1965
1967
1969
. ..
1971
1972
Total
annual
payments to
recipients
(millions of
dollars)
Average
December
payment per
recipient2
Total 3
(thousands)
651
620
803
Percent
of all
families'
556
633
1,055
1,809
2,280
3,565
$21
24
27
33
40
45
1,054
1,297
1,875
1 7
1 5
1 8
??
? 6
3.7
6,203
7,020
52
53
2,918
3,123
5 6
5.9
1 Aid to families with dependent children (AFDC).
Average of all States for December of each year.
3 As of December of each year.
4
AFDC families as of December, and total families as of March (except for April in 1955).
2
Source: Department of Health, Education, and Welfare (Social and Rehabilitation Service).
Several factors seem to have contributed to the rapid rise in the number
of families receiving public assistance. One is the larger number of families
with children and with a female as head, although this increase in turn may
be partly a consequence of the large rise in benefits. From 1950 to 1960
such families increased by 829,000, while AFDC families increased by
152,000. When benefits increased dramatically from 1960 to 1972, however, female-headed families with children increased by 1.5 million, but
AFDC families increased by 2.3 million. A larger proportion of femaleheaded families with children may have become eligible for AFDC, many
eligible families may have learned for the first time that they could join,
or a large number no longer hesitated to receive welfare. The publicity
169
given to the problems of poverty during the 1960's may have informed
the poor of their legal rights.
Undoubtedly, the AFDG program became more financially attractive
during the period. The basic cash benefit level per recipient increased by
85 percent from 1960 to 1970; this may be compared to the increase in
median earnings (full-time, year-round) in the same years amounting to
67 percent for men and 63 percent for women. In addition, AFDC families
were made automatically eligible for many in-kind benefits which were introduced or expanded in this period. According to estimates, by 1971 virtually
all AFDC families were eligible for medicaid, 68 percent actually participated in the food stamp or food distribution program, 59 percent benefited
from the Federal school lunch program, and 13 percent from subsidized
housing. In 1972 a family in New York City consisting of three children
and a mother who did not work, which received all of the benefits listed
above, would have received benefits which cost the government $5,912,
of which $3,756 was cash income. Benefits vary widely, however, and in
Atlanta the value of the same package of benefits for the same family
would have been $3,606, of which $1,788 would be cash income. These
amounts do not include the value of other benefits received, such as child
care and manpower training.
The recipients may not, of course, value the various in-kind benefits at
their actual cost. Benefits such as food stamps are similar to cash, and other
benefits may subsidize basic goods and services. The value the recipients
place on some programs, such as medicaid, would be more difficult to
evaluate.
As the AFDC program with its related benefits became more generous,
more people may have decided that the return was worth the difficulties
and possible humiliation of applying. Much more study is needed before all
the factors underlying the increase in the AFDC case load are understood.
AFDC and Family Formation and Stability
Another issue of social importance is how the increase in AFDC benefits
affects the formation of female-headed families. One recent study of
whether higher levels of stipends in AFDC did result in a higher rate of
female headship used multivariate analysis to control for the effect of male
wages and other relevant causal factors. The finding for 1960 was that across
metropolitan areas, holding constant the male wage, a 10 percent higher
AFDC stipend in an area was associated with a nearly 4 percent higher rate
of female headship. Holding constant the AFDC stipend, an increase in the
male wage was associated with a decline in female headships. The analysis
was duplicated for 1970 with similar findings, although the relationships
were somewhat weaker. By 1970, however, in-kind benefits would have
formed a much larger unmeasured addition to the stipend; results for that
year may consequently be less reliable.
From 1960 to 1970 women with children became more likely to head
families. The proportion increased from 6 to 8 percent for white women
170
and from 19 to 28 percent for black women. In this period widows declined
as a proportion of all female heads of families with children, but unmarried
mothers accounted for an increasing share. It is quite possible that rising
AFDC payments provided one incentive for young women to forgo marriage
and set up a household of their own with their children.
The majority of both black and white female heads of families with children are separated or divorced. During the period 1960 to 1970, disrupted
marriages continued to play a part in the total increase in female headships.
Some of this increase, however, was the result of a decline in the proportion
of divorced and separated mothers who lived with other relatives and an
increase in the proportion who set up their own households and would then
be counted as family heads. Rising levels of AFDC benefits may have made
it financially possible to do so. For this group the effect of AFDC was not to
cause the separation of couples, but to induce the mother to live alone with
her children.
Work Incentives
Important changes in the rules, intended to reduce welfare expenditures by providing a monetary incentive to work, were introduced during
the 1960's. As noted earlier, AFDC recipients were initially subject to a
dollar reduction in cash benefits for each dollar earned (an implicit marginal tax rate of 100 percent). In 1962 a modification of the tax on benefits was introduced, requiring the States to grant a deduction for workrelated expenses. As a result of the 1967 amendments, AFDC recipients
are allowed to retain the first $30 of their earnings without any loss in
benefits, after which cash benefits are reduced by 67 cents for each additional
dollar earned.
Mothers in the AFDC program show no major change in their work in the
labor market since the actual start of WIN in 1969 (Table 47). Yet this
was a period when the labor force participation of women with children
was increasing. The recession in 1971 may have weakened employment
prospects in that year. However, the large increase in the percentage
unemployed in 1973 may well be the result of the work requirement provisions imposed in June 1972, as a result of the 1971 amendments, whereby
all employable welfare recipients were, as a condition of payment, required
to register for work or for training in the WIN program. It should be noted,
though, that the full long-term results of the program changes introduced at
that time are not yet reflected in the data.
One explanation of the puzzling lack of response to the work incentives
introduced in 1969 is that the rapid growth of in-kind benefits, each of
which is reduced in amount as earnings increase, served to increase the
actual reduction in total benefits faced by a recipient who started working.
As an AFDC recipient's earnings rise, she thus pays a price not only in loss
171
TABLE 47.—Trends in the employment status of mothers in the AFDC program, selected years,
1961-73
Status of mother
1961
1967
1969
1971
Total mothers (thousands) *_
743.2
1,109. 0
1, 463. 0
2, 345. 7
Total mothers (percent)
1
1973
2,795. 3
100.0
100.0
100.0
100.0
100.0
Mothers not employed
Actively seeking work
84.3
85.5
6.5
85.3
5.9
85.1
5.7
83.8
11.5
Mothers employed
Full-time
Part-time
15.7
5.6
10.1
14.5
7.0
7.5
14.7
8.3
6.4
15.0
9.0
6.0
16.2
9.9
6.3
Limited to mothers jn the Aid to Families with Dependent Children (AFDC) program who were living at home.
2 Not available.
Note.—Data refer to status in January of each year. Detail may not add to totals because of rounding.
Source: Department of Health, Education, and Welfare (Social and Rehabilitation Service).
of some of the AFDC grant but also in the loss of some food stamp, housing,
and other benefits. According to this view, while the 1967 amendments
alone would have given an incentive to work, their effects may well have
been offset by the increasing benefits in kind, some of which would be lost
for each increase in labor market earnings.
It is not clear, however, how important in practice this factor could be,
since the reduction in cash benefits as earnings rise has become very small.
Many States exempt large amounts of earnings before any reduction in benefits occurs, and this reduction is in addition to the $30 a month income disregard established by the 1967 amendments. In Mississippi, for example,
the State income disregard is large, and it is unlikely that the reduction in
cash benefits ever exceeds 10 percent of earnings net of work expenses
(the average cash benefit tax rate). Moreover, a change in 1969 in the
method of entering work-related expenses into the cash benefits reduction
formula further lowered the effective tax rate. One study estimated that
the average net tax rate paid by the average working AFDC mother in Illinois and New Jersey (two relatively high tax States) fell from 94 percent to
42 percent between 1967 and 1971. In general, it would appear that the
average tax rate on earnings must have fallen since 1969, even after accounting for the growth of in-kind benefits and their effect on the overall implicit tax rate.
An important factor discouraging work may have been the increase
in the benefit level itself (including in-kind benefits), which—since many
persons eligible for AFDC have low potential earnings—made it possible
for many to maintain a higher living standard than could be obtained
through work. Moreover, the average AFDC mother incurs substantial
work expenses including child care, payroll taxes, transportation, and additional outlays for clothing and food. These expenses are likely to make up
a large proportion of earnings that are not high to begin with. Thus, the
actual dollar increment of earnings that could be retained, even if the
benefit tax rates were zero, could well be too low to make it profitable to
work.
172
Equity and Welfare Reform
Many problems of equity have been raised with respect to the AFDC program. There are wide variations from State to State in the level of benefits.
There are wide variations from family to family in the extent to which they
receive in-kind benefits. And, perhaps most important, many poor families
with a working parent earn less than the total benefits to a welfare family.
In designing a reform of the public assistance program it will be important
to pay attention to these inequities.
It will also be important to give women fewer incentives to have children
without marrying or to separate if they are married. It may therefore be
necessary to extend income supplements to the poor family with a working
male head. In the long run, however, such a program would provide work
disincentives for husbands and wives in intact families. This could be overcome by a moderate implicit reduction in benefits as earnings rise, but such
a solution could be costly. Resolving the dilemma will be one of our most
challenging problems.
SOCIAL SECURITY AND SUPPLEMENTAL SECURITY INCOME
Since the 1930's the Federal Government has provided funds for the aged,
blind, and disabled and for the dependents of deceased workers. The current
programs for these groups are known as Social Security and Supplemental
Security Income.
Social Security
The transfer program with the largest disbursement of funds and number
of recipients in 1973 was Old Age and Survivors Insurance (Table 45).
OASI provided $42.2 billion in benefits to 25.2 million recipients. The recipients were either aged or the dependents of deceased workers. Approximately 16 percent of the recipients were classified as in poverty, on the basis
of money income (including social security benefits). Over 3 million persons
received disability benefits under social security, almost one-quarter of whom
were in poverty.
Social security benefits have been rising rapidly in recent years. The minimum and maximum benefits for a worker retiring at age 65 under full benefits has increased from December 1970 to December 1973 by 54 percent and
66 percent respectively, to $84.50 and $266.10 per month. The consumer
price index increased by 23 percent in the same period. In addition, acrossthe-board increases of 7 and 4 percent are scheduled for March and
June 1974. Starting in 1975, social security benefits can be increased annually
to reflect increases in the consumer price index.
One effect of the benefit increases is that the aged are now more likely
to compose a separate family, rather than a subfamily within a larger
family. Although increased social security benefits have reduced poverty
in the past, most recipients at present are not in poverty. Across-the-board
173
527-867 O - 74 - 12
benefit increases greater than the increase in the cost of living cannot be
expected to reduce poverty markedly in the future.
Accompanying the increase in social security benefits has been a rise in
the social security payroll tax. From 1937 to 1950 the tax rate paid by both the
employer and employee was 1 percent of the worker's earnings up to $3,000.
In January 1974 the social security tax rate (for OASI, and disability and
hospital insurance) was 5.85 percent of earnings up to $13,200. There is
reason to believe that part of the employer's tax is shifted to employees.
Viewed solely as a tax, the social security levy is regressive. As a percentage
of all Federal Government receipts, social security taxes increased from
4 percent in 1949 to 24 percent in 1973. The social security tax is unique
in that there tends to be far less public opposition to raising revenue from this
source than from other sources.
Supplemental Security Income
As of January 1974, Federal grants-in-aid to States for public assistance
to the aged, blind, and disabled were discontinued, and a new federally administered Supplemental Security Income program (SSI), financed out of
general tax revenues, was instituted. The primary purpose of this new program is to provide a nationally established minimum income for these three
specific categories of adults who in general cannot be expected to earn an
adequate income. Most of the recipients of public assistance benefits under
the old program for the aged, blind, and disabled were in poverty in 1973
(Table 45). The benefits under SSI for those with no other money income
are $140 a month for a single person and $210 a month for a couple. These
are to be increased to $146 and $219 respectively in July 1974. SSI recipients
cannot purchase food stamps. With the federalization of assistance, benefits
have increased for the aged, blind, and disabled poor in many States, and
States can provide additional income supplements to SSIrecipients.
FEDERAL FOOD SUBSIDY PROGRAMS
Ever since the Great Depression of the 1930's, the subsidization of food
consumption has been a major Federal Government program to aid the poor.
Food Stamps
Food stamps are a Federal program, initiated in 1961, to supplement the
income of the poor in participating counties. The growth of the program has
been phenomenal. In June 1965, 425,000 persons received food stamps at a
cost to the Federal Government of $33 million during fiscal 1965. By July
1973 there were 12.1 million recipients, and Federal costs in fiscal 1973
were $2.1 billion. In June 1973 food stamps were available in 48 States
and the District of Columbia, and the program will be mandated for the
entire Nation in July 1974. An eligible family can buy food coupons for a
price that is lower than the redemption value at the grocery store. The difference between the redemption value and the price of the coupons to the
family is the subsidy.
174
Families on public assistance are automatically eligible for the program.
Almost 40 percent of recipients in July 1973 were not on public assistance,
however, although 92 percent of food stamp recipients were in the poverty
population.
The average monthly subsidy per person in recipient households was
$15.30 in July 1973, or 55 percent of the redemption value of the average
coupon. The maximum monthly subsidy for a family of four with no money
income is $116, and the subsidy declines for each additional dollar of income.
A family of four with monthly income in excess of $390 receives no subsidy.
The income concept for eligibility is money income, including money transfers after deducting income and payroll taxes, child care expenses if needed
because of work, rent payments exceeding 30 percent of money income, and
other allowances.
Other Food Programs
There are two other Federal food programs. The family food distribution program provides free foodstuffs for low-income families. From a peak
of 12.7 million recipients in fiscal 1939, the number has declined to 2.4
million in July 1973. Relatively few counties have both a food stamp and a
food distribution program at the same time. The food stamp program has
gradually replaced the family food distribution program, which will in
general be terminated in July 1974.
The Federal school nutrition programs subsidize milk consumption as
well as breakfast and lunch for children in participating schools, with larger
subsidies for children from low-income families. In fiscal 1972, 25.4 million
school children benefited from the school lunch program at a cost to the
Federal Government of $726 million.
MEDICARE AND MEDICAID
Since 1965 the Federal Government has been more directly involved in
the subsidization of medical care for the aged and the poor through two
new programs, medicare and medicaid.
Medicare
Medicare is a Federal Government health insurance program covering
hospital care, post-hospital extended care, physicians' services, home health
services, and certain other benefits for all persons aged 65 years and older.
Since January 1974 medicare has been extended to those under 65 who have
been entitled to benefits from social security disability insurance for at least
2 years, as well as to all those covered by social security and their dependents
who require treatment for chronic kidney disease. The benefits under medicare are broad but with defined limits, and there are deductibles and cost
sharing (coinsurance) that the recipient must pay.
In fiscal 1973, 10.6 million persons received medical care paid for
through the medicare program. The average benefit was $71 per month
175
(Table 45). Medicare is chiefly designed for the aged, many of whom are
not poor. About 17 percent of the recipients of medicare benefits in fiscal
1973 were in poverty on the basis of current money income.
Me die aid
Medicaid is a Federal-State health assistance program for welfare recipients and the medically indigent. Medicaid is administered by the States
on a cost-sharing basis with the Federal Government. The eligibility requirements and the benefits differ among the States.
The medically indigent are those who are not necessarily poor by the
Bureau of the Census poverty standard but are judged by the States to have
incomes sufficiently low or medical expenses sufficiently high to qualify for
assistance. In fiscal 1973, 70 percent of the medicaid recipients were in the
poverty population. Some of the 23.5 million persons receiving medicaid in
fiscal 1973 were among the aged poor and were using medicaid to pay the
premium, deductibles, and coinsurance required by medicare. Medicaid
benefits are received by many persons, such as children on AFDC and their
mothers, who are not chronically ill and hence have small annual medical
expenses, but who are nevertheless in poverty.
The Growth of the Programs
Public expenditures for medicaid and medicare have been rising at an
annual rate of 14 percent from 1970 to 1973. As knowledge of the programs
has spread the number of recipients has increased. This source of increased
expenditures is not likely to continue indefinitely. There has also been a large
increase in the utilization of services per recipient, and in the prices charged
per unit of service. Although part of the price increase may reflect quality
improvements, some of it derives from pure increases in price.
Higher deductibles and coinsurance would reduce the growing cost of
the programs due to the increase in services and prices per unit of service.
At the same time, however, it would increase the out-of-pocket cost of medical care for the aged and the poor. A mechanism is needed that will provide adequate medical care for the aged and the poor and reduce the strong
inflationary pressures built into medicaid and medicare, but that will do so
without direct Government provision of medical care or extensive regulation of the medical care sector.
INCOME DISTRIBUTION EFFECTS OF MONEY TRANSFER PROGRAMS
The transfer programs discussed above, as well as other government transfers affect the incomes of families. Comparisons between these money transfer payments and the total money income of families show the income redistribution effects of the transfers. How participation in the labor market and
family formation are affected by money transfers is an important issue, but
too little is known at the present time to quantify what the distribution of
family income would be if there were no transfers.
176
Money Transfers
As the data in Table 48 indicate, 38 percent of the families reported receiving some transfer payments in 1970. Social security and railroad retireTABLE 48.—Proportion of families having transfer income from particular sources, 1970
Percent of families in each income class
with transfer payments
Income class 1
Social
security and
railroad
retirement
Total
Public
assistance
2
Other 3
38
24
7
15
Under $1,000..
$l,000-$l f 999_.
$2,000-$2,999_.
$3,000-$3,999_.
$4,000-$4,999_.
41
77
72
60
50
27
60
55
43
35
13
24
19
12
9
3
8
17
17
17
$5,000-$5,999_.
$6,000-$6,999_.
$7,000-$7,999_.
$8,000-$9,999_.
42
35
30
29
27
21
16
14
5
4
3
3
19
16
17
17
$10,000-$14 f 999..
$15,000-$24,999__
$25,000 and over.
26
24
22
11
11
12
2
1
1
17
16
12
All families.
1
Family income is family money income including transfer income in cash.
23 Public assistance includes AFDC and assistance to the aged, blind, and disabled.
Includes unemployment compensation, workmen's compensation, government employee pensions, veterans' benefits,
and unidentified transfer payments.
Source: Department of Health, Education, and Welfare (Social Security Administration).
ment benefits were the most common form of transfer and were received
by 24 percent of the families. Public assistance went to 7 percent of the
families; both unemployment compensation and veterans' benefits were
paid to approximately 5 percent of the families. Only 7 percent of money
income was derived from transfers. The average transfer per family was $696,
of which 56.6 percent was from social security, 13.1 percent from public
assistance, and 30.2 percent from other sources.
The higher the income, the smaller the proportion of families receiving
a transfer. The percentage of income in each group derived from
government transfers was also lower for higher levels of income. For example, those with incomes between $1,000 and $1,999 received an average of
68 percent of their income from transfers, but only 3 percent of the income
in the $15^00 to $24,999 range was derived from transfers. Low-income
families had approximately twice the dollar value of transfers that highincome families had. Except for the lowest two income groups, however, the
mean income from government transfers for those who received transfer
income was largely invariant with family income after transfers. Highincome families receive a small proportion of their total income from government transfers, not because of a smaller dollar transfer per recipient, but
because they have more income from other sources (earnings and property
income) and fewer among them receive transfer income.
177
Public assistance is specifically designed to provide income supplements
for those who would otherwise have little income. Since public assistance is
heavily concentrated in the lowest income groups and the benefits per recipient are a very large fraction of the income of the poor, public assistance has
a strong income redistribution effect. Social security and railroad retirement
payments are largely received by aged families and younger families headed
by a widow. Although these families tend to have low current income, the
benefits are larger for those who had higher earnings in the past.
The target populations for the other forms of transfer payments, that is,
the unemployed, those injured on the job, retired Government employees,
and veterans, are not necessarily poor. Except for the lowest and highest
income groups, approximately 17 percent of the families in each group
received funds in 1970 from one or more of these four sources. Again except
for the extremes of the distribution, there is virtually no change in dollar
benefits per recipient for higher-income groups. The higher the other income
of the family, the smaller the proportion of income derived from such
benefits. These transfers have a mild income redistribution effect.
Within the category of other payments, unemployment compensation is
more important for middle-income families ($4,000 to $15,000) than for
the poorest and wealthiest of families. The members of the poorest families
ordinarily have too little work experience to qualify for unemployment compensation. The income earners in the highest-income families have lower
rates of unemployment.
Income Inequality Before and After the Transfers
Table 49 presents a measure of income inequality, the variance in the
natural logarithm of income, for family money income and family money
income minus particular transfers (see supplement to this chapter). This
permits a determination of the extent to which the different types of transfers reduce income inequality. Such an approach implicitly assumes that the
transfers do not give rise to labor market or family formation responses by
TABLE 49.—The effect of money transfers on family income inequality, 1970
Type of income
Income
inequality 1
0.74
All income
.77
All, excluding "other" t r a n s f e r
1.16
All, excluding social security
All, excluding public assistance3
.85
All, excluding social security and public assistance3
1.45
All, excluding all transfer income
1.57
1 Income inequality is measured by the variance in the natural log of income. (See Supplement to this chapter).
2 "Other" transfers include unemployment benefits, workmen's compensation, government employee pensions, and
veterans benefits. The income classes used were: Under $2,000; $2.000-$2,999; $3,000-$3,999; $4,000-$4,999; $5,000$5,999; $6,000-$6,999; $7,000-$7,999; $8,000-$9,999; $10,000-$14,999; $15,000-$24,999; and $25,000 and over.
3 Public assistance includes AFDC and assistance to the aged, blind, and disabled.
Sources: Department of Health, Education, and Welfare (Social Security Administration) and Council of Economic
Advisers.
178
the recipients. The data suggest that social security and public assistance
dramatically decreased the measured relative inequality of family income.
The combined effect of the other transfers is a small decrease in income
inequality.
The Tax Transfer System
The success of the Government's programs for the redistribution of income
cannot be judged from any one program or from an examination of taxes
or transfers separately. Primarily because of public assistance, social security,
medicaid, and food stamps, the transfer system is highly progressive in redistributing income to low-income families. It was shown above (Table 35)
that the net effect of personal income and payroll taxes on cash and imputed
income appears to be progressive. Several studies have examined the effect
of the tax system on the distribution of income when accrued capital gains
and losses are included in the income concept. These studies suggest that
the tax system is roughly proportional over the income intervals in which
most families belong, regressive for those with very low incomes, and progressive at the upper end. However, the combined direct effects of the tax
and transfer systems clearly appear to be progressive.
SUPPLEMENT
The Variance of the Natural Logarithm of Income
The "variance of the natural logarithm of incom'e" is the measure of overall income
inequality used in the analysis of the distribution of income in this chapter. It can be
written as:
N
£(lnY,-lnY)«
S»(lnY) =
i=l
JJ-~
(1)
where Yj is the income of the i th observation (individual or family), In designates
natural logarithm, ancj there are N observations in the data. Larger values of S2
mean greater inequality of income, and S2 equals zero if there is no inequality. While
a reduction of the measure from 0.7 to 0.6 conveys an acceptable suggestion about a
decline in inequality, and a decline from 0.7 to 0.5 an acceptable suggestion about a
greater decline, the statement that the second of these two declines is twice the first
would not be meaningful.
The variance of the natural logarithm of income is a commonly used simple measure of relative inequality. A measure of relative inequality does not change in value
if all of the observations have the same percentage change in income. If
Y*,=Y,(l+k),
(2)
where k is the percentage change in income, the natural logarithm of both sides of
equation (2) is
lnY*i = lnYi + ln(l + k).
(3)
Computing the mean of both sides of equation (3),
E I n Y
+ ln(l-f k).
179
(4)
Then, subtracting equation (4) from equation (3),
lnY*i— InY* = (lnYs + ln(l-fk)) — "(mY + ln(l + k)) = lnYj — mYT (5)
and
S2(lnY*)=SHlnY).
(6)
Thus, a proportional tax on income or a proportional cash subsidy does not change
relative income inequality.
Relative inequality decreases (increases) if the income of each observation is
increased (decreased) by the same dollar amount. A $100 per year grant to a poor
family constitutes a larger percentage increase in income than an equal dollar grant to
a wealthy family. Such a grant reduces the relative inequality of income.
A progressive tax is one in which the higher the level of income, the larger the
proportion of income paid in taxes. In a regressive tax a smaller proportion of income
is paid in taxes as income increases. A progressive tax reduces, and a regressive tax
increases, relative income inequality (S 2 (lnY)).
180
CHAPTER 6
The International Economy in 1973
I
NTERNATIONAL TRADE AND INVESTMENT grew at a near
record rate during 1973, despite the strains placed on the international
economy by massive capital flows, large fluctuations in exchange rates, and
strong price pressures due to crop failures, capacity limitations, and cutbacks in oil production by the major producers. The existing international
monetary and trading system proved resilient enough to enable governments to cope with the difficulties they experienced in managing their economies, without having to take measures that would have seriously disrupted
international trade and investment flows. While individual governments
adopted different policy instruments, including external measures, in seeking
to stabilize their economies, potential policy conflicts were minimized by
mutual accommodation. The common effort to arrive at pragmatic solutions
to joint problems undoubtedly strengthened the international economic
system.
As indicated elsewhere in this report, the major problem faced by the
United States as well as the other major industrial nations during 1973 was
inflation. In most economies, demand at the beginning of the year was fast
approaching or was already in excess of the capacity to produce more goods.
Demand pressures were intensified when large speculative capital flows led
to excessive increases in the money supply in a number of countries. Superimposed on this generally inflationary environment were particularly large
imbalances between demand and supply in particular sectors. Capacity limitations were especially severe in the processing of raw materials, like petroleum and steel. Moreover crop failures in many parts of the world put
pressures on agricultural supplies in the United States and elsewhere, and
in the latter part of the year the major oil producers in the Middle East cut
back the oil they were supplying to the rest of the world.
General inflation combined with particularly large increases in the prices
of basic foods and processed materials to create tremendous political pressures
in most countries for government actions to reduce price increases. Among
the policy measures governments took in response to such pressures were
price controls and export controls. The latter measure had the unfortunate
side effect of shifting the inflationary pressures to other countries. Nevertheless in most cases governments recognized the limits of beggar-my-neighbor
181
policies, and the tensions among countries resulting from the pursuit of such
policies were successfully eased by means of diplomatic efforts.
In working out cooperative approaches to the various global problems
governments benefited from discussions regarding a longer-term reform of
international economic arrangements. In turn, the experiences of the past
year provided a new perspective on plans for reform. Progress was made in
each of the three major areas of reform: the international monetary system,
the international trading system, and arrangements relating to international
investment.
The international monetary system. Discussions on the future of the international monetary system were held in the framework of the Committee of
Twenty, which was set up by the countries belonging to the International
Monetary Fund (IMF). An indication of the current state of these discussions was provided by the chairman of that committee in a report to the
annual meeting of the IMF in Nairobi in September.
The international trading system. Also in September, 105 countries
reached agreement in Tokyo on some general objectives and a framework
for a major new round of trade negotiations. They pledged to aim simultaneously for an expansion of international trade opportunities and improvements in the rules and procedures for coordinating trade policies. Prior to
this meeting the Administration sent to the Congress draft legislation to
authorize U.S. participation in a new round of trade negotiations and to
improve the legislative provisions dealing with Presidential management of
U.S. trade policy.
International investment. Discussions were held on investment questions in
the framework of the Organization for Economic Cooperation and Development (OECD). The preliminary conclusions reached on the basis of these discussions point to the desirability of some new procedures and guidelines
which would assure an efficient international allocation of new capital.
WHAT HAPPENED IN 1973?
In the area of international economic relations, the year 1973 may be
characterized as one of continuing adjustment to past disequilibria as well
as to new developments that entered the picture during the year. Early in
the year the governments of most major countries abandoned attempts to
fix exchange rates at negotiated levels. While central banks continued to
intervene to some extent, foreign excharge markets played the major role
in determining the exchange rates that would clear the market. This process was marked at times by unusually large fluctuations of market exchange
rates. Nevertheless, the market performed its intermediating function well,
and neither trade nor long-term capital flows were seriously disrupted at
any time during the year.
The developments in the balance of payments accounts of individual
countries reflected, in part, the developments in the foreign exchange markets. The appreciation and depreciation of individual currencies, achieved
182
either through formal measures by the authorities or as a result of free movement of exchange rates, continued to influence the flows of international
commerce and thus the deficits and surpluses of individual countries. Special
developments, such as the shortages of food in certain parts of the world
and, later in the year, the emerging world energy crisis, also affected the
direction and magnitude of trade and capital flows among countries.
What Happened to Exchange Rates?
Developments during 1973 in the foreign exchange market can be conveniently broken into four periods, coinciding with the 4 quarters of
the year. These developments are described in detail below. Briefly, in
the first quarter, massive capital flows from the United States to Europe
and Japan had two effects: First, foreign central banks added around
$10 billion in claims against the United States to their reserves as a
result of their efforts to support the value of the dollar in terms of their own
currencies. Second, when large-scale market intervention failed to restore
stability to foreign exchange markets, fixed exchange rates were abandoned;
consequently the dollar fell during the quarter by an average of 10 percent
against the EC currencies floating jointly, and 7 percent against the currencies of 14 major industrial countries when each is weighted by that
country's bilateral trade with the United States (Table 50). For the
computation of the trade-weighted depreciation of the dollar see the supplement to this chapter.
In the second quarter the dollar depreciated against most continental
European currencies, but remained in close relationship to the Japanese yen,
the Canadian dollar, and a number of other currencies accounting for twothirds of U.S. trade. The dollar dropped 11 percent against most EC currencies floating jointly, and around 5 percent against the group of 14 currencies. Net claims of foreign central banks on the United States during this
period actually decreased by about $0.7 billion.
In the third quarter the decline of the dollar was arrested, and its value
remained roughly the same against the group of 14 currencies. In fact there
was limited intervention by a number of central banks, including the United
States, to prevent the dollar from rising.
TABLE 50.—Changes in the foreign exchange value of the dollar, U.S. liabilities to qfficia
foreigners and U.S. liabilities to private foreigners, 1973
Percent change from preceding quarter
Item
First
quarter
Foreign exchange value of the dollar 1
U.S. liabilities, official foreigners 2
U.S. liabilities, private foreigners*...
Second
quarter
Third
quarter
-6.9
-5.0
1.1
15.9
-.9
-1.3
-9.3
10.6
4.5
Fourth
quarter
5.5
1 Trade-weighted depreciation of the dollar against 14 major currencies; computed by Morgan Guaranty Trust Company .
central banks and governments.
2
Liabilities to foreign
3
Not available.
4
External liabilities to other banks and to other foreigners.
Sources: Morgan Guaranty Trust Company and International Monetary Fund.
183
In the fourth quarter the dollar rose sharply. It rose 12 percent against
the German mark and around 5 percent against the group of 14 currencies.
Central banks intervened substantially to slow the dollar's rise, and claims
by foreign central banks on the United States declined.
The first quarter of 1973: Fixed exchange rates are abandoned. Foreign
exchange markets were stable in the beginning of 1973. In most foreign
exchange markets the dollar was above the level where central banks were
committed to buy dollars to keep its value within the agreed margins. The
stability was so fragile, however, that any disturbance had a highly unsettling effect on the market. The first such disturbance was an acceleration
of the capital flight from Italy into Switzerland. Confronted with massive
outflows, the Italian authorities allowed the lira to float, first for financial
transactions and later for all transactions. In Switzerland, the influx of funds
from abroad intensified an already high rate of inflation. To gain greater
control over its monetary policy, Switzerland decided on January 22 to allow
the franc to float. By terminating their purchases of foreign currencies in
support of a fixed value of the franc vis-a-vis other currencies, the Swiss
monetary authorities were able to avoid further involuntary increases in the
Swiss money supply.
The floating of the franc by Switzerland, a country viewed by many as
the epitome of financial orthodoxy, strengthened expectations that other
exchange rate adjustments were inevitable, particularly for currencies of
countries with large payments imbalances such as Japan and Germany.
These expectations led to increasingly large speculative purchases of marks
and yen for dollars. Such sales reached a peak in the first week of February,
forcing the closing of foreign exchange markets on February 10. Extensive consultations among the monetary officials of major countries followed and culminated in a number of coordinated exchange rate adjustments. On February 12 the Administration announced that it would ask
Congress to approve a 10 percent devaluation of the dollar in terms of Special Drawing Rights (SDR's). At the same time, the Japanese authorities
announced that the Japanese yen would be allowed to float upward. The
resulting exchange rate structure was endorsed by the 14 major industrial
nations.
The multilateral adjustment of exchange rate patterns in February,
including the devaluation of the dollar, did not, however, restore market
confidence in the entire pattern of rates—in particular, the rate for the
German mark. Large-scale flows of speculative funds out of dollars into
marks and some other currencies continued until exchange markets were
officially closed on March 2.
The exchange markets remained officially closed until March 19, although
private trading of currencies continued. On March 19, five of the European
Community (EC) countries—Belgium, Denmark, France, Germany, and
the Netherlands—allowed their currencies to float jointly vis-a-vis the dollar
and other currencies. As before, these countries decided to keep the exchange
184
rates between any two of their currencies within 2% percent of an agreed
relationship. In addition, Norway and Sweden subsequently decided to peg
their currencies to the jointly floating EG currencies.
The second quarter of 1973: The dollar drops further. Between the
end of March and the end of June the markets were characterized by a
substantial depreciation of the dollar against most European currencies. At
the same time, the dollar remained relatively unchanged against the currencies of Japan, Canada, and a number of other countries. The dollar declined
about 11 percent in terms of most EG currencies floating jointly and 5
percent in terms of the trade-weighted average of 14 currencies. The dollar
declined by as much as 15 percent vis-a-vis the German mark, which was
revalued by 5/2 percent relative to the other EG currencies floating jointly.
(Chart 10.)
There were three sources of downward pressure on the dollar in European exchange markets during this period. First, the United States continued to have a deficit vis-a-vis Europe on basic balance transactions—
Chart 10
Change in the Value of the U.S. Dollar
Relative to Selected Foreign Currencies
PERCENT CHANGE FROM MAY 1970
5
0
\
BRITISH POUND
-5
-10
TRADE-WEIGHTED AVERAGE
VALUEOFTHE D O L L A R *
-15
-20
-25
-30
L...
/*
-
A
*
FRENCH FRANC
/
JAPANESE YEN
-35
-40
-
i
GERMAN MARK
1 1 I I I 1 1 I I 1 1 I1 i i i 1 i i i 1 ii i i 1 i i i 1 i i
1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 II
SEPT. OCT. NOV. DEC.
JAN.
FEB. MAR. APRIL MAY JUNE JULY AUG.
1973
* RELATIVE TO 14 MAJOR CURRENCIES; COMPUTED BY MORGAN GUARANTY TRUST COMPANY.
NOTE: FOR INDIVIDUAL CURRENCIES, FRIDAY CLOSING PRICES WERE USED.
SOURCE: MORGAN GUARANTY TRUST COMPANY.
185
which include trade, grants and other unilateral transfers, and long-term
investment. This meant that the public was supplying more dollars through
these transactions in exchange for European currencies than were being
purchased with European currencies through these transactions. Second,
many non-European countries besides the United States had deficits vis-avis Europe in basic transactions. Since most of these countries use the
dollar as a reserve currency, they tended to finance their deficits vis-a-vis
Europe with dollars. Dollars from non-American sources were thus competing with dollars from the United States in European exchange markets.
Third, the dollar is widely held abroad not only by central banks but also
by many private individuals, banks, and corporations. With the continuing
decline of the dollar during the previous 2 years, many of these private
foreign holders wanted to exchange their dollars for foreign currencies.
As long as markets clear, however, there can be no "additional" dollars remaining unsold. Exchange rates will change until enough sellers
have been discouraged from selling or enough buyers have been encouraged to buy. Equilibrium in the market was established during this period
by private foreigners on balance increasing their dollar holdings. Figures
for dollars held by private foreigners in Europe are not available, but the
changes in these holdings are reflected in the $2 billion increase of U.S.
liquid liabilities to all private foreigners from the end of March to the end
of June. Foreign central banks decreased their holdings of dollars over this
period by $650 million.
The rapid drop of the dollar significantly below what many considered
its longer-term value created widespread uncertainty regarding future exchange market trends; for a short period during the end of June and the
beginning of July the spread between buying and selling rates widened,
and it became increasingly difficult for traders to obtain forward coverage.
Nevertheless foreign exchange markets remained open throughout this
period, and normal international trade and investment transactions continued without major disruption. Fears by many that floating exchange
rates would disrupt international trade proved to be without foundation.
The third quarter of 1973: The dollar begins to rise. The decline of the
dollar relative to European currencies was reversed in the third quarter
as an increasing body of opinion in the market held that the dollar had become undervalued, a view that was strengthened by the emergence of a
sizable surplus in U.S. trade of goods and services. In this favorable atmosphere, some further impetus to the turn in market opinion came from the
announcement on July 18 of U.S. intervention in the foreign exchange
market in order to maintain orderly market conditions.
This move discouraged speculation against the dollar by raising the possibility that the U.S. authorities would buy as many dollars (or sell as many
foreign currencies) as would be necessary to prevent a further decline. To
make large-scale intervention by U.S. authorities in the foreign exchange
market a credible possibility, it was announced at the same time that bi-
186
lateral swap facilities had been increased by $6*4 billion; the amount of
foreign currencies that the Federal Reserve could borrow from other central banks thus rose to nearly $18 billion. In fact, intervention by the
Federal Reserve amounted to only about $250 million during the last 3
weeks of July. During this period the dollar rose by around 4 percent
against the jointly floating European currencies.
The fourth quarter of 1973: The dollar rises further. During the fourth
quarter the appreciation of the dollar continued, in part because it was
thought that the United States was in a relatively better position than
Western European countries and Japan to deal with the cutback of oil
production in the Middle East and the simultaneous increase in world oil
prices. At the same time, the surpluses in U.S. trade were becoming larger,
and figures published for the long-term investment account began to show
a surplus. Between September 28 and December 27 the dollar rose by about 11
percent against the jointly floating European currencies. By the end of the
year the dollar was thus approximately back to its February post-devaluation level. The dollar was rising so fast, in fact, that some foreign central
banks found it increasingly desirable to reduce their controls on capital inflows and to sell off some of the dollars which they had accumulated in the
past. Foreign exchange reserves of the Bank of Japan and the Bundesbank
declined by $1 billion each during the October to November period as a
result of their dollar sales.
Increasingly in the fourth quarter the exchange markets became dominated by the energy crisis and the abrupt and massive additions to import
costs of oil. Early in January 1974 both the yen and the European currencies floating jointly depreciated sharply, and in some cases reached levels
lower than those prevailing immediately after the multilateral adjustment
of February 1973. On January 21, the French franc was allowed to float
freely, and immediately declined by 5 percent.
Over the year as a whole the functioning of the exchange market improved as traders gained experience with floating exchange rates. This can be
seen, for instance, in the narrowing spread between the buying and selling
rates of the major currencies traded and in.the diminished day-to-day fluctuations of these currencies. In general, one has to conclude that despite
the dramatic decline and the equally dramatic rise of the dollar against the
major European currencies, foreign exchange markets functioned remarkably well, and only on a few days was it difficult to carry out foreign exchange
transactions.
What Happened to All Those Dollars?
Over the years a large volume of dollars has been accumulated by foreigners, both governments and private individuals. To a large extent these
dollars are held because the dollar is the most widely used currency for international transactions, and a stock of dollars was therefore useful for all the
reasons that induce people to hold money. Dollars are thus held voluntarily
by private banks, corporations, and individuals. They are also held volun-
187
tarily by foreign central banks, even though central banks to some extent
hold these dollars not because they want to increase their dollar reserves,
but because they want to avoid a rise in the value of their currencies relative to the dollar.
Dollars held by foreigners are generally held in the form of dollar balances at commercial banks. However, not all of the dollars held by foreigners are dollars which are liquid liabilities of the United States, that is,
dollar balances held in U.S. commercial banks. Some dollars are liabilities
of European private banks which have accepted dollar deposits. These are
generally known as Eurodollars. European banks can create new dollars by
lending dollars to someone who will redeposit them in a Eurodollar bank.
As long as the proceeds of new loans are left as deposits in the banking system,
the banking system as a whole can continue to create new money in the
form of bank deposits.
A number of central banks have participated in the creation of new dollars
in the Eurodollar market by depositing their reserves with European commercial banks making Eurodollar loans. By so doing, these central banks not
only facilitated the expansion of Eurodollars, but in many cases they ended
up by creating new official reserves. Most major central banks, however, have
now agreed to refrain from depositing new reserves in the Eurodollar market.
When they are sold in the foreign exchange market, dollars owned by
foreigners become indistinguishable from dollars owned by Americans. That
is, when they are sold they exert a downward pressure, and when they are
purchased they exert an upward pressure on the market value of the dollar.
Private American holders of dollars and private foreign holders of dollars,
whether these are held in U.S. or in foreign banks, have similar economic
motives in selling or buying dollars in the foreign exchange market. For instance, if the dollar is expected to fall relative to foreign currencies, holders
of dollars will have an incentive to sell dollars and to buy foreign currencies. If the dollar is expected to rise relative to foreign currencies, holders
of foreign currencies have an incentive to buy dollars and to sell their foreign currencies. While the average foreign holder of dollars is likely to be
more sensitive to such changes in the foreign exchange value of the dollar
than domestic holders of dollars, the experience of the last few years has
shown that Americans will exchange large amounts pf dollars for foreign
currencies when they find it profitable to do so.
There is some reason to believe that during the first half of 1973 expectations of a future fall in the value of the dollar may have induced some dollar
holders, both in the United States and abroad, to sell their dollars, thereby
depressing the market value. Thus there were occasions when the value
of the dollar was declining in the market, even though the United States was
experiencing a rapid improvement in its underlying balance of payments. In
the second half, expectations of a future rise of the dollar may have reinforced an upward trend by inducing both Americans and foreigners to shift
from foreign currencies into dollars.
188
It is difficult to get a precise estimate of the total amount of dollars held
by foreigners, because figures on dollar deposits in foreign banks are
not easily available. Recorded liquid dollar liabilities of the United States—
dollars held by foreigners which are liquid liabilities of either a U.S. bank
or the U.S. Government—amounted to about $83 billion at the end of 1972;
of this, $63 billion was held by official institutions, and about $20 billion
was held by private banks and other foreigners. In addition the Bank for
International Settlements (BIS) has estimated that at the end of 1972 the
total liquid dollar liabilities of private banks in the EC, Sweden, and Switzerland amounted to almost $100 billion. If interbank deposits made by these
banks are taken out of this figure, and certain other adjustments are made,
the BIS finds that the Eurodollar volume was about $70 billion. The total
volume of dollars held by foreigners as balances in both American and European banks was thus in the neighborhood of $150 billion. Of this amount
perhaps a little more than half was held by official institutions, and the
remainder by foreign private banks, corporations, and individuals. In comparison, the domestic supply of dollars in the United States, in the form of
currency and demand deposits, was about $250 billion at the end of 1972.
During 1973 the total stock of dollars held abroad increased further. Total
liquid dollar liabilities of the United States at the end of September
amounted to $92/2 billion, of which $72 billion was held by official institutions and $20yi billion by private foreigners. Indications are that the volume
of Eurodollars has expanded as well.
What Happened to Trade and Investment?
During the first 3 quarters of 1973 Americans exported $3.0 billion more
in goods and services than they imported, a large change from the first 3
quarters of 1972, when imports surpassed exports by $3.7 billion. On a longterm basis, private foreigners invested $1.4 billion more in the United
States than Americans invested abroad during the first 3 quarters of the
year; during the same period in 1972, U.S. private long-term investment
abroad exceeded foreign private long-term investment in the United States by
$0.9 billion.
These developments in the balance of payments are consistent with what
one might expect from the exchange rate realignments of the past 2 years.
The depreciation of the dollar in terms of foreign currencies should lower
the price of U.S. goods and services relative to foreign goods and services,
thereby stimulating sales abroad and encouraging U.S. residents to purchase goods produced at home rather than abroad. By reducing the relative cost of production in the United States and thus adding to its profitability, the depreciation tended to encourage investment in the United
States rather than abroad. Any interpretation of the effect of the depreciation on developments in trade and investment during 1973, however, is
complicated by the changing business conditions in the United States and
elsewhere, by crop failures abroad, by changes in the demand for and sup-
189
527-867 O - 74 - 13
ply of oil, and by domestic price control programs, all of which also affected
the U.S. balance of payments.
Trade in goods and services. The value of U.S. merchandise exports increased 41 percent from the first 3 quarters of 1972 to the first 3 quarters
of 1973, while imports increased 24 percent over the same period. Higher
prices resulting from intense inflationary pressures here and abroad during
1973 accounted for much of the increase in the value of U.S. trade. Adjusting for price increases, however, makes the turnabout in U.S. merchandise trade even more apparent. The volume of imports increased only 7
percent during the first 3 quarters of 1973, just over half the growth rate
from 1971 to 1972, while the volume of exports increased 24 percent during
the first 3 quarters of 1973, more than double the growth rate from 1971 to
1972.
The rapid growth of exports during 1973, following the realignment of
exchange rates, is consistent with economic expectations. But factors other
than the realignment of exchange rates also affected U.S. exports during
1973.
Shortfalls in foreign crops played a major part in increasing agricultural
exports during the first 3 quarters of 1973. Drought in India and Africa,
poor weather conditions in the Soviet Union, and the sharp reductions in
Peruvian fishmeal production greatly reduced world production of grains
and protein feeds in 1972, thus reducing supplies available for 1973. Because the United States was the largest supplier of foodstuffs with relatively
open access to foreign buyers, these developments abroad had a particularly
strong effect on U.S. agricultural exports. The depreciation of the dollar,
however, was also an important factor in expanding agricultural exports by
reducing the relative price of American crops. The value of agricultural exports in the first 3 quarters of 1973 equaled $12.7 billion, up 88 percent from
the same period in 1972. Although exports of agricultural products accounted
for only one-fourth of the value of total exports, 40 percent of the increase
in exports during the first 3 quarters of 1973 came from agricultural products. Prices of food exports during the third quarter were nearly 40 percent
higher than a year earlier, a change which accounted for a large part of the
increase in the value of these exports.
Domestic price control programs also stimulated exports during 1973, at
the expense of domestic supplies. As prices of internationally traded goods
rose, it became more profitable to sell abroad, where prices remained unconstrained, rather than at home, where prices were controlled.
The increase in U.S. exports, which resulted from food shortages and
domestic price control programs, was offset in part by the rapid increase in
imports of crude and refined petroleum products. The fact that the demand
for oil in recent years has been growing more rapidly than domestic oil
production has created a gap which could only be filled by imports. At the
same time, the world price of oil increased dramatically during the year.
Although the major Arab oil producers embargoed oil shipments to the
190
United States in October, this did not reduce the value of oil imports during the rest of the year. (For a more complete discussion of these developments see Chapter 4.)
The relatively slow growth of total imports during 1973, despite the rapid
increase in imports of crude and refined petroleum products, is the most
visible indicator of the impact of exchange rate realignment on U.S. trade.
In the later stages of a cyclical expansion, imports should accelerate as
domestic producers run low on domestic supplies and rely on foreign suppliers to meet their demands. The fact that the volume of imports did not
grow very much faster during 1973 than it did in 1972 suggests that the
dollar depreciation had a significant effect on trade.
Developments in U.S. bilateral trade provide some additional clues to
the impact of exchange rate realignments. For countries whose currencies
have shown a relatively large appreciation in relation to the dollar, one might
expect that imports from the United States would grow more rapidly
than exports to the United States. This appears to be true, both for Japan
and for the EC. Japan, whose currency has risen sharply against the dollar,
experienced a 73 percent increase in imports from the United States during
the first 3 quarters of 1973, while Japanese exports to the United States
increased only 9 percent. The EC, whose currencies also rose sharply
in relation to the dollar, increased their imports from the United States by
40 percent, while their exports to the United States increased by 23 percent.
For countries whose currencies changed relatively little in relation to the
dollar, the growth rates of exports to and imports from the United States
should be more nearly alike. This appears to be true for Canada and the
United Kingdom, whose currencies changed relatively little during 1973 in
relation to the U.S. dollar. Exports by Canada to the United States and
imports from the United States both increased by around 20 percent. Exports by the United Kingdom to the United States and imports from the
United States both grew by around 30 percent.
U.S. trade with Communist countries in Europe, including the U.S.S.R.,
increased dramatically during 1973, not because of exchange rate realignments, but because of a normalization of trade relations combined with
poor harvests in the Soviet Union. Exports to the Communist countries
in Europe increased to $1.4 billion for the first 3 quarters of 1973, while
imports rose to $0.4 billion. Most of the increase in exports was due to larger
sales of agricultural products.
Investments. During the first 3 quarters of 1973 private foreigners made
more long-term investments in the United States than Americans made
abroad. The effective depreciation of the dollar encouraged foreign investment in the United States during the year because it reduced the relative
cost of producing internationally traded goods in the United States rather
than abroad. The relative cost of producing in the United States declined
further as a result of a tendency for wages to rise more rapidly abroad than
in the United States; foreign firms thus had a greater incentive to produce
191
in the United States. In view of the fairly large changes in relative labor costs
(Table 51), the increase in foreign direct investment from none during the
first 3 quarters of 1972 to $1.5 billion during the first 3 quarters of 1973 may
seem fairly small. Judging by the number and size of investment plans that
have been announced by foreign companies, however, this flow can be expected to increase significantly in the next year.
TABLE 51.—Relative labor costs in manufacturing, 1968-73
[1967=1001
Hourly
compensation in
national
currency
Output per
man-hour
Unit labor
cost in
national
currency
United States:
1968
1969
1970
1971
1972
1973
107.2
114.0
122.2
130.8
139.0
150.0
104.8
107.3
108.0
115.7
121.3
127.5
102.3
106.3
113.2
113.0
114.1
117.6
Germany:
1968
1969
1970
1971.
1972
1973 2
105.9
115.5
133.0
152.1
169.4
190.5
107.6
113.8
116.7
122.4
131.0
140.5
98.5
101.5
114.0
124.3
129.4
135.5
99.9
101.6
109.3
114.7
125.0
150.5
98.3
103.1
124.6
142.5
161.7
204.0
104.0
103.1
90.9
79.3
70.6
57.6
116.2
137.3
163.4
189.0
219.5
265.1
112.6
130.0
146.5
151.7
167.0
198.4
103.2
105.8
111.5
124.6
131.5
133.7
100.4
101.1
101.1
104.2
119.5
133.7
103.7
106.9
112.7
129.9
157.1
178.7
98.6
99.4
100.4
87.0
72.6
65.8
107.3
115.3
124.5
134.5
144.5
157.4
107.3
113.2
115.0
121.6
126.9
133.5
100.0
101.9
108.2
110.6
113.8
117.9
100.1
100.2
103.4
106.8
108.9
107.9
100.2
102.1
111.9
118.2
124.0
127.2
102.1
104.1
101.2
95.6
92.0
92.5
Country and year
Japan:
1968
1969
1970
1971
1972
1973 2
.
Canada:
1968
1969
1970
1971.
1972
19732
.
..
.
..
.
Value of
foreign
currency
relative
to the U.S.
dollar
Index of U.S.
Unit labor unit labor cost
cost in
as percent of
U.S.
index of
dollars^
foreign unit
labor cost
102.3
106.3
113.2
113.0
114.1
117.6
i Indexes in national currency adjusted for changes in prevailing exchange rates.
a Based on seasonally adjusted data for first 9 months.
Note.—Data relate to all employees in manufacturing.
Sources: Department of Labor (Bureau of Labor Statistics) and Council of Economic Advisers.
Foreign purchases of U.S. securities other than U.S. Treasury securities
also increased, from $2.6 billion during the first 3 quarters of 1972 to $3.4
billion during the first 3 quarters of 1973. Such an increase is also consistent
with what one would expect from the large depreciation of the dollar, inasmuch as the depreciation should increase the relative profitability of producing in the United States. Market expectations also exerted a strong influence
on the flow of security transactions over the year. Foreign purchases of U.S.
securities were quite large in the first quarter, reaching a total of $1.7 billion.
During the second quarter, purchases fell to $0.5 billion, but increased again
to $1.2 billion in the third quarter.
Direct and portfolio investments abroad by Americans amounted to $3^2
billion during the first 3 quarters of 1973, as they had during the first 3
192
quarters of 1972. There are two possible reasons for the absence of a decline:
First, economic conditions were buoyant throughout the world. Second,
most of the outflow occurred in the first quarter, before the major exchange
rate adjustments of 1973, and was probably motivated by the anticipation
of subsequent exchange rate adjustments.
The U.S. Balance of Payments in 1973
In a world characterized by the managed floating of exchange rates, measurement of the overall balance of payments has become less important. In
a fixed exchange rate world, one of the major functions of overall measures
of the balance of payments was to signal to policy makers when a given exchange rate had become untenable. To the extent that exchange rates are
allowed to adjust automatically in response to payments imbalances, it is no
longer necessary to communicate the desirability of an exchange rate adjustment to the policy maker. Of course, to the extent that exchange rates
remain constrained by official intervention in the foreign exchange market,
the balance of payments numbers will continue to indicate when such intervention may need to be relaxed.
The managed floating of exchange rates has changed in particular
the analytical meaning of the official reserve transactions balance, which
measures the net direction and magnitude of official intervention in the
foreign exchange market over a period of time. In other words, it approximately shows the extent to which governments have bought or sold
currencies to influence the exchange rate. It also includes government-togovernment payments outside the foreign exchange market, but removing
these transactions from the foreign exchange market has the same effect as
direct intervention. As long as governments kept market exchange rates
relatively fixed by buying and selling foreign exchange, the net amount of
such official purchases or sales provided an estimate of the net deficit or net
surplus of a given currency traded in the market. To the extent that governments no longer attempt to keep market exchange rates from falling below
or rising above a fixed level, changes in the net demand or supply of a currency are reflected in a movement of the exchange rate rather than in a net
loss or gain of reserves. Since exchange rates were at first fixed and then
floating to varying degrees in 1973, changes in market pressures were reflected in part by changes in exchange rates and in part by net changes in
international reserves, that is, by the official reserve transactions balance.
As measured by the official reserve transactions balance, the United
States had a deficit of $10I/2 billion in the first quarter, a surplus of $J/2
billion in the second quarter, and a surplus of $2 billion in the third quarter
(Table 52). That is, in the first quarter, governments purchased roughly
$10^2 billion to keep the dollar higher than it would otherwise have been;
in the second quarter, governments more or less allowed the dollar to find its
own level in the market; and in the third quarter, governments sold roughly
$2 billion, to keep the dollar lower than it would otherwise have been.
193
TABLE 52.—U.S. balances on international transactions, 1972—73
[Billions of dollars, seasonally adjusted]
First 3 quarters
1973
Type of transaction
1972
IV
1972
Goodsi
Services
Military transactions
Investment income 2 . . .
Other
II
III
0.7
-5.2
-0.5
-1.7
-1.0
-0.2
1.4
3.5
.9
1.1
.9
1.4
-2.7
5.6
-1.5
-2.1
6.7
-1 1
g
2. 2
_ 5
-.8
2.3
- 4
-.7
2.1
5
-.6
2.3
-.3
g
GOODS AND SERVICES
-3.7
3.0
Unilateral transfers, net 3
-2.9
-2.7
CURRENT ACCOUNT
1
1973
.2
.7
2.1
-.7
-1.0
-.9
-6.6
.3
-1 8
- 6
-.4
1.2
-1.7
.7
.2
-.4
-.2
1.3
-.8
-2.6
1.7
-.6
-1.7
3.0
-.6
-.6
1.4
-.3
-1.8
1.7
.1
-.4
.1
-.4
.5
1.2
CURRENT ACCOUNT AND LONG-TERM CAPITAL
-8.3
1.0
-1.6
g
-.6
2.5
Short-term claims
-1.8
-4.7
-1.2
-3.8
-.6
3
Long-term capital.
U.S. Government4
Direct investment. _.
Other private
..
..
..
..
Short-term liabilities
Errors and unrecorded transactions, net
Allocations of SDR
TOTALS
.
2.3
.5
2.6
-1.8
1.1
1.2
-1.6
-4.8
-1.5
-3.9
.4
-1.4
-8.1
-1.5
-10.5
.3
2.1
.2
.5
-8.9
1 Excludes transfers under military grants.
2 Includes direct investment fees and royalties.
3
Excludes military grants of goods and services.
* Excludes official reserve transactions and includes transactions in some short-term U.S. Government assets.
'Equals official reserve transactions balance.
Note.—Detail may not add to totals because of rounding.
Sources: Department of Commerce, Bureau of Economic Analysis, and Department of the Treasury.
Another commonly used measure of the U.S. balance of payments is the
current account and long-term capital balance, or the "basic" balance,
as it is sometimes called. This balance is computed by adding up all the
recorded transactions in the current and the long-term capital accounts,
including unilateral transfers. It attempts to measure the extent to which
the "long-term" or "underlying" demand for foreign exchange has exceeded the "long-term" or "underlying" supply of foreign exchange during
a given period. If all such transactions were accurately recorded, this balance
would also equal the changes in official reserves and the changes in shortterm foreign assets of private banks, corporations, and individuals, net of
changes in liabilities. Because some transactions may not be measured correctly, however, or may escape measurement altogether, a difference usually
exists between recorded basic transactions above the line and recorded
changes in reserves and short-term assets below the line. This difference appears as an errors-and-omissions item in the balance of payments statistics.
Deficits and surpluses in the basic balance need not necessarily imply any
disequilibrium which requires corrective action by the government. To the
extent that changes in net private holdings of short-term foreign assets are
194
voluntary, the existence of a surplus or deficit need not imply that it is
either undesirable or unsustainable. When such changes are quite large in
any one year, however, there is a strong possibility that the change is a temporary response to unusual circumstances, such as differences in interest
rates. In these cases, some governments might be inclined to intervene to
moderate the exchange rate fluctuations which could result from large
shifts in short-term foreign assets.
The U.S. basic balance was in deficit by $1 billion during the first and
$5/2 billion during the second quarter of 1973, while during the third quarter
it was in surplus by about $2J/2 billion. For the 3 quarters, the U.S. basic balance was in surplus by about $1 billion. In other words, Americans in the
first 3 quarters of 1973 earned $1 billion more from current account and longterm capital transactions than they spent on similar transactions.
Table 52 also shows that during the first 3 quarters $5 billion in net foreign currency expenditures were not recorded, while recorded short-term
private claims on foreigners increased by $4*/2 billion. These two items were
"financed" by the $1 billion current account surplus; a $5/2 billion net
increase in recorded short-term liabilities to private banks, corporations and
individuals; and an $8 billion net increase in U.S. liabilities to foreign official
institutions.
The Net Foreign Asset Position
At the end of 1972 the estimated value of American assets abroad was
$200 billion, and the value of American liabilities to foreigners was $150
billion. The $50 billion difference between the two is the estimated net
American investment position abroad. The net investment position declined
by about $20 billion from 1970 to 1972, but data for the first 3 quarters of
1973 suggest that it probably increased last year.
Changes in the U.S. net asset position are brought about in part by surpluses or deficits in the balance on current account, a balance which includes
U.S. transactions in goods and services, as well as unilateral transfers
(Table 52). The largest changes occurred in the balance on goods and
services. When the United States has a deficit in its trade balance as in 1971
and 1972, it imports more than it pays for with exports, thus increasing
American liabilities to foreigners. With a trade surplus, as in the first 3
quarters of 1973, the United States acquires imports and an increase in net
assets abroad in return for its exports. One would therefore expect an
improvement of the U.S. net asset position during 1973.
The U.S. net asset position is also affected by several kinds of transactions
and accounting adjustments that do not appear in the balance of payments.
When foreign subsidiaries reinvest their earnings, this increases the value of
U.S. assets abroad; and when foreign-ow7ned subsidiaries in the United
States reinvest their earnings, this increases U.S. liabilities to foreigners.
During 1973, U.S. reinvestment of earnings may have exceeded foreign
reinvestment by $4 billion or more, thus adding to the U.S. net asset position. Changes in the valuation of outstanding assets and liabilities, which
195
result from changes in market value or changes in exchange rates, also have
a small impact on the U.S. net asset position. Because of the small surplus
on current account and the large level of net reinvested earnings, the net
asset position of the United States must have improved markedly during
1973.
Balance of payments figures indicate, however, that the increase in liabilities to foreigners exceeded the increase in U.S. assets abroad by about
$4^2 billion for the first 3 quarters of the year. This inconsistency can be
partly explained by the net acquisition of unrecorded short-term foreign
assets by Americans.
U.S. assets abroad are on the whole less liquid than U.S. liabilities to foreigners. At the end of 1972 about 90 percent of the $200 billion in assets
abroad were considered nonliquid. Direct investments amounted to about
$95 billion; holdings of long-term foreign securities were about $25 billion.
The remaining nonliquid assets include $15 billion in nonliquid short-term
assets held by private Americans, $10 billion in private long-term claims
by banks and others and $35 billion in Government-owned assets. Most of
the U.S. liquid assets are in the form of official monetary reserves. On the
other hand, more than half of the $150 billion in liabilities to foreigners are
considered liquid; most of these liabilities are in the form of bank deposits,
short-term Treasury securities, and negotiable certificates of deposit.
HOW GOVERNMENTS BEHAVED IN THE MONETARY ARENA
During 1973 international monetary arrangements continued to evolve
in response to changing needs. A major characteristic of these evolving
arrangements is a considerable diversity in practices by different countries.
Yet despite this diversity, countries cooperated with each other to a remarkable extent, as they had in 1972, and from their cooperation one could begin
to see the development of some conventions to guide countries in their
monetary relations. This process has benefited from the discussions taking
place in the framework of the Committee of Twenty, a committee associated with the International Monetary Fund.
Exchange Rates and Intervention
Exchange rates became more flexible in 1973, as the governments of
most major countries reduced or suspended their commitments to maintain fixed exchange rates, and other governments changed their par values
more frequently. While governments have continued to intervene in the
foreign exchange market in order to influence the movement of the exchange rate, it can no longer be assumed that they will finance an excess
demand or absorb an excess supply of foreign currencies at given exchange
rates. The situation can best be described as one of managed floating.
In managing their exchange rates, countries followed widely differing
practices, as can be seen in Table 53. Some countries have allowed their
currencies to float within a rather wide range, resorting to only limited
196
TABLE 53-—Maximum percent change in exchange rates between vatious foreign currencies
and the dollar during 1973
Maximum percent change in rate during 1973
Type of intervention
No change
1-8 percent
Countries undertaking considerable intervention to maintain a stable relationship
vis-a-vis the dollar (except
where another currency is
noted).
Turkey
Argentina
Bolivia
Costa Rica
Dominican Republic
Ecuador
El Salvador
Guatemala
Haiti
Honduras
Mexico
Nicaragua
Paraguay
Peru
Israel
Philippines
More than
20 percent
Sweden.
Belgium
Germany
Denmark
France
Netherlands
Norway
Italy
Canada
United Kingdom
Iceland
Finland
Portugal
Austria
Switzerland
Brazil
Colombia
Venezuela
Republic of China
Thailand
Korea
Ghana
India (pound)
Pakistan
Spain
Egypt
Ethiopia
Iran
Iraq
Saudi Arabia
Sri Lanka
South Africa
Greece
Yugoslavia
Australia
Uruguay
Afghanistan
Japan
CFA Countries
(French franc)
Chile
Morocco
New Zealand
Countries maintaining a joint
float, with intervention to
maintain a stable relationship within the group, but
minimal intervention in outside currencies.
Countries floating independently with some intervention
in the foreign exchange
market.
9-20 percent
Country fixing rate with respect
to an average of other currencies.
Note.—The procedure for computing maximum percentage changes was to find the largest end month deviation
during the year from the dollar exchange rate in effect at the end of December 1972.
Sources: International Monetary Fund, and Council of Economic Advisers.
intervention in foreign exchange markets to maintain orderly market conditions. One group of countries, comprising Germany, France, Belgium, the
Netherlands, Denmark, Norway, and Sweden, decided to keep their currencies relatively fixed with respect to each other. Whenever spot market exchange rates between any two currencies in the group deviate by more than
2J4 percent from an agreed relationship, the monetary authorities are
obliged to intervene in terms of each other's currencies. However, in January 1974, the Government of France announced that it would sever the tie
between the franc and the other EC currencies floating jointly. Some countries have decided to keep their currencies fixed to one or the other of the
major currencies. A few countries have followed the practice of keeping their
currencies fixed relative to an average of other currencies weighted according to their importance in bilateral trade.
Most countries, regardless of the exchange rate regime they have chosen,
have continued to intervene in the foreign exchange market to varying
degrees. Some countries, the United States among them, have restricted
themselves to limited intervention with the object of maintaining orderly
market conditions. Other countries, although they were officially floating,
197
TABLE 54.—Major changes in capital controls, 1973
Country
Controls on banks and other
financial intermediaries
Australia.
February—broadened coverage of restrictions on borrowing abroad.
October—increase from 25 to
3 3 ^ percent in noninterest-bearing deposits required on borrowings from
abroad with a maturity in
excess of 2 year?.
Belgium.
March to early S e p t e m b e r negative interest rate of 14
percent per week on nonresident convertible franc
holdings
exceeding
the
daily average in the last
quarter of 1972.
Late September—negative interest rate reimposed.
Controls on portfolio
investment
Controls on direct
investment
March—general ban on foreign
investment
in
Australian
real estate.
Canada.
December—act
calling
for
screening of new foreign
direct investments in Canada
passed.
France.
March to early October—prohibition of interest
payments on nonresident franc
deposits of less than 180
days; increase (to 100 percent) in mandatory reserve
requirements on excess of
these deposits above their
Jan. 4 level.
March—restriction on banks'
forward exchange transactions with nonresidents.
April to late October—banks
allowed to impose a negative interest rate of 0.75
percent per month on the
increase
in
nonresident
franc deposits above the
January 4 level.
September—banks
prohibited from lending francs
to nonresidents.
March to early October—nonresident purchases of shortterm securities prohibited.
Germany.
February 4-prior authorization
required (and as a rule not
given) for contracting of
foreign loans and credits in
excess of DM 50,000.
February
24—Government
empowered to raise the
cash deposit requirement
against foreign borrowing
from 50 to 100 percent
(authority not yet invoked).
July 1 to October 1—minimum reserve requirements
against foreign liabilities
effectively
increased
to
90-100 percent, as opposed
to 8-20 percent on domestic liabilities.
February—new
restrictions
on sale of domestic securities to nonresidents.
February—authorization
requirement for nonresident
direct investment valued in
excess of DM 500,000.
July—blocked
noninterest
bearing deposit of 50 percent (25 percent for mutual
funds) required on portfolio
investments abroad.
July—similar deposit required
on
direct
investments
abroad.
May—relaxation of controls
governing acquisition of
Japanese
securities
by
foreign investors, and acquisition of foreign securities by Japanese investors.
May—continued relaxation of
controls on direct foreign
investment in Japan. With
some exceptions, virtually
all industries will be fully
open to foreign ownership
by the end of 1975.
Italy.
Japan.
May—increase from 70 to 90
percent in allowable foreign
currency financing of external operations, including
direct investments overseas, purchases of real
estate abroad, and prepayments for imports.
198
TABLE 54.—Major changes in capital controls, 1973—Continued
Country
Controls on banks and other
financial intermediaries
Controls on portfolio
investment
October25—relaxed requirement that foreigners floating yen loans must immediately convert 90 percent
of the proceeds into foreign currency.
November—banned resident
purchases of foreign bonds
within
6 months
of
their
maturity;
ended
requirement that security
houses should balance
foreign purchases and sales
of Japanese stocks.
November 21—Government
announced that it would
make no further additions
tc its dollar financing of
one-half of Japanese banks'
import loans.
December—marginal reserve
requirement on free yen
deposits by nonresidents
lowered from 50 percent
to 10 percent.
Netherlands.
March to May — noninterest
bearing reserve requirement levied on increases
in banks' net foreign guilder
liabilities; special commission levied against inincreases in balances in
convertible guilder accounts.
Switzerland.
January 29 to October 29—
banks prohibited from having net liabilities in foreign
currencies (spot and forward together).
October 1—National Bank revoked the 2 percent per
quarter negative interest
rate on banks' franc deposit liabilities to nonresidents.
United States..
May 16—Federal Reserve
Board (FRB) lowered reserve requirements against
Eurodollar borrowings in
excess of the reserve free
base (from 20 to 8 percent),
and took steps to eliminate
gradually the reserve free
bases.
December 26—Federal Reserve Board announced
effective Jan. 1, increased
foreign lending and investment ceilings for banks and
other financial institutions
subject to the Voluntary
Foreign Credit Restraint
Program: ceilings raised on
foreign loans by U.S. banks,
by U.S. agencies and
branches of foreign banks,
and by U.S. nonbank financial institutions.
January 1974—Controls on
foreign lending by financial
institutions suspended.
Controls on direct
investment
December—foreigners
allowed to purchase Japanese
bonds without restrictions.
January—residents allowed
to subscribe for new Euroguilder notes issued by
residents.
April—Interest Equalization
Tax(IET) extended through
June 1974.
Continued liberalization: export
credits extended by direct
investors to their affiliated
foreign nationals exempted
from controls.
December 26—Treasury Department announced reduction of the IET from an
annual rate of 94 to J4 percent per annum effective
Jan. 1,1974.
December 26—Commerce Department announced, effective Jan. 1, increased minimum allowable direct investment abroad by U.S. firms
from $10 to $20 million per
year. In addition, various
other regulations were relaxed.
January 1974—IET reduced
to zero.
January 1974—Controls on
foreign investment by U.S.
corporations suspended.
Sources: International Monetary Fund, and Board of Governors of the Federal Reserve System.
have intervened on a broad scale to minimize day-to-day fluctuations in their
rates. Still other countries have continued to intervene in order to keep their
exchange rates stable with respect to a major currency, a group of currencies,
or an average of all currencies.
Despite the great variety of exchange rate practices by different countries,
relations among countries have remained fairly harmonious. Although no
199
attempt was made to agree on a code of conduct to guide governments in
formulating their exchange rate and intervention policies, extensive consultations have led to wide acceptance of some basic tenets that should influence the formulation of policies in this area. An idea repeatedly expressed
in official statements is that countries should intervene in the foreign exchange market when intervention is necessary to maintain orderly market conditions. On the other hand, interventions aimed at obstructing or
accelerating a basic market trend would be generally regarded as harmful.
There is probably also wide recognition that a country with meager reserves
may need more latitude for allowing its exchange rate to decline than a country with ample reserves; and, conversely, a country with ample reserves may
need more latitude for allowing its exchange rate to adjust upward than a
country with meager reserves. Similarly, when its rate is rising, a country with
meager reserves should have wider latitude to intervene in the foreign exchange market than a country with ample reserves, whereas a country with
ample reserves should have a wider latitude to intervene in the foreign
exchange market when its rate is falling.
The conceptual basis for these conventions, if one may call them that, is
similar to the ideas put forward by the United States and some other
countries for reforming the international monetary system. The continuing
discussion in the Committee of Twenty can be expected to give these ideas
more concrete form.
Capital Controls
Another development during 1973 has been the adoption of new measures for controlling capital movements, as can be seen in Table 54. (Controls already in force at the beginning of the year are not shown in the
table.) Capital controls were tightened further in the first part of 1973 by
many major industrial countries, when exchange market developments put
upward pressure on many of the European currencies and several countries
sought to moderate this pressure by imposing restrictions on banks and other
financial intermediaries. Some of the more common restrictions were discriminatory reserve requirements, and penalty rates or prohibition of interest
payments on nonresident deposits. Capital controls did not, however, succeed
in preventing large speculative short-term capital inflows, either prior to the
revaluation of the dollar in February or from late May to early July.
Some countries, on the other hand, took steps to discourage capital
outflows or encourage capital inflows. Italy required noninterest-bearing
deposits against investments abroad in order to stem a continuing capital
outflow. Japan relaxed controls on inward direct and portfolio investment
to reduce the overall balance of payments deficit which developed in 1973.
Since the 1960's the United States has maintained three kinds of restraints
on capital outflows: an interest equalization tax on purchases of foreign
securities, restrictions on foreign direct investments by U.S. corporations,
and limitations on foreign lending by U.S. financial institutions. These
restraints were relaxed in December 1973, and removed entirely in January
1974.
200
Changes in International Liquidity in 1973
Total international reserves increased by $28 billion during the first
9 months of 1973, compared to $28 billion in 1972 and $38 billion in 1971.
From the end of 1970 to the end of September 1973, total reserves doubled,
increasing from $93 billion to $187 billion. As in previous years, most of
the increase was in foreign exchange and resulted from intervention by
foreign central banks in the foreign exchange market to slow down the
appreciation of their currencies vis-a-vis the dollar. After the major European countries and Japan decided to allow their currencies to float in
relation to the dollar, the further accumulation of foreign exchange was
reduced. As can be seen from Table 55, foreign exchange reserves increased
by $22 billion during the first 9 months of 1973. Of this amount $14 billion
occurred in the first quarter, before the major European currencies were
floated. The $22 billion increase in foreign exchange reserves consisted of an
$8 billion increase in U.S. liabilities to foreign central banks. The remainder
constituted increases in dollar balances of central banks held in commercial
banks outside the United States, and reserves held in currencies other than
the dollar. Toward the end of the year a reversal of this trend set in, as an
increasing number of foreign central banks sold dollars to slow the decline
of their currencies relative to the dollar.
Despite the large increase in foreign exchange holdings in 1973, the
composition of reserves did not change significantly during the year. The
proportion held in gold fell from 24 to 23 percent, while that held in
foreign exchange increased from 65 to 67 percent of total reserves. Most of
the increase in primary reserves (gold, SDR's, and reserve positions in
the Fund) resulted from the devaluation of the dollar in terms of gold and
SDR's, which automatically increased by 11 percent the dollar value of
the existing stock of gold, SDR's, and reserve positions in the Fund.
TABLE 55.—Composition of international reserve assets, 1970—73
Value of reserve assets l
(millions of U.S. dollars)
Percent of total reserves
Type of reserve asset
Total reserve assets
September
1973
September
1973
1972
1971
1972
92.6
130.6
158.8
186.9
100
100
100
100
1970
1970
1971
37.2
39.1
38.8
43.2
40
30
24
23
SDR
3.1
6.4
9.4
10.6
3
5
6
6
Reserve position in IMF
7.7
6.9
6.9
7.5
8
5
4
4
44.6
78.1
103.7
125.6
48
60
65
67
23.8
50.7
61.5
69.8
26
39
39
37
Gold stock
...
Foreign exchange
U.S. liabilities
...
i End of period.
Note.—Detail may not add to totals because of rounding.
Source: Internationa] Monetary Fund (IMF).
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The official price of gold was raised from $35 per ounce to $38 per ounce
by the Smithsonian Agreement in December 1971. It rose from $38 to $42.22
an ounce in conjunction with the announcement early in 1973 that the
dollar would be devalued in terms of SDR's. The price of gold in the
private bullion market in London increased from $65 at the end of 1972
to $112 at the end of 1973, having reached a peak of $127 on June 5 and
July 6. Since the market price of gold has been almost three times as high
as the price at which governments have fixed the price of gold for official
transactions, countries that hold gold have been reluctant to use it in international settlements. As a first step to unfreezing gold, a number of countries
which had previously agreed not to buy or sell official gold in the free market
decided to end that agreement in November. While IMF rules still prohibit
official gold purchases from the private market when the free market price is
above the official price, official sales to the private market are permitted
when the free market price is above the official price. Snnce the market price
is now nearly three times the official price, central banks would now be in a
position to sell gold from the market without violating IMF rules. No country has yet announced, however, whether or when it intends to sell gold to
the market.
PLANNING THE FUTURE INTERNATIONAL
MONETARY SYSTEM
Discussions begun in 1972 by the Committee of Twenty on reform of
the international monetary system continued during 1973. The state of
these discussions at the time of the annual meeting of the International
Monetary Fund in Nairobi during September was summarized in a document entitled First Outline of Reform. It is a report in which the chairman
of the committee cites the issues on which some measure of agreement has
been reached, points of disagreement, and suggestions by members of the
committee about ways of dealing with outstanding issues.
The current international monetary arrangements have been evolving as countries have made pragmatic adjustments to changing realities
in the international economy. In making these adjustments, governments
have been influenced by the discussions in the Committee of Twenty, just
as those discussions have been influenced by the experiences gained with the
interim arrangements. In the discussion below, the long-term alternatives
are examined within a framework that encompasses both the Bretton Woods
system and the current interim arrangements.
The Exchange Rate Regime
The central function of an international monetary system is to facilitate
the exchange of one currency for another in such a way that trade and
investments can take place across national frontiers almost as easily as within
a given country. There are various ways of organizing the exchange of one
currency for another. They differ chiefly in their methods of assuring that
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over time a country's payments in foreign currencies equals its receipts in
foreign currencies.
At one extreme, balance between the demand for and supply of a currency is achieved at all times through a free market in which currencies are
traded at whatever exchange rate will clear the market. Many monetary authorities are opposed to this degree of flexibility, however, since they fear
that large exchange rate fluctuations would create difficulties for international commerce. In order to overcome some of these difficulties, most governments have made it a practice to enter the market as buyers and sellers
whenever changes in the private demand or supply of their currencies would
otherwise lead to large fluctuations in exchange rates.
The exchange rate at which one government would like to fix the value of
its currency relative to other currencies may not coincide with the exchange
rate at which other governments would like to fix their currencies.. To avoid
such potential conflicts, it is desirable to agree on some rules, which may
specify when governments may or should intervene in the market, or when
governments may or should allow exchange rates to change.
The rules could be very tightly written, allowing little national discretion;
or they could be written with considerable room for nations to make their
own judgments. The Bretton Woods system imposed a relatively strict
discipline by requiring governments to intervene in the foreign exchange
market whenever rates deviated by more than % percent from internationally agreed rates. Exchange rates could be changed only when it could
be demonstrated that the existing rates created a disequilibrium which was
regarded as fundamental.
Under the current arrangements agreed to in March, governments have
accepted a general obligation to intervene in the foreign exchange market
to assure orderly market conditions.* In the future international monetary
system, the Committee of Twenty has agreed, that exchange rate rules
should be less rigid than they were under the Bretton Woods system, but
that they should impose more precise obligations than exist under the present
arrangements.
When Should Countries Use Demand Management Policies?
Changing the exchange rates is not the only way of removing an imbalance in international payments flows. In fact, it is theoretically possible to
have a system of completely fixed exchange rates in which long-term balance
between the demand for and supply of foreign currencies is achieved through
changes in the level of domestic demand. Under the classical gold standard
*The communique issued on March 16, 1973, by the Group of Ten meeting in Paris
stated that the participating countries "agreed in principle that official intervention
in exchange markets may be useful at appropriate times to facilitate the maintenance
of orderly conditions, keeping in mind also the desirability of encouraging reflows of
speculative movements of funds."
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system, these demand changes were assumed to take place automatically.
Since exchange rates were established by the fixed price of gold in each
country, payments equilibrium was assumed to be preserved by the impact of
net transfers of gold on the domestic money supply and hence on the total demand for goods and services. However, since most governments today consider it their responsibility to manage domestic demand in accordance with
their goals of employment and price stability, complete reliance on adjustments of domestic demand to keep the balance of payments "balanced" is
therefore not considered reasonable. At the same time, any government following a rational policy will manage its domestic demand with regard to the
side effects on international currency markets, since exchange rate movements have a feedback on domestic economic variables.
The methods by which a country equalizes its foreign currency payments
and its foreign currency receipts affects not only its own economy but
foreign economies as well, and hence there needs to be agreement on
mutually acceptable conduct. The Bretton Woods Agreement, for instance,
established a strong presumption that countries would use domestic derpand
management policies for balance of payments adjustment whenever that
would not be inconsistent with domestic price stabilization and employment
objectives.
Under present arrangements countries are free to decide on their own
the extent to which demand management policies should contribute to
a correction of payments imbalance. Nevertheless, in the course of international discussions related to current balance of payments developments,
the impact of alternative adjustment measures on other countries is explored,
and where conflicts are identified, mutually satisfactory solutions can usually
be worked out.
In the future international monetary system, it is generally assumed,
countries will continue to have considerable flexibility in choosing among
alternative adjustment measures, and they will also continue to take into
account the effect of their policies on other countries. It is expected that
the adjustment policies of countries will be reviewed by a new committee
that will be established in the International Monetary Fund to be composed
of policy-making officials from national capitals.
When Should Countries Use Controls?
It would also be theoretically possible to have a system in which balance
of payments equilibrium is maintained by government controls over
international transactions. The Communist countries, in fact, have adopted
such a system. In most non-Communist countries an adjustment system based exclusively on the use of controls would be unacceptable
because it would entail unwarranted government interference with private
decisions and because it would lead to inefficient production and consumption patterns. In some circumstances, however, governments have found it
desirable to use controls to adjust the balance of payments.
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The Bretton Woods Agreement permitted the use of controls to regulate
international capital movements, but generally ruled out any restrictions
on payments for transactions in the current account. The General Agreement on Tariffs and Trade (GATT), which spells out what restrictions
countries may place on trade directly, as distinct from restrictions on payments for trade, provides that governments may temporarily impose quotas
but may not impose or increase tariffs, in order to deal with a serious
balance of payments deficit. In practice, tariff surcharges have been imposed
but have remained in effect only for short periods, because other countries
have exerted strong pressures to remove them promptly. Nothing has happened to change these rules during the time the present arrangements have
been in effect. The First Outline of Reform indicates international agreement on a continued "strong presumption against the use of controls on
current account transactions or payments for balance of payments purposes."
It also rules out the use of controls over capital transactions "for the purpose
of maintaining inappropriate exchange rates or, more generally, of avoiding
appropriate adjustment action." There has also been wide agreement that,
in choosing among different forms of adjustment actions, countries should
take into account repercussions on other countries as well as domestic
considerations.
When Should Countries Correct Payments Imbalances?
Another area of international concern is the timing of policy measures
by countries to remove payments imbalances. This is of international concern because one country's surplus is another country's deficit, and vice
versa. When one country fails to deal with a growing payments imbalance,
it becomes more difficult for another country to deal with its payments imbalance. Under the Bretton Woods system the main provisions dealing with
the timing of adjustment actions were focused on deficit countries. A country
wanting to borrow from the International Monetary Fund had to satisfy the
Fund that it was taking appropriate actions to reduce its deficit. The
more such a country wanted to borrow, the tighter the discipline that the
Fund imposed. The IMF Articles of Agreement also provided for pressures
to be exerted on countries with persistently large surpluses, though this provision was never applied in practice. Under the current arrangements these
provisions remain in effect, although they have become largely inoperative.
According to the Chairman of the Committee of Twenty there is agreement
that countries should "take such prompt and adequate adjustment action,
domestic or external, as may be needed to avoid protracted payments imbalances." There is also agreement that a judgment of what constitutes
"adequate adjustment action" should be based on both objective indicators,
such as a country's level of international reserves, and an evaluation by an
international body such as the IMF. The manner in which these elements
might be best combined remains unsettled.
205
527-867 O - 74 - 14
What Pressures Should Be Exerted on Countries?
Once an obligation is established for countries to act in a timely fashion
to remove payments imbalances, the question arises what, if any, pressures
ought to be exerted on countries that fail to carry out their obligations. The
Bretton Woods Agreement provided mainly for pressures on deficit countries,
insofar as the credit facilities of the Fund were made contingent on a finding
by the Executive Directors of the IMF that a country was taking adequate
steps to remove the deficit in its balance of payments. Under current
arrangements the strongest pressures are those exerted by the foreign exchange market. Attempts by a government to prevent an adjustment of the
exchange rate in the face of a persistent surplus or deficit tend to trigger
large speculative movements, and these in turn exert strong automatic
pressure that countries have found difficult to ignore. The Chairman of the
Committee of Twenty has indicated that a reformed system will provide for
graduated pressures to be applied by the international community on both
surplus and deficit countries in cases of large and persistent imbalance. It has
not been agreed in the Committee of Twenty, however, what those pressures
ought to be and how they ought to be activated.
The Convertibility Issue
Another issue under discussion is the convertibility of national currencies
into primary reserve assets such as SDR's and gold. This particular use of
the term has to be distinguished from the exchange of one currency into
another in the foreign exchange market. The issue of convertibility into
primary reserve assets arises primarily in the context of an agreement to limit
fluctuations of exchange rates by government intervention in the foreign
exchange market. If a surplus country is obligated to buy the currency of
a deficit country to forestall a decline of that currency in the foreign exchange market, the question arises to what extent the deficit country ought
to buy back its currency with primary reserve assets. One argument in favor
of such a requirement is that it limits the extent to which a surplus country
is obligated to finance another country's deficit. Another argument is that
it puts some pressure on the deficit country to accept "financial discipline"
insofar as its deficit is due to excessively loose domestic policies.
Under the Bretton Woods system all countries except the United States
intervened in the foreign exchange market to carry out an obligation to
keep their exchange rates within internationally agreed margins. Since the
currency used for such intervention was generally the U.S. dollar, the dollar
itself was kept fixed in foreign exchange markets by the intervention of
other central banks. The United States, in turn, accepted an obligation to
convert dollars into gold or other reserve assets upon demand. The United
States finally suspended this convertibility of the dollar into primary reserves
on August 15, 1971, though the dollar remained convertible into other
currencies in the foreign exchange market. Inconvertibility came after
an extended period during which the American gold stock was very small
206
in relation to the country's liquid dollar obligations and the major central
banks had abstained from converting large amounts of dollars into gold,
despite the fact that they were continuing to accumulate a large number
of dollars. The Committee of Twenty has agreed that in the context of
long-term monetary reform it would be desirable to establish the convertibility of (the dollar as well as other) currencies into primary reserve assets
insofar as it is decided to stabilize currencies within agreed margins. But
whether such an obligation to convert should be mandatory or at the option
of the country acquiring the currency is still at issue.
The Level, Distribution, and Composition of Reserves
To support the value of their currencies in the foreign exchange market,
most countries maintain an inventory of foreign currencies. In addition,
countries accumulate international assets, such as SDR's or gold, which
can be used to buy foreign currencies from the governments issuing them.
Finally, countries maintain lines of credit with each other and with the
International Monetary Fund so that they can borrow additional amounts
of foreign currency when the need arises. Some might argue that the reserves
a country keeps are its own affair. It is widely believed, however, that the
reserves which countries keep are of interest to the whole world community
because they affect the behavior of governments and in doing so also affect
everyone else. There are three separate, though interrelated, aspects of the socalled liquidity issue: the level of world reserves; their distribution among
countries; and their composition in terms of the types of assets held and
the kind of borrowing facilities that are readily available.
The level of world reserves is important because if the level is not "right,"
countries on balance may be induced to adopt policy measures that have a
disruptive effect on other countries. For instance, some fear that if reserves
are inadequate, countries may not prevent changes in exchange rates
considered excessive by the international community; or they may not gear
domestic demand management policies to appropriate employment objectives, or they may impose controls on imports or capital outflows. On the
other hand, it is feared that if reserves are excessive countries in payments
deficit may keep their exchange rates at a fixed level long after an adjustment would have been desirable; or they may escape financial disciplice and
thus create an inflationary problem for themselves as well as for others; or
they may impose controls on exports or capital inflows.
The distribution of reserves among countries becomes an issue once the
decision is made to manage the global level of reserves. Judgment about the
adequacy of world reserves from the point of view of any one country must
be based on the relative distribution of those reserves among countries. Thus,
while some countries might consider world reserves to be "excessive," they
might not be willing to give up any of their own reserves. From the point
of view of countries with inadequate reserves, global reserves can be excessive only to the extent that other countries are willing to give up "excess"
reserves.
207
The composition of reserves among different assets becomes an issue because each asset (or borrowing facility) has its particular characteristics
which determine its desirability and its most appropriate role relative to
other types of assets. Moreover, one can affect the total volume of reserves
only by affecting the volume of individual components.
The Bretton Woods Agreement sanctioned the use of both gold and foreign currencies as international reserves, but it did not make any provisions
for international control of the level of those reserves. In practice the growth
of the monetary gold stock was the result of the difference between newly
mined gold and the private demand for gold. The growth of currency
reserves (mostly dollars) was the result of the difference between the net
amount of foreign currency acquired through intervention in the foreign
exchange market and the conversion of such currency balances into gold or
other assets. The Bretton Woods Agreement did provide one managed source
of borrowed reserves in the form of controlled access to a stock of foreign
currencies managed by the International Monetary Fund.
In the late 1960's two developments occurred which established some
limited international influence over reserve creation. First, as a result of an
arrangement made among a number of central banks, it was agreed to
stabilize the stock of monetary gold. Second, the member countries of the
International Monetary Fund decided to create a new reserve asset, called
the SDR, which can be created and distributed on the basis of international
consent. At the same time there was an increasing desire to limit the accumulation of currencies, but there was no effective means of doing so. The Committee of Twenty has agreed that in a reformed international monetary
system, "countries will cooperate in the management of their currency reserves." No agreement has been reached, however, on how this is to be
accomplished.
The Issue of the Numeraire
The numeraire of the international monetary system is the common unit
of account in terms of which the relative values of all currencies are measured. While it is of course possible to express the value of a currency in
terms of any other currency, it is usually convenient to adopt a single reference point. In addition to being a convenient measuring stick, the
numeraire is usually also the unit value in terms of which the obligations
of countries to the international monetary system and the claims of countries
on the system are expressed.
Under the Bretton Woods system, gold served as the formal numeraire,
though the dollar became the de facto numeraire. The use of the dollar as
the most commonly used unit of account was made legitimate by the official
tie to gold. It was convenient because the dollar increasingly became the
most important official as well as private international reserve asset.
When the convertibility of the dollar into gold was suspended in August
1971, the tie between the dollar and gold was broken. It was thus no
longer possible to assume that international obligations of countries to the
208
International Monetary Fund, which in legal terms continued to be denominated in gold, would bear a fixed relationship to the dollar. It was also no
longer possible to establish a firm relationship between the value of the
SDR, the internationally created reserve asset, and individual currencies. It
has thus been difficult for countries to discharge their obligations to the
International Monetary Fund, and countries have been reluctant to use
SDR's in settlement of their obligations to each other.
There is wide agreement that the SDR should become the formal
numeraire of the future international monetary system. In order to make
the SDR the numeraire not only formally but also in practice, it will be
necessary, however, to establish an agreed procedure for calculating the
value of the SDR in terms of individual currencies. Since the SDR is not
traded in the market against currencies, there is no one relationship which
suggests itself more strongly than another. The most widely suggested idea is
that the SDR should be valued in terms of an average of the major
currencies.
HOW GOVERNMENTS BEHAVED IN THE TRADE ARENA
During the first half of 1973 the economies of most industrialized countries grew rapidly, and prices rose sharply. Real GNP in the United States
grew at an annual rate of about 5.5 percent during the first half of the year,
an annual rate well above the long-term average; but growth rates in many
foreign economies were also high in relation to long-term growth. The worldwide boom was accompanied by inflation rates exceeding 6 percent in
Canada, France, Italy, Japan and the United States. This rapid growth
of demand, together with poor harvests and cutbacks in world oil
production, created particularly strong upward pressures on the prices
of food and some key raw materials. A number of national governments
attempted to contain inflation by controlling prices, but by doing so they
created widespread shortages and other economic distortions.
Shortages and soaring prices induced governments to add a new dimension
to their trade policies. In addition to their traditional concerns about access
for their products to foreign markets, they showed increasing concern about
access to foreign sources of supply for key materials. Similarly, while governments continued across-the-board efforts to promote exports, they also
showed an increasing tendency to limit the export of commodities in short
supply.
What Countries Did to Encourage Imports
On July 18 the Australian Government announced that it was unilaterally
reducing all its tariffs by 25 percent. In an accompanying statement, the
Government explained that "this reduction . . . is designed to restrain price
increases by increased competition and by stimulating in the short run a
sufficiently large inflow of additional imports to help meet pressing demand."
It was estimated that "the tariff changes will have a direct impact on import
209
prices of approximately the same order of magnitude as a revaluation [of
the Australian dollar] of slightly less than 6 percent." While this was certainly the most dramatic example of the new economic incentives prevailing
in 1973, similar evidence was provided by the actions of many other
countries.
In the United States large increases in the prices of foodstuff's became a
particularly important public issue, and efforts to contain these prices became a prominent objective of domestic economic policy, as explained elsewhere in this report. This overall policy led to a review of the quotas on
imported food products, which have long been part of U.S. agricultural
programs designed to protect farm income at home. Since the problem in
1973 was soaring farm prices rather than falling farm income, the Administration decided to enlarge or suspend many of these quotas while supplies
remained scarce. Quotas on meat imports were suspended for 1973; quotas on
cheese, butter, and nonfat dry milk were all increased temporarily.
Many other countries took similar actions. Japan, for instance, reduced
tariffs on about 5 percent of her import categories and expanded or eliminated some of the remaining quotas on imports of manufactured and agricultural products. Canada lowered tariffs on certain consumer goods and agricultural products. The European Community reduced, and in some cases
suspended, tariffs on various industrial products, primarily chemicals. In
addition, the variable levies which the EC imposes on food imports as part
of its Common Agricultural Policy automatically fell to zero, as world prices
exceeded the support price level in the Community.
What Countries Did to Reduce Exports
With the booming worldwide demand for foodstuffs and raw materials,
prices of such commodities rose to record heights. This increase in domestic
prices as a result of foreign demand pressure caused considerable resentment
in many producing countries and led to public demands that domestic supplies be protected. The situation was further aggravated when some governments imposed price controls in an effort to contain the inflationary pressures.
Since export prices remained uncontrolled, domestic producers had an increased incentive to export their goods, with the result that the domestic
shortages created by the initial imposition of the price controls were aggravated by increased exports. To alleviate the domestic shortages, a number
of governments imposed controls on exports.
The pressures of foreign demand for agricultural goods in 1973 had a
particularly strong impact in the United States. In most of the other major
countries exporting agricultural products, the government acts as the middleman between the domestic producer and the foreign buyer, and it can thus
regulate the level of sales. In contrast, the United States has traditionally permitted foreign buyers to purchase freely in the U.S. market. Partly for this
reason, and partly because the United States had the largest stocks, foreign
buyers converged on the U.S. market, increasing U.S. agricultural exports by
210
88 percent. Since U.S. food prices had been significantly lower in the past
than food prices in more protected markets, the resulting rise of food prices
in the United States was larger than in most other countries. When ceilings
were imposed on the prices of foodstuffs to contain the inflationary pressures,
the export pressures increased even more.
The problems created by rapid increases in foreign demand became particularly pronounced with soybeans and related products. When it appeared
that export contracts would exceed available supplies until new crops were
harvested, temporary controls were imposed on exports of these commodities
in early July. The export licensing provisions allowed each exporter to ship a
fixed percentage of the exports he had contracted before June 14. Later the
controls were extended to cover other high-protein feeds. All these controls
were terminated by October 1. Despite the controls, exports of these products
were substantially larger in 1973 than in 1972. The soybean crop harvested in
late 1972 had been a record crop, and almost the entire increase in production was added to exports in 1973. The United States increased soybean exports by 18 percent and increased exports of soybean meal by 25 percent over
the previous harvesting season.
Export pressures combined with controls on domestic prices also led to
domestic supply shortages for a number of nonagricultural commodities,
including steel scrap and logs. To alleviate shortages, the Government
imposed temporary controls on the export of steel scrap in July. These controls were supplemented by a Japanese decision to reduce imports of ferrous
scrap by 1 million tons during the remainder of 1973. Japan also agreed
voluntarily to cut back her imports of U.S. logs.
A large number of countries besides the United States imposed export
controls to protect domestic supplies of food and to ease inflationary pressures. Brazil, the world's other major exporter of soybeans, limited the export
of soybeans and soybean products shortly after the United States imposed
controls. Canada instituted an export licensing program for protein feed
supplements, edible oils, animal fats, and livestock protein feed; export controls were also imposed on live cattle and hogs and on fresh, chilled, and
frozen beef and pork. Australia tightened export controls on a similar list of
feed products. Both the Canadian and Australian controls were lifted later
in the year. The Common Market countries suspended export subsidies for
several dairy products in July and in August banned the export of wheat and
wheat products. The export bans were later replaced by export levies on
wheat, as well as corn and barley.
Export controls of a more serious kind were imposed by some of the oilproducing countries in the Middle East, after renewed fighting broke out
between Israel and some Arab states. In order to pressure third countries to
support their cause, most Arab states cut back oil production and exports
and imposed an embargo on shipments to the United States, the Netherlands, and several other countries. These controls on oil, as discussed earlier,
severely threaten the economic prospects of all industrial nations. If sus-
211
tained, they would probably be felt most intensely in Japan and Western
Europe because of their relatively high dependence on imported energy
sources.
Lessons for the Future
The world was caught unprepared when the shortages during 1973
caused a shift from a buyer's to a seller's market for certain products. Because a buyer's market had existed in varying degrees for several decades,
most international trading rules focused on trade policy devices, such as
tariffs and quotas, that protected producers in their domestic markets. The
existing patterns of thought as well as existing trade rules were not well
geared to dealing with trade policy measures aimed at restricting exports
and preserving domestic sources of supply.
As the year wore on, countries began to seek practical accommodations
on the new issues that arose; and in the future it will become desirable to
focus greater attention on the possibility of new kinds of commitments by
exporting countries on foreign access to their supplies when world demand
is strong. Such issues will be explored in the forthcoming world conference
on food, in the coming meeting of oil-consuming and oil-producing nations,
and possibly at similar conferences in the future. At the same time the formulation of a more general code of good conduct for exporting countries,
and the adoption of more systematic procedures for the resolution of disputes
over the access to supplies, should be addressed in the context of the forthcoming multilateral trade negotiations.
PLANNING THE FUTURE INTERNATIONAL TRADING SYSTEM
The United States reaffirmed its commitment to a continued expansion
of world trade by joining 104 other countries in opening a new round of
comprehensive trade negotiations in Tokyo during September. In a statement issued at the end of the meeting the participating countries expressed
their willingness to pursue negotiations aimed at "the progressive dismantling
of obstacles to trade and the improvement of the international framework
for the conduct of world trade."
A new initiative in the trade area is timely for a number of reasons.
First, the reductions in trade barriers negotiated during the Kennedy Round
have been fully implemented, and this makes desirable the negotiation of new
commitments. Second, with the lowering of tariffs as a result of past negotiations, nontariff barriers have become relatively more important as a
source of distortion in international trade and have taken on greater importance in international economic relations. Third, expansion of the European Community to include the United Kingdom, Denmark, and Ireland, as well as the substantial elimination of trade barriers between the
expanded European Community and most of the other European countries
have created the possibility of a significant decrease of trade opportunities
between Europe and the rest of the world, including the United States.
212
A reduction of trade barriers on a global basis would reduce the
resulting diversion of trade, just as the Kennedy Round cushioned the
diversion of trade after the EC was formed. Fourth, the ongoing reform
of the international monetary system will require mutually supportive
improvements of the monetary and trading systems, in particular to
ensure that efforts in one field are not frustrated in the other. Finally, recent
years have seen an increase of political friction related to trade issues, both
within the United States and between the United States and its major trading partners. While some friction is inevitable, given the large degree of economic interdependence among countries, the heightening of these tensions
reflects in part a failure of the international institutions designed to resolve
economic disputes before they spill over into the political arena.
An improvement in the functioning of the international trading system
may be the most important outcome of the new round of trade negotiations,
inasmuch as such improvement may be essential for alleviating the tensions
which might otherwise lead to new obstacles to trade. A better international
framework for resolving trade problems is required in five areas: nontariff
barriers related to domestic economic and social policies; agricultural trade
barriers related to domestic agricultural programs; safeguard measures to
facilitate an orderly adjustment to new market conditions by producers in
importing countries; subsidies and other government assistance to industries; and finally new understandings on the access of consuming countries
to sources of supply, which might include safeguard arrangements to facilitate orderly adjustments to new market conditions by consumers in exporting countries.
Quite appropriately, however, the primary focus of the new round of
negotiations will not be on maintenance of the status quo but on a continued dismantling of trade barriers. It should thus be possible to avoid
confusing the end—the expansion of profitable trading opportunities—with
the means—the negotiation of rules governing trade. Countries have benefited greatly from the rapid expansion of trade in the past quarter century;
and should this trend cease or be reversed because of a failure of international cooperation, the economic welfare of all countries, including the
United States, would be likely to suffer.
As in the past, a major focus of the negotiations will be on a reduction of
tariffs. While past trade negotiations have reduced the relative importance
of tariffs, they remain the most visible obstacle to trade.
Approximately 60 percent of all trade in industrial products remains subject to tariffs in the major industrial countries, and the average rate of such
tariffs is about 10 percent. Moreover, while in the aggregate, tariffs have
been substantially reduced, some very high tariffs remain on a few important consumer goods. Of all trade, 4 percent is still subject to tariffs
of 20 percent or more. It is hoped that the negotiations will result in a substantial expansion of the duty-free category as well as a substantial reduction
in the average tariff on the remaining dutiable items.
213
Reducing Nontariff Barriers
In order to make possible the more effective management of the trading
system, new understandings need to be negotiated with respect to a wide
variety of nontariff barriers (NTB's), such as import quotas, preferential
government procurement regulations, discriminatory standards, and unreasonable customs procedures. Some NTB's are imposed for the same reasons
that tariffs are imposed, to protect a particular domestic economic activity.
In negotiating reductions in NTB's the goal is the same as in negotiating
reductions in tariffs: to remove or reduce the obstacles to free exchange of
goods. Other NTB's, however, are merely the unintended by-product of
programs designed to achieve various domestic social or economic objectives.
The negotiating objective in such cases is to bring about modifications in the
design or implementation of policies related to such an objective in order to
avoid unnecessary distortion of trade. It may also be desirable to subject such
policies to periodic review to make sure that the level of protection offered
is the minimum necessary to achieve legitimate domestic goals.
There is a natural tension between the free market principle on which
the GATT is based and the practical reality of extensive government intervention in the economy in most countries. The challenge for these negotiations is to devise arrangements that will give governments considerable
leeway in forming and pursuing their own policies, while encouraging them
to adopt policy measures that will minimize the disruption of the economic
interests of other nations. Such arrangements in themselves will not eliminate
potential policy conflicts among governments, but they can provide some
guidelines for resolving such conflicts to everyone's satisfaction. The absence
of such arrangements creates the danger that governments will try to protect
themselves against the disruptive influence of actions by foreign governments in sensitive sectors by imposing new measures that distort trade.
Reforming Agricultural Trade
Trade barriers and domestic social objectives are perhaps most intertwined in the agricultural sector, where domestic programs to support farm
income and to guarantee the availability of food supplies from domestic
sources have been sheltered by comprehensive tariff and nontariff barriers.
The challenge facing the negotiators is to work out some arrangements that
would permit governments to honor their commitments to both farmers
and consumers at lower levels of protection. A reduction of the level of
protection would not only benefit consumers by reducing real food prices,
but encourage producers to use their resources in a manner more consistent
with comparative advantage. It is also true, of course, that the necessary
shifts in production patterns would be difficult for some producers, and
provisions to ease the adjustment costs would be needed in many countries. For some countries this will mean new measures to transfer income
to those farmers who suffer income losses in the short run from lower
levels of protection.
214
In working out an approach to the negotiated reduction of agricultural
trade barriers, one must distinguish between cyclical and structural reasons
for agricultural protection. Cyclical problems arise when market prices rise
above accepted norms or farm incomes drop below accepted norms. Structural problems arise if the norms for prices and incomes differ between one
country and another.
Cyclical problems. Most farm programs are designed to put a floor under
farm incomes when production increases sharply. During periods of peak
production, therefore, governments tend to raise farm incomes either directly
by making up any shortfalls with direct payments, or indirectly by keeping
farm prices above the level that would prevail in a free market. Governments
can use either domestic or international trade measures to keep prices high.
Farm prices can be raised by reducing supply through cutbacks in the production or restrictions on imports, or by increasing demand through financing
the build-up of domestic stocks or subsidizing exports.
Governments may also attempt to restrain price increases when export
markets expand or production declines sharply. During such periods, governments try as far as possible to increase domestic supplies and reduce
domestic prices of food by drawing down domestic stocks, increasing domestic production, reducing exports, and increasing imports. Of course if
all countries simultaneously have a problem of inadequate production,
attempts by one country to increase imports or reduce exports, or both, will
make the problem worse for other countries. The more a country depends
on exports or imports, the greater its exposure.
Some countries, the United States among them, permit agricultural prices
to vary over a wider range than is true in other countries, for example, the
members of the European Community. This difference has permitted countries with narrower margins for price fluctuation to increase the stability of
their own supplies and prices through trade at the expense of countries
with wider margins for price fluctuation. The reason is that, long before the
country with wider margins takes such action, the country with the narrower margin tends to limit imports and to increase export incentives when
prices are falling and to limit exports when prices are rising. As a result,
surpluses and shortages are exaggerated for the latter when price pressures
develop in either direction.
Two conclusions can be drawn from all this. First, unless governments
can develop some understandings on the use of trade measures during
a period of excess or inadequate food production throughout the world, tensions will be inevitable. Second, governments will be reluctant to increase
their dependence on foreign trade as long as they cannot receive adequate
assurances that other governments will not pursue policies which seek to
shift the costs of moderating swings in farm incomes and food prices to
their neighbors.
215
Structural problems. Agreements on a set of rules regarding cyclically
related trade measures can be separated from negotiations designed to
reduce agricultural trade barriers arising from structural differences between
the farm sector in one country and another. While most governments are
committed to preventing agricultural prices from falling below or rising
above accepted levels, these levels differ between one country and another.
Under conditions of free trade, however, market prices in different countries
will generally not vary by more than the cost of transportation. To the extent
therefore that one country wishes to support a market price that is either
lower or higher than in other countries, it has to impose some limitation on
trade flows. If agricultural trade barriers are to be reduced, countries will
need to find some means to reduce the differences in market support prices.
An approach to agricultural negotiations. International negotiations on
agricultural trade are timely because many foreign governments are in the
process of reassessing their agricultural policies in response to considerable
public dissatisfaction with the results of current agricultural programs. During normal times, changes in existing programs would be difficult to negotiate even if no economic interest were seriously affected. At a time when
change has become inevitable, it is far easier to work out a greater harmonization of national approaches to agricultural problems.
These negotiations need to be approached in a fairly pragmatic manner.
It would be impractical, as some have suggested, to negotiate tight international agreements regulating prices, production, inventories, and trade
controls on individual commodities. On the other hand, governments will be
reluctant to increase the dependence of their consumers on imports and the
dependence of their producers on exports, without some agreement on the
availability of such imports when food is in relatively short supply and the
accessibility of such exports to foreign markets when food is in relatively
excess supply. Undoubtedly some degree of international understanding on
the use of trade controls relative to domestic measures will be required. As
part of such an international understanding, it may be desirable to achieve a
better coordination of those internal policies which are undertaken to moderate extreme fluctuations in food supplies and prices.
Better international understandings on improved access to supplies as well
as access to markets should persuade countries on their own to undertake
more of the long-term changes in their agricultural programs that would
result in more efficient patterns of worldwide production. Important in
such long-term reforms would be the adjustment of relative prices among
farm products. Another element could be a greater shift toward more direct
methods of supporting farm incomes while allowing prices more room to
decline during bumper crop years.
216
Negotiating a New International Safeguard System
New international agreements would also be useful with respect to the
rules and procedures adopted by countries to deal with problems of import
disruption. Most nations at one time or another find it desirable to limit the
growth of imports for a transitional period so that domestic industry can
have time to adjust. Since the current international rules and procedures
have proved largely unworkable in practice, governments have generally
worked out informal arrangements with each other. It would be desirable to
bring these arrangements within an accepted international framework in
which the interests of third parties could be better protected. The adoption
of certain internationally accepted principles could also reduce some of the
political friction which has tended to be associated with the negotiation of
such arrangements. It would moderate the effects of adjustment, while giving
the international community some better assurance that restrictive measures
will not be any broader or continue any longer than necessary for domestic
adjustment to take place.
Subsidies and Countervailing Duties
Better international understanding is also needed on the use of subsidies and the imposition of countervailing duties designed to offset foreign
subsidies. Governments commonly employ subsidies to achieve specific economic and social goals. When such subsidies are used to favor industries
competing with export or import industries, they affect not only domestic
economic activity but foreign economic activity as well. Foreign governments can try to neutralize the effect of the subsidy on their own trade by
imposing an equivalent duty on imports or an equivalent subsidy on exports. Given the widespread use of subsidies by most governments, trade
would become increasingly subject to new tariffs if governments actually
countervailed against every form of foreign subsidy. Conversely, the competitive position of unsubsidized businesses in some countries could be increasingly affected by subsidized production in other countries. What is
needed therefore is international agreement on the types of subsidies that are
not internationally acceptable, and consequently subject to countervailing
duties, and general agreement on the types of subsidies that are acceptable.
Access to Foreign Supplies
The events of the past year have demonstrated that access to supplies
can be as much of a problem as access to markets, and that international
guidelines on access to supplies can be as valuable as international
agreements about access to markets. The possibility has thus arisen of a
new type of reciprocity in international trading relations: commitments
by producing countries to consuming countries on access to supplies, and
commitments by consuming countries to producing countries on access
to markets. Similarly, safeguard arrangements which are designed to protect
producers in consuming countries when excessively large increases in imports
threaten to disrupt domestic production could be matched by safeguard
217
arrangements which are designed to protect consumers in producing countries when excessively large exports threaten to disrupt domestic markets
in producing countries.
Pending Trade Legislation
In order for the United States Government to be able to make such farreaching international commitments on trade practices and policies., it is
necessary to obtain public backing and the appropriate legislative mandate.
Two approaches were considered early last year. One approach would be first
to negotiate preliminary agreements with other countries, and then on the
basis of such agreements to seek the necessary legislation. The other approach would be first to seek a broad enough legislative mandate to cover
negotiating outcomes that could be foreseen and a procedure for congressional participation where negotiating outcomes could not be foreseen, and
then to negotiate an agreement within the context of that legislative framework. The second alernative was chosen both because other governments
could not be expected to put forward their maximum concessions if U.S.
offers did not have the explicit support of the Congress, and because it
would make possible more active participation of the Congress in an area
where congressional prerogatives have traditionally been strong.
Accordingly, last April the President sent draft legislation to the Congress.
After extensive hearings, the House of Representatives approved a bill that
would provide the necessary authorities to negotiate both a comprehensive
reform of the international trading system and increased access to foreign
markets and supplies. It would also significantly improve the management
of U.S. trade policy on a day-to-day basis. In the coming months the Senate
is scheduled to consider this legislation.
Congressional passage of trade legislation has become more important
than ever because of the strains that the massive increase in international oil
prices is likely to place on the international trading system in the coming
year. All countries will be under pressure to reduce their imports and to
expand their exports to pay for the increased cost of oil, even though all
oil-consuming countries together will not be able to improve their trade
balance by more than the oil-producing countries are prepared to increase
their imports. Given the large increases in oil revenues and the small populations of most oil-producing countries, only a fraction of such revenues is likely
to be spent on goods in the short run. At the same time, a number of key
products could be in short supply at current price relationships, and this
could induce new international competition for such supplies. In order to
negotiate effectively with other countries on the resolution of some of these
problems and in order to protect U.S. economic interests in the absence of
such agreements, a new legislative mandate is urgently needed.
The draft bill before the Congress would improve the President's ability
to manage U.S. trade policies in several respects. It would give the President
limited authority to impose a temporary import surcharge or other import
218
limitations, either to deal with a serious balance of payments deficit or to
cooperate in correcting a balance of payments disequilibrium. He could also
reduce or suspend import restrictions in order to reduce either a persistent
balance of payments surplus or excessive inflationary pressures in specific
commodity areas. Other permanent authority would permit the President
full exercise of U.S. rights and obligations under trade agreements, and still
another provision would revise and expand the President's authority to take
action against foreign countries which maintain unjustifiable or unreasonable import restrictions or other policies which seriously injure U.S. trade.
The legislation would also liberalize the criteria for granting adjustment
assistance to firms and workers displaced by import competition and would
temporarily limit the growth of imports when such growth might seriously
injure a domestic industry.
*
*
*
*
*
*
*
In the context of the postwar period, developments in the international
economy during the past year appear rather turbulent. Massive capital flows
led to fluctuations in exchange rates that were far in excess of any that attracted attention in the recent past. Inflation accelerated throughout much
of the world, as demand for goods outgrew the productive capacity of the
world economy. Shortfalls in farm output and cutbacks in oil production,
combined with selective embargoes on oil exports, created intense international competition for food and energy. In all these different ways, the
world received an effective demonstration of the extent to which economic
interdependence has become a reality.
Despite the economic difficulties, most nations were able to record significant economic gains; and despite some stresses and strains in international
economic relations, the postwar framework for economic cooperation among
nations remained intact. This ability of the world economy to adjust to
the new realities was in large part due to the willingness of most governments to accept greater flexibility in their economic relationships, while
continuing to recognize the need for self-discpline in the pursuit of
individual national goals. Certainly the introduction of more flexible exchange rate relationships facilitated the adjustment of economic relations
among individual national economies experiencing widely different domestic
circumstances. Equally important was the willingness of governments to negotiate pragmatic accommodations to politically difficult international monetary and trade issues.
In the coming year, the new arrangements for international cooperation
that were evolving in the past year will be put to a strenuous test. The continuing constraints imposed on the production and export of oil by a number
of countries in the Middle East will intensify the competition for energy supplies and chemicals. In addition, the recent large increase in world oil prices
will require major adjustments in relative incomes both within and among
nations, in relative prices of both domestic and internationally traded goods,
in world patterns of production and trade, and in the worldwide flow of
219
capital and the means of putting this capital to its most productive uses.
These adjustments are likely to pose severe hardships for some countries, and
some domestic economic difficulties for all nations. The pressures to take
unilateral measures at the expense of one's neighbors could become quite
intense in such an environment. Were just one nation, and then others, to
pursue such a course, however, the resulting disruption of international trade
would be likely to cause even more serious losses of economic welfare for
everyone. International conferences such as the recently concluded meeting
of finance ministers in Rome, and the coming conferences on the world oil
and the world food situation, will be useful in the search for cooperative
solutions. At the same time, the international monetary discussions and the
multilateral trade negotiations will be indispensable to a broader effort to
strengthen the international framework for managing the increasing number of economic problems that are of global significance.
SUPPLEMENT
Measurement of Effective Changes in Exchange Rates
Exchange rates between the United States and her trading partners have changed
frequently over the past 3 years. Since such changes vary from currency to currency,
it is useful to combine them into a single index number representing the effective
change in the value of the U.S. dollar. Several methods of computing such a number
have been developed, but the different methods produce different results. This supplement discusses the rationale behind some of the indexes that have been developed
and examines the differences in results.
Each method of computing the effective change in the value of the dollar combines
individual changes in exchange rates into a weighted average. The most commonly
used weights are based on bilateral trade shares. The appreciation of the German
mark, for example, would receive a greater weight than the appreciation of the French
franc because Germany accounts for a larger share of overall U.S. trade.
The weights may be computed on the basis of export, import, or total trade shares,
depending on the use of the index. The three sets of weights vary because the proportion of U.S. exports that goes to each trading partner will seldom equal the proportion
of U.S. imports accounted for by that country. For instance, in 1972 Japan provided
16 percent of U.S. imports but purchased only 10 percent of our exports. The
appreciation of the yen would therefore receive a larger weight in an import index
than it would in an export index. A composite import-export index of the depreciation
of the dollar might use weights equal to the sum of bilateral exports and imports as a
fraction of total U.S. foreign trade.
Changes in exchange rates may be expressed in two ways: either as the increase
in the value of a foreign currency in terms of dollars or as the decrease in the value of
the dollar in relation to a foreign currency. The magnitude of the percentage change
in each case differs. If the value of the mark expressed in dollars rises by 33 percent,
for example, then the value of the dollar expressed in marks falls by only 25 percent.
This is true for the same reason that 100 is 33 percent more than 75, but 75 is 25
percent less than 100. This confusing arithmetic fact has important implications for
the calculation of these indexes, because the magnitude of the effective change in the
value of the dollar will depend on how the changes in exchange rates are expressed.
An import-weighted index of exchange rate change is normally expressed in terms
of the change in the dollar price of foreign currencies. If one assumes that foreign
220
exporters do not alter their prices, expressed in their own currency, then changes in
the dollar value of foreign currencies accurately reflect the changes in dollar prices
to American importers. Likewise, an export-weighted index is usually based on changes
in the foreign currency prices of dollars, because changes in the value of the dollar
reflect changes in prices to foreign purchasers if American exporters hold their dollar
prices constant.
Selection of the countries to be included in the computation can markedly affect
the value of the index. For completeness one might wish to include as many countries
as possible in the sample, but because some countries account for only a small share
of overall U.S. trade, limiting the sample to major U.S. trading partners should not
significantly affect the value of the index. If a major trading partner were to be
eliminated from the sample, however, the resulting index might not accurately
reflect the effective depreciation of the dollar.
Bilateral trade shares of the United States have been shifting in the last 3 years
in response to changes in exchange rates, further relaxation of trade barriers, and
crop failures abroad. An index of the effective depreciation of the dollar could
therefore be sensitive to the choice of the year for which bilateral trade shares are
computed. In some cases, however, it is difficult to predict how these changes will
affect trade shares. For instance, the depreciation of the dollar in relation to the
currency of a trading partner should stimulate U.S. exports to that country but reduce
U.S. imports from that country. Because these two results tend to offset each other,
the net effect on total trade shares is uncertain.
Changes in exchange rates are computed in relation to the exchange rates in effect
on some base date. Commonly used base dates include these: May 1970, the last
month in which all major U.S. trading partners observed fixed exchange rate policies
for their currencies; December 18, 1971, the day of the Smithsonian Agreement;
and March 19, 1973, the first day of the float against the dollar for a number of foreign currencies. Because the value of the dollar generally declined from May 1970
to July 1973, indexes of effective depreciation of the dollar using an earlier base date
for exchange rates will generally show a greater depreciation of the dollar than those
based on a more recent date. Typical spot rates used are the daily noon spot rates
quoted in New York or London.
The Change in the Value of the Dollar: A Comparison of Several Indexes
Two widely used indexes are the Morgan Guaranty index of effective exchange
rate changes, published by the Morgan Guaranty Trust Company, and the Reuters
Currency Index, computed by Reuters, Limited, the London-based international news
agency. Both are composite indexes, combining bilateral export and import trade
shares in one index, but different techniques are used to compute them.
The Morgan Guaranty index uses a sample of 14 countries other than the United
States, which together accounted for about two-thirds of total U.S. trade in 1972.*
Using separate export and import trade shares computed from 1972 trade data (before September 1973, trade data for 1971 were used), Morgan Guaranty first computes separate export and import indexes and then averages the two results according to the relative weights of exports to and imports from the other 14 countries
in the sample. The export-weighted changes in the values of foreign currencies are
expressed in foreign currency units per dollar; the import-weighted changes are
expressed in dollars per foreign currency unit. Spot exchange rates are the daily noon
dollar bid rates quoted in New York.
The Reuters Currency Index, which is followed closely by foreign central banks
and foreign exchange markets, uses a sample comprising nine countries, eliminating
*The countries are: Canada, Japan, the United Kingdom, West Germany, France, Italy,
Belgium-Luxembourg, the Netherlands, Switzerland, Austria, Denmark, Norway, Sweden,
and Australia.
221
527-867 O - 74 - 15
Canada and four smaller countries used in the Morgan Guaranty sample. Each currency change is weighted by the sum of exports plus imports as a fraction of total
U.S. trade. Trade weights are computed on the basis of average trade shares in
1970-71. Reuters uses noon spot rates in London for all currencies except the yen;
for this they use the closing rate in Tokyo, because the yen market in London is thin
and the quotations are not necessarily representative of world market conditions. All
changes in exchange rates are expressed as changes in foreign currencies vis-a-vis the
dollar. A comparison of these two indexes, plus three others that will be discussed
below, is contained in Table 56.
TABLE 56.—A comparison of several measures of the effective depreciation of the dollar from May
1970, 1971-73
[Percent change]
Year and month
Morgan
Guaranty
index
Reuters
currency
index1
(2)
21
1971:
June
July
Aug
Sept
_
2)
Oct
Nov
-6.'93
-7.20
-9.05
Dec.
1972:
Jan.
Feb...
Mar
April
May . .
June
_
July
Aug
Sept
Oct
Nov
Dec
.
1973:
Jan
Feb.
Mar
April
May
June
July
Aug
Sept
Oct
Nov
Dec
.
.
.
_
.
.
.
__
2
)
Treasury
index
Multilateral
index
Trade model
index
-2.3
-1.85
-1.84
-2.5
-4.6
-5.5
-6.0
-6.3
-8.2
—2.11
-3.39
-4.69
-4.78
-5.20
-6.99
-2.04
-2.72
-4.01
-4.31
-4.57
-5.91
-9.95
-10.73
-10.94
-10.98
-11.54
-11.26
- 15
95
1.15
.92
1 09
.86
-9.0
-9.7
-10.1
-10.0
-10.6
-10.4
-7.89
-8.25
-8.63
-8.50
-8.80
-8.58
-6.43
—7.08
-7.24
-7.26
-7.57
-7.29
-11.16
-11.10
-10.80
-10.57
-10.25
-10.29
69
.51
.18
-.39
-.21
-.37
-10.4
-10.3
-9.6
-9.3
-9.1
-9.5
—8.48
-8.34
-7.97
-7.70
-7.76
-7.76
-7.26
-7.19
-6.99
-6.74
-6.53
-6.45
-10.64
-17.23
-16.52
-16.34
—18.34
-20.72
.49
10.37
10.22
10.01
13.14
17.45
-9.7
-16.0
-15.8
-15.5
-17.4
-19.6
-8.52
-14.34
-13.74
-13.37
-15.76
-18.67
-6.73
-11.51
-11.21
-10.83
-12.61
-14.95
-21.18
-19.25
-19.88
-19.90
-16.34
-15.49
18.32
15.58
16.65
16.07
9.72
7.85
-19.9
-18.3
-18.9
-19.0
-15.6
-14.7
-19.39
-17.23
-17.97
-17.82
-15.12
-13.22
-16.12
-13.63
-14.03
-13.93
-11.82
(2)
» Measures the appreciation from December 1971 of a group of foreign currencies in relation to the dollar.
2 Not available.
Note.—Data are for the last business day of each month. Base rates used are central rates in effect at the end of May
1970.
Sources: Morgan Guaranty Trust Company; Reuters, Limited; Department of the Treasury; Central Intelligence Agency,
Office of Economic Research; and Council of Economic Advisers.
On Friday, July 6, 1973, the Morgan Guaranty index registered the largest depreciation of the dollar during 1973: 22.45 percent from the central rates in effect at
the end of May 1970. On the same day the Reuters Currency Index indicated that
a group of nine foreign currencies had appreciated 20.90 percent against the dollar
from the central rates established by the Smithsonian Agreement in December 1971.
When the Reuters index is recomputed to show the change in the dollar since May
1970, thus permitting the two indexes to be compared, the Reuters index indicates a
222
foreign currency appreciation of 36.39 percent. This number must be reconciled with
the 22.45 percent depreciation of the dollar shown by the Morgan Guaranty index.
The techniques used to compute these two indexes differ widely, and some of these
differences in approach affect the computations more than others. By successively
modifying the approach used by Reuters until the two procedures are equivalent, one
can identify the effect each difference in method has on the calculations.
Morgan Guaranty uses the depreciation of the dollar in relation to foreign currencies
when calculating export-weighted changes in the dollar, and it uses the appreciation
of foreign currencies vis-a-vis the dollar when calculating import-weighted changes.
Reuters uses only the appreciation of foreign currencies vis-a-vis the dollar. Recalculating the Reuters index to conform to the Morgan Guaranty weighting procedure
lowers the Reuters index 5.49 percentage points, to 30.90 percent, still a larger
measure of the depreciation of the dollar than is yielded by the Morgan Guaranty
index.
Noon spot rates in New York on July 6 differed significantly from the noon spot
rates in London. Because the dollar generally declined during the day, noon rates
in New York, taken 5 hours after the noon rates in London, show a greater depreciation of the dollar than the London rates. Recomputing the modified Reuters index
using New York instead of London spot rates increases the measured depreciation
of the dollar about half a percentage point, from 30.90 percent to 31.46 percent.
The use of trade weights based on U.S. bilateral trade in 1971, instead of an average
of bilateral trade during 1970 and 1971, increases the modified Reuters index from
31.46 to 31.91.
With these adjustments the Reuters index has been modified so that the computation technique is identical to that used by Morgan Guaranty; only the sample of
countries differs. Adding Canada to the Reuters sample of nine countries lowers the
Reuters measure almost 10 percentage points, from 31.91 percent to 22.26 percent.
The relatively small depreciation of the U.S. dollar against the Canadian dollar is
given a large weight in the calculation because of the importance of Canadian trade
to the United States. Adding the four remaining countries to the Reuters sample plus
Canada raises the index of the depreciation of the dollar to 22.45 percent, the number published by Morgan Guaranty on July 6, 1973.
Three observations are suggested by the results. First, the calculation is affected
to only a minor degree by some of the differences in approach—for instance, the
choice of spot rates, the selection of a year from which to compute trade shares, and
the decision to include several countries with relatively small shares of U.S. trade.
Second, excluding a major trading partner like Canada can have a great impact on
the measure of effective exchange rate change. Third, the choice of whether to express changes in exchange rates in terms of the appreciation of foreign currencies
or the depreciation of the dollar is also important, especially if the changes in exchange rates are large for some important trading partners in the sample.
An index used internally by the Treasury Department is computed by a method
similar to that used by Morgan Guaranty, except that it covers all OECD countries
(22 other than the United States) and the weights used are derived from 1972
bilateral trade data. Changes in the dollar cost of foreign exchange are weighted by
bilateral import shares. Changes in the foreign exchange cost of dollars are weighted
by bilateral export shares. The resulting import- and export-weighted indexes are then
weighted by the relative importance of imports and exports in U.S. total trade with
the 22-country group and finally averaged to produce a single index of the effective
depreciation of the dollar.
On July 6, 1973, the Treasury Department index showed that the dollar had depreciated 20.8 percent since May 1970 in relation to the currencies of the other
OECD countries, 1.65 percentage points less than the Morgan Guaranty figure. Some
of the difference derives from the addition to the sample of eight countries whose
223
currencies have appreciated relatively little in relation to the dollar. Any remaining
difference is due to the use of trade shares based on bilateral trade in 1972 rather
than 1971.
Other Methods for Computing Weights
One problem associated with the use of these indexes is that the weights take into
account only bilateral trade with the United States, when, in fact, changes in any
one exchange rate affect trade of other countries as well. When the mark and the
yen appreciate, for example, U.S. exports to Japan and Germany increase and
imports from those two countries decline. In addition, third countries now find
German and Japanese imports relatively more expensive than imports from the
United States. For this reason, U.S. exports to third countries should also increase.
One solution is to weight changes in each country's exchange rate by that country's importance in total world trade. The multilateral index presented in Table 56
is one such measure. For each of the countries in the Morgan Guaranty sample, the
depreciation of the dollar against each foreign currency is weighted by the sum of
each country's exports to and imports from the other 14 countries (including the
United States), divided by 1972 total trade among the 15 countries. The spot rates
used were daily closing rates in New York.
An additional revision of weights based on past trade shares might incorporate the
use of price effects to anticipate the importance of changes in the value of each country's currency to U.S. trade. A country whose trade is more responsive to price changes
should receive a greater weight because changes in its exchange rate would have a
larger impact on the U.S. trade balance than its relative trade share alone would
indicate. A multilateral trade model may be used to compute a set of weights proportional to the effects of bilateral exchange rate changes on the U.S. trade balance.
To construct a trade model index of the depreciation of the dollar, weights were
calculated with the use of a preliminary version of a trade flow model developed
by the Office of Economic Research of the Central Intelligence Agency. The model
assumes that prices have a significant effect on trade among the 17 countries and
groups of countries that are included. In the preliminary form of the model, producers
of any one good which is traded internationally are assumed to react similarly to a
change in the price of their product, no matter which country they live in. The U.S.
supply of chemicals on the international market, for example, is no more sensitive to
changes in the domestic currency price of chemicals than is the supply from any
other country. Similarly, importers of any one good also react to price changes in
the same fashion, no matter where they live. As a result of these assumptions, the
response of any two countries to a similar change in their exchange rates differs
primarily because the product mix of their trade differs.
For July 6, 1973, the multilateral index showed an effective depreciation of the
dollar equal to 20.54 percent, about 2 percentage points less than the Morgan
Guaranty index. For the same day the trade model index showed that the dollar had
depreciated 16.81 percent from May 1970, if the change in each currency is weighted
by its relative contribution to the change in the U.S. trade balance. One reason why
both these indexes show a smaller change in the value of the dollar than the Morgan
Guaranty index is that in both cases changes in exchange rates are expressed in terms
of the depreciation of the dollar in relation to each foreign currency. The Morgan
Guaranty index, on the other hand, uses the appreciation of foreign currencies in relation to the dollar for part of its calculation, and the magnitude of changes expressed
in this manner is greater.
Another reason both these indexes may differ from the Morgan Guaranty index is
that the weights are calculated differently. While no simple pattern emerges from a
comparison of the trade model weights with the bilateral weights, there is a clear
pattern suggested by a comparison of the multilateral weights with the bilateral
224
TABLE 57.—Changes in exchange rates from May 1970,
7970-73
[Percent change]
German mark
Japanese yen
French franc
British pound
Year and month
Dollar
rate
Effective
rate
Dollar
rate
Effective
rate
Dollar
rate
Effective
rate
Dollar
rate
Effective
rate
1970:
June.
0.75
0.51
0.31
-0.12
0.59
0.24
-0.10
-0.64
July..
Aug..
Sept.
Oct..
Nov..
Dec.
.79
.79
.79
.76
.81
.42
.46
.37
.34
.31
.27
-.06
.17
.49
.57
.61
.64
.65
-.38
.13
.08
.15
.14
.14
.64
.58
.60
.55
.64
.57
.24
.15
.07
.01
.06
.14
-.39
-.51
-.61
-.52
-.40
-.39
-1.15
-1.21
-1.39
-1.25
-1.21
-1.17
1971:
Jan..
Feb..
Mar..
Apr..
May..
JuneJuly..
Aug..
Sept.
Oct..
Nov..
Dec.
.64
.99
.79
.71
3.01
4.21
.04
.33
.13
.06
1.81
3.87
.56
.69
.70
.70
.72
.72
-.15
-.15
-.15
-.13
-.31
-.37
.64
.65
.69
.68
.50
.49
.03
-.12
-.01
.00
-1.22
-1.79
.24
.74
.78
.75
.78
.78
-.69
-.28
-.26
-.27
-.76
-1.04
5.14
7.15
9.05
10.04
9.82
11.97
3.73
4.86
5.37
5.57
5.07
5.28
.73
1.21
6.50
8.73
9.50
12.50
-.38
-.34
4.26
5.99
6.68
8.78
.73
.70
.60
.38
.51
3.02
-1.60
-2.85
-4.55
-5.72
-5.73
-4.94
.77
1.44
2.89
3.77
3.89
5.27
-1.12
-1.29
-1.07
-.92
-.98
-1.13
1972:
Jan..
Feb..
Mar..
Apr..
May..
June.
13.30
14.89
15.45
15.17
15.12
15.51
4.71
5.01
5.10
5.09
4.88
5.01
15.12
17.97
18.99
18.59
18.27
19,05
10.75
12.70
13.54
13.26
12.93
13.40
7.36
9.14
10.17
10.26
10.77
10.73
-2.23
-1.71
-.99
-.60
-.24
-.37
7.12
8.49
9.09
8.76
8.85
7.05
-.63
-.25
-.02
-.14
-.22
-2.02
July..
Aug..
Sept..
Oct..
Nov..
Dec.
15.78
14.86
14.62
14.13
14.25
14.42
5.28
4.69
4.67
4.57
4.84
5.13
19.59
19.53
19.55
19.60
19.61
19.51
14.20
14.24
14.35
14.55
14.70
14.47
11.03
11.01
10.96
10.56
10.19
9.18
-.04
.25
.43
.51
.26
-.82
1.86
2.09
1.71
-.22
-2.06
-2.30
-7.54
-7.06
-7.27
-8.81
-10.97
-11.16
1973:
Jan..
Feb..
Mar..
AprMay..
June.
14.51
21.78
30.11
29.02
31.18
41.96
5.03
6.77
9.29
9.93
10.38
15.11
19.29
29.75
37.48
35.60
36.03
36.11
13.73
21.88
25.16
23.89
23.75
22.73
9.26
16.57
23.25
21.96
24.09
30.37
-.79
1.35
2.18
2.66
3.11
4.11
-1.83
1.15
3.02
3.49
5.44
7.34
-11.01
-12.90
-14.47
-12.92
-12.10
-13.78
July..
Aug..
Sept.
Oct..
Nov..
Dec-
56.72
50.86
50.96
51.63
41.88
37.72
21.36
19.98
19.63
18.99
16.24
16.54
36.08
35.73
35.60
35.17
29.39
28.49
21.52
22.10
21.75
20.80
17.35
17.52
36.94
30.67
30.33
31.73
26.01
20.84
3.82
1.58
.90
1.46
1.69
.37
5.73
3.15
.76
1.22
-.54
-3.44
-19.20
-19.76
-22.39
-22.73
-20.71
-21.54
Note.—Monthly figures are averages of daily figures.
Morgan Guaranty Trust Company computes the effective change in the value of foreign currencies by applying
the same techniques used to compute the effective depreciation of the dollar.
Sources: Federal Reserve Bank of New York and Morgan Guaranty Trust Company.
weights. First, multilateral trade within the European Economic Community accounts
for a large share of total trade among the 15 countries in the multilateral index sample,
and hence the relatively large depreciation of the dollar in relation to most European
currencies is given a relatively large weight in the multilateral index. Second, because
Canada accounts for only 9 percent of total trade among the 15 countries, the small
depreciation of the U.S. dollar in relation to the Canadian dollar receives a much
smaller weight in the multilateral index than in an index based on bilateral trade
shares. These two effects would tend to raise the level of the multilateral index and
bring it closer to the Morgan Guaranty figure.
225
Effective Changes in Other Currencies
Although the discussion in this supplement is directed specifically toward measuring
the effective depreciation of the dollar, the same techniques are used to compute the
effective change in the value of other currencies as well. An index of the effective
changes in a foreign currency is useful because changes in the dollar rate alone can be
deceptive. The sharp appreciation of the German mark in terms of dollars, for
example, is a misleading indicator of the overall increase in the value of the mark, just
as the depreciation of the dollar against any single currency may give a misleading impression of the decline in the value of the dollar. Changes in the dollar exchange rates
and effective changes in the exchange rates for several foreign currencies are presented
in Table 57 for comparison.
226
Appendix A
ACTIVITIES OF THE ADVISORY COMMITTEE ON THE
ECONOMIC ROLE OF WOMEN
227
Activities of the Advisory Committee on the
Economic Role of Women
In September 1972 the President announced the establishment of the
Advisory Committee on the Economic Role of Women to provide a formal
mechanism for improving the information and analysis available to policy makers about the economic problems women encounter and for assuring
that the economic interests of women are given appropriate weight in policy
considerations.
In January 1973 the Chairman of the Council of Economic Advisers,
who is also Chairman of the Advisory Committee, appointed the following
persons from the private sector to serve on the committee:
Jacqueline Brandwynne
Casey Eike
Cynthia Epstein
Stephen Fuller
Julia Greer
Jacqueline Gutwillig
Ruth Handler
Lenore Hershey
Gertrude Himmelfarb
E. Marie Johnson
M. Jane Kay
Sister Collette Mahoney
Jacob Mincer
Arthur Rasmussen
Bernice Sandier
Ruth Washington
Also serving on the committee are the Secretary of the Treasury, the Secretary of Commerce, the Secretary of Labor, the Secretary of Health, Education, and Welfare, and Anne Armstrong, Counsellor to the President.
The committee met four times during 1973. The first meeting, held in
January, was in part organizational and in part a review of Chapter 4 of
the 1973 Annual Report of the Council of Economic Advisers, which discusses the economic role of women. At this meeting the committee members
suggested several topics that they felt were particularly relevant to women's
economic opportunities.
The meeting of April 30 was devoted to a discussion of career development for women. Participating in the discussion were Dr. Sidney J. Marland, Jr., then Assistant Secretary for Education in the Department of
Health, Education, and Welfare; Robert J. Brown, Associate Manpower
Administrator for the U.S. Employment Service; and Dr. Bennetta B.
Washington, Special Assistant to the Assistant Secretary of Labor for Manpower. Dr. Helen Astin (University of California, Los Angeles), and
Dr. Cynthia Epstein (Queens College, New York), who is also a com-
229
mittee member, presented results of research examining education, attitudes, and careers as they relate to women.
In its aim of furthering opportunities for women in business and industry,
the Advisory Committee also sponsored a symposium on "The Advancement of Women in Industry" on September 20, 1973. The opening speech
was given by Roy Ash, Director of the Office of Management and Budget.
Representatives of several major firms reported on both the progress and
the problems encountered in programs to improve the recruiting and promotion of women. Other speakers included representatives from government, labor unions, and universities.
As a result of the symposium, the nongovernment members of the committee prepared a set of recommendations urging the private sector to
adopt particular actions that would facilitate the economic advancement
of women. Guidelines are included for employers, unions, and the media,
suggesting specific steps that can be taken to ensure equal opportunity for
women. On December 5, 1973, the committee met to discuss the final
recommendations. These will be published and distributed to leaders of
industry and will also be available to the public.
On the same day, the committee members met together at the White
House with members of the Citizens' Advisory Council on the Status of
Women and with delegates from 11 member countries of the Organization
for Economic Cooperation and Development (OECD), who were in Washington to participate in an experts' meeting on "The Role of Women in the
Economy." The occasion was a reception at which the Task Force on
Women's Rights and Responsibilities dedicated a bust of Susan B. Anthony.
The committee's plans for 1974 include intensive study of several topics
which have important economic effects for women, including child care,
social security taxes and benefits, and the income tax structure.
At the December 5 meeting, the committee adopted a resolution presented to the Administration, urging that evening school programs not
be curtailed as a result of the fuel shortage, since many adults, both
women and men, depend on evening classes to continue their schooling.
230
Appendix B
REPORT TO THE PRESIDENT ON THE ACTIVITIES
of the
COUNCIL OF ECONOMIC ADVISERS DURING 1973
231
LETTER OF TRANSMITTAL
COUNCIL OF ECONOMIC ADVISERS,
Washington, D.C., December 31,1973.
T H E PRESIDENT:
SIR : The Council of Economic Advisers submits this report on its activities
during the calendar year 1973 in accordance with the requirements of the
Congress, as set forth in Section 4(d) of the Employment Act of 1946.
Respectfully,
HERBERT STEIN, Chairman.
WILLIAM J.
FELLNER.
GARY L. SEEVERS.
233
Report to the President on the Activities of the
Council of Economic Advisers During 1973
The Council of Economic Advisers was established by the Employment
Act of 1946 to advise and assist the President in discharging his responsibilities under the act. During 1973 a wide range of economic policy-making
issues arose. As the economy approached full employment, the pace of
inflation accelerated and a shortfall in farm product supplies sent food
prices sharply upward. Late in the year the embargo of petroleum supplies
by the Arabian producers precipitated the onset of a major energy crisis.
Herbert Stein served as Council Chairman during 1973, his second year
in that capacity. Mr. Stein is on leave of absence from the University of
Virginia, where he is A. Willis Robertson Professor of Economics.
Several changes in the membership of the Council took place during 1973.
On July 18, Gary L. Seevers succeeded Ezra Solomon, who had left the
Council on March 26 to return to the Graduate School of Business at Stanford University, where he is Dean Witter Professor of Finance. Mr. Seevers
was formerly Special Assistant to the Chairman of the Council.
On October 31, 1973, William J. Fellner became a Member of the
Council, filling a vacancy created by the return of Marina v.N. Whitman
to the University of Pittsburgh, where she is Professor of Economics.
Mr. Fellner is Sterling Professor of Economics Emeritus at Yale University
and Resident Scholar from the American Enterprise Institute, now on leave.
ECONOMIC POLICY MAKING AND THE COUNCIL OF
ECONOMIC ADVISERS
RESPONSIBILITIES OF THE COUNCIL
The principal directive of the Employment Act of 1946 is "to promote
maximum employment, production, and purchasing power." The basic
responsibility of the Council is the analysis and interpretation of economic
trends and developments to assist the President in reaching that goal. The
Council also provides analysis and recommendations on other economic
policy problems that warrant the attention of the Executive Office of the
President. The Council prepares regular reports on current economic conditions and forecasts of the economic outlook. Its recommendations are an
integral part of economic policy making.
235
Past Council Members and their dates of service are listed below
Name
Edwin G. Nourse
Leon H. Keyserling.
John D. Clark..
Roy Blough
Robert C. Turner
Arthur F. Burns
NeilH.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.
JamesS. Duesenberry..
Merton J. Peck
Warren L. Smith
Hendrik S. Houthakker.
Paul W. McCracken.....
Ezra Solomon
Marina v.N. Whitman.. .
Oath of office date
Position
Chairman
Vice Chairman._.
Acting Chairman.
Chairman
Member
Vice Chairman...
Member..
Member..
Chairman
Member
Member
Member.
Chairman
Member
Member.
Member
Member.
Chairman
Member
Member
Member.
Chairman
Member..
Member.
Member
Chairman
Member
Member
Member.
Member
Chairman
Member.
Member
Augusts 1946.
August 9,1946.
November 2 , 1 9 4 9 . .
May 10,1950
August 9, 1946
May 10,1950
June 29, 1950
September 8, 1952..
March 1 9 , 1 9 5 3 . . . . .
September 15, 1953..
December 2,1953.
April 4,1955
December 3 , 1 9 5 6 . .
May 2,1955
December 3, 1 9 5 6 . . .
November 1 , 1 9 5 8 . . .
May 7, 1959
January 29, 1 9 6 1 . . . .
January 2 9 , 1 9 6 1 . . . .
January 2 9 , 1 9 6 1 . . . .
August 3, 1962.
November 16, 1964..
May 17,1963
September 2,1964...
November 16, 1964..
February 15, 1 9 6 8 . . .
February 2 , 1 9 6 6 . . . .
Februarys, 1 9 6 8 . . .
July 1,1968
Februarys 1969. ___
February 4, 1 9 6 9 . . . .
September 9,1971...
March 13,1972
Separation date
November 1,1949.
January 20,1953.
February 11,1953.
August 20, 1952.
January 20,1953.
December 1,1956.
February 9, 1955.
April 29, 1955.
January 20,1961.
October 31, 1958.
January 31,1959.
January 20,1961.
January 20,1961.
November 15,1964.
July 31,1962.
December 27,1962.
February 15,1968.
August 31,1964.
February 1,1966.
January 20,1969.
June 30,1968.
January 20,1969.
January 20,1969.
July 15,1971.
December 31.1971.
March 26, 1973.
August 15,1973.
Under the Employment Act it is also the duty of the Council "to appraise
the various programs and functions of the Federal Government" and "to
make recommendations to the President" as to how economic policy might
be better adjusted toward the achievement of employment, production,
and price level objectives. This has involved the Council with an increasingly
wide range of problems and has expanded the Council's direct advisory role
within the Executive Office of the President. It has also created close working
relationships with the departments, agencies, and offices in the executive
branch both in evaluating current programs and in developing new ones.
The Council also reviews legislation proposed by Congress and submits recommendations based upon the economic implications of these prospective
programs and actions.
In addition to its duties in the analysis and forecasting of economic trends
and developments, the Council and its staff in 1973 also participated in the
examination of a wide range of economic issues incident to the formulation of programs and policies by the Administration. These included: the
restructuring and modification of domestic farm programs in order to facilitate the further expansion of farm production and food supplies and the
development of new farm legislation; measures to improve the efficiency,
structure, and functioning of the Nation's financial markets and programs affecting environmental quality, transportation, and housing; the
analysis of various aspects of the energy problem, including oil import
policies and the impact of the oil embargo upon the economy; policies to
236
govern the exploitation of the resources of the seas; study of the lumber
and plywood industry and the management of the Nation's timber resources;
supply problems of minerals and materials, and the disposition of stockpiles
of strategic materials; and the sale and lease of Government-financed technology. During 1972 the President requested the Chairman of the Council
to organize an Advisory Committee on the Economic Role of Women; this
is discussed separately in Appendix A. The Council also contributed to
analysis of a number of other questions, including: youth unemployment
problems and the effects of social legislation upon youth employment opportunities; ways in which the workmen's compensation system might be improved; proposals to improve health insurance; and many of the specific
problems arising in the operation of the price and wage control system.
International trade and investment continued to be topics of major
concern to the Council. The Council helps formulate the Administration's policies on overall international trade policy, and it also works on
the resolution of specific trade problems. In 1973 the Council contributed
to decisions relating to the easing of restrictions on imports of meats and dairy
products, the reassessment of quota limitations on imports of other farm
products, including wheat and cotton, the preparation of the U.S. negotiating position in the trade talks which are scheduled for 1974, and the legislation that would provide authority for the reciprocal reduction of trade
barriers and improvement of Presidential authority for the day-to-day
management of trade policy.
Early each year the President submits the Economic Report of the President to the Congress as required by the Employment Act. The Council
assumes major responsibility for the preparation of this Report, which
together with the Annual Report of the Council of Economic Advisers
reviews the progress of the economy over the past year and outlines the
Administration's policies and programs to achieve the goals of the act.
The Council works closely with the economic policy-making units of the
Administration. The review and analysis of the overall performance of the
economy is coordinated within the series of "Troika" working groups which
are composed of representatives of the Council, the Treasury, and the Office
of Management and Budget (OMB). At regular intervals senior staff
economists from each of these agencies evaluate recent economic performance
and formulate economic forecasts. These studies are then submitted to a
second group, which is composed of a Council Member, the Assistant Secretary of the Treasury for Economic Policy, and the Economist for OMB.
The analysis and projections are reviewed and cleared for consideration by
the Troika, which includes the Chairman of the Council, the Secretary of the
Treasury, and the Director of OMB. The Directors of the Council on International Economic Policy and the Cost of Living Council (CLC) commonly meet with the Troika, thus providing a means of coordinating international and domestic economic policy with the direct controls on prices
and wages. The Troika, usually augmented by the Chairman of the Board of
237
527-867 O - 74 - 16
Governors of the Federal Reserve System to form the Quadriad, meets with
the President from time to time to review the performance of the economy
and discuss possible changes in economic policy.
The Chairman of the Council is a member of the Council on Economic
Policy which was formed in January 1973 to provide for general coordination
of all aspects of economic policy. The Council works closely with the Cost
of Living Council, which supervises the operation of price and wage controls under the Economic Stabilization Program. Mr. Stein is Vice Chairman
of this group and is a member of its committees on food and health.
Mr. Seevers is a member of the CLC Deputies Group and also serves on
the Committee on Food. Senior staff economists participate in a number of
formal and informal CLC study and review groups. The Chairman is also
a member of the Domestic Council, the Council on International Economic
Policy, and the Federal Property Council. He and the Council Members serve
on a number of subcommittees of these agencies in the Executive Office of the
President.
In addition the Council and its professional staff served on more than 35
interagency study groups for analysis and review of economic problems and
the coordination of policy.
The Joint Economic Committee (JEC), like the Council, was created by
the Employment Act of 1946 to make a continuing study of matters relating
to the Economic Report and to submit its own report and recommendations
to the Congress. Since its inception, the Council has made itself readily
available to the JEC. During 1973 the Chairman and Council Members
appeared before the JEC or its subcommittees six times. On February 6 the
Council presented testimony before the JEC on the Economic Report, and
appeared again on August 1 to review economic developments during the
first half of 1973. Mr. Stein appeared before the JEC Subcommittee on
Consumer Economics on March 21, as did Mr. Seevers on September 25.
On July 10 Mr. Stein presented testimony with Mrs. Whitman in connection with the economic role of women in the economy, and on December 4
he appeared before the JEC Subcommittee on International Economics to
present testimony in connection with the effects of the oil embargo upon the
economy. In addition to the Council's appearances before the JEC, on
February 5 Mr. Stein testified on the Federal budget before the House
Committee on Appropriations and presented testimony on the economic
effects of the oil embargo on December 14 before the Senate Permanent
Investigations Subcommittee.
The Council continued its active role in the exchange of information and
views on international economic developments and policies. The Chairman
is the head of the U.S. delegation to the Economic Policy Committee of
the Organization for Economic Cooperation and Development (OECD)
and also serves as vice chairman of the committee. Council Members and
staff economists attended several working party meetings of the committee
during the year. The Council also participated in a working group of the
238
Manpower and Social Affairs Committee of the OECD on the economic
role of women in the economy, and in this regard the Council's staff coordinated the U.S. report and headed the U.S. delegation to an experts' meeting
with 10 other countries.
In April Mrs. Whitman and a delegation of senior staff economists from
the Council visited Tokyo to continue the semiannual exchange of information on economic problems and policies with the Economic Planning Agency
for Japan, an exchange that was initiated during 1972. In October the
Council was host to a delegation of economists from the Economic Planning
Agency who visited Washington to continue these discussions. In October
Mr. Stein, with Mr. Foss, a member of the CEA staff, visited Romania to
continue the dialogue on economic planning that was also initiated in 1972.
PUBLIC INFORMATION
The annual Economic Report is the main vehicle through which the
Council informs the public of its work and its views. The Report presents
a comprehensive review of economic conditions as well as forecasts for the
coming year and an explanation of the Administration's overall economic
policy. In recent years about 50,000 copies of the Report have been distributed. The Council also assumes primary responsibility for the monthly
publication Economic Indicators, which is prepared by the Council's Statistical Office under the direction of Frances M. James and issued by the Joint
Economic Committee with a distribution of about 10,000 copies.
The Council holds monthly press briefings at which it presents information and analysis of current economic problems and developments. Information is also provided through frequent speeches by the Chairman and
Members of the Council and through participation in seminars and panels.
The Council answers numerous requests for information from the Congress,
the press, and individual citizens; it also receives individual visitors and
representatives from business, academic, and other groups as often as is
possible without interfering with other duties.
ORGANIZATION AND STAFF OF T H E COUNCIL
OFFICE OF THE CHAIRMAN
The Chairman is responsible for communicating the Council's views to the
President. This duty is performed through direct consultation with the President and regular reports on economic developments. The Chairman represents the Council at Cabinet meetings and at many other formal and
informal meetings of Government officials. He also exercises ultimate responsibility for directing the work of the professional staff.
COUNCIL MEMBERS
The two Council Members directly supervise the work of the staff, are
responsible for all subject matter covered by the Council, and represent the
239
Council at a wide range of meetings, where they assume major responsibility for the Council's involvement. Whenever the Chairman is absent from
Washington, one of the Council Members automatically becomes Acting
Chairman.
In practice the Chairman and the Council Members work as a team. For
operational reasons, however, subject matter is divided among them informally. Mr. Seevers is responsible for the areas encompassing the Economic
Stabilization Program, international trade, energy and natural resources,
food and agriculture, urban and national growth policy, transportation, regulated industries, environmental problems, and antitrust.
Mr. Fellner's special responsibilities comprise business conditions, shortterm forecasting, monetary and fiscal policy, international finance, manpower training and employment, financial markets, housing, the economic
role of women, taxation, social security, and health, education, and welfare.
PROFESSIONAL STAFF
At the end of 1973 the professional staff consisted of 14 senior staff economists, two statisticians, and 10 members of the junior research staff.
Members of the professional staff were responsible for economic analysis
and policy recommendations in major subject areas involving the Council's
interests and responsibilities. In addition, staff economists carried out many
different Council and interagency assignments requiring the application of
their knowledge and analytical skills. The professional staff and their special
fields at the end of the year were:
Senior Staff Economists
George A. Akerlof
Barry R. Chiswick
John D. Darroch
John M. Davis, Jr
Geza M. Feketekuty
Murray F. Foss
George M. von Furstenberg....
Mary W. Hook
Benton F. Massell
Leo V. Mayer
June A. O'Neill
Joel Popkin
Allan G. Pulsipher
Sung W. Son
Labor and Manpower
Labor, Human Resources, and Income Distribution
Prices and Industry Studies
Special Assistant to the Chairman
International Finance and Trade
Business Conditions, Analysis, and Forecasting
Fiscal Policy, Public Finance, and Housing
Business Conditions, Analysis, and Forecasting
Energy
Agriculture and Food
Labor, Human Resources, and Income Distribution
Price Analysis
Regulated Industries, Science, Technology, Environment, and Transportation
Monetary Policy, Financial Institutions, Housing,
and Interest Rates
Statisticians
Frances M. James
Catherine H. Furlong
Senior Staff Statistician
Statistician
240
Junior Staff Economists
James S. Fackler
Eric B. Herr
David C. Munro
Laura B. Peterson
Rosemary Quintano
Lydia Segal
Carl I. Van Duyne
Labor, Human Resources, and Income Distribution
Fiscal Policy, Housing, and Public Finance
Business Conditions, Analysis, and Forecasting
International Finance and Trade
Econometrics and Forecasting
Price Analysis, Econometrics, and Forecasting
Monetary Policy, International Finance, and
Trade
Research Assistants and Interns
Mary P. Kane
M. Cary Leahey
Robert O. Mendelsohn
Frances M. James, Senior Staff Statistician, is in charge of the Council's
Statistical Office and manages the Council's economic and statistical information system. She supervises the publication of Economic Indicators and the
preparation of tables and charts for the Economic Report and for the Council's work. She also handles the fact checking of memoranda, testimony, and
speeches. Catherine H. Furlong, Dorothy Bagovich, Natalie V. Rentfro, and
Mary P. Kane assist Miss James.
The Council conducts a student intern program, employing a limited
number of promising graduate and undergraduate students of economics
for temporary periods, particularly during the summer months. Interns
who served during 1973 were Lee J. Alston (Indiana University), Elizabeth
L. Bailey (Simmons College), Irwin L. Collier, Jr. (Yale University),
Robert S. Dohner (Harvard University), David R. Henderson (University
of California, Los Angeles), and Steven B. Robkin (Duke University).
Each year the Council obtains the consulting services of several economists.
Consultants who provided services during 1973 included Marion Clawson
(Resources for the Future), John L. Cornwall (Southern Illinois University), George C. Eads (George Washington University), Karl A. Fox
(Iowa State University), Hendrik S. Houthakker (Harvard University),
Paul W. MacAvoy (Massachusetts Institute of Technology), Richard N.
Rosett (University of Rochester), and Roger P. Sherman (University of
Virginia). James R. Golden (U.S. Military Academy) was a member of
the professional staff during the summer.
In preparing the Economic Report, the Council relied upon the editorial
assistance of Rosannah C. Steinhoff.
SUPPORTING STAFF
The Administrative Office provides administrative support for the entire
Council staff including preparation and analysis of the Council's budget;
procurement of equipment and supplies; responding to correspondence and
inquiries from the general public; and distribution of Council speeches, re-
241
ports, and congressional testimony. James H. Ayres served as Administrative
Officer, assisted by Nancy F. Skidmore, Elizabeth A. Kaminski, Margaret L.
Snyder, and Bettye T. Siegel. The duplicating, mail, and messenger department was operated by James W. Gatling, Frank C. Norman, and Kharl A.
Williams.
The secretarial staff for the Chairman and Council Members consisted of
Joyce A. Pilkerton, Mary C. Fibich, Patricia A. Lee, Alice H. Williams, and
Margaret L. Snyder. Secretaries for the professional staff included D. Carolyn Fletcher, Dorothy L. Green, Bessie M. Lafakis, Jean P. Noll, Earnestine Reid, Linda A. Reilly, and Lillie M. Sturniolo. F. Denise Singletary
supplemented the secretarial staff during the summer. Special assistance
in connection with the Report was furnished by Dorothy L. Reid and Eleanor A. McStay, former members of the Council staff.
DEPARTURES
The Council's professional staff is drawn primarily from universities and
research institutions, and these economists normally serve for 1 or 2 years.
Senior staff economists who resigned during the year were William E. Gibson
(Brookings Institution), Ronald F. Hoffman (Department of Health, Education, and Welfare), William A. Johnson (Department of the Treasury),
Nicholas S. Perna (Federal Reserve Bank of New York), Robert D. Tollison
(Texas A&M), and Robert C. Vogel (Southern Illinois University). Junior
economists who resigned in 1973 were Paul W. Boltz, Andrew J. Safir, and
Mary E. Sullivan. Other resignations included Zell Berman, research assistant; and Cheryl L. Green and Julie L. Ohner, secretaries. Mayme Burnett,
secretary, retired from Federal service during 1973.
The Council suffered a loss in August with the death of V. Madge
McMahon, who had been with the Statistical Office since 1968.
242
Appendix C
STATISTICAL TABLES RELATING TO INCOME,
EMPLOYMENT, AND PRODUCTION
243
CONTENTS
NATIONAL INCOME OR EXPENDITURE:
G-l. Gross national product or expenditure, 1929-73
C-2. Gross national product or expenditure in 1958 dollars, 1929-73
•.
G-3. Implicit price deflators for gross national product, 1929-73
C-4. Implicit price deflators and alternative price measures of gross
national product and gross private product, 1939-73
C-5. Gross national product by industry in 1958 dollars, 1947-72
C-6. Gross national product by major type of product, 1929-73
G—7. Gross national product by major type of product in 1958 dollars,
1929-73
C—8. Gross national product: Receipts and expenditures by major economic
groups, 1929-73
C-9. Gross national product by sector, 1929-73
C-10. Gross national product by sector in 1958 dollars, 1929-73
G—11. Gross product originating in nonfinancial corporations and dollar
costs per unit of output, 1948-73
C-12. Personal consumption expenditures, 1929-73
C-13. Gross private domestic investment, 1929-73
C-14. Relation of gross national product and national income, 1929-73
C-15. National income by type of income, 1929-73
C—16. Relation of national income and personal income, 1929-73
C-17. Disposition of personal income, 1929-73
C-18. Total and per capita disposable personal income and personal consumption expenditures in current and 1958 dollars, 1929-73
C-19. Sources of personal income, 1929-73
C-20. Sources and uses of gross saving, 1929-73
C-21. Saving by individuals, 1946-73
C-22. Number and money income (in 1972 dollars) of families and unrelated
individuals, by race of head, 1947-72
Page
249
250
252
254
255
256
257
258
260
261
262
263
264
265
266
267
268
269
270
272
273
274
POPULATION, EMPLOYMENT, WAGES, AND PRODUCTIVITY:
C-23.
C-24.
C-25.
C-26.
C-27.
C-28.
C-29.
C—30.
Population by age groups, 1929-73
Noninstitutional population and the labor force, 1929-73
Civilian employment and unemployment by sex and age, 1947-73. .
Selected unemployment rates, 1948-73
Unemployment by duration, 1947-73
Unemployment insurance programs, selected data, 1946-73
Wage and salary workers in nonagricultural establishments, 1929-73.
Average weekly hours and hourly earnings in selected private nonagricultural industries, 1947-73
C-31. Average weekly earnings in selected private nonagricultural industries, 1947-73
C-32. Output per man-hour and related data, private economy, 1947-73. .
C-33. Changes in output per man-hour and related data, private economy,
1948-73
245
275
276
278
279
280
281
282
284
285
286
287
PRODUCTION AND BUSINESS ACTIVITY:
C-34. Industrial production indexes, major industry divisions, 1929-73.. . .
C-35. Industrial production indexes, market groupings, 1947-73
C—36. Industrial production indexes, selected manufactures, 1947—73
C-37. Capacity utilization rate in manufacturing and major materials
industries, 1948-73
C-38. New construction activity, 1929-73
C-39. New housing starts and applications for financing, 1929-73
C-40. Business expenditures for new plant and equipment, 1947—74
C—41. Sales and inventories in manufacturing and trade, 1947—73
C-42. Manufacturers' shipments and inventories, 1947-73
C-43. Manufacturers' new and unfilled orders, 1947-73
PRICES:
C-44. Consumer price indexes by expenditure classes, 1929-73
C—45. Consumer price indexes by commodity and service groups, 1939—73.
C—46. Consumer price indexes, selected commodities and services, 1939—73.
O-47. Consumer price indexes, seasonally adjusted, 1970-73
C-48. Percent changes in consumer price indexes, major groups, 1948-73..
C-49. Wholesale price indexes by major commodity groups, 1929-73
C-50. Wholesale price indexes by stage of processing, 1947-73
C-51. Percent changes in wholesale price indexes, major groups, 1948-73..
MONEY STOCK, CREDIT, AND FINANCE:
C-52. Money stock measures, 1947-73
C-53. Commercial bank loans and investments, 1930-73
C-54. Total funds raised in credit markets by nonfinancial sectors, 1965-73.
C-55. Private liquid asset holdings, nonfinancial investors, 1965-73
C-56. Federal Reserve Bank credit and member bank reserves, 1929-73. .
C-57. Aggregate reserves and member bank deposits, 1959-73
C-58. Bond yields and interest rates, 1929-73
C-59. Short-and intermediate-term consumer credit outstanding, 1929-73.
C-60. Instalment credit extended and repaid, 1946-73
C—61. Mortgage debt outstanding by type of property and of financing,
1939-73
C-62. Mortgage debt outstanding by lender, 1939-73
C-63. Net public and private debt, 1929-72
GOVERNMENT FINANCE:
C-64. Federal budget receipts and outlays, fiscal years 1929-75
C-65. Federal budget receipts, outlays, financing, and debt, fiscal years
1964-75
.
C-66. Relation of the Federal budget to the Federal sector of the national
income and product accounts, fiscal years 1972—75
C-67. Receipts and expenditures of the government sector of the national
income and product accounts, 1929-73
C—68. Receipts and expenditures of the Federal Government sector of the
national income and product accounts, 1949-75
C-69. Receipts and expenditures of the State and local government sector of
the national income and product accounts, 1946-73
C—70. State and local government revenues and expenditures, selected fiscal
years, 1927-72
C-71. Public debt securities by kind of obligation, 1946-73
C-72. Estimated ownership of public debt securities, 1946-73
C-73. Average length and maturity distribution of marketable interestbearing public debt, 1946-73
246
Pag€
288
289
290
291
292
294
296
297
298
299
300
301
302
303
304
305
307
309
310
311
312
314
315
316
317
319
320
321
322
323
324
325
327
328
329
330
331
332
333
334
CORPORATE PROFITS AND FINANCE:
C-74. Profits before and after taxes, all private corporations, 1929-73
C—75. Sales, profits, and stockholders' equity, all manufacturing corporations, 1947-73
C-76. Relation of profits after taxes to stockholders' equity and to sales, all
manufacturing corporations, by industry group, 1950-73
C—77. Sources and uses of funds, nonfarm nonfinancial corporate business,
1946-73
C-78. Current assets and liabilities of U.S. corporations, 1939-73
C-79. State and municipal and corporate securities offered, 1934-73
C-80. Common stock prices, earnings, and yields, and stock market credit,
1949-73
C-81. Business formation and business failures, 1929-73
Page
335
336
337
339
340
341
342
343
AGRICULTURE:
C-82.
C-83.
C-84.
C-85.
Income of farm people and farmers, 1929-73
Farm production indexes, 1929-73
Farm population, employment, and productivity, 1929-73
Indexes of prices received and prices paid by farmers, and parity ratio,
1929-73
C-86. Selected measures of farm resources and inputs, 1929-73
C-87. Comparative balance sheet of the farming sector, 1929-74
344
345
346
347
348
349
INTERNATIONAL STATISTICS:
C-88. U.S. balance of payments, 1946-73
C-89. U.S. merchandise exports and imports by commodity groups,
1958-73
C-90. U.S. merchandise exports and imports by area, 1967-73
C—91. U.S. overseas loans and grants, by type and area, fiscal years,
1962-73
C-92. International reserves, 1949, 1953, and 1968-73
C-93. U.S. reserve assets, 1946-73
C-94. International investment position of the United States at year-end,
1960 and 1968-72
C-95. Price changes in international trade, 1965-73
C—96. Consumer price indexes in the United States and other major industrial countries, 1955-73
General Notes
Detail in these tables may not add to totals because of rounding.
Unless otherwise noted, all dollar figures are in current dollars.
See Economic Report 1972 for data for intervening years not shown here.
Symbols used:
» Preliminary.
_ _ Not available (also, not applicable).
247
350
352
353
354
355
356
357
358
359
NATIONAL INCOME OR EXPENDITURE
TABLE C-l.—Gross national product or expenditure, 1929-73
PerYear or quarter
Total
gross
national
product
consumpexpenditures »
Gross
Net
private exports
doof goods
mestic
and
investservices 3
ment^
Government purchases of goods and services *
Federal
Total
Total
National
defense 5
Other
State
and
local
Percent
change
from
preceding
period,
total gross
national
product6
Billions of dollars
1929
103.1
77 2
16.2
1.1
8.5
1.3
1. 3
7.2
1933
55.6
45.8
1.4
.4
8.0
2.0
2. D
6.0
1939
-4.2
90.5
66.8
9.3
1.1
13.3
5.1
1.2
3.9
8.2
6.9
1940
1941
1942
1943
1944..
1945
1946
1947
1948
1949
99.7
124.5
157.9
191.6
210.1
211.9
208.5
231.3
257.6
256.5
70.8
80.6
88.5
99.3
108.3
119.7
143.4
160.7
173.6
176.8
13.1
17.9
9.8
5.7
7.1
10.6
30.6
34.0
46.0
35.7
1.7
1.3
.0
-2.0
-1.8
-.6
7.5
11.5
6.4
6.1
14.0
24.8
59.6
88.6
96.5
82.3
27.0
25.1
31.6
37.8
6.0
16.9
51.9
81.1
89.0
74.2
17.2
12.5
16.5
20.1
2.2
13.8
49.4
79.7
87.4
73.5
14.7
9.1
10.7
13.3
3.8
3.1
2.5
1.4
1.6
.7
2.5
3.5
5.8
6.8
8.0
7.9
7.7
7.4
7.5
8.1
9.8
12.6
15.0
17.7
10.2
24.9
26.8
21.3
9.7
.9
-1.6
10.9
11.3
-.4
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
284.8
328.4
345.5
364.6
364.8
398.0
419.2
441.1
447.3
483.7
191.0
206.3
216.7
230.0
236.5
254.4
266.7
281.4
290.1
311.2
54.1
59.3
51.9
52.6
51.7
67.4
70.0
67.9
60.9
75.3
1.8
3.7
2.2
.4
1.8
2.0
4.0
5.7
2.2
.1
37.9
59.1
74.7
81.6
74.8
74.2
78.6
86.1
94.2
97.0
18.4
37.7
51.8
57.0
47.4
44.1
45.6
49.5
53.6
53.7
14.1
33.6
45.9
48.7
41.2
38.6
40.3
44.2
45.9
46.0
4.3
4.1
5.9
8.4
6.2
5.5
5.3
5.3
7.7
7.6
19.5
21.5
22.9
24.6
27.4
30.1
33.0
36.6
40.6
43.3
11.0
15.3
5.2
5.5
.1
9.1
5.3
5.2
1.4
8.2
503.7
520.1
560.3
590.5
632.4
684.9
749.9
793.9
864.2
930.3
325.2
335.2
355.1
375.0
401.2
432.8
466.3
492.1
536.2
579.5
74.8
71.7
83.0
87.1
94.0
108.1
121.4
116.6
126.0
139.0
4.0
5.6
5.1
5.9
8.5
6.9
5.3
5.2
2.5
1.9
99.6
107.6
117.1
122.5
128.7
137.0
156.8
180.1
199.6
210.0
53.5
57.4
63.4
64.2
65.2
66.9
77.8
90.7
98.8
98.8
44.9
47.8
51.6
50.8
50.0
50.1
60.7
72.4
78.3
78.4
8.6
9.6
11.8
13.5
15.2
16.8
17.1
18.4
20.5
20.4
46.1
50.2
53.7
58.2
63.5
70.1
79.0
89.4
100.8
111.2
4.1
3.2
7.7
5.4
7.1
8.3
9.5
5.9
8.9
7.6
977.1
1,055.5
1,155.2
1,288. 2
617.6
667.2
726.5
805.0
136.3
153.2
178.3
201.5
3.6
.8
-4.6
4.6
219.5
234.3
255.0
277.2
96.2
98.1
104.4
106.9
74.6
71.6
74.4
74.2
21.6
26.5
30.1
32.7
123.3
136.2
150.5
170.3
5.0
8.0
9.4
11.5
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
.
1970
1971
1972
1973 v
Seasonally adjusted annual rates
1,027.2
1,046.9
. . 1,063.5
1,084.2
650.0
662.2
673.0
683.4
145.5
152.7
153.8
160.8
3.8
.5
1.1
-2.2
227.9
231.5
235.5
242.2
96.1
96.7
98.2
101.2
72.3
71.3
70.3
72.4
23.9
25.4
27.9
28.8
131.8
134.8
137.3
141.0
15.0
7.9
6.5
8.0
1972: 1
II
III
IV
1,112.5
1,142.4
1,166.5
1,199.2
700.2
719.2
734.1
752.6
167.5
174.7
181.5
189.4
-5.5
-5.7
—3.8
-3.5
250.3
254.2
254.7
260.7
106.0
106.7
102.3
102.7
76.5
76.6
71.9
72.4
29.5
30.1
30.4
30.3
144.3
147.5
152.4
158.0
10.9
11.2
8.7
11.7
1973: 1
II
III.
IV v
1,242.5
1,272.0
1,304.5
1,334.0
779.4
795.6
816.0
829.0
194.5
198.2
202.0
211.2
.0
2.8
7.6
8.0
268.6
275.3
279.0
285.8
105.5
107.3
106.8
107.8
74.3
74.2
74.2
74.0
31.2
33.1
32.7
33.8
168.0
168.0
172.2
178.0
15.2
9.9
10.6
9.4
1971: 1 .
II
III..
IV
1 See Table C-12 for detailed components.
2 See Table C-13 for detailed components.
See Table C-8 for exports and imports separately.
< Net of Government sales.
s This category corresponds closely to the national defense classification in the "Budget of the United States Government
for6 the Fiscal Year ending June 30,1975."
Changes are based on unrounded data and therefore may differ slightly from those obtained from published data.
3
Source: Department of Commerce, Bureau of Economic Analysis.
249
TABLE C-2.—Gross national product or expenditure in 1958 dollars, 1929-73
Personal consumption
expenditures
Year or
quarter
Total
gross
national
product
Gross private domestic investment
Fixed investment
Total
Durable
goods
Nondurable
goods
Nonresidential
Services
Total
Total
Total
Structures
Producers'
durable
equipment
Residential
structures
Change
in business
inventories
Billions of 1958 dollars
1929
203.6
139.6
16.3
69.3
54.0
40.4
36.9
26.5
13.9
12.6
10.4
3.5
1933
141.5
112.8
8.3
58.6
46.0
5.3
9.7
7.6
3.3
4.3
2.1
-4.3
1939
1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
209.4
148.2
14.5
81.2
52.5
24.7
23.5
15.3
5.9
9.4
8.2
1.2
227.2
263.7
297.8
337.1
361.3
355.2
312.6
309.9
323.7
324.1
155.7
165.4
161.4
165.8
171.4
183.0
203.5
206.3
210.8
216.5
16.7
19.1
11.7
10.2
9.4
10.6
20.5
24.7
26.3
28.4
84.6
89.9
91.3
93.7
97.3
104.7
110.8
108.3
108.7
110.5
54.4
56.3
58.5
61.8
64.7
67.7
72.1
73.4
75.8
77.6
33.0
41.6
21.4
12.7
14.0
19.6
52.3
51.5
60.4
48.0
28.1
32.0
17.3
12.9
15.9
22.6
42.3
51.7
55.9
51.9
18.9
22.2
12.5
10.0
13.4
19.8
30.2
36.2
38.0
34.5
6.8
8.1
4.6
2.9
3.8
5.7
12.5
11.6
12.3
11.9
12.1
14.2
7.9
7.2
9.6
14.1
17.7
24.6
25.7
22.6
9.2
9.8
4.9
2.9
2.5
2.8
12.1
15.4
17.9
17.4
4.9
9.6
4.0
-.2
-1.9
-2.9
10.0
-.2
4.6
-3.9
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
355.3
383.4
395.1
412.8
407.0
438.0
446.1
452.5
447.3
475.9
230.5
232.8
239.4
250.8
255.7
274.2
281.4
288.2
290.1
307.3
34.7
31.5
30.8
35.3
35.4
43.2
41.0
41.5
37.9
43.7
114.0
116.5
120.8
124.4
125.5
131.7
136.2
138.7
140.2
146.8
81.8
84.8
87.8
91.1
94.8
99.3
104.1
108.0
112.0
116.8
69.3
70.0
60.5
61.2
59.4
75.4
74.3
68.8
60.9
73.6
61.0
59.0
57.2
60.2
61.4
69.0
69.5
67.6
62.4
68.8
37.5
39.6
38.3
40.7
39.6
43.9
47.3
47.4
41.6
44.1
12.7
14.1
13.7
14.9
15.2
16.2
18.5
18.2
16.6
16.2
24.8
25.5
24.6
25.8
24.5
27.7
28.8
29.1
25.0
27.9
23.5
19.5
18.9
19.6
21.7
25.1
22.2
20.2
20.8
24.7
8.3
10.9
3.3
.9
-2.0
6.4
4.8
1.2
-1.5
4.8
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
487.7
497.2
529.8
551.0
581.1
617.8
658.1
675.2
706.6
725.6
316.1
322.5
338.4
353.3
373.7
397.7
418.1
430.1
452.7
469.1
44.9
43.9
49.2
53.7
59.0
66.6
71.7
72.9
81.3
85.6
149.6
153.0
158.2
162.2
170.3
178.6
187.0
190.2
197.1
201.3
121.6
125.6
131.1
137.4
144.4
152.5
159.4
167.0
174.4
182.2
72.4 68.9
69.0 67.0
79.4 73.4
82.5 76.7
87.8 81.9
99.2 90.1
109.3 95.4
101.2 93.5
105.2 98.8
110.5 103.8
47.1
45.5
49.7
51.9
57.8
66.3
74.1
73.2
75.6
80.1
17.4
17.4
17.9
17.9
19.1
22.3
24.0
22.6
23.4
24.3
29.6
28.1
31.7
34.0
38.7
44.0
50.1
50.6
52.2
55.8
21.9
21.6
23.8
24.8
24.2
23.8
21.3
20.4
23.2
23.7
3.5
2.0
6.0
5.8
5.8
9.0
13.9
7.7
6.4
6.7
1970
1971
1972
1973
722.5
745.4
790.7
837.3
477.5
496.3
526.8
554.7
83.8
92.2
104.0
114.6
206.5
211.6
220.9
229.2
187.2
192.4
201.8
210.9
103.4 99.5
110.3 105.0
122.9 118.3
131.7 126.6
77.2
76.1
83.7
92.5
23.7
22.5
23.0
24.8
53.5
53.6
60.8
67.7
22.2
29.0
34.6
34.0
3.9
5.3
4.6
5.2
Seasonally adjusted annual rates
1971:1
504.1
89.3
90.2
93.6
95.8
210.2
211.8
211.5
213.0
189.9
191.7
192.9
195.3
106.6
110.3
109.5
114.8
100.7
103.8
105.5
110.1
74.8
75.5
75.6
78.4
22.9
22.6
22.4
22.1
51.9
52.9
53.2
56.3
25.9
28.3
29.9
31.7
5.8
6.5
4.0
4.7
512.5
523.4
531.0
540.5
99.2
101.9
105.8
109.2
215.0
220.7
222.2
225.8
198.2
200.8
202.9
205.4
116.5
121.0
124.8
129.1
115.4
116.7
118.2
122.8
81.5
82.5
83.4
87.5
23.0
23.0
22.7
23.1
58.4
59.5
60.7
64.3
34.0
34.2
34.7
35.3
1.1
4.3
6.6
6.3
552.7
553.3
558.1
554.5
117.0
116.2
115.4
109.7
228.8
228.0
230.2
229.6
207.0
209.1
212.5
215.2
130.2
130.2
130.8
135.7
126.9
126.9
127.7
124.7
91.2
91.5
93.2
94.1
23.8
24.4
25.2
26.0
67.4
67.2
68.0
68.2
35.6
35.3
34.5
30.6
3.3
3.4
3.0
10.9
735.1
489.5
759.0
768.0
785.6
796.7
812.3
829.3
834.3
841.3
844.1
IL... 740.4 493.6
III—. 746.9 498.0
IV....
1972:1
IV....
1973:1
II
III....
IV p . . .
See footnotes at end of table.
250
TABLE C-2.—Gross national product or expenditure in 1958 dollars,
Net exports of goods and
services
Government purchases of
goods and services i
Year or quarter
Net
exports
Exports
Imports
Total
Federal
State
and
local
1929-73—Continue
Addendum:
Gross
private
product
Percent change from
preceding periodJ
Total
gross
national
product
Gross
private
product
Billions of 1958 dollars
1929
1.5
11.8
10.3
22.0
3.5
18.5
190.9
1933
.0
7.1
7.1
23.3
6.0
17.3
127.5
-1.9
-2.7
1939
1.3
10.0
8.7
35.2
12.5
22.7
188.7
8.5
9.4
1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
21
.4
-2.1
-5.9
-5.8
-3.8
8.4
12 3
6.1
6.4
11 0
11.2
7.8
6.8
7.6
10.2
19.6
22.6
18.1
18.1
8 9
10 8
9.9
12.6
13.4
13.9
11.2
10 3
12.0
11.7
36 4
56 3
117.1
164.4
181.7
156.4
48.4
39 9
46.3
53.3
15 0
36.2
98.9
147.8
165.4
139.7
30.1
19 1
23.7
27.6
21 4
20.1
18.3
16.6
16.3
16.7
18.4
20 8
22.7
25.7
205 6
236.6
257.3
272.8
286.9
282.5
275.1
281 4
295.0
294.1
8.5
16.1
12.9
13.2
7.2
-1.7
-12.0
-.9
4.4
.2
9.0
15.0
8.8
6.1
5.2
-1.5
-2.6
2.3
4.8
-.3
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959.
27
5.3
3 0
1.1
3.0
3 2
5 0
6.2
2.2
.3
16.3
19.3
18 2
17.8
18.8
20 9
24.2
26.2
23.1
23.8
13.6
14.1
15 2
16.7
15.8
17 7
19 1
19.9
20.9
23.5
52.8
75.4
92 1
99.8
88.9
85 2
85.3
89.3
94.2
94.7
25.3
47.4
63 8
70.0
56.8
50 7
49 7
51.7
53.6
52.5
27.5
27.9
28 4
29 7
32.1
34 4
35.6
37.6
40.6
42.2
324.2
344.6
353 2
371.1
366.2
397 2
404 8
410.5
405.2
433.4
9.6
7.9
3.0
4.5
-1.4
7.6
1.8
1.5
-1.1
6.4
10.2
6.3
2.5
5.0
-1.3
8.5
1.9
1.4
-1.3
7.0
1960
1961
1962
1963
1964
1965.
1966
1967
1968
1969
4.3
51
4 5
5.6
8.3
6.2
4.2
36
1.0
.2
27.3
28 0
30.0
32.1
36.5
37.4
40.2
42 1
45.7
48.4
23.0
22 9
25.5
26.6
28.2
31.2
36.1
38 5
44.7
48.3
94.9
100 5
107.5
109.6
111.2
114.7
126.5
140.2
147.7
145.9
51.4
54 6
60.0
59.5
58.1
57.9
65.4
74.7
78.1
73.5
43.5
45 9
47.5
50.1
53.2
56 8
61.1
65 5
69.6
72.4
444.0
452 3
482 9
503.2
532.0
567 0
603.5
617 5
647.0
664.9
2.5
1.9
6.6
4.0
5.4
6.3
6.5
2.6
4.7
2.7
2.4
1.9
6.7
4.2
5.7
6.6
6.4
2.3
4.8
2.8
2.3
.4
-2.0
6.0
52.2
52.7
56.4
67.3
50.0
52.4
58.4
61.3
139.3
138.4
143.0
144.8
64.3
60.9
60.8
57.3
75 0
77.5
82.2
87.5
661 7
684.7
729.5
774.8
—.4
3.2
6.1
5.9
-.5
3.5
6.5
6.2
1970
1971
1972
1973*
. . .
Seasonally adjusted annual rates
1971: 1
II
III
IV
1972: 1
II
Ill
IV
1973: 1
II
Ill
IV*
2.4
-1.6
52.8
53.4
54.9
49.7
50.4
53.7
54.1
51.3
136.7
136.7
138 6
141.6
60.1
59.9
61 1
62.5
76.6
76.8
77.5
79.1
674.6
679.9
686.1
698.2
9.1
2.9
3.6
6.6
9.9
3.2
3.7
7.2
-3 7
-2.8
-.9
-.8
55.4
54.1
56.6
59.6
59.1
56.8
57.5
60.3
142 7
144.0
141 8
143.5
63 0
62.9
58 8
58.6
79 7
81.1
83 0
85.0
707.3
725.0
735.3
750.3
49
9.5
5.8
8.1
5.4
10.4
5.8
8.4
2.0
5.6
7.4
9.2
65.3
66.6
67.4
69.8
63.3
61.1
60.0
60.6
144.4
145.2
145.0
144.8
58.2
58.2
57.2
55.6
86.2
87.0
87.8
89.2
767.1
772.0
778.8
781.2
8.7
2.4
3.4
1.3
9.3
2.5
3.6
1.3
1 Net of Government sales.
2
Changes are based on unrounded data and therefore may differ slightly from those obtained from published data.
Source: Department of Commerce, Bureau of Economic Analysis.
251
TABLE C-3.—Implicit price deflators for gross national product, 1929-73
[Index numbers, 1958=100]
Gross private domestic investment i
Personal consumDtion
expenditures
Year or quarter
Total
gross
national
product^
Fixed investment
Nonresidential
Total
Durable
goods
Nondurable
goods
Services
Total
Total
Structures
Producers'
durable
equipment
Residential
structures
1929
50.64
55.3
56.4
54.5
56.1
39.4
39.9
35.7
44.6
38.1
1933
39.29
40.6
41.9
38.0
43.6
30.6
31.6
27.9
34.5
27.1
1939
43.23
45.1
46.0
43.2
47.7
37.7
38.7
33.1
42.2
35.7
1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
43.87
47.22
53.03
56.83
58.16
59.66
66.70
74.64
79.57
79.12
45.5
48.7
54.8
59.9
63.2
65.4
70.5
77.9
82.3
81.7
46.5
50.4
59.3
64.2
71.5
75.9
76.8
82.7
86.3
86.8
43.8
47.7
55.6
62.5
66.2
68.7
74.3
83.6
88.5
85.6
47.9
49.8
52.7
55.3
57.5
58.7
62.7
67.9
72.1
74.3
39.0
42.0
46.5
49.3
51.1
51.5
58.5
66.7
73.9
74.7
40.0
42.7
47.8
49.9
51.0
51.0
56.3
64.5
70.7
72.8
33.9
36.4
41.3
46.8
48.6
49.2
54.4
64.4
71.5
71.2
43.4
46.3
51.5
51.1
51.9
51.7
57.5
64.6
70.3
73.6
36.9
40.3
43.3
47.0
51.6
54.9
59.7
71.7
80.8
78.5
1950
1951
1952
1953
1954 .
.
.
1955
1956
1957
.
.
1958
1959
80.16
85.64
87.45
88.33
89.63
90.86
93.99
97.49
100.00
101.66
82.9
88.6
90.5
91.7
92.5
92.8
94.8
97.7
100.0
101.3
87.8
94.2
95.4
94.3
92.9
91.9
94.9
98.4
100.0
101.4
86.0
93.3
94.3
93.9
94.2
93.6
94.9
97.7
100.0
99.9
76.3
80.0
83.6
87.7
90.0
92.0
94.6
97.3
100.0
103.0
77.5
83.1
85.3
86.6
86.8
89.0
94.0
98.5
100.0
102.6
74.4
80.4
82.6
84.0
84.8
86.7
92.4
97.9
100.0
102.2
72.9
79.3
83.2
84.9
86.0
88.1
93.4
98.6
100.0
102.7
75.2
80.9
82.2
83.5
84.0
85.9
91.8
97.5
100.0
102.0
82.5
88.6
90.8
91.9
90.4
92.9
97.4
99.8
100.0
103.1
I960
1961
1962
1963
1964
1965
1966
1967
1968
1969
103.29
104.62
105.78
107.17
108.85
110.86
113.94
117.59
122.30
128.20
102.9
103.9
104.9
106.1
107.4
108.8
111.5
114.4
118.4
123.5
100.9
100.6
100.8
100.4
100.4
99.6
98.7
100.3
103.4
106.1
101.2
101.9
102.8
104.0
104.9
106.9
110.7
113.0
117.1
122.2
105.8
107.6
109.0
110.9
113.1
115.1
118.3
122.2
126.9
133.2
103.4
103.9
104.9
106.0
107.6
109.3
111.8
115.9
120.4
126.4
102.9
103.4
104.1
104.5
105.7
107.5
110.2
113.8
117.5
123.0
104.0
105.6
107.1
108.9
111.1
114.7
118.9
124.0
129.8
141.0
102.2
102.1
102.3
102.3
103.0
103.9
106.0
109.3
112.0
115.2
104.5
105.0
106.7
108.9
112.3
114.2
117.4
123.1
129.7
137.7
1970
1971
1972
1973*
135.24
141.60
146.10
153.86
129.3
134.4
137.9
145.1
108.9
112.3
112.8
114.5
127.8
131.7
135.7
146.8
140.2
148.0
153.2
160.0
132.5
140.1
145.7
153.3
130.2
137.3
141.3
147.0
152.6
168.4
181.7
194.4
120.3
124.2
126.0
129.6
140.2
147.5
156.3
170.5
Seasonally adjusted
1971: 1
II
III.
IV
139.73
141.40
142.39
142.85
132.8
134.2
135.2
135.6
112.3
113.0
112.6
111.4
130.1
131.3
132.3
133.1
145.4
147.3
149.2
150.1
137.5
139.7
141.7
141.3
135.6
137.1
138.5
137.8
161.4
166.5
171.4
174.4
124.1
124.6
124.7
123.4
142.9
146.7
149.6
149.9
1972: 1
II
Ill
IV..
144.85
145.42
146.42
147.63
136.6
137.4
138.2
139.2
112.3
112.9
113.5
112.5
134.3
135.0
136.0
137.6
151.3
152.5
153.5
155.3
143.6
145.0
146.3
147.6
140.0
141.1
141.8
142.1
178.2
180.4
182.2
186.0
125.0
125.9
126.8
126.3
152.4
154.4
157.0
161.2
1973: 1
II...
Ill
IV*
149.81
152.46
155.06
158.04
141.0
143.8
146.2
149.5
113.0
114.3
115.1
115.6
140.8
144.8
148.4
152.9
157.0
159.0
160.7
163.2
149.7
152.7
154.4
156.6
143.5
146.5
148.1
149.9
190.7
193.9
195.9
196.8
126.8
129.3
130.3
132.0
165.6
168.6
171.6
177.1
See footnotes at end of table.
252
TABLE C-3.—Implicit price deflators for gross national product, 1929-73—Continued
[Index numbers, 1958=100]
Exports and Imports of
goods and services!
Government purchases of goods
and services
Gross national product
by sector
Year or quarter
Exports
Imports
Total
Federal
State and
local
Private2
Total
Nonfarm
General
government
1929
59.5
57.3
38.6
36.0
39.1
51.73
51.2
34.1
1933
33.7
28.8
34.5
33.1
35.0
39.92
42.1
33.5
1939
44.1
38.6
37.9
40.8
36.3
43.93
44.9
36 8
1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
48.6
53.0
61.5
65.2
69.9
71.3
75.4
87.3
92.7
87.0
40.8
43.0
48.3
51.2
53.2
56.4
64.9
79.4
86.4
82.2
38.5
44.0
50.9
53.9
53.1
52.6
55.8
62.9
68.1
71.0
40.2
46.6
52.5
54.9
53.8
53.1
57.3
65.6
69.8
73.0
37.3
39.2
42.3
44.6
46.1
48.6
53.2
60.4
66.4
68.9
44.69
48.66
55.51
60.85
62.02
62.59
68.25
76.27
81.40
80.60
45 4
48.8
54.8
59.5
60.8
60.9
65.8
73.5
78.6
79.1
36 0
34.7
37.3
39 7
43.3
48.3
55.4
58 5
60.8
64.7
1950
1951
1952
1953.
1954
1955
1956
1957
1958
1959
84.9
97.0
98.8
95.2
94.3
94.9
97.5
101.3
100.0
98.8
88.7
107.2
103.6
99.1
100.8
100.6
102.5
104.0
100.0
99.3
71.8
78.5
81.0
81.8
84.1
87.1
92.1
96.4
100.0
102.4
72.9
79.4
81.2
81.4
83.5
86.9
91.7
95.8
100.0
102.2
70.8
76.9
80.6
82.8
85.3
87.5
92.7
97.3
100.0
102.6
81.41
87.35
88.99
89.65
90.77
91.57
94.53
97.92
100.00
101.41
80.0
85.3
87.4
89.0
90.5
91.7
94.8
98.3
100.0
101.8
67.1
70.5
74.4
76.6
79.5
84.0
88.7
93.3
100.0
104.2
99.9
101.9
100.8
100.6
101.5
104.7
107.7
109.7
110.9
114.6
101.0
100.1
98.5
99.5
101.5
103.4
105.6
106.5
107.7
111.1
105.0
107.1
109.0
111.8
115.7
119.4
124.0
128.5
135.1
144.0
104.2
105.2
105.6
108.0
112.2
115.5
118.8
121.5
126.5
134.5
105.9
109.4
113.2
116.3
119.5
123.5
129.4
136.4
144.8
153.6
102. 76
103.73
104. 73
105.80
107.05
108.83
111.56
114.79
118.90
124.30
103.2
104.2
105.1
106.3
107.7
109.2
111.6
115.3
119.3
124.6
108.6
113.6
116.6
121.5
128.4
133.5
140.3
147.6
159.1
171.0
120.5
125.7
130.2
150.5
118.6
125.0
133.6
157.8
157.6
169.2
178.3
191.4
149.5
160.9
171.7
186.5
164.6
175.8
183.2
194.5
130.32
135.88
139. 78
147.23
130.9
136.6
139.8
145.4
188.9
206.2
221.5
236.1
.
_•_
1960
1961
1962
1963.
1964
1965
1966..
1967
1968
1969
1970
1971
1972
1973
.
.
.
,
..
.
-
P
Seasonally adjusted
1971: 1
II
III
IV
_.
1972: 1
II
III
IV
1973: 1
II
III
IV p_
124.8
125.6
125.9
126.6
123.2
124.1
125.8
127.1
166.7
169.4
169.9
171.0
160.0
161.5
160.7
161.9
172.1
175.5
177.2
178.2
134.15
135. 73
136.66
136.93
135.0
136.5
137.5
137.5
201.9
205.2
207.1
210.7
127.0
129.2
130.7
133.7
128.3
133.0
135.2
137.8
175.4
176.6
179.6
181.6
168.2
169.8
173.9
175.5
181.0
181.9
183.7
185.9
138.59
139.12
140.07
141.27
139.0
139.3
140.0
140.9
217.9
220.8
222.6
224.6
137.4
145.9
155.0
162.6
141.8
154.5
161.7
174.1
186.0
189.6
192.5
197.4
181.2
184.4
186.8
194.1
189.2
193.1
196.1
199.5
143. 25
145.88
148.47
151.24
142.4
144.5
146.1
148.6
230.8
233.9
237.1
242.6
1 Separate deflators are not available for total gross private domestic investment, change in business inventories, and
net exports of goods and services.
2 Gross national product less compensation of general government employees. See also Tables C-9 and C-10.
Source: Department of Commerce, Bureau of Economic Analysis.
253
527-867 O - 74 - 17
TABLE C—4.—Implicit price deflators and alternative price measures of gross national product and
gross private product, 1939-73
Gross national product price
measures, 1958=100
Total
Year or
quarter
Percent change from preceding periodl
Total
Private
Price Implicit Price
Implicit index,
index,
price
price
1967 deflator
1967
deflator weights
weights
Implicit
price
deflator
Price
index,
1967
weights
Private
Chain
price
index
Implicit
price
deflator
Price
index,
1967
weights
Chain
price
index
43.23
43.93
-1.5
-1.6
43.87
47.22
53.03
56.83
58.16
44.69
48.66
55.51
60.85
62.02
1.5
7.7
12.3
7.2
2.3
17
8.9
14.1
9.6
1.9
59.66
66.70
74.64
79.57
79.12
62.59
68.25
76.27
81.40
80.60
2.6
11.8
11.9
6.6
-.6
.9
9.0
11 8
6.7
-1.0
1950
1951
1952
1953
1954
80.16
85.64
87.45
88.33
89.63
81.41
87.35
88.99
89.65
90.77
1.3
6.8
2.1
1.0
1.5
1.0
7.3
1.9
.7
1.2
1955
1956
1957
1958
1959
90.86
93.99
97.49
100. 00
101.66
91.57
94.53
97.92
100. 00
101.41
1.4
3.4
3.7
2.5
1.7
.9
3.2
3.6
2.1
1.4
1960
1961
1963
1964
103. 29
104.62
105. 78
107 17
108. 85
102. 76
103.73
104. 73
105.80
107 05
1.6
1.3
1.1
1.3
1.6
1.3
.9
1.0
1.0
1.2
1965
1966
1967
1968
1969
110.86
113.94
117.59
122. 30
128. 20
110.75
114.06
117.58
122. 51
128.61
108. 83
111.56
114.79
118.90
124. 30
108.65
111.62
114.78
119.10
124.67
1.8
2.8
3.2
4.0
4.8
3.0
3.1
4.2
5.0
3.1
4.2
4.9
1.7
2.5
2.9
3.6
4.5
2.7
2.8
3.8
4.7
2.9
3.8
4.6
1970
1971
1972
1973*
135. 24
141.60
146.10
153. 86
135.60
142.55
148.02
157. 07
130.32
135.88
139.78
147.23
130. 67
136. 64
141. 05
149.50
5.5
4.7
3.2
5.3
5.4
5.1
3.8
6.1
5.3
5.1
3.6
5.8
4.8
4.3
2.9
5.3
4.8
4.6
3.2
6.0
4.7
4.5
3.1
5.6
1939
.
1940
1941
1942
1943
1944
1945 .
1946 . .
1947
1948
1949
.
196
Seasonally adjusted annual rates
1971:1
II
III
IV
139.73
141.40
142.39
142.85
140.36
142.17
143.48
144.31
134.15
135.73
136.66
136.93
134.65
136.34
137. 58
138.11
5.5
4.9
2.8
1.3
6.9
5.3
3.7
2.3
6.8
5.2
3.6
1.9
4.3
4.8
2.8
.8
5.4
5.1
3.7
1.5
5.4
5.0
3.6
1.3
1972:1
II
Ill
IV
144.85
145.42
146.42
147.63
146.30
147.33
148.48
149.95
138.59
139.12
140.07
141.27
139.49
140.35
141.44
142.87
5.7
1.6
2.8
3.3
5.6
2.8
3.2
4.0
5.2
2.6
3.2
3.9
4.9
1.6
2.7
3.5
4.1
2.5
3.1
4.1
4.0
2.2
3.2
3.9
1973:1
II
Ill
IV*_.___
149.81
152.46
155.06
158.04
152.79
155. 59
158.37
161.48
143.25
145.88
148.47
151.24
145.32
148.11
150.87
153.66
6.1
7.3
7.0
7.9
7.8
7.6
7.3
8.0
7.1
7.0
7.0
7.7
5.7
7.6
7.3
7.7
7.0
7.9
7.6
7.6
6.5
7.2
7.1
7.4
1
Changes are based on unrounded data and therefore may differ slightly from those obtained from published indexes.
Source: Department of Commerce, Bureau of Economic Analysis.
254
TABLE C-5.—Gross national product by industry in 1958 dollars, 1947-72
[Billions of 1958 dollars]
Year
AgriTotal culture, Congross fores- tract
natry,
contional
and
strucproduct fishtion
eries
Manufacturing
Total
TransGovportaerntion, Whole- Finance,
insurment
Nonsale
Ducomance,
Servand
All
and
rable durable muniand
ices govern- otheri
goods goods cation, retail
real
ment
trade estate
indus- indus- and
entertries
tries
utiliprises
ties
1947
1948
1949
309.9
323.7
324.1
17.9
20.0
19.4
12.9
14.1
14.7
91.8
96.3
90.9
52.3
55.0
50.5
39.4
41.3
40.4
29.6
30.4
28.7
52.7
54.2
55.2
35.6
36.5
37.8
30.6
31.9
32.1
32.4
33.2
34.7
6.7
7.1
10.6
1950
1951
1952...
1953
1954..
355.3
383.4
395.1
412.8
407.0
20.4
19.5
20.2
21.2
21.6
16.2
18.2
18.3
18.9
19.3
105.5
116.2
118.7
128.6
119.5
60.8
69.0
71.5
79.1
71.2
44.7
47.2
47.3
49.5
48.3
30.8
34.3
34.6
35.7
36.4
60.4
61.4
62.9
64.9
65.5
41.0
42.9
44.7
46.8
49.8
33.1
34.0
34.5
35 3
35.4
35.9
43.9
47.2
47.1
46.1
12.1
13.0
14.0
14 3
13.5
1955
1956...
1957
1958
1959...
438.0
446.1
452.5
447.3
475.9
22.1
22.0
21.5
22.0
22.3
20.8
21.8
21.1
20.7
22.0
133.6
134.1
134.6
123.7
138.9
80.7
79.4
79.6
69.6
79.9
52.9
54.6
54.9
54.0
59.0
38.6
40.5
41.3
40.6
43.3
71.6
73.8
75.1
75.1
80.8
52.7
54.8
57.0
59.2
61.4
38.2
40.2
41.8
42.9
45.1
46.0
46.2
46.9
47.3
47.9
14.4
12.7
13.1
16.0
14.1
1960
1961. .
1962
1963
1964 .
487.7
497.2
529.8
551.0
581.1
23.1
23.4
23.3
24.0
23.6
21.7
21.4
21.7
21.9
23.3
140.9
140.4
154.6
162.4
173.7
81.0
79.7
90.0
95.6
102.4
59.9
60.7
64.7
66.8
71.3
44.9
46.0
48.9
51.9
54.7
82.3
83.5
88.9
92.8
98.9
64.1
67.1
71.2
74.4
78.3
46.7
48.3
50.8
52.2
54.7
49.2
50.6
52.6
53.9
56.1
14.7
16.3
17.9
17.4
17.8
1965
1966—
1967
1968
1969
617.8
658.1
675.2
706.6
725.6
25.0
23.7
25.2
24.8
25.4
23.5
24.7
23.1
23.8
24.1
190.5
205.7
205.4
219.2
228.6
114.8
125.1
123.9
131.8
136.9
75.7
80.7
81.4
87.4
91.7
59.2
64.0
66.5
70.9
75.4
104.8
111.6
113.9
120.8
124.2
83.1
86.8
91.6
95.2
95.5
57.7
60.6
63.4
65.8
67.7
58.0
61.8
65.5
68.6
70.3
15.8
19.4
20.6
17.6
14.3
1970
1971. .
1972._
722.5
745.4
790.7
26.2
27.4
26.0
23.6
24.1
24.7
217.5
223.7
243.7
125.1
127.7
140.3
92.4
96.0
103.4
77.4
81.0
86.4
126.5
131.5
139.9
96.4
99.9
105.1
69.2
69.6
72.5
70.0
70.0
71.7
15.8
18.3
20.5
i Mining, rest of the world, and residual (the difference between gross national product measured as sum of final products and gross national product measured as sum of gross product by industries).
Source: Department of Commerce, Bureau of Economic Analysis.
255
TABLE C-6.—Gross national product by major type of product, 1929-73
[Billions of dollars]
Goods output
Final
sales
change
Total
Total
gross
national
product
Inventory
Year or
quarter
Total
Final
sales
Durable goods
la
11
Total
Final
sales
1.7
56.1
54.3
1.7
17.5
57.2 - 1 . 6
27.0
?8.fi - 1 . 6
4,9
1939
90.5
90.1
.4
49.0
48.6
.4
12.7
12.4
1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
99.7
124.5
157.9
191.6
210.1
211.9
208.5
231.3
257.6
256.5
97.5
120.1
156.2
192.2
211.1
213.0
202.1
231.8
252.9
259.6
2.2
4.5
1.8
-.6
-1.0
-1.0
fi 4
56.0
72.5
93.6
120.4
132.3
128.9
124.9
139.7
154.2
147.5
53.8
68.0
91.9
121.0
133.3
1?9.9
118.5
140.1
149.4
150.5
2.2
4.5
1.8
-.6
-1.0
-1.0
fi 4
1933
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963.
1964
1965
1966
1967
1968
1969
101.4
103 1
....
....
....
....
1970
1971
1972
1973 v
ll
Total
Oi CO
Final
sales
J-g
55.6
1929
Nondurable goods
16.1
1.4
Gross
Serv- Struc- auto
ices tures product
If
c u
38.5
5.4 - . 5
38.2
n 3
35.6
11.4
23.2 - 1 . 1
25.7
2.9
36.2
.1
34.0
7.5
4! 7
-3.1
16.6
26.8
35.5
54.2
57.9
48 9
36.9
46.0
48.7
47.8
15.4 1.2 39.3 38.4 1 0
23.8 3.0 45.6 44.2 1.4
34.5 1.0 58.1 57.4
.7
.0 66.2 66.8 - . 6
54.2
58.5 - . 6 74.4 74.8 - . 3
50.? - 1 . 3 80.0 79.7
31.6 5 3 88.0 86.9 1 1
44.3 1.7 93.7 95.9 - 2 . 2
.7 105.5 101.5 4.0
48.0
49.9 - 2 . 1 99.7 100.6 - 1 . 0
35.4
40.3
50.3
62.5
71.8
76.5
68 0
70.2
75.7
80.8
8.3
11.8
14.0
8.7
6.1
6.5
15.6
21.4
27.7
28.3
7.2
8.8
11.9
284.8
328.4
345.5
364.6
364 8
398.0
419.2
441 1
447.3
483 7
278.0 6.8 162.4 155.6 6.8
318.1 10.3 189.7 179.4 10.3
342.4 3,1 195.6 192.5 3.1
.4 204.1 203.7
.4
364.1
366.4 - 1 5 197.1 198.6 - 1 5
392.0 6.0 216.4 "210.4 6.0
414.5 4.7 225.4 220.7 4.7
439 8 1 3 234.6 233.3 1 3
448.8 - 1 . 5 230.8 232.3 - 1 . 5
478 9 4 8 249.1 244.4 4 8
60.4
73.7
74.6
79.4
72.1
85.7
90.3
94.4
83.6
95.6
56.3 4.1 102.0 99.3 2.7
66.8 6.9 116.0 112.6 3.4
73.5 1.1 121.0 119.1 ? 0
.9 124.8 125.2 - . 5
78.5
74.6 - ? 5 125.0 124.1 1 0
82.7 3.0 130.7 127.7 2.9
87.5 2.8 135.1 133.2 1.9
.0
93.1 1 3 140.2 140.2
86.4 - 2 . 8 147.2 145.9 1.3
93.2 ? 3 153.6 151.1 2.4
87.0
101.2
110.8
118.8
123 5
132.6
142.3
154 2
163.4
176.2
35.4
37.5
39.1
41.7
44.2
49.0
51.5
52 3
53.1
58.3
15.4
13.5
12.0
16.3
14.6
21.2
16.9
19 5
14.5
19.1
503.7
520.1
560.3
590.5 .
632.4
684.9
749.9
793.9
864.2
930.3
500.2 3 6 259.6 256.0 3.6 99.5 97.4 ? 1
518 1 ? 0 262.3 260.2 ? n 96.5 96.6 - 1
554.3 fi 0 284.5 278.5 fi 0 109.0 106.2 ? 8
584.6 5.9 298.6 292.7 5.9 116.1 113.3 2.8
626.6 5.8 319.4 313.6 5.8 127.0 122.8 4.2
675.3 9.6 347.2 337.6 9.6 139.6 133.0 6.7
735.1 14.8 383.3 368.5 14.8 156.7 146.2 10.5
785.7 8.2 398.9 390.7 8.2 161.1 156.5 4.7
857.1 7.1 429.5 422.4 7.1 174.5 169.6 4.9
922.5 7.8 457.5 449.7 7.8 187.3 182.3 5.0
977.1 972.6
1,055.5 1,049.4
1,155.2 1,149.1
1, 288. 2 1, 280.8
17
-3.1
45
6.1
6.0
7.4
471.2
497.1
541.4
614.3
466.7
491.1
535.4
606.8
45
6.1
6.0
7.4
183.7
193.1
219.1
249.2
182.5
191.1
214.1
242.1
.3
1 ?
2.0
4.9
7.0
36.3
160.1
165.8
175.5
182.5
192.4
207.6
226.6
237.7
255.0
270.2
158.6
163.7
172.2
179.4
190.7
204.7
222.3
234.2
252.9
267.4
15
2.1
3?
3.1
1.6
3.0
4.3
3.5
2.1
2.8
187.3
199 5
213.3
226.2
244.2
262.9
289.1
316.5
346.6
377.9
56.8
58.3
62.6
65.7
68.8
74.8
77.5
78.6
88.1
94.9
21.4
17.9
22.5
25.1
25.8
31.8
30.0
28.9
36.3
36.6
287.5
304.0
322.3
365.1
284.1
299.9
321.2
364.7
33
4.1
1.1
.4
410.3 95.6
447.4 110.9
487.3 126.5
534.3 139.6
30.7
40.9
43.6
49.5
Seasonally adjusted annual rates
1971:1
1,027.2
II
1,046.9
III __ 1,063.5
IV... 1,084.2
1,020.2
1,039.2
1,059.2
1,078.9
7.0
7.6
4.3
5.3
489.1
493.6
499.5
506.4
482.1
485.9
495.2
501.1
7.0
7.6
4.3
5.3
191.4
192.3
193.5
195.3
187.4 4.1
188.1 4.2
.7
192.8
196.2 - . 9
297.7
301.2
306.0
311.0
294.7
297.8
302.4
304.9
2.9
3.4
3.7
6.2
433.9
444.0
450.8
460.9
104.1
109.3
113:2
117.0
42.5
40.0
42.2
39.0
1972:1
II
III
IV...
1,110.8
1,136.9
1,157.8
1,191.0
1 7
5.5
8.7
8.2
516.9
536.4
548.6
563.6
515.2
531.0
539.9
555.4
17
5.5
8.7
8.2
205.9
214.6
222.6
233.2
,4
205.5
211.4 3.2
216.8 5.8
222.8 10.4
311.0
321.9
326.0
330.3
309.7 1 3
319.6 2.3
323.1 2.9
332.5 - 2 . 2
471.8
481.5
491.8
503.9
123.8
124.4
126.2
131.7
40.1
42.1
46.5
45.6
1 9 7 3 : 1 . . . . 1,242.5 1,237.8 4.6
I I . . . 1,272.0 1,267.5 4.5
1,304.5 1,299.8 4.7
IV p.". 1,334.0 1,318.1 15.9
589.6
604.2
622.3
641.0
585.0 4.6
599.6 4.5
617.6 4.7
625.1 15.9
242.5
249.7
254.3
250.2
238.1
242.4
246.2
241.8
4.4
7.3
8.0
8.4
347.2
354.5
368.0
393.8
.3
346.9
357.3 - 2 . 8
371.4 - 3 . 4
383.4 7.5
514.8
527.7
540.8
554.1
138.1
140.1
141.4
133.9
51.5
51.2
49.6
45.7
1,112.5
1,142.4
1,166.5
1,199.2
Source: Department of Commerce, Bureau of Economic Analysis.
256
TABLE C-7.—Gross national product by major type of product in 1958 dollars, 1929-73
[Billions of 1958 dollars]
Goods output
Year or
quarter
Total
Total
Ingross
na- Final ventional sales tory
change
prodFinal
uct
Total sales
3.5 103.9 100.4
Durable goods
c3<»
a> to
|"g
2.7
70.4
69.5
0.8
69.3
73.2 - 4 . 3
11.7
13.4 - 1 . 7
57.1
59.8 - 2 . 7
63.0
27.6
27.0
.6
83.0
82.5
.6
76.9
21.8
35.6
50.0
57.2
85.6
95.9
84.3
54.7
60.1
61.3
58.0
32.8 2.7
43.5 6.6
54.4 2.9
85.2
.4
97.4 - 1 . 5
87.4 - 3 . 1
46.1 8.6
58.6 1.5
60.0 1.2
61.0 - 3 . 0
88.4
93.4
100.9
101.7
108.8
113.7
117.4
112.2
117.1
116.2
86.2
90.3
99.7
102.4
109.3
113.6
116. C
113.8
113.8
117.1
2.2
3.1
1.2
-.6
-.4
.2
1.4
-1.7
3.3
-.9
80.0
89.8
107.7
131.8
144.0
144.3
113.3
106.5
109.3
112.4
23.2
30.5
31.9
17.9
12.4
12.9
27.2
31.2
36.1
37.5
10.3
11.4
14.8
73.4
84.1
84.6
91.0
81.9
96.5
96.5
96.2
83.6
94.0
68.3 5.2 119.1 116.0 3.1 117.5
76.1 8.0 124.3 121.4 2.9 130.5
83.2 1.5 129.4 127.6 1.8 136.3
140.3
89.9 1.2 134.4 134.6
84.8 - 3 . 0 133.2 132.3 "~!9 141.8
93.0 3.4 139.7 136.7 3.0 147.5
93.5 3.0 142.5 140.7 1.8 153.0
.0 160.1
95.0 1.2 143.6 143.6
86.4 - 2 . 8 147.2 145.9 1.3 163.4
171.2
2.5
91.6 2.4 153.7 151.2
45.2
44.4
44.7
47.0
50.2
54.3
54.0
52.6
53.1
57.0
19.1
15.9
13.5
18.7
17.1
24.6
18.6
20.2
14.5
18.5
21.0
17.5
22.0
24.7
25.5
31.8
30.6
29.0
35.4
35.0
141.5 145.9 -4.3
1939
209.4 208.2
1.2
1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
227.2
263.7
297.8
337.1
361.3
355.2
312.6
309.9
323.7
324.1
222.3
4.9
254.1
9.6
293.8
4.0
337.3 - . 2
363.2 -1.9
358.2 -2.9
302.6 10.0
310.1 - . 2
319.1
4.6
328.1 -3.9
4.9
9.6
4.0
-.2
-1.9
-2.9
10.0
—. 2
4.6
-3.9
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
355.3
383.4
395.1
412.8
407.0
438.0
446.1
452.5
447.3
475.9
347.0 8.3 192.6 184.3 8.3
372.5 10.9 208.4 197.5 10.9
3.3 214.0 210.7 3.3
391.8
411.8
.9 225.4 224.5
.9
409.0 -2.0 215.1 217.1 - 2 . 0
6.4 236.1 229.7 6.4
431.6
4.8 239.0 234.2 4.8
441.2
1
451.
239.8 238.5 1.2
448. -1.5 230.8 232.3 - 1 . 5
4.8 247.7 242.9 4.8
471.
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
487.7
497.?
529.8
551. (
581.1
617.8
658.1
675.?
706.6
725.6
484.
495.
523.
545.
575.
608.
644.
667.
700.
718.9
3.5
2.0
6.0
5.8
5.8
9.0
13.9
1970
1971
1972
1973*-
722.
745.4
790.
837.3
718.5
740.
786.
832.
3.9
5.3
4.6
5.2
1.2 110.7 109.5
385.4
396.1
423.9
455.9
1"
Final
sales
30.9
1933
256.0
257.3
277.3
289.7
308.6
330.7
356.8
363.1
6] 4 379.7
6.7 390.0
Total
Gross
auto
product
33.6
203.6 200.1
124.0
143.4
158.1
187.4
204.8
198.0
172.1
172.2
178.4
174.2
Is
ss
Serv- Strucices tures
3.5
1929
68.8
Final
Total sales
Nondurable go
119.0
133.8
154.1
187.6
206.7
201.0
162.1
172.4
173.8
178.1
252.6 3.5 97.8 95.9
255.3 2.0 94.9 94.9
271.3 6.0 107.0 104.1
283.9 5.8 114.2 111.4
302.8 5.8 124.6 120.4
321.7 9.0 136.5 130.1
342.9 13.9 151.8 141.9
355.4 7.7 152.2 148.0
373.3 6.4 160.7 156.2
383.3 6.7 167.5 163.2
381.4
390.8
419.3
450.7
3.9
5.3
4.6
5.2
159.0
163.0
184.1
205.6
158.0
161.3
180.2
200.5
2.0
.0
2.8
2.8
4.1
6.5
9.8
4.3
4.4
4.3
c
L7
3.9
5.1
30.3
158.2
162.3
170.3
175.6
184.1
194.2
205.1
210.9
219.0
222.5
156.7
160.3
167.2
172.5
182.3
191.6
201.0
207.4
217.0
220.1
1.5
2.0
3.1
3.1
1.7
2.6
4.1
3.5
2.0
2.5
176.6
184.0
193.7
200.9
210.8
221.9
236.3
249.
259..
268.2
55.0
55.8
58.8
60.4
61.6
65.2
65.0
63.0
67.2
67.3
226.4
233.1
239.8
250.3
223.4
229.5
239.1
250.2
3.0
3.6
.7
.1
273.3
280.1
292.6
305.9
63.8
69.1
74.2
75.5
28.5
36.4
39.0
44.0
Seasonally adjusted annual rates
1971: I....
II..
III..
IV...
735.1
740.4
746.9
759.0
729.3
733.8
742.9
754.3
5.8
6.5
4.0
4.7
385.5
385.9
393.1
398.6
5.8
6.5
4.0
4.7
161.2
161.3
163.2
166.2
158.0 3.3
157.8 3.5
162.4
.8
166.9 - . 7
230.1
231.1
234.0
237.2
227.6
228.1
230.7
231.7
2.6
3.0
3.2
5.5
276.6
279.4
280.2
284.3
67.2
68.5
69.6
71.3
37.2
34.8
37.7
35.9
1972: I...
II..
III..
IV..
768.0
785.6
796.7
812.3
766.9
781.3
790.0
806.0
1.1 407.3 406.2
4.3 421.5 417.2
6.6 428.4 421.7
6.3 438.4 432.1
1.1
4.3
6.6
6.3
173.5
180.4
186.2
196.3
173.2
177.7
181.8
188.0
.3
2.7
4.4
8.2
233.8
241.1
242.2
242.1
.8
233.0
239.5 1.6
240.0 2.2
244.1 - 1 . 9
286.8
290.3
294.5
298.8
73.9
73.8
73.8
75.1
36.1
37.7
41.0
41.4
1973: I...
II..
III.
IV*.
829.3
834.3
841.3
844.1
826.0
831.0
838.3
833.2
448.7 3.3
450.5 3.4
453.7 3.0
449.8 10.9
203.4
207.1
208.1
203.7
200.3
201.8
202.4
197.6
3.2
5.4
5.7
6.1
248.7
246.7
248.7
257.0
248.5
.2
248.7 - 2 . 0
251.3 - 2 . 6
252.2 4.8
300.6
304.1
308.6
310.4
76.7
76.3
76.0
73.0
46.4
45.5
43.6
40.6
3.3
3.4
3.0
10.9
391.4
392.4
397.1
403.4
452.1
453.9
456.8
460.7
Source: Department of Commerce, Bureau of Economic Analysis.
257
TABLE C-8.—Gross national product: Receipts and expenditures by major economic groupSy 1929-73
[Billions of dollars]
Persons
Government
Disposable personal
income
Ye3 r or
qua rter
Total i
Less:
1nterEquals:
est
Total
paid
excludand
ing
intransterest
fer
and
payments transfers
to foreigners
Net receipts
Personal
consumption
expenditures
Personal
saving
or
dissaving
Tax
and
nontax
receipts
or accruals
Less:
Transfers,
interest,
and
subsidies 2
Expendtiures
Equals:
Net
receipts
Total
expenditures
Less:
Transfers,
interest,
and
subsidies 2
Equals:
Purchases
of
goods
and
services
Surplus
or
deficit
na-'
tional
income
and
product accounts
1929
83.3
1. 9
81.4
77.2
4.2
11.3
1.8
9.5
10.3
1.8
8.5
1.0
1933
45.5
7
44.9
45.8
-.9
9.3
2.7
6.7
10.7
2.7
8.0
-1.4
1939
70.3
9
69.4
66. 8
17. 6
4.2
13.3
-2.2
1940
1941
194?
1943
1944
1945
1946
1947
1948
1949
75.7
1 0
1 1
8
8
8
1, 0
1 4
1 8
74.7
91.6
116.1
132.7
145.5
149.3
158.6
4.4
4.0
4.4
-.7
-3.8
-31.4
-44.1
-51.8
-39.5
5.4
189.1
188.6
14.0
24.8
59.6
88.6
96.5
82.3
27.0
25.1
31.6
37.8
1950
1951
195?
1953
1954
1955
1956
H57
1958
1959
2.6
15.4
4.2
11.2
13.3
21.0
28.2
44.4
44.7
42.8
32.4
39.5
40.1
34.7
18
?8
64
93
103
13.4
9.4
17.7
25.0
32.6
49.2
51.2
53.2
50.9
56.8
58.9
56.0
4.4
4.0
4.4
4.7
6.5
10.4
18.5
17.3
2. 4
8
6
5
3
3
7
4
7
6
8
3.8
11.0
27.6
186.9
186.2
70
80
88
99
108
119
143
160
173
176.
206.9
226.6
238.3
252.6
257.4
275.3
293.2
308.5
318.8
337.3
2. 9
3.1
3 5
4 3
4 6
5 1
5 9
6 4
6, 5
7 1
204.1
223.5
234.8
248.3
252.9
270.2
287.2
302.2
312.3
330.3
191.
?06
?16
230
?36
254
?66
?81
290
311
0
3
13.1
17.3
18.1
18.3
16.4
15.8
20.6
20.7
22.3
19.1
68.7
84.8
89.8
94.3
89.7
100.4
109.0
115.6
114.7
128.9
22.9
19.9
19.0
19.5
21.9
23.4
45.8
64.9
70.8
74.8
67.8
76.9
83.5
86.8
81.6
22.9
19.9
19.0
19.5
21.9
23.4
95.0
60. 8
79 0
93 7
101. 2
96. 7
97.6
104 1
114. 9
127. 2
131 0
1960
1961
196?
1963
1964
1965
1966
1967
1968
1969
350.0
364.4
385.3
404.6
438.1
473.2
511.9
546.3
591.0
634.4
78
3?5 ?
8 1
8 6
9 7
10 7
1? 0
13 0
13 9
15. 1
16.7
342.3
356.3
376.6
394.9
427.4
461.3
498.9
532.4
575.9
617.7
3^5
355
375
401
43?
466
49?
536
579.
?
1
0
?
8
3
1
?
5
17.0
21.2
21.6
19.9
26.2
28.4
32.5
40.4
39.8
38.2
139.8
144.6
157.0
168.8
174.1
189.1
213.3
228.9
263.5
296.7
36.5
41.3
42.8
44.4
46.7
49.9
55.5
62.8
70.7
77.9
103.3
103.3
114.2
124.3
127.3
139.2
157.9
166.2
192.7
218.8
1
0
9
9
4
9
3
242 9
270. 3
287.9
36.5
41.3
42.8
44.4
46.7
49.9
55.5
62.8
70.7
77.9
107.6
117.1
122.5
128.7
137.0
156.8
180.1
199.6
210.0
1970
1971
197?
1973
691.7
746.0
797.0
882.6
17.9
18 7
?0 7
23. 7
673.8
727. 3
776.2
858.8
617 6
667 ?
7?6 5
805. 0
56.2
60.2
49.7
53.8
302.5
322.0
368.2
419.0
93.2
105.9
115.9
130.2
209.4
216.2
252.2
288.8
312.7
340 ?
370 9
470. 4
93.2
105.9
115.9
219.5
234.3
255.0
277.2
-10.1
-18.1
-2.8
11.6
92.7
116.9
133.5
146.3
150.2
160.0
169.8
p
168.0
7
0
5
4
7
4
1
?
33.4
37.3
29.6
15.2
7.3
18.8
21.3
25.5
28.7
33.0
34.0
4
8
0
3
0
92. 7
45 5
42. 4
50.3
59. 1
136.
149
159.
166
175.
186.
4.7
6.5
10.4
18.5
17.3
18.8
21.3
25.5
28.7
33.0
34.0
130.2
37.9
59.1
74.7
81.6
74.8
74.2
78.6
86.1
94.2
97.0
99.6
14.4
8.5
-3.2
7.9
5.8
-3.8
-6.9
-7.0
2.7
4.9
.7
-12.5
-2.1
3.7
-4.3
-2.9
1.8
-1.4
2.2
1.1
-13.9
-6.8
8.8
Seasonally adjusted annual rates
727.4
744.0
752.0
760.4
18. 3
18. 3
18. 8
19. 2
709.1
725.7
733.3
741.2
650.0
662.2
673.0
683.4
59.2
63.5
60.2
57.8
312.5
319.0
324.4
332.2
100.5
107.3
107.2
108.5
212.0
211.8
217.1
223.7
328.4
338.8
342.8
350.7
100.5
107.3
107.2
108.5
227.9
231.5
235.5
242.2
-15.9
-19.7
-18.4
-18.6
772.8
785.4
III" I 800.9
I V . . . 828.7
19. 8
20. 3
21. 0
21. 7
753.1
765.1
779.9
807.0
700.2
719.2
734.1
752.6
52.9
45.9
45.8
54.4
356.8
363.4
370.6
381.9
111 9
113.0
113.9
125.0
244.9
250.4
256.7
256.9
362.2
367.2
368.5
385.7
111.9
113.0
113.9
125.0
250.3
254.2
254.7
260.7
-5.4
-3.9
2.0
-3.8
851.5
869.7
891.1
918.0
22. 1
23. 1
24. 1
25. 6
829.4
846.6
867.0
892.4
779.4
795.6
816.0
829.0
50.0
51.0
51.1
63.3
402.7
414.7
425.0
125.2
127.8
131.7
136.1
277. 5
286.9
293.3
393.8
403.2
410.7
421.9
125.2
127.8
131.7
136.1
268.6
275.3
279.0
285.8
8.9
11.6
14.3
1971 1
II. „
III...
IV.._
1972- 1
1973
lf"_~
III...
IV P..
See footnotes at end of table.
258
T A B L E C—8.—Gross national product:
Receipts and expenditures by major economic groups.
1929-73—Continued
[Billions of dollars]
Business
Year
or
quarter
JTOSS
retained
earnings 3
International
Gross
private
omestic
investment*
Excess
of investment
()
Net
transers to
forigners
jy persons
and
lovers
ment
Net exports of goods
and services
Exports
Less:
Imports
Equals:
Net
exports
Excess
of
transfers
or
of net
exports
(>'
Total
income
or receipts
1929....
11.2
16.2
-5.1
0.4
7.0
5.9
1.1
-0.8
102.4
1933....
3.2
1.4
1.8
.2
2.4
2.0
.4
-.2
55.0
1939....
8.4
9.3
-.9
.2
4.4
3.4
1.1
1940....
1941....
1942....
1943....
1944....
1945....
1946....
1947....
1948....
1949....
10.5
11.4
14.5
16.3
17.1
15.1
14.5
20.2
28.0
29.7
13.1
17.9
9.8
5.7
7.1
10.6
30.6
34.0
46.0
35.7
-2.7
-6.5
4.6
10.6
10.0
4.6
-16.1
-13.8
-18.0
-6.0
.2
.2
.2
3.6
4.6
4.8
6.5
7.1
7.9
7.2
8.2
10.3
9.6
1.7
1.3
.0
-2.0
-1.8
-.6
7.5
11.5
6.4
6.1
-1.5
-1.1
!3
.8
2.9
2.6
4.5
5.6
5.4
5.9
4.8
4.4
5.3
7.2
14.7
19.7
16.8
15.8
1950....
1951....
1952....
1953....
1954....
1955....
1956....
1957....
1958....
1959....
29.4
33.1
35.1
36.1
39.2
46.3
47.3
49.8
49.4
56.8
54.1
59.3
51.9
52.6
51.7
67.4
70.0
67.9
60.9
75.3
-24.7
-26.2
-16.8
-16.5
-12.5
-21.1
-22.8
-18.1
-11.5
-18.5
4.0
3.5
2.5
2.5
2.3
2.5
2.4
2.3
2.4
2.4
13.8
18.7
18.0
16.9
17.8
19.8
23.6
26.5
23.1
23.5
12.0
15.1
15.8
16.6
15.9
17.8
19.6
20.8
20.9
23.3
1.8
3.7
2.2
.4
1.8
2.0
4.0
5.7
2.2
.1
2.2
-.2
.3
2.1
I960....
1961....
1962....
1963...
1964...
1965...
1966...
1967...
1968...
1969...
56.8
58.7
66.3
68.8
76.2
84.7
91.3
93.0
95.4
97.0
74.8
71.7
83.0
87.1
94.0
108.1
121.4
116.6
126.0
139.0
-18.0
-13.0
-16.8
-18.4
-17.8
-23.4
-30.1
-23.5
-30.6
-42.0
2.4
2.6
2.7
2.8
2.8
2.8
2.8
3.0
2.9
2.9
27.2
28.6
30.3
32.3
37.1
39.2
43.4
46.2
50.6
55.5
23.2
23.0
25.1
26.4
28.6
32.3
38.1
41.0
48.1
53.6
1970...
1971...
1972...
1973 P .
97.0
111.8
124.4
134.7
136.3
153.2
178.3
201.5
-39.3
-41.4
-53.9
-66.8
3.2
3.6
3.7
3.6
62.9
66.3
73.5
101.3
59.3
65.5
78.1
96.7
Statistical
discrepancy
Gross
national
product
or expenditure
0.7
103.1
89.2
1.3
90.5
98.7
124.1
159.0
193.6
207.6
208.0
208.4
230.4
259.5
256.2
1.0
.4
-1.1
-2.0
2.5
3.9
.1
.9
-2.0
99.7
124.5
157.9
191.6
210.1
211.9
208.5
231.3
257.6
256.5
-L5
-3.4
.2
2.3
283.3
325.1
343.3
361.6
362.1
395.9
420.4
441.1
445.8
484.5
1.5
3.3
2.2
3.0
2.7
2.1
-1.1
.0
1.6
284.8
328.4
345.5
364.6
364.8
398.0
419.2
441.1
447.3
483.7
4.0
5.6
5.1
5.9
8.5
6.9
5.3
5.2
2.5
1.9
-1.7
-3.0
-2.5
-3.1
-5.7
-4.1
-2.4
-2.2
.4
1.0
504.8
520.8
559.8
590.8
633.7
688.0
750.9
794.6
866.9
936.3
-1.0
-.8
-6.1
503.7
520.1
560.3
590.5
632.4
684.9
749.9
793.9
864.2
930.3
3.6
.8
-4.6
4.6
-.4
2.8
8.4
-1.0
983.5
1, 058.8
1,156.6
1,285.9
-6.4
-3.4
-1.5
2.3
977.1
1,055.5
1,155.2
1,288.2
2. 2
2.1
1.4
-4.6
-8.9
-1.9
-.5
55.6
-3.1
-1.0
-7.7
Seasonally adjusted annual rates
III.
IV.
105.1
109.9
112.5
119.5
145.5
152.7
153.8
160.8
-40.3
-42.8
-41.3
-41.3
3.2
3.4
3.8
3.9
65.9
67.1
69.1
63.0
62.1
66.6
68.0
65.2
3.8
.5
1.1
-2.2
-0.6
2.9
2.7
6.1
1,
1,
1,
1,
029.5
ObO.7
066.9
088.3
-2.3
-3.8
-3.3
-4.0
1,027.2
1, 046.9
1,063. 5
1,084.2
1972:
L.
II
III
IV
117.4
124.1
124.5
131.6
167.5
174.7
181.5
189.4
-50.1
-50.5
-57.0
-57.8
3.9
3.8
3.8
3.5
70.3
69.9
74.0
79.7
75.8
75.6
77.7
83.2
-5.5
-5.7
-3.8
-3.5
9.4
9.4
7.6
7.0
1,
1,
1,
1,
119.2
143.4
164.9
199.1
-6.7
-1.0
1.6
.2
1,112.5
1,142.4
1,166.5
1,199.2
1973:
I..
II.
131.5
132.0
136.9
194.5
198.2
202.0
211.2
-63.0
-66.2
-65.1
3.0
3.3
3.5
4.4
89.7
97.2
104.5
113.5
89.7
94.4
97.0
105.6
.0
2.8
7.6
8.0
3.0
.5
-4.0
-3.5
1, 241.4
1, 268.9
1, 300.8
1.1
3.2
3.7
1, 242.5
1,272.0
1, 304. 5
1,334.0
1971:
I.
IV v
1 Personal income less personal tax and nontax payments (fines, penalties, etc.).
2 Government transfer payments to persons, foreign net transfers by Government, net interest paid by government,
subsidies less current surplus of government enterprises, and disbursements less wage accruals.
3
Capital consumption allowances, corporate inventory valuation adjustment, undistributed corporate profits, and
private wage accruals less disbursements.
4
Private business investment, purchases of capital goods by private nonprofit institutions, and residential housing.
See Table C-13.
s Net foreign investment less capital grants received by the United States, with sign changed.
Source: Department of Commerce, Bureau of Economic Analysis.
259
TABLE C-9.—Gross national pro 3uct by sector, 1929-73
[Billions of dollars]
Gross private product1
Year or
quarter
Total
gross
national
product
Business
Total
Total
Nonfarm *
Farm
Households
and
institutions
Rest of
the world
Gross
government
product»
1929
103.1
98.8
95.1
85.4
9.7
2.9
0.8
4.3
1933
55.6
50.9
48.9
44.3
4.6
1.7
3
4 7
1939
90.5
82.9
80.3
74.0
6.3
2.3
.3
7.6
1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
99.7
124.5
157.9
191.6
210.1
211.9
208.5
231.3
257.6
256.5
91.9
115.1
142.8
166.0
177.9
176.8
187.7
214.6
240.1
237.0
89.1
112.2
139.5
162.4
173.8
172.3
182.7
208.6
233.5
230.1
82.6
103.3
126.5
147.2
158.5
156.4
163.9
188.5
210.2
211.4
6.5
8.9
13.0
15.3
15.3
15.9
18.8
20.2
23.3
18.8
2.4
2.5
2.9
3 2
3.7
4.1
4.5
5.1
5.6
5.9
4
.4
.4
4
.4
.4
6
8
1.0
1.0
78
9.4
15.1
25 6
32.2
35.2
20 8
16 7
17.4
19.4
1950..
1951
1952
1953..
1954
1955
1956
1957.
1958
1959
284.8
328.4
345.5
364.6
364.8
398.0
419.2
441.1
447.3
483.7
263.9
301.0
314.3
332.7
332.4
363.8
382.6
402.0
405.2
439.4
256.3
292.8
305.8
323.6
322.7
352.9
370.8
389.3
391.7
425.0
236.3
269.9
283.7
303.3
303.1
334.1
352.2
370.9
370.9
405.3
20.0
22.9
22.2
20.3
19.6
18.8
18.6
18.4
20.8
19.6
6.4
6.9
7.2
7.8
8.1
9.1
9.8
10.5
11.4
12.2
1.2
1.3
1.3
1.3
1.6
1.8
2.1
2.2
2.0
2.2
20.9
27.4
31.2
31.9
32.5
34.2
36.6
39.1
42.1
44.3
503.7
520.1
560.3
590.5
632.4
684.9
749.9
793.9
864.2
930.3
456.3
469.2
505.7
532.4
569.4
617.1
673.3
708.8
769.3
826.5
440.7
452.3
487.4
513.0
548.2
594.4
648.9
681.6
739.0
794.1
420.2
431.4
466.2
491.5
527.6
570.8
624.0
657.0
713.9
766.2
20.5
20.9
21.2
21.5
20.6
23.7
24.9
24.6
25.2
27.9
13.2
14.0
15.0
16.0
17.3
18.5
20.2
22.8
25.5
28.1
2.4
2.9
3.3
3.4
4.0
4.2
4.1
4.5
4.7
4.3
47.5
50.9
54.7
58.1
63.0
67.8
76.6
85.1
94.9
103.8
977.1
1, 055. 5
1,155.2
1,288.2
862.4
930.3
1,019.7
1,140.7
827.0
889.9
975.4
1,090.3
797.9
859.4
941.0
1,042.7
29.0
30.4
34.4
47.6
30.8
33.5
36.8
41.1
4.6
7.0
7.5
9.3
114.7
125.1
135.4
147.5
1960...
1961
1962
1963.
1964...
1965
1966
1967. .
1968
1969
1970
1971
1972__
1973 *
.
Seasonally adjusted annual rates
1971: 1
II
Ill
IV
1,027.2
1, 046.9
1,063.5
1, 084.2
904.9
922.8
937.6
956.0
866.4
882.3
897.5
913.3
836.5
852.0
867.5
881.7
29.9
30.2
30.0
31.6
32.6
33.1
33.8
34.5
5.9
7.4
6.3
8.2
122.3
124.1
125.9
128.2
1972: 1
II
Ill
IV
1,112.5
1,142.4
1,166.5
1,199.2
980.3
1,008.6
1,030.0
1,060.0
937.8
965.2
984.9
1,013.6
904.8
931.3
951.0
976.9
33.0
33.9
33.9
36.7
35.5
36.6
37.5
37.8
7.0
6.8
7.6
8.7
132.2
133.8
136.5
139.2
1973: 1
II
Ill
1,242. 5
1,272.0
1, 304.5
1,334.0
1,098.9
1,126.2
1,156.3
1,181.5
1,050.5
1,076.8
1,105.2
1,128.8
1,008.9
1,033.5
1, 056.2
1,072.2
41.6
43.3
49.0
56.6
39.3
40.5
41.8
43.0
9.1
8.9
9.3
9.7
143.5
145.8
148.2
152.5
*2 Gross national product less compensation of general government employees.
Includes compensation of employees in government enterprises.
3 Compensation of general government employees.
Source: Department of Commerce, Bureau of Economic Analysis.
260
TABLE C-10.—Gross national product by sector in 1958 dollars, 1929-73
[Billions of 1958 dollars]
Gross private productl
Year or
quarter
Total
gross
national
product
Business
Total
Total
Nonfarm *
Farm
Households
and
institutions
Rest of
the world
Gross
government
product*
1929
203.6
190.9
182.1
165.1
17.0
7.4
1.4
1933
141.5
127.5
120.6
103.0
17.5
5.7
1.2
14.0
1939
209.4
188.7
180.7
162.5
18.2
7.1
.9
20.6
1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
227.2
263.7
297.8
337.1
361.3
355.2
312.6
309.9
323.7
324.1
205.6
236.6
257.3
272.8
286.9
282.5
275.1
281.4
295.0
294.1
197.1
228.1
248.7
264.9
278.9
274.6
267.0
272.8
286.0
284.7
179.6
209.3
228.0
245.3
259.5
256.5
248.6
255.8
267.0
266.2
17.5
18.8
20.6
19.6
19.4
18.1
18.5
17.0
19.0
18.4
7.6
7.5
78
7.2
7.1
7.1
7.1
7.5
7.9
8.2
1.0
.9
8
8
.9
.8
.9
1.1
1.2
1.2
21.6
27.2
40 5
64 3
74 4
72 8
37 5
28 6
28.7
30.1
355.3
383.4
395 1
412.8
407.0
438.0
446.1
452.5
447.3
475.9
324.2
344,6
353.2
371.1
366.2
397.2
404.8
410.5
405.2
433.4
314.2
334.5
343.2
360.7
355.4
385.4
392.2
397.5
391.7
419.4
294.9
316.2
324.2
340.7
335.0
364.4
371.4
377.2
370.9
398.3
19.4
18.4
19.0
20.0
20.4
20.9
20.8
20.3
20.8
21.1
8.7
8.8
8.8
9.1
9.2
10.1
10.6
10.9
11.4
11.7
1.3
1.2
1.2
1.3
1.6
1.8
2.0
2.1
2.0
2.2
31.1
38.8
41 8
41 7
40 9
40.7
41.3
41.9
42.1
42.5
I960
1961
1962
1963
1964
1965
1966
1967
1968
1969
487.7
497.2
529.8
551.0
581.1
617.8
658.1
675.2
706.6
725.6
444.0
452.3
482.9
503.2
532.0
567.0
603.5
617.5
647.0
664.9
429.5
436.9
466.7
486.6
514.4
548.9
584.9
597.8
626.5
644.6
407.6
414.8
444.6
463.8
492.1
525.2
562.5
573.9
603.1
620.5
21.9
22.2
22.1
22.8
22.3
23.7
22.4
23.9
23.4
24.1
12.2
12.4
12.9
13.2
13.7
14.0
14.6
15.4
16.0
16.3
2.3
2.9
3.4
3.4
3.9
4.1
3.9
4.3
4.5
4.0
43.7
44.8
46.9
47.8
49.1
50.8
54.6
57.6
59.7
60.7
1970
1971
1972
1973 *»
722.5
745 4
790.7
837.3
661.7
684.7
729.5
774.8
641.1
662.2
706.6
750.9
616.4
636.3
682.0
727.7
24.8
26.0
24.6
23.2
16.6
16.8
17.4
18.3
4.0
5.6
5.5
5.6
60.7
60.7
61.1
62.5
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
. .-
12.7
Seasonally adjusted annual rates
1971: 1
II
III
IV
735.1
740 4
746.9
759.0
674.6
679.9
686.1
698.2
652.9
657 0
664.3
674.8
626.4
631.2
638.3
649.1
26.5
25.9
25.9
25.7
16.8
16.8
16.8
16.9
4.8
6.0
5.0
6.5
60.6
60.5
60.8
60.8
1972: 1. . . .
II
III
IV
768.0
785.6
796.7
812.3
707.3
725.0
735.3
750.3
684.7
702.6
712.3
726.8
659.2
677.4
688.7
702.5
25.6
25.2
23.6
24.2
17.2
17.4
17.5
17.4
5.4
5.0
5.5
6.2
60.7
60.6
61.3
62.0
1973: 1
II
Ill
IV*
829.3
834.3
841.3
844.1
767.1
772.0
778.8
781.2
742.9
748.3
754.7
757.5
718.1
725.9
733.6
733.2
24.8
22.4
21.2
24.3
18.0
18.2
18.5
18.5
6.3
5.5
5.4
5.3
62.2
62.4
62.5
62.9
* Gross national product less compensation of general government employees.
2 Includes compensation of employees in government enterprises,
s Compensation of general government employees.
Source: Department of Commerce, Bureau of Economic Analysis.
261
TABLE C-ll.—Gross product originating in nonfinancial corporations and dollar costs per unit of
output, 1948-73
Gross product
originating in
nonfinancial
corporations (billions of dollars)
Current dollar costs per unit of 1958 dollar gross product (dollars)
Corporate profits and inventory valuation adjustment
Year or quarter
Capital
consumption
allowances
Indirect
business
taxes 2
CompensaNet
tion of interest
employees
Total
Profits
tax
liability
Profits
after
taxes
plus inventory
valuation
adjustment
0.005
.006
0.171
.162
0.069
.057
0.103
.104
.507
.541
.570
.584
.591
.005
.005
.006
.006
.007
.180
.186
.168
.154
.149
.090
.103
.086
.084
.074
.090
.083
.082
.070
.075
.081
.085
.090
.097
.094
.582
.619
.642
.659
.654
.007
.007
.009
.011
.010
.170
.160
.155
.142
.164
.084
.081
.076
.069
.080
.086
.079
.078
.073
.084
.091
.095
.100
.100
.100
.099
.103
.101
.102
.103
.670
.670
.665
.664
.664
.011
.013
.014
.015
.015
.151
.149
.154
.158
.168
.073
.073
.071
.074
.074
.078
.076
.082
.084
.094
055
073
104
132
162
.099
.100
.107
.109
.115
.100
.096
.100
.105
.109
.660
.678
.707
.727
.764
.017
.019
.023
.025
.029
.179
.180
.167
.166
.145
.077
.078
.073
.082
.078
.102
.102
.094
.084
.067
214
252
281
327
.126
.131
.133
.133
.119
.125
.122
.122
.812
.825
.847
.038
.037
.037
.037
.119
.134
.142
.156
.064
.067
.074
.091
.055
.067
.068
.064
0.038
.037
.037
.037
0.131
.135
.135
.133
0.068
.070
.068
.062
0.063
.065
,068
.071
Total
costsi
Current
dollars
1958
dollars
1948
1949
137.0
133.3
172.9
165.6
0.793
.805
0.040
.047
0.070
.076
0.507
.514
1950
1951
1952
1953
1954
151.7
174.3
182.0
194.7
191.6
186.4
203.5
207.1
219.8
213.4
.814
.857
.879
.886
.898
.046
.049
.054
.059
.069
.075
.075
.081
.083
.081
1955
1956
1957
1958
1959
216.3
231.2
241.9
236.0
263.7
237.2
244.0
247.2
236.0
260.8
.912
.948
979
000
011
.072
.076
.082
.091
1960
1961
1962
1963
1964
273.1
278.4
302.8
320.0
346.0
267.1
270.6
292.9
308.0
329.7
022
029
034
039
050
1965
1966
1967
1968
1969
377.6
413.0
430.8
469.9
504.3
357.8
385.0
390.2
415.0
433.9
1970
1971
1972
1973
519.1
554.1
608.9
680.5
427.7
442.7
475.5
512.8
Seasonally adjusted annual rates
1971:1..
II.
III.
IV.
540.5
550.6
557.4
568.1
434.6
440.0
443.5
452.4
1.244
1.251
1.257
1.256
0.130
.131
.132
.132
0.124
.124
.125
.126
0.820
.824
.828
.828
1972:1..
II.
Ill
IV.
587.4
601.9
612.9
633.2
462.3
471.9
477.8
489.8
1.271
1.276
1.283
1.293
.132
.135
.132
.133
.122
.122
.122
.122
.842
.845
.850
.853
.036
.036
.037
.037
.139
.138
.142
.148
.072
.072
.074
.077
.067
.066
.068
.071
1973:1..
II.
Ill
656.7
672.5
689.3
503.4
509.6
517.2
1.305
1.320
1.333
.132
.132
.133
.122
.122
.122
.862
.874
.883
.036
.037
.037
.152
.155
.158
.088
.095
.092
.064
.060
.066
.
1
This is equal to the deflator for gross product of nonfinancial corporations, with the decimal point shifted two places to
the left.
* Also includes business transfer payments less subsidies.
Source: Department of Commerce, Bureau of Economic Analysis.
262
TABLE C-12.—Personal consumption expenditures, 1929-73
[Billions of dollars]
Year
or
quarter
r
3
J
I
s
1
•a
c
ca
i^
o3
I
Nondurable goods
Durable goods
£=
O
"S.
E
1
a
<
1!
T3
03
E °
O
I
c
•o
-o
i
I
IE
15
o
Services
co
1 1 1
I
3
O
X
c
1
1
••I
•g
</>
=1
o
X
c
co
o
1929...
77.2
9.2
3.2
4.8
1.2
37.7
19.5
9.4
u
1.8
7.0
30.3
11.5
4.0
2.6
1933...
45.8
3.5
1.1
1.9
.5
22.3
11.5
4.6
1.5
4.6
20.1
7.9
2.8
1.5
7.9
1939...
66.8
6.7
2.2
3.5
1.0
35.1
19.1
7.1
2.2
6.7
25.0
9.1
3.8
2.0
10.1
1940...
1941...
1942...
1943...
1944...
1945...
1946...
1947...
1948...
1949...
70.8
80.6
88.5
99.3
108.3
119.7
143.4
160.7
173.6
176.8
7.8
9.6
6.9
6.6
6.7
8.0
15.8
20.4
22.7
24.6
2.7
3.4
.7
.8
.8
1.0
4.0
6.2
7.5
9.9
3.9
4.9
4.7
3.9
3.8
4.6
8.6
10.9
11.9
11.6
1.1
1.4
1.6
1.9
2.2
2.5
3.2
3.3
3.4
3.2
37.0
42.9
50.8
58.6
64.3
71.9
82.4
90.5
96.2
94.5
20.2
23.4
28.4
33.2
36.7
40.6
47.4
52.3
54.2
52.5
7.4
8.8
13.4
14.4
16.5
18.2
18.8
20.1
19.3
2.3
2.6
2.1
1.3
1.6
1.8
3.0
3.6
4.4
5.0
7.1
8.0
9.3
10.6
11.7
13.0
13.8
15.7
17.5
17.7
26.0
28.1
30.8
34.2
37.2
39.8
45.3
49.8
54.7
57.6
9.4
10.2
11.0
11.5
12.0
12.5
13.9
15.7
17.5
19,3
4.0
4.3
4.8
5.2
5.9
6.4
6.8
7.5
8.1
8.5
2.1
2.4
2.7
3.4
3.7
4.0
5.0
5.3
5.8
5.9
10.4
11.2
12.3
14.0
15.6
16.8
19.7
21.4
23.3
23.9
1950...
1951...
1952-..
1953...
1954...
1955
19561I_
1957...
1958...
1959...
191.0
206.3
216.7
230.0
236.5
254.4
266.7
281.4
290.1
311.2
30.5
29.6
29.3
33.2
32.8
39.6
38.9
40.8
37.9
44.3
13.1
11.6
11.1
14.2
13.6
18.4
16.4
18.3
15.4
19.5
14.1
14.4
14.3
14.9
15.0
16.6
17.5
17.3
17.1
18.9
3.3
3.6
3.9
4.1
4.2
4.6
5.0
5.2
5.4
5.9
98.1
108.8
114.0
116.8
118.3
123.3
129.3
135.6
140.2
146.6
53.9
60.4
63.4
64.4
65.4
67.2
69.9
73.6
76.4
78.6
19.6
21.2
21.9
22.1
22.1
23.1
24.1
24.3
24.7
26.4
5.4
6.1
6.8
7.7
8.2
9.0
9.8
10.6
11.0
11.6
19.2 62.4 21.3
21.1 67.9 23.9
21.7 73.4 26.5
22.7 79.9 29.3
22.6 85.4 31.7
24.0 91.4 33.7
25.4 98.5 36.0
27.1 105.0 38.5
28.2 112.0 41.1
30.1 120.3 43.7
6.2
9.5
6.7
10.4
7.1
11.1
7.8
12.0
7.9
12.6
14 0 8.2
8.6
15.2
9.0
16.2
9.3
17.3
18.5 10.1
25.4
26.9
28.7
30.8
33.2
35.5
38.6
41.3
44.3
48.0
1960...
1961...
1962...
1963...
1964...
1965...
1966...
1967...
1968...
1969...
325.2
335.2
355.1
375.0
401.2
432.8
466.3
492.1
536.2
579.5
45.3
44.2
49.5
53.9
59.2
66.3
70.8
73.1
84.0
90.8
20.1
18.4
22.0
24.3
25.8
30.3
30.3
30.5
37.5
40.2
18.9
19.3
20.5
22.2
25.0
26.9
29.9
31.4
34.3
37.1
6.3
6.5
6.9
7.5
8.5
9.1
10.5
11.2
12.3
13.5
151.3
155.9
162.6
168.6
178.7
191.1
206.9
215.0
230.8
245.9
80.5
82.9
85.7
88.2
92.9
98.8
105.8
108.5
115.3
120.6
27.3
27.9
29.6
30.6
33.5
35.9
40.3
42.3
46.3
50.2
12.3
12.4
12.9
13.5
14.0
15.3
16.6
17.6
19.0
20.9
31.2
32.7
34.4
36.3
38.2
41.1
44.4
46.6
50.2
54.2
46.3
48.7
52.0
55.4
59.3
63.5
67.5
71.8
77.3
84.1
20.0
20.8
22.0
23.1
24.3
25.6
27.1
29.1
31.2
33.8
10.8
10.6
11.0
11.4
11.6
12.6
13.6
14.5
15.5
16.6
51.6
54.9
58.0
62.5
68.1
73.8
80.4
88.5
97.3
108.2
1970....
1971....
1972....
1973*...
617.6
667.2
726.5
805.0
91.3
103.6
117.4
131.1
37.3
46.6
52.8
57.9
39.6
42.1
48.1
54.7
14.4
14.9
16.5
18.5
263.8
278.7
299.9
336.3
130.0
136.6
145.3
161.5
52.8
57.0
62.3
69.8
22.2
23.5
25.5
29.0
58.7 262.6 90.9
61.5 284.9 98.5
66.8 309.2 105.5
76.0 337.6 114.5
36.4
39.7
43.8
48.0
18.3
20.4
21.8
23.4
117.0
126.3
138.0
151.6
11.0
128.7
135.1
143.0
152.4
163.3
175.5
188.6
204.0
221.3
242.7
12.2
Seasonally adjusted annual rates
1971:
1
II..-.
III...
IV....
650.0
662.2
673.0
683.4
100.3
101.9
105.4
106.7
44.7
45.5
48.3
47.8
41.3
41.6
41.9
43.6
14.4
14.8
15.2
15.3
273.5
278.0
279.8
283.5
134.1
136.2
137.6
138.4
55.7
57.0
57.4
58.1
22.9
23.1
23.6
24.5
60.7
61.7
61.2
62.6
276.1 95.4
282.3 97.6
287.8 99.5
293.2 101.4
38.4
39.3
40.3
40.7
19.4
20.1
20.6
21.2
122.8
125.3
127.4
129.9
1972:
1
II.—
III...
IV....
700.2
719.2
734.1
752.6
111.5
115.1
120.2
122.9
49.4
51.2
55.0
55.7
46.6
47.3
48.6
50.0
15.4
16.6
16.6
17.3
288.8
297.9
302.3
310.7
141.0
144.7
146.5
149.1
59.4
61.7
62.9
65.1
24.7
25.0
25.8
26.6
63.6
66.6
67.2
70.0
300.0
306.2
311.6
319.0
103.1
104.7
106.3
107.9
41.8
43.2
44.5
45.7
21.6
21.7
21.8
22.2
133.5
136.6
138.9
143.1
60.5
59.7
59.2
52.1
53.7
54.4
55.0
55.8
18.0
18.6
18.6
18.9
322.2
330.3
341.6
351.1
154.7
158.1
164.3
169.0
68.3
69.3
70.3
71.2
27.5
28.8
29.4
30.2
71.7
74.2
77.5
80.6
325.0
332.6
341.6
351.2
110.6
113.3
115.8
118.4
46.5
47.1
48.7
49.7
22.8
23.2
23.7
24.2
145.1
149.0
153.4
158.9
1973:
779.4 132.2
1
I L - - . 795.6 132.8
I I I . . . 816.0 132.8
IVP...
829.0 126.8
1
Includes consumer purchases of mobile homes.
2 Includes imputed rental value of owner-occupied dwellings.
Source: Department of Commerce, Bureau of Economic Analysts.
263
TABLE C-13.—Gross private domestic investment, 1929-73
[Billions of dollars]
Change in
business
inventories
Fixed investment
Year or
quarter
Total
gross
private
domestic
investment
Nonresidential
Total
Producers'
durable
equipment
Structures
Total
1929...
1933
Residential structures
Total
Total
Total
Nonfarm
Total
Nonfarm
Nonform
Nonfarm
Farm
16.2
14.5
10.6
5.0
4.8
5.6
4.9
4.0
3.8
0.2
1.7
1.4
3.0
2.4
.9
.9
1.5
1.3
.6
.5
.0
-1.6
1 8
-1.4
9.3
8.9
5.9
2.0
1.9
4.0
3.4
2.9
2.8
.1
.4
.3
1940...
1941...
1942
1943.
1944...
1945
1946
1947...
1948
1949
13.1
17.9
9.8
5.7
7.1
10.6
30.6
34.0
46.0
35.7
11.0
13.4
8.1
6.4
8.1
11.6
24.2
34.4
41.3
38.8
7.5
9.5
6.0
5.0
6.8
10.1
17.0
23.4
26.9
25.1
2.3
2.9
1.9
1.3
1.8
2.8
6.8
7.5
8.8
8.5
2.2
2.8
1.8
1.2
1.7
2.7
6.1
6.7
8.0
7.7
5.3
6.6
4.1
3.7
5.0
7.3
10.2
15.9
18.1
16.6
4.6
5.6
3.5
3.2
4.2
6.3
9.2
14.0
15.5
13.7
3.4
3.9
2.1
1.4
1.3
1.5
7.2
11.1
14.4
13.7
3.2
3.7
1.9
1.2
1.1
1.4
6.7
10.4
13.6
12.8
.2
.2
.2
.2
.1
.1
.5
.7
.9
.8
2.2
4.5
1.8
-.6
19
1950
1951.
1952..
1953
1954.
1955
1956
1957
1958
1959
54.1
59.3
51.9
52.6
51.7
67.4
70.0
67.9
60.9
75.3
47.3
49.0
48.8
52.1
53.3
61.4
65.3
66.5
62.4
70.5
27.9
31.8
31.6
34.2
33.6
38.1
43.7
46.4
41.6
45.1
9.2
11.2
11.4
12.7
13.1
14.3
17.2
18.0
16.6
16.7
8.5
10.4
10.5
11.9
12.3
13.6
16.5
17.2
15.8
15.9
18 7
20.7
20.2
21.5
20.6
23.8
26.5
28.4
25.0
28.4
15.7
17.7
17.6
18.6
18.0
21.2
24.2
25.9
22.0
25.4
19.4
17.2
17.2
18.0
19.7
23.3
21.6
20.2
20.8
25.5
18.6
16.4
16.4
17.2
19.0
22.7
20.9
19.5
20.1
24.8
.8
.8
.8
.8
.7
.6
1960
1961
1962
1963
1964.
1965
1966
1967
1968
1969
74.8
71.7
83.0
87.1
94.0
108.1
121.4
116.6
126.0
139.0
71.3
69.7
77.0
81.3
88.2
98.5
106.6
108.4
118.9
131.1
48.4
47.0
51.7
54.3
61.1
71.3
81.6
83.3
88.8
98.5
18.1
18.4
19.2
19.5
21.2
25.5
28.5
28.0
30.3
34.2
17.4
17.7
18.5
18.8
20.5
24.9
27.8
27.3
29.6
33.5
30.3
28.6
32.5
34.8
39.9
45.8
53.1
55.3
58.5
64.3
27.7
25.8
29.5
31.2
36.3
41.6
48.4
50.0
53.6
59.2
22.8
22.6
25.3
27.0
27.1
27.2
25.0
25.1
30.1
32.6
22.2
22.0
24.8
26.4
26.6
26.7
24.5
24.5
29.5
32.0
.6
.6
.6
.6
.5
.5
.5
.6
.5
.6
1970
1971
1972
1973 p..
136.3
153 2
178.3
201.5
131.7
147 1
172.3
194.0
100.6
104 4
118.2
136.0
36.1
37.9
41.7
48.3
35.3
37 0
40.8
47.3
64.4
66 5
76.5
87.7
58.9
60.9
69.8
79.3
31.2
42.7
54.0
58.0
30.7
42.2
53.5
57.4
.5
.6
.6
.6
4.5
6.1
6.0
7.4
1939
.7
.6
.6
-1.0
-1.0
6.4
-.5
4.7
-3.1
6.8
10.3
3.1
.4
-1.5
4.0
7
- 6
-.6
-.6
6
1
3
-2
4
3
0
2
6 0
9 1
2.1
11
-2.1
6.0
4.7
1.3
5.5
-1.5
-2.3
4.8
51
.8
4.8
3.6
2.0
6.0
5.9
5.8
9.6
3.3
1.7
5.3
5.1
6.4
8.6
14.8
15.0
8.2
7.1
7.8
7.5
6.9
7.7
4.3
4 5
5.6
6.7
Seasonally adjusted annual rates
1971: 1.
II
III
IV
145.5
152.7
153.8
160.8
138.5
145.0
149.5
155.6
101.4
103.6
104.7
108.0
37.0
37.6
38.4
38.5
36.2
36.8
37.6
37.7
64.4
66.0
66.3
69.5
58.6
60.3
60.7
64.0
37.1
41.5
44.8
47.5
36.6
41.0
44.1
46.9
0.5
7.0
5.8
.5
.7
.6
7.6
4.3
5.3
6.3
2.4
3.5
1972: 1.
II
Ill
IV
167.5
174.7
181.5
189.4
165.8
169.2
172.9
181.2
114.0
116.3
118.3
124.3
41.0
41.5
41.3
43.0
40.1
40.6
40.4
42.1
73.1
74.9
77.0
81.2
67.3
68.9
69.8
73.4
5i. 8
52.8
54.5
56.9
51.2
52.3
53.9
56.4
.6
.6
.6
.5
1.7
5.5
8.7
8.2
1.4
4.8
8.4
7.9
1973: 1
II
ML....
194.5
198.2
202.0
211.2
189.9
193.7
197.3
195.3
130.9
134.1
138.0
141.1
45.3
47.2
49.5
51.1
44.4
46.3
48.5
50.1
85.5
86.9
88.6
90.0
77.8
78.4
80.0
80.9
59.0
59.6
59.2
54.2
58.4
59.1
58.6
53.6
.6
.5
.6
.7
4.6
4.5
4.7
15.9
4.4
4.4
3.2
14.9
IV p . . . .
Source: Department of Commerce, Bureau of Economic Analysis.
264
TABLE C-14.—Relation of gross national product and national income, J929-73
[Billions of dollars]
Gross
national
product
Year or quarter
Less:
Capital
consumption
allowances
Equals:
Net
national
product
Plus:
Subsidies
less
current
surplus
of government
enterprises
Less:
Indirect
business
tax and
nontax
liability
Business
transfer
payments
Statistical
discrepancy
Equals:
National
income
1929
103.1
7.9
95.2
-0.1
7.0
0.6
0.7
1933
55.6
7.0
48.6
.0
7.1
.7
.6
40.3
1939
90.5
7.3
83.2
.5
9.4
.5
1.3
72.6
1940
1941
1942
1943
1944
1946
1947
1948
1949
99.7
124.5
157.9
191.6
210.1
211.9
208.5
231.3
257.6
256.5
7.5
8.2
9.8
10.3
11.0
11.3
9.9
12.2
14.5
16.6
92.2
116.3
148.1
181.3
199.1
200.7
198.6
219.1
243.1
239.9
.4
.1
.2
.2
.7
.8
.9
-.2
-.1
-.1
10.0
11.3
11.8
12.7
14.1
15.5
17.1
18.4
20.1
21.3
.4
.5
.5
.5
.5
.5
.5
.6
.7
.8
1.0
.4
-1.1
-2.0
2.5
3.9
.1
.9
—2.0
.3
81.1
104.2
137 1
170.3
182.6
181 5
181.9
199.0
224 2
217.5
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
284.8
328.4
345.5
364.6
364.8
398.0
419.2
441.1
447.3
483.7
18.3
21.2
23.2
25.7
28.2
31.5
34.1
37.1
38.9
41.4
266.4
307.2
322.3
338.9
336.6
366.5
385.2
404.0
408.4
442.3
2
.2
-.1
-.4
— 2
-.1
.8
.9
.9
.1
23.3
25.2
27.6
29.6
29.4
32.1
34.9
37.3
38.5
41.5
.8
.9
1.0
1.2
1.1
1.2
1.4
1.5
1.6
1.7
1.5
3.3
2.2
3.0
2.7
2.1
-1.1
.0
1.6
-.8
241 1
278 0
291.4
304.7
303 1
331.0
350.8
366 1
367.8
400.0
503.7
520.1
560.3
590.5
632.4
684.9
749.9
793.9
864.2
930.3
43.4
45.2
50.0
52.6
56.1
59.8
63.9
68.9
74.5
81.6
460.3
474.9
510.4
537.9
576.3
625.1
685.9
725.0
789.7
848.7
.2
1.4
1.4
.8
1.3
1.3
2.3
1.4
1.9
2.0
2.1
2.3
2.5
2,7
3.0
3.1
3.4
3.8
-1.0
-.8
.5
-.3
-1.3
-3.1
-1.0
1.0
45.2
47.7
51.5
54.7
58.4
62.5
65.7
70.4
78.6
85.9
-2.7
-6.1
414.5
427.3
457.7
481.9
518.1
564.3
620.6
653.6
711.1
766.0
977.1
1,055.5
1,155.2
1,288.2
87.3
93.8
102.4
109.6
889.8
961.6
1,052.8
1,178.6
1.7
1.2
1.7
.7
93.5
102.4
109.5
117.8
4.0
4.3
4.6
4.9
-6.4
-3.4
-1.5
2.'3
800.5
859.4
941.8
1,054.2
1945
. • .
.
1960 .
1961
1962
1963
1964 . .
1965
1966
1967
1968 . . .
1969
1970
1971
1972
1973 y.
..
.
.
.
.
86.8
Seasonally adjusted annual rates
1,027.2
1,046.9
1, 063. 5
1,084.2
91.6
92.7
94.6
96.4
935.6
954.1
968.9
987.8
1.8
1.0
1.0
1.1
99.7
101.1
103.2
105.8
4.2
4.3
4.4
4.4
-2.3
-3.8
-3.3
-4.0
835.9
853.6
865.6
882.7
1972: 1
II .
III..
IV
1,112.5
1,142.4
1,166.5
1,199.2
98.4
103.6
102.3
105.1
1,014.2
1,038.8
1,064.2
1, 094.1
1.2
1.5
1.8
2.2
106.5
108.4
110.5
112.8
4.5
4.6
4.7
4.7
-6.7
— 1.0
1.6
.2
911.0
928.3
949.2
978.6
1973: 1
II
III
IV v
1,242.5
1,272.0
1,304. 5
1,334.0
106.9
109.0
110.5
112.1
1,135.5
1,163.0
1,194.0
1,221.9
.9
.4
.6
.9
115.6
117.2
118.5
120.2
4.8
4.9
5.0
5.1
1.1
3.2
3.7
1,015.0
1,038.2
1,067.4
1971: 1 .
II
Ill
IV
.
.
Source: Department of Commerce, Bureau of Economic Analysis.
265
TABLE C-15.—National income by type of income, 1929-73
[Billions of dollars]
Compensation of
employees
Total
national
income l
Year or
quarter
Total
Business and professional income
SuppleWages ments
to
and
sala- wages
and
ries
sala-2
ries
Income Invenof
tory
unin- valuTotal corpoation
rated adjustenter- ment
prises
Income
of
farm
proprietors 3
Rental
income
of
persons
Corporate profits
and inventory
valuation
adjustment
Net
interCorpo- Invenest
tory
rate
Total profits valubefore ation
taxes i adjustment
1929
86.8
51.1
50.4
0.7
9.0
8.8
0.1
6.2
5.4
10.5
10.0
0.5
4.7
1933
40.3
29.5
29.0
.5
3.3
3.9
-.5
2.6
2.0 - 1 . 2
1.0
-2.1
4.1
1939
72.6
48.1
45.9
2.2
7.4
7.6
-.2
4.4
2.7
6.3
7.0
-.7
3.5
1940
1941
1942
1943
1944
1945.
1946
1947
1948
1949
81.1
104.2
137.1
170.3
182.6
181.5
181.9
199.0
224.2
217.5
52.1
64.8
85.3
109.5
121.2
123.1
117.9
128.9
141.1
141.0
49.8
62.1
82.1
105.8
116.7
117.5
112.0
123.0
135.4
134.5
2.3
2.7
3.2
3.8
4.5
5.6
5.9
5.9
5.8
6.5
8.6
11.1
14.0
17.0
18.2
19.2
21.6
20.3
22.7
22.6
8.6
11.7
14.4
17.1
18.3
19.3
23.3
21.8
23.1
22.2
.0
-.6
-.4
-.2
-.1
-.1
-1.7
-1.5
-.4
.5
4.5
6.4
9.8
11.7
11.6
12.2
14.9
15.2
17.5
12.7
2.9
3.5
4.5
5.1
5.4
5.6
6.6
7.1
8.0
8.4
9.8
15.2
20.3
24.4
23.8
19.2
19.3
25.6
33.0
30.8
10.0
17.7
21.5
25.1
24.1
19.7
24.6
31.5
35.2
28.9
-.2
-2.5
-1.2
-.8
-.3
-.6
-5.3
-5.9
-2.2
1.9
3.3
3.2
3.1
2.7
2.3
2.2
1.5
1.9
1.8
1.9
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
241.1
278.0
291.4
304.7
303.1
331.0
350.8
366.1
367.8
400.0
154.6
180.7
195.3
209.1
208.0
224.5
243.1
256.0
257.8
279.1
146.8
171.1
185.1
198.3
196.5
211.3
227.8
238.7
239.9
258.2
7.8
9.6
10.2
10.9
11.5
13.2
15.2
17.3
17.9
20.9
24.0
26.1
27.1
27.5
27.6
30.3
31.3
32.8
33.2
35.1
25.1
26.5
26.9
27.6
27.6
30.5
31.8
33.1
33.2
35.3
-1.1
-.3
.2
-.2
.0
-.2
-.5
-.3
-.1
-.1
13.5
15.8
15.0
13.0
12.4
11.4
11.4
11.3
13.4
11.4
9.4
10.3
11.5
12.7
13.6
13.9
14.3
14.8
15.4
15.6
37.7
42.7
39.9
39.6
38.0
46.9
46.1
45.6
41.1
51.7
42.6 - 5 . 0
43.9 - 1 . 2
1.0
38.9
40.6 - 1 . 0
-.3
38.3
48 6 - 1 7
48.8 - 2 . 7
47.2 - 1 . 5
-.3
41.4
52.1
-.5
2.0
2.3
2.6
2.8
3.6
41
4.6
5.6
6.8
7.1
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
414.5
427.3
457.7
481.9
518.1
564.3
620.6
653.6
711.1
766.0
294.2
302.6
323.6
341.0
365.7
393.8
435.5
467.2
514.6
566.0
270.8
278.1
296.1
311.1
333.7
358.9
394.5
423.1
464.9
509.7
23.4
24.6
27.5
29.9
32.0
35.0
41.0
44.2
49.7
56.3
34.2
35.6
37.1
37.9
40.2
42.4
45.2
47.3
49.5
50.5
34.3
35.6
37.1
37.9
40.3
42.8
45.6
47.6
50.3
51.2
.0
.0
.0
.0
-A
-.4
-.3
-.7
-.8
12.0
12.8
13.0
13.1
12.1
14.8
16.1
14.8
14.7
16.7
15.8
16.0
16.7
17.1
18.0
19.0
20.0
21.1
21.2
22.6
49.9
50.3
55.7
58.9
66.3
76.1
82.4
78.7
84.3
79.8
49.7
50.3
55.4
59.4
66.8
77.8
84.2
79.8
87.6
84.9
.2
-.1
.3
-.5
-.5
-1.7
-1.8
-1.1
-3.3
-5.1
8.4
10.0
11.6
13.8
15.8
18.2
21.4
24.4
26.9
30.5
800.5
859.4
941.8
1,054.2
603.9
644.1
707.1
785.3
542.0
573.8
627.3
691.5
61.9
70.3
79.7
93.9
50.0
51.9
54.0
57.5
50.7
52.6
55.1
60.0
-.7
-.7
-1.1
-2.5
16.9
16.8
20.2
26.8
23.9 69.2
24.5 80.1
24.1 91.1
25.1 109.2
74.0 - 4 . 8
85.1 - 4 . 9
98.0 - 6 . 9
126.5 - 1 7 . 3
36.5
42.0
45.2
50.4
-
1970
1971
1972
1973 v
Seasonally adjusted annual rates
1971:1
II —
III..
IV..
835.9
853.6
865.6
882.7
627.6
638.8
648.8
661.2
559.8
569.3
577.6
588.6
67.7
69.6
71.1
72.6
50.9
51.7
52.3
52.7
16.9
16.6
16.3
17.5
24.4
24.7
24.7
24.4
75.8
80.5
80.9
83.4
80.8
85.5
87.0
86.9
-5.0
-5.0
-6.1
-3.6
40.2
41.4
42.7
43.5
1972: 1...
II
III.
IV..
911.0
928.3
949.2
978.6
684.3
699.6
713.1
731.2
607.3
620.8
632.5
648.7
77.0
78.9
80.5
82.5
53.1
53.3
54.3
55.3
19.5
19.9
19.8
21.8
24.1
22.6
24.9
24.9
86.2
88.0
91.5
98.8
92.8
94.8
98.4
106.1
-6.6
-6.7
-6.9
-7.3
43.9
44.8
45.7
46.6
1,015.0 757.4
1973: 1
H
1,038.2 774.9
III. 1,067.4 794.0
815.0
IV v
666.7
682.3
699.3
717.6
90.8
92.6
94.7
97.5
56.3
57.1
57.9
58.7
24.3
24.4
27.1
31.3
24.7 104.3
24.6 107.9
25.3 112.0
25.7
119.6 -15.4
128.9 -21.1
129.0 -17.0
-15.6
47.9
49.4
51.1
53.0
1
National income is the total net income earned in production. It differs from gross national product mainly in that it
excludes depreciation charges and other allowances for business and institutional consumption of durable capital goods,
and
indirect business taxes. See Table C-14.
2
Employer contributions for social insurance and to private pension, health, and welfare funds; compensation for
injuries; directors' fees; pay of the military reserve; and a few other minor items.
3 Includes change in inventories.
* See Table C-74 for corporate tax liability and profits after taxes.
Source: Department of Commerce, Bureau of Economic Analysis.
266
TABLE C—16.—Relation of national income and personal income, 1929—73
[Billions of dollars]
Less:
Year or quarter
National
income
Corporate
profits
and inventory
valuation
adjustment
Plus
Wage
ContriGovbutions accruals ernment
for
less
transfer
social
dispayments
insurburseto perance
ments
sons
Interest
paid
by
government
/noi.\
{.net,;
Equals:
Dividends
and by
consumers
Business Personal
transfer income
payments
1929.
86.8
10.5
0.2
0.0
0.9
2.5
5.8
0.6
85.9
1933..
40.3
-1.2
.3
.0
1.5
1.6
2.0
.7
47.0
1939..
72.6
6.3
2.1
.0
2.5
1.9
3.8
.5
72.8
1940..
1941..
1942..
1943..
1944..
1945..
1946..
1947..
1948..
1949..
81.1
104.2
137.1
170.3
182.6
181.5
181.9
199.0
224.2
217.5
9.8
15.2
20.3
24.4
23.8
19.2
19.3
25.6
33.0
30.8
2.3
2.8
3.5
4.5
5.2
6.1
6.0
5.7
5.2
5.7
.0
.0
.0
.2
-.2
.0
.0
.0
.0
.0
2.7
2.6
2.6
2.5
3.1
5.6
10.8
11.1
10.5
11.6
2.1
2.2
2.2
2.6
3.3
4.2
5.2
5.5
6.1
6.5
4.0
4.4
4.3
4.4
4.6
4.6
5.6
6.3
7.0
7.2
.4
.5
.5
.5
.5
.5
.5
.6
.7
.8
78.3
96.0
122.9
151.3
165.3
171.1
178.7
191.3
210.2
207.2
1950..
1951..
1952..
1953..
1954..
1955..
1956..
1957..
1958..
1959..
241.1
278.0
291.4
304.7
303.1
331.0
350.8
366.1
367.8
400.0
37.7
42.7
39.9
39.6
38.0
46.9
46.1
45.6
41.1
51.7
6.9
8.2
8.7
8.8
9.8
11.1
12.6
14.5
14.8
17.6
.0
.1
.0
-.1
.0
.0
.0
.0
.0
.0
14.3
11.5
12.0
12.8
14.9
16.1
17.1
19.9
24.1
24.9
7.2
7.6
8.1
9.0
9.5
10.1
11.2
12.0
12.1
13.6
8.8
8.6
8.6
8.9
9.3
10.5
11.3
11.7
11.6
12.6
.8
.9
1.0
1.2
1.1
1.2
1.4
1.5
1.6
1.7
227.6
255.6
272.5
288.2
290.1
310.9
333.0
351.1
361.2
383.5
I960..
1961...
1962...
1963...
1964...
1965...
1966...
1967...
1968...
1969...
414.5
427.3
457.7
481.9
518.1
564.3
620.6
653.6
711.1
766.0
49.9
50.3
55.7
58.9
66.3
76.1
82.4
78.7
84.3
79.8
20.7
21.4
24.0
26.9
27.9
29.6
38.0
42.4
47.1
54.2
.0
.0
.0
.0
.0
.0
.0
.0
.0
.0
26.6
30.4
31.2
33.0
34.2
37.2
41.1
48.7
56.1
61.9
15.1
15.0
16.1
17.6
19.1
20.5
22.2
23.6
26.1
28.7
13.4
13.8
15.2
16.5
17.8
19.8
20.8
21.4
23.6
24.3
1.9
2.0
2.1
2.3
2.5
2.7
3.0
3.1
3.4
3.8
401.0
416.8
442.6
465.5
497.5
538.9
587.2
629.3
688.9
750.9
1970__.
1971...
1972__.
1973*..
800.5
859.4
941.8
1, 054. 2
69.2
80.1
91.1
109.2
57.7
64.6
73.7
92.1
.0
.6
- . 5i
75.1
88.9
98.3
112.5
31.0
31.0
32.7
37.1
24.7
25.1
26.0
27.8
4.0
4.3
4.6
4.9
808.3
863.5
939.2
1,035.5
Seasonally adjusted annual rates
835.9
853.6
865.6
882.7
75.8
80.5
80.9
83.4
63.3
64.1
65.0
66.0
0.0
.2
.6
1.5
82.6
90.3
90.6
92.1
31.1
30.8
31.0
31.2
25.3
25.1
25.2
24.9
4.2
4.3
4.4
4.4
840.0
859.5
870.2
884.4
911.0
928.3
949.2
978.6
86.2
88.0
91.5
98.8
71.7
72.9
74.5
75.8
-1.4
-.4
-.2
.0
94.3
95.3
96.4
107.3
31.6
32.6
32.9
33.7
25.7
25.9
26.2
26.4
4.5
4.6
4.7
4.7
910.8
926.1
943.7
976.1
1,015.0
1,038.2
1,067.4
104.3
107.9
112.0
89.3
90.9
93.0
95.0
.0
-.3
.0
.0
108.8
110.8
113.7
116.8
34.7
36.1
38.0
39.6
26.9
27.3
28.1
29.0
4.8
4.9
5.0
5.1
996.6
1,019.0
1,047.1
1,079.2
1971: !.
IV.
1972: 1.
III.
IV..
1973: !
II...
III..
IV*..
Source: Department of Commerce, Bureau of Economic Analysis.
267
TABLE C-17.—Disposition of personal income, 1929-73
Percent of disposable
personal income
Less: Personal outlays
Year or
quarter
Personal
income
Less:
Personal
tax
and
nontax
payments
Equals:
Disposable
personal
income
Total
PerPersonal
sonal
Interest transfer
consump- paid by paycontion
sumers ments
expendto foritures
eigners
Equals:
Personal
saving
Personal
outlays
Total
Billions of dollars
Consumption
expend*
itures
Personal
saving
Percent
1929.....
85.9
2.6
83.3
79.1
77.2
1.5
0.3
4.2
95.0
92.7
5.0
1933....
47.0
1.5
45.5
46.5
45.8
.5
.2
-.9
102.0
100.6
-2.0
1939....
72.8
2.4
70.3
67.7
66.8
.7
.2
2.6
96.3
95.0
3.7
1940.....
1941.....
1942.....
1943.....
1944.....
1945.....
1946.....
1947.....
1948....
1949....
78.3
96.0
122.9
151.3
165.3
171.1
178.7
191.3
210.2
207.2
2.6
3.3
6.0
17.8
18.9
20.9
18.7
21.4
21.1
18.6
75.7
92.7
116.9
133.5
146.3
150.2
160.0
169.8
189.1
188.6
71.8
81.7
89.3
100.1
109.1
120.7
144.8
162.5
175.8
179.2
70.8
80.6
88.5
99.3
108.3
119.7
143.4
160.7
173.6
176.8
.8
.9
.7
.5
.5
.5
.8
1.1
1.5
1.9
.2
.2
.1
.2
.4
.5
.7
.7
.7
.5
3.8
11.0
27.6
33.4
37.3
29.6
15.2
7.3
13.4
9.4
94.9
88.2
76.4
75.0
74.5
80.3
90.5
95.7
92.9
95.0
93.6
86.9
75.7
74.4
74.0
79.7
89.6
94.6
91.8
93.8
5.1
11.8
23.6
25.0
25.5
19.7
9.5
4.3
7.1
5.0
1950....
1951....
1952....
1953....
1954....
1955....
1956....
1957....
1958....
1959....
227.6
255.6
272.5
288.2
290.1
310.9
333.0
351.1
361.2
383.5
20.7
29.0
34.1
35.6
32.7
35.5
39.8
42.6
42.3
46.2
206.9
226.6
238.3
252.6
257.4
275.3
293.2
308.5
318.8
337.3
193.9
209.3
220.2
234.3
241.0
259.5
272.6
287.8
296.6
318.3
191.0
206.3
216.7
230.0
236.5
254.4
266.7
281.4
290.1
311.2
2.4
2.7
3.0
3.8
4.0
4.7
5.4
5.8
5.9
6.5
.5
.4
.4
.5
.5
.5
.6
.6
.6
.6
13.1
17.3
18.1
18.3
16.4
15.8
20.6
20.7
22.3
19.1
93.7
92.4
92.4
92.8
93.6
94.3
93.0
93.3
93.0
94.4
92.3
91.0
90.9
91.1
91.9
92.4
91.0
91.2
91.0
92.3
6.3
7.6
7.6
7.2
6.4
5.7
7.0
6.7
7.0
5.6
I960....
1961—.
1962....
1963....
1964....
1965....
1966....
1967....
1968
1969
401.0
416.8
442.6
465.5
497.5
538.9
587.2
629.3
688.9
750.9
50.9
52.4
57.4
60.9
59.4
65.7
75.4
83.0
97.9
116.5
350.0
364.4
385.3
404.6
438.1
473.2
511.9
546.3
591.0
634.4
333.0
343.3
363.7
384.7
411.9
444.8
479.3
506.0
551.2
596.2
325.2
335.2
355.1
375.0
401.2
432.8
466.3
492.1
536.2
579.5
7.3
7.6
8.1
9.1
10.1
11.3
12.4
13.2
14.3
15.8
.5
.5
.5
.6
.6
.7
.6
.7
.8
.9
17.0
21.2
21.6
19.9
26.2
28.4
32.5
40.4
39.8
38.2
95.1
94.2
94.4
95.1
94.0
94.0
93.6
92.6
93.3
94.0
92.9
92.0
92.2
92.7
91.6
91.5
91.1
90.1
90.7
91.3
4.9
5.8
5.6
4.9
6.0
6.0
6.4
7.4
6.7
6.0
1970
1971....
1972....
1973 P
808.3
863.5
939.2
.,035.5
116.6
117.5
142.2
152.9
691.7
746.0
797.0
882.6
635.5
685.8
747.2
828.7
617.6
667.2
726.5
805.0
16.8
17.7
19.7
22.5
1.0
1.0
1.0
1.2
56.2
60.2
49.7
53.8
91.9
91.9
93.8
93.9
89.3
89.4
91.2
91.2
8.1
8.1
6.2
6.1
Seasonally adjusted annual rates
Seasonally adjusted
1971: L . . .
II...
III —
IV...
840.0
859.5
870.2
884.4
112.6
115.5
118.1
124.0
121A
744.0
752.0
760.4
668.3
680.6
691.8
702.6
650.0
662.2
673.0
683.4
17.3
17.4
17.7
18.2
1.0
.9
1.1
1.1
59.2
63.5
60.2
57.8
91.9
91.5
92.0
92.4
89.4
89.0
89.5
89.9
8.1
8.5
8.0
7.6
1972: I . . . .
II..
III..
IV...
910.8
926.1
943.7
976.1
138.0
140.7
142.8
147.4
772.8
785.4
800.9
828.7
720.0
739.5
755.1
774.3
700.2
719.2
734.1
752.6
18.8
19.4
20.0
20.7
1.0
.9
1.0
1.1
52.9
45.9
45.8
54.4
93.2
94.2
94.3
93.4
90.6
91.6
91.7
90.8
6.8
5.8
5.7
6.6
1973: I . . . . 996.6
I I . . . 1,019.0
ML. 1, 047.1
IV P . 1,079.2
145.1
149.3
156.0
161.2
851.5
869.7
891.1
918.0
801.5
818.7
840.1
854.6
779.4
795.6
816.0
829.0
21.2
22.0
23.0
23.8
.9
1.0
1.1
1.8
50.0
51.0
51.1
63.3
94.1
94.1
94.3
93.1
91.5
91.5
91.6
90.3
5.9
5.9
5.7
6.9
Source: Department of Commerce, Bureau of Economic Analysis.
268
TABLE C-18.— Total and per capita disposable personal income and personal consumption
expenditures in current and 1958 dollars, 1929-73
Disposable personal income
Total (billions
of dollars)
Year or quarter
Current
dollars
1958
dollars
Personal consumption expenditures
Per capita
(dollars)
Current
dollars
Total (billions
of dollars)
1958
dollars
Current
dollars
1958
dollars
Population
(thousands) i
Per capita
(dollars)
Current
dollars
1958
dollars
1929
83.3
150.6
683
1,236
77.2
139.6
634
1,145
121,875
1933
45.5
112.2
362
893
45.8
112.8
364
897
125,690
1939
70.3
155.9
537
1,190
66.8
148.2
510
1,131
131,028
1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
75.7
92.7
116.9
133.5
146.3
150.2
160.0
169.8
189.1
188.6
166.3
190.3
213.4
222.8
231.6
229.7
227.0
218.0
229.8
230.8
573
695
867
976
1,057
1,074
1 132
1,178
1,290
1,264
1,259
1,427
1,582
1,629
1 673
1,642
1 606
1,513
1,567
1,547
70.8
80.6
88.5
99.3
108.3
119.7
143.4
160.7
173.6
176.8
155.7
165.4
161.4
165.8
171.4
183.0
203.5
206.3
210.8
216.5
536
604
656
726
782
1,014
1,115
1,184
1,185
1,178
1,240
1 197
1,213
1 238
1,308
1 439
1,431
1,438
1,451
132,122
133,402
134 860
136,739
138 397
139 928
141 389
144 126
146,631
149,188
206.9
226.6
238.3
252.6
257.4
275.3
293.2
308.5
318.8
337.3
249.6
255.7
263.3
275.4
278.3
296.7
309.3
315.8
318.8
333.0
1 364
1,469
1,518
1,583
1,585
1 666
1,743
1,801
1,831
1,905
1 646
1,657
1,678
1,726
1,714
1,795
1,839
1,844
1,831
1,881
191.0
206.3
216.7
230.0
236.5
254.4
266.7
281.4
290.1
311.2
230.5
232.8
239.4
250.8
255.7
274.2
281.4
288.2
290.1
307.3
1,259
1,337
1,381
1,441
1,456
1,539
1,585
1,643
1,666
1,758
1 520
1,509
1,525
1,572
1,575
1,659
1,673
1,683
1,666
1,735
151 684
154, 287
156,954
159,565
162,391
165 275
168, 221
171,274
174,141
177,073
350.0
364.4
385.3
404.6
438.1
473.2
511.9
546.3
591.0
634.4
340.2
350.7
367.3
381.3
407.9
435.0
458.9
477.5
499.0
513.6
1,937
1 984
2,065
2,138
2,283
2,436
2 604
2,749
2,945
3,130
1,883
1 909
1,969
2,015
2,126
2,239
2 335
2,403
2,486
2,534
325.2
335.2
355.1
375.0
401.2
432.8
466.3
492.1
536.2
579.5
316.1
322.5
338.4
353.3
373.7
397.7
418.1
430.1
452.7
469.1
1,800
1,825
1,903
1,981
2,091
2,228
2,372
2,476
2,671
2,859
1,749
1 756
1,814
1,867
1,948
2,047
2 127
2,164
2,256
2,315
180,671
183 691
186| 538
189,242
191,889
194,303
196 560
198,712
200, 706
202,677
691.7
746.0
797.0
882.6
534.8
554.9
577.9
608.1
3,376
3 603
3,816
4,195
2,610
2,680
2,767
2,890
617.6
667.2
726.5
805.0
477.5
496.3
526.8
554.7
3,015
3,222
3,479
3,826
2,331
2,397
2,523
2,636
204,879
207,045
208,842
210,404
.
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
. .
._..
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
. .
1970
1971
1972
1973*
.
.
855
Seasonally adjusted annual rates
1971:1
||
III
IV
1972-1
II
Ill
IV
1973:1
II
Ill
IV v
727.4
744.0
752.0
760.4
547.8
554.6
556.4
560.9
3,526
3,598
3,628
3,658
2,655
2 682
2,684
2,698
650.0
662.2
673.0
683.4
489.5
493 6
498.0
504.1
3,151
3,202
3,246
3,288
2,373
2 387
2,402
2,425
206,306
206,795
207,313
207,862
772.8
785.4
800.9
828.7
565.7
571.6
579.3
595.1
3,711
3,765
3 831
3,955
2 716
2,740
2 771
2,841
700.2
719.2
734.1
752.6
512.5
523.4
531.0
540.5
3,362
3,447
3,511
3,592
2,461
2,509
2 540
2,580
208, 259
208,634
209 058
209,514
851.5
869.7
891.1
918.0
603.9
604.8
603.5
613.9
4,057
4,137
4,231
4,350
2,878
2,877
2,894
2,909
779.4
795.6
816.0
829.0
552.7
553.3
558.1
554.5
3,714
3,785
3,874
3,928
2,634
2,632
2,650
2,627
209,871
210,221
210,618
211,036
1
Population of the United States including Armed Forces overseas; includes Alaska and Hawaii beginning 1960. Annual
data are for July 1; quarterly data are for middle of period, interpolated from monthly data.
Source: Department of Commerce (Bureau of Economic Analysis and Bureau of the Census).
269
527-867 O - 74 - 18
TABLE C-19.—Sources of personal income, 1929-73
[Billions of dollars]
Wage and salary disbursements*
Total
personal
income
Year or quarter
Commodityproducing
industries
Total
Total
Manufacturing
Propri etors'
income
Distrib- Service
utive
indus- industries
tries
Government
Other
labor
income*
Business
and
professional
Farm1
1929
85.9
50.4
21.5
16.1
15.6
8.4
4.9
0.6
9.0
6.2
1933
47.0
29.0
9.8
7.8
8.8
5.2
5.1
.4
3.3
2.6
1939 .
72.8
45.9
17.4
13.6
13.3
7.1
8.2
.6
7.4
4.4
1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
78.3
96.0
122.9
151.3
165.3
171.1
178.7
191.3
210.2
207.2
49.8
62.1
82.1
105.6
116.9
117.5
112.0
123.0
135.3
134.6
19.7
27.5
39.1
48.9
50.3
45.8
46.0
54.3
61.0
57.7
15.6
21.7
30.9
40.9
42.9
38.2
36.5
42.5
47.2
44.7
14.2
16.3
18.0
20.1
22.7
24.8
31.0
35.2
37.6
37.7
7.5
8.1
9.0
9.9
10.9
12.0
14.4
16.1
17.9
18.6
8.4
10.2
16.0
26.6
33.0
34.9
20.7
17.4
18.9
20.6
7
.7
.9
1 1
1.5
1 8
1.9
2.3
2.7
3.0
8 6
11.1
14.0
17 0
18.2
19 2
21.6
20.3
22.7
22.6
4 5
6.4
9.8
11 7
11.6
12 2
14.9
15.2
17 5
12.7
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
227.6
255.6
272.5
288.2
290.1
310.9
333.0
351.1
361.2
383.5
146.7
171.0
185.1
198.3
196.5
211.3
227.8
238 7
239.9
258.2
64.6
76.1
81.8
89.4
85.4
92.8
100.2
103.8
99.7
109.1
50.3
59.4
64.2
71.2
67.6
73.9
79.5
82.5
78.7
86.9
39.9
44.3
46.9
49.8
50.2
53.4
57.7
60.5
60.8
64.8
19.9
21.7
23.3
25.1
26.4
28.9
31.6
33.9
35.9
38.7
22.4
28.9
33.1
34.1
34.6
36.2
38.3
40.4
43.5
45.6
3.8
4.8
5.3
6.0
6.3
7.3
8.4
9.5
9.9
11.3
24.0
26.1
27.1
27.5
27.6
30.3
31.3
32.8
33.2
35.1
13 5
15.8
15 0
13.0
12.4
11 4
11.4
11 3
13.4
11.4
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
401.0
416.8
442.6
465.5
497.5
538.9
587.2
629.3
688.9
750.9
270.8
278.1
296.1
311.1
333.7
358.9
394.5
423.1
464.9
509.7
112.5
112.8
120.8
125.7
134.1
144.5
159.3
166.5
181.5
197.5
89.7
89.8
96.7
100.6
107.2
115.6
128.1
134.2
145.9
157.6
68.1
69.1
72.5
76.0
81.2
86.9
93.8
100.3
109.2
120.0
41.5
44.0
46.8
49.9
54.1
58.3
63.7
70.5
78.5
88.1
48.7
52.2
56.0
59.5
64.3
69.3
77.7
85.8
95.7
104.1
12.0
12.7
13.9
14.9
16.6
18.7
20.7
22.3
25.4
28.4
34.2
35.6
37.1
37.9
40.2
42.4
45.2
47.3
49.5
50.5
12.0
12.8
13.0
13.1
12 1
14.8
16.1
14.8
14.7
16.7
808.3
863.5
939.2
. . 1,035.5
542.0
573.3
627.8
691.5
200.9
206.3
226.0
252.0
158.3
160.5
175.9
196.8
129.3
138.3
151.5
165.1
96.6
104.7
116.1
129.0
115.1
123.9
134.2
145.4
32.2
36.6
40.7
44.9
50.0
51.9
54.0
57.5
16.9
16.8
20.2
26.8
. .
1970
1971
1972
1973» „
.
..
Seasonally adjusted annual rates
1971- 1
II
Ill
IV
840.0
859.5
870.2
884.4
559.8
569.1
577.0
587.1
202.5
205.3
207.0
210.5
158.5
159.9
160.6
163.1
134.7
137.2
139.2
142.3
101.3
103.6
105.9
108.0
121.4
123.0
125.0
126.3
34.8
36.1
37.2
38.1
50.9
51.7
52.3
52.7
16.9
16.6
16.3
17.5
1972: 1
II
III
IV
.
910.8
926.1
943.7
976.1
608.8
621.1
632.7
648.7
218.2
223.7
227.3
234.8
168.9
174.0
177.0
183.7
147.5
150.0
152.5
156.0
111.6
114.9
117.9
120.1
131.6
132.6
135.0
137.8
39.1
40.2
41.3
42.3
53.1
53.3
54.3
55.3
19.5
19. S
19.8
21.8
1973- 1
II
Ill
IV*.._
996.6
1,019.0
1, 047.1
1,079.2
666.7
682.6
699.3
717.6
241.6
248.6
255.3
262.3
189.1
194.8
199.1
204.3
159.5
163.3
167.0
170.7
123.9
126.9
130.9
134.2
141.6
143.7
146.1
150.3
43.3
44.2
45.3
46.7
56.3
57.1
57.9
58.7
24.3
24.4
27.1
31.3
See footnotes at end of table.
270
TABLE C-19.—Sources of personal income, 1929-73—Continued
[Billions of dollars]
Transfer payments
Year or
quarter
Rental
income Diviof per- dends
sons
Personal
interest
income
Old age,
survivors,
disability,
and health
insurance
benefits
Total
State
unemployment insurance
benefits
Veterans
benefits
Other
Less:
Personal
contributions
for social
insurance
Nonagricultural
personal
income*
1929..
5.4
5.8
7.2
1.5
0.6
0.9
0.1
1933..
2.0
2.0
5.7
2.1
.5
1.6
.2
43.2
1939..
2.7
3.8
5.5
3.0
0.0
0.4
.5
2.0
.6
66.9
1940..
1941..
1942..
1943..
1944..
1945..
1946..
1947..
1948.
1949.
2.9
3.5
4.5
5.1
5.4
5.6
6.6
7.1
8.0
8.4
4.0
4.4
4.3
4.4
4.6
4.6
5.6
6.3
7.0
7.2
5.4
5.5
5.3
5.3
5.6
6.3
6.8
7.5
7.9
8.5
3.1
3.1
3.1
3.0
3.6
6.2
11.3
11.7
11.2
12.4
.0
.1
.1
.2
.2
.3
.4
.5
.6
.7
.5
.3
.3
.1
.1
.4
1.1
1.7
.5
.5
.5
.5
.9
2.8
6.7
6.7
5.8
5.1
2.0
2.2
2.2
2.2
2.4
2.7
3.1
3.7
4.1
4.9
.7
.8
1.2
1.8
2.2
2.3
2.0
2.1
2.2
2.2
72.3
87.8
111.0
137.3
151.2
156.4
161.0
173.0
189.4
191.3
1950.
1951..
1952
1953.
1954.
1955.
1956.
1957.
1958.
1959.
9.4
10.3
11.5
12.7
13.6
13.9
14.3
14.8
15.4
15.6
8.8
8.6
8.6
8.9
9.3
10.5
11.3
11.7
11.6
12.6
9.2
9.9
10.6
11.8
13.1
14.2
15.7
17.6
18.9
20.7
15.1
12.5
13.0
14.0
16.0
17.3
18.5
21.4
25.7
26.6
1.0
1.9
2.2
3.0
3.6
4.9
5.7
7.3
8.5
10.2
1.4
.8
1.0
1.0
2.0
1.4
1.4
1.8
3.9
2.5
4.9
3.9
3.9
3.7
3.9
4.3
4.3
4.4
4.6
4.6
7.9
5.9
6.0
6.3
6.5
6.8
7.2
7.9
8.7
9.4
2.9
3.4
3.8
4.0
4.6
5.2
5.8
6.7
6.9
7.9
210.9
236.4
254.1
271.9
274.7
296.4
318.5
336.6
344.3
368.5
1960.
1961.
1962.
1963.
1964.
1965.
1966.
1967.
1968.
1969.
15.8
16.0
16.7
17.1
18.0
19.0
20.0
21.1
21.2
22.6
13.4
13.8
15.2
16.5
17.8
19.8
20.8
21.4
23.6
24.3
23.4
25.0
27.7
31.4
34.9
38.7
43.6
48.0
52.9
59.3
28.5
32.4
33.3
35.3
36.7
39.9
44.1
51.8
59.6
65.8
11.1
12.6
14.3
15.2
16.0
18.1
20.8
25.7
30.3
33.0
2.8
4.0
2.9
2.8
2.6
2.2
1.8
2.1
2.1
2.1
4.6
4.8
4.8
5.0
5.3
5.6
5.7
6.6
7.3
8.3
10.0
10.9
11.2
12.2
12.9
14.0
15.7
17.5
20.0
22.4
9.3
9.6
10.3
11.8
12.5
13.4
17.7
20.5
22.8
26.3
385.2
400.0
425.5
448.1
480.9
519.5
566.3
609.4
668.8
728.3
1970....
1971....
1972....
1973 v
23.9
24.5
24.1
25.1
24.7
25.1
26.0
27.8
67.5
73.0
78.0
87.5
79.1
93.2
103.0
117.5
38.5
44.5
49.6
60.9
3.9
5.7
5.5
4.2
9.7
11.2
12.7
13.6
27.1
31.8
35.1
38.8
28.0
30.9
34.7
43.1
784.9
839.8
911.5
1,000.6
77.6
Seasonally adjusted annual rates
IV....
24.4
24.7
24.7
24.4
25.3
25.1
25.2
24.9
71.4
72.2
73.7
74.7
86.7
94.6
94.9
96.5
40.3
46.6
45.1
45.9
5.2
5.7
5.9
5.9
10.8
11.1
11.4
11.7
30.5
31.3
32.6
33.1
30.3
30.7
31.1
31.5
816.0
836.1
847.0
859.8
1972:1
II....
Ill
IV
24.1
22.6
24.9
24.9
25.7
25.9
26.2
26.4
75.5
77.4
78.6
80.3
98.8
99.9
101.1
112.0
46.6
47.3
48.0
56.4
5.8
6.3
5.3
4.7
12.0
12.1
12.6
14.1
34.4
34.1
35.2
36.8
33.8
34.3
35.2
35.7
883.9
898.8
916.5
946.7
1973: I
II.
III
IV P . . .
24.7
24.6
25.3
25.7
26.9
27.3
28.1
29.0
82.7
85.6
89.1
92.6
113.6
115.7
118.7
121.9
58.3
60.0
61.8
63.4
4.1
4.1
4.1
4.4
13.3
13.4
13.8
13.9
37.8
38.2
39.0
40.2
41.9
42.6
43.6
44.2
964.5
986.7
1,011.9
1,039.0
1971:1
1
The total of wage and salary disbursements and other labor income differs from compensation of employees in Table
C-15 in that it excludes employer contributions for social insurance and the excess of wage accruals over wage disbursements.
3
Includes change in inventories.
3
Nonagricultural income is personal income exclusive of net income of unincorporated farm enterprises, farm wages,
agricultural net interest, and net dividends paid by agricultural corporations.
Source: Department of Commerce, Bureau of Economic Analysis.
271
TABLE C-20.—Sources and uses of gross saving, 1929-73
[Billions of dollars]
Gross private saving and government surplus or deficit,
national income and product accounts
Year or
quarter
Capital
grants
received
by the
United
State States i
and
local
Government surplus
or deficit ( - )
Private saving
Total
Total
Gross investment
Personal
saving
Gross
business
saving
Total
Federal
Total
Gross
private
domestic investment
Net
foreign
investments
Statistical
discrepancy
1929
16.3
15.3
4.2
11.2
1.0
1.2
-0.2
17.0
16.2
0.8
1933
.9
2.3
-.9
3.2
-1.4
-1.3
-.1
1.6
1.4
.2
.6
1939
8.8
11.0
2.6
8.4
-2.2
-2.2
(0
10.2
9.3
.9
1.3
1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
13.6
18.6
10.7
5.5
2.5
5.2
35.1
42.0
49.9
35.9
14.3
22.4
42.0
49.7
54.3
44.7
29,7
27.5
41.4
39.0
3.8
11.0
27.6
33.4
37.3
29.6
15.2
7.3
13.4
9.4
10.5
11.4
14.5
16.3
17.1
15.1
14.5
20.2
28.0
29.7
-.7
-3.8
-31.4
-4M
-51.8
-39.5
5.4
14.4
85
-3.2
-1.3
-5.1
-33.1
-46.6
-54.5
-42.1
3.5
13.4
8.4
-2.4
.6
1.3
1.8
2.5
2.7
2.6
1.9
1.0
.1
-.7
mm"
14.6
19.0
9.6
3.5
5.0
9.1
35.2
42.9
47.9
36.2
13.1
17.9
9.8
5.7
7.1
10.6
30.6
34.0
46.0
35.7
1.5
1.1
1.0
.4
-1.1
-2.0
2.5
3.9
.1
.9
-2 0
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
50.4
56.1
49.5
47.5
48.5
64.8
72.7
71.2
59.2
73.8
42.5
50.3
53.3
54.4
55.6
62.1
67 8
70.5
71.7
75.9
13.1
17.3
18.1
18.3
16.4
15.8
20.6
20.7
22.3
19.1
29.4
7.9
33.1
5.8
35.1 - 3 . 8
36.1 —6 9
39.2 - 7 0
46.3
2.7
47.3
49
7
49.8
49.4 - 1 2 . 5
56.8 - 2 . 1
9.1 - 1 . 2
-.4
6.2
-3.8
—7.0
-5.9 -1.1
4.0 - 1 . 3
5 7 _ 9
2.1 - 1 4
-10.2 - 2 . 3
-1.2
-.8
------
51.8
59.5
51.6
50.5
51.3
66.9
71.6
71.2
60.7
73.0
54.1
59.3
51.9
52.6
51.7
67.4
70.0
67.9
60.9
75.3
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
77.5
75.5
85.0
90.5
101.0
115.3
124.9
119.5
128.3
144.0
73.9
79.8
87.9
88.7
102.4
113.1
123.8
133.4
135.2
135.2
17.0
21.2
21.6
19.9
26.2
28.4
32.5
40.4
39.8
38.2
56.8
3.7
3.5
58.7 - 4 . 3 - 3 . 8
66.3 - 2 9 - 3 . 8
68.8
1.8
.7
76.2 - 1 . 4 - 3 . 0
84.7
2.2
1.2
91.3
1.1
-.2
93.0 - 1 3 . 9 - 1 2 . 4
95.4 - 6 . 8 - 6 . 5
97.0
8.8
8.1
76.5
74.7
85.5
90.3
99.7
112.2
123.9
118.8
125.6
137.9
74.8
71.7
83.0
87.1
94.0
108.1
121.4
116.6
126.0
139.0
-i'.o
-3.1
—1.0
-.7
-2.7
-6.1
143.1
153.8
171.4
. . . . 200.2
153.2
171.9
174.2
188.6
56.2
60.2
49.7
53.8
97.0 — 10 1 - 1 1 . 9
111.8 - 1 8 . 1 - 2 2 . 2
124.4 - 2 8 - 1 5 . 9
134.7
.6
11.6
137.6
151.1
170.6
202.5
136.3
153.2
178.3
201.5
1.3
-2.1
-7.6
1.0
-6.4
-3.4
-1.5
2.3
1970
1971
1972
1973*
.2
-.5
9
1.2
1.7
1.0
1.3
-1.6
""'.7
1 8
4.0
13 1
11.0
9
.7
7
.0
-2^2
-2.1
-1.4
4.6
8.9
1.9
.5
-2.2
-i!i
-.5
1.5
3.4
-.2
-2.3
1.7
3.0
2.5
3.1
5.7
4.1
2.4
2.2
0.7
1.5
3.3
2.2
30
2.7
2.1
-1 1
.0
1.6
-.8
-1.0
-.8
.5
Seasonally adjusted annual rates
1971: 1
II
III....
IV....
148.4
153.6
154.4
158.7
164.3
173.3
172.5
177.3
59.2
63.5
60.2
57.8
105.1
109.9
112.5
119.5
1972: 1
II
III.—
IV....
164.8
166.2
172.4
182.2
170.2
170.0
170.3
186.0
52.9
45.9
45.8
54.4
117.4
124.1
124.5
131.6
190.4
1973: 1
194.5
II
III.... 202.3
181.5
183.0
188.0
50.0
51.0
51.1
63.3
131.5
132.0
136.9
-17.6
-23.5
-23.2
-24.5
1.7
3.7
4.8
5.9
0.7
.7
.7
.7
146.8
150.5
151.8
155.4
145.5
152.7
153.8
160.8
1.3
-2.2
-2.0
-5.4
-2.3
-3.8
-3.3
-4.0
- 5 . 4 -13.8
-3.9 -19.0
2.0 - 7 . 4
- 3 . 8 -23.4
8.4
15.2
9.5
19.6
.7
.7
.7
.7
158.9
165.9
174.7
183.1
167.5
174.7
181.5
189.4
-8.7
-8.7
-6.9
-6.3
-6.7
-1.0
1.6
.2
13.9
11.5
10.4
.0
.0
.0
.0
191.5
197.7
206.0
214.7
194.5
198.2
202.0
211.2
-3.0
-.5
4.0
3.5
1.1
3.2
3.7
-15.9
-19.7
-18.4
-18.6
8.9
11.6
14.3
-5.0
.0
4.0
1 Allocations of special drawing rights (SDR).
2 Net exports of goods and services less net transfers to foreigners.
3 Surplus of $32 million.
« Deficit of $41 million.
Source: Department of Commerce, Bureau of Economic Analysis.
272
TABLE C-21.—Saving by individuals, 1946-73l
[Billions of dollars]
Increase in financial assets
Year or
quarter
Total
Net investment in
Less: Increase in
debt
Securities
CurInsurNon- Mortrency Savance
corgage
Non- ConCorpoand
and
podebt Con- Other
ings Govrate Corpo- pen- farm sumer rate
Total 2 deon sumer
acerndumand counts ment and
sion homes rables busi- non- credit debt«
rate
for- equidereness farm
secu- eign
posits
assets homes
ties 4 serves
rities 3
bonds
1946..
1947..
1948..
1949..
25.7
20.
23.3
18.9
18.9
13.2
9.0
10.0
5.6
.1
-2.9
-2.0
6.3
3.4
2.3
2.7
1950..
1951..
1952..
1953..
1954..
26.9
30.3
27.2
30.4
28.2
13.8
18.8
22.7
22.5
22.7
2.6
4.6
1.6
1.0
2.2
2.5
4.9
7.8
8.3
9.3
-.4
1.9
2.3
1955....
1956....
1957....
1958....
1959.......
34.
36.0
34.1
33.0
34.8
28.4
30.0
28.6
31.6
36.5
1.2
1.8
-.5
3.8
9.6
12.1
14.1
•11.3
6.0
3.9
2.2
-2.4
9.0
I960..
1961..
1962 .
1963..
1964..
32.3
31.7
37.1
39.1
49.5
31.6
35.1
39.
45.1
55.5
1.9
2.5
1.7
3.0
4.7
11.4
16.5
25.7
24.6
27.4
3.5
.7
-.8
4.4
5.7
1965..
1966..
1967..
1968..
1969..
55.2
65.
'64.8
67.4
60.1
58.1
62.7
68.5
72.0
61.3
7.8
3.9
11.3
12.5
1.6
28.0
20.5
34.8
30.3
6.0
4.2
11.4
-.9
4.7
21.8
1970..
1971..
1972..
76.8 79.6
89.8 99.9
99. 124.9
9.6
11.0
12.9
44.4 - 8 . 2
70.5 -13.6
5.7
75.8
1.1
1.1
1.0
5.3
5.4
5.3
5.6
4.2
6.9
10.5
9.0
5.8
7.5
7.
7.0
3.3
3.2
7.4
2.5
3.8
4.3
5.0
4.1
2.7
3.2
2.8
2.9
0.0
2.5
2.9
2.6
.7
-'.3
1.6
1.6
.9
.7
6.9
6.3
7.8
8.0
7.9
13.7
13.5
12.8
13.5
13.7
10.2
5.5
3.6
6.4
4.9
6.4
4.6
2.5
1.6
2.7
7.4
7.1
6.4
7.7
8.6
4.1
1.2
4.8
3.9
1.1
5.6
3.8
3.0
2.1
6.0
1.0
.9
1.1
1.3
.3
1.1
1.9
1.5
1.5
.6
8.5
9.5
9.5
10.4
11.9
17.7
16.4
13.8
12.7
16.5
9.9
5.9
4.9
.6
5.5
3.5
1.9
2.3
3.3
3.2
12.2
11.2
8.8
8.8
12.6
6.4
3.5
2.6
.2
6.4
6.8
3.4
4.2
6.2
7.9
.6 - . 4
.4
.1
- . 1 -2.1
.0 - 2 . 9
.1 - . 2
11.6
12.2
12.7
14.1
15.6
14.5
12.0
12.8
12.6
12.5
5.1
2.9
6.7
8.9
11.2
2.2
3.2
5.6
6.9
6.2
10.
10.9
12.7
14.8
16.0
4.6
1.8
5.8
7.9
8.5
5.7
8.7
8.5
11.8
11.4
-2.2
-1.1
-4.5
-7.9
-4.3
17.0
19.4
19.6
20.1
20.8
12.0
11.5
9.2
12.8
13.3
14.8
15.2
12.4
16.7
16.2
9.0
7.2
8.2
7.9
9.0
15.2
12.7
10.4
14.6
16.1
9.6
6.4
4.5
10.0
10.4
13.8
12.3
18.6
17.3
13.3
10.1 - 2 . 6
8.2 -5.4
4.9 - 5 . 9
24.3
28.3
28.0
10.6
17.4
24.1
10.6
16.0
23.6
6.6
11.0
12.1
12.5
24.1
38.4
6.0
11.2
19.2
12.1
19.2
27.3
8.9
- 1 . 4 -0.9
1.6 - . 8
1.3 - . 1
1.8 - . 4
-.8
.0
.0
1.0
2.1
4.6
4.7
7.4
Seasonally adjusted annual rates
1971:
1st half.
2nd half.
92.5 97.5
89.1 104.4
1972: I . . .
II...
III..
IV..
92.6
98.8
104.8
101.4
1973: I . . .
IL.
III.
105.3 118.1
117.1 131.0
93.0 115.8
113.2
125.8
127.2
133.1
15.6
6.4
19.7
6.9
14.6
10.2
9.0
11.2
14.7
80.8 -24.2
60.7 - 1 . 6
8.6 -10.6
7.7 - . 2
28.0
28.5
14.6
20.2
15.2
16.9
10.9
11.2
18.3
30.0
13.6
18.4
20.0
85.0 - 7 . 2
71.6 10.6
.1
76.1
70.6 19.0
7.2 - 8 . 1
1.8 - 5 . 6
1.9
3.9
6.5 -11.7
20.4
32.8
28.8
30.2
22.6
23.4
25.2
25.2
20.2
22.6
25.8
25.9
11.8
10.3
11.6
14.4
32.7
36.7
40.8
43.5
13.3
18.3
18.9
26.2
29.2
28.4
25.4
27.7
87.1
64.5
43.7
.3
2.8
.7
-6.9
-4.5
-9.2
30.3
33.7
28.2
27.9
30.3
30.3
32.8
31.1
27.9
16.1
14.1
14.6
38.3
43.0
39.7
25.3
24.1
21.9
26.0
22.3
34.0
4.5
17.9
31.0
1
Saving by households, personal trust funds, nonprofit institutions, farms, and other noncorporate business.
Includes commercial paper and miscellaneous financial assets, not shown separately.
Consists of U.S. savings bonds, other U.S. Treasury securities, U.S. Government agency securities and sponsored
agency securities, and State and local obligations.
4
Includes investment company shares.
5
Private life insurance reserves, private insured and noninsured pension reserves, and government insurance and
pension reserves.
• Security credit, policy loans, noncorporate business mortgage debt, and other debt.
3
3
Source: Board of Governors of the Federal Reserve System.
273
TABLE C—22.—Number and money income (in 1972 dollars) offamilies and unrelated individuals
by race of head, 1947-72
Total
White
Negro and other races
With incomes
With incomes
under $3,000 Total
under $3,000
Total
num- Median
num- Median
ber income Number income Number
(milPerber
Per- (mil(mil- cent
lions)
(mil- cent lions)
lions)
lions)
Year
FAMILIES^
1947
1948
1949
37.2
38.6
39 3
$5,665
5,527
5,443
7.6
8.1
8 8
20.4
20.9
22 5
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
39.9
40.6
40.8
41.2
42 0
42.9
43.5
43.7
44 2
45.1
5,757
5,975
6,138
6,630
6,482
6,898
7,357
7,365
7,353
7,769
8.3
77
7.5
7.3
80
7.2
6.5
6.6
67
6.4
20.8
18 9
18.3
17.6
19 1
16.8
15.0
15.1
15.2
14.3
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
45 5
46.3
47.0
47 4
47.8
48.3
49.1
49 8
50.5
51.2
7,941
8,019
8,247
8,543
8,861
9,221
9,667
9,940
10, 381
10,766
6 5
6.5
6.1
5.8
5.4
5.2
4.7
4.5
3.9
3.9
1970
1971
1972
51.9
53.3
54.4
10,617
10,578
11,116
4.1
4.1
3.9
.
..
.
UNRELATED
INDIVIDUALS 2
1947
1948
1949
34.1
35.3
$5,909
5,745
5,662
5.9
6.5
17.4
18.4
19.8
12.0
12.1
11.0
10.3
9.6
9.1
8.3
7.8
6.8
6.6
4 3
4.5
4.6
4 8
4.8
48
50
50
5.1
5.2
4 564
4,461
4,608
4,751
5,183
5,349
6,008
6,380
6,718
7,062
1.4
1.5
1.4
1.4
1.2
1.2
1.1
1.0
.9
.9
33.7
33.4
31.1
29.3
25.4
24.8
?} 6
20.2
17.9
17.3
6.7
6.6
5.9
54
57
5.9
7,018
6,936
7,106
1.0
1.0
1.0
18 ?
18, 4
17.7
10,996
10,948
11,549
3.1
3.1
2.9
7.9
7.7
7.2
46.5
47.6
48.5
49.6
49.0
51.5
1.6
1.5
1.5
1.5
1.5
1.6
4.9
5.1
4.7
4.4
4.1
4.0
3.7
3.5
3.1
3.0
41.1
41.9
42.4
42.7
43.1
43.5
44.1
44.8
45.4
46.0
1.5
1.6
38
3.9
4.0
4.0
40
4.2
8,267
8,390
8,631
8,946
9,256
9,612
10,047
10,318
10, 750
11,168
14.2
14.1
13.0
12.2
11.3
10.7
9.6
9.1
7.8
7.7
$3,023
3,072
2 903
46.2
45.8
39.0
37.5
41.7
38.3
36.4
36.5
37.9
37.5
6.4
5.7
5.1
5.2
5.2
4.8
38 2
39.0
39.5
39.7
40 2
40.9
3.1
3.3
3,248
3 279
3,685
3,868
3 759
3,977
4,052
4,106
3 938
4,178
18.5
16.3
15.7
15.7
16.8
14.7
13.0
13.0
12.9
11.8
5,986
6,224
6,490
6,877
6,749
7,212
7,698
7,669
7,664
8,104
With incomes
under $3,000
Total
num- Median
ber
Num(mil- income ber
Perlions)
(mil- cent
lions)
With incomes
under $1,500
With incomes
under $1,500
With incomes
under $1,500
Number
(millions)
Percent
Number
(millions)
Percent
NumPerber
(mil- cent
lions)
3.0
3.1
41.8
42.6
41.0
8.2
8.4
9.0
$1,866
1,798
1,891
3.5
3.7
38
43.2
44.0
42.5
1950...
1951
1952
1953
1954
1955
1956
1957
1958 . . .
1959
9.4
9.1
9.7
9.5
9.7
9.9
9.8
10.4
10.9
10.9
1,877
1,943
2,235
2,196
1,915
2,064
2,209
2,267
2,207
2,268
41
4.0
37
3.8
4.2
4.0
3.8
3.9
4.1
4.0
43 3
43.7
38.2
40.5
43.4
40.3
39.0
37.6
37.9
37.0
1960...
1961
1962
1963...
1964
1965
1966...
1967
1968
1969.
11.1
11.2
11.0
11.2
12.1
12.1
12.3
13.1
13.8
14.5
2,442
2,456
2,431
2,461
2,686
2,863
3.9
3.8
3.5
3.5
3.6
3.3
35.1
34.3
31.6
31.3
29.6
26.9
2,980
3,349
3,351
3.3
3.0
3.1
1970
1971
1972..
15.4
16.3
16.8
3,383
3,426
3,521
3.2
3.2
3.0
7.2
7.3
$1,955
1,873
1 994
1 959
2,027
2 405
2,320
2,052
2,209
2,275
2,397
2,340
2,404
3.4
3.3
3.2
3.2
3.3
3.3
41.8
42.6
36.9
39.8
41.4
38.4
37.8
35.7
36.2
35.0
2,630
2,644
2,607
2,592
2,830
2,979
3.2
3.1
2.8
2.9
2.9
2.7
32.9
32.0
29.5
29.4
28.0
25.6
25.5
21.7
21.7
9.6
9.6
9.5
9.7
10.4
10.5
10 7
11.3
12.0
12.5
3,117
3,537
3,511
2.7
2.5
2.5
20.7
19.6
17.9
13.4
14.2
14.5
3,537
3,594
3,677
2.6
2.6
2.4
8.3
8.5
8.5
8.9
9.2
9.3
1.0
1.1
$1 397
1,373
L 435
0.5
.6
52.6
53.8
52 0
L 420
494
1,664
1,829
1,359
1,462
1,714
1,510
1,562
1,544
.8
.7
.6
.7
.8
.8
52 0
50.2
46 0
43.7
55.2
51.2
47.2
49.9
48.8
49.3
1,509
1,619
1,733
1,769
1.929
2,171
.7
.8
.7
.7
.6
.6
49.8
47.4
44.1
44.1
39.5
35.2
24.2
20.5
20.1
1.5
1.6
1.5
1.5
1.6
1.7
16
1.8
1.8
2.0
2,284
2,426
2,480
.6
.5
.6
33.3
30.3
32.3
19.1
18.1
16.6
1.9
2.1
2.3
2,428
2,402
2,731
.6
.6
.6
31.7
30.4
26.9
1.4
1.4
1.3
1.5
1.6
1.6
i The term "family" refers to a group of two or more persons related by blood, marriage, or adoption and residing
together; all such persons are considered members of the same family.
3
The term "unrelated individuals" refers to persons 14 years old and over (other than inmates of institutions) who are
not living with any relatives.
Source: Department of Commerce, Bureau of the Census.
274
POPULATION, EMPLOYMENT, WAGES, AND
PRODUCTIVITY
TABLE C-23.—Population by age groups, 1929-73
[Thousands of persons]
Age (years)
July 1
Total
Under 5
5-15
16-19
20-24
25-44
45-64
65 and
over
1929.
121,767
11,734
26,800
9,127
10,694
35, 862
21, 076
6,474
1933.
125, 579
10,612
26,897
9,302
11,152
37,319
22,933
7,363
1939.
130,880
10, 418
25,179
9,822
11,519
39, 354
25, 823
8,764
1940.
1941.
1942
1943.
1944.
132,122
133, 402
134, 860
136, 739
138, 397
10,579
10,850
11,301
12,016
12, 524
24, 811
24, 516
24, 231
24,093
23, 949
9,895
9,840
9,730
9,607
9,561
11,690
11, 807
11,955
12, 064
12, 062
39, 868
40,383
40,861
41, 420
42, 016
26, 249
26,718
27,196
27, 671
28,138
9,031
9,288
9,584
9,867
10,147
1945
1946.
1947.
1948.
1949.
139, 928
141, 389
144,126
146, 631
149,188
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
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
12, 979
13, 244
14, 406
14, 919
15,607
16,410
17,333
17,312
17, 638
18, 057
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
20,337
20, 504
20,448
20,316
20,127
38,496
39,753
41,184
41,640
42, 313
10,694
11,072
11,215
12,004
12,737
11,124
11,450
11,954
12, 707
13,256
47,140
47,089
47, 008
46,996
46,965
36,200
36,714
37,251
37, 794
38,382
16,679
17,108
17,476
17, 785
18,108
1965.
1966
1967
1968
1969
194, 303
196, 560
198,712
200, 706
202,677
19,786
19,171
18, 528
17, 880
17,339
42,944
43,695
44,234
44, 609
44,804
13, 504
14,294
14,212
14,449
14, 804
13,755
14,090
15, 227
15,766
16,465
46,912
46,976
47,188
47,714
48,055
38,997
39,610
40,258
40,890
41,454
18,405
18, 723
19,066
19,396
19,754
1970
1971
1972
1973.
204,879
207, 045
208, 842
210,404
17,156
17,174
17, 006
16,714
44,774
44,441
43,947
43, 227
15,275
15, 634
15,945
16, 308
17,180
18,086
18,021
18,331
48,435
48,809
50,250
51,412
41,974
42,414
42,789
43, 083
20,085
20,487
20,883
21,329
Note.—Includes Armed Forces overseas beginning 1940. Includes Alaska and Hawaii beginning 1950.
Source: Department of Commerce, Bureau of the Census.
275
TABLE C-24.—Noninstitutional population and the labor force,
Year or month
Noninstitutional
population i
Total
labor
force
(includ- Armed
ing
Forcesi
Armed
Forces)
Civilian labor force
Employment
Total
Total
Agricultural
Nonagricultural
1929-73
Labor
force
particiUnem- pation
rate
ploy(total
ment
labor
rate
(percent force as
of
percent
Unem- civilian of nonlabor
instituployforce)
tional
ment
population)
Thousands of persons 14 years of age and over
1929
.
1933
1939
Percent
49,440
260
49,180
47,630
10,450
37,180
1,550
3.2
51, 840
250
51, 590
38, 760
10, 090
28,670
12, 830
24.9
55, 600
370
55, 230
45, 750
9,610
36,140
9,480
17.2
1940
1941
1942
1943
1944
100,380
101,520
102 610
103, 660
104,630
56,180
57,530
60,380
64,560
66,040
540
1,620
3 970
9,020
11,410
55,640
55,910
56,410
55,540
54,630
47,520
50,350
53 750
54,470
53,960
9,540
9,100
9,250
9,080
8,950
37,980
41,250
44 500
45,390
45,010
8,120
5,560
2 660
1,070
670
14.6
9.9
4.7
1.9
1.2
56.0
56.7
58.8
62.3
63.1
1945
1946
1947
105,530
106 520
107; 608
65,300
60 970
61,758
11,440
3 450
1,590
53,860
57,520
60,168
52,820
55 250
57,812
8,580
8 320
8,256
44, 240
46 930
49,557
1,040
2 270
2,356
1.9
3.9
3.9
61.9
57.2
57.4
Thousands of persons 16 years of age and over
1947
1948
1949
103,418
104,527
105,611
60,941
62,080
62,903
1,591
1,459
1,617
59,350
60, 621
61, 286
57,039
58,344
57,649
7,891
7,629
7,656
49,148
50,713
49,990
2,311
2,276
3,637
3.9
3.8
5.9
58.9
59.4
59.6
1950
1951
1952
1953 2
1954
106,645
107 721
108,823
110,601
111,671
63,858
65 117
65,730
66,560
66,993
1,650
3 100
3,592
3,545
3,350
62, 208
62 017
62,138
63,015
63, 643
58,920
59 962
60, 254
61,181
60,110
7,160
6 726
6,501
6,261
6,206
51,760
53 239
53,753
54,922
53,903
3,288
2,055
1,883
1,834
3,532
5.3
3.3
3.0
2.9
5.5
59.9
60.4
60.4
60.2
60.0
1955 . .
1956
1957
1958
1959
112,732
113 811
115;065
116,363
117,881
68,072
69 409
69,729
70,275
70,921
3,049
2 857
2,800
2,636
2,552
65,023
66,552
66,929
67,639
68,369
62,171
63 802
64;071
63,036
64, 630
6,449
6,283
5,947
5,586
5,565
55,724
57,517
58,123
57,450
59,065
2,852
2,750
2,859
4,602
3,740
4.4
4.1
4.3
6.8
5.5
60.4
61.0
60.6
60.4
60.2
119,759
. 121,343
122 981
125,154
127,224
72,142
73,031
73,442
74,571
75,830
2,514
2,572
2,828
2,738
2,739
69,628
70,459
70,614
71,833
73,091
65,778
65,746
66, 702
67,762
69,305
5,458
5,200
4,944
4,687
4,523
60,318
60,546
61,759
63,076
64, 782
3,852
4,714
3,911
4,070
3,786
5.5
6.7
5.5
5.7
5.2
60.2
60.2
59.7
59.6
59.6
129,236
131,180
133,319
135 562
137,841
77,178
78,893
80,793
82,272
84, 240
2,723
3,123
3,446
3 535
3,506
74,455
75,770
77,347
78,737
80, 734
71,088
72,895
74,372
75,920
77,902
4,361
3,979
3,844
3,817
3,606
66,726
68,915
70,527
72,103
74, 296
3,366
2,875
2,975
2,817
2,832
4.5
3.8
3.8
3.6
3.5
59.7
60.1
60.6
60.7
61.1
1970
1971
140 182
142,596
85,903
86,929
3,188
2,817
82,715
84,113
78,627
79,120
3,462
3,387
75,165
75,732
4,088
4,993
4.9
5.9
61.3
61.0
19722
1973 2
145, 775
148,263
88,991
91,040
2,449
2,326
86, 542
88,714
81,702
84,409
3,472
3,452
78, 230
80,957
4,840
4,304
5.6
4.9
61.0
61.4
I960 2 .
1961
1962 2
1963 . . . .
1964
1965
1966
1967
1968
1969
. .
. .
See footnotes at end of table.
276
TABLE C-24.—Noninstitutional population and the labor force,
1929-73—Continued
Civilian labor force
Year or month
Noninstitutional
population i
Total
labor
force
(including
Armed
Forces)
Armed
Forces 1
Employment
Total
Total
Agricultural
Nonagricultural
Unemployment
Labor
force
participation
Unemrate
ploy(total
ment
labor
rate
(percent force as
percent
of
civilian of noninstitulabor
tional
force)
population)
Seasonally adjusted
144,697
144, 895
145, 077
145, 227
145, 427
145,639
88, 315
88,179
88, 664
88, 568
88, 740
88, 854
2,594
2,540
2,504
2,463
2,419
2,393
85, 721
85,639
86,160
86,105
86,321
86, 461
80,637
80,672
81,110
81,153
81, 404
81,623
3,389
3,387
3, 445
3,353
3,378
3,351
77, 248
77, 285
77,665
77, 800
78, 026
78, 272
5,084
4,967
5,050
4,952
4,917
4,838
5.9
5.8
5.9
5.8
5.7
5.6
61.0
60.9
61.1
61.0
61.0
61.0
145,
146,
146,
146,
146,
146,
854
069
289
498
709
923
88,993
89, 337
89,432
89,623
89, 407
89, 701
2,388
2,396
2,405
2,415
2,431
2,440
86,605
86, 941
87, 027
87, 208
86,976
87,261
81,781
82, 083
82, 256
82, 338
82, 486
82,841
3,441
3,593
3,585
3,650
3,490
3,577
78,340
78, 490
78,671
78,688
78, 996
79, 264
4,824
4,858
4,771
4,870
4,490
4,420
5.6
5.6
5.5
5.6
5.2
5.1
61.0
61.2
61.1
61.2
60.9
61.1
1973: Jan..
Feb..
Mar2
Apr..
May.
June.
147,129
147,313
147, 541
147,729
147, 940
148,147
89, 404
90,108
90.523
90;622
90,597
91,133
2,404
2,392
2,361
2,350
2,334
2,315
87, 000
87,716
88,162
88, 272
88, 263
88, 818
82,619
83, 230
83, 782
83, 854
83, 950
84, 518
3,489
3,446
3,469
3,355
3,320
3,430
79,130
79,784
80,313
80,498
80,630
81, 088
4,381
4.486
4,380
4,418
4,313
4,300
5.0
5.1
5.0
5.0
i.9
1.8
60.8
61.2
61.4
61.3
61.2
61.5
July.
Aug.
Sept.
Oct..
Nov.
Dec.
148, 361
148, 565
148,782
149, 001
149, 208
149,436
91,139
91,011
91,664
92.038
92,186
92,315
2,310
2,307
2,292
2,289
2,284
2,282
88, 828
88, 704
89, 373
89, 749
89. 903
90,033
84, 621
84. 513
85, 133
85,649
85,649
85,669
3,512
3,425
3,376
3,455
3,561
3,643
81,109
81, 088
81,757
82,194
82, 088
82, 026
4,207
4.191
4,240
4,100
4,254
4,364
1.7
1.7
\.l
1.6
\.l
1.8
61.4
61.3
61.6
61.8
61.8
61.8
1972: Jan2.
Feb..
Mar..
Apr..
May.
June.
July.
Aug.
Sept.
Oct..
Nov.
Dec.
i
1
Not seasonally adjusted.
2
Not strictly comparable with prior data due to the introduction of population adjustments in the period. The adjustment
beginning January 1972 added 787,000 to the noninstitutional population, 333,000 to the civilian labor force, 301,000 to
civilian employment and 32,000 to unemployment. The adjustment in March 1973 added 60,000 to the civilian labor force
and civilian employment. Unemployment rates were not significantly affected by the adjustments.
Note.—Labor force data in Tables C-24 through C-27 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.
277
TABLE C-25.—Civilian employment and unemployment by sex and age,
1947-73
[Thousands of persons 16 years of age and over]
Employment
Females
Males
Year or
month
Total
Unemployment
20
years
Total 16-19
years and
over
Males
20
Total
Total 16-19 years
years and
over
Total
1947..
1948..
1949..
17,039 40,994
58,344 41,
17,649 40,
2,218 38,776 16,045 1,691 14,354 2,311 1,692
2* 345 39,382 16,618 1,683 14,937 2,276 1,559
2,124 38,803 16,723 1,588 15,137 3,637 2,572
1950..
1951..
1952..
1953 i.
1954..
58,920 41,580
59,962 41,780
60,254 41,684
61,181 42i,431
60,110 41,620
2,186
2,156
2,106
2,135
1,985
1955..
1956..
1957..
1958..
1959..
62,171 42,621
43,380
63,802 43;
64,071 43,357
63,036 "",423
,
64,630 43,,466
19601.
1961..
1962..
19631.
1964..
Females
20
20
16-19 years
16-19 years
years and Total years and
over
over
270 1,422
619
255 1,305
717
352 2,219 1,065
144
152
223
475
564
841
39,394 17,340 1,517 15,824 3,288 2,239
39,626 18,182 ',611 16,570 2,055 1,221
39, 578 18, 570 ,612 16,958 1,883 1,185
40,296 18,750 ,584 17,164 1,834 1,202
39,634 18,490 ,490 17,000 3,532 2,344
318
191
205
184
310
1,922 1,049
834
1,029
698
980
632
1,019
2,035 1,188
195
145
140
123
191
854
689
559
510
997
2,095
2,164
2,117
2,012
2,198
40,526 19,!
1,550
41,2.. 1,422
,
41,239 20,:
),714
40,411:
.
20,613
41,267 21,164
,548
,654
,663
,570
,640
18,002
18,767
19,052
19,043
19,524
2,852
2,750
2,859
4,602
3,740
1,854
1,711
1,841
3,098
2,420
274
269
299
416
398
1,580
1,442
1,541
2,681
2,022
176
823
832
209
821
197
262 1,242
256 1,063
65,778 43,1,904
65, 746 43,
:,656
66,702 44,,177
67,762 44,,657
69,305 45,i, 474
2,360
2,314
2,362
2,406
2,587
41,543 21,,874
41,342 22,1
!,090
41,815 22,!
!,525
42,. 251 23,105
J
42,886 23,831
,769
,793
,833
,849
,929
20,105
20,296
20,693
21,257
21,903
3,852
4,714
3,911
4,070
3,786
2,486
2,997
2,423
2,472
2,205
425
479
407
500
487
2,060 1,366
2,518 1,717
2,016 1,488
1,971 ,598
1,718 ,581
1965..
1966..
1967..
1968..
1969..
71,088 46,i,340
72,895 46,1,919
74,372 47,,479
1,114
75,920 48,
77,902 48,;, 818
2,918 43,422 24,
3,252 43,668 25,
3,18644,:
.
3,255 44,859 27,
3,430 45,388 29,
2,118
2,469
2,497
2, 525
2,686
22.630
23,510
24,397
25,281
26,397
3,366
2,875
2,975
2,817
2,832
1,914
1,551
1,508
1,419
1,403
479 1,435
432 1,120
448 1,060
427
993
441
963
,452
,324
,468
,397
,429
1970..
1971..
19721
19731
8,627 48,960
" 120 49,245
702 50,630
409 51,963
3,407
3,470
3,750
4,017
2,734
2,725
2,972
3,219
26,933
2,235
27,149 4,993 2,776
28,10T 4,840 2,635
29,228 4,304 2,240
599
691
707
647
1,636
2,086
1,928
1,594
1,853
2,217
2.205
2,064
506
567
595
579
1,347
1,650
1,610
1,485
45,553 29,
45,
,
46.880 31,
47,946 32,
998
1,039
1,018
1,504
1,320
286
349
313
383
386
1,080
1,368
1,175
1,216
1,195
395 1,056
921
404
391 1,078
412
985
412 1,016
Seasonally adjusted
2,927 27,788
2,908 27,829
2,948 27,948
2,974 27,922
3,020 27,993
2,955 28,046
5,084
4,967
5,050
4,952
4,917
4,838
2,807
2,838
2,811
2,734
2,699
2,607
747
841
785
708
700
644
2,060
1,997
2,026
2,026
1,999
1,963
2,277
2,129
2,239
2,218
2,218
2,231
648
617
612
607
526
583
1,629
1,512
1,627
1,611
1,692
1,648
81,781 50,705
82,083 50,864
82,256 51,022
82,338 51,068
82,486 51,108
51
82, 841 51,340
3, 718 46,
,987 31,076 2,938 28,138
3,809 47,',055 31,219 2,926 28,293
3, 836 47,
28;
", 186 31,234 2, 954 28,280
3,866 47,,202 31,270 2,997 28,273
3,839 47,,269 31,378 3, 070 28,308
28;
3,866 47,,474 31,501 3,095 28,
"1,406
4,824
4,858
4,771
4,870
4,490
4,420
2,5bO
2,602
2,564
2,615
2,431
2,325
620
736
712
662
695
686
1,930
1,866
1,852
1,953
1,736
1,639
2,274
2,256
2,207
2,255
2,059
2,095
598
614
591
596
566
589
1,676
1,642
1,616
1,659
1,493
1,506
1973: Jan....
Feb...
Mari..
Apr...
May...
June..
82, 619 51,244
83, 230 51, 458
83,782 51, 761
83,854 51,641
83,950 51,597
84,518 51,848
3, 846
3, 945
4, 067
3, 986
3, 929
3,989
3,053 28,1,322
3, 085 28.1,687
3,187 28,834
.
3,177 29,
" "I, 036
3,208 29,,145
3,332 29,338
i,381
•,486
, 380
,418
^ 313
^,300
2,261
2,334
2,311
2,349
2,315
2,231
598
652
632
675
658
630
1,663
1,682
1,679
1,674
1,657
1,601
2,120
2,152
2,069
2,069
1,998
2,069
558
652
573
605
607
557
1,562
1,500
1,496
1,464
1,391
1,512
July...
Aug..
Sept..
Oct...
Nov..
Dec.
84,621 52,037
84,513 51,892
85,133 52; 290
85,649 52,:;638
85,649 52,584
85,669 "I,
52 732
3,950 48,087 32,584 3,103 29,1,481 ,207
3,138 29,i,483 .191
3,900 47,99r 32,621
,
4,152 48,138 32,843 3, 326 29,1,517
240
3,350 29,1,661 4; 100
4,206 48,432
4,159 48,425 .....3,361 29, 704 4,254
4,173 48, 559 32,937 3,341 29, 596 4,364
2,164
2,166
2,172
2,138
2,193
2,182
639
638
659
649
692
656
1,525
1,528
1,513
1,489
1,501
1,526
2,043
2,025
2,068
1,962
2,061
2,182
543
538
586
581
582
609
1,500
1,487
1,482
1,381
1,479
1,573
1972: Jani...
Feb...
Mar .
Apr...
May...
June...
80, 637 49, 922
80, 672 49, 935
81, 110 50,214
81, 153 50,257
81, 404 50,391
81,623 50,622
July...
Aug...
Sept—
Oct....
Nov. .
Dec...
625
562
657
685
46,297 30,715
46,373 30,737
46, 557 30,896
46,572 30,896
47,398 31,375
47,513 31,772
47,694 32,021
47,655 32,213
47,668 32, 353
47,859 32, 670
1 See footnote 2, Table C-24.
Note.—See Note, Table C-24.
Source: Department of Labor, Bureau of Labor Statistics.
278
TABLE C-26.— Selected unemployment rates, 1948-73
[Percent]
B" sex and age
All
workers
Year or month
By color
Both
sexes
16-19
years
Men
20
years
and
over
Women 20
years
and
over
White
By selected groups
ExpeNegro rienced
wage Houseand
and
hold
other salary
races work- heads
ers
Married
men*
Fulltime
workers 2
Bluecollar
workers 3
4.2
8.0
1948
1949
3.8
5.9
9.2
13.4
3.2
5.4
3.6
5.3
3.5
5.6
5.9
8.9
4.3
6.8
3.5
5.4
1950
1951
1952
1953
1954...
1955
1956
1957
1958
1959
5.3
3.3
3.0
2.9
5.5
4.4
4.1
4.3
6.8
5.5
12.2
8.2
8.5
7.6
12.6
11.0
11.1
11.6
15.9
14.6
4.7
2.5
2.4
2.5
4.9
3.8
3.4
3.6
6.2
4.7
5.1
4.0
3.2
2.9
5.5
4.4
4.2
4.1
6.1
5.2
4.9
3.1
2.8
2.7
5.0
3.9
3.6
3.8
6.1
4.8
9.0
5.3
5.4
4.5
9.9
8.7
8.3
7.9
12.6
10.7
6.0
3.7
3.3
3.2
6.2
4.8
4.4
4.6
7.2
5.7
4.6
1.5
1.4
1.7
4.0
2.8
2.6
2.8
5.1
3.6
5.0
2.6
2.5
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
5.5
6.7
5.5
5.7
5.2
4.5
3.8
3.8
3.6
3.5
14.7
16.8
14.7
17.2
16.2
14.8
12.8
12.8
12.7
12.2
4.7
5.7
4.6
4.5
3.9
3.2
2.5
2.3
2.2
2.1
5.1
6.3
5.4
5.4
5.2
4.5
3.8
4.2
3.8
3.7
4.9
6.0
4.9
5.0
4.6
4.1
3.4
3.4
3.2
3.1
10.2
12.4
10.9
10.8
9.6
8.1
7.3
7.4
6.7
6.4
5.7
6.8
5.6
5.5
5.0
4.3
3.5
3.6
3.4
3.3
3.7
3.2
2.7
2.2
2.1
1.9
1.8
3.7
4.6
3.6
3.4
2.8
2.4
1.9
1.8
1.6
1.5
4.9
5.9
5.6
4.9
15.2
16.9
16.2
14.5
3.5
4.4
4.0
3.2
4.8
5.7
5.4
4.8
4.5
5.4
5.0
4.3
8.2
9.9
10.0
8.9
4.8
5.7
5.3
4.5
2.9
3.6
3.3
2.9
.
1970
1971
1972
1973
Labor
force
time
lost*
7.2
3.9
3.6
3.4
7.2
5.8
5.1
6.2
10.2
7.6
4.8
5.1
5.3
8.1
6.6
5.5
4.9
4.2
3.5
3.4
3.1
3.1
7.8
9.2
7.4
7.3
6.3
5.3
4.2
4.4
4.1
3.9
6.7
8.0
6.7
6.4
5.8
5.0
4.2
4.2
4.0
3.9
2.6
3.2
2.8
2.3
4.5
5.5
5.1
4.3
6.2
7.4
6.5
5.3
5.3
6.4
6.0
5.2
5.2
3.8
3.7
4.0
7.2
6.7
Seasonally adjusted
5.9
5.8
5.9
5.8
5.7
5.6
17.6
18.4
17.5
16.5
15.4
15.5
4.3
4.1
4.2
4.2
4.1
4.0
5.5
5.2
5.5
5.5
5.7
5.5
5.3
5.2
5.3
5.3
5.2
5.1
11.0
10.6
10.4
9.4
10.1
9.5
5.6
5.5
5.5
5.3
5.4
5.2
3.5
3.4
3.4
3.4
3.5
3.5
3.0
2.9
2.8
2.9
2.8
2.9
5.4
5.3
5.3
5.3
5.3
5.1
7.1
7.0
7.0
6.8
6.6
6.5
6.3
6.0
6.2
6.0
6.1
5.9
5.6
5.6
5.5
5.6
5.2
5.1
15.5
16.7
16.1
15.5
15.4
15.5
3.9
3.8
3.8
4.0
3.5
3.3
5.6
5.5
5.4
5.5
5.0
5.0
5.0
5.1
5.0
5.1
4.6
4.5
9.8
9.7
9.9
10.1
9.9
9.6
5.3
5.3
5.2
5.3
4.8
4.8
3.3
3.2
3.3
3.4
2.9
2.8
2.8
2.6
2.7
2.8
2.5
2.4
5.1
5.1
4.9
5.1
4.6
4.5
6.5
6.4
6.0
6.0
5.7
5.6
5.9
6.0
5.8
5.9
5.4
5.4
1973: Jan
Feb.
Mar
Apr.
May
June
5.0
5.1
5.0
5.0
4.9
4.8
14.4
15.6
14.2
15.2
15.1
14.0
3.4
3.4
3.4
3.4
3.4
3.2
5.2
5.0
4.9
4.8
4.6
4.9
4.6
4.6
4.4
4.5
4.4
4.3
8.9
9.0
9.0
9.2
9.2
8.8
4.6
4.7
4.6
4.7
4.5
4.4
3.0
3.0
3.0
3.0
2.9
2.9
2.4
2.4
2.5
2.4
2.3
2.3
4.6
4.6
4.5
4.5
4.3
4.3
5.6
5.7
5.5
5.4
5.3
5.3
5.3
5.4
5.3
5.3
5. 2
5.2
July
Aug
Sept
Oct.
Nov
Dec
4.7
4.7
4.7
4.6
4.7
4.8
14.4
14.3
14.3
14.0
14.5
14.4
3.1
3.1
3.0
3.0
3.0
3.0
4.8
4.8
4.8
4.4
4.7
5.0
4.1
4.2
4.2
4.1
4.2
4.4
9.2
8.8
9.2
8.4
8.9
8.6
4.4
4.4
4.4
4.2
4.5
4.6
2.7
2.8
2.7
2.7
2.8
2.8
2.1
2.1
2.1
2.1
2.1
2.2
4.2
4.2
4.2
4.1
4.3
4.4
5.2
5.2
5.1
5.1
5.4
5.2
5.1
5.1
5.1
5.1
5.2
5.4
1972: Jan
Feb . .
Mar
Apr
May
June
July
Aug .
Sept
Oct......
Nov
Dec
i Married men living with their wives. Data for 1949 and 1951-54 are for April; 1950, for March,
a Data for 1949-61 are for May.
3 Includes craft and kindred workers, operatives, and nonfarm laborers. Data for 1948-57 are based on data for
January,
April, July, and October.
4
Man-hours lost by the unemployed and persons on part-time for economic reasons as a percent of potentially available
labor force man-hours.
Note.—See footnote 2 and Note, Table C-24.
Source: Department of Labor, Bureau of Labor Statistics.
279
TABLE O27.—Unemployment by duration, 1947-73
Duration of unemployment
Total unemployment
Year or month
Less than
5 weeks
5-14
weeks
15-26
weeks
27 weeks
and over
Average
(mean)
duration
in weeks
Thousands of persons 16 years of age and over
1947
1948
1949
2,311
2,276
3,637
1,210
1,300
1,756
704
669
1,194
234
193
428
164
116
256
8.6
10.0
1950
1951
1952
1953
1954
3,288
2,055
1,883
1,834
3,532
1,450
1,177
1,135
1 142
1,605
1,055
574
516
482
1,116
425
166
148
132
495
357
137
84
78
317
12.1
9.7
8.4
8.0
11.8
2,852
2,750
2,859
4,602
3,740
1,335
1,412
1,408
1,753
1,585
815
805
891
1,396
1,114
366
301
321
785
469
336
232
239
667
571
13.0
11.3
10.5
13.9
14.4
3,852
4,714
3,911
4,070
3,786
1,719
1,806
1,663
1,751
1,697
1,176
1,376
1,134
1,231
1,117
503
728
534
535
491
454
804
585
553
482
12.8
15.6
14.7
14.0
13.3
1965
1966
1967
1968
1969
3,366
2,875
2,975
2,817
2,832
1,628
1,573
1,634
1,594
1,629
983
779
893
810
827
404
287
271
256
242
351
239
177
156
133
11.8
10.4
8.8
8.4
7.9
1970
1971
1972
1973
4,088
4,993
4,840
4,304
2,137
2,234
2,223
2,196
1,289
1,578
1,459
1,296
427
665
597
475
235
517
562
337
8.7
11.3
12.0
10.0
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
.
.
.
.
. . . .
.
.
..
Seasonally adjusted i
1972: Jan
Feb
Mar
Apr
May
June
July
Aug
Sept
Oct
Nov
Dec
1973: Jan
Feb
Mar
Apr
May
June
July
Aug
Sept
Oct
Nov
Dec
. ...
.
..
5,084
4,967
5,050
4,952
4,917
4,838
2,362
2,116
2,325
2,197
2,203
2,237
1,508
1,470
1,425
1,507
1,517
1,458
642
654
605
530
594
604
592
647
619
642
584
554
12.1
12.4
12.2
12.5
12.3
12.5
4,824
4,858
4,771
4 870
4,490
4,420
2,212
2,233
2,310
2 285
2,158
1,982
1,486
1,506
1,383
1,436
1,365
1,423
643
614
569
581
558
519
518
535
549
512
470
458
11.9
12.0
12.1
11.8
11.4
11.3
4,381
4,486
4,380
4,418
4 313
4,300
2,081
2,264
2,168
2,207
2 251
2,244
1,369
1,264
1,337
1,487
1,287
1,210
510
533
496
467
470
463
407
365
373
320
348
326
10.9
10.5
10.5
10.0
10.0
9.7
4,207
4,191
4,240
4,100
4,254
4,364
2,225
2,206
2,158
2,001
2,243
2,308
1,267
1,220
1,339
1,283
1,235
1,270
478
446
476
431
469
409
277
331
292
325
351
331
9.8
10.0
9.4
10.3
10.0
9.3
i Because of independent seasonal adjustment of the various series, detail will not add to totals.
Note—See footnote 2 and Note, Table C-24.
Source: Department of Labor, Bureau of Labor Statistics.
280
T A B L E C—28.—Unemployment insurance programs, selected data,
State programs
All programs
Year or month
Covered
employment*
Insured
unemployment
(weekly
average) 23
Total
benefits
Insured
paid
unem(milploylions
ment 3
of dollars) 2 i
Initial
claims
Exhaustions*
Insured unemployment as percent of covered
employment
Unadjusted
Weekly average, thousands
Thousands
1946..
1947..
1948..
1949..
1946—73
Seasonally adjusted
Benefits paid
Total
(millions of
dollars)*
Average
weekly
check
(dollars)*
Percent
31,856
33,876
34,646
33,098
2,804 2, 878. 5
1,793 1, 785. 5
1,446 1, 328. 7
2,474 2, 269.8
1,295
997
980
1,973
189
187
200
340
38
24
20
37
4.3
3.1
3.0
6.2
1,094.9
775.1
789.9
1.736.0
18.50
17.83
19.03
20.48
1950.
1951.
1952..
1953..
1954..
1955..
1956.
1957.
1958..
1959..
34,308
36,334
37,006
38,072
36,622
40,018
42,751
43,436
44,411
45,728
1,605
1,000
1,069
1,067
2,051
1,399
1,323
1,571
3,269
2,099
1, 467.6
862.9
1,043. 5
1,050.6
2, 291.8
1,560.2
1, 540.6
1.913.0
4, 290.6
2, 854. 3
1,513
969
1,044
990
1,870
1,265
1,215
1,446
2,526
1,684
236
208
215
218
304
226
111
270
369
277
36
16
18
15
34
25
20
23
50
33
4.6
2.8
2.9
2.8
5.2
3.5
3.2
3.6
6.4
4.4
1.373.1
840.4
998.2
962.2
2,026.9
1,350.3
1,380.7
1,733.9
3, 512.7
2.279.0
20.76
21.09
22.79
23.58
24.93
25.04
27.02
28.17
30.58
30.41
1960.
1961.
1962.
1963..
1964.
1965..
1966.
1967.
1968.
1969.
46,334
46, 266
47,776
48,434
49,637
51, 580
54,739
56,342
57, 977
59,999
2,071 3,022. 8
2,994 4, 358.1
1,946 3.145.1
1,973 3, 025. 9
1,753 2,749. 2
1,450 2, 360. 4
1,129 1,890.9
1,270 2, 221. 5
1,187 2,191. 0
1,177 2, 298. 6
1,908
2,290
1,783
7 1,806
1,605
1,328
1,061
1,205
1,111
1,101
331
350
302
7 298
268
232
203
226
201
200
31
46
32
30
26
21
15
17
16
16
4.8
5.6
4.4
4.3
3.8
3.0
2.3
2.5
2.2
2.1
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
32.87
33.80
34.56
35.27
35.92
37.19
39.75
41.25
43.43
46.17
3,848.5
4,957.0
4,550.0
4,105.0
50.34
54.02
56.03
58.50
1970...
1971 . . .
1972 p..
1973 P . .
59, 526
8 59,375
2,070
2,313
2,185
1,783
4,179.1
5,498.2
5,000.0
4,441.8
1,805
2,150
1,848
1,627
296
295
261
246
25
38
37
30
3.4
4.1
3.5
2.8
1972: J a n " . .
Feb*._
Mar»»..
Apr'..
Mayp..
June p..
3,097
3,122
2,922
2,430
2,105
1,951
530.1
548.9
593.2
449.0
423.1
383.1
2,524
2,492
2,279
2,005
1,740
1,636
385
293
242
237
216
250
40
40
40
43
39
36
4.8
4.7
4.3
3.8
3.3
3.1
3.5
3.6
3.6
3.6
3.6
3.6
484.7
502.9
541.9
407.9
381.2
344.4
55.50
56.04
57.21
57.12
56.40
55.23
July * . .
Aug*._
Sept*.
Oct *___
2,087
1,763
1,554
1,512
1,692
1,994
375.2
391.1
307.8
304.1
325.3
350.2
1,823
1,565
1,388
1,357
1,507
1,801
321
213
190
214
253
324
35
33
29
27
28
28
3.4
2.9
2.6
2.5
2.7
3.3
3.6
3.4
3.4
3.3
3.2
3.0
338.6
349.7
274.7
273.7
294.4
320.9
55.75
55.53
60.16
56.95
57.59
58.35
1973: Jan p . .
Feb p..
Mar p..
Apr p..
May p..
June p.
2,333
2,250
2,075
1,828
1,610
1,523
509.2
447.0
473.9
393.3
365.9
309.4
2,124
2,061
1,898
1,669
1,465
1,384
331
249
213
216
193
206
33
32
33
33
31
28
3.8
3.7
3.4
2.8
2.5
2.4
2.7
2.8
2.8
2.7
2.7
2.7
471.4
416.4
441.0
365.7
339.2
286.6
58.69
59.08
59.09
59.41
58.44
58.12
July p..
Aug p..
Sept p Oct p . . .
1,640
1,572
1,440
1,451
1,665
2,003
320.9
346.9
273.9
309.3
320.9
371.2
1,505
1,436
1,299
1,298
1,501
1,889
275
212
186
210
265
395
27
27
25
24
29
32
2.5
2.4
2.1
2.1
2.4
3.1
2.6
2.7
2.8
2.8
2.8
2.9
296.3
316.3
248.3
280.7
301.4
341.6
57.42
57.46
58.13
58.97
58.63
58.71
Dec P
NOVP..
Dec p . .
1
Includes persons under the State, UCFE (Federal employee, effective January 1955), and RRB (Railroad Retirement
Board) programs. Beginning October 1958, also includes the UCX program (unemployment compensation for ex-servicemen).
2 Includes State, UCFE, RR, UCX, UCV (unemployment compensation for veterans, October 1952-January 1960), and
SRA (Servicemen's Readjustment Act, September 1944-September 1951) programs. Also includes Federal and State
extended benefit programs.
3
Covered workers who have completed at least 1 week of unemployment.
4
Annual data are net amounts and monthly data are gross amounts. Monthly data exclude extended benefit payments.
8
Individuals receiving final payments in benefit year. Data for New Jersey not available for April-June 1971.
8
For total unemployment only. Excludes data for New Jersey for April-December 1971.
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 89 percent of
the total.
Source: Department of Labor, Manpower Administration.
281
TABLE C—29.—Wage and salary workers in nonagricultural establishments, 1929—73
'All employees; thousands of persons]
Manufacturing
Total
wage
and
salary
workers
Year or
month
Total
Durable
goods
Nondurable
goods
Mining
Contract
construction
Transportation
and
public
utilities
Wholesale
and
retail
trade
Finance,
insurance,
and
real
estate
Services
Government
Federal
State
and
local
1929
31,339
10,702
1,087
1,497
3,916
6,123
1,509
3,440
533
1933
23,711
7,397
744
809
2,672
4,755
1,295
2,873
565
2,601
1939
30,618
10, 278
4,715
5,564
854
1,150
2,936
6,426
1,462
3,517
905
3,090
1940
1941
1942
1943
1944
32,376
36,554
40,125
42,452
41, 883
10, 985
13,192
15, 280
17,602
17,328
5,363
6,968
8,823
11,084
10, 856
5,622
6,225
6,458
6,518
6,472
925
957
992
925
892
1,294
1,790
2,170
1,567
1,094
3,038
3,274
3,460
3,647
3,829
6,750
7,210
7,118
6,982
7,058
1,502
1,549
1,538
1,502
1,476
3,681
3,921
4,084
4,148
4,163
996
1,340
2,213
2,905
2,928
3,206
3,320
3,270
3,174
3,116
40,394
41,674
43, 881
44,891
43, 778
15, 524
14,703
15, 545
15, 582
14,441
9,074
7,742
8,385
8,326
7,489
6,450
6,962
7,159
7,256
6,953
836
862
955
994
930
1,132
1,661
1,982
2,169
2,165
3,906
4,061
4,166
4,189
4,001
7,314
8,376
8,955
9,272
9,264
1,497
1,697
1,754
1,829
1,857
4,241
4,719
5,050
5,206
5,264
2,808
2i 254
1,892
1,863
1,908
3,137
3,341
3,582
3,787
3,948
45, 222
47,849
48,825
50, 232
49,022
15,241
16,393
16,632
17,549
16,314
8,094
9,089
9,349
10,110
9,129 •
7,147
7,304
7,284
7,438
7,185
901
2,333
2,603
2,634
2,623
2,612
4,034
4,226
4,248
4,290
4,084
9,386
9,742
10,004
10,247
10,235
1,919
1,991
2,069
2,146
2,234
5,382
5,576
5,730
5,867
6,002
1,928
2,302
2,420
2,305
2,188
4,098
4,087
4,188
4,340
4,563
50,675
52,408
52,894
51,363
53,313
16,882
17, 243
17,174
15,945
16,675
9,541
9,834
9,856
8,830
9,373
7,340
7,409
7,319
7,116
7,303
792
822
2,802
2,999
2,923
2,778
2,960
4,141
4,244
4,241
3,976
4,011
10, 535
10,858
10,886
10,750
11,127
2,335
2,429
2,477
2,519
2,594
6,274
6,536
6,749
6,806
7,130
2,187
2,209
2,217
2,191
2,233
4,727
5,069
5,399
5,648
5,850
1960
1961
1962
1963 .
1964
54,234
54,042
55, 596
56,702
58,331
16,796
16,326
16,853
16,995
17,274
9,459
9,070
9,480
9,616
9,816
7,336
7,256
7,373
7,380
7,458
2,885
2,816
2,902
2,963
3,050
4,004
3,903
3,906
3,903
3,951
11,391
11,337
11, 566
11,778
12,160
2,669
2,731
2,800
2,877
2,957
7,423
7,664
8,028
8,325
8,709
2,270
2,279
2,340
2,358
2,348
6,083
6,315
6,550
6,868
7,?48
1965
1966
1967
1968
1969
60, 815
63,955
65, 857
67,915
70, 284
18,062
19,214
19,447
19,781
20,167
10,406
11,284
11,439
11,626
11,895
7,656
7,930
8,008
8,155
8,272
632
3,186
3,275
3,208
3,285
3,435
4,036
4,151
4,261
4,310
4,429
12,716
13, 245
13,606
14,084
14,639
3,023 9,087
3,100 9,551
3,225 10,099
3,382 10,623
3,564 11,229
2,378
2,564
2,719
2,737
2,758
7,696
8,227
8,679
9,109
9,444
1970
1971
1972
1973
70, 593
70,645
72, 764
75,570
19,349
18, 529
18, 933
19,821
11,195
10, 565
10, 884
11,634
8,154
7,964
8,049
8,187
623
602
3,381
3,411
3,521
3,649
4,493
4,442
4,495
4,610
14,914
15,142
15,683
16,294
3,688
3,796
3,927
4,053
2,705 9,830
2,664 10,191
2,650 10,640
2,624 11,028
1945
1946 .
1947
1948
1949
.
1950
1951
1952
1953
1954
1955 .
1956
1957
1958
1959
P.
..
929
898
866
791
828
751
732
712
672
650
635
634
627
613
606
619
607
625
See footnotes at end of table.
282
11,612
11,869
12, 309
12,865
2,532
TABLE C-29.—Wage and salary workers in nonagricultural establishments,
1929-73—Continued
[All employees; thousands of persons]
Manufacturing
Year or
month
Total
wage
and
salary
workers
Total
Durable
goods
Nondurable
goods
Mining
Contract
construction
Transportation
and
public
utilities
Government
Wholesale
and
retail
trade
Finance,
insurance,
and
real
estate
Services
Federal
State
and
local
Seasonally adjusted
1971: J a n . . ,
Feb...
Mar..
Apr...
May..
June..
70,329
70,276
70,321
70,457
70,601
70,570
18,685
18,611
18,531
18, 530
18, 581
18,519
10,681
10,625
10,560
10,562
10, 599
10,569
8,004
7,986
7,971
7,968
7,982
7,950
624
622
621
624
623
621
3,326
3,303
3,349
3,396
3,401
3,400
4,468
4,487
4,470
4,462
4,465
4,451
15,005
15,020
15,029
15,059
15,094
15,092
3,741
3,744
3,752
3,764
3,780
3,795
11,766
11, 762
11,794
11,808
11,823
11,844
2,655
2,655
2,655
2,660
2,663
2,652
10,059
10,072
10,120
10,154
10,171
10,196
July..
Aug.Sept..
Oct...
Nov—
Dec—
70,533
70,529
70,897
70,861
71,078
71,264
18, 468
18,410
18,532
18,486
18, 523
18, 499
10,529
10,478
10,562
10, 540
10, 552
10,537
7,939
7,932
7,970
7,946
7,971
7,962
601
613
618
519
523
611
3,411
3,405
3,436
3,472
3,522
3,475
4,438
4,401
4,425
4,406
4,403
4,432
15,130
15,175
15,232
15,254
15, 280
15, 333
3,803
3,808
3,821
3,835
3,847
3,855
11,853
11,853
11,942
11,951
11, 997
12,030
2,656
2,668
2,673
2,672
2,668
2,664
10,173
10,196
10,218
10, 266
10,315
10, 365
1972: J a n . . .
Feb...
Mar...
Apr...
May..
June..
71, 545
71,747
72,033
72, 224
72, 534
72,705
18, 544
18,620
18,694
18,780
18,864
18,931
10,573
10,630
10,682
10, 750
10,821
10,857
7,971
7,990
8,012
8,030
8,043
8,074
615
612
613
605
605
601
3,519
3,494
3,512
3,500
3,532
3,540
4,455
4,438
4,482
4,476
4,481
4,486
15, 391
15, 456
15,520
15, 561
15,624
15,678
3,863
3,874
3,885
3,892
3,913
3,927
12, 069
12,112
12,151
12,194
12,252
12,315
2,669
2,665
2,662
2,662
2,665
2,639
10, 420
10,476
10, 514
10, 554
10, 598
10, 588
July..
Aug.Sept..
Oct...
Nov—
Dec...
72,694
73,016
73,268
73, 584
73,835
74,002
18,893
18,975
19,069
19,210
19,312
19, 402
10,867
10,933
11,003
11,112
11,194
11,270
8,026
8,042
8,066
8,098
8,118
8,132
601
603
606
608
608
607
3,499
3,544
3,551
3,561
3,524
3,459
4,477
4,487
4,507
4,540
4,549
4,558
15,685
15,762
15, 794
15,839
15,911
15, 946
3,927
3,940
3,953
3,969
3,981
3,991
12, 341
12, 382
12,403
12, 451
12, 497
12, 537
2,613
2,624
2,633
2,639
2,644
2,650
10,658
10,699
10, 752
10,767
10,809
10,852
1973:Jan... 74,252
F e b . . . 74,715
Mar... 74,914
Apr... 75,105
May... 75,321
June.. 75,526
19,463
19,586
19,643
19, 727
19,782
19,856
11,326
11,421
11,463
11,534
11,602
11,654
8,137
8,165
8,180
8,193
8,180
8,202
610
612
610
608
608
629
3,498
3,594
3,604
3,571
3,620
3,654
4,574
4,580
4,580
4,591
4,593
4,597
16,013
16,114
16,163
16,217
16,256
16,262
3,995
4,014
4,024
4,031
4,044
4,049
12,621
12,682
12,716
12, 746
12,776
12, 820
2,634
2,628
2,631
2,628
2,641
2,613
10,844
10,905
10,943
10,986
11,001
11,046
19,804
19,861
19,882
20,016
20,087
20,113
11,646
11,692
11,708
11,802
11,854
11,870
8,158
8,169
8,174
8,214
8,233
8,243
631
634
633
639
643
646
3,680
3,676
3,700
3,694
3,707
3,753
4,598
4,617
4,629
4,671
4,651
4,633
16,294
16,352
16, 388
16,465
16,529
16,456
4,048
4,064
4,078
4,088
4,093
4,099
12,828
12,906
12,995
13,044
13,122
13,127
2,588
2,599
2,613
2,626
2,638
2,623
11,007
11,038
11,043
11,120
11,172
11,227
July...
Aug...
Sept.Oct....
Nov P .
75,478
75,747
75,961
76,363
76,642
Dec V. 76,677
Note.—Data in Tables C-29 through C-31 are based on reports from employing establishments and relate to full- and
part-time wage and salary workers in nonagricultural establishments who worked during, or received pay for, any part of
the pay period which includes the 12th of the month.
Not comparable with labor force data (Tables C-24 through C - 2 7 ) , which include proprietors, self-employed persons,
domestic servants, and unpaid family workers, and which count persons as employed when they are not at work because
of industrial disputes, bad weather, etc.
For description and details of the various establishment data, see "Employment and Earnings."
Source: Department of Labor, Bureau of Labor Statistics.
283
TABLE C-30.—Average weekly hours and hourly earnings in selected private nonagricultural
industries, 1947-73
[For production or nonsupervisory workers]
Average gross hourly earnings,
current dollars
Average weekly hours
Year
or
month
ConTotal
private Manu- tract
nonag- factur- construcriculing
tion
tural i
Total
Retail private
Manunon- facturtrade 2 agriing
cultural 1
Contract
construction
Adjusted hourly earnings,
total private nonagricultural 3
Index,
1967=100
Retail
trade 2
Percent
change
from
preceding
period
Current
dollars
1967
dollars*
Current
dollars
1967
dollars
1947
1948
1949
40.3
40.0
39.4
40.4
40.0
39.1
38.2
38.1
37.7
40.3 $1,131 $1,217 $1,541 $0.838
40.2 1.225 1.328 1.713
.901
40.4 1.275 1.378 1.792
.951
42.6
46.0
48.2
63.7
63.8
67.5
8 0
4.8
0 2
5.8
1950
1951
1952
1953
1954
39.8
39.9
39.9
39.6
39.1
40.5
40.6
40.7
40.5
39.6
37.4
38.1
38.9
37.9
37.2
40.4
40.4
39.8
39.1
39.2
1.335
1.45
1.52
1.61
1.65
1.440
1.56
1.65
1.74
1.78
1.863
2.02
2.13
2.28
2.39
.983
1.06
1.09
1.16
1.20
50.0
53.7
56.4
59.6
61.7
69.3
69.0
70.9
74.4
76.6
3.7
7.4
5.0
5.7
3.5
2.7
-.4
2.8
4.9
3.0
39.6
39.3
38.8
38.5
39.0
40.7
40.4
39.8
39.2
40.3
37.1
37.5
37.0
36.8
37.0
39.0
38.6
38.1
38.1
38.2
1.71
1.80
1.89
1.95
2.02
1.86
1.95
2.05
2.11
2.19
2.45
2.57
2.71
2.82
2.93
1.25
1.30
1.37
1.42
1.47
63.7
67.0
70.3
73.2
75.8
79.4
82.3
83.4
84.5
86.8
3.2
5.2
4.9
4.1
3.6
3.7
3.7
1.3
1.3
2.7
1960
1961
1962
1963
1964-
38.6
38.6
38.7
38.8
38.7
39.7
39.8
40.4
40.5
40.7
36.7
36.9
37.0
37.3
37.2
38.0
37.6
37.4
37.3
37.0
2.09
2.14
2.22
2.28
2.36
2.26
2.32
2.39
2.46
2.53
3.08
3.20
3.31
3.41
3.55
1.52
1.56
1.63
1.68
1.75
78.4
80.8
83.5
85.9
88.6
88.4
90.2
92.2
93.7
95.3
3.4
3.1
3.3
2 9
3.1
1.8
2.0
2.2
1.6
1.7
1965
1966
1967
1968
1969
38.8
38.6
38.0
37.8
37.7
41.2
41.3
40.6
40.7
40.6
37.4
37.6
37.7
37.4
37.9
36.6
35.9
35.3
34.7
34.2
2.45
2.56
2.68
2.85
3.04
2.61
2.72
2.83
3.01
3.19
3.70
3.89
4.11
4.41
4.79
1.82
1.91
2.01
2.16
2.30
91.9
95.6
100.0
106.6
113.6
97.2
98.4
100.0
102.3
103.5
3.7
4.0
4.6
6.6
6.6
2.0
1.2
1.6
2.3
1.2
1970
1971
1972
1973 P.
37.1
37.0
37.2
37.1
39.8
39.9
40.6
40.7
37.4
37.3
37.0
37.1
33.8
33.7
33.6
33.2
3.22
3.43
3.65
3.89
3.36
3.56
3.81
4.06
5.24
5.69
6.06
6.46
2.44
2.57
2.70
2.86
121.2
129.7
137.9
146.5
104.2
106.9
110.1
110.1
6.7
7.0
6.3
6.2
.7
2.6
3.0
.0
....
1955
1956
1957
1958
1959
.
Seasonally
adjusted
annual rates'
Seasonally adjusted
1972: Jan
Feb
Mar
Apr
May
June
37.0
37.2
37.1
37.3
37.1
37.1
40.1
40.5
40.4
40.7
40.5
40.6
37.2
37.3
37.2
36.8
36.8
36.9
33.7
33.6
33.7
33.7
33.7
33.8
$3.55
3.56
3.59
3.62
3.62
3.63
$3.69
3.71
3.74
3.76
3.78
3.79
$5.91
5.93
5.96
6.00
6.01
6.01
$2.65
2.65
2.66
2.67
2.68
2.69
134.5
134.8
135.6
136.6
136.7
137.2
109.0
108.8
109.3
109.9
109.7
109.9
9.4
3.0
7.4
8.7
1.3
4.3
6.1
-2.7
6.1
6.3
-2.3
2.8
July
Aug
Sept
Oct
Nov
Dec
37.2
37.1
37.3
37.3
37.2
37.0
40.6
40.6
40.8
40.7
40.8
40.7
37.0
37.0
36.9
37.4
36.9
35.8
33.6
33.6
33.6
33.5
33.5
33.6
3.65
3.67
3.69
3.73
3.73
3.75
3.79
3.83
3.86
3.88
3.89
3.93
6.02
6.07
6.10
6.15
6.19
6.29
2.71
2.72
2.73
2.74
2.75
2.77
138.0
138.5
139.3
140.4
140.7
141.9
110.1
110.2
110.4
110.9
110.8
111.5
7.0
4.3
7.8
9.3
2.9
10.3
2.1
1.0
2.5
5.1
-.8
7.6
1973: Jan . .
Feb
Mar
Apr
May
June
36.9
37.2
37.1
37.2
37.2
37.1
40.3
41.0
40.9
40.9
40.7
40.6
36.1
36.2
37.0
37.0
37.5
37.4
33.4
33.5
33.4
33.4
33.4
33.5
3.77
3.78
3.81
3.84
3.85
3.87
3.97
3.96
3.98
4.01
4.02
4.04
6.37
6.29
6.31
6.35
6.34
6.43
2.77
2.79
2.80
2.82
2.83
2.86
142.3
142.5
143.3
144.4
144.7
146.0
111.3
110.7
110.4
110.5
110.1
110.4
3.9
1.4
7.4
9.2
3.0
10.6
-2.1
-6.6
-3.2
1.2
-4.1
3.4
July
Aug
Sept
Oct
Nov p . . . .
Dec v
37.2
37.0
37.2
37.0
37.1
37.0
40.7
40.5
40.8
40.6
40.7
40.7
37.5
37.1
36.7
36.9
38.5
37.1
33.2
33.0
33.2
33.0
33.0
33.0
3.91
3.92
3.96
3.98
3.99
4.02
4.07
4.09
4.13
4.16
4.16
4.19
6.46
6.50
6.59
6.59
6.64
6.68
2.87
2.89
2.92
2.93
2.94
2.95
146.9
147.6
149.0
149.6
150.2
151.4
110.9
109.3
110.0
109.5
109.1
109.4
8.1
5.6
11.9
5.2
4.7
10.1
5.2
-16.0
7.7
-4.9
-4.9
3.1
...
...
1
Also includes other private industry groups shown in Table C-29.
2
Includes eating and drinking places.
3 Adjusted for overtime (in manufacturing only) and for interindustry employment shifts.
< Current dollar earnings index divided by the consumer price index.
1
Computed from indexes to two decimal places.
Note.-See Note, Table C-29.
Source: Department of Labor, Bureau of Labor Statistics.
284
TABLE C-31.—.•Average weekly earnings in selected private nonagricultural industries;
1947-73
[For production or nonsupervisory workers]
Average spendable weekly earnings, total
private nonagricultural4
Average gross weekly earnings
Year or month
Total private
nonagricultural l
Current
dollars
1967
dollars 2
Manu- Contract
facturing construction
Retail
trade 3
Current dollars
Percent change from
preceding period
Amount
Current
dollars
1967
dollars 2
Current
dollars
1967
dollars
1947..
1948..
1949..
$45.58
49.00
50.24
$68.13
67.96
70.36
$49.17
53.12
53.88
$58.87
65.27
67.56
$33.77
36.22
38.42
$44.64
48.51
49.74
$66.73
67.28
69.66
8.7
2.5
0.8
3.5
1950..
1951..
1952..
1953..
1954..
53.13
57.86
60.65
63.76
64.52
73.69
74.37
76.29
79.60
80.15
58.32
63.34
67.16
70.47
70.49
69.68
76.96
82.86
86.41
88.91
39.71
42.82
43.38
45.36
47.04
52.04
55.79
57.87
60.31
60.85
72.18
71.71
72.79
75.29
75.59
4.6
7.2
3.7
4.2
.9
3.6
-.7
1.5
3.4
.4
1955..
1956..
1957..
1958..
1959..
67.72
70.74
73.33
75.08
78.78
84.44
86.90
86.99
86.70
90.24
75.70
78.78
81.59
82.71
88.26
90.90
96.38
100.27
103.78
108.41
48.75
50.18
52.20
54.10
56.15
63.41
65.82
67.71
69.11
71.86
79.06
80.86
80.32
79.80
82.31
4.2
3.8
2.9
2.1
4.0
4.6
2.3
-.*6
3.1
I960..
1961..
1962..
1963..
1964..
80.67
82.60
85.91
88.46
91.33
90.95
92.19
94.82
96.47
98.31
89.72
92.34
96.56
99.63
102.97
113.04
118.08
122.47
127.19
132.06
57.76
58.66
60.96
62.66
64.75
72.96
74.48
76.99
78.56
82.57
82.25
83.13
84.98
85.67
1.5
2.1
3.4
2.0
5.1
-.1
1.1
2.2
.8
3.7
1965..
1966..
1967..
1968..
1969..
95.06
98.82
101.84
107.73
114.61
100.59
101.67
101.84
103.39
104.38
107.53
112.34
114.90
122.51
129.51
138.38
146.26
154.95
164.93
181.54
66.61
68.57
70.95
74.95
78.66
86.30
88.66
90.86
95.28
99.99
91.32
91.21
90.86
91.44
91.07
4.5
2.7
2.5
4.9
4.9
2.7
-.1
-.4
.6
-.4
1970..
1971..
1972..
1973 P.
119.46
126.91
135.78
144.32
102.72
104.62
108.36
108.43
133.73
142.04
154.69
165.24
195.98
212.24
224.22
239.67
82.47
86.61
90.72
94.95
104.61
112.12
120.79
126.55
89.95
92.43
96.40
95.08
4.6
7.2
7.7
4.8
-1.2
2.8
4.3
-1.4
Seasonally adjusted
annual rates
Seasonally adjusted
1972:Jan.
Teb_
Mar
Apr.
May_
June
$131.35
132.43
133.19
135.03
134.30
134.67
$106.48
106.84
107.35
108.63
107.72
107.88
$147.97
150.26
151.10
153.03
153.09
153.87
$219.85
221.19
221.71
220.80
221.17
221.77
$89.31
89.04
89.64
89.98
90.32
90.92
$117.30
118.15
118.75
120.20
119.63
119.92
$95.09
95.32
95.71
96.70
95.95
96.07
«4.7
9.1
6.3
15.7
-5.5
2.9
M.8
2.9
5.0
13.1
-8.9
1.5
July.
Aug.
Sept
Oct.
Nov.
Dec
135.78
136.16
137.64
139.13
138.76
138.75
108.35
108.36
109.07
109.89
109.28
109.05
153.87
155.50
157.49
157.92
158.71
159.95
222.74
224.59
225.09
230.01
228.41
225.18
91.06
91.39
91.73
91.79
92.13
93.07
120.79
121.09
122.26
123.43
123.14
123.14
96.39
96.36
96.89
97.49
96.98
96.78
9.1
3.0
12.2
12.1
-2.8
.0
4.1
-.4
6.8
7.7
-6.1
-2.4
1973:Jan.
Feb.
Mar
Apr.
May.
June
139.11
140.62
141.35
142.85
143.22
143. 58
108.79
109.22
108.83
109.30
108.94
108.60
159.99
162.36
162.78
164.01
163.61
164.02
229.96
227.70
233.47
234.95
237.75
240.48
92.52
93.47
93.52
94.19
94.52
95.81
122. 51
123.70
124.26
125.42
125.70
125.98
95.81
96.08
95.67
95.96
95.61
95.29
5 2.1
12.3
5.6
11.8
2.7
2.7
«-4.0
3.4
-5.0
3.7
-4.3
-3.9
July.
Aug.
Sept
Oct..
145.45
145.04
147.31
147.26
148.03
148.74
109.77
107.39
108.72
107.80
107.52
107.45
165.65
165.65
168. 50
168.90
169.31
170.53
242.25
241.15
241. 85
243.17
255.64
247.83
95.28
95.37
96.94
96.69
97.02
97.35
127.42
127.11
128.86
128.82
129.42
129.96
96.16
94.11
95.11
94.30
94.00
93.88
14.6
-2.9
17.8
-.4
5.7
5.1
11.5
-22.8
13.5
-9.8
-3.8
-1.5
Nov
Dec
1 Also includes other private industry groups shown in Table C-29.
» Earnings in current dollars divided by the consumer price index.
3 Includes eating and drinking places.
* Average gross weekly earnings less social security and income taxes for a worker with three dependents,
s In annualizing the rates of change, the effect of the change in tax rates at the beginning of 1972 and 1973 is taken into
account separately.
Note.—See Note, Table C-29.
Source: Department of Labor, Bureau of Labor Statistics.
285
527-867 O - 74 - 19
TABLE C-32.—Output per man-hour and related data, private economy, 1947-73
[1967 = 100]
Output^
Year or quarter
Total
private
Man-hours 3
Output per
man-hour
Compensation
per man-hour3
Unit labor
costs
Implicit price
deflator*
Private
Total Private Total Private Total Private Total Private
Total Private
nonnon- private nonnonnonnonfarm private farm
farm private farm private farm private farm
1947
1948
1949
45.6
47.8
47.6
44.5
46.5
46.4
88.8
89.2
86.2
78.0
79.1
76.0
51.3
53.6
55.3
57.1
58.8
61.1
36.2
39.5
40.1
38.3
41.8
43.0
70.6
73.7
72.5
67.1
71.0
70.3
66.4
70.9
70.2
63.8
68.2
68.7
1950
1951
1952
1953
1954
52.5
55.8
57.2
60.1
59.3
51.3
55.0
56.3
59.1
58.3
87.9
90.7
91.2
92.0
88.6
79.0
82.9
84.1
85.9
82.6
59.7
61.5
62.7
65.3
66.9
65.0
66.3
66.9
68.9
70.5
42.8
46.9
49.8
52.9
54.5
45.3
49.3
52.0
54.9
56.6
71.7
76.3
79.4
81.0
81.5
69.7
74.3
77.6
79.7
80.3
70.9
76.1
77.5
78.1
79.1
69.4
74.0
75.9
77.2
78.5
1955
1956
1957
1958
1959
64.3
65.6
66.5
65.6
70.2
63.4
64.7
65.7
64.8
69.5
92.1
93.7
92.3
88.4
91.2
86.1
88.4
87.9
84.5
87.6
69.9
70.0
72.0
74.3
76.9
73.6
73.2
74.8
76.7
79.3
55.9
59.5
63.3
66.0
69.0
58.6
62.0
65.5
68.1
71.0
80.1
85.0
87.9
88.9
89.8
79.6
84.7
87.6
88.7
89.5
79.8
82.3
85.3
87.1
88.3
79.5
82.3
85.3
86.8
88.3
I960
1961
1962
1963
1964
71.9
73.2
78.2
81.5
86.2
71.1
72.5
77.6
80.9
85.9
92.0
90.6
92.4
92.9
94.5
88.6
87.7
89.8
90.9
92.9
78.2
80.9
84.7
87.7
91.1
80.3
82.7
86.4
89.1
92.4
71.7
74.4
77.7
80.8
84.9
73.9
76.3
79.3
82.2
86.1
91.8
92.1
91.8
92.1
93.1
92.0
92.3
91.8
92.3
93.2
89.5
90.4
91.2
92.2
93.2
89.6
90.4
91.2
92.3
93.4
1965
1966
1967
1968
1969
91.8
97.7
100.0
104.8
107.7
91.5
97.9
100.0
105.1
108.0
97.4
99.7
100.0
101.8
104.2
96.3
99.5
100.0
102.1
105.1
94.2
98.0
100.0
102.9
103.3
95.1
98.4
100.0
102.9
102.7
88.4
94.5
100.0
107.6
115.8
89.2
94.6
100.0
107.3
114.8
93.8
96.5
100.0
104.6
112.1
93.9
96.2
100.0
104.3
111.8
94.8
97.2
100.0
103.6
108.3
94.8
96.8
100.0
103.5
108.1
1970
1971
1972
1973
107.2
110.9
118.1
125.5
107.3
111.0
118.7
126.6
102.6
102.0
104.7
108.1
103.8
103.2
106.0
109.6
104.4
108.7
112.8
116.1
103.4
107.6
112.1
115.5
124.6
133.3
142.4
153.5
123.2
131.8
140.9
151.6
119.3
122.6
126.2
132.2
119.1
122.5
125.7
131.2
113.5
118.4
121.8
128.3
113.5
118.5
121.3
126.2
Seasonally adjusted
1971: I
II
III....
IV....
109.2
110.1
111.1
113.1
109.2
110.2
111.2
113.3
101.6
101.9
101.7
102.7
102.9
103.0
102.9
103.8
107.5
108.0
109.3
110.1
106.1
107.0
108.1
109.1
130.1
132.2
134.7
136.1
128.4
130.9
133.1
134.6
121.0
122.4
123.3
123.6
120.9
122.3
123.1
123.3
116.9
118.2
119.1
119.3
117.1
118.4
119.3
119.3
1972: I
II
III —
IV....
114.5
117.4
119.1
121.5
114.9
117.9
119.9
122.3
103.5
104.4
105.1
105.9
104.6
105.9
106.2
107.1
110.7
112.5
113.3
114.8
109.8
111.3
112.9
114.2
139.4
141.4
143.1
145.7
137.8
139.5
141.8
144.2
125.9
125.7
126.3
126.9
125.5
125.3
125.6
126.2
120.7
121.2
122.0
123.1
120.6
120.8
121.4
122.3
1973: I
II....
III-..IV*
124.2
125.0
126.1
126.5
125.1
126.3
127.6
127.5
106.7
107.7
108.6
109.2
108.2
109.5
110.2
110.7
116.4
116.1
116.2
115.8
115.6
115.3
115.9
115.1
149.6
151.9
154.6
157.6
147.9
149.8
152.7
155.7
128.5
130.9
133.1
136.1
127.9
129.8
131.8
135.2
124.8
127.1
129.3
131.8
123.6
125.4
126.8
128.9
i Output refers to gross national product in 1958 dollars.
> Hours of all persons in private industry engaged in production, including man-hours of proprietors and unpaid family
workers. Man-hours estimates based primarily on establishment data.
3 Wages and salaries of employees plus employers' contribution for social insurance and private benefits plans. Also
includes an estimate of wages, salaries, and supplemental payments for the self-employed.
« Current dollar gross product divided by constant dollar product.
Note.—Data relate to all persons.
Source: Department of Labor, Bureau of Labor Statistics.
286
TABLE C-33.—Changes in output per man-hour and related data, private economy, 1948-73
[Percent change from preceding period]
Man-hours2
Output »
Output per
man-hour
Compensation
per man-hour3
Unit labor
costs
Implicit price
deflator*
Year or quarter
Total
private
Private
Private Total Private Total Private
Total Private
Total
Total
nonnonnonnonnonfarm private farm private farm private farm private farm private
1948..
1949..
4.8
-.3
4.4
-.1
1950..
1951..
1952..
19531954..
10.2
6.3
2.5
5.1
-1.3
10.6
7.0
2.5
5.1
-1.5
1955..
19561957..
1958..
1959..
8.5
1.9
1.4
-1.3
7.0
I960..
19611962..
1963..
1964..
1965..
1966..
1967..
1968..
1969..
1970...
1971...
1972...
1973*..
0.4
Private
nonfarm
1.3
-3.9
4.5
3.2
3.0
4.0
9.0
1.5
9.0
2.9
4.3
-1.6
5.8
-1.0
6.7
-1.0
6.8
-3.7
4.0
4.9
1.5
2.1
-3.8
8.1
3.0
1.9
4.2
2.4
6.3
2.0
.9
2.9
2.3
6.8
9.6
6.1
6.3
3.1
5.5
8.7
5.5
5.6
3.2
-1.2
6.4
4.1
2.0
.6
6.6
4.5
2.6
.9
1.0
7.3
1.9
.7
1.2
1.1
6.5
2.6
1.8
1.7
2.0
1.6
-1.5
7.3
3.9
1.7
-1.5
-4.2
3.3
4.2
2.6
-.6
-3.9
3.7
4.4
.2
2.9
3.1
3.6
4.4
-.6
2.2
2.5
3.4
2.6
6.4
6.5
4.2
4.6
3.5
5.8
5.7
3.8
4.3
-1.7
6.2
3.5
1.1
1.0
-.9
6.4
3.4
1.3
.9
.9
3.2
3.6
2.1
1.4
1.3
3.4
3.7
1.7
1.8
2.4
1.9
6.8
4.2
5.7
2.4
1.9
7.1
4.3
6.1
.8
-1.5
2.0
.6
1.8
1.1
-1.0
2.5
1.2
2.3
1.6
3.5
4.7
3.6
3.9
1.2
3.0
4.6
3.1
3.7
3.9
3.8
4.4
4.0
5.0
4.1
3.2
4.0
3.6
4.7
2.2
.3
-.3
.4
1.1
2.8
.2
-.5
.5
1.0
1.4
.9
.9
1.0
1.2
1.4
.9
.9
1.2
1.3
6.6
6.4
2.3
4.8
2.8
6.6
7.0
2.2
5.1
2.8
3.1
2.4
.3
1.8
2.3
3.6
3.3
2'.1
.2.9
3.4
4.0
2.1
2.9
,4
2.9
3.5
1.6
2.9
-.1
4.1
6.9
5.8
7.6
7.6
3.7
6.1
5.7
7.3
7.0
.7
2.8
3.7
4.6
7.1
2.5
4.0
4.3
7.2
1.7
2.5
2.9
3.6
4.5
1.4
2.2
3.3
3.5
4.5
-.5
3.5
6.5
6.2
-.6
3.4
7.0
6.6
-1.5
-.6
2.7
3.2
-1.3
-.6
2.7
3.5
1.0
4.1
3.8
2.9
.7
4.0
4.2
3.1
7.6
7.0
6.8
7.8
7.3
7.0
6.9
7.6
6.5
2.8
2.9
44.7
6.6
2.8
2.6
4.4
4.8
4.3
2.9
5.3
5.0
4.4
2.3
4.0
-3.4
2.0
3.2
.5
.8
Seasonally adjusted annual rates
1971: I
II
Ill
IV
9.9
3.2
3.7
7.2
9.7
3.7
3.8
7.7
1.2
1.1
-.9
3.9
1.3
.6
-.4
3.6
8.6
2.0
4.7
3.2
8.3
3.1
4.3
4.0
8.0
6.6
7.7
4.4
7.7
8.0
6.9
4.6
-0.6
4.5
2.9
1.3
-0.6
4.7
2.5
.7
4.3
4.8
2.8
.8
4.2
4.4
3.0
-.1
1972: I
II
Ill
IV
5.4
10.4
5.8
8.4
5.6
11.0
7.0
8.3
3.2
3.6
2.6
3.0
3.0
5.0
1.3
3.4
2.1
6.5
3.1
5.2
2.5
5.7
5.6
4.7
9.9
5.9
4.9
7.4
9.9
5.2
6.7
6.8
7.6
-.5
1.7
2.0
7.2
-.5
1.0
2.0
4.9
1.5
2.8
3.5
4.4
1.0
1.9
2.9
9.3
2.6
3.6
1.2
9.2
3.9
4.4
-.4
3.3
3.8
3.2
2.5
4.0
4.8
2.6
2.1
5.8
-1.2
.4
-1.3
5.0
-.8
1.8
-2.4
11.3
6.3
7.3
8.0
10.7
5.3
8.0
8.3
5.2
7.6
6.9
9.3
5.4
6.2
6.1
10.9
5.7
7.5
7.3
7.7
4.3
5.9
4.7
6.9
1973: I
II
III---.-
i Output refers to gross national product in 1958 dollars.
3 Hours of all persons in private industry engaged in production, including man-hours of proprietors and unpaid family
workers. Man-hours estimates based primarily on establishment data.
3 Wages and salaries of employees plus employers' contribution for social insurance and private benefits plans. Also
includes an estimate of wages, salaries, and supplemental payments for the self-employed.
* Current dollar gross product divided by constant dollar product.
Note.—Data relate to all persons.
Percent changes are based on original data and therefore may differ-slightly from percent changes based on indexes
in Table C-32.
Source: Department of Labor, Bureau of Labor Statistics.
287
PRODUCTION AND BUSINESS ACTIVITY
TABLE C-34.—Industrial production indexes, major industry divisions, 1929-73
{1967=1001
Total
industrial
production
Year or month
Manufacturing
Mining
Total
Durable
Utilities
Nondurable
1929 .
21.6
22.8
22.6
23.0
44.4
7.2
1933
13.7
14.0
9.1
19.7
31.5
6.5
1939
21.7
21.5
17.8
25.9
43.4
10.4
1940—
1941
1942
1943
1944 .
1945—
1946
1947
1948
1949
25.0
31.6
36.3
44.0
47.4
40.6
35.0
39.4
41.0
38.8
25.4
32.4
37.8
47.0
50.9
42.6
35.3
39.4
40.9
38.7
23.7
31.6
40.1
54.5
60.2
45.5
31.8
37.9
39.5
35.9
27.2
32.9
34.3
36.7
38.2
38.1
39.3
40.9
42.2
41.5
48.2
51.2
52.8
54.0
57.9
56.8
55.8
63.1
66.3
58.8
11.5
13.0
14.6
16.1
17.1
17.4
18.1
19.6
21.9
23.3
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
44.9
48.7
50.6
54.8
51.9
58.5
61.1
61.9
57.9
64.8
45.0
48.6
50.6
55.1
51.5
58.2
60.5
61.2
56.9
64.1
43.7
49.2
52.2
59.0
52.0
59.5
61.5
61.9
54.2
62.2
46.2
47.8
48.7
50.7
51.0
56.6
59.5
60.5
61.0
67.0
65.7
72.1
71.5
73.4
71.9
80.2
84.4
84.5
77.5
81.1
26.5
30.3
32.8
35.6
38.3
42.8
47.0
50.2
52.5
57.8
66.2
66.7
72.2
76.5
81.7
89.2
97.9
100.0
105.7
110.7
65.4
65.6
71.4
75.8
81.2
89.1
98.3
100.0
105.7
110.5
63.3
62.1
69.0
73.5
79.0
88.5
99.0
100.0
105.5
110.0
68.6
70.7
75.1
79.2
84.4
90.0
97.3
100.0
106.0
111.1
82.7
83.2
85.6
89.0
91.1
93.9
98.4
100.0
103.9
107.2
61.8
65.3
70.2
75 1
81.9
86.9
93 6
100.0
109.4
119.5
106.6
106.8
115.2
125.6
105.2
105.2
114.0
125.2
101.4
99.4
108.4
122.1
110.6
113.5
122.1
129.7
109.7
107.0
108.8
110.0
128.3
133.9
143.4
152.2
-
I960
1961
1962
1963
1964
1965
1966
1967
1968
1969
-
1970
1971
1972
1973*
Seasonally adjusted
1972: Jan
Feb
Mar
Apr
May
June
108.7
UO.O
111.6
113.2
113.8
114.4
107.1
108.5
110.0
111.8
112.6
113.1
100.4
102.1
103.4
105.7
106.5
107.5
116.8
117.8
119.5
120.7
121.3
121.4
107.3
107.2
108.4
109.4
108.0
108.6
137.4
139.7
140.0
141.2
142.0
141.5
July
Aug
Sept
Oct
Nov
Dec
.
115.1
116.3
117.6
119 2
120.2
121.1
114.3
115.4
117.0
118 5
119.5
120.4
108.8
109.7
111.6
113 8
115.3
116.3
122.5
123.6
124.8
125.2
125.6
126.2
108.6
108.8
110.8
110.2
109.7
108.2
143.3
144.9
146.4
147.1
148.2
148.5
1973- Jan
Feb
Mar . .
Apr . . .
May
June
122.2
123 4
123 7
124 1
124.9
125.6
121.4
122 7
123 4
123 8
124.9
125.6
117.5
118 7
119 9
120 6
121.9
123.0
127.0
128 4
128.6
128.4
129.2
129.3
108.5
110.2
109.5
109.0
109.1
109.5
151.0
150.5
149.6
148.7
149. 5
151.6
126.7
126.5
126.8
127.0
127.3
126.6
126.5
126.1
126.3
126.3
126.9
127.1
123.8
122.6
123.3
123.6
124.1
124.0
130.6
130.9
130.7
130.3
131.2
131.4
111.0
111.5
111.8
111.3
110.4
108.9
154.8
154.8
155.8
156.2
153.5
144.5
July
Aug
SeDt
Oct
Nov v
Dec v
Source: Board of Governors of the Federal Reserve System.
288
T A B L E C—35.—Industrial production indexes, market groupings,
1947—73
[1967=1001
Materials 2
Final products
Year or
month
Total
industrial
production
Consumer goods i
Total
Total
Equipment
Automotive
products
Home
goods
Total
Intermediate
products
Total
Business
Durable
goods
Nondurable
goods
1947
1948
1949
39.4
41.0
38.8
38.3
39.7
38.5
42.7
44.0
43.8
47.8
50.0
49.6
39.1
40.8
37.7
29.7
31.2
27.9
38.0
39.5
34.5
42.5
44.9
42.6
39.7
41.4
37.8
39.1
40.2
36.0
40.9
37.8
1950
1951
1952
1953
1954
44.9
48.7
50.6
54.8
51.9
43.4
46.8
50.3
53.7
50.8
50.0
49.5
50.6
53.7
53.3
62.4
55.2
49.7
62.8
58.4
52.0
44.8
44.8
50.7
46.8
30.2
42.1
50.5
54.7
47.9
37.0
45.2
51.2
53.2
46.8
49.6
52.0
51.7
55.3
55.1
45.2
50.0
50.7
56.3
52.0
45.3
51.6
52.7
61.5
53.1
43.6
47.1
47.3
50.2
50.3
1955
1956
1957
1958
1959
58.5
61.1
61.9
57.9
64.8
54.9
58.2
59.9
57.1
62.7
59.5
61.7
63.2
62.6
68.7
77.7
63.9
66.9
53.2
66.8
55.2
58.1
56.8
53.6
61.6
48.9
53.7
55.9
50.0
54.9
50.7
58.7
61.0
51.5
57.9
62.6
65.3
65.3
63.9
70.5
61.5
63.1
63.1
56.8
65.5
65.0
65.2
65.1
54.8
65.3
56.9
59.5
59.3
58.1
65.0
1960
1961
1962
1963
1964
66.2
66.7
72.2
76.5
81.7
64.8
65.3
70.8
74.9
79.6
71.3
72.8
77.7
82.0
86.8
76.4
69.8
84.5
92.5
96.8
62.0
63.9
69.4
74.9
81.7
56.4
55.6
61.9
65.6
70.1
59.4
57.7
62.7
65.8
74.7
71.0
72.4
76.9
81.1
87.3
66.4
66.4
72.4
77.0
82.6
66.1
64.6
71.8
76.6
82.7
65.9
68.2
72.9
77.1
82.1
1965
1966
1967
1968
1969
89.2
97.9
100.0
105.7
110.7
86.8
96.1
100.0
105.8
109.0
93.0
98.6
100.0
106.6
111.1
112.3
108.8
100.0
117.9
117.4
91.4
100.7
100.0
106.9
111.6
78.7
93.0
100.0
104.7
106.1
84.4
98.8
100.0
103.4
107.9
93.0
99.2
100.0
105.7
112.0
91.0
99.8
100.0
105.7
112.4
93.0
103.0
100.0
105.0
112.2
88.5
96.3
100.0
106.9
112.8
1970
1971
1972
1973
106.6
106.8
115.2
125.6
104.5
104.7
111.9
121.2
110.3
115.7
123.6
131.7
99.9
119.5
127.7
136.8
107.6
112.6
124.5
140.4
96.3
89.4
95.5
106.7
101.4
96.8
106.1
122.6
111.7
112.5
121.1
131.1
107.7
107.4
117.4
129.3
103.2
101.7
113.5
130.1
112.5
114.1
122.5
129.1
Seasonally adjusted
1972: Jan...
Feb..
Mar..
Apr..
May..
June.
108.7
110.0
111.6
113.2
113.8
114.4
106.4
107.6
108.5
110.4
110.8
111.0
118.5
119.6
119.9
122.5
122.6
122.7
116.6
119.5
121.3
130.5
125.8
125.1
118.1
120.7
119.1
124.7
124.3
124.9
89.5
90.9
92.6
93.5
94.1
94.7
98.4
99.9
101.5
102.8
104.0
104.7
115.9
117.0
117.5
117.9
118.9
119.4
109.2
110.8
113.7
115.1
115.8
117.1
103.5
105.8
107.8
110.2
111.3
112.6
116.0
117.0
121.2
121.3
121.6
122.8
July..
Aug..
Sept.
Oct..
Nov..
Dec.
115.1
116.3
117.6
119.2
120.2
121.1
111.6
112.6
113.6
115.3
116.3
116.8
123.3
124.3
125.2
127.0
127.4
127.7
125.3
126.0
125.4
132.3
138.3
142.9
124.1
124.3
125.8
127.3
126.9
130.5
95.3
96.3
97.7
98.9
100.7
101.5
105.5
107.2
109.6
111.6
113.4
114.4
119.8
122.3
122.8
124.7
127.6
127.7
117.8
118.8
120.9
122.3
122.8
124.4
113.0
114.5
118.1
120.2
121.4
123.5
124.0
124.7
124.6
125.3
124.6
126.4
1973: Jan..
Feb..
Mar.
Apr.
May.
June
July.
Aug..
Sept..
Oct...
122.2
123.4
123.7
124.1
124.9
125.6
118.6
119.3
119.6
120.0
120.8
121.3
129.8
130.2
130.8
130.9
131.7
131.9
138.6
141.7
144.1
141.7
142.6
142.6
134.5
135.8
138.3
139.8
140.9
141.3
102.9
104.1
104.1
104.7
105.7
106.6
116.9
118.2
118.6
119.6
121.3
122.5
128.4
129.5
129.4
129.3
130.5
132.0
124.5
126.7
127.0
127.7
128.3
129.0
124.1
126.6
127.6
127.9
128.6
129.2
126.3
127.7
127.1
128.5
128.9
129.4
126.7
126.5
126.8
127.0
NOVP.
127.3
Dec v. 126.6
122.1
121.4
122.4
122.8
123.2
122.0
132.9
131.2
132.3
132.8
133.2
130.7
141.7
121.1
129.8
130.9
134.1
122.9
142.9
141.1
142.9
142.3
141.5
141.0
107.3
107.6
108.5
108.8
109.3
109.9
123.0
124.6
125.8
126.2
127.1
127.6
132.5
132.1
131.0
130.5
131.2
131.0
130.9
130.9
131.3
131.5
131.3
131.0
131.6
131.8
132.3
133.0
133.4
133.6
130.4
130.6
130. 3
129.9
129.5
129.7
i Also includes apparel and consumer staples, not shown separately.
> Also includes industrial fuel and power, not shown separately.
Source: Board of Governors of the Federal Reserve System.
289
T A B L E C—36.—Industrial production indexes, selected manufactures, 1947—73
[1967=100]
Durable manufactures
Year or
month
Primary
metals
TransFabricated
Ma- portation 1 nstrumetal chinery
equip- ments
prodment
ucts
Nondurable manufactures
Ordnance,
private
and
government
Lum- Furniture
ber,
and
clay,
and miscelglass laneous
ChemTexicals,
tiles, Paper
petro- Foods
and
apparel, printleum,
and
and
and tobacco
leather ing rubber
64.8
67.4
56.7
50.2
51.1
46.1
31.0
33.9
34.0
24.5
25.2
22.5
7.8
9.0
9.2
1950
1951
1952
1953
1954
71.4
77.7
70.9
80.4
65.0
56.5
60.4
58.9
66.5
59.9
41.7
40.7
45.4
52.8
66.2
57.6
26.1
30.0
35.7
39.2
39.6
11.4
42.2
52.0
63.2
48.4
64.7
53.7
65.7
52.2
35.4
63.2
1955
1956
1957
1958
1959
84.5
84.0
80.4
63.8
74.5
68.3
69.3
71.1
63.7
71.5
46.7
52.2
52.0
45.4
53.9
66.3
64.3
68.9
54.3
61.5
44.2
48.5
50.7
47.7
55.2
36.1
31.8
35.9
44.4
46.1
73.8
75.9
73.3
71.4
82.2
65.8
68.7
67.1
62.1
68.7
73.4
75.1
73.4
71.8
79.6
57.8
61.5
62.2
61.5
67.0
41 2
43 5
45.8
46.5
53.8
66.6
70.3
71.5
73.6
77.2
1960
1961
1962
1963
1964
74.2
72.9
78.2
84.3
95.7
71.6
69.8
75.9
78.4
83.3
56.2
57.1
64.8
67.9
74.3
63.7
59.9
69.3
75.9
79.6
57.8
57.3
59.8
66.4
71.3
46.4
39.2
45.0
51.6
50.7
78.5
79.7
84.3
88.9
94.0
69.7
70.6
76.1
79.5
84.7
79.2
80.2
84.3
86.9
91.9
69.2
71.0
74.3
78.4
84.5
55 6
58.3
64.5
70.0
75 9
79.2
81.5
84.0
87.0
90.6
1965
1966
1967
1968
1969
104.0
108.8
100.0
103.2
114.1
92.6
100.5
100.0
106.3
113.6
84.1
98.6
100.0
101.9
106.8
91.3
101.2
100.0
109.7
107.6
82.9
95.3
100.0
106.7
116.1
60.5
75.1
100.0
113.7
111.6
98.7
102.6
100.0
105.6
111.1
93.8
100.8
100.0
106.2
111.6
97.8
101.7
100.0
104.9
105.9
90.5
98.9
100.0
104.2
109.1
83.8
94.1
100.0
109.6
118.4
92.6
97.0
100.0
103.6
107.5
1970
1971
1972
1973 P.
106.9
100.9
113.1
127.0
109.4
107.4
114.8
130.8
100.3
96.2
107.5
125.9
90.4
92.9
99.0
109.2
110.8
108.5
120.2
138.3
95.3
86.1
86.0
85.3
106.3
111.5
120.0
129.4
108.8
111.7
122.7
135.3
100.2
100.7
108.1
114.7
107.8
107.8
116.1
122.3
118.2
124.7
137.8
149.3
110.8
113.7
117. 6
122.0
1947
1948
1949
. .
..
.
Seasonally adjusted
102.4
102.6
104 9
108.3
110.1
111.3
106.0
108.6
110.2
111.5
112.9
114.5
98.5
99.5
100.8
103.3
104.9
106.6
92.0
94.7
96.1
100.0
98.3
97.4
111.3
114.5
114.5
116.7
118.2
120.7
83.2
83.7
86.4
86.4
86.4
87.7
115.5
118.0
117.2
117.4
117.9
118.5
115.0
117.3
118.3
119.7
121.1
122.1
102.0
101.1
104 2
107.0
106.8
107.5
111.3
112.6
115 0
112.7
114.0
114.6
129.8
132.6
133 6
136.4
137.3
136.9
115.7
115.9
116 3
117.7
117.6
117.9
Nov.
Dec
115.1
114.3
119.7
122.1
122.9
125.4
114.3
116.6
118.0
120.4
122.2
122.3
108.4
109.7
111.8
114.0
115.7
116.8
97.7
98.1
99.5
102.7
105.0
106.6
121.7
122.7
124.3
125.0
125.1
126.6
86.6
86.5
84.8
85.2
87.3
87.8
120.0
121.0
121.9
124.9
124.5
123.7
123.7
126.2
126.6
126.9
126.6
127.7
109.0
109.7
111.2
112.1
113.0
113.2
117.0
117.6
117.7
119.9
120.0
120.3
138.5
140.0
142.2
141.6
142.0
143.8
117.0
118.3
118.6
118.5
119.0
118.5
1973: Jan
Feb
Mar
Apr
May
June
123.1
124 7
123.5
125.8
126.1
124.5
125.7
126 2
128.4
128.9
130.3
133.4
118.4
119.1
121.4
122.6
124.7
126.9
107.6
110.0
110.3
110.0
111.0
112.2
130.1
131.9
133.8
134.7
138.9
140.2
87.0
87.6
87.1
86.4
85.4
86.7
126.4
127.3
129.1
129.9
130.3
129.2
130.3
132.8
133.4
133.1
136.0
135.4
113.4
114.4
114.6
114.0
113.3
115.0
120.0
121.5
122.4
120.8
121.9
122.8
145.5
146.3
146.3
147.9
150.2
149.8
119.6
122.0
121.5
120.7
121.5
119.5
128.1
125.6
127.8
130.8
130.0
130.4
133.5
133.8
131.5
132.6
132.9
134.1
127.6
128.5
130.0
128.5
130.5
131.0
112.1
105.7
107.3
108.9
108.3
103.3
140.8
140.9
141.5
141.0
141.8
143.5
86.7
83.8
83.7
83.9
82.3
83.3
129.8
129.2
128.8
129.7
130.7
132.5
135.9
137.5
138.2
136.1
135.4
137.3
114.5
115.4
117.5
116.2
116.2
116.0
123.8
124.5
122.1
121.3
121.7
122.6
151.8
151.0
150.9
151.1
151.0
151.6
121.3
122.0
122.2
121.9
124.8
124.4
1972: Jan.
Feb
Mar
Apr
..
May
June
July
Aug
s e
o c f!:::::
July
Aug
Sept
Oct
Nov p . . . .
Dec*
Source: Board of Governors of the Federal Reserve System.
290
TABLE C-37.—Capacity utilization rate in manufacturing and major materials industries, 1948-73
Manufacturing
Utilization rate3
Period
Output^
Capacity
Total
Primary
processing
1967 output= 100
Advanced
processing
Major
materials
industries,
utilization
rate'
Percent
41.5
39.1
44.8
47.3
92.7
82.7
98.1
83.8
89.8
82.1
87.9
77.0
45.4
49.3
50.9
55.4
51.4
49.4
51.8
54.9
58.1
61.2
91.9
95.1
92.8
95.5
84.1
97.8
100.1
91.2
94.3
82.9
88.8
92.5
93.7
96.1
84.7
88.5
91.4
82.3
87.3
78.4
58.1
60.3
61.1
56.9
64.0
64.4
68.3
74.8
75.7
78.6
90.0
88.2
84.5
75.1
81.4
93.7
90.7
85.2
75.2
82.7
87.7
86.9
84.1
75.0
80.7
89.8
90.6
84.5
76.0
81.5
I960
1961
1962
1963
1964
65.3
65.6
71.3
75.7
81.1
81.6
84.5
87.7
91.2
94.8
80.1
77.6
81.4
83.0
85.5
79.4
78.2
81.8
84.0
88.0
80.3
77.3
81.1
82.5
84.2
79.4
79.8
82.0
85.0
89.3
1965
1966
1967
1968
1969
89.0
98.1
100.0
105.6
110.4
100.0
106.7
113.7
120.5
127.7
89.0
91.9
87.9
87.7
86.5
91.1
92.1
85.7
86.8
88.5
87.8
91.8
89.1
88.1
85.4
90.7
91.2
86.8
89.5
90.7
105.3
105.2
114.0
125.1
134.6
140.3
145.0
150.7
78.3
75.0
78.6
83.0
81.5
79.3
84.6
89.8
76.5
72.7
75.4
79.4
86.6
85.8
90.2
94.9
1948
1949
1950
1951
1952
1953
1954
-VlTT
1955
1956
1957
1958
1959
.
..
.
-. .
1970
1971
1972
.
1973*
. . .
.
Seasonally adjusted
1968: 1
II
III
IV
.
1969: 1
II
III
.
.
.
.
IV
1970: 1
II
Ill
IV
.
.
1971: 1
II
III
IV
1972: 1
II
Ill
IV
1973:
1 *
II v
\\\v
IV*
103.5
105.3
106.3
107.3
117.9
119.6
121.3
123.0
87.9
88.1
87.6
87.2
86.1
87.6
86.6
87.0
88.8
88.3
88.2
87.3
90.6
90.6
88.4
88.6
109.5
110.4
111.8
110.1
124.9
126.7
128.6
130.5
87.7
87.1
86.9
84.3
88.6
88.7
88.9
87.7
87.1
86.2
85.8
82.5
89.8
90.3
91.1
91.6
106.8
106.8
105.9
101.6
132.2
133.8
135.3
136.9
80.8
79.8
78.3
74.2
83.5
82.4
81.7
78.5
79.3
78.4
76.5
71.9
88.2
86.0
86.5
85.7
103.8
105.6
105.3
106.1
138.3
139.6
141.0
142.3
75.0
75.6
74.7
74.6
79.4
81.1
78.0
78.6
72.7
72.7
72.9
72.4
87.0
87.6
83.7
84.7
108.5
112.5
115.5
119.4
143.5
144.5
145.5
146.6
75.6
77.9
79.4
81.5
80.8
83.5
85.9
88.3
72.9
74.9
75.9
77.8
87.7
89.9
91.0
92.4
122.5
124.8
126.2
126.7
148.0
149.8
151.6
153.3
82.8
83 3
83.3
82.6
89.6
90.1
90.1
89.4
79.1
79.7
79.7
79.0
93.8
94.5
96.0
95.1
1 May differ slightly from data shown in Table C-34 because of rounding.
2 Output as percent of capacity.
Note.—For description of series, see "Federal Reserve Bulletin," October 1971 and November 1966 issues for manufacturing series and August 1973 issue for major materials industries series
Source: Board of Governors of the Federal Reserve System, based on data of Federal Reserve, Department of Commerce,
McGraw-Hill Information Systems Company, and various industry organizations.
291
TABLE CV38.—New construction activity, 1929-73
[Value put in place, billions of dollars]
Private construction
Year or month
Total
new
construction
Residential1
buildings
Public construction
Nonresidential buildings and other
construction'
Total
Total a
New
housing
units
Total
Total
Commercial
Industrial
Other*
State
Fedand
erally locally
owned owned «
1929
10.8
8.3
3.6
3.0
4.7
1.1
0.9
2.6
2.5
0.2
2.3
1933
2.9
1.2
.5
.3
.8
.1
2
.5
16
5
1 i
1939
8.2
4.4
2.7
2.3
1.7
.3
.3
1.2
3.8
.8
3.1
8.7
12.0
14.1
8.3
5.3
5.1
6.2
3.4
2.0
2.2
3.0
3.5
1.7
.9
.8
2.6
3.0
1.4
.7
.6
2.1
2.7
1.7
1.1
1.4
.3
.4
.2
.0
.1
.4
.8
.3
2
.2
1.3
1.5
1.2
.9
1.1
3.6
5.8
10.7
63
3.1
1.2
3.8
9.3
56
2.5
2 4
2 0
13
7
6
1945 .
1946..
5.8
12.6
3.4
10.4
1.3
4.8
.7
3.3
2.1
5.6
.2
1.2
.6
1.7
1.3
2.8
2.4
2.2
1.7
.9
.7
1.4
New series
1946
1947..
1948...
1949
14.3
20.0
26.1
26.7
12.1
16.7
21.4
20.5
6.2
9.9
13.1
12.4
4.8
7.8
10.5
10.0
5.8
6.9
8.2
8.0
1.2
1.0
1.4
1.2
1.7
1.7
1.4
1.0
3.0
4.2
5.5
5.9
2.2
3.3
4.7
6.3
.9
.8
1.2
1.5
1.4
2.5
3.5
4.8
1950._
1951...
1952..
1953..
1954
33.6
35.4
36.8
39.1
41.4
26.7
26.2
26.0
27.9
29.7
18.1
15.9
15.8
16.6
18.2
15.6
13.2
12.9
13.4
14.9
8.6
10.3
10.2
11.3
11.5
1.4
1.5
1.1
1.8
2.2
1.1
2.1
2.3
2.2
2.0
6.1
6.7
6.8
7.3
7.2
6.9
9.3
10.8
11.2
11.7
1.6
3.0
4.2
4.1
3.4
5.2
6.3
6.6
7.1
8.3
1955
1956 .
1957
1958
1959 _.
46.5
47.6
49.1
50.2
55.3
34.8
34.9
35.1
34.7
39.2
21.9
20.2
19.0
19.8
24.3
18.2
16.1
14.7
15.4
19.2
12.9
14.7
16.1
14.9
15.0
3.2
3.6
3.6
3.6
3.9
2.4
3.1
3.6
2.4
2.1
7.3
8.0
9.0
8.9
8.9
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
1964 . . .
54.6
56.3
60.0
64.6
67.4
38.8
39.1
42.1
45.2
47.0
23.0
23.1
25.2
27.9
28.0
17.3
17.1
19.4
21.7
21.8
15.8
16.0
16.9
17.3
19.0
4.2
4.7
5.1
5.0
5.4
2.9
2.8
2.8
2.9
3.6
8.8
8.6
9.0
9.4
10.1
15.9
17.1
17.9
19.4
20.4
3.6
3.9
3.9
4.0
3.9
12.2
13.3
14.0
15.4
16.5
1965
1966
1967
1968
1969
73.4
76 0
77.5
86.6
93.4
51.4
52 0
52.0
59.0
65.4
27.9
25.7
25.6
30.6
33.2
21.7
19.4
19.0
24.0
25.9
23.4
26.3
26.4
28.5
32.2
7.8
9.4
6.0
6.8
14.7
16.0
22.1
24.0
25.5
27.6
28.0
4.0
4.0
3.5
3.4
3.3
18.0
20.0
22.1
24.2
24.7
94.2
109.2
]??.*
135.1
66.1
79.4
31.9
43.3
54.2
57.9
24.3
35.1
4^.7
47.8
34.2
36.1
3?. 5
44.9
9.8
11.6
13.5
15.5
6.5
5.4
4.7
6.0
17.9
19.1
21.3
23.4
28.1
29.9
30.2
32.2
3.3
4.0
4.4
4.9
24.8
25.9
25.8
27.4
1940.
1941...
1942
1943
1944
1970
1971 _
1972 6
1973
.
9? fi
102.8
See footnotes at end of table.
292
TABLE C—38.—New construction activity, 1929—73—Continued
[Value put in place, billions of dollars]
Private construction
Year or month
Total
new
construction
Residential
buildings i
Total
Total 2
Public construction
Nonresidential buildings and other
construction i
New
housing
units
Total
Commercials
Industrial
Total
Other *
Federally
owned
State
and
locally5
owned
Seasonally adjusted annual rates
119.9
121.5
123.0
120.8
122.5
121.6
88.6
91.1
92.6
91.7
92.7
92.6
49.8
52.0
53.3
52.9
52.7
53.3
40.6
42.8
44.0
43.6
43.4
43.8
38.8
39.1
39.4
38.9
40.0
39.3
13.2
13.2
13.2
13.4
14.1
13.3
4.9
4.7
4.8
4.6
4.7
4.8
20.7
21.2
21.4
20.9
21.2
21.1
31.3
30.4
30.4
29.0
29.8
29.0
4.4
4.4
4.6
4.2
4.5
4.8
26.9
26.0
25.7
24.9
25.2
24.3
Sept....
Oct.....
Nov
Dec
121.6
123.0
125.1
128.5
126.8
131.6
92.4
93.9
94.5
96.2
97.5
98.5
53.8
54.5
55.5
56.4
57.2
57.5
44.1
44.7
45.9
46.9
47.8
48.0
38.7
39.4
39.0
39.8
40.3
40.9
13.2
13.4
13.4
13.7
13.6
13.9
4.6
4.7
4.5
4.3
4.6
4.8
20.8
21.3
21.0
21.8
22.1
22.3
29.2
29.2
30.6
32.3
29.3
33.1
4.4
4.1
4.3
4.4
4.4
4.4
24.8
25.1
26.4
27.9
24.9
28.7
1973: Jan
Feb
Mar....
Apr....
May...
June...
135.7
136.4
137.5
133.8
134.1
133.8
102.0
104.1
103.8
101.2
101.8
102.8
59.4
61.5
60.7
58.0
57.5
58.2
48.1
49.4
49.6
48.9
49.2
49.5
42.7
42.6
43.1
43.2
44.3
44.6
15.0
14.9
15.1
15.5
16.1
15.7
5.3
5.2
5.5
5.3
5.3
5.9
22.4
22.6
22.5
22.4
22.9
23.0
33.7
32.3
33.6
32.6
32.3
31.0
5.1
4.9
5.5
4.5
5.3
4.8
28.6
27.4
28.1
28.0
27.0
26.1
July...
Aug...
Sept...
Oct*>_._
Nov »
136.9
136.9
136.9
134.9
134.0
105.4
105.8
103.7
102.7
101.8
59.4
59.8
59.0
56.3
54.6
49.5
49.3
48.2
46.0
44.0
45.9
46.0
44.7
46.4
47.2
16.1
15.8
15.1
15.6
15.6
6.3
6.7
6.3
6.6
6.8
23.5
23.5
23.3
24.3
24.8
31.5
31.1
33.2
32.2
32.3
4.9
4.6
4.6
4.8
4.8
26.6
26.5
28.6
27.4
1972: Jan
Feb....
Mar....
Apr....
May....
June...
July
Aug
1 Beginning I960, farm residential buildings included in residential buildings; prior to I960, included in nonresidential
buildings
and other construction.
2
Total includes additions and alterations and nonhousekeeping units, not shown separately.
3 Office buildings, warehouses, stores, restaurants, garages, etc.
* Religious, educational, hospital and institutional, miscellaneous nonresidential, farm, public utilities, and all other
private.
s Includes Federal grants-in-aid for State and locally owned projects.
* Preliminary estimates by Council of Economic Advisers.
Source: Department of Commerce, Bureau of the Census, except as noted.
293
TABLE C—39.—New housing starts and applications for financing, 1929-73
[Thousands of units]
Housing starts
Private and
public^
Proposed
home con-6
struction
Private i
Total (farm and nonfarm)
Year or month
Total
(farm
and
nonfarm)
Nonfarm
Type of
structure 2
Total
One
family
FHA*
VA
93.0
1933
1940
1941
1942
1943
1944
Two or
more
families
Requests
for
VA
appraisals
509.0
1929
1939
Government
home programs
(nonfarm)3
New
private
housing
units
Appliauthor- cations
for
ized«
FHA
commitments 4
.
.
- .
515.0
144.7
179 8
602.6
706.1
356.0
191.0
141.8
176.6
217.1
160.2
126.1
83.6
231.2
288 5
238 5
144 4
62 9
326.0
1,023.0
1,268.0
1,362.0
1,466.0
38.9
67.1
178.3
216.4
252 6
7 8.8
91 8
160.3
71.1
90 8
56
121
286
293
327
191.2
148.6
141.3
156.5
307.0
392.9
270.7
128.3
102.1
109.3 1,208.3
397 7
192.8
267 9
253.7
338.6
306 2
197 7
198.8
341.7
369.7
164.4
226 3
251.4
535.4
620.8
401.5
159.4
234.2
234.0
New series
1945
1946
1947
1948
1949
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
1,952.0
1,491.0
1, 504. 0
1,438.0
1,551.0
1,646.0
1,349. 0
1,224.0
1, 382.0
1, 553.7 1,531.3 1,517.6 1,234.0
I960
1961
1962
1963
1964
1965
1966
1967
1968
1969
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, 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
1,469.0
2,084. 5
2, 378.5
2,053.8
(8)
(8)
(8)
.
1970
1971
1972
1973 p
(«)
283.0
328.2
186.9
229.1
216.5
250.9
268.7
183.4
150.1
270.3
307.0
257.4
338.7
471.5
590.8
558.3
509.1
386.3
447.7
608.2
656.2
225.7
198.8
197.3
166.2
154.0
159.9
129.1
141.9
147.7
153.6
74.6
83 3
77.8
71.0
59.2
49.4
36.8
52.5
56.1
51.2
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
242.4
243 8
221.1
190 2
182.1
188 9
153.0
167 2
168.9
187.6
142.9
177 8
171.2
139 3
113.6
102.1
99.2
124.3
131.7
138.2
620.7
1,433.6
812.9
2,052.2 1,151.0
901.2
2, 356.6 1,309.2 1,047.5
2,041.6 1,131.4
910.2
233.5
301.2
198.4
73.6
61.0
94.0
104.0
86.1
1,351.5
1,924.6
2,218.9
1,771.3
315.0
366.8
225.2
83.2
143.7
217.9
209.4
161.8
1, 252.2
994.7
1,313.0
974.3
1,462.9
991.4
1,603.2 « 1,012.4
1,528.8
970.5
1,472.8
963.7
1,164. 9 778.6
1,291.6
843.9
1,507.6
899.4
1,466.8
810.6
See footnotes at end of table.
6
7
4
2
0
294
TABLE C-39.—New housing starts and applications for financing, 1929-73—Continued
[Thousands of units]
Housing starts
Private and
public i
Proposed
home construction 8
Private 1
Total (farm and nonfarm)
Year or month
Total
(farm
and
nonfarm)
Government
home programs
(nonfarm) 3
Type of
structure *
Nonfarm
New
private
housing
units
authorized s
Total
One
family
Two or
more
families
FHA*
VA
Applications
for
FHA
commitments*
Requests
for
VA
appraisals
Seasonally adjusted annual rates
1972: J a n . .
Feb..
Mar..
Apr..
May..
June.
150.9
153.6
205.8
213.2
227.9
226.2
2,439
2,540
2,313
2,204
2,318
2,315
1,395
1,281
1,310
1,215
1,308
1,283
1,044
1,260
1,003
989
1,011
1,032
350
285
260
221
197
182
115
118
123
104
100
99
2,265
2,168
2,153
2,146
2,045
2,201
325
323
264
111
111
111
232
226
209
243
198
219
July..
Aug—
Sept.
Oct..
Nov..
Dec..
207.5
231.0
204.4
218.2
187.1
152.7
2,244
2,424
2,426
2,446
2 395
2,369
1,319
1,373
1,382
1,315
1,324
,207
925
1,051
1,045
1,131
1,071
1,162
176
179
175
149
125
106
107
103
106
98
92
86
2,196
2,281
2,366
2,318
2,226
2,399
224
207
166
147
162
131
200
202
192
189
207
194
1973: J a n . .
Feb..
Mar..
Apr..
May..
June.
147.3
139.5
201.1
205.4
234.2
203.4
2,497
2,456
2,260
2,123
2,413
2,128
1,450
1,372
1,245
1,202
[,271
1,124
1,047
1,084
1,015
921
1,142
1,004
87
111
92
74
81
80
96
105
101
100
111
88
2,233
2,209
2,129
1,939
1,838
2,030
124
100
93
68
89
103
222
217
201
169
161
166
July..
Aug..
Sept.
Oct..
Nov*.
Dec*.
203.2
199.9
148.9
149.5
132.9
88.6
2,191
2,094
1,804
1,646
1,696
1,355
1,247
1,125
982
956
936
762
944
969
822
690
760
593
80
69
68
52
57
37
87
91
71
62
56
64
1,780
1,750
1,596
1,316
1,314
1,231
93
70
94
50
57
30
135
143
133
141
136
119
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 but excluded from total private starts and from FHA starts.
2 Not available prior to 1959 except for nonfarm for 1929-44.
3 Data are not available for new homes started under the Department of Agriculture, Farmers Home Administration
program.
4
Units are for 1- to 4-family housing.
« Authorized by issuance of local building permit: in 14,000 permit-issuing places beginning 1972; 13,000 for 1967-71;
12,000 for 1963-66; and 10,000 prior to 1963.
e Units in mortgage applications or appraisal requests for new home construction.
78 Monthly estimates for September 1945-May 1950 were prepared by Housing and Home Finance Agency.
Not available separately beginning January 1970.
Sources: Department of Commerce, Department of Housing and Urban Development, and Veterans Administration
(except as noted).
295
TABLE C-40.—Business expenditures for new plant and equipment, 1947-74
l
[Billions of dollars]
Nonmanufacturing
Manufacturing
Year
or quarter
Total
Total
Transportation
Durable
goods
Nondurable
goods
Total
Mining
Railroad
Air
Other
Public
utilities
Communication
Commercial
and
other 2
1947
1948
1949
19.33
21.30
18.98
8.44
9.01
7.12
3.25
3.30
2.45
5.19
5.71
4.68
10.89
12.29
11.86
0.69
.93
.88
0.91
1.37
1.42
0.17
.10
.12
1.13
1.17
.76
1.54
2.54
3.10
1.40
1.74
1.34
5 05
4.42
4.24
1950 .
1951
1952
1953 .
1954
20.21
25.46
26.43
28.20
27.19
7.39
10.71
11.45
11.86
11.24
2.94
4.82
5.21
5.31
4.91
4.45
5.89
6.24
6.56
6.33
12.82
14.75
14.98
16.34
15.95
.84
1.11
1.21
1.25
1.28
1.18
1.58
1.50
1.42
.93
.10
.14
.24
.24
.24
1.09
1.33
1.23
1.29
1.22
3.24
3.56
3.74
4.34
3.99
1.14
1.37
1 61
1.78
1.82
5.22
5 67
5 45
6.02
6.45
1955
1956
1957
1958
1959
29.53
35.73
37.94
31.89
33.55
11.89
15.40
16.51
12.38
12.77
5.41
7.45
7.84
5.61
5.81
6.48
7.95
8.68
6.77
6.95
17.64
20.34
21.43
19.51
20.78
1.31
1.64
1.69
1.43
1.36
1.02
1.37
1.58
.86
1.02
.26
.35
.41
.37
.78
1.30
1.31
1.30
1.06
1.33
4.03
4.52
5.67
5.52
5.14
2.11
2.82
3.19
2.79
2.72
7 63
8.32
7.60
7.48
8.44
1960
1961
1962
1963...
1964
36.75
35.91
38.39
40.77
46.97
15.09
14.33
15.06
16.22
19.34
7.23
6.31
6.79
7.53
9.28
7.85
8.02
8.26
8.70
10.07
21.66
21.58
23.33
24.55
27.62
1.30
1.29
1.40
1.27
1.34
1.16
.82
1.02
1.26
1.66
.66
.73
.52
.40
1.02
1.30
1.23
1.65
1.58
1.50
5.24
5.00
4.90
4.98
5.49
3.24
3.39
3.85
4.06
4.61
8.75
9.13
9.99
10.99
12.02
54.42
63.51
65.47
67.76
75.56
23.44
28.20
28.51
28.37
31.68
11.50
14.06
14.06
14.12
15.96
11.94
14.14
14.45
14.25
15.72
30.98
35.32
36.96
39.40
43.88
1.46
1.62
1.65
1.63
1.86
1.99
2.37
1.86
1.45
1.86
1.22
1.74
2.29
2.56
2.51
1.68
1.64
1.48
1.59
1.68
6.13
7.43
8.74
10.20
11.61
5.30
6.02
6.34
6.83
8.30
13.19
14.48
14.59
15.14
16.05
79.71
1970.
1971
81.21
88.44
1972
19733.. . . . 100. 08
31.95
29.99
31.35
38.00
15.80
14.15
15.64
19.39
16.15
15.84
15.72
18.61
47.76
51.22
57.09
62.07
1.89
2.16
2.42
2.76
1.78
1.67
1.80
1.94
3.03
1.88
2.46
2.41
1.23
1.38
1.46
1.60
13.14
15.30
17.00
19.09
112.11
44.40
22.61
21.79
67.71
3.14
2.27
2.16
1.62
22.16
10.10
16.59
10.77
18.05
11.89
20.07
13.03
21.24
*36 36
_.
1965
1966....
1967
1968
1969
19743
Seasonally adjusted annual rates
1971: 1
II
III—.
IV___.
79.32
81.61
80.75
83.18
30.46
30.12
29.19
30.35
14.21
14.06
13.76
14.61
16.25
16.06
15.43
15.74
48.86
51.50
51.56
52.82
2.04
2.08
2.23
2.30
1.46
1.88
1.72
1.64
1.29
2.28
1.68
2.26
1.33
1.40
1.48
1.33
14.64
14.91
15.87
15.74
10.70
11.21
10.73
10.44
17.39
17.72
17.85
19.10
1972: 1
II
III —
IV—
86.79
87.12
87.67
91.94
30.09
30.37
30.98
33.64
15.06
14.77
15.67
16.86
15.02
15.60
15.31
16.78
56.70
56.75
56.70
58.30
2.42
2.38
2.40
2.46
2.10
1.88
1.50
1.71
1.96
2.89
2.67
2.33
1.48
1.53
1.41
1.42
16.92
16.60
17.01
17.53
11.71
11.59
11.56
12.63
20.10
19.88
20.16
20.21
96.19
1973: 1
97.76
II
III — 100.90
35.51
36.58
38.81
17.88
18.64
19.73
17.63
17.94
19.08
60.68
61.18
62.09
2.59
2.77
2.82
2.11
1.75
1.95
2.21
2.72
2.49
1.53
1.62
1.79
18.38
18.08
18.58
12.34
12.70
13.12
21.53
21.55
21.36
IV3... 104.94
40.54
20.94
19.60
64.40
2.85
1.98
2.22
1.53
21.20
1974: |3____ 108.16
113... 111.92
42.92
45.12
22.21
22.69
20.71
22.43
65.24
66.80
2.90
2.43
2.16
1.74
21.57
.
34
63
43
34
1 Excludes agricultural business; real estate operators; medical, legal, educational, and cultural service; and nonprofit
organizations. These figures do not agree precisely with the nonresidential fixed investment data in the gross national
product estimates, mainly because those data include investment by farmers, professionals, institutions, and real estate
firms, and certain outlays charged to current account.
2 Commercial and other includes trade, service, construction, finance, and insurance.
3
Estimates based on expected capital expenditures reported by business in October-December 1973. Includes adjustments when necessary for systematic tendencies in expectations data.
Note.—Annual total is the sum of unadjusted expenditures; it does not necessarily coincide with the average of seasonally adjusted figures.
Source: Department of Commerce, Bureau of Economic Analysis.
296
TABLE C-41.—Sales and inventories in manufacturing and trade, 1947-73
[Amounts in millions of dollars]
Total manufacturing
and trade
Manufacturing
Merchant wholesalers
Retail trade
Year or month
Sales
Inventories 2
1947...
1948...
1949...
35,260
33,788
52, 507
49,497
1.42 17,316 28,543
1.53 16,126 26,321
1.58
1.57
1.75
6,!
6,514
1950...
1951...
1952...
1953...
1954...
38,596
43,356
44, 840
47,987
46,443
59,822
70,242
72, 377
76,122
73,175
1.36
1.55
1.58
1.58
1.60
18,634
21,714
22, 529
24, 843
23,355
31,078
39, 306
41,136
43,948
41,612
1.48
1.66
1.78
1.76
1.81
7,695 9,284
8,597 9,886
8,782 10,210
9,052 10,686
8,993 10,637
1955...
1956...
1957...
1958...
1959...
51,694
54,063
55,879
54, 233
59, 661
79, 516
87,304
89, 052
86,922
91,891
1.47
1.55
1.59
1.60
1.50
26,480
27,740
28, 736
27,280
30,219
45, 069
50,642
51,871
50,070
52, 707
1.62
1.73
1.
1.84
1.70
9,893
10,513
10,475
10,257
11,491
1960...
1961*.
1962...
1963...
1964...
60, 746 94, 747
61,133 95,648
65,417 101,090
68,969 105, 477
73,685 111,457
1.56
1.54
1.51
1.49
1.47
30, 796
30,896
33,113
35, 032
37,335
53,814
54,939
58, 213
60, 043
63,386
1.76
1.74
1.72
1.69
1.64
1965...
1966...
1967...
1968...
1969...
80, 276 120,900
87,178 136,729
145,164
97,100 155, 376
103,104 166,813
1.45
1.47
1.57
1.55
1.56
41,003
44, 869
46, 449
50, 282
53, 555
68, 221
77,965
84, 655
90,875
97, 074
1970...
1971...
1972...
1973 K.
104,708 174,875
112,267 183i 622
124,680 194,151
194,"144,094 215,
"1,646
1.63
1.60
1.51
1.42
52,860 101 ,645
55,917 102, 445
"719
62, 466 '107;
72,032 118,435
Ratio 3
Sales i
Inventories 2
15,513
25,897
Ratio s
Sales i
Inventories 2
Ratio s
Sales i
Inventories 2
Ratio 3
10,200 14,241
1.13 11,135 16,007
1.19 11,149 15,470
1.26
1.39
1.41
1.07
1.16
1.12
1.17
1.18
12,268
13, 046
13, 529
14,091
14, 095
19,460
21,050
21,031
21,488
20,926
1.38
1.64
1.52
1.53
1.51
11,678
13, 260
12,730
12, 739
13,879
1.13
1.19
1.23
1.24
1.15
15,321
15,811
16, 667
16,696
17, 951
22,769
23,402
24,451
24,113
25,305
1.43
1.47
1.44
1.43
1.40
11,656
11,988
12,674
13,382
14, 527
14,120
14,488
14,936
16,048
16, 977
1.22
1.20
1.16
1.15
1.13
18, 294
18, 249
19,630
20, 556
21,823
26,813
26, 221
27,941
29,386
31,094
1.45
1.43
1.38
1.39
1.40
1.60
1.62
1.76
1.74
1.76
15, 595
16,979
17, 099
18, 329
19, 726
18, 274
20,691
21, 557
22, 528
24, 363
1.14
1.14
1.21
1.20
1.19
34,405
38,073
38,952
41,973
45, 376
1.39
1.44
1.46
1.43
1.46
1.89
1.82
1.67
1.56
20,554
22,280
24, 850
30, 083
26, 604
28,916
31, 732
36, 283
1.23
1.23
1.21
1.13
23,677
25,330
26,151
28, 490
29, 824
31, 294
34, 071
37, 365
41,979
46, 626
52, 261
54,700
60,928
1.47
1.47
1.42
1.37
24, 351
23, 533
23,884
24,170
24,260
24,230
29, 049
29,181
29,174
29, 574
29, 729
29, 641
1.19
1.24
1.22
1.22!
1.23;
1.22
34, 886
35, 345
36,450
36,296
37,141
36,822
52, 458
52, 484
52, 639
52, 814
53, 402
53, 293
1.50
1.48
1.44
1.46
1.44
1.45
24, 394
25,137
25, 407
25,779
26, 212
26,962
30, 056
30,164
30, 657
31, 032
31, 289
31,732
1.23
1.20
1.21
1.20
1.19
1.18
37,342
37,969
37,746
39,106
38,713
39,417
52,940
53,107
53, 661
53,934
54, 658
54, 700
1.42
1.40
1.42
1.38
1.41
1.39
7,957
7,706
Seasonally adjusted
184,068
184,571
184, 856
185, 655
186,816
187,194
1.56
1.56
1.54
1.53
1.52
1.53
59, 062 102,561
59,120 102,906
59,905 103,043
60,886 103,267
61,272 103,685
61,295 104,260
July...
Aug...
Sept...
Oct...
Nov...
Dec...
[22,783 187, 681
.26,792 189, 093
.27,656 190,486
.30,336 191
191, 583
131,918 192,921
.33, 483 194;
"1,151
1.53
1.49
1.49
1.47
1.46
1.45
61, 047 104, 685
63,686 105,822
64,503:106,168
65,451 106,617
66,993 106,974
67,104 107, 719
1973:Jan...
Feb....
Mar....
Apr....
May...
June...
.36,863 196, 295
38,910 198,172
.41,010 199,525
41,274 200, 787
42,682 202, 896
42,311 205,252
1.43
1.43i
1.411
1.42,
1.42
1.44
68,401 108,187
69,245 109,082
69,719 110,174
70,468 110,577
71,284 111,625
71,616,113,025
.58
.58
.57,
.57
.58
27,755
28,423
29,312
29,621
29,675
29,528
32, 582
33, 051
33,245!
33,574!
33,985
34,148
1.17
1.16
1.13
1.13
1.15!
1.16
40,707
41,242i
41,979:
41,185!
41,723
41,167
55,526
55,039
56,106
56,636
57,285
58,079
1.36
1.36
1.34
1.38
1.37
1.41
July....
Aug
Sept...
Oct....
Nov *>_.
Dec p..
46, 458 206,813
46,068:208,668
46,2411210,354
50,2571212,417
52,957 215,645
1.41
1.43
1.44
1.44
1.41
73, 248!113, 910
73, 0211114,907
73, O6O|116,114
75,269 117,224
77,019 118,435
1.561
1.57
1.59
1.56,
1.54
30,443
30,692
30,646
31,918
32, 903
34, 653
34,984
35, 266
35,379
36,283
1.14
1.14
1.15
1.11
1.10
42, 767
42, 355
42, 535
43,070
43, 035
42,453
58,250
58,797
58,974
59,814
60,928
1.36
1.39
1.39
1.39
1.42
1972:Jan...
Feb...
Mar...
Apr...
May...
June..
118,299
117,998
120,239
121,352
122,673
122,347
1.74
1.74
1.72
.70
.69
.70
T
1 Monthly average for year and total for month.
2 Seasonally adjusted, end of period.
3
Inventory /sales ratio. For annual periods, ratio of weighted average inventories to average monthly sales; for monthly
data, ratio of inventories at end of month to sales for month.
< Manufacturing data prior to 1961 not completely comparable with later data. See Department of Commerce, Bureau
of the Census, "Series M 3 - 1 . 1 , " September 1968.
* Based on seasonally adjusted data through November.
Note.—The inventory figures in this table do not agree with the estimates of change in business inventories included
in the gross national product since these figures cover only manufacturing and trade rather than all business, and show
inventories in terms of current book value without adjustment for revaluation.
Source: Department of Commerce (Bureau of Economic Analysis and Bureau of the Census).
297
TABLE O42.—Manufacturers' shipments and inventories, 1947-73
[Millions of dollars]
Inventories2
Shipments i
Durable goods industries
Year or month
Total
1947
1948...
1949
15,513
17,316
16,126
1950
1951
1952
1953...
1954
Durable
goods
industries
6,694
7,579
7,191
18,634 8,845
. 21,714 10,493
. . 22,529 11,313
24,843 13,349
23,355 11,828
Nondurable
goods
industries
Total
Total
Materials
and
supplies
FinWork
ished
in
process goods
8,819 25,897 13,061
9,738 28,543 14,662
8,935 26,321 13,060
9,789
11,221
11,216
11,494
11,527
31,078
39,306
41,136
43,948
41,612
15,539
20,991
23,731
25,878
23,710
Nondurable goods industries
Total
Materials
and
supplies
FinWork
in
ished
process goods
12,836
13,881
13,261
8,966 10,720
7,894 9,721
15,539
18,315
17,405
6,206 18,070
6,040 17,902
8,317
8,167
2,472
2,440
7,409
7,415
6,348
7,565
8,125
7,749
8,143
8,556
8,971
8,775
8,671
9,089
2,571
2,721
2,864
2,800
2,928
7,666
8,622
8,624
8,498
8,857
1955.
1956...
1957
1958
1959...
26,480
27,740
28,736
27,280
30,219
14,071
14,715
15,237
13,571
15,545
12,409
13,025
13,499
13,708
14,674
45,069
50,642
51,871
50,070
52,707
26,405 9,194 10,756
30,447 10,417 12,317
31,728 10,608 12,837
30,095 9,847 12,294
31,839 10,585 12,952
1960...
1961'
1962
1963
1964
30,796
30,896
33,113
35,032
37,335
15,817
15,544
17,103
18,247
19,634
14,979
15,352
16,010
16,786
17,701
53,814
54,939
58,213
60,043
63,386
32,360
32, 509
34,605
35,813
38,436
10,286
10,242
10,798
11,001
11,927
12,780 9,190
13,211 9,056
14,205 9,602
14,997 9,815
16,253 10,256
21,454 9,113
22,430 9,464
23,608 9,841
24,230 10,003
24,950 10,185
2,935 9,353
3,193 9,773
3,304 10,463
3,410 10,817
3,519 11,246
41,003
44,869
46,449
50,282
53, 555
22,216
24,633
25,212
27,694
29,459
18,788
20, 236
21,236
22, 588
24,096
68,221
77,965
84,655
90, 875
97, 074
42,227
49, 818
54,931
59,112
63,371
13,299
15, 501
16, 445
17,418
18,668
18,152
21,978
25, 017
27,605
29,175
10,776
12,339
13,469
14, 089
15, 528
25,994
28,147
29,724
31,763
33,703
10,488
11,220
11,746
12, 299
12, 823
3,823
4,237
4,434
4,849
5,152
11,683
12,690
13, 544
14,615
15, 728
52,860
55,917
62,466
72,032
28,231
29,948
33, 892
39, 563
24,629
25,969
28, 573
32,469
101,645
102,445
107,719
118,435
66,768
66,050
70,218
77,645
19,000
19, 270
20, 010
23,444
30,393
29,142
32,074
35, 519
17, 375
17,638
18,134
18,682
34, 877
36, 395
37, 501
40,790
13,130
13,578
13, 865
15,868
5,278
5,647
5,968
6,416
16, 469
17,170
17,668
18, 506
1965
1966
1967.
1968
1969
.
1970
1971
1972
1973 *
18,664
20,195
20,143
19,975
20,868
Seasonally adjusted
1972: Jan
Feb
Mar
Apr
May....
June
59,062
59,120
59,905
60,886
61,272
61, 295
31,556
31,758
32,188
33,003
33,241
32,919
27, 506
27, 362
27,717
27,883
28,031
28, 376
102, 561
102,906
103,043
103,267
103,685
104,260
66,283
66, 534
66, 569
66,725
67,161
67, 502
19,181
19,178
19,083
19,039
19,110
18,900
29, 320
29,492
29, 595
29,726
30,014
30,380
17,782
17, 864
17,891
17,960
18,037
18, 222
36,278
36,372
36, 474
36, 542
36, 524
36,758
13, 564
13,673
13, 527
13, 599
13, 589
13,708
5,675
5,683
5,799
5,753
5,690
5,722
17,039
17,016
17,148
17,190
17,245
17, 328
July
Aug
Sept....
Oct
Nov
Dec
61,047
63,686
64, 503
65,451
66,993
67,104
32, 803
34,687
35, 249
36,302
36,870
36,614
28,244
28,999
29, 254
29,149
30,123
30,490
104,685
105, 822
106,168
106,617
106,974
107,719
67,734
68, 568
68,875
69,308
69,613
70, 218
19,317
19, 596
19,558
19,790
19,902
20, 010
30,323
30,563
30,932
31,412
31,639
32,074
18,094
18,409
18, 385
18,106
18,072
18,134
36,951
37, 254
37,293
37,309
37,361
37, 501
13,706
13,776
13, 827
13,780
13, 808
13, 865
5,751
5,813
5,871
5,928
5,927
5,968
17,494
17,665
17,595
17,601
17,626
17,668
68,401
69, 245
69,719
70,468
71, 284
71,616
37,773
38,122
38,064
38,651
39, 284
39,257
30,628
31,123
31,655
31,817
32,000
32,359
108,187
109,082
110,174
110, 577
111,625
113,025
70, 590
71,136
71,873
72,213
72,867
73,801
20,252
20,463
20,659
20,887
21,198
21, 424
32,286
32,559
33,005
33,114
33, 318
33,735
18, 052
18,114
18,209
18,212
18, 351
18,642
37,597
37,946
38, 301
38,364
38, 758
39,224
13,965
14, 251
14, 406
14,531
14,660
15,010
5,960
6,006
6,048
6,093
6,134
6,151
17,672
17,689
17,847
17,740
17,964
18,063
73,248
73, 021
73,060
75,269
77, 019
40,779
39,633
40,162
41, 567
41, 896
40,646
32,469
33, 388
32,898
33,702
35,123
113,910
114,907
116,114
117, 224
118,435
74,278
75,213
76,249
76, 951
77,645
21,721
22,080
22,621
23,064
23,444
33,944
34,461
34,742
35, 082
35, 519
18,613
18,672
18,886
18,805
18, 682
39,632
39,694
39, 865
40,273
40,790
15,350
15, 514
15, 554
15, 772
15, 868
6,177
6,250
6,298
6,323
6,416
18,105
17,930
18,013
18,178
18, 506
1973:Jan
Feb
Mar
Apr
May
June
July
Aug
Sept
Oct
Nov p . Dec p
i Monthly average for year and total for month.
> Book value, seasonally adjusted, end of period, except as noted.
3 Data prior to 1961 not completely comparable with later data. See Department of Commerce, Bureau of the Census,
"Series M3-1.1," September 1968.
« Based on seasonally adjusted data through November.
Source: Department of Commerce, Bureau of the Census.
298
TABLE C-43.—Manvjacturers* new and unfilled orders, 1947-73
[Amounts in millions of dollars]
New orders l
Unfilled orders 2
Unfilled ordersshipments ratio 3
Durable goods
industries
Year or month
Total
Total
1947..
1948..
1949..
1950..
1951..
1952..
1953..
1954..
15,256
17,693
15,614
20,110
23,907
23,204
23,586
22,335
6,388
8,126
6,633
10,165
12,841
12,061
12,147
10, 768
1955..
1956..
1957..
1958..
1959..
27,465
28,368
27, 559
26,903
30,672
30,115
31,086
33,005
35,322
37,952
14,996
15,365
14, 111
13,171
15, 948
15, 223
15,699
17,025
18,521
20,258
I960..
1961«
1962..
1963..
1964..
1965.
1966..
1967..
1968..
1969.
41, 803 22,986
45,944 25,720
46,763 25,526
50,243 27,666
53,646 29, 549
52,063 27,431
55,732 29,751
63,514 34,867
74,605 42,073
1970..
1971..
1972.
1973»
Capital
goods
industries,
nondefense
Nondurable
goods
industries
34,473
30,736
24,045
41,456
67,266
75,857
61,178
48,266
28,579
26,619
19,622
35,435
63,394
72,680
58,637
45,250
60,004
67,375
53,183
48,882
54,494
46,133
48,395
47,307
50,940
58,506
Nondurable
goods
industries
Total
Durable
goods
industries
Nondurable
goods
industries
3.63
3,87
3.35
2.60
2.85
4.12
4.27
4.55
4.00
3.49
3.44
0.96
56,241
63,880
50,352
45,739
50,654
5,894
4,117
4,423
6,021
3,872
3,177
2,541
3,016
3,763
3,495
2,831
3,143
3,840
43,401
45,241
44,485
47,958
55,623
2,732
3,154
2,822
2,982
2,883
2.58
2.52
2.46
2.40
2.49
3.21
3.01
2.95
2.89
2.99
.63
.72
.65
.63
.57
18,817 68,146 64,920
20, 224 81,029 77,964
21,238 84,994 81,904
22, 577 84,177 81, 240
24,097 85,286 82,334
24,632 75,585 72, 599
25,981 73,282 70,152
28,648 86,020 81,986
32, 531 114,324 109,606
3,226
3,065
3,090
2,937
2,952
2.62
2.93
2.81
2.71
2.59
.60
.56
.52
.47
.45
2,986
3,130
4,034
4,718
2.39
2.15
2.18
2.53
3.12
3.51
3.38
3.27
3.13
2.90
2.59
2.59
3.00
3,207
3,350
3,440
3,501
3,529
3,574
3,609
3,647
3,721
3,800
3,941
4,034
2.13
2.14
2.12
2.10
2.11
2.18
8,868
9,566
8,981
9,945
11,066
11,143
11, 439
11,566
12, 469
13,003
13,448
13, 733
14,724
14,893
15,387
15,980
16,801
17,694
6,971
7,694
7,021
7,339
8,983
11,016
Total
Durable
goods
industries
3.42
1.12
1.04
.85
.55
.45
.44
.52
.54
Seasonally adjusted
1972: Jan....
Feb...
Mar...
Apr...
May...
June..
July...
Aug...
Sept...
Oct....
Nov...
Dec...
1973: J a n . . .
Feb...
Mar...
May"."
June..
July...
Aug...
Sept..
Oct....
NOVJ>_.
Dec »..
59,739 32,156
59,544 32, 039
60,260 32,453
61,747 33,803
62,051 33,992
63,817 35,396
61,486 33,207
64,809 35,772
66,620 37, 292
66,355 37,127
67, 726 37,462
68,908 38, 325
70,016 39,218
71,022 39,765
72,806 41,021
73,325 41,341
74,535 42, 449
75,361 43,016
75,145 42,697
76,113 42, 689
75,129 42, 259
77,758 44,037
79, 441 44,315
41,655
7,895
8,152
8,304
8,700
8,932
8,981
8,954
8,899
9,727
9,625
9,699
9,991
10,277
10,105
10,572
10,619
10,919
11,415
11,404
11, 032
11, 267
11, 595
11,970
12,176
27, 583
27, 505
27,807
27,944
28,059
28,421
28,279
29,037
29,328
29,228
30,264
30, 583
30,798
31,257
31,785
31,984
32,086
32,345
32,448
33,424
32,870
33,721
35,126
73,959
74,383
74,738
75, 599
76, 378
78,900
79,339
80,462
82, 579
83,483
84, 216
86,020
87,635
89,412
92,499
95, 354
98, 602
102,355
70, 752
71,033
71, 298
72,098
72, 849
75,326
75,730
76,815
78,858
79,683
80, 275
81,986
83,431
85,074
88,031
90,719
93,882
97,647
104,246 99, 560
107,344 102,621
j 109, 410 104, 716
jlll,897 107,185
114,324 109,606
110,619
0.45
.46
.47
.48
.48
.48
.48
.48
.49
.50
.51
.52
4,204
4,338
4,468
4,635
4,720
4,708
2.17
2.14
2.18
2.15
2.13
2.18
2.17
2.18
2.25
2.28
2.32
2.41
2.57
2.58
2.55
2.52
2.52
2.62
2.61
2.56
2.60
2.55
2.53
2.59
2.57
2.58
2.66
2.70
2.75
2.85
4,686
4,723
4,694
4,712
4,718
2.41
2.51
2.57
2.52
2.53
2.84
2.98
3.02
2.97
3.00
.57
.57
.60
.56
.54
.53
.54
.55
.57
.57
.57
1 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, except as noted.
* Data prior to 1961 not completely comparable with later data. Comparable data for new orders (total, durable, and
nondurable) are available for 1958,1959, and 1960 only. See Department of Commerce, Bureau of the Census, "Series
M3-1.1," September 1968, for these data.
« Based on seasonally adjusted data through November.
3
3
Source: Department of Commerce, Bureau of the Census.
299
PRICES
TABLE C-44.—Consumer price indexes by expenditure classes, 1929-73
For urban wage earners and clerical workers
[1967 = 100]
Year or month
All
items
Housing
Food
Total
Rent
Apparel
and
upkeep
Transportation
Medical Personal
care
care
Reading
and
recreation
Other
goods
and
services
48.5
1929
51.3
48.3
76.0
1933-.
38.8
30.6
54.1
36.9
1939
41.6
34.6
52.2
56.0
42.4
43.0
36.7
40.3
45.3
46.9
1940
1941
1942
1943
1944..
1945
1946
1947
1948
1949
42.0
44 1
48 8
51.8
52.7
53 9
58 5
66.9
72.1
71.4
35.2
38.4
45.1
50.3
49.6
50 7
58.1
70.6
76.6
73.5
52.4
53 7
56 2
56.8
58.1
59 1
60 6
65.2
69.8
70.9
56.2
57 2
58 5
58.5
58.6
58 8
59 2
61.1
65.1
68.0
42.8
44 8
52.3
54.6
58.5
61 5
67.5
78.2
83.3
80.1
42.7
44 2
48 1
47.9
47.9
47 8
50 3
55.5
61.8
66.4
36.8
37 0
38.0
39.9
41.1
42 1
44 4
48.1
51.1
52.7
40.2
41 2
45 2
49.9
53.4
55 1
59 0
66.0
68.5
68.3
46.1
47 7
50 0
54.1
60.0
62 4
64.5
68.7
72.2
74.9
48.3
49 2
50 7
53.3
54.7
56 9
58 8
63.8
66.8
68.7
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
72.1
77.8
79.5
80.1
80.5
80.2
81.4
84.3
86 6
87.3
74.5
82.8
84.3
83.0
82.8
81.6
82.2
84.9
88.5
87.1
72.8
77.2
78.7
80 8
81.7
82.3
83.6
86.2
87 7
88.6
70.4
73.2
76.2
80 3
83.2
84.3
85.9
87.5
89 1
90.4
79.0
86.1
85.3
84 6
84.5
84.1
85.8
87.3
87 5
88.2
68 2
72.5
77.3
79 5
78.3
77.4
78.8
83.3
86 0
89.6
53.7
56.3
59.3
61 4
63.4
64.8
67.2
69.9
73 2
76.4
68.3
74.7
75.6
76.3
76.6
77.9
81.1
84.1
86 9
88.7
74.4
76.6
76.9
77.7
76.9
76.7
77.8
80.7
83.9
85.3
69 9
72.8
76.6
78 5
79.8
79.8
81.0
83.3
84 4
86.1
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
88.7
89.6
90.6
91 7
92 9
94.5
97.2
100 0
104 2
109.8
88.0
89. i
89.9
91 2
92.4
94.4
99.1
100.0
103.6
108.9
90 2
90.9
91.7
92 7
93 8
94.9
97.2
100 0
104 2
110.8
91 7
92 9
94.0
95 0
95 9
96 9
98.2
100 0
102.4
105.7
89 6
90.4
90.9
91 9
92 7
93.7
96.1
100 0
105.4
111.5
89 6
90.6
92.5
93 0
94 3
95.9
97.2
100 0
103 2
107.2
79 1
81.4
83.5
85 6
87.3
89.5
93.4
100.0
106.1
113.4
90.1
90.6
92.2
93 4
94.5
95.2
97.1
100.0
104.2
109.3
87.3
89.3
91.3
92.8
95.0
95.9
97.5
100.0
104.7
108.7
87 8
88 5
89.1
90 6
92 0
94.2
97.2
100.0
104.6
109.1
1970
1971
1972
1973
116.3
121 3
125.3
.133.1
118.9
124 3
129.2
135.0
110.1
115 2
119.2
124.2
116.1
119 8
122.3
126.8
112.7
118 6
119.9
123.8
120.6
128.4
132.5
137.7
113.2
116.8
119.8
125.2
113.4
119.3
122.8
125.9
116.0
120.9
125.5
129.0
123.2
123 8
124.0
124.3
124.7
125.0
114.9
118.4
123.5
141.4
120.3
122.2
122.4
122.4
122 3
123.0
127.3
127 6
127.9
128.2
128 5
129.0
117.5
117.8
118.0
118.4
118.6
119.0
120.2
120 7
121.3
121.8
122 5
122.1
118.9
118.3
118.4
118.6
119.5
119.8
130.5
131.0
131.4
131.7
132.0
132.4
118.1
118.4
118.7
119.1
119.7
120.0
121.4
121.5
121.7
122.3
122.5
122.9
123.5
124.3
124.6
125.1
125.4
125.6
125.5
125.7
126.2
126.6
126.9
127.3
124.2
124.6
124.8
124.9
125.4
126.0
129 5
129.9
130.2
130.4
130 8
131.2
119.2
119.6
119.9
120.3
120.5
121.0
121 1
120 8
123.1
124.3
125 0
125.0
120.2
120.5
121.0
121.2
121.4
121.3
132.7
132.9
133.1
133.9
134.1
134.4
120.0
120.2
120.5
120.8
121.0
121.5
123.0
123.0
123.7
124.0
124.1
124.0
125.8
126.0
126.2
126.4
126.4
126.5
127.7
128.6
129 8
130.7
131.5
132.4
128.6
131.1
134 5
136.5
137.9
139.8
131.5
132.0
132 4
132 8
133.3
133.9
121.8
122.3
122 8
123.2
123.7
124.0
123.0
123.6
124 8
125 8
126.7
126.8
121.0
121.1
121 5
122 6
123.5
124.6
134.9
135.3
135 8
136.2
136.6
137.0
121.8
122.4
123.1
123.8
124.4
124.9
124.1
124.3
124.5
125.2
125.6
125.9
126.7
127.1
127.6
128.2
128.5
129.0
132.7
135.1
135.5
136.6
137.6
138.5
140.9
149.4
148.3
148.4
150.0
151.3
134.2
135.2
136 6
138 1
139.4
140.5
124.4
125.0
125 4
125 9
126.3
126.9
125.8
126.5
128.3
129.6
130.5
130.5
124.8
124.5
123.9
125.0
125.8
126.7
137.3
137.6
138.3
140.6
140.9
141.4
125.3
125.7
126.3
127.3
128.1
129.2
126.2
126.1
126.8
127.2
127.5
127.6
129.5
129.4
129.9
130.3
130.8
131.3
1972: J a n . . .
Feb
Mar..
Apr
May
JuneJuly
Aug
Sept..
Oct .
Nov.
Dec
1973: Jan.
Feb...
Mar
Apr
May
June
July. .
Aug
Sept
Oct
Nov
Dec.
.
Source: Department of Labor, Bureau of Labor Statistics.
300
TABLE O45.—Consumer price indexes by commodity and service groups, 1939-73
For urban wage earners and clerical workers
[1967=100)
Commodities
Year or
month
All
items
Services
Special indexes
Commodities less food
All
commodities
Food
All
Durable
Nondurable
All
Rent
Services
less
rent
All
items
less
food
All
items
less
shelter
Nondurable
commodities
41.6
40.2
34.6
47.7
48.5
44.3
43.5
56.0
38.1
47.2
39.7
38.4
1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
42.0
44.1
48.8
51.8
52.7
53.9
58.5
66.9
72.1
71.4
40.6
43.3
49.6
54.0
54.7
56.3
62.4
75.0
80.4
78.3
35.2
38.4
45.1
50.3
49.6
50.7
58.1
70.6
76.6
73.5
48.0
50.4
56.0
58.4
61.6
64.1
68.1
76.8
82.7
81.5
48.1
51.4
58.4
60.3
65.9
70.9
74.1
80.3
86.2
87.4
44.7
46.7
51.6
53.8
56.6
58.6
62.9
72.2
77.8
76.3
43.6
44.2
45.6
46.4
47.5
48.2
49.1
51.1
54.3
56.9
56.2
57.2
58.5
58.5
58.6
58.8
59.2
61.1
65.1
68.0
38.1
38.6
40.3
42.1
44.2
45.1
46.7
49.0
51.9
54.5
47.3
48.7
52.1
53.6
55.7
56.9
59.4
64.9
69.6
70.3
39.9
42.4
47.7
51.3
52.2
53.6
59.0
68.5
73.9
72.6
38.9
41.6
47.6
51.8
52.2
53.7
59.6
71.9
77.2
74.9
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
72.1
77.8
79.5
80.1
80.5
80.2
81.4
84.3
86.6
87.3
78.8
85.9
87.0
86.7
85.9
85.1
85.9
88.6
90.6
90.7
74.5
82.8
84.3
83.0
82.8
81.6
82.2
84.9
88.5
87.1
81.4
87.5
88.3
88.5
87.5
86.9
87.8
90.5
91.5
92.7
88.4
95.1
96.4
95.7
93.3
91.5
91.5
94.4
95.9
97.3
76.2
82.0
82.4
83.1
83.5
83.5
85.3
87.6
88.2
89.3
58.7
61.8
64.5
67.3
69.5
70.9
72.7
75.6
78.5
80.8
70.4
73.2
76.2
80.3
83.2
84.3
85.9
87.5
89.1
90.4
56.0
59.3
62.2
64.8
66.7
68.2
70.1
73.3
76.4
79.0
71.1
75.7
77.5
79.0
79.5
79.7
81.1
83.8
85.7
87.3
73.1
79.2
80.8
81.0
81.0
80.6
81.7
84.4
86.9
87.6
75.4
82.5
83.4
83.2
83.2
$2.5
83.7
86.3
88.6
88.2
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
88.7
89.6
90.6
91.7
92.9
94.5
97.2
100.0
104.2
109.8
91.5
92.0
92.8
93.6
94.6
95.7
98.2
100.0
103.7
108.4
88.0
89.1
89.9
91.2
92.4
94.4
99.1
100.0
103.6
108.9
93.1
93.4
94.1
94.8
95.6
96.2
97.5
100.0
103.7
108.1
96.7
96.6
97.6
97.9
98.8
98.4
98.5
100.0
103.1
107.0
90.7
91.2
91.8
92.7
93.5
94.8.
97.0
100.0
104.1
108.8
83.5
85.2
86.8
88.5
90.2
92.2
95.8
100.0
105.2
112.5
91.7
92.9
94.0
95.0
95.9
96.9
98.2
100.0
102.4
105.7
81.9
83.9
85.5
87.3
89.2
91.5
95.3
100.0
105.7
113.8
89.7
90.8
92.0
93.2
94.5
96.7
100.0
104.4
110.1
89.9
90.9
92.1
93.2
94.6
97.4
100.0
104.1
109.0
89.4
90.2
90.9
92.0
93.0
94.6
98.1
100.0
103.9
108.9
1970
1971
1972
1973
116.3
121.3
125.3
133.1
113.5
117.4
120.9
129.9
114.9
118.4
123.5
141.4
112.5
116.8
119.4
123.5
111.8
116.5
118.9
121.9
113.1
117.0
119.8
124.8
121.6
128.4
133.3
139.1
110.1
115.2
119.2
124.2
123.7
130.8
135.9
141.8
116.7
122.1
125.8
130.7
114.4
119.3
122.9
131.1
114.0
117.7
121.7
132.8
1972: Jan
Feb
Mar
Apr
May
June
123.2
123.8
124.0
124.3
124.7
125.0
118.7
119.4
119.7
119.9
120.3
120.7
120.3
122.2
122.4
122.4
122.3
123.0
117.7
117.8
118.2
118.5
119.2
119.4
117.3
117.1
117.3
117.7
118.4
119.2
118.1
118.4
118.9
119.1
119.7
119.5
131.5
131.8
132.1
132.4
132.7
133.1
117.5
117.8
118.0
118.4
118.6
119.0
134.1
134.4
134.6
135.0
135.3
135.7
124.0
124.2
124.5
124.9
125.4
125.7
120.9
121.5
121.8
122.0
122.4
122.7
119.2
120.3
120.6
120.7
121.0
121.2
July
Aug
Sept
Oct
Nov
Dec
125.5
125.7
126.2
126.6
126.9
127.3
121.2
121.4
122.0
122.3
122.7
122.9
124.2
124.6
124.8
124.9
125.4
126.0
119.4
119.5
120.3
120.8
121.0
121.1
119.6
119.7
119.8
120.1
120.3
120.3
119.3
119.4
120.8
121.3
121.7
121.7
133.5
133.8
134.1
134.6
134.9
135.4
119.2
119.6
119.9
120.3
120.5
121.0
136.1
136.4
136.7
137.2
137.6
138.0
125.9
126.1
126.7
127.1
127.4
127.6
123.1
123.2
123.8
124.2
124.6
124.8
121.7
122.0
122.8
123.1
123.5
123.8
127.7
128.6
129.8
130.7
131.5
132.4
123.4
124.5
126.1
127.4
128.3
129.4
128.6
131.1
134.5
136.5
137.9
139.8
120.5
120.9
121.5
122.3
123.0
123.7
119.9
119.9
120.2
121.0
121.8
122.3
120.9
121.6
122.4
123.3
124.0
124.7
135.7
136.2
136.6
137.1
137.6
138.1
121.8
122.3
122.8
123.2
123.7
124.0
138.3
138.7
139.2
139.6
140.1
140.7
127.5
127.9
128.4
129.1
129.7
130.3
125.3
126.4
127.8
128.9
129.7
130.6
124.7
126.2
128.3
129.7
130.7
132.0
132.7
135.1
135.5
136.6
137.6
138.5
129.7
132.8
132.8
133.5
134.7
135.7
140.9
149.4
148.3
148.4
150.0
151.3
123.5
123.8
124.3
125.4
126.3
127.1
122.4
122.6
122.6
123.2
123.3
123.2
124.4
124.7
125.5
127.0
128.5
130.0
138.4
139.3
140.6
142.2
143.0
143.8
124.4
125.0
125.4
125.9
126.3
126.9
141.0
141.9
143.4
145.2
146.1
146.9
130.4
130.9
131.8
133.1
134.0
134.7
131.0
133.5
133.6
134.5
135.6
136.5
132.4
136.6
136.5
137.4
138.9
140.3
1939
_.
1973: Jan
Feb
Mar.....
Apr
May
June
July
Aug
Sept
Oct
Nov
Dec
Source: Department of Labor, Bureau of Labor Statistics.
301
527-867 O - 74 - 20
T A B L E C—46.—Consumer price indexes, selected commodities and services,
1939—73
For urban wage earners and clerical workers
[1967=1001
Nondurable commodities less food
Durable commodities
Year or month
Used
cars
Household
durables
Total
Apparel
commodities
Services less rent
Nondurables
less
Total
food
and
apparel
House- Transhold
serv- portation
ices
servless
ices
rent
Medical
care
services
Total i
New
cars
1939
48.5
43.2
56.6
44.3
43.0
46.3
38.1
36.1
32.5
1940
1941
1942 .
1943
1944
1945
1946 . . .
1947
1948
1949
48.1
51.4
58.4
60.3
65.9
70.9
74.1
80.3
86.2
87.4
43.3
46.6
69.2
75.6
82.8
55.9
59.8
66.9
69.5
76.0
81.8
86.5
95.6
101.7
99.0
44.7
46.7
51.6
53.8
56.6
58.6
62.9
72 2
77.8
76.3
43.5
45.8
53.5
55.9
59.8
63.0
69.5
80 4
85.4
82.0
46.8
48.4
51.1
53 2
54.7
55.8
58.2
66 2
72.3
72 4
38.1
38.6
40.3
42.1
44.2
45.1
46.7
49.0
51.9
54.5
36.1
36.3
38.2
38 2
38.2
38.2
39.0
40 3
44.9
50 0
32.5
32.7
33.7
35.4
36.9
37.9
40.1
43 5
46.4
48.1
88.4
95.1
96.4
95.7
93.3
91.5
91.5
94.4
95.9
97.3
83.4
87.4
94.9
95.8
94.3
90.9
93.5
98.4
101.5
105.9
100.2
109.8
106.9
105.7
102.9
100.1
99.7
101.4
102.1
102.0
76.2
82.0
82.4
83.1
83.5
83 5
85.3
87.6
88.2
89.3
81.1
88.7
87.7
86.7
86.3
85 8
87 3
88.2
88.2
89.0
72.9
77.5
79 0
81 0
81.8
82 1
84 1
87 4
88 3
89.6
56.0
59.3
62.2
64.8
66.7
68.2
70.1
73.3
76.4
79.0
71.2
75.4
79.4
81.6
53.3
58.3
62.4
66.4
69.2
69.4
70.5
73.8
78.5
81.2
49.2
51.7
55.0
57.0
58.7
60 4
62.8
65.5
68.7
72.0
71.1
73.9
76.2
78.0
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
96.7
96.6
97.6
97.9
98.8
98.4
98.5
100.0
103.1
107.0
104.5
104.5
104.1
103.5
103.2
100.9
99.1
100.0
102.8
104.4
83.6
86.9
94.8
96.0
100.1
99.4
97.0
100.0
103.1
101.9
100.7
100.6
100.3
100.2
98.7
98.6
100.0
103.3
107.4
90.7
91.2
91.8
92.7
93.5
94.8
97.0
100.0
104.1
108.8
90.3
90 9
90.8
91.3
91.2
92.1
92 0
93 1
92.8
93.9
93.6
95.5
96.0
97.5
100.0 100.0
105 6 103 3
111.9 107.0
81.9
83.9
85.5
87.3
89.2
91.5
95.3
100.0
105.7
113.8
85.0
86.0
87.1
89.0
90.4
92.1
95.7
100.0
105.9
115.3
83.3
74.9
77.7
85.3
80.2
86.6
82.6
87.5
84.6
89.6
87.3
92.9
92.0
96.8
100.0 100.0
104 0 107.3
111.3 116.0
80.8
83.4
85.6
87.7
90.1
92.6
96.2
100.0
105.6
110.6
1970
1971
1972
1973
111.8
116.5
118.9
121.9
107.6
112.0
111.0
111.1
104.3
110.2
110.5
117.6
110.2
112.9
115.0
118.8
113.1
117.0
119.8
124.8
116 5
120.1
122.7
127.1
111 2
115.2
118.2
123.4
123.7
130.8
135.9
141.8
126.8
132.6
139.2
146.8
123.1
133.0
136.0
136.9
124.2
133.3
138.2
144.3
116.7
122.5
125.8
131.6
1972: Jan
Feb
Mar
May
June
117.3
117.1
117.3
117.7
118.4
119.2
112.2
111.9
111.7
111.7
111.4
111.3
105.3
103.0
103.9
106.4
110.0
112.0
113.7
113.6
114.1
114.4
114.8
115.1
118.1
118.4
118.9
119.1
119.7
119.5
120.3
120 9
121.6
122.1
122.9
122.4
116.8
117 0
117.3
117.4
117.9
117.9
134.1
134.4
134.6
135.0
135.3
135.7
136.9
137.3
137.6
138.0
138.4
138.8
135.6
135.6
135.4
135.6
135.8
136.0
135.8
136.4
136.9
137.3
137.6
138.0
124.3
124.5
124.7
125.1
125.3
125.6
July
Aug
Sept
Oct.
Nov
Dec
119.6
119.7
119.8
120.1
120.3
120.3
111.0
110.6
109.6
110.1
110.2
110.6
112.7
112.4
113.6
115.2
116.0
115.0
115.3
115.4
115.6
115.8
116.0
116.2
119.3
119.4
120.8
121.3
121.7
121.7
121.3
120.9
123.5
124.9
125.6
125.5
118.2
118.6
119.3
119.3
119.4
119.5
136.1
136.4
136.7
137.2
137.6
138.0
139.5
140.0
140.3
140.7
141.3
141.9
136.3
136.3
136.3
136.2
136.3
136.4
138.4
138.6
138.9
139.9
140.1
140.5
125.8
125.9
126.7
127.0
127.4
127.7
1973: Jan
Feb
Mar
Apr
May
June
119.9
119.9
120.2
121.0
121.8
122.3
111.1
111.0
110.8
111.1
111.1
111.0
112.8
112.4
113.7
117.3
120.6
122.3
116.1
116.3
116.9
117.7
118.5
119.2
120.9
121.6
122.4
123.3
124.0
124.7
123.1
123.8
125.2
126.2
127.2
127.2
119.7
120.4
120.8
121.7
122.2
123.3
138.3
138.7
139.2
139.6
140.1
140.7
142.3
142.8
143.2
143.6
144.2
144.9
136.0
136.1
136.3
136.5
136.6
137.0
141.0
141.5
142.2
142.7
143.1
143.6
128.1
128.6
129.2
129.9
130.6
131.3
July
Aug
Sept
Oct
Nov.
Dec
122.4
122.6
122.6
123.2
. 123.3
123.2
110.9
110.6
109.1
111.9
112.2
112.0
122.7
121.3
120.3
118.5
116.1
112.6
119.4
119.6
120.1
120.4
120.8
121.0
124.4
124.7
125.5
127.0
128.5
130.0
126.0
126.6
128.7
130.0
130.8
130.7
123.5
123.6
123.8
125.3
127.3
129.6
141.0
141.9
143.4
145.2
146.1
146.9
145.3
146.8
149.3
151.7
153.2
154.2
137.0
137.1
137.2
137.4
137.4
138.1
143.9
144.3
145.1
147.8
148.2
148.7
131.7
132.1
133.3
134.0
134.8
135.3
1950
1951
1952
1953
1954
1955
1956
1957
1958 . .
1959
.
89.2
75.9
71.8
69.1
77.4
80.2
89.5
(3)
Other*
i Includes certain items not shown separately.
Includes the services components of apparel, personal care, reading and recreation, and other goods and services.
> Not available.
Source: Department of Labor, Bureau of Labor Statistics.
3
302
T A B L E C—47.—Consumer price indexes, seasonally adjusted, 1970—73
For urban wage earners and clerical workers
11967=100, seasonally adjusted]
Special indexes
Year and month
All
All
items
All
items items
less
less
less
medfood shelter ical
Commodity groups
All
commodities
Selected expenditure classes
Commodities less
food
Food
Total
Durable
Nondurable
Shelter
Fuel
and
utilities
Apparel Trans- Medporand
ical
up- tation care
keep
1970: Jan...
Feb...
Mar..
Apr...
May..
June..
113.4
114.1
114.7
115.4
116.0
116.5
112.2
112.6
112.8
113.5
113.9
114.2
113.2
113.8
114.4
115.0
115.6
115.9
111.4
111.9
112.1
112.6
113.1
113.3
113.6
114.3
114.3
114.6
115.0
114.9
110.3
110.6
110.8
111.5
111.9
112.4
109.1
109.3
109.8
110.3
111.0
111.6
111.0
111.5
111.7
112.4
112.7
112.9
118.4
119.6
121.2
122.0
122.8
123.6
105.0
105.2
105.8
106.4
106.7
106.8
114.2
114.6
114.8
115.1
115.4
115.9
109.5
110.0
110.0
111.3
111.9
112.4
116.5
117.2
118.1
118.9
119.5
120.4
July..
Aug...
Sept..
Oct...
Nov...
Dec...
117.0
117.3
118.0
118.7
119.4
120.1
114.6
114.9
115.4
116.0
116.4
116.8
116.3
116.7
117.2
117.9
118.3
118.8
113.6
113.7
114.2
114.7
115.1
115.6
115.0
115.1
115.6
115.8
115.7
115.6
112.6
112.9
113.4
114.0
114.6
115.3
111.8
112.2
113.0
113.7
114.2
115.1
113.3
113.5
113.9
114.4
114.8
115.4
124.0
124.8
125.8
126.4
127.0
127.8
107.6
108.1
108.7
109.6
110.6
111.2
116.1
116.6
117.0
117.3
117.8
118.3
113.2
112.8
113.7
115.0
115.9
116.9
121.2
121.9
122.5
123.0
123.8
124.6
1971: Jan...
Feb...
MarApr...
May..
June..
120.4
120.6
120.7
120.9
121.6
122.2
117.2
117.6
118.0
118.5
119.1
119.6
119.0
119.2
119.5
119.8
120.4
121.0
115.7
115.7
116.2
116.6
117.2
117.7
115.7
116.1
117.1
117.7
118.2
118.8
115.5
115.5
115.7
115.9
116.5
116.9
115.2
115.3
115.7
115.9
116.5
116.9
115.6
115.7
115.9
116.1
116.6
116.9
128.0
127.6
126.7
126.6
127.5
128.4
112.0
112.9
113.5
113.8
114.3
114.8
118.4
118.7
118.8
119.2
119.8
120.0
117.1
117.7
118.2
118.3
118.6
119.1
125.2
125.9
126.7
127.2
127.8
128.5
July..
Aug...
Sept..
Oct...
Nov...
Dec...
122.4
122.8
123.1
123.3
123.5
123.8
119.8
120.2
120.2
120.3
120.5
120.9
121.3
121.6
121.7
122.0
122.2
122.6
117.9
118.1
118.1
118.3
118.5
118.9
119.0
119.3
119.0
119.3
119.8
120.5
117.1
117.5
117.4
117.5
117.6
117.7
117.1
116.9
116.9
116.9
116.9
117.1
117.1
117.7
118.0
118.1
118.1
118.3
128.8
129.4
129.9
130.5
131.2
131.5
115.6
116.1
116.3
116.6
116.3
117.5
120.1
120.2
120.4
120.6
120.7
120.8
119.2
119.3
119.4
118.9
118.6
118.4
129.0
129.7
130.1
129.9
130.1
130.5
1972: Jan
Feb
Mar
Apr
May
June
124.1
124.4
124.6
124.9
125.4
125.6
121.1
121.6
121.8
121.9
122.3
122.5
123.0
123.5
123.7
123.9
124.3
124.5
119.1
119.6
119.8
119.9
120.3
120.5
120.5
122.4
122.4
122.3
122.3
122.5
118.1
118.2
118.6
118.6
119.1
119.2
117.3
117.6
117.9
118.1
118.3
118.7
118; 5
118.8
119.1
119.2
119.6
119.5
132.4
132.9
132.8
133.1
133.8
134.2
118.3
118.8
118.9
119.2
119.7
120.0
121.0
121.3
121.5
121.9
122.0
122.0
118; 5
118.5
118.9
118.8
119.3
119.3
130.8
131.1
131.3
131.4
131.7
132.3
July
Aug
Sept
Oct
Nov
Dec
125.9
126.2
126.7
126.8
127.1
127.5
122.9
123.2
123.8
124.2
124.7
124.8
125.0
125.3
125.9
126.2
126.6
126.8
121.0
121.3
122.0
122.3
122.7
122.8
123.3
123.9
124.8
125.5
126.4
126.3
119.5
119.9
120.3
120.3
120.5
120.7
119.2
119.7
120.3
119.9
119.9
120.1
119.8
119.9
120.4
120.7
121.1
121.2
135.0
135.4
135.6
135.9
136.1
136.7
120.1
120.3
120.9
121.2
121.6
121.9
122.0
122.1
122.9
123.3
123.6
124.0
120.0
120.5
122.0
120.8
121.3
121.2
132.4
132.6
132.8
134.2
134.5
134.8
1973: Jan
Feb
Mar
Apr
May
June
127.6
128.2
128.5
129.1
129.7
130.2
125.6
126.5
127.8
128.8
129.6
130.3
127.6
128.3
129.6
130.5
131.3
132.
123.8
124.7
126.2
127.4
128.3
129.1
128.9
131.4
134.5
136.4
137.9
139.2
120.9
121.3
121.9
122.4
122.9
123.5
119.9
120.4
120.8
121.4
121.7
121.8
121.3
122.0
122.6
123.4
123.9
124.7
137.0
137.7
137.7
138.1
139.0
139.5
122.7
123.9
124.2
124.7
125.3
125.9
123.9
124.2
125.1
125.9
126.2
126.7
120.6
121.3
122.0
122.8
123.3
124.1
135.2
135.4
135.7
135.9
136.3
136.9
July
Aug
Sept
Oct
Nov
Dec
130.4
131.0
. . . - 131.8
132.8
133.7
134.6
130.
133.5
133.6
134.5
135.7
136.5
132.4
135.0
135.4
136.4
137.5
138.3
129.4
132.7
132.8
133.5
134.7
135.6
139.9
148.5
148.3
149.1
151.2
151.6
123.6
124.2
124.3
124.9
125.8
126.
122.0
122.6
123.1
123.0
122.9
123.0
124.9
125.2
125.1
126.4
127.9
129.5
139.7
141.0
142.8
144.6
145.5
146.3
125.8
126.6
127.3
129.2
132.0
135.8
126.7
127.9
128.0
128.6
129.1
129.5
124.6
124.5
124.9
124.6
125.
126.6
137.0
137.3
138.0
140.9
141.3
141.8
Source: Department of Labor, Bureau of Labor Statistics.
303
TABLE C—48.—Percent changes in consumer price indexes, major groups, 1948—73
[Percent change from preceding period i]
All items
Year or month
Unadjusted
Commodities less food Services 2
Food
Seasonally
adjusted
Unadjusted
Seasonally
adjusted
Unadjusted
Seasonally
adjusted
Unadjusted
2.7
-1.8
-0.8
-3.7
5.8
5.9
.9
.6
-.5
9.6
7.4
-1.1
-1.3
-1.6
1955
1956
1957
1958
1959
.4
2.9
3.0
1.8
1.5
-.9
3.1
2.8
2.2
-.8
2 2
.8
1.5
4.5
27
37
1960
1961
1962
1963
1964
1.5
.7
1.2
1.6
1.2
3.1
-.9
1.5
1.9
1 4
_ 3
6
.7
1.2
4
2.7
19
17
2.3
1.8
1965
1966
1967
1968
1969
1.9
3 4
3.0
4.7
6.1
3.4
3 9
1.2
4.3
7.2
.7
19
3 1
3.7
4.5
26
4.9
4.0
6 1
7 4
5.5
3.4
3.4
8.8
2.2
4.3
47
20.1
4.8
2.3
25
5.0
8 2
41
3 6
6.2
1948
1949
1950
1951
1952
1953
1954
..
1970
1971
1972
1973
.
. _
.
.
1971: July
Aug
Sept
Oct
Nov
Dec
.2
.2
.1
.2
.2
.4
0.2
.4
.l
.2
.2
.3
.5
.2
-.8
-.2
1
1.1
0.2
.3
-.3
.3
.4
.6
-.1
.1
.3
.5
.1
.0
0.2
.3
-.1
.1
.1
.1
.5
.4
.4
1972: Jan
Feb
Mar
Apr
May
June
.1
.5
.2
.2
.3
.2
.2
.5
.1
.2
.3
.1
.0
1.6
.2
.0
—.1
.6
.0
1.6
.0
-.1
.0
.2
-.3
.1
.3
.3
.6
.2
.3
.1
.3
.0
.4
.1
.6
.2
.2
.2
.2
.3
.4
.2
.4
.3
.2
.3
.4
.3
.4
.3
.3
.2
1.0
.7
.5
.7
.6
.7
-.1
.0
.1
.7
.4
.2
.1
.3
.3
.3
.0
.2
.2
.3
.2
.2
.4
.2
.4
.3
.7
.9
.7
.6
.5
.7
.9
.6
.6
.6
2.1
1.9
2.6
2.1
1.9
2.4
1.4
1.1
.9
-.5
.3
.5
.7
.6
.6
.2
.3
.5
.4
.4
.5
.2
.4
.3
.4
.4
.4
.2
1.8
.3
.8
.7
.7
.2
1.9
.3
.8
.8
.5
.8
6.0
.5
6.1
-.1
.5
1.4
.3
-.2
.2
.4
.9
.7
.6
.1
.5
.1
.5
.7
.7
.2
.7
.9
1.1
.6
.6
July
Aug
Sept
Oct
Nov
Dec
July
Aug
Sept
Oct
Nov
Dec
.
. . .
. . . .
. . .
1
.2
.1
.4
.5
LOO
1973: Jan
Feb
Mar
Apr
May
June
,
1.4
.1
1.1
.9
3
3
Annual changes are from December to December.
Percent changes for services are based on unadjusted indexes since these prices have little seasonal movement.
Note.—The seasonally adjusted changes for the all items index are based on seasonal adjustment factors and seasonally
adjusted indexes carried to two decimal places.
Source: Department of Labor, Bureau of Labor Statistics
8
304
TABLE C~49.—Wholesale price indexes by major commodity groups, 1929-73
[1967=100]
Farm products and processed
foods and feeds
All commodities
Year or month
Total
Farm
products
Processed
foods
and
feeds
Industrial commodities
Total
Textile
products
and
apparel
Hides,
Fuels
skins,
and
leather,
related Chemicals
allied
and
products, and
products
related
and
products power
1929
49 1
64 1
48 6
48 9
59 4
1933
34 0
31.4
37.8
36.3
47.6
1939
39 8
40.0
43.3
42.8
52.3
51.5
1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
40 5
45 1
50 9
53.3
53.6
54 6
62.3
76.5
82.8
78.7
94.3
101.5
89.6
41 4
50 3
64.8
75.0
75 5
78.5
90.9
109.4
117.5
101.6
82.9
88.7
80.6
44.0
47.3
50.7
51.5
52.3
53.0
58.0
70.8
76.9
75.3
103.6
108.1
98.9
45.2
48.4
52.8
52.7
52.2
52 9
61.1
83.3
84.2
79.9
51.4
54.6
56 2
57.8
59.5
60 1
64.4
76.9
90.5
86.2
52.4
57.0
63.3
64.1
64.8
65.2
70.5
93.7
95.9
87.6
1950....
1951
1952
1953
1954
1955
1956
1957
1958.. .
1959
81.8
91 1
88.6
87.4
87.6
87.8
90.7
93.3
94.6
94 8
93.9
106 9
102.7
96.0
95.7
91.2
90.6
93.7
98.1
93.5
106.7
124.2
117.2
106.2
104.7
98.2
96.9
99.5
103.9
97.5
83.4
92.7
91.6
87.4
88.9
85.0
84.9
87.4
91.8
89.4
78.0
86.1
84.1
84.8
85.0
86.9
90.8
93.3
93.6
95.3
102.7
114.6
103.4
100.8
98.6
98.7
98.7
98.8
97.0
98.4
86.3
99.1
80.1
81.3
77.6
77.3
81.9
82.0
82.9
94.2
87.1
90.3
90.1
92.6
91.3
91.2
94.0
99.1
95.3
95.3
88.9
101.7
96.5
97.7
98.9
98.5
99.1
101.2
102.0
101.6
94.9
94.5
94.8
94.5
94.7
96.6
99.8
100.0
102.5
106.5
93.7
93.7
94.7
93.8
93.2
97.1
103.5
100.0
102.4
108.0
97.2
96.3
98.0
96.0
94.6
98.7
105.9
100.0
102.5
109.1
89.5
91.0
91.9
92.5
92.3
95.5
101.2
100.0
102.2
107.3
95.3
94.8
94.8
94.7
95.2
96.4
98.5
100.0
102.5
106.0
99.5
97.7
98.6
98.5
99.2
99.8
100.1
100.0
103.7
106.0
90.8
91.7
92.7
90.0
90.3
94.3
103.4
100.0
103.2
108.9
96.1
97.2
96.7
96.3
93.7
95.5
97.8
100.0
98.9
100.9
101.8
100.7
99.1
97.9
98.3
99.0
99.4
100.0
99.8
99.9
1970
1971
1972
1973
110.4
113.9
119.1
135.5
111.7
113.8
122.4
159.1
111.0
112.9
125.0
176.3
112.1
114.3
120.8
148.1
110.0
114.0
117.9
127.0
107.1
108.6
113.6
123.8
110.3
114.0
131.3
143.1
106.2
114.2
118.6
145.5
102.2
104.2
104.2
110.0
1972: Jan
Feb
Mar
Apr .
May
June
116.3
117.3
117.4
117.5
118.2
118.8
117.4
119.6
119.1
118.3
120.0
121.3
117.8
120.7
119.7
119.1
122.2
124.0
117.2
118.8
118.6
117.7
118.6
119.6
115.9
116.5
116.8
117.3
117.6
117.9
111.3
112.0
112.1
112.6
113.3
113.6
117.8
119.1
123.0
127.2
129.5
130.9
116.0
116.1
116.5
116.9
117.5
118.2
103.4
103.5
103.4
104.1
104.4
104.3
119.7
119.9
120.2
120.0
120.7
122.9
124.0
123.8
124.5
123.3
125.3
132.6
128.0
128.2
128.6
125.5
128.8
137.5
121.5
121.0
121.8
121.8
123.1
129.4
118.1
118.5
118.7
118.8
119.1
119.4
114.0
114.1
114.3
114.8
115.1
115.6
131.6
134.6
135.7
139.8
144.0
142.2
118.6
119.7
120.3
120.6
121.3
121.9
104.2
104.4
104.4
104.4
104.7
104.8
124.5
126.9
129.7
130.7
133.5
136.7
137.0
142.4
149.0
147.9
154.9
163.6
144.2
150.9
160.9
160.6
170.4
182.3
132.4
137.0
141.4
139.8
145.0
151.8
120.0
121.3
122.7
124.4
125.8
126.9
116.6
117.4
119.0
120.8
122.3
123.7
143.9
144.9
143.5
145.0
142.2
140.9
122.2
126.0
126.7
131.8
135.5
142.8
105.1
105.6
106.7
107.7
109.3
110.4
134.9
142.7
140.2
139.5
141.8
145.3
156.9
184.5
173.5
166.8
164.4
168.0
173.3
213.3
200.4
188.4
184.0
187.2
146.5
166.2
156.3
153.1
151.9
155.7
126.9
127.4
128.1
129.6
133.5
137.1
124.2
125.2
126.8
128.5
130.0
131.4
141.4
143.0
143.8
143.8
143.0
141.9
142.8
142.9
144.8
150.5
179.2
201.3
110.8
111.0
111.5
112.7
113.5
115.6
I960...
1961
1962
1963
1964
1965
1966
1967
1968
1969
.
_.
.
July...
Aug
Sept
Oct
Nov
Dec
1973: Jan
Feb
Mar
Apr
May
June
July
Aug
__ . . .
Sept...
Oct
Nov
. .
Dec
See next page for continuation of table and for footnotes.
305
47.4
TABLE O49.—Wholesale price indexes by major commodity groups,
1929-73—Continued
[1967=100]
Industrial commodities—Continued
Pulp,
Metals
Rubber Lumber
paper,
and
and
and
and
plastic
metal
wood
allied
products products products
products
Year or month
Transportation
FurniMachin- ture and N on me- equipment:
ery and housetallic
Motor
equipmineral vehicles
hold
ment
products
durables
and
equipment!
Miscellaneous
products
1929
59 4
25 0
40 2
55 8
51 2
41 9
1933
40.2
19.0
30.7
44.6
47 2
34 8
1939
61.2
24.8
37.6
41.3
52.6
49.1
39.1
1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
57.1
61.5
71.6
73.6
72.7
70.5
70.8
70.5
72.8
70.5
27.4
32.7
35.6
37.7
40.6
41.2
47.2
73.4
84.0
77.7
72.5
75.7
72.4
37.8
38.5
39.1
39.0
39.0
39.6
44.3
54.9
62.5
63.0
41.4
42.1
42.8
42.4
42.1
42.2
46.4
53.7
58.2
61.0
53.8
57.2
61.8
61 4
63 1
63.2
67.1
77.0
81.6
82.9
49 1
50.2
52.3
52 4
53.5
55.7
59.3
66 3
71.6
73.5
40 4
43 2
47.2
47 2
47 5
48 3
56.0
64 1
70.8
75.7
73.5
76.5
78.0
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
85.9
105.4
95.5
89.1
90.4
102 4
103.8
103.4
103.3
102.9
89.3
97.2
94.4
94.3
92.6
97 1
98.5
93.5
92.4
98.8
74.3
88.0
85.7
85.5
85.5
87 8
93.6
95.4
96.4
97.3
66.3
73.8
73.9
76.3
76.9
82.1
89.2
91.0
90.4
92.3
63.1
70.5
70.6
72.2
73.4
75.7
81.8
87.6
89.4
91.3
84.7
91.8
90.1
91.9
92.9
93 3
95.8
98.3
99.1
99.3
75.4
80.1
80 1
83.3
85.1
87 5
91.3
94.8
95.8
97.0
75.3
79.4
84 0
83.6
83.8
86 3
91 2
95.1
98.1
100.3
79.2
83.9
83.4
85.6
86.4
86.5
87.6
90.2
92.0
92.2
103.1
99.2
96 3
96.8
95.5
95.9
97 8
100 0
103.4
105. 3
95.3
91.0
91.6
93.5
95.4
95 9
100.2
100.0
113.3
125.3
98.1
95.2
96 3
95.6
95.4
96 2
98 8
100.0
101.1
104 0
92.4
91.9
91 2
91.3
93.8
96.4
98.8
100.0
102.6
108.5
92.0
91.9
92.0
92.2
92.8
93 9
96.8
100.0
103.2
106.5
99.0
98.4
97 7
97.0
97.4
96.9
98.0
100.0
102.8
104.9
97.2
97.6
97 6
97.1
97.3
97.5
98.4
100.0
103.7
107.7
98 8
98.6
98 6
97.8
98.3
98 5
98.6
100.0
102.8
104.8
93.0
93.3
93.7
94.5
95.2
95.9
97.7
100.0
102.2
105.2
108.3
109 2
109 3
112.4
113.6
127.0
144.3
177.2
108.2
110 1
113 4
122.1
116.6
119.0
123.5
132.8
111.4
115.5
117.9
121.7
107.5
109.9
111.4
115.2
112.9
122.4
126.1
130.2
108.7
114.7
118.0
119.2
109.9
112.8
114.6
119.7
109 5
109.2
108.9
108.7
108 8
108.9
134.9
137.7
139.5
141.1
142.7
144.2
110 8
111.6
112 3
112.8
113 2
113.5
121.4
122.6
123.4
123.5
123.6
123.6
116.5
117.1
117.3
117.6
117.9
118.1
110.2
110.8
110.9
111.0
111.1
111.2
124.3
124.6
124.8
125.6
125.9
125.8
117.9
118.0
118.0
118.1
118.1
118.5
113.7
114.0
114.2
114.1
114.1
114.2
109.2
109.5
109 5
109.5
109.8
109.8
146.1
148.1
148.5
149.2
149.4
149.8
113.7
114.1
114.3
114.7
115.0
115.1
123.5
123.7
124.0
124.1
124.1
124.4
118.3
118.3
118.3
118.4
118.5
118.6
111.4
111.7
112.0
112.0
112.3
112.4
126.2
126.7
126.9
127.3
127.3
127.4
118.4
118.5
118.5
116.9
117.0
118.4
114.9
115.1
115.2
115.0
115.0
115.1
110.0
110.1
110.3
110 6
111.5
112.6
151.0
161.0
173.2
182.0
186.9
183.1
115.8
116.5
118.3
119.8
120.7
122.0
125.6
126.9
129.2
130.5
131.7
132.5
118.9
119.4
120.0
120.8
121.5
121.9
112.6
113.1
113.5
114.1
115.1
115.2
128.2
128.4
129.0
130.0
130.5
131.1
118.2
118.2
118.6
119.0
119.1
118.9
115.8
117.1
117.9
118.6
119.5
120.2
112.9
113.1
112.8
114.0
114.8
116.5
177.8
178.8
181.9
180.3
184.7
186.1
122.3
123.3
124.4
125.8
127.6
128.7
132.8
133.7
134.4
135.9
138.5
141.8
122.0
122.3
122.6
123.1
123.8
124.6
115.2
115.9
116.0
116.6
117.2
117.5
130.0
130.0
129.9
130.9
131.5
132.6
119.0
119.0
118.3
120.0
120.1
121.4
120.9
121. C
121.1
121.0
121.3
121.6
. ... -
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
-
1972" Jan
Feb . .
Mar
Apr
May
June
July . .
Aug
Sept
Oct
Nov
Dec
. .
1973: Jan
Feb .
Mar
Apr
May
June .
July
Aug
Sept
Oct
Nov
Dec
i Index for total transportation equipment is not shown but is available beginning December 1968.
Source: Department of Labor. Bureau of Labor Statistics.
306
TABLE C-50.—Wholesale price indexes by stage of processing, 1947-73
[1967=100]
Intermediate materials, supplies, and components »
Crude materials
Materials and components for
manufacturing
Year or month
All
commodities
Materials
and
components
For
For
Com- for conFor
nonfood durable durable ponents struction
manu- manu- manufactur- factur- facturing
ing
ing
Materials
Total
Foodstuffs
and
feedstuffs
Nonfood
materials
except
fuel
Fuel
Total
Total
1947
1948
1949
76.5
82.8
78.7
101.2
110.9
96.0
111.7
120.8
100.3
90.6
100.7
91.6
66.6
78.7
78.3
72.4
78.3
75.2
72.1
77.8
74.5
94.0
96.9
83.3
95.2
100.8
91.9
54.4
61.4
63.1
58.3
63.0
64.2
66.0
73.1
73.2
1950
1951
1952
1953
1954
81.8
91.1
88.6
87.4
87.6
104.6
120.1
110.3
101.9
101.0
107.6
124.5
117.2
104.9
104.9
104.7
120.7
104.6
100.1
98.2
77.9
79.4
79.9
82.7
79.0
78.6
88.1
85.5
86.0
86.5
78.1
88.5
84.8
86.2
86.3
86.7
96.6
92.9
93.0
92.2
96.5
111.8
100.6
99.8
98.2
66.7
74.1
74.3
77.6
79.3
66.6
75.6
75.7
77.1
77.5
77.0
84.3
83.7
85.1
85.5
1955
1956
1957
1958
1959..
87.8
90.7
93.3
94.6
94.8
97.1
97.6
99.8
102.0
99.4
95.1
93.1
97.2
103.0
96.2
103.8
107.6
106.2
102.2
105.8
78.8
84.4
89.2
90.3
91.9
88.1
92.0
94.1
94.3
95.6
88.4
92.6
94.8
95.2
96.5
89.3
89.7
91.3
93.4
90.0
98.6
100.1
101.4
100.4
102.1
83.3
88.5
91.4
92.0
94.2
80.9
88.3
91.8
92.5
93.6
88.9
93.5
94.0
94.0
96.6
1960
1961
1962
1963
1964
94.9
94.5
94.8
94.5
94.7
97.0
96.5
97.5
95.4
94.5
95.1
93.8
95.7
92.9
90.8
101.4
102.5
102.0
100.7
102.4
92.8
92.6
92.1
93.2
92.8
95.6
95.0
94.9
95.2
95.5
96.5
95.3
94.7
94.9
95.9
91.1
94.0
92.0
96.6
95.2
102.1
99.9
99.3
98.4
99.1
94.3
93.0
92.9
93.0
94.8
93.1
92.2
91.5
91.5
92.3
95.9
94.6
94.2
94.5
95.4
1965
1966
1967
1968
1969
96.6
99.8
100.0
102.5
106.5
99.3
105.7
100.0
101.6
108.4
97.1
105.9
100.0
101.3
109.3
104.5
106.7
100.0
102.1
106.9
93.5
96.3
100.0
102.3
106.6
96.8
99.2
100.0
102.3
105.9
97.4
99.3
100.0
102.2
105.7
97.6
101.9
100.0
101.5
107.1
100.0
100.8
100.0
101.3
102.4
96.8
98.6
100.0
103.3
109.1
93.8
97.1
100.0
102.3
105.6
96.2
98.8
100.0
104.9
110.7
1970
1971
1972
1973
110.4
113.9
119.1
135.5
112.2
115.0
127.6
174.0
112.1
114.2
127.5
179.6
109.8
110.5
121.9
161.5
122.3
138.5
148.7
164.5
109.8
114.0
118.7
131.9
110.0
113.0
117.0
127.8
112.9
116.2
119.9
146.0
104.0
105.6
109.4
121.5
115.1
118.8
123.8
133.7
111.1
114.7
117.6
121.4
112.6
119.5
126.2
136.7
1972: Jan...
Feb.Mar..
Apr...
May..
June..
116.3
117.3
117.4
117.5
118.2
118.8
120.2
123.1
123.1
123.0
125.5
127.2
119.3
122.9
122.0
121.0
124.0
126.7
115.4
117.3
119.5
121.3
123.2
122.7
145.4
145.6
146.2
146.9
147.3
147.2
115.9
116.7
117.2
117.7
118.2
118.5
114.9
115.7
115.9
116.4
116.9
117.1
117.9
119.4
118.6
117.8
118.5
119.2
107.0
107.4
107.5
108.7
109.3
109.6
121.5
122.7
123.3
123.7
123.9
123.8
116.0
116.5
116.6
117.0
117.6
118.0
123.1
124.2
124.9
125.5
125.9
126.3
July..
Aug..
Sept..
Oct...
Nov..
Dec...
119.7
119.9
120.2
120.0
120.7
122.9
130.1
130.3
130.3
129.2
130.4
138.3
131.2
130.7
131.4
129.6
129.9
140.7
122.6
124.2
122.2
122.3
124.7
127.2
147.5
148.5
149.1
149.9
154.4
156.3
118.8
119.2
119.7
119.9
120.6
122.3
117.3
117.5
117.7
118.0
118.2
118.8
120.1
119.8
120.3
121.2
120.9
125.1
109.7
110.0
110.2
110.7
111.3
111.8
123.8
124.3
124.6
124.6
124.6
124.7
118.1
118.2
118.1
118.1
118.2
118.2
126.7
127.2
127.4
127.7
127.8
127.9
1973:Jan...
Feb...
Mar...
Apr._.
May...
June..
124.5
126.9
129.7
130.7
133.5
136.7
143.3
151.3
159.0
158.8
167.7
177.5
146.4
156.0
166.2
164.2
173.7
185.4
132.1
138.1
141.4
144.6
154.2
161.8
155.5
156.3
156.9
160.4
161.6
162.6
123.1
125.1
127.4
128.5
131.5
134.3
119.7
121.1
123.5
125.1
126.6
127.8
126.9
130.8
136.0
136.4
138.1
142.6
112.6
113.8
115.7
117.9
120.0
121.9
125.9
127.7
130.9
132.7
134.0
134.3
118.5
118.8
119.6
120.1
121.0
121.3
128.6
130.9
134.2
136.8
138.5
137.9
July..
Aug...
Sept._
Oct...
Nov...
Dec...
134.9
142.7
140.2
139.5
141.8
145.3
170.9
207.5
197.1
185.7
182.7
186.4
177.7
226.2
205.2
189.2
184.2
185.3
155.9
172.7
184.7
180.8
180.8
190.5
163.0
164.4
169.2
169.9
175.0
179.5
131.9
136.1
133.9
134.6
136.4
139.6
128.1
130.6
130.8
131.7
132.8
135.7
143.3
163.5
157.6
158.7
156.0
162.6
122.7
123.6
125.1
126.3
127.6
130.2
134.1
134.5
135.0
135.9
137.8
141.7
121.6
122.0
122.3
122.9
123.8
124.5
136.7
137.3
138.3
138.7
140.7
142.0
See next page for continuation of table and for footnotes.
307
TABLE C~50.—Wholesale price indexes by stage of processing,
1947-73—Continued
[1967=100]
Special groups of industrial
products
Finished goods
Consumer finished goods
Year or month
Total
Total
Foods
Other
nondurable
goods
Durable
goods
Producer
finished
goods
Crude
materials 2
Intermediate
materials,
supplies,
and components 3
Consumer
finished
goods
excluding
foods
1947..
1948..
1949..
74.0
79.9
77.6
80.5
86.5
82.5
82.8
90.4
83.1
80.7
85.8
82.3
74.6
79.7
81.8
55.4
60.4
63.4
79.2
92.5
84.0
70.0
76.1
74.2
79.0
84.0
82.2
1950..
1951..
1952..
1953..
1954..
79.0
86.5
86.0
85.1
85.3
83.9
91.8
90.7
89.2
89.1
84.7
95.2
94.3
89.4
88.7
83.6
90.0
87.8
88.6
88.9
82.7
88.2
88.9
89.6
90.3
64.9
71.2
72.4
73.6
74.5
93.6
102.9
93.1
92.4
88.0
77.7
87.0
84.3
85.3
85.7
83.5
89.5
88.3
89.1
89.4
1955..
1956..
1957..
1958..
1959..
85.5
87.9
91.1
93.2
93.0
88.5
89.8
92.4
94.4
93.6
86.5
86.3
89.3
94.5
90.1
89.4
91.1
93.2
92.6
94.0
91.2
94.3
97.1
98.4
99.6
76.7
82.4
87.5
89.8
91.5
96.6
102.3
100.9
96.9
102.3
88.3
92.6
95.0
94.8
96.4
90.1
92.3
94.6
94.7
95.9
I960..
1961..
1962..
1963..
1964..
93.7
93.7
94.0
93.7
94.1
94.5
94.3
94.6
94.1
94.3
92.1
91.7
92.5
91.4
91.9
94.7
94.7
94.8
95.1
94.8
99.2
98.8
98.3
97.8
98.2
91.7
91.8
92.2
92.4
93.3
98.3
97.2
95.6
94.3
97.1
96.8
95.5
95.3
95.0
95.6
96.3
96.2
96.0
96.0
95.9
1965..
1966..
1967..
1968..
1969..
95.7
98.8
100.0
102.9
106.6
96.1
99.4
100.0
102.7
106.6
95.4
101.6
100.0
103.7
110.0
95.9
97.8
100.0
102.2
105.0
97.9
98.5
100.0
102.2
104.0
94.4
96.8
100.0
103.5
106.9
100.9
104.5
100.0
102.0
110.6
96.9
98.9
100.0
102.6
106.1
96.6
98.1
100.0
102.1
104.6
1970..
1971..
1972..
1973_
110.4
113.5
117.2
129.5
109.9
112.7
116.6
131.2
113.4
115.2
121.7
146.4
108.2
111.3
113.6
125.9
107.1
110.9
113.2
115.8
111.9
116.6
119.5
123.5
118.8
122.7
131.1
155.2
110.0
114.3
118.9
128.4
107.7
111.2
113.5
121.9
1972:Jan..
Feb_.
Mar_.
Apr..
May..
June_
115.5
116.3
116.1
115.8
116.4
116.9
114.7
115.6
115.2
114.8
115.5
116.1
118.7
120.6
119.4
118.0
119.5
120.7
112.0
112.1
112.4
112.7
113.1
113.5
112.9
113.2
113.1
113.2
113.1
113.2
118.4
118.8
119.0
119.3
119.4
119.6
125.6
127.0
129.1
129.3
129.9
129.8
116.4
117.2
117.6
118.2
118.6
119.0
112.3
112.5
112.7
112.9
113.1
113.4
July..
Aug..
Sept..
Oct...
Nov..
Dec.
117.8
117.9
118.2
117.6
118.3
119.5
117.3
117.4
117.7
117.1
117.9
119.3
123.3
123.1
123.6
122.3
124.1
127.1
113.8
114.2
114.5
114.7
115.0
115.2
113.5
113.6
113.7
112.7
112.8
113.7
119.7
119.8
119.9
119.7
119.9
120.3
130.2
132.3
132.6
133.8
136.3
136.8
119.2
119.5
119.8
120.1
120.3
120.5
113.7
114.0
114.2
113.9
114.1
114.6
1973:Jan...
Feb..
Mar..
Apr..
May..
June.
121.0
122.5
124.6
125.6
126.8
128.7
121.2
122.9
125.5
126.6
127.9
130.2
131.8
134.1
140.2
140.7
141.9
145.0
115.4
117.4
117.8
119.8
121.6
124.7
113.8
114.0
114.5
115.3
115.7
115.9
120.6
121.2
121.7
122.3
123.1
123.4
139.1
142.3
142.5
146.8
149.6
152.8
121.2
122.6
124.8
126.6
128.0
128.9
114.8
116.0
116.5
118.0
119.3
121.3
July..
Aug..
Sept..
Oct...
Nov .
Dec.
128.8
132.9
132.2
132.8
136.8
140.7
130.4
135.4
134.5
135.0
139.9
144.7
145.4
158.6
156.1
153.6
153.7
155.7
124.5
124.5
124.8
128.2
140.9
151.1
116.1
116.3
115.8
116.7
117.0
117.9
123.5
123.9
124.2
125.1
125.7
126.7
153.5
156.0
161.0
164.7
174.2
179.8
128.7
129.5
130.3
131.2
133.5
135.9
121.2
121.3
121.3
123.7
131.6
138.2
1
Includes, in addition to subgroups shown, processed fuels and lubricants, containers, and supplies.
2 Excludes crude foodstuffs and feedstuffs, plant and animal fibers, oilseeds, and leaf tobacco.
3
Excludes intermediate materials for food manufacturing and manufactured animal feeds.
Note.—For a listing of the commodities included in each sector, see monthly report, "Wholesale Prices and Price
I ndexes," January-February 1967.
Source: Department of Labor, Bureau of Labor Statistics.
308
TABLE C-51.—Percent changes in wholesale price indexes, major groups, 1948-73
[Percent change from preceding period l\
Industrial
commodities
All
commodities
Year
or
month
Farm products
and processed
foods and feeds
Consumer finished goods
Total
All except
foods
Foods
SeaSeaSeaUnad- sonally Unad- sonally Unad- sonally
adadusted
j usted
adjusted
justed
justed
justed
SeaSeaSeaUnad- sonally Unad- sonally Unad- sonally
adjusted
justed
adadjusted
justed
justed
justed
1948
1949
1.5
-6.1
5.0
-5.0
-6.8
-8.9
1.2
-5.6
-2.4
-7.4
4.0
-4.5
1950.,
1951
1952
1953
1954
14.7
1.2
-3.4
5
- 6
14.0
,4
-1.4
14
,2
17.0
3.5
-8.2
-2 3
-2 6
10.2
2.7
-3.1
-.1
-.6
13.3
5.3
-5.9
-2.2
-1.9
8.2
.9
-1.1
1.6
.3
1955
1956
1957
1958 .
1959
1.6
4.5
2.0
-6.4
6.0
4.2
-.2
-4 4
-.1
3.1
3.0
.2
-.7
-2.9
3.6
5.3
.4
-3.7
1.7
2.5
1.7
.2
.8
-.3
4.3
42
1.1
.9
1 2
I960
1961
1962
1963
1964
.5
-.2
.0
-.1
.4
-.6
-.1
-.2
.5
.6
3.9
-.6
6
-2.1
.0
2.1
-.8
.1
-.4
.2
5.2
-1.8
-1.3
.4
.4
-.3
-.1
.1
.1
1965
1966
1967
1968
1969
3.4
1.7
1.0
2.8
4 8
1.4
2.2
19
2.7
39
9.5
.2
-1 8
3.5
75
4.0
1.6
1.2
3.1
49
9.1
1.4
-.4
4.8
8.2
.9
1.7
2.1
2.0
2.9
2.2
40
6.5
18.2
3.6
32
3.6
14.8
-1 4
6.0
14.4
26.7
1.4
3.3
4.5
21.3
-2.5
59
8.0
22.5
3.9
1.8
2.2
20.6
1970
1971
1972
1973
. . .
. .
.
1971: July
Aug
Sept
Oct...
Nov
Dec
.3
.3
-.3
-.1
.1
.8
1972: Jan
Feb
Mar
Apr
May....
June
.8
9
.1
.1
.6
July....
Aug
Sept....
Oct
Nov . .
Dec
.8
.2
.3
-.2
.6
1.8
1973:Jan
Feb
Mar
Apr
May
June
July.....
Aug
Sept....
Oct
Nov
Dec
0.2
_". 2
.1
.1
.6
.4
5
.2
.3
.5
.5
-.1
.0
-.1
.3
.5
5
.3
.4
.3
.3
0.6
"o
_ l
.1
.3
-.3
-.3
-1 4
.0
.5
2.0
-1.0
1.2
_ 9
8
.3
1.5
-.1
.3
-.5
.2
.2
1.0
-0.5
1.0
-.6
.7
.1
.6
-.7
.4
-1.0
.1
.6
1.7
-1.7
2.1
-1.3
1.9
-.1
.9
.4
.1
1.3
19
-.4
-.7
1.4
1.1
.4
.8
-.3
-.3
.6
.5
.2
.7
-.3
.1
.3
.3
.8
1.6
-1.0
-1.2
1.3
1.0
.3
1.6
-1.0
-.2
.7
.5
.2
.2
.2
.2
.2
.3
.'3
.3
\l
1.0
.1
.3
-.5
.7
1.2
.6
.7
.3
.0
1.1
1.4
.3
.8
2.2
-.2
.4
-1.1
1.5
2.4
.3
.3
.2
-.3
.2
.4
.2
.4
.4
-.4
.3
.3
.2
1.0
.4
1.3
1.1
1.7
.1
1.1
.5
1.4
1.1
1.6
-.1
.1
.0
2.0
6.4
5.0
-.2
.7o
1.5
.2
.3
.2
1
.3
.3
.3
4
.3
4
.3
.4
.2
.3
.3
1
.4
.2
2.2
-.2
.6
-1 0
1.6
5.8
.5
9
.0
1
.8
.5
1.7
1.3
1.4
- 3
1.6
5.0
1.3
1.9
2.2
.8
2.1
2.4
.9
1.6
2.3
10
2.0
2.3
.5
1.1
1.2
14
1.1
.9
.3
1.0
1.2
13
1.2
1.0
3.3
3.9
4.6
- 7
4.7
5.6
2.6
3.0
5.0
1
4.1
5.0
1.6
1.4
2.1
.9
1.0
1.8
1.4
1.2
2.2
1.4
.7
1.6
3.7
1.7
4.5
.4
.9
2.2
3.1
1.8
4.5
1.4
-1.3
5.8
-1.8
-.5
1.6
2.5
-1.4
6.2
-1.5
-.3
1.8
2.2
.0
.4
.5
1.2
3.0
2.7
.1
.4
.7
1.1
3.2
2.6
-4.1
17.6
-6.0
-3.9
-1.4
2.2
-4.6
19.3
-5.2
-3.3
-1.5
1.4
.2
3.8
-.7
.4
3.6
3.4
-.2
4.5
-.6
.9
3.5
3.0
.3
9.1
-1.6
-1.6
.1
1.3
-.8
10.8
-1.7
'.4
.7
.6
.5
.8
1.6
L7
-!6
.5
.3
.0
.4
0.4
-'.1
.0
.1
.4
.1
.*2
1.8
6.5
4.9
i Annual changes are from December to December.
Note.—The seasonally adjusted changes for all commodities and industrial commodities are based on seasonal adjustment factors and seasonally adjusted indexes carried to two decimal places.
Source: Department of Labor, Bureau of Labor Statistics.
309
MONEY STOCK, CREDIT, AND FINANCE
TABLE C-52.—Money stock measures, 1947-73
[Averages of daily figures; billions of dollars, seasonally adjusted]
Components and related items
Overall measures
M3
M3
(M l P lus
Mi
(Ms plus
time
(Currency deposits
deposits
plus
at nonat comdemand
bank
mercial
deposits)
thrift
banks
instituother than
arge CD's) tions)
Year and
month
Deposits at commercial banks
Currency 1
Time and savings 3
Demand2
Total
Large
CD's<
Other
Deposits
at nonbank
thrift
institu-fi
tions
U.S.
Government
demand
deposits
(unadjusted^
1947: Dec
1948: Dec
1949: Dec
113.1
111 5
111.2
26.4
25.8
25.1
86.7
85.8
86.0
35.4
36.0
36.4
10
1.8
2.8
1950: Dec
91 2
96 5
100.1
101.1
104.9
107.4
108.7
107.6
112.6
114.5
36.7
38.2
41.1
44.5
48.3
50.0
51.9
57.4
65.4
67.4
67.4
88.5
2.4
2 7
4 9
38
5.0
3,4
3.4
3.5
39
4.9
97.3
107.9
120.1
134.4
149.2
161.3
167.4
183.1
194.7
201.7
4 7
4.9
5.6
5.1
5.5
4.6
3.4
5.0
5.0
5.6
1952:
1953:
1954:
1955:
1956:
19571958:
1959:
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
116.2
122.7
127.4
128.8
132.3
135.2
136.9
135.9
141. 1
143.4
210.9
299.4
25.0
26.1
27.3
27.7
27.4
27.8
28.2
28.3
28 6
28.9
1960:
1961:
1962:
1963:
1964:
1965:
1966:
1967:
1968:
1969:
Dec . .
Dec
Dec
Dec
Dec
Dec
Dec . . .
Dec . . . .
Dec
Dec
144.2
148.7
150.9
156.5
163 7
171.3
175.4
186.9
201.5
208.6
217.1
228.6
242.8
258.9
277.1
301.4
317.8
349.7
382.4
392.1
314.4
336.5
362.9
393.2
426.3
462.7
485.2
532.8
577.1
593.8
29.0
29.6
30.6
32.5
34.3
36.3
38.3
40.4
43.4
46.1
115.2
119.1
120.3
124.1
129.5
134.9
137.0
146.5
158.1
162.5
72.9
82.7
97.6
112.0
126.2
146.3
157.9
183.1
204.2
194.4
2.8
5.7
9.6
12.8
16.2
15.4
20.4
23.3
10.9
72.9
79.9
92.0
102.3
113.4
130.2
142.4
162.7
180.9
183.5
1970:
1971:
1972:
1973:
Dec
Dec
Dec
Dec*.—
221 2
235.2
255.7
270.4
425 2
473.0
525.5
570.7
641 2
726.9
822.4
893.2
49 1
52.6
56.9
61.6
172 2
182.6
198.7
208.8
229.2
270.9
313.3
363.1
25.3
33.0
43.4
62.8
203 9
237.9
269.9
300.3
216 1
253.9
296.9
322.6
73
6.9
7.4
6.3
235.5
238 2
240 5
242.0
242 8
244.2
477.3
482 9
487 6
490.6
494 1
498.4
735.2
745.0
753.5
760.0
766.5
774.1
52.9 182.6
53.2 184.9
53 6 186.9
53.8 188.2
54.1 188.7
54.3 189.8
275.2
278.7
280.7
283.6
287.9
291.7
33.4
33.9
33.7
35.1
36.5
37.4
241.8
244.7
247.1
248.5
251.3
254.3
257.9
262.1
265.9
269.4
272.4
275.7
7.4
7.9
7.7
10.5
6.9
246.6
247.9
249.5
251.3
252 6
255.7
503.7
507.8
511.9
516.6
520 1
525.5
783.3
791.1
798.8
807.2
813.9
822.4
54.6
54.9
55.3
55.8
56.3
56.9
192.0
193.0
194.2
195.6
196.3
198.7
295.0
298.6
302.1
305.5
309.4
313.3
37.9
38.7
39.8
40.2
41.9
43.4
257.1
259.9
262.4
265.3
267.5
269.9
279.6
283.2
286.9
290.6
293.8
296.9
7.3
5.3
6.0
6.7
6.3
7.4
256.7
257.9
258.1
259.4
262.4
265.5
529.6
532.3
534.6
538.3
543.6
549.4
830.4
836.7
841.7
847.7
855.0
863.5
57.1
57.5
58.0
58.6
58.9
59.4
199.6
200.4
200.1
200.8
203.4
206.2
317.6
323.5
331.1
337.3
342.6
345.8
44.7
49.1
54.6
58.4
61.3
62.0
272.8
274.4
276.6
278.9
281.3
283.8
300.8
304.4
307.0
309.4
311.4
314.2
8.1
9.9
10.4
8.3
8.7
7.1
266.4
266.2
265.4
266.5
268.8
270.4
552.0
554.9
556.6
561.6
566.7
570.7
867.9
870.9
873.2
879.8
886.9
893.2
59.5
59.8
60.2
60.4
60.9
61.6
207.0
206.4
205.2
206.1
207.9
208.8
349.4
355.0
357.9
358.9
359.9
363.1
63.9
66.3
66.7
63.8
62.0
62.8
285.6
288.7
291.2
295.1
297.8
300.3
315.9
315.9
316.6
318.3
320.2
322.6
6.5
4.1
5.3
6.0
4.3
6.3
19*51: Dec
1972:Jan
Feb
Mar
._.
Apr
May
June
July
Aug
Sept
Oct
-.
Nov
Dec
1973: Jan
Feb
Mar
Apr
May
June
July
Aug
Sept
Oct
Nov
Dec P
7.4
1 Currency outside the Treasury, the Federal Reserve Banks, and the vaults of all commercial banks.
2 Demand deposits other than those due to domestic commercial banks and the U.S. Government, less cash items in
process of collection and Federal Reserve float, plus foreign demand balances at Federal Reserve Banks.
3 Time and savings deposits other than those due to domestic commercial banks and the U.S. Government. Effective
June 1966, excludes balances accumulated for payment of personal loans (about $1.1 billion).
* Negotiable time certificates of deposit issued in denominations of $100,000 or more by large weekly reporting commercial banks.
« Average of the beginning- and end-of-month deposits of mutual savings banks and savings capital at savings and loan
associations.
6
Deposits at all commercial banks.
Source: Board of Governors of the Federal Reserve System.
310
TABLE C-53.—Commercial bank loans and investments, 1930-73
[Billions of dollars!
Loans
End of year
or month 1
Total loans
and investments 2
Total 2
Investments
Commercial
and
industrial
U.S. Government securities
Other
securities
1930:June
48.9
34.5
5.0
9.4
1933:June
30.4
16.3
7.5
6.5
1939
40.7
17.2
16.3
7.1
43.9
50.7
67.4
85.1
105.5
124.0
114.0
116.3
114. 7
18.8
21.7
19.2
19.1
21.6
26.1
31.1
38.1
42.4
17.8
21.8
41.4
59.8
77.6
90.6
74.8
69.2
62.6
7.4
7.2
6.8
6.1
6.3
7.3
8.1
9.0
9.2
1940
1941..
1942
1943
1944
1945
1946
1947
1948
Loans plus
loans sold to
bank affiliates 2
Seasonally adjusted
1948
1949
113.0
118.7
41.5
42.0
62.3
66.4
9.2
10.3
1950....
1951
1952
1953
1954
1955
1956...
1957
1958...
19593
124.7
130.2
139.1
143.1
153.1
157.6
161.6
166.4
181.2
188.7
51.1
56.5
62.8
66.2
69.1
80.6
88.1
91.5
95.6
110.5
39.4
61.1
60.4
62.2
62.2
67.6
60.3
57.2
56.9
65.1
57.7
12.4
13.4
14.2
14.7
16.4
16.8
16.3
17.9
20.5
20.5
1960
1961
1962
1963
1964...
1965
1966
1967
1968
19695
197.4
212.8
231.2
250.2
272.4
300.1
«316.1
352.0
390.2
401.7
116.7
123.6
137.3
153.7
172.9
198.2
* 213.9
231.3
258.2
279.1
42.1
43.9
47.6
52.1
58.4
69.5
78.6
86.2
95.9
105.7
59.9
65.3
64.7
61.5
60.8
57.1
53.5
59.4
60.7
51.5
20.8
23.9
29.2
35.0
38.7
44.8
M8.7
61.3
71.3
71.1
283.0
1970
1971..
1972
1973 v
435.5
484.8
556.4
625.4
291.7
«320. 3
377.8
444.5
110.0
115.9
7 129.7
156.3
57.9
60.1
61.9
53.2
85.9
fl 104.4
116.7
127.7
294.7
• 323.1
380.4
448.8
1973: Jan
Feb
Mar
Apr
May
June
564.7
575.4
583.6
589.6
597.7
602.0
385.8
397.2
405.8
411.1
417.4
420.3
133.3
138.1
141.8
143.9
146.8
148.2
61.8
60.6
60.4
61.0
61.0
61.6
117.1
117.6
117.4
117.5
119.3
120.1
388.4
400.3
409.0
414.7
421.1
423.8
608.2
616.0
618.2
621.7
624.6
625.4
427.3
435.3
438.1
440.0
443.6
444.5
151.4
153.6
154.0
154.0
155.5
156.3
59.6
57.7
56.3
54.9
54.5
53.2
121.3
123.0
123.8
126.8
126.5
127.7
431.3
440.0
442.7
444.6
447.9
448.8
July v
Aug*
Sept*
Oct"
Nov*
Dec*
1 Data are for last Wednesday of month (except June 30 and December 31 call dates).
Adjusted to exclude all interbank loans beginning 1948 and domestic bank loans only beginning January 1959.
Beginning January 1959, loans and investments are reported gross, without valuation reserves deducted, rather than
net of valuation reserves, as in earlier periods.
4 Effective June 1966, balances accumulated for payment of personal loans (about $1.1 billion) are excluded from loans
at all commercial banks, and certain certificates of CCC and Export-Import Bank totaling about $1 billion are included in
other securities rather than in loans.
* Beginning June 1969, data include all bank-premises subsidiaries and other significant majority-owned domestic
subsidiaries; earlier data include commercial banks only.
« Beginning June 1971, Farmers Home Administration insured notes totaling about $0.7 billion are classified as other
securities
rather than as loans.
7
Beginning June 1972, commercial and industrial loans were reduced by about $0.4 billion due to loan ^classifications
at one large bank.
2
3
Source: Board of Governors of the Federal Reserve System.
311
TABLE C-54.—Total funds raised in credit markets by nonfinancial sectors, 1965-73
[Billions of dollars]
Item
1965
1966
1967
1968
69.9
67.7
82.2
1.8
3.6
13.0
1.3
.5
2.3
1.3
8.9
4.1
All other nonfinancial sectors.
68.1
64.1
69.2
Corporate equities.
Debt instruments..
.2
67.9
.8
63.3
2.2
67.0
38.8
38.9
45.7
7.3
5.9
25.6
5.6
11.0
22.3
15.4
3.6
4.4
2.2
Total funds raised
U.S. Government.
Public debt securities..
Budget agency issues.
Debt capital instruments..
State and local government securities
Corporate and foreign bonds
Mo rtgages
Home
Other residential..
Commercial
Farm
Other private credit.
Bank loans n.e.c
Consumer credit
Open-market paper.
Other
1969
1970
1971
94.6
91.4
97.5
146.7
13.4
-3.6
12.8
25.5
10.3
3.1
-1.3
-2.4
12.9
-.1
26.0
-.5
81.2
95.0
84.7
121.2
3.4
91.6
4.9
79.8
11.7
109.5
50.6
50.6
57.7
83.2
7.8
15.9
22.0
9.5
14.0
27.1
9.9
13.0
27.7
11.3
20.6
25.7
16.6
19.7
46.8
11.7
3.1
5.7
1.8
11.5
3.6
4.7
2.3
15.1
3.4
6.4
2.2
15.7
4.7
5.3
1.9
12.8
5.8
5.3
1.8
26.0
8.8
10.0
2.0
29.0
24.4
21.3
32.0
41.0
22.1
26.3
14.1
9.6
-.3
5.6
10.7
6.4
1.0
6.2
9.5
4.5
2.1
5.1
13.1
10.0
1.6
7.2
15.3
10.4
3.3
12.0
6.4
6.0
3.8
5.9
9.3
11.2
-.9
6.6
68.1
64.1
69.2
81.2
95.0
84.7
121.2
2.5
7.7
1.3
6.3
22.6
33.9
4.0
7.9
19.0
38.2
3.1
9.8
29.6
38.7
3.3
10.7
32.2
48.8
3.0
11.4
22.9
47.3
5.7
17.0
38.3
60.2
3.6
5.0
-1.4
82.6
By borrowing sector:
Total funds raised.
Foreign
State and local governments...
Households
Nonfinancial business
28.4
29.5
Farm
.....
Nonfarm noncorporate.
Corporate..
3.1
5.4
25.4
3.2
5.3
29.6
2.8
5.6
30.3
3.2
7.4
20.4
38.3
38.8
4.1
8.7
47.4
69.9
67.7
82.2
94.6
91.4
97.5
146.7
46.3
41.2
50.3
60.0
47.8
62.6
82.5
40.5
24.4
52.1
48.3
5.4
66.6
94.2
Demand deposits and currency...
Time and savings accounts
7.8
32.7
4.1
20.3
12.8
39.3
14.5
33.9
7.7
-2.3
10.5
56.1
13.0
81.2
At commercial banks...
At savings institutions.
19.6
13.2
13.0
7.3
22.6
16.7
21.0
12.9
-10.3
8.0
39.2
16.9
40.6
40.6
Credit market instruments, net—
5.8
16.8
-1.7
11.7
42.4
2.9
U.S. Government securities
Private credit market instruments.
5.0
-2.2
Corporate equities..
-.1
Less secu rity debt
8.2
9.3
-1.1
-.3
-1.4
5.6
-4.5
1.5
8.0
12.4
-7.9
16.8
28.2
-4.3
-1.6
Total funds advanced to nonfinancial sectors
3.3
5.7
Financed directly or indirectly by:
Private domestic nonfinancial sectors
Deposits.
- 4 . 1 -11.7
-8.3
5.9
-2.6
-.9
-13.0
8.8
-5.4
2.1
Other sources :
Foreign funds.
.5
1.8
4.9
5.1
10.6
2.4
23.9
At banks..
Direct
.8
-.3
3.7
-1.9
2.3
2.7
2.6
2.5
9.3
1.3
-8.5
10.9
-3.2
27.2
Change in U.S. Government cash
balacne
-1.0
U.S. Government loans
2.8
Private insurance and pension reserves. 15.6
Other
5.8
-.4
4.9
18.1
2.2
1.2
4.6
18.2
3.0
-1.1
4.9
18.8
6.9
.4
2.9
19.2
10.4
2.8
2.8
21.8
5.1
See footnote at end of table.
312
3.2
3.2
25.4
8.4
TABLE G-54.—Total funds raised in credit markets by nonfinancial sectors, 1965-73—Continued
[Billions of dollars]
1973 unadjusted
quarterly flows
1973 seasonally
adjusted annual rates
Item
46.5
47.1
37.4
221.7
180.2
8.8
-5.9
-.4
32.6
1.5
-9.6
8.2
.6
-5.9
.0
-1.1
.7
30.1
2.6
1.4
.1
-12.4
2.9
All other nonfinancial sectors.
37.7
53.1
37.8
189.1
178.7
166.0
Corporate equities.
Debt instruments..
2.2
35.5
2.2
50.9
.7
37.1
8.9
180.1
8.7
170.0
2.9
163.1
18.4
27.4
23.8
81.7
102.8
93.0
1.5
1.7
15.1
2.8
3.6
21.0
1.0
2.0
20.8
5.1
8.3
68.3
9.7
11.7
81.4
5.1
8.5
79.4
8.2
2.8
3.1
1.0
11.6
4.1
4.0
1.3
11.6
3.4
4.8
1.0
37.9
12.6
13.8
4.0
44.9
15.6
16.4
4.6
42.5
14.1
18.9
3.9
17.0
23.5
13.2
98.4
67.2
70.1
13.9
1.8
-1.7
3.1
13.1
7.8
.5
74.4
25.3
-10.8
9.6
33.5
24.1
4.0
5.6
37.0
21.9
3.1
2.1
5.8
6.0
.8
.7
37.7
53.1
37.8
189.1
178.7
166.0
3.3
1.6
11.2
21.6
1.8
2.8
21.3
27.2
-.7
.9
18.2
19.4
14.3
5.4
71.3
98.0
7.3
9.5
72.5
89.5
-2.1
4.9
77.3
85.8
2.0
2.7
16.9
2.8
3.7
20.6
1.6
3.6
14.2
7.0
13.8
77.2
7.7
13.0
68.8
7.6
14.1
64.1
46.5
47.1
37.4
221.7
180.2
156.4
20.3
35.6
22.1
111.4
134.9
117.0
17.9
29.7
11.0
120.0
98.1
69.9
Demand deposits and currency.
Time and savings accounts
-12.7
30.6
10.1
19.6
-4.1
15.1
-.8
120.7
20.7
77.4
8.1
61.9
At commercial banks..
At savings institutions.
18.7
12.0
11.0
8.6
14.0
1.1
76.3
44.4
46.1
31.3
54.0
7.8
2.4
5.9
11.1
-8.5
36.8
47.0
2.8
-.8
3
2.2
3.8
8.8
3.8
-2.4
-.7
-4.1
-6.8
-3.0
23.3
13.5
-4.5
-4.5
32.5
20.4
-9.2
-3.3
Total funds raised
U.S. GovernmentPublic debt securities.
Budget agency issues.
Debt capital instruments.
State and local government securities..
Corporate and foreign bonds
Mortgages
Home
Other residential.
Commercial
Farm
Other private creditBank loans n.e.c
Consumer credit
Open-market paper..
Other
156.4
By borrowing sector:
Total funds raised.
Foreign
State and local governments.
Households
Nonfinancial business
Farm
Nonfarm noncorporate..
Corporate
Total funds advanced to nonfinancial sectors..
Financed directly or indirectly by:
Private domestic nonfinancial sectors..
Deposits
Credit market instruments, net..
U.S. Government securities
Private credit market instruments.
Corporate equities
Less security debt
-1.2
-1.1
Other sources:
Foreign funds.
9.7
.2
1.6
38.6
.6
-1.8
At banks..
Direct
.2
9.5
2.1
-1.9
1.0
.6
1.9
36.7
8.1
-7.5
4.6
-6.4
2.3
.5
7.3
6.5
-.4
-.2
7.1
4.8
-5.1
1.1
6.9
10.9
16.4
1.9
28.8
24.5
-9.3
-1.0
29.1
25.8
-21.3
4.2
27.4
Change in U.S. Government cash balance.
U.S. Government loans.
Private insurance and pension reserves...
Other
Source: Board of Governors of the Federal Reserve System.
313
30.8
TABLE C—55.—Private liquid asset holdings, nonfinancial investors, 1965—73
[Averages of daily figures; billions of dollars, seasonally adjusted]
Currency and deposits
U.S. Government
securities
Time deposits
Year
and
month
Total
liquid
assets
Total
1965: Dec.
1966: Dec.
1967: Dec.
1968: Dec.
1969: Dec.
1970: Dec.
1971: Dec.
1972: Dec.
1973: Dec p.
561.0
590.6
640.4
699.8
730.3
780.8
863.9
975.1
,080.9
1971: Jan..
Feb..
Mar..
Apr_.
MayJune.
Currency ]
Demand
deposits *
451.0
473.7
520.3
564.2
582.1
630.7
718.6
814.7
887.5
36.3
38.3
40.4
43.4
46.1
49.1
52.6
56.9
61.6
789.0
798.7
807.1
814.0
821.6
828.8
638.3
649.4
659.6
668.2
677.2
684.4
July.
Aug_.
Sept.
Oct..
Nov.Dec.
835.7
840.4
845.4
852.4
857.6
863.9
1972:Jan...
Feb..
Mar..
Apr_.
May..
June.
Shortterm
Savmarketings
able
bonds 3
securities«
Negotiable
certificates
of deposit*
Commercial
paper'
Commercial
banks1
Nonbank
thrift
institutions 2
119.1
121.1
129.4
139.4
143.4
151.5
160.6
174.7
184.3
125.2
136.9
156.3
174.5
177.2
198.7
233.4
265.0
294.6
170.4
177.3
194.2
206.9
215.4
231.4
272.0
318.1
347.0
49.5
50.1
51.0
51.4
51.1
51.3
53.7
57.0
60.9
38.7
43.6
39.6
46.9
64.9
53.3
40.7
42.8
52.4
14.9
14.5
19.1
22.4
9.0
23.0
29.7
39.3
57.2
6.8
8.8
10.4
14.9
23.3
22.4
21.2
21.2
22.8
49.4
49.8
50.0
50.5
50.8
51.0
151.3
153.1
154.4
155.4
157.9
159.7
202.7
207.5
212.4
215.4
217.9
220.0
234.9
239.0
242.8
246.9
250.6
253.7
51.5
51.6
51.8
52.0
52.2
52.4
52.6
50.5
48.0
47.0
46.2
46.2
24.3
25.5
26.5
26.1
26.4
26.9
22.3
21.7
21.3
20.6
19.6
18.8
690.4
695.0
699.7
706.4
712.2
718.6
51.5
51.6
51.9
52.2
52.3
52.6
160.5
160.4
160.3
160.8
160.3
160.6
221.4
222.9
224.3
227.1
230.2
233.4
257.1
260.1
263.1
266.3
269.3
272.0
52.6
52.9
53.1
53.3
53.5
53.7
46.4
45.7
44.3
43.0
41.8
40.7
27.4
27.2
27.8
28.7
28.7
29.7
18.8
19.5
20.4
21.0
21.4
21.2
872.6
881.6
892.3
901.3
909.2
917.4
727.4
737.2
746.2
752.6
758.8
766.1
52.9
53.2
b3.6
53.8
54.1
54.3
160.8
163.0
165.2
166.3
166.2
166.9
237.4
240.2
242.4
243.8
246.5
249.4
276.3
280.9
285.0
288.7
291.9
295.5
54.0
54.2
54.5
54.8
55.0
55.3
39.7
38.2
39.4
40.1
40.0
39.6
30.1
30.6
30.5
32.0
33.4
34.3
21.4
21.4
21.6
21.9
22.0
22.1
July..
Aug..
Sept.
Oct._
Nov..
Dec.
926.6
935.2
944.4
954.0
964.4
975.1
774.9
782.9
790.8
799.6
806.5
814.7
54.6
54.9
55.3
55.8
56.3
56.9
168.4
169.6
170.7
171.9
172.5
174.7
252.2
255.0
257.4
260.4
262.7
265.0
299.6
303.5
307.5
311.5
315.0
318.1
55.6
55.9
56.1
56.4
56.7
57.0
39.3
39.1
39.5
40.2
42.0
42.8
34.8
35.6
36.6
36.8
38.2
39.3
22.0
21.7
21.4
21.0
21.1
21.2
1973:Jan...
Feb..
Mar..
Apr..
May..
June.
983.2
992.6
1,004.1
1,014.2
1, 026.4
1,037.2
822.9
829.2
834.7
841.0
848.4
857.3
57.1
57.5
58.0
58.6
58.9
59.4
175.1
175.7
175.5
176.5
178.9
181.4
268.0
269.4
271.6
273.7
276.0
278.7
322.7
326.6
329.5
332.3
334.6
337.8
57.3
57.6
57.9
58.2
58.5
58.8
41.5
41.1
42.5
42.6
44.4
45.2
40.2
44.3
49.6
53.3
56.0
56.4
21.3
20.5
19.5
19.1
19.1
19.6
1,045.2
1,053.1
1,058.5
1,064.3
1,071.2
1,080.9
861.6
864.2
866.5
873.3
880.3
887.5
59.5
59.8
60.2
60.4
60.9
61.6
182.0
181.2
179.8
180.9
183.0
184.3
280.4
283.5
286.0
289.7
292.1
294.6
339.7
339.7
340.5
342.3
344.3
347.0
59.0
59.3
59.4
60.0
60.8
60.9
45.8
47.4
49.0
50.0
50.9
52.4
58.4
60.8
61.0
58.0
56.3
57.2
20.4
21.5
22.6
23.0
23.0
22.8
July...
Aug...
Sept..
Oct...
Nov...
Dec p .
1 Money stock components (see Table C-52) after deducting foreign holdings and holdings by domestic financial institutions. The three columns add to M2 held by domestic nonfinancial sectors.
2 Deposits at nonbank thrift institutions, as published in money stock statistics, plus monthly-average deposits at credit
unions.
3 Series E and H savings bonds held by individuals.
* Short-term marketable U.S. Government securities excluding official, foreign, and financial institution holdings.
5
Certificates over $100,000 at weekly reporting banks, except foreign holdings.
6
Commercial paper held outside banks and other financial institutions.
Source: Board of Governors of the Federal Reserve System.
314
TABLE C-56.—Federal Reserve Bank credit and member bank reserves, 1929-73
[Averages of daily figures; millions of dollars]
Reserve Bank credit outstanding
Year and month
Total
*929: Dec
1933- Dec
. -
1939- Dec
U.S.
Government securities
Member bank
borrowings
Total
Seasonal
Member bank reserves
All
other,
mainly
float
Total
Required
1,643
446
801
396
2,395
2,347
2,669
2 432
95
142
2 588
U 822
Excess
48
I
766
2,612
2,510
3
99
11,473
6,462
5,011
2,305
2,404
6,035
11,914
19,612
24, 744
24, 746
22, 858
23,978
19,012
2,188
2,219
5 549
11,166
18, 693
23 708
23, 767
21,905
23, 002
18, 287
3
5
4
90
265
334
157
224
134
118
114
180
482
658
654
702
822
729
842
607
14, 049
12,812
13,152
12, 749
14,168
16 027
16,517
17,261
19,990
16,291
7,403
9,422
10 776
11,701
12, 884
14 536
15,617
16,275
19,193
15,488
6 646
3,390
2 376
1 048
1 284
1 491
'900
986
797
803
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
21,606
25,446
27,299
27,107
26,317
26, 853
27,156
26,186
28,412
29, 435
20, 345
23,409
24, 400
25, 639
24,917
24, 602
24, 765
23, 982
26,312
27, 036
142
657
1,593
441
246
839
688
710
557
906
1,119
1,380
1,306
1,027
1,154
1,412
1,703
1,494
1,543
1,493
17,391
20,310
21,180
19,920
19, 279
19,240
19, 535
19,420
18,899
2 18,932
16,364
19, 484
20, 457
19,227
18, 576
18,646
18,883
18, 843
18, 383
18, 450
1 027
826
723
693
703
594
652
577
516
482
1960:
1961:
1962:
1963:
1964:
1965:
1966:
1967:
1968:
1969:
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
29, 060
31,217
33, 218
36,610
39, 873
43,853
46,864
51,268
56,610
64,100
27, 248
29, 098
30, 546
33, 729
37,126
40, 885
43, 760
48, 891
52, 529
57, 500
87
149
304
327
243
454
557
238
765
1,086
1,725
1,970
2,368
2,554
2,504
2,514
2,547
2,139
3,316
5,514
19,283
20,118
20, 040
20, 746
21,609
22, 719
23, 830
25, 260
27, 221
28, 031
18, 527
19, 550
19,468
20,210
21,198
22, 267
23, 438
24,915
26, 766
27, 774
756
568
572
536
411
452
392
345
455
257
1970:
1971:
1972:
1973:
Dec
Dec
Dec
Dec*
66,708
74, 255
76,851
85,554
61,688
69,158
71,094
79,701
321
107
1,049
1,298
4,699
4,990
4,708
4,555
29, 265
31,329
3 31,353
3 34,984
28,993
31,164
31,134
34,791
272
165
3 219
3 193
75,415
73, 994
73,181
75,171
75, 705
76,108
70,
69,
69,
70,
71,
71,
687
966
273
939
428
632
20
33
99
109
119
94
4,708
3,995
3,809
4,123
4,158
4,382
32, 865
31,922
31,921
32, 565
32,812
32, 539
32,692
31,798
31,688
32, 429
32, 708
32, 335
173
124
233
136
104
204
July
Aug
Sept
Oct
Nov
Dec
77,035
76,676
75, 451
77,331
75,959
76,851
72, 089
71,858
70, 252
71 359
71,112
71,094
202
438
514
574
606
1,049
4,744
4,380
4,685
5 398
4,241
4,708
33, 021
33,148
33, 003
33 803
3 31,774
31,353
32, 874
32,893
32,841
33 556
31,460
31,134
147
255
162
247
3 314
219
1973:Jan
Feb
Mar
Apr
May
June
78, 063
77,600
79, 219
80, 542
81,889
80, 546
72 194
72, 307
74 019
75,353
76,758
75, 355
1,165
1,593
1,858
1,721
1,786
1,789
5
30
77
4 704
3,700
3 342
3 468
3,345
3,402
3 32,962
31,742
31 973
32,277
32, 393
32, 028
32,620
31, 537
31,678
32,125
32, 275
31,969
3 342
205
295
152
118
59
83, 880
82,445
81, 809
83,643
83, 755
85,554
77,448
76,653
76,073
78 042
78,457
79,701
2,051
2,143
1,861
1 467
1 399
1,298
124
163
147
126
84
41
4,381
3,649
3,875
4 134
3 899
4,555
33,542
33, 785
34,019
34,912
34, 727
34,984
33,199
33,539
33,782
34,712
34, 523
34,791
343
246
237
200
204
193
1940:
1941:
1942:
1943:
1944:
19451946:
1947:
1948:
1949:
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
1950:
1951:
1952:
1953:
1954:
1955:
1956:
1957:
1958:
1959:
1972:Jan
Feb
Mar
Apr
May
June
July
Aug
Sept
Oct
Nov
Dec p
. . .
.-.
. . .
.
.
1
41
Data are for licensed banks only.
2 Beginning December 1959, total reserves held include vault cash allowed.
3 Beginning November 1972, includes $450 million of reserve deficiencies on which Federal Reserve Banks are allowed
to waive penalties for a transition period in connection with bank adaptation to Regulation J as amended effective November 9,1972. Beginning 1973, allowable deficiencies included are (beginning with first statement week of quarter): first
quarter, $279 million; second quarter, $172 million; third quarter, $112 million; fourth quarter, $84 mifiion.
Source: Board of Governors of the Federal Reserve System.
315
TABLE C-57.—Aggregate reserves and member bank deposits, 1959-73
[Averages of daily figures; i billions of dollars, seasonally adjusted]
Deposits subject to reserve
requirements *
Member bank reserves 2
Year and
month
Demand
Total
N on borRequired
rowed
Available 3
Total
Time
and
savings
Private
U.S.
Government
Total
member
bank
deposits
plus
nondeposit8
items
1959: Dec
18.57
17.63
18.07
16.62
158.2
54.3
99.0
4.8
158.2
1960:
1961:
1962:
1963:
1964:
Dec
Dec
Dec
Dec
Dec
18.88
19.71
19.64
20.26
21.18
18.81
19.57
19.38
19.93
20.91
18 14
19.12
19.07
19.77
20.77
17 01
17.71
17.58
18.26
19.08
162 5
175.5
189.0
203.2
218.7
58 8
67.7
79.9
92.1
103.8
99 1
102.9
103.3
105.9
109.1
4.5
4.9
5.7
5.2
5.9
162 5
175.5
189.0
203.4
220.1
1965:
1966:
1967:
1968:
1969:
Dec
Dec
Dec
Dec
Dec
22.24
23.34
24.81
27.28
28.01
21.80
22 81
24.58
26.54
26.90
21.82
23.00
24.44
26.86
27.73
20.21
21.40
22.50
24.86
25.40
238.5
246.7
275.5
299.6
287.7
120.6
128 6
148.8
164.4
150.4
112.8
113 9
121.2
130.3
131.9
5.1
4.2
5.5
4.9
5.3
240.0
250 9
279.9
306.6
307.7
1970:
1971:
1972:
1973:
Dec
Dec
Dec
Dec
29.19
31.30
31.41
35.11
28.86
31.17
30.36
33.81
28.95
31.12
31.13
34.80
27.10
28.96
29.05
32.91
321.3
360.3
402.0
442.2
178.8
210.4
241.4
279.0
136.1
143.8
154.5
158.3
6.5
6.1
6.1
4.9
332.9
364.3
406 4
449.6
31.76
31.68
31.98
32.57
32.82
32.99
31.74
31.64
31.88
32.45
32.71
32.88
31.55
31.52
31.79
32.42
32.68
32.78
29.18
29.36
29.66
29.83
29.94
30.17
363.5
365.7
370.2
374.5
378.9
380.9
213.6
216.2
217.3
219.4
222.8
225.6
143.5
145.2
147.2
147.6
148.4
149.3
6.4
4.2
5.7
7.5
7.8
6.0
367 5
369.3
373.9
378.1
382.7
384 7
33.17
33.39
33.35
33.81
31.92
31.41
32.93
33.00
32.81
33.25
31.32
30.36
32.97
33.20
33.14
33.59
31.57
31.13
30.38
30.65
30.96
31.06
29.62
29.05
384.4
387.3
390.4
394.1
398.4
402.0
228.0
230.4
233.1
235.6
238.7
241.4
150.9
151.8
152.4
152.8
152.9
154.5
5.5
5.0
4.9
5.8
6.8
6.1
388.3
391.4
394.5
398.4
402.7
406.4
32.20
31.63
31.91
32.30
32.44
32.46
31.04
30.04
30.08
30.59
30.60
30.61
31.94
31.43
31.70
32.08
32.29
32.22
29.44
29.37
29.62
29.87
30.11
30.55
404.7
409.0
416.3
421.4
425.1
428.9
244.0
248.9
255.4
260.9
265.1
267.3
154.0
154.0
153.3
153.4
154.8
156.3
6.7
6.1
7.6
7.1
5.2
5.3
409.7
413.5
421.2
426.6
430.5
434.5
33.58
33.91
34.17
34.94
34.86
35.11
31.62
31.74
32.32
33.47
33.46
33.81
33.29
33.73
33.95
34.72
34.62
34.80
31.36
32.04
32.39
32.84
32.71
32.91
431.1
436.7
438.6
439.7
440.4
442.2
270.1
275.0
277.5
277.3
277.1
279.0
157.1
157.0
156.2
156.4
157.5
158.3
3.9
4.8
5.0
6.0
5.8
4.9
437.6
443.8
445.9
446.5
447.5
449.6
.
.
1972: Jan
Feb .
Mar
Apr
May
June
July
Aug
Sept
Oct
Nov
Dec
1973: Jan
Feb . . .
Mar
Apr
May
June
July
Aug
Sept
Oct
Nov 5
Dec*
1 Except as noted in footnote 5.
2 Member bank reserves series reflects actual reserve requirement percentages with no adjustment to eliminate the
effect of changes in Regulations D and M.
3 Reserves available tc support private nonbank deposits are defined as (1) required reserves for (a) private demand
deposits, (b) total time and savings deposits, and (c) nondeposit sources subject to reserve requirements and (2) excess
reserves. This series excludes required reserves for net interbank and U.S. Government demand deposits.
< Deposits subject to reserve requirements include total time and sayings deposits and net demand deposits as defined
by Regulation D. Private demand deposits include all demand deposits except those due to the U.S. Government, less
cash items in process of collection and demand balances due from domestic commercial banks.
s Total member bank deposits subject to reserve requirements, plus Eurodollar borrowings, bank-related commercial
paper (data relate to Wednesday figures), and certain other nondeposit items. This series for deposits is referred to as
"the adjusted bank credit proxy."
Source: Board of Governors of the Federal Reserve System.
316
TABLE C-58.—Bond yields and interest rates, 1929-73
(Percent per annum]
Corporate
bonds
(Moody's)
U.S. Government securities
Year or month
3-month 9-12
Treas- month
2
ury
bills i issues
3-5
Taxable
year
issues 3 bonds*
Aaa
Baa
Average
High- rate on Prime
Fedgrade
shortFHA
comeral
municterm
new
merReserve
ipal
bank
home
Bank
cial
bonds
loans
mortdis(Stand- to busi- '?.%•
gage
count
ard & n e s s yields 5
rate
Poor's) selected months
cities
4.73
5.90
4.27
5.85
5.16
0.515
2.66
4.49
7.76
4.71
1.73
2.56
1939
.023
.59
3.01
4.96
2.76
2.1
.59
1.00
1940
1941
1942
1943
1944
.014
.103
.326
.373
.375
0.75
.79
.50
.73
1.46
1.34
1.33
2.46
2.47
2.48
2.84
2.77
2.83
2.73
? 1?
4.75
4.33
4.28
3.91
3.61
2.50
2.10
2.36
2.06
1.86
2.1
2.0
2.2
2.6
2.4
.56
.53
.66
.69
.73
1.00
1.00
1.00
fi 1.00
« 1.00
.375
.375
.594
1.040
1.102
.81
.82
.88
1.14
1.14
1.18
1.16
1.32
1.62
1.43
2.37
2.19
2.25
2.44
2.31
2.62
? 53
2.61
2.82
? 6fi
3.29
3.05
3.24
3.47
3.42
1.67
1.64
2.01
2.40
2.21
2.2
2.1
2.1
2.5
2.68
.75
.81
1.03
1.44
1.49
«1.00
6 1.00
1.00
1.34
1.50
1.218
1.552
1.766
1.931
.953
1.26
1.73
1.81
2.07
.92
1.50
1.93
2.13
2.56
1.82
2.32
2.57
2.68
2.94
2.55
2.62
? 86
2.96
3.20
2.90
3.24
3.41
3.52
3.74
3.51
1.98
2.00
2.19
2.72
2.37
2.69
3.11
3.49
3.69
3.61
1.45
2.16
2.33
2.52
1.58
1.59
1.75
1.75
1.99
1.60
4.17
1.753
2.658
3.267
1 839
3.405
1.89
2.83
3.53
2.09
4.11
2.50
3.12
3.62
2.90
4.33
2.84
3.08
3.47
3.43
4.07
3.06
3.36
3.89
3.79
4.38
3.53
3 88
4.71
4 73
5.05
2.53
2.93
3.60
3.56
3.95
3.70
4.20
4.62
4.34
7 5.00
2.18
3.31
3.81
2 46
3.97
1.89
2.77
3.12
2.15
3.36
4.64
4.79
5.42
5.49
5.71
2 928
2.378
2.778
3.157
3.549
3.55
2.91
3.02
3.28
3.76
3.99
3.60
3.57
3.72
4.06
4.01
3.90
3.95
4.00
4.15
4.41
4.35
4.33
4.26
4.40
5.19
5.08
5.02
4.86
4.83
3.73
3.46
3.18
3.23
3.22
5.16
4.97
5.00
5.01
4.99
3.85
2.97
3.26
3.55
3.97
3.53
3.00
3.00
3.23
3.55
6.18
5.80
5.61
5.47
5.45
1965
1966
1967
1968 . .
1969
3.954
4.881
4.321
5.339
6.677
4.09
5.17
4.84
5.62
7.06
4.22
5.16
5.07
5.59
6.85
4.21
4.66
4.85
5.25
6.10
4.49
5.51
6.18
7.03
4.87
5.67
6 23
6.94
7.81
3.27
3.82
3.98
4.51
5.81
5.06
6.00
7 6.00
6.68
8.21
4.38
5.55
5.10
5.90
7.83
4.04
4.50
4.19
5.17
5.87
5.46
6.29
6.55
7.13
8.19
1970
1971 .
1972...
1973 . .
6 458
4.348
4.071
7.041
6 90
4.75
4.86
7.30
7 37
5.77
5.85
6.92
6 59
5.74
5.63
6.30
8 04
7.39
7.21
7.44
9 11
8.56
8.16
8.24
6 51
5.70
5.27
5.18
8 48
7 6.32
5.82
8.30
7.72
5.11
4.69
8.15
5.95
4.88
4.50
6.44
9.05
7.78
7.53
8.08
1929
...
1933
.
.
1945 . .
1946
1947
1948 .
1949
1950 .
1951
1952
1953
1954
.
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
.
..
5n
See next page for continuation of table and for footnotes.
317
527-867 O - 74 - 21
6
4.34
4.21
4.29
4.61
4.62
TABLE G-58.—Bond yields and interest rates, 1929-73—Continued
(Percent per annuml
Corporate
bonds
(Moody's)
U.S. Government securities
Year or month
3-month
9-12
Treasmonth
ury
issues2
bills i
3-5
Taxable
year
4
issues 3 bonds
Aaa
Baa
Average
Highrate on
Prime
Fedgrade
shortcomeral
municterm
merReserve
ipal
bank
cial
Bank
bonds
loans
dis(Stand- to busi- paper,
count
ard & nessrate
months
Poor's) selected
cities
1971: Jan
Feb
Mar
Apr
May
June
4.494
3.773
3.323
3.780
4.139
4.699
4.29
3.80
3.66
4.21
4.93
5.57
5.72
5.31
4.74
5.42
6.02
6.36
5.91
5.84
5.71
5.75
5.96
5.94
7.36
7.08
7.21
7.25
7.53
7.64
8.74
8.39
8.46
8.45
8.62
8.75
5.70
5.55
5.44
5.65
6.14
6.22
July
Aug
Sept
Oct
Nov
Dec
5.405
5.078
4.668
4.489
4.191
4.023
5.89
5.67
5.31
4.74
4.50
4.38
6.77
6.39
5.96
5.68
5.50
5.42
5.91
5.78
5.56
5.46
5.44
5.62
7.64
7.59
7.44
7.39
7.26
7.25
8.76
8.76
8.59
8.48
8.38
8.38
6.31
5.95
5.52
5.24
5.30
5.36
3.403
3.180
3.723
3.723
3.648
3.874
3.99
4.07
4.54
4.84
4.58
4.87
5.33
5.51
5.74
6.01
5.69
5.77
5.62
5.67
5.66
5.74
5.64
5.59
7.19
7.27
7.24
7.30
7.30
7.23
8.23
8.23
8.24
8.24
8.23
8.20
5.25
5.33
5.30
5.45
5.26
5.37
Julv
Aug
Sept
Oct
Nov
Dec
4.059
4.014
4.651
4.719
4.774
5.061
4.89
4.91
5.49
5.41
5.22
5.46
5.86
5.92
6.16
6.11
6.03
6.07
5.57
5.54
5.70
5.69
5.50
5.63
7.21
7.19
7.22
7.21
7.12
7.08
8.23
8.19
8.09
8.06
7.99
7.93
5.39
5.29
5.36
5.20
5.03
5.03
1973: Jan
Feb
Mar
Apr
May
June
5.307
5.558
6.054
6.289
6.348
7.188
5.78
6.07
6.81
6.79
6.83
7.27
6.29
6.61
6.85
6.74
6.78
6.76
5.94
6.14
6.20
6.11
6.22
6.32
7.15
7.22
7.29
7.26
7.29
7.37
7.90
7.97
8.03
8.09
8.06
8.13
5.05
5.12
5.30
5.16
5.12
5.15
July
Aug
Sept
Oct
Nov
Dec
8.015
8.672
8 478
7.155
7.866
7.364
8.37
8.82
8.44
7.42
7.66
7.38
7.49
7.75
7.16
6.81
6.96
6.80
6.53
6.81
6.42
6.26
6.31
6.35
7.45
7.68
7.63
7.60
7.67
7.68
8.24
8.53
8.63
8.41
8.42
8.48
5.39
5.47
5.11
5.05
5.17
5.12
1S72: Jan .
Feb
Mar
Apr
May
June
7 6.59
6.01
6.51
6.18
5.52
5.59
5.84
6.33
6.52
7.35
9.24
10.08
FHA
new
home
mortgage
yields s
5.11
4.47
4.19
4.57
5 10
5.45
5.23
4.91
4 75
4.75
4 75
4 75
8.40
5.75
5.73
5.75
5.54
4.92
4.74
4 88
5.00
5.00
5 00
4.90
4.63
7 89
7.97
7.92
7 84
7.75
7.62
4.08
3.93
4.17
4.58
4.51
4.64
4.50
4.50
4.50
4.50
4.50
4.50
7.59
7.49
7 46
7.45
7.50
7 53
4.85
4.82
5.14
5.30
5.25
5.45
4 50
4.50
4.50
4.50
4.50
4.50
7 54
7.54
7.55
7 56
7.57
7.57
5.78
6.22
6.85
7.14
7.27
7.99
4.77
5.05
5.50
5.50
5.90
6.33
7.56
7.55
7.56
7.63
7.73
7.79
9.18
10.21
10.23
8.92
8.94
9.08
6.98
7.29
7.50
7.50
7.50
7.50
7.89
8.19
7 32
7 37
7 75
9.18
8.97
8.86
1
3
Rate on new issues within period. First issued in December 1929.
Certificates of indebtedness and selected note and bond issues.
3 Selected note and bond issues.
* First issued in 1941. Series includes bonds which are neither due nor callable before a given number of years as follows: April 1953 to date, 10 years; April 1952-March 1953,12 years; October 1941-March 1952,15 years.
* Data for first of the month, based on the maximum permissible interest rate ( 8 H percent beginning August 25,1973).
Through
July 1961, computed on 25-year mortgages paid in 12 years and thereafter, 30-year mortgages paid in 15 years.
6
From October 30, 1942, to April 24,1946, a preferential rate of 0.50 percent was in effect for advances secured by
Government securities maturing in 1 year or less.
7
Series revised. Not strictly comparable with earlier data.
NOte.—Yields and rates computed for New York City except for short-term bank loans.
Sources: Department of Housing and Urban Development, Department of the Treasury, Board of Governors of the
Federal Reserve System, Moody's Investors Service, and Standard & Poor's Corporation.
318
TABLE C-59.—Short- and intermediate-term consumer credit outstanding, 1929-73
[Millions of dollars]
r^oninstalmentcredi
Instalment credit
Total
Automobile
paper
Other
consumer
goods
paper
Total
End of year or
month
Home
improvement
loans*
Personal
loans
Total
Charge
accounts
Other 2
Addendum:
Policy
loans by
life insurance
companies s
1929.
7,116
3, 524
1,384
1,544
27
569
3, 592
1,996
1, 596
1933
3,885
1, 7?3
493
799
15
416
?, lfi?
1,286
876
3 769
1939.
7,222
4, 503
1,497
1,620
298
1,088
? 719
1,414
1 305
3,248
1940
1941
1942.
1943
1944
1945.
1946
1947.
1948.
1949.
8,338
9,172
5,983
4,901
5,111
5,665
8,384
11, 598
14,447
17, 364
\ 514
6 085
166
?' 13fi
? 176
2, 462
4, 17?
6, 695
8 996
11, 590
2,071
2,458
742
355
397
455
981
1,924
3,018
4,555
1,827
1,929
1,195
819
791
816
1,290
2,143
2,901
3,706
371
376
255
130
119
182
405
718
853
898
1,245
1,322
974
832
869
1,009
1,496
1,910
2,224
2,431
?, 8?4
3 087
2, 817
?, 7fiS
2, 935
3,203
4,212
4, 903
5 4f>1
5, 774
1 471
1,645
1,444
1 440
i; 517
1,612
2,076
2,381
2,722
2,854
1, 3S3
1, 44?
1, 373
1, 3?1)
1, 418
591
?\ 136
2, 522
? 7?9
2, 920
3 091
2 919
2,683
2 373
2 134
1,962
1 894
1,937
2,057
2,240
1950
1951.
1952
1953
1954.
1955
1956
1957.
1958
1959.
21,471
22,712
27, 520
31,393
32,464
38, 830
42,334
44,971
45,129
51, 544
14, 70S
15, 294
19, 403
?\ DOS
23, 568
?8,
31, 7?n
33, 868
33, fi4?
39,247
6,074
5,972
7,733
9,835
9,809
13,460
14, 420
15, 340
14,152
16,420
4,799
4,880
6,174
6,779
6,751
7,641
8,606
8,844
9,028
10,631
1,016
1,085
1,385
1,610
1,616
1,693
1,905
2,101
2,346
2,809
2,814
3,357
4,111
4,781
5,392
6,112
6,789
7,582
8,116
9,386
fi, 7fiR
7, 418
8, 117
8,388
8, 896
9, 9?4
in, 614
ii, 103
11, 487
12, 297
3,367
3,700
4 130
4,274
4,485
4 795
4,995
5,146
5 060
5,104
3 401
3, 718
3, 987
4, 114
4, 411
5, 1?9
\ 619
5, 957
fi, 4?7
7, 193
2,413
2,590
2 713
2,914
3,127
3,290
3,519
3,869
4,188
4,618
1960
1961.
1962.
1963
1964.
1965
1966
1967.
1968
1969.
56,141
57,982
63, 821
71,739
80, 268
89, 883
96, 239
100,783
110,770
121,146
42,968
43, 891
48, 720
55, 486
6? 69?
70, 893
76, ?45
79 4?8
87, 745
97,105
17,658
17,135
19, 381
22, 254
24, 934
28,437
30,010
29, 796
32,948
35, 527
11,545
11,862
12,627
14,177
16,333
18, 483
20, 732
22, 389
24, 626
28,313
3,148
3,221
3,298
3,437
3,577
3,736
3,841
4,008
4,239
4,613
10,617
11,673
13,414
15,618
17, 848
20, 237
21,662
23, 235
25, 932
28,652
173
14, 091
15 101
16, ?S3
17, 57fi
18,990
19,994
?1 355
?3, 0?5
24, 041
5,329
5,324
5,684
5,903
6,195
6,430
6,686
7,070
7,193
7,373
7, 844
8,767
9,417
10 3sn
11 381
1? •ifif)
13 308
14 ?85
15 83?
16,668
5,231
5,733
6,234
6,655
7,140
7,678
9,117
10,059
11,306
13,825
1970
1971.
1972.
1973*
127,163
138,394
157, 564
180, 800
102, 064
111,295
127, 332
148,100
35,184
38,664
44,129
51, 400
31,465
34,353
40,080
47, 750
5,070
5,413
6,201
7 350
30, 345
32, 865
36,922
41,600
?5
27
30
3?
099
099
232
700
7,968
8,350
9,002
9,600
17,131
18 749
21 230
?3 inn
16,064
17,065
18, 003
1972: Jan . . .
Feb
Mar
Apr
May
June
137,426
136,941
137,879
139,410
141,450
143,812
110,
110
111
112
114
116
757
510
?57
439
183
3fi5
38,450
38,516
38,853
39, 348
40, 063
41,019
34,
33,
33,
33,
34,
35,
046
579
695
981
439
041
5,399
5,403
5,437
5,504
5,604
5,717
32, 862
33,012
33, 272
33, 606
34, 077
34, 588
26
26
?6
26
27
27,
669
431
6??
971
?fi7
447
7,630
6,987
6,963
7,179
7,464
7,610
19
19
19
19
19
19
039
444
659
792
803
837
17,130
17,186
17,267
17,352
17,434
17,522
145,214
147, 631
148,976
150, 576
152, 968
157, 564
117,702
119,911
121,193
122, 505
124 325
127 332
41,603
42, 323
42, 644
43,162
43, 674
44,129
35, 470
36,188
36, 745
37,216
38, 064
40, 080
5,797
5,950
6,049
6,124
6,174
6,201
34,
35,
35,
36,
36,
36,
27
?7
27
?8
28
30
512
7?n
783
071
643
232
7,644
7,717
7,693
7,780
8,010
9,002
19,868
20, 003
20, 090
20, 291
20, 633
21, 230
17,601
17,691
17, 771
17,855
17,927
18, 003
197 V Jan
Feb
Mar
Apr
May .
June
157, 227
157, 582
159, 320
161,491
164, 277
167, 083
1?7 3fi8
127 959
129 375
131 0??
133 531
136,018
44, 353
44,817
45,610
46, 478
47, 518
48, 549
39, 952
39,795
39,951
40, 441
41, 096
41, 853
6,193
6,239
6,328
6,408
6,541
6,688
36, 870
37,108
37, 486
37, 695
38,376
38,928
29 8S9
29, 623
29,945
30.469
30 74fi
31 065
8,357
7,646
7,702
8,036
8,319
8,555
21r 502
21 977
22 243
?? 433
?? 4?7
22 ,510
18, 080
18,166
18, 288
18, 420
18, 533
18, 673
July
Aug
Sept
Oct .
Nov .
Dec 4
169,148
171,978
173, 035
174,840
176,969
180,800
138r
140
14?
143
145
148
49,352
50,232
50,557
51,092
51,371
51,400
42,575
43, 505
44, 019
44, 632
45,592
47, 750
6,845
7,009
7 120
7,235
7,321
7,350
39,440
40, 064
40,397
40,651
41,116
41,600
30 936
31 168
3n 94?
31 230
31 569
32 700
8,479
8,605
8,335
8,590
8,785
9,600
?? 457
?? 563
?? 607
22 ,640
?? 784
23 ,100
18, 841
19,181
19,511
19,768
19, 926
July. . .
Aug
Sept. .
Oct.
Nov
Dec
.
.
212
810
093
610
400
100
832
450
755
003
413
922
1
Holdings of financial institutions only; holdings of retail outlets are included in other consumer goods paper.
Single-payment loans and service credit.
Data are annual statement asset values. These loans are not included in consumer credit series.
* Preliminary; by Council of Economic Advisers.
2
3
Sources: Board of Governors of the Federal Reserve System and Institute of Life Insurance (except as noted).
319
2,379
TABLE C-60.—Instalment credit extended and repaid, 1946-73
[Millions of dollars]
Total
Automobile
paper
Year or month
Other consumer
goods paper
Home improvement loans
Extended
Personal
loans
Extended
Repaid
Extended
Repaid
Extended
Repaid
.
8,495
12,713
15,585
18,108
6,785
10,190
13, 284
15, 514
1,969
3,692
5,217
6,967
1,443
2,749
4,123
5,430
3,077
4,498
5,383
5,865
2,603
3,645
4,625
5,060
423
704
714
734
200
391
579
689
3,026
3,819
4 271
4,542
2,539
3,405
3 957
4,335
.
21, 558
23, 576
29, 514
31, 558
31,051
18, 445
22,985
25,405
27,956
30, 488
8,530
8,956
11,764
12,981
11,807
7,011
9,058
10,003
10, 879
11,833
7,150
7,485
9,186
9,227
9,117
6,057
7,404
7,892
8,622
9,145
835
841
1,217
1,344
1,261
717
772
917
1,119
1,255
5 043
6,294
7 347
8,006
8,866
4 660
5,751
6 593
7,336
8,255
1955
1956
1957
1958
1959
38,972
39, 866
42,019
40,110
48, 048
33,634
37, 056
39, 870
40,339
42,603
16,734
15,515
16, 465
14,226
17, 779
13,082
14, 555
15, 545
15,415
15, 579
10,642
11,721
11,810
11,738
13,981
9,752
10 758
11,574
11,557
12, 402
1,393
1,582
1,674
1,871
2,222
1,316
1 370
1,477
1,626
1,765
10, 203
11 051
12 069
12, 275
14,070
9,484
10 373
11 276
11,741
12, 857
1960
1961
1962
1963
1964
49,793
49 048
56,191
63, 591
70,670
46,073
48,124
51,360
56,825
63,470
17,657
16 029
19,694
22,126
24,046
16,419
16, 552
17,447
19,254
21,369
14, 525
14,551
15,701
17,920
20,821
13,613
14, 235
14,935
16,369
18,666
2,215
2,092
2,084
2,186
2,225
1,876
2,015
2,010
2,046
2,086
15,396
16 377
18,710
21, 359
23, 578
14,165
15 319
16 969
19,156
21,349
1965
1966
1967
1968
1969
78 661
82,832
87,171
99,984
109,146
70,463
77,480
83,988
91,667
99,786
27, 208
27,192
26,320
31, 083
32, 553
23,706
25,619
26,534
27,931
29,974
22,857
26,329
29,504
33,507
38,332
20,707
24,080
27,847
31,270
34,645
2,270
2,223
2,369
2,534
2,831
2,112
2,118
2,202
2,303
2,457
26.326
27,088
28,978
32,860
35,430
23 938
25,663
27,405
30,163
32,710
1970
1971
1972..
19731
112,158
124,281
1*2,951
165,800
107,199
115, 050
126,914
145,000
29,794
34,873
40,194
46,800
30,137
31, 393
34,729
39,500
43, 873
47,821
55, 599
67,100
40,721
44,933
49,872
59,400
2,963
3,244
4,006
4,700
2,506
2,901
3,218
3,600
35, 528
38,343
43,152
47,200
33,835
35,823
39,095
42,500
1946
1947
1948
1949
1950
1951
1952
1953
1954
Repaid
Extended
Repaid
Seasonally adjusted
1972: Jan..
Feb..
Mar..
Apr..
May.
June.
11,116
10,952
11,741
11,374
11,687
12,057
10,015
10, 069
10,427
10,384
10,355
10,671
3,089
3,100
3,176
3,162
3,274
3,412
2,795
2,776
2,831
2,867
2,819
2,922
4,258
4,052
4,453
4,370
4,393
4,577
3,905
3,878
3,944
3,986
3,981
4,164
309
296
323
331
334
351
256
253
262
268
287
283
3,460
3,504
3,789
3,511
3,686
3,717
3,059
3,162
3,390
3,263
3,268
3,302
July.
Aug..
Sept.
Oct..
Nov..
Dec.
11,687
12,484
11,953
12,404
12,846
12,627
10,593
10,841
10,667
10,908
11,128
10,964
3,298
3,491
3,368
3,504
3,620
3,763
2,917
2,896
2,873
3,041
3,023
2,977
4,684
4,990
4,772
4,971
5,118
4,876
4,249
4,395
4,303
4,354
4,444
4,341
328
371
340
335
327
351
279
270
263
263
271
263
3,377
3,632
3,473
3,594
3,781
3,637
3,148
3,280
3,228
3,250
3,390
3,383
1973: Jan..
Feb..
MarApr..
May.
June.
13,304
13,434
13, 852
13, 465
13,932
13, 646
11,355
11,437
11,808
12,061
11,941
12, 034
4,006
3,972
4,001
3,822
3,989
3,762
3,097
3,145
3,225
3,218
3,261
3,253
5,282
5,245
5,349
5,563
5,504
5,505
4,649
4,627
4,755
4,963
4,917
4,955
329
364
406
365
374
400
267
275
286
294
290
300
3,687
3,853
4,096
3,715
4,065
3,979
3,342
3,390
3,542
3,586
3,473
3,526
July.
Aug.
Sept.
Oct..
Nov.
Dec I
14, 542
14, 294
13,691
14,149
14,275
13,600
12, 544
12,399
12, 332
12,449
12,549
12,400
3,930
3,968
3,939
3,912
3,819
3,600
3,334
3,293
3,406
3,427
3,471
3,450
5,943
5,961
5,537
5,911
5,978
5,700
5,141
5,168
5,072
5,149
5,154
5,050
433
408
410
415
402
450
308
298
322
308
301
300
4,236
3,957
3,805
3,911
4,076
3,850
3,761
3,640
3,532
3,565
3,623
3,600
1
Preliminary; December by Council of Economic Advisers.
Source: Board of Governors of the Federal Reserve System (except as noted).
320
TABLE C-61.—Mortgage debt outstanding by type of property and of financing, 1939-73
[Billions of dollars]
Nonfarm properties
Nonfarm properties by type of mortgage
Government underwritten
End of year
or quarter
All
properties
Farm
properties
Total
Multi- Commer1- to 4- family
cial
family
houses prop- properties erties i
Conventional *
1- to 4-family houses
Total
Total
FHA
insured
VA
guaranteed
Total
1- to 4family
houses
1939
35.5
6.6
28.9
16.3
5.6
7.0
1.8
1.8
1.8
27.1
14.5
1940
1941
1942 .
1943
1944
36.5
37.6
36.7
35.3
34.7
6.5
6.4
6.0
5.4
4.9
30.0
31.2
30.8
29.9
29.7
17.4
18.4
18.2
17.8
17.9
5.7
5.9
5.8
5.8
5.6
6.9
7.0
6.7
6.3
6.2
2.3
3.0
3.7
4.1
4.2
2.3
3.0
2.3
3.0
3.7
4.1
3.7
4.1
4.2
4.2
27.7
28.2
27.1
25.8
25.5
15.1
15.4
14.5
13.7
13.7
1945
1946
1947
1948
1949
35.5
41.8
48.9
56.2
62.7
4.8
5.1
5.3
5.6
30.8
36.9
43.9
50.9
57.1
18.6
23.0
28.2
33.3
37.6
5.7
6.1
6.6
7.5
8.6
6.4
7.7
9.1
10.2
10.8
4.3
6.3
9.8
4.1
3.7
3.8
5.3
6.9
0.2
2.4
5.5
7.2
8.1
26.5
30.6
34.1
13.6
18.1
4.3
6.1
9.3
12.5
15.0
37.3
39.0
14.3
16.9
18.9
20.8
22.6
72.8
82.3
91.4
101.3
113.7
6.1
6.7
7.2
7.7
8.2
66.7
75.6
84.2
93.6
105.4
45.2
51.7
58.5
75.7
10.1
11.5
12.3
12.9
13.5
11.5
12.5
13.4
14.5
16.3
22.1
26.6
29.3
32.1
36.2
18.9
22.9
25.4
28.1
32.1
8.6
9.7
10.8
12.0
12.8
10.3
13.2
14.6
16.1
19.3
44.6
49.0
54.9
61.5
69.2
26.3
28.8
33.1
38.0
43.6
129.9
144.5
156.5
171.8
190.8
9.0
9.8
10.4
11.1
12.1
120.9
134.6
146.1
160.7
178.7
88.2
99.0
107.6
117.7
130.9
14.3
14.9
15.3
16.8
18.7
18.3
20.7
23.2
26.1
29.2
42.9
47.8
51.6
55.1
59.3
38.9
43.9
47.2
50.1
53.8
14.3
15.5
16.5
19.7
23.8
24.6
28.4
30.7
30.4
30.0
78.0
86.8
94.6
105.5
119.4
49.3
55.1
60.4
67.6
77.0
1960. .
1961
1962
1963
1964
206.8
226.3
248.6
274.3
300.1
12.8
13.9
15.2
16.8
18.9
194.0
212.4
233.4
257.4
281.2
141.3
153.1
166.5
182.2
197.6
20.3
23.0
25.8
29.0
33.6
32.4
36.4
41.1
46.2
50.0
62.3
65.6
69.4
73.4
77.2
56.4
59.1
62.2
65.9
69.2
26.7
29.5
32.3
35.0
38.3
29.7
29.6
29.9
30.9
30.9
131.7
146.8
164.1
184.0
204.0
84.8
93.9
104.3
116.3
128.3
1965
1966
1967...
1968
1969
325.8
347.4
370.2
397.5
425.3
21.2
23.3
25.5
27.5
29.5
304.6
324.1
344.8
370.0
395.9
212.9
223.6
236.1
251.2
266.8
37.2
40.3
43.9
47.3
52.2
54.5
60.1
64.8
71.4
76.9
81.2
84.1
88.2
93.4
100.2
73.1
76.1
79.9
84.4
90.2
42.0
44.8
47.4
50.6
54.5
31.1
31.3
32.5
33.8
35.7
223.4
240.0
256.6
276.6
295.7
139.8
147.6
156.1
166.8
176.6
1970
1971
1972 *
1973 *
451.7
499.9
565.4
633.7
31.2
32.9
35.4
39.4
420.5
467.0
530.0
594.3
280.2
307.8
346.1
383.8
58.0
66.8
76.4
86.9
82.3
92.4
107.5
123.6
131.1
109.2
120.7
97.2
105.2
113.0
59.9
65.7
68.2
37.3
39.5
44.7
311.3
346.3
398.8
182.9
202.6
233 1
1971:1 . .
II
III....
IV
459.0
471.1
485.6
499.9
31.8
31.9
32.4
32.9
427.2
439.3
453.2
467.0
283.6
290.9
299.7
307.8
59.7
62.1
64.3
66.8
83.9
86.3
89.2
92.4
114.4
117.5
120.7
111.0
98.2
100.4
102.9
105.2
61.0
62.8
64.4
65.7
37.3
37.6
38.5
39.5
316.2
324.9
335.7
346.3
185.3
190.5
196.8
202.6
1972:1
511.7
529.1
547.3
565.4
33.5
34.4
35.0
35.4
478.2
494.8
512.3
530.0
314.1
324.6
335.8
346.1
68.8
71.3
73.5
76.4
95.3
98.9
103.0
107.5
123.7
126.6
129.0
131.1
107.5
109.6
111.5
113.0
66.8
67.6
68.4
68.2
40.7
42.0
43.1
44.7
354.5
368.2
383.3
398.8
206.6
215.0
224.3
233.1
580.1
600.4
619.9
633.7
36.5
37.7
38.7
39.4
543.6
562.7
581.2
594.3
353.9
365.7
376.6
383.8
79.0
82.2
85.0
86.9
110.7
114.8
119.5
132.5
133.6
113.7
114.7
67.9
67.5
45.8
47.2
410.9
429.1
240.2
251.0
.
1950
1951
1952
1953
1954
.
1955
1956
1957
1958
1959
.
P....
II * > - . .
III * . . .
IVP__,
1 9 7 3 : !*__-_
II *.__
Ill p
IV*.-
4.9
66.1
123.6
1 Includes negligible amount of farm loans held by savings and loan associations.
3 Derived figures.
Source: Board of Governors of the Federal Reserve System, estimated and compiled from data supplied by various
Government and private organizations.
321
TABLE C-62.—Mortgage debt outstanding by lender, 1939-73
[Billions of dollars]
Selected financial institutions
End of year
or quarter
Total
Total
Savings
and
loan
associations
Mutual
savings
banks
Commercial
banks i
Other lenders
Life
insurance
U.S.
comagencies2
panies
Individuals
and
others
1939
35.5
18.6
3.8
4.8
4.3
5.7
5.0
11.9
1940
1941
1942
1943
1944
36.5
37.6
36.7
35.3
34.7
19.5
20.7
20.7
20.2
20.2
4.1
4.6
46
4.6
4.8
4.9
4.8
46
4.4
4.3
4.6
4.9
4 7
4.5
4.4
6.0
6.4
67
6.7
6.7
4.9
4.7
4.3
3.6
3.0
12.0
12.2
11 7
11.5
11.5
1945
1946
1947
1948
1949
35.5
41.8
48.9
56.2
62.7
21.0
26.0
31.8
37.8
42.9
5.4
7.1
89
10.3
11.6
4.2
4.4
49
5.8
6.7
4.8
7.2
94
10.9
11.6
6.6
7.2
87
10.8
12.9
2.4
2.0
18
1.9
2.4
12.1
13.8
15 3
16.5
17.4
1950
1951
1952
1953
1954
72.8
82.3
91.4
101.3
113.7
51.7
59.5
66 9
75 1
85.7
13.7
15.6
18 4
22 0
26.1
8.3
9.9
11 4
12 9
15.0
13.7
14.7
15 9
16 8
18.6
16.1
19.3
21 3
23 3
26.0
2.7
3.4
40
44
4.6
18.4
19.4
20 5
21.8
23.4
1955
1956
1957
1958
1959
129.9
144.5
156.5
171.8
190.8
99 3
111.2
119.7
131 5
145.5
31 4
35.7
40.0
45 6
53.1
17 5
19.7
21.2
23 3
25.0
21 0
22.7
23.3
25 5
28.1
29 4
33.0
35.2
37 1
39.2
52
6.0
7.5
78
10.0
25.4
27.3
29.3
32.5
35.4
1960
1961
1962
1963
1964
206.8
226.3
248.6
274.3
300.1
157.6
172 6
192.5
217.1
241.0
60.1
68 8
78.8
90.9
101.3
26.9
29 1
32.3
36.2
40.6
28.8
30 4
34.5
39.4
44.0
41.8
44 2
46.9
50.5
55.2
11.2
11.8
12.2
11.2
11.4
38.0
41.9
44.0
45.9
47.7
1965
1966
1967
1968
1969
325.8
347.4
370.2
397.5
425.3
264.6
280.8
298 8
319 9
339.1
110.3
114.4
121 8
130 8
140.2
44.6
47.3
50 5
53.5
56.1
49.7
54.4
59 0
65 7
70.7
60.0
64.6
67 5
70.0
72.0
12.4
15.8
18.4
21.7
26.8
48.7
50.9
53.0
55.8
59.4
1970
1971
1972*
1973 »
451.7
499.9
565.4
633.7
355 9
394.4
450.6
504.5
150 3
174.4
206.4
232.6
57 9
62.0
67.6
73.2
73 3
82.5
99.3
118.1
74.4
75.5
77.3
80.6
33.0
39.4
45.8
55.3
62.8
66.2
69.0
73.9
1971: 1
II
III
IV
459.0
471.1
485.6
499.9
361.8
372 0
383.5
394.4
154.2
161 2
168.2
174.4
58.7
59 6
60.6
62.0
74.4
76 6
79.9
82.5
74.5
74 5
74.8
75.5
33.6
35.2
37.4
39.4
63.5
63.9
64.6
66.2
1972: 1 v
II v
Ill v
IV v
511.7
529.1
547.3
565.4
404.2
418.9
434.6
450.6
180 1
188.9
197.9
206.4
63 0
64.4
65.9
67.6
85 6
90.1
95.0
99.3
75 4
75.5
75.8
77.3
41.2
42.7
44.3
45.8
66.4
67.5
68.3
69.0
1973:1 P.
II p
III p
IV*>_
580.1
600.4
619.9
633.7
463.3
480.5
494.9
504.5
213.3
222.8
229.4
232.6
68.9
70.6
72.0
73.2
103.5
109.1
114.4
118.1
77.6
77.9
79.0
80.6
47.3
49.0
53.0
55.3
69.5
71.0
71.9
73.9
.
1
2
Includes loans held by nondeposit trust companies, but not by bank trust departments.
Includes former Federal National Mortgage Association and new Government National Mortgage Association, as well as
Federal Housing Administration, Veterans Administration, Public Housing Administration, Farmers Home Administration,
and in earlier years Reconstruction Finance Corporation, Homeowners Loan Corporation, and Federal Farm Mortgage
Corporation. Also includes U.S.-sponsored agencies such as new FNMA, Federal Land Banks, GNMA (Pools), and Federal
Home Loan Mortgage Corporation. Other U.S. agencies (amounts small or current separate data not readily available)
included with "individuals and others."
Source: Board of Governors of the Federal Reserve System, based on data from various Government and private organizations.
322
TABLE C-63.—Net public and private debt, 1929-72 *
[Billions of dollars]
Private
Public
Individual and noncorporate
End of year
Total
Federal
Government 2
Federal
financial
agencies 3
Nonfarm
State
and
local
governments
Total
Corporate
Total
1929
191.9
16. 5
13.6
161.8
88.9
72.9
1933
168.5
24.3
16.3
127.9
76.9
51.0
Total
Mortgage
Commercial
and
financial*
Farrrl *
Consumer
60.7
31.2
22. 4
7.1
9. 1
41.9
26.3
11.7
3.9
1?
?
183.3
42.6
16.4
124.3
73.5
50.8
8. 8
42.0
25.0
9.8
7.2
189.8
211.4
258.6
313.2
370 6
44.8
56.
101. 7
154. 4
211. q
16.4
16.1
15.4
14.5
13.9
128.6
139.0
141.5
144.3
144.8
75.6
83.4
91.6
95.5
94.1
53.0
55.6
49.9
48.8
50.7
q 1
q
9. 0
8
7. 7
43.9
46.3
40.9
40.5
42.9
26.1
27.1
26.8
26.1
26.0
9.5
8. l
9
11. 8
83
9.2
6.0
4.9
5.1
1945
1946
1947.
1948
1949 -
405.9
396 6
415.7
431.3
445.8
252. 5
229.
221. 7
215.3
6
0.7
.6
.7
13.4
13.7
15.0
17.0
19.1
140.0
153.4
178.3
198.4
208.4
85.3
93.5
108.9
117.8
118.0
54.7
59.9
69.4
80.6
90.4
7 3
7 6
8. 6
in 8
1? 0
47.4
52.3
60.7
69.7
78.4
27.0
31.8
37.2
42.4
47.1
14. 7
12 1
11 q
1? q
q
5.7
84
11.6
14.4
17.4
1950
1951 __
1952
1953
1954
486.2
519.2
550.2
581.6
605.9
?17 4
9
5
226 8
229. 1
m'
.7
1.3
1.3
1.4
1.3
21.7
24.2
27.0
30.7
35.5
246.4
276.8
300.4
322.7
340.0
142.1
162.5
171.0
179.5
182.8
104.3
114.3
129.4
143.2
157.2
12.
13.7
15.2
16. 8
17.5
92.0
100.6
114.2
126.4
139.7
54.8
61.7
68.9
76.7
86.4
8
16.
17 8
18 4
20. 8
21.5
22.7
27.5
31.4
32.5
1955
1956
1957._.
1958
1959
665.8
698.4
728.3
769.6
833.0
6
224. 3
0
231
241 4
2.9
2.4
2.4
2.5
3.7
41.1
44.5
48.6
53.7
59.6
392.2
427.2
454.3
482.4
528.3
212.1
231.7
246.7
259.5
283.3
180.1
195.5
207.6
222.9
245.0
18.7
19.4
20.2
?3
?3 8
161.4
176.1
187.4
199.7
221.2
98.7
109.4
118.1
128.1
141.0
24.
24.4
24.3
?6 5
?8 7
n
38.8
42.3
45.0
45.1
51.5
1960
1961 _
?^q 8
246. 7
?53 6
257. 5
264.0
3.5
4.0
5.3
7.2
7.5
64.9
70.5
77.0
83.9
90.4
566.1
609.1
660.1
722.3
789.7
302.8
324.3
348.2
376.4
409.6
263.3
284.8
311.9
345.8
380.1
1
27 5
30
1963
1964 -
874.2
930.3
996.0
1, 070.9
1, 151.6
36 0
238.2
257.3
281.7
312.6
344.1
151.3
164.5
180.3
198 6
218.9
8
34. 8
V 6
4?
45. 0
56.1
58.0
63.8
71.7
80.3
1965 . .
1966
1967
1968
1969
1, 243.6
1 338.7
1 438.7
1 582.5
1 735.0
266.4
271.8
286.5
291.9
289.3
8.9
11.2
9.0
21.4
30.6
98.3
870.0
104.8
950.8
113.4 1, 029.9
123.9 1, 145.4
132.6 1,282.6
454.3
506.6
553.7
631.5
734.2
415.7
444.2
476.2
513.9
548.4
39
42
48
51
55
3
4
3
8
5
376.4
401.8
427.9
462.1
492.9
236.8
251.6
266.9
284.9
303.9
49. 7
53. 9
60. 2
66. 4
67. 9
89.9
96.2
100.8
110.8
121.1
1970
1971
1972
1 854.1
2 018.3
2 227.3
301.1
325.9
341.2
38.8
39.8
42.6
144.8 1, 369. 4
163.0 1,489.6
176.5 1,667.0
793.5
858.6
952.3
575.9
631.0
714.7
58 7
63 2
67 8
517.2
567.8
646.9
320.9
352.6
397.8
69. 1
76. 9
91. 5
127.2
138.4
157.6
cv
to
a
1939
1940
1941
1942_
1943
1944
n
in
n
n
1 Net public and private debt is a comprehensive aggregate of the indebtedness of borrowers after eliminating certain
types
of duplicating governmental and corporate debt.
2
Net Federal Government and agency debt is the outstanding debt held by the public, as defined in the "Budget of the
United States Government, for the Fiscal Year ending June 30,1975."
3 This comprises the debt of federally sponsored agencies, in which there is no longer any Federal proprietary interest.
The obligations of the Federal Land Banks are included beginning with 1947, the debt of the Federal Home Loan Banks
is included beginning with 1951, and the debts of the Federal National Mortgage Association, Federal Intermediate Credit
Banks, and Banks for Cooperatives are included beginning with 1968.
* Farm mortgages and farm production loans. Farmers' financial and consumer debt is included in the nonfarm categories,
s Financial debt is debt owed to banks for purchasing or carrying securities, customers' debt to brokers, and debt owed
to life insurance companies by policyholders.
Sources: Department of Commerce (Bureau of Economic Analysis), Department of the Treasury, Department of Agriculture, Board of Governors of the Federal Reserve System, Federal Home Loan Bank Board, Federal Land Banks, and
Federal National Mortgage Association.
323
GOVERNMENT FINANCE
TABLE C-64.—Federal budget receipts and outlays,fiscalyears 1929-75
[Millions of dollars]
Receipts
Fiscal year
Outlays
Surplus or
deficit (-)
1929
3,862
3,127
734
1933
1,997
4,598
-2,602
4,979
8,841
-3,862
1940 .
1941
1942
1943 .. ..
1944
6,879
9,202
15,104
25,097
47,818
9,589
13,980
34,500
78,909
93,956
-2,710
-4,778
-19,396
-53,812
-46,138
1945 ..
1946
1947
1948 .. .
1949
50,162
43 537
43,531
45,357
41 576
95,184
61,738
36,931
36,493
40,570
-45,022
-18,201
6,600
8,864
1,006
1950
1951
1952 - ,
1953
1954
40,940
53 390
68,011
71,495
69,719
43,147
45,797
67,962
76,769
70,890
-2,207
7,593
49
-5,274
-1,170
65,469
74 547
79,990
79,636
79,249
68,509
70,460
76,741
82, 575
92,104
-3,041
4,087
3,249
-2,939
-12,855
1960
1961
1962
1963
1964
92,492
94,389
99,676
106,560
112,662
92,223
97,795
106,813
111,311
118,584
269
-3,406
-7,137
-4,751
-5,922
1965
1966
1967—
1968
1969
116,833
130,856
149,552
153,671
187,784
118,430
134,652
158,254
178,833
184,548
-1,596
-3,796
-8,702
-25,161
3,236
1970
1971 .
1972
1973
1974 I
193,743
188,392
208,649
232, 225
270, 000
196,588
211,425
231,876
246, 526
274,660
-2,845
-23,033
-23,227
-14,301
-4,660
1975 I
295,000
304,445
-9,445
1939
1955...
1956
1957 .
1958
1959
..
i Estimate.
Note.—Data for 1929-39 are according to the administrative budget, those for 1940-53 according to the consolidated
cash statement, and those for 1954-75 according to the unified budget.
Certain interfund transactions are excluded from receipts and outlays beginning 1932. For years prior to 1932 the amounts
of such transactions are not significant.
Refunds of receipts are excluded from receipts and outlays.
Sources: Department of the Treasury and Office of Management and Budget.
324
TABLE C-65.—Federal budget receipts, outlays,financing,and debt,fiscalyears 1964—75
{Millions of dollars; fiscal years]
Actual
Description
1969
1964
1965
1966
1967
1968
112,662
116,833
130,856
149,552
153,671
187, 784
87,205
28,518
-3,061
90,943
29,230
-3,339
101,427
32,997
-3,568
111,835
42,935
- 5 , 218
114,726
44,716
-5,771
143,321
52,009
- 7 , 547
118,584
118,430
134,652
158, 254
178, 833
184, 548
126,779
36,693
-5,218
143,105
41, 499
-5,771
148,811
43, 284
- 7 , 547
BUDGET RECEIPTS AND OUTLAYS:
Total receipts
Federal funds
Trust funds
Interfund transactions.
Total outlays
Federal funds
Trust funds
Interfund transactions.
95,761
25,884
-3,061
Total surplus or deficit ( - ) _
Federal funds..
Trust funds...
94,807
26,962
-3,339
106, 512
31,708
- 3 , 568
-5,922
- 1 , 596
-3,796
-8,702
-25,161
3,236
-8,556
2,634
-3,864
2,268
-5,085
1,289
-14,944
6,242
-28,379
3,217
-5,490
8,725
5,922
1,596
3,796
8,702
25,161
1-3,236
3,092
2,830
4,061
-2,465
3,076
720
2,838
5,863
23,100
2,061
-1,044
-2,192
316,763
323,154
329,474
341,348
369,769
367,144
59,210
257,553
61, 540
261,614
64,784
264,690
73, 819
267,529
79,140
290,629
87,661
279, 483
34,794
222, 759
39,100
222, 514
42,169
222,521
46,719
220,810
52, 230
238, 399
54, 095
225, 388
112,662
116,833
130,856
149,552
153,671
187,784
48,697
23,493
22,012
13,731
2,394
1,252
48,792
25,461
22, 258
14, 570
2,716
1,442
55,446
30,073
25, 567
13, 062
3,066
1,767
61, 526
33,971
33,349
13,719
2,978
1,901
68, 726
28,665
34, 622
14,079
3,051
2,038
87, 249
36,678
39,918
15, 222
3,491
2,319
947
138
1,372
111
1,713
162
1,805
303
2,091
400
2,662
247
118, 584
118,430
134,652
158,254
178, 833
184, 548
53, 591
4,117
4,170
5,184
1,966
6,531
-185
1,762
1,713
25,141
5,681
9,810
1,979
49, 578
4,340
5,091
4,805
2,056
7,440
288
2,290
1,700
25,711
5,722
10,358
2,160
56,785
4,490
5,933
3,676
2,036
7,302
2,644
4,265
2,505
28,932
5,921
11,285
2,240
70,081
4,547
5,423
4,373
1,878
7,647
2,616
5,880
6,661
31,168
6,899
12, 588
2,429
80,517
4,619
4,721
5,940
1,722
8,126
4,076
6,743
9,603
34,139
6,882
13,746
2,500
81, 232
3,785
4,247
6,218
2,169
7,942
1,961
6,529
11,604
37,748
7,640
15,791
2,800
-1,256
-1,621
-1,329
-1,780
-1,447
-1,917
-1,661
- 2 , 275
-1,825
-2,674
-2,018
- 3 , 099
BUDGET FINANCING:
Total means of financing.
Net borrowing from the public or
repayment of borrowing ( - )
Other means of financing
OUTSTANDING DEBT, END OF YEAR:
Gross Federal debt
Held by Government agencies..
Held by the public
Federal Reserve System.
Others
BUDGET RECEIPTS.
Individual income taxes
Corporation income taxes
Social insurance taxes and contributions...
Excise taxes
Estate and gift taxes..
Customs duties
Miscellaneous receipts:
Deposit of earnings by Federal Reserve System
Allother
BUDGET OUTLAYS.
National defense
International affairs and finance
Space research and technology
Agriculture and rural development
Natural resources and environment
Commerce and transportation
Community development and housing
Education and manpower
Health
Income security
Veterans benefits and services..
Interest
General government
General revenue sharing....
Allowances
Undistributed intragovernmental transactions:
Employer share, employee retirementInterest received by trust funds
See next page for continuation of table and for footnotes.
325
TABLE C-65.—Federal budget receipts, outlays,financing,and debt,fiscalyears 1964—75—Con.
[Millions of dollars; fiscal years]
Actual
Estimate
Description
1970
1971
1972
1973
1974
193,743
143,158
59,362
-8,778
188,392
133,785
66,193
-11,586
208,649
148,846
72,959
-13,156
232,225
161,357
92,193
-21,325
270,000
185,581
105,548
-21,129
295,000
202, 757
115,818
-23,575
196,588
211,425
231,876
246,526
274,660
304,445
Federal funds
156,301
Trust funds
.
49,065
Interfund transactions.
-8,778
Total surplus or deficit ( — ) . .
-2,845
-13,143
Federal funds.._
10,297
Trust funds
BUDGET FINANCING:
12,845
Total means of financing...
Net borrowing from the public or re3,814
payment of borrowing (—)
-969
Other means of financing
163,651
59,361
-11,586
-23,033
- 2 9 , 866
6,832
177,959
67,073
-13,156
- 2 3 , 227
-29,114
5,886
186,406
81, 447
-21,325
-14,301
-25,046
10,746
203, 715
92,075
-21,129
-4,660
-18,133
14,473
220,636
107,385
-23,575
23,033
23, 227
14,301
4,660
9,445
19,448
3,585
19,442
3,785
19,275
-4,974
3,500
1,160
12,500
- 3 , 055
382,603
97,723
284,880
57,714
227,166
409,457
105,140
304,328
65,518
238,810
437,329
113,559
323, 770
71,426
252,344
468,426
125,381
343, 045
75,182
267,863
486,350
139,806
346,545
507,973
148,929
359, 045
193,743
90,412
32,829
45,298
15,705
3,644
2,430
188,392
86, 230
26,785
48,578
16,614
3,735
2,591
208,649
94,737
32,166
53,914
15,477
5,436
3,287
232,225
103, 246
36,153
64,542
16, 260
4,917
3,188
270,000
118,000
43,000
77,907
17,144
5,400
3,500
295,000
129, 000
48, 000
85,603
17, 444
6,000
3,800
3,266
158
196,588
80, 295
3,570
3,749
6,201
2,568
9,455
2,965
7,289
12,898
43, 734
8,677
18,312
3,255
3,533
325
211,425
77,661
3,095
3,381
5,096
2,716
11,428
3,357
8,226
14,452
56,128
9,776
19, 609
3,875
3,252
381
231,876
78,336
3,726
3,422
7,063
3,761
11,284
4,282
9,752
17,099
64,909
10,731
20,582
4,787
3,495
426
246,526
76,021
2,957
3,311
6,191
589
13,070
4,132
10,185
18,417
73, 073
12,013
22,813
5,480
6,636
4,400
649
274,660
80,573
3,886
3,177
4,039
609
13,521
5,450
10,819
23, 268
84,995
13, 285
27, 754
6,800
6,147
300
4,700
453
304, 445
87,729
4,103
3,272
2,729
3,128
13,400
5,667
11,537
26, 282
100,071
13,612
29,122
6,774
6,174
1,561
-2,444
-3,936
-2,611
- 4 , 765
-2,768
-5,089
-2,927
-5,436
-3,543
-6,420
-3,577
-7,140
BUDGET RECEIPTS AND OUTLAYS:
Total receipts.
Federal funds
Trust funds
Interfund transactions
Total outlays.
1975
-9,445
-17,878
8,433
OUTSTANDING DEBT, END OF YEAR:
Gross Federal debt
Held by Government agencies.
Held by the public
Federal Reserve System.
Others
BUDGET RECEIPTS.
Individual income taxes
Corporation income taxes
Social insurance taxes and contributions..
Excise taxes
Estate and gift taxes
Customs duties
Miscellaneous receipts:
Deposit of earnings by Federal Reserve
System.
Allother
BUDGET OUTLAYS.
National defense
International affairs and finance
Space research and technology
Agriculture and rural development
Natural resources and environment
Commerce and transportation
Community development and housing
Education and manpower
Health
Income security
Veterans benefits and services
Interest
General government
General revenue sharing
Allowances
Undistributed intragovernmental transactions:
Employer share, employee retirement.
Interest received by trust funds
i Excludes changes due to reclassification and to conversion of mixed-ownership enterprises to private ownership. (See
footnotes to Table 9, "Budget of the United States Government for the Fiscal Year Ending June 30, 1971," and footnotes
to Table 10, "Budget of the United States Government for the Fiscal Year Ending June 30,1972.")
Sources: Department of the Treasury and Office of Management and Budget.
326
T A B L E C-66.—Relation of the Federal budget to the Federal sector of the national income and
product accounts, fiscal years 1972—75
[Billions of dollars; fiscal years]
Estimate
Actual
Receipts and expenditures
1974
1973
1972
1975
RECEIPTS
208.6
232.2
270.0
295.0
Government contribution for employee retirement (grossing)
Other netting and grossing
Adjustment to accruals
Other .
3.3
1.6
.5
-.4
3.7
1.7
6.1
-.4
4.4
1.5
5.4
-.8
4.5
1.6
4.3
-.6
Federal sector, national income and product accounts,
receipts
213.7
243.3
280.5
304.8
231.9
246.5
274.7
304.4
-2.4
-1.6
-2.4
-2.0
3.3
3.7
4.4
4.5
1.6
-.3
-1.0
1.7
2.3
2.5
1.5
-.4
7.4
1.6
-.2
5.1
233.2
255.1
285.2
313.4
Total receipts, budget
EXPENDITURES
Total outlays, budget
Lending and financial transactions
Government contribution for employee retirement
(grossing)
Other netting and grossing
Defense timing adjustment
Other
Federal sector, national income and product accounts,
expenditures
Note.—See Special Analysis A, "Budget of the United States Government for the Fiscal Year Ending June 30, 1975,"
for description of these categories.
Sources: Department of Commerce (Bureau of Economic Analysis), Department of the Treasury, and Office of Management and Budget.
327
T A B L E C-67.—Receipts and expenditures of the government sector of the national income and product
accounts, 1929-73
[Billions of dollars]
Total government
Federal Government
Surplus or
deficit
Calendar year or quarter
Receipts
Expenditures
national
income
and
product accounts
State and local
government
Surplus or
deficit
Surplus or
deficit
Receipts
Expenditures
national
income
and
product accounts
Receipts
Expenditures
national
income
and
product accounts
-0.2
1929.
11.3
10.3
1.0
3.8
2.6
1.2
7.6
7.8
1933
9.3
10.7
-1.4
2.7
4.0
-1.3
7.2
7.2
1939...
15.4
17.6
-2.2
6.7
8.9
-2.2
9.6
9.6
1940...
L941
1942 ..
1943
1944 ..
1945
1946
1947
1948 .
1949
17.7
25.0
32.6
49 2
51.2
53.2
50.9
56.8
58.9
56.0
18 4
28.8
64 0
93 3
103 0
92.7
45 5
42.4
50 3
59.1
_ 7
-3.8
-31 4
-44 1
-51 8
-39.5
5 4
14.4
85
-3.2
8.6
15.4
22 9
39 3
41.0
42.5
39 1
43.2
43 3
38.9
10.0
20.5
56.1
85 8
95.5
84.6
35 6
29.8
34 9
41.3
-1 3
-331
-46 6
-54 5
-42.1
3 5
13.4
84
-2.4
10 0
10.4
10 6
10 9
11 1
11.6
12 9
15.3
17 6
19.3
93
9.1
88
84
85
9.0
11 0
14.3
17 4
20.0
68.7
84 8
89.8
94 3
89.7
100 4
109.0
115 6
114.7
128.9
60.8
79 0
93.7
101 2
96.7
97 6
104.1
114 9
127 2
131.0
7.9
5 8
-3.8
-6 9
-7.0
2 7
4.9
7
-12 5
-2.1
49.9
64 0
67.2
70 0
63.8
72 1
77.6
81 6
78.7
89.7
40.8
57.8
71.0
77.0
69.7
68.1
71.9
79 6
88.9
91.0
9.1
62
-3.8
-7 0
-5.9
40
5.7
2 1
-10.2
-1.2
21.1
23 3
25.2
27 2
28.8
31 4
34.7
38 2
41.6
46.0
22.3
23 7
25.3
27 0
29.9
32 7
35.6
39 5
44.0
46.8
139 8
144.6
157.0
168.8
174.1
189.1
213.3
228 9
263.5
296.7
136 1
149 0
159.9
166.9
175 4
186.9
212 3
242 9
270.3
287.9
3 7
-4 3
-2.9
1.8
-1 4
2.2
1.1
-13 9
-6.8
8.8
96 5
98 3
106.4
114.5
115 0
124.7
142.5
151 2
175.0
197.3
93 0
102.1
110.3
113.9
118 1
123.5
142.8
163 6
181.5
189.2
3 5
-3.8
-3.8
.7
-3.0
1.2
-.2
-12.4
-6.5
8.1
49 9
53 6
58.6
63.4
69 5
75.5
85.2
93 5
107.1
119.7
49 6
54.1
57.6
62.2
67 8
74.5
83.9
95 1
107.5
119.0
1.0
1.3
- 1.6
-.3
.7
1970
1971
1972
1973*
302.5
322.0
368.2
419.0
312.7
340.2
370.9
407.4
-10.1
-18.1
-2.8
11.6
192.0
198.9
228.7
265.4
203.9
221.0
244.6
264.7
-11.9
-22.2
-15.9
.6
135.0
152.3
177.2
194.8
133.2
148.3
164.0
183.8
1.8
4.0
13.1
11.0
1971: 1
II
III . .
IV
312.5
319.0
324.4
332.2
328 4
338 8
342.8
350.7
-15 9
-19.7
-18.4
-18.6
194 8
197.7
199.4
203.5
212 4
221.2
222.6
228.0
-17.6
-23.5
-23.2
-24.5
145 1
150 6
154.3
159.3
143.4
146.9
149.5
153.4
1.7
3.7
4.8
5.9
1972: 1.
II
III
IV
356.8
363.4
370.6
381.9
362.2
367 2
368 5
385.7
-5.4
-3 9
2.0
-3.8
222.9
225.4
229.6
236.9
236.6
244 4
237.0
260.3
-13.8
-19.0
-7.4
-23.4
166.2
175 9
175.3
191.2
157.8
160.8
165.9
171.6
8.4
15.2
9.5
19.6
1973: 1
402.7
414.7
425.0
393.8
403.2
410.7
421.9
8.9
11.6
14.3
253.6
262.4
269 5
258.6
262.4
265.6
272.4
-5.0
.0
4.0
190.2
192.8
196.0
176.4
181.2
185.7
191.9
13.9
11.5
10.4
1950...
1951
1952...
1953
1954...
1955
1956 ..
1957
1958 .
1959
. .
1960
1961
1962
1963
1964
1965
1966
1967
1968...
1969
.
-.1
0)
.6
1.3
1.8
2.5
2.7
2.6
1.9
1.0
.1
-.7
-1.2
(2)
.1
-1.1
-1.3
-.9
-1 4
-2.3
-.8
.2
-.5
.9
Seasonally adjusted annual rates
III
i Surplus of $32 million.
Deficit of $41 million.
Note.—Federal grants-in-aid to State and local governments are reflected in Federal expenditures and State and local
receipts and expenditures. Total government receipts and expenditures have been adjusted to eliminate this duplication.
Source: Department of Commerce, Bureau of Economic Analysis.
3
328
TABLE C-68.—Receipts and expenditures of the Federal Government sector of the national income
and product accounts, 1949-75
[Billions of dollars]
Receipts
Expenditures
Transfer
payments
Indi-
Year or quarter
Total
Personal
tav
tax
and
nontax
busi- ConPurchases
ness tribupotions
rate
of
tax
for
profits and
Total i goods
tax
and
non- social
acservtax
insuracance
ices
ceipts cruals cruCor-
To
persons
To
foreigners
(net)
Grantsin-aid
to State
and
local
governments
Not
wet
interest
paid
als
Subsidies
less
current
surplus
of
government
enterprises
Surplus
or
deficit
->,
national income
and
product
accounts
Fiscal year:
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 v
1974 2
1975 2
Calendar year:
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 v
40.0
42.0
60.8
65.1
69.3
65.8
67.2
75.8
80.7
77.9
85.4
94.8
95.3
104.2
110.2
115.5
120.5
132.8
147.2
160.6
190.4
195.2
192.6
213.7
243.3
280.5
304.8
16.3
16.5
23.2
28.8
31.4
30.3
29.7
33.6
36.7
36.3
38.2
42.5
43.6
47.3
49.6
50.7
51.3
57.6
64.5
71.4
90.0
93.6
87.4
100.1
107.2
123.7
135.3
11.0
11.9
21.5
19.3
19.7
17.3
18.7
21.1
20.6
17.8
21.5
22.3
20.3
22.9
23.5
25.7
27.7
31.0
31.2
33.7
37.4
33.3
32.2
34.7
43.8
50.3
50.2
38.9 16.1
49.9 18.1
64.0 26.1
67.2 31.0
70.0 32.2
63.8 29.0
72.1 31.4
77.6 35.2
81.6 37.4
78.7 36.8
89.7 39.9
96.5 43.6
98.3 44.7
106.4 48.6
114.5 51.5
115.0 48.6
124.7 53.8
142.5 61.7
151.2 67.5
175.0 79.7
197.3 94.8
192.0 92.2
198.9 89.9
228.7 107.9
265.4 114.5
17.0
21.5
18.5
19.5
17.0
20.6
20.6
20.2
18.0
22.5
21.7
21.8
22.7
24.6
26.4
29.3
32.1
30.7
36.7
36.6
31.0
33.3
37.8
49.8
105.6
106.6
108.1
111.3
108.5
111.4
116.9
121.1
36.0
36.7
38.0
40.7
46.6
50.8
51.0
9.8
8.0
8.2
9.5
9.7
10.7
10.4
10.0
10.8
11.7
11.6
11.9
13.2
13.3
14.2
15.0
15.6
16.9
15.7
15.8
17.1
18.6
19.2
20.1
19.9
20.9
23.3
27.5
8.0
8.9
9.4
10.3
10.9
9.7
4.8
5.5
6.6
7.3
7.5
7.8
8.7
10.2
11.7
12.2
13.8
16.7
18.1
19.9
22.1
23.5
24.6
28.5
35.7
38.3
44.4
49.1
52.9
59.0
71.4
83.2
91.8
4.9
5.9
7.1
7.4
7.4
8.1
9.3
10.7
11.2
11.8
11.5
12.5
13.5
13.6
14.6
15.3
16.1
16.5
15.7
16.3
18.0
19.0
19.3
20.4
19.9
21.0
10.6
12.2
12.4
14.8
17.7
18.2
20.5
23.1
23.8
25.1
33.0
36.7
40.7
46.9
49.5
55.2
63.0
80.1
19.7
19.7
19.9
20.3
20.7
21.2
20.8
-21.5
61.5
62.4
63.6
64.6
77.8
79.1
80.8
82.6
39.6
42.4
44.6
66.0
75.8
74.2
67.3
69.8
76.0
83.1
90.9
91.3
98.0
106.4
111.4
116.9
118.5
131.9
154.5
172.5
185.7
195.9
212.6
233.2
255.1
285.2
313.4
19.3
8.1
19.0 11.3
25.1
8.1
46.6
8.5
56.1
9.3
53.2 10.5
43.9 12.1
45.2 12.8
47.7 14.4
50.7 17.8
54.7 19.8
52.7 20.6
55.5 23.6
60.9 25.1
63.4 26.4
65.7 27.3
64.4 28.3
71.7 31.8
85.3 37.2
94.9 42.7
99.4 48.5
98.0 54.8
95.9 67.4
103.2 75.8
104.5 86.8
111.5 102.5
121.6 120.7
5.0
4.3
3.1
2.6
2.1
1.7
2.1
1.8
1.9
1.7
1.8
1.8
2.1
2.1
2.1
2.2
2.2
2.3
2.2
2.1
2.2
2.0
2.3
2.8
2.6
4.7
2.8
41.3
40.8
57.8
71.0
77.0
69.7
68.1
71.9
79.6
88.9
91.0
93.0
102.1
110.3
113.9
118.1
123.5
142.8
163.6
181.5
189.2
203.9
221.0
244.6
264.7
20.1
18.4
37.7
51.8
57.0
47.4
44.1
45.6
49.5
53.6
53.7
53.5
57.4
63.4
64.2
65.2
66.9
77.8
90.7
98.8
98.8
96.2
98.1
104.4
106.9
8.7
5.1
3.6
3.1
2.1
2.0
1.8
2.0
1.9
1.8
1.8
1.8
1.9
2.1
2.2
2.2
2.2
2.2
2.3
2.2
2.1
2.1
2.2
2.6
2.7
2.4
10.8
8.5
8.8
9.5
11.5
12.4
13.4
15.7
19.5
20.1
21.5
24.9
25.5
27.0
27.8
30.3
33.4
40.0
46.1
50.3
61.0
72.3
80.1
93.1
2.1
2.4
2.4
2.5
2.8
2.9
3.0
3.2
3.7
4.7
6.2
6.8
6.9
7.6
8.4
9.8
10.9
12.7
14.8
17.8
19.2
22.6
26.8
32.9
40.4
44.1
46.6
4.3
4.4
4.6
4.8
4.8
5.0
4.9
5.1
5.5
5.7
5.9
7.0
6.8
6.8
7.5
8.1
8.5
9.0
9.9
0.8
1.0
1.3
1.1
.9
1.0
1.3
1.7
2.8
2.5
2.4
2.3
3.2
3.8
3.6
3.8
4.1
4.5
5.1
4.1
4.1
4.7
5.8
5.2
6.4
4.2
2.1
4.4
4.5
4.7
4.7
4.9
5.0
4.9
5.3
10.9
12.3
14.0
14.3
13.4
14.4
18.2
19.6
0.4
-i!o
-6.5
-8.5
-.1
6.0
4.7
-5.1
-5.5
3.5
-2.7
-2.1
-1.2
-1.4
2.0
.9
-7.3
-11.9
4.7
-.7
-19.9
-19.5
-11.8
-4.7
-8.6
10.4
11.1
14.4
15.8
18.7
20.3
24.4
29.1
37.7
41.2
10.2
11.7
13.1
14.6
13.6
13.5
15.9
.8
1.2
1.3
1.0
.8
1.1
1.5
2.4
2.6
2.7
2.1
2.5
3.8
4.0
3.6
4.2
4.3
5.4
4.6
4.1
4.6
5.5
5.3
6.1
5.4
32.2
38.0
34.4
46.1
41.1
40.5
40.5
42.5
13.1
13.6
13.4
13.7
14.7
15.6
16.2
16.9
5.5 -13.8
5.9 -19.0
6.2 - 7 . 4
6.7 -23.4
5.5 - 5 . 0
.0
5.1
4.0
5.3
5.7
2.2
2.3
2.5
2.6
2.8
2.9
3.1
3.3
4.2
5.6
6.8
6.5
7.2
8.0
9.1
f> 7
5.6
6.4
7.1
6.6
7.2
7.7
8.3
8.7
9.5
-2.4
9.1
6.2
-3.8
-7.0
-5.9
4.0
5.7
2.1
-10.2
-1.2
3.5
-3.8
-3.8
.7
-3.0
1.2
-.2
-12.4
-6.5
8.1
-11.9
-22.2
-15.9
.6
Seasonally adjusted annual rates
1972: I
II
III
IV
1973: I
II
Ill
222.9
225.4
229.6
236.9
253.6
262.4
269.5
236.6
244.4
237.0
260.3
258.6
262.4
265.6
272.4
106.0
106.7
102.3
102.7
105.5
107.3
106.8
107.8
76.8
77.3
78.0
88.5
89.7
91.5
94.2
96.9
2.9
2.8
2.8
2.5
2.1
2.3
2.5
2.6
1
Wage accruals less disbursements have been subtracted from total. These were (in billions of dollars at seasonally
adjusted annual rates) .0, - . 1 , .0, and .0 in the 4 quarters of 1972 and .0, - . 1 , .0, and .0 in the 4 quarters of 1973,
respectively.
2 Estimates.
Sources: Department of Commerce (Bureau of Economic Analysis) and Office of Management and Budget.
329
527-867
O - 7 4 - 2 2
T A B L E C-69.—Receipts
and expenditures of the State and local government sector of the national
income and product accounts,
1946-73
[Billions of dollars]
Expenditures
Receipts
Calendar
year or
quarter
Total
ndirect
PerbusiCorsonal porate
ness
tax
tax
profits
and
and
tax
nontax iccruals nontax
eceipts
accruals
PurContrichases
butions Fedof
for
eral
Total » goods
social grantsand
insurn-aid
servance
ices
Transfer
payments
to
persons
Subsidies
less
current
Net surplus
interest of govpaid
ernment
enterprises
Surplus
or
deficit
<-),
national
income
and
product accounts
9.3
10.6
12.1
13.3
0.5
.6
.7
1.1
1.7
2.0
2.2
11.0
14.3
17.4
20.0
9.8
12.6
15.0
17.7
1.7
2.3
2.9
2.9
0.3
.3
.3
.3
-0.7
14.5
15.8
17.3
18.7
19.7
1.0
1.2
1.3
1.5
1.7
2.3
2.5
2.6
2.8
2.9
22.3
23.7
25.3
27.0
29.9
19.5
21.5
22.9
24.6
27.4
3.5
3.0
3.2
3.3
3.4
.3
.3
.3
.3
.4
-.9
-LI
-1.2
-1.4
-1.1
1.0
1.0
1.0
1.0
1.2
21.4
23.6
25.5
27.0
28.9
1.8
2.0
2.3
2.5
2.7
3.1
3.3
4.2
5.6
6.8
32.7
35.6
39.5
44.0
46.8
30.1
33.0
36.6
40.6
43.3
3.7
3.8
4.2
4.6
4.8
.5
.5
.5
.6
.7
-1.6
-1.7
-1.8
-1.8
-2.0
-1.3
-.9
-1.4
-2.3
-.8
7.3
7.7
8.7
9.4
10.8
1.3
1.4
1.4
1.7
1.9
31.7
34.1
36.9
39.4
42.3
3.0
3.2
3.5
3.8
4.1
6.5
7.2
8.0
9.1
10.4
49.6
54.1
57.6
62.2
67.8
46.1
50.2
53.7
58.2
63.5
5.1
5.5
5.7
6.0
6.5
.7
.8
.8
.8
-2.2
-2.3
-2.6
-2.8
-2.9
.2
-.5
.9
1.2
1.7
75.5
85.2
93.5
107.1
119.7
11.8
13.7
15.5
18.3
21.7
2.1
2.2
2.4
3.2
3.4
45.9
49.9
54.1
60.6
67.0
4.5
5.0
5.7
6.4
7.3
11.1
14.4
15.8
18.7
20.3
74.5
83.9
95.1
107.5
119.0
70.1
79.0
89.4
100.8
111.2
6.9
7.7
8.7
10.0
11.6
.5
.3
.2
.0
-.2
-3.0
-3.1
-3.2
-3.4
-3.5
1.0
1.3
-1.6
-.3
.7
135.0
152.3
177.2
194.8
24.4
27.7
34.3
38.4
3.8
4.1
4.9
6.4
74.1
82.0
89.6
96.8
8.3
9.4
10.7
12.0
24.4
29.1
37.7
41.2
133.2
148.3
164.0
183.8
123.3
136.2
150.5
170.3
14.1
16.6
18.2
19.5
-.4
-.2
-.4
-1.3
-3.8
-4.1
-4.4
-4.7
1.8
4.0
13.1
11.0
1946..
1947..
1948..
1949..
12.9
15.3
17.6
19.3
1.5
1.8
2.1
2.4
1950..
1951..
1952..
1953..
1954..
21.1
23.3
25.2
27.2
28.8
2.6
2.9
3.1
3.4
3.7
1955.
1956.
1957.
1958.
1959.
31.4
34.7
38.2
41.6
46.0
4.1
4.7
5.2
5.6
6.3
1960.
1961.
1962.
1963.
1964.
49.9
53.6
58.6
63.4
69.5
1965.
1966.
1967.
1968.
19691970—
1971...
1972...
1973 p..
0.5
.6
.7
.6
.9
-.9
1.9
1.0
.1
-.7
-1.2
-.4
Seasonally adjusted annual rates
1971: I
II
Ill
IV
145.1
150.6
154.3
159.3
26.0
27.1
28.0
29.5
3.9
4.1
4.3
4.2
78.9
80.9
83.2
85.1
8.9
9.2
9.5
9.8
27.4
29.3
29.3
30.7
143.4
146.9
149.5
153.4
131.8
134.8
137.3
141.0
15.9
16.4
16.8
17.2
-0.3
-.2
-.2
-.2
-4.0
-4.1
-4.1
-4.2
1.7
3.7
4.8
5.9
1972: I
II....
HI —
IV
166.2
175.9
175.3
191.2
32.4
34.1
34.6
36.1
4.6
4.7
4.9
5.2
86.8
88.7
90.6
92.5
10.2
10.5
10.9
11.3
32.2
38.0
34.4
46.1
157.8
160.8
165.9
171.6
144.3
147.5
152.4
158.0
17.5
18.0
18.5
18.8
-.3
-.4
-.5
-.6
-4.3
-4.4
-4.5
-4.6
8.4
15.2
9.5
19.6
1973: L . . .
II...
Ill
IV
190.2
192.8
196.0
36.6
37.9
39.1
40.1
6.1
6.6
6.6
94.9
96.0
97.7
98.6
11.6
11.8
12.1
12.5
41.1
40.5
40.5
42.5
176.4
181.2
185.7
191.9
163.0
168.0
172.2
178.0
19.1
19.4
19.5
19.9
-1.2
-1.6
-1.3
-1.1
-4.6
-4.7
-4.7
-4.8
13.9
11.5
10.4
1
Wage accruals less disbursements have been subtracted from total. These were (in billions of dollars, at seasonally
adjusted annual rates) .0, .0, .3, and .4 in the 4 quarters of 1971; - . 6 , - . 1 , .0, and .0 in the 4 quarters of 1972; and .0,
— . 1 , .0, and .0 in the 4 quarters of 1973. respectively.
2 Deficit of $41 million.
Source: Department of Commerce, Bureau of Economic Analysis.
330
TABLE C-10.—State and local government revenues and expenditures, selectedfiscalyears, 1927-72
[Millions of dollars]
General revenues by source*
Fiscal year 1
Total
Property
taxes
Sales
and
gross
receipts
taxes
Individual
income
taxes
General expenditures by function*
ReveCorponue
ration
from
net
Federal
income
Governtaxes
ment
All
other
revenues 3
Total
Education
Highways
Public
welfare
All
other *
1927..
7,271
4,730
470
70
92
116
1,793
7,210
2,235
1,809
151
1932..
1934..
1936..
1938..
7,267
7,678
8,395
9,228
4,487
4,076
4,093
4,440
752
1,008
1,484
1,794
74
80
153
218
79
49
113
165
232
1,016
948
1,643
1,449
1,604
1,811
7,765
7,181
7,644
8,757
2,311
1,831
2,177
2,491
1,741
1,509
1,425
1,650
444
889
827
1,069
3,269
2,952
3,215
3,547
1940..
1942..
1944..
1946..
1948..
9,609
10,418
10,908
12,356
17,250
4,430
4,537
4,604
4,986
6,126
1,982
2,351
2,289
2,986
4,442
224
276
342
422
543
156
272
451
447
592
945
858
954
855
1,861
1,872 9,229
2,123
9,190
2,269 8,863
2,661
11,028
3,685 17,684
2,638
2,586
2,793
3,356
5,379
1,573
1,490
1,200
1,672
3,036
1,156
1,225
1,133
1,409
2,099
3,862
3,889
3,737
4,591
7,170
1950..
1952..
1953..
1954..
20,911
25,181
27,307
29,012
7,349
8,652
9,375
9,967
5,154
6,357
6,927
7,276
788
998
1,065
1,127
593
846
817
778
2,486
2,566
2,870
2,966
4,541
5,763
6,252
6,897
22,787 7,177
26, 098 8,318
27,910 9,390
30, 701 10, 557
3,803
4,650
4,987
5,527
2,940 8,867
2,788 10,342
2,914 10,619
3,060 11,557
1955..
1956..
1957..
1958..
1959..
31,073
34,667
38,164
41,219
45,306
10,735 7,643
11,749 8,691
12,864 9,467
14, 047 9,829
14,983 10,437
1,237
1,538
1,754
1,759
1,994
744
890
984
1,018
1,001
7,584
3,131
3,335 8,465
3,843 9,250
4,865 9,699
6,377 10,516
33,724
36,711
40,375
44, 851
48,887
11,907
13,220
14,134
15,919
17,283
6,452
6,953
7,816
8,567
9,592
3,168
3,139
3,485
3,818
4,136
I960..
1961..
1962.
1963.
50,505
54,03^
58,252
62,890
16,405
18,002
19,054
20,089
11,849
12,463
13,494
14,456
2,463
2,613
3,037
3,269
1,180
1,266
1,308
1,505
6,974
7,131
7,871
8,722
11,634
12,563
13,489
14,850
51,876
56,201
60,206
64, 816
18,719 9,428
20,574 9,844
22,216 10,357
23,776 11,136
12,197
13,399
14,940
16, 547
17, 876
4,404 19, 325
4,720 21,063
5,084 22,549
5,481 24, 423
1962-63«.
1963-64 8
1964-65«.
62,269 19,833 14, 446
68, 443 21,241 15,762
74,000 22,583 17,118
3,267
3,791
4,090
1,505 8,663 14, 556 63,977 23,729 11,150
1,695 10,002 15,951 69,302 26, 286 11,664
1,929 11,029 17, 250 74,546 28, 563 12,221
5,420 23,678
5,766 25, 586
6,315 27,447
24,670
26,047
27, 74;
30,673
34,054
1965-66«...
1966-67«
1967-68*...
1968-69«...
1969-70*...
83,036
91,197
101,264
114,550
130,756
1970-71'
1971-72 5
144,927 37,852 33,233 11,900
166,352 42,133 37,488 15,237
19,085 4,760
20,530 5,826
22,911 7,308
26,519 8,908
30,32r 10,81'
2,038
2,227
2,518
3,180
3,738
13,214
15,370
17,181
19,153
21,857
19,269
21,197
598
23,598
26,118
29,971
82,843
93,350
102,411
116,728
131,332
33,287
37, 919
41,158
47,238
52,718
3,015
12,770 6,757 30,029
13,932 8,218 33,281
14,481 9,857 36,915
15,417 12,110 41,963
16,427 14,679 47, 507
3,424 26,146 32,374 150,674 59,413 18,095 18,226 54,940
4,416 31,253 35,825 166,873 64,886 19,010 21,070 61,907
i Fiscal years not the same for all governments. See footnote 5.
3 Excludes revenues or expenditures of publicly owned utilities and liquor stores, and of insurance-trust activities.
Intergovernmental receipts and payments between State and local governments are also excluded.
3 Includes licenses and other taxes and charges and miscellaneous revenues.
* Includes expenditures for health, hospitals, police, local fire protection, natural resources, sanitation, housing and
urban renewal, local parks and recreation, general control, financial administration, interest on general debt, and unallocable expenditures.
« Data for fiscal year ending in the 12-month period through June 30. Data for 1963 and earlier years include local government amounts grouped in terms of fiscal years ended during the particular calendar year.
Note.—Data are not available for intervening years.
See Table C-63 for net debt of State and local governments.
Source: Department of Commerce, Bureau of the Census.
331
TABLE C-71.—Public debt securities by kind of obligation, 1946-73
[Billions of dollars]
Interest-bearing public debt
Total
public
debt
securities
End of year or
month
Marketable public issues
by maturity class
Within
1 year
1 to 10
years
10
years
and
over
Nonmarketable public
issues
U.S.
savings
bonds
and
notes
Foreign
and
international
Other
Special
issues
Matured
public
debt
and
debt
bearing no
interest
1946
1947
1948
1949
259.1
256.9
252.8
257.1
54.8
49.6
44.6
49.4
61.7
56.1
55.1
51.8
60.1
60.0
57.7
53.9
49.8
52.1
55.1
56.7
67
7 4
6 3
9.3
24 6
29 0
31.7
33.9
15
27
2 2
2.1
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
256.7
259.4
267.4
275.2
278.7
280.8
276.6
274.9
282.9
290.8
49.4
47 1
57.7
73.9
62.8
61.7
68.6
75.3
72.6
79.9
50.5
56.7
62.2
50.4
64.7
68.6
58.9
56.9
71.0
83.7
52.5
38.8
28.7
30.3
30.2
32.9
32.9
32.0
32.0
24.6
58.0
57.6
57.9
57.7
57.7
57.9
56.3
52.5
51.2
48.2
10.1
20 9
19 6
19 3
17.7
12.7
11 9
10.4
9.2
7.8
33.7
35 9
39 1
41 2
42.6
43.9
45 6
45.8
44.8
43.5
24
2 3
21
2 3
30
3.0
24
20
2.1
3.1
290.2
296.2
303.5
309.3
317.9
320.9
329.3
344.7
358.0
368.2
75.3
85.9
87.3
89.4
88 5
93.4
105.2
104.4
108 6
118.1
89.5
84.7
95.6
94.2
100.4
95.6
87.5
97.0
103.4
93.3
24.2
25.4
20.1
24.0
23 6
25.6
25.4
25.1
24.8
24.4
47.2
47.5
47.5
48.8
49 7
50 3
50.8
51.7
52 3
52.2
1.3
1.8
2.4
1.5
3.2
4.4
4.7
6.3
5 3
4.6
3.8
35
29
2.7
2.6
26
2.5
44.3
43 5
43.4
43.7
46 1
46.3
52.0
57.2
59.1
71.0
3.4
35
4.3
4.1
44
4.4
4.3
3.5
2.9
2.0
1970
1971
1972
1973
389.2
424.1
449.3
469.9
123 4
119.1
130.4
141.6
104.9
123.0
117.7
106.8
19.4
19.9
21.4
21.8
52.5
54.9
58.1
60.8
6.5
17.4
21.3
26.9
2.4
2.4
24
2.8
78.1
85.7
95.9
107.1
1.9
1.8
2.0
2.1
1972: Jan
Feb..
Mar
Apr
May .
June
422.9
424.0
427.3
425.3
427.9
427.3
119.2
122.1
126.3
122.3
126.6
121.9
123.0
119.4
119.5
121.2
115.9
115.9
19.8
19.7
19.6
19.5
19.4
19.4
55.1
55.3
55.6
55.9
56.2
56.5
17.6
17.5
17.2
19.1
18.9
19.7
2.4
2.4
2.4
2.4
2.4
2.4
84.2
85.6
84.9
83.1
86.6
89.6
1.8
1.9
1.8
1.8
1.8
1.9
432.4
435.4
433.9
439.9
444.2
449.3
122.5
121.6
121 3
122.4
128.6
130.4
115.9
114.9
114.9
116.9
115.6
117.7
19.3
21.6
21.6
21.5
21.4
21.4
56.7
57.0
57.2
57.5
57.8
58.1
22.7
22.4
22.5
21.8
21.7
21.3
2.4
2.4
2.4
2.4
2.4
2.4
91.0
93.6
92.3
95.5
94.9
95.9
1.8
1.9
1.8
1.8
1.8
2.C
450.1
454.8
458.6
457.1
457.3
458.1
131.5
130.2
130.2
128.4
125.7
122.8
117.7
117.8
117.8
117.7
117.8
119.3
22.0
21.9
21.8
21.7
22.4
20.8
58.4
58.7
59.0
59.3
59.7
59.9
21.2
26.1
29.1
29.2
29.0
29.2
2.5
2.5
2.5
2.5
2.5
2.5
95.0
95.8
96.4
96.4
98.3
101.7
1.9
1.9
1.8
1.8
1.9
1.J
459.0
461.8
461.4
462.5
464.0
469.9
122.6
129.1
129.1
130.9
139.4
141.6
119.3
111.7
111.7
111.6
109.0
106.8
20.8
21.6
21.6
21.5
21.8
21.8
60.2
60.3
60.3
60.5
60.8
60.8
28.8
28.6
28.9
28.4
26.7
26.9
2.5
2.5
2.5
2.6
2.8
2.8
103.0
106.1
105.4
105.1
101.6
107.1
1.8
l.S
2.C
1.9
2.C
2.1
.
.
..
....
.
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
-.--
July
Aug
Sept
Oct
Nov
Dec
1973:Jan
Feb
Mar
Apr. .
May...
June _
July
Aug
Sept
Oct
Nov
Dec
.
.
.
.
.
. . .
.
Source: Department of the Treasury.
332
0.5
TABLE C-72.—Estimated ownership of public debt securities, 1946-73
[Par values,i billions of dollars]
Total public debt securities 2
Held by private investors
Held
End of year or
month
Total
259.1
256.9
252.8
257.1
1946
1947 .
1948
1949
1950
1951 .
1952
1953
1954
1955
1956
1957....
1958
1959
I960.. .
.
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1972:Jan
Feb
Mar
Apr
May
June
July
Aug
Sept
Oct
Nov
Dec
1973: Jan
Feb
Mar
Apr
May
June
July
Aug _ .
Sept
Oct
Nov
Dec
.. .
..
256 7
259 4
267.4
275.2
278 7
280.8
276.6
274.9
282.9
290.8
290.2
296.2
303.5
309 3
317 9
320.9
329.3
344 7
358 0
368.2
389.2
424.1
449 3
469.9
422 9
424.0
427 3
425 3
427.9
427 3
432 4
435 4
433 9
439 9
444 2
449 3
450.1
454 8
458.6
457 1
457.3
458.1
459.0
461.8
461 4
462.5
464 0
469.9
Held by
Govern- Federal
Reserve
ment
accounts Banks
27.4
30.8
33.7
35.9
36.0
39.3
42.9
45.4
46.7
49.0
51.2
52.8
52.1
51.4
52.8
52.5
53.2
55.3
58.4
59.7
65.8
73.1
76.6
89.0
97.1
106.0
116.9
129.6
104.4
106.2
105.5
105.5
109.1
111.5
112.8
115.4
113.5
116.7
116.1
116.9
116.2
117.1
117.9
117.9
120.1
123.4
125.0
128.7
127.8
127.4
127.1
129.6
23 3
22 6
23.3
18.9
20 8
23 8
24.7
25.9
24 9
24.8
24 9
24.2
26.3
26.6
27.4
28.9
30.8
33 6
37 0
40.8
44.3
49 1
52 9
57.2
62.1
70.2
69.9
78.5
69.6
67.7
69 9
70 3
71.6
71 4
70 8
70 7
69.7
70 1
69 5
69.9
72.0
72.6
74.3
75 5
74.1
75.0
77.1
76.1
76 2
78.5
77.2
78.5
Total
Mutual
savings
State
Miscelbanks
Other and
Comlocal Indilaneous
mercial and in- corpo-4 govern6
invesviduals
banks 3 surance rations ments *
tors 7
companies
208 3
203 6
195.8
202.4
74 5
68 7
62.4
66.8
36 7
35.9
32.7
31.5
199 9
196 3
199.8
203.8
207 1
207.0
200.5
197.9
204.5
212.7
210.0
214.8
219.5
220 5
222 5
220 5
219.2
222 4
228 5
222.0
229.9
247.9
262.5
261.7
248 9
250.2
251 9
249.5
247.2
244 4
248 8
249.3
250.7
253.1
253 6
262.5
261.8
265.1
266.4
263 7
263.1
259.7
256.9
257.1
257.4
256.5
259.7
261.7
61 8
61 5
63.4
63.7
69 1
62.0
59 5
59.5
67.5
60.3
62.1
67.2
67.1
64 2
63 9
60 7
57.4
63 8
66.0
56.8
62.7
65.3
67 7
60.2
63.1
62.4
63 6
62.2
61.3
60 9
60 5
60.3
61.1
61.6
64.2
67 7
66.4
62.8
62.0
60.5
58.9
58.8
56.5
55.1
55.4
56.3
58.5
60.2
29 6
26 2
25.5
25.1
24 1
23.1
21.2
20.1
19.8
19.4
18.1
17.4
17.4
16 8
16.5
15.6
14.1
12.7
11.6
10.1
9.8
9.3
8.7
7.6
9.2
9.2
9.2
9.1
9.1
8.9
8.8
8.6
8.9
8.6
8.8
8.6
8.7
8.4
8.4
8.2
8.1
8.1
8.0
7.8
7.7
7.6
7.5
7.6
1
15 3
14 1
14.8
16.8
19 7
20 7
19.9
21.5
19 1
23.2
18.7
17.7
18.1
21.4
18.7
18.5
18.6
18.7
18.2
15.8
14.9
12.2
14.2
10.4
7.3
11.4
9.8
11.4
10.8
11.1
10.6
9.5
10.3
9.3
9.4
8.0
7.8
9.1
10.6
9.8
10.3
10.9
11.2
10.0
10.8
9.8
10.3
11.5
9.2
10.2
11.1
11.4
6 3
7 3
7.9
8.1
8 8
9 6
11.1
12.7
14 4
15.4
16.3
16.6
16.5
18.0
18.7
19.0
20.1
21.1
21.2
22.9
24.3
24.1
24.9
27.2
27.8
25.4
28.9
29.3
26.0
26.7
26.2
26.1
26.0
26.9
26.9
27.0
27.6
28.5
28.6
28.9
30.0
29.5
29.4
29.2
28.6
28.8
28.4
27.7
29.0
28.5
28.9
29.3
64 1
65 7
65.5
66.3
66 3
64.6
65.2
64.8
63 5
65.0
65.9
64.9
63.7
69.4
66.1
65.9
66.0
68.2
69.8
72.1
74.6
74.0
75.8
81.4
81.9
74.0
74.7
77.3
73.6
73.6
74.7
74.6
74.4
74.0
74.3
74.2
74.0
74.1
74.5
74.7
74.9
75.0
75.3
75.4
75.7
75.9
76.7
77.0
77.2
77.0
77.2
77.3
11 4
11.9
12.5
12.9
13.6
13.7
14.7
16.1
16.9
18.3
18.9
19.1
18.9
24.3
26.5
26.9
30.2
31.6
33.0
33.4
33.9
35.7
36.1
36.1
40.4
62.5
72.8
76.0
66.2
67.2
67.5
67.9
66.1
64.5
68.9
71.2
71.4
71.3
72. C
72.8
71.5
78.5
80.1
80.4
81. C
78.4
77.0
78.0
78. S
76.9
76.6
76.0
U.S. savings bonds, series A-F and J, and U.S. savings notes are included at current redemption value.
Not all of total shown is subject to statutory debt limitation.
Includes commercial banks, trust companies, and stock savings banks in the United States and Territories and island
possessions; figures exclude securities held in trust departments. Since the estimates in this table are on the basis of par
values and include holdings of banks in United States Territories and possessions, they do not agree with the estimates
in Table C-53, which are based on book values and relate only to banks within the United States.
4
Exclusive of banks and insurance companies.
6
Includes trust, sinking, and investment funds of State and local governments and their agencies, and of Territories
and possessions.
6
Includes partnerships and personal trust accounts.
7
Includes savings and loan associations, nonprofit institutions, corporate pension trust funds, dealers and brokers,
Federal oriented agencies not included in Government accounts, and investments of foreign balances and international
accounts in this country. Beginning with December 1946, the international accounts include investments by the I nternationa I
Bank for Reconstruction and Development, the International Monetary Fund, the International Development Association,
the Inter-American Development Bank, and various United Nations' funds, in special non-interest-bearing notes and
bonds issued by the U.S. Government.
2
3
Source: Department of the Treasury.
333
TABLE C-73.—Average length and maturity distribution of marketable interest-bearing
public debt, 1946-73
Maturity class»
End of year or month
Amount
outstanding
Within
1 year
Ito5
years
5 to 10
years
10 to 20
years
Average length
20 years
and over
Millions of dollars
Fiscal year:
1946
1947
1948 .
1949
Years
Months
9
9
1
5
9
8
2
9
g
2
189,606
168, 702
160, 346
155,147
61,974
51,211
48, 742
48,130
24, 763
21, 851
21,630
32, 562
41, 807
35, 562
32, 264
16, 746
17,461
18, 597
16, 229
22, 821
43, 599
41,481
41,481
34, 888
1950
1951
1952
1953
1954
155,310
137,917
140, 407
147,335
150,354
42,338
43,908
46,367
65, 270
62, 734
51, 292
46, 526
47, 814
36,161
29, 866
7,792
8,707
13,933
15,651
27, 515
28,035
29,979
25, 700
28,662
28,634
25, 853
8,797
6,594
1,592
1,606
5
6
1955
1956
1957
1958
1959
155, 206
154,953
155, 705
166,675
178, 027
49, 703
58,714
71,952
67, 782
72,958
39,107
34, 401
40,669
42, 557
58, 304
34, 253
28,908
12, 328
21, 476
17, 052
28,613
28, 578
26,407
27,652
21,625
3,530
4,351
4,349
7,208
8,088
5
5
4
5
10
4
9
3
4
7
I960
1961
1962
1963
1964
183, 845
187,148
196,072
203,508
206,489
70,467
81,120
88, 442
85, 294
81,424
72, 844
58,400
57,041
58,026
65,453
20, 246
26, 435
26,049
37, 385
34,929
12,630
10, 233
9,319
8,360
8,355
7,658
10,960
15,221
14, 444
16,328
4
5
o
1965
1966
1967
1968
1969
208,695
209,127
210,672
226, 592
226,107
87,637
89,136
89,648
106,407
103,910
56,198
60, 933
71,424
64, 470
62, 770
39,169
33, 596
24, 378
30, 754
34, 837
8,449
8,439
8,425
8,407
8,374
17, 241
17, 023
16,797
16, 553
16, 217
5
4
4
11
4
4
7
2
4
0
1970
1971
1972
1973
232, 599
245, 473
257, 202
262,971
105, 530
112,772
121,944
122,803
89,615
89, 074
89,004
88, 223
15, 882
24, 503
26, 852
31,111
10, 524
8,455
9,343
14, 477
11,048
10,670
10, 059
6,357
3
8
6
261,918
261,215
265,380
262,989
261,924
257, 202
119,152
122, 067
126,315
122,263
126,617
121,944
93,646
93,089
93,106
94, 849
89,005
89,004
29,318
26,347
26, 349
26,348
26,853
26,852
9,484
9,459
9,419
9,392
9,363
9,343
10,317
10, 253
10,191
10,137
10,086
10, 059
3
3
4
4
3
3
3
3
3
3
3
3
257,717
258,095
257, 720
260,863
265,621
269, 509
122, 528
121, 589
121,260
122, 442
128, 569
130, 422
89,004
85, 730
85, 730
87,762
86, 464
88, 564
26,852
29,149
29,148
29,147
29,146
29,143
9,318
15,419
15,394
15, 363
15, 330
15, 301
10,015
6,208
6,188
6,151
6,112
6,079
3
3
3
3
2
4
4
3
271,121
269,881
269,775
267, 847
265,919
262,971
131,454
130, 205
130,187
128, 359
125,697
122, 803
88, 572
95,422
95,425
95, 392
88, 222
88,223
29,142
22, 357
22,356
22,356
29,620
31,111
15,271
16,114
16, 058
16,022
15,996
14,477
6,682
5,783
5,748
5,718
6,385
6,357
3
262,708
262,405
262,356
264, 047
270,234
270,224
122,602
129,072
129,114
130,940
139,433
141,571
88,223
80,594
80,576
80, 535
83, 817
81,715
31,108
31,106
31,103
31,102
25,136
25,134
14,457
15, 345
15,317
15, 269
15,679
15,659
6,318
6,288
6,245
6,201
6,169
6,145
3
2
3
3
3
3
3
3
2
1
1
0
1972- Jan
Feb
Mar
Apr
May
June
July
Aug
Sept
Oct
Nov
Dec
1973:Jan
Feb
Mar
Apr
- .
. .
. .
May
June
July
Aug
Sept
Oct
Nov
Dec
6
7
5
5
8
4
4
4
6
4
5
11
1
3
3
3
3
3
2
2
1
1
3
1
3
3
3
3
0
0
3
2
Mote.—All issues classified to final maturity except partially tax-exempt bonds, which were classified to earliest call
date (the last of these bonds were called on August 14,1962 for redemption on December 15,1962).
Source: Department of the Treasury.
334
CORPORATE PROFITS AND FINANCE
TABLE C-74—Profits before and after taxes, all private corporations, 1929-73
[Billions of dollars]
Corporate profits (before taxes) and
inventory valuation adjustment
rManufacturing
Y ear or
q uarter
All
industries
Total
Dur- Nondurable
goods able
goods
inindustries dustries
Transportation,
communication,
and
public
utilities
Corporate profits
after taxes
All
other
industries
Corporate
profits
before
taxes
Corporate
tax
liability i
Total
UndisDivi- tribdends uted
profits
Corporate
capital
consumption
allow-2
ances
Profits
plus
capital
consumption
allowances3
1929
10. 5
5. 2
2. 6
2. 6
1.8
3.4
10.0
1.4
8. 6
5. 8
2. 8
4.2
12. 8
1933
-1. 2
4
4
0
.0
-.8
1.0
.5
4
2. 0
6
3.8
4. 2
1939
6. 3
3. 3
1. 7
1. 7
1.0
2.0
7.0
1.4
5. 6
3. 8
1. 8
3.7
9. 3
1940
1941
194?
1943
1944
1945
1946
1947
1948
1949
9. 8
15. 2
70 3
24 4
23. 8
19. 2
19
6
33 0
30 8
5. 5
9. 5
11 8
13 8
13. 2
9. 7
q 0
13 6
17 6
16
3. 1
6. 4
7
8 1
7. 4
4. 5
4
5 8
7 5
8 1
2. 4
3. 1
4 6
5. 7
5. 9
5. 2
6 6
7 8
10 0
8 1
1.3
2.0
3.4
4.4
3.9
2.7
1.8
2.2
3.0
3.0
3.0
3.7
5.1
6.
6. 7
6. 7
8 5
9 9
12. 5
11.6
10.0
17.7
21.5
25.1
24.1
19.7
24.6
31.5
35.2
28.9
2.8
7.6
11.4
14.1
12.9
10.7
9.1
11.3
12.5
10.4
7. 2
10. 1
10 1
11. 1
11. 2
9. 0
15 5
?0
22. 7
18.5
4. 0
4. 4
4 3
4. 4
4. 6
4. 6
5 6
6 3
70
7
3. 2
5. 7
5 9
6 6
6. 5
4. 4
9 9
13. 9
15 6
11 3
3.8
4.2
5.0
5.4
6.1
6.4
4.7
5.8
7.0
7.9
11. 0
14. 4
15.
16. 4
17. 2
15. 4
20.
26. 0
29. 7
26. 5
?n q
1951
195?
1953
1954
1955
1956
19S7
1958
1959
37 7
4? 7
39. q
39.6
38 n
46 q
46 i
45 6
1
51. 7
1? 0
13
11 7
11 9
10 5
14 3
1? 8
13 3
q
13. 6
8 9
11 4
9 9
10 1
9 4
11 8
11 9
10 7
10 0
12. 7
4.0
4.6
4.9
5.0
4.7
5.6
5.9
5.8
5.9
7.0
1? 7
13 5
13 3
1?, 6
13 4
15
15 6
15 8
15. q
18.4
42.6
43.9
38.9
40.6
38.3
48.6
48.8
47.2
41.4
52.1
17.8
22.3
19.4
20.3
17.7
21.6
21.7
21.2
19.0
23.7
?4 9
6
19 6
4
?0 6
?7 0
?7
0
22. 3
28.5
8 8
8. 6
8.6
8. 9
9 3
10 5
11 3
11. 7
11 6
12. 6
16 0
13 0
11. 0
11. 5
11 3
16 5
15. 9
14.
10 8
15. 9
8.8
10.3
11.5
13.2
15.0
17.4
18.9
20.8
22.0
23.5
33. 7
31. 8
31. 0
33. 5
35. 5
44. 4
46.
46. 8
44. 3
52. 0
I960
1961
1962
1963
1964
1965
1966
1967
1968
1969
49
50
55
58
66
76
8?
78
84
79
6
8
7
1?
11
14
15
17
6
7
7
fi
?4 n
?0 7
4
18 8
1? 4
11 q
1? 5
13 0
14 q
16 6
18. 6
18.0
19 3
17 7
7.5
7.9
8.5
9.5
10.1
11.1
11.9
10.8
10.6
10.1
17.9
19 i
?0 5
6
?3 5
?5 6
9
29. 1
32.0
33. 1
49.7
50.3
55.4
59.4
66.8
77.8
84.2
79.8
87.6
84.9
23.0
23.1
24.2
26.3
28.3
31.3
34.3
33.2
39.9
40.1
26.7
?7 j>
31 <p
33 1
38 4
46 5
49 9
46 6
47 8
44 8
13
13
15
16
17
19
?0
5
8
8
8
4
?3 6
?4 3
13. 2
13 5
16 0
16. 6
?0 6
7
29. 1
3
24. 2
?0 5
24.9
26.2
30.1
31.8
33.9
36.4
39.5
43.0
46.8
51.9
51. 6
53. 5
61. 3
64. 8
72. 3
82. 9
89. 5
89. 6
94. 6
96. 8
8
5
1
7
10
14 7
?0
26 9
17. 3
17.8
?0 0
24 8
7.8
8.6
9.3
9.3
33.7
39 1
41 7
48 2
74.0
85.1
98.0
126.5
34.8
37.4
42.7
56.2
39
47
55
70
24. 7
25.1
?6 0
27 8
14 6
5
?9 3
42. 4
56.0
60.4
65.9
71.0
95.
108.0
121. 3
141. 3
1970
1971
1972
1973
V
q
?4 6
6
22 0
iq q
?6 0
?4 7
?4 0
iq
26. 3
1
4
7
3
8
?4
?3
?6
?8
3?
39
4?
38
41
36
6q
80 1
qi 1
109. 2
?7
3?
40
51
7
q
4
0
4
1
8
8
8
3
6
4
2
4
8
Seasonally adjustec\ annual rates
75 8
80. 5
80. 9
83. 4
31 8
32.7
31.8
33.6
14 ?
14 9
13 8
15 7
17
17
18
17
6
8
0
9
8.2
9.1
9.1
7.9
35 8
38.6
40.0
41.9
80.8
85.5
87.0
86.9
37.0
38.4
38.0
36.4
43.8
47 1
49 0
50 6
?5
25
25
24
3
1
2
9
18.5
22.0
23.7
25.7
58.8
59.8
61.0
62.1
102. 6
106.9
109.9
112.6
III
Ill
IV
86.
88.0
91.5
98.8
37.3
38.7
39.9
44.7
18 7
20.2
19.5
22.3
18
18
20
22
6
5
4
4
8.5
8.9
9.8
9.9
40.4
40.4
41.7
44.2
92.8
94.8
98.4
106.1
40.6
41.4
42.9
45.9
5?
53 4
55 6
60 3
?5
25
26
26
7
9
2
4
26.5
27.5
29.4
33.9
63.4
66.2
66.0
68.0
115.6
119 5
121 6
128 3
1973 I
II
III
104.3
107. 9
112 0
49.7
52 4
51 9
26.9
28 5
26 6
22 8
23.9
25.3
9.2
8.5
10.3
45.4
47 0
49 8
119.6
128.9
129.0
52.7
57.4
57.6
66 9
71.6
71.5
26 9
27.3
28.1
29.0
40.0
44 2
43 4
69.3
70.5
71.7
72.7
136 2
142 0
143 2
1971: 1
II
III
IV
1972'
1 Federal and State corporate income and excess profits taxes.
2 Includes depreciation and accidental damages.
3
Corporate profits after taxes plus corporate capital consumption allowances.
Source: Department of Commerce, Bureau of Economic Analysis.
335
TABLE C-75.—Sales, profits, and stockholders* equity, all manufacturing corporations, 1947—73
[Billions of dollars]
1\ll manufacturing
corporations *
Year or
quarter
Profits
Sales
(net)
Nondurable goods
industries^
Durable goods industries
Profits
Profits
StockStockStockBefore After holders' Sales Before After holders' Sales Before After holders'
Federal Federal equity2 (net) Federal Federal equity 2 (net) Federal Federal equity 2
income income
income income
income income
taxes taxes
taxes taxes
taxes taxes
1947
1948
1949. . .
150.7
165.6
154.9
16.6
18.4
14.4
10.1
11.5
9.0
65.1
72.2
77.6
66.6
75.3
70.3
7.6
8.9
7.5
4.5
5.4
4.5
31.1
34.1
37.0
84.1
90.4
84.6
9.0
9.5
7.0
5.6
6.2
4.6
34.0
38.1
40.6
1950
1951.
1952
1953
1954
181.9
245.0
250.2
265.9
248.5
23.2
27.4
22.9
24.4
20.9
12.9
11.9
10.7
11.3
11.2
83.3
98.3
103.7
108.2
113.1
86.8
116.8
1?? 0
137.9
122.8
12.9
15.4
12.9
14.0
11.4
6.7
6.1
5.5
5.8
5.6
39.9
47.2
49.8
52.4
54.9
95.1
128.1
128.0
128.0
125.7
10 3
12.1
10.0
10 4
96
61
5.7
5.2
5 5
56
43 5
51.1
53.9
55 7
58.2
1955
1956
1957.
1958
1959
278.4
307.3
320.0
305.3
338.0
28.6
29.8
28.2
22.7
29.7
15.1
16.2
15.4
12.7
16.3
120.1
131.6
141.1
147.4
157.1
142.1
159.5
166.0
148 6
169.4
16.5
16.5
15.8
11.4
15.8
8.1
8.3
7.9
5.8
8.1
58.8
65.2
70.5
72.8
77.9
136.3
147.8
154.1
156.7
168.5
12 1
13.2
12.4
11.3
13.9
70
78
7.5
6.9
8.3
61.3
66.4
70.6
74.6
79.2
I960..
1961
1962
1963
1964
345.7
356.4
389.9
412.7
443.1
27.5
27.5
31.9
34.9
39.6
15.2
15.3
17.7
19.5
23.2
165.4
172.6
181.4
189.7
199.8
173 9
175 ?
195.5
209.0
226.3
14.0
13.6
16.7
18.5
21.2
7.0
6.9
8.6
9.5
11.6
82.3
84.9
89.1
93.3
98.5
171.8
181.2
194.4
203.6
216.8
13.5
13.9
15.1
16.4
18.3
8.2
8.5
92
10.0
11.6
83.1
87.7
92.3
96.3
101.3
1965
1966
1967
1968
1969.
492.2
554.2
575.4
631.9
694.6
46.5
51.8
47.8
55.4
58.1
27.5
30.9
29.0
32.1
33.2
211.7
230.3
247.6
265.9
289.9
?57 0
291.7
300 6
335.5
366.5
26.2
29.2
25.7
30.6
31.5
14.5
16.4
14.6
16.5
16.9
105.4
115.2
125.0
135.6
147.6
235.2
262.4
274.8
296.4
328.1
20.3
22.6
22.0
24.8
26.6
13.0
14.6
14.4
15.5
16.4
106.3
115.1
122.6
130.3
142.3
1970
1971
1972
708.8
751.4
849.5
48.1
53.2
63.2
28.6
31.3
36.5
306.8 363.1
320.9 382.5
343.4 435.8
23.0
26.5
33.6
12.9
14.5
18.4
155.1 345.7
160.6 368.9
171.4 413.7
25.2
26.7
29.6
15.7
16.7
18.0
151.7
160.3
172.0
1971:1
II
III
IV
177.5
191.4
185.6
196.9
12.1
14.5
12.8
13.7
7.0
8.5
7.5
8.2
314.0
319.0
323.2
327.3
90 7
99 8
92.6
99.4
6.0
7.8
5.8
6.9
3.2
4.3
3.2
3.8
158.0
160.3
161.2
162.8
86.9
91.6
93.1
97.4
6.1
6.8
7.0
6.8
3.8
4.2
4.3
4.4
156.0
158.7
162.0
164.6
1972:1
II
Ill
IV
197.2
213.2
210.6
228.6
13.9
16.7
15.1
17.5
7.9
9.6
8.8
10.1
332.6
340.4
347.4
353.1
100.0
111.5
106.2
118.1
7.3
9.6
7.5
9.2
3.9
5.3
4.2
5.1
165.5 97.2
170.3 101.7
173.6 104.4
176.3 110.4
6.6
7.2
7.6
8.3
4.1
4.3
4.6
5.0
167.1
170.1
173.9
176.8
1973:1 . . .
II
III
232.5
256.3
254.0
18.3
22.2
19.6
10.5
13.0
11.6
361.1 ] ? ] . ?
370.8 136.5
378.9 130.3
10.3
12.7
9.9
5.7
7.1
5.7
181.9 111.3
187.1 119.9
191.9 123.7
8.0
9.5
9.7
4.8
5.8
5.9
179.2
183.7
186.9
1 Includes newspapers beginning 1969.
2 Annual data are average equity for the year (using four end-of-quarter figures).
Note.—For explanatory notes concerning compilation of the series, see "Quarterly Financial Report for Manufacturing
Corporations," Federal Trade Commission.
Data are not necessarily comparable from one period to another due to changes in accounting procedures, industry
classifications, sampling procedures, etc. Specific information about the effects of the more significant changes and revisions is contained in the following issues of the "Quarterly Financial Report": third quarter 1953, third quarter 1956,
first quarter 1959, and first quarter 1965.
Source: Federal Trade Commission.
336
TABLE C-76.—Relation of profits after taxes to stockholders* equity and to sales, all manufacturing corporations, by industry group, 1950-73
Durable goods industries
Year or
quarter
All
manufacturTotal
ing
durcor- able 2
pora-1
tions
Electrical MaMoma- chintor
vehi- Air- chinery
ery,
craft
cles
(exand equip- cept
and
equip- parts ment, elecand trical)
ment
supplies
Fabricated
metal
products
Primary
iron
and
steel
industries
Primary
nonferrous
metal
industries
MisLumcellaInber
neous
Stone, Furni- and stru- manclay,
ture wood ments ufacturand
and prod- and
reucts
ing
glass
fixprod- tures (ex- lated (incept prod- cluducts
furni- ucts
ing
ture)
ordnance)
Ratio of profits after Federal income taxes (annual rate) to stockholders' equity—percent3
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1972: I
IV....
1973: I
II....
III...
15.4 16.9 25.3
12.1 13.0 14.3
10.3 11.1 13.9
10.5 11.1 13.9
9.9 10.3 14.1
12.6 13.8 21.7
12.3 12.8 13.1
10.9 11.3 14.2
8.6
8.0
8.2
10.4 10.4 14.5
9.2
8.5 13.5
8.9
8.1 11.4
9.8
9.6 16.3
10.3 10.1 16.7
11.6 11.7 16.9
13.0 13.8 19.5
13.4 14.2 15.9
11.7 11.7 11.7
12.1 12.2 15.1
11.5 11.4 12.6
9.3
8.3 6.1
9.7
9.0 13.1
10.6 10 8 14 7
9.5
9.3 16 4
11.3 12 4 19 1
10.1
97 55
11.5 11 6 17 6
11.6 12 5 21 1
14.0 15 3 21 4
12.3 11 9 6 8
17.7
13.2
8.1
7.3
9.8
12.7
11.3
12.2
15.2
14.4
12.9
14.2
10.6
6.8
5.8
7.9
7.2
9.7
7.3
7.4
9.8
12 2
9.8
20.9
14.0
13.7
13.1
12.4
12.3
11.4
12.5
10.2
12.5
9.5
8.9
10.0
10.1
11.2
13.5
14.8
12.8
12.2
11.1
9.1
9.5
10.8
8.5
11.1
10.2
13.5
11.6
13.3
12.7
14.1
13.0
11.3
9.8
8.6
10.3
12.6
10.7
6.9
9.7
7.5
7.8
9.1
9.6
12.5
14.1
15.0
12.9
12.3
12.2
9.8
8.7
10.6
9.3
11.7
11.0
10.2
12 4
14 7
12.9
16.0
13.4
10.1
9.8
7.6
10.0
10.7
9.3
7.3
8.0
5.6
5.9
7.9
8.3
10.1
13.2
14.7
12.7
11.7
11.3
8.5
8.3
10.9
9.2
12.1
11.7
10.2
11.9
15.4
13.7
14.3
12.3
8.5
10.7
8.1
13.5
12.7
11.4
7.2
8.0
7.2
6.1
5.4
7.0
8.8
9.8
10.2
7.7
7.6
7.6
4.3
4.5
6.0
4.0
7.5
4.9
7.6
7.8
10.4
9.3
15.1
13.8
11.6
11.1
10.4
15.5
16.4
9.3
6.0
7.9
7.1
7.1
7.5
7.6
9.8
11.9
14.8
10.9
10.8
12.2
10.6
5.1
5.9
5.7
7.5
4.9
5.6
8.4
11.5
9.1
17.7
14.2
11.7
11.8
12.5
15.6
14.9
12.4
10.2
12.7
9.9
8.9
8.9
8.7
9.6
10.3
9.9
8.2
9.2
9.2
6.9
9.2
10.1
5.0
12.7
13.4
9.3
6.2
13.5
14.2
15.2
11.3
8.6
8.2
6.0
9.2
11.6
8.5
6.3
8.9
6.5
4.9
7.9
8.3
10.1
13.4
14.2
12.1
12.2
12.6
7.9
9.5
13.4
10.1
14.6
13.7
14.7
14.2
14.4
12.7
17.5
11.9
8.5
7.1
6.3
11.1
8.7
4.7
5.7
9.4
3.6
4.1
5.6
8.2
9.9
10.1
10.0
8.6
14.6
13.0
5.6
11.4
16.3
12.5
19.2
19.2
14.1
21.0
30.4
22.3
16.7
13.2
11.6
11.4
12.3
12.5
12.4
12.0
10.6
13.1
11.6
10.6
12.0
12.1
14.4
17.5
20.9
18.0
16.6
15.6
14.3
13.6
14.9
13.5
14.9
15.8
15.2
14.1
16.6
17.6
12.3
9.7
7.0
8.2
7.5
8.5
11.6
7.7
8.2
9.3
9.2
9.9
9.4
8.8
9.5
10.7
15.4
13.1
12.4
11.6
10.0
9.0
10.8
7.6
10.9
9.8
14.6
6.9
12.1
12.5
9.4
5.5
4.1
3.5
3.4
5.4
3.9
2.3
2.8
4.2
1.7
1.9
2.5
3.3
3.9
4.0
3.8
3.4
5.3
4.8
2.5
4.4
5.0
4.4
5.8
5.7
4.3
6.3
7.8
6.3
8.6
6.1
4.8
4.6
5.5
6.0
5.8
5.7
5.4
6.5
5.9
5.4
5.9
6.0
7.2
8.6
9.5
8.5
8.1
7.8
7.3
7.2
8.2
7.8
8.1
8.5
8.2
7.9
8.7
9.2
5.6
3.7
2.7
2.9
2.8
3.1
3.6
2.5
3.0
3.5
3.5
3.6
3.4
3.3
3.6
3.8
4.9
4.2
4.0
3.8
3.4
3.2
3.3
2.5
3.3
3.1
3.9
2.1
3.5
3.5
Profits after Federal income taxes per dollar of sales—cents
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1972: I . . .
II..
III.
IV..
1973: I
7.1
4.8
4.3
4.3
4.5
5.4
5.3
4.8
4.2
4.8
4.4
4.3
4.5
4.7
5.2
5.6
5.6
5.0
5.1
4.8
4.0
4.1
4.3
4.0
4.5
4.2
4.4
4.5
5.1
4.6
7.7
5.3
4.5
4.2
4.6
5.7
5.2
4.8
3.9
4.8
4.0
3.9
4.4
4.5
5.1
5.7
5.6
4.8
4.9
4.6
3.5
3.8
4.2
3.9
4.7
4.0
4.3
4.7
5.2
4.4
8.3
4.7
4.7
3.9
5.1
6.9
5.2
5.4
4.0
6.3
5.9
5.5
6.9
6.9
7.0
7.2
6.2
4.9
5.7
4.7
2.6
4.6
4.8
5.4
5.9
2.2
5.3
6.1
6.1
2.4
2.9
2.4
1.6
1.4
1.8
2.4
2.3
2.6
3.3
3.0
2.7
3.2
3.0
2.0
1.8
2.5
2.3
2.9
2.4
2.2
2.9
3.2
2.9
7.2
5.0
4.5
4.1
4.5
4.4
3.8
4.2
3.8
4.4
3.5
3.5
3.7
3.8
4.2
4.8
4.8
4.4
4.3
3.9
3.3
3.5
3.9
3.2
4.0
3.8
4.5
4.1
4.3
4.3
7.3
5.5
4.8
4.2
4.4
5.1
5.4
4.8
3.7
4.8
3.9
4.1
4.5
4.7
5.8
6.2
6.4
5.7
5.5
5.4
4.6
4.2
4.9
4.5
5.2
5.1
4.6
5.5
5.9
5.4
6.8
5.0
4.0
3.6
3.1
3.8
4.0
3.6
3.1
3.2
2.4
2.5
3.1
3.2
3.7
4.5
4.9
4.5
4.1
3.8
3.0
2.9
3.5
3.1
3.8
3.8
3.1
3.7
4.3
4.0
See footnotes at end of table.
337
7.9
5.8
4.7
5.3
5.3
7.2
6.7
6.6
5.4
5.4
5.1
4.6
3.9
4.8
5.6
5.7
5.8
4.8
4.6
4.4
2.5
2.6
3.1
2.3
3.7
2.5
3.7
3.5
4.4
4.0
10.2
7.8
6.7
6.3
6.6
8.3
9.3
6.6
4.7
5.8
5.4
5.3
5.5
5.3
6.5
7.3
8.2
6.8
6.2
6.6
6.2
3.3
3.7
3.7
4.5
3.2
3.3
4.5
5.4
4.7
10.1
7.1
6.6
6.5
7.4
8.6
8.2
7.5
6.8
7.9
6.6
5.8
5.6
5.3
5.6
5.9
5.6
4.8
5.2
4.7
3.6
4.5
4.7
2.7
5.8
5.9
4.1
3.1
5.6
5.8
5.1
3.4
2.7
2.6
2.1
2.9
3.4
2.6
2.0
2.7
2.1
1.6
2.3
2.4
2.9
3.7
3.9
3.5
3.4
3.5
2.5
3.0
3.7
3.1
3.9
3.8
4.0
4.1
3.8
3.6
TABLE C-76.—Relation of profits after taxes to stockholders' equity and to sales, all manufacturing corporations, by industry group,
1950-73—Continued
Nondurable goods industries
Year or
quarter
Total
nondurable' 2
Food
and
kindred
products
Tobacco
manufactures
Textile
mill
products
Apparel
and
related
products
Paper
and
allied
products
Printing
and
publishing i
Chemicals
and
allied
products
Petroleum
refining
Rubber
and
miscellaneous
plastic
products
Leather
and
leather
products
Ratio of profits after Federal income taxes (annual rate) to stockholders' equity—percent 3
1950
1951
1952
1953
1954
1955
1956 __
1957..
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
. ..
1972:1
II
III....
IV.....
1973: 1
II
III
14.1
11.2
9.7
9.9
9.6
11.4
11.8
10.6
9.2
10.4
9.8
9.6
9.9
10.4
11.5
12.2
12.7
11.8
11.9
11.5
10.3
10.3
10.5
9.8
10.2
10.5
11.4
10.8
12.7
12.7
12.3
8.1
7.6
8.1
8.1
8.9
9.3
8.7
8.7
9.3
8.7
8.9
8.8
9.0
10.0
10.7
11.2
10.8
10.8
10.9
10.8
11.0
11.1
10.0
11.6
11.2
11.4
10.8
12.3
13.3
1950 .
1951
1952
1953
1954 _
1955
1956 . . .
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1972:1
II....
III..-.
IV....
1973:1
IL—
III...
6.5
45
4.1
4.3
4.4
5.1
5.3
4.9
4.4
4.9
4.8
4.7
4.7
4.9
5.4
5.5
5.6
5.3
5.2
5.0
4.5
4.5
4.4
4.2
4.3
4.4
4.6
4.3
4.9
4.8
3.4
2 0
1.9
2.0
2.1
2.3
2.4
2.2
2.2
2.4
2.3
2.3
2.3
2.4
2.7
2.7
2.7
2.6
2.6
2.6
2.5
2.6
2.5
2.4
2.7
2.5
2.5
2.4
2.6
2.7
11.5
9.5
8.4
9.4
10.2
11.4
11.7
12.5
13.5
13.4
13.4
13.6
13.1
13.4
13.4
13.5
14.1
14.4
14.4
14.5
15.7
15.8
15.4
15.1
15.9
15.3
15.4
13.6
15.4
15.6
12.7
8.2
4.2
4.6
1.8
5.7
5.8
4.2
3.5
7.5
5.8
5.0
6.2
6.1
8.5
10.9
10.1
7.6
8.8
7.9
5.1
6.7
7.5
6.4
7.3
7.3
9.0
8.4
11.1
8.6
10.1
2.9
4.4
5.1
4.5
6.1
8.1
6.3
4.9
8.6
7.7
7.2
9.3
7.7
11.7
12.7
13.3
12.0
13.0
11.9
9.3
11.2
12.-0
10.9
9.3
12.4
15.1
8.0
14.6
6.3
16.2
13.9
10.5
10.1
9.9
11.5
11.6
8.9
8.1
9.5
8.5
7.9
8.1
8.1
9.3
9.4
10.6
9.1
9.7
10.1
7.0
4.8
9.0
6.5
10.5
8.6
10.5
10.8
14.6
13.1
11.5
10.3
9.1
9.4
9.2
10.2
13.0
11.7
9.0
11.4
10.6
8.5
10.3
9.2
12.6
14.2
15.6
13.0
12.5
12.6
11.2
10.7
12.1
7.6
12.6
12.6
15.3
10.4
12.2
13.7
17.8
12.2
10.9
10.7
11.6
14.7
14.2
13.3
11.4
13.7
12.2
11.8
12.4
12.9
14.4
15.2
15.1
13.1
13.3
12.8
11.4
11.8
12.9
12.7
12.9
12.9
12.8
14.4
15.5
14.8
15.2
13 3
13.4
12.7
13 4
13.9
12.5
10.0
9.8
10.1
10.3
10.1
11.3
11.4
11.8
12.4
12.5
12.3
11.7
11.0
10.3
8.7
8.8
7.4
8.7
9.8
9.2
10.7
12.3
16.9
14.8
11 1
11.3
10.6
13 2
12.2
11.1
9.1
11.0
9.1
9.3
9.6
9.2
10.6
11.7
12.2
10.3
12.3
10.3
7.1
9.6
10.8
10.2
12.1
10.0
10.9
10.0
14.1
9.6
10.9
2.1
5.8
6.0
5.9
8.5
7.2
7.0
5.7
8.5
6.3
4.4
6.9
6.9
10.5
11.6
12.9
11.9
13.0
9.3
9.4
8.2
9.1
10.2
6.3
10.6
9.2
9.1
7.4
10.6
5.8
4.5
3.6
3.8
4.0
4.4
4.4
4.2
3.5
4.0
3.6
3.8
3.7
3.6
4.1
4.3
4.4
3.9
4.5
3.8
2.7
3.6
4.0
4.0
4.3
3.7
3.9
3.6
4.6
3.2
3.7
.6
1.8
1.8
1.9
2.5
2.1
2.0
1.7
2.2
1.6
1.1
1.8
1.8
2.6
2.8
3.0
3.0
3.3
2.6
2.5
2.2
2.4
2.8
1.7
2.8
2.2
2.4
2.0
2.8
Profits after Federal income taxes per dollar of sales—cents
4.9
38
3.2
3.7
4.2
48
5.0
5.2
5.4
5.4
5.5
5.7
5.7
5.9
5.9
5.9
5.9
5.9
5.5
5.2
5.8
6.1
6.0
5.9
6.2
6.0
5.8
5.6
6.0
6.0
5.8
34
1.9
2.2
1.0
2 6
2.6
1.9
1.6
3.0
2.5
2.1
2.4
2.3
3.1
3.8
3.6
2.9
3.1
2.9
1.9
2.4
2.6
2.3
2.5
2.6
2.8
2.8
3.4
2.8
2.8
.6
1.0
1.2
1.1
1.3
1.6
1.3
1.0
1.5
1.4
1.3
1.6
1.4
2.1
2.3
2.4
2.3
2.4
2.3
1.9
2.4
2.4
2.3
2.0
2.3
2.7
1.6
2.8
1.2
8.8
6.6
5.7
5.4
5.6
6.1
6.1
5.0
4.7
5.2
5.0
4.7
4.6
4.5
5.1
4.9
5.4
4.7
4.7
4.8
3.4
2.3
4.0
3.0
4.6
3.8
4.6
4.7
5.9
5.6
4.5
3.7
3.3
3.4
3.4
3.6
4.2
3.7
3.1
4.0
3.6
2.8
3.4
3.2
4.3
4.8
5.1
4.4
4.1
4.7
4.2
4.1
4.7
3.0
4.8
4.9
5.7
4.1
4.5
5.2
10.3
6.5
6.1
6.1
6.8
8.3
8.0
7.6
7.0
7.9
7.5
7.3
7.4
7.5
7.9
7.9
7.8
6.9
6.8
6.5
5.9
6.1
6.4
6.4
6.3
6.5
6.3
6.9
7.0
6.9
11.1
10.1
10.4
10.6
11.1
11.6
10.6
9.5
9.5
9.9
10.3
9.7
10.8
10.9
11.1
11.2
11.0
10.7
10.1
9.3
8.3
6.7
6.8
5.8
6.8
7.2
6.7
7.5
8.0
i Includes newspapers beginning 1969.
* Includes certain industries not shown separately.
3 Annual ratios based on average equity for the year (using four end-of-quarter figures). Quarterly ratios based on equity
at end of quarter only.
Note.—For explanatory notes concerning compilation of the series, see "Quarterly Financial Report for Manufacturing
Corporations," Federal Trade Commission. See also Note, Table C-75.
Source: Federal Trade Commission.
338
TABLE C-77.—Sources and uses of funds, nonfarm nonfinancial corporate business, 1946-73
[Billions of dollars]
Sources
Uses
Externa
Period
Total
Credit market funds
InternaM
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
.
_.
_.
. .
.... .
. .
Total
Other
Long- Shortterm 2 term 3
Purchase
of
physical
assets 4
Increase
in
financial
assets
Discrepancy
(sources
less
uses)
18.3
27.0
28.2
19.6
7.8
12.6
18.7
19.1
10.5
14.4
9.6
.6
6.8
8.6
6.3
3.2
3.4
5.5
6.4
5.1
3.3
3.1
-.1
-1.8
3.7
5.8
3.3
-2.7
16.5
25.5
25.2
18.7
17.9
17.2
20.2
15.2
-1.4
8.4
5.0
3.5
1 8
1.4
3.0
.9
41.1
35.5
29.1
27.2
28.8
52.5
44.3
42.2
41.2
55.1
17.9
19.9
21.2
21.1
23.3
29.2
28.9
30.6
29.5
35.0
23.2
15.6
7.9
6.1
5.5
23.3
15.4
11.6
11.7
20.1
7.2
10.0
9.2
5.6
6.3
10.3
12.9
12.0
10.6
12.6
3.8
5.9
7.8
5.9
6.6
6.5
7.5
10.3
10.5
8.1
3.4
4.1
1.4
-.3
-.3
3.8
5.4
1.7
.0
4.5
15.9
5.6
-1.3
.5
-.8
13.0
2.5
-.4
1.2
7.5
40.4
37.2
28.9
26.8
26.4
47.8
39.7
38.7
37.8
50.8
24.0
29.8
24.3
24.5
21.5
31.3
35.7
34.5
27.0
36.7
16.4
7.4
4.6
2.3
4.9
16.5
4.0
4.2
10.8
14.2
.7
-1.7
.2
.4
2.5
4.6
4 6
3.5
3.4
4.3
47.4
54.5
59.2
65.0
72.4
91.4
97.4
94.1
112.4
115.5
34.4
35.6
41.8
43.9
50.5
56.6
61.2
61.5
61.7
60.7
12.9
19.0
17.4
21.1
21.9
34.8
36.2
32.6
50.7
54.8
11.9
12.3
12.5
12.1
14.5
20.4
25.4
29.6
30.3
38.3
7.5
10.8
9.5
8.2
8.8
9.2
15.6
21.3
17.0
19.5
4.5
1.5
2.9
3.9
5.6
11.3
9.8
8.3
13.3
18.8
1.0
6.7
4.9
9.0
7.4
14.4
10.9
3.0
20.4
16.5
41.4
49.5
54.7
59.3
65.0
82.5
89.1
88.2
104.0
112.1
38.7
36.3
43.6
45.2
51.6
62.3
76.5
71.4
75.0
83.7
2.7
13.2
11.1
14.2
13.4
20.2
12.6
16.8
29.0
28.4
6.0
5.0
4.5
5.6
7.4
8.9
8.3
5.9
8.4
3.4
100.7
122.7
146.3
59.4
69.9
77.5
41.3
52.8
68.9
38.8
47.4
54.6
29.8
42.0
38.2
9.0
5.4
16.4
2.5
5.5
14.2
95.0
109.7
131.4
84.0
86.7
100.7
11.0
23.0
30.7
5.7
13.0
15.0
Seasonally adjusted annual rates
1971: 1st half... 118.1
127.2
2d half
67.3
72.4
50.8
54.8
45.1
49.7
42.0
41.9
3.0
7.8
5.8
5.2
106.2
113.3
86.5
87.0
19.7
26.3
12.0
13.9
129.7
135.2
144.3
176.2
73.1
76.2
77.6
82.9
56.6
59.0
66.7
93.3
42.8
52.5
52.8
69.9
33.9
40.7
39.4
38.8
8.9
11.8
13.4
31.1
13.8
6.4
13.9
23.4
127.3
120.7
131.8
146.0
93.9
98.0
103.3
107.4
33.4
22.7
28.5
38.6
2.3
14.6
12.5
30.2
173.7
183.9
191.6
81.4
80.3
85.9
92.3
103.6
105.7
77.2
68.8
64.1
32.4
39.3
32.7
44.7
29.3
31.4
15.0
34.9
41.6
163.9
167.7
183.3
107.4
109.8
117.7
56.5
57.9
65.6
9.7
16.2
8.2
1972: 1
II
III
IV
1973: 1
II
III*
...
1
Undistributed profits (after inventory valuation adjustment) and capital consumption allowances.
2 Stocks, bonds, and mortgages.
3 Bank loans, commercial paper, finance company loans, bankers' acceptances, and Government loans.
4 Plant and equipment, residential structures, and inventory investment.
Source: Board of Governors of the Federal Reserve System.
339
TABLE C-78.— Current assets and liabilities of U.S. corporations, 1939—73
[Billions of dollars]
Current assets
End of year
or quarter
U.S.
Cash
on
GovernTotal hand
and
ment
in
securibanks1 ties 2
Receivables
from
U.S.
Government 3
Current liabilities
Notes
and
InOther
acvencur- Total
counts tories rent
receivasable
sets*
Advances
and
Notes
preand
acpayments, counts
U.S.
payGovable
ernment3
Federal
income
tax
liabilities
Other
current
liabilities
Net
working
capital
All corporations»
54.5
10.8
2. ?
1940..
1941.
1942.
1943.
1944.
1945.
1946.
1947.
1948.
1949.
60.3
72.9
83.6
93.8
97.2
97.4
108.1
123.6
133.0
133.1
13.1
13.9
17.6
21.6
21.6
21.7
22.8
25.0
25.3
26.5
2. 0
4 0
10 1
16 4
20 9
21 1
15.3
14 1
14 8
16.8
0.1
.6
4.0
5.0
4.7
2.7
1950.
1951.
1952.
1953.
1954.
1955.
1956.
1957.
1958.
1959.
161.5
79.1
186.2
190.6
194.6
224.0
237.9
244.7
255.3
277.3
28.1
30.0
30.8
31.1
33.4
34.6
34.8
34.9
37.4
36.3
19 7
20 7
19 g
21 5
19 2
23 5
19 1
18 6
18 8
22.8
1.1
2.7
2.8
2.6
2.4
2.3
2.6
2.8
2.8
2.9
1960.
1961.
289.0
306.8
37.2
41.1
20.1
20 0
1961..
1962..
1963..
1964.
1965..
1966..
1967.
1968.
1969.
1970.
1971.
1972.
254.7
269.7
288.2
305.6
336.0
364.0
386.2
426.5
473.5
34.8
37.1
39.8
40.5
42.8
41.9
45.5
48.2
47.9
490.5
516.6
561.2
1972: I . . . .
II...
Ill
IV
1973:
1939.
18.0
1.4
30.0
21.9
1. 2
6.9
24.5
19.8
25.6
27.3
27.6
26.8
26.3
37.6
44.6
48.9
45.3
1.5
1.4
1.3
1.3
1.4
2.4
1.7
1.6
1.6
1.4
32.8
40.7
47.3
51.6
51.7
45.8
51.9
61.5
64.4
60.7
22.6
0.6
25.6
.8
24.0
2.0
24.1
2.2
25.0
1.8
24.8
.9
31.5
.1
37.6
39.3
37.5
2. 5
7.
12. 6
16. 6
15. 5
10. 4
8. 5
10. 7
11. 5
9. 3
7.1
7.2
8.7
8.7
9.4
9.7
11.8
13.2
13.5
14.0
27.5
32.3
36.3
42.1
45.6
51.6
56.2
62.1
68.6
72.4
55.7
58.8
64.6
65.9
71.2
£6.6
95.1
99.4
106.9
117.7
55.1
64.9
65.8
67.2
65.3
72.8
80.4
82.2
81.9
88.4
1.7
2.1
2.4
2.4
3.1
4.2
5.9
6.7
7.5
9.1
79.8
92.6
96.1
98.9
99.7
121.0
130.5
133.1
136.6
153.1
.4
1.3
2.3
2.2
2.4
2.3
2.4
2.3
1.7
1.7
47.9
53.6
57.0
57.3
59.3
73.8
81.5
84.3
88.7
99.3
16.7
21. 3
18.1
18 7
15. 5
19 3
17. 6
15 4
12 9
15 0
14.9
16.5
18.7
20.7
22.5
25.7
29.0
31.1
33.3
37.0
81.6
86.5
90.1
91.8
94.9
103.0
107.4
111.6
118.7
124.2
3.1
3.4
126.1
135.8
91.8
95.2
10.6 160.4
11.4 171.2
1.8
1.8
105.0
112.8
13 5
14.1
40.1
42.5
128.6
135.6
16.5
16.8
16.7
15.8
14.4
13.0
10.3
11.5
10.6
3.4
3.7
3.6
3.4
3.9
4.5
5.1
5.1
4.8
94.5
99.5
106.9
116.5
130.2
142.1
150.2
168.8
192.2
123.7
132.4
145.5
156.6
178.8
199.4
211.3
244.1
287.8
1.8
2.0
2.5
2.7
3.1
4.4
5.8
6.4
7.3
82.6
86.7
94.5
102.2
118.4
133.1
141.3
162.4
191.9
13.3
14.3
15.7
16.2
18.3
17.4
13.2
14.3
12.6
26.0
29.4
32.8
35.5
39.0
44.5
51.0
61.0
76.0
131.0
137.3
142.7
H9.0
157.2
164.6
174.9
182.4
185.7
49.7
55.3
60.3
7.6
10.4
9.7
4.2
3.5
3.4
200.6 196.0
207.5 2C3.1
228.9 218.2
32.4 302.6
36.8 311.9
40.7 336.8
6.6
4.9
4.0
200.5
202.8
216.9
11.8
14.5
16.7
83.7
89.7
99.2
187.9
204.7
224.4
526.1
534.3
545.3
561.2
55.3
55.7
57.3
60.3
9.9
8.7
7.6
9.7
3.4
2.8
2.9
3.4
211.4
216.3
222.5
228.9
38.9
40.1
39.8
40.7
316.4
319.1
326.2
336.8
4.9
4.9
4.7
4.0
202.5
204.0
207.6
216.9
15.7
13.4
15.0
16.7
93.3
96.8
98.9
99.2
209.7
215.2
219.1
224.4
577.0
594.7
611.6
61.0
62.2
62.1
10.4
9.4
9.2
3.2
2.9
3.1
234.0 225.9
243.7 233.5
252.2 241.5
42.5 345.7
43.0 356.9
43.5 369.7
4.1
4.5
4.4
218.1
227.6
235.6
18.6 104.9
16.5 108.3
18.2 111.5
231.3
237.8
241.9
23.9
27.4
23.3
21.9
21.8
23.2
30.0
38.3
42.4
43.0
Nonfinancial corporations«
I
Ill
95.0
100.5
106.8
113.1
126.6
142.8
153.1
166.0
186.4
207.2
210.7
215.2
218.2
1
2
3
10.5
12.1
14.4
16.3
18.1
19.7
22.0
26.9
31.6
Includes time certificates of deposit.
Includes Federal agency issues.
Receivables from and payables to the U.S. Government do not include amounts offset against each other on corporations' booksor amounts arising from subcontracting which are not directly due from or to the U.S. Government. Wherever
possible, adjustments have been made to include U.S. Government advances offset against inventories on corporations'
IOKS.
hnnbe
* Includes marketable investments (other than Government securities and time certificates of deposit) as well as sundry
current assets.
5
Excludes banks, savings and loan associations, and insurance companies.
6
Excludes banks, sayings and loan associations, insurance companies, investment companies, finance companies
(personal and commercial), real estate companies, and security and commodity brokers, dealers, and exchanges.
Note.—Year-end data through 1969 are based on "Statistics of Income" (Treasury Department), covering virtually
U I \s
WVlllUUlv«f
h/U *J\*U
Ufl
VICI LCI
WVMIUIIVU
Securities and Exchange Commission.
Source: Securities and Exchange Commission.
340
TABLE C-79.—State and municipal and corporate securities offered, 1934-73
[Millions of dollars]
Corporate securities offered for cash
Year or quarter
State and
municipal
securities
offered
for cash
(principal
amounts)
Industry of corporate issuer
Type of corporate security
Total
corporate
offerings
Common
stock
Preferred
stock
Electric,
Transportations
Bonds
and
notes
Manufacturing^
371
67
133
176
water 2
Communication
Other
1934
939
397
19
1939
1,128
2,164
87
98
1,980
604
1,271
186
103
1940
2,677
2,667
1,062
1,170
3,202
108
110
34
56
163
183
167
112
124
369
2,386
2,390
917
990
2,669
992
848
539
510
1,061
1,203
1943
1944
1,238
956
524
435
661
1,357
472
477
1,422
324
366
48
161
609
159
96
4
21
109
1945
1946
1947
1948
1949
795
1,157
2,324
2,690
2,907
6,011
6,900
6,577
7,078
6,052
397
891
779
614
736
758
1,127
762
492
425
4,855
4,882
5,036
5,973
4,890
2 026
3 701
2 742
2 226
1,414
2,319
2,158
3,257
2,187
2,320
1,454
711
286
755
800
902
571
211
329
293
1,008
946
1950
1951
1952
1953
3,532
3,189
4,401
5,558
6,969
6,361
7,741
9,534
8,898
9,516
811
1,212
1,369
1,326
1,213
631
838
564
489
816
4,920
5,691
7,601
7,083
7,488
1,200
3,122
4,039
2,254
2,268
2,649
2,455
2,675
3,029
3,713
813
494
992
595
778
399
612
760
882
720
1,300
1,058
1,068
2,138
2,037
1958
1959
5,977
5,446
6,958
7,449
7,681
10,240
10,939
12,884
11,558
9,748
2,185
2,301
2,516
1,334
2,027
635
636
411
571
531
7,420
8,002
9,957
9,653
7,190
2,994
3,647
4,234
3,515
2,073
2,464
2,529
3,938
3,804
3,258
893
724
824
824
967
1,132
1,419
1,462
1,424
717
2,757
2,619
2,426
1,991
2,733
1960
1961
1962
1963
1964
7,230
8,360
8,558
10,107
10, 544
10,154
13,165
10, 705
12,211
13,957
1,664
3,294
1,314
1,011
2,679
409
450
422
343
412
8,081
9,420
8,969
10,856
10, 865
2,152
4,077
3,249
3,514
3,046
2,851
3,032
2,825
2,677
2,760
718
694
567
957
982
1,050
1,834
1,303
1,105
2,189
3,383
3,527
2,761
3,957
4,980
1965
1966
1967
1968
1969
11,148
11,089
14,288
16,374
11,460
15,992
18, 074
24,798
21,966
26, 744
1,547
1,939
1,959
3,946
7,714
725
574
885
637
682
13,720
15,561
21,954
17,383
18,348
5,417
7,070
11,058
6,979
6,356
2,936
3,665
4,935
5,281
6,736
1,013
1,972
2,067
1,875
2,146
947
2,003
1,979
1,766
2,188
5,680
3,364
4,759
6,064
9,319
1970
17, 762
24,370
22,944
22,760
38,506
44,907
40,835
33,110
6,948
9,315
9,693
7,905
1,383
3,677
3,372
3,390
30,176
31,915
27,771
21,816
10,609
11,682
6,622
4,845
11,007
11,778
11,318
10,246
2,207
2,442
2,027
1,711
5,146
5,819
4,825
4,898
9,537
13,190
16,045
11,411
1972: L_.
II. _
III..
IV..
5,865
6,109
5,383
5,587
9,813
11,158
9,240
10,624
2,065
2,798
2,418
2,412
803
1,002
720
847
6,945
7,359
6,103
7,364
1,466
2,088
1,627
1,441
2,252
3,479
2,644
2,943
634
529
386
478
1,506
1,369
868
1,082
3,955
3,693
3,716
4,681
1973: I . . .
II...
III..
IV P.
5,638
5,604
5,096
6,422
8,222
8,598
6,366
9,924
2,729
1,799
1,296
2,081
1,142
603
440
1,205
4,350
6,197
4,631
6,638
879
1,411
1,156
1,399
2,427
2,886
2,018
2,915
329
519
478
385
1,215
964
871
1,848
3,373
2,821
1,841
3,376
1941
1942
1954
1955
1956
1957
1971
1972
1973 v
1
Prior to 1948, also includes extractive, radio broadcasting, airline companies, com mercial, and miscellaneous company
issues.
2 Prior to 1948, also includes telephone, street railway, and bus company issues.
3 Prior to 1948, includes railroad issues only.
Note.—Covers substantially all new issues of State, municipal, and corporate securities offered for cash sale in the United
States in amounts over $100,000 and with terms to maturity of more than 1 year; excludes notes issued exclusively to
corr rr.ercial banks, intercorporate transactions, investment company issues, and issues to be sold over an extended period,
such as employee-purchase plans.
Sources: Securities and Exchange Commission, "The Commercial and Financial Chronicle," and "The Bond Buyer."
341
TABLE C-80.—Common stock prices\ earnings, and yields, and stock market credit, 1949-73
Standard & Poor's common stock data
Price indexes
Margin credit at brokers and banks
l
Regulated5
Year or month
Dividend
yield
(percent) 2
Price/
earnings
ratio 3
Total
(500
stocks)
Industrials
(425
stocks)
1949..
15.23
15. 00
17. 87
12.83
6.59
6.49
1950..
1951..
1952.
1953..
1954..
1955..
1956.
1957..
1958..
1959..
18.40
22.34
24.50
24.73
29.69
40.49
46.62
44.38
46.24
57.38
18.33
22. 68
24. 78
24. 84
30.25
42. 40
49. 80
47. 63
49. 36
61. 45
19. 96
20.59
22. 86
24. 03
27. 57
31. 37
32. 25
32. 19
37.22
44. 15
15.53
19.91
22.49
22.60
23.96
32.94
33.65
28.11
27.05
35.09
6.57
6.13
5.80
5.80
4.95
4.08
4.09
4.35
3.97
3.23
7.15
8.57
10.57
9.77
11.75
12.59
13.25
12.73
16.33
17.32
I960..
1961..
1962.
1963.
1964
1965.
1966.
1967.
1968.
1969..
55.85
66.27
62.38
69.87
81.37
88.17
85.26
91.93
98.70
97.84
59. 43
69. 99
65. 54
73. 39
86. 19
93. 48
91. 08
99. 18
107. 49
107.13
46. 86
60. 20
59. 16
64. 99
69 91
76.08
68. 21
68. 10
66. 42
62 64
30.31
32.83
30.56
37.58
45.46
46.78
46.34
46.72
48.84
45.95
3.47
2.98
3.37
3.17
3.01
3.00
3.40
3.20
3.07
3.24
16.98
21.68
17.39
18.20
18.81
17.92
15.15
17.48
17.66
16.48
1970.
1971.
1972.
1973-.
83.22
98.29
109. 20
107.43
91 29
108 35
121 79
120.44
54.48
59.33
56.90
53 47
32.13
41.94
44.11
38.05
3.83
3.14
2.84
3.06
15.69
18.50
18.20
1972: Jan....
Feb...
Mar...
Apr...
May...
June..
103.30 114 12
105. 24 116 86
107.69 119 73
108.81 121.34
107.65 120.16
108.01 120.84
60
57
57
55
54
53
19
41
73
70
94
73
45.16
45.66
46.48
47.38
45.06
43.66
2.96
2.92
2.86
2.83
2.88
2.87
18.45
July...
Aug...
Sept...
Oct....
Nov...
Dec...
107.21 119.98
111.01 124 35
109.39 122 33
109.56 122 39
115.05 128 29
117. 50 131 08
53
54
55
56
61
61
47
66
36
66
16
73
42.00
43.28
42.37
41.20
42.41
44.62
2.90
2.80
2.83
2.82
2.73
2.70
18.00
Public
utilities
(55
stocks)
Railroads
(20
stocks)
Total
Brokers
Banks
Unregulated;
nonmargin
stock
credit
at
banks e
Other
security
credit
at
banks?
Millions of dollars
1941-43=10
17.95
18.39
1973: Jan...
Feb...
Mar..
Apr...
May..
June..
118.42
114.16
112. 42
110.27
107.22
104. 75
132
127
126
123
119
117
55
87
05
56
95
20
60 01
57 52
55 94
55.34
55.43
54.37
42.87
40.61
39.29
38.88
36.14
34.35
2.69
2.80
2.83
2.90
3.01
3.06
16.40
July..
Aug_.
Sept..
Oct...
Nov..
Dec...
105. 83
103.80
105.61
109. 84
102.03
94.78
118.65
116.75
118.52
123.42
114 64
106.16
53 31
50 14
52 31
53 22
48 30
45.74
35.22
33.76
35.49
38.24
39.74
41.48
3.04
3.16
3.13
3.05
3.36
3.70
14.17
14.42
6,850
7,427
7,847
8,250
8,472
8,747
5,989
6,477
6,896
7,283
7,478
7,792
861
950
951
967
994
955
1,182
1,170
1,158
1,150
1,141
1,644
1,313
1,327
1,294
1,278
1,296
1,274
8,924
9,092
9,091
9,024
9,068
9,045
7,945
8,060
8,083
8,081
8,166
8,180
979
1,032
1,008
943
902
865
1,772
1,800
1,871
1,875
1,871
1,896
1,285
1,298
1,255
1,351
1,396
1,528
8,840
8,640
8,347
8,165
7,650
7,369
7,975
7,773
7,468
7,293
6,784
6,416
865
867
879
872
866
953
1,932
1,951
1,862
1,952
1,992
1,973
1,484
1,508
1,586
1,492
1,513
7,299
7,081
6,954
7,093
6,243
6,056
5,949
5,912
5,671
1,056
1,025
1,005
1,181
1,957
1,952
1,909
1,878
1 Monthly data are averages of daily figures and annual data are averages of monthly figures.
2
Aggregate cash dividends (based on latest known annual rate) divided by aggregate market value based on Wednesday closing prices. Monthly data are averages of weekly figures; annual data are averages of monthly figures.
3
Ratio of price index for last day of quarter to earnings for 12 months ending with that quarter. Annual ratios are
averages of quarterly data.
4
Margin credit includes all credit extended to purchase or carry stocks or related equity instruments and secured at
least in part by stock. Credit extended by brokers is end-of-month data for member firms of the New York Stock Exchange. June data for banks are universe totals; all other data for banks represent estimates for all commercial banks,
which accounted for 60 percent of security credit outstanding at banks on June 30,1971.
5
1 n addition to assigning a current loan value to margin stock generally, Regulations T and U permit special loan values
for convertible bonds and stock acquired through exercise of subscription rights.
8
Nonmargin stocks are those not listed on a national securities exchange and not included in the Board of Governors
of the Federal Reserve System's list of over-the-counter margin stocks. At banks, loans to purchase or carry nonmargin
stocks are unregulated; at brokers, such stocks have no loan value.
7
Includes loans to purchase or carry margin stock if these are unsecured or secured entirely by unrestricted collateral.
Sources: Board of Governors of the Federal Reserve System, New York Stock Exchange, and Standard & Poor's Corporation.
342
TABLE C-81.—Business formation and business failures,
1929-73
Business failuresl
Index
of net
business
formation
(1967 = 100)
Year or month
New
business
rations
(num-
ness
failure
Liability size
class
Total
1929 . .
1933 3
1939 3
1940
1941
1942
1943 . .
1944
1945
1946
1947 .
1948
1949
1950
1951
1952
1953
1954
1955
1956
1957
1958....
1959
1960
1961
1962 .
1963...
1964...
1965
1966
1967
1968
1969 . .
1970 . .
1971
1972
1973
.
.
.
112.6
87.8
93.1
93.3
98.2
94.4
91.3
99.1
95.2
90.4
89.5
96.8
02.4
88.3
90.7
93.3
97.2
98.6
98.2
100.0
109.8
116.2
108.0
111.0
117.9
4118.4
Amount of current
liabilities (millions
of dollars)
Number of failures
132,916
112,897
96, 346
85,640
93,092
83,778
92 946
102 706
117 411
139,915
141,163
137,112
150,781
193,067
182 713
181 535
182, 057
186,404
197, 724
203,897
200,010
206,569
233,635
274,267
264,209
287, 577
316,601
4 306,404
Under $100,000
and
$100,000 over
Liability size
class
Total
103.9
100.3
69.6
63.0
54.4
44.6
16.4
6.5
4.2
5.2
14.3
20.4
34.4
34.3
30.7
28.7
33.2
42.0
41.6
48.0
51.7
55.9
51.8
57.0
64.4
60.8
56.3
53.2
53.3
51.6
49.0
38.6
37.3
43.8
41.7
38.3
36.4
22,909
19,859
14,768
13,619
11,848
9,405
3,221
1 222
809
1,129
3,474
5,250
9,246
9,162
8,058
7 611
8 862
11 086
10,969
12,686
13, 739
14,964
14,053
15 445
17 075
15 782
14,374
13,501
13,514
13,061
12 364
9 636
9,154
10,748
10,326
9,566
9,345
22,165
18,880
14, 541
13,400
11,685
9,282
3,155
1 176
759
1,003
3,103
4,853
8,708
8,746
7,626
7 081
8 075
10,226
10,113
11,615
12, 547
13,499
12,707
13 650
15 006
13,772
12,192
11,346
11,340
10,833
10 144
7,829
7,192
8,019
7,611
7,040
6,627
744
979
227
219
163
123
66
46
50
126
371
397
538
416
432
530
787
860
856
1,071
1,192
1,465
1,346
1 795
2 069
2 010
2,182
2,155
2,174
2,228
2 220
1 807
1,962
2,729
2,715
2,526
2,718
483.3
457.5
182.5
166.7
136.1
100.8
45.3
31.7
30.2
67.3
204.6
234.6
308.1
248.3
259.5
283.3
394.2
462.6
449.4
562.7
615.3
728.3
692.8
938.6
1, 090.1
1,213.6
1,352.6
1,329.2
1,321.7
1,385.7
1 265.2
941.0
1,142.1
1,887.8
1,916.9
2,000.2
2,298.6
35.7
40.8
41.2
36.5
38.2
34.2
38.5
40.5
39.1
38 8
38.5
37.4
34.9
36.0
35.9
35.2
36.3
38.2
35.7
39.1
38.6
37.0
34.7
35.7
750
880
986
808
856
730
740
824
730
755
799
708
772
753
874
796
838
840
714
837
717
772
739
693
553
647
672
592
670
528
538
578
551
593
574
544
534
557
647
598
559
608
520
580
502
519
513
490
197
233
314
216
186
202
202
246
179
162
225
164
238
196
111
198
279
232
194
257
215
253
226
203
101.6
191.3
220.7
148.5
190.1
127.9
204.6
253.6
113.5
153 0
208.6
86.8
205.8
137.2
252.3
119.3
167.9
180.2
206.2
190.1
189.5
185.7
218.7
245.6
Under $100,000
and
$100,000 over
261.5
215.5
132.9
119.9
100.7
80.3
30.2
14.5
11.4
15.7
63.7
93.9
161.4
151.2
131.6
131.9
167.5
211.4
206.4
239.8
267.1
297.6
278.9
327.2
370.1
346.5
321.0
313.6
321.7
321.5
297.9
241.1
231.3
269.3
271.3
258.8
235.6
221.8
242.0
49.7
46.8
35.4
20.5
15.1
17.1
18.8
51.6
140.9
140.7
146.7
97.1
128.0
151.4
226.6
251.2
243.0
322.9
348.2
430.7
413.9
611.4
720.0
867.1
1,031.6
1,015.6
1,000.0
1,064.1
967.3
699.9
910.8
1,618.4
1,645.6
1,741.5
2,063.0
Seasonally adjusted
1972:Jan
Feb
Mar
Apr
May
June
July
Aug
Sept
Oct
Nov
Dec
1973:Jan
Feb
Mar
Apr
May
June
July
Aug
Sept.
Oct
Nov
Dec
.. .
114.7
114.6
116.9
118.0
118.5
117.7
118.0
117.5
118.7
120.4
120.2
120.1
119.1
119.8
121.9
119.6
119.0
118.2
118.1
117.7
115.6
24, 871
25,055
26, 862
26, 681
26,243
26,303
26,815
26,420
26, 798
27,417
26, 387
27,614
27,173
28,640
29,914
28,693
28, 422
27, 859
27, 832
27,696
26,277
P115.8
P26,215
P117.8
v27,683
20.1
23.0
24.4
28.5
23.3
18.1
19.2
21 0
19.6
21 4
21.0
19.1
19.1
19.3
23.1
20.7
19.0
20.4
19.6
20.4
18.5
18.7
19,6
17.2
81.5
168.3
196.3
120.0
166.8
109.8
185.4
232.6
93.9
131.6
187.6
67.7
186.7
117.9
229.2
98.7
149.0
159.8
186.6
169.8
171.0
167.0
199.1
228.4
1 Commercial and industrial failures only. Excludes failures of banks and railroads and, beginning 1933, of real estate,
insurance,
holding, and financial companies, steamship lines, travel agencies, etc.
2
Failure rate per 10,000 listed enterprises.
3 Series revised; not strictly comparable with earlier data.
* Preliminary; based on seasonally adjusted data through November.
Sources: Department of Commerce (Bureau of Economic Analysis) and Dun & Brad street, Inc.
343
AGRICULTURE
TABLE C-82.—Income offarm people and farmers,
1929-73
Income received from farming
Personal income
received by total
farm population
Year or
quarter
Net to farm
operators
Realized gross
From
From
From
nonfarm
all
Total 3
farm
sources sources^ sources
2
ProducCash tion ex- Exclud- Includreceipts penses ing net ing net
from
inven- invenmarkettory
tory
ings
change change«
Billions of dollars
Net income per
farm, including
net inventory
change
Current
dollars
1967
dollars«
Dollars
1929
13.9
11.3
7.7
6.3
6.2
945
1,969
1933
7.1
5.3
4.4
2.7
2.6
379
1 115
1939
7.4
4.8
2.6
10.6
7.9
6.3
4.3
4.4
685
1,851
1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
. .
7.6
10.1
14.1
16.5
16.6
17.2
20.0
21.1
23.8
19.5
4.8
6.8
10.1
12.1
12.2
12.8
15.5
15.8
18.0
13.3
2.8
3.3
3.9
4.4
4.4
4.4
4.6
5.3
5.8
6.2
11.1
13.9
18.8
23.4
24.4
25.8
29.5
34.1
34.7
31.6
8.4
11.1
15.6
19.6
20.5
21.7
24.8
29.6
30.2
27.8
6.9
7.8
10.0
11.6
12.3
13.1
14.5
17.0
18.8
18.0
4.2
6.1
8.8
11.8
12.1
12.8
15.0
17.1
15.9
13.6
4.5
6.5
9.9
11.7
11.7
12.3
15.1
15.4
17.7
12.8
706
1,031
1,588
1,927
1,950
2,063
2,543
2 615
3 044
2 233
1,858
2,578
3 452
3 706
3 611
3,619
4,037
3 534
3 903
2 977
. .
20.4
22.7
22.1
19.8
18.4
17.6
17.8
17.7
19.5
18.1
14.1
16.2
15.4
13.4
12.5
11.4
11.2
11.0
12.8
11.0
6.3
6.5
6.7
6.4
5.9
6.2
6.6
6.6
6.7
7.0
32.3
37.1
36.8
35.0
33.6
33.1
34.3
34.0
37.9
37.5
28.5
32.9
32.5
31.0
29.8
29.5
30.4
29.7
33.5
33.5
19.4
22.3
22.6
21.3
21.6
21.9
22.4
23.3
25.2
26.1
12.9
14.8
14.1
13.7
12.0
11.2
11.9
10.7
12.7
11.4
13.7
16.0
15.1
13.1
12.5
11.5
11.4
11.3
13.5
11.5
2,421
2 946
2 896
2 626
2 606
2,463
2,535
2 590
3 189
2,795
3,186
3 549
3 448
3 126
3 102
2,932
2,982
2 943
3 583
3,140
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
18.7
19.7
20.4
20.6
20.6
23.6
24.9
24.0
25.1
27.6
11.5
12.2
12.3
12.1
11.3
13.5
14.4
13.1
13.2
14.9
7.2
7.5
8.2
8.5
9.3
10.0
10.5
10.9
11.9
12.7
38.1
39.8
41.3
42.3
42.6
44.9
49.7
49.0
50.9
55.6
34.2
35.1
36.4
37.4
37.2
39.3
43.3
M.I
44.1
48.1
26.4
27.1
28.6
29.7
29.5
30.9
33.4
34.8
36.2
38.8
11.7
12.6
12.6
12.6
13. 1
14.0
16.3
14.2
14.7
16.8
12.1
13.0
13.2
13.2
12.3
15.0
16.3
14.9
14.8
16.9
3 048
3 395
3 579
3,697
3,548
4,465
4 990
4,707
4,828
5,620
3 387
3,772
3,933
4,018
3,815
4,700
5,092
4,707
4,642
5,156
1970
1971
1972
28.3
29.2
34.0
41.3
15.1
15.2
18.1
23.8
13.2
14.0
15.9
17.5
57.8
59.7
68.9
90.5
50.5
52.8
60.7
83.4
41.0
44.5
49.2
64.4
16.8
15.2
19.7
26.1
16.9
16.9
20.3
26.9
5,725
5,817
7,089
9,469
5,022
4,888
5,717
6,862
17 0
16.7
16.4
17.6
19.6
20.0
19 9
21.9
24 4
24.7
27.2
31.4
5 840
5,740
5,640
6,050
6,830
6,970
6 930
7,630
8,620
8,720
9,610
11,090
4,990
4,860
4,700
5,040
5,600
5,620
5,540
6,060
6,580
6,410
6,860
7,650
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
.
.
1973P
Seasonally adjusted annual rates
1971: 1
II .
Ill
IV
1972: 1
II
III
IV .
1973: 1
II .
Ill
IVP
58.9
59.7
59.1
61.3
65.8
68.1
68 7
72.8
79.8
82.5
91.4
108.3
51 8
52.8
52.2
54.4
57.8
59.8
60 5
64.6
72 4
75.5
84.5
101.2
1
43 1
44.4
44.7
45.9
47.0
48.8
49 4
51.5
55 8
58.0
65.9
77.9
15 8
15.3
14.4
15.4
18.8
19.3
19 3
21.3
24 0
24.5
25.5
30.4
Net income to farm operators including net inventory change, less net income of nonresident operators, plus wages and
salaries and other labor income of farm resident workers, less contributions of farm resident operators and workers to
social
insurance.
2
Consists of income received by farm residents from nonfarm sources, such as wages and salaries from nonfarm employment, nonfarm business and professional income, rents from nonfarm real estate, dividends, interest, royalties,
unemployment
compensation, and social security payments.
3
Cash receipts from marketings, Government payments, and nonmoney income furnished by farms (excluding net
inventory change).
* Includes net value of physical change in inventory of crops and livestock valued at average prices for the year.
* Income in current dollars divided by the index of prices paid by farmers for family living items on a 1967 base.
Source: Department of Agriculture.
344
TABLE C-83.—Farm production indexes, 1929-73
[1967=100]
Crops
Farm
output i
Year
Livestock and products
Hay Food Vege- Fruits
Feed
and
Total 2 grains
and
forage grains tables nuts
Cotton
ToOil
bacco crops Total 3
Meat
animals
Dairy Poultry
prod- and
ucts eggs
1929...
53
62
50
69
50
65
67
200
77
8
54
52
76
32
1933...
50
56
45
60
35
65
68
175
70
6
57
58
80
32
1939...
58
64
52
65
47
72
85
160
97
17
59
59
83
35
1940...
1941...
1942...
1943 ..
1944...
60
62
69
68
70
66
68
76
71
75
53
70
66
60
63
75
74
81
79
78
52
59
62
53
66
74
75
80
86
82
83
88
87
75
87
170
145
173
155
166
74
64
71
71
99
20
22
33
35
29
60
64
71
77
73
60
63
73
81
73
85
89
92
91
93
36
39
45
52
51
1945 ..
1946...
1947...
1948...
1949...
69
71
69
75
74
73
76
73
83
79
61
66
50
73
64
81
76
73
73
72
68
71
83
80
69
84
93
82
87
84
79
94
90
82
87
122
117
160
202
217
100
117
107
100
100
31
30
32
39
36
73
71
70
68
72
70
68
67
66
69
95
94
93
90
93
54
50
49
48
54
1950...
1951...
1952. .
1953...
1954...
73
75
78
79
79
76
77
81
81
79
65
60
64
62
66
77
80
78
80
80
64
63
81
74
66
85
80
81
84
83
87
89
86
87
88
135
205
205
222
188
103
118
114
105
114
41
38
37
37
41
75
78
78
79
82
74
79
79
78
81
93
92
92
97
98
56
59
59
61
63
1955 ..
1956...
1957...
1958...
1959...
82
82
80
86
88
82
82
80
89
89
69
69
75
82
85
85
81
88
88
84
62
65
61
90
72
86
91
88
90
89
88
92
84
91
93
199
180
148
154
196
111
110
84
88
91
46
54
53
65
58
84
84
83
85
88
86
83
80
82
88
99
101
102
101
100
62
68
69
73
76
1960...
1961...
1962 ..
1963...
1964...
90
90
91
9b
94
92
91
92
95
93
88
79
80
87
76
89
89
92
92
93
86
78
73
76
84
91
96
94
94
90
87
91
92
89
90
192
193
200
207
206
99
104
117
119
113
61
71
72
75
75
87
91
92
95
97
85
89
90
95
98
101
104
105
104
105
75
81
81
83
87
1965...
1966...
1967...
1968...
1969...
97
96
100
102
103
98
95
100
103
104
89
89
100
95
99
97
96
100
100
100
87
87
100
105
97
96
97
100
103
103
95
97
100
93
113
202
129
100
148
135
94
95
100
87
91
90
96
100
112
115
95
97
100
100
101
92
96
100
102
102
104
101
100
99
99
90
96
100
98
101
1970...
1971 ..
1972...
102
110
112
116
100
112
113
119
90
117
114
117
99
105
104
109
91
106
101
111
101
99
100
101
107
115
104
127
137
142
182
173
97
86
89
90
117
121
129
156
105
107
108
107
108
110
111
111
100
101
102
99
106
106
109
106
1973P
1 Farm output measures the annual volume of farm production available for eventual human use through sales from
farms or consumption in farm households. Total excludes production of seeds and of feed for horses and mules. The
Department of Agriculture also estimates net farm output, which excludes all quantities used for feed.
2 Includes production of seeds and of fe"ecf for horses and mules and certain items not shown separately.
3 Includes certain items not shown separately.
Source: Department of Agriculture.
345
527-867 O - 74 - 23
TABLE
C-84.—Farm population, employment,and productivity, 1929-73
Farm population
(April l ) i
Year
ber
(thousands)
As percent of
total
population 2
Farm employment
(thousands) 3
Farm output
Per man-hour
Par
Total
Family Hired unit of
workers workers total
input
Total
Crops
Livestock
and
products
Crop
production
per
acre <
Index, 1967 = 100
1929
30, 580
25.1
12, 763
9,360
3,403
54
17
17
26
1933
32,393
25.8
12,739
9,874
2,865
54
16
17
25
50
1939
30, 840
23.5
11,338
8,611
2,727
60
20
21
27
61
1940
1941
1942
1943
1944
30, 547
30,118
28,914
26,186
24, 815
23.1
22.6
21.4
19.2
17.9
10, 979
10,669
10, 504
10, 446
10,219
8,300
8,017
7,949
8,010
7,988
2,679
2,652
2,555
2,436
2,231
62
64
69
21
22
24
22
24
26
27
28
30
68
24
26
32
62
64
70
69
25
27
31
68
1945
1946
1947
1948
1949
24, 420
25, 403
25, 829
24, 383
24,194
17.5
18.0
17.9
16.6
16.2
10, 000
10, 295
10,382
10, 363
9,964
7,881
8,106
8,115
8,026
7,712
2,119
2,189
2,267
2,337
2,252
70
27
29
31
68
33
34
67
75
23, 048
21, 890
21,748
19, 874
19,019
15.2
14.2
13.9
12.5
11.7
9,926
9,546
9,149
8,864
8,651
7,597
7,310
7,005
6,775
6,570
2,329
2,236
2,144
2,089
2,081
19, 078
18,712
17,656
17,128
16,592
11.5
11.1
10.3
9.8
9.4
8,381
7,852
7,600
7,503
7,342
6,345
5,900
5,660
5,521
5,390
1960
1961
1962
1963
1964
15, 635
14,803
14 313
13, 367
12,954
8.7
8.1
7.7
7.1
6.8
7,057
6,919
6,700
6,518
6,110
1965
1966
1967
1968
1969
12 363
11,595
10, 875
10,454
10, 307
6.4
5.9
5.5
5.2
5.1
9,712
9,425
9,610
9,500
4.7
4.6
4.6
4.5
1950
1951
1952
1953
1954
.
1955
1956
1957
1958
1959
.
,.
.
1970
1971
1972
1973 p
57
64
72
29
31
70
76
29
32
31
35
73
33
36
36
70
73
73
35
36
39
38
37
39
69
69
76
77
39
41
42
43
40
41
43
45
43
73
73
78
2,036
1,952
1,940
1,982
1,952
81
47
48
46
82
83
50
53
52
56
89
59
65
48
51
55
74
77
77
86
90
62
66
59
86
5,172
5,029
4,873
4,738
4,506
1,885
1,890
1,827
1,780
1,604
93
67
71
62
88
94
95
98
70
73
80
73
77
82
67
71
77
97
83
85
83
92
95
97
95
5,610
5,214
4,903
4,749
4,596
4,128
3,854
3,650
3,536
3,420
1,482
1,360
1,253
1,213
1,176
100
92
97
100
101
101
91
94
100
106
112
95
100
106
112
93
100
105
112
100
99
100
104
107
4,523
4,436
4,373
4,395
3,348
3,275
3,227
3,232
1,175
1,161
1,146
1,163
101
108
110
112
113
125
131
129
110
122
126
127
119
130
138
127
102
111
115
114
32
87
70
71
1 Farm population as defined by Department of Agriculture and Department of Commerce, i.e., civilian population
living on farms, regardless of occupation.
2 Total population of United States as of July 1 including Armed Forces overseas.
3 Includes persons doing farmwork on all farms. These data, published by the Department of Agriculture, Statistical
Reporting Service, differ from those on agricultural employment by the Department of Labor (see Table C-24) because of
differences in the method of approach, in concepts of employment, and in time of month for which the data are collected.
See monthly report on "Farm Labor."
< Computed from variable weights for individual crops produced each year.
Sources: Department of Agriculture and Department of Commerce (Bureau of the Census\
346
TABLE C-85.—Indexes of prices received and prices paid by farmers, and parity ratio, 1929-73
[Index, 1967=100, except as noted]
Year or month
All farm
products
Crops
Parity ratio l
Prices paid by farmers
Prices received by farmers
items,
Livestock All
interest,
and
taxes,
and
products wage rates
Family
living
items
Production
items
Actual
Adjusted 2
57
47
48
51
92
31
25
32
34
34
64
66
1939
37
42
39
36
37
42
77
85
1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
39
49
63
76
78
81
93
109
113
98
44
55
70
85
87
92
104
122
127
111
39
50
62
71
71
76
87
104
114
98
36
39
44
50
53
56
61
70
76
73
38
40
46
52
54
57
63
74
78
75
43
45
52
57
60
61
67
78
87
83
81
93
105
113
108
109
113
115
110
100
88
98
109
102
119
113
100
97
91
91
92
98
95
103
117
118
106
107
102
104
99
99
98
101
121
110
97
90
84
82
88
99
93
75
82
84
81
81
81
81
84
86
87
76
83
84
84
84
84
85
88
89
89
86
95
95
89
89
87
87
90
92
93
101
107
100
92
89
84
83
82
85
81
102
108
101
93
89
85
84
85
88
82
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
94
94
96
96
93
98
105
100
103
108
99
100
103
106
106
103
105
100
101
97
91
91
92
89
85
94
105
100
104
117
88
88
90
91
92
94
98
100
104
109
90
90
91
92
93
95
98
100
104
109
92
80
79
80
78
76
77
80
74
73
74
82
83
83
81
80
82
86
79
79
80
1970
1971
1972
1973
110
112
126
172
100
107
115
164
118
116
134
178
114
120
127
145
114
119
124
138
110
115
122
72
69
74
88
77
74
79
92
1972: Jan 15
Feb 15
Mar 15
Apr 15..
May 15
June 15...
120
122
120
119
123
125
111
110
108
112
114
116
127
131
129
126
130
132
123
124
124
125
125
126
121
123
123
123
124
124
118
119
119
120
121
73
74
72
71
73
74
78
79
77
76
78
79
127
128
128
129
130
137
115
117
117
117
120
127
136
135
138
139
138
145
127
127
128
129
130
131
125
125
126
125
127
127
122
122
124
125
126
129
75
75
75
75
75
78
80
80
80
80
80
83
....
144
149
159
157
163
172
131
133
140
143
154
170
153
161
174
168
169
173
134
136
138
140
143
146
129
131
132
134
136
138
132
134
138
139
143
149
80
82
86
83
85
87
83
85
89
87
89
91
. . .
172
207
191
184
181
184
164
195
183
182
181
193
179
217
198
187
182
178
146
151
150
150
151
153
138
141
142
142
146
146
148
157
154
153
153
156
88
102
95
91
89
89
92
107
99
95
93
93
.
July 15
Aug 15
Sept 15
Oct 15
Nov 15
Dec 15
«
1973:Jan 15
Feb 15
Mar 15
Apr 15
May 15
June 15
95
94
96
99
100
102
106
CD
July 15
Aug 15
Sept 15"
Oct 15
Nov 15 .
Dec 15
4*
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
. .
CO
65
28
toco
58
1933.
too
1929
111
115
116
111
100
1
Percentage ratio of index of prices received by farmers to index of prices paid, interest, taxes, and wages rates on
1910-14=100 base.
2
The adjusted parity ratio reflects Government payments made directly to farmers.
Source: Department of Agriculture.
347
TABLE C-86.—Selected measures of farm resources and inputs, 1929-73
Index numbers of inputs (1967 = 100)
Crops
Manharhours
vested
of
(milfarm
lions
work
of
(bilacres) i lions)
Year
Total
Farm
labor
Farm
real
estate
Mechanical
power
and
machinery
Feed,
Fertiseed,
lizer
and
Taxes Misceland
liveand
liming
stock interest laneous
mapurterials chases2
1929...:
365
23.2
99
302
104
40
11
31
69
53
1933
340
22.6
93
294
98
33
6
28
71
52
1939
331
20.7
96
270
103
41
12
41
67
50
1940. .
1941
1942
1943.. .
1944
341
344
348
357
362
20.5
20.0
20.6
20.3
20.2
97
97
100
101
102
269
265
271
267
265
105
103
101
100
100
43
45
51
54
56
14
15
17
19
23
43
46
49
53
53
68
68
69
72
74
51
52
49
52
54
1945.
1946
1947
1948
1949
354
352
355
356
360
18.8
18.1
17.2
16.8
16.2
99
98
98
99
101
249
239
226
220
212
100
104
105
105
106
57
56
62
69
76
23
24
28
29
31
55
54
56
57
63
75
76
76
74
77
53
54
54
59
62
1950
1951
1952
1953
1954
345
344
349
348
346
15.1
15.2
14.5
14.0
13.3
100
103
103
102
101
199
200
191
184
176
107
108
106
107
107
80
86
90
91
92
32
36
39
42
43
64
68
70
70
72
77
77
79
80
80
63
67
67
65
64
1955
1956
1957
1958
1959
340
324
324
324
324
12.8
12.0
11.1
10.5
10.3
101
100
97
97
98
170
160
149
143
139
107
104
104
102
102
45
44
46
48
54
68
70
69
74
79
324
302
295
298
298
9.8
9.4
9.0
8.7
8.2
96
96
96
97
97
134
129
123
120
115
101
100
100
100
101
54
58
62
70
76
73
76
75
81
84
84
87
89
89
91
82
8?
81
82
86
1960
1961
1962
1963
1964
93
94
92
93
94
92
90
92
91
92
87
89
90
92
94
80
84
89
94
99
298
294
306
300
290
7.8
7.4
7.3
7.0
6.7
97
98
100
101
102
109
101
100
96
94
101
100
100
99
99
95
99
100
102
102
80
90
100
107
110
92
97
100
101
104
95
98
100
103
105
101
98
100
108
110
293
305
294
322
6.5
6.4
6.2
6.5
101
102
102
104
89
88
85
89
98
97
101
97
101
103
102
105
113
121
120
124
109
109
110
109
106
104
108
109
107
109
117
115
.
. .
1965
1966
1967
1968
1969
1970
1971
1972
1973 v
..
.. .
1
Acreage harvested (excluding duplication) plus acreages in fruits, tree nuts, and farm gardens.
2 Nonfarm portion of feed, seed, and livestock purchases.
Source: Department of Agriculture.
348
TABLE G-87.—Comparative balance sheet of the farming sector, 1929-74
[Billions of dollars]
Assets
Claims
Other physical assets
Beginning of
year
Financial assets
MaHouseReal Live- chinDehold
Total estate
stock * ery
equip- posits
and Crops 2 ment
and
motor
and
curvehifurnish- rency
cles
ings
ProReal Other prieInvest- Total estate
tors'
U.S.
ment
debt debt equisavings in coties
bonds operatives
1929
48.0
6.6
3.2
1933
30.8
3.0
2.5
8.5
1939....
34.1
5.1
3.2
6.8
9.8
1940.
1941...
1942
1943
1944..
52.9
55.0
62.9
73.7
84.6
33.6
34.4
37.5
41.6
48.2
5.1
5.3
7.1
9.6
9.7
3.1
3.3
4.0
4.9
5.4
2.7
3.0
3.8
5.1
6.1
4.2
4.2
49
5.0
5.3
3.2
3.5
42
5.4
6.6
0.2
.4
.5
1.1
2.2
0.8
.9
.9
52.9
55.0
62 9
73.7
84.6
6.6
6.5
6 4
6.0
5.4
3.4
3.9
41
4.0
3.5
42.9
44.6
52 4
63 7
75.7
1945.
1946.
1947
1948
1949...
94.2
103.5
116.4
127.9
134.9
53.9
61.0
68.5
73.7
76.6
9.0
9.7
11.9
13.3
14.4
6.5
5.4
5.3
7.4
10.1
6.7
6.3
7.1
9.0
8.6
5.6
6.1
7.7
8.5
9.1
7.9
9.4
10.2
99
9.6
3.4
4.2
4.2
4.4
4.6
? 94.2
L.4 103.5
116.4
7 127.9
q 134.9
4.9
4.8
4.9
51
5.3
3.4
3.2
3.6
4.2
6.1
85.9
95.5
107.9
118 6
123.5
1950.
1951
1952
1953.
1954
132.5
151.5
167.0
164.3
161.2
75.3
86.6
95.1
96.5
95.0
12.9
17.1
19.5
14.8
11.7
12.2
14.1
16.7
17.4
18.4
7.6
7.9
8.8
9.0
9.2
8.6
9.7
10 3
9.9
9.9
9.1
9.1
9.4
9.4
9.4
4.7
4.7
4.7
4.6
4.7
2.1
2.3
2.5
2.7
2.9
132.5
151.5
167.0
164.3
161.2
5.6
6.1
67
7.2
7.7
6.8
7.0
8.0
8.9
9.2
120.1
138.4
152 3
148.2
144.3
1955.
1956
19571958
1959. .
165.1
. 169.6
177.9
185.8
202.1
98.2
102.9
110.4
115.9
124.4
11.2
10.6
11.0
13.9
17.7
18.6
19.3
20.2
20.2
21.8
9.6
8.4
8.3
7.6
9.3
10.0
10.5
10.0
9.9
9.8
9.4
9.5
9.4
9.5
10.0
11
5.1
5.1
5.2
3.1
3.2
3.5
3.7
3.9
165.1
169.6
177.9
185 8
202.1
8.2
9.0
9.8
10 4
11.1
9.4
9.8
9.5
10 0
12.5
147.5
150.8
158.6
165 4
178.5
1960
1961 .
1962_
1963
1964
203.5
. . 204.2
212.8
221.4
229.2
130.2
131.8
138.0
143.8
152.1
15.2
15.5
16.4
17.3
15.8
22.7
22.2
22.5
23.4
23.9
7.7
8.0
8.8
9.3
9.8
9.6
8.9
9.1
90
8.8
9.2
8.7
8.8
9.2
9.2
4.7
4.6
4.4
4.4
4.2
4.2
4.5
4.8
5.0
5.4
203.5
204.2
212.8
221 4
229.2
12 1
12.8
13.9
15 2
16.8
12.7
13.4
14.8
16.5
18.1
178.7
178.0
184.1
189 7
194.3
1965
1966
1967
1968
1969
237.2
253.7
266.6
279.9
294.0
160.9
172.2
181.7
191.9
200.8
14.4
17.5
18.9
18.7
20.1
24.7
25.8
27.2
29.5
30.9
9.2
9.7
10.0
9.6
10.6
8.6
8.6
8.4
9.0
9.6
9.6
10.0
10.3
10.9
11.5
4.2
4.0
3.9
3.8
3.7
5.6
59
6.2
6.5
6.8
237.2
253 7
266.6
279.9
294.0
18.9
21 2
23.3
25.5
27.1
18.7
20 4
22.4
24.9
27.5
199.6
212.1
220.9
229.5
239.4
1970
1971
1972
1973
1974 v
305.1
316.2
341.4
384.5
454.6
206.1
214.1
230.5
2
@FedFRASER